NBC, News Corp, and the $1 Billion “Idea”

In case you haven't heard, NBC & News Corp. recently received $100 million in venture funding from Providence Equity Partners, a Rhode Island-based investment firm that specializes in the media and communications industries. This money, according to the New York Times, "will allow the companies to accelerate the introduction of their service and the transfer of NBC and Fox films and television shows into Internet-friendly video formats."

Oh, and did I mention that, since its March announcement, the yet unnamed company has apparently already built a market valuation of $1 billion. That's right, $1 billion, which means that the $100 million in investment money will only earn Providence a 10% stake in the newly formed company.

All of these impressive numbers made me take a second look at the history of the joint project (currently being called NewCo and NewSite), which is still extremely short and uneventful.

What Still Remains To Be Done

It seems that NBC and News Corp. have more hurdles ahead of them than they do behind them. The new company still needs to develop a name, which shouldn't be too hard to accomplish. The longer they go without a name, the longer they will have to go without a website, which is something else that remains to be completed.

The service also needs to define it's specific goals and mission for being developed because, currently, it has practically no published, useful information. In fact, I am still confused myself about what exactly this project is aiming to provide. I know that NBC and News Corp. have said that the venture is not a direct rival to YouTube because the content would consist primarily of television programming (would that make it a Joost competitor), but then I heard that the service "would accept user-generated content but would primarily serve as a way to show their collective libraries of film and television shows in a protected, high-quality format," which is exactly what YouTube is known for.

What Has Been Accomplished

So far, the biggest news about what has been done is probably the announcement of Jason Kilar as the CEO, who worked for Amazon for almost 10 years, before taking this position. The only other progress I managed to discover is the fact that NewCo recently leased office space in Los Angeles and that approximately 120 people are already working for the company.

How Is NewCo Worth $1 Billion?

After taking all of that information in, I was left scratching my head wondering how the service could already be worth $1 billion? What made me scratch my head even more was the fact that the company actually managed to find an investor willing to accept their "estimated" valuation and offer them $100 million while only receiving a 10% stake.

“It’s a sign of the times when a company that didn’t exist a couple months ago can raise this kind of money,” stated Todd Dagres, partner at Spark Capital, the media VC firm that has funded project such as Me.dium and Veoh. He found $1 billion to be an abnormally high value "for a company that could most likely not be sold or go public, considering NBC and the News Corporation hold large stakes."

As long as the service has no name and no "clear mission" that defines it, it remains an "idea" in my book. It's not even an innovative idea at that, since several television networks are already offering their content online, at their official websites.

If this venture is already worth $1 billion, just wait until a name is finalized. Maybe that will double the value! What do you think?