In a long-anticipated challenge to YouTube and other online video sites, two big media companies yesterday announced a new venture to showcase their own programming across the Internet’s biggest Web sites, as well as a new jointly owned Web destination.
The News Corporation and NBC Universal will distribute their latest video fare, like episodes of “24” and “The Office” on AOL, Yahoo, MSN and MySpace, which together reach about 96 percent of the Internet’s audience in the United States.
The content, which will appear in an embedded media player on these Web sites as well as on a new separate video site that News Corporation and NBC Universal will introduce, will be supported by advertising and be free to viewers.
Viewers will also be able to edit the content and post their own videos, a popular feature of other online video sites, as well as buy downloads of movies from the 20th Century Fox and Universal Studios.
News Corporation and NBC Universal, like other media companies, have had complex and increasingly tense relationships with Google, which owns YouTube. The media companies’ copyrighted material, like television shows and music videos, show up on YouTube without the media companies’ permission. Viacom, which has held discussions on joining the unnamed new venture but so far has not done so, is suing YouTube for $1 billion on the grounds of copyright infringement.
While many media joint ventures have fizzled both online and off, the unnamed venture — which some working on the project referred to internally as “Caterpillar” — could represent one of the boldest efforts yet by conventional media companies to try to maintain control over their content and advertising relationships on the freewheeling Web.
The idea is to create a “one-stop shop” for advertisers that would give the media companies’ more clout in negotiating to distribute their video material around the Internet. The new company does not yet have a name or a management team but is expected to start operating this summer.
Jeff Zucker, the chief executive of NBC Universal, said that the distribution deals with the major Web destinations underscored that the new venture is not merely a defensive move against YouTube and Google, as some early reports had characterized it.
“I totally disagree with that,” Mr. Zucker said in an interview. “What this is doing is taking advantage of the huge marketplace, both on the advertising side and consumer side, for this kind of material.”
Peter A. Chernin, the president of the News Corporation, said the new site “has absolutely no resemblance” to YouTube and that Eric E. Schmidt, the chief executive of Google, is considering licensing the new venture’s fare just as other big Internet players have.
A Google spokesman confirmed that Mr. Schmidt spoke with Mr. Chernin yesterday morning by phone but declined to discuss any details about the call.
All the advertising in the video programming will be sold by either the media companies themselves or the new Web venture, and shows and clips will be displayed on a video player that will be embedded in sites like MSN and AOL. For the Internet companies who are distributing the shows, it allows them a new way to tap into the surging popularity of Internet video and vie with YouTube for viewers.
The impetus for announcing the business now, executives involved said, was the conclusion of deals with AOL, Yahoo, MSN and MySpace. The partners had also spent several months trying to recruit other media companies including Viacom, Walt Disney and CBS to join their start-up.
“This was never about speed, this was about getting it right,” Mr. Chernin said in an interview. “It took us this long to get it right.”
Carl D. Folta, a Viacom spokesman, said that “a new online video distribution platform that respects copyrights is a welcome addition to the industry.” Mr. Folta declined to comment on whether Viacom would join the venture.
Both of the founding companies have vast video assets. In addition to owning the NBC TV network, NBC Universal’s businesses include the cable channels USA Network, Sci-Fi Channel and Bravo. The News Corporation owns the Fox Television Network and MySpace.
Both companies have agreed to make their entertainment content available online only through the new venture or through their existing Web outlets such as NBC.com and Fox.com. Mr. Zucker said NBC would continue to promote NBC.com heavily alongside its programming.
Five people familiar with the terms of the new venture — none of whom wanted to be identified because they said the information was confidential — said the new company would get close to 90 percent of the gross revenue from any advertising displayed on a distributor Web site like AOL. The majority of new revenue generated by the new business will go to its media partners.
The venture will have its own sale force. But to avoid the appearance of one TV network’s fare getting more attention, marketers looking to advertise there will not be able to buy advertising based on individual shows or networks, but rather according to genre or demographic data.
At the same time, NBC or Fox can reclaim and sell the advertising inventory of any show it is distributing online by buying it back from the new company at a discount.
“Everything they’ve promised sounds great,” said James L. McQuivey, an analyst at Forrester Research. “But file this in the category of easier said than done. This is going to be a huge undertaking to pull off. The site has to be amazing, fun to use, well branded. It’s not something you can pull together in a couple of months.”
Because its content is coming from only two companies initially, this venture could invite comparisons to some earlier ill-starred attempts by media companies to compete online. For example, in 1999 Universal Music and Bertelsmann teamed up to start a site called GetMusic.com to compete with the popular file-sharing site Napster.
That venture, like others, did not survive even though Napster’s faded under legal pressure, because it did not offer a wide enough selection of programming to excite consumers.
The new video venture is different in several respects, however. For one, it is advertising-supported and represents a new, centralized way for the television networks to try extend their relationships with marketers online, where video is the fastest-growing category of advertising. The companies’ said initial advertisers include Cadbury Schweppes, Royal Caribbean, Cisco, Esurance, Intel and General Motors.
Jessica Reif Cohen, the media analyst at Merrill Lynch, said the new venture could provide “more significant reach than advertisers have previously been able to obtain online” for video.
Starz Sues Disney Over Film Sales
LOS ANGELES, March 22 — Starz Entertainment, a unit of Liberty Media, wants to block Walt Disney from selling movies over the Internet while those films are showing on Starz cable and Web services.
Starz filed suit Thursday in United States District Court for the Central District of California alleging that the sale of movies through Apple’s iTunes store and elsewhere violates a promise to license those films to Starz exclusively for a set period.
Starz contends it has paid Disney more than $1 billion for exclusive rights to show Disney films during blocks of time after the movies leave theaters. The lawsuit claims the contract prevents Disney from selling films on the Internet before they appear on Starz services, like the Starz and Encore video-on-demand movie channels or its online service, Vongo.
The lawsuit, against Disney’s Buena Vista unit, was filed after months of talks failed to produce a solution, Starz said.
“We believe Starz misreads its agreement with Buena Vista Television and that its claim is without merit,” a Disney spokeswoman, Kim Harbin, said in a statement. “BVT retained and has the right to sell its motion pictures in a wide range of mediums.”
