New media moves out of the backroom and into the boardroom

The latest fad for the large media conglomerates seems to be corporate restructuring. Viacom International, Capital Cities/ABC and Philips have all reorganized their corporate structures in the past month to take advantage of the new opportunities afforded by new technologies and interactive media.

All of these reorganizations, as well as other, similar reorganizations that took place recently at AT&T, Paramount, Tribune and Time Warner, have one thing in common: the interest and activities in digital media are closer to the top of the company than ever before.

VIACOM CREATES GROUP FOCUSED ON CASTRO VALLEY

Even though Viacom has an interactive media division, Viacom New Media, the company has now applied a corporate-wide structure to its new development efforts. Prompted by the need to find quality interactive programming for its Castro Valley project, Viacom will be actively searching out and developing programming for the ITV trial, both internally and externally. (As Digital Media went to press, talks between Viacom and Paramount were heating up. Look for more in-depth coverage in next month’s issue.)

The company gave the newly created position of president of Interactive Television to Thomas Dooley, who has been with Viacom since 1980. Dooley, who has held a number of positions in finance and business management, including vice president of finance, the treasurer of the company and senior vice president of corporate development — a title he will continue to hold — has no experience in creative content development or engineering.

The business of ITV. He is expected to create a financially viable operation out of Viacom’s diverse activities in interactive television, including both technology and programming. Dooley will report directly to Frank Biondi, the president and CEO of Viacom International.

This undertaking will be no easy task, as it will require the coordination of a number of entities, including the television networks (Showtime, Nickelodeon, MTV), as well as the Viacom Corporate Technology Group and Viacom New Media.

On the top of Dooley’s “to do” list is getting the Castro Valley project up and running. To do this, he has brought on board two new Viacom executives, who are charged with actually running the Castro Valley operations.

Robert Meyers, now vice president of corporate development for the interactive television group, will be responsible for managing the Castro Valley project. Meyers has been a project manager for Viacom since 1989, and was at NBC for 10 years prior to that.

Peter Miller, vice president of corporate development for Interactive Television Applications, is responsible for the interactive programming on the Castro Valley system, which includes building relationships and obtaining programming outside the company. Miller, who was an independent consultant before coming to Viacom, was instrumental in starting Apple’s interactive television project under the Advanced Technology Group between 1990 and 1992. Before that, he worked for Lotus Development and ON Technology.

New Media remains in-house developer. Viacom New Media will continue to develop interactive programming as an in-house studio under Michele DiLorenzo, now executive vice president of the group. The New Media division made its own personnel announcement, bringing former Sega marketing executive Al Nilsen to the company as vice president of marketing. Nilsen ran the product launches for the Sega Genesis machine, as well as both Sonic the Hedgehog titles.

ABC MULTIMEDIA ON PAR WITH NETWORK TV

Elsewhere in the world of television, Capital Cities/ABC announced that it has formed a new division, the Capital Cities/ABC Multimedia Group, reporting directly to the CEO of the parent company, Daniel Burke. The Multimedia Group will be headed by Stephen Weiswasser, senior vice president of Capital Cities/ABC and now president of the Multimedia Group.

Cap Cities Multimedia. Weiswasser will be in charge of developing new business opportunities in interactive television, pay-per-view, home video (including videotape and laser disc), HDTV, and — it would appear — anything digital. He will be “centralizing and expanding the company’s activities in new and emerging media technologies,” according to the official statement. ABC News Interactive, the company’s most visible foray into digital media to date, will be a part of this division, although the company has been very quiet over the past year. (Weiswasser declined to be interviewed at this time, as he feels that he is still getting up to speed on the new division.)

In addition to new media technologies, Weiswasser will be responsible for the corporation’s legal and governmental affairs department. Before the creation of the new division, he was an executive vice president of ABC News; before that he ran the day-to-day operations of the ABC Television Network.

The new division will be on par with the other major divisions of the corporation, which include the Television Network Group, the Publishing Group, and the Broadcast Group. For a company as big as Capital Cities/ABC, creating a multimedia division on the same corporate level as its core businesses is a clear indicator of just how important emerging new media and interactive television markets have become to the company. Weiswasser’s legal and government background also signals that the company will be keeping a close watch on regulatory and intellectual property issues.

PHILIPS CREATES UMBRELLA GROUP FOR NEW MEDIA

Philips, which has been slogging through the digital media minefields for years with its Compact Disc-Interactive format, has also created a new structure for its digital media activities. The difference between Philips and Viacom or Capital Cities/ABC is that Philips has been devoting significant corporate resources to interactive media — with its CD-I technology — for nearly ten years. In that time, however, the company has failed to establish a beachhead for consumer interactive media players or titles. The other difference is that these changes appear to be largely cosmetic, with one exception — Philips will begin producing titles for platforms other than CD-I.

With the goal of coordinating and streamlining both development of new titles and international marketing and sales efforts, Philips established Philips Media six months ago, the uber-structure for all of Philips’s electronic media activities worldwide. This includes Philips’s participation in companies like Blockbuster Video, Whittle Communications, Activision, General Magic and its international cable television and telecommunications operations.

Scott Marden, president and CEO of Philips Media, has taken all of the interactive media elements and merged them into a single publishing structure called Philips Media Electronic Publishing (PMEP). Philips Media is a division of the consumer electronics portion of the company. Marden reports to Philips Electronics CEO Henk Bodt. Polygram remains a separate entity, 80 percent owned by Philips.

Individual content labels. The new PMEP structure divides all of the content creation entities into separate groups focused on particular market areas. Each of the labels’ presidents will report to Marden. They are the Children’s Labels Group, under Sarina Simon; the Games Labels Group, under David McElhatten; the Home Entertainment and Special Interest Labels Group, under Ann Kronen; European/Country Labels Group (odd mix!), under Jean-Pierre Isbouts; Education Labels Group, under Bernard Luskin; and the FMV/Digital Video Group, under Graham Wilson.

Each of the labels’ presidents will be responsible for the success or failure of the individual divisions, based on their expertise in the particular markets they serve. Editorial and product decisions, however, will go through an approval process that includes both Marden and the North American operations.

The end of PIMA. In this reorg, the former Philips Interactive Media of America (PIMA) and the positions of chairman and president of PIMA have been eliminated. Those positions were held by Gordon Stulberg and Bernard Luskin, respectively. Stulberg is now acting as a consultant to the company (which is corporate lingo for saying that he has retired). Luskin has assumed the role of COO of the North American activities of PMEP, where he will be responsible for all of the business structures of PMEP on this continent, including business affairs, legal, financial, product testing, etc. He will also be part of the editorial process for title development and coordination. This is essentially the same role he held as president of PIMA.

The other half of this restructuring was the creation of a new, international marketing and distribution operation, under the direction of John Hawkins, president and general manager of Philips Media Distribution. Emiel Petrone, who has handled the sales and marketing operations for PIMA, will oversee the North American sales and marketing of Philips Media Distribution and will report to Hawkins. His operations, however, will be coordinated by Luskin.

Business as usual? While PMEP representatives say that the details on just how the new structure will work are still being hammered out, the shift from PIMA to PMEP appears to be cosmetic. While the official statement from Philips highlights new reporting structures, it appears that, in practice, it’s business as usual. (The parties affected by this restructuring were meeting in London as Digital Media went to press and were not available to answer some of these questions. If it is indeed the case that little will change in daily operations, we have to ask ourselves: Why did they make the reorganization statement in the first place?)

It’s not just CD-I anymore. The goal of the new structure is to leverage the size and international scope of the Philips corporation not only for CD-I, but for all forms of digital interactive media. Does that mean that Philips will start producing titles for other computer and consumer electronics products? “Yes. And broadcast,” says Luskin. “We must diversify strategically to generate the revenue to compete successfully [in the interactive media market].” He also reiterated Philips’s full commitment to CD-I.

The admission that Philips needs to diversify its interactive media production is significant. CD-I players have not sold very well, and the company has spent literally billions of dollars on title development that has shown almost no return. It is long past time for the company to take decisive steps to leverage the numbers of creative and talented people (and subsequently, the money to support them) into a successful business, before Philips bankrupts itself trying to recoup its investment in CD-I.

WINDOW DRESSING OR A FUNDAMENTAL SHIFT?

It is no secret that the big media giants have been struggling for the past few years to find a way to best leverage their assets in new technologies. The initial forays into new media for many of these companies tended to happen in small, experimental divisions, which, if measured by the number of interesting CD-ROM titles each produced, cannot be labeled successful.

The problem, of course, is that digital media became relegated to its own ghetto, while the rest of the company got on with its traditional products. There was not enough cross-pollination, in talent or funding, to create a full-fledged business for these companies. Now we are starting to see a fundamental shift in that restructuring.

The people charged with creating interactive media products are now reporting directly to the top of these companies. The attention to new technologies is now in the boardroom, not only the backroom.

Time will tell whether any of these changes will result in successful new products. The implementation of digital media platforms will be playing out over the course of the decade, and only the companies that adapt to the changes and make the transition will be around to reap the benefits of the new, and still ill-defined, markets. All of these companies realize, however, that a sizable portion of their future is tied up in interactive media, and its successful development is too important to be left to mid-level divisions.

David Baron