Yahoo to Acquire CNET, Newscorp to Acquire Gawker, NY Times to Slash Costs?

|
Includes: AABA, CNET, NWS, NYT, SIRI, TWX
by: David Jackson

Jason Calacanis

Along with many others, Jason Calacanis published a list of predictions for 2006. Most lists of predictions are unhelpful, but Mr Calacanis is CEO of blog network Weblogs Inc which was recently acquired by Time Warner, and his predictions are of relevance to media and Internet investors.

Some of the predictions are not new. CNET, Mr Calacanis thinks, will be acquired by Yahoo. But CNET has been on the block for a while, and the CEO has publicly stated that the company is up for sale. The surprise, if anything, is that no buyer has yet emerged. Perhaps that's because the stock is now expensive, making an acquisition less likely.

The other Internet and media-related predictions are more interesting. The threat to mainstream media from blogs is a key issue for media investors; Paul Graham argues that blogs pose a significant threat, while Nick Carr disagrees. Despite his role as CEO of a blog network, Mr Calacanis seems to align himself with Nick Carr, arguing that most blog networks will fizzle, only a couple will succeed in raising capital, the New York Times (NYSE:NYT) will roll out its own blogs, and the leading surviving blog network will be acquired by News Corp (NASDAQ:NWS). If he's right, this is incrementally positive analysis for investors in newspaper and diversified media companies.

The newspapers won't have a free ride, though. Mr Calacanis predicts that the New York Times will lay off 10-20% of its staff, while its online assets will thrive.

His pessimism extends also to podcasting and its threat to radio companies. The real threat, he thinks, will come from the satellite radio companies XM Satellite Radio (XMSR) and Sirius (NASDAQ:SIRI).

Here are the relevant predictions, grouped by topic for stock investors, in his own words:

On CNET:

  • DIGG will be bought by CNET.
  • CNET will be bought by Yahoo or Fox Interactive/Newscorp.

On blogs and mainstream media:

  • 30 of the 50 blog networks will fizzle out and/or die. Only one or two (other than Gawker) will break 20M pages a month. The blog network space is just way too crowded, and if you can't go big at this point you're gonna have a real hard time doing a *real* network (say 20 blogs or more). Now, you'll do just fine if you stay focused on a narrow niche that you can own.
  • Metblogs and Gothamist will both raise venture or seed capital.
  • Gawker will hit 20 blogs and get bought by Newscorp--Nick Denton will keep Fleshbot and retire for the third time before spinning the Fleshbot into an ipod video service claiming all the while that "there's no business in it."

On newspaper companies:

  • Newscorp (and maybe some other folks) might spin out their Interactive assets and take them public.
  • New York Times will cut the newsroom staff by 10-20% and face another Jayson Blair/Judith Miller-style scandal. However, advertising on their website will be oversold. They will launch gadget, car, personal finance, and video game blogs that will do OK.

On radio:

  • No podcasting company will have any significant success in 2006, but a number of podcasters will be offered great jobs at Sirius and XM Radio.
  • Sirius will hit 5M subscribers by the end of the year due to Howard Stern's massive success in drawing new subscribers (note: I own a small amount of Sirius stock in my retirement account, AOL has a deal with SiriusXM--AOL bought my company Weblogs, Inc., and I've been a fan of Howard Stern for 20 years).

Full list of Jason Calacanis predictions here.

« Any opinions expressed on the Seeking Alpha sites are those of the individual authors and do not necessarily represent the opinion of SeekingAlpha or its management. »