The Digital Divisions Are Dead At Big Media: Big Media’s love affair with the Internet ebbs and flows with the markets. When they see money pouring into Web startups, they feel threatened and rush to do the same. They ramp up their digital divisions, which usually are no more than venture arms, and hope to strike it rich. When the markets are down, as they are now, their attention drifts elsewhere—exactly at the time when they can pick up innovation on the cheap. [...]Consider, for example, that CBS’s entire market capitalization is now only $2.5 billion, which is not much more than the $2.1 billion its digital division CBS Interactive paid in cash over the past two years for Cnet ($1.8 billion) and Last.fm ($280 million). (It also made a number of other smaller acquisitions and investments). As of December 31, 2008, CBS only had $419 million in cash on its balance sheet.
When it bought Cnet last May, CBS’s market cap was $16.5 billion. [...]
Media executives are going into self-preservation mode. They know that all media businesses are going digital, eventually. But right now, they are more concerned with sheltering their core business than with pushing forward a digital business that will leech attention and profits from the core business.
