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Live on Yahoo: Broadcast.com!

Yahoo thinks in broad(band) terms, scooping up the pioneering Webcasting site for a cool $5.7 billion.

By Tom Spring, PCWorld   

The portal will buy the streaming-media company with a stock swap valued at $5.7 billion. Yahoo has been looking for a way to enter the broadband market, and Broadcast.com brings to the table exclusive rights to Webcast programming from thousands of radio and TV stations.

Adding Broadcast.com completes Yahoo's strategy of becoming a distribution platform for content, advertising, and business services, Yahoo President Jeff Mallett said during a conference call Thursday.

"As broadband grows, users are going to demand more media-rich content," Mallett says. "This deal is about today, and setting up [Yahoo] for the future."

Mallett says Broadcast.com will become a division of Yahoo called Yahoo Broadcast Services. The division will focus on "threading" audio and video content into Yahoo's large stable of Web services.

Yahoo says you'll soon find more audio and video content integrated into its news, shopping, and entertainment programming. And without a doubt, Broadcast.com will deliver more advertising and fuel e-commerce.

Making Broadcast.com History

As cable and telephone companies pick up the pace in rolling out high-speed Net services, portals are following close behind with media-rich content.

Broadcast.com was on the cutting edge of Webcasting when it was founded in 1995, and initially helped radio stations broadcast online.

Today, two-thirds of Broadcast.com's revenues come from facilitating conference calls and hosting investor meetings over the Internet. The rest come from advertising and product sales from traffic generated through the broadcast of news, sports, and infomercials.

Folding Broadcast.com into Yahoo's portfolio of properties will allow the popular Web directory to become a player in the burgeoning broadband portal space, analysts say. Yahoo says it will continue to push Broadcast.com's business services in tandem with efforts to create consumer-oriented content for Yahoo users.

But because both sites are visited by many of the same Internet users, Yahoo won't get much of a boost in virtual foot traffic to its site. About one million people visit Broadcast.com each day, compared with Yahoo's three million.

Broadband Bandwagon

Yahoo isn't alone in its rush to develop a next-generation Internet portal. Competitors are also stepping up efforts to piece together broadband strategies.

High-speed Net access provider @Home has constructed an elaborate Web gateway marrying the narrow-band world of the Net to its own high-octane content. America Online has struck deals with Bell Atlantic and SBC Communications to offer broadband AOL over the telcos' Digital Subscriber Lines. And on Monday Microsoft's MSN.com began trials of its own DSL service in four cities. (DSL allows existing phone lines to be upgraded to handle high-speed Internet traffic and phone service simultaneously.)

Then there are portals like NBC-owned upstart Snap, which caters to people who access the Net at high speeds.

Yahoo's own broadband portal, Turbo Yahoo, has been in development for the past year.

A Whole New Net

The broadband market has been lukewarm for years, says Lee Doyle, an analyst with International Data Corporation. Only recently has it started to heat up.

High-speed surfing will get a jolt this year when the number of users jumps from about 600,000 to 1.2 million. By 2002, around 12 million users will be surfing the Net at high speeds.

"We are at the front end of the growth curve," says Michael Harris, an analyst with Kinetic Strategies. "Portals know what broadband can do for them, and they are working hard to line up all their ducks. Once the Web gets turbocharged there will be a lot of new possibilities."

Mechele Pelino, an analyst with the Yankee Group, expects to see many more Internet players shopping for broadband partners. "Portals are going to have to give users what they want; otherwise they are going to be at a disadvantage."

Yahoo says the deal with Broadcast.com will be finalized by September.