Online Video Vets Take $10M Stake in Broadband Enterprises

Jonathan Miller, Ross Levinsohn Make First Deal Since Partnering in Velocity Investment Group

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NEW YORK ( -- Since former AOL CEO Jonathan Miller and former Fox Interactive Media chief Ross Levinsohn banded together as partners in Velocity Investment Group, internet watchers have been curious to see where they'd place their bets. Online video -- its distribution, content creation and monetization -- is an area in which they are particularly bullish.
Jonathan Miller and Ross Levinsohn
Levinsohn Photo: Jonathan Alcorn/ZUMA Press

Jonathan Miller, left, and Ross Levinsohn are partners in Velocity Investment Group, which has taken a $10 million stake in Broadband Enterprises

The group's first investment is a $10 million stake in Broadband Enterprises. The deal also marks the first round of funding Broadband Enterprises has raised, despite its having been around for two years and having grown its online traffic into something that rivals top media companies and portals.

Mr. Miller, who will join the board of Broadband Enterprises, said Velocity is interested in investing in "online platforms that scale, the content you put through those and [those with] the ability to make money in the space."

46 million U.S. unique viewers
Broadband Enterprises' business is in online video syndication, content creation and online video ad sales. According to ComScore data obtained by Ad Age, the network served videos to more than 46 million U.S. unique viewers in October; that puts its scale below Google (which inlcudes YouTube) but above Fox Interactive Media. Matt Wasserlauf, CEO of Broadband Enterprises, said the funds will be used to continue to produce original content and to more widely deploy its contextual targeting technology.

"It's really important from a strategic standpoint we've got Jon Miller and Ross Levinsohn, who will be helping us navigate a critical time in the space," Mr. Wasserlauf said. He said he's had a longtime relationship with what used to be Mr. Miller's team at AOL and when Mr. Miller left the company and was planning to start his own fund, he reached out to him. Only over course of last year did real material conversations begin.

"We have a big interest in what's going on with video content online and how anyone builds a real business model around it," Mr. Miller said. "What led us to Broadband Enterprises is something simple: follow the money."

He called Broadband Enterprises "the largest seller of video advertising online outside of the big portals. They've cracked major advertisers like P&G, Philips, GM and they have distribution to over 200 sites." Messrs. Wasserlauf and Miller both stressed the company is net cash-flow positive -- a sign that the model is working.

Betting on online video
Velocity is not alone in placing bets on online video. On Monday, video ad network Tremor Media announced an $11 million Series B round, funded by its existing investors, Canaan Partners and Masthead Venture Partners. Tremor will use its funds to introduce new ad units and targeting technologies.

The online video space is indeed growing from both a consumer-viewing and advertiser-demand standpoint. Mr. Miller emphasized the importance of what he calls the "expanding middle" in the online video space.

"If you're familiar with long tail there's the head and the tail and the next big thing is expanding middle, the professional or semi-professional content," he said. "That means targeted content from many, many different sources. It's a different model from six large media companies supplying much of what you consume."

He predicts that after the middle expands, highly produced, highly professional content will find its way to the web. "It's already started with things like Hulu," he said, referring to, the online-video site backed by NBC Universal and News Corp. "And the parenthesis of this discussion is that the quality of the viewing experience starts to matter more. With YouTube, quality of viewing experience didn't matter. But I think we're gong to start to see it matter."
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