If there's gold to be mined from the intricate mesh of the Internet, Cox Enterprises intends to find it.
The Atlanta-based communications giant has taken the aggressive step of consolidating its disparate new-media endeavors under one umbrella, Cox Interactive Media, to focus on developing what it sees as the nascent stages of a highly profitable business.
"You can burn a lot of money duplicating efforts," said Peter Winter, the unit's president. "The Internet has reached the state in its evolution that it requires a single-minded focus, rather than being just another in the spectrum of things that our traditional management has to think about."
Cox Interactive was formed in July and already has 90 employees. It manages at least 25 projects, many of which were already under way among Cox's various media outlets.
Mr. Winter envisions a future in which the Internet business turns a tidy profit, while supporting and complementing Cox's publishing, broadcast and cable concerns.
The company owns 19 newspapers, half a dozen TV stations and 38 radio stations. It is also the nation's fifth largest cable multiple systems operator, with more than 3.3 million subscribers.
With such a variety of traditional media, Cox believes it can build online synergy in each of its markets, using its various properties to augment and promote one another.
"The unusual thing about this is the way that we have been able to establish a separate division with the wholehearted support of our traditional properties, [while] essentially giving birth to a future competitor," Mr. Winter said.
LOCAL SITES FIRST
A board of senior managers across all divisions of the parent company will develop strategies. Internal operations are broken into six divisions: financial management, business development, content development, sales, marketing and technical operations.
Mr. Winter wouldn't discuss his budget but said he had hired about 90 employees, a number he expects to double within a year.
The company will concentrate first on developing local "city sites" and specialty niches.
It has already launched sites including Fastball, a multimedia resource for fans of Major League Baseball; Go West, aimed at outdoor enthusiasts in the Western U.S.; and Hurricane '96, which tracked the progress of storms along the East Coast.
A site for Austin, Texas, opened in September; others will follow in Atlanta and Orange County, Calif., the latter with @Home, a cable modem service.
Mr. Winter sees building successful local content sites as key to the organization's growth, since the bulk of advertising resources is spent locally.
Cox Interactive Sales, a unit of TeleRep, handles national ad sales for the Web sites. Mr. Winter said he expects local ad reps to provide entree to local advertisers.
But the advantage of solid territorial franchises goes beyond ad sales.
`MORE THAN PUBLISHING'
"You must realize that this medium is more than publishing or broadcasting down to the marketplace. You need to provide people with the means by which they can explore with each other their common interests," he said.
It is this philosophy that may give Cox its shot at success. Established media properties already afford it an insider's knowledge of the peculiarities of each home community.
"Interactivity is all about a person's experience," said Jim Sterne, president of consultancy Target Marketing. "The future is in information that's pertinent to me as an individual, and that's geographic specific."
But as bright as the future may seem, it may not be profitable for quite a while. A recent report by Forrester Research predicts the typical commercial Web site will not break even until 2000--if then.
5 YEARS TO PROFITS
By that point, the report predicts, total Internet advertising revenues will approach $2.5 billion, up from an estimated $50 million in 1995. By contrast, radio ad revenues in 1996 will be about $11 billion.
Mr. Winter says he expects it will be at least five years before the unit will be profitable.
"Changes in consumer and commercial habit always take at least twice as long as technologists project. That's a real advantage of building your brand early, and staking your position in a new medium. Brand building is being done today for reward in 10 years' time," he said.
Copyright November 1996, Crain Communications Inc.