Apparently, media runs in the family. Mr. Rogers, who seven months ago left his post as president of NBC Cable and was one of the founders of CNBC, is putting Primedia on a fast track to the interactive future.
So far, that means a rapid-fire succession of deals. Among his largest efforts, he brought together Primedia's New York Magazine with Cablevision's Rainbow Media to produce a broadband, interactive urban entertainment Web site. And he paired Soap Opera Digest with Sony Corp. to create a site where fans can access their favorite soaps.
In his boldest venture so far, Mr. Rogers brokered a three-way deal with Primedia, cable and Web holding company Liberty Media and technology venture capital outfit CMGI. He sold 5% stakes in Primedia to Liberty for $200 million and to CMGI for $171 million in stock. In return, Primedia hopes to evolve into a print, video, Internet, broadband video and new technology content-distribution empire.
Mr. Rogers sat down recently with Advertising Age reporter Richard Linnett to discuss Primedia's future prospects and his views on the evolution of print media in the Internet era. An edited transcript follows.
Advertising Age: In the short time you've been with Primedia, you've been very aggressive in setting up new deals that leverage the content of your publications. How many deals have you actually done so far?
Tom Rogers: Well, we've done some big deals, some medium deals and some small deals. All told, between advertising for equity deals, venture deals, investment deals and major strategic initiatives, we've probably done close to 20.
AA: That's since you've come on board?
Mr. Rogers: The last five months. I wanted a key element of my coming to Primedia to be that this company could change -- and change quickly. So in five months, we very quickly changed the perception of the company to a print-, video- and Internet-based company that has content that's being driven in all directions for all kinds of applications. The speed of change is something that I hope people will see. We came out of the box fast, and we only get faster.
Now that we have a new organization in place, both in terms of new people and new organizational structure, the pace of change will be able to accelerate even more than the fast and furious five months of activity we've already had.
AA: Did you move to Primedia knowing what you wanted to do?
Mr. Rogers: I was executive VP of NBC and president of NBC Cable. I was involved in broadcast activity, cable activity, international activity, Internet and media activity, particularly with MSNBC and NBCi, which I took a lead in creating before I left. So I had been involved with a full range of mass media sectors.
What attracted me to Primedia was one, how undervalued it seemed, and two, how what I was able to do at NBC seemed totally applicable to Primedia.
NBC, when Bob Wright and I got there 12 or more years ago, was just a traditional broadcast company with a handful of broadcast stations and nothing else. My mission was to diversify the business base into cable and then new media, digital and interactive, international and the various things that we succeeded in developing.
Primedia looked much the same: a traditional company that needed to have its business base broadened, particularly brought into the new-media world. What I saw at Primedia was a treasure trove of niche properties. People thought that was crazy 10 years ago -- to create value out of niche -- [but] now the whole marketplace is creating value out of more narrowly defined areas. Primedia owns more individual media niches than any other company in the country.
I looked at it, and I said, you know what is really different about this thing? Companies usually are either consumer media plays or [business-to-business] media plays, but you almost never see a company that is both. And this was both.
Then I saw something else that fascinated me, coming out of my television background: a company that nobody recognized beyond maybe Channel 1, which is the leading teen news channel in the country. [But I saw] how much video material Primedia produces. It's thousands upon thousands of hours, mostly very narrow, just like the print publications.
Lastly, the thing that was a zinger for me, that said this thing really has characteristics unlike any media company I've ever seen, was what I've described as the notion of not b-to-b, but of p-to-p: passions to the pocketbook.
Not all media content is created equal. In a world of online interactivity, where advertising alone can't support the viability of new-media franchises and you need e-commerce and transactional activity to support it, you must have content that is in some way commercially tied. [This is] so that when you are hitting somebody with your content, you are also motivating them to purchase products or services related to that content.
We are all about reaching people who are obsessed about various business or personal pursuits, whether it's hunting or fishing or quilting or kayaking or a business pursuit. And what you're passionate about is where you spend your money.
AA: You've done some deals with TV and some with online. Are there any that show more promise? Or is it the combination of the two that really shows the promise?
Mr. Rogers: To me, the strength of this company is how much there is to develop across how many areas. While everything we've done has near-term applicability, the full impact of broadband video is going to come later than the impact of the Internet. This is because there's a lot of technology evolution that still has to occur before that full impact is felt. We're positioning ourselves heavily in terms of TV in that regard, and we established a Primedia broadband video unit.
I think the Internet activity that we're engaged in will have more near-term impact, because of the ability of people to access it and deal with it sooner.
AA: How do you see existing print companies changing? Does their survival depend on adapting in the way that you're adapting right now?
Mr. Rogers: I don't think for much longer you can define yourself as a print company or a video company or a TV company or a magazine company. Companies of the future are going to define themselves by content. Your strength is going to be a function of how many different ways you exploit your content over the huge number of new distribution systems that are developing.
The issue will be just how many forms in addition to your traditional one do you have to distribute information. And each mode of distribution will require you to customize and adapt your content in ways that make that appliance or device particularly usable.
Distribution has always been a highly constrained element in media. There have only been a certain number of broadcast channels, a certain number of newspapers in a city, a certain number of cable channels. Now the broadband world and the wireless world and the world of downloadable information to electronic devices opens up how many ways there are to get information out there.
Having said that, there are some enormous opportunities for print companies. Imagine a world where e-magazines are even being received by a minority of users. I don't think print is going to disappear by any means. I still think it's the most convenient, in some ways the most adaptable form of distribution of content. But [elec- tronic distribution] saves you the costs of paper and pre-press and wholesale costs and distributor costs.
That is not going to be realized very near term. But it is something that over time will breathe a lot of new vitality into this business.
AA: How about advertisers? What kinds of opportunities will be there for advertisers?
Mr. Rogers: Our content has an endemic basis of advertising support, endemic advertisers who are unique to our particular categories of content. Our content is a key bridge between our advertisers and our users and these individual targets.
New technology and new media allow you to create an even closer relationship so that there is a way for people who are active fly fisherman, who want content on fly fishing, to not only see something they want to buy, but immediately act on it.
When you're dealing with people who are passionate about things, if you can connect buyers with advertisers more directly and capture some of that impulse and passion that derives from the kind of content we deal in, that is going to create a much more direct sales relationship.
AA: When it comes to new-media deals, how risky can Primedia afford to be -- or not be?
Mr. Rogers: You take more risk not pursuing these opportunities than you do pursuing them. You run a much greater risk of standing still and simply trying to cautiously deal with the industry in its current form. You have to aggressively pursue future potential.
Having said that, I think one of the focal points for Primedia will be just better operations of a traditional business. This company has been an acquisition vehicle and not viewed as a well-integrated operating company. Therefore, it has never looked at how to
drive a top-line integrated sales approach that can bring to the marketplace opportunities for marketing that go well beyond the way it's been presented in the past.
From a cost management point of view, I think there are all kinds of productivity improvements that come from being an integrated company. That will allow us to take out $20 million to $30 million of cost next year, based on operating the company in a more productive manner.
AA: Where do you envision the company in five, 10 or even 20 years?
Mr. Rogers: I don't think it's going to matter how good a job you do as a traditional media player, and I don't think it's going to be important how strong an Internet or new-media player you are. The distinguishing characteristic of success will be how well are your traditional businesses and your new-media businesses tied together, fully integrated, so that content and cross-promotion and sales forces are used in a way that take the brand on the traditional side and leverage it in ways that give you both cost advantages and revenue advantages in creating new media value.
The marketplace now is beginning to punish Internet-only players. The mere existence of an Internet business without an advantageous economic model doesn't suggest that those are the most viable businesses going forward. Traditional businesses that simply say, "Hey, I've got an Internet strategy; I'm throwing $100 million at it," are also getting punished.
What it's about is figuring out on a business-by-business, unit-by-unit basis how new- media value is created by leveraging a traditional media base and doing it smartly so that you have a cost advantage over the new-media-only player. [You also must leverage] it smartly so that you have a revenue advantage over the traditional media player or the Internet player operating alone.
AA: You're talking about models, but there really are no models. You're creating the model. But, in a sense, are you also going back to things that have been done before?
Mr. Rogers: The notion of launching new products and figuring out ways to integrate them is not new. What is different here is that the new-media world has developed very quickly in some ways as a totally separate world.
But [viewing these employees and workplaces as different and separate entities] creates boundaries and elements that stand in the way of integration. And this is just at a time when the true distinguishing characteristics of a successful company will be how much they integrate, not how much they push their new elements away. [It's not a good idea] to say, "Hey, I've got to get this away to make sure that it can move faster, 'cause I don't want the core part of the company to slow it down."
In saying that, you have to go out of your way to figure out the bridges, the links, the tie-ins and the use of resources so that you are integrating at the same time. Otherwise, you just end up with all the cost base and all the disadvantages of being a free-standing, independent Internet player. The way to win will be in presenting a smarter, more cost-effective model by virtue of integration.