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New Media Market Investment Cross Currents

Kagan Research reports that as the dot-com bubble boiled from 1998-2001, Website startups virtually gave away equity stakes in themselves to traditional media giants in exchange for promotional help. Because most Websites fizzled, not much value accrued from those transfers of equity stakes.

In the current Internet cycle, leading websites are muscular � Internet advertising gross billings amounted to $11.9 billion in 2005 � which makes for a completely different environment and some unusual cross currents. New media seems seem poised to diversify into old media and strategic alliances are sometimes sealed with sizeable sales of equity stakes.

"Many Web companies have concluded that extending into 'old' media would be beneficial because of its greater reach," says Kagan Research senior analyst Derek Baine. "Internet users still watch cable TV, broadcast TV, listen to radio and read magazines."

In the current Internet cycle, Baine notes that the most common type of cross media transaction is old media buying into new media. Old media conglomerates Viacom, News Corp. and NBC Universal are buying Internet Website companies to tap businesses with high growth rates, as the accompanying table of stock prices indicates.

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