Time Warner, Walt Disney Co., and News Corp. are planning ambitious e-commerce expansions of their sites to supplement online advertising revenues.
Time Warner (TWX) confirmed Monday that it plans to become a Web retailer, selling CDs, books, and videos through its Pathfinder site. The Wall Street Journal first reported the effort.
Separately, News Corp. said that it, too, plans to pitch its wares online. And Disney is expanding its online merchandising to offer hotel reservations and travel services to visitors to its theme parks.
Such online retailing ventures emphasize the failure of media companies to make money from advertising-supported content alone. Perhaps the only way to make substantial money from online content, according to industry executives, is to package it with other services, such as retailing.
"If you can be a profitable business based on ad sales, and then have a successful e-commerce platform on top, then you will have a robust, powerful business going forward," said Scott Ehrlich, a senior vice president and executive producer at News Corp.'s NewsAmerica Digital Publishing, which runs the Fox News, Fox Sports, and TVGEN Web sites.
Time Warner will launch an online venture in the next six to 12 months, selling merchandise from its vast media properties: CDs from Atlantic Records, books from Warner's publishing arm, and videos from Warner Bros. Studios. It already sells CDs at its Columbia House site, and signs members up online through the Book of the Month Club.
"They have the infrastructure they need to launch e-commerce," said Jessica Reif Cohen, analyst at Merrill Lynch Securities.
"The Time Warner news doesn't surprise me," said Jeanne Hanley, analyst at Capital Reflections. "They have such a strong presence in terms of their Pathfinder site. It's a good platform for them to showcase their products on."
Pathfinder, launched in 1994, regularly lands on the most-visited Web site lists. It features articles from magazines like Time and People and also produces original, Internet-only content. Even with the deluge of daily visitors, it hasn't made a dime in profit. Still, Time Warner executives have been reluctant to pull the plug on such a viewer magnet.
News Corp. has had a similar experience. The company's various media properties, such as Twentieth Century Fox, have been brilliant at purveying The Simpsons on TV and Titanic at video stores but have had no such luck online.
A person close to the News Corp. said an online store will be open for business next week, selling Fox Sports-branded apparel and eventually sports-team gear. A Fox Store will also be launched online by the end of this month, offering products connected to Fox TV shows.
Disney (DIS) will be expanding its online retailing efforts as well. The company has been selling Disney videos, clothes, and toys online for two and a half years. It has just begun selling sports gear on its ESPN SportsZone site and is preparing to sell special-report videos on ABCNews.com. In addition, Disney is testing a full-service travel reservation site for Disneyland and Walt Disney World.
Disney realizes that advertising alone isn't enough, said Chuck Davis, senior vice president of e-commerce at Disney's Buena Vista Internet Group. Online media outlets also need other revenue channels in order to thrive: subscriptions, licensing, and e-commerce.
"We have all four [channels] up and running today," Davis said. "It doesn't surprise us that Time Warner would want to get into the e-commerce business too."
