CReATION: Dotcoms turn to traditional media

<p>The once-fashionable dotcoms are now buying traditional media </p><p>companies in a bid to bring much-needed revenue into their balance </p><p>sheets. </p><p><BR><BR> </p><p>Hong Kong-based entertainment website Stareast recently took over the </p><p>61-year-old local daily newspaper, Sing Pao Daily. </p><p><BR><BR> </p><p>In a similar move, Hongkong.com acquired Miller Freeman Asia's travel </p><p>and tourism group, as well as its publishing services as part of its B2B </p><p>travel service strategy. </p><p><BR><BR> </p><p>After burning millions of investment dollars and following the bursting </p><p>of the Internet stock bubble, dotcom companies are now striving for a </p><p>sustainable, profitable business model. </p><p><BR><BR> </p><p>Tom.com CEO Wang Shen admitted the company had taken up a more </p><p>"realistic" approach with the adjusting of its business positioning from </p><p>merely a portal to an integrated media and IT venture. </p><p><BR><BR> </p><p>Having acquired shares at YC Press, Kunming Fench Star, 163.net and </p><p>shawei.com in China, Mr Shen said the company would invest in any media, </p><p>which was profitable. </p><p><BR><BR> </p><p>The immediate task of most dotcoms is to curb, or at least lower losses, </p><p>otherwise, these companies will see their investment cycles in the </p><p>market shortened, said one financial analyst. </p><p><BR><BR> </p><p>The Internet has done little to deliver the expectations of dotcom </p><p>investors: advertising and ecommerce revenue on the Web is fairly </p><p>low. </p><p><BR><BR> </p><p>Adspend on the Internet accounts for about one per cent of total media </p><p>advertising income in Hong Kong, and ecommerce has yet to be proven as </p><p>an active revenue channel. </p><p><BR><BR> </p><p>Therefore, the analyst said, buying out profitable traditional media </p><p>businesses can help generate income. </p><p><BR><BR> </p><p>"The Internet started up as a zero revenue business, and therefore, the </p><p>dotcoms still have a long way to achieve, at least break even," added </p><p>the analyst. </p><p><BR><BR> </p><p>The plunge of stock prices has signified the bottom line asset value of </p><p>dotcom companies, bringing a reality check to dotcom business </p><p>development. </p><p><BR><BR> </p><p>Stock prices, to a big extent, reflect the value and prospect of </p><p>businesses. </p><p><BR><BR> </p><p>And, the reality of the business is that you have to make a profit to </p><p>lift the company value in the market. </p><p><BR><BR> </p><p>"If they (dotcoms) don't look into some actual profit-driven business, </p><p>they are still operating in a virtual model," said the analyst. </p><p><BR><BR> </p><p>Established, profitable old media offers dotcoms concrete "cash flow" to </p><p>sustain businesses, said Cash senior research analyst Barbara Hon. </p><p><BR><BR> </p><p>"These dotcoms are still in the investment phase and are losing money at </p><p>the moment," said Ms Hon, adding that acquiring profitable businesses </p><p>would enhance the financial positioning of Internet companies. </p><p><BR><BR> </p><p>Internet and media form the best marriage, as offline and online media </p><p>can create a business synergy in the long run, explained Ms Hon. </p><p><BR><BR> </p><p>The AOL/Time Warner merger set out a new media scene in the new economy: </p><p>vertical integration is an inevitable trend in the industry. </p><p><BR><BR> </p><p>When new media bought into old media, issues were raised concerning </p><p>whether the Internet would finally swallow traditional media. </p><p><BR><BR> </p><p>However, the coming together of the Internet and old media has </p><p>demonstrated to the industry the fact that new media still has to rely </p><p>on traditional media to generate substantial income. </p><p><BR><BR> </p>