Moguls Raise $1 Billion to Make TV for Your Doctor's Office
(Bloomberg) -- After decades working at some of the biggest media and technology companies in the world, Jeffrey Katzenberg and Meg Whitman have teamed up to entertain people while they wait at the doctor’s office.
The pair -- colleagues at Walt Disney Co. many years ago -- have raised $1 billion for NewTV, a service that will offer short-form video made with TV-sized budgets. Madrone Capital Partners, backed by heirs to the Walmart Inc. fortune, leads a star-studded group of investors that also includes Alibaba Group Holding Ltd. and Goldman Sachs Group Inc.
Nine of the world’s largest entertainment companies have also invested in NewTV and will produce shows for the service ahead of its planned 2019 debut. Walt Disney Co. and 21st Century Fox Inc. are looking to Katzenberg, a fit 67-year-old, and Whitman, a 62-year-old billionaire, to reach the elusive, young consumers who watch little conventional TV. Such viewers entertain themselves with YouTube, Instagram, Snapchat and other mobile apps while waiting for an appointment, sitting at the office or walking around.
“You leave your house every day with a little baby TV,’’ Whitman said. “You have 10 minutes waiting at the doctor’s office, and you want to see something great.’’
While big media companies are rushing to compete with Netflix Inc. in high-end, longer-form TV, they don’t have the time or the appetite to take a risk of this scale, Katzenberg said. Verizon Communications Inc. tried to create a competitor to YouTube called Go90, while former Hulu chief Jason Kilar tried to build a paid subscription service for short-form programming called Vessel. Neither survived.
Katzenberg and Whitman say they are pioneering a new type of entertainment, one that provides high-end storytelling for these brief moments of boredom. Customers will be able to pick between a paid service with a limited number of advertisements, and a slightly more expensive paid service with no ads.
The videos have to be a completely different experience from YouTube, Instagram and Snapchat, where the advertising rates don’t support Hollywood-quality storytelling. The videos will span all genres, from scripted to reality to news. Episodes be five minutes to 10 minutes in length. Some still stand on their own, while others will be part of longer-form series that span a couple hours.
“NewTV is opening a significant growth opportunity for creators across Fox with an entirely new way of storytelling, designed to address the exploding market for mobile video consumption,’’ Fox President Peter Rice said in a statement.
Whitman and Katzenberg have set up shop in a communal working space in Hollywood operated by Serendipity, a competitor to WeWork Cos. They will soon occupy the third and fourth floors of the building, and Whitman, long a resident of the Bay Area, is moving back to Southern California.
For Katzenberg, the former head of DreamWorks Animation, NewTV is one of several ventures housed under WndrCo, a holding company that has made investments in digital media and software businesses. He recruited Whitman, his old board member at DreamWorks Animation, to run NewTV.
He then turned to many of his old partners, friends and adversaries to supply programming. NewTV won’t produce any shows. It will pay traditional studios for exclusive rights to shows over a couple of years, after which the rights will revert to the studio.
Most of the studios have made investments in the tens of millions of dollars -- small bets to see if their old friend has another trick up his sleeve.
“We kinda like doing things that everybody thinks we can’t,’’ he said. “If there weren’t a fair amount of skepticism about it, I wouldn’t be interested.’’
©2018 Bloomberg L.P.