Seven's I7 Takes Stake In Murphy's Radio Play

Sydney Morning Herald

Wednesday November 10, 1999

By KIRSTY NEEDHAM

The US acquisitions have been primarily driven by the need to capture large Net traffic spaces.

Seven Network's Internet subsidiary, i7, has taken a major stake in Mr Chris Murphy's Internet radio venture, Digital One, in a deal that mirrors the US trend of television networks bartering advertising space for equity in Internet start-ups.

The deal will see i7 take 37.5 per cent of Digital One in return for providing an undisclosed amount of working capital and marketing support for Digital One's Internet radio stations and compilation CDs on the Seven Network.

I7 is headed by Mr Andrew Cohen, who was brought in from Mr Kerry Stokes's private company, Australian Capital Equity, in October to restructure Seven's Web plans.

Mr Cohen said Seven was looking at what US networks such as CBS and NBC were doing online. ``Television stations are not content-rich in any area other than sport and entertainment," he said.

CBS has recently taken a stake in 13 Internet companies, including a finance and a sport site, in return for advertising space on its television network, as mass marketing costs escalate for Internet brands. NBC has bought the Snap portal and Xoom sites, and partners with Microsoft in MSNBC.

The i7 Web site, which is due to launch in the second quarter of next year, will draw content from a series of companies in which i7 will make strategic investments. To date these include boutique auction house Wemyss, Ticketmaster, and finance site Channel E.

Seven's existing TV show-based Web site has been outsourced and i7 turned into a ``purely executive production company" identifying the areas Seven wanted to be in and locating partners to work with, Mr Cohen said.

Www.consult analyst Mr Ramin Marzbani said Seven and Ten had some way to go to catch up with Nine, which is benefiting from its relationship with the top-ranking ninemsn portal.

Ten last month announced a $20 million online venture with Village Roadshow, to launch in March 2000.

``The US Internet-related acquisitions over the past year have primarily been driven by the need to capture large Net traffic spaces, not necessarily content," Mr Marzbani said.

For Digital One, the Seven deal is the latest in a series of co-marketing and distribution agreements, and one that will give the Internet radio stations access to digital TV distribution in the long term, according to Mr Murphy.

The niche radio stations and an upcoming CD retail site will be carried by Telstra, while Sony has agreed to produce compilation CDs of the music played on Digital One stations for a share of revenue.

Mr Murphy, the former manager of rock band INXS and founder of the rooArt record label, recently sold AM radio station 2SM to focus on Digital One, which plans to generate revenues from electronic commerce and advertising.