With Media Camp, Turner Broadcasting Hedges Against a Digital Future

6/5/12Follow @wroush

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innovative technology alone may not be enough for startups in established industries, and that the byzantine complexities of working with the existing players can be a challenge. That’s why, at Media Camp, “the focus is heavily on education,” Austin says. “We want to help [our companies] rework their business models to give them the best chance to have a commercial arrangement with a media company.”

One way Media Camp plans to do that is through a classic mentor model—the only difference being that most of the Media Camp mentors will be drawn from Turner Broadcasting and perhaps other parts of Time Warner. “Say a company is doing something news-related; we’ll bring in someone from CNN. Say it’s gaming—we can find someone from the Cartoon Network,” says Austin.

Structurally, Media Camp will closely mirror other local accelerator programs. Turner will provide each of the admitted startups with $20,000 in seed funding, in return for 5 or 6 percent of their common stock. The program will get underway on June 18 and will last 12 weeks, with each week devoted to a subject such as basic startup paperwork, technology changes in the media business, selling to media enterprises, copyright and content licensing, search and discovery, personalization, audience analytics, and advertising. The program will culminate in a “Pitch Day” for investors in mid-September.

So many companies applied for the inaugural session that “we could easily have picked 10 or 20 good ones,” Austin says. The focus in the selection process, he says, was on technology companies with actual prototypes, rather than pure content plays. A game development company would probably have a hard time getting in, for example, whereas a gaming platform company would have a better shot. “We are looking for technology disrupters who are changing the way content is going to be consumed in the future,” Austin says.

As I ticked off specific areas that might fit under this description—mobile and tablet software, connected TVs, targeted advertising, context-aware search, new forms of content delivery—Austin kept nodding. “The one area where we have the least interest, probably, is music,” he says, “just because it’s already been disrupted in so many ways. But it’s hard to say never.”

Even more unusual than Media Camp’s focus on a single industry is the fact that it has a single backer: Turner. (I know of only two other corporate-sponsored accelerators: Wieden & Kennedy’s Portland Incubator Experiment in Portland, OR, and Citrix System’s Citrix Startup Accelerator in Silicon Valley.) That will put the participating startups in an interesting position, since it will be clear to the outside world that to some extent, they’re all auditioning for a permanent berth at Turner—and that they’re being evaluated based on their technologies’ strategic importance to the broadcasting giant.

“Since we are fully funded by Turner,” taking money from Media Camp “will be seen by future investors as a strategic investment, which can be a bonus or a negative for a company,” Austin acknowledges.

He says he can see three possible outcomes for successful Media Camp companies: First and least desirable, the company’s product might so useful that some Turner brand becomes its primary customer. “We could suck them dry, whip them around, and make them do what we want, but in that case they may not last, and we want them to be around for while,” he says.

More desirable—but least likely—Turner might “find a company we love so much that we want to acquire them,” Austin says. But Turner doesn’t yet have much of a record of startup acquisitions, with the exception of Zite, the maker of a personalized news reader for tablets that we profiled here in March. CNN bought the startup last fall.

Third, and most likely, in Austin’s words: Turner “really likes” the company and decides to make a strategic investment beyond the initial $20,000. He points out that Time Warner has a strategic fund, Time Warner Investments, for just such occasions. This January, for example, the fund led a $12 million Series B round for Cambridge, MA-based Bluefin Labs, a social TV analytics company.

But even if the Media Camp startups don’t end up having any long-term relationship with Turner or Time Warner, the company will work to get them funded by other investors, Austin says. That’s the point of the pitch day for venture and angel investors, and participating startups will also get exposure to specific venture firms close to Turner. “We are not going to guarantee funding coming out of this, but hopefully we can find some kind of commercial arrangement to utilize their technologies, and we will do everything in our power to help them get funded externally.”

Personally, I’ve been an early, vocal, and public cord-cutter—I prefer my TV content in Internet-mediated, à la carte form, not in the expensive, bundled form the cable providers and TV networks would rather sell me. And I’m pretty sure I’m not alone. So I asked Austin whether the creation of Media Camp is in part a hedge against the day when Turner’s revenues from cable TV programming begin to drop. His response was a veiled yes.

“My personal belief is that the number of cord-cutters is still very small, and more people have been coming on board than cutting,” he says. “That doesn’t’ mean there won’t be a major disruption, but if there is going to be a decline, I don’t believe it is going to be a cliff, it will be more gradual. The problem is that digital [i.e. Internet] dollars, classically, amount to pennies on the linear dollar. [“Linear” is cable-speak for live.] I think there are ways of making more money off digital, and we are close to doing that, but that is one area where I am looking for startups that are interesting. If linear dollars do decline, it would be nice to have the digital dollars to make up the difference.”

“That,” Austin sums up, “is why it makes sense for a company like Turner, which still makes the vast majority of its revenue outside the digital realm, to focus on digital, which we are doing here in San Francisco. I don’t think we have the answer today. But my personal belief is that we have a few years to figure this out.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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