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RealTime IT News

ninemsn To Drop Multimillion Dollar Content Deal

ecorp, the Internet business arm of Australian media company Publishing and Broadcasting Ltd (PBL), will conclude a AUS$4 million (US$2.6 million) content deal for its portal, ninemsn, by the end of this month.

This deal, which provides content for national telecommunications carrier Telstra's Big Pond site, represents 40 percent of ninemsn's revenue, and is the portal's largest single income source.

The deal is expected to be completed before ecorp's IPO, at which point it should become Australia's largest Internet company when it floats at a valuation of AUS$804 million (US$534 million).

The revelation is actually contained within ecorp's prospectus, but this detail was overlooked by all previous reports and analysis. ninemsn, which is a joint venture between ecorp and Microsoft, generated AUS$8 million revenue for 1998/99, and of ecorp's half, "more than 40 percent relates to non-core revenues from certain contractual agreements which ninemsn has decided to conclude, and will not continue beyond 30 June 1999," according to the prospectus.

Executive chairman of ecorp Daniel Petre, said that while a final decision has not been made following the company's discussions with Telstra.

"It's fair to say that as far as our future plans go, we don't factor [the Telstra partnership] as a big deal in terms of revenue," said Petre. "It's not as if we're giving up a significant portion of our forward revenues."

This means that ninemsn will need to derive supplementary revenue from the sponsorships, advertising sales, and smaller deals with partners such as recruitment firm Seek Communications.

ninemsn managing director Steve Vamos told Internet World Australia magazine in March that the revenue streams were forecast to change by 2001 to 60 percent for sponsorships, 20 percent for content deals, and 20 percent for e-commerce commissions.