Wallstrip Cons CBS for $5 Million

I was waiting for more on Wallstrip's acquisition by CBS and now the deal is publicly confirmed, though not the rumored price of $5 million.

However, that price is said to come from strong sources with acquisition of Wallstrip host Lindsay Campbell key to the deal.

This is so incredibly ridiculous.  Could really awesome drugs be the explanation?  Campbell and Wallstrip are not worth $5 million in any universe where media companies wish to actually survive.  That's old world pricing and CBS just got reamed.  Pathetic.

Sounds like a tale for Michael Wolff.

Compare compete's rankings of Wallstrip, ProHipHop and Hip Hop Press.

Update:
My bad, I should have gone past the incomplete story at Techcrunch but my mind's just having difficulty taking all this in. 

NewTeeVee does a nice job and points out that CBS denied the $5 million tag so we'll see about that.  Apparently, it's a larger talent move than just Campbell:
Wallstrip star Lindsay Campbell and producers Adam Elend and Jeff Marks will become full-time employees of CBS, and Lindzon, who also makes his living as an investor, will play a consulting role.

So, what's a good price for a YouTube-type talent, two producers of a YouTube-type talent and a "consultant" who says this about Wallstrip's approach:
“There’s two ways to do a show, the Oprah Winfrey way and the Montel Williams way,” Lindzon pontificates. Wallstrip, he says, is the former.

Whatever.  This is ridiculous.  Pricing anyone?

Update:
It turns out that Trader Mike, who many of us met via Move the Crowd, is in this thing up to his neck and I'm hoping he did quite well.

Howard Lindzon's version of the tale of Wallstrip reveals that a lot of people came together to make this thing happen.

Congratulations to all of you for a big success.  Despite my questions about CBS, many of which relate to problems television had before the Internet was popular, you folks deserve to celebrate all you want.

Comments

[Trader Mike]

Clyde,

Yes, you should have gone waaaay deeper than the posts by Duncan at TechCrunch. Read my post or Howard Lindzon's or Fred Wilson's and maybe you'll get a better understanding. Or maybe you'll still feel like we conned CBS. :-)

[Clyde Smith]

"We"? What is your connection to this? It's rather unclear.

Reading the various posts linked from your post:
http://tradermike.net/2007/05/cbs_acquires_wallstrip/

I got two new names from your post:
Jon and Roman from Fresh Bread Network.

From Fred's, I got a reminder of how collective hallucinations regarding valuation are intelligently woven.

Mike, no disrespect to anyone involved on the sell side. They did the smart thing.

Here's what Fred says:
http://avc.blogs.com/a_vc/2007/05/wallstrip_hits_.html

"Along the way Howard, Adam, Jeff, Lindsay, and a few other brave souls they hired figured out a bunch of stuff that is key to a successful web video show. Like how to get the show on every video service quickly and easily. How to tag and promote the show on each and every service so it actually gets seen. How to measure and track all the views. How to reconcile all the different measurements you get. How to get subscribers in iTunes, FeedBurner, and YouTube. How to make a web site that communicates what the show is quickly and easily. How to do advertising in a way that doesn't get in the way of the viewer. How to get the show indexed by ticker in the major finance portals. And most of all, how to keep it short, fun, and funny."

The hard parts of this are reconciling measurements and being "fun" and "funny". However, some folks are good with numbers and some folks are funny.

By the way, if you're a Big Media guy who's impressed by Fred's list, I can hook you up with lots of folks who can do that and teach you to know how to say all those things because, guess what, they're obvious if you've been paying attention.

And I can get it for you a bit cheaper.

[Trader Mike]

I'm one of the founders, an investor and an advisor on the technical side of things.

It's interesting to me how there's a group of people who make it seem like CBS got duped somehow. Or, before this deal happened, that the WallStrip investors got duped. Well, clearly the original investors didn't get duped and I guess only time will tell whether CBS made a good deal or not.

A lot of people are stuck on the fact that WallStrip had little revenue. Well CBS could easily pop some ads in the show and make the thing profitable. But like I said, I guess time will tell.

[Clyde Smith]

The revenue's not the issue. Lindzon made it clear before he started Wallstrip that advertising was not an important part of what he considered an online business plan. As he's shown.

I think CBS got duped (I never had an opinion on the initial investors) because I haven't seen any evidence to the contrary.

But I'm basing my response on the talent package they picked up. Having worked in the performing arts with a lot of involvement with video for many years, though I'm not a production guy, I know what goes into making this stuff (it's easier than when I was doing it). I also know what kind of talent is available at the grassroots level that can do what these new Internet hostesses do but will not show up on big media's talent radar.

I'm also drawing on personal contacts in the film and tv industry including a woman who used to work with MTV as a field producer and her revelations regarding the flawed casting processes for certain shows that were embarassments but ran anyway.

So, from my perspective, CBS got duped but maybe that's the best they can do in which case, maybe it was a good deal for them.

Hey, congratulations, Mike. You done did good!

[Trader Mike]

well it sounds to me like all those grass roots folks should be putting projects together and making a killing

[g. kofi annan]

With all these mergers and acquisitions (Google/Doubleclick. Microsoft/aQuantive etc.) it feels like the early dot-com days again (circa 1995). But now instead of tech, it's media.

Clyde, I understand how you can say that CBS got duped, but it's just like the hip-hop industry. The rappers with the major deals and backing might not be the best, buy they fit nicely into the business model the majors are comfortable with. Like you, I know tons of talented people both in media and hip-hop, but it takes more than talent to play in the majors. Sad but true.

[Clyde Smith]

"well it sounds to me like all those grass roots folks should be putting projects together and making a killing"

On the one hand, some are but I'm surprised at the number that aren't. On the other, this obviously wasn't just about artistic talent but about mobilizing a whole network of resources and connections.

Beyond that, of course I'm overreacting, it's just all rather mindblowing.

[dj mirateck]

"Wallstrip CONS..."

a bit harsh are we?

google purchases youtube for $1.6 billion.

google purchases doubleclick for $3.1 billion.

wpp group purchases 24/7 real media for $649 million.

microsoft buys aquantive for $6 billion.

cbs buys wallstrip for $5 million.

facebook will go for close to $1 billion.

bebo will fetch close to $1 billion.

(i'm calling yahoo to buy either facebook or bebo in the next month).

the motives aren't obvious in any of these situations. the acquisitions are clearly strategic and their value will come apparent with time... i'm not to privy to wallstrip, but i imagine that there are some very smart and creative people behind it, and that is what the price tag is for.

remember when people freaked when fox purchased myspace for $600 million? people said that heads would roll. after a year, they sold the search rights to Google for $1 billion, and ad revenue is growing steadily.

$5 million today might mean a ten-fold return in the near future. you just never know. it's the wild west again in the online space.

[Clyde Smith]

"i imagine that there are some very smart and creative people behind it, and that is what the price tag is for."

That seems to be the consensus.

Yes, it's M&A time everywhere at the moment. But the valuation of MySpace and of Wallstrip are two very different things.

That said, I am backing off my initial harshness as I go.