It's not quite as incredible a merger as, say, Manchester United
and Arsenal forgetting their differences and becoming one club, but 365
and Rivals.net's link-up will cause a few jaws to drop.
It's certainly a sign of the times. A glance at the ad sales houses
shows that consolidation is the theme of the day. It makes sense that
Chrysalis, which owns Rivals.net, and 365, are pooling internet
operations in a new company to cut costs.
Market downturns may often increase competition but they also can lower
barriers between rivals. It's one of the things that fuelled The
Carphone Warehouse's Charles Dunstone's comments last week when he was
quoted saying that downturns were the time when business gets
Competitors can now look for the similarities rather than differences
between them, particularly if they are looking to grow a new market.
Instinctively it sounds good, though perhaps not as much as Sports.com's
apparent cherry picking of rival Sportal's overseas operations.
Sports.com has just bought sportal.de.
The Chrysalis/365 deal is not as comprehensive as it might have once
been, but this is a clue to how it could work. Effectively, 365
Corporation and Chrysalis are merging their intenet activities; however,
neither group has as many pure internet plays as they once did. The 365
Corporation has concentrated recent launches on telecoms and gets income
from premium-rate phone businesses. Its management can now concentrate
on that, while Rivals.net gains by losing a competitor.
Both businesses should get a clearer route forward but new structures
and operations can be a distraction. There's been talk of Chrysalis's TV
connections and the opportunities they could provide for 365.
Fine. But exploring such deals takes time and resources. If the
joint-venture cannot develop the site's existing models and its reliance
on advertising then it needs to think on. Maintaining such illusions
would be the new-media equivalent of an own goal.