The Digital Research Initiative
The University of North Carolina at Chapel Hill


THE CEO'S MEMO


To: Eric Chernoff, Chief Financial Officer
From: Tom Hughes, Chief Executive Officer

At our next meeting, I plan to brief the Board of Directors about our strategies for growth markets, especially in new media. We have a number of initiatives going forward in broadcast, newspaper publishing and cable involving the Internet. But these are largely uncoordinated, and I'm not sure any represent real revenue potential. Growth projections for the internet are all over the place. Some say it will represent over $40 billion in revenues by the year 2000. Some predict there will be 15 million cable modems in use within three years; others forecast only 2 million cable modems by then, saying cable networks can't be upgraded fast enough to support more growth.

For discussions at the retreat we have scheduled, lay out some scenarios and options on the potential of the Internet for Olympia's lines of business over the next five years. I'd like you to consider the following questions:
  • We have talked to various players in the Internet business, including Microsoft. Should we consider alliances, partnerships, or other ties? If so, with whom and why?
  • Is there a creative edge we could exploit, considering the creative talent at our stations and cable nets?
  • Will the Net be most useful in attracting local ad revenues, or national? Alternatively, does the Net threaten to shrink our local and/or national ad revnues?
  • Should we consider changes in our investment strategy because of the Internet? If so, what would we sell, or buy? (As you know, we have had ongoing talks with firms interested in acquiring our cable systems and one or more of the cable networks; others with interests in our newspaper and broadcast properties are in the wings).
  • Maybe, we should think "outside of the box," and consider investing in an Internet application that is not simply a line extension of our existing business, but something truly innovative that promises high reward, with higher risk. (One possibility would be some application or innovation in on-line transactional or advertising services -- I was impressed by a Wall Street Journal article on how Harte-Hanks has bet boldly in this manner). Fundamentally, should we approach new media aggressively, or go slow, waiting for markets to develop before attempting to get our share of them?
At any rate, I don't expect you to have the answers. I just want you to frame the options and issues to provide for a good discussion at the retreat. At the meeting, I plan to listen and ask questions, and will count on you and the managers to frame the discussion and bring it all to a conclusion with some sort of summary that reflects any consensus that is achieved. I'll take my own counsel on the results."

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