The Dutch entertelco, that never came about

While writing the blog about Berlusconi’s interest in Endemol yesterday, I was reminded of a story of Endemol before it was acquired by Telefonica.

Endemol was acquired by Telefonica in 2000 for 5,5 billion euro in shares. That was a lot of money. But it was the hayday season of Internet and the acquisition fitted right into convergence trend of internet and entertainment as well as mobile phone and entertainment. Internet providers were hot and needed entertainment content badly. 3G or UMTS had not arrived yet, but the promise was there: playing games on internet at home and your mobile, when on the move and watching tv and movies on your mobile phone.

So the merger of AOL and Time Warner was an example for Telefonica. Also Bertelsmann was looking into that direction of converging its music, publishing and radio/television business, but the family decided differently and they never got to the convergence state. But in Europe Telefonica took the step of becoming the first telecom company with an entertainment division, an entertelco.

But the acquisition by Telefonica was the end of a hectic period for Joop van de Ende and John de Mol, owners of Endemol. If Telefonica had not offered so much money, the Dutch entertainment company had almost become part of a Dutch entertelco. Endemol was suited by telecom companies, internet providers and multimedia/internet production companies. KPN walked into the door as World Online just made its exit. World Online having just picked up a lot of money from its IPO in March 2000 was very, very eager to get its hands on Endemol. And several configurations were thought up at that time:
1. KPN, Endemol, NOB Interactive;
2. World Online and Endemol;
3. KPN, World Online, Endemol and NOB Interactive.

While this clog dance was going on, Endemol was being teased by Villanova, the CEO of Telefonica and a great believer in the entertelco construction. He offered money, distribution networks, and the whole world as the market place. So it is not strange that Endemol chose Telefonica in the end.

While Telefonica was not the best choice, when you look back over the past five years, it was undoubtedly better that a merger with any of the Dutch companies. KPN had to retreat from the flight forward to Eastern Europe and limit its playing field to Germany, the Netherlands and Belgium. World Online went badly wrong on the stock exchange and had to sell out to Tiscali. And NOB Interactive was trimmed mean and lean and sold in parts. That was the end of the Dutch entertelco dream.

(Today it was announced that John de Mol and employees of his company have been extoted and threatened with the death. A demand of 4 million euro was made. The extortionist, who has a criminal record, had been arrested in February. )