TV Showman, Once Exiled, Returns With Video Site

Friday February 1, 2008

LOS ANGELES — One of Big Media’s most controversial executives is back after a period of quasi-forced retirement.

Stephen Chao — who was fired from a top position at the News Corporation after, in separate incidents, hiring a male stripper to disrobe at a company meeting and nearly drowning Rupert Murdoch’s dog at a party — plans to announce on Wednesday the formation of a Web video company that he hopes to build into an educational alternative to YouTube.

The site,, aggregates how-to videos, from the mundane (like “how to tie a tie” and “how to market your lawn care business in the winter”) to the strange (“how to do Criss Angel’s vanishing toothpick trick”) and the off-color (“how to train your cat to use the toilet” and beyond).

Mr. Chao says the business melds his two primary interests: a fascination with the bizarre — he worked as a National Enquirer reporter after graduating from Harvard — and the media frontier.

“I’m a video freak and I love turning over rocks and finding stuff,” he said in a telephone interview. “What I started to notice is that there is a lot of how-to information out there that is fabulous but kind of hard to find. We set out to make it easy.”

Mr. Chao’s résumé includes high-profile stints at the News Corporation, where he helped create “America’s Most Wanted” and “Cops” for Fox. He has also logged time at various media companies run by Barry Diller. But Mr. Chao, 52 years old, is perhaps best known for one of corporate America’s most spectacular flame-outs.

In 1992, Mr. Murdoch fired Mr. Chao, considered a gifted but quirky executive, after he engaged a man to remove all of his clothes during a speech being delivered at a company management retreat. The purpose was to drive home a point about decency, but Mr. Murdoch, seated in the audience next to Dick Cheney (then the secretary of defense), was not amused. Now, after spending the better part of the last decade doing consulting work and surfing near his home in Santa Monica, Calif., Mr. Chao has returned to reinvent himself as an Internet entrepreneur.

He and his partners, which include E. W. Scripps, have already cataloged nearly 100,000 videos. Scripps’ television properties include HGTV, the Food Network, the DIY Network and the Fine Living Network.

In addition to contributing instructional segments from its vast archives, Scripps will handle advertising sales for the new company. Scripps said it would aim at niche markets like glass-blowing or leatherwork that correspond to the site’s video categories.

General Catalyst Partners, a Massachusetts venture capital firm with about $1 billion under management, is the primary investor in Michael Goedecke co-founded the company with Mr. Chao and will serve as chief of product and technology.

So far, the number of videos on the site is tiny compared with YouTube, but Mr. Chao says that his business model will try to sidestep legal problems. YouTube, which is owned by Google, has been sued for copyright infringement by big media companies; YouTube says that it works hard to keep copyrighted material off its site.

Mr. Chao said he would avoid the piracy sinkhole by linking to videos around the Web rather than being the host of the videos, as YouTube does. “Because I happen to come from television, I happen to believe that YouTube is guilty of copyright infringement,” he said. “I don’t want to have anything to do with that.”

The how-to field is considered one of the most promising areas in Internet video. New companies like Video Jug have popped up to mine the niche, while more entrenched players like Martha Stewart Living Omnimedia see it as a potential bonanza. Ms. Stewart’s company, for instance, has been experimenting with ways to exploit its trove of instructional clips about the domestic arts, most recently introducing a video-on-demand service. Ms. Stewart’s company is also testing something it calls the Marthapedia.

“The idea is to create a one-stop-shop place to go for any information about how to do anything,” Susan Lyne, the chief executive of Martha Stewart Living, said in her most recent conference call with analysts. “Literally millions and millions of pieces of information.”

How big is the how-to market? Mr. Chao said his research showed that instructional video just for topics like fitness, dancing, languages, auto repair and gardening generated $800 million to $1 billion annually.

Mr. Chao is an expert at getting attention, but it will be difficult to top some of his previous stunts. Once, during a party at Mr. Murdoch’s home, Mr. Chao nearly drowned his host’s purebred puppy after throwing it in a swimming pool to see if it could swim. Mr. Chao then had to jump into the pool, while in a business suit, to save it.

After parting ways with Fox, Mr. Chao spent six weeks working at a McDonald’s in Redondo Beach, Calif. He went on to head programming for USA Networks, where he helped develop the popular series “Monk.” But a fiery relationship with Mr. Diller, the head of the network, overshadowed that experience. The two executives had a hard time living down an incident when both were at Fox in which Mr. Diller hurled a videocassette at Mr. Chao with such intensity that it created a hole in the wall. Mr. Chao framed that section of the wall.

He left USA Networks in 2001 and, aside from introducing several cable networks in Latin America, he has largely spent his time with his family in Santa Monica. What made him want to return to the public eye?

“You can’t spend all your life surfing,” he said.

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