31 August 2010

Blockbuster Preparing for September Bankruptcy

LA Times

After dominating the home video rental business for more than a decade and struggling to survive in recent years against upstarts Netflix and Redbox, Blockbuster Inc. is preparing to file for bankruptcy next month, according to people who have been briefed on the matter.

Executives from Blockbuster and its senior debt holders last week held meetings with the six major movie studios to discuss their intention to enter a “pre-planned” bankruptcy in mid-September, said several people familiar with the situation who requested anonymity due to the sensitivity of ongoing talks.

Blockbuster is hoping to use its time in Chapter 11 to restructure a crippling debt load of nearly $1 billion and escape leases on 500 or more of it 3,425 stores in the U.S. Maintaining the support of Hollywood's film studios during the process will be critical so that Blockbuster can continue to rely upon an uninterrupted supply of new DVDs.

Blockbuster has lost a total of $1.1 billion since the beginning of 2008 and has been severely hamstrung in efforts to grow its business due to interest payments on $920 million in debt. Earlier this month the company announced that most of its debt holders had agreed to a forbearance on interest payments until Sept. 30, during which time it would attempt a recapitalization.

Last week Dallas-based Blockbuster's chief executive, Jim Keyes, came to Los Angeles to hold individual meetings with executives at studios including 20th Century Fox, Paramount Pictures, Sony Pictures, Universal Pictures, Walt Disney Studios and Warner Bros. He was joined by a team of restructuring consultants hired to help turn around the struggling company, along with its senior debt holders who would likely end up owning a substantial portion of Blockbuster following bankruptcy.

Former Sony Pictures home entertainment president Ben Feingold, who is serving as an advisor to the debt holders, was present as well.

Though its plans are not yet set in stone, people knowledgeable about the discussions said the Blockbuster representatives presented a mid-September bankruptcy as the most likely scenario. It would enter what is known as a “pre-planned bankruptcy,” meaning most but not all creditors would be on board ahead of time, including senior debt holders and content suppliers.

One of the primary goals of the bankruptcy process, which the company said it hopes would last about five months, would be to escape costly leases for some of its worst-performing stores. Though Blockbuster hasn’t decided exactly how many locations it would seek to shutter as part of a bankruptcy, executives told the major studios it is looking at between 500 and 800.

Blockbuster closed nearly 1,000 stores in the last year alone, a reflection of consumers’ rapidly declining interest in renting DVDs from retail locations now that they can rent them from ubiquitous kiosks in grocery stores, in the mail, or via the Internet.

If it successfully exits bankruptcy, Blockbuster has told Hollywood studios, it hopes to grow through non-retail initiatives. Kiosk manufacturer NCR Corp., for instance, has already deployed about 6,000 Blockbuster-branded kiosks that, like Redbox, rent DVDs for $1 per night.

The company also hopes to expand its presence in the still nascent digital distribution space, through which a growing number of customers are downloading or streaming movies on computers, Internet-connected televisions, and mobile phones.

Most studios are believed to be supportive of Blockbuster’s efforts, as they want to see it remain in business as a viable competitor to Netflix and Redbox, particularly since the formerly second-largest DVD rental store, Hollywood Video parent firm Movie Gallery Inc., went out of business in April.

But there are still some issues to be resolved, including the company’s desire to continue offering movies from all the studios on the same day they go on sale. Fox, Universal and Warner have all instituted a 28-day window on rentals through Redbox and Netflix.

The studios would likely be protected from any significant losses on payments Blockbuster might owe them at the time it files for bankruptcy under the proposed plan. But they would lose revenue from any stores shut down.

The parties most impacted would be Blockbuster’s junior debt holders and the landlords of leases that would be canceled under the proposed bankruptcy. It remains to be seen whether they would attempt to challenge a plan that left them with a fraction of what they are owed.

If the company does not enter bankruptcy, it would need to find a new investor or convince its debt owners to significantly reduce its interest payments for the foreseeable future.

A Blockbuster spokeswoman declined to comment on the studio meetings. In a statement, she said, “The extension of our forbearance agreement is a strong sign of support from our senior secured noteholders as we work toward putting in place a more appropriate capital structure to support Blockbuster’s long-term growth. … Our discussions continue to be productive and we have every reason to believe we will come out of the recapitalization process financially stronger and more competitively positioned for the future.”

Blockbuster stock, which last month was delisted by the New York Stock Exchange because of its ongoing low price and moved to the over-the-counter market, closed Thursday at 11 cents. The company’s total market value is $24 million.

In 1994 it was acquired by former owner Viacom Inc. for $8.4 billion.

30 August 2010

Oxford English Dictionary 'Will not be Printed Again'

Telegraph UK

The next edition of the Oxford English Dictionary, the world’s most definitive work on the language, will never be printed because of the impact of the internet on book sales.

Sales of the third edition of the vast tome have fallen due to the increasing popularity of online alternatives, according to its publisher.

A team of 80 lexicographers has been working on the third edition of the OED – known as OED3 – for the past 21 years.

The dictionary’s owner, Oxford University Press (OUP), said the impact of the internet means OED3 will probably appear only in electronic form.

The most recent OED has existed online for more than a decade, where it receives two million hits a month from subscribers who pay an annual fee of £240.

“The print dictionary market is just disappearing, it is falling away by tens of per cent a year,” Nigel Portwood, the chief executive of OUP, told the Sunday Times. Asked if he thought the third edition would be printed, he said: “I don’t think so.”

Almost one third of a million entries were contained in the second version of the OED, published in 1989 across 20 volumes.

The next full edition is still estimated to be more than a decade away from completion; only 28 per cent has been finished to date.

OUP said it would continue to print the more familiar Oxford Dictionary of English, the single-volume version sold in bookshops and which contains more contemporary entries such as vuvuzela, the plastic trumpet encountered in the 2010 football World Cup.

Mr Portwood said printed dictionaries had a shelf life of about another 30 years, with the pace of change increased by the popularity of e-books and devices such as the Apple iPad and Amazon’s Kindle.

Simon Winchester, author of ‘The Meaning of Everything: The Story of the Oxford English Dictionary’, said the switch towards online formats was “prescient”.

He said: “Until six months ago I was clinging to the idea that printed books would likely last for ever. Since the arrival of the iPad I am now wholly convinced otherwise.

“The printed book is about to vanish at extraordinary speed. I have two complete OEDs, but never consult them – I use the online OED five or six times daily. The same with many of my reference books – and soon with most.

“Books are about to vanish; reading is about to expand as a pastime; these are inescapable realities.”

The first dictionary in recognisable format was Samuel Johnson’s, which was published in 1755. It remained the standard text for 150 years until the OUP embarked on its project in 1879.

The first OED came out in sections from 1884, completed in 1928.

Despite its worldwide reputation, the OED has never made a profit. The continuing research costs several million pounds a year. “These are the sort of long-term research projects which will never cover their costs, but are something that we choose to do,” Mr Portwood said.

A spokesman for the OUP said a print version of OED3 could not be ruled out “if there is sufficient demand at the time” but that its completion was “likely to be more than a decade” away.

27 August 2010

Key Wooing Billionaires to New Zealand Minus English ‘Attitude’


When he was Merrill Lynch & Co.’s global head of foreign exchange in London in 1998, the ever- cheerful John Key was nicknamed “the smiling assassin” after he fired some 50 members of his team.

Today, as prime minister of his native New Zealand, population 4.4 million, he’s using his trademark grin to woo billionaire immigrants, foreign investors and high-end tourists to one of the planet’s most remote developed countries, Bloomberg Markets magazine reports in its October issue.

Key, 49, even took time out from a session of the United Nations General Assembly last year to appear on the Late Show with David Letterman to talk up his island nation in the southwest Pacific.

He encouraged visitors to take a “convenient” 20-hour, one- or two-stop flight from New York to the former British colony.

“It’s like England without the attitude,” he wisecracked, adding: “Visit in the next 30 days and I will pick you up at the airport.”

Key was joking with Letterman, yet his underlying message was serious. Since he took office in November 2008, the prime minister has cut income and corporate taxes, offered scholarships for business executives and taken personal control of the country’s tourism ministry to boost a stuttering $125 billion economy.

‘Lord of the Rings’

New Zealand, whose snowcapped peaks and verdant valleys formed the backdrop to the Academy Award-winning “Lord of the Rings” trilogy, is struggling to rebound from its worst recession in 30 years.

Living standards as measured by per capita gross domestic product are about 15 percent lower than the average for other Organization for Economic Cooperation and Development countries, according to 2009 estimates based on purchasing-power parity.

One million New Zealanders, including one-fourth of university graduates, have moved to work overseas -- 260,000 in the past 10 years. Unemployment rose in the second quarter to 6.8 percent from 6 percent in the first.

Key says New Zealand needs to lift per capita income by 35 percent to match that of Australia, a three-hour flight across the Tasman Sea. In the meantime, he’s trying to replace departing compatriots with wealthy foreigners.

“Attracting high-net-worth individuals is critical in terms of the investments they make and the opportunities they provide for others,” Key says in Wellington, the pocket-sized capital of 180,000, where he works in an office atop a conical building called the Beehive.

‘Live Off Your Wits’

As for his currency background, it comes in most handy in political debates.

“Parliamentary question time is very much like being on a trading floor,” he says. “You live off your wits, and you feed off the environment.”

Key, who leads the center-right National Party, is pushing pro-business policies. He has trimmed the top income tax rate to 33 percent from 38 percent compared with 45 percent for Australia. Next year, the corporate tax rate will fall to 28 percent, two percentage points below Australia’s, from 30 percent. He’s trying to win free-trade agreements with India and Russia. He has cut bureaucracy so that New Zealand’s biggest city, Auckland, will be run by one local authority instead of eight. And on Aug. 9, he announced a scholarship under which New Zealand executives can get grants of as much as NZ$110,000 ($80,000) to study at top international business schools and come back to work in the country.

‘Quite Remarkable’

“Look at what he’s done; it’s quite remarkable,” says Jonathan Ling, chief executive officer of Fletcher Building Ltd., the country’s biggest publicly traded company, who often recruits executives from the New Zealand diaspora. Since Key took office on Nov. 19, 2008, Fletcher shares have gained 30 percent to NZ$7.40 on Aug. 23.

Key isn’t starting from scratch in luring affluent visitors. New Zealand has long been a first or second home to such investors as billionaire hedge-fund manager Julian Robertson and former Levi Strauss & Co. President Tom Tusher.

Robertson developed two of the nation’s most spectacular golf resorts, Kauri Cliffs and The Farm at Cape Kidnappers. In 2002, he bought two wineries, including Dry River, which produces what Bloomberg Markets wine and spirits columnist Elin McCoy describes as one of the New World’s great pinot noirs.

Tusher, 69, owns Blanket Bay, a NZ$750--NZ$2,500-a-night hideaway near Queenstown, and the nearby Amisfield winery. Neither man will disclose the total value of his investments.

Prime Minister’s Fan

“New Zealand is the most beautiful place on Earth,” says Robertson, 78, who oversees about $23 billion at New York-based Tiger Management LLC and spends three months a year in the country.

“I am a fan of the prime minister,” says Robertson, who is due to open his third New Zealand resort, Matakauri Lodge, this Friday. “Now they have a progressive conservative premier. I think it will be much better for them.” Key ousted the Labour Party’s Helen Clark, who’d led the country for nine years.

The prime minister’s job has been complicated -- even for a veteran currency trader -- by a New Zealand dollar that has yo- yoed between 39 U.S. cents and 82 U.S. cents in the past decade.

Hostage to the so-called carry trade, the currency -- nicknamed the kiwi after the national emblem, a chicken-sized flightless bird -- rises when foreign investors pour in money to take advantage of higher-interest-bearing assets. It falls when they pull money out.

Global Dairy Exporter

Exports and inbound tourism, which make up almost 40 percent of New Zealand’s GDP, become more expensive with a strong kiwi. That hurts a country that’s the biggest global exporter of dairy products and lamb and whose visitors account for 20 percent of foreign-exchange earnings. New Zealand suffers, although less so, when the kiwi hits lows, because imports cost more.

Key says there’s not much he can do to prevent the kiwi’s wild swings, even with his 20 years of foreign-exchange experience. What he can do is try to negotiate more free-trade agreements to compensate for barriers and subsidies that restrict access for meat and dairy products in New Zealand’s biggest markets.

OECD figures in July showed that in New Zealand, a free- trading nation, one percent of farmers’ incomes comes from subsidies, compared with 61 percent in Norway, 23 percent in the European Union and 9 percent in the U.S.

‘Most Vulnerable Nation’

“We would be the most vulnerable nation in the world to the vagaries of global markets,” says Andrew Ferrier, chief executive officer of Fonterra Cooperative Group Ltd., the world’s biggest dairy-exporting company.

A rebounding global economy is already helping Key’s prospects. Sales of milk, butter and lamb are increasing as the world emerges from its financial crisis. New Zealand’s economy is poised to grow 3 percent this year, according to the International Monetary Fund, compared with a 1.6 percent contraction in 2009.

On Aug. 23, Fonterra reported that its dairy exports rose to a record 2.1 million metric tons in the year ended July 31, buoyed by demand from China and other parts of Asia.

The prime minister is getting the benefit of the doubt from some rivals because of his personality and inspirational life story, says Mike Moore, a former Labour Party prime minister and one-time director-general of the World Trade Organization.

‘Hard Man to Hate’

“We in the Labour Party have a serious problem with John Key,” says Moore, who this month became New Zealand’s ambassador to the U.S. “He’s a very hard man to hate.”

Key grew up with adversity. His late mother, Ruth Lazar, an Austrian Jew, fled to the U.K. in 1938 to escape Adolf Hitler’s advance. In 1948, she married George Key, an Englishman. The couple emigrated to New Zealand in the 1950s.

“If mum hadn’t got to England, she would have almost certainly gone to the gas chambers like so many of her family,” John Key says.

His father died when the boy was 6 and he, two siblings and Ruth entered public housing in Christchurch, where the Keys made their way among other struggling families. He never lacked confidence.

“From very early on, I wanted two things,” Key says. “I wanted to go into business and become financially independent. Secondly, I wanted to go into politics. When I was very young, I wanted to be prime minister.”

Currency Trading

Key’s path to riches and political power began in 1985 -- the year when New Zealand floated the kiwi, which had been pegged to a basket of currencies. He decided he could make his fortune trading the suddenly fluctuating New Zealand dollar.

He joined Bankers Trust in Auckland in 1988, so eager to succeed that he and his wife, Bronagh, slept in the green glow of a financial terminal beside their bed.

In 1995, Merrill Lynch hired him as a managing director of Asian foreign exchange in Singapore. Three months into the job, then-boss Steve Bellotti asked what Key thought of Merrill’s foreign-exchange business. “I think it sucks,” Key said.

Key told Bellotti that Merrill could be a bigger player in currencies. Bellotti, who confirms the story, shared that view.

“They had the clients and the cross-border flow in equities, fixed interest and commodities, but they were not capturing the foreign-exchange part,” Bellotti says.

Bellotti offered Key the job of global head of foreign exchange in London with the proviso that if he didn’t perform he’d be fired in a year.

“If I don’t make it in 11 months, I’ll quit,” Key replied.

‘Difficult Environment’

Instead, it was Key who ended up sacking other people. Bellotti says Key expanded the business as they’d planned. Then came the 1997 Asian financial crisis and 1998 Russian debt default. Key was ordered to cut his 300-strong team by 50 or 60, Bellotti recalls.

“It was a very difficult environment,” Key says. “But for the survival of the business, we did what was necessary.”

Bellotti, now managing director for global markets at Australia & New Zealand Banking Group Ltd. in Sydney, says Key succeeded as a currency trader without taking big risks.

“He was not the king of volatility,” Bellotti says. “He was not the superstar outstanding athlete. He was consistent sometimes to the point of being boring. He was also a great team builder.”

Key also became wealthy. New Zealand newspapers have reported that he earned about $2 million a year in London and his fortune is now $40 million.

He’ll say only: “It was a substantial amount of money -- enough to have choices.”

Stonyridge Larose

By then a father of two, Key chose to quit Merrill and take a shot at becoming prime minister. He sought to improve his chances of successfully entering politics with a classy gift -- and humor -- to win over a local party official who’d invited him to a beach barbecue.

Turning up with a NZ$200 bottle of Stonyridge Larose, one of the country’s best red wines, he recommended that his host not serve it with the sausages.

“It was good wine,” Key says, beaming broadly. “I hope he still has it in his cellars.”

Key’s political debut wasn’t easy even with such schmoozing. He was selected as a National Party candidate only after a bruising intraparty contest. He faced New Zealand voters for the first time during the 2002 general election. National suffered its worst defeat ever, winning 27 seats in the 120- member Parliament. Key, who’d been chosen for one of the safest seats, escaped the rout.

‘Money Shuffler’

“If I hadn’t challenged in such a strong seat, I would never have made it,” he says.

With so few National members in Parliament, he was promoted to finance spokesman in 2004. National lost the 2005 election and his colleagues chose him to be opposition leader in 2006.

Key has suffered reverses during his two years in office - -and digs at his background.

“It is all very well being an international money shuffler, but I thought they were part of the problem, not the solution,” Labour Party opposition leader Phil Goff says.

Key’s attempts to raise living standards closer to Australia’s are having the opposite effect, he says, noting that Australia’s economy has been growing faster than New Zealand’s and its jobless rate -- 5.3 percent in July -- is lower.

“You have to deliver, not just be a smiling face,” Goff says.

Key backed down in July on a plan to open conservation areas to mining after protesters said the move would jeopardize tourists’ and food shoppers’ image of a green New Zealand.

‘Gold and Sparkling Things’

“He did not understand the depth of feeling people have for their land,” says Helen Kelly, president of the New Zealand Council of Trade Unions. “He thought they would be attracted by the gold and sparkling things that mining would bring, but this isn’t really “The Lord of the Rings.’”

So far, most voters aren’t holding mistakes against Key. If an election had been held in early August, his National Party would have been re-elected with 54.5 percent of the vote, a poll conducted for television station TV3 found.

The poll that really counts will come when Key’s three-year term ends in November 2011 and he seeks re-election. If the world keeps buying New Zealand farm products and if former colleagues on forex desks don’t make the country’s currency too volatile, Key should be smiling for another three years.

26 August 2010

Michael Eisner could take Reins at Tribune


Michael Eisner is not a man with many close friends. But John Angelo is one of the few.

Angelo is co-founder of hedge fund Angelo, Gordon & Co., one of the senior creditors in the complex Tribune Co. bankruptcy. And he's the person who approached Eisner about joining the board of a reconfigured Tribune.

Formidable legal obstacles must be overcome before new management can be installed at the troubled media company. But Eisner, formerly Disney chairman and CEO, is in talks to become chairman of the board, possibly with former colleague Jeff Shell, now president of the Comcast Programming Group, as his CEO.

A source close to Eisner said he believes Tribune is "a massively undervalued asset" that "if managed properly could be turned around."

Tribune owns 23 television stations, including KTLA-TV Los Angeles, and a group of newspapers including the Los Angeles Times and the Chicago Tribune. The L.A. Times first reported the talks.

Though Eisner has told associates he's glad that he no longer has to contend with running a public company, several say they believe he is bored with his current ventures, which include creating content for the Internet.

"I can certainly see how, despite his protests to the contrary, he felt on the sidelines," one associate said. "My own pop psychology is that he would love something where the story line is, 'He's done it again.' "

Television veteran Fred Silverman, who was Eisner's boss long ago at ABC and consulted on programming at the network when Eisner was still at Disney, said he believes Eisner could, in fact, do it again.

"He certainly knows how to grow a company," he said. "The thing with Michael is he'll come along and the next thing you know, they'll own (a company like) Lionsgate."

It is not clear that Eisner has any particular affinity for news, though he played reporter to write his upcoming book, Working Together: Why Great Partnerships Succeed.

"I ended up learning a lot," Eisner wrote in an e-mail sent to friends Wednesday. "I interviewed Bill and Melinda Gates ... I visited with the producer Brian Grazer and director Ron Howard ... I went to Paris to speak with Valentino and Giancarlo Giammetti. I interviewed Arthur Blank and Bernie Marcus about their partnership at Home Depot and Ian Schrager about his collaboration at Studio 54 with the late Steve Rubell."

A source who has seen the book says the first chapter discusses Eisner's relationship at Disney with his late No. 2, Frank Wells, who died in a helicopter crash in 1994. The last chapter in the book is about Angelo and his partnership with Michael Gordon.

25 August 2010

Disney, Apple Near iTunes Deal

The Wall Street Journal

Apple Inc. is in discussions with major TV companies to offer 99-cent rentals of television episodes, according to people familiar with the situation, as the company tries to reshape the television business around its devices, including a new one for pushing Internet video onto TV sets.

Apple is nearing an agreement with Walt Disney Co. to offer such rentals for some ABC television shows through its iTunes content store, these people said, but the proposal is facing at least some resistance from big TV companies, including CBS Corp., General Electric Co.'s NBC Universal, News Corp., and Viacom Inc., people briefed on Apple's proposal said.

The Cupertino, Calif., company is pushing to reach agreements for its television service—which would give viewers a 48-hour window to view an electronic version of the show—before the new television season starts in September, some of those people said.

At the same time, the company is working on a new device that would allow users to stream video, such as rentals, to their TV sets, according to a person with knowledge of Apple's plans. Unlike Apple's existing Apple TV hardware, which stores downloads users can access on their televisions, the new device would act as a conduit for streaming media more directly, and could be announced as early as September, the person said.

Apple declined to comment.

Lower prices for TV shows, along with the new TV-streaming device, could help Apple in the pitched battle to pipe content into American living rooms. Traditional cable- and satellite-TV providers are already facing competition from companies including Net flix Inc. and Hulu LLC. Google Inc. soon plans to roll out its own Web-TV service, too.

Media companies, however, have been wary of pumping too much content online, worried that they could encourage viewers to cancel their monthly TV subscriptions. The tens of billions of dollars media companies make each year from monthly bills are a key source of profits.

Through iTunes, customers currently can pay to download electronic copies of many cable and broadcast shows, often for $1.99 each for the standard version, to view on iPhones, the iPad tablet computer, Apple TV or other devices. Apple has told media companies that the entertainment offerings through iTunes are too costly, according to people familiar with the matter, and has said the media companies would make more money if prices were lower.

Media companies are weighing the potential revenue they would make if more people paid for TV shows on iTunes against the dangers of eroding their business on traditional TV. But they don't want to be left behind as viewers spend more time online. That has led some to offer some shows on their own websites, or through services like Hulu.

News Corp.'s Fox is receptive towards Apple's pitch of 99-cent TV-show rentals, according to people familiar with the matter, who cautioned that significant hurdles remain to any deal with Apple. News Corp. also owns The Wall Street Journal. Bloomberg News reported Apple's talks with News Corp. Tuesday.

CBS is mulling the Apple proposal, but is unlikely to agree to an Apple service of this type, according to a person familiar with the matter. NBC and MTV-owner Viacom don't currently intend to accept Apple's proposal, according to people familiar with the companies' positions.

The 99-cent rental plan is the latest of several pushes by Apple in the last year to boost consumption of TV shows through its iTunes content bazaar. Apple pushed to get TV companies to participate in a plan to offer television subscriptions over the Internet. Those plans met resistance from several media companies, as did a later proposal to sell TV episodes for 99-cents each, according to people briefed on the proposal.

Electronic rentals differ from sales, in part because they remain viewable for a limited time. But some media executives argue that they would still undercut online sales in iTunes because many people only watch episodes they buy only once. It is unclear which Disney programming would be available for viewers as part of the service. One person briefed on the Disney-Apple talks said a deal is not done yet, but that one is close.

Disney has been seen as a likely Apple collaborator in part because Apple Chief Executive Steve Jobs sits on its board and is the Burbank, Calif., company's largest individual shareholder.

23 August 2010

Broadcasters want FM on Cellphones; Phone Makers Balk

USA Today

Cellphones are on the cutting edge of technological innovation. But they may also offer an old-fashioned service — FM radio — if a controversial new proposal gains traction in Washington.

Groups representing broadcasters, musicians and record companies say they may ask Congress to require that new mobile phones include equipment to receive FM.

The idea emerged in a proposed compromise for a dispute over whether musicians and record companies should receive royalty payments from radio stations that air their tunes.

It makes sense because "broadcasters provide a tremendous lifeline service" by keeping people informed during emergencies such as hurricanes or terrorist attacks, says National Association of Broadcasters spokesman Dennis Wharton.

But others say that FM radio chips and antennas would drain batteries, add to costs and take up space that could be used for new technologies.

"Broadcasters should man up, stop whining to Congress and start competing," says Consumer Electronics Association CEO Gary Shapiro. Cellphone industry trade group CTIA: The Wireless Association also opposes an FM mandate.

The NAB says it might drop its opposition to royalty payments if its members get benefits in return — including the ability to reach millions of cellphone customers. The group will update its members and hear their views today in a private online "virtual town hall" session.

Marty Machowsky, spokesman for the MusicFirst Coalition — an organization backed by music unions and trade groups that's leading the fight for royalty payments — says FM in phones is fine as "another way for people to enjoy music."

Several manufacturers — including Sony Ericsson, Nokia, Samsung, LG and HTC — already sell phones that can receive FM radio signals.

That shows that FM technology doesn't harm cellphones or add a big expense, Wharton says. He says that in another year or so, it might become economical to also include chips that can handle digital signals from the growing number of stations offering HD Radio.

But Shapiro says that FM-equipped phones have been poor sellers. If a mandate catches on in Congress, he adds, then he'd ask to double radio stations' royalty payments and make sure that "the wireless industry will be compensated."

If the CEA fights the idea, it could "throw a wrench into this," says Jeffrey Silva, an analyst at research firm Medley Global Advisors.

Stallone's 'Expendables' Still on Top in Week 2

USA Today

The Expendables proved to be anything but this weekend, coasting to the top spot for the second straight week.

The Sylvester Stallone action film took in $16.5 million, according to Hollywood.com. Although the movie dropped 53% from last week's debut, it was plenty to hold off a slew of newcomers, including a surprisingly strong start for the parody Vampires Suck.

But there was no denying Stallone and his band of aging action icons.

"There hasn't been an action film like this since the throwback years" of the 1980s and '90s, says David Spitz, head of distribution for Lionsgate, which released the picture. "It's clear there's a public appetite for good action."

Enough to warrant a sequel?

"Nothing has been decided," Spitz says. "But it's pretty impressive what (Expendables) did this weekend, especially against all that competition."

Indeed, the weekend was one of Hollywood's busiest, with five movies opening. And none were a match for Vampires Suck, the parody of the Twilight films. Despite a no-name cast and a $17 million budget, the comedy made $12.2 million. The film, which opened Wednesday, has raked in $18.6 million so far.

The movie got an unusual boost from males, who usually thumb their noses at vampire flicks but made up 45% of the audience this weekend. "That was a great surprise," says Bert Livingston of 20th Century Fox, which released Vampires. "It puts us in a great position for the rest of summer."

The Julia Roberts romance Eat Pray Love was third with $12 million, followed by the comedy Lottery Ticket, which surprised analysts with $11.1 million.

Will Ferrell and Mark Wahlberg's The Other Guys rounded out the top five with $10.1 million.

The horror film Piranha 3D met expectations with $10 million, good for sixth place.

The losers of the weekend were the two genres that usually flourish in summer: family films and romance.

Nanny McPhee Returns was expected to top all newcomers this weekend. Instead, it managed just $8.3 million and seventh place. Still, it was a better haul than the Jennifer Aniston romance The Switch, which opened in eighth place with $8.1 million.

Final figures are due today.

20 August 2010

Clean Energy Investors Flash Cash for Ads in California Climate Law Battle


California’s clean energy investors are raising millions of dollars for an advertising battle with oil refiners who want to delay the state’s new law on reducing greenhouse gas emissions.

The campaign, supported by investors such as Tom Steyer, founder of San Francisco-based hedge fund Farallon Capital Management LLC, aims to convince residents to vote against the so-called Proposition 23 when it comes up for approval in November. The proposal, backed by the oil industry, would delay laws to begin regulating the state’s carbon emissions in 2012.

California’s Global Warming Solutions Act, signed into law by Republican Governor Arnold Schwarzenegger in 2006, requires the state cut output of greenhouse gases linked to climate change to their 1990 levels by 2020. The state will introduce a cap-and-trade program to put a price on carbon emissions and trade pollution rights.

“It would be a big setback for clean energy in the U.S. if California’s climate-change law is overturned,” Kevin Parker, the global head of asset management for Deutsche Bank AG, said in a telephone interview.

If the most populous state backs away, it would give other states and the federal government “a free pass to do nothing” on curbing greenhouse gases, said Parker, who oversees about $7 billion to $7.5 billion in climate change related investments as part of about $700 billion in funds.

Tesoro Corp. and Valero Energy Corp., which operate refineries in the state that would face extra costs under a cap- and-trade system, have contributed most of the $6.16 million raised to lobby for Proposition 23, according to the California secretary of state’s office.

‘Common Sense’

Valero, based in San Antonio, Texas, has 1,600 employees in the state and supports the measure as a “common sense approach to making sure higher costs don’t further hamper California’s economy,” said Bill Day, a Valero spokesman. Lynn Westfall, a spokesman for Tesoro, also based in San Antonio, declined to comment on the proposition.

Supporters of the carbon law, which include companies involved in the hunt for energy from non-traditional sources such as fuel cells, the sun, algae and the wind, have raised $5.56 million from mostly environmental groups and investors, according to state records.

Most of the more than $11.5 million raised so far by the two sides will be spent on television and radio advertising, said Robert Stern, President for the Center for Governmental Studies, a Los Angeles-based non-profit public policy group.

Farallon Capital

The marketing blitz has yet to hit the airwaves, Stern said in a telephone interview. “The best bang for your buck comes after Labor Day when people start paying attention,” he said. Labor Day is Sept. 6.

Steyer, at Farallon Capital, has contributed $2.5 million and pledged another $2.5 million, according to state records and a campaign statement.

“Proposition 23 is designed to derail a green technology revolution that we are in the early innings of and that is the engine for California’s growth,” Steyer said in an interview.

Steyer, who is co-chair of a campaign opposing Proposition 23 along with former U.S. Secretary of State George Shultz, said he did not have a “meaningful percentage” of his investments in clean tech companies.

Steyer and his wife donated about $40 million for a renewable energy center announced in 2009 at Stanford University in Palo Alto, California, he said.

John Doerr, a partner at Menlo Park, California-based Kleiner Perkins Caufield & Byers and an investor in fuel cell maker Bloom Energy Corp., has given $500,000 to the campaign, state records show.

Investor’s View

Companies involved in renewable energy are ready to pour more cash into the campaign if needed, said Steve Westly, an alternative energy venture capitalist and former State Controller who opposes the ballot initiative.

Vinod Khosla, founder and partner of Menlo Park, California-based Khosla Ventures, said he would reevaluate his investments in the state if Proposition 23 passes. Khosla Ventures said it raised more than $1 billion last year for investment funds focused on the clean energy industry.

“If there is not a clean-tech market in California, you will see people look in India and China, where there are markets,” Khosla said during an event on Aug. 10 at Google Inc. headquarters where speakers voiced support for California’s greenhouse gas laws.

Jobs Requirement

Proposition 23 would halt the program for cutting greenhouse gases until California’s 12.3 percent unemployment rate falls to 5.5 percent for four consecutive quarters.

Since 1970, there have been three periods when the state’s jobless rate has fallen that low for that long, according to an analysis of the ballot measure by the state’s Legislative Analyst’s Office, a non-partisan agency that works for legislature.

It’s likely that the state’s greenhouse gas laws would be suspended for many years given economic forecasts that project unemployment staying above 8 percent for the next five years, according to the analysis.

“No one has a crystal ball about when the unemployment rate will come down, but it’s almost certain that without Proposition 23, rates will remain higher for longer,” said Anita Mangels, communications director for the California Jobs Initiative, which formed to support Proposition 23.

Unless the carbon law is linked to the unemployment rate, it will needlessly funnel money to non-traditional energy companies and boost gasoline prices, hurting the economy and causing job losses, opponents of the carbon law said.

Taxpayers and energy consumers are “guaranteeing the investments of venture capitalists in businesses that will be subsidized heavily by the state, with a market guaranteed by the state and their competition dampened by the state,” Mangels said in a telephone interview.

Delaying the enforcement of the climate-change law will give California’s economy time to recover so it can handle the greenhouse-gas limits, Mangels said.

19 August 2010

Dollywood turns 25


PIGEON FORGE, Tenn. -- It's been 25 years since Dolly Parton bought a relatively small theme park near her hometown and christened it Dollywood. Today it offers everything you'd want in a family attraction, from surprisingly scary roller coasters and kid-friendly water rides to crowd-pleasing live shows and a big gift shop. Of course, Parton is a master of reinvention, and because of her connection to the park, Dollywood isn't just the same old song and dance, year after year.

To commemorate the 25th season, Parton and her business partners, Herschend Family Enterprises, unveiled a $6 million challenge course at the far end of the park where tourists of every shape and size safely strap themselves into a vest and harness, then tentatively make their way across a variety of rope swings, mountain facades and wobbly wooden steps. And looking up, they can see -- and occasionally hear the screams of -- adventurous visitors soaring on the Great Smoky Mountain Skyzip, high above the 150-acre park.

Every year, Parton personally rides a parade float through Pigeon Forge, visits the theme park and unveils a new attraction. In 2009, she wrote eight new songs for the extravagant Sha-Kon-a-Hey! Land of Blue Smoke, a mystical musical about the last family to leave the Smoky Mountains. The year before that, the River Battle ride encouraged families to pile onto a raft and soak other families with water guns.

Of course, there are the perennial favorites, too. The Tennessee Tornado is a triple-loop steel roller coaster that reaches 70 miles per hour and surges with back-to-back 360-degree loops. Across the park, the wooden Thunderhead races by at 55 miles per hour. Meanwhile, Mystery Mine takes a 95-degree, 85-foot vertical drop -- and that's just in the beginning. If all that sounds too intense, the relatively mild Blazing Fury may work as a launching point for the younger set. And there's almost always a seat on the Dollywood Express steam locomotive.

For Parton's own legion of fans, the Chasing Rainbows Museum is the ultimate draw. Parton displays a massive amount of photographs and keepsakes from her own archives, with the most impressive piece being the modest patchwork jacket that inspired her classic song, "Coat of Many Colors." Just a few steps beyond it, a grand staircase leads into an awe-inspiring room of outfits, awards, magazine covers and multi-media exhibits. The newest addition may be the graduation cap and gown(s) she wore when the University of Tennessee in Knoxville presented her with an honorary doctorate degree in 2009.

"I always thought that if I made it big or got successful at what I had started out to do, that I wanted to come back to my part of the country and do something great, something that would bring a lot of jobs into this area," Parton told The Associated Press earlier this year. "Sure enough, I was lucky, and God was good to me and things happened good. We started the park, and 25 years later, we're still at it."

Parton's likeness is scarcely seen across the park landscape, within driving distance of many Gatlinburg attractions, but her music accentuates a few of the attractions. There's a quaint shop called Old Flames Candles, named after her No. 1 hit, "Old Flames Can't Hold a Candle to You." Her uncle Bill Owens, who brought a young Parton to Nashville to pursue a music career, sings and picks at the Back Porch Theater while some of her cousins perform hits like "Jolene" and "I Will Always Love You."

In a quieter part of the park, more than a dozen bald eagles reside in an aviary while craftsmen explain traditional skills such as glassblowing and blacksmithing. A large hall of photographs describes the evolution from the former Silver Dollar City into what has become the top ticketed tourist attraction in Tennessee, bringing in about 2.3 million visitors a year.

Nearby, a one-room church is named for Robert F. Thomas, the doctor who delivered Parton in 1946. As the fourth of 12 children, she grew up poor in a part of Sevier County called Locust Ridge. A replica of her Tennessee Mountain Home is on prominent display in the park, next to a buffet restaurant called Aunt Granny's, lifting the nickname she was given by her numerous nieces and nephews. It's not hard to find a quick bite anywhere in the park, though, with a breakfast stop recommended at the Spotlight Bakery, just a few steps from the entrance.

Parton's other properties in Pigeon Forge include the Dixie Stampede, a fork-free dinner theater that pits the north side of the coliseum against the south side, with the winner largely determined by animal races and audience participation. Dollywood Vacations is a community of mountain cabins nestled behind the park. Meanwhile, Dollywood's Splash Country cools off the kids with water slides, wave pools and river tubing. The summer-only attraction will be open this year through Sept. 6.

Starting on Sept. 29, the Pigeon Forge attraction will host a month-long National Gospel and Harvest Celebration. That's followed by Smoky Mountain Christmas, elaborately decorated for the season from Nov. 6 through Jan. 1, 2011. After that, if the last 25 years are any indication, the future certainly holds something new and unexpected.

Ann Coulter Dropped from Conference over Speech to Gay Republicans

Washington Scene

The conservative website World Net Daily.com (WND) announced Wednesday that it was canceling a planned keynote address by Ann Coulter next month at its "Taking America Back Annual Conference" because of her decision to give a paid speech before a gay conservative group.

Coulter was hired to speak at the GOProud conference, a meeting of homosexual political conservatives, on September 25.

WND editor in chief Joseph Farah said a statement on WND's website, "There is simply no room [at the WND conference] for compromisers or for people who accept money from those determined to destroy the moral fabric required for self-governance and liberty."

"They hired me to give a speech," Coulter told Farah when asked about the appearance, "So I'm giving a speech. I do it all the time."

Coulter, who writes a weekly column for WND.com, said the decision to drop her from the conference was "silly."

"I speak to a lot of groups and do not endorse them," she continued. "I speak at Harvard and I certainly don't endorse their views. I've spoken to Democratic groups and liberal Republican groups that loooove abortion. The main thing I do is speak on college campuses, which is about the equivalent of speaking at an al-Qaida conference."

Even without Coulter, the Miami, Fla., WND conference will still feature plenty of conservative stars, including Rep. Michele Bachman (R-Minn.). Bachman will be joined by Ambassador Alan Keyes, Colorado GOP gubernatorial candidate Tom Tancredo, former Sen. and retired Admiral Jeremiah Denton, and talk-show host Rusty Humphries.

Newsweek’s Zakaria Defects to Rival Time

Folio Mag

Newsweek International editor and CNN host Fareed Zakaria is leaving the magazine to join rival Time as editor-at-large starting October 1. Zakaria will have a regular column and will contribute cover stories and features in the print magazine and on Time.com.

Zakaria [pictured] also has renewed his association with CNN and will continue to produce his weekly show, “Fareed Zakaria GPS,” as well as several other special reports annually, sister company Time Inc. announced Wednesday. In addition, Zakaria will serve as a consultant for HBO’s documentary unit.

Time Inc., CNN and HBO are all owned by parent company Time Warner.

Responsible for overseeing the Newsweek’s editions abroad, Zakaria has been the editor of Newsweek International since October 2000 and has contributed a regular column to the U.S. edition. Prior to joining Newsweek, Zakaria served as managing editor of Foreign Affairs for eight years.

Earlier this month, the Washington Post Co. sold Newsweek to audio magnate Sidney Harman, who apparently intends to keep a majority of Newsweek’s staff. Zakaria’s departure eliminates him as a possible candidate to replace managing editor Jon Meacham, who has said he is leaving the magazine once the sale process is complete.

17 August 2010

DISH Network iPad App Works as Remote Control

PC Mag

On Thursday, DISH Network took its Apple iPhone app to the iPad, allowing users to program and directly control their DISH DVRs.

The free app, available form the Apple iTunes App Store, already has been released in a version for the iPod touch and iPhone. In that form, the app can be used as a means to program the DVR, browse a schedule of shows, and adding and deleting programs. The app is compatible with most DISH receivers.

The iPad version adds a new twist, remote control, allowing a user who is unwilling or unable to find his DVR remote to control the DVR via the tablet.

"At DISH Network, we are excited about the potential of tablet computers - like the Apple iPad - to enhance the TV viewing experience and enable consumers to remain connected to their TVs everywhere," said Vivek Khemka, vice president of Customer Technology for DISH Network, in a statement.

Demand Media, Maker of Social-Media Applications, Plans $125 Million IPO


Demand Media Inc., the developer of applications for social-media websites, plans to raise as much as $125 million in an initial public offering, it said in a filing with the Securities and Exchange Commission.

The Santa Monica, California-based company didn’t give a price range or expected date in yesterday’s filing for the sale, which will be led by Goldman Sachs Group Inc. and Morgan Stanley in New York.

The creator of content for sites on topics from fitness to travel was founded in 2006 with backing from Goldman Sachs, Oak Investment Partners in Palo Alto, California, and Spectrum Equity Investors in Menlo Park, California. Demand Media hasn’t posted a profit since its inception, the prospectus showed.

Demand Media’s announcement came after filings for U.S. IPOs climbed to the highest since 2007 last quarter and the Standard & Poor’s 500 Index posted its biggest monthly gain in a year in July.

The company hired Joanne Bradford, a senior vice president from Sunnyvale, California-based Yahoo! Inc., to be its chief revenue officer in March. Demand Media’s Chairman and Chief Executive Officer Richard Rosenblatt formerly worked for MySpace Inc. owner Intermix Media Inc. of Los Angeles before they were both bought by Rupert Murdoch’s News Corp. of New York in 2005, according to the prospectus.

Demand Media’s tools allow websites to add user profiles, discussion forums, blogs and photo and video sharing, according to the filing. EHow.com, livestrong.com, the National Football League’s website and the online version of the San Francisco Chronicle use the products, the prospectus said.

16 August 2010

Narco-Blogger Beats Mexico Drug War News Blackout

Associated Press

MEXICO CITY – An anonymous, twentysomething blogger is giving Mexicans what they can't get elsewhere — an inside view of their country's raging drug war.

Operating from behind a thick curtain of computer security, Blog del Narco in less than six months has become Mexico's go-to Internet site at a time when mainstream media are feeling pressure and threats to stay away from the story.

Many postings, including warnings and a beheading, appear to come directly from drug traffickers. Others depict crime scenes accessible only to military or police.

The undifferentiated content suggests that all sides are using the blog — drug gangs to project their power, law enforcement to show that it too can play rough, and the public to learn about incidents that the mainstream media are forced to ignore or play down.

In at least one case Blog del Narco may have led to a major arrest — of a prison warden after a video posting detailed her alleged system of setting inmates free at night to carry out killings for a drug cartel.

The mysterious blogger hides his identity behind an elaborate cyber-screen. The Associated Press wrote to the blog's e-mail address, and the blogger called back from a disguised phone number. He said he is a student in northern Mexico majoring in computer security, that he launched the blog in March as a "hobby," but it now has grown to hundreds of postings a day and 3 million hits a week.

"People now demand information and if you don't publish it, they complain," he said.

Indeed, President Felipe Calderon has heard complaints that his government is not putting out enough information to allow people to function and stay safe.

"You authorities have placed Mexicans in the middle of a shootout where it's not clear where the bullets are coming from," journalist Hector Aguilar Camin said at a recent forum evaluating the government's strategy for fighting organized crime. "When it comes to information, the Mexican public safety agencies don't even shoot in self-defense."

The violence has killed more then 28,000 people and made Mexico one of the world's most dangerous countries for journalists, which explains why Blog del Narco cloaks itself so heavily in anonymity.

"For the scanty details that they (mass media) put on television, they get grenades thrown at them and their reporters kidnapped," the blogger said. "We publish everything. Imagine what they could do to us."

Among his postings:

• A video of a man being decapitated. While media only reported police finding a beheaded body, the video shows the man confessing to working for drug lord Edgar "La Barbie" Valdez Villareal, who is locked in a fight with both the Beltran Leyva and Sinaloa cartels;

• The prison warden affair, which unfolded in a video of masked members of the Zetas drug gang interrogating a police officer, who reveals that inmates allied with the Sinaloa cartel are given guns and cars and sent off to commit murders. At the end of the video the officer is shot to death;

• Links to Facebook pages of alleged traffickers and their children, weapons, cars and lavish parties;

• Photos of Mexican pop music stars at a birthday party for an alleged drug dealer's teenage daughter in the border state of Coahuila, across from Texas.

"The girl wrote to me and told me, in a threatening way, to take down her photos," the blogger said. "But as long as I don't hear from her father, I won't take them down."

While there are numerous blogs on Mexico's drug war, Blog del Narco seems to be the first used by the traffickers themselves. The blogger said he provides an uncensored platform, posting photographs and videos he receives regardless of content or cartel affiliation.

It can be extremely gory, but his neutrality has helped build his credibility.

"We don't insult them, we don't say one specific group is the bad one," he said. "We don't want problems with them."

Critics say it's free public relations for the cartels.

"Media outlets have social responsibilities and have to serve the public," said Carlos Lauria, of the New York-based Committee to Protect Journalists. "This is being produced by someone who is not doing it from a journalistic perspective. He is doing it without any ethical considerations."

Blog del Narco's first posting concerned a small-town shootout in the border state of Tamaulipas that police wouldn't even confirm happened. The blog aired a resident's YouTube video of the crashed cars and corpses along the highway.

Soon Blog Del Narco was dominating Mexico's drug-war blogosphere.

The blogger maintains a Facebook page and Twitter account that includes CNN en Espanol, all major Mexican media, the FBI and the Mexican Defense Department among its more than 7,300 followers. Rusty Payne, spokesman for the U.S. Drug Enforcement Administration, said "we're very aware of these kinds of things" but wouldn't say whether the DEA uses the information in its investigations.

Blog del Narco has also become a meeting point for people anxious to get information the mainstream media doesn't deliver, such as what streets to avoid during shootouts.

In Nuevo Laredo, where journalists have been attacked, 26-year-old storeowner Claudia Perez says she reads Blog del Narco to know when streets close, but can do without the gore.

"There are times when they do publish useful things, like such or such street is blocked," she said, "but they also put a lot of information about narcos and the ugly things they do."

Blog del Narco is registered with a U.S. company and all its blog-related payments are made with bank deposits, not a credit card, he said.

The blogger said he spends about four hours a day working on the blog and has recruited a friend to help after becoming overwhelmed with submissions.

Many of his videos are sent to him by readers, who know he will get them a much wider airing in Mexico, or are taken from YouTube. He regularly lifts news reports from other media sites without credit. He says mainstream media did the same with his content — until the national Milenio Television network aired the prison warden video and credited Blog del Narco.

Its daily hits went up 30 percent.

Murdoch's BSkyB Bid Grows More Costly as Pound Gains


Rupert Murdoch’s bid for the rest of British Sky Broadcasting Group Plc has become $700 million more expensive after the pound’s 6 percent gain against the dollar.

News Corp.’s 7.8 billion-pound bid for full control of the U.K.’s biggest pay-TV operator, dismissed by some investors as too little, was worth $11.5 billion when it was announced on June 15. It is now valued at about $12.2 billion. For News Corp. the cost in dollar terms may continue to climb, limiting its ability to raise the offer.

“It may make it more of a challenge for News to get to a price that we and most of the market feel they need to pay,” said Nick Bell, an analyst with Jefferies International in London. “It has been a very material rise since the deal was announced.”

Murdoch, chairman and chief executive officer of News Corp., wants full control of BSkyB to gain from its steady subscription business. He also has his sights set on the U.K. broadcaster’s cash flow, which increased 23 percent in the year ended June 30 to 626 million pounds as it reaped the rewards of investments in broadband and high-definition television.

The companies failed to agree on a price for 61 percent of BSkyB that News Corp. doesn’t already own and said they will focus on gaining regulatory approval first.

News Corp., based in New York, doesn’t hedge its investments in foreign operations, according to its U.S. regulatory filings. In an Aug. 6 filing, the company said that potential fluctuations in the pound may affect the amount of cash needed for the BSkyB deal.

The British currency traded at a six-month high against the dollar on Aug. 6. One pound now buys $1.5658, up from $1.48 in June.

‘Get More’

“Sterling may continue to do well,” Audrey Childe- Freeman, a senior currency strategist at Brown Brothers Harriman Ltd. in London. “The U.K. is a little ahead of the U.S. when trying to deal with the big-debt predicament.”

According to Bloomberg’s survey of 32 analysts, the pound may buy as much as $1.68 by the end of the first quarter of 2011. The median estimate is for $1.52.

The pound’s strength also means News Corp. will book greater BSkyB revenue when it’s converted into dollars.

“It looks more expensive, but they will get more from it,” said Lorna Tilbian, an analyst at Numis Securities in London.

A News Corp. official in London declined to comment on the impact of the pound’s gain on the deal. News Corp. will register its proposed purchase with the European Commission “very shortly,” Murdoch said last week. Both parties have said they will focus on regulatory approvals for the deal that would be Murdoch’s biggest acquisition.

Greater Scrutiny

“It could be 6 months or 12 months, but certainly not more than 12,” Murdoch said on Aug. 4. “We would be very disappointed if it went beyond this fiscal year.”

The transaction could take longer than one year if U.K. regulators and lawmakers intervene, said Martin Baker, an antitrust lawyer with the firm Taylor Wessing LLP in London.

“Anything to do with News Corp. tends to get scrutinized heavily by regulators,” Baker said. “On the whole, the merger control issues here are pretty benign. The battle will be over plurality of the media.”

BSkyB, based in Isleworth, England, in June rejected News Corp.’s offer of 700 pence a share. The independent directors, led by Nicholas Ferguson, chairman of SVG Capital, said they may accept an offer of more than 800 pence a share. There is a “significant gap” between News Corp.’s proposal and the company’s value, Ferguson said.

Small Premiums

News Corp. has said it plans to raise about $4 billion in debt to fund the purchase, and use cash for the remainder. The company has about $8.71 billion in cash.

Analysts at Citigroup Inc., Investec, Macquarie Securities, Numis Securities, Sanford C. Bernstein and Singer Capital Markets have named figures between 750 pence to 860 pence per share as a potentially acceptable price for shareholders.

Others such as Alan Gould, a New York-based analyst with Evercore Partners, said News Corp. pays small premiums when buying companies in which it has stakes, such as Fox.

“The history of News Corp. has been that they haven’t paid huge premiums once a deal’s been announced,” Gould said. “You have to pay a fair price. It doesn’t mean you have to pay an overly exorbitant price. There’s no reason for News Corp. to compete against itself.”

Gould estimates News Corp. may raise its bid to about 725 pence a share.

‘Disciplined Approach’

News Corp.’s Chief Operating Officer Chase Carey, who is leading the negotiations for BSkyB, said last week he isn’t talking to the independent board at this time.

Carey reiterated the offer was “full and fair” and said the company will take a “disciplined approach” to the deal.

News Corp. fell 25 cents, or 1.9 percent, to $13.14 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have dropped 4 percent this year.

BSkyB shares have gained 26 percent this year. They fell 2 pence to 706 pence today in London. BSkyB has traded close to 700 pence since the offer was announced, indicating investors are waiting for a formal offer to be announced before buying more shares, according to Panmure Gordon analyst Alex de Groote.

“The shares will narrow the gap as and when we get information that the deal is more firm,” he said.

Rdio Music Service: Mobile, Social, Impressive -- and Now Open to All

PC World

And the subscription music services just keep coming: Rdio, from Skype founders Niklas Zennström and Janus Friis, is leaving private beta today. That means that anyone can sign up for this ambitious new offering, which includes a Web-based service plus mobile apps for iPhone, Android, and BlackBerry. It competes against such services as Rhapsody and MOG, and from my time with it so far, it seems to do so formidably.

In terms of features, Rdio may be the most comprehensive iTunes substitute so far. (For the moment, at least–the competition is pretty intense in this category.) Like the late, lamented Lala, it can scan your music collection and add albums you already have to your online collection. (It doesn't match Lala's ability to give you online access even for stuff that's not in its own collection, though, and it's not finding every track in my library.) Its iPhone app supports iOS4 multitasking, so you can listen in the background while using another app. It has a neat syncing feature that lets you find music in your desktop browser, then auto-download it to your phone for listening whether or not you have Internet access.

Like Lala, Rdio also emphasizes the social aspect of music: Its Web-based version lets you find and follow friends and peek at the music they've been listening to. Every time I try a feature like this, I'm struck by the fact that my friendships almost never seem to have anything to do with shared tastes in music. But maybe you'll find it a useful way to discover songs you'll like.

The service says it currently offers seven million songs–fewer than Rhapsody’s ten million plus or the 13 million in Apple's iTunes Store, but still impressive.

Rdio is a paid service, and follows the standard pricing for subscription music: The Web-based version is $4.99 a month, and Web-plus-mobile is $9.99 a month. In both cases, you can listen to all the music you like as long as you keep paying. The $9.99 fee seems to cover multiple devices (Rhapsody charges $14.99 a month if you want to listen on more than one mobile gadget).

Subscription music remains a theoretically appealing idea that surprisingly few folks choose to pay for. (People who are willing to plunk down money for songs, it seems, prefer to buy them outright rather than rent them.) But Rdio comes close to erasing all the downsides of subscriptions except for the need to keep paying, and I'll bet its major competitors will match most of its features soon. If you'd like to feast on music for $10 a month, give it a listen.

14 August 2010

Newsweek Sale a Head-Scratcher

LA Times

Sidney Harman, the stereo industry magnate who announced Monday that he was buying Newsweek magazine, has made a lot of money in his life.

Harman, who turns 92 this week, told the staff at the ailing newsweekly that he was not all that interested in making more, at least from his new acquisition.

"I'm not here to make money," he told them, according to a Newsweek published account. "I'm here to make joy."

They could use some.

Newsweek, which has about 325 employees, hasn't made a profit since 2007 and lost about $30 million last year. The magazine was put up for sale by Washington Post Co. in May.

Harman made his money in high-fidelity audio equipment built by the San Fernando Valley company he co-founded in 1953, Harman Kardon Inc., and sold under brands including Harman Kardon and JBL. He probably didn't spend much on Newsweek. Terms of the deal were not disclosed, but Newsweek reported that Harman "has agreed to pay a small amount in cash and to assume tens of millions of dollars in financial obligations."

At least he can't be labeled as old guard in publishing.

"He has no track record to go on for the media industry," said Steve Cohn, editor of Media Industry Newsletter. "Until last week, I'd never heard of him."

Harman did not respond to requests for an interview about his plans for Newsweek.

News magazines played a vital role in informing the public before the arrival of the Internet, said James McQuivey, a media analyst at Forrester Research.

"Newspapers were historically too close to the news to step back and do analysis. Monthlies missed key events in a rapid-paced world," he said. "Newsweeklies filled the gap between them."

With analysis now being provided by a multitude of websites and blogs targeting a wide range of political viewpoints, newsweeklies have struggled to reposition themselves away from the general interest niche, McQuivey said.

"In the end, it's unclear why so many newsweeklies are necessary," he said. "The Internet will sweep most of them away in due time."

Allen Weiner, a Gartner analyst, said the move by Harman has many in the industry perplexed.

"There is nothing in his background that seems to suggest that he has some magical answer to this, or knows of some business model that nobody else knows of," Weiner said. "I guess for the moment that he's willing to take on a lot of debt, which he most certainly will do. But while we all know he's wealthy, we don't really even have an idea of how deep his pockets are."

Harman Kardon was sold to Beatrice Foods in 1976 when Harman was named U.S. Deputy Secretary of Commerce under President Carter. Leaving government in 1980, he bought the company back and named it Harman International Industries Inc., serving as its chief executive until 2007. He's currently chairman emeritus of the publicly traded company, which recorded about $3 billion in sales last year.

But his personal fortune has taken hits in recent years. Although he has not had to disclose his finances, his wife — U.S. Rep. Jane Harman (D-Venice) — has, at least to some extent.

According to the Roll Call newspaper that covers Capital Hill, two accounts listed in Sidney Harman's name valued at $50 million each in a 2007 disclosure statement by the congresswoman had dropped by a combined $70 million in her report for 2008.

But there was plenty left over. Last year, Roll Call named Jane Harman the third-wealthiest member of Congress, with a net worth of at least $112 million.

Jane Harman said her career had nothing to do with her husband's acquisition of Newsweek.

"Sidney was quoted recently as saying: 'I don't tell Jane how to vote and she doesn't tell me how to run my business,' " she said in a statement. "That's our rule and we stick to it."

The sale is expected to be completed by the end of September. At that point, current editor Jon Meacham will leave. Meacham is the author of the 2008 book "American Lion: A Biography of President Andrew Jackson" and several other highly regarded biographies.

He said in an e-mail to his staff when the sale was announced, "I wish Mr. Harman and his team all the success in the world."

Trent Gegax, who worked for Newsweek as a reporter and editor from 1994 to 2006, believes the magazine will need an abundance of it. Newsweek, he said, always considered itself a scrappy, lively underdog. Harman could be embracing the magazine in that tradition.

"We always kind of thought of ourselves as the Viet Cong versus the U.S. military when I was there; we were always shorthanded economically," said Gegax, who now runs an investment firm in New York. "It's an interesting play and he's trying to do a great thing. Maybe he's a romantic and thinks he can save Newsweek.

"And maybe he can, but you've got to doubt it. I doubt it."

Cable Focuses on Internet while Satellite TV Grows


U.S. cable television companies wooed home Internet users from rivals in the second quarter, helping offset a trend that has seen their television customers flee to top satellite player DirecTV Group.

Time Warner Cable Inc and Cablevision Systems Corp reported on Thursday, like Comcast Corp last week, that they successfully added Internet subscribers in what is now a key focus for companies that were originally built on the back of cable TV programming.

Time Warner Cable Chief Executive Glenn Britt said on a conference call that successfully marketing Internet access is as important, if not more so, as selling bundles of TV shows.

"Broadband is still growing nicely and becoming a more important part of people's every day lives and we're seeing tangible evidence the consumers are willing to pay more for the speed and reliability," Britt said.

Time Warner Cable added 85,000 broadband subscribers during the quarter, while Cablevision added 27,000. Comcast, the No.1 U.S. cable company added 118,000.

With rising programming costs in their video businesses, cable companies see broadband, with its relatively fixed costs, as a more profitable business to grow.

Cablevision for instance said it plans to offer more video applications to customers who use Internet-enabled devices at home and free Wi-Fi connections to its customers around major spots in its local area.

"Broadband is increasingly important for cable companies," said Collins Stewart analyst Thomas Eagan. "It has become the strategic focus, with TV following."

The top two cable companies both lost video subscribers during the quarter: Comcast lost 265,000, while Time Warner Cable lost 111,000. Cablevision which has been competing aggressively with Verizon Communications in its New York area managed to buck that trend in the quarter by adding 2,900.

DirecTV Group added 100,000 U.S. subscribers, beating the forecasts of most analysts, some of which had worried the company might lose customers due to the slow economy and competition from cable and newcomers to the pay-TV market like Verizon's FiOS and AT&T Inc's U-Verse.

"For years, questions have swirled about DirecTV's ability to sustain subscriber growth in the U.S. Not to worry. Today's results suggest that subscriber growth is just fine, thank you," said Bernstein Research analyst Craig Moffett in a client note.


Both Time Warner Cable and Cablevision posted financial results ahead or in line with expectations.

Time Warner Cable's net income rose to 95 cents a share, beating average Wall Street forecasts for 93 cents. While its revenue rose 5.8 percent to $4.73 billion, ahead of average forecasts of $4.68 billion, according to Thomson Reuters.

"Overall they struck a good balance between customer and financial growth," said Eagan of Collins Stewart.

Cablevision's net income was 20 cents a share sharply missing an average Wall Street forecast of 40 cents, mainly due to the one-time loss on extinguishment of debt. Bernstein Research said excluding that loss, Cablevision's profit was in line with consensus.

Revenue rose 5.8 percent to $1.802 billion ahead a forecast of $1.769 billion, according to Thomson Reuters.

Bernstein's Moffett said Cablevision's second quarter had shown "almost no discernible weak points".

DirecTV, which also added 415,000 subscribers in Latin America, posted an adjusted profit of 60 cents a share, in line with expectations. Its revenue rose 12 percent to $5.85 billion.

Shares in Time Warner Cable and Cablevision have risen more than 40 percent and 30 percent respectively since the start of the year as investors have bet that cable will be a leader in future communications thanks to its broadband strength.

13 August 2010

US FDA warns Pharma firm about Facebook Promotion

Bloomberg / Business Week

The U.S. Food and Drug Administration has warned a pharmaceutical company that its use of the Facebook Share button to promote a cancer-fighting medication violates FDA requirements for disclosing information about drugs.

The FDA, in a letter sent to drug-maker Novartis Pharmaceuticals July 29, tells the company that its use of Facebook Share to promote Tasigna is incomplete and misleading.

This is likely the first time the FDA has issued a warning to a pharmaceutical firm for using Facebook to promote its products, said Jeffrey Chester , a privacy advocate and executive director of the Center for Digital Democracy.

The FDA, which posted the warning letter on its website this week, asks Novartis to stop using Facebook Share to promote the leukemia drug.

"The shared content is misleading because it makes representations about the efficacy of Tasigna but fails to communicate any risk information associated with the use of this drug," said the FDA letter, signed by Karen Rulli, acting group letter of the agency's Division of Drug Marketing, Advertising, and Communications. "In addition, the shared content inadequately communicates Tasigna's FDA-approved indication and implies superiority over other products."

FDA rules require that most medication promotional pieces contain information about risks associated with taking the drug, the letter said. In addition, promotional materials are misleading if they suggest a "drug is safer or more effective than another drug when this superiority has not been demonstrated by substantial evidence or substantial clinical experience," the letter said.

Novartis also failed to notify the FDA of the Tasigna promotion, as required by the agency, the letter said.

Novartis, in a statement, said it takes the FDA letter "very seriously."

"We have addressed its concerns by taking the direct and immediate action of taking down the widget referenced by the FDA," the company said. "Novartis will continue to have active discussions with the FDA to understand fully all of the concerns. We also will assess all of our Web assets and materials based on these concerns."

The warning letter highlights a problem with Facebook and other websites targeting advertising dollars from pharmaceutical and companies, said Chester, who asked the FDA in March to investigate the online marketing of drugs. Facebook should be responsible for creating safeguards for the marketing of medications and other health products on its site, he said.

Websites "see digital dollars in their bottom lines and are ignoring the health risks confronting consumers who are targeted using social-media marketing," Chester said. "This letter is a wake-up call -- for the pharma industry, Facebook, and social media application companies."

The FDA's letter is appropriate, Chester added. "Risk warnings must be prominently disclosed -- and not purposefully ... hidden by making a consumer click for more information," he said.

A representative of Facebook didn't have an immediate comment on the letter or Chester's perspective.

Cable Firms Eye Tablet Space

The Wall Street Journal
Comcast, Verizon and Others Plan New Apps; Licensing Content Slows Process

More TV shows and movies may be coming to tablet computers like Apple Inc.'s iPad—for those who pay to watch.

At least seven of the ten largest subscription-TV providers in the U.S. are building new tablet-computer applications that offer select TV shows and movies to their existing subscribers, often for little or no additional fee.

The efforts are going head-to-head with a handful of existing video applications from TV networks and online video services such as Netflix Inc. and Hulu LLC, hoping to compete by offering more content and features that integrate with home TV service.

Comcast Corp. is testing a free iPad application that allows existing subscribers to search for and watch some TV shows on the go, and plans to release it by the end of the year. The company says it already has content providers lined up for the service, but declined to specify which ones.

Verizon Communications Inc. plans to release an app for renting movies on devices than run Google Inc.'s Android operating system in the fall. The app will be targeted at its 3.2 million Fios TV subscribers, but it will eventually be available to nonsubscribers, said Shawn Strickland, Verizon's vice president of consumer strategy and planning. He said the company also aims to launch the service for other devices like the iPad.

Time Warner Cable Inc. plans to launch an iPad app that would let subscribers watch TV shows over Wi-Fi in "the not too distant future," according to a spokesman.

The new apps come as pay-TV providers wrestle with how to keep people paying big monthly subscription fees, despite growing traction for Web-video services like Netflix. Some providers have started to offer paying subscribers the ability to watch TV shows over the Internet, a concept dubbed "authentication" or "TV Everywhere." The rise of video-friendly devices like the iPad has made that push more urgent.

"If we can't keep pace with what consumers want, our product is rapidly going to be less and less interesting," said Ira Bahr, chief marketing officer for Dish Network Corp.'s satellite-TV service, which plans to offer video-watching capability for subscribers in iPads and Android tablets around the beginning of the fall. The service requires either a special set-top box or an adapter, which involve an additional cost.

Charlie Herrin, who runs product development for Comcast Interactive Media, said the cable giant is investing in services for tablets to make its offerings more attractive to consumers. "For certain users, it's a more convenient form factor to curl up in a bed or in a chair watching something," he said.

Comcast's new application will ask subscribers to log in, and include a search function to display all the available episodes of a show—whether they're on live TV, on traditional video-on-demand or available to watch on the iPad.

The new applications arrive as media companies and new upstarts have been aggressively exploiting the Web to offer programming directly to consumers, while paid television providers' Web offerings have often lagged behind. Now, major TV distributors are trying to fight back, with online access through TV Everywhere-type services.

But it has been slow going. Comcast and Verizon, for their part, have already signed up several networks, such as Time Warner Inc.'s HBO, TNT and TBS to participate in offerings for authenticated subscribers, available via computer Web browsers. Those offerings are growing more comprehensive, but they don't include the full array of TV content. In some cases it takes additional rights to put programs on the iPad or other mobile devices, according to people familiar with the matter.

Media companies aren't keen to cede them right away. Some are still working out their own digital and mobile strategies. Some also worry whether online video will ever supply enough cash to support big-budget productions.

DirecTV Inc., the second-largest U.S. television distributor by subscribers, says it has already worked out much of the technology to authenticate subscribers and put video on tablet computers, something it plans to do on the iPad this season with National Football League games for an additional $50 on top of its $300 "Sunday Ticket" offering. But it isn't planning an imminent launch for broader TV content on the Web or tablets in part because of slow progress in licensing. "We're going on the path to negotiate deals with content owners," said Derek Chang, who oversees content acquisition at DirecTV, adding that he hopes to have "critical mass" to launch an authentication-type service, with mobile applications, "within the next year."

Some distributors are trying to get around the issue by offering services where they say they have existing rights. Dish Network is integrating video-watching ability into its existing TV-remote app by tapping into a technology called Slingbox that it already offers in a pricier set-top box. Slingbox, owned by sister company EchoStar Corp., currently gives users access to shows and recordings on their home set-top boxes from computer Web browsers and mobile phones.

Meanwhile, Cablevision Systems Corp., said last week that it is conducting trials that allow people to watch video on iPads and other devices, so long as they are in their homes. The reason: Video outside the home "requires different rights structures," Tom Rutledge, Cablevision's chief operating officer, said in a conference call to discuss second-quarter results.

"We're essentially putting cable TV on any device that can function as a TV in the home," he said.

09 August 2010

DirecTV, Cablevision Sales Rise as People Watch Television to Save Money


DirecTV, Cablevision Systems Corp. and Time Warner Cable Inc. reported second-quarter sales that beat analysts’ estimates, signaling consumers are continuing to spend on pay-TV programming as the economic recovery sputters.

Each company added subscribers in the period ended in June and customers spent more on premium services such as high- definition set-top boxes and digital-video recorders.

Consumers may be putting more value on their time at home and curbing restaurant and cinema visits, benefiting the pay-TV providers, said Tom Eagan, an analyst at Collins Stewart LLC in New York. More Americans than projected filed applications for unemployment insurance last week, indicating firings remain elevated as the U.S. economic growth moderates.

“Cable and satellite has been relatively recession proof,” Eagan said. “Household spending is holding up because people in general see cable and satellite-TV being a relatively good deal versus other forms of entertainment.”

Time Warner Cable, the second-largest U.S. cable-television company, boosted sales 5.8 percent to $4.73 billion, beating the $4.68 billion analysts projected. DirecTV’s sales rose 12 percent to $5.85 billion, exceeding analysts’ $5.73 billion estimate. Cablevision’s sales rose 5.8 percent to $1.8 billion, compared with the $1.77 billion average projection.

DirecTV added $1, or 2.6 percent, to $38.90 at 2:23 p.m. New York time in Nasdaq Stock Market trading. Cablevision fell 2 cents to $27.52 on the New York Stock Exchange, and Time Warner Cable dropped 21 cents to $58.81. Contrary to analysts’ predictions, Time Warner Cable didn’t announce a stock buyback.

DVRs, Pay-Per-View

Cablevision, which competes against Verizon Communications Inc. for New York area TV, phone and Web subscribers, won 75,900 new customers last quarter, led by high-speed Internet users. Customers subscribing to more products helped the Bethpage, New York-based company boost the average monthly revenue per video customer 6.8 percent to $149.12.

“We’re holding up quite well and managing to continue to win back customers from our competitors,” Cablevision Chief Operating Officer Tom Rutledge said on a conference call today. He estimates that 40 percent of Cablevision’s customers who have left to try Verizon’s FiOS product return.

DirecTV’s average revenue per user gained 5.7 percent to $87.90, as the company equipped U.S. customers with advanced and expensive features, such as multiroom DVRs and pay-per-view movies. The El Segundo, California-based company gained a net 100,000 customers in the U.S. and 415,000 in Latin America, helped by World Cup soccer matches shown in high definition.

Premium Movies

“For the first time in several years, our year-over-year buy rates increased for premium movie channels,” said DirecTV’s Chief Financial Officer Patrick Doyle on the company’s conference call. “In addition to premiums, we also saw a solid year-over-year growth in pay-per-view movies.”

To maintain that growth, DirecTV plans to introduce more premium products by the end of the year. Those include an enhanced cinema selection, and an NFL Sunday Ticket “to go” service that will provide live video streams from games to mobile devices like the iPad or a computer for an extra $50.

Time Warner Cable, based in New York, added 110,000 new subscribers. Its subscription revenue rose 5.1 percent to $4.52 billion as more users selected higher-end services like digital video recorders and the company raised prices.

Weakness Ahead?

Still, a cooling economy means employers will resist taking on more staff, raising the risk consumer spending will weaken enough to impact pay-TV providers, too. Time Warner Cable said the sluggish economy limited its second-quarter subscriber gains, and said it saw such weakness continue into July.

“If you look at the key indicators in the economy, things like vacancy rates and unemployment rates - we’re still at exceptionally high levels,” Rob Marcus, Time Warner Cable’s chief financial officer, said on a conference call. “It shouldn’t be terribly surprising that we continue to see weakness in subscriber net adds.”

Initial jobless claims climbed by 19,000 to 479,000 in the week ended July 31, the most since April and exceeding the highest estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington.

Weak housing starts have also affected subscriber growth numbers. Builders broke ground on fewest new homes in eight months in June after the expiration of a U.S. government tax incentive caused sales to slump.

“The market for housing is still terribly soft,” Cablevision’s Rutledge said. “There is virtually no construction of housing going on in our footprint and occupancy rates are still low. So you don’t have any of the wind at our back.”

Growth in the U.S. economy slowed to 2.4 percent in the second quarter from 3.7 percent pace of expansion in the first quarter. The world’s largest economy is recovering after shrinking 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009.