John Malone Deals Himself Out At DirecTV

from Business Week

Sometimes even a wheeler-dealer like John Malone outsmarts himself. That’s seems to be the situation at DirectTV. (DTV), where the razor sharp media baron seems to have dealt himself out of installing his own choice as CEO of the satellite TV giant despite once owning 57% of the company’s stock. Instead, he controls 24% of the company’s votes, but seems to have been bottled up by a very independent DirecTV board.

Those are the details that are emerging from a recent SEC filing by DirecTV. The satellite company clearly wanted to stop Malone, who buys and sells companies faster than most people change socks, from exerting too much control over the company. So in what has to have been a wing ding of negotiations, the DirecTV board swapped the DirecTV stake that Malone’s Liberty Media (LMDIA) once held for shares in DirecTV that Liberty will distribute to its shareholders. In addition, DirecTV took a $2 billion loan off Liberty’s hands that it used to buy those shares in the first place, but took Liberty’s 65% stake in the Game Show network and three Fox Sports regional networks. Malone got super-voting shares that are capped at 24% of the company’s voting shares.

What motivated DirecTV’s board to do the deal? They were angling for “the elimination of a single shareholder …with the ability to veto change of control provisions,” the company said in its SEC filing. More important, the board wanted to “reduce the level of influence that Malone could exert,” they added. Anyone need more of a roadmap than that?


Why’d Malone do the deal? Mostly for tax reasons, which seem to drive much of what the media baron does. The stock-for-stock swap allows him to avoid a ton of taxes on the appreciation in DirecTV’s stock in 2006. DirecTV sweetened the deal by giving Liberty shareholders a 5.6% premium on top of that tax-free treatment. DirecTV’s shareholders will vote on the transaction on Nov. 12.

But in doing the deal Malone seems to have also dealt himself out of a potentially richer prize. He tried for months – and seems to have given up – the idea of installing his top lieutenant, Liberty CEO Greg Maffei, as DirecTV’s CEO. Maffei is a sharp operator, and a great dealmaker, and more than likely Malone would have wanted him to begin peddling DirecTV to AT&T (T) or some other buyer. I'm figuring the board wanted to keep Malone's imagination in check.

Instead, the DirecTV board, which has eight independent members (Malone is the company’s chairman and Maffei is a board members,) blocked Maffei, who now tells folks he is no longer interested. In August, the board created a search committee, which Malone heads. But the board has clearly no intention of allowing him to railroad them into taking his choice as CEO. “They gave him what he wanted with the stock swap,” says one source close to the dealmaker.” “And that’s about all they intend to give him.”

More than likely DirecTV will name its CEO sometime in late November or early December. The candidates include Bruce Churchill, who heads DirecTV’s Latin American unit, and Cablevision president Tom Rutledge. The search committee was created after DirecTV CEO Chase Carey’s resignation in June to become News Corp(NWS)president and chief operating officer. Larry Hunter, the satellite opeator’s excecutive vice-president for legal, human resources and administration, has been serving as interim CEO since Carey’s departure.

Viacom Up, Sees TV Advertising Demand Rising

from the Wall Street Journal

Viacom Inc. executives said Tuesday that they were seeing increased demand and strong prices for television advertising heading into the holiday season, adding to an up-tempo chorus from media executives after a brutal year in which advertisers have slashed budgets.

The comments came as Viacom reported a 15% increase in second-quarter income, with cost cutting boosting brisk ticket sales for summer blockbuster movies.

Viacom, which owns a suite of cable networks including MTV, Nickelodeon and Comedy Central, saw its U.S. ad revenue decline 4% in the third quarter from the year-earlier period. But that was an improvement from a 6% decline in the third quarter.

"There is demand out there at the moment," Philippe Dauman, Viacom's chief executive, said of the advertising market. He said prices in the fourth quarter for last-minute ads, known as "scatter," are up "double-digit" percentages above ads sold in advance, in what is called the "upfront" market.

But Mr. Dauman added that many commercials remain unsold for the fourth quarter, because both cable and broadcast networks received fewer advance commitments in the upfront season.

"The next several weeks going forward will really tell the tale, as companies in different industries evaluate their own condition," Mr. Dauman added during a conference call to discuss results.

There are some signs that advertisers are spending more money, however, after months of cutting commitments and tightening purse strings. Some cable-TV networks are running out of spots to sell in November and early December, driving prices for last-minute ads well above prices for those sold in advance, ad buyers say.

"Inventory's very tight on some networks, especially in November or early December," said Chris Boothe, president and chief operating officer of Publicis Groupe SA's Starcom USA in an interview.

In part, TV ad spending appears increased because it comes against easier comparisons to last year's historic economic collapse. Increased prices for ads sold close to airdate also face easier comparisons to the lower prices TV networks were forced to accept over the summer in the upfront market. It was the first time since 2001 that many major network groups were forced to take across-the-board rate cuts.

Executives at major advertising holding companies have said recently that it's too early to call an ad recovery. While the tone of conversations with advertisers about the economy is improving, advertisers "generally remain cautious about committing to new marketing expenditures or increasing spending behind existing efforts," Michael I. Roth, chief executive of Interpublic Group of Cos., said last week on a conference call to discuss third-quarter results.

But ad buyers say some advertisers that cut money earlier in the year are putting that money back into the ad market in time for the holidays. Viacom's Mr. Dauman said he sees potential growth in some categories of advertisers, including technology companies and even car manufacturers.

"You see some categories that suffered a lot in the recession, such as automotive, who are coming back in," Mr. Dauman said.

Viacom reported a profit of $463 million, or 76 cents a share, up from $401 million, or 65 cents a share, a year earlier. Excluding a tax benefit as well as an after-tax loss related to paying off debt in the latest quarter, earnings rose to 69 cents a share from 55 cents a share. Analysts polled by Thomson Reuters expected earnings of 57 cents a share on revenue of $3.3 billion.

Revenue dropped 2.7% to $3.32 billion, as Viacom's Paramount movie studio saw revenue decline 6.5% to $1.2 billion. Paramount's results were dragged down by enduring weakness in DVD sales, more than offsetting an 16% increase in world-wide theatrical revenue from big summer blockbusters like "G.I. Joe: The Rise of Cobra."

The home-video picture could improve somewhat in the fourth quarter because of DVD releases of its summer popcorn films, Viacom executives said. "Transformers: Revenge of the Fallen" has sold 8.3 million DVDs since its release on Oct. 20, Mr. Dauman said.

For the last year, Viacom's results have also been dragged down by the poor performance of its flagship MTV cable channel. In the third quarter, viewership in its target audience of people between 12 and 34 years old declined 2.8%, compared with the year-earlier period, according to Nielsen Co. The company has shifted executives and increased the number of programs on the air, helping slow the decline in recent quarters.

"We are continuing to adjust MTV's content mix and schedule, bringing in more original shows, as well as targeted acquisitions that are being used to help lift daytime and afternoon ratings," Mr. Dauman said, adding that MTV will have a "bigger marketing presence" off the channel.

Viacom's new version of the "Rock Band" game, which features songs from the Beatles, helped boost the company's revenue, selling 595,000 copies in September, according to tracking firm NPD Group. Because of the expensive hardware sold with the game, "Rock Band" is a drag on Viacom's profit margin. But Tom Dooley, Viacom's chief financial officer, said the company expects the game to break even or become "slightly profitable" in the fourth quarter, depending on how many copies sell in the holiday period.

"It really depends literally on the next three to six weeks," Mr. Dooley said.

CNN Launches Mideast News Center

from WorldScreen

ABU DHABI: CNN has opened its new news-gathering and production hub in the Middle East, which will host the global network's first daily live news show from the region.

Tony Maddox, the managing director and executive VP of CNN International, officially opened CNN Abu Dhabi today alongside Phil Kent, the chairman and CEO of Turner Broadcasting System, and Christiane Amanpour, chief international correspondent. “The Middle East has played a significant role in CNN’s heritage and is part of our DNA, two of our earliest bureaus were in Cairo and Jerusalem,” said Maddox. “This region unquestionably plays an integral part in world affairs, and the new hub in Abu Dhabi gives us the opportunity to get to the heart of the rich and diverse stories across the political, business, social and cultural spectrums.”

“The establishment of a permanent broadcast and production centre in the Middle East by CNN is a significant and unique move by a Western news broadcaster,” he continued. “It gives CNN a powerful base from which to coordinate seven regional bureaus and showcase a new daily news show from the Middle East.”

The facility in Abu Dhabi will coordinate newsgathering for the seven CNN operations in the region—Baghdad, Beirut, Cairo, Dubai, Jerusalem, Kabul and Islamabad—with a staff of more than two dozen. Built as a fully high-definition and online production facility, CNN Abu Dhabi houses a four-camera digital studio with 24/7 live capability, edit suites and fully integrated newsroom.

With CNN Abu Dhabi the network launches its first daily live news show from the Middle East, Prism, hosted by Stan Grant. Also due to be produced at CNN Abu Dhabi are Inside the Middle East, now in its sixth year, and Marketplace Middle East, which launched two years ago.

Comcast, GE Try To Find A Price

Wall Street Journal

Comcast Corp. and General Electric Co. are wrestling over the value of NBC Universal in negotiations that would give Comcast control of GE's television and movie company, and an agreement could come within the next three weeks, people familiar with the talks said.

GE and Comcast executives held a series of sessions in New York last week, including presentations from NBC Universal executives on their units, people who attended the meetings said.

Those meetings completed much of the due diligence for a Comcast deal, some of those people said. The Comcast-GE talks could still fall apart.

Meantime, GE is exploring other options for NBC Universal, according to people familiar with the matter. GE and media company News Corp. are in preliminary conversations about an alternative NBC Universal deal, said a spokeswoman for News Corp., which also owns The Wall Street Journal. "It's a great set of businesses, and we're taking a look at it," she said.

One of the biggest outstanding issues for Comcast and GE remains the value of NBC Universal. It is central to a set of transactions that would merge Comcast's television networks with NBC Universal, creating a television and movie behemoth controlled by the nation's largest cable company.

In the transaction Comcast and GE are considering, Comcast would contribute cash and cable networks in return for an initial 51% of the expanded entity. GE, which now owns 80% of NBC Universal, would retain 49%. French telecom and media company Vivendi SA, which owns 20%, would be bought out.

Comcast has tried to pull NBC Universal's value down, minimizing the cash it would need to contribute to a deal, people familiar with the matter said. GE, citing rising media stock prices since summer, has pushed for an increase, they said.

Any Comcast deal could take a year or longer to clear regulators, people familiar with the talks said. Public interest groups and competitors of NBC Universal and Comcast also could urge lawmakers or regulators to put conditions on any deal.

A News Corp. deal would be tricky, too. Regulatory rules would prohibit News Corp., which owns the Fox broadcast network, from owning the NBC network. A person familiar with the matter said that any News Corp. deal would exclude NBC, local TV stations owned by NBC Universal and cable-news channel MSNBC. Dividing NBC Universal could make a potential deal more difficult, another person familiar with the matter said.

One person familiar with the talks said Comcast wasn't worried about talks with News Corp., calling them a GE negotiating tactic.

Any other potential deals could also face an uphill battle, given the momentum of the Comcast talks. GE and Comcast have been discussing the outlines of a deal since early spring, according to people with knowledge of the talks.

Brian Roberts, Comcast's chief executive, played a central role in pitching a potential deal to Jeffrey Immelt, GE's chief executive, a person familiar with the matter said. Another person described the role of Messrs. Roberts and Immelt in talks as "huge."

What Happened To NBC?

Detroit Examiner

Bob Wright, the former Chairman and CEO of NBC Universal spoke with FOX Business Network’s Liz Claman about the TV network that went from stellar to cellar.

Bob Wright was named president and CEO of NBC in 1986, in February 2007, Wright, after 21 years, was succeeded by Jeff Zucker.

Under Bob Wright’s leadership, NBC was transformed from a broadcast network into a global media powerhouse, leading the way in TV programming, station ownership, and television production. In 1986, Wright's first year at NBC, the network had revenues of $2.6 billion, by 2006, his last full year at the helm, company revenues had grown to $16.2 billion. To say Bob Wright was a good businessman would be an understatement.

Among his achievements, Wright diversified NBC by launching cable networks CNBC and MSNBC. He also acquired entertainment cable network Bravo and Spanish-language broadcaster Telemundo, before orchestrating the VUE acquisition, which added to NBC the Universal Pictures film studio, Universal theme parks, and a collection of fast-growing cable networks such as USA Network and SCI FI Network (now called Syfy).

After his grandson was diagnosed with autism in 2004, Bob Wright and his wife, Suzanne, established a foundation called Autism Speaks, which is now the largest organization representing families and people with autism in the U.S. with affiliates in the U.K. and Canada.

He spoke with FOX Business Network’s Liz Claman about Autism Speaks and Liz took the opportunity to ask about what was going on at NBC now.

Claman: “Got to get to the Comcast/NBC story, we hear Comcast for $6 billion in cash and a couple of networks like E! Entertainment and Golf Channel would get operating control of NBC. How for $6 billion and two networks do they get operating control of a network that the price is valued at $30 to $35 billion?”

Wright: The answer is you have to have a minimal view of this. This is a depressed time for media. NBC Universal value is lower today than three or four years ago.

Claman: But I look at this and I think is now really the time?

Wright: I don’t think an IPO is such an attractive proposition right in this market either. And I’m sure the French are very sophisticated so they’re not going to miss that.

Claman: So not the right time for an IPO? You know when you ran NBC, it was number 1, you had must see TV, here’s what one analyst said to me, the NBC Empire has fallen apart since Bob Wright left. Looking through different lens now, what went wrong in the last couple of years?

Wright: I think it’s been a tougher time for broadcasting. We’re not on a roll; we haven’t been on a roll on the entertainment side where we generate so much money.

Claman: Jay Leno, that’s not doing well. Was that a good bet?

Wright: It’s a conservative position. Jay is an extremely well-recognized person. He also happens to work harder than about anybody in television. Good for your 47, 48 weeks a year on the air. That’s like local news. So over time you know he’s there and there at 10:00. Not like where is he this week? Is he coming back?

Claman: But Law and Order SVU did better in that 10 o’clock time slot.

Wright: But they don’t do that many episodes. He does his episodes that go for 48 weeks. It’s going to -- you make a decision like that, Liz, you have to be, have to have a long time view. When News Corporation went into this business, you have to have a long point of view.

Claman: They do?

Wright: It’s a decision with a long point of view. You know, and Jay has talent and ability to produce the show that is going to work and they’ll have to wait a while.

That is a lot better way to put it than “He will do better during reruns.” Jeff Zucker started failing even before he was promoted to CEO at NBC Universal. Following the merger with French media empire Vivendi Universal, he was promoted to president of its Television Group in May 2004. During Zucker's tenure, NBC slid from first place to fourth place in the ratings. Shows that Zucker championed such as Father of the Pride and the Friends spinoff Joey were considered failures.

Yet he was then promoted to Chief Executive Officer of NBC in 2005 and President and CEO of NBC Universal in 2007.

NBC needs to admit it was a mistake putting Conan O’Brien in as the host of the Tonight Show and fix the problem. While Jay Leno may do well in the long haul, when you are losing money and in the ratings cellar you should be looking for a quicker solution.

Who ever ends up with NBC, the future is bright, there is no way to go but up from here.

Search Market Exploding With Innovation

Mercury News

It's a global battle whose foot soldiers will be engineering teams working inside a few square miles of Sunnyvale and Mountain View, with billions of dollars in advertising at stake.

Almost a decade after Google became a household name, Microsoft's launch of its Bing search engine, followed by Microsoft and Yahoo's deal to collaborate on search, could give the world's dominant Internet search engine its first serious challenge in years, as search becomes a key front in the looming competition between Google and Microsoft.

But regardless of who wins this competition, the beneficiaries are everyone who uses search engines, as quickening innovation improves the quality of information and delivers it in more useful packets. This year for the first time, a majority of the roughly 180 million U.S. adult Internet users typed a query into a search engine on a typical day, and search is gaining on e-mail as the most common online task.

Thanks to new technology, users will get their answers faster, from more than just text, and if the companies are successful, may find search engines are better at understanding what they are looking for.

"Search is going to change more in the next year than it has in the past five years," said Ben Schachter, an analyst with Broadpoint AmTech, who believes the pace of search innovation is the greatest in at least a decade.

Deluge of innovation

The pace of new features rolled out by Google, Yahoo and Microsoft has been furious in recent weeks.

At the Oct. 20-22 Web 2.0 industry conference in San Francisco, Microsoft announced a deal that allows Bing to search up-to-the-minute postings on Twitter, with much of the software engineering done at Microsoft's Mountain View campus. Google scrambled to announce its own real-time search deal with Twitter several hours later.

Not to be outdone, Google last week unveiled a new service that allows people to search for a specific song title and see a link to that song on MySpace or Lala in their search results — a service Google described as yet another way to speed users to results.

Within minutes of Google's music launch, Yahoo posted a company blog reminding that its search engine has had the ability to show links to free audio files in a partnership with Rhapsody since 2008.

Google has been unveiling so many search changes — even tweaking the size of the search box on its sacrosanct home page and pinching advertising on the results page slightly toward its center— that it has begun a "This Week in Search" item on its company blog to track new features.

Yahoo, which has been working aggressively to make sure the look and feel of its search engine remains distinct, even though its underlying results eventually will be generated by Bing, announced a new "Search Experience" in September. Among the changes: Yahoo allows users to bundle their search results from an array of topical providers they can select. A search for a restaurant would allow a user to click on a link to Yelp results; a sports search would offer bundles of results from ESPN, or a local newspaper.

"Now the real competitors have emerged, and it's mainly Google and Microsoft, with Yahoo in there because of its brand identity," said Greg Sterling, principal of Sterling Market Intelligence.

Beyond the blue links

On each of the three biggest search sites, the basic 10 blue hyperlinks that have been the essential product of an Internet search are rapidly being augmented or replaced by deeper, richer and more detailed nuggets of data — for example, a map, photos, restaurant reviews embedded in Yahoo search results for "San Jose sushi," not just the basic links to restaurant Web sites.

Since Microsoft launched Bing in June — calling it a "decision engine" for its ability to filter out unimportant information — the new search engine has gained more than 156 million monthly searches, while Google has seen a slight decline, according to comScore.

While Google and Yahoo say Bing is not driving the innovation surge, some analysts are not convinced. "I do think Bing has put some pressure on Google," Sterling said.

Microsoft, Yahoo and Google say they are innovating because people's expectations for a search engine are far higher than they were even five years ago. People no longer search for a Web site; now they expect to find a specific piece of information, like the cheapest airfare to Chicago.

"We increasingly find that people think about search the way they think about a public utility," said Susannah Fox of the Pew Internet & American Life Project, which compiled the search data. "When you turn on a tap you expect clean water to come out, and when you do a search you expect good information to come out."

The big three search engines also search more than words. Bing offers visual searches, allowing users to browse and filter images of politicians, celebrities, album covers, or even yoga poses, as they search for information.

Clicks that count

Increasingly, a successful search is about an engine's ability to reveal a "Web of objects" — images, videos, audio files, or blog posts — rather than just a web of pages, said Larry Cornett, Yahoo's vice president for consumer products and search.

"We kicked off this huge innovation in search engines well over a year ago," Cornett said, "before anyone was doing anything else but the 10 blue links."

The new Yahoo page offers a "Search Pad" where users can note their searches. In an effort to make the results more relevant to an individual by tracking their search history, Yahoo is reading it, too.

"Every search engine looks at clicks," Cornett said. "We tried to be very open about that and say, not only is that going on, but, hey, do you want to use this for your benefit?"

At Google, speed remains king, said Johanna Wright, Google's director of product management for search.

In a recent experiment, it slowed its Web site by 0.4 seconds. The result, Wright said: People searched less.

Among the changes Google rolled out in the past three weeks are a "Jump to" link in the search results that allow a user to go directly to a keyword buried deep within a document, saving the user time, like the music search Google rolled out this week.

"Speed is something we take almost manically seriously," said Jack Menzel, group product manager for search. "We obsess about tens of milliseconds."

Microsoft, which has its Search Technology Center in Mountain View, says its philosophy boils down to helping people make a choice, sometimes limiting results when Bing decides a person knows what he is looking for.

A search for "UPS", for example, produces little on the results page but a box to enter your package tracking number, and the customer service number for UPS.

"What it amounts to is trying to build a mind-reader, to understand people," said Qi Lu, head of online services for Microsoft.

Microsoft also realized that its old search identity, called "Live Search,'' wasn't exactly hip, said Stefan Weitz, director of Bing Search.

"We wanted to make sure you could use it as a verb," Weitz said. "You want people to be able to say, 'I Binged that.' "