Reuters - Disney joins Hulu video site

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Disney joins Hulu video site

Thursday, Apr 30, 2009 11:38PM UTC

By Paul Thomasch

NEW YORK (Reuters) - Walt Disney Co will buy a 30 percent stake in Hulu.com, bringing popular TV shows such as "Lost" and "Grey's Anatomy" to the video website founded by NBC Universal and News Corp.

Disney's entrance, which comes after months of negotiations, means that three of the four major U.S. broadcast networks now have stakes in Hulu: NBC, News Corp's Fox and Disney's ABC. Only CBS Corp is absent.

Hulu officials declined to provide financial details on the deal on Thursday. A source directly involved in the deal, who did not want to be identified because all sides in the deal decided that the terms would be confidential, put Disney's stake at 30 percent, the same as the other networks.

Disney will get three seats on the 12-member board, the same as News Corp and NBC Universal.

Hulu has emerged as one of the most popular online video destinations since its launch in 2007. Though it still lags Google Inc's YouTube, some 380 million videos were viewed on Hulu last month, up 14.3 percent from February, according to market research firm comScore. It is now among the top three online video sites in the United States.

Conversations with CBS are continuing, said Hulu Chief Executive Jason Kilar. "We'd love to have them be a part of Hulu ... ultimately it's their decision," he told Reuters in an interview.

In a statement, CBS did not directly address its future plans regarding Hulu. The company said it believes in "controlling our own rights" for content across media.

"CBS has long employed open, non-exclusive content partnerships that allow fans across the Internet to engage with our programing in such a way that we control our distribution, sales and profit," it said.

When asked if CBS could join Hulu as an investor, News Corp Chief Operating Officer Peter Chernin told Reuters, "I'm not sure there's room, legally or economically, for another partner, but I think Hulu has consistently said they'd like to license CBS content."

Other media companies, including Viacom Inc, provide movies or TV shows to the website, but in deals that involve advertising revenue sharing and not ownership stakes.

The only other ownership stakes are held by Providence Equity Partners, which has two seats on the board, and employees of Hulu, whose chief executive has one seat.

Disney has previously sought to expand viewership of ABC shows offered on its website and its local affiliates' sites, on AOL.com and on Comcast Corp's Fancast site.

HULU EYES MUSIC, WORLD

To grow further, Hulu is studying adding music videos, sports and news, while it is also looking at expanding the service outside the United States.

"We would like to continue to have as much premium content as possible," said NBC Universal Chief Executive Jeff Zucker in an interview. NBC is a unit of General Electric Co

"Then expand Hulu internationally -- that should be the goal for 2010," Zucker added, declining to say what markets the partnership is considering.

Elsewhere, big cable network owners are working on plans to move more of their shows online but are trying to devise strategies that do not undermine the lucrative cable-network-affiliate-fee business model.

Time Warner Inc Chief Executive Jeffrey Bewkes is championing "TV Everywhere," a plan that will allow subscribers to watch cable TV shows online that they've already paid for with their package. Comcast is working on a similar plan called Online On Demand.

Disney shares rose 4.2 percent to $21.90 on the New York Stock Exchange.

(Additional reporting by Yinka Adegoke and Robert MacMillan; Editing by Lisa Von Ahn, Brian Moss and Brian Moss)

CNN - Justice David Souter to retire from Supreme Court, source says

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Justice David Souter to retire from Supreme Court, source says

After more than 18 years on the nation's highest court, Supreme Court Justice David Souter is retiring, a source close to Souter told CNN Thursday.

Souter will leave after the current court term recesses in June, the source said.

Filling Souter's seat would be President Barack Obama's first Supreme Court appointment -- and the first since George W. Bush's picks of Samuel Alito in 2006 and Chief Justice John Roberts in 2005.

Souter, 69, was tapped for the court by President George H.W. Bush in 1990, but disappointed many conservatives when he turned out to be a typical old-fashioned Yankee Republican -- a moderate, with an independent, even quirky streak.

Souter's departure will leave the two oldest justices -- and the most liberal -- still on the bench. Retirements for John Paul Stevens, 89, and Ruth Bader Ginsburg, 76, have been rumored for years, with many expecting that one or the other would be the first to give a new Democratic president a Supreme Court vacancy.

Souter's decision came as something of a surprise, although he has long been known to prefer the quiet of his New Hampshire farmhouse to the bustle of the nation's capital.

CNN - DNA leads to suspect in 1970s Los Angeles serial killings

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DNA leads to suspect in 1970s Los Angeles serial killings

A man who Los Angeles police believe raped and murdered dozens of women decades ago was arrested by cold case investigators this month after a computer matched his DNA to evidence from two killings in the 1970s.

John Floyd Thomas Jr., 72, may have begun his killings as far back as 1955 and he could be one of the worst serial killers in United States history, according to Los Angeles Police Chief William Bratton.

"We have yet to reach the depths of what he has done," Bratton said Thursday.

Until his April 2 arrest, Thomas was a Los Angeles insurance adjuster. Police now call him the "Southland Strangler" -- named for the geographical section of Los Angeles County where they suspect he killed at least 30 women and raped many more.

Thomas, who sits in a Los Angeles jail, has been charged with two killings -- in 1972 and 1976 -- but prosecutors will likely add more cases when he faces arraignment on May 20, Bratton said.

While Thomas was arrested "a number of times between 1955 and 1978" for sex crimes and burglaries, detectives did not have the technology to identify him as a suspect when the region was terrorized by a series of killings then blamed on the "Westside Rapist," Bratton said.

Officials, using new computer databases and software, are now "looking to see what the patterns were," said Los Angeles Police Deputy Chief Charlie Beck.

"A lot of work has yet to be done," Beck said.

Bob Kistner had just begun his law enforcement career in 1976 when his great aunt, 80-year-old Maybelle Hudson, was beaten, raped and strangled to death in the garage of her Inglewood, California, home.

He had just retired as a sergeant with the Long Beach, California, Police Department when he got the call recently that investigators linked Thomas to her murder.

"I waited my entire career for that phone call," Kistner said.

It was a routine call to Thomas from an LAPD officer last fall that led to the break in the case.

Thomas, a registered sex offender, is required by California law to provide a DNA sample for inclusion in the state's database.

Because of a backlog of cases, Thomas was not asked until October to report to a patrol station to have the inside of his cheek swabbed.

"He was very cooperative," the patrolman who took the sample said.

The California Department of Justice called LAPD cold case detectives on March 27 to tell them the DNA came up as a match to rape kit evidence collected from Ethel Sokoloff, who was 68 in 1972 when she was found beaten and strangled in her Los Angeles home.

Those detectives had sent the biological evidence from the Sokoloff case to a state lab in 2002 as part of their review of about 6,000 unsolved murders in Los Angeles that happened between 1960 and 1996.

DNA analysis in 2004 concluded that Sokoloff's killer also beat, raped and killed Elizabeth McKeown, 67, in 1976, Beck said.

The murders of three other older women -- including Maybelle Hudson -- were also linked by DNA to a common killer, he said.

"Because of Thomas's criminal background, the close proximity of his homes to murder locations, similar victim descriptions [white elderly females] and other evidence that suggests the type of modus operandi used by the suspect, detectives strongly believe Thomas is very likely the suspect in 'The Westside Rapist' cases," a police statement said.

Thomas is single, although he has been married five times, police said.

While he served about 12 years in prison between 1955 and the late 1970s for his previous convictions, he has no record since his last arrest in 1978, police said.

Deputy Chief Beck said the growing use of DNA databases and computers to match them to crime evidence will likely lead to more cold case killers being identified.

CNN - Scientists dig for lessons from past pandemics

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Scientists dig for lessons from past pandemics

If there's a blessing in the current swine flu epidemic, it's how benign the illness seems to be outside the central disease cluster in Mexico. But history offers a dark warning to anyone ready to write off the 2009 H1N1 virus.

In each of the four major pandemics since 1889, a spring wave of relatively mild illness was followed by a second wave, a few months later, of a much more virulent disease. This was true in 1889, 1957, 1968 and in the catastrophic flu outbreak of 1918, which sickened an estimated third of the world's population and killed, conservatively, 50 million people.

Lone Simonson, an epidemiologist at the National Institutes of Health, who has studied the course of prior pandemics in both the United States and her native Denmark, says, "The good news from past pandemics, in several experiences, is that the majority of deaths have happened not in the first wave, but later." Based on this, Simonson suggests there may be time to develop an effective vaccine before a second, more virulent strain, begins to circulate.

As swine flu -- also known as the 2009 version of the H1N1 flu strain -- spreads, Simonson and other health experts are diving into the history books for clues about how the outbreak might unfold -- and, more importantly, how it might be contained. In fact, the official Pandemic Influenza Operation Plan, or O-Plan, of the U.S. Centers for Disease Control and Prevention, is based in large part on a history lesson -- research organized by pediatrician and medical historian Dr. Howard Markel of the University of Michigan.

A cheerful man with thick-rimmed black glasses and a professor's manner, Markel was tapped by the CDC to study what worked and what didn't during the 1918 flu disaster. Markel and colleagues examined 43 cities and found that so-called nonpharmaceutical interventions -- steps such as quarantines and school closings -- were remarkably successful in tamping down the outbreak. "They don't make the population immune, but they buy you time, either by preventing influenza from getting into the community or slowing down the spread," Markel told CNN.

Markel describes a dramatic example in the mining town of Gunnison, Colorado. In 1918, town leaders built a veritable barricade, closing down the railroad station and blocking all roads into town. Four thousand townspeople lived on stockpiled supplies and food from hunting or fishing. For three and a half months, while influenza raged in nearly every city in America, Gunnison saw not a single case of flu -- not until the spring, when roads were reopened and a handful of residents fell sick. Life magazine: Killer epidemic of 1918

Nonpharmaceutical interventions, or NPIs, also proved effective in big cities such as New York, according to Markel. In fact, the sooner cities moved to limit public gatherings or isolate patients, the less severe their experience tended to be -- as much as an eight- or ninefold difference in case and death rates, he says. Based on this guidance, the CDC preparedness plan devotes dozens of pages to potential NPIs, from voluntary isolation to reorganizing company work schedules to reduce the density of people sitting next to each other in the office or while riding trains and buses.

If it seems odd to base medical strategy on 90-year-old newspapers, the approach is increasingly popular. "There's a big case for looking at history," says Simonson. "We call it archaeo-epidemiology. You go to libraries and places like that, dig around, collaborate with people like John Barry and try to quantify what really worked."

Barry is the author of "The Great Influenza," perhaps the signature history of the devastating 1918 pandemic. He says the historical record shows that isolating patients worked to slow the spread of flu in 1918, but that attempted quarantines -- preventing movement in and out of cities -- was "worthless."

While Barry supports the CDC's general containment strategy, in the past he has charged that Markel's findings rest on flimsy historical research. After the findings were published in the Journal of the American Medical Association, Barry wrote a letter in response, saying it wasn't swift action but rather an earlier wave of mild flu, acting like a vaccination, that was probably responsible for New York's relatively low caseload. In the letter, he noted, "New York City health commissioner Royal Copeland did tell reporters...that he would isolate and quarantine cases," but based on his own articles in the New York Medical Journal, he "apparently never imposed those measures."

It looks superficially like an academic feud, but in this field, different conclusions can suggest radically different approaches to quashing a pandemic. Nowhere is this more true than in research that builds computer models to predict the spread of outbreaks, based on previous ones. Markel, along with most analysts, says that in prior pandemics, the so-called R-naught number -- the number of new infections caused by each infected person -- has been approximately 2.0. The current U.S. pandemic control strategy is based on computer simulations that assume a flu virus with an R-naught between 1.6 and 2.4.

Last year, however, Simonson and Viggo Andreasen concluded that the true R-naught of the 1918 flu virus was probably somewhere between 3 and 4. Since an epidemic grows exponentially -- each person sickens three others, each of whom infects three more, and so on -- this is a tremendous difference. "It says it's going to be harder than we thought" to control a pandemic," Simonson says with grim understatement.

Barry agrees. "I do think that some of these things, like isolating [sick people], will take off some of the edge. We hope they'll do more than that. But to think they'll stop a pandemic, that is just not going to happen."

Simonson says control measures such as the steps taken by Mexico in recent days -- closing schools and restaurants, for example -- are still worth the effort. "It doesn't mean we should give up, because we don't know the R-naught [for swine flu]. We don't know how easily this spreads." But she adds, NPIs are at best a way to buy time. "We just badly need a vaccine. That's the most important thing."

To date, the CDC has emphasized personal protective steps such as washing hands and using hand gels, as opposed to tightening border controls or issuing formal directives to close schools or limit public gatherings. Such steps have been left to state and local officials, who have responded in a variety of ways.

One reason for the delay in stronger guidelines is that swine flu caught planners off guard; they had anticipated being able to recognize a pandemic overseas, weeks or at least days before it hit the United States. At the same time, CDC acting director Dr. Richard Besser said Thursday that it's important to let officials tailor their response to local conditions. "They can take the recommendations we're providing and apply them locally. [By doing that] we hope to learn and see what are the most effective control strategies."

Markel agrees that the best response depends on the particular situation. "History is not predictive science. And the powers of public health officials [in 1918] were much greater. Another difference is that people's trust of doctors and government in 1918 was probably remarkably different.... But what I have found, studying epidemics, is that good planning and good relationships between local state and federal authorities, goes a long way."

CNN - Confirmed swine flu cases leap

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Confirmed swine flu cases leap

Confirmed cases of swine flu worldwide increased to 236 on Thursday, up significantly from the previous day's total of 147, the World Health Organization reported.

In the United States, the Centers for Disease Control and Prevention said it has confirmed 109 cases of swine flu, or 2009 H1N1, in 11 states, an increase of 18 from its previous total.

Mexico, with 97 confirmed cases, showed the biggest increase in the world, WHO said. There were 26 confirmed cases Wednesday.

The higher totals do not necessarily mean that incidence of the disease is increasing, but rather that health investigators are getting through their backlog of specimens, said Dr. Keiji Fukuda, assistant director-general of WHO.

The latest tally was announced one day after WHO raised the pandemic threat level to 5 on a six-step scale. WHO did not change the threat level Thursday.

"There is nothing epidemiologically that points to us today that we should be moving toward Phase 6," Fukuda said.

The level 5 designation means infection from the outbreak that originated in Mexico has been jumping from person-to-person with relative ease.

"It really is all of humanity that is under threat during a pandemic," said Dr. Margaret Chan, the WHO's director-general. "We do not have all the answers right now, but we will get them."

The health department in Spain reported three new confirmed cases, bringing the total for the country to 13. H1N1 was suspected in 84 other cases.

The health department in the United Kingdom also reported three new cases, to bring the total there to eight. An additional 230 cases are being investigated.

On Thursday, Japan reported its first suspected case, which has not been verified by WHO.

In the United States, New York has the most cases, with 50, followed by Texas, with 26. California has 14 cases.

The CDC on Thursday added an 11th state, South Carolina, with 10 cases.

"There are many more states that have suspect cases, and we will be getting additional results over time," said Dr. Richard Besser, acting director of the Centers for Disease Control and Prevention in Atlanta, Georgia.

By Monday, he said, all states will have additional antiviral drugs from the Strategic National Stockpile that can be given to people at high risk for flu. There hasn't been a decision on whether to attempt making a vaccine specifically for H1N1, he said.

Swine flu is a contagious respiratory disease that affects pigs and can jump to humans. Symptoms include fever, runny nose, sore throat, nausea, vomiting and diarrhea.

Reacting to comments earlier in the day by Vice President Joe Biden, who said he has advised his family to avoid "confined spaces" such as airplanes and subways, Besser said, "If you have a fever and flu-like symptoms, you should not be getting on an airplane. That is part of being a responsible part of our community. You don't want to put people at risk.

"I think flying is safe, going on the subway is safe. People should go out and live their lives," he said, but added, "There is shared responsibility when it comes to preventing infectious diseases, shared responsibility when it comes to fighting a new infection for which we have incomplete information.

"There's no one action that's going to stop this. There's no silver bullet, but all of the efforts ... will help to reduce the impact on people's health."

Nowhere is the crisis more severe than in Mexico. Medics in Mexico City were tending to patients in tents set up outside hospitals while clad head-to-toe in biohazard suits, goggles and two pairs of glasses.

The government has ordered a shutdown of about 35,000 public venues, mandated restaurants to serve takeout only and closed all nonessential government offices and private businesses.

Mexican President Felipe Calderon took to television late Wednesday night, saying the country has enough medicine to cure the sick.

"In times of difficulty, we've always come together," he said. "Together we will overcome this disease."

In the United States, President Obama called on schools with confirmed or possible swine flu cases to consider closing temporarily.

Ecuador joined Cuba and Argentina in banning travel to or from Mexico. Egypt began slaughtering all pigs Thursday, although no cases of swine flu have been reported in that country.

Reuters - Facebook eyes additional funding: report

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Facebook eyes additional funding: report

Thursday, Apr 30, 2009 9:41AM UTC

(Reuters) - Social-networking website Facebook has held meetings with private equity firms to explore raising another round of funding, the New York Post reported on Thursday, citing sources.

Facebook could not be immediately reached for comment.

Facebook held "valuation discussions" with Providence Equity Partners, General Atlantic, Bain Capital, Kohlberg Kravis Roberts, among others, the paper said, citing multiple sources close to or involved in the situation.

The process has been informal and no term sheets have been drawn up, the sources told the paper.

The private-equity firms value the website in the $2 billion to $3 billion range, lower than Facebook's estimate of $5 billion to $6 billion, the sources told the paper.

The talks have created friction with Facebook's existing investors, who have poured in $400 million into the website and would like a return on their investment before seeing their stakes diluted through a new round of funding, the paper said.

Facebook's existing investors include Greylock Partners, Meritech Capital Partners and Microsoft Corp.

(Reporting by Ajay Kamalakaran in Bangalore; editing by Simon Jessop)

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Reuters - U.S. economy tumbles steeply in first quarter

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U.S. economy tumbles steeply in first quarter

Wednesday, Apr 29, 2009 5:27PM UTC

By Lucia Mutikani

WASHINGTON (Reuters) - The U.S. economy contracted at a surprisingly steep 6.1 percent rate in the first quarter, dragged down by a record plunge in business inventories and a slump in exports, data showed on Wednesday.

However, the data did not change views the economy would emerge from the recession, now in its 16th month, in the second half of the year. Next month, the downturn is on track to become the longest since the Great Depression.

The Commerce Department said inventories were drawn down by a record $103.7 billion -- potentially good news for the economy because it suggests businesses have cut the stockpile of unsold merchandise to levels that will let them start placing new orders, which would stimulate production.

"The larger-than-expected decline in first-quarter GDP is good news for the upcoming quarters. We expect that the recession will be over in the second half of the year," said Harm Bandholz, an economist at Unicredit Markets and Investment Banking in New York.

While the drop in gross domestic product, which followed a 6.3 percent fourth-quarter decline, was much steeper than economists had expected, investors were cheered as they saw it laying the groundwork for a recovery.

U.S. stocks rose, further helped by unexpectedly strong earnings from Time Warner Inc and Qwest Communications International, with the blue-chip Dow Jones industrial average up about 143 points at midday.

GDP, which measures total goods and services produced within U.S. borders, has now dropped for three straight quarters for the first time since the 1974-1975 recession. That downturn, which started in 1973, lasted 16 months.

The data came as the Federal Reserve resumed a two-day meeting. The Fed, which has cut interest rates to almost zero and pumped about a trillion dollars into the economy to try to break its downward spiral, is expected to nod to signs hinting at economic improvement in a post-meeting statement.

SILVER LINING IN GRIM DATA

Christina Romer, the head of the White House Council of Economic Advisers, told Reuters Financial Television the decline in inventories and a rise in consumer spending offered a silver lining in an otherwise bleak report.

"To the degree that that's a sign that firms are bringing down some of their inventories ... that combined with consumers coming back to life could mean we need to start producing things again," she said. "It could put us in a position for perhaps a less dreary number going forward."

The inventory plunge accounted for 2.79 percentage points of the drop in GDP. Excluding inventories, GDP contracted 3.4 percent. Business investment, which is typically made when companies are planning production increases, tumbled a record 37.9 percent in the first quarter.

However, consumer spending, which accounts for over two-thirds of U.S. economic activity, rose 2.2 percent, after collapsing in the second half of 2008. Consumer spending was bolstered by a 9.4 percent jump in purchases of durable goods, the first advance after four quarters of decline.

"We can expect some moderation in the pace of the economy's decline. The larger question now surrounds the intense weakness we have seen in business investment," said Bob DiClemente, chief economist at Citigroup in New York.

"It's going to draw much attention as a potential source of aggravating factor for the recession going forward."

HOUSING ACTIVITY STILL SLIDING

Home-building activity slid at a 38 percent rate, the biggest decline since the second quarter of 1980. There are signs, however, that a big drop in construction activity is starting to slow and analysts expect this component to begin showing improvement in the quarters ahead.

Exports collapsed 30 percent, the biggest decline since 1969, after dropping 23.6 percent in the fourth quarter as recession took hold around the globe. The decline in exports knocked off a record 4.06 percentage points from GDP.

The Commerce Department said a $787 billion government package of spending and tax cuts, approved in February, had little impact on first-quarter GDP. Part of the stimulus package is designed to bolster state and local government spending, which fell at a 3.9 percent rate in the first quarter, the largest drop since 1981's second quarter.

A separate report showed U.S. home loan applications fell 18.1 percent last week to the lowest level since mid-March, even as mortgage rates clung to record lows.

(Additional reporting by Tim Ahmann in Washington and Lynn Adler in New York; Editing by Jan Paschal)

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CEO Forum: Media mogul Diller on Twitter, Ticketmaster, etc.

There's one consistent quality in IAC/InterActiveCorp (IACI) CEO Barry Diller's long career, one that has made him a force in television, movies, home shopping and the Internet. He loves to challenge conventional wisdom about business and himself.

Consider Diller's most recent and controversial pivot: After years of opposing media mergers, he's earned the wrath of pop icon Bruce Springsteen and others with an effort to create a concert colossus.

Diller, 67, wants to join the dominant ticketing and music-management company Ticketmaster, where he's chairman with Live Nation, the leading owner of arenas, which also now manages performers and sells tickets. The outcome is in the hands of antitrust officials.

But the effort is characteristic of a CEO who has become a celebrity in his own right after shaking up entertainment programming at ABC, reviving Paramount with blockbuster movies including Saturday Night Fever and Raiders of the Lost Ark, creating Fox Broadcasting and then ditching Hollywood to become a retail and digital entrepreneur.

His online empire now includes such disparate properties as Citysearch, Ask.com, Expedia, The Daily Beast, CollegeHumor, Match.com and Evite. With so many properties that depend on consumer spending and advertising, the gloomy economy poses the toughest challenge yet to Diller's programming and dealmaking skills.

He shared his views about prospects for business, his companies, the Internet and traditional media with USA TODAY's David Lieberman at the 10th USA TODAY CEO Forum, in conjunction with the Olin School of Business at Washington University in St. Louis.

The interview took place in front of an audience. Edited for length and clarity, here are Diller's thoughts on:

Acquisitions

Q: You're stockpiling cash. Are you waiting for prices to drop more before you buy something?

A: I'd like to spend it intelligently. You can't have it get hot in your pocket. Unfortunately, it's really shocking to me, but I cannot find anything that is worthwhile buying today. I hope to God I do.

Q: What kind of things are you looking at?

A: We've been in the consumer part of the Internet for a long time. But I can't find anything in the Internet area. So, what you have to do when that happens is redefine what (your) area is so you can keep growing.

Q: How about AOL?

A: Oh, that's a good question. We talk with AOL a lot, and there's a lot of common relationships there. We're, I think, the seventh- or eighth-largest Internet network, and I think AOL is one or two slots behind us. There's a really good idea for a combination there, but it's complicated to do. It's inside Time Warner, which wants to get rid of it. It's hard to engineer because of its legacy. But, industrially, it makes sense.

Q: Twitter?

A: I'm sure there are some commercial applications for Twitter, but they don't really interest me. I mean, 140 characters? I am really not interested in Ashton Kutcher's daily walks. Not for me.

Q: Facebook?

A: Facebook's the real deal. Nobody can buy Facebook now. Everybody has taken an angle at it. But Facebook may be the place that organizes everybody's personal information. It's got a very good chance of being that.

Paramount

Q: Back in 1994 you tried to buy Paramount. With the benefit of hindsight, are you glad you lost?

A: We lost Paramount in the sense that we didn't make the last bid. And I think it was a big mistake. I wish we owned Paramount.

Q: Why?

A: I would have loved to have played in (the digital media revolution) in television and motion pictures. I think it would have been interesting, and I think we would have done OK with that asset.

I didn't do it because I was chicken. I had just come from being a corporatist, and I clutched at the last minute and I shouldn't have, and I know what it was due to. It was due to lack of experience. And it was a good lesson for me because it taught me not to do that.

Broadband

Q: You said a few years ago that you were concerned the cable industry would take over broadband. Is that still a concern?

A: I very much believe in net neutrality. We have all lived through a world which has been dominated by distribution scarcity. There were only so many cable programs you could have because (cable operators) conned everybody into thinking that (their lines) could only carry so much. But, they were interested in it being scarce. They could say (to programmers): If you want to get on, give us half your business. It was a great scam while it lasted, this idea of scarcity.

Well, the Internet is this miracle. It is an absolutely extraordinary idea that you can press a send button, and you are publishing to the world.

And what cable companies want and telephone companies want, of course, is to say: No, wait a minute. If you're going to publish a book, you publish to us, and then we transmit it on from there. And, therefore, we want the Internet not to be neutral. We have invested all this money, and this is how we'll get our return. I think that's a horrendous idea.

Q: Time Warner Cable's been talking about usage-based pricing for broadband.

A: Well, I'm not against usage. You pay for electricity only by how much you use. I don't think there's anything wrong with paying, so long as it's a common carrier meaning there has to be regulated pricing like there is for utilities, which is not going to happen.

So, I think the idea of charging for usage is a good idea. The problem is: If you've got little competition there, then the prices can just be, excuse me, ridiculous.

Print and TV

Q: What's the future of print media in the Internet age?

A: If you've got ink on your hands, which means that you're a print person, you're finished. These news-gathering organizations depended upon being the only place in town. And everybody has advertising now. So, it's a very tough transition.

You're going to pay for information that you want. And you're going to pay directly, which means there's going to be either micropayments or subscriptions. Advertising in the new world order can't support much of anything. Therefore, you're going to have hybrid business models that are going to have subscription revenues and other types of revenues.

We're going to have professional news-gathering operations. I do not think we're going to be a world where we're going to have citizen reporters doing all of the work. I think that it's going to be a really tough period, it will get worse, and then I think it will come out the other end by being supported by other revenue streams.

Q: How about TV's big-budget shows?

A: No. Forty years ago you had three channels. Then, with cable, you had more channels. But we're just getting to the point where there's enough bandwidth that we're going to have unlimited opportunity to get whatever we want.

Because there is no longer scarcity, an hour-long drama is not going to exist at the multimillion-dollar production level and not in the current distribution scheme. For everybody in that world, you talk about creative destruction. General entertainment is absolutely going to change for all of us.

Ticketmaster

Q: Live Nation is the country's largest owner of arenas. Ticketmaster is the largest ticketing company and has deals with several stars. Why shouldn't we be nervous about seeing them get together?

A: Well, you can be nervous all you wish. It sounds awfully arrogant. It's not meant that way. The thing is: These companies don't compete with each other directly. We don't own venues as Live Nation does. And Live Nation just entered the ticketing business but they don't compete with us at this point. So, it's vertical, and there's nothing legally wrong with vertical.

The issue is: Will consumers pay more? No. I actually think that what the combination will do will allow us to develop what was really lacking. The big players are getting rather old. The Rolling Stones are out there now. What we don't have is a great development process for new talent.

The recorded music business now is, in a sense, the loss leader for live entertainment. And the truth is that they should have symbiotic relationships, and I think we can bring that. But it's under review at the Justice Department and we'll know whenever they get around to dealing with this.

Q: Fleetwood Mac will be playing in St. Louis in a couple weeks. You can get a midpriced ticket for about $77, then there's a convenience charge of $9.70, a building facility charge of $2.50, and for the privilege of printing out my own ticket at home, I've got to pay you $2.50.

A: I would tell you what a great privilege it is for you to be able to do that and how much infrastructure we had to create and desks we had to make in order for you to do that. But here's the thing: Ticketmaster is the definition of an unloved company. Many more people are denied tickets than we are able to give them because there are only so many seats in the house.

The problem with the ticketing business is: It's the essence of non-transparency. And the reason is that everybody has an ax to grind. Artists do not want consumers to know that they have a take of different parts of the ticketing package. People who own venues want to put in service charges. So I think there's going to be legislation which is going to force transparency, and I think that would be great for everybody.

Video on the web

Q: You've been very excited about video on the Web. But no one's making money at it yet.

A: That's definitely true. We have a site called CollegeHumor.com some of you have probably seen. A few years ago it started to produce videos, and over a relatively short period they built up this little group, about 30 people, and they now make about eight videos a week.

And they're extremely successful in the sense that a lot of people view them. They get spikes in the millions of hits, and the quality is very good. And it's not expensive to produce a three- to five-minute video. Now people are getting used to the fact that they're going to have some commercial interruption of videos.

Q: So what's the business opportunity?

A: Go back almost 100 years to the beginning of the motion picture business. They began with "one-reelers." A lot of them were serials. They were at that time anywhere from seven to 10 minutes. Cecil B. DeMille, one of the great movie makers of all time, was making 30 of these a year.

So, I see this little group who are using modern techniques. They're going to graduate as the form evolves just like the movie business did, from two-reelers to 10-reelers. In other words, it will expand as the Internet and bandwidth is able to deliver video that will not just be seen on small little form factors, but on screens in your house or screens of any size.

The economy

Q: The credit markets seem to be easing, but employment looks pretty grim. Have we seen a bottom yet or, as Paul Krugman says, is it just getting worse more slowly?

A: It seems impossible that you could say that we actually know the duration or the depth (of the recession), because there are really three areas that most impact us.

One is unemployment, which is undoubtedly going to rise from where it is now. We have not seen what will happen with commercial real estate, because commercial real estate is primarily based upon huge amounts of leverage.

And the other area we haven't seen is corporate debt, which is also based upon huge amounts of leverage, and those two haven't yet washed through this.

Q: So, what takes us out? Can you count on consumer spending coming back, or would it likely be some other engine?

A: Well, for sure we're going to count on government spending coming back. I mean, they're throwing everything that can be imagined at this. Everything has a very short life span now; we may have this very sharp, quick resolution.

Executive pay

Q: A couple of years ago you were the highest-paid executive in the country. Do you think that, in retrospect, you went too far?

Please go to corresponding website for complete details.

Portfolio Mobile - The Times' Rorshach Geithner Story

The Times' Rorshach Geithner Story





The New York Times has provided a handy blogging point for today in the form of a long piece on the relationships Tim Geithner formed while head of the New York Fed. The story is based in part on the results of a Times FOIA request, for the contents of Geithner's daily calendar while at the bank, and bloggers have primarily approached the story as a search for potentially nefarious activities. As examples, we see Paul Kedrosky concluding that there's no real "smoking gun," and Yves Smith writing that the story is far too kind, as it mysteriously excises all the times Geithner was scheduled to dine on babies and puppies in the company of Satan and AIG executives.

For the life of me, I don't know why we're not spending at least a little more time on the opening anecdote:



Last June, with a financial hurricane gathering force, Treasury Secretary Henry M. Paulson Jr. convened the nation's economic stewards for a brainstorming session. What emergency powers might the government want at its disposal to confront the crisis? he asked.

Timothy F. Geithner, who as president of the New York Federal Reserve Bank oversaw many of the nation's most powerful financial institutions, stunned the group with the audacity of his answer. He proposed asking Congress to give the president broad power to guarantee all the debt in the banking system, according to two participants, including Michele Davis, then an assistant Treasury secretary.

The proposal quickly died amid protests that it was politically untenable because it could put taxpayers on the hook for trillions of dollars.



Smith notes the line and proceeds to throw of a line constituting one of the most epic examples of point missing in recent memory:

The story fails to note this was almost assuredly the most bank friendly program possible.

To begin with, that's not even true. The most bank friendly program possible is handing the banks a lot of money with no strings attached. But how does Smith miss that this would not only have been a very smart and prescient move, but it might also have laid the groundwork for a much tougher bank policy? Guaranteeing all the bank debt was, of course, one of the key ingredients of the Swedish bank rescue so beloved by fans of nationalization. Smith just assumes Geithner is looking to help his Wall Street buddies, but he might just as easily have been reading directly from the Swedes' playbook.



Moreover, this move would have entirely changed the calculus in September. It would have made the government much more reluctant to let Lehman fail, which I believe we can agree would have been a good thing. Had they nonetheless decided that Lehman should be allowed to go down, in the knowledge that the government would have to make the debtholders whole, then we would have avoided most of the negative effects of the actual Lehman collapse. No money market fund would break the buck. No freeze in commercial paper markets would have resulted. And no emergency rush to TARP would have followed. Correspondingly, no intense fear of bank failures or nationalizations would have cast its shadow over all subsequent decisions.



This should be getting more attention, and it should also be causing Geithner-haters to rethink what they think they know about the man -- about his timidity, subservience, and allegiances. But it's already clear that it won't.Related Links
Geithner's Brave New Regulatory World: An IMterview
Finally, Drama! A Geithner vs. Bair Clash?
Harder Times

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