Case Blog

With August drawing to a close as we enter the dog days of summer, we start to get ready for fall. The XXIX Olympic Games in Beijing are living up to their advance promise and NBC, in spite of this being the first Olympic Games with extensive live online coverage, is getting very good ratings. Michael Phelps’ outstanding performance, 8 gold medals, has certainly contributed to the global focus on Beijing.

As the world watched President Bush and Prime Minister Putin chat during the opening ceremonies, no one knew that Putin would quietly leave Beijing to personally direct the incursion into Georgia. President Sarkozy of France, who is also head of the European Union (this position rotates), quickly tried to broker a truce. He at first appeared to be successful, but as the days have dragged on, it is clear that Russia will pull back on its own terms.  What are Russia’s true ambitions? Will they turn their attention to Poland and the Ukraine, which have also aligned themselves with the west?  Both presumptive presidential nominees, Senator McCain and Senator Obama, have quickly turned their attention to foreign affairs. And the Bush administration is slowly realizing that the world balance has changed in a way they had not anticipated.

Back in the media market, we have seen the very successful introduction of Apple’s 3G iPhone. Its arrival was tied to the introduction of the App Store, which was promised by Steve Jobs at MacWorld in January. (See my blog, Mobile, January 27, 2008.)  By opening up the iPhone as a development platform, Apple has once again shown us the future.  I have downloaded two applications, Voice Dialer, which allow me to voice activate my contact database for calls, and the New York Times. The first one went very smoothly and I have added several updates since the first download. The New York Times application, which is excellent, unfortunately led to my iPhone freezing.  My advice is to download the iPhone’s very good user manual to your computer prior to downloading any apps. This will save you a trip to the local Apple Store to unfreeze your phone. I trust that Apple in an upcoming release will correct this problem, which has been widely reported in the press.

The mobile market as a whole is looking very promising. Google’s CEO Eric Schmidt weighed in this week, saying that the advertising opportunity for mobile will eventually eclipse Google’s current online advertising business. And Microsoft’s licensees for their mobile operating system will soon engage in this market with platforms that allow for custom applications for the user.

The end of summer has also brought with it the first of the NFL’s preseason games and the usual speculation about how the season will unfold. Brett Favre had Jets fans attention last evening in a preseason game against the Redskins. Can he, along with the other talent that Jets owner Woody Johnson has assembled in the offseason, allow the team to challenge the Patriots in their division? In his brief playing time, Favre did not appear to have lost any of the skills that made him a legend in Green Bay and he certainly was not ready, on a personal level, for retirement.  Will there be two playoff teams in New York in January? Which team will be most improved, the Miami Dolphins or the Oakland Raiders?

It will soon be time to return to work and the media deal market should become more active as well. And shortly after the upcoming Democratic and Republican conventions, all eyes will turn to the presidential election. Any forecasts on the candidates vice presidential running mates?

It was one year ago that I wrote in posting title “August Credit Turmoil”: “For those of us in the media business who focus on M&A and disappeared several weeks ago, our world was changed while we were enjoying our favorite recreational pursuits… Many of us are expecting a federal funds rate cut in mid-September now that the Federal Reserve seeks to stave off a recession. There is also a sense that the Fed Chairman passed his first real test.” At the time that was written, we had no idea how many more tests Ben Bernanke and Hank Paulson would face. These may have been the most challenging 12 months for the global financial system since World War II. Who would have forecast that the subprime meltdown in the United States would lead to a global credit crunch or that The Bear would be brought to its knees and that the only alternative was a fire sale to JPMorgan Chase (JPM)?

During this time we have seen an activist Federal Reserve working hand in hand with the Treasury Department under the leadership of Hank Paulson. Neither Bernanke nor Paulson have been doctrinaire regarding free markets. In mid-July we saw the latest example of this when shares of 19 financial institutions were protected from naked short selling by an emergency order from the SEC. SEC Chairman Christopher Cox went on record that he was not opposed to legitimate short selling — only “unlawful manipulation through ‘naked’ short selling that threatens the stability of financial institutions.” (WSJ 7/19-7/20, 2008)  Over the past month we have seen many of these same financial institutions show a significant increase in price from their lows of early July.

I am, as a rule, opposed to government intervention in free markets because of the dislocation that can result. One can look back, for example, to the Nixon price controls and the inflationary results that followed their removal. However, challenging times often demand extraordinary actions. Restoring confidence in the U.S. and global financial markets  has been critical, and I believe that the leadership demonstrated by The Fed & other agencies has been correct. Both presumptive presidential nominees, Senator McCain and Senator Obama, and their advisers would be well advised to study the turbulence of the past year and the herculean efforts that have been necessary to stave off disaster.

This past weekend we also saw almost all of the world’s best golfers go for the last major, the PGA Championship. With Tiger out of the mix for the balance of the season, Sergio Garcia looked well positioned going into the back 9 to finally have a very good shot at winning his first major.  He was denied by Padraig Harrington, the back-to-back British Open champion, who put on an exceptional putting display on the 16th, 17th & 18th holes. He displayed the skill, concentration and focus necessary to excel at a very precise game.  During Tiger’s absence, Phil Mickelson, who has been ranked #2 in the world, has not been able to step into the void.

Let’s hope that while we are all on holiday next August it will be a quieter time, and we will be in the midst of a strong recovery.

In the fall of last year I wrote about doing business in China and the many trips I made to China during my time at Reed Business (B2B in China). As I watched the XXIX Olympics’ masterful and beautifully choreographed opening-night ceremony on Friday evening, I thought back to many of my visits. My last one, in the fall of ‘06, when Mary Claire accompanied me, was one of my most memorable and as always my dear friend Hugo Shong was an impeccable host.

The historian Arnold Toynbee’s prophecy that the 21st century would belong to China is becoming more and more of a reality to the global community. This is China’s time on the world stage. As host to these 2008 Summer Olympic Games, the world will watch with awe and fascination this rich and complex culture.  I trust that it is time for me to plan another trip to China in the not too distant future. History is clearly a “long march” and there remain many opportunities for media investments for those who have patience.  I believe that the B2B sectors, in particular, will provide excellent returns over the long term. I also sense that the events and exposition business will prove very profitable.

For those of you now in Beijing, my favorite high-end restaurant is Tian Di Yi Jia, which translates into Heaven & Earth Restaurant. It is located at 140 Nan Chi Zi Dajie, Dongcheng, in Beijing. The phone number is 8511-5557. It is only a 5-minute cab ride from the Grand Hyatt Hotel. The cuisine is superb and it has a world-class wine list, with many first-growth Bordeaux wines, as well as outstanding wines from other parts of the world.

In late June, I wrote in a posting titled “Summer”: “As we move into summer, the financial markets continue to be unsettled, with the surge in oil prices continuing to depress the stock markets. Is this surge truly driven by demand from growth economies like China and India? I have a hard time reconciling this with the slowdown in growth the last several quarters around the globe, including both China and India. How much of this is driven by commodity speculation, which is fed by a weak U.S. dollar?” This past week we continued to see the price of a barrel of oil spiral downward to $116 and it now looks like a $100 per barrel price may be closer to becoming a reality than a $200 per barrel price. This fall has taken place concurrently with the strengthening of the U.S. dollar versus the Euro and other world currencies.

On Tuesday evening, Major League Baseball staged its annual All-Star Game at Yankee Stadium in the Bronx. Once again the American League All-Stars beat their National League counterparts, winning 4-3 in 15 innings and securing home field for the American League’s representative in the Fall Classic.  The pre-game show with All Stars from the past brought back many memories. It does seem strange that The House That Ruth Built will be replaced by a new Yankee Stadium right next to it for the start of next season, but the All-Star Game was a fitting curtain call for the ghosts of past seasons. Yankee Stadium has been the Yankees’ home for all of their 39 American League Pennants and 26 World Series Championships.

On Friday evening, Mary Claire and I joined our good friends Trish and Frank Cavuoto at Billy Joel’s farewell concert to Shea Stadium. The Mets will also have a new home next season, and while they have not been around New York as long as the Yankees, they have their loyal fans, many of whom were former Dodger and Giants fans prior to those teams deserting New York for California in the ’50s. Billy Joel at 59 struggled earlier in the set with the heat and humidity, which were stifling, and made it a classic New York City July evening.  Some wet towels and a number of guest appearances helped him through. Tony Bennett joined him early and they did a wonderful duet of  “New York State of Mind.” Roger Daltrey, of The Who, joined later with “My Generation” and finally Paul McCartney, just off a plane from London, joined Billy Joel on stage to close out the evening with “I Saw Her Standing There and Let It Be.”

Turning to the deal market, there has been one that I have followed with great interest but  not commented on previously — the takeover battle between Electronic Arts (ERTS) and Take-Two Interactive Software, Inc. (TTWO).  Several years ago during the options scandals, Strauss Zelnick and the Zelnick Media team very skillfully won control of Take-Two Interactive through a proxy fight. They proceeded to calm investors and refused to rush Grand Theft Auto IV to market, in spite of criticism at the time. As the release date of April 30th approached, Electronic Arts decided that they needed the Grand Theft Auto franchise to reinvigorate their growth. They made an initial offer of $26 per share, which was rebuffed, and then they slightly lowered it to $25.74.  The Zelnick team, this time with shareholder support, resisted the offer, prior to the release of Grand Theft Auto IV, and clearly stated that they believed the offer undervalued the company, but that they would consider an increased offer after the release. During this time, both sides held to their positions. In its debut week, Grand Theft Auto IV did over $500M in sales! This one release has clearly helped the more sophisticated technology platforms from Microsoft (MSFT) and Sony (SNE) gain market share at Nintendo’s (NDTOY) expense.

While this battle appears to be winding its way through the courts as anti-trust issues are examined and dates for the offer to expire have been extended several times, it will be interesting to see if EA is willing to finally raise its offer to secure its target, in light of the fact that a competing offer has not materialized.  I believe that EA’s bid will not carry the day without a higher offer for a company and franchise that have been very well managed for shareholders by the Zelnick team.  During this same time, France’s Vivendi (VIV) acquired Activision and merged their operations into Activision-Blizzard (ATVID) to became the world’s largest videogame publisher. This was a position long held by EA, which brings some additional perspective to the value of Take-Two.

Are there some lessons in this long-running takeover battle for Steve Ballmer and his new partner, Carl Icahn, as they approach the August 1st Yahoo (YHOO) shareholder meeting and the vote to oust Yahoo’s current board? On Friday, Bill Miller, chairman of Legg Mason Capital Management, the large mutual fund operation which holds a 4.4% stake in Yahoo, announced his support for the current board. As I write this, it was just announced that Yahoo and Icahn have reached an agreement to expand the board and to allocate 3 seats to the Icahn team.

Another legend from the past, Greg Norman, aka The Shark, held our attention this weekend at the British Open being played at Royal Birkdale Golf Club. Norman led at the end of three rounds played under classic Links conditions, lots of wind and rain, with a +2. Could he hold on to become at 53 the oldest person to win a major? Norman had won the British Open previously in 1986 and 1993, and had recently married tennis legend Chris Evert. In the final round  on Sunday he opened with 3 bogeys and found himself struggling for most of the day. Padraig Harrington, who won the Claret Jug in 2007, secured this year’s championship with an extraordinary eagle on the par 5, 17th hole.

The conditions, particularly the high winds, brought back fond memories of our trip to Bandon Dunes in early May. Many of you know that while I enjoy golf and play with great enthusiasm, the results are not often reflected in my handicap. Over time I have learned to be patient, if not more consistent. On Friday July 11th I was invited by Fred Goldberg, a longtime friend, to join him for a round of golf at The Franklin Hills Country Club in Franklin, Michigan. On the 14th hole, a 200 yard par 3, using a TaylorMade demo driver, I finally had my first hole-in-one. I trust that this alone will bring me back for many more rounds.

As the Bear Market continues and forecasts begin to come down for fiscal year ‘08, we will start to see some stars fall to earth. Yesterday, EMC CEO and VMware (VMW) chairman Joe Tucci moved to oust VMware’s cofounder and CEO Diane Greene. (VMware was spun out last year in a very successful IPO; EMC still owns 86% of VMware’s shares, post IPO.) Greene started the company with her husband, Mendel Rosenblum, a Stanford University computer science professor. Tucci was quoted in the Wall Street Journal that, “the board had concluded Ms. Greene lacked the experience to continue running a company that expects to have revenue nearing $2 billion this year.”  She was replaced by Paul Maritz, a veteran of Microsoft, who retired and then started Pi Corp., a company that EMC acquired. As in past downturns, boards start to question whether a CEO that has driven a fast-growth company to stardom can manage a decline and protect shareholders on the downside.  It is clear that we are once again seeing a slowdown in IT spending by the large enterprise clients.  I anticipate that this retrenchment in spending will carry over into the first half of ‘09.

As the malaise spreads, even boards of early stage, venture-backed technology companies are going to be faced with tough decisions regarding leadership over the next several quarters. The best training for a leader to ride out these downturns is to have lived through one or two before. I trust that the CEOs that survived the tech bubble in ‘01-’02 will move quickly to protect on the downside.

I predicted several months ago that the Microsoft (MSFT) vs. Yahoo (YHOO) battle would be over shortly. Then Carl Icahn jumped into the fray and put forth a slate to replace the Yahoo board. With Steve Ballmer now joining with Icahn and stating that he would be open once again to a Yahoo transaction if the current Yahoo board is replaced, it appears like this battle will move back to center stage. Jerry Yang, Yahoo’s cofounder and CEO, has now been widely quoted saying that Microsoft is trying to destabilize the company.  Between now and Yahoo’s August shareholders meeting, the rhetoric should heat up on both sides. Will Yang and Sue Decker be two more stars that will fall to earth  before they have a chance to execute their ambitious growth plans?

Finally, this past weekend we saw the announcement that Landmark’s Weather Channel will be sold to a consortium led by NBC Universal, Bain Capital and the Blackstone Group. It was speculated that the price paid is close to $3.5 billion. NBC Universal will provide management services, but the majority of the equity was provided by the two private equity firms. In the current credit crunch, I believe that this type of consortium deal will become much more in vogue, particularly for transactions over $2 billion.  Returns will be more modest than in the past, but deals will get done.

As stock markets around the globe continued their slump last week, the headlines proclaiming that we are in a bear market were omnipresent. The markets were all down very significantly from their October ‘07 highs. With oil and gold heading in the opposite direction and setting new daily highs, there was no denying that the bears were now in charge. Very quickly, most of the financial sector stocks were downgraded, many of them, including CitiGroup (C), to sell, by William F. Tanona, a Goldman Sachs (GS) analyst.

Have we finally seen blood in the street? Is this a buying opportunity for many equities that now provide excellent dividend yields,  or should you head to the beach, stay predominantly in cash, and not make any decisions until after Labor Day?

The weak balance sheets of the major banks and brokerage firms and their need for more capital continue to impact the private equity deal market. I do not anticipate that we will see the return of the mega deal in the fall. Deal flow in the media and telecommunications sector will continue to be concentrated in the middle market, most likely through year-end. I also anticipate that an activist Fed, with the support of the Hank Paulson, will continue to make certain that there are no failures that have a contagion effect.  The continued weak economy will provide the backdrop for this fall’s elections, both on the national and state levels.  Let’s hope that the political commentators will help us understand the real differences that the candidates have with regards to economic policy, and how this will impact a potential recovery.

I returned to New York this week, where summer has clearly moved in, from northern California, where we continue to be plagued by a earlier than usual wildfire season that is being fueled by the very dry winter we had.

As you head to the beach, I have three recommendations for new paperback releases to take with you:

The Accidental Investment Banker: Inside the Decade That Transformed Wall Street, by Jonathan A. Knee and The Last Tycoons: The Secret History of Lazard Freres & Co., by William D. Cohan. I know both authors, and while they take a very different approach, I believe that both are must-reads.  Finally, if you are involved with intellectual property decisions and the law, I recommend Norman Pearlstine’s: Off the Record: The Press, the Government, and the War over Anonymous Sources.

I am sitting at my desk in my home office in Blackhawk. It is clear that spring has given way to summer across the United States, and today’s high temperature is forecast to reach 105 degrees. Outdoor activities such as golf will give way to air conditioning today. The summer of ‘08 should prove to be a memorable one, with premium gasoline touching $4.75 per gallon on the west coast and with the airlines canceling flights to deal with the surging fuel costs.

Mary Claire and I had a wonderful time last weekend hosting friends and family for our daughter-in-law Stephanie’s and our son Jordan’s wedding!  We were delighted to spend time with many old friends and to share this special event with those that are closest to us. The Blackhawk Country Club, which has been home for more than 15 years, proved to be an excellent venue for this celebration.

We are gradually recovering and spent several days in Sonoma and Napa counties earlier in the week as part of the process. As always, we were not disappointed by the quality of the wines and food and the overall ambiance of these two special valleys.  We spent one very memorable afternoon lunch and tasting with Wells Guthrie, the winemaker and proprietor of Copain Wine Cellars, at their new winery in Healdsburg.  We also had an outstanding tasting with Fritz Hatton at Arietta.

As we move into summer, the financial markets continue to be unsettled, with the surge in oil prices continuing to depress the stock markets. Is this surge truly driven by demand from growth economies like China and India? I have a hard time reconciling this with the slowdown in growth the last several quarters around the globe, including both China and India. How much of this is driven by commodity speculation, which is fed by a weak U.S. dollar?  In late February, I wrote in a posting titled “The Dollar”: “While we are experiencing an early taste of spring in the Bay Area and New York City remains locked in winter, this week is proving very cold for the U.S. dollar. It has weakened against every major currency, but particularly against the Euro and the British Pound. As the U.S. economy remains stalled, with very little growth in the fourth quarter of ‘07, and the U.S. financial markets remain troubled by various structured financial instruments, with a new acronym encountering trouble each week, global investors continue to move to other currencies…I do not see the current administration changing this policy before the November elections.”  I stand corrected and I believe that Secretary of the Treasury Hank Paulson and our Fed Chairman Ben Bernanke have realized the consequences of a weak dollar and have been trying to talk it up, with only modest success. To reverse the decline and impact will take time and hopefully be continued by an incoming administration in January.

Summer has finally given us two presidential candidates from the major parties, in Senators McCain and Obama. I hope that we start to learn more about their proposed initiatives for the economy, which up until now have been more sound bites than substance. It will require real leadership to turn around a weak dollar and surging commodity prices.

As the subprime mortgage crisis fallout continues, we are now looking to fix blame. We saw the “perp walk” return to New York City this week, with two former Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, taken to their indictment hearing in handcuffs. This was very reminiscent of the fallout from the equities bubble, when we saw the Rigas family, which ran Adelphia, escorted into court in handcuffs as well. The Cioffi/Tannin case was built around email exchanges between the two managers. Will this approach be any more effective than it was in the prosecution of the tech deal maker, Frank Quattrone, who was subsequently retried and acquitted and has recently launched a merchant bank called Qatalyst?  I believe that fraudulent behavior should be prosecuted and punishment should be part of the process, but I do not believe that the government should look to make scapegoats out of innocent individuals. I am glad to see that Quattrone has started a new chapter and I will not be surprised if someday the former Bear Stearns’ team of Cioffi and Tannin have the same opportunity, if they can afford a legal team of the same quality as Quattrone’s.

Finally, the Celtics and Doc Rivers should be complimented on their outstanding play and their 17th NBA Championship.

On Thursday evening the NBA finals open in Boston, with the Celtics facing the Lakers. These fabled franchises have met eleven times in the NBA finals, but this is the first time since 1987. Back in the ’80s when they met three times in the finals, Larry Bird led the Celtics and Magic Johnson led the Lakers. Their personal rivalry started in the 1979 NCAA championship game, which was won by Magic and Michigan State.  These two champions gave us the most intense rivalry of the ’80s.  Will the Kobe Bryant led Lakers dominate or will the trio of Paul Pierce, Kevin Garnett and Ray Allen prove to be too much for the Lakers? Will Phil Jackson win another championship ring and go one up on the legendary Red Auerbach, who must be tuning in for this series?  This is what great rivalries are all about and I trust that most of the nation will be caught up in the intensity of the battle.

Over the years in business, I came to have a high regard and healthy respect for my best competitors. They are the ones that are able to help you take your game to another level. I started my media career in sales and marketing and to this day I can recite the legendary battles for market share with our competitors. In the ’80s for example, when I ran the special interest consumer magazines for Capital Cities/ABC, two of our titles, High Fidelity & Modern Photography, competed directly with Stereo Review & Popular Photography from Ziff-Davis, which was led by the publishing legend Bill Ziff.  In the ’90s when I joined IDG’s InfoWorld, we battled PC Week, another title from Ziff-Davis.  It is not the easy victories but the hard-fought ones that build character and over time produce winning franchises. These are the ones that you reflect on, as you look back on your career. You also recall the teammates that made these hard-fought battles worthwhile. You remember the days that you went to war and covered each other’s backs.

Several years ago, after a pleasant lunch in San Francisco with a former rival, I remember walking down the street and having him tell me that the ZD team always believed that they were the better team than the IDG team. I challenged him on this and we both understood that even though we were long removed from the IDG vs. ZD rivalry, those were years and battles that would live on for both of us forever.

Last week, as I flew west to Los Angeles, I settled in to catch up on my magazine reading. I had with me the most recent issues of BusinessWeek, Forbes, Fortune and Sports Illustrated. I am a longtime subscriber to all of them and still look forward to a block of uninterrupted time when I can read them cover to cover.  I found the current issue of Fortune of particular interest, as it ranked the largest private equity firms and had an up-to-date profile on each of those that made the cut. The lead article and a very flattering profile were on Jonathan Nelson, cofounder of Providence Equity. I have a high regard for Providence Equity and their focused approach to Media and Telecommunications buyouts. They have clearly been one of the most successful private equity firms over the past several years. Stephanie Mehta’s profile was insightful and quite flattering to Nelson and his partners. She focused on the record-breaking $51B buyout of BCE, the parent company of Bell Canada.  Providence partnered with the Ontario Teachers’ Pension Fund and Madison Dearborn Partners on this deal.

After reading the entire issue, I went back to the cover shot of Jonathan Nelson and all of a sudden the SI Jinx crossed my mind. For those of you who have not followed the SI Jinx, it is the phenomenon that simply appearing on the cover of Sports Illustrated with a flattering profile very consistently leads to a heart-breaking loss. The most recent SI Jinx that comes to mind is the Patriots’ and Bill Belichick’s loss to the Giants after being lionized by Sports Illustrated as the team of destiny that would go undefeated right through the Super Bowl to finish 19-0 and ended up 18-1.  Two days later the story broke that the banks that had agreed to fund the Bell Canada deal, Citigroup, Deutsche Bank and Royal Bank of Scotland, wanted to renegotiate  at a lower price to remove the risk they now saw in the current market environment.

Has Fortune now joined its Time Warner sibling Sports Illustrated in the cover jinx? Will CEOs start to resist cover stories in the same way many athletes do today with SI?

I hope those of you who love golf got to see Phil Mickelson’s amazing birdie on the 18th hole this past Sunday during the Colonial, in Fort Worth, Texas.  After launching a drive into the trees and rough on the left Michelson was left with an impossible shot. I sat there and said to myself, this is very reminiscent of the U.S. Open at Winged Foot, his driver has failed him, again.  He then proceeded to loft a wedge shot from 140 yards out onto the green, under one tree and over another. And with a friendly bounce the ball stopped less than 9 feet from the hole. He went on to sink the putt for a birdie and beat Rod Pampling by a stroke! Pampling was heard to remark that this is what the #2 players in the world do.  With Phil in fine form and with Tiger Woods returning from knee surgery, the U.S. Open at Torrey Pines should be an outstanding event.

It was not that long ago that all the large, well-known private equity firms in the United States and Europe were focused on the largest deals they could find. I remember meeting with many of them as I was deciding on what I wanted to do in my next chapter after Reed Business, and the question for many of them was how large were the deals I wanted to do or how large an equity check they could write.

After having spent many years in the B2B global markets, I had a clear understanding that most of the transactions took place in the middle market.  I placed the transaction values in a range of $50M-$500M.  This played a large part in my decision to partner with Austin Ventures to start Case Interactive Media.  As the credit crunch has continued, I have been surprised at how many large private equity firms are redefining themselves as having a middle market focus.

I read recently that Tony James, Blackstone’s president, defined their core to be the middle market. I was surprised at first to read this, but upon reflection it became clear that the middle market definition is being expanded to include deals up to $2.5B, which is still much smaller than we were seeing during the spring of ‘07 when covenant light deals were in vogue.  In some ways it feels like the Triple A minor league teams are now playing part of the season against the major league teams.

The good news in all of this is that I see the market window staying open for deal flow with a very strong second half of this year. Clearly the Reed Business transaction will be a major one in the second half, and I believe that we will see more deals along the lines of CBS acquiring CNet.  The activist funds, Jana and Sandell, got their desired outcome and CNet gained a parent. The larger media companies have strong balance sheets that will allow them to acquire digital properties to assuage the concern of investors that the media companies’ core revenue streams will be marginalized over time by the Internet.

We will get to watch the next round of the battle between Microsoft vs. Yahoo unfold over the next several weeks. I must admit that I find it somewhat strange to find Carl Ichan and now Boone Pickens in the middle of the fray! I do admire that both of them are still keeping score and have not retired to the sidelines.  I would love to hear their thoughts on Vista and search marketing! The ending to this story should unfold shortly.