Case Blog

We were originally planning to head to Blackhawk this week, but two very exciting transactions that we will announce shortly will keep us in New York City for the next two weeks.  While we  await the time when we can make these announcements, I thought I’d share some excellent diversions to tide everyone over as summer gets under way.

Within the past week, Mary Claire and I have paid two visits to what we lovingly refer to as my cousin’s cafe, Salumeria Rosi Parmacotto, which is the well-known Tuscan chef Cesare Casella’s latest creation. It is located on the Upper West Side of New York City (above Columbus Circle, on Amsterdam Avenue near 73rd Street). I knew we would be back this weekend, after having brunch last Sunday and Mary Claire telling Cesare that his caponata (cooked vegetable salad, with the primary ingredient being aubergine) was the best she had ever tasted.  He has taken a small plates approach, which is taking hold across the country, particularly in wine bars, and is very attractive in the current economic climate.  I trust that we will make one or two more visits before we head west. www.salumeriarosi.com

Tonight, I look forward to watching Phil Jackson coach the Lakers to his 10th NBA championship. With this win, he will stand alone. He has been tied at 9 with the legendary Celtics coach Red Auerbach. Looking back on Jackson’s record with the Chicago Bulls and Michael Jordan and now with the Lakers and Kobe Bryant, it is clear that he knows how to put together a winning team with the chemistry necessary to carry them all the way to the pinnacle of success. I am confident that this record will stand for many years.

If you make it west to Sonoma County this summer and are looking to have a spectacular dining experience, I strongly recommend that you make a reservation, well in advance, at Cyrus in downtown Healdsburg, just off the square. Their champagne and caviar cart to start the meal is exquisite. www.cyrusrestaurant.com

For wines I am going to focus on the much-maligned chardonnay and recommend several special wineries that consistently produce outstanding chardonnays.

Aubert: I have referenced Mark Aubert previously with regards to his outstanding Pinot Noir wines. His chardonnay releases are my personal favorites. www.aubertwines.com

Copain: With a slight detour from the chardonnays listed, if you are looking for something very different for a summer day, I recommend Wells Guthrie’s Tous Ensemble Rose, which is dry and crisp.  www.copainwines.com

Martinelli: Their winemaker/wine consultant, the legendary Helen Turley, consistently releases outstanding unfiltered chardonnays from several vineyards. www.martinelliwinery.com

Rochioli: This Sonoma-based winery consistently produces excellent chardonnays and sauvignon blancs. www.rochioliwinery.com

Williams Selyem: This legendary winery is known primarily for its pinot noir releases and has a huge fan base. While I continue to enjoy their pinot noirs, I am always intrigued by their chardonnay releases, which are very limited but are truly outstanding. www.williamsselyem.com

Starting on Thursday we will have golf’s U.S. Open Championship to focus on, with its return to the Bethpage Black Course on Long Island. Is Tiger Woods back in full force to defend his amazing ‘08 championship, and will he once again tame Bethpage Black as he did in ‘02? Will Phil Mickelson, a crowd favorite in New York, challenge him or will we see one of the younger pros in their 20’s make their move? Regardless of who triumphs, it will hold our attention as only a fabled major golf championship can.

Each of us in the media industry continues to review our models for content creation, particularly during this advertising recession. We often look toward the Google  (GOOG) model of aggregated content from sources around the globe with envy and realize that they identified a model, with paid search, that allows them to monetize their significant audience with great efficiency. We also realize that their cost of content creation is not a significant expense line in their model.  Most of us also understand that this model is not one that can be easily replicated. While we need to find more efficient ways to publish and distribute our content, we should focus on producing high-quality editorial content that becomes high-demand information and can be re-purposed many times across multiple platforms.

Over the course of my career, I have been privileged to have a front-row seat when talented editorial teams created high-quality, must-have information products. For example, in the ’80s I was able to witness the rapid growth of the personal computer revolution and the many first-class products created by the Compute! editorial team led by Robert Lock and Richard Mansfield.

During the early ’90s, I watched and supported the impresario of events, Stewart Alsop, establish the Agenda Conference as the event that set the course for the PC industry as it exploded.  His fireside chats with Bill Gates are memorable, even today.

In the late ’90s, I supported and applauded the efforts of John Battelle and Jonathan Weber as they launched The Industry Standard, which became the primary information source for the Internet revolution.  It was a publication that was in such demand that its publisher, Steve Thompson, and his team set the all-time advertising page record of 7,700 ad pages for a single year.

Today, we are one week away from the launch of the ai5000. When it launches on June 15th as a digital publication (you can get a sneak preview and a complimentary subscription at www.ai5000.com), it will fulfill a vision of high-quality and must-have information that the asset owners around the globe deserve. The original vision for this dynamic launch came from Charlie Ruffel, the founder of Asset International. Much of the first-class editorial came from the efforts of Kip McDaniel, a unique talent. Together with the rest of the AI team and a group of talented contributors, they have produced a level of excitement for our global capital markets that our industry can use after a long and deep recession,

As we migrate more and more of our assets and events to the digital world, we must renew our quest for quality content. This will insure that we can once again grow during the recovery cycle that has just begun.

At the start of this long Memorial Day weekend, it is clear that with spring we saw some “green shoots” and sensed that we had most likely touched bottom in this deep recession in February or March. Confidence has slowly returned with regards to our financial system and the strongest banks are in the midst of negotiating with Treasury Secretary Geithner on when they can repay the TARP funds. Our credit system has slowly defrosted as well. As we move toward summer, we will start to hear more and more about possible debt swaps, done at significant discounts, from overleveraged private equity deals that have survived but are still searching for a way forward. While my focus is on the media sector, this process has started across all sectors of the economy.

Back in October, I wrote in A Family’s & an Industry’s Conundrum about the depressed newspaper industry, with a focus on the New York Times Company (NYT) and the McClatchy Company (MNI), both family controlled, longtime publishers. Since that time both of them have seen their fortunes worsen as the advertising free fall from November to February left both of them in significantly worse financial shape than they were in the early fall.

McClatchy announced earlier in the week that they are pursuing a debt swap at a significant discount. (WSJ May 22, 2009) They have asked bondholders of $1.15B of their debt to take equity stakes that equate to a range of $.18-$.33 on the dollar, varying by issues they hold and how quickly they agree to the terms. If they are successful, McClatchy could lower its debt load by as much as $500M and, most importantly, gain three years to repay the bonds that currently come due in 2011. Together with the significant cutbacks in fixed costs they have already made, this “reset” could give them the breathing room they need to reinvent their news franchises across the country.

While radio appeared to be surviving as a medium better than the newspaper sector, the deepening recession showed us that this was not the case. Last year in a much-publicized deal, Bain Capital LLC and Thomas H. Lee Partners LP finally took Clear Channel, a public company controlled by the Mays family, private. The deal was protracted, and in the end the company went private at a slightly reduced price per share with a debt load of $22B, compared to its $5.9B debt load when it operated as a public company. Clear Channel’s radio business experienced a 22% decline in advertising revenue in the first quarter of ‘09. (WSJ May 11, 2009) As part of their effort to reduce costs, they have had significant layoffs and suspended their 401K matching contribution. This has been a common response to the current recession by overleveraged companies across all sectors. Nevin Adams, editor-in-chief of PlanSponsor, has chronicled many of these 401K matching contribution suspensions in his daily, NewsDash. It has been widely reported in the business press that the two private equity sponsors are now trying to negotiate a debt swap to avoid violating loan covenants later in the year. The New York Post reported that the initial proposal has been rejected by two of the senior lenders. (NY Post May 22, 2009)

At the end of the day, I sense that both of these debt swaps will get done with some modifications. As the economic recovery takes place, both businesses will have bought some time to move from an analog to a digital strategy that will allow them to survive, although as much less dominant national players then they were prior to this recession. Advertising dollars are starting to be spent again, and we should not lose sight of the fact that Google emerged dramatically from the last recession. There is tremendous leverage in the advertising/marketing spend, but yesterday’s dominant players do not always emerge as the tomorrow’s leaders.

I spent most of last week in London, where Gordon Brown’s government remains under pressure from the Tories to call for a new election. The expense scandal that engulfed the House of Commons while I was there certainly has not strengthened Labour’s hand to resist. Just as we saw the Democrats and President Obama take over from eight years of Republican control of the White House, I sense that the Tories’ time is near after more then 10 years of Labour’s dominance during the Blair years and the current Brown term.

I have noticed during the past two recessions, where I have had a unique window into both the U.S. and UK advertising markets, that British companies do not move to cut their marketing spend as dramatically as their U.S. counterparts. I trust that this serves them well during the recovery, where the strongest companies can gain very profitable market share. There is a lesson for U.S. marketers in this strategy.

Back in mid-February, I wrote in Transparency: “The current financial crisis, which has resulted in the worst recession since World War II, will come to an end when confidence is restored in our global financial institutions. Treasury Secretary Tim Geithner learned very quickly last week that the markets want more than a blueprint, they want a specific plan that will lead to the balance sheets of our largest money center banks being healthy and the subprime toxic assets isolated.”  Part of the specific plan that emerged was the “stress test” for 19 large banks around the country. At this point it not clear to me whether Secretary Geithner or Larry Summers or someone else within the Obama administration came up the idea of a stress test to determine if the banks’ balance sheets were strong enough to weather a continuing and deepening recession, but I am willing to give credit to the Obama team for finally demonstrating to everyone that the worst is behind us.

The back and forth between the Treasury Department and several of the banks, for example Wells Fargo (WFC), reminded me of the process that those of us on the deal side often experience in finding a common ground for valuation of a company prior to an acquisition or investment. In other words, I think it was a healthy process and in the end all of the banks worked within the guidelines and are now going forward raising additional capital where necessary.   It is clear that of the largest bank holding companies, JPMorgan Chase (JPM) and Goldman Sachs (GS) are very strong and will be able to pay back the government before the end of this year.  Bank of America (BAC) and Citigroup (C) still have some work in front of them, but they are clearly in stronger shape than some analysts would have had us believe, which was reflected in the significant share increase they both realized this past week. In the case of Bank of America, it would appear that the Merrill Lynch acquisition, while problematic, should play out in a positive way over the next several years.

With confidence restored in our major banks, I trust that we will start to see more signs of recovery in June and into the third quarter. We will also start to see more signs of consolidation within several sectors, including media, as the strongest companies look to take advantage of the current low valuations to improve their market share.  Will Microsoft (MSFT) make one last run at Yahoo (YHOO) to improve its fortunes in search?

As we enter mid-May the second round of the NBA playoffs are starting to give us a hint of what the finals, in early June, will look like. Can any team in the east stop LeBron James and the Cavaliers? The defending champion Celtics without Kevin Garnett do not look like they have the bench to pull it off, particularly after a long struggle in the first round with the Chicago Bulls.  In the west, it is clear that the Lakers, once again, will be the team that someone will have to beat to make a trip to the finals. Could we end up with that made-for-TV finals of LeBron vs. Kobe?

While taking some R&R last week, Mary Claire and I had the pleasure of dining at Spago on Maui. While trying to decide on a red wine to accompany a Kobe style flank steak, I noticed a Syrah from a small winery out of Washington state, DeLILLE Cellars. A friend and colleague from earlier in our careers, John Koenigs, had dropped me a note recently about DeLILLE’s Syrahs. While I was familiar with them, I had not had the pleasure of trying their Doyenne Syrah. We went with the ‘05 Doyenne Syrah (RP 91) and found it to be an excellent full-bodied wine with hints of cassis, blackberries, pepper and espresso.  It is 97% Syrah and 3% Viognier.  DeLILLE’s current ‘06 release is available through their website for $49. www.delillecellars.com

As we emerge from the long winter recession, once more the debate is underway about whether marketers should spend any of their budget on branding or focus entirely on lead generation. I, for one, believe that this is not an either/or decision. The best marketers, those who have created growth during this downturn, continue to rely on a marketing mix that includes both.  Amazon (AMZN) has seen dramatic growth since they introduced their Prime membership program, which included free shipping. There were many skeptics, but this innovative approach fueled their recent growth at the expense of their major competitors, Borders (BGP) and Barnes & Noble (BKS).  In the case of Amazon, they also regularly communicate by email with their large, established customer base. They also gained market share in the consumer electronics category when Circuit City committed so many missteps that they found themselves forced to declare bankruptcy and close their doors.  Once again Amazon has innovated with the Kindle 2 and has been rewarded.  Mary Claire and I each have one and love the flexibility they provide when we travel.

Apple (APPL) is another example of a company that has continued to successfully invest in branding. Apple has one of the strongest consumer brands, one that stands for innovation and style. They have taken this strong brand and turned the smartphone market on its head. Apple and AT&T (ATT), their distribution partner in the U.S., both reported strong earnings last week because of the iPhone, which continues to eclipse all of its competitors.

As B2B marketers, we need to offer our clients opportunities for both brand building and measurable lead generation opportunities. We must do this across multiple platforms, both online and offline, through opportunities like live events. I hear more and more clients asking for “thought leadership opportunities” tied to whitepapers and conferences. Those among us that are most responsive to the unique marketing needs of our client base will emerge from the downturn stronger and with increased market share. Stephen Moylan, who joined us at Asset International a short time ago as Executive Vice President of Sales & Marketing, is one of the best marketers I have had the pleasure of working with over the years. He listens to customer and client needs and is then able to respond with creative programs tailored to help them meet their specific goals. In many ways, in this weekend of the NFL draft, Stephen is my go-to guy, the person I can depend upon to make certain that our customer base is receiving the attention and creative programs they deserve.

On Saturday, the first day of the NFL draft, we drove up to Hafner Vineyard, www.hafnervineyard.com, just north of Healdsburg in Sonoma County. The Hafner family has an annual luncheon for their best customers to show their appreciation. They have 120+ people to their home, which has magnificent views out over the valley and their 1,000+ acres. They have never used the retail channel, because they found it too impersonal. They only sell to a small select group of restaurants and individuals by direct marketing. Their client base is very loyal (we have been customers since 1992, when we moved to the Bay Area) and is appreciative of the number of ways that the Hafner family has found to say thank you.  A long time ago I attended a lecture by Peter Drucker and came away with one memory, which I will paraphrase: the primary objective of a business is to create a customer. As we work our way out of this deep recession, we would all do well to celebrate and recognize the unique contributions of our customers.

Before we turn to opportunities, I need to do a mea culpa on my pick of Louisville to go all the way after they trounced Arizona. They unexpectedly ran into the Motown favorite, Tom Izzo’s Michigan State Spartans. Detroit needed some magic and the team from 90 miles away in Lansing answered the call. The idea of Louisville playing in an all-Big East final faded away and we found Michigan State facing North Carolina in the final. The Spartan dream ended quickly at the hands of Ty Lawson and Tyler Hansbrough.  Coach Roy Williams took President Obama’s call after the game, congratulating Williams and his team and also thanking him for vindicating Obama’s pick of UNC to win the tournament. I will defer to the nation’s #1 fan when next year’s brackets are released.

Turning to the Masters this past Sunday, we saw a “final within a final.” With Tiger Woods and Phil Mickelson trailing the leaders by a significant margin when the third round ended on Saturday, they were paired together for the final round on Sunday. With the crowds and the cameras following them on Sunday they found magic, with Mickelson tying a course record 30 on the front 9 and Tiger gradually bringing the leaders within reach. This was the first Act of a very enjoyable play. On the back 9 in Act II, we realized that Tiger and Phil were going to fall short, as the magic faded and they gave back several strokes and Kenny Perry had the Green Jacket within reach. Then the unthinkable happened: a very consistent golfer trying to sit on a lead bogeyed both 17 and 18 to find himself in a three-way tie. The final Act was a sudden-death play-off between Perry, Angel Cabrera and Chad Campbell. Cabrera had stayed close all day, and when Perry left the door open Cabrera was not going to be denied. He walked off with the Green Jacket and his second major championship, having won the US Open in ‘07 at Oakmont.

The media market has significant opportunities in ‘09, but they are not all obvious and they are very different than they have been in the recent past. Across the various sectors there are companies that were overleveraged, and in this advertising tsunami they do not have the cash flow to meet their debt obligations. Many of them have excellent brands and are well positioned within their sector for a rebound as the economy improves. They will need to be recapitalized, though, in order to survive. With strategic investors on the sidelines waiting for the storm to pass, the opportunity will fall, once again, to the private equity investors who have dry powder and recognize the upside potential. It will also fall to some of the lenders, who will find themselves trading their debt for equity.  This opportunity may even exist for some of the overleveraged newspaper properties that have strong brands, community support and a digital strategy for the future.

Yesterday Goldman Sachs (GS) made two important announcements. First they are going to raise capital in the public markets to be the first major financial institution to repay the TARP funds to the government. I trust that many more will follow over the next several quarters. I sense that this demonstrates that we have touched bottom and we are at the beginning of a recovery, although on any given day it does not feel that way. The financial stocks rallied on this news. Goldman Sachs also announced that they are in the process of closing a $5.5B fund to buy private equity investments at a discount in the secondary market. The GS Vintage Fund V (WSJ 4/13/09) will be the largest secondary fund raised to date. Many pension funds and endowments that need liquidity are now open to selling their positions in this asset class at a discount. Again, for the savvy investor, this is a time of opportunity.

Finally, if you go to www.assetinternational.com and click on AI’s 5000 you will find the opening pages of, “Harvard Has a Cold,” by Kristopher McDaniel. He chronicles why Harvard, earlier this year, tried to sell some of its private equity holdings in the secondary market. This is the type of in-depth, quality reporting and analysis that you will find in this digital publication when it launches in early June.

The last week of winter was not kind to President Obama or Treasury Secretary Geithner.  Critics’ voices got louder and insisted that the administration was not up to the task of restoring confidence in our financial markets and institutions.  The late-night visit with Jay Leno by the President did not help and there started to be calls from some quarters to replace Tim Geithner with Larry Summers.

As we started spring on the morning of March 20th, we had snow flurries in New York City and the first full week of spring remained winter-like, by and large cold and damp from a weather perspective.  For the administration, though, spring arrived when Secretary Geithner moved from a bank recovery blueprint several weeks ago that was not well received by the markets to a plan to use both public and private funds to remove toxic assets from the banks’ balance sheets.  Wall Street, even with a down Friday, reacted very positively and the Dow finished the week up 6.8%. The 17% gain over the past three weeks was the “best three-week stretch since September of 1982.” (WSJ 3/28/09)  I’ve spoken with a number of individuals who have re-entered the market for the first time since the fall. And I have consistently stated that the recovery would not begin until we had a plan that met the markets approval to restore the balance sheets of the major banks by removing the toxic assets. With that plan in place, a recovery will begin.

President Obama ended the week by hosting a meeting with the heads of the major banks. The rhetoric at this meeting was much cooler than it was during the AIG bonus debacle a week earlier.  The bankers emerged from the meeting talking about cooperation with the government in solving the current credit crisis and restoring growth to the U.S. and our trading partners’ economies.

For those of us in the media business, I believe that we will see a much-improved 2nd quarter, with advertising starting to rebound off the floor of November-February. Credit markets will also start to show some daylight, but EBOs  (equity buyouts) will remain the most viable transactions at least through the summer, as many overleveraged deals from ‘06 and ‘07 will continue to struggle.

In the midst of the economic turmoil, March Madness roars on, with the Big East demonstrating its dominance and strength. My personal favorite at the start, Rick Pitino’s Louisville Cardinals, remain my pick to win it all after their dominating 103-64 win over the supposed Cinderella Arizona Wildcats.   Each time I watch the Cardinals I am impressed by their athleticism, strong defense and bench strength.

If you have a moment this week, please take a look at our new corporate website, where all our products and services can be found: www.assetinternational.com.

On Thursday March 12th in the Wall Street Journal, Peter Lattman wrote,  “The LBO is dead. Long live the EBO” (WSJ, “Lacking Leverage, Firms Embrace EBOs”).  In the article he quoted Scott Nuttall, a partner at KKR speaking at a private equity conference, “Opportunities abound right now. You don’t need to use leverage to buy companies when they’re trading at a 50% discount to their historic average multiples.”

The appeal of the EBO for the seller is there is not the risk of a transaction failing to close because of the credit markets. In the same article, an October deal by Advent was cited. Advent paid all cash for a card-processing business, later renamed Monext. This was a $260M transaction. “We were able to provide certainty, which is a scarce commodity these days,” according to  Advent’s Stephen Hoffmeister.

In the media space we will see more EBOs than LBOs this year — if deals are going to get done. The EBO does carry some risk for the private equity firm, though. In order for these deals to be successful in the long run, there needs to be realistic price expectations  on the part of the sellers and their advisers.

Earlier this week, Bill Cohan’s new book, “House of Cards: A Tale of Hubris and Wretched Excess on Wall Street,” was published by Doubleday.  The initial reviews have all been outstanding. Bill has clearly made the transition from investment banker to established author. This story of Bear Stearns’ demise, together with his first book, “The Last Tycoons,” has established him as a force to be reckoned with on Wall Street.

Later this afternoon, “Selection Sunday” will provide answers for the March Madness field of 65. There are always disappointments for the schools on the bubble, but on Monday morning the NIT selection extends their season.

Several readers have asked for some new wine recommendations to carry them from winter to spring. Here are several new ones from northern California that provide both value and very good quality.

Steel Plow Syrah
Landmark Vineyards consistently produces quality wines that represent real value. Most of their releases are priced between $20 and $40. One of my recent favorites is their ‘06 Steel Plow Syrah, which can be purchased on their website for $30.  I have had it several times recently in restaurants and find it to have depth. It is perfect when paired with a short rib on a winter evening.  The Wine Spectator recently rated it a 94 (WS 94). www.landmarkwine.com

Anagram
I was recently introduced to Rich Moran by my friend and former publishing colleague Stewart Alsop. Rich is a partner at the venerable venture capital firm Venrock. Rich and his wife Carol collaborate on producing limited (600 cases per year) Bordeaux-style blends, named Anagram. Their vineyard is located in Knights Valley. I ordered a mixed case of their ‘04, ‘05 and ‘06 releases. When we returned late on Friday night to New York City from Blackhawk, we opened the ‘04 Anagram with our favorite pizzas from Una Pizza Napoletana (www.unapizza.com). I was impressed with the balance, the wonderful nose and the nuances of this release. I could not find a review from either the Wine Advocate or the Wine Spectator, but I rated it an 89-90. At an average price of $40 this represents excellent value. Please let Rich or Carol know when you order that you have read this blog entry. Small wineries need viral, word-of-mouth marketing. It is nice to see someone from our industry have as many varied interests, all of which Rich does successfully. While Stewart introduced us, Rich and I must thank Tom Peterson of El Dorado Ventures for pointing out to us that we shared a passion for wine.
www.moranmanor.com

Lucia Chardonnay, Lucia Pinot Noir
This is another brand from Pisoni Vineyards. The current releases include the ‘07 Lucia Chardonnay, $40 and the ‘07 Lucia Pinot Noir, $40.  It also includes the Gary’s Vineyard release for $50. I am just ordering this weekend, but since their introduction several years ago, all of the Lucia releases have represented excellent quality and value. www.luciavineyards.com

It is crunch time for the Division I men’s college basketball teams. With “Selection Sunday” looming large on March 15th, teams on the bubble need to make their move.  Rivals.com has just published its projections for the field of 65. Penn State, Kentucky, Cincinnati and Miami are currently the last four in. Virginia Tech, Maryland, Michigan and Temple are currently the last four out. Michigan improved its chances for a bid this week with a win over #16 Purdue.

The projected #1 seeds are North Carolina, Connecticut, Pittsburgh and Oklahoma. The projected #2 seeds are Louisville, Michigan State, Duke and Memphis. Will the projected 9th seed Boston College be a Cinderella team with its wins over North Carolina, Duke and Florida State, or will the team that lost to Harvard show up at tourney time?  Over the years, the lead-up to the tournament has become a sign that spring is almost here and another winter behind us.

After an exciting finish by Phil Mickelson (will he hold on or will he self destruct?) last Sunday at the Northern Trust PGA event at the Riviera Country Club in Los Angeles, their was an uproar in the press and the halls of Congress over Northern Trust’s sponsorship and entertaining during the event. On Friday, Northern Trust CEO Frederick Waddell responded in a letter to Congressman Frank, chairman of the House Financial Services Committee, and 17 other members of Congress.  While stating that Northern Trust understood that this is a time of great financial uncertainty, Waddell defended the sponsorship and pointed out that “the event has raised more than $50M for charity since its inception.”  Northern Trust (NTRS) remains profitable and has announced that it will return the $1.6B in TARP funds, with interest, as soon as it can replace it with private capital. I sense that they will not be alone. Healthy financial institutions would like to make their own decisions on appropriate marketing activities as they have in the past, which I fully support. Those of us who plan events as an important part of our product and service offerings need to be extra sensitive in the current climate when we select venues.

On Sunday evening in Los Angeles the 81st Academy Awards took place at the Kodak Theatre, just down the road from the Riviera Country Club.  Slumdog Millionaire walked off with 8 Oscars! The movie captured the dichotomy of Mumbai, India, with its poverty juxtaposed against the growth of the city that took place over the last decade. Slumdog Millionaire managed to capture the spirit and determination of the people of Mumbai.

We held Asset International’s first global sales meeting this week and laid out our growth plans to the sales teams from London, New York and Stamford, which represent their respective markets, Global Custodian, Plan Adviser and Plan Sponsor. The meeting ended with a real enthusiasm for our global vision and a real sense of team. This will serve us well as we prepare to launch The 5000 in late April.

Later this week, Mary Claire and I will head to our home in Blackhawk to get an early feel for spring. I know we will be sharing our Kindle 2 on the flight. If you have not already done so, you should go to www.amazon.com and take a tour of the latest Kindle. For those of us who love to read, this is a must-have platform. It demonstrates that the digital transformation is at hand. I marvel that it can hold a library of 1,500 books, and its capability for wireless downloads is truly impressive.

While we are in Blackhawk, I will have the opportunity during a round or two of golf with my friend and golf partner, George Riggs, a longtime newspaper executive who recently retired, to share thoughts and insights on the perilous state of the newspaper industry. The two Philadelphia papers that Brian Tierney acquired with a group of investors from McClatchy (MNI $.49  2/27/09) as part of the Knight-Ridder transaction filed for bankruptcy this past week. This was quickly followed by an announcement from Hearst that the San Francisco Chronicle, which lost $50M+ this past year, will have to find a path to profitability, be sold or  be shut down.  Finally later in the week, Scripps (SSP), which had made a similar announcement to Hearst earlier, followed through and shut down the storied Rocky Mountain News.

We are starting to see all of the overleveraged newspaper properties headed toward bankruptcy filings as they try to deleverage. And those properties that are still seeking a viable new model and have healthy, diversified media company parents are finding out that their owners’ patience is coming to an end. Will there be an investment opportunity found in the rubble when the dust settles, or has the digital divide left newspapers behind? Is there brand equity left that will allow new models, with low overhead and debt, to thrive during an economic recovery?

The current financial crisis, which has resulted in the worst recession since World War II, will come to an end when confidence is restored in our global financial institutions.  Treasury Secretary Tim Geithner learned very quickly last week that the markets want more than a blueprint, they want a specific plan that will lead to the balance sheets of our largest money center banks being healthy and the subprime toxic assets isolated.  He and his colleagues in the Obama administration need to come forward with a transparent plan that starts to restore confidence.  The need for transparency is greater than at any time in recent memory and it must be combined with a plan that provides decisive actions.

We also need the Obama team to start to demonstrate some optimism that there will be a recovery. On January 9th, 1961 President-Elect John F. Kennedy inspired a nation with such optimism in a speech delivered to the Joint Convention of the General Court of the Commonwealth of Massachusetts.  He said, “During the last sixty days, I have been at the task of constructing an administration. It has been a long and deliberate process. Some have counseled greater speed. Others have counseled more expedient tests. But I have been guided by the standard John Winthrop set before his shipmates on the flagship Arbella three hundred and thirty-one years ago, as they, too, faced the task of building a new government on a perilous frontier. ‘We must always consider,’ he said, ’that we shall be as a city upon a hill–the eyes of all people are upon us.’  Today the eyes of all people are truly upon us–and our governments, in every branch, at every level, national, state and local, must be as a city upon a hill–constructed and inhabited by men aware of their great trust and their great responsibilities.”

President Ronald Reagan in his farewell speech on January 11th, 1989 also spoke of the “shining city upon a hill.” He said, “And that’s about all I have to say tonight. Except for one thing. The past few days when I’ve been at that window upstairs, I’ve thought a bit of the ‘shining city upon a hill.’ The phrase comes from John Winthrop, who wrote it to describe the America he imagined. What he imagined was important…I’ve spoken of the shining city all my political life, but I don’t know if I ever quite communicated what I saw when I said it. But in my mind it was a tall proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace, a city with free ports that hummed with commerce and creativity, and if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here. That’s how I saw it and see it still.”

President Obama has both the mandate and the oratorical skills to help restore a sense of confidence and optimism. He needs to communicate directly with the American people that we will find our way to a recovery.

In our own small way the team at Asset International works every day to provide transparency to our readers.  Nevin Adams, the editor-in-chief of Plan Sponsor (www.plansponsor.com), provides the leadership to our editorial team and encourages them to deal, forthrightly, with issues of the day and how they impact both plan design and investment strategies.  Nevin, as most of the best business editors I have known, came to Asset International from an industry position. This background provides him with a unique vantage point and insures that Plan Sponsor is a “must read” and a trusted information source for our subscribers.

On the deal front, we saw John Malone and Liberty emerge as a possible white knight for Sirius XM. As the first major tranche of bonds come due on Tuesday, Mel Karmazin and his board will have to make a decision on Charlie Ergen and the Dish Network, John Malone and DirecTV, or bankruptcy. As a subscriber, I am assuming that any of these options will allow me to continue to listen to CNBC as I drive to and from AI’s offices in Stamford.