Case Blog

This past week Treasury Secretary Hank Paulson admitted that the plan he backed so vociferously just a short time ago, to buy toxic mortgage assets, was not going to work. With the recession deepening around the globe, world leaders continue to seek ways to turn around the global financial markets.

Over the weekend, President Bush hosted leaders from more than 20 countries (G-20) in an attempt to write a new agenda to avoid future meltdowns and to find a way to jump-start economies that do not seem to be responding to earlier efforts. Just prior to the meeting, China unveiled a large stimulus package that was applauded around the globe, but this news was followed by the European Union announcing, to the surprise of no one, that they were officially in recession. President-elect Obama was invited to the summit, but chose instead to send former Secretary of State Madeleine Albright and former Republican Congressman Jim Leach.  By deferring to the current administration, the Obama team buys some time to get a cabinet in place and work on some clear positions to address the current malaise. The G-20 Summit ended on Saturday with the leaders of the G-20 pledging to stabilize the world’s financial markets in order to restore growth and agreeing to five broad principles. They also agreed to meet again before the end of April ‘09.  We also learned last week that approximately half of the authorized TARP funds, $350 billion, will remain uncommitted and that the Obama administration will have some flexibility as they take power.

On the home front, a deal to bail out the domestic auto industry is looking less likely as Republican opposition is growing.  The U.S. auto industry’s slide has been prolonged and it is difficult to envision Detroit regaining lost market share from its global competitors. It is clear that this industry needs a lower wage and benefit base and has to develop common platforms that will deliver autos that people will buy.  When gas touched close to $5 per gallon, the love affair with the SUV came to an end. Now that it is selling closer to $2 per gallon, the recession-plagued economy is keeping people out of new car showrooms. With oil sliding toward $50 per barrel on weak demand, T. Boone Pickens has disappeared from our airwaves with his hedge funds absorbing very large losses. He and his wind farms will not be missed.

I sense that eventually we will get a recovery from all the concerted efforts being put forth, but that it will be in the second half of ‘09 and it will be gradual. In the interim, the media deal market will remain very slow.  However, strategic investors and private equity funds  that are willing to use cash and think about the impact of leverage later should be able to find some excellent assets available at attractive prices.

Over the weekend Mary Claire and I went to the theatre to see “Speed-the-Plow” by David Mamet. It stars Jeremy Piven, Raul Esparza and Elisabeth Moss. Piven of Entourage fame and Moss a star on Mad Men were excellent when combined with the talented Esparza. It is scheduled to run until February at the Ethel Barrymore Theatre on W. 47th St.

Late this week, we will depart for Blackhawk for Thanksgiving. I know that everyone will look forward to the Thanksgiving interlude, which will provide some needed relief from the continued bad news in the global markets. We will host our friends, Cate and Joe DeMarco.

Another friend, David Crosby, reminded me recently that I had not written about Pride Mountain Vineyards, except for a brief mention in an earlier blog. As you try to pick a wine to go with your Thanksgiving dinner, you would not be disappointed with Pride’s exquisite Merlots. They have just released their ‘07 Vintner’s Select Merlot. I am a great fan of their Cabernet Sauvignon releases as well.  This winery is a longtime favorite of mine. It was founded by a husband and wife team, Carolyn & Jim Pride. Jim Pride passed away in ‘04, but the winery continues to be run by the family. www.pridewines.com

For those of you who would like something a little more refined with your turkey dinner, but with a full body and much nuance, I would recommend Peter Michael’s Pinot Noir: Le Moulin Rouge. I would also recommend you start your meal with their Sauvignon Blanc: l’Apres Midi. www.petermichaelwinery.com

Finally, one will never go wrong with the outstanding Chardonnay & Pinot Noir wines from Kistler Vineyards.  Their Cuvee Catherine & Cuvee Elizabeth Pinot Noirs are two of my all-time favorites from the Sonoma Coast.    www.kistlervineyards.com

You should be able to find limited quantities of these wines in your better wine shops. In New York City, I recommend you try Crush Wine & Spirits, which has an excellent selection of wines. They are  near the corner of 57th and 3rd, at 153 E. 57th Street.  www.crushwineco.com   You can also try Sherry-Lehmann, which recently relocated from Madison Avenue to the corner of Park Avenue and 59th St. www.sherry-lehmann.com

Happy Thanksgiving!

In April of this year, in a blog entry titled, Transitions, I focused on the analog to digital transition that media companies were faced with, and how difficult this would prove in a challenged economy. In many ways, I did not envision the challenges that September and October would present us. This is clearly the most difficult advertising environment that we have experienced since the fourth quarter of ‘01, after the tragic events of 9/11.

I would like to focus, though, on the transition that will take place between President-elect Obama and the current Bush administration. After a primary season that seemed to go on forever and a bruising fall campaign, it became clear on the evening of the  election, which I spent in London, that President-elect Obama and his team had run a flawless campaign, which was evidenced by his commanding margin in both the Electoral College and in the popular vote.

Our democracy, around the world, will be judged on the transition between administrations. We should all take a deep breath and allow the Obama team the time to select the key positions in their administration. As President-elect Obama has pointed out, we have one president at a time, but his transition team  should be able to focus, in a collaborative way with the departing Bush administration. Some have been too quick to criticize his pick of Rahm Emanuel, as chief of staff, as too partisan of a choice.  History has shown that within the modern presidency, this is a critical choice and one that only the president can make.

President Bush has reached out and tomorrow the Obama family will visit the White House, which is very appropriate. In a time where we are challenged at home and abroad, we should allow President-elect Obama to prepare for the next four years.  As someone, who has taken over companies and divisions from previous CEO’s and their administrations, I have come to appreciate most, those who have left me a clean balance sheet. I hope that the Bush administration takes this approach and acts in the best spirit of bipartisanship. As the new opposition party, the Republicans will have plenty of time to critique and reflect on why they lost the support of the majority of the American public and what they must do to address this, as the minority party.

Turning to football, why have the Miami Dolphins improved to 5-4, with 3 straight victories, to find themselves in the thick of the AFC East divisional race, after finishing 1-15, last season? During the past several seasons they have employed some excellent coaches, for example Nick Saban, who now has Alabama back on top of the college polls at #1, and yet was not able to turnaround the Dolphins.  Bill Parcells, who has directed winning transitions for the Giants, Patriots, Jets and Dallas got bored in his latest retirement. He realized that the sidelines were really for a younger person, but he put together a strong transition team, mostly from his days in Dallas, and arrived with new head coach, Tony Sparano, and once again has turned a losing franchise into a winner.  They have even given the NFL the Wildcat offense, which is being copied around the league. 

I spent Saturday evening, in Chestnut Hill with my brother-in-law, John McQuade, watching Boston College defeat Notre Dame for the 6th straight time. The final score was 17-0. Several observations; Charlie Weiss has an improved Notre Dame team, but it is not of caliber of the teams in the top 25, although it is one victory (6) away from being bowl eligible. Clausen will complete all four years at Notre Dame, because the NFL is not going to call on him to enter the draft, early. I got my tickets late and found myself in the far end-zone, with many Notre Dame fans. I was impressed to see several rows away, Mike Golic, co-host of Mike & Mike in the Morning on ESPN with Mike Greenberg, sitting with other parents and Notre Dame fans. His son, Mike, plays for the Irish. Obviously, during an ESPN broadcast, he could have been in the booth, but on Saturday evening he was there as a parent.

Transitions are never easy, but when executed well they can be exhilarating and allow a new team to prepare for all the challenges they face!