NBC Universal: Sparrow hawk or strutting peacock?

The media conglomerate said on Friday it won't let Apple sell its television shows on iTunes. Apple said NBC wanted to more than double the wholesale rate for each show, an edict that would have forced iTunes to raise the price of each episode download to $4.99 from $1.99.

Apple refused. CEO Steve Jobs has been able to keep content providers under his thumb for some time now, because they know the iPod is the only game in town for digital media players.

So what does that mean to the folks at home? Apple thinks a flat rate for music and video is best because it will bring in customers and make everybody a nice pile of money. Some of the folks who provide the content, like NBC, think it's ridiculous not to have a say in the pricing of their shows. After all, some cost more to produce than others, right?

This could have some interesting implications, especially when you consider that Apple will show the world its new iPod next week. The iPod is a seemingly unstoppable success, but it appears that NBC is betting that it's nothing more than a hard drive and some pretty plastic if it's not stuffed full of "30 Rock" and "Heroes" episodes.

Either way, maybe "strutting peacock" trumps "sparrowhawk" when you consider that it's only the beginning of September and the Apple-NBC contract has until the end of the year to play out. That's plenty of billable hours for brown-bag lawyers' lunches in Manhattan.

On the other hand, NBC Universal did just announce their "Hulu" joint venture with News Corp. Hulu is an online video service that will put a bunch of programming that both networks own on the Internet -- for free. Now there's a price that beats $1.99 any day of the week.

All right, media conspiracy theory people, will NBC pull the old William Tell trick on Apple? Or is it just preening and strutting?

Other media and tech news from this week, complete with avian references:

- Speaking of sparrow hawks, NBC Universal plans to double the size of its cable business outside the United States by buying Sparrowhawk Media, owner of the Hallmark channel. The price, our source told us, is about $350 million. (Reuters)

- Google is making the Associated Press, Britain's Press Association, Canadian Press and Agence France-Presse happy with its decision to host stories from the four news outlets. Key to the deal: they are licensing the feeds to Google. Talk about monetizing assets! (Reuters)

- The newspaper business is a cash cow, but in the end, it still stinks, according to Goldman Sachs and Fitch. The Newspaper Association of America's numbers paint a similar picture, even if the group wouldn't characterize it quite that way. (MediaFile)

- CNN broke up with Reuters, saying it would prefer to spend its money on its own news operations. "Everything is changing," the CNN spokesman told us. Don't we know it! (Reuters)

- He's our Legend, not yours. Bob Marley's family says it will sue Universal Music and Verizon Wireless, claiming they used the reggae king's name and image without permission. No lawsuit, no cry. (Reuters)

- Nokia, the world's largest cell phone maker, unveils an online music store, gaming service and four new multimedia handsets. They will all feature the complete works of Sibelius. We wish. (Reuters)

- EMI votes Eric Nicoli off the island. (Reuters)

Apparently a good book in the WC just doesn't cut it anymore. Here's the proof, according to Reuters reporter Ritsuko Ando:

Japanese toilet maker Toto Ltd, in hopes of winning more U.S. converts, launched an advertising campaign this summer to familiarize consumers with its products. ... Toto is a pioneer of the washlet. The name belongs to its product line Washlet, but is used in Japan as a generic term for all high-tech toilets with bidet functions. Most washlets come with warm toilet seats, a bidet spray that extends from under the seat to jet warm water, and a dryer, as well as a remote control to adjust toilet seat and water temperatures.

Toto had us at "warm toilet seats," but Ando reports that there is a bit of an uphill battle to convert Americans into buyers because of a hesitation to discuss scatological necessities. Still, Toto's U.S. spokeswoman Lenora Campos says there's a point of no return factor: "When people become washlet users, they become washlet evangelists," she said. "Once you make that leap, you don't want to go back."

Campos also should win a quote-of-the-year award for this gem: "Toilet paper just distributes the problem... Whenever we clean anything else, we wash with water, right?"

Sold!

LG Electronics says it's not intimidated by giant Nokia's unveiling of an online music store and gaming service this week.

Rather, LG says the move should open up the online multimedia services business to other players -- itself included.

"If they're creating the market and creating the use, we're happy," the head of LG's mobile design strategy, Chang Ma, told Reuters at the IFA consumer electronics fair in Berlin.

LG has scored design hits with its "Chocolate" and "Shine" phones and this week at IFA launched its first premium feature phone, the "Viewty." The device comes packed with user-friendly picture and video sharing features including a hot key to upload video to YouTube.

Visitors to Berlin's IFA consumer electronics fair seemed pretty indifferent to the environmental effects of their buying choices. Actually, quite a few showed more interest in big TV screens and hot brands, despite manufacturers' efforts to woo them with green credentials.

Richard Lee, 35, responded with a shrug of the shoulders when asked if he preferred environmentally friendly products. "I prefer Japanese products," he said, explaning that he works for an electronics manufacturer.

"We came to get new ideas," he added, prying the back off an HDTV monitor in one of the exhibition stalls to peer at the inner components.

Richard probably doesn't recycle either. 
 

Stocks welcomed a joint effort by the Federal Reserve and the White House to reassure on the credit front. Analysts offered more qualified support to a promise by President Bush to help struggling homeowners refinance their mortgages.

"It's very light on detail and limited in scope," said Jeff Schappe, chief investment officer at BB&T Asset Management. "He is putting it essentially in the lap of Congress. It would allow some delinquent borrowers to get an FHA guarantee so that they can refinance. I suspect it's going to be limited to borrowers in a primary residence who are significantly delinquent."

Axel Merk, a portfolio manager at the Merk Hard Currency Fund, concluded what Bush's plan "will do is make poor homeowners slaves of their homes. .. The terms of the loan will require that you basically never pay down your loan. Unless they are bailed out by higher home prices, they are becoming prisoners of their homes."

More Wall Street comments here

When it's time to accessorize, don't forget your gadgets! For the gadget that has everything now come pouches, bags and sleeves to clothe your iPod, XBox or laptop. At the Magic Marketplace apparel trade show in Las Vegas this week, Tandy Brands Accessories, a major accessories supplier for retailers like Target, Wal-Mart Stores, Kohl's and J.C. Penney, launched its NextGen line.  

The idea of protecting your gadgets in streamlined, modern-looking cases must make sense to some people, because Best Buy this fall will begin carrying a line of Liz Claiborne bags, cases and covers for electronics.  "Every year, we've been hearing at holiday that electronics were the big winners. We decided we needed to accessorize those electronics," said Dan Weaver, vice president of design for Tandy's men's division.

Accessories as a category are generally insulated from fluctuations in consumer spending since people may forgo a full outfit but won't feel guilty if they buy a bag, a belt or other small item."Times are tough but our price points in categories are still accessible," Weaver said. "I think overall the apparel industry will feel a pinch but I think we will be ok with accessories."

Arbitrage spreads, which measure the difference between the current and offered price of an acquisition target, have tightened on some closely watched leveraged buyouts -- meaning investors are betting Wall St. will get to work closing the deals. 

Earlier this month the spreads had widened as tightening credit markets and fears of a global liquidity crunch turned a normal summer slowdown in mergers and acquisitions into a deep freeze. 

But arbs are growing confident again. Alliance Data, being acquired by Blackstone, has allowed the private equity firm to purchase shares before closing and said Blackstone had committed capital to complete the deal -- positive signs that an arbitrage trader said were being reflected across LBOs. 

Also tightening spreads was news on TXU clearing hurdles and the Bush bounce, the trader said. 

Below are the current arbitrage spreads and those from August 10 for some closely watched LBOs.
    
 
    Target             Buyer                  Arb spread  
                                                    Current       Aug. 10
    ALLTEL           TPG; GS            4.7%           8.5%
 
    Cablevision       Mgmt                8.4%           9.9%
 
    Clear Channel   Bain                  5.7%         12.2%
                             
    First Data          KKR                 2.4%           9.5%
 
    Harrah's            Apollo; TPG      4.9%           8.4%
 
    Hilton Hotels     Blackstone        3.7%          8.2%
 
    SLM Corp         JC Flowers      20.2%         24.5%
                             
    TXU                  KKR                 2.4%           8.8%

(Image credit. "1937 Labor Day Parade." http://www.ufcw81.org/PublisherFiles/middle_years.htm)

Blog Guy, our family keeps a list of our favorite postings in your blog. We read them over and over, and laugh until root beer comes out of our noses. We were just wondering if other readers have favorites, too?
The Johnsons

Okay, nobody believes for a moment that there's a Johnson family that rereads this junk, but I am able to tell you the most popular posts.

Through the wonders of programs that, you know, count stuff, here are the most visited posts for August. You can make sure you didn't miss any, so those Johnson kids won't get ahead of your kids:

Are Victorias Secret models turning shy?
Not so fast, grasshopper!
Duct tape crime - can they make it stick?
Quick, Robin! To the gyrocopter!
Yes, Im a bikini major, minoring in poise

REUTERS photo by Mario Anzuoni

Historically, August is a dull month for dealmakers as Wall Street heads to the Hamptons and European CEOs go on holiday. But this August marked the slowest pace for mergers since 2004, according to research firm Dealogic.

Hampered by tightening credit markets, which made it difficult to borrow money to fund deals, global mergers and acquisition volume dropped 25 percent from 2006. Worldwide M&A totaled $183.3 billion, which was the slowest August since 2004 and the weakest monthly tally since July 2005, Dealogic said.

In the U.S., merger activity dropped to $53.9 billion, down 22 percent from August, 2006. This month's deals included private equity group TPG's $395.5 million agreement to buy Midwest Air Group and pharmacy-benefits manager Medco Health Solutions Inc.'s pact to buy PolyMedica Corp. for $1.2 billion.

On the bright side, global M&A still is up 51 percent to a record $3.6 trillion this year, compared with the same period a year ago, boosted by frenzied dealmaking in the first half of the year. Year-to-date, M&A in the U.S. is up 36 percent from last year to $1.3 trillion. 

The Dealogic statistics are current as of August 29.

Dutch electronics group Philips showed off crystal-inlaid USB sticks and headphones at the IFA consumer electronics fair in Berlin in an attempt to bring a little sparkle to its collection of computer accessories.

Teaming up with Austrian crystal maker Swarovski, Philips is offering heart-shaped USB keys that can be worn as a pendant for those with data they want to keep close to their hearts, and "Amazone" headphones for powerful women wanting to show their softer side.

"These new products will change the way women interact with innovation and technology," they claim in a press release.