Remember those scary movie close-ups of a fly caught in a spider’s web, or some tourist who steps into quicksand, or another variation of the same? How with each twist and turn to get free, the captive enmeshes themselves deeper into the trap? 

We’re starting to get that uncomfortable feeling about Yahoo as it dodges the embrace of Microsoft while trying to orchestrate a partnership with Google that won’t encroach on its own business. The New York Post says today that a deal with Google, already at the “any minute now” stage for almost a month, could be sealed next week.
    
Some of the moves could provide a boost down the line, like a new ad-trading partnership with WPP Group, the world’s second largest advertising services company. 
    
[N.B. WPP chief Martin Sorrell said last week it was a shame Yahoo and Microsoft couldn’t work it out, since their break-up just leaves Google the biggest kid in the playground]
    
But Yahoo does not have that much more time to prove it can go it alone. Yesterday, Yahoo stood up to billionaire Carl Icahn, who officially launched his proxy fight to deliver the company back to Microsoft. That means there must be some resolution by the time Yahoo’s shareholders meet on July 3. (Reuters)

Keep an eye on:    
* “Gossip Girl” can’t save ratings for the CW network. (WSJ)
    
* Fox embraces Less Is More principle, cutting ad time for two new shows. (Hollywood Reporter via Reuters)

* Microsoft to save cheap laptop program for the world’s poorest schoolchildren. (WSJ)

(Photo: Reuters)

Somebody’s knocking on Yahoo’s door this week and it isn’t Steve Ballmer, yet. We wondered whether someone was building a position that helped keep Yahoo shares aloft since Microsoft pulled back from deal talks about a week and a half ago. 
    
It turns out that activist shareholder par excellence Carl Icahn has accumulated about 50 million shares in that time and will likely decide today whether to launch a proxy contest, before Yahoo’s deadline for board nominations expires on Thursday.
    
What may sway his decision is a sign from Microsoft that it is willing to come back to the table after Yahoo rebuffed a sweetened $47.5 billion offer. 
    
According to the Wall Street Journal, some other shareholder activists may be spoiling for a fight, including Firebrand Partners’ Scott Galloway, whose powers of persuasion won him a board seat at the New York Times earlier this year.
    
While all of this may not be good news for Yahoo CEO Jerry Yang, the action could well buoy shares in the meantime, at least until he reaches his own conclusions on how to proceed.
    
(Reuters) (WSJ)     

Keep an eye on: 
* Clear Channel’s buyers and banks settle on how to finance the deal. (Reuters)

* Barry Diller and John Malone make nice on spin-off plan for four of IAC’s business units. (Reuters)

* Bonnie Fuller quits tabloid publisher American Media. (Reuters)

Photo: Reuters

For years we have interviewed media analyst/newsletter editor/industry maven Jack Myers about the television upfronts. We have tried to track him down at upfront parties, cocktail napkin in hand, to get his initial reaction on the new shows trotted out by the networks while he talks to the most senior executives. We have written up his forecasts and predictions on how many billions of advertising dollars the nets will say they have booked.

And now, in what may be the most definitive sign that more than 50 years of upfront fanfare has come to an end, Myers says he will no longer prognosticate on their outcome, according to an e-mail newsletter sent round today:

This year, I am not offering predictions nor will I report after-the-fact on network Upfront revenues. The Upfront is no longer a representative indicator of network performance and the information released by the networks is, at best, questionable. If a network ever actually reports poor performance in the Upfront, then we can be assured it was a disaster.

The change of heart makes sense given the total overhaul of the television industry. Networks are selling more and more advertising for shows not only when they appear on air, but on the Internet as well. A television writers’ strike over the winter that brought pilot production to a standstill means they have very few shows to preview to advertisers this year. The introduction of a new ratings system to account for DVR use has wreaked havoc on the numbers used to set advertising rates.

And of course, there’s the economy.

But we are definitely sad to hear this from Jack, whose predictions were so on target:

My own performance has generally been on-the-money, although last year I believed the market would be considerably softer than it, in fact, turned out to be.

Aside from the specific revenue forecasts, Myers does give general conclusions about the state of upfront negotiations. Based on his talks with industry leaders, he sees a reasonably quick haggling season that should end before the July 4 holiday weekend. He expects the networks to boost their CPM pricing and incremental revenue from their new digital distribution models.

(Photo: Reuters / ABC’s “Desperate Housewives” at the more festive 2007 upfronts)

And it was thus decreed that the messengers of Steve Ballmer were sent far across the land to say No to an alliance with the kingdom of Yahoo:
    
“Yahoo could always come back again and say please buy us for $33 (a share) and I’m sure we might reconsider it, but we’re not assuming that’s going to happen,” Microsoft Chief Research and Strategy Office Craig Mundie to Reuters in Jakarta, May 8. 

“The conclusion was reached that we should pursue our independent path,” Microsoft Chairman Bill Gates in Tokyo, May 7.    
    
“The key decisions on that will be made by Microsoft CEO Steve Ballmer, who took a look at Yahoo and decided that, on our own, he likes the stuff that we’re doing,” Gates in Seoul, May 6.

“We decided to move on and basically withdraw our offer …. Absolutely, that’s the end of the story. We are moving on because our strategy is very clear,” Microsoft International President Jean-Philippe Courtois to Reuters in London, May 6.

The globe-trotting Microsoft messengers have yet to fully convince Yahoo shareholders of their sincerity, since investors have propped the stock up to nearly $26 despite the break-up of talks over the weekend. That’s well below Microsoft’s last offer for $33 per share, but still perched higher than the $19-level, where Yahoo traded before the takeover offer was made public on Feb. 1.

Maybe shareholders are mindful of Microsoft’s last world tour in April, when Ballmer hopscotched through Morocco, Italy and Belgium saying there was no way he would raise his initial offer of $31 for Yahoo. Two weeks, and two dollars per share later, Yahoo is still waiting.

Keep an eye on:

* Rupert Murdoch says News Corp is feeling the squeeze on advertising budgets due to a weakened U.S. economy; the company’s division that includes MySpace will likely miss a $1 billion annual revenue goal by 10 percent. (Reuters)

* Warner Music Group’s quarterly loss comes in worse than expected and the company suspends its dividend to raise cash and cut debt. (Reuters)

* NBC Universal is starting a 24-hour local news network in New York, in what could be the first of several such channels around the country, to help weather a weak local TV advertising market. (WSJ)
 
Photo: Reuters

Call it the new simplicity. IAC’s businesses are better off on their own in the market than trying to work with a strategic partner, according to chief mogul Barry Diller.
    
Recently empowered by a court decision that says he can do what he wants with IAC with little limitation from controlling shareholder Liberty Media, Diller said today a plan to spin off four major IAC units probably won’t involve any partners and that he was on track to complete the separation in August. 

Here’s his comments from a conference call to discuss quarterly earnings. We’re wondering how much of this may still be a negotiating position, or should we expect to see one big IAC, and four little IACs, trading on the Nasdaq before Thanksgiving: 
    

What we’re not discussing is the possibility of a so-called swap transaction with Liberty. While the potential for such a deal exists just by the nature of our relationship, I think it’s very unlikely that one will occur. 
 
Relative to private equity, we’ve had lots of discussions, we have lots of people knocking on the door and coming in and talking about different schemes and ideas. The truth is as we go through this, I think we’re not probably going to do any of them. I think that the best thing to do is simplicity. We may do one or some modified thing but I don’t think we’re going to do anything that would particularly engage (the) private equity world. 
    
The best thing is to get these companies spun out and to get them into the public markets, get their managements out there, so to speak, and taking care of their own businesses and talking to the investment community. I think that’s probably the better step forward for us at this point. 

For those watching at home, Liberty was mulling a swap for IAC’s HSN shopping channel, or maybe a smaller asset. Firms such as Quadrangle and Elevation Partners were also among the parties who have discussed taking a stake in another IAC unit.

(Photo: Reuters)

Nick Denton’s Gawker Media is parting with three of its blogs: political gossip site Wonkette, travel site Gridskipper and music site Idolator, dumping ballast in a stormy ad market.    
 
Denton put it simply in a memo to employees, first seen on Silicon Alley Insider:    

Why these three sites? To be blunt: they each had their editorial successes; but someone else will have better luck selling the advertising than we did. … it would be naive to think that we can merely power through an advertising recession. We need to concentrate our energies … on the sites with the greatest potential for audience and advertising. 
    

Here’s the details:
* Buzznet, a music social network, is buying Idolator after snapping up its main rival Stereogum.

* Gridskipper is being taken over by urban info site Curbed. Gawker holds a stake.

* Wonkette, founded by Ana Marie Cox, will be spun off to managing editor Ken Layne and become part of the Blogads network of political sites like Daily Kos. 

Financial terms weren’t released.
    
That leaves Gawker with 12 sites, including its namesake media blog, Gizmodo, Valleywag and Defamer.

(Photo: Reuters)

News Corp jewel Fox Interactive Media (a.k.a the catchy “FIM”) made a late-night admission that its revenue might fall short of a $1 billion target for the current fiscal year.

The division that houses teen hangout MySpace is also revamping its advertising sales division to embrace a new technology that mines user profiles on the social network site to serve visitors more individually-tailored ads.

“We expect to be close to our target,” FIM said of its revenue for fiscal 2008. One company source said the timing of the new ad technology could be partly to blame for any shortfall.

This is not the first sign of trouble at the unit considered News Corp’s boldest play in the digital arena. As early as October, Rupert Murdoch downplayed expectations for MySpace revenue for fiscal 2008, while ad sales partner Google admitted in January that making money off of social networks (read: MySpace) was proving more difficult than even Larry Page and Sergey Brin could have anticipated.

Is that what made Yahoo so attractive?

(Reuters)

Keep an eye on:
* Microsoft and Yahoo senior executives met this week to discuss Microsoft’s proposal to acquire the Internet company but failed to resolve any of their differences. (WSJ)

* The dispute over the $20 billion leveraged buyout of U.S. radio operator Clear Channel will go to trial in New York as early as May 5. (Reuters)

* Mexico’s media giant Televisa starts production of its first Chinese language soap opera, as it looks to the Asian market for new business. (Reuters)

* HarperCollins is forming a new publishing group that will substitute profit-sharing with authors for cash advances and try to eliminate the costly practice of allowing booksellers to return unsold copies. (NYTimes)

(Photo of MySpace CEO Chris DeWolfe and News Corp Chairman Rupert Murdoch, via Reuters)

Clear Channel may be fighting its banks with guns blazing in a Texas court, but it’s singing a softer tune to Washington regulators.

The company told the U.S. Securities and Exchange Commission that its pending $20 billion buyout by Thomas H. Lee Partners and Bain Capital Partners may not close, saying it wanted to caution the markets not to hope for an easy resolution.
    
The deal was supposed to close by March 31, but six banks who agreed to finance it have since balked as debt markets deteriorate. As far as Clear Channel is concerned, all the other closing conditions have been met.
(Reuters)

Keep an eye on:

• Tom Cruise dined at a Beverly Hills hot spot with Viacom chief Sumner Redstone, who severed the actor’s long-running partnership with the company’s Paramount Pictures in 2006. Cruise is widely thought to want to renew the “Mission: Impossible” series, which Paramount has the rights to.
  (WSJ)
• WiMax could prove a bigger risk than its worth for top U.S. cable companies, especially as they plunk down cash in a tough economy for an unproven technology.
  (Reuters)
• David Marash, the most prominent American anchor on Al Jazeera English, has quit the 24-hour international news channel, citing an increased level of editorial control exercised by the channel’s headquarters in Doha, Qatar.
  (NYTimes)

(Photo: Reuters)

Who needs competition when you have a nice big merger to complete? After 13 months of Congressional haggling that would have put John McCain to shame, Sirius chief Mel Karmazin won U.S. Department of Justice approval for his $5 billion marriage with XM Satellite Radio.
    
Sure they’re the only two subscription radio operators, but with all those iTunes downloads and Web radio personalities, there’s no need to think anyone will suffer with Howard Stern and Oprah Winfrey in their exclusive hands.   
    
Most expect the FCC will come through with the final green-light for XM and Sirius to close the deal, and then the real work on actually making money from satellite will begin.
    
We’re still a little stuck on the regulatory landscape that seems to err on the side of bigness, from Verizon and AT&T’s billion-dollar wireless spectrum wins, to a push from underdogs like Microsoft and Google to use the blank spaces of TV spectrum for mobile Internet and the ability to even contemplate a scenario in which Rupert Murdoch buys Newsday.
    
Let the games begin.

Reuters, Deal Journal, Silicon Alley Insider

Keep an eye on:

• Google unveiled plans for a new generation of wireless devices to operate on soon-to-be-vacant television airwaves, and sought to alleviate fears that this might interfere with TV broadcasts or wireless microphones.  (Reuters)
• Fox Broadcasting asked U.S. regulators to reconsider indecency fines the government imposed last month on 13 Fox television stations for airing episodes of a reality TV show in 2003.  (Reuters)
• Hulu video site looks great, but in terms of consistently good service, not so much. (Silicon Alley Insider)
• The CEO of Sony BMG Music Entertainment tells the Frankfurter Allgemeine Zeitung (in German!) that the company is developing an online music subscription service that would give users unlimited access to its music and be compatible with a host of digital music players.
  (Associated Press)

(Photo: Reuters / Mel Karmazin)

The FCC took in a record haul of $19.6 billion from its auction of wireless airwaves, but the real story will unfold in the next few days when we find out who won the hundreds of licenses issued.

FCC chief Kevin Martin said he would make that list public after commissioners approve an order to formally end the auction.

High on the guess list is Verizon Wireless, which many in the industry believe paid as much as $4.74 billion for the coveted “C” block of spectrum. That block carries requirements — advocated by Web search leader Google Inc — that it be accessible to any device or software application.

Add in a recent interview in which Eric Schmidt talks about Verizon’s recent visits to the Googleplex and “commitment to open access,” and it starts to seem like that ringing noise you hear just might be the Google phone.
(Reuters) (WSJ)

Keep an eye on:
* Dow Jones & Co, now in the hands of Rupert Murdoch, will end a 40-year partnership with the Associated Press after the AP asked for more money.
(Reuters)

* Adobe Systems Inc. has begun work to create a media player destined for Apple Inc.’s iPhone, adding a new wrinkle to a standoff between the two long-term partners.
(WSJ)

* News Corp.’s Fox passed CBS as the most-watched television network after its “American Idol” singing contest topped ratings and the Hollywood writers strike limited competition from scripted shows.
(LATimes)
(Reuters photo of Kevin Martin)