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)

While Wall Street is agape over the bargain basement sale of Bear Stearns, a major media drama is unfolding in Mexico.

Long-time foes Grupo Televisa and the General Electric-backed Telemundo will share content south of the border in an early partnership that will ultimately focus on the coveted U.S Hispanic market, according to the Wall Street Journal.

That could eventually threaten the dominance of Univision on Spanish-language broadcasting in the United States.

In a tale that rivals its own sugary soap operas for power, passion and influence, Telemundo was angling for its own television station in Mexico, but could not gain a foothold against the sway of Televisa and TV Azteca.

According to the deal, Telemundo’s programming will appear on a Televisa station in Mexico. Televisa will also carry a Telemundo channel on its local cable and satellite networks.

WSJ

Keep an eye on:

* HBO is replacing its president Carolyn Strauss, who is signing a new production deal inside the company. She has been involved with several of the cable network’s biggest hits, from “Sex and the City” to “The Sopranos”. (NYTimes)

* You might think the demand for more niche news has opened up the journalism business, but a study today from the Project for Excellence in Journalism shows a wave of layoffs at newspapers and other outlets means a much narrower band of coverage. (Reuters)

* Viacom chief Philippe Dauman is apparently alone in the belief all is well with Steven Spielberg, who plans to bolt from Paramount Pictures when his contract ends this fall.
(NYPost)

(Photo: Televisa CEO Emilio Azcarraga Jean, Reuters)

Simple relationship advice to John Malone: If you think you’ve hurt your friend, don’t wait to pick up the phone.

That’s the lesson from today’s episode of the Barry Diller vs John Malone fight in Delaware court today. 
    
Diller confirmed that his decision to pursue a reconfiguration of IAC/InterActiveCorp that has landed it in court with Liberty was swayed by an October article in the Wall Street Journal which quoted Malone as saying, among other things, that IAC shares might be trading at “a Barry discount.”
    
Malone himself said he knew the story could cause trouble when he took the stand on Monday:

“I thought, Barry’s not going to like this when he sees it. (Did you call Diller?) I should have but I did not. Because when I read it, it came across not the way I would have liked it to come across. In the end I did call. It was roughly two months later.”

Well, Barry did not like it one bit:

“Oh yes this was hurtful. I expected John Malone to call to apologize. I thought he’d read this and say: ‘Oh my God, I would never do that. I would never be party to such a thing.’”
    
But John didn’t call:    
 
“Much to my dismay, he did not call me from October 27 until December 20-something. That’s all I know.”
    
So Barry thought:
 
“They’re trying to prod me or they’re trying to manipulate me. It has to be some form of manipulation. … It pushed me further, that’s for sure, but it had been discussed previously.”
    
And when he did call?:

“It started out coolly … I was actually quite emotionless. It never varied from beginning to end from my point of view.”

About two-thirds of the way through the call, Diller informed Malone he would endorse a plan to spin off four of IAC’s businesses with a single class of shares, a move that would dilute Liberty’s super-voting control over the units as separate entities.
    
“(Malone) said: ‘We’ll have a messy, public … proxy fight’. I think I responded ‘I don’t care.’ Then I said ‘You’ve lost me John. I’ll do everything fair … I’m not going to do anything hostile or anything like that, but you’ve lost me.’”
 
“And he said: ‘So be it.’”

(Photos of Malone and Diller at Delaware court house from Reuters)

Media titans John Malone and Barry Diller knew they had their fair share of disagreements over the years, but like many couples heading to divorce, they apparently needed someone else to tell them that.

Enter Wall Street Journal reporter Jessica Vascellaro.

The media industry read with rapt interest her story in October that put in plain language how much tension had built up between the two over their partnership in IAC/InterActiveCorp. 

But as the two moguls duke it out in Delaware court this week, they keep invoking that story, day after day, as the moment that sent their relationship past the point of no return. 

Diller apparently understood the story as grounds to endorse a control structure for a spin-off of IAC businesses that would dilute the grip of Malone’s Liberty Media over the units. And that is what brought them to court today.
 
“It was kind of a verification in his mind they had gone over a significant line and the possibility of doing a transaction beneficial to both sides was becoming highly unlikely,” IAC Vice Chairman Victor Kaufman said when asked by Liberty’s lawyers.
 
IAC’s lawyers made liberal use of the story as well, asking Liberty CEO Greg Maffei whether he orchestrated the original interviews with himself and a usually press-shy Malone to send a message to Diller. They asked Maffei whether he tried to influence that story by flying the New York-based reporter out to Denver and talking up his views of Diller over several hours of travel time.
 
Maffei rebuffed that idea, saying  he didn’t come up with the idea for the flight, that there were other people on the plane and most of the time they spent playing the card game “Oh, Heck”:
 
[We asked Dow Jones about the flight. Here’s their statement: “The Wall Street Journal attempted to reimburse Liberty for the flight, but the company subsequently returned the check. In keeping with our guidelines, we still intend to reimburse Liberty. We stand by the fairness and accuracy of our story.”]
 
After it appeared, Malone said he had already guessed Diller’s reaction:
“I thought Barry’s not going to like this when he sees it. (Did you call Diller?) I should have but I did not. Because when I read it, it came across not the way I would have liked it to come across. 
    
In the end I did call. It was roughly two months later. (Apparently Diller told Malone of his one share, one vote plan during that call)”

(Photo: Reuters / Maffei in Sun Valley 2007)

John Malone is famous in the media industry for his complex deal-making skills that have confounded some of the best minds in business. But he seemed almost forlorn in Delaware court today when talking about the unraveling of his relationship with Barry Diller, the former television and film honcho who built up IAC/InterActiveCorp with his backing.About halfway through a rigorous cross examination by Marc Wolinsky, who was representing IAC, Malone’s responses gave us the impression that his lieutenant and CEO Greg Maffei had a hand in precipitating a difficult business dispute into all-out war. Here are some chapter headings from his direct testimony and cross-examination:The tension dates years back to Maffei’s role in Expedia’s sale to IAC. When Maffei was appointed CEO of Liberty Media in 2005, Malone said Diller branded it a “poor choice.”“I knew there was a history. I knew that Barry was complaining that there was no cooperation between Expedia and Hotels.com … he thought that was wrong. I’m not sure I was aware of any personality difference until much later.”By 2006, Maffei was making comments that questioned the solidity of Diller’s control over IAC, under a proxy agreement to vote Liberty shares. Barry had some feelings about that.“Mr Diller was very unhappy or upset that Mr Maffei would make these … claims or references, anything that would undermine his confidence that he had the voting power.”When Maffei and Liberty counsel suggested a way to weaken Diller’s proxy, Malone said he objected.“I told them that I regarded it as brain damage. (So what did you do when Maffei persisted in his argument?) I would assume that he has something in mind in terms of it being a viable legal argument, or because our lawyers are telling him they believe it’s a valuable and appropriate legal position.”By late 2007, Maffei took a more aggressive stance when it came to pushing Diller to compensate Liberty for the declining value of its IAC stake, Malone said.“I would say Mr Maffei believed it was in the interest of Liberty to try and separate our interests from IAC and Expedia. I think Mr Maffei can be pugilistic where these issues are concerned.”Because at the end of the day, Malone would be happy to make up with good ol’ Barry. Asked if he preferred to litigate their dispute in Colorado rather than Delaware, he said:“I didn’t want to have to sue Mr. Diller anywhere. I still hold him no ill-will and I still seek a win-win solution for our disputes. I don’t think any of us likes that we are having an open dispute after 13, 14 years of building value together.”Cue one Denver sunset please.(Photo: Reuters/John Randolph/ Liberty Media Corporation Chairman John Malone returns to Chancery court in Wilmington Delaware)

YouTube is making some new promises to advertisers who are still on the fence about this whole online video thing that was supposed to take off in 2006, and then in 2007, but forget about 2008 because people, there’s a recession on the horizon.

I sat with a couple of reporters today at the YouTube “Videocracy” event at a Manhattan club venue, where three floors worth of advertising partners and employees lounged on mini-sofas and heard about the wonders of targeted video.

David Eun scopes out content partnerships for Google and YouTube. He told us that the real story of digital video is not being told by big TV networks with their multimillion dollar productions, and called that content “just a sliver” of what the company is doing as it signs on 250 to 300 new partners a quarter.

“A lot of the best content … is coming from smaller video producers,” he said. An example? Some fine work by the professional bull riders association. If you’re an advertiser, and you think your sweet spot audience harbors a secret desire for riding rough, where else will you find them?
“They’re never going to get a cable network,” Eun said.

Another thing. The way those broadcast networks are still hoarding video only on approved sites and media players. It’s just not the right direction. (Did someone say Hulu?)

“We don’t work exclusively. We don’t require it. It’s old school. I call it (creating) a false scarcity,” Eun said.

We still came away with the feeling that online video advertising had a ways to go before becoming a jackpot to somebody. Maybe to Google, which is building more campaigns with its clients that can move from its search listings to video tie-ins.

“Most of the major brand advertisers we have on Google are engaged on YouTube or getting engaged,” Tim Armstrong, the company’s North American ad chief said.