The Live Nation touring and merchandising agreement with supergroup U2 could be worth $100 million estimates one Wall Street analyst.

Live Nation, a tour promoter that is evolving rapidly into an all-round music company, has prepped a 12-year deal with supergroup U2 which includes its merchandising, digital, image licensing in addition to its touring but hasn’t revealed how much money will change hands (not to us anyway).

However David Joyce, media analyst at Miller Tabak, ventures that the deal will be in the $100 million range. Joyce, who likes Live Nation’s prospects, has based his guesstimate on the $120 million figure that Live Nation is widely believed to have agreed with Madonna in cash and stock last year.

The Madonna deal was a much more far-reaching partnership that included three albums over 10 years. While the U2 pact doesn’t include recording, it’s a longer term deal with a bigger live act says Joyce.

What does $100 million get you these days? Well for 12 years Live Nation can print as many ‘U2 waz ‘ere 2018 World Tour’ t-shirts as they can sell, and they might be able to convince a few more big pop names to come on board the touring/merchandise all-you-can-eat fiesta now that they have Madonna and U2 on their calling card. But will they make their money back? That’s the big question.

Joyce cautions that the record labels want a piece of the action as well:

“Will the music label companies, facing continued secular decline in their traditional album-selling business, get into the concert promotion, artist merchandising, and fan website business with their currently signed artists, thereby fending off Live Nation’s expansion attempts?”

That appears likely, especially as Live Nation works quickly to formalize deeper relationships with the biggest names in pop and may be willing to pay more than the labels at present. It’s shaping up to be an arms race that could end up getting very expensive.

(Photo: Reuters)

In the eyes of Wall Street, Comcast Corp is no longer a growth stock and needs to start to focus more on returning value to shareholders, so says a Goldman Sachs report today.

The note from Goldman analyst Ingrid Chung comes two weeks after we reported that investors are beginning to re-think the Comcast ‘value stock’ story and are now calling for the reinstatement of a dividend. The last time the U.S. cable company paid a dividend was nine years ago.

Chung also says investors will be looking for a confident 2008 outlook from Comcast on Valentine’s Day, when it is scheduled to report quarterly earnings:

While competition and the economic slowdown continue to chip away at Comcast’s business, we would become more constructive on the stock if the company were to post strong 2008 free cash flow guidance and show a renewed commitment to shareholder friendly initiatives (such as a dividend) when it reports 4Q2007 results on 2/14.

Goldman Sachs downgraded Comcast shares to a “Neutral” rating on Dec. 4 after the cable company lowered its full-year revenue growth forecast.

The stock fell around 40 percent in the last year as investors believe the company is struggling with pressures from the U.S. economic slowdown and increased competition for customers from satellite TV operators and new advanced video services from phone companies.

One investor is publicly calling for the head of Chief Executive Brian Roberts. Chieftain Capital, which owns around 2 percent of Comcast’s outstanding shares, also thinks a dividend would be a good idea. Chung said Comcast can help its own cause by making itself more appealing to value investors:

We believe Comcast can no longer view itself as a growth company and in order to attract the incremental investor, Comcast needs to show investors that lowered expectations are now achievable and to demonstrate an increased commitment to returning cash to shareholders.

(Photo: Comcast CEO Brian Roberts/Reuters)

Numbers don’t lie, finance geeks will tell you. If that’s the case, then maybe things aren’t as bad for the music majors as media reports, trade bodies and executives will have us believe.

This came to mind after perusing the earnings reports from the two largest music companies: Universal Music Group (a unit of French telecoms/media giant Vivendi) and Sony BMG Music Entertainment (a joint venture of Sony Corp  and German media group Bertelsmann AG).

Universal posted a 3 percent fall in revenue in the fourth quarter of 2007, while Sony BMG said sales growth was flat (0 percent) after hit albums from Alicia Keys, Celine Dion and Carrie Underwood.

These aren’t bad performances when you consider both companies account for over half of music album sales — a market that is meant to have shrunk by around 15 percent in the United States through 2007.

But, as music blog Coolfer notes, the figures may not tell the full story.

Growth at Universal, whose best sellers included Andrea Bocelli and Mary J. Blige, benefited more from acquisitions including BMG Music Publishing and Sanctuary. Excluding the acquisitions, Universal’s revenue fell 5 percent.

As for New York-headquartered Sony BMG, it said Alicia Keys et al were important but the company also benefited from the favorable impact of exchange rates on sales outside the United States. Universal also claimed a similar impact.

For music companies, it seems the weak dollar is a bit of a hit.

On Tuesday Yahoo said it faced “headwinds” in 2008 and forecast revenue growth below Wall Street expectations and said it would cut 1,000 jobs.

Hardly blindsided, Wall Street still expected better numbers. On Wednesday morning at least seven major brokerages cut their price targets on Yahoo stock.

Yahoo co-founder and Chief Executive Jerry Yang predicted a tough 2008.

“While we will continue to face headwinds this year, we believe that the moves we are making will help us exit 2008 stronger and more competitive and return to higher levels of operating cash growth in 2009,” he said in a statement.

So how might these headwinds mean affect Yahoo’s larger rival in the Web advertising space: Google?

Both companies compete in paid search, a form of marketing where advertisers pay when customers click on ads.

Google is scheduled to report its quarterly numbers on Thursday and already some analysts are wondering whether Yahoo’s difficulties are its own or industry-wide impact from a slowing economy.

Analysts expect Google to fare better in an economic downturn with its dominance of paid search says Citigroup analyst Mark Mahaney. But Mahaney rates a Yahoo a “hold”  despite his concerns of Yahoo’s potential to be acquired as well as its “still very large” Web presence.

(Reuters)

Keep an eye on:

• MySpace will launch its program to court outside software developers in February in a bid to widen the gap against rival Facebook. (Reuters)
• Bidding remained stalled on a key piece of spectrum in the U.S. government’s wireless airwaves auction. (Reuters)
• British-based educational publisher Pearson has agreed to sell its 50 percent stake in German business daily Financial Times Deutschland to publishing Gruner + Jahr. This gives G+J full control. (Reuters)

With friends like Liberty Media Chairman John Malone who needs enemies? He’s ratcheted up his duel with long-time pal and business partner Barry Diller, chair of IAC/InterActiveCorp by asking a court to remove Diller, his wife Diane Von Furstenberg, Edgar Bronfman Jr (Warner Music CEO) and several other directors from the IAC board.

The problem? Well as Liberty sees it those board members are breaching their fiduciary duty with a plan to dilute Liberty’s voting control over IAC’s businesses in a proposed spin-off of four of its largest units.

You may recall Liberty owns nearly 30 percent of IAC but has almost 62 percent voting control, which Diller has the right to vote.

Naturally as one mogul to another Diller has reacted with typical bombastic style in a statement describing Liberty’s attempt to take control of the Internet conglomerate “preposterous” and “a desperate sideshow”.

“Liberty has now gone off the deep end,” said IAC. See here:

Oh and to answer that earlier question about friends and enemies. Maybe Barry Diller should consult News Corp chief Rupert Murdoch who had to give up DirecTV to Malone last year after his friend came close to threatening Murdoch’s control of his company by stealth buying of News Corp.’s stock.

(Reuters)

Keep an eye on:

• Yahoo’s Q4 earnings will be “strong” says Henry Blodget. (Silicon Alley Insider)
• UK regulators ask News Corp’s BSkyB to cut stake in rival broadcaster ITV. (Reuters)
• The Wall Street Journal could be moving from Wall Street to midtown. (New York Times)

The music industry is dead. Long live the music industry. In a piece we put out earlier today, we highlighted how more Web sites are popping up to help new and established artists get funding directly from their fans. See here.

So if you’re a musician and your demo songs are any good,  fans can buy “shares” in your next album for a minimum of $10 each. At the very least the fan gets a copy of the completed album. Plus, the more shares they buy the more access they get to the creative and production process for the album – like sitting in on a recording session.

Yet the challenge of distribution is still an important battle for up and coming artists who fund their own recordings. Many are still unable to get their music on to iTunes, which has more 70 percent of all digital sales in countries like the United States.

This is how TuneCore.com helped Eric Stiner, a 33-year old New Yorker who recorded for two bands Boy/Girl and Kill Kill Kill while completing his PhD in evolutionary biology at City University of New York.

“It’s near impossible to get music up on iTunes, TuneCore made it really easy,” said Stiner.

And what about selling CDs in stores?

“The CD is dead to us,” Stiner said. “It really only exists for us for demo purposes and radio stations. Digital music is more economical, more eco-friendly and way easier for distribution.”

(Photo of Sting/Reuters)

As if U.S. cable TV executives don’t have enough to worry about these days, what with the faltering economy, growing competition from phone and satellite rivals and now: irate shareholders.

Comcast, the U.S. largest cable operator, received a letter from one of its largest shareholders calling for the head of Chief Executive Brian Roberts. Chieftain Capital Management, an investment advisory firm with around 60 million Comcast shares or 2 percent of the outstanding float, is deeply unhappy with the 40 percent drop in the stock last year. We have a link to the letter here via Pali Research.

Chieftain — which manages around $5 billion in funds of which Comcast is just under a third — believes Roberts’ reluctance to take on more debt to buy back more shares or to pay a regular dividend are just a few of the missteps that led to the shares’ current parlous state.

“We want and deserve the best CEO Comcast’s board of directors can find — and, based on his record, Brian Roberts is not it,” said the Chieftain letter.

According to Chieftain, Comcast’s management has been a “Comcastrophe” a play on Comcast’s “Comcastic” ad campaign. Ouch.

But it’s not all bad for Roberts.

Comcast’s PR folks were quick to point us to Institutional Investor magazine’s survey of portfolio managers and analysts for the Best CEO in the cable and satellite sector, which was published this week. No prizes for guessing the survey’s favorite cable guy is Roberts.

Also Richard Greenfield of Pali Research doesn’t agree with Chieftain’s thinking that Comcast needs to lever up because, as he sees it, the company is in a ‘war’ with everyone from phone and satellite companies to Apple and wireless and needs to spend more to win.

Others think that if Comcast commits to returning some of its free cash flow to investors as a regular dividend that might make the stock more attractive to a wider range of investors. See our analysis here.

(Photo: Reuters)

After all the fevered expectation that built up last year, it turned out that Charlie Ergen, founder and CEO of EchoStar Communications Corp, did not sell his DISH Network satellite TV business to AT&T Inc. But he did spin off his set-top box unit EchoStar Holdings under the ticker SATS. There was also some insider selling at the time, which gave the impression a company sale wasn’t imminent.

And then we learned Ergen was preparing a bid for wireless spectrum in the upcoming U.S. FCC 700MHz auction. Such a move arguably ruled out any merger talks with AT&T , which is also bidding as FCC rules do not allow two bidding parties to talk with each other.

So end of story, right? Citi analyst Jason Bazinet doesn’t think so.

Bazinet, you may recall, got DISH shares jumping last year when he suggested there was a 65 percent chance that AT&T would buy EchoStar. In a new note published yesterday, he says:

Contrary to popular belief (and our prior view), tax-free SATS spin doesn’t thwart M&A for two years. And while insider selling was large in magnitude, it was narrow in breadth, suggesting M&A cannot be ruled out. Finally, the 700MHz auction delays, but doesn’t preclude, M&A.

We can’t help but wonder if CEO Ergen will sell DISH, but embed a long-term (above market) set-top-box contract into a sale agreement. This sort of scenario would allow Mr. Ergen to capture more M&A upside if he increases his SATS stake or takes SATS private.”

(Photo: Reuters)

This year’s Super Bowl advertising rates may be hitting record levels, but not everyone who has a spot is sure they want one. At least that seems to be what car maker Hyundai is saying, according to stories in the WSJ, AdAge and Automotive News.

The U.S. unit of the South Korean car company is seriously considering pulling its two booked spots from the Super Bowl ad fiesta because of concerns about the slowing economy. The company is said to be worried that taking out high-priced ads in the current environment might not sit well with consumers.

Super Bowl XLII which takes place on Feb 3 will air on the Fox Network and is pretty much sold out. Prices for the some of the 30-second ad slots have topped $2.7 million to $3 million.

Overall, though, advertisers believe that with the Hollywood writers’ strike, declining television ratings and the budgetary pressures that accompany an economic slowdown makes the Super Bowl more attractive, rather than less attractive, according to this Reuters analysis.

 Keep an eye on:

• Goldman Sachs top media analyst quits to join NFL - Reuters
• Apple unveils super-thin ‘Air’ laptop, Web rentals but investors are unimpressed. Reuters
• Oprah Winfrey gets her OWN network in partnership with Discovery Communications. Reuters, New York Times

 American Idol rocks.

So says everyone from Madison Avenue to Wall Street as U.S. television’s top show returns to the Fox network tonight. And as if the bubbliness of Paula and sarcasm of Simon were not enough to keep the TV talent competition show top of prime-time, commentators believe it could do even better than usual thanks to the ongoing Hollywood writers’ strike.

American Idol, which generally airs twice a week, averaged over 30 million viewers per episode last season and could beat those numbers this season. But it’s in advertising that it could really outperform, according to this Reuters story.  Advertising rates have soared — reaching more than $900,000 in the scatter market for a thirty second spot — as marketers look to buy time alongside one of the few guaranteed ratings winners amid the writers’ strike.

RBC Capital Markets analyst David Bank said “Idol” was one reason he’d buy up News Corp shares before the company reports quarterly earnings this season.

“Ratings success is making Fox (the) best positioned broadcast TV network to take advantage of strong scatter pricing,” Bank wrote in a research note today. “Return of American Idol (tonight) should bolster ratings against minimal original content competition due to the ongoing writer’s strike.”

 Keep an eye on:

- IAC/InterActiveCorp’s Ticketmaster has agreed to pay $265 million for TicketsNow Inc, a Web site that resells tickets to concerts and sports events - WSJ

- EMI confirms restructuring, plans to cut 2,000 jobs - Reuters

- Wireless service company Clearwire says it will offer its customers applications such as e-mail and calendar from Web search leader Google - Reuters