from Commentaries:
Gut feeling: How Google CEO valued YouTube deal
Let the second-guessing, the mock horror, the disbelief, the crowing begin.
Google CEO Eric Schmidt has acknowledged he realized upfront that he was overpaying to acquire YouTube, to the tune of $1 billion, judged by any conventional measures.
The many critics of Google's $1.65 billion deal to acquire the video-sharing site three years ago will claim this confirms everything they have always said about the deal. Not quite.
In fact, not really at all.
Schmidt came clean in a deposition by lawyers in the Viacom copyright lawsuit that there was very little revenue coming into YouTube to justify the price his company paid.
No surprises here. There were intangibles to consider:
1. YouTube's popularity was sky-rocketing, making it the runaway market leader among video-sharing sites. 2. It was crushing his company's own site, Google Video. 3. YouTube was up for auction and would be sold to a competitor unless Google jumped first. 4. Google overbid to ensure YouTube didn't fall into rival hands.
from Commentaries:
The finite value of a T-Mobile UK merger
-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --
By Eric Auchard
LONDON, Sept 4 (Reuters) - Deja vu, all over and over again. The news is that T-Mobile UK is for sale. Still.
The Financial Times, citing unnamed sources, says Deutsche Telekom is in "preliminary stage" talks with Vodafone, France Telecom, and Telefonica to sell T-Mobile UK.
The logic of such a deal seems to be compelling. DT needs to sell out because T-Mobile lacks the scale to gain an edge over its multiple competitors.
A combination would create substantial value, both for the buyer, and in terms of raising prices in what is one of Europe's most competitive mobile markets. Sanford Bernstein estimates that it could create up to 6 billion euros of value for Vodafone and Telefonica's O2, and up to 5 billion for FT's Orange mobile unit.
But there's a rub. Although the deal creates a lot of value for the winner, it's also worth a lot just being a free-rider and benefiting from improved industry pricing that flows from consolidation. So the marginal advantage of winning shrinks. Unlike a conventional bid battle, where rivals try to thwart the other guy from stealing the prize, everyone is saying "after you, Didier" or "No please Julio, after you. I insist."
With all that in mind would Vodafone have a crack @ 3 if T-Mobile is taken by o2 or Orange.Making it 2nd country where 3 has been swallowed by Vodafone.If this does happen is this the end of the 3 Brand with HW having major stakes in Vodafone’s operation in Australia & UK.
Can we see another carrier from Asia Pacific jumping into the UK market or even a US Carrier buying T-Mobile’s UK & US businesses AT&T or Verizon going GSM LTE next year.
mavenglobal@gmail.com
from Commentaries:
Bracing for bar brawl in mobile phone emerging markets
The last thing that the complex negotiations between India's Bharti and South Africa's MTN Group to create the world's third largest mobile phone company needed is more complexity. The existing deal involving an intricate mix of cash and stock is further complicated by currency fluctuations and diverging growth rates between the maturing Indian market and the wide-open African one.
But if a third company, Zain of Kuwait, succeeds in starting up a full-scale bidding war for itself, the Bharti-MTN deal could come off the rails and fall apart. Zain's CEO told Kuwaiti daily Al-Rai on Monday that it is in talks with three major, but so-far unnamed telecom firms, including one from India. Last month, Zain said it was reviewing the possible sale of its far-flung African operations after French conglomerate Vivendi called off talks to buy a majority of Zain's African business. A Vivendi spokesman says nothing has changed since then. There's no word yet from other obvious suspects -- France Telecom or Vodafone -- on whether they are interested.
The most likely Indian bidder for Zain looks like Reliance Communications, India's distant No. 2 mobile operator to Bharti. There's history here, as Reliance tried to nab MTN a year ago. That move came after Bharti's first try to strike a deal with MTN, South Africa's second largest operator, fell apart over which company's management would end up controlling the combined entity.
At least temporarily, the only two parties we can rule out as bidders for Zain are Bharti and MTN. The two would be entirely likely candidates, except that they remain locked in exclusive talks with one another until the end of August. Zain's assets make it an obvious alternative should Bharti and MTN fail to make their belaboured third effort to strike a deal work after more than a year of trying.
There may be too much sheer complexity in merging India's most successful company with the diverse strengths of MTN, a big player from South Africa to Nigeria to Iran and Afghanistan. Both companies have corporate egos to match their roughly US$30 billion market capitalizations.
The outright acquisition of Zain's comparable assets looks a whole lot simpler. Clearly Zain, valued at around $20 billion on the Kuwaiti exchange, is trying to stoke a bidding war for itself by talking up mystery bidders. Coming just weeks ahead of the Bharti-MTN deadline, the Zain CEO's comments suggest he is trying to entice either Bharti or MTN or both into bidding for it.
Until recently, the two merger speculations appeared to be two separate events that happened to be taking place over some of the same battleground -- mobile phone markets across Africa and the Middle East. Maybe a good old fashioned frontier bar brawl is the easiest way of working this all out.
from Commentaries:
Tech Links: Phones, more phones and communion wafers
Better luck next year for Android Taiwanese smartphone maker HTC has warned of a revenue shortfall, saying it has too many new phone models chasing too little revenue. Revenue growth will turn negative in 2009, instead of growing 10 percent, as the company had previously forecast.
Chief Executive Peter Chou says: "Momentum on both the Windows Mobile and Android platforms are also turning out to be weaker than expected."
HTC said it is boosting its marketing spending to more than 15 percent of revenue from 13.5 percent to fend off market leader Nokia and the Apple iPhone juggernaut.
My favorite line: "Investors have been relatively bearish on the company this year, with HTC's shares having risen about 36 percent so far, far lagging the 54 percent advance on the TAIEX share index."
Bharti looks ready to raise price for MTN Bharti Airtel and MTN have agreed to a month-long extension to merger talks to seal a deal that would create the world's third largest mobile phone company in subscriber terms.
This looks like the prelude to Bharti raising its bid for MTN, answering resistance to the deal by investors in the South African company. It all follows weeks of jockeying by Bharti to line up funding with banks and key shareholders.
The merger appears to be moving ahead despite signs of growing worker unrest in MTN's homeland. Over the weekend, South Africa's Communication Workers Union said workers at the fixed-line operations of Telkom SA will hold a two-day strike this week.
What I wish these phone maker companies would start working on is an Internet Cell Phone. One that uses the internet to communicate voice thru. They will compete against Cell Based Systems and this will force the Cell Companies to Lower their Prices to Decent Levels.. This current Contract/subscriber system is old and Monopolistic. If Google or Sony or or Somebody could develop this phone that worked as tranparently as the current cell system then the next wave of Telecommunications could begin and Give these Cell Companies LOTS of Competition. Thus Lower Prices to the end user. Right now My next phone will be an Internet Based Phone NOT a Cell Phone.
Sirius XM on the iPhone
We’re not entirely sure if the current round of leaks will lift Sirius XM out of its $1.40 per share doldrums, but screenshots of a new iPhone application in development that will let users stream Sirius XM radio stations could put a new shine on the company.
The shots, leaked to Orbitcast, show a login screen that would appear to imply that the service would likely only be available to existing Sirius or XM subscribers or subscribers to the mobile service. We’ve seen various mobile applications that do just that over the years for Windows Mobile phones. But this is the first to offer a common platform for both services — and months ahead of the company’s own timeline for an interoperable receiver.
Citigroup’s Tony Wible thinks the link to Apple “highlight that SIRI’s value lies in its content and not its hardware or infrastructure.” And such applications could help it gain share in the audio entertainment market. “SIRI bears argue that AAPL’s products will take share from SIRI, but we disagree as both MP3 players and satellite radio have unique advantages that leads us to believe both will co-exist. New satellite radio plans create a greater opportunity for synergies between the two,” Wible writes.
We think it could potentially create an ancillary income stream and soften its reliance on automotive contracts at a time when U.S. car sales limp along. Perhaps more importantly, such applications makes Apple, and its ubiquitous devices, a partner rather than a direct rival.
The application, called StarPlayr, developed by GeeksToolBox, could nudge Sirius XM away from Apple’s line of fire.
(Photo: Orbitcast.com)
standby kids….radiolicious will be this and so much more. We will be the mobile destinastion for content on the iPhone and are already developing for Storm and Bold. Everyone wants to grab the PR battle but we;re in the trenches working for contrent that you really want….we are currently in app store for iPhone with new content being added everyday.
Sony buys out Bertelsmann’s stake in Sony BMG
(Updates earlier post to clarify deal terms)
After four years of recriminations and in-fighting between executives from Sony Music and executives from BMG Music Entertainment, Tokyo-based Sony Corp has decided to end the mutual pain of a controversial merger and take full control of Sony BMG.
Artists like Beyonce, Bruce Springsteen and Justin Timberlake will now record under a new banner: Sony Music Entertainment Inc.
The FT had reported in June that Bertelsmann was looking for $1.2 billion-$1.5 billion for its 50 percent stake in Sony BMG, but it looks like the German media company settled for $600 million-$900 million — the exact sum depends on how you do the math.
Basically, Sony said it is paying $600 million cash to Bertelsmann, which will also get half of another $600 million in cash on Sony BMG’s balance sheet for a grand total of $900 million. The deal values Sony BMG at $1.2 billion. (UPDATE: You can argue that half of Sony BMG’s cash belonged to Sony, so its total cost was $900 million but Sony says it hadn’t consolidated Sony BMG’s cash. Bertelsmann adds that the value to it was higher than $1.2 billion, after taking into account tax breaks)
Will full ownership by Sony give the record label a new lease on life? According to Music & Copyright research, Sony BMG ranks second in the music industry with a 20.1 percent market share, behind Universal Music’s 28.8 percent. Here’s what some analysts told our correspondents in Tokyo and London:
Daiwa Institute of Research analyst Kazuharu Miura
Yahoo: The Road to No Deal
The following is a timeline of key events leading up to Yahoo’s Aug. 1 annual meeting.
2006 January – Yahoo Inc begins to report a string of weak quarterly results, reflecting competitive missteps by the company, market share gains by rival Google Inc, changes in the online advertising landscape and weakening spending in some ad segments.
2006 – Microsoft Corp and Yahoo begin preliminary talks on various partnerships, including a merger.
2007 February – Yahoo, under the leadership of previous Chief Executive Terry Semel, tells Microsoft it is not the right time to discuss a takeover, as the Yahoo board sees great potential in its new advertising technology and by making internal organizational changes.
2007 June 12 – A strong minority of Yahoo shareholders challenges the company’s direction, as CEO Semel comes under fire. Nearly a third of votes cast at the company’s annual shareholders’ meeting oppose some of Yahoo’s directors.
2007 June 18 – Yahoo co-founder Jerry Yang takes over as chief executive as Semel steps aside. Semel remains Yahoo chairman.
Sirius XM: Are you ready for some radio?
The marathon satellite merger for Sirius and XM is finally complete. (Check out the new “Sirius XM Radio” logo, above, provided by Sirius.)
That means new channel options, new pricing options, new radios — eventually.
We want to know if you care. Does the prospect of having Oprah and Howard Stern on your radio make you want to sign up for satellite radio? Will you start paying for the service once the free subscription in your new car runs out? Does the thought of the upcoming professional football season mean it’s time to pick up a satellite radio?
We’d like to know.
I have been a subscriber to Sirius since 2006, and I am thoroughly disheartened with the new format. All of my favorite stations have been completely revamped and the on air personalities removed. Sirius was like old time FM without the commercials, laid back and loose. Now the corporate greed mongers have taken over and it sounds like any terrestrial radio station without the commercials. Give it a few more years and they will start sneaking the commercials in, and it will be like cable TV, paying for content and commercials. I will not be renewing my subscription. I can get the same effect with a subsription to Rh*****y or I T***s or any number of other outlets and an MP3 player. That way I hear what I want when I want. Look for my Sirius Starmate receiver and Boombox on E-B**
Timeline: Sirius and XM Satellite Radio
******Federal regulators have cleared the last remaining hurdle for Sirius Satellite Radio’s proposed acquisition of XM Satellite Radio Holdings, a deal that will combine rivals in the nascent U.S. pay-radio market.******The U.S. Federal Communications Commission reached an agreement to conditionally approve the deal on Thursday, four months after the Department of Justice gave its blessing, and 18 months after XM and Sirius agreed to combine. Experts say that new services from a combined company could come in a few months, but suggest their holiday subscription growth may be hurt by the delayed deal closing.******Here are are some important dates in the history of the satellite radio industry.******* 1994 – CD Radio goes public at about $3.15.******* Oct. 1999 – XM goes public at $12 a share.************* Nov. 1999 – CD Radio changes its name to Sirius Satellite.******* Nov. 2001 – XM starts national radio service, after launching its first two satellites — “Rock” and “Roll” — earlier in the year.***
**** 2002 – Sirius launches national satellite radio service.******* Oct 2003 – XM reaches 1 million subscribers.******* Dec 2003 – Sirius signs 7-year, $220 million pact with the National Football League.******* Oct 2004 – Shock Jocks Opie and Anthony begin broadcasting on XM, on a premium channel.******* Oct 2004 – XM signs 11-year, $650 million pact with Major League Baseball; deal starts with the 2005 season.******* Oct 2004 – XM unveils Delphi MyFi, its first portable radio receiver.******* Dec 2004 – Sirius reached 1 million subscribers********** Oct 2004 – Sirius signs shock jock Howard Stern to 5-year, $500 million deal.******* April 2005 – XM raises subscription price to $12.95 a month from $9.99, matching Sirius.*******Sept 2005 – XM surpasses 5 million subscribers.******* Feb 2006 – XM signs 3-year, $55 million deal with Oprah Winfrey.******* Sept 2006 – Sirius tops 5 million subscribers.******* Jan 2006 – Sirius starts broadcasts of Howard Stern.******* Feb 2007 – Sirius and XM propose merger; Deal requires approval of their respective shareholders, the U.S. Federal Communications Commission and the U.S. Justice Department. Sirius CEO Mel Karmazin to be CEO of new company, XM Chairman Gary Parson to become Chairman.************* July 2007 – CEO Hugh Panero says he is stepping down in August; COO Nate Davis to become Interim CEO.******* Nov 2007 – XM and Sirius shareholders approve the deal.******* Mar 2008 – The Justice Department approves the deal.************* June 16, 2008 – FCC Chairman Kevin Martin announced his recommendation to approve the merger with conditions.******* June 30, 2008 – Sirius ends the second quarter with 8.9 million subscribers, up 25 percent from a year earlier. XM had 9.65 million subscribers at the end of June, up 17 percent from a year earlier.******* July 25, 2008 – FCC Commissioners approve the deal with conditions, clearing the way for a deal that will leave just one U.S. satellite radio service. Analysts expect the deal to close within days or weeks of the regulatory approval.******(Sources: XM, Sirius, Hoover’s, Reuters)******(Top picture: A Russian Proton with a satellite for Sirius Satellite Radio is lifted into place at its launching pad at the Baikonur Cosmodrome, Kazakhstan, on September 1, 2000, while (L to R) Bob Prevaux, Program Director for Space Systems Loral talks with Rob Briskman, Executive Vice President for Sirius Satellite Radio and Ted Sitek, Mission Manager for International Launch Services. (Reuters/Karl Ronstrom))
Google, Microsoft augur tougher times ahead
Google’s second quarter earnings disappointed Wall Street yesterday and sent its shares tumbling. The search giant blamed lower returns from managing its huge cash piles but analysts are also concerned the market leader in search advertising might augur a wider slowdown in online advertising.
Google itself said revenue growth from search ads was “positive” in every sector except for real estate, which was down by a small amount.
But the Street wasn’t convinced, perhaps because Microsoft also disappointed with its quarterly earnings citing “tough” economic conditions which impacted its software business and online ad sales.
As is well known Microsoft has been involved in on-off on-again buyout talks with Yahoo while Yahoo is separately flirting with the idea of a merger with Time Warner’s AOL unit. But just in case the AOL talks don’t work out for Yahoo, Reuters has learned that Yahoo is prepared to renew talks over News Corp’s Web properties, which include leading social networking site MySpace.
Keep an eye on:
- Rambler Media, owner of Russia’s Ramble Web portal has agreed to sell the Begun advertising agency to Google for $140 million (Reuters).
- Warner Bros is set to unleash an online series on Batman that it hopes will usher in a new kind of Web entertainment blending comic books and animation called “motion comics” (WSJ)
- EMI is hunting for a smaller New York headquarters for its North American recorded-music operation after completing a global cost-cutting initiative last month that eliminated some 2000 jobs world wide. (New York Post)
(Photo: Reuters)
Yet, the author fails to mention perhaps the most important reason Google bought YouTube– to defend online content.
If Google’s objective is eyeballs– and we can all agree that it is– then it would benefit Google to have Internet users across the world being able to infringe copyright, i.e. upload copyrighted movies, tv shows, and clips.
At the time of Google’s purchase, the number one threat to YouTube’s success were lawsuits from copyright holders.
Without having the resources and clout of a serious parent company (i.e. Google, Microsoft, Newscorp, or maybe Yahoo at the time) YouTube would have been sued, and subsequently lost in the courts, therefore, setting a precedent that would have been much more detrimental to online video, and Google’s business, than overpaying for YouTube. Even at a price of more than $1.5 billion.
Don’t be fooled, Google knew exactly what it was doing when it agreed to pay more than 1 billion extra than it had “valued” YouTube, which was, reducing a threat to its business- which isn’t search, but rather attention. skh