The bigwigs of the digital world have descended on Carlsbad, California.

The D: All Things Digital conference always attracts the elite of the tech world and this year is no exception, with a lineup that includes Bill Gates, Steve Ballmer, Jerry Yang, Tom Glocer, Barry Diller, Jeffrey Bewkes, and Mark Zuckerberg, among others.

Kicking it off, Microsoft’s Gates and Ballmer showed off new Windows features that are based on “multi-touch” software that will be part of Windows 7. Ballmer said touchscreens were just one way Windows would be improved.

OK. Cool. But what if you wanted to know about Gates and Ballmer? What were they like up on stage? Were they nervous? Relaxed? Were they funny? Dull? Did Ballmer do his screaming thing?

After all, for some the conference is a little like the Super Bowl, Cannes, and the MTV Video Music Awards wrapped into one big buzzfest. If you’re in that camp, the tech bloggers have your back. A sampling of the reporting:

GigaOM: “It didn’t quite have the sentimental feeling of the Steve Jobs & Bill Gates talk from last year, but it was interesting to see the dynamic of Steve Ballmer & Bill Gates. I think it was great to see Bill step back and let Steve enjoy the limelight, and not take himself too seriously.”

paidContent: “Here at D listening to the Bill and Steve show-Gates and Ballmer this year, no repeat of last year’s star turn by Steve Jobs. It starts with the Microsoft-Gates farewell video from CES with a few tweaks.

And now it’s a group interview with Kara, Walt, Bill and Steve (not quite Bob, Carol, Ted and Alice). We’ve been through Harvard, where the two met in a residence hall. Quite a bit to go before we get to the unveiling of Windows 7.”

Silicon Alley Insider: “The rest of the chat’s highlights include a pretty interesting walk through memory lane, where Bill and Steve discuss their time at Harvard, and early days at the company. They spent quite a bit of time talking about Bill’s reluctance to take any risks with his company’s money, which seems to have implications for the Yahoo deal. It was also interesting to see just how much Apple, popular adulation of the company, have gotten under MSFTs skin. ”

Keep an eye on:

• Major League Soccer’s Seattle Sounders have landed a major sponsor, Microsoft, which will emblazon the front of the team’s uniforms. They will announce a deal for “Xbox 360 LIVE” to be splashed across the Sounders’ uniforms (The Wall Street Journal)
• Apple watchers believe that a new version of the iPhone will be introduced at the opening day of Apple’s Worldwide Developers Conference on June 9, leading to rampant speculation about the phone’s possible features (The New York Times)
• TV networks are attempting to cut costs for reality shows, already thought of as the cheapest form of prime-time programming (Hollywood Reporter)

(Photo: Reuters)

TV strike? What TV strike?

Seems that Fox survived the 14-week writers strike, and arguably thrived if you stack its prime-time ratings up against major broadcast networks. It has  finished the season as the undisputed ratings leader for the first time, thanks to a combination of the Super Bowl and that little talent show known as “American Idol.”

Sure, “American Idol” ended its latest run with year-to-year declines in both overall audience and ratings for viewers aged 18 to 49 – and the show notched some record ratings lows this season. But let’s be honest here, it’s coming off pretty tough comparisons.

Even if the talent show is fading a bit, the network has built a strong supporting cast around “American Idol,” one that includes “House,” “Bones,” and “24,” which will be back next year after the strike kept it off the schedule this season.

Simply put, Fox is dominating right now. As per usual, it winds up the season as the most popular network with young adults, but now, for the first time in its two-decade history, it also wears the crown of the most-watched network in prime-time. CBS had long owned that title.

Not that Fox is free and clear. In a year when the five largest English-language broadcasters — ABC, CBS, NBC, Fox and the CW — ended the season down 10 percent collectively among young-adult viewers and 7 percent in overall audience, everybody in the industry is worried. Fox is just a bit less worried.

(Reuters)

 Keep an eye on:

• Yahoo has nominated nine of its 10 existing directors for reelection to the company’s board.

• Why hasn’t online online video advertising taken off as quickly as many expected? Executives attending the Reuters Global Technology, Media and Telecoms Summit this week cite inexperienced creative and sales staff and fear of the unknown among the roadblocks for online video advertising (Reuters)
• Steven Spielberg’s fourth “Indiana Jones” installment is one of the most highly anticipated films of the year – one that many in Hollywood hope will revive a sluggish box office (Reuters)
• The leading contenders to buy the Weather Channel in an auction are Time Warner and a partnership between General Electric Co’s NBC Universal and Blackstone Group LP, people familiar with the auction tell The Wall Street Journal.

(Photo: Reuters)

Take that Google!

Microsoft, in a bid to win share of the search market from Google and Yahoo, now plans to offer a new “cashback” service that provides a rebate when users buy something they found searching with Windows Live.

Chairman Bill Gates’ announcement of the rebate plan is the latest loud and clear sign of how much importance Microsoft is placing on advertising. (It apparently has been in talks with a company named, ummm, Yahoo, about just this).

“This is giving you a reason why you should use a particular search engine,” Gates said at the company’s Advance 08 advertising conference.

At first glance, it seems like a sound strategy, particularly given the timing of the initiative. Consumers could soon be facing $4/gallon gasoline prices, food costs have jumped and the overall economy still looks glum. If ever there was a time when people wanted coupons or rebates, this would seem to be it.

This alone isn’t going to close the gap with Google in the search department, but for a company that is facing a long road in catching up to the market leader, it just may be a step in the right direction.

Keep an eye on:

• David Cook won the coveted title of “American Idol,” dealing an unexpected but decisive defeat to a silken-voiced teenager on Fox’s blockbuster TV show (Reuters)
• Advertising on mobile phones has enormous potential to become a significant platform for marketers, but any breakthrough is years away and major operators must work together to succeed, executives said at the Reuters Technology, Media and Telecoms Summit (Reuters)
• With movies getting more costly to make and market, Hollywood is increasingly using release dates that have worked in the past to launch movies with the same genre, star or filmmaker (LA Times)

(Photo: Reuters)

The secret is out: What Microsoft wants is Yahoo’s search business. Reuters has reported that the deal now under discussion would have…

1). Microsoft buy the search operation.

2). Yahoo sell off its Asian assets.

3). Microsoft buy a chunk of what remains of Yahoo.

Microsoft and Yahoo representatives declined to comment on the Reuters report. But clearly these talks are all about search.

And that really shouldn’t come as a surprise. After all, search is crushing all other types of advertising in terms of growth and Google is threatening to run away with market share, leaving Microsoft and all others in the dust.

At the moment, Yahoo is a distant second to Google in search in the United States, and Microsoft is third. Together they would have around 30 percent U.S. share, which still leaves them behind Google, but at least keeps them somewhat in the game.

However, to keep things sufficiently complicated, Yahoo and Google are still talking about a possible search advertising deal, creating what columnist Therese Poletti calls a “bizarre triangle.”

“The Mountain View, Calif.-based Internet search giant is Microsoft’s real target in this battle, as Microsoft enviously eyes the piles of money Google is making as the dominant player in Internet search-based advertising. Perhaps Microsoft should think twice before buying Yahoo’s search business, in light of the fact that Yahoo has been talking to Google about outsourcing search,” Poletti writes.

She later adds, “Microsoft chief executive Steve Ballmer was quoted a few weeks ago as saying the company would be fine without Yahoo. But that old adage, ‘actions speak louder than words,’ comes to mind. If Microsoft really does not need Yahoo, then why this incessant dance?”

(Photo: Reuters) 

Keep an eye on:

• The SEC charged eight former executives of AOL Time Warner, now known as Time Warner Inc, in a fraudulent scheme that overstated company advertising revenue by more than $1 billion (Reuters) 
• Jean-Francois Decaux, chief executive of JCDecaux, said guidance for underlying sales growth of 6-7 percent for 2008 was “realistic”. Decaux also told the Reuters Technology, Media and Telecoms Summit that Europe’s biggest outdoor advertising group could raise roughly $1.56 billion for a big acquisition without diluting the shares (Reuters)
• Bertelsmann AG has given the nod to Markus Dohle, the head of its printing unit, Markus Dohle, to take charge at book publishing unit Random House (WSJ.com)
• Netflix is offering its 8.2 million subscribers an option to watch movies without visiting the post office (NY Times) 

With all the interest in Yahoo Inc these days, we took the opportunity to ask Nokia CFO Rick Simonson at the Reuters Global Technology, Media and Telecoms Summit if the world’s largest mobile phone maker would be interested in buying Yahoo. He laughed and joked that of all the questions we could have asked him, this was one he didn’t see coming. Then he goes on to say:

We’ve not been involved obviously in Yahoo. We’re focused on closing the acquisition with Navteq …

We’re not out in the desert trying to invent a search algorithm that’s better than Google or Yahoo’s for instance. They’ve got some scale there we don’t have.

As it is, Nokia doesn’t see returns from its investment in Internet services until about 2010. But at least it’s only earmarking hundreds of millions of euros a year on the project — far short of the last price tag of $47.5 billion that Microsoft last offered for all of Yahoo.

(Photo: Reuters)

So Microsoft is now proposing a new deal: This one could be some sort of partnership or joint venture for search-related advertising to take on Google Inc, the New York Times reports.

Just one problem. Carl Icahn doesn’t appear to be hot on the idea. Reuters, citing a person familiar his with the financier’s thinking, reports that this latest talk about an partial Microsoft-Yahoo alliance could prompt the billionaire investor to press Yahoo to further pursue a deal with Google.

“Microsoft is trying to get the milk without buying the cow, and if you look at Icahn’s history, he has never been used that way,” said this person. “He does not want to see Yahoo pushed into some joint venture with Microsoft and is not going to be used to push Yahoo into it.”

Icahn launched a proxy campaign last week to replace Yahoo’s board, saying it acted irrationally in refusing Microsoft’s $47.5 billion bid.

Icahn’s presence further complicates the Yahoo situation. He’s accumulated 59 million shares and options in Yahoo and has the support of Paulson & Co, a $30 billion hedge fund that has amassed a 3.4 percent stake in Yahoo, and other investors upset by the board’s handling of negotiations with Microsoft.

That gives Icahn a lot of pull in Yahoo’s future, whether that’s alone, with Microsoft, with Google, with whomever — yet a source tells Reuters that Microsoft hasn’t held discussions with him.

Maybe Microsoft and Yahoo want to pick up the phone and give Icahn a ring.

Keep an eye on:

• Facebook founder and CEO Mark Zuckerberg is stressing his company’s independence after a report that the social networking site might be sold to software giant Microsoft, which is hunting for ways to beef up its Internet business (Reuters)
• Fox Networks is launching an international online ad network focused on financial news and advice, with help from the Wall Street Journal Digital Network (Reuters)
• Leading U.S. cable television chiefs say the industry has been “recession-resistant” in spite of fears that it would be tripped up by the housing market downturn and slowing U.S. economy (Reuters)

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)

Billionaire investor Carl Icahn fired a salvo at Yahoo on Thursday morning, threatening a proxy fight unless Yahoo gets Microsoft back to the negotiating table.

In a letter to Yahoo Chairman Roy Bostock he said Yahoo’s board had acted “irrationally” in turning away an offer that amounted to a 72 percent premium and warned Yahoo not to announce any “strategic alternatives” (such as a deal with AOL or Google) without a shareholder vote.

I am perplexed by the board’s actions. It is irresponsible to hide behind management’s more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.

Icahn also disclosed he has purchased 59 million shares and has sought antitrust clearance from the FTC to acquire up to approximately $2.5 billion worth of Yahoo stock.

Microsoft has remained quiet so far. Wall Street Journal reported earlier that Icahn had been yet unable to lock in Microsoft’s support.

Also, despite having nominated a 10-member slate, which include Icahn, former Viacom chief Frank Biondi, Icahn Enterprise’s vice chairman Keith Meister, former New Line co-CEO Robert Shaye and corporate governance expert Lucian Bebchuk, he could yet settle for a smaller slate of Yahoo directors.

After spending a week telling the world how uninterested they are in Yahoo, Microsoft has remained quiet so far.

(Reuters)

Keep an eye on:

• CBS to buy CNET Networks for $1.8 billion to boost its Web presence, and maybe laying to rest a CNET activist investor fight (Reuters)
• Ask.com to expand its vocabulary with plans to buy Lexico, owner of Dictionary.com and Thesaurus.com (Reuters)

(Picture: Reuters / Icahn at the Lazard presentation during the Time Warner battle.)

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

As the Microsoft-Yahoo will-they-won’t-they? saga drags on, Google’s role in any future talks becomes more apparent.

On Thursday Google CEO Eric Schmidt said a two-week trial selling search advertisements on rival Yahoo last month had given the companies good reason to discuss cooperation, but there was no deal yet.

That isn’t great news for some in the online advertising world.  As commentators have pointed out, a Google-Yahoo partnership (Yahoogle? Yoogle? Gahoo?) could concentrate too much power with just one team. This has led to some folk to paint Microsoft as the little guy. Yes, the same Microsoft, which is a Monopoly 101 case study for first-year economics college students.

In a TV interview with CNBC on Friday, WPP CEO Martin Sorrell said, “It was a shame…that those negotiations failed. Maybe they’ll come back again.”

Sorrell, whose empire of ad agencies includes Ogilvy, JWT and Y&R,  said the advertising industry lost a potential balancing influence in the Web search market when the talks between Microsoft and Yahoo collapsed.

Meanwhile,  Silicon Alley Insider reports that Google is seriously considering having display ads on its home page, based on statements from executives. SAI estimates Google could add up to $3 billion to $4 billion in annual revenue if it decided to do so.

 Keep an eye on:

* British video search engine company Blinkx sees it shares fly on rumors of a possible bid by News Corp or Google  (Reuters)

* MySpace lets users share their profiles across the Web (Reuters)

* Real Networks spins off its gaming division (GigaOM)

(Photo: Reuters)