General Electric’s problems – it warned yesterday that turmoil in the global credit markets could drive profit down as much as 12 percent — have once more put the spotlight on its media unit, NBC Universal.

Forever, it seems, media observers and Wall Street bankers have been talking about whether or not NBC should be sold by majority-owner GE. For its part, GE and its leadership — most notably CEO Jeff Immelt — repeatedly respond that NBC isn’t going anywhere.

As The Hollywood Reporter points out, GE’s latest troubles have nothing to do with NBC.  The article reports that Immelt called NBC a “great media franchise” during his rounds yesterday.

During a conference call with Wall Street analysts, Immelt was asked three times if he would spin off GE Capital, prompting him to quip later on CNBC: “At least it took over from, ‘Are we going to spin out NBC?’ “

That’s not to say that NBC isn’t facing challenges of its own.  NBC Universal CEO Jeff Zucker told a conference on Friday that local TV stations have been profoundly impacted by the economic downturn, according to Reuters.

“We haven’t seen an advertising slowdown on a national level yet in the United States but obviously we’re concerned about it, and I think if you’re not concerned about it you’re in denial,” he added.

Reuters later spoke to Zucker on the sidelines and came up with these tidbits…

1.  Zucker isn’t interested in Rainbow Media
2.  He’s “pleased” with NBC Entertainment co-chairman Ben Silverman
3.  And he’s still not into “wanton spending on pilots.”

Keep an eye on:

• Microsoft Corp Chief Executive Steve Ballmer said on Thursday he still sees a “certain buoyancy” among technology and telecommunications customers worldwide, despite recent U.S. economic woes (Reuters)
• Cablevision’s largest shareholder yesterday ratcheted up the pressure on the controlling Dolan family (NY Post)

(Photo: Reuters)

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.

2008
Jan. 31 - Microsoft CEO Steve Ballmer makes a $44.6 billion, $31-per-share, cash-and-stock takeover offer to Yahoo’s board. Semel resigns as chairman and is replaced by Roy Bostock.

Feb. 1 - Microsoft makes the offer public. Its shares fall 6.6 percent to $30.45; Yahoo shares rise 48 percent to $28.38.

Feb. 11 - Yahoo rejects the Microsoft offer as too low.

Mid-February - Yahoo begins talks with Time Warner Inc on a deal to combine the media conglomerate’s AOL unit with Yahoo in exchange for Time Warner taking a stake in the merged company. MySpace owner News Corp and Yahoo also discuss a tie-up.

March 18 - Yahoo releases financial forecasts until 2010, in an effort to prove it is worth more than Microsoft bid.

March 28 - One of seven face-to-face meetings takes place between the “senior-most” executives of Microsoft and Yahoo to discuss the bid. Yahoo asks how Microsoft would handle regulatory issues, including antitrust concerns, in a merger.

April 4-7 - Microsoft reevaluates its bid for Yahoo because the Internet company may have lost value since the offer was first made. Microsoft sets a three-week deadline for Yahoo to reach a deal or possibly face a proxy fight. Yahoo again rejects Microsoft’s bid.

April 9 - Yahoo says it will test Google search ads on its site, which could be more lucrative than selling its own search ads. Talks between Yahoo and Time Warner/AOL heat up.

April 15 - At another meeting between between Yahoo and Microsoft executives and their financial advisers, Yahoo asks about Microsoft’s integration plans and Yahoo raises a list of “key non-price deal terms” it believes are critical.

May 3 - After several earlier meetings, Yang meets Ballmer in Seattle. Microsoft verbally raises its offer to $33/share, or $47.5 billion, from its original $31/share bid. Yahoo wants $37/share, or about $5 billion more. Late in the day, Ballmer calls off the talks.

May 15 - Carl Icahn proposes a full dissident board slate for election at Yahoo’s annual shareholder meeting in July. Icahn says he now holds a 4.3 percent stake in Yahoo, including 9.9 million shares and 49 million call options. Yahoo Chairman Bostock replies to Icahn that “none of the alternatives we are considering would preclude us from entering into a transaction with Microsoft or any other party.”

May 18 - Microsoft says it has raised with Yahoo an “alternative” deal that would not involve the software maker buying all of the web company but says it could reconsider pursuing a full acquisition. Microsoft proposed buying Yahoo’s search business and as part of the deal Microsoft would buy a stake in what remains of the company.

June 6 - Icahn says Yahoo should offer to sell itself to Microsoft of $34.375 a share. Throughout June, the two sides exchange a series of letters in an acrimonious war of words.

June 12 - Yahoo announces search advertising deal with Google for up to 10 years, and says talks with Microsoft have ended. U.S. lawmakers promise to scrutinize the deal on antitrust concerns. The companies say they will wait up to three-and-a-half months to put the deal into effect.

June 13 - Microsoft says it had offered to pay $8 billion, or $35 a share, for a 16 percent equity stake in Yahoo, and $1 billion in up-front payments to acquire Yahoo’s search advertising assets.

June 26 - Icahn says in a proxy filing that if his slate is elected, it will seek to hire a “talented and experienced CEO” to replace Yang, eliminate a severance plan, and sell Yahoo to Microsoft for at least $33 a share.

July 7 - Microsoft says it is interested in discussing a major transaction with Yahoo, such as the purchase of all or part of the company, only if Yahoo elects a new board. Microsoft says it has concluded that it cannot reach an agreement with Yahoo’s current management.

July 21 - Yahoo reaches settlement with Icahn that will put the billionaire activist investor and two other nominees on an expanded 11-member board in August, defusing a proxy battle showdown and making an immediate deal with Microsoft less likely.

July 22 - Yahoo’s second-quarter net profit fell 19 percent but investors took heart that it did not change its outlook despite a weakening U.S. economy and the distraction of Microsoft’s failed takeover bid.

Aug. 1 - Yahoo’s annual shareholder meeting.

Sources: Statements from Microsoft, Yahoo, Google and Icahn; Reuters stories and data.

Photos: Reuters, Yahoo and Microsoft company materials, Google Maps.

Compiled by Eric Auchard, Peter Henderson and Tiffany Wu.

If you’re getting lost in all the nasty rhetoric between Yahoo, Microsoft and Carl Icahn, here’s our primer on what the fuss is all about.

They’re trading insults (again) after the latest deal talks broke down (again). Microsoft’s top lawyer is pressing the antitrust issue in Yahoo’s Google search partnership in Washington today, while Yahoo’s top lawyer accused Microsoft of trying to force a fire sale.

Don’t forget, this comes after Monday’s war of words over the latest Microsoft proposal to acquire Yahoo search, which was floated with the help of billionaire activist investor Icahn and rejected by Yahoo (again). Here’s what they’re saying about that deal:

Source: Statements from Yahoo, Microsoft and Icahn

On how they met:

Gates : Steve and I were both at Harvard and I was in this dorm up at Radcliffe where the kind of anti-social math types hung out … I was energetic and had ideas. There was a guy who would hang out with me who also knew Steve and he kept saying “There is this other guy who is super energetic like you and he’s a neat guy.” So … we went out to the movies together. I think we saw right away that, even though we are different in some ways, we had a lot in common and from that day forward, we brainstormed about our dreams, what we wanted to do and that was fantastic.

Ballmer: So we went out to see this movie. It was a double bill. ‘Singing in the Rain,’ which is my favorite movie ever. I’ve seen it now 30 times … We come back from the movie and we’re dancing, playing Gene Kelly and some guy wrestles me to the ground. Bill is trying to beat him away. It was really a weird kind of place.

On how Ballmer joined Microsoft:

Ballmer: Bill and Paul (Allen) interviewed me. Bill’s Mom and Dad took me out to dinner. They had met me once before. That was the big rush back then, dinner with Bill’s Mom and Dad. And then at the end of my job interview, and I think this is unique, Bill says “OK, I’m leaving town. Here’s my car, take care of yourself.” So I took him to the airport and he left on vacation in the middle of my job interview. So I guess I got the job anyway.”

Gates: I knew I wanted Steve. I knew I needed Steve, because every contract seemed like such a miracle … Picking which to do, how to price it and how to hire people. I had hired my friends, which was a small set and that wasn’t going to get us there. I was shy about it. I thought Microsoft was very important, but Steve clearly had so much opportunity that I was shy about saying to him, “Hey, come here.”

On negotiating Ballmer’s salary:

Gates: I went on that vacation, I was on a boat … and so it was over the radio phone … that we negotiated, not his share ownership, we’d come up with a formula that came up with something like 7 or 8 percent. We were negotiating his salary, whether it would be $36,000 or …

Ballmer: $40,000 or $50,000. That was the negotiation

Gates: So, over this radio phone, my friends on the boat, they’re all drinking and saying “Give him whatever he wants.”

Ballmer: “Don’t worry, he was tough. We split the difference. I came to Microsoft because of Bill. I didn’t know much about programming or I didn’t know much about personal computers. I knew Bill had a cool company. I knew he was a great guy and that he was brilliant and something good could happen.

On how Ballmer wanted to quit a month into the job:

Ballmer: I said “Jeez, I just dropped out of business school to come to a 30-person company as the bookkeeper.” My parents didn’t got to college. My dad didn’t finish high school and the fact that I dropped out wasn’t considered very good by my family. So I went out to dinner again with Bill and his dad … So this is what Bill said to keep me: “You don’t get it. You don’t get it. You don’t get it. We’re going to put a computer on every desk and in every home. It’s not worth it to go back to business school.” It was the vision that Bill, maybe it had been repeated before that, but it sticks in my mind as the thing he said that got me to stay.

On the office car park:

Gates: In the early days, we worked unbelievably hard. In fact, it was kind of a fun thing that I knew everyone’s car in the parking lot and there was always a thing that you would try to take the first parking place, because that meant you were the first to come in. If, when you left, there was a still a car to the left of you, that meant someone had done something called ‘lapped you.’ That is they had come in before you and they left after you. That was a humiliation that someone was lapping you. In fact, we told a guy at IBM, Mel Hallerman, who was part of the original PC project and we told him about this. He was a hard-working guy so he started doing it at IBM and doing it very well. He was in early and left late.

Ballmer: No life. The guy had no life.

Gates: About nine months later, we’re down at IBM. Steve and I go out to dinner with Mel and Mel’s saying ‘there is some guy who’s been working harder than I am. I come in really early, I leave really late. The guy is here before me and leaving after me every day. I’m going to find out who this guy is.’ So after we have dinner, we go back to this IBM parking lot and Mel points out the car of this guy. Steve looks at it and says “Wait a minute, that’s the rental car that a few months ago I took and forgot to take back.”

(Photo: Reuters)

The document adds some color to what we already know, including a history of rebuffing offers dating back to 2007, criticism over the size of Yahoo’s severance plan by its own consultants and Yahoo’s recently hired CTO.

Notes by a Yahoo participant from a phone call between CEO Jerry Yang and Microsoft CEO Steve Ballmer Ballmer also appear to indicate that Yang quickly rejected Microsoft’s January 2008 overtures, as his predecessor Terry Semel did a year before (at the far higher price of $40).

The following are excerpts from the complaint containing internal Yahoo correspondence. The numbers at the start of each excerpt  refer to the paragraph order in the complaint:

Terry Semel rejects a $40 per share offer from Microsoft in Jan. 2007

31. Yahoo’s reaction has been consistent, giving the back of the hand to Microsoft’s efforts towards a consensual deal, including a January 2007 acquisition proposal offering about $40 per share. The Board-authorized response to that approach was a letter from then-CEO Terry Semel rejecting “a broader strategic transaction at [that] time,” but professing a willingness to discuss “a commercial partnership arrangement.” Discovery obtained by Plaintiffs gives no indication of serious discussions about any such commercial relationship.

Yang ordered a rejection letter to be prepared in Oct, 2007 spurning an expected offer from a “third party” that the complaint says is Microsoft:

32.  During an October 5, 2007, meeting, Yang and the Board discussed “recent communications about a third party’s interest in a transaction with the Company” and “the likelihood that a third party would make an offer to purchase the Company.” Yang obtained approval to set the stage publicly for a rejection of any offer. A standby press release to be issued by Yang after consultation with select Board members stated, among other things, that “the Board will carefully consider the offer and is committed to acting in the best interests of shareholders in doing so,” but that it had “very recently determined that it was not the right time for the company to seek to sell itself.”

Notes from phone call between Microsoft’s Steve Ballmer and Yahoo’s Jerry Yang a day ahead of Microsoft going public with its offer

38.  On January 31, 2008, telephone call captured by notes of an unidentified Yahoo participant, Ballmer told Yang that Microsoft much preferred to negotiate a deal in private but was prepared to disclose its offer publicly because of concerns that Yang would never support any deal, regardless of price. According to the notes:

–if we want to make a counterproposal and in the ballpark then we don’t go public and we push for an [agreement].

*****

–if you guys can’t get to a [point] of discussion in a couple of days — then still going to go public — and everyone can see what investors think

–if on the same page tonight then hold announcement but if not then we put it out there and its visible and we work through it

*****

–if had a price and willing to sell the business and get that comfort from you and Roy then can hold it a couple of days

Jerry — you don’t lose anything by waiting a week.

*****

Steve — if you really don’t want to sell the biz then don’t want to wait.

Microsoft had earmarked $1.5 billion to retain Yahoo employees.

39.  According to the notes, Microsoft made clear from the outset it “care[s] about employees,” “want[s] employees to be OK,” and had earmarked “$1.5b for retention of employees,” in addition to the “$45b for deal.”

Yahoo CTO Ari Balogh disagreed with Yang’s quick adoption of an employee retention plan.

50. The day after Microsoft’s offer, Yahoo’s newly-hired Chief Technology Officer, Ari Balogh, the person to whom Yahoo’s engineers report, told Yang that he disagreed with Yang’s desire for immediate adoption of a broad employee retention plan. Balogh reasoned that Microsoft’s offer:

“is likely hugely retentive for anyone who understands how these things go (and everyone will shortly as we prepare them for the dance). We should run the glue analysis on the key folks, and have set up a pool and leeway to move quickly based on senior management judgment, as necessary. After this settles in, we can make a decision on something narrow or broad or nothing.”

 A compensation consultant firm Yahoo hired to evaluate its change in control severance plan called Yahoo’s plans “nuts.”

61. Compensia calculated that the cost of the proposal would equal $1.5 billion, or 3.2% of the transaction price. In an internal email, Compensia President Tim Sparks wrote that “3.2% seems very high for a deal of this size, but I am guessing (hoping) that this assumes 100% double trigger activation?” (Ex. A) In an email one minute later, Sparks made clear his view of Yang’s plan to provide 100% equity acceleration for all employees: “That’s nuts.” (Ex. B)

At the very start of the call, Yang essentially said “Don’t go there” to analysts and investors, reminding them about the purpose of the call.

“I’d like to remind you that today’s call is about our Q1 results, so please direct your questions to the quarter if possible,” Yang said.

When he touched on Microsoft — referring to it as three months of “uncertainty” — it was to reiterate the same line: “Our board and management are committed to choosing a path to maximize shareholder value.”

At the same time, Yang was bent on convincing analysts and investors that, despite an unchanged revenue forecast for the year, Yahoo deserves a higher price than the $43 billion cash-and-stock deal that Microsoft has offered. Is that because Yahoo piggybacked on gains from a stake in China’s Alibaba.com to a higher quarterly profit? Or because Yang said Yahoo’s “strategies and investments are beginning to pay off”?

Not that analysts or investors were convinced. Most continue to believe that Yahoo’s earnings are unlikely to put pressure on Microsoft on raise its bid.

Microsoft CEO Steve Ballmer, meanwhile, said before the earnings, “I wish Yahoo all the success with its results, but it doesn’t affect the value of Yahoo to Microsoft.”

So where does that leave Yahoo now? Wednesday might offer some clues, when Yahoo’s two-week test on outsourcing search advertising to Google ends. Or it may not. Yahoo chairman Sue Decker already swatted hopes on the call, saying it’s “premature” to speculate on what sort of deal the two might strike.

Photo: Yahoo CEO Jerry Yang (Reuters)

Normally our policy is to not comment about things like this, but this morning’s rumors about a bidding war involving Google and Microsoft have created such a stir we feel compelled to tell you all directly that they are completely inaccurate.Sorry to burst any drama theories, but they aren’t true. We remain focused on improving Digg and rolling out great features.

Alleyinsider’s Peter Kafka remains a bit skeptical over Adelson’s comments.(TechCrunch )Keep an eye on:

• Microsoft’s Steve Ballmer pledged the company would gain share against Google in online advertising and Web searching, even if it’s his “last breath” at the company. (Reuters)
• The board of National Public Radio its said chief executive, Ken Stern, was leaving after less than 18 months “by mutual agreement.” (NYT)

(Photo: Digg.com founder Kevin Rose, Digg.com)