Time Warner's earnings may be better-than-expected, but the most arresting news out of its quarterly report isn't really about the media company's profit, revenue or forecasts. It's about strategy.

It's always interesting to find out what direction Time Warner plans to take. What's it selling? What's it spinning off? What could it buy? Will it get rid of AOL? Could it acquire NBC Universal?

Here's the latest news: Time Warner Chief Jeffrey Bewkes says the company would split AOL's dial-up Internet and advertising business. This plan, along with getting rid of its cable services business, basically positions Time Warner as a content company.

Here's what Bewkes said in the press release:

We've also made significant progress in our top structural initiatives. During the quarter, we agreed to the terms of our planned separation from Time Warner Cable. In addition, we've made the key decisions that will enable us to run AOL's access and audience businesses separately beginning in 2009. As we continue to reshape Time Warner, we'll increasingly focus on our goal to create and manage high-quality branded content, across multiple platforms around the world, at the highest returns possible for our stockholders.

Okay, but this leaves a lot of questions to be answered. Sources have said Time Warner is still talking about deals to merge or sell off its online advertising and Internet business. Does this mean a deal with Microsoft? Or Yahoo? And if it sees itself as a content company, does this mean it could be looking to acquire a TV network? Or more cable channels? Does it make a deal with NBC Universal more likely? (We should note that NBC Universal and parent GE have repeatedly said the media concern is not up for sale).

It's time to speculate...

Keep an eye on:

• Comcast is buying email fashion and culture newsletter Daily Candy for $125 million, the Wall Street Journal reports, citing people familiar with the matter (WSJ.com)
• Mel Karmazin talks to the New York Times about the merger of Sirius Satellite Radio and XM Radio, and says the movie he is most proud of making in his time as a media mogul is "Jackass." "It cost me $6 million and made $100 million," he says (NY Times)
• Mario Gabelli has filed to raise $200 million and will use the proceeds to buy a media or telecom company (NY Post)

(Photo: Reuters)

Hey, did someone mention hanging chads?

Not yet, but one of Yahoo Inc's largest and most critical shareholders, Capital Research Global Investors, has asked for a probe of last week's shareholder vote, which was widely seen as a pat on the back for Chief Executive Jerry Yang.

Yang, who has been under pressure since Yahoo and Microsoft failed to agree to a deal, received 85.4 percent support in the results announced on Friday, with the remaining votes withheld in protest.

"I guess Jerry Yang didn't come out of the meeting as unscathed as it seemed," Canaccord Adams analyst Colin Gillis said of the uncertainty raised by calls for a recount.

The New York Times describes the situation this way: "The recount was requested because the total number of votes cast appeared too low, according to a person with knowledge of the matter who asked to remain anonymous because he was not authorized to discuss it. The person said that Capital Research believed that any undercounting of votes was most likely due to a technical mistake, not any tampering with the vote."

Questions over the vote -- first reported by the D: All Things Digital blog -- is the last headache Yang/Yahoo need. Yang's position seems secure, even if the final vote count changes somewhat. But the point is that the company is still trying to put the Microsoft mess behind it, and would clearly rather avoid any more bad publicity.

Keep an eye on:

• Under a deal with the International Olympic Committee, YouTube will provide about three hours a day of exclusive content during the Games (WSJ.com)
• Friendster, the social network site, got a new chief executive and $20 million in financing (Silicon Alley Insider)
• Motorola tapped semiconductor industry executive Sanjay K. Jha to head its troubled mobile phone division and share chief executive duties for the entire company (NY Times)

(Photo: Reuters)

If for some reason you assumed that Yahoo's deal with Carl Icahn would quiet the chatter about a deal, you were mistaken. The conference call to discuss quarterly earnings made that clear.

Past distractions, future possibilities, it was all there for listeners. The only problem is that for all the chatter on the call about deals, there was no real insight offered about what Yahoo might do.

Here's a look at what Yahoo's executives said about M&A during the call:

• Frankly, I think Yahoo's ability to perform is especially impressive in light of the extraordinary events surrounding the company this year. It has been nearly six months since Microsoft made an unsolicited proposal for Yahoo and everyone here, the board, management and over 14 thousand Yahoo's around the world have continued to work for one central goal, maximizing value for our shareholders.
• Significantly, we have also actively explored a number of alternatives to maximize value for the company, and we remain open to value creating transactions that provide real tangible value.
• I don't want to speculate on any potential transactions or spin-outs that might have been mentioned in the press. I will say that we have examined various alternatives for Asia and will continue to do that.
• We have looked at just the about every alternative you could imagine as far as looking at how do we best position the company to go forward either through transactions and/or financial options. At this point, we clearly are still looking at what the best ways for us to continue to drive shareholder value. We don't have anything specific that we will talk about but clearly, we view that we continue to have very strong balance sheets and we have ability to generate cash, so we're going to take that in act as we think about what's the best way to move forward.

OK, we get it. Yahoo wants to maximize shareholder value ... whatever that means.

Why announce one deal when you can do four?

Just a day after billionaire investor Carl Icahn called for the removal of Yahoo CEO Jerry Yang, the company blasted out of the gate Wednesday morning, trumpeting deals with CBS, Walmart.com, Havas Digital and the newspaper consortium.

With CBS, Yahoo will carry some of its shows as the broadcaster continues to proliferate the Web with them through other partners AOL, Microsoft, and Google. For Walmart.com, Yahoo will be the primary marketing and sales channel for the retailer's web site. Yahoo also said an additional 41 U.S. newspapers have joined its newspaper consortium, which lets them use Yahoo's paid search system as well as have their stories carried over Yahoo properties.

Yahoo also inked a deal with Havas Digital to develop a proprietary media trading platform.

It would be considered good news during any other period. For now, investors are reserving judgement for August 1, the date of its annual shareholders meeting.

Meanwhile, what Reuters correspondent Michele Gershberg is reporting out of the Advertising 2.0 conference on Wednesday will likely dominate buzz in the Microsoft Yahoo betting circles. Speaking at the conference, Yahoo President Sue Decker tells the audience that engaged conversations with Microsoft continue, and that "there are many ways" a combo with Microsoft could be beneficial.

Here's a riddle: What does Decker mean when she says Yahoo will be a principal in search as well as display. Can we interpret this as a sign it has no intentions to sell off its paid search business to Microsoft. Or, if it strikes a deal with Google, will she still consider Yahoo a principal in search?

(Reuters)

Keep an eye on:

• Sony struck a deal that lets ads distributed over the Internet be inserted into PlayStation 3 videogames (The Wall Street Journal)
• The upfront market is up and running with buyers saying the market is anywhere from 20 percent to 50 percent complete. Fox and ABC are setting the market (AdAge.com)
• Tribune Co. wants to keep a minority stake in the Chicago Cubs after it sells control of the major league ballclub. It also wants to talk to comedian Jay Leno about a possible job (Chicago Tribune)

We're moving into summer now -- peak wedding time. Naturally, all sorts of mergers are on the mind.

Take a much-speculated about combination of Time Warner and NBC Universal, a subject that inevitably pops up when anybody talks about potential mergers in the media world. Thanks to Newsweek, it's once again making the rounds.

Here's the key takeway from the article:

And so they have begun preliminary efforts to explore a commingling of their entertainment assets-combining GE's NBC Universal with Time Warner-in hopes of eventually igniting investor enthusiasm and pumping up their stock prices, according to media-industry executives familiar with the developments but not authorized to comment.

The article says Jeff Immelt and Jeff Bewkes, of GE and Time Warner, respectively, talked about it among a range of subjects that came up during a recent conversation. (A GE spokesman told Newsweek that the subject came up, while Time Warner declined to comment).

Other points of note in the story:

The two sides are not currently in negotiations.

Things are most likely to heat up in the fall, after the Olympics (NBC carries the games).

The two sides already appear to have an idea about how a deal would be structured.

Immelt and Richard Parsons, Bewkes' predecessor, also considered a deal.

It's going to be a fun summer.

Keep an eye on:

• "Sex and the City" fashioned a surprisingly strong opening at the North American box office, as frenzied female fans used the romantic comedy as an excuse for a big party (Reuters)
• Makers of dishwasher detergent and fabric freshener are dressing up their packaging in the hopes that consumers will showcase the bottles when they're not using them (The Wall Street Journal)
• Discovery Communications is introducing Planet Green, a new cable brand that will be dedicated to eco-friendly living (New York Times)
• MTV went ahead with its annual star-studded movie awards at the Universal Studios lot on Sunday, hours after a spectacular blaze destroyed chunks of Hollywood history nearby (Reuters)

(Photo: Reuters / Time Warner Center)

It may not seem as sexy as Yahoo-Microsoft, but there is another notable takeover saga brewing in media. This one is between WPP, the British advertising group, and Taylor Nelson Sofres, the market research firm.

Why does WPP want TNS badly enough that it continued to urge the research firm to engage in talks even after its $1.9 billion bid had been rejected?

It's partly because research has become so much more essential to advertising these days. With so many media outlets, it doesn't come as a shock that advertisers are desperate for more information about their products and markets.

WPP Chief Executive Martin Sorrell expressed surpise and disappointment that the board of TNS turned down WPP's offer. But perhaps this is just a bit of cat-and-mouse, with WPP prepared to come back with a bigger number for TNS, which is also talking with Germany's Gfk. 

"Given the potential for greater returns, we believe WPP could afford a higher offer," analysts at UBS said in a note to clients.

Of course, nearly everyone was saying the same thing about Microsoft over the last few weeks, and we know where that went.

(Reuters)

Keep an eye on:

• NBC Universal has reach an exclusive deal with with the "Project Runway" production team, less than a month after it was outbid for rights to the cable show by Lifetime Networks. Now a new production team has to be put in place. (LA Times) 
• Microsoft is adding TV shows to its Zune marketplace, offering rougly 800 TV shows, each for $1.99, for download from places such as Comedy Central, MTV and NBCU. (paidContent)
• CBS Radio CEO Dan Mason, meeting with advertisers, dismissed the notion that the iPod and satellite radio will kill radio. "To say that an iPod or satellite radio, with little or no human connection will ever replace radio is absurd." (paidContent)

(Photo: Reuters)

Who says the newspaper business is doomed? Circulation and advertising may be in the dumps, sure, but judging from the bidders lining up to buy Newsday there are plenty of moguls still keen on newspapers.

The latest development: The Wall Street Journal reports that Cablevision is planning to bid as much as $650 million for the Long Island daily, which likely catapults it ahead of other bidders like News Corp, which owns the New York Post, and Mortimer Zuckerman, who owns the Daily News.

Cablevision's bid could come within two days, the report said, adding that it was unclear whether whether Cablevision is working with New York Observer owner Jared Kushner in its offer. Beyond Cablevision's cable assets, it owns the New York Knicks, the New York Rangers, Madison Square Garden and Radio City Music Hall.

The New York Times offered a different view. It, too, said Cablevision is preparing a bid, but it reported that the owners of the New York Observer have dropped out of the race.

Cablevision? Zuckerman? New York Observer? News Corp? What's going on here?

These are smart, successful media companies and executives, so they must know something. Indeed, the New York Times reported that people briefed on its finances says that Newsday last year generated more than $80 million in income and about $500 million in revenue.

And it is, after all, the key paper in a relatively affluent area.

But get this: The New York Times also reports that some executives at companies interested in Newsday "learned over the last month that its printing, trucking and subscription operations were more troubled and inefficient than they knew. Paradoxically, that has persuaded them that the paper was worth more than they initially thought."

Go figure.

Keep an eye on:

• With time running out a self-imposed deadline in contract talks with actors, major Hollywood studios say the two sides remained far from a deal and that excessive union demands are to blame (Reuters)
• Comcast Corp, the largest U.S. cable operator, on Thursday posted a fall in first-quarter net profit as it lost basic video subscribers because of fierce competition from phone and satellite companies (Reuters)
• Microsoft indicated a willingness to up its bid for Yahoo to $33 per share, but Chief Executive Steve Ballmer has also appeared ready to walk away from the deal altogether if need be, the Wall Street Journal reports , quoting people with knowledge of the situation. It reported that Microsoft's board met Wednesday without reaching a decision.
• Talk at the 2008 leadership conference of the American Association of Advertising Agencies centered on politics and the economy (The New York Times)

(Photo: Reuters)

Sumner Redstone just won’t stop dancing.

CBS Corp. and Viacom Inc.’s executive chairman keeps getting questions about whether he would take one of his media companies private — and he keeps dodging the issue.

His latest dance came during a conference call to discuss CBS’ quarterly earnings, when he was asked what would “trigger” a decision to go private. Back in June, he fielded a similar question during an interview on CNBC.

Here’s what he said on Tuesday: 

“(We) like the companies the way they are. We think there is an enormous amount of growth in them without any great strategic change. 
However, and I’m very clear on this, we do consider all alternatives. There has been a lot of discussion inside and outside about taking one of these companies private. 
What I can say is, I’ve said it before, it’s not on the front burner. But you can rest assured it will receive the consideration it should as we always consider what’s good for these companies.”

Why the equivocation? Given the the skittishness of the debt markets, this would seem a reasonable time to rule out going private. What do you think? What’s Redstone got in mind?