Cox Enterprises, the parent company of Cox Newspapers and cable company Cox Communications, is buying online advertising firm Adify for at least $300 million — not a bad multiple on revenues of $7 million in 2007 and an expected $35 million this year, according to paidContent.org.

“By any standards, it is a very rich deal,” paidContent’s Rafat Ali wrote. Adify creates custom online ad platforms for customers like the Guardian and Forbes. Reuters announced a deal with Adify in January to create an ad-supported network of small- to medium-sized publishers in areas like personal finance and football.

peHUB’s Dan Primack notes that it’s a “big day for Adify backer US Venture Partners, whose latest fundraising drive has been met with lukewarm enthusiasm.” Venture capital backers, which also included Venrock, NBC’s Peacock Equity fund and Time Warner, had invested about $27 million in Adify.

The Clear Channel Communications court hearing on Thursday brought no resolution to the battle over the $20 billion buyout of the radio station operator, but it did provide some heated words and enlightening emails.

Private equity firms Thomas H. Lee Partners and Bain Capital Partners sued the banks — Citigroup Inc, Morgan Stanley, Credit Suisse Group, Royal Bank of Scotland Group Plc, Deutsche Bank AG, and Wachovia Corp — to force them to fund the buyout of Clear Channel.

The private equity buyers contend the banks balked at providing financing after credit markets deteriorated last year. The buyout firms filed lawsuits in both New York and Texas, seeking to force the banks to fund the deal. The private equity firms rejected the banks’ offer on Tuesday to settle the dispute through binding arbitration.

Mark Hansen, a lawyer for the private equity firms, said the bankers “cooked up a set of loan documents that are nuclear, draconian and punitive” in an attempt to void the contract.

Projecting some emails onto a screen, Hansen highlighted a series of loan conditions that grew increasing onerous over time, including one that insisted the private equity firms could not use their own cash to repay the debt.

“Ah, there will be war.” one bank executive told another in an e-mail..

Hansen told the judge, “They want to lose the war. They want to lose the deal….They want the deal to blow-up.”

The Clear Channel battle promises to continue into May.

New York State Supreme Court Judge Helen Freedman did not indicate when she would rule on the banks’ request to dismiss the lawsuit. A May 5 trial date in the case may be delayed, the judge said.

“Don’t look too forward to May 5,” she said. “I might have to extend it a few days after.”

Stay tuned.

(Additional reporting by Leslie Gevirtz)

They say the early bird gets the worm. But if you’re a business reporter for a national broadsheet, getting to the office before 8 a.m. can be a real hardship.

While waiting on hold for JPMorgan Chase officials to begin their 8 earnings call, Scribbler A was shooting the breeze with her rival, Scribbler B (Names withheld to protect the innocent).

After some shop talk, the two talked about how they deal with such early assignments.

A - Are you in the office or are you home?

B (sounding tired) - No, I’m in the office. I actually came in this morning.

A - You usually don’t?

B - No, I normally call in from home.

A - I always come in.

B - Really?

A - Yeah. It’s four times a year. You know? It’s easier.”

Egads! We should all have it so tough…

Last week, an “anti-collusion” deadline expired, allowing wireless carriers that participated in a recent FCC airwaves auction to weigh mergers. That could open the door for companies such as MetroPCS and Leap Wireless to reconsider merger talks.

In September, MetroPCS made an unsolicited bid to acquire Leap for about $5.3 billion. Leap said the price was too low, but it was open to discussions. MetroPCS withdrew its offer in November, saying it was unable to “engage Leap in meaningful negotiations.”

Leap Wireless said it maintains its long-held stance: “We think there could be merit to a combination with MetoPCS,” but it will continue focusing on its own business and launching in new markets, it said. MetroPCS was not immediately available to comment.

Low-cost wireless service company MetroPCS on Monday posted better-than-expected growth in customers despite the weak economy. Morgan Stanley analyst Simon Flannery said he expects both MetroPCS and Leap “to continue to take market share as they expand coverage.”

“Investors will also focus on industry consolidation potential particularly in the wake of the end of the FCC’s anti-collusion rules expiring last week,” Flannery said in a research report.

Last week, UBS analyst John Hodulik also noted the April 3 anti-collusion deadline. “We believe merger talks could resume between Metro and Leap at that time. We continue to believe a merger between the two companies is likely given similar business models and potential for synergies,” Hodulik said in a research report.

Despite that public spat and Leap’s rejection of MetroPCS’s overture, analysts have speculated that the two companies would eventually combine. Stay tuned.

A deal to sell the Chicago Cubs baseball team was originally supposed to be clinched last year. That’s slowly slipped and now some fear it could even take till after the 2008 baseball season before its owner Tribune finds a new owner for the loveable losers.

To be sure, there’s a lot of activity going on behind the scenes, with talks to sell Wrigley Field to Illinois state moving forward. But the complexities involved mean it’ll likely be months before a deal for all the assets — the field, the team and a stake in a sports TV network - is sorted out. 
    
The flip side is that for real estate tycoon Sam Zell, who led the $8.2 billion buyout of Tribune, it doesn’t matter much. Since Tribune is now a privately owned company, it doesn’t have the pressures of quarterly deadlines and vocal shareholders.
    
However, the pressure is at an all-time high for the Cubs team, which is trying to win its first World Series title in 100 years.  
    

Sirius Satellite Radio Inc Chief Executive Mel Karmazin said on Wednesday he hoped U.S. regulators would rule by the end of March on the satellite radio company’s proposed merger with rival XM Satellite Radio Inc.

Speaking at the Bear Stearns 21st Annual Media Conference, Karmazin said he “took heart” about recent comments by U.S. Federal Communication Commission Chairman Kevin Martin, who indicated that his agency aimed to rule on the deal by the end of March.

Shares of the satellite radio companies immediately jumped on hopes the deal could actually close soon. The stocks had been under pressure amid investors’ fears the deal could get blocked by regulators.

Shares of Sirius, whose programming includes “shock jock” Howard Stern and NASCAR auto racing, hit a high of $2.95 and traded at $2.86, up 11 cents, or 4 percent. Shares of XM, whose programming features Oprah Winfrey and Major League Baseball, hit a high of $12 and traded at $11.58, up 49 cents, or 4.4 percent in afternoon trading.

Karmazin’s predictions on timing, however, may prove false since the companies have been wrong before. The satellite radio companies previously predicted that regulators would sign off on their their proposed $4.2 billion merger by the end of 2007.

XM Satellite Radio Holdings Inc Chairman Gary Parsons was less specific than Karmazin when he spoke at the Bear Stearns conference. He merely said he was confident the regulatory review was moving forward “in a timely manner.”

The deal, which was announced on Feb. 20, 2007, must meet certain standards, such as being in the public interest and not harming competition, as some critics have claimed.

“Clearly if there was a big problem with the merger, it wouldn’t take the (regulators) this long to figure it out. Either you believe we compete with a whole bunch of audio choices or you think there’s a distinct market called satellite radio,” Karmazin said.

Phillip Zane, an antitrust lawyer with Baker Donelson PC, said “the market definition is crucial as it is in any antitrust case. If the market is only satellite radio, then the parties have a problem because they’re the only satellite radio.”

The Department of Justice appeared to have all of the information it needed on the deal, but the companies were having active discussions with the FCC, Karmazin said. Talks with the FCC had recently accelerated, he said.

Unless the DOJ sued to stop the proposed merger, the deal could close immediately after the FCC ruled, Karmazin said.

Still, the DOJ would be wary about bringing a case to block the deal unless it was sure it would prevail, Zane said.

“The market’s changed a lot just since the merger’s been announced,” Zane said.

(Additional reporting by Diane Bartz in Washington)
(PHOTO: Reuters)

It’s hard to think of venture capitalists giving up their peaceful deal-gathering and startup-hunting activities to participate in the kind of rabble-rousing that is the hallmark of activist investors.

But two venture capitalists are playing prominent roles in two ongoing battles — one is a full-on proxy fight and the other is threatening to turn into one.

In January, a consortium led by hedge fund JANA Partners locked horns with CNET Networks to oust the online media company’s board and nominate its own candidates. The consortium’s nominees include Santo Politi, founder of the Boston-based VC firm Spark Capital. Politi is supposed to have been instrumental in spearheading the dissidents’ approach, according to Thomson Financial’s editor-at-large and PE Week Wire creator Dan Primack. A recent meeting between the two sides aimed at avoiding a proxy battle didn’t get anywhere, a source told Reuters.

Meanwhile, hedge fund Harbinger Capital Partners, which has amassed an impressive stake in the New York Times Co. in recent weeks, also began fighting in January, though the formal proxy was only filed last month. It too has a slate of nominees for election to the Times’ board, among them, Allen Morgan, a managing director at the storied Silicon Valley venture firm Mayfield Fund.

Morgan, a lawyer by training, has remained mostly quiet, except to emphasize his passive play in the activist game. “Because of my longstanding interest in, and experience with, Internet and new media companies, I was approached by a group of stockholders of the New York Times Company to see if I would agree to become a nominee… and I’ve agreed,” Morgan wrote on his blog, www.allensblog.typepad.com,on Jan. 29.

Photo credit: Reuters file

Is video game maker Take-Two a “diamond” or a “depreciating asset” for Electronic Arts? When EA publicly announced its $2 billion takeover bid for Take-Two a few weeks ago, EA’s chief financial officer Warren Jenson told reporters Take-Two was a “depreciating asset” that had to be picked up quickly so that the two companies can be integrated ahead of the holiday season. “The longer we wait, the less value it has,” he told the New York Times.

Cut to the more recent Morgan Stanley tech conference, where Jenson sweetened his talk a little, calling Take-Two’s assets “diamonds,” according to GamesIndustry.biz, a trade publication.

“We consider the people at Take-Two, and the studios and IPs, as diamonds,” he said. EA would take these Take-Two diamonds and show them off to the “global marketplace,” Jenson said.

Take-Two has been mum ever since it spurned the offer, saying it was ill-timed and undervalued the company. Although EA’s sweet-talking might mollify Take-Two shareholders a little, it’s cold, hard cash they’re waiting for in the form of a higher offer.  Of course, it all comes down to how much EA is willing to shell out for these diamonds.

Photo credit: Reuters file

Sprint Nextel’s earnings may have been weak, but its conviction to keep its long-distance network remains strong.

Sprint’s former Chief Executive Gary Forsee had resisted selling the long-distance business, despite continued calls from analysts for a sale of the unit after he spun off the company’s local telephone business.

On Thursday, Forsee’s replacement Dan Hesse sounded even more attached to the business. While he would not rule out a sale of the unit, he said there were many reasons why Sprint should hold on to it.

“People forget when you talk about a wireless network, it’s primarily wireline. The backbone is a core part of the network.” Hesse said, adding that the wireline network was important to helping Sprint support high-speed data services.

“If somebody came with an incredible number of zeros behind a check or what have you, we’re always open to it, but it would be, number one — a huge distraction — and, number two — for the variety of reasons I’ve described, it’s a tremendous asset for this company,” he said.

Hesse also noted that his biggest rivals Verizon and AT&T had both bought long-distance networks.

AT&T has a “a backbone network because they know it’s crucial to their wireless business.” he said. “Verizon bought a backbone network because it’s crucial to their wireless business and it’s also crucial to competing in the enterprise segment which is the most valuable segment in the market.”

Although some investors have previously said that Sprint’s weak financial position, management changes and customer losses might make it vulnerable to a buyout, Morgan Stanley analyst Simon Flannery said in a research report “we do not believe that Sprint is likely to be acquired.”

Sprint posted a $29.45 billion quarterly loss due to a huge goodwill write-off, forecast deepening customer losses and ended dividend payments for the foreseeable future. Fitch Ratings cut its rating on the No. 3 U.S. wireless telephone company to junk status. Shares of Sprint fell to a five-year low and closed at $8.09, down 86 cents, or 9.6 percent.

(PHOTO: Dan Hesse, from Sprint website)
(Reporting by Sinead Carew and Jesssica Hall)

Tech stocks are plummeting, bankers are warning venture-backed companies away from IPOs, and many are convinced that we’re heading into a recession. But start-up companies, the little babies of Silicon Valley, have no cause for fear, because the tech grand-daddies — Microsoft, Cisco, IBM — continue to be bullish about dealmaking.

Their capacity for huge acquisitions, like Microsoft’s bear-hug offer for Yahoo, may be limited, but these cash-rich tech titans love to buy lots of small companies that take them to new markets or make sense for their corporate strategies. At a Redwood City venture capital conference today, executives from across the tech spectrum, including Microsoft, Cisco, News Corp’s Fox Interactive Media (which owns MySpace) and McAfee, said they remain gung-ho on acquiring start-up companies. The worsening economy hasn’t changed their attitude, it seems — two months ago, at another VC conference, they said the same thing.

Cisco dealmaker Rob Salvagno said the company has made between 10 and 15 acquisitions every year for the past few years, and he doesn’t see that changing this year. They’re going to keep up their hunt for the coolest start-ups in international markets as well, he told the crowd.

Fox Interactive Media’s Jack Kennedy said they were more opportunistic about buying companies, but are energetically prowling for “game-changers”.

And if you thought Microsoft’s eyes were trained solely on Yahoo, think again. Dan’l Lewin, Microsoft’s head of emerging business development, said the company will do “a lot more of what we’ve been doing,” which is, picking up about 20 companies a year.

Separately, Ebay’s M&A chief Lorraine McDonough in a chat with Reuters, said the Web auction giant has the ”financial flexibility” – meaning about $2.4 billion in free cash flow — to pursue attractive opportunities this year.  Ebay, best known for its buyouts of PayPal and Skype, will continue making targeted acquisitions, she has said before. For start-ups, obviously things are still green in the Valley.