EMI-Apple pen deal to sell songs

EMI said almost all of its catalog, excluding music by The Beatles, is included in the deal.

LONDON, England (AP) -- EMI Group PLC on Monday announced a deal that will allow computer company Apple Inc. to sell the record company's songs online without copy protection software.

The agreement means that customers of Apple's iTunes store will soon be able to play downloaded songs by the Rolling Stones, Norah Jones, Coldplay and other top-selling artists without the copying restrictions once imposed by their label.

EMI said almost all of its catalog, excluding music by The Beatles, is included in the deal.

Singles and albums free from copy-protection software and with a higher sound quality will be offered as a premium product, the companies announced at a London news conference.

Consumers will pay a higher price for the premium singles, but the same price for albums either with or without the copy protection software.

The announcement follows calls by Apple Chief Executive Steve Jobs earlier this year for the world's four major record companies, including EMI, to start selling songs online without copy-protection software.

The software, known as DRM, is designed to combat piracy by preventing unauthorized copying, but can make downloading music difficult for consumers.

The software used by Apple does not work with competing services or devices, meaning that consumers can only download songs from iTunes to iPod music players. The linkages between the download services and players has drawn criticism from European industry regulators, who argue that it limits buyer choice.

Jobs argued there was little benefit to record companies selling more than 90 percent of their music without DRM on compact discs, then selling the remaining percentage online with DRM.

Some analysts suggest that lifting the software restrictions could boost sales of online music, which currently account for around 10 percent of global music sales.

EMI has acted as the distributor for The Beatles since the early 1960s, but The Beatles' music holding company, Apple Corps Ltd., has so far declined to allow the Fab Four's music on any Internet music services including iTunes.

The situation was exacerbated by a long-running trademark dispute between Apple Inc. and Apple Corps. That legal feud was resolved in February when the two companies agreed on joint use of the apple logo and name, a deal many saw as paving the way for an agreement for online access to the Fab Four's songs.

Apple Corps was founded by the Fab Four in 1968 and is still owned by Paul McCartney, Ringo Starr, the widow of John Lennon and the estate of George Harrison.

Real estate magnate wins bidding for Tribune

By Thomas S. Mulligan and James Rainey
Times Staff Writers

9:52 AM PDT, April 2, 2007

Billionaire real estate mogul Sam Zell has reached an agreement to buy Tribune Co. in a two-stage deal valued at $8.2 billion, or $34 a share, the company said this morning.

Tribune, owner of the Los Angeles Times and KTLA-TV Channel 5, also announced that it would sell the Chicago Cubs baseball team after the 2007 baseball season and the company's 25% interest in its regional cable sports network.

The deal, worth about $13 billion including Tribune's nearly $5 billion in existing debt, would put a 65-year-old entrepreneur famed for turning around troubled properties at the helm of the nation's third-largest newspaper chain and one of its largest conglomerations of television stations.

Zell's offer was sweetened over the weekend to top an eleventh-hour proposal from Los Angeles billionaires Eli Broad and Ron Burkle.

Tribune's board deliberated late into the night Sunday to arrive at a decision that would bring the six-month auction to a close, one day after the company's self-imposed March 31 deadline.

Pending regulatory and shareholder approvals that could take months, Zell would take control of the company in partnership with a newly formed employee stock ownership plan, or ESOP. The new Tribune would be privately held and run by Zell in conjunction with the ESOP, which would be represented by an independent trustee.

The deal represents the second potential sale in a little more than a year of one of the nation's top newspaper operators. McClatchy Co. of Sacramento bought Knight Ridder Inc., previously the second-largest chain by circulation, in March 2006. But McClatchy's subsequent swoon on the stock market – and Tribune's trouble finding a buyer, despite its roster of marquee assets – became emblematic of the decline plaguing old media companies trying to compete with the Internet.

The transaction would mark a watershed for both Chicago and Los Angeles. It would turn the 160-year-old Tribune and its flagship Chicago Tribune, a major economic and political powerhouse in the Midwest, over to a quirky businessman whose previous investments have not had nearly such a high public profile.

And the deal would effectively liberate the Chandler family of California – owners of the Los Angeles Times for more than a century – from a newspaper business with which they have become disillusioned. For the second time in seven years, the Chandlers helped push The Times into the hands of new, Chicago-based owners.

In 2000, the pioneering Los Angeles family sold its control of Times Mirror Co. to Tribune. And the Chandlers' remaining 20% stake in Tribune still gave them enough leverage to demand the strategic review that that would end with this sale. The auction did not turn into anything like a bidding contest until Broad and Burkle submitted their revised offer, which they valued at $34 a share, or $8.1 billion, late last week.

Zell, a maverick who fancies Ducati motorcyles, leather jackets and rousing games of paintball, had himself not entered the bidding until early February, after Tribune's deadline for offers.

Zell made his move at a time when he was still negotiating the second-biggest leveraged buyout in history – the sale of his Equity Office Properties Trust commercial real estate empire for $23 billion to Blackstone Group, a New York private equity firm.

Several private equity firms and newspaper industry giant Gannett Co. had taken a look at Tribune but backed away from bidding on the whole company. The fragmentation of audiences and advertising leakage to the Internet scared off many potential investors.

But Zell said he saw reason to be hopeful about the company's prospects, and he has told executives in the company that he has particularly high hopes for Tribune's Internet holdings, which include 42.5% of the largest online job search site, CareerBuilder.com.

He said in an interview with the Associated Press last month that he was more bullish on the company's core businesses than most. "I just think that newspapers are a part of our life and they're a part of our culture and a part of our society," Zell said, "and there will always be a place for them."

Although Zell had indicated earlier that he was not looking at the company from "a breakup perspective," wealthy individuals and groups in several cities have expressed an interest in buying some of Tribune's papers and might press the new owners to sell to them.

Burkle and Broad have said they were principally interested in Tribune to obtain the Los Angeles Times and maintain it as a first-rate newspaper. Billionaire entertainment mogul David Geffen offered the company $2 billion for The Times alone and has given no indication he has lost interest in acquiring the paper.

Such local buyers have come to be seen as one of the last groups still interested in newspapers. Tribune's operating profit has dipped from its 2003 high of $1.36 billion to $1.09 billion in 2006. The falloff in newspaper advertising continued, or even accelerated, in the first months of 2007.

Those declines have been reflected in the price of Tribune shares, which reached nearly $52 a share in spring 2004 but languished below $28 last year before a stock buyback and attendant protests by the Chandler family kicked off the auction.

Tribune became a publicly traded company in 1983, thriving on 20%-plus profit margins of its flagship Chicago Tribune and, in particular, its Orlando Sentinel and South Florida Sun-Sentinel.

The company's biggest expansion, in 2000, would become its most problematic. It bought out the Chandler family's Times Mirror Co. for $8 billion – acquiring newspapers including the Times, the Baltimore Sun and Newsday of Long Island.

Although those papers had fine journalistic reputations, they did not produce the stellar profit margins that had been the norm for most Tribune publications. The combined company hoped to attract an audience and advertisers because of its ownership of newspapers and television stations in the three largest markets – New York, Los Angeles and Chicago.

But the new Tribune was immediately hit by a national recession, and the hoped-for synergies paled in comparison to expectations. The company might have considered a sale of its assets but had held most for so long that the potential capital gains taxes would have been devastating.

The seven independent directors who oversaw the deal (minus three Chandler family representatives and Chief Executive Dennis FitzSimons) focused instead on the sale of all of Tribune. They received offers in January from the Burkle-Broad partnership and from the Chandlers but found that both amounted to reorganizations that did not offer a premium and that the company could accomplish on its own.

---

April 2, 2007

Warner’s Digital Watchdog Widens War on Pirates

By LAURA M. HOLSON

LOS ANGELES, April 1 — Hollywood studios spend millions every year trying to get people to watch their movies. At Warner Brothers Entertainment, Darcy Antonellis is trying to get them to stop watching — illegally, that is.

Ms. Antonellis oversees the studio’s growing worldwide antipiracy efforts as Hollywood’s attention shifts from bootleg DVDs made in China to the problem of copyrighted television and movie clips showing up on sites like YouTube and MySpace.

While producers and celebrities garner most of the attention in Hollywood, technology executives like Ms. Antonellis are at the forefront of the industry as they try to protect the studio’s control over its content.

With movies like the “Harry Potter” series and “Ocean’s 11” franchise and television series like “Friends,” Warner has one of the largest libraries in Hollywood. As a result, it can exert more influence over its relationships with online partners, making it one of the most-watched studios both inside and outside the industry.

“People want to be more interactive and have a voice,” said Ms. Antonellis. “We need to consider all the opportunities.”

Piracy may seem like the biggest threat to Hollywood, but Ms. Antonellis suggested instead that changing consumer behavior will have a greater impact on the entertainment business.

Movie studios, like their peers in music and television, are in the midst of a significant and frightening shift as almost every form of media is becoming ubiquitous on the Internet. And through sites like YouTube, viewers have grown accustomed to seeing whatever they want to see, free.

“People thinking it is O.K. to take this stuff for free on a worldwide basis has a bigger impact than anything,” said Ms. Antonellis.

Many entertainment companies are growing impatient watching companies like YouTube distribute clips of movies and television shows free. At the same time they are concerned that YouTube earns advertising revenue from Web sites that offer pirated movies for sale on the site. Even while negotiating with YouTube, NBC Universal and Fox announced their own joint video service, and Viacom filed a $1 billion lawsuit against Google, which owns YouTube.

Missteps made today could have grave consequences for the future, particularly when it comes to consumers’ willingness to pay for movies and television shows online, she believes. To illustrate the point, she tells of her niece’s fish, named Mortimer, who one day leaped from his bowl, flopped on the table and gasped for air.

“Mortimer took the leap to freedom,” she said. “He said, ‘I’m free, but I’m dead,’ ” said Ms. Antonellis.

Warner and other entertainment companies are moving cautiously ahead, but their interests are divided. All want to share their content online with consumers but are, at the same time, imposing constraints that risk alienating a younger, Web-oriented audience.

On the piracy front, Ms. Antonellis said Warner has created four small teams that range from a two-person operation to nearly a dozen people in a larger group.

The teams are based in Burbank, London and Hong Kong, and most have dual roles in piracy and other Warner operations, like the legal department. Ms. Antonellis said she wanted the teams to understand both areas because “you can’t hand down policies in a vacuum. It doesn’t work.”

Warner’s emphasis shifts depending on where piracy is most rampant. As well as cracking down in countries like China, where pirated DVDs are sold on street corners for as little as $1 on the same day a movie is released, the company also works with the United States Trade Representative’s office to monitor pirated movies.

Like many studios, Warner can trace the origin of movies that have been copied using camcorders, but they are particularly aggressive on this front. Russia is particularly difficult to police because of the vast amount of money available to finance the making and sale of black market DVDs.

Recently the Hollywood studios took their case to Washington, with celebrities like Will Smith and Clint Eastwood in tow, to educate legislators on the damaging impact of piracy on their business. Ms. Antonellis was there; she is the piracy liaison for Warner to the Motion Picture Association of America, the industry’s lobbying group.

For her part, Ms. Antonellis and her team review all the deals Warner seeks, particularly those online and for distributing content over mobile phones. She has considerable sway; Warner deal makers rely on her expertise to tell them how a deal should be structured.

When it comes to YouTube, Time Warner is in a delicate position. In 2005, Google spent $1 billion for a stake in America Online, a division of Time Warner, and expanded its strategic alliance. Google bought YouTube last year.

Not surprisingly, Ms. Antonellis is conservative in her comments about the media companies’ negotiations with YouTube.

“Clearly the lawsuit has sent out a message,” she said of Viacom’s suit. “We are hopeful that social networks such as YouTube will put in place proper systems which will reflect our intellectual property and will facilitate legal offerings.”

Ms. Antonellis is the rare Hollywood executive who never planned on a studio career. The 44-year-old former college tennis pro hoped to become a journalist until, as she put it, she learned writing was not her gift. She had an aptitude for math, though. After her freshman year at Temple University, two hours from her hometown, Newark, Ms. Antonellis decided to sign up for the electrical engineering program instead.

She did not abandon her interest in news, though. She graduated in 1984 and headed to New York City where she got an engineering internship at CBS working with Chris Cookson, the chief technology officer of Warner Brothers Entertainment who was then an executive in the technical operations department of CBS. In 1988 she moved to Washington where Mr. Cookson appointed her director of Washington operations for the CBS news bureau.

“We’re the folks behind the curtain who make the broadcast look as seamless as possible,” said Ms. Antonellis.

If anything prepared Ms. Antonellis for a career in Hollywood, perhaps it was the two months she spent in Kuwait during the gulf war as director of technical operations for CBS News. Then she worked for well-known and demanding bosses, among them the news anchor Dan Rather. She was a skillful negotiator, bartering with locals for a generator to light the set. And she was quick to adapt, dressing like a military officer because women were not allowed to drive.

In Washington she was exposed to other divisions: sports, news magazines, even soap operas, which were sometimes filmed in the studio.

“One day the elevator door opened and a pot-bellied pig walked out,” said Ms. Antonellis, who has won two Emmy Awards for her technical prowess. “I thought, ‘O.K., we are doing a story on a pot-bellied pig. Do we bring him to the green room? Do we have to worry about him eating all the crudités?’ ”

She left Washington in 1991 and moved back to New York and worked in operations and engineering for CBS Sports, covering three Olympics, including the 1998 Winter Olympics in Nagano, Japan. That same year Mr. Cookson recruited her to Warner to help with the studio’s transition to a digital world.

“We share here a belief and understanding in new technology and that consumers want to experience our movies and television shows differently,” Mr. Cookson said. “Darcy really understands the whole equation.”

Ms. Antonellis believes that the next three months will be most critical for Hollywood as the need to offer legal movies and television shows to consumers intensifies. When asked about criticism that studios aren’t moving quickly to offer content online, she pointed to a deal Warner made last year with BitTorrent, a movie-swapping site that approached the Motion Picture Association of America about selling movies legally.

“We were criticized for not being aggressive enough,” she said. “At the same time, we can’t be faulted for being radical in our approach.”

Indeed, Warner spends millions in research to understand what consumers want. And the results can be surprising. In Britain, Warner recently found that consumers there were more interested in watching feature films, as opposed to television programs, on portable devices because their commutes were twice as long.

“If we don’t encompass the last piece in our thinking — how consumers want to use content — then we are going to miss it,” said Miss Antonellis. “Just think how consumer behavior has evolved in the last two years.”

Last year Steven P. Jobs, the chief executive of Apple and a director of the Walt Disney Company, announced a deal with Disney to offer movies on Apple’s video iPod. Despite that, many of Disney’s competitors remained holdouts. At the heart of the debate are the standards governing digital rights management, commonly called D.R.M. Studios want stricter rules on copying, while Mr. Jobs supports a more liberal approach, particularly with music.

“There may be opportunities down the road but we have to come to some agreement about what the offerings will be,” said Ms. Antonellis of Warner’s and Apple’s discussion. “The term D.R.M. is steeped and mired in its legacy definition. Today, call it something else. I don’t care what you call it. Get rid of it. But we need to make this work so we can get a deal.”

Ms. Antonellis may have to rely not only her technical expertise but the valuable communication skills she learned at CBS.

“Part of my responsibility is to take technology-based ideas and take it out of the techie space,” she said. “If executives look at me like I have three heads, then I’ve failed as an executive.”

---

April 1, 2007

Media Frenzy

Push Comes to Shove for Control of Web Video

By RICHARD SIKLOS

FOR now, the biggest news in the exploding realm of online video is not much more than a news release. Still, the recent announcement from the News Corporation and NBC Universal of a new online video venture shows a big change in how traditional media companies are trying to confront their digital futures without looking like dinosaurs dodging comets.

At the same time, the companies’ tactics are a striking attempt to shift the old-fashioned way that most audiences have obtained their media into the wide-open digital maw.

Last year, Google’s acquisition of YouTube, the Internet’s most-visited video Web site, was a clear signal for media companies. Ever since, they have been scrambling to find ways to make money and to keep as much control as possible over their output.

YouTube, of course, has very little revenue right now, but its huge popularity and implied money-making potential were reflected in the $1.65 billion that Google paid for it. (And as far as proven Internet concepts go, media companies are not smitten by the economics of Apple’s iTunes, either, even though many networks including NBC and Fox, owned by the News Corporation, are selling shows on it.)

Inevitably, the control-hungry media giants have asked themselves these questions: Why should we let savvy intermediaries like Google or Apple hog the relationships with consumers or advertisers? And why should we allow them to create valuable new businesses in the process? NBC Universal and the News Corporation spent months trying to recruit other players like Viacom and Walt Disney to fight back, but they have set out alone, leaving an open invitation for others to join their merry band. They’ve agreed to pool all their video content on the Web to create what is effectively a syndication service that will distribute it to other established Web sites and through a new online site they plan to unveil this summer.

Neither the company’s name nor its management team is in place — details, shmetails — and clearly this gambit faces big hurdles when you consider both the track record of media joint ventures and big media companies’ ability to create breakout Internet plays.

But the big news from these strange bedfellows — NBC is owned by the square-jawed General Electric and the News Corporation pumps with the pulsing rebel heart of Rupert Murdoch — is that they have deals in place to distribute their video fare via four of the Web’s biggest destinations: AOL, Yahoo, Microsoft’s MSN, and MySpace, also owned by Mr. Murdoch’s company.

Most of the joint venture’s offerings will be current and past TV shows supported by advertising, though some content will be user-created clips and movies for paid download. It’s notable that the planned service intends to offer only TV shows that are already available via Web sites like NBC.com and Fox.com, and movies that can be downloaded elsewhere. Indeed, the Web is full of places to find TV shows — including sites like AllofTV.net and Alluc.org — and they can be viewed with no ads or distracting promotions.

So what’s the big deal? Advertising, apparently. Video is the fastest-growing segment of the fastest-growing medium — the Internet, of course — but online video grabs a tiny fragment of the $60 billion spent annually on broadcast and cable TV ads. Skeptics rightly point out that it is far from clear whether putting video onto the Web adds any revenue to the media companies’ coffers — although plenty of media executives swear that it does — or whether it will cannibalize TV viewing.

And while video is clearly the next big thing online, it is uncertain how much appetite there is for TV shows and movies on computer screens. Will the main attraction be existing fare distributed online, or new sources of original content like, say, the new video clips from The Onion, the satirical newspaper?

So let’s look at what this News/NBC venture is really about. It’s clearly trying to sop up advertising dollars by creating a one-stop shop for advertisers to buy shows they already know from companies they already know. It’s also about putting those shows and ads in front of a huge audience available at Web destinations where people already spend a lot of time, like AOL and Yahoo.

Mostly, though, it’s about the control and the split — the amount of money that the media companies get to keep versus what they will share with the big Web sites.

Several people involved in News/NBC say that 90 percent goes to the new company and 10 percent to the Web sites. News/NBC will have to share some of its take with the other media companies that provide their content to the service.

Media companies are also talking to YouTube about displaying their content. When the talk turns to revenue, the proposed split by YouTube, according to one media executive involved in such negotiations, is roughly 70 percent to the content owner and 30 percent to YouTube. (The executive requested anonymity because the talks are confidential.)

But more important than the cold numbers is Google’s insistence that it handle the ad business for video. YouTube has the image of a happy-go-lucky site where anyone can put up videos they like, but it has serious ambitions to take advantage of Google’s proven mastery of unobtrusive, relevant ads in text and make a few dollars in video.

It all comes down to control. The site’s terms of use warn users not to “post advertisements or solicitations of business.” That means that NBC and Fox, which want YouTube’s huge young audience, still post clips there but, for now, ad-free. (Certainly advertising does appear elsewhere on the site, including a product placement for chewing gum last week on the much-discussed Web drama, “lonelygirl15.”) In general, YouTube’s advertising game plan is a very different from Google’s core search business — roughly the equivalent of Google telling people that their Web pages will be included in its search results, but only if they contain no ads on them.

Most strikingly, the News/NBC venture represents a nod to the truisms that, even in the age of consumer choice, proximity matters and audiences are still sheep. For all the Web’s efforts at personalization, from bookmarks to RSS feeds to widgets, having these shows on AOL or Yahoo might still make a big difference in ensuring a broad audience. One Web executive who has worked on the new venture even coined a horrific new oxymoron when he summed up the strategy to me: “exclusive ubiquity.”

THAT’S no different from how media have been marketed and distributed for decades. Nothing makes a song a hit like radio play, nothing matters more to the success of a film than how it does on opening weekend, and nothing ensures the popularity of a new channel like where it sits on the cable dial. And who wins the nightly news ratings can be determined as much by the preceding shows on the schedule than the mix of the news or the anchor’s hair.

Putting your video where people will actually see it on the Web is the equivalent of basic cable distribution or a wide opening at the theater. At least that’s what the folks behind News/NBC are betting on, hoping that more big media companies will climb aboard and give the venture the heft to continue to dictate terms.

The only problem is that, for now, the two-year-old YouTube is far and away the most popular site for video online. And rival start-ups like Joost, from the guys who created Skype, are coming up fast. Clearly, the last breathless press release on the subject has yet to be written.

Debra Opri Bills Larry Birkhead Kings Ransom

Posted Apr 1st 2007 3:10AM by TMZ Staff

TMZ has learned Larry Birkhead got a Fed Ex on Saturday, and it was not good news. It was a bill for legal services from Debri Opri, the lawyer he fired two weeks ago. The total: $620,492.84.

Opri billed her services out at $475 an hour. Here are some of the charges:

- A total of three $1,500 monthly charges for Luck Media & Marketing, Opri's personal publicist.

- On March 1, 2007, the day before Anna's funeral, there is a charge of 10 hours for "preparation for and attendance in Bahamas re services and var. meetings re same." On the day of Anna's funeral, there is another 10 hour charge with the exact same language. Ironically, TMZ knows Birkhead asked Opri not to even attend the funeral, but she did anyway. On March 3, Opri charged yet another 10 hours for travel from Nassau back to L.A.

- On February 24, 2007, while Opri and Birkhead stayed at a private residence in Ft. Lauderdale during the Florida hearing, Opri billed $600 for Seafood World. We're told she brought four trays of lobster to the house. The bill says, "Dinner gift/Ft. Lauderdale house stay." But it was no gift to Larry. That same day, she billed $211 for items at Publix grocery store.

- March 8, 2007, Opri billed $161.65 for an Outback Steakhouse dinner. And get this -- the bill was for $111.65. Opri left a $50 tip and billed Birkhead, who wasn't even there!

- Opri billed Birkhead $4,265 for Cingular roaming service while she was in the Bahamas.

- Opri billed Birkhead 18 times for Diva Limos that took them to and from the Ft. Lauderdale courthouse to the private residence.

- October 22, 2006, Opri billed Birkhead $1,116.16 for a dinner at Graycliff, a restaurant in Nassau. The note next to the charge is "Alexiou atty mtg." Alexiou is Birkhead's lawyer in the Bahamas. Birkhead was not present.

- The next day, October 23, Opri billed $2,467.75 at Graycliff restaurant for another meal. The charge again was for "Alexiou atty mtg." Again, Birkhead was not present.

- Also on October 23, Birkhead was billed $25.75. The item -- "laundry service Zawacki." Zawacki is Opri's husband, who was present on the trip. Ouch!

- Opri's bill reveals that "20/20" is more than a TV show -- it's the number of hours she bills for a "20/20" interview with Larry Birkhead. Opri and Birkhead went from L.A. to New York City on December 9, 2006, did the interview and returned the next day. Opri billed 10 hours travel time each way.

In all, the packet of bills Birkhead received today totaled 112 pages. Opri offered Birkhead a bargain: Instead of the $620,492.84 bill, she offered him a discount at $511,365.09, but only if he accepts immediately. Opri wrote, "I'm still willing to accept the discounted billing at this time, but only without further discussion."

TMZ contacted James Levesque, Opri's publicist with Luck Media & Marketing. He said, "Debra Opri always gets paid. That's what she does for a living." Beyond that, he wouldn't comment on the bill. Opri could not be immediately reached for comment.

UPDATE: TMZ has just obtained a statement from David Owen, Opri's lawyer. He said, "We're pretty confident that her bills are fair and reasonable and he has not paid them. She is entitled to be paid and he stiffed her and her bills are fair and reasonable."