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THE WALL STREET JOURNAL CAMPUS EDITION.
WEDNESDAY, DECEMBER 5.2001
©2001Dow Jones & Company, Inc. All Rights Reserved.
What's News- In Business and Finance
THE WEEK OF DECEMBER 3, 2001
Enron also took aim at its once merger candidate, Dynery Inc., suing the rival energy company for "not less than $10 billion." The charge: Dynery wrongly terminated the merger agreement last week. Dynery blasted back by filing suit against Enron, claiming it has the right to take control of Enron's flagship Northern Natural Gas Co. pipeline system.
Enron Corp.'s slide took a number of twists.
Energy Giant Files For Bankruptcy
In recent weeks Enron began a calamitous fall that led to the collapse of its once-lofty stock price into penny-stock realm. The decline reflected a loss of confidence in the company caused by big losses in its third-quarter results; repeated restatements of earnings; and revelations, now being investigated by the Securities and Exchange Commission, that some of its officers participated in partnerships designed to keep debt off the balance sheet, but which produced still more losses.
Music fans are in an uproar over a development from the major music labels: compact disks that block consumers from making digital copies of songs.
Some music buyers have gripped that the technology—being tested mainly in Europe—sometimes prevents them from simply playing the disks. Web sites tracking "bad CDs" have sprung up, and techies have begun protesting in online forums.
Fans Gripe Over CD Copy Protection
In the most high-profile example, European fans of pop singer Natalie Imbruglia recently peered her official Web site with criticism after some found they couldn't play her newest release on certain devices. BMG Entertainment, which released the Imbruglia CD, says it has received only about one complaint for every 1,000 copies of all its copy-protected CDs.
Excite and AT&T Clash Over Assets
Excite At Home Corp. cut off AT&T Corp. from its Internet network, disrupting service to about 850,000 AT&T cable subscribers. Subsequently, AT&T said it was dropping plans to buy Excite's assets.
Two months ago, facing heavy debts and a cash squeeze, Excite filed for Chapter 11 bankruptcy protection. AT&T later offered to buy the Excite network assets.
Excite's latest move came after the collapse late Friday of negotiations between AT&T and Excite for a new service agreement. People close to the matter say AT&T refused to pay the amount sought by Excite to continue the service, which they put at more than $300 million.
AT&T has been working around the clock to finish its own high-speed network to replace Excite, which allowed it to take a tougher line in negotiations. Maintaining a relationship with Excite would allow AT&T to preserve customers' current e-mail addresses, among other things. But the longer AT&T operates without Excite's facilities, the more customers are likely to be shifted over to the new AT&T network, people familiar with the situation say.
Cox Communications Inc. and
Comcast Corp., two other cable operators that depend on Excite facilities, reached a definitive agreement with Excite that ensures uninterrupted high-speed service for three months. Both companies eventually hope to transfer their Excite users to proprietary Internet services.
Downward Revision
The annualized change in quarterly infiation-adjusted gross domestic product was revised down Friday to a contraction of 1.1% from a preliminary estimate of a 0.4% contraction.
Source: Economy.com/Free Lunch
Recorder That Zaps Ads Hits Market
Silicon Valley electronics company SonicBlue Inc. said it began shipping a controversial new digital video recorder that lets users skip television commercials and share programs, thumbing its nose at an entertainment-industry lawsuit seeking to prevent the sale of the device.
The Replay TV product, like similar devices, lets consumers record television shows onto a computer hard disk, giving viewers the ability to pause live broadcasts. But it also includes two novel features that have enraged television broadcasters: one that automatically shuts off commercials and another that transmits copies of shows to other Replay users.
Microsoft Tries Cutting AOL's Cable
Microsoft Corp., in a highly unusual move, is offering to financially back two rival bidders for A&T Corp.'s cable-telie business as it tries to thwart a third bidder, AOL Time Warner Inc.
Microsoft is backing both Cox Communications and Comcast, which made separate, competing offers to acquire AT&T Broadband, AT&T's cable unit, according to people familiar with the situation.
The software company's interest in backing the competing bids stems in large part from its interest in blocking AOL. A fierce competitor of AOL. Microsoft is concerned about the media company's ability to get its hands on AT&T Broadband, the nation's largest cable-TV business, according to people familiar with the situation.
if AOL were to company, it would catapult the company to the No. 1 spot with more than 25 million cable subscribers. With $36 billion in cash its disposal, Microsoft is trying to keep AT&T's 13.7 million cable subscribers in the hands of a friendly ally.
Ford Motor Co. and Toyota Motor Corp. are discussing plans to share development of a new electric-gasoline hybrid vehicle..Nintendo Co. said it rang up $150 million in U.S. sales for its new GameCube video-game machines, games and accessories in the first 10 days after the GameCube's debut earlier this month. But it said the big surprise seller was the lower-priced Game Boy handheld system, whose sales during Thanksgiving week rose more than fivefold from the previous week.
Online Music Goes Mainstream
By Robert J. Toth
Odds & Ends
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Biggest Record Labels Launch Own Services As Free Sites Threaten
By NICK WINGFIELD and ANNA WILDE MATHEWS
Pressplay, owned by Vivendi Universal SA and Sony Corp., will offer users song streams and downloads as well. Unlike its competitor, pressplay will let users keep listening to all the tracks they have downloaded, with
The five big recording companies are finally ready to launch their first serious Internet music services. But are the offerings -due out during the next few weeks-too little, too late?
MusicNet, backed by EMI Group PLC, Bertelsmann AG, AOL Time Warner Inc., and software maker RealNetworks Inc., won't let customers purchase songs in the traditional sense. Instead, consumers will have two choices. They can "stream" a portion of their monthly allotment of music, allowing them to listen to songs over slow Internet connections. They also will be able to download and store songs on their computers, but only listen to them for a limited time.
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A networking diva offers key pointers on boosting your career by knowing how to ask for help—and
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Instead of owning the music permanently, a user will acquire a "license" to listen to designated songs for 30 days. Executives have said in the past that consumers might pay $10 or so a month for rights to listen to an allotment of 75 songs, though people familiar with the service said the actual number of songs could be more than double that figure. To keep listening to a song after the 30-day period, a user that again clicks on that selection will have that song counted against the current month's allotment.
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The record-label services plan to boast an array of major artists and big recent releases. MusicNet's labels include artists like Eric Clapton and the Dave Matthews Band. Pressplay's backers have performers like U2 and Pearl Jam. Both pressplay and MusicNet say they will have more than 100,000 tracks when they launch, with plans to add more over time. Both ventures also plan to have tighter quality control on recordings, better searching facilities and faster downloading speeds than the unauthorized services.
For an entrepreneur, starting a business is the first step in a neverending process that you rarely get right the first time. Three consultants who specialize in helping new companies suggest ways to increase your business's chances for success.
Executives connected with the ventures concede the restrictions they placed on the music aren't ideal, but say they expect the policies to be relaxed over time as the labels become more comfortable that the services aren't spoiling CD sales or contributing to piracy.
Still, their offerings will be limited. Neither can promise the music of all five major record companies. Even some chunks from the labels' own catalogs will be missing, mostly because they weren't able to secure rights to the songs of certain artists whose contracts give them control over use of their music on the Web.
ging in for a long battle to win massmarket consumers, not necessarily the earliest adopters. "Do I think we're going to convert every Napter 15-year-old overnight?" says Rob Glaser, chief executive of RealNetworks, the biggest shareholder of MusicNet. "No. It doesn't mean we'll take over the world ... but I think we'll find there's substantial demand."
Executives add that they are dig-
Napster Factor
Napster, of course, demonstrated the possibilities—and perils—of the Internet for the music industry. At its peak, the company had more than 60 million users, and placed no limitations on their ability to download unauthorized MP3 files free of charge. The service generated widespread fear within the music industry that the Web would demolish the industry's financial underpinnings, and led to a landmark copyright lawsuit against the company.
These days, Napster is more friend than foe to the labels. The service has been offline since July as the company tries to comply with a court order to keep pirated music from its system. The company, which now has a close relationship with Bertelsmann, even has a tentative agreement to distribute MusicNet tracks to its subscribers as part of a planned new subscription service, which has suffered delays (RealNetworks and AOL are creating their own versions of MusicNet for consumers, while pressplay will be available through Microsoft Corp.'s MSN, Yahoo Inc. and Vivendi's MP3.com).
In the meantime, the growth of Napster-like services continues unabated. Use of three of the best-known services, Grokster, Kazaa and MusicCity, jumped $20\%$ between September and October, when users exchanged 1.81 billion files, according to market research firm Webozie. The services are becoming more inviting, with an ever-expanding variety of songs and new tools that make downloading tunes speedier.
out affecting the balance of their monthly allotment of downloads, as long as they continue to pay subscription fees. The venture won't yet reveal pricing or other details.
Possibly the biggest drawback is that music from both services will be stuck on customers' PCs. Initially, the special software used by the ventures won't let consumers record songs onto compact disks or digital music players. Making such personalized, portable tune selections is a predominant pastime for digital music fans.
Still, the biggest menace of the music industry—the Napster Inc. free music-swapping Web site—was effectively shut down last summer by a judge who ruled on an industry lawsuit. That would seem to bode well for the two new services. But in the meantime, other free music-swapping sites have taken off, posing stiff competition for the industry.
"Consumers are going to laugh in their face," says Nick Donatiello, president of the market-research firm Odyssey LP. The record labels "took so long to get together that a whole new set of expectations has been created. Now they have to climb the wall they allowed to be built."
Louisiana superbowl In the worst advertising downtow in recent memory, some of the most visible sponsors of recent Super Bowl games—Cingular Wireless, Electronic Data Systems Corp. and Volkswagen AG, for example—are taking a pass.
Super Bowl Sees No Rush For Ad Spots
BY JOE FLINT and SUZANNE VRANICA
sst, wanna buy some Super Bowl air time?
Bowl air time?
Fox still has plenty of advertising spots left to sell in the Feb. 3 broadcast of Super Bowl XXXVI from the Louisiana Supremes.
Fox plans to scale back the length of the Super Bowl broadcast in February—welcome news to the many football fans who tune in to watch the game, rather than the marathon of hype surrounding it. Instead of the record seven hours of pregame programming Fox aired in 1999, or the nearly as exhausting six hours CBS aired for Super Bowl XXXV this year, Fox is planning to air only three and a half hours of pregame fare—because the ad market is too soft to support a longer show. "If it could be sold, we could produce it," a Fox Sports spokesman says.
Louisiana Superdome.
Fox still has about 30% of commercial time in the actual game left to unload. Officials are trying to resist holding a fire sale. By this time a year ago, Viacom Inc.'s CBS had already sold about 80% of its Super Bowl inventory. In 1999, during the dot-com ad bonanza, Walt Disney Co.'s ABC was practically sold out by now.
Fox says the slow economy and competition for ad dollars from the coming Winter Olympic Games on NBC have made it tough selling the Super Bowl. But Fox insists it will tally up as much ad revenue as CBS did earlier this year for spots aired during the game. CBS got as much as $2.3 million for some 30-second commercials in Super Bowl XXXV, with the average price hovering at about $2 million for ads during the game.
Fox officials are sounding an upbeat note. "We are above $2 million on average so far," says Jon Nesvig, president of sales for Fox Broadcasting, referring to the average price of a 30-second commercial. He adds the network is "pretty confident" it will be able to maintain that average. Still, Mr. Nesvig says, "people are hanging on to their money as long as they can." Sales aren't as brisk as what he expected a year ago, he says, but they are better than he feared 12 weeks ago.
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