As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studies its users’ reactions and explores how best to promote full episodes on the site.

Google gained $3.02 or .92% today to $332 in Nasdaq trading.

--Swati Pandey

Photo of David Duchovny in "Californication" courtesy Randy Tepper, Showtime. Photo of the cast of "Beverly Hills 90210" courtesy 20th Century Fox.

UPDATE: In a sign of just how deep the media companies are being hurt by the economic downturn, CBS also said it would take a $14-billion write down in the book value of its TV and radio stations.

Viacom Inc. and CBS Corp., each controlled by billionaire Sumner Redstone, separately revised downward their full-year quidance, saying the weakening ad market would depress earnings. The announcements immediately sent the stocks of the sister companies into a nosedive and helped to trigger a sell-off in other major media stocks such as Rupert Murdoch's News Corp. and giant Time Warner Inc.

Viacom said it expected to report adjusted third-quarter earnings of $0.53 to $0.55 a share, dampened by a 2% decline in worldwide advertising revenues, inlcuding 3% in domestic advertising and 8% in international advertising. The biggest contributors to Viacom's revenue and earnings comes from its cable TV networks, such as MTV, Comedy Central and Nickelodeon, among others.

Viacom and CBS made the statements after Redstone's privately held National Amusements Inc., one of the largest operators of movie theaters in the country, said it was forced to sell $400 million of its shares in Viacom and CBS "to pay down debt to comply with its credit agreement covenants."

A spokeswoman for National Amusements declined to discuss the company's debt crunch.

Viacom shares were the first to fall -- plummeting by as much as 26% during the trading day -- before rallying a bit to close down 17% at $17.10. CBS released its guidance two hours after Viacom's announcement, and its shares were immediately hammered, closing down 20% at $8.10. A year earlier, CBS was trading at $30 a share.   

The Redstone companies weren't the only ones to feel pain, although the others rallied along with the market just before the closing bell. Rupert Murdoch's News Corp. ended the day down about 6% at $8.63 a share. Time Warner Inc. fell 8.4% to $9.24 a share, while Walt Disney Co. slipped 3% to $23.04.

One bright spot: General Electric, which owns NBC Universal, said profit at the movie studio and television network unit rose 10% to $645 million in the third quarter. But that's past performance: Those gains were fueled in part to advertising associated with NBC's coverage of the Bejing Olympics in August. The bigger question is how NBC will fare in the current quarter as the advertising economy weakens. 

-- Meg James

Photos: CBS (Los Angeles Times); Viacom; (Chris Hondros / Getty Images)

In the latest instance of retro pastimes adapting to new technology -- like playing Pacman on Facebook or making pot roast in a microwave -- old media broadcaster Clear Channel is trying to make the leap to the iPhone.

The San Antonio-based radio and billboard giant launched iheartradio, a free application for the iPhone and iPod Touch that will give listeners another shot at hearing "Hotel California" just in case they find themselves out of range from one of Clear Channel's 1,100 radio stations.

The move comes amid what Jim Kerr, a vice president for digital development with the Pollack Media Group, calls a "land rush into the iPhone app space." Clear Channel Radio brings its traditional content -- well-worn songs and all the commercials in between -- to a device already crowded with applications enabling Internet radio listening. Existing applications like FlyCast and RadioTime offer broad selections of terrestrial and Internet radio stations. FlyCast is free, while RadioTime costs $5.99. Internet streaming and recommendation services like Last.fm and Pandora are on the iPhone, too.

Despite the competition, Kerr thinks it's not too late for Clear Channel to get into the iPhone app game. "Whoever gets there first and carves the ground wins," he says.

And it’s not the first time Big Radio has been available off its traditional sliver of airwaves -- Clear Channel has offered content through other cellphones, created podcasts and built specifically branded websites for its stations, with live streams of radio broadcasts and some on-demand tracks. The company has also launched online-only stations like the LGBT-friendly Pride (up-tempo danceable tracks plus relevant news and talk) and the quirkier eRockster. Combined, the station websites bring in more than 10 million unique visitors a month, the company claims, citing a comScore report.

Clear Channel’s latest online effort centralizes all its stations at one site, still in beta testing, called iHeartMusic. Listeners can stream hundreds of stations, selected by location or format. As with the individual sites, some content will be available on-demand, but generally listeners are at the mercy of the programmer.

For now, the iPhone app is a streamlined version of the iHeartMusic website, without on-demand content and with only 10 terrestrial stations -- including L.A.’s KIIS-FM and KFI-AM -- along with eRockster and Pride. Clear Channel plans to add about three to five stations each week, says Evan Harrison, executive vice president of Clear Channel Radio, who notified employees about the application in an e-mail Wednesday. 

The lack of flexibility and relatively slim offerings are not necessarily a handicap, says Pollack Media's Kerr. He notes that Clear Channel has the advantage with more passive music fans, who would rather listen to familiar local stations and who aren't necessarily interested in discovering new music themselves.

In a little over 24 hours, Harrison says, iheartradio was downloaded about 5,000 times.

--Swati Pandey

Photo of Evan Harrison courtesy Clear Channel. Photo of radio courtesy baboon (via Flickr, Creative Commons License)

Here’s more fallout from the credit crisis: There might soon come a time when you miss those incessant Capital One TV ads that showed Visigoths storming quiet suburban neighborhoods. Nielsen Monitor-Plus released numbers today showing that credit card companies such as Capital One, Discover and Visa drastically reduced the number of TV ads they’re buying these days. And when TV advertising spending goes down, networks have less to spend on quality TV shows.

This summer, TV advertising by credit card companies was up significantly from the same period last year. But in the first three weeks of September, credit card companies bought 24% fewer ad units than they had during the same time last year. Mutual funds bought 29% fewer TV ad units than they had during the same period last year. And loan companies bought 7% fewer ad units than they had in the first three weeks of September 2007.

The cutbacks aren't just affecting the big networks.

“The big impact is really on the local TV stations,” says Mike Vorhaus, president of research firm Magid Advisors. “That’s where they run a lot of these ads.”

TV advertising already took a beating this summer when the housing market collapsed: then, mortgage services companies bought 54% fewer TV ad units than they had during the same time the previous year, and loan companies bought 37% fewer, per Nielsen Monitor-Plus. It’s probably not going to get any better: Retailers aren’t expected to spend as much this year on advertising during the busy holiday season, and next year, stations won’t have ads for the Olympics or the presidential race to boost revenues. Which means, for now, any credit card ads starring Visigoths should probably be considered a good thing. 

-- Alana Semuels

Photo: Visa is one of the companies that cut back on TV advertising in September. Credit: Paul Sakuma / Associated Press

From bobby-soxers to boy-band groupies, teenagers have always been key consumers for the music industry. Only now, instead of counting on them to buy albums with their allowances, labels are happy to have their attention. 

Universal Music Group announced today that it would license its music videos to teen social networking site Kiwibox.com, aiming to attract young fans beyond Internet haunts like the youth-friendly but not youth-focused YouTube or MySpace.

For now, Universal is the only label Kiwibox has inked a deal with, though Kiwibox Chief Executive Lin Dai says the other three major labels are "very excited about the possibility of working with us."

It might seem like overkill in a crowded music social-networking field — dominated by the just-launched MySpace Music but well served too by sites such as iMeem and Last.fm. But Dai says a teen-only market is the key advantage Kiwibox offers labels.

"Record labels are trying to reach a targeted teen market," he says, "and that’s a bit hard to do through other social networks where the majority of users aren’t teens anymore."

Kiwibox has 2 million members, 20,000 of whom help produce a weekly online magazine on the site. Dai noted that this peer-edited and -produced content — which has always included music-related features like video interviews with artists and album reviews — will set Kiwibox’s offerings apart from purely user-generated and chronologically organized content on MySpace or YouTube.

Like those sites, Kiwibox aims to add links that will let users purchase tracks, since, Dai says, "teens always see music videos as promotional items."

And airing those videos in a social setting has benefits. A Forrester Research study conducted last year found that over a third of social networkers between the ages of 12 and 17 used the sites to discover music, and 72% of them watched videos online.  Other youth-focused sites, including Piczo.com and myYearbook.com, also offer music-related content.

"Providing media in social networks where people are pursuing their lifestyles already is very popular right now," said Forrester Research analyst Jeremiah Owyang.

-- Swati Pandey

Photo: Kiwibox.com Chief Executive Lin Dai. Credit: Kiwibox

With Wall Street in chaos, is it any wonder worried consumers are starting to cut back on discretionary spending?

A new Jupiter Research report found that 32% of online adults say they're cutting back on going to the movies. That's fewer than people who say they're doing less driving (63%), shopping (60%) and vacationing (44%), but nonetheless should sound some alarms in Hollywood.

During the 1991 recession, box office revenue slumped 4.4%, according to Adams Media Research. But people don't always avoid the theater in times of economic unrest. After the Sept. 11, 2001, terrorist attacks, box office revenue actually rose 8.6%; and the immediate aftermath of 1929 stock market collapse sent people to the theaters in droves for a bit of escapism. Box office revenue rose 58.2% in 1929 over the previous year.

But as the hard times dragged on, ticket sales declined. By 1932, box office receipts were off 26.7% from 1931, according to Adams.

And that was before the advent of television, the Internet or video games.

--Dawn C. Chmielewski

PHOTO: Traders working in Wall Street at the beginning of the 1929 stock market crash. OFF/AFP/Getty Image.

There's nothing quite like having a roomful of entertainment-industry movers and shakers to suggest that you're old.

It happened at a PricewaterhouseCoopers Global Entertainment Outlook conference in West Hollywood on Tuesday, when four members of the so-called Net generation trotted onstage to talk media consumption, particularly their wayward Web-surfing habits, before a graying crowd of entertainment-industry-executive types.

Spurred by a moderator and audience members posing queries as if they were anthropologists facing an unknown tribe, the panelists detailed the number of hours they spend online per day (nearly all of them), media content sites they frequent (as one said, "I heart Hulu") and their take on online advertising (make it better).

Asked what effect the financial crisis had on them, one cited the absence of investment-bank recruiters on his UC campus, and two acknowledged budgeting more carefully. One, of course, said that most people he knows "have hardly noticed." (An audience member mumbled that that could be only because he was too young to have a 401[k].)

The demographic bracket bandied about during the conversation, and the one that seemed to apply to all four panelists, was 18 to 25. I ask — having recently skidded out of that demo — whatever happened to 18 to 34? Isn't that whom advertisers really want to reach?

The older half of that broader demo, the panel would have us believe, apparently doesn't watch television online or on cellphones. That glib pronouncement ignored the fact that the next set of panelists — some of whom might have been older than 34 — were behind technology to allow those very trends to evolve, albeit not as quickly as the kids wished.

And sure, most of this is sour grapes from a recently arrived old-timer, but at least MTV agrees with me. The latest study by MTV Networks International's advertising and marketing division, released Tuesday, found that 25-to-34-year-olds are "still actively and emotionally connected to youth culture" but "largely ignored by marketers and advertisers."

Or maybe 27-year-old MTV just knows that it's skidding out of the prime demo too. 

-- Swati Pandey

You really know you're in a Depression when "They Shoot Horses, Don't They?" marathons are back.

But this time, it's DVDs. And no Jane Fonda.

In an attempt to get a Guinnes record -- and a life -- Suresh Joachim and Claudia Wavra watched movies for 123 hours, continuously, in a Plexiglas box in New York's Times Square.

The marathon began Thursday with "Iron Man" and ended 57 films later on Tuesday afternoon with "Thelma and Louise," which was personally delivered to the viewing room by Louise, herself, Susan Sarandon, who really doesn't need this kind of publicity.

A representative of Guinness said the record could not be confirmed for about two weeks.

The couple was allowed ten minute breaks between films and was not allowed to fall asleep while watching, which makes it likely that neither "Speed Racer" nor the remake of "The Women" were included.

Joachim, who lives in Canada, claims to have numerous other worthwhile records, including longest time standing on one foot, most bridesmaids at his wedding, longest time rocking in a rocking chair and longest time watching TV, a feat he accomplished on the set of the "Live with Regis and Kelly" show. Really, look it up.

On his website, Joachim says his upcoming feats will include "Elvis singing" for 75 hours.

Thankyouverymuch.

Photo: Joachim, Louise a/k/a Susan Sarandon, and Wavra (PRNewsFoto/Netflix)