Putting more on the line online

From Times Staff Writers

There may be one constant in the media sector in 2007: its obsession with Google Inc. and the Web.

Internet envy had old media working overtime in 2006. Viacom Inc. Chairman Sumner Redstone became so overwrought after losing the MySpace social networking site to News Corp. that he served up his well-regarded lieutenant of 20 years, Tom Freston, as a scapegoat. Freston was sacked.

The scramble to keep up with the new medium -- along with the threat of a Hollywood writers strike, the possible retirement of a handful of industry bosses and some high-profile mergers -- will make for an exciting, if unpredictable, 2007 in the media, entertainment and technology businesses.


That uncertainty won’t stop us from making our annual predictions, based on interviews with analysts, investors and executives, along with some educated guesswork.

The Eye meets the brain. Talks among the major TV networks about building a video-sharing service to rival Google’s YouTube break down when CBS Inc. splits from the pack and signs a three-year partnership with Google.

The search giant gains access to the broadcaster’s vast video library and some of its radio advertising inventory. CBS gets close to $1 billion in revenue guarantees, propelling its stock in the short run.

Can you hear Jobs now? Apple Computer Inc. unveils an iPod cellphone that is anything but the bride of “FrankenPhone,” the name given its first attempt to put the iTunes music service on Motorola’s clunky Rokr phone.

Apple tries something radical for the U.S. cellular market, selling the phone without a service plan and promoting it as a sexy fashion accessory. ITunes gets a bump as youths and adults listen to even more music on the go.

But will Apple co-founder and Chief Executive Steve Jobs deflect an options backdating probe and be around to take the bow?


Zucker saddles a peacock. NBC Universal Chairman Bob Wright retires early this year, handing the reins to Jeff Zucker, his second in command. But objects in Zucker’s rearview mirror may be closer than they appear.

Although steadfast in his support of Zucker, Jeffrey Immelt, chairman of NBC Universal parent General Electric Co., conducted a stealth headhunting expedition for Wright’s replacement last year. It was inconclusive, but Immelt clearly has a Plan B.

In December, he dispatched veteran GE executive Michael Pilot to be NBC Universal’s head of advertising sales, telling Wall Street that his pick was the “single best guy” at GE to fill the slot. “Mike now is in NBC to make it work,” he said.

The Chandlers’ comeback. Tribune Co. is bought by the Los Angeles newspaper dynasty that is its largest shareholder, which is intent on avoiding a huge tax bill had the company -- owner of the Los Angeles Times, the Chicago Cubs, KTLA-TV Channel 5 and many other properties -- been sold off piecemeal.

It’s hardly the result anticipated when, in mid-2006, the family began agitating for management to spin off its broadcasting arm to lift the wilting stock price.

Yahoo goes hitching. With its stock drooping, the Internet portal decides that it can’t keep pace with Google without nuptials. Potential partners are plentiful: Time Warner Inc.’s AOL , Microsoft Corp.’s MSN, EBay Inc. and a handful of older media giants eager to bet on Internet content.


Yahoo Chief Executive Terry Semel retires after seeing the merger through. He’s succeeded by his No. 2, Sue Decker, unless the partner is EBay, whose CEO, Meg Whitman, would get the job.

Three strikes for Stringer. Sony Corp. returns to Japanese management when Chief Executive Howard Stringer retires after a series of high-profile embarrassments.

After going to the mat to lead a buyout of Metro-Goldwyn-Mayer, Sony last year was dropped by the legendary studio as its primary film distributor, its prize in the deal, because of a loophole in the $4.9-billion acquisition agreement.

Then, Sony’s second-quarter profit was decimated when almost every major laptop computer maker recalled the company’s lithium ion batteries because of safety concerns.

Sony’s PlayStation 3, designed as a Trojan horse to establish its Blu-ray high-definition DVD format as leader, became so difficult to manufacture that the game box was seriously delayed -- and then trounced in holiday sales by the niftier Nintendo Wii.

Staggs for president. Walt Disney Chief Executive Robert Iger is in no hurry to name a president, but the board’s incoming chairman makes succession an issue.


Iger bypasses the higher-profile hotshot Anne Sweeney, who oversees the Disney Channel and ABC, in favor of Chief Financial Officer Tom Staggs, who is well liked on Wall Street.

AT&T; savors the Dish. After buying BellSouth Corp., AT&T; Inc. pursues EchoStar Communications Corp., owner of the Dish Network satellite TV service. The acquisition would give AT&T; a national TV brand overnight, relieving the phone giant of pressure to build its own.

But AT&T; Chairman Edward E. Whitacre Jr. has a short window of opportunity: Cable mogul John Malone wants Dish too.

For Malone, deja vu. Malone gets the chance to become a major shareholder of AT&T; a second time (the first was in the 1990s, when he sold his cable company to the phone giant). He sells DirecTV to AT&T; for stock, but only after combining the satellite leader with Dish.

What does he tell regulators who nixed the Dish-DirecTV combo in 2002? That without a deal, neither could withstand new competition from phone behemoths such as AT&T.;

Big Media scores again. The Republican-controlled Federal Communications Commission narrowly votes to loosen media ownership restrictions, making media companies happy but angering the new Democratic majority in Congress, which tries to fight back with legislation.


TV station values jump as the rules allow companies with newspapers to own broadcasters in the same city. But the changes are too late for Tribune, which had snapped up newspapers including The Times expecting restrictions to melt away sooner.

Murdoch lands the Journal. News Corp. adds to its stable of newspapers by buying Dow Jones & Co., owner of the Wall Street Journal, to bolster Rupert Murdoch’s nascent business news cable channel, a companion to his Fox News juggernaut.

Some investors are furious that Murdoch would spend $5 billion on an old-line media acquisition when a purchase of CNet Networks Inc. could fill a similar need for a fraction of the price.

A MySpace for kids. Walt Disney Co. launches a social networking site for children, hoping that tykes take to it as teens did to MySpace. But like its ToonTown multi-player game for kids, the initiative gets little traction. Toddlers drawn to Disney characters such as Winnie and Mickey do not spend their days at the keyboard.

Talent pools. Hollywood talent agencies continue to consolidate. Indie-oriented United Talent Agency, home to Johnny Depp and other stars, sells out to little-known Connecticut investment banker Suhail Rizvi, who owns half of International Creative Management.

Head UTA agents Jeremy Zimmer and Jim Berkus smile all the way to the bank, while Rizvi sets his sights on destabilizing monolithic Creative Artists Agency.


Hollywood crunch. As DVD sales decline for the first time ever, studios step up their crackdown on costs, putting the squeeze on talent, shuttering production deals, cutting jobs and finding other ways to rein in spiraling production and marketing budgets.

Some big stars follow Tom Cruise’s lead by setting up joint production ventures with investors, bypassing the traditional studio financing system.

Studios increasingly rely on outside financial partners, although many of them flee after being burned by big-budget flops in 2006. Studios accelerate the next-generation, high-definition DVD format to keep their cash cow alive and take advantage of banner sales of flat-panel TVs.

Strike out. Bracing for a strike, studios and networks stock up on reality TV shows this spring, angering leaders of the Writers Guild of America, West.

Although they are eager to share the spoils of digital content distribution, the writers lie low when their contract expires Nov. 1, choosing instead to align with the Screen Actors Guild, whose contract expires in 2008.

The studios cut deals with both unions to avert twin strikes, but thousands of production employees are out of work for months in 2008 because the studios stockpiled TV shows and movies.


Of sequels and pixels. A flood does not a glut make, at least when it comes to animated feature films. Although 13 are scheduled for release this year, following 16 in 2006, audiences still turn out, especially for DreamWorks Animation’s “Shrek 3,” Pixar Animation Studios’ “Ratatouille” and 20th Century Fox’s “The Simpsons Movie.”

The big summer surprise at the box office? “Fantastic Four: Rise of the Silver Surfer” leaves Spidey, Shrek, Captain Jack and Harry Potter in the dust.

Parsons for mayor. Time Warner Chairman Richard D. Parsons, eyeing a bid for mayor of New York, conducts preliminary polling, scoring well on name recognition, fiscal acumen and leadership skills. But Gotham voters tell pollsters that Parsons is “not rich enough” to be mayor. He retires to his Italian wine villa.

Spring training. New York Yankees owner George Steinbrenner trades places with Sumner Redstone. The Yankees justify the move by saying that after six seasons without a World Series victory, they need a take-charge leader who isn’t afraid to stand up to his front office.

Viacom promises Wall Street that Steinbrenner will bring a “human touch” needed to coddle fragile egos in the entertainment business.

Redstone’s daughter Shari is offered a job in Tampa, Fla., running the Yankees’ farm system, with a promise from her father that “if she wants it badly enough,” one day she might be called up to the big leagues.



Times staff writers Dawn C. Chmielewski, Claudia Eller, Josh Friedman, Chris Gaither, James S. Granelli, Claire Hoffman, Sallie Hofmeister, Meg James, Joseph Menn, Thomas S. Mulligan, Jim Puzzanghera and Richard Verrier contributed to this report.