July 2007

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OWNERSHIP
Dow Jones and Murdoch Said to Move Close to Deal
Verizon Rumors
Clear Channel calls XM Sirius merger "peril"
Tribune Shares Drop as L.A. Times Has `Worst Quarter'
Cable-TV industry facing consolidation

INTERNET/BROADBAND
States weigh limits on public Internet
Number Of Online Chinese Poised To Surpass U.S. Internet Users
Internet Phone Company Halts Operations 0
Web Broadcasters Continue Talks With Music Industry Over Royalties

QUICKLY -- Washington in the grip of summer gridlock; AT&T raises
rates on features; Digital Television Consumer Education Workshop

OWNERSHIP

DOW JONES AND MURDOCH SAID TO MOVE CLOSE TO DEAL
[SOURCE: New York Times, AUTHOR: Richard Perez-Pena and Richard Siklos]
Rupert Murdoch reportedly moved a major step closer to achieving his
long-standing aim of acquiring The Wall Street Journal when Dow Jones
& Company tentatively agreed to be acquired by Mr. Murdoch's News
Corporation yesterday. But the deal still must win the approval of
the Bancroft family, which controls a majority of the company's
voting stock and has balked so far at selling to Mr. Murdoch, with
some family members instead searching for another buyer. According to
a report on The Journal's Web site, representatives of Dow Jones
accepted Mr. Murdoch's $60-a-share bid, which values the company at
$5 billion. The News Corporation and Dow Jones declined to comment.
The agreement was expected to be put to the board tonight, and would
cap a three-month effort by Mr. Murdoch to add Dow Jones to his
global media empire.
http://www.nytimes.com/2007/07/17/business/media/17dow.html
(requires registration)
* Dow Jones, Murdoch Reach a Deal
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/16/AR200707...
* Murdoch's News Corp., Dow Jones reach tentative deal
http://www.usatoday.com/printedition/money/20070717/1b_dowjones17.art.htm
* Dow Jones board to vote on Murdoch's bid
http://www.latimes.com/business/printedition/la-fi-dowjones17jul17,1,293...
* Murdoch reaches tentative Dow Jones deal
http://www.ft.com/cms/s/b6212c48-3401-11dc-9887-0000779fd2ac.html

VERIZON RUMORS
[SOURCE: Associated Press]
Although Vodafone Group denied a report by the Financial Times that
it is weighing a $160 billion bid for Verizon Communications, the
notion of a deal injected Wall Street with optimism and helped stocks
mostly hold last week's sizable gains. "I think just the idea of the
number floated -- $160 billion -- gets the juices running in the
market again even after this big move," said Greg Church, chairman of
Church Capital Management in Yardley, Pa., referring to last week's
gains. "It would be the biggest deal ever. People want to be at the
party and they don't want miss it."
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/16/AR200707...
(requires registration)
* Vodafone says it's not bidding for Verizon
http://www.latimes.com/business/printedition/la-fi-voda17jul17,1,4126797...

CLEAR CHANNEL CALLS XM SIRIUS MERGER "PERIL" -- UNLESS BROADCASTER
CAN BUY MORE RADIO STATIONS
[SOURCE: Lasar's Letter on the FCC, AUTHOR: Matthew Lasar]
Clear Channel has invoked the impending "peril" of a merged XM/Sirius
satellite service to repeat its oft made request for Federal
Communications Commission permission to buy more radio stations. "The
only circumstance under which approval of the proposed merger might
survive scrutiny under the Commission's public interest test would be
if the Commission were to contemporaneously eliminate all local radio
ownership regulations," Clear Channel Vice President Andrew Levin
wrote to the FCC on July 9th, "thus freeing local radio broadcasters
to be in a position to match the competition between XM and Sirius
that would be lost." Clear Channel submitted its comments as part of
the public proceeding that the FCC is running on the proposed merger.
The Commission will take statements until July 24th.
http://www.lasarletter.net/drupal/node/435

TRIBUNE SHARES DROP AS LA TIME HAS "WORST QUARTER"
[SOURCE: Bloomberg, AUTHOR: Tim Mullaney and Michael Janofsky]
Tribune Co. shares fell as much as 2.1 percent after Los Angeles
Times publisher David Hiller said the newspaper had "one of the worst
quarters we have ever experienced" in the three months through June.
The memo indicates an advertising slump didn't abate in June after
dragging down Tribune's publishing revenue by 8.6 percent in April
and 10 percent in May. The decline will complicate efforts to
complete the Chicago-based company's $8.2 billion buyout led by
investor Sam Zell, said analyst Ed Atorino of Benchmark Co. in New York.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amq32xr4ulRA

CABLE-TV INDUSTRY FACING CONSOLIDATION
[SOURCE: Denver Post, AUTHOR: Andy Vuong]
The cable-television industry is poised for consolidation as its
battle with telecom companies for residential customers intensifies,
experts say. Several catalysts could speed a fusion of the nation's
cable operators, including: 1) Widespread adoption of Verizon
Communications' fiber-optic TV service, FiOS. The New York-based
phone company's TV project is by far the industry's most aggressive,
and if it is successful, cable operators could look to combine
operations to better compete. 2) A merger of the nation's largest
satellite-TV operators DirecTV and Douglas County-based EchoStar
Communications. The combined entity would have nearly 30 million
subscribers, more than that of the largest cable-TV operator,
Comcast. 3) Demand for high-definition TV service. Cable companies
may have to increase capacity on their networks to offer more
channels in HD, and the bigger they are, the more money they can
borrow to upgrade their networks. "Five years from now, I think there
will be five major telecom providers in the United States," said
Scott Chandler, managing partner of Franklin Court Partners, a
Littleton-based telecommunications consulting firm. "At least two of
those five will be cable companies."
http://origin.denverpost.com/business/ci_6373085

INTERNET/BROADBAND

STATES WEIGH LIMITS ON PUBLIC INTERNET
[SOURCE: USAToday, AUTHOR: Jordan Schrader]
This year, Wyoming became one of 12 states that restricts public
broadband Internet, joining Colorado, Florida, Louisiana, Nebraska,
Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington
and Wisconsin. Legislation proposing restrictions in North Carolina
is in the committee phase but has inspired opposition from cities,
consumer advocates such as the North Carolina Public Interest
Research Group and tech companies such as Google. The debate also
has caught the attention of U.S. Rep. Rick Boucher, D-Va., who has
drafted a bill to keep states from putting up barriers to public
Internet. "Broadband is every bit as essential as electricity was
when it was emerging 100 years ago," he said. One of the state
legislators Boucher wants to stop, Rep. Drew Saunders, also drew a
comparison to the utilities of the past. The Democratic chairman of
the N.C. House Public Utilities Committee said the bill he introduced
this year would apply 21st-century technology to the principle that
municipalities shouldn't compete with industry. His proposal would
keep North Carolina cities from subsidizing a communication service
with taxes or other money and require the service to turn a profit.
"We're not saying they cannot compete," Saunders said. "We're saying
that if you do, you've got to do some of the same things (as) private
industry." Not all states are moving in the direction of more
restrictions. In Pennsylvania, Rep. Mike Sturla, a Democrat, has
proposed ending a law limiting local public broadband to places where
a phone company had refused to provide the requested connection speeds.
http://www.usatoday.com/printedition/news/20070717/a_limitingweb17.art.htm

NUMBER OF ONLINE CHINESE POISED TO SURPASS US INTERNET USERS
[SOURCE: InformationWeek, AUTHOR: Antone Gonsalves]
The number of Internet users in China has reached 137 million, and
with double-digit annual growth projected, the country is poised to
overtake the United States in total number of users within a few
years, a researcher said. Based on figures supplied by the China
Network Information Center, the country's Internet population grew by
18% in 2004 and 2005, and 23% in 2006, the Pew Internet & American
Life Project said in a recent report. Those numbers translate into 26
million new users in 2006, and 57 million over the last three years.
By comparison, growth in the United States, which has reached a far
greater level of maturity in Internet use, has amounted to between 7
million and 9 million adults and teenagers since 2005. The total
number of Internet users in the United States today is estimated at
165 million to 210 million, with current growth rates not expected to
change much. The CNNIC, on the other hand, expects China's growth to
remain in the double digits, driving the number of Web users to 210
million by the beginning of 2009, the Pew report said. While 71% of
Americans age 18 and over use the Internet, only about 10% of China's
population is online. The Chinese users are relatively young, male,
urban, and are disproportionately composed of students, the report
said. Specifically, 70% are under the age of 30 and nearly 60% are
men. The penetration rate in urban areas is about 20%, compared with
just over 3% in rural areas. Bridging the rural/urban digital divide
is an ongoing initiative for the Chinese government.
http://www.informationweek.com/shared/printableArticle.jhtml?articleID=2...

INTERNET PHONE COMPANY HALTS OPERATIONS
[SOURCE: New York Times, AUTHOR: Matt Richtel]
SunRocket, one of the largest start-up companies offering Internet
phone service, has ceased operation and is moving its customers to
one or more other companies. The development underlined the struggles
of start-ups trying to make a business out of providing
Internet-based phone service, telecommunications industry analysts
said. The companies face enormous pressure from the biggest
competitors in the industry, both cable and traditional phone service
providers. The cable companies in particular have made a strong push
into the telephone market by offering the service as part of a
package with television and Internet access. Start-ups like SunRocket
and Vonage, the largest and best known of the group, tend to offer
only phone service, and they do not have the ability of the larger
companies to ensure quality of service because they do not operate
their own telecommunications lines, said Richard Greenfield, a media
analyst at Pali Research in New York. "They only have one product and
they can't control quality," Mr. Greenfield said, adding that the
business is "extremely challenging."
http://www.nytimes.com/2007/07/17/business/17sunrocket.html
(requires registration)

WEB BROADCASTERS CONTINUE TALKS WITH MUSIC INDUSTRY OVER ROYALTIES
[SOURCE: Wall Street Journal, AUTHOR: Sarah McBride sarah.mcbride( at )wsj.com]
Web broadcasters continued negotiations with the music industry over
higher online music royalties even after the July 15 deadline to put
the rates into place. Many online radio broadcasters have complained
that the new royalty rates are too high and would force some of them
to go off the air. Previously, online radio stations paid a
percentage of their revenue as a royalty. Under the new rules, larger
Webcasters, such as Yahoo Inc.'s Yahoo! Music and Time Warner's AOL
Music, will pay rates that start at .08 cents a song, per listener
and per play; smaller Webcasters for now would continue to pay a
percentage of revenue. As the royalty increase took effect over the
weekend, many Internet broadcasters continued to play music. Some
said they have begun to pay the higher rates. Yahoo was among the
broadcasters that said they would start paying the higher rates now
while they continued negotiations with SoundExchange, a body that
represents artists and music labels. AOL said it had already paid the
higher rates for May; June and July rates are still pending.
SoundExchange doesn't appear to be attempting to collect the higher
royalties yet. It has reached out to continue talks with small
Webcasters. The Digital Music Association, which represents many
larger Webcasters, said it was trying to set up talks for later this
week. National Public Radio and SoundExchange held talks Friday about
the rates public radio stations would ultimately pay.
http://online.wsj.com/article/SB118463027408468227.html?mod=todays_us_ma...
(requires subscription)
* Webcasters' Fates Still Uncertain
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/16/AR200707...
* Internet music stations receive a reprieve
http://www.latimes.com/business/printedition/la-fi-radio17jul17,1,361517...

QUICKLY

WASHINGTON IN THE GRIP OF SUMMER GRIDLOCK
[SOURCE: Reuters, AUTHOR: Steve Holland]
Gridlock has seized control of Washington, from the White House to
the white dome of the U.S. Capitol. Republicans and Democrats are
engaged in close combat over disputes ranging from the Iraq war to
the federal budget to the firings of U.S. prosecutors, and more.
There is a lot of rhetoric, but action has largely ground to a
snail's pace. And there is little prospect of a major change any time
soon, as the summer doldrums set in.
http://www.reuters.com/article/politicsNews/idUSN1327758620070716

AT&T RAISES RATES ON FEATURES
[SOURCE: Los Angeles Times, AUTHOR: James S. Granelli]
Millions of Californians will start paying several dollars a month
more for land-line phone service after AT&T's second price increase
for custom-calling features since the state lifted rate caps last
year. The nation's biggest phone carrier this week boosted the cost
of caller ID, call waiting and a host of other features for a la
carte phone service. AT&T and other carriers want more people to sign
up for bundles because those customers have proved less expensive to
maintain and less likely to leave for rival companies. The price
hikes could leave the phone companies vulnerable to customer
defections because cable TV companies are aggressively wooing phone
customers. Phone companies say the rate increases reflect their
increasing costs, which they had not been able to pass on to
consumers under decades of regulated pricing. But consumer groups
complained that competition was failing to keep prices down, as
promised, after the state Public Utilities Commission's decision in
August to end rate regulation.
http://www.latimes.com/news/printedition/front/la-fi-phone17jul17,1,4224...
(requires registration)

DIGITAL TELEVISION CONSUMER EDUCATION WORKSHOP
[SOURCE: Federal Communications Commission]
The Federal Communications Commission today announced it will hold a
day-long Digital Television Consumer Education Workshop at its
Washington, DC headquarters on Wednesday, September 26, 2007. The
purpose of the workshop is to provide an opportunity for all
interested parties to jointly discuss the challenges associated with
the upcoming transition and explore ways to develop coordinated
consumer education activities. Organizations representing a broad
range of consumers and other stakeholders will be represented,
including those who represent senior citizens, low-income consumers,
non-English speakers, people with disabilities, tribes, and public
interest organizations working on behalf of underserved customers or
those living in rural areas. The agenda and speakers will be
announced at a later date. Press inquiries should be directed to
Rosemary Kimball at (202) 418-0511, rosemary.kimball( at )fcc.gov. Other
inquiries should be directed to Pam Slipakoff at (202) 418-7705,
pam.slipakoff( at )fcc.gov, or Lauren Patrich at (202) 418-7944,
lauren.patrich( at )fcc.gov.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-275260A1.doc
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While the summaries are factually accurate, their often informal tone
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