DaimlerChrysler Cuts Chrysler from It's Name
DaimlerChrysler said it will sell 80.1% of its struggling U.S.-based Chrysler Group division to private-equity company Cerberus Capital Management L.P.., ending a nine-year tie-up that didn't deliver the anticipated benefits. The deal, in which DaimlerChrysler is effectively paying to dispose of most of Chrysler, is also a watershed in the industry, marking the first time a private-equity company has acquired one of the world's biggest auto makers. Analysts said that Cerberus is likely to look to slash costs at Chrysler and can drive synergies by tying its financial-services arm up with GMAC, the former financial services arm of General Motors Corp. Cerberus has a 51% stake in GMAC. DaimlerChrysler said the deal will result in a €500 million ($677 million) cash outflow for DaimlerChrysler and will lop between €3 billion and €4 billion off its net profit this year. However, the agreement also allows it to shed Chrysler's $18 billion of retirement and health-care liabilities, which will be folded into a new Chrysler holding company, Chrysler Holding LLC. Daimler noted that Chrysler's pension funds are significantly over-funded at present. Cerberus will make a capital contribution of $7.4 billion to the new Chrysler holding company. Of the total, $6.05 billion will be put into Chrysler -- $5 billion into the industrial operations and $1.05 billion into financial services -- and DaimlerChrysler will get $1.35 billion. However, DaimlerChrysler expects to pay out $1.6 billion before the deal closes due to Chrysler's negative cashflow and will pay about $878 million to discharge long-term liabilities. DaimlerChrysler will also loan Chrysler $400 million. DaimlerChrysler said the deal is still subject to the approval of its supervisory board, but has been backed by the powerful United Auto Workers union.

Telefonica sells Endemol for €2.6bn
Endemol, the maker of Deal or No Deal, has been sold to a consortium that includes the former prime minister of Italy and the creator of Big Brother in a deal valued at €2.6bn. Telefónica, the Spanish telecoms group, paid €5.5bn for Endemol in 2000 and will generate a big tax loss on the sale of its remaining 75% stake. Endemol shares jumped 2.6 % to €25.30 on confirmation of the news, giving the Amsterdam-listed group a market capitalisation of more than €3bn. The deal unites Silvio Berlusconi, the former Italian prime minister who owns 36% of Mediaset, with John de Mol, who founded Endemol and turned Big Brother into a global franchise. Goldman Sachs Capital Partners is backing the consortium. Its success could prompt some of Endemol’s senior management to leave, however. Some executives are concerned that Endemol’s independence could be threatened by a sale to Mediaset. Stéphane Courbit, head of Endemol France, was leading a rival consortium and is not expected to stay. Managers of its Spanish division have also told the Spanish press they will leave should Mediaset succeed. Endemol has also been in dispute with Mediaset, after the Italian group hired the presenter of Deal Or No Deal for its own, similar show. For Mediaset, Endemol represents a chance to diversify away from the Italian market while building up its in-house production. The Italian group began examining Endemol in the face of proposed legislation which could impose advertising limits on two of its three domestic channels and force the third to move to satellite transmission. Mediaset, which claims a 43% share of its home market, made an unsuccessful attempt to expand abroad last year with a bid for ProSiebenSat.1 before the German broadcaster’s eventual sale to private equity. Mr de Mol’s involvement represents a return to the company at which he made his name with the launch of Big Brother a decade ago. After selling Endemol to Telefónica in 2000, he remained as creative director for four years before leaving to launch Talpa, whose Tien television channel acquired rights to Dutch premier league football. Mr de Mol could sell Talpa to help finance the deal. Telefónica was advised by Lehman Brothers on the Endemol sale.

Microsoft reveals VoIP hardware
Microsoft on Sunday introduced phones, headsets and other devices that work with its software, with the intention of replacing the traditional office phone and delivering emails, instant messages and phone calls over the internet. Microsoft said it worked with nine technology manufacturers, including Samsung and NEC, to develop hardware to work with its unified communications strategy. Instead of one system for phones and another for emails and instant messaging, Microsoft wants all communications to run over internet networks on its Office Communicator program. Microsoft forecasts that the shift to web-based phone systems will gain momentum during the next three years, eventually generating billions of dollars in new revenue for the company. The new hardware products will be unveiled at this week's Microsoft Windows Hardware Engineering Conference in Los Angeles. The new products include an internet protocol phone from NEC that connects to a computer's USB and a Bluetooth headset that connects via wireless technology to the Office program, made by LG-Nortel, a joint venture of LG Electronics and Nortel Networks. Other hardware manufacturers working with Microsoft are Asus, Plantronics, Polycom, Tatung and Vitelix.

Wal-Mart to Bring Skype to Masses
Wal-Mart Stores Inc. is adding an array of Skype phone gear to the electronics sections of 1,800 stores, bringing the provider of inexpensive Internet calling to a mainstream audience. The dedicated Skype section will feature handsets, headsets and Web cams designed to work with Skype, a provider of free and inexpensive long-distance calls, including to phone numbers abroad. Wal-Mart will also sell the first prepaid cards for Skype calls to be sold in the U.S., the companies were expected to announce today. Skype is a unit of eBay Inc., of San Jose, Calif. The section at more than half of Wal-Mart's roughly 3,300 U.S. stores will feature Skype-compatible gear made by Motorola Inc., Plantronics Inc., Logitech International SA, Philips Electronics NV and others. Those makers sell those products in stores through their relationships with Best Buy and Circuit City Stores, but Wal-Mart will be the first to offer a wide selection in one place.

Study shows online apparel sales growing
Online shoppers — wooed by new sites like Gap Inc.'s shoe site piperlime.com, enhanced merchandise images and such come-ons as free shipping — spent more on clothing and accessories than on computers for the first time ever. Online sales of apparel, accessories and footwear reached $18.3 billion last year and should hit $22.1 billion this year, according to the Shop.org survey conducted by Internet research firm Forrester Research. Shop.org is the online arm of National Retail Federation, the retail industry trade group. Meanwhile, computer hardware and software, long the leader for nontravel online sales, moved into second place last year, at $17.2 billion. That was followed by sales of autos and auto parts, whose sales reached $16.7 billion, and home furnishings, which posted sales of $10 billion. Computer peripherals, which reached $1.5 billion in sales last year, were not included in the hardware and software category. The figures were based on responses from 170 online retailers as well as an analysis of industry data. Overall, online sales including travel rose 25% to $219.9 billion last year. Excluding travel, e-commerce rose 29% to $146.5 billion. For the current year, online sales including travel are projected to rise 18% to $259.1 billion. Sales excluding travel should reach $174.5 billion in 2007, or a 19% gain. The study reported that 10% of all clothing, accessories and footwear sales are expected to occur online this year, up from 8% last year. And overall online retail sales excluding travel should account for 7% of the total retail market in 2007, up from 6%.

DVR users front and center at upfront
If you use a digital video recorder to record shows that you watch as many as seven days after they originally air, be assured that your viewing habits will be a big focus for the television networks next week when they try to sell commercial time for the fall season. Traditionally, ad rates for the so-called upfront season are based on how highly network programs were rated in the previous season. Last year, the broadcast nets took in just under $9 billion based on this standard formula. Now, however, the networks argue that the DVR has changed the game, though various reports still indicate that total upfront ad sales are unlikely to exceed those of a year ago. Last year, Walt Disney Co. owned ABC led a push to set its rates based on Nielsen Media Research's new "Live Plus 7" measurement, which tracks the programs viewed by digital video recorder users as many as seven days after those shows originally aired. "Live Plus 3" is a variation on that metric. Nielsen has also come up with a method for tracking viewership during commercials, so that advertisers have a sense of who is skipping ads and who is watching them. Advertisers rejected ABC's argument for "Live Plus," saying they wouldn't pay for viewers who were skipping their ads. This year's early shift to Daylight Savings Time also took a toll, pushing viewers to evening activities outside the home sooner than in years past. As last year, some advertisers, looking at the ever-rising usage of the Web as an entertainment source, will want to hold back on spending big money during the upfront period while they see what new opportunities emerge online as the year goes on.

Study sees no future in selling video downloads
Sites that sell movies and TV shows such as Apple's iTunes will likely peak this year and then lose popularity as more content becomes available on free outlets supported by ads, according to a new study. Sales of movies and television shows are expected to almost triple to $279 million in 2007 from an estimated $98 million last year. But unless the average consumer begins paying for their online video en masse, growth in sales will likely peter out next year, according to Forrester Research.Estimates show that sales growth is not likely to triple or even double in 2008 and beyond, after early adopters and media addicts have already started using the services. Confusion over different video file formats, difficulties watching downloaded videos on television screens and other technical problems have kept average people from paying for shows online. Efforts by traditional media distribution companies to make more of their shows available for free on the Internet--including the Hollywood-backed film service MovieLink, Wal-Mart Stores' service and Amazon.com's Unbox service--are also working against paid services. Led by Walt Disney's ABC.com, TV networks including News Corp.'s Fox are offering some hit shows online for free. News Corp. and General Electric's NBC Universal also launched a joint venture to distribute a combined archive of shows over the Internet. Currently, only about 9% of Net-using adults have paid to download a program or a movie, the study said. These people spent an average of $14 each to buy videos last year and will likely spend more this year.

Star Wars special effects voted best ever
George Lucas's groundbreaking Star Wars has won an award for the Most Influential Visual Effects Film of All Time exactly 30 years after its release. The honour was granted by the Visual Effects Society, the entertainment industry's official trade organisation for visual effects practitioners. The Society's 1,500 global members voted on the most influential visual effects films of all time, putting Star Wars at the top just ahead of Ridley Scott's Blade Runner. Third place was a tie between another golden oldie, Stanley Kubrick's 2001: A Space Odyssey, and the more recent Wachowski Brothers' The Matrix. Steven Spielberg's Jurassic Park (1993) came fifth, Steven Lisberger's Tron (1982) came sixth and the 1933 version of King Kong came seventh. Older films continued to dominate the top 10, with Spielberg's Close Encounters of the Third Kind (1977) in eighth place, Ridley Scott's Alien (1979) in ninth place and James Cameron's The Abyss (1989) in tenth place. Eric Roth, executive director of the Visual Effects Society, said: "These films have had a significant, lasting impact on the practice and appreciation of visual effects as an integral, artistic element of cinematic expression and the storytelling process."

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