Phil Dusenberry.


The obit is here. During his tenure as executive creative director at BBDO, the initials were said to mean: "Bring it Back and Do it Over." He was the best there ever was at what he did. And a prince among men. He died at the age of 71.

Immigration.

It is clear in Iowa that immigration is the great issue that won't go away. Members of the American elite, including U.S. senators, continue to do damage to the public debate on immigration. They do not view it as a crucial question of America's continuance. They view it as an onerous issue that might upset their personal plans, an issue dominated by pro-immigration groups and power centers on the one hand, and the pesky American people, with their limited and quasi-racist concerns, on the other.

Because politicians see immigration as just another issue in "the game," they feel compelled to speak of it not with honest indifference but with hot words and images. With a lack of sympathy. This is in contrast to normal Americans, who do not use hot words, and just want the problem handled and the rule of law returned to the borders.

Politicians, that is, distort the debate, not because they care so much but because they care so little.

Hillary Clinton is not up at night worrying about the national-security implications of open borders in the age of terror. She's up at night worrying about whether to use Mr. Obama's position on driver's licenses for illegals against him in ads or push polls.

A real and felt concern among the candidates about immigration is a rare thing. And people can tell. They can tell with both parties. This is the real source of bitterness in this debate. It's not regnant racism. It's knowing the political class is incapable of caring, and so repairing.

--Peggy Noonan, WSJ, December 14, 2007

The Future of Warfare

Is genomic. And the first really comprehensive overview of the threat can be read here. It's useful to remember that this is not futuristic stiff. About five years ago, some scientists purchased chromosomes from the back of some science magazines and re-engineered the polio virus, genetically modified it and delivered the results to NIH. You can read about that (and other, similarly terrifying "developments") here.

Political Commentary.

I've long been a fan of Real Clear Politics. Jmac and Tom Bevan have done an amazing job building out the indispensable political website. And they are adding to their empire! Next week, the official launch of Real Clear Markets and Real Clear Sports will occur. Those sites are "live" now, if you want to check out the betas.

Anyway, I'll be filing columns with Real Clear Politics from time to time. And here's the first one, which was posted today.

General Wayne Downing

A great soldier died yesterday at the age of 67. It was no surprise that immediately after the attacks of 9/11, President Bush turned to him for help. He was the guy you called in situations like that.

Merry Christmas.


Ellisblog is on a more or less permanent hiatus, due to other work. But we wish you a Merry Christmas and a happy and healthy New Year.

Columns.

Below is a column I wrote a while back about a private equity group's scheme to acquire The Boston Globe from The New York Times. In the column, I opined that Times Publisher and CEO Arthur Sulzberger "would be a fool" to sell the Globe at this juncture. I no longer believe that. I now think he should sell all of the "New England assets" (The Globe, the Worcester paper, the Red Sox stake and the NESN stake), and gather up $1 billion-plus. This would enable the Times company to enter the next (2009-2010?) recession loaded with cash.

The fact is that the Globe is doomed. Without union concessions, the cost structure doesn't work. And the unions will never concede anything, ever. So the NYT might as well get $600 million for it now, rather than $300 million for it in 2010.

Squeeze Play

By JOHN ELLIS
October 31, 2006; Page A18

Last week in Boston, a group of local businessmen led by Jack Welch let it be known that they were interested in acquiring the Boston Globe from the New York Times Company for $500-$600 million. The offer served to put the Globe "in play" (as the talking heads say) and to galvanize Class B (non-family) shareholders of Times stock, already up in arms about mismanagement and financial performance.

The public side of this saga began on Oct. 19, when Times Chairman and CEO Arthur Sulzberger received a letter from Sen. Edward Kennedy and a motley crew of local pols and labor skates demanding that the Times stop "disinvesting" in the Globe and sign a pending labor agreement with Globe employees. Picking a fight with the Times has long been the express lane to oblivion in Democratic Party politics. The fact that a gaggle of Democratic pols was picking a fight with it over one of its owned properties meant that private equity could not be far behind. And indeed it was. Whenever a company is "in play," the prospect of auction looms. Buyers hate auctions. They serve only to drive up price. Private-equity firms spend countless hours scheming to derail auctions, often enlisting competing private-equity firms into their consortium to short-circuit the process. Sellers, of course, love auctions and generally insist that they occur to "maximize shareholder value."

What made the Team Welch bid remarkable was its keen understanding of the auction process and its skillful leveraging of local assets toward shutting down any possibility of same by the Times. The Kennedy letter wasn't meant for Mr. Sulzberger; it was a message to other private equity firms: We have the local pols and labor leaders on our side. The presence of Jack Connors, Boston's leading ad-man, as a partner in the deal was another message to private-equity firms: We have the best-connected guy in the city and he employs a lot of people who decide where to place advertising in local media. The inclusion of Joe O'Donnell, concessionaire and one of Boston's favorite sons, sent another message: We have friends on both sides of the aisle. And, oh, by the way, "Jimmy" Lee of J.P. Morgan Chase is crunching the numbers and will provide Team Welch with all the financing it could ever need. Usually, the more public the process is, the more likely an auction results. But by tilting the mirrors of perception in public, Mr. Welch left other private-equity players with the following choice: Sign on with Team Welch or risk a nasty, local bidding war that will doom the upside in the deal for everyone.

Now comes the tricky part. Mr. Welch and Mr. Lee must get shareholders of Times B-shares to clamor for the sale of the Globe. Morgan Stanley has been vocal about its disappointment with Times senior management and must decide whether it should push for a sale. Ordinarily, they would push for an auction to maximize return. But with Welch and Co. having effectively shut that door, they may find themselves endorsing the deal (demanding a higher price) and calling it a day. If enough Class B's join with Morgan Stanley clamoring for a sale, pressure on Mr. Sulzberger would be ferocious.

Mr. Sulzberger would be a fool, of course, to sell the Globe to anyone at this juncture. The transition from newsprint to pixels has been a painful one for newspaper companies everywhere. Print advertising revenues have hemorrhaged. But Web 2.0 is just around the corner and social networks have emerged as the engine of growth on the Internet. Combine shared interests (social networks) with publishers (content aimed at those interests) with targeted advertising (specific to those interests) and you have the makings of a money machine. On any given day in the summer, more people read the Globe's Red Sox blog than buy the physical newspaper. The blog is a social network. The content that is published there doesn't cost much to produce. Red Sox stuff sells like hotcakes all across America. Everyone shares in the revenue.

The Times has said it has no interest in selling. Jack Welch and Co., having capped the price by taking auction out of play, must now move decisively to force a sale. It's a long shot -- but the skill with which Team Welch has played its hand so far suggests that the future ownership of the Boston Globe is still an open question.

Viacom

Here's the column I wrote for the Wall Street Journal's op-ed page about the shake-up at Viacom. Jim Cramer has an excellent column on the same subject in last week's issue of New York magazine. And last Friday's "Heard on the Street" provides a good insider-y account of how Viacom's stock rebounded last week.

Dick Kollar

The thing about life, said the poet Robert Frost, is that it does go on. But for those of us who are lucky enough to be members at the Sleepy Hollow Country Club, life will seem a bit diminished now that Dick Kollar has passed away. He died in his sleep last Thursday night at the age of 71.

He was a golf professional; the head pro for a time at Mahopac, an assistant pro at Garrison before that. At 51 he moved indoors and ran the men's locker room at Sleepy Hollow. He played golf whenever he could. Winter, rain, cold, he didn't care. He loved the game.

If, during the course of your day, you saw Dick, it meant that that day was a good day, because you were near the course or the range, and the thwack of a four-iron hitting a Titleist ProV1 would soon be the sound in your ears.

Because of this, you were always especially glad to see Dick. And the great thing about Dick was that he was always seemed especially glad to see you. Even if he wasn't. "Got a game," he'd say, as he wheeled around the locker-room, a crooked smile on his warm face. "Andy shot 74 today. He's got some game, that guy. Hits the ball a mile."

Dick had game. We will miss him more than we know.

WSJ

John Batchelder, the ABC Radio talk show host, told me a funny story today about Katie Couric. Apparently, Ms. Couric was interviewing Mike Wallace and at the end of the interview, asked him what he would like written on his tombstone. "Tough, but fair" said Wallace, who then turned the tables and asked his host the same question. I'm sure you're too young to have even thought about it, said Wallace. No, no, replied Ms. Couric. I know exactly how I would like it to read. Well? asked Wallace. "Perky no more," replied Ms. Couric.

Anyway, here's the piece from the Journal, for those of you unable to access it:


Fatten Before Sale


Fifty years ago, there were two publications that were required reading for all employees at the CIA. One was the New York Times. The other was the morning transcript of the CBS News World News Round-Up. The latter was required reading because if you didn't know what CBS News was saying that day, you didn't know what was going on.

Today, CBS News is a nonessential and under-performing division of a media conglomerate that couldn't care less about journalism and thinks of news as something best practiced at MTV Networks. CBS management would sell the division in a heartbeat if they could, but they can't, at least for the time being. Fiduciary duty thus requires that they do something to enhance the value of the asset, so that it might fetch a higher price when it is finally divested.

The basic math is straightforward. If every broadcast news organization employs roughly 1,000 people and the average salary cost per person is $125,000, then the payroll cost is $125 million. Multiply times three (for overhead, operating costs, special events, etc.) and you have a starting budget of nearly $400 million.

The only real source of revenue to offset these costs is advertising. Unless a broadcast network also owns a cable news channel, there simply isn't enough advertising time to sell to cover costs and deliver an acceptable profit to Wall Street. NBC Chairman Bob Wright understood this when he took the helm at 30 Rock in the late 1980s. He created CNBC as a business news channel and later created MSNBC (in partnership with Microsoft) as a news channel. Those two organizations have time to sell seven days a week, 24 hours a day. And all those ads, cheesy though they may be, make healthier the finances of NBC News.

CBS has no cable news network to spread cost across. It has the CBS Evening News for 30 minutes every night, the successful but aging "60 Minutes" franchise, and its woeful morning news shows. The basic math is therefore untenable. CBS News is not, long term, a viable financial enterprise.

What to do? Ideally, CBS management would like to sell CBS News to Time Warner or -- imagine the culture clash -- to Fox (which has a cable news network, but no broadcast news division). A deal with Time Warner might look like this: TWX buys CBS News for some multiple of revenues. TWX then leases back the "60 Minutes" franchise, the Evening News and a hybrid morning chat-and-news show for inclusion in the regular CBS programming schedule. The costs of maintaining CBS News is transferred to TWX, which can defray those costs across two cable news channels (CNN and Headline News)and repurpose the video and audio libraries of CBS News across those and other TWX channels. CBS gets news programming, ad revenue that easily covers the leasing fees, and the fulfillment of its "public service" obligation that is a requirement of its broadcast license.

When to do it? Never sell at the bottom. CBS News is just now emerging from the debacle that caused Dan Rather to "retire," the dismissal of four senior employees, and the decent-interval defenestration of the news division's then-president. Having lived through the debacle, CBS Chairman Les Moonves knew better than anyone that he had to rebuild the reputation and image of CBS News if he was ever to realize the full value of the asset. Rearranging the deck chairs wasn't going to cut it. He needed something that changed the perception of CBS News and, if possible, wrought some havoc upon the competition.

Hiring Katie Couric certainly rattles NBC News. The "Today Show" franchise has been a money machine for the network since Ms. Couric took the helm there. Will her departure cause morning viewers to graze elsewhere? It's a question Mr. Moonves is happy to have on the table.
Whether or not Ms. Couric can change the context in which CBS News is understood is less certain. But whatever else she may be, Ms. Couric is accustomed to success. She has dominated morning news for nearly 15 years. She is, among baby-boomer women especially, hugely popular. And she's credible enough to keep the CBS knights of journalism quiet. The organization has no choice but to embrace her.

Launching her as the new face of CBS News gives the CBS publicity machine five months to reposition and redefine the news division. Given the resurgence of its prime time schedule and long-established hold on older, less-urban viewers, it seems unlikely that the ratings for the CBS Evening News will be hurt over the time leading up to Ms. Couric's arrival. Given Ms. Couric's proven appeal to baby-boomer women, it seems likely (amid a huge publicity blitz) that the ratings for the evening newscast will tick upward shortly after she assumes the anchor post. And given Ms. Couric's proven ability to hold the viewers she acquires, it seems likely that her $15 million annual salary will be more than covered.

Assuming the prime time schedule continues to perform, it is not hard to imagine that Ms. Couric will lead CBS News into a more competitive stance. At which point, the value of the asset can be realized in a deal. Katie Couric is, metaphorically, the transitional figure between a once-great broadcast news organization and what will almost certainly be the first news division ever sold off by a broadcast network. Given the options available to Mr. Moonves and the playing field he inherited, he could have done a lot worse.



http://online.wsj.com/article/SB114445219364320690.html