That's the Way the WebTV Cookie Crumbles

WebTV has posted a notice on their on-line status board saying, "Users may experience problems accessing web sites requiring cookies." What they didn't mention is that sites serving WebTV users will also endure customer service issues, and loss of revenue. WebTV has not given an estimated time for the repair.

Cookies are small computer files that a website sends to a user's web browser, or in the case of WebTV, to the WebTV cookie server. Cookies can contain a variety of information, such as user names, passwords, and information such as what a shopper has in their cart, the position of pieces on a game board, and whether or not a person is allowed to access a certain site.

Without cookies, many sites fail to operate optimally. Some gaming sites and homepage building sites fail entirely, refusing to let users enter. Cookies are also used by e-commerce companies for ad and affiliate program tracking. As a result, visits and registrations by WebTV users may not be credited to affiliate sites. This can have significant impact on sites (such as Net4TV Voice) that rely on affiliates and ads for part of their operating revenue.

Ultimate Negotiating Tactics

Rupert Murdoch, head of News Corp. and Fox, took a trip this week to chat with GM about his attempt to take over DirecTV. GM owns a stake in Hughes Electronics Corp., which owns DirecTV. Murdoch, in addition to owning Fox, also owns Sky Global Networks, the world's largest satellite TV provider. Murdoch has long had a jones to add DirecTV and its 10 million subscribers to his network, which would make it extend everywhere around the globe, except, oddly enough, China.

Confused yet? It gets worse. Added to this ménage á many is Microsoft, which has a jones of its own to be the technology provider for satellite receivers throughout Murdoch's empire. For the honor of being chosen as the preferred provider of satellite receiver technology, Microsoft will pay a rumored dowry of $3-8 billion... that's with a "B" as in "beaucoup bucks"... to finance the deal and will throw in its UltimateTV operations, which it gleaned from its WebTV acquisition. The hitch is that Murdoch's deal must be executed or the Microsoft deal will be dead.

Microsoft, many of you will recall, recently gnawed off its foot to get away from the coyote ugly Echostar DISHPlayer, its joint venture with DirecTV arch rival Echostar, and began work on what became UltimateTV. Both systems are based on technology culled from the remains of WebTV, which Microsoft acquired for a mere $503 million from its founders, including Rearden Steel founder Steve Pearlman. (More on him in a moment.)

Polyamorous Microsoft also has had some troubles with its attempts to gain control of several European telecom and cable concerns and may be wanting the Murdoch merger to salve its love bites. After pouring a small fortune into several European cable companies in hopes of establishing Microsoft TV as the preferred middleware that cable MSOs ask for by name, Bill Gates was stunned when European regulators yelled at Microsoft for engaging in monopolistic corporate conduct. It just confirmed the old adage that money can't buy you love, and if you try, you will be in trouble with the authorities. Several Euro cable ops have turned to Microsoft's arch iTV rival, Liberate Technologies for its settop software.

Former TCI, current Liberty Media Group CEO John Malone, flush with cash after cashing out his cable system to AT&T, will chip in a mere $500 million to $1 billion. It might be worth noting that earlier this month, Microsoft Chairman Bill Gate's investment firm reported that it has a 7.8 percent stake in Liberty Satellite & Technology, which is affiliated with... you guessed it, Liberty Media Group and its CEO John Malone. Microsoft CEO Steve Ballmer was also seen headed to Detroit, flush with cash and armed for battle.

Murdoch's overtures of affection for DirecTV were rebuffed by Hughes CEO Michael Smith in February, over $70-billion price and control of the company. Smith felt Murdoch to be an insincere suitor with an offer that undervalued DirecTV. Murdoch is wining that Smith is reneging on his $70-billion handshake on the deal. Smith may be considering the single life for DirecTV by spinning it off in much the same way GM spun off its Saturn car unit. To fund that venture, Smith is said to have approached several companies, including Microsoft to pony up some cash.

Not attending any of the nuptials will be General Electric, which after looking at Hughes' books, RSVP'd in the negative. General Electric owns NBC, which of course has a joint venture with Microsoft called MSNBC. Absent from the guest list is AOL Time Warner, despite their partnership for settops combining DirecTV and AOLTV. (But more on that in a moment also.) We couldn't help but wonder if Disney's Michael Eisner's invitation was lost in the mail, or if he was just clever enough to avoid the swirling rumors.

Murdoch's ardor for DirecTV seems to be of the Simon and Garfunkle "Love the One You're With" kind. It's rumored that he pitched woo with Echostar as well, hoping to line-up them and their 5 million subs as a back-up plan, should GM refuse it's daughter's hand.

The Merc article suggest that an Echostar wedding would be contentious--think Jerry Springer--and would require a large pile of cash and a paper bag to consummate. Seems Echostar CEO Charlie Ergen and Murdoch are not old drinking buds. To make matters weirder, Ergen is said to have broached the idea of wedding DirecTV. (Can you imagine what the children would look like?) Besides, Echostar seemed to have its eyes on another... (More on that in a minute.)

The deal calls for News Corp. to latch on to a controlling 35 percent of a joined Sky Global-DirecTV and would put Rupert in the drivers' seat for day-to-day ops.

The biggest mystery is how Murdoch will pay GM the $6 billion it is demanding since sources have been quoted by the Merc as saying that News Corp. is light on cash, and too heavy on debt to beg or borrow, making them resort to steal it with stock.

If the numbers for these nuptials make your head spin, you aren't alone. Different news sources cite different numbers. The one thing all these stories do have in common is a lack of named sources. Our resident rumorologist says his sources suggest that Rupert Murdoch's people seem to be engaging in the fine Murdoch tradition of tabloid negotiation; if you don't have sufficient cash or clout to put fear into your enemy, a juicy leak and screaming headline will do in a pinch. Nothing scares us more than the sound of corporate elephants mating.

Steve Pearlman Shrugged, Nodded, and Pocketed a Cool $67 mil

So, one might have wondered what was to become of Echostar in light of all the lusting over DirecTV. And where was AOL Time Warner?

Remember Steve Pearlman, the founder of WebTV who sold it to Microsoft for a cool $500 mil, and left to start his "incubator," which has a name that sounds suspiciously like a company name in an Ayn Rand novel--Rearden Steel?

John Galt... errr Pearlman was back in the labs on Bryant Street, in Palo Alto, tinkering and has come up with ... well we don't really know, but we are almost certain that DirecTV, Rupert Murdoch, and Microsoft are going to be most unhappy about it, as it may Ultimately be better than Microsoft's newest obsession, although no product has been announced.

Conjecture on this one is only slightly less wild than the Ginger scooter a few months ago. The buzz says that it's kind of like a digital video recorder like UltimateTV, ReplayTV, and TiVo, but with a twist. Rather than recording one or two signals, it can record... well who knows, but a lot, and from a variety of sources, including broadband cable, satellite, DSL, and digital broadcast. The Ultimate killing machine will not, apparently be able to dematerialize, or hover, like Ginger was briefly rumored to do.

Pearlman will only say that it's breakthrough technology that will enhance the home entertainment experience. I wonder if this is what he now means by "Better TV."

But it's got a bunch of heavy hitters hot and bothered enough to pony up $67 million. That's right, Steve closed what is being called the largest Series A funding in history with America Online as its lead investor. Venture firms include Mayfield, Vulcan Ventures, The Barksdale Group. The technology sector was represented by include Macromedia and Cisco. Other than AOL, representing the media sector is The Washington Post Company. And, other than AOL, representing distribution is ... wait for it... Echostar.

IBM's Bummer Trip

When you think of rabble-rousers, and hippy-dippy feel good grooves, you don't often think of IBM... until now. Seems Big Blue has gone into a funk after an LSD-inspired advertising promotion got out of hand in Chicago and San Francisco. Creative types at stuffy corporation tried to shuck the white shirt and tie, for tie-dye and cans of paint in a promotion extolling "Peace Love Linux." The message was stenciled in paint on the sidewalks to promote The Big Blue Hippie's line of Linux servers. But the love-in for Linux ran afoul with municipal codes against vandalism.

Both Chicago and San Francisco are being squares about the movement, and are bumming Big Blue out by levying clean up fees and fines. For each psychedelic civic infraction in Chicago, The Man will take away $67 for clean up, and $50 for a fine. San Francisco, national capital of free love, but apparently not of graffiti, is levying $500 fines for each peacenik message.

For its part, IBM apologized and said that it thought the paint was washable. It was, after Chicago went after it with high-power sprayers. We can't feel too bad for IBM. Despite some bad publicity, some hefty fines, and a good chewing out from The Man, IBM got more international publicity than it could have ever afforded. Believers of the Linux faith around the world have gotten the message that despite being the embodiment of evil corporate computing, IBM can be pretty cool, even if they have to break the law to do it.

Interactive TV Alert: VIP

Sony Pictures Digital Entertainment uplinked the first episode of VIP Interactive, an iTV version of the private eye adventure/comedy star vehicle for Pamela Lee Anderson. Look for the show in your TV listings at odd hours of the night as it is syndicated.

Viewers of VIP Interactive will be able to register and play to enter a drawing for prizes, including Sony electronics. Throughout the broadcast, pop-up trivia and snarky observations about the shows' characters, plot, and dialog appear, adding an inch or two of much needed depth to the show, but without taking your eyes off Pamela for too long. Think pop-up video.

Four sweeps month episodes are scheduled, starting this week. To view the interactive program, you need a WebTV Plus, UltimateTV, or Echostar DISHPlayer, and a tolerance or keen interest for romping vamps. Check your brains at the remote, and go interactive!

iTV with Seoul

The world's largest interactive TV service will soon be in Seoul Korea, thanks to a Korean ISP called It's TV. They are building their iTV service over the Internet with a data rate of 10 megabits per second per household. That is at least five times the speed of most cable modems in the US. Equipment and integration service will be supplied by nCUBE, Orca, and Lucent. It's TV will create its own settop box. The system is unique to Korea because the broadband infrastructure is in place in much of Seoul. Subs will rise from 88,000 in 2001 to 460,000 in 2003.

A Day (Off) In the Sun

Sun Microsystems, makers of many of the servers that power the Internet is falling on hard times as more dot.coms fail and demand for their servers has dropped. To keep the lights on, Sun has told its employees to stay home during the first week of July as a cost-cutting measure. Employees with accrued vacation will use it. Those without will go on unpaid leave.

Webvan Man Canned

Webvan, who earlier lost its CEO just named a new CEO, Robert Swan, who immediately started measures to save the beleaguered home grocer from going the way of the milkman. Another city has been forced to go out and buy their own groceries as Webvan has announced plans to lay off their 485 employees in Atlanta and closed its operations. Gone, too are 400 jobs in Foster City, California, and Kirkland Washington.

Webvan will also do a reverse stock split 25-to-1 to raise its Nasdaq price in an attempt to keep it listed. Webvan has been trading at around 24 cents and has been warned that it may be delisted. Few companies ever come back from delisting.

A bright spot for Webvan is Fullerton, California, which serves the Greater Los Angeles Area, including Net4TV. The Fullerton operation is profitable, which will make attracting additional investment, if not easy, at least possible.

Interactive TV is Live and Well and Raking in the Bucks

Cox Communications and Comcast Interactive Capital have just helped dump $28 million into the coffers of MetaTV, a maker of iTV content creation software. Cox and Comcast, the third and fifth largest cable companies in the United Sates, joined Liberate Technologies, Atrium Venture Partners, Harron Capital Redpoint Ventures, Rosewood Venture Group, and Saints Ventures venture capital firms. MetaTV has partnerships with all of the major middleware providers: Liberate, Microsoft TV, PowerTV, OpenTV, and WorldGate.

Scientific Atlanta commemorated the six millionth Explorer advanced Interactive settop box by presenting AOL Time Warner's Florida cable president with a commemorative settop box. We only hope he made the cable guy sit around home all day wondering if he'd ever show up.

The ceremony was held in Orlando where the first interactive TV trials were held as part of the Full Service Network that laid much of the groundwork for what people think of when they think of iTV, for better or for worse.

ABC has said that it is reaping a windfall of advertising revenue for the iTV version of Who Wants to Be a Millionaire? starring the contractually cheery Regis Philbin. Not so cheery are lawyers for ACTV who are mad at the Mouse House for patent infringement. ACTV and coincidentally (?) Disney differ from most iTV applications in that they don't use a settop box. Instead they rely on a computer and a web-based application that is synchronized to the broadcast.