The Bush Administration, weary of controversy at the Federal Communications Commission, on Mar. 16 tapped Kevin Martin, a discreet deregulator, for the top job. Martin, 38, is widely viewed as a consensus builder and a savvier operator than outgoing Chairman Michael Powell, who ruffled feathers with his autocratic style. A commissioner for four years, Martin has strong ties to Team Bush, having worked on the President's 2000 campaign.
While Martin was at odds with Powell over rules that require local phone companies to lease their networks to upstart rivals, the two were mostly on the same policy wavelength. Martin is expected to continue the FCC's push to deregulate big media and broadband and to pursue its crusade against indecency over the airwaves. But big challenges loom that will test Martin's political skills. Chief among them: renegotiating the complex system that subsidizes local phone service and getting broadcasters to make the digital transition for good.
After a decade of consolidation, media giants with stagnant stock prices are looking to break apart their companies. Viacom (VIA) confirmed on Mar. 16 that it was considering splitting the company up. Sources say one piece could include CBS and Infinity Broadcasting, while the other would consist of red-hot MTV, other cable networks, and the Paramount studio. Viacom's stock rose $2.70 on the news, to $37. A day earlier, John Malone's Liberty Media (L) unveiled plans to spin off its 50% stake in cable network Discovery Communications. Investors could benefit, but the biggest winners will surely be fee-hungry investment bankers, the same ones who put these giants together.
Digital videorecording pioneer TiVo (TIVO) on Mar. 15 struck a deal to offer its TV recording software to customers of Comcast (CMCSA) nationwide by late 2006. With the nation's largest cable operator giving the money-losing TiVo a new lease on life, the deal could lead to similar licensing pacts from other cable providers and consumer-electronics companies. TiVo has been losing ground to cheaper digital recording offerings from cable and satellite providers. As part of the deal, the two will share revenue from interactive advertising in a model that could be emulated by others.
The firestorm over Harvard University President Lawrence Summers' management style shows no sign of abating. On Mar. 15, Harvard's faculty of arts and sciences voted 218 to 185 to express a lack of confidence in Summers. While humiliating, the rebuke has no real effect. The Harvard Corp., which alone can fire the president, still backs Summers; soon after the vote, Corporation Senior Fellow James Houghton (also the chairman of Corning (GLW)) reaffirmed his support. Still, the bad blood may hurt Summers' efforts to overhaul undergrad education.
Martin Sullivan may be only the third CEO in the history of American International Group (AIG), but he'll have no time to savor his promotion. Sullivan, 50, replaced Maurice "Hank" Greenberg on Mar. 14 as regulators are again scrutinizing the insurance giant, which paid out $126 million in fines last year. The allegations this time: that Greenberg, 79, initiated a deal with General Re that artificially boosted AIG's reserves by $500 million. Greenberg denies wrongdoing. The task of cleaning up the mess lies with Sullivan.
But don't weep for Greenberg. Besides his $2.7 billion in stock and any pension or severance benefits, he has got a bundle coming. Since 1993, he has deferred at least $72 million in bonuses from Starr International, a private entity controlled by AIG execs; earlier contributions starting in 1975 were not available. Add those in, and figure on investment returns, and Greenberg's takeaway is likely to be much higher.
-- Eastman Kodak will restate its 2003 and 2004 earnings.
-- Fidelity Investments is starting a company to manage institutional money.
-- Ex-WorldCom CEO Bernie Ebbers was convicted of criminal fraud. He'll appeal.
Shares of Research in Motion (RIMM) rose 18% on Mar. 16, to $78.96, after the Waterloo (Ont.) company settled a patent dispute, ending doubt about its right to sell BlackBerrys in the U.S. Under the deal, RIM will pay holding company NTP $450 million and gain licensing rights.