Apple (NSDQ: AAPL) is talking to the three remaining major labels about adding more DRM-free, MP3 tracks, a year after EMI signed on. UMG, Sony (NYSE: SNE) BMG and WMG are still talking to Apple, and at least one is close to an agreement, this News.com report says. Meanwhile Amazon's music store, Napster (NSDQ: NAPS), Rhapsody and other have already amassed on the MP3 deals with these labels, but no specific evidence yet that DRM-free has spurred the sales of song downloads in the last year. One evidence does point out that with price parity, users prefer DRM-free over DRMed songs...who wouldn't?

Meanwhile, that persnickety MySpace Music CEO hasn't signed on yet, has he?

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Jonathan Grayer is resigning as chairman and CEO of the Washington Post Company's Kaplan Higher Education unit after 17 years in the role. His replacement is Andrew Rosen, who has served as COO since Grayer became CEO in 1992; he's been with the company since 1986. While WaPo is mainly known for publishing the Washington Post and Newsweek, it's the Kaplan unit that's been the prime revenue driver lately. The education division produced revenues of $602 million in Q3, more than half of WaPo's total $1.1 billion. Year-to-date, the Kaplan segment revs rose 15 percent to $1.7 billion, while during the same period, WaPo's total revs grew only 8 percent to $3.2 billion. Release

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Updated: The sale price was even more of a fire sale: a mere $3 million, it turns out, and it also assumes some liabilities. Wow, that would have surely hurt its investors, listed below. Lionsgate had an 18.6 percent stake in the company. According to Sonic, CinemaNow has been generating around $1 million-$1.2 million per quarter in revenue on expenses of $1 million-$1.5 million, reports Variety.

Original post: Cinemanow, the online movie service that has been around for a long time, has been bought by Sonic Solutions, the digital media software company. Terms of the deal were not disclosed, but rival Movielink got sold for a fire-sale price of $7 million last year to Blockbuster, and while Cinemanow's price is probably not that low, it isn't likely to be exponentially higher as well...see update above.

Cinemanow, founded in 1999, was backed by Lionsgate, but never really took off, and had been languishing from slow growth, as other online TV-focused (and more open) rivals like YouTube, Hulu and others took off. It was one of the first ones to offer DVD burning with some movies, and also offered limited "day and date" download and DVD burning; it was also one of the first ones to be embedded with devices such as Dell, HP, Samsung, TiVo, DivX, and Archos, but adoption was minimal.

The company CEO Curt Marvis left earlier this year to join Lionsgate as its new president of digital media. In 2006, it received $20.3 million in late stage (fifth round) funding, from Echostar and Japanese mobile content giant Index Holdings (JSD: 4835). Previous investors included Transcosmos, Cisco Systems, Lionsgate and Menlo Venture. Total money invested was more than $40 million.

As for Sonic, the two companies had been working together for a while to enable the download and burn of DVD movies on to its new Qflix DVD drives. The Qflix system adds a digital lock to burned DVDs, and thus studio-sanctioned, so to speak, and it had been working with partners like Dell and Pioneer for distribution. CinemaNow will be merged into Sonic's Qflix team to form a new Premium Content Group under the direction of Mark Ely, Sonic's EVP of Strategy. With this deal, CinemaNow CEO Tom Frank is leaving, while its COO and president David Cook become the GM of this new group. The group will focus on increasing the placement of CinemaNow's storefront on PCs and consumer electronics devices, and expanding the adoption of the Qflix technology platform. Sonic also owns Roxio, for those interested, which at one point owned Napster. Details in release.

Related

• CinemaNow Gets $20.3 Million Fifth Round Funding, From EchoStar, Index

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After spending hundreds of hours deliberating and thousands of pounds on consultants' fees in the search for a new London home only to decide to stay put in its Wapping HQ, News International has now declared it cannot afford to upgrade the east London site. The plan had been to improve the sprawling complex next summer and eventually move in News Corp (NYSE: NWS) family members like Dow Jones, MySpace and Harper Collins. But those plans have been shelved because of the adverse economic conditions, according to an internal memo by James Murdoch, CEO of News Corp Europe and Asia, seen by Reuters and MediaGuardian. This could be seen as a blow to News Corp.'s plans to further integrate its media brands and create synergies where possible—with every executive in one building it's not far to go for that breakfast meeting about that content-sharing deal. More details at our sister site PC:UK. 

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The Dow, with its first sub-8,000 close in five years, wasn't the only index with a record-you-don't-want day: the ContentNextDex, our own index of media, tech, mobile and entertainment stocks, dropped nearly 6 percent to 507.32—the lowest close since we launched it officially in September 2007. Compared with the year's high of 1,076.02, that's a staggering 47.68 percent loss year to date. The ContentNextDex performance hovered between the Dow's 5 percent drop to 7,997 and the S&P 500's loss of 6.12 percent.

ContentNexDex is a flood of red with Yahoo (NSDQ: YHOO) snugly in the top five losers thanks to Steve Ballmer's most recent public repudiation, down 20.8 percent to $9.14. Media General (NYSE: MEG) lost nearly 30 percent of what was left of its value, closing at $2.96. Fellow newspaper publisher McClatchy (NYSE: MNI) wasn't far behind, down nearly 22 percent to $1.51. Together, the combined market cap doesn't come close to $200 million—$152.8 million to be exact. Sirius XM (NSDQ: SIRI) Radio is close to non-existence at 16 cents per share with a market cap of $515 million. In all, 30 stocks—just under one third of ContentNextDex—closed with double-digit losses.

How did some other big names fare? Google (NSDQ: GOOG) dropped 5.8 percent to $280; Clearwire (NSDQ: CLWR) and Sprint (NYSE: S) each lost about 13 percent, closing at $5.80 and $1.88 respectively; New York Times Co. (NYSE: NYT), down 10.3 percent to $6.35 (those dividends are looking even iffier); and News Corp (NYSE: NWS) dropped 4.8 percent to $6.55. Among the market cap leaders, NBC Universal (NYSE: GE) parent GE fared the worst with a 10 percent loss, closing at $14.45 while Microsoft (NSDQ: MSFT) lost a mere 6.7 percent, closing at $18.29. For the gainers, the only one with volume really worth noting was DivX (NSDQ: DIVX), which sued Yahoo earlier this week. It finished the day at $4.39, up nearly 2 percent (but it's down nearly 21 percent for the week).

As for tomorrow, channel Bette Davis and fasten your seat belts for a bumpy ride.

Media General and NYTCo smacked by Harbinger as well: AP does a good job of explaining how some complicated actions by hedge fund Harbinger Capital Partners to limit its interests in NYTCo and Media General helped push those stocks to their lowest levels in decades during today's trading. Harbinger invested and agitated its way onto the boards of the two newspaper publishers earlier this year.

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• ContentNext Media Index Changes: Out With The Old, in With The New
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• ContentNext Media Index Falls 1.71 Percent After Fed Rate Cut
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DirecTV-backed professional videogaming league Championship Gaming Series (CGS) has folded. Launched in January 2007, CGS started with six franchises in the U.S. (in cities like LA, NY and Dallas), and expanded internationally this year. Its matches were picked up by DirecTV (NYSE: DTV), BSkyB (NYSE: BSY) and Star, and the LA-based company had corporate sponsors like Xbox 360 and Mountain Dew. CGS also announced a new executive team in January, but the progress wasn't enough to bring the company into profitability. In a statement, CGS said "the economics just didn't add up for us at this time." The shutdown leaves Major League Gaming (MLG) as the only real contender in the professional gaming space. 

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NBC Local and Fox announced last week their plan to pool resources to cover local news in certain markets, an encouraging sign that TV stations are beginning to understand the desperate need to rationalize their massive newsgathering costs. Is there too much local TV news? I think yes, and it's a warning bell I've sounded for some time.

Way back when, there were three network affiliates in a market, and each produced one to several local newscasts a day. Those newscasts were typically the most profitable parts of the day for TV stations, as they kept all the revenues. Driven in particular by growth in auto, the largest ad category, all was good in local TV land.

Enter new networks and their affiliates and 24-hour cable network news channels, and you suddenly have a surplus of news. (I am clearly ignoring the proliferation of other local media, as TV is less fungible than most mediums). The local ad dollar started to peak a year or so ago, as auto came under inordinate pressure. Growth in local TV news inventory combined with a leaky bucket of ad dollars is a prescription for trouble.

More after the jump

Local marketing agreements (LMAs), shared service agreements and duopolies have proven to be palatable solutions in some markets. While there are many variations on a theme, two stations can share some programming, ad sales, or other costs that help, in my view, reduce the total cost structure in the market, allowing for a better return. That's exactly what NBC Local and Fox are planning to do.

While the economics have certainly changed somewhat since I last analyzed the cost structure of TV stations a couple of years ago, the numbers are still instructive. At the time, a typical large-market TV station with $100 million to $150 million in revenues spent about 20% of revenues on newsgathering. Presuming another 30% of revenues were spent on other operating costs, the station produced a 50% cash-flow margin. As ad revenues have been under pressure, declining at a high single-digit rate this year, it has been harder to keep costs under control. There aren't a lot of costs to get rid of at a station, and an opportunity to reduce newsgathering expenses by half by combining forces with another station can have a meaningful impact on the bottom line.

I think there is considerable risk that some stations won't be viable if the current ad drought continues.  Too much local TV news is being produced even in a good ad market, as ad dollars are finite. TV stations have opportunities on line, especially as the market is aggressively pursuing video but we don't think the ad dollars will be great enough any time soon to materially help out any individual station. Local news-sharing arrangements such as the type being rolled out by NBC and Fox are a smarter way to go.

Lauren Rich Fine is ContentNext's Research Director

Photo Credit: skye820

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B2B online media and events company TechTarget (NSDQ: TTGT) has acquired The Brian Madden Company, a Website and conference provider geared toward IT professionals in the cloud-computing space. Terms of the deal were not disclosed. The buy adds the Chicago-based BriForum to TechTarget's roster of conferences like The Ajax Experience and the Online ROI Summit. TechTarget's last acquisition was its $58 million pickup of white paper and lead-generation firm KnowledgeStorm. 

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In case you didn't believe him the first 20 times, Microsoft (NSDQ: MSFT) CEO Steve Ballmer repeated today at the company's annual shareholders' meeting that he has no intention of making another offer for Yahoo (NSDQ: YHOO). Ballmer's words, reported by MarketWatch: "Let me be as clear as I think I've tried to be publicly: We are done with all acquisition discussions with Yahoo. We have moved on."

Ballmer also repeated that a potential search deal could be "an interesting opportunity." Not clear whether he means acquiring Yahoo's search business, as he tried to do after the full-monty bid failed, or some other arrangement. Meanwhile, Yahoo's stock price, boosted by the notion that Jerry Yang's departure as CEO signaled a Ballmer reversal, is coming back down, dropping more than 17 percent to $9.57 as I type.

Photo Credit: DBegley

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At a time when many media companies are retrenching, women's magazine publisher Meredith (NYSE: MDP) Corp has pulled out its checkbook and taken a minority stake in Real Girls Media Network. The publisher of Better Homes and Gardens and Fitness wants to use the San Francisco-based women's content and social net aggregator to buttress its 31 websites. In particular, Meredith and Real Girls Media will combine their inventory and sales forces. Also, as part of the investment, Meredith will have access to Real Girls Media's technology and apply its tools to the mag publisher's existing sites. The amount of the stake wasn't disclosed.

Real Girls Media, founded by Kate Everett-Thorp, a WaldenVC venture partner and former president of marketing agency AKQA, raised a $6 million first round of funding two years ago. Among the sites it operates is DivineCaroline, which mixes user-gen and professional content around channels that range from relationships to travel to style. Release

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Karlheinz Brandenburg, credited with at least jointly "inventing" MP3, has joined with a German development bank to invest in DJTunes, a European music download site offering house, techno, trance and electro tracks in that very file format.

DJTunes targets DJs, club-goers and labels and claims over 300,000 tracks, all in the DRM-free format that is beloved of DJs for its lack of copyright locks - if not exactly for its high fidelity. The site lets users upload and sell their tracks and mixes, and will use the funds in part to branch out by launching a hip-hop site next year. The investment is made along with Beteiligungsmanagement Thüringen (BM|T) though the size is undisclosed; DJTunes also got seed funds in 2006. Release. More at paidContent:UK…

Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page

WebMD, QualityHealth Parent Cancel $50 Million-Plus Acquisition; Ad Pact, Minority Interest Instead

Some consolidation unwinding in the health content area and another deal that won't happen for WebMD ... WebMD Health Corp. and Marketing Technology Solutions, the owner of QualityHealth.com, have "mutually terminated" the acquisition of MTS, a deal announced in September for $50 million in cash plus a possible $25 million earn-out.  Instead, WebMD has signed an ad services pact with MTS and acquired a minority preferred interest. WebMD will sell some of QualityHealth.com's ads and provide "limited access" to some of its own inventory. Release.

It's the latest in a series of challenges for WebMD (NSDQ: WBMD). Last month, WebMD and majority owner HLTH Corp. canceled a long-planned merger, citing changes in the credit market among other factors. The company's stock has been on a wild ride, too, swinging from $26.06 on Sept. 15, when the QualityHealth deal was announced, to prices in the $32 range, then dropping to a low of $14.03 on Oct. 16 before climbing back into the $20s, closing Tuesday at $18.63.

WebMD also faces increased competition. Merging QualityHealth.com's 5.5 million uniques with its own network would have helped with the challenge it faces from Waterfront Media's EverydayHealth, which recently merged with Steve Case's Revolution Health LLC. The most recent numbers from comScore (NSDQ: SCOR) Media Metrix put EverydayHealth.com ahead of WebMD in unique visitors, the first time it had dropped from first place in recent memory. But WebMD still claims to be the "leading provider of health information services" through its mix of public and private sites and publications. 

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• WebMD Buys QualityHealth For Up To $75 Million

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Time Inc. Expected To Shed 250 Jobs Today; Shutters Cottage Living Mag

Time Inc. will lay off 250 staffers today as part of the 600 job cuts announced last month, the NY Post reports, citing unidentified sources. Meanwhile, Reuters confirmed NYP's report that Cottage Living magazine was being shuttered. A Time Inc. rep confirmed that 47 posts that would be lost in the magazine's closing, but that of those nine staffers at the four-year-old Cottage Living will be reassigned to other Time Inc. properties. The company would not comment on the 250 figure, however.

The cuts come amid a slew of mag closures and layoffs at media companies the past few weeks, including the shuttering of Ziff Davis' PCMag as a print product and Forbes' pulling the plug on its ForbesAuto site, which along with a realignment of its web and print ad sales staffs, left 43 employees out of work this week.

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Ziff Davis To Close Print PCMag, Focus On Online; Still Looking For Options For Gaming Division

Ziff Davis, the tech/gaming media company that recently exited Chapter 11 bankruptcy, is now taking the brave but inevitable step of closing down the print version of PCMag to focus its energy on its growing PCMag online network of sites, led by flagship PCmag.com. The magazine, which was started in 1982, has a storied history, but its print base eroded over the years as its core brand of journalism—news you can use while shopping for computers—moved online. It cut back from bi-weekly to monthly earlier this year. PCMag, which literally invented the idea of comparative hardware and software reviews, at one time during the '80s averaged about 400 pages an issue, with some issues breaking the 500- and even the 600-page marks, according to this Wikipedia history.

The last issue will be dated January 2009; the closure will claim the jobs of about seven employees, all from the print production side. None of the editorial employees, who are now writing for the online sites anyway, will be affected. The site will still be called PCMag (with mag remaining in the name), but the online network—which has sites such as ExtremeTech, Gearlog, Appscout, Smart Device Central, GoodCleanTech, DL.TV, Cranky Geeks, and PCMagCast—will now be called PCMag Digital Network, with PCMag.com as its lead property. The company has about 200 employees, and the PCMag division has about 140 employees.

I spoke in detail today with Jason Young, the CEO of Ziff Davis, about this move, the online focus, and the status of the company's more-troubled gaming division.

What he said after the jump

On the online side, he wouldn't disclose the revenues for the PCMag brand, but said it was in "tens and tens of millions" of dollars. He said the revenues on the online side have grown an average of 42 percent yearly since 2001; digital is about 70 percent of the revenues for the PCMag brand, and overall is profitable. He said that despite the economic situation, the PCMag brand revenues grew about 18 percent in Q308, and thinks that it will hold up despite advertising downturn due to the power of the brand. Of course competition is heavy for those shrinking ad dollars, from everyone including other established brands like CNET, to newer ones like Engadget and others.

As for the status of its gaming group, which consists of its 1Up online brand and other gaming sites and EGM print magazine (the only print book left within Ziff Davis), Young said it is considering strategic options for the division. Same is true for its now shuttered DigitalLife consumer tech expo event. The company has tried to sell the gaming division before as well but was not able to find the right buyer then, our sources say.

Update: PCMag will continue to be published as an electronic/digital edition, as editor Lance Ulanoff explains here.

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• Ziff Davis' Ch 11 Reorg Approved By Judge
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• Ziff Davis' Ch 11 Update: Revenue Projections And Liquidation Analysis; Print To Be Sold or Closed?

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Publicis Acquires Tribal Agency, Buying Into LatAm Digital Marketing

Big Four ad agency Publicis is now buying into Latin American digital advertising, acquiring Sao Paulo-based Tribal to add to its Digitas online ad group. Digitas CEO Laura Lang said Tribal is "fundamental" to expanding in the growing region. Publicis bought Digitas back in 2006 and has grafted on various international digital acquisitions in the UK, India, Singapore, China and its native France, so this will be a foothold across the Atlantic. Tribal, which has 100 staff, counts Philips and Microsoft (NSDQ: MSFT) amongst its clients. Publicis is resisting the urge to rename Tribal "Digitas LatAm"; the agency will retain its name as well as its CEO Pierre Mantovani and creative director Renato Fabri. In Brazil, the ad market grew 25.1 percent in 2007, up from 2006's 19.4 percent, outstripping the economy, according to ZenithOptimedia, which expects 15.4 percent growth this year while other international markets' growth slows down.

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