TIME Bonus Section January 2005: Inside Business/Biz Briefs

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A Bid for a Bigger Blockbuster
Blockbuster caused a flutter when it announced a billion-dollar bid last month to buy rival Hollywood Entertainment, and rental chain Movie Gallery Inc. followed up with a bid of its own. What was puzzling, however, was the rationale that inspired Blockbuster's proposal. Online subscription services like Netflix, along with DVD sales and video-on-demand services, have eaten into the company's income. Its rental revenues have declined each quarter this year compared with last. Blockbuster has responded by investing in video-game rentals and launching its own online subscription service. It's "surprising that Blockbuster would choose to spend so much reinforcing its presence in the brick-and-mortar portion of this business," says Marla Backer, a Research Associates — Soleil analyst. If the Blockbuster deal is struck, the combined company will control roughly 50% of the traditional rental market — which means antitrust regulators will probably get involved. Movie Gallery notes that this is not a problem its bid is likely to face.--By Unmesh Kher

Anti-U.S. Backlash
It may not be a boycott, but it's beginning to feel like one. According to two polls by GMI, a Seattle-based market-research company, nearly 20% of consumers abroad say they will avoid U.S. companies and products like McDonald's, Starbucks, American Airlines and Barbie dolls because of the U.S.'s unilateral foreign policies. And the more American a brand is perceived to be, the more resistance it encounters. For instance, almost half the survey respondents (including 1,000 people from each of the G8 nations, excluding the U.S.) associate Mattel's Barbie with America, while 10% make the same link with Kleenex. So 33% of respondents say they will avoid Barbie, but only 10% won't touch the tissues. (Worldwide Barbie-doll sales fell 13% in the third quarter of 2004.) The study found that U.S. brands with few substitutes such as Levi's and Microsoft should go unscathed. But 43% of consumers overseas say they won't smoke Marlboro cigarettes. "I don't think foreign policy is going to drive down quarterly revenues right away," says GMI chief operating officer Mitchell Eggers, who spearheaded the study. "But over time, given the sharp change in how foreigners view American brands, the bottom-line differences will tend to come out." --By Sean Gregory

Wal-Mart launched its in-store TV network in 1997 to pitch products and entertain shoppers. But do people really watch TV while they shop? A new AC Nielsen study says Wal-Mart customers are watching seven minutes of TV while shopping, up from five minutes in 2002. Brand recall was even more surprising--65%, compared with 23% for products advertised on TV. Having installed 100,000 TVs in 2,620 stores, Wal-Mart is rolling out new plasma and LCD models — some at eye level for "can't miss" advertising. PRN (Premier Retail Networks) customizes entertainment, news and product p.r. so that Wal-Mart TV differs from the PRN network showing at a Best Buy or a Sears. Shoppers at Wal-Mart have watched a Britney Spears concert and Fox News coverage of the 2004 election, with 12 minutes of ads per hour. Advertisers pay from $50,000 to $300,000 for four weeks of exposure, but the payoff at Wal-Mart is an audience estimated at 138 million weekly — all of them already off the couch and in the store. --By Cathy Booth Thomas

Inflated Pay
Ever wonder if corporate executives are paid too much? Look at it this way: from 1993 to 2002, the aggregate compensation of the top five executives in all public companies amounted to an astonishing $250 billion, equivalent to 7.5% of all corporate earnings. Defenders of the status quo say that such bloated pay provides managers — particularly CEOs — with incentives crucial to high performance. Those defenders have not yet read Lucian Bebchuk and Jesse Fried's Pay Without Performance. The authors marshal a formidable arsenal of facts to pick apart the incentives argument, exposing myriad ways in which CEOs have decoupled pay from performance and hidden that fact from investors with the aid of supine corporate directors. The lucidly argued treatise frames the issue not in ethical terms but as a problem of efficiency. As for solutions, Bebchuk and Fried maintain that board directors should be not only more independent of the executives they supervise but also much more dependent on stockholders. If shareholders had the power to alter the composition of the corporate board, the authors argue, directors would be more likely to keep investors' interests top of mind when setting CEO salaries and perks.--By Unmesh Kher

Web on the Run
It looks like a checkbook. But you'll want to open the Pocket Surfer, a new 6in. by 3in. portable Internet device from DataWind, a small tech shop based in Montreal. On most pdas and cell phones, Web pages are crunched and reformatted and take too long to download. On the Pocket Surfer, however, pages look just like those on your laptop: pictures, links, even pop-up ads (fortunately, the Pocket Surfer lets you quash those nuisances with a single button). And it's easy to set up. DataWind gives you an adapter to plug into your cell phone, which connects the Pocket Surfer to a wireless Web network. The downsides: you can't chat on the phone and be online simultaneously, and the thumb keyboard is a little tough to navigate at first. But a sticker below the keyboard outlines the basics, so you will be messaging in no time. And really, couldn't you use less multitasking anyway? DataWind, founded and operated by brothers Raja and Suneet Tuli, is rolling out the PocketSurfer in the U.S., Canada and Venezuela. It's available at datawind.com for $199.--By Sean Gregory