Cue disbelief from people who have indeed cut the cord. Or at least want to cut the cord.

Today’s episode comes courtesy of Viacom CEO Philippe Dauman, during his company’s earnings call this morning. Guess what he said after an analyst asked if his recent Netflix deal would push cable subscribers to bail out and go Web-only?

Okay, no need to guess. PaidContent’s David Kaplan jotted down Dauman’s response:

Even through this powerful recession, TV viewership held up. There is much ado about nothing, when it comes to talk of cord-cutting. We have seen subscribers on more networks increase, because we’ve seen incremental distribution from the telcos. We don’t see cord-cutting happening. If anything, it’s the economy that holds down subscribers. As it returns, so do the subscribers.

Since we’re going to see/hear this movie many more times for quite some time, it may be worthwhile to start figuring out how both sides could be right.

Here’s a theory to start with: Cord cutters are real, but they’re a very vocal minority, and they’re dramatically overrepresented on sites like this one. And even if you’re not a cord cutter, I’d guess that if you’re reading this site you’re much more likely than the average American to have a media- and tech-savvy friend who has cut the cord.

The flip side of the argument is that pay TV numbers may still be increasing, but not by much. And if the cable guys are right, and the losses they’ve been seeing are because the economy is lousy, then that strikes me as much more important than they’re letting on: Who gives up TV, and how can the cable guys not figure out a way to sell them TV at a price they can afford?

So, again, I’m just spitballing. Take it from here, or let me know what you think.

Here are Bewkes’s prepared remarks from Time Warner’s earnings call this morning:

In Magazines, Content Everywhere means offering our subscribers a convenient, attractively-priced way of enjoying our titles in print and enhanced electronic versions, across as many devices as possible.

If you’ve downloaded an iPad version of one of our Time Inc. magazines, you know it’s a rich and compelling consumer experience. As you’d expect, we want to offer our customers a range of purchase options including single copy sales, digital subscriptions and combined print and digital subscriptions. For instance, subscribers to People’s print edition can now access the People iPad app for free.

In the near future, we expect to announce deals with other tablet makers that offer our readers flexible ways to access all our electronic titles. We’re confident that as competition increases in that space, every tablet manufacturer will want to give its consumers the same range of choices and the same value.

That’s a classic bit of corporatespeak, since it doesn’t pin Time Warner or its Time Inc. unit down to anything, with anyone. But it’s also easy to translate: “We were psyched about the iPad, but now we’re frustrated over the ongoing subscription standoff. But we bet Google will be very happy to help us out–and maybe that will prompt Apple to come around.”

It’s no secret that Time Inc., like every other magazine publisher, would very much like to work with Google*. Both because they think the new Android tablets will be a hit, and because publishers want leverage when they talk to Steve Jobs.

And it would make sense for Google to go out of its way to give content makers what they want–in this case, the ability to sell magazine subscriptions and keep all of the customer data–because more content makes its tablets more attractive.

We still don’t know what that will look like in practice. For instance, will publishers be able to sell subscriptions “in app,” or will they have to do it via a Google store?

And we also don’t know if the inability to buy digital magazines via subscriptions is what’s really holding back buyers, or if it’s just something they like to complain about on iTunes comments (which, it turns out, publishing executives take very, very seriously–every time I talk to one, they cite the anonymous scribblings).

But now Bewkes says we ought to know in the “near future.” Stay tuned….

*Yes, the content guys want to work with Microsoft on its Windows-flavored tablets and even RIM and its BlackBerry device, too. But Google’s the real focus here.

Except, says Netflix CEO Reed Hastings, that’s not what his 19.6 million customers are doing.

Responding to a question during yesterday’s earnings call, Hastings told analysts he doesn’t see any evidence that his customers are choosing Netflix instead of cable. They’re using it to augment their cable subscription, he said: “We still see no evidence that our subscribers cut cords at a greater rate than the population.”

That contradicts both popular wisdom, as well as at least one recent survey, which found Netflix subscribers using the service as a cable substitute. Then again, a competing study from BTIG’s Rich Greenfield (registration required) found that hypothetical cord cutters are only slightly more likely–by a margin of 51 percent to 49 percent–to have Netflix.

And the existence of cable-cutting itself is still very much up for debate in the TV business. Cable companies like Comcast insist that they don’t see evidence of it. But Ivan Seidenberg, who runs cable competitor Verizon, says it’s inevitable.

Netflix, meanwhile, has been consistent in arguing that it’s not helping anyone do any snipping. Here’s Hastings answering a similar question during an earnings call three months ago (PDF):

Q: Do you see any evidence that Netflix subscribers are inclined to either cancel multi-channel video subscriptions, or to pare back use of premium services such as Starz, Encore, HBO?

A: No, we haven’t seen any evidence of that and there’s no evidence in the total numbers of those firms in last quarter’s financials and total subscribers, so total multi-channel video subscribers is continuing to grow in the US. Premium subscribers is not showing any decline, so I don’t think there’s any material cord cutting. I think what’s happening is the multi-channel video, such a broad package with an incredible array of products, that we’re a tiny little fraction of that, and our subscribers view us as a supplemental service, and because it’s a modest cost at $9 a month, it works for them and their budget.

The numbers bear Hastings out: In the past year, his service has added 5.8 million subscribers. If, say, 20 percent of those new customers were cord cutters, you would have seen cable rolls drop by more than one million people. But so far we’ve only seen a 200,000-person drop, in the second quarter of 2010. And some analysts think that number will turn positive for the rest of the year.

But that doesn’t mean Hastings doesn’t plan to cut directly into the cable business in the future, when Netflix has a truly comprehensive streaming video catalog. Which means it’s worth asking Hastings about cord-cutting every quarter.

One of these days you might get a different answer.

In August, the Worcester, Mass., paper put up a Times-style pay wall: Visitors can read 10 “local” articles a month for free, but after that they need to pay up. It’s not a coincidence that the Telegram is using the same idea that the Times will try in a few months–the paper is one of several local titles owned by the Times itself.

So. How’s that Telegram doing since the wall went up?

Just great, Times CEO Janet Robinson said during the paper’s earnings call today: The Telegram’s metrics are “on plan,” and traffic hasn’t suffered.

In fact, Robinson said, the Times was pleasantly surprised to see that the Telegram’s unique visitors number had increased since the wall went up.

What’s that? I asked the Times for numbers to flesh that one out, but it declined. ComScore, though, does back Robinson up: The Web traffic counter says 281,000 U.S. unique visitors came by the Telegram in August, and that number crept up to 294,000 in September.

That’s a tiny bump, though comScore often has a difficult time measuring smaller sites. For comparison’s sake, note that the Telegram tells advertisers it reaches 700,000 uniques a month.

Still, a bump is a bump. And it’s certainly not the plummet that many people would expect. When the London Times put up a pay wall this summer, for instance, it saw traffic drop a reported 90 percent. (News Corp. owns both the London Times and this site.)

So how do we explain the Telegram’s increase? In the absence of input from the Times or the Telegram (I’ve asked both for comment), we have to speculate. Feel free to add your own in, but I can start with a few theories:

• Maybe the Telegram had some particularly blog-friendly, Facebook-friendly or Google-friendly stories in September. If that’s the case, the metered model would work well for the site, since it encourages casual visitors to show up via referral, without having to pay up. For a relatively modest site like the Telegram, you wouldn’t need many high-traffic stories to push up its base number.
• Or maybe it’s just as simple as a seasonal spike: Traffic numbers often droop in the summer, when people have better things to do than sit in front of their browsers, and then spike back up in the fall.

In any case, this should give the Times a bit of confidence about its strategy for the flagship paper, which it promises to tell us more about soon.

UPDATE: Some readers are having a hard time accepting Robinson’s assertions and comScore’s numbers.

I have no reason to think that Robinson, the Times or the Telegram made the data up. If you’re a conspiracist who thinks otherwise, you should note that the NYT wasn’t boasting about the data during the call, though Robinson did take time to read off a whole laundry list of digital accomplishments. It only came up in response to a question about the Telegram’s performance.

But different third-party analytics companies often reach different conclusions. So if you do want to look at a different data set, here’s one from Compete, via Jonathan Mendez. As you can see, it tells a very different story–a 20 percent drop from August to September (click to enlarge):

Talking about Google’s characterization of the Android platform as open and Apple’s as closed, Jobs said, “We find this a bit disingenuous.” The open vs. closed argument is a “smokescreen,” Jobs said. The real issues, in terms of satisfying consumers, are the advantages of Apple’s integrated approach in contrast to the multiple flavors of Android as adapted by various manufacturers and carriers.

Noting too that there will be at least four Android app stores, as opposed to Apple’s one-stop shop, Jobs said that “this is going to be a mess for both users and developers.”

Android may be Apple’s biggest competitor in the mobile market, Jobs said, but Apple’s goal is to create products that “just work” and “their approach is very different from that.”

Furthermore, he said, “Even if Google were right, and the real issue was closed vs. open, it’s important to remember that open systems don’t always win.”

“We are very committed to the integrated approach, no matter how many times Google tries to characterize it as closed,” he said.

“We believe that like netbooks, tablets will expand the term for computing overall with a new form factor and new uses that bring computing to even more aspects of our lives,” Otellini said during the call. “Will they impact PC sales? Sure. At the margin, they probably will. Consumers will have a limited amount of discretionary income and some will choose to purchase a tablet instead of upgrading an existing PC or purchasing a netbook in any given period. We saw the same thing happen when netbooks were introduced, but three years later, both the PC and the netbook market segments have grown substantially and we believe that will happen again with tablets.”

Given that, what does Intel (INTC) plan to do to gain a little more presence in the category?

“We are deeply engaged with a number of partners to bring to market innovative tablet solutions,” he explained. “Our design win momentum is very strong, and in the coming months and quarters, you will see Intel solutions that run on Windows, Android and MeeGo operating systems across a variety of form factors and price points. We fully expect to participate broadly and profitably in this category, and that in the end, the tablet category will be additive to our bottom line and not take away from it.”

“We are the only architecture that runs all of the major–all but one of the major tablet operating systems, we don’t yet run on Apple,” he added. “So I think we’re in a pretty good space.”

We don’t yet run on Apple? Is that just wishful thinking or…eh, never mind.

PREVIOUSLY:

• Intel: Tablet Market Will Grow Between 73 Percent and 88 Percent by 2014

“Once you see the new platform…you’ll be all very surprised,” RIM co-CEO Jim Balsillie said during the company’s earnings call Thursday. “…I think you’ll just be amazed that how it’s a quantum leap over anything that’s out there….I just wish I could wind the clock forward a few weeks.”

I’ll bet you do. How annoying it must have been to report softer sales and handset shipments than expected on a day when the newly launched iPhone 4 is selling out to massive crowds.

Of course, RIM did sell its 100 millionth BlackBerry during the quarter. An impressive milestone, but one the company has already passed. The more pressing question now: How quickly will Research in Motion (RIMM) sell another 100 million in a market enamored of super-smartphones like the Droid, iPhone and Evo?

Well, it looks like Apple may have decided that such a partnership does make sense, because industry sources are telling the occasionally reliable DigiTimes that Pegatron Technology is manufacturing a CDMA version of the iPhone 4 suitable for the Verizon network (CDMA is short for code division multiple access).

Another Verizon iPhone rumor, I know. But in this case, it is lent credence by a March Wall Street Journal report that claimed essentially the same thing.

Still, that Apple (AAPL) has contracted Pegatron to build a CDMA iPhone does not necessarily mean the device is destined for Verizon (VZ). There are other carriers that use the CDMA standard: Sprint (S), China Telecom and SK Telecom (SKM), to name a few.

That said, Verizon is certainly an attractive candidate, as the carrier would immediately give Apple access to about 80 million new customers. And the concessions Apple has recently squeezed out of AT&T (T)–a “breakthrough” wireless deal for the iPad and a six-month extension on eligibility for iPhone 4 upgrade pricing–do suggest that the carrier is doing all it can to prolong its iPhone-exclusivity agreement and lock as many customers into new contracts as it can before it ends.

Anyway, at this point I’d be happy to see the iPhone added to Verizon’s lineup, if only to put an end to these seemingly endless rumors.

“Patent trolls are part of the industry today; that’s just the way it is,” he said. “We’ve dealt with them before and we’ll deal with this situation in the same exact way. I’m just very disappointed in this, from a former leader of our industry, that they would do this.”

Benioff’s remarks today echo those he made during a May 20 earnings call, though this time he exercised a bit of restraint and stopped short of decrying Microsoft (MSFT) as a bunch of “alley thugs.”

His message, I suppose, is that Salesforce.com (CRM) isn’t much worried by Microsoft’s suit–though perhaps it should be, given the limited patent portfolio in its defense arsenal and Microsoft’s endgame here. As analyst Rob Enderle wrote last week:

Microsoft wants to set an example and losing isn’t an option. In addition the patents in question are key to being able to defend Microsoft’s existing market making the combination into one of the most important legal efforts that Microsoft is likely to undertake. This means they probably won’t settle, will fund the effort fully, and will do whatever it takes to make it successful. ?

Piper Jaffray analyst Gene Munster checked in with 50 U.S. Apple retail stores and found the iPad sold out or in limited supply at many of them.

“74 percent of the stores we checked were completely sold out of all iPad models. 26 percent had some WiFi models in stock, and no stores had any 3G models available,” the analyst reports.

“We note that the stores have implemented a reservation system, by which customers can request to be placed on a waitlist for future iPad shipments, notified upon arrival, and given 24 hours to pick up the iPad,” Munster adds. “One Apple store representative indicated that the in-store reservation system typically takes 4-7 days.”

Given that, the fact that iPad orders made at Apple’s online store are now listed as shipping in “7-10 business days,” up from a previous range of “5-7 business days,” and the international iPad launch next week, Munster figures supply constraints will easily last through the June quarter, reaching equilibrium in late fall.

“[The iPad launch] far exceeded our expectations. We were shocked by U.S. demand,” Apple COO Tim Cook said during Apple’s last earnings call.

Evidently that continues to be the case.

[Image credit: Gizmodo commenter Ahubbuch]

One problem: That service is supposed to feature content from publications other than those owned by Murdoch. And sources familiar with News Corp.’s plans tell me Murdoch has yet to sign partners on to the venture.

News Corp. officials do say Murdoch is hopeful about bringing on Gannett (GCI), the publisher behind USA Today and 82 smaller papers. A person familiar with talks between the companies described them as “late stage.” A spokeswoman for News Corp. (NWS), which owns this Web site, declined to comment; Gannett officials didn’t respond to a request for comment.

And it’s possible that Murdoch’s lieutenants, led by digital boss Jon Miller, have other deals in the works that they’re close to closing.

That’s certainly what Murdoch hinted at in the prepared remarks he delivered at the start of his May 4 earnings call:

Today, we are in final discussions with a number of publishers, device makers and technology companies…and we will soon develop an innovative subscription model that will deliver digital content to consumers…wherever and whenever they want it.

Later, in response to a reporter’s question about the subscription plan, Murdoch went further, announcing that his company would be “giving a press conference in about three to four weeks which we hope will have some important announcements in.”

But that would be a more effective press conference if Murdoch could announce that he has convinced other big publishers to embrace his model. Right now, at least, he can’t say that.

This might seem like a classic example of Murdoch going off script during an earnings call, which happens with some frequency. But in this case, News Corp. officials have been working on a similar timetable behind the scenes. For instance, I’m told that they have been casting about for a public relations agency to help promote the plan and have been telling prospective candidates about their proposed schedule.

So it seems that Murdoch may have been intentionally placing his cart pre-horse in hopes that doing so would speed negotiations along. Can’t wait to see if he’s right.

Asked about the HP’s plans for the OS during an earnings call Tuesday, CEO Mark Hurd added printers to the list of future webOS devices. “We expect to leverage webOS in a number of form factors, including slates and Web-connected printers,” he said. “We’ve got a whole series of Web-connected printers now and as they connect to the Web, they need an OS.”

And webOS is a good one, though just how it might be leveraged in printers is an interesting question. The Officejet doesn’t exactly lend itself to playing X-Plane or Need for Speed.

In any event, HP (HPQ) clearly has big plans for Palm’s (PALM) platform. As I wrote back in April, “Mark my words, today is the beginning of a new HP ecosystem–smartphones, connected devices, apps and the OS that ties them all together.”

Make that smartphones, connected devices, apps, printers and the OS that ties them all together.

Today, this no longer appears to be the case–at least in Japan. There, the models will be SIM-locked to Softbank Mobile, which has evidently negotiated an exclusivity deal for the device. Softbank is the exclusive carrier for the iPhone in Japan, so I suppose this shouldn’t come as shock. Still, it is a bit of surprise, since NTT DoCoMo President Ryuji Yamada said in an earnings call last month that the company would sell iPad-compatible micro-SIM cards in time for the device’s launch in the country.

Evidently, Apple (AAPL) has been pleased enough with Softbank’s support for the iPhone to tweak the multiple-carrier distribution plan it had intended for the iPad outside the U.S. Either that or the company has always been open to international SIM-lock exclusivity deals for the device, given the right terms.

I’ve asked Apple for comment and will update here if I’m offered one.

That appears to be what the publisher has in mind with TheSmokingJacket.com, a “safe-for-work” site it has in the works (don’t bother trying out the URL–nothing to see there now).

PaidContent’s David Kaplan, who had to sit through Playboy’s (PLA) earnings call this morning, doesn’t have any other details, presumably because Playboy didn’t offer them up.

But it’s easy to imagine what a Playboy-run site you could view at work without getting fired might look like: Take a look at Maxim.com or FHM.com or AskMen.com or any of Break Media‘s sites or…you get the picture.

Time Warner (TWX) says ad revenue grew five percent and subscription revenue, two percent. These aren’t huge numbers, and they’re coming off lousy comps, but they’re still positive, and an increase is an increase.

In fact, the ad increase is the first the magazine group has seen in two years, Time Warner announced during its earnings call this morning.

Overall revenue still declined by one percent, but that’s because the unit no longer gets contributions from the Southern Living at Home direct sales business it sold off last year. Online revenue was up 20 percent.

Meanwhile, Time Inc.’s operating income improved dramatically to $50 million; a year ago the unit posted a $32 million loss. Chalk that up to the multiple rounds of layoffs and cost-cutting measures Ann Moore pushed through in the past couple of years.

Remember Rupert Murdoch’s plan to convince other media companies to join him behind a pay wall and offer their stuff only via subscription? It’s still around, in some form. We’ll hear more about it in “three to four weeks” Murdoch said today during News Corp.’s earnings call.

Just what Murdoch has in store isn’t entirely clear. Last year, he sent digital media head Jon Miller out to convince rival newspaper publishers to join News Corp.’s Wall Street Journal in the pay-to-play ring. But it appears that Murdoch may now be thinking of a subscription offering that extends beyond newspapers and into entertainment.

I’ve asked News Corp. if it has anything to add to Murdoch’s hazy comments this afternoon, but I’m not optimistic. I do think we’ll hear more about this before the press conference Murdoch plans for later this month, though.

Meanwhile, here’s some background on “Project Alesia,” the subscription/pay wall plan that may or may not be what Murdoch was talking about today.

Earlier

We’ve seen the numbers, so we know that News Corp. had a very nice quarter. Now let’s hear what Rupert Murdoch has to say about his company’s performance. I’m also interested to see how much ire Murdoch expresses for Google (GOOG) and how much ardor he has for Apple’s (AAPL) iPad, among other digital topics.

The following is a live paraphrase that includes my editorial notes; I’ll note direct quotes where appropriate.

Liveblog

Dave DeVoe going over numbers from the release.

Earnings include one-time items of three cents per share. [Should net that out of earlier reports when comparing to Wall Street expectations.]

Newspapers: Operating income up nearly five times. Higher advertising across nearly all markets. Forex helps, too.

“Other” (includes Myspace): Lower search and ad revenue, but costs are down.

Some balance-sheet talk: We’ve got a lot of cash on the books, and we know it. Some of it will get paid out to Jim Cameron and other participants in “Avatar.” But we’re working on ways to deploy the extra cash. We’ll get back to you on it by the next quarter.

Guidance: We’ve done better than anticipated in lots of our business for the last nine months, but our next quarter will be down. That’s because we expect the film business to be down $100 million, even including “Avatar” DVD releases (reason: We had very good quarter last year). Also, Fox Broadcast will be down. So we’re only bumping up guidance a bit.

Rupert Murdoch:

Exceptional results, “pretty much across the board.”

We’re psyched for five reasons:

1. Content. Really important, and we’re really good at it. Shout-outs for “Avatar,” Fox News Channel, newspapers, TV shows. “Fortune favors the bold,” etc. “We have the no. 1 national newspaper on all three continents.”

2. Technology: We’re good at that, too. The Apple iPad, “which I believe will lead a revolution in content consumption.” First month, 64,000 active users for The Wall Street Journal iPad app. “Unlike the Kindle, we keep 100 percent of the subscriber revenue from the iPad.” Innovative subscription model coming to deliver content to people whenever they want it (paging Jon Miller, James Murdoch).

[Apologies, lost the thread here. But Rupert is gung-ho about TV and other core businesses]

Q&A

Is there concern that you can’t keep growth in the next fiscal year? Can you?

Murdoch: Absolutely! Hedges on numbers. “We have a great slate of films coming up, but we don’t have an ‘Avatar’ in there.” If ad growth keeps up, “I think we can be very confident.”

COO Chase Carey: I agree! The ad market is actually picking up. Sports has been a little slower than other ad markets, and they’re now picking up. “Looks great.”

Question for Devoe: Please talk more about that big cash pile.

Murdoch: I can answer that! “We’re well aware that our balance sheet…is inefficient at the moment.” Increased dividends, stock buy backs, investing in our businesses, possibility of “opportunistic investments,” which we’ve been “nervous” about doing in past year but now we have some things we’re looking at. Cue M&A klaxons!

More color on the TV biz, please.

Carey: Strong recovery in most categories. Not just auto and telecom. Financial, insurance, all sorts of stuff. “It’s pretty broad.”

Murdoch: “We’re seeing pretty optimistic and expanded advertising budgets from the big advertisers.” Not sure when that money is coming, but would guess Q2, when they’re launching new cars. “There’s a lot of money out there on the boards.” And as free over-the-air audiences shrink–and ours is shrinking less–that money is finding its way to cable. So any show that can show any sort of advertising can attract money. “It feels good; that’s all I’m saying.”

Please talk about new retrans/carriage negotiations.

Carey: Fox News deals starting to come up. Will be staggered over a couple of years. “I think the Fox News network…is certainly–maybe with ESPN–second to none.” So pay up, cable guys! (And customers!)

Carey mounts a long defense of Sky Italia. I’ll refrain from transcribing.

Similarly, you’re probably not interested to read what he has to say about satellite TV in Europe.

Netflix is killing it. What does that mean for you guys? Good news because it says good thing about your library? Or maybe an opportunity for you to do more with your library?

Carey: Noncommittal answer. But: “There is a question whether the Netflix model is getting us fair value for our product.” So we’ll keep looking at windowing content and whether we’re getting paid enough for our stuff. “I think it’s a focus.”

Please talk about Fox Audience Network plans and MySpace/Google plans.

Carey: Google plan doesn’t affect FAN. Not going to comment on “rumors.” “I don’t think that’s productive.” But! The key is to build enough traffic to attract enough dollars. FAN has a done a good job.

Let me try to re-ask the same question regarding restructuring or spinoff of FAN.

Murdoch: Praises MySpace. In the past few years “we made some big mistakes,” but we have fine new management now. “Early indications, and they’re only indications, are that we’re getting new visitors, and they’re staying longer,” so ad dollars will follow.

[Sorry missed this question, but I believe it is about guidance.] Murdoch is not talking up the film slate, but indicates that he’s spending a bunch of money on movies, and the company will take hits on those initially before they see dollars come back.

Carey: The film business fluctuates from quarter to quarter. But our team is great, and we have great movies coming. “We couldn’t be more excited and positive about the film business.”

Murdoch: Our movie investors praise us.

Any film properties you’re interested in?

Murdoch: “We’d look if something real came onto the market,” but we don’t put MGM in that category, at least not at the price it’s asking. We prefer to invest in our own stuff, and that goes for TV shows as well. “Glee” is a big hit and we own it. Same goes for “Modern Family.”

More info on digital, please. What about MySpace profitability? What happens when Google deal ends w/MySpace?

Carey: “Clearly, MySpace is a work in progress.” [This is a familiar refrain.] But promising signs. Talking up “Glee” tryouts. Improved the platform, etc. By the end of 2010, we want a foundation installed that we can go forward with, and we want to have a cash positive business going into 2011. “The trends are better but they’re not what they need to be….A number of the key metrics are not going up, but they’re better than what they were.”

Are you getting retrans fees for Fox broadcast now?

Not yet.

Why isn’t TV station top-line growth showing up on overall segment results?

Has to do with way we present results. [Confusing and confused discussion about bookkeeping ensues.]

[Still going!]

Press Q&A! (Usually much more entertaining)

Question about Australian news story about…mining?

Murdoch: “Nothing to do with media.”

Same guy has a question about Australian football (?). Rupert professes shock about whatever the scandal was.

Eighty-one advertisers bailed on Glenn Beck. Now it seems as if the only ads are in-house and for gold. When will you stop subsidizing the show and require it to carry its own weight?

Rupert says the 81 number is wrong and that Glenn Beck show doing great.

More color on that subscription model, please.

Rupert: Press conference coming in three-to-four weeks.

But: We’re getting about $4 a week for The Wall Street Journal… [voice trails off].

So this would be about entertainment as well?

Oh, you bet. Everyone’s been talking about negotiating with Apple.

[Both Rupert and FT's Ken Li seem confused. Me too.]

How much did you invest in Wall Street Journal New York edition?

Rupert. “Happy to tell you. We invested nothing.” Maybe $1 million in it. But ti already covers its costs. The notion that we’re spending $30 million on it is “BS.”

[Sorry, missed next two questions.]

Soon to-be Murdoch employee Claire Atkinson has questions about TV ads and online video ads.

Murdoch: WSJ.com is up 11 percent. $100 million in digital revenue at Dow Jones. At Fox news.com, “absolutely thriving.” [If he answered TV question, I didn't hear it, but I think he passed on that one.]

That’s all, folks.

Looks like Apple (AAPL) may have decided to add Verizon (VZ) as an iPhone carrier, because The Wall Street Journal reports that the company is working on two new iPhones, a fourth-generation model and another designed for a CDMA network like Verizon’s.

Sources tell The Journal that Pegatron Technology, Apple’s manufacturing partner for the CDMA device, is scheduled to begin mass-producing the new iPhone in September, though it is not yet clear when or on whose network the company intends to launch it. The publication says the new model “appears” to be designed for Verizon Wireless. But other carriers use the CDMA standard–Sprint (S), China Telecom and SK Telecom, to name a few.

That said, Verizon certainly seems a likely candidate, as the carrier would immediately give Apple access to about 80 million new customers. But rumors of an Apple-Verizon deal for the iPhone and the iPad have been circulating for quite some time and none have ever panned out. Which is not to say they won’t pan out this time, just that The Journal has not yet been able to confirm that they will.

A Verizon iPhone would, of course, be bad news for AT&T (T). As I’ve noted here before, a move to nonexclusivity in the U.S. would likely have some negative impact on the carrier’s subscriber base.

[This post was clarified and updated with new details at 2:45 pm PDT]

But analysts aren’t so sure. In a note to clients this morning, Kaufman Bros. analyst Shaw Wu wondered just how much good the AT&T (T) deal will do for Palm (PALM) given the pricing of its smartphones. The company is selling the Pre Plus and Pixi Plus for $149.99 and $49.99, respectively, with a two-year service agreement and after a $100 mail-in rebate. Hardly a compelling proposition when the prices of competing devices like Apple’s (AAPL) iPhone and Research in Motion’s (RIMM) BlackBerry are significantly lower.

“While we are pleased to see PALM expand its footprint, we are unsure how meaningful the impact will be as we believe AT&T is the most competitive carrier out there being the exclusive partner for iPhone in the U.S,” says Wu. “We believe PALM’s price points are arguably too high when one can get an iPhone 3G for $99 and a BlackBerry for as little as $9.99.”

Exactly. And beyond price, there is the issue of AT&T’s relationship to the iPhone, which has spiked both its subscriber numbers and wireless data revenue since the carrier first began peddling it. Is AT&T is going to put the Pre and Pixi out in front, given what the iPhone has done for the carrier’s financials? Does Palm’s AT&T deal include a commitment to aggressively market and sell its devices? Because it’s going to need one if it’s to compete with the iPhone on its home turf.

As Palm CEO Jon Rubinstein observed on the company’s latest earnings call, launching a pair of new smartphones on a carrier that’s already heavily invested in a hero device–as Verizon (VZ) is with Droid and AT&T is with the iPhone–is no easy task. Said Rubinstein: “If we could have launched at Verizon prior to the Droid, I think we would have gotten the attention the Droid got.”

But you didn’t. And now you’re launching on AT&T after the iPhone, a device with far greater critical mass than Droid. Why will things be any different this time around?

FURTHER READING:

• Exercise in Futility? Palm Pre Plus, Pixi Plus Headed to AT&T
• Palm: Pssst. Wanna Buy 1.15 Million Smartphones?
• Palm Pileup: Weak Smartphone Sales and a Gruesome Q4 Forecast
• Could Be Worse, Could Be Raining: Palm’s AT&T Launch Delayed?
• Could WebOS Licensing Be Palm’s Salvation?
• Palm’s Salvation? Less Push, More Pull.
• And if Palm’s Project JumpStart Doesn’t Work Out, There’s Always “Project Defibrillator”
• Double Face-Palm: Analysts React to Palm’s Lowered Guidance
• Time to Start Looking for a Buyer, Palm?
• 2010: Year of the Palm? Maybe Not…
• Analyst: Palm May Be Acquired in the Next Two Years

In a research note issued this morning, Huberty describes a “positive correlation between Apple (AAPL) store expansion and Mac market share” and applies it to Apple’s plans for 25 new retail stores in China. Though the company has less than one percent market share in China today, she writes, there is significant untapped demand for its products.

“Our Dec ’09 proprietary survey of 1,050 high-end Chinese consumers, representing an addressable population of 50 million, points to strong underlying demand for Apple products….What’s more, Chinese Apple product owners are 2x more likely to purchase future Apple products according to our survey. We believe Apple’s investment in China targets the revenue upside from this halo-effect.” (Click on charts below to enlarge.)

And that’s a safe bet: As COO Tim Cook noted during Apple’s January earnings call, “if you look at greater China last quarter, which is China, Hong Kong and Taiwan, our revenues tripled year-over-year in that geography which is I think phenomenal by any measure. We have a tremendous focus on it.”

Remarking on Palm’s gruesome third quarter during an earnings call yesterday, CEO Jon Rubinstein called the company’s performance “extremely disappointing to me personally.” This sentiment seems to be widely held among investors, who are dragging the company’s shares through the mud today–at $4.66, Palm is down 17.52 percent as I write this–and among analysts questioning whether Palm can ever pull off the turnaround for which it’s striving.

Analysts issued a handful of research notes on the company this morning and they are all viciously negative. The headlines proclaim that Palm’s brand value has collapsed, its financial performance is a disaster, and its execution missteps in a business as competitive as the mobile market have left its prospects dubious.

Over at Canaccord Adams, Peter Misek essentially threw in the towel on the company: “We believe that Palm’s troubles will only accelerate as carriers and suppliers increasingly question the company’s solvency and withdraw their support,” he wrote.

“With what appears to us to be roughly 12 months of cash on hand, an accelerating burn rate, a complete lack of earnings visibility, and substantial debt and preferred equity,” Misek added, “we no longer see any value in the company’s common equity. As such, we are reiterating our SELL recommendation and reducing our target to US$0.00 (previously US$4.00).”

Then there was this from Kaufman Bros. analyst Shaw Wu: “While we believe PALM has some value with its webOS and tight integration of hardware and software, we are unsure of the company’s prospects as an ongoing concern.”

And this from Morgan Keegan analyst Tavis McCourt: “It is certainly looking less likely that Palm can execute this turnaround on its own, but the company has at least one more chance with new hardware later this year to try and create some real consumer demand for webOS.”

And finally, this from Needham and Company’s Charlie Wolf: “Palm appears to be in a no-win situation. The company could invest even more in marketing the Pre and Pixi. But it’s unclear whether Palm could ever spend enough to reach a position where Pre and Pixi sales were sufficient to cover its marketing bill and return the company to profitability.”

Wolf concludes that “In the mean time, time is running out. Supported by an increasing number of smartphone manufacturers, the Android juggernaut is continuing to gain steam. And the day when Microsoft (N/R) launches Window Phone 7 and rejoins the spending party is drawing closer.”

If it’s true that bad news begets bad news, Palm is in for a very rough time of it in the months ahead. The company has already lost half its market value since the year began. Time for a takeover? Perhaps, though Rubinstein seems intent on staying the course.

“There’s all kinds of speculation out there that we are going to get bought, that we are not going to get bought,” Rubinstein said on the earnings call Thursday. “We’re not going to comment on any of those. Obviously, we are a public company. And if there’s a reasonable proposal, of course the Board has to consider it. But, that being said, our focus since the day I arrived here, and that’s almost three years ago now, is to build a great company with a great mobile platform and great products. And that has been our focus.”

FURTHER READING:

• Palm Pileup: Weak Smartphone Sales and a Gruesome Q4 Forecast
• Could Be Worse, Could Be Raining: Palm’s AT&T Launch Delayed?
• Could WebOS Licensing Be Palm’s Salvation?
• Palm’s Salvation? Less Push, More Pull.
• And if Palm’s Project JumpStart Doesn’t Work Out, There’s Always “Project Defibrillator”
• Double Face-Palm: Analysts React to Palm’s Lowered Guidance
• Time to Start Looking for a Buyer, Palm?
• 2010: Year of the Palm? Maybe Not…
• Analyst: Palm May Be Acquired in the Next Two Years

The good news: For its third quarter, Palm reported a net loss of $18.5 million, or 13 cents a share, on revenue of $349.9 million. That’s nicely ahead of its recent guidance of $285 million to $310 million, but obviously well below the $424.7 million analysts had been expecting before the pre-announcement.

The bad news: While Palm shipped 960,000 smartphones during the quarter, the company sold only 408,000 of them. That’s about 30 percent less than it sold last quarter and significantly fewer than the 500,000-600,000 analysts were looking for. Palm has a lot of unsold inventory sitting around.

And then there was this: Looking ahead, the company said it fourth-quarter revenue will be less than $150 million. That’s about half what Wall Street was expecting. Pure ugliness.

“Our recent underperformance has been very disappointing, but the potential for Palm remains strong,” said Jon Rubinstein, Palm chairman and chief executive officer. “The work we’re doing to improve sales is having an impact, we’re making great progress on future products, and we’re looking forward to upcoming launches with new carrier partners. Most importantly, we have built a unique and highly differentiated platform in webOS, which will provide us with a considerable–and growing–advantage as we move forward.”

At $4.94, Palm shares are down more than 12 percent as I write this.

Notes from the earnings call:

• There are now over 2,000 apps in the Palm App Catalog.
• Handset sales are predominantly webOS.
• Rubinstein says Palm has been held back by “execution missteps.”
• Rubinstein declined to discuss speculation about a possible acquisition of the company

FURTHER READING:

• Could Be Worse, Could Be Raining: Palm’s AT&T Launch Delayed?
• Could WebOS Licensing Be Palm’s Salvation?
• Palm’s Salvation? Less Push, More Pull.
• And if Palm’s Project JumpStart Doesn’t Work Out, There’s Always “Project Defibrillator”
• Double Face-Palm: Analysts React to Palm’s Lowered Guidance
• Time to Start Looking for a Buyer, Palm?
• 2010: Year of the Palm? Maybe Not…
• Analyst: Palm May Be Acquired in the Next Two Years

“We’ve been pushing the state-of-the-art in every facet of design….We’ve been innovating like crazy for the last few years on this and we’ve filed for over 200 patents for all of the inventions in iPhone. And we intend to protect them.”

– Apple CEO Steve Jobs, Jan. 9, 2007

Asked for his thoughts on iPhone rivals during a January 2009 earnings call, Apple COO Tim Cook said the company would not stand for having its intellectual property ripped off.

“We are watching the landscape,” Cook said. “We like competition, as long as they don’t rip off our IP, and if they do, we’re going to go after anybody that does….We think competition is good; it makes it us all better. But we’re ready to suit up and go against anyone.”

Well, looks like Apple (AAPL) is suiting up, and against a big opponent. This morning, the iPhone maker filed suit against HTC, a Taiwanese handset manufacturer that makes a number of Android smartphones, including the operating system’s marquee device, Google’s Nexus One (Read the suits in their entirety here.)

In a lawsuit filed concurrently with the U.S. International Trade Commission and U.S. District Court in Delaware, Apple alleges that HTC infringed some 20 patents related to the iPhone’s graphical user interface, underlying architecture and hardware. The company is asking for a permanent injunction barring HTC from importing or selling infringing phones in the U.S., along with triple damages and maximum interest.

“We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it,” Apple CEO Steve Jobs said in a press release announcing the action. “We think competition is healthy, but competitors should create their own original technology, not steal ours.”

HTC appears to have been totally blindsided by the suit. As of this writing, it hasn’t even been served.

“We only learned of Apple’s actions based on Apple’s press release,” the company said in a statement. “We have not been served any papers yet so we are in no position to comment on the claims. We respect and value patent rights but we are committed to defending our own innovations. We have been innovating and patenting our own technology for 13 years.”

It’s not yet clear whether Google (GOOG) is implicated here. But it certainly seems possible. After all, HTC manufactures a number of Android devices, and while Google insisted at the Nexus One launch that it didn’t design the device, the search giant clearly played a role in its development.

Of course, it could be that Apple is suing HTC because it can’t, for some reason, sue Google. More details to follow once I’ve read through the suits.

Further Reading:

• Apple Sues HTC [Complete Court Filings]
• Why HTC, Apple? And Why Now?
• Apple vs. Google: Game On

But you won’t hear Apple boast about how much money it’s making from iTunes. Because there’s not much to boast about.

Even at today’s hyper volume, the digital store is still running at “a bit over break-even,” the company reminded analysts during its earnings call last month.

Here’s the relevant excerpt from that call, via Seeking Alpha (thanks to Venrock’s David Pakman for pointing this out yesterday at the Digital Music Forum East):

Maynard Um–UBS
We have seen a number of industry revenue forecasts for applications and just given kind of the expected explosive growth there I am just wondering if that is still a break-evenish type of business as you look forward over the next couple of years?…

[Apple CFO] Peter Oppenheimer
…Regarding the App Store and the iTunes stores, we are running those a bit over break even and that hasn’t changed. We are very excited to be providing our developers with a fabulous opportunity and we think that is helping us a lot with the iPhone and the iPod touch platform.

As Oppenheimer says, this isn’t a new development. Apple (AAPL) has always maintained that iTunes wasn’t a real money maker. It’s supposed to help sell iPods, iPhones, and soon, iPads.

For years, industry observers figured that as the iTunes business scaled, this would change. An alternate theory, held by some of Apple’s media partners–the company was being overly modest about its success.

Apple doesn’t break out iTunes sales, but lumps them into a category called “Other music related products and services,” which generated net sales of $4 billion last year. That’s an increase of 21 percent over 2008, and the company attributed this growth to “increased net sales of third-party digital content and applications from the iTunes Store.”

“There are certain shows that will be sold on Apple for 99 cents,” Moonves said today, adding, however, that details have not been worked out.

It’s possible that Moonves doesn’t plan to make any significant concessions on pricing–CBS, like other networks, already offers some older shows, or new shows it wants to promote, at discount prices. But the context of Moonves’s comments, which came during the company’s earnings call today, indicated that he is planning on changing his pricing structure on more than a one-off basis.

UPDATE: That metaphorical throat-clearing you might be hearing right now is the sound of people who are familiar with Moonves’s thinking. Said people are telling me that while CBS is open to talks with Apple, etc., the company has no imminent plans to change pricing and that Moonves didn’t really mean to imply that anything is afoot. But since said people won’t go on the record, we have to go with what Moonves actually said.

Any kind of price cut would represent a partial victory for Jobs and Apple (AAPL) content boss Eddy Cue, who have been trying to convince the networks to lower their prices. The Financial Times first reported on those efforts last month.

Video sales haven’t been robust at iTunes and aren’t a significant revenue source for the networks. But since the networks are still worried about cannibalizing existing revenue sources like syndication fees and DVD sales, they’ve been reluctant to chop prices further.

GE’s (GE) NBC Universal ended up yanking its shows off of iTunes in 2008 because it wanted the ability to raise prices, and it got at least some of what it wanted: Since that imbroglio, networks have been able to sell their HD shows for $2.99 a piece.

Owen Van Natta, the prominent Internet executive brought in to overhaul MySpace, has left after less than a year.

News Corp. (NWS), which owns the social network, has replaced the CEO with his former lieutenants, Mike Jones and Jason Hirschhorn, who have been named co-presidents.

It is Van Natta’s second consecutive short-tenured job. Prior to MySpace, he ran music start-up Project Playlist, where he stayed for less than six months. Van Natta built his reputation at Facebook and Amazon (AMZN).

A  press release spins this as a mutual decision between Van Natta and Jon Miller, the News Corp. executive who joined the company less than a year ago himself to run digital operations. But that’s going to be a difficult story to sell.

For starters, it’s clear that attempts to turn the social network around are taking much longer than expected, as News Corp. CEO Rupert Murdoch acknowledged last week during the company’s earnings call.

Last fall, News Corp. disclosed that MySpace and the rest of the company’s digital portfolio were coming up short on their end of a $900 million, three-year search deal with Google (GOOG), which meant News Corp. would receive around $100 million less than originally anticipated.

That may be in part because of changes the new MySpace leadership made to the site’s design, which cut down on some of the page views the old site created. But the shortfall was primarily because the MySpace audience has been migrating to other sites, particularly Facebook, for some time.

MySpace executives have been overhauling the site, mainly under the hood, and rolling out a series of incremental changes in recent weeks. These changes aren’t supposed to win back Facebook users–the company has declared that it’s no longer trying to compete with that site as a social network anymore–but are designed to help it hang on to existing users and establish itself as some sort of entertainment hub.

A tough task under any circumstance. But tensions in the corporate suite didn’t make it easier. Miller hired Van Natta, but the CEO didn’t bring in the two executives directly beneath him; both Jones and Hirschhorn were hired by Miller (along with Murdoch, who signed off on both men).

People who have talked to Van Natta say he has been relatively public about his frustrations at the job in recent weeks. Describing Jones and Hirschhorn as happy campers would be a stretch, too.

But whatever finally prompted the move seems to have come relatively quickly: The MySpace and News Corp. insiders I’ve talked to so far seem taken aback by Van Natta’s departure.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

Here is the official press release from News Corp.:

Owen Van Natta Steps Down as MySpace CEO; ?Mike Jones and Jason Hirschhorn Elevated to Co-Presidents

Los Angeles, CA, February 10, 2010–News Corporation today announced that Owen Van Natta will step down from his position as MySpace CEO, effective immediately. Mr. Van Natta will be replaced by newly-elevated co-Presidents Mike Jones and Jason Hirschhorn, who will each report to Jon Miller, Chairman and CEO of Digital Media for News Corporation.  All three executives joined MySpace in April 2009, with Mr. Jones and Mr. Hirschhorn previously serving as Chief Operating Officer and Chief Product Officer, respectively.

“Owen took on an incredible challenge in working to refocus and revitalize MySpace, and the business has shown very positive signs recently as a result of his dedicated work,” said Jon Miller, News Corporation’s Chairman and CEO of Digital Media. “However, in talking to Owen about his priorities both personally and professionally going forward, we both agreed that it was best for him to step down at this time. I want to thank Owen for all of his efforts.”

Mr. Miller continued, “Mike and Jason have demonstrated true leadership in their operational and product guidance, respectively, and I have the utmost confidence in both of them to lead MySpace into its next chapter.”

In a joint statement, Mr. Jones and Mr. Hirschhorn noted:

“We joined MySpace last April with very a specific set of goals in mind, and are anxious to continue working together to make those goals a reality. This business is now pointed in the right direction, and we have a great team of employees that will continue to push MySpace closer to its potential as the place where people go to be discovered and to discover great content.”

Mr. Van Natta commented:

“MySpace is an incredibly unique place and we’ve made real gains in terms of product focus and user experience.  I’m proud of the work we’ve all accomplished together and look forward to watching its continued growth.”

Prior to his role as MySpace COO, Mr. Jones founded and operated several online businesses, including Userplane, a leading provider of tools for online communities such as MySpace. Userplane was acquired in 2006 by AOL, where Jones subsequently served as a senior vice president and focused on social media monetization and also pioneered the distribution of widgets and other technology to Web publishers. He also was founder and CEO of Tsavo Media, an online content and search network developing next-generation publishing platforms and technology services.

Since joining MySpace, Mr. Hirschhorn oversaw all aspects of product development, and previously has led both start-up and established online businesses. He was president of Sling Media, Inc.’s Entertainment Group, which created consumer-driven applications and services for the Slingbox device, and was chief digital officer at MTV Networks, where he oversaw the company’s digital media businesses, products and strategies. Hirschhorn joined MTV Networks following the acquisition of his company, Mischief New Media, which provided interactive services to the entertainment industry.