• by February 9, 2004

STARCOM DISCONNECTS FROM AOL - Starcom, which some considered a strong favorite in America Online's media account pitch, has pulled out of the review citing a potential conflict with an even bigger media client, Walt Disney Co., the Riff has learned. "The Starcom management team has decided to withdraw from the AOL new business pitch," said Starcom, in a statement issued following a call from The Riff. "Having mapped out the future contact environment for AOL, we feel the future of that business lives in a space that may be in direct conflict with Disney, an extremely important client to us." Wow! The Riff isn't so much surprised with the fact that Starcom would drop out of the running for AOL's $200 million offline media buying account. Not even that it would do it at the 11th hour (the pitch is supposed to be decided on Friday). What's got the Riff ruminating is the fact that media accounts have grown to the point where there could be potential strategic conflicts between two seemingly disparate clients. While they're both media concerns, Disney is more about theme parks, movies and programming networks. AOL, while aligned to a major studio and networks, is more about online connectivity. Meanwhile, the Riff hears that two finalists - Carat and Initiative Media - will make their final pitches to AOL on Tuesday.

WALT DISNEY WOULD BE SPINNING IN HIS GRAVE, IF HE WERE BURIED - First the Walt Disney Co. board disses his nephew Roy and now it is giving the cold shoulder to his great-niece Abigail. Abigail, who is Roy's daughter, has been barred from attending a meeting Disney is holding this week with big investors and securities analysts in Florida. A Disney spokesman said Abigail's request was rejected ostensibly because the conference was not suited for "retail investors," though the Riff suspects the real reason is the ongoing battle between her dad and Disney chief Michael Eisner, whom he has sworn to depose.

SIX SIGMA, OR JUST DEEP SIX - Big Media has had more than its rightful share of corporate governance issues. Just ask the shareholders of Time Warner and Adelphia Communications. But now one of their own has joined an elite club of corporate right-doers. Well, the parent of one, anyway. General Electric, which owns NBC-soon to be NBC Universal-along with Telemundo, Bravo and a burgeoning base of media assets, has become one of only 22 of the 2,121 companies tracked by GovernanceMetrics International to score a perfect 10 in its latest governance ratings. This is no small feat, when you consider that the group beat the overall U.S. market by more than 4 percent over the past year and by nearly 10 percent over three years. The big question for Madison Avenue, of course, will be whether NBC continues to beat the overall network marketplace in the upcoming 2004-05 upfront advertising marketplace. Given the peacock network's Nielsen ratings slippage this season, and the fact that it will lose two of its most prized series - "Frasier" and "Friends" - at the end of this season, the odds don't look good for that. Barring some amazing new series coming out of its spring development season, NBC will be hard-pressed to justify its hefty CPM premium another year. And no matter how good its parent's governance is, all the Six Sigma in the world can't fix what a couple of hit series might.

CHANCES ARE, YOU WON'T SEE THIS DEAL REPORTED BY MSNBC - Microsoft has long been in bed with General Electric's NBC unit, but it's starting to get awfully cozy with Walt Disney Co. Microsoft, which is in a long-standing joint venture with NBC involving MSNBC and MSNBC.com, and has entered into a new multiyear deal with Disney to develop new digital media initiatives for delivering content into the home, on Microsoft's Windows XP-based computer operating system and to a variety of portable entertainment devices. The deal, which hinges on Microsoft's new Media Digital Rights Management technology, may be just the thing the Disney team has been imagineering for its next generation of digital media products. And one of those just might be spelled MSABC, or even MSESPN.