TECHNOLOGY

TIME WARNER CLOSER TO BUILDING ONLINE-AD SERVICE WITH MICROSOFT

Time Warner is closing in on an agreement with Microsoft to build an online-advertising service designed to compete with Google, say people familiar with the negotiations.

After months of on-again-off-again negotiations, the two companies are now focused on a deal that would combine advertising-related assets with minimal, if any, money changing hands. An agreement is expected to be struck sometime before year-end, but it is still possible that AOL could choose instead to deepen its relationship with Google at Microsoft’s expense.

As of Monday, however, initial signs pointed to a Microsoft-AOL alliance, albeit one far less ambitious than many analysts and investors had expected.

Under the negotiations, AOL would drop Google as its primary provider of Internet search and use Microsoft’s MSN service instead, say people familiar with the talks.

– Dow Jones Newswires

NBC IS SECOND NETWORK TO OFFER SHOWS ON ITUNES

Apple Computer’s deal with NBC Universal will help boost sales of the video iPod and provide another avenue for paid downloads of television programs, analysts said.

“It’s fairly significant that a second major network will be utilizing iTunes,” an analyst with Deutsche Bank, Chris Whitmore, said. “For Apple, it’s significant that it will translate into video iPod unit sales. While much of the margin is on the actual players, content drives the whole model.” Apple Computer said yesterday its iTunes music store will now offer more than 300 episodes of 16 NBC programs, including “The Tonight Show with Jay Leno” and “Law & Order.” The programs can be downloaded to Apple’s iPod for $1.99 an episode.

– Dow Jones Newswires

IN THE BOARDROOM

CLARK RESIGNS LAZARD BOARD TO ELIMINATE ‘APPEARANCE OF CONFLICT’

Robert Clark, a member of the boards of Time Warner and Lazard, left his position as board member of Lazard yesterday, citing his wish “to eliminate the appearance of a conflict of interest.” Lazard has been retained by corporate raider Carl Icahn as part of his quest to wrest control of Time Warner.

– Dow Jones Newswires

PRIVATE EQUITY

BLACKSTONE GROUP RAISES $500M FOR ITS FIRST DISTRESSED-DEBT FUND

Blackstone Group, manager of the world’s biggest buyout fund, raised more than $500 million to invest in debt of struggling companies as the 20-year-old firm expands beyond leveraged takeovers.

The so-called distressed-debt fund, the firm’s first, will be used to purchase bank loans, bonds, and shares of companies in America and Europe that are, or are likely to become, bankrupt, head of the firm’s distressed securities advisers unit, John Dionne, said.

Buyout firms including Blackstone, Carlyle Group, and Apollo Management are encroaching on areas dominated by hedge funds such as Oaktree Capital Management, which sought $1.7 billion for distressed investments earlier this year. Apollo co-founder Joshua Harris has said he expects the economy to weaken, hurting buyout returns and helping distressed-debt investments as companies struggle to pay debt.

– Bloomberg News

IN BRIEF

The chairman of the Securities and Exchange Commission, Christopher Cox, plans to name Brian Cartwright, a partner at Latham & Watkins, as the agency’s chief legal officer … Johnson & Johnson signaled it may not raise its $21.8 billion offer to buy Guidant, the no. 2 maker of implantable defibrillators, after Boston Scientific made a higher bid on Monday … The Victoria’s Secret “angels” returned to television yesterday after a one-year hiatus with an hour-long fashion show.

– Bloomberg News