By Scott Moritz

Cable duo Comcast (CMCSA) and Time Warner Cable (TWC) could arrive at a WiMax deal as early as this weekend, according to people close to the discussions.

In the proposed deal, the cable companies would chip in some $1.5 billion toward a nationwide wireless network construction project led through a joint venture between Sprint (S) and Clearwire (CLWR). Comcast and Time Warner Cable entry into the discussions was first reported Wednesday by The Wall Street Journal.

“There’s a 40% chance of it happening over the weekend,” says a source familiar with the deal.

Comcast was unavailable for comment and Time Warner Cable had no comment.

According to the plan, the cable companies would be teaming with Intel (INTC) and possibly Google (GOOG) in this new venture to build a fast wireless network using WiMax technology. Intel has already signaled its interest and could be in for around $1 billion.

The sources also say a large retailer, presumably Best Buy (BBY), is also interested in the partnership. Best Buy declined to comment.

Among the possible snags to the cable deal is the push by Sprint and Clearwire to get the satellite TV players EchoStar (DISH) and DirecTV (DTV) involved in the deal. Both satellite players are restricted from entering deal talks until late next week as part of an anti-collusion silence period related to the recent wireless auction.

As one source described it, Clearwire and Sprint are running an airwave auction of their own, and they want to make sure they have the most bidders possible. Sprint and Clearwire would contribute their spectrum licenses and infrastructure to the venture, but they still need several billion dollars to make it happen.

Wireless, particularly mobile broadband, is seen as a huge opportunity for the cable companies and the satellite players to add more services and deliver more products to compete with phone companies.

WiMax was in danger of becoming the path not taken on the wireless upgrade map. AT&T (T) and Verizon (VZ) have selected a fast mobile data technology called long term evolution or LTE as the evolution route for their networks. LTE is an extension of Europe’s GSM wireless standard.

By Michal Lev-Ram

America is known as a nation of TV watchers, but viewers have not embraced the small screen as enthusiastically as they have the big one in their living room.

Just 4.6% of U.S. wireless customers have watched TV or videos on their cell phone, according to research firm M:Metrics. Verizon Wireless (VZ) has yet to release subscriber numbers for a mobile TV offering it launched last year, but Paul Jacobs, the CEO of Qualcomm (QCOM), which provides the live television service, recently said that adoption has been slower than he would like.

Now Verizon rival AT&T (T) is gearing up for the May launch of the same Qualcomm service, called MediaFlo. The question is, will subscribers to the country’s largest nationwide network want to watch?

Analysts say that while U.S. consumers love their TV, it’s not clear there is a huge demand for full-length programming on the go. For one, most Americans commute by car, not on public transportation.

“Without a clear block of time like commuting on the subway it’s just not clear there will be that many people willing to pay for the service,” says Tim Farrar, president of research firm Telecom, Media and Finance Associates.

But Farrar says that even in countries like Japan and Korea, where consumers watch mobile TV on the train, the business model remains unproven. Korea’s TU Media, the company that runs local carrier SK Telecom’s ad-sponsored mobile TV service, acknowledges it is losing money due to poor ad sales and reportedly laid off about a third of its staff earlier this year.

Although AT&T says it won’t disclose pricing information until the service launches, Verizon currently charges $15 per month for access to eight channels, including Comedy Central and MTV. That fee doesn’t include the cost of a data and voice plan.

Another problem, says Farrar, is that Qualcomm’s live mobile TV network doesn’t yet blanket the entire country and doesn’t work on a wide variety of devices. Only those consumers who live in a select number of markets can get the service and must purchase a new phone to use it. AT&T says it will initially offer only two TV-compatible devices, the LG Vu and the Access by Samsung.

Of course, another possible reason for the slow uptake of mobile TV is that many consumers don’t even know it exists.

“When people haven’t tried a service before you need to educate them and show them how much fun it will be,” said AT&T spokesman Mark Siegel, who declined to comment on how the carrier plans to market and advertise its upcoming service.

By Michal Lev-Ram

Business software giant Oracle reported quarterly earnings Wednesday that met Wall Street’s expectations, but company shares slipped almost 9% in after-hours trading on news that third-quarter sales came in slightly below the Street estimates.

Net income for the third quarter rose 30% to $1.3 billion, or 26 cents per share.

Excluding certain one-time items, the company’s net income came in at $1.34 billion, or 30 cents a share, in line with analysts’ estimates and 30% higher than its year-ago earnings. Oracle (ORCL) reported sales of $5.3 billion, up from last year’s $4.45 billion but less than the $5.4 billion analysts had hoped for, according to Thomson First Call.

Oracle CEO Larry Ellison seemed unfazed by the miss, saying the company’s operating margins are now “substantially higher ” than its competitors, including Microsoft (MSFT), and that he expects to pass $10 billion in annual sales by next quarter.

Redwood City, Calif.-based Oracle has been on a shopping spree recently, scooping up over 30 companies in the last three years, including PeopleSoft and Siebel Systems. It is currently in the process of purchasing BEA Systems, an acquisition that would likely help the company compete more effectively against another rival, IBM.

By Michal Lev-Ram

Couch potatoes, listen up: If you’re still using an analog TV, you might find static instead of “American Idol” on your screen come Feb. 18, 2009. That’s when the Federal Communications Commission plans to end a half-century of analog broadcasting.

This is the final step in switching to digital television broadcasting, which takes up less bandwidth and allows for high-definition pictures. With the government’s auction of the old analog TV spectrum now completed — companies like Verizon Wireless (VZ) and AT&T (T) bid billions of dollars those airwaves, which are well-suited for mobile broadband — attention is focusing on the 11.4 million U.S. households that Nielsen estimates are not ready for the big switch to digital television.

The only way consumers can keep their old televisions is by paying for cable or satellite service or buying a converter box, which receives and converts digital signals into a format that analog TVs can display. To make sure these analog-only households aren’t stuck without programming next February, the government has launched a coupon program to make the transition to digital smoother. Qualifying families can apply for up to two, $40 coupons to be used toward purchasing converter boxes.

Todd Sedmak, a spokesman for the National Telecommunications and Information Administration, the government group overseeing the coupons program, says companies in the broadcasting, cable and consumer electronics industries have committed to spending over $1 billion to educate consumers about the upcoming change.

“Many resources are being tapped to inform the public,” says Sedmak, who adds that more than 4.5 million households have already requested about 8.5 million coupons. To date though, the government has only mailed about 2 million coupons.

Critics say despite the efforts to educate, getting the word out to over 11 million people — many of them living in rural locations — will be difficult. They also argue that converter boxes are not readily available and that that the coupons are good for only three months. Best Buy (BBY) carries only one model, retailing for $60, that is covered by the coupon.

What’s more, the upcoming switch could affect some groups more than others. According to a recent Nielsen study, adults over 55 are better prepared than younger households, while Hispanics and African-American households will be more affected than whites and Asians.

Eric Rossi, head of Nielsen’s digital transition preparedness team, said in a recent report: “The change to all-digital broadcasting is the most significant change in the history of television.”

By Yi-Wyn Yen

Yahoo has joined Google and MySpace to form the three musketeers of social media. The companies announced Tuesday they are starting the OpenSocial Foundation to create universally-accepted standards for social networking sites and applications.

Yahoo’s endorsement of Google’s OpenSocial initiative comes two weeks after MySpace (NWS) opened its doors to developers using the OpenSocial standard. MySpace was the first social networking site to adopt OpenSocial.

Yahoo (YHOO) did not disclose which of its web properties will use OpenSocial. “We’re supporting OpenSocial because it’s rapidly growing and maturing,” said Wade Chambers, Yahoo’s vice president of platforms.

The OpenSocial Foundation plans to provide a formal intellectual property and governance framework for developers. Google OpenSocial director Joe Kraus argues that as the web becomes more social and social networking sites open up their platforms, developers will benefit from using a set of common standards. Kraus says the nonprofit will set up shop in 90 days.

“Open source is important,” Kraus told Fortune last week. “It gives [sites] and developers the confidence that they can use OpenSocial in perpetuity without concern of something bad happening. It’s always available to them and it’s not going to be obsolete.”

Google (GOOG) announced its OpenSocial initiative last fall one week after Microsoft (MSFT) agreed to pay Facebook $240 million for a minority stake. Facebook became the first social network to open its platform to developers last May. Facebook, which uses its own open-source platform, says it does not have any immediate plans to join the OpenSocial Foundation.

By Yi-Wyn Yen

Shares of Yahoo (YHOO) rose 3% to $28.35 on Tuesday afternoon after Citigroup analyst Mark Mahaney raised Yahoo’s stock from “hold” to “buy.”

Mahaney, who has consistently said that a merger is likely, suggests that Microsoft raise its offer from $31 to $34 a share. “We believe buying Yahoo shares here provides an attractive return,” he wrote. “We think the strategic value of Yahoo and Microsoft is very significant.”

Mahaney says it’s unlikely Microsoft (MSFT) will walk away from the deal because it has no real alternative to compete with Google (GOOG). “Despite 3-4 years of making online advertising a key strategic priority, Microsoft has yet to demonstrate traction,” Mahaney wrote in a note to clients Monday. He argues that Microsoft will get further left behind as Google continues to increase its lead in search and ramp up its display advertising business with its DoubleClick acquisition.

Mahaney believes Yahoo’s continued efforts to find a white knight will also force Microsoft to up its offer. He believes that Time Warner (TWX), which owns AOL (and Fortune and CNNMoney.com), could form a partnership to swap content in exchange for a stake in Yahoo. However, industry watchers have said that as the weeks drag on with no announcement, it is unlikely that a white knight will swoop in to save Yahoo.

By Yi-Wyn Yen

Google’s acquisition of ad server DoubleClick is supposed to help the search giant make a splash in the display advertising market. But it’s YouTube that Google is hoping will make it a big player on Madison Avenue.

“We’re spending a lot of time on YouTube right now because that happens to be a clear objective and clear opportunity,” said Tim Armstrong, Google’s president of advertising at a recent Bear Stearns media conference.

What isn’t clear is why Google (GOOG) hasn’t figured out how to make a profit from YouTube yet.

Google built its multi-billion empire by delivering text-based ads that appeal to marketers looking for a direct response. Now the search engine’s going after major brand advertisers who see video as an opportunity to connect with consumers on an emotional level.

For a company consumed by organizing the world’s information, Madison Avenue is an unfamiliar turf. “They’re starting to think about branding,” said Matt Sanchez, CEO of video ad network VideoEgg. “There’s a culture shift going on at Google.”

While display marketing isn’t Google’s forte, the company has created an appealing branding opportunity with YouTube. The videosharing site has become the go-to site for short, snacky clips. But some advertisers worry that, unlike watching an episode of Lost on ABC.com or a Saturday Night Live clip on Hulu, most of YouTube’s vast collection of campy, user-uploaded clips are unmarketable.

“This is a challenge for advertisers,” said Chris Allen, the video innovation director for media agency Starcom. Roughly 10 to 20% of YouTube’s content is professionally produced. That really starts to diminish the opportunities for brand advertisers.”

One media buyer takes a glass-half full approach. “We’re trying to figure out what is the value in brand association with content that’s not premium,” said Curt Hecht, chief digital officer for GM Planworks, which handles advertising for General Motors (GM). “The approach we take is, how can we package this in front of a ton of eyeballs.”

YouTube is the King Kong of online videos, and what it lacks in marketable clips it makes up for with its massive and engaged audience. In January, nearly 79 million viewers, or a third of all online viewers in the U.S., watched more than three billion user-posted videos on YouTube, according to comScore’s latest report.

However, delivering all those free video clips isn’t cheap. YouTube sends a staggering 1,000 gigabytes of data every second, or nearly 300 billion GBs each month. Several industry insiders estimate that YouTube spends roughly $1 million a day just to pay for the bandwidth to host the videos. By that number, YouTube downloads would account for roughly 3% of Google’s $11.5 billion operating costs for 2007.

YouTube, which makes the bulk of its revenue from selling display ads that run on the right-hand side of the site’s homepage, has not been a moneymaker for Google. The company states YouTube’s revenues last year were “not material” in a regulatory filing. The search giant paid $1.6 billion for the company in October 2006. “I’d be surprised if they broke $20 million in revenue in ’07,” said Anton Denissov, an online video analyst with the Yankee Group.

Part of the problem is that advertisers and companies like Google are still experimenting with what works in the web video market. Advertisers will spend $1.35 billion on online video advertising in the U.S. this year, according to eMarketer. That represents 1.5% of television advertising spending this year, and just 5% of all Internet advertising spending. The research firm forecasts that U.S. spending for web video ads will triple to $4.3 billion in 2011.

Wall Street is anxious for Google to turn the videosharing site into a cash cow. Last October during its earnings call with analysts, Google co-founder Sergey Brin said making money wasn’t a top priority. The company has focused heavily on refining a user’s experience and collecting data on how viewers find videos on YouTube. Dave Eun, who runs Google’s content businesses, said the company would “turn up the dial on monetization” next year.

Last fall Google introduced several types of ad formats with moderate success. Its says viewers are responding favorably to its overlay ads, which run on the bottom of a screen like a sports ticker 10 seconds after a video starts. A viewer can choose to close the ad or click on it to expand the ad before returning to the original clip. The overlay ads only appear on YouTube’s select premium content.

“We’ve been careful about testing different monetization approaches,” Eun said at the Bear Stearns conference on March 10. “We’ve purposely not taken the easy money. And frankly, there was a lot of easy money out there. We could have taken cut-down TV ads and pushed them down our users’ throats with pre-rolls.”

Not everyone is convinced that just because Google flips a switch, the YouTube money will start pouring in. “All of Silicon Valley has a hard time understanding that it’s not some spigot you turn on,” said VideoEgg’s Sanchez. “Maybe that’s how direct marketers work, but media buyers on the brand side don’t spend money that way.”

“There’s no silver bullet,” he added. “Google’s been testing and pushing and marketing its product, but it’s not suddenly going to do a billion dollars in revenue off YouTube.”

By Michal Lev-Ram

The wireless spectrum auction ended last week but Google is not done lobbying the Federal Communications Commission.

On Monday the company sent a letter to the FCC outlining what it would like to do with so-called “white space” — airwaves found between broadcast channels that will become available when television switches from analog to digital early next year. Unlike the five blocks of spectrum recently up for auction, these airwaves are unlicensed and largely unused.

Google (GOOG) is proposing that the spectrum be used for mobile broadband services, including Internet access for upcoming — you guessed it — Android-running phones, which use an operating system promoted by Google. The company says it will ensure that devices operating in the unlicensed spectrum won’t interfere with TV channels or wireless microphone signals, and that it intends to provide the “technical support necessary to make these plans happen” at no cost to phonemakers.

The company said it is confident its proposal will “eliminate any remaining legitimate concerns about the merits of using the white space for unlicensed personal/portable devices.”

Google’s not the only one pushing the FCC to allow the unused spectrum to be used for mobile broadband services. Microsoft (MSFT), Dell (DELL) and Hewlett-Packard (HPQ) have also joined the “White Space Coalition.” But the proposal has drawn plenty opposition from groups like the National Association of Broadcasters, who worry that using white space for a wireless broadband service will interfere with digital TV transmissions.

By Yi-Wyn Yen

Electronic Arts announced Monday that chief financial officer Warren Jenson is resigning as the video game publisher presses a hostile bid to buy rival Take-Two.

Jenson, who has been the CFO since June 2002, will leave the company in September. EA did not specify a reason for Jenson’s departure and said it will name his replacement “shortly.”

Analysts say the shakeup is not surprising. Chief executive John Riccitiello has made a number of key management moves since he joined the video gaming powerhouse last April. Riccitiello’s latest came last week when he hired a new right-hand man in president and chief operating officer John Pleasant.

“Riccitiello was brought in because the stock hadn’t moved in three years,” said Michael Pachter, a gaming analyst with Wedbush Morgan. “Now it’s been four years. To help him, he’s hiring people he’s comfortable with. If you hire a new coach and the team’s not winning, the coach is going to bring in new players.”

Jenson, 50, spent three years as the CFO of Amazon (AMZN) before joining EA (ERTS), and has also held that position at Delta Airlines and NBC Universal.

The timing of Jenson’s resignation indicates that the company’s plans for a new CFO are unrelated to its $1.9 billion bid to acquire Take-Two. A source who has spoken to a high-level EA executive says that the company has already chosen a successor to Jenson.

In a note to clients, UBS analyst Ben Schachter wrote, “We envision little impact to the company’s strategy on the deal going forward. We think CEO John Riccitiello is the driving force behind this deal, though the timing here is unnerving and will likely raise questions with investors.”

Take-Two (TTWO) management has rejected EA’s offer of $26 a share is too low. EA has taken its case directly to Take-Two’s shareholders, and is giving them until April 11, one day after the annual shareholder’s meeting, to aceept the offer. Take-Two’s board has urged shareholders to hold off until it reviews the offer and informs them of its decision by March 27.

By Yi-Wyn Yen

For most of the past year, Facebook has been the hottest playground for developers to build applications that allow millions of people to play an online version of Scrabble or throw sheep at one another. But thanks to Google, MySpace may soon be the new virtual hotbed for developers.

Last week News Corporation’s MySpace (NWS) became the first social network to adopt Google’s (GOOG) OpenSocial, a set of common standards that allow developers to build applications. Since then, some developers who have been spending virtually all their resources building for Facebook’s open platform say they are now shifting a majority of their efforts to Facebook’s chief rival.

“We’re spending 90% of our resources building on OpenSocial now,” says Jia Shen, the CTO and co-founder of RockYou, a prolific widget maker that has built popular Facebook apps like SuperWall and Horoscope. “For our company, launches are really, really important in establishing an initial footprint.”

Says Keith Rabois, vice president of business development at rival widget shop Slide: “We are investing an incredible amount into MySpace.”

Though MySpace officially opened its doors to developers on March 13, developers complain that company hasn’t actively promoted the new applications to make users aware of them. They also say that MySpace, which has been plagued by privacy and spamming issues in the past, is being overly cautious in rolling out its open platform. “It’s like being handed a cell phone and not being allowed to make any calls,” Shen says. “We’re still waiting for the chance to grow and spread our apps on the site.”

MySpace did not return a call or e-mails seeking comment.

Still, the potential to tap a massive audience is enough for hundreds of developers to shift their attention to the MySpace platform. While Facebook is steadily gaining users, MySpace remains the largest social networking site in the U.S. Last month MySpace boasted 68 million unique visitors with the average user spending four hours on the site, according to comScore.

Google, whose own social network, Orkut, is little known outside Brazil, has been eager to make itself relevant in social networking. After Facebook popularized the open platform for social networks, Google announced its OpenSocial initiative last fall to encourage other networks to do the same using Google’s common set of standards. Among those that have joined the Google alliance include Orkut, LinkedIn and Hi Five, which will roll out its OpenSocial-padded platform next week.

“This was a brilliant idea on Google’s part,” says Shayan Ghazizadeh, the founder of Zoosk, which makes a popular dating app on Facebook. “They could have sold everyone to use the Orkut platform. Instead they set up this independent standard and encouraged everyone to gang up on Facebook.”

OpenSocial director Joe Kraus insists OpenSocial was never about Google going up against Facebook. Over a cup of soup last week at the Googleplex, Kraus discussed Google’s longterm vision. “The notion of having your friends around with you across the web will happen,” he says. “The notion of being social on any site will occur. You should be able to go to eBay and see what your friend’s friend has reviewed. What we want is the ability to have your friends to become social on the web.”

Google says any site, not just social networks, can choose to use OpenSocial. No permission needed. Yahoo is reportedly planning to use the OpenSocial standard for some of its web properties. Bebo, the social networking site that AOL (TWX) bought last week for $850 million, had originally aligned itself with OpenSocial but has since switched to using Facebook’s platform.

Kraus says he would “absolutely love” for Facebook to join OpenSocial. “Part of the nice thing about open governance is that all these [social networks] can have influence,” he says. “You can better align interests, and all your partners feel like they have a stake. What’s the famous line? ‘If you want to go fast, go alone. If you want to go far, go together.’ “

Facebook will likely try to go fast and far on its own. It has little incentive to convert to OpenSocial given that it has its own platform in place. Not to mention the fact that one of its minority investors is Microsoft (MSFT), which is clearly not a fan of Google.

Even without Facebook, OpenSocial is getting the backing from developers it needs on MySpace, according to Kraus. He says OpenSocial is something developers can “learn once” and “write anywhere.”

But some developers argue that the technical challenges of writing for different platforms isn’t the problem. Because every network has its rules, quirks and culture, using a common standard doesn’t necessarily save developers time. “Customizing the features takes a lot of work,” Slide’s Rabois says. “What you develop for MySpace users is different from Facebook users or Bebo users. This isn’t driven by technology. At the end of the day, it comes down to the users.”

“The reality is, you have to do special things for every social network,”Ghazizadeh says. “Maybe it’s not the same amount of work, but there’s still a lot you need to do. Google’s not the savior that it wants to position itself as.”

Perhaps not, but then, that was never Google’s intention with OpenSocial. “Truthfully,” Kraus says, “The goal is to make OpenSocial part of the fabric of the web.”