PNC Buying Mercantile Bankshares

one of the nation's biggest regional banking companies, is buying the Mid-Atlantic region banker Mercantile Bankshares for about $6 billion in cash and stock.

Pittsburgh-based PNC said Monday the deal will significantly expand its presence in the Baltimore and Washington, D.C., areas. PNC got a foothold last year in the attractive District of Columbia market with its $643 million acquisition of Riggs Bank, which was headquartered in the nation's capital.

Based on PNC's closing stock price of $73.60 on Friday, the deal values shares of Baltimore-based Mercantile at $47.24 apiece, a 28.4 percent premium over their closing price of $36.78 on Friday.

Mercantile Bankshares shares rose $7.97, or 22 percent, to $44.75 in premarket trading.

Mercantile shareholders will receive a combination of 52.5 million shares of PNC stock and $2.13 billion in cash. Under the deal, each Mercantile share will be exchanged for 0.4184 shares of PNC stock and $16.45 in cash.

PNC expects the deal, which is expected to close during the first quarter of 2007, to add to earnings per share in 2008.

Two Mercantile directors will join the board of the combined company. Mercantile Chairman, President and Chief Executive Edward J. Kelly III will be named a PNC vice chairman when the deal is completed.

PNC has $94.9 billion in assets and more than 2.5 million consumer and small business customers in Pennsylvania, New Jersey, Maryland, Virginia, Delaware, Ohio, Kentucky, Indiana and the District of Columbia.

Mercantile has $17 billion in assets offering services through 240 offices in Maryland, Virginia, the District of Columbia, Delaware and southeastern Pennsylvania.

PNC said the deal for Mercantile should make PNC a top-10 U.S. bank holding company by market capitalization and the 11th largest U.S. bank by deposits.

It said the deal should enable it to cut more than $100 million of operating expenses through the elimination of operational and administrative redundancies.

I cannot Stop!

This has been one action packed week for me. There was something going on every single night. Today in addition to Justine's follow-up appointment with the ENT, Jeff and I had 3 meetings to attend. There was one problem though - they were all at the same time! We opted out of Joshua's classroom information night. He has the same teachers this year for 5th grade that he had last year in 4th. It's a 2 teacher 4th/5th grade pod. He's thrived in that class and I'll really miss them next year. At any rate, since we knew the rules of the class, we attended the other 2 things.

I worked the spirit wear sales table at the JV football game and Jeff attended the band information meeting. Joshua is going to play the clarinet. I hope he sticks with this ... Josh needs to find something to be involved in. I hope this is it for him.

I'm totally whipped, but I'm still up because I have to pack. I leave tomorrow straight from work to head for the airport. I'm flying to Williamsburg/Newport News, VA to spend the weekend with 2 friends of mine. I can't wait! The trip will be way too short - but it will still be nice to get away ALONE. That's for sure.

I have a remedy for it being too short though. 2 weeks from now I'm taking a girls trip to Chicago with some other frieds. LOL!

U.S. GDP slows to 1.6%

The U.S. economy slowed in the third quarter, growing at a real 1.6% seasonally adjusted annual rate after a 2.6% pace in the second quarter, the Commerce Department estimated Friday. The downturn was sharper than expected. Economists surveyed by MarketWatch were expecting GDP to increase 2.0% in the third quarter. A weakening housing sector and a drop in business inventories pulled GDP down in the quarter. Real final sales increased 1.7% annualized, down from 2.1% in the second quarter. Meanwhile, core consumer prices increased at a 2.3% rate in the quarter, raising the year-over-year increase to 2.4% from 2.2% in the second quarter. The economy has grown 2.9% in the past four quarters.

Sony readies three films for 50GB Blu-ray release

Sony has finally announced the release of movies on 50GB Blu-ray discs that will be released by the end of the year.

The latest Adam Sandler flick, “Click”, will be available on 10 October, while “Black Hawk Down” gets high-def treatment by 14 November. “Talladega Nights; The Ballad of Ricky Bobby” joins its 50GB siblings on 12 December.

Although “Click” may seem an odd choice to herald in the era of 50GB discs, it was shot entirely in high-definition with plenty of extra content to fill up the disc. This added content includes an audio commentary, four deleted scenes, and seven featurettes.

“Black Hawk Down” will be the first Blu-ray disc to feature Blu-Wizard, which is a “unique playlist technology” that lets consumers customise how they watch special features. On this disc, extras include an audio commentary with author Mark Bowden, screenwriter Ken Nolan, producer Jerry Bruckhimer, director Ridley Scott, and US Special Forces Veterans ’93; as well as “The Essence of Combat—Making Black Hawk Down”, and several featurettes.

Fans of “Talladega Nights: The Ballad of Ricky Bobby” will be pleased to hear that the disc includes the Unrated Edition of the film, as well as many extra features.

Google-YouTube deal joins Net search and video forces.BIG BOY!!

A landmark in the future of media happened over a meal at Denny's.
Last week, as multiple offers swirled around YouTube, Google (GOOG) co-founder Larry Page and CEO Eric Schmidt met YouTube founders Chad Hurley and Steve Chen at a Silicon Valley Denny's.

"We discussed the possibilities and the excitement we both shared" for video on the Internet, Hurley says. "They have the resources to help us accelerate that."

Google is buying YouTube for $1.65 billion, the companies said Monday. The biggest force in search and Internet advertising is soaking up the biggest force in online video. But the combination means more than that.

The deal is part of a vision consistent across the technology and media landscape. It's the same vision that brought together YouTube and Google. Mass media — the grand media trend of the 20th century — is becoming personal media.

The Internet is making it possible for people to find and consume any song, TV program, video or movie anytime they want. That's because video content, from instructions on how to groom a poodle to clips from CBS' 60 Minutes, is increasingly available on the Net.

At the same time, cheap technology like video cameras and editing software is allowing just about anyone to create video content, adding ever more personal and esoteric media to the mix of offerings.

If you listen to YouTube's founders or Google's leaders, you can hear what that's going to be like. Search Google for "plumbing toilet flusher" and you'll probably find a how-to video on YouTube. "For queries like that, a lot of times video is the best result," Google's Page says.

Planning a vacation to Osaka, Japan? Search and find all the home videos taken by tourists and posted on the Web. Music videos, news and movie trailers will all be there. A few hours before Google said it will buy YouTube, YouTube announced deals to legally put music videos from Universal and Sony BMG on its site, and news and sports from CBS.

"This is the next step in the evolution of the Internet," Google CEO Schmidt says. On Monday, he kept noting that YouTube founders Chen and Hurley remind him of Google's founders in Google's early days — a couple of guys with a plan to alter the universe.

Bursting with video

All of this helps explain an explosion in Internet video. Venture capital investments in video-sharing sites are on track to set a record this year. VCs pumped $156 million into such start-ups during the first half of this year vs. $267 million all of last year, says Dow Jones VentureOne.

Internet video sites have exploded from barely any just one year ago to more than 240. New ones appear every week. The industry hasn't seen anything like it since the Web-retailing zaniness of the mid-to-late-1990s. Recent arrivals include Eefoof, Bix, Guba, Blennus, Stickam and Frozen Hippo.

Big players are crashing the party. In January, Google put up Google Video — which, by the way, isn't going away. "Google video doesn't go away ever — I want to make that clear," Schmidt says. Meanwhile, Yahoo and AOL are aggressively moving into video. So is News Corp.-owned MySpace.

Advertisers in just the past six months have come to love Internet video and are increasingly pushing ad dollars that way.

"You've got more video being viewed on YouTube than you do on some cable channels," says Ian Schafer, CEO of Deep Focus, a marketing firm that represents studios such as The Weinstein Co. He says that the marriage of Google and YouTube could form "another video network that in many ways eclipses the eyeballs of some mass media."

"We are seeing the number of terabytes of video delivered doubling every three months," says Alan Ramadan, a top executive at Macromedia, which makes the Flash player that shows video on both Google and YouTube. "I haven't seen this kind of demand before, and it's something that we all felt the Web could become one day — a distribution platform for rich content and experiences."

A busy weekend

At the center of the whirlwind stands YouTube, which actually moved its headquarters over the weekend from San Mateo to San Bruno in California's Silicon Valley — while the founders negotiated the Google deal. "It was a busy weekend," Chen says with a laugh.

The company launched in the summer of 2005, and by March 2006 was the star at high-level tech conference PC Forum. In January of this year, YouTube had 9.5 million unique visitors, according to ComScore. In August, that had grown to 72 million. To those users, YouTube is streaming more than 100 million videos a day. Yes, a day.

"This was a company that was moving very, very quickly," says Mark Heesen, president of the National Venture Capital Association trade group. He compares YouTube's trajectory to Skype, the Internet phone company started in August 2003 and sold to eBay last year for $2.5 billion in cash and stock.

In the past few months, it seems that everyone in technology realized the power of the video trend on the Net and saw the movement toward personal media. That's when the suitors came calling.

"A lot of parties expressed interest," Hurley says. Though he won't name them, Yahoo and News Corp. were among names that surfaced as suitors. "We wanted to remain independent, but as discussions progressed with Google, we saw an opportunity to remain independent and continue our vision, but with a lot more resources and experience behind us."

Google did, in fact, promise to leave YouTube alone — it will keep all its employees, separate headquarters, its own brand.

"I've been pretty giddy over this," Chen says. But he admits that he's not yet sure what, exactly, will change about the way YouTube or Google handles video. Right now, for instance, a search on Google Video will not find a video that's on YouTube. That will change.

"It all happened so quickly, the exact details of integrating the products are still up in the air," Chen says. "We're forming integration teams right now."

For Google, the deal means it now owns the top brand in Internet video and a backup plan for its own push into video. Google Video has failed to catch fire.

Some critics say Google just bought itself a boatload of potential lawsuits. A good deal of video on YouTube is snatched off TV programs and movies by individuals and posted there — and that could be infringing on copyrights. But Google and YouTube both waved that off on Monday, pointing to the day's deals with CBS and record labels as proof that content owners would rather work with YouTube than take it to court.

"The copyright concerns are overblown," says Suranga Chandratillake, CEO of BlinkX, a video search engine that competes with Google Video. "Content owners are more interested in doing business than ever" for Internet video.

They see how powerful this new personal media can be. The rock band OK Go recently proved that. It made a simple video with a handheld video camera of its four members dancing on treadmills and posted the video on YouTube. In four weeks, the video was viewed more than 3.5 million times. As a result, OK Go's album saw a 182% jump on Billboard's Digital Album chart and shipped another 50,000 CDs.

"This is a paradigm smasher of the first order," says OK Go manager Jamie Lincoln Kitman.

In the grand scheme of things, the $1.65 billion Google is paying for YouTube doesn't rank high among the largest U.S. buyouts so far this year, tracker Dealogic says. The biggest was a deal in March by AT&T to buy BellSouth, valued at $67 billion at the time. Alcatel agreed to pay $13.4 billion for Lucent in April.

But when it comes to shaping the future, a couple billion dollars negotiated under Denny's fluorescent lights might be the winner.