More brutal honesty from the official statement (emphasis added):

"MySpace grew too big considering the realities of today's marketplace," said Jonathan Miller, News Corporation's chief executive of Digital Media... "I believe this restructuring will help MySpace operate much more effectively both structurally and financially moving forward. I am confident in MySpace's next phase under the leadership of Owen and his team."

The sort of talk may rattle employees, but it should hearten investors: without this sort of sober and honest thinking, Van Natta (pictured) doesn't even have a prayer of turning around his social network to surpass his nemesis and former boss Mark Zuckerberg at Facebook.

(Pic: Dan Farber)

Morgan joined HuffPo in October 2007 after working as general manager at CBSNews.com. As CEO, she served on the HuffPo board along with Hippeau, Arianna Huffington, co-founder Kenneth Lerer and Fred Harman of Oak Investment Partners, which in December put $25 million into the internet publication.

The image associated with this post is best viewed using a browser.That deal converted HuffPo's election buzz and traffic into dollars, signaling that the publication was entering the media big leagues. Another key development was an investigative reporting grant, accompanied by the influx of veteran editors from other publications, including one from the Washington Post.

It's been unclear whether the recent growth was compatible with founder Huffington's often volatile and always idiosyncratic management style; today's turnover could be a sign that HuffPo's investors demanded closer supervision — or, less climactically, simply wanted Morgan out.

UPDATE: HuffPo confirms, in a statement that pointedly notes, "The Huffington Post co-founders Arianna Huffington and Kenneth Lerer made the announcement" of Morgan's departure and not, say, Softbank. Morgan, meanwhile, pointedly notes that she's leaving with some shares of the company.

Huffington's quote:

Having worked closely with [Hippeau] for the last three years, I know firsthand what an invaluable asset he has been in our expansion. And now, given his impressive background in the industry and his intimate knowledge of HuffPost, Eric is uniquely able to hit the ground running as the company takes its expansion to the next level.

Hippeau was CEO of tech publisher Ziff Davis from 1989-2000 and serves on the board of Yahoo. At Softbank, he's a managing partner.

(Pic: Top via PaidContent, bottom via TechCrunch)

The deal slinging Barry Diller's attempt at reaching for some of that Daily Candy scrilla, Very Short List, was officially finished around Thursday night, we hear. Brief history: Diller, pissed on missing out on some of that email-blast money that he thought would be a shoo-in for solid ad sales with Daily Candy, decided to form a literal, cultured, once-a-day mailer for high-minded consumers to read. Diller, ever fond of his media buddies, got Spy-founder Kurt Andersen to jump on board. And it was highly enjoyable!

But then they didn't make any money off of it, and had to find an easy mark to unload it on. Enter New York Observer boy wonder Jared Kushner, stage left. Cut to: Thursday night. Six full-time VSL employees are given notice to pack their boxes, and get their shit out, as Friday would be their last day. After a messy, messy ordeal. A (now former) IAC employee writes in:

Timeline: We get a bunch of emails Thursday morning. At 10AM, the GM said he might have news (at 6PM, that news would finally be delivered). Someone else said that the deal had already gone through, and that it was finally over. And yet someone else said that we still had assignments for the next week, so it would stretch for another week. And then we heard that the person who was supposed to take over at the NYO had been fired the week before in their bloodbath. So nobody knew anything. Thursday night, the news came through. Our last day was Friday, after SIX WEEKS of being told we were going to be laid off. The worst part: some of us were on the phone with the NYO's people on Friday, trying to teach them how to do our jobs.

The image associated with this post is best viewed using a browser.

Very Short List recently won a Webby Award! :)

But now Observer staffers - who're probably a little overworked since a grip of their most able colleagues were fired - are going to be running Very Short List. :( So who knows what's actually going to happen to the mailer, or what the Observer plans on turning it into.

Most people familiar with the deal are pretty shocked by it, and by how easily Kushner was rolled on this one. The fact that the young mogul thinks he can make money off of VSL where Diller - with all of his resources - didn't is pretty incredible, and rather audacious. Lesser so is the fact that Kushner just fired a stable of some of the most able writers in New York, possibly capable of turning the Observer's web presence into a viable product. Right before acquiring VSL, something - again - actually proven not to make money.

Among other problems IAC had with Very Short List: the only people who have time to look at some bullshit emailer telling them what to read are broke writers like me, who don't have the money to spend on advertisers' products. Besides which, I already know what book I'm buying next week, because I have the time to figure it out. The high-minded, high-income consumers VSL originally set out to target are actually out there earning money, and are too busy to look at an email telling them how to spend it (besides which, they can typically suss that kind of thing out for themselves). So instead VSL had to depend on a niche audience, and at last count, that was only 200,000.

No telling how many people are going to hit that "unsubscribe" link over the next few mornings as VSL does (or doesn't) begin to hit their in boxes, quality control of the thing in check, or otherwise. For that matter, The Observer's daily mailer, too.

Update: Just found out that Sara Vilkomerson, a onetime VSL editor, will be working on the product at the Observer, where she already is. She'll be working on it there on top of her current responsibilities for no additional pay. And an email, sent to 30 or so VSL staffers, stringers, etc. that went out today:

Dear Team VSL:

Needless to say, this has been an intensely bittersweet week. Last Monday we picked up our Webby, which was the sweetest part, and testament to how inspired your work has been. Tomorrow, The New York Observer is taking over majority control and day-to-day management of VSL from IAC. Unfortunately, as part of the transition, they will not be taking any of VSL's existing staff. But as this extraordinary team disperses, we wanted to tell you how incredibly grateful we are for everyone's great work and dedication to this project. We are very proud of it, and aware of just how hard everyone has worked.

We're also pleased that Very Short List will endure — and sincerely hopeful that it can maintain the remarkable standard of excellence established by all of you, so that our 200,000 subscribers will continue being uniquely surprised and enlightened and entertained every weekday.

Thank you. And let's raise a glass together soon — date and place TBD.

Kurt Andersen, Gary Foodim, Michael Jackson, Emily Oberman and Bonny SIegler

as we look ahead and to position us for success in 2009, we’re continuing the work already underway to get fit as an organization: actively looking for ways to make process and structural changes to our business that will allow us to work more efficiently, with more scale. we’ve enlisted the help of Bain & Co. to work with the leadership team on identifying ways to leverage our strengths, and to improve and accelerate our performance.

You know it's Jerry, because there aren't any capital letters. Yang doesn't say "layoffs" or "cuts," but it's pretty clear what he means by "getting fit as an organization." The full memo:

yahoos,

it's time for another update.

as a company, we've made some great progress this year. while it hasn't been easy, especially in light of the challenges we’ve faced (not to mention the current downturn in the macro economic environment), we've accomplished a tremendous amount and we’re all working hard to continue executing on the company’s strategic plan.

as we look ahead and to position us for success in 2009, we’re continuing the work already underway to get fit as an organization: actively looking for ways to make process and structural changes to our business that will allow us to work more efficiently, with more scale. we’ve enlisted the help of Bain & Co. to work with the leadership team on identifying ways to leverage our strengths, and to improve and accelerate our performance.
we all know and experience parts of yahoo! where we can do better and be more agile in a competitive marketplace. this is consistent with what you told us in the YEES survey conducted in may – we need to find easier ways to work within yahoo!, and more importantly, create an even better experience for our customers and users.

each one of us will play an important role in this process. in the coming weeks, we’ll be soliciting your input and feedback. i want to know how we can improve the way we work with each other, and the way others work with yahoo!.

i know that yahoo! can benefit greatly from more discipline among all departments and functions, across the company. longer term, getting fit now will enable us to be more successful moving forward.

thanks,

jerry

Ok, sad thing first: a good Samaritan reset the password and tried to alert Sarah. But he also posted the new password, causing multiple people to try to log in at once, freezing the account for 24 hours. And now, the account has been deleted! Which is, as we said, maybe destruction of evidence? So for now this is, we think, all we'll get to see from this email account (if anyone finds evidence of saved emails, let us know.)

The full timeline of events, with corroborating evidence of the legitimacy of these screengrabs, is here. Here's why it all looks convincing:

• The emails to Ivy Frye, a Palin aide who's mentioned in the earlier email stories specifically wondering how best to hide her correspondence with the governor.
• The attached contact list (below) features an email address for husband Todd Palin that is legit. As well as an apparently genuine phone number for Bristol Palin and an address for Beth Leschper, Palin's deputy communications director.
• The email from Amy McCorkell, a known associate of Palin's from Wasilla who might have the governor's personal email address.
• Emails to and from Lt Governor Sean Parnell about a local radio talk host.
• Calls to the phone number listed for Bristol Palin apparently go to her voicemail.
• The public profile for the gov.palin address dates its last update to April of this year—well before she became McCain's running mate. So if it's a hoax, it's a hoax that began long before anyone outside of Alaska cared about Palin.
• We haven't seen these family photos before. Have we?
• The previously accessible public profiles for gov.sarah@yahoo and gov.palin@yahoo were both deleted at the same time.

Here are the screenshots of the emails saved before the account went dark, along with the contact list. It's newsworthy and we will not be taking it down!

CONTACT LIST

Beth Leschper (Beth Leschper SOA) [Edit]
beth.leschper@alaska.gov
Blanche Kallstrom (Blanche) [Edit]
mbkrdk@starband.net
Bristol Palin (Bristol) [Edit]
bristol_palin@hotmail.com
Chuck Heath (Chuck) [Edit]
chckheath@yahoo.com
fek9wnr@yahoo.com (Todd) [Edit]
fek9wnr@yahoo.com
ftb907@yahoo.com (Frank) [Edit]
ftb907@yahoo.com
Heather Bruce (Heather) [Edit]
khbruce@gci.net
ivy.frye@alaska.gov (Ivy SOA) [Edit]
ivy.frye@alaska.gov
ivyfrye@yahoo.com (Ivy Personal) [Edit]
ivyfrye@yahoo.com
Judy Patrick (Judy Patrick) [Edit]
jpphoto@mtaonline.net
kris.perry@alaska.gov (Kris Perry SOA) [Edit]
kris.perry@alaska.gov
krisandclark@yahoo.com (Kris Personal) [Edit]
krisandclark@yahoo.com
paymckhea@yahoo.com (Molly) [Edit]
paymckhea@yahoo.com
Roseanne Hughes (Roseanne Hughes SOA) [Edit]
roseanne.hughes@alaska.gov
Sally Heath (Mom) [Edit]
salheath@mtaonline.net
Sean Parnell (Sean Personal) [Edit]
sparnell@alaska.com
Sharon Leighow (Sharon SOA) [Edit]
sharon.leighow@alaska.gov
Sleighow@aol.com (Sharon Leighow Personal) [Edit]
Sleighow@aol.com
Track Palin (Track) [Edit]
track_44@hotmail.com

UPDATE:

ARLINGTON, VA — Today, McCain-Palin 2008 Campaign Manager Rick Davis issued the following statement concerning reports about Governor Palin's email and an invasion of privacy:
"This is a shocking invasion of the Governor's privacy and a violation of law. The matter has been turned over to the appropriate authorities and we hope that anyone in possession of these emails will destroy them. We will have no further comment."

Point one: legitimacy confirmed! Point two: I guess we'll have to blow up the internet now?

• "Mini-Me Sex Tape Released On Overseas Website" (avn.com)
• Sex WIth Mini Me (SexWithMiniMe.com)

Previously: Verne Troyer Sex Tape Costar Tells All!, Not The Verne Troyer Sex Tape

When Ward resigned, the company cited "personal reasons," but an alleged and anonymous LucasArts employee later suggested in a post on Gamasutra that Ward may have been pressured to leave, pointing to differing philosophies within the company.

That anonymous poster wrote "There are some that believe that more money can be made by licensing the SW and Indiana Jones IP to third party developers than through in-house development," hinting that the change in leadership "could spell trouble for the LucasArts division."

Ward was replaced by interim president Howard Roffman until former EA COO Darrell Rodriguez was named president in April. Whether the rumored layoffs are part of a plan to reorganize LucasArts development is unknown.

We've contacted LucasArts for clarification and comment, but did not hear back as of press time.

Update: While LucasArts public relations did not get back to us today, several former LucasArts staffers did, with one telling us that 75-100 employees were laid off from the company, including the producer of LEGO Indiana Jones and LEGO Star Wars: The Complete Saga, Shawn Storc.

According to another source, up to 80% of staff has been laid off in departments such as Production Services, which includes QA and Compliance, with jobs planned to be outsourced overseas. Cuts were also said to be made in development, with art and programming staffers being laid off.

Mike Fahey and Leigh Alexander contributed to this story.

By: Brian Crecente and Leigh Alexander

Rumored developer displeasure with Entertainment Software Association president Mike Gallagher may be partially to blame for nearly half a dozen member publishers dropping out of this year's E3 conference, Kotaku has learned.

This morning we broke the news that not only are Vivendi and Activision not attending this year's E3 they've both decided to drop out of the association all together. We've since learned that NCSoft, Her Interactive and id Software have all decided not to attend this year's show, though they are all remaining members of the association.

Only NCSoft had returned calls about the decision as of press time, saying that their decision to not attend E3 this year, the first time they won't in the company's history, was due to the development cycle of their games and in no way reflects on the ESA or it's leadership.

But several industry sources who wish to remain anonymous say Gallagher is in part to blame for issues surrounding this year's E3.

Wedbush Morgan analyst Michael Pachter also believes that the drop-outs are spurred by decisions made by Gallagher, who he says is less knowledgeable and sophisticated than his predecessor, Doug Lowenstein.

"Lowenstein was a very savvy industry veteran who paid attention to the goings-on in the industry and cared what the community had to say," Pachter said. "The new person.. whose name completely escapes me because I've never met him or heard from him, is far less knowledgeable and sophisticated about this industry than Doug was and is going to make some rookie mistakes."

"Doug used to be a very visible spokesperson in congress... when you'd get these [things like] Barack Obama saying videogames are corrupting our youth or MADD saying that Take-Two should pull GTA off t he shelves, you would hear Lowenstein immediately shoot back. I would guess that Activision doesn't perceive the same value from the ESA as they did under Doug's leadership. I criticize [Gallagher's] lack of drive to learn about the industry."

While the ESA and Gallagher declined to comment for this story, several sources tell us that Gallagher has come under fire for what is perceived as his poor handling of the association.

In March, GamePolitics reported that the ESA shuttered its New York office, and in so doing fired that office's head, senior VP and general counsel Gail Markels. Markels, who reportedly earned $317,000 in 2005, successfully led all the ESA's litigation efforts against unconstitutional video game laws.

The ESA apparently trimmed its lobbying initiatives throughout 2007 while budgets rose, according to a report made by GameSpot on public filings. Last year, the Association spent a record $2.86 million on lobbying — even though it chose to confront fewer issues, removing lobbying on online gambling, taxation of virtual property, and Internet privacy in favor of focusing solely on constitutional, copyright and relevant trade issues.

Pachter points to the timing of this year's E3 as another mistep. He believes that the new July date just doesn't work out for Activision and Vivendi for financial reasons. Most game companies have a financial quarter that ends in June. Those companies usually have to observe a two-week "quiet period" following the end of the quarter, during which they may not speak to investors — and Pachter says that Activision is especially strict about observing theirs to the minute.

With that in mind, the July E3 is just financially inopportune for both Activision and Vivendi based on the schedules of their fiscal quarters.

"And a Vivendi that feels snubbed could be a big detriment to the ESA, Pachter said. "Vivendi's revenues are so heavily from online subscriptions, which technically don't fall under the ESA... but if ESA ever cares to represent the MMO companies, they really have to have Blizzard as part of their consortium. And there's no question that the market in 20 years is going to shift to a more heavily-utilized download model."

Activision and Vivendi, for their part, say the decision to not renew their membership in the ESA this year was purely a business one.

"After careful consideration, Activision has decided not to renew its ESA membership for business reasons and will not be participating in any official E3 activities. We appreciate the work that the ESA has done over the years in promoting the interactive entertainment industry with state and federal governments and wish the ESA best of luck with the show."

Vivendi sent a similar statement to us today. Both declined to comment about Gallagher's leadership of the ESA.

Activision did confirm with us that while they will not be attending the show, they will be holding an event on the first day of E3, though not at the convention center. Vivendi has not yet commented on whether they will be showing outside of the convention center during the show's week.

The ESA contacted us after the story went live to clarify that Codemasters will be attending E3 afterall.

So, are readers finally tiring of the torrent of shallow news about no-name celebrities, as Salon believes? The reasons for the abrupt decision are more prosaic, and depressing. Pagesix.com experienced its first day with more than 1m pageviews, last week, when the site published a gallery of photographs of Eliot Spitzer's hooker, Ashley Alexandra Dupré. But it was not making sufficiently rapid inroads into a market dominated by Time Warner's TMZ, and gossip blogs such as Perez Hilton. But the decision to shutter the spinoff gossip site likely owes even more to the Australian media mogul's pessimism about the US economy, and advertising spending.

Murdoch, disclosing a slowdown in ad revenue at his Fox television stations and newspapers, has predicted a "temporary downturn for a year or so." Other media companies, such as the New York Times, are also suffering from the advertising downturn, and have cut costs by making piecemeal layoffs.

The News Corporation boss, who has funded a decade of losses at his tabloid, the New York Post, is typically a patient investor. But he can also be decisive. He will be wary of overstretching the company, particularly after stretching to acquire the Wall Street Journal. During the last big advertising downturn, Murdoch nearly lost control of his company.

Anyway, before competitors gloat at News Corporation's reverse, they should remember this: if advertising spending has indeed turned down, the downturn will not spare web sites. The web's boosters hope that newly cost-conscious marketers will simply redirect their budgets from print and television to the web; that was the hope during the last recession, and it was wishful thinking, then and now. Murdoch will be embarrassed for a day; other media groups will be subsidizing loss-making websites for months before they come to the same conclusion.

The "Change in Control Employee Severance Plan" will give "minimum levels of compensation" to all employees in the event that they are fired as a result of a change in control of the company. While Take-Two goes to some lengths to point out that this has nothing to do with the possibility of a buy-out, they also note that the plan was created to address the "understandable concerns" that some employees have about the possibility of an EA buy-out.

We hope that this benefit will alleviate some of the concerns you may have, and allow you to remain fully focused on your responsibilities. You are critical to the success of Take-Two. The most important contribution each of us can make during this period is doing our jobs with the same focus, skill and creativity we always have.

We remain committed to open communication with all of you, and will continue to update you when and as we can.

Creativity is at an all-time high at Take-Two — this is an incredibly exciting time for all of us and also for our customers who depend on us for cutting-edge innovation and the industry's most exciting games. We know we won't disappoint.

Sincerely,
Strauss and Ben

Was that the sound of stockholders announcing their intentions? Hit the jump for the full email.

EMAIL TO EMPLOYEES REGARDING ADOPTION OF THE TAKE-TWO INTERACTIVE SOFTWARE, INC. CHANGE IN CONTROL SEVERANCE PLAN

Dear Team:

Last week we informed you of EA's unsolicited proposal to acquire Take-Two, which our Board rejected. Although there is no update on the proposal, we have been working to substantively address the understandable concerns that some of you may have as a result of the proposal. Therefore, we have established a formal severance plan for the benefit of our employees, and are publicly announcing that plan today.

Please note: we are not assuming that any change in control will occur or, if there were a change, that any positions would be affected.

Our "Change in Control Employee Severance Plan" provides for minimum levels of compensation for all employees in the event that an employee's position is terminated as a result of a change in control of the Company. These types of plans are fairly common for publicly traded companies. In fact, both Electronic Arts and THQ have change in control severance plans. If you have any questions about our plan, please speak with your manager, local HR director or Courtney Kelley.

We hope that this benefit will alleviate some of the concerns you may have, and allow you to remain fully focused on your responsibilities. You are critical to the success of Take-Two. The most important contribution each of us can make during this period is doing our jobs with the same focus, skill and creativity we always have.

We remain committed to open communication with all of you, and will continue to update you when and as we can.

Creativity is at an all-time high at Take-Two — this is an incredibly exciting time for all of us and also for our customers who depend on us for cutting-edge innovation and the industry's most exciting games. We know we won't disappoint.

Sincerely,

Strauss and Ben

I also, coincidentally, received Take-Two's comments on the whole, now-public, affair while on the phone with Riccitello. While the two seem to match up on the basic facts, their final analysis don't.

"Basically, (Take-Two) said to us that they thought the offer was inadequate and the price wasn't right," Riccitiello said. "Pretty much the standard response you get from just about anyone in a case like this."

Take-Two's official line pretty much says the same thing, though with a bit more detail on why the $2 billion offer doesn't work for them.

"Electronic Arts' proposal provides insufficient value to our shareholders and comes at absolutely the wrong time given the crucial initiatives underway at the Company," said Strauss Zelnick, Executive Chairman of the Board of Take-Two. "Thanks to the extraordinary efforts of our creative and business teams, Take-Two has made enormous strides in the past 10 months toward our common goal of being the most creative, innovative and efficient company in our industry. We're extremely proud of our unique portfolio of game franchises, exceptional creative talent and loyal consumer following. Our Board believes that we will build greater value for our stakeholders by remaining relentlessly focused on our strategy and delivering on our mission of making the highest quality interactive entertainment.

"In addition to undervaluing key elements of our business, EA's proposal fails to recognize the value we are building through our ongoing turnaround efforts, which will further revitalize Take-Two. While we have made substantial progress already, the turnaround of our business which we initiated in June is not yet complete, and we believe its benefits have not been recognized in either our current stock price or in the value of EA's proposal.

"While the Board believes that entering into discussions with EA at this time is not in the best interests of shareholders, we had offered to enter into a good-faith dialogue with EA to determine if our companies can reach common ground on the appropriate value of Take-Two as a first step to realizing a mutually beneficially transaction. However, given the great importance of the Grand Theft Auto IV launch to the value of Take-Two, the Board has determined that the only prudent and responsible course for our Company and its stockholders is to defer these discussions until immediately after Grand Theft Auto IV is released. Therefore, we offered to initiate discussions with EA on April 30th, 2008 (the day after Grand Theft Auto IV is scheduled to release). We believe this offer demonstrated our commitment to pursuing all avenues to maximize stockholder value, while we believe that EA's refusal to entertain this path is evidence of their desire to acquire Take-Two at a significant discount, whereas we believe this value rightly belongs to our stockholders."

When I told Riccitiello about Take-Two's desire to forestall talks until after the GTA launch, perhaps because they want to see how one of their top titles will do before selling, he said that they did their best to hold off on their offer. In fact EA first approached the board in December, but decided to wait on starting serious talks to make sure the rumblings wouldn't create problems for the Rockstar team working to get the game wrapped up. But now, Riccitiello believes, the company is pretty much done and the time to talk is almost past.

"I initially brought the offer in December, but we waited until GTA development was complete," he said, pointing out that most analysts have already built forecasts for GTA sales into the company's stock value. "That's already baked into their estimates. The truth is the longer they wait the less valuable the (GTA) asset becomes we have less time to influence the holiday sales.

"We felt we got the timing right."

I asked Riccitiello about the perception some have, right or wrong, that Electronic Arts is a company that buys up successful franchises and then runs them into the ground but pumping out endless iterations of the same game. He was quick to point out the reorganization the company went through last year to try and place a greater emphasis on developers over the larger EA brand. The move, from what I heard from people at Bioware, Maxis and Pandemic, was definitely in the right direction.

Riccitiello, in fact, points to their new label model, one inspired by conversations he had with Rockstar's as proof that Take-Two and it's developers would find a happy home at EA.

"As a company, Take-Two is a company that has been faced with operations, financial and legal challenges," he said.

"We think that (the recent reorganization at EA) creates a super environment for the studio labels... We can give them access to the world's best distribution model."

News of this offer brings to mind, for me, rumors I heard earlier this week that a large company (I heard Microsoft, but it could just as easily be EA) was in fact courting some of Take-Two's largest shareholders in an effort to line-up a hostile take-over if an equitable purchase couldn't be arranged, a question that riled the folks at EA.

"We haven't taken anything off the table in terms of options," Riccitello said. "But we see ourselves, in many ways, as a White Knight. There is nothing friendlier than a 60 percent increase in their stock."

"Frankly you can write anything, but look at what we've done (with the labels model). People are flocking to that. I think we can be a good home for these developers."

Riccitello, incidentally, said he was in New York, where Take-Two is based, rather than EA's headquarters in Los Angles, this weekend. I asked if it was because he expected to be sitting down with Take-Two in the coming days and he declined to say. But did say it was a good place to handle the press attention in the coming week.

EA Makes Offer to Buy Take-Two [Kotaku]

Electronic Arts just called me to let me know that they are making a bid to acquire Take-Two Interactive in an all-cash merger of about $2 billion.

The offer set Take-Two's stock at $26 per a share, about 64 percent over the company's closing stock price prior to the company's Feb. 15 offer.

Take-Two's board rejected the offer, leading Electronic Arts to make their offer public to the company's shareholders.

In the letter, attached in the jump, EA CEO John Riccitiello tells Take-Two's Stauss Zelnick that the buy-out would help both the company and its stock holders:

Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders. Take-Two's game designers would also benefit from EA's financial resources, stable, game-focused management team, and strong global publishing capabilities. ... There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today.

Specifically, the letter mentions that EA could really help out with the launch of GTA IV. Hit the jump for the full letter and check back later to read our interview with Riccitiello.

Updates:
EA CEO/ Take-Two Chairman Talk Take Over Bid
The Take-Two Letters: EA Rejected
EA or Not EA: The Take Two Question

February 19, 2008

Mr. Strauss Zelnick
Executive Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012

Dear Strauss:

Thank you for your letter of February 15, 2008. While I appreciate its courteous tone and value our ongoing dialogue, I am disappointed that you have rejected Electronic Arts Inc.'s ("EA's") $25 per share cash offer to acquire Take-Two Interactive Software, Inc. ("Take-Two") and declined to engage in the friendly negotiations we proposed. We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So, to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EA's offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash. This offer is subject to Take-Two agreeing by February 22, 2008 to commence negotiation of a definitive merger agreement and to permit EA to commence a limited due diligence review of Take-Two.

Our revised all-cash offer represents a 64% premium over Take-Two's most recent closing price and a 63% premium over Take-Two's 30-day trailing average price (based on prices as of market close on Friday, February 15th). We believe our offer represents a unique and compelling opportunity for Take-Two shareholders to maximize the value of their investment in the company, with materially lower risk than if Take-Two proceeds on a stand-alone basis.

We also believe that the transaction we are proposing represents a uniquely attractive opportunity for Take-Two's creative teams and key employees. EA is a diversified leader with well-established franchises and proven intellectual properties, global reach, and significant financial resources. I know we both agree that Take-Two's talented creative teams deserve a permanent home within a stable and growing publisher that provides these teams an environment to do what they do best - create great games. EA is organized in a four-label model that provides our creative teams the autonomy they need to fully realize their creative ambitions, while also providing a stable and supportive corporate and publishing infrastructure which allows them to best address the global marketplace. We have the resources to make the significant investments in technology and infrastructure needed for the most creative and innovative games in the industry. In short, a combination with EA would provide Take-Two's studios and employees a combination of the right resources for investment and global reach, and the right environment to do their best work.

We believe that Take-Two's shareholders would not be well-served by any further delay in negotiating and completing the proposed merger. While the videogame industry remains an attractive, high-growth business, the challenges and risks in the business are escalating, and the need for scale is becoming more pronounced. Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.

We also believe that any delay in this proposed transaction works against the interest of Take-Two's shareholders, because:

— There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA's strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year's holiday selling season.

— We believe Take-Two's current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.

— With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.

We also believe the transaction we are proposing will create value for EA's shareholders. In addition to the top-line benefits noted above, we can achieve bottom-line benefits by combining Take-Two's and EA's corporate and publishing infrastructures and by optimally supporting Take-Two's creative teams and intellectual properties in EA's decentralized label structure.

Considerable thought, time and resources have been put forth in developing this offer, and our Board of Directors unanimously supports it. Our offer is not conditioned on any financing requirement. It is subject to the satisfactory completion of a due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements, and the satisfaction of customary conditions to be set forth in such agreements. We are prepared to move forward immediately with formal due diligence and the negotiation and execution of a definitive merger agreement and believe that with adequate access to the necessary information and people, we can complete both in approximately two weeks. We believe that our due diligence review can be completed with minimal disruption, requiring only limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. We also have prepared a draft merger agreement that we can forward to you immediately.

Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two's shareholders.

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Two's shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22.

LucasArts president Jim Ward surprised the developer on Monday with news that he was leaving the company he's been with for nearly ten years.

In a prepared statement sent to Kotaku shortly after we broke the news of his departure, Ward sang the praises of a game development company he says he's helped reboot.

"I am so proud of all people and the work we've done together at LucasArts over the last four years," he wrote. "It's been an incredible experience. Together we've rebooted the company and set LucasArts on a path to even greater success. This is a fantastic team and they are positioned for their best year ever."

Margaret Grohne, PR director for the game development arm of Lucas Films, said LucasArts found out about Ward's decision Monday evening.

"He told the company he was leaving for personal reasons and he didn't elaborate on that," she said. "He is leaving in a couple of weeks.

"We are starting a search for a new president and in the transition Howard Roffman, president of Lucas Licensing, will be stepping in. He has been with the company for over 25 years and very intimately connected with the games business. "

Ward's departure, Grohne said, will not impact release dates or development schedules for any of LucasArts' games.

"We have a really strong line up for 08," she said. Ward "has a very strong team in place and he has set up a very strong company. He is leaving us in a very good place."

"We are sorry to see him go. He's been with the Lucas film organization for over 10 years and he has definitely contributed quite a bit to our organization."

Ward was scheduled to speak at next week's D.I.C.E. conference in a talk entitled "Breaking the Broken Model!", but LucasArts confirmed he will no longer be attending the event.

Many of you know I've said in the past that 10 years was about the right amount of time for any CEO to stay at the helm of a company. Now that I've reached that milestone myself, I still believe this. It's time for eBay, and this community, to have a new leadership team, a new perspective and a new vision.

As we announced today, I will step down as eBay's President and CEO on March 31, 2008, and our current head of eBay Marketplaces, John Donahoe, will succeed me in my role. Rajiv Dutta, our current president of PayPal and former CFO for several years, will replace John as the president of eBay Marketplaces. You'll be hearing more from them and their teams in the coming weeks and months.

Looking back, I was given a remarkable opportunity when Pierre Omidyar, eBay's founder, asked me to join eBay in January 1998. Ten years later, I couldn't be more in awe of what we accomplished together. When I joined eBay, it was a small site, in some ways still very much an experiment. Most people didn't know, or didn't believe, that perfect strangers would trade with one another, and that they could almost always be counted on to do the right thing.

Over the course of a decade, you have helped revolutionize the way people use the Internet, buy and sell things, create and grow businesses, and connect with each other. In 2007 alone, our community of hundreds of millions of people around the world traded more than $60 billion in goods. Millions found the courage to tap their entrepreneurial spirit and start businesses. Millions more have pursued passions and made connections that will last a lifetime. And countless others found that perfect thing - an old high school yearbook, a favorite toy from their youth - that they couldn't get anywhere else.

I am truly astounded by what has been built here. And all the credit goes to you, our community. You took the chances to start businesses. You created markets for products where there were none before. You defined what it means to be a good citizen in this Internet-enabled world. And yes, we hit a few bumps along with way, but that's to be expected when you're building something that has never existed before. But even, and especially, during those times, I was always inspired by the passion you showed.

It's with great pride and a strong sense of accomplishment that I leave this post and hand it over to the capable leaders we have in John and Rajiv. I've known both of them for many years and have believed for a long time that they are the ideal people to steer eBay into the future.

eBay is in my blood and always will be, so I'm not stepping back completely; I will remain on eBay's Board of Directors. And of course, I'll keep buying and selling on the site.

I'm so very honored to have worked with you in building this incredible community. Thank you for letting me be a part of it for the last decade.

Meg

Responding to rumors we broke earlier today that College Hoops 2K9 has been canceled due to a breakdown in negotiations with the license holders for collegiate basketball, 2K Sports parent company Take-Two had this to say to Kotaku:

2K Sports has decided not to continue negotiations with the CLC for the license for its top-rated College Hoops franchise, which would have been released next in November 2008. We are committed to providing fans with high-quality, critically-acclaimed sports games, but given our disciplined approach to the business, we do not believe the current discussions would result in an acceptable outcome.

I followed up with Take-Two to try and get more details and while the declined to talk about any roll EA might have had in the break-down, they did confirm that College Hoops 2K9 has indeed been canceled.

No word still from The Collegiate Licensing Company or Electronic Arts, but we'll keep you posted.

Rumor: 2K9 College Hoops Canned, EA Seeks NCAA Deal [Kotaku]

WARNER BROS. ENTERTAINMENT TO RELEASE ITS HIGH-DEFINITION DVD TITLES EXCLUSIVELY IN THE BLU-RAY DISC FORMAT BEGINNING LATER THIS YEAR Decision Made in Response to Strong Consumer Preference for Format

(January 4, 2008 - Burbank, CA) - In response to consumer demand, Warner Bros. Entertainment will release its high-definition DVD titles exclusively in the Blu-ray disc format beginning later this year, it was announced today by Barry Meyer, Chairman & CEO, Warner Bros. and Kevin Tsujihara, President, Warner Bros. Home Entertainment Group.

"Warner Bros.' move to exclusively release in the Blu-ray disc format is a strategic decision focused on the long term and the most direct way to give consumers what they want," said Meyer. "The window of opportunity for high-definition DVD could be missed if format confusion continues to linger. We believe that exclusively distributing in Blu-ray will further the potential for mass market success and ultimately benefit retailers, producers, and most importantly, consumers."

Warner Home Video will continue to release its titles in standard DVD format and Blu-ray. After a short window following their standard DVD and Blu-ray releases, all new titles will continue to be released in HD DVD until the end of May 2008.

"Warner Bros. has produced in both high-definition formats in an effort to provide consumer choice, foster mainstream adoption and drive down hardware prices," said Jeff Bewkes, President and Chief Executive Officer, Time Warner Inc., the parent company of Warner Bros. Entertainment. "Today's decision by Warner Bros. to distribute in a single format comes at the right time and is the best decision both for consumers and Time Warner."

"A two-format landscape has led to consumer confusion and indifference toward high definition, which has kept the technology from reaching mass adoption and becoming the important revenue stream that it can be for the industry," said Tsujihara. "Consumers have clearly chosen Blu-ray, and we believe that recognizing this preference is the right step in making this great home entertainment experience accessible to the widest possible audience. Warner Bros. has worked very closely with the Toshiba Corporation in promoting high definition media and we have enormous respect for their efforts. We look forward to working with them on other projects in the future."

The Entertainment Software Association today announced that the E3 Media & Business Summit will be returning to the spacious digs of the Los Angeles Convention Center for next year's event which will run from July 15 through July 17. But that doesn't mean that the new E3 is returning to its old ways.

'We are very much not going back to the old E3," Rich Taylor, senior vice president of communications and research for the ESA, told me in an interview. "I think we are all on the same page for the industry on what we want those days in July to be about."

"This is the new E3, new and improved."

And that, according to Taylor, means the small, more intimate meetings of this year's E3. A toned-down affair that saw 3,000 to 4,000 attendees and whole lot less booth babes.

The decision to move back to the LA Convention Center came after Santa Monica's E3 this year was rife with complaints, mostly about the amount of walking people had to do to get to appointments. This year's E3 did away with the convention center all together, hosting different publishers in suites at hotels spread out across Santa Monica. There was an exhibit hall, but it was not well attended, mostly because of its location and the fact that it wasn't anywhere near the hotels.

"We talked to many folks, participants on both the media and industry side of things, one of the overriding things they wanted was a more centralized facility," Taylor said. "That's one reason we moved back to the LA Convention Center... hotels are walking distance from the convention center, they're closer to each other..."

Taylor said that despite some people's fears, this year's smaller E3 managed to attract just as much media attention and he believes new E3s will continue to do so.

In the press release sent out this morning the ESA said the event will "continue to focus on the business of the computer and video game industry, with an emphasis on press events and small meetings with media, development, and other key sectors. While there will be opportunities for game demonstrations, the 2008 E3 Media & Business Summit will not feature the large trade show environment of previous years."

Next year's E3 exhibitors will include both ESA and non-ESA members and range the gamut from online and mobile to PC and console gaming. As with last year, attendance at all events, meetings and demonstrations will be invitation only. Media attendance will also remain by invitation only, with attending companies having a say in who gets invited.

"The US is the world's number one video game market and the E3 Media & Business Summit is its premier video game conference. The 2008 Summit will provide a professional and efficient environment for suite-based meetings with media, and other industry leaders," said Michael D. Gallagher, CEO of the ESA, which represents US computer and video game publishers and owns the E3 Media & Business Summit. "We look forward to welcoming the media and top industry executives to a centralized, business focused and personalized experience. Our program of high-level meetings, networking and personal dialogue, and industry-shaping panel discussions will capture the explosive growth we have seen in 2007 and lay the foundation for the 2008 video game marketplace."

Taylor declined to say whether future E3s will be at the LA Convention Center or whether any sort of multi-year contract was signed.

"We are pretty laser focused on making July a success right now," he said.

More details are expected to hit in the coming months, but for now color me... strangely undecided.