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Nine analysts and top management from thirty-seven sector firms examine the Media & Entertainment sector in this special 199-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info389.htm

TWST: Can we start out with a quick overview of interactive technology and what you see going on in that industry?

Mr. Smith: What I see going on in interactive technology is a movement toward a substantially changed way in which we interface with our television sets and to some extent our computers. We tend to focus on the TV side of things. The change is not happening as fast as some people might have expected two or three years ago, and that’s had an effect on some of the companies that are involved in this space, and particularly on their receptivity in the exchanges. However, we think that what the television set means to the household is going to be substantially different in 2005/2006 from what it is today. The first manifestation of that is video-on-demand, which is actively being rolled out by the major cable MSOs, and, with nary an exception, they’re all pretty enthusiastic about it and about what it can do for them — for a lot of reasons. We think that, once video-on-demand becomes relatively pervasive, perhaps toward late 2002, you’ll begin to see both the cable MSOs and the investment community turn their collective attentions to what’s next. This might include a number of functionalities such as interactive video or t-commerce, perhaps games and in some cases Internet functionality over television; those kinds of things will constitute the second wave.

TWST: Why has it taken longer than expected to roll out?

Mr. Smith: Because it’s an innovation and innovations, historically, take longer than generally expected to become widely deployed. In a recent piece, we pointed out that if you could go back to the early part of the 20th century, you’d probably find any number of people who would say that the automobile was never going to catch on, because it hadn’t caught on as fast as many people thought it would. They could, as a result, come up with all sorts of reasons why it wouldn’t catch on — it wasn’t dependable, it didn’t go fast enough, it tended to break down, all those sorts of things. But innovation always takes longer than is generally assumed will be the case. We don’t necessarily learn by experience at all.

TWST: Is there any evidence that consumers want something like that?

Mr. Smith: At this point about 2% of viewers who are Wink-enabled have tended to click on Wink (Nasdaq:WINK) ads, which is a pretty decent percentage, particularly from a cold start. There’s a company called Insight Communications (Nasdaq:ICCI), which is a New York-based cable operator that is sort of at the forefront of these things, especially using the technology on a local basis. For instance, in Insight’s Rockford, Illinois, system, you can click on a remote, get a list of restaurants in Rockford, click again and get a specific restaurant, and discover what the specials of the day are, and that sort of thing. As I said, we tend to think that, over time, there’ll be an increase in local content for interactive television. Most of the examples that are given of clicking and accessing information from the television set tend to be more national in nature, and I suppose, in the final analysis, they always will be, but we think that there will emerge a fairly healthy local component as well.

This special issue includes:

1) Broadcasting - TV & Radio - In an in-depth (10,600 words) Analyst Roundtable, James Goss, Vice President at Barrington Research Associates, Inc. and Alissa Grahm, Media Analyst at William Blair & Company, examine the outlook for the sector including, general market radio, regulatory outlook and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at nineteen sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Media & Entertainment Stocks - In an in-depth (3,100 words) Analyst Interview, Edward Hatch, Head of Media & Entertainment Equity Research Group for SG Cowen Securities Corp., examines the outlook for the sector and shares specific stock recommendations.

4) Entertainment & Media Stocks - In an in-depth (6,500 words) Analyst Interview, David Miller, Media and Entertainment Analyst at Sutro & Co., Inc., examines the outlook for the sector and shares specific stock recommendations.

5) Newspaper Stocks - In an in-depth (3,300 words) Analyst Interview, Leland Westerfield, Director in the Communications Group of UBS Warburg Equity Research, examines the outlook for the sector and shares specific stock recommendations.

6) Internet Media Stocks - In an in-depth (3,600 words) Analyst Interview, Safa Rashtchy, Vice President of U.S. Bancorp Piper Jaffray, examines the outlook for the sector and shares specific stock recommendations.

7) Outlook for Media & Internet Media Stocks - In an in-depth (3,400 words) Analyst Interview, Jordan Rohan, Head of Media Research at Wit SoundView Corp., examines the outlook for the sector and shares specific stock recommendations.

8) Interactive Television & New Media Technologies - In an in-depth (5,100 words) Analyst Interview, Murray Arenson, Equity Research Analyst at Morgan Keegan & Company, examines the outlook for the sector and shares specific stock recommendations.

9) Interactive Technology - In an in-depth (4,100 words) Analyst Interview, David Lee Smith, Senior Analyst covering the media sector for Dain Rauscher Wessels, examines the outlook for the sector and shares specific stock recommendations.

10) CEO interviews (average 2,500 words). Top management of thirty-seven sector firms examine the outlook for their firm and the sector.