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Moderator:
Osmar Abib, Managing Director, Global Energy Group, Credit Suisse

With crude oil futures approaching $120 per barrel, it's no wonder that this breakout session on future of oil and energy attracted significant interest from attendees. Moderator Osmar Abib of Credit Suisse highlighted the rising prices of oil and gas and the complex relationship between oil prices, interest rates, inflation and the strength of the U.S. dollar. He cited an OPEC official who asserted that there is no supply problem because there are no lines at the gas pumps and that the more immediate problem was the rising price of food. Abib emphasized that it is time to recognize the need to address the rapidly increasing demand for energy from developing economies.

Karen Harbert of the U.S. Chamber of Commerce stated that the demand for energy will increase 50 percent between now and 2030, with 70 percent of that figure coming from developing nations. India and China alone will account for a significant portion of increased demand. To address the problem, she said, approximately $20 trillion in new investment across various technologies is required. Unfortunately, there are several barriers to get the money flowing, including resource nationalism. She also emphasizes on the lack of sufficient investments necessary to meet the demand.

What does this mean to the price of oil? Antoine Halff of Newedge predicted that price volatility is here to stay. According to him, producers no longer find it necessary to increase production to maximize profits; now they are focused on capturing the rent (controlling the market), even if it means curtailing production. He also believes that renewable sources will constitute a small fraction of the overall energy supply.

Robert Cavnar of Milagro Exploration cited access restrictions to energy sources as a supply impediment, noting that most of the wells his company drills these days are at least 14,000-16,000 feet deep, up to a mile deeper that wells that were dug just a few years ago. In contrast to Halff's assertion that renewables will constitute a small niche in the overall future energy supply, Joseph Stanislaw of the JAStanislaw Group said he was certain that renewables will emerge to become one of the main sources of U.S. energy. Although passionate about renewable energy, both Stanislaw and Harbert agreed that the United States cannot get away from reliance on traditional energy. Nor is it good to demonize oil and gas, which continue to fuel the existing infrastructure. Instead, they suggested, oil and gas will have to become bridges to a renewable-rich future.

The panelists also discussed the relative advantage that the national oil companies have over their international counterparts. Yet despite having access to huge reserves, national oil companies are reluctant to invest in exploration. This must change, the speakers agreed.

Another important factor affecting the growth of the energy sector is the availability of talent. "We're having a difficult time sourcing technical people," said Robert Cavnar of Milagro Exploration, who added that while experience is valuable, his average engineer is 55 years old. Russia, he said, has done a tremendous job of training skilled petrochemical engineers, but international oil companies find it hard to recruit them.

Nuclear energy, panelists agreed, is the elephant in the room, capable of filling the energy gap between supply and demand. But the nuclear industry suffers the same problems: a lack of materials (uranium), engineers and capital.

In conclusion, panelists concurred that the political environment isn't yet even conducive to a long-term focus on energy demand. Changes in the regulatory, fiscal, legal and diplomatic realms will have to come first.

Moderator:
Lewis Feldman, Partner, Goodwin Procter LLP

If the audience anticipated blunt discussion, this panel did not disappoint. Moderator Lewis Feldman opened with a discussion of current real estate market dislocation, fueled as it has been by a combination of low prices, easy credit and a resulting high demand. Lending standards retreated as Wall Street's use of collateralized debt obligations (CDOs), with highly profitable transaction fees and potential returns, had "investors consuming them like sumo wrestlers at a Las Vegas buffet line." Problems began to emerge by 2006, and now the losses are piling up. "So where, asked Feldman, is the bottom?"

All eyes turned to iconic Sam Zell of Equity Group Investments, who stressed how crucial it is to recognize that the real estate market is "heterogeneous," with impacts varying by market sector. "The single-family residential (SFR) market is dead," he said, noting that the cause of death can be traced to failed federal policy. "For forty years, every single time the federal government has tried to increase home ownership above 62 percent — and it went up to 69 percent this decade," he added, "the policy fails, and home ownership retreats and a recession ensues.

"Buy all the SFR you can at 40 cents on the dollar," he added, "because there is a huge oversupply."

In the commercial real estate (CRE) market, strong demand exceeds supply for assets like Class "A" office buildings. This market is in relatively good shape, Zell said, adding, "I have seen the numbers on losses and they are overstated in this area." Still, he warned, construction could effectively stop by the end of this year. Why? Because a loss of confidence has frozen lending since July 2007, and it takes about nine months for CRE work to start drying up due to a lack of capital.

Brian Fabbri of BNP Paribas noted that banks are tight, but with reason: "Builders are still building more SFR than people are buying," he said. "We should be concerned because all the losses to date incurred at full employment absent a recession. If we lose 1.5 million jobs in a recession, it is going to get worse." He predicted that the SFR market won't bottom out until well into 2009.

Current federal programs support a bunch of people who never should've bought houses,"interjected Zell. "They should not be getting our sympathy because they have no equity invested in the property and got loans without financial means tests. They must be cleared from the SFR market for it to return to good health. They can liquidate their asset or choose the foreclosure process." The federal government, he said, "is hurting the SFR market by helping those who never should've got their house in the first place."

"This housing bubble fed itself through borrowing from the pool of future homeowners for the next 10 years," noted Bobby Turner. "The market incentives encouraged overbuilding in suburbs in outlying areas, where land was cheap and transportation costs were 9 to 14 percent of disposable income." Now that transportation costs are hitting 25 percent of disposable income, he said, people can't afford to live in outlying areas and commute to work, and this is making urban areas more attractive.

Michael Van Konynenburg of Eastdil Secured spoke of the great run CRE investors and bankers did enjoy from 2002 to 2007. Throughout this period, he said, commercial lending didn't loosen its standards, as the SFR market did. But the SFR impact on the CRE market, along with the declining dollar, a recession and not much CRE to sell, has a chilling effect on CRE lending: down 80 percent from 2007 to the first quarter of 2008. If the CRE investment market doesn't recover, he predicted, there could be material stress in CRE by late 2010. "We have a recession, and investors are waiting for the federal government to show its hand," he explained. "Does the government take steps now to make matters worse? Or does the federal government give clear signals that enable the markets to unfreeze themselves?"

The panel was pessimistic that foreign investors will "save" the real estate market. "There are always opportunities," said Zell, "but there isn't always scale. While there's a demand for high-quality office buildings, there is excess supply in houses. There simply is no scale to buying up SFR. This is compounded by the fact the U.S. liquidity problem is not a worldwide problem. There is plenty of investment going on external to the U.S."

Investors in the Middle East would be the most capable investors, said Fabbri, noting that they are savvy and invest wisely. While they have invested big in the past, they like to visit to see what they bought. U.S. politics (visa and security challenges) make it much more difficult to come to the country relative to travel ease in EU countries. The U.S. tax regime is also somewhat unfriendly, he continued.

"The domestic challenge," said Bobby Turner of Canyon Capital Advisors, "is getting current investors, most notably pension funds, to focus on opportunities and not on current problems."

The panel's discussion was specific to asset prices, not rents, and their shared belief that the country is in recession. Feldman asked each to pick one opportunity for investing, and Fabbri picked international investments for the best returns. Turner opted for domestic urban rental housing that benefits from immigration trends. Van Konynenburg said he likes major hotels in urban infill, while Sam Zell stated that he's bullish on Brazil, suggesting it may exceed China as an economic power in 30 years.

Moderator:
Frank Douglas, Senior Fellow, Ewing Marion Kauffman Foundation

Pharmaceutical firms have produced a string of blockbuster drugs that can save lives and alleviate suffering. But lately their discovery model appears to be drilling dry holes. Despite rising research and development budgets, fewer therapies are receiving FDA approval. With many high-profile drugs about to come off-patent, the industry's current business model appears to need an overhaul. Researchers are trying to tackle more complex diseases, but why haven't new drug-discovery tools (such as high-throughput screening) improved productivity? This panel of experts tackled this question, along with other key issues. How can new technologies pull risk forward, allowing failure to occur in the earlier clinical stages, when costs are lower? How might the FDA approval timeline be condensed to reduce costs? How will the research and development model be structured and financed among the major players? Will multinational pharmaceutical firms work more collaboratively with biotech firms, universities, private research labs and government research facilities? What can be done to foster innovation that saves lives?

Moderator:
Gordon Crovitz, Columnist and Former Publisher, The Wall Street Journal

It was moderator Gordon Crovitz's considerable acumen in guiding the discussion that made several points clear: The contraction of print media is really the creation of new opportunities in this digital age; and newspapers are really media companies well positioned to lead the way with strong branding, talented writers, a deep sense of social responsibility and resources that far exceed what competing businesses offer.

If you wonder whether newspapers will be an integral part of America′s digital society, look at businessmen like Sam Zell, who has taken the helm at Tribune Company, and Brian Tierney, a local businessman who recently became publisher of The Philadelphia Inquirer. When executives like these enter the news business, it′s evidence that claims of the demise of the print medium are, indeed, greatly exaggerated.

But newspapers today face twin challenges: how to adapt to and monetize digital distribution and advertising revenue; and how to meet the Fourth Estate's obligation of "feeding them spinach with the ice cream" in the interests of a civil society.

"Newspapers are 'news media' companies," said Brian Greenspun, President of the Las Vegas Sun. "We're just witnessing how news will be delivered a little different from the past, and in an enterprise fashion." Some people will still receive their news in print with their coffee, he added, while others will expect to read it over the Internet. Publishers are working to align distribution with consumer preference, but print media, he maintained, will be around for a long time. "The future will also include integrated and stand-alone rich media, primary source materials, and community participation," Greenspun continued. "The Las Vegas Sun ceased print news years ago through a joint operating agreement with our former rival newspaper, which still prints and distributes a morning paper. This freed us to become the newspaper we wanted to be and put the capital 'J' back in journalism through investigative and in-depth reporting.

"The challenge is monetizing the Internet," he added. "It may take three to five years from now, but we'll figure it out."

Tierney's confidence is equally unflinching. "The number of newspapers in America has not changed appreciably in a century," he explained. At the Philadelphia Inquirer, we have 470 journalists serving the community. Where local radio or television put five people on a Phillies game with maybe one minute of evening news coverage, I have journalists who can cover the game from all angles and give the consumer instant access to statistics and Phillies-related information with a depth no radio or television station can provide. We have branding, and The Inquirer produces much of the Philly news available via the Internet." To get through the current period, he continued, the secret is to focus like a laser beam on cost. "We renegotiated a number of contracts, eliminated wasteful habits and realigned resources to grow online revenue, stabilize print news, improve quality, create niche products, incorporate local video, online radio and ask what else we can sell from our web presence."

Gone are the days of print's incredible profit margins, Tierney said. Ad revenue is way down. "It's extremely difficult to create print advertisement, compared to radio or television ads," he said. "It's not very glamorous either, so many advertising agencies ceased doing print ads. ... Our advertising staff now goes to ad agencies and businesses to show them what can be done with print ads and to do the technical layout for them. 'You want to buy a Phillies ticket for tomorrow based on today′s game? To the left of the story is a link to buy your Phillies tickets now.'"

Online reporting has its advantages. "In Las Vegas, the Sun's reporting on the Monte Carlo (casino fire) commenced before the Las Vegas Fire Department arrived on the scene, and in a multimedia approach with depth over several days," said Greenspun. "We had over 40 million web hits on this event alone. No one else generates that level of click volume in the Las Vegas market. Advertisers are smart and they'll go where they'll be successful in getting their ad seen."

Ted Olson is co-chairing an Aspen Institute study on the community information needs of a democracy. "The product is not in decline," he stated, "but the old form of delivery is. The consumer's appetite is there for news, and newspapers are well positioned to serve those needs once they figure out the revenue challenge associated with the new forms of distribution."

Perhaps it is no surprise that as a former solicitor general, Olson's views of newspapers are quite grounded. "In a democracy the most important thing we have is good information," he said. "Newspapers have traditionally served our democracy well in that capacity." Anyone can call himself a journalist and publish something on the web, said Olson, but newspapers possess the resources to provide a depth and breadth on issues that is difficult to replicate. This benefits democracy, he continued, and if the Internet facilitates distributing that information or contributing more depth, so much the better.

"But the web raises important First Amendment questions related to what constitutes a journalist from others who report on an event," he continued. There are shield laws in 49 states protecting journalists from revealing sources. Does that protection extend to anyone publishing any text on the Internet? Who decides? Who credentials? What is privacy? What do you do about serving the needs of small communities? It's branding that has traditionally distinguished a journalist from a note-taking gadfly.

While today's young people may read printed news less than a generation ago, it was noted that not many young people read newspapers 30 years ago either. Youngsters today may be more adept at multimedia and locating information online, but Greenspun notes that when they do come to the point where they want information, that Google search often leads them to a newspaper article. The challenge is to "feed them spinach with the ice cream" so what they read is not only attractive and satisfies their "light" tastes, but offers substantive thought that contributes to their education as citizens.

Moderator:
Joel Kurtzman, Senior Fellow, Milken Institute; Executive Director, SAVE; Publisher, The Milken Institute Review

This panel addressed the opportunities and challenges for nuclear power from a variety of regional and economic perspectives. Representatives from the U.S. and British public sectors, the electricity industry and the scientific community broadly agreed that new investment in nuclear technology is technologically and economically feasible, but they predicted that political opposition will likely continue to slow development of the sector in the near term.

Lady Barbara Thomas Judge of the United Kingdom Atomic Energy Authority noted that the political environment in recent years has prevented her agency from building plants; now they are exclusively in the business of decommissioning them. But she believes that nuclear power is now back on the agenda in her country. Citing a statistic stating that nuclear power could be "cost effective at $40 per barrel," she asserted that current oil and natural gas prices make nuclear energy an important part of any country's energy portfolio. She further pointed to France, which derives 80 percent of its energy from 59 nuclear power plants, as a nuclear power success story.

Richard Meserve of the Carnegie Institution discussed U.S. regulatory issues from his perspective as the former chairman of the Nuclear Regulatory Commission (NRC). He noted that the existing nuclear plants provide by far "the cheapest power on the grid right now," providing power without worsening climate change. Nuclear should make sense but it faces regulatory hurdles that politics may keep in place.

Meserve also described reform of the nuclear plant licensing process by the NRC. Historically, a plant operator would have to acquire a license to build a plant and then a second license to operate the plant once it was built. Nuclear power opponents would hold up this second licensing process, creating substantial regulatory risk for plant developers. The new process streamlines the two procedures into one, but may still pose significant delays that will affect the economics of plant investment.

The perspective of the private sector was provided by Michael Morris of the American Electric Power Company. He agreed with Meserve's comment about the tremendous cost advantage of power generated by existing plants but cited the economic challenges of new investments. He offered the example of North Carolina-based Progressive energy, which filed for a license to build a $17 billion plant, while their market cap was only $12 billion. Nevertheless he noted that China and India are currently building a combined 43 nuclear plants, and he felt that not doing so for political reasons was a mistake.

Marianne Walck of Sandia National Laboratories emphasized nuclear energy's technological viability, focusing specifically on the safety and security testing undertaken by Department of Energy labs with respect to waste transportation and storage. She described rigorous testing of the transport containers that included dropping them on reinforced steel surfaces with spikes, and setting the containers on fire. She is confident that the technology and safety controls are there, concluding that "most if not all of the barriers we face to nuclear energy are political."

Moderator:
Mark Bloomer, President and Founding Partner, Bloomer deVere Group Avia Inc.

"Informed executives have come to realize that they can't get the job done without business aviation," said Robet Knebel of Flexjet. This morning panel explored the value provided by business aviation and laid out guidelines for most effectively utilizing the different options for private air travel as a tool for improving a firm′s productivity and saving costs.

Private-sector attitudes about business aviation have changed dramatically over the past 25 years, said Knebel. Just a few decades ago, he explained, "the cost of aviation was seen as indefensible, but today its use is seen as indispensable." Two trends have accompanied this rise in interest, he said. First, there is a growing menu of options for chartering aircraft. Traditionally, companies who wanted to use private air travel were required to either purchase a block of time on an aircraft or buy their own fleets. New arrangements, like air taxis and fractional ownership of aircraft, have allowed companies to employ business aviation more effectively and inexpensively. Second, new types of aircraft designed for business aviation have come to market, also increasing efficiency and decreasing the cost of travel by allowing businesses to tailor their fleets to their needs.

As a result of these developments, businesses have been able to use private aircraft to meet a variety of needs. While the public perception has been that executives are the primary users of these aircraft, in fact, only about 86 percent of passengers traveling on business management jets are at the executive level. Co-panelist Gary Hoffman of Corporate Aviation Management explained that one of his clients, an oil company with interests around the world, used a variety of business aviation tools to increase productivity. The company purchased its own jet to fly skilled engineers from Anchorage, Alaska, to remote areas of the state and chartered international flights for its executives.

Alvaro Pascotto of Morrison & Foerster LLP said his clients have turned to private aviation as a result of the declining efficiency of commercial aviation. In the wake of 9/11, it grown increasingly inconvenient and time-consuming to travel, making business aviation an attractive option. Pascotto pointed out that the private equity sector has recognized this growing industry and invested in it, being particularly inclined toward business aviation-related firms because of the segmentation in the market.

That rapid growth can be seen especially in Europe and the developing world, said Brant Dahlfors of Bombadier Aerospace. "Prior to 2003 the U.S. represented 70 percent of the world market," he said. "Today demand outside the United Sates has reached 70 percent." Markets for business aviation in China, India and Eastern Europe are expected to grow substantially in the near future.

In closing, the panel highlighted two major issues facing the business aviation industry today. First, the industry is considering how to reduce its environmental impact. Second, private aviation businesses are fighting against commercial aviation groups over the relative portion that each sector should pay in contributing to the maintenance of America's airports.

Moderator:
Brant Dahlfors, Vice President of U.S. Sales, Business Aircraft, Bombardier Aerospace

Business aircraft come in all shapes, sizes and price points. Corporations and individuals can charter, own a fractional share or a jet card, an entire aircraft or a fleet. An owner can operate their own aircraft, place it with a management company and even offer it for charter, generating revenue. With today's ever-changing legal, tax and regulatory concerns, how can first-time consumers know which choice will best meet their unique transportation requirements? This panel of industry experts highlighted the benefits and considerations of each option. They also previewed the latest technological and environmental advances coming in the next-generation aircraft that will be introduced over the next decade.

Moderator:
Amy Liu, Deputy Director, Metropolitan Policy Program, Brookings Institution

The United States is struggling to finance and modernize its transportation infrastructure at a moment when globalization and technological innovation have led to massive increases in trade, shipping and transport, and as concerns about climate change intensify. Many metropolitan areas lack transit options, while freight and port hubs remain congested.

Thus, it should come as no surprise that what reverberated throughout this session was "integrate, integrate, integrate" when it comes to national transportation policy. "The biggest need is a holistic approach," said Douglas Duncan of FedEx Freight Corp. Addressing roads, railways, ports and airports independently is no longer affordable, he warned, nor will it produce the national transportation system Americans need.

Moderator Amy Liu of the Brookings Institution burst that bubble quickly. A holistic approach would be difficult to achieve when national legislation is absent a meaningful purpose or mission statement, as is the case at present. She outlined the major challenges facing the nation through six issues that foster imperatives for reform: (1) infrastructure age (2) traffic congestion (3) growing freight traffic (4) energy consumption/emissions/climate change (5) rising fuel costs and (6) a lack of financing. Studies calling for support of the "Rebuild America" initiative of California Gov. Arnold Schwarzenegger, Pennsylvania Gov. Edward Rendell and New York Mayor Michael Bloomberg are positive, but much more is needed and the danger of waiting is real.

"Over the past two decades," said Liu, "transportation has pulled inventory out of the supply system and into the supply chain, creating significant cost savings. Those savings have flattened out the past few years and are in danger of reversing themselves through increased congestion and higher costs if we continue with 'business as usual.' If we allow that to happen, it will make America less competitive and doom us to smaller markets because we simply won't be able to move domestic product to major markets as competitively as foreign suppliers will."

"In the last 20 years we consumed the infrastructure windfall that Eisenhower created in the 1950s and '60s," said Steven Koch of Credit Suisse. "Not only do we need new infrastructure, but we need to recapitalize the existing infrastructure" if this nation is to remain competitive.

Funding new infrastructure and recapitalization is difficult, said Koch. For the past 30 to 40 years, infrastructure hasn't been a significant political issue. Today, incidents like the recent Minneapolis bridge collapse may temporarily draw the public's attention to our aging or inadequate infrastructure, but other political issues overshadow them. In addition, the public has a solid mistrust of politicians who come asking for infrastructure funding but who then divert the funds for other purposes.

In addition, the public has great difficulty visualizing the interrelated nature of facilities, said Kevin Klowden of the Milken Institute, especially the relation of infrastructure to their personal life. "They understand rush-hour traffic congestion, but not the impact Katrina had on the New Orleans area ports and movement of goods throughout the region and up and down the Mississippi that have a tangible impact on their personal economic well-being."

Better use of local public-private partnerships (PPPs) as delivery mechanisms can help, said Steve Allen of Macquarie Capital Group. "There are plenty of private investment funds available, and pension funds love infrastructure because it provides a stable return that meets or exceeds their target rates on contracts running 25 to 99 years." There are thousands of miles of roads that private capital does not care to invest in, he said, because the economic returns are lacking, but an economic return exists when PPPs can free up municipal funds for the construction and maintenance of those roads. PPPs can also be more efficient managers of roads for private equity worries. Roads are very expensive to build or rebuild, but maintenance is inexpensive. Private equity ensures appropriate construction and maintenance to minimize life cycle costs; municipalities that suffer from competing priorities and erratic funding over time would find these projects more difficult to complete.

"Look north to Canada and the Asia-Pacific Gateway and Corridor Initiative as an example of a successful PPP that emphasized local and national collaboration," said John Higginbotham of Transport Canada and an adviser to the initiative. By establishing a purpose-specific fund and signaling its commitment with $1 billion upfront funding, the Canadian government combined private and public resources to create the integrated system that now serves Canada and Midwest United States down to New Orleans. The initiative enabled selecting projects based on merit and innovation, with particular focus on security and environmental issues that sometimes proved challenging.

The panelists agreed that the United States must change its approach to planning, legislating and funding infrastructure projects if it is to achieve anything that approaches Canada's success and meet its pressing and readily observable future needs.

Moderator:
Larry Carroll, News Anchor, KFWB News 980

The music industry has been roundly criticized for its failure to embrace the future and create a new business model for today's consumers, who increasingly choose to get their music online. Millions of dollars have been lost; some even believe the music industry presents an object lesson in how not to conduct business in the digital era.

"Nobody has a clue right now," said Quincy Jones, the legendary musician, producer and composer known for identifying hit artists ahead of the curve. "The volume of sales we had in the past will never come back. The genie is never going back in the bottle."

Justin Goldberg of Indie911 acknowledged that few firms are earning substantial revenues from online music sales yet but maintained that, with the exception of the recording segment, other areas of the music business — including tours and publishing — are doing quite well. There is also more use of music in film and television productions, he said. As for the recording side of the business, Goldberg added, "This industry was once driven by larger-than-life entrepreneurial personalities and format updates, but now things are more in the consumers' hands."

Andrew Lack of Sony BMG Music Entertainment agreed that now is a great time to be artist or a fan of music. It's easier than ever both to get more music and distribute one's music. He cited two new landmark agreements involving major record labels and Nokia and MySpace. "These two agreements and their associated business models show that we may be turning things around," he said. "The power of working with the largest social network and one of the largest mobile handset makers is undeniable."

Jones added that working in new technologies and getting "hooked into Silicon Valley" are key to success.

Established artists are already taking advantage of digital technologies. For example, Madonna signed a $120-million "360 degree" contract with concert promoter Live Nation, and Prince, Nine Inch Nails and Coldplay have experimented with digital album releases. "There are many schemes available to established stars now," remarked Lack. "But it has always been the role of the record label to find new talent, and that continues today." And as the field of players in that role becomes more crowded — with social networks and services like Goldberg′s Indie911 helping fans find new music — the labels have had to diversify their activities.

All three men noted one new "activity" in particular — the popular television show "American Idol," which has been a boon to the music industry, spinning out a variety of new stars.

In wrapping up the session and getting at the heart of the matter, moderator and radio host Larry Carroll asked the panelists if all of the "pipers of the music industry are ever going to get paid." That is, can this industry make money in the long term? And in the most telling response of the panel, almost in unison, all three shrugged their shoulders.

Moderator:
Ernest Wilson III, Dean, Annenberg School for Communication, University of Southern California

Ernest Wilson III, Dean of the Annenberg School of Communication at USC and the moderator for the panel, opened the discussion reminding the audience of the "dinosaur age" when people had desktops, not yet laptops, and were essentially chained to their desks. The advent of laptops began the age of mobility, and the trend accelerated with the introduction of the modem and then wireless Internet. But today's generation of phones and mobile devices will usher us into yet another era.

The panel consisted of five gentlemen, each with a specific (and often adamant) view as to the superiority of certain products and approaches for taking the world mobile.

Rama Shukla of Intel helped to frame the discussion, referring to it as an "old debate" ("are we trying to shrink the PC into a phone or make the phone grow up into a PC?"). Most on the panel thought the mobile phone is growing up. Mike Yuen of Qualcomm pointed out that "the cell phone is the most ubiquitous electronic device in the world." Doug Britt of Helio added that when it came to entering the digital information age, "the starting point in Asia and Africa was the mobile device, not the PC."

Mark Collins of AT&T Mobility spoke of the "limitless" possibilities for handheld devices and said we are at the dawn of a new industry. However, Collins admitted "there are certain things you can't do on a device the size of a business card because of the size of human hands, battery life and screen size." But perhaps Americans are a little spoiled. David Steinberg of CAIVIS Acquisitions Corp. pointed out that "in America we grew with 15 inch monitors . . . in Asia, they didn't." While the handheld mobile device is a supplement to the personal computer for most Americans, the handheld is the primary device for many Asians. Because of this, the two markets are developing quite differently.

"Ubiquity" was the word of the day. Several panelists spoke of traveling to Asia and seeing people operate not just one but sometimes two or three mobile devices at the same time. Britt shared his personal experience of buying a $2 slushie from a vendor in Korea who was watching TV on one mobile phone and texting on another. Still, Shukla maintained that if given the option, a taxi driver in Asia would still prefer to pull over and use an Internet café, if one were available. But the rest of the panel disagreed — not surprising on a panel full of spirited debate.

Moderator:
Linda Assante, Partner, Oak Hill Investment Management LP

Based on their experience investing billions throughout all four BRIC markets (Brazil, Russia, India and China), the five panelists provided a relatively objective breakdown of their rationale for investing in each country, along with some of the risks their firms are actively managing.

Linda Assante of Oak Hill Investment Management kicked off the panel by reminding the audience that although the Russian population is shrinking, China, India and Brazil will combine to add 360 million people to the global population within the next ten years. This statistic, combined with significant economic growth, will drive sustainable large-scale demand for all types of real estate in the BRIC markets.

At a macro level, Michael Golubic of the Townsend Group stated that the exploding demand for commercial and residential space has created an urgent, opportunistic investment atmosphere and returns between 20 and 30 percent. Golubic also mentioned that, in general, real estate makes a good inflation hedge due to the ability to pass on price increases through increased rents or CPI-adjusting contracts. However, Peter Madden of APG Investments US reminded the audience that the real estate boom has led to a significant shortage of human capital in all markets, and that no investor should move forward without qualified local personnel on the front lines.

As the discussion moved to India, Katherine Farley of Tishman Speyer and Rajesh Agarwal of AIG Investments described the factors currently attracting investment capital. Due to the fact that the Indian market only opened up to foreign direct investment in 2004, there are currently more hotel rooms in Orlando than there are on the entire Indian subcontinent. Similarly, India has only 1 square foot of retail real estate per capita, as compared to 20 square feet per capita in the United States. India is currently about 4 million housing units short, and demographic trends are exacerbating the problem, with a young population and increasing numbers of women choosing to live alone rather than with their parents. The government is trying to encourage development with tax incentives, but with India on track to have 70 cities of more than 1 million people each by 2020, the bureaucracy may not be moving fast enough.

India is not without its challenges. Many investors have been frustrated by the desperate lack of infrastructure; the slow, wasteful bureaucracy; the minimal access to local financing; and the recent poor performance of the Indian stock market.

The population growth issues in China are very similar to India, but the key difference is the role of government. Farley stated that if an investor's goals align with the goals of the Chinese government, things can happen very quickly. She argued that her firm looks for investments with strong fundamentals that have the potential for a "pop" from market developments such as high-speed rail and "green" incentives. Farley also stated that although China is full of flashy office buildings, once you peel back the exterior and look inside, many of them don't have the internal office layout to fit the needs of multinationals looking for true class-A commercial space.

Many investors are scared off by the fact that the Chinese government owns all the land in China, only providing 50-year commercial leases and 70-year residential leases to developers. Farley acknowledged this risk, but emphasized that working with the U.S. government can actually be more risky due to the higher potential for litigation.

As the conversation moved on to the Brazilian market, João Teixeira of GoldenTree InSite Partners provided some excellent insight into the root causes behind Brazil's real estate boom. The Brazilian government provided additional mortgage protection to the banking industry several years ago. Since 2005, mortgage interest rates have dropped from 14 to 10 percent, loan durations have grown from 15 years to 30 years, and loan volume has grown from $3 billion to more than $15 billion. This has increased the market for a $150,000 condo from 2.5 million potential buyers to 5.5 million potential buyers just based on affordability metrics. These banking changes, combined with more than 8 billion gallons of oil reserves found off the coast of Rio, controlled inflation for the last 15 years. An 18 million-unit housing shortage makes Brazil one of the hottest real estate markets in the world.

The challenge for this kind of market is rapid price appreciation for investors who aren't in the market yet. Urban property values are skyrocketing, cap rates have dropped from 13 to 9 percent, and the lack of consistent institutional control outside of the major urban centers all combine to increase risk.

Although all the panelists acknowledged the incredible potential of the Russian market, many of them were still in the "wait and see" mode when it came to capital allocation. Michael Golubic's clients had enjoyed some success partnering with the World Bank, but outside of international institutions, working with the oligarchy could produce results, but also plenty of negative media attention. The combination of language barriers, lack of transparency, corruption and a general lack of faith that investors would be able to get their money out of Russia has kept a lot of international capital on the sidelines.

When asked about what countries might appear on the global real estate radar screen next, Turkey and Vietnam topped the list, followed closely by Mexico, Colombia and Argentina.

As the conversation wrapped up, the panelists all emphasized the importance of having a qualified local team on the ground prior to investing and general optimism about the future of the BRIC markets.

Moderator:
Jim Gray, Sportscaster, NBC (Olympics), Showtime and Westwood One Radio

It's not just about bragging rights and the love of the game anymore. The wide world of sports has become a $213 billion behemoth, comprising marketing, endorsements, media, merchandising, travel and more. We live in a world of constant change, said panel moderator and NBC sportscaster Jim Grey, "and the business of sports is changing on a daily basis."

Recession became a key topic for the panelists, who agreed that sports teams suffer when consumers spend money elsewhere. The business of sports is based substantially on advertising, and Timothy Leiweke of AEG added that when consumers stop spending, retailers cut their sports advertising. Sumner Redstone of Viacom Inc, argued that "the best will survive because those companies are good at what they do." When he owned the New York Knicks, the team succeeded, he said. When he sold it, "they tanked."

Even in times of recession, said Casey Wasserman of the Wasserman Media Group, sports rights will continue to grow because new channels are developed faster than for any other media types. Grey commented on a recent statistic from Disney Inc.: 50 percent of its market capitalization is represented by ESPN. Redstone agreed, adding that "at CBS, sports are very important — they make the money."

Ed Goren of Fox Sports responded that all his company's contracts with sports entities generate profit, regardless of the deal size, although the Super Bowl is the single most profitable event in any day for Fox, earning the company over $600 million in one day. In fact, said Wasserman, nine of the top 10 most watched shows of all-time, have been Super Bowl games. "That," he added, "is the power of sports!"

The sporting industry in the United States constitutes a $51 billion market, growing at a rate of 37.6 percent a year. With Los Angeles offering a substantial market base, Grey asked the panelists if they thought there would be an NFL team in L.A. by 2015. "It would take two to three years to design a stadium, one to two years to sift through politics, two years to build the stadium, and that's not even talking about the team," said Leiweke. "I don't see how it could happen."

Globalization has been a growing phenomenon in sports, and Grey wondered what sport is best positioned to go overseas. Wasserman said he believes the NBA has the lowest barriers of entry and the biggest stars in the world, concluding, "The NBA can transport globally better and more efficiently than any other sport." Leiweke agreed but argued that sports facilities around the world are the biggest hindrance to the NBA spreading globally. "Once new facilities come online and the infrastructure needed to succeed is developed," he said, "this will enable the league to be global." Goren countered that baseball is the best positioned as a global sport. For example, when Japan won the World Baseball Classic, that victory empowered other countries to believe they could compete as well. "It created opportunity for expansion as a global sport," he said. Even so, Wasserman pointed out that soccer is currently the most global sport by far, and he doesn't see that changing any time soon. A testament to Major League Soccer′s success is its ability to build the "right" infrastructure in other countries.

Transitioning from soccer to "branding" and athletes, Grey stated that the top three sports brands are the New York Yankees, Real Madrid and Tiger Woods. "Tiger has an enormous impact in the business of golf," said Redstone, and the panelists agreed they didn't foresee another powerful athlete in our lifetime.

The most controversial topic of the session was mixed martial arts, which has been called a brutal sport and for which no standardized fight rules exist. All panelists recognized the sport's growth but said it directly conflicts with social responsibility. For that reason, said Goren, Fox didn't offer the sport. Redstone agreed, saying, "There is a difference between the bottom line and social responsibility. I don't believe MMA is socially responsible, but it′s good for the bottom line. Still, I don't like it."

As for gambling, Wasserman said there is a taboo in the United States that restricts gambling as a growth sport. He recommended we define what gambling is specifically because fantasy sports, such as March Madness brackets, are drawing a fine line. Leiweke warned that there must be some separation between those who own and gamble, but he predicted there will be a team in Las Vegas soon.

Finally, Grey asked how sports companies could capitalize on digital content. Digital sports media constitute their own $3 billion industry already. Fox rents its product to Internet media to protect the content rights, said Goren, but many entities give up these rights and it hurts business. Redstone acknowledged that the Internet "is still a small pot of business." However, "as we move ahead, it will be the growth business." As an illustration of how times have changed, Leiweke said, "ESPN was a secondary consideration when Disney initially bought its parent company."

Moderator:
Rhonda Schaffler, Anchor, Bloomberg Television

During the past decade, consumer spending has driven the U.S. economy and contributed to growth in the larger world economy. For policy-makers, retail sales are a bellwether, and consumer spending has become a key tool for staving off recession. But in a world of increasing Internet sales, new pressure on margins due to low-cost imports, and sinking consumer confidence, retailers are facing a host of challenges. Do the answers lie within the U.S. economy or in places with stronger currencies, such as Europe? Will retailers turn to new markets with growing consumer appetites, such as China and India? In this panel, a group of experienced retail executives discussed the challenges they face in the current market, and how they are able to keep their companies thriving, even as the economy slows.

Moderator:
Dennis Kneale, Media and Technology Editor, CNBC

The world of mass entertainment is facing a transformation perhaps even more profound than the shift it faced in the early 1980s with the rise of the VCR and the personal computer. Industry leaders met to discuss how these changes are converging and how they will shape the future of entertainment in a provocative session moderated by CNBC editor Dennis Kneale. The panelists, all representing major media companies, discussed the barriers and benefits of the digital revolution.

Throughout the session, the panelists returned to the question of "What does a 21st-century company look like?" Terry Semel (of Windsor Media, formerly of Yahoo!) noted a historical pattern in which past media corporations dominated older technologies but did not own newer innovations (such as radio stations not owning television), opening the door for a changing of the guard. Peter Chernin of News Corporation added, "We are in the business of trying to create content," noting that companies are adjusting to the new patterns and transformation of consumer consumption. Mark Thompson of the BBC agreed, saying that it's wrong to look at digital as simply a new way to distribute old technology. In the end, innovations in distribution will happen, thanks to these new companies with differing business models.

The next item on the agenda was a shift towards the benefits of the digital revolution and how it will change the way people interact. The focus was on connectivity. Robert Kotick of Activision spoke about the way that video-game consoles are moving towards connecting TV to the Internet in ways that haven't been accomplished before. Adding on to the idea of connectivity, each of the panelists noted the importance of mobile phones. Although there are 1 billion television viewers and 1 billion users on the Internet, there are 2 billion cell phone users around the world.

A question arose about the lifespan of theaters. Thompson noted that movie theaters are universal, that digital film and the movie theater experience can and will co-exist. Other questions brought up included the role of U.S. broadband and its slow connection speed in relation to the rest of the world. For now, even though the industry is moving towards downloadable content such as movies and video games, the lack of infrastructure to support such measures is hindering its adoption.

The panel ended its discussion with advertising advice and lessons for company business models. Kotick brought up his company's wildly successful game Guitar Hero, which includes untold hours of untapped advertising potential. Semel built on this with the concept of opening up platforms, creating Web sites that allow people to access their personal information that is currently housing on a multitude of sites. The panel concluded by addressing piracy; other media sectors are hoping to avoid the struggles of the music industry by adapting to change instead of fighting against it.