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Enron to Dissolve Media Unit

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NEW YORK -- Amid the high profile meltdown of Enron Corp. is the expected demise of a lesser-known unit designed to create a futures market for media buying. Last year, the Houston-based energy-services company, which is seeking bankruptcy protection and fending off federal investigations and several lawsuits, created Enron Media Services to market "price-risk-management" plans to advertisers and media agencies. By entering into long-term agreements with advertisers, networks and media buyers, EMS claimed it could guarantee fixed pricing for media for up to five years, and profit by reselling the media later at the current market price. As early as this past spring, it boasted that it would execute $1 billion in media buys by year's end. Two weeks ago, the company was still planning to sell EMS. Last week, however, the unit suspended its transactions, and it will likely be dissolved, said Mark Palmer, an Enron representative. "Since that business was built on intellectual capital, represented by people who are no longer with the company, there is really nothing left to sell," Palmer said. He was unable to say how many media buys Enron had executed. Most buyers were skeptical of Enron's claims and abilities in the media arena, but conceded that smoothing out the inefficiencies caused by volatile media prices would be a welcome development. Marketers and media shops were interested in Enron's plan to enable the hedging of media costs as far as five years ahead. Enron sought deals with various media agencies during the past year, and Bcom3's Starcom expressed a slight degree of interest on behalf of its clients. Former Enron employees said that while it made deals with cable companies in the spot market, it was unable to attract major networks or media shops. Networks balked at making their inventory available for Enron to resell, while buyers disliked the uncertainty of locking in prices for a long period, several sources said. Still, there were aspects that buyers found appealing, such as Enron's ability to conduct transactions online.