CHARLIE ROSE: Ken Auletta is here. For 18 years, he’s written for the "New Yorker" magazine. He has several books on media, including "Three Blind Mice, How the TV Networks Lost their Way." His latest examines the transformative power of Google. It is called "Google: The End of the World as we Know It." Our conversation last month focused mainly on the company and its founders. Today we take a closer look at Google’s impact on all kinds of media, including print, broadcasting, advertising, and so many other things. I am pleased to have Ken Auletta back at this table. Welcome. KEN AULETTA: Thank you, Charlie. CHARLIE ROSE: Tell me how Google is positioned for the future and what are the both internal and external threats to them? KEN AULETTA: Short question, huh? (LAUGHTER) How much time do we have, Charlie? CHARLIE ROSE: Well, I thought I’d just sit back and -- You know. KEN AULETTA: Their betting -- Eric Schmidt, the CEO said to me -- and I quote him in the book as saying -- that we hope to be the first $100 billion media company. He didn’t say "search company." He said media company. In order to do that, search, which still grows, but its growth rate has slowed. They are betting on three other possible economic engines. One is YouTube, which this year will lose money. But its losses are shrinking. So if they can transform YouTube into a moneymaker, and we’ll talk later about how they might do that, that’s one engine of growth. A second engine of growth is Android, their operating system for cell phones, smart phones. They’re betting they will take off, and they’ve done fairly well so far, but it still makes no money. If it does start making money, that’s another engine of growth. And the third engine of growth they’re betting on is cloud computing, which is instead of buying packaged software from Microsoft or instead of having an IT department and doing it yourself in the company, outsource to us, or have a cloud which is like your Blackberry, it’s following you everywhere, don’t buy packaged software. We’ll provide you with the software. CHARLIE ROSE: So what are the implicit threats to all this? KEN AULETTA: Well, the threats to them, a, people may not like cloud computing, companies may not want to give up control. If I don’t packaged software, I don’t control it on my computer. And if Gmail goes down or one of the Google apps goes down, as has happened, I can’t use my computer. On the other hand, if my computer crashes I can’t use it, either. So that’s the tradeoff. We don’t know what consumers will choose. With Android, will phone companies let them in, and how will that monetize it? It’s very difficult to do an ad on a cell phone. "Excuse me, we interrupt your cell phone call to bring you this ad." I don’t think so. And then with YouTube, the problem that YouTube has had is that advertisers want their friendly ads in a friendly environment. User- generated content is not a predictable and often friendly environment. So they want more professional content. What Google is moving towards with YouTube -- and this provides some hope that they’ll generate some income -- is they’re basically moving away from the engineer’s notion that we can sell advertising on anything, which was a stupid notion, because you can’t. And they’re moving towards with more professional content, and I think you’re going see YouTube moving away from just the advertising model and begin to charge people. CHARLIE ROSE: Oh, my god. You’re saying Google no longer believes that the advertising model is the only thing will rule the future? KEN AULETTA: I am, indeed, saying that. In fact, I’ll tell you, Charlie, I had a fascinating journey as I went through and reported this book and tried to look at where the future is going. I interviewed people like Marc Andreessen on who created Netscape, people like John Hennessey, the president of Stanford who is on the board of Google who was an early proponent and heat of the communications department at Standard. And they both said to me something that I would hear more and more. We made a mistake in the early days of the Internet by just making everything free, and we have to begin to figure out a micropayment or subscription or some other model here. And so you hear that. Mark Andresen said to me "I’m inches away from getting people’s credit cards" for his social networking. So I asked Eric Schmidt last December "Do you think free is still the right model?" He said "I do." I said "John Hennessey, your board member doesn’t think it’s the right model." He said "I disagree with John, respectfully." My last interview with Eric Schmidt last April... CHARLIE ROSE: So December to April. KEN AULETTA: December, I said "Do you still agree with what you told me about free?" He said "I was wrong, I changed my mind." And I think the recession was a punch in the nose to the valley, because they realizing that advertising is a slender reed to lean on and they have to find another source of revenue. They’re in the same predicament, in the way, that traditional media is in. Traditional media is saying we want to figure out way to charge for our content. The new media, the Internet, is moving to the same center and saying "We have to figure out some way to charge." CHARLIE ROSE: Rupert Murdoch is on the cutting edge, trying to figure that out. Where does that stand and is he likely to figure out a model that works? KEN AULETTA: Murdoch, as he often has done in his business career, is willing to throw down the gauntlet and take a real risk. And what he’s doing here, and all these meek newspaper guys are pushing him forward, "We love you what you’re doing" but they didn’t do it themselves, right? And he’s saying "I’m tired of people commoditizing the information in my newspapers." CHARLIE ROSE: Taking my material and selling it and wrapping advertising around it. KEN AULETTA: Right. And I don’t make enough money that way and I want to make more. So what I’m thinking of doing, Mr. Google, is taking the "Wall Street Journal" and some of my other newspapers off of Google’s search so you can’t get it -- which is easy to do. You can opt out of Google search very easily. Google allows you do that. And I’ll sell it to Microsoft. They want to gain market share, they have only a 10 percent market share with Bing. CHARLIE ROSE: Market share for search engine. KEN AULETTA: For search engine. Google dominates that world. In order siphon consumers away from Google, would Microsoft be willing to pay Murdoch and other newspapers lining up behind him? We don’t know whether they would. I think it’s the first opening snot a negotiation that Murdoch is starting. CHARLIE ROSE: Why would Microsoft want to do that? KEN AULETTA: Because they want to gain market share from Google. They’ve already offered other incentives for people to do business with Bing, with Microsoft search engine, which had not worked, by the way. They’ve developed a better search engine and they’ve gained one or two percent market share, but it’s not enough. And so in order to make a real forward touchdown pass, they have to try -- if they can get top newspapers like "The Times" and the "Wall Street Journal" and the "Washington Post" off of the Google search, that makes the Google search less attractive. On the other hand, will Google then come in and say we’ll offer you something. That’s what Murdoch is trying to do. He’s trying to create an option here. CHARLIE ROSE: So you’re thinking that what he’s really doing is positioning his bargaining play. KEN AULETTA: I do. CHARLIE ROSE: So Google will come back and say "Don’t leave, we’ll do this." KEN AULETTA: I don’t know whether Google will. I know Google won’t do it for "St. Louis Post Dispatch" and they probably don’t want to do it for a lot of Murdoch’s newspapers. But the "Wall Street Journal" is not just another newspaper, nor is the "New York Times." What Murdoch is crystallizing, I think, Charlie, is the fact that traditional media has to figure out another revenue source and has to figure how to avoid becoming treated like a commodity. Google comes back or search engines come back and say "Look, we are expanding your audience. Many more people go online and read you. And if you shut yourself off from search, you’ll lose some audience." They come back and say "Yes, but I’m not monetizing the audience I’m getting." CHARLIE ROSE: And then you’re not paying the reporters and everything else. And is it an economic dimension that, in fact, if they can work something out, "Wall Street Journal," and reduce dramatically their printing costs, they’ll lose their narrowing and expense item that’s troublesome for them? KEN AULETTA: Newspapers would love to get rid of printing presses and trucks for distribution and paper costs. CHARLIE ROSE: Because it’s a huge percentage of their expense budget? KEN AULETTA: It’s 60 percent to 70 percent of their expense budget. It’s huge. CHARLIE ROSE: So they want to go digital if they can figure out a way to make it profitable. KEN AULETTA: They know they can’t go totally digital because there are people who want that newspaper and will read that newspaper, and you can’t just disenfranchise them. The problem is... CHARLIE ROSE: I bet they would if the economics circumstances looked that way. KEN AULETTA: If they could make money out of it. The problem is you sell an ad -- the same ad on line gets 10 percent for what that same ad on the newspaper gets. And people spend much less time being online with that newspaper. And that’s why the math doesn’t work right now. CHARLIE ROSE: Speaking of Google again, this book is about Google. "Apple and Google rivalry heats up." So what’s the competition? Is that only about, what? KEN AULETTA: It’s about everything. They compete in phones -- they compete with phones. Google comes in and comes up with an operating system which goes right at iPone. Google now is going to... CHARLIE ROSE: Their Android is... KEN AULETTA: That’s the operating system for cell phones with Motorola. But they have it with Verizon versus the iPhones deal with AT&T. But that headline is also about what they’re doing in the music business. They bought a music company, so they want to do online music, and they made a deal with universe to do that, Vivo, it’s called, and that competes with iTunes, which is Apple. And when Google talks about cloud computing, they’re competing with Apple in that. And the thing that’s interesting -- among the things that are interesting, and I write about this in my book -- at the time Eric Schmidt was on the board of Apple, he was compelled in August to step down. CHARLIE ROSE: Compelled by Steve jobs? KEN AULETTA: Well, the government was investigating collusion, which is kind of silly. I don’t think it’s collusion, but a conflict. The two companies are increasingly competing even though if you ask the founders of Google who their business hero is, it’s Steve Jobs. But this is business, or, as the godfather says... CHARLIE ROSE: Is John Hennessey on the board of both or just one? Just Google? KEN AULETTA: Yes. But there are three people who are on the board -- who are close to both and advisors. Bill Campbell who was the lead director of Apple is on the board of Apple and is maybe Steve Jobs’ closest associate is one of Google’s closest associates. He comes in and spends a couple of days a week. He’s called a coach. CHARLIE ROSE: What does he do? I never understood what Bill Campbell does. KEN AULETTA: He advises -- he is -- Eric Schmidt calls him his consigliari. And he advises the founders and the management of Google about how to act in a grown-up way. CHARLIE ROSE: How to act in a grown-up way? KEN AULETTA: How to act in a grown-up way and how to deal. If they have a problem with a manager they often will send Bill Campbell to talk to the manager. He is a grownup. He is a former Columbia University football coach. He’s the chairman of the board of Columbia University today. He’s the chairman of the board of Intuit. He’s made a lot of money. He just donates his time to doing this. He loves being a coach, and basically coaching managers. That’s what he does. And he’s very important. Then Al Gore is an advisor to Google and is on the board of Apple. And Art Levinson... CHARLIE ROSE: And made a ton of money with Google stock, didn’t he? KEN AULETTA: He sure did. He sure did. But Art Levinson just stepped down from the board of Google to stay on the board of Apple. CHARLIE ROSE: So pretty much they’re going to eliminate all the people who have duel alliances? KEN AULETTA: Bill Campbell is still working with both and Al Gore is still working with both. CHARLIE ROSE: Who would be more nervous about that, Apple or Google? KEN AULETTA: I think there’s just growing friction between them. They’re seeing that they’re just bumping up against each other. And that creates paranoia, as your friend Andy Grove, his favorite word. CHARLIE ROSE: Only the paranoid survive. So where is Microsoft in all of this? KEN AULETTA: Paranoid. (LAUGHTER) CHARLIE ROSE: Big time paranoid? KEN AULETTA: Big time. I visited Microsoft on my book tour and the same week I also visited Google in Mountain View. And it was really interesting to go back to Microsoft. I had written a book about them ten years ago and covered them, and they had a swagger then and were kind of imperious and feeling their oats. CHARLIE ROSE: And squelching all competition. KEN AULETTA: Yes. They were really -- well, they were tried in a federal court for doing that and found guilty. CHARLIE ROSE: Your friend Mark Andreessen? KEN AULETTA: You bet. But what happened was what I noticed was the humility at Microsoft. They were asking questions. But they were asking questions about Google. Tell us about Google, Ken. CHARLIE ROSE: Like what would they want to know? KEN AULETTA: What was your impression of them? Do they really this or that? And I think it was really the sense that Google is the new game in town and has kind of passed them by. CHARLIE ROSE: Well Bill Gates has said frequent that Google reminds him of a young Microsoft... KEN AULETTA: That’s right. CHARLIE ROSE: ... more than any other company ever. KEN AULETTA: That’s right. But then when you go to Google, you saw the swagger, I saw the swagger that I would see years ago. CHARLIE ROSE: So is that a problem for them, that kind of arrogance? KEN AULETTA: That is always the danger for a powerful, successful company -- hubris, that you get full of yourself, you close yourself off, as Microsoft did, and you miss the signs. And it’s exacerbated their problem by the fact you’re dealing with engineers. Engineers like to measure things. You can’t measure... (LAUGHTER) CHARLIE ROSE: Yes, they do. KEN AULETTA: You can’t measure fears... CHARLIE ROSE: That’s why they’re engineers. You can’t measure fears, so they can’t quantify it. KEN AULETTA: And therefore they don’t see it or hear it. CHARLIE ROSE: Oh, really? They don’t see it or hear it? KEN AULETTA: The don’t as acutely as they should, which was why Microsoft was late to understand the government was coming after them. CHARLIE ROSE: Or late to understand search? KEN AULETTA: Totally late to understand search. But Google is arguably -- has been late to understand the governments, not just the U.S. government, the governments around the world have questions about three areas: -- one, their size or so called monopoly potential, two is privacy, and three is customers. CHARLIE ROSE: Here’s an interesting thing -- Microsoft has developed Bing, right? KEN AULETTA: Right. CHARLIE ROSE: It’s pretty good. Reviews are pretty good. KEN AULETTA: It is. CHARLIE ROSE: But it only has ten percent of the market and Google has, what, 60 some? KEN AULETTA: It has 65 percent in the U.S., 70 in the world. CHARLIE ROSE: Does Microsoft have a chance with a relationship with Yahoo! or somewhere else to be a significant competitor in search. KEN AULETTA: Well, when they combine with Yahoo! they’ll get up close to 20 percent. CHARLIE ROSE: Doubling what they have now. KEN AULETTA: Yes. And Microsoft has very deep pockets and is -- you know, you only have to know Bill Gates to know they’re competitive, and they don’t give up so easy. CHARLIE ROSE: And they didn’t go up on search even though they had failure after failure. KEN AULETTA: That’s right, and they’re coming at them. Whether they’ll succeed -- but they don’t lack for drive. CHARLIE ROSE: But does Sergey and Larry lack for drive? KEN AULETTA: No. (LAUGHTER) No, you’re dealing with world-class -- CHARLIE ROSE: Jobs, Gates? KEN AULETTA: Don’t forget Jeff Bezos. CHARLIE ROSE: Bezos, Larry Page -- who’s the smartest? KEN AULETTA: Oh, they’re smart in different ways. CHARLIE ROSE: Jeff Bezos, what does he have? KEN AULETTA: He has a strategic sense. He thinks over the horizon and he thinks -- when he says "I don’t want to know what people might be doing, I want to know what they are doing now, and that’s how I want to build my business strategy." CHARLIE ROSE: Does he believe he’s Wal-Mart? KEN AULETTA: He’s acting like he does. CHARLIE ROSE: He certainly does. KEN AULETTA: He’s going right at them. CHARLIE ROSE: And they’re going at him, too though. KEN AULETTA: Yes, but look how much advanced he is in online sales versus Wal-Mart. He’s doing very well. He’s a really smart guy. CHARLIE ROSE: What’s amazing about shim I know serious people who counted him out at the first implosion. KEN AULETTA: Right. CHARLIE ROSE: Don’t you? KEN AULETTA: Oh, very serious people counted him out. CHARLIE ROSE: The stock went down to nothing. KEN AULETTA: And still do. He said on your snow last February, he said, you know, "I" -- You asked him what’s his great talent, and he said "I think I have a talent for thinking ahead and sticking to a long-range plan and being able to withstand the criticism from those who think I’m lost." He has that. But Bill Gates has a different kind of intelligence. Gates is a genius, and he also is very well educated. CHARLIE ROSE: Self-taught. Self-taught. KEN AULETTA: He reads. CHARLIE ROSE: He dropped out of the college, for god’s sakes. KEN AULETTA: But he reads a lot. It’s interesting. And just look at how he approached his charity, his philanthropic efforts. He’s done it with such intelligence that you have to be impressed by that. I think problem that Bill Gates had was that he was a cold businessman, and he basically had a killer instinct. He wanted to kill Netscape. Not harm, not injure them, he wanted to kill them, put them out of business. And that’s why he was found guilty. (LAUGHTER) And the Google guys are not killers. They’re cold engineers. CHARLIE ROSE: Well, I... KEN AULETTA: I don’t think they’re killers. I don’t think they sit there and take joy in eradicating another company the way Bill Gates and... CHARLIE ROSE: Oh, you think he enjoyed it rather than did it as a necessity because he wants to create a... CHARLIE ROSE: I think he thought it was a necessity, but I think he was enjoying it. CHARLIE ROSE: I didn’t know that. That’s an interesting idea. KEN AULETTA: Having written a book about it and having sat in a courtroom and listened to the testimony. CHARLIE ROSE: That he enjoyed it rather than did it as a simply business strategy? KEN AULETTA: Yes, I think Microsoft took some joy in crippling Netscape. CHARLIE ROSE: What’s the talk of a new web, or whatever may be a sort of new generation Internet? KEN AULETTA: Well, the worry that Google has is that people will get so caught up and devoted to Facebook and Twitter, social networks like those, that that will become their Internet. It will be the way AOL was at one point in time or Yahoo! was at one point in time for a lot of people, and that they’ll get everything they want from there. And the Internet won’t be the ocean. It will be this island where all their friends are. CHARLIE ROSE: What is the evidence that that might very well happen? KEN AULETTA: Well, Facebook has 300 million users in just five years. That’s extraordinary. And what Google worries about is that, if you think about a Google search, as miraculous as search is, and Google has a wonderful search engine, it’s a pretty inefficient search engine. And the truth is if you ask privately this question -- not even privately -- if you ask the Google guys, they’ll admit it’s inefficient. If I do a search and you get back 10,000 answers, it’s a blizzard of information. But if I want to buy a camera and I tweet or post something from my friends on Facebook or Twitter and get back 15 or 20 answers from people I know, I would buy this camera and here’s why... CHARLIE ROSE: And nine out of ten say, that you’ve got a -- KEN AULETTA: I’ve got a really effective search. CHARLIE ROSE: And seven of them have owned that camera. KEN AULETTA: You bet. And it’s called vertical search, which means fewer answers from experts, OK? You can imagine another form of experts, and there are sites that do that in vertical search. The reason that -- a major reason Google tried to buy Twitter last spring was exactly this. They’re worried about social networking search. CHARLIE ROSE: How hard did they try? KEN AULETTA: They tried hard. CHARLIE ROSE: So, in other words, they -- Twitter did not want to sell? Not for sale. So it wasn’t a question of how many dollars they could put on the table? KEN AULETTA: That is correct. CHARLIE ROSE: So what sells out there that people at Google are excited about? And are they on the cutting edge of exciting stuff or are there two more kids in a dormitory room at Stanford that are about ready to come up with something that’s going to blaze new trails? KEN AULETTA: Well, we don’t know that. That’s the great thing. I mean, I think I may have told the story when I was on your show, I tell in my book that Bill Gates in ‘98, when I asked him what he worried about, he didn’t say the obvious, which is "My competitors, Netscape, or Oracle or Apple." He said "I worry about someone in a garage inventing about something that I haven’t thought of. (LAUGHTER) That year there were two guys in a garage. CHARLIE ROSE: Sergey and Larry in a dorm, yes. KEN AULETTA: Google has the same reason to worry. What is that new technology? One thing they are conscious of is social networking and that could pose a problem for search. CHARLIE ROSE: Why don’t they get in social networking? KEN AULETTA: Well, they have, and they haven’t done a good job. CHARLIE ROSE: And what does that say? KEN AULETTA: Some people think they don’t a good social networking gene. CHARLIE ROSE: Really? They don’t understand it, don’t get it? KEN AULETTA: They think they don’t quite get it. That’s an argument. CHARLIE ROSE: How is their culture different, say, than Apple’s culture? KEN AULETTA: Apple is the culture of the sun king and it is culture... (LAUGHTER) CHARLIE ROSE: That would be Mr. Jobs? KEN AULETTA: There ain’t no other. And he’s a genius. And by the way, he’s a bit of a poet too. If you read some of materially interviews he did, like in the "Playboy" interview he did 20 years ago, his use of language and his breadth of reading, of novels and stuff, is quite extraordinary, and his awareness of music. He’s a very interesting cat. But he is a guy who is very controlling. And no one talks to the press. And there’s a certain amount of fear there that you don’t see on the Google campus at all. And it doesn’t mean that Larry and Sergey are not respected, but they’re not feared that way. And it feels more like college campus than I think... CHARLIE ROSE: And Apple feels more like what? KEN AULETTA: More like Microsoft. (LAUGHTER) CHARLIE ROSE: When I ask all these people that you interviewed about who it is they most respect and have the most deep admiration for achievement, it’s always Steve Jobs. KEN AULETTA: Oh, it’s extraordinary. You go back -- the graduation speech he made at Stanford is the Gettysburg address of graduation speeches. CHARLIE ROSE: And all he did was tell three stories. KEN AULETTA: That’s right. And he’s also such a private guy, and for him to be so personal and talk about his illness and his life and his failures in a graduation speech was unheard of. He’s a very secretive guy, and much more so than most of these people. CHARLIE ROSE: What has come out of, say, China, as huge a market as that is, and China’s effort to censor or restrict Google? KEN AULETTA: Well, China -- Google decided like every business in the world, we want to be in the biggest consumer market in the world, China. And China then wakes up and says, hey, wait a second, we don’t want you to have search engine than can tell people about and show pictures of Tiananmen Square, what really happened there. We would like to see flowers in Tiananmen Square, people dancing and smiling. And Google was faced with a choice. Do you get out of China or stay and compromise? CHARLIE ROSE: And they showed courage didn’t they? KEN AULETTA: They didn’t, they compromised. It was an embarrassment. CHARLIE ROSE: That’s my point. Did they later regret it or do they live with their embarrassment? KEN AULETTA: I actually describe a scene at their 2008... CHARLIE ROSE: Why do you think I’m talking about that? Because this is... KEN AULETTA: In their 2008 annual meeting with shareholders it came up. It was posed by shareholders that you get out of China. And they voted it down, Google management. They chose to stay in China. They are not the dominant search engine in China, a Chinese-controlled search engine is. CHARLIE ROSE: Is it as good as Google? KEN AULETTA: I couldn’t -- it’s certainly censored. It’s certainly not as broad as Google would be even in China. But I don’t speak the language, so... CHARLIE ROSE: Here’s the takeaway from this. They all know that "free" has got to be redefined. KEN AULETTA: That is a headline I would affix, and I think it’s a real important development, Charlie, and it’s new, and I try to write about in that book. But if you even go -- Chris Anderson, the editor of "Wired" magazine, wrote a book that came out in July called "Free." And Chris, who I think is intellectually honest, affixed the last chapter, he called it a coda chapter, and in that coda he basically said "Free alone is not the answer." So he negated some of the things he said in the previous chapter. And it just is a realization that dawned on the Internet too late that because of the recession you couldn’t just rely on advertising. But here’s the problem. The problem is how do you change the culture of the Internet? You can say "free alone is not the answer and we have to charge somehow," but can you get people to pay? And we don’t know the answer to that. CHARLIE ROSE: My guess is they’ll pay something. KEN AULETTA: They do for iTunes, they do for Match.com, they do for other things. CHARLIE ROSE: That’s my point. KEN AULETTA: But the view has come to be that information is and should be free. Can newspapers and magazines begin to change that culture with the help of... CHARLIE ROSE: Will they look back as music looks back at its mistakes, will they look back and say had we never gone free we would have been a lot better off, why didn’t we find a formula, even though we’re talking about digital dimes and analog dollars? KEN AULETTA: Charlie, it’s not just the formula. Why didn’t they invest in digital? Why didn’t they create a more inventive online newspaper and put someone in charge of it who actually understood the online world, that it was a multimedia world, a two-way world, unlike a print newspaper that came out in the morning. And, by the way, you can’t break stories until they’re in the newspaper. They bear a measure of blame -- the music companies, the publishing companies, the television companies, a measure of blame for this situation they’re in today. CHARLIE ROSE: It’s the same reason people in radio didn’t want to go into television and the same reason people in the railroad business didn’t go into the airplane business, or not, is it? KEN AULETTA: It is. But they didn’t understand the transportation business. CHARLIE ROSE: I love that. KEN AULETTA: But what’s common today and scary today, the big change today the speed of change. And that speed of change terrifies people. And it terrifies not just traditional media people but new media people. Who’s that person in the garage inventing that new technology? Do I sacrifice my existing television business and put it online at that a cheaper rate, again dimes for dollars or pennies for dollars. But if I don’t, am I missing the train? And that’s scary, and it should be. CHARLIE ROSE: This is the very reason that Warren Buffett says he’s never made a significant investment in technology. KEN AULETTA: Yes, but a lot of people... CHARLIE ROSE: But a lot of people got very rich. KEN AULETTA: If he’d invested in Google he would have done very well. CHARLIE ROSE: Comcast and GE -- why did GE sell? KEN AULETTA: GE, I think, gave up. I think they felt -- you know, they’re a company that has seen better times. CHARLIE ROSE: Makes turbine engines. KEN AULETTA: And they didn’t see it -- it wasn’t the cash flow generator that it had been. Always something else to offset... CHARLIE ROSE: Was that because it was a business out of fashion or because it had bad management? I’m not talking about GE, I’m talking about NBC. They sold it because they didn’t believe in its future. KEN AULETTA: If you’re in fourth place for a long period of time you have to blame someone, and you can’t blame GE for that. (LAUGHTER) CHARLIE ROSE: That’s my point. KEN AULETTA: And so they haven’t done very well in the entertainment division, obviously. They’ve done very well with the cable purchases they made in cable, which was the great allure for Comcast. When you ask Comcast officials why did you do the NBC/Universal deal, the first answer they give you that we wanted those cable networks, because that’s a growing business. NBC -- Network is declining in numbers in both sales and circulation. And the NBC station is declining in income and circulation. But the cable networks, Bravo and USA are growing, and CNBC. That was the attraction. The other attraction, they want to compete against ESPN, and NBC sports tied up with their regional sports networks of Comcast gives them a shot, they hope, at competing with the ESPN. So the network was not the attraction that it had been. But for GE it was the way to exit the business, which they wanted to do. CHARLIE ROSE: Jack Welch liked it more than Jeff Immelt. KEN AULETTA: He liked it because it was a better business at the time he entered it. CHARLIE ROSE: He liked it more than that. KEN AULETTA: He liked the glamour, I’m sure that’s true. I know it’s true. (LAUGHTER) CHARLIE ROSE: The book is called "Google: The End of the World as we Know It." Ken Auletta, who covers media better than anybody, especially technology. I’m pleased to have him here for part two of a conversation about this book. Thank you again. KEN AULETTA: Thank you, Charlie.