Dolby Labs used Audio Engineering Society convention in N.Y.C. to demonstrate new Advanced Audio Coding (AAC) encoder, with Liquid Audio as first licensee. Dolby said Liquid Audio planned to implement AAC encoder in new version of Liquid Player software for introduction early in 2002. Dolby said AAC audio quality was “far superior” to that of MP3 but required 30% less bandwidth. Dolby is worldwide patent administrator for AAC on behalf of other developers, including AT&T, Fraunhofer Institute, Sony.

Western Digital Pres.-CEO Matthew Massengill adds chmn. title, replacing Thomas Pardun, who remains a dir.

Details were scarce -- and Panasonic largely was keeping silent -- on Japanese report Fri. that company was readying introduction of 40” and 45” LCD rear-projection TVs in U.S. next year. Details of launch, including pricing, specs and market positioning, are expected to be revealed at Las Vegas CES. Company’s National TV Mktg. Mgr. Jonas Tanenbaum declined comment, and only item in report that Matsushita America spokesman would confirm was that products would be assembled at Matsushita Kotobuki plant in Vancouver, Wash. Report said sets would be supplied to mass marketers through Panasonic subsidiary.

As retailers scramble to get additional GameCube and Xbox consoles on their shelves this holiday season, toy retailers also are having trouble receiving enough shipments of Hasbro’s e-Kara karaoke set and LeapFrog’s LeapPad interactive educational device to satisfy demand, report said.

Activision started shipping E- (Everyone) rated Game Boy Advance side-scrolling title Alienators: Evolution Continues at $39.99.

Telegen temporarily capped salaries at $100,000 and CEO Jessica Stevens is voluntarily forgoing pay as display company struggles to cut costs, it said in quarterly SEC report. Restructuring, which included trimming 9 positions, is forecast to reduce operating expenses up to $250,000 per month, filing said. In earlier cost-saving measure, salaries of Stevens and Exec. Vp Bonnie Crystal were trimmed to $200,000, effective March 1, from $500,000 and $450,000, respectively. Telegen said it narrowed 3rd quarter net loss to $1.4 million from $2.3 million year ago as general and administrative expenses fell to $984,933 from $2.3 million. As part of realignment, COO William Swayne resigned, but remains on board and will be investment banking adviser to company. Telegen didn’t record any revenue and ended quarter with accumulated deficit of $40.2 million. Company raised $1 million in Oct. in sale of common stock and warrants and said it had sufficient funding to last through 2nd quarter 2002 but would need to raise additional money. It plans to have prototype production line for its high-gain emissive displays (HGED) in place by early 2002 at cost of $5-$10 million. Telegen won’t start “significant production” of panels until early 2003, it said. It has demonstrated 7” HGED with 100 candelas and 200:1 contrast ratio and is said to be readying 12” version.

Okla. judge dismissed shareholder suit against CD Warehouse, clearing one barrier to sale of music chain to Djangos.com. Okla. County Dist. Court Judge Daniel Owens, Okla. City, dismissed suit Thurs., less than month after CD Warehouse board accepted Djangos buyout offer of $1.50 per share. Potential sale addresses key tenet of suit, which was filed in Oct. by shareholder Brent Galyon alleging that CD Warehouse board had breached fiduciary duty by ignoring buyout offers. Board accepted Djangos’ offer of $1.50 per share Oct. 25 after shrugging off earlier bids of $1 and $1.25.

Blockbuster shut down 4-market test of online reservation system, conceding it was “Web idea that probably was ahead of its time that wasn’t economically viable,” spokeswoman said. Chain started test in Austin and Denver earlier this year and expanded to Cincinnati and San Diego in June and Sept., respectively. Test showed 50% of people who used service said they wouldn’t have otherwise rented without online option, spokeswoman said. But investment required for national rollout proved daunting. Blockbuster invested heavily in promoting the online service in TV and radio ads in test markets. “We didn’t want to invest the resources that would be required for a national rollout without assurance that it really would increase rentals,” spokeswoman said. As for RadioShack store-within-a-store format currently deployed in 130 Blockbuster stores in 4 markets, spokeswoman said decision on whether to expand concept would be made in first quarter. “There’s definitely a place for it [CE] in our store, but whether it’s the Blockbuster brand or a partnership, that’s what we're looking at,” spokeswoman said. “Right now we're just trying to get through the holiday season.”

Pilot episode of 13-episode weekly TV series aimed at videogamers, Cyplex, is in postproduction and its creator, Burtin Productions (BP), is “hoping for a fall ‘02 launch,” Exec. Prod. Rob Sebastian told us.

House Commerce Committee leaders held their 2nd go-round with industry leaders involved in digital transition -- along with FCC Chmn. Powell -- and several participants agreed afterward that cable compatibility and copyright issues were major problems delaying transition. As compared with Oct. meeting that went nowhere, participant told us, “this time [Congress members] listened and got more information about what the problems are” and how they could be solved.