Tag Archives: News event
Reuters deputy social media editor charged by Justice Department
by Chris Roush
Matthew Keys, a deputy social media editor at Thomson Reuters, has been charged in a federal indictment for allegedly conspiring with members of the hacker group “Anonymous” to hack into a Tribune Company website, the Justice Department announced.
Dylan Byers and Josh Gerstein of Politico write, “Keys, a former web producer for the Tribune Co-owned television station KTXL FOX 40, in Sacramento, Calif., was charged with providing members of the group with log-in credentials for a computer server belonging to the Tribune Co., according to the DoJ’s press release.
“‘According to the indictment, Keys identified himself on an Internet chat forum as a former Tribune Company employee and provided members of Anonymous with a login and password to the Tribune Company server,’ the DoJ press release reads. ‘After providing log-in credentials, Keys allegedly encouraged the Anonymous members to disrupt the website. According to the indictment, at least one of the computer hackers used the credentials provided by Keys to log into the Tribune Company server, and ultimately that hacker made changes to the web version of a Los Angeles Times news feature.’
“‘If convicted, Keys faces up to 10 years in prison, three years of supervised release and a fine of $250,000 for each count. The indictment also contains a notice of forfeiture provision for property traceable to the offense,’ the press release states.
“The Tribune Company declined to comment; we’ve reached out to Keys and Reuters, as well.”
Read more here.
Retail sales jump, but by how much?
by Liz Hester
The fact that retail sales were up 1.1 percent made headlines in the major business papers and web sites.
But the placement of the so-called core number, the one most watched by economists and other market analysts, in various stories is something to note.
The New York Times put the core number in the fourth paragraph and spent several focusing on it near the top of the story:
Retail sales in the United States rose more than expected in February, suggesting that consumer spending this quarter will hold up despite higher taxes.
The Commerce Department said on Wednesday that retail sales increased 1.1 percent last month, the largest rise since September, after a revised 0.2 percent gain in January.
Economists polled by Reuters had expected retail sales, which account for about 30 percent of consumer spending, to rise 0.5 percent last month after a previously reported 0.1 percent gain in January.
So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, rose 0.4 percent after advancing 0.3 percent in January.
The rise in core sales was the latest suggestion of momentum in the economy even as fiscal policy tightened, marked by the end of a 2 percent payroll tax cut and an increase in tax rates for wealthy Americans in January.
The gains in core sales in the first two months of the year offered hope that consumer spending, which accounts for about 70 percent of the American economy, might not be slowing much this quarter after growing at a 2.1 percent annual rate over the last three months of 2012.
The first mention of core sales in the Wall Street Journal story was in the seventh paragraph and didn’t last long:
Retail sales excluding gasoline, automobiles and building materials—a figure watched closely by economists who use it as a truer gauge of consumer behavior—was up 0.36% in February, the Commerce Department said.
“The combination of higher gasoline prices and higher payroll taxes limited household purchasing power at the start of (the first quarter),” economists with UBS Investment Research said earlier this week. “That said, a strengthening labor market, rising tax refunds and a more confident consumer should provide important support to the consumer later in the quarter.
Wednesday’s report showed spending dropped 1% at department stores and 0.7% at restaurants. Building material sales remained elevated, rising 1.1%, although that could be because of rebuilding efforts in the aftermath of superstorm Sandy.
While the top of the Reuters story was positive, it still put the core sales number in the fifth paragraph, again giving it a bit more significance:
Retail sales expanded at their fastest clip in five months in February, the latest sign of momentum for an economy facing headwinds from higher taxes and pricier gasoline.
The solid sales last month comes on the heels of strong gains in employment and manufacturing. But the improvement in the economic picture is likely insufficient to shift the Federal Reserve from its very accommodative monetary policy stance.
“The economy in February is looking solid. None of this, however, is likely to cause the Fed to change tack in the near term,” said John Ryding, chief economist at RDQ Economics in New York.
Retail sales increased 1.1 percent, the largest rise since September, after a revised 0.2 percent gain in January. That was well above economists’ forecasts for a 0.5 percent advance.
So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, rose 0.4 percent after increasing 0.3 percent in January.
The upbeat report helped to lift to the dollar to a seven-month high against a basket of currencies. Prices for U.S. government debt fell and stocks on Wall Street slipped after a recent rally.
It’s interesting to see the difference in the treatment of the number that seems to be the most watched by traders and economists. It just shows that it pays to read beyond the first couple of paragraphs to make sure that you’re getting the full story.
Illinois pension charged by SEC
by Liz Hester
The Securities and Exchange Commission said Illinois didn’t put enough into its state pension and charged the state with securities fraud. It’s most noteworthy because it’s only the second time the agency has gone after a state.
Here are the details from the Wall Street Journal”
For years, Illinois officials misled investors and shortchanged the state pension system, leaving future generations of taxpayers to foot the bill, U.S. securities regulators allege.
The Securities and Exchange Commission on Monday charged Illinois with securities fraud, marking only the second time the agency has filed civil-fraud charges against a state.
But the agency and the state also announced that a settlement had already been reached in which Illinois won’t pay a penalty or admit wrongdoing.
The action was part of a broader push by the SEC to bring greater transparency and accountability to the municipal-bond market, as the agency alleged the state failed to adequately disclose to investors the risks of its underfunded pensions systems.
The action also shows in detail how political decisions left the state with only 40 cents of assets for every dollar of pension liabilities—a financial hole Illinois officials are now scrambling to fill.
Yet no matter how harmful the pension practices were to the state’s finances, SEC officials say they could only pursue charges against Illinois for what it failed to tell bond investors, who bought bonds worth $2.2 billion.
The New York Times explains how the SEC is able to come after the state for not funding its retirement plan:
In announcing a settlement with the state on Monday, the Securities and Exchange Commission accused Illinois of claiming that it had been properly funding public workers’ retirement plans when it had not. In particular, it cited the period from 2005 to 2009, when Illinois also issued $2.2 billion in bonds.
The growing hole in the state pension system put increasing pressure on Illinois’ own finances during that time, raising the risk that at some point the state would not be able to pay for everything, and retirees and bond buyers would be competing for the same limited money. The risk grew greater every year, the S.E.C. said, but investors could not see it by looking at Illinois’ disclosures.
In effect, that meant investors overpaid for bonds of a lower value than they were made out to have, although the S.E.C. did not measure any loss in dollars, and it did not impose fines or penalties in Monday’s settlement. Illinois agreed to a cease-and-desist order without admitting or denying the accusations.
The charges put the state’s pension system, generally thought to be the weakest of any state, back in the national spotlight. In his budget address last week, Gov. Pat Quinn, a Democrat, issued a clear warning that the system had to be fixed.
“Without pension reform, within two years, Illinois will be spending more on public pensions than on education,” said Mr. Quinn. “As I said to you a year ago, our state cannot continue on this path.”
Many states, counties and cities are struggling with shortfalls in their pension systems, and because large numbers of people now qualify to draw benefits, the expense is wreaking havoc with budgets. Still, securities lawyers are not predicting a wave of S.E.C. pension enforcement actions. The states are legal sovereigns, and federal securities regulators have much more power to police corporate wrongdoing than potential violations by the states and municipalities.
The S.E.C. does have the power to step in when it believes that there has been a fraud, but that means meeting a tough standard of proof. Many of today’s troubled public pension funds got that way through missteps that, while harmful, do not necessarily constitute fraud: overly rosy investment assumptions, failure to take into account that Americans are living longer, and bad calls about how much benefits actually cost.
Reuters provided these details on how Illinois was able to skip out on its payments:
In official statements accompanying bond offerings Illinois explained that factors such as market performance had contributed to the increase in its unfunded pension liability, but it “misleadingly omitted to disclose the primary driver of the increase – the insufficient contributions,” the SEC said.
In order to keep its contributions low, Illinois had developed a complicated system that included “ramp-ups” and “pension holidays,” the SEC said.
Instead of paying to pension funds what actuaries had determined to be the annual contributions, Illinois followed a funding plan approved by the legislature that deferred the payment of pension obligations, compounding its pension burden.
The legislature phased in the state’s contribution over a fifteen-year “ramp” period, where the amount Illinois put in gradually grew until in 2011 it made the full amount. It then had to put in a level amount so the pension system was funded by 2045.
The state went further, amortizing pension costs over 50 years, instead of the typical 30, which gave it a longer window to pay off the liability. Then, it lowered the contributions in 2006 by 56 percent and in 2007 by 45 percent in “pension holidays.”
The Times said that the state has taken some measures to correct the problems, but significant pension reform hasn’t been undertaken. Seems like it’s time to get started.
The business of Star Wars
by Liz Hester
Bloomberg Businessweek was out Thursday with an excellent profile of Disney and the acquisition of Lucasfilm and Star Wars. The big takeaway for nerds everywhere is that key members of the original cast are likely to return (maybe):
Here’s creator George Lucas’s slip up:
Asked whether members of the original Star Wars cast will appear in Episode VIIand if he called them before the deal closed to keep them informed, Lucas says, “We had already signed Mark and Carrie and Harrison—or we were pretty much in final stages of negotiation. So I called them to say, ‘Look, this is what’s going on.’ ” He pauses. “Maybe I’m not supposed to say that. I think they want to announce that with some big whoop-de-do, but we were negotiating with them.” Then he adds: “I won’t say whether the negotiations were successful or not.”
Besides the revelation, business reporters should take note of the profile. It’s a well-written analysis of the deal and Disney’s recent success at acquiring iconic businesses and integrating them. The lead anecdote chronicled talks between Lucas and Disney CEO Robert Iger. Here’s Iger’s strategy in a nutshell:
The clandestine talks eventually led to the announcement last October that Disney would pay $4 billion for Lucasfilm, thus putting the Star Wars heroes and villains into the same trove of iconic characters as Iron Man, Buzz Lightyear, and Mickey Mouse. Disney sent excitable Star Wars fans into a frenzy by unveiling a plan to release the long-promised final trilogy starting in 2015. Their enthusiasm reached a crescendo in January when J.J. Abrams, director of the acclaimed 2009 rebooting ofStar Trek, signed on to oversee the first film. “It’s like a dream come true,” gushes Jason Swank, co-host of RebelForce Radio, a weekly podcast.
The deal fit perfectly into Iger’s plan for Disney. He wants to secure the company’s creative and competitive future at a time when consumers are inundated with choices, thanks to a proliferation of cable television networks and the ubiquity of the Internet. “It’s a less forgiving world than it’s ever been,” he says. “Things have to be really great to do well.” Part of Iger’s strategy is to acquire companies that could be described as mini-Disneys such as Pixar and Marvel—reservoirs of franchise-worthy characters that can drive all of Disney’s businesses, from movies and television shows to theme parks, toys, and beyond. Lucas’s needs were more emotional. At 68, he was ready to retire and escape from the imaginary world he created—but he didn’t want anybody to desecrate it.
And it’s Iger’s vision of keeping other acquisitions intact, but expanding their characters and other intellectual property within Disney’s empire that have made him such a success at the helm of Disney.
Iger, however, proved to have a very clear vision. He understood that Disney’s success rested on developing enduring characters. This was a strategy Walt Disney pioneered with Mickey Mouse and Grimm’s Fairy Tales heroines Snow White and Cinderella. More recently, Disney translated The Lion King, a hit animated movie, into a long-running Broadway show. Pirates of the Caribbean, a theme park ride, became a movie series and drove sales of related books and video games.
Iger accelerated that process by making acquisitions. The first was the $7.4 billion purchase of Pixar Animation Studios in 2006. Iger personally negotiated the deal with Steve Jobs, who was then Pixar’s CEO. As part of the deal, Iger kept the creative team, led by John Lasseter, in place and allowed them to continue to operate with a minimum of interference in their headquarters near San Francisco. “Steve and I spent more time negotiating the social issues than we did the economic issues,” Iger says. “He thought maintaining the culture of Pixar was a major ingredient of their creative success. He was right.”
The transaction gave Disney a new source of hit movies. Jobs also became a Disney board member and its largest shareholder. Periodically he would call Iger to say, “Hey, Bob, I saw the movie you just released last night, and it sucked,” Iger recalls. Nevertheless, the Disney CEO says that having Jobs as a friend and adviser was “additive rather than the other way around.”
In 2009, Iger negotiated a similar deal for Disney to buy Marvel Entertainment for $4 billion. Once again, Iger kept the leadership intact: Marvel CEO Isaac Perlmutter and Marvel studio chief Kevin Feige. He thought Disney would profit from their deep knowledge of the superhero movie genre. While the Marvel acquisition didn’t involve a celebrity like Jobs or Lucas, it’s paid off handsomely. Last year, Disney releasedThe Avengers, the first Marvel film it distributed and marketed. The movie grossed $1.5 billion globally, making it the third-most lucrative movie in history. “It was successful beyond belief,” says Jessica Reif Cohen, a media analyst at Bank of America Merrill Lynch (BAC).
The piece is an interesting read full of great stories and details. It’s a great example of a company profile pegged to the latest industry news. Kudos.
Mixed message on jobs
by Liz Hester
A well-watched jobs report was better than expected Wednesday, but the anecdotal news for those looking for work wasn’t so good.
First, let’s look at the ADP report from this Wall Street Journal story:
Private businesses added new employees in February at a faster pace than economists expected, according to a tally of private-sector hiring released Wednesday.
Private-sector jobs in the U.S. increased by 198,000 last month, according to a national employment report calculated by payroll processor Automatic Data Processing Inc. and forecasting firm Moody’s Analytics.
Economists surveyed by Dow Jones Newswires expected ADP to report a smaller gain of 175,000 private jobs. The January job gain was revised up to 215,000 from 192,000 reported a month ago.
The ADP report comes out two days ahead of the Bureau of Labor Statistics’ employment situation report. The BLS report counts private and government payroll slots. The median forecast of economists expects February payrolls increased 160,000. Although the ADP report beats expectations, the increase may not be big enough to cause many economists to change their forecasts significantly.
According to ADP, companies employing between one and 49 workers increased jobs by 77,000 in February. Midsize businesses with payrolls of 50 to 499 workers hired 65,000 new employees. Large firms, businesses with 500 or more employees, added 57,000 positions.
Service-sector jobs increased by 164,000 in February, and factory jobs rose by 9,000.
But the news isn’t all good news for many in the market for employment. According to a New York Times story, companies are reluctant to fill positions and are calling job candidates back for more rounds of interviews than in previous years.
American employers have a variety of job vacancies, piles of cash and countless well-qualified candidates. But despite a slowly improving economy, many companies remain reluctant to actually hire, stringing job applicants along for weeks or months before they make a decision.
If they ever do.
The number of job openings has increased to levels not seen since the height of the financial crisis, but vacancies are staying unfilled much longer than they used to — an average of 23 business days today compared to a low of 15 in mid-2009, according to a new measure of Labor Department data by the economists Steven J. Davis, Jason Faberman and John Haltiwanger.
Some have attributed the more extended process to a mismatch between the requirements of the 4 million jobs available and the skills held by many of the 12 million unemployed. That’s probably true in a few high-skilled fields, like nursing or biotech, but for a large majority of positions where candidates are plentiful, the bigger problem seems to be a sort of hiring paralysis.
“There’s a fear that the economy is going to go down again, so the message you get from C.F.O.’s is to be careful about hiring someone,” said John Sullivan, a management professor at San Francisco State University who runs a human resources consulting business. “There’s this great fear of making a mistake, of wasting money in a tight economy.”
As a result, employers are bringing in large numbers of candidates for interview after interview after interview. Data from Glassdoor.com, a site that collects information on hiring at different companies, shows that the average duration of the interview process at major companies like Starbucks, General Mills and Southwest Airlines has roughly doubled since 2010.
“After they call you back after the sixth interview, there’s a part of you that wants to say, ‘That’s it, I’m not going back,’ ” said Paul Sullivan, 43, an exasperated but cheerful video editor in Washington. “But then you think, hey, maybe seven is my lucky number. And besides, if I don’t go, they’ll just eliminate me if something else comes up because they’ll think I have an attitude problem.”
The Times story doesn’t do anything to resolve the conflict between the anecdotal reporting and the actual figures released. The story was extremely well reported with a variety of “real people” examples, which every reporter knows can be more than challenging to find. I commend Catherine Rampell for her diligent work, but there should have been some mention of the latest job numbers.
I would like to know why companies seem to be dragging their feet on putting people in jobs, but employment continues to rise. I’m sure there is some explanation and I hope a diligent reporter will follow through on finding it.
Watching the stock market’s swings
by Liz Hester
Wall Street Journal markets editor extraordinaire (and personal friend) Emma Moody tweeted Tuesday morning: “Please, please just let this death-by-1000-ticks saga be over…” Her link to the story “Stock Futures Track Global Markets Higher” was quickly replaced as the Dow climbed to a record close.
Let’s take a look at some of the coverage of this milestone. Here’s the WSJ closing bell story:
The Dow Jones Industrial Average surged to its highest closing level ever, finally overcoming the losses tied to the financial crisis on the back of a tenacious stock rally that began in March 2009. And the blue chips did it with an exclamation point—a 125.95-point blast that left the old record in the dust.
“It really does represent an achievement that we have climbed out of this crater,” said Jack Ablin, chief investment officer at Chicago’s BMO Private Bank, which manages about $66 billion.
The Dow advanced 0.9% to 14253.77 Tuesday to top its previous high of 14164.53, set in October 2007. Stocks plunged in the wake of the financial crisis, with the benchmark bottoming at 6547.05 on March 9, 2009.
The Standard & Poor’s 500-stock index rose 14.59 points, or 1%, to 1539.79 Tuesday. The Nasdaq Composite Index added 42.10 points, or 1.3%, to 3224.13.
The New York Times story expresses well some of the surprise surrounding the recent bull market’s stock surges.
Of course, a few things have happened since October 2007. The housing market collapsed, the financial system went into meltdown, the European Union started to fray and politicians dragged the United States through an on-off-on-again fiscal imbroglio.
But stocks managed to move beyond all that.
Since a low point in March 2009, the Dow Jones index has more than doubled, stunning even the most seasoned stock market watchers. It closed at 14,253.77 Tuesday.
“What’s amazing about this bull market is that people still don’t think it’s real,” said Richard Bernstein, chief executive of Richard Bernstein Advisors, a money management firm. “We think this could be the biggest bull market of our careers.”
On Tuesday in particular, leading indexes abroad rose after the Chinese government announced that it would step up spending and European data showed that retail sales there have been stronger than expected.
After the bell sounded at the New York Stock Exchange, stocks were pushed up even more after a reading on the service sector in the United States showed that it had risen to its highest level of activity in a year, surprising analysts.
Bloomberg’s story had some interesting perspective and facts about the recent gains.
The bull market in U.S. equities enters its fifth year this month. The S&P 500 has surged 128 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.
U.S. stock indexes advanced this week amid optimism the Fed will maintain stimulus measures to support the economic recovery. Fed Vice Chairman Janet Yellen said yesterday the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program.
Global equities also rose today as China pledged to support economic expansion. The nation will keep its growth target at 7.5 percent for this year and plans a 10 percent jump in fiscal spending, the government said during the start of the National People’s Congress today.
The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which covers about 90 percent of the economy, rose to 56 in February from the prior month’s 55.2, the Tempe, Arizona-based group said today. Readings above 50 signal expansion. The ISM services survey covers industries ranging from utilities and retailing to housing, health care and finance.
Then there are the sidebars to the coverage to consider. NPR’s Planet Money had an interesting piece saying the Dow didn’t actually hit a record since the returns haven’t been adjusted for inflation, a fair point.
Just a quick, cranky reminder: Despite what you may have read, the Dow Jones Industrial Average did not hit a new high today in any meaningful sense.
After adjusting for inflation, the Dow was higher in 2000 than it is today. It was also higher in 2007. It would need to rise another 10 percent or so to hit an all time high in real (i.e. inflation-adjusted) terms.
When reporting on other numbers that change over time, it’s routine to adjust for inflation. So when people talk about wages stagnating for American households, it means that, after you adjust for inflation, the median wage is roughly the same as it was 15 years ago. If you didn’t adjust for inflation, you would say the median wage has risen by more than 40 percent over the past 15 years. But that would be a meaningless statement.
It’s equally meaningless for the Dow. And even if the Dow did hit a real, inflation-adjusted, all time high, it wouldn’t mean much anyway.
There are other, less arbitrary indexes of the U.S. stock market, such as the S&P 500, which tracks 500 (rather than just 30) big U.S. companies. The S&P 500, for what it’s worth, is below it’s all-time highs in both nominal and inflation-adjusted terms.
Then there are the poor people who fail to remember the mantra, “Buy low. Sell high.” According to WSJ, rising markets cause more people to pile in. Exactly the opposite of what everyone says you should do.
The Dow Jones Industrial Average is back in record territory, and now everyone wants a piece of the action.
Stockbrokers say clients are phoning in orders. Mutual-fund data show investors buying U.S.-stock funds, which they had fled for years.
This is classic investor behavior. History shows that investors typically get excited and jump into stocks when indexes are hitting records. They also tend to sell when indexes are down, which means they sell low and buy high. No wonder they have so much trouble matching index gains.
In all but one of the past six bull markets, investor purchases of stock mutual funds picked up right after the Dow’s first new record, according to Ned Davis Research. In the six months after that first record, the median flow of money into stock funds, in percentage terms, was three times as strong as in the six months before.
A bull market is commonly defined as a gain of 20% or more from a low, and it ends when stocks decline 20% or more from a high. The current bull market began in March 2009.
Unfortunately, bull markets tend to be getting long in the tooth by the time they hit record territory. There were exceptions, but the median bull market had less than two years to go after that first record.
Come on, people. Do you really think Warren Buffett is buying stocks now? It is interesting that the Dow has risen to a non-adjusted record, but this last story with its sad facts about investor behavior is the most compelling to me.
Time and Meredith: Will they mesh?
by Liz Hester
The New York Times ran an interesting story Monday about the merger of Time Inc. and Meredith Corp. The basic premise of the story is that Meredith is the good, frugal, honest Midwest firm while Time is the greedy, bloated and wasteful New York publishing giant.
Without actually coming out and saying it, the prediction is that the culture clashes will be too great for the combined firm to succeed.
Here are a few excerpts from the story:
Meredith’s headquarters in Des Moines have an open floor plan; the executives have their offices on the first floor and favor early-morning meetings. A recent lunch at one of Meredith’s magazines featured kale salad and rosemary-infused cucumber lemonade. Time executives tend toward lunches at Michael’s, where the dry-aged steak is a highlight, and after-work cocktails at the Lamb’s Club.
And then there are the postrecessionary approaches to travel: Meredith’s chief executive turned its corporate jets into shuttles with open seating, while Time still allows staff members to expense hotel rooms at the Four Seasons.
“It’s like the Yankees’ farm team taking over the Yankees,” according to a current Time Inc. executive who, like many who talked about the merger, declined to be identified while criticizing bosses or potential bosses.
The merger news appears to be more troubling to employees at the long revered Time Inc., whose lucrative titles like People and InStyle have been essentially sold off by Time Warner and are likely to be overseen by Meredith’s chief executive, Stephen M. Lacy. Time Inc. employees have made cracks about Des Moines and shared more sobering fears about the merger.
While Time executives privately characterized Meredith executives in the past week as being cheap on everything from compensation to their magazines’ spending on paper stock, former Meredith executives say the company merely spends wisely.
While public filings do not reveal the salary of Time Inc.’s chief executive, Laura Lang, Mr. Lacy makes an annual base salary of $950,000 as Meredith’s chief and has total compensation of $5.8 million including stock awards. Mr. Griffin said that when he worked at Meredith, the company focused aggressively on spending judiciously and weathering the recession.
“There’s a difference between spending and investing, and Meredith has aggressively invested,” Mr. Griffin said. “There really is a sense we’re all in this together.”
Time, which its former executive Ed McCarrick described as “the Harvard of the publishing business,” has followed a very different trajectory. Nancy Williamson, who worked for the company from 1959 to 1989 at Sports Illustrated, Time and People, described how the company evolved from a news organization investing in serious journalism to a much fatter company.
“Greed came to the company in the ’90s,” she said. “It was just a huge company: huge bonuses, huge salaries, stock shares for the big guy, not the little guy.”
Jim Kelly, a former Time Inc. executive, stressed that the company had tried to address its costs for years and added that “Time has had more restructurings than Angelina Jolie has tattoos.”
There were some parts of the story that were critical of Meredith, such as this one, but it still shifted back to a positive spin.
In recent years, Meredith has actually fared worse than Time in terms of advertising pages for its monthly titles. Craig Huber, an independent research analyst with Huber Research Partners, noted that Meredith performed better during the recession, then dropped off relative to its competition as the economy improved. But he added that Meredith has continued to expand its magazine business while Time Warner shifted its focus elsewhere.
“Meredith has been willing to invest in small acquisitions that Time Warner has been trying to get out of,” he said. “Time Warner is focused on the rest of their business, all of their entertainment business, whereas Meredith only has magazines and TV stations.”
Meredith has also focused on bringing in new sources of revenue from events and custom publishing around their magazine titles, according to Reed Phillips, a managing partner for DeSilva & Phillips, a media banking firm. He said that Mr. Bewkes believed that “under Meredith’s management, with their ability to monetize marketing services for the Time Inc. magazines,” the magazines would be “better off and more profitable.”
While I appreciate the idea and the sentiment behind the story, I think it could have been a little more balanced.
The deal is happening, and it seems that there must be something good about Time Inc. I just had a hard time finding it in this story.
Casino magnate suing WSJ reporter for libel
by Chris Roush
Casino magnate Sheldon Adelson sued a Wall Street Journal reporter for libel, seeking damages for a December article in which he was described as “foul-mouthed,” according to the complaint filed in Hong Kong.
Keach Hagey of The Journal writes, “The article ran under the headline ‘Fired Executive Rankles Casino Industry’ in the U.S. edition of the newspaper, but also appeared in overseas editions and on WSJ.com.
“The article, which ran in early December, contrasted Mr. Jacobs, ‘a 6-foot-5-inch-tall Ivy League graduate who colleagues say rarely curses,’ with Mr. Adelson, ‘a scrappy, foul-mouthed billionaire from working-class Dorchester, Mass.’
“The story was co-written by Kate O’Keeffe, a Journal reporter based in Hong Kong, and Alexandra Berzon, a U.S.-based reporter but the suit names only Ms. O’Keeffe. It doesn’t name the Journal or its publisher, News Corp.‘s Dow Jones & Co.
“The suit, filed on Feb. 22 in Hong Kong’s Court of First Instance, seeks ‘damages, including aggravated, exemplary and special damages.’
“The Wall Street Journal said it is representing Ms. O’Keeffe in the suit. ‘We will vigorously defend Ms. O’Keeffe in this lawsuit,’ said a Wall Street Journal spokeswoman. The company declined to comment further.”
Read more here.
Looking at the Fed and jobs
by Liz Hester
Minutes from the Federal Open Markets Committee meeting Jan 29-30, released Wednesday, show that members of the committee are beginning to differ on policy to reduce the nation’s jobless rate.
Here’s the top of the New York Times story, which focuses on the debate.
There are widening divisions among Federal Reserve officials about the value of its efforts to reduce unemployment, but supporters of those efforts remain firmly in control, according to an official account of the Fed’s most recent meeting in January.
An increasingly vocal minority of Fed officials are concerned that buying about $85 billion of Treasury securities and mortgage-backed securities each month is doing more harm than good. They argue the purchases may need to end even before unemployment drops, because the Fed’s efforts are encouraging excessive risk-taking and may be difficult to reverse.
But the Fed’s policy-making committee reiterated its determination in January to hold course until there is “substantial improvement” in the outlook for job growth, and several officials cautioned at the January meeting that the greater risk to the economy was in stopping too soon, according to the account, which was published after a standard three-week delay.
“A few participants noted examples of past instances in which policymakers had prematurely removed accommodation, with adverse effects on economic growth, employment, and price stability,” it said. “They also stressed the importance of communicating the Committee’s commitment to maintaining a highly accommodative stance of policy as long as warranted by economic conditions.”
Proponents of strong action to reduce unemployment raised for the first time the possibility that the Fed should maintain a portion of its asset holdings even as the economy recovers because doing so could magnify the benefits. Its holdings now total almost $3 trillion.
The Wall Street Journal chose to focus on what a quick pull-back in the Fed’s policy would do to markets.
Federal Reserve officials expressed growing unease with the central bank’s easy-money policies at its latest policy meeting and some suggested the Fed might need to pull them back before the job market is fully back to normal.
Minutes released Wednesday of the Fed’s Jan. 29-30 policy meeting showed that officials worried the central bank’s easy-money policies could lead to instability in financial markets and might be hard to pull back in the future. The Fed plans to evaluate how the programs are doing at its next meeting March 19 and 20.
Several officials said that the Fed should be prepared to vary the pace of its asset purchases, depending on how the economy performs and its analysis of the costs and benefits of the program, according to the minutes.
Some Fed officials suggested the Fed may need to alter its stated course to continue the bond-buying programs until the job market improves “substantially,” a threshold it hasn’t defined.
The Bloomberg story focused on the quantitative easing aspect of the Fed’s recent policy:
Several Federal Reserve policy makers said the central bank should be ready to vary the pace of their $85 billion in monthly bond purchases amid a debate over the risks and benefits of further quantitative easing.
The officials “emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved,” according to the minutes of the Federal Open Market Committee’s Jan. 29-30 meeting released today in Washington.
The minutes showed policy makers were divided about the strategy behind Chairman Ben S. Bernanke’s program of buying bonds until there is “substantial” improvement in a U.S. labor market burdened with 7.9 percent unemployment, with some saying an earlier end to purchases might be needed, and others warning against a premature withdrawal of stimulus.
No matter which story you read first, it is obvious that the members of the Federal Reserve are getting nervous about the length of their stimulus programs. It’s a quick turn from vowing in August that the Fed would take action to help create jobs.
The market didn’t like the news, dropping slightly after the minutes were released.
A deal announced prematurely
by Chris Roush
The deal between OfficeMax and Office Depot was announced earlier than expected on Wednesday, giving business journalists a head start, reports Michael de la Merced of The New York Times.
De la Merced writes, “While the deal has been years in the making, it was initially announced prematurely. A news release announcing the merger of the companies was posted on Office Depot’s Web site early on Wednesday morning, but it quickly disappeared.
“Several news organizations reported the terms disclosed in the errant news release for Office Depot’s earnings. The details were buried on page four of the release, under the header ‘Other Matters.’
“As the details filtered through the market, shares of the companies jumped. In premarket trading, Office Depot’s stock rose more than 7 percent, while OfficeMax shares were up more than 8 percent.
“In a call with analysts, Mr. Austrian said that Office Depot’s Webcast provider ‘inadvertently’ published his company’s fourth-quarter earnings ‘well ahead of schedule.’
“The episode is reminiscent of other times that companies’ earnings releases were published prematurely. Last fall, Google‘s third-quarter earnings were published three hours early, which the technology giant blamed on a mistake by R.R. Donnelley & Sons, the company’s printer.
“Representatives for Office Depot and OfficeMax were not immediately available for comment on the erroneous release.”
Read more here.
