Broadcast TV Faces Struggle to Stay Viable

Editor's Note: Broadcast TV is facing the same demographic shifts as newspapers - a loss of mass audience which is affecting its ability to collect a premium for advertising. This will have an important impact on the future of traditional broadcasters moving forward. Like newspapers, the broadcast business model is broken and no one knows how to fix it.
The New York Times - CBS, home to “60 Minutes,” the “CSI” franchise, “Two and a Half Men” and the new hit crime drama “The Mentalist,” is having a better year in prime time than any other network.

And yet, as at the other networks, profits have declined sharply at CBS.

For decades, the big three, now big four, networks all had the same game plan: spend many millions to develop and produce scripted shows aimed at a mass audience and national advertisers, with a shelf life of years or decades as reruns in syndication.

But that model, based on attracting enough ad dollars to cover the costs of shows like “Lost” and “ER,” no longer appears viable. Network dramas now cost about $3 million an hour.

The future for the networks, it seems, is more low-cost reality shows, more news and talk, and a greater effort to find new revenue streams, whether they be from receiving subscriber fees as cable channels do, or becoming cable networks themselves, an idea that has gained currency.

The last bastion of the big network audience is the Super Bowl and other live events like the Grammy Awards and the Academy Awards. The rub is that those have traditionally been viewed as promotional outlets for a network’s other shows, and rarely make money themselves.

Ratings over all for broadcast networks continue to decline, making it harder for them to justify their high prices for advertising. Cable channels are spending more on original shows, which bring in new viewers and dampen their appetites for buying repeats of broadcast shows.

For the networks, the crisis is twofold: cultural and financial. For viewers, the result is more low-cost reality shows, prime-time talk and news programs and sports from the institutions that once made “Hill Street Blues,” “All in the Family” and “Cheers.”
http://www.nytimes.com/2009/02/28/business/media/28network.html

Ads Now in Soap Opera Scripts; Products Plugged on Fox News

The New York Times - Earlier this month, the ABC soap opera “One Life to Live” featured a scene in which Todd, the publisher of the local newspaper, and Tea, his lawyer, had a conversation about Todd’s legal problems, which ranged from being a murder suspect to being on trial for kidnapping.

Tea: I warmed up some soup for you. I don’t want you to go to the police station on an empty stomach.

(Already we are on new ground since characters in soap operas do not, as a rule, ever eat anything.)

Todd: What kind of soup is this?

Tea: It’s Campbell’s. It’s healthy, good for your heart.

Todd: (spooning away) Yeah, it’s good.

Before we go any further, let me just say that I understand soap operas are not high on your list of concerns, what with the economy flat-lining and all. However, the two things are somewhat related.

... Which I will explain after pointing out that I do not actually spend my afternoons watching “One Life to Live.” Do we have that clear? O.K., let’s move forward.

For some time now, characters in daytime dramas have been taking time from their normal activities, like having amnesia, to engage in animated discussions about the sponsors’ products. The ABC soap actors spent February talking about how Campbell’s soup and other assorted products are good for your heart. (And tasty, too!)

Lynn Leahey, the editorial director of Soap Opera Digest, pointed to an episode of “As the World Turns” in which Margo needed to get her hair fixed before a date with her husband (don’t ask) and reached for a bottle of Nice ’n Easy Root Touch-Up. “I feel like I took off 10 years in 10 minutes!” she exclaimed.

And here’s the thing. Viewers don’t complain. “Oh well... To keep the soaps on the air. To keep the actors paid,” wrote a philosophical e-mailer on a soap opera chat site.

Daytime dramas are swimming in choppy waters these days. Ratings are down. Shows are getting canceled. “They’re struggling to find a business model that works,” said Leahey, in a remark I have heard a time or two lately in other contexts.

So, the viewers acquiesce. In fact, for all the complaining about car bailouts and greedy bankers, people have become extremely tolerant of irritating behavior on the part of struggling corporations. Lines we never even bothered to think of as lines are being crossed. Last summer in Las Vegas, the anchors on the local Fox station started delivering the news with two prominently placed cups of McDonald’s iced coffee in front of them. A spokesperson called it a “nontraditional revenue source.” It’s only a matter of time before TV reporters conclude interviews with disaster victims by asking if they wouldn’t like a refreshing glass of V-8.http://www.nytimes.com/2009/02/28/opinion/28collins.html

Rocky Mountain News Shuts Down Amid Ad Slump

The Rocky Mountain News on Thursday became the largest-circulation daily to close its doors in the newspaper-industry crisis, after publisher E.W. Scripps Co. failed to find a buyer for the 150-year-old Denver paper.

The closure of Colorado's oldest newspaper, which prints its last edition Friday, makes Denver the first of what could be a string of major metropolitan markets to lose a daily. Tumbling advertising revenues have endangered one or more dailies in Philadelphia, San Francisco and Minneapolis, among others, and two publishers have filed for bankruptcy protection in the past week alone.

"Most of us thought it was a matter of time," said Bernie Lincicome, a Rocky sports columnist since 2000. "Nobody buys newspapers."

In early December, Cincinnati-based Scripps said it planned to sell the Rocky and its 50% stake in the Denver Newspaper Agency, a joint venture that handles the business operations for both the Rocky and its similarly sized rival, the Denver Post, owned by MediaNews Group. Scripps gave prospective buyers until mid-January to submit bids, but only one potential buyer emerged, and that party didn't present a viable plan, the company said.

Mark Contreras, Scripps's senior vice president of newspapers, said fast shrinking advertising revenues and readership ultimately meant "the model with two major metro dailies in a market the size of Denver was not sustainable." The Rocky had average weekday circulation as of Sept. 30 of 210,281, compared with the Post's 210,585.

Like a lot of cost-cutting measures by newspapers, joint ventures like Denver's haven't done enough to stem the industry's losses. Both Seattle and Tucson, Ariz., which operate as two-newspaper cities under a similar business arrangement, may lose a paper within weeks.

The Rocky's demise ends what is regarded as the country's oldest continuous newspaper rivalry. Fresh off the Rocky's announcement, the Post said it would publish an extra day -- Saturday -- begin delivering to all Rocky subscribers and poach some of the newspaper's star writers.http://online.wsj.com/article/SB123567732712586001.html

Pressure to Re-evaluate Dow Index

The Wall Street Journal - As the Dow Jones Industrial Average hits lows not seen since the dot-com bust, Wall Street is getting antsy about its inclusion of low-priced stocks that some traders and analysts believe should be yanked from the 30-stock average.

Their gripes are based in simple arithmetic, since the average is weighted according to the nominal price quotes of its 30 components, hand-picked by top editors at Dow Jones & Co., which also publishes the Wall Street Journal.

With five stocks in the Dow trading under $10 – Bank of America, Citigroup, Alcoa, General Motors, and, as of today, General Electric – the average’s detractors say it’s become a skewed indicator of the market. They want the runts replaced for essentially the same reason the editors would never add in an extremely high-priced stock like Berkshire Hathaway, now trading above $76,000 a share, or Google, at $340.

“The committee is just not doing its job by leaving these names in,” said James Bianco, president of Bianco Research in Chicago, which recently sent a note to clients analyzing the impact of low-priced stocks in the Dow. He notes that a simultaneous drop in all five sub-$10 Dow components to zero would only cause the average to fall by less than 200 points. However, a 100% decline in the Dow’s most high-priced component, IBM, would cause a drop of more than 700 points.

In the eyes of many investors these days, several of the Dow’s sub-$10 stocks are indeed candidates to go to zero if the government nationalizes them, wiping out private shareholders’ equity. Bank of America and Citigroup are most often cited by traders as candidates for a takeover, though executives and government officials have attempted to dissuade investors from believing that will happen.

Dow Jones Indexes removed American International Group from the industrial average last fall after it received bailout funds that amounted to a de facto nationalization. Mr. Prestbo said the index committee is ready to remove other names quickly if a similar scenario comes to pass, but the committee won’t make moves in anticipation of any government takeovers.http://blogs.wsj.com/marketbeat/2009/02/20/the-unbalanced-dow-industrials/

Bankruptcy Funding Solicited for Car Makers

The Wall Street Journal - Outside advisers to the U.S. Treasury have started lining up the largest bankruptcy loan ever, talking with banks and other lenders about at least $40 billion in financing for General Motors Corp. and Chrysler LLC, in case the two auto makers need it, said several people familiar with the matter.

While acknowledging the grimness of the task, administration officials involved in the auto talks said they are trying to find a way to restructure the two companies without resorting to bankruptcy proceedings. They stressed the latest efforts were "due diligence" on the part of the government advisers, and that bankruptcy financing may not be necessary.

Still, people involved in talks with senior Obama administration officials said that the administration believes that the option of Chapter 11 filings by the two auto makers needs to be seriously considered.

"Everything is on the table right now," one person involved in the matter said, adding that President Barack Obama doesn't want to see more massive job losses in the auto industry. His administration also doesn't want to anger the United Auto Workers by appearing to push for bankruptcy, this person added.

The initial discussions call for private banks to provide the financing -- known as a debtor-in-possession, or DIP, loan -- with the government guaranteeing or backstopping the loan. In this scenario, some of the financing would be used to pay back the $17.4 billion the government lent GM and Chrysler late last year.

Treasury advisers are handling the effort and keeping GM and Chrysler informed of the steps through back-door channels, said the people familiar with the matter. The interplay between the government, auto makers and the markets is proving to be complicated.http://online.wsj.com/article/SB123535613910745405.html

Murdoch Hasn't Given Up on Print or Newspapers

The New York Times - Rupert Murdoch had an office built for him at The Wall Street Journal within days of buying it 14 months ago, and he has made ample use of it — ordering up a wave of changes in the once-staid paper’s content and culture, from the addition of a weekly sports page to general news displacing financial news on the front page to the thinning of its layers of editing.

But Mr. Murdoch, as much old-fashioned press baron as 21st century multimedia mogul, faces a depressing reality: his lifelong fondness for newspapers has become a significant drag on the fortunes of his company, the News Corporation.

The company recently took $8.4 billion in write-downs, including $3 billion on its newspaper unit, which includes The Journal’s publisher, Dow Jones & Company. Meanwhile, the News Corporation’s stock price has fallen by two-thirds in the last year, a sharper decline than at media conglomerate peers like Time Warner and Viacom.

In more vibrant economic times, investors and Wall Street analysts were more willing to look past Mr. Murdoch’s attachment to newspapers — the newspaper segment is now the company’s biggest single source of revenue, about 19 percent in the most recent quarter. But they find that a tougher chore these days, as other media struggle and newspapers suffer through their worst slump since the Depression.

“The thing I hear from investors is that they wish News Corp. was everything but newspapers,” said David C. Joyce, media analyst at Miller Tabak & Company.

“Investors are more forgiving when they are in a better mood,” he said. “The hope for a turnaround in the newspaper business is looking elusive.”

The declining economy and the sinking fortunes of print publications have placed in stark relief Mr. Murdoch’s love of newspapers and his deal to acquire Dow Jones just before the recession set in. Mr. Murdoch, chairman and chief executive of the News Corporation, paid more than $5 billion for an asset that generated about $100 million in operating income last year, a price that now looks like a staggering overpayment. Mr. Murdoch declined to comment for this article.

On the surface, the News Corporation’s Feb. 5 earnings report, for the quarter that ended Dec. 31, appeared to show a nearly $90 million increase in newspaper division revenue from a year earlier. But that was an illusion created by the addition of Dow Jones, which the News Corporation owned for only 18 days of the year-ago period.

What's in a Wall Street Bonus Figure? Not Accuracy

Many of the chief executives from financial institutions, testifying before Congress, drew criticism for reported bonus grants at their companies

The Wall Street Journal - Late last month, New York state's comptroller said Wall Street bonuses totaled $18.4 billion last year. The firestorm he provoked helped lead to legislation that may upend compensation at major banks.

So much depended upon a number so few understood. The figure, which is neither precise nor complete, is probably an underestimate.

After the figure came out, President Barack Obama called the bonuses "shameful" in the wake of the government's $700 billion plan to bail out many of these same Wall Street firms. The criticism laid the groundwork for a provision inserted into the stimulus bill signed into law this week that caps bonus payments for top earners at companies that have received taxpayer dollars.

But the $18.4 billion is merely an estimate, derived from tax-withholding data, labor statistics and bank balance sheets. Bonuses aren't always specified as such on tax returns, so they are estimated by New York state officials from bumps in pay during bonus season.

The comptroller's office releases the estimate annually, usually before some bonuses have even been paid. Later estimates, based on more-complete data, sometimes revise the initial ones by more than 40%. And even these are just estimates. Banks don't supply hard numbers, and important components, such as stock options that haven't been exercised, are excluded.

The figures also cover only employees who work in the securities industry in New York City. How many bonuses are excluded as a result is impossible to say: The industry's highest earners work in New York, but most of its employees work elsewhere.

"People have a tendency to jump to the number and not fully understand it," says Ken Bleiwas, state deputy comptroller for New York City, who oversees the number-crunching. "It's not an easy analysis."http://online.wsj.com/article/SB123509366925028921.html

Economy Dreadful, But Worse Elsewhere

The New York Times - If the economies and stock markets of the world were graded on a curve, the United States would be doing quite well.

In the fourth quarter of last year, the American economy shrank at a 3.8 percent annual rate, the worst such performance in a quarter-century. They are envious in Japan, where this week the comparable figure came in at negative 12.7 percent — three times as bad.

Industrial production in the United States is falling at the fastest rate in three decades. But the 10 percent year-over-year plunge reported this week for January looks good in comparison to the declines in countries like Germany, off almost 13 percent in its most recently reported month, and South Korea, down about 21 percent.

Even in the area of exploding mortgages, the United States has done better than some countries, particularly in Eastern Europe. There it is possible now to owe twice what a house is worth — even if the house has not lost much of its value.

Grading on the curve, as any college student knows, requires that a certain proportion of high grades be given out no matter how badly the class as a whole performs. If the best student in the class gets just over half the answers right on a difficult test, that student deserves an A.http://www.nytimes.com/2009/02/20/business/economy/20norris.html

After Losses, a Move to Reclaim Executives’ Pay

SHOULD executives get to keep lavish pay packages when the profits that generated their compensation go up in smoke?

As the financial crisis deepens, what might have been a philosophical question is now the topic of the day. With losses mounting at the nation’s largest financial institutions, years of earnings have been erased, investors have lost billions, thousands of employees have been let go, and taxpayers have been tapped to rescue the financial system. But executives who helped set the problems in motion, or ignored them as they mounted, are still doing fine. Humbled, perhaps, but well paid for their anguish.

Executives at seven major financial institutions that have collapsed, were sold at distressed prices or are in deep to the taxpayer received $464 million in performance pay since 2005, according to an analysis performed for The New York Times. Almost half of that consisted of cash compensation.

Yet these firms have reported losses of $107 billion since 2007, a result of their own missteps and the ensuing economic downturn. And $740 billion in stock market value has been lost since these companies’ shares peaked in 2007, just before the housing bubble burst.

The New York Times - Against that landscape, a growing chorus is demanding that executive compensation snared shortly before problems emerged be given back.

“There is a line that separates fair compensation from stealing from shareholders,” said Frederick E. Rowe, a money manager in Dallas and a founder of Investors for Director Accountability, a nonprofit group. “When managements ignore that line or can’t see it, then hell, yes, they should be required to give the money back.”

Corporate boards that awarded lush executive pay packages almost always justified them by saying they encouraged superior performance and were directly tied to benchmarks like profitability.

But now, with a public backlash against excessive pay and taxpayer lifelines extended to crippled companies, the idea of recouping compensation, known as “clawback,” is gaining traction.http://www.nytimes.com/2009/02/22/business/22pay.html

When Consumers Cut Back: A Lesson From Japan

TOKYO — As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect.

The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.

Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.

Japan eventually pulled itself out of the Lost Decade of the 1990s, thanks in part to a boom in exports to the United States and China. But even as the economy expanded, shell-shocked consumers refused to spend. Between 2001 and 2007, per-capita consumer spending rose only 0.2 percent.

Now, as exports dry up amid a worldwide collapse in demand, Japan’s economy is in free-fall because it cannot rely on domestic consumption to pick up the slack.

In the last three months of 2008, Japan’s economy shrank at an annualized rate of 12.7 percent, the sharpest decline since the oil shocks of the 1970s.http://www.nytimes.com/2009/02/22/business/worldbusiness/22japan.html

Journal Register seeks bankruptcy protection

NEW YORK (Reuters) - Journal Register Co sought Chapter 11 bankruptcy protection on Saturday, making it the latest U.S. newspaper company to buckle under deteriorating advertising revenue and debt that it cannot easily repay.

The company publishes 20 daily newspapers, including The New Haven Register and The Trentonian. It joins the ranks of the Minneapolis Star-Tribune, as well as Tribune Co, publisher of the Chicago Tribune and Los Angeles Times, and highlights the challenges U.S. newspapers face as advertisers flee their print editions and more people get their news for free online.

For years, Journal Register has been among the smallest of publicly traded U.S. newspaper publishers. Nevertheless, its filing will increase scrutiny on other U.S. newspaper publishers, including McClatchy Co and Lee Enterprises, which are trying to survive a severe ad downturn without running afoul of their creditors.

Journal Register has already agreed with key creditors on a pre-negotiated reorganization plan, and said it was planning to restructure its operations.

The case is In re: Journal Register Co., U.S. Bankruptcy Court, Southern District of New York, No. 09-10769.http://uk.reuters.com/article/burningIssues/idUKTRE51K20520090222

Banks May Need to Be Nationalized

Dow's Lineup of Companies Changing

Associated Press - NEW YORK -- Some dogs of the Dow have lost their bite.

If the prices of the three cheapest stocks in the Dow Jones industrial average -- General Motors Corp., Citigroup Inc. and Bank of America Corp. -- fell to zero, the index would shed fewer than 70 points. That's only about 0.9 percent.

With the three companies valued at less than $5 a share apiece, some investors think the Dow should replace them among its 30 stocks. A $1 move in a Dow stock corresponds to about an 8-point move in the index, according to Dow Jones Indexes.

"I'm certainly surprised they haven't done it," said Jack Ablin, chief investment officer at Harris Private Bank. Ablin said he already considers stocks such as GM and Citigroup "ex-officio" members of the Dow.

Dow Jones said it has no plan to shuffle out components, and it has no official threshold to determine whether a company should be included or excluded. But it has a history of replacing weak companies with stronger ones and isn't ruling out future changes.

The Dow Jones industrial average is far from the be-all, end-all measure of the U.S. stock market. Market participants tend to use broader indexes such as the Standard & Poor's 500 index for statistical analysis. Even Prestbo said the Dow is "very subjectively run."

But the Dow is the most-watched stock index in the world, and it is historically useful because it is so old. It was created in 1896 by Wall Street Journal editor and Dow Jones & Co. co-founder Charles Dow. General Electric Co., which sank yesterday to a 13-year low of $9.95 before closing at $10.06, is the only original component left.http://www.dispatch.com/live/content/business/stories/2009/02/20/dow_components_0220.ART_ART_02-20-09_C8_2MCVONK.html

Nationwide's CEO dumped - Columbus Dispatch Asleep at the Wheel

Editor's Note: Another big story where The Dispatch totally misses the boat. Few reasons given, but we are told a lot about what a great corporate citizen Mr. Jurgensen was. Also, notice how the company's 2008 loss isn't mentioned until 10 graphs into the story and we have to read on to the jump to see that Mr. Jurgensen received $23 million for taking the company's publicly traded unit private. Maybe the newspaper will follow up with a more complete story - MT

The Columbus Dispatch - The top executive at Nationwide has stepped down and been replaced by the president and chief operating officer, bringing abrupt change to one of the city's largest employers.

Jerry Jurgensen, chief executive since 2000, and the company's board of directors "mutually agreed" that Jurgensen would step down, Nationwide said in a news release yesterday. He has been replaced by Steve Rasmussen, who has been with the company since 1998.

Rasmussen, 56, has been president and chief operating officer of Nationwide Mutual and Nationwide Mutual Fire Insurance Co. since September 2003. He also has served as chairman, chief operating officer and director of Allied Group Inc., a Nationwide subsidiary.

The company gave little explanation for Jurgensen's departure, and he could not be reached for comment.http://www.dispatch.com/live/content/local_news/stories/2009/02/20/nationwide_print.ART_ART_02-20-09_A1_RNCVP8V.html?sid=101

New York TImes Stock Drops Below $4 Per Share

Post courtesy of Emily Mullin

Barron's - One sign of how desperate things have gotten at the New York Times (NYT): the share price is cheaper than it costs to purchase a copy of the Sunday paper in New York City.

Shares dropped below $4 in Tuesday’s trading, reaching an all-time low for the stock. That’s south of the $4 cover price that the paper commands at New York City news vendors. (Newsstands themselves have become about as rare as a good quarter of ad spending.)

The downturn in the housing and automotive markets, coupled with the overall economic recession, have cut sharply into advertising revenues, and effectively ruined the model for newspaper operations. When the Times reported its fiscal fourth quarter late last month, it said its net plunged 48% on a year-over-year basis, as ad revenues declined 18% in the period. The company has looked for non-core assets to sell, and has hired bankers to organize the disposition of its partially owned sports operations, which include the Boston Red Sox and Fenway Stadium.

Still, as the poisonous ad-spending market continues to wreak havoc on the operations of newspaper publishers, it’s a wonder whether there won’t be a time when shares of the Times meets the price newsstands charge for the daily paper, currently pegged at $1.50.http://blogs.barrons.com/stockstowatchtoday/2009/02/17/sign-of-the-times/trackback/

A Swiss Bank Is Set to Open Its Secret Files

In the hush-hush world of Swiss banking, the unthinkable is happening: secrets are spilling into the open.

UBS, the largest bank in Switzerland, agreed on Wednesday to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes. The bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities.

It is unclear how many of its clients’ names UBS will divulge. Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers.

But to some, turning over any names at all heralds the end of the secret Swiss bank account, whose traditions date to the Middle Ages.

“The Swiss are saying that this is the end of Swiss banking as they knew it,” said Jack Blum, an offshore tax specialist. “Nobody will trust the security of the Swiss bank account.”

As part of the settlement, UBS agreed to cooperate with a broad summons issued by the Justice Department to turn over the names. Under the terms of a so-called deferred prosecution agreement, the bank and its executives could be indicted if UBS didn’t identify the customers.

UBS has said it is closing the offshore accounts of its American clients. But under the deal with the United States authorities, the bank must provide periodic written evidence of that to prosecutors. UBS earned $200 million annually from the business.

Prosecutors suspect that from late 2002 to 2007, UBS helped American clients illegally hide $20 billion, letting them evade $300 million a year in taxes. http://www.nytimes.com/2009/02/19/business/worldbusiness/19ubs.html

Business Writing 492 - Agenda

Stories you should read before today's class:


http://online.wsj.com/article/SB123497955720814011.html?mod=testMod

http://online.wsj.com/article/SB123500373416017943.html

http://online.wsj.com/article/SB123496582087411241.html

http://online.wsj.com/article/SB123498923468215541.html

http://online.wsj.com/article/SB123500467245718075.html?mod=testMod

I Dream of Denver - South, West Gain, Midwest Loses

The New York Times - You may not know it to look at them, but urban planners are human and have dreams. One dream many share is that Americans will give up their love affair with suburban sprawl and will rediscover denser, more environmentally friendly, less auto-dependent ways of living.

Those dreams have been aroused over the past few months. The economic crisis has devastated the fast-growing developments on the far suburban fringe. Americans now taste the bitter fruit of their overconsumption.

The time has finally come, some writers are predicting, when Americans will finally repent. They’ll move back to the urban core. They will ride more bicycles, have smaller homes and tinier fridges and rediscover the joys of dense community — and maybe even superior beer.

America will, in short, finally begin to look a little more like Amsterdam.

Well, Amsterdam is a wonderful city, but Americans never seem to want to live there. And even now, in this moment of chastening pain, they don’t seem to want the Dutch option.

The Pew Research Center just finished a study about where Americans would like to live and what sort of lifestyle they would like to have. The first thing they found is that even in dark times, Americans are still looking over the next horizon. Nearly half of those surveyed said they would rather live in a different type of community from the one they are living in at present.

Second, Americans still want to move outward. City dwellers are least happy with where they live, and cities are one of the least popular places to live. Only 52 percent of urbanites rate their communities “excellent” or “very good,” compared with 68 percent of suburbanites and 71 percent of the people who live in rural America.

Cities remain attractive to the young. Forty-five percent of Americans between the ages of 18 and 34 would like to live in New York City. But cities are profoundly unattractive to people with families and to the elderly. Only 14 percent of Americans 35 and older are interested in living in New York City. Only 8 percent of people over 65 are drawn to Los Angeles. We’ve all heard stories about retirees who move back into cities once their children are grown, but that is more anecdote than trend.

Third, Americans still want to go west. The researchers at Pew asked Americans what metro areas they would like to live in. Seven of the top 10 were in the West: Denver, San Diego, Seattle, San Francisco, Phoenix, Portland and Sacramento. The other three were in the South: Orlando, Tampa and San Antonio. Eastern cities were down the list and Midwestern cities were at the bottom.

Finally, Americans want to go someplace new. The powerhouse cities of the 20th century — New York, Los Angeles, Chicago — are much less desirable today than the ones that have more recently sprouted up.

In short, Americans may indeed be gloomy and hunkered down. But they’re still Americans. They are still drawn to virgin ground, still restless against limits.http://www.nytimes.com/2009/02/17/opinion/17brooks.html

Starbucks Coffee, Now in Instant

The New York Times - In Howard Schultz’s 1997 book about developing Starbucks, he wrote, “Nothing pains me more than hearing critics compare Starbucks to a chain of discount stores or fast-food operations.”

On Tuesday, the man who set out to improve Americans’ taste in coffee, unveiled instant coffee bearing the Starbucks brand. Packages of Via Ready Brew will appear in Starbucks shops in Seattle and Chicago on March 3, the same day that Starbucks will begin offering breakfast value meals in stores nationwide.

Selling instant coffee and serving value meals might sound more like the purview of an American convenience store and less like that of an Italian espresso bar. Water-soluble coffee is a gamble, marketing analysts said. It could lure customers who drink fast-food or grocery store coffee, or it could water down the Starbucks brand.

But Mr. Schultz said he was ready for the critics who say, “This is desperate, this is a Hail Mary pass, this is off-brand for Starbucks.” http://www.nytimes.com/2009/02/18/business/18sbux.html

SEC Accuses Texas Financier of 'Massive' $8 Billion Fraud

The Securities and Exchange Commission charged Texas financier R. Allen Stanford with an $8 billion fraud, alleging in a civil complaint that he lured investors with promises of high returns on certificates of deposit but poured their money into a "black box" of hard-to-trade assets.

The second huge alleged fraud to emerge in three months -- following Ponzi-scheme charges against Bernard L. Madoff -- reverberated around the world, given Mr. Stanford's status as an international cricket sponsor, Washington political donor and private banker to Latin America's wealthy. Federal agents searched the Houston buildings that are home to his Stanford Financial Group, and customers lined up to withdraw money from a bank he owns in Antigua, the Caribbean island nation where Mr. Stanford's offshore banking operations are based.

According to the SEC, Stanford representatives told people who bought CDs from Stanford International Bank that it was putting their money in easy-to-trade assets; had more than 20 analysts monitoring the portfolio; and underwent yearly audits by Antiguan regulators. In fact, the SEC alleged, the bulk of the money went into real estate and private equity, and the investments were reviewed by only two people: Mr. Stanford and James M. Davis, the bank's chief financial officer and Mr. Stanford's onetime classmate at Baylor University.http://online.wsj.com/article/SB123489015427300943.html

Local Web-Ad Market Cools Down

Editor's Note: A tough year is ahead for web site advertising, which means the web is going to trim hiring. - MT
The Wall Street Journal - Local ads have accounted for some of the fastest growth in Internet advertising in recent years, as small businesses from car-repair shops in Dallas to bakeries in Charlotte, N.C., have taken their marketing online.

This year, growth in the local-ad market -- which represents about a third of total online ad spending in the U.S. -- is expected to shrink, according to one key estimate, challenging the ad and media-buying shops that rely on the local Internet market.

A number of start-ups, including ReachLocal, Yodle and Spot Runner, have cropped up in the past few years, raising millions of dollars and building technologies to help local businesses make the most of their Internet ad buys. Meanwhile, more-established local-media companies, from newspapers to Yellow Pages directories, have scurried to retrain their sales forces to sell online ads alongside their traditional products.

Now, local businesses are chopping their total ad spending amid the recession. While the local online-ad market remains one of the few relatively bright spots in the ad landscape, it probably will be tough for any one ad-space seller to reap much of the benefit.

Online spending by local U.S. advertisers, which grew by 45% in 2008 to $12. 7 billion, is expected to see growth fall to 5.4% in 2009, according to media-research firm Borrell Associates. Total U.S. online ad spending is expected to be about flat, declining 0.3% to $36.9 billion in 2009, compared with growth of 8.5% in 2008, Borrell says.http://online.wsj.com/article/SB123491660496304367.html

Automakers Seek $14 Billion More in Aid

G.M.'s headquarters in downtown Detroit.
The New York Times - DETROIT — The price tag for bailing out General Motors and Chrysler jumped by another $14 billion Tuesday, to $39 billion, with the two automakers saying they would need the additional aid from the federal government to remain solvent.

In return, the two companies also promised to make further drastic cuts to all parts of their operations, in the hope that they can eventually strike a balance between their bloated cost structures and a dismal market for new car sales.

G.M., for example, said it would cut 47,000 more of its 244,000 workers worldwide; close five more plants in North America, leaving it with 33; and cut its lineup of brands in half, to just four: Chevrolet, Cadillac, GMC and Buick.

The Pontiac brand will have a much smaller role, if any, in G.M.’s future, and the company also said it would phase out its Saturn brand, which it once hoped would build small cars to counter the best of the Japanese brands.

G.M. also said it had made progress in discussions with the United Automobile Workers union and its bondholders to reduce its costs further.

The cash crisis will require fast action by the administration’s new cabinet-level Presidential Task Force on Autos, which is overseeing the reorganization of G.M. and Chrysler.

The deteriorating finances of the two companies present the Obama administration with two options, neither of them appealing.

It can provide the money in the hopes that the companies will stabilize, and no longer have to keep pushing workers into a growing pool of people without jobs. But there are no guarantees, as the Treasury Department learned on Tuesday when the automakers filed updates on their restructuring plans, that they might not be forced to come back again with requests for more money.

But if the federal government balks at the automakers’ requests, that would mean the two companies probably would have no choice but to file for bankruptcy protection, because they are losing hundreds of millions of dollars each month.

And the car companies said on Tuesday that the cost of a bankruptcy reorganization, with the government providing financing to help it through that process, would be far greater than their latest loan requests. Without such help, the companies would have to liquidate, creating staggering new job losses.

In a statement, the administration said Tuesday night that its task force would be reviewing the carmakers’ reports in coming days, adding that “more will be required from everyone involved — creditors, suppliers, dealers, labor and auto executives themselves — to ensure the viability of these companies going forward.”

The third Detroit auto company, Ford Motor, has not received federal assistance and has no requests pending.http://www.nytimes.com/2009/02/18/business/18auto.html

Bailout Likely to Focus on Most Afflicted Homeowners

The long-awaited housing bailout will finally be announced on Wednesday.

In a speech in Phoenix, a signature real estate boomtown gone bust, President Obama will explain his plan to reduce foreclosures. And the key to understanding that plan will be remembering that there are two different groups of homeowners who are at risk of foreclosure.

The first group is made up of people who cannot afford their mortgages and have fallen behind on their monthly payments. Many took out loans they were never going to be able to afford, while others have since lost their jobs. About three million households — and rising — fall into this category. Without help, they will lose their homes.

The second group is far larger. It is made up of the more than 10 million households that can afford their monthly payments but whose houses are worth less than what is owed on their mortgages. In real estate parlance, they are underwater. If they want to stay in their homes, they will have no trouble doing so. But some may choose to walk away voluntarily, rather than continue to make payments on an investment that may never pay off.http://www.nytimes.com/2009/02/18/business/economy/18leonhardt.html

Business Stories Featured in George Polk Awards

NEW YORK -- Author Gay Talese, who influenced a generation of writers with books such as Thy Neighbor's Wife and Honor Thy Father, was named the winner of a George Polk Award for career achievement yesterday.

Other winners of the 2008 Polk Awards include New York Times reporters Barry Bearak and Celia Dugger, who risked their lives exposing violence in Zimbabwe, and Paul Salopek of the Chicago Tribune, who reported on pre-emptive U.S. tactics in combating terrorism in the Horn of Africa.

The Polk Awards, presented by Long Island University, are considered among the top prizes in U.S. journalism. They were created in 1949 in honor of CBS reporter George W. Polk, who was killed while covering the Greek civil war, and will be awarded at an April 16 luncheon in New York.

Talese began his career as a copy boy at The New York Times and worked as a reporter there from 1956 to 1965.

He has written for publications -- including The New Yorker and Harper's -- in addition to his books, which also include The Bridge: The Building of the Verrazano-Narrows Bridge and The Kingdom and the Power: Behind the Scenes at The New York Times. He is considered a pioneer of the literary style of reporting known as new journalism.

Other winners:

• The husband-and-wife team of Bearak and Dugger, who shared the Polk Award for foreign reporting. Even after Bearak was jailed for five days for illegal reporting, the pair continued to file stories describing the violence that shook Zimbabwe after disputed elections.

• Salopek of the Tribune for reporting about efforts by the U.S. military to pre-empt radical Islamist activity in African nations including Kenya, Ethiopia, Somalia and Sudan.

• David Barstow of The New York Times for a two-part series about retired military officers working as analysts for broadcast networks while moonlighting as paid defense-industry consultants. Barstow reported that these ostensibly independent analysts used their air time to advance the interests of defense-contractor clients.

• Eric Nalder of the Seattle Post-Intelligencer for his two-part series "Demoted to Private: America's Military Housing Disaster." Nalder showed how the Defense Department awarded $1 billion in contracts to a politically connected consortium as part of an effort to privatize military housing construction.

• Jim Schaefer and M.L. Elrick of the Detroit Free Press for stories that led to the resignation and jailing of Detroit Mayor Kwame Kilpatrick. The two found graphic text messages and other evidence showing that Kilpatrick had lied under oath about a sexual relationship with his chief of staff.

• Paul Pringle of the Los Angeles Times for unearthing corruption in the Service Employees International Union.

• Ryan Gabrielson and Paul Giblin of the East Valley Tribune of Mesa, Ariz., for a five-part series about Maricopa County Sheriff Joe Arpaio's campaign against illegal immigrants.

• Richard Behar for an article about China's drive to invest in sub-Saharan Africa, published in the business magazine Fast Company.

• Susanne Rust and Meg Kissinger of the Milwaukee Journal Sentinel for a six-part series on potential toxins found in everyday materials such as "microwave-safe" plastics and baby bottles.

• Ken Armstrong and Nick Perry of The Seattle Times for a four-part series on the University of Washington's football team, which won the 2001 Rose Bowl even though at least two dozen members had been arrested, some on charges of violent felonies, while at the school.

• Correspondent Scott Pelley, producer Solly Granatstein and co-producer Nicole Young of CBS' 60 Minutes for a segment that showed how some American companies that are paid to recycle electronic waste have instead dumped it in China.

• Filmmaker Stefan Forbes for Boogie Man: The Lee Atwater Story, a portrait of the Republican operative and his continuing influence on American politics after his death in 1991 at age 40 from a brain tumor.

• Alex Blumberg of This American Life, produced by Chicago Public Radio and distributed by Public Radio International, and Adam Davidson of National Public Radio, for their collaborative report, "The Giant Pool of Money," which distilled the complex chain of events that led to the subprime mortgage crisis.http://www.dispatch.com/live/content/life/stories/2009/02/18/2_POLK_AWARDS.ART_ART_02-18-09_D3_78CUSN8.html

Stocks Slide in Asia, Europe on concerns about U.S.

The New York Times - PARIS — Shares in in Europe followed Asian indexes lower Tuesday on continued concern about the health of the corporate sector and the widening effects of the financial crisis.

In Europe, attention turned to the plight of lenders t active in Eastern Europe after Moody’s Investors Service said it might downgrade banks with units in the region. Investors are worried about the debts owed by banks in Eastern Europe to financial institutions in western European countries, especially Austria, Belgium, Germany, Greece and Italy.

“The effects of the slowdown are continuing to widen geographically, especially to countries that have been reliant on demand in the West,” said Henk Potts, equity strategist at Barclays Wealth in London.

Amid fears about exposure to Eastern Europe, Erste, a bank based in Vienna, lost 7.7 percent. Swedbank, based in Stockholm, fell 3.6 percent, while UniCredit, the Italian bank, lost 5 percent. http://www.nytimes.com/2009/02/18/business/18markets.html

Nearly broke California faces fiscal crisis - $41 billion in the red

California’s budget woes have forced the cancellation of thousands of infrastructure projects, like this new bridge in Glendale.

The New York Times - LOS ANGELES — The state of California — its deficits ballooning, its lawmakers intransigent and its governor apparently bereft of allies or influence — appears headed off the fiscal rails.

Since the fall, when lawmakers began trying to attack the gaps in the $143 billion budget that their earlier plan had not addressed, the state has fallen into deeper financial straits, with more bad news coming daily from Sacramento. The state, nearly out of cash, has laid off scores of workers and put hundreds more on unpaid furloughs. It has stopped paying counties and issuing income tax refunds and halted thousands of infrastructure projects.

Twenty-thousand layoff notices will go out on Tuesday morning, Matt David, the communications director for Gov. Arnold Schwarzenegger, said Monday night. “In the absence of a budget we need to realize this savings and the process takes six months,” Mr. David said.

After negotiating nonstop from Saturday afternoon until late Sunday night on a series of budget bills that would have closed a projected $41 billion deficit, state lawmakers failed to get enough votes to close the deal and adjourned. They returned to the Capitol on Monday morning and labored into the evening but still failed to reach a deal. They planned to reconvene at 10 a.m. Tuesday to go at it again.

California has also lost access to much of the credit markets, nearly unheard of among state municipal bond issuers. Recently, Standard & Poor’s downgraded the state’s bond rating to the lowest in the nation.

California’s woes will almost certainly leave a jagged fiscal scar on the nation’s most populous state, an outgrowth of the financial triptych of above-average unemployment, high foreclosure rates and plummeting tax revenues, and the state’s unusual budgeting practices.http://www.nytimes.com/2009/02/17/us/17cali.html

Brokerages Tighten Hedge Fund Financing

Brokerage firms are reducing financing and other services to hundreds of hedge funds, in a move that could accelerate the shakeout among these heavy-hitting investors.

Under financial pressure, securities firms are dividing their hedge-fund clients into lists of those they consider best able to weather the financial turmoil and those they're less sure of. The result is that more funds may have to merge, find other financing at higher cost or close.

The squeeze, described by a range of brokerage-firm and hedge-fund officials, takes different forms. For instance, they say firms have reduced financing for the flagship fund run by John Meriwether, a founder of Long-Term Capital Management, the fund whose near-collapse caused a brief market crisis in 1998. The move has forced Mr. Meriwether's Relative Value Opportunity fund -- down 42% in 2008 -- to reduce its borrowing to finance trades, putting pressure on returns. Mr. Meriwether, whose firm is called JWM Partners LLC, declined to comment.

Banks also have pressed Kenneth Griffin's Citadel Investment Group, whose biggest funds lost 54% last year, to sell some securities and reduce its borrowing to finance trades. Goldman Sachs Group Inc. increased financing costs last year when a big trade went sour for another large fund, Glenview Capital Management. J.P. Morgan Chase & Co. has tightened financing terms for some funds.

Being on banks' less-favored lists doesn't necessarily mean a death knell for hedge funds -- private investment partnerships that cater to institutions and the rich and have wide discretion in their strategies. Plenty of such funds could continue, especially smaller ones that don't rely heavily on Wall Street. Funds also could get off the lists if their returns rebound or they get cash infusions from investors. But since many hedge funds make heavy use of borrowed money, or leverage, reduced financing can crimp performance.http://online.wsj.com/article/SB123483417670296081.html?mod=testMod

Will Stimulus Bill Be A Waste of Money?

Auto Maker Bankruptcy Looms

The Wall Street Journal - Troubled U.S. auto makers and union representatives dug in late Monday for all-night cost-cutting negotiations as the government advanced its point person on auto restructuring, a former investment banker with a record for demanding harsh concessions from manufacturers, unions and investors alike.

General Motors Corp. and Chrysler LLC are required to submit recovery plans to the government on Tuesday as part of their agreement to receive billions of dollars in federal loans. As the government's auto-industry task force began to take shape ahead of the deadline, President Barack Obama's administration appeared to be turning up the pressure on GM and Chrysler to carry out tough restructuring measures, possibly through the use of the bankruptcy court.http://online.wsj.com/article/SB123483084725295657.html?mod=testMod

Economists' U.S. Outlook Dims

The Wall Street Journal - Prospects for an economic recovery this year are fading.

Economists in the latest Wall Street Journal forecasting survey, while still mostly projecting growth in the U.S. gross domestic product by the third quarter, largely agree that a "second-half recovery"—a scenario that has been a common feature of most 2009 outlooks—is looking much less likely now than it did a few months ago. Recent data showing just how sharply growth in the U.S. and abroad has declined in the final months of 2008 have cast a deepening shadow over 2009.

As recently as September, economists, on average, thought the U.S. would see annualized GDP growth of 1.2% in the first three months of this year; now, they see a 4.6% decline. Forecasts for the second quarter, the April-June period, have seen a similar shift, from a 1.9% growth forecast to a 1.5% decline, based on the 52 economists who participated in the Journal's February survey.

The average forecast now sees growth in the third quarter at 0.7%, less than half the rate expected last fall. The fourth-quarter picture has also darkened, but just slightly, to growth of 1.9% from the 2.1% seen in November. Five economists see growth declining through the fourth quarter of 2009; they say the current consensus outlook, which says the recession will end in August as GDP growth returns positive, is far too optimistic.http://online.wsj.com/article/SB123445757254678091.html

Got A Journalism Degree and No Job? The Strip Club is Hiring

The Wall Street Journal - A couple of years back, around the time he was turning 50, Michael Precker was in his prime as a journalist. He'd never imagined himself doing anything else: "I knew in seventh grade I wanted to be a newspaperman."

A graduate of Columbia Journalism School, he was a foreign correspondent for 11 years in the Middle East and wrote feature articles on countless subjects for the Dallas Morning News. One year, the paper nominated him for a Pulitzer Prize.

Now he has a new job: running a strip club. "I feel lucky," he says.

Mr. Precker's career adjustment reflects the recent chaos of the newspaper business. It happened in 2006. Back then the industry was already pretty far along in its path to today's never-ending reports of bankruptcies and layoffs.

When the Morning News offered buyouts in 2006, he says the paper's leadership made clear that the reduction in staff wasn't temporary -- or necessarily complete. And maybe the next buyout offer would be less generous. Demand for the long-form journalism he favored was drying up. He could see "storm clouds" all around him.

"It seemed pretty clear that people of my vintage weren't going to get through retirement," says Mr. Precker, now 53 years old.

Around that time he found himself seated at a charity dinner near the owner of a Dallas strip club, Dawn Rizos. Hearing him mention the newspaper industry's travails, she offered him a job. "I like smart people. You could do communications," she told him.

He laughed it off. "I thought, 'I couldn't stoop to something like that,'" he recalls.

Soon afterwards, he was visiting Israel when the war with Hezbollah in Lebanon broke out, and to his surprise he found himself disinterested in covering it. "As much as I loved my job and was proud of what I'd done, I didn't have the urge anymore to run up to the border and explain it all to the American people and then come back and brag about how I'd been shot at," he says.http://online.wsj.com/article/SB123447503728679243.html?mod=article-outset-box

Chicken Price Slump , Leaves Farmers Wanting to Flee the Coop

The Wall Street Journal - CENTER RIDGE, Ark. -- Like many Americans, Darris and Sarah Dixon are struggling with mortgage payments and trying to avoid bankruptcy.

But the home the Dixons live in isn't the problem. The problem is their three chicken houses, on which they owe nearly $500,000.

"There's no way we'll make the chicken house payments," Mr. Dixon says from his farm abutting the Ozark Mountains.

A chicken housing crisis has cropped up in the U.S., and it's producing some of the same bleak results as the human one -- foreclosures, lawsuits and devastated homeowners.

In the wake of last year's bankruptcy filing by poultry giant Pilgrim's Pride Corp., hundreds of farmers suddenly find themselves unable to make mortgage payments on their pricey chicken coops.

To cut costs, Pilgrim's, the nation's second-largest chicken company, has terminated contracts with at least 300 farms in Arkansas, Florida and North Carolina. Under these contracts, farmers receive a set price per pound for raising chicks supplied by Pilgrim's until they are ready for slaughter. The company turns the birds into nuggets, wings and other food.

Pilgrim's still has contracts with more than 5,000 growers nationwide, and executives say they are trying to cut as few as possible. They say the reason the 300 farms weren't needed was that Pilgrim's stopped or reduced production at processing plants in those areas. "It's a very sad situation," says Don Jackson, the company's president and chief executive. But "the company is in bad shape." Last year Pilgrim's had a loss of nearly $1 billion.http://online.wsj.com/article/SB123440092979675383.html?mod=article-outset-box

Icing the Culprit in Continental Flight 3407 Crash?

GM Offers U.S. Two Choices: More Aid or Bankruptcy

The Wall Street Journal - General Motors Corp., nearing a federally imposed deadline to present a restructuring plan, will offer the government two costly alternatives: commit billions more in bailout money to fund the company's operations, or provide financial backing as part of a bankruptcy filing, said people familiar with GM's thinking.

The competing choices, which highlight GM's rapidly deteriorating operations, present a dilemma for Congress and the Obama administration. If they refuse to provide additional aid to GM on top of the $13.4 billion already committed they risk seeing an industrial icon fall into bankruptcy.

Some experts and members of Congress say bankruptcy reorganization is the surest way for GM to cut costs and become viable. But it could be a politically unpalatable development during a recession that already has thrown millions of workers out of jobs.
http://online.wsj.com/article/SB123458663412987489.html?mod=testMod

Bailout Needs Some Strings Attached to Limit Pay

The New York Times - JUST in case you missed it: The Congressional Oversight Panel monitoring the Treasury Department’s bailout of broken banks — the Troubled Asset Relief Program — reported last week that Henry M. Paulson Jr.’s team at Treasury paid significantly more for the assets it bought from banks than they were worth when the deal was announced in the fall.

“The panel’s analysis revealed that in the 10 largest transactions made with TARP funds, for every $100 spent by Treasury, it received assets worth, on average, only $66,” the report said. “This disparity translates into a $78 billion shortfall for the first $254 billion in TARP funds that were spent.”

More taxpayer money down the drain, alas. And all the more reason to focus closely on executive pay restrictions at any bank that receives TARP funding.

Although our long-running financial despond has produced few real positives, surely this is one: Investors are finally seeing just how regally executives live on their shareholders’ dimes. Maybe now they will do something about it.

During good times, banks either hide or try to justify such perks as fleets of corporate jets and Las Vegas junkets. But as companies run to taxpayers for their bailout billions, they are now being forced to forgo the Gulfstreams, the tee times at Pebble Beach and those sumptuous spa treatments.

Could shame, that long-lost American character trait, be making a comeback? Not likely. So it’s important to make Washington’s plan to rein in executive pay airtight. Loud rebukes against executive excess are amusing, but a $500,000 cap on salary means only that the executives will be paid some other way. And requiring companies to recover compensation only if an executive is found to have lied on financial statements? Good luck with that. http://www.nytimes.com/2009/02/08/business/08gret.html?partner=permalink&exprod=permalink

Will the Stimulus Package Work?

Members of the House and the Senate working on the final version of the stimulus on Wednesday. The fragile consensus, and the president’s agenda, face many tests in coming months.

WASHINGTON — It is a quick, sweet victory for the new president, and potentially a historic one. The question now is whether the $789 billion economic stimulus plan agreed to by Congressional leaders on Wednesday is the opening act for a more ambitious domestic agenda from President Obama or a harbinger of reduced expectations.

Both the substance of his first big legislative accomplishment and the way he achieved it underscored the scale of the challenges facing the nation and how different a political climate this is from the early stages of recent administrations.

While it hammered home the reality of bigger, more activist government, the economic package was not the culmination of a hard-fought ideological drive, like Lyndon B. Johnson’s civil rights and Great Society programs, or Ronald Reagan’s tax cuts, but rather a necessary and hastily patched-together response to an immediate and increasingly dire situation. On the domestic issues Mr. Obama ran and won on — health care, education, climate change, rebalancing the distribution of wealth — the legislation does little more than promise there will be more to come.

In cobbling together a plan that could get through both the House and the Senate, Mr. Obama prevailed, but not in the way he had hoped. His inability to win over more than a handful of Republicans amounted to a loss of innocence, a reminder that his high-minded calls for change in the practice of governance had been ground up in a matter of weeks by entrenched forces of partisanship and deep, principled differences between left and right.

In the end, Congress did not come together to address what Mr. Obama has regularly suggested is a crisis that could rival the Great Depression. What consensus has been forged so far is likely to be tested in the months to come as he faces scrutiny over the effectiveness of the stimulus package and the likelihood that he will have to ask Congress for substantially more money to heal the fractures in the financial system. http://www.nytimes.com/2009/02/12/us/politics/12assess.html?_r=1&hp

The Real Stimulus Burden - We Will Be Paying For Many Years

The Wall Street Journal - In 2003, amid debate about the Bush tax cuts and a budget deficit of merely $400 billion, Maine Senator Olympia Snowe demanded that any tax cuts be capped at $350 billion. "At a time of growing federal deficits," the Republican declared to much media praise, "it is especially important that this plan be right-sized without putting our future at risk."

Flash forward to Tuesday: Ms. Snowe provided one of three crucial GOP votes that helped Democrats pass $838 billion in new spending and "tax cuts" -- often for people who pay no taxes. The deficit for 2009 even before this stimulus? $1.2 trillion.

If nothing else good comes from this exercise, at least Senators Snowe, Susan Collins and Arlen Specter should be laughed out of town if they ever fret about a budget deficit again.

As of late yesterday, the details of the final House-Senate stimulus bill weren't available. But this much we do know: The bill will mark the largest single-year increase in domestic federal spending since World War II; it will send the budget deficit to heights not seen in 60 years; and it will establish a new and much higher spending baseline for years to come. Combine this new spending, and the borrowing it will require, with the trillions of dollars still needed for the banking system, and we are about to test the outer limits of our national balance sheet.

Even under CBO's conservative estimate, the Senate bill increases outlays by $546 billion over 10 years. But to get this low a figure, CBO assumes that the half-trillion in spending will be a one-time wonder. We are thus expected to believe that Democrats will let these additions to their favorite programs vanish after two or three years. To believe this, you have to ignore the last half-century of budget politics. Spending never declines; at best it merely fails to grow as fast as the economy.http://online.wsj.com/article/SB123440436240475615.html

Sirius Seeks To Fend Off Takeover, Bankruptcy

Sirius XM Radio Inc. is seeking an investment from Liberty Media Corp., people familiar with the matter say, in a last-ditch effort to fend off an unsolicited takeover approach from satellite entrepreneur Charles Ergen.

The talks set the stage for a battle between the leading U.S. satellite-television providers -- Liberty-controlled DirectTV Group Inc. and Mr. Ergen's Dish Network Corp. -- for control of the country's sole satellite-radio operator.

Liberty, which is controlled by billionaire John Malone, emerged as a potential "white knight" for Sirius after Mr. Ergen made an unsolicited offer late last year to take control of the radio operator.

Though the talks between Sirius and Liberty are advanced, a deal remains far from certain, a person familiar with the matter said. It wasn't clear how much Liberty would be willing to invest in Sirius and whether it would end up with control. Mr. Malone is known as a careful negotiator and is unlikely to cut a deal in haste.http://online.wsj.com/article/SB123440851532776029.html?mod=testMod

Bank Chieftains Appear Before Congress

WASHINGTON — James D’Agostino craned his neck to get a view of the Morgan Stanley chief executive John J. Mack in the hope that the Wall Street titan would be subjected to a firestorm of criticism in a reckoning before Congress.

After participating in a protest last weekend at Mr. Mack’s home in Rye, N.Y., Mr. D’Agostino said he was eager to see lawmakers “go after him. And the others, too.”

But inside the House chamber where Mr. Mack sat shoulder to shoulder with Vikram S. Pandit, Kenneth D. Lewis, and the heads of five other too-big-to-fail banks leaning on government support, lawmakers instead delivered the equivalent of a slow burn.

“There is in the country a great deal of anger about the financial institutions, including those represented here,” Barney Frank, the chairman of the House Financial Services Committee said, gazing at the row of executives. But, Mr. Frank continued, it would be impractical to scrap the entire financial system and start anew. “We have no option if we are to get credit flowing in this country other than to work with the existing institutions,” he said.

Bank of America. Citigroup. Goldman Sachs. Morgan Stanley. These are the among the banks that the public blames for creating the mess that ravaged financial markets and ripped into the economy.

They and others that have taken in billions of dollars in hard-earned taxpayer dollars are widely perceived not to be returning the favor to the nation. Some say they are curbing lending while continuing to dish out millions in executive pay. But they are also the giants of the banking world that lawmakers are counting on to haul the economy back onto its feet.

This “dilemma,” as Mr. Frank described it, led some lawmakers to walk a finer line with the bankers than had been the case with the heads of the Big Three automakers, who have also sought billions in support to shore up their teetering industry.

So, at the first hearing to call banking chiefs to account for how they have spent a collective $165 billion in taxpayer money, the pitchforks were tabled — for the most part.

“You once lived behind a one-way mirror, unaccountable to the public at large,” said Representative Paul E. Kanjorksi, a Democrat from Pennsylvania. “When you took taxpayer money you moved into a fishbowl.”

The love-hate relationship with Wall Street dates back to the days when the financial district was settled by the Dutch. But the 1930s holds the greatest echoes to today. Back then, lawmakers were looking for answers behind the 1929 stock market crash, and for years they hauled bankers into contentious hearings. http://www.nytimes.com/2009/02/12/business/12bank.html?partner=permalink&exprod=permalink

http://www.cnbc.com/id/15840232?video=1030938318

Congress Strikes $789 Billion Stimulus Deal

The Wall Street Journal - WASHINGTON -- Congress and the White House reached accord on a $789.5 billion economic-recovery package that would shower hundreds of billions of dollars in tax relief on individuals and businesses and spark an infrastructure building boom, from the nation's ports and waterways to its schools and military bases. The deal all but clinches passage of one of the largest economic rescue programs since Franklin Roosevelt launched the New Deal.

President Barack Obama, speaking at a Northern Virginia construction site, hailed an "endeavor of enormous scope and scale." The package dwarfs the military budget and exceeds the cost of the entire Iraq war since the invasion of 2003.

Defying two decades of mostly Republican-led efforts to diminish federal authority and focus on lifting the economy through tax cuts, the legislation would expand unemployment insurance, tilt federal assistance to the poor, launch major efforts to streamline health-care delivery and give Washington a larger hand in local education spending.

The plan may be only a down payment on the Obama administration's effort to turn around an economy that has shed 3.6 million jobs since December 2006. Both Mr. Obama and Democratic leaders lowered their work-creation expectation Wednesday. They had originally said their goal was to create, or save, four million jobs. Last night, they cut that to 3.5 million.

The president has framed the deal as the first leg of an economic program aimed also at unclogging credit markets, lifting the housing market and tightening regulation of the financial and banking sector.

The agreement came late Wednesday after last-minute dickering over education and school-construction funds that dramatized the intensity of negotiations. The House and Senate convened a conference committee to bless the legislation and clear the way for action in the House as early as Thursday. Both chambers are expected to pass the compromise shortly.http://online.wsj.com/article/SB123436825805373367.html?mod=testMod

Big Grocer Pulls Unilever Items Over Pricing

The Wall Street Journal - A big grocery chain has removed from its Belgian stores about 300 Unilever products that it says are priced too high, a sign of mounting tension between retailers and suppliers as the recession grinds on.

The move by Brussels-based Delhaize SA, which operates the Food Lion chain and other grocery stores in the U.S., comes just days after Unilever reported strong fourth-quarter profit that was driven in large part by its ability to command big price increases despite the ailing economy.

The banished products include everything from Dove soap and Axe deodorant to a jam brand called Effi. Delhaize normally stocks as many as 500 Unilever products in its 775 stores in Belgium.

The stare-down shows how fraught relations between retailers and their suppliers are becoming amid the severe slump in consumer spending. Grocery stores across the globe are putting growing pressure on food and drink companies to lower prices or to offer other more favorable terms.

Faced with penny-pinching consumers and the growing strength of discount stores, retailers are desperate to cut prices, and a growing number are asking suppliers to help foot the bill.

Meanwhile, consumer-goods companies such as Unilever are struggling with a drop in demand from stores whose customers are trading down to cheaper private-label brands. Earlier this month, Kraft Foods Inc. lowered its earnings guidance for the year as retailers, including Wal-Mart Stores Inc., cut back orders.http://online.wsj.com/article/SB123430797027570341.html?mg=com-wsj

Market Pans Economic Stimulus

The Wall Street Journal - WASHINGTON -- Treasury Secretary Timothy Geithner promised forceful action to get credit flowing again in the economy, but the lack of detail in his much-anticipated speech helped drive stocks down nearly 5%, the worst selloff since President Barack Obama assumed office.

Announcing the Obama administration's financial-rescue plan in the Treasury's ornate Cash Room, Mr. Geithner described a mix of efforts that were mostly already known in their outlines. They included a fresh round of capital injections into banks, an expansion of a Federal Reserve lending program and a public-private effort to relieve banks of soured assets. The steps are aimed at getting $1 trillion to $2 trillion in financing flowing through the economy to kick-start both consumer and business lending.

The other prong of the administration's economic program advanced Tuesday as the Senate passed a $838 billion stimulus bill, setting up a conference with the House to reach a final bill, possibly by the end of this week.

Mr. Geithner committed the government to spending $50 billion to stem home foreclosures but said the details remain to be worked out in the next few weeks. Officials also will take the coming weeks to flesh out details, in consultation with the public, of a planned Public-Private Investment Fund to take soured assets off banks' books.

After his speech, Mr. Geithner met with lawmakers. The Treasury could find itself back on Capitol Hill at some point seeking more financial-rescue funds. Officials said they have enough for the time being, but didn't rule out asking for more.http://online.wsj.com/article/SB123427167262568141.html

Geithner Swings and Misses

The Wall Street Journal - Heard on the Street: Geithner Swings and Misses Heard on the Street columnist Peter Eavis explains to Simon Constable how Treasury Secretary Timothy Geithner missed a great opportunity to "shock and awe," but instead wimped out. Heard on the Street: Geithner Swings and Misses Heard on the Street columnist Peter Eavis explains to Simon Constable how Treasury Secretary Timothy Geithner missed a great opportunity to "shock and awe," but instead wimped out. Peter Eavis Simon Constable treasury secretary Tim Geithner economy plan timothy geithner financial crisis heard on the street

Why Analysts Keep Telling Investors to Buy

Even now, with the recession deepening and markets on edge, Wall Street analysts say it is a good time to buy.

Still.

At the top of the market, they urged investors to buy or hold onto stocks about 95 percent of the time. When stocks stumbled, they stayed optimistic. Even in November, when credit froze, the economy stalled and financial markets tumbled to their lowest levels in a decade, analysts as a group rarely said sell.

And last month, as the Dow and Standard & Poor’s 500-stock index suffered their worst January ever, analysts put a sell rating on a mere 5.9 percent of stocks, according to Bloomberg data. Many companies have taken such a beating in the downturn, analysts argue, that their shares are bound to bounce back.

Maybe. But after so many bad calls on so many companies, why should investors believe them this time?

When Internet stocks imploded in 2000 and 2001, Wall Street analysts were widely scorned for fanning a frenzy that had inflated dot-com shares to unsustainable heights. But this time around, credit rating agencies, mortgage companies and Wall Street bankers have shouldered much of the blame for the Crash of 2008, and few have publicly questioned the analysts who urged investors to buy all the way down.

On Oct. 8, as Congress and the Treasury Department frantically tried to calm the plummeting markets, a Citigroup analyst upgraded Bank of America to buy. Since then, Bank of America shares have fallen 77 percent.

That same month, Jeffrey Harte, a top-rated analyst at Sandler O’Neill and Partners, also lifted Bank of America to buy, from hold, and a month later, he gave Citigroup the same upgrade, according to Bloomberg data.http://www.nytimes.com/2009/02/09/business/09analyst.html?partner=permalink&exprod=permalink

The Death of Local TV Stations

LAS VEGAS -- Lisa Howfield, general manager of KVBC, the NBC affiliate here, watched last year as the broadcast-television business began to shrink. She started cutting. She combined departments. She made do with old equipment, and did away with luxuries like yearly sales getaways.

In December and January, she laid off 15 employees, or 6% of her staff. After the weatherman left last month, one of the morning news anchors took on both jobs. "It's like a bad roller-coaster ride," says Ms. Howfield. Her station's full-day viewership is down 7.7% this TV season from the same period last year, according to Nielsen Co., and Ms. Howfield expects her ad revenue in 2009 will be down 30% from 2008.

Local television stations like Ms. Howfield's dominated the TV business for more than half a century. They inspired the term "network": a web of Channel 7s and 11s that delivered shows from ABC, CBS, NBC -- and later, Fox -- plus local news, syndicated reruns and talk shows. Because the stations owned the licenses to the airwaves that broadcast TV signals, big networks couldn't distribute content without them. In turn, local stations became the vehicles for the greatest mass-market advertising blitz in history.

Now, with their viewership in decline and ad revenue on a downward spiral, many local TV stations face the prospect of being cut out of the picture. Executives at some major networks are beginning to talk about an option that once would have been unthinkable: eventually taking shows straight to cable, where networks can take in a steady stream of subscriber fees even in an advertising slump.

In December, CBS Corp.'s chief executive, Leslie Moonves, told an investor conference that moving the CBS network to cable would be "a very interesting proposition." Two days earlier, Jeff Zucker, chief executive of General Electric Co.'s NBC Universal, warned more broadly that the entire broadcast-TV model must change. "Otherwise it will be like the newspaper business or the car business," he told investors.
[Tv stations revenue]

Many local stations -- once treated like royalty by broadcast networks -- are scaling back their original programming, cutting down on weekend news shows and trimming staff. Nationwide, 2009 TV-station ad revenue is projected to fall 20% to 30%, according to Bernstein Research.http://online.wsj.com/article/SB123422910357065971.html#printMode

Retailers Stop Making Sales Forecasts

The Wall Street Journal - After another round of weak monthly sales, more of the nation's major retailers are abandoning efforts to forecast short-term financial performance as a deepening recession makes their results increasingly unpredictable.

Wal-Mart Stores Inc.'s January sales for stores open at least a year came in slightly stronger than expected, rising 2.1% excluding gasoline sales, the retailer reported Thursday. Wal-Mart had estimated sales would increase up to 2%, and Wall Street analysts had predicted 1.1%.

Despite the positive surprise, Wal-Mart said it would no longer provide monthly sales forecasts, but would provide sales estimates four times a year.

"We believe this guidance is a more appropriate measure for our investors, particularly in volatile times when consumer swings are more difficult to predict," Wal-Mart Chief Financial Officer Tom Schoewe said in a statement.http://online.wsj.com/article/SB123383873406452067.html

Scrambling to Clear Debt, Sirius Talks to EchoStar

The Wall Street Journal - Sirius XM Radio Inc. Chief Executive Mel Karmazin is scrambling to raise about $175 million by Feb. 17 to fend off the company's bankruptcy and a possible takeover threat from EchoStar Corp.

Sirius has been in talks for several weeks with EchoStar, which holds around $400 million of the satellite-radio company's debt, people familiar with the matter said.

EchoStar Chairman and Chief Executive Charles Ergen, who is believed to be seeking control of Sirius, has been accumulating Sirius debt since late summer, the people said. EchoStar holds most of the $175 million in Sirius debt expiring in February and owns more than half of a $400 million tranche coming due in December. Both stakes were purchased from hedge funds. Sirius's total debt load is $3.25 billion. Sirius didn't respond to a request for comment.

A spokesman for EchoStar declined to comment on the strategy behind acquiring the debt. It remained unclear what Mr. Ergen would do with Sirius if he acquires it. Mr. Ergen also controls satellite-TV provider Dish Network Corp. There is a link between Mr. Ergen's empire and his target: Former Sirius CEO Joseph Clayton is on the EchoStar board.

Industry officials and consultants see the latest EchoStar moves as a way to differentiate Dish from cable-television rivals by getting into wireless and mobile-video services. Combining the satellite spectrum and unused wireless spectrum Mr. Ergen already controls with the radio spectrum EchoStar would acquire is a way to reach that goal. Sirius's shares rose two cents to 17 cents. Its debt has also rallied.

Seeking to take control of a company by acquiring its debt is an unorthodox strategy and could backfire. The debt EchoStar holds is junior to $600 million in bank loans Sirius has taken out. In the event of a bankruptcy filing by Sirius, the bonds held by EchoStar could be worthless. But Mr. Ergen could be counting on negotiating a settlement with the banks that would allow him to seize control.

A bankruptcy filing could offer advantages to Mr. Ergen because it would allow Sirius to extract itself from costly contracts, including a $500 million, five-year agreement with radio personality Howard Stern. On his show Thursday, Mr. Stern said he didn't understand the financial details of EchoStar's moves, but added, "I just need to know who I'm working for on any given day."http://online.wsj.com/article/SB123388180101154945.html?mod=testMod

Lewis Puts Money Where Mouth Is

Bank of America Corp. Chairman and Chief Executive Kenneth Lewis purchased an additional 200,000 shares of the Charlotte, N.C., bank's common stock Wednesday in his latest effort to convince employees, investors and the board that he and his management team can lead it out of its current crisis.

The bank's shares fell on Thursday to their lowest level since October 1984 before rebounding to close at $4.84, up 2.98%. Analysts attributed the volatility to concerns about how involved the U.S. government is in the affairs of the nation's largest bank by assets.

Government officials played a heavy hand in Bank of America's acquisition of securities firm Merrill Lynch & Co., for which Mr. Lewis has been under fire. The stock's price improved once U.S. Sen. Christopher Dodd (D., Conn.) publicly dismissed speculation that the U.S. could soon nationalize Bank of America.

Last week, Mr. Lewis went before his directors in Charlotte for "the longest board meeting in anyone's memory," he told employees in a memo. "The board unanimously endorsed our business model, strategic direction and the team. The burden of execution and accountability, as always, rests squarely on our shoulders to vindicate their confidence in us."

He called the company's performance in January "encouraging." The "extreme dislocations in the capital markets we suffered last quarter seem to have moderated" but "credit costs continue to be a big issue."http://online.wsj.com/article/SB123388497589255167.html?mod=testMod

Recession Job Losses Surpass Three Million

WASHINGTON -- U.S. employment plunged in January by a three-decade high, a government report showed, bringing total job losses since the recession started in December 2007 to 3.6 million.

Half of those losses occurred in the last three months alone, and the stepped-up pace of layoffs in recent months suggests no end in sight to the economic downturn.

The report, which included another sharp rise in the unemployment rate to a 16-year high, upped the heat on U.S. lawmakers to enact a large fiscal stimulus package.

Nonfarm payrolls, which are calculated by a survey of establishments, tumbled 598,000 in January, the U.S. Labor Department said Friday, the most since December 1974 and well above the 525,000 drop Wall Street economists in a Dow Jones Newswires survey expected. December was revised to show an even steeper decline of 577,000.

The U.S. "is contracting greatly," said Christina Romer, head of the White House Council of Economic Advisers, and the jobs data "reinforce the need for bold fiscal action."

The government included revisions for all of 2008, which showed the U.S. lost about 3 million jobs last year, roughly 400,000 more than first thought. In the 12 months through January, the economy shed more jobs over that timeframe since the government started compiling those figures in 1939.http://online.wsj.com/article/SB123392627601156735.html

Obama Lays Out Limits on Executive Pay

Firms That Get Bailout Funds Face $500,000 Salary Cap, Must Disclose Luxury Purchases; A Move to 'Claw Back' Bonuses

The Wall Street Journal - WASHINGTON -- President Barack Obama laid out strict new regulations on executive compensation Wednesday, strafing Wall Street with tough talk as Washington asserts increasing control over a financial sector seeking more government funds.

President Barack Obama's unveiled new rules on executive pay caps and expense disclosure. WSJ's Jonathan Weisman speaks about what effects this could have on big business.

The plan, which represents the most aggressive assault on executive pay by federal officials, includes salary caps of $500,000 for top executives at firms that accept "extraordinary assistance" from the government.

It also restricts severance packages, known as "golden parachutes," for dismissed executives and requires the disclosure of policies on so-called luxury spending on things such as holiday parties, corporate jets and office renovations.

The rules do not apply retroactively, not even to those firms that have already been bailed out. But they will be imposed on all companies -- in the financial, auto or other sectors -- receiving any future help. This includes those that h

The administration called the latter part of the initiative the "name and shame" provision, designed to make companies think twice about indulgent outlays.http://online.wsj.com/article/SB123375514020647787.html