Wednesday, April 15, 2015

Gold Prices Held Down by a Stronger Dollar

Amazing how we said the world was ending in 2008 and it has not. Aivars Lode
By Tatyana Shumsky
Gold prices pulled back below $1,200 an ounce on Monday as a stronger dollar overwhelmed interest from foreign buyers.
The most actively traded contract, for June delivery, fell $5.30, or 0.4%, to settle at $1,199.30 a troy ounce on the Comex division of the New York Mercantile Exchange.
The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, was recently up 0.2% at 88.35 as the dollar neared a 12-year high against the euro. Gold is traded in dollars and becomes more expensive for buyers in other countries when the greenback strengthens against their home currency.
Gold denominated in euros rallied to a 2½-month high, trading at €1,139.20 an ounce.
Still, noted Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago, “There’s a lot of support here despite the move in the dollar.” 
Negative bond yields in Switzerland and other European countries are burnishing gold’s appeal to investors there, Mr. Haberkorn said. Gold doesn’t pay interest or dividends and has an easier time competing with yield-bearing assets when yields are negative.
Gold is seen as a store of value and a currency alternative by some investors, who buy it as a haven from those risks. Europe’s recent efforts to jump-start economic growth have focused on pumping cash into its financial system. Some traders worry this will further erode the value of the euro and have been buying gold as a hedge.

How Volcanoes Change the Climate

No mention of man in here. Aivars Lode

By The Economist

TWO hundred years ago, Tambora, a volcano in Indonesia, blew its top in the most violent eruption in recent history. Damage from the volcano and an associated tsunami was immense; perhaps 100,000 people died immediately, or starved in the aftermath. The effects on the wider world, though, were even greater. Like all large eruptions, Tambora’s was to change the climate around much of the planet for years.
But just how do volcanoes change the climate?
Eruptions spew out not just lava and ash, but also gases—indeed it is these gases, trapped under great pressure in molten rock, that give an eruption its explosive power. For the climate, the key gas is sulphur dioxide. Once it gets into the stratosphere, sulphur dioxide from a volcano mingles with water, forming tiny sulphate particles.

These particles reflect some sunlight back into space, and the surface below cools. They also absorb some sunlight, warming up the stratosphere. These temperature changes have big knock-on effects. A cooler surface means less evaporation, and thus less rainfall. A warmer stratosphere means stronger jet streams. In the year after Tambora’s eruption, scientists estimate the stratosphere's sulphate veil caused a three percent drop in rainfall and cooled the planet by one degree Celsius. That is a temperature drop in one year twice as large as the long-term warming the Earth has seen over the past half-century. The climate upheaval caused a hiatus of the Indian monsoon, drought in southern Africa and widespread crop failures in Europe, where it was known as the year without a summer.

No one can say when an eruption large enough to have such drastic effects will happen next. That one will happen, though, is a certainty.

One of the reasons they cite is cord cutting Viacom Sets $785 Million Charge for Restructuring

More trouble in the digital world. Aivars Lode

Media company says pretax charge to cover layoffs, asset write-downs as rerun values slide

By Keach Hagey 

Viacom Inc. said it would take $785 million in pretax charges for job cuts and to write down the value of underperforming shows hit by weak ratings, a soft advertising market and growing online competition.
The layoffs affected as many as 400 people, according to people familiar with the matter, while the shows being written down include reruns of “CSI,” “Entourage” and “Community,” among others. Charges include an accounting change for programming such as reality and game shows that are losing their allure faster than in the past. 
New York-based Viacom is grappling with weak ratings across all its major networks, and concerns on Wall Street that pay-TV providers may decide they can do without its bundle of channels. In the first quarter, its Nickelodeon channel was down 34% in its target demographic, its Comedy Central was off 30%, Spike dropped 23%, and MTV lost 34%, all compared with a year earlier, according to Jefferies and Nielsen estimates.
On Monday, it said the restructuring is expected to provide annual savings of about $350 million, and $175 million this year. The company disclosed plans for the restructuring in February during its first-quarter earnings call. 
Net income in the media giant’s fiscal second quarter is projected to fall 15% to $429 million, according to analysts’ estimates compiled by FactSet. Viacom earned $502 million in net profit on $3.17 billion in revenue a year ago. 
About $430 million of the write-down is to account for underperforming programming, including abandoning some acquired shows, according to a regulatory filing on Monday. The charge underscores the difficulty that many big media companies are facing with reruns as they cope with cord-cutting, Netflix’s popularity and rapid changes in what viewers find popular. 
The restructuring formalizes the reorganization of Viacom’s television networks into two groups from three. That move was signaled when longtime Viacom executive Van Toffler, who led the group that included MTV, VH1 and CMT, said in February he would leave the company in April and his division’s channels would be absorbed by two newly reorganized groups.
The company said the new structure “realigns sales, marketing, creative and support functions, increases efficiencies in program and product development, enhances opportunities to share expertise, and promotes greater cross-marketing and cross channel programming activity.”
The company also said that the savings would let it reallocate resources to expand in new areas like “data analysis, technology development and consumer insights.” 
Viacom Chief Executive Philippe Dauman has been one of the most vocal critics of Nielsen’s ability to measure viewing that occurs on nontraditional platforms like mobile devices, and has pledged to increase the amount of its revenues that are “non-Nielsen-dependent” to 50% from 30%. 
The recent proliferation of competition for viewers’ attention from streaming video services like Netflix, Amazon and Hulu may be largely to blame for the steep drop off in cable TV’s ratings. The Cabletelevision Advertising Bureau estimates that about 40% of third- and fourth-quarter TV ratings declines can be attributed to such subscription online video services, according to people who attended the industry group’s March meeting. 
Because of the charge and other acquisitions, Viacom said it would “temporarily pause” until October a $20 billion share repurchase program.
Viacom, which is controlled by media mogul Sumner Redstone, fell as much as 1.8% in late trading after closing up 98 cents at $68.92 in 4 p.m. Nasdaq trading. Its shares were off 19% in the last 12 months.

No Wins, No Problem as Knicks’ Network Beckons Buyers: Real M&A

 More change in the digital media space afraid of technology dismemberment. Aivars Lode

By Alex Sherman 
    (Bloomberg) -- Watching the New York Knicks is a form of
punishment these days. That may not stop Comcast Corp. or
Twenty-First Century Fox Inc. from spending billions for the
rights to show you their games.
    Madison Square Garden Co. Chairman James Dolan is forging
ahead with a plan to split the $6.4 billion company into two
pieces: the sports franchises and entertainment venues on one
side, and the regional sports television networks on the other.
Those networks, MSG Network and MSG+, may become instant
acquisition targets, said Brandon Ross, an analyst for BTIG in
New York.
    Comcast and Fox are repositories for regional sports
networks, or RSNs, and would relish more sports programming in
New York, the largest U.S. television market, Ross said. For
Comcast, it would be the next logical move after acquiring Time
Warner Cable Inc., which owns two RSNs in another big market,
Los Angeles.
    “Fox has already said they want to strengthen their
portfolio of RSNs, and I definitely believe Comcast is going to
be a potential buyer, especially with its pending Time Warner
Cable deal,” Ross said in a phone interview.
    The media assets may be worth about $4 billion, based on
estimates from BTIG and other research firms.
    Barry Watkins, a spokesman for New York-based MSG, declined
to comment. MSG shares closed Wednesday at $83.88 and are up
11.5 percent so far this year.
    MSG and MSG+ air live games and related content for the
National Basketball Association’s Knicks and the National Hockey
League’s New York Rangers and Islanders, New Jersey Devils and
Buffalo Sabres.
    MSG charged pay-TV providers $3.49 per subscriber per month
this year, according to estimates from research firm SNL Kagan.
MSG+ charged $2.98. The average regional sports network charges
$2.66, implying a higher value for New York’s sports teams --
even as the Knicks struggle through the current season with the
NBA’s worst record.
    Fox, which owns almost two dozen regional sports networks
across the U.S., may be the more aggressive bidder for MSG after
raising its ownership stake in the YES Network, which airs New
York Yankees games, to 80 percent last year, Ross said. There
are marketing and operational synergies by owning two large RSNs
in the same area. Fox can also use the broadcast rights from the
New York-area teams to add live programming to its national
sports network, FS1, he said.
    Comcast would also be a natural fit for MSG if regulators
approve its $45 billion Time Warner Cable acquisition, said Amy
Yong, a New York-based analyst for Macquarie Group Ltd. Comcast
owns regional sports networks in many areas of the U.S. where it
also offers cable service, including San Francisco, Boston,
Philadelphia and Chicago. Comcast also already owns a minority
stake in SNY, which airs New York Mets games.
    The largest U.S. cable provider will additionally acquire
Time Warner Cable’s two Los Angeles regional sports networks,
which broadcast Lakers basketball and Dodgers baseball games, if
a deal goes through.
    “If Comcast were to buy MSG after Time Warner Cable, it
would build a pretty strong New York and L.A. presence, which is
pretty complementary,” Yong said. “It makes sense from that
    Like most tax-free spinoffs, there could be a waiting
period post-closing of anywhere from six months to two years
before an acquirer can bid.
    Still, the Dolan family may want to sell the networks
sooner rather than later. The networks are exposed in a changing
television landscape, where consumers now have access to
skinnier video bundles for as little as $20 a month that don’t
include regional sports networks.
    “The Dolans will probably want to do everything in their
power to do so, given everything that’s going on in the broader
video market,” BTIG’s Ross said.

Wednesday, March 25, 2015

Move Over, Mall of America: Bigger Extravaganza Planned in Miami

More than four years ago, I wrote about how Miami would be one of the most popular cities on the planet; check out the developments being planned. Aivars Lode

Canadian developer would build U.S.’s biggest mall—including hotel, amusement park and sea-lion show

By Robyn A. Friedman 

Most shopping-mall operators are shying away from new construction, especially as e-commerce cuts into foot traffic. Apparently a Canadian firm doesn’t have the same concerns: It aims to build not only a new mall, but the biggest mall in the U.S.
The project, called American Dream Miami, was unveiled last week by Edmonton, Alberta-based Triple Five Group, which also owns Minnesota’s Mall of America.
At 4.2 million square feet and 520 stores, the Mall of America is considered the nation’s largest shopping destination. But in a statement last week, Triple Five said its Florida project “will exceed our other world famous projects in all respects.”
Executives at Triple Five declined to comment, but Miami-Dade County’s mayor said the project would cost about $4 billion. In addition to the retail space, the mall would include a ski slope, a water park, a sea-lion show, miniature golf, bowling, a submarine ride, restaurants, a performing-arts theater, a cinema, a Ferris wheel, an ice rink and a roller-coaster ride as well as hotels and condominiums.
The development would be built in an unincorporated part of the county, northwest of the city center.
If its plans seem like a tall order, consider this: Triple Five isn’t the only real-estate developer that has recently added retail in the Miami area or is in the process of doing so. 
Scheduled for completion at the end of 2015, Midtown Doral, under development by Optimus International Developers, will bring 300,000 square feet to the greater Miami area. At Brickell City Centre, considered the financial district of Miami, Hong Kong developer Swire Properties will deliver 565,000 square feet of retail space anchored by Saks Fifth Avenue in the fourth quarter of 2016. The Mall at Miami Worldcenter, in the heart of downtown, will complete 765,000 square feet of restaurant, retail and entertainment space by 2017.
Whether Miami can support such a large amount of new retail space is a question. Some brokers say Miami’s retail market is strong and that while e-commerce has put a damper on retail growth in other locales, Miami has been little-affected.
That’s in part because of population growth. According to the Miami Downtown Development Authority, Miami’s downtown population alone has doubled from 40,466 in 2000 to 80,750 in 2014, and it is forecast to hit 92,519 by 2019. More broadly, the entire county grew to nearly 2.5 million residents in 2010, according to Census figures, from just over 2.25 million in 2000.
Miami also can count on a constant stream of tourists, many from Latin America, who come there to shop, analysts say.
“Miami for years was under-retailed,” said Jim Fried, managing director of Aztec Group Inc., a real-estate investment-banking firm in Miami. “I think there will be enough growth to support the additional retail.
Not everyone is so sure. Even though demand for Miami condos has been strong, many buyers are from Latin America or Canada and aren’t permanent residents. Others may not have the financial means to support the onslaught of luxury retail. Average incomes in Miami are lower than in New York, Los Angeles and San Francisco, other cities with lots of new pricey condos.
“A lot of the owners will live here only two or three months out of the year, and the rest of the time the place will sit empty,” said Jack McCabe, a housing industry analyst in Deerfield Beach, Fla. “Or they will rent the units out to people who are trying to make ends meet to live in downtown Miami and who don’t have the disposable income to support the retailers.”
What to Find at American Dream Miami?
  • ski slope
  • water park
  • sea-lion show
  • miniature golf
  • bowling
  • submarine ride
  • restaurants
  • performing-arts theater
  • cinema
  • Ferris wheel
  • ice rink
  • roller-coaster ride
  • hotels
  • condominiums 
But Triple Five is betting not only on strong retail demand and population growth, but also on a new model for retail real estate: shopping centers paired with entertainment, residential and hotel facilities, all located at the same property.
Such amenities are by nature risky, however, and can lead to delays and cost overruns. Case in point: Triple Five’s American Dream Meadowlands project, a 2.8-million square-foot retail and hotel complex near MetLife Stadium in New Jersey. Triple Five agreed to buy the half-finished project, which also features an indoor ski slope and a giant Ferris wheel, in 2010, and had hoped to complete it by 2013. The $4 billion project still has yet to secure financing amid a swelling budget and delays in getting local government approvals. 
Questions also remain about whether Triple Five can obtain financing for the American Dream Miami. Still, city managers are bullish. “This project will be the largest in Miami-Dade history,” said Carlos A. Gimenez, the county mayor. “We are supportive of it but it still has to go through all of the regulations and environmentals before it can come to fruition.”
—Robbie Whelan contributed to this article

Monday, March 23, 2015

Sony Joins Crowd of Online TV Providers

More changes in the cable TV business. Aivars Lode

TOKYO—Sony Corp. is ramping up its online TV efforts in the U.S., but will face competition from a number of other companies targeting consumers who don’t have pay-television service.
Andrew House, president of Sony Computer Entertainment, said Wednesday that the company would start commercial operation of the service, called PlayStation Vue, within two weeks in New York, Chicago and Philadelphia, following invitation-only tests in those cities. The company plans to roll out the new service nationwide by the end of this year.
Vue is one of several new U.S. services aimed at “cord cutters,” people who have spurned traditional pay-TV services in favor of other forms of entertainment. PlayStation Vue will compete, for example, with Dish Network Corp.’s recently introduced Sling TV, which operates via a range of streaming devices.
Individual TV networks have also been rolling out subscription streaming services, including CBS Corp. and Viacom Inc.’s Nickelodeon. CBS Chief Executive Leslie Moonvestold an investor conference Wednesday that its service has more than 100,000 subscribers, though he declined to give an exact figure. 
This week, Time Warner Inc.’s HBO said it would roll out its stand-alone streaming offering, “HBO Now,” in time for the season premiere next month of its hit “Game of Thrones.”
The challenge for media companies as they roll out these services is to target “cord cutters” and “cord nevers”—young people who never intend to get a pay-TV connection—without enticing existing customers to switch over from traditional services. That would cannibalize the hugely profitable pay-TV business that has driven the profits of every major media conglomerate in recent years.
A number of TV providers have made channels available for PlayStation Vue, including CBS, Viacom, Comcast Corp.’s NBCUniversal and 21st Century Fox. News Corp, owner of The Wall Street Journal, and 21st Century Fox were until mid-2013 part of the same company.
Sony sees Vue, which currently operates via PS3 and PS4 game consoles, as a way to broaden the appeal of the hardware beyond hard-core gamers. Vue is one of several new features on Sony’s PlayStation Network, including a music streaming service from Spotify AB that replaces Sony’s own music offering.
Sony hasn’t announced pricing of Vue, which the company also plans to make available via Apple iPads. A basic Sling TV package costs $20 a month.
Discussions with other content providers are “ongoing and are moving forward positively,” Mr. House said in an interview. He declined to discuss potential partners, but one big holdout is Walt Disney Co., whose ESPN sports network is popular with a young, videogame-playing demographic.
“We are in discussions but there is nothing to announce at this time,” said an ESPN spokeswoman.
Mr. House said that “even absent ESPN, we are very confident that we have a very robust offering in the sports area with existing partnerships.” PlayStation Vue’s current lineup includes Fox Sports, 21st Century Fox’s sports channel.

Sunday, March 22, 2015

U.S. Is Seeking Billions From Global Banks in Currency Manipulation Settlement

As discussed here many years ago, now the US government is suing the big banks for currency manipulation. Aivars Lode

By Keri Geiger and Greg Farrell
(Bloomberg) -- The U.S. Justice Department is seeking about $1 billion each from global banks being investigated for manipulation of currency markets, according to two people familiar with the talks. 
The figure is a starting point in settlement discussions, with some banks being asked for more and some less than $1 billion. One bank that has cooperated from the beginning is expected to pay far less, one of the people said. Penalties of about $4 billion are on the table, according to one of the people, though the number could change markedly. 
Banks are pushing back harder than in some previous negotiations, including those for mortgage-backed securities, and the final penalties could be lower, people close to the talks said. 
The discussions, which have begun in earnest in recent weeks, could lead to settlements that would resolve U.S. accusations of criminal activity in the currency markets against Barclays Plc, Citigroup Inc., JPMorgan Chase & Co., Royal Bank of Scotland Group Plc and UBS Group AG. The government has also said it is preparing cases against individuals. 
Peter Carr, a Justice Department spokesman, declined to comment, as did spokesmen for the banks. 
Prosecutors are also pressing Barclays, Citigroup, JPMorgan and the Royal Bank of Scotland to plead guilty, people familiar with the matter have said. 
In the worldwide investigation into currency-rigging, six banks have already agreed to pay regulators about $4.3 billion. 
The Justice Department’s move signals that investigations are giving way to wrangling over issues such as whether the banks plead guilty to antitrust or fraud charges, what behaviors the banks will admit to in settlement documents and how much they will pay. 

Bolstering Reserves 

Barclays reserved 750 million pounds ($1.1 billion) for the currency settlement in the fourth quarter, bringing its total to 1.25 billion pounds. RBS took a 1.2 billion-pound charge in the same period for conduct and litigation, including a 320 million-pound provision for U.S. currency-rigging probes. 
JPMorgan Chase set aside an additional $1.1 billion, pre-tax, for legal expenses in the fourth quarter, without breaking out an amount for the currency settlement. Citigroup added $2.9 billion in the fourth quarter, in part to resolve foreign-exchange probes. 
UBS set aside 176 million francs ($175 million) for legal charges in the fourth quarter, after allotting 1.84 billion Swiss francs the previous quarter. 
Final settlements often vary significantly from the Justice Department’s initial demands as both sides hammer out an agreement over weeks or even months. During settlement talks for BNP Paribas SA over sanctions violations, penalties ranging from $3.5 billion to $15 billion were floated, according to a person familiar with the discussions. The bank ultimately agreed to plead guilty and pay $8.97 billion. 

Singled Out 

U.S. prosecutors are seeking a simultaneous settlement with the banks, which would enable the lenders to avoid being singled out for industrywide conduct, people familiar with the matter have said. 
The Justice Department had long shied away from seeking guilty pleas from banks over concerns criminal convictions could roil financial markets. However, markets shrugged off guilty pleas last year from Credit Suisse Group AG over helping Americans evade taxes and BNP over sanctions violations. 
UBS, which was the first bank to notify U.S. authorities of possible misconduct in the foreign-exchange market, has been granted immunity from prosecution for antitrust violations, a person familiar with the matter has said. 
As talks to resolve the U.S. cases advance, the Justice Department and New York’s state banking regulator have opened up a new investigation into whether banks abused a longstanding practice in the currency spot markets known as “last look.” The practice allows banks to back out of unfavorable trades at the last moment.