May 27, 2024

On Night of Big Finales, ‘Office’ Rises and ‘Idol’ Falls

On a busy night of finales for television favorites, “The Office” regained a little of its former glory, “Scandal” demonstrated it may have more glory to come and “American Idol” looked like a pale shadow of past glory.

Even with “The Office” signing off for a last time, the big ratings news Thursday night was made by “Idol,” which ended a lackluster season — its 12th with a drop of more than 40 percent in the ratings.

The numbers for “Idol” and “The Office” were somewhat preliminary because both ran past 10 p.m., and their best numbers most likely came after the measured hour. But by Fox’s own estimate of where “Idol” will end up, its finale will be down 42 percent in the category its advertisers most care about, viewers between the ages of 18 and 49, from a 6.4 rating last season to a 3.7 this season.

By current network standards a 3.7 in that viewing group is a solid number, especially for a 12-year-old show. But for the once mighty “Idol,” it is a precipitous fall. It wasn’t even the best rating of the night in that group, topped by the 4.4 scored by CBS’s comedy hit “The Big Bang Theory.”

And over all, “Idol” shed more than seven million viewers compared with last year’s finale, with a total of 14.2 million viewers (by Fox’s estimate) down, from 21.5 million last season. Even more telling is the vertiginous drop from two years ago. That finale scored a 9.2 rating in the 18-49 group and attracted 29.3 million viewers.

As for “The Office,” the finale, which ran 1 hour and 15 minutes, recorded a 3.0 rating in the 18-49 group, the show’s best in 16 months; no episode has been higher since November of 2011. The finale also averaged 5.7 million viewers, the best since January 2012.

ABC’s “Scandal,” perhaps the hottest drama on television, had its best total viewer number ever, with about 9.1 million, and it matched its best rating ever in the 18-49 group, a 3.2.

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High & Low Finance: A Tax That Could Change the Trading Game

To the dismay of the United States government — not to mention Wall Street — much of Europe seems poised to begin taxing financial trading as soon as next year.

The idea is hardly new, but until now financial markets and institutions have been able to ward off any such tax in most major markets. The financiers claimed a tax would hurt economic growth and raise the cost of capital for companies. They said it would drive trading to other countries, leaving the country that adopted it with less revenue and fewer jobs.

But those arguments have not proved persuasive in Europe, which thinks it has found a way to keep institutions from avoiding the tax.

If Europe proves to be correct, it could turn out to be a seminal moment in the relation of governments to large financial institutions.

The tax would be tiny for investors who buy and hold, but could prove to be significant for traders who place millions of orders a day.

Under the proposal, a trade of shares worth 10,000 euros would face a tax of one-tenth of 1 percent, or 10 euros. A trade of a derivative would face a tax of one-hundredth of 1 percent. But that tax would be applied to the notional value, which can be very large relative to the cost of the derivative. So a credit-default swap on 1 million euros of debt would have a tax of 100 euros, or about 0.4 percent of the annual premium on such a swap.

I’ll get to how Europe thinks it can prevent widespread evasion in a minute. But for now, assume the Europeans could accomplish that. And assume, as European officials say they hope will happen, that the tax spreads to other major markets, something Europe is trying to encourage by offering to share the tax revenue with other countries that impose a similar tax.

What would happen?

It would not destroy markets that have good reason to exist — that is, markets that serve actual investors. The tax would be far smaller than the fixed commissions that American investors once took for granted, and even less than the costs implicit in the fact that until decimalization arrived in 2001, that most stocks could move only in increments of one-eighth of a dollar, or 12.5 cents. Markets, and the American economy, managed to prosper.

But there would nevertheless be significant changes — changes that might be for the better in some ways. High-frequency trading, which was encouraged by allowing prices to move in increments of a penny or less, and by technological advances, would be discouraged. So too would be some of the strategies used by hedge funds that involve trades expected to yield very narrow — but presumably very safe — profits. To make such trades worth doing, funds borrow a lot of money and make the trades using very little equity. That is a strategy that is guaranteed to work — or to blow up disastrously if markets do not act as expected. Discouraging it might be a good thing.

One objective, says Algirdas Semeta, the European Union commissioner in charge of tax policy, “is to reorient the financial system back to financing the real economy.”

But can Europe pull it off? Will trading simply migrate to other jurisdictions, such as the United States and Britain, which want nothing to do with the tax? Europeans seem confident. The tax would be owed no matter where the trade took place, as long as a European security or European institution was involved. The law has been written so broadly that if a French bank bought shares in an American company on the New York Stock Exchange, the tax would be owed.

Manfred Bergmann, the European Commission director for indirect taxation and tax administration and a primary designer of the tax plan, calls it a “Triple A approach — all markets, all actors and all products.”

To get out of the tax, a financial institution would have to do more than simply move its headquarters out of the 11 countries that now plan to impose the tax. It would also have to forgo serving clients in any of those countries and trading in securities or derivatives from any of the countries. Officials are confident that no major institution will be willing to forsake such large markets as France, Germany, Italy and Spain.

The other countries that have at least preliminarily agreed to impose the tax are Belgium, Austria, Greece, Portugal, Slovakia, Slovenia and Estonia.

The scope of the tax is very broad. The proposal has exceptions for currency trading and the physical trading of commodities, but not for derivatives like currency or commodity futures contracts. When a company sold newly issued securities to investors, that transaction would not be taxed, but subsequent market trades would be. Over-the-counter trades would be subject to tax just as would transactions on a stock exchange, as long as a financial institution — a term that is also defined very broadly — was involved. You could sell your shares in Daimler to a friend without paying tax, but not if you got a broker involved.

Floyd Norris comments on finance and the economy at

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Starbucks Earnings Increased 13% in Latest Quarter

The company’s results were helped by a 6 percent increase in global sales at cafes open at least a year.

The performance reflects the turnaround Starbucks has made since its struggles during the recession. After bringing back its founder, Howard Schultz, as chief executive in 2008, the company embarked on a reorganization that included closing underperforming stores in the United States.

Mr. Schultz has said that the company has the ability to keep growing even through a turbulent economy because most people see Starbucks as an “affordable luxury.”

Starbucks said it earned $432.2 million, or 57 cents a share, in the quarter, up from $382.1 million, or 50 cents a share, a year earlier. Revenue in the period ending Dec. 30, the first quarter of Starbucks’s fiscal year, rose 11 percent, to $3.8 billion. Analysts had expected a profit of 57 cents a share and revenue of $3.85 billion, according to FactSet.

Shares rose 11 cents on Thursday, to $54.57 a share.

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Media Decoder Blog: Leno Wins Three-Way Late-Night Race

On Jimmy Kimmel’s first night as a new player in the 11:35 p.m. late-night sweepstakes with Jay Leno and David Letterman, Mr. Leno retained bragging rights — narrowly.

On Tuesday night, Mr. Leno on NBC pulled in 3.27 million viewers, edging Mr. Kimmel on ABC, who had 3.1 million. The total for Mr. Kimmel was his second highest. It also put him in second place, ahead of David Letterman on CBS, who had 2.88 million viewers.

Mr. Leno was also the winner in the audience of most interest to late-night advertisers, viewers between the ages of 18 and 49. Mr. Leno had 1.084 million viewers in that group to 887,000 for Mr. Kimmel and 683,000 for Mr. Letterman.

Mr. Leno has been the late-night leader for most of the past two decades, at least in terms of entertainment shows. The show Mr. Kimmel replaced at 11:35, “Nightline,” often averaged more viewers in recent years than either Mr. Leno or Mr. Letterman, but it enjoyed a significant advantage in being just a half-hour show in a time period when viewers routinely go to bed with every passing minute.

“Nightline” proved it will be a factor at 12:35 a.m. It had 1.72 million total viewers for its half hour, while Jimmy Fallon on NBC had 1.35 million for his hourlong broadcast, and Craig Ferguson on CBS had 1.30 million.

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Business Briefing | FINANCE: The F.D.I.C. Closes First National Bank of Florida

Regulators on Friday closed a small bank in Florida, raising to 71 the number of bank failures this year. The Federal Deposit Insurance Corporation seized First National Bank of Florida, based in Milton, Fla. The bank had $296.8 million in assets and $280.1 million in deposits. CharterBank, based in West Point, Ga., agreed to assume the assets and deposits of the failed bank.

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DealBook: Icahn Ends His Battle With Lions Gate

Carl C. Icahn is selling his entire stake in Lions Gate.Chip East/Bloomberg NewsCarl C. Icahn is selling his entire stake in Lions Gate.

With his sights set on Clorox, the activist investor Carl C. Icahn is ending his long-running battle over control of Lions Gate Entertainment.

Lions Gate said Tuesday afternoon that Mr. Icahn had agreed to sell off his entire stake in the movie studio. The two parties also agreed to end all litigation between them, the company said in a statement.

Mr. Icahn first sought to buy all of Lions Gate in March 2010, after the company rebuffed his proposal to increase his stake to nearly 30 percent. Since then, Mr. Icahn and Lions Gate have continued to skirmish, with him making several revised bids and conducting and losing a proxy fight to put his five nominees on the company’s board in December.

Mr. Icahn pulled his last bid, of $7.50 a share, ahead of a December shareholder meeting. He had previously lost a court battle to prevent a Lions Gate director, Mark Rachesky, from exchanging debt for equity in a move that diluted Mr. Icahn’s stake to 33 percent from 38 percent.

In its statement, Lions Gate said Mr. Icahn and his son, Brett, had agreed to sell their stake of 44.2 million shares in the company at $7 a share, which it said was approximately the same as their cost basis in buying the stock.

Shares of Lions Gate closed down 3 cents on Tuesday at $7.52, but they later fell to $7.08 in after-hours trading after the company announced the agreement with Mr. Icahn.

Under the terms of the agreement, a Lions Gate company is buying about 11 million shares, while MHR Fund Management, which is controlled by Mr. Rachesky, is buying another 11 million shares. Lions Gate said it would designate one or more parties to buy up to 22.1 million remaining shares.

“We believe that this accretive and antidilutive transaction is in the best interests of all Lions Gate shareholders, and it allows the company to continue to focus on the execution of its long-term business plan,” Jon Feltheimer, Lions Gate’s chief executive, said in the statement.

As of late, Mr. Icahn has been preoccupied with his effort to either take over Clorox or force the company to sell itself in an auction. Mr. Icahn is seeking to replace the entire Clorox board in order to conduct the auction and said Tuesday that he would agree to buy the company for $78 a share if the auction did not produce at least that price.

Lions Gate, in its statement, quoted Mr. Icahn as saying, “As some have noted, my own ’slate’ is pretty full at the time, and I therefore determined that it is a good time to exit.”

Mr. Icahn has not yet responded to a call for further comment.

Perella Weinberg Partners served as outside financial adviser to the Lions Gate board, and Wachtell, Lipton, Rosen Katz and Heenan Blaikie served as legal counsel.

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