June 11, 2023

In Overhaul, ‘Today’ Show Director Gets a New Title

NBC News is replacing the longtime director of “Today” in the latest sign of a top-to-bottom overhaul at the morning show, which is trying to climb out of a second-place ratings pit after a painful year there.

Joe Michaels, who has worked at the show since 1989 and has been the director for 18 years, was given a new job last week that portends more change to come. Mr. Michaels will be the senior director, responsible for the installation of a new “Today” show set and graphics style, among other initiatives.

Mr. Michaels was caught off-guard by the change, according to associates of his. The network has yet to name a new director, which is a crucial position in a television control room because the person calls the camera shots and communicates other instructions to the staff.

A spokeswoman for “Today” declined to comment. But in an internal memorandum last Friday, the “Today” show executive producer, Don Nash, wrote, “We are looking at every aspect of the show — tweaking where the show needs tweaking, overhauling where the show needs overhauling. Many changes have been implemented already, many more are in the works.”

“The most critical projects need oversight from a strong, knowledgeable and experienced leader,” Mr. Nash said of Mr. Michaels’s move.

The most pressing project is a renovation of Rockefeller Center’s Studio 1A, the home of the show’s street-level set since 1994. It has not been redesigned since 2006. In August the show will move to a temporary summer set on Rockefeller Plaza, as it did in ’06, for construction of the new set, which will make its debut in early fall.

Mr. Michaels, who has been at NBC his entire career and is a major part of the show’s institutional memory, will also help with strategic “big picture” planning, said an executive with knowledge of the situation, who insisted on anonymity to talk about internal matters that the network had not discussed publicly.

The executive said, “We want to rethink everything” at the morning show, even the use of the outdoor plaza where the show’s fans gather every morning for a glimpse of Matt Lauer and his co-hosts: “We’re rethinking the plaza experience.”

Seemingly the only thing that is not under consideration is a casting change.

The personnel moves there started last fall when Jim Bell, the head of the show for nearly eight years, was replaced by Mr. Nash and Alex Wallace, who was named the executive in charge of the show. Last month, two executive producers were installed directly underneath Mr. Nash: Tom Mazzarelli, who oversees the show from 7 to 8 a.m., and Tammy Filler, who oversees it from 9 to 10 a.m.

“Today” is the top priority of the next president of NBC News, Deborah Turness, who will take over in August. “Today” staff members expect further organizational changes after Ms. Turness starts her job.

Article source: http://www.nytimes.com/2013/06/19/business/media/nbc-replaces-veteran-director-of-today.html?partner=rss&emc=rss

Google Expected to Start a Competitor to Spotify

Google is planning to introduce the new service as early as Wednesday at Google I/O, the company’s annual conference for software developers. The subscription feature will be connected to Play, Google’s online media hub, complementing its download store and “locker” feature, which lets people store their digital entertainment collections online, according to these people, who spoke on the condition of anonymity before Google’s official announcement.

News of the announcement first appeared on The Verge, a technology-oriented Web site. A Google spokeswoman declined to comment.

Google has been developing entertainment features for Android mobile devices, which puts the company in direct competition with digital music leaders like Apple, whose iTunes store is the largest retailer of music — digital or physical — in the United States. While Android phones and other devices remain extremely popular, Google has had limited success with its download store, people in the music business say.

By expanding to streaming music, Google will be tapping into the most rapid growth area in digital music. Spotify, which was founded in Sweden in 2008 and came to the United States almost two years ago, now has more than 24 million regular users, six million of whom pay about $5 to $10 a month for premium service. Pandora now has more than 200 million users, the vast majority of whom use it free.

Apple is also said to be developing a Pandora-like Internet radio service, although its negotiations with record labels and publishers have been slow.

Google’s streaming service will not include a free tier, according to the people briefed on the plans. The subscription rate was not known, but was expected to be similar to that of Spotify and other competing services like Rhapsody and Rdio, about $10 a month.

To get the licenses it needs, Google has been negotiating with record companies for months — a slow process in any case, which sometimes takes longer in Google’s case because of its complicated relationship with the major record companies. While record labels now turn to Google’s YouTube for a big part of their promotional campaigns, the labels’ trade group, the Recording Industry Association of America, has criticized Google for not doing enough to combat online music piracy.

Google is said to have licensing deals for the service with the three major record labels: the Universal Music Group, Sony Music Entertainment and the Warner Music Group. Representatives of those labels declined to comment.

Making matters more complicated, the service to be unveiled this week is one of two parallel music services being prepared by separate branches of Google. YouTube, which last week introduced a few dozen paid video channels, is also said to be developing a music service. The details of YouTube’s service are unclear, but negotiations are said to be continuing with music companies.

Article source: http://www.nytimes.com/2013/05/15/business/media/google-set-to-introduce-music-service-to-compete-with-spotify.html?partner=rss&emc=rss

YouTube Is Said to Plan a Subscription Option

This week YouTube, the world’s largest video Web site, will announce a plan to let some video makers charge a monthly subscription to their channels. There will be paid channels for children’s programming, entertainment, music and many other topic areas, according to people with knowledge of the plan, who spoke on condition of anonymity because they had been asked by YouTube not to comment publicly yet. Some of the channels — there will be several dozen at the outset — will cost as little as $1.99 a month.

If the subscription option catches on, it could herald a huge change for the online video industry, which has subsisted almost entirely on advertising revenue. It could give producers of Web video series a second source of revenue, analogous in some ways to the flexible pay walls that some newspapers and magazines have adopted. It could also put more pressure on the cable television industry, which is fighting off fresh competition from the Web.

For now, though, it is just a test, intended in part to mollify some of the most popular contributors to the sprawling Web site. The overwhelming majority of videos on YouTube, a unit of Google, will remain free to all. But some homegrown YouTube stars, start-ups and major media companies have been frustrated by what they see as relatively low amounts of revenue coming from the ads that YouTube attaches to their videos. By enabling the subscription option, YouTube is giving them another way to profit from their work — if their fans are willing to pay to watch, that is.

Some of YouTube’s partners planned to start promoting their paid channels on Thursday, though the announcements could come sooner, in light of recent news coverage. (The Financial Times reported on Sunday that the announcements were expected as early as this week.) YouTube will process the payments through Google Wallet, the system that Google’s app store uses.

As YouTube users read about the plan on Monday, many objected to paying for something they treat as free and ubiquitous as air and water. But others said there were some channels worth paying a few bucks for.

A YouTube spokesman declined to comment on the specifics of the subscription plan. In a statement the company said, “We have nothing to announce at this time, but we’re looking into creating a subscription platform that could bring even more great content to YouTube for our users to enjoy and provide our partners with another vehicle to generate revenue from their content, beyond the rental and ad-supported models we offer.”

Paid subscriptions to YouTube channels are a long time coming; Google applied for a patent for a “self-service channel marketplace” in 2011, and the subscription plan has been an open secret in the industry almost since then.

The plan has gained momentum as Netflix, Hulu and Amazon have drawn in subscribers for their video offerings. Netflix has nearly 30 million streaming subscribers in the United States; Hulu’s paid service, Hulu Plus, has about four million. Amazon has not said how many people pay for Amazon Prime, which includes its video service, but the number is known to be in the millions.

Other companies, like AOL and Yahoo, have invested in free video programming, supported by advertisers. YouTube’s strategy stands out from all the rest; its infrastructure increasingly lets video makers be their own Netflixes and Hulus, albeit on a smaller scale. It looks more like the à la carte model of a newsstand than the bundled channel model of cable television.

YouTube pitched two options to potential partners: one version of paid channels with ads (allowing for two sources of revenue, like cable television channels have) and one version without ads. The ad-free option was appealing to programmers of children’s channels, several of which will be available soon, according to some people briefed on the plan.

“It’s a worthy experiment,” said Laura Martin, a senior analyst at Needham Company, who has advocated for dual revenue streams for all manner of media companies. She said Hulu Plus and The New York Times’s online subscriptions were two successful models for producers who might try paid channels.

Another appealing aspect of the pitch was this: some of the paid channels will be available internationally, in 10 countries to start, allowing for a vast potential audience overseas.

The subscriptions will not be for channels in the television sense of the term; rather, they will consist of libraries of videos on demand, much like the thousands of free channels already on YouTube. Some of the video makers who have worked with YouTube on the subscription option want to convert fans to paying customers; others hope to distinguish themselves by selling archives of old television episodes.

But for YouTube, at least, advertising will remain the basis of its business. The company was estimated to take in $1.3 billion in ad revenues last year, and that number could climb to $2 billion this year, according to a recent report by Pivotal Research.

YouTube executives held a promotional event for advertisers in New York last week and did not bring up the forthcoming paid channels or its past ventures into financing professionally produced channels. (It supplied an estimated $300 million to producers in 2011 and 2012, but it has backed away from that strategy of late.)

“I thought YouTube was like TV. I was wrong. It isn’t,” Robert Kyncl, the company’s global head of content, said at the event. YouTube, unlike television, is interactive, he said. “And YouTube is everywhere.”

Article source: http://www.nytimes.com/2013/05/07/business/media/youtube-said-to-be-planning-a-subscription-option.html?partner=rss&emc=rss

Some Retailers Rethink Their Role in BangladeshRS = 15

Benetton repeatedly revised its accounts of goods produced at one of the factories, while officials at Gap, the Children’s Place and other retailers huddled to figure out how to improve conditions, and some debated whether to remain in Bangladesh at all.

At least one big American company, however, had already decided to leave the country — pushed by the last devastating disaster, a fire just six months ago that killed 112 people.

The Walt Disney Company, considered the world’s largest licenser with sales of nearly $40 billion, in March ordered an end to the production of branded merchandise in Bangladesh. A Disney official told The New York Times on Wednesday that the company had sent a letter to thousands of licensees and vendors on March 4 setting out new rules for overseas production.

Less than 1 percent of the factories used by Disney’s contractors are in Bangladesh, according to the official, who spoke on the condition of anonymity. The company’s efforts had accelerated because of the November fire at a factory that labor advocates asserted had made Disney apparel. The Disney ban also extends to other countries, including Pakistan, where a fire last September killed 262 garment workers.

Disney’s move reflects the difficult calculus that companies with operations in countries like Bangladesh are facing as they balance profit and reputation against the backdrop of a wrenching human disaster.

Bangladesh has some of the lowest wages in the world, its government is eager to lure Western companies and their jobs, and many labor groups want those big corporations to stay to improve conditions, not cut their losses and run.

But as the recent string of disasters has shown, there are great perils to operating there.

“These are complicated global issues and there is no ‘one size fits all’ solution,” said Bob Chapek, president of Disney Consumer Products. “Disney is a publicly held company accountable to its shareholders, and after much thought and discussion we felt this was the most responsible way to manage the challenges associated with our supply chain.”

The public disclosure of Disney’s directive came two days after officials from two dozen retailers and apparel companies, including Walmart, Gap, Carrefour and Li Fung, met near Frankfurt with representatives from the German government and nongovernment organizations to try to negotiate a plan to ensure safety at the more than 4,000 garment factories in Bangladesh.

With 3.6 million garment workers and more than $18 billion in apparel exports last year, Bangladesh is the world’s second-largest apparel exporter after China.

Walmart, Gap and other companies said on Wednesday that they were already taking action, including paying for Bangladesh factory managers to be trained in fire safety. But labor advocacy groups are pushing them to do more, especially to help finance factory improvements like fire escapes.

“Companies feel tremendous pressure now,” said Scott Nova, the executive director of the Worker Rights Consortium, a factory-monitoring group based in Washington. “The apparel brands and retailers face a greater level of reputation risk of being associated with abusive and dangerous conditions in Bangladesh than ever before.”

On Wednesday, thousands of people continued to gather around the collapsed Rana Plaza building in Savar, a suburb of Dhaka, Bangladesh’s capital. As emergency personnel dug through the rubble for yet another day, many relatives of the missing carried signs, holding out diminishing hope that a loved one would be found. A mass burial of unclaimed bodies was conducted as the death count climbed above 400.

In Rome, Pope Francis voiced sympathy for Bangladeshi garment workers on Wednesday, saying he was shocked to learn that many of them earned just $40 a month. “This is called slave labor,” he said.

Article source: http://www.nytimes.com/2013/05/02/business/some-retailers-rethink-their-role-in-bangladesh.html?partner=rss&emc=rss

Media Decoder: ‘Being White in Philly’ Article Brings an Outcry

Few subjects appear to provoke from readers as much debate, and anger, as race does. Since Philadelphia Magazine published its article “Being White in Philly: Whites, race, class, and the things that never get said” in late February, it has drawn a public rebuke by the city’s mayor, the threat of a boycott by the local African-American Chamber of Commerce and at least two forums where the magazine’s editor and the article’s writer answered angry questions.

 “I absolutely stand by the journalism in the story,” Tom McGrath, the editor of Philadelphia Magazine, said. “I absolutely stand by the journalism in the story,” Tom McGrath, the editor of Philadelphia Magazine, said.

Controversy clearly can be good for business. The magazine, whose circulation has declined nearly 10 percent in the last five years, according to the Alliance for Audited Media, had a minor boom in sales from the issue. Tom McGrath, the editor, said the article generated 1.4 million page views, a milestone for the site. The article has over 6,000 comments online, and Mr. McGrath said several vendors told the magazine that they sold out of the issue and wanted more copies.

But the issue’s notoriety may have a downside. The Philadelphia Inquirer columnist Karen Heller criticized the article’s author, Robert Huber, for providing anonymity to all of his interview subjects and painting a portrait of a city devoid of any voices other than white residents.

Mr. Huber did not include any interviews with African-Americans, and all 10 white Philadelphia residents in the article were quoted by first name or by a changed name. The article also shed light on how little diversity there is at the magazine, which has one full-time African-American employee.

Adrienne Simpson, an event planner at Philadelphia Magazine, wrote in The Philadelphia Inquirer: “The all-white staff of a city magazine, a city whose black population makes up 44 percent of its residents, is ill-equipped to spearhead any kind of enlightened discussion about race. Why? Because its hiring practices have made it abundantly clear that black people and their opinions have no place in its discussions. And I don’t just mean discussions about race.”

Shalimar Blakely, executive director of the African-American Chamber of Commerce of Pennsylvania, New Jersey and Delaware, said she hoped that the controversy might persuade Philadelphia Magazine to consider creating a more diverse work environment. While she was hopeful that the magazine would make changes on its own, she stressed that the business community would resort to more serious measures.

“Whether or not it will turn into a boycott, I don’t know,” Ms. Blakely said. “I’m open to whatever steps it takes to make the magazine more diverse.”

Mr. McGrath, the editor, said: “I absolutely stand by the journalism in the story,” but he added that he was open to increasing diversity in the magazine’s workplace.

“It’s an issue I’ve committed to taking a look at,” he said, “in terms of the way we go forward, in how we handle the sensitive issues about race.”

Article source: http://mediadecoder.blogs.nytimes.com/2013/03/24/being-white-in-philly-article-brings-an-outcry/?partner=rss&emc=rss

Murdoch’s Appetite for Los Angeles Times May Depend on F.C.C. Changes

Mr. Murdoch, who has never shied away from a regulatory battle, has been beefing up News Corporation’s lobbying efforts in Washington in the last few months to urge regulators to revise a media ownership rule that would prevent the company from acquiring The Los Angeles Times and other newspapers in markets in which it already owns television stations.

“He wants it,” one person close to Mr. Murdoch said of The Los Angeles Times.

“They’re working on getting a waiver now,” added this person, who spoke on the condition of anonymity to discuss internal talks. But another person close to Mr. Murdoch said he currently considered a potential deal more trouble than it is worth given the regulatory hurdles in Washington.

The resignation of Mr. Genachowski, a Democrat, could further stall a plan favored by the departing chairman that would relax a longtime ban on consolidation between television stations and newspapers in local markets. The F.C.C. signaled on Friday that a vote on easing media ownership rules would move forward despite Mr. Genachowski’s departure.

Initially expected to be presented for a vote early this year, the measure has already faced several setbacks. Last month, Mr. Genachowski said there would be no vote until the Minority Media and Telecommunications Council, a Washington-based nonprofit, completed a study of the impact of cross-ownership on news gathering. That process could take several weeks, potentially pushing a vote to the summer.

In a series of letters sent to the F.C.C. late last year, Maureen A. O’Connell, News Corporation’s senior vice president for regulatory and government affairs, and Jared S. Sher, a vice president and associate general counsel at the company, argued that regulators should dissolve the cross-ownership rule. “There can be little debate today that the newspaper industry faces existential threats,” Ms. O’Connell wrote in a Dec. 7 letter documenting a meeting with agency officials. “We urged the F.C.C. to eliminate the cross-ownership rule as a relic from a bygone era.”

Any easing of the media ownership rule would face fierce opposition from groups that say too much consolidation threatens a free press. If Mr. Murdoch owned a major Hollywood studio and a newspaper known as the paper of record for the entertainment industry, it could spark additional skepticism.

Mr. Murdoch has given mixed signals about his interest in The Los Angeles Times, which is being put on the market by the Tribune Company, along with its other seven newspapers. A longtime reader of the paper, Mr. Murdoch is weighing whether a bid would be worth the headache and regulatory battles, said several people close to him who spoke on the condition of anonymity to discuss private conversations. (The Tribune Company has indicated that it may prefer to sell its newspapers as a bundle.)

Under the Obama administration, Mr. Murdoch has lost some of his muscle in Washington. Even Representative Eric Cantor, Republican of Virginia, considered a Murdoch ally, recently supported shelving the Stop Online Piracy Act, which News Corporation and other media companies had lobbied to pass.

“It won’t get through with the Democratic administration in place,” Mr. Murdoch told a Los Angeles Times reporter when asked at the Golden Globes in January whether he wanted to buy the paper.

This summer, News Corporation will separate its newspapers into a smaller, mostly publishing-based company. Even if regulators were to grant a waiver of the cross-ownership rule, The Los Angeles Times would need significant investment that could strain the new company, said one of the people close to Mr. Murdoch.

News Corporation spent $6.3 million on lobbying last year, working mostly with the Washington firms Fritts Group, Glover Park Group, Cormac Group and Quinn Gillespie Associates, according to the Center for Responsive Politics.

A spokeswoman for News Corporation declined to comment.

Under Mr. Genachowski’s proposal to modify media ownership rules, a company or an individual could own both a television station and a newspaper in the same top-20 market as long as the station was not in the top four in audience size based on Nielsen ratings. News Corporation owns the Los Angeles stations KTTV and KCOP, and KCOP rates between fourth and fifth among local stations.

A spokesman for the F.C.C. has said the proposed rules would make it more difficult to acquire a waiver. “The assertion that the F.C.C.’s order would make it easier for a top-four TV station — or for a TV station that moves between fourth and fifth in the rankings — to acquire a newspaper is simply false,” the spokesman, Justin Cole, said in a statement last month.

Craig Aaron, president and chief executive of Free Press, an advocacy group that supports diverse media ownership, agreed that there was “very little wiggle room” in the current rules. But if the rules change, he said, “the opportunity to obtain a waiver becomes much closer to reality.”

Article source: http://www.nytimes.com/2013/03/25/business/media/murdochs-appetite-for-los-angeles-times-may-depend-on-fcc-changes.html?partner=rss&emc=rss

Europe Rejects British Bid to Ease Plan to Curb Bank Bonuses

The ministers, taking up rules provisionally approved last week by representatives of the European Parliament and member states, broadly agreed on Tuesday to cap bonuses at no more than the annual salary for bankers working in the 27-nation European Union and for those working for European-based banks worldwide. The ministers left the door open for further concessions that could permit some slightly higher bonuses.

The bonus caps, which are subject to formal approval by a majority of member states, among other steps, are aimed at reining in the risky, but potentially high-reward, behavior that contributed to the financial crisis.

British officials and bankers have warned that the limits could make it harder to keep London, Europe’s main financial hub, competitive with financial centers like New York, Singapore and Hong Kong.

During the ministers’ meeting here on Tuesday, George Osborne, the British chancellor of the Exchequer, told his colleagues that the measures could have the “perverse” effect of raising fixed salaries, making it harder to punish bankers for bad investments or ethical lapses by revoking their bonuses.

But facing almost certain defeat on the issue, Mr. Osborne struck a conciliatory tone, saying he would endorse the rules “if we make progress in the next couple of weeks.”

The rules are drafted to apply to a banker working in New York for a British bank like Barclays, and to a banker in London working for an American bank like Citigroup.

A bonus could not be higher unless the bank’s shareholders approved, and even then it could not exceed twice the salary.

British officials, speaking on condition of anonymity because they were not authorized to discuss the issue publicly, said their government would seek to raise the limits on some types of bonuses given in stocks or bonds that would vest in the future. But the legislation was expected to pass in close to its current form.

“It looks like the key points will hold,” said Philip Davies, a partner in London at Eversheds, an international law firm. He predicted that the bonus caps would put London’s financial district, known as the City, at a competitive disadvantage to banking hubs like Wall Street and Hong Kong.

“The long-term effect on the City remains to be seen.” he said. “But as it now stands, alternative jurisdictions that are able to offer more favorable terms look to have a significant recruitment edge.”

Banks are concerned about how the proposed caps would affect them, said several legal specialists who are advising banks based in the City. Some are even seeking legal advice as to whether the European officials are authorized to limit bonuses.

While no bank appears to be ready to take the issue to court, specialists say that will remain a possibility as long as questions about how the bonus caps will work remain unanswered.

When Michel Barnier, the European commissioner responsible for financial regulation, was asked whether he thought any legal challenge would succeed, he replied, “Good luck.”

Some financial institutions are looking at ways to devise compensation packages around long-term incentives that would allow bankers to receive sizable compensation despite any new controls. Yet advisers acknowledge that it would be difficult for leading banks to defend such moves, because of widespread public anger over the industry’s past excesses.

Mr. Osborne’s foes called the European Union’s rebuke a sign that the Conservative government led by Prime Minister David Cameron, which has called a referendum on Britain’s membership in the bloc, was increasingly unable to influence policy making in Europe.

“This government needs to take a crash course in finding friends and influencing E.U. partners,” said Arlene McCarthy, a member of Britain’s Labour Party in the European Parliament and a senior member of the chamber’s Economic and Monetary Affairs Committee.

Ms. McCarthy said she supported the caps as the only way to rein in bankers. But she complained that the Cameron government had failed to win more favorable terms for the City “because of a kind of arrogance” toward its partners in the European Union.

Ireland, which holds the rotating presidency of the bloc, helped broker talks on the bonus caps last week with legislators of the European Parliament. On Tuesday, Michael Noonan, the Irish finance minister, said, “Now there is very little further we can do for” Britain. “We pushed the negotiations to quite a degree, and we got the best possible compromise,” he said.

Mr. Osborne was in a bind over how forcefully to argue for changes. He was under acute pressure from members of the Conservative Party who favor a tough line against European rules that they consider at odds with British interests.

Adding to that pressure was a growing challenge from the United Kingdom Independence Party, which wants to pull Britain out of the European Union.

But supporting high pay for bankers angers significant sections of British voters, who are struggling in a weak economy. Many of them also resent the banking industry for receiving several giant bailouts paid for by taxpayers.

Mr. Osborne also needed to temper his criticism because the caps are part of a legislative package that included something his government favors: tougher rules about how much capital European banks most hold in reserve to protect against losses.

Mark Scott contributed reporting from London.

Article source: http://www.nytimes.com/2013/03/06/business/global/britain-isolated-as-european-colleagues-support-bonus-caps.html?partner=rss&emc=rss

DealBook: Tribune Said to Hire Banks to Sell Newspapers

The Tribune Company has hired investment banks to pursue a sale of its top newspapers, including The Chicago Tribune and The Los Angeles Times, a person briefed on the matter told DealBook on Tuesday.

The media company, which emerged from bankruptcy late last year, has hired JPMorgan Chase and Evercore Partners to run the process, said this person, who spoke on condition of anonymity.

Tribune’s move comes as little surprise. Speculation has been swirling around the media industry for some time that a number of potential suitors had emerged for the company’s holdings, a lot that may include the News Corporation.

Peter Liguori, Tribune’s recently appointed chief executive, told The Los Angeles Times last month that he had not ruled out a sale of the company’s newspaper brands but added that he wasn’t “going into this job with a fire-sale sign.”

A sale would help Tribune focus more on its bigger broadcasting operations, which includes WGN America and 24 stations across the country.

The company emerged from Chapter 11 protection on Dec. 31, under the control of the investment firms Oaktree Capital and Angelo, Gordon, as well as JPMorgan.

Shares in Tribune, which trade over the counter, were up 1.3 percent on Tuesday at $53.50. That values the media conglomerate at about $3 billion.

News of the hiring of the banks was reported earlier by CNBC.

Article source: http://dealbook.nytimes.com/2013/02/26/tribune-said-to-hire-bankers-to-sell-newspapers/?partner=rss&emc=rss

DealBook: Prosecutors, Shifting Strategy, Build New Wall Street Cases

Lanny A. Breuer, the head of the Justice Department's criminal division.Richard Drew/Associated PressLanny A. Breuer, the head of the Justice Department’s criminal division.

Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks.

In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations.

Lawyers for several big banks, who spoke on the condition of anonymity, said they were already adjusting their defenses and urging banks to fire employees suspected of wrongdoing in the hope of appeasing authorities.

But critics question whether the new strategy amounts to a symbolic reprimand rather than a sweeping rebuke. So far, the Justice Department has extracted guilty pleas only from remote subsidiaries of big foreign banks, a move that has inflicted reputational damage but little else.

The new strategy first materialized in recent settlements with UBS and the Royal Bank of Scotland, which were accused of manipulating interest rates to bolster profit. As part of a broader deal, the banks’ Japanese subsidiaries pleaded guilty to felony wire fraud.

Senator Carl Levin of Michigan has criticized prosecutors for not doing more to hold banks accountable for their actions.J. Scott Applewhite/Associated PressSenator Carl Levin of Michigan has criticized prosecutors for not doing more to hold banks accountable for their actions.

The settlements present a significant shift. Authorities have long avoided guilty pleas over fears they will destroy the banks and imperil the broader economy. By going after a subsidiary, prosecutors shield the parent company from losing its license, but still send a warning to the financial industry.

The Justice Department plans to continue the campaign as it pursues guilty pleas from other bank subsidiaries suspected of reporting false interest rates, according to the prosecutors and the lawyers who requested anonymity to discuss the cases. Authorities are scrutinizing Citigroup, whose Japanese unit is suspected of rate manipulation, and prosecutors recently accused one former trader there of colluding with other banks in a vast rate-rigging conspiracy.

Prosecutors want the rate-rigging investigation to serve as a template for other financial fraud cases. Two officials, who spoke on condition of anonymity, described a plan to eventually wring an admission of guilt from an entire bank.

“This Department of Justice will continue to hold financial institutions that break the law criminally responsible,” Lanny A. Breuer, the departing head of the agency’s criminal division, said in an interview.

The strategy will face significant roadblocks.

For one, banking regulators are likely to sound alarms about the economy. HSBC avoided charges in a money laundering case last year after concerns arose that an indictment could put the bank out of business. In the first interest rate-rigging case, prosecutors briefly considered criminal charges against an arm of Barclays, but they hesitated given the bank’s cooperation and its importance to the financial system, two people close to the case said.

The Justice Department will also face resistance from Wall Street. In meetings with authorities, banks are trying to distinguish their activities from the bad behavior at UBS and Barclays, according to the industry lawyers. One lawyer who represents Deutsche Bank acknowledged that Wall Street was girding for battle over the push for guilty pleas.

Some lawyers posit that the new approach amounts to a government shakedown, because institutions may plead guilty to dodge an indictment. “I think it’s a step in the wrong direction,” said James R. Copland, the director of the Center for Legal Policy at the Manhattan Institute.

Complicating matters, lawmakers and consumer advocates will continue to complain that banks get off too easily. In the rate manipulation cases, critics have clamored for more potent penalties, seeking convictions against parent companies.

The problems “should provide motivation to prosecutors, regulators and Congress to do more to ensure that this type of behavior is stopped, and that banks and their executives who manipulate markets are held accountable,” said Senator Carl Levin, Democrat of Michigan.

Critics point to the UBS case. Before UBS signed the deal, Japanese authorities assured the bank that a guilty plea would not cost the subsidiary its license, a person involved in the case said. While the case has weighed on the stock price, the subsidiary is operating normally and clients have stayed put, according to people with direct knowledge of the case.

Prosecutors defend their effort, saying it was born from painful experiences over the last decade.

After Arthur Andersen was convicted in 2002, the accounting firm went out of business, taking 28,000 jobs with it. The Supreme Court later overturned the case, prompting the government to alter its approach.

Prosecutors then turned to deferred-prosecution agreements, which suspend charges against corporations in exchange for certain concessions and a promise to behave. But the Justice Department took heat for prosecuting few top bank executives after the financial crisis. A recent “Frontline” documentary portrayed prosecutors as Wall Street apologists.

So the government is seeking a balanced approach, aiming to hold banks accountable without shutting them down. Prosecutors consulted federal policies that required them to weigh action with “collateral consequences” like job losses. Mr. Breuer also collected input from staff, including the head of his fraud unit, Denis J. McInerney, a former defense lawyer who represented Arthur Andersen.

Mr. Breuer eventually deployed a strategy built on guilty pleas for subsidiaries. He imported the model, in part, from his foreign bribery actions and pharmaceutical cases.

“Extracting a guilty plea from a wholly owned subsidiary finally enables the Justice Department to look tough on financial institutions while sparing them from the corporate death penalty,” said Evan T. Barr, a former federal prosecutor who now defends white-collar cases as a partner at Steptoe Johnson.

As the Arthur Andersen cases fades from memory, some prosecutors say their new approach will lay the groundwork for parent companies to plead guilty.

But first, officials say, they are testing the strategy in the interest rate-rigging case. Authorities suspect that more than a dozen banks falsified reports to influence benchmark interest rates like the London interbank offered rate, or Libor, which underpins the costs for trillions of dollars in financial products like mortgages and credit cards.

Prosecutors focused on Japanese units because e-mail traffic exposed how traders there had routinely manipulated rates to increase profits, officials say. The units also have few ties to American arms of the banks, containing any threat to the economy.

After the Barclays case, authorities shifted to UBS, given the scope of the evidence and the bank’s past brushes with authorities, according to officials. The bank’s Japanese subsidiary was also a hub of rate-rigging activity. “The Justice Department had a clear view on the past of this institution,” said one executive who met with government officials.

Along with paying $1.5 billion in fines, the bank agreed to bolster its controls and have its Japanese unit plead guilty. It was the first big global bank subsidiary to plead guilty in more than two decades.

The Royal Bank of Scotland met a similar fate. The bank’s conduct was less severe than the actions of UBS, but it too had a rogue Japanese subsidiary. The bank announced a $612 million settlement with authorities this month, including a guilty plea in Japan.

Using the settlements as a template, prosecutors are building cases against other banks ensnared in the investigation, people involved in the case said, and guilty pleas are likely. Deutsche Bank is expected to settle with authorities by late 2013, the people said.

Citigroup and JPMorgan Chase, two American banks under scrutiny, pose a thornier challenge. So far, authorities have flexed their newfound muscle with foreign banks.

American regulators may warn that extending the campaign to Citigroup would threaten the company’s stock and prompt an exodus of clients. Japan’s regulators, some feeling upstaged by the recent actions, might raise similar concerns. Citigroup’s lawyers will also push back, people involved in the case said, citing the bank’s cooperation with investigators and emphasizing that wrongdoing never reached upper levels of management. The bank fired the trader recently charged by the Justice Department.

Authorities could counter that Citigroup’s Japanese unit is a repeat offender. It butted heads with Japanese regulators three times over the last decade.

“This is hard-nosed negotiation,” said Samuel W. Buell, a former prosecutor who is now a professor at Duke Law School. “It’s a game of chicken.”

Mark Scott contributed reporting from London and Hiroko Tabuchi from Tokyo.

A version of this article appeared in print on 02/19/2013, on page B1 of the NewYork edition with the headline: Prosecutors, Shifting Strategy, Build New Wall Street Cases.

Article source: http://dealbook.nytimes.com/2013/02/18/prosecutors-build-a-better-strategy-to-go-after-wall-street/?partner=rss&emc=rss

Media Decoder Blog: Time Warner Considers Spinning Off Some of Its Magazines

9:15 p.m. | Updated

Time Warner is in talks to shed much of Time Inc., the country’s largest magazine publisher and the foundation on which the $49 billion media conglomerate was built, according to people involved in the negotiations.

Time Warner is in early discussions with the Meredith Corporation to put most of Time Inc.’s magazines — including People, InStyle and Real Simple — into a separate, publicly traded company that would also include Meredith titles like Better Homes and Gardens and Ladies’ Home Journal.

The new company would then borrow money to pay a one-time dividend back to Time Warner, essentially turning what appears to be a corporate spinoff into a sale. The figure being discussed is $1.75 billion, according to the people involved in the negotiations, who requested anonymity to discuss private conversations publicly.

The deal under consideration is one of several options Time Warner is exploring to reduce its troubled publishing unit. As part of the agreement, existing shareholders in Time Warner and Meredith would receive stakes in the new venture. That venture would be primarily a women’s magazine company, expanding on Meredith’s stable of lifestyle publications with strong female readership, especially in the Midwestern United States.

Time Warner would continue to control the news-based magazines Time, Fortune and Sports Illustrated, along with Money magazine. Another person involved in the negotiations said Meredith did not want those magazines — including the standard-bearer Time, which is expensive to operate and reported a 23.2 percent decline in newsstand sales in the second half of 2012 — to be part of the deal.

Spokesmen for Time Warner and Meredith declined to comment. The new company would allow both Meredith and Time Warner to insulate their other assets from the troubled magazine business. It would also give Time Warner the benefit of a large payday in the form of a dividend without having to resort to an outright sale, which could have much harsher tax implications.

Like Time Inc., Meredith has a long and lucrative history in the women’s magazine market, and both companies have emphasized consumer marketing, wringing value from their subscriber lists at every turn.

But in other ways, the joining of the two would involve some remarkable adjustments. The Time Life Building, a “Mad Men”-era skyscraper in the middle of Midtown, has long been a symbol of Manhattan publishing. Meredith’s roots date to 1902 and the creation of Successful Farming magazine. It owns some of the country’s largest-circulation women’s magazines, but maintains popular, folksy titles like Country Life and the carpentry magazine Wood.

It is unclear whether the new company would move some former Time Inc. employees to Des Moines, where Meredith is based.

The talks come days after Time Inc. said it would lay off 6 percent of its 8,000 employees. Its overall revenue has declined roughly 30 percent in the last five years.

In recent years, Time Warner has tried to trim assets unrelated to the television and movie production business. It has divested itself of AOL, Time Warner Cable, the Warner Music Group and the Time Warner Book Group.

Jeffrey L. Bewkes, chief executive of Time Warner, has previously denied reports that he would sell or spin off Time Inc. He frequently talks about the division’s strongest brands as, essentially, cable channels, and he has mandated that Time Inc. make its magazines available on digital devices.

“They’re printing pages right now, but they’re also on electronic screens with moving pictures,” Mr. Bewkes said in an earlier interview. “A cable channel like TNT or TBS,” he added, is “pretty much the same as what People or Time or InStyle should do.”

Keeping Time, Fortune and Sports Illustrated would allow Time Warner to maintain its name and historical roots, at least until a buyer with interest in the remaining titles emerged.

“Time’s name is on the door,” said a person briefed on Mr. Bewkes’s thinking who requested anonymity to discuss private conversations. “I think Jeff feels it would be better to hang on to it and not sell it for what would be a low price.”

Jeff Zucker, the newly named president of CNN Worldwide, is said to have expressed interest in further collaborations with the newsmagazines.

Time Inc. and Meredith have a recent connection. Jack Griffin, a former Meredith executive, had a brief and stormy reign as chief of Time Inc. before Laura Lang took over in January 2012 — a tenure of less than six months that highlighted the culture clash between the companies.

Time Inc. editors “look down on Meredith as being a sleepy, Iowa-based publisher without the cutting-edge skills and abilities that they feel that they have,” said Peter Kreisky, who was a senior adviser to Mr. Griffin during his brief period at Time Inc.

Ms. Lang, previously chief executive of the digital advertising company Digitas, is an upbeat marketing executive with digital skills but no journalism experience who promptly hired Bain Company, a Boston consultancy. In a July interview with The New York Times, Ms. Lang said: “Everyone was asking, ‘Who’s getting laid off?’ But it couldn’t be further from the truth.”

She moved aggressively to make Time Inc.’s magazines available digitally and to take advantage of consumer data. In June, the company announced that all of its magazines would be available on Apple’s newsstand.

But those moves weren’t enough to stop the industrywide tide of declining subscription and advertising revenue, prompting Time Warner executives to accelerate their exploration of ways to sell or spin off the magazines. Time Warner initiated the conversation with Meredith, said a person involved in the deal.

“In a declining business, selling today is always better than selling tomorrow,” said another person with knowledge of the deal who was not authorized to discuss the talks publicly.

Last week, Time Warner said revenue at Time Inc. had fallen 7 percent, to $967 million, while advertising revenue fell 4 percent, or $24 million. Subscriptions were flat. (Revenue at the company’s cable television channels rose 5 percent, to $3.67 billion.)

Even People, which has long helped bolster Time Inc.’s bottom line, has suffered. People’s newsstand sales declined 12.2 percent in the second half of 2012 compared with the year before, according to the Alliance for Audited Media. Its advertising pages dropped 6 percent in 2012, according to the Publishers Information Bureau.

Last month, Ms. Lang said she would cut around 480 people at an estimated cost of $60 million in restructuring fees. Magazines like Time and People asked employees to take buyouts and said they would begin layoffs if they did not meet the necessary numbers by Wednesday.

In a conference call with analysts last week, John K. Martin, chief financial and administration officer at Time Warner, said that “very challenging industry conditions weighed” on Time Inc.’s results.

Time Warner isn’t alone in feeling the pinch of a troubled publishing division. In June, News Corporation said it would split its publishing assets, including newspapers like The Wall Street Journal and The New York Post, into a publicly traded company separate from its entertainment division, which includes the highly profitable cable channels FX and Fox News. The separation is expected to be complete this summer.

In October, Barry Diller’s IAC/InterActiveCorp said it would stop publishing Newsweek and merge it with its irreverent digital news site, The Daily Beast.

Christine Haughney, Andrew Ross Sorkin and David Carr contributed reporting.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/13/time-warner-in-talks-to-sell-off-majority-of-magazines/?partner=rss&emc=rss