April 1, 2023

Wall Street Turns Upward

The stock market edged higher on Monday, although disappointing McDonald’s earnings kept the Dow Jones industrial average from making any significant gains.

Banks and health shares were the day’s best performers; financial stocks advanced for the 10th time in the last 12 sessions. Bank of America led the group, while the American-listed shares of UBS rose 60 cents, or 3.22 percent, to $19.24, after the Swiss bank’s second-quarter profit exceeded forecasts.

Analysts said the market would probably trend higher in the absence of any weak economic news, but it would need strong earnings and positive forecasts to post large gains.

“Most earnings have been good, maybe not great but good, and as a consequence I think investors continue to show that equities is the asset class of choice for them right now,” said Richard Meckler, president of LibertyView Capital Management.

Weaker-than-expected results from the fast-food company McDonald’s weighed on the Dow after it said its full-year results would be “challenged” by falling sales in Europe. McDonald’s shares lost $2.69, or 2.68 percent, to $97.58.

The Dow Jones industrial average gained 1.81 points, or 0.01 percent, to 15,545.55.

The Standard Poor’s 500-stock index reached another nominal closing record high, rising 3.44 points, or 0.2 percent, to 1,695.53.

The Nasdaq composite index added 12.77 points, or 0.36 percent, to 3,600.39.

The S. P. 500 has advanced nearly 19 percent so far this year.

Nearly one-third of S. P. 500 companies are expected to report earnings this week, including Apple on Tuesday. Of the 109 companies in the S. P. 500 that have reported earnings for the quarter, 64.2 percent have exceeded analysts’ expectations, while fewer than half have topped revenue estimates.

In the bond market, interest rates were stable. The price of the Treasury’s 10-year note was unchanged at 93 21/32, while its yield remained at 2.48 percent.

Article source: http://www.nytimes.com/2013/07/23/business/daily-stock-market-activity.html?partner=rss&emc=rss

Cutting Edge Group Buys Varése Sarabande

Over the holidays, the Cutting Edge Group, a company in London that provides and invests in music for the screen, and its partner Wood Creek Capital Management acquired a well-known purveyor of soundtracks: the Varèse Sarabande record label.

The acquisition was disclosed in interviews last week with executives involved in the transaction. They declined to discuss the terms of the deal, but described it as an initial step in using about $100 million in funds that will extend the reach of Cutting Edge, beginning with the purchase and expansion of Varése Sarabande, which will quickly increase its output by half to at least 60 soundtracks a year.

The financing will come from Wood Creek, which is based in Connecticut, and from two additional backers, Octopus Investments and Aberdeen Asset Management, which are based in Britain and are otherwise involved with Cutting Edge.

“When you deploy $100 million in this space, that’s an awful lot of money,” said Philip Moross, the chief executive of Cutting Edge.

Mr. Moross, who spoke by telephone on Thursday, referred to a movie music business in which the budgets for film scores have dwindled, as inexpensive or stolen downloads knocked the bottom out of soundtrack sales.

The music for “The Bodyguard” from 1992, which starred Whitney Houston and Kevin Costner, sold about 12 million albums in the United States, for instance; but more recent hits, like the “Twilight” soundtrack, have sold a fraction of that number.

Cutting Edge has grown by spreading its portfolio to include the management of music rights, the representation of composers, and upfront investment in the music for many films. By spending a relatively modest sum for rights to the music of films like “The King’s Speech” while they are still in production, for example, Cutting Edge helps to underwrite a stronger soundtrack. It can then recoup its money through aggressive sales of the music to advertisers and others.

Varése Sarabande, which released its first album in 1978, was founded in Los Angeles by the entrepreneur Chris Kuchler and others, and did well by specializing in what larger competitors had left behind. (The label’s unusual name, born of a merger between the predecessor Varése International with Sarabande Records, combines the name of the composer Edgard Varése with the term for a Spanish dance.)

Its recent soundtracks include music from “The Bourne Legacy,” “The Help,” and the second season of HBO’s “Game of Thrones” The company has focused largely on scores, rather than on song compilations that require the acquisition of expensive rights.

Varése Sarabande releases about 40 soundtracks a year. But that number will quickly grow to 60 or more, said Darren Blumenthal, a Los Angeles investment adviser who introduced Mr. Moross to Mr. Kuchler, and will now become chief executive of Varése Sarabande.

Mr. Kuchler, who was the principal owner of Varése Sarabande, will stay with the label at least through a transition period of several months, and Robert Townson, its managing director, is expected to remain in place. “Being together is better for both of us,” Mr. Kuchler said in an e-mail on Saturday. “They needed us to round out our operation, and we needed them because things have been getting difficult in our niche area of the music industry.”

Mr. Blumenthal, who spoke jointly with Mr. Moross on Thursday, said the decision to sell came slowly for Mr. Kuchler, who turned down a parade of potential buyers over the last five years.

Mr. Moross, said Mr. Blumenthal, began negotiating with Mr. Kuchler about two years ago. And the deal finally closed in late December, as entrepreneurs across the United States were busy selling assets in advance of an anticipated increase in federal taxes.

Mr. Kuchler turned away most potential buyers, Mr. Blumenthal said, because they were “financial, versus strategic.”

The strategic advantage in joining with Cutting Edge, he said, includes an expectation that all or most of the five dozen films with which Cutting Edge is involved annually will now release a score via Varése Sarabande.

Thus, “Side Effects,” which was directed by Steven Soderbergh and is set for release on Feb. 8 by Open Road Films, was made with input from Cutting Edge, which invested in the music, helped find the music supervisor, and will now release its score, by Thomas Newman, on Varése Sarabande.

Mr. Moross and Mr. Blumenthal also talk of expanding Varése Sarabande’s existing events business, which has regularly staged concerts at festivals and elsewhere in recent years.

That could mean having film scores conducted by their composers at the Hollywood Bowl, for instance, then selling recordings of the performance, Mr. Moross said.

It is just one way, he added, of getting more value from scores. “These are highly undervalued properties,” he said.

Article source: http://www.nytimes.com/2013/01/07/business/media/cutting-edge-group-buys-varese-sarabande.html?partner=rss&emc=rss

DealBook: Cerberus to Sell $2.5 Billion Stake in Japanese Bank

Brian Prince, left, newly named chairman of Aozora Bank, and Shinsuke Baba, newly named president and chief executive.Tomohiro Ohsumi/Bloomberg NewsBrian Prince, left, newly named chairman of Aozora Bank, and Shinsuke Baba, newly named president and chief executive.

TOKYO — The private equity firm Cerberus Capital Management will start selling its $2.5 billion stake in Japan’s struggling Aozora Bank this year, the Asian lender said on Thursday, in a much-anticipated exit for the firm more than a decade after its initial investment.

Ceberus, based in New York, will sell a portion of its 55 percent stake in Aozora in a share buyback plan, Aozora said in a news release. The firm will sell its remaining Aozora shares in the capital markets or through private transactions, the statement said.

Shares in Aozora plunged on the news, ending the day down 9 percent at 232 yen, or about $2.99, in Tokyo. At that price, a sale of Cerberus’s entire stake would fetch about $2.5 billion.

Cerberus has not yet decided on the sale’s pace and pricing, Aozora said. The bank, based in Tokyo, also said it was replacing its chief executive, Brian Prince, with Shinsuke Baba, the bank’s chairman.

Representatives of Cerberus in Tokyo could not immediately be reached.

Aozora’s predecessor, the Nippon Credit Bank, was temporarily nationalized in 1998 during Japan’s banking crisis. The government then sold off large stakes in the bank to investors, including Cerberus, which had hoped to profit from Japan’s distressed assets.

Despite an attempted turnaround, Aozora, a mid-size lender in the Asian country, has struggled to carve out a lucrative business, squeezed between Japan’s megabanks and smaller regional lenders that dominate local lending.

Last month, Aozora said it would take more than a decade to pay back about 180 billion yen in public money that it owed the government.

Cerberus has already more than doubled its initial 100 billion yen investment in Aozora when it sold part of its holdings during the bank’s 2006 relisting. But Aozora’s share price has slumped amid the financial crisis and has struggled to recover, limiting any further upside for the American firm and spurring its executives to explore a possible exit.

Article source: http://dealbook.nytimes.com/2012/09/27/cerberus-to-sell-2-5-billion-stake-in-japanese-bank/?partner=rss&emc=rss

DealBook: Diamondback Avoids Criminal Charges in Insider Trading Case

Diamondback’s office in Stamford, Conn.Douglas Healey/Bloomberg NewsDiamondback Capital Management, based in Stamford, Conn., entered into a nonprosecution agreement with the government.

6:00 p.m. | Updated

Diamondback Capital Management, one of the largest hedge funds ensnared by the government’s insider trading crackdown, will not face criminal charges and will pay more than $9 million in civil fines to resolve its role in the investigation.

The hedge fund has entered into a nonprosecution agreement with the United States attorney’s office in Manhattan. The government agreed not to bring criminal charges against Diamondback, citing the fund’s prompt cooperation and voluntary adoption of remedial measures.

And under the terms of the proposed settlement with the Securities and Exchange Commission, Diamondback will forfeit $6 million in ill-gotten gains. It will also pay a civil penalty of $3 million.

In a departure from the S.E.C.’s historical practices, Diamondback’s pact with the S.E.C. does not include language that the fund “neither admits nor denies” any wrongdoing in the case.

This month, the S.E.C. announced that it would no longer permit defendants to “neither admit nor deny” charges if the defendant admitted to or had been convicted of criminal violations. The new policy also applies to cases like the Diamondback one in which a company enters a nonprosecution agreement with criminal authorities.

Diamondback, which is based in Stamford, Conn., was at the center of a big insider trading case brought by the government last week. Federal prosecutors announced criminal charges against seven individuals, accusing them of an insider trading scheme in which they earned a total of $62 million in illegal profits trading Dell stock while in possession of confidential information about the computer company.

Two of the defendants were Diamondback employees. Federal authorities arrested Todd Newman, a former portfolio manager, and announced that a former analyst, Jesse Tortora, had pleaded guilty and was cooperating with the government. The S.E.C. filed parallel civil charges against the fund and the two former employees.

“We believe that the proposed settlement appropriately sanctions the misconduct while giving due credit to Diamondback for its substantial assistance in the government’s investigation and the pending actions against former employees and their co-defendants,” George Canellos, the head of the S.E.C.’s New York office, said in a statement.

A lawyer for Mr. Newman did not immediately respond to a request for comment.

Diamondback was given little chance for survival when F.B.I. agents raided the fund in November 2010 in search of evidence of insider trading. The other three funds raided that fall — Level Global Investors, Loch Capital Management and Barai Capital — have shut down.

Diamondback continues to operate after struggling with negative publicity from the investigation and investor withdrawals. Its assets under management have been cut in half, dropping to about $2.5 billion from more than $5 billion at the peak, according to people briefed on the fund.

In a letter sent to its investors on Monday, Diamondback’s co-founders, Richard Schimel and Larry Sapanski, said that an extensive internal review by the fund’s outside counsel at WilmerHale found no evidence establishing improper trading by any Diamondback employees except for Mr. Newman and Mr. Tortora.

Mr. Schimel and Mr. Sapanski, who both started their careers at SAC Capital Advisors, the giant Connecticut hedge fund run by the billionaire investor Steven A. Cohen, said the fund’s principals, and not its investors, would bear all of the costs related to the investigation.

“We are gratified finally to have reached closure on the government proceedings, and deeply regret the difficulties caused to our investors during the last 14 months,” they wrote in a letter to the fund’s investors on Monday. “Everyone at Diamondback is looking forward to a successful 2012.”

This post has been revised to reflect the following correction:

Correction: January 23, 2012

An earlier version of this article misspelled the last name of Richard Schimel, one of Diamondback’s co-founders.

Article source: http://feeds.nytimes.com/click.phdo?i=2fd66200805e57b3e51eee04bac88dfb

DealBook: Cerberus Kills $1.1 Billion Deal With Innkeepers

5:58 p.m. | Updated

Cerberus Capital Management and the Chatham Lodging Trust announced on Monday that they had called off a $1.1 billion deal to buy out of bankruptcy 64 hotels owned by the Innkeepers USA Trust.

In a brief statement, the two companies said the decision arose from a determination that Innkeepers had suffered a “material adverse change” in its operating performance. Cerberus and Chatham did not elaborate on what the so-called MAC was, but said it would probably have a prolonged negative effect on the company’s business.

The two companies had agreed in May to buy the hotels from Innkeepers, which operated hotels for chains like Hilton and Marriott. It filed for bankruptcy in July 2010 after buckling under a debt load that arose from its sale to Apollo Global Management.

In June, the federal judge overseeing Innkeeper’s bankruptcy case approved the sale, which was meant to lift the company out of Chapter 11 protection.

Invoking a MAC has been relatively rare since the financial crisis. Several investment firms used MAC clauses in their deal agreements to walk away from leveraged buyouts reached during the private equity boom.

Perhaps the most notable example was J.C. Flowers Company’s bitter fight to walk away from its deal to buy the SLM Corporation, better known as Sallie Mae.

In 2007, Cerberus tried to walk away from its $4 billion buyout of United Rentals — but in that case, it did not cite a MAC as a reason to cancel the deal. Instead, it said it would pay a $100 million breakup fee.

United Rentals retaliated with a lawsuit in November that year, but was defeated in court and forced to let Cerberus withdraw from its commitment.

Article source: http://feeds.nytimes.com/click.phdo?i=911453af189ce552c5805890aeb36d54

Gannett Newspaper Revenue Falls 6.5% in Weak Ad Climate

In the latest sign that the industry has yet to recover from an advertising slump, quarterly profit and revenue at the newspaper company Gannett fell.

Gannett, the largest newspaper chain in the United States, said Monday that total revenue was down 2.2 percent to $1.33 billion in the second quarter. The figure was in line with the average analyst forecast, according to Thomson Reuters.

Gannett, which publishes USA Today and 81 other newspapers, said ad revenue at its newspapers dropped 6.5 percent to $646.9 million as retail, automotive and national advertisers pulled back on their spending.

Advertising revenue this quarter is “getting off to the same start” as the second quarter, Gracia Martore, president and chief operating officer of Gannett, said in a conference call.

The company also doubled its quarterly dividend and reinstated its $1 billion share buyback.

Gannett posted a profit of $151.5 million, or 62 cents a share, compared with $195.5 million, or 73 cents a share a year earlier.

Excluding costs for facility closings and job cuts and a net tax benefit, Gannett posted a profit of 58 cents a share, beating analysts’ forecast by a penny.

Gannett cut 2 percent of its work force, or 700 employees, at its American newspaper division in June, citing a sputtering economic recovery weighing down national and local advertising.

Derek Maupin, research analyst at Hodges Capital management, which holds shares in Gannett, is slightly concerned about Gannett’s print advertising but believe shares are still undervalued at its current price. He cited increases in other segments like broadcasting revenue.

At the company’s broadcast division, total revenue inched up to $184.4 million compared with $184 million in the same quarter a year ago.

TV revenue was up slightly to $177.7 million and the company forecast the percentage decline in the third quarter to be in the midsingle digits.

Digital advertising rose almost 13 percent to $173.4 million, the company said.

The company doubled its dividend to 8 cents a share. It expects to repurchase $100 million in shares over the next 12 months, as part of the $1 billion share buyback originally approved five years ago.

Article source: http://feeds.nytimes.com/click.phdo?i=5a3714ee83a08ccc6227ae2352a9b71e