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Bucks Blog: Worrying About Electronic Benefits Deadline? Don’t

January 10, 2013 by Leave a Comment

March 1 is the deadline set by the federal government for converting all benefits payments — including Social Security — to electronic deposits.

That’s the date by which recipients are supposed to choose direct deposit of their monthly payment into a bank account or to a prepaid debit card, like the government’s Direct Express card.

But those who don’t switch by the deadline apparently won’t face any serious consequences, aside from continued pestering from the government.

Those who fail to switch will still receive paper checks, said Walt Henderson, director of the Treasury Department’s Go Direct campaign. Those recipients will, however, get mailings from the government after the deadline, in an effort to encourage them to adopt electronic payments, he said.

“We don’t have the authority to change their payment method without their permission,” he said in a telephone interview. But they may be mailed a Direct Express card, and urged to activate it.

But, he said, “We won’t automatically switch them.”

Those who continue to hold out for paper will continue to hear from the government, he said. But they won’t get telephone calls, because of the widespread use of telephone schemes aimed at those who receive benefits.

“The whole premise is to educate people about electronic payments,” he said.

The move is part of an effort by the Treasury Department to shift transactions away from paper to save money and reduce potential errors. All new applicants for federal benefits, as of May 1, 2011, have had to select an electronic delivery method.

Currently, about 93 percent of payments to recipients of Social Security and Supplemental Security Income are made electronically — either through direct deposit into a bank account, or onto a prepaid debit card. (Some privately issued prepaid cards can also be used to receive payments, as long as they are insured by the Federal Deposit Insurance Corporation and meet other requirements.)

But about 5 million recipients still get paper checks, so the Treasury Department is aiming at those people in the next two months to encourage them to choose an electronic option. In research conducted last fall, Mr. Henderson said, 75 percent of those still receiving paper checks said they intended to switch by the deadline.

Those age 92 or older are exempt from the requirement. Others who don’t want to switch are supposed to apply for a waiver. They must either have a “mental impairment” that prevents them from using the card or live in a geographically remote area where it may be difficult to use them.

Some consumer advocates raised concerns that the waiver process was too complex for people to navigate. About 600 waivers had been issued as of the end of December, Mr. Henderson said.

Given that there is no real punishment for not complying with the switch, does it make sense to have people fill out forms — which must be notarized — to apply for waivers? In a follow-up e-mail, Mr. Henderson said, “Our expectation is that individuals receiving federal benefit payments such as Social Security will comply with the requirement to receive those funds electronically by direct deposit or the Direct Express card.” He added that the waivers exist to be “sensitive to certain populations who may have trouble complying, but who want to be in compliance with regulations related to their payments.”

Meanwhile, Treasury has continued issuing statements urging recipients to switch. “Switching to an electronic payment is not optional — it’s the law,” David Lebryk, commissioner of the Treasury Department’s Financial Management Service, said in one announcement, which was titled, in part, “Time is running out.”

Representatives of Fisca, a trade group representing check-cashing providers, have complained that the government is “needlessly scaring” benefits recipients into thinking they may have to go without their payments after March 1, if they don’t switch to electronic deposit.

Do you plan to switch to electronic payments for your federal benefits by March 1?

Article source: http://bucks.blogs.nytimes.com/2013/01/10/worrying-about-electronic-benefits-deadline-dont/?partner=rss&emc=rss

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Media Decoder Blog: CNN Announces Jeffrey Zucker as President

November 30, 2012 by Leave a Comment

Jeff Zucker, in 2010, when he was the president and chief executive of NBC Universal.Kevin Keelan/Clarion Pictures Jeff Zucker, in 2010, when he was the president and chief executive of NBC Universal.

8:00 p.m. | Updated
CNN announced on Thursday that it would install Jeffrey Zucker, the former chief executive of NBC, as president of CNN Worldwide.

The announcement was the culmination of a four-month search to find a replacement for Jim Walton, who had led CNN to record profits even as ratings for its American network, CNN/U.S., hit record lows. The network announced in July that Mr. Walton would step down at the end of the year.

What’s Next?
Many Paths for CNN

Jeff Zucker no doubt is getting much advice on how to revitalize the network: maybe add more celebrities or double-down on news or documentaries.

Mr. Zucker, 47, will be expected to revive the American network to competitive standing against its rivals, Fox News and MSNBC, even as it maintains its position as a nonpartisan news network, versus those speaking from the right (Fox) and left (MSNBC). Mr. Zucker said he would start his new assignment in January.

In a telephone interview, Mr. Zucker, who said he began discussing the job with CNN executives after Labor Day, summarized what would be his chief challenge: expanding the network’s appeal beyond times when there is breaking news.

“CNN has to find the right programming that exists in between the 25 nights a year when it is most relevant,” he said. “Beyond the fact that we are committed to news and journalism, everything else is open for discussion.”

Mr. Zucker will arrive at CNN carrying the baggage of the collapse of NBC’s own broadcast network, which fell from longtime leadership in prime time to last place under Mr. Zucker, even as the company’s cable networks, including MSNBC, thrived. But Mr. Zucker also brings a reputation for leadership in news, which he forged in two tenures overseeing NBC’s “Today” show to dominance in morning ratings and profits.

Time Warner’s chief executive, Jeffrey L. Bewkes, and his deputy, Phil Kent, the head of Turner Broadcasting, were known to have sought candidates with the right combination of management skills, programming expertise and journalistic credibility to oversee CNN’s many channels and Web sites. There was a shortlist, and Mr. Zucker was on it from the beginning.

Walter Isaacson, who ran CNN from 2001 to 2003, preceding Mr. Walton, said Mr. Zucker was a smart choice because “CNN has great journalists, but what it has needed is an imaginative programmer who knows how to build good shows.”

Phil Griffin, the president of MSNBC, said that if anyone could “bring CNN back,” Mr. Zucker could. Referring to Roger Ailes, the Fox News chairman, Mr. Griffin said: “Ailes on one side, Zucker on the other: Game on.”

This year, Mr. Zucker joined with his longtime friend Katie Couric to produce “Katie,” the syndicated talk show that started in September. The series had its best ratings yet last week.

Mr. Zucker said he had not been actively looking for another job when the CNN position came open. “You can’t come from the background I come from — news, television, great brands — and not be unbelievably intrigued by this,” he said.

At CNN, Mr. Zucker will report to Mr. Kent. He will be based at CNN’s bureau in New York. Mr. Walton was based in Atlanta, where CNN has had its headquarters since its inception in 1980.

Mr. Zucker steered clear of any specific plans he might have for overhauling CNN’s programming. But while underscoring CNN’s commitment to presenting news without the partisan slant of its cable news competitors, Mr. Zucker said several times that he would be looking to make CNN’s programs “more vibrant and exciting” and that news consisted of more than just “politics and war.”

As for examples of what he might mean by redefining news, Mr. Zucker mentioned a coming weekend show on CNN hosted by the chef and world traveler Anthony Bourdain. He also cited the “nonfiction programming” being produced on other cable networks, like Discovery, as part of the competitive landscape that CNN has to be a part of.

“When I say nonfiction programming, I’m not talking about reality shows,” Mr. Zucker said. “I’m not talking about ‘Honey Boo Boo.’ But there is plenty of nonfiction programming that could fit very well under the CNN brand.”

He added, “We know that continuing to do exactly what we’ve been doing will leave us exactly where we’ve been. And that’s not good enough.”

Mr. Kent said that as a cable network, CNN had to find a way to build a core constituency of viewers who considered the network essential viewing.

Still, Mr. Zucker acknowledged that the lineup of CNN prime-time shows, which have greatly lagged their competitors on Fox News and MSNBC, would be a “top priority.” Mr. Kent said one of the continuing issues he expected the new president to address, because of Mr. Zucker’s history as a hands-on news producer, was the subpar execution of some of the network’s programs.

Mr. Kent also said Mr. Zucker’s expertise in morning television was a “wonderful byproduct” of his hiring. Both executives said CNN was likely to redesign the network’s morning program to make it more competitive with its cable rivals and the morning shows on the broadcast networks.

Mr. Zucker acknowledged the negative marks he had received for his handling of the entertainment operation at NBC when he was the chief executive there, saying, “there is no doubt I made mistakes” running NBC Entertainment. “And I own them.”

But both he and Mr. Kent stressed that in joining a full-time news business, Mr. Zucker would be returning to the area of his greatest success and expertise. “I’m excited by the possibilities,” Mr. Zucker said.

Article source: http://mediadecoder.blogs.nytimes.com/2012/11/29/cnn-makes-it-official-zucker-to-be-new-president/?partner=rss&emc=rss

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Europe Weighs a Tough Law on Online Privacy and User Data

January 24, 2012 by Leave a Comment

The proposed data protection regulation from the European Commission, a copy of which was obtained by The New York Times, could have significant consequences for all Internet companies that trade in personal data, whether it is pictures that people post on social networks or what they buy on retail sites or look for on a search engine.

The regulation would compel Web sites to tell consumers why their data is being collected and retain it for only as long as necessary. If data is stolen, sites would have to notify regulators within 24 hours. It also offers consumers the right to transport their data from one service to another — to deactivate a Facebook account, for example, and take one’s trove of pictures and posts and contacts to Google Plus.

The proposed law strikes at the heart of some of the knottiest questions governing digital life and commerce: who owns personal data, what happens to it once it is posted online, and what the proper balance is between guarding privacy and leveraging that data to aim commercial or political advertising at ordinary people.

“Companies must be transparent about what they are doing, clear about which data is being used for what,” the European Commission’s vice president for justice, Viviane Reding, said in a recent telephone interview. “I am absolutely persuaded the new law is necessary to have, on the one hand, better protection of the constitutional rights of our citizens and more flexibility for companies to utilize our Continent.”

Ms. Reding is scheduled to release the proposed regulation on Wednesday in Brussels. The European Parliament is expected to deliberate on the proposal in the coming months, and the law, if approved, would go into effect by 2014.

The regulation is not likely to directly affect American consumers. For American companies, its silver lining is that it offers one uniform law for all 27 countries in Europe. Currently each country, and sometimes, as in the case of Germany, each state, has separate laws about data protection.

Even so, many of the provisions are likely to be costly or cumbersome. And the proposed penalties could be as high as 2 percent of a company’s annual global revenue, according to a European diplomat who did not want to publicly discuss unreleased legislation.

“Individuals are getting more rights. The balance is tilting more to the individual versus the companies,” said Françoise Gilbert, a lawyer in Palo Alto, Calif., who represents technology companies doing business in Europe. “There is very little that’s good for the companies other than a reduction of administrative headaches.”

Perhaps for historical or cultural reasons, Europeans tend to be more invested in issues of data privacy than Americans. Certainly, the proposed regulation is evidence that European politicians consider it to be a more urgent legislative issue than members of the United States Congress. Privacy bills have languished on Capitol Hill. Those that have been proposed, by Senator John Kerry and others, have none of the strict protections included in the draft European regulations.

For the most part, American companies have pushed for a system of self-regulation and regard European-style regulations as a hindrance to innovation.

Ronald Zink, chief operating officer for European affairs at Microsoft, pointed to the potential difficulty of obtaining explicit consent. He gave the example of Microsoft’s Xbox Kinect system, which stores body measurements so it can visually recognize repeat players. He worried that the proposed law would require players to provide consent every time they played a game, even if the information never left the game console, requiring more time and effort on the player’s part. “We have designed the product to be private,” Mr. Zink said. “We put a lot of thought into how this controls our work in terms of privacy by design.”

Kevin J. O’Brien contributed reporting from Berlin.

Article source: http://feeds.nytimes.com/click.phdo?i=de96f21c4c8af4d28b9aebeb8d0b5a27

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With Impasse in Congress, 3 Million Could Lose Jobless Benefits

December 21, 2011 by Leave a Comment

Jobless benefits have been overshadowed by debate on a payroll tax cut, but have become a huge sticking point in negotiations on a bill that deals with both issues.

Republicans would continue aid for some of the unemployed, but would sharply reduce the maximum duration of benefits and impose strict new requirements on people seeking or receiving aid.

Democrats said these changes made no sense at a time when 45 percent of jobless workers had been unemployed for more than half a year and the average duration of unemployment — 41 weeks — was higher than at any time in 60 years.

Jon D. Grandstaff, 50, who lives in a suburb of Tulsa, Okla., said Tuesday that he had been watching the debate in Congress with trepidation, worried that his jobless benefits would be exhausted on Jan. 9.

“This mess in Congress is so upsetting,” Mr. Grandstaff said in an interview. “I don’t know who to blame — House, Senate, Republicans, Democrats. They are toying with people’s lives. I’m getting really scared and nervous.”

Mr. Grandstaff said he was making $43,000 a year when he was laid off in March from the collections department of a major cellphone company. Now he is working at a part-time job for $8 an hour and hoping the position will lead to full-time work.

Brenda G. Crosier, 52, of Northglenn, Colo., outside Denver, is also at risk of losing extended unemployment benefits. She said she applied for five to eight jobs a week but rarely received responses, and in a telephone interview Tuesday she had this question for Congress:

“Why are you leaving for Christmas vacation? If you worked for a company and you did not have your work done, you would not be walking out the door. You have no business leaving until your work is finished.”

Major provisions of the federal unemployment insurance program begin expiring in the first week of January, and people would begin to feel the effects over the next several months. By mid-February, the Labor Department estimates, 2.2 million workers would have lost jobless benefits, and by the end of March, 3.6 million will be affected.

People in states with the highest unemployment rates would be among the hardest hit.

The cornerstone of the program, regular unemployment insurance benefits, provides up to 26 weeks of assistance financed by the states. In states with high unemployment, jobless workers may be able to get up to 73 weeks of additional benefits, financed by the federal government, for a total of 99 weeks of aid. House Republicans would reduce the maximum to 59 weeks.

“This reflects a more normal level of benefits typically available after recessions,” said Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee.

Senator Orrin G. Hatch of Utah, the senior Republican on the Finance Committee, said: “I don’t see why you have to go more than 59 weeks. In fact, we need some incentives for people to get back to work. A lot of these people don’t want to work unless they get really high-paying jobs, and they’re not going to get them ever. So they just stay home and watch television. I don’t mean to malign people, but far too many are doing that.”

The Senate version of the payroll tax bill, passed with bipartisan support on Saturday, would continue paying jobless benefits under current law for two months, while lawmakers tried to figure out a longer-term solution.

House Republicans said they wanted a full-year extension, with additional requirements to prevent abuse of the program. They would require most recipients of jobless benefits to search for work and to pursue G.E.D. certificates if they had not completed high school.

Representative Jim McDermott, Democrat of Washington, said the Republican proposals amounted to “the most drastic attack on the unemployment system” in 75 years.

House Republicans would also allow states to require drug testing as a condition of getting benefits. Democrats said such tests were an insult to the unemployed, because they implied that many were lazy drug abusers.

“I don’t see anyone in the Republican majority demanding drug testing for folks who receive oil and gas subsidies,” said Representative James E. Clyburn, Democrat of South Carolina.

But Representative Jack Kingston, Republican of Georgia, said, “People who are unemployed should be looking for a job and should not become voluntarily ineligible by taking illegal drugs.”

Democrats say the program has reduced poverty and helped stabilize the economy, reducing the depth of the last recession. Republicans say the benefits have led some people to reduce their efforts to find new jobs.

Representative Dennis J. Kucinich, Democrat of Ohio, said: “The problem is not a lack of effort for those seeking a job. The problem is a lack of jobs.”

House Republicans said they had borrowed ideas from the jobs bill that President Obama sent Congress in September. The nonpartisan Congressional Research Service said the president’s proposal would probably reduce the maximum length of unemployment benefits to 79 weeks, from the current 99, in many states.

Republicans would allow states to get waivers from many federal standards and requirements, including one stipulating that money from state unemployment taxes must be spent on jobless benefits.

Democrats see the waivers as a threat to the fabric of the unemployment insurance system. But Republicans said that, instead of just writing benefit checks, federal and state officials must do more to help people get back to work.

“In this uncertain economy, using unemployment dollars to subsidize the training of a new employee to re-enter the work force is just good public policy,” said Representative James B. Renacci, Republican of Ohio.

Article source: http://feeds.nytimes.com/click.phdo?i=3535547ea254cc90cb6a0fd9b4b89171

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DealBook: Cigna to Buy HealthSpring for $3.8 Billion

October 25, 2011 by Leave a Comment

Shares of HealthSpring leaped 33.7 percent following the announcement of the deal with Cigna.

7:40 p.m. | Updated

Cigna has become the latest company to bet on the aging of America, agreeing on Monday to buy HealthSpring for $3.8 billion in cash to expand its Medicare and senior care business.

With HealthSpring, Cigna will add 340,000 Medicare Advantage customers in 11 states and Washington, as well as a stand-alone Medicare prescription division with more than 800,000 customers.

“It’s a fast-growing space, and the demographics are there,” David M. Cordani, Cigna’s chief executive, said in a telephone interview on Monday.

Advantage plans currently serve about a quarter of some 46 million Medicare beneficiaries. UnitedHealthcare and Humana are among the biggest companies in this business.

Cigna’s acquisition could prompt takeover interest for other smaller Medicare providers, including Universal American and WellCare, wrote Carl McDonald, an analyst with Citigroup, in a research note on Monday.

Shares of those providers rose sharply on Monday. WellCare closed up nearly 9 percent, while Universal American closed up nearly 4 percent.

The deal is the largest that Cigna has ever struck, according to Capital IQ data, and it is paying a premium. Under the terms of the deal, it will pay $55 a share, 37 percent above HealthSpring’s closing price on Friday. Mr. McDonald estimated that Cigna was paying about $10,000 per member of HealthSpring’s Medicare Advantage customers, which is roughly double the valuations of other Medicare-based deals in recent years.

Mr. Cardoni said Cigna had long identified HealthSpring’s specialty — providing a private insurance plan that combines traditional Medicare coverage with additional services — as an important area for growth. Cigna negotiated with HealthSpring for several months before striking Monday’s deal.

HealthSpring has reported steady profit growth since going public in 2006, as it has added customers in a rapidly growing business. Last year, it reported $194.2 million in net income on $3.1 billion in revenue.

HealthSpring’s existing management team, led by its chairman and chief executive, Herbert A. Fritch, will continue to lead the business after the deal closes. Mr. Fritch owns a 3.3 percent stake in the company, according to Thomson Reuters data.

“We’ll be integrating aspects of our company into their model,” Mr. Cardoni said. He added that Mr. Fritch and his team would benefit from access to Cigna’s existing portfolio of specialty services.

Based in Nashville, HealthSpring was built up by G.T.C.R. Golder Rauner, a private equity firm based in Chicago, which in 2004 took control of a predecessor, NewQuest Health Solutions, through a recapitalization. G.T.C.R. took HealthSpring public in February 2006 in a public offering priced at $19.50 a share.

Joseph P. Nolan, the head of G.T.C.R.’s health care services team, still holds a seat on HealthSpring’s board.

Cigna said it expected the deal, which is estimated to close in the first half of next year, would begin adding to its earnings per share in the first full year after closing. Separately on Monday, Cigna raised its earnings guidance for this year by 24 cents, as it took higher-than-expected revenue in the third quarter.

Shareholders in both companies appeared to like the deal. HealthSpring’s shares jumped 33.6 percent to $53.66. Meanwhile, shares in Cigna rose 0.7 percent to $45.03, in the latest example of investors rewarding companies that are unafraid to buy additional growth if the price is reasonable.

Article source: http://feeds.nytimes.com/click.phdo?i=283e99a28def1b885466c702996c576f

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Ousted Olympus Chief Accuses the Company of Fraud

October 17, 2011 by Leave a Comment

The executive, Michael Woodford, was in London on Monday where he delivered a dossier of what he called “condemning” evidence on Olympus to Britain’s Serious Fraud Office.

Mr. Woodford, 51, said he confronted the Olympus chairman, Tsuyoshi Kikukawa, last week with a report he had commissioned from the accounting firm PriceWaterhouseCoopers, which he said raised questions about almost $700 million in payments that Olympus had made to financial advisers over an acquisition in 2008.

The PriceWaterhouseCoopers report says that improper conduct could not be ruled out. Mr. Woodford said that he had demanded Mr. Kikukawa’s resignation, only to have the chairman convene a board meeting on Friday in which Mr. Woodford, the only non-Japanese executive among the 15 directors, was fired.

“I’d be delighted to return and put in a new management structure,” Mr. Woodford said Monday during a telephone interview from London. “But with or without me, the board should all go.”

Olympus denied any wrongdoing and declined to make Mr. Kikukawa available for an interview.

Mr. Woodford, a 30-year Olympus veteran, had been president since April and added the chief executive’s post in September.

He said he had also made enquiries into Olympus’s acquisition in 2008 of three small Japanese companies unrelated to Olympus’s core businesses for almost $600 million. Those investments were written down to only a quarter of their value within the same fiscal year, he said.

In all, the transactions he is questioning resulted in the destruction of $1.3 billion in shareholder value at Olympus, a maker of cameras and medical equipment, Mr. Woodford said. The transactions, he said, occurred under Mr. Kikukawa, who preceded him as chief executive before becoming chairman.

“Olympus needs a complete and utter forensic accounting,” Mr. Woodford said. “To be that incompetent is difficult to imagine, which suggests that there is something more sinister going on.”

Yoshiaki Yamada, a spokesman in Tokyo for Olympus, maintained Monday that Mr. Woodford had been stripped of his title because his leadership style had created “a big gap” with the rest of management, which was “inhibiting decision-making.”

“All of our mergers and acquisitions have been carried out with proper accounting, and through appropriate procedures and processes,” Mr. Yamada said.

Mr. Woodford’s allegations were first reported by the Financial Times.

Since Mr. Woodford’s dismissal on Friday, Olympus has lost more than $3 billion in market capitalization. The stock sank 22 percent in Tokyo on Monday after losing 18 percent on Friday, when the company fired Mr. Woodford.

Mr. Woodford said the transactions first came to his attention in late July, when an article in the Japanese finance magazine Facta raised questions about Olympus’s acquisition of the three Japanese companies. But when Mr. Woodford asked Mr. Kikukawa about the article over lunch in early August, he said the chairman told him it was “a domestic situation” that the Briton need not worry about.

Mr. Woodford said he sent a copy of the PriceWaterhouseCoopers report to Mr. Kikukawa last week, along with a letter in which Mr. Woodford called the transactions “shameful” and called for the resignations of the chairman and two other executives. He said he also sent the report to all members of the Olympus board and suggested to Mr. Kikukawa that they meet Friday to discuss “where we go from here.”

Article source: http://www.nytimes.com/2011/10/18/business/global/ousted-olympus-chief-accuses-the-company-of-fraud.html?partner=rss&emc=rss

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Media Decoder Blog: Netflix Abandons Plan to Rent DVDs on Qwikster

October 10, 2011 by Leave a Comment

10:22 a.m. | Updated Abandoning a break-up plan it announced last month, Netflix said Monday morning that it had decided to keep its DVD-by-mail and online streaming services together under one name and one Web site.

The company admitted that it had moved too fast when it tried to spin-off the old-fashioned DVD service into a new company called Qwikster.

“We underestimated the appeal of the single Web site and a single service,” Steve Swasey, a Netflix spokesman, said in a telephone interview. He quickly added: “We greatly underestimated it.”

Mr. Swasey said that the Netflix chief executive Reed Hastings declined an interview request. But in a statement, Mr. Hastings said, “Consumers value the simplicity Netflix has always offered and we respect that. There is a difference between moving quickly — which Netflix has done very well for years — and moving too fast, which is what we did in this case.”

Mr. Swasey declined to comment on any involvement by the Netflix board in the decision to keep the two services together. Initial reaction to the Netflix announcement was largely positive, and the company’s stock rose about 6 percent in early trading.

In an analysts note, Ingrid Chung of Goldman Sachs credited Netflix management for “listening to its customers (finally) and working to fix its relationship with customers.”

Richard Greenfield, a media analyst for BTIG Capital, said in an e-mail message that Monday’s announcement was the “necessary reversal of a bad decision.”

“The key remaining question,” he said, “is why did they make the Qwikster decision in the first place?”

Netflix said it never actually separated the services or started Qwikster. But the Sept. 18 announcement that it intended to do so stoked anger among Netflix customers, some of whom were already incensed by a price hike to $16 from $10 for those who receive both DVDs and streaming. (That increase will remain in place.)

In a blog post that day about the plan, Mr. Hastings wrote, “Companies rarely die from moving too fast, and they frequently die from moving too slowly.” His implication was that Netflix had to act aggressively to expand its fast-growing streaming service by severing its older, slower DVD-by-mail arm.

In a sentence that now seems like a bit of foreshadowing, Mr. Hastings also wrote, “It is possible we are moving too fast – it is hard to say.”

Netflix said that day that the separation would take effect in a few weeks. But tens of thousands spoke out against the plan on Netflix’s Web site and others, and Netflix stock slid sharply.

Three days after the announcement, Mr. Hastings wrote in a Facebook status update, “In Wyoming with 10 investors at a ranch/retreat. I think I might need a food taster. I can hardly blame them.”

The planned break-up was rooted in Mr. Hastings’ and Netflix’s belief that DVDs and online streams have different cost structures and different consumer demographics.

In July, to address the structural underpinnings of the business, Netflix announced that it would start charging $8 a month for both its streaming service and its DVD service, a total of $16 a month for the combination.

Previously, DVDs were a $2 add-on to the $8 streaming service. Of course, subscribers who only wanted one service or the other — most new subscribers only want the online streams — saw no price hike, but that fact was drowned out by the outcry.

Netflix expected some of its 25 million subscribers to cancel in the wake of the price change, but the cancellation rate exceeded expectations. The company said in mid-September that it expected to report a quarterly decline of about one million in the third quarter, which ended on Sept. 30.

But that guidance was given before the break-up was announced; Mr. Swasey said Netflix would not comment on whether the quarterly losses would exceed the already-lowered expectations. The company will report earnings and subscriber figures on Oct. 24.

On Sunday night, Mr. Swasey sought to reiterate what Mr. Hastings tried to say last month when he announced Qwikster: that Netflix had failed to communicate effectively about the price changes. “We had to look at the reality of what it cost” to mail multiple DVDs to households each month, Mr. Swasey said, noting that the round-trip postage alone for one DVD cost almost $1.

Under the plan announced on Monday, the price change will remain in effect, but the two services will not be untethered. That means that subscribers who want both online streams and DVDs won’t have to manage two accounts and pay two bills each month, after all.

Netflix tried to be crystal-clear about it, issuing a press release that was titled “DVDs Will Be Staying at Netflix.com” and sending e-mails to subscribers about the news.

“Netflix said in a Sept. 18 blog post that its DVD by mail service would operate at Qwikster.com,” the press release read. “Instead, U.S. members will continue to use one website, one account and one password for their movie and TV watching enjoyment under the Netflix brand.”

A plan for Qwikster to rent video games may or may not move forward; Mr. Swasey said it was “to be determined.”

Netflix, meanwhile, still has to concentrate on its online streaming service, which is widely considered to be its core business.

Next February, it is expected to lose the right to stream films from Walt Disney Studios and Sony Pictures Entertainment as a result of a failed renegotiation with the premium cable channel Starz. But it announced a deal last month with DreamWorks Animation to stream that studio’s films starting in 2013. Last week, it announced a deal with AMC Networks to stream old episodes of TV shows like “The Walking Dead.”

Netflix also remains interested in paying for the production of new TV shows. Earlier this year it ordered its first original drama, “House of Cards,” which is expected to have its premiere in late 2012. Now it is in talks to distribute new episodes of two cancelled TV series, “Arrested Development,” formerly of the Fox network, and “Reno 911,” formerly of Comedy Central. The past seasons of both shows can be streamed via Netflix — and can be rented on DVD, too.

Article source: http://feeds.nytimes.com/click.phdo?i=3cc9fbf0dd8f01d27335136151e445a2

Filed Under: Business News Tagged With: , ,

DealBook: Clear Channel Names Pittman as Its New Chief

October 3, 2011 by Leave a Comment

Shayla Harris/The New York Times

When Robert W. Pittman first joined Clear Channel Communications last November as the chairman of its media and entertainment business, he told the company that he was not interested in becoming chief executive.

Eleven months later, he has changed his mind.

Clear Channel announced on Sunday that it had named Mr. Pittman its new chief executive and executive chairman, ending a search to find a replacement for Mark P. Mays, a scion of the company’s founding family.

“It’s very rare that you get such a test drive,” Mr. Pittman said in a telephone interview on Saturday. “This is one of those companies where the closer you looked, the better it seemed.”

It is the latest leadership post for Mr. Pittman, who helped create MTV and later became a senior executive at AOL.

But leading Clear Channel, which is both the nation’s biggest radio station operator and an outdoor advertising giant, at a time when the company is under pressure from digital rivals and an uncertain economic outlook will be a new test for Mr. Pittman.

“The biggest challenge anyone faces is the macroeconomic picture,” Mr. Pittman said. “Anyone who does any business with the consumer and sells advertising worries about that.”

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Clear Channel, which was taken over three years ago by the private equity firms Bain Capital and THL Partners, is also laboring under $19.9 billion in long-term debt, giving it little room for error.

The company has shown some improvement of late. Its second-quarter revenue rose 7.6 percent over the same time last year, to $1.6 billion. And its net loss during the same time has shrunk 38 percent, to $53.2 million.

Radio revenue for that time period rose about 4 percent, to $780.9 million.

“He has already generated a renewed sense of confidence and direction not only at Clear Channel, but across the entire radio and media landscape,” Scott M. Sperling, a co-president of THL, said in a statement.

Mr. Pittman, 57, first joined last year after investing $5 million of his own money in Clear Channel. He became a senior adviser to the company’s sprawling radio business, with a special interest in overseeing the expansion of its digital strategy.

Chief among his initiatives was building out iHeartRadio, a Facebook-linked service that made Clear Channel’s 850 radio stations available both online and in smartphones. With iHeartRadio, the company sought to push back against the rise of Pandora Media and other Internet radio services.

Despite competition from Internet and satellite, terrestrial broadcast radio remains a strong draw for listeners and commuters. Last week Arbitron, the industry’s standard ratings service, said that 241.4 million people 12 or older listened to the radio each week in the United States, an increase of 1.7 million from a year ago.

Last month, Clear Channel presented its first iHeartRadio Music Festival in Las Vegas, a two-day concert with Lady Gaga, Coldplay, the Black Eyed Peas, Jay-Z and many others, to publicize its app and demonstrate to advertisers the strength of its reach.

Mr. Pittman said that iHeartRadio would become the central consumer brand for Clear Channel’s stations. “That has been a real win for us,” he said.

Richard Greenfield, an analyst at BTIG Research, added that Clear Channel had been surprisingly successful in competing against the latest generation of Internet start-ups.

“IHeartRadio illustrates how Pandora is more of a feature versus a stand-alone business, with iHeartRadio being able to combine the appeal of terrestrial radio with the functionality of customizable Internet radio,” he wrote in an e-mail.

Clear Channel has also formed partnerships with other companies, including a forthcoming music service on Microsoft’s Xbox Live and streaming the music for Zynga’s collaboration with Lady Gaga.

It has also made some small acquisitions, including Thumbplay, a digital music subscription service that was folded into iHeartRadio. Mr. Pittman said that Clear Channel might strike more deals in the future, but that he would focus in large part on organic growth.

Mr. Pittman will also oversee Clear Channel’s outdoor advertising business, which owns or operates some 190,000 displays in North America. It also has operations in nearly 30 countries in Asia, Australia and Europe. That business has fared well, reporting a 12 percent rise in second-quarter revenue from last year, to $789.2 million.

Mr. Pittman, who entered the media business as a 15-year-old radio announcer in Brookhaven, Miss., helped create MTV in 1981 and later worked at Time Warner and Century 21 before joining AOL in 1996. He became the chief operating officer of the newly merged AOL Time Warner in 2001, but left the next year.

Since then, he has become a venture capitalist, co-founding the Pilot Group in 2002. The firm was an early investor in Zynga, the online game titan, and it sold DailyCandy to Comcast three years ago for $125 million.

Article source: http://feeds.nytimes.com/click.phdo?i=4a585356a34d0b398c13fe80e34a2c75

Filed Under: Business News Tagged With: , ,

Russia Is Better Prepared for a Possible Global Downturn

August 18, 2011 by Leave a Comment

This time is different.

While the Russian economy is still vulnerable to the vicissitudes of global capital and commodity moves, it is in a far better position to weather the effects of a fresh recession in Europe or the United States.

Russia is not immune, of course. The European sovereign debt crisis, exacerbated by Standard Poor’s downgrade of the debt of the United States, caused a sell-off in the Russian stock market, but it hardly went into its typical free fall. The Micex index fell 17 percent from Aug. 1 until Aug. 10.

While drastic, it was about the same as the peak-to-trough decline of the Standard Poor’s 500-stock index over the last month, and Russian stocks have recovered somewhat over the last few trading sessions.

The ruble declined 7.5 percent against the dollar in 11 trading days, but then rebounded Monday, the most it has climbed in any single day in more than a year and a half.

One reason for the new resilience is that Russian private sector debt is only a fraction of what it was in 2008, after the oligarchs had quietly bulked up on Western loans collateralized against their companies’ shares.

This buildup of debt set off a cascade of margin-call selling in Russia, accelerating the collapse of the market. These debt levels are no longer widespread here.

Also, Russian banks have gone from being net debtors to net creditors.

“The situation with debt has changed dramatically,” Vladimir Tikhomirov, chief economist at Otkritie, one of Russia’s largest financial firms, said in a telephone interview.

In the fourth quarter of 2008, $80 billion in corporate and bank debt came due to foreign lenders, he said. Since then companies have paid down and extended the maturities of debt. In the fourth quarter of this year, only $35 billion will come due, giving companies a good deal more leeway to handle a downturn.

One sign of this change came from Oleg V. Deripaska, the metals and automobile tycoon whose hugely leveraged business came to symbolize the oligarchs’ debt binge and its aftermath in the recession. He announced without fanfare on Tuesday that he had restructured a $4.5 billion loan from the Russian bank Sberbank, extending its repayment period.

To be sure, Russia is hardly a haven, and never will be, as long as it continues its reliance on volatile commodity exports.

In the 20 years since the breakup of the Soviet Union, the Russian stock market has been either in the top five performing markets in the world or the bottom five in every year except one, according to estimates by Renaissance, an investment bank in Moscow.

“Russia has always been a big cyclical market,” Kingsmill Bond, the chief Russia strategist for Citigroup, said in a telephone interview from London. And despite its stronger starting position now, it is still vulnerable to a drop in the price of oil.

“If the situation in Europe worsens, and we get major recessions materializing, that would impact the oil price, and Russia would be damaged,” he said.

Mr. Bond has estimated that for each $10 drop in the average annual price of a barrel of oil, Russia loses 1 percent of its gross domestic product.

Russia can ill afford a sharp decline in the price of oil because, though the oligarchs and their businesses are carrying less debt, government spending has increased well beyond current tax receipts from oil export tariffs and mineral extraction fees.

In 2008, the Russian budget was intended to run a surplus at oil prices above $60 a barrel. But now, the Russian government estimates it will need to collect taxes on oil at prices above $120 a barrel to balance the budget. As they are already below that level, the finance ministry is borrowing from domestic and foreign investors.

Article source: http://www.nytimes.com/2011/08/18/business/global/this-time-russia-is-prepared-for-a-global-downturn.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: Heated Frenzy for Tech I.P.O.’s Fails to Ignite Freescale

May 27, 2011 by Leave a Comment

Richard Beyer, right, of Freescale Semiconductor, watched trading at the New York Stock Exchange Thursday.Richard Drew/Associated PressRichard Beyer, right, of Freescale Semiconductor watched trading at the New York Stock Exchange on Thursday.

For the last several weeks, the market for initial public offerings looked red hot, thanks almost entirely to the eye-popping debut of the professional social network LinkedIn.

Shares in the Internet darling more than doubled in their first day of trading and have stayed in the stratosphere even after an 8 percent decline on Thursday.

But it takes more than a connection to technology to cook up a sizzling I.P.O., as Freescale Semiconductor learned this week.

Shares in the chip maker closed on Thursday at $18.33, up 1.8 percent from their offering price, after having risen even higher earlier in the day. But the company’s debut price of $18, set on Wednesday night, was at the bottom of an already reduced price range. It earned Freescale $783 million in proceeds, instead of the original $1 billion target.

Richard M. Beyer, Freescale’s chief executive, said in a telephone interview on Thursday morning that he was pleased with the stock’s performance, even at the reduced initial price.

“We seem to have priced it at a level that the investment community thinks is good,” he said.

Freescale was not even the worst-performing stock debut this week. Spirit Airlines, a low-cost carrier, saw its shares tumble 3.8 percent to $11.55 in its first day of trading on Thursday even after having cut its offering’s price range. And shares in the American International Group remain below the $29 price set for the long-awaited sale of stock owned by the federal government.

Mr. Beyer cited the choppier market for offerings that were not related to social media as the primary driver behind Freescale’s price range.

The experience of Freescale shows how the recent frothiness in the initial offering market has been confined in part to social-media companies like LinkedIn and Yandex, a Russian search engine whose $1.3 billion offering was the largest by an Internet company in the United States since Google’s debut in 2004.

“We did consider changing the name of our company to ‘Freescale Social Networking,’ “ Mr. Beyer joked.

Seriously, he added, “We’re O.K. with the fact that some of those social networking company I.P.O.’s have been doing much better, but those investments weren’t made with macroeconomics in mind.”

Freescale is only the latest company owned by private equity firms to seek a return to the public markets. Earlier this year, Nielsen, the ratings company; the hospital operator HCA; and the oil-and-gas pipeline company Kinder Morgan all held well-received offerings. While Nielsen’s stock remains well above the company’s offering price, shares in HCA and Kinder Morgan have since fallen below their debuts.

All told, initial offerings by buyout-backed companies total $13.9 billion so far this year, according to data from Thomson Reuters. They account for 63 percent of all I.P.O.’s in the United States.

None of Freescale’s private equity owners, including the Blackstone Group, the Carlyle Group, TPG Capital and Permira, sold shares in the offering, unlike other private equity-backed I.P.O.’s this year. Those owners are likely to wait until Freescale’s stock price rises before selling their holdings, hoping to eke out even a small profit.

Freescale’s offering is notable given the company’s reputation as one of the more troubled takeovers of the private-equity boom. It was acquired in 2006 by several buyout firms for $17.6 billion, or $40 a share.

That acquisition left the company with an enormous debt, which now stands at $7.6 billion. All of the proceeds of the initial offering will go to reducing that burden.

Freescale was also battered by the recession, which reduced demand for the products containing its chips like cars, networking equipment and consumer products.

The company reported a loss of more than $1 billion last year, though its revenue began to rise again after a slump in 2009.

Mr. Beyer said that one of Freescale’s biggest priorities was cutting its debt, since the company saves about $8 million in interest expense for every $100 million in obligations it pays off. After the I.P.O., Freescale’s interest expense will shrink to a little more than $500 million a year.

He added that a resurgence in two of Freescale’s core markets, autos and networking, was expected to continue this year, with more than 10 percent growth in the former and about 6 percent in the latter.

Article source: http://feeds.nytimes.com/click.phdo?i=85fd472bfc0253073d10103e2254b126

Filed Under: Business News Tagged With: , ,
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