October172011

Murdoch’s latest scandal


Wall Street Journal Europe Publisher Andrew Langhoff resigned yesterday, but why? A hard-to-comprehend story in today’s Wall Street Journal alleges that Langhoff transgressed by pressuring Wall Street Journal Europe reporters into covering an advertiser, consulting firm ELP, and by contractually promising that WSJE reporters would cover ELP in “special report” sections. (The tainted stories in question now carry a disclaimer.) There’s a third dimension to the scandal, which the Wall Street Journal article soft-pedals. It turns out that bulk-sold, discounted copies of WSJE were sold to the same advertiser, ELP, to boost circulation. I defy any reader to cull the salient passages and find any evidence or hint of circulatory wrong-doing by the publication. For that sort of coverage, see today’s piece in the Guardian by Nick Davies, “Wall Street Journal circulation scam claims senior Murdoch executive.” Davies exploits the circulation angle, alleging that the WSJE publisher “set up a complex scheme to channel money to ELP to pay for the papers it had agreed to buy—effectively buying the papers with the Journal‘s own cash.” The Guardian also calls Langhoff’s resignation a “damage limitation exercise” prompted by its inquiries into the scandal. The Wall Street Journal calls the resignation a result of an “internal probe” into the special-report articles and a circulation agreement with ELP. Will the scandal go bigger or will it burn itself out in a couple of days? Rupert Murdoch’s News Corp., which owns the Wall Street Journal Europe, has already copped to the journalistic sins of having a publisher promise an advertiser coverage and of leaning on reporters to produce it. This behavior is considered very, very, unclean in the world of publishing when conducted covertly. But when the advertiser-pleasing copy is produced overtly in special sections, the worst publishers are accused of is opportunism. Today, most quality newspapers assemble special sections themed to energy, transportation, education, philanthropy, investing, health, et al. These sections, which contain soft or backgrounderish copy, are propped up by lucrative ads from the major industries doing business in the theme area. So great is the publisher’s appetite for special sections that if the New York Times could persuade Eukanuba, Purina, and Hartz Ultraguard Plus Rid Worm tablets to take out gigantic ads, it would gladly print a “Your Dog’s Retirement” section. Twice a year. The Financial Times, for example, hammers together special sections with laughable regularity. Yesterday’s FT special section, “Canadian Energy,” contains big-ass ads from Chevron, Shell, and the American Petroleum Institute. Are you dying to read “Oil shifts country’s centre of gravity”? Does “Technology opens far-flung possibilities” float your boat? Then grab a copy before they all disappear. The articles in most special sections aren’t embarrassing or unethical as much as they’re useless. You’ll rarely find a critical article in a special section, so why bother reading? The intended audience for special sections isn’t readers, it’s advertisers. As a rule, special sections are two steps up from supplements titled “Advertising Supplement,” which are written by outside writers, and two steps down from a newspaper’s regular coverage. There are good special sections out there—I’m thinking of the ones that run in the Economist—but most of them suck. As for the Wall Street Journal Europe‘s circulation problems, that scandal could grow, too, especially if Murdoch’s minions don’t force others to walk the plank. (The best way to stanch a scandal is to feed it human flesh.) But again, the standard newspaper circulation scandal isn’t what’s illegal, it’s what’s legal, to cite Michael Kinsley. For decades, publishers and advertisers have used their captive, the Audit Bureau of Circulation, to expand the definition of what constitutes paid circulation. The definition has grown so broad that it wouldn’t surprise me if it started including monarch butterflies and fallen autumn leaves in its official counts of newspaper circulation. For more about the ABC and how the organization’s blind-eye generosity contributed to the last decade’s circ scandals at Newsday, the Dallas Morning News, Hoy, and the Chicago Sun-Times, see my 2004 piece from Slate. Still, even by the low standards of the industry, the Wall Street Journal Europe circ shenanigans seem pretty wild. According to the Guardian, the Wall Street Journal Europe had a circulation of 75,000 in 2010 of which 31,000 of which were sold at a steep discount for distribution to students, who “may or may not have read them.” What’s the bigger scandal? That the WSJE had a pitiful circulation of 75,000 in 2010? Or that 41 percent of that circulation was ginned up in an arrangement that the Audit Bureau of Circulation deemed “legitimate,” as Davies puts it? I think the former. How will Murdoch get out of this one? The last time one of his newspapers got him into ethical trouble, he had it exterminated. But killing News of the World didn’t stop the bleeding. For such an ethically compromised businessman, this has got to be a sideshow. ****** Every column I write is an unspecial section. Send advertisements to Shafer.Reuters@gmail.com.  Audit my Twitter feed. (This RSS feed rings every time a new Shafer column goes live. This hand-built one rings every time a correction is filed.) PHOTO: News Corp Chief Executive and Chairman Rupert Murdoch arrives, sitting next to a copy of the Wall Street Journal, to attend a parliamentary committee hearing at Portcullis House in London July 19, 2011.

Murdoch’s latest scandal 

October152011

UPDATE 4-Thousands protest banks, corporate greed in US marches


By Edith Honan and Edward McAllisterNEW YORK, Oct 15 (Reuters) - Thousands of anti-Wall Street protesters rallied in New York’s Times Square on Saturday, buoyed by a global day of demonstrations in support of their monthlong campaign against corporate greed.Inspired by the Occupy Wall Street movement, protests on Saturday started in Asia and rippled through Europe back to the United States and Canada. Protesters fed up with economic inequality took to the streets in cities from Washington, Boston and Chicago to Los Angeles, Miami and Toronto.After weeks of intense media coverage, the size of the U.S. protests on Saturday have been smaller than G20 meetings or political conventions yielded in recent years. Such events often draw tens of thousands of demonstrators.In New York, where the movement began when protesters set up camp in a Lower Manhattan park on Sept. 17, organizers said the protest grew to at least 5,000 people as they marched to Times Square from their makeshift outdoor headquarters.”These protests are already making a difference,” said Jordan Smith, 25, a former substance abuse counselor from San Francisco, who joined the New York protest. “The dialogue is now happening all over the world.”The protesters chanted, “We got sold out, banks got bailed out” and “All day, all week, occupy Wall Street.” They arrived in Times Square at a time when the area is already crowded with tourists and Broadway theatergoers.”This is disgusting” said Anatoly Lapushner, who was shopping with his family at Toys R Us in Times Square. “Why aren’t they marching on Washington and the politicians? Instead they go after the economic lifeblood of the city.”PARTY MOOD IN NEW YORKAmerican protesters are angry that U.S. banks are enjoying booming profits after getting bailouts in 2008, while many people are struggling in a difficult economy with more than 9 percent unemployment and little help from Washington.Some were disappointed the New York crowd was not larger.”People don’t want to get involved. They’d rather watch on TV,” said Troy Simmons, 47, who joined demonstrators as he left work. “The protesters could have done better today … people from the whole region should be here and it didn’t happen.”The Times Square mood was akin to New Year’s Eve, when the famed “ball drop” occurs. In a festive mood, protesters were joined by throngs of tourists snapping pictures, together counting back from 10 and shouting, “Happy New Year.”Police said three people were arrested in Times Square after pushing down police barriers and five men were arrested earlier for wearing masks. Police also arrested 24 people at a Citibank branch in Manhattan, mostly for trespassing.Citibank was not immediately available for comment.At about 8 p.m., police arrested 42 people for blocking the sidewalk. Protesters complained they had no place to go with a wall of police in riot gear in front of them and thousands of demonstrators behind them leaving Times Square.Five thousand people marched through the streets of Los Angeles and gathered peacefully outside City Hall.The Occupy Wall Street movement has been gathering steam over the past month, culminating with Saturday’s action. The protests worldwide were mostly peaceful apart from Rome, where the demonstration sparked riots.But it was unclear if the movement, which has been driven using social media, would sustain momentum beyond Saturday. Critics have accused the group of not having clear goals.In Toronto, a couple of thousand people gathered peacefully and started to set up a camp in one of the city’s parks. Protesters in Washington marched through the streets.”I am going to start my life as an adult in debt and that’s not fair,” student Nathaniel Brown told Reuters Television. “Millions of teenagers across the country are going to start their futures in debt, while all of these corporations are getting money fed all the time and none of us can get any.”

UPDATE 4Thousands protest banks corporate greed in US marches 

October122011

EURO GOVT-Bunds fall on poor auction, Barroso bank recap plan eyed


* Equities recover pending European Commission bank recap plans* Italian, Spanish debt yields rise, traders say ECB absent from marketBy Emelia Sithole-MatariseLONDON, Oct 12 (Reuters) - German Bund futures hit two-month lows on Wednesday after a poor 30-year auction by the euro zone benchmark issuer and as an equities rally pending a European Commmission bank recapitalisation plan cut bids for safe-haven government debt.The German sale of 1.625 billion euros of 30-year bonds drew less in bids than the amount on offer, with demand below the average at long-term auctions this year as the low yield and pickup in risk appetite made investors reluctant to hold ultra-long dated Bunds.Data showing euro zone industrial production was much stronger than expected in August, indicating the economic slowdown in the third quarter might be smaller than feared, added to the bearish mometum in Bunds.German 10-year yields looked set to extend their rise in coming sessions to 2.20 percent — a level last reached nearly six weeks ago — though traders and strategists said the scope for another significant sell-off looked limited in the absence of concrete plans on the debt crisis. The yield was last up 7 basis points on the day at 2.16 percent.”The Bund auction was weak so yields are going higher and the market is expecting some comments from (Commission President Jose Manuel) Barroso in the next couple of hours. Equities are rallying partly on expectations of solutions to the crisis and problems in Europe,” a trader said.Barroso said he would propose a plan to help European banks which are facing severe funding pressures due to market worries about their exposure to debt issued by Greece and other peripheral euro zone countries.That will offer the latest sign of what direction European leaders may be taking after Germany and France promised to come up with a comprehensive solution to the crisis.The Bund future was last 74 ticks down at 133.81, having fallen as low as 133.69 earlier, around levels plumbed on August 17. Signals from technical charts were mixed for Bunds, according to RBS analysts.”A closed gap from Sept. 2 and together with a triple top pattern suggest further downside potential to the targets at 132.78 and 131.33/00, while short-term momentum indicate a pause or even a bounce in the trend,” they said in a note.SLOVAK GLITCHBunds reversed gains made earlier as European shares rallied on growing perceptions that the Slovak parliament’s rejection of a plan to give new powers to the euro zone’s rescue fund for indebted states was a temporary glitch.The Slovak parliament may hold a new vote as soon as Thursday to approve the fund but the rejection highlighted the barriers leaders face in finding a comprehensive solution to the euro zone’s debt crisis.Highlighting the nervousness still plaguing the market, Italian and Spanish bond yields rose, with traders saying they had so far seen no sign of European Central Bank buying in the secondary market. Italian 10-year bond yields were up 8 bps at 5.71 percent while equivalent Spanish Bonos were up 5 bps at 5.078 percent .”The potential for a further signficant sell-off (in Bunds) is very limited at least in coming days as the next step is what decision will be taken ahead of the G20 on the bank recapitalisation,” BNP Paribas strategists Patrick Jacq.”If the coming decisions are still constructive for the euro zone and are reinforcing prospects of strong support to Greece and other countries then the sell-off will probably extend but with 10-year yields having backed up 50 bps that’s already quite significant.”The 30-year Bund yield was up 9 bps at 2.919 percent , steepening the 10/30-year yield curve by 4 bps to 76 bps as the ultra-long end underperformed after the auction.”What you see right now is some sort of repricing in German yields,” said Norbert Aul, a strategist at RBC Capital Markets.”We are coming from an exceptionally low level and now with the talk of bank recapitalisation and the burden-sharing within the EMU, you also see that in terms of higher yields, but it doesn’t mean that the appetite for German paper is abating.”

EURO GOVTBunds fall on poor auction Barroso bank recap plan eyed 

6AM

BASIS POINT-IFC Development refinancing cut 71% to HK$5 bln


When it first sounded the market in July, the borrower, owned by blue chips Sun Hung Kai Properties Ltd , Henderson Land Development Co Ltd and Hong Kong & China Gas Co Ltd , was considering a HK$17 billion facility to refinance a maturing deal of roughly the same size. But in early August the company opted to cut the size to HK$10 billion in a bid to ensure successful syndication.IFC Development is now inviting relationship banks to join as underwriters at an all-in of between 140 basis points and 150 basis points via a margin of 135 basis points over Hibor with commitments of HK$500 million to HK$1 billion. Tenor of the unsecured deal is set at 3.5 years.The deal’s loan pricing is at the low end of the previous price talk of between 150 basis points and 180 basis points all-in.”It’s a reflection of the cautious sentiment in Hong Kong’s loan market where many banks are suffering with soaring funding costs,” said a corporate loans banker with one of IFC’s existing lenders.After a bull run in the first half this year, Hong Kong’s loan market has turned because tighter liquidity and spiking funding costs have made lenders more selective and prompted them to demand higher prices on new deals. Loan pricing for large corporate borrowers in Hong Kong has almost doubled to 170 basis points all-in, compared to the sub-90 basis points margins seen at the end of 2010.As a result, the city’s total syndicated loan volume plunged to $11.55 billion in the third quarter, down 42% from the second quarter, marking the sharpest quarter-on-quarter fall in five years, according to Thomson Reuters LPC data.Nevertheless, some loan bankers looking at the situation do not expect IFC Development to experience any hiccups in the syndication as the deal is largely relationship-driven.Meanwhile, banking sources said shareholders of IFC Development — which holds International Finance Centre, the premier office and retail complex in Hong Kong’s Central district — are planning to inject cash into the company to repay part of the maturing facility that is being refinanced.The new IFC loan will refinance a HK$17.35 billion five-year facility completed in March 2007. A total of 19 banks joined IFC’s 2007 loan as mandated lead arrangers and 14 others joined in general syndication. The 2007 loan paid a top-level all-in of 43 basis points via a margin of 37 basis points over Hibor.The MLAs on the 2007 loan were ABN AMRO Bank, Bank of China Hong Kong, Bank of Communications, Bank of East Asia, Bank of Tokyo-Mitsubishi UFJ, BayernLB, BNP Paribas, the then Calyon, CCB International Finance, Citigroup, DBS Bank, Fortis Bank Hong Kong, Hang Seng Bank, HSBC, ICBC Asia, Mizuho Corporate Bank, Rabobank International, Standard Chartered Bank and Sumitomo Mitsui Banking Corp.The rest of the participants were Shanghai Commercial Bank, Agricultural Bank of China, Wing Lung Bank, Bangkok Bank, BBVA, KBC Bank, Scotia Bank, Bank of China Tokyo, Nanyang Commercial Bank, Public Bank, Tai Fung Bank, Mega International Commercial Bank, Bank of China Macau and Chong Hing Bank.

BASIS POINTIFC Development refinancing cut 71% to HK$5 bln 

3AM

UPDATE 2-D.Boerse/NYSE have four weeks to answer EU-source


* $9 bln deal will deliver savings to customers-NYSE execBy Jonathan Spicer and Ann SaphirCHICAGO, Oct 11 (Reuters) - Merger partners Deutsche Boerse AG and NYSE Euronext have until Nov. 8 to formally address the European Commission’s specific concerns over their $9 billion deal, according to a source familiar with the time table.Officials at the exchange operators are now still reading and analyzing the document, known as the “statement of objections,” that European Union antitrust regulators sent to them on Oct. 5, said the source, who wasn’t authorized to speak publicly.The German exchange agreed to buy the Big Board parent in February, a transaction that would create the world’s largest market operator.The EU antitrust review got underway this summer and could continue through the rest of the year as regulators decide whether to allow the companies to combine their Eurex and Liffe venues to take a strangle hold on exchange-based European derivatives trading.Regulators are expected to look only at exchange-traded derivatives rather than including the broader over-the-counter derivatives market, separate sources told Reuters on Monday. A narrow view of the market could make it more difficult for the deal to win regulatory approval.At a Futures Industry Association conference here on Tuesday, a top NYSE Euronext executive said the combination will create a European “champion” that will deliver savings to hedge funds and other market users.”We have to show value to end-users,” Garry Jones, who runs NYSE’s global derivatives business, told the conference.The deal between the two derivatives giants will deliver as much as $4 billion in savings on margins, he said, while also pledging that the merged company will not use its bigger size to raise prices.

UPDATE 2DBoerse/NYSE have four weeks to answer EUsource 

October112011

Wal-Mart, Facebook unveil partnership


The effort covers about 3,500 Wal-Mart outlets and will send alerts to the company’s Facebook fans about new products and discounts, the companies said.”With early Walmarts, customers would walk in and ask the store manager to get a product,” said Stephen Quinn, chief marketing officer of Wal-Mart. “This is going to allow this kind of communication at national scale. Stores become more relevant on a local level because of interaction with customers.”Wal-Mart is stepping up investments in e-commerce and social networking to try to compete more effectively with Internet rivals led by Amazon.com Inc.Facebook fans of Wal-Mart who sign up to the new page will get about two messages a week from their local store at first, Quinn added.Alerts may be triggered by local events such as a high school football game or weather, he said.”A national message is sometimes not relevant,” Quinn said. “We can now say we have sunscreen in the south and snow boots in the north.”My Local Walmart also will have a role in this year’s holiday shopping season, especially on the day after Thanksgiving when shoppers line up early for deals, he added.Shoppers will be able to download maps of their local store from My Local Walmart, showing them where specific merchandise will be in their store.”It’s impossible to put out a generic map,” Quinn said. “This allows us to put out store maps for each local store.”

WalMart Facebook unveil partnership 

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