Archive for March, 2009

Disney to launch ad-supported channels on YouTube (Reuters)

Monday, March 30th, 2009 | Finance News

NEW YORK (Reuters) –
Walt Disney and Google's YouTube said on Monday they have reached a pact to offer sports highlights, clips of television shows and other short-form content on the hugely popular video-sharing site.

The deal will see videos from sports network ESPN from April and the Disney/ABC Television networks such as ABC Entertainment and SoapNet become available on YouTube from May. Disney Media Networks will have the option to sell its own advertising inventory within those channels.

While the deal does not entail full-length programing, analysts said it represents an important validation for YouTube as it seeks to present itself as an outlet for professionally-made, premium video content.

"The important thing is we got ABC up on the platform, it remains to be seen how that will grow," said YouTube head of content partnerships Jordan Hoffner.

Hoffner said the deal was the product of several months of work and adds to the comprehensiveness of YouTube's library of professional video content which includes content from CBS Corp, the Food Network and Discover Communications Inc's the Discovery Channel, among others.

Disney has resisted making its original content widely available for free through third party distributors on the Web before now. But in recent weeks there have been reports of plans for the media company to partner not just with YouTube but also with Hulu, the online video service owned by News Corp and NBC Universal.

It's unclear whether Disney is still considering a separate deal with Hulu. Representatives at Disney and Hulu were not immediately available to comment.

Anne Sweeney, co-chair, Disney Media Networks said in a statement announcing the YouTube partnership that the deal offers Disney the opportunity to reach a broader online audience, to experiment with different monetization models "and to "extend the reach of our advertisers within branded environments that they most desire."

Sanford Bernstein & Co. analyst Jeff Lindsay said Disney appears to be taking a cautious approach in its deal with YouTube, perhaps to minimize creating too big of a stir among the cable and satellite providers with which it has television distribution agreements.

But he said the deal could cause other producers of premium cable TV content to take note and explore ways of offering programing over the Internet.

YouTube is easily the most popular online video service in the United States, according to data from Web audience measurement firm comScore, with more than 99 million unique viewers in February.

But despite that popularity it has been under pressure from Google investors keen to see the audience numbers converted to dollars. YouTube has yet to make a significant contribution to Google's bottom-line, and the site has struggled to convince advertisers to make a major financial commitment with so many of the videos dominated by clips uploaded by users.

One sign that YouTube executives are prepared to start making compromises is that it has agreed for Disney to test pre-roll advertising on short-form content. YouTube founders Chad Hurley and Steve Chen have in the past said that pre-roll advertising would harm the popularity of its service as its videos are short-form.

Shares of Google were up $1.56 at $344.25 in after-hours trade. Disney shares were up 15 cents at $18.

(Reporting by Alexei Oreskovic and Yinka Adegoke)

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Lennar reports wider quarterly loss (Reuters)

Monday, March 30th, 2009 | Finance News

NEW YORK (Reuters) –
Lennar Corp (LEN.N), the second-largest U.S. homebuilder on Monday reported a wider quarterly loss as it scrambled to sell off its inventory of homes in the face of a brutal economic downturn.

Lennar reported a first-quarter loss of $155.9 million, or 98 cents per diluted share, including charges that totaled 71 cents a share for write-offs and other adjustments. Revenue tumbled 44 percent to $593.1 million.

A year earlier, it posted a net loss of $88.2 million, or $0.56 per diluted share.

"The housing market continued its downward trend throughout our first quarter," Chief Executive Stuart Miller said in a statement. "Despite historically low interest rates and some indicators pointing toward market stabilization, low consumer confidence, increased unemployment and growing foreclosure rates negatively impacted new home sales in most of our markets."

The company posted a 38 percent decrease in the number of home deliveries and a 12 percent decrease in the average sales price of homes delivered in the first quarter.

Overall, analysts had forecast a loss of 69 cents a share on revenue of $542.54 million, according to Reuters Estimates.

Smaller rival KB Home (KBH.N) last week reported better-than-expected quarterly results, which analysts attributed to a shift at that company to build more low-priced homes intended to compete with foreclosed properties.

Lennar early this year came under fire for how it treats its joint ventures. Barry Minkow, a California pastor who has served time for stock fraud but who now investigates fraud, alleged the company treats those ventures as a "Ponzi scheme."

Lennar denied those claims and has sued Minkow.

Lennar on Monday said its number of unconsolidated joint ventures had been reduced to 95, down from 116 in the fourth quarter.

Shares of Lennar fell $1.55, for 15.11 percent, to $8.71 on the New York Stock Exchange ahead of the release of its quarterly results.

(Reporting by Paul Thomasch; Editing by Gary Hill)

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Obama’s tough auto stance may include bankruptcy (Reuters)

Monday, March 30th, 2009 | Finance News

WASHINGTON (Reuters) –
President Barack Obama ordered General Motors Corp and Chrysler LLC to accelerate their survival efforts and brace for possible bankruptcy, saying neither company had done enough to justify the taxpayer money they were seeking.

Obama, describing the industry as a pillar of the economy, nevertheless gave GM and Chrysler a little more time and money to wring further concessions from workers, creditors and other stakeholders.

"We cannot, we must not, and we will not let our auto industry simply vanish," Obama said in White House remarks on Monday that were partly overshadowed by his decision to force out GM CEO Rick Wagoner.

U.S. stock indexes tumbled on the harsher-than-expected government stance, which could push GM and Chrysler closer to a bankruptcy court restructuring that could threaten equity holders and force deeper losses on creditors.

A committee representing GM bondholders planned to meet later on Monday to discuss a debt restructuring plan according to a source familiar with the situation.

With about $28 billion in debt to bondholders, the GM offer would translate into $2.2 billion in cash, $4.3 billion in debt and an additional stock-based payout in a recapitalized company that would all but wipe out current stockholders.

The Obama administration is giving GM 60 days to rework its survival plan. The new CEO of the biggest U.S. automaker said a court-supervised restructuring in bankruptcy might be necessary.

Chrysler's operation would be funded for the next 30 days as it works to complete an alliance with Italy's Fiat SpA, considered the No. 3 U.S. maker's best chance of surviving.

A source familiar with the negotiations said Fiat's stake in Chrysler could start as low as 20 percent.

GM had sought more than $16 billion in new aid after getting $13.4 billion in December, while Chrysler wanted $5 billion on top of $4 billion at the end of 2008.

GM shares closed 25 percent lower on Monday while stock of Ford Motor Co, which has not sought a bailout, closed down 2.8 percent. Chrysler is privately held by Cerberus Capital Management.

BANKRUPTCY OPTION

Jared Bernstein, a member of the government's autos task force, told Reuters Financial Television that a process that splits off the "bad" assets of GM or Chrysler, and sends those through a court-supervised bankruptcy, is a possibility, but U.S. officials have not determined yet to pursue that option.

"I don't think we're at that level of analysis until we see the kinds of changes and adjustments, concessions that are going to be made over the next 60 days," Bernstein said.

With U.S. auto sales near 30-year lows, Obama moved to reassure would-be car-buyers, saying the government would stand behind the warranties of GM and Chrysler. He also offered his support for a tax credit incentive of up to $5,000 to trade in older and less fuel-efficient vehicles.

The U.S. auto industry, including cash-strapped dealers and suppliers, has cut 400,000 jobs over the past year while losing billions of dollars.

Deutsche Bank economist Joseph LaVorgna said in a note on Monday that a GM and Chrysler bankruptcy could eliminate a million of the roughly 3 million auto sector jobs.

"As we have long feared, a bankruptcy -- even a controlled one -- would put downward pressure on production, further upward pressure on the unemployment rate and likely negatively impact consumer confidence," LaVorgna said.

PLANS REJECTED

Obama's auto task force rejected the turnaround plans submitted by GM and Chrysler following their December bailout.

"While Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plans they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger," Obama said.

The Obama administration did not say how much working capital the government would extend to GM and Chrysler over the coming weeks, but GM has said it needs $2 billion for April.

The U.S. government team raced to make the auto announcement before Obama heads to Europe for eight days of meetings surrounding the G20 conference.

Separately, Canada said plans set out by the Canadian branches of GM and Chrysler did not go far enough to make them viable, but it offered $3.2 billion in bridge loans to tide the companies over while they restructure.

Chrysler said on Monday it had reached agreement on a framework for an alliance with Fiat.

The next step for Chrysler is trying to reach cost-saving deals with creditors and the United Auto Workers (UAW), which could yield a $6 billion government investment if all restructuring and alliance pieces fall into place.

Fiat Chief Executive Sergio Marchionne said the talks with the Obama administration have been "tough but fair" and a deal will make Chrysler stronger and preserve U.S. jobs.

NEW GM CEO

GM's new chief executive, Fritz Henderson said the company would address elusive concession agreements with bondholders and the UAW, conditions crucial elements of its 60-day window extended by the government to prove viability.

"Our strong preference is to complete this restructuring out of court," Henderson said. "However, GM will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process."

Wagoner and GM's board had long argued that bankruptcy by any of the major automakers would threaten thousands of jobs, including suppliers, and could lead to a GM liquidation.

Wagoner, who had presided over the company's rapid decline in the past five years and had run the automaker since 2000, was forced out at the request of the Obama auto task force, headed by former investment banker Steve Rattner. A majority of GM's board will also be replaced.

Europe's No. 2 carmaker by sales, PSA Peugeot Citroen, ousted CEO Christian Streiff on Sunday, replacing him with former Corus head Philippe Varin from June 1. PSA Peugeot Citroen shares fell 7.7 percent in Europe.

(Additional reporting by Walden Siew, Poornima Gupta and David Bailey in Detroit; Jeff Mason in Washington, John McCrank in Ottawa; Helen Massy-Beresford and Estelle Shirbon in Paris; Gilles Castonguay in Milan and Angelika Gruber in Berlin)

(Editing by Patrick Fitzgibbons and Tim Dobbyn)

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