Archive for December, 2009

Fox, Time Warner Cable ink temp deal to avoid blackout (Reuters)

Thursday, December 31st, 2009 | Finance News

NEW YORK (Reuters) –
Time Warner Cable and News Corp's Fox Networks agreed to a brief extension of their current carriage contract on Thursday to avoid a blackout that would have prevented 13 million U.S. homes from seeing TV shows like "The Simpsons" and college and NFL football games.

The two sides continued to negotiate for a longer-term deal into the early hours of Friday morning.

Time Warner Cable also agreed a short extension with Scripps Networks Interactive's Food Network.

But another cable operator, Cablevision Systems Corp, which has 3 million subscribers in the New York area, said early on Friday it had been unable to reach a new carriage agreement with Scripps and dropped both Food Network and HGTV.

It said in a statement it had "no expectations" of carrying Scripps programing again.

The last-minute negotiations over how much cable operators pay networks to distribute their programing are often contentious. In 2008 Time Warner Cable went to the wire with Viacom Inc on New Year's eve in a similar dispute.

In the last 12 months talks between cable operators and program providers have become even more tense. Programmers have been seeking better affiliate fees as they have seen advertising revenue hurt by the U.S. economic downturn and remain uncertain about the future of TV advertising as more marketers turn to the Web.

FOX VS TIME WARNER CABLE

The short-term extension between Fox and Time Warner Cable comes after a months-long dispute over how much the second largest U.S. cable company should pay for the right to deliver the free-to-air Fox broadcast network to its subscribers in major cities like New York and Los Angeles.

News Corp, which is controlled by media mogul Rupert Murdoch, has been targeting around $1 a month per subscriber, a sum which Time Warner Cable has described as "unreasonable." Time Warner Cable executives have privately pointed to deals with other smaller broadcasters for around 20-25 cents a subscriber.

The dispute has played out in the press and aggressive marketing campaigns from both companies seeking support from the affected subscribers.

Neither side is well-positioned for a long standoff. Time Warner Cable, which faces stiff competition for video customers from satellite providers and phone companies, will be reluctant to lose popular shows like "American Idol" which returns to Fox on Jan 12.

Meanwhile, the prospect of sports fans not being able to watch college and NFL football games on Fox's free-to-air broadcast has attracted attention from the U.S. Federal Communications Commission Chairman Julian Genachowski, Senator John Kerry and some other members of Congress.

Fox will also be hurt by a loss in advertising dollars if more than 13 million homes are not able to see its shows.

(Reporting by Yinka Adegoke; Editing by Kim Coghill)

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Wall St closes out ’09 with best gains since 2003 (Reuters)

Thursday, December 31st, 2009 | Finance News

NEW YORK (Reuters) –
U.S. stocks ended 2009 on Thursday with their best gains since 2003, driven by optimism about the economy's recovery and a brighter outlook for profits.

The benchmark Standard & Poor's 500 index rose 23.5 percent for the year, while the Dow climbed 18.8 percent and the Nasdaq jumped 43.9 percent from its close on December 31, 2008.

It was the market's first annual advance in two years. In 2008, the S&P 500 slid 38.5 percent when the economic crisis led to Wall Street's worst year since the Great Depression.

For Thursday's session alone, though, U.S. stocks declined, with a late-day sell-off pushing all three major indexes down about 1 percent as investors sold some of the year's best-performing stocks to lock in some of 2009's substantial gains.

Most of the year's advance is the result of a nine-month rally, led by gains in technology and materials shares on expectations the economic recovery will spur capital spending and increase demand for energy, metals and other natural resources.

"It really was a turnaround year," said Charles Lieberman, chief investment officer of Advisors Capital Management, LLC in Paramus, New Jersey. "It shows how much of a recovery there's been."

American Express (AXP.N), Microsoft (MSFT.O) and IBM (IBM.N) were the Dow's top gainers for the year. All three ended Thursday lower, however.

On the other hand, General Electric (GE.N), long considered a bellwether, finished second to last among the Dow components in terms of 2009 performance, with big oil producer Exxon Mobil Corp (XOM.N) in last place.

A LIFT FROM EARNINGS

Signs of an economic rebound, including more than 70 percent of companies beating profit expectations in the second quarter, have driven the S&P 500 up 65 percent since its March 9 closing low. The dollar's weakness throughout much of 2009 also gave the market a strong boost on hopes about exports.

Despite optimism about 2009, Wall Street registered its first-ever negative decade on a total return basis even with dividends reinvested. The S&P 500 is down about 10 percent for the decade, on that basis.

After a fast sell-off late in the session, the Dow Jones industrial average (.DJI) ended down 120.46 points, or 1.14 percent, at 10,428.05. The Standard & Poor's 500 Index (.SPX) slid 11.32 points, or 1.00 percent, at 1,115.10. The Nasdaq Composite Index (.IXIC) lost 22.13 points, or 0.97 percent, to close at 2,269.15.

U.S. financial markets will be closed on Friday for New Year's Day.

WINNING QUARTER, LOSING WEEK

For the fourth quarter, the Dow rose 7.5 percent, the S&P 500 gained 5.5 percent and the Nasdaq jumped 6.9 percent.

But for the week, the Dow was off 0.9 percent, the S&P 500 was down 0.4 percent and the Nasdaq fell 0.7 percent.

The S&P 500's top-performing stock for the year was XL Capital (XL.N) -- up an eye-popping 395.4 percent in 2009. On Thursday, however, XL Capital's stock slipped 0.4 percent to end at $18.33 on the New York Stock Exchange.

Citigroup (C.N), down 50.7 percent for the year, was among the worst performers in the S&P 500.

IBM rose 55.5 percent for the year, Microsoft gained 56.8 percent in 2009 and American Express jumped 118.4 percent. For the day, IBM fell 1.3 percent to $130.90, Microsoft dropped 1.6 percent to $30.48 and American Express declined 0.7 percent to $40.52.

S&P OFF 29 PERCENT FROM RECORD CLOSE

Analysts see further upside in stocks in 2010 if the recovery proves sustainable. The U.S. unemployment rate is still at 10 percent -- a 26-year high.

The Dow is down 26 percent from its record closing high on October 9, 2007, while the S&P 500 is down 29 percent from its record close on that same date. The Nasdaq is down 55 percent from its March 10, 2000, closing high. A drop of 20 percent or more technically signifies a bear market.

"I don't think we're overbought," Lieberman said.

Emerging markets performed better than the United States and other developed markets, with China's key stock index ending with an 80 percent gain and Brazil's stock market up 83 percent for the year.

The S&P information technology sector (.GSPT) is up 59.9 percent for the year, while the S&P materials sector (.GSPM) is up 45.2 percent.

Telecommunications (.GSPL) was the worst-performing S&P 500 sector, with a gain of just 2.6 percent for the year, followed by utilities (.GSPU), up 6.8 percent.

Adding to Thursday's bearish tone, the December reading of the Institute for Supply Management-Chicago index, also known as the PMI or purchasing managers' index, was revised downward from the level reported on Wednesday.

Volume was light, with many investors out for the holidays. Just 679.9 million shares traded on the NYSE, well below last year's daily closing average of 1.49 billion.

On Nasdaq, about 1.27 billion shares traded, also sharply below last year's daily average of 2.28 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of 2 to 1, while on the Nasdaq, about 17 stocks fell for every 10 that rose.

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal)

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Jobless claims hit 17-month low (Reuters)

Thursday, December 31st, 2009 | Finance News

WASHINGTON (Reuters) –
The number of U.S. workers filing new applications for jobless benefits unexpectedly fell last week to the lowest level in about 17 months, suggesting the economy might be on the cusp of creating jobs.

While some analysts cautioned that a holiday-shortened week may have kept some unemployed workers from filing for benefits, others said the data showed the battered U.S. labor market was healing.

Initial claims for state unemployment benefits dropped to a seasonally adjusted 432,000 in the week ended December 26 from 454,000 in the prior week, the Labor Department said on Thursday. The prior week figure was revised from the government's initial report of 452,000.

Claims fell to their lowest level since the week of July 19, 2008, and were below economists' expectations for a rise to 460,000.

"It's consistent with a slow, steady improvement in the labor market," said Robert MacIntosh, chief economist at Eaton Vance Corp in Boston. "We're not out of the woods, but this is what you want to see."

The data helped lift U.S. stocks as the market opened, though major indexes soon slipped into negative territory in light pre-holiday trade. An industry association's downward revision of readings on business activity in the U.S. Midwest a day after it reported vigorous growth weighed on the market.

The Institute for Supply Management-Chicago revised its business barometer index, which gives a picture of how manufacturers are faring, to 58.7 for December from the 60.0 it reported on Wednesday. A subindex on employment, which the group originally said had showed growth, was revised to 47.6 from 51.2.

Any reading above 50 indicates expansion. The revised figures reflected adjustments for seasonal fluctuations.

But the jobless claims figures helped send U.S. government bond prices lower and the dollar higher, rising against the yen and cutting losses against the euro, as traders priced in greater chances of Federal Reserve interest rate hikes next year.

The year "has just ended on a high note for initial claims with a more promising outlook in 2010," said Ian Pollick, an economic strategist at TD Securities in Toronto.

The data on unemployment insurance claims was the latest to show the labor market moving toward health after two years of heavy job losses as the economy pulls out of a deep recession.

Many economists think the U.S. economy, which returned to growth in the third quarter, expanded at a 4 percent annual rate or better in the final three months of the year.

Some think December will be the first month in two years that more jobs were created than lost, a case buttressed by the claims data.

"I think it gives you a better chance of having a positive (employment) number," said MacIntosh, of Eaton Vance. "The probability of a positive number is still low, but it's a little bit higher."

The government's closely watched payrolls report on December employment is due at the end of next week.

A Labor Department official said based on seasonal factors, there would normally be a rise in the number of initial claims this time of year. Instead, the unadjusted data showed a decline of about 8,000 applications.

The four-week moving average, which irons out weekly fluctuations, fell by 5,500 to 460,250, marking the 17th straight weekly decline.

The drop took the closely watched average to its lowest mark since the week of September 20, 2008, around the time when the collapse of Lehman Brothers sparked a global financial market panic and intensified the recession.

The number of people still claiming benefits after an initial week of aid fell to 4.98 million in the week ended December 19, the latest week for which data is available, from 5.04 million in the prior week. It was the first time so-called continued claims had dropped below 5 million since February. However, the ranks of long-term unemployed on extended benefits rolls rose.

Fed officials have cited the high level of unemployment as a reason to keep benchmark overnight interest rates near zero for "an extended period."

While job losses have braked sharply in recent months, the unemployment rate in November stood at 10 percent, just off the 26-1/2 year high hit in October.

(Additional reporting by Tim Ahmann in Washington and Burton Frierson in New York; Editing by Neil Stempleman, Dan Grebler and Leslie Adler)

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