Florida newspapers at core of industry strife

Wake up and good morning. With plenty of implications for Florida, it's one more turn of the wringer this week for a troubled newspaper industry with reports the Tribune Co. is preparing for a possible filing for bankruptcy-court protection. The Tribune Co. owns 23 TV stations (and the Chicago Cubs) and 12 newspapers, including two of the eight largest in the country by circulation: the Los Angeles Times had weekday circulation of 739,000 and the Chicago Tribune had 542,000 as of Sept. 30.

The company also owns the South Florida Sun-Sentinel in Fort Lauderdale and the Orlando Sentinel.

Tribune Co. has been struggling under a $13-billion debt load incurred last December when real estate magnate Sam Zell took the company private in an $8.2-billion leveraged buyout. Today the company faces a deadline on $70-million of unsecured debt taken on by Tribune Co. before the deal.

Chicago-based Tribune has hired investment bank Lazard Ltd. as its financial adviser and law firm Sidley Austin to advise the company on a possible trip through Chapter 11 bankruptcy, say reports in the Wall Street Journal and New York Times.

For Florida newspaper readers, it's only the latest crisis brewing. Another newspaper company also burdened by debt and a steep slide in newspaper advertising, the McClatchy Co., wants to sell the Miami Herald, according to reports. The Herald is one of the largest of McClatchy’s 30 daily papers, with daily circulation of 210,000, and arguably its most prestigious, having won 19 Pulitzer prizes. The newspaper was once the largest in Florida but demographic changes and competition has forced it to shrink. (The St. Petersburg Times -- the newspaper I work for -- is Florida's largest newspaper now, and it, too, faces a challenging business environment. But it is privately owned and does not face the same stock price or debt pressures of many publicly-traded companies.)

Of course, the Miami Herald got a new owner just a few years ago when the once-great-now-defunct Knight-Ridder newspaper chain sold most of its papers to McClatchy for $4.5-billion in 2006.

Here's what all these newspaper companies share. They are publicly traded and investors are pessimistic about the industry's future, depressing company stocks. They have large debt loads -- the Tribune because buyer Zell borrowed heavily to buy the company in the first place, and similarly McClatchy borrowed to buy Knight-Ridder. They also face sharply dropping advertising revenue (most newspapers, public or not, face this same issue) because of the recession and some fundamental shifts in advertising strategies away from the printed page.

What does this all mean for Florida, which has suffered especially because of the sharp decline in housing (and real estate advertising)? Well, the Miami Herald could see a new owner of some kind. It's less clear the Orlando Sentinel or Fort Lauderdale's Sun-Sentinel will be sold but it's a distinct possibility if a Chapter 11 step by their parent company forces the sale of assets to raise money.

The owner of the struggling Tampa Tribune, Media General Inc. in Richmond, Va., saw its stock price close at a startling low $1.57 on Friday after trading above $27 per share in the past year.

The hardest-to-decipher question: Who's in the market for newspapers? With newspaper profits shrinking fast, the economy contracting and credit tight, many newspapers have been on the block for months without selling. Tribune Co. did manage to auction off its Long Island, N.Y., daily Newsday (bought by a cable TV business) to raise cash. But tighter credit markets are pushing sale prices lower.

Consider what's happening in the Denver market. William Dean Singleton, the chief owner of The Denver Post, said told the Denver Business Journal that Cincinnati's E.W. Scripps Co., the owner of the Rocky Mountain News, told his company last month it planned to close the money-losing News "as soon as practical." Singleton told the Journal he doubts a buyer will emerge for the 149-year-old daily, which was put up for sale Thursday.

-- Robert Trigaux, Times Business Columnist

source: tampabay.com

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Rory Vanucchi
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Three Reasons Why the Dollar's Not Yet Done

by Louis Basenese

Recall, in late March, I predicted here the dollar was overdue for a rally. Ninety-six percent of you cursed me. The other 4% pocketed an easy 20% or so (more if you played the options market).

But after such a swift run - mind you similar moves in currencies typically take years, not months - is the dollar rally finally coming unhinged?

Legendary investor Jim Rogers seems to think so. As he told Bloomberg News in a TV interview, he plans to exit his dollar holdings because he thinks the dollar “will go down a lot” and it is “going to lose its status as the world’s reserve currency.”

To which I simply respond, “Into what Jimbo?” No other choice for a reserve currency exists. No matter how much other governments wish it were so. The euro is frequently mentioned. But it’s depreciating in value. And there’s not enough liquidity to handle the demand. Plus, it’s still a prepubescent, experimental currency, not one governments can invest in with 100% faith.

Moreover, with two-thirds of foreign reserves already in dollars, it would take more than eight years to replace the dollar as the currency of choice.

So once again, I’m striking out on my own. (And I’m ready for the flood of fan e-mails.) While many pundits would like you to believe that the dollar rally will be short-lived, I completely disagree.

The dollar’s not done.

Today I offer up three more reasons why. And of course, three ways to play it.

Too Far, Too Fast? Hardly…

Keep in mind, currency rallies tend to be measured in years and months. Not weeks and days. In fact, according to Bespoke Investment Group, the average dollar rally lasts 489 calendar days. The longest rally on record lasted roughly 10 years.

While I don’t think we’re in store for a historic run this time, I do think the current rally has more legs (about another year based on the averages out of Bespoke).

Aside from no alternative world reserve currency, here are three more fundamentals in defense of the dollar:

Further Interest Rate Cuts
Foreign governments bought into the farce that was decoupling. As a result, they remained hawkish for way too long, keeping interest rates too high, at a time when they should have been cutting them to stimulate growth. And now they’re scrambling to catch up. They must make growth their first priority. So further interest rates cuts are inevitable, narrowing the gap with U.S. interest rates. And before long, perhaps the middle of 2009, we could be raising rates while other countries are still lowering.

Continued Deleveraging
As Mark Astley, CEO of Millennium Global Investments, a U.K.-based currency manager, notes, “there is a pyramid of leverage” in the financial markets that will take considerable time to unwind. The half-frozen credit markets are only slowing down the process. As they thaw out completely, expect hedge funds and foreign banks to keep buying up dollars.

Uncertainty Reigns
Despite a new president, uncertainty remains in the markets. Or as UniCredit wrote in a recent research note, “We do not expect global recession fears to wane considerably.” And during times of fear and risk aversion, the dollar tends to outperform.

Bottom line, the current rally has plenty of room to run. If you dare to be contrarian, here’s how I recommend you play it.

Consider Pure Plays
For a pure play on the U.S. dollar - without trading the currency markets - I recommend the PowerShares DB US Dollar Bullish Fund (UUP). It’s designed to replicate the performance of being long the greenback against the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.

Another strong choice is the EverBank* DollarBull CD. Available in 3-, 6-, 9- and 12-month terms, it offers potential appreciation in the U.S. dollar against a selected foreign currency. If you opt for the latter, I recommend going long the U.S. dollar versus the euro.

Take Profits on Unhedged Multinationals
Consider taking profits in multinationals with significant foreign currency exposure. I say that because the rapidly strengthening dollar will dent future earnings in two major ways. First, because profits earned abroad will be worth less, as they’re translated back into dollars. Second, because demand for the company’s products will drop off, as they will be more expensive to foreign buyers. We’re already seeing this double-whammy hurt third-quarter results for some big multinationals. But if the dollar holds its ground, or strengthens further, the impact will be much more dramatic in the fourth quarter. So get out while you’re ahead.

Buy American
While the dollar was plummeting, it made sense to buy companies with significant international sales. They provided a nice currency hedge. However, a strong dollar means we need to reverse course and seek out companies with zero (or minimal) international revenues. I’d stick to solid companies in the utility, health care and consumer staples industries, as demand will remain steady no matter how long the recession lasts.

In the end, I know my dollar stance is contrarian. Or as many of you put it last time, “ignorant” and “completely out of touch.”

I’d add “profitable” to that list now. And I don’t expect this time to be any different.

*Disclaimer: The publisher of Investment U maintains a marketing relationship with EverBank, but it’s important to note that we’d recommend their products and services anyway.

source: seekingalpha.com

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Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
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http://waterfrontlife.blogspot.com
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Shareholders Ponder North Dakota Law

A new front in the battle over corporate governance is emerging in an unlikely place: North Dakota.

Only two publicly traded companies are incorporated in North Dakota. But last year lawmakers there -- prodded by out-of-state activists including Carl Icahn -- enacted the nation's most shareholder-friendly corporate-governance law.

Associated Press

Carl Icahn

The law prescribes rules that companies incorporating in North Dakota can adopt as a package, including requiring an annual shareholder advisory vote on executive pay and the naming of a chairman who isn't an executive. The rules also provide for the annual election of directors and make it easier for shareholders to nominate their own director candidates.

Now, shareholders at four companies are offering resolutions urging those companies to reincorporate in North Dakota. Experts say the proposals, while unlikely to pass, could lead to pressure for more shareholder-friendly corporate-governance rules in other states.

John Chevedden, a longtime activist investor in California, filed a proposal urging Oshkosh Corp. to move its incorporation to North Dakota from Wisconsin. Mr. Chevedden also helped shareholders at Hain Celestial Group Inc., Whole Foods Market Inc. and PG&E Corp. draft and file similar proposals.

Mr. Chevedden says he picked those companies because of what he considers to be their weak governance and the timing of their annual meetings. "We wanted to get early feedback ... to see what level of support this will generate," he says.

In October, Hain Celestial, a Melville, N.Y., organic-food maker incorporated in Delaware, unsuccessfully petitioned the Securities and Exchange Commission to dismiss the proposal on procedural grounds. A company spokeswoman declined to comment.

Brian Hertzog, a spokesman for California-based and incorporated PG&E, says shareholders are well served by the utility's current corporate-governance rules. "It's unlikely that we would support" the proposal, he says. "We've been a California company now for over 100 years."

Representatives at Oshkosh and Whole Foods declined to comment.

The North Dakota law is part of an effort by shareholder advocates to generate competition among states for company incorporations based on governance rules. More than half of publicly traded companies are incorporated in Delaware, which has long courted such business. Critics say Delaware law favors management over shareholders.

In 2005, a group of activists, including Mr. Icahn, hired William H. Clark Jr. -- a Philadelphia lawyer who has helped write corporate laws in Pennsylvania -- to draft a pro-shareholder governance model. Mr. Chevedden says he isn't affiliated with that group.

"I think it was prescient," says Mr. Icahn. "If you look at the companies on Wall Street and the problems you have there, it's because nobody is accountable."

Mr. Clark first took the legislation to Vermont, home to only five public companies in 2005. But one company objected, and the bill died in committee.

The following year, North Dakota removed a provision from its constitution that had discouraged companies from incorporating there. Mr. Clark then began building support for a revamped corporate-governance bill. He recruited local lawyers, a prominent businessman and the former mayor of Bismarck as backers. The group then hired a well-known Bismarck lobbyist, Joel Gilbertson.

Republican State Rep. Duane DeKrey says he has known Mr. Gilbertson for years and agreed to co-sponsor the bill, although he had no "burning desire one way or another" and didn't expect it to pass.

The Greater North Dakota Chamber of Commerce and Integrity Mutual Funds Inc., the larger of two companies incorporated in the state, opposed the bill. But Integrity dropped its objections after learning it could stick with its traditional rules, Mr. Clark says. Integrity Chief Executive Bradley Wells declined to comment.

Al Jaeger

The group also won the support of longtime Secretary of State Al Jaeger, who thinks the law might attract business to North Dakota. "Our position was ... we will build it," Mr. Jaeger says. "If somebody wants to come and play in our ball field, that's great."

The North Dakota law is unlikely to draw much business to the state soon, experts say. The four reincorporation proposals are nonbinding and unlikely to win approval, says Carol Bowie, director of the Center for Corporate Governance at proxy adviser RiskMetrics Group Inc.Activist investors say the North Dakota law adds fuel to the debate over shareholder rights and oversight, which has intensified during the U.S. financial crisis.

"This is more a wake-up call for Delaware to modernize than any significant attempt to attract business in North Dakota," says Richard Ferlauto, head of corporate governance and pension investment at the American Federation of State, County and Municipal Employees.

Write to Cari Tuna at cari.tuna@wsj.com

source: wsj.com

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http://online.wsj.com/article/SB122852051008284099.html


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Rory Vanucchi
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China plays beggar thy neighbor

By Peter Navarro

The latest summit between the United States and Chinese officials graphically illustrates that China has learned to play two games from the West: hardball and beggar thy neighbor.

China's hardball approach is evident in the announcement by its major sovereign wealth fund that it will no longer invest in the US financial sector.

The stated reason for this provocative announcement, which was issued on the very eve of the economic summit, is that any such investments would be too risky.

"I don't dare to invest in financial institutions now," Lou Jiwei, chairman of China Investment Corp, said at a conference in Hong



Kong. "The policies of the developed nations on these institutions are not clear. Until they are clear, I don't dare to invest in them. What if they go bust? I will lose everything."

In fact, China's new policy represents both retaliation and a bargaining chip. The retaliatory part of the hardball message has been aimed directly at US Treasury Secretary Henry Paulson, who, much to the displeasure of the Chinese, continues to repeat his demand for Chinese currency reform. The bargaining-chip part is designed to reinforce just how weak the US position is in negotiations while leaving open the door to future investments by China's sovereign wealth fund if the US behaves itself.

As for the beggar thy neighbor, it has become clear over the past week that Chinese government officials intend to export their way out of the global economic crisis. This is all too readily apparent in the recent downward movements of the Chinese yuan relative to the dollar. Stripped of any rhetoric, this movement represents a "competitive devaluation" designed to boost Chinese exports to the US at the expense of both domestic US manufacturers and competing countries such as South Korea and Japan.

In fact, Chinese currency manipulation represents "beggar thy neighbor" on a grand scale. By grossly undervaluing the Chinese yuan relative to the US dollar over the past five years, China has grown its economy on the backs of American workers and helped to decimate the American manufacturing base. Today, it is almost impossible for American manufacturers to compete against their Chinese counterparts when the yuan is undervalued by 30% or more. Add to this an extensive array of illegal Chinese export subsidies, and it becomes easy to understand how China has been able to offshore so many American jobs to its own factories.
Under political pressure, China allowed the yuan to modestly appreciate relative to the dollar over the past year. However, despite this appreciation, the yuan still fell relative to the euro and other major currencies - in the process, significantly exacerbating China's trade imbalance with Europe.

It's not just the United States and Europe that China's currency manipulation hurts. Japan, South Korea and others of China's erstwhile competitors in Asia for export markets likewise lose competitive advantage. That's why China's latest devaluation of its currency could not come at a worse time for its Asian neighbors.

South Korea is experiencing an horrific currency crisis of its own, one that is in large part driven by the steep decline in its exports and a collateral slowing of its economy. The last thing South Korea needs right now is a competitive devaluation by China that further negatively impacts South Korean exports and puts more downward pressure on the won.

Japan is in exactly the same boat. This is a country that just a year ago finally got its head above the economic waters but now is sinking back into the recessionary, deflationary morass. China's devaluation likewise strikes hard at the ability of Japan to bounce back.

The ultimate big picture here is that China could play a very constructive role in the rebuilding of the global economy. With its huge foreign reserves, it could assist Asian neighbors like South Korea in their time of need. China could also use this time as a transition point for moving from an export-driven economy to one fueled by domestic consumption.

It is all too clear, however, that China has chosen to move in the opposite direction. This will not only further destabilize the global economy. It will also significantly strain relations with the United States. This is particularly true given the campaign promise of president-elect Barack Obama to crack down on Chinese mercantilism.

Peter Navarro is a professor at the Paul Merage School of Business, University of California-Irvine, a CNBC contributor, and author of The Coming China Wars. www.peternavarro.com

(Copyright 2008 Peter Navarro.)

source: atimes.com

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http://www.atimes.com/atimes/China_Business/JL09Cb01.html


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Rory Vanucchi
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Mediterranean Diet Enriched With Nuts Cuts Heart Risks

MONDAY, Dec. 8 (HealthDay News) -- In older adults at risk for heart disease, a Mediterranean diet plus daily servings of mixed nuts may help manage metabolic syndrome, according to a Spanish study.

Metabolic syndrome describes a group of health problems that includes abdominal obesity, high cholesterol, high blood pressure and high glucose levels -- all of which are risk factors for cardiovascular disease. Previous research suggests that a Mediterranean diet -- which includes lots of cereals, vegetables, fruits and olive oil, moderate consumption of fish and alcohol, and low intake of dairy, meats and sweets -- lowers the risk of metabolic syndrome.

This new study included 1,224 people, ages 55 to 80, at high risk for cardiovascular disease. They were randomly assigned to one of three groups. The control group received advice on a low-fat diet while the other two groups received quarterly education about the Mediterranean diet. One of the Mediterranean diet groups received one liter per week of virgin olive oil, while the other group received 30 grams per day of mixed nuts.

At the start of the study, 61.4 percent of the participants met criteria for metabolic syndrome. After one year, the prevalence of metabolic syndrome decreased by 13.7 percent in the mixed nut group, by 6.7 percent in the olive oil group, and by 2 percent in the control group.

There were no weight changes in any of the groups over the one-year study period. But the number of people with large waist circumference, high triglycerides or high blood pressure significantly decreased in the Mediterranean diet/mixed nuts group compared with the control group. This suggests that the Mediterranean diet with mixed nuts improves certain features of metabolic syndrome, such as oxygen-related cell damage, insulin resistance, and chronic inflammation, the researchers said.

"Traditionally, dietary patterns recommended for health have been low-fat, high-carbohydrate diets, which generally are not palatable. The results of the present study show that a non-energy-restricted traditional Mediterranean diet enriched with nuts, which is high in fat, high in unsaturated fat and palatable, is a useful tool in managing the metabolic syndrome," concluded Dr. Jordi Salas-Salvado, of the University of Rovira i Virgili, and colleagues.

source: usnews.com

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http://health.usnews.com/articles/health/healthday/2008/12/08/mediterranean-diet-enriched-with-nuts-cuts-heart.html


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Rory Vanucchi
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http://waterfrontlife.blogspot.com
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