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Tuesday, April 30, 2013

Can the New Cadillac Catch Up to BMW?

Cadillac is expected to unveil the latest incarnation of its CTS Wednesday, a decade after first launching the midsize sedan whose sharp-creased looks—inspired by stealth bombers—were designed to attract younger buyers.

The CTS, to be introduced at the New York International Auto Show, has had some success in rejuvenating Cadillac's image. But it didn't revive slumping sales—and it failed to attract enough younger buyers from shifting toward foreign luxury cars. Once the top-selling luxury brand in the U.S., Cadillac finished 2012 in fifth place, behind BMW, Mercedes-Benz, Lexus and even Honda Motor Co.'s Acura.

But with the new CTS, Cadillac is again promising to use the $40,000-and-up car to challenge rivals such as BMW's 5 series and Daimler AG's Mercedes-Benz E-class for buyers.

The 2014 CTS will offer an eight-speed transmission—a first for General Motors Co.'s brands. The car will go from the heaviest to the lightest among its European rivals, giving it better fuel economy. Cadillac executives say the vehicle uses aluminum in front doors and bumpers to slim down to 3,616 pounds, about 250 pounds less than the last design.

Getty Images The first 2013 Cadillac ATS available for retail sale is prepared to roll off the assembly line at the GM in July.

"The CTS was the vehicle that began the Cadillac renaissance," said Robert Ferguson, Cadillac's global brand chief. The new model "is a cornerstone vehicle for us and will keep the momentum going."

But in some respects it is the same old Cadillac facing the same dilemma. The average age of a Cadillac owner is 65 years old, compared with 49 years for BMW and 48 years for Audi, according to researcher StrategicVision. The new-to-GM eight-speed transmission has been available in rival vehicles for more than a year.

Cadillac is expected to unveil the latest incarnation of its CTS Wednesday, a decade after first launching the midsize sedan whose sharp-creased looks were designed to attract younger buyers. Joe White reports. Photo: Getty Images.

After a lot of ups and downs over the years, the brand is focusing on a three-sedan portfolio—the ATS, CTS and XTS. That compares with the four different body styles in the BMW 5 series alone. GM says it plans to introduce six new or refreshed Cadillacs over the next four years and insist the coming CTS won't lag the size, length and electronic bling of its German rivals.

A strong debut for the new model is critical for GM. The company is pinning its future on the global sales of two brands: Cadillac and Chevrolet. GM needs Cadillac to crack the luxury barrier and boost its presence in markets such as China, Russia and perhaps Brazil if it hopes to generate the profit it needs for the brand's long-term survival.

That the new CTS a decade later faces the same, unaccomplished mission of regaining market and mind share from German luxury brands shows how much its rivals have gained. Audi, BMW and Mercedes are introducing a variety of new models in the U.S. and China this year to broaden their appeal to new and younger buyers.

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Despite repeated revival promises, Cadillac's U.S. market share has remained relatively unchanged over the past 10 years, bouncing between a high of 1.35% in 2005 to 1.05% at the end of 2012.

Since the launch of the first generation CTS in 2002, Cadillac has sought to hammer a message that its cars are no longer the soft-riding, oversize boulevardiers that wealthy members of the World War II generation piloted to summer hotels in the Catskills or cabins in Northern Michigan.

It strove to recast the car as a high-performance machine, showing images of the CTS roaring around Germany's Nürburgring race circuit—a testing ground the German brands use to fine-tune the handling of their vehicles.

To launch last year's new sedan, the 2013 ATS, Cadillac commissioned a series of television spots showing a pair of young driving enthusiasts flogging the car along twisty roads in exotic locations from China to the tip of South America.

Today, GM again is considering changing Cadillac's advertising agency. If it does, it would be the fifth such switch since 2007.

Cadillac 2014 CTS, above, would chase BMW's 5 series and Mercedes E-class.

"We owe it to ourselves to take a step back," Cadillac U.S. marketing chief Don Butler said. "We are looking at everything go on in the brand and asking ourselves should it be structured differently.

In part, that is because the about $38,000 and up ATS has gotten off to a slow start. U.S. dealers had a hefty 106 days' supply of the cars as of the end of February. By contrast, BMW's overall stock of unsold cars in the U.S. amounted to just 39 days' supply.

R.L. Polk & Co. automotive analyst Tom Libby said the new Cadillacs represent "a huge step forward for them." But at the same time, he said, BMW, Audi and Mercedes-Benz are escalating their assaults on the U.S. market with new models—including lower-priced vehicles aimed at picking off younger, affluent buyers before they ever consider Cadillac.

"They are also expanding their product portfolio downward which only increases the pressure," Mr. Libby said.

Mercedes-Benz, for example, will use the New York show to debut its CLA 45 AMG—a high performance version of the compact four-door it highlighted during the 2013 Super Bowl. The CLA will start under $30,000. Mercedes says the AMG version can reach 60 miles an hour time from a standing start in under 5 seconds at a price of about $50,000.

"Over the next seven years we are launching 30 new or refreshed cars, which averages out to about one new car per quarter," Mercedes-Benz spokesman Christian Bokich said. "We continue to invest in our product portfolio to meet what we see as the future demands of luxury customers."

Those new vehicles and others could make it tough for Cadillac to hang on to its rank in the U.S. Hot on Cadillac's heels is Volkswagen AG's Audi brand, which has been steadily increasing market share since 2004 when it had 0.44% of the U.S. market. Audi had a share of 0.96% at the end of 2012, and the brand is launching more models—including a compact A3 sedan that will be shown at the New York auto show.

To lead the latest relaunch of Cadillac, GM CEO Dan Akerson reached outside the company's automotive marketing ranks and named Mr. Ferguson, GM's Washington lobbyist and a former AT&T Inc. executive as Cadillac's global brand head.

Mr. Ferguson said he is confident Cadillac new lineup can take on the Germans by more directly positioning its cars in the same size and price categories of the German brands. GM says the ATS pricing is akin to BMW's 3 series and Audi's A4.

With the new sedan, "We are going to ride the CTS to get Cadillac to sales numbers it has never posted," Mr. Ferguson said. Cadillacs including the ATS and compact SRX sport utility also will help Cadillac in growth markets such as Brazil, Russia and China, he said.

Early sales of the ATS in the U.S. isn't a fair indicator of the brand's potential, Mr. Ferguson said, because they reflect a failure to supply enough all-wheel-drive models in a segment where roughly half the cars sell with the feature.

Now, Mr. Ferguson said, 70% of those customers buying a new ATS sedan have never previously owned a Cadillac.

Data from Edmunds.com, the car shopping website, suggests that the ATS is getting some looks from people shopping German brands. In February, about 4.9% of shoppers who looked at a BMW 3 series also looked at the ATS, up from 3.3% in December 2012.

But there was more cross-shopping traffic between the ATS and the Cadillac CTS. Of those who looked at a CTS, 26% also looked at the ATS. Of course, some things never change: Edmunds analyst Jessica Caldwell said the top state for ATS purchases is Michigan, GM's home state.

Write to Jeff Bennett at jeff.bennett@dowjones.com and Joseph B. White at joseph.white@wsj.com

A version of this article appeared March 27, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: New Cadillac, Old Dilemma.


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Monday, April 29, 2013

Chevron Cuts Executive Compensation

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Sunday, April 28, 2013

Comcast Scores Court Victory

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Saturday, April 27, 2013

Cyberattack on Spam Fighter Said to Be Over

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Friday, April 26, 2013

Judge Approves AMR Merger, Denies CEO Payout

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Thursday, April 25, 2013

Mitsubishi Reports Battery Glitches

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Wednesday, April 24, 2013

NBC Had Brief Talks With CNN's Anderson Cooper

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Tuesday, April 23, 2013

Rail Capacity, Spending Soar

EPPING, N.D.—On a recent subzero day at a rail station here on the plains, a giant tank train stretches like a black belt across the horizon—as far as the eye can see. Soon it will be filled to the brim with light, sweet crude oil and headed to a refinery on Puget Sound. Another mile-long train will pull in right behind it, and another after that.

Increasingly, scenes like this are being played throughout the country. "Hot Trains" dedicated to high-priority customers like United Parcel Service Inc. roar across the country to deliver everything from microwaves to tennis shoes and ...

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Monday, April 22, 2013

Sharp Finds Silver Lining

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Sunday, April 21, 2013

B&N Snubs Publisher

Barnes & Noble Inc. has sharply reduced the number of Simon & Schuster titles it carries in its stores as well as the promotion it gives those books as a result of a financial dispute between the two companies, say people familiar with the matter.

Getty Images Barnes & Noble is pressing Simon & Schuster for more compensation.

The dispute, which one publishing executive likened to a blackout of TV channels by a cable operator, reflects tensions created by the shift to digital reading and the impact of online discounting, which are shaking up publishing.

The disagreement covers an array of issues. These include the question of which side will bear the financial burden of e-book discounting that has returned in the wake of a settlement between major publishers, including Simon & Schuster, and the Justice Department of an antitrust lawsuit, the people say. Under an earlier model, publishers set the consumer prices of their digital books, eliminating unwanted discounting.

Barnes & Noble is also pressing Simon & Schuster for more compensation, such as costs associated with in-store promotions. Publishers typically give retailers money to cover certain store marketing costs. The retailer is arguing that its stores serve as the primary way for consumers to discover new writers, say people familiar with the situation. The retailer worries that consumers use its stores as "showrooms" to find titles that they then order online at a discounted price, the people said.

"We do not comment on specific relationships with publishers. However, we do support those publishers who support our physical and digital businesses," Barnes & Noble said in a statement.

In an interview, Carolyn Reidy, chief executive of Simon & Schuster, described negotiations between the companies as tough but said she is confident the matter will eventually be resolved.

The dispute holds risks for both sides. Simon & Schuster is losing sales and promotions at the biggest book chain in the U.S. While the retailer is still carrying the publisher's biggest books in quantity, titles by lesser-known authors have been cut sharply, said the people familiar with the matter. Orders for some titles have been reduced by as much as 90%, according to one literary agent.

A recent walk-through at one of Barnes & Noble's stores in Manhattan found hard-cover editions of such current Simon & Schuster best sellers as Jodi Picoult's novel "The Storyteller" and Clive Davis's memoir "The Soundtrack of My Life." Elsewhere, however, the paperback edition of veteran author M.J. Rose's novel "The Book of Lost Fragrances," published in February, was out of stock and a search of the retailer's online site showed that the book was also unavailable at three other Manhattan locations.

For Barnes & Noble, the dispute could cause customers who can't find the books they want to instead shop online at Amazon.com Inc.

The dispute was reported by Publishers Weekly in late January, shortly after Barnes & Noble curtailed its Simon & Schuster orders. At that time, the two companies believed they would soon resolve their differences. Instead, the dispute has continued.

The disagreement comes as readers increasingly embrace e-books. At Simon & Schuster, for example, digital-book sales grew 24% in the fourth quarter, even as total publishing revenue fell 6%. Digital books represented 24% of total publishing revenue that quarter, up from 18% a year earlier.

Several writers published by Simon & Schuster expressed dismay that their books have been affected by the dispute but said they understood economic forces were involved and didn't blame their publisher or Barnes & Noble.

Jamie Mason, author of the thriller "Three Graves Full," published by Simon & Schuster imprint Gallery Books, said Barnes & Noble was "incredibly supportive" of her book during preproduction and that the chain was instrumental in changing the cover. "It was really cool," she said. But shortly before publication on Feb. 12, she learned that "Three Graves Full" would no longer receive the promotion at Barnes & Noble stores that had been expected. "It's frustrating," she said. "I'm a debut novelist. I don't have name recognition." She said Simon & Schuster has worked to boost sales elsewhere.

Write to Jeffrey A. Trachtenberg at jeffrey.trachtenberg@wsj.com

A version of this article appeared March 23, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Barnes & Noble Snubs Publisher.


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Saturday, April 20, 2013

Balancing Act for Warner CEO

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Friday, April 19, 2013

CBS Buys Half of TV Guide

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Thursday, April 18, 2013

CBS Nears Deal to Buy Half of TV Guide Network

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Wednesday, April 17, 2013

China Is Now No. 2 Box Office Behind U.S.

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Tuesday, April 16, 2013

'Croods' Grab the Box Office

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Monday, April 15, 2013

Investors to Buy Blockbuster U.K.

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Sunday, April 14, 2013

New Flipboard: News and Posts Handpicked and Shared

Flipboard has allowed smart phone and tablet users to aggregate digital content for a while, but it now allows you to publish your own digital magazines without any design skills. Walt Mossberg takes a look at version 2.0. (Photo: Flipboard, Inc.)

One of the best ways of following topics that are interesting to you is Flipboard, a popular app for Apple and Android mobile devices that automatically turns social-network posts and news from online publications, into beautiful, magazine-like pages you "flip" through by swiping.

Now, a new second generation of Flipboard, out Tuesday, is extending the app so it allows users to create and share their own handsome digital magazines with a few clicks and without any design talent required. If you make your magazine public, anyone with Flipboard, which is a free app, can read it and comment on it.

Walt Mossberg/ The Wall Street Journal Walt Mossberg's Flipboard magazine on the American Revolution.

I've been testing this new version of Flipboard, which has some other improved features, over the past week or so, on several iPads and an iPhone. My verdict is the new features make a great mobile app even better. There are some limitations to the new capabilities, but they make your mobile device more personal and more of a creative tool, rather than just a means of consumption. For now, the new version is only available for Apple's devices, but an Android edition is in the works.

The original Flipboard, which is produced by a small, private Silicon Valley company of the same name, was aimed at helping people wade through the welter of information on social networks and the Web, by allowing them to corral posts on popular topics like, say, baking or basketball, into attractive collections. The company says that capability has earned it 50 million registered users and a smaller, but active, core group of millions who use it daily.

I have long used Flipboard to follow tech and political news, or to leaf through everything posted on Twitter or Facebook by particular people or sites. These collections would update as new posts meeting the criteria appeared. If I had a collection about, say, the economy or smartphones, based on tweets on those subjects, it would stay current, showing me automatically any Web pages referenced within those tweets.

[image] Flipboard Above, one person's Flipboard page with personal magazines and subscriptions.

With the new personal magazine feature, however, I can make my own Flipboard-hosted publications on particular topics of interest, handpicking the posts or articles I want to include, rather than relying on feeds or algorithms. And it's easy to do. When you find a post, video or article you want to include in your magazine, you just click a plus button next to it, choose which of your magazines to "flip it" into and it appears in that magazine. The magazine only updates when you decide to update it with a new article, photo or video. The original creators are credited.

During my testing, I made five magazines, some public and some private. Since these were just for testing, they weren't carefully created. But I was impressed by how quickly I could produce them and how nicely Flipboard laid them out, with handsome cover photos, bold headlines and a logical arrangement of photos and articles.

I made public magazines on the American Revolution, Ancient Wonders, the Boston Red Sox and my favorite current TV dramas. I also made a private magazine to store content I wanted to read later.

This process is greatly helped by a much-enhanced search feature in Flipboard, which finds items both in Flipboard itself and in a long list of social networks and sites, such as Twitter, Facebook, Google+, YouTube, Instagram, Flickr, Tumblr and streams of content, called RSS feeds, produced by various sites.

You can add content to your magazines using a special bookmark for most browsers on PCs or Macs. When you see something on the Web you'd like in one of your magazines, click this bookmark and a small Flipboard window opens with thumbnails of your magazines, allowing you to add the item. Alas, this bookmark is very difficult to install on the browsers on the iPad and iPhone.

There's a new Notifications feature that tells you when people have liked or commented on your magazines. A "By Our Readers" feature suggests public magazines the Flipboard staff considers outstanding.

Publishers are making use of the new magazine feature in Flipboard. Esquire has created a magazine that's a collection of its interviews and Rolling Stone has published a Flipboard magazine collecting some of its articles on the Beatles.

If you find a magazine you like, you can subscribe to it, for easy and continued access, or share a link to it via Twitter, Facebook or email. If somebody who has Flipboard wants to view the magazine, it'll automatically open. Otherwise, the link will take a person to a Web page with instructions on how to get Flipboard.

Unfortunately, what you can't do is to edit your magazine much, or add original or local content to it. You can't rearrange articles, or create your own text articles, or add photos or videos that live only on your iPad or iPhone. You also can't rearrange articles. Because Flipboard is so oriented to pulling in content from online sources, to use one of your own photos or videos in your own magazine, you'd have to first post it to a site like Flickr. To use an article you write for your own magazine, you'd have to first post it online.

The only tweaking you can do directly is to change the cover picture, which is typically drawn from the most recent article you include that has a photo; remove an item; create and change the title and a short description of the magazine; and change its status between publicly visible or private.

You also can't charge for your magazines or sell ads in them, though any ads embedded in the content you include would travel with that content into your magazine.

Flipboard says it expects to add some of these features, like the ability to use photos and videos stored on your device, in updates.

Overall, Flipboard's new personal magazines are a very good addition to a very good app.

—Find all of Walt Mossberg's columns and videos at the All Things Digital website, walt.allthingsd.com. Email him at mossberg@wsj.com. A version of this article appeared March 27, 2013, on page D1 in the U.S. edition of The Wall Street Journal, with the headline: New Flipboard: News, Posts Handpicked And Shared.


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Saturday, April 13, 2013

Nike's Profit Leaps 55%

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Friday, April 12, 2013

Oh, My! That Dirty Book Has Sold 70 Million Copies

Everybody knows sex sells. Now, in book-publishing circles, it's a bit clearer exactly how much.


E.L. James's "Fifty Shades" erotic trilogy sold more than 70 million copies in print, audio and e-book editions in English, German and Spanish from March through December, according to Bertelsmann SE & Co., parent of the books' publisher Random House. The first of the books was published in the ...

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Thursday, April 11, 2013

Scholastic Posts Loss as 'Hunger Games' Ebbs

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Wednesday, April 10, 2013

Signals Weak for TV-Ad Market

Broadcast-television ratings have dropped sharply this season. And that, combined with the weak economy and competition from other media, augurs badly for the spring ad-sales market, ad buyers and analysts say.


Some of them are predicting that the broadcast networks' take will be steady to slightly lower in the so-called upfront, the annual bazaar in which TV executives pitch their new shows for the coming season.


More TV ad dollars are expected to move to cable channels, a shift that has accelerated in the past couple of years. But both broadcast and cable television are facing more intense competition from online media, including Web video outlets.


That rivalry is likely to be on full display in May, when some of the online giants and TV networks go head to head with glitzy events aimed at wooing advertisers. After the presentations, the TV networks step up their ad-sales negotiations, trying to win commitments for the bulk of the new TV season's ad time.


Magna Global, a research and ad-buying arm of Interpublic Group of Cos., estimates that the money raised in this year's TV upfront market could be up about 2%. Magna expects broadcast networks' dollar volume could fall 2% while cable TV's volume could rise about 5%.


"Despite corporate profits being at a high, marketers are still taking a cautious approach in anticipation of lackluster consumer spending and, therefore, their willingness to invest in advertising is taking a conservative approach," said Tim Spengler, chief executive officer of Magna Global.


Another major ad-buying company suggested that ad sales could be flat at broadcast networks and higher at cable networks. Meanwhile, Chris Geraci, president of national broadcast at Omnicom Media Group, a unit of advertising company Omnicom Group Inc., said his firm foresees "flat demand overall, with continued strength from the technology and automotive sectors, balanced by potential reductions from retail and pharmaceuticals."


These predictions suggest the upfront could be weaker than last year, when the ad-sales market was tepid, and volume was flat at most of the major broadcast networks. Networks don't publicly disclose details of their upfront sales.


"Early indications are that the 2013/14 TV upfront could follow last year's trend of slowing growth," Michael Senno, an analyst at Credit Suisse, said in a note to investors last week. He said that ad buyers currently expect steady or slightly higher total dollar-volume growth.


Network predictions are mixed: One network executive said that volumes could be higher, while another said it was too early to make predictions.


One sign of the broadcast networks' tempered expectations came from CBS Corp. Chief Executive Les Moonves, who in the past couple of years has predicted "double digit" increases in upfront pricing. During an investor conference earlier this month, Mr. Moonves declined to project a specific number. He did, however, say ad demand was increasing and CBS would "lead" in "volume and CPM increases." CPM is the cost of reaching a thousand viewers.


Mr. Moonves's reason for taking a low-key approach: Last year, the network's price increase failed to match his forecast. "Last year was only up 9% [in terms of upfront pricing], so I was a little bit of a liar," he said during the conference.


One factor weighing on advertisers' minds are the rating shortfalls that many networks have suffered this season. Ratings have weakened at the four big networks since the start of the fall season in late September.


Among viewers ages 18 to 49, the demographic most prized by advertisers, this season's average prime-time audiences through March 17 were down 23% at News Corp .'s Fox; 7% at Comcast Corp.'s NBC; 3% at CBS; and 8% at Walt Disney Co.'s ABC. (News Corp. also owns Dow Jones & Co., publisher of The Wall Street Journal.)


Fox has been particularly hard hit because few of its new fall shows drew big audiences, while aging hit "American Idol" has been losing steam.

NBC NBC's Savannah Guthrie and Matt Lauer. Network predictions are mixed.


CBS was the only broadcast network to show a rise in total viewership, with a 2% gain.


The audience figures don't include delayed digital-video-recorder viewing on days after a show's broadcast, which TV executives blame for most of the erosion.


The ratings declines have some marketers rethinking their ad-buying strategies, ad buyers said. Some are expected to shift money to cable channels, they said. While ratings have declined at some cable channels, ad prices on cable tend to be lower than on broadcast TV, according to ad buyers.


In some cases, the Web could take a share of those dollars. "Advertisers have seen a significant shortage of ratings, and some are willing to take some money and move it online," said John Muszynski, chief investment officer at ad company Publicis Groupe SA's Spark SMG.


Indeed, one major movie-studio marketing executive said the studio plans to keep overall TV spending flat this year, in part because of muted ratings. "Ratings are not up, and there really is nothing big and new to jump into," the marketing executive said.


To be sure, media buyers and networks typically spar over their upfront expectations as a negotiating tactic. But this year's anemic predictions may carry more weight, with full-year growth in TV spending expected to weaken, in part because the year lacks an Olympics or presidential election, two events that boosted ad spending last year. Some ad buyers foresee an uptick in 2014, however, in part because of the Winter Olympics and the soccer World Cup.


Publicis's ZenithOptimedia expects TV advertising to grow just 2.8% this year to $63.9 billion. Zenith expects outlays on network-TV ads to decline 2% and spending on cable to increase 7%.


Michael Nathanson, an analyst for Nomura Securities, is more pessimistic. In a recent note to investors he predicted that broadcast-network advertising would decline 2.5% while cable would rise 5%.

A version of this article appeared March 25, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Signals Weak for TV-Ad Market.


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Tuesday, April 9, 2013

When the Box Says 'Protein,' Shoppers Say 'I'll Take It'

When General Mills Inc. wanted to introduce two new bars to its stable of snacks, it chose the same word to make them sell: protein.

Protein is the buzzword that is helping sell many kinds of foods. Food companies are placing more prominent protein labels on packaging and adding protein to such products as drinks, bars and cereals.

"It's one of those rare things that has a lot of different meanings to a lot of different people and they are all positive," says Barry Calpino, vice president of breakthrough innovation for Kraft Foods Group Inc., sellers of products from Velveeta ...

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Monday, April 8, 2013

Blackstone Open to Dell as CEO

Blackstone Group LP is open to keeping Dell Inc. founder Michael Dell as chief executive under its plan to gain control of the computer maker, people familiar with the matter said.

The private-equity firm is competing against an offer from Mr. Dell and private-equity firm Silver Lake Partners to take the company private. Hedge-fund investor Carl Icahn also made a proposal for Dell late ...

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Sunday, April 7, 2013

GameStop Will Need a Powerup to Win

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Saturday, April 6, 2013

Jimmy Stewart's Lesson for the Euro Zone

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Friday, April 5, 2013

Oil Demand Could Peak by End of Decade, Citi Analysts Say

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Thursday, April 4, 2013

Pinnacle IPO to Test Appetite

NEW YORK–Thursday's initial public offering for frozen foods purveyor Pinnacle Foods Inc. is setting up to be a test of how much investors are willing to pay for a company that offers a hefty dividend but comes saddled with debt and limited prospects for growth.

The maker of Van de Kamp's fish sticks and Lender's frozen bagels is slated to set a price for its IPO late Wednesday, a deal that is likely to be the year's third-largest IPO. Shares are expected to fetch between $18 and $20 per share and could raise as much as $580 million.

Pinnacle, which is backed by Blackstone Group LP, is the latest in a string of deals brought to market this year by sponsors including private-equity shops or venture capital firms. Blackstone bought Parsippany, N.J.-based Pinnacle for $2.16 billion in 2007. It added Birds Eye Foods Inc. in 2009 with a $1.3 billion deal.

Pinnacle said in its prospectus that it's targeting an 18-cent quarterly dividend, which would imply a 3.8% annual yield based on the midpoint offer price. That compares with a 2.2% dividend yield on stocks in the Standard & Poor's 500-stock index. With interest rates at rock bottom, high-dividend paying stocks have been commanding a premium from investors.

"I would be surprised if it doesn't price at the top end of the price range or above that," said Josef Schuster, founder of IPOX Schuster LLC, an IPO research-and-investment firm based in Chicago. "It's a stable business and has good brand value. I think investors are also looking at it for the dividend yield," he said.

Mr. Schuster's fund, the $67 million First Trust U.S. IPO Index exchange-traded fund, doesn't participate in first-day IPO trading, but said he is looking hard at adding shares in the coming weeks.

Another potential positive for the deal is that investors have been taking a shine to IPOs brought to market by financial sponsors such as Blackstone. Thirteen such deals have generated an average first-day gain of 20%, compared with a 14% first-day pop for all initial offerings, according to Ipreo, a market intelligence firm.

On the potential negative side of the ledger, Pinnacle's brands–which also include Vlasic pickles and Celeste pizza–are widely known, but its sales have mostly been flat. The company booked $2.5 billion in sales in the 2012, up 0.4% from the year earlier.

Then there's the debt: As of the end of last year, its total debt stood at $2.1 billion, or about five times 2012's adjusted earnings before interest, taxes, depreciation and amortization.

But leverage hasn't been much problem for recent IPOs. With the Federal Reserve expected to keep interest rates low, investors have relegated concerns about debt loads to the back burner.

For example, Realogy Holdings Corp., a real-estate services firm that owns and franchises brokerages including Century 21 and Coldwell Banker, had net leverage of more than seven times its forward Ebita when it went public in October. That deal, which was backed by private-equity firm Apollo Global Management LLC, fetched a price at the high end of its prospective range and shares are up more than 80% since their IPO.

In Realogy's case, investors jumped at the chance to play an IPO tied to a broader recovery in the housing market, observers say. Stocks like plywood maker Boise Cascade Co. and Tri Pointe Homes LLC have seen strong stock gains after their IPOs this year.

Analysts also note the consumer-staples sector generally tends to be more supportive of debt loads because sales, even if uninspiring, are usually relatively stable.

"The food industry is an example of an industry with relatively low operating risk. So food companies, whether it's Heinz, or Pinnacle Foods, can support higher debt ratios than companies in more cyclical industries," said Jay Ritter, a finance professor at the University of Florida who tracks IPOs.

Pinnacle will list Thursday on the New York Stock Exchange under the ticker PF and would carry a market value of $2.2 billion at the high point of the prospective price range.

Write to Chris Dieterich at chris.dieterich@dowjones.com or Matt Jarzemsky at matt.jarzemsky@dowjones.com


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Wednesday, April 3, 2013

Prudential Is Fined Over AIA Bid

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Tuesday, April 2, 2013

Small Nations Stress Distance from Cyprus

BRUSSELS—The risks posed by hosting a large financial industry became a flash point on Wednesday as the Cyprus bailout trained the spotlight on other small euro nations that depend on the sector for jobs and economic growth.

The issue has become a sore spot mainly for Luxembourg and Malta after the debate over Cyprus prompted European ministers and politicians to question the viability of housing a large financial center in a small country. Cyprus's bailout requires the country to shrink its large financial services industry to the euro-zone average, setting an unwelcome precedent for nations whose economic models are based on financial services.

The decision to impose losses on Cypriot bank deposits as part of the bailout has also raised fears in some countries that the euro zone is turning itself into a less attractive environment for global finance.

Luxembourg, which is one of the euro zone's biggest financial centers despite its tiny size, fired back on Wednesday, issuing a statement saying it was concerned about recent "comparisons between the business model of international financial sectors in the euro area."

Luxembourg finance minister Luc Frieden said there was nothing wrong with having a larger-than-average financial services industry. "We want to expand it further, not to downsize it," Mr. Frieden told The Wall Street Journal in an interview on Wednesday.

Mr. Frieden also rebuffed suggestions that the Cypriot bailout, which imposes steep losses on many uninsured bank deposits, should guide how the euro zone treats failing banks in the future. All deposits, regardless of size, should be protected in euro zone bank overhauls, he said.

"The risks are too high with the Cypriot model," he said, adding that depositors must be able to have absolute trust in their banks.

Luxembourg, a nation of 525,000 people sandwiched between Germany, France and Belgium, is a world financial center, packed with banks, investment funds and wealth-management firms catering to the very rich. The assets of its banking system are worth 22 times its annual economic output, by far the largest proportion in Europe and far higher than Cyprus, where bank assets are about seven times annual output.

The country, one of the euro zone's founding members, became a financial center thanks to low taxation and comparatively light regulation dating back decades. Luxembourg has weathered the financial crisis relatively well so far, but officials fear the country has much to lose if investors begin to see the currency area as a risky place to keep money. "Depositors and investors will go to Asia or elsewhere," Mr. Frieden said.

In an interview published Wednesday, the central bank governor of Malta, a small country with big ambitions to build a financial sector, also dismissed as "misleading" any comparison with Cyprus. The assets of Malta's major banks amount to "just below 300%" of gross domestic product, which by international standards was "within normal limits," Josef Bonnici told the Times of Malta. Overall bank assets are around eight times GDP, according to European Central Bank data.

Mr. Bonnici also highlighted the exceptional nature of Cypriot banks' losses on Greek government debt. "Maltese domestic banks have limited exposure to securities issued by the program countries," Mr. Bonnici said.

Luxembourg also took issue with comments by some officials that boiled down Cyprus's problems into a simple question of the size of its banking system, relative to its overall economy. What matters, rather, is the "quality and solidity" of the financial sector and its size in relation to the euro area as a whole, the government argued in a statement.

Still, some financial experts argue that governments need to pay close attention to the size of their financial sectors, because they could be dragged down by the inability to support failing banks.

"The lesson from Cyprus is that you have a very strong fragility of the sovereign when the banking system is very large," said Nicolas Veron, a senior fellow at Brussels-based think tank Bruegel.

Cyprus's bailout has sparked fresh warnings from policy makers about overreliance on financial sector revenues. In a speech in Moscow last week, European Commission President José Manuel Barroso said the crisis in Cyprus was "the result of an unsustainable financial system" that was a multiple of the country's GDP and "certainly has to adapt."

"Markets are now focusing on potential weaknesses in euro-zone states whose banking sectors are very large relative to their economies," said Christian Schulz, an economist at Berenberg Bank in London.

Mr. Schulz said the political signals from the Cyprus bailout are a clear threat to Luxembourg's interests.

"Luxembourg will now have to explain why its financial system is so big," he said. "That in itself will raise concern with people who have large deposits there."

Still, Luxembourg's banking sector consists largely of subsidiaries and branches of foreign banks, so that significant support might be expected from mother banks and, ultimately, the governments of those mother banks, in the event of a crisis. Just 8% of Luxembourg's banking assets are held by domestic banks, compared with 71% for Cyprus, according to ECB data.

All three big international credit ratings firms still rate Luxembourg's government debt triple-A.

—Todd Buell
contributed to this article.

Write to Tom Fairless at tom.fairless@dowjones.com


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Monday, April 1, 2013

U.K. Banks Need Almost $38 Billion

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