Wednesday, April 15, 2015

Gold Prices Held Down by a Stronger Dollar

Amazing how we said the world was ending in 2008 and it has not. Aivars Lode
By Tatyana Shumsky
Gold prices pulled back below $1,200 an ounce on Monday as a stronger dollar overwhelmed interest from foreign buyers.
The most actively traded contract, for June delivery, fell $5.30, or 0.4%, to settle at $1,199.30 a troy ounce on the Comex division of the New York Mercantile Exchange.
The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, was recently up 0.2% at 88.35 as the dollar neared a 12-year high against the euro. Gold is traded in dollars and becomes more expensive for buyers in other countries when the greenback strengthens against their home currency.
Gold denominated in euros rallied to a 2½-month high, trading at €1,139.20 an ounce.
Still, noted Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago, “There’s a lot of support here despite the move in the dollar.” 
Negative bond yields in Switzerland and other European countries are burnishing gold’s appeal to investors there, Mr. Haberkorn said. Gold doesn’t pay interest or dividends and has an easier time competing with yield-bearing assets when yields are negative.
Gold is seen as a store of value and a currency alternative by some investors, who buy it as a haven from those risks. Europe’s recent efforts to jump-start economic growth have focused on pumping cash into its financial system. Some traders worry this will further erode the value of the euro and have been buying gold as a hedge.

How Volcanoes Change the Climate

No mention of man in here. Aivars Lode

By The Economist

TWO hundred years ago, Tambora, a volcano in Indonesia, blew its top in the most violent eruption in recent history. Damage from the volcano and an associated tsunami was immense; perhaps 100,000 people died immediately, or starved in the aftermath. The effects on the wider world, though, were even greater. Like all large eruptions, Tambora’s was to change the climate around much of the planet for years.
But just how do volcanoes change the climate?
Eruptions spew out not just lava and ash, but also gases—indeed it is these gases, trapped under great pressure in molten rock, that give an eruption its explosive power. For the climate, the key gas is sulphur dioxide. Once it gets into the stratosphere, sulphur dioxide from a volcano mingles with water, forming tiny sulphate particles.

These particles reflect some sunlight back into space, and the surface below cools. They also absorb some sunlight, warming up the stratosphere. These temperature changes have big knock-on effects. A cooler surface means less evaporation, and thus less rainfall. A warmer stratosphere means stronger jet streams. In the year after Tambora’s eruption, scientists estimate the stratosphere's sulphate veil caused a three percent drop in rainfall and cooled the planet by one degree Celsius. That is a temperature drop in one year twice as large as the long-term warming the Earth has seen over the past half-century. The climate upheaval caused a hiatus of the Indian monsoon, drought in southern Africa and widespread crop failures in Europe, where it was known as the year without a summer.

No one can say when an eruption large enough to have such drastic effects will happen next. That one will happen, though, is a certainty.

One of the reasons they cite is cord cutting Viacom Sets $785 Million Charge for Restructuring

More trouble in the digital world. Aivars Lode

Media company says pretax charge to cover layoffs, asset write-downs as rerun values slide

By Keach Hagey 

Viacom Inc. said it would take $785 million in pretax charges for job cuts and to write down the value of underperforming shows hit by weak ratings, a soft advertising market and growing online competition.
The layoffs affected as many as 400 people, according to people familiar with the matter, while the shows being written down include reruns of “CSI,” “Entourage” and “Community,” among others. Charges include an accounting change for programming such as reality and game shows that are losing their allure faster than in the past. 
New York-based Viacom is grappling with weak ratings across all its major networks, and concerns on Wall Street that pay-TV providers may decide they can do without its bundle of channels. In the first quarter, its Nickelodeon channel was down 34% in its target demographic, its Comedy Central was off 30%, Spike dropped 23%, and MTV lost 34%, all compared with a year earlier, according to Jefferies and Nielsen estimates.
On Monday, it said the restructuring is expected to provide annual savings of about $350 million, and $175 million this year. The company disclosed plans for the restructuring in February during its first-quarter earnings call. 
Net income in the media giant’s fiscal second quarter is projected to fall 15% to $429 million, according to analysts’ estimates compiled by FactSet. Viacom earned $502 million in net profit on $3.17 billion in revenue a year ago. 
About $430 million of the write-down is to account for underperforming programming, including abandoning some acquired shows, according to a regulatory filing on Monday. The charge underscores the difficulty that many big media companies are facing with reruns as they cope with cord-cutting, Netflix’s popularity and rapid changes in what viewers find popular. 
The restructuring formalizes the reorganization of Viacom’s television networks into two groups from three. That move was signaled when longtime Viacom executive Van Toffler, who led the group that included MTV, VH1 and CMT, said in February he would leave the company in April and his division’s channels would be absorbed by two newly reorganized groups.
The company said the new structure “realigns sales, marketing, creative and support functions, increases efficiencies in program and product development, enhances opportunities to share expertise, and promotes greater cross-marketing and cross channel programming activity.”
The company also said that the savings would let it reallocate resources to expand in new areas like “data analysis, technology development and consumer insights.” 
Viacom Chief Executive Philippe Dauman has been one of the most vocal critics of Nielsen’s ability to measure viewing that occurs on nontraditional platforms like mobile devices, and has pledged to increase the amount of its revenues that are “non-Nielsen-dependent” to 50% from 30%. 
The recent proliferation of competition for viewers’ attention from streaming video services like Netflix, Amazon and Hulu may be largely to blame for the steep drop off in cable TV’s ratings. The Cabletelevision Advertising Bureau estimates that about 40% of third- and fourth-quarter TV ratings declines can be attributed to such subscription online video services, according to people who attended the industry group’s March meeting. 
Because of the charge and other acquisitions, Viacom said it would “temporarily pause” until October a $20 billion share repurchase program.
Viacom, which is controlled by media mogul Sumner Redstone, fell as much as 1.8% in late trading after closing up 98 cents at $68.92 in 4 p.m. Nasdaq trading. Its shares were off 19% in the last 12 months.

No Wins, No Problem as Knicks’ Network Beckons Buyers: Real M&A

 More change in the digital media space afraid of technology dismemberment. Aivars Lode

By Alex Sherman 
    (Bloomberg) -- Watching the New York Knicks is a form of
punishment these days. That may not stop Comcast Corp. or
Twenty-First Century Fox Inc. from spending billions for the
rights to show you their games.
    Madison Square Garden Co. Chairman James Dolan is forging
ahead with a plan to split the $6.4 billion company into two
pieces: the sports franchises and entertainment venues on one
side, and the regional sports television networks on the other.
Those networks, MSG Network and MSG+, may become instant
acquisition targets, said Brandon Ross, an analyst for BTIG in
New York.
    Comcast and Fox are repositories for regional sports
networks, or RSNs, and would relish more sports programming in
New York, the largest U.S. television market, Ross said. For
Comcast, it would be the next logical move after acquiring Time
Warner Cable Inc., which owns two RSNs in another big market,
Los Angeles.
    “Fox has already said they want to strengthen their
portfolio of RSNs, and I definitely believe Comcast is going to
be a potential buyer, especially with its pending Time Warner
Cable deal,” Ross said in a phone interview.
    The media assets may be worth about $4 billion, based on
estimates from BTIG and other research firms.
    Barry Watkins, a spokesman for New York-based MSG, declined
to comment. MSG shares closed Wednesday at $83.88 and are up
11.5 percent so far this year.
    MSG and MSG+ air live games and related content for the
National Basketball Association’s Knicks and the National Hockey
League’s New York Rangers and Islanders, New Jersey Devils and
Buffalo Sabres.
    MSG charged pay-TV providers $3.49 per subscriber per month
this year, according to estimates from research firm SNL Kagan.
MSG+ charged $2.98. The average regional sports network charges
$2.66, implying a higher value for New York’s sports teams --
even as the Knicks struggle through the current season with the
NBA’s worst record.
    Fox, which owns almost two dozen regional sports networks
across the U.S., may be the more aggressive bidder for MSG after
raising its ownership stake in the YES Network, which airs New
York Yankees games, to 80 percent last year, Ross said. There
are marketing and operational synergies by owning two large RSNs
in the same area. Fox can also use the broadcast rights from the
New York-area teams to add live programming to its national
sports network, FS1, he said.
    Comcast would also be a natural fit for MSG if regulators
approve its $45 billion Time Warner Cable acquisition, said Amy
Yong, a New York-based analyst for Macquarie Group Ltd. Comcast
owns regional sports networks in many areas of the U.S. where it
also offers cable service, including San Francisco, Boston,
Philadelphia and Chicago. Comcast also already owns a minority
stake in SNY, which airs New York Mets games.
    The largest U.S. cable provider will additionally acquire
Time Warner Cable’s two Los Angeles regional sports networks,
which broadcast Lakers basketball and Dodgers baseball games, if
a deal goes through.
    “If Comcast were to buy MSG after Time Warner Cable, it
would build a pretty strong New York and L.A. presence, which is
pretty complementary,” Yong said. “It makes sense from that
    Like most tax-free spinoffs, there could be a waiting
period post-closing of anywhere from six months to two years
before an acquirer can bid.
    Still, the Dolan family may want to sell the networks
sooner rather than later. The networks are exposed in a changing
television landscape, where consumers now have access to
skinnier video bundles for as little as $20 a month that don’t
include regional sports networks.
    “The Dolans will probably want to do everything in their
power to do so, given everything that’s going on in the broader
video market,” BTIG’s Ross said.