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Boston Financial News – Ultimate Fighting Means Big $$$

Boston Money — Mon, 23 Aug 2010 04:28:42 +0000

UFC’s Boston road trip well worth it

By Dan Duggan | Sunday, August 22, 2010 | http://www.bostonherald.com | Ultimate Fighting

Photo by Herald file

With his signature bombast, Dana White has vowed to “blow the (expletive) roof” off TD Garden.

And the UFC president will attempt to back up that boast when his mixed martial arts organization makes its Massachusetts debut at the Garden with Saturday’s pay-per-view event, UFC 118.

White, media savvy and ever-quotable, will be ubiquitous this week. He’ll attend Wednesday’s Red Sox [team stats]-Mariners game at Fenway Park [map] and will make numerous radio and television appearances. And there will be plenty of star power around the city with dozens of UFC fighters on hand for the Fan Expo at the Hynes Convention Center on Friday and Saturday.

On fight night, music will blare, fans will roar and the action will excite.

It figures to be a wild week. But getting the UFC to Boston was the result of a quiet and steady process that took years.

Mapping out plans

The map, measuring about 4 x 6 feet, rests against the window in Marc Ratner’s Las Vegas office.

Displaying the United States and Canada, the map features three colors: green, yellow and gray, representing the different stages of MMA regulation.

Green means MMA is sanctioned in the state, yellow means regulation is pending and gray means the state or province has no athletic commission, as is the case in Alaska and Wyoming. The UFC won’t hold an event in unregulated states, so the organization has strived for MMA regulation in the other 48 states with commissions.

When Ratner joined the UFC in 2006 after 14 years as executive director of the Nevada State Athletic Commission, there was far less green on the map. MMA was sanctioned in 22 states and faced an uphill battle, due to lingering misconceptions that the sport was no-holds-barred.

As the UFC’s vice president of regulatory affairs, Ratner has spearheaded the effort to get the sport regulated across the country. Well-respected from his time overseeing many of the biggest fights in boxing, Ratner set out to educate legislators about MMA.

“It’s always about education,” Ratner said. “We had to do more education to really have the legislators really understand exactly what we were doing and really explain to them about the healthy and safety.”

While the UFC aimed to grow the sport globally, it had a keen eye on a few markets. One of those targeted spots was Massachusetts.

Though smaller, local promotions had legally conducted shows for years, there was no government regulation.

The first step in bringing UFC to the Bay State came in May 2008 when White and Ratner enlisted the Dewey Square Group, a Boston-based lobbying firm. Though it succeeded in getting an MMA regulation bill passed as an amendment to the 2008 budget, there was not enough time for a full hearing, so it didn’t get through the legislature.

When a new legislative session began in 2009, State Sen. James E. Timilty, the chairman of the public safety and homeland security committee, made the bill a priority.

“We should have some oversight just to make sure something doesn’t go wrong,” said Timilty (D-Walpole). “And secondly, there’s a significant economic benefit.”

At a hearing in front of the public safety committee at the State House in April 2009, Ratner was joined by other executives and UFC lightweight Kenny Florian, a Dover native who is set to fight on Saturday’s card.

The bill ultimately faced little opposition, passing by a 34-1 vote in the Senate and a 144-10 vote in the House. Gov. Deval Patrick signed the bill into law in November.

Massachusetts then became the 42nd state to regulate MMA. Such progress wouldn’t have been possible without Ratner’s work.

“The guy is legendary for his work with the (Nevada) athletic commission,” White said. “To have a man like that going out representing us and working with all these other commissions to get it done, you can’t put a value on that.”

Garden is ripe

Regulation paved the way for the UFC to come to Massachusetts, but it wasn’t the final hurdle. The UFC needed a venue, and though there was some discussion of an outdoor show at Fenway Park, TD Garden – home to the Celtics [team stats] and Bruins [team stats] – was the only realistic option.

Once MMA got regulated, the UFC and Garden quickly agreed on the date.

“We knew from seeing what was happening in other major markets that the UFC is breaking out and doing incredible numbers,” Garden president John Wentzell said. “The interest is skyrocketing, both live as well as on the pay-per-view side. We knew it was a very hot commodity and it hasn’t disappointed.”

The state also needed to revamp its athletic commission to include officials with backgrounds in mixed martial arts. The three-person commission grew to five.

Though the commission has experienced some growing pains, everything is now going smoothly with UFC 118 now just six days away. Commissioner Todd Grossman – noting that “the biggest show on Earth” is about to be held in Boston after just five months of planning – said it is testament to the panel’s hard work and progress.

“The fact that we’ve been able to get a program up and running as efficiently as we have is quite impressive for a government agency,” he said.

Green means go

Ratner’s map now has 44 green states. Among the UFC’s priority destinations, only New York remains unrealized, but Ratner considers regulation in the Empire State inevitable.

That’s the same belief Ratner had in Massachusetts when he set out to convince its lawmakers two years ago. Now that it’s come to fruition, the UFC will get the big, glitzy payoff for all the dull, behind-the-scenes work.

“You know how much this means to me and how long I’ve wanted to come there and how much I love the city of Boston,” said White, who once lived in South Boston and ran a boxing gym in the Hub. “Boston has always been good to me. Believe me when I tell you, I’m going to put on a show that’s going to blow the (expletive) roof off that place.”

Article URL: http://www.bostonherald.com/sports/other_sports/ultimate_fighting/view.bg?articleid=1276271

BJ Penn’s main goal to rewrite past
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Schedule of events for UFC 118
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Chael Sonnen talks great game before UFC 117 vs. Silva
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Boston Finance – The Future of Fort Point Channel

Boston Money — Sun, 15 Aug 2010 17:11:56 +0000

Revival on tap for Hub channel

$11m plan turns Fort Point into a social hot spot

By Casey Ross, Globe Staff | August 14, 2010

Fort Point Boston

Boston’s Fort Point Channel, for decades a polluted workhorse of industry, is about to undergo a dramatic transformation to a recreational and social playground that could host floating restaurants and music shows, kayak rentals and fishing charters.

This fall, major property owners along the channel will lay the groundwork for its renaissance with new public docks that will increase access to the milelong waterway, advancing the city’s vision of a civic space akin to the Boston Common or the Rose Fitzgerald Kennedy Greenway.

An $11 million plan for improvements to the channel is modeled, in part, on waterfronts in Chicago, Seattle, and other cities where museums, outdoor dining, and public events draw crowds to their shorelines.

The catalyst for the burst of activity in Boston is a law signed earlier this month by Governor Deval Patrick that essentially rezones the channel for recreational use, allowing installation of docks and other floating structures that were once banned to protect commercial navigation.

“These changes will allow us to take an urban waterway and activate it in ways that have been very successful in other cities,’’ said James Rooney, head of the nearby convention center and president of Friends of the Fort Point Channel, a civic group involved in the channel restoration.

Most of the boat ramps, taxi stations and docks will be built by commercial property owners who are required by their environmental permits to improve public access and amenities to their waterfronts.

Funds for many other improvements, such as floating art barges and water festivals, will be raised from fees charged to firms planning future building projects in the area.

New developments are moving slowly in the down economy, so it may take several years before new attractions are built. The shuttered Boston Tea Party Museum, for example, is still raising money to complete renovations and reopen facilities closed after being struck by lightning in 2001.

Another wave of improvements will probably result from the eventual redevelopment of the US Postal Service mail facility, which is planning to relocate to South Boston. But that project, too, has also been slowed by the recession.

Still, the new access points to begin construction this fall will open the channel to an array of possibilities, including floating restaurants and cafes, fountains, model boat racing, and other attractions included in a plan City Hall has for the area.

“I’ve always seen this area as a great opportunity for rowing and other events on the water,’’ Mayor Thomas M. Menino said in an interview. “Right now, it’s really just dead, unused space. But the improvements in access will help us open it up and plan for the future of that whole area.’’

Already Boston Properties has built a 60-foot ramp to a dock that will provide temporary docking service for visiting boaters behind the 32-story tower it is building at the corner of Congress Street and Atlantic Avenue. The tower will have an expansive public plaza on the channel to eventually include a new tour service and concierge desk that will provide information on waterfront attractions.

Further up the channel, Procter & Gamble Co., which owns Gillette and its sprawling headquarters in South Boston, will begin construction this fall on a 60-foot dock in an area that will be dedicated to canoeing and kayaking. City officials are also urging Procter & Gamble to provide free public parking on its property, a request the firm is considering.

The Boston Children’s Museum is planning to build a dock for a water taxi station next spring. The museum is also exploring floating educational facilities and a possible partnership with a boat rental service, although those plans are still being developed.

“We would love to see this channel come alive,’’ said Amy Auerbach, the museum’s chief financial officer. “There are so many teaching and learning opportunities, and we want to take advantage of that as much as we can.’’

In many ways, Fort Point is ideal for a public park. The channel itself is about a mile long with a watersheet stretching more than 50 acres, making the area larger than the Boston Common. The expanded access will offer new perspectives to view the Boston Tea Party, which was staged in this corner of the harbor in 1773, and the wharves and warehouses that made the city a maritime center. The channel is also protected from wind and choppy surf, making it an ideal place to learn to use kayaks and canoes.

Parts of it still suffer from its past as an industrial zone, particularly the further reaches between the MBTA railroad tracks and Interstate 93, where trash and other debris are in plain view.

For more than a century, the channel was an active shipping route that provided access to smoke-belching rail and lumber yards in South Bay. But commercial traffic slowed dramatically in the 20th century, and for the last 50 years it has remained largely unused.

Recently some portions of the channel waterfront were spruced up. A new boardwalk in front of the Boston Children’s Museum, for example, is a popular fishing site, a fact that still seems surreal to those who remember when water in the channel was repellent to any form of life.

Rooney is a South Boston native who vividly recalls the rotten-egg stench emanating from the channel during his youth.

“It was so bad you didn’t even want to walk or drive over the bridges, ’’ he said.

As the Greenway was a byproduct of years of Big Dig construction, Fort Point Channel’s comeback is due to another major public works project: The $3.8 billion cleanup of Boston Harbor, which removed decades worth of sewage and industrial filth and made the water safer for recreational use.

While today its gray-green waters are hardly pristine, the channel is free of dangerous levels of contaminants, and it offers a pleasant getaway for residents and office workers. Sunny afternoons bring lunch-time crowds; office workers gather with their Blackberries out as children fish and tourists whiz by on bicycles or Segway scooters.

Getting to the next step could take years, but environmental advocates say the first wave of change promises that the once-forgotten channel is on its way to becoming a much livelier place.

“It’s not instantly going to be Venice on the water, but it will offer cultural activities that people can easily access,’’ said Vivien Li, executive director of the Boston Harbor Association. “People from all over the city will be able to enjoy the waterfront in a very safe area.’’

Casey Ross can be reached at cross@globe.com.

Boston Finance – Bridal Show Scam – FBI Arrests Karen Tucker!

Boston Money — Wed, 04 Aug 2010 15:53:43 +0000

Bridal Show Scam Busted: Woman Committed Cross-Country Wedding Fraud, Says FBI

Posted by Barry Leibowitz

(

CBS)

BOSTON (CBS/AP)

Thousands of bridal show exhibitors were jilted in an alleged scam in Boston, according to the FBI, which says a Pittsburgh woman cheated wedding businesses out of thousands of dollars for a “show” that never happened.

The FBI said 47-year-old Karen Tucker, who was arrested Tuesday, pulled off similar bridal show scams in five other states. She’s charged with wire fraud and aggravated identity theft.

Tucker and an uncharged co-conspirator allegedly posed as representatives of a business known as The Boston 411, then led the Massachusetts Convention Center Authority to believe they would hold an extravagant home and bridal show at the Hynes Convention Center over three days in March.

The heavily promoted show promised exhibitors face time with thousands of pre-registered brides-to-be, though few were actually lined up, authorities said. Prosecutors said Tucker and the other person collected fees in advance from exhibitors, but used most of the money for personal expenses, including rent, restaurants and shopping trips to Wal-Mart.

Tucker’s business even promised some money from the never-held show would be used to help victims of the Haiti earthquake, authorities said.

Tucker made a brief appearance in U.S. District Court in Pittsburgh on Tuesday. She will be held without bail until a detention hearing can be held in Boston.

Boston wedding photographer Aram Orchanian said he paid $750 through the PayPal online money transfer service to rent a corner booth at the Boston show and spent $3,000 more to produce promotional materials for it.

“I don’t understand how somebody can do this,” Orchanian said after learning of Tucker’s arrest Tuesday. “It’s just money to her, but to the people she did this to, it is their business.”

Tucker also allegedly conducted scams against wedding businesses in Ohio, Florida, Maryland, Nevada and Texas. Authorities said she ran a scheme in Miami between March and July of 2009, when an online version of “South Beach Bride” magazine was created with the promise that a printed magazine with ads from paid advertisers would be published and distributed. No printed magazine was published and the advertisers were not refunded their money, authorities said.

Durivage said authorities believe Tucker and her co-conspirator have, “with varying degrees of success,” run similar schemes in Columbus, Ohio, Las Vegas, Baltimore and Dallas.

MORE ON CRIMESIDER

March 2, 2010 – Bridal Show Thinly Veiled Scam: Boston Expo Burns 6,000 Brides and Vendors, Say Police

Financial Reform – Geithner in Boston

Boston Money — Tue, 03 Aug 2010 00:21:24 +0000

In New York, Geithner Kicks off Financial Reform Sales Tour

by Nancy CookAugust 02, 2010

Mario Tama / Getty Images U.S. Treasury Secretary Timothy Geithner speaks about financial reform at New York University’s Stern School of Business on August 2, 1010 in New York City.

Treasury officials are fanning out across the country this week to cities known for their financial institutions, including Boston, Charlotte and Philadelphia, to sell financial reform to Americans.

First stop: New York, where Treasury Secretary Timothy Geithner gave a speech late Monday afternoon at NYU’s Stern School of Business. There, before a small audience, he laid out the moral argument for financial reform and urged bankers to act before the government forced them to curb their excesses. “You can do all of that right now even before the first new rule of financial reform is written,” he said. After charting out the causes of the Great Recession, Geithner went through the four pillars of financial reform: consumer protection, mortgage lending, the derivatives market and increased leverage for global financial institutions.

Though his speech gave a more detailed look at the Obama administration’s plans, the crux of his talk centered about the ethical argument that banks need to keep more capital on hand and regulate themselves—just as consumers need to do a better job of saving—all for the good of the country. Both the tone of the speech and the Treasury officials’ roster of appearances were reminiscent of the way President Obama’s people marketed health care legislation and the stimulus package.

In early February 2009, Obama went to the heart of communities hit by the Great Recession: Elkhart, Ind., Fort Myers, Fla., and Peoria, Ill., to talk up the need for a stimulus package—just as Geithner came to the heart of the banking industry in Manhattan on Monday. A large segment of Geithner’s talk centered on the ways financial reform will help consumers. He talked specifically about simpler disclosures for auto loans, credit cards and mortgages, as well as better enforcement of consumer finance and mortgage scams, much like the Obama administration’s recent efforts to try to explain to health care reform to the general public by talking about the ways it would help ordinary Americans. The administration recently spent $700,000 on national cable TV ads, for instance, in which Andy Griffith says health care reform will give seniors free check-ups and lower prescription costs.

But, moral arguments notwithstanding, the administration still needs to sell the bill to bankers and financial leaders if not in public, then at least behind closed doors.

Geithner met Mayor Michael Bloomberg for breakfast Monday morning and privately ate lunch with leaders from the city’s financial and real estate sectors. According to Reuters, the lunch list included Laurence Fink of BlackRock, Donald Marron of LightYear Capital, Eric Mindich of Eton Park Financial Management and James Tisch of Loews Corp.

Win a Mustang – Joslin’s High Hopes Fund

Boston Money — Fri, 30 Jul 2010 13:12:15 +0000

With the proud support of The Iacocca Foundation and Herb Chambers, Joslin Diabetes Center presents an exclusive raffle benefiting Joslin’s High Hopes Fund. Enter to win this Limited 45th Anniversary Edition Iacocca Mustang and help raise critical support for the ongoing fight against diabetes.All proceeds from the raffle will go directly to Joslin’s High Hopes Fund which supports the Center’s greatest needs in research, education and clinical care.

Only 2,500 tickets will be sold! Don’t miss your opportunity to win this priceless piece of moving artwork!More information

Boston Financial News – Making it work in a tough Economy.

Boston Money — Tue, 20 Jul 2010 12:08:06 +0000

What companies do in a tough economy.

NEW YORK – A burrito company known for super-sized stuffed tortillas goes small. A chocolatier turns to cheaper pick-me-ups rather than expensive indulgences. A furniture retailer expands in the midst of the housing market bust.

Three businesses with three different stories, yet one unmistakable conclusion. For all the hand-wringing about the economy, plenty of companies are getting it right. They’re doing it the same way businesses have survived bad economies for decades: through innovation, cutting costs
and a little luck.

“When you see big national companies struggling, many times I wonder how we will make it,” says John Pepper, who founded the Boston-based burrito chain Boloco 13 years ago. “We are constantly blocking and tackling. We have to be.”

What follows are three good-news stories in a bad-news economy.

Trouble for Boloco’s burrito business showed up two years ago in the form of brown paper bags, the kind that workers in Boston’s financial district were using to tote their lunches in from home. As that was happening, two national burrito chains, Chipotle and Qdoba, expanded in New England, where Boloco has 16 stores.

It didn’t take long before the crowds thinned at Boloco. The worst part was that business dropped in the first and last 15 minutes of the two-hour lunchtime crush. The result: sales fell about 20 percent in its city locations and 10 percent across the company.

“The shoulders of the business fell off a lot,” Pepper says. “People were ordering the same, but there were less people.”

Pepper knew that offering cheaper and smaller items during a recession can be a bad idea in the food business. Slowing sales can get slower if too many people trade down. But he still thought there was an opportunity to grab people who didn’t want a huge burrito for lunch or might want to try some of his food without committing to a larger size.

The “mini” line includes burritos, shakes, smoothies and bowls, which has all the stuff that goes in a burrito except the tortilla. The 8-ounce mini burrito goes for $3.95, compared with the $6.25 for the 20-ounce original and $5.35 for a 14-ounce small. A mini shake sells for $2.95, while the original goes for $4.50.

Not only did people come back, now they visit more often. They don’t just buy a mini burrito, but pair minis together, or better yet, they buy an original burrito and then tag on a mini shake.

The value of the average transaction is up about 8 percent, and overall sales and profits are about 13 percent higher than a year ago.

“What we did was controversial because we are in the ‘super-size me’ business, but it worked,” Pepper says.

Lake Champlain Chocolates owner Jim Lampman was also watching his thriving business slow as the recession took hold two years ago.

The Vermont-based company’s annual sales fell by about 8 percent. Many of the 3,000 stores that carry its chocolates began ordering less and some stores couldn’t pay their bills.

Lampman, who founded the company in 1983, eliminated higher priced items and priced candy in ways that would attract buyers, like under $20, $15, $10 and $5.

A chocolate lollipop that once sold for as much as $6 was knocked down to $3.50 or so. Each one, from hearts to pumpkins, is hand-painted, so he scaled back on the design to save labor costs. He kept his seasonal packaging the same last year, saving $100,000. He depleted the inventories that he had.

Lampman also recognized the value of keeping his customers. He shipped products even when a store didn’t spend the required minimum of $250. He forgave some outstanding bills.

“A downturn like this forced us to be more focused on our operations and how we handle products,” Lampman says. “The result was we got all the business back we lost, and now are having one of our best years ever.”

At Unlimited Furniture Group Inc., owner Lenny Kharitonov thinks this is the right time to build his New York-based retail and distribution company into a national chain.

In the last two years, he expanded to seven stores from two and entered new markets in Chicago, Atlanta, Orlando, Boston and Washington. He took advantage of a glut of commercial real estate to negotiate flexible and affordable leases for new stores.

Kharitonov also uses the drop in newspaper advertising to his advantage by getting cheaper rates. Finding talented workers is easier and less expensive, too, because unemployment is so high.

It’s a risky strategy during the housing slump. The furniture business suffers when people don’t move, which means they don’t need new things for their homes. Plenty of his competitors have closed stores or gone out of business.

Kharitonov is making money, but not a lot.

“If we can be successful in a bad economy, then we will be in good shape in a stronger economy,” Kharitonov says.

He’s got a point. The economy will eventually lift from its funk. When it does, these companies should be well on their way.
___

Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

Boston Celtics Finance – Fork over Green for Playoff Security?

Boston Money — Sun, 18 Jul 2010 12:51:09 +0000

C’s loss cost Boston serious green

By Edward Mason | Friday, July 16, 2010 | http://www.bostonherald.com

Photo by Kelvin Ma

A victory celebration that never happened cost the cash-strapped city nearly $450,000 in police overtime as an army of cops hit the streets to control expected crowds of Boston Celtics [team stats] fans during the NBA Finals.

The Celts failed in their bid to win an 18th title, but a City Hall watchdog says the team should foot their fair share of the police OT bill just the same.

“The economy is down, but with the playoffs, money is coming in for the Celtics,” said Matthew Cahill, executive director of the Boston Finance Commission. “Taxpayers shouldn’t shoulder the complete burden of these things. It would only be just to share the burden of the police overtime.”

But it’s unlikely the Menino administration will go after the Green for the green, seeing it instead as a responsibility for the Police Department’s ranks of blue.

“The Boston Police Department develops safety and security plans, and Boston police will consider all revenue sources (to cover the costs),” said Dot Joyce, spokeswoman for Mayor Thomas M. Menino.

BPD spokesman Eddy Chrispin pointed out that the city, not the sports teams, traditionally pays for overtime following playoff games during title runs.

Cracking down on rowdy rooters outside the TD Garden and the Fenway bars on June 15 and 17 – Games 6 and 7 of the NBA Finals – cost $441,363, according to the Boston Police Department.

Cahill noted there is a history of partnership between the city and its teams to pay for police. The Celtics and local businesses helped pay for cops at championship parades in the past, most notably kicking in $350,000 – half of all noncop costs – when the Green Team hoisted its 17th banner in 2008.

Cahill, the city’s finance watchdog, said there’s nothing wrong with asking.

“It would be even better if the Celtics offered,” Cahill said. “They benefit financially from the playoffs.”

Calls and e-mails to the Celtics were not returned.

The nearly $450,000 paid for a dramatic show of force for the final two games of the 2010 NBA Finals, as Hub police brass sought to tamp down on shenanigans and mayhem that marred earlier sports celebrations.

In all, 3,159 officers over two days were used to keep a lid on violence in North Station and the Fenway. Police shut access to streets and barred patrons from entering taverns after the third quarter.

Article URL: http://www.bostonherald.com/news/regional/view.bg?articleid=1268232

Danny Ainge: Celtics to sign C Jermaine O’Neal
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Green machine
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Bradley needs ankle surgery; will miss summer league
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Boston Finance – Venture Capital Makes a Comeback

Boston Money — Sun, 18 Jul 2010 12:43:53 +0000

Boston Business Journal – July 17, 2010
/boston/stories/2010/07/12/daily33.html

Saturday, July 17, 2010, 12:01am EDT

Article Courtesy of: Boston Business Journal

VC showing signs of recovery

Boston Business Journal – by Galen Moore

Industry tracker Dow Jones Venturesource hailed a return to pre-recession levels in venture capital investing in the second quarter of 2010, but when combined with a dismal Q1, the venture industry remains on track for a $20 billion to $25 billion year in 2010.

VCs invested $7.7 billion over 744 deals in Q2, a 26-percent increase over the dollars invested, and 13 percent above the deals done in the same period in 2009.

Massachusetts enjoyed its share of the upswing, with $792.2 million invested over 81 deals – a 19 percent increase in activity, and a 56-percent increase in volume, over the year-ago period, when investors put $508.2 million to work over 68 deals.

However, New York was a fast follower, with $412.2 million invested in 63 deals. California remained the leader by far, with $3.96 billion invested over 296 deals.

Nationally, average deal size broke the $10 million mark for the first time since before the fall, 2008 financial collapse, reaching $10.4 million on the strength of outsize deals in the energy sector, where the average deal sizze shot to $43.8 million, compared to $22.6 million in Q2, 2009.

The New England region’s largest energy deal on the quarter was Westborough-based lithium ion battery maker Boston-Power Inc., which took $62 million – up from $60 million initially reported – from existing investors Foundation Asset Management, Oak Investment Partners, Venrock and Gabriel Venture Partners.

However, the region’s biggest deal of the quarter closed in the IT sector. In April, Summit Partners invested $96.5 million Casa Systems Inc., an Andover-based company that makes network equipment for delivering video over cable.

Financial Penalties for Illegal Downloads: $2,250 per Tune?

Boston Money — Sun, 11 Jul 2010 13:56:06 +0000

Is $2,250 Per Song the New Standard for Online Copyright Infringement?

Article Courtesy of: PC Magazine

By David Murphy

Fancy a $675,000 penalty for illegally downloading 30 songs off the Internet? That was the kind of music Boston University graduate student Joel Tenenbaum was ready to face following a July 2009 verdict that found him liable for sharing 30 copyright-protected songs on the popular Kazaa P2P network.

The damage–$22,500 per song–has since been lowered by U.S. District Judge Nancy Gertner, who cut out roughly 90 percent of the original penalty to a more “manageable” $67,500, or $2,250 per pirated track. We say that as we do, for the move still puts Tenenbaum in an untenable financial position.

“A $67,500 pricetag for 30 songs is still a bill Joel cannot afford,” wrote Debbie Rosenbaum on the site Joel Fights Back. “Even Judge Gertner added, ‘Significantly, this amount is more than I might have awarded in my independent judgment.’”

The Recording Industry Association of America, plaintiffs in the case, remains less than thrilled by the decision. According to a statement released by the RIAA, the group plans to contest the decision on the grounds that it invalidates the carefully construed arguments–reached by a jury–as to the reparations owed.

“The judge appropriately recognized the egregious conduct of the defendant, including lying to the court about his behavior, but then erroneously dismisses the profound economic and artistic harm caused when hundreds of songs are illegally distributed for free to millions of strangers on file-sharing networks,” the organization said.

Interestingly, Gertner’s reduction in fees exactly matches a similar reduction performed by Michael Davis, chief judge for the U.S. district court for the District of Minnestora, in the not-quite-so-different case of Jammie Thomas-Rasset versus the RIAA. Thomas-Rasset, found liable for infringing 24 different copyrights for sharing music on Kazaa, was facing a $1.92 million penalty herself.

Finding the penalty to be too far into, “the realm of gross injustice,” said Davis, the judge instead reduced the total damages to $54,000. That’s $2,250 per song as well, or three times the minimum amount provided for by U.S. copyright law.

That doesn’t mean that the RIAA has accepted the ruling, however. In fact, the group elected to pursue its rights to a third trial against Thomas-Rasset and Davis, in response, ordered both parties to figure it all out via third-party arbitration. That didn’t quite work, and the third case against Thomas-Rasset will kick off on October 4 of this year.

Though it might appear that judges are looking to set a payment precedent in cases of P2P-based copyright infringement of music, the RIAA has made it clear that it’s equally willing to go to the mat to preserve what it feels are fair and adequate restitutions for its member labels.

That said, these two major court cases are, indeed, the only ones that have actually gone to trial based on the RIAA’s lawsuit threats–most accused settle out of court to an amount far less than the $2,250-per-song “standard” that’s emerging.

Finance News – Poof go the Big Brands

Boston Money — Fri, 09 Jul 2010 17:20:59 +0000

10 Brands That May Disappear in 2011

by Douglas A. McIntyre

provided by

24/7 Wall St. has created a new list of brands that may disappear, which includes Readers Digest, Kia Motors, Dollar Thrifty (NYSE: DTG – News), Zale (NYSE: ZLC – News), Blockbuster (BLOKA.PK – News), T-Mobile, BP Plc (NYSE: BP – News), RadioShack (NYSE: RSH – News), Merrill Lynch and Moody’s (NYSE: MCO – News).

24/7 Wall St. regularly compiles a report of brands that are likely to disappear in the near-term. Last April, and again in December, we published our findings. Usually, it would take a full year before such a list could be compiled again. However, the current economic climate has accelerated this process and a majority of the brands on the first two lists are either gone, have been acquired, or have filed for bankruptcy.

With a number of the brands on the December list either gone or on a short-term path to extinction, 24/7 Wall St. has put together the latest version of the Ten Brands That Will Disappear. To qualify, we expect that brand to be gone by the end of 2011, or for its parent to be sold or go into Chapter 11.

Reader’s Digest was once the most widely read magazine in the world. According to the company, it still may be when its overseas editions are taken into account.

Last August, the company took its U.S. operations into Chapter 11 to decrease debt. It emerged from bankruptcy in February with $525 million in exit financing. The company cut the number of issues it publishes a year from 12 to 10 last year. It also cut its circulation guarantee for advertisers to 5.5 million copies from 8 million. It would have been unthinkable just a few years ago that a magazine as old and famous as Reader’s Digest would be shuttered. However, Reader’s Digest as it is known in the U.S. will be gone.

Blockbuster was the national leader in the video rental business for nearly two decades. Now it is contemplating Chapter 11 to eliminate debt. The company lost $65 million last quarter. Its revenue continues to fall rapidly as firms such as Redbox and NetFlix (Nasdaq: NFLX – News) siphon off its revenue. Blockbuster has more than 6,000 stores, so it is hard to imagine that the company could disappear. But, there is some precedent, even if it is on a smaller scale. Blockbuster rival Movie Gallery said in February that it would close all of its 2,400 U.S. stores. Blockbuster’s model of renting movies through physical locations has been destroyed by cable and satellite video on demand, DVDs via mail and dispensing machines. Blockbuster may still be around as a company that has movie kiosks and a small mail and Internet-delivered content business. But its brick and-mortar business is dead.

Dollar Thrifty Automotive Group, the car rental company, is for sale. Hertz (NYSE: HTZ – News) is a potential buyer, as is Avis Budget (NYSE: CAR – News). Each of the larger car rental firms would use the Dollar Thrifty business to expand their market share. That does not mean that they would keep the brand. The current company is not much of a business. It made only $27 million last quarter on revenue of $348 million. It has more than $1.5 billion in “debt and other obligations.” The number of vehicles that Dollar Thrifty operates at any one time is only 95,000 compared to 420,000 for Hertz. The firm’s customer base and some of its locations may be valuable, but Dollar Thrifty can’t compete with Avis and Hertz. A decade ago, the car rental industry was able to support six independent brands. A significant drop in business and leisure travel and sharp competition among the companies has already caused the creation of Avis Budget. Dollar Thrifty will be the next casualty of the industry’s consolidation.

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T-Mobile, the U.S. wireless provider, is owned by telecom giant Deutsche Telekom (DTEGY.PK – News). It is the No.4 cellular company in an American market that only supports two really successful firms — AT&T Wireless and Verizon Wireless. Even the third-largest company in the market — Sprint-Nextel (NYSE: S – News) — has 50 million customers. T-Mobile had 34 million customers at the end of last year. T-Mobile only had a profit of $306 million in 2009. That was down from $483 million in 2008. T-Mobile not only faces three larger competitors, it also has to begin to offer 4G service to compete with Sprint’s new WiMax service and LTE-based products from AT&T (NYSE: T – News) and Verizon (NYSE: VZ – News). T-Mobile may seek a partner to offer a 4G network, but there are no super-fast broadband networks likely to be finished before its three rivals offer the service. As it now stands, T-Mobile has no future in the U.S. A merger with Sprint-Nextel has been mentioned several times. The combined company would have a customer base about the same size as AT&T or Verizon. And the transaction would probably make Deutsche Telekom a large owner of the combined operation. Another alternative would be a merger with Virgin Mobile. Maybe Deutsche Telekom will just change the firm’s name.

Moody’s Corp. may have the name with the largest negative brand equity in the U.S. Scandals about the company’s rating of mortgage-backed securities and allegations that the firm compromised it ratings process to get business have ruined the company’s image. Moody’s is more than 100 years old, but the reputation it built over those years is irretrievably lost. There is a chance Moody’s could be ruined by civil actions, four of which are pending, and by charges brought by the U.S. government. Overseas authorities may bring a number of actions against the company as well. Moody’s activities are almost certainly to be more regulated, which will squeeze margins and hurt sales. Moody’s may end up selling its accounts to a new rating company, which would probably hire many of its employees. Pacific Investment Management Co. and other institutional investors have talked about taking on some if not all the roles that the current rating firms play. Research houses like Alliance Bernstein (NYSE: AB – News) could also take on some of those rolls. Part of Moody’s operation may stay alive, but there is not much left to salvage in the brand.

BP: The case against the BP brand is not so much that the company will enter bankruptcy. It is that BP may end up breaking into pieces for its own sake. This may be to put the liabilities for the Deepwater Horizon spill into a company that also holds escrow capital to cover the huge costs of clean-up and suits. BP may also want to separate its successful refining operations from its exploration business, or recreate an American- based company similar to BP America, which existed for two decades. A restructuring of BP would also allow the firm to take a badly crippled brand and give the oil operation a new name — much as it did when it changed its name from British Petroleum. The second time may be the charm.

RadioShack is one of the oldest retailers in the U.S. It was founded in 1921 and in the early 1960s was purchased by Tandy Corp. The Tandy name was used for some of Radio Shack’s retail stores. RadioShack is currently a takeover target. There have been rumors that the company may be taken private via a leveraged buyout or purchased by Best Buy (NYSE: BBY – News), probably for its locations. Best Buy would certainly not keep the RadioShack brand because it is considered downscale and does not have the reputation for quality products and service that Best Buy enjoys. RadioShack has already begun to rebrand itself as “The Shack,” an indication that it knows the older brand is a burden.

Zale Corp. was founded in 1924 by the Zale brothers. It was one of the earliest retailers to offer the ability to buy items on credit. By 1980, Zale had revenue of over $1 billion. In 1992, Zale filed for bankruptcy and by the end of that decade, its revenue was $1.3 billion — about the same as it is today. Zale has been at death’s door for some time. Its market value is down to $48 million. The company is trying to turn itself around, but most experts are not convinced. The company recently made the Forbes list for firms with extreme financial risk. In the last quarter, the retailer lost $12 million on revenue of $360 million. Zale is also in a very crowded market that includes retailers as large as Wal-Mart (NYSE: WMT – News). Golden Gate Capital recently put money into Zale to buy it time. New money may defer the point at which Zale goes under, but it won’t prevent it.

Merrill Lynch may have been acquired, but that will not keep it safe. In fact, quite the opposite is true. Banks and other large financial services firms have a habit of buying large retail brokerage houses and then changing their names. Shearson is gone. So is EF Hutton and Prudential. In most cases the parent company wants to put their own names on the door. That is very likely to happen to Merrill Lynch, which was at one point the largest full-service broker in the U.S. Merrill is now owned by Bank of America Corp. (NYSE: BAC – News), and the buyout spawned a number of scandals that kept Merrill’s name in the paper for weeks and did a great deal to harm its name with customers. Bank of America will follow a time honored tradition, and Merrill Lynch will become BofA Investment Management.

Kia Motors Corp. is one of the two car brands of Hyundai of South Korea. It has always been a marginal brand. Its stable mate, Hyundai USA, has a reputation for high quality cars like the Sonata and Genesis. Kia sells “low rent” cars and SUV nameplates like the Sorento and Rio. As GM and Ford (NYSE: F – News) have already discovered, it is expensive to maintain multiple brands and storied car names, including Pontiac, Saturn and Mercury, are disappearing. Most Kia cars sell for $14,000 to $25,000. Hyundai has several cars in the same price range. Hyundai’s Sonata has quickly become one of the best-selling cars in America, and its Genesis flagship model competes with mid-sized BMWs and Mercedes. The parent company will take a page from several other global car companies and dump its weakest brand.

To read more on these brands and others, see the full article at 24/7 Wall St.