Monday, October 31, 2011

Home prices show gains

WASHINGTON — Home prices rose in August in half of major cities measured by a private survey, a sign that prices are stabilizing in some hard-hit portions of the country.

The Standard & Poor’s/Case-Shiller index showed Tuesday that prices increased in August from July in 10 of the 20 cities tracked. That marked the fifth straight month that at least half of the cities in the survey showed monthly gains.

The biggest price increases were in Washington, Chicago and Detroit. The greatest declines were in Atlanta and Los Angeles.

The August data provides a “modest glimmer of hope” that some areas may have bottomed out and could be turning around, said David M. Blitzer, chairman of S&P’s index committee.

He noted that cities in the Midwest — Chicago, Detroit and Minneapolis — have shown some strength since May.

In Detroit, the recovering auto industry has helped lead a small rebound in the housing market. Home prices have risen 2.7 percent since August 2010, making it one of only two cities to show a year-over-year gain in that time. The other was Washington.

In Minneapolis and Chicago, fewer homes are being put up for sale, leading to higher prices and better sales figures. That’s likely due to fewer foreclosures in those cities. September’s drop in homes for sale in the Twin Cities was the largest decline in inventory in more than seven years, according to the Minneapolis Area Association of Realtors.

Still, Robert Shiller, the co-founder of the index and a Yale economics professor, said in an interview on CNBC that overall home prices were “flat” and a recovery in the struggling housing market was not on the horizon.

The index, which covers half of all U.S. homes, measures prices compared with those in January 2000 and creates a three-month moving average. The August data are the latest available nationally.

But more recent numbers are available for Middle Tennessee from the Greater Nashville Association of Realtors. In a nine-county swath in and nearby Nashville, September’s single-family median home price dropped 5.1 percent from the same period last year, the second consecutive month that prices have ticked lower after rallying this summer. The median price of $163,000 was a drop of more than $8,800 year-over-year, the GNAR data found.

More drops likely

Prices are certain to fall again once banks resume millions of foreclosures. They have been delayed because of a yearlong government investigation into mortgage lending practices.

“We certainly believe the bulk of the decline in housing is behind us and indeed, one might even say that ‘housing’ is more likely to improve from here,” said Dan Greenhaus, chief global strategist for BTIG. “But given the overwhelming level of inventory that remains on the market … further price declines seem almost assured to help clear the market.”

Sunday, October 30, 2011

In book, Steve Jobs hints at plan for Apple to reinvent TV

LOS ANGELES — Now that Apple Inc.’s chief visionary is gone, the company is facing a billion-dollar question: Will it be able to conjure another pioneering product without Steve Jobs?

Perhaps fittingly, a possible answer came posthumously from Jobs himself.

The television set, the quintessential squawk box of the 20th century, is ripe for a reinvention, the Apple co-founder said before he died Oct. 5.

“I’d like to create an integrated television set that is completely easy to use,” Jobs told biographer Walter Isaacson in the new book Steve Jobs, which hit shelves this week. “It would be seamlessly synched with all of your devices and … will have the simplest user interface you could imagine. I finally cracked it.”

His remarks in the book have set off a flurry of speculation that Apple will roll out a television set that could remake the $100 billion industry, much as the company altered personal computers, music players and cellphones.

Emphasis is on simplicity

Apple and Jobs have a record of taking existing technologies and redesigning them with an emphasis on visual simplicity, allowing users to play songs, open applications and make calls with the click of a mouse or the swipe of a finger — with little technical knowledge required.

But in the past decade, television systems have gone in the other direction, with remote controls sprouting dozens of buttons, many for obscure functions that consumers don’t use. Meanwhile, cable TVs grid of hundreds of shows and channels has become overgrown and difficult to navigate.

“My parents come to my house, and there are three remotes to work the TV,” said Peter Misek, an analyst at Jefferies & Co. “I literally have to change the station for them because they’re freaked out to try it themselves. That’s a disaster.”

For some analysts, Jobs’ declaration to Isaacson has confirmed what they already suspected. Brian White of Ticonderoga Securities wrote to investors Tuesday that he had seen “concrete evidence that an Apple Smart TV was already flowing through factories over in China in early stage pilot and prototype production.”

What's new

Apple has been able to build highly profitable businesses with its iPhone and Mac computers which have been priced at the high end of the market.

Industry watchers believe that Apple has been laying the groundwork for a television set for years, intensifying its focus recently on developing high-resolution, TV-like screen technology for its iPhones and iPad tablet computers, and on software that works across all of its devices and allows users to manage and store broad swaths of their digital lives.

Apple this month also introduced a sophisticated voice-control system for the new model of its iPhone. Called Siri, the software is able to understand free-form spoken commands, including scheduling meetings, writing emails, checking the weather and finding restaurants.

Saturday, October 29, 2011

European debt deal lifts Dow by almost 340 points

NEW YORK — An agreement to contain the European debt crisis electrified the stock market Thursday, driving the Dow Jones industrial average up nearly 340 points and putting the Standard & Poor’s 500 index on track for its best month since 1974.

Investors were relieved after European leaders crafted a deal to slash Greece’s debt load and prevent the crisis there from engulfing larger countries like Italy. The package is aimed at preventing another financial disaster like the one that happened in September 2008 after the collapse of Lehman Brothers.

But some analysts cautioned that Europe’s problems remain unsolved.

“The market keeps on thinking that it’s put Europe’s problems to bed, but it’s like putting a 3-year-old to bed: You might put it there, but it won’t stay there,” said David Kelly, chief market strategist at J.P. Morgan Funds.

Kelly said Europe’s debt problems will remain an issue until the economies of struggling nations like Greece and Portugal grow again.

Still, the Dow Jones industrial average soared 339.51 points, or 2.9 percent, to close at 12,208.55. That was its largest jump since Aug. 11, when it rose 423 points.

All 30 stocks in the Dow rose, led by Bank of America with a9.6 percent gain. It was the first time the Dow closed above 12,000 since Aug. 1.

“This seems to set aside the worries that there would be a massive contagion over there that would have brought everything down with it,” said Mark Lamkin, head of Lamkin Wealth Management.

Even with Thursday’s gains, the Dow remains 4.7 percent below the high for the year it reached on April 29. The Dow has fallen every month since then due to a combination of a slowdown in the U.S. economy, a worldwide parts shortage after the earthquake and tsunami in Japan, and concerns about the European debt crisis.

The Dow is now at approximately the same level it traded at on July 28.

But anticipation of a solution to Europe’s debt problems and signs that the U.S. economy is not in another recession have lifted stocks higher throughout October.

Middle Tenn. shows signs of stability

In the Nashville area, there were some modest signs of economic stability as well. The Middle Tennessee unemployment rate for 13 counties in the Nashville-Murfreesboro region held steady for September at 8.5 percent, the same rate as August’s revised data, the state Department of Labor and Workforce Development said. Davidson County saw its jobless rate ease lower by 0.2 percentage points compared with a year earlier.

The Dow is up 11.9 percent for the month so far. With only two full days of trading left in October, the Dow could have its biggest monthly gain since January 1987.

The S&P 500 rose 3.7 percent, to 1,284.59. That index is up 13.5 percent for the month, its best performance since a 16.3 percent gain in October 1974.

Small-company stocks rose more than the broader market. The Russell 2000 index jumped 5.3 percent.

European leaders still have to finalize the details of their latest plan. French President Nicolas Sarkozy spoke with Chinese President Hu Jintao amid hopes that countries with lots of cash, like China, can contribute to the European rescue.

Past attempts to contain Europe’s two-year debt crisis have proved insufficient. Greece has been surviving on rescue loans since May 2010. In July, creditors agreed to take some losses on their Greek bonds, but that wasn’t enough to fix the problem.

Worries about Europe’s debt crisis and a weak U.S. economy dragged the S&P 500 down19.4 percent between April 29 and Oct. 3. That put it on the cusp of what’s called a bear market, which is a 20 percent decline.

Since then, there have been a number of more encouraging signs in the U.S. economy. Despite the jitters over Europe, many large American companies have been reporting strong profit growth in the third quarter, including Dow Chemical.

Friday, October 28, 2011

Will Nissan's Smyrna plant go global?

Nissan’s two U.S. plants, including the one in Smyrna, could soon go global and begin making vehicles for export overseas, moving beyond their current role of assembling cars and trucks only for buyers in North America.

The move could lead to significant expansion of the automaker’s U.S. production facilities, including its other vehicle-assembly plant, in Canton, Miss., and the engine plant in Decherd, Tenn., analysts say. And any significant expansion could also bring an increase in jobs for American workers.

Building cars here for export is a move that Nissan’s Japanese leaders have said might be necessary because of the increasingly high costs of production in Japan, fueled in large part by the high value of the Japanese yen versus the U.S. dollar and other world currencies.

“As far as trying to keep production in Japan, all bets are off,” said Rebecca Lindland, director of auto-industry research for IHS Global Insight. “The yen is definitely wreaking havoc not only for Nissan, but for Honda and Toyota as well.

“It’s incredibly difficult to make a profit when you aren’t building where you sell, but it’s also important to find stable currency opportunities, or your products are going to be more expensive and the price tags uncompetitive, particularly in developing countries,” she said. “It’s especially important now that the Detroit 3 (General Motors, Ford and Chrysler) are doing so well.”

Franklin-based Nissan Americas officials wouldn’t comment about the possibility of using their U.S. plants to assemble any vehicles for export as far away as numerous markets in Asia. But Japanese media recently reported that Yokohama, Japan-based Nissan Corp. plans to move some production of its Teana premium midsize sedan to the Smyrna plant near Nashville.

Although it’s not sold in North America, the Teana is available in South America, Asia and other parts of the world. Adding it to the product mix in Smyrna wouldn’t be difficult, analysts say, because the car uses the same basic architecture as the Maxima sedan, one of the key products at the Middle Tennessee plant.

If that occurs, the Teana would be the first Nissan vehicle built in Smyrna strictly for export elsewhere, but the volume of shipments would be relatively small, auto analysts said. The car’s annual sales are well below those of such popular Smyrna products as the midsize Altima sedan, which recently has been out-selling the one time market-leading Honda Accord.

Other exports

But exports from Tennessee could go well beyond the Teana, and include the all-electric Leaf, as well as other electric vehicles and even a new plug-in hybrid that Nissan Chief Executive Carlos Ghosn mentioned as he unveiled the automaker’s six-year “Nissan Green Program” this week in Yokohama, Japan.

The new models are expected to arrive by 2015, including the plug-in hybrid, which would be similar in concept to the Chevrolet Volt and the new 2012 Toyota Prius plug-in model.

While there was no word given on where any of the new Nissan “green” vehicles, including three more all-electric models, would be produced, Smyrna is a good bet to get at least some of them, and could produce significant numbers for export, Lindland said.

“There’s a strong possibility they would produce these new electric vehicles in the United States,” she said. “The yen is not getting any better. They will have to start making decisions now because the situation is not likely to change anytime soon.”

Nissan is now expanding the Smyrna facility to begin assembling the Leaf in early 2013, and also is building a $1 billion lithium-ion battery plant at the same site to make up to 200,000 battery packs annually for the Leaf both for local production and export. The Smyrna plant will initially have the capacity to assemble 150,000 of the Leaf cars annually.

“I’m sure they are looking at the feasibility of exporting the Leaf, particularly since they’re going to have excess capacity at least at the start,” Lindland said. “It’s too soon to say what the real demand will be for the Leaf because they still have infrastructure and supply-chain issues.”

Moving production of some models here from Japan for eventual export probably would be a good idea, said Jim Hall, owner of the automotive consulting firm 2953 Analytics in suburban Detroit.

“It makes sense,” Hall said. “But whether they do it depends on more than the value of the yen. They have to be vehicles whose engines are built here, as well. If you have to bring engines over (from Asia), the transportation costs can be prohibitive.”

Sales of the Leaf, which went on sale in limited areas last December, have been sluggish so far. The only plant now building the Leaf is in Japan, but the vehicle in on sale in North America, Asia and Europe. A plant is also planned for England, but it’s not online yet.

Capacity available

Nissan has significant unused capacity at both Smyrna and Canton now. As currently configured, Smyrna can build 550,000 vehicles a year, but turned out just 282,500 in 2010; Canton can assemble 400,000, but produced only 230,000 last year.

Canton already has a new product this year, though — the 2012 NV commercial van, which began shipping to U.S. dealers in February. They are full-size cargo vans about the size of Nissan’s Titan pickup, and are the automaker’s first foray into the U.S. commercial-vehicle market that has been dominated by Ford and General Motors.

The Canton plant, which has three assembly lines, already is working one of them on three shifts, building the Altima midsize sedan. But the second line, which builds the Titan full-size pickup and Armada full-size SUV, runs just one shift daily. The third line began producing the commercial vans in mid-January.

Before getting any vehicles to build and then export overseas, though, Smyrna and Canton may see more models for the North American market that are now built in Japan. One is already slated to move to Smyrna from Japan in early 2013 — the Nissan Rogue compact crossover utility vehicle.

Smyrna would seem to be the most logical place to expand production, adds George Peterson, president of the industry research firm AutoPacific.

“Smyrna is huge and very flexible,” he said. “It’s already the largest auto plant in the country, and from that standpoint, it can absorb a lot of capacity.”

Thursday, October 27, 2011

BMI board sets two firsts with new leader

BMI’s board of directors has a new face at the helm, and it’s the first time the title has been given to a woman and an African-American.

Susan Davenport Austin, an Ivy League-educated woman from Pittsburgh whose family has a long history in radio and who previously spent 10 years in investment banking, will be music rights group BMI’s next chairwoman of the board, the company said Wednesday.

Austin, 44, who is based in New York, was the board’s vice chairwoman before her appointment and will succeed Jack Sander, who will serve as the company’s presiding director.

“The music business has been changing and evolving, but we will continue to make certain that our songwriters are getting paid,” Austin said, referring to BMI’s watchdog duty as overseer of royalty payments, as well as promoting growth within the music industry.

Austin remains chief financial officer of Sheridan Broadcasting Corp., a Pittsburgh-based network of stations, which includes gospel programming. Austin’s family founded the company in 1972.

BMI recently unveiled mobile applications in which songwriters can upload set lists and concert venues to be considered for royalty payments.

Austin sees her tenure on the board’s top post as a way to continue on this path.

BMI last month reported $931 million in revenue for the fiscal year ending June 30.

“This historic high in revenues continues an unbroken record of year-over-year increases stretching back more than 20 years,” a BMI press release noted.

BMI distributed $796 million in royalties this year. The company represents songwriters, composers and music publishers.

Austin said her new role will play to her strengths, some of which she employed on Wall Street.

“In investment banking, I used to tell people my job was to raise money and buy and sell companies. But I was really helping a company with strategic thinking,” said Austin, who said the same approach applies to her duties on the BMI board.

Austin went to Harvard University, from which she received a bachelor’s degree in mathematics. She also holds a master’s degree in business administration from Stanford University. Before joining her family’s broadcasting company, Austin worked in communications for Goldman Sachs and also at Bear, Stearns & Co.

Wednesday, October 26, 2011

First Horizon CEO elected to chairman of the board

Bryan Jordan, CEO of First Horizon National Corp., has been elected to succeed Mike Rose as chairman of the bank holding company’s board as of Jan. 1.

Scott M. Niswonger, chair and founder of Landair Transport, also has been elected to the First Horizon board. Memphis-based First Horizon is the parent of First Tennessee Bank.

Rose, 69, will retire from the First Horizon board in April, just after he reaches the board’s mandatory retirement age of 70. Rose has served as a director since 1984 and as chairman since January 2007. Jordan called Rose “a thoughtful guiding force.”

The 49-year-old Jordan, who was recruited to the bank by Rose, joined First Horizon as chief financial officer in May 2007 and was named CEO less than a year and a half later.

Meanwhile, Niswonger also is chairman emeritus and former CEO of Forward Air Inc. After completing his aviation studies at Purdue University, he moved to Greeneville, Tenn., as a corporate pilot for The Magnavox Co. He began his first transportation company in 1973. He is president and founder of the Niswonger Foundation, an educational operating foundation, and a member of the executive council for the Niswonger Children’s Hospital, an affiliate of St. Jude Children’s Research Hospital.

— Randy McClain

Tuesday, October 25, 2011

Global law firm chooses Nashville for facility

An international law firm said Tuesday it will consolidate back-office functions in a new Nashville facility, the latest shared-services center to come to the region.

Pillsbury Winthrop Shaw Pittman LLC said its planned center will provide human resource, information technology, finance and other non-legal professional services for its 14 offices worldwide, including its New York headquarters.

The center is expected to open in fall 2012 and eventually have as many as 150 employees, who probably will be a mix of relocations and local hires.

The firm wants to lease about 30,000 to 40,000 square feet of office space and is scouting several possible locations for the center, but has no timetable for making a decision, said Sean Whelan, the firm’s chief financial officer.

Whelan declined to say what geographical areas the firm is considering, but a local official said the firm is focusing its search on Davidson County.

“We’re excited,” said Jeff Hite, the Nashville Area Chamber of Commerce’s business recruitment director. “It’s a good win for Nashville.”

Local officials had been talking with the firm and its site selection consultant for six months, he said. Those talks included economic incentives offered by Metro, the state and the Tennessee Valley Authority, Hite said. The amount and type of incentives the project could receive have not been determined, local and state officials said.

Nashville wins out

Pillsbury Winthrop began its search with 300 U.S. cities, then narrowed that to a dozen for additional study, Whelan said. From there, the firm picked four finalists for site visits before ultimately choosing Nashville.

Affordable housing, a concentration of educational institutions here, cultural amenities and favorable tax rates were key factors in the decision, Whelan said.

“We really wanted to find a place that was attractive to our employees,” he said, noting Nashville was the top choice of a focus group of Pillsbury Winthrop employees.

That helped push Nashville ahead of other places that offered lower startup and operating costs, said Jim Rishwain, the firm’s chairman.

The firm announced plans for the center a year ahead of its anticipated opening to give employees enough time to consider and prepare for relocation, Whelan said. He, along with the firm’s chief information officer, will move to Nashville to oversee the center’s startup and operations.

Last year, Loews Hotels opened a 40,000-square-foot shared-services center here. As part of its search, Pillsbury Winthrop talked with Loews and others who have opened similar centers in the area, Whelan said.

Pillsbury Winthrop focuses on the energy, financial services, real estate and technology sectors. It has 11 U.S. offices, plus one each in London, Shanghai and Tokyo and an affiliate in Abu Dhabi, according to its website. This will be its first location in Tennessee.

Monday, October 24, 2011

For investors, playing it 'safe' can still be risky

CHICAGO — Investors remain anxious to find safety even as the stock market moves back toward positive territory for the year.

They’re on pace to yank more than $20 billion out of stock funds this month, the fourth time in the last five months, scarred by the volatility over everything from the sluggish economy to Europe’s debt crisis to the threat of another global recession.

Despite the recent market uptick, there’s still plenty to worry about.

Fears remain that the Greek government may fail to pay its massive debts, which would wreak widespread financial havoc. Federal Reserve Chairman Ben Bernanke hasn’t backed off from his statement early this month that the economic recovery “is close to faltering.” And investors aren’t fully convinced that the selloff that pushed the Standard & Poor’s 500 index down 14 percent in the third quarter has run its course.

All the added uncertainty fuels any temptation to abandon stocks, as many already have done.

But “playing it safe” comes at a cost. Over the long run, fleeing to cash or buying Treasurys may be even more dangerous in this era of low interest rates as well as low returns. It can do permanent damage to your money’s buying power and your retirement prospects.

That’s the message financial advisers have been hammering home to clients who want to abandon the stock market, fearing a repeat of the 2008 meltdown or who are simply fed up with all the plunges.

Illusion of safety

Disillusioned investors, too, risk chasing an illusion of safety. So-called safe havens aren’t all that safe anymore.

“This is what I say to clients: ‘There is no safety’,” says Femi Shote, an investment adviser with Asset Harvest Group in McLean, Va. “What I preach is resilience, not safety.”

Hints of improvement in the latest corporate results hold out hope for investors, while highlighting the risk of being on the sidelines. Joseph LaVorgna, chief U.S. economist at Deutsche Bank, says the stock market is “pretty cheap” after all the selling and could come back quickly.

“All this volatility doesn’t engender a lot of confidence,” LaVorgna says. “But some good news can quickly restore it. If it looks like the economy is still growing and there’s some resolution in Europe, we could have the tonic for a powerful rally.”

Whether that occurs soon or not, here’s a look at the numbers confirms the meager payoffs of playing it safe.

Cash: Although it can provide a sense of security, cash doesn’t hold its value well over time. The average yield on a money-market account is just 0.54 percent, according to Even the best-paying online savings accounts pay 1 percent or less. As recently as the summer of 2008, just before the financial crisis hit full-force, you could earn 5 percent on such accounts.

Certificates of deposit also pay poorly. The highest rates available are 1.15 percent on a one-year CD and 2.2 percent on a five-year CD.

U.S. Treasury notes: The safety of bonds is less rewarding than it used to be. The yield on the benchmark 10-year Treasury fell to a record-low 1.71 percent last month and remains near 2 percent.

Gold: It is far too speculative to be used wisely as protection against a falling stock market. But gold has been embraced by investors worried about rising U.S. debt, the possibility of inflation and a spreading European debt crisis. More and more piled in as the price nearly tripled in four years, reaching a record $1,891.90 on Aug. 22.

Since then, it has tumbled all the way back near $1,600.

Aside from gold’s recent slide, a market-weary investor might reason that at least cash and other options offer less downside risk than stocks and the most protection for their accounts. Investment experts, however, consider that thinking short-sighted. If you’re too conservative, they note, you can outlive your money.

Inflation historically averages about 3 percent, so putting money aside that earns less than 1 percent means its value is eroding over time. Keeping money in the stock market is the likeliest way to stay ahead of inflation.

Even in a period that included two sharp declines in the market, the S&P 500 index had an average annual return of 7 percent for the 15 years from mid-1996 through June 30. That’s hard to match elsewhere.

Investors who ditch stocks are removing future growth from their portfolios and need to compensate elsewhere.

“When you sell, you need to simultaneously increase the amount you’re contributing to that account,” says Stuart Ritter, a certified financial planner for T. Rowe Price in Baltimore. “Or if you’re in retirement, you need to withdraw less. Otherwise you have no chance to keep up with inflation.”

Opportunity cost

Then there’s what economists call the opportunity cost — what you miss out in the long haul by leaving.

Over the longer term, the case for staying in stocks is even more compelling. History says the market is highly unlikely to decline over any 10-year period, recent times notwithstanding. On a rolling basis, the S&P 500 has produced losses in only four out of 76 different 10-year periods since 1926, according to a T. Rowe Price analysis.

Those who want to keep their cash on the sidelines until the market calms down, even for a few days, do so at risk of missing a comeback. An investment that excluded the best 10 days of the S&P 500 in the past decade would have posted an annual loss of 1.5 percent rather than a gain of 5.3 percent.

Investors who sat out even part of the 2009-11 bull market learned the hard way.

When panicked clients call Joe Adkins of Financial Advisors International with a request to sell after seeing the Dow drop hundreds of points, the Orlando, Fla., money manager offers a ready reminder. Had they sold stocks in March 2009 when the market bottomed and bought back in in December 2009, he tells them, they would have missed a 4,000-point gain in the Dow — nearly two-thirds of the two-year bull-market rally.

“You shouldn’t manage your money based on the headlines,” his advice goes. “Just weather the storm, because if you go to cash you risk running out of money.”

Besides telling clients to stick with the market, many advisers are steering them toward large, stable, blue chip stocks with a history of paying annual dividends of 3 percent or more.

Others recommend sinking a small percentage into alternative investments — a catch-all term for such instruments as hedge funds. Alternative investments can be used as a tool to reduce overall risk through diversification. But the complexity, cost and lack of liquidity typically don’t make those the safest of investments, either.

Sunday, October 23, 2011

Newcomer musicians open their wallets to avoid paying dues

Musician and Detroit native John Maison is willing to pay his dues to make it in the music business — but he’s also willing to pay in cash.

So the 20-something former commercial loan officer decided to hire Nashville songwriting consultant Marc-Alan Barnette to help him speed along the traditional years-long, dues-paying, school-of-hard-knocks route to Nashville songwriter success.

For a fee, Barnette agreed to impart to Maison some of the music industry wisdom he had learned from nearly a quarter-century as a songwriter, including introducing Maison to the right publishers, booking him in the best songwriter showcase events and serving as a co-writer on some of Maison’s original songs.

“Nashville is a 10-year town,” Maison said. “That’s how long it takes to establish all the relationships and filter through all the garbage of empty promises. But the idea is if you hire someone like Marc you can get your chops down and pay your dues so much faster.”

Barnette is among a growing number of “songwriter service” providers who are making a living by offering aspiring songwriters and singers entrée into the world of Nashville music.

The practice is controversial because it upends the mutual self-help culture that singers and songwriters say has long defined the local music scene — where musicians and writers have moved to town, made friends and been able to navigate the often-complicated music business with informal advice freely traded among fellow artists.

The practice also has drawn outright scam artists, who promise wildly extravagant results — fame, record deals, hit songs — they can’t deliver in return for hefty fees, industry observers say.

But Barnette, who in the past has opened for Charlie Daniels, Garth Brooks and Patty Loveless, is among the consultants who staff at institutions like the Nashville Songwriters Association International recommend.

The music business' shifting landscape

Two seismic shifts in the music industry in the past decade — one cultural, one economic — have driven the phenomenon of songwriting consultant services, said Bart Herbison, NSAI’s executive director.

The first is the economics of the music business. Longtime songwriters are turning to consulting to make a living because their own options for making money have narrowed. Publishers are retaining fewer professional songwriters on staff as well.

What used to be a comfortable middle-class living, even for songwriters without huge hits, has all but evaporated, leading songwriters like Barnette into more entrepreneurial roles.

The second shift is the “American Idol phenomena,” Herbison said. “Everyone wants to be a star overnight. It’s just that moment in our culture. You’ve got the demand for that kind of help.”

Barnette said he also sees a third phenomenon at work: The songwriting community in the digital age is a lot more complicated than it used to be. While there are fewer opportunities to becoming successful, there are many more ways to access them than in the past. He sees his role as a “personal trainer for songwriters and artists.”

Yes, he is charging for a service that teaches people what they can learn on their own, “but you can send someone to downtown New York City and have them figure out how to drive around without a map,” he said. “I provide the map.”

The songwriting scene

Nashville’s songwriting scene includes longstanding institutions that have staff designated specifically to help newcomers. Performing rights organizations such as BMI, ASCAP and SESAC, which collect royalties for songwriters, offer walk-in, free appointments for aspiring songwriters to ask questions or play their music and get constructive feedback.

The Nashville Songwriters Association International offers seminars and workshops — some free and some paid — that attract songwriters from around the world.

It hosts events such as “Pitch to Publishers” nights that give aspiring singer-songwriters an audience with song publishers; or there’s SongPosium, which provides an intense three-day campus-style education in all things one needs to know about the music industry.

Joining the organization for a $150 annual fee gives songwriters access to a host of other events as well as access to songwriting rooms and the comfortable, clubby headquarters.

Increasingly, however, NSAI has had to adapt to different demands by aspiring songwriters looking for quicker payoffs, Herbison said.

The association used to provide five song camps a year that lasted five days. Now they have two, but have added a series of short hourlong seminars.

It’s a sign of the times for songwriters who, because of their desire for quick success or because they can’t financially afford to invest the time, want quicker payoffs for their time, Herbison said.

Lorna Flowers became a songwriting consultant in March after a publishing deal ended.

The longtime pop and country songwriter, who moved to Nashville from Great Britain in 2004, has had three No. 1 hits on the European charts and, in the beginning, was making a comfortable living as a songwriter. Now, she offers consulting services to out-of-towners, many from overseas, as well as booking songwriter nights at two clubs and operating a production company.

“You have to have six jobs to make a living in Nashville at the minute,” Flowers said.

Flowers commuted from England for many years and said she learned the hard way how difficult it was for out-of-towners to navigate the Nashville music landscape. She’d arrive in Nashville, wait around for callbacks and then have to leave before she could accomplish anything.

“I know what it’s like to sit in a Nashville hotel room and try and figure all this out,” Flowers said. “This town runs on rescheduling. It’s hard not to take it personally, and it’s almost impossible to figure things out without someone to give you a hand.”

Flowers’ services range from performance voice coaching to arranging for meetings with publishers, or trips to industry networking events.

Flowers also offers to co-write with her clients or set them up with other co-writers for a fee that ranges between $100 to $500 per session.

Charging for co-writing — something Flowers calls “coach writing” — is among the most controversial practices among music consultants. Songwriters who write together have a longstanding tradition of agreeing to split future royalties, with money only changing hands if the song earns any.

“It is controversial, and I understand that,” Flowers said. “But the truth is that I can help people do their best and I can find other songwriters who will improve their chances of writing a quality song.”

Music industry insiders say the other upside to legitimate consultants is their ability to steer aspiring songwriters and artists away from scams.

Ripoff stories in the Nashville music business are legion, with newcomers paying thousands of dollars for demos that should cost hundreds, high-priced headshots, and CD replication services that return low-quality cuts.

“You see Harvard graduates come to town who lose any business sense,” Barnette said.

Legitimate songwriting consultants, who themselves have learned the hard way who to avoid working with, can steer clients away from bad actors to legitimate service providers.

When does it pay off?

Maison, the Detroit songwriter, said that hiring Barnette as a consultant seems to be paying off.

In the three years since he began working with Barnette, Maison has been able to quit his day job and make a living off music. He was just picked up on an independent label, Big High Five Records. And he plans to keep using Barnette, despite some initial skepticism.

“When I first heard about people charging for this, to be honest I was like, ‘What a joke. That’s a scam. No way,’ ” he said.

“But the music business is like anything else. You get what you pay for.”

Saturday, October 22, 2011

No longer made in China: U.S. companies start re-importing some jobs

Four years ago, La Vergne-based Pro Charging Systems LLC outsourced manufacturing of several key components of its new line of battery chargers to China.

The idea was to take advantage of lower labor costs and other advantages the company was counting on as it made charger parts there that would end up in hunting vehicles and golf carts sold in the United States.

Over the past year, though, Pro Charging has shifted that work and some other assignments back to U.S.-based suppliers.

The La Vergne company illustrates a surprising trend — call it a trickle — in which some manufacturers are bringing jobs back to America from Asia. With U.S. jobless rates stubbornly high, it’s part of a welcome reversal fueled by the Chinese economy starting to lose its cost advantages for many products made abroad but bound for final assembly and sale here.

Pro Charging’s changing strategy has been a plus for Pine Hill Plastics Inc., a small manufacturer in McMinnville, Tenn. Pine Hill makes a battery cover for Pro Charging that used to be made overseas.

Jeff Wolaver, Pine Hill’s president, said his company has signed contracts with two other U.S. companies in recent months to bring their production home from China or other Asian outposts.

That has allowed the plastic injection molding company to add roughly 10 employees this year, Wolaver said.

“Anytime we can increase sales with an existing client, it’s a bonus to us … just further developing a relationship,” he said, referring to Pro Charging and another company. “My employees (also) see that we’re able to compete in the global marketplace, and that gives them a lot of confidence. It boosts morale.”

As labor costs rise in China — along with steep fuel and transportation costs to ship merchandise back home — the idea of making goods in the U.S.A. starts to look better to American companies, a recent study by The Boston Consulting Group found. U.S. suppliers also are closing the gap in relative costs by operating more efficiently here.

“We’re not saying that factories in China will close,” said Mike Zinser, a partner who leads Boston Consulting Group’s manufacturing work in the Americas. “There will still be huge demand for serving the Chinese market and the rest of Asia. But in terms of supplying North America, China will no longer be the default option.”

The once-enormous gap in labor costs between China’s coastal provinces and lower-wage Southern states like Tennessee should shrink even more by 2015 as wages rise in China, according to Boston Consulting’s analysis. Some production shifting away from China could go to Mexico where labor costs will stay extremely cheap, but not as much as some might think, the group’s report adds.

“The tide has turned and will continue to turn at a quicker pace in years to follow,” said Pro Charging Chairman and Chief Executive Timothy J. Knox. “We can never forget we’re a manufacturing culture. That’s our heritage. We’re very good at it.”

In addition to hunting vehicle and golf cart accessories, Knox’s company makes battery chargers for floor scrubbers and some other equipment.

U.S. manufacturing advantages include a better-skilled workforce, ease of security and other logistical advantages “that will make the U.S. a better option for many companies,” wrote Justin Rose, co-author of the Boston Consulting study. It lists transportation goods, including vehicles and auto parts, household appliances, and furniture among seven sectors that could return up to 3 million manufacturing jobs to the U.S.

The analysis, however, acknowledges that some other manufacturing sectors, including footwear and textiles, probably won’t come back to these shores.

China remains key partner

China remains Tennessee’s No. 1 source of imports and the third-biggest export destination for the Volunteer State behind Canada and Mexico.

Last year, $16.4 billion worth of products — including toys, electronics, appliances and machinery —were imported into Tennessee from China, up 24 percent from 2009, according to U.S. Commerce Department data.

Meanwhile, this state’s exports to China grew 38 percent to $1.8 billion last year — and through August of this year they’re running 17 percent above the year-earlier pace.

Nationally, for all of 2011, though, the U.S. has run up a trade deficit of $189.3 billion with China, highlighting what The Economic Policy Institute think tank says has been the loss of 2.8 million U.S. jobs between 2001 and 2010.

Last week, the U.S. Senate passed a bill aimed at curbing cheap imports from China by pressuring that country to revalue its currency. In the House, the bill faces stiff opposition from Republican leaders wary of a trade war that could harm U.S. business interests in China.

Pro Charging’s decision to bring back production of components — including plastic covers for its chargers — was driven in part by patriotism and to help the U.S. economy recover momentum, CEO Knox said.

The shift has taken more than a year, beginning with Pro Charging doing research on potential U.S. suppliers and working with them to ensure that the products were made in a cost-effective way, Knox said. “We were able to remain competitive from a price-point standpoint, while we improved our quality and shortened our delivery time.”

The first production that Pro Charging brought back from China went to SAPA Extruder Inc.’s aluminum extrusion plant in Mountain Top, Pa.

Bill Peterson, the plant’s sales manager, said the work contributes to keeping its workforce busy. Using a punch press as part of the process of creating the aluminum components for Pro Charging helps to reduce costs, Peterson added.

“We’re excited about the business and opportunity to grow with Pro Charging,” he said.

Elsewhere, automotive supplier O-Flex Automotive Inc. of Murfreesboro will soon begin handling putting a black or silver coating on the body of Pro Charging’s battery chargers to guard against aluminum corrosion.

“They have an agressive program for growth, and we like the fact this helps us diversify,” Scott Powell, sales engineer at O-Flex Automotive, said of the new work.

Gap is narrowing

Jeremy A. Leonard, an economic consultant with the Washington-based Manufacturers Alliance for Productivity and Innovation, says U.S. companies that moved production to China only because of low labor costs are finding there’s more to consider than wages.

For instance, rising oil prices have made overseas transportation costs more expensive in recent years, plus shipping times are often a key factor with customers.

“If you’re in a market where speed to market is important, (moving products) by ship … is going to take longer than if you’re producing close to your customer,” Leonard said.

Wages in China, meanwhile, are growing 15 percent to 20 percent a year, according to Boston Consulting’s study. And stagnant wages in the U.S. manufacturing sector have helped narrow the relative cost advantages that China long enjoyed, said John Butler, project manager with the state’s Department of Economic and Community Development.

Political debates over foreign competition come down to one thing most often, though: jobs.

The U.S. jobless rate remains above 9 percent, and Tennessee’s rate was 9.7 percent in late summer.

Last week, one federal program that has paid for job training and other aid for more than 35,000 unemployed Tennesseans (and many more workers in other states) since 2002 was extended for at least two more years.

Congressional Democrats and the Obama administration made renewal of the Trade Adjustment Assistance program a precondition for voting on trade agreements with South Korea, Colombia and Panama. Lawmakers approved the renewal and the three trade pacts last week.

The Trade Adjustment Assistance plan will get $575 million over two years for training, relocation aid, health insurance tax credits, job-search allowances and other benefits to workers who lose jobs as a result of foreign trade.

Tennessee manufacturing employees have been a major beneficiary of the program in recent years.

It provided $20.5 million in benefits to newly unemployed Tennesseans in fiscal 2010 alone. More than 8,400 Tennessee workers from 67 companies received trade adjustment aid for the first time in 2010, the 12th-highest number in the nation. Most states that topped that number were Midwestern states hit by losses in the auto industry or states with larger populations such as California, Texas and New York.

An analysis last year by Middle Tennessee State University economist Steven Livingston found the state generates almost twice the number of requests for trade adjustment aid than one would expect based on the number of manufacturing businesses.

Livingston attributed that to two factors. First, many of Tennessee’s manufacturing plants are branches owned by out-of-state companies, and Tennessee plants are more likely to be located in rural areas. Such sites are often among the first to be closed when the economy plummets.

Dr. Ming Wang, president of the Tennessee Chinese Chamber of Commerce, sees other promising economic factors at work.

Rising wages in China, for instance, will boost demand for U.S. products, Wang said. And Chinese companies seeking new markets will add manufacturing plants here to be closer to domestic consumers they hope to target.

“This year, when the world’s largest manufacturer is on the brink of becoming the world’s largest consumer, that’s a once in a lifetime opportunity for many of our businesses here,” Wang said.

Friday, October 21, 2011

David Bohan: Successful messages air across multiple channels

The old adage about not putting all your eggs in one basket applies to marketers and how they must approach media in today’s multichannel world, especially if they’re chasing well-to-do customers.

The affluent market is significant. There are 58.5 million adults in households with incomes of at least $100,000, just under one-quarter of all U.S. families. This group represents 60 percent of all income and 70 percent of the nation’s net worth.

A study of affluent consumers by the Ipsos Mendelsohn research firm showed that those consumers tap into multiple channels of media. The Internet has 98 percent penetration, print reaches 80 percent (six publications a month per household) and television is still huge.

They are online more than 30 hours a week, half of them are active on Facebook, and their normal TV time is 17 hours a week.

“From a media perspective, new technologies have been layered on top of existing choices; television, radio and print remain mainstays of affluent consumer media experiences, with the Internet and various devices adding layers of interactivity and content immersion,” said Steve Kraus, chief research and insights officer at Ipsos Mendelsohn.

Looking at the broader market, the Direct Marketing Association reports that more than half of all consumers read directmail offers from merchants, and 55 percent find catalogs useful.

“Consumers don’t live a single-channel life, or even a dual-channel life … there are so many ways that consumers are engaging and searching for content,” said Liz Miller, vice president of the Chief Marketing Officer Council.

Are marketers listening?

Despite this evidence, a recent Pitney Bowes study found that only 60 percent of businesses incorporate multichannel campaigns in their marketing programs.

Practical examples of multichannel campaigns were profiled in the August issue of Deliver magazine, a U.S. Postal Service publication.

N’Tini’s, a New Orleans restaurant, combined direct mail, personalized URLs, social media and email to promote its lunch business.

“Combining print with some sort of interactive tool allows you to really build a database, rank your direct mail and build a relationship with customers,” said Renee Hall of the Dukky marketing technology firm, which supported N’Tini’s campaign.

Norton-Norris, an Illinois agency that specializes in college marketing, produced a multichannel campaign to increase enrollment at Virginia College.

The campaign started with TV ads whose call to action was visiting the college’s website. That led to six pieces of direct mail to reinforce the Web inquiries.The percentage of enrollees was 62 percent higher among the prospects who received the direct mail pitch.

“The broad reach of television and the personalized targeting of direct mail complement each other very well,” Robert Brecht, director of research and education at the DMN3 Institute, said of the Virginia College campaign.

Your own marketing message may be very good, but are you letting it speak for you through only one channel? If so, rethink your media plan.

Thursday, October 20, 2011

Richard Cowart: New TriStar chief is accessible exec, fierce foe

After a decade of relative stability, the market transition is now complete.

All three leading Metro Nashville health systems have new leaders. First, Jeff Balser at Vanderbilt Health. Next, Dr. Mike Schatzlein at Saint Thomas/Baptist. Finally, Steve Corbeil at HCA/TriStar.

Corbeil, a Michigan graduate and the son of a suburban Detroit banker, has been in hospital management for more than 20 years. He began his career as the CEO of a small hospital in Tullahoma, now Harton Regional Medical Center. After hospital assignments in Los Angeles, New Orleans and Redding, Calif., Corbeil became a regional executive for Tenet Healthcare based in Dallas.

When Healthcare Midwest decided to sell its health system in Kansas City, Mo., Corbeil led the Tenet team seeking to acquire the Kansas City assets and operations. However, after HCA won the bid for Healthcare Midwest, the tables were turned, and Corbeil returned to HCA as president of the 10-hospital HCA Midwest Health System, where he has been since 2007.

Known as a gregarious “people person,” Corbeil brings to TriStar Health System a well-earned reputation as an active listener, an approachable executive and a fierce competitor.

Health Midwest’s transition from a sprawling and struggling nonprofit system to a high- performing market leader speaks to his ability to charm physicians and inspire a workforce.

Still, Corbeil’s tenure in Missouri was not without controversy. One of Corbeil’s hospitals, Centerpoint Medical Center in Independence, Mo., was cited by the National Labor Relations Board for unfair labor practices in a contentious dispute with a nurses union. Likewise, several HCA Kansas City facilities scored poorly in the initial round of Medicare core benchmarks, though those scores have improved significantly during Corbeil’s tenure.

TriStar ranks high

The presidency of TriStar has always been a stellar position within the HCA constellation. The HCA founders have a strong community pride in their headquarters city.

The TriStar hospitals were a showcase of how HCA runs first-class, high-performing hospitals. Former TriStar Health System presidents include Paul Rutledge, the current president of HCA’s Central Group and an influential member of the HCA senior management team.

The transfer of Corbeil to Nashville signals his ascendency in the HCA executives’ farm system.

Corbeil’s arrival coincides with the retirement of Larry Kloess, the current president of TriStar Health System. Kloess served first as Centennial’s CEO and later as TriStar president. Kloess is one of the consummate gentlemen of health care, highly regarded by his teammates, his competitors and the community at large.

Kloess has been activein many civic endeavors, including chairing the Tennessee Hospital Association and the localaffiliate of the American Heart Association. While HCA isbringing in a first-class leader, it is also losing one to early retirement.

As the three health systems’ new quarterbacks settle into their jobs, we’ll keep watch on how the market rankings are affected with new signal callers at the center of attention.

Wednesday, October 19, 2011

Finally, Social Security raise on way

Social Security recipients are expected to get a cost-of-living raise of at least 3.5 percent beginning in January — the first increase in three years — and Nashville retiree Jack Duggin is “all for it.”

The government will announce today whether inflation has risen sharply enough over the past year to justify an increase in monthly benefits for about 55 million Social Security beneficiaries under a measure dating to the 1970s that provides for automatic raises when prices hit a certain level.

“An increase would be helpful for anyone who is retired,” said the 79-year-old Duggin, who lives in Green Hills. “The costs for everything are going up, especially groceries, but our incomes are not.”

Retirees, surviving spouses, disabled people and others who get federal benefits did not receive cost-of-living adjustments in 2010 or 2011 because inflation remained low.

Yet consumer prices have risen sharply in the past year, climbing an unadjusted 3.8 percent in the 12 months ended in August.

Duggin said seniors on fixed incomes really didn’t believe the government when it said prices hadn’t gone up steeply enough the past two years to trigger automatic cost-of-living raises for those who depend on Social Security.

“Some prices may be the same, but the way they’re doing that is by reducing quantities,” Duggin said, referring to consumer goods on supermarket shelves. “Pick up a box of cereal, and it’s not as heavy as it used to be. The price didn’t go down, though.”

David Penn, an economist at Middle Tennessee State University, said a cost-of-living raise should help senior citizens somewhat, although rising health-care costs make it hard to keep pace. For many retirees, Social Security accounts for more than 90 percent of their income.

“I’m surprised it’s that large of an increase, but it probably should be higher,” Penn said. The cost-of-living increase has been tied to average pay, but there have been discussions about adjusting it to consider including health-care expenditures.

“And that has been rising a lot faster than other things in the Consumer Price Index,” Penn said. “(But) I’m not sure Social Security could afford to keep up with increases in health care.”

The average monthly Social Security benefit is $1,082, or about $13,000 a year. With a 3.5 percent increase, that would mean a raise of almost $38 a month, or an additional $455 a year, for the typical recipient.

“It seems like it’s time to have an increase, and 3.5 percent is better than nothing — which is what we’ve been getting the past two years,” said retired Metro schoolteacher Charlotte McAnally. “But I hope we’re going to continue to have Social Security.

“The thing we hear about all the time is they’re trying to modify it or take it away from us,” the 71-year-old McAnally said. “I think they can find other ways to raise money for the government. There is enough in the Social Security Trust Fund to pay every eligible American for the next 25 years, as long as they don’t keep taking money out to pay for other things, such as armaments.”

Worries remain

Renette Corenswet, 88, of Nashville also worries that benefits might be reduced or taken away in the long run.

“I guess I’m like everybody else,” she said. “I just hope they don’t subtract from what we’re now getting. Everything costs so much these days, so we’re just asking that they don’t decrease our payments.”

Before the annual increases stopped two years ago, they had averaged about 4.2 percent a year since the automatic adjustments began. The last time Social Security payments were adjusted, in 2009, they went up 5.8 percent, the largest increase in 27 years. That big raise was attributed to a spike in energy prices. But energy quickly dropped in 2009, and housing prices fell, contributing to lower inflation the past two years.

“People certainly feel like they are falling behind,” said David Certner, legislative policy director for the AARP, “and these are modest-income folks to begin with, so every dollar counts. I think sometimes people forget what seniors’ incomes are.”

Part of the Social Security increase in January could be lost to higher Medicare premiums, which are deducted from Social Security payments. Medicare Part B premiums for 2012 are expected to increase.

Tuesday, October 18, 2011

G-20 wrangles over Europe's crisis bill as nations watch

PARIS — Finance chiefs from the Group of 20 rich and developing nations wrangled Friday over whether the eurozone should pick up the whole bill for its escalating debt crisis, or whether the rest of the world should help out more.

The International Monetary Fund — the world’s lender of last resort for cash-strapped countries — has until now funded about a third of the cost of the bailouts of Greece, Ireland and Portugal. But while some, including the United States, are arguing that Europe has more than enough money to spend its way out of the crisis, others are pushing for more support as the currency union’s debt troubles risk dragging the world economy back into recession.

In recent days, markets have been buoyed by hopes that the 17 countries that use the euro will sort out key aspects of a more aggressive solution to their debt crisis in time for an EU summit Oct. 23 and a Group of 20 meeting in early November.

Any such deal is going to be extremely costly. As well as shoring up Europe’s weaker banks, the eurozone has to come up with a strategy to stop large economies like Italy and Spain from joining the bailout club.

To do that, the region’s bailout fund, the euro440 billion ($608 billion) European Financial Stability Facility, is expected to soon start buying their bonds on the open market — the hope is that will support their prices and keep a lid on their borrowing costs to allow them to carry on funding themselves in the markets.

But most economists, and a growing number of European officials, believe that the EFSF is way too small to stabilize both countries and recapitalize banks in other cash-strapped countries.

While the eurozone is working on ways to maximize the impact of its limited resources, there is a growing drive to get the IMF to stump up more cash. However, any attempt to get the IMF to play a more hands-on approach, by possibly joining the EFSF in bond market interventions, is likely to meet with some resistance as well as require changes to the IMF’s legal framework.

German finance minister Wolfgang Schaeuble said an increase in the IMF’s resources was not necessary.

“The IMF has enough to fulfill its tasks,” he told journalists as he arrived at the meeting. He said help and solidarity from the rest of the world was welcome, but stressed that “the Europeans have to take care of the biggest part of the task.”

Schaeuble said he expected EU leaders to take the necessary decisions to tackle the crisis at their summit next week.

“We are on the way to take clear measures to contain the danger of contagion.”

U.S. Treasury Secretary Timothy Geithner indicated Friday that he was in favor of maintaining IMF support, but stressed that Europe had enough money to resolve its troubles on its own. He also opposed beefing up the IMF’s resources, as might be required if the fund was to take on a more active role.

“The IMF has very, very substantial uncommitted resources because of the actions we took in ‘09 and 2010,” Geithner said in an interview on CNBC.

“If Europe has a comprehensive strategy in place that looks like it makes sense and is using the very ample financial resources of Europe, then we’re happy to see the IMF play a continuing role, as it’s been playing in supporting what the Europeans are doing.”

The pressure on Europe to finally get a grip on its debt crisis has ratcheted up in recent weeks amid signs that it’s taking its toll on the global economy. Trouble in Europe’s banks could have spillover effects all around the financial system, similar to what happened after the collapse of Lehman Brothers in 2008.

“We have lost a million jobs, we have lost on the revenue side and the current events actually create greater uncertainty and lack of confidence, so it is absolutely crucial, that both, as the G20, but certainly as Europe, that we get a higher level of decisiveness in terms of resolving this crisis,” South African finance minister Pravin Gordhan told The Associated Press Friday.

Gordhan also appeared somewhat more open to a larger role of the IMF in Europe.

“It is about getting ahead of the curve and developing the financial firepower, which would enable Europe to assure the rest of the world that either on its own, through the EFSF, or with the IMF, they are able to actually contain this contagion,” he said.

Officials warned not to expect too much of the meeting of G-20 finance ministers and central bankers in Paris. The get-together is a stop on the road to a meeting of EU leaders on Oct. 23, when the eurozone is expected to present its new and improved crisis strategy, and a G-20 summit of leaders in Cannes in early November.

Monday, October 17, 2011

Netflix scraps idea to split DVD rental

NEW YORK — Netflix generates more head-scratching plot twists than a cheap B-movie.

On Monday, the company said it would reverse a previously announced decision to put its DVD-by-mail and Internet streaming services on separate websites, a plan that was widely derided by Netflix subscribers.

People will be able to use both services under one account and one password, CEO Reed Hastings said Monday in a blog post.

Netflix Inc., however, plans to stick to pricing plans introduced in June, which means subscribers are now paying separately for streaming service and mailed DVDs. That change amounted to a price increase for most subscribers.

Investors saw the reversal as an Oscar-worthy move, sending the stock up $7.68, or 6.6 percent, to $124.89 in midmorning trading after rising as high as $128.50.

Less than a month ago, Netflix said it would split the DVD rental business off to a new website, to be called Qwikster. Subscribers howled at the move, saying they saw Netflix as a destination for movies in general and didn’t want to manage two accounts.

“It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs,” Hastings said in the blog post Monday.

Netflix’s decision to stay one website is likely to please subscribers. But its turbulent relationship with subscribers over the last three months raises questions about the company’s management, as it attempts the transition from a DVD-by-mail business to one that largely delivers movies streamed over the Internet. Netflix movies can already be streamed directly to PCs, smartphones, tablets, DVD players, game consoles and TV sets.

The Qwikster announcement was a follow-up to the July price change. Analysts saw it as a way for Netflix to distance itself from the older DVD business, which has less future potential than Internet streaming.

Netflix had 24.6 million subscribers at the end of June, but it warned last month that it expected a net 600,000 to leave by the end of September because of the price increase. That would be by far the worst downturn in the company’s history. Netflix reports final figures on Oct. 24 for the quarter that ended in September.

Even with Monday’s premarket bounce, Netflix’s shares have been savaged by the price change and the Qwikster initiative. They’ve lost more than half their value since July. The stock closed at $111.62 per share in Nasdaq trading Monday.

Sunday, October 16, 2011

Southern Living Showcase Home features European, green innovations

The house at 913 Dorset Drive in Nashville looks like a traditional French country home from the outside. On the inside, it blends European innovation, green technology and Southern charm to create Middle Tennessee’s newest Southern Living Showcase Home.

“People are going to enjoy seeing things they haven’t seen before,” says Alan Looney, president of Castle Homes, the custom builder selected by Southern Living magazine to build the 4,460-square-foot, $1.2 million house.

The home, off Granny White Pike near Old Hickory Boulevard, will be open for tours on select days Friday through Nov. 6.

In addition to the work of 11 of Middle Tennessee’s best-known designers, the interior has a feature that originated in Europe and is popular in the Southwestern United States but which Looney says is new in Nashville. Called a NanaWall, the entire glass wall between the main living area and the screened porch folds back, like an accordion, opening the entire downstairs to the outdoors and encouraging the homeowner to turn off the air conditioner.

“On a nice fall day, open it up and your outdoor and indoor spaces become one,” Looney says.

The porch features another innovation: a Skimstone concrete floor that is as thin as a dollar bill. The floor is finished with a Modello design that is created with stencils instead of toxic sealants and acids, says Pablo Johnson, who completed the installation for the Seattle-based Rudd Co.

“With regular (concrete treatments), you’re bringing toxins to the homeowner’s property,” he says.

'Light and airy'

When it’s time to close the NanaWall and turn on the heat, a hidden feature will save money and energy. The home features a Dual Fuel heating system. An electric heat pump provides warmth until the outside temperature drops to 40 degrees. Then the natural gas furnace switches on. Each heating system operates at temperatures where it is most efficient, Looney says.

The house also is Energy Star certified by the U.S. Department of Energy. Its green elements include LP Building Products’ TechShield radiant barrier in the roof, thorough insulation, low-flow plumbing fixtures and low-VOC paint and carpeting.

At less than 4,500 square feet, the house also gets green points for having less space to heat and cool than homes in its price range that were built just a few years ago.

“People who call today about a custom home want to downsize. Less to maintain, fewer rooms you don’t use,” Looney says.

They also want an open floor plan such as the one featured in the Southern Living Showcase Home that brings together the kitchen, dining room and main living area.

“You’re in the area you live in every day,” Looney says.

Saturday, October 15, 2011

99 Cents Only chain agrees to $1.6B buyout offer

LOS ANGELES — 99 Cents Only Stores Inc., a West Coast-based discount chain built along the lines of Dollar General, has agreed to go private in a deal valued at $1.6 billion after months of talks with several groups interested in the company.

The Commerce, Calif., chain agreed to be acquired by Los Angeles private equity firm Ares Management and the Canada Pension Plan Investment Board for $22 a share in cash.

The price is 32 percent higher than the stock’s close on March 10, the day before it announced that it had received a $1.3 billion buyout proposal from Los Angeles investment firm Leonard Green & Partners and 99 Cents Only’s founding family. The market viewed that $19.09-a-share bid as a lowball offer, and investors quickly pushed the stock above that level.

99 Cents Only said the family of company founder David Gold had approved the Ares offer and would continue to hold a minority stake.

Deep-discount chains have been viewed as appealing takeover targets as cash-strapped consumers seeking lower prices and convenience have flocked there for household essentials and some food products.

Dollar General, based in Goodlettsville, Tenn., was also purchased by private equity interests in early 2007, but has since returned to being publicly traded. Dollar General planned to open 625 new stores nationally this year amid strong sales results.

'Significant value'

Chief Executive Eric Schiffer, along with his brothers-in-law Jeff Gold, 99 Cents Only’s president, and Howard Gold, executive vice president, would remain in their positions and serve as directors. David Gold would serve as chairman emeritus.

The agreement “delivers significant value to our shareholders,” Schiffer said in a company statement.

“We have come to know and respect Ares Management and CPPIB through this process, and we believe they will be excellent partners and help us achieve our long-term goals as a company,” he said.

Ares Management also has invested in such businesses as Samsonite, Serta, Simmons Bedding, General Nutrition Centers and Maidenform Brands. The Canada Pension Plan Investment Board invests retirement assets of 17 million Canadians.

“We believe that 99 Cents Only Stores is a franchise company and we look forward to working closely with the company’s management team and dedicated employees to continue to expand the business in order to successfully increase the company’s attractive market position,” said David Kaplan, a senior partner and founding member of Ares Management.

More than half of 99 Cents Only’s sales come from food and beverages, and analysts say it has solid sales per square foot compared to competitors in its niche. 99 Cents Only operates more than 280 stores, mostly in California, with other locations in Texas, Arizona and Nevada.

Friday, October 14, 2011

Chrysler is last of Big Three to reach agreement with UAW

DETROIT — The last of Detroit’s carmakers has reached a deal with the United Auto Workers union.

Chrysler Group LLC and union negotiators agreed on a new four-year contract Wednesday that creates 2,100 new jobs. The company also will invest $4.5 billion in its plants under the deal, which covers 26,000 U.S. workers.

The deal is less generous than those given to General Motors Co. and Ford Motor Co. It includes a $3,500 signing bonus and $1,000 in annual bonuses. Most Chrysler workers won’t get yearly raises but could receive profit-sharing checks if the company makes money. The agreement also raises entry-level wages to $19.28 per hour by 2015. Chrysler’s workers must ratify the agreement.

This is the first contract since Chrysler’s government bailout and trip to bankruptcy court two years ago, and the first since management of the company was taken over by Italian automaker Fiat SpA.

“This agreement is the latest in a remarkable turnaround for Chrysler,” UAW Vice President General Holiefield said in a statement.

Contract negotiations are closely watched because they set the pay and benefits for 112,000 factory workers at the Detroit Three as well as for thousands of employees at auto suppliers and at the non-unionized plants of foreign automakers such as Toyota Motor Co. and Volkswagen AG.

GM workers ratified their labor agreement last month. Ford workers are still voting.

Bonuses smaller

Workers at GM are getting $5,000 bonuses. Ford workers stand to get $6,000 bonuses if they ratify their agreement. The less generous deal at Chrysler is partly because the company isn’t as healthy as its rivals. GM and Ford made billions of dollars last year, while Chrysler lost money.

Chrysler and the union hit a number of stumbling blocks during negotiations. As the original deadline to reach a new contract approached in mid-September, Chrysler CEO Sergio Marchionne sent an angry letter to UAW President Bob King, accusing him of failing to show up at a meeting to finalize the deal. The two sides eventually agreed to extend the contract to Oct. 19.

Late last week, three money issues separated the company and the union: The size of signing bonuses and profit-sharing checks and a cap on the number of entry-level workers that Chrysler could employ.

The union wanted to cap the number of workers at 25 percent in 2015, while Chrysler wanted no limit, said two people briefed on the talks who asked not to be identified because the negotiations are private.

Entry-level workers make $14 to $16 per hour, about half the wage of longtime union workers. The UAW wants the lower-paid workers to move up to the higher wage of around $29, while the company wants to control costs by paying more workers at the lower rate.

About 12 percent of Chrysler’s 23,000 factory workers now are paid the lower wage, and the carmaker plans to hire thousands more over the next four years as it retools factories to make new models.

Ford agreed to a 20 percent cap, while GM’s limit is 25 percent.

The UAW also represents 3,000 salaried workers such as engineers.

Tough in Italy

Marchionne has been tough on Fiat’s Italian unions, challenging the Italian way of negotiating new contracts and seeking plant-by-plant deals in a bid for more flexible work rules instead of the traditional national contracts.

In the process, he has run up against resistance from the FIOM metalworkers union. FIOM is planning a one-day strike at all Fiat plants on Oct. 21.

Chrysler, which has been majority-owned by Italy’s Fiat since July, is still struggling to make a profit. The company earned $116 million in the first quarter, its first quarterly net profit in five years. But it lost $370 million in the second quarter, mostly because of charges for refinancing debt.

Chrysler expects to earn $200 million to $500 million this year, excluding the debt charges. If so, it will be Chrysler’s first profitable year on that basis since 2005.

The company is earning only a fraction of its Detroit rivals. Ford reported a profit of $6.6 billion last year, while GM earned $4.7 billion.

Thursday, October 13, 2011

Banks expect a weak third quarter

NEW YORK — Investors are bracing for a rough earnings season from banks.

Turbulence in stock and bond markets, combined with waning confidence among business and consumers, hurt banks’ business in the third quarter. IPOs were shelved, companies postponed plans to sell bonds, and acquisitions were put on ice. Consumers also held back on spending.

The sharp drop in business activity hurt banks, which rely on borrowing by companies and consumers to make money. Most Wall Street analysts lowered their earnings estimates for large U.S. banks.

JPMorgan Chase & Co. will be the first major bank to report results Thursday, followed by Citigroup, Wells Fargo, Bank of America and Goldman Sachs the week after.

The intense global market turmoil during the third quarter has already taken a toll on bank stocks. The KBW index of leading banks plunged 27 percent during the third quarter.

Howard Chen, an analyst at Credit Suisse, estimates that mergers and acquisitions volume in the third quarter plummeted 34 percent from the prior quarter, while stock underwriting sank 54 percent.

Chen said it was the weakest quarter for total debt issuance since the financial crisis. Overall debt and loan underwriting volume fell 27 percent from the previous quarter, leading to a 35 percent decrease in fees.

Worries about Europe’s debt problems continued to hang over U.S. banks in the third quarter. Investors expect bank executives to offer more clarification on how exposed the banks are to the crisis when the banks host conference calls to discuss their earnings.

Most large banks have disclosed the amount of European debt they own, but it’s unclear how much exposure they have via more complex derivatives trades they conduct with their counterparts in Europe. For example, U.S. banks sell financial contracts that act as insurance to protect against defaults on riskier European bonds.

Growth in U.S. business loans is expected to be a bright spot. According to the Federal Reserve, corporate borrowing grew rapidly during the third quarter.

Here are the consensus earnings forecasts and highlights for each of the large U.S. banks from analysts surveyed by FactSet:

JPMorgan Chase & Co. reports Thursday. It is expected to earn 96 cents per share on revenue of $23.6 billion. Analysts expect JPMorgan, considered one of the strongest and most stable among the large banks, to grab market share from competitors. However, it might be forced to once again to put aside more reserves to offset costs from increased litigation and repurchasing poorly written loans.

Citigroup Inc. reports on Monday. The New York bank is expected to report earnings of 84 cents per share on revenue of $19.3 billion. Barclays Capital analyst Jason Goldberg reduced his estimates by 11 cents because of weakness in investment banking and the increasingly uncertain global economy.

Wells Fargo & Co. also reports Monday. The San Francisco bank is expected to earn 72 cents a share on revenue of $20.2 billion. Wells has one of the largest mortgage origination businesses of all banks and will likely have benefited from lower mortgage rates. Rates on 30-year mortgages hit a historic low of 4.08 percent in the third quarter.

Bank of America Corp. reports Oct. 18. Analysts expect the Charlotte, N.C. bank to report earnings of 26 cents per share on revenue of $25.8 billion. The bank has been battling lawsuits related to mortgages. It paid out $12.7 billion to settle claims in the first half of the year. Its Merrill Lynch investment banking and brokerage division helped lift earnings in the first half of 2011, but Merrill is unlikely not be of much help this quarter because of low trading volumes.

Goldman Sachs Group Inc. also releases results Tuesday. It is expected to earn 23 cents per share on revenue of $5.3 billion. Chen, of Credit Suisse, is more negative than other analysts on the New York bank. Chen wrote in a report that the difficult market conditions and low appetite for risk among investment banking and trading clients could lead to a third quarter loss of 70 cents a share. If that happens, Chen notes, it would be only the secondquarterly loss for Goldman since 1999.

Morgan Stanley will report on Wednesday, Oct. 19. Analysts estimate it will earn 31 cents per share on revenue of $7.5 billion. A sharp downturn in the investment advisory business is expected to hurt Morgan Stanley.

Wednesday, October 12, 2011

Business briefs: Tim McGraw, Curb Records hearing scheduled

A Nov. 29 court hearing here will decide whether country music star Tim McGraw can record any new albums during an ongoing legal dispute with Curb Records.

Curb Records filed suit against McGraw in May, alleging breach of contract by the singer whose career was launched by the label two decades ago.

McGraw counter-sued, seeking a ruling that would release him from his contract with Curb entirely.

A trial date in the contract dispute has been set for July 9, 2012.

The Nov. 29 hearing, which is expected to last two days, will “first make a final determination on whether or not Curb is entitled to prevent Mr. McGraw, by injunction or otherwise, from recording for other entities other than Curb,” court records state.

— Anita Wadhwani

Woman sentenced in fraud case

A Kentucky woman has been sentenced to six years in prison for her role in an investment scam that federal prosecutors said defrauded more than 50 victims of nearly $3 million.

Federal prosecutors said 66-year-old Ann Scarborough was sentenced in federal court in Nashville for her October 2010 conviction for wire fraud and money laundering.

Prosecutors said she and others sought investors for non-existent real estate projects involving strip malls in Las Vegas, a Disney theme park in Middle Tennessee, a medical center in Arizona, new land for the Bonnaroo music festival near Manchester, Tenn., and others.

— Associated Press

Company to pay back wages

Mid-Continental Restoration Co. Inc. has agreed to pay $99,093 in back wages to 47 employees at its Murfreesboro location after a probe by the U.S. Department of Labor’s Wage and Hour Division found violations of the Fair Labor Standards Act.

In addition to paying back wages, the company has agreed to change its business practices so that all hours worked, including travel time, will be accurately recorded and paid at least at the applicable minimum wage, and overtime payments will be calculated according to appropriate provisions, the labor department said.

Mid-Continental Restoration Co. is headquartered in Fort Scott, Kan., and has additional offices in Indiana, Oklahoma, South Dakota, Tennessee and Texas.

— Staff reports

Investor buys McKendree Village

The McKendree Village retirement community in Hermitage has been sold to an Atlanta-based investor for $17.6 million. Covington Senior Living LLC acquired the community through its Nashville Healthcare Investors LLC unit, according to Davidson County property records.

McKendree Village is Covington’s fourth such retirement community. Molly Morand, vice president of Covington Senior Living, said the buyer plans to keep McKendree Village a faith-based community and retain a chaplain. Morand said the firm is evaluating renovations to the campus and possible expansion of services.

— Getahn Ward

Tuesday, October 11, 2011

Nervous unemployed seek safeguards against job bias

WASHINGTON — After two years on the unemployment rolls, Selena Forte thought she’d found a temporary job at a delivery company that matched her qualifications.

But Forte, 55, of Cleveland, says a recruiter for an employment agency told her she would not be considered for the job because she had been out of work too long. She had lost her job driving a bus.

“They didn’t even want to hear about my experience,” Forte said. “It didn’t make sense. You’re always told just go out there and get a job.”

Forte, scraping by now as a part-time substitute school bus driver, is part of a growing number of unemployed or underemployed Americans who complain they are being screened out of job openings for the very reason they’re looking for work in the first place. Some companies and job agencies prefer applicants who already have jobs, or haven’t been jobless too long.

She could get help from a provision in President Barack Obama’s jobs bill, which would ban companies with 15 or more employees from refusing to consider — or offer a job to — someone who is unemployed. The measure also applies to employment agencies and would prohibit want ads that disqualify applicants just because they are unemployed.

But Obama’s bill faces a troubled path in Congress, as Republicans strongly oppose its plans for tax increases on the wealthy and other spending provisions. Should the bill fail, Democrats are sure to remind jobless voters that the Republicans blocked an attempt to redress discrimination against them at a time when work is so hard to find.

Praised, panned

The effort to protect the unemployed has drawn praise from workers’ rights advocates, but business groups say it will just stir up needless litigation by frustrated job applicants. The provision would give those claiming discrimination a right to sue, and violators would face fines of up to $1,000 per day, plus attorney fees and costs.

“Threatening business owners with new lawsuits is not going to help create jobs and will probably have a chilling effect on hiring,” said Cynthia Magnuson, spokeswoman for the National Federation of Independent Business. “Business owners may be concerned about posting a new job if they could face a possible lawsuit.”

A survey earlier this year by the National Employment Law Project found more than 150 job postings on employment websites such as and requiring that applicants “must be currently employed” or using other exclusionary language based on current employment status.

'Really alarming'

“It’s really alarming to us that employers continue to ignore the strong public condemnation of this practice,” said Maurice Emsellem, the legal group’s policy co-director.

The issue has gained more prominence as the unemployment level remains stuck over 9 percent and a record 4.5 million people — nearly one-third of the unemployed — have been out of work for a year or more. And older workers, like Forte, often struggle to find new jobs.

“There’s a flood of workers looking for jobs right now and unfortunately, this is a convenient way to streamline the process” by employers, Emsellem said.


Some companies might assume people who have been out of work for several months may not be stellar performers, he said.

The practice has also drawn concern from the federal government’s Equal Employment Opportunity Commission, where members at a hearing earlier this year said barring unemployed people from employment may have a greater effect on blacks and Hispanics with higher jobless rates.

Ron Cooper, a former commission general counsel during the Bush administration now in private practice, said he thinks the problem is being overblown.


“People, I’m sure, are looking for shortcuts to trim the applicant pool that they’re looking at,” Cooper said. “But I’ve never heard of this as a top-shelf criteria for people making those decisions.”

Forte says she had sought a job at FedEx through the agency Kelly Services, where she said a recruiter told her the company was not considering applicants who have been out of work longer than six months.

“Here I am, a seasoned worker. I didn’t have six months, but I had eight years of experience,” she said.

Jane Stehney, a Kelly spokeswoman, said the company does not discriminate on any basis, including unemployment status. And Sally Davenport, a spokeswoman for FedEx in Memphis, said her company has no policy barring the unemployed from seeking a job and never instructed the temp agency to discriminate

“We interview and hire the candidates best qualified for the job,” she said. “There was obviously confusion on the part of the temp agency.”

Last month, the job search website announced it would not accept any job ad that seeks to exclude the unemployed.

“Our policy is to exclude job listings that do not comply with federal or local laws related to discriminatory hiring practices as well as job listings that discriminate against the unemployed,” said spokeswoman Sophie Beaurpere.

Ohio Sen. Sherrod Brown, a Democrat who has sponsored a separate bill protecting the unemployed, said he understands that employers need the right to hire according to their needs and to factor in work experience.

“But they shouldn’t have the right to discriminate from the start and preemptively deny qualified workers a fair chance at a job they need,” Brown said.

Monday, October 10, 2011

Smith & Wesson to shed Franklin-based security firm

Gun maker Smith & Wesson Holding Corp. said it plans to sell off its Franklin-based perimeter security services operation to focus on its core business of making firearms.

The Springfield, Mass.-based company also attributed its plans to a deteriorating environment for the security business amid cuts in government spending.

Known as Smith & Wesson Security Solutions, the unit provides security equipment and installation for the defense, transportation, petroleum and chemical industries, and for corporate facilities, airports and national labs.

Synergy was lacking

The decision comes two years after Smith & Wesson acquired locally based Universal Safety Response in a move to diversify and renamed that company. The security solutions unit has 125 employees, mostly in Franklin, and brought in 13 percent of Smith & Wesson’s revenues for its last fiscal year.

“There weren’t very many synergies between the two business units, so there shouldn’t be much disruption to the core firearms segment that’s remaining for Smith & Wesson,” said WedBush Securities analyst Rommel Dionosio, citing recent growth in the company’s firearm sales as a positive.

Smith & Wesson last week elevated P. James Debney, who had led its firearm division for the past two years, to president and chief executive.

He replaced Michael F. Golden, who, after leading the company for the past seven years, stepped down as part of a succession plan. Golden remains a director and also is now co-vice chairman of Smith & Wesson’s board.

Sunday, October 9, 2011

Ford workers swap pay raises for profit sharing, jobs

DETROIT — The union that once set the gold standard for American wages is giving up pay raises in exchange for a piece of the auto industry’s profits and the promise of thousands of new jobs.

Under agreements struck with Ford and General Motors, most of the companies’ factory workers will get profit-sharing checks instead of annual raises. They’ll also get a signing bonus. In turn, the automakers will increase their workforces and invest billions more dollars in their factories.

It’s an unusual turnabout for the United Auto Workers. For decades, its members’ pay and benefits were the envy of workers around the world, and it wouldn’t hesitate to strike to protect them. But the agreement signals a new reality. After the industry nearly collapsed two years ago, the UAW is no longer fighting the Big Three but fighting to compete against rivals who pay their workers far less.

“We are aware of the competition that Ford and General Motors and Chrysler face,” UAW President Bob King said Tuesday after announcing terms of a new four-year contract with Ford.

Ford Motor Co. and the UAW agreed on a four-year contract Tuesday, three weeks after the union reached a similar agreement at General Motors Co. The companies are promising at least 17,000 new U.S. jobs over the life of the contracts, and are offering workers signing bonuses and profit-sharing payments.

But the companies will be able to contain their costs by not paying annual raises to their U.S. factory workers and by hiring thousands of new workers at lower wage rates.

Ford workers will get at least $16,700 over the four-year contract, in the form of a $6,000 signing bonus, $7,000 in lump-sum and inflation protection payments and at least $3,700 in profit-sharing this year. That’s more generous than GM’s agreement, which guarantees workers at least $11,500.

Saturday, October 8, 2011

Gibson Guitar renews effort for return of ebony

Attorneys for Gibson Guitar renewed their request in federal court Friday for the return of $70,000 worth of ebony wood seized from the company’s Nashville plant two years ago.

The latest legal petition comes in the midst of an ongoing U.S. investigation into the company’s international wood deals that began in 2009 and has resulted in two separate raids on the company, a possible criminal probe and the transformation of one of the world’s oldest guitar companies into a cause célèbre for conservative activists.

A coalition of tea party groups and musicians has organized a pro-Gibson rally today in a restaurant parking lot near Opryland.

On Friday, Gibson attorneys sought to reopen a case closed on Sept. 28, when U.S. District Judge William Haynes Jr. — at the request of federal prosecutors — put on hold a dispute over the fate of the seized ebony, which was harvested in Madagascar, while a potential criminal investigation was under way.

Gibson lawyers asked the judge to reconsider.

Since the raid, “Gibson has diligently sought both the return of its property and some measure of accountability from the Government for its actions – actions that Gibson believes were without a valid legal predicate,” the request said. “Gibson has cooperated with the Government in its investigation and has given the Government all of the information it has requested. Gibson seeks only justice in return.”

Attorneys for Gibson and for the U.S. Attorney’s office were not immediately available for comment.

A separate federal case is ongoing concerning rosewood from India seized by federal agents on Aug. 24. In both raids on Gibson — in 2009 and in August — federal prosecutors alleged the company violated the Lacey Act, a U.S. environmental protection law that bars companies from importing protected woods and woods barred for export in their countries of origin.

Gibson CEO Henry Juszkiewicz has strongly denied the allegations in both cases.

Friday, October 7, 2011

Senators: Home-care visits overbooked

WASHINGTON — Senate investigators are accusing three of the nation’s biggest home-care providers of deliberately increasing their visits to patients to get higher payments from the government’s Medicare program.

A report released Monday by the Senate Finance committee lays out more than a half-dozen strategies used by executives at Amedisys, LHC Group and Gentiva to increase home care, even when patients may not have required extra attention. Staffers for Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, reviewed internal documents by the companies.

“Elderly patients in the Medicare system should not be used as pawns to increase a company’s profits,” Baucus said in a statement. “Especially in these tough economic times, taxpayers simply cannot afford for their dollars to be wasted on unnecessary care.”

Grassley said the government must “fix the policy that lets Medicare money flow down the drain.”

The company records show caregivers targeted their number of visits to trigger bonus payments from Medicare. In one case, a company tasked a special team of workers to develop the most profitable treatment regimens possible.

The government program provides health coverage to more than 47 million seniors. The program spends $19 billion on home care annually, according to the report.

Shares of home-care providers fell in trading Monday. Baton Rouge, La.-based Amedisys Inc. fell 71 cents, or 4.8 percent, to $14.11. The stock is down 58 percent in the year to date. The company said in a statement it was “disappointed with the committee’s conclusions” and stands by its “integrity, ethics and patient care practices.”

Shares of Atlanta-based Gentiva Health Services Inc. fell 66 cents, or 12 percent, to $4.86 in trading. It has declined 82 percent in the year to date.

And shares of LHC Group Inc. fell 80 cents, or 4.7 percent, to $16.26. Since the start of the year, the stock has shed 46 percent of its value. On Friday, the Lafayette, La., company announced it would pay $65 million to settle a civil inquiry with the federal government over whether some government-reimbursed patient care was medically necessary.

Thursday, October 6, 2011

NPR's new chief vows to focus on news and 'depoliticize' network

WASHINGTON — The man who helped bring Sesame Street to a global audience for the past 11 years will take over as president and CEO of NPR, the public radio network announced Sunday.

Gary Knell, the longtime president and CEO of Sesame Workshop, will start at NPR on Dec. 1.

Knell succeeds Vivian Schiller, who resigned under pressure in March after a former NPR fundraiser was caught on camera calling the tea party racist. The episode led some conservatives to call for an end to federal funding for NPR, but Congress ultimately retained the money as part of a budget deal in April.

Schiller was also criticized for firing analyst Juan Williams over comments about Muslims.

Knell, 57, told the Associated Press on Sunday that he wanted to “depoliticize” NPR by highlighting its commitment to hard-hitting local, national and international journalism across multiple platforms. He said he does not believe that NPR is biased and wants to try to change the minds of those who perceive it as such.

“I think NPR needs to do a better job of telling a story,” Knell said. “It’s about journalism, it’s about news. It’s not about promoting one political agenda or another.”

Unanimous pick

NPR’s board of directors voted unanimously to hire Knell .

“Gary is an extraordinary leader with extensive experience in public media, programming and education,” board chairman Dave Edwards said in a statement. “As CEO of Sesame Workshop for more than a decade, he has led a large, complex organization through a tumultuous media environment, helping it grow by providing innovative, engaging content in new and creative ways.”

At Sesame Workshop, Knell created co-productions in South Africa, India, Northern Ireland and Egypt and made the organization’s programming available on a variety of digital platforms.

“Despite the fact that it may appear that I’m a guy who’s doing puppet shows, that’s not really true,” Knell said. “It’s a complex media organization that’s global in size.”

Nikki Usher, an assistant professor at the George Washington University school of media and public affairs who has studied NPR extensively, said Knell was a smart hire.

“Public broadcasting is a world that sort of demands that you know a lot about the way that things get financed,” Usher said. “I think it’s a really good decision to go with someone who’s inside public broadcasting because of the difficult situation that public broadcasting is in.”

Wednesday, October 5, 2011

Hotel Indigo has new owner

Bob Winston, president of Winston Hospitality in Raleigh, N.C., snaps up troubled hotels with various financial woes at bargain prices — then tries to renew their life.

For his latest venture, he came to Nashville.

Winston on Friday bought a Hotel Indigo operation — a boutique hotel on Union Street downtown — for$14 million in a bankruptcy sale, according to Davidson County property records.

That Hotel Indigo location, a $30 million investment that struggled amid the recession, sold its property and building for $11.8 million, and the remaining sum was attributable to the hotel’s business operations, confirmed Robert Waldschmidt, the sale’s trustee.

The hotel’s former property owner, 315 Union Street Holdings LLC, filed for Chapter 11 bankruptcy protection in December in an effort to broker a deal with Branch Banking & Trust of Atlanta to restructure a troubled loan.

A deal was never reached.

Hotel Indigo, with 96 rooms and 3,000 square feet of meeting space, opened in two historic buildings: 301 Union and 315 Union, which were combined. The 301 Union structure, built in 1909, was formerly the American Trust Building; the other, built in 1926, was the Nashville Trust Co.

Mark Lineberry, the hotel’s former property owner, could not be reached for comment on Friday.

The Hotel Indigo on West End Avenue was not involved in Friday’s developments.

Buyer plans overhaul

Winston, who manages five upscale hotels, mostly in the South, said the flailing Hotel Indigo was “right down the middle of our sweet spot.”

He continued: “We take over loans in markets all over the country that have been in financial trouble. It’s very difficult to have really robust sales with a hotel in bankruptcy. But we bring in our team and reposition the business.”

Earlier this year, the company acquired two yet-to-open luxury hotels in Connecticut with troubled loans.

Here, Winston has some overhauling in mind. In particular, he plans to install reinforced windowpanes throughout the building becaus, he said, customers often complain about the level of noise.

Winston’s additional renovations to the Indigo building will be “in the millions,” he said.

“The hotel itself is a great box,” Winston said. “But because of cost overruns and other issues associated with the building, it just got overleveraged.”

Winston suggested that the investment, his first in Nashville, signals an acute interest in the local hospitality market.

“We’ve been looking for the right project in Nashville for years,” Winston said. “And we’d like to add to our portfolio in Nashville. There are some other potential opportunities we’re now considering.”