News Archive

U.S. urges China to implement planned economic reforms

WASHINGTON (Reuters) – The United States urged China on Tuesday to quickly implement planned reforms to open up its economy and said it will keep a close eye on progress as officials work to resolve remaining trade tensions with the world’s second-largest economy.

The Office of the U.S. Trade Representative (USTR) also said the United States would not hesitate to lodge new disputes with the World Trade Organization if bilateral talks on a range of contentious issues from agriculture to intellectual property failed.

China, a $450 billion market for U.S. goods and services that has become a key source of revenue for some American companies, announced plans last month to steer its economy towards more sustainable growth and liberalize markets.

The USTR said the reforms, which aim to boost productivity and switch the focus of China’s economic model from goods exports to domestic consumption and services, had much in common with the U.S. trade agenda with China.

“The United States shares (the reforms’) goals of reducing Chinese government intervention in the economy, accelerating China’s opening up to foreign goods and services, reforming China’s state-owned enterprises and improving transparency and the rule of law to allow fair competition in China’s market,” the USTR said in a report to U.S. lawmakers.

“The United States therefore will urge China to speedily implement these promising Third Plenum Decision economic reform elements.”

In its latest scorecard of China’s compliance with its WTO obligations, the USTR expressed particular concern at intellectual property infringements, including copyright violations and piracy which it said cost U.S. companies billions of dollars every year in lost royalties and revenue.

The U.S. is also concerned about the theft of trade secrets by or for the benefit of Chinese companies, and lax enforcement of existing legal protections which means many victims of such thefts do not lodge formal complaints.

“When bilateral discussions fail to resolve key issues, the United States will remain prepared to take other types of action on these issues, including WTO dispute settlement where appropriate,” said the USTR, which reported seven active WTO cases against China during 2013.

Other key unresolved issues highlighted in the report include Chinese export restraints on rare earths and other raw materials and a ban on U.S. beef imports, which both countries have said they aim to lift by July 2014.

China, which joined the WTO 12 years ago, is the United States’ largest agricultural export market with exports of more than $25 billion in 2013 but the USTR said the country remained “among the least transparent and predictable of the world’s major markets for agricultural products.”

The USTR’s wish list for China includes reducing market access barriers, more transparency, less discrimination, requiring state-owned enterprises to compete with other enterprises on a level playing field and a stronger legal system.

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Strewth, a foreign Holden? GM hopes Australian icon will endure

SYDNEY (Reuters) – It’s as much a part of Australia as kangaroos, the Sydney Opera House or vegemite, and General Motors Co’s (GM.N) decision to stop manufacturing Holdens in the country looks like the marketing equivalent of a car crash.

Australians have reacted with a mixture of anger, sadness and resignation to GM’s pre-Christmas announcement that it will stop making cars in Australia by 2017 due to high costs and a cripplingly strong currency.

But GM and independent brand experts are confident Holden will not only survive the public relations nightmare, they expect it to endure as one of the most valuable assets GM has ever built down under.

“The fact that they’re no longer made here will cause some dissatisfaction and backlash but there’ll still be a lot of people who like them,” said Danny Samson, professor of management at Melbourne University. “It’s a very well regarded brand and there’s no way you’d want to throw it away.”

While a combination of a strong pipeline of new models, effective retraining for affected staff and continued investment in its distribution network would help Holden mitigate the fallout, its biggest asset will be its long and much-loved history in Australia.

As Australia rose to prosperity in the 1950s and 1960s, feeding and clothing a Europe recovering from World War 2, the vehicle it drove was the Holden ute.

The ute – short for utility vehicle – became ubiquitous in both Australia’s countryside – the bush – and the suburbs, its pick-up style flat bed handy for transporting surfboards or sheep.

Holden’s popularity continued to grow during the 1970s, driven by the success of its HQ series and the celebrated in its advertising campaign featuring the jingle “Football, Meat Pies, Kangaroos and Holden Cars” – an Australian version of the North American “Baseball, Hot Dogs, Apple Pies and Chevrolet” ad.

A fierce rivalry with Ford (F.N), most famously on Bathurst’s Mt Panorama racetrack, took the brand to passionate heights.

One Holden model was even named a priceless national treasure by the National Library of Australia and the death in a 2006 rally crash of Holden racing stalwart Peter Brock, the undisputed “King of the Mountain”, was a day of national mourning.


GM is adamant the Holden brand with its “lion and stone wheel” logo will remain in Australia after its two plants near Adelaide and Melbourne are closed in 2017.

“Holden is here to stay,” GM Holden Chief Executive Mike Devereux said after announcing the planned production shutdown. “The brand is going to be a part of the fabric of this country for a very long time.”

Even so, the costs of maintaining a separate brand in such a small and fractured market have prompted speculation that GM will eventually rebadge its imported Holdens as Chevrolets.

Holden is currently the second-best selling auto brand in Australia, with its market share of around 11 percent trailing Toyota Motor Corp’s (7203.T) near-20 percent. But with more than 60 makers fighting for a market selling just over 1 million vehicles a year, Australia represents a small pie being sliced very thinly.

GM already imports the majority of the Holdens it sells in Australia, mostly from South Korea and Thailand, and may ramp up imports from such plants once Australian production halts.

Paul Nicolaides, a logistics manager at an industrial company and life-long Holden fan, said that would weigh on whether he continued to buy Holdens after 2017.

“I’ve been a Holden man all of my life and I’ve actually got the latest model, Commodore,” he said. “We would have a rethink about what we would buy, (but) there’s nothing else Australian anymore, with Ford gone and now Holden, where would we go?”


That highlights a broader challenge to the “Australian Made” campaign that promotes buying locally made goods but has already seen the domestic auto industry gutted and a host of other companies moving production offshore.

In October, Swedish appliance maker Electrolux AB (ELUXb.ST) announced it would close a manufacturing plant in New South Wales, while global food giant Heinz last year moved some production from Australia to New Zealand, where costs are lower.

“What (Holden’s departure) reflects first and foremost, is that Australia has become a very high-cost country,” said Ian Harrison, the chief executive of Australian Made Campaign Ltd, the not-for-profit organization behind the certification and marketing tool. “There is not one thing in this country that you can’t get more cheaply somewhere else.”

Melbourne University’s Samson questioned whether the “Made in Australia” factor had ever been particularly powerful.

“Only if the Australian product is every bit as valuable do they then say alright, I’ll buy the Australian one, but in many categories, it’s not that big of a deal.”

Indeed, government funding for Australian Made was turned off in 1996 and the organization is now solely reliant on license fees for its green and gold kangaroo triangle for its A$2.5 million annual budget.

In the meantime, Holden fans will mourn.

“A bit sad, very sad actually, because I’ve been a follower of Holden with my father,” said Bruce Lethborg, president of Holden Sporting Car Club of Victoria. “My father had Holdens, my very first car was a 1966 HR Holden, it’s just devastating really.”

(Editing by Raju Gopalakrishnan)

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A minicar named Hustler? Japan’s brand names raise eyebrows

TOKYO (Reuters) – Suzuki Motor Corp had little idea that the name “Hustler” for its new, boxy minicar aimed at outdoorsy Japanese customers might cause mirth among English speakers for its association with an adult magazine – but it’s not alone.

Plucking words from foreign dictionaries without checking how they might be received by native speakers appears to be a habit at Japanese companies, which have produced countless products with unintentionally unsavory names.

The name Hustler was chosen to conjure the image of agility, as well as invite nostalgia from customers who remembered an off-road motorbike released in 1969 called the Hustler 250, said a Suzuki public relations officer.

Foreign visitors might instead recall the sexually explicit magazine started by porn magnate Larry Flynt as competition to Playboy, or associate the word with obtaining money through illegal activities or vice industries.

The Hustler follows a string of other Japan-made cars to bemuse speakers of foreign languages, such as Daihatsu Motor Co Ltd’s Naked in 2000 and Isuzu Motors Ltd’s 1983 Bighorn.

Spanish speakers were taken aback by Mazda Motor Corp’s Laputa, a derogatory word for sex worker, while Mitsubishi Motors Corp sold its Pajero model as the Montero in Spanish-speaking countries as the former is slang for sexual self-pleasure.

Japanese confectionery often yields a chuckle from foreign tourists, too. A tubular chocolate snack called Collon and an isotonic sports drink named Pocari Sweat, for example, bear unfortunate associations with bodily functions.

While many brand names around the world don’t translate across borders – the Iranian washing powder Barf, which means snow in Persian, or a Swedish chocolate bar called Plopp, for example – Japanese companies often use foreign words for how they sound, with little regard to their original meaning.

This is partly due to foreign words having an exotic ring, much like how Chinese characters are seen by Westerners as poetic or profound choices for tattoos even if the results don’t make much sense to native speakers. But Japanese firms often fail to check if a name ‘travels’ because of historical reasons, marketers say.

“Japan really is an island nation, and was historically closed for a long time. Also, the domestic market is so big that companies can be successful without thinking globally,” said Masamichi Nakamura, executive director at global marketing firm Interbrand’s branch in Tokyo.

But Japan is far from having a patent on unintentionally salacious brand names: websites like revel in strange uses of English across Asia, including neighboring South Korea’s snack maker Lotte Confectionary Co Ltd’s Crunky Ball Nude.

(Reporting by Sophie Knight; Editing by Christopher Cushing)

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Detroit reaches deal to end interest-rate swaps

DETROIT (Reuters) – The city of Detroit reached an agreement on Tuesday with two banks to end a costly interest-rate swap agreement, a significant step as the city negotiates with creditors to put together a plan to exit the largest municipal bankruptcy in U.S. history.

Detroit will pay $165 million, plus up to $4.2 million in costs, to end the interest-rate swap agreements with UBS AG (UBSN.VX) and Bank of America Corp’s (BAC.N) Merrill Lynch Capital Services at a 43 percent discount. The new agreement, which was reached after the judge overseeing the case implored the city to negotiate better terms than it first proposed, will save the city about $65 million.

As part of the arrangement, Detroit will also take out a $285 million loan from Barclays PLC (BARC.L) to pay to end the swaps. It will use $120 million of that toward improvements to services in the city, which is hampered by $18.5 billion in debt.

Terms of the agreement were announced by Robert Hertzberg, of the law firm Pepper Hamilton, which represents Detroit, before U.S. District Judge Gerald Rosen, the chief mediator in the bankruptcy case. The deal must still be approved by the U.S. bankruptcy judge overseeing the case, Steven Rhodes.

Robert Gordon, an attorney representing the city’s two pension funds, said the funds would continue to oppose the deal even with the changes. “The revised deal is better, but that is not saying a lot,” Gordon, of the law firm Clark Hill, wrote in an email.

The deal was reached after two days of mediation this week, led by Rosen.

“This is – I think it’s the first, I think it’s fair to say, significant agreement in the bankruptcy,” Rosen said, according to a court transcript.

Detroit had initially secured a $350 million loan from Barclays, of which about $230 million would be used to end the swap agreements with UBS and Merrill Lynch at 75 cents on the dollar. The remainder of the cash was slated to be used to improve city services.

The swaps had been intended to hedge interest rate risk for a portion of $1.4 billion of pension debt Detroit sold in 2005 and 2006.

A spokesman for Bank of America declined to comment. UBS could not be reached immediately for comment.

Rhodes last week encouraged Detroit to negotiate better terms with the banks after he halted a hearing at which the city was seeking approval of the deal.

The agreement can be terminated if it is not approved by January 31, 2014. Detroit plans to file a request with Rhodes to approve the deal by Friday, said Hertzberg, the city’s attorney.

Detroit Emergency Manager Kevyn Orr, in a statement, called the deal an “important development. This agreement represents a significant reduction from the original deal struck with the banks,” Orr said. “The banks and the City, through mediation, and with the mediator’s recommendation, have accepted the reduction in terms.”

(Reporting by Joseph Lichterman; editing by Leslie Adler and Dan Grebler)

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Exclusive: Target hackers stole encrypted bank PINs

BOSTON/NEW YORK (Reuters) – The hackers who attacked Target Corp (TGT.N) and compromised up to 40 million credit cards and debit cards also managed to steal encrypted personal identification numbers (PINs), according to a senior payments executive familiar with the situation.

One major U.S. bank fears that the thieves would be able to crack the encryption code and make fraudulent withdrawals from consumer bank accounts, said the executive, who spoke on the condition of anonymity because the data breach is still under investigation.

Target spokeswoman Molly Snyder said “no unencrypted PIN data was accessed” and there was no evidence that PIN data has been “compromised.” She confirmed that some “encrypted data” was stolen, but declined to say if that included encrypted PINs.

“We continue to have no reason to believe that PIN data, whether encrypted or unencrypted, was compromised. And we have not been made aware of any such issue in communications with financial institutions to date,” Snyder said by email. “We are very early in an ongoing forensic and criminal investigation.”

The No. 3 U.S. retailer said last week that hackers stole data from as many as 40 million cards used at Target stores during the first three weeks of the holiday shopping season, making it the second-largest data breach in U.S. retail history.

Target has not said how its systems were compromised, though it described the operation as “sophisticated.” The U.S. Secret Service and the Justice Department are investigating. Officials with both agencies have declined comment on the investigations.

The attack could end up costing hundreds of millions of dollars, but it is unclear so far who will bear the expense.

While bank customers are typically not liable for losses because of fraudulent activity on their credit and debit cards, JPMorgan Chase Co (JPM.N) and Santander Bank (SAN.MC) said they have lowered limits on how much cash customers can take out of teller machines and spend at stores.

The unprecedented move has led to complaints from consumer advocates about the inconvenience it caused from the late November Thanksgiving holiday into the run-up to Christmas. But sorting out account activity after a fraudulent withdrawal could take a lot more time and be worse for customers.

JPMorgan has said it was able to reduce inconvenience by giving customers new debit cards printed quickly at many of its branches, and by keeping branches open for extended hours. A Santander spokeswoman was not available for comment on Tuesday.

Security experts said it is highly unusual for banks to reduce caps on withdrawals, and the move likely reflects worries that PINs have fallen into criminal hands, even if they are encrypted.

“That’s a really extreme measure to take,” said Avivah Litan, a Gartner analyst who specializes in cyber security and fraud detection. “They definitely found something in the data that showed there was something happening with cash withdrawals.”


While the use of encryption codes may prevent amateur hackers from obtaining the digital keys to customer bank deposits, the concern is the coding cannot stop the kind of sophisticated cyber criminal who was able to infiltrate Target for three weeks.

Daniel Clemens, CEO of Packet Ninjas, a cyber security consulting firm, said banks were prudent to lower debit card limits because they will not know for sure if Target’s PIN encryption was infallible until the investigation is completed.

As an example of potential vulnerabilities in PIN encryption, Clemens said he once worked for a retailer who hired his firm to hack into its network to find security vulnerabilities. He was able to access the closely guarded digital “key” used to unscramble encrypted PINs, which he said surprised his client, who thought the data was secure.

In other cases, hackers can get PINs by using a tool known as a “RAM scraper,” which captures the PINs while they are temporarily stored in memory, Clemens said.

The attack on Target began on November 27, the day before the Thanksgiving holiday and continued until December 15. Banks that issue debit and credit cards learned about the breach on December 18, and Target publicly disclosed the loss of personal account data on December 19.

On December 21, JPMorgan, the largest U.S. bank, alerted 2 million of its debit cardholders that it was lowering the daily limits on ATM withdrawals to $100 and capping store purchases with their cards at $500.

On Monday, the bank partly eased the limits it had imposed on Saturday, setting them at $250 a day for ATM withdrawals and $1,000 a day for purchases. (The usual debit card daily limits are $200 to $500 for cash withdrawals and $500 for purchases, a bank spokeswoman said last week.)

On Monday, Santander – a unit of Spain’s Banco Santander (SAN.MC) – followed suit, lowering the daily limits on cash withdrawals and purchases on Santander and Sovereign branded debit and credit cards of customers who used them at Target when the breach occurred. Santander did not disclose the new limits, but said it was monitoring the accounts and issuing new cards to customers who were affected.

The largest breach against a U.S. retailer, uncovered in 2007 at TJX Cos Inc (TJX.N), led to the theft of data from more than 90 million credit cards over about 18 months.

(Reporting by Jim Finkle in Boston and David Henry in New York, Additional reporting by Dhanya Skariachan in New York; Writing by Paritosh Bansal, Editing by Tiffany Wu and Grant McCool)

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Dow, S&P end at record highs in brief pre-holiday trade

NEW YORK (Reuters) – U.S. stocks scored modest gains on Tuesday as investors exercised restraint from making big bets in a short session ahead of the Christmas holiday, with the Dow and SP 500 once again ending at record highs.

Markets closed early on Tuesday and will remain shut until Thursday for the holiday. Trading was extremely light during the day’s abbreviated session, which ended at 1 p.m. EST (1800 GMT). Many market participants were out of the office on the day before Christmas. Volume is expected to remain muted throughout the week and the light trading could allow for greater volatility.

Both the Dow and SP 500 continued to ascend to all-time highs, with the Dow reaching a record high for the fifth consecutive session, while the SP 500’s record streak stood at three days in a row. Further upside may be limited at these levels, especially in the absence of major trading catalysts.

“What we are seeing is the market heading into the Christmas holiday extended on a near-term basis, but we are not seeing any interest in profit taking,” said Fred Dickson, chief market strategist at D.A. Davidson Co in Lake Oswego, Oregon.

“We may see a little price consolidation across the week and headed into the New Year.”

In the latest positive sign for the economy, data showed orders for long-lasting U.S. manufactured goods shot up 3.5 percent in November and a gauge of planned business spending on capital goods marked its largest increase in nearly a year.

A separate report revealed new home sales slipped in November, but sales in October were revised to show the highest pace in more than five years and house prices rebounded.

The Dow Jones industrial average .DJI rose 62.94 points or 0.39 percent, to finish at 16,357.55, a record closing high. The SP 500 .SPX gained 5.33 points or 0.29 percent, to end at 1,833.32, a record closing high. The Nasdaq Composite .IXIC added 6.513 points or 0.16 percent, to close at 4,155.417.

The Dow also hit an all-time intraday high at 16,360.60, while the SP 500 reached a record intraday high at 1,833.32.

The SP 500 has soared 28.5 percent this year, largely due to stimulus measures from the U.S. Federal Reserve. The index is on track for its best year since 1997. The Dow is up 24.8 percent in 2013 while the Nasdaq has jumped 37.6 percent for the year.

The retail sector stayed in focus on the last shopping day before Christmas. Target Corp’s (TGT.N) general counsel, Timothy Baer, spoke with top state prosecutors on Monday to address their concerns about a massive data breach, as consumer lawsuits piled up against the discount retailer and two U.S. senators called for a federal probe. Target’s stock slipped 0.3 percent to $61.71.

Walt Disney Co (DIS.N) named Twitter Inc (TWTR.N) co-founder Jack Dorsey an independent board director. Shares of Disney, a Dow component, rose 0.8 percent to $73.85 while Twitter surged 8.4 percent to $69.96.

Private equity firm Carlyle Group LP (CG.O) is nearing an agreement to acquire Johnson Johnson’s (JNJ.N) ortho clinical diagnostics unit, four people familiar with the matter said on Monday, in a deal expected to be worth around $4 billion. Carlyle Group shares gained 2.1 percent to $36.11. Johnson Johnson, a Dow component, edged up 3 cents, or 0.03 percent, to $92.06.

Volume was light because of the abbreviated session, with only about 2.17 billion shares traded on U.S. exchanges – well below the 6.43 billion average so far this month, according to data from BATS Global Markets.

Advancing stocks outnumbered declining ones on the New York Stock Exchange by a ratio of 2 to 1. On the Nasdaq, slightly more than three stocks rose for every two that fell.

(Editing by Jan Paschal)

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Analysis: In telecom merger mania, skeptical eye from Obama administration

WASHINGTON/NEW YORK (Reuters) – A pair of potentially transformative U.S. telecoms and cable deals could run afoul of Obama administration regulators who worry that mergers among market leaders would hurt consumers.

With both cable and mobile phone operators grappling with slowing growth, speculation has intensified recently about potential takeovers of No. 4 wireless service provider T-Mobile US Inc and No. 2 cable service provider Time Warner Cable Inc.

Some possible buyers, including Sprint Corp and Comcast Corp, may face headwinds in convincing U.S. regulators that their deals would improve competition.

“The Obama administration definitely is more skeptical of large corporate combinations… They are concerned about the effects of market concentration on consumers,” said Robert McDowell, who stepped down as the senior Republican member of the Federal Communications Commission earlier this year.

“It’s not an impossible wall to climb over but it is a high wall nonetheless,” said McDowell, now a visiting fellow at the nonprofit Hudson Institute in Washington.

The Obama administration’s pro-consumer tack could threaten deals that eliminate big competitors within an industry, such as a Sprint bid for T-Mobile or a Comcast bid for Time Warner Cable. Regulators could, on the other hand, welcome transactions that bolster new entrants, such as one combining satellite TV service provider Dish Network Corp with T-Mobile, experts say.

“Dish/T-Mobile, from a regulatory standpoint, it would be a slam-dunk,” said Stifel analyst David Kaut.

All the companies mentioned in this story declined comment.

Sources earlier told Reuters that Dish is considering making a bid for T-Mobile next year, potentially setting the stage for a new bidding war with Japan’s SoftBank Corp, which owns 80 percent of Sprint.

Comcast Corp and smaller rival Charter Communications Inc and Cox Communications Inc are all circling No. 2 U.S. cable provider Time Warner Cable.


Sprint and T-Mobile executives have argued that the wireless market would be much healthier with a stronger third competitor that could better challenge the leading players, Verizon Communications Inc and ATT Inc.

ATT and Verizon Wireless have roughly a third of the U.S. wireless customers each, while Sprint and T-Mobile have a third between them, according to Roger Entner of Recon Analytics.

Both FCC and Justice Department chiefs have signaled they will take a hard line in scrutinizing consolidation bids.

“We have a responsibility at this agency to protect competition that exists and promote competition in those areas where it doesn’t,” new FCC Chairman Tom Wheeler, in the past a cable and wireless lobbyist, told reporters earlier this month.

The FCC, in an annual report released in March, said competition in the wireless industry is “highly concentrated.” Similarly, the Justice Department’s assistant attorney general for antitrust, William Baer, has described the industry as “not uniformly competitive.”

“The Department believes it is essential to maintain vigilance against any lessening of the intensity of competitive market forces,” Baer told the FCC in a filing in April related to an upcoming auction of low-frequency airwaves.

The government’s rejection of ATT’s $39 billion plan to buy T-Mobile from Deutsche Telekom in 2011 remains the biggest shadow looming over big communications deals.

T-Mobile, which is 67 percent-owned by Germany’s Deutsche Telekom, was hemorrhaging customers at the time ATT sought to buy it. But this year, T-Mobile started to add subscribers and its new service plans have also forced ATT and other rivals to offer cheaper and more flexible packages.

Roe Equity Research analyst Kevin Roe agreed that T-Mobile and Sprint, now under Japan’s SoftBank, have better balance sheets and stronger networks than before.

“Neither company deserves any pity. They did two years ago but no longer,” he said of the No. 3 and No. 4 providers.

Some antitrust experts pointed to the U.S. Airways and American Airlines merger to form the world’s largest airline as a sign of hope for big deals. Regulators ultimately allowed that combination to proceed but only after the two companies agreed to divest gate slots at key airports, including in Washington and New York.

Similarly, McDowell said if regulators were to approve the Sprint/T-Mobile deal, it would carry “extraordinary conditions and divestitures.”


In cable, antitrust experts say that a Time Warner Cable merger with a smaller competitor, such as Charter or Cox, raises fewer red flags than a deal with market leader Comcast.

Time Warner Cable has 12 million video customers, or 12 percent of the U.S. households that pay for TV access. Charter and Cox have around 4 million each, while Comcast has over 22 million.

Antitrust experts say a Comcast deal cannot be ruled out either, but could mean sacrifices from the merging companies, potential divestitures or agreement to other stipulations.

The fear with a cable deal is that it may create a company powerful enough to withhold content from other distributors, such as satellite TV or Internet video streaming sites.

Agreeing to license content to competitors could resolve that issue, as Comcast did when it bought NBC in 2011, said Robert Doyle of the law firm Doyle, Barlow and Mazard PLLC.

The Justice Department may also worry that the power of a Comcast/Time Warner combination could depress prices paid to content-providers, which are on the rise.

Together, Comcast and Time Warner Cable would have “a tremendous amount of bargaining power” against studios and other channels as Comcast also owns NBC Universal, Entner said.

“I think that theory is going to get a lot of traction,” said Matthew Cantor of the law firm Constantine Cannon.

(Reporting by Alina Selyukh and Diane Bartz in Washington and Sinead Carew, Liana B. Baker and Nicola Leske in New York; Editing by Christian Plumb and Andrew Hay)

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SoftBank gets closer to buying T-Mobile: report

(Reuters) – Japan-based SoftBank Corp (9984.T) is in final stages of talks with T-Mobile (TMUS.N)parent company Deutsche Telekom (DTEGn.DE)about acquiring the U.S.-based wireless carrier, the Nikkei news service reported on Tuesday, citing anonymous sources.

SoftBank, which purchased 80 percent of Sprint (S.N) earlier this year, wants to pay for T-Mobile using shares of Sprint as early as next spring in a deal worth more than $19 billion, the report said. SoftBank aims to have Sprint buy the majority of T-Mobile shares.

SoftBank has thought about a stock swap but now may have added a tender offer and other kinds of deals to its list of options, Nikkei reported. Deutsche Telekom prefers a cash deal, the story said.

SoftBank is speaking to banks about borrowing funds for a deal, according to news reports.

Sprint has been interested in combining with T-Mobile for years and top executives from both companies have said that consolidation is needed in the U.S. wireless market to create a stronger rival against the biggest players, Verizon and ATT.

A tie-up between Sprint and T-Mobile is expected to draw regulatory scrutiny, experts have said.

Shares of T-Mobile rose 21 cents or 0.7 percent to $32.06 per share.

(Reporting by Liana B. Baker; Editing by David Gregorio)

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U.S. manufacturing, housing data buoy economic outlook

WASHINGTON (Reuters) – Orders for long-lasting U.S. manufactured goods surged in November and a gauge of planned business spending on capital goods recorded its largest increase in nearly a year, pointing to sustained strength in the economy.

While another report on Tuesday showed new home sales slipped in November, sales in October were revised to show the highest pace in more than five years. In addition, house prices rebounded, underscoring the economy’s improving fundamentals.

“We are coming out of the shadows of the Great Recession in many ways,” said Robert Dye, chief economist at Comerica in Dallas.

The Commerce Department said durable goods orders jumped 3.5 percent last month as demand increased for a range of goods from aircraft to machinery and computers and electronic products.

The increase, which outpaced economists’ expectations for a 2 percent rise, more than reversed a drop in October. Excluding transportation, orders recorded their largest gain in six months.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, surged 4.5 percent. The increase snapped two straight months of declines and was the largest advance since January.

The increase in these so-called core capital and overall durable goods orders suggested strength in manufacturing and was further evidence of a firming economic growth outlook.

It narrows the gap with sentiment surveys that have offered a more upbeat view of manufacturing than government data.

“Sentiments were showing things were good but not the hard numbers. Things seemed to have turned now,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. “Businesses going into 2014 are more confident in their outlook.”

From consumer spending to employment and trade, the foundations appear to be in place for sustained and strong economic growth in 2014.

In a second report, the Commerce Department said new home sales fell 2.1 percent to a seasonally adjusted annual rate of 464,000 units. However, October’s sales were revised to a 474,000 unit pace, which was the highest level since July 2008.

Despite the fall, home sales retained the bulk of the previous month’s 17.6 percent increase.

The reports are the latest to support the U.S. Federal Reserve’s decision last week to start trimming back its monthly bond purchases from January, a process which is likely to continue for much of next year.


U.S. Treasuries prices fell with benchmark yields hovering near three-month highs as investors trimmed their bond holdings in thin trade before Christmas. U.S. stocks were little changed, while the dollar rose marginally against a basket of currencies.

The durable goods orders report showed that shipments of core capital goods, which are used to calculate equipment spending in the government’s measure of gross domestic product, increased 2.8 percent last month.

That was the largest rise since March 2012, prompting economists at Goldman Sachs raised their fourth-quarter GDP estimate by a tenth of a percentage point to a 2.4 percent annual rate. Shipments had dropped in September and October.

Manufacturing is being boosted by the housing market recovery through demand for building materials and household appliances. Home resales momentum has, however, slowed somewhat since the summer because of higher mortgage rates.

Applications for home mortgages fell for a second week to hit a 13-year low last week, another report showed.

Refinancing activity is also ebbing, which means the cycle of people lowering their monthly housing costs appears to be petering out.

But home sales are expected to accelerate next year, driven in part by employment gains. Continued recovery in household formation from multi-decade lows, against a backdrop of lean housing inventory, is also expected to boost activity.

“While the backup in mortgage rates could put a temporary dent in the pace of sales, continued job gains, as well as a return to more normal rates of household formation, should help to underpin housing demand,” said Omair Sharif, an economist at RBS in Stamford, Connecticut.

The median price of a new home hit a seven-month high in November and was more than 10 percent higher than a year earlier.

(Reporting by Lucia Mutikani; Additional reporting by Richard Leong; Editing by Krista Hughes)

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