Business news in brief

QUOTE OF THE DAY

“The economy was expanding modestly and possibly gaining momentum before the government shutdown.”

Ken Goldstein, Conference Board economist Article, 1D

Blockbuster to shut all 300 U.S. stores

Blockbuster LLC, the video-rental company owned by Dish Network Corp., will close its remaining 300 U.S. stores by early January.

Blockbuster will shut the outlets and also discontinue its DVD-by-mail service by the middle of next month, Englewood, Colo.-based Dish said Wednesday in a statement. The company will keep the licensing rights to the Blockbuster brand and use it with Dish services. It also has a video streaming product called Blockbuster On Demand.

Dish, which acquired the chain out of bankruptcy in April 2011, had already divested Blockbuster’s international assets, including operations in the U.K. and Scandinavia. The company has been gradually shutting down the 1,700 stores it acquired.

“This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” Dish Chief Executive Officer Joseph Clayton said in the statement.

Blockbuster was once so dominant in the home-video market that it was sued by independent video retailers who claimed in 2001 that the company’s revenue-sharing agreements with movie studios hurt competition. The lawsuit was dismissed.

When the company was spun off by Viacom Inc. in 2004, it operated about 9,000 locations - before streaming video services such as Netflix Inc. devastated the industry. Blockbuster filed for bankruptcy protection in September 2010.

U.K. firm to fire 1,775, close shipyards

LONDON - British defense contractor BAE Systems announced plans to cut some 1,775 jobs at three shipyards Wednesday, ending the building of warships in England for the first time in hundreds of years.

BAE told unions it was starting the legal process to stop shipbuilding at a yard in Portsmouth in England and eliminate jobs at Govan and Scotstoun in Scotland once work is completed on two aircraft carriers in 2015.

The cuts will have political ramifications ahead of a Scottish independence vote in 2014. Critics contend the Scottish shipyards got preferential treatment at the expense of the English one to prevent independence leader Alex Salmond from arguing that Scotland was punished for seeking independence.

Gerald Vernon-Jackson, a local government leader in Portsmouth, told the BBC on Wednesday that closing the Portsmouth shipyard raised the prospect that no advanced warships would be built in England - potentially forcing Britain to turn to France or Germany for ships.

Ships have been built in Portsmouth for hundreds of years, since Britain first became a naval power.

“We’re an island nation,” said Vernon-Jackson. “We depend on sea trade for the food we eat, for the fuel in our cars, for the gas in our central heating systems, and the Royal Navy has never bought ships from abroad.”

Investor, firm sued over futures trades

Donald R. Wilson and his DRW Investments LLC were sued Wednesday by the U.S. Commodity Futures Trading Commission over what the agency called “manipulative” futures trades in a purported $20 million scheme.

Wilson and his Chicago-based investment fund manipulated prices for interest-rate swap futures contracts traded on the Nasdaq OMX futures exchange and cleared through the International Derivatives Clearinghouse from January through August 2011, according a complaint the commission filed in Manhattan federal court.

DRW sued the commission in September in federal court in Chicago, seeking to block the regulator from its “stated intention to bring an enforcement action.”

Interest-rate swaps - exchanges of interest-rate exposure from floating to fixed or vice versa for a notional amount of money - are used by speculators and those looking to hedge risks. The commission is seeking unspecified fines and restitution.

  • Bloomberg News

OPEC leader criteria said unresolved

OPEC has yet to decide on requirements for selecting a new secretary-general to replace Abdalla El-Badri, whose extended term ends this year, according to three people familiar with OPEC policy.

The organization’s board of governors ended a meeting Wednesday in Vienna without agreeing on the selection criteria, the people said, asking not to be identified because discussions among the 12 member nations are private.

El-Badri, a former Libyan oil minister, served two three year terms as secretary-general before being given a oneyear extension last December. He may be asked to remain for another 12 months, the people said. A decision will be taken when the group’s ministers meet next, on Dec. 4 in Vienna.

The Organization of Petroleum Exporting Countries is made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The two biggest producers, Saudi Arabia and Iraq, have both submitted candidates for secretary-general, as has Iran.

  • Bloomberg News

No more mortgages, Ally Financial says

NEW YORK - Ally Financial, once one of the largest U.S. home lenders, has ended the mortgage business that drove the company to the brink of collapse.

Ally no longer offers or services home loans, and the pipeline of pending mortgages stands at zero, according to a presentation released Tuesday by the Detroit-based auto financer. The company has paid a settlement reached last month with U.S. regulators tied to its residential lending.

The settlement is the last of any significant costs, Jeff Brown, senior executive vice president for finance, told investors during a conference call.

Mortgages are in Ally’s “rearview mirror,” Chief Executive Officer Michael Carpenter said, ending an almost 30-year foray that led to more than $10 billion in losses and a $17.2 billion U.S. bailout. Under Carpenter’s predecessors, brands such as GMAC Mortgage and online lender Ditech propelled the firm into the top ranks of subprime lenders in 2006, just as the housing bubble began to pop.

The bailout left taxpayers with a 74 percent stake and Carpenter with the task of rebuilding the firm, originally known as GMAC when it was the in-house financing arm of General Motors Corp. Burdened by mortgages made to borrowers with shoddy credit, Ally began reporting losses in 2007 that reached $10.3 billion in 2009. With the company on the verge of failure, the U.S. engineered a bailout to ensure money kept flowing to the auto industry and preserved jobs.

  • Bloomberg News

Business, Pages 28 on 11/07/2013

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