Reader's Digest Bankruptcy
Print journalism had a bad few days. The Reader's Digest filed for Chapter 11 for the second time in three years, with $1.1 billion in assets and $1.2 billion in liabilities. The transaction will buy the publisher time and decrease debt service, but that is about all. The magazine's many editions are read by the old and undereducated. Its Internet presence is inadequate to offset tumbling print sales, which have done so much damage to so many publications that were once the core of a booming industry.
The news comes just days after rumors that Time Warner Inc. (NYSE: TWX) will sell most of its publications into a venture with publisher Meredith. Time Inc. may keep Fortune, Sports Illustrated and Time. These three may be handed to media veteran Jeff Zucker, who is the new head of CNN. CNN Money is already the portal for Fortune and Money. And Sports Illustrated has relied on CNN for traffic as well, although that prized position recently was taken by the Bleacher Report.
For the sector to be completely transformed, all that is left is for Mexican billionaire Carlos Slim, who loaned money to the New York Times Co. (NYSE: NYT) several years ago (and was paid back) to buy the ancient newspaper. Another American industry will have been destroyed.
Rising Crude Oil Prices
Crude oil prices are approaching $100 again, a level where the commodity has not traded since the autumn. Blame a better economy in China and political problems in the Middle East, although those explanations are childishly simple. WTI crude trades just below $96. Oil prices certainly could hurt the U.S. economy, but because of its delicate state, Europe is more vulnerable. According to Bloomberg:
Oil prices are acting as a brake on the global economy, and harming Europe in particular, the International Energy Agency's chief economist said at a conference in London today.
Europe will need to spend 500 billion euros ($668 billion) on oil imports this year, about 200 billion euros more than average levels, if oil prices remain near current levels, the IEA's Fatih Birol, said in London at the start of International Petroleum Week.
"Prices are very high," he said in a Bloomberg Television interview. The "current level of oil prices is a major impact on the global economy, but especially for Europe."
BP Heads to Court
BP PLC (NYSE: BP) has decided that the best way to repent from the sins it took on with the Gulf of Mexico disaster is to litigate. According to The Wall Street Journal:
BP already has agreed to pay more than $30 billion in fines, settlements and cleanup costs for the 2010 Deepwater Horizon explosion and oil spill. Now it is placing a big bet that by going to trial next week, it can hold down the cost of one of its last major potential liabilities for the disaster.
The London-based oil company says both the law and the facts of the case make facing a federal judge in a trial a safer bet than reaching a settlement with Gulf Coast states, businesses, individuals and the federal government for environmental-related claims.
Filed under: 24/7 Wall St. Wire, Market Open Tagged: BP, NYT, TWX