TIME Aereo

Barry Diller Blasts Obama for Backing TV Broadcasters

Media tycoon Barry Diller attends the performance of "One Night Only" benefiting the Motion Picture and Television Fund in Los Angeles
Media tycoon Barry Diller. Phil McCarten / REUTERS

The billionaire says the Obama Administration is aligning itself "against competition, choice and the consumer" by supporting TV broadcasters aiming to kill Aereo

Billionaire mogul Barry Diller blasted the Obama Administration and the nation’s largest TV broadcasters on Thursday for trying to shut down Aereo, the upstart online video service backed by the media investor. Next week, Aereo will square off against the broadcasters in a landmark Supreme Court case with billions of dollars at stake that could transform the TV business.

Aereo uses thousands of dime-sized antennas to pick up free, over-the-air TV signals, which it transmits to customers over the Internet for a monthly fee starting at $8. The startup has angered the major broadcasters, including NBC, FOX, ABC and CBS, which claim the service is illegal because it’s ripping off their copyrighted TV signals. Aereo hit back on Thursday by launching a website designed to advance its argument that the service is legal.

In March, the Obama administration filed a friend of the court brief supporting the broadcasters and claiming that Aereo is “liable for infringement.” Several well-known public interest and technology advocacy groups have backed Aereo, including the Electronic Frontier Foundation, Public Knowledge, the Consumer Electronics Association, and Engine Advocacy. Dozens of prominent law professors and legal scholars are also supporting Aereo.

Last year, federal courts in New York and Boston agreed with Aereo’s argument that it is transmitting legally protected “private performances” to individual users over their own leased antennas, based on principles established by the important 2008 Cablevision decision, which allowed remote-storage DVR technology. But in February, a federal judge in Utah sided with the broadcasters, intensifying the legal uncertainty surrounding Aereo.

“The networks would like the court to expand copyright law far beyond what Congress intended,” says EFF Staff Attorney Mitch Stoltz. “The networks’ interpretation of the law would strip away the commercial freedom that led to the home stereo, the VCR, all manner of personal audio and video technology and to Internet services of many kinds.”

Diller’s broadside, which was published in a Wall Street Journal opinion piece, accused the TV networks of turning their back on a century-old agreement in which they were granted use of the nation’s public airwaves in exchange for delivering free, advertising-supported TV programming. In recent years, the TV networks have been able to extract billions of dollars in retransmission fees from cable and satellite companies for the right to broadcast their programming.

“Broadcasters make more money when consumers are steered away from over-the-air program delivery and toward cable and satellite systems that pay the broadcasters retransmission fees,” wrote Diller, who is on Aereo’s board of directors. “There’s nothing wrong with that. But it seems rich for them to forget the agreement they made to provide television to the consumer in return for the spectrum that enables their business.”

Diller also castigated the Obama administration for aligning itself “against competition, choice and the consumer” by supporting the broadcasters. “In siding with the broadcasters, the administration has signaled that the preservation of legacy business models takes precedence over lawful technological innovation,” Diller wrote.

The Obama administration’s support for the broadcasters “ignores the government’s own previous legal positions and threatens to outlaw the entire cloud-computing industry,” Diller wrote, echoing a point made by Aereo CEO Chet Kanojia in a recent interview with TIME. That’s because Aereo’s cloud-based DVR service relies on the same legal principles as the entire cloud-computing industry, which enables consumers to store data on remote servers accessible by the Internet.

The broadcasters claim that Aereo’s service amounts to blatant theft, and have warned that if Aereo prevails, they could remove their primetime shows from free TV and move them to pay channels like Showtime. The National Football League and Major League Baseball have threatened to take high-profile broadcasts like the Super Bowl and World Series to cable. Such a move by the broadcasters would “disenfranchise” millions of viewers who rely on antennas to receive TV programming, “just because they want to make more money,” Kanojia says.

Meanwhile, Aereo suffered a setback this week when the Supreme Court announced that Justice Samuel Alito, who had earlier recused himself from the case, will now be able to participate. Oral arguments are set for next Tuesday. (The high court doesn’t comment on why justices do or do not recuse themselves, but it’s often because of stock ownership in one of the parties.)

Alito’s participation gives the broadcasters a boost because it removes the possibility of 4-4 tie, which would have meant that a lower court ruling in favor of Aereo would stand. “With Alito no longer recused, broadcasters now have an additional avenue for scoring that fifth vote,” according to Scott R. Flick, a D.C.-based partner at the law firm Pillsbury. “In other words, it’s easier to attract 5 votes out of 9 than it is to get 5 votes out of 8.”

TIME Autos

Here Comes the Next Big Push to Get Drivers to Buy Electric Cars

Japan Nissan
Itsuo Inouye—AP

Everybody understands that one big upside of owning an electric car is that you’ll never have to spend a penny on gasoline. Now, you won’t have to pay for the electricity needed to charge the car either.

Thanks to a new “No Charge to Charge” initiative from Nissan, drivers who purchase or lease a new battery-powered Nissan Leaf will receive a special card that allows them to plug in at public charging stations at no cost whatsoever starting July 1. The program will be available in 25 U.S. markets, which have collectively accounted for 80% of all Leaf purchases thus far, and owners will be able to charge their vehicles for free for two years. Anyone who purchases outright or leases a new Leaf as of April 1 or later is eligible in the participating markets, which include many major cities along the West Coast, as well as Nashville, Houston, and Washington, D.C.

According to the U.S. Department of Energy’s FuelEconomy.gov site, a Nissan Leaf owner can expect to pay an average of $550 in “fuel cost” annually, based on driving 15,000 miles per year. So Nissan’s program would seem to be the equivalent of a $1,100 bonus for buyers. Whether or not an owner actually realizes such a return will depend a lot on how easy it is to use the public charging stations where plugging in is free. Most electric car owners charge their vehicles at home at night, and Nissan isn’t going to pitch in with any portion of your house’s electricity bill.

Even if “No Charge to Charge” offers less of a return that it initially seems like at first glance, the program obviously makes it more enticing—and more cost-effective—to buy a Leaf, so it could push some potential buyers off the fence. “The net effect here is it really increases the utility of the Leaf for the driver,” Norman Hajjar, research director for the electric-car app creator Recargo, said of Nissan’s new initiative, via the San Francisco Chronicle.

Nissan’s move comes at a muddled time in the electric car market, when Tesla is clearly the runaway success at the high end of the field, and when a wide range of less expensive EVs, plug-ins, and hybrids continue to vie for consumer attention. Despite the arrival of more and more plug-in models into the market, hybrids and electric cars remain a very small niche, representing around 3% of new car sales.

In a statement that’s about as definitive as you can get, Michelle Krebs, senior analyst with Edmunds.com, told the Detroit Free Press, “Plug-in vehicles aren’t going away, but how many will sell, at what price and using which technology, is yet to be determined.”

The Nissan Leaf ended 2013 on a high note, with its best sales month ever in December: 2,529 units sold, bringing the year’s total to 22,610, more than double the amount in 2012. But the disappearance of end-of-year incentives, combined with brutally cold weather that hurt all auto sales, resulted in a big electric car sale slump in early 2014. According to MarketWatch, there were 918 Chevy Volts and 1,252 Nissan Leafs sold in January 2014, compared to 2,392 Volts and 2,529 Leafs the previous month.

Leaf sales have rebounded with the onset of warmer weather, including 2,507 units sold in March, its second-best month ever, and a 12% increase over March 2013. For the first three months of 2014, meanwhile, sales of the gas-electric hybrid Volt decreased by 15% compared to the same period in 2013.

In any event, it’s clear that for any plug-in to achieve true mainstream appeal, some work needs to be done to convince the average driver of the cost-effectiveness of an electric car. Basically, the cars need to be cheaper to own and operate, or automakers need to do a better job of proving to consumers that these vehicles are indeed cheap to own and operate.

Throwing in two years’ worth of free charging, as Nissan is doing, certainly helps the equation. So does the tried-but-true practice of simply lowering the retail price. That’s what Nissan did in early 2013, which resulted in the automaker selling twice as many Leafs in 2013 that it did the previous year. And that’s what GM is planning for the next Chevy Volt, with the recent news that an entry-level Volt should hit the market for the 2016 model year with a list price starting at around $30,000—roughly $10,000 less than the base price of the original Volt.

TIME Retirement

This Is How Detroit Found Itself a Mysterious Pot of Gold

A protestor holds a sign outside the federal courthouse in support of Detroit city workers Rebecca Cook—Reuters

Suddenly the cops and firemen and other municipal workers' retirement doesn't look so bleak in the Motor City. But don't try this at home.

To the great relief of firefighters, police and other public employees in bankrupt Detroit, city fathers recently plugged a huge hole in their pension plans. For now, anyway, something close to these employees’ retirement dreams have been restored.

But how did they do it? Just a few weeks ago, Detroit leaders pegged the pension shortfall at $3.5 billion—about 20% of the city’s total indebtedness—and they were threatening to slash benefits beyond already expected cuts of up to 14% for cops and firemen and 34% for other workers. Miraculously, workers are now being assured that benefits cuts will be comparatively tame, amounting to less than a 5% reduction for those hardest hit.

Where did the money come from? Who found the pot of gold that is enabling the city to fill such a big funding gap? The answer, of course, is that no one found so much as a single hard penny. Actuaries simply juggled a few numbers on the city ledger and, voila, a paper windfall appeared. Don’t try this at home.

The most important accounting change was the assumed rate of return on investments held in the city’s two big retirement funds. Previously, the annual rate of return was estimated at 6.25% and 6.5% on the two funds. Now the city is assuming a rate of return of 6.75% on both funds. Why the bump? In part, anyway, the city seems to be taking heart in the stock market’s big gain last year, when after lackluster returns the past decade or so the S&P 500 rebounded with a glowing 32% total return.

A sustained higher rate of return would mean more annual income for the funds, making them better able to meet benefits promises with the same amount of assets. But the question remains: Is the higher return assumption realistic? One year is not a trend. Many planners believe we have decades of slow growth and modest returns ahead. A bankruptcy judge still must rule on the rosier projections.

A pension fund manager boosting the return assumption because stocks finally had a good year is a little like you at home predicting next winter won’t be so cold and slashing your heating budget. You might be right. But it’s just a guess—and if the guess is wrong you will have to find the money elsewhere to heat the house. Your finances only looked better briefly; the picture dimmed as soon as another cold winter hit.

So how realistic is the 6.75% return assumption? In the Detroit General Retirement System, annualized returns over the past seven years have been 3.9%, according to one analysis. The past five years, public pension funds have had a median annualized return of 5.3%, according to another analysis. Not so good, right?

But let’s not throw Detroit’s leaders under the bus just yet. Because people generally work and accrue benefits over 40 years or so, pension funds can take an extremely long view. The median pension fund return over the past 25 years has been 8.6%. The typical pension fund manager today assumes long-term rates of return between 7% and 8%. So Detroit has company, and may even seem cautious.

Among others, Warren Buffett has scolded pension managers for not recognizing a fundamental shift to slower growth and lower returns. But the new assumptions in the Motor City aren’t completely unsupportable. Maybe the city’s employees will catch a much-needed break and get the higher returns that pension managers hope for.

 

TIME Video Games

Sony’s PlayStation 4 Was the Top-Selling Console in March, but Titanfall Was the Top-Selling Game

Screenshot from publisher Electronic Arts and developer Respawn Entertainment's massively-multiplayer first-person Xbox One shooter Titanfall (also for Xbox 360 and Windows). Electronic Arts

Microsoft's Xbox One cedes the top console sales spot to Sony's PS4, but takes first in software sales for March 2014 with EA and Respawn's Titanfall.

Xbox One owners, exhale: Microsoft had a very good March. While the company continues to cede the top monthly console sales spot to Sony’s PlayStation 4, its Xbox- and Windows-exclusive massively multiplayer first-person shooter, Titanfall, was tops in software sales.

That’s good news, as is Microsoft’s disclosure of a new sales figure: 5 million, or the number of Xbox Ones sold worldwide since launch. Yes, it’s some 2 million shy of Sony’s 7 million-selling PlayStation 4, but remember that Sony had a one-week lead, the PS4 is $100 cheaper and the company’s currently selling the PS4 in a whopping 72 countries and regions, while Microsoft’s only selling the Xbox One in 13. Microsoft plans to expand the Xbox One’s availability to 39 countries this September, but lopsided hardly begins to describe direct sales comparisons.

Retail (and burgeoning digital) sales tracker NPD Group says hardware sales were up 78 percent over March 2013 — no surprise, since hardware sales have been up year-on-year since the PS3 and Xbox One launched last November. That’s translating to across-the-board gains in hardware, software and accessories, which combined were up 3 percent year-on-year.

NPD confirms that both the PS4 and Xbox One are setting records: add both systems together through their preliminary five months of availability and you’re talking twice the sales of the PS3 and Xbox 360 for the same period. What’s more, if you run the same figure for retail software sales, combined PS4 and Xbox One software is up some 60 percent.

This sort of momentum’s never forever, but to all the naysayers who said this next generation of game consoles was going to flop, at least for now, crow’s still very much on the menu.

Sony hasn’t put up a blog post or dropped a press release yet, but fired this off through the PlayStation twitter account:

Microsoft hasn’t manned the Twitter-cannon yet, but did offer more granular figures in an email, noting that it sold 311,000 Xbox Ones in the U.S. in March (60 percent higher sales than the Xbox 360 for the same period — forget the PS4, who can argue with that?), that it sold 111,000 Xbox 360s for March (holding the top seventh-gen console spot) and that it’s seeing attachment sales of nearly 3 games per Xbox One console sold.

TIME Retail

Michaels Says Malware Compromised Up to 2.6 Million Payment Cards

Black Friday Grey Thursday Black Thursday
Nancy and Rachel Nelson of Moss Point leave Michaels in D'Iberville, Miss., Nov. 28, 2013. John Fitzhugh—AP

The arts and crafts chain said that as many as 2.6 million payment cards used at its stores may have been affected by a security breach via sophisticated malware, though it has not yet heard many reports of fraud

Michaels Stores Inc. announced in a press release Thursday that as many as 2.6 million payment cards used at Michaels and Aaron Brothers craft stores may have been affected by a security breach. They say they have so far received “limited” reports of fraud.

A criminal attacked the largest arts and crafts chain in the U.S. using sophisticated malware. The company learned of a possible data security breach in January but did not discover the details until after several months of investigation. Michaels Stores said they had identified and fully contained the incident.

 

TIME technology

Weibo Chief: We’ll Be Watching Facebook and Twitter

Weibo And Sabre Beginning Trading On NASDAQ
China's Weibo CEO Charles Chao (center) stands with Robert Greifeld, Nasdaq CEO, moments after Weibo began trading on the Nasdaq exchange under the ticker symbol WB on April 17, 2014 in New York City. Spencer Platt—Getty Images

During its first day on the market in the U.S, the social network known as the "Twitter of China" saw its shares leap 19 percent Thursday. Weibo will now compete directly with social giants like Facebook and Twitter for the attention of U.S. investors

The social network commonly referred to as the “Twitter of China” saw huge gains during its first day on the market in the U.S amid a particularly rough month for both IPOs and tech stocks. Shares of Weibo, a subsidiary of the Chinese Internet company Sina, leapt 19 percent Thursday, from an IPO price of $17 to $20.24 when markets closed.

Weibo quickly earned back some of the market valuation it had lost by pricing at the very low-end of its IPO range of $17 to $19. The company raised about $285 million Wednesday night in its IPO, less than the $380 million originally anticipated. But caution seemed to pay off with an offering that saw an impressive first-day pop. “The IPO market is kind of soft in the last couple of weeks and the [tech] sector was also hit hard,” Charles Chao, chairman of Weibo, told TIME just before Weibo shares began trading on the Nasdaq. “It’s not perfect in terms of timing, but relatively speaking, we’re pretty happy about this pricing actually.”

Weibo, like Twitter, is a mostly public social network through which celebrities and ordinary Chinese people discuss news and personal happenings in their lives. The platform boasts 144 million monthly active users, 70 percent of whom use the company’s mobile app. Also like Twitter, Weibo has debuted on the public markets as an unprofitable business. The company lost $47.4 million in the first quarter of 2014, though it posted a small profit in the previous quarter.

Weibo will now compete directly with social giants like Facebook and Twitter for the attention of American investors. For now, they operate in different markets, with Facebook and Twitter banned in China and Weibo’s English-language site having only a small presence in foreign countries. But Facebook has expressed interest in China in the past, and Chao wouldn’t rule out a potential expansion of Weibo to appeal beyond Chinese users in the future. “These are great companies with a lot of innovations and powerful user bases,” he said of Twitter and Facebook. “We from time to time will look into their innovations to see whether some of these can be applied to the Chinese market.”

Excitement surrounding Weibo’s IPO had deflated in recent weeks partially due to censorship policies in China that could ultimately stem user growth. Chao dismissed such concerns, noting that Internet companies have to regulate themselves to some extent in every country, not just China. “We always want to be compliant with the laws and regulations in China,” he said. “I don’t see too much problem there.”

More broadly, Weibo was just a victim of bad timing, arriving on the market during an overall downturn in tech stocks that has seen the tech-heavy Nasdaq slide 6.5 percent from its March peak. Earlier Chinese IPOs this year, like the IT training company Tarena, have underperformed.

Weibo, though, managed to fight past these headwinds and achieve a successful offering. The strong IPO may ratchet up the fervor for Alibaba, the Chinese e-commerce giant that is prepping a huge offering in the U.S. later this year. It could also provide some stability to the tech sector, which has yet to have a hugely successful IPO since Twitter’s runaway success last November.

 

TIME Economy

S&P Has Best Week Since Last Summer

Stocks bounced back from a poor stretch and ended Easter week ahead, with the S&P recording its best week since July.

Stocks bounced back from a poor start to the month and ended the shortened week ahead, with the S&P recording its best week since July.

The S&P rose .1 percent to 1,8645 Thursday and gained 2.7 percent on the week, which ends Thursday ahead of the Good Friday holiday. The Dow Jones Industrial Average was down slightly on the day, but both the Dow and the Nasdaq were up more than 2% for the week.

Stocks were buoyed by a series of strong earnings reports this week, including from GE and Morgan Stanley.

But a couple heavyweights bucked the trend. Google and IBM both reported poorer than expected results and saw their stocks tumble, with Google down 3.7% Thursday and IBM down 3.3%.

TIME Advertising

Here’s a Bunch of Super Old People Telling You to Be Totally Hardcore

Awesome

You’ve probably been told at some point or another that you can learn a lot from your elders. Auto manufacturer Dodge has now gathered a whole bunch of them—many more than 100 years old—to impart some of the wisdom they’ve gained over their long lives. The result is a new ad commemorating the 100th anniversary of the first Dodge. In the spot, men and women as old as 106 share the type of hard-earned knowledge that only comes from a long life on this Earth. Their responses start sweet and then…we won’t spoil it.

Dodge is hoping to expand sales of its muscle cars with updated versions of the Charger and Challenger. The Chrysler-owned brand unveiled two new versions of the cars this week at the New York Auto Show. Last year, Charger sales were up 19% to nearly 100,000 cars sold, making it one of the best-selling full-size cars. This year has been a different story: during for the first three months of 2014, sales dropped 4.4% versus the same time in 2013. Over all Chrysler Group sales last month were up 13% compared to the same month the year previous. It was Chrysler’s best March sales performance since 2007.

TIME General Motors

Judge Denies Move To Take Recalled GM Cars Off the Road

Whether General Motors should take its recalled cars off the road is up to federal transportation authorities, a judge has ruled, marking a victory for the company as it faces a legal battle related to the recall of 2.6 million vehicles over faulty ignition switches

A U.S. judge said Thursday that recalled General Motors cars can stay on the road, a major victory for the company as it faces an uphill legal battle related to 2.6 million vehicles recently recalled over malfunctioning ignition switches.

The decision came in a lawsuit brought against them by a couple seeking compensation for the lost value of their recalled 2006 Chevrolet Cobalt. Their Cobalt was recalled along with millions of other GM vehicles after it was discovered the cars’ ignition switches can be inadvertently set to “off” while the car is being operated, disabling power steering and other features. The ignition switch problem has been linked to at least 13 deaths.

The couples’ lawsuit demanded “park it now” notices for every vehicle included in the recall, which would’ve forced owners of the affected cars to keep their vehicles off the road. GM opposed issuing such notices, claiming the car is safe if nothing is attached to the key in the ignition and arguing that taking all affected cars off the road would be a logistical nightmare.

The judge in the case ruled that determining whether the cars need to be taken off the road is up to the National Highway Traffic Safety Administration.

Although the judge’s decision is a win for GM, it’s just one in a growing series of legal battles against the company for the ignition issue, which the company has reportedly known about for years.

[NYT]

TIME Food

Panera’s Founder Showed Us Exactly How He Plans to Revolutionize Dining

Ron Shaich, Panera's Executive Chairman Of The Board
Ron Shaich, Panera's co-founder Boston Globe—Boston Globe/Getty Images

Panera Bread is changing the way customers interact with its cafes thanks to an across-the-board digital transformation involving self-service kiosks and from-the-table mobile ordering—a strategy four years in the making from founder and CEO Ron Shaich

When Panera Bread’s CEO suggests turkey chili for lunch (even though you’re more of a tomato soup guy) and a turkey club (despite the fact that ham and swiss is clearly superior), you give in and let him order.

Because not only does Ron Shaich really want me to try the turkey chili, which he assures me that I’ll like, but he wants to demonstrate what the company calls “Panera Bread 2.0″ – an across-the-board shift involving self-service iPads, from-the-table mobile ordering and a new take-out system that will fundamentally change the way Panera interacts with its customers.

Over the next three years, Panera Bread will redesign its 1,800 restaurants to allow for a host of integrated technologies to make the dining experience easier, faster and more technologically driven — all something Shaich has been pondering for years now. “I wrote a vision for this four years ago,” he tells me over lunch at a Panera Bread in Midtown Manhattan, one of a handful of cafes just beginning to use some of the new technologies. “The big thing here is not about technology. It’s technology enabling a differentiated guest experience for how you want to use Panera.”

In 2010, Shaich stepped down as CEO, became executive chairman, and began thinking long-term about the company, all centered around a main idea: How would he compete with Panera if he weren’t working for Panera? He remembers calling a Panera cafe near his home in Brookline, Mass., and getting the manager on the phone so his food would be ready by the time he got to the restaurant. “I thought, this is a phenomenal system,” he says. “The only problem is this only works for the CEO. There’s 8 million customers a week.”

Shaich says he realized that Panera’s soft underbelly was a one-size-fits-all guest experience. Everybody got in the same line. Everybody waited at the same registers. Then the cashiers would send everyone over to what Shaich calls the “mosh pit.” “That’s where we’d say, Pick up your food,” he says. “And you’d play the game in the mosh pit called find your food. You sandwich is here. Your salad is over there. Your espresso drink is in a third place.”

Those experiences led him to rethink the way the restaurant operated and interacted with its customers. And it led him here, to this Midtown Panera, where he’s ordering me turkey chili on an iPad instead of waiting in a traditional line and choosing an item from an overhead menu. At this café, the Panera iPads are the first thing you see when you walk in. Shaich swipes through the menu, adds a chicken salad for himself, chooses my turkey chili and turkey club, and swipes his credit card.

As we wait, he takes me into the kitchen to show how the back-end inner-workings have had to change as well. Shaich says 50% of Panera’s orders are customized, meaning people are adding or subtracting certain ingredients to their preferences. Panera 2.0 is all about personalization, and the order boards for Panera’s kitchen staff have also been altered. Added ingredients show up in bright green. Subtracted ones are in red. It’s all an attempt to increase Panera’s accuracy.

After a few minutes, we reach a counter to get our food, one of several places you can now locate an order. All items ordered from the iPad kiosks are at one counter. Take-out items are situated in a bookshelf-like area for easier pick-up. Or, you can bypass the whole thing, sit down at a table, order on your phone, and your meal will arrive right where you’re sitting.

The $42 million 2.0 rollout will cost $125,000 a store, and Shaich has publicly told shareholders to expect slower growth over the next couple years. But he believes what Panera is doing is where the industry as a whole is heading. He says they’re not just using technology for technology’s sake, but are utilizing it in a way that is enhancing the customer experience and catering to a younger demographic that increasingly uses mobile technologies and is accustomed to getting things to their own specifications quickly.

“My whole job is to figure out what the world’s going to need down the road and get this company to that place,” Shaich says. “Expect us to have relatively modest earnings growth over the next two years, because we’re making major investments in this. But it changes the trajectory of the whole company.”

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