FBI offers $65,000 for info on 2008 Times Square bomber
The FBI and the New York City Police Department announced on Tuesday an award of up to $65,000 for information leading to the identification and arrest of the suspect or suspects behind the unsolved 2008 bombing of the U.S. Armed Forces Recruiting Station in Times Square.
Additionally, the FBI released videos of the key suspect and a photo of the explosive device used in the bombing. In the footage the suspect appears to be working alone, but the FBI, in its press release announcing the reward, noted that “he or she may have had a lookout or surveillance team of as many as five other individuals in Times Square at the time of the attack.”
On March 6, 2008, the unknown individual placed a small bomb in front of the U.S. Armed Forces Recruiting Station in Times Square. Security videos from the area show the bomber fleeing the scene on a bicycle, which was later recovered in a dumpster some seven blocks away near Madison Avenue and 38th Street.
“Someone, somewhere knows something about a bomber who’s still on the run,” said FBI Assistant Director in Charge George Venizelos in the release. “Today, we’re asking for the public’s assistance in finding those responsible and encouraging the public to look at these photos and video, which could be the key to breaking the case.”
According to the FBI, the suspect may be connected to two other bombings in New York City: one in front of the British Consulate in 2005 and another at the Mexican Consulate in 2007. With both bombings, the devices were delivered by an individual on a bicycle and detonated early in the morning.
The investigation is being conducted by the FBI’s Joint Terrorism Task Force in Manhattan, which includes FBI agents, NYPD detectives, and members of other local, state and federal agencies. The FBI asks for anyone with information on the three bombings to call 212-384-1000.
By William Holt
8 hurt, some seriously, when car jumps curb in NYC
A car rocketing down an avenue in Manhattan’s dense East Village swerved out of control, plowed down a sidewalk and smashed through a storefront flower stand Wednesday morning, injuring eight people, witnesses and officials said.
At least one person was critically hurt in the crash, which happened at around 7 a.m., police said.
A New Yorker who saw the wreck unfold said he saw two vehicles racing down Second Avenue at a frightening speed.
”They were swerving around cars. When the white car swerved right, it lost control,” said Dr. Alvaro Alban.
The vehicle smashed through everything on the sidewalk. A fire hydrant landed down the block. A large tree and a street sign were down. A person on a bicycle was struck, along with three workers at a 24-hour grocery.
”Everything that was in the way, he took it out,” said bystander Rafael Fuentes.
The car crashed through the market’s flower stand, overturning an outdoor refrigerator case.
Another witness, Najava Stone, said people were hurt by flying debris. He said the car spun before landing in a crosswalk.
Flowers were strewn on the sidewalk and on the crumpled hood of the car. Its front end was obliterated.
Police were investigating whether the driver was impaired.
The other car never stopped, Alban said.
By KAREN MATTHEWS
Chinese supercomputer named as world’s fastest
A Chinese university has built the world’s fastest supercomputer, almost doubling the speed of the U.S. machine that previously claimed the top spot and underlining China’s rise as a science and technology powerhouse.
The semiannual TOP500 listing of the world’s fastest supercomputers released Monday says the Tianhe-2 developed by the National University of Defense Technology in central China’s Changsha city is capable of sustained computing of 33.86 petaflops per second. That’s the equivalent of 33,860 trillion calculations per second.
The Tianhe-2, which means Milky Way-2, knocks the U.S. Energy Department’s Titan machine off the No. 1 spot. It achieved 17.59 petaflops per second.
Supercomputers are used for complex work such as modeling weather systems, simulating nuclear explosions and designing jetliners.
It’s the second time a Chinese computer has been named the world’s fastest. In November 2010, the Tianhe-2’s predecessor, Tianhe-1A, had that honor before Japan’s K computer overtook it a few months later on the TOP500 list, a ranking curated by three computer scientists at universities in the U.S. and Germany.
The Tianhe-2 shows how China is leveraging rapid economic growth and sharp increases in research spending to join the United States, Europe and Japan in the global technology elite.
”Most of the features of the system were developed in China, and they are only using Intel for the main compute part,” TOP500 editor Jack Dongarra, who toured the Tianhe-2 facility in May, said in a news release. ”That is, the interconnect, operating system, front-end processors and software are mainly Chinese.”
World’s Tallest Coaster May Find Home in Vegas
The newest attraction on the Las Vegas Strip may not be a new hotel, casino or nightclub but a 650-foot roller coaster.
If a coaster of this size were to be built, it would be the world’s tallest. Currently, the tallest in the world is the 456-foot tall Kingda Ka at New Jersey’s Six Flags Great Adventure.
Florida-based U.S. Thrill Rides submitted an application in April to the Federal Aviation Administration for the so-called ”Polercoaster.” The application is classified as a ”work in progress.”
Polercoaster is designed to be two attractions in one: a roller coaster and an observation tower. The coaster, according to Michael Kitchen, president of U.S. Thrill Rides, would have a very small footprint.
That’s a necessity in a city as developed as Las Vegas. Most roller coasters take up several acres of land.
The Polercoaster, Kitchen said, ”loads from the bottom, takes patrons to breathtaking heights up the center of the tower and then descends down around the structure with multiple inversions, loops and direction changes.”
Federal law requires developers to give the FAA the opportunity to review any structure more than 200 feet tall to determine if it could pose a hazard to aircraft or navigation aids and, if so, whether the hazard could be mitigated. It’s up to the local government to decide whether to issue a building permit.
For those who’d prefer to skip the drops and loops, there’s the observation deck. The U.S. Thrill Rides website said the observation tower would be serviced by two glass elevators. ”This allows operators to use the two levels on top as an observation deck and retail-restaurant space, providing additional revenue,” the website reads.
According to a map filed with the FAA application, the site of the Polercoaster appears to be at or very near the Tropicana Las Vegas. Tropicana Chief Marketing Officer Fred Harmon would not comment specifically on the proposal. ”We have been approached by many companies, given the quality of our location. However, no commitments have been made,” he said.
Kitchen would not specifically comment on the location in the proposal. He did say, however, that ”Vegas is rebounding and is unarguably one of the best tourism markets in the world.”
By GENEVIEVE SHAW BROWN
Headhunter for the Rich Turns on Them
Wall Street’s masters of the universe have a new enemy: Adrian Barrie Smith.
Mr. Smith, a British recruiter who supplies butlers, maids and other domestic workers to some of the world’s wealthiest families, has turned on his former clients.
Over the last 18 months, Mr. Smith has filed lawsuits against the families of some of the most prominent names in finance, including Stephen A. Schwarzman, the chairman of the Blackstone Group; Carl C. Icahn, the activist investor; Leonard Blavatnik, the Russian investor who recently acquired Warner Music; Howard Lutnick, the chairman and chief executive of Cantor Fitzgerald; and George Soros’s former wife, Susan Soros Webber. To top it off, he filed a suit against Jerry Seinfeld and his wife, Jessica. Before that, he sued Ron Perelman, the billionaire investor, and the singer Mariah Carey.
This week, Mr. Smith is expected to be in court with a case against the wife of Kenneth A. Buckfire, co-founder of Miller Buckfire, the restructuring firm.
In virtually every instance, Mr. Smith has accused his clients of some form of breach of contract and has then trotted out a list of complaints about race and age discrimination. His targets see it as mudslinging, even extortion. Mr. Smith says he is simply trying to get the truth out about New York’s powerful.
“I could tell you stories that you simply would never believe,” Mr. Smith told me in a recent e-mail. “Who sits in the private planes and homes, dinner parties of the elite? The butlers, the nannies, the housekeepers.” He added, “And who do they e-mail, and tell all the gossip to? Me.”
When I first heard of Mr. Smith a little more than a year ago, I have to admit, I was intrigued. He promised the secrets of the city’s biggest names and stories worthy of a Park Avenue version of the TV show “Desperate Housewives.” He offered himself up as a Robin Hood crusading on behalf of the working class that serve the wealthiest.
But I came to believe that his intent could well be to tell fanciful stories in hopes of drawing media attention to extract settlement payments in his lawsuits.
In 2011, Mr. Smith was convicted of aggravated harassment of a potential client, Tania Higgins, the wife of a hedge fund manager. “I will have a really great laugh when I see your house crumble,” he said in a voice mail message to her that included profane language that can’t be printed here. “I will have my revenge.”
When it became clear that I intended to write about him, Mr. Smith sent a series of blistering e-mails threatening me with a lawsuit. “Bring your lawyer. You personally will be sued,” he said in one e-mail. “You are on notice! A jury made up of New Yorkers will judge you, plus all your colleagues, and the press worldwide,” he told me.
One of his early rambling e-mails said, “It would be nice if someone focused on the truth rather than merely just making me look foolish.” But he quickly moved to more threats: “Who are you taking money from? Who are you doing a favor for? Someone got to you today. Right?” His final e-mail on Monday said, among other things, “You throw dirt on me, and surely it’s my right to return the favor. Walk away. That’s my advice.”
In an interview last year with a colleague of mine, Mr. Smith admitted that he had a temper, and that “curse words were used” in some of his previous business dealings. But he defended himself against allegations that he was a bully who had harassed, or even blackmailed, his high-powered clientele.
“Do I look like a bully? Do you see any tattoos on me? I don’t even drink,” he said.
And yet his Twitter account is an unfiltered diatribe against his targets.
“Gail Golden Icahn is so lazy she cannot squeeze her own toothpaste, or switch on the TVs, cook, clean or drive a car. She hires someone!” he wrote.
Another, misspelling included, said: “Rupert Murdock apparently aided his friend Nelson Peltz to burn his house to the ground for insurance money. Tommy Mottola helped. Wow.”(Mr. Mottola’s former wife is Ms. Carey.)
In his case against the Seinfelds, he contended that the family’s butler rejected a qualified housekeeper because the butler said the Seinfelds would think “she is not cute enough and she’s a little fat.”
I mention these claims not to dignify them, but rather to illustrate the nature of his claims.
In my reporting, I discovered that Mr. Smith had outstanding lawsuits against media organizations including the News Corporation, the Daily Beast, and yes, even The New York Times. (Ms. Higgins’s case against him was mentioned in passing in an article about housekeepers in the New York section last year.) He also brought a case against The Daily Telegraph in Britain, contending that the paper used a photograph of Mr. Smith without his permission.
In a twist, after threatening to sue the musician Lou Reed in 2011 and getting into a heated argument with Mr. Reed’s manager, Mr. Smith had the manager arrested on charges of harassment. That case was dismissed, but a separate case was brought against Mr. Smith, who pleaded guilty to a charge of aggravated harassment in the second degree.
In Ms. Icahn’s case, Mr. Smith was hired to find a housekeeper but was quickly fired after she discovered he was finding potential prospects on Craigslist, not from the pool of experienced housekeepers he said he had relationships with, according to people briefed on the case. The cases against the others seem equally thin.
When I called many of the subjects of his suits, virtually every one of them refused to speak about him or even provide a “no comment.” They all said that they feared his retribution, name calling and other backbiting.
Oddly enough, Mr. Smith’s litigious efforts appear to be working, at least outside of court. Mr. Schwarzman paid about $19,000 to settle his case, according to people briefed on it, hoping Mr. Smith would go away. Ms. Icahn offered him $1,500, which he rejected.
But the courts could be slowing Mr. Smith down. Last December, the city’s small-claims court barred Mr. Smith from bringing any new cases without receiving permission from the court in advance, citing 51 cases he has brought since 2006. The order said it was intended “to avoid the possibility of the use of the small-claims part for the purpose of harassment.” On Tuesday, Mr. Buckfire’s lawyers are planning to seek a permanent injunction stopping Mr. Smith’s lawsuit against their client.Mr. Smith now says he is writing a book. The title? “Filthy & Rich in New York City.”
By ANDREW ROSS SORKIN
One of US FBI’s most wanted nabbed in Mexico
Mexican authorities have arrested a former university professor who was on the FBI’s Ten Most Wanted Fugitives list in the resort city of Playa del Carmen.
Prosecutor Gaspar Armando Garcia Torres said Walter Lee Williams, 64, is wanted on charges of sexual exploitation of children and traveling abroad for the purpose of engaging in sexual acts with children.
Garcia said Williams was captured late Tuesday while drinking coffee near a park in the Caribbean beach town.
”This person is wanted by the FBI because he is linked to the sexual exploitation of children,” Garcia told reporters.
He said it wasn’t clear how long Williams had been living in Playa del Carmen and that the fugitive also had an address in nearby Cancun, where he was taken and turned over to Mexican immigration officials.
Garcia did not say whether Williams is suspected of committing any crimes in Mexico.
A federal arrest warrant was issued for the former Palm Springs, California, resident in Los Angeles in April, according to the FBI website.
The indictment alleges Williams traveled from Los Angeles to the Philippines in January 2011 to engage in sex acts with two 14-year-old boys he met online in 2010, the U.S. Department of Justice said in a statement Monday.
While in the Philippines, Williams allegedly engaged in sex acts with both boys and produced sexually explicit photos of one of the boys. Williams fled the Los Angeles area approximately one week after returning from the Philippines, it added.
Until 2011, Williams was a tenured professor at the University of Southern California where his field of study was gender development. Williams was also affiliated with the Buddhist Universal Association of Los Angeles, California, according to the FBI.
”Williams has an extensive history of travel throughout the South East Asia region, specifically the Philippines,” the FBI said. ”He has reportedly resided in Indonesia, Polynesia and Thailand.”
The FBI added Williams to its Ten Most Wanted Fugitives list on Monday.
”I analyzed the computers and the camera that belong to Williams and found child pornography,” said Special Agent Jeff Yesensky, in a video about Williams posted on the FBI’s website Monday to bring attention to the case.
”He preys on the most vulnerable children,” Yesensky added.
By GABRIEL ALCOCER
Who picked up the new Kanye West ”Yeezus” album?
White House says U.S. to resume talks with Taliban
Perhaps channeling Winston Churchill’s famous warning about ”the end of the beginning,” the White House on Tuesday announced plans for direct talks with Afghanistan’s Taliban militia, but it cautioned against expecting any quick breakthrough that might speed the end of America’s longest war.
Among the likely items on the agenda: the return of U.S. Army Sgt. Bowe Bergdahl, held captive by the Taliban-allied Haqqani network since 2009.
U.S. and Taliban negotiators will hold formal talks ”in a couple of days” in the Gulf state of Qatar, where the Taliban will officially open an office on Tuesday, U.S. officials said on a conference call with reporters. The negotiations are part of a diplomatic push to ease the American withdrawal by the end of 2014 and ensure the war-torn country does not serve as a springboard for attacks like the Sept. 11, 2001, terrorist strikes.
The White House announced the face-to-face negotiations even as Afghanistan President Hamid Karzai proclaimed that his war-torn country’s military and police had taken the lead from NATO forces. Karzai also announced the start of separate peace talks with the Taliban in Qatar while calling for them to move to Afghanistan as soon as possible.
”We need to be realistic. This is a new development, a potentially significant development. But peace is not at hand,” a senior administration official cautioned on the call, which was held on condition that none of the participants be named. The process of political reconciliation in Afghanistan ”will certainly promise to be complex, long and messy,” another top official said on the call.
In the U.S.-Taliban talks, Washington is likely to send James Dobbins, who took over May 10 as the State Department’s special representative for Afghanistan and Pakistan. Officials on the call said they believed the Taliban negotiators would be ”fully authorized” by the militia’s leader, Mullah Omar, who has eluded capture since U.S. forces invaded Afghanistan in late 2001.
One of the officials said the Taliban would shortly release a statement saying “that they oppose the use of Afghan soil to threaten other countries and, second, that they support an Afghan peace process,” as long sought by the United States. The first part of the statement is meant to indicate that they will break with al-Qaida, the official said.
The Taliban and other insurgent groups must also commit to ending their attacks and accept Afghanistan’s constitution—including protections for women and minority rights, the official said.
While the negotiations are a good first step on the path to peace, ”there’s no guarantee that this will happen quickly, if at all,” the first official underlined. ”The core of this process is not going to be the U.S. Taliban talks. Those can help advance the process, but the core of it is going to be negotiations among Afghans, and the level of trust on both sides is extremely low, as one would expect. So it’s going to be a long, hard process if indeed it advances significantly at all.”
And even as the talks continue, American forces will not ”let up” in helping their Afghan counterparts or battling insurgents, one of the officials stressed.
Asked whether possible prisoner exchanges might be discussed, another official replied: ”Clearly, we do want to get our soldier, Sgt. Bergdahl, back. And I would expect that detainee exchanges would be an item on the U.S.-Taliban agenda.”
Still, ”the first meeting is likely to be just an exchange of agendas rather than any substantive, detailed discussion. We’ll tell them what we want to talk about; they’ll tell us what they want to talk about; and we’ll both then adjourn and consult on next steps, and then have another meeting in a week or two later,” one official said.
U.S. officials have long complained about Pakistan’s role in at least tolerating the flow of insurgents and weapons into Afghanistan. But ”Pakistan has been genuinely supportive of a peace process for Afghanistan,” one official said.”There has in the past been skepticism about their support, but in recent months I think we’ve seen evidence that there is genuine support and that they’ve employed their influence such as it is to encourage the Taliban to engage and to engage in this particular format.”
The officials declined to spell out in detail how the talks might affect the timetable for withdrawing America’s roughly 60,000 troops. While U.S. and NATO combat forces are due to depart by the end of 2014, putting their Afghan counterparts solely in charge, President Barack Obama is expected to leave a residual force to help train the local military and police and carry out counterterrorism operations.
”The levels and nature of our presence are obviously going to be influenced, on the one hand, by levels of violence in Afghanistan and, on the other hand, by the presence or absence of international terrorists in or around Afghanistan,” one official said. ”To the extent the talks contribute to diminishing violence and eliminating international terrorists in and around Afghanistan, that will have an impact on decisions regarding our future presence.”
According to the independent organization iCasualties, 2,238 Americans have died in Afghanistan, including 64 in 2013.
By Olivier Knox
Man who disrupted flight ranted about CIA
Passengers aboard a flight from Hong Kong jumped on a man who began ranting about national security and the CIA, then bound his hands and feet for the final six hours of the flight to the United States on Monday.
The man, described by passengers as an American, asked that United Airlines Flight 116 be diverted to Canada as he screamed about being afraid of the FBI and of being poisoned, passengers said.
”He was clearly not stable,” said passenger Jacques Roizen of New York, who helped wrestle the man to the cabin floor and sat in the same row as him after he was handcuffed.
Roizen said he, other passengers and a flight attendant jumped on the man and subdued him when he started reaching for his pockets hours before the plane landed at Liberty Airport in Newark. United said it followed its procedures for dealing with disruptive passengers and decided to continue the flight as scheduled.
While the plane was still in the air, the FBI said that the man had claimed everyone aboard was being poisoned, but the agency later said it was working to clarify just what the man said.
Passenger Peter Jones of Washington said he heard the man claim he himself was going to be poisoned.
The FBI said the man was hospitalized but did not provide further information about him. The passenger had called out what he said was his name, his birthdate and his Social Security number and claimed he worked for a U.S. embassy in the Middle East.
Jones and other passengers said they did not hear him threaten anyone else.
”He said someone was going to poison him,” Jones said.
While sitting in the same row as the subdued man, Roizen said he did his best to try to calm him.
”He was very paranoid,” he said.
By KATIE ZEZIMA
Airborne laser reveals city under Cambodian earth
Airborne laser technology has uncovered a network of roadways and canals, illustrating a bustling ancient city linking Cambodia’s famed Angkor Wat temples complex.
The discovery was announced late Monday in a peer-reviewed paper released early by the journal Proceedings of the National Academy of Sciences. The laser scanning revealed a previously undocumented formal urban planned landscape integrating the 1,200-year-old temples.
The airborne lasers produced a detailed map of a vast cityscape, including highways and previously undiscovered temples, hidden beneath dense vegetation atop Phnom Kulen mountain in Siem Reap province. It was the lost city of Mahendraparvata.
”What we have now with this instrument is just ’bang’ — all of a sudden, an immediate picture of an entire city that people didn’t know was there before, which is remarkable,” University of Sydney archaeologist Damian Evans, the study’s lead author, told Australia’s The Age in a video interview from Cambodia. ”So instead of this kind of very long gradual process, you have this kind of sudden eureka moment where you bring the data up on screen the first time and there it is — this ancient city very clearly in front of you.”
The laser technology, known as lidar, works by firing laser pulses from an aircraft to the ground and measuring the distance to create a detailed, three-dimensional map of the area. It’s a useful tool for archaeologists because the lasers can penetrate dense vegetation and cover swaths of ground far faster than they could be analyzed on foot. Lidar has been used to explore other archaeological sites, such as Stonehenge.
In April 2012, the Australian researchers loaded the equipment onto a helicopter, which spent days crisscrossing the dense forests from 800 meters above the ground. The team then confirmed the findings with an on-foot expedition through the jungle.
”We had reasonable expectations, I guess, of what we would find using the lidar data, but what we’ve ended up with has just blown our minds,” Evans told The Age. ”It’s just absolutely incredible what we can see.”
The researchers theorize the civilization at Mahendraparvata eventually collapsed because of deforestation and broken canals and reservoirs.
Supreme Court strikes down Arizona voter ID citizenship law
The Supreme Court announced on Monday it has struck down an Arizona law that required voters to provide documentary proof of citizenship before registering to vote.
In Arizona v. Inter Tribal Council, seven justices agreed that the Arizona law oversteps the state’s authority by essentially invalidating the federal voter registration form. The form, established by a 1993 law, lets people register to vote by sending in a uniform document accepted by all states. Voters must swear they are citizens on the form.
In a 2004 ballot initiative, Arizona voters decided they wanted to go beyond that federal requirement, by asking for proof of citizenship—such as a birth certificate, passport or tribal ID card—at the point of voter registration.
Critics of the Arizona law argued that it stripped some voters of their ability to vote, because some civil rights groups estimate that about 13 million citizens do not have documentary proof of their citizenship. The law’s supporters said it would guard against any attempts by noncitizens to vote in federal elections. Three other states had similar laws and joined in on the case.
The opinion striking down the Arizona law was written by Justice Antonin Scalia, one of the court’s conservatives. Justices Samuel Alito and Clarence Thomas, also members of the court’s conservative wing, disagreed with the ruling.
A year ago, the Supreme Court struck down several parts of Arizona’s SB1070 law, which sought to give the state broader enforcement powers against unauthorized immigrants. The court in that ruling argued that the federal government’s immigration laws preempted the state’s, and that Arizona was interfering with federal power. The court did let a key aspect of the law stand, however, giving local and state police the power to inquire into immigration status during routine stops.
The court has yet to release its decision in Shelby County v. Holder, a case that will decide whether states with a history of voter discrimination must continue to get federal approval to change voting-related laws. The decision could have a big effect on whether laws that require voters to show identification at polls in these states will pass legal muster.
”Today’s case … reiterates that when it comes to federal elections, Congress has quite a bit of authority,” Jon Greenbaum, chief counsel for the Lawyers’ Committee for Civil Rights Under Law.
By Liz Goodwin
7-Eleven Stores Operated ’Modern Day Plantation System,’ Feds Claim
The owners of 7-Eleven franchises in New York and Virginia created a ”modern day plantation system” in which undocumented workers were furnished with stolen identities and forced to work 100 hours a week for a fraction of their wages, according to a federal authorities.
Ten stores in New York and four in Virginia were seized today as part of the federal investigation which found the undocumented workers from Pakistan were given identities stolen from children and the deceased, according to federal prosecutor Loretta E. Lynch.
”The 7-11 franchises seized today will be better known for their big fraud than their Big Gulp,” said James Hayes, special agent in charge of the Immigration and Customs Enforcement’s office of investigations in New York.
Nine people, including store owners and managers, were charged today with conspiring to commit wire fraud, stealing identities and harboring undocumented immigrants, Lynch said.
After initial court appearances, all defendants were ordered to be held without bail. Their next court appearances are scheduled for July 15.
According to the indicitment, the workers, who are said to be from Pakistan, were forced to live in boarding houses and pay rent to their employers. At least 18 undocumented workers were found today and could be deported, federal authorities said.
The investigation, which is one of the largest criminal immigrant employment investigations ever by the Department of Justice and the Department of Homeland Security, began when several of the employees tipped off police, authorities said.
”These defendants ruthlessly exploited their immigrant employees, stealing their wages and requiring them to live in unregulated boarding houses, in effect creating a modern day plantation system,” Lynch said.
The federal probe is expected to widen with at least 40 franchises in seven states being inspected today, authorities said.
A spokeswoman for Dallas-based 7-Eleven said it is aware of the investigation and is cooperating with authorities.
”7-Eleven is aware of today’s activity and has been cooperating with federal authorities during their investigation,” said Margaret Chabris, director of Corporate Communications for 7-Eleven. ”We will have no further comment until we learn more.”
By AARON KATERSKY and ALYSSA NEWCOMB
Netflix cuts original TV deal with DreamWorks
Netflix said Monday that it would offer new TV shows from DreamWorks Animation starting in 2014 in what the company described as its biggest transaction ever for original first-run content.
Though financial details were not disclosed, Netflix Inc. said the agreement includes more than 300 hours of new TV episodes in a multi-year deal. Analysts estimated the contract could be worth several hundred million dollars over time.
The transaction is a major coup for both companies. It helps Netflix compete with pay TV channels such as HBO and Showtime, and it gives DreamWorks a potentially lucrative outlet for its shows as it tries to shed its reliance on two or three big-budget movies each year.
”This is arguably a groundbreaking deal,” said Tuna Amobi, a Standard & Poor’s equity analyst who covers both Netflix and DreamWorks Animation SKG Inc.
While concerns remain about how much the deal will cost Netflix in the end, the company said it can debut the original series in the 40 countries where Netflix operates. That could help spread the costs over more territories and more subscribers if Netflix continues to grow overseas.
”The big question is if this is going to be an international catalyst in terms of subscriber growth,” Amobi said.
Investors hailed the deal as a win-win. Netflix shares rose $15.24, or 7.1 percent, to close at $229.23 on Monday, while DreamWorks shares rose 93 cents, or 4 percent, to close at $23.74.
Netflix is doubling down on original children’s programming, hoping to strengthen its push to become a family entertainment brand. The new content should ease some of the pain of losing a range of kids shows from Viacom Inc.’s Nickelodeon network, including future episodes of ”Dora the Explorer,” which Amazon.com Inc. snapped up for its streaming service in early June.
The deal suggests DreamWorks will significantly ramp up its production of TV shows. Currently, it only produces ”Dragons: Riders of Berk” for Cartoon Network, which completed a run of 20 episodes at 23 minutes each — less than 8 hours of content in all — in March.
A second season of ”Dragons” is set for release in the fall, and Netflix had already contracted with DreamWorks for a series based on its upcoming film, ”Turbo.” But the deal suggests that several new series will have to debut each year to fulfill the industry standard deal length of five to seven years.
New series will be based on characters either from future film hits, past franchises like ”Shrek,” or even older hits, including the hundreds of characters like ”Casper the Friendly Ghost,” which DreamWorks acquired when it bought Classic Media last July for $155 million.
The new DreamWorks shows aren’t likely to tread on ground already covered by its existing TV shows, according to DreamWorks spokeswoman Allison Rawlings.
DreamWorks already licenses characters from ”Kung Fu Panda,” ’'Madagascar” and ”Monsters vs. Aliens” to Viacom’s Nickelodeon, which has been producing original animated TV shows based on those movies since 2008.
The multi-year agreement tops the undisclosed amount Netflix spent on ”House of Cards,” the political drama starring Kevin Spacey that debuted to rave reviews on Netflix in February.
Netflix has been adding original programming to its roster of older movies and TV show reruns, and is set to launch the Jenji Kohan-created ”Orange Is the New Black” next month. The company has said that for the next several years, it will contain original content spending to within 10 percent of its $2 billion in annual content costs.
Netflix’s increased focus on children’s programming is seen as a departure from the tactics of traditional premium pay TV channels such as HBO, Starz and Showtime, whose original shows tend to be tailored to adults. It also ramps up the competition for children viewers with Amazon, which said last month it will produce three new original kids shows for members of its Amazon Prime subscription plan.
Netflix has said it has 29.2 million streaming video subscribers in the U.S. and 7.1 million internationally as of the end of March. Those figures are up 5.8 million and 4.1 million respectively from a year ago.
In December, Netflix announced it will offer Disney movies, starting with films released in 2016. It declined to make a similar deal for the rights to Sony movies starting in 2016, which was kept by Starz.
Investor reaction wasn’t uniformly positive. Analyst Rich Tullo of brokerage Albert Fried & Co. said he doubts that DreamWorks has the capacity to produce more than one or two new series a year.
”It’s physically impossible without this content being spread out over 10 years,” he said.
Hit TV shows aren’t guaranteed, and it’s not clear that this will make up for Netflix’s loss of Nickelodeon content, he said.
”Are they going to lose 2 million subscribers off losing Nickelodeon content? That’s possible too,” he said.
Netflix has gradually been shifting where it spends money — preferring exclusive and original content over shows that appear elsewhere, as was the case with content from Starz and Viacom. It let both of those deals lapse.
The company studies the viewing habits of its subscribers to gather insights into whether the programming is likely to be a hit on its service, and how much to pay for it. But not all of its picks have been winners.
After ”Arrested Development” debuted last month, Netflix’s shares dropped more than 6 percent because critics had mixed reviews. Monday’s gains more than made up the lost ground.
By Ryan Nakashima
Microsoft boss defends Xbox One price
Sony was E3’s big winner in large part because of the company’s decision to price the PlayStation 4 at $399, a full $100 cheaper than Microsoft’s upcoming Xbox One.
But the man in charge of Xbox maintains Microsoft is offering an incredible deal.
Don Mattrick, president of Microsoft’s Interactive Entertainment Business, defended the Xbox One’s price tag against the heavy criticism it has been receiving, telling Bloomberg TV the price is more than fair given all the system has to offer.
”It’s a lower number than some of the analysts had forecasted,” he said. ”We’re over-delivering value against other choices I think consumers can get. Any modern product these days, you look at it [and] $499 isn’t a ridiculous price point. We’re delivering thousands of dollars of value to people, so I think they’re going to love it when they use it.”
Arguing the value of a system versus its cost is old hat in the video game industry. It’s the go-to tool for any console manufacturer facing criticism about pricing decisions, but given Microsoft’s other recent PR stumbles – specifically, confusion about its policy on used games (which is still persistent, despite the company putting out a clear statement on the matter right before E3) and its required internet connection — Mattrick’s argument is falling flat.
”Isn’t this pretty much what Sony was saying last gen about their outlandish pricing?,” noted one forum user on GameSpot. ”The sign of a wise man is the ability to learn from others’ mistakes.”
Not helping things was Mattrick’s tone-deaf reply to a question last week about that required Internet connection.
”We have a product for people who aren’t able to get some form of connectivity — it’s called Xbox 360,” he said.
Microsoft’s protests notwithstanding, no one seems happy about the Xbox One’s price. Publishers were quick to note they would have preferred it to be $100 cheaper, and while Mattrick says the price is lower than some analysts had predicted, the ones we’ve spoken with say they were just as shocked as gamers were when it was announced.
”The launch price is above our expectations, and potentially pushing the envelope as Microsoft looks to expand the console beyond the core gaming demographic and to a broader consumer audience,” said Edward Williams of BMO Capital Markets.
By Chris Morris
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