"Not in my wildest dreams, no. It's almost inconceivable now what happened." --Enron ex-CEO Jeff Skilling testifying in his fraud and conspiracy trial as to whether he suspected Enron would go bankrupt months after he resigned in 2001
As a string of new deals to offer current TV shows over the Web and video on demand strains ties between broadcast networks and local affiliates, Fox Television has reached an agreement to allow its roughly 150 affiliates to share a slice of the New Media pie, BusinessWeek has learned. The pact could be a model for networks like ABC, now in talks with its affiliates over the network's plan to offer free, next-day showings of some of its popular shows on its Web site.
Affiliate stations of ABC and the other networks say their revenues will suffer if viewers have the option of watching the shows elsewhere. Since affiliates help publicize the programs, they argue, they should share in New Media revenues the shows generate. The Fox pact allows stations to get a portion (the percentage is not clear) of the additional revenues for up to a year after they air a program. The deal was hammered out by Ed Wilson, president of Fox Television Networks, and Brian Brady, chairman of the Fox affiliates and president of Northwest Broadcasting, which owns stations in Oregon, New York, and Washington. Says Wade Hargrove, the lawyer for the affiliates: "This is a precedent-setting deal -- for the affiliates to be able to participate in the near term in revenues from reruns shown on platforms other than the stations." A Fox network spokesman declined to comment.
Taking a year off between secondary school and university is a treasured custom for young Brits. But the gap year, as it is called, has become a legal issue for Gap Inc. The San Francisco retailer is suing Gap Sports Ltd., a British upstart that places gap-year students in volunteer coaching and other public-service jobs in developing countries. In a suit filed in London, Gap Inc. alleges trademark infringement, requests damages of $500,000 plus, and demands that Gap Sports stop using the word "gap" in its Internet domain names. "Our trademark is one of our most valuable assets," says company spokesman Greg Rossiter. "It's our obligation to protect our brand."
Gap Sports founder James Burton, 26, couldn't be reached. But Sarah Jeffery, the company's lawyer, argues that "gap year" is a common term in Britain and that other gap-year marketers such as Gapwork, Gapyear, and Ski le Gap use the word in their online names. The retailer, she says, is "trying to claim a monopoly on the word 'gap"' and is "sorely underestimating the intelligence of the general public if they think consumers are likely to confuse our client with Gap Inc." Gap Sports expects to place 400 young people in volunteer jobs this year, up from 200 last year. Do Burton and David, his younger brother, who helps run the business, shop at Gap, which targets their age group? Says Jeffery: "If they did, they don't anymore."
It looked as if the Mississippi Choctaw Indians had lined up a sweet deal: a $300 million no-bid federal contract for Hurricane Katrina cleanup in their home state. (The Choctaws gained notoriety as one of Jack Abramoff's biggest clients, having paid the since-convicted lobbyist and his partners about $27.6 million to sway Congress on gaming issues.)
Pressured by Mississippi politicians to replace the current out-of-state contractor with locals -- and legally stalled by rival bidders' complaints -- the Army Corps of Engineers planned to award a "bridge" contract to a Choctaw construction unit, IKBI. Under special rules, Native American businesses can land no-bid federal contracts of any size (BW-Apr. 10). But last week, the Army said the job instead would go to the nonminority Necaise Brothers Construction, based in Gulfport, Miss.
The new deal, now worth $150 million, is on hold due to another complaint by the current, Florida-based contractor, Ashbritt. But the Choctaws aren't entirely out of luck. IKBI is a candidate for a separate $25 million contract set aside for small or minority outfits. "We hope we've got a shot at something," IKBI President Josh Gamblin said.
WHY READ IT
For edifying quips from employment litigators Lou Michels and Rod Satterwhite at McGuireWoods.
The Kansas Supreme Court joined...over 20 other states in recognizing that innocent victims of horseplay...may be entitled to workers' compensation.... The case involves a plaintiff who leaned back in her chair while waiting for a meeting to start. The chair, of course, had little wheels on the bottom. Suddenly, it was like the plaintiff was back in fourth grade -- a colleague grabbed the chair, and the plaintiff hit the floor.... Who says work's no fun?"
Cheap-chic apparel has a new queen. Sales for Spanish retailer Inditex, best known for its Zara shops, were up 21% in 2005, to $8.15 billion. That puts Zara ahead of longtime leader H&M Hennes & Mauritz, which had sales of $7.87 billion. Using in-house design and tightly controlled manufacture and distribution, Zara can stock new trendy styles weekly. "They've built up an excitement around snapping up new clothes before they [sell out]," says Kris Miller, a Bain & Co. analyst. Fast-fashion sales, which have grown twice as quickly as overall clothing sales in Spain and Britain, account for just 1% of the $181 billion U.S. clothing market. Plenty of room to grow.
Plans to create dot-xxx Web domain were shelved late last month, and porn surfers weren't the only ones disappointed. European Union officials charge that American politics and puritanism were behind the decision by the U.S.-based Internet Corporation for Assigned Names & Numbers (ICANN) to postpone approval for a triple-x domain.
The delay, says Martin Selmayr, a spokesperson for the EU's Commission for Information Society & Media, "takes away from the credibility of the argument that the U.S. is in favor of a free Internet." ICANN was advised to take "adequate additional time" on the issue by the Commerce Dept., which oversees the organization, after conservative groups argued in a letter-writing campaign that a triple-X domain would foster more Web porn. To fight what it views as U.S. hegemony over the Web, the EU commission wants ICANN to report to an international body like the U.N. when its latest Memorandum of Understanding with Commerce expires in September.
As demonstrations intensify and legislation stalls in the U.S. over the status of illegal immigrants, France has been taking another tack. It's offering cash payments -- the equivalent of about $2,400 per adult and $600 per child -- to illegals who agree to return to their native countries. The government began to offer the payments last September but so far has found fewer than 200 takers. Now, law-and-order Interior Minister Nicolas Sarkozy is urging officials to cut the program's red tape to make participation easier, according to the French daily Le Figaro, which obtained a copy of an Interior Ministry memo sent to local officials. But critics say the payments are too low to entice many of France's estimated 400,000 illegals to say adieu.
Meanwhile, France is getting tougher on those who don't leave voluntarily. Since 2002, the number of illegals expelled annually from the country has doubled, to 20,000 last year. At the same time, Sarkozy is spearheading legislation to make it easier for well-educated, highly skilled immigrants to enter the country. Sarkozy, the front-runner in the 2007 French presidential race, is himself the son of an immigrant. His father fled communist Hungary in 1949 and was granted refugee status in France.
Trying to turn out productive workers as efficiently as possible, a few fast-food chains are using iPod video players to train new employees. Pal's Sudden Service, a regional chain with Tennessee and Virginia outlets, started iPod video training in its 20 restaurants in February. "We're looking to expedite the learning process through technology," says Pal's CEO Thom Crosby. Chuck E. Cheese's (CEC), the pizza-and-games chain, is a few months into testing the video iPods in one of its Dallas outlets.
Both programs, developed by podTraining, a Flower Mound (Tex.) startup, use short video clips to show new hires how to do their jobs. Unlike video or DVD-based training systems, the iPods can be updated quickly and cheaply by downloading new content. And the portability of the iPod allows training to be done on the job. New Pal's employees practice making the chain's trademark Big Pal burger while watching a video of the process. Other videos address customer service, ethics, and cashier operations.
TJ Schier, president and founder of podTraining, says he is developing more fast-food training videos for the iPod, including troubleshooting segments produced with Coca-Cola (KO) to teach workers what to do when a soda machine breaks. He says retailers, banks, and pharmaceutical companies are now asking the company for iPod videos to train clerks and salespeople. At Pal's, the iPod program has shaved a week and a half from new-employee training times, Crosby says, and has created a cool factor that has given a boost to recruitment.