NEWS AT A GLANCE
What’s selling in magazines
Magazine ad sales dropped 8.2 percent in the second quarter, the Publishers Information Bureau reported, pointing to increasing trouble for the magazine business. The decline follows a 6.4 percent drop in the first quarter and a 0.8 percent slip the quarter before that. Automobile ads fell the sharpest, 21.3 percent, and ads for computers and other tech items fell 17.5 percent. But luxury-goods ads actually rose, helping high-end fashion, travel, and home design magazines. News magazines generally fared poorer, while several publications stayed about even. “The joke here is, ‘Flat is the new up,’” said Conde Nast editorial director Thomas J. Wallace. Magazines are doing better than newspapers. (The New York Times)
Citigroup sells German operations for $7.7 billion
Citigroup, the largest U.S. bank, agreed to sell its retail banking operations in Germany to France’s Credit Mutuel for $7.7 billion. Citi decided to sell its German Citibank Privatkunden unit, the centerpiece of its European business, after a worldwide strategic review by CEO Vikram Pandit. (Reuters) Credit Mutuel beat out Germany’s Deutsche Bank to buy the unit, which is Germany’s market leader for consumer loans. “Citibank gives the French lender a great foothold in the German retail market,” said Merck Finck & Co. analyst Konrad Becker. (Bloomberg) Separately, General Electric agreed to sell its Japanese consumer lending business, GE Consumer Finance, to Japan’s Shinsei Bank for $5.4 billion. (Nikkei in CNNMoney)
U.S. mulls Fannie, Freddie takeovers
The Bush administration is reportedly considering a plan to take over one or both of the government-sponsored mortgage giants Fannie Mae and Freddie Mac. If the companies, buffeted by rising foreclosures and declining asset values, are placed under conservatorship, their shares would be worth little or nothing and taxpayers would be responsible for any losses. (The New York Times) The two companies have lost $11 billion in recent months, and their shares have plunged to 1991 levels as investors fear for their viability. They own or guarantee more than $5 trillion in mortgages. (MarketWatch) “The government has to step in and do something,” said Friedman, Billings, Ramsey & Co. analyst Paul Miller. (AP in Yahoo! Finance)
Beating conventional wisdom, speedily
Americans are buying fewer cars, as gas prices rise and credit falls, but Fiat has found a road to growth: sell a 12 mpg sports car that retails for $115,000. Sales of Fiat’s Maserati luxury sports cars jumped 20 percent last month and are up 16 percent this year, even as luxury-car sales as a whole are down 15 percent. Fiat started selling Maseratis in the U.S. in 2002, after an 11-year hiatus, and the sales bump is helped by expanding dealerships and new models. But Maseratis also fit a niche for rich people who want something more exotic than a Mercedes. “If you’ve got money, you want people to know you’ve got money, and people want to find something that not everybody has,” said Iceology analyst Wes Brown. (Bloomberg)
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