Business and Finance

Netflix’s key contract with Starz expired on Tuesday, causing a massive hit to its instant streaming catalog of movies and TV shows.

Pay-cable network Starz struck a four-year licensing deal with Netflix back in 2008. Netflix had been trying for months to negotiate a new contract, but talks fell apart back in September.

The Starz contract officially expired on February 28, so titles such as "Toy Story 3," "Scarface" and "Young Frankenstein" are no longer available on streaming from Netflix.

A significant amount of Starz’ content catalog is Disney (, Fortune 500) films, though it includes licensed titles from several other studios. Netflix spokesman Steve Swasey would not confirm how many titles were pulled.

Swasey implied that Netflix will be able to get some of those titles back by striking deals with other cable networks, saying that "only about 15 Disney titles are really non-replaceable."

"There’s always an ebb and flow of title availability, and there always will be," Swasey said. "There’s never a shortage of stuff. You’ll see more titles soon."

As of January, Starz content accounted for 2% of viewing time, Swasey said.

Still, the loss highlights two major problems for Netflix (): a streaming catalog that some customers complain is lackluster, and the increasing costs of content.

Before the talks fell apart last year, Netflix called the Starz contract "one of our most important deals" — because it was one of the few that gave Netflix streaming access to relatively recent movies.

Because Starz has licensing deals with several major movie studios, Netflix was able to piggyback on the arrangements and boost its catalog of recent releases.

Starz said it ended the contract talks because of "our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content."

Meaning: Starz wants more money. Netflix was able to score cheap contracts years ago, when streaming video hadn’t fully broken into the mainstream. Now that streaming video is so popular, providers are upping the price tag for their content.

Those increasing costs have set off a vicious cycle. In order to offset content charges, Netflix began charging separate prices for its DVDs-by-mail and streaming video plans in September 2011.

That raised the cheapest-possible bill for customers who want both services from $10 to $16 a month. Outraged customers left thousands of comments on Netflix’s blog, and in the third quarter of 2011, the company’s U.S. subscriber base fell for the first time in years.

Millions of customers stayed on, but some have complained of a too-small streaming catalog. Outright loss of content, like the Starz expiration, leaves angry customers asking why they’re paying more for less.

Netflix has been striking other deals to beef up its catalog. Last week, the company announced a multi-year agreement to get Academy Award-winning titles "The Artist" and "Undefeated," as well as other movies from The Weinstein Company.

Netflix is making an even bigger bet on TV, including studio-like moves. Last year Netflix licensed its first original series, "House of Cards," which stars Kevin Spacey and is due out in late 2012. In November, Netflix announced it would release a new season of the cancelled "Arrested Development" in 2013.

Meanwhile, studios now have a bargaining chip in the form of Netflix’s competitors. Beyond direct rivals like Hulu and kiosk service Redbox (owned by Coinstar ()), big tech players like Amazon (, Fortune 500) and Google (, Fortune 500) are jumping into the streaming game.  

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The number of Americans filing first-time claims for jobless benefits last week held at a four- year low and consumers became more confident, indicating an improving labor market may boost household spending.

Applications (INJCJC) for unemployment insurance benefits were unchanged in the week ended Feb. 18 at 351,000, the fewest since March 2008, Labor Department figures showed today. The Bloomberg Consumer Comfort Index rose to minus 38.4 in the week to Feb. 19, the strongest reading since April 2008.

Oil prices hit a new nine-month high Thursday as the dollar fell and gas pump prices climbed closer to $4 a gallon across much of the country.

Benchmark crude prices rose by $1.55 to end the day at $107.83 per barrel in New York. That’s the highest price since May 4 of last year. Brent crude increased by 72 cents to finish at $123.62 per barrel in London.

The rise in oil prices has helped push retail gasoline prices to record levels for this time of year. Benchmark crude has increased 9 percent so far in 2012, and gas pump prices are up about 5 percent.

Retail gasoline prices added another 3 cents Thursday for a national average of $3.61 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has already topped $4 in California, Hawaii and Alaska. Gasoline is nearly $3.90 per gallon in New York and Connecticut. Analysts think we could see a national average of $4.25 a gallon by April.

The ongoing tension between western nations and Iran is continuing to drive oil prices higher.

Iran, the world’s third-biggest oil exporter, already has cut off shipments to Britain and France, and it may halt exports to other European countries. Iran also has threatened to close the Strait of Hormuz, a crucial waterway in the Persian Gulf through which one-sixth of the world’s seaborne exports flow every day.

Experts doubt Iran will try to dramatically cut shipments, given its dependence on oil sales. About half of the country’s revenue comes from crude. But many investors are snapping up oil contracts in case tensions escalate further.

“The Iranian influence remains as a major driver” in oil prices, independent analyst and trader Jim Ritterbusch said.

In addition to an oil embargo set to start this summer, European Union leaders said Thursday that the EU is preparing regulations that will put further financial pressure on Iran by keeping its banks from using a major financial clearinghouse no fax cash advances.

Oil prices got an extra boost Thursday afternoon as the dollar fell against the euro and other major currencies. Oil is priced in U.S. currency and tends to rise as the dollar falls and makes crude cheaper for investors with foreign money.

Oil prices are higher even though U.S. petroleum demand has been tanking compared to a year ago. The Energy Information Administration said Thursday that demand has dropped 6.7 percent for oil, and 6.1 percent for gasoline. The U.S. remains the world’s biggest oil consumer, but government data show that demand is growing the most overseas in developing countries like China.

Meanwhile, the price of natural gas fell after the government said supplies remain significantly higher than average for this time of year. Natural gas futures on Thursday fell by 2 cents to finish at $2.62 per 1,000 cubic feet in New York.

A boom in North American shale drilling has filled underground storage facilities across the country. The Energy Information Administration says supplies are more than 40 percent higher than the five-year average.

Major natural gas producers recently cut back on production, as prices linger around a 10-year low. But analysts say they’re not doing enough to reduce the glut.

“There’s still an avalanche of gas available right now,” said Gene McGillian, a broker and oil analyst at Tradition Energy.

In other energy trading, heating oil rose 2 cents to finish at $3.29 per gallon and gasoline futures rose by 3 cents to end at $3.11 per gallon.

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The Obama administration will release details tomorrow on its proposal to reduce the 35 percent corporate tax rate and eliminate tax breaks, said administration officials familiar with the plan.

The Treasury Department will outline the proposal, according to the officials, who briefed reporters on condition of anonymity. They didn

Markets were optimistic Monday that Greece will finally secure a massive but long-delayed international bailout, allowing the debt-crippled country to avoid defaulting on its debts next month.

A surprise easing in monetary policy in China over the weekend also added to the buoyant mood in markets _ many stock indexes are trading at multi-month highs, while the euro has recovered its poise.

The main focus of attention _ on a day when Wall Street will be shut for a public holiday _ will be Brussels, where the finance ministers from the 17 eurozone countries are gathering to discuss the elusive Greek bailout deal.

After some eurozone countries suggested last week that they might prefer Greece to default, the latest comments indicate the ministers will approve th euro130 billion ($171 billion) bailout. Greece has struggled to convince its partners in the eurozone, particularly Germany, that it will enact the austerity and reform measures in return for the cash.

France’s finance minister Francois Baroin told Europe 1 radio Monday that while details will have to be worked out, “the political commitments have been made.” Both parties in the Greek coalition government have agreed to push forward the measures in the event they are in government after expected elections in April.

“Officials have confirmed that momentum is building for approval of the deal and that while there are some gaps to be filled, the gaps are not so large that they risk derailing the whole process,” said Sue Trinh, an analyst at RBC Capital Markets.

Alongside the bailout, Greece is expected to conclude debt-reduction discussions with its private creditors. That should slice off around euro100 billion from Greece’s debt mountain. Even after that, Greece will have the highest debt burden of all the euro countries.

One of the last-minute hurdles to overcome is how to get Greece’s debt burden down to around 120 percent of GDP by 2020. One way that target could be met is if European central banks forgo profits due on their holdings of Greek debt.

Even though there are issues that need to be ironed out, investors are confident of a successful conclusion.

In Europe, the FTSE 100 index of leading British shares was up 0.8 percent at 5,952 while Germany’s DAX rose 1.4 percent to 6,944. The CAC-40 in France was 0.8 percent higher at 3,468.

The euro was 0.1 percent higher at $1.3223.

Sentiment has also been boosted by the surprise decision over the weekend by China’s central bank to lower the ratio of funds that banks must hold as reserves to 20.5 percent from 21 percent, effective Friday. That will free up tens of billions of dollars for loans at a time when the growth rate is expected to drop from last quarter’s 8.9 percent to closer to 8 percent. The cut is the second in two months.

Earlier in Asia, Japan’s Nikkei 225 index added 1.1 percent to close at 9,485.09, its highest closing level of the year. South Korea’s Kospi rose slightly to 2,024.90. Mainland China’s benchmark Shanghai Composite Index climbed 0.3 percent to 2,363.60 after gaining more than 1 percent earlier in the day, while the Shenzhen Composite Index gained 0.3 percent to 923.32.

Hong Kong’s Hang Seng dipped 0.3 percent to 21,424.79.

In the oil markets, Iran was battling with Greece to be the main focus of attention. Oil prices have jumped to a nine-month high near $105 a barrel Monday after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country’s nuclear program.

Benchmark crude was up $1.50 to $104.74 per barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Earlier in the day, it rose to $105.21, the highest since May.

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Pamela Sampson in Bangkok contributed to this report.

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U.S. stock futures are slightly higher on hopes that Greece would soon get its crucial second bailout and following another batch of upbeat U.S. economic news.

Investors are growing more optimistic that European finance ministers will sign off on the Greek bailout and a bond swap agreement with Greece’s private creditors on Monday.

Dow Jones industrial futures are up 33 points to 12,903. The broader S&P 500 futures are up 2 points at 1,357. Nasdaq 100 futures are up 2 points at 2,595 instant credit reports.

Sentiment in the markets has been further buoyed by more positive U.S. economic data, particularly in the jobs market. Figures released Thursday showed jobless claims fell last week by 13,000 to 348,000, the lowest level since February 2008.

Most European and Asian markets rose Friday.

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Stocks surged last week to their highest levels in years, but there are few key economic reports slated for the week ahead to sustain the rally.

The big news last week was Friday’s report from the U.S. Labor Department, which showed a much larger-than-expected increase in hiring and a surprise drop in the unemployment rate.

Investors cheered the jobs data, which came on the heels of upbeat reports on auto sales, construction spending and manufacturing activity.

The Dow rose 1.6% last week, ending at its highest point since May 2008. The Nasdaq jumped 3.2% over the last five trading days, climbing to its highest level since December 2000, and the S&P 500 added 2.2%.

Next week, investors will take in reports on consumer sentiment and the nation’s trade balance, both coming on Friday.

On the corporate front, Dow stocks Coca-Cola (, Fortune 500), Cisco (, Fortune 500) and Disney (, Fortune 500) are scheduled to report quarterly results.

Given the lack of major economic reports next week and the market’s recent strength, some analysts say stocks are vulnerable to a sell off.

"The market is definitely due for a pullback," said Keith Springer, president of Springer Financial Advisors in Sacramento, Calif. "But so many people have been waiting for one that it might not come until the market is much higher."

Meanwhile, the focus next week could shift back to the debt crisis in Europe, where talks in Greece over a debt write down and a second bailout appear to be coming to a head.

Concerns about a hard landing in China may also be top of mind next week, with reports due on consumer prices and foreign trade due out.

"Next week, I think the trade will continue to monitor the Greek debt restructuring, while watching the Chinese inflation and trade data," said Nick Kalivas, market strategist at Hadrian Partners.

Greece appears close to a deal with its private sector creditors to write down a portion of the nation’s debts. The deal has been held up for weeks by disagreements over how much of a loss investors would voluntarily accept on Greek bonds.

Kiss QE3 hopes goodbye. And good riddance!

At the same time, there are concerns that political wrangling in Athens over more budget cuts could delay a second bailout, which is now expected to total €145 billion, up from the previously estimated €130 billion.

There is also widespread speculation that Greece will not meet its mandated fiscal targets unless its "official" creditors, such as the European Central bank, take part in the restructuring.

The ECB is expected to hold interest rates steady at its regularly scheduled policy meeting and press conference on Thursday. 

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Indonesia

The frightful images of a sinking Italian cruise ship have scared off some cruise passengers, at least temporarily, during the industry’s peak booking season.

Travel agents — who book more than two-thirds of cruise passengers worldwide — have been nervously watching bookings since the Costa Concordia, which is owned by Carnival Corp, ran aground on Jan. 13.

On Monday, they got a new reason to be nervous: bookings fell significantly for Miami-based Carnival Corp. following the Costa accident. Attention is now focused on Royal Caribbean Cruises Ltd., which reports earnings Thursday. An increase there could show that passengers are fleeing Carnival over safety fears. A decrease could indicate an overall distrust of all cruise lines.

Nearly 11 million Americans took a cruise last year, generating an estimated $14.5 billion in revenue for the industry, according to PhoCusWright, a travel research firm. Like the rest of the travel industry, cruise lines are still recovering from the recession. Several new megaships started sailing just as passengers struggling with finances decided to stay home. But 2012 was supposed to be a year of moderate growth.

Carnival won’t say exactly how much bookings have dropped, but it disclosed Monday that in the 12 days following the Concordia capsizing, there was a percent decline “in the midteens compared to the prior year.” Reservations hit a low on Jan. 16, the company said in its annual report filed with the SEC.

Carnival operates 101 ships under several brands including Costa, Carnival, Cunard, Holland America, Princess and Seabourn. It said reservations with the Costa line are “down significantly” but difficult to interpret because many Costa customers were rebooked on other ships because of the loss of the Concordia ship.

Unlike plane tickets or hotel rooms, which are mostly booked directly through the Internet, most cruises are sold by travel agents. That scattered sales approach makes it harder to gauge the impact of an accident like the Concordia.

“Who knows how many people … (were) on the fence and decided not to book?” said Michael Driscoll, editor of Cruise Week.

Barclay’s Capital noted that on Thursday, the Carnival line began offering promotional onboard credits of up to $200 for things like drinks and spa treatments.

“Despite this ad, which in normal circumstances would have stimulated strong call volume, calls remain down 10 (percent),” Barclay’s analyst Felicia R. Hendrix wrote in a note to investors.

A major unnamed online travel agent has also seen cruise call volume fall 30 percent, Hendrix said.

Hendrix also noted that cancellations in the U.S. are up 10 to 15 percent. That’s because savvy travelers are backing out of trips now in anticipation of getting the same cruise later for less.

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1901 • John F. Queeny sets up Monsanto Chemical Works in honor of his wife, Olga Monsanto, and begins making saccharin at a St. Louis plant.

1929 • Monsanto buys two companies to enter the rubber chemicals business. It also buys several other chemical companies.

1997 • Monsanto spins off its chemical group as Solutia Inc.

December 2003 • Solutia files for Chapter 11 bankruptcy.

May 2004 • Solutia promotes Jeffry Quinn to president and CEO after he joined the company in 2003.

May 2007 • Solutia buys the half of Brussels-based Flexsys NV, a supplier of chemicals to the rubber industry, that it didn’t own.

February 2008 • Solutia emerges from bankruptcy.

June 2009 • Solutia sells its nylon business unit.

January 2012 • Eastman Chemical announces plans to acquire Solutia.

Source: St. Louis Post-Dispatch research, Solutia

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