SAC Capital Manager Awaits Word on Charges

Federal prosecutors are nearing a decision whether to bring criminal charges against Michael Steinberg, a longtime portfolio manager at SAC Capital Advisors, the giant hedge fund owned by the billionaire investor Steven A. Cohen.

In recent months, a former SAC analyst who worked directly for Mr. Steinberg has met with authorities and provided them with information about his former boss, according to a person with direct knowledge of the investigation. The analyst, Jon Horvath, has been cooperating with the government since pleading guilty in September to insider trading charges.

A lawyer for Mr. Steinberg, Barry Berke, said in a statement that his client “did absolutely nothing wrong.” Mr. Berke added: “At all times, his trading decisions were based on detailed analysis as well as information that he understood had been properly obtained through the types of channels that institutional investors rely upon on a daily basis.”

Steven Peikin, a lawyer for Mr. Horvarth, declined to coment. Representatives for the United States attorney’s office in Manhattan and the F.B.I. declined to comment.

Mr. Horvarth admitted to being part of an insider trading ring that illegally traded the technology stocks Dell and Nvidia. As part of his guilty plea, he implicated Mr. Steinberg, saying that he gave the secret data to his SAC boss and that they traded based on secret financial data about those two companies.

If prosecutors file a criminal case against him, Mr. Steinberg, 40, would be the most senior SAC employee charged in the government’s investigation of the hedge fund, which is based in Stamford, Co! nn. Including Mr. Steinberg, at least eight current or former SAC employees have been tied to allegations of insider trading while working there. Four have pleaded guilty to federal charges.

As the prosecutors weigh whether to indict Mr. Steinberg, who was put on leave last year, SAC clients are contemplating a different decision. Investors have until Thursday to inform the fund that they want their money back. The fund has told employees that it expects at least $1 billion in withdrawals from the $14 billion fund because of the heightening investigation. SAC has a standard quarterly redemption deadline.

The investigation intensified last November, when another former SAC portfolio manager, Mathew Martoma, was accused of using inside information about drug companies to avoid losses and earn profits of a combined $276 million. For the first time in the inquiry, Mr. Cohen was involved in the trades that the government contends were illegal.

Mr. Cohen has said through a spokesman that he has cted appropriately at all times. Mr. Martoma has pleaded not guilty and is fighting the charges.

The government has previously identified Mr. Steinberg, a technology stock specialist in SAC’s Sigma Capital unit, as a co-conspirator in a case involving two former hedge fund managers, Todd Newman and Anthony Chiasson. A jury convicted Mr. Newman and Mr. Chiasson in December on charges that they traded shares of Dell while in possession of secret information about the technology company.

Mr. Steinberg’s name came up several times during their trial. Evidence emerged in the case that just days before Dell announced quarterly earnings in 2008, Mr. Horvath e-mailed Mr. Steinberg with details about its financials.

“I have a secondhand read from someone at the company,” Mr. Horvath wrote. “Please keep to yourself as obviously not well known.”

Mr. Steinberg replied: “Yes normally we would never divulge data like this, so please be discreet. Thanks.”

Of the former ! SAC portf! olio managers and analysts ensnared by the government’s insider trading inquiry, Mr. Steinberg had the closest relationship with Mr. Cohen. He joined the fund in 1997, when it was only a few dozen traders; today, it has more than 1,000 employees. For a time, he sat next to Mr. Cohen on the trading floor and was relied upon as an important source of information about technology stocks.

Prosecutors have until August to file a case against Mr. Steinberg. Under the statute of limitations for insider trading crimes, the government has five years from the trade in question â€" in this case, from August 2008 â€" to bring charges against him.

American and US Airways Said to Vote for Merger

Ending a yearlong courtship by US Airways, American Airlines agreed on Wednesday to merge with the smaller carrier, paving the way for the creation of the nation’s largest airline.

The boards of both companies met separately to approve the combination, according to two people with knowledge of the vote. A merger would bolster American’s domestic footprint, strengthen its presence in the Northeast and give it a bigger network to attract business travelers and corporate accounts.

The merger, the details of which will be announced Thursday morning, would create a rival with the size and breadth to compete against United Airlines and Delta Air Lines, which have both gron through mergers of their own in recent years and are currently the biggest.

But while United and Delta went through bankruptcies and mergers over the last decade, American has been steadily losing ground while racking up losses that have totaled more than $12 billion since 2001. It was the last major airline to seek court protection to restructure its business when it filed for bankruptcy in November 2011.

The wave of big mergers in the industry has created healthier and more profitable airlines that are now better able to invest in new planes and products, including Wi-Fi, individual entertainment screens and more comfortable seats for business passengers. But some consumer advocates said they worried that reducing the number of airlines would lead to higher fares over the long run and allow airlines to increase revenue ! by imposing new or higher fees.

The deal, which was finalized in recent days, could be formalized as American exits bankruptcy. W. Douglas Parker, the chairman and chief executive of US Airways, will take over as American’s new chief executive. Thomas W. Horton, American’s current chairman and chief executive, will be chairman, though his tenure could be limited.

The merger still needs to pass several steps. It must be approved by American’s bankruptcy judge in New York. US Airways shareholders, who will also have to approve the deal, would hold 28 percent of the combined carrier.

In addition, it will be reviewed by the Department of Justice’s antitrust division, though analysts expect regulators to clear the deal.

If approved, the nation’s top four airlines â€" American, United, Delta and Southwest Airlines â€" wuld control nearly 70 percent of the domestic market.

The merger is a victory for Mr. Parker. Over the last year, he has convinced American’s creditors that the carrier needed to expand its network to compete. In April, he won the critical backing of American’s three labor groups, which defied American’s management and publicly endorsed a deal with US Airways.

The biggest challenge for the merged company, which will be called American Airlines, will be to integrate operations over the next couple of years. That is no easy task since airline mergers are often rocky â€" involving complex technological systems, big reservation networks as well as large labor groups with different corporate cultures that all need to be seamlessly combined.

United angered passengers last year after a series of merger-related computer and reservation mistakes, and late and delayed flights.

Mr. Parker has done this before. In 2005, when he was the head of America West, he engineered a merger wi! th the la! rger US Airways.

In this case, the merged American Airlines will still be based in Fort Worth and have a combined 94,000 employees, 950 planes, 6,500 daily flights, eight major hubs, and total sales of nearly $39 billion. It would be the market leader on the East Coast, the Southwest and South America. But it would remain a smaller player in Europe, where United and Delta are stronger. The merger does little to bolster American’s presence in Asia, where it trails far behind its rivals.

American has major hubs in Dallas, Miami, Chicago, Los Angeles and New York. US Airways has hubs in Phoenix, Philadelphia and Charlotte, N.C., and has a big presence at Ronald Reagan National Airport in Washington.

In reviewing previous mergers, federal regulators have not focused on the overall size of the combined airline but instead looked at whether a merger would decrease competition in individual cities. To do so, regulators examine specific routes, or city-pairs, and look at whether a merger reducesthe number of airlines there.

The last time the Justice Department challenged a merger was the proposed combination between United Airlines and US Airways in 2001. It rejected that on the ground that it would reduce consumer choice and possibly lead to higher fares.

Since then, the department has allowed a wave of big mergers that have reshaped the industry, said Alison Smith, a former antitrust official and now a partner in the law firm McDermott Will & Emery.

American and US Airways only have about 12 overlapping routes, a figure that is unlikely to set off regulatory opposition, she said. One problem, however, could come up at National Airport, where the combined carriers hold a market share of about 60 percent. There, regulators might request that American give up some takeoff and landing rights before approving the merger.

Regulators sought similar concessions from United at Newark Liberty International Airport after its merger with Continental Airlines.

It is also unclear whether American needs all of its combined hubs. Analysts pointed out that Phoenix was at risk because of its proximity to Dallas, since it makes little sense to have two big hubs so close to each other.

Despite the increased concentration, consumers can still expect to find vibrant competition, said William S. Swelbar, a research engineer at the Massachusetts Institute of Technology’s International Center for Air Transportation.

“We will have four very big, very vigorous competitors in the market,” he said.

Travelers are better seved by bigger airlines offering more connecting flights and more destinations, analysts said. Consumers today can easily compare fares and shop for the cheapest flight online, which keeps airfares in check.

But Kevin Mitchell, chairman of the Business Travel Coalition, disagreed. He said that consumers would see few benefits to offset the merger’s negative impact â€" including “reduced competition, higher fares and fees and diminished service to small and midsize communities.”

How a Meredith-Time Warner Joint Venture Would Work

Many analysts have questioned how the Meredith Corporation could afford to buy a business as big as Time Warner‘s non-news magazine titles.

After all, Meredith’s market value as of Wednesday evening was about $1.6 billion. Time Warner’s publishing arm reported about $3.4 billion in revenue last year.

The rub is this: What’s being discussed isn’t a sale, but the formation of a new joint venture.

Time Warner and Meredith are each expected to contribute substantially all of their magazine titles to a new joint venture, people briefed on the matter told DealBook on Wednesday. That would leave Time Warner as primarily a film and television company, though still holding onto titls like Time and Fortune, and Meredith a broadcast television concern.

What would be created is a publicly traded assemblage of Time Warner publications like People, widely considered one of the most lucrative magazines around, and Meredith titles like Better Homes and Gardens. Shareholders of both conglomerates would be given shares in the new joint venture.

The two media companies are still discussing a number of important details, including how much of the new company each of their shareholder bases would own, as well as whether the joint venture would pay a dividend.

They are also discussing whether the new company would provide back-office services to the titles that Time Warner plans to keep, which also include Sports Illustrated and Money, these people said.

If the transaction is completed, it would be the most significant deal in Meredith’s roughly 111-year history. The biggest that the media conglomerate has struck to date is its 2005 purchase of Gruner and Jahr’s ! women’s magazines, including Family Circle, Parents, Child and Fitness, for $350 million.

An Expensive, but Logical Cable Deal

A 10 billion euro bid by Vodafone for Kabel Deutschland would be logical - and expensive. The revelation that the British mobile group is eyeing Germany’s biggest cable operator has understandably unnerved its shareholders. Cable companies are pricier than phone groups, and Vodafone’s deal-making record is patchy. Still, a deal would offer opportunities to cut costs and boost sales. Vodafone needs to be prepared to make the case.

On Feb. 12, Kabel Deutschland’s shares were worth about 5.6 billion euros. That suggests an enterprise value of about 10 billion euros ($13.4 billion), after adding a conventional 30 percent takeover premium and debt of 2.8 billion euros. That would be a big transaction - but clearly achievable for the mobile giant. Vodafone’s earnings before interest, taxes, depreciation and amortization, or Ebitda, should top 1 billion pounds this year and its debt load is comfortable.

The valuation discrepancy between the two companies is inconvenient. Kabel Deutschland trades at 8.7 times Ebitda, before any takeover premium. Vodafone trades at 5 times Ebitda, adjusting for a shareholding in the U.S. operator Verizon Wireless. Vodafone shareholders might balk at paying way above Vodafone’s own beaten-down rating â€" no matter if that cable’s premium valuation reflects more robust growth and predictable cash flows.

Vodafone’s directors might be cautious too. Investors clashed with its former chairman, John Bond, over merger missteps. And trust busters might object: Kabel Deutschland is itself still trying to win approval to buy a smaller rival.

The benefits, though, are clear. Switching customers from Arcor, the fixed-line service Vodafone! runs over Deutsche Telekom’s network, could be worth 1.25 billion euros, taxed and capitalised, say analysts at Jefferies. Vodafone could boost revenues too by selling more bundled services combining mobile, landline, broadband and television. Whether this “convergence” will happen is a divisive issue among telecoms executives. It seems to be taking off in some European markets - but isn’t in Germany yet.

There may be canny timing too: Vodafone’s interest comes as Kabel Deutschland arch-rival Liberty Global is tied up buying Britain’s Virgin Media and unlikely to counterbid. It would have been cheaper to do a deal when Kabel Deutschland floated three years ago. But a deal makes sense. It’s a shame then that Vodafone isn’t going into it with stronger credibility as a buyer.

Quentin Webb is a columnist for Reuters Breakingviews. or more independent commentary and analysis, visit breakingviews.com.

Time Warner in Talks to Sell Many of Its Magazines

3:53 p.m. | Updated Time Warner, the $49 billion media conglomerate built on the foundation of the printed word, is in early talks with Meredith Corporation to sell its publishing division Time Inc., shedding itself of the vast majority of its magazines, according to three people briefed on the discussions who could not comment publicly on preliminary and private conversations.

The deal being discussed would allow Time Warner to hang onto three flagship magazines, Time, Fortune and Sports Illustrated, while selling the majority of its portfolio, including magazines like Real Simple, Entertainment Weekly, Cooking Light and InStyle. The titles, which amount to essentially a women’s magazine company, make a good fit for Meredith Corporation, based in Des Moines, Iowa, and the publisher of such titles as Better Homes and Gardens and Ladies’ Home Journal. Jack Griffin, a former chief executive at Meredith, served a brief and stormy reign as cief of Time Inc. before Laura Lang took over in January.

Meredith would also gain People magazine, the celebrity weekly and crown jewel of Time Inc.’s stable of 21 magazines.
But Meredith did not express interest in purchasing Time Inc.’s sluggish news titles, said a person briefed on the discussions.

A Time Warner spokesman declined to comment. News of the talks was first reported by Fortune, a magazine owned by Time Inc.

The talks come weeks after Time Inc. announced it would lay off 6 percent of its global work force of more than 8,000 employees during an industrywide decline in subscription and advertising revenue. Overall revenue at Time Inc. has declined roughly 30 percent in the last five years.

Time Warner’s history is rooted in Time, the weekly news  magazine founded by Henry Luce in 1923 on which the giant media conglomerate got its start. But ! lately the publishing company’s sluggish performance has stood in sharp contrast to the strong performance at Time Warner’s cable channels like HBO, TBS and TNT.

In the last several years, the company has tried to trim some assets unrelated to the television and movie production business. That included shedding AOL, Time Warner Cable, the Warner Music Group and the Time Warner Book Group.

Jeffrey L. Bewkes, chief executive of Time Warner, has denied reports that he would sell Time Inc. He frequently talks about the division’s strongest brands essentially as cable television channels and has aggressively mandated that Time Inc. make its magazines available on digital devices.

“They’re printing pages right now, but they’re also on electronic screens with moving pictures,” Mr. Bewkes said in a previous interview. He added that “a cable channel like TNT or TBS” is “pretty much the same as what People or Time or InStyle should do.”

The cmpany’s exploration of a deal that would allow it to keep male-oriented titles like Sports Illustrated, Time and Fortune would let it maintain its name and historical roots.

“Time’s name is on the door. I think Jeff feels it would be better to hang onto it and not sell it for what would be a low price,” said a person briefed on Mr. Bewkes’s thinking who could not discuss private conversations on the record.

Ms. Lang, previously the chief executive of the digital advertising company Digitas, stepped in at a tumultuous time after Mr. Griffin was forced out after less than six months on the job. She hired Bain & Company, a consultancy based in Boston, to assess the business.

Many of  Time Inc.’s magazine titles have been struggling as more readers have been reading material online, and newsstand sales have dropped. Even titles like People, which long helped financially bolster Time Inc.’s less lucrative titles, has suffered. People’s newsstand sales declined 12.2 perce! nt in the! second half of 2012 compared to the year before, according to figures released last week by the Alliance for Audited Media. Its advertising pages dropped by 6 percent in 2012 compared to the year before, according to the Publishers Information Bureau.

Last month, Ms. Lang said she was cutting staff 6 percent, or about 480 people. Magazines like Time and People asked employees to take buyouts and said they would lay people off if they did not meet those numbers. Wednesday is the last day for employees to raise their hands for buyouts.

On a conference call with analysts last week, John K. Martin, chief financial and administration officer at Time Warner, said that “very challenging industry conditions weighed” on the company’s results.

The talks come as News Corporation prepares to sever its publishing assets, including newspapers like The Wall Street Journal and The New York Post, from its more lucrative entertainment division, which includes the cable channels FX and Fox News. The sparation is expected to be complete this summer.

Christine Haughney and David Carr contributed reporting.

Meet the Morgan Stanley C.F.O. Candidates

Who will be the next chief financial officer at Morgan Stanley

Ruth Porat is in the post, but she is regarded to be a leading contender for deputy Treasury secretary. If she is selected for the government post, it will result in yet another shuffle in the bank’s top ranks. In recent months, Paul Taubman left Morgan Stanley after a power struggle with Colm Kelleher, who ran institutional securities with him.

Paul Wirth, Jonathan Pruzan, Dan Simkowitz and James A. Rosenthal are among the names being raised as possible successors to Ms. Porat, according to several people at the firm who were not authorized to speak on the record.

Mr. Wirth, a certified public accountant, is the firm’s deputy chief financial officer, a job he has held since February 2011.He also has deep roots on Wall Street and has previously worked at Credit Suisse and Deloitte & Touche.

While Mr. Wirth appears to have the training to do the job, Morgan Stanley has a long tradition of tapping investment bankers to be chief financial officer, as was the case with Ms. Porat.

This has led to speculation that the firm’s chief executive, James P. Gorman, will ask Mr. Pruzan, a financial services banker, to step in. Mr. Pruzan was recently tapped by Mr. Gorman to advise on the revamping of the fixed-income department.

Mr. Simkowitz, Morgan Stanley’s chairman of global capital markets, is another possible contender to succeed Ms. Porat, according to firm insiders. Mr. Simcowitz is well known in banking circles on Wall Street, and has worked closely with Ms. Porat in the past. During the financial crisis, the pa! ir were among the Morgan Stanley bankers who advised the Treasury Department on how best to deal with Fannie Mae and Freddie Mac, the government-controlled mortgage giants. He was also heavily involved in the public offering of Facebook, which has drawn criticism from investors who say it was overpriced. Morgan Stanley, which led that offering, has stood by its actions.

Another name in the mix is Mr. Rosenthal, Morgan Stanley’s chief operating officer and a member of the firm’s powerful operating committee, which includes Morgan Staley’s top officers. Mr. Rosenthal joined Morgan Stanley in March 2008 from the real estate company Tishman Speyer, where he had served as chief financial officer since 2006. Previously, he had worked at Lehman Brothers and McKinsey & Company, where Mr. Gorman had worked for years.

Frank Petigas, global co-head of investment banking at Morgan Stanley, has been mentioned as a dark horse candidate. He is a banker, which helps his chances, but he was only recently named to his current post. He is also based in London, so if selected, he would have to move to New York.

One person who isn’t in the running is Gary Shedl! in, a ban! ker in the firm’s asset management unit. This week, he announced he was going from banking asset managers to working at one, BlackRock.

In First Disclosure, Getco Reveals Years of Sagging Revenues and Profits

Getco, a leading high-frequency trading firm, revealed that its revenues and earnings have slid almost uninterruptedly since the financial crisis, according to disclosures made public on Wednesday.

Getco, which is privately held, released its financial results for the first time as part of its impending purchase of Knight Capital Group, the trading firm that suffered a debilitating trading glitch last August. Getco, a 14-year old Chicago-based company, won a bidding war for Knight in December, ultimately offering a combination of cash and shares that values Knight at around $1.4 billion.

The filings provide the first look into what is likely the most powerful company in a highly secretive industry.

As was expected, Getco has struggled as trading activity has withered in many financial markets over the last few years, but the magntude of the declines was striking. The firm’s profits in the first nine months of last year fell 82 percent from a year earlier to $25 million, while the firm’s trading revenues were down 43 percent to $414 million in that same period. That was a much sharper drop than the decline in trading volume on the markets where Getco makes most of its money.

Getco’s struggles illustrate the larger challenges facing computerized trading companies. While these high-speed firms have come to dominate the trading world - accounting for over half of all stock trading - since 2008 they have encountered sliding trading volumes and less extreme short-term swings in the price of financial assets.

While Getco’s overall expenses have fallen in recent years, the costs of keeping computers close to the big exchanges, and maintaining high-speed data streams, were more than three times higher in the first nine months of last year than they were for all of 2008. The firm’s head count more than doubled ov! er the same period, to 409 from 189. Meanwhile, the trading revenues in the first nine months of 2012 were barely a third of what they were in all of 2008.

Getco notes in the filing that some competitors are “currently making decisions about their long-term ability to compete across asset classes and product types,” leading some of them to close or scale back. Getco will become a publicly traded company through its merger with Knight. Together, they will become one of the largest players in trading of American stocks.

Knight recently announced that its profits in the fourth quarter of 2012 were $6.5 million, down 84 percent from a year earlier, in part because of costs related to its Aug. 1 programming troubles that flooded the market with errant trades. The issue ultimately led to losses of $458 million for the firm. Knight’s revenue in the fourth quarter was down 16 percent, to $288 million.

Getco was among several firms that helped keep Knight alive the weekend after the trading ebacle. Within a few months, Getco made its push to purchase Knight outright and eventually outbid another high speed trading firm, Virtu.

Getco makes a majority of its money trading American stocks, using sophisticated computer algorithms to dart in and out of trading positions, taking advantage of small moves in the prices of stocks and rebates offered by exchanges. The company has been expanding in other American financial markets, such as options and futures, and in stock markets elsewhere in the world, but those markets have generally seen slower trading as well.

Getco has also made a push to expand its business trading on behalf of clients. But for most of last year it still made 94 percent of its revenue from trading with its own money.

The filing on Wednesday was part of the process of winning shareholder backing for the merger. The deal still requires the approval of its shareholders and regulators, but the companies expect to close the purchase in the second quarter of thi! s year.

Knight was attractive to Getco in part because it has a reliable business buying and selling the shares of small retail investors, who are easier to make money trading against than large institutional investors. The companies appear to have their best hope for future growth in changes to the financial markets being instigated by financial reform legislation in the United States and Europe. Wednesday’s filing notes that legislation is likely to push more trading of bonds and derivatives onto electronic platforms where Knight and Getco can participate.

Getco also said in the filings that it is in position to take advantage of the broader challenges facing the high-speed trading industry and predicted that its earnings will rise sharply this year.

“Getco believes that it stands to benefit from this period of rationalization and consolidation as it is positioned to potentially capture a greater share of activity if and when market volumes and volatilities increase,” the filing said.

Meet Morgan Stanley\'s C.F.O. Candidates

Who will be the next chief financial officer at Morgan Stanley

Ruth Porat is currently in the post, but she is regarded to be a leading contender for deputy Treasury secretary. If she is selected for the government post, it will result in yet another shuffle in the bank’s top ranks. In recent months, Paul Taubman left Morgan Stanley after a power struggle with Colm Kelleher, who ran institutional securities with him.

Paul Wirth, Jonathan Pruzan, Dan Simkowitz and James A. Rosenthal are among the names being raised as possible successors to Ms. Porat, according to several people at the firm who are not authorized to speak on the record.

Mr. Wirth, a certified public accountant, is currently the firm’s deputy chief financial officer, a job he has held since Feb. 2011. He also has deep roots on Wall Street and has previously worked at Credit Suisse and Deloitte & Touche.

While Mr. Wirth appears o have the training to do the job, Morgan Stanley has a long tradition of tapping investment bankers to be chief financial officer, as was the case with Ms. Porat.

This has led to speculation that the firm’s chief executive, James P. Gorman, will ask Mr. Pruzan, a financial services banker, to step in. Mr. Pruzan was recently tapped by Mr. Gorman to advise on the revamping of the fixed-income department.

Mr. Simkowitz, Morgan Stanley’s chairman of global capital markets, is another possible contender to succeed Ms. Porat, according to firm insiders. Mr. Simcowitz is well known in banking circles on Wall Street, and has worked closely with Ms. Porat in the past. During the financial crisis the pair was among the Morgan Stanley bankers who advised the treasury on how best to deal with Fannie Mae and Freddie Mac, the government controlled mortgage giants. He was also heavily involved in the public offering of Facebook, which has drawn criticism from investors who say it was overpriced.! Morgan Stanley, which led that offering, has stood by its actions.

Another name in the mix is Mr. Rosenthal, Morgan Stanley’s chief operating officer and a member of the firm’s powerful operating committee, which includes Morgan Stanley’s top officers. Mr. Rosenthal joined Morgan Stanley in March 2008 from the real estate company Tishman Speyer, where he had served as chief financial officer since 2006. Previously, he had worked at Lehman Brothers and McKinsey & Company, where Mr. Gorman for years worked.

Frank Petigas, global co-head of investment banking at Morgan Stanley, has been mentioned as a dark horse candidate. He is a banker, which helps his chances, but he was only recently named to his current post. He is also based in London, so if selected, he would have to move to New York.

One person who isn’t in the running is Gary Shedlin, a banker in the firm’s asset management unit. This week, he announced he is going from banking asset managers to working at one, BlackRock./p>

Comcast\'s Prime-Time Deal

Comcast has smartly ad-libbed on an already winning script. Back in 2009, the U.S. cable operator engineered a complex, multi-step deal with General Electric to buy NBCUniversal. It has now smoothly accelerated and slightly rejigged the acquisition of the 49 percent of the TV and film group it doesn’t own for $16.7 billion. With the financial side of things now sorted, Comcast’s boss, Brian Roberts, must prove he’s the right owner.

The transaction cements the chief executive’s media mogul ambitions. Mr. Roberts aranged to buy the owner of Universal Studios and CNBC after a failed hostile bid for Walt Disney. Comcast valued the original 51 percent it acquired at $13.8 billion, partly by contributing its own channels, accepting the obligation to buy half GE’s remaining stake in 2014.

Instead - perhaps betraying a touch of impatience - Comcast and G.E. have improvised. The newly negotiated purchase cost looks close to what the original mechanism would have produced, according to a Breakingviews calculator from 2009 adjusted for the earlier denouement and slightly faster growth in NBCUniversal’s operating cash flow than expected. Comcast is valuing the media enterprise at about nine times earnings before interest, taxes, depreciation and amortization, or Ebitda, assuming growth continues at a similar pace, roughly where Barclays analysts peg Disney.

NBCUniversal’s cash flow won’t fund the deal as it might have done had Comcast waited longer, but the $4 billion-plus of cash it had accumulated as of Sept. 30 will help. So too will the low interest rates at which Comcast can borrow - not to mention $2.7 billion of financing help from GE, which can now hasten its own restructuring plans.

In total, Mr. Roberts is draining essentially all the $11 billion of cash on Comcast’s year-end books to pay for the deal, and it now falls to him to demonstrate his media credentials. Early returns are good. The NBC broadcast network topped U.S. ratings last fall for the first time in a decade. Despite the pricey cost of broadcasting the Londn Olympics, the company didn’t lose money on the deal as expected. And Harry Potter has worked his magic at NBCUniversal’s theme parks. Comcast shares are up by over 70 percent - better than rivals and the broader stock market - since the first part of the deal closed in January 2011.

Even so, it isn’t clear NBCUniversal’s entertainment networks like USA will command higher fees for cable carriage the way sports-intensive channels have. Advertising revenue remains highly unpredictable, as does the film business. And Comcast’s cable peers in recent years have jettisoned media operations after shareholders fretted that value got lost within a conglomerate structure. Mr. Roberts may be putting away his engineering hat for now, but it could come in handy again some day.

Jeffrey Goldfar! b is an a! ssistant editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Regulator Explains Decision to End Flawed Foreclosure Review

A top regulator shed light Wednesday on his decision to scuttle an independent review of bank foreclosures, portraying the flawed process as a boon to outside consultants and a barren maze for homeowners.

At a luncheon speech in Washington, Thomas J. Curry, the Comptroller of the Currency, outlined the shifting stages of the independent foreclosure review, a process that began in 2011 when regulators accused banks and other loan servicers of shoddy foreclosure practices.

Mr. Curry, who took over the role several months after the review started, argued that homeowners languished without payment as the review suffered from delays. The independent consultants that banks hired to run the 14-month review, however, racked up some $2 billion in charges.

“It just doesn’t make sense forthese servicers to continue funneling money to consultants that could be better used to help distressed borrowers who have lost their homes,” according to a copy of his written remarks before the Women in Housing and Finance group.

The speech comes amid a growing outcry from lawmakers and housing advocates, who have questioned the regulatory oversight of the foreclosure review. Critics argue that regulators should never have trusted consultants to objectively evaluate banks from which they are paid huge sums.

Mr. Curry recalled a pivotal moment in November 2012 that came as he reviewed the consultants’ compensation. He detected a stunning contrast with their $2 billion payday: “we were still not ready to compensate the first borrower,” he said.

The Comptroller’s office, he said, “came to the realization that maintaining our course would significantly delay compensation withou! t appreciable benefit to the affected borrowers. I decided we needed to change direction.” The Federal Reserve, which also oversaw the review, agreed.

The regulators instead opted to strike a multi-billion dollar settlement with the nation’s largest banks, ordering them to make $3.6 billion in cash payments to homeowners. Regulators expect to dole out the first payments to homeowners in late March.

To accelerate the payments, the comptroller’s office decided to cut the consultants out altogether. Instead, according to people involved in the process, regulators are turning to the banks for help. The banks will now have to assess each loan for potential errors, which will help determine the size of the payments to homeowners.

While the process presents a potential conflict of interest, regulators say they will check the work. And banks have already agreed to pay a fixed amount to hmeowners, regardless of what they find in the loan files.

In switching gears, the Comptroller dealt a blow to consultants once central to the process. In late 2011, regulators ordered the nation’s largest banks to hire consultants to determine whether homeowners were wrongfully evicted.

PricewaterhouseCoopers signed deals with four banks, including Citigroup. Promontory scrutinized foreclosures for Wells Fargo, Bank of America and PNC. Deloitte & Touche handled JPMorgan Chase’s loans.

Mr. Curry explained that his move to halt the review “was not a decision I made lightly.” The consultants, he said, helped provide a “unique understanding of the nature of the problems with foreclosure practices.”

But the reviews were plagued with problems from the onset. Some consultants warned that they were not detecting any harm under the narrow terms that regulators set. Other consulting firms, including Promontory, farmed out some work to contract employees. They all faced questions about their objectivity, as they were paid billions of dollars by the same banks they were asked to investigate.

Mr. Curry, however, did offer some support for the consultants.

“The processes established by the consultants to complete the reviews were very thorough and in some cases involved thousands of checkpoints, which reflected the extraordinarily complex laws and rules invlved in mortgage servicing and foreclosure processing,” he said.

Even with the flawed review ending, Mr. Curry voiced hope that regulators’ actions will assuage concerns about the foreclosure process.

“It’s critical that we restore trust in this industry so that families undergoing foreclosure can have faith that they will at least be treated fairly,” he said.

ING to Cut 2,400 Jobs; Quarterly Profit Misses Estimates

PARIS â€" The ING Group, the largest Dutch bank, said Wednesday that it would cut 2,400 jobs in its retail banking business as more of its customers adopt mobile banking.

The bank, based in Amsterdam, also posted a fourth-quarter profit of 1.4 billion euros, or $1.9 billion, up 21 percent from the year-earlier as the bank booked onetime gains on asset sales. The figure missed the 1.6 billion-euro estimate that analysts surveyed by Reuters had expected.

Without the divestments, the fourth-quarter profit would have been a more modest 373 million euros, ING said.

With the announcement Wednesday, ING has announced about 7,500 job losses in just over a year, shrinking its work force by about 9 percent, said Frans Middendorff, an ING spokesman.

The bank said it was booking the costs of the latest round of restructuring in 2012, with an after-tax charge of 452 million euros. The cost-cutting measures, it said, “are essential to drive future performance, reducing annual expenses by a comined 1 billion euros by 2015.”

In a presentation to investors, the bank showed that in just five years, the number of mobile and Internet banking transactions at its Dutch retail unit had soared, growing from a level about 32 percent greater than traditional branch transactions in 2008, to more than 400 percent greater last year.

“We have made great progress in improving service and investing in IT as customers move swiftly towards mobile banking,” Jan Hommen, the ING chief executive, said in a statement. “As our business model evolves, so must our organization.”

As a result of that shift, Mr. Hommen said, the Netherlands retail banking unit will reduce its work force by about 1,400 employees by the end of 2015, saving 120 million euros a year beginning in 2016. ING Bank in Belgium will cut another 1,000 employees by 2015, “through natural attrition,” rather than layoffs, something it said would save it 150 million euros a year.

Mr. Middendorff said that there wo! uld inevitably be layoffs at the Dutch retail unit, but said it was impossible to estimate how many until the other reductions take place over the next three years.

ING’s fourth-quarter results included a total of 1.6 billion euros of one-time gains from its divestments. It booked a gain of 1.1 billion on the sale of ING Direct Canada, and another 745 million euros on the sale of Insurance Malaysia. It booked a loss of 244 million euros on the sale of ING Direct UK to Barclays, a deal that is expected to close before the end of June. It also began preparing last year for the long-delayed initial public offering of its ING U.S. insurance business.

ING was bailed out by the Dutch state after the Lehman Brothers shock of 2008; it said it had reached a deal with the European Commission to gain “more time and greater flexibility for restructuring,” even as it repaid the government 1.1 billion euros and paid down debt.

ING also noted that with the nationalization this month of SNS Reaal, it and other Dutch banks would be required next year to contribute to a special onetime levy of 1 billion euros. It said that it expected to book a charge of 300 million to 350 million euros on its share of the costs.

Switzerland to Require Banks to Hold More Capital to Offset Mortgages

LONDON - The Swiss government on Wednesday said banks would be required to hold additional capital for residential mortgages amid concerns that the country’s booming property market is overheating.

Switzerland, which already has more stringent capital rules for its banks than other European countries, said lenders would be required to hold an extra 1 percent of risk-weighted assets to make the financial system more stable in light of an “excessive rise in prices in the real estate market and exorbitant mortgage debt.” Banks have until Sept. 30 to comply.

Property values in Switzerland have been rising as investors spooked by the uncertainties of the economic crisis in the eurozone sought a more stable places for their money. Greater demand for Swiss homes have pushed up prices at a time of low interest rates and forced many buyers to take on larger mortgages. The Swiss central bank has been unable to cool the market by increasing borrowing rates because of an overvalued Swiss currency.

An index created by UBS measuring the likelihood of a Swiss property bubble was “clearly in the risk zone,” the Swiss bank wrote in a note to investors earlier this month. In the final three months of last year, house prices soared to six times the annual average Swiss household income compared to about four times in 2000, according to the bank. It called the ever rising demand for properties not intended for personal use “remarkable.”

The government said it was following a recommendation by the Swiss National Bank to increase the capital buffers. “The sustained growth in mortgage debt and rise in real estate prices of residential properties has led to imbalances which pose a significant risk to the stability of the banking sector and to that of the economy,” the government said in a statement.

Mortgage debt has been growing faster than the economy and mortgage volume in relation to income has reached “risky” levels, the government said. It added that residential property prices have gained more than what is justified by fundamental factors.

UBS and Credit Suisse, Switzerland’s biggest banks, both said earlier this month that they are working on increasing their capital buffers and that the suggested increase would not change their plans.

Comcast\'s NBCUniversal Deal

Comcast agreed on Tuesday to pay $16.7 billion to buy General Electric’s 49 percent stake in NBCUniversal, speeding up a sales process that was expected to take several more years, Amy Chozick and Brian Stelter report in The New York Times.

The acquisition, which should be completed by the end of March, highlights Comcast’s commitment to NBCUniversal’s highly profitable cable channels, theme parks and the NBC broadcast network, according to Brian Roberts, chief executive of Comcast. In addition, the growing necessity of owning television content as well as the delivery systems accelerated the decision, Mr. Roberts said. “It’s been a very smooth couple of years, and the content continues to get more valuable with new revenue streams,” he said. Comcast also said NBCUniversal would buy the NBC studios and offies at 30 Rockefeller Center and the CNBC headquarters in Englewood Cliffs, N.J., for a combined price of about $1.4 billion.

“Comcast, with a conservative, low-profile culture, had clashed with the G.E. approach, according to employees and executives in television,” Ms. Chozick and Mr. Stelter write. “Comcast took control of NBCUniversal in early 2011 by acquiring 51 percent of the media company from General Electric. The structure of the deal gave Comcast the option of buying out G.E. in a three-and-a-half to seven-year time frame. In part because of the clash in corporate cultures, television executives said, both sides were eager to accelerate the sale.”

RESISTANCE GROWS TO DELL DEAL  |  Michael S. Dell’s plan to take his company private for $24.4 billion is “quickly becoming one of the biggest deals in years to face a shareholder uprising,” DealBook’s Michael J. de la Merced writes. “The opposition to Mr. Dell’s buyout effort now includes the mutual fund giant T. Rowe Price, which on Tuesday said that it opposed the offer at its current price of $13.65 a share.”

“And Southeastern Asset Management, an investment firm, stepped up its campaign against the Dell takeover bid. The asset manager disclosed on Tuesday that it had hired D. F. King & Company, a proxy solicitation firm, in what may be the first step toward a fight against Dell’s board. Southeastern has also hired a longtime mergers lawyer, Dennis Block of Greenberg Traurig, as an outside legal adviser, according to a person briefed on the matter. It has suggested that potential tactics could include a lawsuit or an intervention by a Delaware judge.”

APPLE AND THE WAYS OF WALL STREET  | Money “makes you do things you don’t want to do,” goes the adage from the movie “Wall Street.” In the case of Apple, money is making the company and a large investor, David Einhorn of Greenlight Capital, engage in an unusual struggle, Steven M. Davidoff writes in the Deal Professor column. Mr. Einhorn has proposed that Apple issue a special security to return some of its $140 billion cash pile to shareholders. On Tuesday, Timothy D. Cook, Apple’s chief executive, said a lawsuit filed by the hedge fund manager in that effort was a “silly sideshow.”

“Yet Apple is not doing itself any favors by trying to do an end run around Mr. Einhorn,” Mr. Davidoff writes. “Despite Apple’s growing cash pile, the company’s value is shrinking. But instead of focusing on making Apple an even b! etter bus! iness, shareholders are trying to rescue their bubblelike bets with financial gimmickry, and Apple is engaging in its own gimmicks to defeat them. Even Apple can be consumed by the strange world of Wall Street.”

BANKS REVIEWING THEIR OWN FORECLOSURES  |  “Washington is seeking help from an unlikely group in its effort to distribute billions of dollars to struggling homeowners in foreclosure: the same banks accused of abusing homeowners with shoddy foreclosure practices,” Jessica Silver-Greenberg and Ben Protess report in DealBook.

“In doing so, the regulators are trying to speed the process after a flawed, independent foreclosure review delayed relief for millions of borrowers, according to people briefed on the matter. But housing advocates worry that the banks, eager to end the cotly process, could take shortcuts as they comb through loan files for errors, potentially diverting aid from the neediest homeowners. Regulators say they will check the work. And banks have already agreed to pay a fixed amount to troubled homeowners, creating another backstop.”

“According to officials involved in the process, who spoke anonymously because the matter is not public, the regulators had few alternatives.”

ON THE AGENDA  |  The Credit Suisse financial services forum continues in Miami, with Jonathan Gray, global head of real estate at the Blackstone Group, presenting at 12:15 p.m. Comcast reports earnings before ! the marke! t opens, and MetLife announces results on Wednesday evening. The House Financial Services Committee conducts a hearing at 10 a.m. on the Federal Housing Administration’s report to Congress. Steve Case, the AOL co-founder, is on CNBC at 9 a.m.

THE BILLIONAIRE TRAVEL DIARIES  |  Want to travel like a billionaire A niche travel industry that caters to the world’s ultrawealthy is standing ready, provided money is no object, Condé Nast Traveler writes. For the adventurous, there’s Calivigny Island in the Caribbean, a personal paradise belonging to a French businessman and his wife that rents for $165,000 a night. More modest accommodations can be found at the Beverly Hills Hotel, which recentlyadded two “presidential bungalows” that go for $18,150 a night each. “The word no is not part of my vocabulary because the impossible today may be probable tomorrow,” said the travel agent Jody Bear, of Bear & Bear in New York.

Mergers & Acquisitions Â'

Ryanair Indicates Regulators Will Reject Aer Lingus Deal  |  The discount European airline Ryanair said it plans to appeal should regulators block its bid for Aer Lingus. DealBook Â'

Nexen Secures U.S. Approval of Its Sale to Cnooc  |  Nexen has receive! d the las! t regulatory approval needed for its $15 billion sale to the China National Offshore Oil Corporation, after the Obama administration declared the deal free from national security concerns. DealBook Â'

Deal Speculation Surrounds Vodafone’s German Unit  |  A German magazine reported that the German unit of Vodafone was planning to buy Kabel Deutschland, according to Reuters. REUTERS

Rosneft Approves Financing for Purchase of TNK-BP Stake  | 
REUTERS

INVESTMENT BANKING Â'

Societe Generale to Restructure After 4th-Quarter Loss  |  The French bank posted a net loss of $640 million in the last three months of 2012, and announced a restructuring plan to cut costs and simplify its operations. DealBook Â'

ING Plans to Cut 2,400 Jobs  |  The Dutch financial services firm ING “reported profit that missed analysts’ estimates on restructuring expenses as it announced 1,400 more job cuts in the Netherlands and 1,000 in Belgium,” Bloomberg News reports. BLOOMBERG NEWS

A Top UBS Executive Is to Depart  |  Carsten Kengeter, former head of the investment bank of UBS, is resigning from the Swiss banking giant. DealBook Â'

Goldman’s C.E.O. Dismisses Talk of Retirement  |  “The combination of this being who I am and what I do and having absolutely no other interests makes me think this is what I’ll be doing for a while,” Lloyd C. Blankfein of Goldman Sachs told Bloomberg TV. BLOOMBERG NEWS

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Searching for Deeper Meaning in a Prominent Beard  |  “Goldman Sachs Chief Executive Lloyd Blankfein has been sporting a beard lately, which has some people asking: is he on his way out” writes Lauren Tara LaCapra in a blog post for Reuters. But a Goldman spokesman, Jake Siewert, said, “Sometimes a beard is just a beard.” REUTERS

Goldman Executive Predicts Higher Returns for the Industry  |  Harvey M. Schwartz, Goldman Sachs’s chief financial officer, said he expected the average return on equity in the banking industry would rise above 12 percent as firms scale back certain businesses, Bloomberg News reports. BLOOMBERG NEWS

For Lehmanites at Barclays, Unpleasant Memories  |  With Barclays planning to cut 3,700 more jobs, “some of the former Lehman employees at Barclays say they feel like they are back on a roller-coaster ride of uncertainty,” Quartz writes. QUARTZ

PRIVATE EQUITY Â'

Billionaire Turns to Investing in Distressed Homes  |  The billionaire B. Wayne Hughes “is buying thousands of houses to rent,” making his firm “the second-biggest owner of single-family rentals after Stephen Schwarzma’s Blackstone Group,” Bloomberg News reports. BLOOMBERG NEWS

When the Landlord Is From Wall Street  |  The New Republic looks at the trend of investment firms buying foreclosed homes to rent them out, writing, “It’s the next Wall Street gold rush.” NEW REPUBLIC

Carlyle Names Head of Government Affairs  |  Carlyle has hired Barrett Karr, majority staff director of a House committee, to lead its United States government affairs. DealBook Â'

HEDGE FUNDS Â'

Few Winners in the Herbalife Fight  |  With William A. Ackman and Daniel S. Loeb taking opposite bets regarding Herbalife, “investors in the funds, as a group, became the losers because of the way hedge fund compensation works,” Steven N. Kaplan writes in Bloomberg View. BLOOMBERG VIEW

I.P.O./OFFERINGS Â'

SeaWorld Picks N.Y.S.E. for Its Listing  |  SeaWorld Entertainment, which is backed by the Blackston Group, plans to hold its initial public offering on the New York Stock Exchange, it said on Tuesday. WALL STREET JOURNAL

VENTURE CAPITAL Â'

Silicon Valley Executives Push for Overhaul of Immigration Laws  |  The New York Times reports: “Silicon Valley executives, who have long pressed the government to provide more visas for foreign-born math and science brains, are joining forces with an array of immigration groups seeking comprehensive changes in the law. And as momentum builds in Washington for a broad revamping, the tech industry has more hope than ever that it will finally achieve its goal: the expanded access to visas t! hat it sa! ys is critical to its own continued growth and that of the economy as a whole.” NEW YORK TIMES

Music Service Takes Aim at Bigger Rival, Pandora  |  A small player in the digital music business, Slacker, is releasing an advertisement that is critical of Pandora. NEW YORK TIMES

LEGAL/REGULATORY Â'

Prospect of British Exit From European Union Is Met With Skepticism  |  The idea that Britain might be btter off outside the European Union has been embraced by Prime Minister David Cameron and some in his party, but according to opinion polls, it is “by no means widely accepted by the majority of voters,” The New York Times writes. NEW YORK TIMES

Automatically Deleted E-Mails in the SAC Case  |  Bloomberg News reports: “The federal investigation of insider trading by SAC Capital Advisors LP and its founder, Steven A. Cohen, has been hampered by a lack of extensive e-mail evidence. One reason: During the period of time at the heart of the probe, July 2008, SAC automatically deleted its e-mails.” BLOOMBERG NEWS

Swiss Banks Must Hold Additional Capital Against Real Estate  |  Bloomberg News reports: “The Swiss government ordered banks to hold additional capital as a buffer against risks posed by the country’s biggest property boom in two decades.” BLOOMBERG NEWS

Lux Capital Closes 3rd Fund at $245 Million

The venture capital firm Lux Capital said on Wednesday that it had closed its third fund at $245 million, the biggest pool of capital it has raised to date.

Lux, which focuses on investments in the energy, technology and health care industries, said it had surpassed its fund-raising target of $200 million.

The firm, founded in 2000, has invested in the likes of Kurion, a company that focuses on treating nuclear waste and was involved in the cleanup of the Fukushima nuclear plant disaster in Japan. Among its executives are Jeffrey B. Kindler, the former chief executive of Pfizer, and R. James Woolsey, a former head of the Central Intelligence Agency.

“We feel very, very fortunate,” Peter Hébert, a co-founder of Lux, told DealBook in an interview by phone.

Mr. Hébert said the firm, whose first fund was less than $10 million, has succeeded by focusing on a relatively smaller number of companies, about two dozen.

It has also benefited from being first in an investment opportunity and by claiming a set of industries that is not as crowded as the consumer Internet space that gave rise to Facebook, Groupon and an army of clones.

“The w! ord of the day is differentiation,” Mr. Hébert said. “L.P.’s are looking for firms that look unique.”

Societe Generale Reports Loss in Fourth Quarter

Paris â€" Société Générale, one of the largest French banks, on Wednesday posted a larger loss than the market had expected and said it would restructure to cut costs and simplify operations.

The bank, based in Paris, reported a fourth-quarter net loss of 476 million euros, or $640 million, compared with a year-earlier profit of 100 million euros. Analysts surveyed by Reuters had expected a net loss of about 237 million euros.

Profit was hurt by a charge of 686 million euros as the bank revalued its own debt, an accounting obligation as the market for those securities improved. It also set aside 300 million euros as a provision against legal costs, and it wrote down 380 million euros of goodwill in its investment banking business, mostly on Newedge, the brokerage in which it owns a 50 percent stake.

Without the one-time items, it said, fourth-quarter net income would have been about 537 million euros.

Under Frédéric Oudéa, its chairman and chief executive, Société Générae has been working to emerge from the financial crisis as a leaner institution. It said that between mid-2011 and the end of 2012, it disposed of 16 billion euros of loan portfolio assets from the corporate and investment banking unit, and another 19 billion euros of other assets.

The bank’s restructuring, and an improvement in sentiment in the euro zone economy, have helped to restore its market standing. After a difficult 2011 that was marred by questions about Société Générale’s exposure to Greece, the bank’s shares have rallied, gaining 49 percent over the last year.

The bank also said Wednesday that Philippe Heim would take over as chief financial officer. Mr. Heim replaces Bertrand Badre, who is leaving to take a position as managing director for finance at the World Bank. Jacques Ripoll, the bank’s asset-management chief, it said, “has decided to pursue his career outside the group.”

The new restructuring measures announced on Wednesday include building the ba! nk around three core businesses: French retail banking; international retail banking and financial services; and corporate and investment banking and private banking.

The Société Générale group employs about 160,000 employees around the world, and it was not immediately clear if the announcement of a new organization meant the bank would follow the lead of other large global institutions with a round of layoffs.

“There will be review processes to define the target organizations for each entity in the weeks to come,” the bank said. “The organization proposals will be addressed in the framework of an enhanced employee dialogue in keeping with agreements with trade unions and the procedures for consulting with worker councils.”

Mr. Oudéa said in a statement that the purpose of the changes was “to make our organization more efficient and flexible.”

Société Générale said its Tier 1 capital ratio, a measure of the bank’s ability to withstand financial shocks, stood a 10.7 percent at the end of December, up 1.65 percentage point from a year earlier. The French firm said it expected to attain a Core Tier 1 capital target under the accounting rules known as the Basel III regime of 9 percent to 9.5 percent by the end of 2013.