Finance Matters

Archive for March 8th, 2010

On Bloomberg, Vincent Deluard of TrimTabs has the latest on the ho-hum hedge fund flows seen this year.

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• Fund Flows Expose The World’s New Safe Havens
• Gold ETF Fund Flows Quadrupled In November
• Global Fund Flows Sputter

Newser’s Michael Wolff took a little swipe at CNBC media and entertainment reporter Julia Boorstin this morning.

A reader alerted us to Wolff’s appearance on Squawk on the Street to discuss Disney’s battle with Cablevision over carrier fees.

She says the settlements mean media companies will be able to look for higher fees from other cable providers. “It sets a stage for other negotiations down the line,” Boorstin said.

“These negotiations are going to go on but you have to look at a broader picture here, which you seldom do,” Wolff said.

Julia’s jaw dropped and she seemed at first shocked, then annoyed at Wolff’s statement.

Wolff explained that consumers are beginning to think “beyond the box,” which means cablers will lose subscribers and content providers could lose audience members and have to think about other distribution platforms for their content.

Watch the clip below, with Wolff’s comment about 40 seconds in the video:

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• Shady CNBC Advertiser Attacks Us…And Still Seems As Scammy As Ever
• CNBC REALLY Wants You To Watch Its Special On Boomers Hosted By Tom Brokaw Tonight
• Carol Bartz Shoots A Subtle Dig At Facebook On CNBC, Asks "What’s Their Revenue?"

Big thanks to Slate for answering a question that’s certainly on the mind of a lot of folks: can California actually go bankrupt?

Long story short: Yes.

Here’s the nut of how it works.

Say the state can’t make its debt payments, and no one will lend it any more money. In that case, the federal government can step in and put the state into receivership. This would involve the assignment of an accountant to manage the state’s debt, overseen by a judge. It would be a lot like bankruptcy, except instead of following a structured set of steps—informing creditors, appointing creditors’ committees, a 120-day window to file a plan, etc.—a receiver has the authority to force creditors to renegotiate loans in a speedy fashion. However, the accountant in charge would not have the power to make decisions about the state’s budget, such as which programs needed to be cut and which taxes had to be raised. (No state has ever gone into receivership.)

Don’t miss: The 10 debt-laden states quickly becoming the next California >

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• Paterson: If NY Can’t Figure Out A Way To Close Its $8.2 Billion Budget, We’re Looking At A Depression
• 10 Debt-Laden States Quickly Becoming The Next California
• Here’s What You Need To Know About The Greece-Like Riots Exploding In California

Weil Gotshal’s bankruptcy practice had nothing short of a monster 2009 — they handled the General Motors bankruptcy and reorganization and continue to bill huge hours to the Lehman and Washington Mutual bankruptcies. Even so, they showed just a tiny uptick in gross revenue and a small decrease in revenue per lawyer.

These end-of-year 2009 numbers say a lot of what it takes to keep a firm up and running — if certain practices struggle, other have to kill themselves to keep things afloat.

The 2009 numbers, from Am Law:

Gross revenue: up .18%, from $$1,230,801,620 in 2008 to $1,233,054,282 in 2009

Revenue per lawyers: down 1.64% from $1,034,287 in 2008 to $1,017,372 in 2009

Weil is a firm “with diverse practice groups,” firm executive partner Barry Wolf told Am Law. “And, while BFR [business finance & restructuring] is a phenomenal practice of ours and it drives a lot, it’s 100 lawyers out of 1,250, so we clearly feel the impact in certain of our other practices.” 

Large firm like to be large just for this reason — when corporate groups are struggling, litigation and bankruptcy are usually huge. This economic collapse was a little different, in that it involved huge players who are not usually as impacted by a downturn and, for reasons everyone is still trying to pinpoint exactly, it wasn’t a huge litigation boom like most downturns are.

Wolf’s comments to Am Law also highlighted another issue firms deal with when trying to keep their heads above water — making sure they get paid. Weil has not yet collected some of those big, high-profile bankruptcy dollars. 2009 might be over, but they are still hoping to see some money out of it.

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• Number Of The Day: Weil Gotshal Has Billed Lehman $296,631 Per Day Since Bankruptcy
• Weil’s Great Year Means "Distinguished" Bonuses For Some Associates
• 10 Law Firms That Are Loving The Financial Crisis

New York’s defiant Governor Paterson starkly laid out the stakes for the state, as it seeks to solve its budgetary woes.

Crain’s:

During a town hall meeting at Brooklyn Borough Hall, Mr. Paterson made scant reference to his precarious political position during an hourlong question-and-answer session before a largely friendly audience that greeted him with a standing ovation. He instead focused on the state’s beleaguered budget, going so far as to predict that New York could fall into a depression if drastic steps to control spending were not taken soon.

“The reality is that this is where New York state can move this year if we don’t act, and act now,” he said. “What I came here to tell you today is that we are crossing that Rubicon between recession and something else far worse, if my colleagues in the legislature and I can’t close a $9.2 billion deficit.”

Read the rest at Crain’s >

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• The Way We Live Now: Schools Move To Four Day Week To Combat Budget Crises
• No School Today In California!
• 10 Debt-Laden States Quickly Becoming The Next California