Insuring the Insurers

The Treasury Department will open up its checkbook for another teetering segment of the financial-services sector, the insurance industry, the Wall Street Journal reports this morning in an exclusive. The announcement to provide bailout funds for insurers under the TARP program could come any day now, a bit of welcome relief for the battered sector. Just how bad have things been for the insurers? "Shares of life insurers have fallen more than 40% this year. Their troubles led to a string of rating-agency downgrades that, in a vicious cycle, made it more difficult for some insurers to raise funds," the newspaper writes.

Bloomberg reports there is already a lengthening queue of hobbled insurers seeking federal aid. "Life insurers including Prudential Financial Inc. and Principal Financial Group Inc. are seeking access to the $700 billion U.S. program after the swoon in financial markets squeezed profit and sliced the value of their holdings that back policies. Some applications were filed as early as November," Bloomberg writes. For those keeping score, insurers would be the third industry to be added to the TARP plan after banks and automakers.

The New York Times leads off its business coverage today with an article that may, at first glance, appear self-serving. What will it take for consumers to begin paying for news online? the newspaper asks. After all, as the headline ponders, we already pay for cable, music, and extra baggage when we fly; why not online news? The best minds at Hearst Newspapers, the New York Times, and Time Inc. are already hard at work devising "possible Internet fees," the newspaper writes. Battered by declining advertising revenues, news chiefs are talking tough that the free-lunch days are coming to a swift end. Even Rupert Murdoch, "who once vowed to make The Wall Street Journal’s Web site free, is now an evangelist for charging readers," the newspaper writes, quoting him as telling a cable industry conference last week, "People reading news for free on the Web, that’s got to change." The NYT's Bill Keller says, "We’re looking, of course, at ways to extract payments from the consumers of our news—micro-payments, subscriptions, memberships, licensing, even voluntary donations." The article does mention the fact the NYT has already tried, and abandoned, charging for premium content.

At the center of the free-versus-pay debate lies, of course, Google. And its relationship with publishers is still fraught with tension. On Tuesday, Google CEO Eric Schmidt gave the closing speech at the annual meeting of the Newspaper Association of America in San Diego, making nice with the publishers. The NYT, in a separate article, says the tone was constructive, polite even. "Industry executives ... only briefly touched upon a perennially sore point: whether the use of headlines and snippets of newspaper stories on Google News is 'fair use' under copyright law or a misappropriation of newspaper content." It left one spectator baffled. "I was surprised that the publishers really let Google off the hook,” Jim Chisholm, a consultant who advises newspaper companies told the NYT. "While Google News generates a lot of audience, ultimately, the question is going to be who is going to make the money out of that: Google or the publishers." Still, Schmidt managed to get some shots in during the keynote speech, saying if newspapers are to survive they "will have to get used to the idea that they are not just generators of trusted, professional content, but also aggregators of the new kinds of content the Web has enabled," the Los Angeles Times writes.

Wild Turkey fans, this next one is for you. French drinks group Pernod Ricard is defying the market gloom. According to the Financial Times, Pernod is "expected to announce a €1 bn ($1.3bn) rights issue and a deal to sell its Wild Turkey bourbon brand." Wild Turkey is expected to net Pernod $575 million. That's one expensive round of drinks! The expected buyer is Italy's Gruppo Campari, the newspaper writes, noting it has amassed about 600 million euros to spend on acquisitions. Sure enough, in an article just breaking early this morning, the WSJ confirms the Pernod sale of Wild Turkey to Campari. While it continues to shed "non core" brands, Pernod is expected to hold on to Chivas Regal scotch and Beefeater gin, the WSJ writes.

Now to a less-inviting brown liquid. The WSJ reports that pension funds are growing restless about a pending legal decision pitting Chevron against thousands of indigenous people living in the Ecuadoran jungle. The trouble lies with Texaco, a unit Chevron bought in 2001 for roughly $30 billion. Texaco stands accused of polluting "waterways and wells across a vast area of Ecuador by dumping billions of gallons of oil waste into leaky pits during 20 years of operations there," the newspaper recaps. If found guilty, the oil giant could face $27 billion in damages, a fee that would dwarf what Exxon had to pay to clean up the Valdez spill in 1989. Now pension funds holding $1 billion in Chevron stock are speaking out about the case, objections Chevron has tried to keep off the agenda at its annual meeting in May. It's not just the enormous fees the funds find hard to swallow; turns out the lead U.S. plaintiffs' attorney, Steven Donziger, has a powerful friend in Washington, President Obama, the newspaper reports. The NYT, too, goes after oil giants today, saying they are proving to be a stubborn opposition to President Obama's green initiatives. Unconvinced the $150 billion "clean-energy future" plan announced by President Obama will work, oil companies "are staying on the sidelines, balking at investing in new technologies favored by the president, or even straying from commitments they had already made," the newspaper writes.

And, finally, you can add the CEO of Goldman Sachs to the growing opposition to out-of-whack executive pay. According to the Los Angeles Times, Goldman CEO Lloyd Blankfein declared on Tuesday that the financial industry needs a "renewal of common sense," and that includes "pay standards to 'discourage selfish behavior, including excessive risk-taking.' " Blankfein favors the less-liquid stock-based compensation for a job well done. And, he'd like to see firms "claw back" previously paid bonuses if risky bets turn out to generate losses for the company.