Review site Yelp battles extortion claims

SAN FRANCISCO — First the chefs of a small Italian restaurant got mad at online review site Yelp. Instead of trying to get better reviews, they decided to take a different approach: get terrible ones.

The campaign helped Botte Bistro get a rating of one out of five stars, as more than 1,000 reviewers left hundreds of tongue-in-cheek reviews panning the Richmond, California, eatery, said chef Michele Massimo, adding that it boosted business.

It was the latest protest among businesses who for years have complained that Yelp was extorting them by raising or dropping ratings depending on whether they advertised with the Internet's most popular review site.

Yelp has persistently denied those claims on its website, in court and at every opportunity when the question is put publicly to the company.

"It wouldn't pass the straight face test," Yelp spokesman Vince Sullitto said of the extortion claims.

Sullitto said Yelp attracts millions of viewers and sells advertising to 80,000 businesses because of the site's credibility with consumers. Sullitto said many of the company's critics are businesses that have received bad reviews.

Last month, the 9th U.S. Circuit Court of Appeals tossed out a lawsuit filed by several businesses claiming Yelp extorted them by removing positive reviews after advertising sales pitches were turned down.

The court is one rung below the U.S. Supreme Court and the ruling could have been a definitive one for Yelp.

Instead, it served to fuel the company's critics because the court said that, even if Yelp did manipulate reviews to penalize businesses, the practice would not constitute extortion.

The court said it found no evidence of manipulation and that it was ruling narrowly only on the question of extortion. Nonetheless, the company's critics said the ruling supported their claims.

Even before the 9th Circuit ruling, Yelp was battling two lawsuits filed by company investors who make similar extortion claims.

The suits, filed in San Francisco federal court over the summer, allege that the company's stock traded at artificially inflated prices because the "company tried to sell services designed to suppress negative reviews or make them go away" and then lied about it.

The company has yet to formally respond to the lawsuits in court, but says it will fight these legal actions as well.

Last year, a lawyer serving as a small-claims judge in San Diego likened Yelp to a "modern-day version of the Mafia going to stores and saying, 'You want to not be bothered? You want to not have incidents in your store? Pay us protection money.'"

The judge, Peter Doft, made the comments when he ordered Yelp to pay San Diego lawyer Julian McMillan $2,700 over a contract dispute involving advertising on Yelp.

The award was later overturned by a higher court, which ruled that McMillan's dispute with Yelp should be decided by an arbitrator instead of a court. McMillan didn't pursue his claim.

But Yelp did file a lawsuit against McMillan, alleging he and his employees submitted fake Yelp reviews of his law practice. McMillan denies the charges and alleges that Yelp sued him because of his small-claims court victory.

The allegations are so widespread and have persisted for so long that the company asks on its website: "Does Yelp extort small businesses?" The company answers no.

Yelp has had a complicated relationship with merchants, restaurateurs and other small businesses on which the company depends on for advertising revenue. To attract advertising, Yelp needs to maintain a popular and credible site.

To do this, Yelp says, its uses an algorithm to weed out fake reviews submitted by business owners, relatives and friends that is often misunderstood. The automated removal programs accidentally erase many positive reviews written by legitimate customers.

Yelp concedes that removing legitimate reviews is not ideal, but argues that's the price it pays for its credibility. Furthermore, Yelp keeps details of its algorithm under wraps so its review system can't be easily exploited and gamed.

That secrecy also breeds suspicion.

"We don't know who is leaving the reviews, and we don't think it's fair," said Massimo, the chef. "You are so vulnerable."

Massimo said he and his partner decided to launch their novel protest for a one-star rating after receiving several aggressive sales calls from Yelp that they perceived to be veiled threats. The ploy worked and business continues to be brisk, he said.

"It was the best marketing idea I've ever had," Massimo said. "Thanks, Yelp."

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India's Toonz to acquire Spanish animator Imira

HONG KONG - Indian animation group Toonz Entertainment has announced plans to acquire Spain's Imira Entertainment.

It is understood that Toonz will take 100% control of the Spanish firm which is both producer and distributor.

Although in the near term Imira will operate as a separate business, it is understood that Toonz and Imira will handle share distribution tasks, with Imira representing Toonz Animation content in Europe, the U.S., Latin America and Africa, and Toonz playing to its strengths in the Asia Pacific region.

Toonz may also become a co-producer of some Imira titles.

Imira is best known for children's TV shows including "Lucky Fred," and "Sandra the Fairytale Detective."

"Adding Imira Entertainment to the Toonz Group brings significant complementary services and areas of expertise to our offering," said Toonz CEO, P Jayakumar.

"Toonz Animation has a world-class pedigree in television and film. It is an exciting home for Imira Entertainment and a natural fit," said Imira CEO Sergi Reitg.

© 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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Fiat Chrysler bounce around in 1st day on NYSE

DETROIT — Shares of Fiat Chrysler Automobiles jumped as the market opened Monday, but fell in the morning and were nearly flat at midday after making their debut on the New York Stock Exchange.

The newly merged company's stock, traded under the symbol FCAU, opened at $9 and rose quickly to $9.55 before falling to $8.91, or 1 percent in morning trading. By midday, however, they recovered to $8.99, down just a penny.

The company began trading in New York to raise its profile and give U.S. investors a chance to own part of the Chrysler comeback story. The stock will also trade in Milan, Italy.

"FCA's listing marks the hard-won arrival at a destination," Sergio Marchionne, CEO of both companies, said in a statement. He and Chairman John Elkann are scheduled to ring the closing bell at the NYSE to commemorate the first day of trading. "Today marks the beginning of our journey as one global automaker, one FCA," the statement said.

Chrysler is now profitable, driven by a rebound in U.S. sales, five years after a trip through bankruptcy and a takeover by Fiat orchestrated by the U.S. government. But that performance is offset by Fiat's struggles in Europe. Fiat Chrysler is the seventh-largest auto company in the world, and Marchionne wanted the merger to consolidate costs and technology to compete with larger global automakers.

Fiat Chrysler has an ambitious goal to grow sales 60 percent to more than 7 million cars and trucks by 2018. Combined, the companies sold 4.4 million cars and trucks last year, compared with 6.3 million for Detroit rival Ford. Toyota was the global leader with sales of 9.98 million vehicles.

Only a limited number of shares will go on sale Monday, mainly from Italian stockholders. The company released details of a new share structure Monday, swapping Fiat SpA shares one-for-one for stock in the new company. The company also holds 35 million shares and could sell them later in the year after Marchionne and Chrysler Chief Financial Officer Richard Palmer do a "road show" explaining plans for the merged automaker. Additional shares also could be offered to raise capital.

In an interview, Morningstar senior analyst Richard Hilgert said Fiat Chrysler faces macroeconomic troubles in Europe and South America, its two largest markets outside the U.S. Also, earnings likely will look smaller as the company switches from international to U.S. accounting standards, he said.

"Fiat Chrysler's stock is not for the faint of heart," said in a note to investors.

The stock's debut in New York comes at an inopportune time. The market, and auto stocks in particular, took hits last week, with both General Motors Co. and Ford Motor Co. shares hitting 52-week lows.

The combined Fiat Chrysler is counting on expanding sales at Jeep, Alfa-Romeo and Maserati and a revival of the Chrysler brand to place it firmly in the top ranks of global automakers.

Fiat owned 58.5 percent of Chrysler last year, and the two companies were combined in January when it bought the rest from a trust fund that pays health care bills for union retirees.

Marchionne, 62, who has led Chrysler's restructuring and combination with Fiat, said last week that he plans to stay with the company through 2018.

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Warner Bros. launches VOD service for new movies in Korea

SEOUL - Warner Bros. Korea is to launch a VOD service exclusively concentrating on films that have not had a theatrical release in the country.

The service will launch on all three of the major IPTV platforms in Korea, with "Blended" as the first title available on Oct. 16, followed by "Tammy" and Clint Eastwood's "Jersey Boys."

"This will be a chance for Korean audiences to download films that are not being given the opportunity to be released at theaters and it will also serve as an important distribution channel for films in a market which is seeing one of the fastest growth rate in the IPTV field," said Kang Myeong-ku, head of Digital Distribution, Warner Bros. Korea.

Nara Kim of Warner Bros. Korea's Digital Distribution Team told Variety that the service will begin with Warner titles only, but that it may extend to include movies from other major companies, notably Sony.

IPTV is growing rapidly in Korea, with the three major players -- KT, Olleh TV and LG U+tv - now counting over 10 million subscribers and industry watchers forecasting that they will overtake conventional cable next year.

Theatrical releasing dominates the economic cycle for movies in Korea, and the value of the online market is currently estimated to be only a quarter of the theatrical box office. But that represents a significant comeback for the ancillary market after the almost complete elimination of the DVD business in 2009.

Film buying on the part of Korean distributors at last week's Busan film market was driven in large measure by the expansion of the ancillary market.

© 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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Report: Starz to launch streaming service in international markets

CANNES - U.S. pay TV outfit Starz is to launch in international markets with the creation of the international Starz Play service, according to a press report.

It has inked a pact with Peter Ekelund's Swedish media group Parsifal Entertainment, which helped set up HBO's streaming service in the Nordic countries, to create Starz Play, an over-the-top video streaming service that will launch in the Middle East, Africa, Asia and Latin America, the Financial Times reported Sunday.

The deal, which the company will unveil on Monday at the Mipcom television market in Cannes, comes as Netflix expands rapidly in international markets.

"What we focused on is how quickly and dramatically HBO succeeded with its Nordic program," Chris Albrecht, Starz chief executive, told the FT.

"The amount of money and capital investment needed to build these new platforms is a fraction of what it is to build a linear (television) channel," he said. "This gives us an international business that has real potential."

Parsifal has invested alongside Starz in the new service, as well as unnamed financial institutions.

© 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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GM ignition switch deaths rise to 27

DETROIT — At least 27 people have died and 25 people have been seriously injured in crashes involving General Motors cars with defective ignition switches.

Attorney Kenneth Feinberg, who was hired by GM to compensate victims, updated the totals Monday.

Feinberg says he has received 178 death claims since August. Of those, 27 have been deemed eligible for compensation payments.

Twenty-five of the 1,193 injury claimants have also received compensation offers.

Feinberg has made 31 settlement offers, and 21 have been accepted thus far. None of the offers has been rejected, said Camille Biros, deputy administrator of the fund for Feinberg's firm.

GM knew about faulty ignition switches in Chevrolet Cobalts and other small cars for more than a decade but didn't recall them until February of this year. The switches can slip out of the "on" position, which causes the cars to stall, knocks out power steering and turns off the air bags.

Feinberg will accept claims until Dec. 31.

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Time Inc. magazine employees turn down contract proposal

More than 200 union-represented employees of Time Inc. have turned down the conglomerate's final contract offer following months of negotiations between the Newspaper Guild of New York and the company.

"Time Inc.'s proposal to hollow out its own company was voted down by its employees in a nearly unanimous vote because it is simply not acceptable," said Newspaper Guild of New York President Bill O'Meara. "Management wants the ability to send 160 editorial jobs overseas, which would be a massive blow to some of the nation's most important and respected magazines."

The guild said Monday that the rejected "last, best and final" offer would reduce benefits and allow management at Time, People, Sports Illustrated, Fortune and Money to subcontract up to 60 full-time regular positions and all of the current 100 temporary positions - more than half of the journalists at the five magazines.

The guild said it would mount a vigorous campaign against the proposals, including pursing its legal options at the National Labor Relations Board.

Time Inc. was spun off from parent company Time Warner Inc. on June 6. Representatives were not immediately available for comment.

© 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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Canadian Ebola vaccine to begin testing

TORONTO — An experimental Canadian-made Ebola vaccine that has shown promise in tests on primates is beginning clinical trials on humans in the U.S.

The vaccine will be tested on healthy individuals Monday to see how well it works, whether there are side effects and what the proper dosage is, Health Minister Rona Ambrose said.

"The Canadian vaccine provides great hope and promise because it has shown to be 100 percent effective in preventing the spread of the Ebola virus when tested on animals," she said.

Studies in primates have shown this vaccine works both to prevent infection when given before exposure, and to increase survival chances when given quickly after exposure.

A small U.S. company called NewLink Genetics holds the license for the vaccine and the trials are set to begin in a lab in Maryland. Ambrose said the results are expected in December.

NewLink said earlier this month that at least five clinical trials involving the vaccine, known as VSV-EBOV, would soon be underway in the United States, Germany, Switzerland and in an unnamed African country that is not battling Ebola.

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Ford hiring 850 workers for new truck

DEARBORN, Mich. — Ford is hiring 850 workers to help build its new F-150 pickup truck.

The company says 500 of the workers will go to the Dearborn Truck plant, where the F-150 is assembled. Three hundred workers will go to the Dearborn Stamping plant and 50 workers will go to Dearborn Diversified, which makes axles and other parts.

With the added hiring, Ford will have nearly 5,000 hourly workers at the complex near its Dearborn headquarters.

Ford recently completed a $359 million renovation of the Dearborn Truck plant to prepare for its new aluminum-clad F-150, which is scheduled to go on sale by the end of this year.

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Nobel to Frenchman for work on industry regulation

STOCKHOLM — Frenchman Jean Tirole won the Nobel prize for economics Monday for finding ways to encourage better products and competitive prices in industries dominated by a few companies.

Tirole's work is credited with helping shape the deregulation of industries in developed economies in the 1980s and 1990s. But he has also called for stronger oversight of banks in the wake of the global financial crisis.

"I was incredibly surprised at the honor, and it took me half an hour to recoup" from the Nobel committee's call, Tirole, 61, said in an interview with the website Nobelprize.org

Tirole, who works at the Toulouse School of Economics in France and has a doctorate from Massachusetts Institute of Technology, is the third Frenchman to win the $1.1 million Nobel Memorial Prize in Economic Sciences, which has been dominated by U.S. economists. This is the first year since 1999 that an American has not been one of the winners.

Tirole cannot be easily categorized as pro- or anti-regulation. He agrees with free-market advocates that "because firms know more than regulators, regulation is necessarily going to be imperfect," said Harvard University economist Eric Maskin, who taught Tirole at MIT and who won a Nobel prize himself in 2007. "But that doesn't mean there shouldn't be regulation. You have to be very careful so you don't do more harm than good."

At a news conference Monday, Tirole said: "The market needs a strong state to function normally."

Left unregulated, companies that have few competitors can refuse to innovate and can charge unnecessarily high prices. But attempts to regulate them often fail. Companies grow close to the government agencies that are supposed to supervise them and find ways to use regulations to keep out competitors.

Studying specific markets, including telecommunications and finance, Tirole devised rules meant to align companies' interests with those of consumers, nudging producers into providing better products and lower prices.

"His contribution is that he has given us a whole toolbox," said Torsten Persson of the prize committee. "More than that, he has given us an instruction manual for what tool to use in what market ... Politicians would be stupid not to take his policy advice."

They haven't always listened.

Joshua Gans, management professor at the University of Toronto, said American consumers pay unnecessarily high prices for cable TV and Internet access because U.S. regulators didn't follow Tirole's advice: He called for requiring cable and phone companies to sell competitors access to "the last mile" of cable connecting homes to telecommunications networks. Instead, giants such as Comcast and Time Warner now control the last mile.

To reach a home, a potential competitor has to go to the expense of installing its own cable. That limits competition and allows existing telecom providers to charge higher prices.

Tirole is the second French economist to make headlines this year. Thomas Piketty gained fame with a recent best-seller, "Capital in the 21st Century," using 300 years of economic data to argue that the gap between rich and poor will only get worse. The book is based on research he worked on with his countryman Emmanuel Saez.

The economics prize was also the second Nobel award captured by Frenchmen this year, with the literature prize last week going to Patrick Modiano.

"After Patrick Modiano, another Frenchman in the firmament. Congratulations to Jean Tirole. A thumb in the eye for french bashing," French Prime Minister Manuel Valls tweeted.

Monday's prize completes the 2014 Nobel Prize announcements.

In prizes awarded last week, Taliban attack survivor Malala Yousafzai, 17, became the youngest Nobel winner ever as she and Kailash Satyarthi of India won the peace prize for fighting for children's rights. Modiano won the literature prize for his lifelong study of the Nazi occupation and its effect on France.

U.S. researchers Eric Betzig and William Moerner and Stefan Hell of Germany shared the chemistry prize for finding ways to make microscopes more powerful than previously thought possible.

Isamu Akasaki and Hiroshi Amano of Japan and Japanese-born U.S. scientist Shuji Nakamura won the physics prize for the invention of blue light-emitting diodes used in mobile phones, computers and TVs.

U.S.-British scientist John O'Keefe split the Nobel Prize in medicine with Norwegian couple May-Britt Moser and Edvard Moser for breakthroughs in brain cell research that could pave the way for a better understanding of diseases like Alzheimer's.

The awards will be presented on Dec. 10, the anniversary of prize founder Alfred Nobel's death in 1896.

Even though the economics award is not an original Nobel Prize — it was added in 1968 by Sweden's central bank — it is presented with the others and carries the same prize money.

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Wiseman reported from Washington. Lori Hinnant in Paris contributed to this report.

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