In gun debate, video game industry defends itself






WASHINGTON (AP) — The video game industry, blamed by some for fostering a culture of violence, defended its practices Friday at a White House meeting exploring how to prevent horrific shootings like the recent Connecticut elementary school massacre.


Vice President Joe Biden, wrapping up three days of wide-ranging talks on gun violence prevention, said the meeting was an effort to understand whether the U.S. was undergoing a “coarsening of our culture.”






“I come to this meeting with no judgment. You all know the judgments other people have made,” Biden said at the opening of a two-hour discussion. “We’re looking for help.”


The gaming industry says that violent crime, particularly among the young, has fallen since the early 1990s while video games have increased in popularity.


There are conflicting studies on the impact of video games and other screen violence. Some conclude that video games can desensitize people to real-world violence or temporarily quiet part of the brain that governs impulse control. Other studies have concluded there is no lasting effect.


Cheryl Olson, a participant in Biden’s meeting and a researcher of the effect of violent video games, said there was concern among industry representatives that they would be made into a scapegoat in the wake of the Connecticut shooting.


“The vice president made clear that he did not want to do that,” Olson said.


Biden is expected to suggest ways to address violence in video games, movies and on television when he sends President Barack Obama a package of recommendations for curbing gun violence Tuesday. The proposals are expected to include calls for universal background checks and bans on assault weapons and high-capacity ammunition magazines.


Obama appointed Biden to lead a gun violence task force after last month’s shooting at a Newtown, Conn., elementary school that left 20 children and six educators dead.


Gun-safety activists were coalescing around expanded background checks as a key goal for the vice president’s task force. Some advocates said it may be more politically realistic — and even more effective as policy — than reinstating a ban on assault weapons.


The Brady Campaign to Prevent Gun Violence said some 40 percent of gun sales happen with no background checks, such as at gun shows and by private sellers over the Internet or through classified ads.


“Our top policy priority is closing the massive hole in the background check system,” the group said.


While not backing off support for an assault weapons ban, some advocates said there could be broader political support for increasing background checks, in part because that could actually increase business for retailers and licensed gun dealers who have access to the federal background check system.


“The truth is that an assault weapons ban is a very important part of the solution — and it is also much tougher to pass,” said Mark Glaze, director of Mayors Against Illegal Guns.


Restrictions on high-capacity ammunition magazines are also seen by some as an easier lift politically than banning assault weapons.


The National Rifle Association adamantly opposes universal background checks, as well as bans on assault weapons and high-capacity magazines — all measures that would require congressional approval. The NRA and other pro-gun groups contend that a culture that glamorizes violence bears more responsibility for mass shootings than access to a wide range of weapons and ammunition.


In a 2009 report, the American Academy of Pediatrics declared, “The evidence is now clear and convincing: Media violence is one of the causal factors of real-life violence and aggression.”


The report focused on all types of media violence. But for video games in particular, the pediatricians cited studies that found high exposure to violent ones increased physical aggression at least in the short term, and warned that they allow people to rehearse violent acts. On the other hand, it said friendly video games could promote good behavior.


A wide spectrum of the video game industry was represented at the meeting with the vice president, including the makers of violent war video games like “Call of Duty” and “Medal of Honor” and a representative from the Entertainment Software Ratings Board, which sets age ratings that on every video game package released in the United States.


The vice president met Thursday with representatives from the entertainment industry, including Motion Picture Association of America and the National Cable & Telecommunications Association. In a joint statement after the meeting, a half-dozen said they “look forward to doing our part to seek meaningful solutions” but offered no specifics.


Biden, hinting at other possible recommendations to the president, said he is interested in technology that would keep a gun from being fired by anyone other than the person who bought it. He said such technology may have curtailed what happened last month in Connecticut, where the shooter used guns purchased by his mother.


The vice president has also discussed making gun trafficking a felony, a step Obama can take through executive action. And he is expected to make recommendations for improving mental health care and school safety.


“We know this is a complex problem,” Biden said. “We know there’s no single answer.”


The president plans to push for the new measures in his State of the Union address, scheduled for Feb. 12.


___


Associated Press writers Lauran Neergaard and Darlene Superville contributed to this report.


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Britney Spears and fiance end yearlong engagement


LOS ANGELES (AP) — Britney Spears announced Friday that she has ended her yearlong engagement, capping a week of changes that included her leaving "The X Factor" and promising fans she was returning her focus to music.


Within hours of confirming her departure from the Fox reality series, Spears also announced that her relationship with talent agent Jason Trawick had ended.


"Jason and I have decided to call off our engagement," Spears said in the statement. "I'll always adore him and we will remain great friends."


Spears' publicist Jeff Raymond said the breakup was a difficult decision made by "two mature adults."


"I love and cherish her and her boys, and we will be close forever," Trawick said in a joint statement that was first reported by People magazine.


Trawick also resigned his role Friday as a Spears' co-conservator, with Superior Court Judge Reva Goetz approving his departure from the case.


Spears and Trawick got engaged in December 2011 and he was added as her co-conservator in April.


Spears, 31, has been under a court-supervised conservatorship since February 2008, with her father and another co-conservator, Andrew Wallet, having control over numerous aspects of her personal life. The case was opened after several incidents of erratic behavior by the pop singer and a pair of hospitalizations, but Spears has recovered and she appeared weekly on "X Factor."


She said in a statement that judging young talent made her miss performing. "I can't wait to get back out there and do what I love most," she said in a statement.


Her father Jamie Spears met with Goetz for about an hour on Friday but left before a hearing where Trawick's resignation was announced.


Trawick has served as Spears' agent and the pair started dating in 2009.


Trawick did not have authority over Spears' finances, which have rebounded since her public meltdown. Goetz recently reviewed and approved of an accounting that showed Spears ended 2010 with more than $27.5 million in assets, including nearly $15 million in cash.


Attorneys handling the case are expected to file updated financial statements in the coming months.


___


Anthony McCartney can be reached at http://twitter.com/mccartneyAP .


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Makers of Violent Video Games Marshal Support to Fend Off Regulation





WASHINGTON — With the Newtown, Conn., massacre spurring concern over violent video games, makers of popular games like Call of Duty and Mortal Kombat are rallying Congressional support to try to fend off their biggest regulatory threat in two decades.







Alex Wong/Getty Images

Vice President Joseph R. Biden Jr. meeting Friday with video game industry executives, a response to last month's massacre.







The $60 billion industry is facing intense political pressure from an unlikely alliance of critics who say that violent imagery in video games has contributed to a culture of violence. Vice President Joseph R. Biden Jr. met with industry executives on Friday to discuss the concerns, highlighting the issue’s prominence.


No clear link has emerged between the Connecticut rampage and the gunman Adam Lanza’s interest in video games. Even so, the industry’s detractors want to see a federal study on the impact of violent gaming, as well as cigarette-style warning labels and other measures to curb the games’ graphic imagery.


“Connecticut has changed things,” Representative Frank R. Wolf, a Virginia Republican and a frequent critic of what he terms the shocking violence of games, said in an interview. “I don’t know what we’re going to do, but we’re going to do something.”


Gun laws have been the Obama administration’s central focus in considering responses to the shootings. But a violent media culture is being scrutinized, too, alongside mental health laws and policies.


“The stool has three legs, and this is one of them,” Mr. Wolf said of violent video games.


Studies on the impact of gaming violence offer conflicting evidence. But science aside, public rhetoric has clearly shifted since the shootings, with politicians and even the National Rifle Association — normally a fan of shooting games — quick to blame video games and Hollywood movies for inuring children to violence.


“I don’t let games like Call of Duty in my house,” Gov. Chris Christie of New Jersey said this week on MSNBC. “You cannot tell me that a kid sitting in a basement for hours playing Call of Duty and killing people over and over and over again does not desensitize that child to the real-life effects of violence.”


Residents in Southington, Conn., 30 miles northeast of Newtown, went so far as to organize a rally to destroy violent games. (The event was canceled this week.) Mr. Biden, meeting with some of the industry’s biggest manufacturers and retailers, withheld judgment on whether graphic games fuel violence. But he added quickly, “You all know the judgment other people have made.”


Industry executives are steeling for a political battle, and they have strong support from Congress as well as from the courts.


Industry representatives have already spoken with more than a dozen lawmakers’ offices since the shootings, urging them to resist threatened regulations. They say video games are a harmless, legally protected diversion already well regulated by the industry itself through ratings that restricting some games to “mature” audiences.


With game makers on the defensive, they have begun pulling together scientific research, legal opinions and marketing studies to make their case to federal officials.


“This has been litigated all the way to the Supreme Court,” Michael Gallagher, chief executive of the industry’s main lobbying arm, said in an interview, referring to a 2011 ruling that rejected a California ban on selling violent games to minors on First Amendment grounds.


Twenty years ago, with graphic video games still a nascent technology, manufacturers faced similar threats of a crackdown over violent games. Even Captain Kangaroo — Bob Keeshan — lobbied for stricter oversight. The industry, heading off government action, responded at that time by creating the ratings labels, similar to movie ratings, that are ubiquitous on store shelves today.


This time, with a more formidable presence in Washington, the industry is not so willing to discuss voluntary concessions.


Game makers have spent more than $20 million since 2008 on federal lobbying, and millions more on campaign donations.


Mr. Gallagher’s group, the Entertainment Software Association, has five outside lobbying firms to push its interests in Washington. And the industry has enjoyed not only a hands-off approach from Congress, which has rejected past efforts to toughen regulations, but also tax breaks that have spurred sharp growth.


Game makers even have their own bipartisan Congressional caucus, with 39 lawmakers joining to keep the industry competitive.


Michael D. Shear contributed reporting.



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Cold winter puts a chill on China's economy















































BEIJING — China's coldest winter in nearly three decades sent vegetable prices soaring and drove inflation to a seven-month high in December.


Consumer prices rose 2.5% from December a year earlier, China's National Bureau of Statistics said Friday, up from 2% year-over-year growth in November.


A key reason for concern is that rising inflation could restrict China's ability to stimulate growth if its tepid recovery loses momentum.








Higher food prices also worry the Chinese government because discontent rises when poorer people have to pay a bigger share of their income on food. Chinese households spend more than 20% of their earnings on food, or more than three times as much as U.S. households spend, according to the American Enterprise Institute.


Still, economists noted, inflation was modest and would remain manageable for the remainder of the year.


"In all, we are still not particularly concerned about high inflation in 2013," Louis Kuijs, an economist for the Royal Bank of Scotland, said in a research note Friday.


China has been battered by a deep chill in recent weeks that has killed livestock and ruined crops. Vegetable prices last month rose 17.5% from November, accounting for more than half of the overall increase in consumer prices last month.


"Many places saw their temperatures drop to historical lows," Yu Qiumei, a senior analyst for the statistics bureau, said. "Frequent snow in the north and rainy and gloomy weather in the south impacted the production, transportation and sales of vegetables."


Analysts said prices for food probably will continue to rise as demand soars during the Chinese New Year national holiday next month, then will level off.


david.pierson@latimes.com






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Irvine City Council overhauls oversight, spending on Great Park









Capping a raucous eight-hour-plus meeting, the Irvine City Council early Wednesday voted to overhaul the oversight and spending on the beleaguered Orange County Great Park while authorizing an audit of the more than $220 million that so far has been spent on the ambitious project.


A newly elected City Council majority voted 3 to 2 to terminate contracts with two firms that had been paid a combined $1.1 million a year for consulting, lobbying, marketing and public relations. One of those firms — Forde & Mollrich public relations — has been paid $12.4 million since county voters approved the Great Park plan in 2002.


"We need to stop talking about building a Great Park and actually start building a Great Park," council member Jeff Lalloway said.





The council, by the same split vote, also changed the composition of the Great Park's board of directors, shedding four non-elected members and handing control to Irvine's five council members.


The actions mark a significant turning point in the decade-long effort to turn the former El Toro Marine base into a 1,447-acre municipal park with man-made canyons, rivers, forests and gardens that planners hoped would rival New York's Central Park.


The city hoped to finish and maintain the park for years to come with $1.4 billion in state redevelopment funds. But that money vanished last year as part of the cutbacks to deal with California's massive budget deficit.


"We've gone through $220 million, but where has it gone?" council member Christina Shea said of the project's initial funding from developers in exchange for the right to build around the site. "The fact of the matter is the money is almost gone. It can't be business as usual."


The council majority said the changes will bring accountability and efficiencies to a project that critics say has been larded with wasteful spending and no-bid contracts. For all that has been spent, only about 200 acres of the park has been developed and half of that is leased to farmers.


But council members Larry Agran and Beth Krom, who have steered the course of the project since its inception, voted against reconfiguring the Great Park's board of directors and canceling the contracts with the two firms.


Krom has called the move a "witch hunt" against her and Agran. Feuding between liberal and conservative factions on the council has long shaped Irvine politics.


"This is a power play," she said. "There's a new sheriff in town."


The council meeting stretched long into the night, with the final vote coming Wednesday at 1:34 a.m. Tensions were high in the packed chambers with cheering, clapping and heckling coming from the crowd.


At one point council member Lalloway lamented that he "couldn't hear himself think."


During public comments, newly elected Orange County Supervisor Todd Spitzer chastised the council for "fighting like schoolchildren." Earlier this week he said that if the Irvine's new council majority can't make progress on the Great Park, he would seek a ballot initiative to have the county take over.


And Spitzer angrily told Agran that his stewardship of the project had been a failure.


"You know what?" he said. "It's their vision now. You're in the minority."


mike.anton@latimes.com


rhea.mahbubani@latimes.com





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Academy Launches Oscar App on Android, Amazon






LOS ANGELES (TheWrap.com) – The Academy launched its official Oscars app on Android and Amazon on Thursday, expanding its initiative to direct fans’ attention from the television to the second screen.


The app, already available on the iPad and iPhone, was made available for free on the Google Play store and the Amazon app store, the Academy said. According to iTunes, the iPad app was updated earlier on Wednesday.






Developed by the Academy and Disney/ABC Television Group’s digital media arm, the app allows users to see behind-the-scenes videos and stories with host Seth MacFarlane and search information about the nominees. It also features a “My Picks” ballot on which users can organize their dream-team of winners.


On Oscar night on February 24, the app will feature “Backstage Pass,” a live telecast from more than a dozen cameras placed on the Red Carpet and throughout the Dolby Theatre – in the press room, the control room, backstage and elsewhere.


And a ticker on the app will notify when a users’ favorite actor and actress arrives on stage.


“We’re always looking for ways to bring fans closer to the show and this app provides a unique and fun way to do that,” Josh Spector, the managing director of digital media and marketing for the Academy, said in a statement. “More fans than ever will be able to enjoy the full Oscar experience now that our app is available to Droid users.”


Internet News Headlines – Yahoo! News





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Warner wins legal victory for control of Superman


SAN FRANCISCO (AP) — Just in time for the summer release of a hoped-for blockbuster movie "Man of Steel," Warner Bros. won a second significant legal victory Thursday giving it complete commercial control of the lucrative Superman franchise.


A three-judge panel of the 9th U.S. Circuit of Appeals unanimously ruled that the heirs of Superman's co-creator Jerome Siegel must abide by a 2001 letter written by the family's attorney accepting Warner Bros.' offer for their 50 percent share of Superman. Though the five-page letter was never formalized into a contract, the appeals court said it was still binding.


"Statements from the attorneys for both parties establish that the parties had undertaken years of negotiations, that they had resolved the last outstanding point in the deal during a conversation on Oct. 15, 2001, and that the letter accurately reflected the material terms they had orally agreed to on that day," Judge Stephen Reinhardt wrote for the panel.


The ruling Thursday undoes a 2008 trial court decision ordering Warner Bros. to share an undetermined amount of money earned since 1999 with the heirs, and to give the family control of key components of the Superman story, including his costume. If that decision were to stand, the studio would have had to negotiate a new costly royalty agreement with the family.


"The court's decision paves the way for the Siegel finally to receive the compensation they negotiated for and which DC has been prepared to pay for over a decade," Warner Bros. said in a prepared statement, referring to its DC Comics division. "We are extremely pleased that Superman's adventures can continue to be enjoyed across all media platforms worldwide for generations to come."


The family's attorney, Marc Toberoff, didn't respond to a request for comment.


Toberoff said earlier that he would appeal another significant Warner Bros. victory won in October involving the family of Superman's other creator, Joseph Shuster, and their bid for half the commercial rights. Toberoff also represents the Shuster heirs, who lost their bid to retain a 50 percent share of Superman.


A federal judge in Los Angeles had ruled that Shuster's sister and brother relinquished any chance to reclaim Superman copyrights in exchange for annual pension payments from DC Comics. U.S. District Judge Otis Wright noted in that case that the families of both creators have been paid in excess of $4 million since 1978, plus undefined bonuses and medical benefits.


In April, the $412 check that DC Comics wrote in 1938 to acquire Superman and other creative works by Shuster and Siegel sold for $160,000 in an online auction.


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Personal Health: Keeping Firearms Away From Children

I doubt that our forebears who ratified the Second Amendment in 1791 ever imagined how carelessly and callously firearms would be used centuries later. Witness the senseless slaughter of 20 innocent children and 6 adults last month in Newtown, Conn. As a mother of two and grandmother of four, I can’t imagine a more painful loss.

If you are as concerned as I am about the safety of your children and grandchildren, consider that it may be time for a grass-roots movement, comparable to Mothers Against Drunk Driving, to help break the stranglehold the National Rifle Association seems to have on our elected officials. Do you really want, as the association proposed, an armed guard in every school?

The Connecticut massacre occurred just two months after the American Academy of Pediatrics issued a new policy statement on firearm-related injuries to children. Murder and accidental shootings were not the academy’s only concerns. “Suicides among the young are typically impulsive,” the statement noted, “and easy access to lethal weapons largely determines outcome.”

In an article published online last month in The New England Journal of Medicine, Dr. Judith S. Palfrey, a pediatrician at Boston Children’s Hospital, and her husband, Dr. Sean Palfrey, also a pediatrician in Boston, highlighted the shocking statistics.



Every day in the United States, 18 children and young adults between the ages of 1 and 24 die from gun-related injuries. That makes guns the second leading cause of death in young people — twice the number of deaths from cancer, five times the deaths from heart disease and 15 times the deaths from infections.

Dr. Judith S. Palfrey has seen this heartbreak up close. “My niece, who was sad about something, might be alive today if she hadn’t had such easy access to a handgun at age 18,” she told me.

The United States has the dubious distinction of leading high-income countries in firearm homicides, suicides and unintentional deaths among young people. Among American children ages 5 to 14, an international study showed that firearm suicide rates were six times higher, and death rates from unintentional firearm injuries 10 times higher, than in other high-income countries.

Innocent Victims

The Palfreys said they were haunted by the death of one of their patients, a 12-year-old boy who went on an errand for his mother and was caught in the cross-fire of a gun battle. The boy had shortly before written a letter to his mother expressing his desire to become a doctor.

And Dr. Sean Palfrey recalls “with horror” picking up a loaded .22-caliber rifle, at age 11 or 12, and threatening his baby sitter with it. “This scared the hell out of me and remains seared in my memory. I could have killed this person.”

In explaining why he had a gun, he said, “I’m a great-grandson of Theodore Roosevelt, who was a hunter as well as a naturalist, and when I grew up guns were an acceptable part of youth. I took target practice and was an N.R.A. member myself as a child. We had guns for hunting, not automatic weapons that can shoot hundreds of rounds within seconds.”

Now, he said, “I do all my shooting with a camera. This is not the same world it was when the Second Amendment was written. Guns have to be removed so that they can’t be accessed by those who are immature, impulsive or mentally ill.”

In their article, the Palfreys pointed out that “little children explore their worlds without understanding danger, and in one unsupervised moment, an encounter with a gun can end in fatality.” School-age children who see guns used on television, in movies or video games “don’t necessarily understand that people who are really shot may really die,” they said.

Among teenagers, who may fight over girlfriends or sneakers, or have their judgment impaired by drugs or alcohol, “a fistfight may cause transient injuries, but a gunfight can kill rivals, friends, or innocent bystanders,” the pediatricians wrote. Among depressed adolescents, they said, “less than 5 percent of suicide attempts involving drugs are lethal, but 90 percent of those involving guns are.”

Preventing Access

In a 2006 study of gun-owning Americans with children under age 18, 21.7 percent stored a gun loaded, 31.5 percent stored one unlocked, and 8.3 percent stored at least one gun unlocked and loaded. And in households with adolescents ages 13 to 17, firearms were left unlocked 41.7 percent of the time.

These are accidents, or worse, waiting to happen, and the pediatrics academy reiterated its earlier recommendations that pediatricians talk to parents about guns in the home and their safe storage, and follow up by distributing cable locks.

To limit unauthorized access to guns, the academy recommended the use of trigger locks, lockboxes, personalized safety mechanisms, and trigger pressures that are too high for young children.

Still, the academy emphasized, “the safest home for a child or adolescent is one without firearms.”

The Palfreys said that when one of their colleagues asked a mother about guns in her home, she responded, “Why, yes, I have a loaded gun in the drawer of my bedside table.” It was only then the woman realized that this could be a danger to her child, Dr. Judith Palfrey said.

The academy also called for restoring the federal ban, in effect from 1994 to 2004, on the sale of assault weapons to the general public. None of the many attempts to renew it have succeeded in Congress.

The Supreme Court ruled in 2010, in the case of McDonald v. the City of Chicago, that the due process clause of the Fourteenth Amendment applied to provisions of the Second Amendment, and prevented states and localities from restricting citizens’ right to bear arms. The academy stated that the ruling “set the stage for Second Amendment legal challenges to local and state gun laws, including laws requiring the safe storage of firearms and trigger locks, as well as laws aimed at protecting children from firearms.”

In 2011, Florida passed legislation that raised First Amendment questions by forbidding doctors to ask families about guns in the home. Although a permanent injunction against the law was issued, Gov. Rick Scott has appealed the ruling. At the federal level, wording introduced into the Affordable Care Act restricts collection of data on guns in the home.


This post has been revised to reflect the following correction:

Correction: January 11, 2013

The Personal Health column on Tuesday, about firearms and children, using information from The New England Journal of Medicine, misstated the number of children and young adults between the ages of 1 and 24 who die each day in the United States from gun-related injuries. Eighteen people between the ages of 1 and 24 die every day — not seven people between those ages. (Seven deaths a day is the number for children and young adults between the ages of 1 and 19.) And the article misstated part of a Supreme Court ruling. In the case of McDonald v. the City of Chicago in 2010, the court ruled that the due process clause of the Fourteenth Amendment — not the equal protection clause — applied to provisions of the Second Amendment, which guarantees the right to keep and bear arms.

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Herbalife fires back at hedge fund giant









Herbalife Chief Executive Michael Johnson was tired of a powerful hedge fund manager bad-mouthing his company.


So he put on a show Thursday before hundreds of investors at the Four Seasons hotel in Manhattan, rebutting claims that the Los Angeles nutritional supplement company is a pyramid scheme. The presentation accused hedge fund giant Bill Ackman of lies and snobbery, compared Herbalife to the Girl Scouts and featured the company's president entreating that "the world needs more hugs."


Who says Wall Street is more boring these days?





The company's two-hour defense of itself is the latest in a battle since Ackman's Pershing Square Capital Management labeled Herbalife as "the best-managed pyramid scheme in the history of the world," during a similar presentation he made late last month. The outspoken fund manager has made a $1-billion bet that the stock would plunge in value.


"Just the very nature of the 'battle' has never been seen in the history of the Earth," said Tim Ramey, an analyst with D.A. Davidson and Co. "This was a very, very orchestrated attack."


Herbalife has hired a battalion of researchers to prove that it has a legitimate and stable business model. Executives held back no punches Thursday before a crowd of investors and analysts, labeling Ackman an elitist who made "false statements," "distortions" and "misrepresentations" about Herbalife and vowing to use "every means available to protect our reputation."


"In recent weeks, there's been a tremendous amount of misinformation about Herbalife," Johnson said. "This misinformation has found its way into the marketplace. Therefore we are sitting with you to correct some of this today."


In addition to outside experts brought in to bolster Herbalife's claims, company executives went through Pershing's presentation last month, disputing individual slides.


To the complaint that Herbalife is not focused on its products, Chief Operating Officer Rich Goudis showed figures indicating that the company spends millions on research and development.


To a Pershing slide that accused Herbalife of having a small distribution network, the company countered with a map of more than 300 company-run distribution points and showing its expansion in Indonesia and South Korea.


To a Pershing slide showing Herbalife products as more expensive than competitors' per 200-calorie servings, the company offered its own slide that compared the prices of the products per unit and showed costs in line with those of its competitors.


"Pershing intentionally used a misleading metric," Goudis said. "They did this to knowingly create a false impression."


They paraded out experts.


Kim Rory, representing Lieberman Research Worldwide, said distributors she surveyed had joined Herbalife because they wanted to get a discount on the products for personal use. Few signed up because they thought they'd make a large amount of money, and about two-thirds would recommend being a distributor to friends, she said.


Anne Coughlan, a professor at the Kellogg School of Management, defended Herbalife's marketing structure and disputed the allegation that it is a pyramid scheme.


"I didn't even see a scintilla of evidence that would suggest to me any hint that this company is running anything but a legitimate multi-level marketing program," she said.


Perhaps the most personal attacks came from Herbalife President Des Walsh, who said he was "highly offended" by Ackman's portrayal of Herbalife's nutrition clubs and defended the company for bringing nutritional products to poor neighborhoods.


After showing a video featuring happy distributors in crowded nutrition clubs, Walsh suggested that Ackman was out of touch with real America.


"This doesn't look like a country club in Westchester, Connecticut, but let me tell you, inside this club is real America," he said. (Earlier in the presentation, Walsh explained that people come to the club for a hug, adding, "the world needs more hugs.")


His comments echo a note sent out last week by D.A. Davidson analyst Ramey, who has a "buy" rating on Herbalife.


"Perhaps where Mr. Ackman lives he never sees a car with the 'Lose weight, ask me how' message across the rear window," he wrote. "I can tell Mr. Ackman that in my hometown, which is not quite Chappaqua, Herbalife is an iconic and widely recognized brand."


Ackman responded quickly Thursday, saying that Herbalife's presentation "distorted, mischaracterized and outright ignored large portions of our presentation," and that he had been contacted by people who provided more information into Herbalife's business practices, which he will soon reveal.


The unusual fight on Wall Street ramped up in December, when Ackman laid out his case against Herbalife in a three-hour, 200-plus slide presentation. He questioned whether the company was focused on recruiting new distributors, who pay to join the company, instead of on selling products. His announcement sent the company's stock down 36% and turned heads when analysts heard he'd sold short 20 million Herbalife shares.


Ackman's biggest beef with Herbalife focused on its so-called multi-level marketing model, which he said led to only those at the top of the company making money. More than 90% of distributors break even or lose money, he said. Ackman even drew UCLA into the controversy, saying Herbalife mentioned a lab at the university multiple times during each investor presentation to lend itself legitimacy.


Herbalife shares recovered some of their losses in the weeks after Ackman's presentation as some investors expressed confidence in the company. Hedge fund Third Point said it was taking an 8.2% stake in Herbalife, betting that the company would survive Ackman's assault.


Analysts at Thursday's meeting seemed supportive of Herbalife, with some expressing their belief in the company during a question-and-answer period after the presentation. One analyst urged the company to fight back against Pershing Square's method of "slandering" the company.


"It was a good, thorough presentation that certainly accomplished the job of defending the legitimacy of their business model," Ramey said.


Still, not all investors were convinced by the presentation. Herbalife's stock closed down 71 cents, or 1.8%, at $39.24. That may be because on Wednesday the Securities and Exchange Commission opened an investigation into Herbalife, according to published reports.


alana.semuels@latimes.com





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Baseball writers pitch a Hall of Fame shutout

Steroid-tainted stars Barry Bonds, Roger Clemens and Sammy Sosa have been denied entry to baseball's Hall of Fame with voters failing to elect any candidates for only the second time in four decades. (Jan. 9)









PARADISE VALLEY, Ariz. –- Barry Bonds was baseball's home run king, winning a record seven most-valuable-player awards. Roger Clemens' blazing fastball earned him a nickname, "The Rocket," and a record seven Cy Young Awards as the top pitcher in his league.


None of that mattered Wednesday.


Two of the most decorated players in the sport's history, perhaps the best in a generation, were roundly rejected from their sport's Hall of Fame.








In their first year on the ballot, the celebrated — and vilified — stars were turned away in an election that was a referendum on the game's steroid era. For only the second time in 43 years, the Baseball Writers' Assn. of America did not select a player for the game's highest honor.


Clemens was named on 37.6% of the 569 ballots; Bonds on 36.2%. A player must achieve 75% approval — writers can vote for as many as 10 on a ballot — for induction.


Craig Biggio, who starred as a catcher and second baseman with the Houston Astros, led all candidates with 68.2% of the vote. The only other player to get even 60% of the vote was former Detroit Tigers pitcher Jack Morris, at 67.7%.


Former Dodger Mike Piazza was fourth in the voting, receiving 57.8% in his first year on the ballot. Piazza hit 427 home runs and his offensive production was better than any other catcher in the Hall of Fame. But his legacy has been hurt by rumors of performance-enhancing drug use, even though he has never been implicated in an investigation.


Commissioner Bud Selig, who does not vote, said the Hall of Fame is a properly exclusive club and said he had no concerns about the voting process or result.


"The idea that this somehow diminishes the Hall of Fame or baseball is ridiculous," Selig said at the owners' meetings here.


Michael Weiner, the executive director of the players' union, called the election results "unfortunate, if not sad" and said the Hall should include "the best players to have ever played the game."


"To ignore the historic accomplishments of Barry Bonds and Roger Clemens, for example, is hard to justify," he said in a statement.


Bonds and Clemens are famous not only for their on-field accomplishments but for an era tainted by the widespread use of performance-enhancing substances.


A federal jury two years ago convicted Bonds of obstruction of justice but cleared him of charges he lied to a grand jury when he testified he had not knowingly used steroids. Bonds is appealing the conviction.


Clemens testified before Congress that he did not use steroids and later avoided prison time by successfully defending himself in court against perjury charges.


"After what has been written and said over the last few years, I'm not overly surprised," Clemens said via Twitter after the vote was announced. He added: "To those who did take the time to look at the facts … we very much appreciate it."


Bonds had no immediate comment, but Jeff Borris of the Beverly Hills Sports Council, the player's longtime agent, told the Associated Press that it was "unimaginable that the best player to ever play the game would not be a unanimous first-ballot selection."


Their links to alleged steroid use turned Clemens and Bonds from first-ballot locks into also-rans, with voters sharply divided among those who deny any player with ties to performance-enhancing drugs, those who prefer to wait and see what further information might emerge about those players, and those who vote for the most dominant players whatever their era.


Players become eligible for Hall of Fame consideration five years after they retire and remain on the ballot for 15 years, provided they receive at least 5% of the vote. (Times reporters are prohibited by ethics guidelines from voting for sports rankings and awards.)


"A snapshot in time isn't one year," Hall of Fame President Jeff Idelson said. "It's 15."


Even so, the voting trends do not look favorable for Bonds or Clemens. Mark McGwire, who received 19.5% to 23.7% in each of his first six years on the ballot, fell to 16.9% this year.





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