Monday, December 22nd3.2°C

Caesar's Entertainment to buy Caesar's Acquisition, clearing unit for bankruptcy filing

NEW YORK, N.Y. - Caesar's Entertainment will buy an affiliate in a bid to smooth the reorganization of another struggling division and balance its debt load.

The Las Vegas company will take Caesar's Acquisition in an all-stock deal, giving its shareholders an approximately 62 per cent in the combined company.

The manoeuvr will help Caesars Entertainment Operating Co. handle its debt load. The company received a default notice earlier this month, although it disagreed that a default had occurred. Last month, Caesars said it was in discussions with its creditors to lower its $24.2 billion in debt.

Caesar's Entertainment Operating Co. will file for bankruptcy as part of the deal announced Monday.

The new company will have $1.7 billion in cash and operate its casinos in addition properties like Planet Hollywood and online gambling.

The Canadian Press

Express Scripts to shift coverage away from pricey hepatitis C drugs like Sovaldi

The nation's largest pharmacy benefits manager is throwing its weight into a fight over the high cost of treating hepatitis C, saying it will cover a drug from AbbVie while pulling back on those from rival drugmakers.

The treatments traditionally can run close to $100,000 per patient.

Express Scripts says it will no longer cover Sovaldi and Harvoni from Gilead Sciences or Johnson & Johnson's Olysio starting Jan. 1, except under limited circumstances. AbbVie's Viekira Pak, approved only Friday, will become the preferred treatment for patients who have genotype 1 hepatitis C, the most common form of the liver-destroying virus.

The three drugs that will no longer be covered are part of a wave of effective but expensive treatments that hit the market in the past year.

The Canadian Press

Toronto market looks

TORONTO - The Toronto stock market is poised to continue last week's recovery from a steep decline early this month, with U.S. futures and overseas markets making gains early Monday.

The Canadian dollar is at 86.15 cents US, unchanged from Friday's close.

U.S. futures are up across the board with the Dow Jones industrial futures ahead 56 points at 17,817, the Nasdaq futures up 13 points at 4,295.80, and the S&P futures ahead 5.8 points at 2,072.9.

Overseas, the FTSE 100 is up 47.33 points at 6,592.60, the DAX index is ahead 90.19 at 9,877.15 and the CAC 40 is up 37.07 at 4,278.72. In Asia, Shanghai closed at 3,127.44, up 0.61 per cent, Japan's Nikkei 225 gained 0.8 per cent to close at 17,635.14 while the Hang Seng index in Hong Kong advanced 1.26 per cent to 23,408.57.

Toronto and New York soared last week, with the TSX gaining 736 points or 5.36 per cent to close at 14,468.26 while the Dow industrials bounded ahead 524 points or three per cent.

Key to performance was last week's interest rate meeting of the U.S. Federal Reserve. Short-term rates near zero have been a huge aid in the recovery of stock markets since the 2008 financial collapse. Investors have come around to accepting that the Fed will move to start hiking rates next year, likely around the middle of 2015.

Traders are facing a much-shorter trading week with Toronto and New York closing at 1 p.m. on Wednesday for Christmas Eve. Toronto will be closed until Monday while New York reopens Friday.

South Korea has lowered its growth forecast for 2015 due to weak consumer and business sentiment, although the government still expects there to be an improvement over 2014. The finance ministry said Monday that South Korea's economy will expand 3.8 per cent in 2015. Six months ago, it forecast growth of 4.0 per cent. It also lowered its forecast for this year to 3.4 per cent growth from the previous forecast of 3.7 per cent.

In other economic news, Canada and the United States issue reports on gross domestic product on Tuesday. Estimates suggest the Canadian economic growth slowed in October, with advancing 0.1 per cent compared with September's growth of 0.4 per cent, month-over-month.

On the commodity markets, the January crude contract on the New York Mercantile Exchange is down at US$66.50 a barrel.

February bullion is up 70 cents at US$1,196.7 an ounce, while March copper is up one cent at US$2.90 a pound.

The Canadian Press

If you're a comedy writer, do you tackle the Sony hacking? Yes, but maybe carefully

How do you joke about the Sony hacking story? After all, it was an attempt at comedy that launched this whole sobering mess.

If you're Chris Rock, you joke about it cleverly but carefully. Promoting his new movie "Top Five" this week, he noted an added bonus: "My movie's very Korean-friendly. There are no jokes about North Korea in 'Top Five.' If you're Korean, go out and see 'Top Five.' You will enjoy it."

Given that the fallout over an unabashedly silly movie — "The Interview," which Sony shelved last week after a stunning cyberattack by hackers the U.S. has linked to North Korea — has escalated into a serious global situation, one would think comedy writers might be a wee bit skittish just now.

But they ARE in the business of satire, and this is one of the biggest entertainment stories in years.

And so, NBC's "Saturday Night Live" didn't wait long to bring up the scandal — in fact, it didn't wait one second. The show opened with Mike Myers returning as Dr. Evil from the "Austin Powers" movies, taking jabs at Sony, North Korea AND Hollywood. Oh, and Republicans, and "The Interview" actor James Franco's Oscar-hosting skills.

"There's already a GOP," Myers said, referring to the hackers who call themselves Guardians of Peace, "and they're already an evil organization." Referring to hackers' threats of terrorism over the movie, he said that wasn't necessary: "It's easy to kill a movie. Just move it to January." As for Franco, whose character in the film is tasked with assassinating North Korean leader Kim Jong Un, he noted: "The man singlehandedly almost killed the Oscars!"

Later, though, the show played with the idea that maybe it's all a little soon. Comic Bobby Moynihan appeared as Kim Jong Un on "Weekend Update," declaring he wasn't afraid. But then red target marks appeared on his torso, and he reversed course: "I'm Seth Rogen, everybody!" he said, trying to quickly mimic Rogen, a star and director of the film, before skedaddling off the set.

All in jest, but there probably IS a sense of "Is it too soon?" out there, says Janice Min, a veteran entertainment industry observer who oversees The Hollywood Reporter and Billboard.

"I would say we're in an unprecedented era of fear right now," she says, referring to the chilling cyberattack that saw thousands of Sony emails — some deeply embarrassing — and other materials posted online. Things escalated dramatically when hackers then threatened violence against moviegoers, leading theatre chains to pull out and Sony to cancel the Christmas opening.

"There's often a sense of schadenfreude in Hollywood, if something happens to a movie or an executive," Min says. "But in this case the fear is so palpable, people are thinking, what if this were me?"

Even in campaigns for the upcoming awards season in Hollywood, Min notes, "every publicist in town will be coaching their stars on what to say and what not to say, or what to post on Twitter — everything will be very measured."

And so naturally, she adds, there may be a chilling effect on comedy — one that might affect the sharpness of the jokes, for example, at the Golden Globes or the Oscars. "I'm going to venture that at least until the issues are resolved, everyone's too scared, and you don't want to be the one making that North Korea joke because you don't want to be a target yourself," Min says.

Given the magnitude of the events, of course, it's hard to imagine they won't be referenced at the awards shows, especially the early ones. "It's the elephant in the room," says Tim Gray, awards editor for Variety. "You can't pretend it didn't happen."

But just how "safe" the subject may feel will depend on developments in the swift-moving story, which could, at this rate, change many times before sharp-tongued hosts Tina Fey and Amy Poehler take the stage at the Jan. 11 Globes, where the humour is generally more raucous — and boozy — than at the Feb. 22 Oscars. (Producers for both the Globes and the Oscars declined interview requests about plans for the shows.)

Glenn Schwartz, a longtime Hollywood publicist specializing in comedy, notes that awards shows are a combination of the funny and the serious, so he expects to see references to the Sony hack pop up both ways. "There will be some jokes in a monologue, and one or two activist actors using it as a platform to talk about censorship," he predicts.

But Schwartz adds: "This is really uncharted territory. Nobody wants to be responsible for making it worse." And that, he says, is a shame: "Comedy has been offending people for years. That's what's great about it."

The censorship issue is a hot-button topic in Hollywood; George Clooney, in an interview with the trade site Deadline, urged Sony to "do whatever you can to get this movie out. Not because everybody has to see the movie, but because I'm not going to be told we can't see the movie." President Barack Obama subsequently said he felt Sony had made a mistake in shelving the film. Jimmy Kimmel, in a serious tweet, called Sony's decision an "un-American act of cowardice." Filmmaker Judd Apatow said it was "disgraceful" that theatres weren't showing the film.

Two other North Korea-themed films have suffered collateral damage: "Team America," which was set to show as a replacement at a handful of theatres, was pulled, and a Steve Carell project in development was shelved.

On late-night shows, Kimmel, Jimmy Fallon, David Letterman, Conan O'Brien and Seth Myers have all poked fairly innocuous fun. Letterman on Friday joked that North Pole emails had been hacked. He displayed one from Blitzen, the reindeer, asking to take Hanukkah off. It was marked with a big red "HACKED" sign.

Kimmel quipped last week that if the North Koreans were going to stop a movie being shown, "Why couldn't it be 'Love Actually,' which my wife and her friends have in our living room every Christmas?"

And Fallon chose to lightly lampoon the U.S. government, noting that when Amy Pascal of Sony apologized for some embarrassing emailed jokes involving President Obama, the president replied: "Don't worry. I secretly read those emails months ago."

The Canadian Press

WestJet pilots vote in favour of new four-year contract

CALGARY - Pilots at WestJet have accepted a new contract.

The airline says the deal includes improved pay and scheduling that it says places the airline's more than 12-hundred pilots among the highest paid in Canada's airline industry.

Statements from the airline and the WestJet Pilot Association issued on Sunday did not give any specifics of the contract.

The four-year deal, which was hammered out last month, will expire April 30, 2019.

WestJet flies to more than 120 destinations in more than 20 countries.

The Canadian Press

BlackBerry looks to autos, connected homes as avenues for growth in its recovery

WATERLOO, Ont. - BlackBerry is hoping not only to return to the hearts and minds of smartphone users but, starting next year, the company wants to get into their cars and homes too.

With its finances slowly improving, plans are being made for the Waterloo, Ont.-based company to become a bigger player in the Internet of Things movement, which links your phone with various other technology, from your fridge to your television.

The project has been in development for several years at BlackBerry, and chief executive John Chen said Friday that a "roadmap" for his plans will be laid out in early January at the Consumer Electronics Show in Las Vegas.

"Our focus right now is on connected cars, and it will get into connected homes — these things are inseparable," Chen said during a recent meeting with reporters at the company's headquarters.

"Everything we do fits together."

Still in its infancy, the connected home is the next evolution in technology as more people link their smartwatches with their laptops, and their phones to their bluetooth speakers.

BlackBerry (TSX:BB) is trying to get ahead of the curve by developing security software that can be licensed to companies who want their products ready for the growing popularity of machine-to-machine communication.

Coming up with innovative ideas would've been almost unheard of a year ago when the future of BlackBerry was tenuous, at best. The company was drowning in problems and its finances were declining at an alarming speed, with quarterly losses that soared into the billions.

When Chen swooped into the leadership role in late 2013 he immediately launched a rescue effort, a strategy that has partly relied on thinking of new ways to sell the company's older technology, while it worked behind the scenes on fresh ideas.

The approach baffled some analysts but, during the past months, sentiment has shifted towards a likelihood that BlackBerry will survive, albeit as a smaller version of its former self.

Shares of the company have climbed more than 45 per cent in 2014, closing at $11.55 on the Toronto Stock Exchange in late December, after starting the year at $7.90.

"The question is, where are we going to find growth?" said Desmond Lau, a technology analyst at Veritas Investment Research Corp.

"That's still an important question, but it's not a life or death question."

A year ago BlackBerry needed rapid changes and Chen made several key decisions in 2014 that would ensure its survival, such as reeling in expenses, cutting staff and shifting the marketing priorities back to the business community that first fell in love with the smartphone.

Chen said he still needs "a couple of quarters" before the top-line results meet his expectations. He's also stuck to a goal of making the company profitable by the middle of next year.

"I'm going to start making money (for BlackBerry) ... and once we make money we're going to sustain it," Chen said.

"Sustained profit needs to come from growth, it's not coming from cost-cutting."

Envisioning how a reimagined BlackBerry company looks can be difficult for outsiders, especially since most people still consider the company a smartphone maker first.

More than half of BlackBerry's revenue now comes from software and services and there's a clear shift of its business strategy into new markets that could help rebuild its reputation.

In automotive, BlackBerry is partnering with some of North America's largest car manufacturers. It recently secured a deal with Ford Motor Co. to develop their "infortainment" systems that link vehicles with the driver's smartphone, streaming music and maps.

Versions of the technology, developed by BlackBerry subsidiary QNX Software Systems, are already installed in cars from General Motors, Hyundai and Volkswagen.

In high-level government security, BlackBerry is working with Boeing to develop software for the Boeing Black, a smartphone that self destructs if it's tampered with.

The technology will be marketed by Boeing's defence contractor division to security clients around the world, said Boeing spokesman Andrew Lee.

BlackBerry is also targeting the business community with software that provides an extra layer of encryption. For an additional cost, the slate of programs bulk up phone security, making sure that instant messaging service and a virtual conferences can't be hacked.

Yet the BlackBerry still wants to make handsets, much to the dismay of some analysts who think the company needs to surrender to the growing dominance of Apple's iPhone and Samsung's Galaxy models.

Two new keyboard smartphone models were recently introduced — the BlackBerry Classic, which harkens back to the design its top-selling older models favoured by business customers, and the Passport, a device with a larger screen made for people who read a lot of documents on their phones.

"The company seems hellbent on believing in fairly robust order numbers around the handset business," said Max Wolff, chief economist at Manhattan Venture Partners.

"They still think that devices sell because of the actual device."

Wolff argues that BlackBerry needs to scale back on designing handsets because the phones aren't selling in big numbers. In the third-quarter, which ended in November, BlackBerry's revenues declined mainly on weakness in sales of smartphones.

Wolff said he's concerned that technology leaders like Apple and Google have built user-friendly operating systems that became one of the biggest selling features of their smartphones.

BlackBerry doesn't have a "compelling operating system" that would attract most smartphone users, he said.

"Somehow BlackBerry missed the operating system movement, which is just plain scary," he added.

Despite the criticism, Chen wants to stick with making phones, which means that BlackBerrys will continue to be on the shelves at retailers for the foreseeable future, whether they're selling or not.

Updated sales figures for the Passport weren't provided by BlackBerry in the latest quarter, and it also chose not to announce how many Classics were pre-ordered, other than to say it was somewhere north of 200,000 units.

Even if consumers don't warm to the latest BlackBerry phones, there's still plenty of opportunities for the Canadian company, said Carmi Levy, analyst and writer at, a London, Ont.-based web technology company.

"It's fair to say you can be hugely successful and absolutely unsexy," he said.

"Investors don't really care how much coolness BlackBerry has attached to it, as long as the company is making them money."

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The Canadian Press

Stocks face final days of 2014 in far better shape; traders look to GDP data

TORONTO - North American stock markets are facing the last few trading sessions of 2014 in better shape than they have been in weeks after suffering steep declines amid a collapse in oil prices, concerns about U.S. interest rate hikes and the after-effects of the end of the Federal Reserve's third round of quantitative easing at the end of October.

"I think we will see things kind of stabilize — it's been a pretty wild first half of December," observed Colin Cieszynski, chief strategist at CMC Markets.

"But from here on, I suspect it is going to be pretty quiet. Maybe we’ll get some action at the beginning of next week, but after a day or so that will be about it."

Traders are facing a much-shortened trading week with Toronto and New York closing at 1 p.m. on Christmas Eve. Toronto stays shuttered for the rest of the week while New York reopens Friday.

But there is still some top-drawer economic data to consider this week, including the latest readings on Canadian and U.S. gross domestic product along with American reports on durable goods orders, consumer sentiment and new home sales.

Toronto and New York soared last week, with the TSX gaining 736 points or 5.36 per cent while the Dow industrials bounded ahead 524 points or three per cent.

Key to performance was last week's interest rate meeting of the U.S. Federal Reserve. Short-term rates near zero have been a huge aid in the recovery of stock markets since the 2008 financial collapse. Investors have come around to accepting that the Fed will move to start hiking rates next year, likely around the middle of 2015.

But there have been concerns that the Fed could move a lot earlier and the central bank sought to allay those fears last week, saying it would be "patient" in deciding when to hike rates and Fed chairwoman Janet Yellen said that she foresaw no rate hike in the first quarter of 2015.

But analysts suggest that maybe markets are reading too much into the Fed announcement.

"I thought (Yellen) was hinting that they might start to move as early as April and I think the U.S. dollar picked up on that and stocks didn’t — very odd," said Cieszynski.

"In the long run, usually you go with the bond market and currency markets are usually right."

The energy sector was a huge winner on the TSX last week, up about 15 per cent. The sector is still down about 18 per cent year to date, having been positive by about the same amount mid-summer before oil prices started to collapse by about 50 per cent amid demand worries and, especially, a glut in supply.

Crude prices seemed to find support around the US$54 a barrel level this week. On Friday, oil in New York climbed $2.41 to US$56.52 a barrel but analysts said it was too early to call a bottom.

"There is a supply overhang that we have to deal with," said Doug Porter, chief economist at BMO Capital Markets.

"Until we actually see some supply curtailments or a miraculous rebound in demand, I think the price might be on the defensive. It‘s almost a matter of who is forced to blink first in the oil market."

On the economic front, the major report is the latest revision to third-quarter economic growth in the United States. The latest reading showed gross domestic product up 3.9 per cent, following a solid 4.6 per cent advance in the second quarter.

"It looks as if the momentum was largely maintained in Q4," added Porter, who thinks that previous Q3 reading will be revised upward.

"There is obviously underlying strength in the U.S. economy, which we think will continue through 2015, but it looks like there is a good chance it gets revised up and it could mark the second quarter in a row of better than four per cent growth."

On Tuesday, Statistics Canada will release its October GDP reading. Economists generally expect a rise of 0.1 per cent. Oil prices fell 11 per cent in October alone but Porter said the slide in prices won't be reflected very much in the GDP data.

"I think there is a big effect, it just won’t necessarily show up in real GDP," he said.

"Just as during the commodity boom, during the last decade, we didn’t have overly strong real GDP growth, that’s really not where it showed up. It really shows up more in such things as corporate profits and government revenues and incomes, not so much in real output."

The Canadian Press

Saudi petroleum minister tells Arab summit there's no 'conspiracy' behind drop in oil prices

ABU DHABI, United Arab Emirates - Saudi Arabia's oil chief on Sunday dismissed allegations that his kingdom conspired to bring down oil prices in order to harm other countries and told a summit of Arab energy leaders that he was confident the market would stabilize.

The kingdom, which is dependent on oil revenues, is able to weather lower oil prices due to large reserves built up over the years. Non-OPEC member Russia and other nations like Iraq, Iran and Venezuela need prices substantially above present levels to meet budget goals and want to drive prices up.

Saudi Arabia maintains it is opposed to cutting production because of fears its market share could erode.

"The best thing for everybody is to let the most efficient produce," Saudi Petroleum Minister Ali Naimi said in the United Arab Emirates capital of Abu Dhabi. He was addressing the Arab Energy Conference, a gathering held every four years.

The price of U.S. crude has dipped below $60 a barrel, its lowest in five years. Naimi said he was certain that the oil market would recover with the improvement of the global economy.

An OPEC meeting last month failed to agree on production cuts, mainly because of Saudi opposition to curb its own exports. OPEC controls about 40 per cent of the world oil market and Saudi Arabia is the cartel's largest producer.

Naimi said that "a lack of co-operation by non-OPEC production nations, along with the spread of misinformation and speculator's greed" have contributed to the drop in prices.

Some market speculators have suggested the kingdom is forcing lower prices to damage the economies of nations such as Russia and the Shiite powerhouse Iran, staunch backers of Syrian President Bashar Assad. Saudi Arabia backs the mainly Sunni rebels fighting to topple Assad.

Earlier this month, Iranian President Hassan Rouhani said the sharp fall in global oil prices was the result of "treachery," a remark interpreted as a reference to Saudi Arabia.

"I want to say from this podium that talk about a Saudi conspiracy has no basis of accuracy at all and points to a misunderstanding," Naimi said.

The Canadian Press

Obama says US reviewing whether to return North Korea to list of state sponsors of terrorism

HONOLULU, Hawaii - President Barack Obama says the United States is reviewing whether to put North Korea back onto its list of state sponsors of terrorism.

Obama says the high-tech attack against Sony Pictures Entertainment isn't an act of war, but is a very expensive example of cybervandalism. The U.S. blames North Korea for the attack.

Obama tells CNN's "State of the Union" that the U.S. will examine the facts to determine whether North Korea qualifies for the terrorism sponsors list. North Korea was removed in 2008.

Sony has cancelled the release of a film that North Korea found offensive. Sony says it had no choice because theatres wouldn't show the film.

But Obama says had Sony spoken to him directly, he might have called the movie theatres to question their decision.

The Canadian Press

EU's Alpine tourism hubs brace for fewer Russian visits amid Ukraine, ruble and oil-price pain

PARIS - Russia's tensions with the West over Ukraine and the slump for the ruble are echoing through the French Alps — and unfortunately for some businesses, just in time for ski season.

Hoteliers, taxi drivers and ski stations in France's wintertime hotspots and beyond say a tourism boom by big-spending Russians in recent years is about to melt away because of Russia's economic crisis, Western sanctions and a drop in oil prices that is keeping both uber-rich and middle class Russians away as the year ends.

As Moscow and the West began a faceoff over violence in Ukraine this year, Russian President Vladimir Putin warned that U.S and European sanctions would cut both ways. At times, they have: Few places have felt them as have European tourist getaways in the Alps or the Mediterranean. Tourism chiefs cite a one-two punch to Russian travel to the EU: First political strains over Ukraine dent enthusiasm for travelling to the EU, then the financial pain of a falling ruble and oil prices hit Russian pocketbooks.

The pain of falling Russian tourism also has been reported in Austria, Germany, Cyprus and England.

In France's Alps, the Russian reticence is yet another hit to a region suffering from a sluggish domestic economy and a recent lack of snow that forced the cancellation of World Cup races in Val d'Isere this month. Many Russians may be staying home for patriotic reasons, such as to test out the Sochi slopes of this year's Olympics instead of travelling abroad, some analysts say.

The ruble has sagged in recent months and hit a record low of 80 to the dollar this week. That depreciation has come alongside a tumble in the price of crude oil — a crucial cash generator for Russia's economy — to roughly half its summertime high of $107 a barrel.

When their pockets were bulging thanks to high oil prices in previous years, Russians rose to outstrip German and Swiss travellers and took fourth place among the most-frequent foreign visitors to the French Alps in winter — after Britons, Belgians, and the Dutch, consulting firm Comete Conseil says.

"We've received fewer reservations from Russian clients this year. We can draw parallels with what happened on the coast this summer, where they too were less present," said Carole Genevray, marketing director for Comete Conseil, which counts many French Alpine towns as clients. "It's more the geopolitical context than the financial one that has in fact limited Russian visits ... It is Ukraine, plain and simple."

In the Alps both in France and beyond, the impact will likely still be limited: other industry analysts note Russian visitors make up a tiny percentage of the total tourist traffic — far below domestic travellers, for example. Still, Russians' bulging pockets in recent years have made them a welcome customer base for old-school ski slopes eager to drum up new business.

Plus, the Russian holiday schedule, which has links to the Orthodox Christian calendar, brings in many Russian travellers in early January — when many western Europeans are back at work and school, giving an extra influx of cash and extending the wintertime boom for hoteliers and ski stations by up to two weeks.

Adeline Roux, director of the tourism office in Courchevel, perhaps the biggest single mecca for Russian visitors in the French Alps, told France's i-Tele that both super-rich and middle-class Russians may stay away — and not just this year. "Depending on the evolution of the crisis that Russia now faces, we run the risk especially of facing an impact next winter (too)."

The highest-elevation of three ski slope zones in Courchevel, which is the most frequented one by Russians, now offers menus in Russian; regular supermarkets stock Champagne costing hundreds of euros. In February, the daily Le Monde noted how ski instructors and receptionists in the resort town were learning Russian.

These days, statistics and corporate decision-making tell a drearier tourism tale.

Take Austria, a top Russian wintertime destination in recent years. Russian carrier Aeroflot, which has had weekly flights from Moscow to Innsbruck over the past few years, suspended them this season — reflecting what Austrian hoteliers say is the drop in Russian guests in the Austrian Alps.

In Germany's Oberbayern region in Bavaria, the number of Russian visitors fell nearly 4-1/2 per cent from January to September compared to the same period in 2013, according to Bayerische Rundschau TV. The local statistics office reported a 20 per cent decline in September alone versus the same month a year ago.

"We've still had a lot of inquiries from Russia," said Andreas Griess, a spokesman for Hotel Zugspitze in Garmisch-Partenkirchen, one of the region's best-known ski resorts and a popular spot for rich Russians. He told the Rundschau that if December bookings do not pick up significantly, the number of Russian holidaymakers at the hotel could drop by 40 per cent.

It's not just wintertime getaways facing the fallout.

In Cyprus, another favoured spot among Russians, hotel association boss Haris Loizides said the situation with the ruble and European Union sanctions "is definitely having an effect. It's a late booking market, but it seems we won't be able to avoid a 20-25 per cent drop in arrivals."

Ayda Hassas, a Rolex boutique supervisor at London's famed Harrods department store, said the boutique has noticed a "significant drop in Russian clients" compared to the holiday season a year ago, adding: "I think is connected with the currency exchange rate."

In Egypt, Ihab Moussa, who heads a tourism-support coalition, said 3 million Russian tourists visited the fabled North African country this year — the highest number ever. But he expressed fears that the ruble weakness would shrink the number of Russian tourists next year.

Even in the Alps, some remain optimistic — or at least hope to limit the damage.

Franck Jaulneau, the managing director for Hotel Alpaga in the French resort of Megeve north of Courchevel, said: "Not so fast. Yes, there are diplomatic problems, but the Russians aren't ready to desert us just yet."

He noticed a delay, not a decline, in bookings, and said hotels that cultivate Russian business could fare better.

"I'm really confident," Jaulneau said, noting that he visits Russian two to three times a year. He said he is more worried about a lack of snow than a lack of Russians.


Whitney Saldava in London, George Jahn in Vienna, Maggie Michael in Cairo, David Rising in Berlin, and Menelaos Hadjicostis in Nicosia, Cyprus, contributed to this report.

The Canadian Press

North Korea wants joint investigation with US over Sony hacking to prove it's not involved

SEOUL, South Korea - North Korea proposed a joint investigation with the U.S. into the hacking attack against Sony Pictures Entertainment, warning of "serious" consequences if Washington rejects a probe that it believes would prove Pyongyang had nothing to do with the cyberattack.

The proposal was seen by analysts as a typical ploy by the North to try to show that it is sincere, even though it knows the U.S. would never accept its offer for a joint investigation.

U.S. officials blame North Korea for the hacking, citing the tools used in the Sony attack and previous hacks linked to the North, and have vowed to respond. The break-in resulted in the disclosure of tens of thousands of confidential Sony emails and business files, and escalated to threats of terror attacks against U.S. movie theatres that caused Sony to cancel the Christmas Day release of "The Interview," a comedy about a plot to assassinate North Korean leader Kim Jong Un.

On Saturday, an unidentified North Korean Foreign Ministry spokesman in Pyongyang proposed the joint investigation with the U.S., saying the North knows how to prove it's not responsible for the hacking. He also said Washington was slandering Pyongyang by spreading unfounded rumours.

"The U.S. should bear in mind that it will face serious consequences in case it rejects our proposal for joint investigation and presses for what it called countermeasures while finding fault with" North Korea, the spokesman said in a statement carried by Pyongyang's official Korean Central News Agency, or KCNA.

"We have a way to prove that we have nothing to do with the case without resorting to torture, as the CIA does," he said, adding that the U.S. lacks any specific evidence tying North Korea to the hacking.

In Washington, a spokesman for the White House National Security Council, Mark Stroh, said the U.S. stands by the FBI's conclusion that "the North Korean government is responsible for this destructive attack."

"The government of North Korea has a long history of denying responsibility for destructive and provocative actions," Stroh said. "If the North Korean government wants to help, they can admit their culpability and compensate Sony for the damages this attack caused."

The United States was reaching out to China, North Korea's key ally, for help as President Barack Obama weighs possible responses to the cyberattack, said a senior administration official, who wasn't authorized to comment by name and requested anonymity. Although China holds considerable leverage over the North and its technological infrastructure, involving Beijing could pose complications because Obama has pointedly accused China of engaging in its own acts of cybertheft.

An editorial in the Global Times, a newspaper published by China's ruling Communist Party, said that any civilized country will oppose hacker attacks or terror threats, but it also condemned the movie. "The vicious mocking of Kim is only a result of senseless cultural arrogance," it said.

Koh Yu-hwan, a professor at Seoul's Dongguk University, called the North's proposal a "typical" tactic the country has taken in similar disputes with rival countries. In 2010, North Korea proposed a joint investigation after a South Korean-led international team concluded that the North was behind a torpedo attack that killed 46 South Korean sailors, though Pyongyang denied its involvement. South Korea rejected the North's offer for the joint probe.

"They are now talking about a joint investigation because they think there is no conclusive evidence," Koh said. "But the U.S. won't accede to a joint investigation for the crime."

On Friday, Obama declared that Sony "made a mistake" in shelving the satirical film about a plot to assassinate the North Korean leader, and pledged that the U.S. would respond "in a place and manner and time that we choose" to the hacking attack on Sony that led to the movie's withdrawal.

"I wish they had spoken to me first. ... We cannot have a society in which some dictator someplace can start imposing censorship," Obama said at a year-end news conference, speaking of executives at Sony Pictures Entertainment.

Sony said it had had no choice but to cancel distribution of the movie because theatres were refusing to show it.

U.S. options for acting against North Korea are limited. The U.S. already has severe trade sanctions in place, and there is no appetite for military action. Even if investigators could identify and prosecute the individual hackers believed responsible, there's no guarantee that any located are overseas would ever see a U.S. courtroom. Hacking back at North Korean targets by U.S. government experts could encourage further attacks against American targets.

North Korea and the U.S. remain technically in a state of war because the 1950-53 Korean War ended with an armistice, not a peace treaty. The rivals also are locked in an international standoff over the North's nuclear and missile programs and its alleged human rights abuses.

Earlier Saturday, North Korea angrily denounced a move by the United Nations to bring its human rights record before the Security Council and renewed its threat to further bolster its nuclear deterrent against what it called a hostile policy by the U.S. to topple its regime.


Associated Press writer Eric Talmadge in Tokyo contributed to this report.

The Canadian Press

Sony hacking case combines rare blend of international intrigue and Hollywood star power

LOS ANGELES, Calif. - The hackers who hit Sony Pictures Entertainment days before Thanksgiving crippled the network, stole gigabytes of data and spilled into public view unreleased films and reams of private and sometimes embarrassing executive emails.

One month later, the Obama administration confirmed what many had suspected: The North Korean government was behind the punishing breach. U.S. officials are promising a response, unspecified so far.

It was an extraordinarily public reaction from the highest levels of American government, considering that far more vital domestic interests have taken hits from foreign hackers in recent years — including the military, major banks and makers of nuclear and solar power whose trade secrets were siphoned off in a matter of mouse clicks.

Yet even in a digital era with an endless cycle of cyberattacks, none has drawn the public's attention like the Sony breach and its convergence of sensational plotlines:

—an isolated dictator half a world away.

—damaging Hollywood gossip from the executive suite.

—threats of terrorism against Christmas Day moviegoers.

—the American president chastising a corporate decision to shelve a satirical film.

—normally reticent law enforcement agencies laying bare their case against the suspected culprits.

"I can't remember the U.S. talking about a proportional response to Chinese espionage or infiltration of critical infrastructure for that matter, as a policy issue in the same way that we're talking about this today," said Jacob Olcott, a cyberpolicy and legal issues expert at Good Harbor Security Risk Management and a former adviser to Congress.

President Barack Obama said Friday the U.S. would respond to the cyberattack, though he did not say how, after the FBI publicly blamed North Korea. He also criticized Sony's decision to cancel the release of "The Interview," a comedy about a plot to assassinate North Korea's leader.

"This is uncharted territory," said Chris Finan, a former White House cybersecurity adviser. "The things we do in response to this event will indelibly serve to influence future nation state behaviour."

North Korea has denied hacking the studio, and on Saturday proposed a joint investigation with the U.S., warning of "serious" consequences if Washington said no. The White House sidestepped the idea, said it was confident that North Korea was responsible and urged North Korean government officials to "admit their culpability and compensate Sony for the damages this attack caused."

At the same time, the U.S. was reaching out to China, North Korea's key ally, to ask for its co-operation as the U.S. weighs its response, said a senior Obama administration official, who wasn't authorized to comment by name and requested anonymity. Although China holds considerable leverage over the North and its technological infrastructure, involving Beijing could pose complications because Obama has pointedly accused China of engaging in its own acts of cybertheft.

Friday's announcement was a critical moment in an investigation that united the government and cybersecurity professionals who conducted painstaking technical analysis.

The breach was discovered days before Thanksgiving when Sony employees logged onto their computers to find a screen message saying they had been hacked by a group calling itself Guardians of Peace. Experts scoured months of system logs, determining through spikes in network traffic and other anomalies that the attackers had conducted surveillance on the network since spring.

The first goal was to determine the extent of the damage to the network, so crippled that investigators or any other visitors needed handwritten credentials to gain entry.

As they examined the malware, they detected that it was similar to DarkSeoul, used in attacks on South Korea banking and media institutions and connected to North Koreans.

Investigators determined the Internet protocol addresses used, and found that one in Bolivia was the same as one in the DarkSeoul hack. They also found time zone and language settings in Korean, and that the malware itself had source code believed to be held by North Korea.

The FBI statement said clues included similarities to other tools developed by North Korea in specific lines of computer code, encryption algorithms and data deletion methods. More significantly, the FBI discovered that computer Internet addresses known to be operated by North Korea were communicating directly with other computers used to deploy and control the hacking tools and collect the stolen Sony files.

That analysis, along with a North Korean official's declaration that "The Interview" was an "act of war," served to bolster the case for a North Korean motive.

In general, it's exceedingly difficult to pin down responsibility for a cyberattack because hackers typically try to throw investigators off their trail. North Korea's Internet infrastructure is air-gapped, or not directly connected to the outside world, except by proxies through other countries, so it's even more difficult to attribute the hack.

Even when investigators do zero in on suspected culprits, there's often a political calculation about when and whether to publicly name them. The Justice Department took the unusual step in May of announcing indictments against five Chinese military officials accused of cyberespionage, but in many other instances, the public never learns the nationalities of the hackers, much less their identities.

In Sony's case, the FBI had been cautious about assigning blame to North Korea despite the evidence. Just a week before the public announcement, FBI Director James Comey had told reporters, "Before we attribute a particular action to a particular actor, we like to sort the evidence in a very careful way to arrive at a level of confidence that we think justifies saying 'Joe did it' or 'Sally did it,' and we're not at that point yet."

Beyond the FBI's announcement Friday, there were no details on remedies for Sony, no statement holding North Korea responsible for the already-known criminal acts of leaking copyright material, and no demand that North Korea return the stolen data.

"It seems highly unusual for the U.S. government to make an announcement like the FBI made today without a corresponding plan of action, which is exactly what was missing from the statements," Olcott said. "It was a press release to encourage more companies to work with the FBI in the future, but we actually don't really know why."


Tucker reported from Washington. Associated Press writer Josh Lederman in Hawaii contributed to this report.

Follow Abdollah on Twitter at and Tucker at

The Canadian Press

Sony cyberattack gets muted coverage in Japanese media

Japan's biggest newspaper, Yomiuri Shimbun, featured a story about Sony Corp. on its website Friday. It wasn't about hacking. It was about the company's struggling tablet business.

Over at newswire Kyodo News, just after the FBI formally blamed North Korea for the cyberattack, mega pop group AKB48 topped headlines online instead.

While American journalists have extensively covered the fallout from the unprecedented Sony hacking attack, it hasn't exactly been massive news in Japan. Stories certainly surfaced after President Barack Obama weighed in on the issue at his year-end press conference Friday. But overall it has received relatively modest attention, mostly in short stories on the inside pages of Japan's major newspapers.

This might all be perplexing to the rest of the world since Sony is one of Japan's most iconic global brands. Here are a few reasons why the story hasn't gotten major play in Japan's mainstream media:


While Sony Pictures is technically part of the Sony empire, it has long been run as an entirely separate U.S. company. So far, the Japanese media seems to view the hack as an American problem rather than a domestic one. Indeed, at Sony headquarters itself, officials have refused all comment and referred questions about Sony Pictures to the movie division's headquarters in Culver City, California.

"This is seen mainly as an attack on Hollywood," Damian Thong, a senior analyst at Macquarie Capital Securities in Tokyo, said earlier this week. "I feel they want to clean it up as fast they can and just get on with life."

The studio shelved the Christmas Day release of the North Korea spoof movie "The Interview" after the hackers threatened to attack theatres that showed the film. But for Japan, the movie's demise hardly matters. Sony Pictures never planned to show the film there.


Japan's newspapers, which have the highest daily circulations in the world, are inclined to avoid news that is technologically complex. Like hacking. Nobuyuki Hayashi, a veteran freelance tech journalist and consultant based in Tokyo, said the tendency stems from reporters and editors who often don't have a deep understanding of technology. And neither do their aging readers.

"If you are technically savvy and need information (about the Sony hack), you will get it from the Web news media," Hayashi said. "Some technically-savvy people subscribe to a printed newspaper as well, but that's only to read other kinds of news."


It has been a newsy December in Japan, especially with national elections last weekend. Prime Minister Shinzo Abe's Liberal Democratic Party locked up a solid majority in the lower house and reaffirmed his hold on power for up to four more years. In addition to politics, the national chatter was focused on a big blizzard that hit the northern island of Hokkaido this week, dumping heavy snow, derailing trains and killing several people.


AP Business Writer Elaine Kurtenbach contributed to this report.

The Canadian Press

AP Interview: Coelho says Sony hack threatens us all if society lives in fear

GENEVA - Brazilian author Paulo Coelho says the Sony hack threatens us all if society doesn't enforce important values: our individual and collective freedom of expression and an unwavering refusal to negotiate with anonymous terrorists.

The bestselling author said in an interview Friday with The Associated Press that he was prepared to make himself an example — even if it meant inviting criticism and potential threats — if Sony Pictures had taken him up on his $100,000 offer for the rights to its cancelled film.

Defending these values is a matter of the highest concern for "everyone on the planet, everyone who believes in freedom of expression," he said, drawing parallels with the plight of fellow author Salman Rushdie, who spent years in hiding after his novel "The Satanic Verses" drew death threats from the Iranian government.

His plan was to release the film on his blog in the unlikely event Sony took him up on his spontaneous offer via Twitter for the controversial film "The Interview" that Sony cancelled after threats from anonymous hackers.

"I thought that they could take the offer so as not to lose face," Coelho said. "You know, 'In a gesture of good will, we are going to accept $100,000 even if we put $44 million in this movie because we believe in freedom of information.' ... Tomorrow the film would be there."

The author of "The Alchemist" acknowledged he would have been afraid if he had released the film, particularly because he travels and could be vulnerable, but he would have been more ashamed of himself if he didn't at least try.

"So live with fear or live with shame? Better to live with fear," he said at his luxury Geneva home, where his phone and Internet service were mysteriously out of service in an apparent attack directed at him. "In the name of something that is more important than I am, as a physical person."

Sony defended its decision after President Barack Obama said during a press conference that the studio had "made a mistake" in dropping "The Interview," a satirical film about a plot to assassinate North Korea's leader, and he pledged the U.S. would respond "in a place and manner and time that we choose" to the attack that led to the withdrawal. The FBI blamed the hack on the communist government.

Sony said the cancellation happened only because the country's top theatre chains pulled out. "This was their decision," Sony said in a statement.

Coelho made clear he wasn't defending the movie itself but rather that he decried the "culture of fear" and apparent willingness to "negotiate with terrorists" that he said undercuts people's freedom of expression and the principle of not negotiating with terrorists. He also expressed admiration for actor George Clooney's attempt to highlight the same values of sticking one's neck out to defend our freedom of information by putting forward a petition for Hollywood bigwigs to sign — though none did.

Clooney said the entertainment industry should seek release of "The Interview" online, telling the trade site Deadline that he urged Sony to "do whatever you can to get this movie out. Not because everybody has to see the movie, but because I'm not going to be told we can't see the movie. That's the most important part."

Coelho said he was unable to reach any executives to discuss the decision not to screen the film before a projected Dec. 25 release, but he thinks the studio ignored his offer because of fear that more Sony hacked emails would be divulged.

"What I'm doing here is much more a kind of political statement: fight for you rights," he said. "We live in a moment where fear rules, and this cannot continue."

The Canadian Press

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