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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to http://pennystockpaycheck.com for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Takeover approach for Severn Trent

Category : Business

A group of international investors is interested in buying UK water supplier Severn Trent, the company confirms.

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WPP: Big is beautiful at Sorrell’s marketing group – but for how long?

Category : Business

World’s largest marketing services group continues to grow, but questions remain what would happen if its chief left

This week MediaGuardian 25, our survey of Britain’s most important media companies, covering TV, radio, newspapers, magazines, music and digital, looks at WPP.

L’Oreal is one of the seemingly few global advertisers that Sir Martin Sorrell hasn’t managed to snare, yet after he pocketed almost £18m for running WPP last year some investors have been left muttering a version of the beauty brand’s famous strapline: “Is it really because he’s worth it?”

WPP’s chief executive took a rare blow on the chin last week, bowing to shareholders’ outrage at the scale of his pay packet, accepting a £150,000 salary cut, a 20% reduction in bonus and a significantly reduced long-term incentive programme.

Investors will get a chance to have their say at WPP’s annual meeting in June, with some complaining the board is too quick to kowtow to the company founder’s will. “WPP will probably trot out ‘oh but he formed this company from scratch …’, and he has sold [people] that [line] over and over again,” says one City source. “Entrepreneurs only tend to get paid out once when they float their company. Sorrell likes to be paid like an investment banker.”

It has been 28 years since he took the gamble on Wire and Plastic Products, a stockmarket-listed manufacturer of wire baskets, which he has used as a vehicle to create the world’s largest marketing services company. Last year WPP made more than £1bn in pre-tax profits and £10bn in revenues. It has a market capitalisation of more than £13bn.

“WPP is doing incredibly well, I think Martin is a force of nature and has built an amazing company,” says a senior advertising executive who once worked with Sorrell. “It is the most successful communications group in the world and Martin has led it brilliantly.” But some wonder whether the sprawling juggernaut – which employs 165,000 staff globally – is getting beyond the control of even the indefatigable Sorrell.

“It is too big, it is a bit like the Roman empire and is held together by one man’s force of will,” says the senior adman. “Therein lies the danger, there is something Napoleonic about it all. WPP is so big, it is almost unmanageable.”

Maybe so, but City analysts love the company – last year WPP’s share price rose 31% from 675p to 888p: “It will take more than another fat pay cheque to Sir Martin to spook the shareholders into selling,” says Anthony de Larrinaga, managing director at financial research company WYT.

Although there is an ongoing debate about whether Sorrell, who hates to see a prize asset go to a rival, overpaid in deals such as the £1.1bn purchase of research firm TNS, WPP is ticking the right boxes. “WPP is well-postioned from the three key angles of geography, clients and devices/product mix,” says Johnathan Barrett at Singer Capital Markets.

WPP’s engine is fuelled by its massive media buying capability: its Group M division uses its advertising buying power to get the best deals for clients across media including TV, press, radio and online. The advertising and media buying operation made £4.2bn in revenues last year, almost 42% of the total, and operating profits of £755m, just under half of WPP’s total.

The growth rate of WPP’s media buying operation alone, which is well over double the size of any rival in the UK, was a storming 7.4% in 2013′s first quarter. Group M controls about £1.2bn of UK TV ad spend, 30% of the market, and is almost as strong in other media. Potentially most concerning is that in most cases the closest rival media agency group is lucky to hold a market share of about half that of WPP.

“It has reached a stage that [media owners] can’t say no to Group M,” says a senior executive at a rival agency. “Their clout is unmanageable.” An example is Group M’s highly-publicised move to pull its £300m annual TV ad spend from Channel 4, close to a third of the £1bn the broadcaster takes in ad revenue annually, in a bid to drive down prices on commercials for WPP clients.

“[The outcome] was a draw, of sorts,” says one TV industry insider. “Group M didn’t come out looking so good reputation-wise, the publicity and the boycott turned out to be an uncomfortable place to be.” WPP would counter that such views are rivals’ sour grapes.; that other media groups have pulled client ad spend to get better deals, and that Channel 4 is perhaps not the force it was in terms of value for money Rival Aegis Media once boycotted Channel 5 for the best part of nine months, and more recently there was a spat with News International over the value it delivers for advertisers.

“Dominance and market leadership are two different things,” says a spokesman for WPP. “There is no lack of competition in the market. Group M is a strong leader in this highly competitive market, and benefits of leverage accrue to the clients.”

ITV’s family of channels has a 46% share of the TV advertising market, Channel 4 about 28%, Global Radio almost 60% of the radio advertising market and News International’s newspapers 25% share of press advertising. They are big enough to handle forceful negotiations, some say, adding that if you want to look at market dominance focus on Google’s 92% share of the UK search market.

“ITV and Associated [owner of the Daily Mail] may be able to withstand Group M, but most others are bullied and fall over,” says the senior media industry executive. But for how long will WPP still have that kind of power? What happens when Sorrell steps back is the question WPP-watchers describe as the elephant in the corner of the room.

The 68-year-old has ruled with an iron grip and there are those who believe that WPP will founder without him. “They’ll be fine until he goes,” says a senior advertising executive. “Then it’s a house of cards.”

Philip Lader, WPP chairman, said last week that there are twice-yearly discussions to prepare for Sorrell’s eventual departure – which could theoretically be abrupt, given his contract allows him to leave “at will” – and that the aim is not to “identify another Martin”.

“We earnestly endeavour to remain prepared for this inevitable transition,” Lader told shareholders. “That time, however, is not now. There’s no ‘elephant’ in the [WPP board] room.”

Rics calls for estate agent tests

Category : Business

Estate agents who are not members of a professional body currently do not have to meet minimum competency standards

First-time buyers would feel more confident when buying a home if estate agents had to pass compulsory tests to show they are up to scratch.

That was one of the findings of a study by the Royal Institution of Chartered Surveyors (Rics), which wants to see greater regulation of estate agents to make sure first-time buyers are not, in its words, “flying blind” through the “biggest purchase of their lives”.

At present, agents who are not members of a professional body do not have to meet minimum competency standards.

There have been signs recently that more first-time buyers are entering the market following government efforts to improve conditions and help people with smaller deposits get on to the property ladder. First-time buyers have consistently been making up around two-fifths of house purchases in recent months.

However, Rics said its research found that three in 10 (29%) first-time buyers said they did not have a good understanding of the sales process when buying a home. More than three-quarters (77%) believe consumers’ understanding would improve if compulsory regulation of estate agents was introduced, and 89% think buyers would be better protected.

Rics said that with the market showing signs of a pick-up and “seemingly over the very worst”, more must be done to ensure that agents are suitably qualified to advise their clients through the sales process.

Peter Bolton King, a Rics director, said: “I would recommend that anyone who is buying or selling a house checks that their agent is a regulated member of a professional body such as Rics, and has met minimum standards of competency and understanding.

“By using an unregulated estate agent, people are potentially dealing with someone who doesn’t understand the technicalities involved in buying a home, or their obligations to consumers.”

More than 1,000 people who had either bought a property or obtained a valuation in the past five years took part in the survey.

US central bank to keep buying bonds

Category : World News

US central bank keeps interest rates steady and sticks to its quantitative easing bond-buying programme.

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El Erian: Fed will struggle to unwind its giant trade

Category : Business, Stocks

Pimco CEO Mohamed El-Erian is worried the Fed won’t be able to end its bond buying program without ‘collateral damage.’

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Fed discussed slowing bond purchases

Category : Business, World News

The minutes of March’s meeting of US Fed policymakers show some think its bond buying programme could be slowed down later this year.

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Bond bubble may deflate slowly

Category : Business

Experts surveyed by CNNMoney think interest rates will rise throughout 2013, but not dramatically higher. It will be hard for bond yields to spike as long as the Federal Reserve keeps buying.

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Is buying cheaper than renting?

Category : World News

Is buying cheaper than renting?

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They have ways of making you spend

Category : Business

How messy shops are getting you buying more

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The hedge funds’ Google vs. Apple trade

Category : Business, Stocks

Funds that were buying one and shorting the other are reportedly unwinding their trades.

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