The hoopla surrounding the return of “Arrested Development” on Netflix’s Internet video service has quickly dissolved into a letdown on Wall Street.
Netflix’s stock fell by more than 6 percent Tuesday as investors reacted to critics’ mixed reviews over the weekend of the first new “Arrested Development” episodes since Fox canceled the TV series seven years ago. The shares shed $14.55 to close at $214.19, marking the biggest one-day drop in the stock in nearly six months.
IDC analyst Greg Ireland characterized Tuesday’s sell-off as an overreaction, given that it’s far too early to know whether Netflix’s latest high-profile foray into original programming will turn out to be a hit or a flop for the company. That determination probably won’t be made until late July, when Netflix typically announces the number of subscribers it added during the April-June period.
Netflix declined Tuesday to disclose any information about how many subscribers have watched “Arrested Development,” and how much, given that all 15 new episodes were released at once early Sunday. The mass debut made it possible for Netflix’s 29.2 million U.S. subscribers to watch as many episodes as they wanted during the holiday weekend as part of their $8-a-month subscription fee.
“Arrested Development” is the third original series to debut on Netflix this year. Netflix raised hopes for the series by predicting it could help add as many as 880,000 U.S. subscribers to the online video service during the three months ending in June.
— Associated Press
Kellogg has agreed to pay
$4 million to settle a class-action lawsuit over the marketing claims it made for Frosted Mini-Wheats.
The company, which also makes Frosted Flakes, Eggo waffles and Pop Tarts, was sued for saying the cereal improved children’s attentiveness, memory and other cognitive functions.
Kellogg said in a statement that the ad campaign in question ran about four years ago and that it has since adjusted its messaging to incorporate guidelines set by the Federal Trade Commission. The company, based in Battle Creek, Mich., also noted that it “has a long history of responsible advertising.”
On its Web site, Kellogg now says Frosted Mini-Wheats are full of fiber and that they “fill you up first thing and help keep you focused all morning.”
— Associated Press
● Citigroup has reached a settlement with a federal agency that had accused the bank of misleading Fannie Mae and Freddie Mac into buying $3.5 billion of mortgage-backed securities. The settlement with the Federal Housing Finance Agency was disclosed in a filing Tuesday in U.S. District Court in Manhattan, where a series of related cases by the agency against Wall Street banks are pending. The filing did not disclose the terms of the deal. FHFA spokeswoman Stefanie Johnson said the settlement was “satisfactory” but declined to say how much Citi would pay.
● The European Union’s antitrust chief said Tuesday that Google will have to offer more changes to the way it displays search results to settle a pending case. The period to examine Google’s proposals has been extended by one month and his office will ask Google with “almost 100 percent” certainty in June to do more, Joaquín Almunia told the European Parliament. The European Commission, the 27-nation bloc’s executive arm, has been investigating since 2010 whether Google is abusing its dominant market position. It pointed out several areas of concern that Google is now trying to address through the proposed concessions.
● Manhattan District Attorney Cyrus Vance Jr. has formed a
data-focused unit to help his office analyze the financial aspects of criminal activity from street crime to cybercrime, said David Szuchman, chief of the office’s Investigation Division. Twenty analysts assigned to the Financial Intelligence Unit will track financial crimes by reviewing data from banking, regulatory, law enforcement and open-source data, Vance said Tuesday in a statement. The unit will coordinate with agencies including the Internal Revenue Service, FBI and Secret Service.
● More than 100 members of Congress have asked U.S. regulators to allow American Airlines and US Airways Group to keep all their airport slots at Reagan National Airport if the companies’ planned merger is approved. In a letter, Reps. Michael H. Michaud (D-Maine), John J. Duncan Jr. (R-Tenn.) and 104 bipartisan colleagues argued to Transportation Secretary Ray LaHood and Attorney General Eric H. Holder Jr. that requiring divestiture of slots would mean fewer flights to smaller cities like Bangor and Portland, Maine.
● A former partner at the accounting firm KPMG agreed Tuesday to plead guilty to a securities fraud charge for providing insider information to a friend who plied him with cash bribes, a Rolex watch and other luxury items. Scott London, 50, agreed to plead guilty to one felony count of securities fraud. It carries a maximum 20-year prison term. He’s scheduled to appear in court Friday. London gave privileged information to friend and jewelry store owner Bryan Shaw, who used the information to trade in advance of announcements for such KPMG clients as Herbalife and Skechers USA. Shaw is estimated to have reaped more than $1 million in illicit profits.
— From news services
● 10 a.m.: Metropolitan-area employment and unemployment data for April released.