>> susie: at&t makes a bold bid to become the dominant player in wireless technology by buying t- mobile, and the deal is already facing static from critics. >> tom: the merger could mean much more than cell phones, calls and customers. we'll explain. you're watching "nightly business report" for monday, march 21. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

captioning sponsored by wpbt >> tom: good evening and thanks for joining us. at&t wants to buy t-mobile in a $39 billion deal that could reshape the u.s. wireless industry. susie, if approved, it would leave just three major carriers in this country: at&t, verizon and the much smaller sprint nextel. >> susie: it is a dramatic change, tom. the proposed merger has been approved by the boards of both at&t and t-mobile parent deutche telekom. the deal still faces scrutiny from the department of justice and the federal communications commission. >> tom: critics say the merger could lead to higher prices. and as darren gersh reports, it may also change the way wireless companies do business.

>> reporter: to really understand what's driving the future of telecom, you need to appreciate the difference between smartphones and what analysts like dan hayes call dumb pipes. >> the fear among the network service providers is that they are being relegated to being dumb pipes, where all they are doing is providing connectivity for voice calls and connectivity to the internet and all the value is being taken by companies like google or applications providers who are really making the money. >> reporter: applications like google voice or apple's ichat threaten to replace traditional landline telephones altogether. telecom giants like at&t and verizon have tried to design their own apps, but hayes says they've mostly failed. so they are now trying new services instead-- phones that control home d.v.r.s and let you watch your favorite shows on the road. the goal, says tech strategist bill whyman, is to create new products as the telecomm

companies roll out higher speed, mobile broadband networks. >> the telecom companies don't want to be just the dumb pipe. they want to be able to provide higher value-added services. they want a cut of advertising revenue. they want to get involved in new location-based services. >> reporter: and by offering more services, companies like at&t hope they will be able to sell more expensive service plans, moving up from an industry average of around $60 a month to $100 a month. that's the hope, but hayes says the industry could face new sources of competition. >> one of the concerns for at&t and verizon is that they may well no longer see value from their retail brand. if they are truly dumb pipes, then what is to stop the likes of best buy, walmart, or even apple, from just selling service directly. >> reporter: the at&t/t-mobile merger is sure to face tough scrutiny from regulators who fear the industry will be reduced to two giants controlling the broadband pipes that lead to the internet.

dumb or not, those pipes could still turn out to be valuable. darren gersh, "nightly business report," washington. >> tom: both at&t and t-mobile spend millions of dollars on sponsoring sporting events. coming up in "beyond the scoreboard," could the companies save money with their sports deals? >> susie: citigroup also in the spotlight today after the giant bank announced a reverse stock split and a dividend payout. citi is launching a 10-to-one split on may 6. it will start paying a dividend of a penny a share in the second quarter. and it's one more sign of financial health. citi reported a profit in 2010, its first since the 2007, and it recently paid back its $45 billion bailout loan to the u.s. government. a short while ago, bank analyst moshe orenbach told me citi's new actions are a "modest positive". >> as it relateses to the dividend, we weren't expecting it until next year but it is relatively small

so it is a modest positive the the reverse stock split is nice because it raises the share bryce but it doesn't change the underlying economics. so to the extent that people were unhappy with the stock trading under $5, it's good but it doesn't really change the fundamentals. >> now moshe, the stock performance track record on reverse stroke splits is not really good so is there something going on that's different this time? >> yeah, i think something is a little different this time. in general, companies that are in the midst of reverse stock splitses are usually a little earlier in their repair process of being a troubled company. city group had its major issues well over a year ago, and has been in that repair process for a longer period of time. >> as you know a lot of investors don't buy stocks under $5, so are these moves by city symbolic or are they a solid investment opportunity for investors.

>> so susie, i think that your point's well taken that there are investorses who don't want to buy stocks under $5. so this makes city somewhat more appealing to those investors. it also probably allows sometimes the the sub$5 price is seens as a negative sign so maybe employeeses and the like can feel a little better about it. but as we said before, it doesn't really change the underlying fundamentals. >> so now city stock was down today. you have a neutral rating on the stock. what is your target price for city? >> you know, our target price is $5.70 a share. and the stock is down today, probably because of macro concerns. maybe sometimes because you buy the human or sell the news but it's tough to understand item stock was down more than other banks today. that's a little difficult to understand. >> now several other banks have announced dividends and share buybacks like wells fargo, jpmorgan, u.s.

bancorp, how do they stock up in your view compared to cities as an investment? >> right. so we are currently recommending the shares of those companies of both jrx p morgan and u.s. bank corp. who are further along. they are earning better returns and paying out a higher dividend and buying back some stock. so they are further along in their repair process. >> all right. and from the point of view of investors s it safe to be investing in these financials again after everythinging that they've been through through the financial crisis? >> so susie, every stock even healthy companies can go up and down. but the banks are significantly safer, both in terms of having more capital and in terms of having removed a significant amount of risk on their balance sheet. >> all right. moshe do you have any disclosuress to make. do you own any of these stocks that you talked about? >> i don't own any of them, no. >> all right. thank you very much. really appreciate your time. >> thank you.

>> tom: here are the stories in tonight's nbr newswheel: the news from citi and at&t enticed buyers, giving stocks a boost. the dow jumped 178 points, the nasdaq added 48 and the s&p 500 up 19. big board volume weighed in at just over one billion shares, about a half of friday's pace, while nasdaq volume saw sizable drop as well falling to 1.8 billion shares. sales of previously owned homes plunged in february after three straight months of increases. sales unexpectedly fell more than 9.5% month over month. the median home price dropped more than 5% from a year earlier to $156,000. the federal reserve must release details on which banks took bailouts during the financial crisis. banks wanted the information to be kept secret, but the u.s. supreme court refused to hear their case. the fed says it will release the information, but won't say when. >> susie: oil prices climbed today after a weekend of violence in libya.

in new york trading, may futures gained $1.24 to close just over $103 a barrel. now traders are growing more concerned about political instability in north africa and the middle east, in countries producing more than quarter of the world's oil. suzanne pratt takes a look at what the unrest could mean for oil prices. >> reporter: most energy experts say there's only one direction for oil prices in the foreseeable future-- you guessed it, "up." that's because much of libya's daily 1.6 million barrels of oil is likely to be off the market. opec producers like saudi arabia and kuwait are already making up some of the shortfall. but, there are concerns about supply hits in other countries as the push for democracy spreads in the middle east. oil trader ray carbonne says unstoppable unrest is a huge fear factor in the market. >> i'm a little bit pessimistic as to the situation in the middle east, so i think we're really looking at surpassing 2008 highs if we continue on the

road we're on right now. >> reporter: the 2008 high came in july of that year as crude oil surged to $145 a barrel. middle east analyst robert powell says only conflict in oil-rich saudi arabia could push prices to that level again. >> it does look likely in the near-term, although many of the ingredients-- disaffected youth, high youth unemployment, they're all there. at the moment, all of the attention is turning to bahrain, which is not a big oil producer. but, it's very close to saudi arabia. >> reporter: while there's plenty of debate as to how high oil prices will go this year, there's no question that they're bad news for the u.s. economy. economist joe davis says historically oil prices have been a leading catalyst for economic downturns. >> i'm actually very concerned about it. if we had to rank the risks in terms of the u.s. and, more broadly, the global economic landscape, oil is by far in my opinion the number one risk that bears monitoring.

>> reporter: davis says $120 a barrel for crude oil is the tipping point for the u.s. economy. if the price remains at or above that level for months, we'll see economic growth slip and hiring slide. suzanne pratt, "nightly business report," new york. >> tom: in japan, the operator of a damaged nuclear power plant reports new setbacks in the effort to bring the facility under control. the plant's operator, tokyo electric power company, today reported that high levels of radiation are being found in the ocean about 100 yards offshore from the nuclear plant. and as lucy craft reports, contamination has dispersed well beyond the evacuated zone. >> reporter: for the beleaguered people of japan, there is a new menace. radiation contamination has been discovered in spinach, milk and tap water. officials say the levels don't pose a danger to human health, but they aren't taking any chances. today, the government slapped a ban on shipments of spinach from

four states-- gunma, tochigi, ibaraki and fukushima, where the crippled nuclear power plant is located. milk from fukushima, the state which has borne the brunt of the radiation menace, has also been taken off the market. so far, japanese customers seem to be taking the news in stride. food sales overall are unaffected. but export customers in japan's prime markets-- asia and the u.s.-- have tightened inspections on japanese food products. some overseas customers are shunning all japanese food-- another hurdle, as japan struggles to recover from the worst catastrophe in its postwar history. lucy craft, "nightly business report," tokyo. >> susie: meanwhile, general motors is feeling fallout from the disaster. a g.m. plant in buffalo is stopping some engine production and laying off workers. so far, g.m. is the only american automaker to slow production due to a lack of parts from japan.

and in japan, nissan is resuming work at some of its parts plants this week. it hopes to start building cars again on thursday, but not at full production levels. japan's entire auto industry is still facing big challenges, including rolling power blackouts. >> susie: . >> at&t feels gave a nice boost to investor confidence and a nice boost to stocks

today. >> it certainly did, the megabuyout deal helping out optimism for investors today, so let's go ahead and roll with tonight's market focus. >> tom: investors were in a stock buying mood thanks to the big cell phone deal, but it was energy that led the broad market. we start with at&t. as darren reported, its $39 billion effort to buy t-mobile looks to increase services and subscribers. the stock responded nicely, up more than 1%. since september, the stock has traded in a $2 range between $28 and $30 per share. one of the losers if the at&t/t- mobile deal goes through could be sprint nextel. shares sank almost 14%, giving up all of their recent gains that were had when sprint was the subject of buyout rumors.

sprint is expected to fight the proposed merger of two competitors. smaller players in the cellular services industry saw higher stock prices. pre-paid companies leap wireless and metro p.c.s. are commonly looked at as buyout targets themselves. we've seen some nice gains. leap added 16%. metro p.c.s. up more than 4.5%, and u.s. cellular added almost 5%. one more note on the at&t deal-- stocks of cell phone tower operators fell. s.b.a. communications, american tower and crown castle each fell to their lowest prices of the year. if the at&t deal becomes a reality, it could reduce the need for new communication towers. boeing stock was taking flight today, a day after its newest 747 jumbo jet took flight for the first time. the 747-8 intercontinental is the largest commercial plane built by boeing. this is the third new boeing commercial plane in 15 months, joining the 787 dreamliner and a new freight version of the 747.

both of those are behind schedule. boeing stock led the dow industrials with this 3% jump today. the rally brings boeing back close to the $72 level. right around here. it has had trouble getting over that price since may. the best sector today was energy on the back of higher oil prices. the energy select e.t.f. added 3%. this is the past 90 sessions. look at this nice rally before it ran into middle east turbulence. and today's move brings it to about $1 from a new high. at&t isn't the only company in a buying mood. brokerage charles schwab is expanding its trading platform, buying options express, which concentrates on options and futures. schwab will pay about $1 billion, giving options express shareholders $17.91 per share in the stock-for-stock deal. schwab stock was up just a fraction. options express jumped 17%,

trading at its buyout price. closing a penny below that level. finally, tiffany. shares rebounded 5% from their recent fall. fourth quarter profits were better than forecast. japan is very important to tiffany. 18% of its business comes from japan, and tiffany resisted making predictions about sales there after the disaster. still, its full-year outlook was better than expected. leading to today's rally. and that's tonight's "market focus."

>> tom: the big deal for the stock market today with at&t wireless buying t-mobile promises billion of dollars in cost savings. tonight's "beyond the scoreboard," our look at the business of sports, starts with whether some of those savings could come from sports sponsorships. rick horrow is a sports business analyst and c.e.o. of horrow sports ventures. >> so how about it here, the two companies together is a that they can save upwards of 40 billion dollars, most of that coming from job cuts. how much could come from sponsorships. >> well, the world in one cell phone company, it's a great thing. but usual category competition is good for properties because it bids up the rights and category integration is not. this is one of those cases. these two companies spend billions on sports sponsorship over the years and now they will consolidate as one. >> the sports business has seen two buyers turn into one buy never this case. let's look at what they have been buying. at&t is known for sponsoring the masters golf tournament,

also behind the nc 2 a tournament. and is the wb a&w nba. are these sponsorships spending strategies complimentary or competitive. >> look at the demographics when you analyze it. at&t and the masters, that is a high demographic property, as we say in the business, people that can afford it and t mobile basketball goes the other way. the real key is over the next few months the two fiefdoms marketing directors will get together and allocate their assets. my sense is they will spread them among all demographics, maximize their retail reach and do it more efficiently. >> the nfl, still no movement in the talks between the oiningers and players union and now we're just learning how much money some companies may have on the line should there be no nfl season. directv rakeses in with a cache described at 325,000 for its sunday ticket subscription level it says it could lose $715 million or so next season in revenue

but it could save a billion dollars in expenseses so maybe not such as o loss. >> the billion dollarses is because they don't have to pay the rightses fee but they don't get the television. and the nfl says the value of the directv deals was the goodwill and brand building that they entered into when they got that deal long last fall. clearly no television, no brand awareness. >> the stock price has come off its high recently, it's near its lowest price in a month. do you think the market is concerned about no season. >> they are concerned, the playerses are concerned about no season, the coaches, the team, the cities, directv is just another one of the many entities who should be concerned. >> let's move to madison square guard bes msg. if are you looking for inflation look for ticket prices next season for the knicks and rangers up i respectively 49% forth knicks, up 23% for the rangers on ice. if it looks to raise money to fix up madison square garden, a return for shareholders here? >> well, first of all, a billion, a billion four investment to renovate madison square guard sown that is where the return is.

as a practical matter if you increase the price of your services 49%, you will be on the streets. >> i'm sorry, you'll be on the street. it is up to the caic ins to generate a product that is 49% better than today, the same for the rang irs, they run a lot of pressure. >> we'll find out if the knicks will be on the street. msg stock price up 30% in the last year, seeing volatility. is there a risk to shareholders that the fans won't pay the price. >> a risk to share shoulders just like any revenue max miization technique, also a risk to the head coach if the knicks aren't going to win. >> rick horrow with hor owe sports ventures. >> susie: here's what we're watching for tomorrow. quarterly results from adobe systems, carnival, dollar general and walgreen. also, our word on the street is "gold." we look at two large mining stocks, barrick gold and goldcorp. last year, the focus was small- cap junior miners. this year, it's the big boys. the united nations is learning big isn't always better.

the group is taking heat from its own ethics investigators, who say work to improve relationships with big business has flopped. the plan, called "global compact," was rolled out 10 years ago. a new study finds some companies are using the project to boost their own image without actually making the environmental, labor and corruption improvements the u.n. was hoping for. >> tom: the top lawyer for the state of wisconsin wants to begin implementing the new law curbing the collective bargaining power of government employees' unions. today he asked an appeals court to let the law go into effect. it had been blocked by a circuit court. but the wisconsin attorney general says that court had no right to overstep a law passed by the state legislature.

>> susie: social security's been around for more than 75 years, but the largest government program is now considered the third rail in american politics. those who touch it risk getting a huge shock. but tonight's commentator has some thoughts on keeping social security solvent. she's maya macguineas, director of the fiscal policy program at the new america foundation. >> there are two competing narratives on the health of social security.

narrative one? the program faces insolvency, but down the road. the trust funds will be able to cover the costs for about 25 more years but then, all of a sudden, benefits will have to be cut abruptly for everyone-- including the poorest retirees. narrative two? social security has now started running cash flow deficits. covering these costs will cost taxpayers trillions of dollars and add unmanageable strains on the budget. guess what? both are true. politicians are busily fighting over which is the correct description of the problem. the irony is that whichever narrative one prefers, the policy prescription is the same: we need some combination of benefit cuts and tax increases, and the sooner we make them, the more fairly the changes can be spread. here's the bottom line: the nation's largest government program faces insolvency. changes have to be made. rather than fighting over which is the right narrative, politicians should get to work on finding a solution. i'm maya macguineas.

>> tom: want to see what's coming up this week or this month on "nightly business report?" check out our website, nbr on pbs.org. also comment on our blog and see the latest business headlines. or you can follow us on twitter, @bizrpt, or my personal feed, @hudsonnbr. if you don't tweet, you can friend us on facebook at bizrpt. >> susie: and speaking of twitter, the social networking site has gone from zero to a billion in just five years. on march 21, 2006, co-founder jack dorsey sent the first tweet, saying, "just setting up my twitter." the rest is history. 200 million users, 140 million tweets a day. and tom, an amazing record: 7,000 tweets per second just after the japanese earthquake hit 10 days ago. >> we have ree per tweet

that is amazing vments happy birthday that is nightly business report for monday, march 21st. >> susie: good night tom. i'm susie gharib. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org