News Fox Planning National Sports Network It Hopes Can Challenge ESPN

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Fox Planning National Sports Network It Hopes Can Challenge ESPN
Mar 5th 2013, 03:13

For Rupert Murdoch, creating a national cable sports network in the United States to compete with ESPN has been his white whale — a tantalizing television opportunity but one of the few fields that his media empire has not conquered.

News Corporation's chief executive, Rupert Murdoch, will use existing contracts to stock his new sports network with games.

But two decades after shaking up the sports broadcasting world for the first time by acquiring N.F.L. rights, Murdoch has plans to challenge ESPN head on and claim some of the lucrative revenue that the sports media giant has had largely to itself for more than three decades.

On Tuesday, Fox will announce its intention to start Fox Sports 1, an all-sports network, in August.

The channel will carry Nascar races, Major League Baseball games, college basketball and football, soccer and U.F.C. fights. It will also broadcast studio shows, including one that is to be hosted by Regis Philbin, a celebrated Notre Dame fan.

Murdoch's effort is a long shot to topple ESPN, or at least take a huge bite out of it.

ESPN brings in more than $6 billion annually from its industry-high subscriber fees. It owns the rights to televise Major League Baseball, the N.F.L., the N.B.A., Nascar, tennis, myriad collegiate conferences, the Bowl Championship Series and its new playoffs, and a raft of other sports. Both ESPN and ESPN2 have 98.5 million subscribers.

It is a true empire, with eight domestic cable channels; the ESPN3 broadband network; the Web sites ESPN.com and Grantland.com; a radio network; digital properties like ESPNw, which focuses on women's sports; a magazine; the WatchESPN app, which enables viewing of ESPN on computers, smartphones and tablets; and ownership of the Global X Games, college basketball tournaments and seven bowl games.

Fox Sports 1 will join a market that is far more crowded than it was when Murdoch first contemplated squaring off against ESPN. Not only will Fox face the dominance of ESPN, but NBC and CBS have their own sports channels, which are struggling for viewers and identities. The Big Ten and Pacific-12 Conferences have created their own networks, and the Southeastern Conference is planning one. And in the past decade, Major League Baseball, the N.F.L., the N.B.A. and the N.H.L. have started their own channels.

Still, Fox and its parent, News Corporation, have a companywide faith in sports as a DVR-proof way to attract viewers — especially young men — and a belief that their new sports channel will differentiate itself from the competition, as the Fox News channel has demonstrated in its successful challenge to CNN and then MSNBC. To ensure that Fox Sports 1 has some of the style and attitude that Fox Sports has had since it began in the mid-1990s, Murdoch and Chase Carey, News Corporation's president and chief operating officer, brought back one of their favorite executives, David Hill, for its creation and launch. Hill, the former head of the Fox Sports Media Group, left the division last year for another job within News Corporation.

"We think sports is a huge arena that has room in it to build a really attractive businesses," Carey told analysts on an earnings call last month. He said that the company recognizes the escalating costs of sports rights but "in a world of increasing fragmentation, we think sports continues to be a more and more important and unique part of that overall landscape."

The channel's success might not have to come as a result of beating ESPN at its game.

David Bank, managing director of global media and Internet research at RBC Capital Markets, said that Fox Sports 1 would be a success "from Day 1" and could, in future years, bid against ESPN for N.B.A. rights and any cable package of N.F.L. games that might come to market.

"Do I expect them to be ESPN? No," he said. "Mega-success will be hard to determine for five years."

But, he said, "Rupert and Chase have had a pretty decent run at building long-term value."

Michael Nathanson, an analyst at Nomura Securities, wrote in a recent report that Fox Sports 1 would be a "good start" for News Corporation but was "unlikely to make a material dent to ESPN's business for the investable time horizon."

One way to measure Fox Sports 1's future success will be how many subscribers it gets and the subscriber fees it can accumulate. Fox has spent months working to convert Speed, a motorsports-centric network with 81 million subscribers, to Fox Sports 1. A companion service, Fox Sports 2, will replace another niche channel, Fuel.

Fox is seeking substantially more for Fox Sports 1 than the 31-cent monthly subscriber fee that Speed gets, according to the media research firm SNL Kagan.

Bank estimated that Fox Sports 1 will probably charge cable, satellite and telephone companies 75 cents to $1 a subscriber. "At $1 a sub, it's a massive home run," he said.

By comparison, ESPN charges $5.15 a month and additional fees for its other channels.

"We view Fox as a formidable competitor," said John Skipper, ESPN's president. "They've got the resources of News Corp., and the willingness that Fox has shown in the past to take big bets and to create a difference."

He added: "We like our hand. We just have to play it well."

Fox is certainly asset-rich. It plans to use existing long-term deals to fill Fox Sports 1 with M.L.B. games, including some from the league division series, beginning in 2014; Nascar Sprint Cup and truck races; U.F.C. matches; future World Cup soccer matches; and Big 12 and Pac-12 football and basketball games, as well as those from a basketball conference that is being formed by the seven Catholic universities that are leaving the Big East. The new network is also expected to buy some Big East games from ESPN.

Fox also has 22 regional sports networks to plumb for talent and some of its baseball programming. Two of those regional channels, each in Los Angeles, recently lost the rights to carry the Lakers and the Dodgers — each to networks created by Time Warner Cable. But last November, News Corporation made a major foray into the New York sports market by paying about $2 billion for a 49 percent stake in the YES Network, the profitable channel of the Yankees, with an option to buy up to 80 percent in three years.

Still, the possibility of starting a national sports network constitutes unfinished business at Fox.

In the late 1990s, Fox tied a package of M.L.B. games and a news operation with Keith Olbermann as the star anchor on its regional sports channels. It failed. Recalling that time, a former Fox executive said, "It was Chase's vision that we'd use the regional sports networks to transition into a national sports network."

Then, in 2004, Murdoch tried to create a national channel in partnership with the N.F.L. and cable operators. At the time, Murdoch said, "We want to consider the capacity of pay television subscribers to pay for two ESPNs."

But that effort never got off the ground, and he has waited nine years to make his next move.

Sports will become even more integral by this summer, when News Corporation splits into two publicly traded companies. The company's newspapers, including The Wall Street Journal and The New York Post, will join a publishing-based company that will retain the name News Corporation. The 20th Century Fox studio, Fox Broadcasting, Fox Sports, the cable channels FX and Fox News and the regional sports networks will form the Fox Group.

News Corporation has recently grown its sports business in the United States and abroad, making live sports programming central to the Fox Group, executives have said.

In the past year, News Corporation paid $335 million to complete its acquisition of Singapore-based ESPN Star Sports, previously a joint venture with the Walt Disney Company, and $757.6 million to broadcast Indian Premier League cricket through March 2018 on its Star TV channel.

"Across the whole sports portfolio, it's about making choices about where you want to invest and where to prioritize," James Murdoch, the deputy chief operating officer of News Corporation, said on the earnings call last month.

A version of this article appeared in print on March 5, 2013, on page B10 of the New York edition with the headline: Fox to Create New Network It Sees as Rival For ESPN .

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News Woman Lied About Sex With Senator Menendez, Her Lawyer Says

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Woman Lied About Sex With Senator Menendez, Her Lawyer Says
Mar 5th 2013, 01:48

SANTO DOMINGO, Dominican Republic (AP) — A Dominican woman who said in a video that she had had sex with Senator Robert Menendez of New Jersey for money is acknowledging that the story is false, according to her sworn statement released by a lawyer enmeshed in the scandal.

Senator Robert Menendez has been a target of ethics charges that have appeared to be timed to his election campaigns.

The lawyer, Vinicio Castillo Semán, said at a news conference on Monday that the woman, identified as Nexis de los Santos, 23, had said in a sworn statement not only that she had never gone "to bed with" Mr. Menendez, but also that she had never met him.

On Monday, Senator Menendez, a Democrat, said, "I've always said that these are all false, they're smears, and so I look forward to seeing whatever the Dominican courts have that prove what I've said all along."

Mr. Castillo has been accused of hosting outings on his yacht in which Mr. Menendez had sex with prostitutes. He has strongly denied the allegations and said he would seek a criminal probe into the source of the reports. On Monday, Mr. Castillo distributed copies of the woman's statement. The woman did not attend.

According to Mr. Castillo, the woman claims that she and a friend were approached by another Dominican lawyer who manufactured the accusations against Mr. Menendez.

That lawyer, Melanio Figueroa, could not be reached directly for comment. Last month, an assistant at the lawyer's office said it had dropped the women's case.

The video was recorded without their consent, Mr. Castillo said.

In the video, the two women also claimed they had had sex with Mr. Castillo and Dr. Salomon E. Melgen, a Florida eye doctor who is a prominent Democratic campaign contributor.

Mr. Castillo has said he has known Mr. Menendez for some 15 years and has never seen him with a prostitute. He said he had never hosted any parties involving prostitutes.

In November, the Web site The Daily Caller published an article that included a video interview with two women who claimed to be prostitutes.

A version of this article appeared in print on March 5, 2013, on page A23 of the New York edition with the headline: Lawyer Says Woman Lied About Sex With Menendez.

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News Obama Names 2 to Fill E.P.A. and Energy Posts

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Obama Names 2 to Fill E.P.A. and Energy Posts
Mar 5th 2013, 02:24

WASHINGTON — President Obama on Monday named two people to his cabinet who will be charged with making good on his threat to use the powers of the executive branch to tackle climate change and energy policy if Congress does not act quickly.

Ernest J. Moniz, nominated to the Energy Department, and Gina McCarthy, named to the E.P.A.

Mr. Obama nominated Gina McCarthy, a tough-talking native of Boston and an experienced clean air regulator, to take charge at the Environmental Protection Agency, and Ernest J. Moniz, a physicist and strong advocate of natural gas and nuclear power as cleaner alternatives to coal, to run the Department of Energy.

The appointments, which require Senate confirmation, send an unmistakable signal that the president intends to mount a multifaceted campaign in his second term to tackle climate change by using all the executive branch tools at his disposal.

But even with Ms. McCarthy and Mr. Moniz in place, Mr. Obama would have to confront major hurdles in trying to refashion the American way of producing and consuming energy, the same hurdles that stymied climate and energy policy in his first term.

Among the first of those is a decision on the Keystone XL pipeline, which the administration appears inclined to approve over the vociferous objections of environmental advocates.

Mr. Obama, in introducing the nominees at the White House on Monday, recognized the political and economic delicacy of the task facing both of them.

"So these two over here," he said, gesturing toward Ms. McCarthy and Mr. Moniz, "they're going to be making sure that we're investing in American energy, that we're doing everything that we can to combat the threat of climate change, that we're going to be creating jobs and economic opportunity in the first place."

It is a difficult, even paradoxical task. Addressing climate change and ensuring domestic energy independence have sometimes proved to be contradictory goals, analysts said.

"The president himself has framed the challenge of going all in to cut the pollution that causes climate change while still having an 'all-of-the-above' energy policy," said Gene Karpinski, the president of the League of Conservation Voters. "We need to make sure we lean heavily on the clean energy alternatives and all the measures that cut carbon pollution, and don't in essence take two steps forward and one step back. We will not solve the problem that way."

Mr. Obama has embraced the boom in unconventional natural gas production, which has brought lower energy prices and reduced emissions as utilities switch from coal to natural gas to produce electricity. But the production of natural gas through hydraulic fracturing, known as fracking, presents difficult environmental issues, including the possibility of groundwater contamination and the unregulated release of methane, a potent greenhouse gas.

Natural gas is cleaner than coal, but it is still a fossil fuel that even its advocates see as a bridge fuel rather than a long-term answer to climate change.

Mr. Obama has also pursued increased offshore drilling for oil and gas in the Gulf of Mexico and the Arctic Ocean, an enterprise fraught with environmental peril, as the BP oil spill in the gulf in 2010 and Shell's mishaps in the Arctic last year dramatized.

In leaning toward construction of the pipeline, the administration would be embracing a project to carry heavy crude oil from tar sands formations in Alberta to refineries in Texas. That would result in the delivery of 800,000 barrels of oil a day from a friendly source and thousands of construction, refinery and spinoff jobs. But a State Department environmental impact report issued Friday notes that extracting, shipping and refining the Canadian oil would produce measurably more greenhouse gas emissions than other types of oil.

Michael A. Levi, a climate and energy fellow at the Council on Foreign Relations, said that the appointments of Ms. McCarthy, 58, and Mr. Moniz, 68, represent a continuation of the president's first-term policies rather than a sharp break. The two are practical, practiced insiders who put a premium on finding workable solutions and have more experience navigating the federal bureaucracy and Congress than the officials they have been tapped to succeed, Lisa P. Jackson at the E.P.A. and Steven Chu at Energy.

"Putting it all together," Mr. Levi said, "it appears to reinforce the president's stated desire to push forward on a variety of different fronts. These are not people who want to use a club casually. They are not about to use rigid regulations to try to force deep changes in the U.S. economy, but they are also people who want to do big things."

The E.P.A., which the Supreme Court granted authority to regulate carbon dioxide and other heat-trapping gases, is in the midst of writing regulations governing such emissions from new power plants. Those rules, expected to be completed this year, would essentially bar construction of any new coal-fired power plants unless they included the means to capture carbon gases, a technology that does not yet exist on a commercial scale.

But to make a real dent in the nation's emissions, the agency must then devise emissions limits for existing plants, a hugely controversial project that could force the shutdown of dozens of older coal-burning power plants, cause a steep drop in domestic demand for coal and trigger a sharp rise in energy prices.

No matter how carefully written — and Ms. McCarthy is an expert on federal air quality law — any such regulations would be subject to intense opposition in the courts, and in Congress, which could seek to overturn the regulations.

David Doniger, the director of the climate and clean air program at the Natural Resources Defense Council, said that the big issues before the Obama administration were the budget, immigration, gun control and climate. "Climate change is the only one of these where he has the authority to take significant action under laws the Congress has already passed, principally the Clean Air Act, and the energy efficiency laws that Moniz will be implementing," Mr. Doniger said.

"The two agencies can work together," he said. "We think these two appointees both very seriously get climate change."

In addition to the E.P.A., the Energy Department has a strong role in the government's climate change efforts, said Dan W. Reicher, who served in two assistant secretary positions at the department while Mr. Moniz was an under secretary during the Clinton administration.

Some actions would be fairly direct, like setting additional efficiency standards for appliances. The department also still has $17.5 billion in loan guarantee authority for new nuclear projects, Mr. Reicher pointed out, and has primary responsibility for handling civilian nuclear wastes — a problem that is vital to the future of the civilian nuclear power industry.

The Energy Department's failure to begin accepting waste by the contractual deadline, which was in 1998, costs billions of dollars in penalties to taxpayers. And, he said, the department would most likely play a role in another of Mr. Obama's priorities: reducing nuclear weapons.

A version of this article appeared in print on March 5, 2013, on page A1 of the New York edition with the headline: Cabinet Picks Could Take On Climate Policy .

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News Khalil Edney Is Big Shot at New Rochelle High School and on YouTube

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Khalil Edney Is Big Shot at New Rochelle High School and on YouTube
Mar 5th 2013, 02:27

Yana Paskova for The New York Times

Khalil Edney enjoying the spotlight at New Rochelle High School.

NEW ROCHELLE, N.Y. — In the 24 hours that followed the buzzer-beater turned international Internet sensation, Khalil Edney rode in a limousine, stayed overnight at a Manhattan hotel, conducted national television interviews, held a makeshift news conference and resumed the end of his usual routine — an anticlimactic high school basketball practice.

New Rochelle High School students congratulate Khalil Edney, center, and his teammates.

Khalil Edney, whose mother died from cervical cancer in 2006, dedicated a tattoo to his mother. Of The Shot, his father, Lewis, said, "I thought his mother took it out of his hands and scored."

Life was different. Way different.

On Sunday, Edney was a 17-year-old star quarterback who moonlighted with the New Rochelle High School basketball team. He ranked second in scoring, but as a reserve, and an injured one at that, who nearly missed this particular playoff game with a bum ankle.

By Monday, he had become a new-age celebrity, a (young) man of the moment, sought after, in demand, and all because of one play that lasted a couple of seconds: a two-handed heave that traveled 55 or so feet and won New Rochelle a playoff contest. It became known simply and unoriginally as The Shot.

"That's what the world's calling it," Khalil said.

The world? It certainly seemed that way. Edney went on three morning shows, including "Good Morning America," on which his story followed one about the pope. He appeared on ESPN's flagship program, "SportsCenter," twice. He had an interviewed scheduled with CNN for Tuesday morning and one YouTube video of The Shot had already accumulated more than 1.4 million views by late afternoon.

This said less about the basketball player and his moment than it did about this era of modern sports. In a world driven and captured and analyzed on social media, the feedback is instant, often overdramatized. A high school playoff game can conclude in dramatic fashion in Westchester County, and word can spread across the country in a matter of minutes — the best shot ever, the best buzzer-beater ever, Facebook post after Facebook post Sunday with the same question:

Did you see The Shot?

"It's amazing," said Don Conetta, the principal at New Rochelle. "For all the things we do in education, this one-tenth-of-a-second shot is getting unbelievable attention from the world."

The play itself almost defied description and belief: New Rochelle was losing, 60-58, to Mount Vernon, its counterpart in a rivalry that Mount Vernon usually dominated. All of 2.9 seconds remained in the Section 1 Class AA final. The outlook looked bleak.

Edney's youngest brother turned to their father, Lewis Edney, in the stands and said, "Daddy, we do this all the time in the park."

Coach Rasaun Young called for an inbounds play named Valpo, after the buzzer-beater that Bryce Drew made in the 1998 N.C.A.A. tournament to secure a first-round victory for Valparaiso. That buzzer-beater started with a long inbounds pass, followed by another, shorter pass to Drew on the right wing.

Young called for the same play. It did not unfold how he drew it up.

Edney took the ball along the baseline and heaved the ball down court, toward his teammate Joe Clarke, the same friend he connected with for a winning touchdown late in the state football semifinals. This pass, though, was intercepted by a Mount Vernon player, who could have held the ball or thrown it straight into the air, but who instead tossed it back toward Edney.

Edney had followed his initial throw upcourt. He says he is still not sure exactly why he did that, only that he did. He secured the ball thrown by the Mount Vernon player and in one motion pushed up the desperation heave.

The play-by-play announcer on MSG Varsity deftly switched gears, from "And Mount Vernon is going to hold on and win!" to "But hold on one second!" to a series of pure screams.

New Rochelle Athletic Director Steve Young sat behind the team bench. As he watched The Shot, he liked the trajectory, and he whispered, "This might go in."

It did, and bedlam ensued, first among Mount Vernon and its fans, who assumed the clock had run out before Edney got the shot off, then among New Rochelle and its supporters once the referees affirmed he had. Teammates piled on top of Edney. Fans streamed onto the court. A referee covered his head as the mob approached.

One teammate soon posted on Twitter, along with video of The Shot: "Prom date?"

On Monday afternoon, Young sat inside his office and considered this 24-hour period, as surreal as any he could remember. A newspaper rested on the desk, its headline "Long Shot Earns a Title." Young had received some 50 phone calls, twice that many text messages and more than 20 news media requests.

He made sure to mention all that happened at New Rochelle this school year: the state football title, the national cheerleading championship, even a Super Bowl ring for Baltimore Ravens running back Ray Rice, an alum. Rice spoke at a rally Saturday, attended the game and posted a picture of the scoreboard on Twitter afterward. The last time New Rochelle won a Section 1 basketball title was 2005, back when Rice was the point guard.

The Shot, well, it shot across the Internet, noted by Duke guard Seth Curry on Twitter with a "Wow!" and by Knicks guard J. R. Smith.

It meant more, though, to Edney, whose mother died from cervical cancer in 2006. At the news conference Monday, Edney spread his arms wide to show the "momma's boy" tattoo, along with the date of her birth (right arm) and the day she died (left).

Edney's father had sat behind the team bench, and when his son launched the ball, Lewis Edney said, "I thought his mother took it out of his hands and scored."

He added, "At the end of the day, I think it was his mother watching over him."

The improbable win sent New Rochelle to the state regional semifinals, the next game scheduled for Tuesday. Edney repeatedly said his news tour and newfound celebrity would not affect his play, or his team's preparations for that contest, even if that seemed hard to fathom.

"It's a great story," Young said. "I hope, though, we can keep this in perspective. This is a great highlight. I just hope this isn't the highlight of their lives."

Edney is set to play quarterback next fall at Dean College in Massachusetts. The events of the past two days would not affect those plans, he said.

Reporters continued to ask Edney if this represented a dream fulfilled. No, he answered. He could not have dreamed this in the first place.

"It was a miracle," he said.

A version of this article appeared in print on March 5, 2013, on page B10 of the New York edition with the headline: Big Shot on Campus, and Everywhere.

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News Sequestration Poses Political Risks for Obama

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Sequestration Poses Political Risks for Obama
Mar 5th 2013, 00:59

Doug Mills/The New York Times

President Obama on Monday at the first cabinet meeting of his second term. It was also the first cabinet meeting for Defense Secretary Chuck Hagel, next to him.

WASHINGTON — As the nation's top Democrat, President Obama has a clear imperative: to ratchet up pressure on Republicans for across-the-board spending cuts by using the power of his office to dramatize the impact on families, businesses and the military.

But as president, Mr. Obama is charged with minimizing the damage from the spending reductions and must steer clear of talking down the economy. A sustained campaign against the cuts by the president could become what one former aide called "a self-fulfilling kind of mess."

As a result, Mr. Obama is carefully navigating between maximizing heat on Republicans to undo the cuts while mobilizing efforts to make sure that the steep spending cuts do not hurt Americans. His advisers acknowledge the potential political perils ahead as the president struggles to find the right kind of balance.

At his first cabinet meeting of his second term on Monday, Mr. Obama called the cuts an "area of deep concern" that would slow the country's growth, but promised to "manage through it" while pursuing a robust agenda. It was an echo of his formulations from the White House podium on Friday, when he began to dial back the dire warnings about long lines at airports and furloughs of F.B.I. agents, to name a couple, that he had made over the past several weeks.

"I've instructed not just my White House but every agency to make sure that regardless of some of the challenges that they may face because of sequestration, we're not going to stop working on behalf of the American people," Mr. Obama said, using the formal name for the spending cuts.

The president's approach is unlikely to satisfy Mr. Obama's most partisan backers, who view blaming Republicans for the deep spending cuts — especially in the military — as a tantalizing opportunity for political gain. And stepping back from a battle over the cuts could allow the significantly lower spending to become the "new normal" for the federal budget.

But a high-profile focus on the cuts in the months ahead is risky, too.

If severe economic pain ultimately fails to materialize, Mr. Obama could be blamed for hyping the situation, much like his cabinet secretaries were in recent weeks. (Homeland Security Secretary Janet Napolitano, for example, was criticized for declaring the nation would be "less safe" because of furloughs of border patrol agents.)

Seeking short-term political gain with the spending cuts could also make more difficult the president's hopes for a longer-term budget deal with Republicans on taxes and entitlement spending.

Mr. Obama's team is keenly aware that the more he focuses on the cuts, the more he threatens to divert attention from his second-term priorities on guns, immigration and preschool.

"You can't simply put them on hold and simply deal with this," David Axelrod, a former top adviser to Mr. Obama, said in an interview. The danger of sounding the alarm on the sequester, he said, is that "you can so magnify the impact of it so that it becomes an even bigger self-fulfilling kind of mess."

Mr. Obama was careful during his first term to seize on any bit of good economic news so that no one could accuse him of hurting the economy by his statements. That desire to be upbeat — as in 2010, when administration officials declared a "recovery summer" just before the economy dipped again — sometimes got him into trouble.

The question now for the president is how much to keep up the drumbeat of concern about the spending cuts in the weeks ahead.

In talking points distributed by the White House to Democratic pundits on Friday, advisers suggested focusing on how Republican refusal to accept tax increases will "threaten our national security and hundreds of thousands of middle-class jobs and our entire economy while too many Americans are still looking for work."

But the document also urges them to make the point that it is time to turn to other issues. Former Senator Tom Daschle of South Dakota, the Democratic leader during the Clinton years and the first term of George W. Bush, said he expects the president will not spend much time talking about the cuts.

"What he has to do is say, 'I warned you about this, it's going to happen, it's gradual, but at the same time, we've got a country to run,' " Mr. Daschle said. "You're not going to hear him with much more hyperbolic rhetoric."

Senior White House aides said as much on Friday before Mr. Obama formally signed the order putting the cuts into effect. They told reporters that sequestration cuts would not be the only thing the president talks about — or even the majority of what he talks about — in the weeks ahead.

But they said he will try to score a political point when opportunities arise.

Aides continue to bet that they will. Even without Mr. Obama's intervention, White House officials said they expect the effect of the cuts will slowly become more visible.

Government workers will begin forced furloughs in April, air control towers in small towns will eventually close and a lack of overtime for airport security officers will make lines longer over time.

"This is a slow-roll disaster instead of a meteor hitting," said Matt Bennett, a Clinton-era adviser and the vice president for communications at Third Way, a liberal research group. "It's coming on slowly. You are going to see it popping up."

But it's also possible that the severe angst is limited to relatively small communities of interest: federal workers, defense contractors, service providers who depend on government grants. If that happens, Mr. Obama would have little leverage to use against Republicans.

"It's imperative not to lose sight of the rest of the agenda," said Jim Manley, a former top aide to Senator Harry Reid of Nevada, the majority leader. "They are smart enough to realize it's a delicate balancing act."

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News F.C.C. Urges a Right to Unlock Cellphones

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F.C.C. Urges a Right to Unlock Cellphones
Mar 5th 2013, 01:34

WASHINGTON — For a decade consumers have been able to keep their cellphone numbers even if they switched their wireless carriers. On Monday, the Obama administration and the Federal Communications Commission said consumers should also be able to switch carriers and keep their actual phones.

For consumers, being able to take their iPhone or any other type of handset with them when they switch carriers could make it easier to take advantage of lower rates once an initial contract is fulfilled. That might mean more price competition and more choices for cellphone customers.

The administration and the F.C.C., under Julius Genachowski, announced that they will urge Congress to overturn a ruling made last year by the Copyright Office of the Library of Congress that made it illegal for consumers to unlock their cellphones, opening the protective software that restricts most phones from working on another carrier's network.

Most consumers probably are not even aware that there is a process that would allow them to keep their current phone when they switch from one national carrier to another — but only after they have satisfied their initial service contract. The freedom to keep a phone regardless of the carrier has become a popular cause in technology circles, and an online petition to the White House gained more than 100,000 signatures in a month, prompting a response.

"If you have paid for a mobile device, and aren't bound by a service agreement or other obligation, you should be able to use it on another network," R. David Edelman, a senior White House adviser for Internet, innovation and policy, wrote in a blog post on the White House Web site.

"It's common sense," he said, and it raises concerns about consumer choice, competition and innovation.

Without a change, the potential consequences for unauthorized unlocking, under the Digital Millennium Copyright Act, are stiff: a $500,000 fine and five years in prison.

Wireless phone companies say they do not understand what the fuss is about. The big carriers each have policies that allow for phone unlocking on request once a user has fulfilled the initial contract terms. And, the carriers say, there are plenty of places to buy an unlocked phone to be used on a pay-as-you-go basis.

"We'll unlock your device if you've fulfilled the terms of your service agreement," AT&T, one of the largest wireless carriers, said in a statement Monday. "And, if you bring an unlocked device that will work on our network, we'll sell you a SIM card and service."

The key, therefore, is whether a cellphone designed to operate on one company's network will operate on another company's system. Unlike in Europe, cellphone systems in the United States do not all operate using the same technology, meaning a phone from one carrier might not easily transfer to another.

Michael Altschul, a senior vice president of CTIA — The Wireless Association, a trade group representing cellphone companies, said the national wireless carriers only insist on a phone remaining locked for the duration of the service contract so they can recover some of the cost of their subsidy that reduces the purchase price of the phone. Consumers have long been able to buy phones that already are unlocked, but that usually requires paying full price, which is often several times the subsidized price at which carriers offer phones along with a two-year contract.

For example, an unlocked iPhone 5 can be bought from the Apple store for $649; the same phone bought from AT&T costs $199 if the buyer accepts a two-year contract for wireless service.

The ban on unlocking a cellphone became an issue with the passage in 1988 of the copyright act, which among other provisions makes it illegal to circumvent digital protection technology. Unlocking a phone requires altering the software that restricts use of the phone to a certain carrier's network, and runs afoul of the act.

But until recently, the copyright office had granted an exemption for mobile phones, subject to review every few years. Last year, however, the copyright office did not renew the exemption, prompting protests from the tech community.

The Library of Congress issued a statement Monday saying it agreed with the Obama administration that the issue of whether consumers should be able to unlock their phones "has implications for telecommunications policy" and that it should be reviewed by Congress and the administration.

Because the Library of Congress, and therefore the copyright office, are part of the legislative branch, the White House cannot simply overturn the current ruling. But both the White House and the F.C.C. urged Congress to take up the issue.

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News Justices to Take Up Case on Generic Drug Makers’ Liability

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Justices to Take Up Case on Generic Drug Makers' Liability
Mar 4th 2013, 22:56

Cheryl Senter for The New York Times

A reaction to the anti-inflammatory drug sulindac rendered Karen Bartlett legally blind.

The injuries that Karen Bartlett suffered after taking a mild pain pill are enough to make anyone squeamish.

Ms. Bartlett, who lives in Plaistow, N.H., developed a rare but severe reaction to the anti-inflammatory drug sulindac after a doctor prescribed it to treat shoulder pain in 2004. Within weeks of taking the drug, her skin began to slough off until nearly two-thirds of it was gone.

She spent almost two months in a burn unit, and months more in a medically induced coma. The reaction permanently damaged her lungs and esophagus and rendered her legally blind.

Ms. Bartlett sued Mutual Pharmaceutical Company, which made the drug she took, a generic pill, arguing that the drug's design was dangerous and defective. During her trial in 2010 in Federal District Court in Concord, N.H., her burn surgeon described her experience as "hell on earth," and a jury awarded her $21 million. An appeals court upheld the verdict.

"I wouldn't want anybody to go through what I went through," Ms. Bartlett said in a recent interview. "It was horrible. And this medication that I took, sulindac, I don't think it should be prescribed."

Now, in a case that is being closely watched by pharmaceutical companies, federal regulators and others, the Supreme Court will hear arguments this month on whether Mutual can be held responsible for Ms. Bartlett's injuries. The outcome is likely to further clarify the legal recourse for patients who take generic drugs, which now account for 80 percent of all prescriptions in the United States.

Two years ago, the Supreme Court severely limited the conditions under which consumers of generic drugs could sue the manufacturers, ruling in Pliva v. Mensing that such companies did not have control over what warning labels said and therefore could not be sued for not alerting patients to the risks of taking their drugs.

Ms. Bartlett's case is slightly different because she did not argue that the drug's warning label was inadequate. She claimed that the drug itself was defective. But Mutual has contended that the rationale is the same since, like the label, it has no control over the drug's design.

Under federal law, generic companies are not allowed to deviate from the brand-name drug they are copying. Sulindac is the scientific name for Clinoril, a drug similar to ibuprofen that was approved by the Food and Drug Administration in 1978 and is sold by Merck. Like ibuprofen, sulindac is in a class of drugs known as nonsteroidal anti-inflammatory drugs or Nsaids, which are in widespread use.

Mutual is appealing a decision by the United States Court of Appeals for the First Circuit, in Boston, that upheld the jury verdict and argued that even if Mutual could not have changed the drug's design, it had no obligation to continue selling a defective product and could have taken the drug off the market. Mutual is a subsidiary of Sun Pharmaceutical of India.

Interest groups on both sides say any decision could have serious consequences.

If the court agrees with Mutual and rules that generic companies cannot be sued for defective products, trial lawyers warn that patients will be left with very few options if they are injured by a generic drug.

"The question becomes, can you sue a generic manufacturer for anything?" said Bill Curtis, a Dallas lawyer who specializes in pharmaceutical cases.

But manufacturers of generic drugs and other business groups have said that if the court sides with Ms. Bartlett, the decisions of individual juries could trump the authority of federal agencies like the Food and Drug Administration and potentially lead drug makers to remove valuable medicines from the market. The federal government has sided with the generic drug makers in this case even though it opposed the industry in the Mensing case.

"Tort judgments second-guessing F.D.A.'s expert drug safety determination would undermine the federal regime to the extent that they forbade or significantly restricted the marketing of an F.D.A.-approved drug," the government wrote in its brief to the court.

Keith M. Jensen, Ms. Bartlett's lawyer, disputed this argument, saying, "that presumes the F.D.A. always has all the information and that drug companies never have incentive to hide it from them." He said lawsuits like Ms. Bartlett's could uncover new information about the safety of a drug.

In the case of sulindac, he presented evidence at trial that patients taking the drug were more at risk of developing the condition that Ms. Bartlett contracted, known as toxic epidermal necrolysis, a severe form of a related condition called Stevens-Johnson Syndrome, than those taking other, similar pain drugs. The conditions can be set off by a negative reaction to many drugs, but only rarely.

It is difficult to estimate how common the reactions are because some contend they are underreported, but one recent review of medical literature found that fewer than a handful of people out of a million users of Nsaids would be affected.

Like all Nsaids, sulindac carried a notice on its label that patients could develop Stevens-Johnson Syndrome. But in 2005, after Ms. Bartlett's reaction, the F.D.A. required that all manufacturers of Nsaids strengthen their labels by specifically listing the risk of developing the skin reactions in the "Warnings" section of the label. That same year, Pfizer removed the pain drug Bextra from the market after the F.D.A. warned that patients were at a heightened risk for developing Stevens-Johnson Syndrome and other skin reactions.

In its brief, the federal government disputed the conclusion that sulindac was unsafe, saying the F.D.A. had reviewed the drug and determined that it could remain on the market.

Ms. Bartlett said that before her injury she was independent, active and loved her job as a secretary at an insurance company. In 2004, she visited her doctor because her shoulder hurt, and he prescribed Clinoril. The pharmacist dispensed a generic version of the drug.

Today, Ms. Bartlett is 53 and legally blind despite 13 eye operations. She said she struggled to reach the mailbox each day and could no longer drive or work. Her lungs are severely damaged, and she has trouble eating.

To her, it makes no difference who made the drug she took. "I think the generic companies as well as brand-name companies, they should be held accountable for the medicines that they put out there," she said.

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