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Toy story

Business | There will be fewer places to shop for the perfect gift this Christmas

Issue: "2004 Election: Countdown," Oct. 23, 2004

When you head out to shop for toys this Christmas season, where will you go?

K-B Toys is no longer an option. FAO Schwarz is nearly extinct, too. Those two specialty toy stores went bankrupt after dismal holiday sales in 2003. This year, Toys "R" Us will try to survive the season against discount leaders Wal-Mart and Target.

With profits down 60 percent from a year ago, Toys "R" Us may sell its toy business if sales don't rebound (see "Toys aren't us," Aug. 28). To get a jump on the holidays, Toys "R" Us is stocking its shelves early with exclusive products that it hopes customers will prefer to the low prices that discounters offer.

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Toy manufacturers are willing to work with Toys "R" Us on exclusive products because the nation's second-largest toy retailer buys a wider variety of products. Plus, by testing products year-round, Toys "R" Us provides toy makers a better idea of what will sell.

In the end, though, what happens to Toys "R" Us will come down to price. Surveys show consumers plan to spend the same or less this holiday season, meaning price will again be the primary factor.

A recent spot check of 80 toys showed Toys "R" Us prices only 1.2 percent higher than Wal-Mart and 1.8 percent higher than Target. At this time last year, Toys "R" Us prices were 5 percent to 7 percent higher than the discounters.

Howard's end?

Facing billion-dollar losses, it appears there's no limit to how far satellite radio companies will go to offer exclusive programming to a small but growing number of listeners.

Like cable television, satellite radio isn't subject to federal indecency rules because it's provided only to paid subscribers. With the Federal Communications Commission cracking down on crude programming over public airwaves, it's likely more shock jocks like Howard Stern will make the move to satellite.

Mr. Stern was involved in the two biggest radio fines ever imposed by the FCC, including a record $1.75 million settlement reached four months ago. He currently reaches more than 12 million daily listeners and has the No. 1 show in most major markets. That's why Sirius, which has just 600,000 subscribers, signed Mr. Stern to a five-year deal worth $500 million on Oct. 6.

Currently, just 3 million people subscribe to Sirius and market leader XM Satellite Radio at a monthly price of $9.99 to $12.95. Subscriber growth is expected in the coming years because the industry has joined forces with automobile manufacturers to offer satellite radio packages to new car buyers. The rate of new subscribers may increase now as the satellite radio dial, much like cable television, becomes cluttered with X-rated content.

Balance Sheet

• Hurricane season has battered Florida, but it's been more than kind to The Weather Channel, which posted its biggest ratings month in history for September. The network posted a single-day record, reaching 1.9 million households the day before Hurricane Ivan made landfall.

• Employer payrolls grew by 96,000 in September, meaning 1.78 million jobs have been added in the past year. But while the economy continues to grow, many businesses remain reluctant to hire new workers because of global pricing pressures and skyrocketing costs for healthcare and pensions.

• AT&T Corp. is cutting at least 7,500 more jobs and slashing the book value of its assets by $11.4 billion, drastic moves prompted by the company's plan to retreat from the traditional consumer telephone business following a lost court battle.

• Visa and MasterCard can no longer block partner banks from issuing cards from other competitors. The Supreme Court decision allows Discover and American Express to offer both credit cards and debit cards, which could push down interest rates charged to consumers.

• Investcorp S.A., a private investment firm, has inked a $350 million all-cash deal to buy 54 business publications put on the block by The Thomson Corp. The business, which includes magazines such as American Banker, Bond Buyer, and Investment Dealers' Digest, had revenue of about $170 million in 2003.


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