These are stories Report on Business is following Monday, March 26, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Brothels as business Ontario's top court may be paving the way for legal brothels operated like businesses.
As The Globe and Mail's Kirk Makin reports today, the court in Canada's most populous province ruled that prostitution is dangerous, and the risks are exacerbated when prostitutes can't work together in one shop or without security. The ruling by the five judges is aimed at protecting prostitutes.
Prosecutors are likely to ask for a stay while they appeal. But until that's granted, the Ontario ruling goes into effect in a year. Further, prostitutes can hire security as of late next month.
Without going into the details of the ruling - they can be found in my colleague's article - it's worth examining the legal operations of brothels as businesses, and whether they protect their staff.
Professor Barbara Brents of the University of Nevada, Las Vegas, thinks so, and lauded the Ontario judges for their decision.
"Nevada's legal brothel system has helped prevent violence, trafficking and gives women needed rights and resources," she told me today . "It is heartening that these judges are recognizing that simply criminalizing prostitution has done little to protect sex workers. I hope their efforts stick."
Ms. Brents and various colleagues have conducted in-depth studies of the sex industry, notably in Nevada.
With Professor Teela Sanders of the University of Leeds, she analyzed the "expansion of commercial sex," citing statistics suggesting the global industry was valued at at least $20-billion (U.S.), and likely far more, in 1998. That presumably takes in a wide array of businesses, including massage parlours and bars that offer lap dancing.
"Mainstreaming of the sex industry is invariably linked to wider patterns in leisure consumption, travel, and the hedonistic search for relaxation and pleasure," they said.
"Global tourists increasingly consume services that sell escapism, themed adventure, spectacle, fantasy, voyeurism, and even transgression," according to their study.
"Workers increasingly sell emotions, performances, and connections in an unequal context. The sexualization of work is particularly noticeable in empirical studies of the tourism, leisure, beauty, and restaurant industries."
They also talked about "mainstreaming," or integration on economic and social fronts.
In Las Vegas, for example, two people who had been with the Chamber of Commerce at the time quit, perceiving discrimination against sex businesses, and formed the Sin City Chamber of Commerce, which by 2008 boasted more than 500 members. They believed they could make money, and some 80 per cent of the members aren't in the sex trade.
"Mainstream businesses join because they recognize there are profits in providing services to adult-related businesses, including advertising, printing, financial services, attorneys, apparel, and travel agencies," the professors wrote.
"Dedicated, friendly and non-judgmental services provided to sex businesses will generate repeat and loyal customers in a somewhat alienating business world."
In another study, with different colleagues, Prof. Brents looked specifically at how the industry was becoming more business-oriented in Nevada.
"The largest of Nevada’s brothels with the capital to do so are beginning to adopt marketing strategies that are more like mainstream businesses," they said in the separate study.
"They are upscaling, expanding services, clientele and markets and using business forms similar to mainstream businesses, including corporate forms and diversification, as they try to integrate into the tourist economy. The nature of the product sold involves less of a McDonaldized rationalization of outcome-oriented sexual gratification than in the past, and is aimed more at providing individualized, interactive, touristic experiences."
There's also money to be made for governments, which can impact the companies involved.
In Australia, for example, according to reports, it costs $28,000 (Australian) for various fees for a five-room shop, and $3,700 to renew them annually. Several brothels collapsed in the recession.
Prof. Brents questioned one part of the Ontario ruling, the portion that says it's still illegal to communicate for the purposes of prostitution.
"It is rather difficult to run a business in any kind of a fair and equitable way if one cannot legally engage in the necessary negotiations," she told me.
- Ontario's top court legalizes brothels in bid to protect prostitutes
- Barbara Brents research
- Read the ruling
SNC chief quits Canada's SNC-Lavalin Group Inc. is in the eye of the storm today.
Chief executive officer Pierre Duhaime quit amid allegations he allowed a former vice-president to make unauthorized payments, which it said did not appear related to its Libyan projects, The Globe and Mail's Paul Waldie reports.
At the same time, the global engineering giant posted a dramatic drop in quarter results.
Mr. Duhaime's resignation came as the company released the results of an internal review into some $56-million (U.S.) in questionable payments directed by a former vice-president.
"The company intends to separately report these matters to the appropriate authorities and to cooperate fully with such authorities with respect to these or any other matters," SNC said.
Separately, SNC's fourth-quarter profit slipped to $76-million (Canadian) or 50 cents a share, diluted, from $158.7-million or $1.04 a year earlier, pushed down by losses in its infrastructure and environment, and hydrocarbons and chemicals business. The year-earlier period included a hefty gain.
Revenue climbed 16 per cent to $2.1-billion.
"The company currently expects its full year 2012 net income to be in line with full year 2011 net income, as we expect that the power and mining and metallurgy segments, mainly based on their current backlog, and the infrastructure concession investments segment will be the main contributors to net income while the hydrocarbons and chemicals and infrastructure and environment segments will continue to be challenging throughout 2012," the company added.
RBC hikes mortgage rates Canada's biggest mortgage lender is hiking its rates, a sign that the mortgage war playing out across the country could be coming to an end.
Royal Bank of Canada said today its special rate on four-year fixed-rate mortgages will rise by half a percentage point to 3.49 per cent, The Globe and Mail's Tara Perkins reports.
Hunger Games pumps Lions Gate Shares of Lions Gate Entertainment Corp. climbed today and analysts began raising their price targets on the stock after the $155-million (U.S.) weekend success of The Hunger Games.
Starring Jennifer Lawrence and based on the hit series by Suzanne Collins, Lions Gate appears to have a remarkable franchise on its hands, with up to three sequels.
According to The Los Angeles Times, the first movie alone is expected to mean a profit of more than $300-million for the company, while the sequels could bring that to $1.5-billion. Other analysts pegged it at more. The company's stock was already up sharply this year.
"The panacea in the movie business is to find franchises," said vice-chairman Michael Burns. "The idea that we can create some predictability around the most unpredictable part of our business is fantastic."
- David Milstead: Hunger Games nearly pure profit for Lions Gate
- The Hunger Games is an appeal to our baser appetites
Wine on the rise This is downright un-Canadian: Wine is gaining on beer as a drink of choice.
Beer's share of the alcohol market has slipped to 45 per cent from 52 per cent in 2000, Statistics Canada said today, while wine now accounts for 30 per cent, up from 23 per cent over the same period.
"Although beer remained the alcoholic drink of choice, measured in both volume and dollar value, its dominance continued to decline as consumers turned more to wine," the agency said in its report on how the market performed in the fiscal year that ended March 31, 2011.
Here's another tidbit: We're actually drinking slightly less, but paying more.
Beer and liquor stores sold $20.3-billion of beverages in that fiscal year, but volumes were down by 0.5 per cent. Stores in the Yukon posted the biggest increase, followed by Ontario.
Markets eye Ontario budget This is a key week in business and finance in Canada, starting in Toronto and ending in Waterloo, Ont.
The government of Ontario, the most stressed among Canada's provinces, kicks things off tomorrow with a challenging budget. As Sean Silcoff and Bill Curry report in today's Globe and Mail, juggling hefty debts with a path to growth is tricky, to say the least.
"While the Ontario government has already ruled out raising taxes, other revenue-raising options will likely be examined, including a host of user fees," said senior economist Jacques Marcil of Toronto-Dominion Bank.
"In addition, the government has already announced that it will realign its lottery and gaming crown corporation towards higher income-generating goals. Also, the 1.5-percentage-point cut in corporate taxes planned for 2012 could likely be delayed. Over all, while the Ontario government obviously has long-term directions in mind for the economy, we expect the upcoming budget to be highly focused on immediate cost-reduction measures."
Flaherty sitting prettier The Canadian government is in a much more enviable position, running billions better than plan, but is still expected to cut deep when Finance Minister Jim Flaherty unveils his budget on Thursday.
The Conservative government is pitching it as a document paving the way for jobs in the longer-term, despite trimming the ranks of the public sector in the shorter-term, as The Globe and Mail's Shawn McCarthy reports today. Sort of like amputating the leg to save the patient, or something like that.
"The primary focus will be on the extent of any new restraint and any new proposals on Canada’s pension system (specifically Old Age Security)," said Douglas Porter and Robert Kavcic of BMO Nesbitt Burns.
"The good news is that the economy has largely performed as expected over the past year, despite the many global challenges, and federal finances are coming in better than forecast. Whereas in last fall’s review, Finance was expecting the deficit in the current fiscal year (which ends March 31) to narrow to $31-billion from $33.4-billion in fiscal year 2010-2011, it now looks like it may be as low as $26-billion (or 1.5 per cent of GDP). And, after pushing out the target for balancing the books by a year to fiscal year 2015-2016, current trends suggest that it is quite doable to hit that goal one year earlier without major new restraint measures."
And then there's RIM At about the same time that Mr. Flaherty is unveiling his budget, the new chief executive officer of Research In Motion Ltd. , Thorsten Heins, will be presiding over his first set of quarterly results.
The BlackBerry maker has struggled of late to keep up with its rivals, notably Apple Inc. , and its fourth-quarter results are expected to show that struggle continues, as The Globe and Mail's Iain Marlow writes today.
"We foresee another tough quarter for RIM when it reports Q4 results next Thursday," said Phillip Huang of UBS Securities Canada, forecasting revenue of $4.4-billion and earnings per share of 81 cents, which is below estimates of other economists.
"We believe RIM’s BB7 devices continue to struggle, Playbook sales have seen some traction on discounted pricing, with the low-end doing relatively better," he said. "We estimate 11.5 million phones/375,000 tablet units in 4Q."