In Vietnam, US relies on pirate site to network

HO CHI MINH CITY, Vietnam (AP) — It's a wildly popular website laden with unlicensed songs and Hollywood movies, a prime exhibit of the digital piracy that is strangling the music industry in Asia and eroding legitimate online sales around the world.

The free-to-download bonanza has pushed Vietnam's Zing.vn into the ranks of the globe's top 550 websites. But a few clicks inside the site reveal a surprising presence: the U.S. government, which maintains a bustling social media account there.

Washington is a vocal proponent of intellectual property rights in Vietnam as it is around the world, and a site like Zing would be shut down in the United States. But with space for public diplomacy limited in Communist Vietnam, the American embassy uses its "Zingme" account to reach out to young people in Vietnam as it seeks to build closer ties with its former enemy.

The embassy's presence shows just how mainstream pirate sites have become in Vietnam, where the government does nothing to stop them operating. But it also raises questions whether Washington is legitimizing a renowned pirate site that record labels, singers and industry groups say ignores requests that it take down infringing material.

Coca-Cola and Samsung pulled their advertising from the site earlier this month because of piracy concerns following questions by The Associated Press. The move challenged Zing's business model and was praised by recording industry groups. Samsung said last week it was also closing its Zingme account for the same reason.

The embassy said it recognizes the concerns for U.S. copyright interests posed by Zing but that it believes that contact with the website's users could reduce traffic or infringing activity on it. The mission sometimes uses its Zingme page to post about copyright infringement.

Its statement noted that the site had removed, at its request, the link to infringing material that appears on other Zingme pages as a matter of course. It also noted to its lack of options in a country where the Communist government controls the media, saying "there were few spaces for public discourse and intermittent access to Facebook", referring to a block the government sometimes puts on the American social networking site.

But not everyone thinks engaging with Zing is the right thing to do.

"Here we are as an American company trying to set things right with one of the biggest pirates in Vietnam but the U.S. embassy is essentially showing its support by being on its site," said Mimi Nguyen, an American who has been trying fruitlessly to get Zing to take down some 10,000 songs owned by her family's business for a year.

"It is really sad to find out the embassy is using their platform."

The Recording Industry Association of America, which praised the decision by Samsung and Coke to withdrawn from Zing and has labeled Zing a "notorious" pirate site, said it was neither endorsing nor criticizing the embassy's decision to maintain the site.

Neil Turkewitz, a senior vice president at the association, said he imagined the embassy had tried to balance the ability to target a tech-savvy demographic with anti-piracy messages against the appearance of a connection between it and the site.

"My guess is that it wasn't an easy decision," he said.

The recording industry around the world is struggling to make money from online distribution models, and illegal downloading remains rampant. Artists and producers in much of Asia are feeling the pinch especially hard because governments have failed to pass or enforce anti-piracy laws. Licensed CDs, films and downloads can cost the equivalent of a day's salary, making it even harder to wean people off pirated products.

In Vietnam, inaction by a government that sees no political upside in cracking down on what many see as a victimless crimes has pushed the industry to the point of collapse. Zing is seen as the No.1 enemy by those who speak out against its effective stranglehold over the country's music industry.

"Zing is destroying the industry and they know it," said record producer Quoc Trung, who is leading a campaign against online piracy. "We need people to pay for music, not just click on it. It is now or never."

Zing, which declined repeated requests for comment on this article and a previous one, has used free download to become the sixth-most visited site in Vietnam, and the second most popular Vietnamese music download site. Around 15 percent of its visitors are from overseas. It is not the only infringing website in Vietnam by far, but it is the most visited.

Sites that offer pirated content alongside other Internet services like Zing exist elsewhere around the world and are among the most reprehensible, according to the Recording Industry Association of America.

"They want to appear as legitimate actors, and have functions unrelated to piracy, yet operate network services that include features that intentionally and effectively induce infringement," it said in a letter to the U.S. Trade Representative in August asking the government to use all the tools at its disposal to ensure Zing and others are not permitted to undermine legitimate online markets.

"These services deliberately gain market share by providing access to infringing materials, launching music services without any form of licensing, and have demonstrated continued resolve to engage in conduct based upon misappropriation."

Zingme closely resembles Facebook, which recently overtook the Vietnamese site in subscriber numbers, according to one research group. Facebook is sometimes blocked by the government because of fears it could be used to mobilize dissent against its one-party rule. Zingme is never blocked, and is more popular with younger, less educated Vietnamese. Companies and institutions often have accounts on both. The embassy has more than 18,000 friends on Zingme, compared to 12,000 on Facebook.

Many in the industry have no choice but to work with Zing even as it distributes their music and films for free. Not having your music on the site means getting an audience for live concerts, or attracting commercial sponsorship, is almost impossible, industry executives said. But a few are pushing back, among them established singer Le Quyen, who is suing Zing and eight other infringing websites.

"I'm sure that Zing is aware that what they do is wrong, but they are afraid that other singers will put pressure on them if I win the case," she said before one of her near-weekly concerts at a venue owned by her husband here. "That's why they keep avoiding my demands. Their tactic is to drag the case on until their opponent gets tired and gives up."

Some in the industry predict Zing and other websites will embrace a more legitimate model, rather like Baidu in neighboring China, which after years of complaints from international and local record labels about pirated content signed a licensing deal with its former critics last year. Major Western record labels eager to sell music in the 13th most populous country in the world have been in early talks with Zing and other sites, but there is no deal on the horizon.

For now, the sites are not taking down their unlicensed content because doing so would mean that users would flock to that of a rival, and new ones are cropping all the time. Those offering unlimited downloads of Hollywood movies for a monthly subscription as low as $2 are amassing large audiences, and could be looking to leveraging their popularity to become legitimate providers.

"In Vietnam, you build an audience first, and then you negotiate," said Phung Tien Cong, a manager at MVCorp, which is trying to establish a pay-for-song business in collaboration with Zing, other websites and license holders.

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Brummitt can be reached at https://twitter.com/cjbrummitt.

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China passes law to curb abuse of mental hospitals

BEIJING (AP) — China's legislature on Friday passed a long-awaited mental health law that aims to prevent people from being involuntarily held and unnecessarily treated in psychiatric facilities — abuses that have been used against government critics and triggered public outrage.

The law standardizes mental health care services, requiring general hospitals to set up special outpatient clinics or provide counseling, and calls for the training of more doctors.

Debated for years, the law attempts to address an imbalance in Chinese society — a lack of mental health care services for a population that has grown more prosperous but also more aware of modern-day stresses and the need for treatment. Psychiatrists who helped draft and improve the legislation welcomed its passage.

"The law will protect the rights of mental patients and prevent those who don't need treatment from being forced to receive it," said Dr. Liu Xiehe, an 85-year-old psychiatrist based in the southwestern city of Chengdu, who drafted the first version of the law in 1985.

"Our mental health law is in line with international standards. This shows the government pays attention to the development of mental health and the protection of people's rights in this area," Liu told The Associated Press by phone.

Pressure has grown on the government in recent years after state media and rights activists reported cases of people forced into mental hospitals when they did not require treatment. Some were placed there by employers with whom they had wage disputes, some by their family members in fights over money, and others — usually people with grievances against officials — by police who wanted to silence them.

Yang Yamei, of the Inner Mongolian city of Hulunbuir, has been locked up at a local mental hospital for the last eight months in what her daughter says is retaliation for her attempts to seek compensation from the government for a court ruling that unfairly sentenced her to three years in a labor camp.

This is the third time in four years that she has been forcibly committed, her daughter Guo Dandan said by phone.

"It's because my mother has been petitioning for help, but the authorities don't want to solve her problems, so they put her in there," Guo said. "I have tried many times to persuade her doctors to release her, but they refuse."

Guo's claim could not be independently verified. Local government offices and the mental hospital could not immediately be reached for comment.

"I only hope that the law will be stricter," Guo said. "In the cases of petitioners, when the authorities can use their personal relationships with doctors to fake medical records, hospitals should not be allowed to accept such cases."

The law states for the first time that mental health examinations and treatment must be conducted on a voluntary basis, unless a person is considered a danger to himself or others. Only psychiatrists have the authority to commit people to hospitals for treatment, and treatment may be compulsory for patients diagnosed with a severe mental illness, according to the law.

Significantly, the law gives people who feel they have been unnecessarily admitted into mental health facilities the right to appeal.

But it will likely be a challenge for people to exercise that right once they are in the system, said Huang Xuetao, a lawyer who runs an organization in the southern city of Shenzhen that assists people who have been committed against their will.

Though questions remain over how the law will be enforced and whether sufficient government funding will be provided to enable the expansion of services, psychiatrists said the passage of the legislation marked a milestone.

"It's very exciting. I honestly believe this will start a new trajectory," said Dr. Michael Phillips, a Canadian psychiatrist who has worked in China for nearly three decades and now heads a suicide research center in Shanghai.

Phillips said the biggest change for the psychiatric system is the curb on involuntary admissions. At least 80 percent of hospital admissions are compulsory, he said.

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Associated Press researcher Flora Ji contributed to this report.

Follow Gillian Wong on Twitter: http://twitter.com/gillianwong

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Superstorm Sandy clobbers New York City

  NEW YORK, N.Y. - Superstorm Sandy slammed into the New Jersey coastline and hurled a record-breaking four-metre surge of seawater at New York City on Monday, roaring ashore and putting the presidential campaign on hold a week before election day At least 13 deaths were blamed on the storm.

Sandy knocked out power to at least 5.7 million people, and New York's main utility said large sections of Manhattan had been plunged into darkness by the storm, with 250,000 customers without power as water pressed into the island from three sides, flooding rail yards, subway tracks, tunnels and roads.

Just before its centre reached land, the storm was stripped of hurricane status, but the distinction was purely technical, based on its shape and internal temperature. It still packed hurricane-force wind, and forecasters were careful to say it remained every bit as dangerous to the 50 million people in its path. By late night, the centre of the storm was over southern New Jersey.

The National Hurricane Center announced at 8 p.m. that Sandy had come ashore near Atlantic City. It smacked the boarded-up big cities of the Northeast corridor, from Washington and Baltimore to Philadelphia, New York and Boston, with stinging rain and gusts of more than 85 135 kilometres per hour. The sea surged a record of nearly four metres at the foot of Manhattan, flooding the financial district and subway tunnels.

The 13 deaths were reported in New Jersey, New York, West Virginia, Pennsylvania and Connecticut. Some of the victims were killed by falling trees. Police in Toronto said a woman was killed by a falling sign as high winds closed in on Canada's largest city.

As it made its way toward land, it converged with a cold-weather system that turned into a fearsome superstorm, a monstrous hybrid consisting not only of rain and high wind but of snow. Forecasters warned of six-metre waves bashing into the Chicago lakefront and up to 90 centimetres of snow in West Virginia.

Storm damage was projected at $10 billion to $20 billion, meaning it could prove to be one of the costliest natural disasters in U.S. history.

President Barack Obama and Mitt Romney suspended their campaigning with just over a week to go before election day.

At the White House, Obama made a direct appeal to those in harm's way: "Please listen to what your state and local officials are saying. When they tell you to evacuate, you need to evacuate. Don't delay, don't pause, don't question the instructions that are being given, because this is a powerful storm."

The storm washed away a section of the Atlantic City Boardwalk in New Jersey. Water was splashing over the seawalls at the southern tip of Manhattan.

New York Mayor Michael Bloomberg said late Monday that the worst of the rain had passed for the city, and that the high tide that sent water sloshing into Manhattan from three sides was receding.

Still, authorities also feared the surge of seawater would damage the underground electrical and communications lines in lower Manhattan that are vital to the nation's financial centre.

Water began pooling in rail yards and on highways near the Hudson River waterfront on Manhattan's far west side. On coastal Long Island, floodwaters swamped cars, downed trees and put neighbourhoods under water as beachfronts and fishing villages bore the brunt of the storm. A police car was lost rescuing 14 people from the popular resort Fire Island.

In downtown Manhattan, rescue workers floated bright orange rafts on flooded streets, while police officers with loudspeakers told people to go home.

"Now it's really turning into something," said Brian Damianakes, taking shelter in a bank vestibule and watching a trash can blow down the street in Battery Park.

A construction crane atop a luxury high-rise in midtown Manhattan collapsed in high winds and dangled precariously. Residents in surrounding buildings were ordered to move to lower floors and the streets below were cleared, but there were no immediate reports of injuries.

The facade of a four-storey Manhattan building in the Chelsea neighbourhood crumbled and collapsed suddenly, leaving the lights, couches, cabinets and desks inside visible from the street. No one was hurt, although some of the falling debris hit a car.

The major American stock exchanges closed for the day, the first unplanned shutdown since the Sept. 11 attacks in 2001. Wall Street expected to remain closed on Tuesday. The United Nations cancelled all meetings at its New York headquarters.

Not only was the New York subway shut down, but the Holland Tunnel connecting New York to New Jersey was closed, as was a tunnel between Brooklyn and Manhattan. The Brooklyn Bridge, the George Washington Bridge, the Verrazano-Narrows Bridge and several other spans were closed because of high winds.

Authorities had warned that New York City and Long Island could get the worst of the storm surge: a three-metre onslaught of seawater that could swamp Lower Manhattan, flood the subways and damage the underground network of electrical and communications lines that are vital to the nation's financial capital.

"Leave immediately. Conditions are deteriorating very rapidly, and the window for you getting out safely is closing," New York Mayor Michael Bloomberg told those in low-lying areas earlier in the day.

Defiant New Yorkers jogged, pushed strollers and took snapshots of churning New York Harbor during the day Monday, trying to salvage normal routines.

Without most stores and museums open, tourists were left to snap photos of the World Trade Center site, Wall Street and Times Square in largely deserted streets.

Belgian tourist Gerd Van don Mooter-Dedecker, 56, wandered in to Trinity Church after learning that a planned shopping spree with her husband Monday wouldn't happen. "We brought empty suitcases so we could fill them up," she said.

As rain from the leading edges began to fall over the Northeast on Sunday, hundreds of thousands of people from Maryland to Connecticut were ordered to leave low-lying coastal areas, including 375,000 in lower Manhattan and other parts of New York City, 50,000 in Delaware and 30,000 in Atlantic City, New Jersey.

Obama declared emergencies in Massachusetts, Connecticut, Rhode Island, New York, New Jersey and Pennsylvania, authorizing federal relief work to begin well ahead of time. He promised the government would "respond big and respond fast" after the storm hits.

Off North Carolina, a replica of the 18th-century sailing ship HMS Bounty that was built for the 1962 Marlon Brando movie "Mutiny on the Bounty" went down in the storm, and 14 crew members were rescued by helicopter from rubber lifeboats bobbing in 5.5-metre seas. Another crew member was found hours later and was hospitalized in critical condition. The captain was still missing.

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Chinese protest factory even after official pledge

NINGBO, China (AP) — Protests against the expansion of a factory are resuming in an eastern China city despite a local government pledge to halt the project.

About 200 protesters gathered outside Ningbo government offices Monday for a fourth straight day of protests. Police channeled the crowd from the front of the building off to a side street.

The protests have occasionally featured violent clashes between protesters and police, who have detained some demonstrators. On Sunday night, the government promised to halt the expansion of the ethylene plant belonging to state-run Sinopec, though the crowd continued to protest, leaving only late in the night.

The protest, the latest on environmental issues, comes as China's authoritarian government wants calm for a transfer of power in the Communist Party leadership at a party congress that starts Nov. 8.

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In San Francisco, tech investor leads a political makeover

SAN FRANCISCO (Reuters) - One morning in April, Ron Conway, the billionaire technology investor, sat in a conference room on the second floor of San Francisco's City Hall with about 50 representatives from the city's business community.

On the agenda was a sweeping proposal by Mayor Ed Lee to reform the city's payroll tax, a plan that would favor companies with many employees but little revenue — tech start-ups, namely — while shifting the burden to the real estate and financial industries.

The head of the San Francisco Chamber of Commerce was arguing against the proposal when Conway abruptly cut him off.

"The tech industry is producing all the jobs in this city," Conway snapped, according to four people present, his voice rising as he insisted that old-line businesses "need to get on board."

In the end, they did get on board — and San Francisco voters on November 6 will decide whether to approve the change in the tax code.

Conway's success with the tax initiative demonstrates the profound transformation playing out in San Francisco's business corridors and its halls of power. As start-ups blossom, attracting a wave of entrepreneurs and investment dollars, the tech industry is wielding newfound clout in local politics — largely thanks to Conway, its brash, silver-haired champion.

The shift, local political experts say, harks back to the turn of the last century, when financial institutions like the Bank of Italy — forebear to present-day Bank of America — gradually eroded the railroad barons' grip over California politics.

Now the tech industry, led by Conway, is beginning to overshadow long-dominant local business lobbies, said Chris Lehane, a political consultant and former adviser in the Clinton White House.

"When you have a new business entity that really hasn't existed in the past and becomes a real player in local politics, that changes the balance a bit," said Lehane, who is based in San Francisco. "People like Ron Conway, he's an angel investor in companies but also an angel supporter of politicians he cares about."

Not everyone in this famously liberal city is enthused about the new tech boom, which is driving up rents and threatening to price out all but the wealthy.

"As someone who lived through the tech boom in the '90s and watched countless friends and community members get pushed out of their homes, only for the bubble to disintegrate, this is painful to watch," said Gabriel Haaland, political director for the SEIU Local 1021, the largest union in the city. "Those times are here again."

Last month, when San Francisco Magazine published an article bemoaning tech-driven gentrification, traffic on the magazine's website broke all records.

"It touched on an issue that people have been thinking about for a while," said Jon Steinberg, the magazine's editor.

Conway and Lee make no apologies.

"Tech added 13,000 out of the 25,000 new jobs we created the last couple years, which helped us bring the unemployment rate to the third-lowest in the state," Lee, a Democrat, said in an interview. "We have to work with the new jobs creators, and that's what I believe the public wants me to do."

Conway, who made his name in the 1990s by betting on small, early-stage companies and scoring a huge win with Google, says a key goal of a new civic organization he has started, San Francisco Citizens Initiative for Technology & Innovation, is to provide service jobs in tech for long-term residents and the unemployed.

"It would be great if we could create a few hundred jobs in the $50,000 to $80,000 income bracket," said Conway. "We're here to improve the living conditions for all of San Francisco. That's the responsibility tech wants to take."

ODD COUPLE

Conway and Lee have an exceptionally close relationship, one that has captivated the city's political set even while attracting accusations of favoritism from the mayor's rivals.

The two make an odd couple. Lee was a publicity-shy city bureaucrat and civil rights lawyer for decades before being named caretaker mayor of this Democratic bastion in 2011 after his predecessor was elected lieutenant governor. Conway, until recently a registered Republican, counts Tiger Woods and Henry Kissinger among his investors and considers a start-up tour with Ashton Kutcher in tow just another day's work.

In a city that faces chronic budget deficits even as it enjoys a comparatively strong economy, the relationship is symbiotic. Conway taps his access to Lee to promote his companies, from Twitter to Zynga to Airbnb; Lee persuades Conway to rally tech leaders to help fund the police, the schools, the parks.

Their alliance began only last year. As interim mayor, Lee impressed Conway when he pushed through a tax exemption for Twitter, which had considered moving out of the city to avoid the tax bill that would have resulted from an initial public offering. San Francisco imposes a 1.5 percent payroll tax on local companies, a levy that applies to any gains in an IPO.

When Lee ran for a full four-year term several months later, Conway formed an independent political action committee on his behalf. He rustled up almost $700,000 from the likes of entrepreneur Sean Parker; Zynga CEO Mark Pincus; Salesforce CEO Marc Benioff; venture capitalists John Doerr and Tom Byers; and Credit Suisse banker Bill Brady.

He also enlisted Portal A, a video production outfit consisting of three twentysomething hitmakers, to create a YouTube video that featured rapper MC Hammer, Yahoo CEO Marissa Mayer and San Francisco Giants pitcher Brian Wilson dancing on Conway's rooftop. The clip went viral and effectively drowned out ads from Lee's rivals.

A year later, Conway rated the mayor's performance a "9.5 out of 10."

"I have a tremendous respect for Mayor Lee," he said. "He listens to people. He builds consensus, and that's an improvement from the past."

Conway said he and Lee are "too busy with our day jobs" to socialize frequently. Neither likes to publicly discuss their relationship. But when the mayor turned 60 in May, Lee and his family sat down for a three-hour private dinner with Conway and his wife, Gayle, at an Italian restaurant in North Beach, according to the San Francisco Chronicle's gossip columnists.

For Conway — whose calls to the mayor's office are considered the highest priority, City Hall insiders say — no issue facing his portfolio companies is too insignificant for him to get involved. In one instance this year, after social media company Pinterest moved to San Francisco, Conway pressed officials to repaint curbs to allow employee parking near the start-up's offices, according to two people with knowledge of the matter. The city refused; Conway denied that the incident occurred.

While some cities have cracked down on services like Airbnb, which lets residents rent out spare bedrooms and can run afoul of local lodging ordinances, Lee has taken the opposite tack. This year he formed a policy-making group to consider how to regulate and foster such companies, which are part of what's known in Silicon Valley as the "sharing economy."

The mayor has also urged Conway to help city initiatives. Conway recently contributed $100,000 toward a campaign to approve bonds to restore the city's parks, and gave $25,000 to a charity founded by Lee that funds impoverished public schools. When a group of software developers tried recently to create an app that would improve public bus performance but lacked funds for a pilot program, SF Citi stepped in and cut a check.

Lee said he hoped Conway would fill a void left by recently deceased philanthropists such as Gap Inc founder Don Fisher, real estate mogul Walter Shorenstein and private equity investor Warren Hellman.

"The tech guys like Conway usually want to meet presidents and such. You never see them play so deep in local government," said one Democratic fundraiser. "It's unusual."

But the tech world says the headlong plunge into local politics is classic Conway.

"When Ron is passionate about an issue or a company or a person, it's never a secret," said Twitter CEO Dick Costolo. "He's passionate about San Francisco right now, and it's exhibiting itself in the way he helps companies in the city, the way he helps the city. It's fantastic to see."

CHANGING TAX POLICY

Conway says his top priority is passage of the payroll tax reform initiative on November 6.

The measure would tax local businesses based on their gross receipts instead of the size of their payroll, which benefits low-revenue, high-headcount companies like startups. Financial, insurance and real estate companies would see their local taxes rise by 30 percent, while taxes will remain flat for most scientific and technical companies.

Crucially, the measure would also mean that proceeds from an IPO would not be subject to taxes.

Landlords, and to a lesser extent financial services companies, conceded that they had lost their first political fight with the tech industry, but took the long view.

"We knew we were going to be socked in a big way, and we worked early and long and hard with the city for a rate that was fair," said Ken Cleaveland of the Building Owners and Managers Association. "In the end it wasn't in our best interest to fight our tenants."

(Reporting by Gerry Shih; Editing by Jonathan Weber, Douglas Royalty and Dale Hudson)

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'Argo' finally tops box office with $12.4M

LOS ANGELES (AP) — It took three weeks, but "Argo" finally found its way to the top of the box office.

The Warner Bros. thriller from director and star Ben Affleck, inspired by the real-life rescue of six U.S. embassy workers during the 1979 Iranian hostage crisis, made nearly $12.4 million this weekend, according to Sunday studio estimates. "Argo" had been in second place the past two weeks and has now made about $60.8 million total.

Debuting at No. 3 was the sprawling, star-studded "Cloud Atlas," which made a disappointing $9.4 million. The nearly three-hour drama, also from Warner Bros., was co-directed by siblings Lana and Andy Wachowski and Tom Tykwer and features an ensemble cast including Tom Hanks, Halle Berry and Hugh Grant playing multiple roles over six story lines.

Dan Fellman, head of distribution at Warner Bros., said the studio thought there might be a good chance of "Argo" coming out on top this weekend.

"We're thrilled. An accomplishment like that is well deserved, they don't happen very often. You would probably have to do a lot of searching to find a movie that opened in wide release to have two No. 2 weekends in a row and hit No. 1 in the third week," Fellman said. "It's a tribute to the film. Word-of-mouth has taken over the campaign. We have a long way to go, we have a lot of year-end accolades which will approach, and we'll see what happens in terms of the Academy."

On the flip side, Fellman acknowledged that "Cloud Atlas" underperformed compared to hopes that it would end up in the $11-12 million range domestically. The movie had an estimated budget of $100 million. But he pointed out that it had a higher per-screen average than any other film opening in the top 10 with $4,681.

"We did very well on the East and West coasts in a number of major cities," he said. "We're challenged in the Midwest and the South."

It was a soft weekend all around, though, with several newcomers opening poorly, Hollywood.com box-office analyst Paul Dergarabedian pointed out. The horror sequel "Silent Hill: Revelation 3-D" from Open Road Films debuted at No. 5 with $8 million and the Paramount Halloween comedy "Fun Size" arrived in 10th place with just over $4 million. "Chasing Mavericks," an inspirational surfing drama from Fox 2000, didn't even open in the top 12 — it came in at No. 13 with $2.2 million.

The World Series might have been a factor in keeping folks away from the theaters; also, potential moviegoers along the East Coast in the path of Hurricane Sandy might have stayed home this weekend.

"The whole marketplace felt more like September than October. Back in September, we had four down weekends in a row. There was no momentum in the marketplace," Dergarabedian said. "When a holdover is No. 1, it reflects a lack of strength in the marketplace. Every week should have a new movie topping the chart."

As for the philosophical, centuries-spanning "Cloud Atlas," he said: "To have a) a big budget, b) Tom Hanks and c) it's a big, epic film, it doesn't necessarily follow that it's going to be a big box office hit. I admire that they went for it."

But there's hope on the horizon with the animated comedy "Wreck-It Ralph" coming next weekend, the latest James Bond film, "Skyfall," opening Nov. 9 and the final installment in the "Twilight" saga due out Nov. 16. "Skyfall" opened this weekend overseas with a whopping $77.7 million in 25 countries.

"This is just one of those box office weekends we'd rather forget," Dergarabedian said. "Unless you're 'Argo.'"

Estimated ticket sales are for Friday through Sunday at U.S. and Canadian theaters, according to Hollywood.com. Where available, latest international numbers are also included. Final domestic figures will be released Monday.

1. "Argo," $12.4 million. ($5 million international.)

2. "Hotel Transylvania," $9.5 million. ($18.1 million international.)

3. "Cloud Atlas," $9.4 million.

4. "Paranormal Activity 4," $8.7 million. ($14.1 million international.)

5. (tie) "Silent Hill: Revelation 3-D," $8 million.

6. "Taken 2," $8 million. ($10.1 million.)

7. "Here Comes the Boom," $5.5 million.

8. "Sinister," $5.07 million.

9. Alex Cross," $5.05 million.

10. "Fun Size," $4.1 million.

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Estimated weekend ticket sales at international theaters (excluding the U.S. and Canada) for films distributed overseas by Hollywood studios, according to Rentrak:

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1. "Skyfall," $77.7 million.

2. "Hotel Transylvania," $18.1 million.

3. "Paranormal Activity 4," $14.1 million.

4. "The Bourne Legacy," $11.5 million.

5. "Taken 2," $10.1 million.

6. "The Impossible," $8.7 million.

7. "Madagascar 3," $8.4 million.

8. "Asterix et Obelix: Au Service de Sa Majeste," $5.3 million.

9. (tie) "Argo," $5 million.

10. "Ted," $5 million.

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Universal and Focus are owned by NBC Universal, a unit of Comcast Corp.; Sony, Columbia, Sony Screen Gems and Sony Pictures Classics are units of Sony Corp.; Paramount is owned by Viacom Inc.; Disney, Pixar and Marvel are owned by The Walt Disney Co.; Miramax is owned by Filmyard Holdings LLC; 20th Century Fox and Fox Searchlight are owned by News Corp.; Warner Bros. and New Line are units of Time Warner Inc.; MGM is owned by a group of former creditors including Highland Capital, Anchorage Advisors and Carl Icahn; Lionsgate is owned by Lions Gate Entertainment Corp.; IFC is owned by AMC Networks Inc.; Rogue is owned by Relativity Media LLC.

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FDA: Pharmacy tied to outbreak knew of bacteria

WASHINGTON (AP) — Staffers at a pharmacy linked to the deadly meningitis outbreak documented dozens of cases of mold and bacteria growing in rooms that were supposed to be sterile, according to federal health inspectors.

In a preliminary report on conditions at the pharmacy, the Food and Drug Administration said Friday that even when the contamination at New England Compounding Center exceeded the company's own safety levels, there is no evidence that staffers investigated or corrected the problem. The FDA uncovered some four dozen reports of potential contamination in company records, stretching back to January this year.

The report comes from an FDA inspection of the Framingham, Mass.-based company earlier this month after steroid injections made by the company were tied to an outbreak of fungal meningitis. FDA officials confirmed last week that the black fungus found in the company's vials was the same fungus that has sickened 338 people across the U.S., causing 25 deaths.

The New England Compounding Center's lawyer said Friday the pharmacy "will review this report and will continue our cooperation with the FDA."

Compounding pharmacies like NECC traditionally fill special orders placed by doctors for individual patients, turning out a small number of customized formulas each week. They have traditionally been overseen by state pharmacy boards, though the FDA occasionally steps in when major problems arise. Some pharmacies have grown into much larger businesses in the last 20 years, supplying bulk orders of medicines to hospitals that need a steady supply of drugs on hand.

The FDA report provides new details about NECC's conditions, which were first reported by state officials earlier this week. The drug at the center of the investigation is made without preservative, so it's very important that it be made under highly sterile conditions. Compounding pharmacies prepare their medications in clean rooms, which are supposed to be temperature-controlled and air-filtered to maintain sterility.

But FDA inspectors noted that workers at the pharmacy turned off the clean room's air conditioning every night. FDA regulators said that could interfere with the conditions needed to prevent bacterial growth.

Inspectors also say they found a host of potential contaminants in or around the pharmacy's clean rooms, including green and yellow residues, water droplets and standing water from a leaking boiler.

Additionally, inspectors found "greenish yellow discoloration" inside an autoclave, a piece of equipment used to sterilize vials and stoppers. In another supposedly sterile room inspectors found a "dark, hair-like discoloration" along the wall. Elsewhere FDA staff said that dust from a nearby recycling facility appeared to be drifting into the pharmacy's rooftop air-conditioning system.

The FDA on Friday declined to characterize the severity of the problems at NECC, or to speculate on how they may have led to contamination of the products made by the pharmacy. FDA emphasized that the report is based on "initial observations" and that the agency's investigation is ongoing.

The agency also provided new details about the pharmacy's handling of the steroids it recalled last month. The company recalled three lots of steroids made since May that totaled 17,676 single-dose vials of medicine — roughly equivalent to 20 gallons. The shots are mainly used to treat back pain.

According to the agency's report, the pharmacy began shipping vials from the August lot to customers on Aug. 17. That was nearly two weeks before the pharmacy received test results from an outside laboratory confirming the sterility of the drug. When FDA scientists went back and tested the same lot this month, they found contamination in 50 vials.

Outside experts said the report paints a picture of a dysfunctional operation.

"The entire pharmacy was an incubator of bacteria and fungus," said Sarah Sellers, a former FDA officer who left the agency in 2008 after unsuccessfully pushing it to increase regulation of compounding pharmacies. She now consults for drug manufacturers. "The pharmacy knew this through monitoring results, and chose to do nothing."

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East Coast superstorm could endanger 50 million people

NEW YORK (AP) — From Washington to Boston, big cities and small towns Sunday buttoned up against the onslaught of a superstorm that could endanger 50 million people in the most heavily populated corridor in the nation, with forecasters warning that the New York area could get the worst of it — an 11-foot wall of water.

"The time for preparing and talking is about over," Federal Emergency Management Administrator Craig Fugate said as Hurricane Sandy made its way up the Atlantic on a collision course with two other weather systems that could turn it into one of the most fearsome storms on record in the U.S. "People need to be acting now."

Forecasters said the hurricane could blow ashore Monday night or early Tuesday along the New Jersey coast, then cut across into Pennsylvania and travel up through New York State on Wednesday.

Airlines canceled more than 7,200 flights and Amtrak began suspending train service across the Northeast. New York, Philadelphia, Washington and Baltimore moved to shut down their subways, buses and trains and said schools would be closed on Monday. Boston also called off school. And all non-essential government offices closed in the nation's capital.

As rain from the leading edges of the monster hurricane began to fall over the Northeast, hundreds of thousands of people from Maryland to Connecticut were ordered to evacuate low-lying coastal areas, including 375,000 in lower Manhattan and other parts of New York City, 50,000 in Delaware and 30,000 in Atlantic City, N.J., where the city's 12 casinos were forced to shut down for only the fourth time ever.

"We were told to get the heck out. I was going to stay, but it's better to be safe than sorry," said Hugh Phillips, who was one of the first in line when a Red Cross shelter in Lewes, Del., opened at noon.

"I think this one's going to do us in," said Mark Palazzolo, who boarded up his bait-and-tackle shop in Point Pleasant Beach, N.J., with the same wood he used in past storms, crossing out the names of Hurricanes Isaac and Irene and spray-painting "Sandy" next to them. "I got a call from a friend of mine from Florida last night who said, 'Mark, get out! If it's not the storm, it'll be the aftermath. People are going to be fighting in the streets over gasoline and food.'"

Authorities warned that the nation's biggest city could get hit with a surge of seawater that could swamp parts of lower Manhattan, flood subway tunnels and cripple the network of electrical and communications lines that are vital to the nation's financial center.

Sandy, a Category 1 hurricane with sustained winds of 75 mph as of Sunday evening, was blamed for 65 deaths in the Caribbean before it began traveling northward, parallel to the Eastern Seaboard. As of 11 p.m., it was centered about 470 miles southeast of New York City, moving at 14 mph, with hurricane-force winds extending an incredible 175 miles from its center.

It was expected to hook inland during the day Monday, colliding with a wintry storm moving in from the west and cold air streaming down from the Arctic.

Forecasters said the combination could bring close to a foot of rain in places, a potentially lethal storm surge of 4 to 11 feet across much of the region, and punishing winds that could cause widespread power outages that last for days. The storm could also dump up to 2 feet of snow in Kentucky, North Carolina and West Virginia.

Louis Uccellini, environmental prediction chief for the National Oceanic and Atmospheric Administration, told The Associated Press that given Sandy's east-to-west track into New Jersey, the worst of the storm surge could be just to the north, in New York City, on Long Island and in northern New Jersey.

Forecasters said that because of giant waves and high tides made worse by a full moon, the metropolitan area of about 20 million people could get hit with an 11-foot wall of water.

"This is the worst-case scenario," Uccellini said.

New York Mayor Michael Bloomberg warned: "If you don't evacuate, you are not only endangering your life, you are also endangering the lives of the first responders who are going in to rescue you. This is a serious and dangerous storm."

New Jersey's famously blunt Gov. Chris Christie was less polite: "Don't be stupid. Get out."

New York called off school Monday for the city's 1.1 million students and announced it would suspend all train, bus and subway service Sunday night. More than 5 million riders a day depend on the transit system. The New York Stock Exchange announced it will shut down its trading floor Monday but continue to trade electronically.

Officials also postponed Monday's reopening of the Statue of Liberty, which had been closed for a year for $30 million in renovations.

In Washington, President Barack Obama promised the government would "respond big and respond fast" after the storm hits.

"My message to the governors as well as to the mayors is anything they need, we will be there, and we will cut through red tape. We are not going to get bogged down with a lot of rules," he said.

He also pleaded for neighborliness: "In times like this, one of the things that Americans do is we pull together and we help out one another And so, there may be elderly populations in your area. Check on your neighbor, check on your friend. Make sure that they are prepared. If we do, then we're going to get through this storm just fine."

The storm forced the president and Mitt Romney to rearrange their campaign schedules in the crucial closing days of the presidential race. And early voting on Monday in Maryland and the District of Columbia was canceled.

Despite the dire warnings, some souls were refusing to budge.

Jonas Clark of Manchester Township, N.J. — right in the area where Sandy was projected to come ashore — stood outside a convenience store, calmly sipping a coffee and wondering why people were working themselves "into a tizzy."

"I've seen a lot of major storms in my time, and there's nothing you can do but take reasonable precautions and ride out things the best you can," said Clark, 73. "Nature's going to what it's going to do. It's great that there's so much information out there about what you can do to protect yourself and your home, but it all boils down basically to 'use your common sense.'"

In New Jersey, Denise Faulkner and her boyfriend showed up at the Atlantic City Convention Center with her 7-month-old daughter and two sons, ages 3 and 12, thinking there was a shelter there. She was dismayed to learn that it was just a gathering point for buses to somewhere else. Last year, they were out of their home for two days because of Hurricane Irene.

"I'm real overwhelmed," she said as baby Zahiriah, wrapped in a pink blanket with embroidered elephants, slept in a car seat. "We're at it again. Last year we had to do it. This year we have to do it. And you have to be around all sorts of people — strangers. It's a bit much."

Before leaving their home in Atlantic City, John and Robshima Williams of packed their kids' Halloween costumes so they could go bunk-to-bunk trick-or-treating at a shelter. Her 8-year-old twins are going as the Grim Reaper and a zombie, while her 6-year-old plans to dress as a witch.

"We're just trying to make a bad situation good," the mother said. "We're going to make it fun no matter where we are."

___

Breed reported from Raleigh, N.C.; Contributing to this report were AP Science Writer Seth Borenstein in Washington; Katie Zezima in Atlantic City, N.J.; Wayne Parry in Point Pleasant Beach, N.J.; and Dave Dishneau in Wilmington, Del.

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Outspoken China officers a challenge to the party

BEIJING (AP) — China's government has demanded talks with Japan in their latest dust-up over a set of tiny islands, but a high-ranking Chinese military officer has suggested drastically more belligerent responses.

Dispatch hundreds of fishing boats to fight a maritime guerrilla war, says Maj. Gen. Luo Yuan. Turn the uninhabited outcroppings into a bombing range. Rip up World War II peace agreements and seize back the territory, now controlled by Japan but long claimed by China.

"A nation without a martial spirit is a nation without hope," Luo declared at an academic forum this month in the southern city of Shenzhen while officials in Beijing continued to urge negotiations.

Luo's remarks reflect a challenge for China's leadership from a military increasingly willing to push the limits of the ruling Communist Party's official line on foreign relations, territorial claims and even government reforms. It's a challenge that will need to be carefully managed if a once-a-decade leadership transition beginning Nov. 8 is to go smoothly, with China's global reputation and the party's credibility both at stake.

Backed by what is now the world's second-largest military budget behind the U.S., the People's Liberation Army is bristling with new armaments and is becoming increasingly assertive. That has distressed neighbors such as Japan, Vietnam and the Philippines, all locked in disputes with China over island territory potentially rich in oil, and has prompted the U.S. to send more military assets to the region.

Presiding over this force will be a new generation of military leaders taking power at the same time as the new crop of political leaders.

Up to seven of the 10 uniformed members of the Central Military Commission, which oversees the armed forces, are set to retire. Members of the new panel are expected to demand an even greater say in decision making — and a tougher line in disputes with other nations.

While President Hu Jintao's absolute command over the armed forces had at time been questioned, his presumed successor — Vice President Xi Jingping — may have an easier time keeping officers on-message because of his closer ties with many top military figures as a fellow "princeling" — those with ties to communist China's founding fathers.

He may have to wait, though: Hu will likely seek to hold onto his position as chairman of the military commission for another two years, as his predecessor did. Also, five officers generally considered loyal to Hu were promoted this week to top posts such air force commander and chief of the general staff, meaning they will sit on the new commission once it is appointed next month.

Officially, China espouses a "peaceful rise" philosophy that stresses a defensive military posture and the negotiated resolution of disputes. But the PLA's newest generation of ships, submarines, stealth planes and the development of its first aircraft carrier suggest the capability for operations far from home.

Hawkish officers such as Luo have a broad audience in the PLA and in a Chinese public that has grown more stridently nationalistic and increasingly impatient with a ruling party seen as bloated, unresponsive and corrupt. Luo, whose father was a top security officer for Mao Zedong, has at times openly questioned the legitimacy of the "peaceful rise" philosophy and warned that it doesn't preclude China from using force to assert its interests.

Their sentiments find a ready audience via books, online sites and even in state media.

There's a "continual tug-of-war between the party and the PLA," said Denny Roy, an expert on the Chinese military and senior fellow at the East-West Center in Hawaii.

"The party may not want to appear to be trying to stifle a popular nationalistic position expressed by a military man, (which could) turn public anger against the civilian leadership," Roy said.

The 2.3 million-member PLA is technically the house army of the Communist Party, ultimately loyal to the party rather than the Chinese nation. Its chief mission is ensuring the party's hold on power, as it did in 1989 in the bloody suppression of pro-democracy protests centered on Beijing's Tiananmen Square.

No military officers are openly challenging party control. But some have railed against official corruption and called for a degree of political openness that makes party leaders nervous. Among the boldest has been Gen. Liu Yazhou, whose works espousing greater democracy have been privately published and placed in coffee shops in Beijing's university district.

"Senior officers feel entitled to raise their voices because they believe that the party's corruption has elevated the relative standing of the PLA," said Washington-based military strategist and historian Edward Luttwak, who knows Luo personally.

In the 2009 book "China Dream," senior colonel and National Defense University professor Liu Mingfu called for China to upend U.S. dominance in international relations, saying China had a stark choice between becoming the pre-eminent power or one that has "been left behind and eliminated."

Those sentiments were echoed in the introduction to a 2010 scholarly work by Gen. Liu Yuan, whose father, Liu Shaoqi, was a Chinese head of state in the 1950s and 1960s. The younger Liu called for China to cast aside restraint and praised warfare as a foundation of modern culture.

"Those involved in warfare are the most glorious, wonderful, and mournful," wrote Liu, a full general in the PLA who serves as a political commissar.

Requests to interview Luo and the three Lius, who are not related, were declined.

Many observers see a pronounced gap between the headline-grabbing views and bombastic statements of these kinds of officers — most often based in academia — and those of unit commanders who are much more cognizant of the PLA's limitations, as well as top military leaders considered staunchly loyal to the party.

"I would emphasize that, overall, the party leadership wields ultimate decision-making power on key national security issues," said Sarah McDowall, a China analyst with IHS Janes in Britain.

The PLA also has shown the world a friendlier side in recent years, cooperating in anti-pirate patrols off Africa's coast, joining in UN peacekeeping operations and sending a hospital ship to the Caribbean. However, some of that may be as much about testing the ability to operate far afield as about diplomacy.

Xi, the incoming leader, is seen as representing a strain of firm, though not shrill, nationalism. His ties to the military are smoothed by his years in uniform as secretary to former Defense Minister Geng Biao from 1979-1982 — as well as his being the son of a leading communist guerrilla.

The military will continue to yield major sway through its outsized representation on major bodies. It will have 251 delegates at the national party congress opening Nov. 8, three times the number from China's most populous province, Henan.

Its influence has ensured robust spending on such new assets as the prototype J-20 stealth fighter.

McDowall of HIS Jane's said the PLA's influence has been growing in recent years "owing to the increasing resources allocated to it" and that it has a major, behind-the-scenes say in this year's political leadership transition.

"High-ranking military men may feel they have slack in the leash and can speak boldly" when the country's political establishment is in flux, said Roy, the East-West Center senior fellow. "For many in the Chinese military, these outspoken guys are patriotic heroes."

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Star Silicon Valley analyst felled by Facebook IPO fallout

SAN FRANCISCO (Reuters) - The firing of Citigroup stock analyst Mark Mahaney on Friday in the regulatory fallout from Facebook Inc's initial public offering was greeted with shock and dismay in Silicon Valley, where Mahaney was a well-known and well-liked figure.

"Pretty shocked," was the reaction of Jacob Funds Chief Executive Ryan Jacob, who described Mahaney as one of the most respected financial analysts covering the Internet industry.

"I'd put him at the top. If not at the top, then near the top," said Jacob. "He really knew what to look for."

In addition to firing Mahaney, Citigroup paid a $2 million fine to Massachusetts regulators to settle charges that the bank improperly disclosed research on Facebook ahead of its $16 billion IPO in May.

The settlement agreement said Mahaney failed to supervise a junior analyst who improperly shared Facebook research with the TechCrunch news website. (Settlement agreement: http://r.reuters.com/pyj63t)

The settlement agreement also outlined an incident in which Mahaney failed to get approval before responding to a journalist's questions about Google Inc -- and told a Citigroup compliance staffer that the conversation had not occurred -- even after being warned about unauthorized conversations with the media.

Mahaney declined to comment.

Mahaney got his start in the late 1990s, during the first dot-com boom where he worked at Morgan Stanley for Mary Meeker, one of the star analysts of the time. He went on to work at hedge fund Galleon Group before moving to Citigroup in 2005. Unlike most of his New York-based peers in the analyst world, Mahaney worked in San Francisco's financial district, close to the companies and personalities at the heart of the tech industry.

Earlier this month, Mahaney was named the top Internet analyst for the fifth straight year by Institutional Investor. The review cited fans of Mahaney who praised a "systematic" investment approach that allows him to avoid the "waffling" often evidenced by other analysts.

Mahaney's Buy rating on IAC/InteractiveCorp in April 2011, when the stock traded at $33.32, allowed investors to lock in a 51 percent gain before he downgraded the stock to a Hold at $50.31 a few months later, according to Institutional Investor.

But it wasn't only his stock picks that put him in good stead. He earned kudos for simply being a nice guy.

"He's a kind and thoughtful person and that's evident in the way he deals with people," said Jason Jones of Internet investment firm HighStep Capital. "He's very well liked on Wall Street because of that."

A CAUTIOUS VIEW ON FACEBOOK

Mahaney was only indirectly involved in the incident involving the Facebook research, according to the settlement agreement by Massachusetts regulators released on Friday. But the actions of the junior analyst who worked for him provide an unusual glimpse into the type of behind-the-scenes information trading that regulators are attempting to rein in.

While the Massachusetts regulators did not identify any of the individuals by name, Reuters has learned that the incident involved TechCrunch reporters Josh Constine and Kim-Mai Cutler as well as Citi junior analyst Eric Jacobs.

Jacobs, Constine and Cutler all did not respond to requests for comments.

In early May, shortly before Facebook's IPO, Jacobs sent an email to Cutler and Constine. Constine attended Stanford University at the same time as Jacobs.

Constine, who studied social networks such as Facebook and Twitter for his 2009 Master's degree in cybersociology at Stanford, had a close friendship with Jacobs, according to the settlement agreement.

"I am ramping up coverage on FB and thought you guys might like to see how the street is thinking about it (and our estimates)," Jacobs wrote in the email. The email included an "outline" that Jacobs said would eventually become the firm's 30-40 page initiation report on Facebook.

He also included a "Facebook One Pager" document, which contained confidential, non-public information that Citigroup obtained in order to help begin covering Facebook after the IPO.

Asked by Constine if the information could be published and attributed to an anonymous source, Jacobs responded that "my boss would eat me alive," the agreement said.

A spokeswoman for AOL Inc, which owns TechCrunch, declined to answer questions on the matter, saying only that "We are looking into the matter and have no comment at this time."

Ironically, Mahaney was one of a small group of analysts at the many banks underwriting Facebook's IPO who had cautious views of the richly valued offering. Mahaney initiated coverage of the company with a neutral rating.

Analysts at the top three underwriters on Facebook's IPO - Morgan Stanley, Goldman Sachs and J.P. Morgan - started the stock with overweight or buy recommendations.

Earlier this year, Reuters reported that Facebook had pre-briefed analysts for its underwriters ahead of its IPO, advising them to reduce their profit and revenue forecasts.

Facebook, whose stock was priced at $38 a share in the IPO, closed Friday's regular session at $21.94 and has traded as low as $17.55.

"There were tens of billions of dollars in losses based on hyping the name, a lack of skeptical information and misunderstanding the company," said Max Wolff, chief economist and senior analyst at research firm GreenCrest Capital.

"It's highly unfortunate and darkly ironic that one of the signature regulatory actions from this IPO so far involves punishing analysts for disseminating cautious information about Facebook," he added.

(Editing by Jonathan Weber, Mary Milliken and Lisa Shumaker)

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