Obama hails veterans, pledges continued support

ARLINGTON, Virginia (Reuters) – President Barack Obama laid a wreath at the Tomb of the Unknown Soldier to mark the Veterans Day holiday on Sunday, declaring that soldiers‘ needs would be met even as the country winds down wars in the Middle East and Asia.

In the ceremony at Arlington National Cemetery, Obama pledged continuing support for veterans as they make the transition to civilian life.

“This is the first Veterans Day in a decade in which there are no American troops fighting and dying in Iraq,” the president said at the cemetery across the Potomac River from Washington, where soldiers’ graves are marked with row upon row of simple white stones.

“After a decade of war, our heroes are coming home,” he said. “Over the next few years more than a million service members will transition back to civilian life.”

The president touted the work of first lady Michelle Obama and Jill Biden, wife of Vice President Joe Biden, for their work in the Joining Forces campaign, which urges businesses to hire veterans. He also reaffirmed his commitment to continuing the post-9/11 GI Bill program, which provides college education funding for those who have served, and said soldiers suffering war-related health problems will get the care they need.

“No one who fights for this country overseas should ever have to fight for a job, or a roof over their head, or the care that they have earned when they come home,” he said.

After the ceremony, Obama visited with people in an area of the cemetery known as Section 60, where many of the solders who died in the Iraq and Afghanistan wars are buried.

The Democratic president won re-election to a second four-year term on Tuesday and now faces tough negotiations with Republican congressional leaders to avoid sharp spending cuts that loom at the end of the year. A big chunk of those reductions would come through a decline in defense spending.

During the campaign, Obama and Biden regularly pledged their commitment to bringing troops home from Afghanistan and taking care of American veterans. Obama criticized his opponent, Republican Mitt Romney, for failing to mention the war in Afghanistan during his speech to the Republican National Convention.

(Reporting by Samson Reiny, writing by Mark Felsenthal; Editing by Doina Chiacu)

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Analysis: Hudson’s Bay faces tough sell as it prepares for IPO

TORONTO/NEW YORK (Reuters) – If Hudson’s Bay Co wants to provide some measure of comfort to investors in its upcoming initial public offering, it might have to throw in some of its signature striped wool blankets.

The retailer, owner of two of the most venerable names in department stores – Hudson’s Bay in Canada and Lord & Taylor in the United States – faces a big challenge in convincing investors it can win the turnaround game, especially with a hip and agile competitor like Target Corp about to arrive in Canada.

As HBC prepares for its C$ 400 million ($ 399 million) initial public offering in Toronto, it is touting a “transformation” that includes rising sales at established stores, a figure investors watch closely.

But both chains face increasing competition, a likely medium- and long-run negative for the stock. The department store sector has grown slowly as shoppers look online or seek out discount stores.

In the United States, Lord & Taylor competes with a resurgent Macy’s Inc , and in Canada, HBC faces competition from Target and other U.S. companies intent on shaking up the retail landscape.

“I think an investor in the Bay would be well-advised to wait until Target has entered the market and they have some insight as to what the business climate will be for the Bay on a real basis, not on a speculative basis,” said Mark Cohen, former chief executive of Sears Canada Inc and now a professor of marketing at Columbia University in New York.

HBC says its transformation is a work in progress, with more upside to come.

“The focus will be the opportunity to close the margin gap, the opportunity to grow same-store sales,” said Walter Stackow, analyst with Manning & Napier, which invests in retail stocks.

HBC has estimated it will sell up to 19 percent of the company in the IPO at between C$ 18.50 and C$ 21.50 per share, giving it a market value of C$ 2.4 billion, according to a fund manager who has reviewed the firm’s sale documents.

The company is braving an otherwise stalled IPO market in Canada. A recent PwC survey counted three issues on the Toronto Stock Exchange in the first nine months of 2012, down from 14 in the same period last year.

HBC says it will use the proceeds to pay down debt, although it will remain heavily indebted – as of July 28, total short- and long-term debt came to C$ 1.37 billion.

Ryan Bushell, a portfolio manager with Leon Frazer & Associates in Toronto who manages the IA Clarington Canadian Conservative Equity Fund, said he was briefed on the IPO but is staying on the sidelines for now.

“We wouldn’t be stepping into more consumer sensitive names right at this moment,” he said. “We’d rather see how the market digests this IPO and see a few quarters of execution as a public company.”

HBC declined to comment for this piece.

CANADIAN SQUEEZE

Founded in 1670, Hudson’s Bay was a fur trading business long before it operated department stores, having been granted control of a significant part of what is now Canada by King Charles II. It went private in 2006, as shoppers fled to specialty retailers and U.S.-based heavyweights like Wal-Mart Stores Inc .

NRDC Equity Partners, controlled by U.S. real estate investor Richard Baker and his family, bought out HBC‘s other investors in 2008, and integrated it with Lord & Taylor, which operates 48 stores across the United States.

A recent study by consultancy Kantar Retail singled out Hudson’s Bay’s 90 outlets as particularly vulnerable to Target. Early HBC investors will have little chance to gauge the impact of Target’s 2013 arrival in Canada before buying in.

“I wouldn’t touch it (the IPO) with a 10-foot pole,” said Barry Schwartz, vice president and portfolio manager at Toronto’s Baskin Financial Services. “I think it’s an opportunistic idea to take advantage of a pretty good market and the fact that Target hasn’t made any impact yet.”

With a presence primarily in the U.S. northeast, Lord & Taylor is small relative to its publicly traded peers. It had sales of C$ 1.4 billion last year, or roughly three weeks of revenue at Macy’s, which sold Lord & Taylor off in 2006. Hudson’s Bay had sales of C$ 2.2 billion.

HBC has focused on its two marquee banners, winding down discount chains Fields and Zellers, and selling many of its Zellers leases to Target in a C$ 1.83 billion deal. Home Outfitters, HBC‘s 69-outlet Canadian housewares chain, is not much mentioned in the prospectus.

Columbia University’s Cohen said the remaining Zellers locations may prove costly to liquidate, and Hudson’s Bay just doesn’t have a strong market position.

High-end Nordstrom Inc , legendary in the United States for its customer service, will start rolling out its namesake department stores and lower-priced Rack outlets in Canada in 2014. Even Canadian luxury retailer Holt Renfrew is launching a new lower-priced banner.

COMPETITION AT LORD & TAYLOR

For its part, Lord & Taylor must take on Macy’s, Nordstrom and Saks Inc , all of which are expanding their outlet chains. Macy’s is spending $ 400 million on its Manhattan flagship, while Kohl’s and Nordstrom are opening new stores.

Last year, Lord & Taylor spent C$ 91 million to improve its stores, including a facelift at its Manhattan flagship. Industry experts say the chain, founded in 1826, let its high-end aura erode over the years, relying too much on discounts.

It has ramped up offerings by U.S. designers like Elie Tahari, and shows the biggest image improvement among shoppers in the last 13 months, according to market research firm YouGov. But it still lags Macy’s and Nordstrom.

“Lord & Taylor has a very loyal customer base,” said retail industry veteran Walter Loeb, who earlier in his career was a senior merchant at Macy’s and analyst at Morgan Stanley. “But they have to build a new customer base.”

Another potential problem for HBC is lagging e-commerce. Last year, it got 2.1 percent of sales online, compared with 8 percent to 15 percent for the publicly traded U.S. department stores.

Selling, general and administrative costs in relation to sales have improved in recent years, thanks in part to efficiencies from combining some of the two chains’ operations.

At 35 percent of sales last year, the costs are lower than those of Sears stores in Canada, with 38 percent, but far above most of HBC‘s peer group. They were 22.6 percent at Kohl’s and 26.7 percent at Nordstrom.

HBC‘s real estate, including historic buildings in major cities like New York and Toronto, could provide some floor to the stock’s value, should its turnaround stumble. The company owns or ground leases more than 11 million square feet of retail space, and has long-term, low-cost leases for another 14 million.

HBC sales rose 6.4 percent from 2009 to 2011, and operating income jumped more than 17-fold as the retailer boosted store productivity and margins, but that growth could falter.

“At the end of the day, the department store category is not a fast growing category,” Manning & Napier’s Stackow said.

($ 1 = $ 1.00 Canadian)

(Additional reporting by Solarina Ho and Euan Rocha in Toronto; Editing by Janet Guttsman, Mary Milliken and Steve Orlofsky)

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BBC must reform or die, says Trust chairman

LONDON (Reuters) – The BBC could be doomed unless it makes radical changes, the head of its governing trust said on Sunday, after its director general quit to take the blame for the airing of false child sex abuse allegations against a former politician.

Chris Patten, chairman of the BBC Trust, said confidence had to be restored if the publicly funded corporation was to withstand pressure from rivals, especially Rupert Murdoch‘s media empire, which would try to take advantage of the turmoil.

“If you’re saying, ‘Does the BBC need a thorough structural radical overhaul?’, then absolutely it does, and that is what we will have to do,” Patten, a one-time senior figure in Prime Minister David Cameron‘s Conservative Party and the last British governor of Hong Kong, told BBC television.

“The basis for the BBC’s position in this country is the trust that people have in it,” Patten said. “If the BBC loses that, it’s over.”

George Entwistle resigned as director general on Saturday, just two months into the job, to take responsibility for the child sex allegation on the flagship news programme Newsnight.

The witness in the report, who says he suffered sexual abuse at a care home in the late 1970s, said on Friday he had misidentified the politician, Alistair McAlpine. Newsnight admitted it had not shown the witness a picture of McAlpine, or approached McAlpine for comment before going to air.

Already under pressure after revelations that a long-time star presenter, the late Jimmy Savile, was a paedophile, Entwistle conceded on the BBC morning news that he had not known – or asked – who the alleged abuser was until the name appeared in social media.

The BBC, celebrating its 90th anniversary, is affectionately known in Britain as “Auntie”, and respected around much of the world.

But with 22,000 staff working at eight national TV channels, 50 radio stations and an extensive Internet operation, critics say it is hampered by a complex and overly bureaucratic and hierarchical management structure.

THOMPSON’S LEGACY

Journalists said this had become worse under Entwistle’s predecessor Mark Thompson, who took over in the wake of the last major crisis to hit the corporation and is set to become chief executive of the New York Times Co on Monday.

In that instance, both director general and chairman were forced out after the BBC was castigated by a public inquiry over a report alleging government impropriety in the fevered build up to war in Iraq, leading to major organisational changes.

One of the BBC’s most prominent figures, Newsnight presenter Jeremy Paxman, said since the Iraq report furore, management had become bloated while cash had been cut from programme budgets.

“He (Entwistle) has been brought low by cowards and incompetents,” Paxman said in a statement, echoing a widely-held view that Entwistle was a good man who had been let down by his senior staff.

Prime Minister Cameron appeared ready to give the BBC the benefit of the doubt, believing that “one of the great institutions of this country” could reform and deal with its failings, according to sources in his office.

Patten, who must find a new director general to sort out the mess, agreed that management structures had proved inadequate.

“Apparently decisions about the programme went up through every damned layer of BBC management, bureaucracy, legal checks – and still emerged,” he said.

“One of the jokes I made, and actually it wasn’t all that funny, when I came to the BBC … was that there were more senior leaders in the BBC then there were in the Chinese Communist Party.”

Patten ruled out resigning himself but other senior jobs are expected to be on the line, while BBC supporters fear investigative journalism will be scaled back. He said he expected to name Entwistle’s successor in weeks, not months.

Among the immediate challenges are threats of litigation.

McAlpine, a close ally of former prime minister Margaret Thatcher, has indicated he will sue for damages.

Claims for compensation are also likely from victims who say Savile, one of the most recognisable personalities on British television in the 1960s, 70s and 80s, sexually abused them as children, sometimes on BBC premises.

INQUIRIES

Two inquiries are already under way, looking at failures at Newsnight and allegations relating to Savile, both of which could make uncomfortable reading for senior figures.

Police have also launched a major inquiry into Savile’s crimes and victims’ allegations of a high-profile paedophile ring. Detectives said they had arrested their third suspect on Sunday, a man in his 70s from Cambridgeshire in central England.

Funded by an annual licence fee levied on all TV viewers, the BBC has long been resented by its commercial rivals, who argue it has an unfair advantage and distorts the market.

Murdoch’s Sun tabloid gleefully reported Entwistle’s departure with the headline “Bye Bye Chump” and Patten said News Corp and others would put the boot in, happy to deflect attention after a phone-hacking scandal put the newspaper industry under intense and painful scrutiny.

He said that “one or two newspapers, Mr. Murdoch’s papers” would love to see the BBC lose its national status, “but I think the great British public doesn’t want to see that happen”.

Murdoch himself was watching from afar.

“BBC getting into deeper mess. After Savile scandal, now prominent news program falsely names senior pol as paedophile,” he wrote on his Twitter website on Saturday.

It is not just the BBC and the likes of Entwistle and Patten who are in the spotlight.

Thompson, whom Entwistle succeeded in mid-September, has also faced questions from staff at the New York Times over whether he is still the right person to take one of the biggest jobs in American newspaper publishing.

Britain’s Murdoch-owned Sunday Times queried how Thompson could have been unaware of claims about Savile during his tenure at the BBC as he had told British lawmakers, saying his lawyers had written to the paper addressing the allegations in early September, while he was still director general.

(Editing by Kevin Liffey and Sophie Hares)

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Google says multiple services blocked in China

SAN FRANCISCO (Reuters) – Google Inc said several of its online services have been blocked in China.

Traffic to Google’s services in China dropped sharply beginning Friday evening there, according to an online “Transparency Report” website operated by Google, which provides updates about access to its services in different parts of the world.

Among the sites affected were Google’s search engine and its Gmail web email product.

The disruptions come as China’s once-in-a-decade meeting to appoint new leadership gets underway.

A Google spokeswoman said the company did not know why the disruption was happening. Google said in a statement that it had “checked and there’s nothing wrong on our end.”

Google’s YouTube video service has been inaccessible in China since 2009, while access to other services in China are blocked sporadically.

In 2010 Google relocated its Chinese search engine to Hong Kong after a spat with authorities over censorship and cyber-attacks that Google said originated in China.

(Reporting By Alexei Oreskovic; editing by John Wallace)

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Nutella maker says will brave French tax hike

PARIS (Reuters) – The makers of the renowned Nutella food spread say they will not change the lucrative recipe even if France, its biggest market, endorses proposals to quadruple tax on a key ingredient of the gooey mix, palm oil.

Senators in France, where a left-wing government is hiking tax generally to help slash a bloated debt, have proposed a 300 percent tax hike on palm oil on the grounds that its production harms the environment and its consumption fuels obesity.

Frederic Thil, French director for Ferrero, the Italian firm that makes the sugary, chocolate-colored paste, sounded a defiant note in Le Parisien daily.

“The arguments are unfair and the repercussions would be catastrophic,” he told the newspaper.

More than 100 million jars of Nutella were sold in France alone in 2008, according to Ferrero, whose website says the recipe sold in large quantities across the Western world was invented in the backroom of an Italian pastry shop in 1944.

The main ingredients are sugar, milk powder, hazelnuts, cocoa, emulsifier, flavoring and palm oil, on which a tax of almost 100 euros per metric tonne is levied in France at the moment.

That tax would rise to 400 euros a tonne if the proposal floated by a Senate committee earlier this month secures majority backing in the Senate and in the lower house of parliament, the National Assembly.

France, which is keen to find other funding sources for a generous healthcare system in cash-strapped times, has already raised tax on sugary drinks and recently hatched plans to hike tax on beer to help plug the hole in public welfare finances.

Thil said the maker of Nutella, popular in many countries as a breakfast fare smeared onto slices of bread, would do all it could to limit the hit from any tax rise for consumers.

Palm oil, also extensively used in margarine, biscuits and crisps, makes up about 20 percent of the Nutella mix. The 300 percent tax rise, if passed on, would raise the cost of a 1-kilo jar or the spread by 0.06 euros, according to ASEF, an association of doctors that backs the tax hike proposal.

The other argument made for a tax increase is that it will encourage a shift away from intensive production methods that have prompted destruction of forests in countries such as Malaysia, a major exporter of palm oil.

(Reporting By Brian Love; Editing by Toby Chopra)

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Greece in bid for bridge finance

9 November 2012 Last updated at 14:04 ET

Greece is to make an urgent bid to raise funds from the financial markets in case it does not get another tranche of bailout aid in time to repay debts.

On Tuesday, it plans to issue bonds, repayable in one and three months, to cover debt repayments due on Friday.

The bond issue is to raise 3.12bn euros ($ 4bn; £2.4bn), to help the country repay creditors owed about 4bn euros.

Greece is negotiating to secure aid worth 31.5bn euros from the European Union and International Monetary Fund.

Without the aid, heavily-indebted Greece would face bankruptcy.

Manos Chatzidakis, an analyst at Beta Securities in Athens, said the four-week treasury auction was an unusual but necessary step.

It would keep Athens afloat until leaders of the eurozone meet on 26 November to approve payment of the latest rescue loans. Despite the Athens Parliament passing the hugely unpopular austerity cutbacks, the EU, IMF and European Central Bank are still reviewing the country’s finances.

“This is bridge financing ahead of the November 26 decision, to ensure that there is no problem with [repaying] bondholders. It is unorthodox, but it’s a form of bridge financing and not the beginning of regular such issues. It has a purely technical role,” Mr Chatzidakis said.

The news came as Cyprus began a new round of talks about a bailout to support the country’s ailing banks and service its debt payments.

Negotiators from the EU, ECB and the IMF – collectively known as troika – held talks with senior government officials from Cyprus’s finance ministry and central bank. The talks are expected to continue into next week.

Cyprus has been unable to tap international financial markets for money since last year because of its junk credit rating. The country has been negotiating with Russia for money, but the talks are thought to have stalled.

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Twin explosions strike southern Syrian city

BEIRUT (AP) — Syria‘s state-run news agency says two large explosions have struck the southern city of Daraa, causing multiple casualties and heavy material damage.

SANA did not immediately give further information or say what the target of Saturday’s explosions was.

The Britain-based Syrian Observatory for Human Rights says the blasts went off near a branch of the country’s Military Intelligence in Daraa.

The Observatory, which relies on a network of activists on the ground, says the explosions were followed by clashes between regime forces and rebels fighting to topple President Bashar Assad.

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Social media shakes up solitary online FX trading

LONDON (Reuters) – The solitary world of online foreign exchange trading is emerging from the shadows as solo investors turn to specialist social media networks to link up with their peers and seek market-beating strategies.

Individual or retail trading, estimated at 8-10 percent of the $ 2.5 trillion daily spot FX market, used to conjure an image of a lone trader with little contact with the outside world.

But that is changing. Thanks to specially tailored websites known as social trading networks, users are able to see and even copy the trades of top-ranked rivals, swap ideas and gauge the market mood in online chat with a community of contacts.

“In the world of trading there are a lot of signals but social media gives us the market sentiment and it is ideal for chatting to people across the world for trade ideas,” said Patrick Orini, who has been trading FX online since 2004.

Retail forex traders make their deals using personal accounts through brokers such as Alpari, FxPro and IronFX. Increasingly, traders are hooking up their broker accounts with social trading networks, such as eToro, Currensee and Tradeo.

Traders usually pay a subscription to use the service while the social network and the broker might share revenue on trades.

In a system reminiscent of microblog network Twitter, top players who make their trades visible can gather thousands of followers, some of whom pay to copy their strategies.

Orini’s trading account on a social trading network called Tradeo has 500 followers, of whom around 20 copy his trades.

If online investors do well in their trades, they will attract more followers and will be ranked higher on the trader “leaderboard” posted on the site.

Retail FX has grown over the last decade as brokers allow individual traders to take highly leveraged positions previously accessible only to institutional investors. The largest group of market players is based in Japan.

eToro, one the world’s largest social trading platforms has processed more than 20 million trades since it went live at the beginning of 2012.

Tradeo, a social network for forex traders based in Tel Aviv, launched three months ago and, according to its co-founder and CEO Jonathan Adest, the site has posted up to half a billion dollars of trades from around 10,000 traders since then.

“It’s not a broker, but a network for brokers — a bit like an online trading room,” Adest said.

He said Tradeo also combats a key hazard of online trading — inaccurate or bogus information. Traders often swap ideas on comment boards, but anonymity and low security makes it difficult to weed out spam.

“The idea of creating a niche social network for forex traders is to help verify commentators usually found in chat rooms and comment boards,” Adest said.

In its increased use of social media, online forex trading is catching up with developments in the equities market.

Retail equities trading is estimated to account for up to half of trade in UK small companies. Retail FX’s smaller share of the overall market reflects the fact that most trade is over-the-counter and lack of volatility that make it harder to turn a profit.

TWITTER

In the equities market, analysis of Twitter postings and news headlines has been used to predict stock price movements.

London-based hedge fund firm Derwent Capital is launching a new spread betting application for retail traders in January that will use Twitter’s 350 million daily tweets to create a sentiment indicator covering currency pairs and other assets.

Social media makes existing currency market sentiment models more effective, said John Hardy, head of FX strategy at Saxo Bank.

“It would be a new way to measure “sentiment” in real time, something that banks can do already via how people are actually trading…but the Twitter measures might be able to bring new nuances and sophistication,” he said.

Arguably, solo traders who hook up to social trading networks are seeking an edge in the “wisdom of crowds”.

“The reason why so many people, like myself, do share their activity and ideas is to help each other and build the community,” Orini said. “I got so many valuable ideas from other traders, that I’m more than happy to share my ideas as well.”

(Editing by Nigel Stephenson)

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Andy Summers film documents surviving the Police

LOS ANGELES (Reuters) – Police guitarist Andy Summers has always been a multifaceted artist – musician, songwriter, photographer and author. Now he can add filmmaker to his extensive resume.

“Can’t Stand Losing You: Surviving the Police,” Summers’ 90-minute documentary film that chronicles his musical career and life with supergroup, has its world premiere at the DOC NYC festival in New York on Friday.

Summers, who narrates the film, describes it as “a musical journey” that uses live footage from the 2007-2008 Police reunion world tour, along with lots of archival material from both the early Police days and the London punk scene.

“But it’s not done as a chronological story,” he told Reuters. “We establish the fact we’re doing the reunion tour early on, and then it dips in and out of live Police concert footage, and then starts going back to the earlier days.”

Based on his 2006 memoir “One Train Later,” the documentary also incorporates rare footage dating back to the 1960s, when Summers, now 69, was involved with the early British rock scene and seminal artists including British vocalist and keyboard player Zoot Money and Eric Burdon. The film also features many still photographs that the rock star took along the way.

“I was always interested in photography, so it was very natural for me to document everything, whether it was backstage at some grungy club or on early tours with the Police,” he said.

“So there’s a lot of intimate moments and interesting shots and archival stuff, especially in the first 25 minutes of the film, with the Sex Pistols appearing and so on.”

BUMPING INTO FAME

Following his book’s lead, the film also documents the serendipitous nature of the formation of the Police, one of the biggest bands in rock history, when Summers “just happened to bump into” drummer Stewart Copeland in a London Underground station one day in 1977.

The two decided to have coffee and discuss forming a new band with a then-unknown singer called Sting, whom they had just met.

“One train later, and it all might never have happened,” recalled Summers, “which is why I titled the book ‘One Train Later.’”

He would have preferred that title for the documentary. “It’s much hipper and doesn’t pander to the obvious Police connection,” he said, “so I’m hoping at some point we’ll change it to that.”

Inevitably, the film also focuses on the breakup of the always-combustible and often acrimonious trio.

“It’s obviously a very painful and poignant moment, when we all realize, ‘Well, that’s it,’” Summers said of the 2008 footage documenting the band’s final dissolution.

“The camera lingers on all our faces, and you can see the raw emotion there. It’s very bittersweet.”

As for rumors that the Police may re-form yet again for another tour, Summers does not think that is likely, even though their 30th reunion tour grossed more than $ 350 million.

“But then I never thought we’d get back together to do the last tour, so I never shut the door on anything,” he said. “I personally think that my book was somewhat of a provoking agent in getting the Police reunited, so maybe this film will do the same thing again.”

(Reporting by Iain Blair, Editing by Jill Serjeant, Patricia Reaney and Lisa Von Ahn)

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Uncle Sam to Start Tracking Tobacco Use in Movies Aimed at Kids

Federal health authorities said Friday they will begin monitoring how well movie studios are doing to reduce depictions of smoking and other tobacco use in youth-rated movies.

Authorities at the Center for Disease Control and Prevention’s Office on Smoking and Health said that voluntary efforts by movie studios to reduce tobacco use in youth-rated movies have been unimpressive. Data on tobacco use in movies will  be added to regular CDC reports to the public on smoking prevalence among youth and adults, total and per-capita cigarette consumption, and progress on tobacco control policies.

“We all have a responsibility to prevent youth from becoming tobacco users, and the movie industry has a responsibility to protect our youth from exposure to tobacco use and other pro-tobacco imagery in movies that are produced and rated as appropriate for children and adolescents,” said the lead author of the paper, Dr. Tim McAfee. “Eliminating tobacco imagery in movies is an important step that should be easy to take.”

MORE: PG-13 Movies May Start Teens Smoking

Understanding what motivates kids to smoke is a high priority of public-health experts. According to the U.S. Department of Health and Human Services, more than 3,800 kids a day smoke their first cigarette. And, while smoking rates fell over the past 40 years, rates in both adults and youths have held steady in more recent years.

Previous research shows that kids who see smoking on television and in the movies are more likely to take up smoking. But depictions of smoking continue to turn up in youth-rated movies. Last year, the number of on-screen smoking scenes increased, according to a study published in the October issue of the journal Preventing Chronic Disease.

The data, from Thumbs Up! Thumbs Down!, a project of  Breathe California-Emigrant Trails, is based on tobacco incidents in top-grossing movies each year rated G, PG and PG-13. The study looked at 134 movies that were among the 10 top-grossing, youth-rated movies last year for at least one week.

The study found the number of tobacco incidents rose 3 percent (1,881 incidents) in 2011 compared to 2010 despite the fact that there were five fewer movies in the 2011 sample. The number of tobacco incidents per movie rose 7 percent over 2010 — 13.1 incidents per movie in 2010 and 14 last year. The biggest increase in smoking depictions occurred in G and PG movies.

MORE: Smoking Rates Around the World Are Astronomical

And, while kids aren’t supposed to see R-rated movies, smoking incidents in those films rose 7 percent in 2011, said the author of the study, Dr. Stanton A. Glantz, a professor of medicine for the Center for Tobacco Control Research and Education at the University of California, San Francisco. Glantz has been studying smoking in the movies for many years.

“There are going to be hundreds or thousands of kids who will take up smoking due to this backsliding,” Glantz told Take Part. “There is a dose response here, too — the more kids see, the more likely they will smoke.”

The uptick in smoking comes at a time when health professionals are unified behind the idea that kids are influenced by such depictions in the media. In a report released earlier this year, U.S. Surgeon General Regina Benjamin identified smoking in movies and tobacco-company advertising as the primary forces that cause kids to take up smoking.

“The evidence is sufficient to conclude that there is a causal relationship between depictions of smoking in the movies and the initiation of smoking among young people,” the Surgeon General’s report noted. Images of smoking in the movies, “are powerful because they can make smoking seem like a normal, acceptable, or even attractive activity. Young people may also look up to movie stars, both on and off screen, and may want to imitate behaviors they see.”

MORE: Teen Smoking an ‘Epidemic,’ Surgeon General Says

Previous studies have also showed that depictions of smoking in the movies are more likely to influence low-risk kids to smoke; “the kids whose parents don’t smoke or kids who do well in school,” Glantz says.

The increase in on-screen smoking is further disappointing because top officials for three studios — Comcast (Universal), Disney and Time Warner — had previously committed to reductions in smoking in their movies, Glantz says. Smoking in youth-rated movies declined from 2005 to 2010.

Among these companies with stated policies discouraging smoking in movies, the percentage of movies that were tobacco-free declined by 17 percent from 2010 to 2011.

“A few studios had taken the lead in reducing the amount of smoking in their films,” Glantz says.  “They accomplished it and showed it could be done. But now there is this serious back-sliding. I don’t know what accounts for that.  These three studios are now about as bad as the studios that hadn’t made a lot of progress. I don’t know what happened.”

The Walt Disney Company “actively seeks to limit the depiction of smoking in

movies marketed to youth,” according to a statement released by the company to Take Part.

MORE: U.S. Appeals Court Strikes Down Graphic Cigarette Warning Labels

“Disney discourages depictions of cigarette smoking in movies produced in the United States for which a Disney entity is the sole or lead producer and which are released either as a Touchstone movie or Marvel movie, and seeks to limit cigarette smoking in those movies that are not rated “R” to: scenes in which smoking is part of the historical, biographical or cultural context of the scene or is important to the character or scene from a factual or creative standpoint, or to scenes in which cigarette smoking is portrayed in an unfavorable light or the negative consequences of smoking are emphasized,” according to the statement.

The company also said it prohibits tobacco product placement and promotions and will  place anti-smoking public service announcements on DVD’s of new and newly re-mastered titles, not rated “R,” that depict cigarette smoking and will work with theater owners to encourage the exhibition of an anti-smoking public service announcement before the theatrical exhibition of any such movie.

But the World Health Organization and other public health groups have recommended formal policies aimed at eliminating smoking in the movies, McAfee noted.

MORE: Teens: Smoking Less, Calling It ‘Scummy’ More

The Glantz study raises “serious concerns about this individual company approach,” he wrote. “This difference suggests that individual company policies may not be sufficient to sustain a reduction in youth exposure to tobacco-use and other pro-tobacco imagery in movies and that more formal, industry-wide policies are needed.”

Glantz has long argued for a modernized rating system to give movies with any tobacco use an R rating, unless the presentation of tobacco “clearly and unambiguously reflects the dangers and consequences of tobacco use,” he says. Other options to discourage smoking are to run anti-smoking messages prior to the movie and persuading movie studies to adopt policies to certify they receive no payments for depicting particular tobacco brands in their movies.

“The MPAA has refused to address this issue in a meaningful way by giving movies with smoking an R rating,” Glantz says. “They have never rated a single movie R for smoking. The goal here is to get smoking out of the movies being shown to kids.”

Question: Should movies that depict smoking receive an R rating? Tell us what you think in the comments.

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Shari Roan is an award-winning health writer based in Southern California. She is the author of three books on health and science subjects.

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