Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I'm Business columnist David Lazarus, and here's a rundown of upcoming stories this week and the highlights of last week.
Car Week: Monterey Car Week, a Carmel-area festival attended by wealthy collectors, kicks off Tuesday night. But the real excesses begin the next evening with entrepreneur Gordon McCall’s MotorWorks Revival, featuring the world’s snazziest airplanes, jets and automobiles. Festival highlights include vintage car auctions projected to move $415 million worth of automotive steel, car debuts from top automakers and the crème de la crème Sunday vintage car competition known as the Pebble Beach Concours d’Elegance.
PUC hearing: At a Wednesday hearing in San Francisco, the California Public Utilities Commission will allow the public to comment on ways to overhaul the agency to improve its efficiency, effectiveness and accountability. A recent report commissioned by the PUC found that secret communications between the agency and the utilities it regulates have influenced the outcome of multibillion-dollar decisions.
Retail sales: Consumer spending accounts for about two-thirds of U.S. economic activity, so retail sales is an important stat. The latest numbers will be released by the Commerce Department on Thursday. A rebound is expected for July after a broad-based setback a month earlier. Improved car sales likely will boost the spending figure higher. Sales likely will remain strong this month as back-to-school shopping steps up.
Gangsta Gangsta: Will Friday be a good day for the box office? Hollywood’s spirits are high in anticipation of the N.W.A biopic “Straight Outta Compton,” which is poised to generate big ticket sales in its opening weekend. The Universal Pictures entry is benefiting from enthusiastic reviews, the timeliness of its social themes and the endorsements of Ice Cube and Dr. Dre, who produced. Less lucky is the Warner Bros. action flick “The Man From U.N.C.L.E.” The expensive, likely troubled picture is the latest from “Snatch” director Guy Ritchie.
Relativity hearing: Relativity Media is bankrupt and looking for buyers, quick. The company’s hope is to close a sale by early October, but this month, a Manhattan bankruptcy judge expressed reservations about that timeline and approved only $9.5 million in interim debtor-in-possession financing. At Friday’s follow-up hearing in New York, Relativity’s lawyers are hoping for approval of their original plan, and the full $45 million they’re seeking.
Monday’s Business Section takes a puff of the vaping industry. Thousands of vaping companies nationwide face an uncertain future as the Food and Drug Administration considers how to regulate the fledgling business. If the FDA deems liquid nicotine a tobacco product, as expected by the end of the year, companies would be required to submit applications detailing ingredients, potential health effects and how each product is manufactured. Some say this could eliminate as many as 99% of the small businesses.
Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:
Media meltdown: The entertainment industry took a pounding on Wall Street as long-simmering concerns about declining pay-TV subscriptions boiled up in quarterly earnings reports. The sell-off — one analyst called it "the media meltdown" — came after Walt Disney Co. warned investors that profit from ESPN and other cable channels would not be as robust as initially thought because fewer consumers are subscribing to full pay-TV packages. "One sentence from Disney and nearly $60 billion in market value gets wiped out," Doug Creutz, media analyst with Cowen & Co., said Thursday. "Can you say panic?"
Parental leave: Microsoft wasted no time in following Netflix’s lead in substantially boosting paid leave time for new parents. The software company said it would begin offering mothers and fathers full payment for 12 weeks of leave. Netflix is offering up to a year of paid leave. Many tech companies have bolstered their parental leave policies in recent years. Google offers biological mothers up to 22 months of paid leave; Apple, 18 months. Facebook offers four months to both mothers and fathers. But experts say such policies only work at companies with progressive cultures and managers who set the right example.
Pay gap: The Securities and Exchange Commission voted to require public companies to publish the gap between the pay of the chief executive and the average worker — a controversial measure that is sure to stoke the heated debate about income inequality. The commission voted 3-2 along partisan lines, with Democratic appointees arguing that the measure will help shareholders hold corporate boards accountable in setting executive pay and Republicans saying the proposal is an exercise in showmanship and a misuse of securities laws. The rule, required under the 2010 Dodd-Frank financial reform law, would require the nation’s 4,000 publicly traded companies to disclose the ratio of the annual total compensation of the CEO to the median of the annual total compensation of the company’s employees.
Airwave auction: Federal regulators set the date and rules for a unique, complex effort to buy some broadcast airwaves and auction them to wireless companies to provide more mobile services. The so-called broadcast incentive auction will begin March 29, about four years after Congress authorized the innovative approach in hopes of making more spectrum available for wireless Internet while generating billions of dollars in revenue for the government. The premise is simple: lure some broadcasters to give up their valuable spectrum by offering to share some of the money the government will receive by auctioning the rights to use the airwaves to wireless providers.
Disney expansion: The Walt Disney Co. has purchased three parcels of land near its Anaheim resort, sparking speculation that the property would free up land for a future park expansion involving Disney's Star Wars or Marvel's superhero characters. "People have put two and two together, and they know that something cool could be coming down the line," said Robert Niles, founder of Themeparkinsider.com. Disney acquired the Marvel and Star Wars characters through purchases of Marvel Entertainment Inc. in 2009 and Lucasfilm in 2012. But resort officials are not commenting on a future park expansion, except to say that any expansion will remain within the resort's current footprint. That suggests the company may move some behind-the-scene facilities elsewhere to make space for new attractions.
What We’re Reading
And some recent stories from other publications that caught our eye:
Mystery hack: A nice whodunit from the Hollywood Reporter on the hacking of Red Granite Pictures, an independent film backer with credits including "The Wolf of Wall Street." The company claims someone "unlawfully and without permission obtained access to Plaintiff's computer systems," gathered contact information and sent harassing emails to Red Granite employees and others who have done business with the company.
Solar bonds: Fortune cites a recent example of two of Elon Musk’s three companies — electric car company Tesla, rocket firm SpaceX and solar installer SolarCity — working together. Over the past six months, SpaceX has invested $165 million in solar bonds backed by SolarCity's solar panel systems. Sounds a bit like one hand feeding the other.
Pension critic: The Long Beach Press Telegram offers a look at investor and Stanford University lecturer David Crane, who sits atop the enemies list for California’s public employee unions. He believes their pension plans are time bombs that will explode under future generations. Unions and their political allies want Crane to just go away. He wears that criticism as a badge of honor.
Benedict Arnold: Bloomberg notes that a company selling beer named for a hero of the American Revolution may forsake its home country. Boston Beer Co., maker of Samuel Adams beer and Angry Orchard hard cider, would be worth more to a foreign owner unburdened by the U.S. tax structure, founder Jim Koch told a Senate committee. Because of that, Koch says he regularly gets pitches from investment bankers looking to strike a sale. He’s been turning them down — for now.
Streaming pros: The Verge tells the story of how HBO looked for some tech help when it wanted to make sure its HBO Now streaming service was state of the art. So it turned to a start-up called Major League Baseball Advanced Media, or BAM for short. The firm began as the in-house IT department for the league’s 30 teams. But over the past 15 years, BAM has emerged as one of the most talented and reliable names in streaming video.
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