Column: California Inc.: Looking beyond the Brexit vote
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.
Trading resumes today under the cloud of Britain’s stunning decision to exit, or “Brexit,” the European Union, adding to ongoing questions about European stability, international trade and our battered retirement accounts. We should get a better sense this week of the level of market volatility to expect in coming weeks and months as investors digest Friday’s stock rout and look ahead to next steps.
LOOKING AHEAD
VW deal: A settlement of the Volkswagen emissions-cheating scandal is scheduled to be announced in federal court in San Francisco on Tuesday. Volkswagen reportedly has agreed to take a series of steps costing about $10.2 billion to settle claims from U.S. consumers, pay government penalties and fund a program to remediate the environmental damage caused by pollution. Most of the money would go to compensate 482,000 owners of cars with 2-liter diesel engines that were programmed to turn on emissions controls during lab tests and turn them off while on the road.
Redstone suit: On Thursday, a Massachusetts judge will consider dismissing a lawsuit that challenges the decision by media mogul Sumner Redstone to oust two longtime advisors from their roles helping oversee the Redstone family’s empire. The two associates – Viacom Chief Executive Philippe Dauman and Viacom director George Abrams – filed the suit after being removed May 20 from their positions in a trust that will eventually make decisions about Redstone’s controlling shares in Viacom and CBS Corp. Redstone’s lawyers have asked the judge to dismiss the suit.
Propositions: Californians will learn Thursday what issues they will be voting on in November – and it could be a long list. As many as 18 measures could qualify to be on the Nov. 8 ballot. Among them are proposals to overturn a state law banning single-use plastic bags in grocery stores, to raise the minimum wage to $15 an hour by 2021, to require actors in pornographic films to use condoms and to impose price controls on state purchases of prescription drugs. Secretary of State Alex Padilla must certify the final list Thursday.
In-flight entertainment: Starting Friday, all passengers on nearly every Delta Air Lines flight can watch and listen to movies, television shows and music through their own digital device or seat-back entertainment system for free. That includes fliers in coach seats. Delta will offer complimentary access to up to 300 movies, 750 TV shows, 100 foreign films, 2,400 songs and 18 channels of live satellite TV. Until now, Delta passengers in coach have had to pay $6 for recently released movies and $1 for premium TV channels such as HBO.
Hoop dreams: Though the NBA season has ended, the business of pro basketball is ready to heat up. Friday is the start of the free agency period when teams can start trying to sign players who are not committed elsewhere. There will be an unprecedented amount of cash for teams to spend on free agents this year with the rise of the salary cap to a projected $92 million per team. One star coming on the market is Dirk Nowitzki, who has informed the Dallas Mavericks that he is opting out of the final year of his contract and becoming a free agent.
THE AGENDA
Monday’s Business section focuses on Americans’ golden years. The aging of the baby boomers, the looming funding crisis for Social Security and the meager size of many workers’ nest eggs – if they have one at all -- have spurred candidates, lawmakers and experts to propose ways to boost retirement savings. Politicians are even talking about making changes to Social Security, long known as the third rail of politics because touching it was thought to be a career-killer. “The longer we wait, the more draconian the solutions will have to be,” says one former lawmaker.
STORY LINES
Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:
A room of one’s own: Britain’s exit from the European union – the so-called Brexit – will be a top financial story for weeks if not months to come. The Brits themselves seemed bewildered by the outcome and are just starting to realize the ramifications of their decision. If you’re just joining the party, here’s a helpful explainer about what happened and where we go from here. The Times’ verdict: “The ‘Brexit’ vote may turn out to have been a blunder of historic proportions. Instead of affirming Britain’s identity and independence, it could tear the country apart.”
Nuke plant nixed: One of California’s largest energy utilities took a bold step in the 21st century electricity revolution with an agreement to close its last operating nuclear plant and develop more solar, wind and other clean power technologies. The decision announced by Pacific Gas & Electric Co. to close its beleaguered Diablo Canyon nuclear plant within the next decade runs counter to the nuclear industry’s arguments that curbing carbon emissions and combating climate change require use of nuclear power, which generates the most electricity without harmful emissions.
Conflict of interest? Los Angeles billionaire Elon Musk has been lauded as an entrepreneurial mastermind, creatively wheeling and dealing to turn his flashy ideas into fully realized companies. But investors and analysts are wary of the latest plan. Musk’s announcement that he wants Tesla Motors to buy SolarCity quickly raised concerns about conflicts of interest, unclear motives and shaky financials. Musk is chairman and top shareholder of both companies.
SunEdison exit: After months of turmoil at SunEdison Inc., during which the big developer of renewable energy projects, once a Wall Street darling, plunged into bankruptcy, Chief Executive Ahmad Chatila has resigned. Chatila was succeeded by John Dubel, SunEdison’s chief restructuring officer. According to filings with the Securities and Exchange Commission, Chatila will not receive severance payments and his resignation had nothing to do with any disagreements with the company.
Pot shot: David Dinenberg’s Kind Financial is about helping navigate bureaucracy, specifically the regulations and red tape that come with marijuana legalization. Its marquee product is software that helps government agencies track pot production and sales. The start-up drew headlines after Microsoft announced it would make Kind’s Agrisoft Seed to Sale software available for sale on its cloud computing platform that services government clients – a move that marks Microsoft’s foray into the marijuana business.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
Help yourself: Big Pharma knows that the way to a doctor’s prescription pad is through his or her tummy. As Stat tell it, “doctors who were fed meals costing even less than $20 later prescribed certain brand-name pills more often than rival medicines.”
Wretched hive: Bloomberg peeks inside Donald Trump’s most valuable office tower, located at 40 Wall Street. It finds “frauds, thieves, boiler rooms and penny-stock schemers,” plus more unregistered brokerages than any other U.S. address.
Murky outlook: The New York Times takes a close look at the $3.1-billion expansion of the Panama Canal. “When the speeches and the celebrations end, one inescapable fact will remain: The expanded canal’s future is cloudy at best, its safety, quality of construction and economic viability in doubt.”
Authentic brands: Is there a more pitiful retail trend than “authenticity” as a way to lure millennials? Fast Company looks at how “Shinola signaled that it would soon be engaged in a pitched battle with Warby Parker to be the specialty-retail tastemaker to millennials.”
What time is it? Bet you didn’t know you could still call for the time. The Atlantic helpfully reminds us that dialing (202) 762-1401 will get you the U.S. Naval Observatory. “You’ll hear a pleasant ticking sound followed by the announcement of the exact time, delivered in an old-timey-broadcasting voice.”
SPARE CHANGE
The gods of rock, not to mention the U.S. legal system, smiled on Led Zeppelin with a court verdict in Los Angeles that the band didn’t lift the iconic riff that opens its classic song “Stairway to Heaven.” The unanimous decision by the panel of eight men and women came after a weeklong trial in which Jimmy Page, Zep’s guitar wizard, and singer Robert Plant rebuffed the claim of thievery and told how they wrote their most famous song nearly half a century ago.
Now check out the opening to this classic. Too close for comfort?
For the latest money news, go to www.latimes.com/business. Until next time, I’ll see you in the Business section.
David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.
