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 Monday with the overhang of Friday’s news that the U.S. economy grew at a surprisingly weak 1.2% annual rate in the second quarter. The first of three estimates for the April-June period was less than half what economists had forecast and could cause Federal Reserve policymakers to hold off on another interest rate hike until at least December. Experts had expected the economy to bounce back strongly in the second quarter after an anemic expansion over the winter caused in part by financial market turmoil.
Less-friendly skies: Starting Monday, American Airlines’ frequent flier program will begin rewarding miles based on dollars spent on airfare rather than miles flown. That means a traveler flying first class will usually earn more reward miles for the same flight than a passenger in coach. Delta, United and Southwest have all switched to similar dollar-based systems. The only major U.S. carrier that still awards miles based on miles flown is Seattle-based Alaska Airlines.
Pension bill: Legislation that would require more disclosure from private equity firms that manage money for California's public pension plans will be debated at a hearing Monday before the state Senate appropriations committee. Assembly Bill 2833, authored by Assemblyman Ken Cooley (D-Rancho Cordova) and sponsored by Treasurer John Chiang, is facing resistance from the private equity industry. Last month, legislators weakened a key part of the bill that would have forced greater disclosures related to the fees paid to private equity firms.
A blog of one’s own: Some 3,000 people are expected to attend BlogHer 16, an annual conference aimed at women bloggers being held Thursday through Saturday at Los Angeles’ JW Marriott hotel at L.A. Live. Events will address such topics as turning blogs into books, search-engine optimization and “owning your expertise.” Kim Kardashian West will be the keynote speaker. Other speakers include Mayim Bialik of “The Big Bang Theory” and Ashley Carufel, assistant director of content strategy and social media for PBS Food.
Play time: The Summer Olympics in Rio de Janeiro begin on Friday and, even before the first event, NBC figures to be a big winner. The network expects its prime-time rating for the Olympics to be higher than 2012 as all of the events will be live instead of tape-delayed. NBCUniversal Chief Executive Steve Burke has said it will be "the most profitable Olympics in history." NBC paid $4.32 billion to the International Olympic Committee in 2011 for the rights to four sets of Games -- outbidding its nearest rival by almost $1 billion -- and an additional $7.75 billion to extend the deal through 2032.
Job growth: On Friday, the Labor Department will release the July jobs report. Economists expect growth of about 175,000 net new jobs, a solid figure, though still less than June’s 287,000 figure. The unemployment rate is forecast to tick down to 4.8%. Last week, California reported that the state added a healthy 40,300 net jobs in June, while the unemployment rate increased from 5.2% to 5.4%. More Californians entered the job market in June, which explains why the jobless rate increased despite the decent growth in jobs.
Monday’s Business section takes a gander at other tech companies that may have “for sale” signs now that Yahoo has been purchased by Verizon. So far this year, there have been 5,153 tech mergers announced worldwide valued at $355 billion, by far the largest merger activity of any industry, according to the research firm Dealogic. One reason: Many tech companies have struggled with execution, unforeseen competition, management turnover and other woes. That’s prompted disaffected investors to keep pushing share prices lower, leaving the companies with market values well below their highs that are luring buyers.
Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:
Luxury homes: Los Angeles has long attracted wealthy individuals willing to spend millions of dollars for a sprawling estate in the chaparral hills above the city or along its fabled coast. But to crack down on money laundering by bad guys, the U.S. Treasury Department will require buyers of luxury homes in L.A. and other California counties with pricey real estate to reveal their identities when laying out cash to purchase homes through secretive shell companies.
Vizio sale: The Chinese technology company LeEco is buying Irvine television maker Vizio for $2 billion in cash, the latest major success story for Southern California's technology start-up sector. The deal, expected to close in the fourth quarter, gives LeEco a dominant position in TVs and external speakers in the U.S. as the Beijing giant tries to match the likes of Apple and Netflix in international appeal. “Their goal is global,” one analyst said.
Yahoo acquisition: With its $4.8-billion acquisition of Yahoo, Verizon has snatched up an Internet pioneer with a massive audience. But it has also secured something equally coveted in Silicon Valley: real estate. When the deal closes, the telecom giant will become one of the largest office landlords in the nation's technology hub thanks to the roughly 1-million-square-foot campus Yahoo owns in Sunnyvale, Calif. — a desirable position amid the current tech boom.
Airbnb files suit: Airbnb sued the city of Anaheim, challenging a new city law that imposes fines on short-term rental sites for listing homes and apartments that violate the city’s rental regulations. The lawsuit, filed in U.S. District Court in Santa Ana, marks the second time in so many months that the popular rental site has sued a city over regulations that target online rental sites over violations committed by hosts who use the sites. Airbnb sued its hometown of San Francisco last month.
Debt collectors: The Consumer Financial Protection Bureau is taking its first step toward reining in debt collectors, releasing an early outline of rules aimed at preventing them from harassing consumers and trying to collect debts that don’t exist. The proposal would require collection companies to do more to verify information about debts before contacting consumers, limit the number of times a collector can call or email consumers, and make it easier for consumers to dispute debts.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
Crafty merger: The San Francisco Chronicle explores how Anheuser-Busch InBev’s pending $108-billion merger with SABMiller could be good for California’s craft breweries. A Justice Department ruling “includes serious restrictions on Anheuser-Busch InBev that will help protect all breweries’ access to markets.”
Not so Big Three: USA Today notes an auto-industry milestone. Fiat Chrysler will stop making cars in the United States. “Instead, Fiat Chrysler's U.S. plants will be focusing entirely on pickups and SUVs for the Ram and Jeep brands.”
Star pre-trek: Fast Company lays out the logistical steps involved in moving a 2-ton satellite across California prior to launch. Lockheed Martin created a “clean room on wheels” that “had to ensure that all shocks and vibrations were absorbed to prevent any of the technology from getting dislodged in motion.”
Drone deal: The New York Times says British consumers may be receiving Amazon drone deliveries far sooner than Americans. “Britain’s aviation regulator will let Amazon test several aspects of drone technology — such as piloting the machines beyond the line of sight of its operators — that the Federal Aviation Administration has not permitted.”
But no liquids: Travelers can pose questions to the Transportation Security Administration via Twitter and Facebook Messenger. As Cnet relates, one recent post asked “if it's OK to bring this mummified head of Jeremy Bentham as a carry-on item." Bentham was a 19th century English philosopher. The TSA, it turns out, is open-minded on the issue.
It’s amazing what some people try to sneak onto airplanes. My fave: The woman who tried to slip aboard with 51 live tropical fish hidden in secret pouches under her clothes. Oh, and the cannonball, of course.
For the latest money news, go to www.latimes.com/business. Until next time, I'll see you in the Business section.