Week in Review
TOP 10 STORIES, JUNE 19-23
1. Gas Prices Keep Pumping: The week started on a low note for motorists as the Energy Information Administration reported a record average gas price of $1.681 for self-serve regular gasoline nationwide. California drivers were in the unusual position of paying less than the national average--t $1.618 for self-serve regular. The Organization of Petroleum Exporting Countries agreed Wednesday to pump nearly 3% more oil, but experts doubt that the latest production increase will be big enough to lower gasoline prices this summer. OPEC officials said they want oil prices to fall to the $25 neighborhood, but so far oil has not cooperated. OPEC is scheduled to meet again Sept. 10, although OPEC Secretary General Rilwanu Lukman said the cartel might act sooner to increase production again if oil prices don’t drop.
--Nancy Rivera Brooks
2. Cable Companies May Have Won One: Local governments can’t force cable operators to open their lines to Internet access rivals, the U.S. 9th Circuit Court of Appeals ruled Thursday in an apparent victory for the cable companies. AT&T; Corp. had brought the suit against Portland, Ore., after the city demanded that it provide “open access” to Internet service providers such as America Online Inc. But the ISPs pointed to a part of the decision that could swing the issue in their favor: The court classified high-speed Internet access sold by cable operators as a telecommunications service, which could mean cable companies will have to open their lines as phone companies have--exactly what the ISPs have sought. The Los Angeles City Council immediately put on hold a proposal to force open access. The issue now seems destined for the Supreme Court.
--Sallie Hofmeister
3. AT&T; Phone Rate Hikes Return: AT&T; Corp. set new prices for its basic long-distance calling plans that trimmed some weekend rates but raised peak weekday prices just two weeks after it had backed off a price increase that angered federal regulators and consumer groups. The lower rates, effective July 1, will benefit customers who make few or no long-distance calls--and will cut the company’s earnings by 1 cent to 2 cents a share. Days earlier, AT&T; Wireless Group had snapped up mobile phone systems serving San Francisco, San Diego and Houston for $3.3 billion, filling major gaps in its national coverage.
4. Fox Studio Chief Out: Fox Filmed Entertainment chief Bill Mechanic quit under intense pressure from the top as the studio reeled from a string of box-office failures, the latest being “Titan A.E.” Mechanic, who has no job lined up, called it a resignation, but sources said he was fired. Mechanic oversaw such mega-hits as “Titanic” and “There’s Something About Mary” at the studio, but has for some time had strained relations with Rupert Murdoch, chief of parent News Corp., and No. 2 Peter Chernin, who hired Mechanic from Walt Disney Co. in 1993.
5. Murdock Nears Castle & Cooke Deal: It will cost him more, but Los Angeles real estate mogul David Murdock looks to be on his way to acquiring Castle & Cooke Inc., the company that owns the Hawaiian island of Lanai as well as other real estate in Hawaii and the U.S. Southwest. Murdock announced an agreement with dissident shareholders Thursday under which he’ll pay $19.25 a share for the 73% of the company he doesn’t already own. He originally offered $17 in March and raised the bid to $18.50 last month. Shareholders said he was offering too little for the company and filed lawsuits seeking to block the deal. They’ve agreed to drop legal action in return for the higher price. Murdock values the deal, including the assumption of debt, at about $615 million.
--Jerry Hirsch
6. Seagram Deal Meets Skepticism: Seagram Co. Chief Executive Edgar Bronfman Jr. and Vivendi Chairman Jean-Marie Messier formally announced Vivendi’s $34-billion acquisition of Seagram on Monday, then set out on a campaign to sell investors on the deal, one of the biggest in media history. Shares in both companies and in Canal Plus, part of the three-way deal, plunged after the announcement. Critics don’t understand how Seagram, which only recently transformed itself from a liquor company into an entertainment operation, is supposed to mesh with Vivendi, a water utility turned leading telecommunications force. Seagram shares fell $5.25 to $58.75 on Tuesday and ended the week slightly higher at $59.25 on the New York Stock Exchange.
7. Microsoft Suit Heads for Supreme Court: The judge in the Microsoft Corp. antitrust case forwarded the landmark suit to the Supreme Court and stayed the operating sanctions he had placed on the Redmond, Wash., software giant. In sending the case to the high court, U.S. District Judge Thomas Penfield Jackson invoked a rarely used law that permits urgent antitrust disputes to leapfrog the U.S. Court of Appeals. He also delayed implementing tough restrictions on the software giant’s business practices until a higher court can review his punishment. Late in the week, Microsoft unveiled its long-awaited Internet strategy, which the company dubbed Microsoft.Net. The plan, the company’s first major strategy shift in a decade, aims to develop the framework for writing programs that connect Internet sites, personal computers and devices such as cell phones and hand-held computers.
8. Airbus Steps Up Rivalry: Airbus Industrie flexed its muscle against rival Boeing Co., finally delivering on promises to authorize orders for a super-jumbo jet that would be the largest in the sky and to convert to a single private corporation from a consortium of European companies. Airbus is gambling that the 555-seat A3XX will serve growing air traffic between main transatlantic routes, but many industry analysts expect more growth in direct service between smaller cities. The first A3XX won’t be ready until at least 2005.
9. USA Networks Reworks: After just 18 months on the job, Barry Baker resigned as second-in-command to Barry Diller at USA Networks Inc. on Wednesday, saying he wants to run a company again. Diller said Friday the company will be reorganized into three separate units for entertainment, electronic retailing and information and services, adding that he may buy the rest of Ticketmaster Online-CitySearch Inc. and sell shares of his media company’s information and services business to the public.
10. Amazon Takes a Big Hit: Amazon.com Inc. shares suffered their worst-ever fall Friday, sliding $8.13, or 19%, to $33.88 on Nasdaq as a slew of analysts advised caution on the online mega-store; some contended the company could miss sales or run out of money by the end of the year. Two other leading Internet stocks, EBay Inc. and Priceline.com Inc., fell as much as 14% after suffering their own Wall Street doubters. But some market watchers said the drubbing was more like a Richter-scale reading of e-commerce volatility than a serious change in economic indicators.
Bidders Nibble at Nabisco
The food industry had plenty of news to digest last week. Carl Icahn raised his offer for Nabisco Group Holdings to $8.3 billion, while Philip Morris Cos. and a European company reportedly made low-ball bids in the auction for the snacks maker. Analysts were split on how long Nabisco would take to make a decision. . . . Investors will be able to get a bite of Burger King shares, after its British parent Diageo said it plans to offer up to 20% of the U.S. fast-food chain to the public. . . . Consolidation continued as ConAgra Inc., whose brands include Butterball turkeys and Orville Redenbacher popcorn, agreed to pay $1.6 billion for International Home Foods Inc., maker of Chef Boyardee pasta products.
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Oil Boil
OPEC production restrictions have kept the price of oil at or near nine-year highs for the last few months. Two agreements among cartel members to pump more oil have yet to bring the price down for long. Weekly closes and latest for crude oil futures on the New York Mercantile Exchange:
Friday: $32.25 per barrel
Source: Bloomberg News --Compiled by Glenda McCarthy
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See Monday’s edition for a preview of the week’s events.
