TOP 10 STORIES / Oct. 30-Nov. 3
1 U.S. Regulators Propose California Power Overhaul: The Federal Energy Regulatory Commission proposed sweeping changes to fix California’s $23-billion electricity market. But the commission stopped short of ordering refunds of the sky-high electricity prices paid since June, saying it lacked the legal authority and had found no evidence of individual companies driving up electricity prices. The commission left the door open for some sort of payback in the future should it uncover specific instances of such market abuse. An investigation by FERC staff found that California’s electricity crisis is the result of market design defects and a shortage of electricity. FERC’s ruling leaves California regulators with the task of figuring out whether utilities or consumers will bear the cost of last summer’s high electricity prices. (Nancy Rivera Brooks)
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2 Napster Pact Rocks Music Industry: Napster Inc. thumbed its nose at the record industry again this week, carving out a deal with Bertelsmann, the deep-pocketed parent of one of the biggest music companies in the world, BMG. The move, which stunned Bertelsmann’s competitors, should keep Napster up and running awhile longer, but it does little to solve most of the upstart company’s problems--particularly a barrage of copyright-violation lawsuits. Under the deal with Bertelsmann, Napster promised to develop a version of its controversial file-sharing service under which it would charge membership fees in order to compensate labels, artists and songwriters. But analysts say there’s no technology available to fulfill the promises made by Napster or much likelihood that Napster users will cough up cash for songs they now obtain for free through the service. (Chuck Philips)
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3 Viacom to Buy Black Entertainment Group BET: Viacom Inc. said it reached a deal to acquire BET Holdings Inc., the nation’s largest African American-owned media company, for $2.5 billion. BET founder and Chairman Robert L. Johnson had pressed for a $3-billion price, sources had said days before the announcement. The purchase of BET, whose prized asset is the Black Entertainment Television channel that reaches 62.4 million of the nation’s households, catapults Viacom ahead of Time Warner Inc. as the nation’s leading owner of advertising-supported cable channels. BET gives Viacom its first channel targeting African Americans and also solidifies the company’s dominance over the music programming genre with MTV, VH1 and Country Music Television. Under the deal, Johnson, whose 63% stake is worth about $1.6 billion, would remain under contract to Viacom for five years, with assurances of management control over the networks, which will remain based in Washington. (Sallie Hofmeister)
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4 WorldCom Restructuring Plan Disappoints: Communications giant WorldCom Inc. saw its stock plummet still further after it lowered earnings and said it would split into two separate units in a restructuring that mimics a move made by AT&T; Corp. last month. WorldCom said it will split in two to help distance the firm’s higher-growth Internet, Web hosting, data and corporate long-distance businesses from the stagnant consumer long-distance business, which has been a drag on WorldCom’s stock price. WorldCom said it would create two “tracking” stocks for the units. Investors disappointed in the announcement Wednesday sent WorldCom shares down 20% that day to $18.94, its lowest close in more than three years. It ended the week at $18. Meanwhile, Sprint Corp. said lower prices for long-distance service will hurt profit next year, but said it won’t split off its consumer long-distance business. (Elizabeth Douglass)
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5 Southland’s Imperial Bought by Comerica: Imperial Bancorp, one of the largest banks based in Southern California, agreed to be acquired by Detroit banking company Comerica Inc. for $1.25 billion. George L. Graziadio, Imperial’s 81-year-old chairman and chief executive and major shareholder, will serve as chairman of the combined bank’s California operations. Graziadio resisted a sale for years, but the bank saw its stock hammered this spring by concerns about rising loan problems. Imperial’s position as a lender to entrepreneurial companies made the bank an attractive takeover candidate for large out-of-state players interested in breaking into California. (Times staff writers)
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6 Economic Signs Point to Modest Slowing: The unemployment rate remained at a three-decade low of 3.9% last month, but job growth slowed and the work week shrank, a signal of slower times ahead. Analysts had expected a slight increase in the jobless rate, however. Americans’ average hourly earnings rose just 6 cents, to $13.89, although the increase was the largest in six months. Other signs of economic slowing came in monthly reports of a decline in consumer confidence and in manufacturing activity, but construction activity and new-home sales remained robust. And labor productivity jumped in the third quarter, rather than slowing as many analysts expected, as unit labor costs rose only slightly. (Times staff writers)
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7 Recruiters Resort to Desperate Measures: With the job market tight and the holidays looming, recruiters are getting more assertive--and creative--about snagging employees. In Orange County--where the unemployment rate is a scant 2.5%--retailers and service companies are in a frenzied search for low-skilled workers, as Walt Disney Inc. is trying to scoop up thousands of employees for its new California Adventure theme park in Anaheim. Businesses say they have bumped up salaries, relaxed schedules and offered signing bonuses. But it’s still tough to get and keep workers. So dire is the situation that Disney recently sent letters to its annual-pass holders asking whether they--or anyone they know--would be interested in working at the park. Irvine Marriott Hotel recruiters have taken their job search to the streets, scouring laundermats, bus stops and senior centers. (Leslie Earnest)
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8 Immigrant-Friendly Department Chain Expanding: La Curacao, the Pico Union-based department store that caters to Latino immigrants, is getting ready for its biggest expansion drive yet. A massive South Gate store recently opened and six to eight Los Angeles County outlets are planned for the next three years. Founded as a door-to-door catalog company by two Israeli-born brothers 20 years ago, La Curacao now pulls in more than $100 million in annual revenue. Key to its popularity: an export program that allows shoppers to purchase goods for relatives in Central America and Mexico; computer training for kids while their parents shop; and--most significantly--a credit program that has put a private-label credit card in the hands of 400,000 consumers with little or no credit history. (Lee Romney)
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9 Net Sector Has Its Winners: Hundreds of small Internet start-ups are thriving even as high-profile companies such as Priceline.com and Drkoop.com grab headlines for their big-money flameouts. These mundane “dot-com” survivors typically are small operations with few employees and no venture capital funding and have more in common with shopkeepers who sell fast food and T-shirts than with the darlings of Silicon Valley. Taken together, these nimble upstarts are having perhaps a greater impact on the Internet economy than their high-profile brethren. A recent survey found that more than 16,000 dot-com workers had been laid off since December, but the government estimates that the job category dominated by Internet workers grew by nearly 11,000 jobs in the same period. And some small Net companies are making profits--such as 3-year-old Eclip.com, a Santa Monica-based coupon-clipping Web site.
(Karen Kaplan)
10 A Scooter War Begins: Razor USA, the Cerritos-based importer of the popular $100 scooter, filed a lawsuit in U.S. District Court in Los Angeles accusing 15 competitors with a combination of patent and trade infringement. At stake is several hundred million dollars in expected sales between now and year-end. Razor wants the federal court to block competitors--most of them based in Southern California--from selling similar devices after it was awarded a patent Tuesday for a design component of its hot toy. (Jerry Hirsch)
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* Please see Monday’s Business section for a preview of the week’s events.
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Going Once....
Investors bid down the price of Priceline.com shares after the once-hot company said it expects lower revenue ahead, a 16% cut in its work force and the resignation of its chief financial officer. CFO Heidi Miller had left Citigroup just eight months ago to join the company that lets Internet users name their price for airline tickets and other items. Priceline plunged $2.13, or 31%, to close at $4.72 in Nasdaq trading Friday.
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Priceline.com monthly closes and latest on Nasdaq
Friday: $4.72, down $2.13
