Top 10 Stories Feb. 12-16
1. Energy Plan Unveiled: Gov. Gray Davis announced a long-awaited plan to rescue the state’s near-bankrupt big utilities, winning cautious support on Wall Street but raising concerns among consumer groups and Republican lawmakers. The Davis plan would provide Southern California Edison and Pacific Gas & Electric with two new sources of revenue: a surcharge on electric bills, which would back bonds used to help repay the utilities’ massive debts, and billions from the state’s purchase of their network of high-voltage transmission lines. Consumer groups branded the proposed surcharge an unwarranted rate hike for consumers. Key Republican lawmakers remained at odds with the Democratic governor over the idea of taking over the power grid. One equity analyst described the overall plan as “more comprehensive and potentially workable than we expected,” but cautioned that creditors may balk at waiting the 90 days for it to go into effect.
(A Times Staff Writer)
*
2. Ruling Rocks Napster: The future of Napster Inc., the popular online music-sharing service, is in doubt after a federal appeals panel’s ruling that consumers do not have an absolute right to copy songs from each other over the Internet. The panel ordered U.S. District Judge Marilyn Hall Patel to craft a preliminary injunction barring Napster from letting users copy song files that the major record companies and music publishers have identified as copyrighted. A copyright-infringement trial is to be held later this year. Napster executives say that if Patel orders those files removed from Napster directories, they’ll have no choice but to shut down the service.
(Jon Healey)
*
3. Economic Signs Weak but Not Recessionary: Reflecting the impact of rising energy prices, U.S. wholesale prices leaped 1.1% last month, the biggest increase in more than a decade, government figures showed. The producer price index jump means manufacturers will be pushed further to raise prices, cut costs or endure reduced profits. Other economic reports showed surprisingly low consumer confidence and weaker-than-expected industrial production but unexpectedly strong retail sales and home building. Federal Reserve Chairman Alan Greenspan told Congress that the economy will slow substantially this year but avoid recession. His guarded remarks dampened some hopes on Wall Street that the Fed would remain on a course of cutting interest rates. But some analysts interpreted his sober analysis as leaving room for further, but more limited, cuts.
(Times Staff Writers)
*
4. Janitors Gain With Pact: Leading supermarket chains in Southern California agreed to reverse a decade-long trend of subcontracting low-paid night janitors and will either hire staff janitors or pay union wages. The agreement, which followed a lawsuit filed by janitors and criminal charges filed against their employers, was part of a four-year labor contract ratified by members of the Service Employees International Union. Investigations by state labor agencies and by the Los Angeles Times found that many subcontracted supermarket janitors were routinely underpaid and worked six or seven nights a week under sometimes dangerous conditions. The contract covers about 2,100 janitors and includes significant increases in pay and benefits. Participating stores include Ralphs, Vons and Albertsons.
(Nancy Cleeland)
*
5. Labor Session Subdued: The national AFL-CIO held its annual executive council session in Los Angeles, one of the few bright spots for labor activity. Union membership rates dropped slightly in the last year, and a slowing economy and changed political climate have put unions on the defensive. Leaders braced for what they fear will be a painful relationship with the Bush administration, which has indicated it will try to reverse several labor-friendly regulations. The leaders met for the first time with Labor Secretary Elaine Chao, who said she would work to find “areas of commonality.”
(Nancy Cleeland)
*
6. Holes in Safety Net: More than half of all seafood firms aren’t following federal food safety rules designed to protect consumers from bad fish, said a report released by congressional investigators. The businesses have little incentive to comply, the General Accounting Office report said, because plants are inspected only once a year and few inspectors follow up on problems. Even after finding unsanitary and unsafe conditions, inspectors only issue warning letters, often months after a visit.
(Melinda Fulmer)
*
7. Company Halts Employee Genetic Tests: Burlington Northern Santa Fe Corp., facing a government investigation and an employee lawsuit, said it would stop subjecting workers to genetic tests. The railroad said that in the last year 20 track maintenance workers had been tested after they filed job injury reports for carpal tunnel syndrome. A genetic marker is associated with a rare neuromuscular disease that may include but is never limited to carpal tunnel syndrome symptoms. The Equal Employment Opportunity Commission had asked a judge to halt the tests, saying they violated the Americans With Disabilities Act.
(Lisa Girion)
*
8. Theaters Rescued: Three enigmatic Los Angeles investors emerged as leading white knights for the nation’s troubled theater chains. Loews Cineplex Entertainment filed for Chapter 11 bankruptcy protection under an agreement to be acquired by a group that includes Pacific Capital Group, which is controlled by former Michael Milken associate Gary Winnick, and distressed-debt specialist Oaktree Capital Management. Meanwhile, Edwards Theatres Circuit signed a letter of intent under which Staples Center and Kings owner Philip Anschutz’s investment company and a fund managed by Oaktree will make a significant investment. Winnick and Anschutz own fiber-optics networks that could play a role in converting these outlets to digital cinemas, but sources say digital cinema is not a factor.
(Jon Healey)
*
9. Blue Cross Settles Disputes: Blue Cross of California settled a lawsuit from the large hospital operator Catholic Healthcare West that contended the health insurer routinely declined to pay for patient services as a way to boost profitability. Separately, Woodland Hills-based Blue Cross said it reached a new contract with St. John’s Health Center in Santa Monica. The 233-bed hospital stopped accepting Blue Cross insurance in August, protesting the insurer’s payment rates. The two developments eased tensions between Blue Cross and the health-care providers that in the last year criticized the insurer over its payment practices and low reimbursement fees.
(Jerry Hirsch)
10. Employees Backing Away: More people are cutting back on 401(k) savings investments in the stock of their employer, apparently heeding financial planners’ advice about having too big a retirement bet in one asset. But at 30.2% of the typical investor’s 401(k), the company-stock figure is still too high for comfort, many experts say. In the nation’s 1,000 largest defined-contribution retirement plans, sponsoring-company stock has fallen from a peak of 35.2% two years ago, the latest survey by the trade journal Pensions & Investments found. Among the 200 biggest corporate plans surveyed, company stock is more prevalent, though even in those plans it has dropped to 35.5%, on average, from a peak of 41.2% in 1998. Most financial planners recommend that an investor hold no more than 15% of 401(k) assets in his or her employer’s stock.
(Josh Friedman)
*
These and additional stories from last week are available at https://www.latimes.com/business, divided by category. Click on “Money and Investing,” “Entertainment Business” and other topics.
* Please see Monday’s Business section for a preview of the week’s events.
