TOP STORIES -- March 30 -- April 4
News Corp. Now May Be Sole DirecTV Bidder
SBC Communications Inc. has backed out of the race for DirecTV parent Hughes Electronics Corp., probably leaving News Corp. as the solitary bidder for the nation’s satellite TV leader, sources close to the talks said.
With SBC out, News Corp. could end up paying less of a premium for El Segundo-based Hughes, which is owned by General Motors Corp.
SBC bowed out of the auction after its board meeting March 28, at which a Hughes bid was discussed, people close to the situation said; it was unclear whether the board voted on the bid.
Analysts said SBC had trouble selling the strategy to Wall Street, and fears that it would be a financial strain to buy Hughes have weighed down the telephone company’s stock.
SBC would not comment on the potential DirecTV bid, which GM had expected to receive Wednesday. Hughes and News Corp. also would not comment.
News Corp.’s bid is expected in the coming days.
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American Airlines Averts Filing for Bankruptcy
American Airlines skirted a bankruptcy filing by reaching last-minute deals with its labor unions that will save $1.8 billion a year. American and its parent, AMR Corp., had set Monday as a deadline to either secure the labor pacts or file for Chapter 11 bankruptcy protection.
The Allied Pilots Assn. settled on $660 million in cuts. The Transport Workers Union, whose members include mechanics and other ground workers, agreed to $620 million. Flight attendants agreed to cuts in wages and benefits and to other changes totaling $340 million. The rest of the annual savings will come from management, support staff and other workers.
The airline’s labor pacts were applauded on Wall Street.
Although American got the immediate cost savings it needed, the airline industry is grappling with the travel downturn that has reduced sales, and it remained unclear how much passenger traffic will bounce back after the war ends and the economy rebounds, some analysts said.
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State Finds No Foul Play in High Gasoline Prices
California’s record-high gasoline prices were triggered mainly by in-state production problems and crude oil costs that climbed in advance of war with Iraq, not by manipulation by oil companies, according to a probe by the California Energy Commission.
The commission’s study, released last week, found that the state gasoline market is ripe for “tacit collusion” among refiners.
But Energy Commission investigators found no evidence that oil companies intentionally limited production or took other steps to boost their profits as gasoline prices soared 36% from Jan. 1 to March 17, when the average price hit $2.145 a gallon for self-serve regular.
The study joins a long line of gas price probes that have failed to fault the industry. In a briefing with reporters, however, Energy Commission Chairman William J. Keese made it clear that his agency intended to continue monitoring the market.
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New Contender Emerges for the L.A. Dodgers
News Corp. has cooled to the idea of selling the Los Angeles Dodgers to a group led by New York sports executive David Checketts and is leaning toward a bid from Malcolm Glazer, owner of the NFL’s Tampa Bay Buccaneers, according to several sources close to the discussions.
The entertainment giant, which has owned the Dodgers since 1995, had asked that bids be submitted by April 4.
Glazer appears to be the leading contender for several reasons: The Florida sports owner and entrepreneur is well financed, experienced in sports ownership and, unlike Checketts, interested in buying the Dodgers alone, sources say.
Checketts has offered to pay News Corp. $600 million for the team but only if the company also sells him the profitable cable TV channel that airs Dodgers games.
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Finalists for Rebuilding Iraq Down to Two Firms
Bechtel Group Inc. and Parsons Corp. have emerged as the two finalists in a highly publicized competition to repair Iraq’s roads, railways, schools, water system, airports and ports, sources close to the process said.
San Francisco-based Bechtel is the largest construction firm in the country. Parsons, based in Pasadena, builds roads, airports and industrial parks; it destroys chemical weapons and creates mass transit systems.
An announcement would come from the U.S. Agency for International Development. The contract is worth $600 million; that amount could grow significantly as additional reconstruction contracts are handed out. And whoever wins will take a leap in public recognition.
The bidding has been beset by controversy as foreign companies and their governments were incensed that they weren’t allowed to bid.
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Wall St. Settlement May Not Include Deutsche
Deutsche Bank is likely to become the second Wall Street investment firm to be dropped from an expected industrywide settlement of stock analyst probes after acknowledging that it had not turned over all the evidence demanded months earlier by government investigators.
Deutsche failed to deliver electronic tapes containing e-mail messages sought by securities regulators from California and the federal government. The company blamed the missing e-mails on a computer problem, said Andre Pineda, deputy director of the California Department of Corporations, which along with the Securities and Exchange Commission is investigating Deutsche.
The development is likely to prevent Deutsche from joining 10 other investment banks in a final settlement of the probes that is expected to be announced in the next few weeks.
In addition, The Times reported that San Francisco-based Thomas Weisel Partners would not take part in the settlement because it had reached an impasse in talks with regulators.
California regulators said Friday that they may charge Deutsche Bank with securities fraud and force it to pay a larger fine than previously negotiated.
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Gemstar Restates Earnings Once Again
Gemstar-TV Guide International Inc. again restated earnings and reported a larger-than-expected fourth-quarter loss of $1.3 billion.
Gemstar has been hit hard by disclosures that it overstated revenue generated from ads and its interactive TV programming guide. In a filing with the Securities and Exchange Commission last week, the Pasadena-based company met a deadline to recalculate several years of earnings. It has issued four profit restatements since November as part of its accounting review.
The bottom line for last year: a net loss of $6.2 billion, or $15.17 a share. In 2001, the loss was nearly $751 million, or $1.83.
Much of the red ink in 2002, Chief Executive Jeff Shell said, flowed from large write-downs of overvalued assets, accounting changes, one-time charges and slumping revenue from the company’s flagship TV Guide magazine, which recently hired a new publisher, editor in chief and circulation director.
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Jack in the Box Lowers Quarterly Sales Forecast
Troop deployments from military facilities in Southern California and elsewhere, poor weather in some markets and a sluggish economy overall prompted Jack in the Box Inc. to lower its same-store sales forecast for its fiscal second quarter.
The nation’s fourth-largest burger chain expects sales at stores open at least a year to fall 4% for the period ending April 13, rather than the 2.3% to 2.7% drop previously anticipated.
About 10% of the chain’s nearly 1,900 restaurants are near military facilities or border crossing points, spokesman Brian Luscomb said. As for Jack in the Box’s border outlets, they have suffered as auto travel has slipped on war worries, tighter security and gas price hikes, Luscomb said.
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Businesses Cut Payrolls; Jobless Rate Holds
The nation’s economy lost 108,000 jobs in March, almost three times the number that had been expected, the Labor Department said.
The department also said February’s job losses were worse than previously reported, totaling 357,000. The unemployment rate hovered near an eight-year high at 5.8% in both months.
Coming amid other signs of weakness and as Americans are transfixed by the war against Iraq, the new jobs numbers suggested an economy that started the year on the mend but has ground perilously close to a halt.
The latest losses brought to 2.1 million the number of jobs that have vanished since the March 2001 start of a recession that has yet to be officially declared over. They signaled little relief is in sight for the nation’s 8.4 million unemployed.
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Students Slammed With Song Piracy Lawsuits
The major record companies sued four students at three universities who allegedly operated music-copying services on their campuses’ computer networks.
The students -- one at Princeton University, one at Michigan Technological University and two at Rensselaer Polytechnic Institute -- each could be ordered to pay tens of millions of dollars in damages if a court finds they operated the services and redistributed copyrighted music. The suits are a new punitive tactic for the Recording Industry Assn. of America, which had relied on campus officials to stop piracy by students.
“This problem requires us to ... send a loud and clear message that this kind of activity has consequences,” RIAA President Cary Sherman said.
Several academic officials faulted RIAA for not working through the three universities to address the problem.
