TOP STORIES -- July 14-19
Sanford Weill to Resign as CEO of Citigroup
Sanford I. Weill, the legendary head of Citigroup Inc. whose reputation was dented by the recent stock analyst scandal, said he would step down in January as chief executive of the financial services giant.
Charles O. Prince, head of Citigroup’s investment banking unit and a longtime Weill confidant, will become CEO. Citigroup President Robert B. Willumstad, who had been a candidate for the top spot, will become chief operating officer and oversee all major businesses except investment banking.
Weill, 70, will remain chairman until 2006. He indicated that he would stay closely involved in the company he built.
Weill’s retirement has been long anticipated. He was said to be reluctant to give up his perch atop the world’s largest financial services company. But some Citigroup board members had agitated for a succession plan.
*
Boeing Says It Will Slash More Jobs
Boeing Co. said it would cut an additional 4,000 to 5,000 jobs from its commercial aircraft business, on top of nearly 34,000 jobs it already has slashed.
The bulk of the cuts will be in the Puget Sound area, where most of Boeing’s commercial aircraft are assembled. A spokesman said cuts wouldn’t affect operations in Long Beach, where 717 jetliners are built.
The job-cut announcement came as the company worked to resolve potential problems for its defense operations.
Hoping to resolve a federal probe, Boeing and the Air Force reportedly are discussing the idea of transferring some rocket contracts that Boeing won to launch government satellites to its rival Lockheed Martin Co.
Boeing said it was taking an $835-million pretax charge to cover the cost of getting out of building the rockets for commercial customers.
*
Vivendi Rejects MGM’s Bid for Universal Assets
Determined to fetch the best price for its U.S. entertainment assets, Vivendi Universal rejected as too low Metro-Goldwyn-Mayer Inc.’s $11.5-billion bid but encouraged the Los Angeles studio to stay in the race with a higher offer.
The development raised questions about Vivendi’s strategy. MGM’s bid was said to be among the highest cash offers for Universal’s movie studio, theme parks and TV businesses.
A source close to Vivendi said the move reflected the French company’s disappointment with bids it has received and its confidence in its improved financial condition. Vivendi has the option of holding a public offering of the Universal operation.
MGM executives declined to comment, as did a Vivendi spokeswoman.
*
Edison Planning to Build Power Plant
Southern California Edison said it was moving to build its first major power plant in more than a decade -- another sign that California is plowing under the last traces of its ill-fated electricity deregulation experiment.
Edison, a unit of Rosemead-based Edison International, said it bought an option to take over construction of a stalled 1,054-megawatt plant near Redlands that was being built by AES Corp. before the Virginia firm ran into financial problems.
Edison executives declined to say how much they paid for the option to buy rights to the plant from Bethesda, Md.-based InterGen, which had purchased an option on the plant in March.
*
SEC Probes Accounting at Video Game Firms
The Securities and Exchange Commission is conducting an apparently broad investigation of accounting practices in the video game industry, according to SEC filings by three game publishers.
Santa Monica-based Activision Inc., Calabasas Hills-based THQ Inc. and Acclaim Entertainment Inc. of Geneva, N.Y., received requests for information from the SEC. Activision said SEC staff had informed it “that other companies in the video game industry received similar requests.” The three companies said they were cooperating with the investigation.
In its filing, Activision said, “The investigation appears to be focused on certain accounting practices common to the interactive entertainment industry, with specific emphasis on revenue recognition.”
The SEC hasn’t charged the companies with wrongdoing.
*
Tenet Hospital Indicted Over Doctor Payments
A federal grand jury accused a San Diego hospital and its owner of paying millions of dollars in illegal kickbacks to induce doctors to refer patients to the hospital.
Alvarado Hospital Medical Center and Tenet Health System Hospitals Inc., a unit of Tenet Healthcare Corp., were charged in a 17-count indictment with violations of federal laws carrying a maximum fine of $425,000. The indictment claims that Alvarado and Tenet paid more than $10 million to recruit doctors to the San Diego area and that much of it was bribe money to get the doctors to send patients to Alvarado.
Santa Barbara-based Tenet, which had said that it expected the indictment, issued a statement defending the way it recruits physicians.
“We believe this very broad indictment mistakenly attacks a well-established, lawful and common means by which U.S. hospitals attract needed physicians to their communities,” said Trevor Fetter, Tenet’s president and acting chief executive.
Tenet Healthcare wasn’t named in the indictment.
*
House Panel Aids Effort to Block FCC
A House committee moved to block media giants from owning television stations that reach more than 35% of the nation’s viewers, boosting efforts to reverse the Federal Communications Commission’s loosening of media ownership rules.
In a 40-25 vote, the House Appropriations Committee amended a spending bill, expected to pass, attaching language that would prohibit the FCC from using its money to implement changes to the national ownership cap.
The FCC on June 2 voted to raise the cap to 45%. The commission at the same time relaxed a number of similar limits, spurring a bipartisan revolt among lawmakers worried about giving too much power to media conglomerates such as Viacom Inc. and News Corp.
In the Senate, a bipartisan coalition is pushing a far more comprehensive bill that would repeal additional elements of the FCC decision.
*
Yahoo to Buy Overture in $1.6-Billion Deal
Yahoo Inc. agreed to pay about $1.6 billion in stock and cash for Overture Services Inc., a Pasadena firm that pioneered charging for prime advertising space in Internet search results.
The deal would unite two companies that have enjoyed a lucrative alliance since November 2001. It would be the latest step Yahoo has taken to bolster its cornerstone business to better compete with Google Inc. and Microsoft Corp.’s MSN.
Yahoo agreed to pay $4.75 in cash and 0.6108 share of Yahoo stock for each Overture share.
The cash portion of the deal totals about $313 million. The merger was approved by both companies’ boards, a Yahoo spokeswoman said, and requires approval from Overture shareholders. The deal is expected to close in the fourth quarter.
*
Record Labels Move Ahead With Subpoenas
The Recording Industry Assn. of America has obtained federal court subpoenas for the identities of at least 871 people accused of violating music copyrights by sharing songs online, the Associated Press reported.
The subpoenas compel Internet service providers to reveal names and addresses of people whose accounts allegedly were used to make songs available for copying on a network.
The RIAA declined to say much about the subpoenas. But one thing seems certain: The RIAA has no plans to send warning letters to the people it targets. Instead, it will file lawsuits.
RIAA President Cary Sherman has said the group would “go after the worst offenders first,” judged in terms of the number of songs offered for copying.
*
Landmark Arco Plaza Getting Makeover
Los Angeles developer James A. Thomas revealed plans for a $125-million makeover of downtown landmark Arco Plaza. Among his ideas: a nightly light show of laser beams bouncing between the two towers.
Thomas Property Group beat out several other bidders this year with a reported $270-million offer for the 2.7-million-square-foot office and retail complex. The previous owner, Japan-based Shuwa Investment Corp., paid $640 million in 1986.
Thomas hired the towers’ original design firm, Los Angeles architects A.C. Martin Partners, to oversee improvements.
Work on parts of the upgrade has begun and will be completed over two years. The towers’ offices are about 60% occupied, Thomas said. He added that he was negotiating with several possible lessees.
.
