TOP STORIES -- July 20 -25

House Votes to Restore Media Ownership Cap

The House of Representatives, in a sharp rebuke to the Federal Communications Commission, passed a measure that would keep television broadcasters from owning stations that reach more than 35% of the nation’s viewers.

The 400-21 vote on a spending bill showed growing discontent with a recent move by the FCC to relax decades-old restrictions on media conglomerates.

On June 2, the FCC approved regulations that expanded the ownership cap to 45% from the current 35% and revised other restrictions, including a ban on owning a newspaper and a TV station in the same market.

White House officials have said President Bush would veto the spending bill if the TV provision remained intact. The roughly $40-billion House bill is packed with money for agencies that enjoy broad bipartisan support -- the Commerce, State and Justice departments. The White House and media company lobbyists scrambled to prevent a potentially embarrassing showdown between President Bush and members of his own party.

Newhall Land Agrees to Be Bought by Lennar

Newhall Land & Farming Co., developer of the Valencia master-planned community and one of the state’s largest landowners, agreed to be acquired for $990 million by a Florida-based partnership.

The proposed sale would transfer vast tracts of land to home builder Lennar Corp., which is joining with LNR Property Corp. to buy Newhall Land. Newhall Land owns 47,000 acres in California.

The company is trying to develop a second master-planned community in the region, 12,000-acre Newhall Ranch. The planned purchase brought an outcry from environmental groups that have long opposed Newhall Ranch and the suburban sprawl of Los Angeles.

Newhall Land is a “master limited partnership” whose investors own “units” that are publicly traded like stock. Under the proposed deal, the partnership formed by Lennar and LNR would pay $40.50 for each unit.

Air Force Yanks Big Contracts From Boeing

The Air Force slammed Boeing Co. with one of the harshest penalties ever imposed on a defense contractor.

The Air Force plans to take away seven rocket contracts, valued at about $1 billion, from Boeing and give them to Lockheed. It also said it would indefinitely bar the three Boeing units -- one in Huntington Beach -- responsible for developing, building and servicing the Delta IV rockets from seeking future contracts.

The Air Force said it was punishing Boeing for what it called “serious violations of federal law” that involved illicitly obtaining trade secrets from aerospace rival Lockheed Martin Corp.

Air Force Undersecretary Peter B. Teets said the “quality of information was sufficient to provide great insight into Lockheed Martin’s proprietary cost and pricing.” Boeing has insisted that the Lockheed documents gave it no edge in winning rocket contracts in a 1998 competition.

SBC Invests in EchoStar, Plans to Sell TV Service

Local telephone giant SBC Communications Inc. said it struck a deal with EchoStar Communications Corp., which owns the Dish Network satellite TV service, so it could offer TV along with phone and Internet services in 13 states.

SBC said it invested $500 million in EchoStar securities as part of the deal. Other financial details weren’t disclosed.

SBC figures its pact with EchoStar will nip the growing threat posed by cable companies -- rivals that are the dominant providers of broadband Internet service and have been gaining a toehold in the phone business.

Another major phone company, Qwest Communications International Inc., said it signed marketing agreements with EchoStar and DirecTV.

Starting next year, SBC will offer all services related to satellite TV, Internet connections and both wire-line and wireless phone service.

Tenet Names Kangas as New Chairman

Seeking to restore its reputation, Tenet Healthcare Corp. tapped an independent director to be chairman.

The nation’s second-largest hospital chain named Edward A. Kangas, a former chairman and chief executive of accounting giant Deloitte Touche Tohmatsu, to replace Jeffrey Barbakow, who stepped down as Tenet’s chairman and CEO this spring under shareholder pressure.

Santa Barbara-based Tenet is facing several federal and state investigations of its operations. Kangas, 59, was appointed to Tenet’s board in April, in part to address mounting shareholder concern that the company had too few outside directors. He wasn’t available for comment.

Trevor Fetter is acting CEO. He is considered a leading candidate for the permanent post, but the board could decide to look outside the company.

Former Charter Execs Face Fraud Charges

Federal authorities accused four former top executives of cable company Charter Communications Inc. of conspiring to defraud investors by making it look as if the company had more money and cable subscribers than it did.

A federal grand jury in St. Louis indicted former Chief Operating Officer David Barford and former Chief Financial Officer Kent Kalkwarf on 14 counts of mail fraud, wire fraud and conspiracy to commit wire fraud during 2000-01. Two former senior vice presidents also were indicted on related charges.

Robert Haar, a St. Louis attorney representing Kalkwarf, said the defendants “are being made scapegoats.”

Charter, which has about 500,000 subscribers in Southern California, was not charged.

UPS Settles Bias Suit Filed by Deaf Workers

United Parcel Service Inc. agreed to pay $10 million and improve working conditions for deaf employees to settle a class-action employment discrimination lawsuit on behalf of hearing-impaired workers.

The Atlanta-based package delivery company admitted no wrongdoing in agreeing to the proposed settlement of the suit, which was filed in 1999 in federal court in San Francisco.

The lawsuit claimed that UPS discriminated against deaf applicants for jobs and promotions. It was settled on behalf of about 1,000 deaf or hearing-impaired people who have worked for or applied for jobs with UPS since 1997. The settlement includes $4.1 million in attorneys’ fees and expenses.

UPS agreed to make many changes, including providing deaf and hearing-impaired workers with vibrating pagers, equipping job sites with text telephones and providing interpreters as needed.

Earnings Double at Countrywide Financial

Riding the biggest wave of home financing in American history, Countrywide Financial Corp. said second-quarter profit doubled as the company funded $130 billion of mortgages.

The Calabasas-based company said net income soared to $383 million, or $2.74 a share, from $191 million, or $1.48, a year earlier. Revenue rose 74% to $1.74 billion.

Countrywide funded $130 billion in loans in the second quarter, up from $42 billion a year earlier. Countrywide’s servicing portfolio grew to $559 billion, up more than $100 million since the beginning of the year.

Countrywide projected 2003 earnings at $13 to $15 a share, more than twice last year’s profit and better than the $10.76 average of analysts polled by Thomson First Call.

AOL Posts Big Profit but Sheds Some Subscribers

AOL Time Warner Inc. said it logged its biggest quarterly profit since the 2001 merger that created it, though the America Online Internet service continued to shed subscribers.

Second-quarter net income rose to $1.06 billion, or 26 cents a share, from $396 million, or 9 cents, a year earlier. Results included about $760 million from a settlement with Microsoft Corp. and pretax gains of $542 million on the sale of the company’s half interest in the Comedy Central cable channel. Profit beat Wall Street’s expectations.

Revenue was up 6% to $10.8 billion, helped by the release of the sci-fi sequel “The Matrix Reloaded.” But the America Online unit lost 846,000 dial-up subscribers. AOL ended the quarter with 25.3 million dial-up subscribers. The company said it signed up about 170,000 customers to its proprietary broadband service, fewer than some analysts expected.

Lower Credit Rating Hits California Bonds

California bonds took a hit as traders reacted to the blow delivered to the state’s credit rating.

New York debt-grading firm Standard & Poor’s cut the rating on $26.8 billion in California bonds to BBB -- a three-level downgrade, which brought the state’s bond rating just a hair above “junk” status.

Unless legislators move to resolve the state’s $38-billion budget shortfall, the credit rating could fall further. The municipal bond market reaction drove prices down and yields up by about 0.10 to 0.25 percentage point Friday, traders noted. That’s likely to cost the state about $25 million for every $10 billion in bonds sold, said Robert Gore of Crowell, Weedon & Co. in Los Angeles.

The additional borrowing cost comes at a particularly bad time. Leaders in the state Senate said they had reached a budget compromise that would require borrowing an additional $17 billion from investors.