Stocks Lose Ground as War Realities Sink In
The rally that swept Wall Street in the days leading up to the U.S.-led invasion of Iraq and during the initial days of the assault petered out last week as investors adjusted to the realization that the war may last longer than many had expected.
The Dow Jones industrial average, which gained almost 1,000 points in the eight trading sessions through March 21 on the way to its best week in 20 years, fell 4.4% last week, with 28 of its 30 member stocks losing ground. The benchmark Standard & Poor’s 500 index dropped 3.6%, and the tech-laden Nasdaq composite index slid 3.7%.
Mounting U.S. casualties and stubborn Iraqi resistance sobered investors who had hoped for a quick victory by the U.S.-led coalition. U.S. officials warned that the war could last months.
Worried investors moved money back into government bonds, pushing down yields on government securities. The yield on the benchmark 10-year Treasury note fell from 4.10% on March 21 to 3.90% Friday. In addition, gold and oil prices rebounded on concerns about the progress of the war.
Southland Gasoline Prices Ease Slightly
Retail gasoline prices edged downward in Southern California during the last week, an indication that sharply lower wholesale gasoline prices have begun to trickle down to consumers.
The latest survey from the Automobile Club of Southern California showed that the average price for self-serve regular gasoline fell two-tenths of a cent to $2.163 a gallon in Los Angeles and Long Beach and fell four-tenths of a cent in San Diego to $2.207 a gallon. Prices in the Santa Barbara region fell eight-tenths of a cent to $2.196 a gallon, according to a survey of prices for the seven-day period ended Friday.
Regulators Say Firms ‘Gamed’ Energy Market
Taking a tough new stance, federal energy regulators said that more than 30 private firms manipulated natural gas and electricity prices during the California energy crisis, and they moved to increase the state’s refund to about $3.3 billion.
In addition, the Federal Energy Regulatory Commission threatened to revoke the trading authority of eight subsidiaries of troubled Enron Corp. for allegedly “gaming” the natural gas market. The commission also said it was prepared to strip the trading authority of Reliant Energy Services Inc., now known as Reliant Resources Inc., and BP Energy Co. for allegedly engaging in “coordinated efforts” to manipulate electricity prices at Palo Verde, a key Arizona trading hub. Both companies denied the charges.
California officials expressed some satisfaction with the FERC decision but emphasized that the remedy fell far short of the $8.9 billion in refunds sought by a coalition of state agencies and the major utilities, including Pacific Gas & Electric Co. and Southern California Edison Co.
Al Jazeera TV Barred From NYSE, Nasdaq
In actions protested by free-speech advocates and saluted by nervous stock market traders, the New York Stock Exchange and the Nasdaq Stock Market barred reporters from satellite TV network Al Jazeera from their facilities as the Arab network faced criticism in the U.S. for its coverage of the war in Iraq.
Big Board Vice President Robert Zito cited security and working space considerations in revoking the network’s broadcast credentials but gave no specifics.
Nasdaq, to which Al Jazeera had applied for credentials after the NYSE move, explicitly linked its ban to the Qatar-based network’s airing of images of killed and captured American soldiers.
Media observers said the NYSE action conflicted with American principles of free speech and could result in retaliatory restrictions on U.S. journalists abroad.
Fight Brewing at FCC on Media Merger Rules
Federal Communications Commission Chairman Michael K. Powell brushed aside calls that he slow the agency’s review of media ownership rules and said he would ask for a vote on proposed reforms by June 2.
But some commissioners are complaining that Powell is withholding key details about potential rule changes and playing favorites by giving some com- missioners more information than others.
The budding disharmony raises the possibility that Powell could face another bureaucratic dogfight similar to the high- profile FCC battle Powell waged -- and then lost -- over telephone deregulation.
Commissioner Michael J. Copps, the most outspoken opponent of efforts to relax the ownership rules, complained that he had yet to see drafts on a mathematical formula to measure the diversity of media voices in a local market, even though Powell staffers have discussed the idea publicly and are testing it in different media markets.
FCC officials said the agency was working to make final decisions and keep commissioners informed but that proposals still were evolving.
Univision, Hispanic Win Conditional OK for Deal
Federal antitrust regulators agreed to Univision Communication Inc.'s $2-billion purchase of Hispanic Broadcasting Corp. -- as long as Univision follows through on plans to curtail its influence in a related TV and radio company.
The approval, which had been expected, removes a hurdle that has held up Univision’s plan to grow into a television, radio and record label behemoth commanding two-thirds of advertising dollars spent on Spanish- language media in the U.S.
Antitrust regulators have been concerned that Univision’s 27% ownership of Entravision Communications Corp. -- a Santa Monica-based company with 55 radio stations, 35 television stations and more than 11,000 billboards -- would stifle competition for ad dollars in markets such as San Jose and Las Vegas, where Entravision outlets compete with those owned by Hispanic Broadcasting.
Univision addressed regulators’ concerns by agreeing to reduce the company’s stake in Entravision to 10% within six years and to give up its two seats on Entravision’s board. Univision also agreed to convert its shares to a new class of nonvoting preferred stock.
Sony Unveils Ambitious Plan to Stick With Music
Sony Corp. revealed to employees a long-anticipated divisional blueprint from new music chief Andrew Lack that relies heavily on job cuts and a restructuring to boost performance at an operation that corporate brass has long criticized as bloated and out of touch.
Under the plan, two of the oldest and most successful music labels -- Columbia and Epic -- will undergo significant downsizing as Sony slashes $100 million in annual costs and about 1,000 of 10,000 jobs worldwide.
Also, in a far-reaching management shake-up, expected in coming weeks, Columbia veteran Don Ienner will take charge of a consolidated Sony Music America division. Michele Anthony, executive vice president of the music group, will remain at her post and serve as one of Lack’s top lieutenants.
As rivals scramble to unload recording assets, Lack made it clear that the Japanese electronics giant is banking on music to play a continuing role in a corporation that also sells CD burners, computers and portable MP3 players.
About 350 corporate, label and support staffers will be trimmed from Sony’s operations in Los Angeles, New York and Nashville. About 100 employees in Southern California will get pink slips, executives said.
Def Jam Found Liable in Rap Album Lawsuit
A federal jury in New York found powerhouse record label Island Def Jam and its chairman, Lyor Cohen, liable for fraud and copyright infringement in a dispute over a still-unreleased album that involves some of the rap world’s biggest names.
The eight-member panel sided unanimously with independent label TVT Records, which had accused Cohen and Def Jam of reneging on a deal that would have allowed TVT to release an album featuring rap sensation Ja Rule, now one of Def Jam’s marquee stars.
New York-based TVT is seeking a damage award of more than $30 million.
Def Jam, a New York division of Universal Music Group, said it planned to appeal the verdict.
Scam Victims Target Church of Scientology
Investors defrauded of $255 million by EarthLink Inc. co-founder Reed Slatkin are hoping to recover funds from the Church of Scientology International and six affiliated organizations that allegedly wound up with tens of millions of dollars from the investment scam, their attorneys said.
The investors won an initial battle when a bankruptcy judge in Santa Barbara refused to block subpoenas ordering the Scientology groups to hand over records of money transferred to them by certain Slatkin investors who came out ahead financially. The subpoenas also seek records of communications the groups had about Slatkin, a longtime but now excommunicated Scientologist who was known for his celebrity clientele.
The subpoenas mark the first legal targeting of church entities. No suits have been filed against the church or the affiliates. Attorneys expect months of wrangling before the subpoenas yield anything.
Lawyers for the church groups, who sought to block the subpoenas, won a partial victory from U.S. Bankruptcy Judge Robin Riblet, who is overseeing Slatkin’s bankruptcy. The judge ruled that they could participate in the subpoena process. That would allow the groups to mount further legal challenges and to have access to any documents made public.