TOP STORIES -- May 11-16

Senators Move to Keep TV Station Limits

A bipartisan group of U.S. senators, expressing reservations about a Federal Communications Commission plan to ease media ownership restrictions, introduced a bill that would keep the nation’s biggest television chains from getting bigger.

The bill, sponsored by Alaska Republican Ted Stevens and South Carolina Democrat Ernest F. Hollings among others, would preserve a rule that bars any company from owning TV stations reaching more than 35% of U.S. households.

In a Commerce Committee hearing, senators from both parties voiced opposition to the expansion. But it isn’t clear that sponsors have enough support to prevent the FCC from raising the cap to 45%, as sources say the agency’s staff has proposed.

The FCC proposal also would make it easier to own a TV station and newspaper in the same city, according to sources. The commission is scheduled to vote on the proposal June 2.

An FCC spokesman declined to comment.

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Meters Lacking State Ethanol Certification

Hundreds of measuring devices intended to ensure that gasoline sold in California contains enough smog-reducing ethanol haven’t been certified by the state, Los Angeles County inspectors say.

County officials say they haven’t determined whether the uncertified meters are inaccurately measuring the ethanol added to gasoline. Investigators say contractors who installed the meters may not have been properly licensed and could face sanctions.

The meters are at oil company fuel terminals where trucks are filled with gasoline for delivery to service stations. Inspections at six terminals found all but one of the meters lacked certification, said Jeff Humphreys, deputy director of the county’s Weights and Measures Bureau, which plans to examine all terminals in the county.

State officials say they weren’t aware until recently that the meters hadn’t been ethanol-certified. A spokesman for the state Division of Measurement Standards said the agency was working with the meter maker to certify the devices.

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CPI Falls as Consumer Demand Weakens

Lower prices for energy, cars and clothes drove consumer costs down in April by the largest amount in 18 months, underscoring Federal Reserve anxiety about the possibility of a destabilizing decline.

The consumer price index, the government’s most closely watched inflation gauge, declined by 0.3% last month after rising by 0.3% in March, the Labor Department reported.

For the 12 months ended in April, consumer prices were up a modest 2.2%. The performance of “core” prices, which exclude volatile energy and food costs, was even lower, with a gain of just 1.5% in the same period, the smallest increase since 1966.

Faced with lackluster customer demand, businesses are keeping a lid on price increases and in some cases are cutting prices to lure shoppers.

Federal Reserve Chairman Alan Greenspan and his colleagues are on guard for signs of deflation. Fed policymakers say chances of deflation are remote, but have signaled that they are prepared to lower short-term interest rates to ward off any threat of that happening.

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Fox Division Drives News Corp.’s Earnings

News Corp. swung to a profit of $275 million in its fiscal third quarter from a year-earlier loss due to a strong showing by the film and TV divisions at Fox Entertainment and its “Joe Millionaire” and “American Idol” franchises.

For the quarter ended March 31, News Corp. earned 21 cents a U.S. share, contrasted with a loss of $4 billion, or $3.16, a year earlier, when the company took a $4.1-billion write-down of its investment in Gemstar-TV Guide International Inc. Revenue rose 14% to $4.4 billion.

Driving results was a strong showing from the Fox assets, including its film division, which enjoyed robust DVD sales of releases such as “Ice Age.” Surging wartime ratings of Fox News Channel, which ended the quarter as the top-rated cable channel, also helped the performance. At Fox, profit of $276 million was more than double year-earlier earnings of $108 million.

County Median Home

Price Passes $300,000

The typical purchase price of a home in Los Angeles County broke the $300,000 mark for the first time in April -- and nothing suggests it won’t keep going up.

The supply of houses for sale would have to grow sharply to help relieve upward pressure on prices. But this year, the pool of available properties has been shrinking. Recent statistics by the California Assn. of Realtors show the supply of listed houses and condos in the county fell in March to a level far below the 10-year average.

The median sales price of new and existing homes in L.A. County in April rose 19% from a year earlier, to $303,000, according to a report released by DataQuick Information Systems.

Sales in the county were up 1.2% to 11,407 properties -- the highest for any April since 1989, despite the war in Iraq and an otherwise sluggish economy, according to DataQuick.

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Bailout Money OKd for Workers’ Comp Fund

Insurance Commissioner John Garamendi has authorized a bailout of an industry fund on the brink of running out of cash to pay medical and disability claims for about 40,000 injured California workers.

The California Insurance Guarantee Assn., which pays claims on workers’ compensation, auto, homeowners and liability policies when private insurers become insolvent, has been slammed by a wave of company failures in the workers’ compensation industry.

Obligated to pay $1.6 million a day in benefits to injured workers, CIGA was faced with the prospect of delaying or cutting off payments to thousands as early as last week.

As a stopgap measure, CIGA received Garamendi’s permission to dip into funds earmarked to cover unpaid claims for auto and homeowners policies. The move underscores the precarious health of California’s workers’ compensation system.

Plans call for CIGA to ask the Legislature for permission to float about $500 million in revenue bonds to help its financial situation.

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FDA Panel Backs Genentech Asthma Drug

A Food and Drug Administration advisory panel recommended that the agency approve Genentech Inc.’s drug Xolair, putting it on track to become the first biotechnology product to treat asthma.

The FDA isn’t required to follow the recommendations of its advisors but often does.

South San Francisco-based Genentech expects the FDA to formally approve Xolair for sale by the end of June. The biotech company would market Xolair jointly in the U.S. with Swiss drug maker Novartis, and the two would share profit.

The 11-member FDA panel recommended approving Xolair for patients ages 12 to 65 whose asthma is caused by a year-round allergy and cannot be controlled by steroid inhalers. About 500,000 patients with allergies to such things as pets and dust mites fall into that category, Genentech said.

Xolair is an injectable drug given once or twice a month.

The panel expressed some concern about the long-term effects of Xolair, which aren’t known.

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Sony Plans to Launch Portable Game Machine

Consumer electronics giant Sony Corp. announced plans to challenge rival Nintendo Co.’s control of the multibillion-dollar hand-held video game business.

Set to hit store shelves in late 2004, Sony’s PSP will enter a field ruled by Nintendo, whose 14-year-old Game Boy has cornered more than 90% of the global market for hand-held games. The PSP also is intended to compete with efforts by Microsoft Corp., Intel Corp. and Samsung Electronics Co. to jointly develop a portable entertainment device for music and movies.

Sony’s device will have the processing power of its original PlayStation console and will play movies, music and games on a 4.5-inch backlighted screen. The PSP will play discs half the diameter of a CD. Each disc will be able to store as much as 1.8 gigabytes of memory. Sony didn’t disclose a price for the PSP.

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George Lucas Starts Up Animation Division

After years of fits and starts, George Lucas has launched a new unit, Lucasfilm Animation, to help crack the lucrative digital animation business.

The “Star Wars” visionary has been frustrated by the collapse of studio-controlled animated projects that were to be produced by his organization. The operation also provides more autonomy to a digital animation group that had been part of Lucas’ special effects powerhouse, Industrial Light & Magic.

“Lucasfilm Animation will now have the flexibility to develop and create its own films,” said Lucas’ longtime spokeswoman Lynn Hale.

Hale said the animation unit didn’t have its first project lined up. The staff includes what was ILM’s nine-person animation development team, headed by Patty Blau, and creative ranks are expected to grow.

Lucas, who is prepping the final installment of his epic “Star Wars” film series, couldn’t be reached for comment.

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For a preview of this week’s business news, please see Monday’s Business section.