Comcast Launches Surprise Bid for Disney
The country's largest cable television company launched a surprise takeover bid for Walt Disney Co., a move that could endanger the stewardship of Michael Eisner as chairman of the Burbank-based entertainment giant.
The timing of the unsolicited offer by Comcast Corp. of Philadelphia could not have been worse for Eisner, who has been under fire from critics for his management. He had planned to trumpet recent strong earnings and stock growth during a gathering of Wall Street analysts in Florida.
Instead, Comcast Chairman Brian L. Roberts spoiled the party by disclosing that the cable company had initiated the unsolicited bid, valued about $49 billion as of Friday's market close, to create the world's largest media company in terms of revenue.
Indications from both Comcast and sources close to Disney's board were that the company probably would reject the offer, setting the stage for a potentially bitter battle.
In remarks to investors, Eisner said the board had requested an analysis of the bid from Disney's managers and advisors.
Tower Records Seeks Bankruptcy Protection
Tower Records, a pioneer of the music megastore, filed for bankruptcy protection -- a high-profile casualty of the market forces that have undermined the music industry in recent years.
The chain of 93 U.S. stores, owned by privately held MTS Inc., will stay open for now.
Tower is the latest major music retailer to fall on hard times. The pressure has been mounting since deep discounters began elbowing their way into the music business a decade ago. At the same time, sales have plunged amid widespread illegal downloading of music from the Internet and other forms of piracy.
Under the reorganization plan filed in Delaware, the family of founder Russ Solomon would be forced to relinquish all but 15% of the West Sacramento-based company. Investors who own bonds would receive a collective 85% stake.
Tower executives said they expected to emerge from Chapter 11 within 60 days.
Pimco Mutual Funds May Face Charges
The Pimco mutual fund group, one of the biggest names in the financial services industry, was told by federal regulators that it might be charged with wrongdoing in the mushrooming fund-trading scandal.
Newport Beach-based Pimco, the nation's fifth-largest mutual fund family, disclosed that it received formal notice from the Securities and Exchange Commission that it might face civil charges related to an allegedly improper market-timing arrangement. The company also acknowledged that it had permitted market timing to take place in three of its stock funds in 2002. Yet it stressed that investors suffered no losses.
According to people familiar with the inquiry, the SEC and New Jersey are investigating whether Pimco allowed Canary Capital Partners to market-time some equity funds. The SEC declined to comment.
Pimco made its disclosures after inquiries from The Times.
Fed Chairman Warns of Barriers to Growth
A strengthening U.S. economy should begin creating more jobs soon but future growth could be slowed by ballooning deficits and creeping protectionism, Federal Reserve Chairman Alan Greenspan said.
Greenspan, in his semiannual economic assessment to Congress, urged lawmakers to take steps to narrow the federal budget shortfall and resist pressure to restrict international trade.
In an important signal to financial markets, Greenspan said the central bank would continue to be "patient" before raising its benchmark short-term interest rate. His comments buoyed securities markets.
Greenspan predicted that businesses would soon find it increasingly difficult to respond to rising demand without hiring more workers.
SEC Announces Rules on Fund Fee Disclosure
The Securities and Exchange Commission, seeking to rebuild public faith in the scandal-tainted mutual fund industry, called for banning special incentive payments to brokers and ordered that funds disclose more about fees charged to investors.
Under the new rules, adopted unanimously, mutual fund companies must disclose their holdings quarterly, instead of twice a year. In addition, funds will have to tell shareholders twice a year about the typical costs associated with a $1,000 investment.
Also, the SEC proposed that fund boards provide shareholders more information about the advisory fees they approve.
In their proposal on special incentive payments, regulators moved toward banning arrangements in which fund firms reward brokers who distribute their funds.
Stewart Wins Motion to Block Expert Testimony
A federal judge dealt a blow to the government's effort to prove Martha Stewart committed securities fraud when she publicly proclaimed her innocence amid an investigation of a stock sale.
U.S. District Judge Miriam Goldman Cedarbaum blocked expert testimony on whether investors in Stewart's homemaking empire would have considered her public statements about her ImClone Systems Inc. sale important.
The securities fraud count -- the most serious she faces -- accuses Stewart of propping up the stock price of Martha Stewart Living Omnimedia Inc. by claiming in 2002 that her ImClone sale was proper and that she was cooperating with authorities.
Cedarbaum granted a motion by Stewart to block expert testimony on the "materiality" of her statements.
Separately, Kmart Holding Corp. is seeking to cut its payments to Martha Stewart Living Omnimedia by as much as $6.5 million because of lower sales of Stewart's housewares at the discount retailer's stores.
Safeway Posts Loss for Fiscal 4th Quarter
Safeway Inc., owner of Vons and Pavilions stores, said it lost $696 million in its fiscal fourth quarter, including $103 million because of the California supermarket strike.
Chief Executive Steven Burd told analysts that strike-related losses -- now about $2 million a day -- were moving lower as the dispute entered its fifth month.
The Pleasanton, Calif.-based company released the report for its first full quarter since the dispute began as the United Food and Commercial Workers union and supermarket negotiators met with a federal mediator.
Safeway's loss in the quarter ended Jan. 3 was attributed largely to write-downs and other charges related to the company's troubled Dominick's and Randall's grocery chains in Illinois and Texas, respectively.
The latest loss amounted to $1.57 a share. In the fourth quarter a year earlier, which also included write-downs and other charges, Safeway lost $1.05 billion, or $2.37 a share.
For all its stores, sales rose 3% to $11 billion, helped by having one additional week in its latest fiscal year.
Tenet Appoints Insider as Operating Chief
Hospital chain Tenet Healthcare Corp. named Reynold J. Jennings chief operating officer amid fresh questions about the Santa Barbara company's ability to pull off its turnaround plan.
Jennings, 57, was president of Tenet's eastern division. His appointment culminates a management shake-up precipitated by a host of financial losses and scandals, including allegations of unnecessary heart surgeries at a Redding, Calif., hospital and unusually high Medicare charges for the sickest patients.
The appointment of Jennings comes almost two weeks after Chief Executive Trevor Fetter announced that the company would sell 27 hospitals, including 19 in California, and focus on a core of strong facilities.
A group of dissident shareholders, in a report called "Tenet's Death Rattle," questioned whether the company would be able to carry out its plan or even survive in one piece.
Fetter downplayed the significance of the report, characterizing it as one man's opinion, referring to the Florida physician who heads the shareholder group.
California Merchandise Exports Jump 13.8%
California merchandise exports surged 13.8% in the fourth quarter, the strongest gain in three years and a potent signal that the state's economy is on the mend.
Government trade statistics showed that the state's farms and factories saw healthy increases in exports in sectors including food and agricultural products, chemicals and machinery. Although annual shipments of computer and electronic equipment fell for the third straight year, the final quarter of 2003 proved a winner. Overseas shipments surged 10.5% over a year earlier.
The report showed that the state's merchandise exports were $94 billion last year, up 1.9% from 2002, according to data from the Massachusetts Institute for Social and Economic Research, which publishes official state-by-state trade statistics. Experts say California exporters are getting a boost from a weak dollar, a budding global recovery and fast-developing China.
For a preview of this week's business news, please see Monday's Business section.