Week in Review

Disney Chief Says He Won’t Renew Contract

Walt Disney Co. Chief Executive Michael Eisner, one of Hollywood’s most powerful and controversial titans, said he would leave the fabled entertainment company he has led for nearly two decades when his employment contract expires in September 2006.

Eisner’s decision came a few months after the CEO fended off a bruising shareholder revolt. Eisner won the battle but came under great pressure to resign or identify a successor as head of the Burbank-based company.

In an interview with the Los Angeles Times, Eisner denied that he was reacting to outside pressure. “I decided I was not going to be CEO forever,” he said.

In a letter to the Disney board, Eisner said, “It has been a fantastic Disney ride for the past 20 years. Ups and downs to be sure, but filled with great satisfaction in building this wonderful creator of classic American culture into one of the premiere entertainment-oriented companies in the world.”

Eisner said he would help the board find a successor and assist in the transition. But it is unclear who will succeed Eisner.

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U.S. Healthcare Costs for Workers Jump 11.2%

The cost of providing health insurance for U.S. workers rose an average of 11.2% this year -- five times as fast as wages -- according to a research group’s survey released last week.

It costs an average of $9,950 to insure an employee and three family members, according to the survey by the Kaiser Family Foundation and the Health Research and Educational Trust. Of that, $2,661 is paid by the employee, the rest by the company.

Kaiser, not affiliated with health insurer Kaiser Permanente, surveyed 3,017 companies. The 11.2% rise in premiums this year represents an improvement over last year’s 13.9% jump, but the report provided few other comforting statistics.

Kaiser found that since 2000, workers’ share of insurance premiums has surged 57% for individual coverage and 49% for a family. In that period, wages rose just 12% -- 2.2% this year.

The number of jobs offering health insurance is plummeting, with 5 million fewer jobs offering benefits in 2004 than in 2001, the survey found.

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Frank Quattrone Gets 18 Months in Prison

Frank Quattrone, the former high-powered Silicon Valley investment banker, was sentenced to 18 months in prison for obstructing government investigations of hot stock offerings at the height of the bull market.

U.S. District Judge Richard Owen rejected a plea for leniency, imposing a term exceeding federal sentencing guidelines. Owen ruled that Quattrone should serve additional time, siding with prosecutors who said that he had lied on the witness stand. Sentencing guidelines call for a prison stay of 10 to 16 months, and probation officials had recommended five months in prison and five months of home detainment.

Owen denied Quattrone bail pending his appeal. The judge initially wanted the former investment banker to surrender in two weeks but extended that to 50 days at the defense’s request. He also fined Quattrone $90,000, the maximum penalty of $30,000 for each of the three counts -- two of obstruction of justice and one of witness tampering -- on which he was convicted.

The judge granted Quattrone’s request that he serve his time at federal prison in Lompoc, Calif.

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Fed’s Greenspan Says Recovery Is Picking Up

Federal Reserve Chairman Alan Greenspan said the recovery was gaining momentum again after a spring slowdown, but he warned that Washington’s burgeoning budget deficits posed a long-term threat to the economy.

Recent economic data suggest that “the expansion has regained some traction” since the second-quarter “soft patch,” Greenspan told the House Budget Committee. Consumer spending and housing construction rallied in July, he said, and energy prices eased.

Although the Fed chairman didn’t mention interest rates, economists interpreted his remarks as a signal that the central bank was likely to continue raising short-term rates in quarter-point increments. The next rate increase is expected when Fed policymakers meet Sept. 21.

Greenspan said higher energy prices were the main cause of the spring slowdown, in which economic growth fell to an annualized rate of 2.8% from 4.5% in the first quarter. Now that energy prices are subsiding, growth is picking up again, he said.

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Court Says FERC Didn’t Protect State Consumers

In a rebuke to federal regulators, a U.S. appeals court said the Federal Energy Regulatory Commission failed to protect California consumers during the energy crisis and ordered the panel to consider an additional $2.8 billion in refunds.

The decision by the U.S. 9th Circuit Court of Appeals rejected the regulators’ contention that they lacked legal authority to require refunds for the first phase of the market meltdown, in the summer of 2000. The ruling inflamed the long-running dispute over the energy crisis of 2000-01.

Overall, the state has sought $9 billion in restitution for electricity overcharges during the crisis. However, FERC has suggested that the final tally could be about $3 billion, much of which the utilities owe to their power suppliers. The ruling by the three-judge panel in San Francisco sets the stage for a near doubling of refunds.

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Oracle Wins Ruling in PeopleSoft Takeover Bid

In a rare defeat for antitrust enforcers, a federal judge cleared the way for Oracle Corp. to press ahead with its hostile bid for software rival PeopleSoft Inc.

Redwood Shores-based Oracle still faces major obstacles to the $7.7-billion deal, but the court victory improved its chances. The company launched its bid for Pleasanton-based PeopleSoft in June 2003.

At a four-week trial this summer, the government argued that prices would rise because big corporate customers could choose between only Oracle and industry leader SAP of Germany. But U.S. District Judge Vaughn Walker ruled that the government lawyers had defined the market for the software products too narrowly and should have given more weight to competition from Microsoft Corp. and others.

The Justice Department said it would consider challenging the decision.

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Boeing Receives Satellite Order From DirecTV

DirecTV Inc. placed an order for three Boeing Co. satellites to provide high-definition television programs across the U.S.

The order potentially is worth more than $750 million to Boeing, analysts said, and represents one of the biggest deals since the commercial satellite industry went into a tailspin four years ago after several high-profile telecommunication companies collapsed.

Boeing was once the world’s largest satellite maker. Last year, it cited the weakest satellite market in decades when it took a $1.1-billion charge, and in recent years it has slashed the workforce at its satellite systems unit in El Segundo by nearly half, to about 5,000.

Boeing expects to deliver the first two satellites in 2007. A third satellite would be used as a backup. A satellite can cost $100 million to $250 million, and a more sophisticated model can take 18 months to build.

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Disneyland Official May Garner State Post

The safety manager at Walt Disney Co.’s Disneyland is a top contender to run the state agency that enforces amusement park safety laws -- a possibility prompting concern among industry watchdogs.

Gov. Arnold Schwarzenegger is expected to name Richard Warner as director of the California Division of Occupational Safety and Health, sources inside the agency said.

The state agency, known as Cal/OSHA, oversees workplace safety. Since 2000, it’s been charged with inspecting rides and investigating accidents at theme parks.

The expected appointment comes as the state moves to complete the drafting of enforcement regulations for California’s first amusement park safety law. Naming an industry insider to run Cal/OSHA could create a conflict of interest, safety advocates say.

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Korn/Ferry Posts Profit as Companies Add Jobs

Headhunter Korn/Ferry International posted an $8.4-million profit for its fiscal first quarter, reversing a year-earlier loss, as companies worldwide added upper-management jobs across a range of industries.

Analysts said the news from the Century City-based firm was another encouraging sign that as the economy recovered, more companies were hiring and turning to search consultants.

Net income for the quarter ended July 31 was $8.4 million, or 20 cents a share, topping forecasts of 15 cents. The year-earlier net loss was $9.4 million, or 25 cents. Korn/Ferry said second-quarter earnings would be 14 cents to 20 cents a share, at the high end of Wall Street forecasts.

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