TOP STORIES -- April 3 - 8

Time Warner, Comcast in Joint Bid for Adelphia

Financially ailing Adelphia Communications Corp., the largest cable operator in Southern California, has struck a preliminary deal to be taken over by the nation’s two industry leaders for about $17.7 billion in stock and cash.

The joint bid by Time Warner Inc. and Comcast Corp. was presented to a U.S. bankruptcy judge in New York, sources familiar with the agreement said. Adelphia, whose stock plummeted after a financial scandal involving its now-convicted founder and one of his sons, filed for Chapter 11 bankruptcy protection in June 2002.

The deal must be approved not only by the judge but also by creditors, who are owed about $20 billion.

Under the terms of the bid, Time Warner would grab the Southern California subscribers of Adelphia and Comcast, gaining a firm grip on the only big market in the country that remains fragmented among cable operators.

Time Warner’s reach would expand from fewer than 20% of Los Angeles-area households to more than 70%.

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ChevronTexaco to Buy Unocal for $16.4 Billion

ChevronTexaco Corp. agreed to buy Unocal Corp. for $16.4 billion -- a move that would combine two California-bred energy companies in a deal partly spawned by record oil prices.

With the acquisition of El Segundo-based Unocal, ChevronTexaco’s oil and natural gas reserves would increase about 15%, to the equivalent of 13 billion barrels of oil.

San Ramon-based ChevronTexaco said it would also assume $1.6 billion of Unocal’s debt.

The proposed acquisition calls for Unocal shareholders to receive either 1.03 shares of ChevronTexaco or $65 cash for each of their shares. But the payout would be prorated so that, overall, ChevronTexaco would pay about 75% of the total purchase price with stock and the balance with cash.

ChevronTexaco Chief Executive David O’Reilly said there would be layoffs at Unocal, whose headquarters would be phased out after the deal is completed in the next few months.

A Unocal shareholder has sued to block the deal.

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Qwest May Take Offer to MCI Shareholders

Long-distance carrier MCI Inc. said it had rejected Qwest Communications International Inc.’s bid of $8.9 billion, or $27.50 a share, saying it wasn’t “superior” to the $7.5 billion, or $23.10 a share, offered by Verizon Communications Inc.

The decision by MCI’s board of directors was the latest rebuff of Qwest in the two months since the board agreed to an acquisition by Verizon, the nation’s largest phone company.

Qwest, the smallest and weakest regional carrier, said it would “allow shareholders to dictate the next steps” but stopped short of saying it would launch a hostile takeover.

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Pump Prices Expected to Stay High Through 2006

California’s gasoline costs are expected to remain substantially higher than the rest of the nation’s this summer, with prices 25 cents to 50 cents above the predicted U.S. average of about $2.28 a gallon during the peak driving season, according to the Energy Information Administration, the Energy Department’s statistical arm.

Last week the average price for self-serve regular gasoline in Los Angeles leaped 5% to a record $2.575, an AAA survey said, pushing ever closer to the dreaded $3 mark.

California requires a cleaner-burning recipe produced by few refineries outside the state, contributing to higher prices.

The U.S. average for regular gasoline reached a record $2.265 a gallon Friday, up 32.7 cents in the last month, AAA said.

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Divided SEC OKs Overhaul of Markets

A divided Securities and Exchange Commission approved an overhaul of rules governing the nation’s stock markets, in effect forcing the New York Stock Exchange to modernize but giving the Big Board a reprieve from earlier plans that threatened its future.

The 3-2 vote capped a stormy battle involving the commission, Congress, investors and the markets themselves over how to regulate the increasingly complex web of stock markets that don’t follow the same rules or execute trades at the same speed.

When it goes into effect next year, the rule will require all markets to secure the best price for investors, even if that means sending orders to competing markets. The requirement has long applied to the NYSE but not to Nasdaq or fast-growing electronic venues that have sprung up in recent years. The rule also will require improved electronic links between the markets.

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Interest Rate on EE Bonds to Be Fixed

The U.S. Treasury said it would end a program that assured buyers of Series EE savings bonds an automatic earnings boost in times of rising market interest rates.

The change is a sign that the government expects rates to keep climbing -- as they have for the last year -- and is seeking to save taxpayers money at the expense of savings bond buyers, some analysts say.

Series EE bonds are popular with people of limited means because they can be purchased for as little as $25. Since 1982, the bonds have earned either a guaranteed minimum rate or a rate that floated with the market, adjusted every six months.

The Treasury said that, starting May 1, newly issued Series EE bonds would pay a fixed rate for their 20-to-30-year term.

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U.S. to Probe Imports of Chinese Goods

Facing a crush of Chinese textiles and apparel since global quotas were lifted Jan. 1, the Bush administration took the first step toward reimposing limits on purchases of certain clothing from China.

The move came after intense pressure on the White House from American textile interests.

The Commerce Department’s Committee for the Implementation of Textile Agreements said it was launching an investigation to determine whether imports of Chinese-made cotton shirts, trousers and underwear were disrupting the U.S. market.

If the investigation finds such disruption, as expected, it could lead to the imposition of new import limits within the next two to three months.

A spokesman for the China National Textile and Apparel Council, a trade group in Beijing, said the burst of exports in the first quarter was expected and wouldn’t last long. He appealed to the Bush administration to reconsider its move toward setting quotas.

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FDA Issues Warning on Painkillers; Drug Pulled

Moving to address one of its worst drug safety debacles, the Food and Drug Administration announced that dozens of widely used prescription painkillers must carry the government’s strongest warning that they posed risk of heart attack and stroke.

And one blockbuster painkiller, Bextra, was removed from the market. The FDA said the drug could cause potentially life-threatening skin reactions in some patients as well as heart problems.

Bextra, along with Celebrex, both made by Pfizer Inc., have been medications of choice for millions of patients suffering from arthritis and other forms of chronic pain. The two drugs, known as Cox-2 inhibitors, belong to a larger category of medications called nonsteroidal anti-inflammatory drugs, or NSAIDs.

All prescription drugs classified as NSAIDs must now carry the stronger warning label.

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Telemundo Chief Quits; NBC Veteran Takes Over

Three years after NBC Universal paid more than $2 billion for Telemundo, the second-place Spanish-language network is making big changes at the top.

Jim McNamara, the network’s longtime chief executive, stepped down and was replaced by Don Browne, a veteran NBC news producer who has been Telemundo’s chief operating officer since May 2003.

In 2001, when Telemundo was owned by Sony Corp. and Liberty Media Corp., it was McNamara who helped persuade NBC to acquire the operation for $2.7 billion, including debt.

Some analysts speculated that Telemundo’s stalled ratings might have played a part in McNamara’s departure. Others said NBC had always wanted one of its own in charge.

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Another Blow for Sharper Image Purifier

Shares of Sharper Image Corp. sank 9% on Tuesday after Consumer Reports panned the latest version of the company’s bestselling air purifier.

Not only does it fail to sufficiently clean indoor air, but the heavily advertised Ionic Breeze Quadra Silent Air Purifier and four similar machines by other manufacturers might even release potentially unhealthy levels of ozone, the magazine said.

Sharper Image lawyer E. Robert Wallach blasted the report as “a vendetta” by Yonkers, N.Y.-based Consumers Union, the magazine’s nonprofit publisher. The San Francisco-based retailer had unsuccessfully sued Consumer Reports for libel for earlier articles critical of the machines.

The shares, which fell $1.36 to $14.32 on Nasdaq on Tuesday, rebounded to $15.50, by Friday. The stock is down 18% this year after tumbling 42% in 2004.

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Obesity Is Costly for the State, Report Says

The rapidly growing population of the overweight and physically unfit in California could cost the state $28.7 billion this year in healthcare expenses, injuries and lost productivity, 32% more than five years ago, according to a study released last week.

State health officials who commissioned the study said they were surprised by the scope of the problem: California was the 27th-leanest state last year -- it was the sixth-leanest in 1990. More than half of California adults are overweight or obese. About 1.7 million residents are so obese they qualify for weight-loss surgery.

Lost productivity, including sick days and disability leaves, cost $11.2 billion in 2000, the study said. Medical costs associated with inactivity and obesity, such as diabetes and heart treatment, were pegged at $10.2 billion. And on-the-job sprains and other injuries among the overweight and unfit resulted in $338 million in workers’ compensation payments.

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