Week in Review
Mammoth Founder to Sell Controlling Stake
Dave McCoy, founder of Mammoth Mountain Ski Area, is putting up for sale his controlling interest in the Eastern Sierra winter resort.
The news touched off speculation and uncertainty in the scenic town about 300 miles north of Los Angeles along U.S. 395.
The company employs 3,000 workers and holds leases to 4,000 acres of U.S. Forest Service-owned land at Mammoth and June mountains. The resort’s properties include a lodge and more than a dozen stores and dining venues.
“As healthy and engaged as Dave is, the fact is he is 89 years old and won’t live forever,” the company said in a statement.
Financial bankers hired by McCoy said a “handful” of companies had expressed interest in the properties, which one analyst estimated could fetch as much as $200 million.
State Adds a Modest 20,000 Jobs in January
After a year of teeth gnashing about why the Golden State’s economy lagged behind the nation’s, new data showed that job growth in 2004 kept pace with the national average after all.
Revised employment figures for last year, combined with a modest addition of a net 20,000 jobs in January, show a 1.6% growth in employment, almost on par with the national clip of 1.7%. Previously, California’s job growth had been pegged at 1%, using survey data rather than since-updated numbers taken from employers’ payrolls.
Still, January’s modest job growth shows that California’s recovery continues at an unspectacular pace. Although the unemployment rate fell to 5.8% from 6%, the state saw more people leave the workforce -- a sign that more Californians have given up trying to find jobs.
Wal-Mart Chief Takes His Case to California
With its California expansion plans stalled, Wal-Mart Stores Inc. dispatched Chief Executive H. Lee Scott Jr. to Los Angeles to plead the case for the world’s largest company.
Among his messages: We’re not backing down.
Scott acknowledged to 500 business leaders at a Town Hall Los Angeles luncheon that Wal-Mart had made mistakes in trying to expand quickly in California, its most important market for growth. Efforts to build Supercenters -- combination grocery and discount stores -- have faced hostile city ordinances, strong community opposition and complaints that they pay too little and run competitors out of business.
But Scott said Wal-Mart was undeterred, noting that the company would open 25 stores in California this year, including one in Los Angeles.
Oil Tops $51 a Barrel, Raising Gas Price Fears
The price of oil shot past $51 a barrel for the first time since late October, probably condemning motorists to another round of gasoline price increases.
The benchmark U.S. grade of crude oil for March delivery soared $2.80, or 5.8%, to $51.15 Tuesday on the New York Mercantile Exchange. It was the commodity’s biggest one-day percentage gain since June.
The jump rekindled fears of a slowdown in U.S. economic growth.
The average price for self-serve regular in California rose last week for the fifth straight week, gaining an additional 5.9 cents to $2.15 a gallon, the Energy Department reported.
On Friday, crude oil for April delivery rose 10 cents to $51.49 a barrel, a four-month high. For the week, the price rose 5.1%.
JetBlue Plans to Start Service at Burbank
JetBlue Airways Corp., the discount airline, will add coast-to-coast service from Burbank in late May.
In a move that would mean the first nonstop flights between Burbank and the East Coast, the carrier intends to launch three daily nonstops between Bob Hope Airport and New York’s John F. Kennedy International Airport -- JetBlue’s home base -- on May 24. They company has scheduled a fourth daily flight to start in July.
JetBlue’s nonstop flights to New York, Boston and Washington currently take off from Long Beach Airport, the carrier’s West Coast hub.
Viacom Takes Big Hit From Radio Holdings
In a move that reflects the continued challenges facing the struggling radio business, Viacom Inc. wrote down the value of its Infinity Broadcasting division, contributing to the fifth-largest quarterly loss ever reported by a U.S. company.
The New York media giant, which also owns CBS, MTV and Paramount Pictures, posted an $18.4-billion loss after taking an $18-billion charge against fourth-quarter 2004 earnings.
The bulk of the write-down -- $10.9 billion -- was attributable to Viacom’s radio holdings, while the rest was related to its outdoor advertising business.
Leslie Moonves, co-president of Viacom, said in a conference call with investors that getting the radio business “back on a growth path” was a top priority.
Adelphia Stops Carrying Triple-X Programming
Adelphia Communications Corp., in a quick about-face, stopped offering customers the opportunity to purchase so-called triple-X programming after receiving tens of thousands of complaints from anti-pornography activists and expressions of concern in investment circles that the hard-core fare could complicate the company’s pending sale.
Adelphia, which filed for Chapter 11 bankruptcy protection in 2002, would not comment beyond saying in a statement that “some concern has been expressed over this type of adult programming. Adelphia will remove it from all of its systems.”
The company for some time has aired single- and double- X-rated programs and will continue to do so. Adelphia began offering even raunchier programming from Playboy Enterprises Inc. this month for the first time in a major market -- Southern California. The plan attracted headlines, and controversy, across the country.
Burkle Faces Off With Ovitz Over Websites
Los Angeles billionaire Ronald Burkle sued former Hollywood power broker Michael Ovitz, claiming that Ovitz reneged on a promise to share the financial risks in two-ill fated Internet companies.
According to the lawsuit, filed in Los Angeles County Superior Court, Ovitz cost Burkle millions of dollars by leaving him holding the bag when CheckOut.com and Talk City.com went sour.
Burkle claims in the lawsuit that he was enticed into pumping $29 million into CheckOut and $4 million into Talk City. Ovitz, the suit says, should have shouldered half those amounts.
Ovitz’s lawyer, James Ellis, accused Burkle of going to court out of spite because of the outcome of another business deal with Ovitz that is not mentioned in the suit. Ellis would not provide details.
A lawyer for Burkle, Patricia Glaser, called Ellis’ contention “nonsense.”
State Is Investigating Two Title Insurers
State Insurance Commissioner John Garamendi said he was investigating two big title insurers as part of a probe into alleged kickbacks paid to builders, lenders and Realtors in exchange for client referrals.
Garamendi said Fidelity National Financial Inc. and LandAmerica Financial Group Inc. had been involved in complex arrangements that amounted to paying bribes for referrals while jacking up the cost of title insurance for home buyers. He issued subpoenas ordering the companies to produce documents and their executives to appear at a public hearing in April.
An unknown number of home buyers may have been overcharged hundreds of millions of dollars in title insurance premiums, Garamendi said. State and federal law prohibits title companies or others involved in real estate transactions from paying incentives or referral fees to generate business.
LandAmerica said it would cease the reinsurance arrangements that prompted the probe but said Garamendi’s statements were “untrue and misleading.”
Wachovia Halts Trading Program Under Probe
Brokerage Wachovia Securities said that it had permanently stopped a long-running trading practice at one of its Westlake Village offices after claims that the program may have violated securities rules.
Wachovia is investigating certain arbitrage trading at its Westlake Village office at 4550 E. Thousand Oaks Blvd. in response to an anonymous letter. The New York Stock Exchange and the NASD, the brokerage industry’s self-regulatory agency, also are investigating the letter’s allegations, sources said. The NYSE and the NASD declined to comment.
Richmond, Va.-based Wachovia said its probe was continuing.
The arbitrage trading program involves buying shares directly from companies that offer price discounts on such stock purchases, then quickly selling the shares in the open market.
Hot Weather May Bring Southland Blackouts
Parts of Southern California could endure blackouts this summer if the region incurs unusually hot weather, state energy officials said in a new forecast.
In areas served by Edison International’s Southern California Edison Co. and Sempra Energy’s San Diego Gas & Electric Co., electricity demand could exceed supply by as much as 1.5% in periods of peak demand in September, according to the forecast, released at a special hearing of the Senate Energy, Utilities and Communications Committee.
The potential for rolling blackouts like those that swept California in the energy crisis of 2000-01 could be even greater if bottlenecks continue to jam overtaxed power transmission lines, said Jim Detmers, vice president of the California Independent System Operator.