Newsletter: California Inc.: The big bucks of fantasy football
Welcome to California Inc., the weekly newsletter of the L.A. Times Business section.
I'm Business columnist David Lazarus, and here's a rundown of upcoming stories this week and the highlights of last week.
The quarterly earnings season is in full gear, and solid numbers last week from the likes of McDonald's, Alphabet and Amazon goosed the stock market higher. We'll see if momentum can be maintained this week. Meanwhile, YouTube will begin offering a premium service on Wednesday. Would you pay $9.99 a month for ad-free online videos? YouTube could generate nearly $950 million a year if just 5% of U.S. users subscribe, according to the investment house UBS.
Looking Ahead
Interest rates: Federal Reserve policymakers meet Tuesday and Wednesday to again consider raising the benchmark interest rate, which has been near zero for 6 1/2 years. Recent clues suggest that a rate increase is unlikely this time around. Federal Reserve Gov. Daniel Tarullo said Oct. 13 that he didn't anticipate a hike in the so-called federal funds rate before the end of the year — a shift in tone by central bankers from September.
Tech earnings: Investors will be watching Tuesday as two high-profile tech companies — Twitter and Apple — report their financial condition. Twitter has had an eventful month in which co-founder Jack Dorsey returned to the company as chief executive. He then announced that 336 jobs would be cut. Apple followers, meanwhile, will be looking for hints about sales of the new iPhone 6S, released in September. About two-thirds of Apple revenue comes from the iPhone.
Health insurance: Anthem Inc., California’s largest for-profit health insurer, reports its quarterly results Wednesday. The company is likely to face questions from shareholders about its pending merger with Cigna. That deal, as well as Aetna Inc.’s proposed acquisition of Humana Inc., has raised concerns about their effect on jobs and the economy. The Justice Department is looking into whether this dwindling competition will be good for consumers.
Doctor warnings: Should you be told if your doctor is on medical probation? The California Medical Board will hold a public hearing in San Diego on Friday to consider a proposal, backed by Consumers Union, that would require doctors who have been placed on official probation to inform patients before providing care. Almost 500 physicians in California are on state-ordered probation due to such offenses as sexual misconduct, substance abuse and medical negligence.
Halo's back: The latest entry in the 14-year-old “Halo” video game series will be released Tuesday — and is expected to give a big financial boost to Xbox-maker Microsoft as the holiday shopping season approaches. “Halo 5: Guardians” takes players into an interstellar story line that involves — surprise, surprise — a lot of explosions and alien-blasting. It’s a winning formula. The Halo series has more than $3.5 billion in global sales.
The Agenda
Monday's Business section charges downfield with a look at fantasy football, which has evolved into a big-bucks business. Fueled by incessant TV advertising, the daily fantasy sports market — led by FanDuel Inc. and DraftKings Inc. — seemingly has come from nowhere to be a multibillion-dollar industry. But now the U.S. government and some state authorities are taking a closer look at the legality of daily fantasy sports. That’s raising the specter of more regulations and a slowdown in the games’ soaring popularity.
Story Lines
Here are some of the other stories that ran in The Times' Business section in recent days that we’re continuing to follow:
Lights out: Fresh & Easy, the grocery chain that has struggled for years in Southern California, said it was closing its business — but holding out hope for a buyer. A spokesman for the El Segundo chain said Fresh & Easy was starting “the process for an organized wind-down.” Fresh & Easy doesn't have enough cash and couldn't obtain financing to continue operating. That's despite progress made over the last two years that has moved the company “closer to break even.” The company operates 97 stores in California, Nevada and Arizona. The Southland is home to 54 locations.
Land of CalPERS: The Achilles' heel of the vast CalPERS fund has been its real estate portfolio, but there are signs that the long-troubled segment is finally turning around. Investment returns for the California Public Employees' Retirement System have been dragged down by its $27-billion investment in office buildings, housing developments, warehouses and shopping centers. But a recent study found that the portfolio finally pulled ahead of its peers by a solid margin, posting a 15.5% annual return in the five years that ended June 30.
Natural selection: Drivers who use hands-free commands remain distracted for up to 27 seconds after they have made a call or changed music, according to the AAA Foundation for Traffic Safety. The auto club’s safety branch found that this lingering distraction raises new concerns for using phones and vehicle infotainment systems. “Overwhelming scientific evidence concludes that hands-free is not risk-free,” said Marshall Doney, AAA’s chief executive. The distraction continues even when a motorist turns attention back to the road and has both hands on the steering wheel, AAA said.
Millennial worries: Most Los Angeles millennials are confident about their ability to manage their finances, but that doesn't mean they're not stressing about money. A new survey by Bank of America and USA Today found that L.A. millennials ages 18 to 34 say they have a clear understanding of their financial situation and 44% are prepared for a rainy day, with three months of living expenses saved up. But 75% say they worry about their finances "often" or at least "sometimes," with 39% saying they are "chronically stressed" about money. This pressure can be traced to the uncertain job market or student loan debt, according to the report.
Spooky profits: Some 157 million Americans expect to celebrate Halloween this year, whether it's by walking their kids around the block for free candy, carving a pumpkin for the front window or donning a costume for a neighborhood party. Consumers will spend $6.9 billion on Halloween, or an average of $74.34 each, the National Retail Federation estimates. Once mostly the purview of children, Halloween has grown into a major consumer holiday that now includes 18- to 34-year-old millennials and older adults who seize the opportunity for a night of escapism. "It's not just for kids trick-or-treating anymore," said Trisha Lombardo, a spokeswoman for Spirit Halloween, which has 1,150 temporary stores that operate just for the Halloween season.
What We’re Reading
And some recent stories from other publications that caught our eye:
Herbalife’s woes: The Herbalife saga reads like a corporate soap opera. Fortune explores how hedge-fund titan Bill Ackman “has committed himself to destroying the company.” But after three years of activism, is it worth it?
Problematic plastic: Russell Simmons, famous for co-founding Def Jam Records, among other endeavors, started RushCard 12 years ago. The prepaid debit cards were intended to appeal to underbanked Americans, primarily blacks and Latinos. But, says the Atlantic, the cards “can do more to hurt than to help.”
Hard labor: What's it like to be a temp worker for Amazon? The Huffington Post chronicles one man's experience. All goes well, until he's found "lying unconscious in aisle A-215, beneath shelves stocked with Tupperware and heating pads."
Tesla’s No. 1 fan: Who needs a paid pitchman when you’ve got Stephen Colbert? As Bloomberg observes, The “Late Show” host has emerged as an effective evangelist for Tesla Motors — and isn’t shy about sharing his enthusiasm for the company’s cars. “I love my Tesla — it’s so fast, it’s all electric,” Colbert told viewers.
His big idea: LinkedIn founder Reid Hoffman has a big idea about fixing income inequality, or so says the New Yorker. “Hoffman is convinced that we can fix the problem through Internet-enabled networks,” the magazine says. “The keeper of your career will be not your employer but your personal network.” Um, OK.
For the latest money news, go to www.latimes.com/business. Until next time, I'll see you in the Business section.
