Newsletter: California Inc.: Cable merger will reshape pay-TV landscape

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.

Trading begins today on a down note after the Labor Department reported Friday that job growth slowed sharply in April to a seven-month low. The nation’s public- and private-sector employers added 160,000 net new jobs last month. The figure was below analysts’ expectations and well off the 208,000 net new jobs added in March.



Power outages: A state Senate committee plans to question California energy agencies on Tuesday about their warnings that Southern California will face blackouts if the Aliso Canyon natural gas storage facility remains closed this summer. The Senate Energy, Utilities and Commerce Committee hearing will explore blackout warnings that were included in a report released last month by the California Energy Commission, the California Public Utilities Commission and the California Independent System Operator. Critics of the report say there are alternatives to Aliso Canyon that could work.

Forceful financials: Burbank’s Walt Disney Co. will report its fiscal second-quarter earnings Tuesday. Investors will be looking for details of “Star Wars” merchandise sales in the most recent three-month period and information about the state of the company’s cable TV business. Analysts polled by FactSet Research predict that Disney will report $2.3 billion profit on $13.2 billion in revenue, a boost from the $2.1-billion profit and $12.5 billion in sales during last year’s second quarter.

Cable merger: The California Public Utilities Commission will hold a key vote Thursday on whether to allow Charter Communications to swallow Time Warner Cable and Bright House Networks. The $71-billion-plus acquisition is expected to dramatically reshape the pay-TV and Internet-service market in the United States. It would create the second-largest cable TV company and Internet service provider, and the third-largest pay TV provider, in the nation, with more than 23 million customers in 41 states. The Federal Communications Commission gave its approval on Friday.

Consumer spending: The Commerce Department releases April retail sales figures on Friday. The consensus prediction of analysts is that the numbers will show a healthy 0.8% rise, according to FactSet Research. The previous report, for March, showed a 0.3% drop in sales. That was largely fueled by a 2.1% plunge in consumer auto purchases — the steepest such fall in more than a year. The retail report provides the first indication each month of Americans’ spending, which drives 70% of the economy.



Monday’s Business section explores the world of financial advisors, who critics say might put their own interests before those of clients. As baby boomers retire, younger Americans — particularly millennials — are questioning the conventional approach to retirement planning as their bank accounts grow big enough to start investing. They’re moving on to automated programs known as robo-advisors that spit out suggested portfolios and investment options.


Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:


Tainted scopes: At least three patients died last year at Huntington Hospital in Pasadena in an outbreak of septicemia suspected to have been caused by tainted medical scopes, according to a newly discovered regulatory report. Huntington Hospital officials had confirmed in August that three patients were sickened the previous month but declined to say more about their condition. They later told Olympus Corp., the scope’s manufacturer, of the deaths, according to the company’s report to federal regulators. Hospital officials said this week that they believed patient privacy laws prevented them from telling the public that the patients had died.

Tesla loss: Tesla Motors reported a larger first-quarter loss compared with a year ago, but the report nearly was overshadowed by news of the planned departure of two of the company’s key manufacturing executives. The electric car maker also said it has ramped up production of its new Model X sport utility vehicle, whose prior delays contributed to the financial losses. Tesla’s first-quarter loss was $282.3 million, compared with a loss of $154.2 million a year earlier. The company confirmed that Greg Reichow, vice president of production, and Josh Ensign, vice president of manufacturing, were leaving. The departures unsettled investors and drove Tesla’s stock price down sharply.

Redstone trial: The lawsuit over Sumner Redstone’s mental competency got off to an explosive start on Friday when the media mogul said in a videotaped deposition that he felt “hate” for Manuela Herzer, the former girlfriend whose lawsuit alleges Redstone is no longer capable of making his own decisions. Earlier in the week, a court filing alleged that Redstone gave Herzer and a second former girlfriend, Sydney Holland, $150 million from 2010 to 2015. Both women had acrimonious partings with the 92-year-old billionaire last year. The personal affairs of Redstone, the chairman emeritus of Viacom Inc. and CBS Corp., have been dragged into public view by the lawsuit in Los Angeles County Superior Court.

Streaming service: Hulu, the streaming service owned by major TV networks, confirmed that it is developing a cable-like digital service that would stream feeds of live programming from broadcast and cable TV channels. Chief Executive Mike Hopkins said the service is expected to launch in 2017 and would enable subscribers to “enjoy live sports, news, and events — all in real time, without a traditional cable or satellite subscription.” The Santa Monica-based company is in active negotiations with Disney, Fox and NBCUniversal for access to their broadcast and cable networks, which include ESPN, Disney Channel, Fox News, FX and others. No word on pricing.


Not so wonderful: The last chance to make a case for Pom Wonderful’s health claims just got poured down the drain by the nation’s highest court. The U.S. Supreme Court declined to review an appeals court decision that health claims in Pom Wonderful advertisements misled consumers. The move ends a nearly six-year battle launched by the company, part of the agricultural empire of Beverly Hills power couple Lynda and Stewart Resnick, against federal regulators, who questioned the science behind claims that drinking pomegranate juice could “cheat death” by preventing heart disease and prostate cancer.


And some recent stories from other publications that caught our eye:

Ethics question: ProPublica says that Dr. William De La Peña, a member of the UC Board of Regents, has been allowed to keep his seat despite a secret investigation that concluded he violated ethics rules “by trying to strike a financially beneficial deal between his eye clinics and UCLA, part of the university system the regents oversee.”


Click like? If you really want to know what Facebook thinks of journalists, says Gizmodo, “all you need to do is look at what happened when the company quietly assembled some to work on its secretive ‘trending news’ project. The results aren’t pretty.”

End of privacy: According to Quartz, Microsoft’s new pact with Google could signal the beginning of the end for personal privacy. “Two of the world’s most powerful companies will henceforth be mutually invested in making sure neither regulators nor legislators interfere with” peeking over users’ shoulders.

Good for everyone: The Atlantic looks at a new White House report that links higher hourly incomes to lower rates of lawbreaking. “The research on this is really clear and really consistent; it cuts across party lines,” says Jason Furman, President Obama’s chief economist.

Family values: Bloomberg Businessweek sets its sights on Jared Kushner, Donald Trump’s son-in-law and a member of the candidate’s inner circle. “In his effort to portray himself as a staunch supporter of Israel, Trump likes to mention that he has Jewish grandchildren. He has Kushner to thank for that.”



It’s tempting to cite the Seinfeld bit about someone embracing Judaism solely for the jokes. Instead, here’s a classic routine along these lines from Woody Allen.

For the latest money news, go to Until next time, I’ll see you in the Business section.