California Inc.: Duking it out over healthcare mega-mergers

Welcome to California Inc., the weekly newsletter of the Los Angeles 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.

It goes without saying that many on Wall Street will be casting a wary eye eastward for signs of stability in the Chinese stock market and economy. Last week’s steep falls for leading indexes reflected concern that the Chinese economy may be running out of steam. On the other hand, we learned Friday that U.S. job growth in December was better than expected.



Labor law: The U.S. Supreme Court will hear a case from California on Monday that challenges pro-union laws in more than 20 states. The laws require all public employees to pay a “fair share fee” to their union, even if they are opposed to the union and refuse to join. Rebecca Friedrichs, an Orange County teacher, sued the California Teachers Assn., saying the forced fees violate her free speech rights under the 1st Amendment.

Giant leap: The new chief executive of Valencia drug maker MannKind, Duane DeSisto, will likely face a lot of questions about the future of the company and its inhalable insulin treatment Afrezza when he appears Tuesday at an investor conference in San Francisco. Last week, French pharmaceutical giant Sanofi told MannKind it would stop selling and marketing the drug after nearly a year of disappointing sales. DeSisto became CEO on Jan. 5.

Hooray for Hollywood: Nominations for this year’s Academy Awards will be announced Thursday beginning at 5:30 a.m. — yes, a.m. — at the Academy’s Samuel Goldwyn Theater in Beverly Hills. The tradition of announcing nominations at the crack of dawn began in 1987. The idea satisfied both the morning TV talk shows in need of higher ratings and the Hollywood publicity machine ready to move into action as early as possible. The 88th Oscars are scheduled to be presented Feb. 28.

Holiday sales: The Commerce Department and the National Retail Federation will report Friday on how well merchants did during the holiday shopping season. The numbers are important because consumer spending accounts for about two-thirds of U.S. economic activity. Macy’s reported last week that it will slash 4,800 jobs and close 40 stores after a disappointing November and December. The Macy’s at the Irvine Spectrum will be among the closures.



Monday’s Business Section looks at how California is serving as a battleground in the fight over mega-mergers reshaping the health insurance industry. Consumer advocates are putting pressure on regulators to scrutinize the deals as concerns mount about patients getting stuck with fewer choices and higher costs. There’s a lot at stake for employers, individuals and taxpayers if just three large health insurers end up in control of roughly half of the U.S. commercial insurance market.


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

China impact: Turmoil in China’s financial markets sent global stocks into a tailspin for the first week of the year. But experts say slowing economic demand in China isn’t enough to disrupt California’s $2.3-trillion economy. Exports to China represent only about 1% of U.S. gross domestic product, and panic overseas could actually spark more investment in California’s attractive real estate markets. The bigger risk to the U.S. and California economies would come if volatility in China continued to roil U.S. and global financial markets.

Gas leak: With ailing residents, displaced neighborhoods and a potential decline in property values, the leak at Southern California Gas Co.'s Aliso Canyon storage facility could cost the utility billions of dollars, some legal experts say. So far, the gas company has spent more than $50 million combating the leak that began Oct. 23. and faces more than 25 lawsuits. The utility said in a filing that the cost of settling the cases “could be significant.”

Netflix expansion: Streaming services giant Netflix took a big step to expand its global footprint, sending the company’s share price soaring. Chief Executive Reed Hastings announced the Los Gatos company had added 130 more countries to its service. It now has services in more than 190 countries, including Russia, India, South Korea and Saudi Arabia. Netflix also said it was including Arabic, Korean and Chinese to the 17 other languages already available.

Orca safety: SeaWorld and state regulators have agreed to settle safety citations issued last year alleging the San Diego marine park failed to protect its trainers working closely with killer whales, both behind the scenes and in performances. Among the settlement’s mandates to better protect workers: Trainers would be barred from “surfing” on the orcas and swimming under them, nor could they stand on a killer whale, except when necessary to get out of the park’s medical pool.


Spacey takes charge: “House of Cards” star Kevin Spacey and his production partner Dana Brunetti have joined Ryan Kavanaugh’s Relativity Media in a surprising development for the entertainment company that has been in bankruptcy since last summer. Spacey will become chairman of Relativity Studios and Brunetti will be the unit’s president, starting in mid-February. The pair will “oversee all creative content and film production for the company,” Relativity said in a statement. Beverly Hills-based Relativity Media filed for Chapter 11 bankruptcy protection in July.


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

Hold the drone: The biggest obstacle to expanded use of drones isn’t technological, says the Washington Post. “People are the problem,” it says. Specifically, a willingness, even desire, among some folks to mess with drones and bring them to Earth as they go about their business.

Brave new world: Bringing a new technology to market can be difficult and, as the Economist reports, it’s especially rough if your product may never receive regulatory approval. But that hasn’t kept investors away from companies jostling for space in the emerging industry of “gene editing.”

Paradise lost: Bloomberg takes a close look at Baha Mar, a $3.5-billion Caribbean resort that’s gone bankrupt and become a ghost town. It’s quite a cautionary tale. “No slot machines jingle-jangle in the casino,” Bloomberg says. “On this bright October morning in the Bahamas, all 2,200 guest rooms are empty.”

Bright future: It can be a challenge bringing electricity to far-flung communities in the developing world. The solution, says the New York Times, may be a combination of solar power and small loans — “a business model that will help some of the 1.2 billion people in the world who don’t have electricity to leapfrog the coal-dependent grid straight to renewable energy sources.”



Is it fun watching the tops of trucks, buses and campers get shaved off by a low bridge? Of course it is. And the Wall Street Journal serves up the video proof.

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