It's nervous time: The market is down 135 points at last check, and it could be even worse if not for a small pullback in the price of oil. GM reported a $39 billion third-quarter loss, which is an all-time record, and while the number shrinks to just $1.6 billion if you exclude a huge writedown, analysts found very little good to say about the results. “Things are bad and getting worse,” Peter Nesvold, an auto analyst with Bear Stearns, wrote to clients this morning. He assured them that the number was “not a typo.” (NYT, Bloomberg)
Networks aren't worried: Their six- to eight-week cushion of primetime shows has been well reported, but getting less attention is another factor that eases the pressure of the writers strike: a tight advertising market that's the result of changes in the way rates are calculated. This year, deals have been largely based on commercial ratings instead of program ratings. During last May's upfront season, when much of the ad time was purchased for this season, advertisers overspent. It’s too complicated to get into the reasons why, but the point is that inventory is tight, which means rates are high. That lessens any immediate concern of lost revenues, although the situation changes drastically if the strike extends beyond January - and at this point that's looking like a good bet. From the WSJ:
Media buyers and some marketers say they aren't pulling business yet because the fallout from the strike has so far been limited to late-night talk shows such as CBS's "Late Show with David Letterman," General Electric Co.'s "The Tonight Show with Jay Leno" on NBC Universal, and Viacom's "The Daily Show with Jon Stewart" and "The Colbert Report," both on Comedy Central. Moreover, it is too early for ratings to have been hurt. "People won't move until they see a definite impact," says Jason Maltby, president and co-executive director of national broadcast at Mindshare, a media buying unit of WPP Group. Lisa Cochrane, vice president of integrated marketing communications at insurance giant Allstate Corp., adds: "We have ratings guarantees so we know we will reach who we need to reach."
Old myths die hard: Remember when Arnold was first running for office in 2003 and scared us into believing that businesses were fleeing California? Well, the now-governor turned out to be wrong. Big-time wrong. A Public Policy Institute of California study finds that most of the business relocations that took place between 1992 and 2004 were within the state, usually to an adjacent county where land prices are cheaper. The study calls the movement to other states "inconsequential." This follows up a PPIC study that said much the same thing, though the governor's flacks pooh-poohed it at the time because it didn't include the year 2003. Well, this time they included 2003, and guess what? Yep, same thing. Here's a passage (thanks to the California Progress Report):
"The data reveal some trend toward more dispersion of firms’ activities across states, with California firms employing more workers and opening more establishments out of state. However, this is offset by non-California firms doing the same within the state. Thus, the changes in firm behavior seem more likely to be a subnational reflection of some of the same forces spurring increased globalization—such as reductions in communications costs from improvements in information technology—than a reflection of the lack of attraction of California as a place to do business."
MIT sues Gehry: The school charges that flaws in the architect's design of the $300 million Stata Center in Cambridge caused leaks to spring, masonry to crack, mold to grow, and drainage to back up. MIT paid Los Angeles-based Gehry Partners $15 million to design the Stata Center - and according to the suit it cost more than $1.5 million to hire another company to rebuild the amphitheater, with new bricks, seats, and a new drainage system. "Gehry breached its duties by providing deficient design services and drawings," says the suit, which seeks unspecified damages. (Boston Globe)
Dog bites man: Believe it or not, LAX is one of eight major airports where the on-time arrival rate has actually increased in the first nine months of the year. Four of the eight are in California - SF, San Diego, Oakland and LAX. In most cases, the explanation has less to do with better efficiency and more to do with drier-than-normal conditions that have reduced delays. Improvements in Houston and Atlanta are more substantive; both airports have added runways and gates, and improved traffic flow. (WSJ)
Queen Mary deal is done: A development company will buy the lease from Queen's Seaport Development Inc. for $43 million, with a news conference scheduled for this morning. You might recall that QSD declared bankruptcy two years ago. Still to be worked out is the city of Long Beach renegotiating the lease with the new development group, called Save the Queen. And there are questions about the STQ folks; Newport Beach developer Jeffrey Klein, one of the principles, had amassed some $700,000 in tax liens between 1995 and 2007 and has been involved in more than 35 lawsuits - the majority of which name him or his companies as plaintiffs. Several of the lawsuits have ended in legal judgments against him. (Press-Telegram)
Remember Todd Thomson:? He's the Citigroup executive who according to press reports got the boot because of his extravagance with company funds, including that now-infamous fish tank in his office. Well, Thomson is finally speaking up - and denying that he did anything wrong. It's interesting timing since he and his boss Charles Prince didn't exactly get along - and Prince himself was dumped this week (the buzz had been that Prince was the source of the media's not-so-flattering reports). And what of his relationship with CNBC's Maria "Money Honey" Bartiromo, who flew with Thomson on a Citigroup plane from Asia? "It's an inappropriate question," he told Reuters. "I've never been accused of having anything other than an appropriate relationship with Maria Bartiromo. And I do have an appropriate relationship with Maria Bartiromo." So there!