LA Biz Observed archive

Mark Lacter covered business, the economy and more here from 2006 until his death on Nov. 13, 2013.
 
The entire LA Biz Observed archive — more than 10,000 blog posts by Mark — remains online and available.
 
April 2008

Tony the P: He delivers

In his closing argument, Anthony Pellicano wanted to emphasize that his detective agency was not a "criminal enterprise," as prosecutors have alleged. Acting as his own defense attorney - and thus having to refer to himself in the third person - Pellicano said, "I respectfully submit to you: They have not found an enterprise - or that there was a common purpose. There was an investigative agency run by a guy who'd been around a...

Law firm largesse

American Lawyer is out with its annual list of the nation's most profitable firms, and L.A.-based Quinn Emanuel Urquhart Oliver & Hedges finds itself in the midst of NY's legal goliaths. Quinn ranked fourth, with profits per partner in 2007 of $3 million. PPP is the law firm equivalent of a baseball ERA, and even though the measurement has been called into question over the years for distorting overall performance, it's still what the legal...

Fed cuts rates

As expected, the central bank lowered the key interest rate by one-quarter percentage point, to 2 percent. But this could be it for a while. A statement accompanying the announcement talked about the impact of cumulative rate cuts, which Fed watchers say is a sign that there's little sentiment to go any further. Plus, there is plenty of concern about inflation. (NYT, WSJ)...

Immigrants find less work

Are Latin American immigrants transferring back less money to their families? A study by the Inter-American Development Bank finds that it really depends on the state. California immigrants will send $14.6 billion this year, which is an increase. But there are drops, in percentage terms, in Pennsylvania, Texas, Georgia, Maryland and Virginia. The study finds that all immigrants are having a tougher time finding a good paying job (almost 40 percent said they were earning...

Blackballing Arianna?

NBC has turned down pitches to have Huffington plug her new book and many in the blogosphere smell conspiracy. You see, Arianna takes aim at Washington bureau chief Tim Russert for supposedly letting Bush and his cronies go unchecked. He pops up a lot in the book, "Right Is Wrong: How the Lunatic Fringe Hijacked America, Shredded The Constitution, And Made Us All Less Safe." Nikki Finke reports that Huffington had been booked on MSNBC's...

Wednesday morning headlines

Economy still ticking: The gross domestic product, which provides an overall scorecard on how the nationís economy is doing, managed to grow at a 0.6 percent annual rate in the first quarter, which matches the fourth-quarter performance. Sure, growth is anemic - 3 percent or so is the historic average for a quarter - but as they say down in Florida, just consider the alternative. So how was there any growth at all, given the...

'Fast & Easy' at Countrywide

It's the lending giantís absurd mortgage program that federal investigators have been honing in on, according to the WSJ. Under "Fast and Easy," borrowers were asked to provide little or no documentation about their finances, the Journal reports. That includes not having to produce pay stubs or tax forms to document earnings. In many cases, Countrywide didn't even require employment to be verified. You can see how this would be a problem. That left the...

'Well-paid thug'

That was prosecutor Daniel Saunders' description of Anthony Pellicano during closing arguments today. He said the government had proven its wiretapping case through documents, testimony from former clients and victims, and of course the actual recordings of phone conversations. "Tires get slashed, computers get hacked, houses get broken into," Saunders said. "And of course, people's phones get wiretapped." He also called co-defendant and former LAPD Sgt. Mark Arneson a "dirty cop" who secretly worked on...

Virtual Bev Hills

I've spent the last few minutes trying to navigate EveryScape.com's new virtual search of Bev Hills (it's being launched in partnership with the cityís Conference & Visitors Bureau). It's a bit of a struggle - I keep driving against one-way traffic and can't seem to get inside any stores or restaurants. Then again I am a techno disaster area, so donít go by me. EveryScape already has virtual scenes for SF, Philly and Washington, D.C....

Milken's big week

The onetime junk bond king - he'll forever wear that label - hosts his annual global conference this week in Bev Hills, where the usual impressive lineup of financial and political superstars get to lay out their view of the world. This time out, there's a bit more buzz about Milken himself - specifically, whether the current subprime/credit mess can at all be compared to the days of high-risk, high-yield junk that helped revolutionize the...

Tuesday morning headlines

Big oil profits: Keep this in mind the next time you fill your tank: Royal Dutch Shell and BP both reported record first-quarter numbers, beating analystsí expectations. Shellís net income rose 25 percent to $9.08 billion. Exxon Mobil and Chevron are set to report later this week. (NYT) Big lender tumble: Countrywide Financial posted a $893 million first-quarter loss, the result of more foreclosures and late payments. That won't offer any comfort to shareholders of...

A new Grand Avenue delay

Construction on phase one of the $1-billion mega-project has been put off until February 2009, with completion now set for 2012 instead of 2011. The reason is the credit crunch. Related Cos., developer of the project, has been unable to secure construction financing (work already has been put off a couple of times). From the Downtown News, which broke the story on its Web site this afternoon: The developer plans to finalize construction documents for...

More on LAT numbers

Several readers offering their thoughts on an earlier post about the paper's circulation decline wonder how it compares with other big dailies. It's a good point - most all the major metro papers have seen substantial slippage since 1998. But based on a quick survey, I couldn't find any with as precipitous drop in circulation (though the Washington Post has taken a pretty big hit). NYT 1998 1,110,143 2008 1,077,254 Difference -32,887 NY Daily News...

Gas hikes slowing down?

The government's weekly survey shows only a four-cent a gallon increase in the average price of regular in the L.A. area, to $3.883. Increases in the last several weeks have been in the seven- to eight-cent range. We're due for an easing of price hikes (at least that what some of the experts say), though don't expect things to settle down until the oil markets settle down. And that hasn't happened. Oil futures neared $120...

Job cuts at Register

A short post on the Web site says that the paper "and its affiliated publications" will lay off between 80 and 90 employees, or 5 percent of its workforce. President and Publisher Terry Horne cited OCís sluggish economy, especially in real estate, that has eaten into ad revenues (no details provided). It's the third round of layoffs in a year for Orange County Register Communications....

*Spinning the GDP

The first-quarter gross domestic product is due out Wednesday, the first chance we get to see how the overall economy has fared this year. By all the recession talk we've been hearing, you would assume that growth contracted during the quarter. (A common definition of recession is two consecutive quarters of negative GDP.) But there is a decent chance that the economy actually grew in the January-March period Ė not much, mind you, but growth...

How far LAT has fallen

A 5.1 percent circulation drop for the 12-month period ended March 31 is pretty bad, but pull back 10 years and the numbers look even worse. In an April 23, 1998 press release, then-publisher Mark Willes (remember him?) was touting the paper's "journalistic enhancements" and "innovative marketing programs" that were "connecting with readers." He also crowed about a "revamped Los Angeles Times Sunday MagazineĒ (that was the year before the Staples fiasco). As for circulation,...

Monday morning headlines

Oil nears $120: A strike at a refinery in Scotland and more violence in Nigeria are the reasons cited. The president of OPEC, Chakib Khelil, blamed a weak dollar for the run-up and didn't rule out $200-a-barrel oil. OPEC economists, however, consider $120 to be at the upper end of the current price range. (FT) Bullish about stocks: Barron's has found lots of portfolio managers taking a darkest-before-dawn position on the markets. More than half...

Zell and his pals

As long as the Tribune CEO keeps dangling Newsday, he's certain to find friends. NY Daily News owner Mort Zuckerman upped his offer for the Long Island newspaper this afternoon, matching Rupert Murdoch's reported $580 million bid. No specifics on what the offer includes - specifically whether it provides the types of tax breaks that Murdoch was said to be offering Zell. (Tax considerations are all-important to Sam.) And let's not rule out two other...

Green gridlock

You knew it had to happen - too many businesses filing for green-related trademarks that look or sound the same. All told, 300,000 were registered last year with the U.S. Patent and Trademark Office, beating the previous all-time high of 289,000 that was set during the dot-com craze in 2000. The actual word "green" wound up in 2,400 trademark applications last year, double the number from 2006. "Eco" and "organic" also had big years. Among...

Housing or gas?

If the subprime disaster isn't what's bringing the U.S. economy to its knees - and there's a decent argument that it hasn't - then higher food and gasoline prices will likely do the trick. There's lots of airplay this morning on consumer confidence falling to a 26-year low - worse than even the forecasts. What's more, the Reuters/University of Michigan index of consumer expectations going out six months dropped from last monthís reading. Perhaps that...

Drop in L.A. car sales

Itís another one of those sign-of-the-times indicators. New vehicle registrations in L.A. County fell 16.3 percent in the first quarter, which is a bit under the 19.3 percent statewide figure. Car sales have been terrible - no surprise, really, given high gas prices and tight credit. Broken out by brand, Lexus is down 16.6 percent, Toyota 15 percent and Mercedes 21.5 percent. Hummer sales are down 45.4 percent, but keep in mind that only 221...

Friday morning headlines

No relief on gas: The average price of self-serve regular gasoline in the L.A. area is now $3.858 a gallon, which according to the Auto Club's latest survey is 55 cents higher than last year. Oil prices are hovering around $117 a barrel this morning. Something about supply concerns in Nigeria. Sagging SAG talks: That's according to Nikki Finke, who says little progress is being made between the Screen Actors Guild and the media companies....

Time for fashion buys

It's the old buy-low, sell-high bit - and among the smaller fashion brands there might be some bargains out there. Portfolio.com spots two in L.A. One is Mblem, launched in 2006 by pop-star-turned-actress Mandy Moore. What started out as a vintage T-shirt brand has morphed into a complete collection carried in more than 500 stores. Also being looked at is Kelly Wearstler - yeah, the former Playboy centerfold who is a judge on Bravoís "Top...

Figuring out Mozilo's pay

Good luck. If you're looking at the summary compensation table for Countrywide CEO Angelo Mozilo, his total compensation is a mere $10.8 million, down 70 percent from a year earlier. That's what the WSJ is reporting. Thing is, the relatively modest payout does not include the $121.5 million that Mozilo realized from exercising stock options (many of them before the mortgage company's big stock plunge). The options were granted over the years and then exercised...

Closing the Digital deal?

Venice-based Digital Domain, the special-effects powerhouse, is not exactly wowing them on Wall Street. The company's initial public offering was supposed to be priced this week, but the underwriter is now calling it a "day to day" situation Ė probably a sign that the company is having trouble rounding up enough interested investors at the $12- to $14-a-share price being sought. This is obviously a lousy time for any company to go public, much less...

The billboard outrage

The Weekly's loooong look at how the city handles billboard regulation - either ineptly or corruptly - hones in on the unsavory role several high-level politicos, most notable City Attorney Rocky Delgadillo. His much ballyhooed settlement with the major billboard companies looks wimpier by the year. The settlement was an outgrowth of the companies appealing the city's 2002 ban on new billboards. The deals with Vista, Clear Channel, CBS and Regency mystified experts in the...

Mariah and the music biz

Not many LABO readers are probably aware of this, but Mariah Carey's new album, "E=MC2", has sold 463,000 copies, making it the highest sales week for any album this year. That's a bit lower than the 500,000+ that had been expected, but 15 percent higher than the debut of her last album. Should we care? Well, yes, if youíre interested in the travails of the music business. Our friend Peter Kafka over at Silicon Alley...

Thursday morning headlines

B of A sticks with Countrywide: A number of Bank of America shareholders put up a stink at the shareholders meeting about buying the mortgage giant for $4 billion (keep in mind that the bank just reported a 77 percent drop in first-quarter profit). But CEO Ken Lewis said that Bank of America paid a fair price for Countrywide and continues to perform deep due-diligence. The Calabasas-based lender lost about $1.6 billion in the last...

Cloning Italian water

Yes, I'm serious. I think. Celebrity chef Mario Batali has a problem with American H2O, which is why he's creating his own mineral water composite, based on a chemical analysis of l'acqua italiana. The water in Italy apparently makes pizza taste better than in the U.S. Posting in Wired, Joe Brown says Batali plans to use his specially formulated water at L.A.'s impossibly popular Pizzeria Mozza (he co-owns the place with Nancy Silverton and Joe...

SAG talks extended

The actors guild will keep going at it with the studios and networks for an extra week, perhaps a sign that at least some progress is being made in cutting a deal (though very little information is leaking out about the contract talks). With SAG negotiations extended until May 2, AFTRA (the American Federation of Television and Radio Artists) has agreed to postpone the start of its negotiations until May 5. The actors guilds are...

Pellicano disconnect

Is it just me or does it seem as if Web headlines and decks are being written by people who haven't the slightest notion of what the story is about? Or perhaps they do and are just following orders to make 'em sexy - even if they're wrong. Check out Portfolio.com, which has a subhead on its main page that claims "Hollywood's been riveted by the wiretapping and racketeering trial of private eye Anthony Pellicano."...

Buying up rice

A local Costco executive says large quantities are being snapped up, and Sam's Club has a limit on purchases.

Beckham's $250 million

David Beckham's commercial value may be much less. Here's why.

In-N-Out in Utah

It's the burger chain's first opening in the state - and the first outside the mainstays of California, Arizona and Nevada.

Jump in foreclosures

The big question is whether they'll spread into long-established mortgages. That would be really bad.

WSJ conference call

There's still a lot of confusion over the pending resignation of the paper's managing editor.

Tuesday morning headlines

Murdoch nears deal for Newsday, D-day for Yahoo, California lags in Fortune 500, and Digital Domain to get priced.

Mattel's legal fees

Product recalls and a nasty lawsuit against the maker of Bratz dolls are making for heavy-duty expenses.

Updated pump prices

It's hard to wrap your arms around the idea that prices keep going up while U.S. demand for gas keeps going down.

Housing turnaround?

There's been a 23 percent increase in existing OC homes and condos placed into escrow over the past 30 days.

San Pedro building slows

There remain plenty of vacancies, which could mean some sort of "lease-to-sell" arrangement.

Monday morning headlines

City budget takes hit, oil prices dip below $117, Burbank flights may move to Van Nuys, and new cable channel in works.

($)ign of the times

L.A.-area venture funding is way down from a year earlier - and much of the action is going to ongoing relationships.

Oil hits $117

Every day brings a new reason for the price runup. Today it was an encouraging earnings report from Caterpillar.

Talk about a discount

The house was bought a little over a year ago for $510,000. It's now going for $279,900.

Innovation guy rocks!

Looking to reinvent Tribune Co.'s newspaper, he says "there are opportunities to come up with new angles."

Jump in unemployment

But the state's separate payroll survey for March shows that county employment was up 25,000 from February.

City National takes hit

The stock price is down this morning on less-than-wonderful earnings results. But it's not a disaster.

Friday morning headlines

Citigroup loses $5.1 billion (and stocks are up), no more auto production in Socal, and "Gossip Girl" pulled from Web.

Canceled policies reviewed

State officials will reopen every medical insurance policy dropped over the last four years.

Zell considers asset sales

But Tribune CEO says the company will be able to meet debt payments this year.

Charles Cohen up close

The NY-based owner of West Hollywood's Pacific Design Center wants everyone to know who owns the place.

Thursday morning headlines

New rumbles about NBC sale, pushback on immigrant crackdown, SAG signs interim pact, and lonelygirl collects.

Dodgers place 4th

They're estimated by Forbes to be worth just under $700 million, with the Angels at $500 million.

Oil: $115.21. Gas: $4.15.

Energy prices keep breaking one record after the other. These numbers were clocked this afternoon.

*Rocky goes after Blue Cross

L.A.'s city attorney is accusing the health insurer of canceling policies and mishandling processing claims.

LAX and airline merger

The Delta-Northwest combination will have little impact locally because only a few routes are shared by the two carriers.

Wednesday morning headlines

Stocks are up on bad but not horrible news, SAG talks enter second day, Northrop takes charge, and Magic scores again.

Download tax defeated

The bill would have only authorized a study on possible impacts, but Silicon Valley companies were taking no chances.

Home prices plunge again

What sales there were in March tended to come from foreclosures in lower-priced inland regions.

Tuesday morning headlines

Oil prices still higher, AFTRA turns down SAG offer, Fresh & Easy gets vote of confidence, and American pilots to picket.

USC buys Tenet hospitals

The sale is a way to resolve lawsuits filed by the university and the hospital operator.

Gas prices jump again

Expect to soon pay $4 a gallon, if you're not already. And with oil near $112 a barrel, there's no relief in sight.

Vegas pulling back

MGM trims staff. It's far from disastrous, but room rates are down and so is convention traffic.

L.A. goes to Washington

The delegation will push for transportation, education and public safety funding.

SAG invites AFTRA

The offer comes as both actors unions prepare for contract talks with the studios and networks.

Monday morning headlines

Blockbuster bids for Circuit City, SAG board rejects actors proposal, Fremont sells assets, and American back in business.

Delta, Northwest near deal

If there is an agreement, the combined airline would be called Delta. Limited impact at LAX.

Big money, lower taxes

CBS CEO Les Moonves received a 28 percent pay raise in the same year CBS earnings fell 25 percent. But that's not all.

Dov crunches the numbers

Amid all his girl chasing, the CEO of American Apparel was running out of money. So he went public (sort of).

Billionaire sues Bear

He claims being duped into buying shares of Bear Stearns just days before the bank's near collapse.

Behind GE's weak earnings

GE couldn't make loans because of the credit crunch, and its NBC Universal unit earned less then expected.

Pellicano rests his case

The Hollywood private eye called an FBI forensics expert as his only witness.

*What to make of LAT rumors

David Geffen could be in talks with Sam Zell to buy the paper that's he been going after since last year.

Friday morning headlines

Market falls on GE numbers, more cancellations at American, L.A. gas prices jump, and Bev Hills approves condo project.

Wal-Mart to expand OC stores

Selling fruits and vegetables, deli meats and fresh baked goods is sure to raise concern among the supermarket chains.

State bonds snapped up

Yields were lower than in March, though 4.96% tax free looks pretty good. Proceeds will go towards infrastructure work.

Living wage law upheld

Barring some last-minute legal action, LAX-area hotels will be required to abide by the new ordinance.

Pinkberry suit settled

Now we get to know what goes into a dish of the frozen concoction, but it's one of those be-careful-what-you-wish-for deals.

New views on economy

WSJ survey of economists finds more pessimism about home prices and unemployment.

Thursday morning headlines

American cancels more flights, prosecutors in Pellicano trial wrapping up, and Microsoft battle for Yahoo gets goofier.

Roscoe's vs. Rosscoe's

A Chicago restaurant owner agrees to change a too-familiar name.

AA's impact at LAX

It's the airport's biggest carrier, but today's cancelled flights only affect a small portion of operations.

Yahoo-AOL near deal

Combining the Internet operations of both companies could help thwart Microsoft's efforts at buying Yahoo.

Couric likely to leave CBS

She could be out by next January - and there's talk about her replacing Larry King.

No morning headlines

Hope to be back later today....

More cancelled flights

American's fleet of 300 MD-80s was pulled from service this afternoon for maintenance inspections.

Turning down bonuses

More CEOs, including at least two locals, are passing up their bonuses in the face of bad economic times.

Luxury car sales plunge

There's not much evidence to suggest that the rich are taking it on the chin. So what gives?

Another Northrop win?

Unlike its upset win over Boeing for the aerial tanker contract, The L.A. company is favored for the spy plane business.

Tuesday morning headlines

Greenspan says he's not to blame, Tribune might resort to credit lines, NBC sues "Runway" producers, and airlines score poorly.

Table set in SAG talks

Union officials have a long list of demands, but media companies might want to hear about them.

L.A. expansions down

Not a big surprise given the slipping economy. Accounting, law, architecture and engineering firms expanded the most.

Gas shoots up

Despite lower demand in the U.S., oil prices remain well over $100 a barrel.

Lowe claims harassment

Somehow it doesn't seem like a fair fight, but it does provide some insight into stuff that no doubt happens all the time.

Monday morning headlines

Yahoo turns down bid, Circuit City might be up for sale, big agent defection at UTA, and still sluggish at the ports.

The Clinton-Burkle payday

The former president and first lady released their taxes, but good luck figuring out his take from the billionaire's investments.

*Rock + Pellicano = Zzzzzz

This is entertainment? Seldom has a one-night stand and subsequent paternity suit sounded so dull.

Fresh & Easy up close

Stores are said to be missing sales targets by up to 70 percent, which is not hard to believe if you walk into one.

Tribune's risk of default

The owner of the LAT has huge amounts of debt to service in the next 18 months. So where does it get the money?

How bad are the numbers?

Thereís no way to sugarcoat an 80,000-job decline in payrolls and a jump in the unemployment rate,

Friday morning headlines

Terrible jobs report, Chris Rock testifies in Pellicano trial, MySpace parent misses revenue target, and another Barista suit.

Economic funny business

If the economy is so rotten, why are 70 percent of Americans satisfied with their economic lot?

Pellicano's gruesome offer

Jurors were told to disregard a hedge fund manager's tantalizing testimony, which is easy for the judge to say.

Picking up for failed airlines

All the carriers must put up with higher fuel prices, but the smaller carriers are more vulnerable.

Thursday morning headlines

Passengers stuck as ATA shuts down, FAA whistleblowers target Southwest, and NY judge dismisses "Borat" lawsuit.

AFTRA sets date

The other actors union will start contract talks on April 28, less than two weeks after SAG begins its bargaining.

Rich and free at last

OC billionaire Igor Olenicoff faced up to three years in the slammer. Then it was six months. Then...

Big Countrywide inquiry

A federal judge says there is a "a common thread of potential wrongdoing" in several bankruptcy filings.

Mortgage relief - but why?

Congress will likely pass legislation to bail out borrowers, but perhaps there's another way to ease the housing crisis.

El Cholo goes fast food

The Western Avenue landmark will still offer signature dishes like Green Corn Tamales. Plus make-your-own guacamole.

L.A. success amid VC gloom

Only five venture capital-backed companies managed to go public in the first quarter, including one from North Hollywood.

Wednesday morning headlines

Bernanke offers semi-gloomy outlook, SAG to start negotiating, United expects delays, and Amgen CEO takes pay cut.

Movies, wiretaps and fools

It's the wiretap trial of Hollywood gumshoe Anthony Pellicano, which is starting to get interesting - and really strange.

*Greene, Martin out at KCBS

In all, fewer than 20 have lost their jobs at KCBS (Channel 2) and sister station KCAL (Channel 9).

March Madness ratings down

CBS says the 12 percent increase in online viewing had no impact on TV viewership.

Scanning Tribune's 10-K

The LAT remains the biggest revenue-generator of the company's newspapers, about 28 percent of total publishing revenue.

Just Zelling along

Did you hear that Sam Zell has renamed Tribune Co.? Or that the company plans to go paperless?

Tuesday morning headlines

Another big bank loss (and the market is way up), thumbs down to Paulson's financial reforms, and layoffs expected at KCBS.