Spike in oil prices: So much for relief at the gas pump. Crude has jumped more than $5 a barrel this morning, which added to yesterday's $5.49 advance brings prices back to near-record levels (over $133, at last check). Oil is being used as a hedge against a weakening dollar. Also, demand remains heavy in Asia (even though it’s softening in the U.S.). From Bloomberg:
"Many investors used the latest selloff in the dollar as an excuse to get back into the market," said Andrey Kryuchenkov, an analyst at Sucden (U.K.) Ltd. in London. "Concerns that demand is flattening in the near term have been overshadowed by persistent inflationary worries'' and ``limited supplies in the long run."'
And gas?: Not only are the numbers sky high, but so is the pace of the increase. In L.A., pump prices jumped 22.7 cents a gallon in just the last week, according to the Auto Club survey. The average price of self-serve regular is $4.339. There had been hope that a drop in oil prices last week would at least stabilize the gasoline situation, but now all bets appear to be off. Adding to the problem are state refineries that have begun producing more diesel fuel and less gasoline. That means more fuel must be brought in from out-of-state and overseas.
Stock market tanking: The Dow is off around 200 points in early trading. Might be a good day to keep an eye on the action.
Calculating strike costs: The estimates continue to be all over the map. A new report from the Milken Institute says that the 100-day writers walkout cost the California economy 37,700 jobs and $2.1 billion in lost output - enough to tip the state into a recession. That conclusion is open to considerable debate – the jobs number is certainly not borne out by state figures – and besides, the U.S. economy actually grew in the first quarter. From Variety:
Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., told Daily Variety that the Milken Institute's $2.1 billion estimate for the economic costs of the strike appeared to be in the same general neighborhood as figures he issued during the strike. "Our estimate for the impact during the 100 days of the strike was about $2.5 billion, and business still has not snapped back, although that's hard to quantify," he added.
But UCLA economist Jerry Nickelsburg continued to offer a less-dire analysis of the strike's impact, saying Thursday that it amounted to less than the $380 million in lost economic activity than he had projected during the strike on the basis of a five-month stoppage. The impact is less than he predicted, Nickelsburg said, in part because the entertainment industry is much more diverse than it was during the previous WGA strike. Nickelsburg noted that cutbacks in traditional production areas led to expansion in newer sectors like vidgames and original production for the Internet and pointed to reports that venture capitalists were courting writers for a range of ventures.
Big numbers for TV ads: NBC received commitments of about $1.9 billion in prime-time advertising for next season, nearly selling out almost all its inventory during the annual "upfront" season. But the network apparently had a bigger-than-normal inventory for the upfronts - nearly 80 percent of the pie, as opposed to 75 percent (the rest is bought in the "scatter" market closer to airtime. From the WSJ:
Even with the shift from scatter, several ad buyers and network executives say broadcast networks' overall upfront sales may be flat or shrink this year as ratings continue to tumble and advertisers move some of their budgets to cable, where viewership has grown. Some high-profile cable networks could see ad spending increase 10% to 20% or more, according to cable network executives and ad buyers. "The high-end cable networks are trying to take a seat at the table at the same time the network negotiations are going on," says Larry Novenstern, executive vice president at Optimedia, a division of Publicis Groupe.
Tribune's debt: The company's available cash on hand, coupled with the $650-million sale of Newsday, should be enough to cover interest and principal payments this year. Given the falloff in ad revenue, the Sam Zell-led company has been struggling to come up with the $1 billion or so needed for its various debt obligations. (LAT)
Feds approve Countrywide deal: Bank of America shareholders might not be thrilled with their company's $4-billion purchase, but it's all right with the Federal Reserve. Calabasas-based Countrywide holds a special meeting of shareholders on June 25 to approve the proposed sale. It's still expected to close in the third quarter. (AP)
Bratz windfall: Carter Bryant, the former Mattel designer who came up with the pouty, urban-themed dolls, has made $30 million in royalties over the past seven years. The payout amount came up in federal court, where Mattel and Bratz-maker MGA are battling over which company has rights to the popular doll. Mattel sued MGA for copyright infringement, claiming it owns the rights to the Bratz franchise because Bryant created the concept while employed at Mattel. (AP)
Trucking group prepares suit: The American Trucking Association objects to the Port of Long Beach requiring special permits for the hauling of goods to and from the ports. The requirement is part of the port's plan to replace thousands of polluting diesel trucks in the harbor. From the Press-Telegram:
The ports, with the help of federal and state grants, will provide more than $1 billion in truck-replacement grants and loans and want some leverage to hold the trucking companies responsible for using cleaner trucks. Earlier this year, both ports adopted concession plans that restrict trucking companies from doing business in the harbor unless they agree to scrap their old trucks in favor of cleaner-burning rigs. The progressive ban launches Oct. 1 with a prohibition on all pre-1989 trucks and continues through 2012, when only vehicles meeting 2007 emission standards are allowed.