Oil down to $109: That's roughly $40 lower than the peak price just a few months back - and points to still lower gas prices. The immediate explanation for today's plunge is less-than-expected damage estimates from Hurricane Gustav (even though inspections of the Gulf oil operations are still a day or two off). But more broadly, oil is down because of a softer global economy, weaker demand for oil and a stronger U.S. dollar. (CNBC)
Big day for stocks: September is normally one of the worst months on Wall Street, but at last check the Dow was up more than 150 points, fueled by the drop in oil prices. There also are reports about a possible cash infusion for Lehman Brothers, which is perking up the financial issues. (AP)
Movie attendance is down: But it all depends on how you want to do the numbers. While fewer tickets were bought this summer, the cost of those tickets was higher than ever. That, plus the success of a few blockbusters, resulted in an estimated $4.2 billion box office take, which is up a bit from last year's $4.18 billion. Factoring in inflation, the summer of 2002 still holds the industry record with $4.63 billion. From the NYT:
The industry had huge flops and huge hits — sometimes at the same studio. Warner, part of Time Warner, was whipsawed between the crash of “Speed Racer” and the surprising success of “The Dark Knight,” a follow-up to “Batman Begins” in 2005. “Speed Racer,” a remake of the old television series, cost an estimated $250 million to produce and market but took in just $43.9 million at the domestic box office. Then “The Dark Knight” came along and cruised to a $504.7 million tally, enough to make it one of the biggest-selling movies of all time. (Warner also had the No. 1 comedy of the summer in “Get Smart.”)
Spielberg nears deal: Hollywood's most powerful director is expected to announce a long-awaited collaboration with India's Reliance Communications, and pull out of his acrimonious relationship with Paramount. BusinessWeek reports that Spielberg is meeting this week with Anil Ambani, the billionaire chairman of Reliance Communications, to finalize what is expected to be up to a $1.2 billion deal.
The Reliance-DreamWorks deal has been rumored for two months (BusinessWeek, 6/19/08) and is assumed to include a $500 million equity infusion from Reliance, which has been beefing up its interest in Hollywood production. In May, its Reliance Big Entertainment unit signed deals to finance projects with the likes of George Clooney, Brad Pitt, and Will Smith. The Spielberg transaction is expected to also include financing of as much as $750 million for DreamWorks' film production with JPMorgan Chase (JPM).
Spielberg has agreed to discuss a possible new agreement with Paramount, sources say, although he is unlikely to stay. The talks are more likely to involve ongoing Paramount-based projects on which Spielberg and his team have been working, and which Spielberg—even after his departure—will maintain a financial interest. (Under his deal with that studio, after he leaves he will get a hefty percentage of the profits for films in which he serves as producer, which include the megafranchise film Transformers.) That's why Spielberg is likely to announce a second venture down the road with another Hollywood studio to distribute the films his new DreamWorks studio will make. The lead candidate is Universal Pictures (GE), where Spielberg still maintains his adobe-style headquarters, a gift from Universal after his 1982 blockbuster E.T.: The Extra Terrestrial.
MGA squabbles with insurers: The question is who winds up paying the damages and court costs in connection with the Valley-based toy company losing to Mattel in that big copyright infringement case? From the Business Journal:
The insurers said in court documents that they may not be required to pay MGA’s legal expenses – mainly lawyers’ fees and court-awarded damages – because they claim the policies don’t cover the types of allegations in the Mattel case. However, Kirk Pasich, an attorney who represents companies and individuals in insurance coverage disputes, said insurers must pay to defend policyholders in litigation even if there is only a possibility that the policy covers allegations set forth in a lawsuit.
Tough life: Now we know the economy is taking its toll. Bankers at Deutsche Bank's mortgage-backed securities operation must limit expense account dinners to $150 per person. Also, bankers were recently told that they can expense golf or dinner- but not both. (NY Post)
Lacter on radio: This morning's business chat with KPCC's Steve Julian covers the debate over drilling off the Santa Barbara coast, and the possible economic infusion from Gustav-related damages. Also available on kpcc.org and on podcast.