In Business This Week
Edited by Monica Roman
HEADLINER
Dennis FitzSimons: The Key to Tribune's Kingdom
Turning to someone who has reached out to younger audiences, Tribune Co. (TRB
) has named Dennis FitzSimons CEO, effective Jan. 1. The parent of the Los Angeles Times, Newsday, Chicago Tribune, and 24 TV stations, Tribune looks to the genial 52-year-old to boost circulation and viewership as audiences move away from big media. He is likely to shore up Tribune with more moves like his new youth-oriented RedEye edition of the Chicago Tribune and the development of the WB Television Network, which Tribune partly owns.
FitzSimons, a 20-year Tribune veteran who came up through the TV ranks, should be helped by fresh gains in print and TV advertising. After recovering from what predecessor John Madigan in late 2001 called the worst ad climate since the Great Depression, the mood "has improved quite a bit," says FitzSimons. Longer term, finding synergies among Tribune's holdings and keeping them growing are his primary challenges. Not to mention rebuilding the stock, which peaked at around $60 in late 1999 and is now at $45.
By Joseph Weber
United: Losing Altitude
UAL (UAL
) lost its last hope to avoid filing for Chapter 11 bankruptcy protection on Dec. 4 when the government's Air Transportation Stabilization Board (ATSB) rejected the airline's request for a $1.8 billion loan guarantee. The parent of United Airlines, the world's second-biggest carrier, had invoked a "grace period" clause on $875 million in debt due on Dec. 2 and warned that it could not repay those obligations without government-backed loans. Even without a deal with its machinists, UAL had secured roughly $820 million a year in wage cuts from its employees to help obtain federal assistance. But analysts and rivals had warned that the airline's restructuring was inadequate, noting that UAL itself said it wouldn't turn a profit until 2005. The ATSB concluded that UAL's revenue projections were "unreasonably optimistic" and that even with all its cost cuts, it would probably face a cash crunch within a few years.
Leaving Detroit in a Cloud of Exhaust
Honda (HMC
) and Toyota (TM
) stole a march on the Big Three by delivering the first fuel-cell vehicles designed for everyday use to the U.S. on Dec. 2. Fuel cells--which convert hydrogen to electric power with no polluting by-products--are seen as the most promising alternative to gasoline engines. Both Honda and Toyota's fuel-cell models use electric motor-drive controls derived from hybrid gas-electric cars the two have been selling in the U.S. for the past two years. The first production hybrid vehicle from a U.S. carmaker is expected next year from Ford.
A Wounded Tenet Soldiers On
More bad news from Tenet Healthcare (THC
) hasn't deterred investors. On Dec. 3, the Santa Barbara (Calif.) hospital operator dropped its earnings estimates for fiscal 2003 from $1.4 billion to less than $1.3 billion. It also expects earnings to slide to $950 million in 2004. Tenet assumes that a Medicare loophole that had allowed it to collect unusually high payments will be closed. But Tenet promised to buy back some of its battered shares, sending its stock up 5%, to $18.75, on Dec. 4.
Disney Redraws the Board
On Dec. 3, Walt Disney (DIS
) said it would reduce its fourth-quarter earnings by $47 million because of the poor showing by its animated film Treasure Planet. The news sent shares tumbling 5% the next day. But Disney investors got better news elsewhere: Its board, under fire because of directors' close ties to Chairman Michael Eisner, underwent an overhaul. Former Senator George Mitchell (D-Me.) was elected presiding director. He will now hold at least two meetings a year without Eisner and other Disney execs. Remnants of the board's cozy relationship with the company remain, however: Disney said it was cooperating with a Securities & Exchange Commission inquiry into its disclosure that four board members had relatives working for the company.
Microsoft Is Not Out of the Woods
As the dust settles from Microsoft's (MSFT
) antitrust victory, the company is trying to douse some local brushfires. Massachusetts and West Virginia, which sought tougher sanctions than those agreed to by the feds, plan to appeal. And at a Dec. 3 hearing in a private antitrust suit filed by Sun Microsystems (SUNW
), a U.S. District Court judge called Sun's proposal to force Microsoft to carry its Java programming language inside Microsoft's Windows operating system "attractive." Microsoft carries Java in the latest version of Windows but plans to stop in 2004. Still, the skirmishes pose only a modest threat: The antitrust ruling leaves little room for appeal, and Microsoft's $40 billion in cash offers ample cushion for any penalties.
Et Cetera...
-- The SEC wants to crack down on accounting firms that sell tax advice to companies that they audit.
-- Consultant Segal Group expects prescription drug prices to rise nearly 20% next year.
-- A former El Paso Corp. (EP
) trader was indicted for allegedly reporting false trades.
CLOSING BELL
Braking
Navistar International (NAV
) hit the skids on Dec. 3, announcing a larger-than-expected quarterly loss. The Warrenville (Ill.) company also warned it will lose money this quarter and perhaps throughout 2003, thanks to a persistent slump in big-truck orders. Shares fell 12%, to $26, but rose to $27.90 on Dec. 4.
CLOSING BELL
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Copyright 2002, by The McGraw-Hill Companies Inc. All rights reserved.
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