In Business This Week: HEADLINER
JOHN BRYAN: A FINGER IN FEWER PIES
John Bryan is hoping that investors believe less is more. On Sept. 15, the Sara Lee chairman and chief executive announced a plan to "deverticalize." That means the conglomerate will sell some $3 billion of its assets, including some manufacturing operations and entire divisions. Bryan will use the money to buy back stock and beef up marketing of his remaining brands, which range from pound cake to Hanes underwear.
Bryan has good reason to make a change. Although Sara Lee has been generating record profits, Wall Street has remained decidedly unimpressed, and Sara Lee's stock has been languishing. "We were pretty boring to Wall Street, and there was a clamor to do something," he says.
Bryan is hoping the new Sara Lee will seem a lot more like Nike, Coca-Cola, and Polo/Ralph Lauren--all of which put more of their resources into marketing and outsource manufacturing. "Brands are the absolute key," he says. So far, so good: Sara Lee's stock rose 14%, to 48 9/16 on the news. By Rick Melcher EDITED BY KELLEY HOLLANDReturn to top
DIET DRUGS' DISAPPEARING ACT
AMERICAN HOME PRODUCTS may be looking for a few good lawyers. On Sept. 15, the company announced it was withdrawing its obesity drugs Pondimin and Redux after a wave of troubling reports on potentially life-threatening side effects. The final straw: Data collected by the Food & Drug Administration that showed 30% of a group of 291 patients who had taken either of the drugs, most often with another weight-loss drug, were found to have abnormal heart function. The move, which will cost the company up to $300 million, is already triggering lawsuits--and the cost estimate does not cover any potential legal liability for American Home. A spokesperson for American Home says it will defend itself against any such litigation.EDITED BY KELLEY HOLLANDReturn to top
FAST-TRACK MAY HIT A SLOW PATCH
DEFYING LIBERAL DEMOCRATS, President Clinton asked Congress on Sept. 16 to renew his authority to negotiate trade accords. He rejected demands by labor and environmental groups that safeguards for worker rights and the environment be in all future deals. But the White House pledged to pursue side agreements on those matters. Still, House Democratic leaders said they would oppose the initiative. The White House hopes to get the so-called fast-track trade bill passed with help from the GOP and Democratic moderates. EDITED BY KELLEY HOLLANDReturn to top
ALL THE KING'S DEALS
IT'S LET'S-MAKE-A-DEAL TIME for King World Productions, distributor of such game shows as Jeopardy! and Wheel of Fortune. First, King World inked a two-year, $130 million contract to keep talk show host Oprah Winfrey from leaving next year. Then, King World settled a bitter lawsuit with Sony so the two companies could launch a revival of Hollywood Squares. Now, King World may be looking at acquiring All American Communications, distributor of The Price is Right and Baywatch. All American has said it is talking to potential buyers. EDITED BY KELLEY HOLLANDReturn to top
THE PRINCE AND THE POP STAR
SAUDI BILLIONAIRE PRINCE Alwaleed bin Talal and superstar singer Michael Jackson, partners for the past two years in Kingdom Entertainment, are teaming up with Sony Music to create a new music label. Alwaleed, who has a personal fortune of $13 billion and major investments in Citicorp, Apple Computer, and TWA, will provide as much as $70 million in startup capital while Jackson will draw in new acts and fold in his current MJJ Music. Last year, the two investors purchased a 50% interest in theme park developer Landmark Entertainment Group. EDITED BY KELLEY HOLLANDReturn to top