In Business This Week: HEADLINER: JOHN KLUGE
Why did media investor John Kluge kill his deal to buy Alliance Entertainment for $533 million in stock? Insiders at Kluge-controlled Metromedia International Group say it's because Alliance, a distributor of vintage recordings by the likes of Mel Torme and Rosemary Clooney, no longer generated enough of what Kluge wanted: cash. He withdrew after fading music industry sales cut Alliance's operating cash flow to about $6 million in the first quarter, way below expectations.
Kluge had hoped to enlist Alliance in creating an MTV-style operation in Eastern Europe, and he still may try such a venture. Meanwhile, he is expanding his media empire at home. This summer, he hopes to close on the $115 million purchase of debt-laden Samuel Goldwyn film studio and the $32.5 million purchase of studio Motion Picture Corp. Insiders say Kluge won't be shopping for another music company anytime soon. But one says the billionaire may use his own or borrowed money, or even an equity offering, to fund a big entertainment or telephone deal.EDITED BY THANE PETERSON By David GreisingReturn to top
WILL USAIR FLY UNITED?
IN 1994, WARREN BUFFETT'S investment portfolio took a rare hit when he wrote down his stake in USAir to $89.5 million, or 25 cents on the dollar. Now another legendary investor, George Soros, thinks the airline is a buy again. According to SEC filings made on Apr. 29, a Soros group in mid-April bought 160,000 shares of USAir's Series B cumulative convertible preferred stock, raising its stake to 5.13% of USAir's preferred, worth $800,000. The shares, if converted to common stock, would give Soros less than a 1% stake in USAir. The investment signals confidence in Stephen Wolf, USAir's CEO, whom analysts expect to sell or merge the airline. Buffett still owns 358,000 USAir nonconvertible preferred shares redeemable in 1999.EDITED BY THANE PETERSONReturn to top
DWINDLING CASH AT APPLE
THE OUTLOOK REMAINS stormy at Apple Computer. On Apr. 29, CEO Gilbert Amelio told analysts that Apple would continue to burn money for at least another six months. With cash already down to $592 million from $952 million six months earlier, the company plans to announce new financing measures in mid-May--a necessity given the piddling three-month extension it recently won on $400 million in maturing debt held in overseas subsidiaries. Researcher Dataquest figures Apple's PC market share fell to just 5.8% in the first quarter.EDITED BY THANE PETERSONReturn to top
A $20 MILLION NUCLEAR HIT
EVERYONE KNOWS RUNNING nuclear power plants can be costly. Houston Lighting & Power found out how costly on May 1, when it agreed to pay the city of Austin, Tex., $20 million. The out-of-court settlement ends a suit over HL&P's day-to-day running of a $6 billion, 2,500-megawatt Bay City (Tex.) nuclear plant. Austin, a minority owner of the plant, sought damages for having to spend $51 million to replace power lost in a yearlong shutdown.EDITED BY THANE PETERSONReturn to top
GREENBERG'S BOOK IS ACES
SOUNDS DEADLY: A COLLECtion of an executive's memos from the past 20 years. But Memos from the Chairman, the new book by Bear Stearns CEO "Ace" Greenberg, is doing fine. After a second printing, 43,000 copies have been put out, 7,800 of them for Bear Stearns. Greenberg, who holds a business degree from the University of Missouri, said at an Apr. 29 book signing near Wall Street that he hopes his tome will convince readers that common sense is all it takes to succeed on Wall Street. "If I can help somebody who didn't go to an Ivy League school--or any college--get a job, I'll be happy."EDITED BY THANE PETERSONReturn to top