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Latest rescue plan: This time the government wants to team up with the private sector to purchase those toxic bank assets. The idea is for the government to supply seed money and for investors to buy a stake in the entity, which would then buy mortgage-backed securities and other troubled assets. From the WSJ:
The Obama administration views the private bank as a way to get around the thorny issue of having to determine a price for soured assets such as certain mortgage-backed securities, many of which are illiquid and hard to value. The government has long worried that if it bought toxic assets and paid too much for them, banks would benefit at the expense of taxpayers -- while if the price was too low, it would force banks to take further write-downs and exacerbate their woes.
Ugly earnings picture: Profits at big U.S. companies fell 32 percent last year, the biggest decline in at least 20 years. From the WSJ:
This year, analysts expect health care, which is generally immune from economic downturns, to be responsible for the largest percentage of earnings in 2009, with about 17% of the per-share results. The consumer-staples industry, spanning companies like Coca Cola Co. and Wal-Mart Stores, is expected to account for 12.5%. "It's going to be a nuts-and-bolts kind of year -- nothing with flair will outperform," says Chris Johnson, chief investment strategist at Johnson Investment Research in Cincinnati.
Live Nation-Ticketmaster deal close: Both boards met last night and a merger agreement is likely to be announced either late today or tomorrow. The new company, expected to be called Live Nation Entertainment, would dominate the concert business, from promotion to ticketing. It's about a 50-50 merger with little or no premium for either company’s shares. (NYT)
DreamWorks deal with Disney: Also expected today is a movie distribution agreement between the Mouse House and Steven Spielberg's DreamWorks SKG. Late last week, Universal pulled out of a similar deal with DreamWorks. From the WSJ:
Under the deal to be announced, the Burbank, Calif., entertainment company will distribute about six movies a year for DreamWorks, and also will likely provide financing in the form of a loan or some line of credit of at least $150 million. In exchange for handling the costs of printing and marketing DreamWorks movies world-wide, Disney would collect a distribution fee of at least 8% from DreamWorks, according to people familiar with the details. DreamWorks will also get access to programming opportunities on Starz Entertainment, the cable channel that already buys rights to air several Disney films a year.
Doug Allen fired - again: The SAG board took the action after an earlier, more ambiguous move prompted guild president Alan Rosenberg to challenge the firing in court (unsuccessfully). Contract talks with the studios and networks could resume as early as next week. Sunday’s vote generated support from 59 percent. (Variety)
Home prices keep falling: January's median price in L.A. County was $320,000, down 35 percent from a year earlier, according to HomeData Corp., which supplies numbers to the Business Journal. The downturn is becoming more noticeable at the high end, with areas like Santa Monica and Malibu showing substantial price drops.
Save the Times: Downtown News owner Sue Laris says it's time for new ownership, "someone who can figure out how to pull the Times intact out of Tribune's bankruptcy, someone who cares deeply about the city, someone for whom managing wealth has become an empty exercise, because it would indeed require putting significant wealth on the line and not looking for much of a monetary return on that wealth." She fears that the place is going down, fast.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.