Column: California Inc.: State regulators to look at Frontier’s takeover of Verizon lines
Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I’m Business columnist David Lazarus, and here’s a rundown of upcoming stories this week and the highlights of last week.
We learned Friday that economic growth at the start of the year wasn’t as bad as initially estimated, boosting the chances that Federal Reserve policymakers will raise a key interest rate next month. The nation’s total economic output — a.k.a. gross domestic product — increased at a 0.8% annual rate from January through March. Though that was still weak, it was an improvement over the initial estimate last month of 0.5%, which would have been the worst quarterly performance in two years.
LOOKING AHEAD
Powerful plans: The Vallejo City Council will vote Tuesday on whether to green light a new electric-car plant in the city. Faraday Future, the Gardena-based electric car company, hopes to take over a 157-acre parcel on the area’s Mare Island and begin building cars within two years. The new facility could help Faraday better compete with Tesla, as well as attract talent and technology from nearby Silicon Valley. Faraday says it would use the space for vehicle construction and corporate offices, as well as a “customer experience and delivery center.”
Frontier issues: The California Public Utilities Commission will hold a public hearing Wednesday in Long Beach to address problems related to last month’s takeover by Frontier Communications of Verizon Communications’ landline phone, television and Internet service systems in the state. As many as 10,000 subscribers have been grappling with phone and Internet outages and other snafus. Customers have been fuming over missed appointments by technicians and delays in accessing movies ordered months ago when Verizon was in charge of the system. The meeting begins at 4 p.m. at Long Beach City Hall.
Uber drivers: A federal court in San Francisco will hold a hearing Thursday on preliminary approval of Uber’s proposed $100 million settlement with drivers in California and Massachusetts who had sought to be classified as employees. The settlement would involve 385,000 drivers. Objections have been growing to the deal from drivers who complain it would not resolve the question of whether they are employees of Uber — a classification that would entitle them to benefits such as minimum wage, overtime, unemployment insurance and Social Security payments.
Tribune stock meeting: The battle for control of Los Angeles Times parent Tribune Publishing could take a key turn Thursday when shareholders gather for the company’s annual meeting. USA Today publisher Gannett Co. launched a hostile bid for Tribune last month and has asked shareholders to withhold votes for a slate of board nominees that is opposed to the takeover plan. That’s a symbolic gesture that, if taken up by enough shareholders, could push the company to negotiate with Gannett. The votes will be tallied at the meeting.
Employment update: The Labor Department will release the latest jobs report Friday. Analysts expect the report to say the economy created about 160,000 net new jobs in May, the same disappointingly slow growth as occurred in April. Monthly employment growth has averaged 192,250 in the first four months of the year, a slowdown from the 229,000 average in 2015. The unemployment rate is forecast to stay at 5%. In March, Federal Reserve leaders predicted the unemployment rate would fall to 4.7% by the end of this year, and to 4.6% in 2017.
THE AGENDA
Monday’s Business section focuses on virtual reality — specifically, the burgeoning market for VR cameras. Big-name brands such as Samsung, Ricoh and Kodak are among the players jockeying for consumer mindshare. The opportunity before them is potentially huge. Deloitte Global predicts the VR industry will crack $1 billion for the first time this year, with $700 million of that coming from hardware such as headsets, cameras and computers. By 2020, the industry could top $30 billion, according to Digi-Capital. The wild card: content. Where will it come from?
STORY LINES
Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:
Paper trail: The Santa Monica consumer group that prompted an investigation into contacts by a top aide for Gov. Jerry Brown with regulated utilities earlier this year has built a searchable public database of thousands of emails between state regulators and utility executives. The emails, released under the California Public Records Act and as part of the utility’s response to the 2010 gas pipeline explosion in San Bruno, were posted by Consumer Watchdog on PUCPapers.org. The California Public Utilities Commission has been under investigation since 2014 for its handling of the San Bruno explosion as well as the closure of the San Onofre Nuclear Generating Station in 2012.
Taking center stage: Shari Redstone has long been on the sidelines of her father’s $40-billion media empire. But in the last month she has emerged as a central figure in the battle over the future of Viacom Inc. and CBS Corp. The 62-year-old vice chair of the two media companies was widely suspected as the force behind Sumner Redstone’s unexpected decision last week to oust his longtime lieutenant, Viacom Chief Executive Philippe Dauman, from the trust that will eventually determine the future of CBS and Viacom. Her influence was further underscored when two of her allies were named to the trust that will eventually oversee the Redstone family’s nearly 80% voting stake in Viacom and CBS.
Prime probe: The U.S. Justice Department has joined a whistle-blower case against Prime Healthcare Services, adding significant weight to allegations of widespread Medicare overbilling at 14 of the company’s hospitals in California. A Los Angeles magistrate judge granted the agency’s request to intervene in the case a day after the government declared in a court filing that its investigation of the Ontario-based hospital operator has “yielded sufficient evidence” that the facilities “submitted or caused the submission of claims to Medicare for unnecessary inpatient stays.”
Millennial market: Yet another challenger has stepped into the fray that is the Southern California grocery store market. Whole Foods Market Inc.’s first smaller format store — 365 by Whole Foods Market — opened in Silver Lake. The upscale grocery chain plans to open 12 more of these smaller concept stores over the next two years across the nation. The biggest selling point at 365 is lower prices, which company executives hope will attract people who wouldn’t normally shop at the more expensive Whole Foods. To attract younger shoppers and keep prices down, the 365 stores also will have more technology in place to help shoppers find what they want.
No satisfaction: It’s easy to snicker about the geriatric nature of a music festival featuring Paul McCartney, the Rolling Stones, Bob Dylan, the Who, Neil Young and Roger Waters. But the October summit of rock royalty in the Southern California desert is a serious business for concertgoers, who are paying big bucks for tickets. It’s also sure to be a little rough on the hips, backs, knees and necks of some audience members who have seen younger days. So it’s no small matter that the organizer, Goldenvoice, has quietly backtracked on an earlier promise that people could bring folding chairs to the event.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
Plenty of cheddar: Some say Disney has done a poor job of managing its licenses in the digital era. But, says REDEF, “not only is Disney’s future bright, it’s closer than ever to fulfilling Walt’s own vision for the storied House of Mouse.”
Profit hungry: Wasted food is becoming a big business. As the New York Times reports, “several startups are chasing ways to use food waste to make other edibles. Some are aiming to quickly distribute food that is about to be thrown out. And yet others are working to use every last ounce of ingredients.”
Lesser Kardashians: Bloomberg explores Snapchat’s influencer economy. “They’re a curious group of former child stars (e.g., Hilary Duff), lesser Kardashians and obscure up-and-comers ... who carve out careers as social media salespeople.”
Targeted marketing: Subaru was struggling to sell cars. Then, according to Priceonomics, the carmaker focused on lesbians. “It was such an unusual decision — and such a success — that it pushed gay and lesbian advertising from the fringes to the mainstream.”
Power lunch: How much does it cost to have lunch with Warren Buffett? MarketWatch crunched the numbers from the billionaire’s annual charity offering. You’ll want a few million on hand if you want to play along.
SPARE CHANGE
Speaking of lunch, there’s no shortage of excellent lunch scenes in movies. For instance, in no particular order, these tasty treats from “The Breakfast Club,” “Back to the Future” and “The Wolf of Wall Street.”
For the latest money news, go to www.latimes.com/business. Until next time, I’ll see you in the Business section.
David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to [email protected].
