Comcast Launches Surprise Bid for Disney
The country's largest cable television company launched a surprise takeover bid for Walt Disney Co., a move that could endanger the stewardship of Michael Eisner as chairman of the Burbank-based entertainment giant.
The timing of the unsolicited offer by Comcast Corp. of Philadelphia could not have been worse for Eisner, who has been under fire from critics for his management. He had planned to trumpet recent strong earnings and stock growth during a gathering of Wall Street analysts in Florida.
Instead, Comcast Chairman Brian L. Roberts spoiled the party by disclosing that the cable company had initiated the unsolicited bid, valued about $49 billion as of Friday's market close, to create the world's largest media company in terms of revenue.
Indications from both Comcast and sources close to Disney's board were that the company probably would reject the offer, setting the stage for a potentially bitter battle.
In remarks to investors, Eisner said the board had requested an analysis of the bid from Disney's managers and advisors.
Tower Records Seeks Bankruptcy Protection
Tower Records, a pioneer of the music megastore, filed for bankruptcy protection -- a high-profile casualty of the market forces that have undermined the music industry in recent years.
The chain of 93 U.S. stores, owned by privately held MTS Inc., will stay open for now.
Tower is the latest major music retailer to fall on hard times. The pressure has been mounting since deep discounters began elbowing their way into the music business a decade ago. At the same time, sales have plunged amid widespread illegal downloading of music from the Internet and other forms of piracy.
Under the reorganization plan filed in Delaware, the family of founder Russ Solomon would be forced to relinquish all but 15% of the West Sacramento-based company. Investors who own bonds would receive a collective 85% stake.
Tower executives said they expected to emerge from Chapter 11 within 60 days.
Pimco Mutual Funds May Face Charges
The Pimco mutual fund group, one of the biggest names in the financial services industry, was told by federal regulators that it might be charged with wrongdoing in the mushrooming fund-trading scandal.
Newport Beach-based Pimco, the nation's fifth-largest mutual fund family, disclosed that it received formal notice from the Securities and Exchange Commission that it might face civil charges related to an allegedly improper market-timing arrangement. The company also acknowledged that it had permitted market timing to take place in three of its stock funds in 2002. Yet it stressed that investors suffered no losses.
According to people familiar with the inquiry, the SEC and New Jersey are investigating whether Pimco allowed Canary Capital Partners to market-time some equity funds. The SEC declined to comment.
Pimco made its disclosures after inquiries from The Times.
Fed Chairman Warns of Barriers to Growth
A strengthening U.S. economy should begin creating more jobs soon but future growth could be slowed by ballooning deficits and creeping protectionism, Federal Reserve Chairman Alan Greenspan said.
Greenspan, in his semiannual economic assessment to Congress, urged lawmakers to take steps to narrow the federal budget shortfall and resist pressure to restrict international trade.
In an important signal to financial markets, Greenspan said the central bank would continue to be "patient" before raising its benchmark short-term interest rate. His comments buoyed securities markets.
Greenspan predicted that businesses would soon find it increasingly difficult to respond to rising demand without hiring more workers.
SEC Announces Rules on Fund Fee Disclosure
The Securities and Exchange Commission, seeking to rebuild public faith in the scandal-tainted mutual fund industry, called for banning special incentive payments to brokers and ordered that funds disclose more about fees charged to investors.
Under the new rules, adopted unanimously, mutual fund companies must disclose their holdings quarterly, instead of twice a year. In addition, funds will have to tell shareholders twice a year about the typical costs associated with a $1,000 investment.
Also, the SEC proposed that fund boards provide shareholders more information about the advisory fees they approve.
In their proposal on special incentive payments, regulators moved toward banning arrangements in which fund firms reward brokers who distribute their funds.
Stewart Wins Motion to Block Expert Testimony
A federal judge dealt a blow to the government's effort to prove Martha Stewart committed securities fraud when she publicly proclaimed her innocence amid an investigation of a stock sale.
U.S. District Judge Miriam Goldman Cedarbaum blocked expert testimony on whether investors in Stewart's homemaking empire would have considered her public statements about her ImClone Systems Inc. sale important.