AOL Teams With Hughes
America Online launched a new offensive in the broadband wars by announcing its plan to invest $1.5 billion in Hughes Electronics Corp. to promote satellite delivery of Internet services.
The move represents the biggest vote of confidence yet in satellites as a consumer broadband technology.
Right now, only about 40,000 U.S. consumers receive their Web access via satellites built by El Segundo-based Hughes. By comparison, 750,000 Americans get that service through cable modem systems.
AOL and Hughes, which initially teamed up last month to develop television set-top Internet boxes, believe satellites will eventually provide ultra-fast Web access to millions of consumers nationwide.
Hughes said it will use much of AOL’s investment to subsidize satellite dishes and installation costs for new customers.
Stores to Be Divested
Albertson’s Inc. reached an agreement with the Federal Trade Commission to divest 145 stores to complete its $9.8 billion acquisition of American Stores Co., which owns the Lucky and SuperSaver chains.
Albertson’s agreed to find buyers for 117 stores in California and other stores in Nevada and New Mexico to allay government antitrust concerns.
The divestiture is expected to significantly alter regional competition by allowing other major chains and independent operators to acquire stores in prime urban locations.
Under terms of the agreement, 31 stores will be sold to Commerce-based Certified Grocers of California, which in turn will sell those stores to select independent chains among its membership. In addition, 40 stores will be sold to Compton-based Ralphs Grocery Co., 43 to Stater Bros. and four to Vons Cos.
Albertson’s pending acquisition of American Stores will create the nation’s second-largest supermarket and drugstore chain.
Qwest Raises Offers
Qwest Communications International raised its unsolicited offer to buy US West Inc. and Frontier Corp. by about 5.5 percent, in an attempt to outbid rival suitor Global Crossing Ltd.
US West and Frontier, which earlier in the week rejected previous takeover bids by Qwest, said the revised offers would be reviewed.
Global Crossing, an undersea cable operator with executive offices in Beverly Hills, said it had no plans to up its offer for the two telecommunications firms.
Global and Denver-based Qwest have been in competition for the past month to buy US West and Frontier. Frontier initially rejected an $11 billion takeover bid by Qwest, while US West refused a $31 billion offer.
Global has offered stock worth about $44 billion for both firms. US West and Frontier both previously agreed to be acquired by Global.
Belmont Controls Urged
A team of scientists recommended costly measures to control contamination at the half-completed Belmont Learning Complex near downtown, and told the L.A. school board that abandoning the costly school project would be justified.
The district’s environmental safety team also called on the board to hold hearings on issues surrounding Belmont, including its cost, potential liability and management problems that allowed the project to proceed so far without environmental protections.
The team’s written report included 13 recommended measures to mitigate contamination and remove methane from beneath the site. The team previously estimated the measures would cost $4 million to $10 million to implement.
Feds Criticize Hollywood
A measure passed by the U.S. House of Representatives criticized the entertainment industry as irresponsible and called on Hollywood to eliminate gratuitous violence in programming that appeals to children.
But legislators failed to gather enough support to include a more-stringent proposal in the juvenile justice crime bill that would have mandated warning labels on violent movies, video games and music. The House also rejected a motion that would have made it a crime to expose children to certain graphic images.
The actions ended two days of debate over the impact of entertainment violence on children, a hot political issue since the school shooting in Littleton, Colo.
Still looming, however, is a Federal Trade Commission and Department of Justice inquiry into whether Hollywood targets young people in the marketing of violent entertainment.
Greece Investigates Litton
Litton Industries Inc. is being investigated by the Greek government to determine if the Woodland Hills-based defense contractor made illegal payments to win defense contracts in that country.
Officials at the Greek Embassy said investigators will look into whether Litton broke any laws when it paid $12 million in commissions to consultants regarding about $150 million in sales of F-16 fighter-jet equipment.
The U.S. Justice Department also is investigating Litton payments to foreign consultants and the reporting of those payments to the U.S. government in connection with sales to Taiwan, Greece and possibly South Korea.
Sempra Drops Bid
Suffering a setback in its strategy to become a major player in deregulated energy markets, Sempra Energy ended its $1.9 billion agreement to buy KN Energy Inc.
The announcement came four months after Sempra disclosed its intent to acquire KN, which is based in Lakewood, Colo. In a joint statement, officials with the firms said they no longer believe they could reach the business objectives they had initially anticipated through the acquisition.
People familiar with the deal said it ran into trouble after KN reported weaker-than-expected financial results for the first quarter, in part because of decreased demand for natural gas along its interstate pipeline.
Distribution Deal Reached
News Corp.’s Fox Filmed Entertainment will take over international distribution of Metro-Goldwyn Mayer Inc.’s films in the theatrical, home video and DVD markets.
The deal comes three months after MGM agreed to pay $225 million to end a previous distribution deal with Warner Home Video.
The Fox deal to distribute MGM’s 5,000-title library on video and DVD will become effective in February. Terms of the agreement were not released.
In addition, MGM and Fox will explore possible cable and satellite distribution ventures.
Also last week, MGM said it would take a second-quarter charge of $225 million to cut 5 percent of its workforce and shelve some film projects. The move comes two months after majority owner Kirk Kerkorian installed new top management.
Compiled by Danny Pollock
