The Los Angeles Times from Los Angeles, California • Page 52

D2 WEDNESDAY, MARCH 30, 1994 LOS ANGELES TIMES Viacom, Cable Giant TCI Discuss Joint Venture BRIEFLY Southwestern Bell, and one source insisted Tuesday that TCI is not the only company that Viacom is talking to now. COMPANY TOWN ANNEX Breslauer Management Firm Disbanding: A spokesman confirmed a report in Daily Variety that partners in the elite Hollywood business firm Breslauer, Jacobson, Rutman Chapman which has as clients such top entertainment talent as director Steven Spielberg and musician Bruce Springsteen are splitting up. The spokesman said it is his understanding that partners Gerald Breslauer, Joel Jacobson and Mickey Rutman will move to the firm Siegel, Feldstein, Duffin Vuylstekem, while partners Nancy Chapman, Terry Byrd and Bonnie Grey are expected to form their firm. third stake in the cable TV channel, Lifetime, to partners Capital Cities ABC and Hearst Corp. for $317.6 million.

By spinning off assets, observers said, Viacom is signaling Blockbuster Entertainment that it doesn't need the home video retail giant's money badly enough to renegotiate the merger agreement it made during the Paramount takeover battle. The Viacom-Blockbuster merger appears stalled over Blockbuster's effort to extract richer terms. Any deal between TCI and Viacom would be designed to settle out of court the acrimonious antitrust action Viacom filed last fall against TCI in the heat of the Paramount takeover battle. The suit is considered potentially damaging to TCI because it lays bare the alleged monopolistic practices of the nation's largest cable operator that have already caught the attention of federal regulators. TCI would benefit by pooling its suburban holdings near San Fran Television: The deal would allow Viacom to generate needed cash, and would give TCI access to big-city markets.

By KATHRYN HARRIS and JOHN LIPPMAN TIMES STAFF WRITERS Viacom Inc. and Tele-Communications Inc. are discussing forming a joint venture to pool Viacom's cable TV assets with some of those of TCI, sources said Tuesday. The deal, which would involve 1.1 million Viacom subscribers, would allow Viacom to generate the cash it needs to reduce debt it has taken on to buy Paramount Communications. The Viacom cable systems have been valued at $2.2 billion.

Viacom appears eager to shed assets that are not crucial to its ongoing operations. On Tuesday, the company said it sold its one- BMG to Distribute Crystal Dynamics' Multimedia: BMG International will make its first foray into multimedia distribution with interactive games produced by Crystal Dynamics, the two firms said. Under the deal, BMG will handle marketing and distribution for Crystal and for Star Interactive a multimedia publishing start-up still in the planning stages which will have an exclusive distribution agree ment with Crystal in all markets outside of North America. BMG is one of several big players from the traditional entertainment arena that have announced plans to get into the distribution end of the rapidly expanding multimedia industry in recent weeks. Crystal is a Silicon Valley start-up run by former 20th Century Fox president Strauss Zelnick.

Zelnick, who does consulting for BMG, denied the persistent rumors that he is planning to take an executive position at the media conglomerate. AIRLINES Air Fare Sale Spreads Across Continental United States: Led by Trans World Airlines, the country's fare sale to more of the country, three The sale was started by USAir last U.S. Consumer Confidence Hits 4-Year High in March fares of $198, $298 and $398. The cheapest fares apply to flights between Eastern cities and Florida, the $298 fares are for trips between the East and Midwest and the most expensive tickets are for transcontinental trips. United Airlines said it has applied the discounts to virtually its entire system in the continental United States, while Delta said it has adopted the sale in most markets.

American Airlines said it will match where it competes with the St. Louis-based airline. Lorenzo Offered a New Hearing: A proposed new airline founded by Frank Lorenzo is getting a chance for a second certification hearing from the Transportation Department. The firm, ATX charged that the Transportation Department's review was preju diced because an attorney on the department public council staff has a brother who is a member of the Air Line Pilots an opponent of ATX's application. Transportation Department offi cials denied any prejudice, but offered to start the review process from scratch.

An administrative law judge has earlier recom mended that ATX Inc. be found unfit, in part because of the involvement of Lorenzo in the airline's operations. Lorenzo was previously a principal in Continental Airlines and Eastern Air Lines, where he fought battles with HEALTH cisco, Seattle and Nashville with Viacom's urban franchises in those three markets. Industry sources speculate that TCI and Viacom might combine their costly pay-TV services Encore and Showtime as part of the settlement. Finally, Viacom might also extract a pledge from TCI not to join with its music video rivals who are planning to launch channels to compete with Viacom's lucrative MTV operation.

But the deal will only go forward if Viacom concludes that the venture will provide cash and defer taxes. The tax ramifications are still being studied, one knowledgeable source said. Both before and after the Paramount takeover battle, Viacom has searched for ways to wring new cash from its cable holdings, which rank 13th nationally in subscribers. The division generates about $200 million annually in cash flow. Last summer, for example, Viacom considered a proposal to form a venture with Crown Media and Consumer Confidence From a monthly survey of 5,000 U.S.

households. Index: 1985 -100. 90r MAMJJASONDJFM t- 1993 1994 Sowce: Conference Board boa Angeles Times DRI-McGraw-Hill a Lexington, economic forecasting firm, attributed the jump in confidence to stepped-up hiring by companies. "We are seeing some decent employment increases recently," he said. "That's the major item in consumer confidence for the average American." Downsizing long-term government bonds and earn profits to repair their balance sheets.

Meanwhile, the bad real estate loans are being placed in separate subsidiary companies Resolution Trust Corps, by another name and sold off to private investors at discounts. Amid all of this, Prime Minister Morihiro Hosokawa is trying to change the political system to make government more responsive to urban voters and consumers. And he is encountering fierce opposition, with political opponents investigating his tax returns-shades of his opposite number, President Clinton. "Tcall Japan a clone of the A United States," says a Japanese investment manager who finds deja vu reassuring. He notes that many of the problems Japan is facing today have been dealt with in the last decade or so by U.S.

business and government. And, just as predictions of doom regarding the mess, competitiveness or bank loans proved wrong here, so Japan's economy and society are likely to emerge stronger from their present trials. Maybe that's why some U.S. pension and mutual fund managers are investing in Japan's market today, as alarmists worry about trade wars and stocks tumble in both countries. Long-term investors know from experience that worry is loud, but progress is quiet.

I I I I I I I I I I I 1 P-h 45 61.9 flM 30 -j. 15 LI I. 1 1 Mentor May Continue to Sell Breast Implants: Mentor Corp. said it may continue to manufacture and sell silicone-gel breast implants in light of a pending settlement that other manufacturers have reached with women who have had implants. The Santa Barbara-based medical devices company, the only firm selling silicone implants in the U.S., agreed to quit marketing them by 1995 as part of a $24-million settlement of hundreds of lawsuits against the company.

The agreement, however, allows for Mentor to continue selling silicone gel implants if a separate global settlement of implant lawsuits allows another company to market them. Mentor said it understands that other manufacturers may continue to sell gel implants as part of the global settlement that women and their lawyers reached with Dow Corning, Baxter International and other firms. IS At the center of the deal would be a pooling of Viacom's arid TCI's systems in areas where the two operators are the major cabje TV providers. Viacom and TCI have already worked together to coordinate construction of! fibpr loop to serve both the Seattle arid San Francisco markets. 1 Although a deal with TCI would close the Viacom lawsuit, it might not be the end of TCI's legal woqs.

In a separate development, a spokesman for the attorney general's office in New York confirmed Tuesday that it launched an antitrust investigation late last yer into TCI-backed Teleport Communications Group, which operates an alternative access telephone service for businesses. Cox Enterprises, Continental Cable and Comcast, three other large cable operators, also have stakes in Teleport. Kemper Execs Severance Plan i Takeover: The top 13 managers are protected by golden parachutes worth! $19 million, a plan passed when directors rejected GjE Capital's bid. From Reuters CHICAGO The top executives at Kemper Corp. may be temptjed to sell the company the target of a hostile $2.35 billion takeover by GE Capital Corp.

because thjey have golden parachutes worth more than $19 million, analysts said Tuesday. "This will help cushion the bjow to Kemper management if GE takes over and it may also preclude Kemper from fighting for conjjql," said Michael Lewis, an analyst with Dean Witter. "It won't atop GE from moving forward." in The rich compensation the top 13 executives takes effect in the event the company is sola. It was adopted by Kempej's executives on March 17, when its board unanimously rejected a proposal by the General ElectriciCo. unit to buy Kemper for $55 a shaj-e, calling it a "low ball" offer.

The Long Grove, Ill-based asset management firm disclosed existence of the golden parachutes in a proxy statement sent Moniay to shareholders. The plan does not need shareholder approval. "The fact that Kemper's management can cash out anytime reduces their incentive to holiiout for a higher bid," said Mark Mftfih-ell, a University of Chicago finance professor. That's because Kemper's directors and executive officers a relatively small stake in the company, he said. According to the proxy statement, 11 out of 15 directorsarid executives held less than fp of Kemper's shares as of Feb.

biggest stake any single individual held was 4.6. vi "It's just protection for management in case they lose the battle," Lewis said. "My guess is that thre would be a pretty good house-cleaning if GE took over." The compensation plan is evidence that Kemper's management is coming to the realization hat GE, flush with cash, is eventually going to get what it wants, saidpne shareholder. "But the company shouldn't enrich management at shareholders' expense, he added. Kemper's shares were off .37.5 cents at $60,625 at the close of trading on the New York Stock Exchange, and General Electric's stock was down $1,875 at $102,375.

cheaper on foreign markets. That, in turn, would create more manufacturing jobs. Such a devaluation is not likely. But, even without such sweeping measures and despite last year's recession, most Mexico experts'fex-pected the country to bounce back with economic growth of 3uor more in 1994. "For most of us who look at Mexico on a daily basis, things have been looking up lately," said Lawrence Krohn, an emerging markets analyst with Lehman Bros.

biggest carriers spread an air days before the offer expires. week and offers round-trip TWA expansion in markets unions. Both went bankrupt. NEWS AUTOS From Associated Press NEW YORK American consumer confidence in the economy hit a four-year high in March, a sign that the United States is headed for a "reasonably vigorous economic expansion," the Conference Board said Tuesday. The business research group said consumers expressed more positive views about the present, and even more upbeat expectations about coming months, in a widely followed monthly survey on consumer sentiment.

Economists noted that the numbers had risen despite publicity about the Whitewater affair that has dogged the Clinton Administration. Allegations of the Clintons' impropriety in pre -presidential land dealings, which have unsettled financial markets, evidently aren't playing a role in how sumers are behaving. But economists who follow the Conference Board data said rising interest rates and a fading stock market could blunt any further rise in its measurement of consumer confidence. FLANIG AN: Continued from Dl The discount store phenomenon is growing rapidly, attracting customers and the attention of international investment managers. Michael Steinberg, who analyzes Japanese stocks for Nomura Securities in New York, likes Kato Denki, an electronics chain that sells Panasonic, Sony and other brands at a discount because it buys in volume from the manufacturersa standard practice in U.S.

retailing but revolution in Japan. Michael Lindsell, the Tokyo-based investment manager for GT Global Japan Fund, favors Auto-bacs 7, a company that is able to sell automobile accessories at half its competitors' because it imports Japanese auto parts from plants in Asia or the United States or it gets volume discounts from manufacturers in Japan. Discounting is not a simple matter in Japan. On one hand, it is directly related to U.S. trade concerns.

Japan used to be the land of controlled markets and prices, which gave Japanese companies high profits in the home market to make them more competitive abroad. Now, companies can't raise prices to earn profits, so they are being forced to cut costs. And that is leading to downsizing and layoffs and a shift in the informal Japanese retirement sys-, tern. Japan's multiple-layered and controlled retail markets served as GM to Take Charge Against 1994 Earnings: General Motors Corp. announced it will take a $758-million hit against 1994 earnings to adopt a new accounting standard.

GM officials say that despite the heavy onetime financial blow, they plan to be profitable this year. The No. 1 U.S. auto maker posted $2.5 billion in 1993 profits after years of staggering losses. The $758-million charge, or $1.05 per share, will be taken in the first quarter of 1994.

TECHNOLOGY Amdahl Forms Alliance: The manufacturer of large-scale computers said its alliance to develop new database servers was a preemptive strike against rival IBM, which will announce its own server next week. Servers are computers that provide file storage andor database access for a group of personal computers hooked together on a network. Amdahl also launched a broad range of new products as part of a new strategy for supporting its existing system390 data server. Amdahl joined forces with software maker Oracle nCUBE and Information Builders Inc. to deliver the first advanced database servers employing massively parallel processing technology, which uses hundreds of thousands of processors to offer more power and speed than common servers.

The Conference Board's index of consumer sentiment rose from 79.9 in February to 86.7 in March, the highest reading since July. 1990. The index, which uses a 1985 base of 100, is derived from a survey sent to 5,000 households nationwide that solicits answers to questions on subjects that range from appliance purchase plans to local job conditions. Economists and financial market players see the consumer confidence index as a barometer of consumers' willingness to borrow and spend money. Consumer spending is thought to account for about two-thirds of economic growth.

Fabian Linden, executive director of the Conference Board's Consumer Research Center, noted the consumer confidence reading was 26 points higher than it was last October. "Such an impressive increase in confidence suggests that we may well be on the way to a sustained and reasonably vigorous economic expansion," he said. J- David Wyss, an economist at. Japan Facing a kind of retirement plan for a system from which employees retire at age 55 with only small pensions. Jobs in small shops were a way for retirees to earn income, but such mom-and-pop stores can't survive in the competitive environment now growing up in Japan.

Major layoffs have not yet hit the big companies, says Lindsell. But almost 70 of Japanese employees work for smaller firms, and more than 100,000 people are losing their jobs each year because small companies are going bankrupt, writes Alexander Kinmont, Tokyo-based investment strategist for Morgan Stanley. Why has Japan's economy, which seemed impregnable a few years ago, hit such difficulties? Because the money stopped, just as it did in the United States when banks and ran afoul of bad loans. In Japan, where real estate prices were bid up to giddy heights a square block of Tokyo was said to be worth as much as all of California problems were inevitable and have turned out to be huge. The major banks have been left with an estimated $250 billion of bad loans, a sum greater than all the losses in the American mess.

Japan's response has mirrored that of the U.S. government. The Bank of Japan, the equivalent of the Federal Reserve, is lowering short-term interest rates so banks can borrow cheaply, invest in based on healthy public finances that will directly benefit the standard of living of all Mexicans." Economists reacted favorably to Zedillo's designation as a sign of continuity from the Salinas regime. There was also approval though restrained from investors. The Mexican Stock Exchange, which had dropped 3 Monday and continued downward in early trading Tuesday, rebounded with the news that Zedillo was named.

Zedillo "is the best candidate that PRI could get under these conditions," said Josue Campos Campuzano, an economist with the Wharton Econometric Forecasting a Philadelphia-based think tank that studies Mexico. "He knows the politics and the economics of the old guard and of the avant-garde of the PRI. He will work to consolidate them." Whatever his policies, Mexico's AEROSPACE Lockheed Corp. to Cut 2,000 Jobs: The aerospace concern said its aeronautical systems unit will make the cuts by the end of 1995, reflecting further phaseouts of Pentagon programs that had been its mainstays. The cuts, scheduled to begin this summer, amount to about 17 of the unit's work force and about 2.5 of parent Lockheed's .83,500 employees.

It will be the largest staff reduction at the unit since it eliminated half its work force in 1989, when the C-5 military cargo plane ceased production, said Doug Oliver, a Lockheed spokesman. The cuts will be through both attrition and layoffs, he said. OTHER MEXICO: Social Concerns to Face the Next President' Prices Up at Second Acid Rain Credits Auction: Proponents of market-based environmental rules praised the results, announced by the Chicago Board of Trade, of the U.S. Environmental Protection Agency's second annual auction of rights to emit acid-rain forming pollution. CBOT officials and the Environmental Defense Fund, an environmental group, said that the increased number of buyers, mostly electric utilities, and the prices paid up from an average of $156 last year to $159 per ton of allowed sulfur dioxide emissions after 1995 showed that the process is working.

Trading is meant to encourage utilities to lower their emissions even faster than federal regulations require, while giving utilities more flexibility in meeting those rules. N.J. Official Named to Private Gaming Post: Players International Inc. said that Steven P. Perskie will resign as chairman of New Jersey's Casino Control Commission to be a vice president, general counsel and a director of the Lake Charles, La.

-based company. It said Perskie will concentrate on developing new projects and fill the board vacancy left by the resignation of Stanley Fishman, brother of Players Chairman Ed Fishman and Vice President David Fishman. Bankruptcy Filings Fall In Fourth Quarter: Americans filed fewer bankruptcies from October through December than they have during any quarter in more than three years, the government said. The Administrative Office of the U.S. Courts said the number of filings totaled 206,570, a 4.1 drop from the July -September period and the smallest number since 192,555 were recorded in the third quarter of 1990.

The decline contributed to a 9.9 drop in bankruptcies for 1993, to 875,202 from 971,517 in 1992. Filings fell in each of the 12 judicial circuits. From Times Staff and Wire Reports next president will be much more subject to outside political pressures and less free than Salinas to impose technocratic solutions, said Rudi Dornbusch, professor of economics at Massachusetts Institute of Technology. "Economic issues are going to be far more politicized than in the past," Dornbusch said. "Democracy has arrived and that makes economic policy-making much harder.

Remedies to poverty will be far more important and politicized than in the past six years." "Mexico will become a real country. It's been the dream of a technocrat for the last six years," Dornbusch said. Advice? Dornbusch of MIT said his suggestions to the new president are an immediate 30 devaluation of the Mexican peso, a move that would create more demand for Mexican goods by making them Continued from Dl progress in achieving stability has paved the way for greater spending on health, education, bridges and roads," said Salomon Bros, economist Larry Goodman. Zedillo, a 42-year-old Yale-educated economist who served Salinas as minister of budget and MAIN STORY: Al planning before leaving to direct Colosio's campaign, on Tuesday spoke of the need to more equitably distribute the nation's economic gains. In accepting the PRI nomination, he pledged to "greatly enhance regional development in every region of the country, particularly those which have been left behind in the greater advancement of the country." He also promised to "further an economy of certainty For the Record vi Melvln Gagerman The name of Melvin Gagerman, chairman'iof Woodland Hills-based Applause was misspelled in Tuesday's Marketing column.

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