The Los Angeles Times from Los Angeles, California • Page 41

LOS ANGELES TIMES D2 WEDNESDAY, SEPTEMBER 30, 1992 Confidence Hits Pre-Election Low BRIEFLY Index of Leading Indicators Seasonally adjusted index, 1982 100 ENTERTAINMENT Economy: Meanwhile, the index of leading indicators declines for the second time in three months. From Times Wire Services WASHINGTON Consumer confidence fell in September to its lowest pre-election reading in 20 years, and the government's chief economic forecasting gauge showed that the economy is on the verge of stalling again, according to reports released Tuesday. The figures suggested that economic problems will last well beyond the Nov. 3 elections a development that may bode ill for President Bush's reelection chanc- The Conference Board said consumer confidence fell to 56.4 in September from 59.0 in August. The previous pre-election low mark was 80 in September, 1980, when incumbent Jimmy Carter lost to challenger Ronald Reagan.

The Commerce Department said its index of leading indicators, designed to forecast economic activity three to six months ahead, fell 0.2 in August after a slim 0.1 rise in July and a 0.3 dip in June. Three straight declines in the leading index have often signaled an impending recession, and analysts said the last three months showed the economy was getting very close to another downturn. The latest report virtually ensures that whoever is sworn in as President in January will be confronted with a very weak economy. Economists were braced for worse news later this week with the release Friday of the unemployment report for September. Many expect that this report, the last look at the most politically sensitive economic statistic before the election, would show the nation's jobless rate edging up to 7.7 as the economy is hit with a new wave of layoffs.

The Conference Board said that since it began making its confidence survey 20 years ago, the incumbent President has lost whenever the index has been below 100 just before the election. Democrat Bill Clinton has hammered George Bush on the state of the economy, calling the President's economic management the weakest since the 1930s. "The nation's sluggish economy and weak job market are continuing to dampen consumer spirits," the Conference Board said. August's decline in the leading Disney Wins Court Round: Walt Disney Co. has won temporary approval to use songs from the movie "Pinocchio" on videocassette advertisements.

An appeals court in New York overturned an order that prevented Disney's Buena Vista Home Video from using such songs as "When You Wish Upon a Star" until a trial is held to determine the legal rights to the songs. Bourne a New York music publisher that holds the copyrights, contends that the advertisements were a "new use" for the 1939 songs and thus prohibited. EMI to Buy Christian Music Company: EMI Music has agreed to acquire Nashville-based Sparrow the world's largest independent Christian music company, for an undisclosed price. Sparrow had sales of more than $30 million in the fiscal year ending June 30. Its recording acts include Steven Curtis Chapman, BeBe CeCe Winans and Debby Boone.

New York-based EMI is le of the world's biggest music companies, with annual sales of more than $2 billion. ill mmmmmmmm 142 Mstww annul SOND 1 FMAMJ A 1991 1992 Source: Comim'rre Department AP Los Angeles Times economic indicators was widespread, with seven of the 11 statistics posting setbacks. The biggest occurred in the price Please see ECONOMY, D5 AUTOS Porsche to Cut More Jobs: The German sports car maker, hit by a sharp drop in sales, plans to cut 1,000 more jobs by next August, trimming its work force to 6,200. Porsche blamed the cuts on continued lack of demand for its expensive cars in the United States and Britain, as well as slow economic conditions in Japan and Germany. Porsche sold 22,481 cars in the fiscal year ended July 31, down 15 from a year earlier.

Regulators Told of 'Credit Crunch' DEFENSE Lending: Top federal banking officials hear borrowers complain about a lack of access to loans. Lenders say financially solid customers are rare. Textron Lycoming Plans to Cut 1,400 Jobs: The defense contractor said it will eliminate more than 40 of its work force, up to 1,400 jobs, over the next year through a combination of layoffs and attrition. Textron Lycoming, which makes small gas-turbine engines for tanks, helicopters and other aircraft, attributed the cutback to reduced defense spending. The company told workers that it planned to lay off 200 workers by the end of October.

AIRLINES of A Reports More Loans to Blacks in '91 Lending: The bank releases 1991 figures on home loans. First Interstate also claims improvement on loans to most ethnic groups. By JAMES BATES TIMES STAFF WRITER Bank of America increased the number of home loans made to blacks in California by 36 last year, a development hailed by community groups Tuesday that had been highly critical of the San Francisco-based bank for being too inactive in 1990. Separately, Los Angeles -based First Interstate Bank of California said that it declined fewer homes loans to all ethnic groups except Latinos in 1991. The bank's numbers also showed it made more home loans to Latinos than in 1990, and fewer loans to blacks.

According to data released by Bank of America, the bank made 1,907 loans to blacks in 1991. Loans Please see LOANS, D13 New Airline to Offer No-Frills Flights to Hawaii: Family Airlines, a new company based in Las Vegas, plans to offer no-frills round -trip service from Hawaii to the West Coast for $249. The airline has filed for certification with the U.S. Department of Transportation and hopes to begin flights in January. It said it will make meals optional, put extra seats in each plane and should be able to break even by selling 55 of its seats.

It expects to operate at 90 capacity because of its low fares, a company spokesman said. The airline was founded by Southern California businessman Barry Michaels. By JAMES BATES TIMES STAFF WKITEK Jack Goetz for five years had little trouble financing his Santa Monica company that prepares would-be lawyers for the bar exam. But last year, Goetz's wealthiest investor sold his stake in the firm, and his bank cut off the company's $600,000 credit line. Even though the business remained sound, the bank told Goetz that lending to the company was now too risky.

He went to another lender, who dangled a potential credit line in front of Goetz for more than two months before turning him down. On Tuesday, Goetz brought his tale of frustration to an unusual forum in Los Angeles in which four of the nation's top bank regulators received a close-up look at the "credit crunch." Prompted by complaints that tight lending is stifling economic recovery, Treasury Secretary Nicholas F. Brady called for the hearings, hosted by Office of Thrift OTHER NEWS LARRY DAVIS Los Angeles Times Office of Thrift Supervision Director Timothy Ryan at Los Angeles meeting called by Bush Administration on credit availability. P. LaWare and Federal Deposit Insurance Corp.

Director C.C. Hope Jr. Please see CREDIT, D4 Supervision Director Timothy Ryan, acting Comptroller of the Currency Stephen Steinbrink, Federal Reserve Board Gov. John THE BREAKUP AT SEARS Hershey, Kraft Battle for Candy Firm: A billion-dollar battle for Norway's largest candy maker escalated as Hershey Foods joined forces with a Norwegian conglomerate to combat a bid by Kraft General Foods. Kraft has offered $1.5 billion for Freia Marabou.

Hershey, believing that Norway's Labor government would be more likely to approve a takeover involving a Norwegian company, contacted Orkla about a counteroffer. Freia, Scandinavia's leading chocolate and snack food maker, is 41 owned by Norsk Hydro and 18.5 by Pennsylvania-based Hershey. Hershey had bid for Norsk Hydro's stake, but its offer was rejected in favor of Kraft's. The battle will sharpen Oct. 9, when Freia stockholders vote on the Kraft offer.

Kraft, a unit of Philip Morris, needs two-thirds of the stockholders to back its offer. Virginia OKs Plan for First Capital Unit: Hartford Life Insurance Co. will take over the business of Fidelity Bankers Life Insurance a Virginia -based subsidiary of troubled First Capital Holdings under a plan approved by the Virginia State Corporation Commission. Fidelity Bankers, with assets of $4 billion and 184,000 policyholders, was seized by Virginia regulators in May, 1991, after junk bond losses forced its Beverly Hills-based parent, First Capital Holdings, to file for Chapter 11 bankruptcy protection. People who hold annuities and life insurance policies face a choice of whether to surrender their holdings for immediate cash, minus a penalty, or to stay with Hartford for five years and a full return.

Gasoline Prices Fall: The average price of self-serve regular unleaded gasoline fell in the past week to $1,157, the American Automobile Assn. reported. AAA said the price dropped 0.6 of a cent from the previous week. Self-serve mid-grade gasoline declined 0.4 cent nationally to an average of $1,253 per gallon. Premium unleaded gasoline slipped 0.3 cent to $1,338.

From Times Staff and Wire Reports, No Bidder Shortage Seen for Coldwell Banker Real estate: Analysts expect to see offers from American Express, GE and Ford. after struggling somewhat in 1990. "I think the shareholders over the years have had a lot of questions about these subsidiary corporations that were not tied to the retail side" at Sears, said Dick Loughlin, president of Irvine-based Century 21 International. But Loughlin, echoing the sentiment that Coldwell and a financial services firm would make a good match, added: "Coldwell is not a company that is suffering severely." In fact, Coldwell Banker increased its market share to 5.7 in 1990 from 5.4 in 1988, according to recent estimates. The firm, which has nearly 18,000 real estate agents in the United States, Canada and Puerto Rico, closed 404,007 transactions in 1990, according to Real Trends, a Dallas-based industry newsletter.

The decision to sell the residential unit comes 11 years after Sears paid $202 million for Coldwell Banker and another $607 million for the Dean Witter brokerage firm as part of its "stocks and socks" strategy to offer a one-stop market of retailing, financial and real estate services. "Pairing real estate and other financial services was a big trend" in the 1980s, said Laurie Moore, co-editor of Real Trends. Even though the trend has cooled somewhat, she said that for a financial services firm "there are not very many opportunities to buy the kind of organization that Coldwell banker represents if you are looking for a major player in the market." Times staff writer Chris Woodyard contributed to this story reached for comment. In announcing a major corporate restructuring, the giant retailer said it will sell the residential unit, including Sears Mortgage Sears Savings Bank and Coldwell Banker Relocation Services. Sears will retain Coldwell's Homart Development a shopping mall development firm.

The sale of the Coldwell Group would also accelerate the trend of consolidation in an industry where housing sales are down about 20 from their 1980s peak. Many small- and medium-size real estate firms have been losing market share to bigger and more aggressive real estate companies. "This is the time you take advantage of the tremendous adversity and attrition in real estate," said Sandford R. Goodkin, a real estate expert who heads his own San Diego consulting firm. "Coldwell Banker is a very well-known and respected name.

And it still makes sense to combine some big financial company" and a real estate brokerage firm. Real estate executives said that Sears' decision to sell its Coldwell residential division had been anticipated ever since April, 1989, when Sears sold Coldwell Banker Commercial Group for $305 million to a group of investors who later changed the firm's name to CB Commercial. Some experts added that they anticipated a Sears move might be at hand because the Coldwell Banker Residential Group, which accounts for about 3 of Sears revenue and 5 of its net income, recently showed improvement 'Santa Barbara' Is 1 of 2 Daytime Casualties at NBC By JUBE SHIVER Jr. TIMES STAFF WRITER Sears, Roebuck decision Tuesday to cut its ties to the Coldwell Banker Residential Group will likely attract bids from several financial services firms eager to profit from a combination of real estate and financial services, analysts said. Sears' decision to divest the residential unit and its Dean Witter Financial Services Group simply underscores the failure to integrate the different businesses under the retailing umbrella, real estate experts said.

American Express General Electric Capita! Corp. and Ford Motor Credit Co. lead a short list of companies that analysts speculate may compete for Mission Viejo-based Coldwell Banker despite current slow home sales. They say the residential unit might attract a financial services company desiring to use the real estate company's customer base to sell its other services. Prudential Life Insurance Co.

has profited from such a combination since it bought Merrill Lynch real estate brokerage firm for about $300 million in 1990. Spokesman for the three companies rumored to be interested in Coldwell Banker could not be REFOCUS: Retailing Re-Emphasized Under New Plan The cancellations underscore the rapidly changing economics of daytime television, which only a few years ago could account for up to 70 of a network's profit. Traditionally, daytime programs cost much less than prime-time shows to produce and attracted healthy advertising because of their success in reaching a largely female audience. But in recent years, the daytime marketplace has become increasingly crowded, with syndicated shows pulling viewers away from the weaker network shows. "NBC has been hurting in the daytime race," said Bill Croasedale, president of national broadcasting at the Los Angeles -based ad agency Western Media.

"They have been running a really poor third against ABC and CBS." NBC's problems have been compounded by the fact that impatient affiliates, facing their own financial pressures, are no longer willing to stick with ratings losers when they can acquire more profitable syndicated shows on their own. NBC, which had been the prime-time ratings leader for five years before being bumped into second place by CBS this last season, is now retrenching from several ambitious expansion plans launched in recent years. Network staffers have been buzzing for several weeks about an "October surprise" that could entail further cutbacks and might include the long-anticipated "strategic" transaction hinted at by NBC's parent, General Electric. By JOHN LIPPMAN TIMES STAFF WR ITER Acknowledging the unprofitable economics of its daytime programs, NBC will turn some time periods over to its affiliates as part of a major overhaul of its schedule. The move, the second time in a year that NBC has cut its daytime programming, is the strongest evidence yet of the network's retrenchment efforts in the face of stiffer competition from syndication, cable and other networks.

NBC will drop its struggling afternoon soap opera "Santa Barbara" on Jan. 15. It will also cancel its medical advice show, "Doctor Dean." Both shows ranked near the bottom in daytime ratings. In the last several years, NBC has cut back a third of its daytime programming, to four hours from six hours. The decision to drop "Santa Barbara" was prompted last week when John Rohrbeck, president of NBC-TV's stations division, refused to continue carrying the soap opera after key affiliates in Boston, Philadelphia and St.

Louis dropped the show, sources said. Affiliates will be handed back the 11 to 11:30 a.m. time period to fill in with syndicated shows. Network executives are still pondering how to fill the "Santa Barbara" 3 to 4 p.m. slot.

Among the replacement shows apparently under consideration are an expanded version of "Classic Concentration," a youth -oriented game show, and a talk show hosted by Sassy magazine editor Jane Pratt. "The number of cards doesn't mean anything," said David Robertson, president of the Nilson Report in Santa Monica. "Discover has 30 more cards than iNo. 2 issuer Citibank but is only one third as profitable." Still, Dean Witter's credit services division did chip in a hefty $174-million profit in 1991, a Discover spokeswoman said. As a brokerage firm, Dean Witter now boasts a retail operation twice as big as that acquired by Sears.

"We went from a big full-service investment bank with a massive trading operation to a more retail -oriented firm," said Dean Witter spokesman Jim Flynn. "I don't think we've decided yet," Flynn said, when asked whether Dean Witter would keep its 85 remaining financial centers in Sears stores. It's a prudent answer, especially when one considers that Flynn, who joined Dean Witter in 1989, is the man who coined the phrase "socks and stocks can pull off a conglomerate structure successfully," Minow added, pointing to General Electric as a successful, broadly diversified company. In announcing the spinoff, Sears Chairman and Chief Executive Edward A. Brennan insisted that the Sears' financial services strategy had been "a resounding success." To be sure, in recent years Sears' financial services operations have outperformed retailing, but that in part reflected the dismal condition of the merchandising arm, analysts said.

"I'd have sold the retailing and kept the other stuff," said Stephen McLin, president of America First Financial Corp. in San Francisco and former executive vice president for strategic planning at BankAmerica. The spinoff will leave Dean Witter, with its Discover operation, the nation's largest issuer of general purpose credit cards, with more than 41 million outstanding, but far from the most profitable. (formerly known as Gulf Western), USX Corp. and Coca-Cola Co.

have all spun off or sold major operations in recent years. The "deconglomeration" of Sears is "a wise, value-adding decision," said shareholder activist Robert A. G. Monks, a frequent critic of Sears management who ran unsuccessfully for a seat on the company's board. The action, Monks added, was "a blueprint for other companies built through unrelated diversification to study and follow." "The issue of how much value the conglomerate structure adds or subtracts will be a central issue for shareholders to consider in the '90s," predicted Nell Minow, a partner of Monks in a Washington-based firm called Lens Inc.

"In terms of shareholder value, it's more important than executive pay or poison pills," two issues that in recent years have caught fire with shareholder activists, Minow said. "There are rare companies that Continued from Dl tools or gardening supplies aren't thinking about buying stocks or mutual funds on the same shopping trip, analysts and observers said. Sears opened 280 Dean Witter sales kiosks in Sears stores between 1981 and 1986, but subsequently closed 200 of them. All the while, its shareholders saw little benefit on the bottom line and asked: Why is the once-proud merchandiser pouring resources into financial services when it was losing its lead in retailing to Kmart and Wal-Mart? Sears also learned what many other conglomerates formed during the 1970s and early 1980s have discovered: That when managements try to do too many things at once, they lose their focus on their core business. Several big, diversified companies have realized that "the sum of the parts is worth more than the whole," said A.

G. Edwards Co. analyst Philip W. Abbenhaus. ITT Paramount Communications.