The Los Angeles Times from Los Angeles, California • 41

BUSINESS Cos Anode Times CC Part IV VSiiliu-Ndav. August IS. Problems for Flamboyant Chairman Charles Knapp July Retail Sales Drop 0.9, Raising Prospect of a Slowing Economy FCA Fights to Keep Depositors' Confidence By TOM FURLONG and BILL SING. Times Staff Writers By KAREN TUMULTY. Times Staff Wnter In addition.

FCA's bad loans already much higher as a percentage of total loans than the industry average is growing Regulators have asked the company to raise more capital by year-end. As a result of such problems, FCA's unit, Stockton -based American Savings Loan is fighting a potentially dangerous erosion of its deposits $1.4 billion in institutional deposits alone last month, or nearly 6 of its total deposit base, its officials confirm. That is the type of problem that eventually forced government regulators last month to rescue Continental Illinois Corp from possible failure. Although almost $1 billion of the outflow Please see FCA, Page 13 packed banquet room, "and nobody likes happy people." The 49-year-old Knapp is making no such jaunty remarks today Plagued by mounting questions about its loans, deposits, profits, rapid growth and management methods, Los Angeles -based FCA is facing a crisis of confidence that could jeopardize its survival and the stability of the entire industry. With an unusually high percentage of fixed-rate loans, FCA's profits are especially vulnerable as rising interest rates boost its costs of raising funds.

Regulators, investors and competitors say a rise of more than two percentage points could seriously erode those profits. Financial Corp of America boss Charles Knapp was his usual cocky self last May when he presided over the firm's annual meeting in Beverly Hills. The flamboyant chairman and chief executive of the nation's largest savings and loan firm berated Carter Hawley Hale Stores Inc for the way it defended itself against a'hostile takeover attempt, blasted Bank of America for turning FCA down on a $5 -million loan and belittled a shareholder he apparently didn't like He also told shareholders that tne company's enormous earnings growth during the tough times of 1981 and 1982 made FCA the envy of the troubled savings and loan industry. "We're happy people," he told the i 111 'vaawuiiimi WASHINGTON -Retail sales, in yet another sign that the nation economic growth is slowing, fell 0.9 last month, the first decrease since March, the government reported Tuesday. Sales in almost every category of merchandise fell, but July's seasonally adjusted sales of $107.8 billion remained 9.1 above levels for July, 1983.

attesting to the strong growth shown earlier this year. Consumer spending has been a major force pulling the economy from its 1981 -1982 recession. Economists caution that the monthly figure by the Commerce Department is only a preliminary estimate that is likely to change significantly. But they said it could indicate a welcome easing of this year's surprisingly strong economic surge which many feared would force interest rates upward. Commerce Secretary Malcolm Baldnge said: "Slower growth of consumer spending should help to relieve pressure on the credit markets resulting from the record installment borrowing of recent months." There was an important indication Tuesday that this was already happening as the Federal Reserve announced that consumer installment borrowing rose $7.83 billion in June.

It was the second -largest gain ever, but was a decrease from the record $10.23 billion increase in May. Analysts say the retail sales figure for July points to further moderation in installment credit. Many economists have expressed concern that consumer borrowingadded to the capital needed by businesses recovering from the last recession and a record government debt would put such a strain on credit markets that interest rates would soar Such an increase, some said, couldjnd the economy back into another painful recession. The widely watched prime interest rate rose several times earlier this year, adding to the alarm. It has held since late June at 13, its highest level since October, 1982.

Despite the monthly decline in retail sales, the economy has "a fantastic amount of strength in it right now," said David Ernst, vice president of Evans Economics, a private economic forecasting firm in Washington. Most forecasters seem to agree with Ernst and express relief rather than concern over the latest in a series of signs that the economic recovery is losing steam. "We all know now that the first and second quarters were extremely strong," said Robert T. Parry, chief economist for Los Angeles-based Security Pacific National Bank. "A slowing is desirable." Please see RETAIL, Page 10 FHLB Lends American $500 Million Jacobs Claims Power to Force Disney Meeting By KATHRYN HARRIS, Times Staff Writer Associated Press victim of high costs and fuel consumption, the 727 was the best selling commercial jet ever.

Airlines paid a total of more than $20 billion for the 1,832 trijets made since early 1963. Last of the line Hundreds of workers at the Boeing Co. aircraft plant in Renton, near Seattle, take part in ceremonies marking the last Boeing 727 to be manufactured. A By TOM FURLONG, Times Staff Writer American Savings Loan a subsidiary of rumor-ridden Financial Corp. of nerica, has received a $500-million loan from the Federal Home Loan Bank of San Francisco, company officials confirmed Tuesday.

FCA stock, apparently reacting to a flurry of unconfirmed reports, continued to plunge Tuesday on trading of 1.18 million shares, making it the third-most-active issue on the Big Board. FCA's stock closed the day down S1.12V6 to $7.25 a share, just slightly above the 52-week low of reached earlier this summer. The stock dropped $1 a share Monday on a volume of 410,000 shares. Earlier, company officials denied a wire service report that American Savings had been forced to borrow heavily from the Federal Reserve System. However, they did confirm the loan from the Federal Home Loan Bank of San Francisco, which was received Monday, they said.

Huddled With SEC Officials Company officials have also called a press conference for this morning in Los Angeles to explain financial information contained in the company's latest financial statement filed with the Securities and Exchange Commission in Washington. FCA attorneys huddled with SEC officials until Tuesday evening, apparently to discuss the contents of the report. Although company officials declined to say what was in the filing, FCA Chairman Charles W. Knapp said in an interview that the filing "would put everything, the good and the bad, out there." Knapp also noted that FCA borrowed $300 million in July from the Federal Home Loan Bank as part of its efforts to stabilize its deposit base. The company lost nearly $600 million in deposits some deliberatelyafter two quarters of growth that averaged more than $1 billion a month.

Please see LOAN, Page 14 New IBM PC Puts Pressure on 'Clones' ON-TV Discussing Sale of Its L.A. System to SelecTV By ELLEN FARLEY, Times Staff Writer restraining order are scheduled for Aug. 20. just two days before the Gibson acquisition is expected to close. Under Disney's bylaws, a special shareholder meeting can't be scheduled in less than 35 or more than 60 days after a request of 10 or more of its stockholders is received.

Jacobs refused to say how many shareholders are backing his request. The Gibson acquisition, announced 11 weeks ago before Jacobs acquired any Disney shares, was negotiated at a time when Disney was fending off another dissident shareholder, New York financier Saul P. Steinberg. Disney subsequently repurchased Steinberg's 11 stake for about $325 million. In pleadings filed earlier this week in the Jacobs lawsuit, lawyers for the Jacobs group contended that the Gibson deal was part of a defensive strategy code -named "Project Fantasy" undertaken by a majority of the Disney directors "to maintain their control of the company." Please see DISNEY, Page 14 Irwin L.

Jacobs, a dissident shareholder of Walt Disney Productions, said Tuesday that he has won enough support from other Disney shareholders to demand a special meeting to vote on a corporate acquisition fiercely opposed by Jacobs. In a telephone interview, the Minneapolis financier said he will provide Burbank -based Disney the required documentation today. Jacobs also said he and four associates have recently added to their 6.3 Disney stake, but he declined to say how much stock he has purchased until documents can be filed with the Securities and Exchange Commission. A Disney spokesman had no comment on Jacobs' latesi action. The Jacobs group, which began buying Disney shares during the last week of June, mounted an attack in late July on Disney's plan to acquire Cincinnati -based Gibson Greetings calling it a waste of corporate assets.

The group has filed a lawsuit in Los Angeles Superior Court to block the merger and said Tuesday that arguments for a temporary Speculation that the two systems were considering a merger has been circulating for at least a year. Both have waged expensive marketing campaigns to attract customers in the past year. SelecTV currently ranks as the fourth -largest system in the country, behind ON's Los Angeles and Chicago systems and Wometco in New York. Founded in 1978, SelecTV is owned by Clarion Corp. of America, a unit of Clarion Co.

Tokyo, and a consortium of individuals, including some of its executives. Nationally, the over-the-air pay-TV business has been on the wane for two years, primarily because of inroads by cable television, which offers consumers more channels for the same, or lower, price. For example, ON-TV charges an average of $22 per month for Please see ON, Page 10 ON-TV, the nation's largest over-the-air pay -television service, is nearing an agreement to sell its Los Angeles system to much smaller SelecTV of California an official of ON's parent company, Rancho Bernardo-based Oak Industries said Tuesday. "We do confirm that we are discussing with SelecTV the possibility of their buying our TV subscribers in Los Angeles," said Robert Hartney, Oak's vice president of corporate relations. "If things keep going as positively as they have been, we might be able to make a more formal statement within a couple of days.

The end result, if this happens and when it is completed, is there would be one over-the-air pay-TV system in Los Angeles, and it would be SelecTV." Officials of SelecTV could not be reached for comment. By MICHAEL A. HILTZIK, Times Staff Writer NEW YORK Moving to reinforce its domination of the desk -top office computer market, International Business Machines Corp. on Tuesday unveiled a more powerful and surprisingly low-priced version of its popular Personal Computer. The introduction of the so-called PC -AT, which had been dubbed the Popcorn by followers of the computer trade, reflects a familiar IBM habit of placing strong technological and marketing pressure on smaller competitors in the business-computer market.

These include Houston-based Compaq Computer Los Gatos-based Eagle Computer Inc. and Columbia Data Products Inc. of Columbia, Please see IBM, Page 2 Markets at a Glance Tuesday. aU9. 1984 0 .48 72 DOW 30 NYSE AMEX NASDAQ WILSHIBE James Hanigan Will Bigger Broadcasters Mean Better Shows? 2 Nonprofit Chains Merge to Form Hospital Network By BRUCE KEPPEL, Times Staff Writer comments that prices have gone "not only about as far as we think things will go, but further." Leibowitz believes that a short-term result of the government's action will be to make some of the smaller TV companies prime acquisition targets.

These would be companies owning fewer than seven stations today that will be hard pressed to buy more in the high-priced marketplace. Leibowitz mentions specifically United Television, Gulf Broadcasting, Malrite Communications, Rollins Communications and Park Communications. A caution, however: Don't look for an immediate hike in their stock prices, because government action is in abeyance until next spring. OK, so much for the economic results. What about the better, or more diverse, programming? That's more problematical.

The truth is the American public votes on programming with its channel tuners and advertisers pay attention. It is, after all, a mass medium. Past government efforts to "improve" programming have come to grief. You'll recall the FCC's rule on prime-time access, which decreed that p.m. to 8 p.m.

be devoted to local, and presumably more socially redeeming, programming? That brought us "Family Feud" and "Wheel of Fortune." Otherwise, think only of public television which, aside from "Sesame Street," has brought us endless hours of fine British Broadcasting Corp. material but not one good "Life of Lincoln." Don't get your hopes up. see on U.S. commercial television today. In plain language, the government would like to create competition for ABC, CBS and NBC, which currently show us soap operas about wealthy families and several varieties of cops and robbers each week, by building up such non-network companies as Metromedia and Capital Cities Communications, whose stationswhen they are not network affiliates currently show us reruns of old cop shows along with such greats of the past as "I Love Lucy" and "Leave It to Beaver." Will the government succeed? In one sense, yes.

Over time, the lifting of limits on TV station ownership will make for bigger companies in the business because television is a very profitable and desirable business to be in. The best-managed television stations, such as those owned by Capital Cities, make operating profits of close to 50 cents on the revenue dollar. This will create a group of more powerful buyers for television programming and therefore will benefit Hollywood by enlarging the customer base of its studios and independent producers. The government's action also will tend to enhance the value of television stations by creating a less restricted market for their sale and resale. In this sense the government is only feeding the flames of a roaring fire.

Prices of TV stations have been rising so much, in anticipation of the ownership rules being relaxed, that Dennis Leibowitz of Donaldson, Lufkin Jen-rette Securities, the industry's leading analyst, The Federal Communications Commission and the Congress are making haste slowly toward new regulations on television station ownership the nearest thing to a license to print money that we have in this economy. The FCC, charged in the Communications Act of 1934 with regulating business on "the people's airwaves," proposed a couple of weeks ago that a single company be allowed to own 12 stations as opposed to the limit of seven under the current rule. But Congress last week frowned on that action and the FCC retreated to reconsider. It will be next spring before the FCC comes out with a revised proposal, one that probably will expand station ownership by a formula that limits to 25 or so the share of the national audience one company's stations can reach. Ultimately, perhaps by 1990, there will be no regulated limit on the number of television stations one company can own.

The result down the road will be more big companies in television broadcasting. And that, curiously enough, is the intended result of both the FCC and the Congress. Why does the government think big is better? Because the FCC and Congress believe that more big companies will bring us better, or at least more diversified, programming. They will do this, goes the thinking, by being able to compete with the three television networks to buy original programming from the Hollywood studios and independent producers who are the source of almost all the non-news programs we markets and a united lobbying voice in Washington. The organization stops short of the merged assets and centralized management structure of investor-owned hospital chains, however.

Each member system will manage its own hospitals. American Healthcare Systems' 26 "shareholders," as they are called, include Lutheran Hospital Society of Southern California, based in Los Angeles; Healthwest Foundation, Northridge; Inter-mountain Health Care Salt Lake City; Health Central Minneapolis, and SamCor, Phoenix. Samuel J. Tibbitts. president of Lutheran hospitals, will be chairman of American Healthcare Systems.

Charles M. Ewell, formerly director of Arthur Young Please see HOSPITALS, Page 14 In a move likely to further blur the distinction between nonprofit hospitals and investor-owned chains, two nonprofit, multi-hospital organizations voted Tuesday to merge their 233 hospitals in 21 states into the nation's largest network of community hospitals. The new organization, to be called American Healthcare Systems, will be based in San Diego, with offices in Chicago and Washington. The merger, which involves Phoenix-based Associated Health Systems and United Healthcare Systems of Kansas City, will provide the 26 regional hospital systems that make up the systems' members with shared administrative and purchasing services, participation in profit-seeking new ventures, improved access to debt.