The Los Angeles Times from Los Angeles, California on June 3, 1987 · 94
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The Los Angeles Times from Los Angeles, California · 94

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Wednesday, June 3, 1987
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94
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2 Part IV Wednesday, June 3. 1987 R CoaAnfldcfl Slimes Stocks Perform Better Than Other Markets From Reuters NEW YORK-Stocks avoided the heavy losses of other financial markets Tuesday as investors took the view that Paul A. Volcker's departure from the Federal Reserve was not a serious setback for equities. These were the highlights of trading in individual stocks on Wall Street Tuesday: On the trading floor, a new issue of Harcourt Brace Jovanovich trading on a when-issued, post-recapitalization basis, was the most active NYSE-listed issue, up 1 to 9VS. Gillette was the second-most actively traded issue, up 1 to 32V4 as takeover speculation again swirled around the consumer products company, traders said. Harcourt Brace Jovanovich common, on the basis of the announced a recapitalization last week after receiving an unwanted takeover offer, rose 2 to 56. BRIEFLY The FCC granted a license renewal to KMEX-TV. In addition to renewing the license of the Los Angeles TV station, the Federal Communications Commission granted license renewals for its Spanish International Communications Corp.'s sister television stations in San Antonio, Tex. (KWEX-TV); Miami (WLTV); New York (WXTV), and Fresno (KFTV). The FCC decision after years of administrative hearings clears the way for the sale of the company to Hallmark Cards Inc. H. F. Ahmanson announced a $24-million writeoff. The Los Angeles -based parent company of Home Savings of America said it will take the loss in the second quarter as a result of its investment in the $800-million secondary reserve of the Federal Savings & Loan Insurance Corp. Ahmanson's $24-million investment in the reserve fund is being written off because FSLIC was recently declared insolvent. Other savings and loans with similar investments are expected to take similar losses. Ahmanson also said it has postponed the sale of up to $1 billion in adjustable-rate mortgage-backed securities because "it is more profitable to keep the loans in our portfolio than sell them at this time." Dennis Levine left prison to testify on Capitol Hill. The first executive to topple in Wall Street's unfolding inside trading scandal told a congressional subcommittee that his superiors were poor managers who subtly encouraged the use of illegal insider tips, lawmakers attending the closed session said. Levine, 34, a merger specialist at Drexel Burnham Lambert when he was arrested on May 12, 1986, testified under subpoena before the House Energy and Commerce investigations subcommittee. Rep. John Dingell (D-Mich.), the subcommittee's chairman, said afterward the testimony was "lengthy, helpful and gave the committee a better appreciation of some of the problems associated with insider trading, specifically as it relates to mergers and acquisitions." But Rep. Gerry Sikorski (D-Minn.) said "it was not a story that engendered compassion. It was more akin to the curiosity one feels when one turns over a rock in a brook and looks to see what's underneath." RATINGS: Rivals Demand Change in 'Sweeps' Results Continued from Page 1 run on KABC's "Eyewitness News" between May 18 and May 27, which promised insights about the Nielsen "families" households that participate in the company's audience research. Competitors claim that the segments inflated KABC ratings by drawing the attention of families in the companies' research samples. The series was heavily promoted on other KABC shows, and elsewhere, including advertisements in TV Guide. "If you're one of the families, obviously you're going to want to find out all about a group that you're included in," said Jane Collins, director of research for KTTV Channel 11. The audience viewing levels gathered from the sweeps, which are conducted four times a year, are used to set the price of future advertising time. Rule Violations Claimed The stations assert that KABC violated the ratings services' rules against any broadcast that calls attention to the sweeps. Such actions are believed to interfere with the collection of untainted numbers. KABC's competitors are unhappy, too, because despite those rules the news segments featured an interview with A. C. Nielsen Chairman and Chief Executive John Holt and footage of Nielsen's audience-ratings operation in Dunedin, Fla. They say Holt's appearance is a serious embarrassment for Nielsen, which apparently was unaware when the series would run. "That he participated makes it all the more astonishing," said Douglas Clemenson, vice president for network advertising sales at CBS Inc., which own KCBS. "This is a stunt that boggles the mind." KABC's 11 p.m. news had a composite rating of 8.3 for the 12 weekdays immediately before the series ran, the Nielsen numbers show. (In Los Angeles, each rating point represents the viewing of General Electric rose 1V4 to 52 in active trading after analyst Nicholas Heymann of Drexel Burn-ham Lambert Inc. added the stock to Drexel's "priority selection list," Retailer Handleman rose to 26 after analyst Mark Manson of Donaldson Lufkin & Jenrette recommended the stock and raised his earnings estimates. Semiconductor stocks came under heavy selling pressure after Merrill Lynch analyst Thomas Kurlak indicated in morning comments that he expected a slowdown in order rates. Texas Instruments fell seven to 169, Motorola fell 2 to 52V4, Advanced Micro Devices lost to 21, National Semiconductor fell V4 to 13 and Intel Corp, trading over the counter, fell 2 V to 39. Computer makers were under pressure as well. IBM skidded 2 to 157'4. NCR fell 2 to 71 and Hewlett Packard fell 2V6 to 64. Dennis B. Levine 45,000 households.) On the first night of the series, KABC's 11 p.m. newscast racked up an 18.2 rating, according to the Nielsen results. For the whole of the series, the rating came to an impressive 10.5, with an audience share of 24. The KCBS news received a 7.1 rating, and the KNBC news an 8.5 rating. If the eight-day period were excluded, as the competitors have asked, KNBC would lead the pack with a 9.4 rating, while KABC would be second with a 9.0 rating, and KCBS would be third, with a 6.9 rating, the Nielsen results show. John Severino, general manager of KABC-TV, did not return several phone calls seeking comment. He has, however, defended the series as a creative idea designed to keep the Capital CitiesABC-owned station ahead in one of the nation's most competitive markets. Spokesmen for Arbitron and Nielsen said the ratings companies have not decided how they will respond to the complaints. But Nielsen officials are meeting with KABC executives today, and may announce their decision soon, industry sources said. Given Little Weight The ratings services usually respond to such complaints by noting in their ratings books that special promotions have been made that may affect the ratings results. But most in the industry agree that such notations are usually given little weight when advertisers and their ad agency representatives decide how much to pay for advertising time. Industry officials say the issue has put the ratings companies in a difficult position. A strong response, such as a decision to drop the ratings, might affect KABC's sales and open them to a lawsuit by KABC, some broadcast officials speculated. But a mild response might provoke KABC's competitors to take the same course, they said. Dow Jones 30 Industrials june'2,'1987 New York Volume Millions of shares MAY III JUNE 8 I 15 I 22 I 29 I 5 MARKETS: Action Fuels Inflation Fears Continued from Page 1 nation's monetary policy is someone Wall Street admires. "No one wanted Volcker to leave. But of the likely successors, Greenspan's the best and that's reflected in the market," said Richard B. Hoey, chief economist for the investment firm Drexel Burn-ham Lambert. Hoey last month polled 512 institutional investment managers on their preference for a Fed chairman and found that Greenspan finished third, after Volcker himself and Gerald Corri-gan, president of the New York Federal Reserve Bank and a Volcker protege. Greenspan, chairman of the President's Council of Economic Advisers in the Ford Administration, is well known in the U.S. financial community as a free market advocate and a pragmatic conservative. Wall Street observers also don't detect any wide divergence between Greenspan's economic philosophy and Volcker's. But Greenspan doesn't have Volcker's stature overseas. "He is an unknown quantity in international finance, as you can see from the near free fall of the dollar," said Allen Sinai, chief economist for the Shearson Lehman Bros, investment firm. Dollar Intervention Analysts said damage to the dollar would have been even worse but for reports of intervention by the Fed and the German central bank. Wall Street currency specialists said they took calls all day Tuesday from foreign investors wondering whether Greenspan is equipped to deal with such weighty international issues as Third World debt and the value of the dollar. "The perception from abroad clearly is that he doesn't have any international standing, and no one is sure how much understanding he has of global economic issues," said Jonathan Francis, an economist specializing in international markets for the First Boston investment firm. Analysts said the dollar was under pressure Tuesday even before the Volcker announcement, largely because of speculation overseas that the economic summit next week would be unproductive because of Japanese Prime Minister Nakasone's plunging popularity at home and West Germany's decision against reducing interest rates. But upon word of Volcker's impending departure, frenzied selling began and the dollar's value registered a swift and steep decline despite Greenspan's prediction at a morning press conference that the dollar has reached its low point. "Paul Volcker was a market stabilizing factor. He was willing to let interest rates rise gradually to take some of the pressure off the dollar, and now his influence is gone," said Carmine Rotondo, a currency specialist with Security Pacific Bank. "Without him, many of us think the Administration will use the dollar as a weapon to wave in the face of our allies." Analysts said Greenspan's appointment is viewed by the currency markets as an indication that the Fed will intervene less often to support the U.S. dollar in world markets. I 1 I I I I L 1 20 .... I H'9h 2400 Close I I Low 80 - 40 Heifer U .. Leo 1 40 , Jl 20 2200 80 300 80 60 40 j 20 -7ft 1 200 4 t- j 80 lift I" t-77 0 3 8 l3f I40 in I :i3i:i10o WEEK ENDED I Author Lowry Files for 'Get Rich' By JAMES BATES, Times Staff Writer Albert J. Lowry, the best-selling author who made a fortune writing and lecturing on how to get rich investing in real estate, has filed for liquidation of his assets under Chapter 7 of the U.S. Bankruptcy Code. The filing, made May 13 in Los Angeles, came as creditors stepped up their efforts to collect from Lowry and marks a dizzying collapse of a man who just a few years ago packed hotel ballrooms nationwide with his lectures and whose net worth was once estimated by a national financial magazine at nearly $30 million. In a Chapter 7 filing, a person voluntarily files a bankruptcy petition. The person's assets are turned over to a trustee for liquidation, and proceeds are then turned over to creditors. The filing also marks the further collapse of the nation's get-rich-quick business, which promotes through television programs and seminars such theories as how to buy real estate with no money down. Two of the largest get-rich-quick companies, National Superstar in Westlake Village and Beckley Group in Fairfield, Iowa, are currently operating under Chapter 11 of the U.S. Bankruptcy Code. Chapter 11 allows a company protection from its creditors while it seeks to reorganize its finances. Lowry could not be reached for comment. In an interview earlier this year, the Westlake Village Business Productivity Dips, Home Sales Spurt From Reuters WASHINGTON The pace of new orders for manufactured goods weakened in April and worker productivity slackened, but Americans bought homes at a surprising clip despite rising mortgage interest rates, the government said Tuesday. The Commerce Department said single-family home sales were up 7.6 in April to a seasonally adjusted annual rate of 777,000. But industry analysts did not expect the pace to continue, attributing the sharp rise to last-minute buying in anticipation of still higher mortgage rates to come. The department also said factory orders were up a scant 0.2 in April to a seasonally adjusted $199.8 billion, with new orders for expensive durable goods like cars and heavy appliances showing no growth at all. The slump followed a 2.6 orders rise in March. Excluding the volatile military goods category, factory orders fell 0.2 in April after a 1.1 March increase, possibly foreshadowing fewer job opportunities later this year. At the same time, the Labor Department revised down its estimate of productivity, or output per worker, to 0.5 between January and March from an earlier reported 1.7. The productivity measure, a statistical index, now stands at 105.4 based on a 1977 benchmark of 100. The drop in labor productivity could increase inflationary pres- FREEDOM: Continued from Page 1 have in the Hoiles suit, to see what effect some action might have. The directors had reason to worry: Harry Hoiles was always poised for court action. In January, 1984, he sought a court order prohibiting the company from buying two TV stations, expanding the Register's facilities and building a new corporate headquarters in Irvine. He alleged, among other things, that the majority was wasting assets, a third of which would have gone to him had he won his lawsuit The court ruled against him then, too. As the company grows, the families also have to devise some formula that would allow shareholders to sell their stock at a fair price to other shareholders or to the company. The families including Hoiles, according to his testimony do not want to sell to outsiders. Industry analysts have said that family-owned companies historically fall prey to public companies CHRONOLOGY OF A FAMILY FEUD Oct., 31, 1970 Freedom Newspapers founder R.C. Hoiles dies. His surviving children, sons Harry and Clarence and daughter Mary Jane Hoiles Hardie, revamp the publishing company to ensure equal voting power. Oct. 30, 1978 D. Robert Segal selected as first non-family president of Freedom Newspapers. March 3, 1981 Post of chief executive officer abolished over Harry Hoiles' objections. Management powers vested in a three-member executive committee. Sept. 26, 1981 In response to his repeated proposals to withdraw from the company, the other families offer Harry $74.1 million for his family's shares about 70 less than appraised value of the company. Dec. 31, 1981 Clarence Hoiles dies. Fab. 8, 1982 Board majority refuses to elect Harry to executive committee. April 14, 1982 Harry and his family file suit to dissolve Freedom Newspapers. Jan. 25, 1984 Harry loses bid to stop Freedom Newspapers from building new corporate headquarters in Irvine, expanding facilities of the Orange County Register and buying two television stations. Dac. 10, 1986 Trial begins on Harry's suit to dissolve Freedom Newspapers. Juna 2, 1987 Superior Court Judge Leonard Goldstein rules that Harry failed to prove his case. Bankruptcy Story Ends New Home Sales for single-family units rose 7.6 in April to a seasonally adjusted annual rate of 777,000. isseHU 19S7B Thousands of units too Moo -700 800 JFMAMJ JASOND sures, said Douglas Handler, senior economist for Wharton Econometrics in Bala-Cynwyd, Pa., because it means unit labor costs for productiongenerally passed on in increased prices to consumers-will begin rising. The April increase in housing sales, coming after a March decline of 2.7, appeared to result from a Please see ECONOMY, Page 14 Expansion because new generations of family members inherit less stock and have little influence in corporate affairs because of their diluted ownership. That frustration creates a desire to sell out. R. David Threshie, Clarence's son-in-law and publisher of the Register, recognized the problem in a September, 1981, letter to his father-in-law and the Hardies: A "major contributing factor" to the feud, he wrote, "is anger that results from the frustration of being locked in a situation where you have no way of getting out, short of forfeiting the bulk of value of your assets if you disagree with what the majority is doing." However,' a formula Threshie suggested for paying off those who want to leave never gained the approval of other family members, although a stock restriction agreement signed by the Hardie and the Clarence Hoiles families does give the company and each family member the right to match any outside offer a dissident gets. at Chapter 7 resident downplayed his financial problems, but acknowledged that he lost millions of dollars on real estate in the Lake Tahoe area, blaming strict development laws there. Lowry's attorney, Stephen J, Snipper, would not comment on the filing. A former butcher from Thunder Bay in Canada's Ontario province, Lowry, 60, is considered one of the fathers of the get-rich-quick, no-money-down real estate business that flourished during the inflation-fueled real estate boom of the late 1970s and early 1980s. Lowry advocated such things as buying property from desperate sellers for no money down and buying rundown properties that could be fixed up. , Lowry rose to nationwide prominence with the publication of his book "How You Can Become Financially Independent by Investing in Real Estate," which made the New York Times best-seller list in 1980. In a May, 1981, cover story, Money magazine, which estimated his net worth at $30 million, called Lowry a "real estate wizard." Lowry also aggressively promoted himself, hiring actor E. G. Marshall in 1983 to narrate a television promotional documentary called "How to Be Successful in America." Lowry's fortunes have since faded. In October, 1985, Please see LOWRY, Page 14 Cannon Films' Officer Resigns By KATHRYN HARRIS, Times Staff Writer The chief financial officer of Cannon Group has resigned after working just five months for the troubled entertainment firm, industry sources said Tuesday. Susan Beazley, who gave up an 11 -year partnership at Arthur Young & Co. to join Cannon in January, could not be reached for comment. But a friend, who asked not to be identified, said he believes that Beazley resigned more than a week ago. No direct confirmation could be obtained from officials of the Los Angeles-based film company. Barry I. Lublin, a senior executive vice president, said through a spokeswoman, "There will be a press release Thursday or Friday regarding Sue and other matters." Cannon recently said it would release its long-delayed annual report to the Securities and Exchange Commission the first week of June, and said it was "hopeful" that it would soon conclude settlement discussions with the Securities and Exchange Commission staff, which has been investigating Cannon's financial public disclosures since 1983. Cannon hired Arthur Young last autumn to audit its 1986 figures. Last month, the company reported a net loss of $60 million for the year ended Jan. 3, and said Arthur Young had advised the company that it was likely to qualify its opinion on the 1986 financial statements. According to Cannon, the accountants' opinion might be qualified in three areas: Cannon's ability to continue as a "going concern,", the outcome of shareholder lawsuits and the effect of the SEC inquiry. SaiyBar Buyout Deal Detailed By WARREN VIETH, Times Staff Writer Resdel Industries filed documents Tuesday with the Securities and Exchange Commission outlining terms of its $15-million stock-swap acquisition of SanBar Corp. and the spinoff of SanBar's Break -Free lubricant subsidiary. The proposed combination would provide Resdel, a Newport Beach ORANGE manufacturer of COUNTY defense-oriented aerospace and electronic equipment, with Irvine-based SanBar's telecommunications equipment manufacturing and service operations. In addition to receiving Resdel stock valued at about $5 million for the 32 stake in the company owned by SanBar founder Barry Hallamore and his father, Lloyd, the two are to receive cash payments from Resdel of $1.3 million and $1.1 million, respectively, under the terms of compensation agreements adopted in 1983. Under the terms of a proxy statement and prospectus filed by Resdel, SanBar stockholders will receive one Resdel share for each of SanBar's 2.1 million shares outstanding. Resdel stock closed at $7.25 and SanBar at $7 per share Tuesday in over-the-counter trading. SanBar stockholders will also receive one share of common stock in SanBar's Break -Free subsidiary for each share of SanBar. That will give the Hallamores effective control of the company with 32 of its shares. Santa Ana-based Break -Free, valued at about $2 million, manufactures a number of cleaners and lubricants. The merger is subject to approval by the SEC and shareholders of both companies. The transaction is expected to be completed in July.

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