Thursday, October 1, 2009

Thursday Morning

US consumer spending, responsible for about 70% of our GDP, rose 1.3% in August. That's the biggest jump since 2001. First-time unemployment claims, however, came in higher than expected. The market's reaction has been to open down about half a percent in the first few minutes of trading.

Comcast is in talks with General Electric to buy a stake in NBC Universal
Negotiations for Comcast to buy about 50 percent of NBC Universal have been under way for at least two months and a deal would depend in part on Vivendi SA making a decision to sell its 20 percent holding, said one of the people, who declined to be identified because the talks are private.

NYTimes wonders, as I did yesterday, what AOL is worth.
Time Warner’s latest quarterly filing with regulators indicates that AOL brought in $1.67 billion in revenue in the first six months of 2009, and reported $315 million in operating income. Its Internet access service had 5.8 million United States subscribers at the end of June. Rich Greenfield of Pali Capital recently put the value of AOL at around $4 billion, which he said was about four times the unit’s earnings before interest, taxes, depreciation and amortization, known as Ebitda.

Bloomberg takes a look at a Phoenix office park, as an example of over-development.
The city of Phoenix is suffering the fallout from growth that boosted its population from 983,403 in 1990 to 1.6 million in 2008, according to the Census Bureau. Single-family building permits in Maricopa County, which includes Phoenix, rose more than five-fold from 1975 to the peak earlier this decade. Delinquencies for loans backed by office, industrial, retail and apartment properties that were bundled into securities in Phoenix increased five-fold since March, according to data compiled by Bloomberg.

After Penske Automotive said no thanks, GM will close the Saturn division.
The Penske Automotive Group said it could not proceed with the deal because another auto manufacturer, which it did not identify, said it would not build vehicles to be distributed under the Saturn brand name. The decision by Penske Automotive stunned G.M. and Saturn dealers, who had hailed Mr. Penske, who has built a track record of successful turnarounds, as the savior of the brand that G.M. was forced to sell as part of its government-financed bankruptcy reorganization.

You'd never know there was a recession, judging by the over-the-top stadiums being built by the NFL. And now the owners' overspending may hit players in the pocketbook.
Many owners used cheap credit to build and renovate 24 of the league’s 31 venues, more than quadrupling debt held by teams and the league to about $9 billion this year from 1996. With debt service headed for a 45 percent jump in 2009 from three years earlier and revenue growth slowing during the recession, owners’ profits are falling. So now they’re pushing for a new labor agreement with the NFL Players Association that may take stadium and other costs into account, reducing the total amount of money going to players at least in the short term, says Michael Cramer, a former president of baseball’s Texas Rangers who teaches sports management at New York University.

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