Nextel announced completion of $1.25 billion debt offering to fund network expansion and acquisition of additional spectrum. It made private placement of its 9.5% senior serial redeemable notes, due Feb. 1.
Tribune TV operating profit edged up 3% to $115.4 million and radio profit rose 18% to $5.9 million in 4th quarter ended Dec. 31. TV revenue was up 6% to $332.3 million and radio up 2% to $13.5 million. Overall net loss widened to $16.9 million in quarter from $11 million loss year ago.
Administrative law judge (ALJ) for Pa. PUC recommended agency reject all alternatives to full structural separation proposed by Verizon and other parties. In recommended decision Fri., he urged PUC to implement within 12 months its Sept. 1999 decision to split Verizon (formerly Bell Atlantic) into separate retail and wholesale business operations. ALJ Wayne Weismandel said PUC in April gave Verizon opportunity to provide detailed proposal for structural separation, with cost analysis, but company used ensuing 8 months to try to convince agency that full structural separation would be prohibitively expensive and cause massive confusion in both retail and wholesale markets, without attempting to describe specific problem elements or proposing how those problems might be mitigated in separation plan. He said Verizon also used time to promote “unacceptable” alternative of splitting off just its advanced digital and high-speed Internet access services. Weismandel said Verizon’s alternative was mere line-of- business split that “didn’t mitigate the anticompetitive impact of Verizon’s dominant market power over its base of legacy monopoly customers,” which he said was driving force behind PUC’s separation order. He said other alternative proposals put forth by various parties couldn’t be evaluated because they lacked any cost study or analysis. He said PUC would need to address key policy issues raised in other alternative proposals, including retail unit’s universal service responsibilities, whether retail unit should have significant independent minority shareholder interests, how migration of existing Verizon customers to retail affiliate should be handled. He said case record compiled to date offered little, if any, guidance for addressing those issues. Weismandel urged PUC to reject all alternative proposals to full separation, give Verizon one year to complete structural separation, and require company within 30 days to file detailed transition program. Verizon said ALJ was wrong in dismissing its “compelling” evidence of prohibitive costs and market chaos from structural separation, and resulting harm to wholesale and retail customers. Verizon Pa. Pres. Daniel Whelan said structural separation of Verizon’s Pa. operation could have dire consequences for Pa. telecom markets, as 1996 structural separation of Cal. electric utilities was having in current Cal. energy market.
Ability of DirecTV receivers for DTV to downgrade HDTV signal to 480i at request of content owners fearful of unauthorized copying is potentially embarrassing for CEA, which is battling cable industry over copy protection demands for HDTV, officials said. Copy Generation Management System (CGMS) covers all brands selling DTV-enabled DirecTV satellite receivers. Hollywood content owners fear that consumers will use high-quality analog component video (Y-Pb-Pr or RGB) outputs on receivers to make copies on digital recorders. DirecTV wouldn’t comment.
There are questions whether News Corp. has enough money to buy DirecTV, which may not be worth $40 billion asking price, some analysts say. Industry report said News Corp. Chmn. Rupert Murdoch planned to cancel IPO of Sky Global Networks if talks with other satellite broadcasters, including DirecTV, fall through. Meanwhile, Bank of America Securities analyst Armand Musey said DirecTV’s 4th quarter financial statement might be understating subscriber acquisition costs (SACs). DirecTV denied charge. Hughes is trying to sell DirecTV unit and, despite “uncertainty,” deal now appears likely to take place “in the short term rather than the long term,” industry source said. Another source said there still were “a few bumps in the road” before deal could be completed.
FCC “strongly admonished” Disney and its outside law firm, Verner, Liipfert, Bernhard, McPherson & Hand, for breaching confidentiality of documents associated with AOL-Time Warner deal but declined to impose any sanctions. In 8-page order adopted Fri., Commission’s Cable Bureau concluded that “principals of Verner Liipfert and Disney were not sufficiently diligent in complying with the protective order” issued by agency on merger documents. Calling breach “significant violation” of its protective order, Commission said actions of Disney and its law firm “have not reflected the standard of conduct the Commission expects of parties in our proceedings.” But, finding “no evidence that the violation was intentional or that it reflects a pattern of noncompliance,” agency said no further action was needed. It said parties already had suffered “substantial penalty” when they were barred from inspecting confidential documents during critical phase of Commission’s merger review in fall. In future, FCC said it would consider banning parties and their counsel from access to confidential documents beginning from time it discovers their violation of protective order until one or 2 business days after they have notified agency and submitting party of violation.
WorldCom wouldn’t confirm reports it planned to lay off 10- 15% of its 77,000 employees, but Wall St. Journal said Fri. reduction could be announced when company reports its 4th-quarter earnings Feb. 8. “We don’t comment on rumors and speculation,” WorldCom spokesman said. Layoffs are expected mainly in company’s consumer long distance, wholesale and prepaid phone card businesses, Journal said. WorldCom has been struggling with slow revenue growth, falling long distance prices, strong competition. It announced in Nov. it would issue tracking stock for its slower growing businesses such as long distance and concentrate core company on higher profile areas such as data services to business customers.
Qualcomm reported $684.02 million revenue for quarter ended Dec. 31, down from $1.12 billion same period of 1999, reflecting in part sale of its cellphone operations. Based on pro forma results, which exclude one-time charges such as those related to Globalstar, $684 million in quarterly revenue was up from $635 million for year earlier. Qualcomm reported quarterly net loss of $228.7 million, vs. $177.1 million profit for same period of 1999. Earlier this month, Globalstar failed to make $22 million principal and interest payment to Qualcomm. Qualcomm said it has $595 million in charges related to reserves against certain Globalstar assets and for related earnings. “We anticipate further growth domestically and internationally during fiscal 2001 with increasing focus on third-generation CDMA deployment,” Qualcomm Chmn. Irwin Jacobs said: “Our satellite businesses, however, have been impacted by economic and capital market conditions, and by Globalstar’s recent decision to suspend payment on its funded debt and to study its options, including restructuring.” Qualcomm said it was sticking by forecast of 90 million CDMA phones expected to be sold in 2001 and 20% drop in the average sales prices of those units.
OpenTV reported higher net loss of $118.8 million on increased revenue of $22.3 million in 4th quarter ended Dec. 31, thanks to continued heavy noncash charges. OpenTV, whose interactive TV software is now in more than 11 million digital set-top boxes worldwide, said it doubled its net loss for year to $240.8 million despite more than doubling revenue to $63.1 million, due to higher operating expenses and noncash charges.
AllTel reported 10% increase in revenue to $7.1 billion last year, while net income rose 5% to $863 million. Company said its “emerging businesses” such as CLEC and long distance services generated 43% more revenue than year ago while wireless revenue was up 15%.