Detroit: Chrysler, GM offer new concessions
Chrysler, the Treasury Department, and the United Autoworkers this week reached a deal to keep the automaker out of bankruptcy court, said Alex Kellogg and Kris Maher in The Wall Street Journal. Under the plan, union workers would own 55 percent of Chrysler, but give up cost-of-living wage increases and accept limits on overtime pay. The firm’s creditors, including Treasury, would swap their debt for shares in the company. The move would allow Chrysler “to intensify negotiations on a merger deal with Fiat.”
General Motors has also offered a “last-ditch” plan for averting Chapter 11, said Steven Mufson in The Washington Post. Under the plan, the U.S. would become the carmaker’s majority shareholder, in exchange for investing $27 billion in the company (including $18 billion already disbursed). GM would ax its Pontiac brand, shutter 13 plants, and lay off 21,000 white-collar workers. For the deal to fly, GM’s other creditors must agree to swap their bonds for shares in GM. So far, creditors have reacted coolly to the offer.
Entertainment: Two top talent agencies to merge
Hollywood talent agencies William Morris and Endeavor have agreed to merge, said Dawn Chmielewski and Meg James in the Los Angeles Times. The combined agency will field more than 300 agents and a roster of heavyweight clients. But the merger of Morris, a longtime Hollywood power, and 14-year-old Endeavor will also generate “upheaval and numerous layoffs.” Like other talent brokers, Morris and Endeavor are being squeezed “as the studios have dramatically curtailed their spending” on movie and TV production.
Software: An unwelcome first for Microsoft
For the first time since it went public, in 1986, Microsoft has reported a year-over-year decline in quarterly revenue, said Ina Fried in CNET.com. The software giant reported that it recorded $13.65 billion in sales in the quarter ended March 31, down 6 percent from $14.45 billion in the same quarter last year and below analysts’ expectations of $14.15 billion. Microsoft blamed “weakness in server and PC sales,” which in turn hurt sales of the Windows operating system and server and office software.
Publishing: Portfolio calls it quits
Condé Nast has closed Portfolio, its high-gloss business magazine, blaming “a historic recession in ad spending,” said David Carr in The New York Times. After a slow start in 2007, the magazine won notice for its coverage of the financial crisis. But it “failed to gain traction with readers and advertisers,” and recently cut its publishing frequency to 10 times a year from 12. In the past year, Condé Nast has also closed Domino, a shelter magazine, and Golf for Women.
Lending: Obama leans on credit card companies
President Obama has warned bankers and credit card executives to curtail what he called “abuses,” or face tough new regulation, said Steven Thomma in The Miami Herald. Obama last week brandished letters from Americans “hit hard by soaring credit fees and rates,” and echoed their complaints that credit card companies were raising rates and imposing heavy penalties without adequate warning. The credit card executives cautioned that new regulations could choke off credit.