Instead of the usual rambling intro to Cocktail Chatter, I want to offer a few notes on columns from the week just past. (I know the intro will be sorely missed, but unfortunately I can promise you that it will be back next week.)
In my piece on the NBA finals, I referred to last year’s disastrous “strike.” But as a couple of readers pointed out, there was no strike. The labor dispute last year was a lockout inflicted by the NBA owners on the players. Mea culpa.
In that same piece, I offered the suggestion that the mediocrity of the finals match-up had something to do with the lower ratings. But readers also suggested that the scheduling of all the games at 9 p.m. had something to do with the ratings shortfall, while others argued that the lockout had driven them to other alternatives, including the Women’s World Cup.
Finally, in last week’s there was a joke (let me delude myself and call it that) about a merger in the forest industry, a joke that apparently rubbed a few people the wrong way because it seemed to be dismissing the forest industry. Actually, I was trying to say something about the relative neglect with which the media treats what you might call Old Economy industries. But I think I failed.
Gotta get back on the horse, though. And so, on to the Chatter.
1. “After three lucrative weekends in a row, Hollywood is trumpeting a major industry turnaround and saying that this could be the biggest summer ever. Of course, there are two things to keep in mind about these predictions. First, Hollywood only ever talks about revenues, and never about profits. You see, it’s like the Internet, except there isn’t any upside. Second, Hollywood never adjusts its numbers for inflation. More revenue in dollars in 1999 than in 1963 or 1933? Now that’s really impressive. I’d bet that only, oh, every industry in America can make that same claim.”
2. “It’s taken more than 20 years, but Congress finally looks ready to pass a bill ‘modernizing’ the financial services industry, which will mean that the lines between banks, insurance companies, and investment banks are going to be blurred beyond all recognition. Oh, wait. Citibank and Travelers (which owns Salomon Brothers) have already merged, and everyone keeps saying Chase wants to buy Merrill Lynch. So I guess the lines are already blurred beyond all recognition.”
3. “The Federal Communications Commission tentatively approved the huge merger between SBC Communications and Ameritech but will require SBC to offer local service in 10 major cities within two years. Yes, it is in fact the first time in history that a merger was almost rejected because the new company was too small.”
4. “In the wake of the Federal Reserve’s decision to raise interest rates by just a quarter of a point, inflation hawks immediately started grumbling that Alan Greenspan is out of touch and has become too big a believer in the hype about the New Economy. Another way of putting this might be to say that inflation hawks get really uncomfortable any time workers and consumers get too happy. All those damned Whos down in Whoville are just smiling too much, I guess.”
5. “Of course, the household savings rate did fall in May to -1.2 percent, the lowest rate since the Great Depression (when of course no one had any money to save). That number is distorted, because it doesn’t include the savings that the stock market is doing for people. But it’s still remarkable. Perhaps everyone is anticipating an alien invasion within the next decade (and just not telling me about it). Alternatively, maybe there’s just a lot of really cool stuff to buy.”
6. “One of the weirdest spectacles this week was watching and listening to all these money managers try to game the Fed’s decision, speculating on whether you should sell stocks before the announcement and then leap in if the news was good, worrying about what the Fed’s bias was going to be, tossing around the possibility that the interest-rate hike would be half a point instead of a quarter point, and wondering what color tie Greenspan would be wearing. If you’ve ever seen a gerbil running inside a wheel, you know exactly what all these money managers looked like.”
7. “The president and chief operating officer of Planet Hollywood, who was brought on board less than a year ago to turn around the company’s disastrous performance, just up and quit. Apparently he came into the office, said he was ‘going to pursue other interests,’ and quit. Planet Hollywood’s chairman insists that the turnaround is on track and that the president’s resignation doesn’t mean anything. Would it have meant anything if the president had added, ‘Steve Forbes has a better chance of winning the presidency than this company does of not going out of business’?”