| Show tuff ruriiiin 1 30 industrials daily close 20 municioal bonds Friday close Conv 30-ye- ar mortgage 22S points 21 key Nightmare on Ad St commodities Friday close State taxes on advertising threaten industry — Page 2E house payments Foreclosure No threat — an option Page 4E Voodoo Economics Ro'xl and Dec Jan Commnd ' ns oaa Dec Jan Feo ofowjnd 1 Snna'so" t Ml Dec Jan Feb Feb Dec Jan non Feb Standard Fsanunas gratae II Capital gains tax cut debated — Page 6E Standard-Examine- r Sunday February 26 1989 economy Week m REVIEW Local The Sears store in the Newgate Mall and all 824 other Sears stores nationwide will close beginning Monday evening for 42 hours and mark down 50000 prices as part of a massive company restructuring Sears will be changing its retail strategy to an “everyday low price” structure in a move termed by the company as “the biggest change in Scars his- Station needs more viewers tory” State regional The cost of living along the Wasatch Front continued to buck the national trend in January dropping at an annual rate of 12 percent according to a monthly report issued by First Security Bank Decreased costs for health care clothing food eaten away from home and taxes offset a jump in expenses for groceries transportation and utilities said Kelly K Matthews First Security economist KOOG has to expand to survive simply because Ogden had a Federal Communications Commission license available Westphal said “Ogden was picked because the FCC allocated a license to the city of Ogden and the original corporation knew of its availability and elected to put up a TV By JIM SAWDEY Sidncard £ yammer staff OGDEN — Something unique happened to Ogden in October 1985 when 30 began broadcasting from a transmitter on Little Mountain in western Weber County It became Ogden’s first and very own station” he said commercial television station Little Mountain isn’t the ideal locaSince then however the station has tion for a broadcaster to transmit to the struggled flirting with bankruptcy and Wasatch Front And KOOG can’t survive by broadcasting to the greater Ogtackling a series of lawsuits that threatened its existence But with the purden area alone It needs the entire chase of controlling shares in the Wasatch Front as its market area publicly-hel- d “In order to survive we have to sercompany by new owners the settlement of most of the suits and vice Salt Lake and Provo to generate the introduction of the Home Shopping ratings To do that we need good proNetwork many of the station's probgraming to generate ratings to get nalems are behind it said station Managtional advertising dollars” he said er Curt Westphal The station’s signal barely reaches Today Westphal is waiting for 60th South in Salt Lake City and the KOOG's parent company American mountains block reception in the AveCommunications and Television to do nues area To reach the Avenues to it what it did for a sister station — KOOG placed a translator on top of inject capital into the station to buy a the Beneficial Life Building With a new Oquirrh Mountains transtransmitter and more programs to attract advertisers mitter KOOG will reach south to ProACTV is the parent company of vo north to Box Elder County and KOOG as well as WTGS Savannah west to Tooele After the transmitter is Georgia American Uplinks Inc Idaho built the station will receive more Springs Colo and National Mobile money for video tape equipment proTelephone Florida graming and personnel he said In November ACTV secured a $5 It’s a wonder Channel 30 is transmitmillion loan and a $1 million line of ting at all credit for WTGS and a $1 million line Several decisions made by the origiof credit for its other three subsidiaries nal owners of KOOG eventually found Westphal knows exactly what he will their way in court as program distribudo with the station’s share: Broaden the tors sued the station alleging a variety station’s horizons by placing a new of programing violation transmitter station atop the Oquirrh “Prior management signed a lot of Mountains contracts for programing that accumuEven though K0OG is an Ogden stalated a lot of debt which has caused tion its broadcast signature reflects its these various lawsuits Now the new need for a bigger audience Instead of company is cleaning them all up” he lt it says said saying KOOG-Ogde- n Lake “I can’t wait until this whole thing is KOOG became an Ogden station over with because to me (the lawsuits) KOOG-Chann- el KOOG-OgdcnSa- Utah is too far from the marketplaces of big business and has some problems related to its conservative image according to the results of a survey of 100 corporate executives On the other hand Utah workers are seen as productive and educated and the size of the state’s labor pool is seen as positive the survey shows Jeame AoamsStanaard-Examme- r State Economic Development Division officials plan to increase their management expenditures 31 percent and bef up their administrative ranks by two positions in a major restructuring of the agency The planned shake-u- p could take until July to complete said Community and Economic Development Department Director David Adams A diluted version of a banking deregulation bill gutted of most of its original intent but allowing bankers limited authority to underwrite and sell some types of securities was approved by the Utah Legislature Wednesday mid-lev- KOOG station manager Curt Westphal in the operations room dirty your name And it’s the new company that’s cleaning it up” he said The expense of those suits added to the difficulty of paying for expensive syndicated programing The dollars just weren’t there and KOOG was on the brink of bankruptcy barely two years after it began broadcasting Then a series of events occured: Tri Vest Bankers bought out the original owners’ controlling stock Local cable companies were required to carry KOOG on their systems Most of the lawsuits were settled or will be settled shortly The Home Shopping Network paid KOOG to broadcast its programs 7 to 18 hours per day eliminating the need to purchase costly syndicated program1 ing Tri Best lined up money to expand the station The Home Shopping network turned the station around because instead of having to pay for programs for the en tire day the station was being paid for 17 to 18 hours of air time he said “Home shopping pays us to put programing on the air and that in essence prevented Channel 30 from going black” he said Now KOOG can turn its attention to what it knows best to battle three competing affiliate stations two Public Broadcasting Service stations an independent and a host of cable television offerings The solution is simple said Westphal: provide an alternative people will watch He says he has done that to an extent and plans to do more Home Shopping Network airs from either 9 pm or 10 pm to 2 pm or 3 pm daily depending on other pn graming And the network has a loyal following he said He is left with six to seven hours in prime time for syndicated programing and commercial time See KOOG on 2E el National Consumer prices propelled by higher costs for food fuel and a variety of other items rose 06 percent last month for the biggest jump in two years the government reported Wednesday The rise in the Labor Department’s Consumer Price Index followed moderate increases of 03 percent in both November and December The Federal Reserve Friday raised its discount rate which it charges on loans to member banks to 7 percent from 65 percent its highest level since April 1986 Employee stock ownership has its share of problems You’re an ordinary working stiff in a big corporation Suddenly your mean old boss starts talking as if he were the rich Uncle Harry you always wished you had Out of the goodness of his heart he tells you he’s going to give you and the rest of the labor force a piece of the action How good a deal is this really? And is it just possible that somebody along the way is getting snookered? Could be — even though there’s a growing trend among major corporations to adopt ESOPs (employee stock ownership plans) that give their employees a slake in the business Companies such as Texaco Procter & Gamble Polaroid JC Penney Avis and Hospital Corporation of America have gone this route swelling the number of ESOP plans to an estimated 8000 ESOPs have always been a sort of tax loans are made by dodge an outside lender to a trust set up for a Low-intere- st compain’s employees The trust buys shares in the company The company Louis Rukeyser Tribune Media Services gets the money But unlike other forms of borrowing the company’s cash contributions to the ESOP (with which these loans are actually repaid) are fully deductible principal as well as interest The leading evangelist for ESOPs is San Francisco lawyer Louis Kelso who made a major convert in 1973 in Sen Russell Long then chairman of the Senate Finance Committee Highly favorable law was written The idea was that it would help privately owned companies whose owners wanted to retire and would give workers the opportunity to become capitalists even on a small-tim- e scale From the start there were serious questions about using the tax code for this purpose Critics ranged across the economic spectrum from Milton Friedman to Paul Samuelson who denounced the plan as a loophole But perhaps the most serious reservation was that ESOPs were making an implied promise on which they might not be able to deliver ESOPs look like retirement plans and have been launched mostly through federal pension laws Congress however exempted ESOPs from key pension safeguards that could spell disaster for a foundering company In other words instead of a pension plan based on sensible diversification workers might be putting all their eggs in the same basket from which they pluck their paychecks If the basket collapses — as companies are known to do — look out! Indeed when I pressed Kelso on this once he acknowledged that he would not recommend ESOPs for "companies that are unsuccessful companies that arc unprofitable” adding frankly: “It’s no substitute for good management” Now to these traditional concerns about ESOPs comes a new one Within the last year or two many large firms have jumped on the ESOP bandwagon as a financing vehicle to make leveraged buyouts prevent hostile takeovers rid themselves of unprofitable divisions or just reap rewards by selling out at astronomical prices to the firms’ employees while giving them only a passive role in management More than a few analysts for example raised their eyebrows at the approximately $2 billion for which Hospital Corporation of America sold off 104 of its hospitals least-profitab- le Avis sold the company to its employees for $175 billion and showed a profit of $740 million Employees will be forced to assume $750 million in debt over 10 years but Avis’ senior management cashed out and no longer holds slock in the company Shamrock Holdings went to court to prove that Polaroid’s new ESOP which gave employees 14 percent of the company’s stock exists simply to thwart a takeover And similar motives were speculated about when Procter & Gamble added $1 billion to its ESOP plan giving employees 20 percent of the company and JC Penney added $700 million to its employee plan bringing the workers’ stake to nearly 25 percent Joseph R Blasi management professor and author of the recent book “Employee Ownership: Revolution or Ripoff?” put it to me bluntly: “All too often employee ownership is abused by managers who exploit it for their own purposes” At its best employee ownership can provide financial security and job protection But workers offered such a plan should remember the oldest rule in investing: caveat emptor Otherwise they in an may find themselves the goats ESOP’s fable |
