Tougher student loan rules could hurt Washington Post Co.

A proposed federal government crackdown on student loan repayment rules could hurt the Washington Post Co.'s Kaplan testing and education unit, Bloomberg BusinessWeek reported.

New regulations being considered by Congress and the Obama administration could make students at schools with the worst loan repayment records ineligible for federal loans. Department of Education data show that less than 35% of federal student loan aid is repaid at for-profit campuses operated by Kaplan and two other large companies, the article said.

In addition to its college admissions test preparation courses, Kaplan offers degree programs online and at campuses in four states, the report noted.

Although the Washington Post newspaper and its Newsweek magazine [which the Post agreed to sell in August 2010] are better known, Kaplan has become the Post's largest unit, accounting for nearly 60 percent of revenue last year, up from 11 percent 10 years ago. Kaplan's impact on profits [is] even greater. In 2009, Kaplan had operating income of $194.8 million, while the Post's newspaper business lost $163.5 million and Newsweek lost $29.2 million.

Post chairman Donald Graham has personally lobbied on Kaplan's behalf and contends that the regulations would punish schools that serve low-income students, Bloomberg BusinessWeek reported.

The warnings about Kaplan have shaken investors in Washington Post stock ... sending the shares at one point to a 14-year low. The stock has tumbled more than 18 percent this year.

The article also noted that the company may also face higher borrowing costs. (Source: Bloomberg BusinessWeek, Sept. 2, 2010.)

Posted Tuesday, September 07, 2010 • Permalink

Martha Stewart to provide programming for Hallmark Channel

Martha Stewart will provide eight hours of programming each weekday for the Hallmark Channel, which will change its focus to home and lifestyle improvement and cooking shows, the Los Angeles Times reported.

Studio City [Calif.]-based Crown Media Holdings Inc. -- which is controlled by the Donald Hall family of Kansas through its privately owned Hallmark Cards Inc. -- has spent nine years and burned through $2 billion trying to come up with a viable strategy for television.

Crown Media earlier had tried to sell the Hallmark Channel, the report noted.

Potential buyers were chased away by Crown Media's heavy debt load, low fees paid by cable operators and legions of gray-haired viewers who loyally tune it to the brand's comfort programming. Advertisers prefer youthful audiences, making it more difficult for Hallmark to command top dollar for commercial time on its two channels.

The LA Times article noted that an investor filed a lawsuit after Crown Media recapitalized $1.1 billion of its debt this summer.

[The] investor alleged that a low-ball valuation was placed on Crown Media that "unfairly diluted the voting interests of minority shareholders," according to the lawsuit, scheduled to go to trial Sept. 21. The recapitalization boosted the Hall family's ownership to 90.3% of the television enterprise, up from about 66%.

The report also said Hallmark had previously paid cable operators to carry the channel on their systems. Common practice in the industry is for operators to pay entertainment companies for the right to distribute their cable channels, the LA Times reported. Although Crown Media ended the practice after five years, it hampered the company's ability to negotiate higher fees for the Hallmark Channel and Hallmark Move Channel. In early September, AT&T U-Verse dropped the two channels after failing to reach a new agreement with Crown Media.

Now, instead of being available in 90 million homes, the Hallmark Channel can be found in 88 million homes, or about three-quarters of U.S. TV households; and the Hallmark Movie Channel is available in about 37 million homes, down from more than 38 million.

Bill Abbott, Hallmark's former advertising sales chief who became Crown Media's CEO in June 2009, "wants the channels to better capitalize on the relationship with Hallmark Cards, in part, by acquiring programming that ‘celebrates' holidays," the article said. (Source: Los Angeles Times, Sept. 7, 2010.)

Posted Tuesday, September 07, 2010 • Permalink

S.C. Johnson completes $550 million debt offering

S.C. Johnson & Son Inc. completed a $550 million debt offering, the Business Journal of Milwaukee reported. The article noted that "debt-ratings agencies applauded the company's ability to generate cash flow during the economic downturn."

Debt-ratings agencies Fitch and Standard & Poor's said the proceeds from the 30-year unsecured notes due in 2040 will fund a $194 million acquisition from Sara Lee Corp. and refinance upcoming debt maturities.

S.C. Johnson is acquiring brands sold in Asia, Europe, Russia and Africa from Sara Lee, the report noted.

S.C. Johnson received positive ratings of A- from both Standard & Poor's and FitchRatings. Neither ratings agency was able to disclose specifics of Johnson's revenue or net income because it is privately held.

(Source: Business Journal of Milwaukee, Sept. 3, 2010.)

Posted Tuesday, September 07, 2010 • Permalink

Malt-O-Meal’s instant oatmeal competes with Quaker’s

Malt-O-Meal Co. is launching a marketing campaign to promote its Better Oats brand of instant oatmeal that takes a stab at rival Quaker Oats Co., the Minneapolis/St. Paul Business Journal reported.

The campaign will start in Quakertown, Pa., and move to Philadelphia (home of the University of Pennsylvania Quakers), the Quaker Square Inn in Akron, Ohio, and Chicago (where Quaker is based). The final stop is Minneapolis, where Malt-O-Meal is headquartered, the journal reported.

Better Oats, Malt-O-Meal's first instant oatmeal brand, debuted last spring, the report noted.

Malt-O-Meal has been a growing presence in the cereal universe. Last year it acquired the Farina Mills hot cereal brand from U.S. Mills, and opened a new factory in Asheboro, N.C. ...

The article noted that in 2002, Malt-O-Meal acquired Quaker's bagged cereal business. Quaker is part of PepsiCo Inc.

Malt-O-Meal is privately owned by members of the Brooks and Fort families, descendants of John Campbell, who founded the company in 1919. (Source: Minneapolis/St. Paul Business Journal, Sept. 2, 2010.)

Posted Friday, September 03, 2010 • Permalink

Billionaire investor’s letter slams Barnes & Noble chairman and family

Los Angeles billionaire Ronald W. Burkle sent a letter to Barnes & Noble Inc. shareholders accusing the company's chairman, Leonard Riggio, "of self-dealing, approving business deals that benefit himself and his family," the Los Angeles Times reported. Riggo acquired Barnes & Noble when it was a single store and built it into a large chain.

Burkle's investment firm, Yucaipa Cos., "owns about 19% of the company and wants to buy more," the article said. A "poison pill" plan currently prevents investors from owning more than 20% of the shares without board approval. Burkle is seeking three seats on the company's board.

The Los Angeles investment firm said it is unfair that ... Riggio and his family, combined, can own about 33% of the bookseller but no entity can own more than 20%.... Riggio alone owns almost 30%. The Yucaipa letter want on to say that Riggio is running Barnes & Noble like a private business. Barnes & Noble paid "almost $70 million in lease payments for office space, warehouses and bookstores owned by entities in which the Riggio family has majority or minority interest," it said.

Analysts have recommended that Barnes & Nobel begin selling some of its 717 stores, the LA Times article said. (Source: Los Angeles Times, Aug. 31, 2010.)

Posted Tuesday, August 31, 2010 • Permalink

Koss launches new products despite embezzlement scandal

As former Koss Corp. employee Sujata Sachdeva awaits sentencing after pleading guilty in a $34 million embezzlement case against the company, Koss has launched three new products and seven product extensions, the Business Journal of Milwaukee reported. CEO Michael Koss told the journal:

"We have continued to operate the business as normally as possible despite the distractions of the criminal case."

Koss Corp. incurred nearly $1.7 million in costs for legal and professional services related to the embezzlement by Sachdeva, who pled guilty to six counts of wire fraud in U.S. District Court, the article said. The company posted a net fourth-quarter loss of $423, 450, according to the report.

Koss Corp. was founded in 1953 by Michael Koss's father, John, who serves as chairman of the board. (Source: Business Journal of Milwaukee, Aug. 27, 2010.)

Posted Monday, August 30, 2010 • Permalink

Penny Pritzker’s directorship status changed at Hyatt

Hyatt Hotels Corp. has changed Penny Pritzker's directorship status; she is no longer considered an independent director at the company, the Wall Street Journal reported. The company, which Pritzker's family controls, made its initial public offering last fall. Hyatt's executive chairman, Thomas Pritzker, is Penny Pritzker's first cousin.

Pritzker's directorship status changed because she took over within the past year as president of a family enterprise that leases the office space to Hyatt for its corporate headquarters in Chicago, said a spokeswoman for her.... Pritzker's new duties apparently made her dealings with Hyatt "material" enough to disqualify her as independent.

According to the report, last fall, when Pritzker was designated an independent director, "various family businesses where she was chairman or president did about $3 million a year in transactions with Hyatt." In an earlier Journal article, observers had questioned her status as an independent director.

The Journal report noted that "Some corporate governance experts also question the independence designation still given to two other directors who have outside business ties to the Hyatt or the Pritzker family." The article added:

Without those two designations, Hyatt's board wouldn't have the majority of independent directors normally required by the New York Stock Exchange, where the company's shares trade.

The Journal reported that Byron Trott, managing partner of BDT Capital Partners LLC, was determined by Hyatt to be independent "even though a firm where he is president serves as an adviser ‘on a broad range of matters' to Pritzker family trusts ... according to Hyatt's proxy statement. Plus, Pritker trusts are limited partners in a BDT investment fund, the proxy said."

Richard Friedman, a partner and managing director at Goldman Sachs Group Inc., also was designated independent. Goldman served as lead underwriter on Hyatt's initial public stock offering, and in 2009 Hyatt paid Goldman $3.5 million for investment banking and advisory services, the Journal article said. (Source: Wall Street Journal, Aug. 24, 2010.)

Posted Tuesday, August 24, 2010 • Permalink

New CEO takes helm at Port Blakely Companies

René Ancinas, a fourth-generation family member, assumed the CEO post at Port Blakely Companies on July 1, the Pacific Northwest family business announced.

Ancinas, 45, succeeds James Eddy Warjone, a third-generation family member who served as CEO for 32 years. Warjone will continue as chairman of the board, a position he has held for the past 13 years, the company said.

Port Blakely Companies, founded nearly 150 years ago, owns and manages operations in forestry, forest products exports and real estate.

Ancinas has been Port Blakely Companies' president and chief operating officer since December 2008. Prior to joining the company, he was a founding member and first president of the Eddy Family Council. Council member Charlotte Lamp chronicled the effort to create the family council in the Autumn 2007 issue of Family Business Magazine.

Posted Tuesday, August 17, 2010 • Permalink

Major German family firms open to bond market

Some of Germany's largest family-owned groups -- including Porsche, Schaeffler, Merckle and Haniel -- are opening up to the bond market, according to a Financial Times report.

The move comes as a result of last year's economic and banking crisis, and is a trend bankers hope will be followed by the country's many small and medium-sized companies.

An observer in the banking industry told the FT that the family firms' move toward capital markets began because "negotiations with banks have become much harder during the crisis."

Law professor Brun-Hagen Hennerkes told the FT:

"There is a new successor generation in family-owned companies that is educated in global business schools and that does not have an aversion against capital markets."

Schaeffler, the giant auto parts and ball bearings company, opened up to the public after the controlling family almost lost the business following a takeover of larger rival Continental.

After the suicide of Adolf Merckle last year, his son Ludwig sold a large stake in one of the company's main holdings, HeidelbergCement, to the stock market. Porsche has started to publish quarterly results in anticipation of its merger with Volkswagen next year.

In contrast to these companies, whose entry into public markets was forced, Haniel issued a 1 billion euro five-year, high-yield bond last year as a way of replacing "unreliable" bank financing, the FT article said. (Source: Financial Times, Aug. 17, 2010.)

Posted Tuesday, August 17, 2010 • Permalink

Robinson Helicopter founder retires

Frank Robinson, the 80-year-old founder of Robinson Helicopter Co. in Torrance, Calif., has retired as the company's president and chairman of the board, the Los Angeles Times reported.

His successor is his son Kurt Robinson, who has worked at the company since 1987, the LA Times reported.

Robinson Helicopter is the world's biggest manufacturer of civilian helicopters, the article said. Frank Robinson founded the company in 1973. The LA Times report noted:

In recent years, the recession affected both the company and Robinson's retirement plans. Last year, production fell 52% to 433 helicopters from 893 in 2008.

Frank Robinson and his company were profiled in the cover story of Family Business magazine's March/April 1991 issue. (Source: Los Angeles Times, Aug. 14, 2010.)

Posted Monday, August 16, 2010 • Permalink