Tribune Co. said it signed definitive agreements to sell nine of its 15 cable-television systems and the Los Angeles Daily News to separate buyers for a total of $413.5 million. Jones Intercable Inc. ...of Englewood, Colo., agreed to buy the cable systems for $237.5 million, boosting its number of subscribers 31% to 740,000 and making it the 12th-largest cable operation in the nation. Tribune Co. said it is negotiating with potential buyers of its remaining six cable systems. Jack Kent Cooke, whose real estate, cable-television and sports interests include the Washington Redskins football team, agreed to buy the newspaper for $176 million. It marks Mr. Cooke's first success in a major media purchase in his last three outings. He dropped a $1.17 billion bid to buy Multimedia Inc. in July and was outbid by Gannett Co. in August for Evening News Association, Detroit. And it won't be his last media buy, he said.
After a spending binge of nearly three years, many signals indicate that consumers may be approaching exhaustion. Surveys show that their confidence is falling while personal bankruptcies and ...delinquency rates on loan payments and credit cards are rising. For most of this year, consumers have relied on savings and credit to pay for deficit spending. But now, burdened with record debt, they are able to save little -- if any -- money and have few prospects for significantly increased income. The evidence is certainly not conclusive. But the Conference Board, a business research group, says consumer confidence dropped for a second consecutive month in September, and a parallel University of Michigan survey has shown declining confidence since midsummer. Leo J. Shapiro, a Chicago market researcher, says his September consumer survey showed "mixed signals, but a lot of bad ones." Among them: Christmas buying plans are falling sharply, day-to-day spending has been reduced, and economic concerns are rising. That retrenchment may prove to be a disaster for retailers. Many economists now expect consumer spending to grow only one or two percentage points in the fourth quarter, or only about half of what they had forecast just a few months ago. Some project flat spending. Although few observers expect consumer spending to slacken so much as to bring on a recession, pessimistic economists say six months to a year may pass before consumers resume their aggressive spending habits. And that threatens to taint Christmas for a second successive year.
In 1981, three giants of the financial-services industry announced plans to enter the securities business in a big way by buying firms with large retail stock-brokerage networks. The three -- ...Prudential Insurance Co. of America, American Express Co. and Sears, Roebuck & Co. -- spent a total of $2 billion buying Bache Group Inc., Shearson Loeb Rhoades Inc. and Dean Witter Reynolds Organization Inc. The renamed Prudential-Bache Securities Inc., is just beginning to turn a profit after racking up the biggest single-year loss in Wall Street history. Dean Witter, while returning modest profits to Sears, has spent heavily to add retail brokers and has been plagued by internal squabbles over the role of investment banking in a retail-oriented company. Shearson, now called Shearson Lehman Brothers Inc., has reaped handsome returns for American Express but has yet to make a mark for itself among the 21 million holders of American Express's green, gold and platinum-colored plastic. But in 1981, the combinations seemed formidable. Prudential, the nation's largest life-insurance company, began the stampede by buying Bache, the sixth-largest securities firm. American Express, the premier credit-card company, teamed with Shearson, the second-largest broker. And Sears, the nation's biggest retailer and owner of Allstate Insurance Co., the second-largest property-casualty insurer, bought both Dean Witter, the fifth-largest securities firm, and Coldwell, Banker & Co., the largest real-estate brokerage business.
Sears, Roebuck & Co.'s much ballyhooed Discover credit and financial-services card is making its debut in Atlanta this month. Household International Inc. is mailing two million solicitations for its ...new HomeCard. Yesterday, Shell Oil Co. announced its all-purpose Signature card, and last week, Amoco Corp. said it was making its 2 1/2-year-old MultiCard more versatile. The new entries are tackling a market that is already heavily saturated. Industry experts estimate that more than 80% of those who are eligible already hold some form of bank card, for example. "There are an awful lot of cards out there," says James W. Forney, manager of Shell's credit card and direct mail division. "But the studies say the credit card business is still going to be a significant sales tool into the future." Sears' Discover card, for example, is as much a financial-services access card as it is a general-purpose credit card for use in retail establishments and for travel and entertainment. Users will have access to a national automatic teller machine network and to other Sears' financial services such as money-market funds and individual retirement accounts.
J.C. Penney Co.'s transformation into an upscale merchandiser so far hasn't worked precisely according to plan. In 1983, the company unveiled a plan designed to turn itself from a drab, middle-market ...retailer into a chain where shoppers would feel comfortable buying more-expensive, department store-type merchandise. In the process, it discarded such products as big appliances and bargain-basement garments, remodeled its stores, added expensive designer clothes, and stocked more name brands. But Penney's earnings declined for four of the last five quarters. And sales, excluding new stores, dropped slightly through the company's current fiscal first half ended July 27. Moreover, some company officials are worried that sales from longtime Penney customers have been lost amid their dogged pursuit of more affluent consumers -- shoppers who generally have resisted the new Penney allure. "In the beginning (Penney management) thought it was going to be easy," says a supplier who asked not to be identified because of a business relationship with the company. "They figured they were already getting the woman who was buying socks and underwear. They thought by upgrading womenswear, they'd get her to buy both."
Cub is on the leading edge of a food-industry shake-up, which has already forced many conventional supermarkets to lower prices, increase services -- or close their doors. With Cub and other super ...warehouse stores springing up across the country, shopping habits are changing, too. Some shoppers drive 50 miles or more to a Cub store instead of going to the nearest neighborhood supermarket. Their payoff is that they find almost everything they need under one roof, and most of it is cheaper than at competing supermarkets. Cub's low prices, smart marketing and sheer size encourage shoppers to spend far more than they do in the average supermarket. Cub is "the most revolutionary thing to come along in food retailing in 20 years," says Joseph N. Uhl, a Purdue University marketing economist who studied Cub for the Federal Trade Commission. "Other companies have tried to imitate them, but no one has Cub's impact." Adds a Kroger Co. executive in Indiana, "There's no question they have the better mousetrap." The difference between Cub and most supermarkets is obvious the minute a shopper walks through Cub's doors. The entryway aisle, called by some "power alley," is lined two stories high with specials, like bean coffee at $2 a pound and half-price apple juice. Above, the ceiling joists and girders are exposed, giving "the subliminal feeling of all that spaciousness up there," says Paul Suneson, director of marketing research for Cub's parent, Super Valu Stores Inc., the nation's largest food wholesaler. "It suggests there's massive buying going on that translates in a shopper's mind that there's tremendous savings going on as well."
The closing is part of an effort by Montgomery Ward, the U.S.'s sixth-largest retailer, and by its parent, Mobil Corp., to shed unprofitable operations and focus the retailer's limited resources on ...new specialty stores. The decision also furthers Mobil's previously reported aim to divest itself of Montgomery Ward after strengthening it financially. New York-based Mobil also has oil, gas, plastics and container-making operations. But it still isn't clear whether a slimmed down Montgomery Ward can gain market share and prosper in the intensely competitive retailing environment. The company is abandoning its general merchandise roots to establish two kinds of stores: large outlets containing seven broad categories of merchandise organized into specialty "stores within a store," and much smaller, stand-alone specialty stores geared to sell the same merchandise in medium-sized markets. Also unclear is the future of big-book general merchandise catalogs, which in recent years have lost ground to specialty catalogs. Though the two largest catalog operators, retailers Sears, Roebuck & Co., Chicago, and J.C. Penney Co., New York, said they plan to continue their big general-purpose catalogs, industry executives said they are anachronisms that might be doomed as costly adjuncts to store operations. In addition to its general catalog, Sears has developed specialty catalogs.
The new card, intended to compete head-to-head with the likes of MasterCard, Visa and American Express, will be accepted in a pilot program in the Atlanta area by Hospital Corp. of America, Denny's ...Inc. restaurants, American Airlines and Transamerica Corp.'s Budget Rent-a-Car. The program will begin soon. Edward R. Telling, Sears chairman and chief executive officer, said at the company's annual meeting in Atlanta that a major hotel chain also is expected to accept the Discover card. He wouldn't name the chain, but a spokeswoman for Holiday Corp. said the hotel concern has been negotiating with Chicago-based Sears. Mr. Telling sought to stress the middle-class appeal of the new Sears charge card, which the giant retail and financial services concern hopes it can use to market more of its products and services. "Denny's serves an awful lot of middle America, as does Hospital Corp.," Mr. Telling said. "We aren't concentrating this card at either end of the economic ladder, but we feel our success lies down the middle, as it always has."
General Mills Inc., in a turnabout reflecting a lower-than-expected market value for its fashion group, said it will spin off most of that business rather than sell it. The food and restaurant ...company said it still expects to gain about $400 million from a series of divestitures and spinoffs planned for fiscal 1985, ending May 31. Those previously announced moves include a spinoff of its toy group; sale of We Are Sportswear, a Southern California clothing chain; sale of some of its restaurants; disposal of the most of the fashion group by spinoff; and sale, for $53 million, of its Foot-Joy Inc. unit to American Brands Inc. General Mills acknowledged that the anticipated value of the fashion group has declined by about $180 million from its estimate of just a month ago. But it said the anticipated proceeds of the toy group spinoff have nearly doubled, to $175 million to $200 million from the previously announced $100 million.
Robert H. Morosky, vice chairman of both Lerner and its owner, Limited Inc., said it will be weeks before the Lerner tangle is fully sorted out. "I can't speculate as to the size of the problem we'll ...find, or what subsequent actions we might take," Mr. Morosky said. In an unprecedented step, Lerner canceled $100 million in orders from 100 suppliers. Although Mr. Morosky said Lerner expects to reinstate the "vast majority" of those orders, the move touched off a wave of garment-industry complaints and threats of breach-of-contract lawsuits. "All of the industry is up in arms," says Eli Elias, president of the Federation of Apparel Manufacturers, a trade group. "This is totally unacceptable." And the Lerner problems raise questions about Limited's purchase. "Something is very wrong with Lerner -- there's more there than Limited bargained for," said Monroe Greenstein, an analyst for Bear, Stearns & Co. "Lerner could be more of a drain on them than (Wall) Street might have been thinking."
