This NY Times article reports that The Bechtel Group and the General Electric Company, partners of Enron Corporation in the troubled Dabhol Power Company in India, have bought Enron’s 65 percent share of Dabhol to recoup part of the $1.2 billion they invested in the failed $3 billion venture. Bechtel and GE, which were the two main contractors for the plant, each previously had a 10 percent stake in Dabhol.
Dabhol was one of several major Enron foreign investments that were poorly structured and unprofitable, eventually contributing to the financial problems that forced Enron into bankruptcy. The background into the Dabhol power plant deal are explained well in the best book on the demise of Enron, Bethany McLean and Peter Elkind’s “The Smartest Guys in the Room — The Amazing Rise and Scandalous Fall of Enron.”
Monthly Archives: April 2004
Wiseguy Philosophy – “I kill therefore I am”
This NY Times book review examines a new collection of essays called “The Sopranos and Philosophy: I Kill Therefore I Am” (Open Court Publishing, $17.95). The book is the seventh in Open Court Publishing’s “Popular Culture and Philosophy” series that is described as “philosophy with training wheels”. Previous books explored pop culture franchises including “Seinfeld,” “The Simpsons,” “The Matrix,” “Buffy the Vampire Slayer” and “Lord of the Rings.”
Interestingly (and thankfully), not all pop culture is fit for philosophical examination, said the editor of the series, William Irwin, an associate professor of philosophy at King’s College in Wilkes-Barre, Pa. Mr. Irwin said he rejected book proposals on the long-running television shows “Friends” and “E.R.” because “they lacked the basic depth and literacy for a thorough philosophical discourse.”
‘Stros-Rockets joint venture wins summary judgment
This Chronicle story reports on the summary judgment that a joint venture comprised of the Astros and the NBA’s Houston Rockets obtained yesterday in their lawsuit seeking a declaratory judgment that the Astros’ television contract with Fox Sports Network allowed the Astros to opt out of the contract in favor of a better deal. The summary judgment removes a major obstacle for the team-owned Houston Regional Sports Network, which would carry Rockets games in 2005 and Astros games beginning in 2006. The network would end a two-decade relationship between the Astros and FSN’s predecessors (Home Sports Entertainment), one of the nation’s first regional sports networks.
This litigation highlights two important considerations regarding sports media contracts. First, in the quickly changing environment of media broadcasting, long term contracts are risky for both sides. In this particular contract, the Astros were the ones who were losing out, but it is at least as common for the media party to lose big on these contracts, as CBS has discovered in regard to its NCAA Basketball Tournament contract.
Secondly, following the lead of the New York Yankees, baseball clubs are increasingly inclined to own their own media outlets to maximize their ability to generate revenue. Major League Baseball is the only major professional sport without a salary cap on players’ salaries and its teams also do not share any meaningful media revenue. Consequently, baseball clubs are constantly under pressure to increase their sources of revenue. That is the bet that the Astros are making in establishing the Houston Regional Sports Network.
Stros improbably top Cards
A big part of baseball’s attractiveness is its utter unpredictability. By any measure, Monday’s game between the Astros and the Cardinals should have been a cake walk for the Redbirds. Due to Andy Pettitte going on the disabled list, the ‘Stros started Jared Fernandez, a journeyman knuckleball pitcher. The Cards were starting Houston native and former University of Houston pitcher, Woody Williams, who has owned the ‘Stros over the past several seasons.
So, what happens? The Stros score four runs in the top of the 1st off of Williams, and then the Cards score four runs off of Fernandez in 1/3rd of an inning in the bottom of the first. The game then settles down until the 8th, when the Stros put it away behind Craig Biggio’s three run double, his third of the game, to win 10-5. Richard Hidalgo was the other big run producer for the Stros, hitting a three run dinger in the 1st and a sac fly in the 8th.
Grizzled observers of the Stros are starting to wonder just how bad those pictures are that Fernandez apparently possesses of manager Jimy Williams and Astros GM Gerry Hunsicker. Williams continues to trot Fernandez into games despite the fact that, after last night’s game, he has an earned run average of 54!
Roger Clemens goes for the Stros in the second game of the series in St. Louis this evening.
VDH expands on the consequences of appeasement
In this earlier post from last week, historian Victor Davis Hanson expounded on the futility of appeasement. In this longer City Journal piece, Dr. Hanson expands on the consequences and causes of the appeasement of radical Islamic fascists that has occurred over the past 25 years since the radical Iranians seized the American hostages in 1979. The entire piece is an excellent history lesson, and here are a few of Dr. Hanson’s pearls of wisdow:
The twentieth century should have taught the citizens of liberal democracies the catastrophic consequences of placating tyrants. British and French restraint over the occupation of the Rhineland, the Anschluss, the absorption of the Czech Sudetenland, and the incorporation of Bohemia and Moravia did not win gratitude but rather Hitler?s contempt for their weakness. Fifty million dead, the Holocaust, and the near destruction of European civilization were the wages of ?appeasement??a term that early-1930s liberals proudly embraced as far more enlightened than the old idea of ?deterrence? and ?military readiness.?
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As long ago as the fourth century b.c., Demosthenes warned how complacency and self-delusion among an affluent and free Athenian people allowed a Macedonian thug like Philip II to end some four centuries of Greek liberty?and in a mere 20 years of creeping aggrandizement down the Greek peninsula. Thereafter, these historical lessons should have been clear to citizens of any liberal society: we must neither presume that comfort and security are our birthrights and are guaranteed without constant sacrifice and vigilance, nor expect that peoples outside the purview of bourgeois liberalism share our commitment to reason, tolerance, and enlightened self-interest.
Most important, military deterrence and the willingness to use force against evil in its infancy usually end up, in the terrible arithmetic of war, saving more lives than they cost. All this can be a hard lesson to relearn each generation, especially now that we contend with the sirens of the mall, Oprah, and latte. Our affluence and leisure are as antithetical to the use of force as rural life and relative poverty once were catalysts for muscular action. The age-old lure of appeasement?perhaps they will cease with this latest concession, perhaps we provoked our enemies, perhaps demonstrations of our future good intentions will win their approval?was never more evident than in the recent Spanish elections, when an affluent European electorate, reeling from the horrific terrorist attack of 3/11, swept from power the pro-U.S. center-right government on the grounds that the mass murders were more the fault of the United States for dragging Spain into the effort to remove fascists and implant democracy in Iraq than of the primordial al-Qaidist culprits, who long ago promised the Western and Christian Iberians ruin for the Crusades and the Reconquista.
Then, after describing the numerous specific attrocities that radical Islamic fascists perpetrated on the United States through four administrations, and the failure of any of those administrations to confront the fascists effectively, Dr. Hanson observes as follows:
[T]he primary cause for our surprising indifference to the events leading up to September 11 lies within ourselves. Westerners always have had a propensity for complacency because of our wealth and freedom; and Americans in particular have enjoyed a comfortable isolation in being separated from the rest of the world by two oceans.
Finally, Dr. Hanson lays it on the line with both Democratic and Republican Administrations’ failure to confront the leading exporter of radical Islamic fascism, Saudi Arabia:
Neither oil-concerned Republicans nor multicultural Democrats were ready to expose the corrupt American relationship with Saudi Arabia. No country is more culpable than that kingdom in funding extremist madrassas and subsidizing terror, or more antithetical to liberal American values from free speech to religious tolerance. But Saudi propagandists learned from the Palestinians the value of constructing their own victimhood as a long-oppressed colonial people. Call a Saudi fundamentalist mullah a fascist, and you can be sure you?ll be tarred as an Islamophobe.
Even when Middle Easterners regularly blew us up, the Clinton administration, unwilling to challenge the new myth of Muslim victimhood, transformed Middle Eastern terrorists bent on destroying America into wayward individual criminals who did not spring from a pathological culture. Thus, Clinton treated the first World Trade Center bombing as only a criminal justice matter?which of course allowed the United States to avoid confronting the issue and taking on the messy and increasingly unpopular business the Bush administration has been engaged in since September 11. Clinton dispatched FBI agents, not soldiers, to Yemen and Saudi Arabia after the attacks on the USS Cole and the Khobar Towers. Yasser Arafat, responsible in the 1970s for the murder of a U.S. diplomat in the Sudan, turned out to be the most frequent foreign visitor to the Clinton Oval Office.
Take the time to read the entire article. Dr. Hanson is shooting straight with us, and it is not comforting. Thanks to my friend Bill Hesson for the pointer to the article.
UT assistant Haith to coach Canes
Mike DeCourcy of The Sporting News is reporting that Frank Haith, 38, associate head basketball coach at the University of Texas for the past three seasons, will be named the new head coach of the University of Miami Hurricanes basketball program this week.
Haith has been a key recruiter for the strong Texas basketball program over the past several years. Although Texas is known more for its football team, the Texas basketball program has actually been better than the football program lately. The Horns have made it to three straight NCAA Tournament Sweet Sixteens and reached the Final Four in the 2002-03 season. Haith also has also worked as an assistant coach at Wake Forest, Texas A&M, Penn State and UNC Wilmington.
Was that “Remember the Alamo” or “Forget the Alamo”?
This Wall Street Journal ($) story reports that The Walt Disney Co.‘s $100 million production of “The Alamo” tanked over the weekend, grossing only an estimated $9.2 million domestically.
The failure is not well-timed. Disney and its chief executive officer, Michael Eisner, are under pressure to meet or exceed the company’s financial targets of 30% earnings growth in the wake of a shareholder revolt that resulted in the Disney board stripping Mr. Eisner of his chairman title.
Disney’s film studio, which had a great year in 2003, has been trying to make it through a shaky stretch of its release schedule this year without a major bomb. “The Alamo,” however, is a clear loser that may struggle to take in even $25 million or $30 million in U.S. theaters at its present pace. Moreover, its prospects overseas are believed to be poor because few foreigners know about the historical event upon which the movie is based. Although the failure of a single film typically doesn’t affect the stock price of Disney much, it is imperative for Disney management to keep its share price up in order to fend off the Comcast, Inc. unsolicited all-stock offer for the company that Disney’s board rejected in February.
“The Alamo” opened to mixed reviews last weekend.
Coke general counsel quits
This Wall Street Journal ($) story reports on the continuing turmoil at the top executive levels of Coca-Cola Company as its general counsel, Deval L. Patrick, has resigned amid criticism from some company directors over his handling of government investigations and a shareholder class action lawsuit relating to allegations of accounting fraud. Here is the NY Times article on the resignation.
The company’s board is already conducting its first-ever outside search for a new chairman and chief executive to succeed Douglas Daft, who plans to retire later this year. Steven J. Heyer, Coke’s president and chief operating officer, probably will leave the company if isn’t named to replace Mr. Daft.
The U.S. attorney’s office in Atlanta and the Securities and Exchange Commission have been conducting wide-ranging investigations into Coke since last summer after a former company auditor made allegations of accounting fraud in a wrongful-termination lawsuit against the company. Mr. Patrick had no role in the alleged misconduct.
One of the most serious allegations is that Coke engaged in “channel stuffing” and overstated its financial results in recent years by shipping excessive beverage concentrate to bottlers in Japan, North America and elsewhere. On a related note, a federal district court in Atlanta denied Coke’s motion to dismiss a shareholder’s class-action lawsuit filed in 2000 and allowed the plaintiffs to pursue discovery on several parts of the lawsuit, including the channel stuffing allegations.
Draft Shell report pins blame on former key executives
This Wall Street Journal ($) story reports that a draft Royal Dutch/Shell Audit Committee report primarily blames Shell’s former chairman, Philip Watts, and former exploration-and-production chief, Walter van de Vijver, for the company’s massive energy-reserve overbooking that was revealed earlier this year. As reported earlier here, Shell’s boards ousted Messrs. Watt and van de Vijver early last month. The report — prepared by Shell’s audit committee and a team of outside attorneys from law firm Davis Polk & Wardwell — is currently circulating among board members and investigators.
In early January, Shell dramatically reduced its estimate of oil and natural gas reserves by 20%, which is a key investor evaluation tool of an energy company’s value. Last month, Shell again trimmed its reserves and announced that it was delaying its annual report until the completion of further reserve reviews. As a result, investigators in Europe and the U.S., including the Securities and Exchange Commission, are probing Shell’s previous overstatements relating to its reserves.
Mickelson wins The Masters
Phil Mickelson won The Masters Golf Tournament in dramatic style with a clutch 12 foot birdie putt on the 72nd hole to edge Ernie Els by a stroke. Here is the NY Times article on Mickelson’s victory.
As everyone who follows golf knows, it is Mickelson’s first victory in one of golf four major tournaments (Masters, U.S. Open, British Open, PGA) and finally lifts from Mickelson’s back the baggage of being “the best golfer never to have won a major.”
This afternoon was the best day of the Masters since Jack Nicklaus‘ dramatic victory at the age of 46 eighteen years ago in 1986 (has it really been that long?). The final nine of Augusta National Golf Club is legendary — there are two par fives that are legitimate eagle holes (13 and 15), two relatively short but testy par threes (12 and 16), an incredibly difficult par four (11), four solid par fours (10, 14, 17, 18), and nine greens that are severely undulating and lightning quick. Consequently, wild scoring swings can occur because, although eagles and birdies are quite possible, bogies and double bogies are looming everywhere if a player makes even the slightest error.
This final day of the Masters had more memorable shots on the back nine than any final day in Masters history. Within ten minutes of each other, Padraig Harrington and Kirk Triplett had holes-in-one of 16. K.J. Choi — a fellow resident of The Woodlands, Texas — holed a 225 yard five iron on the incredibly difficult 11th hole for an eagle, and then played superbly with playing partner Els down the stretch to finish in third place. After jump starting his round with an eagle at the 8th hole, Els stiffed a five iron on 13 to set up a 15 footer for another eagle, followed immediately by a clutch 20 foot putt for birdie by Mickelson on the devlish 12th hole. 46 year old Bernhard Langer remained in contention for his third Masters title until his 235 yard three iron hit the false front on the 15th hole and trickled agonizingly into the pond that fronts that green. And then Mickelson birdies 16 to tie Els, and then birdies 18 (after hitting a 303 yard drive with a 3 metal!) to win his first major golf tournament. Mickelson received a huge assist on his winning birdie putt from his playing partner Chris DiMarco, who blasted out of a greenside bunker to set up a putt on the same line as Mickelson’s. Accordingly, DiMarco’s putt gave Mickelson a good read for his birdie putt. These are just a few of the incredible shots that occurred today and does not include the pressure 5-10 foot putts that each competitor made to remain in the hunt.
Folks, television sports just does not get any better than this.
Mickelson’s win is surprising only because he has been so close and failed in many prior major golf events. It’s always been a mystery among Tour players why Mickelson had not won a major. He has all the tools — power off the tee, great shotmaking ability, and a fabulous short game. Moreover, Mickelson is legendary among Tour players for his ability to excel in pressure situations during the players’ “big bet” practice rounds before various tournaments. After a rather poor 2003 season, Mickelson used the off-season to make his swing more compact and controlled, and to work on his short game. The work is paying off, as he has now won two tournaments this season (the Bob Hope Desert Classic was the other one), finished third in the Players’ Championship and the AT&T Pebble Beach, and had four other top ten finishes. As you would expect, he is the leading money winner on the Tour.
Now that Mickelson has the monkey off his back, it is time to figure out who is the new “best player never to have won a major golf tournament.” My initial list of candidates includes Colin Montgomerie (actually, he’s probably not good enough to win a major anymore), Darren Clarke, Stuart Appleby, Padraig Harrington, Robert Allenby, and the incredible Jay Haas.