Explaining Southern California's economy

Peter Liguori becomes new Tribune CEO, calls the company a startup

2010 Winter TCA Tour - Day 6

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Meet the new CEO of Tribune Co., owner — and possible soon a seller — of the L.A. Times.

Tribune Co. emerged from bankruptcy last year owned by a bank, JP Morgan, and private equity investors from Los Angeles-based Oaktree Capital Management. Now it's going to be run by an executive whose most recent job was at the giant private equity firm the Carlyle Group. Peter Liguori landed there for a stint after serving as the Chief Operating Officer at Discovery Communications.

Last year, the bankers and private-equity guys who now control the company started to talking to yet more bankers about possibly selling Tribune Co.'s newspapers, which include the Los Angeles Times and Chicago Tribune, as well as local TV station KTLA.

In an interview with the L.A. Times published Thursday, Liguori said that he's isn't interested in selling, say...the L.A. Times for a "fire sale" price. And then he said some other things:

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Bond kings chase returns in a low-interest-rate world

A short sale home in the Spring Valley a

MARK RALSTON/AFP/Getty Images

A recovering housing market has yielding big returns for Southern California bond funds that have invested in risky assets.

Heather Perlberg and Pierre Paulden at Bloomberg have a good piece Wednesday about what I call Southern California's "bond triangle" - and its investment managers' relentless quest for returns when interest rates are at historic lows. 

The major players in the story are PIMCO, the nearly $2 trillion fixed-income colossus based in Newport Beach; TCW, with $135 billion in assets under management and in the process of being taken over by the Carlyle Group, a big private-equity firm; and DoubleLine Capital, run by former TCW trader Jeff Gundlach and one of the fastest-growing financing startups in history, with more than $50 amassed in assets in three years. ( TCW and DoubleLine are based in L.A.)

Here's Perlberg and Paulden on how these firms' investment in a risky category of debt has paid off big time:

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Carlyle Group buys TCW, and the Euro crisis comes home

TCW-Getty

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TCW was just bought by the Carlyle Group, a huge private-equity firm. The sale could helo TCW and former parent, struggling French banking giant Société General.

The Carlyle Group, one of the world's biggest private-equity firms, is buying TCW, an institutional investment management firm based in L.A., with roughly $130 billion on the books and a good reputation for fixed-income. In fact, the bond side of what TCW does is such a big part of the business (about 60 percent) that David Lippman, who ran fixed income for TCW, will become CEO of the new, Carlyle-owned enterprise. 

The last thing that popped TCW onto the radar was a meltdown in 2009 that involved its star bond trader, Jeff Gundlach. But there's a meltdown behind the Carlyle deal, as well. And it's all about how TCW former parent, French back Société Générale, is suffering from the ongoing eurozone crisis and from the aftermath of the financial crisis.

Banks around the world are now required to basically keep more money in the vault (so to speak). It's called the "Basel Accord," and it's now up to its third iteration, Basel III. SoGen, France's number two bank, is in the process of bolstering its balance sheet and cutting lines of business in order to comply with Basel III. It's been a rough time for the bank, which is suffering from its exposure to Greek debt — it wrote off three-quarters of its investment last year.

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Dunkin' Donuts: The return to California, by the numbers

dunkin' donuts to california

Photo by Qfamily via Flickr Creative Commons

Is this a match for Starbucks in California?

There haven't been any actual Dunkin' Donuts stores in California since the 1990s, but that's all about to change. This isn't you father's Dunkin' Donuts. This is a whole new, amped-up, recently IPO'd and private-equity enabled Dunkin' Donuts. Not a cheerful place to stop in for a delicious coffee and and sticky ring of fried dough, but Starbucks worst nightmare.

Dunkin' Donuts, which has become something of a hipster alternative to 'Bucks, has almost no presence west of the Mississippi. However, following its $400 million initial public offering last year, it's putting itself under pressure to grow. Understandably, given that it's stock price has bumped along in a narrow trading range since its successful debut (it came out at $19 and has lived reliably above that ever since). But it's trading at 100 times earnings (not unusual for a newly IPO'd company), which means that investors are expecting this sucker to go someplace.

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