TOP STORIES -- May 8 - 13

United Airlines Cleared to Shed Pension Plans

A bankruptcy judge approved United Airlines’ plan to dump its underfunded pension plans on a federal agency, a move that the carrier said it needed to survive -- but one that could trigger a strike against the airline.

U.S. Bankruptcy Judge Eugene Wedoff in Chicago said UAL Corp.’s United could shift all four of its major pension plans to the Pension Benefit Guaranty Corp. The plans’ total liabilities exceed their assets by $9.8 billion, but the agency agreed to assume only $6.6 billion of that shortfall.

The ruling fueled speculation that other major airlines might try to ditch their pension plans to avoid being at a competitive disadvantage to United.

Wedoff’s decision was a blow to United’s 121,500 active and retired employees, many of whom are likely to see their retirement checks reduced because federal pension laws cap how much the insurer pays out.

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Yahoo Launches Music Subscription Service

Yahoo Inc. announced a deeply discounted music service on Tuesday, betting that low prices and personalized features will lure customers away from the troves of free but illicit music online.

Executives of Sunnyvale, Calif.-based Yahoo hope to prod tens of millions of people to try the new service by promoting it on the company’s popular search engine, e-mail service and other Web properties.

Their challenge, though, is to persuade music fans to switch from buying songs to buying access to a service. Yahoo Music Unlimited enables subscribers to play as many songs as they want provided that they pay their monthly fees.

Subscribers would pay $6.99 a month or $60 for a full year’s access to Yahoo’s collection of more than 1 million songs from the four major record companies and hundreds of smaller labels. .

The arrival of new competition spooked investors in online music companies Napster Inc. and RealNetworks Inc., whose stocks fell 27% and 21%, respectively, a day after the announcement. Even shares in Apple Computer Inc., operator of the most popular online music store, were down 9% at one point before finishing with a 2% drop.

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Falling Oil Prices May Offer Motorists Relief

Oil prices fell again this week, hitting their lowest point in almost three months and boosting hopes that motorists will get some relief at the gas pump this summer.

Light sweet crude for June delivery slid $1.91, or 3.8%, to $48.54 on Thursday on the New York Mercantile Exchange -- its lowest level since Feb. 18. It brought the benchmark contract’s two-day loss to almost 7% as investors reacted to news of rising supplies and slowing global demand. Oil continued to fall Friday, to as low as $47.75, before rallying to close the week at $48.67 a barrel.

Gasoline futures fell 5 cents to $1.432 a gallon on Thursday, the lowest since March 1, and then shed 1.98 cents more on Friday.

Oil hit an all-time high of $57.27 on April 1 but has fallen steadily since then as members of the Organization of the Petroleum Exporting Countries increased production and China’s once seemingly runaway economic growth moderated a bit.

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Warner Music Group IPO Lands With a Thud

The much-anticipated initial public stock offering of Warner Music Group Corp. hit another sour note as shares fell 3.5% in their first day of trading on Wednesday on the New York Stock Exchange

The stock slipped 60 cents to $16.40, having fallen as low as $15.75 in early trading. Shares slipped further in the next two sessions, closing out their first week at $15.96.

The price drop came after Warner already was humbled by a significant reduction in its offering price. The company priced its shares at $17 on Tuesday night, down more than 20% from a hoped-for $22 to $24 a share. Although the company sold more shares than it had projected -- 32.6 million instead of 27 million -- the cut in the offer price pared the total amount raised to $554 million, about $100 million less than hoped.

Weak demand for the stock comes amid concerns that digital piracy continues to beguile the industry, and a sign of investor discontent over the sums pocketed by company insiders, including Chief Executive Edgar Bronfman Jr. and private equity firm Thomas H. Lee Partners, analysts said.

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Executive Life Jury Renders Mixed Verdict

A jury reached a split decision in the long-running legal battle over the collapse of Executive Life Insurance Co., finding that a company controlled by French billionaire Francois Pinault defrauded California regulators in a scheme to acquire the failed insurer’s assets but clearing Pinault himself of wrongdoing.

The decision, which came after an eight-week trial and more than 12 days of deliberation, left open the question of whether damages would be assessed against Pinault’s firm, Artemis. The state had been seeking damages of $1 billion.

U.S. District Judge A. Howard Matz postponed a hearing on the issue until the last week of May at the earliest and urged both sides to settle.

In its verdict, the jury cleared Pinault of civil charges that he engaged in intentional misrepresentation, concealment or fraud when he acquired some of the assets of Executive Life.

However, the jury found that Artemis was liable for conspiracy and fraud for its role in the deal.

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Carl Icahn Wins Seat on Blockbuster Board

Billionaire investor Carl Icahn and two other dissidents easily won election to the board of ailing video rental giant Blockbuster Inc., replacing Chief Executive John Antioco and two other directors.

But, in a conciliatory move, Antioco was reappointed as chairman and a director of the Dallas-based company, with Icahn’s blessing, on Friday. The company also confirmed that Antioco would stay on as CEO.

One reason: Blockbuster could be on the hook for about $54 million in severance if Antioco leaves the company altogether, as he threatened to do if he lost the vote.

Icahn was elected with his two designated candidates, former music executive Strauss Zelnick and Edward Bleier, a former top Warner Bros. executive.

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SEC Names 1st Woman to Lead Enforcement

The Securities and Exchange Commission named Linda Chatman Thomsen as chief of its enforcement division, making her the first woman to head the unit at the forefront of the agency’s corporate fraud crackdown.

Thomsen, who was the division’s second-ranking official, succeeds Stephen Cutler, who said last month that he would return to the private sector.

Thomsen, 50, joined the agency a decade ago and rose steadily through the enforcement unit. She oversaw the SEC’s investigation of Enron Corp. after its collapse in 2001.

Thomsen said that “the most important thing from my perspective is to maintain our hard-earned and re-earned reputation for excellence and fairness. If I do nothing else, my time as director would be a huge success.”

The 1,300-person enforcement unit investigates and brings legal action against alleged securities law violators.

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Disney Critics Allege Fraud in CEO Search

Dissident former directors Roy E. Disney and Stanley P. Gold opened a new front in their battle with Walt Disney Co., alleging in a lawsuit that the company’s board conducted a sham search for a new chief executive before giving the job in March to President Robert Iger.

The filing in Delaware Chancery Court alleged that directors duped Gold and Disney into not running an alternative slate of directors at Disney’s annual meeting the previous month by misleading investors into believing that a good-faith effort was underway to find CEO Michael Eisner’s successor.

The two men want the court to scrap the February election results. They are asking for a new vote and want the court to hold up any changes to Iger’s contract, which has not been finalized, before he formally assumes the top job at the Burbank entertainment company Oct. 1.

Disney spokeswoman Zenia Mucha called the action a “frivolous and baseless lawsuit.”

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Sears to Sell or Spin Off OSH Hardware Chain

Retailing giant Sears Holding Corp. said it planned to shed its Orchard Supply Hardware chain to focus on blending its Sears and Kmart stores.

San Jose-based Orchard, better known by its acronym OSH, will either be sold or spun off in an initial public offering, executives of Hoffman Estates, Ill.-based Sears said.

OSH’s 82 stores, all in California, could fetch $300 million in a sale, UBS Securities analyst Gary Balter said. That would be nearly 30% less than the $415 million Sears paid for the chain, then at 60 stores, in 1996.

The stores run from Laguna Niguel in Orange County to Redding in Northern California.

Sears Chief Executive Alan J. Lacy said the company needed to shed OSH to focus on “core business.” Sears declined to say whether it would maintain a stake if it spun off OSH.

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U.S. to Re-Impose Some Textile Quotas on China

The Bush administration announced that it decided to reimpose quotas on three categories of clothing imports from China, responding to pleas from domestic producers that a surge of Chinese imports was threatening thousands of U.S. jobs.

The administration action will impose limits on the amount of cotton trousers, knit shirts and underwear that China can ship to this country, an action that American retailers contend will drive up prices for U.S. consumers.

In announcing the decision, Commerce Secretary Carlos M. Gutierrez said government investigation had found that a surge in shipments from China since global quotas were eliminated Jan. 1 was disrupting the domestic market.

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For a preview of this week’s business news, please see Monday’s Business section.