BusinessWeek's May 5, 2008 Issue: The New Vulture Investors

A preview of the issue on newsstands April 25th

NEW YORK, April 25 /PRNewswire/ --

  THIS WEEK:

  -- Cover Story: The New Vulture Investors
  -- Gas May Finally Cost Too Much
  -- Taking on the Music Industry
  -- Using Ex-Cons to Scare MBAs Straight

  For these stories and more, visit http://www.businessweek.com/


  COVER STORY: THE MIDAS OF MISERY

By Emily Thornton, with Susan Zegel in New York and Christopher Palmeri in Los Angeles

(Photo: http://www.newscom.com/cgi-bin/prnh/20080425/NYF015 )

While Wall Street panicked over the fate of Bear Stearns in mid-March, hedge fund manager Philip A. Falcone enjoyed a notably successful week. The founder of Harbinger Capital Partners made tens of millions of dollars on an earlier wager that Bear and other financial stocks would collapse. Then on Mar. 17 he scored a coup at the financially struggling New York Times when publisher Arthur O. Sulzberger Jr. agreed to add two of Falcone's allies to the board. Days later, the Federal Communications Commission sold off a block of wireless spectrum for billions, dramatically boosting the value of spectrum that Falcone had purchased on the cheap. Falcone is a Midas of Misery. With $19 billion -- nearly 760 times the grubstake he started out with seven years ago -- he is snapping up troubled assets in bankruptcy, shorting distressed bonds, and using huge stock positions to agitate for change at underperforming companies. His holdings read like a who's who of market castoffs: media companies, utilities, and steelmakers. http://www.businessweek.com/magazine/content/08_18/b4082034951866.htm?campaign _id=pr_newswire (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

  GAS MAY FINALLY COST TOO MUCH
  By Christopher Palmeri, with David Kiley and David Welch in Detroit

For 20 years now, county workers in Palm Beach County, Fla., have been counting cars with sensors at strategic points along its 4,000 miles of roads. Nearly every year traffic volume has climbed at least 2%. But in 2007 there was a slight decline in the number of vehicles on the roads. This year traffic is down 7.5% through March. "We're seeing a very significant change," says county engineer George Webb. "We're having a good time speculating why." It's not just Palm Beach. Traffic levels are trending downward nationwide. Preliminary figures from the Federal Highway Administration show it falling 1.4% last year. Now, with nationwide gasoline prices having passed the inflation-adjusted record of $3.40 a gallon set back in 1981, the U.S. Energy Information Administration is predicting that gasoline consumption will actually fall 0.3% this year. That would be the first annual decline since 1991. Is oil-guzzling America changing its ways? Some think so, though it's worth noting the U.S. still consumes one-third of the world's annual gasoline output. http://www.businessweek.com/magazine/content/08_18/b4082000518114.htm?campaign _id=pr_newswire (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

  DOES SHE LOOK LIKE A MUSIC PIRATE?
  By Heather Green

After being sued by the music industry for stealing songs and winning the case's dismissal, Tanya Andersen of Portland, Ore. is now taking the record industry to court. Her case is aimed at exposing investigative practices that are controversial and may be illegal, according to the lawsuit. One company hired by the record industry, she claims, snoops through people's computers, uncovering private files and photos, even though it has no legal right to do so. A different industry-backed company uses tactics similar to those of debt collectors, pressuring people to pay thousands of dollars in settlements even before any wrongdoing is proven. In Andersen's case, the industry's Settlement Support Center said that unless she paid $4,000 to $5,000 immediately, it would "ruin her financially," the suit alleges. Andersen is going after the recording industry under conspiracy laws. She argues the Recording Industry Association of America, the industry's trade group, and its affiliates worked together on a broad campaign to intimidate people into making financial payoffs. The defendants "secretly met and conspired" to develop a "litigation enterprise" with the ultimate goal of preserving the major record companies' control over the music business. Andersen is requesting class action status for her case, seeking at least $5 million in compensation for the class. http://www.businessweek.com/magazine/content/08_18/b4082042959954.htm?campaign _id=pr_newswire (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

  USING EX-CONS TO SCARE MBAs STRAIGHT
  By Jane Porter

By the time he was 40, Walter A. Pavlo Jr. had graduated with a master's degree in business from Mercer University, worked as a manager at MCI, concocted a $6 million money laundering scheme, served a two-year sentence in federal prison, and was divorced, unemployed, and living with his parents. It's a story that should scare any MBA straight. At least that's the hope of business school professors who bring in Pavlo (and pay him as much as $2,500 per visit) to speak to their students about corporate crime. After the Enron-era scandals, business schools quickly created ethics centers and courses. Recently some, including New York University, the University of California at Berkeley, and Purdue, have made the conversation less academic by inviting those with practical experience into the classroom. Pavlo, who lined up his first (albeit unpaid) gig before he was released from jail in 2003, is one of the busiest convicted felons on the B-school speaking circuit. He's given 25 lectures since January and expects to keep up that pace through the year. "Here's a real person telling students what happened to his life. I don't think there is any substitute for that," says Linda K. Trevino, a professor of organizational behavior and ethics at Penn State Smeal College of Business, where Pavlo has appeared several times. http://www.businessweek.com/magazine/content/08_18/b4082058987055.htm?campaign _id=pr_newswire (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)