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That'll Show 'em

Confronting a fierce public backlash against relaxing media-ownership laws, Federal Communications Commission Chairman Michael Powell is trying to make amends. Powell directed the agency on Aug. 20 to recommend ways to promote local content on TV and radio. But the move will probably do little to slow momentum in Congress to overturn a new rule that allows TV networks to own local stations covering 45% of the nation's audience, up from an original 35% limit.

Powell says public outrage is based on misguided fears that big media will ignore local programming. He argues that rules to promote such programming would address those concerns. Powell named two task forces to recommend guidelines within a year to promote localism in broadcasting and to promote minority and small-business ownership. He also directed the agency to issue more licenses for local radio stations.

Many had speculated that Powell would step down after pushing through his media regs reform. Now, the betting is he'll stick around to restore his reputation. The little blue pill is geting a little competition. On Aug. 19, Bayer (BAY) and GlaxoSmithKline (GSK) received Food & Drug Administration approval for their impotence drug Levitra. The drug is the first major challenger to Pfizer's (PFE) Viagra. Analysts say Levitra may be faster-acting than Viagra. But expect Pfizer to defend its $1.7 billion impotence drug aggressively, even pointing out to doctors that Levitra carries a warning about possible heart rhythm disturbances. A spokesperson for Bayer and Glaxo says the FDA concluded the cardiac issue was not "clinically significant." With the baby boomers now in their nesting years, the battle between retailers Home Depot and archrival Lowe's (LOW) has become the do-it-yourself equivalent of the cola wars. And the second quarter looks like another win for upstart Lowe's, which said on Aug. 18 that profits for the quarter ended Aug. 1 surged 28%, thanks to a heady 17% rise in sales. The following day, Home Depot (HD) notched a 9.9% rise in second-quarter profits on a 10.5% rise in revenues. But while Lowe's stock rose $3, to $51.96, on its strong report, Home Depot shares tumbled 5%, to $32.16, as investors decided that Lowe's is winning market share with brighter stores. The mood is glum on Tobacco Road. On Aug. 20, R.J. Reynolds (RJR) (RJR) Tobacco Holdings told workers to expect an unspecified number of job cuts as soon as September. The layoff warning comes after the maker of such popular brands as Winston and Camel reported a 67% drop in second-quarter profits. RJR, the second-largest U.S. cigarette maker, blamed the decline on competition from discount brands. The bad news doesn't stop there. RJR's accounting practices are also the target of a probe by the Securities & Exchange Commission. The SEC wants more disclosure about how much of RJR's sales and marketing budget goes toward defense against product-liability claims. Northwest Airlines (NWAC) won't have to break into its piggy bank after all. The nation's No. 4 carrier got the go-ahead from the Labor Dept. on Aug. 18 to replenish underfunded pension plans with stock in a regional-airline subsidiary instead of cash. Northwest asked for an exemption in late 2002, saying it did not have enough money to bring the funds up to required levels. But in the second quarter, the company posted its first quarterly profit in nearly two years. It also reported that cash reserves now stand at $2.8 billion. Despite the stronger balance sheet, Northwest says it'll take advantage of the break to contribute at least $223 million in Pinnacle Airlines stock to its pension plans and husband the cash stash for other uses. Federal authorities have charged a former U.S. Postal Service employee with securities fraud for misappropriating stock tips from BusinessWeek. On Aug. 20, the SEC sued Davi Thomas, formerly employed in a Mount Vernon (N.Y.) sorting facility, charging that he reaped $154,269 by trading stocks mentioned in BW's Inside Wall Street column. From 1996 to 1999, Thomas allegedly read BW as it passed through the facility and allegedly made numerous trades, profiting from what the SEC called the column's "material impact." The U.S. Attorney for the Eastern District of New York also filed an indictment. Thomas could not be located for comment. SEC officials say his whereabouts are unknown. -- Nokia (NOK) sold more than half its stake in ailing networking outfit Redback Networks (RBAK).

-- Guidant (GDT) must pay Johnson & Johnson (JNJ) $425 million for patent infringement on a stent.

-- The FCC allowed AOL to use video in its instant messaging service. For years, investors have wondered when storage maker Network Appliance (NTAP) would get squashed by larger rivals such as EMC (EMC) On Aug. 20, it helped allay those fears by reporting a 76% jump in first-quarter earnings. The news sparked a 16% jump in Network Appliance's stock, to nearly $21.

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