New Orleans--a Tale of Two Companies

As promised, I am in the Crescent City for Thanksgiving week and a little lagniappe (New Orleanian for extra), and, while so much press and blogging attention has been focused on all levels of government, what I've gleaned is a story of two very different corporations and their behavior in the post-disaster world.

One, let's call it Company B, owns a broadcast media property in New Orleans. In the wake of Katrina, the enterprise relocated twice, finally ending up in Baton Rouge, where it continued to put out what, to my observation, was a consistently fine product during the days and weeks of chaos and worse. A source within the company who's not prone to Pollyannaish views of the business world, says the company continued all employees on the payroll, while telling those with particularly difficult situations not to bother coming in to work until things had settled down. How'd they keep the enterprise going that way, with advertising revenue drying up? They told the managers of the corporation's other properties around the country that they had to up their revenues to make up the difference.
Now, let's look at another company, the electricity supplier for the City of New Orleans, a private firm named Entergy. In the wake of Katrina, Entergy New Orleans, incorporated separately from the parent firm, entered Chapter 11-style bankruptcy. Here's the way the NYT describes what happens now:

"To be without 70 percent of your electricity and gas customers more than 80 days after a storm is an unprecedented occurrence in the utility industry," said Curt Hébert, an executive vice president with Entergy New Orleans's parent, the Entergy Corporation, the country's fifth-largest power company.

The Entergy Corporation posted $350 million in profits in the three months ended Sept. 30, a 24 percent increase over the corresponding period last year. But company officials say regulators prohibit them from using money from any of its four other utilities to bail out the fifth. Entergy has granted its New Orleans subsidiary a $200 million line of credit, but the loan must be repaid.

Who would those regulators be? What must they be thinking--why should the ratepayers in (other city name here) be subsidizing the ratepayers of New Orleans? Entergy's New Orleans subsidiary accounts, according to the International Herald Trib, for about 5% of the company's total earnings.

Now, company B's business is in a regulated industry, too--broadcasting. And the way that firm behaved is the textbook argument for letting local firms be bought up by large national firms--the "cushion" theory. But the experience of Entergy, the "learn to swim, the lifeboat's not coming" theory, is the textbook argument for not letting vital public utilities be subject to the vagaries of that system. Would a municipally owned utility, like LA's DWP, have gotten the lights on sooner, without the distraction of bankrtupcy enforced by a parent company?

Brian Williams is bringing NBC Nightly News down here for two days this week. The Fantasy Assignment Desk suggests they do a piece on the reason why, months after Katrina, large swaths of New Orleans sit pitch dark every night.