Roundtable: Troubles At Qualcomm, San Ysidro School District, SeaWorld And The San Diego River
MS: San Diego's Qualcomm becomes a takeover target for fraud count, so what happens if a broad calm succeeds? The same procedure school district is one of the poorest, so why in the world did they pay their former superintendent so much money? See world's bottom line continues to suffer as attendance continues to sink, and it looks like executives knew that business would be bad. Many homeless are chased away from downtown streets and are lined up camping along the San Diego river creating new problems. I am Mark Sauer the roundtable starts now. MS: Welcome to our discussion of the week's top stories, I am Mark Sauer, in joining me at the roundtable today Matt Hall editorial and opinion director at the San Diego Union Tribune. Good to have you back today. Reporter Leo Castaneda of inewsource. Good to have you here today. Lori Weissberg, she covers business and tourism for the Union Tribune, hello Lori. And environment reporter Joshua Emerson smith, also of the Union Tribune, hello Josh. Good to have you here today. Well, it was a stunner in the business world this week. Qualcomm is the target of a takeover by Qualcomm limited. The 100 billion+ proposal is the latest bull takeover moved by a Malaysian American with a Harvard mba and mechanical engineering degree from MIT. The proposal faces intense scrutiny. Lori, it is a long way from being done on the still right here, give just give us an overview on this. What is the scope of it? LW: It is a combination of cash and stock deal, about $70 per share. Qualcomm before this was trading in the mid-50s per share, it is now up into the high 60s per share. This deal, if it were consummated, would be the biggest technology deal ever. You have market cap value of Qualcomm of about 100 billion, the same for broad calm, so this would be a very big company. And as you mentioned, this would have a lot of scrutiny from regulators. MS: Not just the united states, but Europe, china, all across the world. LW: That is the issue, yes. MS: Let’s talk to Qualcomm's issue history here. They even bought the naming rights of the stadium. Give us a thumbnail on the company and who founded it. LW: It was founded, we mostly know -- we are all familiar with Aaron Jacobs, but it was him and several others including those with engineering backgrounds. Basically, it was around the mid-80s when it was founded, and it flourished mainly in subsequent years when it developed this chip semiconductor technology that powers our mobile devices and cell phones. MS: Matt, that is a core business, isn't it? MH: It is, a sickly they are a semiconductor in chip company. One of calms biggest assets is intellectual property, which aims all that -- which I’m sure that broad calm is interested in. MS: Everyone has a smart phone with some of this technology in it. MH: Everyone knows Apple or Samsung. Well, is up there also. As Lori said it was founded in 1985 and has become synonymous with San Diego. In 1984, I think San Diego had nine fortune 500 companies, but in recent years we have only had to. So, losing Qualcomm or having Qualcomm morphed into something else, kind of getting taken into something else will change the fabric of the county. As you pointed out, there is an $18 million stadium, that is a pretty good investment people know it around the country. But, they have also been super successful. MS: We do have a brief clip here. Kelly Cunningham a senior fellow at the institute for policy research. KC: They pay pretty well. It is well over $100,000 for the average employee at Qualcomm, and so that has a huge spillover effect because they do go out to restaurants and stores, and they spend their money. So, other businesses depend on that. MS: that has to be one of the best pain companies then. I mean, other six-figure average salaries around in San Diego we know of? MH: it is a big part of the local economy. There are 13,000 workers there in a couple of years ago when they were talking about laying off 1300, there was a study that showed the impact of that loss, of those 1300 employees would be a greater impact than the chargers leaving town. So, we are hoping that Qualcomm does not change too much, but it is one to watch for sure. LW: There are other science -- computer science companies that pay well. But, as he said, 1300 employees, there's a lot of people. MS: Qualcomm has been in the news drawing the ire of Apple. They have some legal battles. Briefly, what is the beef there? LW: So, Apple pays royalties or licensing for this technology, and they basically say that Qualcomm is gouging them. That they are being charged for innovations that -- all of the innovations that Qualcomm is not necessarily responsible for, so right now they have stopped paying Qualcomm for those fees. MS: Okay, Lori I wanted to ask you about Qualcomm and the Jacobs family. We were touching on this a moment ago, and what they have meant to San Diego in terms of philanthropy. I should mention that the Jacobs family are long term supporters of kpbs. It has been a big push into the community. LW: Both Qualcomm and Jacobs, and the family, they have contributed a lot. The sympathy, $100 million to the symphony. There is the school of engineering at UCSD. That has his name on it. And Qualcomm itself, and the foundations and institutes they have contributed -- I think it is about $53 million just to UCSD, and then their employees, there was a study a few years ago. Their employees alone, just on their own, probably because of the matching program, about 20 million just in the employees, so it is very philanthropic. MS: Matt, what do we know about Hock Tan, the potential owner here. Would he come to the community? MH: Tbd until about a week ago. Until about a week ago they were based in Singapore, it still is. But, he got along famously with Donald Trump and said we are going to locate our international headquarters to the US, he said at that news conference, that he would spend -- the company would spend a lot of money on r&d, manufacturing, engineering that would lead to more jobs. How then do we get to his purchase of Qualcomm, and what that means locally is a big question. You know, but you cannot -- as Lori just said, think of San Diego without thinking of Irwin Jacobs. MS: well, all right. There are a lot of questions and a lot more to this story as we head into the months ahead. As this deal progresses, we will check in on that I am sure. Well, if you were to guess which school districts superintendent were among the highest paid in California, it is unlikely that San Ysidro would come to mind. They are nearly the poorest and went bankrupt if you years ago. Leo, your story has some shocking details about the pay package for the former superintendent, tell us about that LC: He worked a little more than two years. So, we are talking about Julio Canseco, who was the districts full-time superintendent. They have gone through a more interims in a few years. He worked for two years, 26 months, came out with a little more than $1 million, and that includes a 376 thousand dollars separation package. When he abruptly re-signed in September, +200+ thousand dollar a year salary. And hundred thousand dollars in life insurance benefits, that he was able to cash out. So, it was a cushy job for a while. MS: And how does that pay package compare with San Diego Unified’s Cindy martin, the superintendent there, which is of course a much bigger district? LC: 22 times bigger district, she made about $350,000, he was making on average of about -- if you average out all of those payouts about $450,000. So, it blows her out of the water in a much tinier district. MS: Give us a sense of this district, how many students and the poverty level is high isn't it? LC: It is a relatively small district, about 4800 students, most of them Hispanic. About 80% are on free and reduced lunch. Recently they actually tried to declare an emergency because about a third of their students are homeless. So, this is where the student population is experiencing a lot of financial difficulties. MS: Okay, and San Ysidro as we mentioned in the open, was almost bankrupt and the financial holders are still struggling, are they not? LC: Yes, they were kind of staring into the abyss with a state takeover in 2014-15. They crawled their way back, and they seem to be on pretty solid footing, kind of working their way back recently. Not just this, but they announced that they had $1 million shortfall the last fiscal year, they are projecting another 900,000+ shortfall. So, things are not looking so good. Especially for a district that seem to be finding its footing finally after so much struggle. MS: And just the numbers you are talking about and struggles you're talking about there, certainly that would reflect on this whole package for him. LC: Absolutely, I mean any money that goes through the superintendent is going to supply facilities for whatever it may be. It makes it especially jarring if you have someone who has been paid this you know, as well as anyone in the state if not better, at a district that is not necessarily outperforming everyone, or is not that size. MS: Now, how is the school board there responding to all of this, and as his packages come to light? LC: They have been, you know, there is a lot that they have hinted at that they cannot say, because of legal constraints and things that they think will be coming out in the coming months. They recently hired a new interim superintendent, someone they brought in from the Los Angeles area that they brought in to stabilize and be a steady hand. I think that right now, they are just pleading for understanding. They have actually -- at the meeting last night they said that some of the board members started receiving threats to their own safety. So, I think the situation is bubbling. MS: Lori? LW: And one of your stores, it was -- at least one or two of the board members were almost blaming others for this happening. Like, they were not taking responsibilities. But, how could they make that claim? How could they not know what they were approving? I was surprised by that. LC: I think, you know, I think what they're trying to say, or what they believe is that they were presented with these packages, and they were told one thing, and then the superintendent exist that is one of the problems that these districts have. They meet once a month, it is a part-time board, and they are giving a package that is 400 or 500 pages long three days before and saying don't worry about it, I will explain it to you. So, they maybe feel like they should have gotten more information, or that the information that they got was wrong. But at the end of the day. You know, I talked to David Alvarez and he said the buck stops with the school board. They did not understand it, they should have not approved it, or they should have asked for more time. JE: While I was just going to say -- did the superintendent write all of this, or was there staff that was on his side, or paint a picture here a little. LC: The superintendent was working very closely with his deputy, who then became his interim, both of which have resigned. So, it was kind of -- it seems like the top of the administration, the interim was a deputy who was running the business, or he was helping to write all these contracts and present the financial picture. MH: It is interesting, you mentioned David Alvarez, there is a -- he is a council member who represents a district, one of his staff members is running to replace him when he is termed out. Another candidate in that race is Antonio Martinez, who is on the school board, and so this race -- this issue is not just localized to that school board, it will become I think an issue in that campaign going forward. MS: We have some legal issues also. There has and calls for an investigation by the district attorney, the county superintendent of schools. They said the state should look into it. There is a lawsuit by brakes. LC: That is right, so – MS: A lot of stuff going on. LC: The board members have asked the district attorney to take a look, they are sending some documents. And then last night we got word that the county is calling for what is called an extraordinary audit. We think it is the first time in San Diego county history. So, we will see. It is not going to stop for the next few months. MS: Yes, so a lot to play out. Just one last question on this topic -- the response from the community, are people really up in arms with the stories? LC: I think that people are upset and worried about what is going on. I think so much stuff has been happening so quickly, that people are just trying to get their heads around what was really going on, were these people -- you know, really trying to rip off the district. Is this some internal politics that are going on? So, I think there is a lot of concern that this will trickle down and affect students, which we all care about. MS: We will see what happens as the investigation moves forward. We are going to move on to the Hepatitis A outbreak among the homeless. It triggered -- I’m sorry, we're going to move on to the story on the Sea World today. I'm sorry. So, Lori you had a front-page story today, it showed Sea Worlds officials are reeling over the effect of the black this documentary. And of course, we have had these problems with the aquatic park attendance is lagging, they're talking about a marketing and advertising campaign, but tell us about the latest news here in some of the emails that have come through? LW: In these disclosures of these emails came just a couple days after their earnings, which were not good. So, these were -- there is a lawsuit, a class-action lawsuit of investors who felt that sea world was not upfront about the impact of blackfish, this anti-captivity documentary. And they were not upfront about the true impact of attendance and revenues, and the claim that Sea World did not disclose the real impact until long after the new about it. So, in connection with that lawsuit, they got the judge to unseal some of these internal emails. MS: What do they show? LW: It shows a growing frustration among the executives and staff about cancellations. Willie nelson, bare naked ladies, also the catering events. Cancellations all seemingly tied to blackfish. At one point, the former chief spokesman for any email said we really look like idiots. So, it just showed their frustration, and it showed there is a subject line and some of the emails talking about lost blackfish revenues, and those were -- they were trying to tally that, and that was before, several months before they finally -- in an earnings call, acknowledged there was some backlash. MS: Briefly remind us about blackfish, if folks are not really up on the details of that. This is a documentary that had devastating impact. LW: That was in part because it was aired repeatedly on CNN, but it focused on one whale that was at the Orlando park, but it was also responsible for the death of a trainer there, but it was trying to highlight what they said was the mistreatment of these whales, that should never be held in captivity. And, so it has had an impact on attendance, and it also led to the current CEO to and all captive breeding of porpoise. It has gotten rid of the Shamu shows and has a more educational presentation. They have made changes, but they cannot seem to retain their attendance. They keep trying different marketing attempts to highlight Sea Worlds rescues and ocean conservation efforts. MS: Let's talk about that a little bit. They put some more money into that. A new push in advertising money and all? LW: Right. They're calling it park to planet and it is aired in San Diego, and then they will take it national next year. MS: Yes, this ad campaign, LW: And they acknowledge that it may never should have stopped doing this campaign, they claim in this most recent earnings call that it is resonating with people. But, they are -- like I said, they are struggling. There will be some new attractions next year in San Diego and Orlando which I think that will help. There will be an electric eel coaster, it is supposed to be the highest coaster in San Diego, they are hoping that they can get that kind of crowd back. JE: You know what is so interesting to me? I cannot remember the last time he documentary became such a piece of popular culture like that. Right? Everyone knows what it is. Can -- comedians make jokes about it. It must be an insurmountable thing for them to try to come back from that. MS: They should have the filmmaker come back and do a story on the coaster here. The impact was amazing. LW: Early on, a lot of people say that they took the wrong strategy. When that movie was just coming out, they wrote a letter to critics, trying to get them to understand what was wrong with it. Everybody says that maybe that was not the right approach, and now they are trying this less heavy-handed approach, but every time they think they blackfish effect is gone, it pops back up. MS: Now we touched on this, but the investors are not happy with all of the stuff coming out, and how this has played out over the years since the documentary, right? LW: And then, coinciding with a lawsuit, they are saying that federal investigation -- we don't know a lot about what it is about but it seems to be very much click similar to the claims -- were they forthcoming to their shareholders and investors about the effect of this? So, they kind of intervened in this lawsuit to a degree. But, they are also in the midst of an investigation. MS: What is the status of that? LW: We do not know, and you know, when there is an investigation, the feds will never tell you anything about it, or -- so, we keep looking to see what is happening with the case. I think that it is about to get a class action certification. The judge released a tentative ruling this morning, so maybe it will get more lakes. -- legs. MS: Well, it is another institution in San Diego. And it has struggled here. We will see what happens and more of your reporting as we go forward. MS: Well, now the Hepatitis A outbreak among San Diego’s homeless led to an influx of homeless encampments. Josh, your story talks about the wacky moral effect of in what the officials are trying to do. What is the situation, kind of set that scene along the river? JW: Along the river? Well, I think it is just a general kind of context, which is that the city's approach has been to say we have to clean these areas. Right? We have to go downtown, 17th street, 16th street, in front of Father Joe's village, we have to move people out of there, kind of clean what we see as may be potentially ground zero for the Hepatitis A outbreak, and then those outbreaks were then extended to parts of the San Diego river, around Qualcomm stadium. However, MS: --the same idea. JE: Yes, you have to move on if you are here. Not indefinitely, because actually legally they can't do that. But, they can say that you have to move while we cleaned this, and the issue these cleanup and abatement notices 72 hours in advance of going into an area, and taking out debris, and cleaning up stuff. So -- they focused on the Qualcomm area and the river right around that section, but there are homeless folks all the way from the beach to Santee, right? And, one of the major groups that the foundation that has been working for years to improve conditions on the river does a count of encampments every year, and they found that in October, there was something -- more than 100 encampments where in years past, going back about a decade, they usually find something like 40-50-60 encampments, so that was kind of surprising that they found so many. MS: Basically, double the number along the river. JE: Yeah. MS: You talk to some of the folks and they said I have 72 hours to move, and they told the cop who is there. Where am I going to go? JE: Yes, and we talked to one guy, and he said he talked to a law enforcement officer who told him out of sight out of mind. You know? That is the thing. Stay out of our way basically. MS: And not a real solution. JW: No, not really. That was the interesting thing. We were hearing from -- I have been talking to the homeless for several months, and we keep hearing over and over again they are moving us around, they are shuffling us around, where do I go? What is the long-term solution? MS: Matt, we have seen a couple of city councilmembers here making suggestions. Tell us about that. MH: Yeah, as josh pointed out. The number one from 61-116. There are hundreds there across the river. They have been really fighting to keep the sandy river clean and keep it cleared out. We had proposed using the charges practice facility, the former charges practice facility, which is sitting there vacant. It is part of the soccer city proposal, so it would be a temporary solution, but their suggestion is -- there are showers and restrooms there, there is plenty of space outside the building, right? MS: Tell us exactly where that is? MH: It is on murphy canyon road, pretty close to the stadium itself. MS: What kind of liking to transportation? MH: the mayor's office is one of the reason they are not looking at this right away is because the security would be costly, transportation, getting people back and forth would be a problem, but we just editorialized in favor because you know what? There are homeless people there, so then you need to take them farther to get to downtown? It is a complex issue. MS: Lori? LW: I am just wondering, because I know that you talk to some of them, did any of them mention if they were going to try to go -- or had they tried to go to some of the temporary tent facilities that the city started, including one in golden hill? Have they JE: --yes, the one in golden hill as I understand has been very popular with women, and especially those with children. A lot of folks I talked to do not want to go to the shelters actually. They want their freedom, I mean there is definitely a number of different mindsets out there. In terms of -- but I don't think, I mean I think once you set these facilities up, they fill up pretty quickly. It is not as if there is a lack of demand for them. The best practice that you hear from advocates across the country is the housing first model. Trying to build housing that is affordable for homeless folks, like Father Joe's just recently said that they are floating an idea to build some low-income housing downtown. Of course, that frustrated some of the folks down there. So, it is a sticky situation. LC: It seems like every time we come up with a potential building, like the motel, or the old library, it gets shut down immediately. It does not seem like -- there are a lot of ideas, but it does not seem like any of them were JE: --there was advocating for the old library, there were questions about whether or not it needed to be rehabilitated, and whether it was the right site for it. You know, if you check the lobbying disclosure reports, the downtown partnership was lobbying heavily against that. You know, it is a tough one. How do you help folks who cannot afford the rising rents in San Diego? One thing that was interesting is -- I have been talking to a lot of these folks, and like I said there are a lot of different types of folks out there. There is no shortage of people who recently became homeless. MS: Even though the economy is doing good, the unemployment is supposedly low? JW: I regularly run into people who say I lost my job two years ago and I have held on for a year and now I am homeless. MS: Less than one minute here. The foundation members, are they hopeful they will find a solution to all of this and all of those trails along the river? JW: Hopeful might be a strong word. I mean, they are working pretty diligently. I was surprised at how much effort, they go in and -- twice a week, you know? To document where stuff is, and then to go in and clean up. They want a system of trails, you know all the way along the river, which obviously -- who would not want that, right? But it seems like they get one area cleaned up, and then they have to move on to the next one. And the area they just cleaned up -- you know, MS: We talk about this issue a lot and I’m sure that we will continue the good reporting, because it is a vital issue in our community. Well, that does wrap up another week of stories at the kpbs roundtable. I would like to thank my guests, Matt Hall of the San Diego Union Tribune, Leo Castaneda of inewsource, Lori Weissberg of the Union Tribune, and Joshua Emerson Smith, also of the Union Tribune. A reminder, all the stories we discussed today are on our website, kpbs.org, and wherever you get your podcast. And on a side note, I must close today -- Pat Finn, our wonderful producer leaves us today. Thanks to pat for getting our show on the road in such fine fashion and for being a great friend and teacher. And thank you for joining us today on the roundtable.
QUALCOMM'S BIG OFFER
San Diego-based Qualcomm Inc., is a major player in the global semi-conductor industry.
It is also the current object of desire of Hock Tan, the acquisitions-minded CEO of tech giant Broadcom Ltd. This week he offered to swallow Qualcomm for $103 billion in stock and cash, or $70 a share ($60 in cash, $10 in Broadcom stock).
There are worries that, if successful, Tan would break up the company to sell for parts, that Broadcom wouldn't invest enough in research and development, or that he would simply relocate it.
Tan, however, said Broadcom is “very committed to San Diego.”
-What is Qualcomm’s history in San Diego?
-What impact have Qualcomm and its founders had on San Diego?
-How important is Qualcomm to San Diego’s economy and image?
SAN YSIDRO SCHOOL DISTRICT'S DYSFUNCTION
In a nutshell: San Ysidro School District is one of the poorest in San Diego County, yet it paid its former superintendent, Julio Fonseca, about $1 million in total compensation over the last two years.
His compensation made him the highest-paid superintendent in the county and the second highest in the state.
In 2015, the year it hired Fonseca, San Ysidro had almost worked its way out of both a scandal and a financial hole. Then it declared a nearly $1 million budget shortfall in fiscal year 2016-2017.
In recent months there have been more scandals, the resignations of Fonseca and his replacement, an expensive settlement, a lawsuit filed by attorney Cory Briggs and a request for an "extraordinary state audit" of San Ysidro's finances by the San Diego County Office of Education.
-How did SYSD's board members not notice the scope of Fonseca's compensation?
-Could this lead to a state takeover?
SEAWORLD'S BIG SLIDE
SeaWorld has been unable to reverse a slide in attendance, which declined 9 percent company wide in the third quarter.
Falling revenue and attendance in Florida and Texas are due to recent hurricanes. In San Diego, however, they are caused by perception.
The 2013 film "Blackfish," about the orca that killed a trainer at SeaWorld in Orlando, was thought by SeaWorld executives to be potentially bad for business, a concern they kept from stockholders.
-What can SeaWorld do to change its image in California, or is that a lost cause?
-Are investors suing?
BIG MESS AT THE RIVER
Many of the homeless who put up tents in downtown San Diego have been cleared out by the police and have moved to camps along the San Diego River.
But the camps are unsanitary, with piles of trash and drug paraphernalia and human waste everywhere.
The San Diego River Foundation, which is working toward restoring the river and creating a system of trails, says there have been homeless living along the river for many years but believes the number of camps has nearly doubled in the last year.
-What impacts are recent efforts to temporarily house the homeless having?
-What are the chances the Chargers' former training facility in Murphy Canyon will be used to house the homeless?