Washed It!

On a sticky June night just outside London, the magic finally came to an end for the cast and crew of the “Harry Potter” movies. After a decade together, the small army that has been the busiest in British filmmaking wrapped the final shoot of the last “Potter” production.

The green-screen scene featuring the now world-famous main characters — a trio of young fugitive wizards named Harry, Ron and Hermione — required actors Daniel Radcliffe, Rupert Grint and Emma Watson to hurl themselves onto some off-camera mats to escape danger at the Ministry of Magic. It was an oddly slapstick finish for such a monumental franchise — but that didn’t sap the emotion of the moment.

“I admit it, I did cry like a little girl,” Radcliffe said, recalling the day. “There was a feeling that I had, that we all had, that it was the end of something very special.”

It’s doubtful that pop culture will ever see a phenomenon quite like this sprawling tale that for a decade cast a spell on the page, the screen and beyond. The fantasy epic begins its Hollywood fade-out Nov. 19 with the release of “Harry Potter and the Deathly Hallows — Part 1″ and finishes next summer with the eighth film, “Harry Potter and the Deathly Hallows — Part 2.”

Both movies are poised to be global blockbusters — and may even earn the franchise its first nominations in marquee Academy Award categories — but the numbers posted by their predecessor films are extraordinary already. The six Warner Bros. movies released to date have pulled in $5.7 billion at theaters worldwide; home video adds an additional $1.3 billion. The seven novels from which they sprang, written by J.K. Rowling, account for 400 million books sold in 69 languages.

Then there’s a jaw-dropping $7 billion in retail products, a recently opened amusement attraction in Orlando, touring exhibits of props and costumes and plans for a permanent exhibit outside London.

Still, the true impact of the books and films may not be fully recognized for a decade or two. With ever-rising ticket prices, box-office records don’t stand for long, but no franchise has delivered anything close to eight films in 10 years.

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roducer David Heyman and his team were able to keep their cast intact — including the young lead stars who started as adolescents and grew into young adults with millions in the bank, and no scandals. The movies arrived even as the audience for Rowling’s books grew, creating a unique synergistic effect. The “Potter” movies have earned Warner Bros. more than $1 billion in profit — and the admiration of industry rivals.

“The books and movies fed each other brilliantly to become these commercial tidal waves,” said veteran literary agent Ron Bernstein, of International Creative Management, who has no connection to the books or films.

Former Walt Disney Studios Chairman Dick Cook, who launched his own mega-franchise with “Pirates of the Caribbean,” agreed that “Harry Potter” has been a breed apart.

“It has unequivocally been the best-managed franchise that we’ve ever seen, top to bottom,” he said. “The movies have been terrific and Warner Bros. managed to position each one as a worldwide event. Each movie has been unique and built on the last one and the anticipation has never been better. They’ve honored the source material and done everything right.”

And, unlike, say, “The Lord of the Rings” trilogy, the “Potter” movies adapted a living, breathing literary sensation whose ending was unknown. Rowling would visit the set and sometimes whisper to actors hints of their characters’ destiny, but screenwriter Steve Kloves, who penned seven of the eight scripts, said no one really knew how everything would conclude.

The entire exercise, he said, was a “10-year tightrope walk … and something that will be never be done again for the simple reason that you won’t see another Jo Rowling come along.”

Lucky break

The rags-to-riches story of Rowling seems as unreal as the world of dragons and goblins she created. Joanne Kathleen Rowling (“J.K.” was manufactured by a publishing executive who thought a gender-neutral author name might sell more books to boys) was a single mom in Edinburgh, getting by with the help of welfare, when she finished “Harry Potter and the Philosopher’s Stone,” her first novel.

In late 1997, a copy of the book found its way to Heyman’s London office but ended up on a shelf for low-priority leads. A curious secretary took it home for the weekend. Her enthusiasm prompted Heyman to get past what he has called “that rubbish title,” and the story captured his imagination.

“The funny thing is with all of the magic, all of the wizardry, what really makes the ‘Harry Potter’ stories work are the characters,” he said. “The fantastical elements and the action are wonderful, but the characters are what people remember.”

Heyman sent the book to his friend and fellow Brit Lionel Wigram, a production executive at Warner Bros., to gauge the studio’s interest. Wigram said some in Burbank questioned the viability of the creaky fantasy-adventure genre and viewed the tale of a magical boarding school called Hogwarts as too British for the American heartland. “Don’t spend too much on it,” was the word from the home office, Wigram recalled.

Warner Bros. secured the rights for four “Harry Potter” novels for about $2 million. At that point, only the first book was on shelves in England and none had reached America. Warner Bros. tried to get a financial partner on the project, reaching out to studios including Steven Spielberg’s DreamWorks, which passed.

The end nears for ‘Harry Potter’ on film

Jerry Brown returned to Sacramento on Thursday as California’s next governor, forging relationships and crunching numbers as he anticipates his first budget, which will set the tone for a new administration that he says will be characterized by his trademark frugality.

The former two-term governor has little time. He must present a spending plan within days of taking office in January, when the state will probably be grappling with a new deficit as well as with the new restrictions that voters placed on how revenue can be raised and used. Throughout his campaign, Brown offered few specifics on how he would balance the state’s books, focusing instead on an “exhaustive” collaborative process that he says will include all stakeholders, including labor unions and business.

The spending plan is typically sent to the printer in late December, meaning Brown won’t even be governor by the time his initial draft must be finished. Brown said his transition team is working with the staff at the state Department of Finance.

On Thursday, Brown met with the state budget director, Ana Matosantos. Addressing reporters, Brown described the meeting as “very sobering” and vowed to start working full-time on a budget after he returns from a weeklong vacation.

“I think the problems we face are as bad as anyone could imagine, and it’s going to take a lot of very tough decisions,” Brown said. “It’s very daunting. It’s certainly as bad as it’s ever been, and it’s going to take people in both the Democratic Party and the Republican Party” to produce a viable budget.

He added: “The people of California, they’ll have a chance to see in great depth what it is we’re doing and what kind of money we have to do it and what the gap is. And it’s certainly considerable.”

By next Tuesday, Brown’s transition team will probably be sitting in on a key meeting that takes place at this time every year, when leading state economists come to Sacramento to offer revenue projections. The governor’s office uses those projections to come up with its own forecasting model, on which the proposed budget is based. One of the economists, Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto, said all the early signs suggest no major improvements.

“The budget will include some very difficult revenue numbers,” he said. “We’ll be back in the soup.”

Legislative leaders have estimated that the state will face a deficit of at least $12 billion.

Brown flew with Gov. Arnold Schwarzenegger to Sacramento on Thursday from San Diego, where the two attended the funeral of a police officer. Later, Brown worked the halls of the Capitol, meeting with Matosantos, Assembly Speaker John P

In a number of key races around the country, aggressive and meticulously targeted spending by independent conservative groups appears to have helped produce dramatic results for Republicans.

Unlike Democrats, who relied heavily on financial assistance from unions and Democratic Party committees, Republican candidates got their boost from advertising, mailers and get-out-the-vote drives financed by more than a dozen newly formed conservative groups.

Those groups employed a two-pronged strategy: First, they poured much-needed cash into districts where Republican candidates lagged behind in fundraising. Second, they sent millions into what were once considered safe Democratic districts in an attempt to thin out Democrats’ resources.

The strategy appears to have been a success. In an election cycle where Democratic candidates and party committees had out-raised Republicans by about $168 million, outside conservative groups, armed with $187 million, were able to strategically and successfully leverage that money to produce results for the GOP.

In the 74 House and Senate seats that had switched party hands by early Wednesday morning, 57 were won by Republicans who held the advantage in spending by outside groups, according to an analysis by the consumer advocacy group Public Citizen.

Republican Mark Kirk enjoyed the greatest advantage in non-party outside spending in his winning bid to represent Illinois in the Senate. Thanks to large and consistent ad buys by groups such as American Crossroads and Crossroads GPS — big spenders that were formed this year by Karl Rove and other GOP strategists — Kirk held an $8-million advantage in outside money over his Democratic opponent, Alexi Giannoulias.

In the House, Republican Mick Mulvaney topped the list of outsider support with his successful bid to replace 14-term incumbent and chair of the powerful House Budget Committee, John M. Spratt Jr.

In the final two weeks of the campaign, non-party groups opposing Spratt spent nearly $500,000 in his South Carolina district, compared with just $6,000 spent by groups in support, according to data compiled by the Sunlight Foundation

In southern Virginia, 14-term incumbent Rick Boucher was defeated after conservative groups waged a costly ad campaign that went unmatched by groups on the left.

On the Iron Range of Minnesota, 17-term incumbent James L. Oberstar, chair of the House Transportation Committee, was swept from office after a late October storm of conservative group advertising on Duluth television.

“We were able to go places where Democrats were comfortable and require them to start spending money,” said Carl Forti, political director at the Crossroads groups, citing Oberstar’s district and others. “For us, it was an effort to expand the field.”

Liberal groups did not spend a single dollar advertising in Oberstar’s district, according to the Public Citizen analysis. But the onslaught forced Oberstar to run the first negative ad of his career.

kim.geiger@latimes.com

Times staff writer Tom Hamburger contributed to this report.
Outside groups made the difference for some Republicans

The political center, where swing voters reside and compromise happens, is suddenly a much smaller part of the Washington landscape.

There were the usual kind words and olive branches extended on Wednesday. But nothing could hide the fact that the two parties have deep and abiding differences on nearly every issue facing Congress. The composition of the House and Senate may have changed, but not Washington: The place may be more polarized than ever.

That could make it exceedingly difficult to accomplish anything of great magnitude between now and the next presidential election in November 2012.

The clearest indication of the growing partisan gap was Tuesday’s rout of the Blue Dog caucus, a group of moderate and conservative Democrats who urged the party to adopt a more business-friendly and fiscally conservative agenda. Fewer than half of its 54 members will be returning next year after incumbents were ousted in Pennsylvania, Ohio and a few Democratic pockets of the Deep South. Their absence will likely push the 190 or so remaining House Democrats even further left.

On the Republican side, the victory of dozens of insurgents backed by the “tea party” movement means the emboldened GOP majority will be even more conservative and confrontational than the one that harried President Obama over the last two years.

These lawmakers, and the legion of activists who plan to monitor their performance, have called for drastic changes, including eliminating the Department of Education, privatizing parts of Social Security and repealing the healthcare law just now starting to take effect.

After the presidency, the most difficult job in Washington may soon fall to Rep. John A. Boehner of Ohio, the Republican leader who will likely be the next House speaker. He must balance an agenda that satisfies his fervent tea party caucus without scaring off the voters — politically independent, largely nonideological — who delivered the GOP its big win Tuesday.

It was something Newt Gingrich, the House speaker after the last big GOP landslide in 1994, failed to manage when he led a similar class of zealously partisan freshmen. President Clinton, who had to argue after the so-called Republican Revolution that he was still relevant, romped to reelection just two years later.

Extensive polling, including thousands of voter interviews conducted Tuesday, shows that neither party is well regarded. The election was the third in a row in which 20 or more House seats changed hands, a level of upheaval unseen in more than half a century; these days, voters seem willing to discard unwanted politicians like so much used tissue.

But that hasn’t stopped both sides from claiming to speak for a majority of Americans. A mandate is in the eye of the beholder, and Jenny Beth Martin, national coordinator of the Tea Party Patriots, an online conservative network, seemed to speak for many when she suggested compromise was a good thing — so long as others were doing the compromising.

“We hope that rather than having the gridlock, that the House and Senate will work together to find a way to be responsible with our money again and the other side will move to the center,” Martin said. “Because our side is the center.”

Boehner and Senate Majority Leader Harry Reid of Nevada, who may soon be dueling each day on Capitol Hill, said much the same thing. Both nodded toward the notion of compromise, with qualification.

“We hope President Obama will now respect the will of the people, change course and commit to making the changes they are demanding,” Boehner said. “To the extent he is willing to do this, we are ready to work with him.”

Reid, fresh off reelection in Nevada, said “the time for politics is now over.” He then suggested Republicans “must take their responsibility to present bipartisan solutions more seriously. Simply saying ‘no’ will do nothing to create more jobs, support our middle class and strengthen our economy.”

None of which bodes well for a new era of comity and bipartisan cooperation.

“If you’re a betting person, I would bet on less rather than more being accomplished in Washington,” said Geoff Garin, a longtime Democratic strategist.

If politicians look to the people for guidance, as they presumably should, they are likely to come away confused.

Voters say they hate gridlock, but many also seemed to hate the prolific legislative output of the Obama administration and the Democratic majorities in the House and Senate. Asked what lawmakers should make their top priority in the next Congress, nearly 4 in 10 said reducing the federal deficit. A like number said spending money to create jobs, a move that would increase the deficit. (Two in 10 said cutting taxes, which would also increase the debt.)

On a more fundamental level, voters sent similarly contradictory signals. Nearly 8 in 10 said in a Pew Research poll that lawmakers’ unwillingness to work together was a major problem. But in a subsequent survey, nearly half said they admired a politician who sticks to principle rather than compromising.

Clearly, voters are conflicted. More than ever, they have a government in Washington to match their mood.

mark.barabak@latimes.com

kathleen.hennessey@latimes.com
Midterm election’s big loser is the political center

With Republicans expected to win control of the House in Tuesday’s election, President Obama scheduled a press conference for Wednesday in what was expected to amount to a mid-course correction to deal with the power shift on Capitol Hill.

Obama is expected to try to reach out to Republicans, who have campaigned against his economic stimulus plan, healthcare overhaul and other policies. But if the GOP gains seats in the House and Senate, as expected, heavy partisan conflict is anticipated, especially as the parties gear up for the 2012 reelection campaign.

“This election’s going to be a referendum on Obama’s policies,” Mississippi Gov. Haley Barbour, chairman of the Republican Governors Assn., said on MSNBC on Tuesday. “What is the president’s response going to be?”

Citing the GOP’s pledge to cut spending aggressively, Barbour added: “Hopefully, the president is going to be willing to come forward and say, ‘I recognize we have to do that; let’s work together.’ ”

But Democrats question Republicans’ sincerity, noting Senate Republican leader Mitch McConnell of Kentucky recently said that his top priority was to make “Obama … a one-term president.”

Pennsylvania Gov. Ed Rendell, a former Democratic National Committee chairman, offered his own advice to the White House. “We’ve got to use the president more. He’s a great communicator,” he told MSNBC. “If tonight turns out to be better than expected for Democrats, it’s because the president got energized in the last month.”

If Republicans win control of the House, Obama will still be setting the agenda, Barbour said. “The Republicans are not going to be running the government, but they will have much more of a say than we’ve had for these two years,” he said on MSNBC.

But signaling the conflict that awaits the administration and the new Congress, Barbour said Republicans were going to try to repeal the healthcare reform bill. “If they can’t repeal it, they’re going to try to change it so that you wouldn’t recognize it,” he said on NBC’s “Today.” “They’re going to be faithful to what the voters vote for tonight.”

Fellow Republican Tommy Thompson, a former Wisconsin governor, however, told CNBC: “When it’s all said and done, you’re not going to be able to repeal healthcare because President Obama is not going to sign it, and they don’t have enough votes to override a veto. So why push a cart uphill when you know it’s not going to be able to get to the top?”

richard.simon@latimes.com
Obama’s response: President plans post-election press conference

After years of dishing tales of celebrity folly and misfortune, The National Enquirer’s publisher has fallen on hard times of its own.

American Media Inc. plans to seek federal bankruptcy protection in the next two weeks or so. The privately held company, based in Boca Raton, Fla., announced its intention Monday without sharing any details about its finances.

Calls to American Media weren’t immediately returned.

American Media, whose other publications include Star, Shape, Men’s Fitness and Fit Pregnancy, is trying to get most of its creditors to back its reorganization plan before it files for Chapter 11 protection. About 80% of its bondholders have expressed their support, the company said.

By cobbling together a prepackaged bankruptcy case, American Media hopes to gain court approval of its plan within 60 days of its filing. That would be much quicker than most corporate bankruptcy cases are resolved.

Like other publishers of newspapers and magazines, American Media has been struggling to recover from the recession while also trying to adapt to technology that has driven more readers and advertisers away from print to less expensive — or even free — alternatives on the Internet.

The challenge has proved too daunting for some. More than a dozen U.S. publishers of newspapers and magazines have filed for bankruptcy since December 2008. Many of the publishers seeking refuge in Bankruptcy Court were saddled with heavy debt loads that they took on during better times.

American Media appears to fall in this category. One of its subsidiaries, American Media Operations, had $1.1 billion in debt as of December 2008, according to a filing made with the Securities and Exchange Commission.

The company reached an agreement with its major bondholders in July to reduce its debt by $200 million. It didn’t publicly disclose how much debt it had at that time.

If its reorganization plan is approved, American Media indicated that much of its debt would be wiped out in exchange for giving its bondholders ownership of that company. The bondholder group includes hedge fund Avenue Capital and distressed-debt specialist Angelo, Gordon & Co., which has gained stakes in major newspapers — such as the Orange County Register — through bankruptcy proceedings.

Stiffening competition for celebrity gossip and news has hurt American Media’s publications. Besides other print magazines such as Time Warner Inc.’s People and US Weekly, National Enquirer increasingly finds itself chasing websites, such as Time Warner’s TMZ.com, that dig up the latest news about celebrities.

American Media’s website says its magazines have a combined circulation of about 6.8 million. In March 2008, its publications were selling a combined 7.5 million, according to an SEC filing.
National Enquirer’s owner to file for bankruptcy

GOP gubernatorial nominee Meg Whitman paints rival Jerry Brown as a machine Democrat who as governor decades ago spent big and coddled liberal interests while pursuing an expansive role for government. Brown says he was a deficit hawk who deftly managed the state’s finances and a world-class educational system.

Neither of the conflicting portrayals, featured in the battle the two have been waging on California’s airwaves, is exactly how those eight years went.

Brown disdained political convention and protocol and refused to govern as a run-of-the-mill liberal. He tangled with the Legislature constantly, though it was controlled by fellow Democrats: Lawmakers overrode his vetoes 12 times. And although his early approval rating hit 85% — higher than Ronald Reagan’s had reached — Brown ultimately tripped over his famous frugality, irritating voters by squeezing local schools, delaying road construction and neglecting the growing state university system.

“He had his own ideology, and it was one we had never seen before,” said Paul Priolo, who was the Assembly Republican leader during part of Brown’s governorship. “He was different.”

Brown had many successes, and several of his ideas — carpool lanes, satellite communications for California, computers in classrooms —- are commonplace now. He was the skilled dealmaker who, at 37, negotiated the landmark farm labor agreement that ended the nationwide produce boycotts. He protected some of the state’s most pristine lands and crafted energy policies that sowed the seeds of a green economy long before it was stylish.

But he was also the distracted intellectual who dawdled as soaring property taxes began to crush homeowners, spurring a ballot box revolt. He was paralyzed by the Medfly crisis and criticized for being inattentive to schools.

He recruited a dynamic group of Californians to run the government, spurning the usual insiders and filling many prominent positions with women and minorities for the first time. Some of them helped usher in such pioneering policies as a 25% reduction in air pollution and pressured Detroit for more environmentally friendly cars.

Others flailed. Rose Bird, the ardent death penalty opponent with no judicial experience whom Brown appointed as chief justice of the Supreme Court, was ultimately rejected by a 2-1 margin in a regularly scheduled retention vote.

Lawmakers were inclined to dislike Brown from the start. He came into office on the heels of a successful initiative campaign to ban lavish gifts from lobbyists to politicians. Lawmakers had earlier rejected Brown’s “two hamburgers and a Coke” proposal, inspired by his view that that’s about all a lobbyist should be allowed to buy a lawmaker.

The state Senate leader once ordered the sergeant-at-arms to halt an impromptu Brown press conference in Senate chambers and threatened to have state police forcibly evict him. By Brown’s second term, his bill vetoes were overridden so often that it appeared lawmakers were doing it for sport. No governor since has been overridden.

Sometimes it seemed like Brown was winging it — as he appears to be these days on the stump. His distaste for plans and pamphlets, policy agendas and schedules dates back decades.

“Often we have to just let things emerge,” Brown said in an interview with Playboy in 1976. “If you’re interested in agendas, you might read the inaugural speeches of the last five governors. They say much the same thing: Down with crime, unemployment and taxes.”

Brown had kept his inaugural speech to seven minutes. He talked about unemployment. Then he took a group to Man Fook Lo, a Chinese restaurant in the produce district of Los Angeles. No inaugural ball.

But liberals attracted by Brown’s progressive outlook and family legacy of big projects — his governor father, Pat Brown, built universities and freeways — were disappointed. Brown’s frugality went beyond his rented apartment with a mattress on the floor; he declared an “era of limits” and tightened the state belt even as a record state surplus mounted.

Former Gov. Gray Davis, Brown’s first chief of staff, said Brown suggested senior government staffers save taxpayers money by staying with friends when traveling instead of in hotels.

“His Department of Finance would hide money from us,” said Richard Robinson, a Democrat who represented the Santa Ana area in the Assembly. “It was a major source of frustration.”

Some programs suffered. California slipped from 18th to 31st in the nation, by some measures, in per-pupil school spending. Brown suggested that cutting off some funds for schools would inspire reform. Instead, the school day was shortened, classrooms grew crowded and teachers’ salaries fell behind those in other states.

At the state’s universities, faculty salaries were frozen. Brown said highly compensated state employees such as university professors were deriving “psychic income” from the interesting nature of their work. He vetoed raises for other state employees and curbed spending on transportation, leaving much of the freeway system, a Pat Brown legacy, to deteriorate.

The junior Brown did sign off on construction of the 105 Freeway. But mostly he focused on alternative transportation. He appointed Adriana Gianturco, a 36-year-old Bostonian with no background in highway engineering, to run Caltrans. She had opposed the 105 Freeway, rejected plans for another expressway and transformed the fast lanes on the Santa Monica Freeway into “diamond lanes” for carpoolers.

As young governor, Brown went his own way

The U.S. economy continued to plod along at a sluggish pace in the third quarter, not enough to generate momentum or bring down the nation’s high jobless rate.

The nation’s gross domestic product, or the value of all goods and services produced inside U.S. borders, grew at an annualized rate of 2% in the July-to-September quarter, the Commerce Department said Friday.

That was a tad higher than the 1.7% GDP growth in the second quarter, but overall still paints a picture of a lackluster economy that expanded at a 3.25% annual rate in the second half of last year coming out of the recession, only to see a slowing since spring.

One positive sign was a pickup in consumer spending in the latest quarter. Inflation-adjusted personal consumption increased 2.6%, up from 2.2% in the second quarter, thanks largely to gains in expenditures for housing and other services.

Business investments also contributed positively to the third-quarter GDP, although the rate of increase in spending for equipment and software fell sharply to 12%, from nearly 25% the prior quarter. Government spending also added to the growth, but depressed home-building and the nation’s trade deficit continued to be a drag on the overall economy.

In addition, the latest quarter was boosted by a stronger buildup in inventories, which could curb production and overall economic growth in the coming months, especially if the holiday shopping season turns out poorly.

The overall 2% change in GDP was right in line with analysts’ forecasts, and won’t change expectations that the Federal Reserve on Wednesday will launch a new round of government bond purchases to drive down long-term interest rates and stimulate economic activity.

Before Friday’s report, economists were generally projecting somewhat stronger growth for the fourth quarter and heading into next year. Expectations of the Fed’s likely stimulus program already has pushed down the value of the dollar, which should bolster U.S. exports. Stock prices also have improved in the last quarter, giving consumers a little more confidence.

Uncertainties about the expiring Bush administration’s tax cuts loom as a potential negative, but analysts say even that could provide a lift in the next two months as people move some of their planned spending for 2011 to this year because of the risks of higher taxes.

don.lee@latimes.com
GDP rises slightly to 2% in sign that economy remains sluggish

Weeks before the Deepwater Horizon explosion, oil company BP and subcontractor Halliburton were aware of test results showing that the cement mixture designed to seal the well was unstable — but they used it anyway, President Obama’s special commission investigating the environmental disaster reported Thursday.

The findings shed new light on troubles with the cement job on BP’s Macondo well in the Gulf of Mexico, which exploded April 20, killing 11 workers and causing the largest offshore oil spill in U.S. history. The cement is supposed to secure the well pipes and keeps oil and gas from flowing up the well.

Legal experts said the information could bolster plaintiffs’ cases in the multitude of spill-related lawsuits by helping to show that BP acted with gross negligence leading up to the spill. This could, among other issues, greatly increase the multibillion-dollar penalties BP might have to pay for violation of the Clean Water Act.

“There’s no question that it’s important evidence,” said Charlie Tebbutt, an attorney for the Center for Biological Diversity, which has filed a lawsuit seeking $19 billion under the Clean Water Act. “It serves to confirm the previous reports of significant problems with the exploration and production of the well.”

The information was included in a letter to Obama’s commission by Fred. H. Bartlit Jr., its chief counsel.

David Uhlmann, a law professor at the University of Michigan who formerly headed the Justice Department’s Environmental Crimes Section, said the findings make it appear more likely that Justice officials will file criminal charges not only against BP and Transocean Ltd., the rig’s owner, but also against Halliburton, the Texas oilfield services giant once headed by former Vice President Dick Cheney.

“There have been questions all along about the integrity of the cement job, and today those questions loom larger and are closer to being answered,” Uhlmann said. “And those answers are not good ones for Halliburton.”

In the letter, Bartlit said that his team recently asked Halliburton to turn over samples of the cement materials like those used at the well. The materials were tested by Chevron employees at a Houston lab. The employees were “unable to generate stable foam cement” from the materials, meaning the cement would not be strong enough to keep the well sealed.

Bartlit then asked Halliburton to turn over all of the tests it had run on the mixture.

Those documents showed that Halliburton had conducted four “stability tests” of the mixture. The first two were run in February 2010 using a slightly different recipe than the one eventually used at the well. Both of these tests indicated that the mix was unstable.

Halliburton sent results from only one of those tests to BP in an e-mail March 8.

“There is no indication that Halliburton highlighted to BP the significance of the foam stability data, or that BP personnel raised any questions about it,” Bartlit wrote.

Two more tests were conducted by Halliburton in April. The first test, conducted about seven days before the blowout, again showed the mix to be unstable, although Bartlit said it may have been improperly conducted. These results were reported internally at Halliburton, Bartlit said, “though it appears that Halliburton never provided the data to BP.”

Bartlit said Halliburton apparently began a fourth test, and after modifying the testing procedure, found the cement to be stable.

“We are not yet certain when Halliburton reported this data internally or whether the test was even complete prior to the time the cement job was poured at the Macondo well,” he wrote. “Halliburton reported this data to BP after the blowout.”

Bartlit said that because BP did not have the test results, “the cement job may have been pumped without any lab results indicating that the foam cement slurry would be stable.”

BP officials did not return a call for comment Thursday. A Halliburton spokeswoman said company officials were reviewing the report.

Late Thursday, Halliburton issued a statement. Its February tests were of a different slurry mixture, the company said, and its first April test was “irrelevant because the laboratory did not use the correct amount of cement blend. Furthermore … BP was made aware of the issues with that test.”

Halliburton said its second April test used the agreed-upon mixture and showed it was stable. But BP changed the mixture that was actually used in the well, Halliburton said, and “a foam stability test was not conducted” on the new formulation.

The cement job was not the only problem that plagued the well on the evening of April 20, and Bartlit did not say that it was the only cause of the blowout.

The blowout preventer — a massive device that was supposed to shut off the well off in case of a dangerous geyser of oil and gas — also failed. Other human errors have been alleged as well. On the day of the blowout, BP canceled a test called a “cement bond log” designed to discover cement defects, saving more than $100,000.

Jesse Gagliano, a Halliburton technical advisor, also told federal investigators that BP risked causing a “severe gas flow problem” when they decided to use fewer devices called “centralizers” rather than the 21 he recommended.

Critics of BP and its partners on the Macondo project jumped on the findings to demand greater oversight of the companies involved in the accident and of the oil industry. Rep. Edward J. Markey (D-Mass.), chairman of the House Energy and Environment Subcommittee, said the counsel’s findings underscored the need for BP’s new chief executive, Bob Dudley, to appear before Congress, which he has recently declined to do.

“The fact that BP and Halliburton knew this cement job could fail only solidifies their liability and responsibility for this disaster,” Markey said in a statement. “We now know what BP and Halliburton knew, and when they knew it. And now we know they did absolutely nothing about it.

The report’s release sent Halliburton shares plunging 16%, to less than $30 in New York trading, but it recovered somewhat to close at $31.68, down $2.74, or 8%. BP’s American shares, however, closed at $40.60, up 1.25%.

Richard.fausset@latimes.com

Nbanerjee@tribune.com

Fausset reported from Atlanta and Banerjee reported from Washington. Rong-Gong Lin II contributed to this report from Los Angeles.
Tests warned of cement problems before well’s blowout

Ford Motor Co. demonstrated the growing strength of the U.S. auto industry Tuesday by posting a third-quarter profit of $1.7 billion, a 69% jump over the same period a year ago and surpassing a previous record set in 1997.

The automaker — which unlike General Motors Co. and Chrysler Group avoided bankruptcy reorganization last year — benefitted from both cost cutting and top-line performance, gaining U.S. market share and selling vehicles for higher prices.

“Overall, we are doing better than we expected through the first nine months of the year,” said Alan Mulally, Ford’s chief executive, “and we expect to deliver solid profits in the fourth quarter and for the full year.”

Ford has reduced its level of sales-incentive spending at the same time buyers are adding options to their cars and spending more, according to Edmunds.com, the auto information company. Edmunds.com estimated that buyers paid an average of $30,636 for a Ford in September, slightly higher than a year ago and up 10% from five years ago.

“For a long time, they weren’t really in the car market very strongly, depending mostly on trucks and SUVs. Now they have good cars, and the car market is where the action has been in recent years,” said Jessica Caldwell, an analyst with Edmunds.com.

Ford’s profit equaled 43 cents a share and compared with earnings of $1 billion, or 29 cents a share, in the same period a year earlier. It was the automaker’s sixth consecutive profitable quarter. Revenue fell to $29 billion from $30.3 billion a year earlier, before the company sold off Volvo, the Swedish automaker, to focus on its core Ford and Lincoln brands. Year to date, the company has earned $6.4 billion.

In early trading, Ford shares rose 7 cents to $14.22.

“This was another strong quarter,” said Mulally. “The key drivers for improvement in 2011 will be our growing product strength, a gradually strengthening economy and an unrelenting focus on improving the competitiveness of all our operations.”

On Friday, Ford plans to use some of the cash it is generating to pay off the remaining $3.6 million it owes to the United Auto Workers union retiree healthcare trust, which will save it about $330 million in annual interest expenses. The automaker borrowed heavily to stay afloat during the recession and is working to pay back those loans.

The payment will reduce the company’s total debt to $22.8 billion, a net reduction of $10.8 billion from the end of 2009. Ford said it expected its cash holdings to be equal to its total debt by the year’s end, earlier than it previously anticipated. Ford also plans a stock offering that would convert $3.5 billion in debt to common stock during the fourth quarter.

“We are clearly ahead of where we thought we would be on improving our balance sheet and repaying our loans,” Mulally said. “This allows us to reduce our annualized interest payments by over $800 million.”

Ford’s American operations had an operating profit of $1.6 billion, compared with $300 million in the same period a year earlier. The company was profitable in South America and in Asia, driven by gains in China and India, but lost money in Europe. The company said it expected its European operations to become profitable in this year’s fourth quarter.

Much of the automaker’s success is coming from a string of successful new products, such as the Fusion sedan and the Edge SUV. Truck sales, especially government and business fleet sales of the F-150 pickup also added to the quarterly profit, Caldwell said.

Ford’s latest vehicles have been well received by consumers.

“It’s much better than the Ford of five years ago,” Caldwell said.

Ford sales have risen 21% to 1.4 million vehicles through the first nine months of this year. That’s more than double the overall industry gain. Its share of the U.S. market has grown to 16.7% from 15.2% — the largest jump of any automaker this year, according to Autodata Corp.

The automaker has been able to restructure so it can operate profitably with what are considered historically low auto sales numbers.

There are some signs of a more robust rebound in the U.S. auto market, which was up about 10% through the first nine months of the year.

Mark Fields, Ford’s president of the Americas, said Monday that U.S. auto sales hit an annualized pace of about 12 million vehicles in October, its best rate so far this year. Automakers will report their October sales results next week.

jerry.hirsch@latimes.com

Ford third-quarter profit soars 69% over a year ago