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Byline: -- Staff and Wire Services

Actors unions extend ad pact

Actors and advertisers agreed Friday to discuss radical changes to the system of paying people who appear in commercials as part of a two-year extension of their current contract.

The two unions representing actors agreed to the extension while both sides hire a consultant to recommend alternative compensation methods for ads that appear on television, radio, the Internet and other new media platforms.

Advertisers have been scrambling to find new ways to reach consumers who are skipping 30-second spots on television by using digital video recorders or consuming more entertainment on the Internet or portable devices such as cell phones.

Auto makers, consumer product companies and other advertisers are also experimenting with online ads at a time when TV networks are trying new ways to reach viewers, including selling individual episodes on iTunes and other platforms without ads.

Under the terms of the extension, which must still be approved by both unions, advertisers agreed to a 6 percent pay raise and to increase contributions to the unions' pension and health fund.

Advertisers also agreed to guarantee the unions jurisdiction over all advertising that appears on the Internet, cell phones or other new media platforms that might become popular ways to consume entertainment.

In return, the Screen Actors Guild and the American Federation of Televison and Radio Artists agreed to give advertisers more flexibility to experiment with new forms of ads.

Advertisers will now, for a limited period, be able to edit commercials for use on the Internet without paying extra fees to actors. Previously, any edit of an existing ad counted a a new commercial that triggered news fees.

Gas prices drop for third week

Gas prices across Southern California dropped for the third consecutive week as fears of interruptions in supplies eased, the Automobile Club of Southern California reported Friday.

The average price of self-serve regular gasoline in the Los Angeles area stood at $3.243 Friday morning -- 2.4 cents less than last week, but 4 cents more than last month and 65 cents more than a year ago.

The average price fell 1 cent from July 14-21 and 1.7 cents from July 21-28 after three weeks of rising prices.

Advertisers, eBay test TV sales idea

NEW YORK -- Several major advertisers are teaming up with online auctioneer eBay Inc. to test an idea for selling television advertising in an electronic marketplace, the group announced Friday.

A group of marketers and advertising agencies wants to try what would be a vastly different way of selling TV ads, which are usually negotiated in closed-door deals between networks and advertisers.

The process has long been criticized as cumbersome and opaque, since the exact prices paid by different advertisers often isn't known, meaning that some will wind up paying more than others.

Medco's profits jump 24 percent

TRENTON, N.J. -- Medco Health Solutions Inc., one of the country's largest prescription benefit managers, said Friday that its second-quarter profit jumped 24 percent, boosted by new clients and an acquisition. The company raised its 2006 earnings forecast, and shares rose 2.6 percent after briefly spiking to a 52-week high.

Rebounding from a poor first quarter, Franklin Lakes, N.J.-based Medco earned $170.9 million, or 56 cents per share, in the quarter ended July 1 from $137.4 million, or 48 cents per share, a year earlier.

Results in the latest quarter were depressed by 9 cents per share in costs for the gradual write-off of intangible assets -- contracts Medco got when it was spun off from Merck three years ago.

Medco's earnings, excluding those costs, amounted to 65 cents a share, or 4 cents a share more than the consensus estimate of analysts surveyed by Thomson Financial.