Deals & Dealmakers—DreamWorks Stays With Universal

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After negotiations with Warner Bros. failed to bear fruit, DreamWorks SKG reupped with Universal Studios on a new five-year international theatrical and video distribution deal.

As part of the deal, Universal will reportedly give DreamWorks $250 million in the form of a loan and an advance against future revenue. DreamWorks is more than $1 billion in debt.

Although a deal with Warner Bros. was said to be in its final stages, a number of sticking points could not be resolved. The terms of the two offers were said to be similar.

DreamWorks, which distributes its own movies in theaters in the United States and Canada, has had an international and global video distribution deal with Universal since 1995 that was set to expire at the end of this year. The new deal also extends Universal’s right to use DreamWorks characters and concepts in its theme parks. Under a separate deal, Universal Music also distributes DreamWorks tapes and CDs.

DreamWorks will reportedly use the cash infusion to pay down its liabilities and for production financing. DreamWorks had been shopping its distribution deal all over Hollywood since last year, hoping that one of the major media companies would agree to take equity in the company. But none of the parties, including Viacom-owned Paramount Pictures, Walt Disney Co. and News Corp.-owned 20th Century Fox, elected to go the route.

Despite the lack of a distribution deal, Warner Bros. continues to have a strong relationship with DreamWorks, with which it is co-financing and distributing movies such as the Steven Spielberg-directed “A.I.,” due out in June.


Freeman Leaving DWP

S. David Freeman is taking his white cowboy hat and Tennessee twang to Sacramento.

Freeman, 75, general manager of the Los Angeles Department of Water and Power, said he would resign soon to become Gov. Gray Davis’ chief energy advisor. He is also believed to be a leading candidate to head a new California power authority. A power authority has been proposed as the vehicle by which the state could purchase the electrical transmission grid now owned by California’s private utilities. The agency also could have broad power over conservation programs, construction of new power plants and rehabilitation of current power facilities.

Before working for the DWP, Freeman ran three of the largest public power authorities in the United States, the Tennessee Valley Authority, the New York Power Authority and the Lower Colorado River Authority in Texas. He also served as energy advisor to President Jimmy Carter.


Semel to Lead Yahoo

Rekindling rumors of a possible Hollywood merger, Internet giant Yahoo Inc. has pegged former Warner Bros. co-chairman Terry Semel to replace Tim Koogle as chairman and chief executive.

Semel, 58, who led Warner Bros. for two decades with partner Robert Daly, will take the helm of a company that has seen its fortunes tumble amid the dot-com meltdown. Yahoo’s stock dropped from $250 in January 2000 to a 52-week low of $11.38 this month.

With Semel, Yahoo is expected to embark on the challenging task of transforming itself from a Web-based provider of information and entertainment into a full-fledged media business that more closely resembles a television network or a movie studio, many analysts believe. That should allow the Santa Clara, Calif., company to outgrow its dependence on online advertising, which has become so weak that the once-profitable company is now losing money and plans to slash 12 percent of its workforce.


Lockheed Trying to Revive X-33

Seeking new life for its X-33 experimental space aircraft, Lockheed Martin Corp. has entered talks to seek Air Force funding to revive the one-time potential successor to the space shuttle.

The Palmdale-based program was canceled by the National Aeronautics and Space Administration last month after technical delays and cost overruns. About $1.2 billion was spent on the program since it began in 1996.

Lockheed has reportedly been pushing a deal in which the program would be refocused to develop a rocket plane to carry weapons for the Air Force. About 110 engineers and assemblers in Palmdale were working on a 69-foot demonstration spacecraft that was about 90 percent complete when the funding ran out March 31.

The X-33 was designed to be a big improvement over the space shuttle. It was envisioned as a reliable, reusable spacecraft that could slash launch costs. Instead of using booster rockets as the space shuttle does, the X-33 would reach orbit on a single stage and then land like an airplane.


Pumps Down at USA Stations

Independent gas retailer USA Petroleum has shut down pumps at several stations in Los Angeles, as the price of gasoline on the spot market has soared.

With the price of gas hovering at around $1.90 per gallon on the spot market this month, including taxes and transportation, Agoura Hills-based USA can not compete with larger companies that set prices based on the cost of production at their refineries.

USA stations have closed in Northridge, West Los Angeles, Thousand Oaks and Camarillo in recent weeks.

To combat the burgeoning prices, USA might rebrand stations throughout Los Angeles with Chevron signs and gas, although the company has made no formal announcements about rebranding since March.


Home Prices Keep Rising

Despite the slowing economy, home prices shot up 13.5 percent in Los Angeles County in March over the year-earlier period, the largest year-to-year monthly increase since 1989.

DataQuick Information Systems Inc., a La Jolla research firm, said the median home price was $218,000 in the county in March, compared to $292,000 in Orange County, which saw prices jump 12.3 percent over the year-earlier period.

DataQuick reported that the number of homes sold this March dropped from a particularly strong March 2000, partly because of fewer homes on the market. Sales fell 10 percent in Los Angeles County and 9 percent in Orange County over March last year.

The National Association of Realtors predicted earlier this month that all major U.S. housing indicators would rise, leading to a 4 percent gain in prices and the second best year on record for home sales.


Insurers Request Rate Hikes

Local homeowners could be facing higher insurance premiums after two companies cited higher repair costs in requesting 6.9 percent hikes in their property policies.

Farmers Insurance and 21st Century Insurance each asked for the increases in their homeowner rates, according to state Department of Insurance filings. Los Angeles-based Farmers insures the most homes in California, with 1.6 million dwellings covered. Woodland Hills-based 21st Century insures 50,000.

The rate requests, which must be approved by state regulators before taking effect, are somewhat unusual for California because the state has suffered no major catastrophes recently. Individual rates could rise as much as 15 percent in some areas.

Farmers’ increase would come on top of a 6.5 percent rate hike it received last year. 21st Century’s last rate request was a 7.5 percent decrease it received in 1999, the year it began writing homeowner policies again after being nearly bankrupted by the 1994 Northridge earthquake.


Imports Up at Ports

Imports through the ports of Los Angeles and Long Beach rose in March compared to the like year-earlier period, but exports were mixed, rising in Los Angeles and decreasing in Long Beach.

Shipments arriving at the Port of Los Angeles in March rose 14 percent above year-ago volume, to 207,000 20-foot-long containers. Imports through the Port of Long Beach increased 9.6 percent to 196,000 containers, from 178,000 in March 2000.

Exports from the Port of Los Angeles rose 6.5 percent last month to 88,000 containers, from 83,000 a year earlier. Compared with year-ago volumes, March exports from the Port of Long Beach fell for a fifth consecutive month, declining 13.8 percent.


Record Accident Settlement

In an unprecedented settlement, a Los Angeles Superior Court jury awarded more than $55 million to a woman who was paralyzed in a rollover crash, and to her parents.

Demonstrating once again that Los Angeles is a risky place to defend personal injury suits, the jury ordered Continental General Tire of Illinois to pay $55.4 million to Cynthia Lampe, 33, who was paralyzed from the neck down in the June 1996 crash, and her mother and father. Continental General is the U.S. unit of Continental AG of Germany, the world’s fourth-largest tire manufacturer. Company officials said they would appeal.

The largest civil verdict in U.S. history a $4.9-billion award against General Motors Corp. came in 1999 in a vehicle fire case in Los Angeles Superior Court. That award was trimmed by the judge to $1.2 billion and is now on appeal. Brian Panish, one of the Lampe lawyers, also represented plaintiffs in the GM case.

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