2001 In Review

January

Glimpse of the Future: Online toy seller eToys, showing the weakness that would eventually lead to its Chapter 11 bankruptcy filing and subsequent closure, announced it was shuttering the UK version of its site.

Blue Light Special: Ron Burkle, through his Yucaipa Cos. holdings, upped his stake in Kmart to 3.5 percent. Burkle associate Kenneth J. Abdallah reported a 2.5 percent stake.

Urge to Merge, Purge: On a 3-2 vote, the Federal Communications Commission gave the go ahead to the merger of AOL and Time Warner Inc. More than 5,000 jobs would be lost over the course of the year as the company trimmed its Internet and retail operations.

February

Last Course: Chef, entrepreneur and burgeoning media conglomerate Wolfgang Puck announced his landmark Spago Hollywood, opened in 1982, would close in March.

Buying Library: MGM said it was taking a 20 percent stake in Cablevision for $825 million in cash. The New York-based cable operation runs American Movie Classics, Bravo, Independent Film Channel and Women’s Entertainment networks.

Going, Going : EToys cut the remaining 293 members of its staff and was delisted by Nasdaq.

Dumping Disney: Though the action had been taken in 2000, SEC filings in early 2001 brought to light that Warren Buffett’s Berkshire Hathaway had sold off more than 80 percent of its stake in Walt Disney Co.

Kryptonite: Stan Lee Media, birthplace of Superman and other comic book heroes, filed for Chapter 11 bankruptcy protection amid an SEC investigation over misuse of corporate funds.

March

Gone: EToys files for Chapter 11 bankruptcy protection.

Blackout: The California Power Exchange filed for Chapter 11, citing lawsuits filed against the energy marketplace as a result of money owed to power generators. CalPX was set to liquidate forward power contracts totaling $1 billion to pay generators when Gov. Gray Davis seized them.

Rolling Blackout: Though they hit the northern part of the state in January, blackouts rolled into Los Angeles County in March. While some businesses in Edison or PG & E; territory saw disruptions, they had neither the duration nor impact most had feared. Another round hit in May, but a cool summer helped keep the lights on.

April

Upping the Ante: Developer Robert Maguire, who already had a small stake in the development of Playa Vista, agreed to plunk down $90 million for a larger share of the development pie. He had already formed a partnership with Sam Zell’s Equity Office Properties to partner in a 426,000-square-foot office building there.

We’ll Always Have Paris: The Japan-based parent companies of Sanwa and Tokai banks announced their merger, creating American subsidiary United California Bank with assets of $12 billion. In December, UCB was sold to French banking concern BNP Paribas for $2.4 billion in cash.

Can’t Stand the Heat: Squeezed by rising energy costs and locked into retail rates set by the PUC and exacerbated by the prospect of a long, hot summer Pacific Gas & Electric filed for Chapter 11 bankruptcy.

Family Reunion: Cushman & Wakefield Inc. struck a deal to acquire Cushman Realty. The move brought 200 employees, 11 offices and John Cushman into the C & W; fold.

Man Who Fell to Earth: EarthLink co-founder Reed Slatkin was charged with bilking $35 million from investors in what the plaintiffs called a Ponzi scheme. His lawyer said Slatkin would file for bankruptcy. The fund took in an estimated $593 million from 800 individuals. Slatkin filed in May, and by the end of the year $255 million was still unaccounted for.

May

Theater Revival: Denver billionaire Philip Anschutz stepped up his investment in the ailing movie theater business when he bailed out Edwards Theatres Circuit Inc. by buying a large stake in the exhibitor. By the end of the year he would control roughly 20 percent of the nation’s screens.

Yippee!: Former Warner Bros. co-chairman Terry Semel was tapped to run Yahoo as chief executive. He replaced Tim Koogle.

Pushing the Envelope: The City of Santa Monica approved a $10.50 minimum wage for coastal businesses that gross more than $5 million.

Rate Hike: The Public Utilities Commission shifted some of the increasing burden of energy price increases from commercial users to residential, with some rates climbing by as much as 71 percent. The PUC had approved a $5.7 billion rate increase for Edison and PG & E.;

Tuned Out: Hughes Electronics Corp. Chairman Michael Smith was ousted. Smith failed to embrace parent company General Motors’ efforts to sell Hughes to News Corp., arguing that GM ought to consider a bid from EchoStar Communications (the ultimate winner in the negotiations).

June

Hizzoner: Having come in second in April’s mayoral primary, James Hahn made a late and to some surprising charge in the runoff election, beating Antonio Villaraigosa to replace termed-out Richard Riordan.

Sturm und Drang: After months of saber rattling and tough talk about the potential for a year-long strike, the Writers Guild of America struck a contract with the studios. Both sides claimed the deal was fair, though the union was thought to have conceded a lot.

Pay to Play: NetZero and Juno, rivals in the free ISP market, agreed to merge. NetZero paid $70 million in stock for Juno and the resulting company, based in L.A., is called United Online. The resulting firm is instituting more subscriber-based services in order to shore up revenues.

Whistle While You Work: At Walt Disney Co., pink slips were handed out to the first 1,000 of an estimated 4,000 people that would lose their jobs. Disney had announced it would cut employment by 3 percent.

Emergency Care: Tenet Healthcare Corp. agreed to buy ailing David Freeman Hospitals for $55 million. The cash-poor Freeman system would use the proceeds to pay debts.

Staples II: Developers of the proposed downtown hotel and entertainment complex near Staples Center asked the city for a $75 million subsidy as expected. Officials of Philip Anschutz’s L.A. Arena Co. said the billion-dollar development isn’t economically feasible without public money.

Ring-a-Ding: The Lakers repeated as NBA champs, beating the Philadelphia 76ers 4 games to 1.

July

End to the Drama: The Screen Actors Guild followed the Writers Guild lead and agreed on a contract with the studios.

Daniels’ Final Act: As an epilogue to the Screen Actors Guild non-strike, SAG President William Daniels announced he would not seek a second term as president. He endorsed Valerie Harper, star of the 1970s sitcom “Rhoda,” for the job. Another ’70s TV icon Melissa Gilbert of “Little House on the Prairie” fame also announced for the position and eventually won. Harper supporters weren’t happy, complaining that there were irregularities in the election.

Farmers Takes Hit: L.A. giant Farmers Insurance Exchange was ordered by a Superior Court jury to pay $90 million to claims adjusters who consistently worked overtime hours without receiving additional pay. There was fear that more white-collar workers would file lawsuits.

To Haim!: Walt Disney Co. agreed to buy Fox Family Worldwide Inc. for $3 billion in cash and $2.3 billion in debt from News Corp. and Haim Saban’s closely-held Saban Entertainment Inc. Disney, already a force in cable, was expected to become even more formidable with its acquisition.

August

Ventures Dry Up: Venture funding for Los Angeles-area companies plummeted to $198.6 million in the second quarter of 2001, an 82.5 percent decline from the like quarter the year before.

Layoffs Mount: Two companies with a big L.A. presence announced massive job cuts. Executive recruitment firm Korn/Ferry International said it would slash 500 jobs, about 20 percent of its work force, while Boeing Co. announced plans to lay off an additional 600 workers at its Long Beach plant, home to the beleaguered 717 jet program.

September

No Longer No. 1: Los Angeles sputtered to a close second in the list of top manufacturing areas in the U.S. Chicago was No. 1. Flight of companies and workers to outlying areas around L.A. County was blamed in part for the decline. L.A. had been ranked first for five years.

Staples II Gets OK: L.A. City Council signed off on developers’ plans to build a $1 billion entertainment development near Staples Center. The Council did not address questions of public subsidies for the project.

Terrorist Attacks: L.A. avoided a direct hit but the horror of Sept. 11 affected the community deeply. Businesses, particularly in the tourism and hospitality industry, saw an immediate effect on their bottom lines as people stayed home in droves waiting for the next shoe to drop. Businesses at Los Angeles International Airport got the attention of elected officials who put together financial assistance packages to help them recoup a loss of business.

October

Top Secret Bailout: By a 5-0 vote, the PUC agreed to a settlement bailing out Southern California Edison. The deal allowed the utility to pay off $3.3 billion in debt and maintain rates at the current level. The deal was negotiated behind closed doors, and because it was part of litigation settlement, could not be overturned by the legislature or PUC.

Safe, But Sorry: Super-tight security nearly crippled business at office towers and movie studios in L.A. Lawyers were hit especially hard as they wasted many non-billable hours waiting in long lines at the courthouse and office buildings which turned into fortresses after the Sept. 11 attacks.

November

Hooray: TrizecHahn’s long-anticipated $615 million Hollywood & Highland project opened to great fanfare.

Reason to Celebrate: Workers at Northrop Grumman Corp.’s El Segundo plant cheer the announcement that the Lockheed Martin Corp. team won the contract for the $200 billion Joint Strike Fighter. Northrop is a key member of the team.

Hizzoner II: After tantalizing the electorate for months with Hamlet-like “will-he or won’t-he” consideration, Riordan finally made it official he wants Gov. Gray Davis’ job.

December

Cool House: After delaying a decision for weeks, LACMA’s board chose Rem Koolhaas’ eye-popping design to be the museum’s new home. Cost was said to be an issue topping $200 million, the plan to demolish the existing facility was said to be cheaper.

Cheap Gas: Gasoline prices fell to the lowest level in more than two years, with some pump prices less than $1. Prices, which were nearly $2 in the early part of 2001, fell rapidly as demand lessened after the Sept. 11 attacks.

Big Deals: Vivendi Universal and USA Networks Inc. agreed to merge their entertainment assets and biotech giant Amgen Inc. agreed to buy Immunex Corp. for $17 billion. Investors were jittery.