Filmmaking Costs Decline

The average cost of producing a major studio movie fell more than $700,000 in 1998, to $52.7 million, while the cost of marketing those movies climbed 13 percent in the same period, according to the Motion Picture Association of America.

In his annual assessment of industry finances, MPAA President Jack Valenti said the 1.4 percent dip in production costs signals a more disciplined approach by studio executives in setting production budgets.

But the seven major studios found there was little they could do about the increasing costs of marketing those films through television commercials. In 1998, the average cost jumped to $25.3 million from $22.3 million in 1997.

Valenti also said domestic box-office receipts totaled $6.95 billion in 1998 a 9.2 percent increase over 1997.

Fluor Begins Downsizing

Suffering from the Asian economic crisis and its own cost structure, Irvine-based Fluor Corp. said it would cut 5,000 employees, reorganize its operations and narrow the range of construction projects it undertakes.

The nation’s largest engineering and construction company said the moves will reduce overhead costs by $160 million a year but would require a $130 million pretax charge against earnings in the current quarter.

Chairman and Chief Executive Philip J. Carroll said the current cost structure is unsustainable because the firm expects only $6 billion in new construction orders this year, which is about half the level of two years ago. Many of Fluor’s largest projects were derailed by the Asian economic crisis.

Mayor Funds LAUSD Candidates

L.A. Mayor Richard Riordan has raised more than $1.4 million for the candidates he supports in next month’s Board of Education race.

The amount means the three challengers and one incumbent backed by Riordan should be able to dramatically outspend their rivals in a race the mayor has called critical for overhauling an incompetent school board.

Most of the money raised by Riordan came from a $1,000-a-person reception last month. Among the top contributors was billionaire Eli Broad, who donated $250,000.

Riordan is supporting board member David Tokofsky and challengers Genethia Hayes, Mike Lansing and Caprice Young.

Machinists Settle with Lockheed

Just hours before a strike deadline, machinists at the Lockheed Martin Skunk Works plants in Palmdale and in Marietta, Ga., narrowly approved a new contract calling for a 3 percent raise over three years.

The workers also won more flexibility in scheduling time off and will now be allowed to take vacation time in four-hour increments and sick time in one-hour stretches.

The 1,800 employees are represented by the International Association of Machinists and Aerospace Workers. They had threatened to strike earlier this month but put off the job action under orders from federal officials.

Hotel Rates Increase

The cost of the average hotel room in the L.A. area jumped nearly 5 percent in January while occupancy stayed flat.

The latest figures released by PKF Consulting put the average cost of a one-night stay at $108.74 up $5.13 from the like period a year ago.

The figures underscored a continuing trend among L.A. County hotels, which saw a 9 percent increase in the cost of a room in 1998. Analysts said many hotels are moving toward matching the cost of an overnight stay in other major cities like New York, where rooms average $202 a night.

Hotels in the Hollywood area showed a 26 percent drop in occupancy in January, but that was blamed on an announcement last year that the Holiday Inn planned to close April 1 for a two-year renovation project.

Supes Eye Living Wage

L.A. County, the largest employer in the region, is considering whether to require its hundreds of contractors to pay workers some form of living wage.

Supervisor Zev Yaroslavsky called for a living wage ordinance to be considered next month after fellow Supervisor Yvonne Brathwaite Burke proposed during a board meeting that all bidders for county contracts be warned that the board is considering a living wage policy.

Burke recommended that all contracts involving workers earning less than $7.75 an hour be awarded for only one year. Supervisor Mike Antonovich opposed the move.

Proponents argue that as it is now, the county takes on responsibility for low-wage families by spending millions of dollars a year on welfare and health care. A county study determined an hourly wage of $8.32, with health benefits, is required to keep a family off welfare.

Study Calls for CRA Revamp

A task force has recommended that the Community Redevelopment Agency close all 10 of its field offices and reorganize its downtown Los Angeles headquarters to improve efficiency.

The proposal came as part of a report by a task force of seven CRA managers who were asked to study agency problems by the CRA board. CRA Administrator John Molloy said he might support closing some field offices but would oppose consolidation at the downtown headquarters.

Another remedy under consideration calls for the City Council to declare itself the CRA board and consolidate redevelopment functions in a new Economic Development Department. That plan is opposed by Mayor Richard Riordan.

Foundation Chief Retires

Dr. Malik Hasan has retired as chairman of Foundation Health Systems Inc., one of the biggest health insurers in California and the fourth-largest publicly traded U.S. managed care company.

Hasan is a neurologist who founded one of foundation’s predecessor companies in 1985. Analysts said Hasan will likely stay involved with the firm because he owns about 4.3 million shares of stock, or 4 percent of shares outstanding.

Foundation was formed in 1997 by the $1.34 billion merger of Foundation Health Corp. and Health Systems International Inc., which Hasan headed.

Compiled by Danny Pollock