Deals & Dealmakers—Universal Reassesses Theme Parks

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Once one of the leading spenders in the international theme park business, Universal Studios has put a halt to further expansion as it reviews the cost of keeping up with rival Walt Disney Co. in the resort business.

The move follows the biggest expansion in the company’s history as its new French parent, Vivendi-Universal, assesses how well its two newest parks perform before considering whether to continue to expand the second-largest player in the theme park market.

The decision follows last month’s launch of Universal’s $1.7-billion park in Osaka, Japan, and the recent construction of a $2-billion-plus companion park to its 11-year-old Orlando, Fla. resort.

Universal will instead concentrate on adding hotels in Florida and converting its smallest amusement park, in Spain, to a seaside resort.

Vivendi-Universal was formed last year when French giant Vivendi struck a $31 billion deal with Universal’s former owner, Seagram Co.


Gasoline Battles Continue

Exxon Mobil Corp. has petitioned the Federal Trade Commission to investigate patents held by Unocal Corp. on reformulated gasoline. The five Unocal patents, which closely match federal anti-smog requirements for a third of the nation’s gas pumps, are being blamed by some in the industry for higher gasoline prices. It’s alleged that the patents cause refiners to eliminate or reduce their production for fear of being sued. The action follows a judgment in Unocal’s favor in which it was awarded $92 million from six major oil companies, including Exxon Mobil, for patent infringements over a five-month period in California.


Toy Maker Buys Competitor

Malibu-based Jakks Pacific Inc. has agreed to buy 21st Century Toys Inc., a maker of military action figures and accessories. The terms were not disclosed. Jakks plans to merge 21st Century with its action toys division, which has licenses for Road Champs toy vehicles and World Wrestling Federation figures. Alameda, Calif.-based 21st Century had revenues of about $28 million last year on sales of products including the Ultimate Soldier XD, America’s Finest and the Villains. Jakks had revenues of $252.3 million last year.


Manufacturer Shifts to Mexico

Rancho Dominguez-based Coastcast Corp., the leading maker of stainless steel and titanium golf club heads, announced it would stop production of steel club heads at its Rancho Dominguez plant, a move that will cause it to cut 120 jobs in the next two months. The company will shift production of steel club head casting to Mexico, it said, to better compete with manufacturers from Asia. Coastcast, which also produces orthopedic implants and surgical tools, will continue to manufacture those products at the facility. A plant in Gardena will continue to make titanium club heads. Coastcast sells to customers including Callaway Golf, Ping, Titleist, Cleveland and Cobra.


Price Gouging Charged

Southern California Edison, one of the state’s struggling utilities, has accused the El Paso Corp. of artificially inflating the price of natural gas in the state. El Paso owns the largest pipeline connecting gas-producing regions in the Southwest with Southern California. SCE has charged that market manipulation by El Paso had cost it an extra $1 billion to run its gas-fueled power plants. The period in dispute covers the 13 months ended March 31. Edison claims that, overall, El Paso overcharged energy producers by as much as $3.7 billion over the last year.

The Federal Energy Regulatory Commission is reviewing a complaint by the state’s regulators that a key cause for California’s soaring natural gas prices during the last year was El Paso’s manipulation of the market.

An El Paso subsidiary has replied to the filing, saying that high prices for gas came from “unexpected and unprecedented demand and an insufficient supply infrastructure,” not from a manipulation of supply. The company blamed bad public policy decisions in California for its current energy problems.


Vans Closes Film Deal

Sony Pictures Classics has picked up North American distribution rights for “Dogtown and Z-Boys,” a documentary funded by Santa Fe Springs-based Vans Inc. The film, directed by Stacy Peralta and narrated by Sean Penn, was the winner of the 2001 Sundance Film Festival’s Audience Award and Best Director Award, both in the documentary category. It chronicles the overnight impact of the Zephyr Team (Z-Boys) on skateboarding in the early ’70s, and the eventual collapse of the team later in the same decade, as the individual team members split off and went their own way.


NBC Power Shifts

In a move that raised speculation about the line of succession at NBC, Andrew Lack has been named president of the network. General Electric Co., the network’s parent, said that Lack, president of the news division since 1993, would replace Bob Wright, who will remain NBC’s chief executive. Lack was also named to the newly created post of chief operating officer.

Observers said Lack’s appointment means he is being groomed as Wright’s heir apparent as CEO and chairman of the network, but Wright declined to address that issue.

Lack’s duties as president and COO, effective June 4, include overseeing NBC’s news and entertainment divisions, as well as the MSNBC and CNBC cable news channels. Wright has run NBC for 14 years and will become the new chairman of the network another newly created title. He will also stay on as GE vice chairman and executive officer.


Gemstar Strikes Canadian Deal

Gemstar-TV Guide International Inc. and Shaw Cablesystems G.P., a unit of Shaw Communications Inc., Canada’s largest multivideo programming provider, signed a nonexclusive long-term interactive program guide agreement.

Terms of the agreement provide for guaranteed distribution of Gemstar-TV Guide’s Prevue Interactive service (marketed under the TV Guide Interactive brand in the United States) in Shaw’s six largest cable systems, including Vancouver, Victoria, Calgary, Edmonton, Winnipeg and Saskatoon.

Shaw Cablesystems serves approximately 2.2 million basic service customers and is the eighth-largest cable operator in North America.


Apartment Rental Rates Climb

The price of a typical two-bedroom apartment in Los Angeles and Orange counties jumped to $1,400 a month, according to a study conducted by RealFacts, a Novato, Calif.-based research firm.

Throughout the five-county region, average rents for all apartments at larger complexes surged to record highs in the first quarter, increasing by 9 percent or more from a year ago, the study found. The lack of new buildings and rising home prices contributed to the increase, which was more than twice the rate of inflation.

The greatest increase was seen in Los Angeles, where apartments were leasing for an average of $1,187 per month during the first quarter, a 13 percent jump from the year-earlier period. Los Angeles County is now the priciest apartment market in the region, according to the quarterly report. The average rent was derived from surveying apartments of all sizes, from studios to three-bedroom townhomes.


Community Boards Approved

Los Angeles City Council voted last week to build a network of community councils throughout the city. The plan, which calls for setting up as many as 100 of the neighborhood groups over the next five years, must still be approved by Mayor Richard Riordan. Although the mayor has been supportive of the program, some of the mayoral staff have said the version passed by council has too much red tape. A decision by Riordan whether to support or veto the council’s plan is still a few weeks away.

Council has yet to decide how much funding it’s willing to allocate to the groups, 10 to 20 of which may be funded over the next year. The community councils would have no authority over planning or zoning matters in their areas, though they are expected to play an important role as advisers to the City Council and mayor.


Hanmi Bank Acquisition

In a deal that would create one of the larger lenders to Asian-owned businesses, Hanmi Financial Corp. has agreed to buy California Center Bank for about $103 million in cash. The deal is expected to close in the fourth quarter.

Los Angeles-based Hanmi Financial was formed in 1982 and has $1.07 billion in assets and $959 million in deposits as of March 31. It has 11 branches and 300 employees in Los Angeles, Orange and San Diego counties and specializes in commercial and small-business lending.

California Center Bank, also based in L.A., was formed in 1986 and has $480 million in assets and $421 million in deposits. It has 200 employees in six offices in Los Angeles and Orange counties and specializes in international trade financing for business customers. The combined company would operate under the name Hanmi Bank.


Theater Chain Reprieve

Billionaire Philip Anschutz has struck a deal to bail out the ailing Edwards Theatres Circuit Inc., the state’s largest movie-house chain currently operating under bankruptcy protection.

The chain filed for protection in August, saying it owed $217 million to its largest creditor, a group of lenders led by Bank of America Corp. Terms of the deal with Anschutz and Oaktree Capital Management, a Los Angeles distressed-debt specialist, were not disclosed.

There was speculation that Anschutz would seek to gain control of the company, which has been run by the Edwards family for more than 70 years.

It is the second investment by Anschutz and Oaktree in the theater chain this year.

Anschutz, who has interests in the L.A. Kings hockey team, Staples Center and a piece of the L.A. Lakers, also owns a majority stake in United Artists Theatre Co., a nationwide chain based in Englewood, Colo., that filed for bankruptcy last year. He is also attempting to gain control of Knoxville, Tenn.-based Regal Cinemas Inc., the nation’s largest exhibitor.

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