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Video Wars Heat Up

The same format wars that marked the early days of VCRs have hit the nascent market for digital versatile discs, or DVDs.

A partnership called Digital Video Express backed by Richmond, Va.-based electronics retailer Circuit City Stores Inc. and the L.A. entertainment law firm Ziffren, Brittenham, Branca & Fischer unveiled plans for a new variation of DVDs that threaten to compete with the current format.

Current DVD technology, widely touted as the successor to VCRs, is targeted at consumers who want to buy and create a library of movies on high-resolution compact discs. The new system, to be called Divx, is a disposable technology aimed at those who want just a single viewing, similar to renting a video cassette.

Four Hollywood studios Walt Disney Co., Dreamworks SKG, Viacom Inc.’s Paramount Pictures unit and Seagram Co.’s Universal Pictures unit have agreed to provide titles for Divx release. The first Divx players are expected to appear next spring.

Alternative Treatments Offered

In response to growing consumer interest in alternative medicine, two major California managed care companies will begin offering treatments, ranging from acupuncture to massage therapy.

Beginning in January, Health Net, a subsidiary of Woodland Hills-based Foundation Health Systems, will offer members access to a network of licensed acupuncturists as an add-on policy to its standard HMO benefits. In a separate announcement, San Francisco-based Blue Shield of California said it will begin offering enrollees access to massage therapists, chiropractors and acupuncturists at no extra cost.

Both companies require approval from the state Department of Corrections before they begin marketing the services.

GlenFed, UA Ink Deal

In a bid to expand its retail presence in California, Glendale Federal Bank announced last week that it will install automated teller machines in all United Artist Theater Circuit movie theaters throughout the state.

GlenFed account holders will be able to use the ATMs free-of-charge, while non-customers will be charged $1.25 per transaction.

GlenFed already operates an automated teller at UA’s theater in Old Town Pasadena. The next theater ATM will open in Merced, and the bank plans to install four to five ATMs in theaters per month. UA currently operates 69 theaters in California.

The two companies are considering future joint marketing campaigns.

Starwood Buys Westin

Starwood Lodging Trust, the nation’s largest hotel real estate investment trust, said it has agreed to buy Westin Hotels & Resorts for $1.57 billion in cash, securities and assumed debt.

The acquisition creates the world’s third largest hotel company, with 219 hotels in 38 states including 28 in California and 23 countries, and more than $4 billion in annual revenue.

No hotels will actually change hands, according to Bruce Carpenter, L.A.-based regional director of sales and marketing for Westin.

Starwood already owns and operates the Westwood Marquis, Westin Los Angeles Airport and Long Beach Sheraton hotels, and those three properties will remain a part of Starwood’s real estate holdings.

About all that Starwood is buying in L.A. County is Westin’s management contract at the Century Plaza Hotel and Westin’s franchise agreement with the Westin Bonaventure Hotel in downtown L.A., Carpenter said. He noted that the Westin Bonaventure is neither owned nor managed by Westin. The hotel is managed by the Interstate Hotel group and has a franchise agreement that allows its operators to use the Westin brand name, he said.

Merisel Delays Vote Again

El Segundo-based computer equipment distributor Merisel Inc. announced last week that it is delaying for the second time a special stockholders’ meeting to vote on a controversial debt restructuring plan.

The meeting, originally scheduled for Aug. 29 and delayed until Sept. 18, now will be held “no later than Oct. 15,” the company said in a statement.

Shareholders are being asked to decide whether to retire $125 million in debt by exchanging the 12.5 percent senior notes they hold for 80 percent of the company’s common stock.

The company has been unable to reach an agreement with an ad hoc committee representing the holders of the senior notes. As a result, Merisel decided to break an agreement with debt-holders that called for the company to hold a shareholders’ vote by the end of August, which has forced Merisel to resume $8 million in interest payments on its notes and make amortization payments totaling $40 million on debts from its operating subsidiaries.

Writers File Suit

The West Coast division of the Writers Guild of America last week filed a federal lawsuit challenging the constitutionality of a Los Angeles city ordinance requiring home-based writers to pay a business license tax.

“After several months of discussions with city officials to address our First Amendment concerns, we have reluctantly determined that we must file this suit to prevent city intrusion into writing and other expressive activities in the home,” said Brad Radnitz, president of Writers Guild West, in a statement.

Writers Guild officials want the city of Los Angeles to follow the lead of the city of West Hollywood, which exempts writers, authors and artists from paying business taxes unless they work at a commercial location or incorporate their businesses with the state.

Compiled by Larry Kanter, Jason Booth, Bob Howard and Daniel Taub

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