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Thursday, Jun 8, 2023

The Business Digest

Movie Costs Decline

For the first time in 20 years, the average cost of marketing a motion picture declined in 1999.

Although the decline isn’t huge $780,000 it combined with lower production costs to bring the average total cost of producing and marketing a movie down to $76 million in 1999 from $78 million in 1998, according to Motion Picture Association of America Chairman Jack Valenti.

While costs came down, box-office revenues went up as the average cost of tickets rose from $4.70 in 1998 to $5.08 last year. Domestic box office reached a record $7.5 billion in 1999, even though attendance was down slightly from the previous year.

Kerkorian Makes Vegas Deal

Kirk Kerkorian, the 82-year-old Beverly Hills billionaire and brash dealmaker who controls MGM Grand Inc., would become the unrivaled kingpin of Las Vegas gaming under an agreement in which MGM Grand would buy Mirage Resorts Inc. for $4.4 billion in cash.

The deal would give Kerkorian and MGM Grand control of more than 18,000 rooms up and down the Las Vegas Strip at such famed hotel-casinos as MGM Grand, Mirage, Bellagio, New York-New York and Treasure Island, among others.

The pact also abruptly ended what many expected would become a hostile takeover battle between Kerkorian and Steve Wynn, the flamboyant Mirage chairman who is arguably the other most powerful figure in Las Vegas. Once the deal is completed, Wynn is not likely stay at the new company.

Possible School Sites Identified

Los Angeles school officials said they have identified enough available land in the downtown area to establish five new campuses for 7,000 students, including those at the aging and overcrowded Belmont High School.

One of the five sites identified was the 12-acre former Ambassador Hotel in the Mid-Wilshire district, where a school could provide 1,500 seats. The district is expected to gain possession of the property through foreclosure but it might take 18 months and about $1 million to render the Ambassador land environmentally safe by removing fuel storage tanks buried on the property.

Other sites are the L.A. Unified School District headquarters at 450 N. Grand Ave.; Midway Ford on Vermont Avenue; 1550 W. Washington Blvd.; and Evans Community Adult School.

Workers’ Comp Firm Seized

In the largest government takeover ever of a workers’ compensation company in California, state insurance officials seized control of financially troubled Superior National Insurance Group in Calabasas.

Industry experts say the takeover stemmed from Superior’s management mistakes but also reflected a broad downturn in California’s $5 billion-a-year workers’ compensation insurance business.

Insurance Commissioner Chuck Quackenbush said Superior, the No. 2 workers’ compensation carrier in California, would reopen under management by state officials, and that coverage for employers and insurance benefits for their injured workers will continue without interruption.

Community Bank Loses Suit

The troubled Los Angeles Community Development Bank lost the first of several lawsuits filed by former borrowers, a blow that could signal millions of dollars in taxpayer losses and further damage to the publicly funded lender.

A Superior Court judge found the bank breached its contractual responsibility to Summit Industries, a manufacturer of countertops and sinks. The judge awarded $7.2 million plus interest to Summit’s president, Lindsey Austin.

Austin’s lawsuit alleged the bank bungled his $2.2 million loan, damaging his business, then abruptly and improperly pulled the plug on him after indicating it would help the company work its way back to health. The bank counter-sued Austin, spending more than $1 million on attorney and other fees.

Merit Pay Pitched for Teachers

LAUSD officials are proposing a new teachers’ contract that for the first time would link pay to student achievement.

The bulk of the incentives would be targeted at the district’s lowest-performing schools, where teachers could earn as much as $7,000 a year in additional income if school-wide test scores rose by a prescribed amount.

Union leaders angrily rejected the proposal, saying that giving differential pay would undermine the collaboration between teachers and schools. The union is open to rewarding schools for performance, officials said, but cannot accept the practice of giving extra pay to individual teachers.

Lockheed Gets Fighter Deal

Lockheed Martin Corp., the nation’s biggest defense contractor and a company beset by plunging profit and problems across its product lines, signed a contract worth $6.4 billion to sell 80 advanced F-16 fighter jets to the United Arab Emirates.

The contract is also a boon for Los Angeles-based Northrop Grumman Corp., which will outfit the aircraft, to be called Desert Falcon, with an advanced radar system and electronic warfare technology that will make the planes among the most sophisticated of the F-16 series in the world.

Northrop’s part of the program is estimated at $1 billion.

Studio Project Scaled Back

Developer J. Allen Radford dropped sound stages from his North Hollywood office revitalization project and cut the overall size in half, from 43 to 22 acres.

Two years ago, Radford proposed a $1 billion development with 4.2 million square feet of offices, stores, restaurants and movie theaters, along with a 300-room hotel and 10 sound stages. The new plan calls for 1.8 million square feet of offices, retail, restaurants and movie theaters, a 250-room hotel, and a health club.

The development is planned for land surrounding the North Hollywood subway station on Lankershim and Chandler boulevards. Radford said his marketing research convinced him to scale back the plans.

Democratic Fund-Raiser Convicted

A Los Angeles immigration consultant was convicted on five felony counts stemming from her role in a Buddhist temple fund-raising event in Hacienda Heights attended by Vice President Al Gore.

The verdict handed U.S. Justice Department attorneys a major victory in their prosecution of 1996 Democratic Party fund-raising abuses. Maria Hsia’s conviction on charges that she caused false reports to be filed with federal election officials stemmed from a fund-raiser that netted more than $100,000 for the Clinton-Gore reelection drive.

Although the trial produced no evidence of wrongdoing or knowledge of the scheme on Gore’s part, the verdict is an embarrassment for the vice president as he seeks to convince voters that he has the character and good judgment to be president.

Red Line Opening Scheduled

The long-awaited opening of the Metro Red Line extension from Hollywood to North Hollywood has been set for June 24.

Subway stations in North Hollywood, Universal City and Hollywood/Highland will open that day as part of a 6.3-mile extension linking the San Fernando Valley with Hollywood and downtown Los Angeles.

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