Image Entertainment Inc. has settled a lawsuit with Source Entertainment Inc., clearing the way for the two companies to issue DVD and CD products, it was announced Tuesday. Chatsworth-based Image has exclusive rights to all Source video and audio projects, with the first to be released in the fall, “Hip Hop Hits Volume 11.” Source’s contribution will be track selection, co-production credit and advertising support through its website and hip hop magazine, The Source. Image Music Group Vice President George Steele said in a prepared statement that Source Entertainment understands the need for the two companies to move ahead together. “The Hip Hop series in particular has been wildly successful for us, and we’re glad to be able to continue working with The Source on this and other projects,” Steele said. Image Entertainment is an independent licensee, producer and distributor of home entertainment programming.

Chad Therapeutics Inc. reported earnings of $39,000, or $0.00 per diluted share, on revenues of $5.91 million in the third quarter of fiscal 2006, compared to earnings of $505,000, or $0.05 per diluted share, on revenues of $6.44 million in same period the previous year. Chad said that sales of oxygen conservers fell 30 percent during the first nine months of fiscal 2006 because of pricing pressure and the reduction of sales to a major customer. International sales, which make up a relatively small portion of Chad’s business, increased 312 percent during the same period. Chad has previously stated that it has engaged an investment banking firm to help the company’s board in evaluating “strategic opportunities and considering alternatives to maximize value for Chad’s shareholders,” but said it could not provide any further comment yet.

Egami Media, Inc., a subsidiary of Chatsworth-based Image Entertainment Inc., has signed a non-exclusive agreement to distribute its digital content through Google Video’s online store. Egami has the digital rights to Image Entertainment’s licensed home entertainment DVD programming. Egami’s offerings include live concerts from bands Kiss and Cream as well as comedy programs from National Lampoon and Jamie Foxx’s “Laffapalooza” series. Distributing through Google will allow people to rent or download content online. In a press release, Martin W. Greenwald, president and CEO of Image Entertainment and chairman of Egami said that distribution with Google will increase demand for downloading video online and increase Egami’s sales.

Woodland Hills Chamber, Networking Luncheon 11:30 a.m.-1:00 p.m. Hilton Woodland Hills, 6360 Canoga Ave., Woodland Hills $20 members, $25 non-members Contact (818) 347-4737 That New Network, Monthly Meeting 6:30 p.m. Jerry’s Famous Deli, 16650 Ventura Blvd., Encino $33 Contact (818) 995-4215

Optical Communication Products Inc. said today that it has sold the assets related to one of its business segments to The Furukawa Electric Co. The cash transaction, which includes certain licensing rights granted to Furukawa, totals $1 million, the company said. The Woodland Hills-based semiconductor company had previously announced that it decided to cease operations at its Broomfield, Colo. facility and sell off the assets of that operation. The facility was engaged in the research and design of fiber optic communication networks using VCSEL technology. Pricing for the equipment that utilizes the technology have decreased, and the technology was no longer cost-effective, the company said. Optical Communication Products said the revenues from its Broomfield operation were not significant.

NAI Capital has hired a brokerage team headed by retail specialist Bert Abel to open a branch office in Valencia as the area prepares to add 1.5 million square feet of retail space. The move follows similar efforts by other brokerage firms which have increasingly found their business shifting north as available space in the San Fernando Valley dwindles. “We’re responsible right now for 17 shopping centers in varying stages of construction (in the area),” said Bert Abel, a 10-year veteran of Grubb & Ellis who will head NAI’s new office as executive vice president and branch manager. “Five years ago I was still 60 percent in the San Fernando Valley and some Ventura County. Today the work we do is 75 percent Santa Clarita-based and 25 percent Antelope Valley based and the Antelope Valley is going to take over pretty soon.” Abel will be joined by his former team from Grubb, including John Cserkuti, senior vice president, and associates Allison Abel and Cindy Flynn. In addition, Yair Haimoff, an industrial specialist at NAI’s Encino office, will be moving to the new location and another four brokers, including office specialists are expected to come on board by mid-year. Population growth in the Santa Clarita Valley, which currently houses about 238,000 residents, is expected to double in the next 20 years, and that trend is fueling a burst of retail development. “Our residents are spending money elsewhere because of a variety of reasons and probably because we don’t have a store, a restaurant or an entertainment venue they want,” said Carrie Rogers, economic development manager for the city of Santa Clarita, which has conducted studies on residents’ shopping patterns. “People have been commuting during the week and they would prefer on the weekend to do things closer to home.” The demand for retail stores is increasing as more residents move into both the city of Santa Clarita and outlying, unincorporated areas. “What we’ve been seeing is extraordinary growth potential in that Santa Clarita area and a strong population base,” said Michael Zugsmith, NAI chairman. “We feel there’s a great opportunity given the residential units on board now to have a very successful office there.” NAI’s move follows similar efforts by brokerage firms including Colliers International, Grubb & Ellis and GVA Daum, all of which have added branches in the area in recent years. “Most of the major brokerage houses are doing what we did five years ago,” said Craig Peters, executive vice president at CB Richard Ellis, which early on set up an office in Valencia as a result of the brokerage’s representation of Newhall Land and Farming. “It’s really just a reaction to the amount of business that’s opening up in the market.” Since then Newhall has been acquired by a joint venture of Lennar Co., and other large development groups have made inroads in the area. “There was a point in time that Newhall Land virtually controlled everything,” Zugsmith said. “That’s changed. It’s given an opportunity not just for additional brokerage activity, it’s also given the opportunity for additional developers and service providers within the real estate industry.”

So the proposal to build a shopping center anchored by a 168,000-square-foot Lowe’s store in Westlake Village was defeated. No surprise really. The developer, Rotkin Real Estate, touted the 230,000-square-foot project as another town center, a fashionable concept in the wake of Caruso’s Calabasas Commons and Grove at Farmer’s Market. But those projects are anchored by movie theaters and stores like Nordstrom. Who wants to while away an afternoon sipping latte while watching construction workers haul two-by-fours out to their trucks? Under the proposal, Lowe’s would account for the vast majority of the shopping center, although some restaurants, retail shops and an ultra-luxury car dealership were also included in the mix. No, the Westlake Village proposal would not have created the kind of community gathering place the developers promised. Even if the project didn’t require a wholesale change in the city’s general plan, which calls for the site to be an office project, it would have been misguided. Throwing aside what many say is a well-developed general plan for growth in Westlake Village to make room for a Lowe’s anchored center made even less sense. Which makes the fact that two of the city’s council members supported the project all the more puzzling. So I called Mark Rutherford, one of the Westlake Village city council members who supported the project and asked him why he did. He told me he thought a retail project would not generate significantly more traffic than an office project. Those two things being equal, he said, city residents would like to have more restaurants, and the city would like to have more revenue. “What I was looking at is, if the negative impacts were fairly similar, no question that the retail had a huge financial benefit over the office, anywhere from $700,000 to $1 million more,” Rutherford said. Jim Bruno, one of the council members who voted to deny the proposal, said he may have voted differently if the project were different. He said he may have considered a movie theater or what he called a “more compatible anchor tenant that would bring both family-based recreation and cultural recreation to the community. “I just didn’t see where a big box as an anchor tenant could get us there,” he told me. All told, two members favored the proposal; two opposed it; and one recused himself because of a possible conflict of interest. Because a change to the city’s general plan requires the approval of at least three council members, the project neither passed nor did it get rejected. Call it a stalemate if you will. But the stalemate could give the developers an opportunity to come back to the city. Bart Hollander, who represents Lowe’s on the project, told the council that Lowe’s and Rotkin plan to go ahead and acquire the parcel anyway. They may flip it to an office developer. They can try to pull together another proposal that would win one more vote in their favor. Or they can wait until a new council is elected, until one council member changes his mind, until the city has a more overriding need for more revenues or until some other unforeseeable circumstance comes around. A spokeswoman for Lowe’s said in an e-mail, “Lowe’s is still evaluating our options.” The spokeswoman for Chuck Rotkin did not respond to phone calls seeking comment. But something tells me Westlake Village hasn’t seen the last of this project. Warner Center Project Sold Plans to develop a multifamily community in Warner Center have changed hands. The owners of the property, Pacific Properties LLC, sold it to a partnership of CalSTRS and Fairfield Residential, which is also developing the Noho Commons apartment community, for $60 million. The 11-acre parcel commanded a very high price, thanks to existing entitlements which will allow for more than 500 units and to the newly-passed resolution that requires housing developers in Warner Center to set aside 25 percent of units for workforce housing. This project is one of the last to receive entitlements before the workforce housing rule takes effect, although Pacific had not yet started construction. “We had about five qualified bidders, and they were all really close to the sale price,” said Randall Reel, senior vice president for Pacific Properties. Fairfield is shifting the mix of units. Pacific had planned for a rental complex. The new plans call for about half the units to be rentals and the other half to be condominiums. John Battle, a broker with Lee & Associates, represented the buyers. Lee’s Craig Stevens, along with Lyn Fields of Madison Partners and Stuart Taylor of Taylor Advisors, represented Pacific. Sherman Oaks Sale A 37,000-square-foot Sherman Oaks office building has been sold for $9,350,000. The building, at 12925 Riverside Drive, was acquired by LaeRoc Partners. Trevor Belden, a broker with Lee & Associates L.A. North/Ventura, and Scott Murphy, with Metropolitan Pacific, represented the seller, a private investment group. Country Comes to Encino A newly constructed office building in Encino has sold to the Academy of Country Music for $3 million. The 7,900-square-foot building was constructed unfinished on the inside, allowing the new owners to build it out to their own specifications, said Scott Romick, a broker with Lee & Associates L.A. North/Ventura, who, with Jeremy Barbakow represented the seller. Romick said the corner lot, which abuts the Ventura (101) Freeway, posed a challenge to development because it is surrounded by a residential neighborhood. The developers constructed a two-story building that looks more like a home than an office building. Brad McCarthy, a broker with CB Richard Ellis, represented the Academy, which is relocating from Burbank. Senior reporter Shelly Garcia can be reached at (818) 316-3123 or by e-mail at [email protected].

The first area location of a new home furnishings concept store opened in Burbank last week. EQ3 Furniture and Accents, a franchise retail division created by Palliser Furniture, Canada’s largest manufacturer of assembled household furniture, is designed for urban dwellers seeking affordable, fashionable furnishings. Doug Smith, an EQ3 franchise partner, said he chose the Burbank location for his first L.A.-area store because it offers the kind of market that he believes is well-suited to the retail concept. “What it comes down to is you need to be somewhere where there is an urban pulse,” said Smith. “It could be a furniture row, another lifestyle center where you are with other high-end lifestyle retailers or a heavily traveled urban street with a bit of draw from other areas.” The store is located on North San Fernando Boulevard, next to Burbank’s media center and very close to Ikea, a pioneer in the idea of affordable, Scandinavian-inspired home furnishings design in the U.S. Like Ikea, the EQ3 furnishings are scaled to apartment dwellers. There are ottomans that double as storage units and dining tables that can fold to take up less space when not in use, for instance. “It plays most naturally in a very urban atmosphere,” Smith said. “We do find our way into suburbia as well, but not on scale. You sell a piece for a room or a child’s room or a home office, but when we talk about the opportunities in condos and apartments now we’re seen as an easier fit for the entire apartment. So I think we play very well into vertical growth.” Smith, an 18-year veteran of Ikea, said he was attracted to EQ3 because of the styling and merchandising it offered. “I was very familiar with the industry,” Smith said. “What it comes down to is what products do they offer, what merchandising concept and price levels do they offer? EQ3 passed all my thresholds as an exciting concept.” Palliser Furniture, founded in 1944, is carried at retailers throughout the U.S. and globally as well. Prices at EQ3 range from about $500 to $1,000 for a sofa to about $400 to $600 for a chest of drawers. The stores carry furnishings for living, dining and bedrooms, home offices and table ware and accent pieces. The company launched the EQ3 concept in 2001, and since then has opened franchise stores in San Francisco and New York, among other locations. The company also operates gallery stores within independent retail furniture stores. Retail Outlook The coming year will bring a slowdown in consumer spending with some sectors of the population growing more tight-fisted than others. A just-released Ernst & Young survey projects retail sales will grow by 6 percent in 2006, compared to a growth rate of 6.7 percent in 2005. The Ernst & Young Consumer Trends Center report cites higher energy prices, and a softening housing market among the reason for the slowdown. Upper income consumers will continue to be the most enthusiastic shoppers, however, even these consumers may shift their buying to discount stores as rising costs increasingly take a pinch out of disposable income. The Ernst & Young report noted that what it called the “ongoing polarization of consumer spending between high-income and low income consumers” will continue to adversely affect department stores and other mid-range retailers. The group predicts that there will be further consolidations, acquisitions and bankruptcies in this retail segment in 2006. The Ernst & Young report was echoed by Retail Forward Inc., a global management consulting and research firm that publishes ShopperScape, a monthly survey of about 4,000 U.S. households. Retail Forward’s research projects that consumer spending in February will match the robust rate generated in January but below spending in February last year. “Shoppers remain undaunted largely because of better cash flow this month across each of the key income segments,” said Steve Spiwak, a Retail Forward economist. “This is being offset somewhat by the downtrend in home buying since autumn, which will discourage spending primarily on homegoods.” The survey found households with incomes greater than $75,000 will be more inclined to increase spending in February, while shoppers in middle income and lower income households are likely to spend less than they did in the past few months. One element likely to contribute to retail sales in February is the large number of gift cards households received over the holidays. Most of those gift cards have yet to be spent, the survey found. January retail sales turned out to be surprisingly strong with sales at stores open at least a year rising 5.1 percent according to data released by the International Council of Shopping Centers. The group attributed the month’s performance to the growing popularity of gift cards during the holiday season. According to the ICSC, 40 percent of gift cards purchased during the holidays are spent in the month of January. The warm January weather also affected the month’s sales, the ICSC said. Retail Beat is an occasional column written by senior reporter Shelly Garcia. She can be reached at (818) 316-3123 or by e-mail at [email protected].

Something of a dogfight is underway in Santa Clarita as several newcomers vie to fill the void left since the sale of the area’s pre-eminent community bank. In a little more than a year, at least four banks have either started up or opened branches in the area, hoping to grab the hearts, savings and loans of residents and businesses, many of whom have preferred banking with local institutions. “We knew the marketplace, more than half my employees live in the area, so we felt a strong affinity to the community,” said Tamara Gurney, CEO at Mission Valley Bank, an independent bank in Sun Valley that opened a branch in Santa Clarita about a year ago. “We saw a strong opportunity when the only community bank there went away.” Bankers say that, while many residents are content to bank with the larger players, small- and mid-sized businesses prefer working with local banks. Because of their smaller size, these banks often know the local businesses well, and can provide products better suited to their needs. Business owners can work directly with decision makers and lending officers can authorize loans and other credit approvals onsite, saving time. As banks consolidated however, several independent banks that operated in Santa Clarita were swallowed up by larger players. And by the time Valencia Bank and Trust was sold to the parent company of Union Bank of California in 2002, no independents remained in the area. Seeing an opportunity, Community Bank of Pasadena opened a loan office in the area almost immediately after the sale of Valencia bank. That move was followed by the organization and launch of Bank of Santa Clarita and the addition of a Preferred Bank branch in 2004. Last year, Mission Valley Bank opened its branch and this month, Santa Clara Valley Bank will hold its grand opening. Meanwhile, California United Bank has indicated that it is interested in opening in Santa Clarita and Bank of Santa Clarita just announced its second branch will open in the area next year. “It’s a very difficult community for outsiders to come into and try to establish a base of new business,” said James D. Hicken, president and CEO of Bank of Santa Clarita. “People here want to do business with local people.” Although Bank of Santa Clarita is the only community bank so far with headquarters in the area, the other banks have sought to establish themselves in the community by recruiting local banking executives formerly with Valencia bank and the other independents. “Most of our staff is from the former Valencia Bank and Trust,” said Michael Hause, president and CEO of Santa Clara Valley Bank which operates in Santa Paula and Fillmore. ” We hire successful bankers who are known and have networks in the community and can get the word out about what we do.” It’s also not gone unnoticed by competitors that Santa Clara Valley Bank uses a logo that reads, “SCV Bank,” an abbreviation, competitors say, that may be interpreted as the Santa Clarita Valley. But Hause, who counters that Santa Clarita, after all, means little Santa Clara, said his intention is to capitalize on what he believes will be a growth in population along the so-called Highway 126 corridor that stretches west from Santa Clarita to Fillmore. “Our footprint is the Santa Clara River communities, and we consider Santa Clarita part of that,” said Hause. “In light of the Newhall Ranch development, Santa Clarita will move toward Ventura County. Our Fillmore branch is 18 miles from Valencia, so we have room for infill between those.” Preferred Bank, a commercial bank headquartered in Los Angeles, also moved into the Santa Clarita market by taking advantage of local bankers. “We go out and recruit qualified bankers,” said Li Yu, chairman and CEO of Preferred Bank. “One that came our way is a Valencia resident. He indicated the market is good, and he has a lot of relationships in the area. We decided the area is not only fast growing, but also presented some opportunities.” The question for all these players is whether they can truly find a welcome mat in the community. Several of the bankers said that they have become very active in community affairs in order to raise their profiles. Others are embarking on advertising campaigns to help establish an image in the community. And still others hope that aggressive expansion will help them to secure their positions. “We intend on opening multiple branches sooner rather than later,” said Hicken. “You will find us moving with additional branches across the Santa Clarita Valley. As we do that, it makes it more difficult for competitors to gain a foothold.”

The Motion Picture Association of America filed a round of lawsuits against individuals using software to illegally trade films that have been nominated for an Academy Award. The lawsuits were filed Feb. 10 in the federal court in California, New York, Georgia and the District of Columbia. The suits seek damages of up to $30,000 for each illegally downloaded film; and up to $150,000 per film if willful copyright infringement is proven. Among the films that had been downloaded illegally are “Capote,” “Good Night and Good Luck,” “Walk the Line,” and “Syriana.” The lawsuits are part of the continuing effort to cut down on movie thieves and enforce copyright laws. “The rampant online theft of Oscar-nominated films is a glaring example of the damage piracy can do and in particular to some of the smaller films that depend on revenues to recoup their investments,” MPAA Chairman and CEO Dan Glickman said in a prepared statement. The association represents Buena Vista Pictures Distribution; Metro-Goldwyn-Mayer Studios, Inc.; Paramount Pictures; Sony Pictures Entertainment Inc.; Twentieth Century Fox Film Corp.; Universal Studios; and Warner Bros. Entertainment Inc.