Some Independents Thrive Amid Chain Stores By JEFF WEISS Contributing Reporter Walking down almost any commercial street, it’s hard to avoid noticing the gradual standardization of American business. On many street corners Coffee Bean & Tea Leafs stare menacingly at a Starbucks that looms a stone’s throw away. This doesn’t even take into account the myriad smaller chains, Winchell’s Donuts and 7-11s that peddle enough java to keep John Belushi wired. Even a decade ago, it seemed as though the book world could support chains such as Walden Books, B. Dalton, Bookstar, and Scribners. But the landscape has changed. Almost every chain has been swooped under the aegis of the two book behemoths: Barnes & Noble and Borders. Small independently owned bookstores not only have to fend off challenges from these monolithic chains, but Amazon.com has further eroded the potential market. Statistics show that Americans grow more obese by the year and many have attempted to fend off this trend by relying upon healthier fare. As a result, sandwich chains like Subway, Quizno’s and Togo’s, successfully market their wares as a healthy alternative to traditional fast food. Subway has ballooned to over 21,000 restaurants worldwide, while Quizno’s and Togo’s clock in at 2,000 plus and 400 shops respectively. With all this competition, one is forced to ask themselves whether or not it is possible for the small independently owned coffee shop, book store, or sandwich shop to survive in such a competitive marketplace. While it is undeniable that many a small business’ death knell arrived when a major chain encroached upon its market share, many businesses transcend and even thrive in the face of such business oligarchs. The Business Journal has identified three venerable Valley independent businesses that have not only survived but have consistently turned a profit during their decades in operation. Jennifer’s Coffee Connection 4397 Tujunga Avenue Ste D Studio City Tucked inconspicuously into a tiny Studio City mini-mall with practically no parking, Jennifer’s Coffee Connection has managed to succeed for 18 years. Despite being on its third owner, the primary constant at Jennifer’s has been its ability to consistently turn a profit. Packed in the mornings, with a crowd mostly consisting of 30 and 40-somethings casually clad in blue jeans and sweaters, the coffee shop’s interior immediately strikes one with the murals on a wall depicting a picturesque European villa. By creating a stark contrast to the uniformity of a Starbucks, Jennifer’s manages to create an air of sociability. Arturo Mendoza, the youthful looking 40-year-old owner of Jennifer’s has run the establishment since purchasing it from Mario and Shelly Martin last June. Founded in 1984 by a woman named Jennifer who had previously worked at Priscilla’s Coffee in Toluca Lake, Jennifer’s has been located at various places throughout the lot, before finally settling at its current location. While the store is on its third owner, Mendoza feels that Jennifer’s consistent atmosphere and the employees’ attempts to get to know each regular have paid off in the form of ringing cash registers. “The secret of our survival has been customer service. Getting to know your customers, knowing what they like, knowing their names and being a part of their everyday life is very important,” Mendoza said. One thread that runs through almost all successful businesses is the influence of a hands-on owner. While an owner needs to avoid micro-managing his business, a customer can quickly detect a note of apathy in the employees if the owner is absentee. At Jennifer’s, Mendoza frequently works behind the counter, braving the commute from his residence in Culver City to play an active part in his business. Mendoza maintains that this emphasis on caring and providing customers with quality services, inevitably leads to being able to survive in an airtight marketplace. “We support the local schools, donations, gift certificates, gift baskets, donate coffee for their meetings. We give coffee to some of the churches in the area,” Mendoza said. Paula Sanchez of Claremont has been a regular Jennifer’s customer since 1990. Despite having moved from Burbank (where Sanchez is employed) to Claremont, Sanchez returns to Jennifer’s each day as she waits for the rush-hour traffic to subside before commuting back home. “I come here in the mornings and in the afternoons and this place is always filled with loyal customers. It’s independently owned and I believe in supporting your individual enterprise. I’ve been coming here for 14 years and I’ve seen all three owners. I believe that every dollar I spend is a vote and that’s why I return.” Dutton’s Books & Prints 5146 Laurel Canyon Blvd. North Hollywood Books of practically any field of knowledge pile high to the ceiling, crowding the narrow aisles of Dutton’s Books & Prints in North Hollywood. Winding through this 150,000-200,000 book labyrinth can consume any bibliophile for hours in their search for a specific esoteric and out-of-print text. Founded in 1961, Davis Dutton’s store has adapted to the modern literary world by compiling an inventory as unlike Barnes and Noble as possible. Rather than attempting to peddle bestsellers, Dutton fills a niche by carrying a wide variety of backlist titles in history, humanity, and the sciences. “There are Barnes and Nobles everywhere, but we try to create an inventory which is unlike Barnes and Noble. There are over three-quarters to a million books in print and about 60,000 published each year. No store can carry everything but what we try to do is find a niche, find titles that the Barnes and Nobles don’t carry,” owner Davis Dutton said. “I walk into every Borders and Barnes and Noble that I can and look at everything to see what they have. There are lots of areas where you can fill in the gaps. We rely heavily on older literature. We have our loyal people that come here because they love books and like the ambience and the camaraderie and the home feel.” Dutton’s seems to have its share of followers if the effusive praise of Dutton customer and film and television writer Allan Byrns is any indication. “Why do I shop at Dutton’s books? Because they’re the sweetest shop in town. Everybody knows what they’re doing, they know where the books are, they’ve got the most out of print stuff I’ve ever run across,” the North Hollywood resident said. “Any time I’m desperate and need it for research, they always have the book. Plus their hearts. I’ve never seen anything like them, the attitude is fabulous and the prices are affordable. It’s a great store.” When a B. Dalton store (B. Dalton has since been purchased by Barnes & Noble) opened up down the street from Dutton’s in the mid-1960s, the only way for Dutton’s to survive was by adapting to the changed circumstances. “We started out initially inspired by City Lights in San Francisco to open just a paperback bookstore but that soon became impractical if not impossible, because you have to have dictionaries, and some medical books, and the top 10 to 20 bestsellers,” Dutton said. “Before we knew it we’d become a general bookstore, but even at that time we tried to carry remainders that the chains didn’t carry. B Dalton opened up the street in 1964 and they provided significant competition, then we got into used and rare books. One thing we’ve tried to do is handle books on subjects that the major chains have opted not to carry.” The close-knit environment of Dutton’s, where the employees converse with each other like family members and speak to Dutton with extreme respect, seems to filter down to the loyal Dutton’s customers, many of whom have been coming for decades. “I think we’ve survived on the strength of personal relationships with the customers, by personal service, and trying to be attentive to the areas not being taken care of by the competition,” Dutton said. “We’ve had the dogged determination to survive. The old days when the best seller list could pay your rent are gone. The chains, Amazon.com, the warehouse stores eat into your business. If you want to survive you need to be inventive. There are more places to buy books than there used to be.” Flooky’s 21034 Victory Blvd. Woodland Hills Norman Green is one of the most friendly human beings you will ever find. The owner of Woodland Hills’ Flooky’s stands outside of his restaurant smiling and waving to each customer that passes in and out. No customer can avoid an affable declaration of “Hey, how are you,” or some other salutation. With a Subway sandwich shop literally next door and a Togo’s a half block away, Green has eaten into their once dominant market share by an intense focus on offering high-quality food and by ensuring that each customer feels welcome and fully taken care of. Compared to Subway, Flooky’s has a personal touch. Like “Hello Jon,” “Hello Steve,” “Thank you,” and if the tab is $7.03 and you’re short two cents don’t worry about it. It’s homemade, everything is made from scratch. “Anything you order is fresh, the only thing that we keep on steam tables are my chili and my soups,” Green said. “People are looking for that. I grew up on the East Coast. Everyone knew everyone. Everyone was friendly. It wasn’t, walk in with polished mirrors and get in and get out. That’s the way they look at it. For me, it’s like please come in, sit down and eat for a couple of hours if you want and let’s talk.” When Green purchased Flooky’s nearly two years ago, the business was floundering. Once a thriving sandwich franchise with other operations scattered throughout the Valley, Flooky’s had seen a severe downturn in business, while the Subway next door garnered the majority of the mini-mall’s traffic. “When I bought the place, Flooky’s was in bad shape. The business was dying. If I went by their books, they were losing money. I sat for two to three weeks and from what I saw with the hours I spent here they had 50 people come through the doors,” Green said. “They used to operate from 10:00 a.m. to 6:00 p.m. Now we open by 6:00 a.m. and close at 7:30 p.m. during the week. 4:00 on Saturdays and 3:00 on Sundays. And I never spent a dime on advertising either. It took me about 60 days to turn it around, not to where it is now, but where I wasn’t in the red.” To get the business back in the black, Green fired the entire staff, replacing them with his mother, father, brother, and wife. But overhauling his employee roster wouldn’t be enough. With a menu formerly restricted to pastrami, burgers, and hot dogs, new owner Green instinctively knew that he needed to expand Flooky’s offerings and revamp operations or their wouldn’t be any business to speak of. “We’ve at least tripled the menu’s size. We had to. There are people who don’t eat meat, people who do, people who are vegetarians. Everyone can come into my store and eat. People think of us as just having hot dogs but that’s not true,” Green said. “I’m very obsessed with cleanliness. I use the best quality of everything there is and nobody can beat our prices. Nobody. And everything is always fresh.” Indeed prices at Flooky’s are noticeably low. The most expensive combo meal in the entire store costs $7.50. With 275-350 customers streaming through its doors every day, Flooky’s has been profitable and had growth for the last 18 months. Andy Fuller of Van Nuys is a regular Flooky’s customer, attributing his repeated patronage to several reasons. “It’s conveniently located close to where I work. I think the food is good and they’ve got a few varieties of food and styles that I like to break up my palate with,” Fuller said. Flooky’s once bleak future seems to have been revitalized under Green’s watch. The amiable mustachioed owner seems to have succeeded in eating away at Subway’s previous lunchtime predominance because of the human touch factor that a major chain can never provide. “I get all kinds of people in the store. I get bikers, judges, police officers, business men and women. When they come in everyone knows everyone. As a matter of fact, I have a couple in there right now named Marty and Denise, they’re handicapped but they do everything for themselves,” Green said, gesturing towards a couple hunched over their meals sitting closely to one another in the store. “They started coming a year and a half ago and they come here every day. I keep my eye on them and make sure nobody bothers them. They’re nicest people in the world. I have a personal relationship with all of my customers. I make sure of it. That’s what I would want.”

Ex-Developer of Troubled Site Files Chap. 11 By SHELLY GARCIA Senior Reporter Randall Roth, who just a few years ago was cutting seven-figure deals amid plans for a business park that promised to galvanize the Northeast San Fernando Valley, is broke. Roth has filed two Chap. 11 reorganization petitions, one personal and the other on behalf of his business, Randall Roth Capital Corp. Randall Roth Capital Corp. claims $1.8 million in assets and $4.8 million in debts, according to documents filed in United States Bankruptcy Court for the Central District of California. Roth’s personal petition shows assets of $771,450 and debts of $3,354,000. Court records, along with conversations with a number of parties involved with Roth, suggest that he financed a lavish lifestyle built upon an engaging vision to build an economic engine in the center of the economically depressed Northeast Valley that would clean up a toxic landfill, employ hundreds at good wages and offer community services to the neighborhood. But after years in the making, Roth’s SunQuest Development LLC failed to deliver on its promise, and last year Roth was removed as managing member of the development with loans still outstanding and a string of technical and other consultants holding the bag for services rendered. The two Chap. 11 petitions were filed within one day of each other, on Mar. 31 and April 1. Randall Roth Capital Corp. earned just $13,000 this year, the first year since he was removed from control of the SunQuest project, according to the documents. His personal filing lists monthly income of $30,000 from unspecified wages, and $27,000 from “commissions on future transactions currently under contract.” Roth lists his employer as Randall Roth Capital Corp. in his personal Chap. 11 filing. His expenses include a $9,500 monthly nut for rent or home mortgage payments, alimony and other support payments of $17,000 a month and transportation expenses excluding car payments of $1,000. Roth has remarried and is believed to have a young child from that marriage in addition to two children from his previous marriage. The personal filing lists no car payments, but the documents include a monthly expense of $2,900 described as “auto payment to ex-wife, approximate monthly for vacation.” Roth’s personal Chap. 11 filing lists among its few assets a note from SunQuest totaling $625,000. The balance of the personal property listed in the personal petition is utility deposits, furnishings valued at $105,000, artwork valued at $35,000 and clothing valued at $5,000. Randall Roth Capital Corp. is also listed among the personal assets, but no valuation is attached to the company in the documents. As for the corporate filing, the company’s bank balances total $48, the documents say, and along with security deposits, computers and other office furniture and equipment from the company’s current business headquarters in Westlake Village, Roth Capital Corp. has personal property valued at $35,448. Seeking exemption According to the filing, the company is seeking to exempt Roth’s Calabasas home, the only significant asset listed under Roth Capital Corp. with a value of $1.9 million, from any judgment. Among the creditors named is High Investments, believed to be a high-risk lender, that holds the first trust deed on Roth’s Calabasas home, and Midas Resource Group, a Menlo Park-based group that was one of the original investors in the industrial park. The documents show that High Investments is owed about $1.5 million and Midas is owed $1.6 million. Although the corporate filing also lists among the company’s creditors the Internal Revenue Service, Securities and Exchange Commission and the state’s Franchise Tax Board, the documents do not itemize the amounts owed to these agencies. The personal petition however, notes that Roth owes the IRS $330,000. A hearing date is scheduled for May 11 on both petitions. A Chap. 11 proceeding is used to restructure debt in order to return a company or individual to financial solvency. The reorganization typically involves a settlement with creditors that pays a portion of the amount owed, but the court and the creditors must approve the arrangement, and approval typically depends upon the debtor’s ability to show sufficient income to meet the repayment obligations agreed upon. Bankruptcy experts say that Roth’s petition could run into trouble for several reasons. “He has to show he has enough income to make mortgage payments and generate enough income to pay creditors,” said Laurence D. Merritt, a Woodland Hills attorney who specializes in bankruptcy. Merritt was not personally familiar with Roth or the Chap. 11 petitions he filed, but he said that generally in these cases, courts closely scrutinize a petitioner’s ability to repay debt, and they can shift a Chap. 11 filing into a Chap. 7 bankruptcy filing (which liquidates assets) or appoint a trustee if there is sufficient evidence to indicate that a repayment schedule cannot be met. “The court will probably look at this (petition) skeptically from day one,” Merritt theorized. Calls to Warren Deutsch, a representative of High Investments, and Mark Boucher, who is listed as a contact for Midas in care of Menlo Park-based Investment Research Associates, were not returned. Roth’s Calabasas residence maintains an unlisted phone number. He filed both reorganization petitions without any legal representation, according to the documents. Roth had previously defaulted on another residence in Calabasas, valued at $1.1 million, according to the Chap. 11 documents filed, and several court proceedings are pending against him, believed to stem from an acrimonious divorce from his first wife, Helena. Grew to prominence Roth first emerged as a prominent figure on the Valley’s business scene in the late 1990s when he launched SunQuest Development LLC and announced plans to develop a 650,000-square-foot industrial park in Sun Valley. The project was to encompass three separate parcels, including the site of the Branford Landfill, although Sunquest Development only controlled one portion of the land involved, a 12.5-acre site adjacent to the landfill. The plans were heralded for their potential to clean up a dump that had long blotted the Northeast Valley landscape and because they called for the development of a community center in an area known for its paucity of social and community services. Promising to bring an estimated 500 jobs to the economically depressed area and to abide by a living wage agreement that would raise the wages paid for those jobs, Roth and his proposal were quickly embraced by the community and city officials. The San Fernando Valley Business Journal named Roth among 25 of those expected to lead the Valley’s future in its June 25, 2001 issue. Through SunQuest Development, Roth raised nearly $10 million from private investors to acquire the land and won tentative approval for another $10 million from federal and other agencies including some seed funding from Genesis L.A. Real Estate Fund LLC, for the project, Numerous consultants and contractors signed on to help with the development work, including a number of local Valley companies. As the project gathered momentum, Roth even hosted a party at Universal Studios, which is now listed as one of the creditors on his personal Chap. 11 filing to the tune of $28,000. But under his tutelage, SunQuest Business Park turned out to be a house of cards that toppled. After more than four years, no construction had begun on the site, and last year, amid charges that he bilked investors, misled city officials and brought the project to near-collapse, Roth was removed as the project’s managing member. The remaining and new investors formed a new entity, Sunquest Development II, under the management of The Summit Alliance, a Santa Monica-based group that specializes in turning around troubled companies, and the group has said that it is in the process of revising the site plan, selecting a new developer and finding construction financing for the park. “Currently we’re not pursuing him,” said Cynthia Futter, president of Summit Alliance. “We do believe we have causes of action against him but our focus is on getting this project built and recouping the money from the investors who invested in it.” Troubled project Although Summit Alliance officials did not publicly discuss the reasons behind Roth’s dismissal from the project, court briefs they filed related to Roth’s divorce, paint a troubled picture of the project and Roth’s role in it. According to the documents, Summit and the investors inherited a project on the brink of defaulting and the briefs charge Roth with gross mismanagement including the misappropriation of investor’s funds for his own personal use. “During their tenure as the management of the LLC the Roths took out literally hundreds of thousands of dollars for personal expenses unrelated to the LLC and borrowed from independent investors hundreds of thousands of dollars for things unrelated to the Project or the 12.5 acres,” the Summit Alliance documents state. According to the briefs filed earlier this month, Roth withdrew more than $308,000 for personal expenses while lenders were on the verge of foreclosing on the 12.5-acre portion of the development that Sunquest Development LLC controlled. SunQuest’s general ledger as of Dec. 31, 2003, shows, among other things a $1,552.37 payment to Jaguar Motor Credit along with payments to Roth’s ex-wife, Helena Roth totaling $15,000 described as “personal debt.” The court documents claim that Roth and his related entities (several different LLCs were set up to finance SunQuest) owed the company more than $1 million on loans made to them through the LLC in addition to the other funds withdrawn. Liens had been filed against the property and consultants as well as taxes went unpaid, the documents charge. “All of the secured debt was in default, property taxes were unpaid and foreclosures were forthcoming, the trade debt was virtually all in default and creditors were threatening action, the City of Los Angeles was threatening condemnation of the property as the LLC had not lived up to its commitments to the city payroll taxes were collected from employees and not paid to the government, the LLC was in default of its tax filing and payment obligations (and the IRS has liens against the LLC and all its assets) ” the documents say. The documents suggest that the current owners and management, in taking over the project, decided to restructure the debt and write off the funds that could not be accounted for in order to move the project along. Some of those involved with the project were unaware of the Chap. 11 filings until contacted by the Business Journal. Interviews with a number of the companies listed in the ledger as having provided services to SunQuest, consultants, architects, engineers and others, also revealed that many of these vendors are still owed money from those assignments. Among the local companies that did business with SunQuest are: Poliquin Kellogg Design Group, architects in Woodland Hills, The J. Byer Group, an engineering firm in Glendale, and Rosenheim & Associates, Woodland Hills land use consultants. These company executives declined to be quoted publicly, (some wouldn’t even come to the phone) but they said that Roth’s ability to pull together a competent team of professionals for the project, along with his personable demeanor, helped him to win the confidence of many of those who signed on with him, despite the fact that none knew of any prior experience Roth may have had developing large real estate projects. “One aspect is it was a reasonable project,” said one such source. “Another part is Randy understood a lot of the technical aspects, which was interesting given his background. I have other clients who did that and it has worked out great.” It remains to be seen whether the SunQuest Business Park will ever be built, although the current management says it is confident that the project will be completed.

SBC Expanding Telecom Services In North Valley By SLAV KANDYBA Staff Reporter SBC Communications has expanded its telecom offerings in the Northeast San Fernando Valley as it goes head-to-head in competition with Verizon, which has been the major player there. SBC, the Texas-based telecommunications giant with numerous subsidiaries nationwide, has had limited presence in that part of the Valley, but with the latest move it will offer a large line of products. They will range from the simplest voice plans to sophisticated data and network bundles. In the process, SBC is hoping to lure small and medium businesses, some of which have been asking it for the services, said Howard Lenox, SBC California regional vice president. “We had a small presence in San Fernando, but what we’re doing is we’re changing the way we’re delivering service,” Lenox said. “We’re buying telecom switches and extending our lines into the community.” The decision to enter the market in Pacoima, Sylmar and the City of San Fernando was made in the third quarter of last year, Lenox said. Rather than expanding rapidly, SBC has been taken a slower approach and has been carefully watching Verizon. Verizon officials were not available for comment. “Everyday in our call centers, customers call and ask if they can get service,” Lenox said. He declined to disclose the dollar amount for the investment, but called the Valley endeavor “substantial.” As a result of the expansion, the range of services SBC is able to offer has been increased from regular phone service to “a complete suite of managed data services,” Lenox said. SBC has been in the Northeast Valley since 1997, one year after Congress passed the landmark Telecommunications Act of 1996 which created greater competition in the industry. “What really sets us apart is that we’re bringing a robust bundle of services,” Lenox said.

Pierce Course Brings Auto Sales Into Academia By SLAV KANDYBA Staff Reporter Responding to demand within the auto sales industry and also to add a source of funding for the school, Pierce College will train auto salespeople through a new program. Through the newly established Center for Automotive Sales Training, which is part of the college’s extension department, the Woodland Hills campus will offer the four-day seminars each month through June. The cost is $400, including supplements. “Our gameplan is to have an ongoing program here,” said David Braun, professor and chair of business administration at Pierce. Lew Linet, a veteran of auto sales, will be teaching the courses, which focus on the psychology of customers and salespeople and in effect “more academic than a number of sales programs out there,” he said. “Basically the situation in the country is that automobile business is booming and dealers are in need of salespeople,” Linet said. “The customers have become very sophisticated and the dealers not only need sales people, they need salespeople with more skills to deal with the public.” Linet said he hoped to “teach them right from wrong,” so that “they don’t fail and get disillusioned.” As founder and president of Reseda-based American Auto Seminars, Linet has taught at dealerships throughout the country since 1986. He has a doctorate degree in economics. Lower fees It was Linet who originally approached Pierce with the idea of starting a seminar. After a number of meetings, a deal was worked out to have Linet teach for $400 per student, not the $500 to $1,000 fees he said he typically charges. The idea was to make the seminar reasonably affordable and in the same price range as other fee-based programs. Typically, that’s about $50 to $100 per day, Linet said. On the first day of the seminar, six salespeople-in-the-making came for training. All of them were sent by Shaver Pontiac in Thousand Oaks. The dealership was only going to hire salespeople who finished the seminar, for which they had to shell out their own money, Linet said. Linet said he expects between 20 to 50 people to sign up each month, from different walks of life and experiences. “We are trying to service both the industry and to bring new people into the industry,” Linet said. Pierce is rather unique in offering a fee-based program in auto sales. While other institutions have created fee-based courses, such as Cal State Channel Islands with a biotechnology program, car sales training in an academic setting is uncommon, Linet said. And Pierce stands to gain from the deal. Its portion of the student fees go into the school’s general budget and then used to “supplement our budget so that we can purchase additional supplies, furniture and other equipment,” Braun said. But in the end, demand will tell if the program will stick around. “We’re not sure whether or not we will continue through the summer or whether we’ll take time off,” Braun said. “We’re leaning towards continuing.”

The Audience Is Listening Val Maki, the head of L.A.’s top radio station Power 106, finds the right mix of talent, marketing strategies and of course music keeps the volume turned on high for the Emmis Commmunications property as it targets the Latino youth market By SLAV KANDYBA Staff Reporter Val Maki’s career in radio has taken her on a whirlwind tour of the nation from Boston to New York to Chicago and currently L.A. On a clear day, the entire San Fernando Valley can be seen out of her eighth- floor Burbank office inside the headquarters of KPWR and KZLA radio stations. She has been the general manager for both since 1998. The former, however, is at the head of the pack it has consistently ranked in recent years as the top station by audience share in the competitive L.A. market. So far during Maki’s tenure, Power 106 has seen tremendous growth in advertising and anchored itself among English-speaking Latino youth, it’s “core” audience, Maki said. Advertising targeted specifically for that demographic has propelled the station to the top time and time again. Most listeners tune to Power to hear the hottest rap singles and win contests. Many others tune in every morning to hear radio personality Big Boy, who has found a niche on the radio waves with Big Boy’s Neighborhood, a show featuring pranks and frequent celebrity appearances. Maki recently discussed the success of power and the station’s plans for the future. Question: One of Emmis’ Communications Inc.’s two L.A. radio stations, Power 106, has been the top-rated station here since winter 2002. What do you attribute that to? Answer: Our senior director of marketing has been here for eight years. The lifestyle items that we give away, the contests that we do are other reasons that we generate ratings. With this format, a young audience, it’s really important to do those things. The other thing I attribute to staying ahead is hip hop music is extremely popular. We have played hip hop for a long time, and absolutely own that position in the marketplace. We do play some R & B; music, but our mainstay is hip hop and it has really become the global youth culture. It’s the most popular music on Earth. It’s kind of a universal language. Q: Can you describe the market for Power 106 specifically and how it has contributed to the station’s success? A: We target young Latinos. We target them in a product, and we deliver them in the ratings, and that’s not to say all we have is Latino listeners. When you really are targeting young people, obviously half the population under 34 is Latino. That’s who we are true to but obviously we have other ethnic groups listening to us. We have people here that live this format, like E-Man. He plays for NBA players’ weddings. I can say this unequivocally we have the world’s best mixers. They know what’s happening in the clubs these are the people that are really the best consultants. As a business, we try to target as many people as possible, without turning away our core. It’s a science and an art. Q: What are your observations of the advertising market now? A: Los Angeles again is an amazing marketplace. That’s been part of our good fortune. Even through all the tough times with the exception of 9/11, since 1998 to 2003, L.A. has grown 52 percent. This is a billion-dollar revenue market. We’ve had higher percentage increases. Our revenues more than doubled in that time and our revenue share has increased. It’s been a very healthy marketplace, and as good as that marketplace is, we’ve done better. Power 106 was the number five biller in the country last year, meaning we were the fifth highest in ranking by revenue. We have event revenue opportunities, such as concerts, and a pretty amazing Web site. We have revenue that comes from that (interactive media) it’s growing, although it’s not the major contributor. We see a huge marketing benefit, it extends our brand. We don’t stream, but it allows our audience to interact with us. It encourages audiences to listen in. We absolutely make money on it, I’m very proud of the content. Q: How is Los Angeles different from the markets that you have worked in, such as Chicago, your last stop? A: Chicago is the number three market in both population and revenue. There’s just so much more money in L.A. advertisers look to Los Angeles. It has become such an area to sell cars. Our relationship with our automobiles in Southern California thus the reason for radio being so amazing here, it’s unparalleled. You can’t really compare it to any other market. In Los Angeles, for instance, between 16 to 17 percent of advertising spending goes to radio, whereas the national average is about eight to nine percent. The other major difference is the Latino population. Q: Where do you hope to take Power 106? A: From a ratings standpoint, my answer would be to stay at the top of the ratings and widen the gap. Somehow we have to be innovative enough, and certainly that’s one of my goals. I think that the company’s culture is perfect to where the station can flourish. Certainly, the marketplace has a lot to say, but I think with this environment we can maximize. If we can improve on the innovation that will make the difference to keep us number one. Q: Are you doing any hiring and making any other investments directly attributable to the station’s success? A: We did just add an accounts payable department by one, there are now four people for the two stations. We also increased our engineering department, because of the amazing need for IT people. We have these great broadcast engineers. We’ve made a lot of improvements, including getting a new tracking and billing system. Q: Is Power 106 involved in any community organizations or charity? A: We have the Power of Speech program at Puente Learning Center. And, also have the Knowledge is Power Foundation, which is a 501 (c) 3 nonprofit organization. It has raised more than $1 million approaching $2 million and given away scholarships. The idea is that we’re helping to empower and educate young people. SNAPSHOT: Val Maki Title: Radio Division Vice President, Emmis Communications Inc. Born: May 3, 1962 College: Bachelor’s degree in management from DePaul University, 1998 (attended night classes while working at Emmis station in Chicago) Most Admired People: Rick Cummings and Jeff Smulyan, Emmis Communications executives Career Turning Point: Returning to managing a radio station in Boston after stint in Emmis’ corporate office Personal: Married, 2-year-old son

Gas Price Wars Putting Owners on Front Lines By JEFF WEISS Contributing Reporter Everyone’s done it. You’ve driven through an intersection and decided to purchase gas only to find two gas stations literally across the street from one another and one’s unleaded price is 5 cents lower than its competitor. You subsequently pull into the cheaper station and wonder why there’s such a price difference. The corner of Kester and Burbank in Van Nuys epitomizes this scenario, where a Chevron station last week was selling unleaded for $2.12 a gallon, while the Union 76 a stone’s throw away was retailing for $2.17. A look at these two stations may help better explain the complicated world of gas prices and why one neighborhood may have vastly different prices than another. Last week, the average price of gas in California was $2.148 a gallon, 36 cents higher than the national average and 23.9 cents higher than it was last year at this time. Los Angeles had the dubious honor of being the nation’s highest priced city for gasoline. And many industry experts think that high prices could be a permanent trend. Station owners blame the oil companies and OPEC for the skyrocketing prices and no one contacted both inside and outside the industry believed there was any price gouging by station owners. There are several factors, however, that go into what price a station owner decides to offer his gas. “Some people like to work on margin but I work on volume,” Rafaat Salib, owner of the Chevron at Burbank and Kester said. “Our price is pretty much limited to how much Chevron sells us gas for. That cost depends on how many stations you have, if you have one it’s very difficult to survive. Since I have five stations throughout Los Angeles and a sixth on the way, I’m able to keep my prices low.” Across the street at the Union 76 station, owner David Zebrack claims that Salib’s lower prices do little to alter his business. “I think his costs are a little bit lower and he tries to drive business into his Chevron store and he’s tried to keep his volume at a different level. We compete more with the company-operated Chevron on Sepulveda,” Zebrack said. “We’ve studied the different traffic patterns to see how they affect business. We’ve tried different pricing strategies and we’ve been a couple cents below the Chevron and even when we are lower we don’t see any appreciable increase in volume. We tend to stay 2 to 4 cents above him. They make their own business decisions and we make ours.” Price and profit The price contrasts do have much in common with how much profit margin the owner sets for his station. “I usually make 5 to 7 cents per gallon. It depends on what the oil company sells it to me for, it depends on my cash flow, it changes daily,” Salib said. Since Zebrack does less volume than Salib, he insists that his profit margins need to be higher to turn a profit. Unlike Salib, Zebrack owns only one other store and does not own the station’s property. “We usually run between an 8-to-12-cent profit margin per gallon. It’s pretty comparable for the industry. We try to keep it at that rate, although dealers occasionally might need to get an extra penny or two per gallon to make up for the credit card price.” Retailers agree that the spike in gas prices has done nothing to increase profits. In fact, many gas station owners claim that high prices have only decreased profits, due to many people’s decisions to drive less to cut costs. “No gas station owner likes it when gas prices go up,” Zebrack said. “There’s a misconception that the station owners are making more profit now, but that’s just not true,” Zebrack said. “It’s understandable though, when the consumer gets gas there’s nobody at the oil companies to complain to, so they announce their displeasure to us.” Salib also acknowledges that high prices make it increasingly difficult on the retailer because they constantly have to juggle prices to stay competitive.

New Owners to Close Down Learning Tree University By SHELLY GARCIA Senior Reporter School’s out for Learning Tree University. The 30-year-old school for continuing education will close its doors in June, a little more than a year after it was acquired by its current owners. As many as 46 employees of Learning Tree, which operates campuses in Chatsworth as well as Costa Mesa, may be affected by the closure, according to Dennis Beal, executive vice president and CFO of Corinthian Colleges Inc., which acquired Learning Tree in January 2003. “When we looked at the traditional classroom setting, we thought there might be an opportunity to develop those, but it didn’t work out,” Beal said. Corinthian, a publicly held company with 69 colleges in 21 states including Bryman College, which has a San Fernando Valley campus, specializes in career training in healthcare, business, criminal justice, offering masters, bachelors and associate degrees both through its bricks and mortar campuses and its online programs. When the company acquired Learning Tree it had its eye on LTU’s online curriculum and continuing education programs for healthcare professionals, a series of coursework that enrolls about 10,000 nurses annually, according to the Learning Tree website. (Beal declined to discuss enrollment at the company’s individual units.) But LTU also operates some 45 certificate programs as well as individual continuing education courses in areas ranging from arts and entertainment to information technology, and the school appeared to be struggling to build those components. Although financial data on LTU is not available, the acquisition deal called for Corinthian to pay the seller, GSG Enterprises, $5.3 million in cash with $2 million of that sum deferred pending the ability of the school to achieve certain performance targets. Beal would not discuss the details of the transaction, but he said that the company paid $3.3 million for the LTU assets it acquired. Efforts failed Beal said that Corinthian tried over the past year to build LTU’s non-healthcare components, boosting marketing and other efforts, but the company was not successful. “For a year we tried to develop an intersection between LTU short duration courses and our core competencies of degree-granting,” said Beal, “and when we clearly decided there was not an intersection, we elected to exit that business and retain the two businesses where we believe there is an intersection.” Corinthian also attempted to sell LTU prior to its decision, entering negotiations with two potential buyers. “We actually tried to sell LTU in February and March of this year,” said Beal, “and that transaction was not completed. So at that time we elected to close the two campuses.” With the closure of LTU following the end of its current semester, Corinthian plans to integrate the continuing education courses in healthcare and the online curricula into its other business units. Beal said that the company was still formulating plans for employees, some of whom may be offered positions at other Corinthian units. “The plan right now is for nursing and continuing education to be integrated into our CSI division and online learning will be absorbed into our RCI division. CSI, Corinthian Schools Inc., focuses on offering associates degrees in very specific skill areas. RCI, Rhodes Colleges Inc., offers degree granting programs up to the master’s level. The closure of the schools however, will likely not be the last that’s heard of Learning Tree. Bankruptcy filing Just days before the Corinthian announcement, GSG filed for bankruptcy protection in United States Bankruptcy Court’s Central California District, claiming assets of $2.5 million and debts of $2.5 million. Among the personal property comprising nearly all the company’s assets listed in the Chap. 7 filing, was $2.5 million the documents say is due GSG as “earn out consideration and other fees due and payable by Corinthean (sic) Colleges Inc., pursuant to asset purchase agreement dated as of 12/17/02.” Among the company’s debts is $139,000 in judgments stemming from law suits brought against the company from firms ranging from publisher Prentice Hall Inc.($38,193) to several real estate firms. B. Michael Gould, president, chairman and one of the founders of Learning Tree, said the timing of the Chap. 7 filing was coincidental. Gould declined to comment on the school’s financial health prior to the sale, noting that 2000 was “a record year for the company in terms of revenues and enrollments,” although he added that the school was affected by the events of Sept. 11, 2001. He said he decided to sell LTU because it would require considerable capital and risk to expand it further. “It’s quite sad to see it closed at this point,” said Gould. “It was a venerable institution.” Although Corinthian claims to have bought only certain assets of LTU and not its debts, some of those debts could be re-examined by the trustee appointed for GSG, according to at least some of the creditors named in the Chap. 7 filing. For instance, Newbury Partners, Ltd., the landlord for LTU’s Chatsworth campus, is owed $20,898 in back rent and damages resulting from GSG’s occupancy. “I think it is the position of the debtor that Corinthian bought the assets without the debts,” said Russell Nadel, the Westlake Village attorney representing Newbury Partners. “We disagree. I believe the trustee will go after Corinthian.” The court, which has scheduled a hearing on the petition on April 29 in Woodland Hills, has assigned David Seror at Rein, Evans & Sestanovich LLP, Century City, as trustee for the case. Santa Ana-based Corinthian, founded in 1995, has had a considerable track record of revenue and earnings growth. In its most recent fiscal year, the company’s earnings soared 70 percent to $65.9 million or $1.43 per share and revenues increased more than 50 percent to $517.3 million.

Vision Badly Needed When We Consider Mayoral Candidates FROM THE NEWSROOM By Jason Schaff The formal announcement by former Assembly Speaker Robert Hertzberg that he is running for mayor of Los Angeles brings a whole new dynamic to next year’s city election. The Valley resident’s entry into the race at a time when Mayor James Hahn looks very vulnerable could foster a spirited discussion in the coming months about the future of our city and the effectiveness of its leaders. Hertzberg still needs to flesh out details of his positions on the major issues confronting our city and show that he can raise the necessary funds to be a serious contender to Hahn, but he should be formidable competition for the mayor. Hopefully, the importance of the Valley to the rest of the city and how it is treated in return will be a part of any campaign debate with Hertzberg in the mix. With a high-profile Valley candidate formally throwing his hat in the ring, Hertzberg’s main constituents and neighbors are going to keep Valley issues in his face and consequently in the face of Hahn. Hertzberg, a very dynamic and personable person, seems in his initial statements after announcing his candidacy like he will play on his abilities to bring people together and his leadership qualities as major factors why he should be elected mayor. Hahn has failed to show many leadership characteristics while in office. His technical capabilities in executing the duties of mayor seem to be adequate but unfortunately knowing the ins and outs of how to be mayor are secondary to looking mayoral. He still acts like a bureaucrat and merely reacts to things rather than leading us and setting the agenda as to how to move the city forward. Hertzberg will play on this. A city the size of Los Angeles needs a leader who is bigger than the rest of us a person who is a great communicator and someone who we can connect to. But in addition to acting like a leader, our mayor needs to have vision. Where are we going to be in five or ten years and how are we going to build a framework to get there? Hahn has been poor in that area and Hertzberg is untested. He said we need to make our city look better and give more decision-making to our neighborhoods. That platform will play well in the suburban Valley but these things merely play to immediate gratification. What about the vision? What about the long-term strategy? All candidates will need to develop this before the election. Business Resource Guide The San Fernando Valley Business Journal hits a milestone this issue with our first free-standing publication the Business Resource Guide that you find inserted into the paper. There’s lots of good information in the publication but the biggest thing about it is that it brings to light the fact that there is a whole lot of help available in our local area . Business Journal Editor Jason Schaff can be reached at (818) 316-3125 or at [email protected].

‘Gut’ Feelings Don’t Reflect True Reality of Economy By MARX ACOSTA-RUBIO Thee Chicken Little “sky is falling”, method of managing your company may be effective in keeping certain CEOs and CFOs vigilant. However, as time has proven, it is a very ineffective way of growing your company and viewing the current economic situation. In the March 29 article “Economic Gut Feelings Take Turn for the Worse,’ reporter Shelly Garcia claims that certain business leaders have a “gut feeling” that the economy is doing worse than we may believe. The article claims we should ignore “the relentless stream of data that shows the economic picture is improving.” She cites the opinions of certain individuals, and tries to make a weak claim as to why their gut feelings may be more of an accurate indication of what’s going on. Now, I don’t know about you, but I wouldn’t want a doctor to operate on me based on gut feelings, would you? Let’s first examine what gut feeling is. Gut feeling is your subconscious and conscious mind coming together based on your entire life’s history and memory to give you a feeling of certainty about something. This does not imply that gut feelings are accurate, or inaccurate. It does however, matter of fact suggest that gut feelings are nothing more than a personal feeling for that specific individual. I have polled my colleagues who own/run a variety of businesses in everything from real estate to video conferencing. Some do business locally in the Valley, and others work with the “world economy” in import exporting. All could not disagree more with the article. Transitioning economy I think what we are seeing and what those quoted in the article are “feeling” is not that the economy is doing worse than it seems rather a transition is taking place in how the economy is behaving. The economy is demanding a change, in some industries more rapidly than others. If those changes do not occur it will create very difficult times for those in that industry. Corporations are not being stingy with their dollars. Steve Villoria, CEO and founder of American Media Design (AMD) who specializes in business communication and videoconferencing had this to say: “The reason AMD was hit by the economic downturn is that a slow economy focuses corporate America on short-term financial performance. Discretionary spending on high-ticket internal resources (like what AMD provides) completely dries up as it creates a short-term negative impact on their bottom line. In an economic upturn, such acquisitions are justified on the long term performance realized through increased efficiency. AMD just finished its strongest quarter in years as evidence of this climate. “Next, the article quotes someone regarding empty containers going back to China at port and the export of manufacturing jobs abroad. First of all, Maersk Sealand, one of AMD’s clients is currently rolling out the largest shipping port operation on earth in the Port of Los Angeles, based on the increased demand on trade. What the article fails to recognize is what authors like Alvin Toffler, and John Naisbitt pointed out decades ago: ‘America is heralding in the information age. Measuring trade deficits based on physical goods is an obsolete concept. The information economy output of this country outstrips its deficit many times over.'” Sue Fries, owner of Ecola Termite Company, a local termite company, joined in with “March was an all time high in sales since 2001.” This means consumers have more discretionary income, and are eager to spend it in an optimistic fashion by investing in their own homes. John Spach, of John Spach Financials that specializes in retirement funds handling over $50 million has never been so busy. “I truly believe the days of the generalist are over,” he said. “There will be Home Depots and Costcos but in the private business world owners and CEOs need to define their niche and brand themselves my ‘gut’ tells me the economy is doing well. If the number of new cars, remodels and crowded mall parking lots are any indication of public opinion then I would have to say our economy is thriving.” Darren Campbell, managing director of RE/MAX Commercial Real Estate had this to say: “The economy, both real estate related and beyond appears to be strong with little end in sight. Real estate values continue to rise and are bolstered by low interest rates as well as a clear shortage in the supply of housing on each socio-economic level. Furthermore, rents have risen more than 10 percent annually in the Los Angeles apartment market each year for the past eight years, yet vacancy levels remain at historic low levels (currently under 4 percent countywide). “The Gross Domestic Product is rising because the economy is in fact thriving. Employment for skilled labor and highly specialized employees is strong and rising. This merely points out a growing truth; a person’s level of education and specialized training will predict or even dictate that person’s opportunity for prosperity more than ever in the history of this country. Many industries are experiencing slow growth simply because of a permanent shift in industry in the U.S. We will continue to derive less and less of our GDP in the U.S. from goods manufactured domestically. Thus, manufacturing jobs will continue to be exported while U.S. employees will continually have to develop more sophisticated skills to remain gainfully employed. The trend of transplanting manufacturing facilities overseas to minimize labor costs is not fad but rather a fundamental shift in the global economy. “Savvy foreign competitors will rapidly replace U.S. firms who fail to follow suit. It has become (sometimes painfully) apparent that American factory workers are going to be forced to develop different skill sets to survive the repositioning of labor in the corporate food chain. People with defined skills and specialized areas of expertise are in high demand and continue to experience increases in overall income levels. “So rather than there being a looming recession, there is a major re-positioning underway. If we fail to begin to retrain and prepare unskilled laborers for this shift, the chasm between the affluent and the poor will widen beyond our imaginations.” Marx Acosta-Rubio is the CEO of One Stop Shop, a computer peripherals marketing firm in Chatsworth.