ValueClick Takes Poison Pill to Fend Off Takeovers Poison Pill Strategy: Intended to stabilize stock price and guard against takeovers. By CARLOS MARTINEZ Staff Reporter Westlake Village-based ValueClick Inc. has adopted a so-called “poison pill” stockholder rights plan aimed at staving off a potential hostile takeover. The online advertising firm, whose stock value has hovered around the $2 mark in recent months, said it is attempting to protect the value of the company to its shareholders. “The board believes that adoption of a rights plan is the best available means of protecting the full value of our stockholders’ investment,” said James Zarley, ValueClick chairman and CEO, “and encouraging potential acquirers to negotiate with the board of directors prior to attempting a takeover.” ValueClick is an online advertising provider that places ads for its clients through a network of 25,000 Web sites relating to business, entertainment, sports and travel. Unlike some of its competitors, it charges its clients only when Web users click on their ads. The stockholder rights plan, commonly known as a “poison pill,” is a strategy used by corporations to avert a hostile takeover by another company. It can be risky because it can depress a stock’s value if investors feel a company is takeover-proof or that its management is too entrenched. Under the plan, approved by stockholders June 5, the company will distribute a purchase right for each share of outstanding stock. Each right will allow stockholders to buy a share of preferred stock for $25. It also forces anyone who acquires 15 percent or more of the company’s stock to purchase shares of the company’s preferred stock at twice that, $50. For example, if a shareholder is approached by a firm attempting a hostile takeover, the shareholder can exercise his or her rights to purchase shares in the company’s preferred stock, but is then obligated to sell that stock, if he or she chooses to, for twice its value. The company, however, will be allowed to redeem the rights for the preferred stock for 1 cent per right for 10 days after a public announcement relating to any merger or attempted takeover. This allows the company to acquire the preferred stock shares in instances where it is willing to be taken over by another firm. The rights will expire in 2012. Tony Rodriquez, the company’s vice president of finance, said the plan is meant to force any potential suitors to deal with the company’s board of directors, not individual shareholders. Lanny Baker, an analyst with Solomon Smith Barney, said the company wants to show it’s in business for the long haul and aims to grow the company slowly. “It’s in a business that’s planted at the bottom of the cycle and it’s showing some hints at recovery,” Baker said. “They have a lot of cash on hand and that makes them a good takeover candidate.” Rodriquez said the company does not foresee any potential takeover suitors, but merely acted in order to maintain the share’s proper valuation in cases of one. ValueClick’s stock traded June 21 at $2.90, with a 52-week high of $3.36 and a 52-week low of $1.87. The top institutional owners of ValueClick stock are William Blair & Co., with 1.3 percent, and RS Partners Inc., with about 1.1 percent. For the quarter ending March 31, the company reported a net loss of $1.1 million on revenues of $12. 4 million, compared to a $2.1 million net loss on revenues of $12.7 million for the same period a year earlier. A day before the “poison pill” plan was approved, the company allocated $20 million for its stock repurchase program. In September 2000, ValueClick’s board of directors approved a $10 million stock repurchase program aimed at reducing the number of its outstanding shares, which now number 97.1 million. The company has $281.4 million in cash and securities after it acquired fellow online marketer, Be Free Inc., in March as part of an all-stock deal valued at $128 million. That deal is expected to close by the end of June. The deal marks the company’s fifth acquisition in two years. Last October, the company acquired online ad server and software maker MediaPlex and in 2000 it acquired online marketers StraightUp!, OnResponse and Z Media, an e-mail direct marketing firm. Through these acquisitions, ValueClick has landed a number of major clients such as Barnes and Noble, CitiGroup Inc., Travelocity.com, Sony Corp of America and IBM Corp. Solomon Smith Barney’s Baker said the company will likely turn a profit for the first time in the fourth quarter after years of losses. “They’ve amassed a credible set of assets for advertisers trying to market on the Internet and it’s a reasonable assumption that they’ll become profitable by the fourth quarter,” he said.

The Digest Dodger Dogs: A stand selling Dodger Dogs, previously only available at Dodger Stadium, has opened on the food court at Universal CityWalk, next to Universal Studios theme park. Available are the team’s trademark 10-inch hot dog, the jumbo Dodger Dog and the spicy Picanti, grilled Dodger Stadium-style. Fernando Award Deadline Approaches The deadline to nominate individuals for this year’s Fernando Award, which recognizes volunteers in the San Fernando Valley, is July 5. Applications should be addressed to Michael Miller, Fernando Award Foundation President, State Farm Insurance, 4874 Topanga Canyon Blvd., Woodland Hills, Calif. 91364. From the nominations received, five finalists will be selected and honored at the Jesse McHam Fernando Award Nomination Luncheon in August. The finalist of that group will be revealed in November. Last year’s award winner, Rose Goldwater of Woodland Hills, is the third woman in history to receive the award. SRM Acquires weComm SRM Networks Inc. has acquired weComm Ltd. in a reverse merger transaction. According to the agreement between the two companies, SRM has loaned weComm $1.5 million. At the close of the merger, a minimum of $5 million and a maximum of $12 million worth of SRM stock will be sold to private investors. Home Prices Up Again The median price of homes sold in the San Fernando Valley reached a record high of $309,000 in May. The Valley’s median price the point where half the prices are above and half below it was up 18.8 percent in May compared with the same month a year ago. In April, the median price of a home in the Valley was $293,000. Sales of single-family homes rose 4.4 percent in May over a year ago. However, escrow closings showed a 0.6-percent decline from the previous month to 1,310. The median home price of a home in California reached $321,950 in April. Condo sales grew 15.6 percent in May, with 497 closing escrows. The median price of a condo in May was $184,000, compared with $149,500 a year ago. The previous record was $175,000, reached in January and again in March. Nestle Buys Dreyer’s Nestle SA will acquire a controlling stake in Dreyer’s Grand Ice Cream Inc. as part of a $2.4 billion deal. Nestle, whose U.S. headquarters is in Glendale, will merge its domestic ice cream business, including the Haagen-Dazs brand, into Oakland-based Dreyer’s. Nestle would receive 55 million newly issued Dreyer’s shares, boosting its stake to 67 percent from 23 percent. As part of the deal, Dreyer’s shareholders could sell their stock to Nestle for $83 a share in 2006. The following year, Nestle has the option of calling outstanding Dreyer’s shares for $88 a share. Dreyer’s ice cream is marketed under the Dreyer’s brand in the Western United States and as Edy’s elsewhere. The company, founded by William Dreyer and Joseph Edy in 1928, invented Rocky Road ice cream in 1929. After the deal closes, Dreyer’s will be headed by Rogers and based at Dreyer’s offices in Oakland. Nestle will get three additional seats on an expanded Dreyer’s board of 10. Nestle currently has two of eight board seats. The deal, expected to result in cost savings of about $170 million annually by 2005, is subject to regulatory and shareholder approval but is expected to close by the end of the year. Secession Lawsuit Filed Los Angeles’ largest municipal union has filed a lawsuit today aimed at stopping the November election on San Fernando Valley secession. Robert Hunt, general counsel for the Service Employees International Union’s Local 347, served the notice on Valley secession leaders, the Los Angeles County Board of Supervisors and the Local Agency Formation Commission, the panel that put the breakup measure on the ballot. The complaint, which Hunt is filing as an individual, challenges LAFCO’s finding that the creation of a Valley city would not have a significant effect on the environment. The suit will ask the Los Angeles Superior Court to prohibit the Board of Supervisors from scheduling the election. Hunt contends that LAFCO violated the California Environmental Quality Act by not studying in detail whether a Valley city would have to construct more municipal buildings, hire more employees or take other actions that would have an effect on the environment. SEIU officials are among the leading opponents of secession, but they have said the union would not go to court to try to block a Valley cityhood vote.

Entertainment Industry Led Burbank Out of Doldrums By CARLOS MARTINEZ Staff Reporter For decades, Burbank lived off of the aerospace business, which provided tens of thousands of well-paying jobs that fueled the nation’s defense industry. Today, the aerospace plants are all but gone and Burbank’s economy is driven by an entertainment industry that accounts for 56 percent of all sales transactions in the city, according to a report by the Yorba Linda-based financial consulting firm The Natelson Co. Of the 171,000 people who held jobs in Burbank last year, 133,000 were in the entertainment industry clustered around the city and nearby North Hollywood. “We’ve been fortunate that, as aerospace wound down, the entertainment area began picking up for us,” said Burbank City Manager Robert “Bud” Ovrom. According to Natelson, employment in the entertainment industry in Burbank has grown from about 25,000 in 1987 to its current level. At the same time, manufacturing jobs declined from 33,000 to about 10,000 as Lockheed Martin closed its facilities and moved manufacturing into the Antelope Valley and out of state. In the early 1980s, the city’s aerospace firms were in the thick of a Reagan Era defense buildup, but by 1992 Lockheed had closed its Burbank plant and taken its 12,000 jobs with it. Despite a slow start, the city was able to rebuild its economy, primarily by helping The Walt Disney Co., Warner Brothers and a slew of other large entertainment firms expand through development efforts and tax incentives. Today, the city’s employment base has continued to grow. It had an unemployment rate of 4.5 percent last month, well below the state level of 6.3 percent for the same period. Jack Kyser, chief economist of the Los Angeles Economic Development Corp., said Burbank has benefited from its marketing strategy and efforts to lure more entertainment-related businesses to the city. “You look at Burbank and they’re very business-friendly. They don’t have much in terms of business taxes and they have their own utility,” he said, referring to quite another story with cities in Southern California Edison’s domain. Kyser said Burbank’s ability to transform itself from a struggling manufacturing economy to one based on motion picture and television production is no small feat. “They helped to convert old manufacturing facilities into offices and helped businesses relocate and others to expand there,” he said. Between 1987 and 1997, the number of entertainment-related businesses in Burbank grew from 238 firms to 440, according to city officials. While the bulk of those employed in the industry are freelancers who move from project to project, earning an average of $21,000 a year, those who work for studios or hold steady jobs with motion picture-related firms average an annual $74,000, the Natelson report showed. Such numbers reflect a recent industry study that showed about 60 percent of entertainment industry workers are freelancers who go from one job to another and often have trouble sustaining their careers during economic downturns, said Don Nakamoto, labor market specialist for the Verdugo Jobs Center in Glendale. “It’s a down period now for entertainment,” Nakamoto said. “The networks stockpiled a lot of shows because of the threat of a writers’ strike. They’ve cut back production pretty significantly and, when terrorists made some direct threats to studios and networks, a lot of projects were canceled.” While jobs have been lost in the past year, Nakamoto predicts an upturn in the market within six months. “There are already some signs of improvement,” he said. Burbank’s Ovrom said the city has benefited from increased film and television production in recent years, which has attracted a number of support businesses for the industry. “It’s no longer just Disney, NBC and Warner Brothers who are here, but postproduction companies, sound and other companies who serve the industry,” he said. Despite the influx of new firms into the city, its biggest employers continue to be Warner Brothers, with 4,500 employees; Disney, with 3,340; NBC, 1,350; and the ABC network with about 500 employees. While Kyser hails the city’s economic efforts, he cautioned that the entertainment industry is not recession-proof, as some may think. “It’s still subject to strikes and runaway production issues that can sometimes linger for long periods,” he said.

25 Economic Engines of the Valley: Today & Tomorrow Those who live and work in what we call the Greater San Fernando Valley know one thing for sure: It’s hard to put your finger on the region, to define it in one or two simple words. If the term “diversity” occasionally seems overused, it’s only because it’s a concept that so appropriately defines the area, its people, its institutions and, yes, its economy. It is the home of Amgen Inc., perhaps the highest-profile biotech company in the world. International corporations like Dole Food, Nestle and Countrywide Credit Industries make their headquarters here. But it is also home to tens of thousands of so-called mom-and-pop businesses, some here for generations and others that open up every day for the first time. Commercial real estate brokers close $100 million-plus deals on office buildings in Warner Center, and residential real estate agents make good livings selling $100,000 condos. Giants in their industries like Alfred E. Mann stride across the Valley and small business owners ply their trades for decades on Reseda Boulevard, Ventura Boulevard and Burbank’s Hollywood Way. There are a multitude of people, places and products that make up a vibrant Valley economy. The engines that drive that economy change almost daily. Here are 25 people, places and products the editorial staff of the San Fernando Valley Business Journal believes are either driving the region’s economy at the moment – or will take the driver’s seat in the very near future. Economic Engines of the Valley – Special Report Epogen Amgen Inc. More than 25 years ago, researchers at the University of Washington isolated a protein called erythropoietin, or Epo. They found it could stimulate the growth of red-blood cells in sheep and correct anemia caused by kidney failure. They had a suspicion that Epo could be used also to treat anemia in humans. A small company in Thousand Oaks called Amgen Inc. took a chance on their research. In 1983 it staged an initial public offering and invested a risky $20 million to build a factory to produce what eventually would be called Epogen three years before it received Food and Drug Administration approval. In 1991, Amgen reached the $1 billion sales mark for Epogen; last year, sales reached $5 billion; and those who bought into that original IPO have seen their investment increase 170-fold. Amgen is arguably the largest, most successful biotech firm in the United States, perhaps in the world. Its engineers and scientists have provided the intellectual capital that has spawned many of the biotech startups along the 101 Corridor between Woodland Hills and Camarillo. That’s not all. A new, longer-lasting version of Epo, a second-generation Epogen called Aranesp, will allow Amgen to be more competitive in markets now monopolized by rival Johnson & Johnson. Amgen officials believes annual sales of Aranesp could quickly match Epogen’s $5 billion. – Michael Hart Alfred E. Mann Mannkind Corp. Few were surprised when Alfred E. Mann sold his hugely successful medical device company, MiniMed Inc., to Minnesota-based Medtronic Inc. for $3.7 billion last September. While it may have been the most spectacular one, it wasn’t the first major deal Mann has made with one of the companies that he started from scratch. Mann began his career in 1956 when he created Spectrolab, an electrophysics company that supplied the U.S. Army with optical filters for an anti-tank missile firing system. He used proceeds of the sale of Spectrolab to establish semiconductor maker Heliotek. In 1969, Mann sold Heliotek and turned to the biomedical field in establishing Pacesetter, a firm that in 1972 introduced the first rechargeable pacemaker before he sold it to Siemens AG a few years later. Mann’s non-profit Alfred E. Mann Foundation in Valencia developed the Clarion, a hearing device that allowed many deaf patients to hear for the first time. MiniMed Inc., which he founded in 1985, would later develop and market an implanted insulin pump. Today, Mann, through his MannKind Corp., continues to pump millions of dollars of capital into biomed startups. Among the local examples are AlleCure Corp., CTL ImmunoTherapies Corp. and Advanced Bionics Corp. – Carlos Martinez Stevenson Ranch If a vibrant resale market has sustained older, built-out portions of the San Fernando Valley, new home construction and sales in fast-growing portions of the Santa Clarita and Conejo valleys have been attracting new homebuyers – and businesses that hope to cater to them – in droves. The largest homebuilders in the Valley are there, and the focus of much of the attention in recent years has been Stevenson Ranch, an unincorporated area northwest of Santa Clarita, that up until the late 1980s was little more than a freeway exit with gas and fast food available. Today, it is home to nearly 8,000 people and, once all 4,000 acres of the master-planned community are built out, is expected to have a population of between 40,000 and 50,000. The very first residents moved into Stevenson Ranch in 1990. In those early days, events moved at a snail’s pace. In fact, through the early 1990s, about 40 homes a year were sold. Nowadays, it’s more like eight or nine a week. Developers have primarily concentrated on residential development, with more of the commercial development outside of the planned community. The 86-acre Valencia Marketplace is the closest shopping center. Tenants keep it filled, drawn primarily by residents of the Ranch, where the average household income is $88,000. – Michael Hart BTAC’s Valley Contingent The Blueprint for Business Tax Reform was first released in 1999 by the city’s Business Tax Advisory Committee (BTAC), a group formed with the intention of making recommendations to the Mayor’s Business Team. The committee came up with six reform measures, some of which have been implemented, others still being considered. All aim to level the playing field for small companies, lure larger businesses to Los Angeles and crack down on tax scofflaws. Spearheading the effort were three San Fernando Valley business leaders who are dominant players on the business tax reform issue and members of BTAC: accountant and Co-Chairman Mel Kohn, Marvin Selter of CMS Inc., and attorney Allan Oberman. A citywide tax amnesty program the three pushed for was initiated in the fall of 2001 and reaped roughly $25 million in taxes that would have otherwise gone unpaid – money that will now be used for further tax reforms. BTAC also managed to get the so-called double taxation code eliminated and worked with state legislators to pass a bill allowing the State Franchise Tax Board and the city to share data to track down unregistered businesses. Just recently, BTAC presented the Los Angeles City Council with what will likely prove the most popular of reform recommendations to date: four alternatives to the city’s lopsided gross receipts tax. – Jacqueline Fox Valencia Gateway Years ago, when Newhall Land and Farming Co. started marketing Valencia as a nice place to live, one of the selling points might have been the quick commute down Interstate 5 to Los Angeles. Today, Newhall Land markets Valencia Gateway as a great place to move a business – and tells potential tenants it has a built-in workforce in the 200,000 people who live in the Santa Clarita Valley. The Valencia Gateway, 4,500 acres that hug seven miles of I-5 and Highway 126, encompasses 18.5 million developed square feet of industrial and commercial space and 1,200 companies with 40,000 employees. By the time real estate brokers are done, they expect 2,700 companies with 63,000 employees to occupy 34 million square feet. Doing his part to make sure Newhall Land and others meet those goals is Alfred E. Mann. His Mann Biomedical Park LLM recently purchased the 167-acre North Campus at Rye Canyon Business Park. Already in place at the business park are biomed startups – Advanced Bionics, AlleCure, Second Sight and CTL ImmunoTherapies among them – Mann has substantial investments in. Mann, like others, is lured by the relatively inexpensive land and the strong pitch Newhall Land has made to attract the biotech industry, including seminars and symposia intended to attract the sector’s eye. – Michael Hart Ventura Boulevard The “Boulevard” stretches roughly 18 miles from the 101 interchange in Universal City at the east end far to the west where it dead ends at Mulholland Drive just shy of the Calabasas city limits. Ventura Boulevard, the oldest, continuously traveled route in the San Fernando Valley, was originally part of the famed El Camino Real, nothing more than a dirt road that once served as the pathway Spanish missionaries took on their way north up the coast. Today, the Boulevard is home to more than 8,000 retailers, restaurants and businesses large and small – all serving commerce as one eclectic, collective voice and as the main artery for the Valley’s business community. Traverse Ventura Boulevard any time of day and witness the many faces: from the Pinot Grills and Caf & #233; Bizous of Studio City and Sherman Oaks through the cluster of high rises in Encino and on to the mom-and-pop antique and specialty shops of the west end in Woodland Hills. It is home to every conceivable type of business, from high-tech gadgetry and software developers to B-movie distributors to pawn shops, pool halls and attorneys’ offices – acting, every inch of the way, as San Fernando Valley’s own version of Main Street. – Jacqueline Fox Angelo R. Mozilo Countrywide Credit Industries Inc. Angelo R. Mozilo believed he was on to something different when he co-founded Countrywide Credit Industries Inc. in 1969. Having gone from a small Valley office to one of the largest mortgage lenders in the country, Calabasas-based Countrywide operates 550 branches across the U.S. with net income of $486 million on sales last year of $4.11 billion. Mozilo and partner David Loeb, both experienced mortgage lenders, founded their company in 1969. After two years of major losses, the two men fired their sales staff, radically restructured the company and focused on advertising the company’s low rates and points. Countrywide’s fortunes took off. In the early 1980s, to stem a drop in mortgage lending, the company began acquiring mortgages from other lenders and became one of the top loan servicing companies in the country. Even as low interest rates over the last year have kept many mortgage companies busy refinancing loans, Mozilo has not rested on his laurels. Instead, under his leadership, Countrywide has expanded to provide mortgage refinancing, home appraisals, escrow services, title insurance and most recently moved into banking. As the nation’s third largest provider of home loans, Countrywide is experiencing the biggest growth spurt in its history, due largely to the refinancing activity spurred by rock-bottom interest rates. Although Loeb retired in 1999, Mozilo continues to lead the company as its chairman, president and CEO. – Carlos Martinez Burbank Empire Center At first it looked like it might merely be a boon for Lockheed Martin Co. – 103 acres, abandoned when the Star Wars-defense industry dreams of the Reagan Era came crashing to a halt, was finally being sold to a developer. But Zelman Development Co. turned the desolate parcel into one of the largest and arguably the most successful of retail developments in 2001. Burbank Empire Center, which lies along the Golden State Freeway and Buena Vista Street, is a 620,000-square-foot shopping complex housing the biggest names in big box retailing – a selection that includes Costco, Target, Lowe’s Home Improvement Warehouse, The Great Indoors, Best Buy, Sportmart and Linens ‘n Things. Built at a cost of about $110 million, the development is drawing shoppers from Valencia and beyond, and the location has turned out to be among the top performers for each of the chains located there. With 417,000 people with an average household income of $57,500 living within a five-mile radius of the center, and 184,000 cars traveling past it on Interstate 5 every day, said Zelman CEO Ben Reiling, the project was low risk in spite of its size and scope. “It was a real no-brainer,” Reiling said. “It’s one of the most heavily traveled freeways in the system. It is surrounded by very, very dense residential and it has very solid incomes. And the area was very underserved by big box retail.” – Shelly Garcia Troy Bosch Bank of America To many, small business is the heart of the San Fernando Valley economy. There are more than 2,000 entertainment-related companies with fewer than 50 employees and countless small tech firms are part of the supply chain that serves the telecommunications and semiconductor sectors. That’s not to mention the tens of thousands of companies in the retail and service sectors manned by sole proprietors. None of that would be possible without capital. According to the U.S. Small Business Administration, Bank of America makes more small business loans than any other bank and the person largely responsible for that is senior vice president Troy Bosch, who oversees the bank’s small business lending unit here. “We are the biggest lender in the Valley for a while now,” said Bosch, who has led the unit since 2000. With 168 small business loans worth $9.3 million on the books in the first three months of 2002, the bank is tops in lending by far, said Lorenzo J. Flores, assistant district director of the SBA’s Glendale office. “They do a lot of SBA loans and a lot of other loans for small business,” Flores said. The bank, which has worked with the City Redevelopment Agency in providing SBA loans in recent years, has loaned money to companies in a variety of industries, Bosch said. “We get a good mix of businesses in the Valley,” he said. “You have a manufacturing base and retail and even commercial real estate, and I can’t say one is bigger than the others.” Although figures for last year’s loan program are still being examined by the bank and have not been released, Bosch expects local loan numbers to improve this year and next. “The Valley is really growing business-wise and we don’t see loan activity slowing,” he said. – Carlos Martinez 10 Gigabit Ethernet Just about every American office today has a network of computers that allows them to “talk” to one another. The 10 gigabit Ethernet, a technology that a handful of Valley firms have been instrumental in developing, eventually will make those networks faster and more reliable. While most Ethernet networks operate at speeds of between 1 and 2 gigabits per second, Valley-based telecommunications equipment makers like Vitesse Semiconductor and Internet Machines Inc. have products in the pipeline to speed up those networks to a staggering 10 gigabits per second. Local companies like Ixia and Spirent are developing testing technology to make sure they work. The Ethernet, not to be confused with the Internet, allows users to access and retrieve information located in other computers connected to the network. The speed of the networks often slows due to the volume of traffic along the network, making high-speed connections essential for efficiency, experts say. Lou Tomasetta, CEO of Camarillo-based Vitesse, is optimistic about the growth of the 10 gigabit network, saying that, even if it will be a few years before it is commonly used in the workplace, it is the next generation of Internet technology. “Eventually, there will be a lot of 10 gigabit Ethernet, but that’s probably three or four years away,” he said. – Carlos Martinez Dr. Adam Singer IPC-The Hospitalist Co. While most of the health care industry sought the answer to rising costs by raising prices or cutting services, Dr. Adam Singer was among a handful of pioneers with a different idea. Singer, founder and CEO of IPC-The Hospitalist Co. in North Hollywood, is at the forefront of a new medical specialty, hospital medicine – physicians who oversee patient care from the time of admission to the hospital through discharge, replacing the primary care doctor with one who is on site full time throughout the stay. When he formed the company in 1995, the term hospitalist had barely been coined. Today, there are more than 5,000 such physicians in practice and in use in virtually all the leading hospitals in the country – from Mayo Clinic to Cedars Sinai. Most important, research has shown that hospitalist programs shorten the length of stays, reduce costs and provide better care than more traditional methods. “It’s not about managed care, it’s not about saving money, but it turns out it does both,” said Dr. Larry Wellikson, executive director of the National Association of Inpatient Physicians in Philadelphia, the specialty’s professional group. IPC now includes 250 physicians working at 150 hospitals in six states. As such, it is one of the few national organizations of its kind. And IPC has succeeded in building its national practice where a number of other attempts have failed. “There’s no road map,” said Wellikson, “and one of the things Adam has done is develop a good way to manage the information.” – Shelly Garcia Shrek Moviegoers of all ages in 2001 went absolutely gaga for this cantankerous, if somewhat misunderstood, pudgy green ogre who, in addition to being alone, enjoys dung baths and making candles from his own earwax. And the momentum continues for its maker, Glendale-based DreamWorks SKG. The film immediately took Hollywood and the studio’s behemoth competitor, The Walt Disney Co., by storm and went on to became the second-highest grossing animated film of all time. “Shrek” took in nearly $300 million last year, beating out Disney’s “Monsters Inc.,” at just over $200 million, all the while taking a poke at nearly every fairy tale ever told by Disney on film and by others in print. “Shrek” has grossed nearly $500 million to date worldwide, is the best selling DVD of all time, and owns the No. 1 spot for video sales in 2001. And the film’s success has spread far beyond the walls of the DreamWorks campus. The economic impact of the “Shrek” franchise, including software for online games, DVDs, video sales and licensing rights for novelty products, was immediately felt by the Valley business community and continues today vis & #341; vis a handful of lucrative deals for some local companies. In the most recent example, Calabasas-based TDK Mediactive, publisher of interactive entertainment software, obtained an exclusive licensing agreement for video game platforms for the entire “Shrek” line, including the upcoming sequel. “Shrek” accounted for 70 percent of TDK’s sales in the last quarter of 2001. For the quarter ended Dec. 31, the video game maker reported net income of $827,825 on total revenue of $16.5 million. – Jacqueline Fox Brian Farrell THQ Inc. You could say Brian Farrell has got game. In fact, scores of them. He’s the man behind video game maker THQ Inc. As chairman, president and CEO of the Calabasas-based firm, Farrell has helmed the company through one of its most productive periods ever. Last year, the company reported $36 million in net income on revenue of $379 million, compared to $18.2 million in net income on revenue of $347 million a year earlier. The company, the Valley’s biggest video game maker, is poised to continue growth this year and next, said Farrell, who has guided the company since 1995. Video game companies like THQ and Electronic Arts have resisted the downward pull felt by most tech companies, and THQ more so than most. Farrell’s emphasis on marketing and distribution has led the company to more than 70 countries, opening offices in England, Germany and France. Just as important has been his focus on licensing agreements to develop games based on characters from the World Wrestling Federation, Nickelodeon, the “Power Rangers” of TV and “Star Wars” of film. The popularity of these characters helped propel sales of the company’s games and further push its revenues as sales for its own homegrown games also took off. Robert DeLean, an analyst with Morgan Keegan & Co., said THQ is well positioned as demand for its products continues to grow. – Carlos Martinez VEDC’s Micro-Loan Since 1998, the Valley Economic Development Center has been handing out the kinds of loans most banks wouldn’t touch: the kind that are so small they don’t make money for anybody except the business that really needs them. In fact, in the past five years, VEDC’s Micro-Loan Program has assisted 54 Valley-based businesses in obtaining SBA loans totaling nearly $750,000. The funds were made available through a $200,000 grant courtesy of Bank of America and are used to help small companies and minority- and women-owned businesses in low- to moderate-income census tracts obtain funding to help alleviate debt and cash flow problems, including bankruptcy and foreclosure. Across Los Angeles and Ventura counties, the VEDC’s Micro-Loan Program has resulted in the approval of 144 loans totaling more than $2 million. – Jacqueline Fox Stephanie Vitacco Coldwell Banker, North Valley Regional Office Tech stocks may still be in a slump, perhaps consumers aren’t spending much money and the unemployment rate might be as high as it’s been in several years – but the Valley’s residential real estate market is just fine. In April, there were 47 percent more homes sold than in the same month of 2001, the average Valley home price is now $315,000 and home buyers signed on for $577 million in new mortgages that month, up from $371 million a year earlier. There are somewhere close to 10,000 residential real estate agents doing business in the San Fernando Valley, but few epitomize the boom that keeps going and going and going like Stephanie Vitacco of Coldwell Banker’s Northridge office. Since 1993, Vitacco has averaged 150 to 200 closed sales every year, or about one every three days. She makes her share of high-end sales, but that’s not what makes her one of the top volume realtors in the Valley. “Last month I sold a $100,000 condo in Pacoima and a $1.85 million home in Hidden Hills,” she said. “But I’m just as happy to sell 10 houses for $300,000 as I am one for $3 million.” – Michael Hart Kaiser Permanente Kaiser Foundation Health Plan Inc., best known by its HMO unit, Kaiser Permanente Medical Group, is top dog when it comes to the Valley’s health care industry. Serving more than 800,000 people in the Valley and surrounding area, Kaiser – the Valley’s largest private-sector employer with more than 5,300 workers – has developed into THE HMO for many who work or live in the area. None of which is news, said Lisa Kort, a spokeswoman for the company. “Despite the tough competition, we’ve been here for more than 40 years serving our members,” Kort said. With 13 medical centers, clinics and pharmacies in the Valley and surrounding area, the non-profit health care organization provides medical care, pharmaceuticals and mental health care to its members through its wholly owned medical facilities. Generating $17.7 billion in revenue throughout the state in 2000, the last year figures were available, Kaiser managed to turn around a $550 million loss over two years in the late 1990s. The loss, created by a rapid membership increase that forced many patients to use non-Kaiser facilities, has been stemmed by higher premiums and restructuring that eliminated money-losing clinics and health centers. But while some complain of the higher premiums, Lehman Brothers analyst Josh Raskin said Kaiser remains the industry’s premier operation. – Carlos Martinez Baja-style Fast Food When Greg Dollarhyde and his investment partners acquired the Baja Fresh chain in 1998, it consisted of a mere 49 restaurants generating some $50 million in sales. But Baja Fresh was an idea whose time had come. Consumers were developing an appetite for fast food with more taste and appeal than the warmed over hamburgers that had become an American staple, and aging boomers in particular were showing a decided preference for healthier choices that they could customize to their personal liking. Thousand Oaks-based Baja Fresh, with healthful ingredients cooked to order, flexible menus that allowed for substitutions, low prices and convenience, was at the threshold of a wholesale change in the fast food industry. Sales in bread-and-butter burgers at the large chains have been faltering and these fast food behemoths have recently branched out into the so-called “fast casual” dining category, where sales have been growing by 6 percent to 8 percent annually, versus 1 percent to 2 percent for traditional fast feeders. McDonald’s, for instance, has acquired stakes in Fazoli’s, a chain of fast casual Italian restaurants, and Baja Fresh competitor, Chipotle Mexican Grill. Having grown to 169 units with annual sales of nearly $177 million, Baja Fresh last month attracted the attention of fast food giant Wendy’s International, which is acquiring the chain for $275 million, more than five times what the investors hoped to reap in a public offering. Wendy’s, which will retain Dollarhyde as CEO and keep the Thousand Oaks headquarters, plans to expand the chain to 700 locations over the next five years. – Shelly Garcia Universal Studios City Walk This roughly 300,000-square-foot dining and shopping attraction serves as the gateway to Universal Studios and the Universal Amphitheater, clearly the most popular tourist destination in the San Fernando Valley. Universal keeps attendance figures close to the vest, but foot traffic averages about 10 million a year – that’s a lot of warm bodies coming through the doors of the roughly 80 retailers, restaurateurs and theatres in operation. A recent tune-up of “The Walk,” which began in 1997, was done to help ailing tenants and boost the attraction’s image. Originally built to cater to tourists visiting the theme park and theater, the revamp was intended to create a bigger emphasis on City Walk nightlife that would attract larger crowds of locals, but also keep it on most tourists’ list of top destination spots. – Jacqueline Fox Bananas There aren’t a whole lot of bananas growing in the Valley, but they still represent one of its biggest industries, say officials at Westlake Village-based Dole Food Co. The banana business has been good to Dole, making up about a quarter of its total sales. Although the bananas are grown and harvested in Central America and Asia, the fruit’s economic impact fuels Dole’s continuing growth and its contribution to the Valley economy. Dole may grow and distribute scores of other fruits and vegetables, but bananas accounted for about $1.3 billion in sales in 2001. And even after streamlining its operation to adjust to a shrinking market, the company last year reported $150.4 million in net income on revenues of $4.45 billion. The company’s revenue has dipped in recent years, but its bottom line is as strong as ever, given the fluctuating market and Dole’s ability to cope with this new economy, say analysts. Faced with a protective tariff that favored European-run fresh fruit producers while effectively shutting out American banana producers from Europe, Dole was able to resolve the situation in recent years by acquiring a Spanish fruit grower which could in turn import the bananas on its own label. With higher prices due to a smaller crop resulting from cooler weather in Latin America last year, the company increased its overall revenue from bananas and is already planning to streamline its fresh fruit operation to further improve revenue, the company says. – Carlos Martinez Burbank Airport The Burbank Airport may be embroiled in a long-running dispute with the city of Burbank and surrounding cities over expansion plans, flight curfews and noise concerns, but it remains the Valley’s very busy and only regional and commercial airport. Passenger levels dipped briefly following the attacks of Sept. 11, but the airport remained popular because of the quick access to planes from most businesses in the San Fernando Valley (even with additional security measures, waits for planes are nowhere close to what passengers at Los Angeles International Airport have experienced). In April, 387,682 passengers passed through Burbank, only a 4-percent reduction from April 2001. On the other hand, the nearly 3,600 tons of air cargo that passed through the airport in April was a 24-percent increase over the same month a year ago. Burbank remains a chief provider of commercial opportunities for both aviation-related companies and surrounding businesses, including local restaurants, hotels and tourist attractions. Roughly 5 million passengers came through the facility in 2001 and the Burbank-Glendale-Pasadena Authority, which manages the airport, estimates conservatively that the airport contributes roughly $1 billion to the Valley economy. – Jacqueline Fox Henry Cisneros American CityVista The average price of a home in the San Fernando Valley has risen 46 percent in the past five years. The average speed on the 101 Freeway is down to 30 mph during rush hour as families move farther and farther from their jobs to find affordable homes. It’s a spiral that seems to have no end, and many have argued it is eroding not just the sense of community in Los Angeles, but the productivity of the city as well. Enter Henry Cisneros, former head of Univision Inc. and onetime U.S. Secretary of Housing and Urban Development. In 2000, Cisneros formed American CityVista to tackle the problem of bringing affordable homes to communities close to commercial centers. Working with KB Home and Montage Development Inc., last year American CityVista brought 426 homes to the San Fernando Valley at prices ranging from $240,000 to $300,000 for KB’s Mountain Glen development in Sylmar and $215,000 to $235,000 for Montage at Village Green in the city of San Fernando. Village Green, with four- and five-bedroom homes, is believed to be the lowest-priced single-family home development in the Valley. The development, with 109 homes, is sold out, and 271 of the 317 Mountain Glen homes have been sold to date. “One of the things I learned at HUD is that homes are much more than shelter,” said Cisneros. “They are also the way in which most Americans participate in creating wealth, and that’s hugely important.” – Shelly Garcia Plaza Del Valle Most of the time, the introduction of a new shopping center is an opportunity for multi-billion-dollar chains to add to their store counts. But at Plaza Del Valle, some 100 small merchants, many Latinos and business owners just starting out, have the chance they might not otherwise have to locate in a shopping center. Developed by Agora Realty and Management Inc., Plaza Del Valle was conceived as a town square along the lines of those found in Mexico, with stores, carts and kiosks that can be leased for a fraction of the cost of space in a traditional mall. The $20 million development, on 197,000 square feet along Van Nuys Boulevard between Chase and Parthenia streets in Panorama City, replaces a commercial stretch that was burdened with a 30-percent vacancy rate when the property was acquired several years ago. Designed with fountains, walkways, seating areas and a Hispanic Walk of Fame honoring Latino contributions to education, politics, medicine and entertainment, the mall developers envision it as a shopping destination and a pastime for families. “The first thing we noticed was the density surrounding the project,” said Carey Lefton, CEO of the Sherman Oaks-based company. “We felt a community plaza was very much needed in the area.” Chain stores have long benefited from locating in shopping centers where they can take advantage of the traffic drawn by neighboring stores as well as community events often held at these centers and the brand identity of the center itself. But traditionally shopping centers require merchants to lease large spaces for three years or more. “Most first-time entrepreneurs’ concern is they’re making a long-term commitment and, if it doesn’t work out, they face financial ruin,” said Lefton, who is developing the center with partner and Agora president Michael Bollenbacher. At Plaza Del Valle, retailers can lease spaces as small as 300 square feet on a month-to-month basis, an arrangement that is tailored to the needs of small and family-owned businesses, who have traditionally been limited to neighborhood strip malls where the sales opportunities are far less lucrative. – Shelly Garcia Reseda Boulevard In the 1930s Reseda Boulevard was still a dirt road, horse breeding was the biggest business around and Hollywood stars of the day considered it their ranch haven away from the big city. By the 1960s, the street was paved and in its prime with shopping centers, banks and the Northridge Hospital Medical Center. But by the mid-1990s, the Northridge Earthquake had devastated much of the area around Reseda and Sherman Way, much of what passed for the suburban middle class in the mid-20th century was gone and – frankly – its merchants felt like they had seen better days. Today, Reseda Boulevard has undergone a renaissance, becoming the preferred shopping mecca to the San Fernando Valley’s latest version of the suburban middle class. Many Korean- and Spanish-speaking storeowners cater to a clientele that reflects the wide ethnic diversity that has become the fabric of many North Valley neighborhoods. To serve that merchant community, the Reseda Business Improvement District, two years in the making, became an operating entity in November 2001. It is the most recently incorporated of 10 such districts throughout the Valley since the city program was inaugurated in 1998. In less than nine months, the Reseda BID has won a $1.5 million grant from the Department of Water and Power to move power lines underground and security patrols now in place were partly responsible for a 15-percent cut in the crime rate over last year. “We’re fairly new,” said BID executive director Susan Levi, “but we’re starting to see some changes.” – Michael Hart Mario Matute Mario Matute is an unlikely civil servant. His career has been spent in service to his hometown community of Pacoima, mostly with not-for-profit agencies. But while most who have taken the public route affiliate with a single agency, Matute prefers a more entrepreneurial approach. Since 1998, when he left the Housing Authority of Los Angeles where he was director of San Fernando Gardens, one of the toughest housing projects in the city, Matute has started up three different training programs for the community of Pacoima, all using a combination of private and public funds. The Pacoima Community Technology Center, an offshoot of the Pacoima Workforce Development Initiative, was launched with software and installation help from Linux, computers and furniture donated by National Home Trust and teachers on loan from the Pacoima Skill Center, funded by the Los Angeles Unified School District. Since it began in 2000, the program has trained about 2,000 local residents. A two-year program to prepare 30 moms from the area for careers as pre-school teachers was a joint effort of the public and private sectors. Matute’s most recent effort, as director of the Valley Family Technology Center, partners city and private funding from companies including IBM, Microsoft, Pacific Bell and Verizon, among others, to the tune of about $1 million. Matute, who now makes his home in Canyon Country, was working in job development when he realized finding jobs for the people of Pacoima was not the problem. “It became clear that the reason people aren’t getting jobs or, if they are getting jobs, they’re low-paying, is because they don’t have the skills,” Matute said. “You need to be creative and bring the tools to the residents so they have the opportunity to get a job and a better job.” – Shelly Garcia Sagebrush Cantina On any given Sunday, motorcycles, most of them Harleys, line the parking lot of the Sagebrush Cantina. Kids play tag around the spacious grounds while their parents wait their turn for a table. A loud band, usually rock ‘n roll, blares from the courtyard. The Sagebrush may not be among the area’s largest employers. It may not draw record revenues, but perhaps nowhere else in the San Fernando Valley can you find a locale that seems to bring just about everyone from every walk of life together in one place. Bob Dylan has been there. So have the Red Hot Chili Peppers, Steve Garvey and former L.A. Mayor Tom Bradley. They come for the chips and salsa, the margaritas, the beer pumped through refrigerated lines that keep it at a constant 38 degrees, the sundried tomato tortilla-crusted sea bass with warm mango relish, the Mexican lasagna and the burritos, but mostly they come for the ambience. Since it opened in 1978 the Sagebrush in Calabasas has become a kind of local landmark for the San Fernando Valley. About 4,000 patrons filter through on a Sunday. Special events, typically held under a tent set up for the purpose, may draw even more. Last fall, 6,000 turned out for a 6:00 a.m. “Breakfast with Incubus,” local-Calabasas-boys-turned-famous rockers. Fundraisers, some for charity, some for political causes or candidates, can draw a couple thousand. The Sagebrush may pack them in for these special events, but the restaurant doesn’t insist on a full house all the time. Walk in on a sleepy late night in the middle of the week and you’ll likely find the restaurant empty save for a few regulars. Management could close early on many of those nights, but the restaurant’s owners say they prefer to stay open. Where else would their regulars go? – Shelly Garcia

Time Warner Tries New Weapon in War With Satellite TV Media & Technology by Carlos Martinez It’s here. Well, almost. Time Warner Cable’s Video on Demand service is set to roll out in the Western San Fernando Valley in August at a cost of $2 million, but it will be worth it, say officials who are trying to stem the flow of subscribers to satellite dish service providers. Deane Leavenworth, Time Warner’s vice president of corporate communications, said the service will undergo beta testing in July and be ready for an official rollout in August to all 120,000 West Valley subscribers. The service allows users to access movies, sports events and other programs at any time, not at set times as is now the case. “It’s like using your home VCR. You can pause, rewind or fast forward a film or watch it any time you want,” he said. The service will eventually replace the company’s current so-called “near-video on demand” service which shows pay-per-view films at set times on several channels. “This will be the first time anywhere that true video on demand will be offered,” Leavenworth said. The company’s other cable services in Southern California will also begin the service in August or soon thereafter. The service will be available for $6.95 per month to subscribers of the company’s digital service. Nearly all of the company’s subscribers have switched to its digital service as it has moved away from analog. Those who subscribe to HBO or its sister premium channels can access those channels’ library of programs with the video on demand service free of charge. Access to other programs and films is available by paying the monthly fee. Inphi Raises $36 Million High-speed components maker Inphi Corp. of Westlake Village has raised $24 million in its second round of equity funding. The nearly two-year-old company has so far raised $36 million in its efforts to develop high-speed integrated circuits for optical networks. Lead investor San Francisco-based Walden International was joined by Menlo Park-based Dali-Hook Partners and Tallwood Venture Capital, both of which had invested in Inphi previously, in December 2000 when it raised $12 million. The company makes broadband and so-called “electro-optical” components for intra-city and long-haul telecommunications providers. The company’s products include multiplexers, modulator drivers and amplifiers for speeds of 10 gigabits and 40 gigabits per second. “Given the current economic environment and reduced investment in telecommunications-related startups, our ability to close such a significant round with a lead investor validates our achievements over the past 18 months,” said Tim Semones, Inphi CFO. Lip Bu Tan, chairman of Walden, said Inphi’s growth potential and technology were the main reasons for investing in the startup. “We looked at a number of promising companies in the optical networking industry, but ultimately we were sold on Inphi’s leading-edge technology and demonstrated customer traction,” he said. Conexant to Spin Off Plant Struggling semiconductor and components maker Conexant Systems Inc. Newport Beach, said it will spin off its gallium arsenide wafer manufacturing facility in Newbury Park after Alpha Industries Inc. agreed to merge with Conexant’s wireless unit. Dwight W. Decker, Conexant CEO, said the company will now outsource its wafer manufacturing to other companies. The facility employs 450 people, but last year was idled for several days due to reduced demand for products. The company said it would sell the wafer manufacturing plant to Conexant shareholders. Terms were not announced. However, with the wireless unit sale, Massachusetts-based Alpha would acquire Conexant’s semiconductor assembly plant in Mexicali, Mexico for $150 million in cash. Total value of the merger was not disclosed. The new merged company would be called Skyworks Solutions Inc., which would be listed on Nasdaq under the ticker symbol SWKS. The merger was announced in December and shareholders for Alpha approved the deal June 13. Last year, Conexant’s wireless unit reported sales of about $250 million. The Newport Beach-based company reported a net loss of $1.4 billion last year on revenues of $1.1 billion, compared to a $190 million loss on revenues of $2.1 billion a year earlier. The company last reported an annual profit in 1999 when it posted $12.9 million in net income on revenues of $1.4 billion. Semtech to Continue Stock Buyback Semtech Corp. CEO John D. Poe said the Camarillo-based company plans to continue its stock buyback plan this quarter, having spent $10 million on repurchasing shares last quarter. The company has $24.2 million allocated for the buyback plan. The stock buyback aims to reduce the 73 million outstanding shares the company has. The stock was hovering around $28 per share last week, with a 52-week high of $44.12 and a 52-week low of $24.86. The company is still recovering from a down economy as evidenced by a drop in revenue in its most recent quarter. For the quarter ending April 28, the company reported $9.9 million in net income on revenues of $49.2 million, compared to $13.2 million in net income on revenues of $60.5 million during the same period last year. Business Journal reporter Carlos Martinez may be reached at (818) 676-1750 ext. 17 or by e-mail at [email protected].

San Fernando Swap Meeters Left Holding Bag Again Politics by Jacqueline Fox The folks who sell their wares at the San Fernando Swap Meet each day have got to be ringing their hands in anguish right about now. It appears a local developer’s plans to buy the land where the swap meet sits have again hit a snag, not only putting the future of the swap meet and its roughly 1,000 vendors on hold, but again derailing the city’s hopes of bringing in a much-needed mixed-use retail center to perk up an otherwise blighted industrial pocket. Randy Roth, owner of Sherman Oaks-based Roth Properties, told the Business Journal last fall he’d purchased the 35-acre site at Arroyo Avenue and Glenoaks Boulevard for $28 million and intended to close escrow by the end of the year. However, according to San Fernando City Administrator Jose Pulido, the parcel recently fell out of escrow and the land is now back on the market. It’s not clear where things went wrong for Roth because he hasn’t returned my calls. The 420,000-square-foot lot is listed with Brent Weirick at Colliers Seeley. Weirick won’t call me either, so it’s impossible to say whether there are any serious offers on the table, or even if Roth is planning on giving it one more shot. Roth’s initial plan was to move the swap meet to a new, air-conditioned, covered site, complete with permanent toilets on a 40-acre swath of land in Sun Valley. Goodbye, blue tarps, portable outhouses and long hours stewing in the heat. Roth said he also intended to offer vendors relocation assistance to sweeten the deal, and had a plan that would have eventually allowed the vendors to buy the swap meet for themselves. The on-again, off-again sale of the swap meet land, owned by Richard Dunn and William Hannon (now deceased), has been the source of serious friction among vendors, developers, landowners and city officials for years. A 2000 proposal by Los Angeles-based Regency Realty Corp. to buy the swap meet called for merely shutting it down with no contingencies for the vendors. That plan prompted a slew of heated protests from vendors and residents, and three separate bomb threats. “This is a project we have to be very careful about,” said San Fernando Mayor Cindy Montanez last year, describing Roth’s proposal, which she supported. So what can the vendors hope for now? For starters, they have Roth’s blueprint and should take nothing less, regardless of when the next offer comes and who throws it on the table. Knowledge is power. In the meantime, they ought to beat down Pulido’s door, because he could just be the best thing that’s happened to San Fernando in decades. Pulido is a native of San Fernando. His parents still live there. He came “home,” he said, to help bring the 2.4-square-mile city out of its slump and, so far, it looks like he means business. Since he’s taken over, the city has received a grant of $150,000 from the state and, along with $100,000 of its own money, San Fernando is set to begin its Downtown Rebound program. That program, according to Pulido, has already begun to catch the eye of developers that had never set foot in the city before. With the help of the city of Los Angeles and the Valley Economic Development Center, Pulido threw a $3 million life preserver to Oh Boy! Corp. earlier this year, saving the 50-year-old company from closure and the jobs of about 150 local workers. After learning the city had only 16 senior housing units about 2,000 less than he thinks it should have Pulido secured $1 million from the state to build more. There are plans to establish a partnership with the Northeast Valley Chamber of Commerce (There’s a concept: get off the island if you want to mix and mingle.) and the YMCA, which left the city years ago, is now talking about coming back. According to Pulido, young, first-time homeowners are buying up old places, long covered with stucco, stripping them down to the wood and reviving a once-coveted collection of 1920s bungalows. Starbucks opened June 8 and you know what that means. People just might start hanging out after dark. In a word: San Fernando appears to be on its way to “cool.” Now, the really, really cool thing to do is roll up the sleeves and get a big retailer with mass appeal and a Roth-style approach to development to take notice. In the Running? West Hills resident Jay Rosenzweig is the latest to file papers for his candidacy for what would be the Eighth District council seat of a new Valley city, should a ballot initiative on secession be passed by the voters this November. The 42-year-old Chicago native owns Woodland Hills-based JR Investigations. He said he’s joined the fight to break up the city because, after 28 years of living here, he thinks it’s time government were more accessible. “I want to get the Valley thriving,” said Rosenzweig. “I don’t think the Valley will just survive on its own, it’s going to thrive on its own.” Rosenzweig said the primary focus of his campaign will be the secession issue itself. After all, without a yes vote on that, there’s no point in running for office. “The key is we are going to raise as much money as we can for the secession issue because obviously, if that doesn’t pass, I have no seat,” said Rosenzweig. “I’ll hold fundraisers and have a formal white sheet for my campaign eventually, but right now the primary focus is on secession itself.” Jacqueline Fox is politics reporter at the Business Journal. She can be reached at [email protected].

Burbank Airport Expansion Plans Are Back on Table Security: Mandated updates may force opposition to accept expansion. By JACQUELINE FOX Staff Reporter Post-Sept. 11 airport security mandates may work to jump-start stalled negotiations between the city of Burbank and the Burbank Airport Authority over beleaguered plans to build a new terminal. To comply with recent mandates from the newly formed U.S. Transportation Security Administration, the airport needs a permit for a 40,000-square-foot security upgrade project, the first phase of which must be completed by a December deadline. Plans for the project, expected to cost roughly $14 million, include a new entry road to the main terminal, space for security-related operations and a reconfiguration of the Terminal A baggage claim area that would allow the airport to comply with new carry-on limits. But city officials apparently don’t think enhancements are the best option for meeting the new mandates. Instead, they would like to start fresh talks on building a new terminal and, on June 18, the Burbank City Council voted to form a 15-member committee that would be responsible for drafting a ballot initiative on a replacement terminal to go to the voters this November. The city and the Airport Authority broke off negotiations last year after the city called for a new Environmental Impact Review (EIR) of the airport’s original terminal plans. The airport refused to complete a new study, put the land set aside for the terminal back on the market and, following the terrorist attacks, tabled the whole issue in order to address more pressing security and budgetary issues. But things have changed and now the two sides may just have to start talking again, whether they want to or not. “The security project, in short, highlights the need for a new terminal,” said Burbank Mayor David Laurell in a statement announcing the upcoming public information sessions. “They say they need 40,000 square feet to put a Band-Aid on an old terminal. I think we should instead have dialogue and have the airport and the city walk hand in hand to the Federal Aviation Administration and say, ‘We are in line, let’s start building.'” The city and the airport have already agreed a new terminal would have no more than 14 gates. The city will continue to press for a 10 p.m. to 7 a.m. mandatory flight curfew, overall limits on noise and an assurance there will be no further expansion at the airport once the new terminal is built. In addition to the new security mandates, growth at the airport also appears to be working in the airport’s favor. Aloha Airlines recently added two non-stop flights from Burbank to Hawaii and Southwest Airlines has begun employing new 737s that link to LAX for transcontinental flights. So the facility appears to be moving beyond its former role as a regional commuter airport. “Yes, things have changed since Sept. 11,” said Laurell, “but we need to work on two tracks: security and the long-range plans. We need to look at how we can better serve the public with a new terminal and keep within guidelines for safety and noise control.” According to Burbank City Attorney Dennis Barlow, the city council will decide whether the initial EIR would hold up for any new plans PERC crafts between now and August. He said, even if construction began tomorrow, it would be at least five years before a new terminal could be completed. The security enhancements meanwhile are expected to be completed in the next two to three years. However, if and when a new terminal is built, the old one would be torn down, including any security upgrades made in the meantime. “The airport understands that what they are planning on doing (to meet security mandates) is on a temporary basis,” Barlow said. Complicating plans, as always, for either a new terminal or security enhancements is the ROAR initiative, Measure A passed by Burbank voters last fall. The measure bars the city from approving any expansion plans at the airport without prior voter approval. The legality of the measure is being evaluated by a Superior Court judge and a decision on its merit is expected this week. The airport doesn’t believe security enhancements fall under the definition of expansion, but the city does, and how soon the project can begin will depend on when the airport completes its draft plan and whether Measure A is deemed defensible in court. “Normally, this would be an over-the-counter permit situation in our view,” said airport spokesman Victor Gill. “The city took the position that Measure A precluded the city from issuing such permits. I guess the issue is kind of open as to what happens if there should be action by a judge. “The Airport Authority has yet to make any announcement on how Measure A would impact the security project, but obviously it starts to put everybody between a rock and a hard place.” Gill also said that, in the airport’s view, the two sides have reached agreement on the major issues and, had it not been for the request for a new EIR, the construction would have likely begun by now. “We don’t know what else we can put on the table,” Gill said. “The city’s reaction to the EIR was that it was old so, no matter what comes up, we are back to square one.”

How Much Good Will Secession Do Your Business? From The Newsroom by Michael Hart We at the Business Journal are hardly old warriors when it comes to the secession battles. None of us can say we remember what it was like “the first time” forces in the San Fernando Valley tried to break away from Los Angeles. But we have been around a little while. And while we have left the 60-point headlines to the Daily News and the withering comments from City Hall fixtures to the L.A. Times, we have tried to write about what secession could mean to those who do business here. So, it’s been interesting over the last few weeks, ever since LAFCO made its can’t-turn-back-now commitment to a vote in November, to suddenly have people waking up and asking, “What is all this about anyway?” Business groups, including the United Chambers of Commerce many of whose leaders have been nothing if not outspoken in their support of secession now are saying they need more time to “study” the issue before taking official stands. Add to that the anxiety of those in the opposition who are surprised to learn at least a million or so citizens aren’t happy with their city government and the absence so far of a clearly organized campaign in either camp, and you have to ask yourself: Where has everybody been the last couple of years? Outside of a few details LAFCO ironed out before its vote last month on how a breakup would work, nothing much has changed as far as the pros or cons of a breakup are concerned in quite some time. There are questions, indeed, and the truth is that, as the message is refined and simplified to appeal to voters who have less at stake, the issues move away from the economic sphere and more into that of equal representation in government, the kind of stuff Thomas Jefferson, not Adam Smith, would have been interested in. So what, in essence, is in secession for the Valley business community? What problems do companies have that will be solved? On the plus side and for what it’s worth, it could turn out that a few of the hoops one has to jump through in running a business will go away. It would also be hard for a new city not to have its feet held to the fire when it comes to business taxes. As it is, the leaders of the business tax reform movement come from the Valley, and they’ve been pretty successful so far. Part of that might be an attempt to appease Valley business interests at a sensitive time, but given the momentum that’s already in place, it would be hard for a new city council to go backward even with the tight budget it’s going to have to work with at the start. That’s two problems that might get solved. What else is there? City worker unions can be expected to fight secession the hardest and many would like to turn this vote into a plebiscite on organized labor. A yes vote would certainly be a symbolic victory for those who think unions now have too much influence over how city government is run. So what? How many private-sector employers in the Valley are unionized? I asked that question at a recent meeting of Assemblyman Bob Hertzberg’s business advisory commission and none of the 35 or 40 people there raised their hand. Allow me then to put the union issue in the red-herring column. In our last issue, both in this column and on the front page, we went into pretty close detail on the problems Van Nuys Airport operators will have if and when they go up against neighborhood groups south of the airport. Given the so-called grassroots appeal of secession, you’ve got to believe elected officials are going to listen closer to the homeowners associations than they are to the chambers of commerce. There is no doubt that what is perceived as government intrusion, excessive regulation and an out of control bureaucracy make it difficult to do business here, but it’s not clear to me what a new city government can do about that. Many of you are, or know, business owners or CEOs who have moved some or all your operations to Arizona, Las Vegas, Mexico, India anywhere except here. And if you haven’t, you’re thinking about it. But a surly clerk at City Hall was probably not the straw that broke that camel’s back. It was more likely what you feel are environmental safeguards and workplace rules instigated at the state or federal level that made the difference. It was more likely the dearth of affordable space to expand your business or the lack of a skilled workforce. It was more likely the fact that competition now is coming at you from all over the world, making any cost savings you can get from moving production elsewhere worth it. If you run one of the couple of thousand Valley small businesses that work in the entertainment industry, it’s probably the incentives the Canadian government gives you that are causing you to move production elsewhere. It’s probably the emergence of the monster entertainment conglomerates AOL Time Warner, Vivendi, Disney that has changed the equilibrium you enjoyed before. That’s the environment you do business in today. What can the Camelot City Council do to help you? Michael Hart is editor of the San Fernando Valley Business Journal. He can be reached at [email protected].

Home, Sweet Homebuyers Homeowners Marketing Services delivers to its 4,000 clients throughout the country customers who are ready to buy almost anything By MICHAEL HART Staff Reporter Marc Silverman has been a veterinarian for a long time. He knows what to do with a sick cat, an injured dog. But he also knows the clientele he has at the Agoura Animal Clinic in Agoura Hills, and what they go through when they’re looking for a new vet. “Most people won’t go more than five miles away from their house for a veterinary clinic,” Silverman said. So when he goes looking for new business, there’s not much point in going too far. “Those two hills on each side of (Agoura Hills) kind of keep people here,” Silverman said. Instead, he does his best to make contact with everybody who moves to the area. He sends new homeowners a letter, inviting them in for a free first visit. Silverman figures somewhere around 5 percent of the letters he sends out turn into a visit to his vet clinic. “And as long as I keep getting that number, I’m happy,” he said. Silverman’s happy to talk about his direct mail strategy. Not everybody, however, is so willing to have the competition learn their tricks. That’s why Homeowners Marketing Services in North Hollywood keeps its client list pretty close to the vest. HMS president Barry Weiner said he called 12 clients of the 4,000 he has in 35 states before he found a couple, including Silverman, who were willing to talk to a reporter. The secret apparently is so simple, subterfuge is required to make it work. Homeowners Marketing Services trolls county assessor’s offices all over the country collecting the names of people who have just bought homes. HMS clerks organize the information, turn it around quickly and put it in the hands of people who might want to make use of it: businesses who have something to sell people who have just moved into a new house. “It’s a very simple thing,” Weiner said. “Anybody who moves into a new home needs everything, but when you first move into a new place everything seems so strange.” You don’t know where to go to find a plumber, a dry cleaner, a church, a vet. So Weiner helps them find you. His staff of 75, working out of an office building he owns on Victory Boulevard, plows through 3.6 million names every year, delivering weekly allotments of information already printed on mailing labels. Some national clients get as many as 70,000 names a week, others as few as 50. “When you prospect, you want to target to your best potential,” Weiner said of marketing to new homeowners. “These are all people who are credit-worthy or they wouldn’t be buying a house.” The company was started in 1968 by an entrepreneur named Arthur Bartlett. Then it was called Comps Inc. and was just one enterprise Bartlett was involved in, along with water softeners, gummed labels and coupon books. He sold Comps Inc. to Telecredit Inc. in 1971 for $250,000 and used the money to start a franchise real estate company that would eventually be Century 21. Weiner, Telecredit’s sales manager, bought it from the company. By 1978, he and five employees had sales of $180,000. Last year, sales topped $7 million. Despite the prospects offered almost every company imaginable by technology in the last 25 years, a lot about the mailing list business hasn’t changed. Most of the information still comes to HMS the same way it always did, and it has to be finessed in the same way. “It’s still microfilm and microfiche,” Weiner said. “Some of them are starting to have CDs, but you still have to keypunch it in the same way.” HMS has its share of big clients. Some Weiner was willing to divulge the identity of were Supercuts, ADT Security Services Inc., Budget Blinds and Strouds. But his own sales staff hammers away at small businesses, many that are newly formed and haven’t developed their own networking systems yet. “It puts small business on a level playing field with the big boys,” Weiner said. For $98 a month, a business can get access to new homeowners in what is typically a 10-zip code area. Each week, HMS delivers the mailing labels, ready to go. While home sales obviously vary from area to area, HMS sales manager Renee Simone said it averages about 100 names a week. Silverman’s Agoura Animal Clinic, for instance, is in Los Angeles County Area K, which includes much of the West Valley, from Winnetka and Woodland Hills west to Westlake Village and Agoura Hills. Typically, that area averages about 92 home sales a week. The Glendale-Burbank-LaCanada-Flintridge area averages a few more, about 119; the Beverly Hills-Century City area a lot fewer, 51. Nevertheless, week in and week out, Silverman said, it seems to pay off. What’s more and the cat may be out of the bag here when the veterinarian himself moved to a new house in Agoura Hills a few years ago, he got his own name on a mailing label and plenty of pitches in the mail. “But I didn’t receive anything from another vet clinic,” he said. So far, so good. SPOTLIGHT: Homeowners Marketing Services Year Founded: 1968 Core Business: New homeowner mailing lists Revenue in 1978: $180,000 Revenue in 2001: $7 million Employees in 1978: 5 Employees in 2001: 75 Goal: To help new businesses succeed Driving Force: The need new homeowners have for products and services

A Brand Name Empire Retail: Shoppers are drawn to center from all over northern Los Angeles County By SHELLY GARCIA Senior Reporter Tyler Watts is spending a little newfound free time since graduating high school last week browsing through the Burbank Empire Center. “It’s great,” says the 18-year-old. “You’ve got everything from shoes to food. In the morning, you can have Starbucks coffee. There are cheap clothes, more expensive clothes,” he says, pointing out the stores and restaurants like a tour guide. Watts is not the only shopper singing the praises of the Burbank Empire Center. Since developers transformed a long vacant, 103-acre stretch along the I-5, it has become a destination for shoppers both in and outside the city limits. “It’s a good shopping center. We wanted to drive out,” said Sylmar resident George Van Dyl, who was pushing a shopping cart back to his car along with his daughter Sarah one recent afternoon. They paid visits to Target, Marshalls and Michaels. “They’re big,” said 13-year-old Sarah of the Empire Center stores. “They’re really big. They’re new, so they’re cleaner than the stores where we live.” New, outdoor shopping centers the size of Empire Center are rarely seen in urban areas where it’s difficult, if not impossible, to find the large tracts of land needed to build them. But sprawling Empire Center, built on an abandoned Lockheed site, can accommodate the newest and largest big box prototypes, including a 142,000-square-foot superstore, The Great Indoors. “It’s not common that you can assemble that much land, especially in the densities of Southern California,” said Bill Legier, associate vice president at Colliers Seeley who markets Empire Center. Most big box retailers that locate in densely populated, urban areas have to settle for a freestanding site or one where they serve as the anchor to smaller stores. With about 600,000 square feet of retail space, Empire Center houses retailers from virtually every category of merchandise: Costco, Best Buy, Tilly’s, Men’s Wearhouse, Lowe’s Home Improvement Warehouse, Staples and Aaron Bros., in addition to Target, Marshalls, Michaels, The Great Indoors and a selection of restaurants that ranges from Wendy’s and Krispy Kreme to Hometown Buffet and Outback Steakhouse. “It’s been a good draw for us because of the other retailers,” said Mark Kawate, store manager at Michaels. “When you’re in with Lowe’s and Target and Best Buy, our company doesn’t usually get to have this type of location. Men’s Wearhouse has been running an ad campaign to promote its new location at Empire Center, but it has not been as effective as the location itself. “We’re our busiest around 6 o’clock,” said Justine Herrera, Men’s Wearhouse manager. “We have customers come in and tell us, ‘I didn’t even know you were here.’ So we’re definitely getting a lot of business from the stores.” Ben Reiling, CEO of Zelman Development Co., which built the center, said he jumped at the opportunity to acquire the site because of its size and location. “It’s a real no-brainer,” Reiling said. “It’s a large site. It’s on one of the most heavily traveled freeways in the system. It is surrounded by very, very dense residential and it has very solid incomes.” About 417,000 people with an average household income of $57,500 live within a five-mile radius of the center. Another 100,000 people work in Burbank, the vast majority of them at relatively high-paying studio jobs. Though there were some initial reservations by retailers who wondered if the market could justify another store so close to neighboring locations in North Hollywood or Glendale, they were ultimately persuaded by the demographics. So far, no one seems disappointed. “Our anecdotal information is that (the stores) are far exceeding any projections,” said Sue Georgino, community development director at the city of Burbank. Although it is too soon to tell (some of the stores, including Great Indoors, only opened in the past few months) Burbank is expected to reach its initial annual sales tax revenue projections of $1.5 million from the center (minus revenue from businesses lost because of the center), Georgino said. “From what we can see from the fourth quarter, the center looks like it’s right on target, if not beating the target,” she said. Sales at Linens ‘n Things have made the Empire Center store the best in the chain, said Robb Baade, operations manager. “We’re beating them by a lot.” Sunday is the busiest day for Linens ‘n Things, but at Michaels, it’s Saturday and at Shoe Pavilion, the crowds converge all weekend. “This is going to be busy for a while,” said Will Delaney, a salesman at Shoe Pavilion. “The mall is closed in. Here you have customers come into the store and when they leave they go outside. That’s the main reason it generates a lot of business, because it’s open.” The open and ample parking means shoppers can easily stow their purchases in the car and go back for another round of shopping or take a meal break. “We bought a lot of things,” said Valentina Ayvazova who was making her second trip back to the car with her husband Nicolai. Nicolai, a taxi driver, came upon the center one day while working and suggested they make the trip from West Hollywood to buy gifts for family they will be visiting in Russia next month. “My husband said it’s a good plaza,” Valentina said. On a mid-day afternoon, there was plenty of parking available, but visitors jam the lots at peak hours. “Sometimes you come and you have to park far away,” said Angela Young, a Burbank resident who was shopping one recent afternoon. “My husband and I came for dinner at Outback and we had to drive around and around for a spot.”