Highest Paid Co. Executives

Many business owners and managers today express concerns with their company’s banking relationship. These concerns are legitimate. The financial services industry is going through a massive restructuring due to mergers and acquisitions. There were over 14,000 banks in the United States five years ago. Currently, there are approximately 9,000 banks, and it is predicted that there will only be 2,000 banks in the country by the end of 2003. Ten years ago, who would have contemplated a time when First Interstate Bank, Security Pacific National Bank, Great Western Bank, and Home Savings of America, to name a few, would cease to exist? Since this trend in bank merger-mania will be continuing, it is important for owners and managers of both large and small businesses to understand how to identify a good bank for their company and how to develop an ongoing relationship where their bank and banker anticipates their business needs and helps the company grow. Businesses, depending on their size, have many choices of banks that can help them with their lending, cash management, and investment requirements. There are small community banks that specialize in a geographic area, niche players that target specific types of companies, medium sized banks that like small business customers and large banks that try to do it all. If you choose to work with a small community bank, recognize that the bankers you meet are working with consumers on car loans, small business loans under $100,000 and often larger companies that like a local flavor. If your company is large enough to borrow in excess of $2 million, you might even be reaching that bank’s legal capacity for making loans. There are a number of niche banks that specialize in small to medium size companies and loans between $100,000 and $5 million. These banks may focus on the medical industry, real estate developers, SBA loans, credit card processing or even portions of the entertainment industry. A few of these medium size banks just bank companies or high net worth individuals. The large banks usually divide up the business market into segments based on size. Loans below $2 million are usually handled in a centralized fashion, in small business centers using credit scoring and are moving to the 1-800-BANK type of relationship. Companies with credit needs above $2 million and sales usually between $20 million and $200 million are handled by the middle market group, or corporate banking group. These bankers are strategically located in major business centers primarily on upper floors of office buildings and never at the local branch. These bankers specialize in working with manufacturers, wholesalers and importers, adding value with their experience, knowledge and understanding of business. Now it’s time to think about your banking relationship. F Do you have a banker that is interested in your business? F Does he or she understand your industry? F Is he or she proactive with all of your business needs? If the answer to any of these questions is not a loud shout of support then it’s time to re-evaluate your banking relationship. Given the wave of bank mergers and acquisitions, it is probably a good idea to learn about alternatives anyway, long before it is necessary. The first way to find a competent, proactive banker is to ask for referrals from your accountant, suppliers, customers, or competitors. 75% of companies change banks based on referrals. When you are introduced to a prospective banker, ask questions. Interview the banker as much as the banker interviews you. F What is his or her experience and background? F What types of companies does your prospective banker have in his or her portfolio? F Are they larger or smaller than your business? F Does he or she have any experience in your industry? F How are loans approved? F What types of loans does the bank make? Ask for a number of references, call these companies and ask how your prospective banker has performed. With this information you can determine if you are talking to the right banker and bank. Remember that business banking is built on relationships. All of the products are virtually the same. The bells and whistles are almost universal. There are only so many ways to make a loan. The real differentiation is your relationship with a live thinking and breathing banker. Make sure it is the type of relationship you deserve. Barry Cohn is Regional Vice President for the San Fernando Valley Regional Office of Imperial Bank.

Faced with one of the biggest issues ever to confront the Northeast San Fernando Valley, three local chambers of commerce are merging in hopes of having a louder voice when it comes to the area’s pending redevelopment. The Greater Northeast San Fernando Valley Chamber of Commerce would combine the chambers of San Fernando, Pacoima and Mission Hills together into one big group, creating a single lobbying focus for the most important business leaders in the Northeast Valley. “Redevelopment is a major issue and to be a business organization here, we have to step in the middle of it,” said Larry Mouchawar, president of the Mission Hills Chamber of Commerce. “We need to look at the most prudent way to help (redevelopment). There needs to be a level playing field balancing between the community, politicians and business interests.” The new organization will have a combined membership of more than 400, making it one of the Valley’s largest chambers. And the first issue it plans to tackle is Northeast Valley redevelopment. The L.A. Community Redevelopment Agency has been struggling to map out a redevelopment zone in the communities of Pacoima, Panorama City, Sylmar and Sun Valley. The CRA’s proposals have been sharply criticized, and last month the deeply divided project area committee, an advisory board on redevelopment comprised of business and com-munity members, voted to disband because they could not reach a consensus. The CRA’s plan would divert $490 million in property tax revenues generated by the 6,835-acre area over the course of four decades. The money would be spent on redevelopment projects meant to lure business and developers to the area. The business community has so far been divided on the issue, with some small-business owners concerned that the CRA might use its power of eminent domain to displace them. Under state law, owners of existing businesses and homes in a project area can be forced to move to make way for a renewal project. Councilman Alex Padilla, who backs the redevelopment plan, has proposed eliminating the city’s ability to use eminent domain on residential properties. While none of the three area chambers has taken a formal position on redevelopment efforts, the unified group could garner considerable clout in shaping redevelopment if it were to take a specific stance on the issue. Martha Diaz Aszkenazy, head of San Fernando-based Pueblo Contracting Services Inc., will serve as president of the new chamber. She said the group wants to work with government officials in a non-threatening manner, but added that there may be some disagreements on how to progress. “This issue is emotionally charged,” Aszkenazy said. “The community has long gone without development money. Anyone that tries to put a halt to (the CRA’s redevelopment plan) may be seen as anti-community or racist. We’re looking at redevelopment from a business perspective.” Much of the Northeast Valley has been left behind in the current economic boom. The area is home to 40 percent of the Valley’s population but just 25 percent of its jobs, according to a CRA study. Average per-capita income is $9,266 a year, compared with a citywide per-capita income of $16,188. The three Northeast Valley chambers have been working on their merger for the last six months, though it has been under discussion for years. Though the merger has been approved by the boards of all three chambers, their members must still vote in favor of the pact, which they are expected to do by July 1. The unified chamber would then meet in early July to map out its strategic plan and its position on issues facing the area, including redevelopment.

More Turbulence at Burbank Airport A compromise proposal to build a new terminal at Burbank Airport may be stalled once again. The Burbank Airport Authority agreed to a request by the Burbank City Council to cut the size of the proposed terminal from 330,000 square feet to 275,000 square feet. But the authority rejected the council’s request that it limit the noise footprint (the area where jet noise exceeds 65 decibels) to 290 acres, its current size. The city is trying to renegotiate a compromise deal it reached with the airport authority last August. The two sides then agreed to a 14-gate, 330,000-square-foot terminal to replace the existing 180,000-square-foot building. The city has since proposed scaling it back to 250,000 square feet to lessen opposition from Burbank and L.A. residents living near the airport. The city’s proposal would bar construction of the new terminal unless a mandatory overnight curfew is in place. It also would allow a later expansion to 280,000 square feet and 16 gates in return for strict limits on noise. City officials said the proposal would allow the airport to handle 6.7 million passengers annually rather than the 4.7 million who currently pass through. Studio Giants Sue Small Firm Walt Disney Co., Time Warner Inc. and 10 other entertainment companies filed a lawsuit against an Agoura Hills Internet firm that allows users to record television shows and watch them on their computers. RecordTV.com, a small firm started three months ago with no outside funding, runs a free site that has attracted 100,000 users despite poor and erratic service. The entertainment companies want the site shut down, saying it violates copyright laws, and are seeking $10 million in damages. Padilla Accused of Ethics Violations A former aide to City Councilman Alex Padilla filed a complaint with the city Ethics Commission over the councilman’s role in a proposed Northeast Valley redevelopment project. The allegations concern members of the Project Area Committee, an advisory group studying a proposal to create a giant redevelopment zone in the Northeast Valley. David Cervantes claims Padilla staffers last fall spent hours each week making phone calls and walking Valley streets on city time to campaign for committee candidates in favor of redevelopment. That committee recently voted to disband because members say they are hopelessly deadlocked over the project. Cervantes said he was fired after he talked about his legal and ethical concerns over the matter with another staffer. Padilla’s spokesman has denied the charges. If found to be true, the alleged actions would violate state and city election laws. Two candidates who ran for the advisory panel supported Cervantes’ claim. Transit Study in Works The Metropolitan Transportation Authority agreed to spend $500,000 on a study of traffic on the Ventura and Hollywood freeways and to apply for federal funding for transit projects in three other Los Angeles corridors. One of the projects under consideration is a dedicated bus route along Burbank and Chandler boulevards that would connect Warner Center to the new North Hollywood Red Line station. The study of a 40-mile span of the Ventura and Hollywood freeways from downtown Los Angeles to Moorpark would cost an estimated $4.5 million. Gov. Gray Davis included $3 million toward the study in his state transportation initiative. If all goes as planned, contracts for the engineering studies for the transit corridors may be awarded in November. Magic Mountain Targets Latinos With Latinos now estimated to make up nearly a third of the more than 25 million annual visitors to Southern California theme parks, Six Flags Magic Mountain wants to make sure it gets its share of this increasingly lucrative market. Spanish-language broadcaster Univision Communications Inc. and amusement park operator Six Flags announced a broad marketing agreement, a signal of growing reliance on Latinos for theme park attendance in major metropolitan areas. The arrangement calls for Los Angeles-based Univision to create a Latin festival that will tour eight U.S. Six Flags theme parks, including Six Flags Magic Mountain in Valencia, this summer. Univision will use its clout as the United States’ largest Spanish-language broadcaster to attract stars of novelas (Spanish-language soap operas), and top Univision network talent to the tour. In return, Six Flags, owned by Premier Parks Inc. of Oklahoma City, will step up its advertising with Univision. Eventually, Six Flags parks could house Univision broadcasting sites or Univision-themed attractions.

Frank Sinatra may have called L.A. “a lady,” but I think the fabled crooner and longtime Southland resident had it all wrong. Los Angeles’ essence is not that of some elegant female but her scheming opposite, a male on the make. This notion came to light after watching the latest victim to fall to our city’s charms the French buyers of Universal Studios. Once again, for the umpteenth time, a Hollywood studio has been rescued from its own folly and self-absorption by an outsider eager to be seen in handsome company. Vivendi, originally a French water company, has offered to buy Universal, a property that has seduced more supposedly serious suitors than the most effective gigolo. In the process, it is following the failed scenarios of both the Japanese, who first bought the homegrown studio, and Edgar Bronfman Jr., the wannabe Hollywood mogul and scion of the Seagram liquor clan from Canada. In both cases, the buyers really didn’t know what to do with their expensively purchased new bauble. The Japanese at Matsushita with their equally challenged countrymen from Sony who bought Columbia-TriStar and the usual group of Wall Street “analysts” chortled about “synergy” between Japanese hardware and Hollywood “software.” Yet it turned out that people don’t buy movies to match their TVs. Once that realization hit, the Japanese either exited or tried to make the best of a bad situation, as at the old Columbia, by trying to buy Hollywood talent to keep their ships afloat. Then came the Canadians, in the form of the ultimate media wannabe, Bronfman Junior. His tenure at Universal has been something short of mediocre, and has helped turn the once front-running studio into something of an industry joke. The French are coming Now, luckily for Junior, he found someone who might even be more clueless than he the French. This may prove the ultimate coup for Hollywood, America’s greatest gigolo. While the Japanese showed off their boy-toy prize with quiet and typically understated arrogance, and Bronfman wore his like a rapper’s gold chain, the French may prove the most deluded buyers yet. Gallic vanity and pride, notes Claudine Mulard, L.A. correspondent for Le Monde, France’s most respected newspaper, does much to explain the purchase. With the takeover of an American studio, she notes, French cultural nationalists are now “crowing like crazy” about a great European (read French) media coup. To be sure, Mulard admits, Vivendi and its partner Canal Plus, and indeed France itself, enter the studio business with some experience in mass media. The problem is, judging from Canal Plus’ record, most of it has been harebrained. Mulard is particularly puzzled by the company’s bizarre decision to place the studio headquarters in Paris. Canal Plus boss Pierre Lescure, the man slated to run the new studio, doesn’t plan to move to L.A., explaining that he already owns a house in the sunny south of France. What does this guy think, Hollywood exists for the nice weather? And we thought Junior was clueless? The new Napoleons Now don’t take me wrong. I am not a Francophobe. I love the language, the literature, the food (perhaps a bit too much) and the history. But that’s the point it’s a country whose elite thinks their exquisite culture and grand past assures their future. They look at American dominance in culture and technology and picture themselves as new Napoleons ready to cross the Alps. Basically, the French elites have been delusional for decades. I can never forget my meeting with Jacques Attali, a close aide to former President Mitterand, almost 20 years ago. With the integration of Europe, Attali calmly predicted, the world would soon be divided between the Europeans (led of course by France) and the Japanese. The pauvre Americans would be left in the dust. Of course, Attali was wrong, as at least the Japanese would have the courtesy to admit. But being wrong and never conceding it is the birthright of French politicians, intellectuals and corporate bosses, all of whom tend to have gone to the same schools and belong to the same families. Of course, in the coming months, we locals may be treated to a public relations campaign by the new bosses. Hey, after Junior’s little run, they might even prove decent, or at least coherent, corporate citizens. But don’t be taken in by the cooing from Paris. Deep down, the French corporate, political and media elite will never give up their vain struggle against America, and most particularly against Hollywood. Yet in the end they will lose their shorts, just like the Japanese or Junior, if he hadn’t been lucky enough to find an even bigger bozo to bail him out. A Paris-based global studio, Claudine Mulard suggests, makes very little sense when, to the horror of their supposed betters, most Frenchmen, particularly the youth, are consuming American culture like, well, pommes frites. Eventually Vivendi will realize this and, like the Japanese and Bronfman before them, will look for another suitor to rescue their bank accounts, if not their wounded pride. And someone probably will do it. L.A., the American gigolo, can always be remade once again, ready to seduce the next vain lady who walks down the path.

It hasn’t been business as usual. Or maybe it’s returned to business as usual, depending on how you look at it. The last few months have been trying for venture capitalists, as the companies they funded have been forced to postpone plans for public offerings in the wake of the sharp drop in technology stocks this spring. Many Internet companies have come back, hat in hand, forcing some hard decisions about which companies to keep backing and which to cast adrift. Some companies, of course, have simply collapsed. Business proposals continue to cross venture capitalists’ desks by the dozens, most of which aren’t feasible. Valuations on Internet startups have come down dramatically, which is good for investors because it now costs less to get a sizable percentage of a given company. But the days of cashing out with a 20-fold gain after taking a company public within two years are over. Now, despite a rebound in tech stocks, the IPO market remains shut for almost everyone. “Believe me, we enjoyed every minute,” said Todd Springer, managing partner at Trident Capital. “But we never invested assuming the market would be (like that) over the long term.” The consensus within the local venture community is that deals are now taking longer to do, as more due diligence is being undertaken and stricter requirements imposed. Forecasts have been adjusted to target public offerings for three to five years from when a company first gets funding. In short, it’s what venture capital deals looked like before the heady dot-com days. “What’s come back to the market is a rationality,” said Robert P. Healy, vice president of the private equity group at William E. Simon & Sons. “You’ve got to have a business model that has a sound profit model as well.” Put up or shut down The companies that Healy and his peers manage are undergoing a hard reality check. The days of spending untoward millions on dubious and costly advertising are gone. Quantifiable goals of progress are imperative. And there is a distinct possibility that a nurtured company could get acquired for a fraction of its previous estimated value. “Basically, everybody who started a company felt entitled to venture capital funding,” said Ravin Agrawal, a partner in EastWest VentureGroup. “We definitely had a period where entrepreneurs could name their price. One of the things that has happened in the last few years is, (venture capitalists) haven’t only funded companies, they’ve funded concepts. These concepts aren’t going to survive. So the only option for exit is to be acquired.” Of course, the acquisition price may be little more than a song. Online retailer eToys Inc., itself struggling with perceptions that it may not make it, bought some of the assets of online party-planner eParties for $1.6 million in shares, and 10 of eParties’ staff of 28 were laid off. The deal was noteworthy because eToys is an offspring of Pasadena incubator Idealab, and eParties the brainchild of rival incubator eCompanies, both of which have sought to turn the venture concept on its head by conceptualizing as well as funding startups. eParties debuted with much fanfare only nine months ago, but failed to attract a second round of funding and was quickly disposed of by Santa Monica-based eCompanies. Given eParties’ high-profile debut, its collapse was observed with some amusement by venture capitalists who doubted the viability of an online business that helped consumers plan parties. When the company laid off many of its staffers two weeks before the eToys deal was announced, an eParties spokeswoman characterized the move as a “transition.” “The joke in the venture community was that ‘in a period of transition’ is now code for ‘dead on arrival,'” one local VC said. Attention, K-Mart shoppers As is often the case in business, one investor group’s failed company is often another group’s opportunity. And in the current market, companies that have secured funding are trolling for troubled firms in similar niches, hoping to acquire them on the cheap. By quickly expanding through such acquisitions, the companies hope to establish themselves as sustainable entities in investors’ eyes when the IPO window reopens. And even if they never go public, well-capitalized companies may find acquisitions attractive if for no other reason than the assets are such bargains. “I would say that there are companies that would have raised $80-$100 million last winter that are being shopped around in the $15-$25 million range,” said EastWest’s Agrawal. “CEOs are saying they’d much rather find themselves with something rather than nothing.” Venture capitalists who serve on the boards of several different companies are sounding each other out about prospective tie-ups, gauging which way the wind is blowing and estimating how long a given company might have to survive. Such talk “is literally happening all the time,” Agrawal said. But with all the wheeling and dealing, the venture firms that thrive in this period will most likely be the ones that invested in the fewest purely speculative companies in the first place. “The public market volatility serves as a wakeup call for the investor,” said Brad Jones, general partner at Redpoint Ventures. “There is a tendency when the market is frothy to bend the rules, and not meet all our (investment) criteria. This is back to reality.”

While mega-bank mergers are gobbling up banks all over the country, a small handful of “community banks” have been uniquely thriving in the San Fernando Valley, providing “old-school” service unique to community business. The Valley area has witnessed a virtual transformation and a dramatic shift in the nature of the banking industry. According to one bank President and CEO, Richard Taylor, the Valley has evolved in stages from an agriculture area, to a suburban alternative, and more recently, to a significant industrial community. “Growth and diversity has been a key theme of the San Fernando Valley history,” Taylor said. “The strong national economy has been further fueling local industry.” In fact the recent national boom-years has helped stimulate community banks, including Taylor’s Bank of Granada Hills, to achieve all time high for deposits as well as loans. “While rapid growth has been every exciting for many companies it has also created a cash-flow crunch for others,” Taylor explained. Local banks provide customers with an array of financial product solutions, including SBA guaranteed loans, accounts receivable financing and leasing. All of these approaches allow businesses to grow, or acquire needed equipment, without over-taxing their cash-flow. Taylor attributes much of his one institution’s success to their long history of personal service, and sensitivity to an individual business’ unique needs. “Community banks like our own provide a highly specialized service that the large network banks simply can’t offer,” he explained. For example, a local bank’s staff can approve a business lease in a matter of hours and fund a loan request without the bureaucracy that can slow the process at large banks. “We know our customers by first name and really take an interest in understanding their business needs,” he said. “We’re very proud of the fact that we’ve maintained banking relationships with a great many of our clients for over a decade,” Taylor said. “We’re also proud that many of our employees have been a part of our professional team since our inception,” he added. This article was provided by the Bank of Granada Hills.

In one of the first debates of L.A.’s 2001 mayoral race, candidates recently appeared before the Sherman Oaks Homeowners Association and laid out their agendas. Recognizing the political importance of the San Fernando Valley, nearly all of them tried to position themselves as pro-Valley candidates. So the San Fernando Valley Business Journal asks: Who do you think is the best candidate for the Valley? Lee Alpert Principal Alpert & Barr I’ve endorsed Steve Soboroff. I think in terms of the financial and business aspects, he has the best understanding of the city. Through his business ventures and his capacity as a commissioner for parks and his helping put together the Alameda Corridor project, he has the knowledge to get things done. I think any of the candidates who are serious about running should support a study of secession and, depending on what that study shows, they should take a position for or against. I don’t think they should have to sign an oath saying they support the study. That to me seems somewhat childish. I would like to see them express it publicly. Judy Kessler Block Chief Executive Encino Chamber of Commerce I don’t have enough information yet on the candidates running to say who’s best for the Valley. Obviously, it helps to always have a candidate from the Valley. I’d like to see them support the Valley and at least say they are for a study of secession, if not secession. At the very least, I think they should do that before I take a position on who should be mayor. I think they need to not look at the Valley as a stepchild and take the voters of the Valley into consideration when they plan their strategy. Sadi Sepassi Owner Deco Asphalt I don’t know who would be best for the Valley. I think Richard Leyner (chairman of the United Chambers of Commerce of the San Fernando Valley) should run. I think it’s important that a mayor come from the Valley. I think we need a lot of help out here, and no one in L.A. is listening. I’m sure they’re listening more this time because of secession, and I hope we see more Valley issues come up in the race. Dale Jacobs First Choice Business Solutions I have not heard all the candidates yet and cannot make a decision. I would look for someone who’s fair and equitable in terms of the Valley. I’d like to see them take a fair and balanced approach and be open to discussion about secession. I don’t want them to support secession, that wouldn’t make sense. But I would like them to support a study. I’m a strong supporter of the study. I can’t make a decision on the candidates based on sound bites, and that decision won’t come until the end. Who knows what will happen before then? Everyone’s got their issue. I want someone who will step up when they see the Valley isn’t getting its fair share and say, “Make sure the Valley gets its share.”

It seems that almost every time you open your mailbox you find yet another invitation from yet another credit card company. Your eyes bug, your pulse races…you can’t get to a phone fast enough to get that card activated. These card companies tempt and tease you with low introductory interest rates hoping to lure you away from your current credit card company. You’re ready to transfer all of the debt you have on one card over to this new card at the lower interest rate. Smart move. Let’s jump ahead. Six months down the road, that sweet deal expires, and you’re looking at the same ol’ scenario you were facing six months earlier. But now, in addition to your existing debt, any purchases made at the lower interest rates immediately begin accruing interest at the newer, higher interest rate because the teaser rate has expired. “No problem,” you say. You’ll just reach into the mailbox and pull out yet another sweet deal. Seems like a logical way to get out of debt, right? Wrong. You’ve got to remember that the banks are in business to make money. Teaser rates are not a permanent solution to a debt problem. It seems like a good idea to bounce from one card to another, but every time you bounce, that information goes into your credit file. The number of inquiries on your credit coupled with the fact that you bounce from one card to another will work against you. These credit card companies want to make a profit, and they realize that if you are moving from one card to another you are only hanging around during the teaser rate period then moving on. That well will run dry. Believe it. That’s not to say that you shouldn’t take advantage of a low interest rate offer, just that you shouldn’t become a bouncer. If you can get a really low interest rate on a card, grab it. Transfer an existing balance to that card and do not make any new purchases. Then work hard to pay that balance off while the interest rate is low. This way, when it rises again…and it will rise again…you won’t have to be worried about getting behind again. Dave Lewis is a Los Angeles-based financial consultant.

Business is likely to be very good at the new AMC Theatre that just broke ground in Burbank. And that’s the bad news because the new 16-screen complex will be competing with two other cineplexes operated by the AMC Entertainment Inc. chain in Burbank. And since the new venue will have more screens, along with stadium seating, digital sound and other creature comforts, it is likely to steal market share from those other complexes, which lack comparable amenities. “There’s been a big change in movie-going habits around the country with the advent of the stadium-seat megaplex,” said Rick King, spokesman for Kansas City-based AMC. “The customer is absolutely choosing the theaters with stadium seating, high screen counts, big pictures and digital sound.” As a result of these changes, AMC, like most other theater operators, is grappling with the question of what to do with its older theaters when its newest movie house opens in the fourth quarter of 2001. Over the past five years, as new screens have come online, many of the older, under-performing venues have been shuttered. Still others have been renovated or transformed into discount houses or art film venues. But repositioning or renovating a theater is not easy. “Some places it’s worked, and some it hasn’t,” King said. “In most cases, if you renovate an eight-screen, slope-floor theater, at the end of the day, you’ve still got an eight-screen theater, and people generally prefer higher screen counts.” Million-dollar screens Time was when moviegoers who wanted to take in a show broke out the newspaper and headed for the theater playing the film that caught their fancy. But these days consumers are more likely to make their selections based on which theater has the most screens and the most amenities, sometimes waiting until they arrive at the complex to decide on what movie to see. That has forced a wholesale change in the way operators build theaters, driving costs sky-high at the same time. Screen counts of 15 and more, stadium seating, designs that sharply angle each succeeding row to give moviegoers an unobstructed view, love seats for snuggling, and digital surround sound have doubled the cost of construction to about $1 million per screen, according to industry estimates. The result is a downward spiral in attendance at older theaters. “Almost all the older, slope-floor theaters have experienced some decline (in attendance),” said King. “And in most cases, where the slope-floor theaters are in direct competition with stadium-seating theaters, the decline has been dramatic.” AMC, which has been among the most aggressive operators in building new theaters, last year closed 279 older screens nationwide, and more closures are planned for this year. In Burbank, the new theater complex will be located in a retail/entertainment center under construction next door to an existing, 14-screen multiplex that will be torn down once the newer version opens. But the company plans to retain its two other units in Burbank. One is an eight-screen cineplex in the Media Center mall that has an older, sloped design, and the other is Media Center North, which has stadium seating but only six screens. AMC plans to consider a number of different strategies to revive interest in its older Burbank theater complexes. “Once we get our new complex built, we will be doing a lot of experimenting and testing to find out what formula works the best for that trade area,” King said. He declined to elaborate. But the addition of new, multi-screen theaters in other San Fernando Valley markets has taken a toll on older theaters over the past year. Pacific Theatres Corp. shuttered its five-screen complex in the Sherman Oaks Galleria in preparation for a 16-screen theater due to open in the renovated mall at the end of this year. In March, Pacific also closed its Topanga Theatre in Woodland Hills, and United Artists Theatre Co. earlier this year closed its six-screen Woodland Hills cineplex. Both moves followed the opening of AMC’s 16-screen megaplex in the Woodland Hills Promenade. Losing to home video Some of those operators tried alternate marketing strategies for the houses before closing them. Pacific’s Topanga Theater, for example, switched to a discount-house format, showing second-run films for $2.50 a ticket. Second-run films, those that have previously opened in other theaters, once attracted audiences that didn’t want to pay the full freight to see a newly released film. But in recent years, the window between the time a film opens and its release on home video and cable has shortened, and many consumers prefer to watch the film in the comfort of their own homes. “There seem to be very few successful discount houses these days,” said an industry observer. “With video availability being in the area of six months from first release, the time someone would have to wait to see the film on video and seeing it in a second-run house is a few months.” Before shutting down its Woodland Hills theater, UA tried to boost interest in it by booking “art films,” movies made by small studios and geared to specialized, niche markets. But even art film houses have been failing because of the growth of megaplexes. In order to fill their many screens, the large complexes have turned to showing art films on some screens, and competing with large exhibition chains for distribution rights is generally too much for the smaller theaters to handle. At the same time, the recent success of some independent film producers, who have managed to market films like “Pulp Fiction” or “Shakespeare in Love” into crossover hits that attract national mainstream audiences, has also put smaller theaters at a competitive disadvantage. Where independent studios once looked for alternate channels of distribution, they are now trying out their films in limited release in the large chain theaters. If the movie succeeds, the distributor has no trouble finding other large theaters to show it. If it fails to attract a large enough audience, the studio is more likely to scale back distribution or go quickly to video distribution, rather than move the film into smaller theaters. Still, AMC and others are hopeful they can come up with a formula to keep these smaller theaters profitable, largely because the cost of closing them is often steep. Many theater operators are tied into long-term lease obligations or carry debt on their older venues. “They had to switch (to the newer theaters) when they hadn’t yet written off the old theaters,” said Bud Ovrom, city manager for Burbank. “Now they’ve got a big yoke around their necks over how to get rid of the old theaters and focus on the new theaters.”