Grim Reminder of L.A.’s Heyday
Los Angeles popped into the international spotlight last week because of the slick gala service for Michael Jackson. Celebrities flocked to Staples Center. Fans flew in from overseas. The city demonstrated that it is capable of handling the Big Event.
Indeed, Los Angeles was at the center of the entertainment world again.
As one observer was quoted as saying, the Jackson memorial event branded Los Angeles in the eyes of the world as the capital of pop music, celebrity and lunacy.
And that was striking because, unfortunately, such moments are becoming rare. The Jackson memorial seemed almost an anachronism, a throwback to the times when the celebrity industry thrived in Los Angeles.
Divided Over Taking Both Sides
L.A.’s Occidental Petroleum Corp., which is known for producing oil overseas, now wants to turn inward and extract more oil from its own state of California. Of course, that’d be good for business in the state. But according to an article in last week’s issue of the Los Angeles Business Journal, the company is wary about the effort in Sacramento to slap a big tax on the value of any oil that’s extracted from California.
Indeed, there’s a spirited debate about whether California should impose a so-called severance tax on oil. On the one hand, the pro-tax crowd says it would be “moral” to tax oil that comes out of California’s ground and off its shores. Such a tax would sure help the state in its hour of desperate need budgetwise. But the anti-tax crowd says a severance tax would discourage the oil industry and kill jobs in California. That would only hurt the state.
This is an important matter, and now is the time for people of conscience to take a brave stand.
But not me. I stand on both sides of this issue.
Fictional Defense on Film
Normally, when someone writes an editorial or a letter to the editor that is critical of the Los Angeles Business Journal in some way or disagrees with me personally, we publish it without response from us. Reasonable people can disagree, after all, and everyone should have their say.
But this one, I can’t let pass.
The director of the new documentary “Bananas!” scolded me in a letter to the editor we published last week in the Business Journal. He said it was “irresponsible journalism” for the paper to publish, in the June 8 issue, an article on Page 1 headlined “The Big Slip-Up.”
His main complaint was that we hadn’t seen his movie, so we should not have written an article that made “conclusions as to its contents.” As a result, he said the reporter who produced the article, Alexa Hyland, and I “failed to conduct appropriate objective research.” He used words such as “outrage” and “offended.”
Good and simple?
Recently, another round of calls started up to raise taxes to plug the yawning hole in the state budget. A powerful union even began running ads on television suggesting new levies. The tax-first-and-ask-questions-later crowd picked some vulnerable and tempting targets for new taxes: cigarettes, alcohol, card rooms and the like.
The rationale is compelling. The state could get money from undesirable activity and therefore would not penalize good behavior. And if the higher taxes cause people to stop smoking or drinking, well, that’s a social benefit to California. All good and simple, right?
Alas, not quite. Aside from the fact that such taxes disproportionately hurt the poor, such taxes also fall heaviest on small businesses. Many convenience stores, for example, depend on cigarettes and liquor for much of their sales and a bulk of their profits. Those shopkeepers have families to feed, too.
Virtually Bleeding Money
When MySpace said last week that it was lopping off 30 percent of its staff, you could almost hear the air rushing out of the Web 2.0 bubble.
Granted, the Web 2.0 bubble may not be as spectacular as its dot-com counterpart of the late ’90s, but surprisingly big it has gotten to be, nonetheless.
In fact, MySpace is one of the big reasons it got so pumped up to begin with. Rupert Murdoch plunked down an astounding $580 million four years ago to buy what is, after all, a fairly simple social networking site. Of course, that price didn’t seem so inflated when Google later agreed to give the Beverly Hills-based MySpace $900 million over three years in an advertising partnership.
But, as it turns out, both were inflated prices, and both pumped more air into the hollow business model.
Losing Interest in Homebuying
Poor L.A.’s housing market, prostrate for so long. Just when it looked as if it were ready to stand again, it’s getting kicked.
It was only last week when the Los Angeles Business Journal reported that the median price of homes that sold in Los Angeles County in May actually went up for the first time in a year and a half. Now that may or may not have marked the bottom in prices locally, but the bottom must be getting near.
Besides that, we had several other signals that the housing market here may be ready to start stirring: an economy that seems to have stabilized. A stock market that’s firmed up a bit. Incentive programs to help homebuyers. And, of course, low interest rates.
Oops. Strike that.
Northrop on Defense
You’d think this would be a great time for Northrop Grumman and other big defense contractors, what with two wars lingering, Kim Jong Il fomenting nuclear mischief, and the deepening worries about Iran and Pakistan.
But not so much. The stock of Northrop Grumman – L.A.’s fourth biggest company – has somewhat underperformed the major indexes over the last year, and a few weeks ago it got slapped with a “sell” rating by an influential analyst.
The reason: Despite the world troubles, Defense Secretary Robert Gates has gone all Lizzie Borden on the defense budget, giving it at least 40 whacks. He and the Obama administration have signaled they intend to chop even more, especially big-ticket military hardware. Northrop, of course, specializes in those very things – war ships, fighter planes and such.
Emily Litella Had it Right
I’m sitting here sipping my third – well, maybe my fifth – cup of coffee and feeling guilty for the damage I’m inflicting on my health this morning. As I do every morning.
But wait. Here’s this article in the Los Angeles Times that says the latest study shows – surprise! – coffee is not harmful. In fact, it is beneficial to health. “It is a good beverage choice,” a Harvard researcher says right here.
Hey! Remember all those supposed experts who gravely warned us that coffee drinking will cause heart disease? All those scholarly studies from august institutions that concluded that coffee will cause cancer and hypertension and maybe global warming, too?
Well, in the words of the late, great Emily Litella from Saturday Night Live: Never mind.
A Wealth of Movement
How often have you heard the bromide about how the rich get richer and the poor get poorer?
Well, it’s difficult to look over this year’s list of the wealthiest Angelenos, which is in the May 18 issue of the Los Angeles Business Journal, and declare that that’s true. By our count, 41 of the 50 wealthiest Angelenos lost money over the last year, and eight of them lost more than $1 billion each. Only three on the Business Journal’s wealthiest list actually gained money. On the whole, the rich certainly did not get richer.
Now, I know some could argue that this is only one year and an aberrant one at that, so it doesn’t really count. Over time, the rich do get richer and the poor, poorer.
Reading L.A.’s Fortune
I love the Fortune 500 list. I particularly like the way Fortune reranks its list, such as sorting out the companies that grew the fastest and the ones that proved to be the best investment.
But when I got this year’s Fortune 500 issue last week, it occurred to me what I don’t like about it. Fortune fails to group the companies by metropolitan area. Granted, it does sort them by strict city limits, but that seems archaic since so many corporate headquarters today are in suburbs.
It’s crucial for a metropolitan area to have big corporate headquarters. Major companies provide a base of employment (the effects of this recession notwithstanding) and they tend to underwrite the arts, donate to local civic causes and create foundations. Beyond that, the number of a city’s Fortune 500 companies is kind of a report card. It tells you whether the metro area is attracting and growing big companies – or is repelling them.
Since Fortune does not group the Fortune 500 companies by metro area, I figured I’d try. I picked 15 cities and added in the headquarters in their suburbs. Here goes: