Los Angeles Times - 07.08.2019

LATIMES.COM/BUSINESS WEDNESDAY, AUGUST 7, 2019C3

$71.3-billion purchase of

Rupert Murdoch’s 21st Cen-

tury Fox in March, giving the

company control of proper-

ties such as “The Simpsons,”

“Avatar” and “X-Men.” But

the underperformance of

Fox units hampered Disney

earnings, despite the suc-

cess of Disney’s overall film

slate, which included block-

busters such as “Avengers:

Endgame.”

Storied film studio 20th

Century Fox posted a $170-

million loss in the quarter,

Disney said, thanks partly

to the failure of Fox’s “X-

Men” movie “Dark Phoenix,”

which suffered from poor re-

views. The company said it

recorded an undisclosed im-

pairment charge for “Dark

Phoenix.”

Another Fox asset, the in-

ternational networks busi-

ness Star India, also had a

difficult quarter because of

an increase in the costs of

sports rights to events such

as the Cricket World Cup.

Nonetheless, Iger ex-

pressed continued confi-

dence in Disney’s strategy of

using Fox properties to

boost its growth in the

streaming business, where it

will compete with aggressive

tech players such as Netflix.

“Nothing is more impor-

tant to us than getting this

right,” Iger said. “We’re

clearly bullish on our future,

and for good reason.”

Iger also noted the ex-

traordinary success of Dis-

ney’s own movies in recent

months.

Disney’s films have al-

ready grossed $8 billion at

the worldwide box office this

year, breaking its own record

for the industry.

“Avengers: Endgame,” re-

leased in April, grossed

$2.795 billion in worldwide

ticket sales, making it the

highest-grossing movie ever,

not adjusting for inflation.

The film unseated James

Cameron’s “Avatar,” which

generated $2.79 billion in re-

ceipts and held the record

for nearly 10 years.

Disney’s live-action re-

make of “Aladdin” collected

$1.03 billion, while Pixar’s

“Toy Story 4” grossed

$959 million.

Operating income at

Disney’s movie studio grew

13% to $792 million during

the quarter. The quarter did

not include results from

“The Lion King,” which hit

theaters in July and has col-

lected $1.2 billion in ticket

sales.

As for Fox, Iger touted

film franchises including

“Planet of the Apes” and

“Deadpool” now under the

leadership of studio bosses

Alan Horn and Alan

Bergman, as well as “X-

Men,” which will be stew-

arded by Marvel Studios

President Kevin Feige.

Still, Iger said it would

take “a good solid year, may-

be two years, before we can

have an impact” on Fox’s

film business.

“We’re all confident that

we’re going to be able to turn

around the fortunes of Fox

live action,” Iger said.

Disney’s media networks

business, which now in-

cludes Fox channels such as

FX and National Geo-

graphic, saw operating in-

come grow 7% to $2.1 billion

in the quarter.

The parks and consumer

products segment posted a

4% increase in operating in-

come to $1.72 billion, even as

attendance at Disneyland

Resort in Anaheim and Walt

Disney World in Orlando,

Fla., declined 3%.

Chief Financial Officer

Christine McCarthy said the

drop in visits was because of

efforts to control crowding

during the weeks after the

opening of Star Wars: Ga-

laxy’s Edge in Anaheim.

Walt Disney World custom-

ers, she said, were waiting to

visit the Florida park until

the new Star Wars attrac-

tion opens.

The company’s direct-to-

consumer segment contin-

ued to lose money. The com-

pany posted a loss of

$553 million on revenue of

$3.86 billion in the quarter,

reflecting the major invest-

ment the firm is making in

streaming products. The

unit lost $168 million during

the same period a year ago.

Fox deal drags down Disney earnings

“DARK PHOENIX,”with Jennifer Lawrence, was a

flop, adding to 20th Century Fox’s quarterly loss.

Doane Gregory20th Century Fox

[Disney,from C1]

California’s largest op-
erator of recycling redemp-
tion centers has shut down
and laid off 750 employees.
The Mercury News re-
ported Monday that the
company, Ontario-based
RePlanet, has closed all 284
of its centers.
RePlanet President
David Lawrence said the
company stopped operating
because of increased busi-
ness costs and falling prices
for recycled aluminum and
PET plastic.
The move comes three
years after RePlanet closed
191 of its recycling centers
and laid off almost 300 em-
ployees.
This leaves fewer options
for people to redeem their re-
cyclables, which is especially
concerning for those who
live in poverty or experience
homelessness and rely on re-
cycling for income.
Consumer Watchdog, a
nonprofit that studies issues
in California’s recycling in-
dustry, estimated that more
than 40% of redemption cen-
ters have closed in the last
five years. The closures re-
sult in consumers getting
back only about half of their
nickel and dime deposits on
bottles and cans, according
to a recent report from the

nonprofit.

The closures also mean

more bottles made of alumi-

num and polyethylene tere-

phthalate, or PET, will end

up in landfills. People will ei-

ther throw their recyclables

directly into the garbage or

place them in curbside recy-

cling bins, which are often

filled with contaminated

material that must be

discarded. China, which has

bought much of the U.S.’s re-

cyclable material, has be-

come stricter about what

kinds of material it will ac-

cept.

Advocates are urging the

state to reform how it subsi-

dizes recycling centers. They

worry that now more recy-

clables will end up in land-

fills.

Consumer Watchdog re-

sponded to news of the Re-

Planet closure by urging Cal-

Recycle, the California

agency in charge of recy-

cling, to require all grocery

and convenience store

chains to start redeeming

cans and bottles.

Earlier this year lawmak-

ers proposed legislation

that would require plastic

and other single-use materi-

als sold in the state to be ei-

ther reusable, fully recy-

clable or compostable by

2030. AB 1080 passed the
      state Assembly and is under
      consideration in the Senate.

State’s largest

recycling center

operator closes

associated press

MORE THAN40% of the state’s recycling centers
have closed in the last five years, a group estimates.

Al SeibLos Angeles Times

Manhattan Beach Stu-

dios, a 22-acre production

facility for making movies

and television shows, has

been sold to Los Angeles real

estate giant Hackman Capi-

tal Partners as part of a

$650-million deal that in-

cludes an entertainment

production services com-

pany.

The Manhattan Beach

complex serves as the head-

quarters of Lightstorm

Entertainment, the com-

pany of filmmakers James

Cameron and Jon Landau,

who are working there on

sequels to their hit 2009

science fiction film “Avatar.”

Other current produc-

tions there include HBO’s

Issa Rae-starring comedy

“Insecure,” ABC’s “Ameri-

ca’s Funniest Home Videos”

and “Diary of a Female Pres-

ident,” an upcoming comedy

from Disney+.

Hackman Capital said

Wednesday that it bought

the campus as well as stu-

dio-operating company

MBS Services from Carlyle

Group, an international in-

vestment firm based in

Washington, D.C.

The deal expands Hack-

man Capital’s studio em-

pire, which includes Culver

Studios in Culver City, where

Amazon Studios is based,

and Television City, a his-

toric studio complex built by

CBS in the Fairfax district of

Los Angeles.

It also moves Hackman

Capital into the role of pro-

duction services provider in

addition to being a landlord

and developer.

MBS Services provides

resources for content

creation such as lighting and

grip equipment for the

owners of 35 studios with 259

soundstages in top televi-

sion and film production

markets around the world.

“Studios are very opera-

tionally intensive,” said

Michael Hackman, chief

executive of Hackman Capi-

tal Partners. Acquiring MBS

Services, he said, “was the

next logical step for us in

growing our studio plat-

form.”

Hackman Capital is in

the process of adding new

production space to Culver

Studios and is considering

ways to modernize Televi-

sion City as a studio campus.

The company is studying

options for improvements to

Manhattan Beach Studios

but has no specific plans,

Hackman said.

Hackman Capital ac-

quired Manhattan Beach

Studios in a joint venture

with New York investment

firm Square Mile Capital

Management. Hackman de-

clined to say how much of

the $650-million transaction

was for the Manhattan

Beach real estate and how

much was for MBS Services.

Seller Carlyle Group

bought Manhattan Beach

Studios for $150 million in

2007 and launched MBS

Services in 2013 to offer

management services to

other studio owners.

Manhattan Beach Stu-

dios is one of the newest stu-

dios in the region. It was

built in 1999 by Shamrock

Holdings of California Inc.,

the private investment vehi-

cle for the Roy E. Disney

family. The studio has

587,000 square feet of build-

ings including 15

soundstages, production of-

fices and the OGN Super

Arena for esports competi-

tion.

THE $650-MILLIONdeal includes the production facility and studio-operating company MBS Services.

Hackman Capital Partners

Real estate giant snaps up

Manhattan Beach Studios

Hackman Capital also

buys a production

services company.

By Roger Vincent

HOMEto ABC’s “America’s Funniest Home Videos,” above, the 22-acre studio

complex also houses the “Avatar” sequels currently in production.

Michael AnsellWalt Disney Television via Getty Images

A compromise between
four major automakers and
California’s clean-air regula-
tor on fuel efficiency was re-
jected by the Trump admin-
istration months earlier as
not “a productive alterna-
tive.”
The deal — which Ford
Motor Co., Honda Motor
Co., BMW and Volkswagen
announced July 25 alongside
the California Air Resources
Board — eases the pace of
annual efficiency improve-
ments required under cur-
rent Obama-era rules but is
tougher than the Trump ad-
ministration’s proposal to
cap mileage requirements at
2020 levels.
Key elements of the pact
were contained in a Novem-
ber 2018 summary of Califor-
nia’s proposal that was pre-
pared by Environmental
Protection Agency staff for
Bill Wehrum, who was as-
sistant administrator for
EPA’s Office of Air and Radi-
ation at the time, according
to excerpts of the presenta-
tion viewed by Bloomberg.
Stanley Young, Califor-
nia Air Resources Board
spokesman, confirmed Fri-
day that the state had of-
fered the plan to the EPA
last November. The previ-
ously unreported detail
sheds new light on the
months-long battle between
Washington and Sacra-
mento over the mileage rules
that automakers urged
President Trump to reevalu-
ate during his first weeks in
office.
“Looking back, it seems
that they were never inter-
ested in negotiations or dis-
cussions,” Young said. He
added that the four au-
tomakers’ support of Cali-
fornia’s compromise “high-
lights the fact that our pro-
posal is both feasible and re-
alistic.”
Relations between EPA
and CARB officials have be-
come tense, with each side
blaming the other for the

breakdown of talks. In a

June 20 letter to Republican

lawmakers, EPA Adminis-

trator Andrew Wheeler said

California’s counteroffer

hadn’t yet been endorsed by

Gov. Gavin Newsom and

Atty. Gen. Xavier Becerra

when it was presented to

EPA.

The Trump administra-

tion’s 2018 proposal said cap-

ping fuel economy stand-

ards at 2020 levels would

lead new cars to be less ex-

pensive than they would be

under the current rules. The

agencies argued that more-

affordable cars would enable

people to replace their older

vehicles with newer, safer

ones more rapidly and avoid

thousands of traffic fatali-

ties — claims that experts

and EPA career staffers have

disputed.

Wheeler, in a February in-

terview, said the state’s pro-

posal suggested “just taking

the Obama numbers and

stretching that an addi-

tional year.

“And that doesn’t really

get to the lives saved or the

reducing the price of the au-

tomobiles to where we would

like it to be.”

The White House aban-

doned discussions with Cali-

fornia officials a few weeks

later, saying, “Despite the

administration’s best efforts

to reach a common-sense

solution, it is time to ac-

knowledge that CARB has

failed to put forward a pro-

ductive alternative” after

the federal proposal was re-

leased.

The four-company pact

with California also high-

lights a growing chasm be-

tween the Trump adminis-

tration and the auto indus-

try, which after urging the

administration to retool

Obama-era mileage stand-

ards has since pushed back

on the resulting plan that

recommended capping re-

quirements after 2020.

In June, a group of 17 ma-

jor carmakers unsuccess-

fully asked Trump to resume

talks with California, saying

a pact for unified California-

U.S. standards would “en-

hance our ability to invest

and innovate by avoiding an

extended period of litigation

and instability.”

EPA fought state on

fuel standards plan

Compromise with

automakers had been

rejected by agency.

By Ryan Beene