TV veterans Gail Berman and Lloyd Braun form production company

The pair, just ousted from Paramount and Yahoo, will focus initially on television shows, movies and Internet entertainment.

Former Paramount head Gail Berman is forming a new entertainment company with the person who recommended her for the Paramount post: Lloyd Braun, the former ABC Entertainment chairman who recently resigned as head of Yahoo!’s media group.

By Claudia Eller and Meg James
Times Staff Writers

January 30, 2007

Two of the television industry's biggest names are forming a company to produce TV programs, movies and Internet entertainment, according to four people familiar with the plan.

Gail Berman, who stepped down this month as president of Paramount Pictures, is teaming up with the person who recommended her for that job two years ago: Lloyd Braun, the former ABC Entertainment chairman who until December was head of Yahoo Inc.'s media group.

BermanBraun, their new venture, initially will focus on TV production, the Internet and movies, the sources said.

The pair eventually will expand into producing stage productions and video games.

BermanBraun will be modeled after such former independent boutiques as Carsey-Werner and Brillstein-Grey Entertainment, which maintained financial interests in the shows they produced.

Most Hollywood production companies are financed by the major media giants, which then own most of the entertainment content that is produced.

Before joining Paramount nearly two years ago, Berman built the Fox broadcast network into a ratings juggernaut with such hit shows as "24," "House" and "American Idol."

Braun, before being forced out of Walt Disney Co.'s ABC in 2004, came up with the concept for "Lost" and recruited hotshot writer-director-producer J.J. Abrams to develop the show. "Lost" was instrumental in turning around the fortunes of ABC, which was fourth place in the ratings at the time.

The two are looking for a studio home for the company and are in discussions with 20th Century Fox, Warner Bros., CBS Corp. and NBC Universal, among others. Some studio executives, however, say they would balk at a deal if Berman and Braun insisted on keeping total financial control.

ABC is not on the list of contenders. Braun had a public and bitter falling-out with Disney Chief Executive Bob Iger.

Nor is Berman, 49, in conversations about her new endeavor with her former boss, Paramount Chairman Brad Grey. Berman resigned two weeks ago after a tumultuous tenure at the famed Melrose Avenue studio.

Braun has close ties to Grey, having worked for him in the mid-1990s, when Grey was a talent manager, and was instrumental in helping Grey form Brillstein-Grey. Braun oversaw the development and production of such shows as "NewsRadio," "Just Shoot Me" and HBO's blockbuster mafia series "The Sopranos."

Shortly after Grey took the reins at Paramount in the spring of 2005, Braun suggested that he hire Berman. Although she lacked moviemaking experience, Berman is widely respected for her creative skills.

It was Berman's lack of gravitas in the film industry and her direct and sometimes abrasive style, as well as an upheaval at Paramount, that led to her resignation less than two years into her four-year employment contract.

Berman told confidants that after her difficult experience at Paramount she was no longer interested in taking another executive job.

Before joining the Fox network in 2000, Berman was the founding president of Regency Television, which produced "Malcolm in the Middle." She also had a successful run on Broadway, where she produced such plays as "Joseph and the Amazing Technicolor Dreamcoat."

Braun, 48, also felt somewhat shackled in a corporate setting, according to people familiar with his thinking. He was hired in 2004 to run Yahoo's Santa Monica-based media and entertainment group with a mandate to turn Yahoo into a full-fledged digital entertainment company. But within a year and a half, Yahoo had dramatically downsized its aspirations to be a major content creator.

Braun, a former entertainment lawyer, resigned as part of a management shake-up in December.

Apple pays $700,000 for bloggers' legal fees

Bloggers and online journalists have completed their final victory lap in a protracted fight against Apple.

Earlier this month, a Santa Clara County Court ordered Apple to pay the legal fees associated with the defense of subpoenas issued to online journalists (and other related entities) in response to online reports about a confidential audio/video product -- code-named "Asteroid" -- under development at the Cupertino-based company.

The "Asteroid" product was never released, but Apple claimed the news reports violated California state trade secret law and that the journalists were not entitled to First Amendment protections. However, following an appeals decision last year that strongly sided with the journalists, the Court ordered Apple to pay all legal costs associated with the defense, including a 2.2 times multiplier of the actual fees. [updated]

"The court's ruling is a victory for journalists of all mediums and a tremendous blow to those firms that believe their stature affords them the right to silence the media," said Kasper Jade, the publisher of AppleInsider.com, one of the sites that broke the original "Asteroid" report (the other was PowerPage.org). "Hopefully, Apple will think twice the next time it considers a campaign to bully the little guy into submission."

In total, Apple was ordered to pay nearly $700,000 -- a small amount for a company that reported nearly $1 billion in profit in the December quarter, but a large moral victory for bloggers, journalists and the Electronic Frontier Foundation (EFF) which helped defend against Apple's subpoenas. "We are very pleased, as this will go a long way towards keeping EFF on the forefront of impact litigation defending the rights of online journalists and others," EFF Staff Attorney Kurt Opsahl wrote in an email. "Bloggers break the news, just like journalists do. They must be able to promise confidentiality in order to maintain the free flow of information. Without legal protection, informants will refuse to talk to reporters, diminishing the power of the open press that is the cornerstone of a free society."

Apple last week declined the opportunity to appeal the award ruling and paid in full. In addition, Apple dismissed the underlying case, but did so "without prejudice" (i.e., allowing them the to retain the right to re-file it at a later date). In May of last year, a California state appeals court overturned a lower court decision from a few months prior, ruling in favor of the EFF's appeal on behalf of three bloggers: the Court upheld the rights of online journalists to protect their confidential sources and putting them on par with traditional print journalists.

In its ruling, the appeals court said that bloggers and webmasters are no different in their protections than a reporter and editor for print publications. "We can think of no workable test or principle that would distinguish 'legitimate' from 'illegitimate' news," wrote a three judge panel. "Any attempt by courts to draw such a distinction would imperil a fundamental purpose of the First Amendment, which is to identify the best, most important, and most valuable ideas not by any sociological or economic formula, rule of law, or process of government, but through the rough and tumble competition of the memetic marketplace," the judges added.

The EFF, a legal organization dedicated to bringing traditional rights to the digital and internet worlds, received $425,000, while the remaining monies went to co-counsel Richard Wiebe and Tom Moore who also helped prepare and defend the case.

Behind the multiplierThe EFF asked the court for a multiplier (a.k.a, "loadstar") of the actual legal fees to compensate for the double contingent risk presented, i.e., both the risk of not prevailing in the defense of the subpoenas and the risk of succeeding, but without the circumstances necessary to obtain legal fees. At the low-end of traditional multipliers, which can range from 2-4 under California law, the EFF also said that California laws provides for a multiplier based on the novelty and complexity of the legal issues involved. "We litigated this case in the public interest and successfully obtained substantial public benefits by vindicating constitutional rights protecting all journalists, and the public that benefits from the work of journalists, and vindicating federal statutory rights that protect all the millions of users of email communications," Opsahl wrote.

"Also supporting a multiplier was the fact that the issues litigated were novel and complex, our work was of high quality, and the result achieved was extraordinary." Separately, Apple has sued another Mac enthusiast site Think Secret, alleging that postings on the site contain Apple trade secrets.

Billionaire Saves Bankrupt Air America;

Al Franken Leaving Radio Network Feb. 14

Former Saturday Night Live comedian and bestselling political author Al Franken announced on his radio show this morning that struggling Air America has been saved by the New York real estate developer brother of Manhattan politician Mark Green. At the same time, Franken announced that he will be leaving his radio show on February 14th to consider a run for the U.S. Senate seat from Minnesota. In Chapter 11 bankruptcy proceedings since October, the progressive radio network will be bankrolled by Stephen Green, who is chairman of SL Green Realty Corp, a real estate investment trust specializing in office buildings with a market cap of $12 billion. Franken described him as a multibillionaire. Later, Air America CEO Scott Elberg confirmed the sale, which will be finalized in a week. "This is a great thing, for our affiliates, the company, the audience and every employee in our organization," Elberg told The Huffington Post.

Personally, I'm very disappointed that none of Hollywood's many rich liberals stepped up to the plate individually or collectively to rescue Air America and put it on firm financial footing. This piece I wrote about Air America in 2005 outlines some of its problems back then. But recently, the radio network has had trouble hanging on to its stations in major markets.

Franken's leaving is a big blow to the network since he is its most famous host. But he recently moved his show from New York to Minnesota where the U.S. Senate seat occupied by Republican Norm Coleman has always interested him. he will decide in the next weeks whether to set up an exploratory committee to weigh a run for office. Franken's replacement on Air America will be his friend Thom Hartmann.

Paris Hilton seeks to close website

• From correspondents in Los Angeles
• January 30, 2007

PARIS Hilton has filed a lawsuit in Los Angeles demanding the closure of a website where visitors can pay to view nude photos and other items that formerly belonged to her.

Hilton's suit says the website - parisexposed.com - which displays photos, home videos, diary entries and audiotapes of her conversations, as well as images of her passport, is "one of the most reprehensible invasions of privacy of a celebrity".

The site includes topless pictures of 25-year-old Hilton on holiday and also shows her frolicking in a bath.

In a declaration to the court, the Simple Life reality television star says the items were put into storage two years ago after she and her sister Nicky moved out of a house after it was burgled.

Hilton claimed the removal company was supposed to pay the storage fees and that she was "shocked and surprised" to learn that the amount had not been paid and that her belongings had been sold at a public auction.

"I was appalled to learn that people are exploiting my and my sisters' private personal belongings for commercial gain," she said in her court statement.

Hilton is seeking closure of the site on the grounds that the information shown could be used by people "to steal my identity, or even worse, to harass or stalk me".

The lawsuit claims the possessions were bought by defendants Nabil and Nabila Haniss for $3590 and sold to a third person, Bardia Persa, for $12.937 million. Visitors to the site pay around $51.75 to view the items.

In addition to claiming invasion of privacy, Hilton says she filed copyright registrations last week for three pieces of writing that are contained in the belongings. She claims the site is engaging in copyright infringement.

The publicity hungry Hilton has struggled to keep her personal life private in the past. A home sex video of her and a former boyfriend leaked onto the internet in 2003, and in 2005 a computer hacker broke into her mobile phone address book.

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January 28, 2007

24 Rolls of Toilet Paper, a Tub of Salsa and a Plasma TV

Linda Curtis Schneider and her daughter, Nicole, at a Costco in Nashville. The family shops there for necessities — but often makes spur-of-the-moment purchases, too.

By JULIE BICK

SHOPPING at Costco often goes something like this: Customer comes to buy bulk necessities like toilet paper and dish detergent. Customer buys those items, as well as a pack of giant muffins, three cashmere sweaters and a power tool.

It’s more than impulse buying. It is a calculated part of the company’s business plan. Call it the Costco effect.

“We always come out with too much,” said Linda Curtis Schneider, who lives in Nashville. “It’s hard to get out of there for under $200.”

Even when they are on vacation, the Schneider family seeks out the nearest Costco to gas up their rental car, grab a familiar lunch and browse for local specialties to bring back home. They have bought cases of chocolate-covered macadamia nuts from a Costco in Hawaii, gallon-sized salsa in Tucson, Ariz., and a crate of ruby red grapefruits in Marina del Rey, Calif.

The Costco Wholesale Corporation, based in Issaquah, Wash., aims to offer an inviting mix of necessities and indulgences — bulk detergent and megapacks of yogurts, stocked along with giant plasma TVs and crystal stemware.

From its first Seattle warehouse in 1983, Costco has grown to more than 500 warehouse stores worldwide and finished the 2006 fiscal year with its highest-ever sales, $58.96 billion. Costco is the largest player in the warehouse market. The rival Sam’s Club, a division of Wal-Mart Stores, operates more than 670 warehouse clubs worldwide, with a sales volume of approximately $40 billion.

Richard A. Galanti, Costco’s chief financial officer, said that while a grocery store might stock 40,000 separate types of items, and a Wal-Mart might stock 100,000, Costco will stock only the 4,000 most popular items it can find. “We try to figure out what people really want,” he said.

So, along with purchases of jumbo packs of paper towels and other supplies, impulse buying can be a big part of the Costco experience, because only the most well-liked, trendy, and fast-moving items are stocked.

Those items include iPods, individually wrapped cheese sticks to put in a child’s lunch box, as well as a few of the latest fashions.

Recently, Ms. Schneider and her college-age daughter were excited to find Ugg boots, Smashbox makeup in leather cases and Seven jeans at their Costco in Nashville. “Costco seems to go for the upper crust in taste,” she said.

Some offerings rotate in and out of the warehouse based on the season, sales volume and other factors. As a result, people may go to Costco more often than necessary to see what is new, said Steve Hoch, a retail professor at the Wharton School of the University of Pennsylvania. “When they see something they want,” he added, “they’ll be likely to go ahead and buy it, because next time they return, the item may be gone.”

While most consumers become annoyed when something they expect to find at a store is out of stock, a Costco shopper is likely to think, “I should have gotten it last time,” Professor Hoch said.

Other retailers may also seek to entice shoppers by setting limits and creating scarcity. For example, Target offers limited-edition designer clothing and home furnishings that are unique to its stores, and that are often stocked for a period of only 60 to 90 days.

And at BJ’s Wholesale Club, customers may come for their everyday grocery items, “but if they spot some jewelry or the new capri pants at a great price they will be happier,” said Teleia Farrell, a company spokeswoman. BJ’s uses items like 42-inch televisions and topaz rings to turn “ho-hum shopping into an exciting environment,” she said.

It is the same at Sam’s Club, where “members enjoy looking throughout the club for unexpected deals,” said Susan Koehler, a spokeswoman for the company.

Temporarily stocked surprises are also a calculated part of the Costco shopping experience. “We try to have hundreds of items that are different each time a customer comes to the warehouse, to create a treasure-hunt atmosphere,” said Joel Benoliel, a senior vice president. “We’ll always have the same staples — the cereal, the detergent — and then we add in the ‘wow’ items.” But at the same time, there can be a comforting sameness to each cavernous location.

Psychological factors can strongly influence buying behavior, according to Pamela N. Danziger, author of “Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience” (2006). Shoppers can experience an emotional thrill when they spot a deep discount, or find a particular item before it disappears from the shelves, she said, and creating those kinds of feelings has helped Costco. “Shopping is recreational there,” she said. “People seek out this psychological reward.”

Ted Reisdorf, 43, chief executive of Paragon Custom Homes of Scottsdale, Ariz., goes to Costco once every month or two and stocks up on household supplies, to save him more frequent trips to the grocery store. Once he is there, however, he walks up and down every aisle to see “what jumps out” at him. Mr. Reisdorf usually adds some books, DVDs or baked goods to his cart. “I always buy stuff I don’t exactly need,” he said.

Everyone seems to have an opinion about the Costco shopping experience. Some say they avoid going there because they always spend too much money. Others say they do not mind overspending at Costco because the company treats its workers well. A typical full-time cashier will earn $40,000 a year plus benefits after four years with the company.

Others, however, decry the essence of Costco. Teri Franklin, a mother of two in Seattle, said that Costco fed American consumerism and waste. “Instead of a single board game, you’re offered seven shrink-wrapped together,” she said. “You’ll probably end up playing with a couple and the rest will sit in the closet. But you really only wanted one.” She said she was not tempted to buy anything beyond bottled water and diapers at Costco. “How many things do you need 42 of, really?” she asked.

FOR those who want to minimize impulse buying, consumer experts say, it is helpful to shop as infrequently as possible, to arrive at the store with a list and a budget, and to walk down only the aisles that contain an item on the list. Conventional wisdom would also say that it is a good idea not to shop when hungry.

But those are not the types of shoppers who have made Costco successful. Professor Hoch said that increasing impulse buying or the number of items bought per visit was crucial to the company’s success.

Costco makes the bulk of its profit by charging an annual membership fee for access to its stores, he noted. A larger membership allows the company to buy items in bigger quantities and to pass along savings to customers. Customers who buy more items may feel that the membership fee is worth paying, because the cost is spread over all the products they buy.

Current annual membership rates are $50 for an individual, couple or business, and $100 for an Executive Membership, entitling the customer to other services.

“People laughed at the idea of charging someone to shop at your warehouse, but our membership fees are north of $1 billion a year,” Mr. Benoliel of Costco said. The company has more than 24 million member households in the United States and Canada.

Crucial to the company’s continued growth will be people like the Schneiders, who find shopping at Costco both utilitarian and serendipitous. “I might be going in for lettuce,” said Ms. Schneider, who on the spur of the moment once bought a $2,000 baby grand electronic piano at Costco, “but if I come out with other things, I don’t mind.”