Media Industry Gives Burbank the Last Laugh : Growth: Booming entertainment business is helping revive a beleaguered economy, offset aerospace losses.

By PATRICE APODACA

Oct. 25, 1995 12 AM PT

TIMES STAFF WRITER

BURBANK —

Few cities have been as ridiculed, but these days Burbank can afford to laugh.

The butt of jokes dating back to the ‘60s comedy show “Laugh-In” and perpetuated by Johnny Carson, Burbank was until recently a fitting target. It was hot, smoggy and, in some areas, downright ugly. Adding injury to insult, Burbank lost nearly 14,000 jobs after its biggest employer, Lockheed Corp., packed up and moved in 1990.

But instead of being a poster child for aerospace downsizing, Burbank now stands as a glowing example of a trend that economists and local politicians are increasingly trumpeting: More than any other industry, the fast-growing media and entertainment business is helping to revive the long-beleaguered Southern California economy, and to offset the pain felt throughout the region due to aerospace industry shrinkage.

That growth is apparent throughout Burbank’s Media District. The city’s two movie studios, Walt Disney and Warner Bros., have ruled the box office for the past five years. They are bustling with production activity, thanks to the explosion in demand from overseas markets, cable TV and broadcast networks and new programming avenues such as computer games.

Facilities at NBC Studios in Burbank are also full to the brim. Scores of other enterprises--from sound companies to post-production firms to studio equipment suppliers--are bursting with work. More keep popping up all the time, quickly filling buildings vacated by ball bearing manufacturers and other former Lockheed suppliers.

There’s no end to the growth in sight. Disney and Warner Bros.--along with neighbor MCA, whose Universal Studios is just across the Los Angeles River from Burbank--have embarked on long-term expansion plans. And pending mergers promise to solidify their positions as the world’s dominant media concerns.

“There’s still a strong sentiment that somehow Los Angeles is weaker than it was 10 years ago because of a loss of manufacturing, and particularly that the Valley is hurting because of the loss of aerospace,” said Gary Anderson, a principal consultant at SRI International, a Menlo Park-based research group.

“That’s true,” Anderson said, “but it’s being replaced by an equally high-tech industry. Its product is up on the screen.”

To be sure, the startling growth of the media business can never fully compensate for agonizing aerospace cutbacks. Many of those who once helped design stealth fighters remain jobless, stuck in low-paid positions or have relocated elsewhere. For them, a transition to entertainment-related jobs isn’t always easy.

Nonetheless, Burbank, which is increasingly regarded as the unqualified--if unlikely--media capital of the world, has undergone a remarkable rejuvenation.

The city boasts the tightest office market in Southern California, a relatively low unemployment rate and growing tax revenues. The entertainment jobs being created are high-paying--industry salaries average about $45,000 a year--and the amount of money spent in Burbank has been growing at a 10% annual clip. Moreover, the spotlight on Burbank is helping brighten the economies of other communities nearby, such as Glendale and Studio City, where the studios have also channeled some of their growth. This, at a time when many municipalities are grappling with budget crises, depressed real estate values and high jobless rates.

Burbank City Manager Robert (Bud) Ovrom credited Burbank’s resurgence to a combination of luck and an aggressive, business-friendly municipal staff. Unlike Los Angeles, for example, Burbank has no gross receipts tax. And five years ago, with Lockheed’s departure imminent, the city had the foresight to develop a master plan to guide media industry growth.

So when Disney and Warner Bros. submitted their long-term expansion plans to the city, approvals took less than a year. By comparison, 20th Century-Fox Film Corp.’s growth plan took three years to win passage in Los Angeles.

Disney, whose work force in the Burbank-Glendale area has already grown 25% in the last four years to about 8,000, is continuing to gear up at its 44-acre Burbank lot under the 25-year plan passed in 1992. At the time, Disney projected spending $600 million to add 1.9 million square feet of facilities.

Among the first projects Disney undertook was a gleaming new building to house about 700 animators. The building was completed a year ago, and already “it’s overflowing,” said Peter Rummell, president of Disney design and development.

Disney has another office building under construction, and plans to begin work soon on two new sound stages and accompanying offices. Plus, Rummell estimates, Disney occupies space in about 25 buildings off the main lot in Burbank and nearby Glendale.

Rummell said that it’s unclear how Disney’s pending acquisition of New York-based Capital Cities / ABC, which operates the ABC television network, will affect the company’s long-range growth. But, he said, “it means the pressure is greater, not less” to accommodate Disney’s burgeoning empire.

The pressure is also apparent at Warner Bros., whose parent, New York-based Time Warner Inc., has its own mega-merger in the works with Turner Broadcasting, Ted Turner’s Atlanta cable television concern. Just last month, the Burbank City Council approved Warner Bros.’ 20-year plan to triple its local employment and add 3.3 million square feet of new facilities at a cost of $800 million.

That’s on top of tremendous growth at the studio during the past few years. Between 1992 and 1994, Warner Bros.’ work force in the Burbank-Glendale area grew by about 1,000, to 13,350. And so far this decade, several new buildings have been added at its Burbank lot, including office buildings, a state-of-the-art theater, a film archive and a wardrobe storage facility.

“The bottom line is we wanted to keep this our worldwide headquarters,” said Dan Garcia, Warner Bros.’ vice president of real estate and public affairs.

It isn’t just the studios that are bulging. At NBC’s West Coast headquarters down the street from Warner Bros., “all the studios are full” with production on TV programs including “The Tonight Show,” “Fresh Prince of Bel Air” and “Days of Our Lives,” said Jack O’Neill, NBC’s vice president of facilities. “Basically, we’ve never been busier.”

The growth has also spilled over into the intricate network of companies that provide media-related products and services, from law firms and banks to costume-rental firms and film suppliers.

Avid Technology Inc., for example, has seen its Burbank employment grow from eight in 1992 to 40. The company, which sells video and film editing systems, is moving to another building in the city because “we’re totally cramped” in offices rented just two years ago, said Stephen Goldsmith, Avid’s director of motion picture marketing.

Even the building that Columbia Pictures abandoned in 1990 when it moved to Culver City was quickly filled. Among the current tenants are radio station KIIS-FM and insurer Allianz.

But there’s also a downside to Burbank’s ballooning media industry. The city’s commercial real estate market has become so tight, and rental rates so high, that some firms are forced to look elsewhere for space. Rapidly expanding Saban Entertainment, which produces the “Mighty Morphin Power Rangers” children’s TV show, is moving to larger quarters in Westwood. Ovrom would love to land the new DreamWorks SKG studio, which is currently housed on the Universal lot. But most observers expect that DreamWorks will eventually set up shop at the huge Playa Vista project in Playa del Rey, and the studio is reportedly negotiating to locate its animation division in Glendale.

Nearly 1 million square feet of new commercial and industrial space is being built each year in Burbank, the city estimates. But Ovrom said there’s still a crying need for more, and he has high hopes that the abandoned Lockheed property will eventually be converted to entertainment industry use.

That process is slow in starting. One Santa Monica developer, M. David Paul and Associates, is in the process of buying a Lockheed building that housed the brains of the fabled Skunk Works operations, where top-secret stealth planes were once conceived. Paul is also negotiating to buy 10 acres of adjacent land and plans to develop the site into an entertainment-related business park.

The city is most anxious to get a 103-acre parcel that was the site of Lockheed’s B-1 bomber plant back in use. However, the land and underground water there were badly contaminated and are now being cleaned. Ovrom estimates the site will be ready for redevelopment within two years, after which he envisions the establishment of a “Media District North” on the grounds. But even if the property is determined to be clean, the shadow of former toxic contamination is “a big psychological issue” for prospective tenants, said Seth Dudley, senior vice president at the commercial real estate brokerage Julien J. Studley Inc. in Los Angeles.

Still, observers expect the studios to keep close to home as much as possible, despite mounting competition for media businesses from other parts of Southern California and other states. “The top executives tend to be controlling types who like to have operations close,” Dudley said. “For that reason, Burbank will still be a major focus of growth for this industry.”

Joel Kotkin, a public policy fellow at Pepperdine University, sees Burbank continuing to develop as a hub of an increasingly prosperous, expanding industry. “The infrastructure is already there,” he said. “It would cost a fortune to rebuild what is already there.”

Ovrom is also quick to note that efforts to spruce up “beautiful downtown Burbank” are serving to counter the town’s dusty, downscale image. A once run-down strip of San Fernando Road is now a restaurant and shopping mecca akin to Santa Monica’s Third Street Promenade. Down the street, the Media City Center shopping mall got off to a slow start, but sales are now picking up. New Comp USA, Barnes & Noble and Virgin Records stores will soon open, as well as additional movie theaters.

It’s a long way from the days when Johnny Carson’s “Tonight Show” cameras panned the city’s most unappealing back alleys.

The old jokes, Ovrom said, “don’t really bother me much.”

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Bustling Burbank

For decades, Burbank was a two-industry town. Then with the departure of aerospace giant Lockheed Corp., it became a one- industry town. But the remaining industry- entertainment-is growing so fast it is quickly replacing the lost aerospace jobs and is helping create a vibrant local economy.

Robust Employment Growth

Entertainment industry employment in the San Fernando Valley:

1987

No. of employees: 32,168

1992

No. of employees: 51,924

% change: 61%

Note: Employment figures are from companies involved directly with motion picture and television production.

Unemployment Rate

As of August, 1995

Burbank: 6%

California: 7.8%