Social Media: Opportunities and Dangers

With social media, healthcare providers have many tools at their disposal to help build their businesses. Social network sites can be a powerful tool in the hands of persons who know how to leverage it to its full potential. When social media is misunderstood or misapplied, it can turn into a time sink where many hours that could have been spent more productively in other ways to build your business. Since social media is easily misunderstood, it will help to clarify some of those areas.

One of the things that makes it confusing is that social media uses terms that people often assume they understand, like ‘networking’, yet in the realm of social media, it has very different meanings.

Social Media and Meetings

With 128 million people using the internet in the US, the way of reaching people and being relevant to their needs has changed. This means that the way of doing business has changed as well. The public now consults their phone for the best buys on products and services. They are also using their phones to purchase items. The changes in the way business is conducted also impacts healthcare.

Social Media offers many tools that you as a healthcare professional can use to build your business. With the use of social (interactive) media, the nature of business building has changed. Social network sites provide an interactive way of dealing with potential clients. In previous generations, the relationship between a healthcare provider and potential clients was limited to one way interactions dominated by the healthcare professional. Today, the patients talk back to you using Facebook, email, twitter or some other service, asking questions and want you as a healthcare professional to be responsive. If you provide good service, they can tell others, if your service is lacking, your reputation suffers much faster when they use social media.

In previous generations, any kind of marketing consisted of ads telling about the services provided and contact information. If the healthcare professional had social skills, they may even engage in networking as a way to develop their business. In previous generations, networking consisted of joining local business promotion groups in the local community. A healthcare professional typically joined the Chamber of Commerce, local professional group of their specialization, a business group like the lions or rotary or if they are really adventurous, toastmasters.

With social media, the groups that an aspiring healthcare professional joins have changed. Sure, there are still some of the old groups used in previous generations, which can be used. Social media provides more options. There are physician only sites like Sermo.com, which are a social media site devoted to only physicians.

In other healthcare areas, professional groups like the American Psychological Association and the American Association of Marriage and Family Therapy have developed their media presence. This allows the old professional groups to have a new place to meet on the internet.

In addition to those groups, there are groups on social media sites, themselves. LinkedIn has many professional groups on its site, as does Facebook. These groups vary by specialty. There are groups on oncology, depression, healthcare professional support, etc. Such groups often provide forums where you can discuss issues of concern to yourself as the healthcare provider. I recall a recent lively discussion on the existence on Sexual Addictions on LinkedIn, where healthcare professionals addressed the issue from many different perspectives. These provide a place to find out the latest information and to stay in touch with colleagues. These groups provide a forum where healthcare professional meet and connect with others sharing similar interests. This is a new application of old style social networking. The networking that occurred at monthly or annual meetings is now available on a daily basis. Meetings and relationship continue remaining an important essential for a healthcare professional to develop in building their business.

The New Networking and New Challenges

Social media is changing the application of the term ‘networking’ in new ways. With social media, the healthcare professional is faced with the new dimension when you have to deal with interactive media. In previous generations, building a practice involved the use of static media. With social media, the relationship between the healthcare provider and client becomes interactive. It is no longer one way with the healthcare provider telling the public that they are the expert and the patient has to accept that. Now the public talks back to you, wanting evidence of your expertise, caring and empathy. In the past, you could get away with just ‘being the healthcare professional’. In the age of social media, they want to know something about Dr. Jane, or Jack the therapist.

With the new application of ‘networking’ including the interaction with the client, healthcare professionals are in new game. The clients now ask questions and interact with them in an environment where the healthcare provider is not the one in control. The healthcare professional and the potential clients now share control. Potential clients now ask questions and engage in social interactions that did not exist ten years ago. With social media, the potential client is empowered.They know more and want more than they did ten years ago.

With social media, today’s patients often self-diagnose before seeing the healthcare professional. In one study 81% of respondents indicated that they expect to find help on the internet, including medical help. This means that the public is going to the internet, and its social media for their healthcare help including self-diagnosis. In one recent study 47% of those seeking medical information also made self-diagnoses. This practice is becoming so prevalent, there is a tendency to refer to Dr. Google. One of the big challenges related to this information is is that the public is not always verifying the veracity of information they obtain.

Not only are the public going to the internet looking for help, they are often diagnosing themselves with the information they have access to. Dr. Bryan Varabedian said “Information is the new third party in the exam room”. (Dr. Varabedian maintains a blog addressing the convergence of social media and medicine.) Healthcare providers building their business now have to deal with patients having and using more information.Some of the information is good, while some is not from proven sources. Another challenge is when patients have the right information but are using it in an unorthodox manner.

With patients knowing more, they have begun to self-diagnose their presenting issues or problems.The whole idea of patients daring to self-diagnose is seen as threatening by some healthcare professionals. In Texas, a physician’s group has sued the Chiropractors, podiatrists and family therapists because they dared to diagnose clients. This is a far cry from Pennsylvania, where all 277 of University of Pittsburgh Medical Center (UPMC) sent out e-mails, offering digital house calls. In that state, some patients receive a diagnosis without seeing a doctor (or any healthcare professional) in person or even speaking to one on the phone. It remains to be seen how those healthcare professionals will respond to patients diagnosing themselves. Today’s social media savvy patients also present with more information and ask more informed questions than previous generations. Healthcare professionals now have to be prepared to deal with this challenge of patients having a knowledgeable voice in their healthcare decisions. The patients of today do not always go along with healthcare choices, just based on your word. They may also compare your information with what they find on the internet. This means the healthcare professional needs to provide good information and be on top of the latest trends and developments in their field.

The input of patients in healthcare decisions has great potential in improving the quality of healthcare. By using social media, the patients are not only making informed choices, they are speaking out. With patients having a voice, the healthcare providers who listen to their voices and respond will be seen as the expert. This means that healthcare will have to become more responsive to patients overall if they want their business to thrive.

Potential patients also want to know about their healthcare providers. When patients are often limited as to who the patient can see, when the patients do have some choice, they often have questions and want to interact with the provider. Social media provides a way for them to “get to know” their healthcare provider. Providers that learn how to use social media in dealing with patients will be ahead of their competition. Those providers will also need to develop written “social media policies” in dealing with those patients. Healthcare providers using social media will need to be clear concerning the boundaries between themselves and clients, specifying what information they will share about themselves and their accessibility.

In using the new social media, the public is now going to Facebook or Google to find help before they go to the yellow pages. This means that healthcare providers who do not have a social media presence will be passed over. They will not even by considered by potential patients that are seeking out healthcare.

The Importance of Social Media

When millions of people are using social networks, those healthcare providers who choose not to be a part of it by exercising ‘social media abstinence’ are missing out on the changing way that people interact. Healthcare professionals who choose to avoid social sites altogether are crippling themselves. The public now use them extensively. Whether in the use of their computers or phones, or both, it is a reality. Social media has changed the way people interact in the marketplace.

Dr. Ross Speck, who researched social networks back in the 1970′s saw the changes coming. He stated, “If the psychotherapist is to maintain a healing relationship with human beings in this predicament [social change]-if he is to be of value in relieving distress-he has to innovate”. Although Dr. Speck’s comments were directed at psychotherapists, it has application to any healthcare professional in practice today. It is becoming important for healthcare providers to know how to use social media, or hire someone for them who does.

Dr. Ken Cohn MD, has observed the importance of the new media and medical practice. He often addresses this subject. He sees the time for healthcare providers to act on social media is now, “…because physician leaders over the next 2 years will influence patterns of care delivery for the next 25 years”. Social media is also a way for an aspiring healthcare professional to compete with much larger competition, whether it be from other people in healthcare, publishing or speaking. Using social media removes the size advantage that some exploit in providing healthcare.

Dr. Ken Cohn who has pioneered collaborative work between physicians, hospitals and patients has used the new media to present the message of his work to others. In promoting his book, “I see social media as a great equalizer.” He has seen social media improve the quality of care for hospitals. He has also seen how he, with his book could compete with larger publishers using social media.

Social media also allows the little person just starting out to make a name for themselves. A highly responsive healthcare professional can establish a name for themselves with the public rather than always having to be dependent on the power brokers of established practices.

Social sites are is changing healthcare, including how healthcare providers build their practice. It changes how clients find them, interact with them, and services are delivered. It also changes the way that healthcare providers will find potential patients. Knowing how to use and master social media is critical for any healthcare professional wanting to build their business in today’s social media saturated culture.

Social Media Tools

Once you as a healthcare provider has a social media policy, you need to use the tools available. Below are some of the social media tools and ways they can be used by a healthcare professional in building their business.

Facebook: Facebook is the largest social community. With increasing frequency, people search Facebook for their needs. You can have business page to establish awareness of your business. Given the size of Facebook, it is critical that the healthcare provider have a page in order to remain relevant.

LinkedIn: This social site allows healthcare professionals to network with other professionals. 80% of small business owners in one 2011 survey report using LinkedIn. Having a profile will let others know that you are in business and lead to important business leads. Building a business often involves joint ventures. LinkedIn is a way to find potential partners for joint ventures.

Twitter: This site provides a platform to keep people informed of “what is going on”. The public often likes to know about what is new. Keeping them informed as to events and new items coming out. In the US, 13% of the population online use twitter.

Digg: This news site can be used to develop a following for healthcare providers.

Google: Although not often seen as a social media, it has many functions that involve social interactions. This is where people look for services. Having a good google ranking can make a difference in your business visibility.

Once a healthcare provider has visibility, they will need to use social media in interacting with their potential clients.

The healthcare provider can use these tools for announcements, patient education, answering frequently asked questions, dealing with common healthcare issues, and healthcare topics that would be of interest to them.

Summary of how to use social media

To sum up how a healthcare professional can use social sites to build their business the following steps can be taken:

1. Network with other professionals and people in the local community.

2. Provide good patient information. Become a resource. For example, if you are a chiropractor, you could write a series of articles, blog posts, etc. on exercise, health eating, how to lift heavy loads, etc. With each article, it would enhance your expertise in the eyes of potential clients.

3. Have a written social media policy, then use social media to promote your business.

4. Interact on social sites regarding questions and concerns. Be willing to answer questions and make yourself accessible on such sites. You can use them to post interesting articles, videos, etc.

5. Know how to use social sites to their full potential. Social media has many opportunities. You can set up a blogtalk radio show, have regular episodes on your own YouTube channel, have book club on LibraryThing. You are limited only by your own imagination in reaching out to clients and provide good quality patient care.

6. Let the community know that you are accessible on social sites. Include your twitter address, or Facebook logo on your advertising.

The bankruptcy of the Association of Volleyball Professionals Tour did not leave the sport’s premier event stuck in the sand: Several parties are looking to take control of it. They include the Olympic sanctioning body for U.S. volleyball; sports marketing firms; and the lead AVP creditor, who bought the tour’s assets out of bankruptcy.

“The AVP brand is the most important brand in beach volleyball in the world. It’s going to be tough to relaunch it, but I don’t think it will ever go away,” said Dave Williams, managing director of beach volleyball for USA Volleyball, the Olympic sanctioning body.

The Manhattan Beach City Council was ready to move forward with a plan at its Dec. 21 meeting to give control of the tournament to a joint venture of USA Volleyball and International Management Group, a New York-based sports marketing firm that handles everything from Indian cricket to the Rugby World Cup.

The joint venture offered to sanction and manage a professional volleyball tournament in September as part of a short pro tour. But the bid was strongly opposed by two other companies, including Ion Sports, an L.A. company that owns a cable network and the media rights to the Manhattan Beach event.

However, the firms had not fully developed a proposal, and the council postponed a decision until Jan. 18.

In any case, the beach city wants to resuscitate an event that was once its leading attraction, generating taxes for the city and revenue for its businesses.

“Whoever takes over needs to bring us back to the days when AVP was at its height,” said Manhattan Beach Mayor Richard Montgomery. “Hotel rooms were filled, downtown restaurants were packed, parking lots were full and everyone does well.”

Pro boycott

Last year, AVP shut down operations just prior to the Aug. 21-22 tournament. It had lost several blue-chip sponsors, ran out of cash and failed to find investors. A subsequent bankruptcy filing indicated that the company had assets of just $184,000 and debts of $4.5 million.

The city stepped in at the last minute and operated the tournament with help from Williams, a former AVP executive hired by USA Volleyball earlier in the year. The tournament offered just $25,000 in prize money and many professionals boycotted the event, which normally attracts the sport’s top names.

City officials have pledged to find an operator that is financially stable and can attract top sponsors. It also would like to charge a fee or get a cut of the action, and not just have security and other expenses recouped.

USA Volleyball’s joint venture is looking to produce an event with a total of $150,000 in prize money. (In 2009, AVP awarded $250,000 in prize money at the event.) Manhattan Beach would be the culmination of a five-stop Beach Championship Series that would include events in previous AVP tour cities including Hermosa Beach, Huntington Beach and Chicago.

However, players are a bit leery. After the AVP bankruptcy, players formed an association to represent their interests, with a board that includes Olympic gold medal winners Todd Rogers and Kerri Walsh. Hans Stolfus, a former player acting as spokesman for the association, said that aside from any concerns about USA Volleyball, the players are focused on maximizing prize money.

“It’s not to say USAV isn’t welcome or won’t do a good job, but players want to be able to negotiate with private enterprise to keep the sport as lucrative as it once was,” Stolfus said.

Selling name?

Meanwhile, Ion acquired all media rights to the event from the city last year after the AVP bankruptcy. It set up an event website and carried the tournament on its Ion Television cable channel. It holds the rights to the upcoming event and has an option for future ones.

“We are already invested in the Manhattan Beach brand, and we would like to continue building that relationship with the event and the town,” said Ion Chief Executive Dave Behar.

Ion may make its own bid or partner with Cleveland-based Elevation Group, an International Management spinoff that is run by Steve Lindecke, who served as volleyball star Karch Kiraly’s agent. Elevation runs several grassroots and amateur beach volleyball tournaments.

Meanwhile, AVP saw its assets sold in bankruptcy court in December to an investment group that was the league’s largest stakeholder, RJSM Partners, which had invested $3.8 million in the tour and controlled 72 percent of the company. Other shareholders, who voted down a $36.9 million acquisition of the company in 2008, were left with nothing.

Nick Lewin, managing partner of RJSM, said it may be difficult for the firm to rebuild the tour. So it’s possible that instead of bidding to do so, the company may choose to sell the AVP name to any new tour operator, which otherwise would have to come up with its own name.

“It doesn’t look that way, but we could look at that, too. That’s a financial decision.” he said. “While the (AVP) name may be damaged in the sports marketing world, in consumers’ eyes, it’s still associated with beach volleyball.”

It’s a gamble because federal law prohibits interstate online wagering. However, individual states can authorize it under the same legal doctrine that permits lotteries. His company’s prospects brightened last week when a bill was introduced in the California Assembly to license up to three online poker sites.

“I think there is a real opportunity for technology to open up the potential for online gaming to help states generate new revenue,” Painter said. “It’s such a powerful market you can’t ignore it.”

Globally, online poker betting is a $25 billion industry, according to the American Gaming Association, with U.S.-based law-breaking players accounting for about one-third of that total.

Painter’s partners in the company, U.S. Digital Gaming, are Richard Baskin, a music and film producer who founded Internet video-on-demand service Intertainer, and Richard “Skip” Bronson, a shopping center developer and former partner of Steve Wynn at Mirage Resorts in Las Vegas.

Bronson runs USDG while Baskin and Painter continue to work at their own ventures. USDG plans to sell software packages for running online poker sites.

Painter, whose auto websites are CarsDirect.com, Zag.com and TrueCar.com, started a business incubator called BrightHouse in 2007 to find problems and develop companies to solve them.

When Bronson and Baskin approached BrightHouse with the intrastate solution to illegal online poker, Painter saw the potential and signed on.

USDG started in 2008 and has 20 employees. The firm contracts with lawyers, lobbyists and political consultants in more than half of the state capitals. Bronson said for competitive reasons he wouldn’t disclose the states where USDG is active, but he noted that in addition to California, Iowa, New Jersey and Florida have legislation in the pipeline to legalize online poker.

‘Matter of when’

“I guarantee that it will be legal. It’s only a matter of when and where it starts,” Bronson said. “It will occur within the next 18 months, and once the first state does it, there will be a domino effect.”

A huge market of poker players already exists, but the bettors are wagering via illegal sites based in foreign countries. A legislative analysis in Sacramento estimated 1 million Californians play online poker illegally, and other research cites 10 million people in the United States. USDG’s sales pitch is that states should legalize the activity and tax it.

“Nearly every state is near bankruptcy, while billions of dollars are leaving through illegal gaming sites,” Painter said. “That seems a ridiculous outflow of local capital. U.S. Digital Gaming is about helping the states to conduct legal, regulated gaming and to help plug those budget gaps.”

States have two options: They can run a poker site themselves the way they run lotteries, or they can license private groups such as Indian tribes, card clubs or casino operators to run a site and then tax the revenue.

Either way, USDG would collect a percentage of the revenue in return for providing the software system.

Once a state has a financial interest in gaming, Bronson expects the state’s attorney general will step up enforcement against illegal offshore competitors. At present, no one in the United States has been arrested for playing poker illegally under the federal Unlawful Internet Gaming Enforcement Act.

In addition to the lobbying effort, USDG is working on the technical side of its software package. When built out, the package will include age and geographic location verification of players for legal compliance. It also will include security features, online banking to handle the enormous volume of transactions, an ad server to generate additional revenue and immediate tax collection for the state.

Steep odds?

Lou Kreiger, editor of PokerPlayerNewspaper.com, an Inglewood-based website, said USDG faces big political odds.

Historically, established gambling outlets such as race tracks, card clubs and Indian casinos have preferred the status quo rather than a law that benefits competitors. Bills to legalize online poker similar to the one introduced last week in Sacramento have died in the past due to infighting among Indian tribes.

“For California, it would be a hard change, not because of the market, but because of the politics,” Kreiger said.

Bo Bernhard, director of research at the University of Nevada, Las Vegas’ International Gaming Institute, said the big casinos want federal legalization rather than laws passed by individual states. If legalization and taxation occurs nationally, the Las Vegas casinos will marshal billions of dollars to buy established poker sites in the United Kingdom and launch them legally in the United States.

“Size is the advantage that Las Vegas gaming companies already have,” Bernhard said.

Federal legalization would wipe out USDG’s intrastate marketing plan. But Bronson believes that growing financial pressures on states will force them to act first, and whoever gets a state-approved license will become a potential USDG customer.

So far, USDG hasn’t made a single sale. It has supported itself with cash from the three founders and seed money provided by private investors.

Bronson said the company plans another round of equity financing in the next six months for expansion, but for now USDG has sufficient operating capital.

Painter is convinced his timing will pay off.

“There aren’t many times when the political stars align with opportunity,” Painter said. “I believe in USDG.”

So in 2006, they hired two of that game’s developers and launched their own company, Riot Games, with the backing of two venture capital firms. The company released its fantasy adventure game, called “League of Legends,” in October of last year. It attracted more than 2 million online players within nine months.

Now the Culver City company is doing something unusual: It will add about 100 employees to its current 140 just to keep up with massive demand for new game features.

It’s a rare bright spot in this era of persistently high unemployment in Los Angeles, said Nancy Sidhu, chief economist at the Los Angeles County Economic Development Corp.

“There aren’t an awful lot of parts of the economy where jobs are being added,” she said. “They’re hiring in advance of their expected growth in 2011. That’s very progressive of them and suggests they have a lot of confidence in themselves and their product.”

Beck, Riot’s chief executive, noted that the jobs are the result of “League of Legends’ ” popularity.

“We grew slowly as we started,” said Beck, who co-founded the company with Merrill, now president. “Since the launch of the game, growth has been much more rapid.”

“League of Legends” is a free online game in which players pick a team and try to destroy opposing players. Such games attract millions of online players thanks to a free-to-play model, said David Cole, an analyst with DFC Intelligence, a San Diego video game market research firm.

Instead of generating revenue from subscriptions or sales like most other games by American developers, free-to-play games generate money from players who pay small fees for extra features such as new characters, weapons or even holiday-themed costumes. Prices range from a dollar or two to $15 or so for such add-ons.

Beck and Merrill were inspired by the success of free-to-play game “Defense of the Ancients,” which drew more than 7 million players after its launch in 2003. That’s a lot of players. The problem is not many spend money.

“Players can play as long as they want without putting any money into the game,” Beck said. “In fact, some of our best players have never spent any money in the game.”

So it’s challenging for online games to bring in cash.

“With these games, you’re not talking hundreds of millions of dollars in revenue,” Cole said.

Adding on

Beck would not release revenue for Riot but said that the company makes enough money from sales of the add-ons to hire the 100 new workers and expand its office to house them. The company also makes money from selling a special-edition version of the game in stores for $30.

“Surprisingly enough, some people buy the game in stores,” Cole said. “They call it a collector pack and throw in figurines or additional bonus features.”

As the game launched last year, Riot employed 50 people at its office in a Culver City corporate park. Since then, the company has nearly tripled its staff to 140 and opened a European office in Dublin, Ireland.

The company’s website is now advertising job openings in almost every department, including art director, marketing director and web developer. Beck said Riot is most focused on hiring programmers and developers who can add elements to the game to keep up with high player demand.

Riot has already expanded its current office space twice to keep up with its growing staff. Now the company plans to move into a building somewhere on the Westside that will be three times the size of its current digs to accommodate its new employees, Beck said.

Sidhu said that some video game companies are growing, including those that boomed when their games launched. But not every company can keep up the momentum.

“There are companies in the video game sector that expanded when their games came out,” she said. “And they’re now finding that they have to shrink because there is so much competition.”

Riot has raised $20 million from venture capital firms Benchmark Capital and Firstmark Capital, an approach that is unusual in the world of video games.

Most often, game developers forego venture funding in favor of deals with large publishers such as Activision Blizzard or Electronic Arts. But because primary distribution for “League of Legends” is through online downloads instead of retail sales, Riot wouldn’t have benefited from a publishing deal, Beck said.

“We were interested in being very player focused, and to us that meant running ‘League of Legends’ as a service, with regular updates. We also wanted to provide the game for free,” he said. “Those factors made both a traditional, completion-based, sales revenue-sharing deal a challenge, and it made starting ‘League of Legends’ within a large corporation impractical.”

The industry’s most successful companies are largely South Korean, and better established. One of the most popular games in Korea is “MapleStory,” a role-playing game from developer Wizet that has more than 100 million subscribers worldwide.

Free-to-play games have been popular in Asia, especially Korea, for several years because Internet broadband speeds are faster and able to better accommodate the games’ complex graphics.

“A lot of the big competitors are coming from Korea,” Cole said. “Those companies have been very successful over there and are able to fund expansion worldwide.”

The online game market in the United States grew slowly during the last four years, but Cole believes it could see a boom in the not too distant future. He points to growth at small studios like Riot as a sign that the market is finally taking off.

“If you ask developers, the growth has been much slower than expected,” he said. “It’s getting to the point where people are starting to take notice.”

Using a 90-day workout program called Power 90, she shed 15 pounds. That was in 2003. Her enthusiasm later led her to become one of the first coaches for the Beachbody LLC company. She now earns as much as $16,000 in commissions a week. And she’s one of 450,000 coaches who have helped the Santa Monica company flex its muscles in the $100 billion-plus American fitness industry. The coaches promote the company’s workout programs and other products, and Beachbody has doubled its sales since 2008.

“It’s completely changed my life,” says Morrow, 40, who has since added two kids, bought a bigger house and purchased a more expensive car. “We are blessed beyond all measure.”

The company’s signature product is P90X, a 90-day “extreme” workout program designed for people who are ready for intensive exercise. For $120, a customer gets 12 exercise videos on DVD; detailed instructions on how to follow the program; a nutrition plan with eating guidelines; and, most importantly, lifetime access to the company’s website – Beachbody.com – for personal support and guidance from members, like Morrow, of the company’s amateur coaching team.

“The idea is to re-create the feel of an authentic gym without the commute or the hassle of parking,” said Beachbody Chief Executive Carl Daikeler, 47.

Other Beachbody programs offer variations on the theme.

The $120 Insanity program, he said, is designed to appeal to would-be athletes aspiring to participate in marathons or organized sports. Another program, TurboFire, is aimed at women who “love the group exercise atmosphere but don’t have time for the gym.” A third program – BodyGospel – uses Bible quotes and religious music to get churchgoers to work out.

In addition to the exercise programs – priced from $40 to $120 – the company sells accessories such as weighted gloves, chin-up bars, nutritional supplements including multivitamins and energy drinks, plus something called Shakeology – a meal-replacement vegetable-and-protein shake costing $4 a pop.

Marketing innovation

The products are marketed in two ways: one, through widely aired infomercials featuring videos of the workouts and before-and-after shots of exercise buffs, and two, the network of coaches who advise newcomers and promote the company’s products.

Daikeler said Beachbody spends about $100 million annually on the 30-minute infomercials. Currently, there are eight airing nationally, mostly in the wee hours on cable networks. An additional 10 are in production, with a total of 12 expected to be airing by next month.

In terms of money spent, analysts said, the company is the biggest infomercial producer in the health and fitness industry.

But Daikeler credits the company’s success to its tens of thousands of coaches serving an estimated 1.2 million customers nationwide. To become a coach, a participant must complete an exercise program and get an authorization from his or her own coach. The authorizing coach gets a percentage of the new coach’s sales under what the company calls a network marketing program. To get into business, coaches pay $40 to set up an Internet store and a monthly $14.95 maintenance fee.

They are expected to be available online to help new customers assigned to them, for which they earn a 25 percent commission on each $120 bag of Shakeology they sell.

“We are the first company that inspires people to stay in shape by providing a financial incentive,” he said.

Peter Davis, chief executive of Idea Health and Fitness Association, a San Diego trade group for fitness professionals, said the company has tapped into a desire.

“There are lots of people who would rather exercise at home and Beachbody does a great job reaching that segment by bringing more credibility and a wider breadth of sophistication to the infomercial niche,” said Davis.

However, he noted that many Beachbody programs are so rigorous that they’re not for the average person.

“The criticism you hear is that you have to be in fairly good shape to start,” he said. “The programs are very hard; you have to ease into them to not get injured.”

Most Beachbody coaches are not certified trainers, and Davis said it’s important that they don’t cross the line and give fitness instruction beyond encouragement and sales.

“If they bridge the gap between selling products and actually providing training themselves, I see some potential dangers,” he said.

Gregory Florez, a spokesman for the American Council on Exercise also based in San Diego, seconded that.

“The good news is that it helps with the old notion of ‘If I can do it, you can do it,’” he said. “The flip side is that if they’re not experienced they can dispense, at best, borderline information and, at worse, information that can get you hurt.”

Tom Mikkelsen, who left a well-paying job in Northern California to earn $60,000 a year coaching from his home in Lomita, downplays such concerns.

“I give them more support than advice,” he said of his customers. “I definitely give them a disclaimer up front that I’m not a doctor, nutritionist or certified trainer.”

The criticism doesn’t faze Daikeler, who believes the company has huge potential.

With sales of about $420 million last year – double the amount in 2008 – Daikeler expects annual sales to reach at least $1 billion by 2013. And his goal for the coaches: a million of them serving 100 million customers within five years.

“It’s kind of like a snowball,” he said of the company’s rapid growth. “What we’re doing is a really big deal.”

Beachbody LLC

FOUNDED: 1998

HEADQUARTERS: Santa Monica

CORE BUSINESS: Creating and selling fitness programs and related products.

EMPLOYEES: 345, up from 242 in 2009.

GOAL: To create new programs aimed at children, seniors and those with limited mobility in the foreseeable future.

THE NUMBERS: Sales have doubled in the last three years, to about $420 million for 2010.

It’s a gamble because federal law prohibits interstate online wagering. However, individual states can authorize it under the same legal doctrine that permits lotteries. His company’s prospects brightened last week when a bill was introduced in the California Assembly to license up to three online poker sites.

“I think there is a real opportunity for technology to open up the potential for online gaming to help states generate new revenue,” Painter said. “It’s such a powerful market you can’t ignore it.”

Globally, online poker betting is a $25 billion industry, according to the American Gaming Association, with U.S.-based law-breaking players accounting for about one-third of that total.

Painter’s partners in the company, U.S. Digital Gaming, are Richard Baskin, a music and film producer who founded Internet video-on-demand service Intertainer, and Richard “Skip” Bronson, a shopping center developer and former partner of Steve Wynn at Mirage Resorts in Las Vegas.

Bronson runs USDG while Baskin and Painter continue to work at their own ventures. USDG plans to sell software packages for running online poker sites.

Painter, whose auto websites are CarsDirect.com, Zag.com and TrueCar.com, started a business incubator called BrightHouse in 2007 to find problems and develop companies to solve them.

When Bronson and Baskin approached BrightHouse with the intrastate solution to illegal online poker, Painter saw the potential and signed on.

USDG started in 2008 and has 20 employees. The firm contracts with lawyers, lobbyists and political consultants in more than half of the state capitals. Bronson said for competitive reasons he wouldn’t disclose the states where USDG is active, but he noted that in addition to California, Iowa, New Jersey and Florida have legislation in the pipeline to legalize online poker.

‘Matter of when’

“I guarantee that it will be legal. It’s only a matter of when and where it starts,” Bronson said. “It will occur within the next 18 months, and once the first state does it, there will be a domino effect.”

A huge market of poker players already exists, but the bettors are wagering via illegal sites based in foreign countries. A legislative analysis in Sacramento estimated 1 million Californians play online poker illegally, and other research cites 10 million people in the United States. USDG’s sales pitch is that states should legalize the activity and tax it.

“Nearly every state is near bankruptcy, while billions of dollars are leaving through illegal gaming sites,” Painter said. “That seems a ridiculous outflow of local capital. U.S. Digital Gaming is about helping the states to conduct legal, regulated gaming and to help plug those budget gaps.”

States have two options: They can run a poker site themselves the way they run lotteries, or they can license private groups such as Indian tribes, card clubs or casino operators to run a site and then tax the revenue.

Either way, USDG would collect a percentage of the revenue in return for providing the software system.

Once a state has a financial interest in gaming, Bronson expects the state’s attorney general will step up enforcement against illegal offshore competitors. At present, no one in the United States has been arrested for playing poker illegally under the federal Unlawful Internet Gaming Enforcement Act.

In addition to the lobbying effort, USDG is working on the technical side of its software package. When built out, the package will include age and geographic location verification of players for legal compliance. It also will include security features, online banking to handle the enormous volume of transactions, an ad server to generate additional revenue and immediate tax collection for the state.

Steep odds?

Lou Kreiger, editor of PokerPlayerNewspaper.com, an Inglewood-based website, said USDG faces big political odds.

Historically, established gambling outlets such as race tracks, card clubs and Indian casinos have preferred the status quo rather than a law that benefits competitors. Bills to legalize online poker similar to the one introduced last week in Sacramento have died in the past due to infighting among Indian tribes.

“For California, it would be a hard change, not because of the market, but because of the politics,” Kreiger said.

Bo Bernhard, director of research at the University of Nevada, Las Vegas’ International Gaming Institute, said the big casinos want federal legalization rather than laws passed by individual states. If legalization and taxation occurs nationally, the Las Vegas casinos will marshal billions of dollars to buy established poker sites in the United Kingdom and launch them legally in the United States.

“Size is the advantage that Las Vegas gaming companies already have,” Bernhard said.

Federal legalization would wipe out USDG’s intrastate marketing plan. But Bronson believes that growing financial pressures on states will force them to act first, and whoever gets a state-approved license will become a potential USDG customer.

So far, USDG hasn’t made a single sale. It has supported itself with cash from the three founders and seed money provided by private investors.

Bronson said the company plans another round of equity financing in the next six months for expansion, but for now USDG has sufficient operating capital.

Painter is convinced his timing will pay off.

“There aren’t many times when the political stars align with opportunity,” Painter said. “I believe in USDG.”

Hollywood-based J2 announced Dec. 6 that it had acquired Protus IP Solutions Inc. of Ottawa, Canada. The $213 million deal gives the company access to 500,000 subscribers, expanding its hold on the fax and e-voicemail markets.

With the deal, J2 will command 44 percent of the faxing market, and most of its remaining competitors are tiny.

“This was a big acquisition for them,” said Peter Davidson, president of Davidson Consulting in Sturgis, Mich., which does market research for the fax and communication industries. “It puts them totally in control of the market.”

The company provides communication services for businesses, including voicemails transcribed by voice recognition software. Its primary business, however, is helping businesses transition from traditional fax machines to online faxing.

What is online faxing? Using J2’s technology, customers can send scanned documents from their computers to fax machines, e-mail accounts or other computers via Internet phone. The company’s service, called eFax, costs $17 a month per phone number compared with higher costs, as much as several hundred dollars a month, for a landline fax.

“We take telephone numbers and connect them to the Internet,” said Hemi Zucker, the company’s chief executive. “Our largest success is with fax.”

In its 15-year history, J2 has become the market leader in providing online fax services. The 400-employee company is headquartered in a high-rise across from Grauman’s Chinese Theatre on Hollywood Boulevard.

Protus, a private company, reported $72 million in revenue last year. That compares with J2’s revenue of $246 million in the same span. The largest remaining sizable competitor is CBeyond in Atlanta, but it is smaller than Protus.

In addition to expanding J2’s fax customer base, the acquisition also gives J2 access to Protus’ Internet voicemail customers and its e-mail marketing product, Campaigner. J2 plans to integrate Protus’ fax and voicemail services and customers with its own eFax and eVoice products.

“We think it’s very important to grow the number of overall relations that J2 has,” said J2 President Scott Turicchi, who sees an opportunity for cross-selling. “Many of our customers buy a single service a la carte, and we want to begin to expose more of our services to an increasingly larger customer base.”

Purchasing power

The acquisition of Protus was J2’s eighth purchase in the last year and 31st since 2000. Before Protus, its most recent acquisitions were Miami-based Venali Inc. and Dublin, Ireland’s KeepITSafe Data Solutions Ltd., companies that both provide cloud-based online backup services for businesses.

“Acquisitions are core to our basic operational approach,” Turicchi said. “A lot of the companies in our space tend to be very small, so most of the deals are financially immaterial to us.”

That’s because J2 is sitting on a significant pile of cash. In the third quarter of this year, the company reported about $272 million in cash and investments. The company’s cash comes from the low cost of providing its telecom services – only about $2 per month – compared with the $17 subscription fee.

J2 financed its purchase of Protus with cash on hand. The company will incur $15 million in expenses from the deal in the next nine months.

Daniel Ives, an analyst at Arlington, Va.-based FBR Capital Markets who follows J2, said the acquisition was a smart move for the company.

“There was pressure for them to do a bigger acquisition that would be more of a game-changer rather than small acquisitions,” he said. “Anytime you have a mature business, you need to make moves to find further growth initiatives.”

Zucker noted that the recent acquisitions helped J2 grow despite the recession, and he doesn’t see the fax market maturing anytime soon. Instead of ditching faxes altogether, businesses are moving them from machines to the Internet. E-mails might seem to replace faxes, but faxes still make it easier to send documents on paper or in computers.

“We’re not in the business of creating fax usage, but in replacing it,” he said.

In the next four years, the market for Internet fax services is expected to grow by 11 percent for individuals and 15.5 percent for businesses, according to a study from Davidson Consulting.

In a step to make Internet faxing easier for consumers, J2 recently released an iPhone application that lets people scan documents using the phone’s camera and send them through a J2 eFax account. The company also signed a deal with Hewlett-Packard in September to install its eFax software in the computer giant’s newest machine, which scans, copies and prints files. Instead of connecting the machine to a fax line, eFax connects the device to a wireless Internet signal to send documents.

Zucker acknowledged that fax usage has decreased because of the Internet and e-mail, but he doesn’t worry as long as the need for faxing still exists.

“We don’t care how often people are using the fax, we just care that they need it once in a while,” he said.

The clash finds city officials trying to outmaneuver a group of businesses led by G&L Realty Corp., a Beverly Hills company that owns five medical office buildings in the city. G&L has spent more than $100,000 to place a measure on the March municipal ballot that mandates two hours free parking at city lots.

Beverly Hills isn’t keen on letting go of the parking revenue, so it has taken a two-pronged approach in the face of the measure’s popularity: It filed a legal challenge to the measure and created its own ballot measure that would provide three hours free parking – but to residents only.

“It’s extraordinarily rare in California for a city to file a pre-election challenge,” said Harvey Englander, a noted political consultant hired to orchestrate G&L’s campaign for the initiative. “We just don’t understand why the City Council doesn’t want the voters to vote on this.”

The response from Councilman John Mirisch at a council meeting last week: “The self-serving G&L initiative has one goal and one goal only, which is to provide government-subsidized funding to benefit a private developer and to create an unfunded mandate.”

Beverly Hills is already generous with its parking. Some free parking is available in most of its public lots. Of 13 nonmetered city-owned lots, seven offer two hours of free parking before 6 p.m. Five others provide one hour free, and one is pay as you go. The G&L-supported initiative would establish two hours free parking in 11 of the 13, and expand it into the evening.

G&L’s tenants and other local businesses want more free parking for their clients and customers, but the city may not be in a position to afford it. Like other cities, Beverly Hills has struggled to stay out of the red during the downturn. Officials have cut $27 million from the budget in the last two years, and claim the two-hour parking initiative would cost it $1.3 million annually.

Last week, officials put their own measure on the same March 8 ballot. It would guarantee three hours of free parking during daytime hours at 12 of the 13 lots, but only for Beverly Hills residents. And instead of extending free parking during evening hours, evening rates would be cut by 50 percent. It is expected to cost the city $400,000 in lost revenue annually.

Finding support

It isn’t the first time G&L has inserted itself into city politics. Last year, it was one of many local businesses to successfully campaign against Measure P, which would have raised certain business taxes in Beverly Hills.

The company also found itself debating city officials earlier this year on the benefits of medical offices, in light of a proposal to limit new medical office space. G&L said it has no plans to develop new offices, but commissioned a study that touted the positive economic effect of the health services sector in Beverly Hills.

G&L’s latest campaign was awakened this summer when the city’s Traffic and Parking Commission recommended getting rid of free parking at a Bedford Drive city parking structure, one of the busiest in Beverly Hills. The City Council didn’t follow the recommendation, but the company wasn’t placated.

G&L’s five buildings, which contain medical tenants with patients who come and go, are clustered around the Bedford lot, which only offers one hour free.

The company owns three parking lots in the area, including one stand-alone garage, totaling 689 parking spaces. It charges a maximum of $14.50 for two or more hours, so clients and customers often use the free parking at the city lot. Other area businesses also benefit from free parking at the Bedford.

G&L decided to take matters into its own hands. In addition to Englander’s firm, it hired a law firm to draft an initiative and another consulting firm to gather signatures to put it on the ballot. Unsurprisingly, the drive quickly found support among residents as well as businesses eager for any competitive advantage over neighboring shopping districts. New allies include Marcia Caden, a local resident who has run a jewelry business in the city for more than three decades and is one of the initiative’s sponsors.

“I told them I would do anything they need me to do to support this issue,” said Caden, whose business is on Camden Drive near a city lot offering one-hour free parking. Businesses generally favor the G&L proposal, she added, because it would help lure shoppers from everywhere, not just from other areas of Beverly Hills.

By September, proponents gathered more than 2,600 signatures, well over the 10 percent of registered city voters required for a ballot measure. Englander said the campaign to get the measure on the ballot has so far cost $108,000.

But officials claim the parking initiative is improperly written. After both the city clerk and council approved G&L’s measure for the March ballot, officials challenged it in court, naming City Clerk Byron Pope and Caden as defendants. Officials claim the initiative is illegal in part because rather than act as an ordinance itself, it instructs the council to enact legislation. The lawsuit it set to be heard Jan. 4.

Pope was away at a conference and unavailable for comment last week.

Officials quickly followed the lawsuit with their competing measure, which they describe as a win-win for the city and residents wanting free parking. Officials said G&L is really waging the campaign over one parking lot – the Bedford location that essentially services all of the company’s buildings.

“This is just about the parking next to their businesses on Bedford,” Mayor Jimmy Delshad said. “They want to make sure we don’t charge for two hours for their customers and patients.”

Parking issues

Free parking and politics have mixed before in Beverly Hills.

In 2007, Delshad and Councilwoman Nancy Krasne won election running on a free parking platform, beating out then-Mayor Steve Webb, who opposed two hours of free parking. That year, Delshad and Krasne led a successful effort to establish two hours of free parking in a majority of city lots. Though Delshad and his colleagues have pledged to retain what free parking there is in the city, they are opposed to the expansion proposed by G&L.

The Beverly Hills Chamber of Commerce has yet to weigh in on the competing measures and will likely take up the issue in a January meeting, said Anita Zusman Eddy, vice president of economic development and government affairs.

Caden said two hours is needed for Beverly Hills to stay competitive with shopping districts in places such as Santa Monica, West Hollywood and Century City.

“It is a tremendous asset to the merchants,” she said. “I know it’s a little thing, but if you have the choice of going some place where it’s free or where it’s $5 to $15, I personally am going to go where it’s free.”

Still, neither Santa Monica nor West Hollywood offers as much free parking. In Santa Monica, two free hours is offered at eight downtown lots out of 28 citywide. West Hollywood does not offer free parking at any of its lots.

Earlier this year, Santa Monica rejected a recommendation to eliminate free parking in city lots, mainly because competitors such as Beverly Hills still offer it. In fact, the Beverly Hills conflict has attracted attention from Santa Monica.

“All the Westside cities keep up on what the others are doing and make sure they’re not out of line with the market,” said Don Patterson, Santa Monica’s business and revenue operations manager. “We’re definitely watching what’s happening in Beverly Hills right now.”

The company, founded by nightclub owner-turned-hospitality entrepreneur Sam Nazarian, has been hiring at its corporate headquarters and is in expansion mode.

Among the new ventures, SBE is leveraging its expertise in real estate and hospitality into a consulting business called SBE Reserve, and it is expanding its residential real estate activities.

“We see that the market has turned,” said Behzad Souferian, vice president of real estate at SBE. “There’s more light at the end of this tunnel, and we are at the growth phase again.”

SBE isn’t alone in positioning for the recovery.

Well-known New York hotelier Ian Schrager, who founded Morgans Hotel Group, announced plans last week to launch two trendy hotel chains. Plus, entrepreneur Richard Branson plans to spend $500 million to launch Virgin Hotel, a chain of boutique-style hotels.

However, Nazarian appears to be pursuing expansion more aggressively, said Bruce Baltin, senior vice president at the L.A. office of hospitality firm Colliers PKF Consulting USA.

One of SBE’s primary initiatives is to provide property owners with an array of real estate and hospitality services. For example, if a property owner or investor wants to build a hotel, he can hire SBE Reserve to handle the development, including finding an architect and interior designer, managing the construction, and even marketing and managing the property.

Baltin said that while it’s not unusual for a company that began developing its own properties to start a consultancy similar to SBE Reserve, most don’t offer such a broad range of services.

“It’s a way for a company to leverage its expertise without having to invest a lot of capital in one project,” Baltin said.

Seeking advice

The launch of SBE Reserve follows a slump the company hit during the economic downturn. SBE, headquartered on Beverly Boulevard near the Fairfax District, canceled plans to build a 1,000-room tower at its Sahara Hotel and Casino in Las Vegas; trimmed its corporate staff by about half, laying off about 50; and ran into delays on the multimillion-dollar renovation of its Ritz Plaza Hotel in south Miami Beach last year.

But it was a brutal period for the hospital industry nationwide.

Revenue per available room, a key measure of room rate and occupancy growth, dropped 17 percent from 2008 to 2009 nationally, according to Smith Travel Research.

Colliers PKF expects revenue per available room will increase by 5.6 percent this year, 6.3 percent next year, 10.4 percent in 2012 and 10 percent in 2013.

“It’s been a top-down recovery that’s been led by the luxury segment,” Baltin said. “But of course that segment was hurt the worst.”

Anticipating a recovery, Nazarian has been hunting for properties in New York, Chicago and London, while SBE’s presence in Los Angeles has grown this year to include a new nightclub, the Colony in Hollywood, and a luxury boutique hotel, Redbury @ Hollywood and Vine. What’s more, Souferian said the company has been adding to its corporate staff during the previous six months.

With SBE Reserve, the company is taking advantage of experience developing such popular destinations as nightspot Hyde Lounge and luxury hotel SLS Hotel at Beverly Hills.

SBE has also had a hand in residential real estate investing, although its activity in that area has been pretty low profile. The plan now is to boost that.

Souferian and Nazarian were childhood friends and worked together even before the launch of SBE in 2002. Together, they built the venture into a hospitality firm that develops and manages nightclubs, restaurants and hotels.

Souferian said the idea for SBE Reserve emerged during the downturn as company clients and associates informally asked executives how to find a real estate attorney or a lender, for example.

“We were getting calls for advice and consulting on what they should do,” Souferian said. “Whether it was repositioning debt on one of their assets, or if they were thinking of doing a renovation, if it was the right time to do it.”

So SBE decided to create a division where the company could offer its consulting and advisory services in a formal manner to property owners throughout the United States.

Mansion for sale

The firm’s residential activity until now has included investments in apartment buildings in Southern California, Florida and Illinois. SBE Reserve’s first move is the redesign of a 6,300-square-foot mansion above the Sunset Strip where homes sell for $15 million to $20 million. The company is planning to list the house, which has three bedrooms and six baths, within the next 30 days.

SBE handled the renovation, including obtaining the proper entitlements, and hiring a designer and general contractor. The buyer of the house will get not only panoramic views, but access to SBE’s global concierge service, including VIP treatment at the company’s establishments.

Meanwhile, a separate aspect of the SBE Reserve umbrella is focused on providing services to a wide range of real estate owners, including people who own a single-family residence worth at least $2 million; companies with a portfolio of multifamily residences; and owners of office, commercial, retail or hotel properties.

Souferian declined to comment on how much the company will charge for its services, but acknowledged that there are challenges in turning SBE Reserve into a success.

“Our challenges are going to be picking the appropriate assets where we can really maximize the value for whoever the property owner is,” Souferian said.

But hospitality industry analysts familiar with SBE said the company’s likely to find a hit with SBE Reserve.

“SBE has built a powerful brand and loyal following amongst consumers and the investment community,” said Jim Butler, a partner at Century City law firm Jeffer Mangels Butler & Mitchell LLP. “For them, SBE means very high profile, hip, cutting edge, Hollywood connected and profitable.”

The opposition is driven by fear that private-sector operators would have to dramatically increase parking rates, driving away customers. They’re calling for the city to scrap the plans, or at least limit the rates that any new operators could charge.

“This would be an obstacle to attracting new customers and we could lose some of our existing customers,” said David Friedman, owner of Sarah Leonard Fine Jewelers in Westwood Village. Friedman, whose family has run the store since 1947, has set aside expansion plans because of the mayor’s proposal.

Tej Sundher, one of the owners of the Hollywood Wax Museum and the Hollywood Guinness World of Records Museum, is also concerned. Sundher said most of his customers come by car and he would lose their business if parking became too expensive.

“This would be one of the most negative impactful things for us since the 9/11 terrorist attacks,” he said. “People aren’t going to pay $10 or more to park and walk over to our museums.”

The mayor’s plan, which could be voted on as early as this week, calls for the city to lease out nine city-owned parking garages for 50 years to a business or a consortium. The city would get an up-front payment of $53 million for the lease, which includes three garages in Hollywood and one in Westwood. The $53 million would go to plugging the city’s massive budget hole; the money already has been counted in the city’s 2010-11 general fund. If the plan fails, cuts would have to be made in city services or staffing levels to make up the difference.

In order for the private-sector operator to recoup its investment, the Hollywood lots – including the Hollywood & Highland garage and the ArcLight Cinemas structure – would be allowed to triple rates for short-term parking over five years. Currently, the ArcLight lot charges $4 for the first four hours, $2 with validation. Hollywood & Highland charges $3 for the first four hours. Under the lease plan, a private operator could raise rates over five years to a maximum of $10.80 for the ArcLight garage and $9.60 for the Hollywood & Highland garage.

Meanwhile, the Westwood garage would lose its current free-parking status and could raise rates as high as $5 for short-term parking in phases during the next five years.

For the following 45 years, the parking rates would be indexed to inflation. What’s more, the city would be barred from building parking structures within one-eighth of a mile of these garages for that period.

Besides Hollywood and Westwood, parking garages in Sherman Oaks, Studio City and elsewhere are slated to be leased, but the projected price increases for those garages are not as great because demand in those areas isn’t as high.

The proposal was scheduled for consideration before the City Council last month and was initially set for adoption before the holiday recess. But city administrators delayed the matter after a contentious public hearing and it’s now set to return to the council this month, perhaps this week.

If the council approves the plan, administrators would call for bids from private operators and a lease could be signed by midyear.

City administrators said a private operator could increase automation of the garages to save on labor costs and market them more effectively. If the operator overcharged, the garages wouldn’t get as much business.

“No parking lot operator is going to charge rates that leave the lots half-empty,” said Miguel Santana, city administrative officer. “They will charge rates that keep the garages competitive with surrounding parking lots and find other ways to recoup their investment.”

Filling a need

But merchants and business owners believe a private-sector operator would have to raise rates substantially in order to recoup the up-front investment, even if it means a few parking spaces sit vacant.

Furthermore, they said more shoppers come to their areas because the city-owned garages in Westwood and Hollywood charge significantly lower rates than surrounding lots. The low parking prices also keep rates at the other lots in check.

Some business leaders and owners said they want the city to drop the leasing plan altogether; failing that, they want lower maximum parking rates written into the deal. They are petitioning council members and the Mayor’s Office, meeting privately with council members and researching avenues for legal challenges should the plan pass.

“Hollywood needs more affordable parking lots like Hollywood & Highland and the ArcLight Cinemas, not taking away the existing ones,” said Kerry Morrison, executive director of the Hollywood Property Owners Alliance and chief administrator of the Sunset and Hollywood business improvement districts. “Otherwise, the revitalization that we’ve worked so long and hard for could falter as people go to other areas to shop.”

Another Hollywood opponent of the plan is Mann Theatres Chief Executive Peter Dobson, who runs the famous Mann’s Chinese Theatre as well as the six-screen multiplex at the Hollywood & Highland shopping center.

“I understand the need for prices at these lots to go up a bit, but what they are proposing is simply too high,” he said.

Dobson said that besides losing some casual film patrons, the much coveted Hollywood movie premieres could suffer. While 10 percent or 20 percent of the patrons arriving at the screenings may be celebrities arriving in limousines, the rest are everyday folk who come in by car.

The deal also allows the private operator of the Hollywood & Highland lot to charge up to $30 for special events, such as movie premiers and awards shows at the Kodak Theatre.

Hollywood Chamber of Commerce Chief Executive Leron Gubler wrote in a Business Journal op-ed last month that parking rates as high as $30 for the coming Cirque du Soleil at Kodak Theatre could keep audiences away.

Gubler and other Hollywood chamber leaders late last month sent an e-mail to Hollywood businesses urging them to sign a petition demanding that the council reject the lease plan.

Free parking ends?

Merchants in Westwood Village fought for 15 years to get a city-owned lot built that would have free parking for at least two hours. They had watched many of their customers desert their stores for free parking at other Westside shopping destinations, including Westside Pavilion, Century City and Santa Monica’s Third Street Promenade.

In 1997, the city opened the parking garage on Broxton Avenue. Business at nearby stores, including Sara Leonard Fine Jewelers, immediately ticked up.

“The free parking at that structure was fabulous for our business and for all the businesses along Westwood Boulevard,” owner Friedman said.

Business was good enough that Friedman was planning to expand his store when his lease was due expire at the end of last year. Instead, when he learned of the plan to lease out the Broxton garage, he set aside the expansion and signed a three-year lease extension.

“We just don’t know how much of a negative impact this will be for our customer base,” he said, “so we couldn’t guarantee the income flow to justify the expansion.”

Another longtime Westwood business owner said he’s already had customers tell him that if free parking at the Broxton lot were eliminated, they would find someplace else to go.

Clinton Schudy owns Oakly’s Barber Shop, which opened in 1929 as one of the first businesses in Westwood Village. Schudy said parking has been a longtime challenge in the area.

“I’ve already had some people who drive in who have said they will not come to the village if this parking lot is no longer free,” he said.

City administrative officer Santana said city officials were aware of the situation in Westwood and, for that reason, have amended their proposal to keep free parking at the Broxton garage for the first two years.

But that response hasn’t satisfied Westwood business leaders.

“Look, we’re talking about eliminating free parking in Westwood for the next 50 years while all the nearby Westside shopping areas get to keep their free parking,” said Steve Sann, chairman of the Westwood Village Business Association and the Westwood Community Council. “This is going to hurt the viability of businesses in Westwood for years to come, and it’s all for just one year’s budget gain.”