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Todd AO/Soundelux Files Chapter 11


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Deadline: "Soundelux, Hollywood’s leading independent provider of postproduction sound services, is filing bankruptcy today and closing its facilities in Santa Monica and Hollywood....The company’s Burbank offices “will stay open for now,” said an employee. “It’s sad,” said a worker at the company’s facility on Seward Street in Hollywood. “A lot of people are losing their jobs.--employs about 170 people,-- People are packing up their stuff. There’s a security guard here to make sure we don’t take anything.” Owner David Alfonso, she said, “is signing everything over. The bank will own it as of today.” "

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deadline: "  Soundelux's facilities in Hollywood and Santa Monica were closed yesterday and about 30 of a total 200 employees were laid off, though the company's Burbank operations are staying open." - See more at: http://www.studiodaily.com/2014/05/todd-soundelux-files-for-chapter-11-bankruptcy-protection-shuttering-hollywood-and-santa-monica-locations/?hq_e=el&hq_m=2886609&hq_l=5&hq_v=325c7e0803#sthash.wKB9TqM1.dpuf

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I always thought there'd be a Glenn Glenn, a Todd-AO a Technicolor, and of course CFI.

 

CFI got "absorbed" into Technicolor, but it wasn't long before all that work shifted to the Universal City plant and then the CFI building (right next to what used to be the original home of Technicolor in the 1920s, 1930s, and 1940s) was shut down and sold. CFI was actually a pretty good lab in the 1980s and 1990s, though the old joke was the CFI stood for "Can't Find It" -- when you'd drop by and ask for your developed film. I know a few clients who joked that it also stood for "CFI Care," but in truth, the guys at CFI I dealt with were pretty good people.

 

It's definitely a different world out there. I've heard rumblings there are two more major companies on the verge of sinking, but they're going to try to hang on for the fall TV season.

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It's certainly a changing world out there, in both production and post. More and more, producers are finding ways to circumvent the traditional post process for sound, which has had huge implications for a number of facilities.

 

Although I'm not privey to the buyout details, my guess is that Todd-AO/Soundelux may have had some signicant debt added to their books as part of the buyouts and changes that have taken place over the years, putting them under a huge a mount of pressure. This may have been part of the reason that some of the top talent ankled to join the Foromsa Group (purely speculation on my part).

 

This comes on the heels of the closing of Todd-AO/Sound One-New York, some major scoring stages, the closing of both Technicolor and Deluxe lab operations, and numerous other changes.

 

Not your father's post-production business!

 

--S

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A lot of big facilities in LA that have been bought up by conglomerates have a liability in that the holding company may view the real estate they sit on as an underperforming asset.  IE that the cash flow from audio post is less and more unpredictable than that to be had from retail or condos etc on that site, especially in the parts of LA where a lot of these facilities are located.  I don't think it ever really works out well for a niche business like audio post to become part of a holding company, with control passing out of the hands of people who live and work in the field.  

 

philp

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A lot of big facilities in LA that have been bought up by conglomerates have a liability in that the holding company may view the real estate they sit on as an underperforming asset.  IE that the cash flow from audio post is less and more unpredictable than that to be had fom retail or condos etc on that site, especially in the parts of LA where a lot of these facilities are located. 

 

That may be true in Santa Monica, but if you know that area of Seward Street where Todd AO was in Hollywood, that's not a great neighborhood and there's tons and tons of empty warehouses and office space around there. I bet that building will sit empty for years and years if nobody buys the facility. I know that happened when Crest Video shut down 7-8 years ago, and they were right around the corner.

 

I do agree with the general view that these monolithic corporations that buy post houses have a tough position on profits and the way business is nowadays. When I worked for Kodak's Cinesite division about 10 years ago, we broke open the champagne because it was the first year (in 15 years) that the company had made a big profit, roughly 9%. The corporate guys looked over the books and said, "sorry, it's gotta be double digits," and shut down the place and let 350 people go. In hindsight, they were right: the profits in the VFX business are even worse than they are in the re-recording business (if that's even possible). 

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I think you might be surprised at how much one of those buildings, or more exactly, the lot it sits on, in those not-great neighborhoods is valued at.  A whole lot of money.  Often places like that sit empty because the owners are trying to assemble a large block of land out of adjacent lots on which to build something big, which takes many years in a major city.  They may or may not bother to rent the buildings they intend to tear down in the meantime--it's often easier for them to leave them empty until they are ready to tear them down.  

 

philp

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When I worked for Kodak's Cinesite division about 10 years ago, we broke open the champagne because it was the first year (in 15 years) that the company had made a big profit, roughly 9%. The corporate guys looked over the books and said, "sorry, it's gotta be double digits," and shut down the place and let 350 people go. In hindsight, they were right: the profits in the VFX business are even worse than they are in the re-recording business (if that's even possible). 

 

Ah, but you don't actually know that they were "right". "Right" is just a matter of perspective and intent. IF that division had continued making a 9% profit for eternity they would still have been "right", because it was still not a big enough profit. The dudes in suits often look at the books and try to figure out how to make as much money in as short time as possible, rather than settling for a decent profit over the long haul.

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It's not always just about making as much money as possible for the short term. Sometimes, higher profits are required for long-term success of the overall corporation. I worked for a couple big corporations that told our divisions that we had to bring in at least a 24-28% profit. That "extra" profit from our division was used to prop up other divisions that were in a slump (ie- corporate thought they could turn it around and thus didn't just shut down that particular division), for start-up divisions that were allowed a few money-losing years before they were expected to be profitable, and to cover corporate HQ overhead.

I don't know about Kodak, but if we consistently turned in a 9% profit, we'd have been shut down or sold.

Still bummed to hear about all the places shutting down, though.

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As far as the property in Hollywood sitting vacant, i don't think so.

I know a company who closed down part of their operations in Hollywood because of the amount if money they were going to make, selling it to a developer. That area is slowly getting gentrified.

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My guess is that the vulture I mean "venture" capitalist guys will start selling all of the main assets that have value. Starting with the building in Hollywood.

Then after they've stripped it of all the money, they'll lay everyone off and shut the business down,

That's how people like Mitt Romney got rich.

I knew when the VC guys came in, it wouldn't end well.

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:( Sad. Speaking of Sound One, had a chance to visit during an AES-NY section meeting a couple years back where Dominick Tavella was discussing and showing examples of mixing Ken Burns' documentaries. Nothing like being in a room seeing a 600 input Neve DFC with three Pro Tools systems linked to it driven by a master...

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It's not always just about making as much money as possible for the short term. Sometimes, higher profits are required for long-term success of the overall corporation. I worked for a couple big corporations that told our divisions that we had to bring in at least a 24-28% profit. That "extra" profit from our division was used to prop up other divisions that were in a slump (ie- corporate thought they could turn it around and thus didn't just shut down that particular division), for start-up divisions that were allowed a few money-losing years before they were expected to be profitable, and to cover corporate HQ overhead.

I don't know about Kodak, but if we consistently turned in a 9% profit, we'd have been shut down or sold.

Still bummed to hear about all the places shutting down, though.

 

The "term" is obviously arguable, as is the "width" of the business/corporation. But your example sort of makes my point again though: It isn't a problem with the individual business or its model, it has to do with what's "on paper". A 9% profit is profit. It works. Except if one simply wants more. Then it doesn't. But that's very very different from a business failing because it's at a loss and is unable to sustain itself, possibly because either the business model doesn't work or type or quality of products provided aren't desired.

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Mattias, I think we basically agree. But when Marc wrote, "we broke open the champagne because it was the first year (in 15 years) that the company had made a big profit, roughly 9%" there's the issue of the previous 14 years: did Cinesite make a small profit in those years, or did it post losses that were covered by Kodak? And what about recovering start-up costs? I don't know (and I don't really need to know).

All this reminds me of what happened with music recording studios years ago...and typesetters...and other vfx & post houses...and so many other businesses in our world.

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