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Gov. Newsom seeks faster review of insurance rate hikes. What to know

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Gov. Newsom seeks faster review of insurance rate hikes. What to know

With insurers continuing to pull back from the California’s homeowners’ market, Gov. Gavin Newsom wants to speed up the process by which the companies have their requests for rate hikes reviewed.

The governor said Friday that he is backing a bill that would require the Department of Insurance to complete reviews of proposed premium increases within 60 days to halt any more exits from the market. Here’s what to know:

What exactly did the governor say?

Newsom said that immediate steps need to be taken to stabilize the market, which has seen insurers not renew existing policyholders, stop writing new policies or pull out of the market entirely — sending many homeowners to the insurer of last resort, the state’s FAIR Plan, which is now on the hook for more than $300 billion in payouts. Newsom said he was “deeply mindful” of the burdens placed on the plan.

The governor said he had considered issuing an executive order, but instead is proposing a bill that would require the Insurance Department to speed up its review process of premium rate-hike requests.

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“We need to stabilize this market. We need to send the right signals. We need to move,” he said.

Isn’t there already an insurance reform package being hashed out in Sacramento?

Insurance Commissioner Ricardo Lara is holding hearings on his Sustainable Insurance Strategy, a set of comprehensive regulations intended to stabilize rates and make it more attractive for insurers to write homeowners policies, especially in wildfire areas such as hillsides and canyons.

However, these regulations won’t become law until the end of the year — a deadline sought by the governor, assuming it can be met.

“It should not take this long for emergency regulations,” Newsom said. “We can’t wait until December.”

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How would this bill fit into the larger set of reforms?

Lara has reached a grand bargain with the insurance industry to make the market more attractive, though details are still being worked out.

The plan would allow insurers to include the cost of reinsurance they buy to protect themselves from large fires and other catastrophes into premium costs. It also would allow them to set rates using sophisticated algorithms to predict the risk and cost of future fires, rather than just base them on past events. It’s unclear how an insurer’s application for an expedited rate approval this year would fit into the proposed reforms.

Has Lara reacted to the governor’s proposal?

The commissioner tweeted Friday that his department has taken “significant steps forward” to implement his planned reforms but more needs to be done — and that his department is working with the governor and the Legislature “on critical budget language that keeps us on track to get the job done.”

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What do consumer groups have to say?

Jamie Court, president of Consumer Watchdog, said he didn’t understand the proposal, worrying that it would be a “rubber stamp” on proposed rate increases.

He noted that Proposition 103, the landmark 1988 initiative that gives the insurance commissioner authority to review rate hikes, already mandates that they are conducted within 60 days except in certain circumstances. Those circumstances include requests for rate increases exceeding 7% for homeowners insurance, which allow consumers to seek a hearing, or the commissioner’s own decision to conduct a hearing.

What is the insurance industry’s reaction

Rex Frazier, president of the Personal Insurance Federation of California, a trade group of property and casualty insurers, said despite the promise of 60-day rate reviews under Proposition 103, they are taking longer. He said the Insurance Department will often request that insurers waive their rights to a speedy decision or face an administrative hearing, which can lead to extensive delays. However, Frazier withheld comment on the governor’s proposal until the draft language is released.

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What are the next steps?

Newsom’s office will release the draft bill, which will be carried by a member of the Legislature and be included in the process for adopting the state budget, which the Legislature must approve by June 15. Newsom made his remarks Friday in outlining plans for a revised $288-billion budget, which calls for a series of cutbacks to close a nearly $45-billion shortfall.

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TikTok said to plan job cuts amid a wave of tech industry layoffs

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TikTok said to plan job cuts amid a wave of tech industry layoffs

TikTok is expected to make cuts to its global staff, in another blow for the popular social video app as it faces the threat of a new law that would ban its service in the U.S. if its Chinese owner doesn’t divest.

The layoffs are expected to affect employees in content and marketing and user operations, according to technology-focused news outlet the Information, which first reported on the looming job cuts. TikTok did not immediately respond to a request for comment.

Some U.S. leaders have raised security concerns about TikTok and its parent company ByteDance’s ties to China. ByteDance and TikTok have said the new law “offers no support for the idea” that TikTok’s Chinese ownership poses national security risks.

An unnamed TikTok employee told CNN that the workforce reduction was not related to the potential ban in the U.S.

The cuts come as tech companies have shed their workforce this year to reduce their costs and, in some cases, prepare to hire more people skilled in emerging artificial intelligence tech.

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It’s unclear how many layoffs will occur at TikTok’s U.S. headquarters in Culver City. TikTok employs roughly 500 people in Culver City, according to city data.

TikTok has launched legal battles to stop the government from going forward with its ban of the company’s U.S. operations. The firm sued the U.S. government and funded a separate legal challenge led by TikTok creators. Both petitions said the move to ban or force a sale of the app violates 1st Amendment free speech protections.

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The 2024 box office is terrible. But Imax's big-screen appeal is a bright spot

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The 2024 box office is terrible. But Imax's big-screen appeal is a bright spot

When Warner Bros. film executive Jeff Goldstein saw the huge sand dunes and expansive desert vistas of Denis Villeneuve’s first “Dune” movie, he thought to himself, “This was made for Imax.”

Same went for the sandworm sequences of the sequel, “Dune: Part Two,” a box office hit for the studio earlier this year that pulled in nearly 24% of its domestic box office revenue from Imax. The dystopian wasteland of this weekend’s big action tent pole, “Furiosa: A Mad Max Saga,” brings yet more fodder for the big screen format.

Imax’s giant screens are expected to account for a greater-than-typical share of the George Miller-directed prequel’s box office sales. (The film is tracking to gross more than $40 million domestically for the four-day weekend opening, according to analysts.)

“It immerses you, so you’re there,” said Goldstein, president of domestic distribution for Warner Bros. Pictures. “Audiences look at Imax as something special.”

As studios and exhibitors bemoan audiences’ slow return to movie theaters since the pandemic, Imax has been one of the few bright spots. This year’s box office is down 20% compared to last year, when pictures like “Fast X,” “Barbie” and “The Super Mario Bros. Movie” propelled ticket sales, and yet studios are clamoring to get onto Imax screens.

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Audience behavior has now changed, and getting people out of their houses and back into theaters requires something special they can’t get at home. That put Imax in a fortuitous spot.

The 57-year-old Canadian company, which operates out of Playa Vista, is coming off one of its best years, with Christopher Nolan’s “Oppenheimer” helping to fuel overall global box office revenue — marking Imax’s second-highest grossing year in its history. Films shown on Imax are reaping bigger box office numbers, helped in part by higher ticket prices, and that’s a powerful allure for studios and filmmakers.

Next year, 13 Hollywood movies slated for release will be shot on Imax digital cameras or film, beating a previous record logged in 2021 when seven so-called filmed for Imax movies came out.

The company hopes its brand awareness eventually looms so large that viewers come to its screens first.

“Instead of saying, ‘What’s happening at the movies?,’ I want them to say, ‘What’s happening at Imax?’” said Imax Corp. Chief Executive Rich Gelfond.

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For Imax’s part, its financial performance in the first fiscal quarter of 2024 beat expectations. The company’s net income totaled $3.3 million for the three-month period that ended March 31, up 33% from the previous year, though revenue decreased by about 9%, to $79.1 million. Shares of Imax are up about 10.9% so far this year.

“While there are exceptions like ‘Barbie,’ it is very, very difficult to be a blockbuster without being in Imax,” said Greg Foster, a former Imax Entertainment chief executive who now runs an entertainment consulting business.

Imax’s current mainstream success is what Gelfond and his business partners envisioned when they acquired the company in 1994. At the time, Imax was essentially a museum staple, albeit one that allowed viewers to immerse themselves in the latest nature film or science documentary.

The company adjusted its screens and sound systems to fit in commercial multiplex theaters, allowing its business to grow rapidly while limiting costs (Imax does not own theaters itself, but instead supplies its screening technology to cinema chains). Imax also developed technology to convert movies to Imax’s format to make it more economically attractive for filmmakers and benefited from the advent of digital film, which made it more cost effective.

By 2019, the company had seen year-over-year global box office growth for several years and expanded its global market share to spread its box office almost evenly among North America, China and the rest of the world.

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Like its movie theater owner customers, Imax was hit hard by COVID-19 business shutdowns. But because the company has few assets and little debt, it was insulated in part from the financial fallout that the rest of the industry faced. The company used the time to update its technology, including a new laser projection system and sound system, worked on its marketing and leaned more into local language films, Gelfond said.

Now in a post-pandemic world, moviegoers want something premium and special for their time, and they’re willing to pay for it. That’s a bonus for Imax and so-called premium large-format screens operated by the theater chains.

“In an industry that is constantly re-evaluating its present and its future in terms of competing with new media and bringing back audiences, it’s Imax that has been at the heart of the conversation when we talk about sectors of the industry that have recovered,” said Shawn Robbins, founder of analysis site Box Office Theory. “It’s been a way for studios to have reliability in an often volatile theatrical market.”

Walt Disney Co. has leaned hard into Imax and other premium large formats.

Its marketing campaign for “Kingdom of the Planet of the Apes,” released earlier this month, prominently featured the Imax logo on billboards, bus stop signs and other advertisements. During opening weekend, 41% of the movie’s domestic box office came from premium large-format screenings, 13% of which was Imax, Disney said. Typically, a blockbuster that hasn’t been filmed on Imax cameras, like “Apes,” would do about 10% at the box office, Gelfond said.

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As an industry, “we need to give audiences a terrific experience every time they go to see a movie,” said Tony Chambers, executive vice president and head of theatrical distribution for Walt Disney Studios. “Going to see a movie in premium large formats helps drive engagement and helps drive frequency.”

From 2022 to 2023, premium large formats made up 19% of Disney’s total domestic business; just before the pandemic, that total was 15%. Some of that came from 3-D screens, which have tapered off in popularity.

The company saw box office success with James Cameron’s 2022 sequel, “Avatar: The Way of Water,” which brought in $1.6 billion in revenue from premium large formats out of a total of $2.32 billion (About 11% of which came from Imax). Marvel’s “Guardians of the Galaxy Vol. 3” last year brought in 31% of its box office revenue from premium large formats.

Especially since the pandemic, there’s now more competition for people’s time and attention from streaming and social media, making it crucial for studios to give audiences a good reason to leave their couches.

“We need a way to cut through some of the clutter and make it clear to people that you cannot wait, you need to see this on the big screen,” Chambers said. “One of the ways to do that, from a marketing perspective, is to lean heavily into the premium large format.”

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For a lot of people, he said, that means Imax. In fact, Imax executives bristle when people lump them with the other so-called PLFs, which include Dolby Cinema and ScreenX.

Imax box office makes up 13% of Warner Bros. overall domestic business, compared to an industry wide 5% to 7%, according to the studio. Industry wide, opening weekends are typically 10% to 12% Imax. But some are a bigger draw. The Imax share of “Dune: Part Two’s” domestic box office was 22%.

“It’s this whole notion of how do you hit critical mass,” Goldstein said. “Imax will help you get to critical mass faster.”

Imax’s future hinges on continued growth, especially internationally. As of 2023, the company had 1,772 screens across the globe, including its institutional theaters and museum screens, up slightly from the previous year.

The company also plans to expand, particularly into markets that it thinks are under-served, such as Australia and Japan.

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“It has massive growth potential globally, and it’s certainly not at saturation in most of its global markets at this point,” said Alicia Reese, media and entertainment analyst at Wedbush Securities. “They should trade at a higher multiple given their growth potential.”

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Ari Emanuel denounces Israeli Prime Minister at Jewish group’s gala

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Ari Emanuel denounces Israeli Prime Minister at Jewish group’s gala

Endeavor Chief Executive Ari Emanuel this week called for Israeli Prime Minister Benjamin Netanyahu’s ouster and denounced his leadership following the Oct. 7 Hamas attack.

The Hollywood power player made the remarks during the Simon Wiesenthal Center’s gala in Beverly Hills, where he accepted the Jewish organization’s Humanitarian Award, its highest honor.

“This is a painful and crucial moment for all of us who are Jews and who love Israel. It is not a moment to stay silent,” Emanuel said Wednesday evening.

“Israel is being led not by a problem solver, but by a problem creator. He is an agent of chaos and hatred and division and destruction. And enough is enough. Bibi Netanyahu is a failure.”

His remarks were met with both cheers and jeers, with some attendees walking out of the Beverly Wilshire Hotel. The audience was filled with members of Emanuel’s family and entertainment industry stalwarts including Larry David, Robert Kraft, Mark Wahlberg and Dwayne “The Rock” Johnson.”

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Emanuel, who spoke of his family’s long ties to Israel and who supports a two-state solution, said Netanyahu “doesn’t want a peaceful solution” in the conflict “And it’s become clear that getting to a political solution and Netanyahu remaining in power are irreconcilable paths,” he said.

“As for his responsibilities to keep the people of the state of Israel and Jews across the globe safe, he has obviously failed spectacularly,” Emanuel said. “But he has succeeded wildly in using division to stay in power.”

One of the most powerful executives in Hollywood, Emanuel is also one of the most outspoken. Two years ago he urged businesses to cut ties with the artist formerly known as Kanye West after he made antisemitic remarks. Companies such as Adidas and the Gap stopped working with the rapper and producer.

In 2006, Emanuel wrote an open letter calling on Hollywood to boycott Mel Gibson after his antisemitic rant made during a drunk-driving arrest, saying the actor’s alcoholism “does not excuse racism and anti-Semitism.” Year later, Emanuel accepted an apology from Gibson and supported his return to the film industry.

The Oct. 7 terror attack by Hamas left about 1,200 Israelis dead and more than than 250 kidnapped. Israel’s military retaliation has killed more than 35,000 people and displaced thousands more, according to Gaza health officials. The war has polarized every sector of the U.S., including Hollywood.

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Emanuel lamented the civilian casualties and suffering among Palestinians in Gaza. “The loss of even a single innocent child is a tragedy,” he said. But he called Israel’s war “justified” saying “Israel did not start the war in Gaza. Hamas did.”

He also criticized pro-Palestinian protesters using the slogan “from the river to the sea,” which he said means the elimination of Israel. “That’s the definition of genocide,” he said.

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