A group of pension fund investors got this close to financing the mortgage on what was to be the first major Hollywood movie studio built since the Depression.
Earlier this month, DreamWorks SKG scrapped its plans to build a $250 million high-tech studio on 47 acres at Playa Vista near Los Angeles' airport.
The major piece of the financial pie -- $160 million -- was to be provided by Union Labor Life Insurance Co.'s J for Jobs pension fund commingled mortgage fund.
DreamWorks' well-known principals -- Steven Spielberg, David Geffen and Jeffrey Katzenberg -- committed $40 million of their money.
But the deal killer was in the math. The project still was short $50 million, and the partners couldn't obtain favorable enough mezzanine financing.
So, the partners exercised their option to walk away and get back $13 million they paid for the land in 1995.
Microsoft co-founder Paul Allen also was a partner of DreamWorks' on the deal.
The show will go on, however, and the land ultimately will be developed for movie studio use, said Michael Steed, president of ULLICO, Washington. ULLICO and Gary Winnick, a wealthy telecommunications entrepreneur, once again own the land now that the option has been exercised.
"Discussions are under way as we speak" with potential partners, Mr. Steed said.
He wouldn't name anyone, but said "they are household names and clearly recognizable as being in the film and entertainment industry."
As for the DreamWorks principals, Mr. Steed said "ultimately, they didn't want to be distracted by a long and complicated period of construction" on their studio. As owners of the movie studio, the partners would have been responsible for operating a real estate business as well as a studio. "They are the best at making films and making music," Mr. Steed said.
Entertainment industry executives speculated the decision to scuttle the project was connected to DreamWorks' own fortunes.
DreamWorks has had mixed success with its recent high-profile movies. "Saving Private Ryan" was a big hit, but the animated "The Prince of Egypt" and "Amistad" were not. Also, its television projects haven't done well.
But things may be looking up for the company now that the rancorous four-year legal battle between Mr. Katzenberg -- a former Walt Disney Co. studio chief -- and Disney is settled, and its impact on DreamWorks is ended.
