AP NEWS
Related topics

Visionary Studio Complex Bogs Down in Dispute With Developer

November 15, 1996

LOS ANGELES (AP) _ The futuristic $8 billion project that was to house the DreamWorks SKG studio is mired in a nightmarish power struggle pitting Hollywood moguls against a toppled titan of real estate development.

Groundbreaking is five months late, and there’s still no accord on who will invest the next $150 million to $200 million to get things going. A standoff continues with banks that already are on the hook for $150 million plus several years’ interest.

For now, not so much as a sewer can be built at Playa Vista, Howard Hughes’ old stomping grounds, not to mention what the chairman of GTE Corp. had called ``a telecommunications infrastructure ... unmatched by anything in existence in the world.″

Drawing fire for the delay is Robert F. Maguire III, whose firm was one of the nation’s leading office complex developers until years of declining California property values and rents split it up last August.

Critics say Maguire’s outlook is stuck in the 1980s boom years, loathe to abandon control of the career-capping Playa Vista project or cut his fees on it, despite the fact that DreamWorks has lined up new investors to get it back on track if he will do so.

``It should be a no brainer,″ Michael Montgomery, the lead DreamWorks executive for Playa Vista, said in an interview. ``It’s hard to fathom what’s going through his mind to screw up the project this way.″

Maguire was unavailable for comment Friday, his spokeswoman Peggy Moretti said. She said negotiations are under way to fund the deal and Maguire is hopeful of ironing out the troubles within two months.

``He’s been saying that for two years,″ Montgomery replied.

The war zone is a chunk of coastal land 30 percent larger than New York’s Central Park where Hughes built the world’s longest private airstrip in the 1940s. Adjacent to Marina del Rey, it includes the Ballona Wetlands, a marsh that has been the site of some of the West Coast’s most bitter environmental battles.

The landowner, Howard Hughes Corp., teamed up with Maguire Thomas Partners in 1989 to develop the site. In late 1995, DreamWorks became an equal partner, lured by $70 million in incentives from the city.

Founded by director Steven Spielberg, music mogul David Geffen and former Disney studio boss Jeffrey Katzenberg, DreamWorks has promised studio space to many lesser entertainment lights. It must answer to its own investors, like Microsoft co-founder Paul Allen, who has pledged $500 million.

The Playa Vista plans called for significant marsh restoration, allaying objections of some though not all environmentalists. Also planned are 13,000 residences, 6 million square feet of commercial space and 1,000 hotel rooms, all fiber-optically linked and handy to the airport, hot Westside restaurants, Beverly Hills and Malibu’s celebrity getaway villas.

Recently, though, the only thing getting away appeared to be the deal.

IBM, a longtime Maguire Thomas partner hired as the ``technology architect″ for Playa Vista, told Maguire it’s now out of the deal _ and dunned him for $430,000 in unpaid fees that are ``seriously past due.″

The letter from Richard K. Selvage, IBM’s general manager of media, said IBM won’t participate ``in any capacity″ under Maguire’s leadership.

Katzenberg, speaking to the Wall Street Journal, said Dreamworks was ready to pull out and blamed Maguire. ``All great stories tend to come down to one of three things: Love, greed or ego,″ he said. ``This great story has got two, and love’s not one of them.″

City Councilwoman Ruth Galanter, whose district includes the projects, wrote Maguire warning that if he tries to cut DreamWorks out of the project, the $70 million in incentives will evaporate.

Montgomery, DreamWorks’ Playa Vista executive, said the studio is now seriously looking at buying alternate sites including CBS’ Studio Center, a 19-sound stage production facility in the San Fernando Valley.

However, CBS executive Michael Klausman, who runs Studio Center, categorically denied that it was for sale. DreamWorks currently tapes its TV sitcom ``Ink″ on one of the sound stages and has expressed interest in long-term leases on others, but all are currently occupied, Klausman said.

Several non-DreamWorks and non-Maguire people involved in the project, speaking on condition of anonymity, said they are hopeful of resolution.

Among the good signs, they said, are the involvement in meetings this week of Maguire’s estranged former partner, James A. Thomas, and the head of the Howard Hughes operation, John Goolsby. And IBM was said to be back on board.

AP RADIO
Update hourly