Is It Time to Put the Playa Vista Dream to Bed?

In English, Playa Vista means “beach view.” In Los Angeles, it might as well mean beached whale.

The city’s most over-hyped real estate development in recent memory--the $8-billion commercial and residential extravaganza where DreamWorks SKG wants to build its studio--remains a longshot to end up as originally envisioned. This even though some positive spin is on the horizon--an announcement in the next three weeks that a new group of investors has structured a definitive financing arrangement for the floundering, 1,087-acre project near Marina del Rey.

For starters, there’s nothing on paper even tying DreamWorks to the site. The studio, founded by moguls Steven Spielberg, David Geffen and Jeffrey Katzenberg, never gave more than a loose commitment to locate there. Even that--which one insider describes as nothing more than an “outline”--long ago expired.

Negotiations are in effect starting over, and that could be a problem. Even the guy who originally ran interference for DreamWorks, former Walt Disney Co. financial whiz Michael Montgomery, is no longer involved, too busy running the Sega GameWorks entertainment centers.

The deal to be announced puts control of the project into the hands of real estate funds controlled by investment banks Morgan Stanley Group Inc. and Goldman, Sachs & Co. as well as Beverly Hills financier Gary Winnick’s Pacific Capital Group. Its main significance is to move to the sidelines original developer Robert Maguire, whose financial difficulties--Playa Vista was threatened with foreclosure--and stubbornness in negotiating a definitive deal stalled things. Under the new deal, Maguire will be allowed to develop the non-DreamWorks commercial project, but his say overall will be sharply curtailed. It’s just as well, because he and DreamWorks executives have been at each other’s throats.

On the surface, all sides are trying to remain optimistic, not an easy thing to do on a project that is now more than a year past the date when a shovel was supposed to hit the ground.

“We still hope to be able to make a deal that would bring us to Playa Vista,” says DreamWorks executive Andy Spahn, the studio’s point person on the project. But Spahn adds, “It has to make good economic sense.”

Will it? Sources close to the project say a number of issues could prove sticky when formal negotiations eventually begin to try to lock in DreamWorks. The new group wouldn’t mind, for example, spreading around some of the incentives, such as tax benefits being offered by the city, to make the overall plan more viable.

But DreamWorks executives believe their firm alone is entitled to the benefits because the studio is the only reason the city offered them. One possibility could be to trade benefits for other considerations, such as land. Still, it’s clear this isn’t going to be easy.

Then there’s the matter of what DreamWorks needs now that it’s an ongoing business, as opposed to what it thought it needed back when it was little more than an idea generating more press clippings than entertainment product.

DreamWorks is light-years from that day in December 1995, when ambitious plans for the studio lot were unveiled and its executives were still on friendly terms with Maguire. In the aircraft hangar where Howard Hughes built his infamous Spruce Goose, a stampede of politicians and Hollywood big shots tripped over one another to get near the scene.

DreamWorks executives say their needs have since changed, but they won’t elaborate. It’s safe to assume that starting a new studio from scratch has been daunting, even for people with the stellar track records of Spielberg, Geffen and Katzenberg.

In television, the company has had a rough year: “Spin City” is a modest hit, but “Ink,” “Arsenio” and “High Incident” flopped. In music, a George Michael album was a disappointment, although the company is generating substantial industry buzz with an album by Forest for the Trees, to be released next month.

DreamWorks is on the verge of entering the live-action arena with “The Peacemaker” set for release next month. Next year comes its biggest risk yet: its first feature animation film, “The Prince of Egypt.”

In March 1995, a UCLA economist commissioned by DreamWorks to write an economic impact study projected $300 million in revenue by 1996 and a staggering $1.2 billion by next year. DreamWorks is a private company that doesn’t release numbers, but it’s a pretty safe bet that those figures can be considered moot, even in the unlikely event that “Prince of Egypt” proves to be another “Lion King.”

Another question may be whether DreamWorks wants to be preoccupied with scraping up the hundreds of millions of dollars that are probably necessary to build a first-class studio lot--especially at a development with such bad economic karma--when the company is about to go toe-to-toe with the giant Hollywood studios. One can burn up a lot of money operating a start-up studio, especially when a company like Disney is aiming its guns to protect its feature animation franchise.

No doubt DreamWorks would like to consolidate its office and production space, not to mention feel like it has its own home, instead of operating like an an appendage on another studio’s lot. That’s the case now, as its offices are scattered throughout the city and its headquarters are stuffed into Spielberg’s Amblin offices at Universal Studios.

But at this stage, is it better to own when you can rent? Those who want to lure DreamWorks to other sites, such as officials with the city of Burbank, have smelled blood and are circling. There also seems to be a shortage of developers eager to build sound stages to meet the space crunch caused by Hollywood’s current production boom.

Maybe Playa Vista will still prove too good to pass up. But odds are rising that it will become the dream that didn’t work.

Getting Credits

Leonard Armato is one of the executive producers of the Warner Bros. movie “Steel,” which stars the Lakers’ Shaquille O’Neal and opens today.

Who’s Leonard Armato? He’s Shaq’s sports agent, the guy who gets the Lakers to pony up more than $100 million for the center, puts him in Reebok ads and makes sure he gets to ride every so often on the Warner Bros. jet.

Armato also is the quintessential example of why the current movement by producers to rein in the awarding of producing titles is ultimately futile. If you want Shaq, you get Leonard as an executive producer. For that matter, if you want Shaq, you also get Shaq as an executive producer, as he was on “Steel.”

The reality is that a lot of people who may or may not know the difference between a gaffer and a key grip will continue to get producing credits if stars want them to. And movies in which the producers number in the double digits will continue to be made, remaining one of those silly rites of Hollywood.