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DreamWorks pulls out of studio deal

DreamWorks SKG, the Hollywood film studio co-founded in 1994 by Steven Spielberg, Jeffrey Katzenberg, and David Geffen, pulled out of a deal to build a new $250 million studio on July 1, 1999 because it could not reach a financing agreement. DreamWorks said it was unable to reach a financing deal that "makes good business sense." The closely held company also cited rising construction costs and tougher financing terms due to the rebound in the Los Angeles real estate market. Last year DreamWorks signed a deal with developer Playa Capital Co. to acquire 47 acres in a development in the Playa del Rey area of Los Angeles to construct the first new Hollywood studio in sixty years. The headquarters and studio were to have been part of the 1,087-acre Playa Vista development, which had drawn years of environmental opposition because of its location near sensitive wetlands not far from the Pacific Ocean. Sources have reported that Los Angeles billionaire Gary Winnick and Union Labor Life Insurance had intended to lend DreamWorks $200 million, but negotiations did not go smoothly. DreamWorks had planned to build nearly 1.5 million square feet of facilities, including at least eight sound stages, for its live-action film, music, television, consumer products and other divisions. DreamWorks says it could expand its operations in Glendale, north of downtown Los Angeles, where it has already built an animation studio.