DreamWorks May Pull Out of Playa Vista

In the first public dispute with the new owners of Playa Vista, entertainment company DreamWorks SKG has threatened to abandon its plans to locate its studio headquarters at the massive real estate project near Marina del Rey unless an agreement is reached soon.

DreamWorks partner Jeffrey Katzenberg, in a letter to the top real estate executives at Morgan Stanley Dean Witter & Co. and Goldman Sachs & Co., said the investment firms’ representatives had reneged on previous agreements by nearly doubling the price of land to more than $48.7 million and changing the design of sound stages.

Unless an agreement addressing both issues is reached quickly, “DreamWorks will have no choice but to begin working with the city to secure a new home elsewhere,” said the Katzenberg letter, copies of which were distributed to Los Angeles Mayor Richard Riordan, Gov. Pete Wilson and other officials.

In response, Playa Vista President Peter Denniston said in a statement: “If DreamWorks cannot agree to come to Playa Vista, we will move aggressively to bring another studio or studios to the project.”

The threat to find another headquarters site is the most recent installment in a nearly three-year feud between DreamWorks and the owners of Playa Vista, a 1,000-acre project that would include a major commercial district and thousands of new homes and apartments.

Last year, after some bitter public exchanges with DreamWorks, Los Angeles developer Robert Maguire lost control of Playa Vista to a partnership formed by Morgan Stanley, Goldman Sachs and financial firm Oak Tree Capital Management. Earlier this year, a DreamWorks executive said the change of ownership made “the possibility of a DreamWorks deal much more realistic.”

But Katzenberg’s letter paints a different picture, one that suggests the parties are still miles apart and resisting further compromise.

“We are truly at a point where we can not, and will not, give any more,” Katzenberg said.