In This Tale of Two L.A. Studios, Uncertainty Is Recurring Theme

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Sunset Gower Studios is not the only Los Angeles-area production studio making news these days.


While that famed Hollywood studio is being sold, two other operations Manhattan Beach Studios and Culver Studios are also in varying states of ownership changes.


Amidst a legal battle over alleged embezzlement and fraud by former executives, the Culver Studios ownership group is said to be putting that property on the market. Meanwhile, Manhattan Beach Studios was recently purchased by Carlyle Realty, a unit of private equity firm Carlyle Group.


With Sunset Gower Studios trading for just over $200 million, a high price is likely also in the cards for Culver Studios, if it is sold. According to real estate industry sources that declined to comment on the record, the studio ownership group, PCCP Studio City Los Angeles LLC, has chosen a brokerage team led by CB Richard Ellis Group Inc.’s Kevin Shannon to market the property. Shannon, who brokered the sale of Sunset Gower, declined to comment.


It is unclear if Culver Studios, which includes 13 sound stages, production offices and a New York City street location, will be marketed as a redevelopment opportunity like Sunset Gower Studios or strictly as a studio investment property. One impediment for the redevelopment of the studio at 9336 W. Washington Blvd.: it is a designated a historic site by the local historical society.


In any case, James Cella, Culver Studios president and chief executive, maintained the studio is not on the market. “At this point we are not for sale,” Cella said. “We are very keen on what is going on in the market.”


Meanwhile, in Manhattan Beach, Carlyle paid $150 million for the 22-acre property at 1600 Rosecrans Ave., which includes 580,000 square feet of studio and office space. Washington D.C.-based Carlyle has long been known for defense and government-related investments but has been recently diversifying its holdings. The deal was first reported by the Business Journal in March.


Carlyle, which has counted former presidents as advisers, owns other property in Los Angeles, but the studio is its first Hollywood-related property purchase. Such television shows as “Boston Legal” and “CSI: Miami” are filmed at Manhattan Beach Studios, which is operated by Raleigh Studious.


Since the deal closed in mid-June, Carlyle has worked on its business plan for the studio. “We are in the process of finalizing our business plan and pricing things out, and we do have plans to make improvements,” said Edward Samek, a principal at Carlyle.


Carlyle will spend “a couple of million dollars” on renovations and improvements with a business plan expected in the next month or so, he said.



Culver Studios lawsuits

Though uncertainty surrounds the future of Culver Studios, one thing is certain: a legal battle is taking place between its owners and two former executives, with two Los Angeles County Superior Court cases working their way through the system.


Lawsuits filed in Superior Court allege that former Culver Studios executives Dana Arnold and Hal Katersky mismanaged the studio. Other allegations include embezzlement, breach of fiduciary duties and other acts of misconduct.


A limited liability company that included Arnold, Katersky, the current studio operators and others, purchased the studio from Sony Pictures Entertainment in 2004. But now Arnold and Katersky are being sued by former business partner F. Lee Tomlinson for allegedly deceiving Tomlinson into thinking he was part of the ownership group.


Arnold and Katersky, who are principals in Pacifica Ventures LLC management company, are also being sued by Culver Studios ownership for the alleged misuse of over $1 million in studio funds, in addition to fraud and misrepresentation. The ownership contends that under an agreement with Arnold and Katersky, the pair no longer have an ownership interest in the studio because they were not given a new contract to run it after their management agreement expired on Oct. 31, 2006.


Steven Shapero of Shapero Shapero & Hurst, the attorney representing Katersky and Arnold, said his clients believe neither suit has “the slightest bit of merit.”


“Particularly, the lawsuit brought by the Culver Studios ownership is brought in bad faith and for ulterior purposes. (Arnold and Katersky) believe it is being done for an ulterior motive an anti competitive purpose,” Shapero said.


Cella, the studio’s current chief, declined to comment on the lawsuits. And attorneys at Lord Bissell & Brook LLP representing the studio did not return calls seeking comment.


Tomlinson’s suit was slated to go to trial this week, but was postponed until September because of scheduling conflicts and “discovery issues,” said Tom Nunziato of Nunziato Buckley Weber LLP, who is representing Tomlinson and declined to comment further.


Arnold and Katersky are in the process of filing counter lawsuits. Arnold declined to comment on the lawsuits.

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