Studios venture costly but worthwhile (From Borehamwood Times)

Studios venture costly but worthwhile

6:31pm Thursday 19th July 2007

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To the citizens of Borehamwood and the Borough of Hertsmere: As regular readers of the Borehamwood & Elstree Times are already aware, Pacifica Ventures International actively participated in the Hertsmere Borough Council's recent efforts to secure the financial future of the historic Elstree Studios. The tender process that was concluded this past January spanned a year and involved several substantial bidders.

After winning the bidding process, Pacifica entered into lengthy and sometimes difficult negotiations with the council. The council has now chosen to terminate those negotiations.

Despite several articles in the Times and numerous rumours and innuendos, Pacifica, given its commitment to an appropriately professional process, has refrained from public comment regarding these matters until now.

After many months of effort, hundreds of hours of hard work by Pacifica's staff, and Pacifica's unrecouped expenditure of funds far exceeding the reported amounts incurred by the council to date, Pacifica is deeply disappointed by the council's decision.

However, any insinuation from third parties that the efforts of the executive council or some of its individual members was inappropriate or that the funds spent on advisors to professionally assure the process were either excessive or scandalous' is shortsighted at best and completely misses the larger issues at hand.

It is hard enough to complete such a difficult process, without making the future of the Elstree Studios a politically charged event that only serves to denigrate the hard work of all involved and potentially permanently damage the studio's future prospects.

While we have no direct knowledge of the council's final decision process, and while we obviously disagree, nevertheless we have a deep and abiding respect for the senior management of the borough and the executive council charged with this effort.

Their efforts were tireless in attempting to reconcile the numerous serious and complicated issues facing the Elstree Studios with the goal of bringing third party capital and new management to revitalise the property.

While this might seem to some less informed to be an expensive experiment with no positive result, there was actually a great deal of knowledge gained by the executive council.

There are extremely serious problems surrounding the recapitalisation and revitalisation effort for Elstree Studios as proposed by the council. These issues are not political, but rather they are the hard cold facts of real estate finance and business operations in an entertainment production facilities business that is not only very difficult to be successful in, but is also extremely competitive.

As most readers are already aware, the most serious of these issues is more than five acres of contaminated land known as the mound'. This environmental hazard confronting the property is a potentially catastrophic matter that will impact every effort to revitalise it for many years to come.

Pacifica offered to make a substantial financial contribution to the mitigation costs, but could not accept an unknown and potentially limitless financial and legal liability. Given the recent filing of what is likely the first of numerous lawsuits relating to the cancer-related death of a former set builder at what was then Cannon Films, and the absence of a environmental study quantifying the clean-up costs for the mound, Pacifica could not reasonably step into the chain of liability for this very serious hazard.

While our own consultants advised us against this transaction months ago due to this very issue, we remained loyal to the process and to the citizens of Hertsmere and chose to see the process through.

Meanwhile, Pacifica's business around the world and its relationships with the major Hollywood Studios has continued to grow and flourish; Pacifica is building a custom, state-of-the-art facility for Sony Pictures Imageworks on the campus of Pacifica's Albuquerque Studios and the recent groundbreaking was attended by New Mexico Governor (and presidential candidate) Bill Richardson; Albuquerque Studios is filling up with major projects from all of the major studios, including two significant projects from NBC/Universal Studios and Warner Bros.; and Pacifica is only a few months away from breaking ground on a new studio on the East Coast of the US.

Today, the citizens of Hertsmere have the benefit of owning and operating the currently cash positive Elstree Studios, which is not only historic, but continues to provide an excellent return on investment. The cost incurred by the council in the tender effort, which was intended to ultimately result in the expansion, refurbishment, and modernisation of the studios, was not only visionary, it was and will continue to be an essential effort that must continue to be pursued if the future of the Elstree Studios is to be assured.

The ageing process of the Elstree Studios will relentlessly continue while the film and television industry continues to evolve, increasing its demands for bigger, better and more technologically advanced facilities. We wish the community of Borehamwood and the Hertsmere Borough Council all the best wishes in their future efforts to address the increasingly serious issues that the studios will be facing in the years to come.

Dana Arnold, chief executive officer, Pacifica Ventures International

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