Posted: Monday, September 1st 2014 at 3:58pm
Ga. film studio delivers high drama, few results
By The Associated Press
SAVANNAH, Ga. (AP) -- Medient Studios promised to bring 1,000 jobs and a taste of Hollywood glamor to the middlebrow suburbs of Effingham County last summer, when the company broke ground on a $90 million movie-production campus west of Savannah.
A year later, the studio has delivered plenty of drama but little tangible progress.
Just this summer, Medient has ousted its founder and CEO, and regulators temporarily suspended trading of its stock. It also reported a $14.6 million net loss in its newest earnings report.
No buildings have been constructed on the company's 1,500-acre site near Interstate 16. Medient has yet to start shooting any films in coastal Georgia. Its new top executive promises that will change this fall.
The studio's officers are asking for a fresh start. Last week, Medient announced plans to change its name to Moon River Studios. It's working with economic development officials to renegotiate the terms of its incentives package. The deal promised 1,000 jobs in five years in exchange for $1.25 million in taxpayer-funded site preparation and a lease giving the studio two years on the county-owned property without rent.
"There's a lot of concern," said John Henry, CEO of the Effingham County Industrial Development Authority. He noted that the original deal called for Medient to have limited facilities up and running within its first year. Henry said he still believes the studio can succeed but acknowledged the county has few options.
"We either move forward with the new management team and essentially start at square one, or we assume there's no project whatsoever and go back to marketing the property," Henry said.
Georgia taxpayers also are on the hook for $3 million in state-sponsored incentives to Medient. The studio gets none of that money until it creates at least 250 jobs lasting a full year. The studio currently employs fewer than 24 workers, about the same number it had a year ago, New CEO Jake Shapiro said.
Hollywood has long come to Savannah to film movies, from "Forrest Gump" to the recently announced sequel to "Magic Mike." But the prospect of a studio employing people year-round has been a huge deal for neighboring Effingham County.
Most residents commute to outlying communities. At the time of Medient's groundbreaking in August 2013, Henry said the studio's workforce - from carpenters building sets to computer programmers creating special effects - could boost Effingham employment by 10 percent.
Medient's new managers say locals will see progress soon. Shapiro became CEO in June after its board fired Manu Kumaran. Shapiro said the studio plans to start shooting the horror film "RIP" in the Savannah area this fall. Meanwhile, he said, sets are being constructed on studio property for its next project. Medient is pressing to open its first office building in early 2015.
"We really wanted to demonstrate to the community and our shareholders that there's a very new management team in place with a very clear direction and focus," Shapiro said. "The business plan was always a great business plan. The problem was the former CEO couldn't stick to the business plan."
The company also brought some prominent names onto its board. The new chairman is Charles Koppelman, former chairman of EMI Records and Martha Stewart Living Omnimedia. Former New York Gov. David Paterson joined the board last spring.
The project's first phase - previously planned at $90 million - has slimmed down to about $20 million for a pair of soundstages and a main office building. Henry said the finished studio should still reach $90 million in total investment.
It's unclear how Medient plans to finance construction. In its earnings report filed Aug. 18, the company said it had $156,331 in cash and equivalents, plus a credit line of $808,500. Medient reported zero revenue in the quarter ending June 30, with a net loss of $14.6 million.
Most of the losses were attributed to two films the company owns. Horror film "Storage 24" flopped last year. "Yellow" starring Ray Liotta and Melanie Griffith is awaiting release. Shapiro said the studio reassessed "Yellow" more conservatively, resulting in a $5.3 million loss on paper.
Medient also announced last week an effort to attract new investors to its troubled stock by slashing the number of issued shares from more than 2.3 billion to about 2.3 million. The move came after the Securities and Exchange Commission suspended trading for two weeks starting June 25, citing questions about Medient's accuracy in reporting total outstanding shares to investors.
The value of Medient's stock has plummeted from a high of 62 cents a share last September to a fraction of a penny - .04 cents when markets closed Friday.
Joe Maner, a retired railroad technician in Effingham County, invested $1,000 in Medient stock during the past year. After the price fell, he sold it all. A brokerage receipt showed his stock's total value had fallen to $7.20, Maner said.
He said he still hopes the studio succeeds, but he won't bet any more money on it.
"I don't own a cent," Maner said. "If they want me to have some of it, they'd have to give it to me."
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