To grasp the uncertainty over the future of Universal Studios, one need only look at its real estate in the Cahuenga Pass.
On the one hand, the studio is scrambling to complete its already successful CityWalk entertainment district adjacent to its studio tour; on the other, it has placed expansion plans in deep freeze for the past year and a half, even though it owns some of the choicest undeveloped real estate in Southern California.
Universal denies any linkage between suspending development beyond CityWalk and the persistent rumors that parent Seagram Co. wants to unload the Universal entertainment properties. “The completion of CityWalk underscores our ongoing commitment to Los Angeles,” a Universal representative said.
The CityWalk expansion, which will boost the number of attractions from 40 to 65 when it opens April 12, reflects the undeniable success of offering an idealized version of offbeat retail, entertainment and dining.
“CityWalk is about being fresh and over-the-top,” said Larry Kurzweil, president and chief operating officer of Universal Studios Hollywood. “We’ve been very successful, but we simply didn’t offer enough choices.”
CityWalk, which has confounded skeptics by attracting shoulder-to-shoulder hordes since opening in 1993, is adding distinctive attractions including rock ‘n’ roll bowling, NASCAR virtual racing at speeds of up to 180 mph, a dueling piano bar, an Imax theater and a microbrewery. All told, the expansion adds 93,000 square feet.
But the expansion comes amid a steady drumbeat of rumors that Seagram will sell Universal. Despite repeated denials by Seagram chief Edgar Bronfman Jr., the rumors have helped drive Seagram’s stock price up 30% this year.
So while the CityWalk upgrade shows that Seagram is indeed proceeding with business as usual, the decision to put other expansion on hold underlines the uncertainty that many observers see surrounding Seagram’s operations. Universal insists the real estate issues are not linked.
“The entire scope of Universal CityWalk was approved in 1989,” a Universal representative said in response. “It is separate from the master plan, which is still under consideration.”
Over the past year and a half, Universal has executed an abrupt U-turn on the notion of building out the rest of the more than 400 acres it controls.
From early 1995 to late 1998, Universal aggressively pursued the approval of a master plan through public hearings and by courting supporters. It originally proposed a second theme park and 5.8 million square feet; it eventually reached a compromise on a 15-year plan that would allow it to add 3.2 million square feet in production space, offices and hotels.
But in November 1998, Universal decided to stop pushing. The stated reason remains the same: Seagram needed to evaluate its entire real estate portfolio, which had been expanded significantly following the $10 billion Polygram purchase.
Pro-growth advocates are puzzled since Universal was on the verge of securing key approvals from the Los Angeles Regional Planning Commission.
“We had supported the master plan because it would have made the site into an overnight tourist destination,” said Jack Kyser, chief economist at the Los Angeles Economic Development Corp. “The studio could have been able to take advantage of the Metro Red Line (subway) opening this summer at Universal City and the Democratic Convention coming to downtown this August.”
Kyser also believes the Universal Studios tourist attraction will soon need as much firepower as it can muster, possibly far more than a revamped CityWalk can offer, because Disneyland will open its California Adventure park and an entertainment district next year and theme park Knott’s Berry Farm is planning to expand.
“The new attractions are going to draw a lot of people for an extra day so Universal is likely to see an impact on its attendance if it stands still,” Kyser noted.
Universal’s decision to scale back its original expansion plan by 40% came following homeowners groups objecting to the noise and traffic. Polly Ward, vice president of the Studio City Residents Assn., said Seagram has backed off on getting the master plan through because it was more difficult and costly than originally expected.
“It’s my opinion that they’re going to sell off the entertainment property,” Ward said.
Universal officials made one foray into the community four months ago in a meeting with Universal Tomorrow, a community group that supports expansion.
“My impression is that they wanted to get the CityWalk expansion out of the way before they go back to the master plan,” said Brent Seltzer, who attended to event with 30 other Universal Tomorrow members. “But they were pretty vague about real estate plans. They’re being very quiet about it.”
Seltzer speculates the wrangling with neighbors over the plan may have worn down Universal’s resolve. “They may have just gotten tired of being beaten up over this,” he said.
As for CityWalk, Kurzweil believes the new district needed to turbo-charge itself with a greater selection and more immersion of the senses. “We’re like no place in the world and we’re taking it to a new level,” he said.
The goal is to generate a significant boost in the CityWalk attendance of 10 million annually along with greater spending.
The concept is one that Seagram clearly likes with a second CityWalk opened at its Islands of Adventure theme park in Florida and another planned for itsJapanese theme park, due to open next year.