A 'James Bond' Business Coup
BY WILLIAM MELLOR
Five years ago, a Malaysian company outmaneuvered a British rival to acquire the studio where the latest Star Wars blockbuster was filmed. Now it plans to take the Asian film and entertainment industry by storm
It could have been just another property transaction involving two big British companies. Up for sale was an old helicopter-engine factory and adjoining World War II aerodrome that had been temporarily converted into a film set to shoot the James Bond movie GoldenEye.
The vendor of the 115-hectare site 40 kilometers outside London was blue-chip British aero-engine manufacturer Rolls-Royce PLC. The would-be purchaser: one of Britain's leading property developers, Slough Estates, which, once the filming of GoldenEye was completed, would redevelop the site as a business park and golf course.
It appeared to be a done deal. But a chance social visit to the James Bond film set by a private investment banker, followed by a half-hour meeting at London's posh Ritz Hotel, changed all that.
While GoldenEye star Pierce Brosnan and his co-stars continued to film, an off-screen drama was being played out as a Malaysian company, the DKH-George Town Holdings group -- at that time unheard of in Britain -- stepped in with a dramatic last-minute bid.
Rather than create another business park and golf course, DKH and George Town had a more ambitious plan: to turn the old factory and aerodrome into a permanent film studio -- one of the biggest in Europe, complete with studio tours and an entertainment park.
And after obtaining planning permission from British authorities with a speed that astonished the independent consultants involved, it was the Malaysians who won the day. The result was the creation of Leavesden Studios Ltd., which recently hosted filming of one of the biggest blockbusters in movie history, Star Wars: Episode I -- The Phantom Menace. Preproduction design work for Titanic was also carried out at Leavesden and, most recently, Paramount Pictures' soon to be released Sleepy Hollow, starring Johnny Depp, was filmed there.
Now DKH and its associate company, George Town, which is chaired by Tunku Abdullah Almarhum Abdul Rahman, a member of the entrepreneurial Negri Sembilan royal family and brother of Malaysia's 10th king, plan to expand back into Asia. Last month, DKH (which owns 80 percent of Asia Inc), was appointed to spearhead development of a major film studio and entertainment complex in Malaysia's Multimedia Super Corridor (MSC).
The first phase of the project will be worth $60 million. By the time it is completed, the development will also include a world-class theme park, business and residential townships and a resort.
Says DKH Vice Chairman Ibrahim Ghaffar: "This is a great opportunity to develop the film industry in Malaysia. It will also be a major boost to tourism."
Bob Bishop, chairman emeritus of SiliconGraphics, a leading U.S. IT company that specializes in high-performance computing technology for the film industry, described the establishment of a major studio in the MSC as 'the equivalent of putting together Silicon Valley and Hollywood' (see "Cyber Czar," page 30).
DKH and George Town do not intend to stop there. George Town Chairman Abdullah says the companies hope to forge links with Hong Kong's film industry and plan to further develop their Leavesden film base. Declares Abdullah: "Star Wars has really put Leavesden on the map."
Already boasting one of the world's biggest backlots for outdoor filming, it is planned to expand the Leavesden complex to include new purpose-built studios and a movie theme park.
Meanwhile, the company has further expanded into Europe by acquiring a Swiss private bank, Banque Financič de la Cité in Geneva.
The story of how a Malaysian company came to own a major film studio contains elements of both entrepreneurialism and luck.
It begins in 1994 when Eon Productions Ltd., maker of the James Bond films, attempted to book a studio in which to film GoldenEye, the first Bond film to star Pierce Brosnan as secret agent 007.
To its dismay, its first choice, the famous Pinewood facility outside London, was not available. Worse, no other British film studio big enough to handle the production could be found. So Eon embarked on a worldwide search for a suitable alternative.
That search, too, drew a blank and in near desperation the company turned to Britain's Ministry of Defense, which suggested the producers look at Leavesden's old buildings and disused runway.
For some members of the GoldenEye crew, the trip to Leavesden, near Watford, might have seemed a wasted journey. But when they arrived and saw the lofty aircraft-hangar type factory buildings and the aerodrome's 180-degree unobstructed horizon, all that changed.
"I thought, "My Goodness, this place is fantastic," " recalls Daniel Dark, 35, who was then studio manager for Eon Productions. "It was almost as if it had been designed as a film studio. I thought, "Wouldn't it be great if some visionary came along and purchased it." "
Leading man Brosnan was also impressed. Referring to the difficult task of filling the shoes of the original Bond, Sean Connery, Brosnan said: "There are no ghosts here . . . no ghosts of Sean, no ghosts of the '60s. The factory has a good feel to it, a clean fresh slate."
But Leavesden's newfound fame seemed destined to be brief. Rolls-Royce was content to rent the property to Eon Productions while preparing to sell it to Slough Estates, which describes itself as Britain's leading developer of high-quality business space. Thus GoldenEye would be the first and last film made there.
Enter Angelika Brozler, a European mergers-and-acquisitions specialist and private investment banker who had held positions with Credit Suisse-First Boston, Schroders and one of Europe's richest families. Brozler was a friend of the Broccoli family, which controls Eon productions, and had been invited to spend a day watching GoldenEye being filmed.
Says Brozler: "I thought it was an amazing site and what a shame it would be if it got into the hands of a normal developer."
Brozler knew of the demand for film studios. And she noted that Leavesden was in the heart of one of the world's great filmmaking communities, close to Pinewood, Shepperton and Elstree studios and surrounded by the myriad companies that supply the industry with creative and technical talent. So she wrote a business plan to turn Leavesden into a proper film studio and entertainment center.
To get backing, Brozler first went to the financial markets. But with Leavesden about to be sold to property developers, she couldn't find an investor prepared to move fast enough. The same problem applied when she approached the major publicly listed entertainment companies. If an offer wasn't made within three weeks, the chance would be lost.
"I realized the only people who could capture the opportunity would be entrepreneurs who could quickly understand the project and then act," she says. "Film studios alone are just a break-even business. But once you add studio tours and an entertainment center, you start to make serious money. Though initially capital-intensive, it's a great cash cow."
After casting around, Brozler approached a successful Malaysian businessman, Simon Tay, representing DKH and George Town Holdings. Brozler knew Tay from when Germany's Kempinski hotel chain had been for sale and she had advised him against buying (it was eventually sold to Thailand's Dusit Thani group). Now she was urging Tay to seize this opportunity for the DKH-George Town group.
Brozler and Tay met at London's Ritz Hotel. "It was an extraordinary meeting," Brozler recalls. "I explained the underlying idea and showed video footage of the James Bond film being shot at Leavesden, and half an hour later Simon had decided to ask the group to go for it."
The next problem was how to approach the board of Rolls-Royce. Although plans for the sale to Slough Estates were well advanced, publicly listed Rolls-Royce had a duty to its shareholders to consider alternative offers.
"We had to put an offer to the board of Rolls-Royce that was high enough to attract their attention but not so high that it became not feasible," explains Brozler. "In the meantime, we had to put other things in place and get outline planning permission."
The tactic worked. The initial Malaysian offer was enough to stop Rolls-Royce from closing its deal with Slough Estates. Then the real race against time began. DKH-George Town needed to get planning permission within three months or its option to buy Leavesden would lapse. The company flew in an American lawyer, Jonathan Roth, who had worked with Tay on projects in the U.S. and Europe. "To go through the planning processes required in Britain normally takes a minimum of two years and sometimes three," says Roth. "We got local approval in two months and nine days."
To obtain planning permission, DKH-George Town had to carry out modifications to a dual-carriageway trunk road, involving construction of a slip road to the Leavesden site. A day after planning permission was obtained, the work began. A year later it was finished.
"It was amazing," recalls Jerome Munro-Lafon, 47, a London-based director of international engineering consultants Scott Wilson, who oversaw the job. "I have been involved in a huge number of similar projects and in my experience the normal period from gestation to implementation is 10 to 12 years. Yet DKH came in at the eleventh hour with a completely new concept and got it done in a fraction of that time."
How was this possible? Says Munro-Lafon: "Simon Tay has vision and enormous drive and he enthuses people. We had a team that was totally united."
Planning permission obtained, Rolls-Royce accepted a $67 million cash bid from DKH-George Town. Says Angelika Brozler: "We stole the deal away from Slough Estates."
Of her dealings with Tay, she says: "I had approached other Asian entrepreneurs, but none could move as fast as he did." Was it because Tay is a film enthusiast? "Only in small part," he says. "The bottom line was that it was a very good business deal. There were strong underlying assets that made good commercial sense."
The George Town purchase was applauded in Watford, a self-contained community where the local football club is owned by singer Elton John. When Rolls-Royce closed its factory, 4,000 jobs were lost. But George Town's proposal could ultimately provide work for 3,000 to 5,000.
The deal was also welcomed by the British film community. British Film Commissioner Sydney Samuelson described it as a landmark development, adding: "It is indicative of the energy and persistence of those concerned with making the Leavesden project happen." Trumpeted London's Evening Standard: "Hooray for Watford, Hollywood's rival."
Indeed, part of the attraction for George Town was Leavesden's proximity to other world-famous studios. Only two or three places in the world, including Hollywood, have such a concentration of world-class filmmaking expertise, including small but highly specialized companies dealing in special effects, animation, audio, lighting, set design and other essential cinematic requirements.
Certainly, Leavesden has had no problem attracting big-budget films. After GoldenEye was completed, crew members of Titanic moved in for two months for preproduction design work. After that came Mortal Kombat Annihilation, which was on set at Leavesden for five months.
Then, in January 1997, the studio won the big one: Star Wars: Episode I -- The Phantom Menace. Why was Leavesden chosen? Explains Director George Lucas: "The great advantage of working at Leavesden is the amount of space under cover. We could work on nine different stages at any one time. I couldn't have been more pleased with the facility."
Such was the scale of the Star Wars production that it took over the entire studio, including half a million square feet (55,000 square meters) of covered space, for the best part of two years.
The old aerodrome runway, still largely intact, became otherworldly as Star Wars sets rose on it. In one part of the studio was the desert planet Tatooine, in another the Jedi Council chamber.
While Star Wars was being made, Leavesden announced the appointment of former Disneyland Executive Vice President Norman Doerges as its president and CEO. During a 30-year career with Disney, Doerges was deeply involved in Walt Disney World and Epcot Center in Florida, Disneyland in California and development of the $1.4 billion Disney's California Adventure, due to open beside Disneyland in 2001.
Soon after, Leavesden recruited as executive vice president and executive producer a second Disney veteran, former Senior Vice President Robert McTyre, producer of the Broadway hit Beauty and the Beast and The Lion King.
In addition to developing Leavesden, Doerges and McTyre will play a major role in the Malaysian project. So too will Daniel Dark, formerly of Eon Productions, now studio manager at Leavesden. Dark's father, John, is no stranger to Malaysia. He produced The 7th Dawn, starring William Holden, Susannah York and Capucine, which was filmed there in 1964.
What led Doerges, 55, to leave Disney and join a Malaysian-owned company with no previous studio or theme-park experience? "When Simon Tay approached me, he said DKH was interested in doing something at the same level of quality as Disney," Doerges says. "I did not want to do anything less than that."
That commitment to quality appears to have impressed Malaysia's MSC Implementation Council, chaired by Prime Minister Mahathir Mohamad, which last month gave DKH the green light to begin work on a film studio and entertainment village in the MSC.
For the DKH-George Town group, a half-hour meeting in London's Ritz Hotel five years ago not only resulted in the acquisition of one of Europe's largest film studios, but led to a potentially even greater business coup back home in Asia.