It’s not easy hunting for a sprawling movie studio complex that doesn’t exist. So I went a little overboard for this column. I chatted with people near the site and visited the offices of Moon River Studios. I connected with other people I thought could provide extra insight, among them the chairman of FONU2, the chief executive of the local development Authority and a colleague of actress/director Penny Marshall. I scanned investor sites, did background reviews, read press coverage and dug deep into the hairy regulatory filings of several companies. I got feedback from a Georgia Tech accounting professor and chatted with Scott Trubey, an AJC colleague who has written before on the project. I’m tired. Got an easier column idea? Please email me: mkempner@ajc.com.
To really throw yourself into a movie, it helps to suspend your disbelief. Just let reality give way so you can enjoy the plot.
Which brings me to a rural tip of Effingham County, about 20 miles west of Savannah along I-16. Officials there keep waiting for what promoters have said would be the creation of the nation’s largest movie-making complex, with something like 20 or 30 sound stages.
"We like to say, 'We're going to do to Hollywood what the Japanese did to Detroit, '" one of the project's private promoters, Jake Shapiro, told an AJC reporter and others on a site tour.
That was two years ago, months after the project was announced.
Georgia’s making lots of movies. But not at the proposed project in Effingham.
Shapiro’s outfit has yet to shoot a movie or build a sound stage there. Or get funding to pull it all off.
It’s all in the plans, Shapiro tells me.
In the next few weeks, he hopes to use money largely from the county’s local development authority to put in a road, which will go to the spot where he intends to build a sound stage.
They have given the project a big name: Studioplex. And they have issued many press releases. About things like plans being approved and permits issued and hiring a consultant.
More Promises
I wish the people who live in Effingham could see all the hopes come true. The promised jobs. The excitement of the movie business. The wonderful irony of showbiz becoming huge in an area where logging now helps pay the bills.
The promoters have promised more than movie studios: “boutique” hotels, restaurants, museums (yes, that’s plural), baseball fields, soccer fields and an outdoor concert venue.
Hope is a remarkable thing. It makes people believe when logic tells us to be careful and not suspend our disbelief.
That’s especially true when industries get hot, like movie-making has in Georgia. Hyper growth makes it easy to get caught up in just the hype part.
One county away from Effingham is the state government's own example of how exuberance can put you out on a limb. Georgia spent $60 million to buy and develop a site for a massive DaimlerChrysler project. But the automaker never guaranteed it would come. And it didn't. Thirteen years later, most of the site remains unused.
The state showed more restraint with the Effingham movie project. It offered a $3 million grant, but it kicks in only after bunches of jobs are created.
Restraint is a good thing.
The latest incarnation of the Effingham project hinges on a tiny company called FONU2 that doesn’t yet have enough money to stay in business for long, according to the company’s own auditors.
And that doesn’t even include coming up with the money to actually build the stuff it has promised.
Effingham officials may soon have to decide whether to extend more time to the project’s promoters or just call it quits.
The discussion of such choices hasn’t come up yet, said John Henry, the chief executive of Effingham’s industrial development authority, which has helped back the project.
“I’m not going to speculate on that,” he said.
Instead, Henry stressed to me that he sees plans to start road construction as forward momentum.
“We are quite relieved to get to the point where we are now. It’s been a frustrating process,” he told me.
“Very risky”
Because FONU2 is publicly traded, it's required to disclose financial information. (FONU2, by the way, also goes by the name Moon River Studios and took over from an earlier company called Medient Studios.)
I’ve looked at lots of corporate filings over the years. FONU2’s looked particularly troubling to me.
So I asked Chuck Mulford, an accounting professor who leads Georgia Tech’s Financial Reporting and Analysis Lab, to review the records.
“Overall, the company is obviously a very risky endeavor,” Mulford emailed me.
He pointed out the auditor’s concerns, the company’s absolute need for funding and FONU2’s heavy reliance on using its stock to pay vendors and contractors. The company has raised tens of millions of dollars over the years, he wrote, and most of that is now gone.
One thing FONU2 does have is a sweet lease on public land from Effingham’s development authority.
It’s a 20-year lease on more than 1,500 acres along I-16. The first two years are rent free. Property taxes have been waived for two decades. The promoters have the right to buy the land for $100 at the end of the lease. And the development authority has agreed to spend $1.25 million toward site improvements. (It’s already spent about $270,000 on other expenses associated with the project, plus far more to install a well it said was needed anyway.)
There is a catch. The promoters are required to create a certain number of jobs and spend $90 million, phased in over time, to build the facilities.
But FONU2 said it doesn’t expect to make the first leg of that requirement: spending $20 million on the site by the end of this year, according to a recent filing.
It also needs to come up with more than $500,000 to make its first rent payment by the end of February. And it needs about $2 million just to build a single sound stage. Of course, none of that includes the cost of actually making films.
Help from Penny
None of this should be a shocker. From the very beginning it was a mammoth project proposed by a tiny company with limited resources.
Shapiro, the guy who took reporters around the project site two years ago, now is FONU2’s chairman. He’s a former stock trader who has tried a hodgepodge of ventures. They included work on launching an independent music label and leading a company that bought a California winery, which then got in a deep hole and filed for bankruptcy protection.
Shapiro worked for another company, Medient, that originally proposed the Effingham project.
He recently told me that though his job was to convince people to fund the project under Medient, he concluded the plan had a grandiose design and “the original direction under the original CEO was not reality based.”
He said he always believed in the root idea, though, and now, under FONU2, has focused on simple architectural designs with lower costs and a stronger team of executives and consultants.
Shapiro told me he now hopes to have FONU2’s first sound stage in operation by the end of March.
Meanwhile, he said he’s looking for financing, which so far has been “challenging.”
FONU2 also touts its link to Penny Marshall, the former Laverne & Shirley star whose directing chops include the movie “Big.” Marshall is slated to direct two movies for the company. But her compensation is in FONU2 stock, which has plummeted in value.
“We are in the middle of getting a few issues cleared up” with the company, I was told in an email from Wendi Laski, who identified herself as Marshall’s producing partner.
Laski didn’t elaborate, but she indicated they still plan to make two films with the company.
Shapiro, meanwhile, told me FONU2 could do for movie production what Henry Ford did for car manufacturing: make it speedy and efficient.
I suspect people in Effingham hope there’s more to that sentiment than just fast talk.
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