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STEVE INSKEEP, host:

You know the old saying it takes money to make money? MGM Studios has one of the hottest movie properties going and they don't have the money to finish it. It's author J.R.R. Tolkien's "The Hobbit." It will not be coming to a theater near you anytime soon. Reporter Kim Masters joins us now. We touch base with her from time to time on things Hollywood.

Hi, Kim.

KIM MASTERS: Hi, Steve.

INSKEEP: So what is stopping "The Hobbit" from getting done?

MASTERS: "The Hobbit" is a joint effort between Warner Brothers and MGM. And MGM is a very troubled studio and has been for some time, but it's in crisis now. There are creditors who are owed a great deal of money. They're trying to sell it. And there are no buyers. Things are in a funk in Hollywood. And so "The Hobbit"�is in limbo.

INSKEEP: But I want to figure this out, because it's not like this studio is, you know, just saying I'd gladly pay you Tuesday for a hamburger today. I mean, they've got "The Hobbit." This is something that's got a guaranteed built-in audience. You can assume that it's going to make tons of money. Why wouldn't creditors line up to loan money to something like that?

MASTERS: You know, it's not just�"The Hobbit." They want to sell this property, the studio. And the studio has been just languishing. It has no money. It put out - its last movie that it released was�"Hot Tub Time Machine." Memorable, right? That's a stick with you.

(Soundbite of laughter)

MASTERS: They'd like to go in a time machine back to the days when they were really vibrant and alive. But they're not. They have nothing. They had Guillermo del Toro lined up, this wonderful director who did�"Pan's Labyrinth"�and seemed like a great guy. He had, of course, Peter Jackson, who did�"The Lord of the Rings"�trilogy. He was blessed by Peter Jackson to do two�Hobbit�movies, actually.

And then he had to back out. Why? Because it's in limbo. And if they go forward now and there is no buyer and all of these creditors that are owed money and are controlling the fate of MGM decide to go into bankruptcy, then a company like Time Warner that invested in�"The Hobbit" could find that it is completely out of luck and that it had lost its investment while this company is stuck in bankruptcy. So it's held�"The Hobbit"�up indefinitely.

INSKEEP: And also the latest 007 movie.

MASTERS: That's exactly right. What would seem to be one of the surest thing in the movie business, Bond, you know, James Bond - that would have been Bond 23. Talk about a franchise. But again, the Broccoli family which controls Bond they don't want to go forward with the Bond movie and then find that there's a bankruptcy and this thing is bollixed up in a bankruptcy for an indefinite period. So all of this stuff is now on hold. And it's a symptom of what's wrong with Hollywood.

INSKEEP: I think you've just answered the question for me of why, even though these movies seem to be guaranteed money makers, that they might not go forward, because the possibility of a bankruptcy raises big questions about who would ever get the profits from that.

MASTERS: There's that, and there's - and then there's another issue relating to this MGM sale, which is it owns this library. Libraries have plummeted in value. DVDs are not selling. There's all of this uncertainty about how you're going to watch movies and who's going to pay for it. You know, are you going to watch it in your house, is it going to be streamed, are you going to get it for a dollar out of Redbox? So the library value is questionable, and that holds up the MGM sale, and therefore everything is on hold.

INSKEEP: When Hollywood can't even get "The Hobbit" and a James Bond movie out the door, does that make the whole industry, well beyond MGM, a little depressed?

MASTERS: Well, it's not just that. We just had one of the worst - the Memorial Day weekend, which a had a number of big, supposedly big movies - you know, "Prince of Persia" and the godforsaken "Sex and the City" sequel, this is one of the worst box office weekends on Memorial Day I think since 1993. So there is anxiety, of course, in Hollywood right now. And there's a feeling that the future is a big question mark.

INSKEEP: Kim, always good to talk with you.

MASTERS: Thank you, Steve.

INSKEEP: Kim Masters hosts THE BUSINESS on member station KCRW and is editor-at-large for The Hollywood Reporter.

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