AEG ousted at Kodak Theatre.

Anschutz Entertainment Group, majority owner of the Staples Center and the nation s second-largest promoter of live entertainment, has been replaced as manager of the Kodak Theatre.

The change, coming as AEG's three-year management contract expired, arose from an underlying disagreement about what types of acts could be booked at the Kodak, which is host to the Academy Awards.

Theater owner CIM Group Inc., which also owns the Hollywood & Highland complex, wants longer-running musicals and plays at the venue, while AEG believes competing with the nearby Pantages and its owner, Nederlander Producing Co. of America Inc., would be nearly impossible. Several local theater producers privately agreed last week with AEG's assessment. "That theater should never have been built that way," said one L.A. producer who requested anonymity. "I don't think it will be there in 25 years."

The new management company, called TheatreDreams, is a 50-50 partnership between CIM and the Chicago Theatre owners. TheatreDreams principals, Tony-award winning producers Lawrence J. Wilker and William W. Becker, said they see potential in the venue, describing it as a state-of-the-art facility with nearby parking, restaurants and shops.

"It's a great place to attend an event because you have everything right there," said Wilker, who managed the Kennedy Center in Washington, D.C., for a decade. "You can park once and have a great evening."

The new operators say that while landing extended shows will be an objective, they will also seek out pop music, jazz, dance, theater and TV programs. "We're not hanging our hat on finding long-running events," Wilker said. "The goal is to have a vibrant, active theater."

Keeping the Kodak busy is an important part of CIM's plan to invigorate Hollywood & Highland. Shaul Kuba, a CIM principal, said that when shows are held at the Kodak Theatre, crowds stick around to shop and dine.

"It's been an unbelievable tool for driving business," Kuba said. "The longer a show stays here the business for food and beverage is more steady. Also, people who wouldn't necessarily come here do because of a show."

Still, critics point out that the theater is poorly designed for live performances. About 1,000 of its 3,400 seats are on a third balcony that is unpleasantly steep, and those sitting in the back of the section can't see the front of the stage below.

In addition, the backstage area is small for a theater of the Kodak's size. That precludes shows that require large sets, such as "The Phantom of the Opera." And because of the theater's long-term arrangement to host the Academy Awards, it is unable to house run through the winter-spring season. (The Oscars ceremony takes a month to set up and dismantle.)

AEG president Tim Leiweke said the Kodak is too big for a Broadway show and too small to attract a big-name musical act. "The Pantages was built for Broadway, and the Kodak was built for the Academy Awards," he said.

CIM told AEG that if it wanted to keep the management contract, AEG would have to either land Broadway-type acts or invest in developing that content for the theater, Leiweke said.

"We would have liked to stay there but they wanted us to put more cash into content, especially Broadway shows," he said. "We refused to compete with Jimmy Nederlander on Broadway."

AEG already tried to lure Broadway-type shows to no avail, he said. "We went to people like Mel Brooks to try to get him to do 'The Producers' there, and he didn't like the theater," Leiweke said. "It was not for a lack of trying. Compared to the Nederlanders, we're babes in the woods."

Nederlander officials declined to comment.

The TheatreDreams principals say the Kodak is about the same size as other live theaters being built nowadays, and that it needs the added seats to make producing shows profitable. Also, Wilker said, curtains are being installed that will allow producers who need a more intimate setting to shut out some seats, making the venue feel smaller. "It makes it intimate and beautiful," he said.

While both AEG and CIM officials say they respect each other, AEG's departure has opened the door for more bare-knuckle competition over bookings of plays, music concerts and musicals. Leiweke said that without the Kodak management contract, AEG has been freed of conflict-of-interest issues that kept the promoter from going after acts that could also book the Kodak.

AEG is planning a 7,300-seat theater that will be across from the Staples Center. The company plans to break ground in summer and the theater could be ready within two years.

"We like the CIM guys a lot, but we will be competing for music," Leiweke said. "We will be competing for content and now we can take the gloves off. We will be extremely aggressive in owning the music in this marketplace."

Kuba said the arrangement with the Chicago Theatre is necessary to compete with the Pantages and Shubert theaters of the world.

TheatreDreams, with both the Chicago Theatre and the Kodak, can offer two sizable venues to shows in two of the largest theater markets in the country.

"The reason the Pantages can get longer-running shows is because the Nederlanders have theaters around the world and can offer those to exhibitors," Kuba said. "We are trying to do the same thing."

In the end, the increased competition means more high-quality acts will be coming to L.A., Wilker said. "It's always a problem competing with anybody. I love Jimmy Nederlander and I've known him a long time, but we'll compete as he'll compete. We'll get some shows and he'll get some shows and Los Angeles will benefit."