Fox Studios Australia is to shut down its loss-making public entertainment site, the Backlot to expand the professional component of its otherwise hugely successful central Sydney site.

A restructure is also planned that will see Lend Lease Corporation sell its 50% share in the studio portion of the site back to Fox Filmed Entertainment.

The studio component of the old showground site has been a roaring success since opening in May 1998, as has the retail and 'eatertainment' section. If approvals are granted - and the development has always been controversial - an additional soundstage, a flexible live television/rehearsal stage and an additional 2,000 square metres of production and post-production offices will be built.

This will result in professional production taking up 13.5 hectares of the 24-hectare site, with the shopping, restaurant and cinema precinct that makes up the remainder continuing as a lifestyle environment for the general public. This area will continue to be 50% owned by Lend Lease. "The consistent support of the New South Wales State Government and recent policy announcements of the Federal Government, which we understand are supported by the Federal Opposition, encourage us to have confidence in the future of the Australian production environment," said chief executive Kim Williams, referring to how the recently introduced 12.5% refundable tax offset for offshore production should remove the uncertainty that has surrounded the tax status of offshore productions.

Williams said the studio has been responsible for hosting productions worth over $307.1m (A$600m). Films that have shot at the studio include Mission Impossible 2, Moulin Rouge, Star Wars Episode 2, Down And Under and The Quiet American. Currently in production is Matrix Reloaded and Matrix 3.