Feb. 25 (Bloomberg) -- Richard Stellar thought his elderly mother’s move to the Motion Picture & Television Fund nursing home in 2005 was the last for the former secretary to James Bond producer Albert “Cubby” Broccoli.

Suffering from dementia, Mary Stellar saw the “Casablanca” and “Frankenstein” posters and stills of Charlie Chaplin and thought she was back at Metro-Goldwyn-Mayer Inc., not under care in Los Angeles’ San Fernando Valley.

“She called it MGM,” Richard Stellar, 53, who works in the music industry, recalled during a visit. “It didn’t feel like a nursing home. It feels like the executive offices of MGM.”

Jeffrey Katzenberg, chief executive of DreamWorks Animation SKG Inc. and chairman of the organization’s fund-raising board, says the 114-resident home needs to close. He is trying to eliminate a $10 million annual operating deficit from the facility and an acute-care hospital that threatens other programs helping Hollywood’s elderly.

“It will bankrupt the motion-picture fund if we stay the course that we’re on,” said Katzenberg, whose charitable foundation gave $100,000 to MPTF in 2007, according to tax returns. He recently disclosed personal losses in the alleged Bernard Madoff Ponzi scheme.

Relatives of the residents are fighting to keep the home open, leading to a public battle pitting the families, unionized nurses and other caregivers against Katzenberg, actor Michael Douglas and Frank G. Mancuso, who led Paramount Pictures and MGM and now chairs the foundation’s corporate board.

The MPTF dates back to 1921, when Mary Pickford, Douglas Fairbanks, D.W. Griffith, Chaplin and other celebrities began raising money for entertainers who’d fallen on hard times.

Dr. McCoy, Lily Munster

The Woodland Hills campus that includes the nursing home was developed in the 1940s. Residents have included Larry Fine of the Three Stooges, producer-director Stanley Kramer, DeForest Kelley of “Star Trek” and Yvonne De Carlo of “The Munsters.”

Most residents aren’t A-list celebrities and some receive financial assistance from the fund. They’ve included set carpenters, cameramen, writers, entertainers’ spouses, and secretaries such as Mary Stellar. The MPTF uses the motto “Taking Care of Our Own.”

The battle intensified over the weekend, as much of Hollywood focused on the Academy Awards. On Feb. 21, more than 200 demonstrators, including Richard Stellar and MPTF nurses, marched on Sunset Boulevard in front of the Beverly Hills Hotel, where the fund held its annual pre-Oscar “Night Before” fundraiser. Attendees included Steven Spielberg, Jennifer Lopez, Elton John and Jennifer Aniston.

Media Battle

“Find a way to let them stay!” protesters chanted. Marchers carried signs reading “Shame on Katzenberg” and used photos of the home’s elderly residents as masks.

MPTF representatives, meanwhile, invited reporters to interview Katzenberg, 58, and Douglas, the star of “Wall Street” and “Fatal Attraction” whose family has contributed to the MPTF for decades.

Katzenberg said the MPTF, which announced the planned closing in January, has been hurt by a 10 percent drop in payments from Medi-Cal, California’s public health-insurance program, starting in mid-2008, and investment losses. This year’s party raised $5.5 million, according to Katzenberg, down from $6 million in 2008.

Outside, on Sunset Boulevard, demonstrators said the MPTF has actually planned to close the home for years. They also said they’d heard the MPTF wants to build condominiums on the site.

“It doesn’t really even merit an answer,” Katzenberg said.

Misinformation Campaign?

“It’s a devastating situation, and nobody’s happy about it,” said Douglas, 64. “Taking a 92-year-old mother and having to move her, this is really painful. But I’ve been just really surprised by the amount of misinformation that has been spun around.”

The MPTF fund totaled about $131 million at the end of last year, down from $156 million in 2007, Chief Operating Officer Seth Ellis said in an interview. The MPTF gets about $286 per person a day from Medi-Cal, down from $318 in June 2008, he said.

Excluding assets that secure debt, the fund had about $66 million in available cash at the end of 2008, compared with $91 million a year earlier. The $25 million decline stemmed from a 12 percent drop in the portfolio and an $18 million operating deficit, with about half from the home and hospital.

“It would all be gone within three or four years” if the home remains open, the MPTF said. The fund also has independent- and assisted-living facilities with about 185 residents, as well as fitness programs, financial-planning services and home- modification help for the disabled elderly who want to stay in their own houses, according to the annual report.

Blog Fodder

The fight has provided fodder to blogs that cover Hollywood. TheWrap.Com, founded by former New York Times correspondent Sharon Waxman, ran a two-part series this month that highlighted six residents who died after the closing was announced.

In response, the MPTF said the closure plan “has not resulted in change to our usual experience of illnesses, physical ailments or death.”

Stellar’s mother, 91, needs to be monitored around the clock. At the home last weekend, she was dressed in a neon-yellow sweatshirt with the MPTF logo. Nurse Jean Rice told Richard Stellar his mother was looking forward to watching the Oscars.

“She’s going to wear her gown,” Rice joked. “She’s ready to go.”

Residents’ families are being referred to other homes in the area, and the MPTF said each person who moves will be helped by a doctor, nurses and a social worker.

Stellar isn’t giving up. He hired an attorney with Girardi & Keese, the law firm known for its work with Erin Brockovich, and has no plans to find a new home for his mother. Katzenberg, Mancuso and the other Hollywood executives who run the MPTF, Stellar said, should find a way to keep the home open.

“In making a movie, they’ve come against bigger challenges than this,” he said. “There are other facilities like this that are in the same quandary, but no one is evicting anybody.”

To contact the reporter on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net.

Last Updated: February 25, 2009 14:19 EST