The final episode: George Lucas bows to protests and pulls plug on film studio plans

The George Lucas empire is striking back after giving up its 25-year battle to build a palatial film studio in the pastoral hills north of San Francisco.

Lucasfilm Ltd, the force behind the Star Wars movies, announced on Tuesday that it is abandoning the controversial Grady Ranch project in Marin County, citing bitter opposition from neighbours and delays in the approval process.

The company said it would build its new digital media production studio elsewhere and hopes to sell the farmland to a developer interested in constructing low-income housing.

"We love working and living in Marin, but the residents of Lucas Valley have fought this project for 25 years, and enough is enough," the company said in a statement. "We have several opportunities to build the production stages in communities that see us as a creative asset, not as an evil empire."

The Grady Ranch project would have marked a major expansion of Lucasfilm in Lucas Valley, which has been home to its Skywalker Ranch for three decades. The valley is named after a 19th century rancher with no connection to George Lucas, the Star Wars creator.

The 269,000 sq-ft complex would include two 85ft towers, two indoor sound stages and a large outdoor stage, screening rooms, guest accommodation, general store, employee cafeteria and wine cave.

The company and its backers said the new production studio would generate hundreds of high-paying jobs and tax revenue. Lucasfilm hoped to break ground next year in an area about 15 miles north of the Golden Gate Bridge.

But the project generated strong opposition from homeowners and environmentalists who feared it would increase traffic, noise and cause environmental damage.

The Marin County planning commission unanimously approved the studio project in February, but an opposition appeal led to further delays.

"The level of anger expressed by the homeowners in Lucas Valley has convinced us that, even if we were to acquire the necessary approvals, we would not be able to maintain a constructive relationship with our neighbours," Lucasfilm said.