DreamWorks’ financial woes threaten a pet project.

These are nervous times in Hollywood, as elsewhere. And the spectacle of Steven Spielberg reduced from 800-pound gorilla to maybe 400-pound gorilla is enough to send shivers through even the iciest executives in the business.

Spielberg's company, DreamWorks, has had to scramble to raise financing, and that's scary enough. But money troubles have also cost Spielberg the right to partner on his passion project—a film about Abraham Lincoln. With Liam Neeson lined up to star, Spielberg would like to finish by the end of 2009, the bicentenary of the 16^th president's birth. Spielberg has been developing the project for years and now hopes to start filming within weeks. But DreamWorks' money troubles have cost him. This past weekend, he's been waiting for executives at Paramount—the studio he ditched last year—to decide whether to make the film and hire him to direct it. (Update: A knowledgeable source told me on Wednesday that Paramount has passed on Lincoln.)

DreamWorks has already been jettisoning high-profile projects. It has given up the right to produce Dinner for Schmucks, starring Sacha Baron Cohen and Steve Carell and directed by Jay Roach (Meet the Parents). This is another project that DreamWorks developed, but it couldn't ask the assembled talent to wait around for it to find money. Paramount took it over, and DreamWorks is left with an option to put up one-third of the budget and participate as a passive investor.

The DreamWorks-Paramount partnership has been thorny. DreamWorks sold itself to Paramount in 2006 for about $1.6 billion, but the relationship with Paramount chief Brad Grey quickly soured. When contracts allowed it, DreamWorks partner David Geffen stepped out and stepped down. Spielberg and CEO Stacey Snider also left, planning to raise their own money and distribute their films through Universal. That's the studio that Spielberg has always considered his home. (He kept his offices there even after his company sold itself to Paramount.)

That plan imploded publicly earlier this month. The economy tanked, and DreamWorks found that raising money wasn't so easy. It had to ask Universal for more and more help with financing. When Universal balked, DreamWorks started a quiet conversation with Disney. Universal—which still believed it was in exclusive talks with DreamWorks—learned through press inquiries that DreamWorks had opened negotiations on a new front. Outraged Universal executives publicly renounced any interest in doing business with DreamWorks, pushing DreamWorks into a hasty distribution deal with Disney—a deal less favorable, in certain respects, than the one that had been contemplated at Universal.

Universal's spurning of DreamWorks was an embarrassment that stunned Hollywood. But it wasn't the only instance in which DreamWorks has had to struggle to control its destiny. When the split with Paramount took place, DreamWorks bought the rights to 17 projects that it had developed and hopes to make at the new company. To secure those films, Spielberg had to put up more than $13 million of his own money—a violation of a sacred law of Hollywood, which states that other people's money must always be used for everything.