EXCLUSIVE: Universal Pictures has ended plans to turn the Tony Award-winning Broadway musical In The Heights into a feature with director Kenny Ortega. I’m told that the studio made a hard decision to drop the project. Expectation is that creator Lin-Manuel Miranda can set up the musical elsewhere. The studio backed out because the film’s budget was $37 million, but the original expectation that big Latino names would be in small roles didn’t pan out. That made it a high price tag for a film built on the draw of Miranda, playing a bodega owner in Washington Heights who inherits his late grandmother’s lottery winnings and plans to close his store and retire on the beach in the Dominican Republic. In the three-day span, he realizes that the neighbors on the block are his true family, which makes the exit decision a hard one. Universal acquired the rights in late 2008 with the show’s book writer, Quiara Alegria Hudes, writing the script.

Studios all over town are making hard choices on green lights, something Universal dealt with recently when it decided not to go forward with the Guillermo del Toro-directed At the Mountains of Madness. Part of the reason In the Heights was pricey was because it would have been shot in New York in the summer. But after watching The Fighter leave Paramount with a $50 million price tag and then get put together as a lean, mean indie that cost around $20 million (Paramount distributed it anyway), I think In the Heights can also be reconfigured in way that would make the film more attractive to a backer. Sure enough, Miranda’s WME reps have already begun that process. As for Miranda, he’s obviously disappointed, but taking the high road.

“I have had nothing but a positive experience with Universal Pictures,” he said in a statement. “We weren’t able to make the film version of In The Heights together, but I’m looking forward to working with them in the near future. Moving forward, I’m excited to explore other options to make the In The Heights movie a reality.” The Broadway musical ran nearly three years and won four Tony Awards, and its first tour ends in Miami on April 3.