A Studio Is Born

By RICHARD CORLISS

The White House was crammed with glamorati three weeks ago for a state dinner honoring Boris Yeltsin. Few noticed that among the visitors from Hollywood were three men -- director Steven Spielberg, music mogul David Geffen and ousted Disney movie chief Jeffrey Katzenberg -- who between courses were giddily planning to merge their talent and clout in a new entertainment company. "We're in tuxedos talking about a brand new studio," Spielberg recalls, "and just across from us there's Yeltsin and Bill Clinton talking about disarming the world of nuclear weapons."

You'd think that the plans of three media mavens wouldn't amount to a hill of beans in this crazy world. But last week's word that the entertainment industry's most successful director, most revered studio chief and most creative billionaire were forming their own company smote Hollywood with nuclear force. Spielberg will fold his unit, Amblin, into the new organization (though he may still direct outside projects). Katzenberg will run the studio; late last week the two men were tooling around Los Angeles in Katzenberg's Mustang, looking for a studio lot. And Geffen will make music make money.

The trio will also produce animated films, TV programs and interactive entertainment. They may even help shape the relations between the entertainment monolith MCA Inc. and its antsy Japanese owners.

They have certainly set the industry into a tizz. In a game choked with visionless dolts, the merger of these men suggests a surprising convergence of Hollywood brains. "We want to back our own movies, be the owners of our own dreams," Spielberg says. "Everybody sees the romance in what we're trying to do, not just the business savvy."

"I look at the three of us and think, this has got to be the dream team," Katzenberg said at a press conference that attracted dozens of journalists and industry power brokers, including His Most Powerfulness, Michael Ovitz. "Certainly it's my dream team."

Geffen and Spielberg are famous and extremely rich, and investors would flock to a company they wanted to start up (this one will require about $2 billion in capital), but Katzenberg was the catalyst. As Spielberg said of his pal's fondness for perilous vacation trips, "Jeffrey wanted to go whitewater rafting and took us with him."

In August, when it was announced he would be leaving Disney, Katzenberg had said he would "take a 60-day pit stop ... to rest and recharge." But for this mighty mover, whose relentless vim is both a legend and a curse, two months of R. and R. would be cruel and unusual punishment -- like having to watch Cabin Boy nonstop for a year. Geffen says Katzenberg called him "the day it hit the fan at Disney," and floated the idea of a partnership with him and Spielberg. "It started with 'Wouldn't it be great?"' says Geffen, "but it became real very quickly."

Katzenberg, who was wooed by numerous studios and telephone companies, discussed his future with powerful financiers, including Microsoft's Bill Gates and, reportedly, cable-TV quillionaire John Malone. Then he met regularly with his partners-to-be and clinched the agreement the day of the Yeltsin dinner.

Last Monday the trio met with MCA-Universal boss Lew Wasserman, at 81 still the Godfather of Show, and his deputy Sid Sheinberg. Wasserman and Sheinberg were rankling under the ownership of Matsushita, the Japanese conglomerate. MCA was home to both Geffen, whose current music company is housed there, and Spielberg, whose Amblin films are distributed mainly through Universal; the director regards Sheinberg as a mentor of nearly 30 years. "Lew and Sid's intentions were to get back control of their company," says Katzenberg, "and they hoped we'd be an ally to them. We assured them we would. It didn't go beyond that."

After Wasserman and Sheinberg gave their blessing to the trio, the contracts for the new company were signed -- in a mere six business days after the bustling Katzenberg had left Disney. And on the seventh day, did he rest? Of course not. He worked the phones.

He and his chums will have to keep working -- and praying -- to make their studio flourish. Huge investments in scripts, real estate and a large staff are always vulnerable to the fickleness of the marketplace. Such ambitious outfits as First Artists, Orion Pictures, the Ladd Company and Francis Coppola's Zoetrope Studios all came and, sooner or later, went under. With the iffy exception of TriStar, formed in 1982, no successful major studio has started from scratch since Disney in the 1920s.

If anybody can break the spell, says Hollywood royalty, it's the Katzenberg Kids. Film producer Steve Tisch, who is a close Katzenberg friend, says he would "love to be aligned with them. Plenty of executives would like to work for them -- I hear a lot of Xerox machines running today." Even Disney chairman Michael Eisner, who will not be sending his resume to Katzenberg, gives the troika a rave review. "Competition ignites and stimulates excellence," he says, "and for that I wish them well. I think they'll do well. And I think they'll force us to do even better than we've done in the past."

The new company was already proving its entertainment value by midwifing many a rumor. West Coast gossip: deposed Warner Bros. music kingpin Mo Ostin would work with Geffen. East Coast gossip: Tina Brown, the editor of the New Yorker, would be coming aboard. A spokeswoman who asked Brown about the rumor received the response, "No, no, no."

For the industry the big question is what role the three amigos will play in the Wasserman rumpus with the Japanese. In 1990 Matsushita spent $6.6 billion on MCA, whose prime asset is Spielberg. Since 1982, five of the six Universal films to gross at least $100 million at the domestic box office (E.T., Back to the Future, Back to the Future Part II, Jurassic Park and The Flintstones) have come from Spielberg's Amblin. Another Spielberg film, Schindler's List, | earned $96 million and a slew of Oscars. Universal Studios Florida, the company's pricey rival to Walt Disney World, is virtually a Spielberg shrine, with major rides celebrating E.T., Back to the Future and Jaws. But without its main man, Universal is a crippled company. The rest of its movie trove is a dog named Beethoven and some other dogs named Dr. Giggles, Splitting Heirs and Havana.

So it's reasonable to assume that Wasserman and Sheinberg wouldn't care to lose their franchise player to unrestricted free agency; they surely hope his new company will decide it's not worth setting up an elaborate distribution apparatus and will instead release its films through Universal. (Spielberg and Katzenberg say they would prefer that; Geffen says Warner Bros. would be a second choice.) But when Matsushita's bosses meet with Wasserman and Sheinberg this week, they may take the long Japanese view and decide they don't want to unload MCA -- least of all to Geffen and Spielberg. "I'm not sure Matsushita is a seller," says an entertainment analyst. "Besides, the Japanese might say, 'Don't two of these three guys work for us already?"'

Spielberg, ever loyal to Sheinberg, says that "as long as Sid is at MCA, our entire enterprise will be in some fashion aligned with MCA." Katzenberg is more circumspect: "We didn't get into this to be an equity owner-player- manager of MCA and its assets. I don't want to say there's no set of circumstances under which that can't happen. But it's not our purpose, and I don't like reading it that way."

Katzenberg fields other rumors and lobs them back. An alliance with Microsoft's Bill Gates? "Premature." How about an art-film division run by Bob and Harvey Weinstein, whose Miramax Films Katzenberg bought for Disney last year? "It would be wrong to speculate about that stuff, knowing they still have many years to go under the Disney contract." Will he raid Disney for animation talent? "I'm not in this to be a spoiler."

O.K., sure. But the new company wouldn't exist if Katzenberg hadn't been dumped at Disney -- a fact that must be provoking second thoughts on Dopey Drive. Now the besieged mouse factory faces serious competition in a business it dominates, feature-length cartoons, from Katzenberg, who helped perfect the modern Disney cartoon style. If Katzenberg has a mission other than to run a state-of-the-industry multimedia company, it is to duplicate the artistic and commercial success of recent Disney animation. In Hollywood, revenge is a dish , best eaten in public -- at the box office.

That's down the road. Even an established studio takes 18 months to get a movie from script to screen. And an animation unit takes three or four years to fine-tune a feature. Soon the Big Three will be obliged to step out of the p.r. spotlight and into the crucible of creation. But for them, and maybe even for consumers, the future rolls out like a red carpet. Spielberg, after all, redefined the role of movie director; Katzenberg helped redefine the animated film; and Geffen, in many media, kept redefining himself. If these guys don't make entertainment more entertaining, they'll have a lot to answer for.

With reporting by Patrick E. Cole and Jeffrey Ressner/Los Angeles