Bravos and Shudders Greet Moguls' Plan for New Studio : Hollywood: Some wonder if there's room for the competition from the venture planned by Spielberg, Geffen and Katzenberg.

By JAMES BATES and ELAINE DUTKA

Oct. 13, 1994 12 AM PT

TIMES STAFF WRITERS

Like Hollywood’s version of Carreras, Domingo and Pavarotti, The Three Moguls faced a paparazzi-style news conference to announce plans to form a new studio, touching off a wave of bravos throughout the day from Hollywood executives.

The industry scrambled for superlatives to praise Steven Spielberg, David Geffen and Jeffrey Katzenberg on the bold move, starting with Walt Disney Co. Chairman Michael Eisner, who telephoned the trio just before they announced their plans Wednesday morning for an unnamed, full-service entertainment company.

“It’s an incredibly unique combination. If you’re looking for a new company to do business with, what better combination than these guys?” entertainment lawyer Skip Brittenham said.

Added Walt Disney Motion Pictures Chairman Joe Roth: “This is a great deal all around. Jeffrey has two terrific business partners. They have him to run the company. And there’s another bona fide buyer in town.”

Still, the inescapable fact is that the new entity could soon turn into a formidable competitor for much of Hollywood, as well as a significant raider of executive talent. Some question if there is even room for another player.

“Things will become more competitive, and there are only so many movies to make and so much audience to go after,” said 20th Century Fox President Bill Mechanic, who worked for Katzenberg when the hyper-ambitious executive headed Walt Disney Studios. “Because everything that everyone does has an impact on everyone else, this probably won’t help the overall business.”

Filmmaker Spielberg has a different view, arguing that the market is more elastic when good films are being made.

“The past two summers proved that the market can expand if the movies are there and people want to see them. The notion of ‘competition’ doesn’t apply,” Spielberg said.

One ever-present question throughout the day was whether Katzenberg will tap executive talent at Disney for the new venture, in much the same way Eisner jump-started Disney 10 years ago by staffing Disney’s ranks with his former colleagues at Paramount Pictures--Katzenberg among them.

Walt Disney director Ray Watson concedes that the first thing that came to his mind Wednesday morning when he read about the new venture was whether Katzenberg planned to lure some of Disney’s prized animation talent to the company.

It is unclear whether Katzenberg--who is said to still be working out details of his exit agreement--is bound by any promise to keep his hands off Disney executives. Disney officials and directors such as Watson said they don’t know the answer.

But sources at the company noted that so many executives are under contract, it would be difficult for them to leave and very expensive to buy out their contracts. Enforcing the point, Roth said, “Everyone here is under contract, and I expect these contracts to be observed.”

David Hoberman, president of motion pictures for Walt Disney Studios, said he has “a long contract and I intend to fulfill it. . . . In any case, no one has approached me. It’s all premature because they’re focused on the big picture.”

Others said it is unlikely that executives, especially in animation, would leave the security of Disney, clearly the industry’s top animation company.

“To go from a known entity to an unknown one? I’d be very surprised,” Watson said.

And one producer noted that the three want to keep their start-up costs down and are unlikely to go on a hiring binge. While the three will need someone to handle business affairs, “what do they need with distribution executives and marketing executives now, or 12 creative executives giving story notes?” he said.

The other immediate question is how much of a vacuum the new entity will create for MCA Inc., where one executive called the announcement “no cause for celebration.”

Spielberg’s Amblin Entertainment has been the company’s premier supplier of entertainment over the years. But others suggested that MCA will probably play a role, perhaps as an initial distributor and licenser for the new company. There were even unsubstantiated rumors that the three would eventually link up with MCA and buy a chunk of the company.

“Amblin is a highly important supplier for us. But (Amblin chief) Walter Parkes called me first thing this morning to make it clear that he intends to meet all of his obligations to us. I hope, when things settle down, that we’ll be in business on some level with this new company . . . that there will be an important strategic alliance between us all,” said Casey Silver, president of MCA’s Universal Pictures unit.

Executives said they believe the three will probably risk a minimal amount of their own fortunes, because they should be able to raise money easily given their track records.

“We would be extremely anxious to have the opportunity to finance the venture,” said John Miller, chief of Chemical Bank’s entertainment lending.

Entertainment lawyer Peter Dekom said time may be the company’s only enemy. “It takes 18 months to two years to get into the theatrical production business and four years to finish an animated film. Movies don’t grow on trees . . . you have to plant seeds. These are aggressive guys eager to get going, and frustration could set in.”

One producer said he was puzzled by the lack of detail: “I’m looking for the meat. I want to say, ‘Hooray, Steven Spielberg is in the studio business.’ But I don’t see it yet.”

Others, however, said they have so much confidence in the three that the lack of detail doesn’t matter at this stage.

“All they have got to do is show up in the morning. They’re not reinventing anything they’ve not done before,” said Arnold Rifkin, worldwide head of the motion picture division at William Morris Agency.

* MAIN STORY: A1