HOLLYWOOD IS REELING IN THE MONEY : Companies That Are Awash With Cash From Booms in Cable-TV, Video and on Wall Street Are Running Scared Thanks to Soft Ad Revenues, Scales-Back Syndication--and Big Salaries

While shooting “Extreme Prejudice” last summer, director Walter Hill paused to discuss a small fortune he hoped to make from his producer’s credit on “Aliens,” another film that was just about ready for release.

“When I want to steal money, I produce,” he said with a wink.

About stealing, Hill was kidding, of course. But his remark spoke volumes about the mood of Hollywood in the 1980s. There’s plenty of money in show business these days. And plenty of people are in a hurry to get at it.

Thanks to a rush of wealth from videocassettes and other sources, the last several years have been amazingly fat ones for people in the movie and TV industry. The Hollywood rich have gotten much richer. And their new wealth is affecting everything from restaurant menus and Beverly Hills real estate prices to the financial well-being of big entertainment companies.

Make no mistake about it, the mid-’80s have been a boom time for the entertainment community. “Everybody’s doing dramatically better,” a talent agent said, referring to the lucky actors and actresses at the top. He marveled that his own clients have seen fees double and triple in a few short years--only to be outpaced by walloping pay hikes to dozens of studio executives.

Things have gotten fatter in the middle as well. “They used to say there is no good time to break into the entertainment business. Well, this is a good time,” said UCLA screenwriting professor Richard Walter. Current UCLA students and recent graduates have earned handsome fees writing for TV shows like “Amazing Stories” and “Twilight Zone,” and some have received $100,000 or more to write and revise movie scripts for major studios and a host of independent producers.

As for the working stiffs: “Our rates have gone up and we’re not complaining,” said Mac St. Johns, spokesman for the International Alliance of Theatrical and Stage Employees. Minimum wages for publicists, repairmen and film editors have risen roughly 20% to 30% since 1983, while the average U.S. worker has made do with smaller pay hikes.

In the 1980s, dollars have poured through Hollywood at a clip that hasn’t been matched since the studios were broken off from their theater chains in the late 1940s. Fed by successive booms in cable TV, syndicated TV and videocassettes, about 50 companies had combined 1986 entertainment sales of more than $9 billion--more than double the group’s revenue in 1981, according to Veronis, Suhler & Associates, a New York investment banking firm.

On top of that bonanza, the entertainment business enjoyed a massive windfall from Wall Street last year. According to industry attorney Peter Dekom, various stock, bond and film partnership offerings brought an additional $2 billion to movie and TV companies in 1986.

Yet many Hollywood companies, awash in cash, are also running genuinely scared at the moment. Movie and TV production costs appear to have risen at least as fast as the supply of easy money. Thus, according to an economic survey compiled by the major studios as a bargaining tool in negotiations with guilds and unions, movie making has been a money-losing proposition since the early 1980s.

Until 1985, the studios contend, growing losses on current movies were offset by videocassette sales from old film libraries and big gains in the television business. But soft network advertising revenues and scaled-down syndication buying by independent TV stations threatens to throw TV production into the loss column as well, they say.

“We’re basically out of business,” an officer of one movie industry trade group said. The officer may be exaggerating the studios’ plight to make points in current contract negotiations with the Directors Guild of America. As the guild has pointed out, some studios--including Walt Disney Co., Paramount and Warner Bros.--continue to show strong profits. Yet entertainment companies as a group have been much less profitable than broadcasters, newspaper publishers and cable-TV operators, according to Veronis, Suhler.

So where did the profits go? The answer is as simple as it is painful to admit. “To people,” said a prominent Hollywood lawyer who declined to be identified--people at many different levels of the business.

To make that point out loud is not to court popularity in Hollywood. David Puttnam, English-born and newly arrived as head of Columbia Pictures last year, outraged his peers by taking issue with lavish executive perquisites, or perks, and daring to suggest that $300,000 might be sufficient recompense for the 12 weeks of an actor’s time that it takes to shoot a movie.

A rival studio chief, using an obscenity to express his own opinion of Puttnam’s remarks, quickly added: “I agree with the majority of what he says. But that sort of thing said publicly hurts him.”

As it happens, many of Hollywood’s wealthiest individuals have become wealthier of late. Last year, Los Angeles-area entertainment figures owned 11 of the country’s 400 largest visible fortunes according to Forbes magazine, up from seven when the magazine first compiled its “rich list” in 1982. Meanwhile, the threshold for joining that exclusive club rose to $180 million from $100 million five years ago.

New entries in 1986 included TV moguls Aaron Spelling ($235 million); Merv Griffin ($235 million), and Dick Clark ($180 million)--all wealthy from recent public stock offerings--along with music entrepreneur Berry Gordy ($180 million) and the Walt Disney family ($340 million). The older guard included: Marvin Davis ($1 billion), Kirk Kerkorian ($600 million), Roy Disney ($400 million), Ted Field ($260 million), Norman Lear ($225 million), Jerry Perenchio ($225 million) and Lew Wasserman ($225 million).

Perhaps a few other members of the entertainment community’s very rich--Steven Spielberg, Barbra Streisand, Don Simpson, Jerry Bruckheimer, Sylvester Stallone, Michael Jackson, Bruce Springsteen--might appear on that list if their fortunes could be tracked, or if they chose to put a value on their enterprises by offering stock to the public. Meanwhile, according to business managers and other entertainment industry insiders, more than 100 stars, directors, producers, writers, agents and studio executives have built fortunes of $50 million or more in the last few years.

“We’re seeing so many people in the industry with annual incomes that are mind-boggling. They’re doing substantially better than they were five years ago,” said Bram Goldsmith, chairman of City National Bank in Beverly Hills and a longtime banker to the stars.

“Five years ago, the town had an awful lot of cocaine usage. Now there’s money. It’s the drug of the ‘80s,” said one longtime movie producer who declined to be identified.

If money is a drug, some of its heaviest users at the moment aren’t superstars, but executives. Spelling, now chairman of an American Stock Exchange-listed company, appears to have been the country’s highest-paid corporate officer last year. With salary and production fees totaling $25.9 million during the fiscal year ended last July 31, the TV producer handily outdid Chrysler Corp. Chairman Lee Iacocca’s $20.5 million in pay and bonuses--even though Aaron Spelling Productions, with annual revenue of $221 million, is less than 1% as large as the automotive giant.

In a proxy statement issued last year, Spelling Productions explained that its chairman’s salary and fees would have been $4.7 million if the TV and movie company, which first sold stock in August, had been taken public earlier in the year. According to a list recently published by Business Week, the reduced salary would have made Spelling the nation’s seventh-highest-paid executive, just ahead of such heavy hitters as Ford Motor Co.’s Donald Petersen and ITT’s Rand Araskog. An attorney for Spelling declined to comment on the producer’s compensation.

While Spelling has set a hot pace, some key players in Hollywood are close behind.

At Fox Inc., currently one of the most cost-conscious studios, Chairman Barry Diller is paid $3 million a year, plus 5% of the company’s pre-tax profit. In the last two years, he also received 4 million shares in News Corp., the Rupert Murdoch-controlled company that owns Fox. Worth about $60 million, the stake makes Diller one of Hollywood’s wealthiest individuals--and makes the $3.4 million he earned in 1984 as head of Paramount look like peanuts.

MCA Inc., also on a cost-cutting kick, paid President Sidney J. Sheinberg $6.1 million last year, making him No. 6 on the Business Week list. But Sheinberg only appeared to outstrip Walt Disney Chairman Michael Eisner, who earned $3.4 million, and President Frank Wells, who was paid $1.7 million. In fact, the two Disney officers are entitled to company-granted stock options that could reap them a combined pre-tax profit of about $180 million in the next few years if Disney stock holds on to the sharp gains it has made since the pair took charge of the company just over two years ago.

“Nobody can ever really justify his own salary,” Fox’s Diller said with regard to Hollywood’s rising salaries. But he maintained that his own compensation represents reimbursement for past and future efforts that span many years. Diller also claimed that seemingly “absurd” compensation to individual executives or stars is less damaging to the entertainment business than the current system of making continuing payments to talent each time a movie or TV show is replayed even if the company that made it hasn’t shown a profit. “The entire compensation structure, up, down and sideways just doesn’t make sense,” he said.

Other top guns of major studio compensation--Sheinberg, Eisner and Wells--declined to comment on their salaries.

One highly paid studio officer maintained that good creative executives must be lavishly compensated because they are are the rarest of corporate birds. “When you make a list of people you want to run your movie or television company, believe me, it’s a very short list,” he said.

But the officer, who declined to be identified, also said that big companies are making studio executives wealthier at least in part to keep them from imitating producers like Dino De Laurentiis, Jerry Weintraub and Spelling, who all did especially well in the last two years by organizing independent corporations with loads of backing from Wall Street and banks. “I may in a sense be a fool for working for a studio,” the officer said. “Why shouldn’t I raise financing and start a company and get rich like other people have done?”

In the new companies’ wealth, there is much to envy. For instance, recently formed Carolco Pictures Inc., a New York Stock Exchange-listed company, reported only $12.1 million net income last year. Yet it is carrying $12 million in personal loans to Andy Vajna and Mario Kassar, its two top officers, according to a prospectus issued last year. A spokesman for Carolco, which produces the “Rambo” films, said the loans are secured by Vajna and Kassar’s Carolco stock, which is currently valued at about $170 million.

But it is longtime producer De Laurentiis who reaped what may be the neatest corporate windfall of 1986. De Laurentiis combined some movie assets purchased from Coca-Cola’s Embassy unit for a $5-million promissory note with some additional properties valued at $7.6 million. He then sold 23% of the resulting De Laurentiis Entertainment Group to the public for about $26.4 million, keeping 67% of the firm for himself. At current market prices, his stake is now valued at $64 million. The extra value, said company President Stephen Greenwald, comes from “the fact that Dino agreed to devote himself exclusively to this company full time, and brought a lot of movies already in production that we could distribute quickly.”

Times Staff Writer Deborah Caulfield contributed to this article.