THE BIDDING FOR TIME : NEWS ANALYSIS : Hollywood Giants Appear to Launch New Season of Nastiness

Paramount Communications Inc.’s surprise attack on the Time-Warner merger could mark a step in the evolution of Hollywood’s big companies from clubby competitors to warring--and acquisition-hungry--media empires.

“Feuds have gone on for years. But the stakes are much, much higher now. . . . Everybody’s in play when something like this happens,” the head of a major studio said of Paramount’s attempt to disrupt Warner’s planned merger with Time by making a cash offer for the New York publishing giant.

Through much of the last two decades, the major entertainment companies coexisted in a state of equilibrium, if not quite peace, that seemed to grow from common interest and some unspoken agreements about the limits of competition among friends.

Such bonds gave the studios unusual clout in Washington, where they are represented by the Motion Picture Assn. of America, and an extraordinarily powerful bargaining position in labor negotiations, which are conducted by the Alliance of Motion Picture and Television Producers.

According to a number of Hollywood insiders, inter-company ties have been increasingly strained by takeover pressures, studio expansion into broadcasting and other businesses that were once regarded as common adversaries, and the growing restlessness of some fiercely competitive top executives.

“These are some of the most aggressive guys on earth,” one film producer with close ties to Paramount said of the entertainment industry’s current managerial crop, which includes Martin S. Davis at Paramount, Steven J. Ross at Warner Communications, Michael D. Eisner at Disney, and Barry Diller and Rupert Murdoch at Fox.

Unusual Spate of Lawsuits

Inter-company battles could be particularly damaging today because many studios are married to competitors in complex joint ventures. Paramount and Warner, for instance, co-own a number of theaters, including the Mann theater chain.

Last month, an unusual spate of inter-company lawsuits first pitted Viacom International Inc. against Time’s HBO unit, then Paramount against Viacom. The legal wars appeared to peak when a unit of Murdoch’s News Corp., which owns Fox, sued Disney for $1.5 billion, claiming that the Burbank company had committed fraud by breaching a contract to co-sponsor a British television service.

The suit was settled quickly, but not before it laid bare some simmering tensions between Fox’s chairman, Diller, and Disney’s chairman, Eisner, who had worked together for years as a highly successful team at Paramount.

Fox executives privately complained that Disney had gone rogue, becoming “hyper-aggressive” and “arrogant” under Eisner. Disney executives claimed Diller broke with old competitive protocols by filing the massive suit.

Such executive tensions seldom affect Hollywood’s writers, directors and stars, although director-producer Mel Brooks momentarily was caught between two feuding giants. Fox, where he makes movies, and Disney, where he has a new TV series, had started a tug-of-war for his attentions, according to individuals familiar with his production company.

“He wouldn’t want to comment on it,” Brooks’ assistant said.

Martin Bauer of the Bauer Benedeck Agency, which represents director Lawrence Kasdan, actor Michael J. Fox and other Hollywood talent, called such spillover rare.

“I’m sure (Warner Chairman) Steve Ross is sitting in New York, feeling betrayed by Marty Davis,” Bauer said. “But people tend to react sharply when they feel betrayed personally, not because their companies are betrayed, and I don’t think Warner and Paramount people out here are going to behave differently because of this.”

Still, some studio executives speculated Wednesday that a prolonged fight between Paramount and Warner might complicate dealings at the MPAA, which already has been plagued by diverging interests on major policy issues.

“There’s no question about it. This hurts,” said one top studio officer, who declined to be identified.

The executive pointed out that Fox, which owns a growing broadcasting operation, is already somewhat at odds with other major studios on TV network-related issues, and that agreement on cable TV issues isn’t automatic, given Warner’s major stake in the cable business.

“You’re coming into an era where the companies’ only mutual interest is anti-piracy,” said a studio attorney, who also declined to be identified. “When you consider the pros and cons of belonging to the MPAA, they start to look real thin.