NEWS ANALYSIS : Is It Midnight for Dawn Steel at Columbia? : Studios: Many industry insiders are betting that Columbia’s president won’t remain now that Peter Guber and Jon Peters are finally in charge.

After two months of haggling with Warner Bros. over their exclusive production contract with that studio, producers Peter Guber and Jon Peters are finally free to take over Sony’s newly purchased Columbia Pictures. And they’re hitting the ground running.

Already they’ve talked about the corporate jets they will order. Plans are in the works to build a gym and day-care center and to spruce up the executive offices at Columbia Pictures’ new home at the former MGM lot in Culver City. Even before Warner officially released them from their contract last Thursday--in a settlement that could eventually cost Sony as much as $500 million--Guber and Peters had met with Columbia’s production staff to review the studio’s slate of movie projects.

But one of the first orders of business remains on the table: staffing the studio’s executive suites. Still to be determined is the fate of Columbia Pictures president Dawn Steel, who has been weighing her options since Sony first announced plans to purchase the studio for $3.4 billion in September. A decision is expected in the coming weeks.

Many industry insiders are betting that Steel won’t remain at the studio, despite reports that Guber and Peters have invited her to stay. In an interview last week, Guber and Peters ducked the question of whether they wanted Steel to stay on as president of Columbia.

“We have been friends with Dawn Steel a long time,” said Guber. “We would like to do whatever is the appropriate thing.” Steel declined comment on her future plans.

Sources close to Steel, as well as to Guber and Peters, say there has been discussion about the terms of her possible departure from Columbia. Steel still has about a year left on her employment agreement, so if she were asked to leave, her contract would have to be bought out. If she were to quit, Columbia wouldn’t be obligated to pay her anything. If Steel does leave, informed sources expect her to do so with a financial settlement in hand.

Steel has had a number of offers elsewhere in the industry, principally an independent production contract at Disney. There also have been rumors that Steel may take an independent production deal at Fox, where she is close to company chairman Barry Diller, or that she may make movies with her husband, producer Charles Roven (“Heart Like a Wheel”). Other rumors have Steel taking on executive positions at other studios.

There still is no official word on which industry figures Guber and Peters will bring into the company. As Guber put it last week: “We’ve spent the last month and a half consumed with litigation” over the Warner contract.

But industry sources point to Alan Levine, their longtime attorney at Armstrong, Hirsch & Levine, as the principal candidate for chief operating officer. One source close to Levine said his move to Columbia “was a done deal.”

Levine’s firm is an influential one in the entertainment industry and has close ties to Creative Artists Agency, which handles some of the biggest directors and stars in the business. If Levine does join Columbia, it is expected that he also will oversee much of the studio’s TV production, since he is one of the most prominent legal names in television.

Another potential candidate for a senior post at Columbia is Alan Rich, an executive at Guber-Peters Entertainment Co., which Sony bought for $200 million in order to obtain the services of its two co-chairmen. Guber told Daily Variety last week that their former company would remain as a standing entity inside Columbia Pictures.

However the impending management changes at Columbia turn out, they will cut short Steel’s two-year tenure at the helm of the studio, making it difficult to assess her success. She spent much of her energy during that time finishing up the 33 movies left behind by her iconoclastic predecessor, David Puttnam.

While one of those, “The Last Emperor,” walked away with a best-picture Academy Award, and a few Puttnam films did respectable business at the box office, most of them came and went without much audience or critical attention. Industry observers attribute some of that failure to the limited theatrical release Columbia gave many of these films, as well as their quality.

The last of the Puttnam films, “Time of the Gypsies,” which earned a best director award for Emir Kusturica at the Cannes Film Festival last spring, will be released in February. Filmed in a Gypsy language called Romany, this is believed to be the first film in history to require subtitles in every theater it plays around the world.

Steel’s efforts also were set back by the five-month-long writers’ strike last year. But some of her critics say that, despite these obstacles, Steel should have moved faster to put films into production. Some industry sources speculate that she was hemmed in by the budget-conscious managers above her--former chief executive Victor Kaufman and chief operating officer Lewis Korman--who were eyeing a potential sale of the studio. (Both executives resigned after the Sony purchase.)

Steel’s first major films appeared this past summer--”Ghostbusters II” and “Karate Kid III.” “Ghostbusters” did an impressive $110 million in ticket sales but was considered a disappointment for the studio, which had hoped for grosses closer to the $220 million that the first film did four years earlier. “Karate III’s” box-office performance, while a respectable $39 million, was also considered disappointing.

Nevertheless, both films helped re-establish Columbia’s presence with exhibitors and helped boost the company’s market share to 15.9% so far this year from about 9% at the end of 1988.

That market share also has been helped by the surprise success of a Tri-Star release, “Look Who’s Talking,” the baby-talk comedy produced by MCEG Productions that so far has grossed more than $75 million. (Tri-Star was folded into Columbia Pictures earlier this year, and Steel wasn’t involved in the development of its current releases.)

Columbia’s market position also was aided by the recent box-office success of “When Harry Met Sally,” which the studio released under its distribution agreement with Castle Rock Entertainment.

One of Steel’s pet projects at Columbia was “Casualties of War,” a big-budget Vietnam drama starring Sean Penn and Michael J. Fox that the studio released in August. Although the film drew some impressive reviews, its $17 million in ticket sales fell far short of its $22.5-million budget.

The studio continues to hold high hopes for at least four other films spearheaded by Steel--”Revenge,” a Ray Stark production starring Kevin Costner; “Postcards From the Edge,” based on Carrie Fisher’s novel and directed by Mike Nichols, with Meryl Streep starring; “Flatliners,” a drama about Harvard medical students starring Kiefer Sutherland and Julia Roberts, and “Awakenings,” a Penny Marshall-directed drama starring Robert De Niro and Robin Williams.

Guber and Peters will inherit these projects, as well as about 16 Tri-Star films already scheduled for or in release, including “Steel Magnolias,” “Glory,” “Family Business,” “Music Box,” “Mountains of the Moon,” “Blind Fury” and “Loose Cannons.”

They also will inherit an exclusive production agreement with Michael Douglas, as well as non-exclusive deals with a dozen artists and film makers that Steel brought onto the Columbia lot, including actors Sally Field, Cher, Madonna, Glenn Close and Jane Fonda.