Outlook for the ‘90s : ...

For Hollywood, the opening act of the 1980s was sheer warfare. The major studios battled outsiders who sought to distribute movies through new technologies such as cable networks and home videocassettes. MCA Inc. and Walt Disney Co. fought Sony Corp.’s importation of video players all the way to the U.S. Supreme Court, and MCA and several other studios tried to foil Time Inc.’s Home Box Office by launching their own pay-cable service.

Hollywood lost both battles, but it pocketed awesome sums of money from the licensing of its movies to the new players. Now, video and cable sales generate about 57% of Hollywood’s revenue--compared to about 30% earned at the box office, according to Paul Kagan Associates.

Being pragmatic, the major studios have been merging with one-time enemies. The common quest: to control not only the programming but strategic portions of the distribution “pipeline.”

In the past year alone, Warner Communications Inc. combined with Time Inc., and Columbia Pictures Entertainment agreed to an acquisition by Sony. Three years earlier, 20th Century Fox Film Corp. joined the global empire of Rupert Murdoch, who spent more than $2 billion to buy the studio and seven TV stations and is now building a satellite-delivery TV service in Britain.

The entertainment industry will be dominated in the 1990s by such media giants, according to some analysts, who add Tele-Communications Inc., Disney and Capital Cities/ABC to the list. (Indeed, control of all three TV networks changed hands in the ‘80s, with only CBS not now owned by a huge conglomerate.)

The decade had its subplots, of course--and some befit the propaganda films of the 1940s. Little was said when Australians bid for Hollywood studios, but the arrival of Japanese buyers has touched a nationalistic nerve.

Lee Isgur, Paine Webber’s veteran entertainment industry analyst, predicts that the power of American film making will speed Japanese assimilation into Western culture, rather than the other way around. “The joke,” said Isgur, “is did we buy Japan, or did they buy Columbia Pictures?”