In Hollywood, Propaganda Spreads : Entertainment: With “Twin Peaks” and a Paula Abdul video under its belt, a production firm founded by Steve Golin and Sigurjon Sighvatsson is hot.

When director David Lynch assembled the staff for the quirky television series “Twin Peaks,” the founders of Propaganda Films were obvious choices.

Steve Golin and Sigurjon Sighvatsson made their reputations by producing stylistically adventurous music videos, so their visions were as compatible as coffee and doughnuts.

The rest is pop culture history, as far as “Twin Peaks” is concerned. But the partnership did not end there. Sighvatsson and Golin went on to produce Lynch’s “Wild at Heart,” thereby putting their imprint on two of the year’s most twisted and critically acclaimed projects.

Purveyors of artsy but accessible entertainment, Propaganda has carved a unique place in Hollywood by undertaking everything from music videos and commercials to television and movies. When Golin and Sighvatsson opened their first office four years ago, they had to sand their own floors. This year, the privately held company is expected to generate $80 million worth of business.

“They are completely unique,” said one industry executive. “Propaganda has consistently done the best work in the modern video style. There’s no other company that comes close.”

One of Propaganda’s skills as a production house is its ability to line up top-notch directors, technicians and talent. With its high-tech headquarters and its youthful attitude, the company has become a magnet for people in the vanguard of the creative community.

Golin and Sighvatsson also have proved skillful at developing projects, and they often have a hands-on role in everything from lighting to sound effects.

Propaganda established its reputation by producing music videos for Madonna, Sting, Paula Abdul and Guns N’ Roses, but its audience now extends beyond the MTV generation. The company’s commercials include the recent Nike spot featuring tennis stars John McEnroe and Andre Agassi. The film noir-ish “Kill Me Again” and the zany “Daddy’s Dyin . . . Who’s Got the Will?” are among its films. It also has a minor production role on “Twin Peaks.”

Sighvatsson, a 38-year-old native of Iceland, said he and Golin, 35, only commit to projects that appeal to their own sensibility. “We don’t want to make ‘Die Hard,’ ” he said. “That’s not where our interests lie. We’ll be happy if “Wild at Heart” grosses $40 million.”

Industry observers expect the film, which opens Aug. 17, to do well. Lynch’s first feature since the dark and highly praised “Blue Velvet” in 1986, “Wild at Heart” won the coveted Golden Palm at the Cannes Film Festival and should benefit from Lynch’s cult-like following.

Propaganda initially bought the rights to the novel as a feature film project for one of its in-house music video directors. But Lynch asked to direct the movie after Golin and Sighvatsson requested his input.

“He said, ‘If you don’t mind, I’d like to do this one myself,’ ” Golin recalled.

Propaganda arranged financing for the $10-million movie, which could put Golin and Sighvatsson in the big leagues among independent producers, with the backing of investors such as Polygram Pictures.

But the erotic “Wild at Heart” is just one of many saucers the company has in the air. It is also juggling production work on two other feature films, four television series, two TV movies of the week, a series of cable television films and countless commercials and videos.

That might explain the manic atmosphere at Propaganda’s $1-million headquarters on a Hollywood back street, an angular building that features vast workrooms flooded with sunlight, an espresso bar and a conference room enclosed in a silo.

Architect Frank Israel has called the building a “working village” with the cool sensibility of a “Hollywood dream.”

Others see it as a testimonial to the success of the partnership that started when the equally intense Golin and Sighvatsson met as students at the American Film Institute in 1981.

After apprenticing in various positions around the entertainment industry, the two formed Propaganda in 1986. By gathering a stable of young but accomplished directors, such as David Fincher and Nigel Dick, the company soon became the dominant force in the field. It has collected fistfuls of MTV music video awards and controls about 30% of the music video market.

Dick, who met Golin and Sighvatsson while working as an executive with Polygram Records in Britain, credits the two with helping him and others launch their careers. Colleague Fincher was recently hired to direct the $40-million sequel to “Aliens.”

“Many of us have a particular style that we’ve been allowed to develop,” Dick said. “They allow us freedom but also make sure the company works as a financial unit, which is very difficult to achieve.”

Melinda Newman, music video editor for Billboard magazine, said no other music video company approaches Propaganda’s success. “They’re at the very top,” she said. “They are very well respected in terms of their artistic quality. . . . And they don’t come cheap.”

With commercial sponsors seeking to capture the youthful spirit of videos such as Madonna’s “Express Yourself” and Paula Abdul’s “Straight Up,” it is not surprising that Propaganda was tapped for that market too. The company entered the field in 1988. Its clients have already included Coke, Pepsi, Reebok, Nike, Coors, Dodge and Levi Strauss.

Taking on more film and television work is a way of showing there’s substance to go with the company’s signature style. A movie set against the backdrop of President Kennedy’s assassination is one undertaking. Propaganda is also co-producing two TV movies of the week: “Heat Wave,” a drama based on the 1965 Watts riots, for Turner Network Television, and “Murder in Milan,” a thriller about a model pursued by terrorists, for NBC. In addition to “Twin Peaks,” other television projects include “The Class of Beverly Hills” and “Urban Anxiety” series for the Fox network.

One industry executive who has followed Propaganda’s growth said Golin and Sighvatsson are rare examples of creative people who also happen to be tough-minded businessmen. “They have shown they can handle a budget,” he said. “They know about the nuts and bolts and how to get things done.”

Golin and Sighvatsson, showing the strains of their heavy workload as they sat in the silo conference room recently, said it may be time to bring in professional managers to watch over the company’s growing cash flow. Propaganda employs 59 staffers and 20 free-lancers, and it recently opened an annex across the street for the production of music videos.

It also has a London-based foreign distribution company called Manifesto, which operates in conjunction with Polygram International, in addition to a London staff office.

“We’re at the end of our adolescence,” Sighvatsson said. “Now it’s time to move ahead.”