A look inside Hollywood and the movies. : TIGHT MONEY, LOOSE MONEY : The Good Old Watch-What-They-Do File

Jeffrey Katzenberg, the chairman of Walt Disney Studios, has set the tone in recessionary Hollywood by calling on studio chiefs to rein in costs and avoid adopting a blockbuster mentality if they want to see their industry remain financially healthy.

But Katzenberg continues to take flak from people in the industry because his own studio has been greenlighting big-budget films.

A case in point: Filming wrapped last week on “Distinguished Gentleman,” an Eddie Murphy comedy about a con man who gets elected to Congress after the death of a congressman with the same name. Although Disney isn’t saying how much Murphy is getting paid, the comedian does not come cheap. Cost of the film is said to be more than $30 million.

Next year, Disney will spend $30-million-plus to make “Hocus Pocus,” a fantasy-adventure about three witches who are accidentally reincarnated on Halloween in Salem, Mass., as a young boy tries to impress the girl of his dreams. The film stars Bette Midler, Kathy Najimy (the plump nun in “Sister Act”) and Sarah Jessica Parker.

“Katzenberg is being hypocritical,” said one industry source, who asked not to be identified. “Look at ‘Honey, I Blew Up the Kid.’ That cost $40 million.”

Katzenberg won’t respond to his critics, but studio sources said he has never gone on record saying Disney would avoid ever making big-budget films.

“Jeffrey never said never,” the source said. “If it’s the right property, you do it. Eddie Murphy is perfect fort this part and it was Eddie Murphy’s first non-Paramount movie.”

Besides, the source added, an Eddie Murphy movie is not really a risk. “It’s Eddie Murphy in Washington, D.C., and it’s exactly what people want to see Eddie Murphy doing.”

Filmmaking is notoriously risky, and the bigger the costs, the harder it is to make a film profitable. Universal Pictures reportedly spent $65 million (although the studio denies it) to make “Far and Away,” starring Tom Cruise and Nicole Kidman. Will it be profitable? So far, the film has grossed $57 million, but a Universal spokesman projected that worldwide box office would grow to $130-$135 million. “We will certainly make money on the movie,” the spokesman said.

If there is one word that is used most often by studio chiefs these days, it is profitability .

At Disney, they are proud to note that “The Hand That Rocks the Cradle” cost only $11 million and took in $85 million at the box office. Or that “Sister Act” cost $20 million and has grossed $125 million. Or that “Encino Man” cost $7 million and is expected to gross $40 million by the end of summer. Forget “Newsies,” a period musical that grossed less than $3 million.

But while Disney has its share of profitable movies, are these the kind of films that win critical acclaim?

“It’s mindless drivel,” said one industry source. “If anyone should be ashamed, it’s Katzenberg. He has been popping out mediocre crap for years.”