A Few Insights Into the Polygram Puzzle : Moguls: Chief Alain Levy talks on why he’s sidestepped the bidding war for Paramount so far, and on the plans for his own company.

On the sunlit patio of the Hotel Bel-Air, there’s a steady buzz around Alain Levy.

Singer John Mellencamp stops off to talk about his new record. Entertainment lawyer Allen Grubman has a deal to discuss. Others congratulate the Polygram chief on receiving the Spirit of Life award from the City of Hope--which is what’s brought him to L.A.

It’s a scene that wouldn’t have occurred in years past, when Levy was as anonymous as the far-flung entertainment empire he manages. But the $325-million purchase of Motown Records and Polygram’s unorthodox conquest of the movie business have brought some celebrity to the London-based Levy, a cerebral executive who chain-smokes Dunhill cigarettes.

Hollywood, especially, is intrigued by the 46-year-old mogul.

People wonder why he has remained on the sidelines during the bidding for Paramount Communications, which many see as a perfect fit for Polygram, and whether he seriously intends to build a studio from the ground up.

Levy’s answer is as cautious--or as cagey--as his strategy. He concedes that Paramount is a tempting target as the last major studio likely to go on the block for some time, and he refuses to entirely rule out an eleventh-hour bid. But he’s conflicted over the cost.

“Paramount getting away is a problem, because we’re worried about the lack of available (entertainment) libraries,” Levy says over coffee. “But do you put $9 billion on the table to acquire a library?”

Instead, Levy has committed $1 billion to building his own studio operation over the next decade, through a confluence of companies so complex that it takes a flow chart to sort them out.

Included under the Polygram Filmed Entertainment banner are the majority-owned Interscope, Jodie Foster’s Egg Pictures and Gramercy Pictures, a joint venture with Universal Pictures. In addition to that, there’s Polygram’s wholly owned labels: Propaganda, Working Title and A&M.;

Equally complex is Polygram’s distribution system. Levy missed a chance to acquire a distribution company when New Line Cinema struck a deal with Ted Turner. Distribution provides steady income, but Levy is in no hurry to get into the business. “You need a lot of product for that,” he says. “For now, it’s more important to control marketing.”

Polygram’s film division has never had a runaway hit, even though it’s won plaudits for off-center efforts such as “Wild at Heart.” As the company increases its release pace, some financial analysts view the division as a drag on earnings.

But movies are only a small part of the Polygram puzzle. The European giant, which had $3.66 billion in sales in 1992 and is 80%-owned by Philips Electronics, includes the Mercury, Motown, Deutsche Grammophon and Island record labels. Its worldwide profit rose by 13% in 1992 and by 19% in the first half of 1993. One reason: Billy Ray Cyrus’ “Achy Breaky Heart.”

In the two years since he came aboard, Levy’s worked hard to raise Wall Street’s awareness of Polygram, and he appears to be succeeding. In a strong market, Polygram shares traded at $34.625 on Thursday on the New York Stock Exchange, up from $23.25 earlier this year. The acquisition of Motown this summer was one deal that focused the financial community’s attention on the company. It also gave Polygram more of a presence in the American pop music market, where it has been overshadowed by competitors such as Sony Music and Warner Music, despite a roster that includes superstars such as U2, Mellencamp and Cyrus.

“I am and continue to be a great believer in urban music as a source of creativity,” Levy says. “We have all the elements of the puzzle now to succeed in the U.S.”

Motown is mainly recognized for its vast library of classic ‘60s songs from acts such as the Supremes, the Temptations and Stevie Wonder. But Levy says label chief Jheryl Busby, who’s made progress in reviving Motown, “is more important to me than the library.”

While building more bridges between movies and records is one priority--there’s talk of a Motown film label--Levy refuses to discuss other plans. Yet he says he’s in no hurry to change the company’s complex, confounding structure.

“This is like a bunch of small families, though certainly with a very large parent looking on,” he says with a paternal smile.

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One Ringy Dingy, Two Ringy Dingies:Actress Lily Tomlin, who once played the obnoxious telephone operator Edith Ann on “Laugh In,” is now dialing for dollars to support a documentary based on the late Vito Russo’s book “The Celluloid Closet.”

Tomlin hopes to raise $800,000 for the film version of the book about Hollywood’s depiction of gays and lesbians. Donations are tax-deductible, and people giving $1,000 or more qualify for an on-screen credit.