Revival On Broadway : With the help of Walt Disney Co., Times Square is staging a comeback. But some fear the loss of the district’s soul.

For two decades after it opened in 1903, the New Amsterdam Theatre was nothing less than the high temple of popular entertainment in America.

New York’s colorful social elite and the city’s burgeoning middle class flocked to the spectacular Art Nouveau building on 42nd Street, eager to see the beautiful “girls” of the Ziegfield Follies, hear the latest musicals from Irving Berlin or drink and dance in the roof garden theater.

For the owners, the Theatrical Syndicate, the New Amsterdam was both a glamorous showcase and a creative launching pad--the crucial link in a chain of more than 500 theaters across the country. And it firmly established 42nd Street and soon-to-be-named Times Square as the theatrical and entertainment center of New York.

Today, the once-proud New Amsterdam is a ruin, its cracking terra-cotta ornaments, faded murals and decayed plaster moldings forming a depressing metaphor for the decline of Times Square. It shares a block with eight other historic but crumbling theaters in a neighborhood better known locally for crack pipes than night life.

But city officials and business leaders are ecstatic over the prospect of a revived New Amsterdam--one that would be an altogether different kind of metaphor for the “Crossroads of the World.”

Walt Disney Co., with a big subsidy from the state of New York, has tentatively agreed to renovate and occupy the theater, a project that promises to boost a long-delayed and highly controversial effort to redevelop 42nd Street.

“With Disney coming, we have been bombarded with proposals from entertainment companies,” says Rebecca Robertson, president of the New York state agency spearheading the redevelopment effort. “This is part of the renewal of our economy. Entertainment is a burgeoning business, New York has to be a part of that, and Times Square is a logical place for it.”

If all goes according to plan, the area stretching from 42nd St. to 53rd St. and from 6th avenue to 8th Ave. will again be a colorful, exicting, and unique montage of interesting attractions and fascinating people.

Yet it seems unlikely that Times Square can ever regain its place as the hub of the nation’s entertainment industry.

Today, popular culture is driven by the movies, recorded music, fashion and the merchandising spinoffs those industries generate. New York, along with Los Angeles, is an important hub for all these businesses.

But the intricate cultural dynamics of the entertainment industry have changed radically since the glory days of Oscar Hammerstein, the Shubert brothers and the Theatrical Syndicate, which together with the New York Times invented Times Square. What the new Times Square can probably never be is the pre-eminent creative center, the trendsetter, the place to see and experience the new, the daring and the completely different.

There was a time when the musicians of Tin Pan Alley, the actors of the legitimate stage and the comedians of vaudeville were cultural beacons to the nation and the world--among other things, feeding story lines and performers to the nascent movie business.

In the 1990s, instead, comes the clean, ordered, family-oriented world of Disney, featuring carefully packaged entertainment such as “Beauty and the Beast,” the theatrical version of the hit animated film that is currently playing to sellout audiences on Broadway. Today’s theater audiences skew heavily toward tourists and suburbanites. Creative development, as often as not, takes place in California and many other places across the country.

“Instead of being a place to generate something, it’s a place to see the end product,” says Margaret Knapp, a professor of theater at Arizona State University who wrote a doctoral dissertation on the 42nd Street theaters. “It’s a place to see the latest London musical or a play that was successful in another part of the country.”

Still, for New York City, reinventing Times Square as a vibrant entertainment showcase and a corporate home for the entertainment industry would represent a major economic boost--and a big improvement over the status quo.

The glamorous night life and safe but sinful diversions of the old Times Square--always as much myth as reality--gave way decades ago to the incongruous mix of a staid Broadway theater culture on the one hand and a grim, drug-laced sex industry on the other. By the late 1970s, Times Square had become something of a civic embarrassment, with filthy streets and a sky-high crime rate.

In 1980, the city and state launched the 42nd Street redevelopment project. Like almost any major civic project in this contentious town, the effort quickly got bogged down in political bickering and lawsuits. And the economic slump in the late 1980s nearly killed it entirely.

But now the project is moving, just as private development efforts toward the northern end of Times Square are bearing fruit. The dark side, ruled by pornography and crime, is down if not out. Families and tourists and mainstream entertainment are in.

Public officials and local business folk can hardly contain their glee.

“This will be one of the wonders of the world,” gushes restaurateur Artie Cutler, whose three new Times Square establishments have been playing to packed houses. “People from all walks of life will be coming here.”

In addition to Disney, companies ranging from Warner Music to Madame Tussaud’s Wax Museum are scrambling for space on 42nd Street. Bertelsmann Music Group, the German media giant, has bought a 52-story office tower in the heart of Times Square; Virgin Records will occupy much of the 150,000 square feet of retail space in the building.

At Viacom Inc.’s 56-story headquarters across the street, other tenants are being pushed out as Viacom absorbs Paramount Communications. David Letterman’s CBS “Late Show,” housed a few blocks up Broadway, is building a veritable cult around its neighborhood. Even the troubled theater business is enjoying a modest revival.

While the precise economic impact of all this is difficult to measure, it is clearly salutary.

For one thing, tourism is an increasingly important industry in a city that has been losing businesses of all stripes for years. Times Square has no less than 12,500 hotel rooms and 220 restaurants, and Broadway theaters generate $2.3 billion in local business, according to a recent study by the Port Authority of New York and New Jersey.

Local officials and business leaders say the new, cleaned-up Times Square will be able to retain the diversity of uses--and at least some of the colorful subcultures--that have always made it unique. “Disney-fication,” however, clearly has its dangers. Some here fear that the gains for the city’s pocketbook will come at the expense of a part of its soul.

Cora Cahan, the ebullient president of New 42nd Inc., a nonprofit group charged with overseeing the renovation of six historic theaters, firmly rejects the notion that redevelopment means a bland, antiseptic Times Square.

“This street will be for everyone--young and old, New Yorkers and tourists,” she says. “We’re looking for uses that don’t replicate existing things, that are appropriate to New York and appropriate to New York as an entertainment center.”

Gazing down at 42nd Street from Cahan’s office, one would think she would be happy to find any uses at all. The long block between 7th and 8th avenues, the original heart of the theater district, is a bleak urban moonscape, home to dozens of empty buildings and boarded-up theaters.

At one end of the street is a clutch of X-rated video stores and peep shows, remnants of the 140 sex-related businesses that inhabited Times Square in the late 1970s. The sex industry has a long history in the area--and arguably forms part of its appeal for some visitors--but it is considered a pariah by the Establishment. The number of sex businesses now stands at just over 40, and efforts continue to whittle the number.

Along the rest of 42nd Street today, there are only blank marquees and crumbling facades, grimy reminders of a glorious but distant past.

That past began near the turn of the century, when theatrical entrepreneur Oscar Hammerstein--in search of cheap land and confident that the city’s theater district would continue to creep northward--built the first theater in the district known as Longacre.

Live theater ruled the entertainment kingdom then, and New York ruled the theater. It was big business, big enough to support construction projects such as the Hippodrome, a three-stage complex that occupied an entire city block and seated 6,000.

New York producers such as Hammerstein (grandfather of the lyricist of “Oklahoma” and other musicals), together with the Shuberts and the half-dozen partners of the Theatrical Syndicate controlled thousands of theaters across the country, pioneering the so-called combination, or road show, with productions “direct from New York.”

There were spectacular restaurants on Times Square too, such as Rector’s; there were the “roof gardens” atop many of the theaters, where drinking and dancing went on to the wee hours, and on the side streets there were brothels, some so busy they had lines outside the doors.

But the heyday of legitimate theater and vaudeville--the intimate art form that combined comedy, music and even acrobatics--proved short-lived.

Prohibition was the first blow, altering the economics of live entertainment and driving many impresarios into bankruptcy.

The decisive change, however, was the arrival of motion pictures. By the 1930s, the movies had thoroughly displaced the theater as the main form of popular entertainment, and most of the theaters on 42nd Street were converted to movie houses. In live performance, only burlesque--the predecessor of the modern strip club--continued to thrive.

Initially, there was an intimate relationship between the film industry and Broadway. Movie palaces such as the Paramount and the Strand were the jewels of the theater chains, while creative talent crossed easily from one medium to another. And movies did much to create the mythology of Times Square.

Ultimately, though, Hollywood became the undisputed center of the film business, and theater continued to wither. Once there were hundreds of major playhouses in New York; today, there are just 37 Broadway theaters, and about a third are dark at any given time.

Business has been relatively good this year, with total attendance at its highest level since 1988. Compared to the movie industry, though, Broadway theater is tiny,with less than $400 million a yearin revenue. And doomsayers fear that high costs, archaic union work rules and antiquated management practices assure a continued downward slide.

Some hope that Disney, as a powerful outsider, will shakethings up, perhaps taking on the unions and introducing more sophisticated promotion and marketing techniques. There have already been a few skirmishes with unions over “Beauty and the Beast.”

But Broadway’s problems run deep. “The new generation is not theater-oriented,” laments Emanuel Azenberg, a prominent Broadway producer. “And we have an economic structure that is completely impossible. Seventy-five dollars to go to a musical? . . . A part of the American cultural scene is going away forever.”

The premise of the redevelopment effort is that the cultural scene is simply changing, and that Times Square must put itself in the way of those changes. Nothing symbolizes that better than the 42nd Street project, conceived as a way to reclaim a historic block that succumbed years ago to peep shows, drug dealers and prostitutes of every description.

When the state Urban Development Corp. first put forth its blueprint back in 1984, many of Times Square’s denizens were horrified. The state proposed forcibly buying out the property owners on the block between 7th and 8th. Four key parcels at 42nd Street and 7th Avenue, the heart of Times Square, would be the sites for four massive office towers.

The towers were to be built by private developers, who would get tax breaks and pay the state $241 million, which in turn would be used to buy the other properties and finance the rehabilitation of the theaters.

But the Philip Johnson-designed buildings were harshly criticized as too large and out of step with the spirit of the area; 47 lawsuits were filed to block the project. By the time those were resolved, the real estate and financial services depression of the late 1980s had ruined the market for office space in mid-town. Three new office towers toward the northern end of Times Square ended up in bankruptcy.

In 1993, the city and state came up with an interim plan that delayed construction of the four office towers and put a renewed emphasis on retail and entertainment. It was well received, especially by those who had opposed the office towers in the first place. (The developers are expected to sign off on the plan later this summer.)

In the meantime, the three bankrupt buildings became cheap enough to attract tenants: Two were acquired by Morgan Stanley and the third by Bertelsmann.

Still, a critical question remained: Would private-sector retail and entertainment companies be willing to invest in 42nd Street--especially in old theaters that would require extensive renovation? And what kind of terms would they demand?

A big part of the answer came in January, when Disney Chairman Michael D. Eisner, flanked by Mayor Rudolph Giuliani and Gov. Mario Cuomo, announced that the entertainment giant would take over the New Amsterdam.

“We’re going to get rid of the filth and bring back the old values,” cooed Cuomo. “This is the beginning of a whole new era.”

But Disney did not come cheap. The state will make a $21-million loan at 3% interest, while Disney will put up $8 million. And the deal is only preliminary; Disney still could walk away if the renovation proves too expensive or if the company isn’t pleased with the way development on the rest of the block is proceeding.

“What’s happening on the balance of the street is very important,” says David Malmuth, senior vice president at Disney. “We need to have good neighbors.”

However, the Disney announcement did have its intended effect. Cahan and Robertson have been inundated with proposals for everything from nightclubs and music studios to virtual reality attractions. They refer to two periods in their redevelopment effort: BD (before Disney) and AD.

Meanwhile, Cahan’s organization is renovating the Victory Theatre, across 42nd Street from the New Amsterdam, for children’s performances. And the arrival of thousands of new office workers is giving a big boost to the restaurant and retail businesses.

“Times Square is cleaner and safer and friendlier, but it hasn’t lost its soul,” says Gretchen Dykstra, president of the Times Square Business Improvement District. Her organization, whose street cleaners and security guards supplement the city’s, is credited with helping the district’s revival.

In the long run, Times Square could indeed end up a vibrant, economically successful mix of office buildings on the one hand and big retail stores and entertainment venues on the other.

But the challenge is whether it can do so without losing all that has made it unique. And soul can be in the eye of the beholder. Though the famous news “zipper” still circles the Times Tower, the building is vacant--and may well be torn down to make way for Madame Tussaud’s.