Spielberg, Geffen and Katzenberg Plan New Studio

An all-star team of Hollywood powerbrokers whose combined credits include some of the biggest movies, TV shows and records of all time--Jeffrey Katzenberg, Steven Spielberg and David Geffen--is forming an entertainment company to compete with the major studios.

Katzenberg, who headed Walt Disney Studios until last month, will announce plans for the venture at a Beverly Hills news conference this morning, sources said Tuesday. The company’s strategy will be to produce and distribute entertainment on a more cost-efficient basis than its competitors, the sources said.

The new company will eschew the massive overhead carried by the major studios in favor of a more streamlined structure. It will also offer more favorable financial terms to its partners. The company’s financial backing is unclear, though Katzenberg recently returned from a round of meetings with prospective investors in New York.

Sources speculated that Geffen, whose net worth is said to be nearly $1 billion, may be one of the backers. Spielberg, said to be worth more than $600 million, could also invest some money in the company.

Katzenberg is well known as the tenacious studio chief behind film hits such as “The Lion King” and hit TV shows such as “Home Improvement.” Spielberg is coming off a banner year in which he directed 1993’s most popular and most honored movies, respectively--”Jurassic Park” and “Schindler’s List.” Geffen is considered a record industry wizard for his success with acts ranging from John Lennon and Elton John to Nirvana and Counting Crows.

“They will make (entertainment) history by starting another studio,” said one source.

Katzenberg will run the new company. The precise nature and extent of Spielberg and Geffen’s involvement in the day-to-day management of the company is not known.

Katzenberg has been actively in search of his next challenge since August, when he was forced out of Disney after a bitter falling out with Walt Disney Co. Chairman Michael D. Eisner. Some Hollywood executives speculated that Katzenberg would take the helm of another major studio, such as Sony Pictures Entertainment, but he privately told friends that he was more interested in starting his own company with partners who would share an equity interest.

After 10 years at Disney, Katzenberg’s split with Eisner came over his unsuccessful campaign to be named president and chief operating officer of the company--a spot that became available when longtime executive Frank G. Wells was killed in a crash in April.

Spielberg and Geffen are Katzenberg’s two best friends. Katzenberg and Spielberg are partners in a successful restaurant venture called DIVE!

Spielberg’s Amblin Entertainment production company is based at Universal Pictures under a non-exclusive deal. It is unknown if his involvement in the new company will affect that relationship.

One of the new company’s priorities is expected to be animation. Katzenberg is credited with helping revive Disney’s enormously profitable animation franchise. Spielberg has produced such successful animated features as “Who Framed Roger Rabbit?” and “An American Tail.” The new company is expected to compete head to head with Disney.

Katzenberg’s falling out with Disney was partly over who deserved more credit for the company’s animated hits--Katzenberg or Disney Vice Chairman Roy Disney.

Geffen is also tied to Universal’s parent, MCA--after selling his Geffen Records to MCA in a deal that netted him more than $700 million--through a personal services contract that expires at the end of this year. In addition, Geffen has a movie deal with Warner Bros. His next release is the upcoming Tom Cruise movie, “Interview With the Vampire.”

Times staff writer John Lippman contributed to this story.