‘Dream Team’ Trio Outline Plans for Studio

Describing themselves as Hollywood’s version of the “dream team,” entertainment executives Jeffrey Katzenberg, Steven Spielberg and David Geffen on Wednesday confirmed plans to launch a company from the ground up that will compete with the major studios.

The unnamed company will be financed by the three partners in the early stages--although sources said other investors from the communications world may eventually sign on. It will focus on five major areas: movie and TV production, animation, music and multimedia.

“We’re all going to do what we’ve been doing,” Spielberg said at a packed Beverly Hills news conference Wednesday morning. “We’re just going to hopefully do it better.”

News of their plans rocked the Hollywood community. Katzenberg, Spielberg and Geffen are the most powerful creative executives to combine forces behind a new entertainment company in recent memory--perhaps the most powerful since Charlie Chaplin, Mary Pickford, Douglas Fairbanks and D. W. Griffith combined to form United Artists at the birth of the industry.

If the trio prevails, theirs will be the first studio successfully launched in more than a decade. They may also help to transform the way business is done in Hollywood, since the company is structured as a streamlined alternative to its competitors.

“If they can really pull this off, it will change the face of the industry,” said filmmaker Bob Zemeckis, a friend of Spielberg and collaborator on such hits as the “Back to the Future” film series and “Who Framed Roger Rabbit?” Zemeckis, whose “Forrest Gump” has grossed more than $270 million at the box office, added, “They are a unique mixture. We haven’t seen anything like this since the old UA days. These are three guys are passionate about movies.”

Katzenberg, the former Walt Disney Studios chief who had hits such as “The Lion King” and “Pretty Woman” to his credit before a falling out with company Chairman Michael D. Eisner, is expected to manage the day-to-day operations of the company. Spielberg, the most successful director in Hollywood history (“Jaws,” “E.T.,” “Jurassic Park”) will fold his Amblin Entertainment into the company after fulfilling existing commitments, but will still take directing jobs with other studios. Geffen, who created Asylum and Geffen Records, will launch a record label there.

Initially, at least, they said they will focus on quality over volume. Spielberg said the company would be “about ideas” and a happy “playground” for creative talent. Katzenberg added that there will be no limit on budgets or the level of talent they will work with.

The executives said they intend to be very hands-on at the company, but sources pointed out that not everything they touch has turned to gold. Katzenberg suffered through years of live-action losers at Disney, including “Blank Check” and “Cabin Boy.” In addition to his many hits, Spielberg has had his name on disappointments such as “Always” and “Empire of the Sun.” And Geffen has distanced himself from the operations of his record company in recent years, leading some to question whether he can build another label.

Egos may also become a factor as the company moves forward, since the partners are known as three of the most controlling executives in Hollywood. Speaking of their futures, Katzenberg said: “We’re looking at this as a lifetime commitment for the three of us.” Said Spielberg: “We’re interested in creating a company that will outlive us all.” Added Geffen: “I’ve always been on my own, but this is a once-in-a-lifetime opportunity to work with partners. . . . I haven’t had this much anxiety in 20 years.”

Nor has Hollywood seen such an ambitious new company born in many years. Barbra Streisand, Sidney Portier and Paul Newman created First Artists Production Co. in 1969--and failed. Director/producer Francis Ford Coppola also failed with his filmmaker-friendly American Zoetrope studio in the 1980s. Orion Pictures, formed in 1978, had a run of success until a string of bad movies led to a bankruptcy filing in 1992. TriStar Pictures, formed by CBS, Home Box Office and Columbia Pictures in 1983, lives on as a subsidiary of troubled Sony Pictures Entertainment. And Savoy Pictures, the most recent entry, is still establishing itself.

Katzenberg, Spielberg and Geffen hope to get a leg up by making their company leaner, faster-moving and more financially creative than the competition.

Breaking Disney’s virtual lock on animation is one goal. Spielberg and Katzenberg said feature animation will be a cornerstone of the company. “Jeffrey and I have been horrendously competitive for years, and my appetite for animation has not diminished,” said Spielberg, who made “Roger Rabbit” for Katzenberg at Disney.

TV is another area where the company is expected to be aggressive and innovative. Sources say that it will be willing to offer more favorable financial terms to the networks than its competitors. Katzenberg is known to have strong ties to executives at Capital Cities/ABC. Moreover, the partners have not ruled out a bid for a network.

Multimedia is a special interest of Spielberg’s. The director already has a deal with Knowledge Adventure, a multimedia software company. But he said that would not preclude him from working on separate projects for the new company.

A typical problem for start-up companies is financing, since it takes years to build up the libraries that see established studios through the lean times. But competitors say the Katzenberg-Spielberg-Geffen team will probably clear that hurdle too.

“They’re a powerful force because the three of them are all so unique and so good at what they do,” said Robert Daly, Warner Bros. co-chairman. “They’re starting from scratch, so this won’t be something you’ll see tomorrow. But are they a major competitor? Absolutely.”

Added Paramount Pictures Chief Sherry Lansing: “It’s the most amazing combination of geniuses . . . I think they can do anything they set their minds to.”

“This is as if Babe Ruth, Lou Gerhig and Joe DiMaggio got together,” said Miramax co-founder Harvey Weinstein. “It’s the entertainment hall of fame of all time.”

Details about the new company are sketchy, because it was pulled together very quickly. But sources say it is likely to align itself initially with Universal Pictures parent MCA Inc., where Spielberg and Geffen have long-running ties. Spielberg’s company is based there, in an adobe complex built for him after the success of “E.T.” Geffen, who sold his record company to MCA, works there under a contract ending this year.

Sources said that any ties between the new company and MCA are predicated on MCA Chairman Lew R. Wasserman and President Sidney J. Sheinberg remaining in place. Both are in the midst of contract discussions. Sources said the new company could use MCA for everything from theatrical distribution and merchandising services to video and pay TV deals.

There was even speculation that Katzenberg, Spielberg and Geffen eventually will try to purchase a controlling stake in MCA from its parent, Matsushita Electric Industrial Co.

“I would hope MCA would continue to have a relationship with this entity if it’s considered appropriate by them and us,” said Sheinberg, who was attending an MCA management retreat. “We would look forward to being able to do that and I think they would too.”

Katzenberg described the new company as a “sovereign state.” But it was one that was formed very quickly. The contracts were signed only three days ago, and it was only six weeks ago that Katzenberg was forced out at Disney after an unsuccessful bid to be named president of the parent company. Katzenberg’s career campaign resulted in a very public feud with Eisner, whom he had worked with for 19 years, beginning at Paramount Pictures.

After exploring three options--fixing a troubled company, expanding an existing successful company or starting his own enterprise with partners--Katzenberg decided on a new company, telling one confidant: “At the end of the day I asked myself, ‘Do I want to get involved in somebody else’s creation?’ . . . This is getting up on the high wire and literally putting ourselves at risk with the challenge and rewards of trying to build something from scratch.”

Spielberg and Geffen are Katzenberg’s two best friends. The entrepreneurial Geffen had been pushing Katzenberg to go into business with him. Spielberg, who had always resisted overtures to form his own company, also was open to the idea of teaming up. He and Katzenberg are already partners in DIVE!, a restaurant venture that’s designed to become a national chain.

Actor Tom Hanks on Wednesday jokingly told Spielberg they should call their new venture “DIVE!--the Studio.”

Spielberg relayed a story at the news conference about how he and his wife, actress Kate Capshaw, were visiting Zemeckis and his wife at their vacation house in Jamaica when he learned that Katzenberg was leaving Disney. According to Zemeckis, Katzenberg suggested at that time that Katzenberg and Spielberg should start a studio. “I don’t know if it was a joke or if Jeffrey was half kidding, but I think the seed my have been planted,” Zemeckis said.

Katzenberg said Eisner called all three to congratulate them on the new company Wednesday morning. He added that his rift with Eisner is healing “and that the hurt’s behind us.” However, Katzenberg has retained lawyers to negotiate a settlement of his contract with Disney, and many people expect the multimillion-dollar disagreement to end up in court.

Wednesday’s news conference not only drew one of the largest media crowds covering an entertainment related announcement, but an uncharacteristically large collection of Hollywood power brokers including Michael Ovitz and Ron Meyer, whose Creative Artists Agency represents Spielberg, International Creative Management President Jim Wiatt and United Talent Agency partner Jim Berkus and several of Katzenberg’s still-loyal Disney executives.

The new company still lacks headquarters and a staff, as well as clear, long-term financing. Sources familiar with entertainment funding said it will need $1.5 billion to $2 billion in capital to go forward with its ambitious plans. No one believes that the partners will foot the entire bill, even though Spielberg and Geffen are personally capable of doing so.

Katzenberg said the company will not go public. Sources agreed that the three executives can raise all the money they need from private sources, and that a public offering would expose them to more scrutiny than they’re likely to be willing to put up with.

“I would think that Katzenberg would very much want to avoid the public forum,” one source said. “The results are too publicly known. He needs to keep his aura about him.”

Should they change their minds, raising money publicly will also be easier once the company is up and running, sources say.

Getting a movie into theaters from scratch can take as long as 18 months, but the new company could accelerate that timeline by acquiring existing projects other studios have soured on. Amblin and Geffen Films also have projects in the works. Sources pointed out that Disney, which has said that it plans to scale back production, could find a willing buyer for its orphaned projects in Katzenberg. Given their recent bad blood, however, Eisner may not be anxious to jump-start Katzenberg’s company.

“One significant question is whether Eisner allows anything to go to Katzenberg,” said one source. “If I were Eisner, I wouldn’t put anything in turnaround.”

* FORMIDABLE RIVAL: Deal’s impact in Hollywood. D1

Merger of the Moguls

The new company, yet to be named, would be the first studio to be formed in more than a decade. It initially will be funded by the partners and they plan to eventually raise as much as $2 billion for film, TV and record production.

WHAT IT MEANS

* The new company will create more competition for the major studios.

* It is expected to become heavily involved in feature animation.

* It will create a new record label through David Geffen.

* It will explore opportunities in new media.

* It may partner with other private investors.

OTHER STUDIO STARTUPS Paramount: 1912 Universal: 1912 20th Century Fox: 1915 United Artists: 1919 Walt Disney: 1923 Warner Bros.: 1923 MGM: 1924 Columbia: 1924 Orion: 1978 Tristar: 1982 *

CAREER CHANGES

Katzenberg: New venture gives him a company to run after resiging from Disney.

Spielberg: Amblin Entertainment, his production company, will be folded into new studio.

Geffen: He plans to leave MCA Inc.’s Geffen Records to work exclusively for new entity.