Company Town : ‘Godzilla’ 1 of Many Monster Entertainment Stories Ahead

Will General Electric sell NBC? Will Michael Ovitz resurface in the entertainment business after a year on the sidelines? Will Diller strike again? Could “ER” end up on WB?

The entertainment business is full of surprise endings, making predictions a dangerous game. How many years did analysts predict the downfall of Gerald Levin, chief executive of Time Warner, who staged one of last year’s biggest comebacks? UPN and WB have yet to merge or expire, as analysts have predicted for the last three years. And who would have envisioned Seagram turning over most of its television business to an entrepreneur?

Company Town missed a few and called a few in last year’s round of predictions, but mostly we were premature: Many of the predictions could serve for the coming year as well.

The long-delayed digital videodisc did roll out in 1997 as predicted, but who knew a competing format would emerge to stifle consumer demand? Likewise, while it became possible to surf the Internet via a television set last year, the practice is hardly widespread. And Sony failed to spin off its studio--although it could well do so in ’98.

After taking a drubbing on Wall Street in 1996, most entertainment stocks recovered last year--and could ride another wave this year if advertisers keep on spending. The asset sales and earnings strength that relieved the debt hangover ailing the stocks two years ago should continue in 1998 as companies shave to the core--and find little left to buy. Westinghouse Electric pared down to a pure media company under the CBS banner, with only a few industrial assets left to unload. Viacom sold its cable and radio properties, while Walt Disney unloaded newspaper publishing.

Though some analysts predict that independents will rise again in 1998 as consumers tire of the monotonous dirge of big-budget movies and star-driven TV sitcoms, most say the climbing costs of production require a number of outlets, both domestic and international, over which to spread those costs.

Here are Company Town’s predictions--based on interviews with analysts, investors and industry executives--for 1998:

NBC Falters: Bigger payouts for “ER,” “Frasier,” the NBA and the NFL, coupled with the loss of “Seinfeld,” throws the top-rated network from its perch. Jack Welch considers selling the network or perhaps spinning it off in a public offering--with Sony.

“ER” Renewed for Top Dollar: While Warner Bros. threatens to pull NBC’s top drama in renewal negotiations early in the year, NBC renews the series for an unprecedented $8 million per episode, up from the current $1.2 million. Despite Ted Turner’s preference to move the show to WB and TNT, the company opts for the big payday and for smooth relations with NBC, which also airs the Warner Bros.-produced “Veronica’s Closet” and “Friends.”

Playa Vista: The once-hyped DreamWorks studio project at Playa Vista finally falls through when the studio and the developers fail to agree on terms or arrange suitable financing. DreamWorks is the one to pull the plug, opting to take Seagram chief Edgar Bronfman Jr. up on his offer for 25 acres or so on the Universal Studios lot (with a clause that keeps the tour trams away). Each side blames the other.

Walt Disney: The number of groups boycotting the company over various issues breaks 100, including doomsday societies protesting the company’s release of the film “Armageddon.”

Disney Part 2: The length of Disney’s annual meeting shatters last year’s marathon of four hours-plus as stockholders complain about the $565 million that Chief Executive Michael Eisner made in December cashing in stock options. Meeting runs the approximate length of two Angels games.

DreamWorks: Disney schedules the re-release of “The Lion King,” “Beauty and the Beast,” “Aladdin,” “Snow White,” “The Little Mermaid,” “Cinderella,” “101 Dalmatians” and “Tron” the day that DreamWorks’ first animated feature film, “The Prince of Egypt,” opens in theaters.

Monster Hit: Sony Pictures struggles to match its front-running market share, until “Godzilla” sets a record for a Memorial Day weekend opening.

Titanic: The $200-million epic is snubbed at the Oscars, leading pundits to theorize that the backlash against big-budget studio movies continues.

Titanic Part 2: The $200-million epic sweeps the Oscars, leading pundits to theorize that the backlash against big-budget studio movies is over.

Fast Forward: Viacom takes advantage of a slight uptick in the numbers to formalize a spinoff of its ill-fated Blockbuster Entertainment acquisition to the public, though probably not until 1999, when it will have held the asset for the five years required for preferred tax treatment. It also buys out Chris-Craft Industries, its partner in UPN, although some consider any sale by Herb Siegel a longshot.

Kronfeld’s removal: The head of PolyGram’s domestic music group steps down after being stripped of other duties in ’97 because of racially charged comments he made in a court deposition.

Death Row Flourishes: Despite the incarceration of founder Suge Knight, Death Row tops the charts again with the release of a highly anticipated album by production whiz Daz Dillinger. But the company completely severs ties with Seagram-affiliated Interscope Records before the summer ends and cut a distribution deal with Priority Records.

EMI Music: The company buys the other half of Los Angeles-based rap powerhouse Priority Records, which distributes music by controversial artists such as Master P, N.W.A. and Ice Cube. A longer shot: EMI’s stock price plummets as cash reserves dwindle, bringing the purchase price into the $6-billion range required for Seagram to snap it up.

Biondi’s Departure: While Seagram’s sale of TV assets to Barry Diller fueled speculation that the chief executive was on his way out, Biondi sits tight, collecting his $7.3-million salary.

CBS Split: Some analysts think Mel Karmazin will tire of turning around CBS’ television group and sell to Barry Diller, while keeping the radio group for himself. But unless CBS has several disastrous quarters, the TV group would be too expensive for Diller’s pocketbook. Karmazin wants the glory of fixing CBS.

Brought to You by AT&T;: The long-distance giant becomes the local telephone brand for cable operators looking to use their wires to deliver a dial tone.

Digital TV: It arrives, finally, with a flurry of confusion and with high churn after the novelty wears off. Some analysts, however, are predicting consumers will unplug it in favor of cable with superior sound, pictures and near-video-on-demand.

Disney-Katzenberg Strife: Final settlement number on former studio chief’s breach-of-contract suit is reached. Disney floats a low number, Katzenberg side floats a high number. Both sides declare victory.

Warner Bros.: Anemic box-office performance in 1997 leads to a shake-up in the executive ranks, and possibly the naming of a top executive to run the day-to-day studio operation under co-Chairmen Bob Daly and Terry Semel.

DVD: The digital videodisc format introduced last spring experiences a slow build, failing to replace VHS any time soon. But the current “open format” DVD triumphs handily over DIVX, a sales/rental hybrid backed by Circuit City Stores and entertainment law firm Ziffren Brittenham. That format’s higher cost, minuscule benefits and lack of retailer support makes DIVX flop.

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Also contributing to this report were Times staff writers James Bates and Chuck Philips.