Movie Studios Vie To Cash In On Boom New Technology, Expanded International Market Set Stage For Another Golden Hollywood Era

After paying $5.7 billion for media giant MCA Inc. earlier this month, Seagram Co. Ltd. chief executive Edgar Bronfman Jr. said he wanted to claim his seat at a “table of six.”

The metaphor clicked instantly in the minds of entertainment industry executives and analysts.

The “six” sitting at the table are the major entertainment companies with studios in Los Angeles - MCA, Walt Disney Co., Time Warner Inc., Viacom Inc.’s Paramount Pictures, Sony Corp.’s entertainment division and News Corp.’s Fox Inc.

With fast company like that, it’s clear those at the table are playing high-stakes poker, vying for their share of what is expected to be unprecedented growth well into the next decade, analysts said. Advances in technology, a boom in international marketing and heightened interest in entertainment are counted upon to support double-digit annual hikes in sales.

A recent report by the Alliance for Motion Picture and Television Producers says annual growth for the industry is expected to hit 11 percent a year through 1997. Industry planners say beyond that, growth will reach 5 percent to 8 percent annually.

“I would say the next decade will be pretty exciting,” said Dan Garcia, vice president for real estate planning at Warner Bros. in the Los Angeles-area city of Burbank.

Providing the public plays along, many believe that Hollywood will be entering a new golden age that would rival the 1930s and 1940s in prosperity for the industry.

In the past decade, nearly all of the major studios allied themselves with other companies either through buyouts or mergers and now appear to be in position to take advantage of the boom.

Analysts said under the current makeup, some will be weaker than others but most studios are likely to cash in on the boom. But there are two camps of companies - those that are well-positioned for growth and others which are struggling.

The three domestic-owned firms of Disney, Time Warner and Viacom are considered to have the upper hand although each has its own weakness.

A wild card lies in DreamWorks SKG, the first major new studio to start in decades. DreamWorks is expected to be a big player based largely on the resumes of its principals - director Steven Spielberg, former Disney studio chief Jeffrey Katzenberg and record mogul David Geffen.

The three are close to raising the $2 billion they need to get DreamWorks going, a mere six months after starting the company.

Disney

With $10 billion in annual sales, Burbank-based Disney is considered one of the strongest based on its size and profitability. Although chairman Michael D. Eisner said in a 1994 conference he was unsure about investing in new technology, the company later signed on to provide home entertainment for a Baby Bell venture and created an interactive software division.

The company’s strengths are in animation and theme parks, analysts said, while its chief weakness is the unsure state of its management. The departure of Katzenberg leaves its movie studios in an uncertain state.

Viacom

Analysts believe the parent of Paramount and Blockbuster Video is well-positioned to capture a large share of the market by emphasizing content over investment in delivery systems.

Viacom officials believe they have total access to consumers through Blockbuster stores, the nation’s largest video chain.

Time Warner

The parent of Warner Bros. Pictures is burdened with a heavy debt load, but will be one of the strongest once it reconfigures its holdings, analysts said.

Warner consistently has turned out popular films, and has invested in a variety of ventures including a huge stake in cable systems.

But Time Warner has not turned in an annual profit since Time Inc. and Warner Communications Inc. merged in 1989.

Fox

Fox has a strong investment in all the major media fields - movies, television and interactive products - but its strongest emphasis now appears to be in television, analysts said.

After taking away several key affiliates and National Football League broadcasts from rival CBS in 1994, Fox ran into roadblocks in 1995. Analysts have been troubled by News Corp. Chairman Rupert Murdoch’s difficulties with the Federal Communications Commission over ownership of U.S. television stations.

MCA Inc.

The future for Universal Pictures’ parent could be bright but is uncertain.

Seagram is expected to invest heavily in development and could end up buying a television network, the one cog in the entertainment formula that many other studios have.

Analysts wonder how MCA will survive if Chairman Lew Wasserman and President Sidney Sheinberg leave.

Sony Pictures Entertainment

Sony had a $3.2 billion loss last year due largely to poor performances at the box office. Sony has been criticized for large expenditures, including paying $600 million to buy out the contracts of Peter Guber and Jon Peters.

Guber and Peters ran Sony for a brief period but later left.

While the studio makeup appears to be set, studio executives must stay on their toes, knowing the game could change unexpectedly.