PIPE DREAMS

Directing the most commercially successful films in Hollywood history is one thing, founding a new studio quite another. And Steven Spielberg could be about to discover the difference. Report by David Thomson

Steven Spielberg will be 50 this December. Only 50? He seems to have been important so long, and so active. This spring saw the publication of Joseph McBride's biography: more than 500, very thorough, admiring pages, near the end of which Spielberg's second wife, Kate Capshaw, is heard to utter, "I love Jeffrey [she is speaking about Jeffrey Katzenberg, one of Spielberg's partners in DreamWorks SKG]. But I never want you to become Jeffrey. I don't want you to become involved in that lather of workaholism."

You can see her point. Capshaw has nearly forsaken her own acting career "to be with Steven". Spielberg's first marriage, to another actress, Amy Irving, had her professional ambitions as one of its fracturing rocks. For Capshaw, being with Steven now means presiding over a family of seven children - one from her previous marriage; one from the Spielberg-Irving union; two of their own; and three they have adopted. The most intense period of child-gathering overlapped with Spielberg's three-year hiatus, or resting period, after the astonishing one-two of Jurassic Park and Schindler's List (which opened in 1993). But now he is Spielberg again, the big S in SKG, the hope of his world, and the hero who may do something not managed (or dared) in 60 years - float a new studio on the uncertain seas of the picture business. With Jeffrey Katzenberg as an example, a goad, and a possible mutineer should he falter.

Not that the "rest" was exactly what you or I might need after doing Jurassic Park and Schindler's List more or less at the same time. Spielberg is by far and away the most potent sponsor and enabler of film projects alive today. And in those years, 1994 to `96, while "at home", he was also producer, executive producer or guiding friend to such things as The Flintstones; The Little Rascals; To Wong Foo, Thanks for Everything, Julie Newmar; Casper; The Bridges of Madison County; How to Make an American Quilt; The Trigger Effect; and a little thing called Twister (made for Amblin Entertainment, Spielberg's own company). Nor should we regard his role on such films as a mere kindness to others. He takes sponsorship seriously, just as he draws a healthy cut of the profits. This is a man whose personal worth is close to $1 billion.

Which raises the matter of his latest film - his return, if you like - The Lost World: Jurassic Park, which he directed, and which opened in America in May. Or maybe "exploded" is the word. The Lost World, I would suggest, is even more perfunctory and less interesting as a story than its predecessor. But the dinosaurs are bigger and better done, and the picture grossed $140 million in 10 days - covering its investment in one T-Rex snort. Spielberg stands to receive 17.5 per cent of all revenues on the film (his contract with Universal was only 15 per cent on the original, but a young man needs to build for the future).

That's right: Universal made The Lost World - and they get everything else that's left. Twister was Warner Brothers with Universal; The Bridges of Madison County was Warner's; The Flintstones was Universal's. And so on. Though DreamWorks SKG announced its formation on 11 October 1994, no movie has yet been released bearing its name and logo. You can see how Katzenberg and some of SKG's investors might be fretful - and you may judge how long everyone is prepared to wait for Steven. His reputation has no rival in the history of the business. It is taken for granted that he can deliver success whenever he wants - just as surely as Michael Jordan can win any basketball game.

By now, DreamWorks has little option but to be big. Still, it came about, spontaneously, as a whim and a notion cooked up by a couple of guys. Or maybe just one. Katzenberg had been Michael Eisner's production chief at Disney for years. He had had a string of hits; he had revived the animated feature; and he was famous as a workaholic, a cost-cutter and a man who imposed changes on every project. But in April 1994, Frank Wells, the president of Disney, was killed in a helicopter crash in Nevada. Katzenberg assumed he would become president - after all, Eisner, the head of the company, was himself about to undergo heart- bypass surgery. But Eisner declined to promote his old associate; so, that August, Katzenberg resigned. He talked to Spielberg, and they fashioned a vague idea for a new enterprise. But Spielberg was carried along by the way, at that very moment, Universal (his home base) was being bossed around by its Japanese owner, Matsushita.

So Steven felt more inclined to go independent, despite his old, old personal rule about never investing your own money in pictures. It was Katzenberg's suggestion that they might find an ideal third partner in David Geffen, the record-company owner, and sometime movie producer, and one of the best business heads in town.

The whole dream was cooked up in a couple of months at the end of the summer of 1994. It was all so fast, the name came later. The grand design that became known as DreamWorks would do movies, TV and records (at least). The Chemical Bank pledged a $1 billion line of credit. Paul Allen, the co-founder of Microsoft, put up $500 million. Bill Gates was an investor. $300 million came from the South Korean company, One World Media, in return for Korean distribution rights. And then the SKG trio themselves put up another $100 million - no problem for Geffen or Spielberg, but something that forced Katzenberg, "the poor relative", as he called himself, to borrow heavily. For Katzenberg - no matter that he had been responsible for Beauty and the Beast, Aladdin and The Lion King, to say nothing of Pretty Woman and Dead Poets Society - had earned only salary and bonuses at Disney. He had never had a piece of the action. Though SKG were minority investors, they were awarded control by their backers. They had an empire of their own.

But an empire needs more than a name and emperors; it requires premises, furniture, projects, staff and overhead. Jeffrey Katzenberg made it clear all along that he wanted DreamWorks to challenge Disney in the field of animation. So he raided for talent, and widened the rift between himself and his old home (he is also suing Disney over past profit participation). The new team is hard at work on Prince of Egypt, an animated feature - the prince is Moses - budgeted at $60 million, but not likely to be released until Thanksgiving 1998. That mix of time and money, allied to Katzenberg's need for personal vindication, suggests that Prince of Egypt is bursting with ambition and originality, and the wish to set new standards for animation.

It was far easier to get into television quickly: after all, the orthodoxy prevails that TV can be made fast and cheap, whereas movies are as laborious as the Pyramids. DreamWorks made a deal early on, with the ABC network, to release its TV product, and so far it has done four shows, not one of which has been a clear hit likely to ensure long-term profits and syndication. Spin City, with Michael J Fox, is the closest it has come. But Champs folded after six episodes. High Incident (which had a lot of input from Spielberg) is marginal. While Ink - with Ted Danson and Mary Steenburgen - has been subject to several revisions and reappraisals.

Ideally, a new studio needs its own premises - and these days in Hollywood there is competition for very large, hi-tech facilities, the only places where one can properly make the big, special-effects movies so much in favour. For the moment, DreamWorks has its temporary base at Burbank, but it also entered into partnership with the development group, Maguire Thomas, to build at La Playa Vista. This is an area on the LA shoreline between Marina Del Rey and the Los Angeles airport. On a site of well over 1,000 acres, there were plans for a studio, with offices, and something like 13,000 housing units. On paper, here was urban development allied to creative vision - with an ocean view and all the historic associations of being the place where Howard Hughes had once built and kept the "Spruce Goose", the flying boat with a 320-feet wing-span, weighing 400,000 lbs, which once flew as much as a mile. (Another Spielberg project, maybe with Warren Beatty acting, is to do the Howard Hughes story.)

However, not everyone regarded the Playa Vista scheme fondly. To ecologists and conservationists, this site was the Ballona wetlands, one of the last untouched locations in the Los Angeles area. The protests long ago passed the stage of crankiness. Along with building problems, they have cast a shadow of delay and uncertainty over the studio.

Some reports took wicked pleasure in the way SKG were being made to heed the habits and habitat of rare wading birds. After all, Hollywood is a place of gossip, envy and an unveiled delight at watching the mighty fall. Everyone wants DreamWorks to succeed; but plenty could find comfort in its failure. Nothing remotely like it had happened since 1935 when the new company Twentieth Century (led by Darryl Zanuck and Joseph Schenck) took over the moribund Fox company. But that was only a realignment of existing forces. DreamWorks was three outstanding performers making a new studio, and apparently planning to distribute their own product. Just as Disney was their immediate rival, so SKG made a deal with the toy company, Hasbro, with a view to all the spin-offs there might be from Prince of Egypt.

Nevertheless, the most pointed, or impatient, critique of DreamWorks was: Where are the movies? And what is Steven going to do for you? So the family time he gave himself, and the obligation to Universal to do The Lost World, were drags on every hope at SKG. There was no public sign of acrimony or dispute. But Steven was urged into another picture more quickly than he intended, and DreamWorks is at last about to deliver.

This fall will see the release of its first live-action movie, The Peacemaker, an action/espionage thriller, directed by Mimi Leder, and starring George Clooney and Nicole Kidman. Early word on it is mixed, and no one quite sees it as the kind of bombshell opening the DreamWorks people might have wanted. But only a month or so later - by Christmas - they will open Armistad. Directed by Spielberg himself, it is the story of a 19th-century slave revolt and the trial that followed, from a script by Steve Zaillian (who did the screenplay for Schindler's List). It will star Morgan Freeman, Anthony Hopkins and Mathew McConaughey. This promises to be the liberal- humanist Spielberg, the historian of noble causes, as well as the consummate dramatist. It might not be major box office, but it has the feel of Oscars and even a Best Picture award, an early mark of distinction for the new enterprise.

Armistad finished shooting only early in the spring, but by the end of this month, Spielberg will be at work on another film for DreamWorks - Saving Private Ryan, a story set on D-day and the days thereafter in which a unit is assigned to rescue a soldier whose position in the lines is highly dangerous and whose brother has just been killed. (There was a code in the Second World War that tried to avoid more than one death in a family.) The action scenes are to be shot in Ireland, and Tom Hanks will be playing the leader of the rescue unit. Yet again, a project one wants to see already.

The film production wing at DreamWorks is headed by Walter Parkes and Laurie MacDonald (a married couple), who were brought over from Spielberg's company Amblin. That might suggest that Spielberg now sees all his work as part of SKG. But Amblin is a large company, with many subsidiary interests - it has money in Simon Sherwood's racing stable, in restaurants, and in cartoon series for TV. Nor should we forget Spielberg's innate reluctance to be funder as well as film-maker. He has always enjoyed working for others (so long as he has uncommon deals with them), and relished the freedom to explore personal ventures. Even now, he is very interested in the Survivors of the Shoah Visual History Foundation, a programme to put on film the testimony of Holocaust survivors.

He is only 50, and he has said that he never expects to make another film better than, or more fulfilling than, Schindler's List. He may need DreamWorks a lot less than Jeffrey Katzenberg. It is even possible that Spielberg's ambitions could be drawn into other areas of American life - to politics or education. In which case, DreamWorks SKG could yet come down to what it has always been - a very tough trick to pull off. Suppose, say, that Armistad, Saving Private Ryan and Prince of Egypt are all as good as they could be. Suppose they win Oscars and make good money. Still, the new studio may need something as raw as another Jurassic Park. By then, SKG will have had three or four years of operation, overhead and bank interest. But will it have the resources, all over the world, to sell Prince of Egypt as well as Disney could? That expertise builds slowly, and it is sustained by a conglomerate company that has many other lines of cash flow. Even great film-makers can founder at the bottom-line level because they lack diversification. That's what happened to United Artists, the company formed in 1919 by Chaplin, Douglas Fairbanks, Mary Pickford and DW Griffith. They were a dream team in their day and they wanted to run their own show. But they ended up awfully like that "Spruce Goose". !

HOLLYWOOD STUDIOS: THE BIG PICTURE

THE MAJOR studios in the Golden Age of Hollywood owed their position to vertical integration: they not only controlled production, but also distribution companies and the cinemas where their films were shown. They suffered under the Depression, but were hardest hit by the anti-trust legislation of the 1940s, which broke up their integrated empires; from then on the figure of the capricious and all-powerful Hollywood tycoon began to fade into legend. The "Big Five" were:

PARAMOUNT: Founded in 1914 and merged in 1916 with Adolph Zukor's Famous Players. Made quality silent films, but hard hit by the Depression. Its leading directors and stars included Cecil B de Mille, Marlene Dietrich, Clara Bow, the Marx Brothers and WC Fields.

20th CENTURY FOX: Fox Film Corporation (founded 1914) was a family business headed by William Fox which was going into decline until its merger, in 1935, with Darryl F Zanuck's 20th Century Pictures. Its most bankable stars in the 1930s were Shirley Temple and Will Rogers, and its movies included The Grapes of Wrath and The Gunfighter.

WARNER BROTHERS: A family business, founded in the 1920s by the four sons of Ben Warner (the most famous of whom was Jack). The studio early realised the importance of sound and made an agreement with General Electric to develop the system used in The Jazz Singer. Specialised in efficient production of gangster movies, backstage musicals and "social conscience" stories. Stars included James Cagney and Humphrey Bogart.

MGM: The greatest of all. Formed in 1924 by the merger of Marcus Loew's Metro Pictures with Louis B Meyer Productions and Goldwyn Pictures (which no longer belonged to Samuel Goldwyn, an independent producer who made pictures mainly through United Artists and RKO). Producer Irving Thalberg was its golden boy in the early 1930s. Its films include many great musicals (Wizard of Oz, Singin' in the Rain) and Gone With the Wind.

RKO: Set up by Rockerfeller's Radio Corporation of America at the start of the sound era. Contracted with independent producers for major movies. RKO itself made many films noirs or low-budget movies, but was thought of as "the studio without a style".

Apart from these "Big Five", there were the "Little Three": UNIVERSAL (created by Carl Laemmle; made a smooth transition to sound and specialised in horror movies including Frankenstein and Dracula); COLUMBIA (founded by Harry and Jack Cohn; associated in the 1930s with the New Deal populism of its most famous director, Frank Capra); and UNITED ARTISTS (founded by Charles Chaplin, DW Griffith, Douglas Fairbanks and Mary Pickford as a releasing company to help independents resist the power of the Big Five).

As well as the anti-trust legislation, the majors were hit by the arrival of television (though some, like Columbia, were quick to get into the new medium). They were forced to diversify and did so through the 1960s and 1970s. The late 1970s, however, saw most of their film operations in trouble (not helped by disasters such as Heaven's Gate, which lost United Artists more than $35 million). The mergers and dissolutions of the 1980s (when MGM took over UA, before being itself bought from Kirk Kerkorian by Ted Turner, then bought back by Kerkorian ... ) mean that what mainly survives from the Golden Age are the studios' names and their libraries. Robin Buss