`TITANIC' YEAR FOR HOLLYWOOD; FILM BOOSTER REPORTS BOX OFFICE BOOM IN '97.

Byline: Dave McNary Daily News Staff Writer

Jack Valenti, Hollywood's top lobbyist, issued a sunny outlook for the movie business Tuesday despite a stunning 30 percent jump in the cost of movie production last year.

``The healthy rhythm of ticket purchases and satisfied customers resonated in theaters all over this country last year,'' said Valenti in the keynote speech at the ShoWest trade show here sponsored by The National Association of Theatre Owners. ``Exhibitors have good reason to view the future with wide-lens optimism.''

The key factors cited by Valenti in a speech before about 2,000 theater owners and industry executives included a 7.7 percent gain in last year's domestic box office to $6.36 billion and a 3.7 percent rise in admissions to 1.39 billion tickets for the biggest audience since 1959.

Other indications of the industry's strength mentioned included a 7 percent gain so far this year in domestic grosses, propelled by the breakout success of ``Titanic.'' This year's early success follows a surge in overseas growth in 1997 which included a 6 percent increase in European Union countries, a 13 percent increase in Latin America, and a 2 percent increase in Asia despite the currency crisis.

Valenti said international revenues now comprise 52 percent of the worldwide ticket sales and should be the major driver in the industry's growth in coming years.

In the only downbeat aspect of Valenti's speech, he admitted that production costs remain a critical problem for the business or what he called ``a great shaggy beast prowling the movie forest.'' But he assured theater owners that studios are making serious efforts to cut expenses despite the overwhelming success of ``Titanic,'' which had an estimated $200 million price tag and worldwide grosses now nearing $1.1 billion.

Valenti, the president and chief executive officer of the Motion Picture Association of America, said he believes ``Titanic'' represents a onetime phenomenon, adding ``Titanic may well be described as the movie equivalent of Halley's comet, arriving once every 75 years.''

Instead, Valenti said studio executives are attempting to duplicate the success of ``The Full Monty'' which cost $3 million to produce and has grossed more than $200 million worldwide and he predicted that no film with a budget similar to that of ``Titanic'' would receive a green light in the near future.

``When you have a $200 million movie fail, heads are going to roll,'' he said.

The MPAA's statistics showed that last year's ``negative costs'' - the amount to deliver a finished print for distribution - jumped 34 percent to $53.4 million while the cost for marketing, prints and advertising rose 12.2 percent to $22.2 million. The combined cost - $75.6 million - was 30 percent higher than in 1996.

Valenti's advice to studio executives: Be firm in dealing with demands for higher star salaries or, as he put it, ``Put some steel in your spine.''

In another report, the National Association of Theatre Owners said the average U.S. ticket price rose 4 percent last year to $4.59, double the typical rate increase for the previous eight years.

President William Kartozian, the association president, said the gain was an aberration due to the increased minimum wage and added that the industry has made a solid case for offering a good value for its product. ``People no longer talk about how expensive it is to go to the movies,'' he said. ``I think we've set aside that misperception.''

Kartozian also predicted that the trend toward building large new theaters with state-of-the-art seating and at least 16 screens will continue because of the public's expectations that theaters offer top-notch amenities.

Kartozian also predicted that the number of screens, currently at more than 30,000 at about 6,000 locations, should rise by about one-third to 40,000 over the next decade. Due to the trend toward megaplex theaters the number of locations will be reduced to fewer than 4,000.

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Photo, Chart

PHOTO (Color) Leonardo DiCaprio and Kate Winslet run for safety in ``Titanic,'' the year's biggest hit and the most expensive movie ever made.

CHART: Rising costs: The cost of making a movie has increased from $26.6 million to $70.7 million in the last decade.