'Vanity' Production Deals Hit Skids in Hollywood.

Five years ago, fresh off the success of her hit movie "Clueless," Alicia Silverstone signed a $10 million deal with Columbia Pictures to start her own production company and make two films to be distributed by Columbia.

She was all of 18 years old at the time -- not exactly the kind of seasoned executive it takes to run a successful production company.

Silverstone's lucrative contract with Columbia, which led to the creation of her company First Kiss Productions, sent a buzz through a town that was already nervous about escalating movie-star salaries. It also may have marked the beginning of the end of the vanity production deal.

These days, rather than signing every new star to lavish "vanity" production deals, the major studios are concentrating heavily on trimming the fat. That means fewer stars are getting production credits or up-front funding to start their own companies -- and even established producers, not just actors, are being sent packing.

Walt Disney Co., for example, had as many as 70 feature film production deals in 1996, but this year the studio has only 31 left, according to the latest tally by Daily Variety.

"It's a cycle," said Tom Gray, a senior advisor with the entertainment and new-media practice of Deloitte & Touche LLP. "The studios felt compelled to start loading up on people until it escalated -- and somebody said, 'Wait a minute, why are we paying all these people millions of dollars?' So, now we see this knee-jerk reaction and everybody is cutting back on these deals, because nothing happens in Hollywood that does not get copied by everybody else."

No more free ride

At issue are so-called "housekeeping deals," in which studios provide a producer or actor/producer with offices on the lot, a development executive to run the day-to-day affairs of the company, and support staff. In exchange for the accommodations and staff, plus any additional costs to buy scripts or the movie rights to books (which altogether can cost the studio several million a year), the studio gets the rights to distribute any movies that come out of the arrangement.

Housekeeping deals are sometimes made with well-established producers, but also are often given to actors with big box-office potential. These new production companies, sometimes run by relatives or friends of the stars involved, create studio-funded pet projects that rarely result in a movie, let alone a successful one.

Silverstone's deal, for example, resulted in only one film: "Excess Baggage," a box-office bomb. She hasn't been heard from much since.

"It's the most inefficient way of doing business," said Gray. "It creates gigantic overheads for the studios, which are already overstaffed to start with."

As the studios have, become more concerned about their bottom lines, they are cutting back on such deals. Nicholas Cage, Madonna, Sigourney Weaver and Denzel Washington are among those whose vanity deals were not renewed over the past 12 months.

Twentieth Century Fox cut its production deals from 41 last year to 25 this year. A studio spokeswoman declined to comment on the reasons for the reduction, which included letting go of Weaver and Washington.

Still, there are plenty of stars left who still have their own production companies bankrolled by major studios. They range from veterans like Bruce Willis and Robin Williams at Disney and Clint Eastwood and Kevin Costner at Warner Bros., to young hotshots like Ben Affleck and Matt Damon at Miramax Films.

Of these, perhaps the most successful is Eastwood's Malpaso Productions, which has produced such hits for Warner Bros. as "Absolute Power" and "Unforgiven." Malpaso has a new movie, "Space Cowboys," coming out this summer.

Costner's Tig Productions, on the other hand, has produced some notoriously expensive bombs, such as "Waterworld" and "The Postman." Many other stars with vanity deals have yet to produce any movies at all.

Veterans also gel the ax

It's not just actors-turned-producers who have come under scrutiny by the studios' accountants. Bona fide producers have also seen their studio deals lapse, or have had their budgets downsized.

Last month, Disney did not renew a three-year production deal with director/producer team Barry Sonnenfeld and Barry Josephson. They had hit pay dirt with "Men in Black" for Columbia, but did not deliver a single picture for Disney during their three years on the Burbank lot.

Meanwhile, Warner Bros. reportedly cut producer Jerry Weintraub's annual budget from $3.5 million to $2 million, and his staff from 10 to five people, after three years of underachieving movies such as "The Avengers" and "Vegas Vacation."

"The studios have started to figure out that producers will come to them with their projects whether or not they pay for their overhead," said one studio executive who asked not to be identified. "They can save themselves a bundle of money because producers have nowhere else to go to get their films made."

Metro-Goldwyn-Mayer Inc. has been notable among the majors, in that it has only a small number of producers under exclusive contract.

"We don't think these deals turn out to be productive for the studio," said Larry Gleason, president of worldwide theatrical distribution for MGM. "We do mostly one-picture deals and, as such, we've always been counter to this trend of signing multi-year deals with producers."

Among the few production companies that have deals with MGM are Lion Rock Productions, run by Terence Chang and John Woo, and Robert De Niro's Tribeca Productions.