Hollywood Cartel.

Competition Between Big Studios Fading Away

THE number and depth of partnerships being struck between the major Hollywood studios is rapidly accelerating, further concentrating the industry's power base to cartel-like levels.

The web of interests and conflicts are turning Hollywood into a minefield, and those most at risk of being blown away are the folks outside the major studios.

No one knows that better than the Writers Guild of America, which found out earlier this month when it faced a remarkably unified studio opposition and had to accept less money for less members than it would have liked.

As one insider notes, "In the old days, you could say, 'Screw you, I'm going to go over to that other studio.' Today, it's 'Oh yeah'?"'

Such partnerships are nothing new in Hollywood, and became especially popular in the wake of the colossal home run that 20th Century Fox and Paramount Pictures had with their 1997 co-production of "Titanic," but such inter-studio deals are now becoming much more elaborate and pervasive.

"As the conglomerates get closer and closer to each other, they are all pretty much united," said veteran executive and producer Adam Fields ("Brokedown Palace"). "That's the nature of a cartel."

And as with other such situations, while cartel members mutually benefit, those outside the cartel tend to suffer consequences.

"The little guy gets squeezed out," warns Fields. "You feel it all the way down the food chain - and you did from the day when (then-Universal executive) Sid Sheinberg and (then-Fox executive) Barry Diller got together and decided to make 20 percent the standard video royalty - on their own, without consultation."

Evidence of inter-studio deals is everywhere.

A look at the credits on this year's movies shows that dozens of them -- from ''All the Pretty Horses" to "Rollerball" -- are financed by two or more studios. A trip to the local video store reveals that videos made by Metro-Goldwyn-Mayer Inc. are being released through 20th Century Fox. Over at the movie theater, anything produced by DreamWorks SKG is being distributed by Universal Pictures.

The growing tentacles of the conglomerates have already had an impact in television, where one studio can sell its product to its own network for bargain-basement rates (which has provoked lawsuits from the likes of super-producer Steven Bochco).

But now those ties are reaching b beyond in-house units; they are extending a ross the Hollywood map.

Power controls money

The extent of these close ties poses some real dangers for creative personnel -- especially when it comes to money.

"You have fewer and fewer outlets, and they are increasingly able to control what they pay for product," says producer/manager Gavin Polone. "What's going on in television borders on antitrust violation, and in film it's probably heading in that direction."

On the simplest level, executives may quietly avoid paying too much for a book or screenplay because a studio they're in business with is also hungry for the project.

Likewise, a studio may be influenced in choosing a film's release date, not wanting to go up against a rival that it has a stake in. Would Fox have wanted to go head-to-head with Sony's Julia Roberts picture " America's Sweethearts" this summer, when it will benefit from the movie's success?

The situation becomes even more complicated when you consider studios' other competing interests.

Would Paramount have ever made "Cast Away," given that its sister company y in the Viacom Inc. family, CBS TV, was backing "Survivor"? Maybe the movie would help generate interest in the TV show, but then again, maybe it would hurt the TV show, especially if the movie flopped. (Ultimately, "Cat Away" was made by Fox, in a deal co-financed by DreamWorks.)

Creativity diluted

One consequence is that such scenarios require ever-larger numbers of executives from the various studios to get involved, and that can be detrimental to the creative process.

"It creates a homogenization of taste," producer Fields said. "You have to satisfy not one set of studio executives, but two or more -- and that makes the chance to do something different harder and harder."

Nevertheless, studios now think nothing of owning a chunk of each other's business. Thus Canal Plus, the French pay TV giant that owns Universal Pictures with Vivendi Universal, is also in league with Warner Bros. through their joint investment in Bel Air Entertainment, a production company that has made such movies as "Message in Bottle" and "Proof of Life." And Disney is indirectly tied to MGM, thanks to a multi-picture deal signed between MGM and Disney division Miramax Films.

Still, some are skeptical about how long studios' unified front can last, whatever the studios' economic interests.

"The reality of it is, they collaborate one day and kill each other the next day," says former Mandalay Pictures president Adam Platnick. "A good example is New Line Cinema and Warner Bros. (both divisions of AOL Time Warner). There was a time when New Line was actually distributing films opposite Warners -- with 'Lethal Weapon 4' against 'Rush Hour"'

Platnick believes the studios themselves ultimately stand to lose the most from this high level of cross-collateralization, and he cautions of the risks of what he calls "multiple agendas." Studios can lose their focus, and be torn between backing one project and another.

"Whenever you are in the situation where maybe you are a competitor, and maybe you are a partner, it gets very tricky," he says. "Ultimately, everybody winds up losing."