Mancuso takes on the challenge of giving the MGM lion back its roar.

Frank Mancuso last week began what could be the toughest job in Hollywood. He was hired to resuscitate Metro-Goldwyn-Mayer Inc. but has just three years and a relatively paltry $400 million annually to do the job.

In a messy transition, MGM's owner, French bank Credit Lyonnais SA, supplanted Mancuso, 60, for Alan Ladd Jr. as MGM's chairman on Sunday July 25. Ladd's termination was unexpected while Mancuso had been rumored to be in line to become head of a revived United Artists studio under the MGM umbrella.

Mancuso's mission now is to jump-start output for the MGM and UA production companies under the MGM corporate umbrella and then market hit films to make MGM competitive again. This will potentially enable Credit Lyonnais to sell the studio.

The bank has invested well over $1 billion in the ailing studio and hopes to recoup some of its losses by selling it. Credit Lyonnais was ordered by a federal bankruptcy court to sell MGM by 1997 because U.S. banking law restrict foreign banks from owning equity in non-financial U.S. companies.

The bank's adviser, Michael Ovitz, head of Creative Artists Agency, recruited Mancuso to revive MGM and rekindle the dormant United Artists arm, which has not marketed a film since "Rocky V" in December 1990.

Observers in Hollywood applauded Mancuso's arrival and Credit Lyonnais' further investment because it means more work for the industry.

Even Jeff Berg, head of International Creative Management, who has criticized Ovitz's advisory involvement with MGM as a conflict of interest, cheered Mancuso's appointment and met with him last Wednesday to discuss possible future productions employing ICM's star roster. Many in the industry expect some of CAA's star clients to work in MGM films.

Production could double with as many as 25 films to come each year through the combined MGM and UA pipelines. Only 13 films are trickling out of MGM this year.

The bank has kept the studio barely breathing on a $190 million annual revolving credit line. With the average cost of a Hollywood production (negative cost only) now in excess of $25 million, that outlay did not enable MGM to compete.

Meanwhile, rival studios are cranking up production with Walt Disney Co. alone marketing more than 40 films this year and Sony Pictures Entertainment pipelining over 30.

MGM's current U.S. market share is less than three percent, but entertainment executives say it must capture at least 10 percent of the box office for Credit Lyonnais to have any chance of selling the studio for more than a fire sale price. To get to 10 percent, Credit Lyonnais is going to have to spend a lot more than $400 million annually, many agree.

"He (Mancuso) will absolutely need more money as time goes by, probably several hundred more million," said Peter Dekom, a prominent entertainment industry attorney. "Frank has got connections and respect but he has a huge problem."

Dekom added, "He has time pressure. He must restructure and get it up and running in record time. It normally takes a new team from 18 months to 24 months to get a slate of films in the pipeline. Frank has to accelerate that by six months to a year."

Mancuso doesn't inherit much. Current films in the MGM pipeline don't have blockbuster written on them and the Giancarlo Parretti era deals are a financial and distribution straitjacket for MGM. In November 1990 Parretti acquired the studio with $1.3 billion in loans from Credit Lyonnais. The bank later took over the studio when Parretti couldn't meet his loan payments.

To raise cash to run the studio during his tenure there, Parretti essentially mortgaged the 1990s with a series of domestic and international licensing deals for the MGM and UA libraries. Several of these deals were for 10 years.

Domestically, Turner Broadcasting has television rights to the MGM/UA library while Warner Home Video has the video rights. Parretti ran out of cash and the bank foreclosed on loans and took over ownership of MGM in May 1992.

Currently, MGM has a production deal with just one major Hollywood producer, Richard Zanuck ("Driving Miss Daisy"). However, Zanuck's future with MGM is not assured; he is a close friend of Ladd. Zanuck was not available for comment last week.

There are 600 employees at MGM's new offices in Santa Monica's Colorado Place and observers expect wholesale changes. Ladd's team was headed by Jay Kanter, production head and chief operating officer who has worked with Ladd for more than 20 years. Ashley Boone, head of distribution and marketing, another Ladd confidante, is also not expected to remain.

Possible appointments include several of Mancuso's former associates during his 20-year stint at Paramount Pictures. David Kirkpatrick, Gary Lucchesi and Mancuso's attorney, Ken Suddleson, have been mentioned as possible recruits.

Mancuso is expected to name production heads at MGM and UA within the next two weeks. He was unavailable to comment last week.

MGM's continuing decline is reflected in its poor performance at the 1993 box office. Although Hollywood is on track to break its 1989 summer box office record, MGM is not sharing in the riches.

MGM has only one film, "Benny & Joon," up on just 174 screens. That film reached $23 million in ticket sales after 100 days in release and has been the studio's best showing in 1993.

By comparison a film such as "In the Line of Fire" has booked over $55 million in ticket sales, is currently on over 2,000 screens and has been in release 24 days. The summer's top film "Jurassic Park" has topped $275 million in U.S. box office receipts, while "The Firm" is approaching $120 million.

Earlier MGM releases fell substantially short of expectations. "Body of Evidence" went quickly to the video market after failing to reach $10 million in theater ticket sales last winter.

Without any hits, MGM's losses mount. It reported a first-quarter net loss of $51 million on revenues of $196 million. The studio finished 1992 with a net loss of $271 million on revenues of $936.7 million.

Upcoming releases in August include "Meteor Man" with Robert Townsend, "Son of the Pink Panther" and "Undercover Blues" with Kathleen Turner and Dennis Quaid. For the fall/holiday season, MGM will release "Fatal Instinct" -- a "Fatal Attraction" spoof -- and "Six Degrees of Separation" with Donald Sutherland.