REINVENTING A STUDIO; UA'S NICHE TO BE INDIE FILMS.

Byline: Dave McNary Daily News Staff Writer

United Artists, once one of Hollywood's legendary names with a dozen Best Picture Academy Awards, announced Monday it will specialize in independent films costing less than $20 million.

The move means Santa Monica-based UA, founded 80 years ago by Charlie Chaplin, Douglas Fairbanks, D.W. Griffith and Mary Pickford, will be competing for edgy, low-cost fare like ``Pulp Fiction'' and ``Lock Stock and Two Smoking Barrels'' against established indie players like Miramax, Gramercy and Sony Classics.

A spokesman said UA, a division of struggling Metro-Goldwyn-Mayer, would release four to six movies per year. UA will still be identified as a producer on this year's James Bond movie, ``The World Is Not Enough,'' but that affiliation will disappear from any subsequent Bond movies.

The shift underscores the substantial change from the heritage of UA, which thrived from the 1950s to the late 1970s under the management of Arthur Krim. Its library includes the ``Rocky'' and James Bond films, as well as ``Rebecca,'' ``High Noon,'' ``West Side Story,'' ``One Flew Over the Cuckoo's Nest,'' ``Apocalypse Now,'' ``Raging Bull'' and ``Rain Man.''

UA has been fairly quiet in recent years with the exception of two James Bond movies - ``Goldeneye'' and ``Tomorrow Never Dies'' - and a few moderate successes in 1998 with Leonardo DiCaprio swordfest ``The Man in the Iron Mask'' and Robert DeNiro's ``Ronin.''

Speculation had emerged that rebranding UA was under consideration as a way for new MGM chiefs Alex Yemendjian and Chris McGurk to put their mark on the operation for longtime owner Kirk Kerkorian.

``The United Artists legacy as a haven for independent filmmakers is so indelible, having been established for more than 80 years, that we could not pass up the extraordinary opportunity to capitalize on that proud name, strengthen its current branding and, at the same time, create a new role for it as part of a dynamic, evolving market for smaller films,'' said McGurk, who had been president of Universal Pictures before joining MGM in late April.

The move by struggling MGM is the latest in a long series of changes by Kerkorian, the billionaire investor who has owned the studio off and on for the past 30 years. UA began distributing MGM films in 1973; eight years later, Kerkorian bought UA from TransAmerica and combined it with MGM after ``Heaven's Gate'' bombed.

Kerkorian, who owns 90 percent of MGM, has been rumored to be seeking partnerships with Barry Diller's USA Studios and other cable companies in recent months.

``The bottom line with MGM is that it's got a very strong library, but to compete with other studios, it needs to either be sold or form a key strategic venture,'' said Barry Hyman, an analyst with Ehrenkrantz King Nussbaum. ``Otherwise, they're just shuffling assets, which is what Kerkorian has always been known for.''

Movie analyst Arthur Rockwell, a former MGM executive, said the move is a way of saving money by focusing on low-cost projects. ``They obviously don't have enough money to operate two major divisions,'' he added. ``And until they have the talent and capital, they're just spinning their wheels. They're clearly at the bottom of agents' lists for major projects so they have to re-establish their credibility financially and creatively.''

MGM stock gained 87.5 cents to $15.625 a share, but as the company continues to bleed red ink, it is still 25 percent below the $20 per share price in its 1997 initial public offering. It lost $306.6 million in the first quarter of 1999, partly due to its $225 million payment for ending a video distribution deal.

Besides the next Bond movie, UA still has a remake of ``The Thomas Crown Affair'' in the pipeline for an August release.

MGM also announced that UA, whose most recent release was ``The Rage: Carrie II,'' will lose president Lindsay Doran, who will set up shop as an independent producer with a first-look deal with MGM. No replacement was named Monday, but the spokesman said an announcement will come soon.

UNITED ARTISTS GLORY

United Artists films have won a dozen Best Picture Academy Awards, a total equalled only by Columbia Pictures

1940 - ``Rebecca''

1955 - ``Marty''

1956 - ``Around the World in 80 Days''

1960 - ``The Apartment''

1961 - ``West Side Story''

1963 - ``Tom Jones''

1967 - ``In the Heat of the Night''

1969 - ``Midnight Cowboy''

1975 - ``One Flew Over the Cuckoo's Nest''

1976 - ``Rocky''

1977 - ``Annie Hall''

1988 - ``Rain Man''

CAPTION(S):

2 Photos, Box

PHOTO (1--Color) Tom Cruise, left, and Dustin Hoffman starred in 1988's ``Rain Man,'' which won the Oscar for Best Picture. Santa Monica-based United Artists was founded 80 years ago by Charlie Chaplin, Mary Pickford, Douglas Fairbanks and D.W. Griffith.

(2) no caption (Charlie Chaplin)

BOX: UNITED ARTISTS GLORY (see text)