Questions Abound About Hollywood's Major New Studio: Can Trio Make It Fly?

AS Hollywood buzzes with the news that three of its all-time great talents (Jeffrey Katzenberg, Steven Spielberg, and David Geffen) are uniting to form the first new major entertainment studio in a decade, questions are ricocheting from theater lobby to talent agency to boardroom here:

* How will the studio affect competition, talent, and monetary distribution among Southern California's current major players (Walt Disney Studios, MCA/Universal, 20th Century Fox, Sony Entertainment, Paramount, Warner Bros., and MGM)?

* What will the new company's intention to offer a ``streamlined alternative,'' focusing on quality over quantity, mean for the mix of cinema product currently being offered? Will three creative geniuses accustomed to operating alone be able to collaborate successfully over the long run? ``If they can really pull this off, it will change the face of the industry,'' says filmmaker Bob Zemeckis.

The news was announced last Wednesday that Mr. Katzenberg, Mr. Spielberg, and Mr. Geffen had confirmed plans to launch a major entertainment studio focusing on movie and TV production, animation, music, and multimedia. Because of the trio's unparalleled credentials, the news sent shock waves through the industry. Katzenberg was former chief of Disney, responsible for such megahits as ``The Lion King,'' and ``Pretty Woman.'' Spielberg is considered the most successful director in Hollywood history, producing the wildly popular films ``Jaws,'' ``E.T.,'' and ``Jurassic Park.'' And Geffen is a billionaire record producer.

``It's the most amazing combination of geniuses,'' says Sherry Lansing, head of Paramount Pictures. ``They can do anything they set their minds to.''

For moviegoers and other entertainment consumers, the move represents the first major attempt to provide new product for the coming alliances of TV, cable, film, and computers. ``This is the content side of the convergence of new media,'' says Brian Stonehill, a media analyst at Pomona College in Claremont, Calif. ``Until now, all the talk has been about distribution and hardware.... Now we have three guys in place who have risen to the top of their fields for recognizing how to put ideas together into sight and sound.''

IN Hollywood, a key question is whether and how the new triumvirate will raid talent from other studios, and how their plans will evolve considering the current commitments Geffen and Spielberg have with some of these studios.

Another question is what kind of investors will join in and how many?

``Many have tried this and failed,'' says Douglas Gomery, a specialist in the economics of cinema at the University of Maryland, College Park. Well-backed producers such as Dino DeLaurentis and Francis Coppola failed in the 1980s. Orion Pictures was formed in 1978, had several hits, and yet filed for bankruptcy in 1992.

``It's not enough just to have talent,'' says Mr. Gomery, noting that major studios rely on global distribution networks to market and sell cinema product. The trio is said to have pooled about $1 billion of their own money, but a typical studio profile includes $8 billion to $10 billion in assets.

Gomery wonders: ``How much money are they prepared to risk in the short run to become successful in the long run?''