SHOW BUSINESS: A Studio Is Born

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The White House was crammed with glamorati three weeks ago for a state dinner honoring Boris Yeltsin. Few noticed that among the visitors from Hollywood were three men -- director Steven Spielberg, music mogul David Geffen and ousted Disney movie chief Jeffrey Katzenberg -- who between courses were giddily planning to merge their talent and clout in a new entertainment company. "We're in tuxedos talking about a brand new studio," Spielberg recalls, "and just across from us there's Yeltsin and Bill Clinton talking about disarming the world of nuclear weapons."

You'd think that the plans of three media mavens wouldn't amount to a hill of beans in this crazy world. But last week's word that the entertainment industry's most successful director, most revered studio chief and most creative billionaire were forming their own company smote Hollywood with nuclear force. Spielberg will fold his unit, Amblin, into the new organization (though he may still direct outside projects). Katzenberg will run the studio; late last week the two men were tooling around Los Angeles in Katzenberg's Mustang, looking for a studio lot. And Geffen will make music make money.

The trio will also produce animated films, TV programs and interactive entertainment. They may even help shape the relations between the entertainment monolith MCA Inc. and its antsy Japanese owners.

They have certainly set the industry into a tizz. In a game choked with visionless dolts, the merger of these men suggests a surprising convergence of Hollywood brains. "We want to back our own movies, be the owners of our own dreams," Spielberg says. "Everybody sees the romance in what we're trying to do, not just the business savvy."

"I look at the three of us and think, this has got to be the dream team," Katzenberg said at a press conference that attracted dozens of journalists and industry power brokers, including His Most Powerfulness, Michael Ovitz. "Certainly it's my dream team."

Geffen and Spielberg are famous and extremely rich, and investors would flock to a company they wanted to start up (this one will require about $2 billion in capital), but Katzenberg was the catalyst. As Spielberg said of his pal's fondness for perilous vacation trips, "Jeffrey wanted to go whitewater rafting and took us with him."

In August, when it was announced he would be leaving Disney, Katzenberg had said he would "take a 60-day pit stop ... to rest and recharge." But for this mighty mover, whose relentless vim is both a legend and a curse, two months of R. and R. would be cruel and unusual punishment -- like having to watch Cabin Boy nonstop for a year. Geffen says Katzenberg called him "the day it hit the fan at Disney," and floated the idea of a partnership with him and Spielberg. "It started with 'Wouldn't it be great?"' says Geffen, "but it became real very quickly."

Katzenberg, who was wooed by numerous studios and telephone companies, discussed his future with powerful financiers, including Microsoft's Bill Gates and, reportedly, cable-TV quillionaire John Malone. Then he met regularly with his partners-to-be and clinched the agreement the day of the Yeltsin dinner.