"The Peacemaker," a film about a nuclear warhead falling into the hands of terrorists in Manhattan, opens this week. It might sound like the usual Hollywood big-budget action fare, but the film, starring George Clooney and Nicole Kidman, is special for another reason - and the entertainment industry will be paying close attention to its fortunes.
It marks the first screen test of DreamWorks SKG, the company founded by director Steven Spielberg, former Disney executive Jeffrey Katzenberg and music mogul David Geffen three years ago, and the first new Hollywood studio in 60 years.It was intended that the charmed upstart would not only challenge the existing studios in conventional and animated films but that it would form divisions to produce TV shows, music, toys and computer software. Moreover, it would erect an entire studio "campus" at Playa Vista, an area of swampy land once home to Howard Hughes' Spruce Goose.
Earlier this month, in anticipation of "The Peacemaker" and in keeping with DreamWorks' appetite for hype extravagant even by Hollywood standards, the company took out full page ads in the New York Times and the Los Angeles Times, announcing "A New Season. A New Studio. Three New Movies."
DreamWorks has already endured teething problems but, though the dream may not be quite as vivid as it was, most in the industry believe it is here to stay.
The planned studio at Playa Vista has been mired in environmental disputes and protracted talks with the site's original contractor. Though a settlement is expected, the project has yet to break ground, leaving DreamWorks' 1,500 employees scattered across five locations.
It is not even clear that DreamWorks still wants to tie up millions of dollars in the development at a time when its film release slate is a year behind sched-ule and it is about to go head-to-head with the giant Hollywood studios.
Nominally headed by Spielberg, one of the film unit's difficulties has been that the director has been tied into an existing deal with Universal Pictures. It has had no participation in "Jurassic Park," its sequel "Lost World," or those of Spielberg's production company, Amblin Entertainment, which produced this summer's hit "Men in Black."
So far DreamWorks has set up 15 production deals, including four big-budget films from Robert Zemeckis ("Forrest Gump") and Cameron Crowe ("Jerry Maguire"), but none are due for delivery for another 18 months. But the company is certainly not short of cash, and investors, wooed by the combination of glitter and talent, have flocked to the project.
Microsoft's co-founder Paul Allen put up $500 million, a billion-dollar credit line was secured from Chemical Bank. Spielberg, Katzenberg and Geffen chipped in $33.3 million each, and DreamWorks was bankrolled with equity and debt of $2.7 billion. "It's like stacking hour over Kennedy Airport," Spielberg said of the company's suitors.
With $1 billion spent and little to show for it, the studio has fallen far short of its own 1995 forecast that the company would generate $300 million in revenue in 1996 and $1.3 billion in 1998. But if disappointment is inversely proportionate to expectation, investors can do little but sit and wait.
"The film production slate has not been at the level we expected it to be at," said Bill Savoy, president of the management company that handles Paul Allen's investments. "It's way too early to declare victory or defeat."
Though DreamWorks has kept the costs of its productions below the Hollywood norm ("Peacemaker" cost $50 million; the upcoming Spielberg-directed drama "Armistad" $36 million), the economics of the business have changed since the company's inception.
"The biggest problem they face is that budgets have escalated to levels that once seemed unthinkable," says Larry Gerbrandt, an analyst at Paul Kagan. "It's not unusual for movies to cost $100 million and then another $25 million spent to release them. They have been cautious with good reason. They know as well as the studios that most films fail."
DreamWorks' animation division is run with what Variety calls near obsessive zeal by Jeffrey Katzenberg, Disney's former head of animation.
In his desire to overthrow the Disney monarchy he helped build, Katzenberg will uncoil DreamWorks' first full-length animated film, "Prince of Egypt," late next year. But following the scent of Disney's billion-dollar "Lion King" may not prove easy.
"We've got Disney, we've got Fox coming out with `Anastasia,' and now we have DreamWorks. But we don't know how big the overall market for kids' animated products is," says Gerbrandt.
In TV production, DreamWorks has hardly established itself as a production powerhouse. One series, "Spin City," starring Michael J. Fox, has been a success, but three others have flopped.
At its music division, Geffen installed two of the most respected men in the music business, Lenny Waronker and Mo Ostin, to head the DreamWorks label. But sales of its debut album, "Older" by George Michael, fell below expectation, and though the company has a reputation for nurturing talent, it has yet to find a big domestic success.
Within Hollywood, the film unit has met with a mix of admiration and ire. Rival executives, writers and directors describe being met with haughtiness in their dealings with DreamWorks. "They think it's a privilege for you to work there, as opposed to the other way around," griped one producer. "They just act like they're two notches smarter than anyone else."
A further, and possibly more serious, cause for concern is whether the triumvirate is truly all for one and one for all. "I think Katzenberg is pretty much running the thing all by himself, it's his studio to make," says Bob Dowling, an analyst at the Hollywood Reporter. "Geffen doesn't have too much to show, and Spielberg is tied up making his own productions."
How well "The Peacemaker" does at the box office will be more important to the perception of the company than to its bottom line - it has, after all, plenty of money to spend. But perhaps it is no coincidence that DreamWorks' third release is titled "Mouse Hunt." The company clearly knows who the competition is and, evidently, the dream is still in the works.