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Almost Infamous

Celebrating its first profitable year, DreamWorks exhibits the charm and the hauteur of a classic studio -- leaving Hollywood skeptical about the big picture.


As the crowd filed out of the L.A. premiere of Almost Famous two months ago, the film's young stars -- Billy Crudup, Jason Lee, Fairuza Balk, Kate Hudson -- strolled outside to Sunset Boulevard to join the smokers, while the older industry insiders milled about the covered atrium. Predictably, talk turned to the $60 million film's commercial prospects; the absence of Steven Spielberg, who'd personally lured its director, Cameron Crowe, to bring his shingle to DreamWorks; and the hippie getup Hudson was wearing that night. But the surprise buzz of the evening was about Jeffrey Katzenberg's hair.

Of course, the DreamWorks partner isn't known for having much hair; still, it was a shock to see it buzzed into a distinctly David Geffen-ish look. Moreover, what little remained appeared to have turned white! Had the stress of running DreamWorks finally gotten to Katzenberg, a man famed for his doggedness?

Six years after it was founded by Katzenberg, Spielberg, and Geffen, the first new studio in decades is about to wrap up its first profitable year, led by the live-action film division, which managed to boost production from an anemic six films in 1999 to twelve in 2000. The New York Times reports that the average DreamWorks film grossed $78.7 million, 15 percent more than the industry average. Throughout the summer, it released one hit after another -- and not the usual wince-as-you-make-a-buck crap but well-done popcorn fare like Gladiator and What Lies Beneath.

At a time when every other studio finds itself an increasingly less important subdivision of an increasingly larger multinational corporate monolith, DreamWorks has transformed itself, for better or worse, into a pure, old-fashioned movie studio, which lives or dies on its ability to pick hit movies.

But in today's Hollywood, that's a scary proposition. Tom Pollock, the former chairman of Universal, explains the economics of the current film business: "In an average year, movies generate a 5 percent profit margin; in a good year, perhaps as much as a 15 percent profit margin; in a bad year, a negative 5 percent profit margin or worse. Cable typically generates a 40 to 50 percent profit margin year in, year out."

DreamWorks doesn't own cable, or theme parks, or an Internet business, or a TV network. Indeed, its forays into other media have proved largely disappointing, from the music division, which has mostly hemorrhaged money, to the TV division, which in six years has come up with only one hit (Spin City) on the air, to the recent debacle of, the company's failed Internet start-up.

DreamWorks has always been a paradoxical venture, born equally of idealism and hubris, the kind of place where no one has a title (though everyone knows where the power lies). Its nostalgic stance as an old-fashioned movie studio holds considerable appeal, especially for a community that has seen its cultural hegemony usurped by the Internet, that must deal with hostile and moralizing Washington politicians, and that faces unprecedented labor turmoil.

But here's the bad news. This summer's spectacular box-office run will earn the company far less than it appears, because almost every film on its slate is a co-venture with another studio, with heavy profit participation from players like Bob Zemeckis and Robert De Niro. Moreover, in the movie business, luck always runs out. And by the end of October, Almost Famous and the equally well received The Contender had both tanked at the box office, while the woolly uplift of Robert Redford's The Legend of Bagger Vance looked to be insubstantial competition for the butt-kicking pyrotechnics of Charlie's Angels, both opening this past weekend.

No wonder Jeffrey Katzenberg's hair turned white.

DreamWorks is run less like an ordinary studio than like a Utopian millionaires' collective, where the chain of command is always fluid. Katzenberg is a co-owner who not only runs animation but also serves, idiosyncratically enough, as live action's head of production. Still, in that role he defers to the husband-and-wife team Walter Parkes and Laurie MacDonald, close personal friends of Spielberg's. The couple not only green-light pictures in conjunction with the director but vacation with him. (Geffen rarely weighs in, except to personally negotiate the studio's numerous co-ventures.)

Relationships are everything in Hollywood, and even though it's hard to find anyone here who doesn't genuflect before Spielberg's business acumen and directing skill, it's almost as hard to find a producer or writer who doesn't disparage DreamWorks for its institutional arrogance and off-putting penchant for micromanagement.

On a recent morning last month, Parkes and MacDonald are meeting with a writer and producer on a project called IQ 83. Parkes is dark and lanky, MacDonald an almost crystalline Wasp. They wear jeans and work out of the living room in their spacious home in the choicest section of Santa Monica.

The visitors, Harley Peyton and Adam Goodman, bring in a bulletin board on which the scenes of their script are mapped out on three-by-five cards. It's impossible to imagine another studio head getting down to such minutiae, actually pushing those three-by-five cards around, but Parkes, a former screenwriter (WarGames), revels in it. He's even been known to wield the pen himself, writing Morgan Freeman's speech at the end of Deep Impact and inserting lines into Gladiator.

This does not always endear him to the talent. "He thinks he's Shakespeare," snorts one frustrated producer who's worked with him. Another complains that the team doesn't seem to value independent producers, since Parkes functions as a producer-in-chief. "They're all to the manner born," groans a well-known literary agent. "It's like you're dealing with royalty. Walter's very imperious."

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