Staff Reporter

"Titanic" has given Paramount Pictures the biggest slice of the box-office pie so far this year and most likely bragging rights as 1998's top studio.

But what about No. 2?

As the critical fall and holiday movie season gets under way, it's a horse race among Twentieth Century Fox, Walt Disney Co.'s Buena Vista division and Sony Pictures.

"Second place is going to be a pretty tough call," said Steve Cesinger, an investment banker specializing in the entertainment industry at Los Angeles-based Greif & Co.

At this point, Disney appears to have the edge, based on an especially large number of releases to come out in the next three months. They include "A Bug's Life," which opens Nov. 25, and which Reel Source Inc., a tracking service, estimates will generate more than $100 million at the box office.

Harold Vogel, an analyst at S.G. Cowen Securities Corp., is so bullish on Disney that he thinks it might even catch Paramount. "It's a little early," he said. "Christmas is very busy. It's not over and 'Bug's Life' is still ahead."

The annual battle for market share among the major studios is no small matter in Hollywood. While there is no direct financial benefit, there are many indirect ones, such as being known as a "hot" studio that can attract the hottest talent. The won-lost scorecard also has a way of determining the fate of many a studio chief.

Being No. 1 generally is considered less important than not being No. 7 or 8.

"It's not cyclical it's the law of averages," said Paul D'Addario, managing director of Century City-based Donaldson, Lufkin & Jenrette Securities Corp.'s Entertainment Group.

"We employ the Monte Carlo analysis that looks at a film as a specific financial model," D'Addario said. "Sometimes you get lucky and sometimes you get unlucky. It's more of an art than a science."

"During the past four years, it has been a revolving door," said Marion Boucher Soper, an analyst at Bear, Stearns & Co. "You can go from first place to fifth and fifth place to first. It's not that unusual. It's a battle of big-budget hits, and Paramount had 'Titanic' and Sony had 'Godzilla.' "

As of now it's considered unlikely that any studio will topple Paramount from the No. 1 slot, especially with a "Star Trek" film on tap for the holidays. As of Sept. 20, it holds 17.8 percent of the domestic box office, up from 11.2 percent in 1997, on the strength of "Titanic," "The Truman Show," "Deep Impact" and other films.

"Titanic," directed by James Cameron, has grossed $450 million this year, accounting for nearly half of Paramount's U.S. box office of $863 million.

Ironically, "Titanic" was produced by Fox, which ceded domestic distribution to Paramount last year after the latter agreed to help cover skyrocketing production costs.

If Fox had not ceded those rights, it would be far and away the box-office leader. But even without "Titanic," Fox is currently No. 2 in market share up from No. 5 last year because of hits including "Dr. Doolittle," "There's Something About Mary," and "The X-Files."

Through Sept. 20, it had $635 million in box-office revenue, or a 13.1 percent market share. Its biggest success has been "Dr. Doolittle," which pulled in $142 million.

In third place is Disney, with $628 million and a 13 percent share. It had the summer's top-grossing film, "Armageddon," which pulled in about $195 million but cost more than $150 million to make.

Sony, the No. 1 studio last year on the strength of "Men in Black" and other films, has slipped to No. 4 this year, or 12 percent. The studio's biggest disappointment was "Godzilla," which was expected to do better than the $136 million it took in. Its other big summer release, "The Mark of Zorro," failed to crack the $100 million mark, pulling in about $91 million.

Warner Bros., a division of Time Warner Inc., has garnered an 11 percent market share with $554 million in box-office receipts. Its highest grosser was another expensive action yarn, "Lethal Weapon 4," which pulled in $128 million considered a disappointment in some Hollywood circles.

Warner's sister studio, New Line Cinema, is in sixth place with a 7.5 percent market share, followed by Disney's Miramax with a 6.6 percent share.

Perhaps the most interesting plot twist may be the emergence of DreamWorks SKG as a genuine player in Hollywood.

A year ago, DreamWorks was just releasing its first film, "The Peacemaker," and industry observers were wondering whether the studio founded in 1994 by Steven Spielberg, Jeffrey Katzenberg and David Geffen was more hype than substance.

But this year, on the strength of "Saving Private Ryan" and a range of middling performers like "Small Soldiers," DreamWorks has captured 6.1 percent of the domestic box office, up from just 1.1 percent in 1997. That puts it ahead of such Hollywood stalwarts as Universal Pictures Inc. and MGM.

"Last year, they had no volume," said Bishop Cheen, an analyst at First Union Capital Markets. "Now they have volume."

And DreamWorks seems poised for a strong fall/holiday season with two animated features: "Antz," which opens next week, and "Prince of Egypt," scheduled for a Dec. 18 release. Reel Source projects that "Prince of Egypt" will be a blockbuster on the order of $150 million to $175 million.

In total box-office returns through Sept. 17, Hollywood has pulled in $4.86 billion domestically up from $4.35 billion for the same period last year.

"It's been a good year," said Robert Bucksbaum, president of Reel Source. "Titanic was a boost for the business. It put everybody in the mood to go to the movies."

D'Addario said one reason why so many people have been turning up at the box office this year is the "event nature" of Hollywood's films.

"Some people went to back to see 'Titanic' two, three and four times," he said. "It's an event with bigger budgets."

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