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By FRANK SWERTLOW

Staff Reporter

How much is Asia dragging down Hollywood's overseas box office?

That's the $64 question analysts and studio executives have been grappling with for more than a year. And despite anecdotal evidence of the serious downturn, especially in Korea and Japan, the extent of an Asian fallout remains unclear.

While Hollywood studios posted their best year ever overseas totaling $6.8 billion, a 17 percent gain from a year ago some analysts point out that the numbers would have been even higher if the Asian economies were in decent shape. They also point out other problems, such as currency devaluation and the loss of ancillary income for merchandising and licensing of film-related products, especially in the Disney and Warner Bros. stores.

"You could see a 20 to 40 percent decline," said Jeffrey Logsdon, an analyst at Seidler Cos.

But some studio executives note that attendance in Asian theaters actually was up in 1998, helping offset the losses from currency devaluations. "It shows that, like in the Depression, there is more reason to go to the movies during the bad times," said an executive at Walt Disney Co.

Jim Gianopulos, president of Twentieth Century Fox International, agreed that the Asian downturn may have created an increased appetite for escapist entertainment.

"It's a diversion," he said. "Fantasy takes you out of the reality."

Attendance has not been affected as much in Asia, Gianopulos said, because movie-goers have decided that the price of a movie ticket is still cheap, compared to other entertainment costs. "It's good value," he said.

Value is a relative term.

In Japan, one of the hardest-hit Asian economies, the price of a movie ticket averages $15, and can be as high as $20 at some theaters. And that's why revenues for New Line Cinema have held up surprisingly well in that country essentially remaining unchanged, said Rolf Mittweg, president of New Line International.

Final box-office returns will not be tabulated for several months.

At the least, Asia's troubles have caused Hollywood studios to rethink their strategies for doing business overseas. Although New Line has been asking distributors overseas to advance minimum guarantees, it revised downward its projected revenues for Korea.

"The value of their currency dropped by one-half," said Mittweg. "We had to reduce the minimum guarantee by half."

But he added that New Line remains confident of its partners in Korea. "We deal with Daewoo," he said. "We know they have money, but it is hard to get."

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