By Elizabeth Guider, Dana Harris and Claude Brodesser

HOLLYWOOD (Variety) - Showbiz is in a funk.

Every nook and cranny of the biz -- from messenger services and masseurs to post-production houses and party organizers -- is feeling the malaise.

"I've never seen things quite so dead or people so antsy,'' says one veteran talent agent who fears her bonus may be halved this year.

Whether it's screenwriters who are resigned to penning the umpteenth draft for no extra cash, PR firms that aren't getting paid by their clients or pitches that are being turned down because there's no money, the entertainment biz right now is in a rude mood.

The downturn started 18 months ago with the dot-com debacle, which poured cold water on dreams of instant riches.

That was quickly followed by narrowly averted actors' and writers' strikes, which nonetheless threw a monkeywrench into the town's film production pipeline. A worsening overall economy gave momentum to the downward spiral. Pink slips have hit almost all the major studios, with high-flying cable outlet MTV Networks being just the latest.

Third-quarter earnings of all the media firms -- save French-based Vivendi Universal -- have come up short, while the six broadcast networks are reeling from a billion-dollar shortfall in ad revenues this year. All this before Sept. 11.

Since the attacks, things have, not surprisingly, deteriorated further.

Security has been stepped up on all the Hollywood studio lots, parties and premieres are being scaled back and projects that could be in questionable taste are being shelved or retooled.

Perhaps more worrying is the angst that has taken hold of studios in the wake of 9/11: There's less productivity, more second-guessing and a creeping paralysis among creatives, many of whom now want to work only on "important'' projects.

"It would be one thing if all we were experiencing was a downturn in our own financial well-being. But all this is happening in a nation under attack, so it creates even more anxiety,'' says one TV exec.

There are, however, a few bright spots, especially on the home entertainment area.

Wary of public places, people have deserted theme parks and rock concerts but made a run on DVDs, CDs and even TV sets. Blockbuster, for example, managed a 6% rise in revenues in the third quarter to $1.3 billion.

And, fortunately, in true counter-recessionary style, some parts of the mainstream entertainment biz are showing resiliency.

People are going back to the movies: The domestic box office could, according to industry forecasts, top out at a record $8 billion, despite there being relatively few standout pictures on offer.

Established TV comedy hits such as "Friends'' and "Everybody Loves Raymond'' are earning their best Nielsen ratings in years.

And shaken but stalwart New Yorkers, lured perhaps by discounted tickets, are venturing back to Broadway theaters.

By most accounts, however, Hollywood is not likely ever to return to the go-go levels of the mid-1990s. The economic models that underpinned the film and TV biz simply are no longer viable.

What's more, the war against terrorism has cast its own cloud of uncertainty over the entertainment biz. Old formulas won't apply if there's another round of terror attacks or if the anthrax scare spreads.

A two-part series on the problems facing various sectors of showbiz follows:

FILM

Not only did the town get an instant education as to what a real crisis looked like on Sept. 11, but the terrorist attacks quickly led to tightened security on the lots, including mandatory ID badges and full-vehicle pat-downs.

But these are just the latest in a series of measures the studios have had to adopt as they begin to cope with both the worsening economy and the post-attack malaise.

Already, studios were grappling with the task of producing increasingly expensive films that, somehow, are supposed to provide a larger return on investment.

Add to that a painstaking re-examination of the product filmmakers are turning out: Every picture on a studio's development and release slates is being scrutinized for what it brings to a world rocked daily by reports of war and threats of "asymmetrical weapons.''

Hollywood at the moment is doing everything it can to shield its audiences from extreme forms of violence.

MGM pushed the John Woo actioner "Windtalkers'' to next summer and Miramax moved Martin Scorsese's "Gangs of New York'' to early next year.

"The depression at the studios goes beyond the attacks,'' says Dean Devlin, producer of movies including "The Patriot'' and "Independence Day.''

"Making a movie is a year and a half of your life. You can't do it without passion. And all of our passions have been reshaped.''

As for indie producers, they're faring even more precariously in these perilous times. German entertainment companies, which poured millions into the indie system, have retrenched now that the Neuer Markt has collapsed.

"You look at overhead and core structure and see if they make sense,'' says one indie film exec. "If they can meet their profit potential with a smaller cost structure, that's what they're going to do.''

In Hollywood, that's been translating to cutbacks, where studios like 20th Century Fox are putting the clamp on expense accounts and travel allowances as well as overtime payments.

However, the film industry can take some comfort.

Despite a brief downturn in September, the public still is going to the movies. The 2001 box office since Labor Day stands at $796 million, 8% above last year, suggesting Sept. 11 hasn't scared people away from theaters.

As for subject matter in the movies, expect Hollywood's heightened sensitivity to last for some time.

Currently, studios favor mainstream projects that don't rock any boats (think Steve Martin and Queen Latifah in Disney's "In the Houze''), while any project that contains themes connected to the Sept. 11 attacks will be rejigged or jettisoned.

DEALMAKERS

Nowhere is the economic pinch being felt more keenly than among those doing the dealmaking. Agents are watching helplessly as the stark new reality dawns:

"The idea that, 'Oh, directors always work,' is being challenged,'' says one International Creative Management agent, adding, "If you're young and hot, you'll work. If you're hot and good, you'll work. But it's the middle-range writer and director that's in real trouble.''

Agents, too, are recognizing the need to economize.

One agent who's employed at a Big Five shop confessed she recently headed to (gasp!) downscale restaurant Koo Koo Roo to read her scripts. Initially fearful someone would recognize her, instead she arrived to find numerous colleagues -- with their scripts.

Rush messenger? Not unless it's for Chris Rock, thank you. The head of one midsized shop was aghast when he saw that bills for messengering scripts last year came to $250,000. Now, he says, many shops like his are going to be using mostly the U.S. mail -- anthrax or no.

The trouble comes from movie studios that are now subsumed into vertically integrated congloms, which themselves are taking a beating from a decelerating TV ad market, which in turn mirrors a sagging economy.

"We are all working for The Man right now,'' deadpans Devra Lieb, a partner in literary shop Hohman Maybank Lieb and an agent of 18 years.

"For a lot of writers, it means no more staying home in Santa Monica and waiting for your agent to call. You've got to have energy to go out and meet. You have to fight like a tiger-cat.''

Worse, agents say, the heightened stakes have studios looking to brand names more than ever before.

"Studios are playing it a lot safer,'' laments one William Morris agent. "And only lots of B-level jobs at studios. But if you don't work, you may not work for another six months or a year.''

Or at all. Even top-level directors are feeling pressure to drop their prices or be washed out of the game, Lieb says.

"Agents are becoming far less aggressive. You're just not hearing the kind of swaggering and posturing on deals that was routine before Sept. 11,'' says one TV exec.

Reuters/Variety REUTERS