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Walt disney and universal Pictures took on "Star Wars: The Phantom Menace" and won.

Fox Filmed Entertainment/Lucasfilm's long-awaited movie was feared, Universal put up -- almost consecutively -- three $100 million plus box office hits -- "The Mummy," "Notting Hill" and "American Pie." More recently, "Bowfinger," a Steve Martin-Eddie Murphy comedy, from Imagine Entertainment, is projected to make about $70 million, and a healthy profit.

This represents a tremendous turnaround for Universal compared with the how the studio suffered last year through troubled movies such as "Babe: Pig in the City," "BASEketball" and the remake of "Psycho."

"We'll have the biggest grossing year for Universal ever -- and it's only through September so far," says Marc Shmuger, president of marketing.

Now, Universal finds itself in third place for the summer, with $368.5 million in box-office revenue. Fox was just ahead of Universal with $394 million -- virtually all of that coming from "Phantom Menace." Disney was way ahead in first place, with $581 million in box-office receipts.

Universal's marketing credit goes to Mr. Shmuger's department. Publicity played a large role in making "American Pie" Universal's biggest success of the summer.

American Pie "is a movie that had no known stars, no dazzling effects, and no huge hook to reach an audience," says Mr. Shmuger.

Capturing the teen audience, Universal added an unusual in-theater marketing strategy.

"We made a decision to run an R-rated trailer in theaters exclusively for three months," says Mr. Shmuger.

This is always an iffy move because in some areas theaters don't run R-rated trailers -- a major setback to movie's marketing. But audiences caught on, and, subsequently, so did the most valuable tool in film marketing -- word-of-mouth.

"When you are doing well you have more leverage with your partners in exhibition," says Mr. Shmuger. "You also begin to attract better material."

This hasn't been a problem at Walt Disney. Swooping in from the trees, with movies like "Tarzan" and the more adult-skewing thrillers, such as "The Sixth Sense" Walt Disney recently has been flexing its marketing muscle again.

So strong was Disney that even major changes with senior marketing officials didn't seen to derail its locomotive marketing machine. Recently, Chris Pula, president of marketing for Buena Vista Pictures Marketing, departed after a short 10-month stay. Mr. Pula replaced John Cywinski last December, who lasted a year and half before becoming a McDonald's Corp. VP. Mr. Pula is being replaced by two veteran Disney executives -- Geoffrey Ammer and Oren Aviv -- who will be co-presidents of marketing.

Meanwhile, Disney never skipped a beat because Dick Cook, chairman of Walt Disney Motion Pictures, ultimately controls Disney's vast marketing efforts. According to Competitive Media Reporting, Disney plunked down $328 million in advertising in 1998 -- which includes all of Walt Disney's film imprints: Buena Vista Distribution, Hollywood Pictures, Touchstone Picture, and Walt Disney Pictures. This makes, Disney, in pure marketing dollars, the strongest in the business.

"Tarzan" was billed as a big effort for Disney. It proved its worth, pulling in a whopping $170 million in U.S. receipts. Marketing did its job, and Disney is known to throw around major ad dollars in the summer -- one of its peak periods. But according to production executives, "Tarzan" won't be making big profits because production costs were close to $150 million.

Perhaps Disney's biggest effort was sneaking through an unheralded "The Sixth Sense," which became a megahit. A timely early August debut, as well as great word-of-mouth advertising, has put "Sixth Sense" on track to climb to a stunning $225 million this year. Neither Mr. Cook, nor Mr. Ammer would speak about Disney for this story.

Good business has been spread around the entire Hollywood production scene this summer as a buoyant economy has given virtually all studios big profits. In a summer where executives feared "Star Wars" would ambush every movie in its path,

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