FINAL CUT: Dreams and Disasters In the Making of "Heaven's Gate". By Steven Bach Morrow. 432 pp. $19.95.

AS SENIOR vice president in charge of worldwide production for United Artists, Steve Bach was ideally situated to observe his company disintegrate -- and his own job disappear -- after the failure of one ruinously expensive movie, Heaven's Gate. Or, to recall the forgotten but complete, vainly incriminating title, Michael Cimino's Heaven's Gate. In Final Cut, a revealing and entertaining inside story of the circumstances and decisions that made the Cimino folly inescapable, Bach puts the disaster to salutary use. The most misbegotten American film in recent memory has become the subject of an authoritative account of the way Hollywood misfunctions.

A would-be profound, class-conscious western epic, Heaven's Gate was unveiled near the end of 1980 and exposed as a stiff of stupefying proportions. Quickly withdrawn and then reissued a few months later in a shortened yet unimproved version (down from 219 minutes to 139 minutes), it attracted a trickle of curiosity seekers. Originally budgeted at $12 million, the film was written off as a $44 million loss by UA shortly before the company itself was sold to MGM by the Transamerica Corporation.

Cimino began the film in April 1979, days after winning the Academy Award for directing The Deer Hunter. This honor itself helped set up UA's downfall. Bach was part of a new management team installed early in 1978 to replace the prestigious group led by Arthur Krim and Robert Benjamin, who had defected to form Orion Pictures and spite Transamerica. Given the recognition of the departing regime, the successors -- president Andy Albeck and production executives Danton Rissner, David Field and Bach -- felt considerable competitive pressure. They were anxious to maintain UA's "credibility." In Hollywood that means staying friendly with the talent and the talent's agents in order to have an opportunity to bid for their services.

No book has ever captured the dilemma of the modern Hollywood production executive as accurately as Final Cut. He evidently operates in an unenviable state of privileged futility -- seeming to possess power and status but lacking real authority. Bach writes that, "Without the ability to deliver, there is no power in Hollywood. Maybe only two or three people in the movie business have unlimited, absolute power to commit and deliver without the approvals of committees and boards and often shadowy higher-ups, and everyone knows this . . . When a 'head' of production expresses enthusiasms he cannot enforce . . . his credibility suffers. . . The result is the endless chorus of production executives noes. . . . Yeses are . . . risky and rare."

Rissner, having seen a preliminary cut of The Deer Hunter, was convinced it would prove "a major picture and make Cimino a major director, possibly an unapproachable one." He hoped to approach him promptly with a multiple picture deal so that UA could "negotiate something liveable." When Bach and Field saw The Deer Hunter, they were just as eager to make Cimino an attractive offer. Given the combination of their genuine enthusiasm and competitive needs, it would have required exceptional foresight and extremely persuasive disincentives for them to resist making an indulgent deal with Cimino.

DISINCENTIVES and warning signs were always plentiful. One of the unfailing comic resources of the book is the frequency with which Bach can ruefully document his failure to heed skeptical counsel or private apprehension. Loath to risk losing the next production of a prestige filmmaker (who exuded intimidating artistic self- confidence and orchestrated their insecurities masterfully until cost overruns caught up with him), the UA executives staked Cimino to an extravagantly oblivious, self-absorbed cinematic "vision." They wanted him "to make a movie for UA that would be as fine and powerful as The Deer Hunter." When he failed to deliver, they were left holding the bag -- an unmarketable pseudo-masterpiece.

By accommodating one man's dubious reverie at the expense of their own better judgment and self-interest, they failed to protect either the organization or the artist himself from the consequences of misplaced trust and irresponsible creative autonomy. UA had thrived on a policy of leaving the talent alone after the deal was set. Cimino was allowed to make a permissive mockery of it. Bach stresses that the UA approach flourished with an earlier, studio-trained generation of filmmakers who accepted controls as the price of creative independence. But it was also respected by a succeeding generation, whom Cimino betrayed by wantonly evading the price. This evasion cost the medium at large by contributing to the demise of a major film distributor and by narrowing the options available to responsible, discipline artists.

Bach's unwitting contributions to the collapse of UA, whose history and achievements he valued and hoped to enhance, gives the book a savory tragicomic distinction. It's not every chronicler who can establish an agreeable rapport while casting himself in a pivotal foolish role. Resurfacing as an excellent memoirist, Bach salvages a richly informative and potentially corrective mea culpa from the ashes of his own executive bomb-out. Authentically first-hand and wittily first-person, Final Cut is certainly the best book about the contemporary film business to appear since Indecent Exposure. I think it's also the superior book, enlivened by personal experience and a self-satirizing, gallows-humor tone that suits a Hollywood indictment better than methodical, grimly purposeful sobriety.

It even helps that Bach doesn't seem fully aware of how much the primacy of the deal diminishes other considerations -- notably the quality and suitability of the material being considered for movie adaptation. He remains suspiciously fond of some valueless fast ones, like the way UA made an exorbitant, insincere bid for Peter Benchley's The Island, jacking up the price for the film rights without being left the unlucky high bidder. That gambit established "credibility" for free, but the risks are obvious. Bach also takes inexplicable pride in the way UA outmaneuvered the competition for Gay Talese's eminently unshootable Thy Neighbor's Wife, purchased for $2.5 million on the absurd assumption it could become a dead-serious X-rated blockbuster. Capers like this suggest that the writing was on the wall, Heaven's Gate or no Heaven's Gate.