Hollywood's latest tempest is over a scary essay on the movie business by Jeffrey Katzenberg, the respected chairman of Walt Disney Studios and a man who has no obvious reason to be scared, since his studio was No. 1 in 1990.

The 28-page document implicitly recognizes an ongoing shift in the Hollywood power structure away from agents and back to the studios. The changes are unsettling. Those who stand to lose don't want to be reminded. Those who might gain are afraid because they are more uncertain than ever how to make hits. The old strategies don't work in a world where a no-star "little" movie like "Home Alone" dominates the box office for weeks.

Ostensibly written in a reflective mood for the consumption of Disney insiders only, the Katzenberg analysis was quickly faxed all over town. The essence: big stars and big budgets spell big trouble.

Outside Disney, some Hollywood types quickly accused Katzenberg of arrogance and hypocrisy. They believe that he expected the memo to be leaked and hoped to position himself as a pundit by stating the obvious: that the movie business is facing hard times. Already Warner Bros. and Paramount Pictures, gagging respectively on expensive misadventures such as "The Bonfire of the Vanities" and "The Godfather Part III," have announced that they are cutting costs.

Katzenberg's competitors also contend that the essay represents a grab for high moral ground on cost control despite the fact that Disney -- once famously cheap -- has been sliding toward high-priced scripts and stars. Such upcoming pictures as "What About Bob?" with Bill Murray and Richard Dreyfuss and the $35 million-plus "Rocketeer" are hardly inexpensive, they observe. Katzenberg acknowledges as much in his essay and states, "In the future we'll have to do a better job of controlling our appetite."

In arguing against the big-budget picture, Katzenberg's essay contains a number of barbs. He offers an unfavorable bottom-line view of "Bugsy," a Warren Beatty film about mobster "Bugsy" Siegel, directed by Barry Levinson, now being filmed for rival studio Tri-Star.

Katzenberg asserts that when Beatty and Levinson offer Disney "a big period action film, costing $40 million, with huge talent participation {in profits} ... we must hear what they have to say, allow ourselves to get very excited ... then slap ourselves a few times, throw cold water on our faces and soberly conclude that it's not a project we should choose to get involved in."

Katzenberg does not spare his studio's own recent Beatty effort, "Dick Tracy." The film "made demands on our time, talent and treasury that, upon reflection, may not have been worth it," he says.

But no one associated with Beatty or Levinson -- including the powerful agents and lawyers behind them -- is flattered. It doesn't stop there; Katzenberg speaks of the lure of doing business with "the likes of Steve Martin, Bill Murray, Dustin Hoffman and Sylvester Stallone" but concludes that the past year "should have demolished once and for all" the notion that such stars can guarantee big box office performance.

If they could, he asks, "then how can one explain what happened to the 1990s vehicle for 1989's 'most bankable star,' Jack Nicholson, to say nothing of the heralded return to the screen of Robert Redford?" The allusions are to two notable flops -- Nicholson's "The Two Jakes" and Redford's "Havana" -- neither of which was a Disney film. Katzenberg concludes that "we must blaze a path away from unreasonable salary and {profit} participation deals."

These comments contain an implicit threat to agents who have dominated the industry because they play a role in controlling the destiny of top names (and collect a substantial percentage of their earnings). The essay suggests studios can drive a tougher bargain since no one is perceived as essential.

Katzenberg also turns to new players in town: the Japanese. He questions the logic that led to Sony's purchase of Columbia Pictures and Matsushita's acquisition of MCA Inc., parent of Universal Studios. "The Japanese are getting into a business that is to some extent outside of their cultural context," he writes. While filmmaking is "about the conveyance of emotion," he continues, the Japanese "culturally err on the side of withholding emotion."

Rivals are unlikely to be soothed by Katzenberg's sober appraisal of his own studio's performance. He acknowledges that Disney has "drifted away from {its} original vision." The studio made its mark by reviving careers of flagging stars (Bette Midler, Dreyfuss) and allowing many to move on when their success made them expensive.

Disney has had an enviable string of major hits in the past few years: "Pretty Woman," "Three Men and a Baby," "Who Framed Roger Rabbit," and "Honey, I Shrunk the Kids." But Katzenberg does not celebrate the fact that Disney was No. 1 at the box office last year. That merely underscored that 1990 was "a year of steady decline for all of Hollywood," he warns.

Having had his say, Katzenberg may want to keep a low profile for a few days until a new topic dominates Hollywood chat. But perhaps he will console himself by reflecting that on Wednesday -- the day his essay was published in Daily Variety and prominently featured in the Wall Street Journal -- Disney stock jumped more than five points.