By luring Fox Broadcasting Co. entertainment president Gail Berman to Paramount Pictures, Viacom co-president Tom Freston and Paramount's new chairman Brad Grey have sent a message to Hollywood. They want to change the way the movie business is done. And they are willing to bring in talent from outside the film industry to replace more experienced managers.

Clearly, Freston, Grey and Berman now have an opportunity to update a studio that has lost touch with mainstream audiences. But how they approach that task -- positioning themselves as powerful insiders or critical outsiders -- could mark the difference between success and failure.

For when other Hollywood outsiders have overhauled movie studios, the results have been mixed.

Innovation worked brilliantly when Gulf & Western chairman Charlie Bluhdorn hired Barry Diller, ABC's 32-year-old vp primetime programming, as chairman and CEO of Paramount Pictures in 1974.

Diller and his ABC colleague Michael Eisner imported the high-concept story from TV: They decreed that a movie's hook should be as simple as a logline, easy to sell to a mass-market audience. (The "Flashdance" tag: "Welder by day, dancer by night.") Diller and Eisner also turned the TV series "Star Trek" into a movie franchise and made TV star John Travolta ("Welcome Back, Kotter") into a movie icon with the hits "Saturday Night Fever," "Grease" and "Urban Cowboy."

When MTV, now a division of Paramount's parent company, Viacom, was still in its infancy, the new Paramount pioneered the use of soundtracks to promote movies to young audiences. Workaholic production executives Jeffrey Katzenberg and Don Simpson disdained agency packages and trawled the town for new material and talent, micromanaging every project from the script stage. From 1977-82, Paramount's revenue tripled, and profits increased from $13 million to $100 million.

When Oscar-winning British film producer David Puttnam ("Chariots of Fire") was hired by Coca-Cola in 1986 to run production at Columbia Pictures, he also set himself up as a foe of the status quo. Puttnam declared war on the studio system and fought such entrenched power brokers as CAA chief Mike Ovitz and producer Ray Stark. As he lectured Hollywood: "You're not shooting movies anymore. You're shooting deals."

Puttnam wanted to steer away from star-driven movies and agency packages, spend less on movie budgets and star salaries, hire more European talent and focus instead on script and story. But when Puttnam's slate of films ("Perfect," "Vibes," "Leonard") flopped at the boxoffice, he was run out of town -- after less than two years.

While Diller and his team worked their changes from within the studio system, one hit movie at a time, Puttnam acted like an outsider who knew better than Hollywood. Puttnam returned to England with his tail between his legs. But Diller's Paramount studio model was widely imitated by Hollywood and remains the paradigm for how studios operate today.

Whenever new management takes over a studio, the urge is to claim a fresh identity by replacing the old with the new. "I hate this phrase," Freston told one indie producer, "but we really have to think outside the box." What makes some Hollywood insiders nervous about Freston & Co. is their oft-stated determination to reinvent the wheel. "Every time you hear those words," one Paramount producer says, "it's destroyed the people who uttered them."

Paramount's new top executives might be comfortable with the fast pace of television production, but they aren't delivering programming for the next television season. Instead, they will be filling a global distribution pipeline with 20 films a year in a range of genres: With movies like "Princess of Mars," an Edgar Rice Burroughs adaptation from Alphaville producers Sean Daniel and Jim Jacks, or the possible summer tentpole "The Watchmen," which outgoing president Donald De Line was overseeing in London when he received word that Berman was being courted as his replacement.

New management unhinges scores of relationships, leaving such producers as Tom Cruise and Paul Wagner, Scott Rudin, Bob Evans, Lorenzo DiBonaventura and Jordan Kerner sitting on tenterhooks wondering if their deals -- and projects -- will stay or go. The futures of those who were close to ex-studio chief Sherry Lansing -- from execs Rob Friedman, Tom Jacobson and Karen Rosenfelt to producers John Goldwyn and Lynda Obst -- are in question. And whenever execs or producers depart, scores of projects end in turnaround.

And that interrupts product flow. "It's the stopped motion," one studio veteran says. "Having not done this before, these guys don't understand the chaos this creates. These people are saying to De Line, 'We don't have to do business your way.' "

De Line, who is settling out his three-year contract, could have guaranteed an ongoing slate of pictures if he had stayed in his job. If Grey keeps him on the Paramount lot in a rich producing deal, De Line could continue to supervise more key movies. But insiders think he'll leave to join his good pal Amy Pascal at Sony.

Such established Hollywood insiders as Brian Grazer and WMA chief Jim Wiatt are friends of the new Paramount court. But Freston also enjoys positioning himself as an outsider. As Grey and Berman approach the task of reconfiguring the studio and its underexploited youth brands Nickelodeon Movies and MTV Films, they will have a lot to learn about the studio movie business, which relies on big-budget event movies that take years to develop, produce and release. "MTV is a vibrant engine for making smaller, cooler movies work," one studio producer says. "But it's not a business the entire studio can depend on."

Freston at least appears aware of the balancing act his new team must master. In explaining why he chose Grey to run the studio, Freston explained, "He's an insider in this business but still has an outsider's perspective."