When news leaked that Peter Jackson would receive $20 million to direct Universal's remake of 1933's "King Kong," it drew gasps within the film industry. It was the first time in history that a director had been paid as much as an A-list star. True, the fee also covered Jackson's duties as co-writer and producer, but these were quibbles in the minds of most observers, footnotes to what remained a mold-breaking deal.

The truth of the matter is that Jackson's salary was indicative of something else: an increased polarization between the very top directors and the rest of the directing community -- a community composed of filmmakers who are finding it increasingly difficult to maintain full control over their projects in a bottom-line-minded corporate world.

A decade ago, final cut -- the right of a director to edit a film exactly as he pleases and have it released in theaters that way -- was almost mandatory for any filmmaker who wanted to prove that he had arrived. It was granted to directors who had truly demonstrated their worth, either artistically or at the boxoffice, from Spike Lee to Kenneth Branagh, Martin Scorsese to Steven Spielberg.

Today, many directors say it is almost impossible to get final cut from a major studio, and if they are lucky enough to get it, it is a concession laced with provisos, often stipulating that the director's cut will stay in place only if test screenings prove highly successful. In other words, a director gets final cut provided that test audiences love his film.

"There was always a kind of tug-of-war between management and talent," says director Sydney Pollack (1985's "Out of Africa"). "But it has gotten much worse as (the business) has gotten more corporatized."

A typical contract, obtained from one major studio, reads as follows: The director will have his "artist's cut(s)" so long as: "(a) Artist delivers the picture to the studio in accordance with the provisions of Paragraph 8 below; (b) The final negative cost of the picture does not, or in the studio's sole opinion will not, exceed 110% of the final below-the-line budget approved by the studio, (excluding costs due to force majeure, changes approved in writing by a business affairs executive of the studio, retroactive union scale increases, and losses to the studio reimbursed by insurance); (c) Production and/or postproduction of such a picture is not over-schedule by the lesser of three days or 10% of the total number of days of principal photography of such picture; and (d) Artist is not in breach or default hereunder."

Then, and only then, "subject to the studio's release date plans and release exigencies, Artist shall be entitled to have final United States Theatrical Cut (U.S. Final Cut) of the picture."

This language is not reserved for newcomers or unproven players. Michael Bay, one of the highest-paid helmers in the business, only received final cut on 2001's "Pearl Harbor" in exchange for promising the Walt Disney Co. that the budget of the film would not exceed $145 million. He also had to accept that overages would come out of his fee and agree not to take any upfront salary. Even then, he shared final cut with producer Jerry Bruckheimer. "But that's fine because Jerry has never said, 'You have to take this out,'" Bay says.

Some studios never give final cut at all -- although exceptions can be made if Spielberg or James Cameron wants to sign onto a project. Most would rather offer a top director an exorbitant salary than surrender ultimate control of a film; top directors can now earn $5 million or more per movie, with a share of the back end.

"The studios are more willing to throw money at a problem than give up control," says one industry insider. "In this sort of 'tentpole' world, as you move toward a slate where you have $100 million-plus investments in (a film), not counting marketing and prints, the director may have much more economic power -- because you need that director to bring in the project on time and with a vision and for a budget -- but you are probably more reluctant to turn over final cut to him. Where the power is has shifted."

Executives say several factors are contributing to the studios' reticence -- the turbulent economy foremost among them. The average cost to make and market a film is roughly $89.4 million per studio release, and studios have recently had to tangle with directors who either had final cut or refused to cooperate with the studios' requests in the editing of their films.

The film some say triggered an apparent industry-wide review of final cut policies was the now-notorious "Gigli," on which writer/director Martin Brest had final cut. His editing decisions led to serious conflicts with Revolution Studios; Brest agreed to re-shoot the ending of the picture, as Revolution wanted, but that didn't solve its creative problems.

After "Gigli," Revolution put into place a "no final cut" policy -- unless, of course, they're working with an A-list director like Ron Howard, who won't work otherwise.

Brest and Revolution both declined to comment for this article.

The scandal surrounding New Line's 1998 feature "American History X" stands as another high-profile example. While director Tony Kaye did not have final cut on that film, the publicity surrounding it -- which lead to Kaye's exit from the picture and its recutting by actor Edward Norton -- soured the studio on the idea of giving any helmer too much liberty.

"If it comes to the issue of recutting a director, you are probably already in a lot of trouble," one high-level studio executive notes. "In 15 years, I can count on less than one hand the times when it became an issue, and the reason is because if you get to that, if both sides aren't listening to each other, then you are already toast."

In some cases, though, top stars and producers are awarded final cut. Tom Cruise gets final cut on his films, as does Bruckheimer (though Bruckheimer has been known to share it, as he did with Bay, and as he also did with Joel Schumacher on Buena Vista's "Veronica Guerin").

Among producers, Scott Rudin had sole final cut on last year's "The Hours." Yet when director Stephen Daldry was asked recently about the final cut issue, it was so far from his thoughts that he initially thought the question referred to the computer program rather than the contractual matter.

"For me, it depends on my relationship with the producer," Daldry says. "If one were in a combative relationship or didn't trust your producer, you'd argue for it. But then you could say you shouldn't be in that relationship in first place."

Daldry's success with "Hours" means that he now ranks among the directors who do get final cut, if he wants it. Other such directors include Woody Allen, James L. Brooks, Francis Ford Coppola, Jonathan Demme, Clint Eastwood, Ron Howard, Michael Mann, Anthony Minghella, Pollack, Robert Redford, Ridley Scott, Oliver Stone and Robert Zemeckis.

"Final cut is like being told you have a life-jacket when you get onto an airplane -- it's cold comfort," says Minghella, who retained final cut on his upcoming Christmas release "Cold Mountain." "The reality is that the distributor has authority over the film finally because the way the film is presented to an audience is in the distributor and exhibitor's hands."

"If every director were a final cut director, it would dramatically change the nature of the business," adds Jay Roth, national executive director of the Directors Guild of America. "Final cut is something that is earned, not a minimum condition, and therefore, our view is that the issue of final cut is not an issue of Guild negotiations."

Even if a director has final cut, he or she still must accept the reality that the clause has become a moot point for most studios, which can withdraw their full backing when it comes to marketing a film if they don't like the cut the director has given them -- or worse, never work with the director again. Kaye, for instance, has yet to be employed by a major studio.

Bernardo Bertolucci had final cut on his upcoming "The Dreamers," but Fox still insisted on trimming full-frontal nudity from the film. Bertolucci denounced the move publicly, even though the studio's pick up deal stipulated that he deliver an R-rated film. Bertolucci's producer Jeremy Thomas would only say: "We had a contract for an R-rated film, and unfortunately the film we made was an NC-17 film. We cut a short amount out of it."

Morgan Creek Prods. took matters into its own hands on its upcoming "Exorcist: The Beginning." Following the death of the movie's original director John Frankenheimer, Paul Schrader (2002's "Auto Focus") was hired to helm the "Exorcist" prequel, only to be let go when Morgan Creek decided it was unhappy with Schrader's cut of the film.

"I showed (my cut) to (Morgan Creek chairman and CEO James G. Robinson), and there was a conversation of maybe five or 10 minutes in the screening room," Schrader says, adding that he recut the film and offered to screen it again for Robinson. Rather, he says, "the editor was fired (and) I was told that Morgan Creek wanted to execute its cut. It was suggested that there was no reason for me to be there."
Renny Harlin was then hired to shoot an additional 10 weeks of material, for a cost between $6.5 million and $8 million, but he'll receive no directing credit when the film is released.

"Schrader gave us his cut, and I felt and everyone else felt that his cut just wasn't good enough," Robinson says. "So we went back in, and now we are going to reshoot."

The situation illustrates just how different a place the industry can be for directors who are not the Peter Jacksons of the world (though Jackson, who has final cut on his "Kong" remake, did not have it on the "Lord of the Rings" films). Then again, Jackson's work has made New Line billions of dollars richer, and that, ultimately, speaks the loudest in Hollywood. "This is all about economics," Pollack says. "And anybody who thinks it isn't is a fool."