To hear him talk about the economic challenges facing the entertainment industry, you’d think that Jeffrey Katzenberg, CEO of DreamWorks Animation SKG, would be worried. Still, sitting in a meeting room on the DreamWorks campus, surrounded by plush toys commemorating his company’s biggest hits, Katzenberg speaks in a tone that borders on serenity.

“I tell people, ‘Wherever you are today, this is the new great,’ ” he says, a Kung Fu Panda doll looming over his shoulder. “The sooner you forget what you had, the better off you’ll be.”

Katzenberg’s Zen-like calm is especially surprising, given that just weeks before, he’d learned that he was among the Hollywood victims of Bernard Madoff’s Ponzi scheme. Both Katzenberg and his DreamWorks co-founder, Steven Spielberg, had millions tied up with Madoff, most of it money they’d set aside for charity and all of it probably gone. As Katzenberg speaks of the belt-tightening that is happening in Hollywood, it’s hard not to wonder about his own belt.

“If you look at where you were last summer, and that’s your measure of how you’re doing, it’s hopeless,” he says. His words could also apply to life after Madoff, I suggest. Katzenberg nods. His loss was humiliating, he admits. “It’s gone. It’s finished,” he says. He refuses to reveal how much “it” is, though public tax filings show his and his wife’s foundation had assets of more than $22 million in 2007. “I’m as lucky and as blessed as I can be,” he says. “Let’s move on.”

If only it were so easy. The names of Madoff’s other Hollywood victims are still gradually and grudgingly coming to light. Condé Nast Portfolio has learned that Arnon Milchan, the billionaire producer of such films as Fight Club and Pretty Woman, lost at least $18 million in the scam. (Milchan declined to comment.) Actors Kevin Bacon and Kyra Sedgwick, who are married, have acknowledged that they too were taken. Click to continue »