The Studio Report Card: Paramount Pictures

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For years, going back to the days when Peter Guber would have Deepak Chopra stop by to give pep talks to the troops, Sony Pictures was Hollywood's wackiest, most dysfunctional studio. But no more - all that kooky karma has been shuttled over to the Paramount lot, where, as one Hollywood agent put it, "You find it hard to build up relationships at a place where it's hard to know who's coming and who's going." In the last few years, you've needed a scorecard to keep track of who's in and who's out in the executive ranks, with 2008 seeing the arrival of a new Film Group chief, John Lesher, the departures of a head of marketing (Gerry Rich) and a head of publicity (Mike Vollman) and the naming of co-heads of production, Brad Weston and Adam Goodman, who are both capable executives but are viewed with confusion by agents and managers, who often have no clear idea which one to call about projects.

That said, in terms of market share, Paramount had a great 2008 (all our 2008 stats, courtesy of Media by Numbers, are through Jan. 4), with four of the Top 10 grossing U.S. films, movies that when you tabulate their international grosses, all made more than $500 million, topped by the success of "Indiana Jones and the Kingdom of the Crystal Skull," which did $786 million across the globe. But unlike most studios, who usually own 100% of their "Harry Potter" and "Spider-man" franchises, Paramount is still more of a creative portfolio business than a production entity.

Faced with a nearly empty cupboard in terms of big-time ongoing series when he took over the studio, Brad Grey is still playing catch up, with surprisingly impressive results. In order to give his production team time to assemble its own home-grown franchises, Grey acquired Dreamworks, which, even though the marriage ended badly, bought him time and supplied the studio with a host of in-house hits. When Marvel was looking for a distributor, Grey moved quickly, doing a deal that brought Paramount "Iron Man," a hugely successful, well-reviewed summer hit. The studio also distributes product from Dreamworks Animation, which had a stellar year, delivering two big hits, "Kung Fu Panda" and "Madagascar: Escape 2 Africa."   

But unlike other studios, who reap enormous financial rewards for those kind of mega-hits, Paramount simply gets a piece of the action because it doesn't own any of them. It gets a 10% distribution fee from Marvel, 8% from Dreamworks Animation and roughly 12% of the gross from "Indiana Jones," a franchise the studio has distributed from its beginnings. Paramount's most profitable wholly owned hit was "Cloverfield," a cool, low-budget scarefest (with no gross players) that ended up doing $170 million worldwide and cemented the studio's relationship with its producer, J.J. Abrams, who is at the helm of the studio's much-anticipated "Star Trek," the refurbished franchise that arrives this May.

Paramount had a few minor flops, like the Iraq war drama "Stop Loss," but only one big bomb, the Mike Myers stinker "Love Guru," which it co-financed with Spyglass. But one of its highest profile films, the comedy "Tropic Thunder," ended up being a break-even proposition because the studio gave away 25% of the gross to its stars and filmmaker, while its year-end Oscar candidate, "The Curious Case of Benjamin Button" (co-financed with Warners) is a costly production with 25% of the gross out, so only time will tell if the studio will make any substantial profit on the picture.

So why are so few people in Hollywood bullish on doing business with Paramount? Keep reading:

The biggest rap against the studio is that four years into Brad Grey's tenure, Paramount still doesn't have a coherent identity. Early on, the big talk was that Grey would reinvigorate Paramount's once-potent specialty brands--notably MTV Films, Nickelodeon and what became Paramount Vantage. Instead, the labels have withered, with Vantage laying off virtually all of its staff barely three years after its much-ballyhooed relaunch and MTV and Nickelodeon reduced to shadows of their former selves. The only reason MTV made news at all last year was for the painful Paramount blunder of passing on "Twilight," originally an MTV Films property that was a huge success for Summit Entertainment.

Grey has earned a reputation for being extremely inaccessible, with even top agents saying its hard to get him on the phone. Lesher's reputation isn't much better, with agents terming him "evasive" and "erratic," saying that when there's bad news, he ducks their calls. Lesher made quality films at Vantage, but his overspending ran the division into the ground, so there remains a justifiable skepticism about whether he can assemble a slate of commercial successes in his new job.

Even though you'd think he worked at ESPN judging from the amount of sports programming that is continually playing on the TVs in his office, vice-chairman Rob Moore is the executive who gets the best reviews for his relative accessibility and decisive decision-making. It's Moore who argues that Paramount has made impressive progress, noting that the studio was No. 1 in international box office in 2008, a dramatic upswing from a few short years ago. "We have as good a worldwide marketing and distribution system as any other studio," he told me. "We only released 14 movies last year, yet our average box-office per film was nearly 50% higher than anyone else."

He says the studio has shrewdly bought time while it develops its own in-house franchises. "Because of the change in management, we had fewer current franchises than anyone in our vault. You have to remember--'Batman' has been at Warners for years. They didn't wake up one morning and say, 'Let's make 'Dark Knight.' It takes time to build a franchise. So faced with those circumstances, we went in a different direction. One of the smartest things Brad did was to bet on Marvel, believing they would be a success as a stand-alone company. It's worked well for both of us. Even if we didn't own all our own movies, we made a substantial profit with minimum risk."

Performance: B.     Quality:  B-plus.        Overall Score: B.

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