Paramount’s Big Spin : A look inside the changing studio, the people who run it and the 1990 high-profile, big-money movie strategy

Paramount Pictures, the studio’s executives never tire of telling you, is really a family. But so were the Corleones. And, as fans of Paramount’s proudest property and signature movie, “The Godfather,” will recall, that didn’t stop things from getting a bit tense between the film’s Don Michael and his errant brother, Fredo, at times.

In the Paramount clan, fortunately, no one gets shot. But the feuds can leave scars.

Sometime in the hazy past, producers Jerry Bruckheimer and Don Simpson--charter members of the family, bound to the studio by an exclusive contract--decided they wanted to make a movie called “Top Gun” with Tom Cruise, a hot young star who had gotten less than $150,000 for “Risky Business” at Warner Bros.

Paramount wanted to pay Cruise $575,000, but he wanted about twice that, and the producers offered him $1 million, according to one source. Studio executives fumed, then paid, and eventually got a huge hit.

But things didn’t get easier. Even before the “Top Gun” box-office tally was in, Cruise told Paramount’s then-film president, Ned Tanen, that he wanted to make a movie about race cars. Tanen--like Cruise, a car buff--signed the actor to produce and star in the picture and got a script rolling.

Cruise, meanwhile, racked up back-to-back hits--Disney/Touchstone’s “Cocktail” and MGM/UA’s “Rain Man”--and suddenly wanted a lot more money for his race-car movie than his contract provided. Paramount’s film group co-chief, Sidney Ganis, said no, and studio chairman Frank Mancuso, with corporate boss Martin Davis looking over his shoulder from New York, stood behind him.

Simpson and Bruckheimer, who had been brought in to produce the movie along with Cruise, blew up at Paramount for the low offer, and the actor threatened to quit. Cruise’s longtime agent, Paula Wagner, Creative Artists Agency President Michael Ovitz and Cruise’s lawyer, Barry Hirsch, came on strong. Finally, Tanen, who was by then semi-retired but consulting for the studio, helped patch things up and the studio made Cruise an offer he couldn’t refuse: close to $10 million.

The film, “Days of Thunder,” is now emerging as Paramount’s big hope for the summer. But not before the incident raised enough hackles to diminish the prospects for “Top Gun II,” a potentially lucrative sequel that Paramount has talked about for years. Net result: The studio drew a line on cost, wound up paying anyway and still got stuck with hard feelings in the family.

In Hollywood, of course, everybody fights everybody sooner or later, and family feuds haven’t stopped Paramount from rolling out what some observers believe is this year’s most potent slate of box-office attractions.

Having perfected what it calls the “tent-pole movie”--outsized event films like “Raiders of the Lost Ark” and “Beverly Hills Cop” that spawn sequels strong enough to support a studio’s less-certain bets--Paramount has loaded its 1990 release schedule with an unusual number of high-visibility, high-cost pictures.

If they take off, those movies could return the studio to its premiere position at the box office. Despite some rough spots, Paramount has been on a hot streak since the late 1970s and ranks first among studios in cumulative ticket sales since 1986, when the Mancuso regime’s films first appeared. But such recent disappointments as “We’re No Angels” and “Harlem Nights” helped drop Paramount into fifth place among major film companies, with 13.8% market-share last year. The success of those movies could also establish the credibility of Paramount’s peculiar management arrangement, which places the film operation under two co-presidents--Ganis and marketing chief Barry London.

If the films fail, they could deliver a bad jolt to Paramount Communications. Since selling its financial-services divisions to Ford Motor Co. in a daring divestiture last year, the company depends on its entertainment division for fully 61% of its $3-billion-plus annual revenue.

A series of flops or disappointments may also validate the growing belief in Hollywood that Paramount has been losing its grip ever since control of the studio’s movie operation began shifting from executives with creative backgrounds to those grounded in marketing. Ganis, London, Mancuso, even company chief Davis, are all rooted in sales or publicity. In the studio hierarchy, production head Gary Lucchesi, a former William Morris agent, is the highest-ranked executive who came from the creative side.

In interviews with The Times, several major film producers said they view Paramount’s current management set-up with deep suspicion. When Barry Diller was the company’s chairman and Michael Eisner ran its film division, the producers say, creative decisions were being made by executives with long years of experience working with producers, directors, writers and others involved on the production end. The heavy reliance on product from outside producers has, these critics maintain, impaired Paramount’s ability to control its own destiny.

“Paramount has become more corporate, more faceless,” snaps one film executive who has dealt closely with the company. “The residual personality cult from the Diller days is wearing thin. Those guys were story tellers who would call each other in the middle of the night with ideas. The new guys are just worried about making deals.”

Some of Hollywood’s top producers disagree. “Its the easiest thing in the world to criticize when a few months go by without success. . . . They’ve consistently been strong, and they’re completely supportive of film makers,” says Art Linson, who produced “The Untouchables,” “We’re No Angels” and other films for Paramount.

One big bet is panning out nicely right now. Despite the threat of world peace, the studio’s Cold War thriller “The Hunt for Red October” is a major hit, having taken in more than $40 million in its first two weeks in release.

Another, Simpson and Bruckheimer’s “Days of Thunder,” which reunites the producers with Cruise and “Top Gun” director Tony Scott, is shooting in South Carolina with a June 8 release scheduled. The film will be closely followed by “Another 48 HRS.,” in which Eddie Murphy and Nick Nolte reprise their famous buddy roles for director Walter Hill, and by John Milius’ “Flight of the Intruder,” a Vietnam-era techno-thriller that actually promises more military hardware than “Red October.”

Later in the year, Paramount will release long-awaited sequels to hits of the early ‘70s. “The Two Jakes,” the Jack Nicholson-directed sequel to “Chinatown,” is scheduled for August but has been moved back twice and may not open until fall--nearly a year after its original release date. Then Francis Ford Coppola’s “The Godfather, Part III,” the studio’s obvious pride, will follow at Christmas. Studio executives say all is well with the third installment of a series that has won two best-picture Oscars, even though it is weeks behind schedule in Sicily.

Oddly enough, the person who may have the most at stake on those and the 10 other movies on Paramount’s 1990 schedule appears to be neither Ganis nor Mancuso but 62-year-old Martin Davis. Bronx-born and schooled in movie publicity at the old Samuel Goldwyn Co., Davis took charge of Paramount Communications, then known as Gulf + Western Industries, when founder Charles Bluhdorn died in 1983.

Davis’ early days were, according to many published accounts, marked by bitter feuds with Eisner and Diller, the upshot of which was Diller’s departure from the studio. When Davis then bypassed Eisner for longtime marketing and distribution chief Frank Mancuso as Diller’s replacement, Eisner left too. Diller ended up running 20th Century Fox, and Eisner took over at struggling Disney, where he was soon joined by his Paramount production head, Jeffrey Katzenberg.

Mancuso, with a boost from assets he inherited--the studio’s Eddie Murphy connection, the “Star Trek” and “Raiders of the Lost Ark” “tent poles”--led the studio through a phenomenal mid-’80s winning streak. But, in the minds of some of his detractors, Mancuso used up those franchises without developing many new ones. By stripping away the last of the conglomerate’s non-media businesses last year, Davis focused attention on Paramount Pictures precisely as the studio’s historically strong performance was hitting a roadblock.

In its fiscal year that ended Oct. 31, Paramount, which doesn’t separate movie and television results, reported $252.2 million in operating income from its entertainment division, which was about even with 1988, and down from a record $297.3 million in 1987. Davis has publicly predicted that entertainment results will be flat or down again this year, despite the big films and solid TV performance.

Some Paramount executives say he was simply striking a conservative stance with the prediction. But the fiscal year got off to a bad start when the Robert De Niro-Sean Penn comedy “We’re No Angels” flopped and Eddie Murphy’s “Harlem Nights” petered out far short of expected grosses, pushing entertainment results down sharply. At the same time, Paramount’s publishing operations posted some unusual quarterly losses thanks in part to tougher accounting standards. Eliminating interest income from its huge, $2.5-billion bankroll, which is earmarked for acquisitions, the parent company had an embarrassing $3.7-million loss for the quarter.

Besides making rich producer deals (just added to the Paramount family: “Driving Miss Daisy” producers Richard and Lili Zanuck and Jerry Perenchio), management has raised the studio’s pool of development scripts by a third to approximately 200 in a push to produce as many as 25 films annually within three years. According to studio financial reports, the aggregate spent on upcoming movies and TV shows has shot up to about $750 million, nearly twice what was spent in 1986.

While studio officers decline to discuss budgets, individuals with close ties to Paramount say the company is investing about $200 million on four films--”The Hunt for Red October,” “Days of Thunder,” “Another 48 HRS.” and “Godfather III.” Throw in the costs of “The Two Jakes” and “The Flight of the Intruder” and the studio may have close to a quarter of a billion dollars riding on just six horses.

“Godfather III” was originally budgeted at about $45 million and appears certain to go over, despite the 20 pages that Coppola and Paramount production president Gary Lucchesi recently cut from the script. “Red October” cost more than $35 million--its budget upped partly by an 11th-hour scramble to reshoot special effects at Industrial Light & Magic after another company delivered submarine shots that looked, according to one Paramount insider, like a “cigar in a bathtub.”

Industry analysts point out that big budgets, in and of themselves, aren’t necessarily bad business. A sequel, after all, has to look and perform even better than the original to counteract public skepticism. And big-name stars do cushion the risk of a film falling on its face. The problem is more profitability--which can be diminished in the face of huge salaries and commitments to the stars for shares of gross receipts. An unexpected hit such as 1984’s “Flashdance,” which cost about $10 million to make and grossed $175 million worldwide, can generate far more over the long haul than a more expensive “sure-shot.”

“With everyone taking a participation, the films become more marginally profitable even though market share goes up,” warns an executive who left Paramount’s movie operation in recent years. “When I measure the health of a company, I look not to the franchises but to the surprise successes a regime can create. You look at Disney’s ability to come up with a ‘Dead Poets Society’ or ‘Honey, I Shrunk the Kids,’ or Universal’s consistency with ‘Field of Dreams,’ ‘Parenthood’ and ‘Sea of Love.’ ”

Mancuso argues that expanding foreign markets, from which Paramount now gets nearly 50% of its revenue, make it easier to gamble on big films--as long as the stars or stories have obvious global appeal. But Mancuso has also spent heavier than ever simply to get his traditional “tent poles” this year.

“There’s no question, our slate this year is more expensive than previous years,” says the 56-year-old Mancuso. “But my perception of that is, it’s also the greatest opportunity we’ve had.”

The executive most responsible for finding surprise hits and keeping the well-worn “franchises” fresh at Paramount is Sid Ganis.

Taut and trim with an impeccably groomed beard, Ganis looks younger than his 49 years. Having spent seven years in Marin County as marketing director and aide-de-camp for George Lucas, he is still a bit of an outsider in Hollywood. He keeps a second home not in Malibu but Bolinas, a foggy Northern California coastal town, and he cruised Los Angeles theaters on “Red October’s” opening night not in a BMW or Mercedes but in a Honda Civic.

The Brooklyn-born son of a taxi driver, Ganis landed his first show-business job as an office boy for Broadway publicist Lee Solters, who was then handling such stage luminaries as Barbra Streisand and David Merrick. Ganis quickly moved on to 20th Century Fox and Columbia, then went to work for Seven Arts just as that company was purchasing Warner Bros. Ganis transferred to Los Angeles with Warner and spent the early ‘70s working as a movie publicist and advertising manager for both Warner and CBS’ film division, but he also earned a film credit--as assistant to producer-director Joseph L. Mankiewicz on “There Was a Crooked Man.”

Ganis turned north in 1978 and joined Lucas, whose fledgling film company was explicitly designed to resist money-driven Hollywood values. “I was his sidekick,” Ganis says of his close ties to Lucas during the years when the director-producer used profits from “Star Wars” and “Raiders of the Lost Ark” to build his secluded movie ranch.

In 1986, when Lucas was becoming more interested in his technology businesses than in his film making, Ganis left to join Paramount as marketing chief. Even as Ganis passed through the Paramount arch on Melrose Avenue in Hollywood, Ned Tanen--a film industry veteran who had put in 29 years at MCA-Universal before Mancuso brought him over--was alerting everyone that he planned to retire. As it happened, Tanen stayed for two more years--two wildly successful years when Paramount outperformed the Diller-Eisner regime with such hits as “The Untouchables,” “Fatal Attraction” and “Coming to America.”

With Tanen about to leave, Mancuso surveyed the Paramount family and found two people he considered worthy successors. So he gave the job to both. He split the studio’s film presidency between Ganis and 42-year-old Barry London, whose rise through show business mirrored Mancuso’s. A theater usher while attending UCLA, London joined Paramount as Los Angeles-area film booker in 1971 and climbed to the top of the studio’s distribution and marketing operations.

Mancuso says he structured the split of the presidency to avoid the kind of conflicts between marketing and production departments that were rampant at Paramount during the early ‘80s. The dual presidency has apparently made life calmer behind the studio arches, but it has given some key industry players outside the impression that no one’s in charge.

“There’s no leadership there,” said a talent agent who represents some of the industry’s biggest stars. “You talk to three different people and get three different answers.”

A producer under contract agreed, adding: “No one takes responsibility for anything. And you don’t make a lot of friends without decisions.”

Paramount executives strongly defend their system as collaborative but not dilutive. “This is not rule by committee,” says Mancuso.

London is in charge of marketing and Ganis oversees production, but each has input into the other’s area. When it comes to giving the go-ahead to projects, they meet with Mancuso, who makes the final decision. Ganis and London together oversee the casting of the films, production details and marketing strategies.

“(Ganis) puts something in development. He talks about a concept, and I say, ‘Gee, I think that’s a terrific idea,’ or ‘No, I don’t like it,’ ” explains London, who contributes his opinions again when it’s time to cast a film.

The system’s real test will have less to do with its handling of the big sequels, an area in which it has long excelled, or even with some of the event films such as “The Hunt for Red October” and “Days of Thunder,” in which Tanen has remained heavily involved, than with some fresh pictures that will tell whether Ganis has a million-dollar gut instinct and can assert it in tandem with London.

Critics aside, Ganis has one major player--George Lucas--betting that he can. “He has strong feelings about the creative side of this business. He knows how to treat film makers,” Lucas says of his protege.

One such film is “Crazy People” (coming out April 11), a comedy about advertising that pairs Dudley Moore with Daryl Hannah and director Tony Bill.

Another is “Ghost,” a suspense film with Patrick Swayze, Whoopi Goldberg and Demi Moore that will test the ability of director Jerry Zucker (“Airplane!,” co-writer of “The Naked Gun”) to do something other than broad comedy.

However these films perform, it seems clear that they will begin pushing Paramount away from what one of the studio’s producers has called the “mean-spirited” edge of “Beverly Hills Cop” or a “Fatal Attraction” and toward the warmer kind of themes--”Field of Dreams,” “Dead Poets Society,” “Driving Miss Daisy”--that are paying off for other studios.

“Can we find a film that has the emotional quality of ‘Shane’ to make here? Boy, we are looking for it,” says Ganis. “Can we find the comedy that’s going to be even more hilarious than we think ‘Crazy People’ is? Yeah, we are looking.”

Another peculiar element in the architecture of Frank Mancuso’s Paramount family is its heavy reliance on some very strong producers. While Disney and Warner, for instance, have worked a wide field in Hollywood, Paramount has turned inward, preferring to cultivate exclusive, long-term relationships with Simpson and Bruckheimer (“Beverly Hills Cop,” “Top Gun”), Stanley Jaffe and Sherry Lansing (“Fatal Attraction,” “Black Rain”), Art Linson (“The Untouchables,” “Scrooged”), Eddie Murphy (“Coming to America,” “Harlem Nights”), Mace Neufeld and Bob Rehme (“Red October,” “Flight of the Intruder”), Paul Hogan (“Crocodile Dundee”) and the Zanuck Co.

The system locks in on the outside what some think Paramount doesn’t have on the inside--vast experience and creative force. Simpson, Jaffe, Lansing, Richard Zanuck and Howard W. Koch (“Airplane,” “Ghost”), for instance, have all run major studio production units. But critics say the system also diffuses power and threatens to create its own inflationary spiral.

Eddie Murphy has two pictures remaining on a five-picture deal that reportedly guarantees him $10 million or more a picture. Still, he recently told Playboy magazine that it was “the worst deal in town” and--family feelings notwithstanding--appears to be putting himself out for bids as soon as his contract expires. It’s a reality the studio seems to be sidestepping. “No matter what you read in the papers, I believe Eddie secretly loves the studio,” says Ganis.

“Yeah, and Donald loves Ivana,” retorts one Murphy friend. “It’s like a marriage. You don’t just give your wife money for food and clothing. You send flowers from time to time to keep the romance and the allure alive. Sometimes the studio comes around, but every inch of the way is like pulling teeth.”

By several accounts, Murphy, Art Linson and the Jaffe-Lansing team voiced resentment over the unusually rich and exceedingly public Simpson-Bruckheimer deal announced by Mancuso in January, a bit of family largess that Paramount then trumpeted in full-page ads in The Los Angeles Times, the Wall Street Journal, the New York Times and elsewhere.

Linson denies the talk of resentment and speaks admiringly of Mancuso’s willingness to ride with producers through both their hits and their misses. But he adds: “This deal is going to cause everybody else’s deal to go up or people are going to leave--as long as the market will support them.”

Jaffe also denies any resentment. “I don’t care if somebody pays them a lot of money, as long as they don’t take it out of my pocket,” he says. Jaffe-Lansing managed to enhance their own deal with the studio recently under an agreement to increase production to two films a year. The producers made only five movies for Paramount in the last seven years.

Neither studio executives nor Simpson and Bruckheimer would discuss details of their pact, which requires Paramount to finance and distribute a minimum of five films for the pair over the next five years. Privately, however, studio insiders describe the deal, and the dickering that led to it, as an extraordinary exercise in power politics.

Essentially, the deal gives Simpson and Bruckheimer the right to “put” up to five films to Paramount. That means the studio is compelled to make whatever film the producers want to make, without approval over script and casting, as long as they stay under prescribed budget ceilings. They also get a percentage of the studio’s revenues from the very first dollar taken in, a concession given to top stars and a handful of directors but seldom to producers.

The studio plugged the deal in newspaper ads as a “visionary alliance”--after all, the producers’ movies have grossed more than $2 billion worldwide, including ancillary markets. But some studio executives privately talked the deal down to reporters, claiming the budget ceilings are too low for the producers’ style of film.

In fact, the budgets start at $20 million and escalate to about $25 million, film by film, and are calculated without including studio charges and development costs. That puts them at about the major studio average of $23 million.

Simpson and Bruckheimer haven’t delivered a movie in three years, at least partly because of the time involved in negotiating their deal. They may also have been slowed by a bitter legal squabble with Simpson’s former secretary, who sued him and Paramount, charging that Simpson behaved abusively and used drugs on the lot. Simpson has denied the allegations and countersued. The cases are pending. Asked if he investigated the claims independently, Mancuso said “yes,” but he declined to elaborate.

By the time the deal was signed, there were again hard feelings at the studio, where some executives felt they had been forced to feed the egos of a duo resentful of the media attention heaped on producers Jon Peters and Peter Guber, Larry Gordon and others. One Paramount executive was particularly struck by Simpson’s printed statement that Paramount from now on would simply put up cash, and “we meet at the theater.”

It was, said the executive, “an insult.”

The other Mancuso on Paramount’s lot is the chairman’s 31-year-old son, a movie producer who followed in his father’s footsteps by booking short subjects into Canadian theaters for Paramount during the summer when he was just 14.

Mancuso Jr. is best-known for producing two of Paramount’s gory “Friday the 13th” movies and helping the studio keep the eight-film series on track. “I became a kind of adopted godfather to the movies,” he says of his role.

Eager to get beyond the hack-’em-up exploitation genre, the younger Mancuso was executive producer of an ill-fated attempt to make “The Two Jakes” in 1985. On the very day shooting was to begin, his company pulled the plug amid squabbling over issues that included producer Robert Evans’ insistence on acting in the film.

The producer had a bit more success with “Internal Affairs,” a police thriller that grossed $26 million for Paramount in the United States but ran into problems when, according to published reports, a union pension fund threatened to sue Paramount. The charge: that Mancuso Jr.’s Out of Town Films was set up as a sham corporation designed to avoid labor contracts.

As Mancuso Jr. sees it, the union is trying to renege on its own agreement to let independent companies film for the studios under certain conditions. “The reason this became so celebrated is that we had the audacity to shoot in Los Angeles, and because of my name,” he says.

Mancuso Sr. says he doesn’t interfere with his son’s work, despite Mancuso Jr.’s close association with the movie operation.

“My son’s career is his career. I have nothing to do with his career. He makes his choices,” he says. The father adds: “I want you also to be very careful here, because it’s my family, and I’m very sensitive to that.”

It shouldn’t be surprising that Mancuso identifies himself more closely with “Godfather III” than any other Paramount film, given the intensity of feeling that binds his own, familial studio together--and sometimes tears it apart.

Bluhdorn, before he died, had been passionate in his quest for another “Godfather,” and he relied on Mancuso--who then worked in New York, in daily contact with the corporate chief--to cultivate the studio’s relationship with Coppola and keep delicate pressure on the director for a third film.

Mancuso feels pride of authorship about the movie, having worked for years to persuade an unwilling Coppola to make it. He speaks of the saga in reverential terms, calling it not a “sequel” but “a literary work, with Chapters 1, 2 and 3.”

The script, co-written by Mario Puzo, another Mancuso friend, portrays a graying but still potent Michael Corleone (a role reprised by Al Pacino) as he moves to sever his family’s Las Vegas ties in favor of an alliance with the Vatican. A glimpse of footage promises no shortage of blood. But the very closest clans, and companies, sometimes work that way.

“I see it as the continuing story of an American family,” Mancuso says of the film. “A story of power, what power does, the corruption of power, and the positive aspects of power.”

Not unlike Hollywood.

* TOP GUNS: An interview with Don Simpson and Jerry Bruckheimer. Page 45.