Paramount Chief Talks Hit Snag

Negotiations between Viacom Inc. co-President Tom Freston and Brad Grey, his first choice to run Paramount Pictures, bogged down Monday over how best to extricate the manager-producer from the management company he owns, sources said.

To take the Paramount job, Grey must sever his ties to Beverly Hills-based Brillstein-Grey Entertainment, which represents such stars as Brad Pitt, Jennifer Aniston and Nicolas Cage and “Saturday Night Live” producer Lorne Michaels. Brillstein-Grey also has an active TV production unit that is credited with HBO’s popular series “The Sopranos” and other shows.

According to the sources, Viacom and Grey have yet to come to terms on how much Viacom would compensate the 47-year-old executive for walking away from Brillstein-Grey.

Grey, who declined to comment, told a number of close friends and associates Monday that he hadn’t made up his mind about whether to take the job but hoped to do so by today. Viacom sources said they were confident that the financial and other issues would be resolved quickly.

Freston, who personally wooed Grey, had planned to present a final deal to the Viacom board’s compensation committee Monday. Freston believes that Grey’s hiring would signal a new era at Paramount.

Viacom and Paramount officials had no comment.

The quandary in which Viacom finds itself is notably similar to the one Walt Disney Co. had to navigate a decade ago, when it hired Michael Ovitz, co-founder of Creative Artists Agency, to become Disney’s president.

Before he could join the Burbank entertainment company, Ovitz had to sell his stake in the agency to the group of agents who took it over.

Ovitz’s contract negotiations with Disney also were complicated by the fact that his pay at Creative Artists -- $25 million a year -- was more than most top entertainment executives made. Disney’s board justified giving Ovitz a large number of options to offset the “huge reduction in pay” he took when he joined the company, Disney officials have said.

Similarly, Grey is seeking a package that pushes the limits of what Viacom has paid studio executives, the sources said.

Grey would not only be replacing Paramount Pictures’ outgoing Chairwoman Sherry Lansing but assuming the business duties of her former boss, Jonathan Dolgen, Viacom’s entertainment chief who is no longer at the studio. Grey’s title would be chairman and chief executive.

Many of Brillstein-Grey’s 85 employees were caught off guard over the weekend when news leaked out that Grey had been offered the Paramount job. On Monday, Grey’s indecision left the future of the agency unclear.

“It’s like the French Revolution,” said firm founder Bernie Brillstein, who sold his stake to Grey in 1995. “There are no rules and no one knows what’s going on. It’s very exciting.”

If Grey winds up at Paramount, he will have to resolve his business ties to Warner Bros., where he, Brad Pitt and Jennifer Aniston have a 3-year-old production company called Plan B.

Warner is expected to release Grey from the deal, although executives there had no comment Monday. One scenario has the Warner brass agreeing to let Plan B relocate to Paramount and striking a co-financing agreement with that studio. Warner recently extended Plan B’s deal until 2008.

Grey served as one of the producers of Plan B’s big-budget film “Charlie and the Chocolate Factory,” directed by Tim Burton and starring Johnny Depp. It is due out July 15.

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Times staff writer Meg James contributed to this report.