Paramount Places a Bet

Paramount Pictures’ recent movie fare proves the business truism that big rewards and big risks go hand in hand. Paramount’s risk-aversion has led to years of mediocre box office performance. So owner Viacom Inc.’s decision to hire Brad Grey as Paramount’s new head may mean the parent company is finally willing to roll the dice, bypassing studio insiders for a man who built his career on the opposite side of the table. It’s a pretty good bet.

Grey has spent most of his career as a talent manager, marketing big-name talent to studio executives and producing television shows. He’ll have his work cut out for him at Paramount, which last year managed a paltry 7% share of the domestic market, was dead last in the international film market and struggled to convert its vast library and new releases into DVD sales. Grey must persuade actors, producers and their agents that the studio behind the fabled Melrose Avenue gates has abandoned tightfisted budgets and a cautious creative strategy.

Two of the studio’s biggest recent flops, “Alfie” and “The Stepford Wives,” were watered-down remakes of hits from the days of the sexual revolution. Studios often see remakes as a safe bet, but neither of the two, which broke new ground and resonated with moviegoers the first time around, clicked with today’s audiences. Although Grey’s predecessor, Sherry Lansing, was in the driver’s seat during the years when the studio seemed to have lost its way, Viacom controlled the budgets and bore ultimate responsibility for the creative roadblocks.

Hollywood deals, of course, must include rumor, innuendo and gossip. On that score, Viacom Co-President Tom Freston hired Grey, whom he knows from vacations spent together in Brazil and Cuba, and their friendship reminds some of another buddy movie -- starring two Mikes and a Mouse -- that quickly went sour. Stay tuned.

Turning to a talent manager to run a studio isn’t necessarily a high-risk strategy. The late Ted Ashley was an agent before leading Warner Bros. to such diverse hits as “A Clockwork Orange” and “Dirty Harry.” The late Lew Wasserman represented actors, including Ronald Reagan, before building entertainment conglomerate MCA Inc., and ex-agent Ron Meyer continues his run at Universal Studios. But Grey, who was running a firm with fewer than 100 employees, still represents a significant gamble. His biggest challenge will be learning to manipulate the levers of a big studio while meeting the financial demands of its parent.

Viacom clearly is disappointed in Paramount’s recent past. Its biggest challenge could be keeping its hands off so Grey can do what he was hired to do.