Brad Grey, Paramount's Comeback Kid?

Even though the Paramount chairman quarreled with Spielberg, he deserves credit for a summer movie lineup that could produce hefty profits

by Ron Grover

Bill Clinton, it turns out, doesn't have a lock on being the comeback kid. Let me offer up Brad Grey, the Paramount Pictures chairman vilified last year as the movie studio exec who chased away Steven Spielberg. That's still a major league problem for Grey, who will probably see Spielberg shuttle off to another studio any day now. But give the Paramount biggie some credit for a summer lineup that could produce Hollywood's heftiest box office for parent Viacom (VIAB).

By now you know the Iron Man story. The turbocharged Robert Downey Jr. flick about a man and his suit has turned comic book company Marvel (MVL) into a movie production phenom. But less well-known is that Paramount, which distributed the film under a 2005 deal with Marvel, will most likely pocket a cool $60 million profit—with just about no risk, mind you. Add that to the almost certain boffo performance of Indiana Jones and the Kingdom of the Crystal Skull, which Paramount releases on May 22, as well as Dreamworks Animation's (DWA) Kung Fu Panda (opening June 6), and Paramount's studio $104 million operating earnings are likely to jump by 60% this year and double by 2009, figures Bernstein Research analyst Michael Nathanson.

The $5.5 billion a year studio isn't exactly making all the films that will show up in its earnings column this year. In fact, word around Hollywood is that Paramount executives didn't see much of the Indiana Jones footage until director Steven Spielberg was ready to show it to them—even though Paramount footed the film's $125 million bill. Same for Kung Fu Panda, which was made on Dreamworks Animation's dime. But we're quibbling here: Give Grey some credit for getting in bed with folks who know how to make movies, and (after some initial stumbles) getting out of their way. There are way too many movie moguls who have a problem with that last part. "His job is to articulate strategy, and that meant putting us in business with great talent, great partners," says Paramount Vice-Chairman Rob Moore. As for Indy, it was Grey's job to green-light the film, says Moore, after reading a script he liked.

Jump-Starting the Studio

What no one can deny is that Grey & Co. are starting to see some dividends from the rush to jump-start an all-but-moribund studio that the former talent manager inherited when he got the job in early 2005. Some of the deals were already in place: Outgoing studio Chairman Jonathan Dolgen had revamped the deal to make the fourth Indiana Jones flick that eventually got Spielberg and producer George Lucas interested again. But the Marvel deal was all Brad Grey, who was quick to snatch the agreement, says Iron Man producer Avi Arad. Arad, who ran the Marvel studio in 2005, says he contacted several studios but Grey agreed to distribute the film during the course of an initial phone call.

As for Spielberg & Friends—O.K., early on Grey got some well-deserved grief for taking too much credit for films that the superstar director and his team were making. But Grey made amends for that, offering several concessions to the Dreamworks crew. And as part of a the $1.6 billion acquisition of Dreamworks that he helped craft in late 2005, Grey secured for his studio a well-oiled distribution and marketing team that it desperately needed to lure filmmakers to the studio. That helped him get the distribution rights to Shrek and other films by Dreamworks Animation, which was split off from Spielberg's live action operation. This summer's already buzz-heavy comedy Tropic Thunder, starring Robert Downey and Ben Stiller, came from the Dreamworks deal. Paramount also won sole control of a little film called Transformers that he had shared with Dreamworks.