Brad Grey, Paramount's Comeback Kid?

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Last year, the film starring those form-changing robots minted north of $700 million, according to the movie Web site Box Office Mojo.

The price of admission for getting much of this year's haul wasn't very hefty, either. Paramount's $60 million profit for distributing Iron Man in theaters and DVD comes after it recouped the roughly $60 million or so it spent to distribute and market the flick—meaning a pretty nifty return on its short-term investment. Grey has a similar low-risk deal with Dreamworks Animation, which pays Paramount an 8% distribution fee (after Paramount collects its expenses) for distributing Dreamworks' animated flicks, according to a Dreamworks filing with the Securities & Exchange Commission. These deals are as close to free money as anything Hollywood ever offers.

Galloping Growth

That's one reason why Bernstein's Nathanson figures Paramount's operating profit will grow at a compounded annual rate of 35.5% through 2010, beating the growth of studios controlled by Walt Disney (DIS), News Corp. (NWS), and Time Warner (TWX). Sure, the studio will have some bombs: I'm betting it will have a misfire with the June 20 Mike Myers comedy The Love Guru, which, frankly, is being promoted with a less-than-enticing trailer. Moore says the heavy promotion for the film hasn't yet started, and Myers will go into promo-overdrive soon. Even without the off-beat comedy, Paramount has a good pipeline of movies now. Next year it releases the long-anticipated Star Trek flick from J.J. Abrams. And even if Spielberg does leave for studios unknown, next year Paramount is scheduled to release a Transformers sequel, which is moving ahead with director Michael Bay and star Shia LaBeouf signed on.

There is always the small, maybe microscopic, chance that Spielberg decides to stay on at Paramount, despite lingering animosity between the studio and the director's camp. Of late, the Paramount folks have been quietly telling people around town that maybe, just maybe, the superstar filmmaker will somehow be a part of a deal that keeps him at the studio and that he will still be tied to Paramount for several projects into the future. He is eager to make two major films, on Abraham Lincoln and on the watershed 1968 Democratic convention in Chicago, and both are currently controlled by the Viacom unit. The betting is still that Spielberg signs instead at NBC Universal. Universal's parent company, General Electric (GE), is said to be putting together a fund with outside investors to re-sign the Dreamworks team that left it in 2005. Where does that leave Grey? Well, you know about these comeback kids: They always seem to, well, come back.

Grover is Los Angeles bureau chief for BusinessWeek.