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APRIL 17, 2006
Mission: Precarious Will Paramount's boss stay in the picture? A big fat hit movie wouldn't hurt As one of Hollywood's savviest talent managers, Brad Grey has seen his share of power brawls. But Grey's short tenure as CEO of Paramount Pictures has been brutal even by Hollywood's barracuda standards. Within weeks of his arrival last year, the 48-year-old Grey was under attack by the industry's rumor mill for hiring Gail Berman, Fox TV's top executive, as his second-in-command. The phone lines began lighting up in his newly decorated suite at the stately Paramount studios with agents complaining that Berman was abrasive and feuded with her top assistants on which pictures to choose -- both no-nos in a world where turmoil inside a studio drives hot projects away to rivals. In no time, agents say, Grey was speed-dialing his way through town, soothing feelings, even as the studio denied any rifts. "The rumors were ridiculous and untrue a couple of months ago and remain so now," says a Paramount spokeswoman. BUDGET BATTLE Ever since, Paramount and Grey, a producer of the HBO show The Sopranos, have seen more drama than Tony and his New Jersey henchmen. A tense negotiation between Grey and superstar Tom Cruise over the budget of Mission: Impossible III threatened to shut down the franchise flick before Cruise and director J.J. Abrams agreed to cut $50 million out of the $200 million original. Tongues wagged even more in December when it initially appeared that Paramount had overpaid for DreamWorks SKG's live-action studio, which produced such hits as Saving Private Ryan and Gladiator, by shelling out $1.5 billion. The latest woe is that Grey is linked to the widening investigation of a private eye to the stars, Anthony Pellicano, who has been indicted for wiretapping such personalities as Sylvester Stallone, Garry Shandling, and the wife of billionaire Kirk Kerkorian. Grey has steadfastly denied any knowledge of Pellicano's activities. Sources say that he has testified twice before a grand jury and has been assured he is not under investigation. Still, the timing couldn't be worse as Grey rushes to turn around Paramount. The home of such hits as the Godfather movies, Saturday Night Fever, and Forrest Gump has slumped in recent years as tightfisted managers have scared off the best projects. Now the strife at Paramount is making it even harder for parent Viacom Inc. (VIA ) to pitch a turnaround story to investors. Last year earnings before interest and taxes at the studio fell to $178.8 million, from $257.3 million in 2002, according to Morgan Stanley (MS ). The pressure on Grey to deliver hits is intense. Mission: Impossible III, scheduled for a May 5 release, is a pretty good bet. And prospects are bright for the upcoming Jack Black comedy Nacho Libre and Oliver Stone's September 11 film World Trade Center. Says DreamWorks co-founder and director Steven Spielberg: "I don't get it. Maybe Brad is just the new kid on the block and folks want to make him show he can run a studio. When Mission Impossible [opens] and is a huge hit, this will all evaporate." But it was Spielberg who, unintentionally, helped fuel more speculation. The famed director pressed Grey and Viacom CEO Tom Freston to lure Universal studio chief Stacey Snider to run DreamWorks for Paramount. That move was seen by some as a backstop should Berman, or Grey, be forced to leave. Spielberg and Freston deny that's the case. The barrage of negative news aside, Grey has taken bold action, pushing out some top Paramount executives and hiring more aggressive DreamWorks executives. The dismissals weren't always pleasant: Paramount President Donald De Line heard during a business trip to Europe that Grey was courting Berman and quit shortly thereafter. As for the firings, Freston told Variety that changing people is never nice work. But he conceded: "We could have handled it better." "I BELIEVE IN BRAD" Still, Grey's biggest problem may not be his present performance but his past dealings. He has come under increased scrutiny following two New York Times pieces that describe his acrimonious 1998 lawsuit against former client Shandling, in which Pellicano is alleged to have wiretapped the comedian and his ex-girlfriend after being hired by Grey's lawyer, Bert Fields, who has denied knowing of the wiretaps. A Grey spokeswoman says he did not know that Pellicano was conducting wiretaps. In another case, Scary Movie executive producer Bo Zenga sued Fields, Grey, and Pellicano on Mar. 22 alleging that Pellicano wiretapped Zenga's conversation during an earlier lawsuit filed by Zenga against Grey. That suit was dismissed. Freston says Grey and his lawyer discussed all of this with him before he was hired. "I believe in Brad," says Freston, "and I believe he's telling me the truth." Entertainment veteran Grey no doubt knows how quickly the knives come out when an executive is perceived as in trouble. "If you have money to buy projects and market films, folks will come running," says former Columbia marketing chief Peter Sealey, a Stanford University business professor. "But if things get worse at Paramount, that will change in a hurry." Clearly, scandal and palace intrigue are best left for the big screen.
 By Ronald Grover
BW MALL
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