Already a Bloomberg.com user?
Sign in with the same account.
Top of the News
SHAKE, RATTLE, AND ROLL HEADS
Paramount President Stanley Jaffe swings a mean ax, but he gets results
For an executive who jets in just three times a month, Stanley R. Jaffe gets the royal treatment at Paramount Pictures Corp. Workers at the studio's 61-acre lot are putting the finishing touches on his renovated suite of offices. Outside the building sits the ultimate symbol of Hollywood power: a white Yamaha golf cart with Jaffe's name stenciled on the side. Only two other biggies get their own carts: superstar Eddie Murphy and studio chief Brandon Tartikoff.
Jaffe's cart may get scant mileage, but the former movie producer has swirled like a whirlwind through the studio and its parent, Paramount Communications Inc. Chairman Martin S. Davis named Jaffe president of parent Paramount a year ago. Working out of its New York headquarters, he already has engineered a dramatic shakeup at the $3.9 billion entertainment and publishing giant (table). "The place needed fixing, and that's just what he did," says money manager Mario J. Gabelli, whose fund is Paramount's largest shareholder.
No question, Paramount is again living up to its lofty moniker. After a year of such big-budget flops as Godfather Part III, Paramount is cleaning up with The Addams Family and Wayne's World. Its long-suffering sports teams, basketball's New York Knicks and hockey's New York Rangers, are hot, and they're packing the house at Paramount's own Madison Square Garden. HOUSECLEANING. Wall Street is cheering, too: After slipping for most of the past 12 months, Paramount stock is trading around 47, its 52-week high. Even better, on Mar. 10, the company reported $18.4 million in first-quarter earnings -- reversing last year's $7.3 million loss. That was good enough to boost its first-quarter cash dividend by 14%. Now, Lisbeth R. Barron, a media analyst at S.G. Warburg & Co., predicts 1992 profits will jump almost 75%. True to Hollywood, some of Paramount's current success is plain good luck. But Gabelli and other major investors also applaud Jaffe for cleaning up a
studio that was spinning out of control. Since the hard-edged New York native
arrived, most of the studio's top managers have left. So has the head of Madison Square Garden.
Davis didn't just hire a hatchet man, though. Jaffe, 51, produced Fatal Attraction, and his father ran Columbia Pictures. With his feel for Hollywood, Jaffe smoothed out a contract dispute with Eddie Murphy, agreeing to pay him $ 12 million each for four films. This summer, Murphy stars in Boomerang, his first Paramount film in two years.
Now, Jaffe is turning over most of the studio's management to Tartikoff, the former NBC programming whiz who spent much of his first year focusing on TV production. Under orders to rein in film costs, Tartikoff so far has a mixed record: He hit the jackpot with the $15 million Wayne's World but flopped with last year's low-budget All I Want for Christmas. But Jaffe also backed Tartikoff when he paid Harrison Ford $9 million to star in the upcoming Tom Clancy thriller Patriot Games.
TIDY GARDEN. Moreover, the company spent $200 million to refurbish Madison Square Garden. And Jaffe paid $6 million to lure former Los Angeles Lakers coach Pat Riley out of retirement to lead the Knicks, plus $33 million to extend star Patrick Ewing's contract for six years.
Not everything bodes well for Paramount: The studio, for exam ple, has been slow lining up major new film projects and has only one Christmas offering in the works. And while its losses narrowed, Simon & Schuster, the company's book publisher, still posted a $29.7 million first-quarter loss. Despite much ballyhoo, the publisher lost a bundle on former President Ronald Reagan's memoirs. In the future, its educational arm figures to be hurt by falling outlays for textbooks in some states.
With nearly $1.6 billion in cash, Paramount is uniquely positioned to diversify. The company lately has toyed with deals for such record companies as Virgin and Geffen Records. But it has only bought some lower-priced TV stations and expanded its computer book publishing business. Yet Davis himself hints that some deals could happen soon: "We have our own timetable," he says. "We will be adding more assets."
As for Jaffe, there are rumblings that Davis, who recently turned 64, may have found a successor. Both men still have five years on their contracts -- but with the company on the mend, Davis may be thinking of leaving sooner. Not! Ronald Grover in Los Angeles, with Mark Landler in New York