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Paramount Pictures is in a three-month intermission

Paramount Pictures will go that long between film releases, a break that resulted from belt-tightening and the delay of three releases to next year.

August 13, 2012|By Ben Fritz, Los Angeles Times
  • Paramount Pictures Chairman Brad Grey, left, and actor Brad Pitt attend the AFI Awards in Beverly Hills.
Paramount Pictures Chairman Brad Grey, left, and actor Brad Pitt attend… (Frazer Harrison, Getty…)

As it celebrates its 100th birthday, Paramount Pictures is enjoying a lazy summer.

The Hollywood studio famous for its giant gates on Melrose Avenue and such pictures as "Sunset Boulevard,""The Godfather"and"Transformers"is in the midst of a three-month-plus period during which it has no new releases, the longest such lull for any major studio in the last decade.

And with no self-produced tentpoles this year, it's virtually certain to end up No. 7 in the box-office rankings, an embarrassing outcome for a studio regularly grouped among Hollywood's "big six."

The precipitous drop from No. 1 in 2011 has been caused in part by the delay of three planned 2012 releases to next year. However, it also stems from the strategy Paramount has pursued under Chairman Brad Grey, a powerhouse talent manager and producer who took over Viacom Inc.'s film division in 2005.

Compared with other studios with worldwide operations, Paramount makes fewer movies most years, spends less on development and production, and has been relentless about cost-cutting and sharing risk with both creative and financial partners.

Although that approach has brought Grey and his executive team their share of complaints in Hollywood, it has helped Paramount to improve and stabilize its operating income, which has remained steady for the last three years at about $300 million annually, an achievement amid industrywide drops in DVD sales.

But with deals to distribute movies for DreamWorks Animation and Marvel Studios coming to a close in the next year, the most conservative major studio in Hollywood will now, for the first time since Grey took over, live or die exclusively by the movies it makes.

"We have had great success looking at costs, not just in terms of overhead, but how we put together our pictures," Grey said. "I believe we can be one of the top suppliers in the world, but the only way to do that over the long term is to be ahead of what's happening to our business economically."

Paramount executives paint the Marvel and DreamWorks deals as part of a transition. When Grey took the reins, Paramount had none of the franchises that studios rely on to generate sequels and big profits, nor did it have its own international operation.

Today, Paramount releases its own movies around the world and has three "Transformers" and "Paranormal Activity"movies under its belt. Last year, the studio put life back into the "Mission: Impossible" series, and it will release sequels to "G.I. Joe" and "Star Trek"in 2013. Within the next year, Paramount also hopes to start an annual franchise based on Tom Clancy's Jack Ryan and "Without Remorse" novels, make Tom Cruise a vigilante in "Jack Reacher," turn the troubled Brad Pitt zombie movie "World War Z" into a series, launch a "Paranormal" spin-off focused on a Latino family and start production on a sequel to "Top Gun."

"I think we're finally at the place where we have as many or more franchises than other studios," said Vice Chairman Rob Moore, the head of marketing, distribution and deal-making.

For the last four years, Paramount has released eight to 12 movies of its own annually and it has about a dozen planned for each of 2013 and '14. Sony Pictures Entertainment last year put out 23 movies of its own; Warner Bros., 18; and 20th Century Fox, 14.

Because its slate was already small, the delay of just a few movies resulted in Paramount's light 2012, with no releases between "Katy Perry: Part of Me" on July 5 and "Paranormal Activity 4" on Oct. 19. That may not hurt its current fiscal year, which ends Sept. 30, but it will leave the studio with a paucity of high-profile new DVDs in the fall and early 2013, which account for much of a film company's profits.

Within the studio, executives see their approach as a way to maintain focus and passion.

"If you're making 20 movies a year, you basically need to greenlight a movie every two weeks," said Film Group President Adam Goodman, who oversees production and development. "I don't know how you can find a movie you love every two weeks."

Paramount has slashed its workforce from more than 3,000 in late 2008 to just over 2,200 today (fewer than any other major studio).

It seeks co-financiers for all of its big-budget tentpoles save for "Transformers." On next summer's "World War Z," expected to cost close to $200 million after planned reshoots, Paramount's investment is only about $60 million thanks to three financial partners.

In total, Paramount spends less than $500 million each year on production and acquisitions, while competitors such as Warner and Universal Pictures spend more than $1 billion each.

"Compared to other studios, Paramount spends its money in a concentrated manner on projects they really believe have an upside," said "Transformers" and "G.I. Joe" producer Lorenzo di Bonaventura.

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