Paramount and Grey: At Long Last a Moment in the Sun

According to The New York Times, five years into the uneasy reign of chairman Brad Grey, Paramount is at long last catching a moment in the sun. In the interview, the executive weighs in on his greatest mistakes and achievements and a possible new tentpole from J.J. Abrams.

“Yes, it will be our biggest,” Grey tells the Times of the profit potential in the fourth quarter. Home entertainment revenue is up, ticket sales have been strong (see Paranormal Activity) and costs have dropped as Grey pushed Martin Scorsese‘s Shutter Island into next year to focus on Jason Reitman‘s Up in the Air and on the December introduction of Peter Jackson‘s The Lovely Bones, a film that will not get its big-budget marketing push until January.

Since taking charge of the studio from Sherry Lansing in January 2005, Grey has attracted attention, critical and otherwise, about his bid for prominence in the movie industry, after years spent mostly in television, the NYT notes.

Last week, Grey spoke to the Times in a far-ranging, if cautious, conversation about both his tenure and his plans for Paramount.

“I’m passionate about Paramount, I’m passionate about my colleagues here,” Grey intoned. The job cuts, he said, have largely stopped. In a creative group now headed by Adam Goodman, Grey insists the turmoil is over.

Asked to describe his greatest mistake while at Paramount, Grey at first deflected the question, then said that it lay with his hiring decisions. “Putting a team together that had time to jell was more challenging than I thought.”

As for achievements, Grey is proud to have whittled Paramount’s release schedule to what he believes will be a profitable core of about 16 films a year.

That film count is down from a peak of 22 two years ago when Grey had aggressively expanded production. This year, Paramount will have released just 14 movies, and a handful of remaining Vantage films.

That’s fewer than any of its major competitors while the studio is second only to Warner Bros. in the box-office race, with almost $1.5 billion in domestic ticket sales, to $1.9 billion for Warner, which has twice as many pictures.

Pali Capital analyst Richard Greenfield calls all of this a good start. “It’s still a studio in transition,” he told the NYT.

“They’re now gaining some momentum in finding their own franchises,” said Greenfield. As to whether the good times can be sustained, Greenfield said “that can’t be answered today,” though he added: “They’re in a far, far better position than they were.”

Overall, the idea is to pick winners and to do so without relying heavily on the kind of outside investors and other risk-sharing mechanisms that were common before the capital markets seized.

In finding those hits — and avoiding misses, like The Love Guru or The Soloist — Grey’s staff will be increasingly on its own: Films from the DreamWorks slate are nearly played out and Marvel, though it still owes Paramount five movies, is now owned by Disney.

But, said Grey, the profit potential from successes that are produced and owned entirely by Paramount is vastly higher than that from films that are distributed for a fee. “We want that exponential profit,” he said.

There will be sequels, Grey said, to both Paranormal Activity and G.I. Joe.

The studio also recently moved to create a micro-budget division that will become a kind of research and development arm.

On another front, Paramount is expected as early as this week to extend a trial period under which it has made films available to Redbox, even as several other studios have avoided dealing with the service.

Grey also told the Times there is a possibility that J. J. Abrams could direct another yet-to-be-announced tentpole before the arrival of Star Trek 2 and Mission: Impossible IV.