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February 22, 2006The idea of shadow governments has been around for a long time, usually whispered in smoky bars, though the chatter tends to become more open and angry during Republican administrations.
In any case…
The future of Paramount/DreamWorks seems to be emerging from the smoke. It is, obviously, a work in progress. But what has been clear from the start of the Tom Freston era is that stock price is the first concern and, therefore, rebuilding the mountain will be done much the way repairs are done at Disneyland… behind carefully constructed scaffolding that is meant to look as substantive as any long standing building while all the while, workers are scurrying around preparing a future that is beyond simple imaginations.
As I have mentioned before in this column, Brad Grey announced his hire to the media before the studio did. The Gail Berman hire was done silently, with a leak only occurring when strategically intended. Same with Rob Moore. And then, John Lesher did his own Brad Grey, taking his hire to the press before Paramount could. Then, most recently, the DreamWorks acquisition.
The DreamWorks deal brought aboard a spin master, in David Geffen of a skill rarely seen outside of Washington. And in the first days after the story was "broken" all over multiple papers in order of Geffen preference, the details of the story evolved from Friday to Saturday to Sunday as Geffen, Freston, and Grey measured the temperature expected to be felt on Wall Street at the end of the weekend.
The key change in the deal that was originally floated as an alternative to the more conservative GE/NBC Universal interest in DreamWorks, was that Paramount would not actually buy the DreamWorks library, except in a short-term holding deal before another group could buy the 59-title library for an inflated, then-alleged $1 billion. The price tag for any potential buyer was soon acknowledged as being closer to $850 million, which is still about $100 million high for the assets according to a number of industry insiders. But there seems to be at least one seriously interested party out there, the Soros Group.
The library dump from the $1.6 billion deal was so significant in terms of keeping Wall Street happy that when the actual deal between the two companies, the news was buried in a brief press release that ended up headlined, "Paramount Moves Ahead With Dreamworks Library Sale," in most places.
That was three weeks ago.
To be fair, due diligence on the massive MGM library took many months more than expected for Sony and their partners who actually put up the lion's share of the cash. But 59 films? You can bet that price is still being discussed.
When will the world hear about the done deal? Well, if the number is lower than $850 million, don't expect to hear another word until Paramount has another big box office weekend. Unfortunately for them, Failure To Launch is up against both The Shaggy Dog and The Hills Have Eyes, She's The Man is up against V For Vendetta, and there will be no other Paramount opening until May's Mission: Impossible III. So the issue may be forced before then.
But the point is, it is more than a bit of business. It is a Wall Street issue.
Likewise, the magical process of integrating the DreamWorks team into the Paramount employee roles. To quote Reuters: "Paramount confirmed that 25 midlevel employees were laid off from the finance, marketing, international, human resources and information systems departments. At least 95 more of the studio's 2,000 employees are expected to be let go in the coming week, primarily from domestic distribution. Additionally, once the integration is complete, 120 DreamWorks employees will be laid off."
And the reality of this perfect balance in firings from the two companies? Utter bullshit. And everyone knows it. It is possible that there will be a 20 to 25 percent cut at DreamWorks. But that still leaves a few hundred more slots at Paramount that DreamWorks talent will fill that will not simply be added to the infrastructure.
But the idea of a balanced process is good for the company's image… which is good for the stock price.
When MCN reported the rumors of Stacey Snider's discussions with ParaWorks, a few days later, there was a sudden wave of stories with Brad Grey on the record, discounting the idea that he would "move up into a corporate job (a bit more like Ron Meyer's)" and that Stacey would take his position on top of the studio. Soon after, a series of stories in support of Gail Berman, who was rumored to be moving out as Grey moved up, magically turned up in many of the same outlets. Hmmm…
So the Stacey Snider to Paramount story was dead, right?
No. Of course not. After establishing, by way of media spin, that everything at the studio was as happy as could be, the other shoe dropped. Stacey Snider was happily leaving her spot as the head of a major studio to become a production pal to Steven Spielberg so she could make a half dozen movies a year. Wow. And since we know that no one has ever left the job of running a studio of their own volition, we are left to believe that Ms. Snider is just too busy with the kids to be taxed by running a studio anymore. This would be much better. Topper of a content provider for a studio. A new Walter & Laurie. Uh-huh.
By acknowledging (without speaking herself) that the DreamWorks discussions were real to the L.A. Times, Snider pretty much sealed the door on any chance this was all a negotiating ploy to secure her place back at Universal. Taking Brad Grey's job was a strong play, but this job is a distinct step down that suggested one of two things… Snider was already told that she would soon be out the door at Universal, any way you cut it, or the deal at DreamAmount had some built in upside that wasn't being discussed by the "sources" for the media stories.
Meanwhile, Old Media was still chewing on Gail Berman - with the help of Jeffrey "If You Send It, He Will Print" Wells - as though she was remotely important to the overall story. She is not. And she will not be anytime soon. Nacho Libre, starring Jack Black, will be the first true new era Paramount movie. The only other so qualified film this summer will be the Oliver Stone World Trade Center movie. (The third summer movie for the studio will be Mission: Impossible III and the fourth - if you count it - is Over The Hedge from DreamWorks Animation.) The Stone movie will really be the first thing Berman is judged on. And then, depending on which division gets credit for Babel, the only other developed movie to be released will be Charlotte's Web at Christmas. In other words, the only grade Ms. Berman can get for actual movies in 2005 is "incomplete." But if there is dumping to be done for reasons of skill or personality, it reflects badly on the men who hired Ms. Berman, and that is a problem… where?… the stock price.
The story that seems to elude the "mainstream media" - meaning newspapers like the LA Times - as they pursue rumors that they will repeat without credit when accurate and tsk tsk when they contain no truth worth reporting on, is that there is a shadow government developing at Paramount which is becoming more evident with every one of these odd moves.
The Adam Goodman and Gail Berman combo turns no heads. Stacey Snider comes in and the endgame is…
And have I mentioned that the old (but young) Walter & Laurie are still under contract to DreamWorks, as per deals signed last summer as DreamWorks went into negotiations with Universal.
Though Terry Press has not moved into Paramount Marketing, she is still part of the company and seems to have her hands on all of DreamWorks 2006 product (admittedly a small group of films), from Animation to Dreamgirls. Gerry Rich remains in charge at Paramount… and right now, still has his fingers in the unmarketing-chiefed Paramount Classics, where the deals so far look a lot like Mr. Lesher's old client list, for better or for worse.
And how has the DreamWorks staff fit into the Paramount picture so far? Well, aside from distribution and physical production, where things heavily leaned to one company or the other, DreamWorksers seem to be building out new space on Melrose, going where no execs have gone before.
The strategy is fascinating. Grey's Human Resource department lets people linger in their exit process unlike any other company I have seen in many years… upset, festering, and in pain. The shadow government and the lingering alive-but-dying do nothing much to quell the turmoil of the last three or four years. Paranoia ebbs and flows as each week comes and goes. From the very beginning of the Grey regime, there has always been another shoe, eternally waiting to drop. And still, after all this turmoil, there is still more to come.
Of course, there is another movie company with a shadow government running these days. But this one is no real mystery. Over at Fox, there is the big studio and then there is RiceVille. But, unlike on Melrose, the situation is open, evolving, and growing. Sure, with great success, Rice's power could match or supercede Rothman and Gianopulis. But Rice wouldn't be caught dead thinking that way. (He might want to catch me dead for even suggesting it in public.) But he had outgrown the smaller, gentler version of Searchlight that so many want to emulate and, instead of creating confrontation, Chernin and Rothman and Gianopoulos and Rice found a better way.
One big difference is that the new Fox, all divisions included, will offer at least 35 (probably 40 or more) movies a year in theatrical distribution, while Paramount is still looking to keep it under 20, with the Classics division still a work in progress, but looking more aesthetic than commercial so far.
Meanwhile, at Sony, with Valerie Van Galder in the big marketing chair, Tri-Star will slow to a crawl, leaving Screen Gems as a cash machine, Columbia as the big studio, and the Boys of Sony Classics off on their own boat, as usual. Under attack, Amy Pascal has consolidated power and is waiting for Spider-Man to help, so long as mop-topped Tom Hanks gives her the code to get through this summer.
A post-Snider Universal would be more distinctly defined by G.E./NBC, it would seem. Disney is already long in the process of narrowing focus. And Warner Bros could well end up continue its consolidation even with Carl Icahn on the bench.
But back to ParaWorks…
After two months, the only major firings at DreamWorks remain the same two firings that took place two months ago.
And it becomes apparent… Brad Grey is not going to be pulling out the bloody scythe in front of the media. You know how a few days after a birthday party, you notice that those balloons filled with helium are now hovering just above the floor, no longer floating high. This is the new Paramount way. Lots of hot air and an inevitable deflation. You have to pay Gail Berman's (or Gerry Rich's or David Gale's or whomever is being rumored dead next week) contract anyway… might as well give her a chance to succeed or fail for real. And, whatever happens, there are fresh replacements nearby, some already under contract. No one is going to burst that balloon and make a lot of noise… it would scare the market.
January 5, 2006 - The Business Of 2005, Pt 1
January 9, 2006 - The Business Of 2005, Pt 2
January 11 - Munich In Sequence | Act 1 | Act 2 | Act 3
January 12 - V For Vendetta
