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February 27, 2006The ongoing saga of Paranoiamount…
So now that Stacey Snider has joined DreamWorks in the most classically Paramount way… over the weekend… manipulating a couple of major papers into shaping the story to her/their advantage… and now, she is probably the highest salaried (aside from stock options) employee of Paramount… and her new office will not be on Melrose, but about 1/4 mile straight down the backlot road from her current office, not a turn to be made.
I don't want to be making fun of Ms. Snider's way of telling the story, but this is all about her kids? This is all about DreamWorks and working with Steven? This is all about making 4 to 6 films a year?
Yeah.
It used to be that desperate studios had to look for foreign suckers to come in and refill the vacuumed out coffers. But while GE was busy trying to craft a rational purchase of the desperate household of DreamWorks, David Geffen's Time-Warner to his already struggling AOL was just a phone call away.
At first, the idea didn't take. Sumner Redstone and the board smashed it before it even really took flight. The stumbling block was that it was a $1.6 billion-plus acquisition that was significantly overpriced and a huge bite to absorb by a soon-to-be split Viacom, threatening the increase in stock value that was Redstone's cause for action in the first place.
A couple of months and some tough negotiating by GE later, a more desperate Geffen and a struggling Grey came up with the answer. Sell the library. Sell those 59 films for $1 billion and Paramount can acquire DreamWorks, its releases to come, its production slate, and acquire DreamWorks Animation distribution for under $700 million. And for Geffen, the prize was even greater… escape from a humiliation after 10 years of not making the magic work. The deal he wanted from Universal - even a little better than he ever expected from Universal - was available elsewhere. That, and the opportunity to save the jobs of hundreds of the studio's employees who would have been lost in a GE/NBC/Universal acquisition.
And as any good corporate mountain climber knows - and Geffen has always been more than a little brilliant with the ropes and rock pick - disarray offers the cleanest path to the top of any peak. And whether he had it in mind from the start or if he came to realize just what was in front of him once he got into bed with the Melrosers, Geffen and his partners were not just saved… they faced the opportunity for a resurrection worthy of The Phoenix.
DreamWorks Animation was safe. S, K & G each scored some cash from the deal. They didn't have to worry about the library themselves… if Paramount couldn't sell it, well, it doesn't affect their deal. (In fact, if the library lingers much longer, don't be surprised if S, K & G reacquire it from Paramount for a price. If the price is right - read: about $650 million - they will step into owning it ahead of any outsiders.) And the very loyal, very slick DreamWorks team got to keep their jobs… or some variation of their jobs.
But the idea that DreamWorks would simply become the new Imagine for Paramount… or Amblin, of you will… started evolving into something else pretty quickly. Within a week of the announcement that a deal was pending, DreamWorks execs Rick Sands and Michael Grillo were sent packing. And to this date, as far as I know, they remain the only senior execs at DreamWorks to lose their jobs.
In the excellent Saturday WSJ piece by Marr and Kelly, unnamed Paramount spokeswoman Janet Hill calls the notion that DreamWorks is eating Paramount "ridiculous, given that only three senior DreamWorks executives took Paramount positions." But the reality remains that the combined company is now wildly overstaffed, by no fewer than 100 and likely no more than 200… but overstaffed indeed. Senior DreamWorks execs have not replaced Paramount execs… but they are there… in newly titled jobs… hovering. Keep in mind also that Paramount just had to take an eight-figure hit against quarterly earnings on severance costs alone. (The total write down, described as "severance and the write-down of abandoned projects as well as other write-downs related to movies released in the first quarter" was $54 million.) Taking millions in severance hits for existing senior staff is not the style of this management team. They have shown a distinct preference for letting contracts run out… even if it creates a level of insanity in the ranks that is truly brutal.
Thus, Paranoiamount.
And with more exits certain in the months to come, don't expect things to get better… only worse.
Marc Shmuger has positioned himself effectively as a major candidate for Stacey Snider's empty chair. And the last time a marketing exec took the top slot at a studio? Anyone? Anyone? I'm pretty sure you'd have to go back to Dawn Steel. Of course, Mr. Shmuger has been more than just a marketing chief for a while now. But he is not a production guy. And Oren Aviv doesn't want to be beat to the achievement.
But besides the pedigree issue, Shmuger can threaten to leave, but where is there for him to go? Warner Bros is unlikely to be looking for a shake up, Disney has Aviv spreading out, Fox is settled and a job with Peter Rice would by its nature force Shmuger to work under Nancy Utley, Columbia just switched marketing chiefs and Jeff Blake is not going anywhere, the Weinsteins can't afford him, and Lions Gate plays a different game. That leaves Universal and Paramount/DreamWorks. Could Shmuger move to Melrose? Only if the original Snider scenario, with Brad Grey moving into the Ron Meyer slot and Stacey becoming The Brad, were to come to pass. And it might. But not soon enough to be a part of Shmuger's negotiations for the top Uni job in the next few months. (Paramount Marketing chief Gerry Rich was recently re-upped for another year, so his contract now expires in August '07.)
But it gets more complicated yet again.
What do Brian Grazer and Ron Howard want? How does GE feel about Imagine? Presuming that Imagine will be wanted as a product engine at any studio in town, whose marketing and production team are they most comfortable with? Imagine has been pretty successful, but they haven't had a film gross more than $120 million domestic since A Beautiful Mind in 2001. The DaVinci Code promises to snap that streak this summer… at Columbia. MGM is already splitting off… Revolution is done… so if Imagine is going to move, could it be to Columbia?
Can Stuber & Parent get out of their iron-clad production contract when Snider exits? What studio chief will the now-producing duo, who have to be taken seriously as a major asset to the studio with their first run of films ready to start churning, be happy with? Or is the best answer for a GE/NBC looking not to change the studio dynamic too much to simply give the reins to the pair (or as most stories seem to insist, Stuber alone)?
Of course, the ultimate irony is Stuber/ParentVille is that they got their freedom, aka their production deal, as a result of Paramount making a play for them before the Gail Berman hire. Paranoiamount has actually been the switch flipped for power surges at every studio in town under Brad Grey. Amongst those who have been helped to cash in during these early years of The Grey Era are Aviv, London, Ortenberg, Rice (both Peter and Dennis), Utley, Van Galder… and as stated, Stuber & Parent.
And what does GE/NBC really want for the future? This situation gives the owners of the studio an opportunity to really consider how they see (or can't see) the future of the film business. Marketing is king these days. So who is to say that Marc Shmuger is not the best of all answers? Is the non-theatrical delivery world where they see things going? Being in the smartest Home Entertainment mind? Does the WB emphasis on international revenues appeal? Will NBC/Universal be the first company to go day & date, making all filmed entertainment into the delivery equivalent of television? Hire the TV mind. (Everyone has been thrilled with how that went at Paramount!)
But back to Darth Malibu…
David Geffen is now set up to be Lawrence of Arabia, taking Aqaba from the desert side. It can't be done. The troops don't have the resources. The battle is already lost. They'll all die of thirst in the desert. But if they make it… history.
T.E. Lawrence: I killed two people. One was... yesterday? He was just a boy and I led him into quicksand. The other was... well, before Aqaba. I had to execute him with my pistol, and there was something about it that I didn't like.
General Allenby: That's to be expected.
T.E. Lawrence: No, something else.
General Allenby: Well, then let it be a lesson.
T.E. Lawrence: No... something else.
General Allenby: What then?
T.E. Lawrence: I enjoyed it.Mr. Geffen understands that power is as power does. Stacey Snider's contract will be with Paramount… and it will be longer than Spielberg's or Geffen's. Terry Press' studio marketing chief salary is being absorbed by DW Animation… though she will be working on some DW projects as well. DreamWorks talent already controls distribution and the build out of international distribution. DreamWorks leads post-production. DreamWorks employees have spread out all over publicity, though as noted, none of the senior positions have been filled by DW talent over Paramount talent. But like Haley Joel Osment, people know… even before the stars know… the staff knows… they see dead people.
And look at what DreamWorks' legacy can be. The studio that saved the legendary Paramount in an allegedly bloodless coup. DW, SKG was right… they just needed deeper pockets and a little luck, that's all. They brought new life… they brought Stacey Snider… they may well bring in other major names who want to work with their team and might have been leery of the current Par administration.
And let's do just a little math. If Steven = 1 per year and Walter Parkes & Laurie MacDonald = 2 a year and Adam Goodman = 1 or 2 per year, then where does Stacey Snider flex? With the funding and the staffing, the DreamWorks output will inevitably expand to at least 10 films a year... before Nickolodeon or MTV shoves anything down Gail Berman's throat either. And how does Brad Grey or Tom Freston sya "no" to more money than is in the deal now if DreamWorks is delivering hits? Answer: They don't. If "The Arabs" get the electircal plant and know how to operate it, "The British" lose.
The truth is, the masses at Paramount will be thrilled with any serious success, whoever is its creator. If more jobs are being axed, it doesn't really matter who is left in charge. But success will create a studio where future jobs, perhaps filled by some from the past, will be stable and even… dear God… pleasantly invigorating.
The Snider episode points out exactly the difference between the current atmosphere at Paramount and at Universal. After 6 weeks of The Rumor, Universal asked Ms. Snider to excrete herself or to get off the pot. Paramount waits for contracts to run out, hires without acknowledging the wide-ranging ramifications, and lets the walking-dying linger like self-aware carrion. But to be fair, there is a lot less pressure on NBC/Universal. GE is a big company. Universal is not a standalone stock. And they are not juggling a stock split, a major acquisition, and a sell off of a library all at the same time.
The pressure is really on now. Succeed and rewards are available. Fail and there is someone nearby with their eye on your VP slot… they don't even have to go outside of the studio anymore.
"T.E. Lawrence: A thousand Arabs means a thousand knives, delivered anywhere day or night. It means a thousand camels. That means a thousand packs of high explosives and a thousand crack rifles. We can cross Arabia while Johnny Turk is still turning round, and smash his railways. And while he's mending them, I'll smash them somewhere else. In thirteen weeks, I can have Arabia in chaos."
11 weeks and counting…
(Note: Part II of the Friday column will run tomorrow.)
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
