With a deal finally in place, Brad Grey, one of the entertainment industry's leading talent managers, is set to make the transition to studio head by taking over the top executive post at Paramount Pictures by March 1.

He will succeed Sherry Lansing, who is stepping down after 12 years at the Hollywood-based studio.

Grey's appointment was announced Thursday by Tom Freston, co-president and co-chief operating officer of Viacom, Paramount's parent company.

In his new position, Grey will take on the title of chairman and CEO of Paramount Motion Picture Group. Reporting to Freston, he will oversee all of Paramount's motion picture operations, including business operations worldwide.

Although he'll be taking over Lansing's responsibilities as head of the studio, he also will be handling many of the financial duties that formerly belonged to Jonathan Dolgen, who resigned as chairman of Viacom Entertainment Group in June, shortly after Freston was appointed to the Viacom co-presidency, which he shares with Leslie Moonves, who oversees Viacom's television interests.

In deciding to move into a studio post -- a transition that will require that he divest his lucrative ownership interest in Brillstein-Grey and its related companies -- Grey said, "After talking to Tom, I felt it is a time in my life when I want to take on a new and big and interesting challenge. He felt comfortable with me, and I felt comfortable because of Tom and Les Moonves and the company they have built at Viacom. I think it's an honor to be asked to do this, and I'm just completely enamored of Paramount Pictures and what it stands for."

According to Freston, after Lansing's November decision to leave Paramount this year, he began soliciting ideas about who should succeed her, and "one name that kept popping up was that of Brad Grey." He first approached Grey about the idea shortly before Thanksgiving, and though "those talks were flirtatious at the beginning," they quickly became more serious.

"I couldn't be happier that Brad is taking the post," Freston said. "He is the ideal leader to take Paramount to the next phase. First and foremost, he has the business acumen and the creative acumen. What was most impressive to me is that he's a terrific leader, who led a great team at Brillstein-Grey."

Although experienced in TV production -- he's executive producer of HBO's "The Sopranos" -- Grey only recently has become more involved in film production through Plan B, the production company housed at Warner Bros. Pictures. But that appealed to Freston, who is betting Grey will shake up Paramount's film business because, "He's an insider in this business but still has an outsider's perspective."

Although Grey has begun extricating himself from his Brillstein-Grey holdings, that process isn't complete yet. According to Freston, there was never any discussion that Viacom would assume any of Grey's stake in the company. Rather, Grey said, he will turn over the company to its current execs, such as Marc Gurvitz, Cynthia Pett-Dante and Sandy Wernick. Although the details haven't been worked out, "they will now run and own the most successful management/production company in town," Grey said.

Grey also must make decisions regarding Plan B, in which he is partnered with Brad Pitt and Jennifer Aniston. He said that he had sought the advice of Warner Bros. president Alan Horn in deciding to make the move but has not decided the fate of Plan B. However, he added that the projects that Plan B has developed to date at Warners will remain at Warners; a Warners spokesperson confirmed that fact. Warners will release Plan B's first production, Tim Burton's "Charlie and the Chocolate Factory," this summer.

Regarding Grey's current television deal at 20th Century Fox TV, 20th presidents Dana Walden and Gary Newman said, "Brad has been a valuable partner to our company and a good friend over the past three years, and we wish him well in this new chapter of his professional life. ... We're looking forward to working more closely with the new principles of the company over the coming months on our many mutual projects, including the ABC midseason comedy 'Jake in Progress'."

Lansing, who is expected to remain in place for the next two months to facilitate the transition, also applauded Freston's choice of Grey. "I'm personally very, very happy because Brad is a friend and a terrific, terrific person. For me, it's nice to say, I'm handing over movies that I love and people that I love to someone about whom I have good feelings. It's really a very amicable situation."

Freston's appointment has raised questions about the future of Donald De Line, who as vice chairman of the motion picture group oversees film production. Although De Line had expressed an interest in replacing Lansing, Freston said: "He's indicated that he'd like to stay, and I would like him to stay. There are no plans for any changes. Paramount has developed a great amount of momentum over the last six months, and he deserves a good share of the credit."

Although Paramount failed to create a stir at the boxoffice during much of last year, it has enjoyed two year-end hits in "The SpongeBob SquarePants Movie" and "Lemony Snicket's A Series of Unfortunate Events," two projects that originated at Viacom's Nickelodeon unit. The studio's 2005 schedule includes such potential hits as a remake of "The Longest Yard," starring Adam Sandler -- as it happens, a Brillstein-Grey client -- and the summer sci-fi release "War of the Worlds," starring Tom Cruise and directed by Steven Spielberg.

Grey's appointment didn't appear to raise a signal on Wall Street's radar Thursday.

The usual flood of analyst reports failed to materialize, but when asked about the news, Wall Street insiders said Paramount's move might be risky but also could bear fruit.

"Paramount has been sluggish and these days isn't that central to Viacom's financials," one observer said. "So, while the appointment brings some risks, it also can only shake things up."

Another Street source suggested that as a film studio outsider, Grey "starts with more of a clean slate and might be more willing to do things in ways that are nontraditional."

Several people suggested that Grey's talent-spotting expertise could fit in nicely with Freston's plans to get Paramount to produce more films for younger demographics with young, up-and-coming talent, while also going for tentpole movies with bigger names again.

Viacom shares closed up 1% at $38.27 on Thursday.

Georg Szalai in New York and Cynthia Littleton in Los Angeles contributed to this report.