In Hollywood, a rumor is like a hurricane: It starts from a small nugget of truth and can build into a disruptive force. Even when the person at the eye of the storm knows it's all bollocks, it's no fun.

Ever since Paramount Pictures president Gail Berman, the former Fox Broadcasting entertainment president, arrived on the Melrose Avenue studio lot, gossips have been predicting an end to her tenure even though it has barely begun.

That's because there is always an awkward period for a studio in transition, when the town still hasn't figured out the new rules of engagement. Which producers and directors are in or out? What kinds of movies does this new production chief like? A career TV executive like Berman -- while she brought TV watchers everything from "Arrested Development" and "Buffy the Vampire Slayer" to "American Idol" -- is coming into the movie business with neither a track record of produced movies nor established relationships with filmmakers and stars. Hollywood is notoriously tough on outsiders. And women. Berman is both.

For better or worse, the boss who brought her in, Paramount chairman Brad Grey, is a long-term member of the Hollywood boy's club. He made his fortune at the successful management and production company Brillstein-Grey, which handles such movie and TV cash generators as Brad Pitt, Adam Sandler, Nicolas Cage and Bill Maher. A well-established member of the entertainment elite, Grey has delivered his spiel on "The Charlie Rose Show" and gone on vacation safaris with fellow titans Brian Grazer, DreamWorks Animation czar Jeffrey Katzenberg and his new boss Viacom CEO Tom Freston.

Early last year, Freston decided that the best way to beat his rivals was to reinvent the wheel by bringing in talented people who could rebuild Paramount's stagnant infrastructure and bring new ideas to the lot. As he was checking out the executive talent pool, he talked to Universal Pictures' widely respected chairman Stacey Snider. At the time, she wasn't available: Her contract runs until the end of this year.

The Viacom chief eventually settled on Grey and Berman. At Paramount, Grey is functioning much like Universal Studios president Ron Meyer: He's the boss as manager, businessman, administrator, big thinker, talent schmoozer and troubleshooter. While Grey has plenty of experience in the film industry through representing his clients -- he gets the business side of the business as well as anyone -- he is not a filmmaker. He has never assembled a slate, nor figured out the vagaries of what movies and ad campaigns work with audiences.

Berman and her new co-presidents of production, ex-Dimension president Brad Weston and ex-Universal exec Ally Shearmur, carry the burden of assembling the new Paramount slate. Sifting through the projects in development at the studio, Berman admits that she was appalled at what she found. With only three movies slated for release this year, Grey swiftly greenlighted "Mission: Impossible 3," starring Tom Cruise, renegotiated the star's share of the back-end take so that the studio had more of a chance to make back its $100 million-plus investment. Paramount also pushed forward with the Scott Rudin romantic comedy "Failure to Launch," starring Sarah Jessica Parker and Matthew McConaughey, and brought Pitt's production outfit Plan B over to the lot, along with his movie "Babel." Berman let the producers on the lot know that she wanted a lot more from them. She spoke directly to execs, filmmakers and agents about what she was looking for.

That is where Berman got into trouble. She is a strong forthright woman accustomed to wielding considerable power. She is not the sort of person who hides her intelligence, defers to men, or uses feminine wiles to soften her image. Disgruntled people who don't like being told how to do their business by a big-screen neophyte complained. And spread rumors. Said one marketing executive at another studio, "Agents hate her guts," adding, "She's not winning friends and influencing people."

The anti-Berman argument suggests that she needs to win over the town to attract the hottest material and talent. Truth is, former Paramount production heads Don Simpson, Jeffrey Katzenberg and Dawn Steel didn't win any popularity contests, either. Everyone has their own style. The proof, in the end, will be in the movies she puts together.

Berman and her team had been methodically building a slate of pictures, which takes a long time. When Paramount producers James Jacks and Sean Daniel made a presentation to Berman on Edgar Rice Burroughs' "Princess of Mars," which "Elf" director Jon Favreau is developing, Berman told the producers that she also was interested in one of their other projects, "Ripley's Believe It or Not." She then was able to persuade Tim Burton that the project was right for him, and hopes to make the movie with Jim Carrey.

"It's ridiculous to make any evaluation of someone who has been a success her entire career in just eight months," says producer Rudin, who was one of many people on the Paramount lot who was distressed by the way his friend Donald DeLine, who was replaced by Berman, was unceremoniously ousted by Grey. While Rudin took his producing deal to the Walt Disney Co., he still has many projects at Paramount and finds dealing with Berman "easy and fun," he says. "She's talented, fair, and engages on a creative level. I like her."

Meanwhile, Grey brought in as his chief operating executive Rob Moore, a brilliant financial mind who had soaked up knowledge of every aspect of the movie business by working closely with partner Joe Roth at Revolution Studios. Grey put Moore in charge of studio operations, theatrical and home video distribution and marketing, and Paramount's new foreign distribution operation, which is ramping up in the wake of severing its ongoing partnership with Universal in United International Pictures.

That put even more pressure on Paramount to ramp up a real slate because as of 2007 the studio will need more product than ever to put through its foreign pipeline. So after initially balking at the $1.6 billion price tag to buy DreamWorks, Viacom chairman Sumner Redstone agreed to go ahead with an acquisition -- with Paramount selling the DreamWorks library to defray the expense.

The situation got a lot more complicated for Grey and Berman when Viacom actually bought DreamWorks. Just as the Paramount duo was getting under way, a team of established Hollywood superstars -- Katzenberg, David Geffen and Steven Spielberg -- suddenly dropped into their midst. Yes, Grey and Berman were thrilled to release six A-list movies a year from DreamWorks, and they salivated at the DreamWorks/Paramount co-productions -- some directed by Spielberg -- that the relationship should yield.

But the two large organizations also had to figure out how to merge their staffs. Katzenberg, Spielberg and Geffen had their own interests: They wanted to keep working with personnel they could trust, and they wanted the best possible worldwide distribution and marketing for their pictures. So Katzenberg sat down with Moore, who worked for him for eight years at Disney; they went over the key jobs in marketing and distribution. Deciding that Paramount's distribution division was out of date, they replaced its veteran distribution head Wayne Lewellen, with DreamWorks' Jim Tharp. Paramount also brought in the DreamWorks TV group lead by Hal Richardson to rebuild its TV operation.

Between the two companies, about 240 layoffs have occurred or are planned. "What they really bought was the people," one DreamWorks executive of the Paramount/DreamWorks transaction says. "We're a 10-year-old company; our systems were new. At Paramount they're still using Lotus Notes."

Within Hollywood, a perception rapidly took form that the DreamWorks deal did not favor Berman, because Katzenberg, who has competed with her in the TV arena, was not a fan. But contrary to perception, Katzenberg has no interest in running Paramount. Now that he's set up his people at Paramount, he is moving back to run his animation company. He's building the value of a publicly held company, Barry Diller-style. His marketing chief Terry Press goes with him -- though she will supervise the marketing of her pet project, "Dreamgirls," which Paramount will release in December. On the other hand, if Paramount messes up the release of a DreamWorks movie, there will be hell to pay.

It was important for Paramount to stand up to the DreamWorks team and keep some of their key people, like marketing head Gerry Rich. The studio could not afford to simply roll over, though DreamWorks was in fact forced to sell. As it is, the studio looks weaker than the company it bought for $1.6 billion.

Going forward, Berman's challenge is to pull in more big name talent like Burton, and for Paramount to kick some ass at the boxoffice with movies like "M:I 3," its upcoming "Charlotte's Web," David Fincher's darkly violent "Zodiac," Oliver Stone's "World Trade Center" and Alejandro Gonzalez Inarritu's "Babel."

With rumors of Berman's demise swirling, Grey could have been more forthright about standing up for her: His line to the New York Times that "she's working hard" didn't quite cut it.

The fact that Universal's Snider is now in talks with Meyer about renewing her contract hasn't helped Berman, either. A published photo of Snider and Berman together at a party only fueled speculation that Snider could next take over at Paramount. Instead, the unwanted spotlight is now forcing Snider to make decisions about her future at Universal. Both fiercely ambitious and the mother of two small children, she has to make up her mind sooner rather than later about what she wants to do with the next stage of her life. Will Universal and GE pay to keep her? They'd be foolish not to. But it's hard to imagine her taking over a studio that needs rebuilding like Paramount -- and, in any case, she'd be more suited for Grey's job, not Berman's.

Meanwhile, Berman must tune out any distracting rumors and do the one thing that will determine her fate as a movie executive: put together successful movies. "She's got to make movies that make money," one studio chairman says. "Everything else is bullshit."