Paramount extends Brad Grey contract

Will remain as chairman and CEO through 2014

Brad Grey's tenure as Paramount Pictures Motion Pictures Group chairman and CEO received a vote of confidence Wednesday as Viacom extended his contract, which was set to expire next year, to 2014.

Grey, who left behind a career as a talent manager and producer when he joined Paramount in 2005, had been in discussions for several months with Viacom president and CEO Philippe Dauman about a new, long-term deal.

"Frankly, I'm enjoying the job," Grey said of his decision to re-up. "Even though we are going through a challenging economic moment, I feel optimistic and bullish about our team at Paramount, the filmmakers we are working with and the pictures that we have coming up."

Paramount was the reigning domestic boxoffice champ of 2007, with 15.5% market share; even though it was eclipsed by domestic leader Warners in 2008, Paramount increased that share to 16.5%, distributing three of the top six grossers of the year: "Iron Man" (Marvel Studios), "Indiana Jones and the Kingdom of the Crystal Skull" and "Kung Fu Panda," delivered by the reliable DreamWorks Animation.

On the international front -- where the studio took charge of its own fortunes by separating from United International Pictures, a joint venture with Universal, and setting up Paramount Pictures International -- it saw even greater returns. Its foreign distribution arm, headed by Andrew Cripps under the supervision of Paramount vice chairman Rob Moore, grossed $2.04 billion in 2008, to make Paramount the worldwide boxoffice leader as "Indiana Jones" became the top foreign grosser of the year.

"Under Brad's leadership, Paramount has once again become a home for creative innovation and great talent," Dauman said. "Brad has also put in place a strong organization to implement a financially sound multiyear strategy centered on our exceptional array of brands and franchises."

Grey, viewed skeptically by many when he first arrived at the studio, underwent a sort of baptism by fire. His first choice as production president, Gail Berman, lasted just 18 months.

During the past year, though, the studio's executive hierarchy has settled down. Grey placed Moore and president John Lesher in the top slots. Former DW production head Adam Goodman joined production president Brad Weston in October. Longtime marketing chief Gerry Rich left the company, leaving Josh Greenstein and Megan Colligan in charge. Meanwhile, several Paramount Vantage departments were melded with the studio's corresponding departments as Vantage was downgraded, amid cost pressures, from a specialty division to a label.

"There's a greater stability now on every level," Grey said. "When you first come into a nearly 100-year-old studio, there's a bit of trauma that takes place, and I think our transition was clearly noisy. But I do feel proud of the team that's now in place. When I was first hired, it was my sense that it would take five years to get to this place."

Grey played a critical role in Viacom's purchase of DreamWorks for $1.6 billion in 2006, and even though that relationship unwound last year as Steven Spielberg and Stacey Snider exited the studio to set up an independent version of DreamWorks, it contributed to Paramount's revived fortunes at the boxoffice.

"It was a very good deal," said Bob Daly, the former Warners chief who's been serving as a consultant to Paramount and Grey. As part of the separation, DreamWorks left a significant number of projects at Paramount, several of which could involve Spielberg.

Additionally, Grey forged a distribution arrangement with Marvel that resulted in "Iron Man" and upcoming Marvel films. And the Melrose Avenue studio also benefits by distributing animated fare from the publicly held DreamWorks Animation.

"I think Brad's done a very good job," Daly said. "The place was pretty empty when he got there, but he's developed some franchises. Getting (producer-director) J.J. Abrams was a really big coup. I think 'Star Trek' is going to be a blockbuster. Brad's Chapter 1 was getting his own team in place. In Chapter 2, he'll have to watch costs, watch overhead and come up with a couple of hit movies a year. That's the way it works."

Last year, the studio trimmed some overhead and shrunk its planned annual release slate by 20% to 18-20 features. At the same time, it added Brett Ratner to its producer ranks, held on to the Montecito Picture Co., amid the DreamWorks divorce, and continued working with Marvel, Abrams and Lorenzo di Bonaventura.

"I could not ask for or imagine a better creative partnership," Abrams said.

One immediate challenge Grey is preparing to confront is declining home video sales.

"It's a real issue we need to get our arms around," he said. "While theatrical has been strong, until we can really see where home entertainment is going, we have to have our antennae up because it's the backbone of the movie business right now. But we'll navigate through it."

The studio will release the DWA 3-D feature "Monsters vs. Aliens" in late March. The summer season features three potential blockbusters: the Abrams-directed reboot of "Star Trek" on May 8, the Michael Bay, Imax-augmented sequel "Transformers: Revenge of the Fallen" on June 29 and the potential franchise-launcher "G.I. Joe" on Aug. 7.