THB #483: The Ironic End of Paramount
What a long, strange trip Paramount has been.
When I was a high school kid… then a college kid… Paramount was the cool studio. Edgy, sexy, and high octane. Cool enough to do Grease and Saturday Night Fever in the same year. The Warriors and 48 Hrs and movies from Star Trek. American Gigolo and Popeye. Raiders of the Lost Ark and Airplane. Flashdance and Trading Places. It wasn’t the most successful studio. But the place that had brought us Jerry Lewis and The Godfather was cool.
And then came Sumner Redstone.
It wasn’t all bad under Sumner. His first decade, stewarded mostly by Sherry Lansing and Jon Dolgen, was solid and occasionally better than that.
And then came Brad Grey.
That was, sadly, like the match lighting things off at the front of a Mission: Impossible episode, the beginning of what brought us to this moment. A lot of talented people moved through the executive suites at Paramount, even during Brad’s tenure. But move they usually did, onto other places. He inherited a very strong television production business, which would never be as strong as it was on the day he took over. And Grey failed to ever build his own version of a fully functional film studio… which is not to say there were not successes and smart people… just that he never solved the need for a stable model of vision.
The biggest mistake, I think, was a short-term win… the “acquisition” of DreamWorks SKG. DreamWorks was a great operation run by artists which had overspent in the early years, particularly on TV, and couldn’t quite escape the financial weight of television not working. David Geffen negotiated the deal for Brad Grey to “save” DreamWorks by taking it over, not only making it solvent, but putting a lot of money in the pockets of S, K, and G that they could walk away with. Paramount overpaid. By a lot. The deal didn’t even include DreamWorks Animation, which was the most profitable part of the company at the time. Instead, Paramount paid just under a billion dollars for the library of under 80 titles. Great titles. But not at that price. (The actually worked a deal for a VC to buy the library with an agreement to buy it back at a profit for the VC a few years later… oy!) On top of that, Geffen set the deal up so a newly solvent DreamWorks could escape the Paramount atmosphere in just 3 years. And that is exactly what they did.
Not only had the prize fish that Grey landed and put in the ice chest in the hull of the boat jumped back to life and escaped the boat, but the fishermen on the boat were so excited by their catch, they forgot to keep fishing… meaning that when their big catch swam away somewhat unexpectedly (to them), they didn’t build their own ongoing business that could keep moving at full strength without the one big catch. In other words… Grey happily turned Paramount into DreamWorks-plus (meaning Paramount IP product and a few other films) and when DreamWorks left, he was left as he started… without a fully functional film division. He never figured it out how to stoke the studio fires to the level that had been left to him, much less to the heights of the years before that included Diller, Eisner, Katzenberg, and Bruckheimer (& Simpson).
Grey’s failure was further ensured by Redstone and his acolytes endlessly trying to find “the answer” to Paramount’s soft stock value… which usually meant starving growth to try to look like a movie star. Shortly after Grey took over, Sumner split the Paramount and CBS sides to try to goose the stock. Never really worked. And it hasn’t really worked to bring both sides back together.
Obviously, I have simplified and refocused a lot. But I’m not trying to give you an all-weekend homework assignment.
So… today.
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