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Mission: Rescue Operation
LOS ANGELES, Nov. 2 — Now playing: Tom Cruise, the sequel.
The film star, who took a beating when Paramount ended his longstanding production deal last summer, has found not just a home, but a new career direction that could point the way for expensive actors who are struggling in cost-conscious Hollywood.
Mr. Cruise and his producing partner, Paula Wagner, will take charge of United Artists, the famous production company started by Charlie Chaplin and Mary Pickford, the company said Thursday.
For Mr. Cruise, gaining control of United Artists undoubtedly provides a sense of vindication that he is still a force in Hollywood after he was unceremoniously cut loose this summer from a 14-year deal with Paramount Pictures. Sumner M. Redstone, chairman of Viacom, Paramount’s parent company, said at the time that Mr. Cruise’s “recent conduct has not been acceptable to Paramount.”
He was referring to Mr. Cruise’s couch-jumping on Oprah Winfrey’s show, and his frequent mentions of his belief in Scientology. Mr. Redstone claimed that his behavior had cost the studio as much as $150 million in movie ticket sales for “Mission: Impossible III.”
“He was embarrassing the studio,’’ Mr. Redstone recently told Vanity Fair. “And he was costing us a lot of money.”
Ms. Wagner will be named chief executive of United Artists and Mr. Cruise will be an executive and producer associated with the studio under an unusual arrangement that gives them a minority share of the company. Ultimately Metro-Goldwyn-Mayer Inc., which owns United Artists, hopes that investors take a direct stake in both the unit and Mr. Cruise’s career. “The studios and talent don’t trust each other,” Harry E. Sloan, MGM’s chairman and chief executive, said in an interview Thursday. “We need to start a dialogue.”
For MGM, which is owned by private equity firms in partnership with the Comcast Corporation and the Sony Corporation, the deal offers an alliance with a major star on terms more manageable than the huge fees he commanded from Viacom’s Paramount Pictures for expensive films like last May’s “Mission: Impossible III.” It also offers a way to unlock the value of the United Artists name, which carries enormous cachet, but has been attached to only a few films lately.
The deal also offers a fresh twist on recent trends that have seen investors become directly involved with film producers, even as stars seek more creative and financial control over their careers. Established producers like Joel Silver and Ivan Reitman are among those who have made partnerships with outside investors, allowing them to finance films intended for distribution by studios.
Initially, Mr. Cruise and Ms. Wagner will have authority to produce about four movies a year, for distribution by MGM. Neither Mr. Cruise nor Ms. Wagner put up any capital, Ms. Wagner said. Mr. Cruise may or may not star in the pictures, and will remain free to work as an actor for other studios.
Mr. Sloan and his team have been working to revive MGM as a full-blown movie and television distribution company. Last year, several producers in Hollywood had sought to buy United Artists but were unsuccessful. So far MGM’s recent track record as a distributor of other producers’ movies is unimpressive.
“School for Scoundrels,” which starred Billy Bob Thornton and Jon Heder, brought in only $17.2 million at the domestic box office when it was released in September. The World War I epic “Flyboys” flopped, bringing in only $12.8 million.
Mr. Sloan said MGM was trying to create a new studio model in its dealings with Mr. Cruise and Ms. Wagner. The company will finance United Artists’ first few movies, with budgets of $40 million to $50 million — relatively modest amounts, by current Hollywood standards — and will pay for the unit’s overhead.
After that, Mr. Sloan expects to approach outside investors to finance United Artists’ movies in partnership with Mr. Cruise, who will share an ownership stake in the operation with Ms. Wagner. If investors are not interested in financing the films, MGM said it would pay for them all.
Those outside investors could be hedge funds, wealthy individuals or investment banks. According to Mr. Sloan, the proposed United Artists financial model will spread risk more equally between the studio, talent and the outside investors than a conventional Hollywood deal.
Mr. Sloan said he expected to announce United Artists’ first movie soon. When asked if outside investors would still be interested if United Artists’ initial movies flopped, he laughed and joked, “We’ll take the model out to investors before the first picture opens.”
Recently, some financial funds have seen disappointing results from their investments in studio films. Legendary Pictures, which has a five-year, $600 million deal with Warner Brothers Entertainment to co-finance and co-produce deals, for instance, was an investor in some of that studio’s more noticeable summer duds, including “Lady in the Water” and the animated “The Ant Bully.”
“The actors are not going to have a cakewalk,” said Harold Vogel, the author of “Entertainment Industry Economics.” “These investors don’t say, ‘Oh, it’s so glamorous to go to a party.’ They aren’t that dumb. Instead they say, ‘You will get your money, but we get ours first.’ ”
Mr. Cruise seems to be hedging his own bets by staying on the market as an actor for hire. Also, films already in development under their Cruise/Wagner Productions moniker can be produced by other studios, although Ms. Wagner said she and Mr. Cruise were in negotiations with Paramount to buy back some of the projects they developed there.
From left, Samuel Goldwyn, Charlie Chaplin and Douglas Fairbanks Sr. with Mary Pickford at a 1935 board meeting of United Artists. Mr. Chaplin, Ms. Pickford and Mr. Fairbanks were original founders.
When asked to comment on Mr. Cruise’s new deal, Mr. Redstone said, “I wish Tom and his associates the greatest good fortune in their venture.”
Ms. Wagner said she hoped United Artists would become a home for talent, in keeping with the company’s roots. The studio was originally founded in 1919 by Mr. Chaplin, Ms. Pickford, Douglas Fairbanks Sr. and D. W. Griffith. In later years, it became associated with MGM, and for decades was controlled by the billionaire Kirk Kerkorian, who ultimately engineered the sale to its current owners.
Unlike Mr. Silver and Mr. Reitman, who expect to focus on low-budget thrillers and comedies, United Artists expects to make mainstream films of considerable range, Ms. Wagner said. She added that United Artists’ financial backers would have no creative input; their role would be limited to how money was spent. “We are not looking to make a film that makes people unhappy,” she said.
Of course, that is harder than it seems. Other well-known Hollywood personalities have tried to start talent-friendly studios over the years with limited success. Revolution Studios, to choose one relatively recent example, was started in 2000 by the veteran producer and executive Joe Roth, who said he too wanted to bring actors deeper into the process of creating artful films at a reasonable cost, like the old United Artists. But the deal he cut with Sony to create Revolution was not renewed after a string of disappointments, and he is now going to be a Sony producer.
“I’m still reeling,” said Ms. Wagner of the day’s news. “The ink is not dry on this. If you have a movie, send it our way. We are still figuring this all out.”
