Sources: Paramount in talks to merge backroom DVD operations with Sony and Fox

 

Paramount Pictures is in talks with at least two of its competitors to merge some elements of its home video backroom operations, people briefed on the negotiations said.

While negotiations are in a very preliminary stage, the Viacom-owned studio has initiated discussions with Sony Pictures and 20th Century Fox to combine the production, distribution and administrative elements of their DVD businesses, these people said. The talks are not limited to those studios and could expand to other studios, with Universal being a leading candidate.

People close to the talks stressed that any potential combination would be about saving costs, not about sharing revenue. The studios would not combine marketing or promotion of home entertainment.

There is precedent: Universal and Paramount formed a joint venture years ago called CIC to handle video distribution in international markets.

These talks come at a time when major retailers, including Wal-Mart and Best Buy, are reducing the amount of space they dedicate to carrying DVDs. First quarter DVD sales fell 14% in the first quarter of this year, compared to 2008, according to DEG: The Digital Entertainment Group, a non-profit trade group.

News of the talks was first reported by The Financial Times.

-- Joe Flint and Dawn C. Chmielewski

Michael Bay's "Transformers: Revenge of the Fallen" barely missed breaking the 5-day box-office record held by "The Dark Knight," according to final figures released Monday morning. A year ago, filmmaker Chris Nolan's Batman sequel grossed $203.8 million in its first five days. Bay's "Transformers" sequel sold $200.1 million since its pre-dawn debut just past midnight early Wednesday, Paramount said. 

The movie is clearly polarizing audiences. For all the tickets the film has sold, readers reacted passionately -- and mostly negatively -- to a Monday article about Bay and his box-office track record, saying the movie was gratuitous and poorly made.

Here's the start of the story that made them so upset:

Director Michael Bay has never been a critics' favorite, but the thrashing he received for “Transformers: Revenge of the Fallen” was the worst of his eight-film career. Reviewers ridiculed the new sequel about battling robots as "beyond bad" (Rolling Stone), "bewildering" and "sloppy" (the Village Voice) and "a great grinding garbage disposal of a movie" (the Detroit News).

The early notices were so uniformly disapproving that after Bay's traditional opening-night dinner party at Beverly Hills' Mr. Chow, the 44-year-old director wondered aloud to executives at distributor Paramount Pictures about the possible impact of the drubbing.

He needn't have worried: Rarely have critics been more disconnected from what audiences want and love.

Since it arrived early Wednesday just past midnight, "Transformers: Revenge of the Fallen" sold more tickets in its first five days -- an estimated $201.2 million -- than any other movie in Hollywood history except one: last year's "The Dark Knight" (which grossed $203.8 million in its first five days and went on to earn $533.3 million at the domestic box office). By the end of this week, "Transformers" likely will surpass "Up" and "Star Trek" to become this summer's most-attended release.

"I think they reviewed the wrong movie. They just don't understand the movie and its audience. It's silly fun," Bay said over the weekend of the many "Transformers" critical detractors. "I am convinced that they are born with the anti-fun gene. The reviews are just so vicious. A lot of them are more personal than anything else."

To read the full story, click here

-- John Horn

Photo of Michael Bay by Ricardo DeAratanha/Los Angeles Times.

Sanford C. Bernstein Media analyst Michael Nathanson has issued a blistering report on Viacom's Paramount Pictures in the aftermath of studio Chairman Brad Grey's latest overhaul of his production team.

The studio, Nathanson writes, "has been a perennial disappointment in terms of profitability," but he dismisses speculation that Viacom is shopping Paramount, in part because it is doing so poorly.

While the studio's recent box office performance looks strong on paper, the bulk of its success has come from so-called third-party distribution deals in which the studio distributes movies produced elsewhere. Paramount has such deals with Marvel ("Iron Man") and DreamWorks Animation SKG. Take those away and Paramount has finished no higher than fifth in U.S. box office market share, quite a few pegs down from its current No. 2 perch.

Nathanson estimates that Paramount booked $168 million in operating profit from third-party deals and lost $80 million on its homegrown product. He expects the studio to take a write-down on "Imagine That," the Eddie Murphy flop that set the stage for Grey's most recent executive shake-up.

The studio's operating margin has dropped for three years straight from 3.2% in 2006 to an anemic 1.5% in 2008 and Nathanson is projecting a 2009 margin of 0.3%. Ouch.

Nathanson did not single out Grey for any of the woes at Paramount, even though Grey has been at the helm of the studio since March 2005 and has yet to find an executive team that can last more than 18 months.

Inside Viacom, Grey continues to garner strong support. While one senior executive said of Grey's executive picking skills, "It would be nice if he was able to find the right mix," there is no sign that Viacom Chairman Sumner Redstone -- famous for an itchy trigger finger -- is losing patience. Grey's contract was renewed for five years in January and Redstone has said he has "no reason to believe that Brad will ever be gone as long as I'm alive." Because Redstone has repeatedly said he has no plans to die, it seems Grey is safe.

Of course, Redstone also said in April at the Milken Institute Global Conference that "no Paramount movie has ever bombed" so all bets are off if someone tells him about "Imagine That."

-- Joe Flint

Photo: Paramount Chairman Brad Grey. Credit: Kevin Winter / Getty Images

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Looking to cut overhead and operating expenses in a world without DreamWorks, Paramount Pictures plans to release fewer films, consolidate some operations and slash the remaining DreamWorks staff by some 25 employees. Paramount is under heightened pressure from its corporate parent, Viacom Inc., to continue finding efficiencies at the studio amid a tough economic climate.

"We want to be as profitable as we can and meet the Viacom financial targets," said Paramount Chairman Brad Grey, who said streamlining the DreamWorks operation will save the studio $50 million in overhead.

This summer, Paramount eliminated about $10 million in costs at its specialty film unit Paramount Vantage by laying off dozens of employees and combining the unit's marketing, distribution and physical production divisions with the bigger studio.

Now that Paramount's separation agreement from DreamWorks principals Steven Spielberg and Stacey Snider has been completed, Grey and his vice chairman, Rob Moore, said they could begin implementing their long-contemplated plans to downsize the remaining DreamWorks operation and integrate some of its heretofore separate functions.

Just as it did with Vantage, Paramount will take over the physical production, business affairs and other operating functions that previously were handled separately by DreamWorks. DreamWorks will continue to maintain its own creative staff under Production President Adam Goodman, but it will be dramatically smaller than the 150 employees it had for the past three years under Spielberg and Snider.

Spielberg and Snider have told Paramount that they plan to eventually take about 100 employees with them to their new studio, which has financial backing from India's Reliance ADA Group and has a new distribution pact with Universal Pictures.

"About 25 people will end up with jobs and another 25 will other jobs or get laid off," said Moore.

Goodman will oversee the existing pipeline of about 100 active DreamWorks projects and producer deals, as well as work on developing new projects for Paramount. Paramount has the option to co-finance and co-distribute 35 of DreamWorks' current projects with Spielberg's new studio.

Meanwhile, Paramount's current production president, Brad Weston, will continue supervising the studio's creative staff, talent deals and the development of new projects.

Without DreamWorks contribution of four to six movies a year, Paramount will pare down its annual releases to about 20. One dozen will be produced by Paramount and its MTV Films and Nickelodeon Movies labels. Paramount Vantage will supply up to four movies, with a new strategy to make and acquire movies of all genres costing under $15 million. An additional two to four releases will be produced by DreamWorks Animation and Marvel Studios, both of which have long-term distribution deals with Paramount.

-- Claudia Eller

Michael Bay: Critics don't get my movie, but audiences do

Michael Bay's "Transformers: Revenge of the Fallen" barely missed breaking the 5-day box-office record held by "The Dark Knight," according to final figures released Monday morning. A year ago, filmmaker Chris Nolan's Batman sequel grossed $203.8 million in its first five days. Bay's "Transformers" sequel sold $200.1 million since its pre-dawn debut just past midnight early Wednesday, Paramount said. 

The movie is clearly polarizing audiences. For all the tickets the film has sold, readers reacted passionately -- and mostly negatively -- to a Monday article about Bay and his box-office track record, saying the movie was gratuitous and poorly made.

Here's the start of the story that made them so upset:

Director Michael Bay has never been a critics' favorite, but the thrashing he received for “Transformers: Revenge of the Fallen” was the worst of his eight-film career. Reviewers ridiculed the new sequel about battling robots as "beyond bad" (Rolling Stone), "bewildering" and "sloppy" (the Village Voice) and "a great grinding garbage disposal of a movie" (the Detroit News).

The early notices were so uniformly disapproving that after Bay's traditional opening-night dinner party at Beverly Hills' Mr. Chow, the 44-year-old director wondered aloud to executives at distributor Paramount Pictures about the possible impact of the drubbing.

He needn't have worried: Rarely have critics been more disconnected from what audiences want and love.

Since it arrived early Wednesday just past midnight, "Transformers: Revenge of the Fallen" sold more tickets in its first five days -- an estimated $201.2 million -- than any other movie in Hollywood history except one: last year's "The Dark Knight" (which grossed $203.8 million in its first five days and went on to earn $533.3 million at the domestic box office). By the end of this week, "Transformers" likely will surpass "Up" and "Star Trek" to become this summer's most-attended release.

"I think they reviewed the wrong movie. They just don't understand the movie and its audience. It's silly fun," Bay said over the weekend of the many "Transformers" critical detractors. "I am convinced that they are born with the anti-fun gene. The reviews are just so vicious. A lot of them are more personal than anything else."

To read the full story, click here

-- John Horn

Photo of Michael Bay by Ricardo DeAratanha/Los Angeles Times.

Sanford C. Bernstein Media analyst Michael Nathanson has issued a blistering report on Viacom's Paramount Pictures in the aftermath of studio Chairman Brad Grey's latest overhaul of his production team.

The studio, Nathanson writes, "has been a perennial disappointment in terms of profitability," but he dismisses speculation that Viacom is shopping Paramount, in part because it is doing so poorly.

While the studio's recent box office performance looks strong on paper, the bulk of its success has come from so-called third-party distribution deals in which the studio distributes movies produced elsewhere. Paramount has such deals with Marvel ("Iron Man") and DreamWorks Animation SKG. Take those away and Paramount has finished no higher than fifth in U.S. box office market share, quite a few pegs down from its current No. 2 perch.

Nathanson estimates that Paramount booked $168 million in operating profit from third-party deals and lost $80 million on its homegrown product. He expects the studio to take a write-down on "Imagine That," the Eddie Murphy flop that set the stage for Grey's most recent executive shake-up.

The studio's operating margin has dropped for three years straight from 3.2% in 2006 to an anemic 1.5% in 2008 and Nathanson is projecting a 2009 margin of 0.3%. Ouch.

Nathanson did not single out Grey for any of the woes at Paramount, even though Grey has been at the helm of the studio since March 2005 and has yet to find an executive team that can last more than 18 months.

Inside Viacom, Grey continues to garner strong support. While one senior executive said of Grey's executive picking skills, "It would be nice if he was able to find the right mix," there is no sign that Viacom Chairman Sumner Redstone -- famous for an itchy trigger finger -- is losing patience. Grey's contract was renewed for five years in January and Redstone has said he has "no reason to believe that Brad will ever be gone as long as I'm alive." Because Redstone has repeatedly said he has no plans to die, it seems Grey is safe.

Of course, Redstone also said in April at the Milken Institute Global Conference that "no Paramount movie has ever bombed" so all bets are off if someone tells him about "Imagine That."

-- Joe Flint

Photo: Paramount Chairman Brad Grey. Credit: Kevin Winter / Getty Images

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Looking to cut overhead and operating expenses in a world without DreamWorks, Paramount Pictures plans to release fewer films, consolidate some operations and slash the remaining DreamWorks staff by some 25 employees. Paramount is under heightened pressure from its corporate parent, Viacom Inc., to continue finding efficiencies at the studio amid a tough economic climate.

"We want to be as profitable as we can and meet the Viacom financial targets," said Paramount Chairman Brad Grey, who said streamlining the DreamWorks operation will save the studio $50 million in overhead.

This summer, Paramount eliminated about $10 million in costs at its specialty film unit Paramount Vantage by laying off dozens of employees and combining the unit's marketing, distribution and physical production divisions with the bigger studio.

Now that Paramount's separation agreement from DreamWorks principals Steven Spielberg and Stacey Snider has been completed, Grey and his vice chairman, Rob Moore, said they could begin implementing their long-contemplated plans to downsize the remaining DreamWorks operation and integrate some of its heretofore separate functions.

Just as it did with Vantage, Paramount will take over the physical production, business affairs and other operating functions that previously were handled separately by DreamWorks. DreamWorks will continue to maintain its own creative staff under Production President Adam Goodman, but it will be dramatically smaller than the 150 employees it had for the past three years under Spielberg and Snider.

Spielberg and Snider have told Paramount that they plan to eventually take about 100 employees with them to their new studio, which has financial backing from India's Reliance ADA Group and has a new distribution pact with Universal Pictures.

"About 25 people will end up with jobs and another 25 will other jobs or get laid off," said Moore.

Goodman will oversee the existing pipeline of about 100 active DreamWorks projects and producer deals, as well as work on developing new projects for Paramount. Paramount has the option to co-finance and co-distribute 35 of DreamWorks' current projects with Spielberg's new studio.

Meanwhile, Paramount's current production president, Brad Weston, will continue supervising the studio's creative staff, talent deals and the development of new projects.

Without DreamWorks contribution of four to six movies a year, Paramount will pare down its annual releases to about 20. One dozen will be produced by Paramount and its MTV Films and Nickelodeon Movies labels. Paramount Vantage will supply up to four movies, with a new strategy to make and acquire movies of all genres costing under $15 million. An additional two to four releases will be produced by DreamWorks Animation and Marvel Studios, both of which have long-term distribution deals with Paramount.

-- Claudia Eller

Imagine that: Paramount Pictures needs fixing

Sanford C. Bernstein Media analyst Michael Nathanson has issued a blistering report on Viacom's Paramount Pictures in the aftermath of studio Chairman Brad Grey's latest overhaul of his production team.

The studio, Nathanson writes, "has been a perennial disappointment in terms of profitability," but he dismisses speculation that Viacom is shopping Paramount, in part because it is doing so poorly.

While the studio's recent box office performance looks strong on paper, the bulk of its success has come from so-called third-party distribution deals in which the studio distributes movies produced elsewhere. Paramount has such deals with Marvel ("Iron Man") and DreamWorks Animation SKG. Take those away and Paramount has finished no higher than fifth in U.S. box office market share, quite a few pegs down from its current No. 2 perch.

Nathanson estimates that Paramount booked $168 million in operating profit from third-party deals and lost $80 million on its homegrown product. He expects the studio to take a write-down on "Imagine That," the Eddie Murphy flop that set the stage for Grey's most recent executive shake-up.

The studio's operating margin has dropped for three years straight from 3.2% in 2006 to an anemic 1.5% in 2008 and Nathanson is projecting a 2009 margin of 0.3%. Ouch.

Nathanson did not single out Grey for any of the woes at Paramount, even though Grey has been at the helm of the studio since March 2005 and has yet to find an executive team that can last more than 18 months.

Inside Viacom, Grey continues to garner strong support. While one senior executive said of Grey's executive picking skills, "It would be nice if he was able to find the right mix," there is no sign that Viacom Chairman Sumner Redstone -- famous for an itchy trigger finger -- is losing patience. Grey's contract was renewed for five years in January and Redstone has said he has "no reason to believe that Brad will ever be gone as long as I'm alive." Because Redstone has repeatedly said he has no plans to die, it seems Grey is safe.

Of course, Redstone also said in April at the Milken Institute Global Conference that "no Paramount movie has ever bombed" so all bets are off if someone tells him about "Imagine That."

-- Joe Flint

Photo: Paramount Chairman Brad Grey. Credit: Kevin Winter / Getty Images

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Looking to cut overhead and operating expenses in a world without DreamWorks, Paramount Pictures plans to release fewer films, consolidate some operations and slash the remaining DreamWorks staff by some 25 employees. Paramount is under heightened pressure from its corporate parent, Viacom Inc., to continue finding efficiencies at the studio amid a tough economic climate.

"We want to be as profitable as we can and meet the Viacom financial targets," said Paramount Chairman Brad Grey, who said streamlining the DreamWorks operation will save the studio $50 million in overhead.

This summer, Paramount eliminated about $10 million in costs at its specialty film unit Paramount Vantage by laying off dozens of employees and combining the unit's marketing, distribution and physical production divisions with the bigger studio.

Now that Paramount's separation agreement from DreamWorks principals Steven Spielberg and Stacey Snider has been completed, Grey and his vice chairman, Rob Moore, said they could begin implementing their long-contemplated plans to downsize the remaining DreamWorks operation and integrate some of its heretofore separate functions.

Just as it did with Vantage, Paramount will take over the physical production, business affairs and other operating functions that previously were handled separately by DreamWorks. DreamWorks will continue to maintain its own creative staff under Production President Adam Goodman, but it will be dramatically smaller than the 150 employees it had for the past three years under Spielberg and Snider.

Spielberg and Snider have told Paramount that they plan to eventually take about 100 employees with them to their new studio, which has financial backing from India's Reliance ADA Group and has a new distribution pact with Universal Pictures.

"About 25 people will end up with jobs and another 25 will other jobs or get laid off," said Moore.

Goodman will oversee the existing pipeline of about 100 active DreamWorks projects and producer deals, as well as work on developing new projects for Paramount. Paramount has the option to co-finance and co-distribute 35 of DreamWorks' current projects with Spielberg's new studio.

Meanwhile, Paramount's current production president, Brad Weston, will continue supervising the studio's creative staff, talent deals and the development of new projects.

Without DreamWorks contribution of four to six movies a year, Paramount will pare down its annual releases to about 20. One dozen will be produced by Paramount and its MTV Films and Nickelodeon Movies labels. Paramount Vantage will supply up to four movies, with a new strategy to make and acquire movies of all genres costing under $15 million. An additional two to four releases will be produced by DreamWorks Animation and Marvel Studios, both of which have long-term distribution deals with Paramount.

-- Claudia Eller

Slowing economy, or something, hits studios

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Looking to cut overhead and operating expenses in a world without DreamWorks, Paramount Pictures plans to release fewer films, consolidate some operations and slash the remaining DreamWorks staff by some 25 employees. Paramount is under heightened pressure from its corporate parent, Viacom Inc., to continue finding efficiencies at the studio amid a tough economic climate.

"We want to be as profitable as we can and meet the Viacom financial targets," said Paramount Chairman Brad Grey, who said streamlining the DreamWorks operation will save the studio $50 million in overhead.

This summer, Paramount eliminated about $10 million in costs at its specialty film unit Paramount Vantage by laying off dozens of employees and combining the unit's marketing, distribution and physical production divisions with the bigger studio.

Now that Paramount's separation agreement from DreamWorks principals Steven Spielberg and Stacey Snider has been completed, Grey and his vice chairman, Rob Moore, said they could begin implementing their long-contemplated plans to downsize the remaining DreamWorks operation and integrate some of its heretofore separate functions.

Just as it did with Vantage, Paramount will take over the physical production, business affairs and other operating functions that previously were handled separately by DreamWorks. DreamWorks will continue to maintain its own creative staff under Production President Adam Goodman, but it will be dramatically smaller than the 150 employees it had for the past three years under Spielberg and Snider.

Spielberg and Snider have told Paramount that they plan to eventually take about 100 employees with them to their new studio, which has financial backing from India's Reliance ADA Group and has a new distribution pact with Universal Pictures.

"About 25 people will end up with jobs and another 25 will other jobs or get laid off," said Moore.

Goodman will oversee the existing pipeline of about 100 active DreamWorks projects and producer deals, as well as work on developing new projects for Paramount. Paramount has the option to co-finance and co-distribute 35 of DreamWorks' current projects with Spielberg's new studio.

Meanwhile, Paramount's current production president, Brad Weston, will continue supervising the studio's creative staff, talent deals and the development of new projects.

Without DreamWorks contribution of four to six movies a year, Paramount will pare down its annual releases to about 20. One dozen will be produced by Paramount and its MTV Films and Nickelodeon Movies labels. Paramount Vantage will supply up to four movies, with a new strategy to make and acquire movies of all genres costing under $15 million. An additional two to four releases will be produced by DreamWorks Animation and Marvel Studios, both of which have long-term distribution deals with Paramount.

-- Claudia Eller

Paramount shrinks in post-DreamWorks era

Looking to cut overhead and operating expenses in a world without DreamWorks, Paramount Pictures plans to release fewer films, consolidate some operations and slash the remaining DreamWorks staff by some 25 employees. Paramount is under heightened pressure from its corporate parent, Viacom Inc., to continue finding efficiencies at the studio amid a tough economic climate.

"We want to be as profitable as we can and meet the Viacom financial targets," said Paramount Chairman Brad Grey, who said streamlining the DreamWorks operation will save the studio $50 million in overhead.

This summer, Paramount eliminated about $10 million in costs at its specialty film unit Paramount Vantage by laying off dozens of employees and combining the unit's marketing, distribution and physical production divisions with the bigger studio.

Now that Paramount's separation agreement from DreamWorks principals Steven Spielberg and Stacey Snider has been completed, Grey and his vice chairman, Rob Moore, said they could begin implementing their long-contemplated plans to downsize the remaining DreamWorks operation and integrate some of its heretofore separate functions.

Just as it did with Vantage, Paramount will take over the physical production, business affairs and other operating functions that previously were handled separately by DreamWorks. DreamWorks will continue to maintain its own creative staff under Production President Adam Goodman, but it will be dramatically smaller than the 150 employees it had for the past three years under Spielberg and Snider.

Spielberg and Snider have told Paramount that they plan to eventually take about 100 employees with them to their new studio, which has financial backing from India's Reliance ADA Group and has a new distribution pact with Universal Pictures.

"About 25 people will end up with jobs and another 25 will other jobs or get laid off," said Moore.

Goodman will oversee the existing pipeline of about 100 active DreamWorks projects and producer deals, as well as work on developing new projects for Paramount. Paramount has the option to co-finance and co-distribute 35 of DreamWorks' current projects with Spielberg's new studio.

Meanwhile, Paramount's current production president, Brad Weston, will continue supervising the studio's creative staff, talent deals and the development of new projects.

Without DreamWorks contribution of four to six movies a year, Paramount will pare down its annual releases to about 20. One dozen will be produced by Paramount and its MTV Films and Nickelodeon Movies labels. Paramount Vantage will supply up to four movies, with a new strategy to make and acquire movies of all genres costing under $15 million. An additional two to four releases will be produced by DreamWorks Animation and Marvel Studios, both of which have long-term distribution deals with Paramount.

-- Claudia Eller