Paramount Hopes to Beam Up Profitability for 2009

“Box office accolades are fun, but the goal is to drive a profitable slate,” a top-level Paramount official told TheWrap. “Ultimately, we’re all part of corporations that need to drive value for shareholders.”

Of course, profitability has been elusive for Paramount, which has succeeded under the five-year reign of chairman Brad Grey in its quest to move up the major-studio ranks in terms of market share, but not so much in terms of containing costs.

Trimming its slate, reducing its payroll and winding down specialty division Paramount Vantage, while beginning to also ebb its relationships with DreamWorks SKG and Marvel, Paramount remained a studio in transition in 2009, suddenly concerned with the bottom line.
 
Happily, it got some breaks in 2009.

For one, the studio enjoyed the biggest domestic draw in the movie business with “Transformers: Revenge of the Fallen” ($401.1 domestic, $835 million worldwide).
 
Then it was able to establish several non-DreamWorks/non-Marvel franchises -- rebooting “Star Trek” under J.J. Abrams ($385.5 million globally) and launching “G.I. Joe” ($301.5 million).
 
There was a hit that fell out of the sky -- “Paranormal Activity,” which grossed $107.7 million on a total production and marketing budget that barely exceeded $10 million.
 
And in an awards season so far pretty much bereft of breakout commercial success, the Jason Reitman-directed contender “Up in the Air” is enjoying the most successful platformed expansion (currently at $24.5 million and counting) of any niche film currently in the marketplace.
 
All of this, Paramount officials believe, should translate into profitability, which has been elusive over the last several years, despite flurries of hits that drove the studio from last place in domestic theatrical market share at the beginning of Grey’s reign to second behind Warner in 2008.
 
Indeed, last year, despite huge money-makers on its slate like “Iron Man,” “Indiana Jones and the Kingdom of the Crystal Skull” and “Madagascar: Escape 2 Africa” -- which resulted in one of the biggest global theatrical revenue grosses ever for a major studio at $3.7 billion -- Paramount barley made any money.
 
For its part, parent company Viacom reported $5.8 billion in combined sales (a mighty figure mainly generated off Paramount box-office receipts, sales of films to TV networks and home entertainment revenue).

However, the conglomerate only reported $26 million in film operating income.
 
In 2009, Paramount released only 12 films -- the lowest total for any major -- while yielding global theatrical revenue of $2.8 billion.
 
Misses have been few this year – the Eddie Murphy comedy “Imagine That” and the homeless musical-prodigy biopic “The Soloist” starring Jamie Foxx and Robert Downy Jr. were about it. But through three quarters of this year, Viacom reported an operating loss of $79 million.
 
The fourth quarter, meanwhile, has been filled with good news, with low-overhead projects like “Paranormal Activity” and “Up in the Air” brightening the books, and “Transformers 2,” “Star Trek” and “G.I.

 

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