Paramount Pictures has a reputation for not making many movies.
The studio’s quest to maintain profit margins and the void created by the loss of its distribution deals with Marvel Studios, DreamWorks Animation and Brad Pitt’s Plan B has left Paramount without a deep bench of movies. It’s not unusual for the studio to go months between major releases.
That’s something Paramount wants to change, and it’s the biggest challenge facing its next film group president following Adam Goodman’s dismissal from the job last week.
Paramount is looking to raise the number of movie it fields annually from its current eight to 10-14 live-action titles and an additional animated release, insiders say. The huge gaps in its release calendar is illustrated by the fact that five months separate the opening of the studio’s most recent film, “Hot Tub Time Machine 2,” a co-production with Metro-Goldwyn-Mayer, and its next opener, “Mission: Impossible 5,” which debuts on July 31.
“The slate is incredibly thin, and the studio has a lot of fixed overhead costs,” said Tony Wible, an analyst with Janney Montgomery Scott, who argues that greater scale would improve Paramount’s economics.
The Viacom-owned studio also needs to find fresh franchises to augment its stable of “Star Trek” and “Transformers” films. That’s increasingly important because some of these series are at critical junctures. “Star Trek” will move forward, for instance, without J.J. Abrams, the director of the first two reboots, while “Mission: Impossible” is five chapters into a decades long run with Tom Cruise not getting any younger. “Paranormal Activity” continues to make money, but lower box office returns on each new installment signals that it may be running out of steam.
Paramount has had success in launching series around “G.I. Joe” and “Teenage Mutant Ninja Turtles,” but analysts say the studio needs to be more aggressive in creating intellectual property that can inspire toy lines, television shows and other forms of ancillary revenue. Its newly launched animation division also fielded a hit last month with “The SpongeBob Movie: Sponge Out of Water.” Despite those accomplishments, Paramount ranked sixth in terms of market share in 2014, behind every other major studio save for Lionsgate.
“They have to be safe and sane on the risk side of things, but this is a good time to go for it,” said Matthew Harrigan, an analyst with Wunderlich Securities.
Ratings issues at the television properties owned by Paramount’s parent company Viacom and the prospect of the slowdown in the cable industry at large are putting more pressure on the studio to contribute in a greater way to the company’s bottom line. It’s also resulted in changes at other Viacom divisions, prompting the expansion of Viacom Entertainment Group Doug Herzog and Nickelodeon chief Cyma Zarghami‘s duties and control of programming and the departure of MTV Networks head Van Toffler.
“All these conglomerates need to go back to the drawing board in order to streamline operations and find new ways of monetizing content,” said Wible.
Paramount’s recent success in mining Nickelodeon properties such as SpongeBob and the Ninja Turtles for bigscreen stories will be a template that Goodman’s successor will likely follow.
“These movies provide a nice lift for the shows in terms of advertising and merchandising and become nice little profit centers themselves,” said Marla Backer, an analyst with Research Associates. “There’s a wealth of properties they could exploit synergistically.”
The studio higher-ups became concerned that Goodman was not up to the task, particularly after several big-budget productions, such as “Noah” and “World War Z,” required expensive reshoots and extensive rejiggering at late dates.
As for Goodman, the news that Paramount would move forward without him appeared to take the executive by surprise. His ouster was so abrupt that Goodman only learned he had been fired from media accounts, according to individuals with knowledge of the situation. He has been offered a production deal on the studio lot but has yet to make a decision about whether to accept the pact.
Paramount is weighing both internal candidates, such as production chief Marc Evans, as well as external ones. A number of the names most frequently bandied about, such as Sony Pictures motion picture group chief Doug Belgrad and production president Michael De Luca, face complications. Both men were passed over to replace Amy Pascal as chairman of Sony Pictures Entertainment in favor of TriStar head Tom Rothman, but they remain under contract at that studio.
Whoever lands the position will have different expectations than the ones that Goodman labored under. For the past five years, Paramount has pruned back the number of films it makes. It has said it was more concerned with making money than filling release dates. Now, productivity will be measured in output, not just profitability.