How the major players dealt with the Cruise chaos

Tom Cruise is kissed by his fiance Katie Holmes at the fan screening of 'Mission: Impossible III' at the Grauman's Chinese theatre in Hollywood May 4, 2006. (Mario Anzuoni/Reuters)

Money might have been at the root of the dramatic public breakup that saw Paramount Pictures end its 14-year partnership with Tom Cruise and his production company Cruise/Wagner Prods. this week. But in its bitter wake, reputations -- which can be invaluable in Hollywood -- also are at stake.

On Tuesday, the situation exploded when an intrepid Wall Street Journal reporter managed to get Sumner Redstone, the chairman of Paramount's Viacom Inc. parent, on the telephone.

"As much as we like him personally, we thought it was wrong to renew his deal," Redstone said. "His recent conduct has not been acceptable to Paramount."

With one bold stroke, Redstone publicly shut down a behind-the-scenes negotiation, and suddenly Viacom and Paramount were at war with Cruise, his producing partner Paula Wagner and the mighty Creative Artists Agency, which represents Cruise. His camp angrily responded to Redstone's denunciation by calling the 83-year-old corporate baron's statements "erratic," "vicious," "pompous" and "petulant."

As the drama took on almost Shakespearean proportions, here's how the major players emerged:

THE PATRIARCH:

Redstone is a ruthless corporate player who would probably beat every other media chieftain, including Rupert Murdoch, in a game of "Survivor." While some observers charged Redstone with behaving in a manner unbecoming to a captain of industry, he actually was behaving more like an old-fashioned studio mogul than a corporate suit. Unlike the heads of other entertainment conglomerates, Redstone worked his way up through the film industry as a movie theater operator. The Los Angeles resident still tracks box office grosses every weekend, regularly attends studio premieres and has known Cruise since 1986's "Top Gun."

In 1992, Paramount formally brought C/W onto its Melrose Ave. lot and since then has made an investment in Cruise worth hundreds of millions of dollars. As long as Cruise was delivering $500 million-plus worldwide grossers, his top-of-the-line deluxe deal made sense. But with "Mission: Impossible III" topping out at $400 million worldwide, Cruise suddenly was pocketing more millions than the studio because he gets more than 20% of the first-dollar gross as well as a healthy cut of DVD sales.

Even Cruise's camp acknowledges that his deal, due to expire August 31 after two extensions, wasn't going to be renewed on its old terms. Instead of $4 million in overhead and a $6 million annual discretionary fund, the studio was offering $2 million and $500,000 -- much the same deal that it made last year with Brad Pitt's Plan B Prods.

But why did Redstone insist on kicking Cruise off the lot so publicly? Sounding angry and betrayed, there was something personal about his demeanor. Remember, Redstone is a numbers man. After all the millions that he invested in building up the marquee global movie star brand "Tom Cruise," he was convinced that Cruise's offscreen behavior "effectuates creative suicide and costs the company revenue," he told the Journal. It seems clear that Redstone simply couldn't bear the fact that Cruise's self-destructive public conduct -- most of which took place before "War of the Worlds" more than a year ago -- had cost the studio untold millions in lost ticket sales while the movie star himself walked away with as much as $80 million from "M:I-3," leaving the studio with chump change.

So Redstone was sending a message: We are no longer coddling talent. There were many in Hollywood who applauded his bravado.

THE STUDIO CHIEF:

Unfortunately for Paramount chairman Brad Grey, Redstone left a bit of a mess for him to clean up. The only thing Grey could do in the wake of his boss' comments was maintain a silent public profile, making amends behind the scenes. His predecessor, Sherry Lansing, probably would have acted more subtly: If the studio wanted to cut Cruise loose, she would have called CAA and devised a face-saving exit that would leave the studio open to working with the star -- who still boasts a huge global fan base -- on the deep trunk of projects in which the studio already had invested millions. As of Wednesday, though, a call Grey made to Cruise had not been returned.

Grey now has several fires to put out. Hollywood is still not convinced that Paramount's new team has its act together; the studio is considered fractionalized. "This makes them look weird and talent-unfriendly," one manager says. "There's no grace at this studio. They like to show talent who's boss."

Grey has been tough on deals, demanding reductions on the "M:I-3" budget and Cruise's share of the profits and refusing to spend more than $150 million on "Ripley's Believe It or Not," starring the press-averse Jim Carrey. Grey has preferred to back more modest investments such as "World Trade Center" and "Babel," which have generated positive reviews and Oscar talk. "They're taking a page from the Fox book," one manager says.

THE FIRM:

CAA's leaders, usually allergic to the media, went on the warpath to defend their client. "Paramount has no credibility right now," agency president Richard Lovett told the New York Times. "It is not clear who is running the studio and who is making the decisions."

But while the agency had to make public pronouncements in defense of its star, that doesn't mean CAA will refuse to do business with Paramount. In a contracting industry, there are only six major studio buyers, and Paramount -- which now owns DreamWorks -- is among them. Additionally, DreamWorks partner Steven Spielberg (whose relationship with Cruise has cooled since "War of the Worlds") also is a top CAA client. So once tempers cool, Paramount, DreamWorks and CAA are sure to reach a detente. Still, the whole episode is illustrative of how studios are taking back power from the agencies.

THE POWER COUPLE:

Rick Nicita, one of Cruise's agents, has long been a respected talent agent and partner at CAA, where Wagner, his wife, worked before leaving to partner with Cruise. Their passions ran high when they learned of Redstone's comments.

Some industry insiders suggested that Nicita and Wagner then announced that CAA had raised a revolving private equity fund worth $100 million -- which was news to Cruise's lawyer, Bert Fields -- because they were not likely to set up a rich deal at another studio. Cruise is worth a fortune overseas, and there's plenty of money looking for a home in Hollywood. Wagner is a capable creative producer, and the studios will be delighted to pick up well-made, star-driven movies. The studios also will be more than ready to cast Cruise as a star in their own films as well. An announcement along those lines is expected shortly.

THE STAR:

Meanwhile, Cruise maintained a low profile. In fact, Redstone's attack has even earned him sympathy points in some quarters. That's partly because Cruise is not only a marquee draw but also one of the hardest-working pros in show business. His best efforts aside, though, he might not be able to counteract industrywide pressures to cut back on deluxe talent deals. "Cruise could be in real trouble," one press agent says. "He's getting older. The film market is wobbly. People are second-guessing themselves all over the place."

According to Cruise's reps, the star welcomes the opportunities that setting himself up as a well-financed independent would provide: He'll be able to put his brains and clout behind movies that are likely to wind up better than the commercial fare the studios offer him. He may already be looking for new challenges. He recently trekked into CAA for a project meeting and is trying to resurrect an old John Davis project, "Selling Time," with Spike Lee. Freeing himself from a studio like Paramount could be the best thing to happen to him.

Cruise -- like everyone else in this drama -- ultimately might benefit from a healthy dose of reality. Hollywood still needs stars like Cruise. But as the industry cuts back on needless waste and fiscal insanity, it's re-evaluating the price of stardom.