Or not, studio sources are eager to emphasize — it's business as usual on Melrose! We're not so sure, though, and neither are most of the other observers whose reactions we survey after the jump.

Most can agree that the culprit in the imploded Deutsche Bank deal is the same credit crunch that's overextended most other American industries. The Financial Times (which broke the story Monday) notes that equity and junior debt were covered, but the senior debt was too risky for anyone to bite without terms too steep for Paramount. Wall Street's caution is such that Deutsche Bank shuttered its entire film-financing unit for lack of investors; thus, for now, the 'Mount misses out on 25% production financing, up to $30 million per picture.

That's where the "experts" come in. Nikki Finke has the company line from sources at Paramount, one of whom says Viacom isn't the slightest bit peeved about the deal falling through. But the FT story adds that Viacom could be left holding the bag if other partners can't be found for the projects that are "likely to be released as scheduled." And in fact, that's the likeliest scenario when we consider Grey's rumored mishandling of Melrose Partners II and confirmed mishandling of DreamWorks, among other, smaller deals that proved Paramount as a bona-fide money loser for pretty much everyone but its talent.

David Poland has perhaps the cleanest analysis of how this dynamic would likely have played out between Deutsche Bank and Paramount:

In fact, just the four films mentioned as expected to be part of the deal - Transformers 2, Star Trek, Tropic Thunder, and Benjamin Button - would, under terms suggested in the FT story (25% of production), represent an investment of $150 million of the $450 total that claims to be intended to cover 30 films.

Considering that if these four films — expected hits — generated $1 billion worldwide, Paramount would have a float of about $100 million on distribution fees alone. That would mean that Deutsche Bank would still be about $100 million in the hole after theatrical while Paramount would be in profit, as a corporation.

And that is projecting 4 significant hits!

Then you have less than $10 million per film under the rest of this package, allegedly meaning that all the films together would average $40 million or less to produce.

Anyway, the 'Mount will land on its feet, just as it always does. We hear Cash-Machine Manoj knows a few people who might be able to help. And there is always Dubai.

• Paramount to shelve $450m film financing as crunch hits [Financial Times]

In a nutshell, Eller writes, the scenario works like this:

Untangling the rights to various properties could be tricky. Steven Spielberg has attached himself as a producer to at least 30 DreamWorks projects, which Paramount will not be able to make unless it pays him substantial fees. The filmmaker is guaranteed 7.5% of every box-office dollar collected by Paramount until the movie breaks even. Once the studio recovers its cost and earns a distribution fee, Spielberg is then entitled to 50% of the film's profit.

And that's not even the worst part for the 'Mount: Take away Marvel's Iron Man, DreamWorks Animation's Kung Fu Panda, and DreamWorks' Tropic Thunder, and the only internally developed films in Paramount's Blockbuster Class of '08 are Indy 4 (directed by Spielberg) and The Love Guru (an abomination to God and man). What's in the pipeline if it sheds the 'Works? Benjamin Button? Star Trek? Mission: Impossible 4 (maybe)?

Moreover, will Brad Grey be as quick to claim credit for Paramount's future misfires as he was for DreamWorks' successes? Or will he even be around long enough to pat himself on the back for Untitled Wayans Brothers Comedy? Come to think of it, we kind of wish these guys would stay together for the children.

• DreamWorks- Viacom breakup could get ugly [LAT]

Despite the severed relationship, Cruise, 45, is in talks with Paramount to star in a fourth Mission: Impossible film. Viacom is Paramount's parent company.

"I consider Tom Cruise a great actor and a good friend," Redstone said. "And if Paramount decides — and they will make the decision — to move ahead with him, I will not object."

Redstone, who was seen dining with Cruise in Beverly Hills in March, was responding to a reporter's question after a speech at a conference in South Korea.

No word on whether or not Cruise and Paula Wagner's stalled United Artists tank might follow behind (especially as Dreamworks scouts new bungalows around town), but seeing as MGM still has a UA deal, M:I4 remains a separate matter. In any case, Redstone won't be leaving that one up to Grey, unless perhaps through some miracle of timing and imagination the principals develop M:I4 as a perfect midsummer companion to Valkyrie. Maybe the latter could be an origin story — Ethan Hunt descended from one-eyed Nazis? Don't think Redstone hasn't pitched it.

• Mogul Redstone: Cruise can star in next 'Mission Impossible' [AP]

In the end, the studios just wanted more for their films' pay-cable rights than Showtime was willing to pay. This much was somewhat old news; Viacom and Paramount haven't quite seen eye-to-eye with CBS boss Les Moonves and Showtime chief Matt Blank for some time. The vertical integration implied by their output deals — Showtime had rights to Paramount releases through the end of 2007 — was less a function of convenience than an increasingly forced pairing, especially as Showtime's original programming (Weeds, Dexter, The Tudors) took off over the last few years. Showtime's output deals with MGM and Lionsgate — booked through the end of this year — were just as fragile in the Redstone and Viacom CEO Phillipe Dauman's volatile corporate culture.

Nikki Finke was first on the scene when news broke on Sunday:

Moonves wanted to drastically cut the price for Paramount pics, arguing that "the pay channel world isn't what it used to be" and the value of movies on pay TV has decreased while the importance of hot new scripted original series have increased. I'm told that, as the bargaining dragged on, the Paramount/Viacom camp, once optimistic that it would all work out, lost patience with Moonves' "hard line" and resented being lowballed. Now it looks like Les over-negotiated because Paramount, MGM and Lionsgate have found refuge thanks to Viacom. This new premium TV channel by Viacom, Paramount, MGM and Lionsgate is that old Hollywood maxim at work: Don't get mad. Get even.

Well, yeah. One observer told Finke that Moonves is "royally screwed" — for starters, there are no studios left on the market for output deals. A defiant Blank, however, is standing tall this morning in Variety:

"We're not willing to sell our network down the river for product that's not as valuable as it used to be," he said. "We wish them well. ...

"We've been having unbelievable success with our original programming," Blank said. "Can you name one movie Showtime has aired in the last three years? But people sure do know The Tudors and Californication and Dexter and Weeds."

Take that spin for what you will, but we're of a mind with David Poland: Apart from drunken Sunday-afternoon pissing contests, what's really in this for the 'Mount? Showtime keeps the studio's library for a while still, leaving MGM and Lionsgate's libraries (along with upcoming, inconsistent Paramount product ranging from Iron Man to The Love Guru) the primary source of programming. (DreamWorks films are aligned separately with HBO.) As such, reports The New York Times, original programming may be in the cards when the new channel launches in late 2009. But why pay hundreds of millions to enter that fray when HBO and Showtime have spent years establishing the institutional upper hand?

Sometimes there is no explanation for this kind of stuff besides entertaining Emperor Redstone — and us. We could watch Brad Grey cannibalize Les Moonves all day. Nevertheless, somebody out there knows something the rest of us don't; maybe an original program is jumping ship? Moonves lost a poker bet with MGM chief Harry Sloan over the weekend? Your guesses are as good as ours.

[Photo Credit: Getty Images]

• Studios team on VOD venture [Variety]

A key issue, these people said, turns on the extent to which Mr. Spielberg's personal contract, which expires in January 2010, grants him power over projects to which he has some creative attachment.

The DreamWorks side might assert that he, by virtue of his position with DreamWorks, is effectively attached to the entire development pool — more than 100 projects have been listed by the Studio System, an industry data base owned by The New York Times Company — not just the 30 projects or so with which he has been actively involved.

Given the reach of Mr. Spielberg's contract, attachment to all the projects could let him block Paramount from using them without his consent — enormous leverage in any negotiation over taking the projects elsewhere.

As is so frequently the case in high-powered Hollywood divorces, the silent victims here are the kids—those still-in-development projects conceived during the blissful post-honeymoon phase, who could well wind up irreversibly scarred by all the parental infighting. The best case scenario at this point is that little Transformers 2, Shrek Goes Fourth, and the rest become the beneficiaries of a joint custody ruling, spending week days with their three SKG daddies, then piling into the station wagon and getting plopped at the Bronson Gate for some quality time with "the person who nearly broke my back carrying you for nine months—and don't you ever forget it," Brad Grey.

• In Potential Studio Split, Who Keeps the Movies? [NY Times]

We can hear the legal saber-rattling from here, but we also know there's precedent — and it favors Wall Street.

In a nutshell, the two-phase Melrose fund underwrote up to 20% of net production costs on films like Mean Girls, War of the Worlds and even The Stepford Wives — titles with wide-ranging but ultimately profitable gross performances based on factors beyond box office (product placement, television licensing, toy deals and more). The Melrose group said that results for Melrose I "collapsed" after Dolgen and Lansing left, with even successful films failing to turn a profit for the investors.

Making matters worse, a source close to the situation tells Defamer that spending on P&A went up almost 50% under ex-Paramount COO Rob Friedman and nearly doubled under Grey; an advisor to the group describes Grey's takeover as "[o]ne of the most stunning exercises in spending (he's) ever seen in his thirty-five years."

A studio source said the results of Melrose II "make Melrose I look like investing in Google pre-IPO," while an investor said: "Since we had no say in what movies were being made, what [we] were backing was Dolgen's conservative risk management strategy which had proven successful in the past. Once he was gone, fiscal controls began to deteriorate and when Brad Grey took over they went out the window altogether."

With Melrose II still in force and Grey apparently tightening the reins of late, we hear the investors reportedly want Paramount to credit a "retroactive reduction in P&A spending" to its account — like, yesterday. Again, this isn't necessarily new: Sony agreed to something similar earlier this year for investors in its Gun Hill Road fund. But Melrose's financial terms aren't specific, and best of all, even Viacom CEO Phillippe Dauman reportedly has told the investors to stand down or face a counterclaim.

It's not the sexiest contretemps in the Official History of Hollywood Pissing Contests, but with Grey on the hook, it bears noting. What do you know about it?

[Photo Credit: Getty Images]

In his long-awaited testimony in the wiretapping and racketeering trial of Pellicano, Grey said that the decision to hire the private eye was made by the law firm hired by Grey's former entertainment management company and the law firm's well-known litigator Bert Fields.

The law firm and Fields, Grey said, were hired to defend against lawsuits filed by comedian Garry Shandling and writer-producer Bo Zenga. In both cases, Grey said, Pellicano was paid $25,000 for his investigative services.

And while Grey said he fully endorsed the selection of Pellicano, he said he was never made aware of Pellicano's day-to-day findings or his investigative methods.

Pellicano has been representing himself at the trial, but relinquished cross-examination duties to his lawyer, who only briefly grilled Grey about his sworn ignorance of the P.I.'s wiretapping practices. Perhaps just a few more pointed questions could have dislodged far juicier and more damning testimony, such as a recollection of a fateful lunch at The Grill in which Scary Hollywood Lawyer Bert Fields placed a warm, steady palm over Grey's trembling, salad-fork-clasping hand, and reassured, "Relax. If Shandling so much as farts in a minor key, this guy will get it on tape," before turning to a passing busboy to request another helping of sesame flatbreads.

• Paramount's Grey says he knew of no illegal activity by Pellicano [LAT]

The prosecutor asked Shandling if he knew Pellicano was on board working against him.

The comedian said yes — and claimed that 5 yrs earlier Brad Grey had told him that, "With Bert Fields, you get Anthony Pellicano." Shandling went on to explain that his friend, security expert Gavin De Becker, immediately recommended they do a "bug sweep of Shandlings' phones "because of 'Bert Fields' reputation' ".

Shandling alleged that "they [presumably Brad Grey and/or Bert Fields and/or Anthony Pellicano] began a spin campaign to destroy my reputation by planting stories in newspapers that amounted to character assassination. It was a spiritual test." Shandling turned to the jury and spoke about "The creep factor. It's a feeling that's hard to communicate when you read articles about yourself that aren't accurate. I put up with a lot of pain and soul-searching to get through it."

Sensing what this kind of stinging indictment might do to his reputation as the firm but fair-minded Emperor of the Paramount kingdom, Grey has already issued a response to Shandling's morning testimony:

"I am extremely saddened by Garry's recollection of events dating back more than a decade. His representation is very different than what I remember and what I know to be true. Garry and I had a long personal and professional relationship, which frankly ended when he hired David Boies, and sued me and Brillstein Grey for $100 million. His actions forced us to hire our own lawyer — Bert Fields — and our friendship was overtaken by a legal process that was directed by lawyers and which ended with an equitable settlement. Even though we haven't spoken since that time, he remains one of the most talented people I have known and I wish him only the best."

It's a sad example of the damage Hollywood success can reap on an interpersonal level: One day, you're chasing aspiring actress ass with your best friend and client as you plot his eventual conquest of the primetime TV landscape; the next, the two of you are locked in a bitter feud, and some tech-savvy surveillance whiz your lawyer only calls "The Ears" is monitoring his conversation with a Morton's hostess for anything that might poke holes in a nine-figure lawsuit.

• WHAT A MORNING! Garry Shandling Gives Brutal Testimony About Brad Grey And Bert Fields At Pellicano Wiretapping Trial [Deadline Hollywood Daily]

Like a triple-dog-dare calling out to Bin Laden—whom we strongly suspect is Cloverfield-obsessed io9 commenter Slush-O-Matic—there exists right now perhaps no better temporary monument to Americans' unwavering desire to have the shit scared out of them in the face of growing global adversity.

[Photo: Curbed LA]

• Headless Lady Liberty Being Pimped Out On Melrose [CurbedLA]

But after all the bad blood generated by a very public spat, the gesture may not be dramatic enough to soothe the directing deity's damaged feelings enough to salvage the partnership that's been so lucrative for Paramount, leading the Melrose lot's emperor to undertake an even humbler expression of his appreciation of the DW team's contributions, announcing the immediate establishment of the "Thank You, Steven Spielberg, For Making The High-Grossing DreamWorks Filmed Entertainments That Allow Me To Keep My Job, Love, Brad Grey" banner in tomorrow's trades.

• DreamWorks maintaining its identity [Variety]
• Previously: More Aftershocks From The Two Little Words That Shook Hollywood [Defamer]<./li>

"The deal for us has been highly profitable and is ahead of schedule," Paramount Pictures Chairman Brad Grey said in an interview Thursday. "It would always be better to have Steven and DreamWorks with us, but of course we'll be OK" if they leave. [...]

In a business as unpredictable as Hollywood, DreamWorks and Paramount could wind up having a rapprochement and drawing up new employment contracts.

Grey said he remains hopeful. "The temperature has to go down a little bit," he said. "If there's an economically prudent deal that makes sense for us, of course I want Steven and DreamWorks to be part of Viacom. No one respects Steven and David more than I do."

Should the proverbial cooler heads not prevail, look for Grey's Viacom masters to demand that their studio boss make a more dramatic display of how little a dumping by Spielberg will hurt them. Inviting all of his Paramount family to meet him for a "fun afternoon break" via an internal e-mail, hundreds of employees will join their leader around the Melrose lot's beautiful fountain, into which Grey will blithely toss each and every one of the two-hundred photographs of Spielberg that adorn his office's walls, telling his underlings, "See how much Steven means to me? Sploosh! Didn't feel a thing!" as each lovingly framed memento of their relationship sinks into its bubbling waters

• Fleeing a close encounter with Viacom [LAT]
• Dauman/Katzenberg Feud Over Spielberg Officially Upgraded To Catfight [Defamer]

"It's proved that when you offer people great stories that also deliver state-of-the-art effects and stunts, they want to go out and experience it together. It becomes an event," said DreamWorks CEO/co-chair Stacey Snider, whose studio and Paramount turned out "Transformers."

Of course, it doesn't hurt when those great stories, state-of-the-art effects, and amazing stunts enhance a communal experience constructed around hugely successful animated ogre, spandex-clad superhero, or sexually ambiguous pirate franchises, but whatever. This is not a time for cynicism, it's one for celebration: As we speak, famously generous Paramount emperor Brad Grey is finalizing his plans to end August with a Free Bag of Money Social on the Melrose lot, in which he'll personally reward each employee for their contributions to Shrek the Third and Transformers' incredible run of success.

[Chart via Digital Variety]

• Hollywood hits new highs [Variety]

Geffen himself, calling from his yacht, insisted Friday that "Steven and I are very happy with the performance of Paramount's marketing and distribution teams in handling our films." He cited Rob Moore and Jim Tharp, among others, as contributing to the success of such DreamWorks-Paramount releases as "Transformers" and "Disturbia."

And on the Grey-Spielberg front, DHD's Nikki Finke reports that the embattled Paramount emperor, dejected about the BusinessWeek story, reached out to the director on his Indiana Jones 4 location shoot to be cheered up:

A few weeks ago, when Brad Grey visited Steven Spielberg in Connecticut where Indiana Jones 4 was shooting on location, the DreamWorks partner put the Paramount boss's mind at ease. "Steven said to Brad that he intended to be in business with him a long time," a source tells me. As a result, Grey was flabbergasted when he saw the headline "Paramount & DreamWorks: Splitsville?" from the new issue of Business Week which was reporting how it's "entirely possible" that Spielberg could want to leave Paramount as soon as late next year. The timing couldn't have been worse for Grey. Thanks to yet another DreamWorks pic Transformers performing spectacularly at the summer box office, not only had Paramount climbed to No. 1 in studio market share this year but boasted a new movie franchise to exploit. Grey had been celebrating. Now, because of the article, Brad was "bummed out", a source close to him told me. Also Grey knew that every other Hollywood mogul like him attending Jack Valenti's memorial service last Thursday had heard about the bombshell. So the Paramount chief needed to know if this was real or not. He spoke to Spielberg right away. This time, the director was on location in Hawaii. "And Steven continued to tell Brad he is 'very happy'," an insider tells me.

Hopefully, Grey has had his bruised feelings adequately soothed by Spielberg's assertions of happiness and promises of a long, fulfilling relationship (well, at least one that survives into 2009), allowing him to finally halt the hourly deliveries of FTD's popular "Please Tell Me I'm Pretty Again" flower arrangements to the Indiana Jones set, the alarming frequency of which was starting to seem "a little needy" to the busy director.

[Photo: Getty Images]

• Geffen, Spielberg may walk [Variety]
• Spielberg Tells Grey He's "Very Happy" [DHD]
• Paramount and DreamWorks: Splitsville? [BusinessWeek]

DIRECT FROM Hollywood - Jill and Brad Grey will be seen at a wedding this very day in La-La Land; they aren't canceling, although their own actual marriage, of 25 years, is in an iffy state. They gave me this statement, "We are sad to say we are taking a trial separation from our marriage. We have been together since we were in college, and it's our hope that we will be able to work things out for our sake and the sake of our three children."

We take no joy in correctly predicting that Levangie's separation from Grazer would likely result in the liberation of other Hollywood war brides empowered by her bold move into singledom, but we expect that after an acceptable period of mourning, the two ladies will team up and embark upon a Thelma and Louise-quality rampage (they're way past their Starter Wife victimhood) through the city, speeding away down the Sunset Strip as the Chateau Marmont is consumed by a fire they ignited "just to watch that old bitch burn." Meanwhile, the pair's now-estranged husbands will try and convince old pal Sumner Redstone that now is the time to dump his trophy and join them on a weeklong bender in Vegas, where they'll delight in conning their senescent buddy into bankrolling the entire trip.

• BITS OF NUPTIAL NEWS [Liz Smith]

Bruised by disputes over which of a film's producers are entitled to a best-picture award, the Academy of Motion Picture Arts and Sciences, which awards the Oscars, said it would now, "in a rare and extraordinary circumstance," consider crediting more than three producers as nominees. An eight-year-old policy had limited the number of qualifying producers to three. [...]

In announcing the change Sidney Ganis, the film academy's president, said officials wanted to preserve a limit on the number of credits. But, he added, "a truly unique situation could arise, and we want to have just enough flexibility to allow for that rare occurrence."

Ganis admitted that he was "thrilled" that the rules change could help people like Little Miss Sunshine's Albert Berger and Ron Yerxa, who were denied their share of the credit when their "delightfully overrated labor of love" made its improbable Best Picture run back in February. But he was careful to note that there was some give-and-take necessary to push through this crucial alteration; to compensate for the possibility that credit in special cases like Sunshine's would be dealt with more equitably, the Academy's board quietly introduced a measure that would bar any film in which Paramount emperor Brad Grey had direct involvement from Oscar recognition, because, in Ganis's words, "It's just so much fun to fuck with that guy."

• Oscar Rules Regarding Producing Are Relaxed [NY Times]
• Previously: Oscar SnubWatch: Brad Grey Uncredited, Again [Defamer]

From: [redacted] - Paramount Sent: Tuesday, May 22, 2007 4:54 PM To: NotesMail_All Subject: Message from Brad Grey - Congratulations!!

Congratulations to everyone at DreamWorks Animation and Paramount Pictures on the spectacular opening for SHREK THE THIRD this weekend.

With a 3-day box office gross of $122M, everyone's hard work clearly paid off and together we reached several noteworthy milestones:

* The third highest opening weekend in box office history * The highest opening weekend of all time for an animated film * Paramount's biggest opening weekend ever

Again, congratulations to Jeffrey and all of our friends and partners at DreamWorks Animation. SHREK THE THIRD is a triumph for everyone at DWA and Paramount Pictures around the world.

To celebrate, we'd like you to kick off the Memorial Day Weekend a little early - so take Friday off, compliments of the big green Ogre.

Enjoy the long weekend,

Brad

• Previously: Sun Rises, Sun Sets, Dumb Sequel Breaks Record [Defamer]

Subject: Office Clean-up From: XXXXXXX To: XXXXXXX

Dear All,

It is time for some spring cleaning. Although we understand there is limited storage space, it is very important that we create a professional and business like environment for our employees and outside guests. During the month of March, we ask that you do some serious cleaning. The stacks of boxes, disheveled papers and miscellaneous clutter should be placed into file cabinets, sent to storage and/or discarded. Please check with your department head before you trash any company materials or property.

If you need assistance storing away files, please contact the Records Center at XXXX and they can provide you with the necessary labels and instructions for storing file boxes. If you need additional boxes, you can order standard banker's boxes directly from Office Max. Once the boxes are ready to go, the Records Center will pick them up and send to Iron Mountain.

Our goal is to have the office clean-up no later than March 31.

Thank you for your cooperation with this effort,

XXXXXXXX

The consequences of noncompliance are never discussed, but at a place that may never fully recover from a paralyzing fear of layoffs, the terms "clean-up" and "spring cleaning" can't help but feel a little ominous. Come the first of April, there could be widespread paranoia that fastidious studio emperor Brad Grey himself might suddenly materialize at a messy staffer's workspace, run a white-gloved hand through some overlooked dust hidden beneath an improperly stored file folder, then wordlessly signal security to escort the messy ex-employee off the lot.

• Complete Paramount Coverage [Defamer]

10:19 So I finally asked a question of Graham King, the producer of best picture winner "The Departed:" What did he think about the Brad Grey controversy, the fact that the Paramount Pictures head was denied a producing credit? "I think he deserved the credit on the picture, but I don't make the rules." No, he doesn't, but as the sole credited producer, he did give the speech at the Kodak — and Brad Grey wasn't in it.

We're sure that King's omission of Grey was just an honest mistake (or, at the very least, an attempt not to bore a billion people* with an explanation of why Grey couldn't join him on the stage) and that the Paramount chief carried no ill feelings to the various after-parties they'd both later attend. Still, the security detail at the Vanity Fair event was on high alert to monitor any interactions between the two men, just in case Grey's jilting finally overwhelmed him, leading him to try and drown the victorious King in a chocolate fountain and make off with his loaner Oscar.

[*Not really a billion people.]

• Liveblogging the Oscars: In which we take it from the top [Var On The Town]

Maybe we've just succumbed to the Hallmark-backed brainwashing that reduces the populace to a bunch of joylessly romantic zombies drooling the brown juice of half-chewed chocolate down their slackened jaws each February 14, but we find ourselves completely unable to resist a good love story this morning. Over in Berlin, semi-mummified Viacom overlord Sumner Redstone briefly paused from describing his corporate empire's plans for an immediate takeover of all German media to once again share the depth of his feelings for his kept Paramount man, Brad Grey, in whose warm embrace Redstone plans to spend the rest of his (neverending) days. From an interview in THR:

THR: Paramount didn't have a great year last year ... Redstone: Paramount is in a major turnaround right now. "Dreamgirls" has been nominated for eight Academy Awards. "Babel" has been nominated for (seven), including best picture. Steven Spielberg has a picture coming, "Transformers." I've seen part of it, it is fantastic. "Norbit" opened to $34 million on its first weekend. You will see us rising from the bottom to the top or very near the top in the first six months of this year. We have a great leader in (Paramount Pictures CEO) Brad Grey.

We think he is doing just about all the right things. Before I came to Germany, I saw him in London at the BAFTAS, where several of our pictures were nominated. He's a great leader. I've always said what makes a difference between the winners and the losers is what management brings to the assets. And I believe we have the best management possible at Viacom, at CBS and at the studio.

A disarmingly giddy Redstone then revealed the special Valentine's Day surprises he arranged for his beloved studio chief, which involved a team of florists working all night to fill Grey's office from floor to ceiling in delicate rose petals, and a planned lunchtime serenade involving hundreds of Paramount employees gathering under their boss's window to croon "Unchained Melody," the pair's favorite song.

• Redstone: Par ready for comeback [THR]
• Previously: Gail BermanWatch: Berman Gone, Won't Be Replaced; Brad Grey Given Lifetime Appointment [Defamer]

[Photo: Andrew Cutraro/NY Times]

• Hollywood Takes Its Concerns About Piracy and Taxes to Washington [NY Times]
• Previously: Golden Globes TableHopperWatch: Brad Grey Loves Your Movie The Most [Defamer]

"I insisted, contractually, on autonomy for DreamWorks if I was going to continue under the Paramount and Viacom funding arrangement. So I take exception when the press is contacted by our friends and partners at Paramount, who refer to every DreamWorks picture as a Paramount picture. It is not the case." [...]

Indeed, Mr. Spielberg likened the relationship with Paramount to a marriage of sorts.

"The best marriage is when the husband and wife are always open to compromise, and the most important thing is dialogue," said Mr. Spielberg, who has himself been married 15 years. "I think this marriage is going to be dependent on a healthy amount of dialogue."

Spielberg's marriage analogy does seem like one that's more hopeful about the future of the partnership; whereas any argument that begins with Grey attempting to get his way by crassly reminding his DreamWorks partners that he's the boss because his studio laid out $1.6 billion to acquire theirs probably ends with him being quickly stabbed to death in the Trojan Horse scenario, in the context of a marriage, it ends with a much less fatal bedroom door-slamming, and a vow not to put out again until Grey apologizes for making them feel like such dirty little whores.

• The Director Lines Up a Shot [NY Times]

Because each flagstone on the Path to Oscar™ is such an important part of the journey to Hollywood's Biggest Night that it requires its own media event, the press was invited over to the Hollywood and Highland Grand Ballroom yesterday for a preview of the Governor's Ball, the post-telecast soiree where the Academy attempts to revive Oscar VIPs utterly exhausted from the four hours of congratulatory buggering they've just endured with a free meal. Var's The Knife blog made the trip, reporting that obscure local caterer Wolfgang Puck will be handling the food, and that the gala's organizers have decided to save the industry's most conspicuous awards-season table-hopper from his worst instincts:

The big news: This year, Brad Grey can't be a table-hopping boor because the ball has no tables for 10 or assigned seating; it's "an elegant supper party." (Translation: It's a lot like going to a premiere.)

The shift from stifling assigned seating to a premiere-style buffet setup should facilitate a more relaxed atmosphere, as the more open plan allows for anyone anxious about being approached by an embittered, muttering Paramount emperor Grey following an uncredited Departed Best Picture win to quickly visualize an escape route to the nearest sushi station, allowing them to slip away before having to offer insincerely sympathetic small talk about his unfair treatment by the Academy.

[Pictured: Puck's executive pastry chef knows that if every part of the chocolate Oscar is not carefully covered in a gold glaze, her enraged boss will seize her brush and angrily frost its tiny, edible genitals himself. Photo: Getty Images]

• Puck Feeds Oscars; Troops Grateful [The Knife]
• [Defamer]

Just in case you haven't yet had your fill of stories about the backbiting between Paramount emperor Brad Grey and the sneaky studio usurpers crouching not-so-quietly inside the DreamWorks Trojan Horse he bought a year ago, the LA Weekly's Nikki Finke reports that skeletal Viacom executive presence Sumner Redstone may have signed Grey's death certificate by letting slip at a cozy power-player dinner party a rather impolitic comment about why Dreamgirls found itself without a Best Picture nomination. Clasping your hand to your mouth while trying to suppress an outraged "Oh. No. He. Did. Int!" is completely optional as you read on:

Sumner told the gathering that Brad told him that the reason Dreamgirls wasn't nominated for an Oscar was because "everyone hates David." As in Geffen, the producer of Dreamgirls. "Does Brad have a death wish?" an insider asked rhetorically this morning. Indeed, few have taken on David Geffen and lived to tell the tale. (Just ask Robert Towne, John Branca and Mike Ovitz.) That the Viacom boss would be so indiscreet in such a public setting defies belief. To be fair, Grey made his comment in a private setting.

While the indiscretion of letting such a comment slip does seem careless on the surface, the immortal Redstone didn't scratch his way to the top of the industry over a four-hundred year career by not being a shrewdly calculating operator; a more plausible explanation is that Redstone has had a change of heart since impulsively giving Grey a lifetime appointment to his Paramount job, and rather than go back on his word, took the more passive approach of airing his underling's potentially fatal anti-Geffen grievances, hoping to wake up to a grisly front page story in Variety about how his studio chief mysteriously choked to death on a Dreamgirls Academy screener the night before the Oscars.

[Photo: Getty Images]

• Their Dinner About Brad... (Corrected) [DHD]

Snider told associates she was furious that Grey had not given her a heads-up about the news release and had lumped her in with three production chiefs who lacked her seniority and status. Although she contractually reported to Grey, Snider saw herself as his equal and considered her true boss to be Spielberg, according to people close to her.

After all, she was the only one at the studio other than Grey who could "greenlight" movies. Along with Spielberg and Geffen, Snider can approve, without Grey's blessing, any film costing up to $85 million, and those up to $100 million if Spielberg is director. DreamWorks is expected to make six to eight movies a year — about as many as Paramount, before counting its two smaller labels.

Snider called Grey that evening to express her anger, said a person with knowledge of the conversation. The discussion became acrimonious and Grey hung up on Snider, the person said. Snider immediately contacted Geffen, who phoned Grey on her behalf.

Grey refused to discuss the matter, but sources close to him say the three have made up.

"I feel zero tension with my partners at DreamWorks," Grey said. "We are one company and their success is our success."

Grey's challenge is convincing his new colleagues. "They have to put some of their ego stuff aside and realize they have something bigger and greater than the sum of the parts," suggested Lilli Friedland, a Century City psychologist who works closely with media executives.

We're glad the Times approached a corporate psychologist to offer some perspective on the ongoing dysfunction on the Melrose lot. Perhaps the parties involved will be inspired to take more active steps to put their bickering behind them in the pursuit of the greater studio good, with Snider and Grey meeting in his office to exchange air-clearing blows with foam grievance-bats, whaling harmlessly, but cathartically, away at one another, primal-screaming "I am resentful that you might one day take my job!" and "You don't respect my moviemaking autonomy! Also, it's taking way too long for me to get your job!" as they try and mend a strained working relationship.

• A battle of wills behind scenes at Paramount [LAT]

The full press release (including the names of those awarded the Little Miss Sunshine producing credits) is after the jump:

January 26, 2007 FOR IMMEDIATE RELEASE CONTACT: [redacted]

Academy Announces
Best Picture
Producer Credits

Beverly Hills, CA — The Producers Branch Executive Committee of the Academy of Motion Picture Arts and Sciences today announced the final roster of producers nominated in the Best Picture category for the 79th Annual Academy Awards®:

Best motion picture of the year
"Babel" (Paramount and Paramount Vantage)
An Anonymous Content/Zeta Film/
Central Films Production
Alejandro González Iñárritu, Jon Kilik and Steve Golin, Producers
"The Departed" (Warner Bros.)
A Warner Bros. Pictures Production Graham King, Producer
"Letters from Iwo Jima" (Warner Bros.)
A DreamWorks Pictures/Warner Bros. Pictures
Production Clint Eastwood, Steven Spielberg and Robert Lorenz, Producers
"Little Miss Sunshine" (Fox Searchlight)
A Big Beach/Bona Fide Production David T. Friendly, Peter Saraf and Marc Turtletaub, Producers
"The Queen" (Miramax, Pathé and Granada)
A Granada Production Andy Harries, Christine Langan and Tracey Seaward, Producers

The producers of the films "The Departed" and "Little Miss Sunshine" were not announced on January 23. The nominees for these two pictures were determined by the executive committee at a meeting on Thursday evening (1/25).

• Brad Grey Denied [Slate]
• Brad Grey Just Happy To Be 'Nominee To Be Determined' [Defamer]

On Tuesday, academy spokesman John Pavlik confirmed that an executive committee of the organization's producers branch would meet this week to decide which producers would be given credit on two films, "The Departed" and "Little Miss Sunshine." That will determine who gets to leap to the stage to accept the Oscar on Feb. 25 should either film win.

According to one person close to the matter, the decision to review's Grey's credit was prompted by letters to the academy from prominent Hollywood figures lobbying on Grey's behalf. [...]

Immediately after the [producers] guild's decision to credit King as producer of "The Departed," Grey's camp inquired about the academy's appeal process.

Grey recently acknowledged to confidants that making an appeal could be tricky especially if "The Departed" ended up competing with a Paramount film, as turned out to be the case. But he also believed he deserved credit for launching "The Departed," a view shared by Scorsese and [producer Graham] King.

Antiquated ideas about studio loyalty aside, one can hardly blame Grey for seeking the measure of Hollywood immortality granted by an Oscar; unlike antediluvian Viacom master Sumner Redstone, who recently gave him a lifetime appointment to his Paramount gig, Grey knows he won't live forever, and that his best shot at being remembered will be for the clip of his awkward acceptance speech for a The Departed Best Picture win, in which he addresses the Babel crew with, "Wow, I really wish you guys could be up here with me now to share this. The next time we all do a movie together, I promise to campaign a little harder so that you can get a chance to experience how fucking incredible this feels."

• Academy to ponder credit for 'Departed' [LAT]

Obviously looking to stir up some trouble, an anonymous tipster dropped us this note about the conspicuous table-hopping activities of Paramount emperor Brad Grey, whose various fiefdoms came away with awards for Dreamgirls and Babel:

Word on the street is that ever confident (vertically challenged?) Paramount Czar Brad Grey forced himself upon not one, but two tables at the Globes ceremony last night. Apparently he wanted to be seen at both the Dreamgirls Table AND the Babel Table... Without mentioning names, it seems that he caused a major pain in the ass for several people and displaced the guests of other key figures (talent specifically).

While constant table-flitting is an accepted staple of Globes schmoozing, we imagine it would be annoying to return after a quick trip to the bar and discover Grey plopped in your seat, and have to stand impatiently nearby until he's finished telling your tablemates that he doesn't care how big a favorite "that overrated musical" might be, he's pulling for Babel to eventually win the Oscar because he "loves a good underdog. Unless my Departed eligibility comes through, in which case I'm pulling for that one so that I don't have to feel dirty about playing favorites at the day job."

• Complete Golden Globes Coverage [Defamer]

To quickly review the grand mal seizures that rocked Paramount's executive ranks yesterday: Not only is Paramount Pictures president Gail Berman out (as is co-president of production Alli Shearmur), but after failing to reach terms with the guy from the Water Tower Cafe on a deal to replace Berman, studio emperor Brad Grey has decided to eliminate her position entirely, preferring a "label strategy" of organization, in which every Paramount employee will provide Grey with an in-person, ten-second update on his day's work at the close of business each evening. With all the upheaval in his moviemaking fiefdom yesterday, wizened Viacom corporate overlord Sumner Redstone took a moment to give Grey, whose job security has often been questioned during his tenure atop the 'Mount, an unequivocal vote of confidence following his personnel moves:

"If Brad decided [Berman] was not for Paramount, then Brad was right," he said in an interview. "Brad's the boss, and I have total confidence in his decisions."

Redstone declined to comment when asked what Berman's exit settlement would cost Viacom.

"I have no idea what arrangements will be made between Gail, Brad and Paramount," he said.

Redstone added that he was feeling "very, very bullish" on Paramount these days: "Paramount is on a real roll. I believe in the first six months of this year, we'll go from the bottom to No. 1." [...]

As for nagging speculation that Snider could one day replace Grey, Redstone, 83, said, "I have no reason to believe that Brad will ever be gone as long as I'm alive — and I expect to be here for 50 more years."

This expression of support is even more impressive than it initially sounds; Redstone's pledge to keep Grey on for the duration of his stay on the Earthly plane (he cites the 50 years figure so as not to alarm the public with the fact that he will never actually die) is nothing short of a an invitation to drink of the immortality-granting chalice he stole "from some hippie a long, long time ago" and help Redstone rule his multimedia kingdom for Eternity.

• Paramount says it will not replace Berman [LAT]

While we're still awaiting an official press release announcing president Gail Berman's departure from Paramount, Var has pulled the trigger on an ankling-invoking headline, citing "several studio insiders" who claim that Berman submitted her resignation around noon. An operative within Brad Grey's fortified Melrose lot walls tells us that chatterers think co-president of production Brad Weston will replace her, but we wouldn't be that surprised to discover that Grey, overwhelmed by the pressure of choosing a successor, wandered into the lot's Water Tower Cafe and offered the position to the guy making his banana-and-strawberry Smoothie.

UPDATE: The LA Weekly's Nikki Finke says that the job's not being filled and that Berman isn't getting a "sorry it didn't work out" production deal.

[Photo: Berman and Paramount Vantage's John Lesher in huggier times, via Getty Images]

• Berman leaves Paramount [Variety]

Today's LAT reports that Paramount Emperor Brad Grey and embattled lieutenant Gail Berman are expected to finally part ways this week, ending a partnership so doomed that early drafts of Grey's press release announcing the TV veteran's puzzling ascendency to his studio's presidency ended with the phrase, "I couldn't be more excited to welcome Gail into the Paramount family, and to eventually fire her long after it becomes apparent that this relationship just isn't working out, after an acceptable interval for saving face." The Times takes a look back at Berman's rocky tenure at the 'Mount, during which her "exclusionary, aloof and non-confrontational" boss made the classically passive-aggressive move of buying an entire movie studio rather than prod her about the slow progress of her development slate:

Shortly after joining Paramount, Berman was confronted with published rumors that her job was in jeopardy. Agents and executives complained that Berman was often too tough and impolitic in her dealings with those accustomed to being coddled.

When confronted with such complaints, Berman made amends with various top agents. She took home piles of scripts to read each night. But Berman never clicked with some of her colleagues.

Her supporters said Berman bristled under Grey's management style, which at times can be exclusionary, aloof and non-confrontational.

Several people who do business with Paramount fault top management for its lack of teamwork and rampant backbiting.

The Times notes that it's unclear who might step in for Berman (though underlings Brad Weston and Rob Moore are mentioned) after Grey ceremonially processes her off the Melrose lot behind a symbolic, twenty-foot-tall cardboard box full of her belongings, but we imagine that the Paramount chief will quickly fill her spot, as he suddenly finds himself with a surfeit of free time now that he's been relieved of his responsibility to constantly release statements reinforcing her job security.

[Photos: Getty Images]

• Berman appears to be on way out [LAT]

According to guild rules, executives who work for a studio or financier of a film can't earn a "Produced by" credit unless they "demonstrate a commitment of time and resources to the production of such significance that such commitment is tantamount to taking a leave of absence from his/her executive duties." Grey wasn't working for Warner Bros., but guild officials were concerned his Paramount job kept his focus elsewhere.

Indeed, in a year in which his attention was clearly consumed with identifying which Paramount employees needed to be let go to make room for his new DreamWorks charges and dreaming up ways in how to turn his lot into Hollywood's premiere power-lunch spot, Grey had no time left to devote to satisfying the Guild's onerous producing credit requirements (i.e., showing up on set for five consecutive shooting days to sample craft services, then sit in a personalized director's chair for no fewer than three minutes to give a vague impression of involvement in a production). If nothing else, the PGA's decision could help Grey bypass the tricky politics of winning an Oscar for one studio while running another, eliminating the possibility that he could be overcome by emotion during a theoretical Departed acceptance speech and tragically blurt, "I just gotta say, I always knew this movie was gonna be way better than the crap I'm making at my day job."

*Clarification: Says a reader: "Brad Grey is a first position producer on THE DEPARTED. That's not in dispute. His dispute is only over being listed as a producer for the Oscars."

• Grey loses push for credit on 'Departed' [LAT]

We thought that all of the intramural tension between stranded CBS Corp employees rendered nothing more than unwanted tenants by the Great Viacom/CBS Schism of 2006 and their Paramount landlords would have worked itself out by now, but this report from a member of the Melrose lot's untouchable caste indicates that the holiday season, normally a time for people to put aside their differences over some spiked eggnog and mistletoe-enabled makeout sessions, seems to be