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  1. #1

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    Cruise's studio close to raising $500 million - Los Angeles Times 2/26/07

    Cruise's studio close to raising $500 million

    MGM unit may add partner Wall Street

    By Claudia Eller
    Los Angeles Times Staff Writer
    6:49 PM PST, February 26, 2007

    Wall Street may be ready to show Tom Cruise the money.

    Metro-Goldwyn-Mayer Inc.'s long dormant United Artists movie unit which Cruise and his producing partner are attempting to resuscitate is close to raising about $500 million to finance a slate of movies over the next few years.

    The funding would include money to cover the cost of prints and advertising as well as the production of the films.

    Sources close to the talks cautioned that the deal with expected lead investment bank Merrill Lynch wasn't final, and that terms were still being negotiated. They said an agreement could take an additional 10 days to two weeks to complete.

    "We expect to announce full funding for UA shortly," MGM Chairman Harry Sloan said in an interview. He declined to elaborate.

    Last November, Sloan struck a deal with Cruise and longtime associate Paula Wagner to try to return the UA label to its historic roots as an artist-driven production company in which actors, screenwriters, directors and producers are free to make movies outside the more restrictive studio system. The agreement came two months after Cruise and Wagner were cut loose by Paramount Pictures, where for more than a decade they enjoyed one of the most lucrative production deals in the business.

    Sloan's plans to use a star of Cruise's stature to revive UA harkened back to the studio's founding in 1919. Silent film icons Charlie Chaplin, Douglas Fairbanks, Mary Pickford and director D.W. Griffith formed the studio as a way to give artists creative freedom and ownership in their films.

    If Sloan makes a deal to raise the money, UA would become the latest in a long line of Hollywood production companies and studios to tap Wall Street financing to help bankroll their annual output of movies.

    Merrill Lynch is expected to parcel out to other banks some of the financing, a combination of equity and debt. In recent years, the investment bank has been active in backing movie slates at other studios and independent producers including Paramount Pictures, Marvel Entertainment and Montecito Picture Co., headed by movie director Ivan Reitman and former Universal Pictures Chairman Tom Pollock.

    Sloan has said that he wants UA to stand apart from MGM as an autonomous production unit, with its own film financing and bank credit lines. He believes that by building UA as a separate asset, MGM could someday spin it off to the public or sell the label to a bigger media company.

    The business plan calls for MGM, which owns 65% of UA the remainder is held by Cruise and Wagner to market and distribute at least four of the production company's films a year.

    Cruise and Wagner, who operate UA on the 11th floor of the MGM Tower in Century City, have the power to give the green light for production to any movie costing as much as $50 million without MGM's consent.

    Its first production, "Lions for Lambs," could serve as a model for some of the studio's future productions.

    Directed by Robert Redford, who also stars with Cruise and Meryl Streep, the film is shooting now with financing from MGM.

    A political drama set in Afghanistan and written by Matthew Michael Carnahan, "Lions for Lambs" weaves together three interconnected story lines in which Cruise plays a congressman, Streep an investigative reporter and Redford an idealistic college professor whose former student is a soldier wounded behind enemy lines..

    Despite boasting top stars and an Oscar-winning director, the film's budget is $35 million significantly lower than what similar high-profile movies cost when made by a major studio.

    Sources familiar with the film's economics said Cruise, Streep and Redford agreed to defer most of their usual upfront fees for a cut of the profit after MGM recoups its production and marketing costs. MGM will release the movie in the U.S. in early November and will handle its international sales.

    The UA deal with Cruise and Wagner emerged at a time when the economic climate in Hollywood is shifting. Stars and filmmakers are being squeezed by studios intent on slashing production and marketing costs.

    Wall Street investors, private equity firms and hedge funds are increasingly financing Hollywood projects, ponying up billions of dollars that is giving significant autonomy to the industry's most bankable talent.
    http://www.latimes.com/entertainment...business-enter

    UA reborn with Cruise/Wagner and MGM Deal - 11/2/06
    http://www.micechat.com/forums/showt...united+artists

  2. #2

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    Re: Cruise's studio close to raising $500 million - Los Angeles Times 2/26/07

    Mission Improbable: Tom Cruise as Mogul

    Lester Cohen/WireImage.com
    Tom Cruise and his business partner, Paula Wagner, now run United Artists.

    By Richard Siklos
    The New York Times
    Published: March 4, 2007
    Los Angeles

    ARRAYED in a glass case in the lobby of Metro-Goldwyn-Mayer’s headquarters in Century City are contracts from the creation of the United Artists studio in 1919. The documents bear the signatures of the Tinseltown legends Charlie Chaplin, Mary Pickford, Douglas Fairbanks Sr. and D. W. Griffith. Also ensconced in the case is one of United Artists’ first income statements: sales of $21 million in today’s dollars, a fair sum for the early 20th century but barely enough to finance even a single low-budget film now.

    Some things never change. Asked how United Artists’ early revenues compare with what it takes in today, Harry E. Sloan, chief executive of the studio’s parent company, MGM, replies: “We don’t have any yet. It’s all cost.”

    If Mr. Sloan has his way, however, that will soon change. Last November, he signed the latest set of United Artists contracts with yet another Hollywood heavyweight determined to chart his own financial and creative course: Tom Cruise. Mr. Cruise and his business partner, the veteran film producer Paula Wagner, have signed on to run United Artists with what insiders describe as a relatively free hand for a term of at least five years. In exchange, MGM has granted the pair about a one-third stake in the dormant studio without asking them to invest a penny in it.

    Ms. Wagner is the chief executive of UA — as the studio is commonly known — while Mr. Cruise bears no official title except, perhaps, the world’s most famous movie star. Unlike Ms. Wagner, Mr. Cruise does not draw a salary from UA, according to a person with direct knowledge of the arrangement. The idea is that his ownership stake alone will align the interests of Tom Cruise the actor with Tom Cruise the studio grandee.
    “I can’t put a number on it yet,” says Bert Fields, the Hollywood rainmaker and lawyer who represents Mr. Cruise and Ms. Wagner. “I will tell you this: If their pictures succeed, it will be worth a very large amount.”

    Still, in a town awash in news releases written in magic ink on fairy parchment, Hollywood does not know exactly what to make of the idea of Cruise-as-mogul — or, for that matter, how exactly the fast-moving Mr. Sloan plans to deploy UA and the deep pockets of private equity investors to yank MGM back from the brink of obscurity.

    Moreover, Mr. Cruise stands at the end of a long line of creative potentates in Hollywood, including Burt Lancaster, Paul Newman, Barbra Streisand, Sidney Poitier, Steve McQueen and Steven Spielberg, who have tried to follow the original Chaplin-Fairbanks-Pickford blueprint by overseeing their own mini-studios. All of them experienced mixed results as they ran up against the brutal economics of a hit-and-miss industry in which independents often lack the size needed to overcome the financial vagaries of filmmaking.

    Though the relationship between studios and stars has grown ever more tangled in modern Hollywood, one thing has stayed the same: what many stars most covet — along with fame and fortune — is creative autonomy from their corporate overlords. For actors like Brad Pitt, Reese Witherspoon, Tom Hanks and Leonardo DiCaprio, that has meant deals as independent producers that give them a stronger hand in developing their pet projects and bestow production fees and credits on them.

    Until last year, the gold standard of such deals was an arrangement between Cruise/Wagner Productions and Paramount, the studio where Mr. Cruise, 44, had starred in many of his biggest pictures. But that relationship vaporized in a mushroom cloud last August, after what many critics called Mr. Cruise’s erratic behavior during his promotional tour for the spy thriller “Mission: Impossible III.”

    Sumner M. Redstone, the chairman of Viacom, Paramount’s owner, contended that he had fired Mr. Cruise for “inappropriate” behavior that had hurt his studio’s bottom line. Mr. Cruise’s defenders accused Mr. Redstone of grandstanding and said that, actually, both sides had already been planning to part amicably.

    Regardless, the media firestorm and scrutiny of Mr. Cruise’s career and conduct only intensified when, two months later, Mr. Cruise and Ms. Wagner landed at United Artists, which through different owners has hewed in varying degrees to its founding ideals of artistic hegemony.

    The producer Jerry Bruckheimer, who worked with Mr. Cruise early in his career on the film “Top Gun,” said that the news of the move “kind of shocked Hollywood.”

    Mr. Bruckheimer added: “You have a star and his producing partner actually running a studio. That hasn’t happened in I don’t know how many years.”
    full article at http://www.nytimes.com/2007/03/04/bu...es&oref=slogin

  3. #3

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    Re: Cruise's studio close to raising $500 million - Los Angeles Times 2/26/07

    Redstone wants to mend ties with Cruise

    USA TODAY
    3/5/2007 8:08 AM

    LOS ANGELES (AP) Viacom chairman Sumner Redstone wants to be friends again with Tom Cruise. The actor's behavior over his romance with Katie Holmes and his aggressive defense of Scientology were reasons cited by Redstone when he broke ties with Cruise last year after a long and lucrative relationship at Viacom-owned Paramount Pictures.

    Cruise has since signed a deal with MGM to resurrect the United Artists movie studio.

    Although Redstone hasn't talked with Cruise since the falling out, he said this week he hopes the two can resume their friendship.

    "He was a great friend," Redstone told People magazine at Thursday's Los Angeles premiere of Zodiac. "And I look forward to being his friend again."
    Redstone said he was surprised that his original comments were as explosive as they were.

    "What happened was, I just gave an interview to The Wall Street Journal. In the course of it, they asked me what was going on. I said, 'You know, he would no longer be in the lot,'" Redstone told the magazine. "They treated that like I was firing him. I didn't fire him! I had nothing to do with it. But they treated it explosively. And I didn't like it."
    http://www.usatoday.com/life/people/...e-cruise_N.htm

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