MGM mogul Sloan was against UA’s deal with the Writers, but Tom Cruise and Paula Wagner overruled him. Now he hopes bucking the producers alliance will boost the new United Artists.

By Alex Ben Block

HOLLYWOOD, CA (Hollywood Today) – 01/8/08 – After being publicly dismissed at Paramount by Sumner Redstone, Tom Cruise and business partner Paula Wagner were welcomed into the MGM fold in 2006 by Harry Sloan, who handed them the keys to United Artists. Now Cruise and Wagner are going against Sloan’s wishes by doing an independent deal with the Writers Guild, and Sloan has come under fire from other moguls for breaking ranks with the AMPTP.

Wagner, CEO of UA, has agreed to sign an interim contract with the writers guild, in the same way that David Letterman’s Worldwide Pants was able to make a deal that allows them to go back to work. Sloan and MGM are members of the AMPTP, the management group that represents the major networks and movie companies, and as reported by Deadline Hollywood, he has come under fire from some of the other moguls for letting UA make a deal.

In a letter to members, the guild presidents wrote on Monday: “This agreement is virtually identical to the agreement signed by David Letterman’s Worldwide Pants. It features all the proposals we were preparing to make when the big media conglomerates left the bargaining table a month ago. Those proposals include appropriate minimums and residuals for new media (whether streamed or downloaded, as well as original made-for content), along with basic cable and pay-TV increases, feature animation and reality TV coverage, union solidarity language, and important enforcement, auditing, and arbitration considerations.”

The AMPTP put out a statement attacking the WGA policy of “divide and conquer” by signing individual companies like UA, amid rumors The Weinstein Company, Lucasfilm or Lionsgate may be next. “One-off deals do nothing to bring the WGA closer to a permanent solution for working writers,” said the AMPTP in a statement. “These interim agreements are sideshows and mean only that some writers will be employed at the same time other writers will be picketing.”

In a statement on the deal, Wagner noted that UA was historically rebellious, originally formed to break a studio cartel in 1919 by Charlie Chaplin, Mary Pickford, Douglas Fairbanks and D.W. Griffith (See related story).

“This agreement is important, unique and makes good business sense for United Artists,” Wagner said in a statement. “In keeping with the philosophy of its original founders, artists who sought to create a studio in which artists and their creative visions could flourish, we are pleased to have reached an agreement with the WGA,” she said.

So now some writers will be employed at UA, which aside from Sloan’s feelings, has little to lose and a lot to gain. It will be able to work with top screenwriters since there are few other jobs, and it does not make reality TV shows, so many of the guild clauses that enrage the AMPTP are meaningless to them. In the end, the deal will conform to whatever the final contract is between the writers and management.

What this does mean is that Cruise, Wagner and their small team will have a chance to ramp up UA while others are forced to keep their development offices dark. So Sloan might be miffed, and have to do a mea culpa to the CEO 7 at the AMPTP, but there is no rift in his relations with Cruise or Wagner.

Bringing in Cruise and Wagner has been Sloan’s biggest initiative since taking over as Chairman of MGM in October 2005. However, there has been little to show for it so far. As the strike wore on, the cupboard at UA was almost bare. It has money to spend, but it needs scripts and scribes to do re-writes.

The only scheduled UA release is the World War II thriller “Valkyrie,” staring Cruise and directed by Bryan Singer, scheduled for October, when serious films are released, not in the summer when blockbusters are in season. Disney veteran Dennis Rice, who heads worldwide marketing for UA, says “Valkyrie” will get a wide release. It too reportedly needs some scripting still as a major battle scene needs to be modified and shot.

The only picture so far from the new UA was the disappointing “Lions For Lambs,” a talky $35 million war on terror drama with Robert Redford, Meryl Streep and Cruise as third lead. The lion and the lamb both got eaten. It was a flop with critics and audiences, grossing a modest $60 million worldwide, which means it lost money and tarnished the Cruise image for invincibility.

That image has been taking quite a beating lately anyway, with the release by St. Martin’s Press of “Tom Cruise: An Unauthorized Biography,” by British journalist Andrew Morton, making headlines for stories about Cruise’s role in Scientology, questions about baby Suri’s birth and allegations that ex-wife Nicole Kidman was blackmailed over sex tapes.

Through Bert Fields, Cruise has threatened to sue Morton, and has said he may seek to stop publication in England. The Daily Mirror in London quoted Fields on Monday describing parts of the book “sick and bizarre”.

“It’s a pack of lies,” Fields tells the newspaper. “The book suggests Scientologists somehow run his career. I’ve represented him for over 20 years and I’ve never discussed his business with (Scientology leader) David Miscavige. It’s poorly researched and badly written, and it’s not really even about Tom Cruise – it’s an attack on Scientology.”

The one other movie that came close to getting a green light at UA was “Pinkville” with director Oliver Stone investigating the My Lai Massacre in Vietnam. In the wake of the failure of “Lions For Lambs,” and failure by other war related movies, it was waylaid by the strike, with Stone and stars Bruce Willis and Woody Harrelson off to other projects.

So despite his embarrassment as one of eight AMPTP mega-company CEOs who run U.S. show business, the success of UA is crucial personally and professionally to Sloan, and no sure thing. Sloan has been rebuilding MGM with deal making not development, and his biggest, most high profile deal has been to create the new UA and bring in $500 million in Merrill Lynch financing. But that is not his end game.

At the time the long in gestation UA financing was about to come to fruition, MGM was also in talks with Goldman Sachs and others for a $1 billion financing. Then the bank credit crunch began, and Sloan saw that doing both deals would make the bankers nervous. So he withdrew the MGM financing, and worked to close the UA deal with Merrill Lynch, which despite the market conditions, closed. It’s now money in the bank.

Sloan still hopes to raise the $1 billion for MGM sometime in the future. He knows to do that he must assemble the pieces. He has moved to insure movies to release for a typical fee of 15 percent without the risk of financing production. MGM acts as distributor for the Weinstein Company, Lakeshore Entertainment and a few others. Sloan is planning on getting at least four movies a year from UA once it is up and running.

If that happens UA would again become a valuable asset to MGM. That would help impress investors. Sloan also needs a list of potential franchise movies to tout. Among the projects being assembled by Sloan is a revival of “Death Wish” with Sylvester Stallone in the Charles Bronson role of the man who takes the law into his own hands to clear the streets of criminals.

Sloan also can look forward to the return of the James Bond franchise. The soon to begin production Bond 22 will be the last released by Sony Pictures Entertainment. As part of the separation agreement from Sony when MGM took back distribution of its movies in theaters and home video, Sloan orchestrated a return of the rights to the James Bond franchise and The Pink Panther beginning with Bond 23.

The new James Bond film isn’t the only tentpole picture MGM is involved in – and tentpoles are what the MGM stated it would focus on when UA was revived as a production shingle. It is also listed as the production company for “Lord of the Rings” prequel “The Hobbit,” back on track after distributor New Line made peace with LOTR director Peter Jackson, who is now exec producer of the new Middle Earth ring quest.

MGM is a lean machine. It has no development department for movies or TV shows. It has one of the biggest movie and TV library’s in the world, which generates considerable annual income, and a number of international cable channels that need to be fed new material on a regular basis. For new releases, MGM makes deals with others who do the creative development and deal with the writers. For instance MGM is partnered with Reveille Productions and NBC in the new “American Gladiator” series which had a sensational premiere on NBC on Sunday night.

“American Gladiators” grabbed 12 million viewers to win the time period and rank as the highest-rated new-show premiere of the season on any network in the key demo of 18-49 years of age. It was NBC’s highest-rated premiere for a new show since “Heroes” on September 25, 2006. It’s NBC’s highest-rated new unscripted premiere in 18-49 since “Apprentice” in 2004.

Whether Sumner Redstone was wrong about Cruise’s value as a star attraction will be tested by “Valkyrie,” in which Cruise will be the only recognizable name on the marquee. Despite his history of success, Cruise cynics abound. Business Week magazine wrote last year that “no studio in its right mind would be banking on Tom Cruise with its own money right now. Despite the toothy grin and the wall-to-wall People, US, and tabloid covers leading up to his marriage to Katie Holmes, Tom Cruise is a shadow of his megastar self. Gone are the days when Cruise, now 44, could charm his way to huge box-office hits, such as 1996′s ‘Jerry Maguire’ or 1993′s ‘The Firm.’”

Business Weeks calculated the average cost of Cruises last five films (before “Lions For Lambs”) was $118 million each. Add to that millions more in promotion and advertising. “As the costs for making a Tom Cruise film have climbed,” wrote BW’s show biz expert Ron Grover, “box-office receipts have gone in the other direction. ‘Mission Impossible III’ grossed $133 million at the box office while ‘Mission Impossible II’ grossed $215 million—even though ticket prices had skyrocketed in the six years between the two flicks.”

So BW thinks Cruise is over the hill at 44. In “Valkyrie,” German officers during World War II plot to assassinate Adolph Hitler, but fail and are themselves sentenced to death. Cruise plays a Nazi who is a good guy. If Cruise can pull that off, then making UA once again worthy of its famous founders ought to be an achievable goal.

Sloan has tied his future to Cruise, Wagner and MGM. With the American Gladiators on his side and James Bond due to check in by late in the decade, Sloan may yet raise his billion and a lot more. He has certainly given Wagner and Cruise carte blanche and now they have a chance to grab an edge by being one of the few movie production development companies in operation during the strike. He has also given Cruise a platform to re-invent his career. Whether Cruise and Wagner can take advantage of that in a meaningful way will take about $500 million to play out.