Transformers

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Paramount Pictures rolls out Steven Spielberg's latest movie "Transformers" Monday, marking a milestone in the studio's turnaround. Based on the Hasbro Inc. toys of the same name, the film has all the makings of a summer blockbuster: dazzling special effects, thundering action sequences and a rising male star that has teenage girls squealing in their seats.

Costing $145 million -- a trifle compared with the big summer sequels such as "Spider-Man" and "Pirates," at $300 million-plus apiece -- "Transformers" has the potential to be a money spinner for Viacom Inc.'s Paramount. The movie stars a relatively cheap cast, although producer Mr. Spielberg and director Michael Bay will likely take a chunk of any profits.
Scoring a hit with "Transformers" would leave no doubt Paramount's decision to pay $1.6 billion for Mr. Spielberg's DreamWorks SKG has had its own transformational effects. DreamWorks has become the engine driving the once ailing studio, churning out hits like "Blades of Glory," "Norbit" and "Disturbia," this year alone.

Still, Paramount Chief Executive Brad Grey has work left to do. Integrating Dreamworks into the Paramount empire has been a bigger headache than expected, with the new team determined to keep autonomy. Mr. Grey believes "whatever hiccups and bumps" they experienced have passed and "DreamWorks has performed brilliantly."

Mr. Grey bought DreamWorks just over a year ago to help speed his turnaround. It gave him breathing room to revive the studio's specialty arm, Paramount Vantage, which scored early hits with "Babel" and "An Inconvenient Truth." He also brought in A-list filmmakers such as Martin Scorsese and Brad Pitt, and set up a new international distribution network.

But while DreamWorks and Paramount Vantage have been earning their supper, the core Paramount label is taking longer. Releases this year, including "Zodiac" and "Freedom Writers," were critically acclaimed but did modest business.

Mr. Grey points to next year's slate as the turning point. The line-up includes a new installment of "Indiana Jones," directed by Mr. Spielberg, and a new beginning for "Star Trek."

Indeed, movie franchises are something Paramount needs badly -- as Sony Corp. has with "Spider-Man" or Warner Bros. has with "Harry Potter." "Transformers" is likely to fall into that category, says Mr. Grey.

Paramount has been careful to position "Transformers" as not just for kids. They may have done too good a job: The studio got into hot water during the week with the Campaign for a Commercial-Free Childhood, which complained to the Federal Trade Commission that ads and toys tied to the PG-13 movie are being aimed at kids as young as two.