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Before the 1950s, movie production was monopolized, and film editors, set designers, actors, writers, and other workers were maintained simply as salaried employees. All the actors had to sign contracts that almost made them become the studios’ property. At that time, actors did not have many rights as their studios could order them what to do, how to act, and what to wear. According to Elberse and Stone, “the studios scripted stars’ interviews, and “morals clauses” dictated their public statements, photographic poses, and even significant others” (2).
Sometimes, the actors even had to change their appearance, hair color, and biography details if the studio said so. Moreover, another drawback of the contracts was that they were signed for approximately seven years, and actors’ salaries were rather low and “could not be increased until their contracts expired” (Elberse and Stone 2). This situation changed in 1944 when a court of California compared such contracts with slavery, and all the power went from studios to actors.
After the 1950s, the shift in power helped many actors break free from the suffocating rules and contracts of studios and start making much money by getting “a substantial percentage of films’ earnings” (Elberse and Stone 3). There were several stars who decided to establish their own production companies and became rather successful. Nowadays, the actors, especially the famous ones, are able to decide for themselves, and they are more powerful than the studios.
Tom Cruise’s Star Power
Tom Cruise was born on July 3, 1962, in Syracuse, New York, left high school at eighteen, and, in 1981, starred in his first movie, Endless Love. Filmmakers and critics started paying more attention to the new movie star after his supporting roles in Taps, 1981, and The Outsiders, 1983. However, it was Risky Business that made Cruise an extremely recognizable actor in 1983. In 1986 he cemented his A-list status after starring in Top Gun, a wildly successful movie, and that is when a nearly continuous string of blockbusters started. After 1992, “almost all of his movies grossed $100 million or more: the only exceptions were the controversial Eyes Wide Shut and Magnolia, for which Cruise earned an Oscar nomination for Best Supporting Actor” (Elberse and Stone 6). By 2006, Cruise’s received three Academy Award nominations and was named “world’s most powerful celebrity and Hollywood’s most bankable actor” (Elberse and Stone 6). In total, his movies had gained more than $3 billion.
The fact that Cruise is one of the most successful, talented, powerful, and recognizable Hollywood actors makes him rather valuable for movie studios. There are millions of people of all ages who know and love him and are ready to pay money for watching any movie if Cruise is starring in it. It is possible to suggest that both stars make successful movies and successful movies make stars because it depends on a certain situation. If an actor is already famous and has a huge group of fans, a movie he is starring in has many more chances to gain success and appreciation. On the other hand, if a movie is certainly going to be a piece of art, any talented though not well-known actor will become successful after it.
Viacom’s Partnership with Cruise/Wagner
Paula Wagner was a brilliant agent, and Tom Cruise – a talented and successful actor, so their collaboration could not be anything but a triumph. In 1992 they established Cruise/Wagner Productions and located it on the Hollywood lot of Paramount Pictures. Their partnership was rather productive: Paramount provided a fund of up to six million dollars for developing movie projects in exchange for having a right of being the first to show those movies.
By 2006, Cruise and Wagner have produced thirteen successful movies, including the blockbuster Mission: Impossible franchise, which gained huge popularity and has earned Cruise and Paramount much money. Also, “Cruise also enjoyed a rich income that included 22% of the gross revenues received by the studio on his movies’ theatrical release, DVD sales, and television licensing, among other fees” (Elberse and Stone 7). Thereby, this collaboration was financially profitable for Paramount, Cruise, and Wagner and gained them amazing popularity and reputation. However, it had to end because of Cruise’s inappropriate behavior that would cost Paramount a fortune.
MGM’s Competitive Position
Metro-Goldwyn-Mayer Incorporation was established in 1924 and became an independent, one of the most successful, privately-held television, motion picture, theatrical, and home video distribution and production company. Its annual sales are estimated at around $1.7 billion, and it has released over ten thousand episodes of television programming and four thousand feature film titles that had received more than two hundred Academy Awards.
In 1981, MGM purchased UA and continued distributing and producing new films. However, because of its recent failures and some notoriety, UA was a dormant brand for Metro-Goldwyn-Mayer. The potential synergy between MGM and Cruise/Wagner may be rather useful and profitable as the studio is professional and promising, while Cruise is a quite talented actor who may bring more success, fame, and money to the company. MGM may sponsor the movies that Cruise and Wagner want to make, let them be independent in their choices, and get a good profit from those films.
The Deal between MGM and Cruise/Wagner
The main elements of the deal between MGM and Cruise/Wagner may be considered rather positive and profitable for both sides. The studio received one of the most well-known and loved actors and a talented agent, while they got a chance of creating movies, being sponsored, and making good money. What is more, Cruise was actively involved in choosing what films to make and could work with his talent. According to Elberse and Stone, “he was not obligated to appear in any UA movies, and remained free to star in and produce movies at other studios” (9). This great condition made him rather free in making his own decisions.
The critical innovation of Sloan’s business model was to grant equity ownership to Cruise/Wagner as he wanted any risks to be equally spread between the studio, actors, and investors. This may be considered a rather good idea because if a mistake is made, it will be all sides to correct it, and none of them is the only one to lose money. As for Cruise’s suggestion that UA’s first movie should be an original one, it is fair to say that it makes sense.
Such movies, if they are successful, show the power of a studio, and considering the fact that it is its first movie, it would be great for UA. However, a new studio’s first movie may be the next installment of an already popular franchise. In this way, if this installment is high-quality, prosperous, and on the same level or higher compared to the previous parts, the studio will immediately deserve respect and recognition of the audience, actors, and directors.
Work Cited
Elberse, Anita, and Peter Stone. Metro-Goldwyn-Mayer (MGM) and Tom Cruise. Harvard Business School, 2010.
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