LOS ANGELES -- Painters spent the better part of the first week of July sprucing up the 55-acre Paramount Pictures Corp. lot, primping and preening the studio for its 75th anniversary party on July 12.
The celebration is to bring together about 3,000 members of the Paramount family -- from Hollywood legends to commissary cooks -- to honor the studio founded in 1912 by a Hungarian immigrant who dreamed of providing 'the best show in town.'
Paramount, the studio that gave the world Rudolph Valentino, Bob Hope, Eddie Murphy and Harrison Ford as Indiana Jones, has reason to celebrate.
Last year, Paramount put five movies in the nation's top 10 and took in nearly a quarter of the national box-office gross of $3.8 billion, outpacing its nearest competitor be a more than a two-to-one margin.
'Gulf & Western's Paramount is red hot. I don't see how you can keep hitting winner after winner,' said Gary Schneider, an entertainment analyst with Bear, Stearns & Co. in New York.
Three years ago, Paramount was anything but hot as it faced a corporate drama worthy of a Saturday matinee, and one that threatened to leave the studio's famed arched gates nothing more than a Hollywood landmark.
The studio's top management quit to head rival companies, taking many senior executives with them. The departures left one of filmdom's most prolific hit machines sputtering with only one movie in production and not much time to recover.
Meanwhile, Paramount's corporate parent, Gulf & Western Inc., was in the midst of an ambitious restructuring, shedding businesses with $4 billion in sales in a way that resembled a film editor consigning scenes to the cutting-room floor.
Although the tale is not over, Paramount appears to be on the way to a happy ending, thanks in large part to the marketing muscle of its new management team built by 53-year-old studio chief Frank Mancuso.
'There is an enormous energy at the company right now to get out and be the best. None of us is afraid to be right out there,' agreed Sidney Ganis, president of worldwide marketing for Paramount's motion picture group.
Construction crews are finishing the first major building project on the lot in years, a five-story headquarters for Paramount's marketing and distribution departments named for Adolph Zukor, the studio's founder.
And the studio's 32 stages are buzzing with activity ranging from feature films to network television programs such as 'Cheers' and 'Family Ties' to 'Hard Knocks' and 'Brothers' for cable television's Showtime channel.
Television production increased from 11 programs to 12 this year.
Paramount released 17 movies last year, including 'Top Gun' and 'Children of a Lesser God,' up from 11 in 1985.
But Mancuso said he is more concerned with the quality than the quantity of movies Paramount releases.
'As long as I run the company, I never want Paramount to become a sausage factory,' he said. 'I wouldn't want anybody ever to be able to identify a Paramount film by the type of film it is. I'd love to believe that we play the whole field. There is no such thing as a film we wouldn't do.'
With this summer's blockbuster sequel 'Beverly Hills Cop II' earning $118.6 million in six weeks and 'The Untouchables,' an Elliot Ness-versus-Al Capone gangster story, hauling in $44.6 million in four weeks, Paramount has maintained its leading market share.
In a three-year survey by Variety, the entertainment industry newspaper, Paramount had the nation's top-grossing movie for 101 weeks, compared with 56 weeks for its nearest competitor, Warner Bros.
On the home video front, Paramount's low-priced 'Top Gun,' selling at $26.95, well below the $79 average, continues to top video sales charts.
'The difference between Paramount and other studios is the talent. The talent they have are home run hitters. Other studios have good, solid people but they don't get blockbusters,' said Steven Rosenberg, an entertainment analyst with Paul Kagan Associates, a Carmel, Calif., investment firm.
Martin Davis, Gulf & Western's chairman, attributed the company's heightened value to the restructuring and improved earnings at Paramount, Simon & Schuster, Madison Square Garden and Associates First Capital Corp. of North America.
'These are all higher multiple businesses. All of them are spinning,' Davis said from his office overlooking New York's Central Park.
'The balance sheet today is superb. I could have made that statement the year before or the year before that,' he said. 'I can't remember when we've had a loss year but we've had our ups and downs.'
Gulf & Western reported earnings last year of $267.4 million, or $4.28 a share, compared with $247.8 million, or $3.51 a share, the year before. The conglomerate rolled up revenues of $3.7 billion, an increase from $3.3 billion the year before.
Paramount contributed earnings of more than $110 million on revenues of $927.5 million, up from weak earnings of $75.1 million the year before on revenues of $864 million.
Davis cited Paramount's ability to get the most out of its motion pictures through video sales and television syndication as a key to the studio's financial success.'The only way to compete is to build residuals,' he said.
Studio chief Mancuso agreed.
'A blockbuster in motion picture terms is a blockbuster in video cassette terms is a blockbuster in pay-per-view is a blockbuster in pay television and network and syndication,' Mancuso said. 'It follows right down the line.'
For example, last year's 'Top Gun,' sold more than $270 million worth of tickets at the box-office. Paramount capitalized on the film's success with an innovative marketing approach for the video version.
Savings of as much as $8 million were realized by adding a Diet Pepsi commercial inserted on the 'Top Gun' video tape. Paramount passed the savings to consumers by lowering the video's cost to $26.95 -- a price that helped 'Top Gun' lead video sales charts with sales of more than 2.85 million units, or about $80 million, so far.
'It was an automatic when it hit the streets. To us, coming out in video with 'Top Gun' was like a second release of the film,' said Robert Klingensmith, president of Paramount's video division.
Klingensmith said he expects similar results for 'Crocodile Dundee' when it is released in August. The video will sell for $29.95 and will not have a commercial.
Paramount's video revenues topped $225 million last year, in large part on the sale of low-priced titles.
As in any other industry, success can be fleeting -- a fact not lost on executives at Paramount or parent Gulf & Western. 'You have to say we've been very fortunate. This is a business where luck plays a tremendous role,' said Mel Harris, president of Paramount's television group.
Hollywood's other major studios will not be content to let Paramount sit alone at the top for long.
And, the increasingly hostile environment between Hollywood's labor and management threatens to dampen the industry's profits while television revenues overall decline amid rising production costs.
Moreover, Paramount's hot-shot production team of Donald Simpson and Jerry Bruckheimer -- responsible for such hits as 'Flashdance,' 'Top Gun,' and 'Beverly Hills Cop II,' -- is nearing the end of its contract with the studio.
A bidding war is expected to bring every studio to the pair's office on the Paramount lot. Neither Simpson nor Bruckheimer will tip their hand to their future plans.
'We love being here,' Simpson said. 'The future never knows.'
Paramount's Mancuso said he knows one thing -- a movie studio in today's Hollywood cannot afford to rest on past success.
'This is almost like yesterday's lines. I mean, I don't even have time to think about it,' he said.
Arthur Barron, president of Gulf & Western's entertainment group, agreed.
'You can be comfortable,' he said, 'but you can't relax.'
