Another Hollywood Split

By Rebecca Winters Keegan

Sometimes, dating the prom king is more trouble than it's worth. Like when he's demanding, a little creepy and, frankly, not all that popular anymore. The ugly breakup between Viacom's Paramount Pictures and the studio's major moneymaker Tom Cruise sends a signal to prom kings everywhere: Get over yourselves! O.K., so the signal is really going to A-list movie stars who enjoy $20 million--plus paychecks, cushy production deals and their pick of hot scripts and directors. Be grateful! Act normal! And if you can't do that, at least make lots more money than you cost.

Studios and stars hook up and break up all the time with little fanfare. But the nasty, public send-off Viacom's chairman Sumner Redstone gave Cruise, whose Paramount films have grossed nearly $3 billion, and the announcement that Cruise plans to produce films independently using Wall Street money, have stirred up some already simmering existential crises within the movie industry. Maybe studios don't need stars. Maybe stars don't need studios. Maybe--and this is the one that really scares Hollywood--audiences don't need either of them.

According to Redstone, the breakup of the 14-year partnership began on Oprah Winfrey's couch. The mogul, 83, told the Wall Street Journal that Cruise's "recent conduct has not been acceptable to Paramount." Apparently last spring, when Cruise's War of the Worlds publicity tour included leaping on Winfrey's talk-show furniture while gushing about fiance Katie Holmes, trashing psychiatry on the Today show and sermonizing about Scientology, the star cut into his ticket sales, especially to women. "We don't think someone who effectuates creative suicide and costs the company revenue should be on the lot," Redstone said.

In a sign that power is shifting in Hollywood from stars to suits, Cruise was just the latest A-lister to have been scolded by a testy executive. In July, Lindsay Lohan was publicly rebuked by the chief of Morgan Creek after too much partying caused her to miss work on the set of Georgia Rule. After Mel Gibson's drunken anti-Semitic tirade, he lost a deal for a Holocaust miniseries with ABC. Jim Carrey saw two films shelved this summer because of budget woes. And studios recently let lapse some deals with other actor-producers, including Jennifer Lopez and Denis Leary.

In an industry where rehab stints and extramarital affairs are merely topics to blubber about to Barbara Walters, Cruise's oddball behavior clearly wasn't the whole problem. "I don't think Tom has done anything that would change people's movie-going habits," says Jerry Bruckheimer, who produced Top Gun. The truth is, if Cruise's latest film, Mission: Impossible III, had grossed more, he probably could have distributed Scientology pamphlets door-to-door and Paramount would have made his contract work. Instead, M:i:III is on track to gross $400 million worldwide, the least of the films in the franchise. With Cruise earning 20% of its grosses and a healthy chunk of DVD sales--and with his production company, Cruise/Wagner, allotted as much as $10 million a year--the star has simply become too expensive. Whatever Redstone's beef with Cruise, by the end of the week his studio chief, Brad Grey, was vouching for the actor. "I admire Tom," Grey told TIME. As for collaborating on a Mission: Impossible IV? "I wouldn't rule anything out."

Cruise's camp says that even before Redstone's comments, Cruise/Wagner was securing $100 million in hedge-fund money to finance films independently. "We decided that the best direction for us is to do something where we lead the way in terms of where the film industry is going," says Cruise's producing partner Paula Wagner. The private-equity model has suffered some high-profile failures, like this year's big-budget flop Poseidon, but new investors continue to rush to Tinseltown. In September, Flyboys, at $60 million one of the most financially ambitious and risky films funded entirely by private investors, lands in theaters. With expensive period sets and complex aerial battle scenes, the producers kept the film about World War I flying aces on budget by scrimping on one thing: the movie has no stars.

With reporting by Reported by Jeffrey Ressner, Sonja Steptoe/Los Angeles