Paramount Pictures Finds Long-Sought Balance LOS ANGELES - At 3:08 last Monday afternoon, a handful of workers on storm-soaked walks at the Paramount Pictures lot here saw something unlikely: A double rainbow arched over the executive building. Jamie Rector for The New York Times Brad Grey, chairman of Paramount Pictures, on the studio's lot in Hollywood. Its plans, he says, are "wildly ambitious." J.J. Abrams/Paramount Pictures and CBS Studios Paramount is now cashing in on DVD sales of "Star Trek," one its summer hits. The studio is looking to make a sequel. Five years into the uneasy reign of its chairman, Brad Grey, Paramount is at long last catching a moment in the sun. Home entertainment revenue is up sharply in the fourth quarter, as the DVDs of three summer hits - "Star Trek," "G. I. Joe: The Rise of Cobra" and "Transformers: Revenge of the Fallen," the year's biggest movie to date - flood the Christmas market. Ticket sales have been good, too: "Paranormal Activity," made for $15,000 and marketed on the cheap, took in $107 million at the box office after opening in late September. And costs have dropped, as Mr. Grey bumped one expensive release, Martin Scorsese's "Shutter Island," into next year, to focus on a $25 million Oscar contender, Jason Reitman's "Up in the Air," and on the December introduction of Peter Jackson's "The Lovely Bones," a film that will not get its big-budget marketing push until January. "Yes, it will be our biggest," Mr. Grey said of the profit potential in a quarter that caps a strong year for Paramount in a generally weak film industry. Since taking charge of the studio from Sherry Lansing in January 2005, Mr. Grey has hired, fired, ramped up, scaled back, acquired a film company in DreamWorks SKG, then parted company with Steven Spielberg and its other principals as they chafed under his leadership and left the Paramount fold. Along the way, he attracted attention, critical and otherwise, about his bid for prominence in the movie industry, after years spent mostly in television, both as a talent manager, and as an executive producer of shows like "The Sopranos" and "Politically Incorrect." Last week, Mr. Grey spoke back in a far-ranging, if cautious, conversation about both his tenure and his plans for Paramount, a Viacom unit where his contract as chief executive runs for four more years. "I'm passionate about Paramount, I'm passionate about my colleagues here," said Mr. Grey. He is trim at the age of 51, with a gray-flecked brush cut and a certain kinship with Ryan Bingham, the job termination expert played by George Clooney in "Up in the Air." At Paramount, Mr. Grey said, the job cuts have largely stopped - though not before about a third of the 3,000 employees there when he arrived had been pushed out. The head count was 2,642 in September, as cutbacks in home video and other areas were offset by hiring to create an international distribution system to replace one that had been shared with Universal Pictures. In a creative group now headed by a former DreamWorks executive, Adam Goodman, Mr. Grey insisted that the turmoil was over. In June, he fired John Lesher and Brad Weston, who only 18 months before had replaced another short-lived appointee, Gail Berman, as Paramount's top film executives. Asked to describe his greatest mistake while at Paramount, Mr. Grey at first deflected the question, then said that it lay with his hiring decisions. "Putting a team together that had time to jell was more challenging than I thought," he said. As for achievements, Mr. Grey is proud to have whittled Paramount's release schedule to what he believes will be a profitable core of about 16 films a year. The studio expects to produce about a dozen, and acquire a handful from outside suppliers. That film count is down from a peak of 22 two years ago, when Mr. Grey, eager to pull Paramount out of last place in box-office market share, had aggressively expanded production. Not least, he did so by building a specialty division, Paramount Vantage, that delivered a spate of awards contenders - including "Babel," "Into the Wild," and, with Miramax, "There Will Be Blood" and "No Country for Old Men" - only to shut it down quickly. In closing Paramount Vantage, said Mr. Grey, he was backing away not from the awards game, but only from a costly structure that could not be supported in a deteriorating economy. "You have to evolve," he said. By year's end, Paramount will have released just 14 movies, and a handful of remaining Paramount Vantage films, fewer than any of its major competitors. But it has been running second only to Warner Brothers in the box-office race, with almost $1.5 billion in domestic ticket sales, to $1.9 billion for Warner, which has twice as many pictures. Richard Greenfield, a media analyst with Pali Capital, calls all of this a good start. "It's still a studio in transition," Mr. Greenfield said in a telephone interview. "They're now gaining some momentum in finding their own franchises," said Mr. Greenfield, who pointed to the revitalization of the longstanding "Star Trek" series as an achievement akin to Warner's rebooting of the "Batman" films. As to whether the good times can be sustained, Mr. Greenfield said "that can't be answered today," though he added: "They're in a far, far better position than they were."