Wagner resigns as chief of UA

Metro-Goldwyn-Mayer Inc.’s much-ballyhooed plan to revive the moribund United Artists studio was derailed Wednesday when the movie label’s chief executive, Paula Wagner, stepped down after less than two years on the job.

Wagner’s departure marks an end to her longtime business partnership with actor Tom Cruise, who, along with Wagner, was recruited by MGM chief Harry Sloan in 2006 in a bid to bring UA back to life and help return the struggling MGM to its former stature as a major Hollywood player.

Wagner and Cruise have been a producing team for more than 15 years, making such movies as the “Mission: Impossible” series and “War of the Worlds.” Before the two formed a production company in 1992, Wagner was Cruise’s agent for 11 years.

The development also spells uncertainty for Cruise, who had hoped to revive his career by resuscitating one of Hollywood’s most storied movie studios. Cruise and Wagner joined UA just two months after their dramatic departure from Paramount Pictures amid a bitter falling out with Sumner Redstone, chairman of the studio’s parent, Viacom Inc. Redstone publicly berated Cruise for his off-screen antics, which the mogul blamed for the actor’s diminishing box-office appeal.

The fate of UA and how long Cruise will stay in the fold are now in question. Cruise is not an executive at UA but, together with Wagner, owns a 30% stake in the studio and is involved in creative matters.

“I love Paula,” Cruise said through his publicist. “We’ve worked together and have been friends for almost 25 years. I support her in anything she does . . . and I look forward to working together and producing films in the future.”

In a statement, MGM said that the two would retain their ownership interest and that “nothing will change in regard to Mr. Cruise’s involvement with UA.” MGM said he and Wagner would continue to work on some UA projects together.

MGM did not name a successor to Wagner, who has been negotiating to leave her job for several weeks, as was first reported Wednesday on the Wall Street Journal’s website.

Wagner, who like Cruise was not available to comment, will return to being a producer under her own movie shingle.

“As much as I’ve enjoyed my time as an executive, I have longed to return to my true love, which is making movies, so that’s what I’ve decided to do,” she said in a prepared statement.

Wagner had a tough time making the transition from producer to studio chief and putting together an annual slate of movies, according to several people close to the situation. They said there was friction between Wagner and Sloan over the lack of movies that had been greenlighted for production since her arrival.

After Sloan brought Wagner and Cruise aboard to operate UA as an autonomous movie unit in November 2006, he was able to secure a $500-million revolving film fund with Merrill Lynch & Co. for them to produce four films a year over five years with budgets averaging $40 million to $50 million.

Not complying with certain start dates and release dates could jeopardize the financing, said one person with knowledge of the deal who asked for anonymity because it is confidential.

This person said Wagner was not used to these types of deadlines and was not queuing up movies fast enough to meet the fund’s requirements. Wagner and Cruise had the authority to give the go-ahead to any movie with a budget up to $60 million. MGM, which markets and releases UA films, has to approve films above that budget level.

Since Wagner joined UA, the studio has released just one picture, the $35-million political drama “Lions for Lambs,” starring Cruise, which bombed at the box office and lost tens of millions of dollars. The company’s next release, “Valkyrie,” a World War II drama also headlined by Cruise and costing close to $85 million, was pushed off until next year but MGM announced Wednesday that it would hit theaters Dec. 26.

Wagner was said to be upset when MGM passed on a big-budget production she submitted this year called “Ranger’s Apprentice,” written and directed by Paul Haggis, the filmmaker behind the Oscar-winning hit “Crash.” MGM didn’t think the children’s fantasy story justified a $100-million-plus budget, a person close to the studio said.

Wagner tried to shop the project to other studios but found no takers.

Her impending departure is a black eye for Sloan, whose plan for UA is unraveling at a time when he is attempting to raise hundreds of millions of dollars in sorely needed film financing for debt-ridden MGM. He recently hired former Universal Pictures executive Mary Parent to turn around MGM’s sagging box-office fortunes.

Sloan, a media entrepreneur, was recruited in 2005 by a consortium of investors, including Sony Corp. of America, Providence Equity Partners and Texas Pacific Group, to help MGM regain its footing.

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Times staff writer Rachel Abramowitz contributed to this report.