STUDIO LANDSCAPE SHIFTING MIRAMAX, MGM, PARAMOUNT IN FLUX.

Byline: Greg Hernandez Staff Writer

As the movie industry prepares for Sunday's Academy Award ceremonies, epic behind-the-scene dramas are playing out at some studios with films in Oscar contention.

Miramax Films' Weinstein brothers, who have ``The Aviator'' and ``Finding Neverland'' up for the Best Picture, met with executives from parent company Disney twice this week to finalize the terms of an anticipated parting of ways.

Metro-Goldwyn-Mayer, one of Hollywood's most storied movie studios, reported its final earnings Thursday as an independent company and will become a unit of Sony Corp. as early as next month. MGM's ``Hotel Rwanda'' is up for Oscars in the acting and screenplay categories.

Meanwhile, new Paramount Pictures chief Brad Grey is set to begin as head of that venerable studio on Tuesday during a monthlong transition with outgoing leader Sherry Lansing.

``These things tend to happen in clusters but none of this is unanticipated or unexpected in any way because the changes were foreshadowed a long time ago,'' said media analyst Harold Vogel of Vogel Capital Management.

The Weinsteins, who sold their company to Disney in 1993 for $80 million, arrived in Los Angeles this week for the Oscars and for meetings with Walt Disney Pictures Chairman Dick Cook.

The sessions are said to be far more civilized than the fireworks that had been anticipated, with something of a win-win scenario being hammered out for all parties, according to sources.

It is widely known that such issues as budget, compensation and autonomy had all but doomed renewing the relationship further strained last spring when Disney refused to allow Miramax to release Michael Moore's controversial movie ``Fahrenheit 9/11.''

The Weinsteins would leave Disney when their contract expires at the end of September and are now in the process of raising the financing for their future distribution company.

Miramax would remain a specialty division of Disney, which keeps the division's 800-film library, but no longer be run by the Weinsteins. Its annual budget will also likely be reduced to less than $350 million after having been twice that in recent years due to such costly projects as ``The Gangs of New York'' and ``Cold Mountain.''

``You have to treat Miramax without the Weinstein brothers as a totally different operation,'' observed media analyst Dennis McAlpine of the McAlpine Group. ``It will now probably not be much different from the (specialty) movie divisions of the other studios. Harvey and Bob are characters unto themselves.''

As a Disney division, Miramax released Best Picture Oscar winners ``Chicago,'' ``Shakespeare in Love'' and ``The English Patient.'' Miramax has also been behind such acclaimed films as ``Pulp Fiction,'' and ``Kill Bill Vols. 1 and 2.''

As Miramax is transformed into a financially leaner filmmaking operation, MGM is also scaling down, but far more dramatically. It will no longer be an autonomous entity and will release about six movies a year under the legendary MGM banner.

``That is the end of an era, no doubt,'' said Vogel. ``The brand name MGM and its role in the history of the film business is tremendous.''

But Vogel, author of the book ``Entertainment Industry Economics: A Guide for Financial Analysis,'' said MGM's ``best times had probably passed'' after several years of struggle as it attempted to reassert itself as a major studio.

There were hugely successful James Bond movies, a major success with ``Legally Blonde'' and its slightly less popular sequel. But there were also the consecutive expensive failures of ``Rollerball,'' ``Hart's War'' and ``Windtalkers'' that forced the studio to abandon some of its loftier ambitions and go back to more modestly budgeted fare.

``The last era did a great job but they had a tough time of it,'' Vogel said.

It was announced this month that the studio's current chief financial officer, Daniel Taylor, will be the new president. Studio Chairman Alex Yemenidjian and Chief Operating Officer Chris McGurk are expected to leave once the acquisition becomes final.

MGM on Thursday announced that its fourth-quarter net income fell to $38.5 million, or 16 cents a share, from $60.3 million or 25 cents a share a year ago. The sharp drop was due to merger costs, a charge and declining revenue.

Putting a positive spin on those results, Yemenidjian said: ``We are especially pleased that over the past two years, MGM has generated $333 million in net cash from operating activities, which is considerably stronger than expected.''

McGurk on Thursday touted the success of ``Hotel Rwanda'' as well as what he called an ``extremely promising slate of films'' for 2005, including ``Be Cool,'' ``Beauty Shop'' and ``The Amityville Horror.''

For its part, Viacom Inc.-owned Paramount will be looking for something of a fresh start under Grey. While Lansing leaves on something of a high note with ``Lemony Snicket's A Series of Unfortunate Events'' grossing close to $120 million and ``The SpongeBob SquarePants Movie'' also doing well, her list of 2004 flops included ``Sky Captain and the World of Tomorrow,'' ``Alfie'' and ``Team America: World Police.''

Grey's initial 2005 slate, inherited from Lansing, is highlighted by ``War of the Worlds,'' starring Tom Cruise and directed by Steven Spielberg, and a remake of ``The Longest Yard,'' starring Adam Sandler.

``We shouldn't be too hasty to judge him,'' Vogel said. ``Give him two years.''

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com