Brad Grey expected to exit Paramount Pictures in an overhaul of the struggling studio

Paramount Pictures Chairman Brad Grey is preparing to leave his job, ending months of speculation about his future as Bob Bakish, the CEO of parent company Viacom Inc., moves aggressively to revive the long struggling studio.

Grey, who has led the storied movie company for 12 years, is in negotiations with Viacom to exit after a long period of financial woes at Paramount Pictures, according to three people briefed on the matter who were not authorized to comment on the situation. The company could announce his resignation as early as next week, one of the people said.

The planned departure is the latest management shakeup at a major Hollywood studio as fewer people watch movies at the multiplex. Last month, another struggling studio, Sony Pictures, announced that its longtime chairman, Michael Lynton, would be leaving.

“The performance has been consistently bad for years now, and it had become a major source of financial problems for Viacom’s earnings,” said media analyst Michael Nathanson of the MoffettNathanson research firm. “The industry itself isn’t in great shape, and that’s part of the problem too. It’s just a tougher business now.”

Grey’s tenuous position was underscored last week when Bakish announced a turnaround plan for the beleaguered media giant, with a particular focus on Paramount, which lost $445 million last fiscal year.

While Grey long enjoyed a strong relationship with controlling Viacom shareholder Sumner Redstone and his daughter Shari Redstone, the studio chief was put on notice after Bakish took over as CEO in December. In a recent interview with the Los Angeles Times, Bakish stressed that his division heads would be held responsible — and he didn’t mince words about Grey.

“I’m held accountable, and he’s going to be held accountable,” Bakish told The Times of Grey. “It would be a nice world if you weren’t held accountable, but I’m held accountable to a board of directors, including board of directors who have some shares — including one who has a lot of shares. There is real accountability.”

Viacom declined to comment Friday. Grey, through a spokesman, also declined to comment.

Bakish said he aims to dramatically alter how Paramount Pictures operates. No longer will the Melrose Avenue studio offer filmmakers a vast blank canvas. Instead, he said, Paramount will turn over about half of its film slate to movies that have clear ties to Viacom’s TV channels, including Nickelodeon and MTV.

The company is expected to look outside its own walls for a new studio head, one person said. It’s unclear who would replace Grey. Among possible contenders for the job are former Fox film chief Jim Gianopulos and former Warner Bros. executive Jeff Robinov.

Paramount lagged its rival studios for years as it focused on short-term profitability rather than building the big brands that now bolster the bottom lines of competitors such as Walt Disney Co. and Warner Bros. Entertainment. Paramount has ranked no higher than sixth out of the major distributors at the box office since 2012.

Its major flops have included horror reboot “Rings,” the summer tentpole “Teenage Mutant Ninja Turtles: Out of the Shadows” and “Monster Trucks,” a kids movie that resulted in a $115-million writedown for Viacom before the film was even released. The troubles have amounted to a major fall from grace for the studio that made “The Godfather” and “Forrest Gump.”

Yet, since his days as a talent manager and partner at Brillstein-Grey Entertainment, Grey has established himself as one of Hollywood’s preeminent survivors, known for forging close relationships with the likes of Leonardo DiCaprio, Martin Scorsese and J.J. Abrams.

After he was hired to run Paramount in 2005, Grey led the acquisition of DreamWorks SKG, the studio created by Steven Spielberg, David Geffen and Jeffrey Katzenberg. DreamWorks Animation and Grey’s distribution deal with Marvel Studios filled Paramount’s lineup with reliable hits, until the DreamWorks and Marvel deal evaporated, leaving big holes in the pipeline.

Grey made recent maneuvers to bolster the studio’s finances and ramp up its production slate, which in one year dipped to only eight films. Last month he secured a partnership with Chinese studio Shanghai Film Group and marketing and distribution company Huahua Media worth $1 billion in film financing over three years. Paramount has also enjoyed a strong awards season run with its alien visitation movie “Arrival” and the Denzel Washington drama “Fences.”

But the misses far outweighed the hits, with high-profile commercial flops like Martin Scorsese’s “Silence” — which audiences ignored despite critical acclaim — and “Zoolander 2.”

“Management needs to be held accountable,” said Rich Greenfield, media analyst at BTIG Research who has been a critic of the studio and its management. “Paramount has under-performed for so long and by so far. It’s time for a change in management.”

Grey will join a growing list of recently departed Viacom executives, including Philippe Dauman, the former Viacom CEO who left in August, and Thomas Dooley, the longtime chief operating officer who left in November. The head of MTV Networks, Doug Herzog, who had been with Viacom for more than two decades, and the company’s distribution executive Denise Denson left the company in December, shortly after Bakish took over.

Paramount itself has gone through a series of management overhauls in recent months. Vice Chairman Rob Moore, who had long run the studio day-to-day, was booted in September. In November, former Sony executive Andrew Gumpert was brought in to serve as chief operating officer. In a telling sign, Viacom deployed its New York-based Chief Financial Officer Wade Davis to the Paramount lot in December to dig into the studio’s finances.

ryan.faughnder@latimes.com

@rfaughnder

meg.james@latimes.com

Times Staff Writer David Ng contributed to this report.