Cruise recovers from sacking to find a new studio to run

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Tom Cruise has found himself a new production deal - along with the flattering title of head of United Artists (UA), the actor-based Hollywood production company founded by Charlie Chaplin and Mary Pickford.

The 44-year-old actor and his producing partner, Paula Wagner, were given a new home by UA's parent company, MGM, less than three months after they lost their long-standing deal at Paramount.

They will be able to call themselves studio heads, with a prestigious name to call their own and full control of a production slate expected to average four films per year. On the other hand, the glory days of UA are long gone and it is hard not to see the move as a step down for the Cruise-Wagner team. The organisation they will now head is just a boutique subsidiary of the least prestigious of the Hollywood studios - a place agents and producers generally turn when they have been rejected everywhere else.

MGM was bought out by Sony in 2004 and seriously considered getting out of the production and distribution business altogether. For years its major revenue sources have been its library of old classics and its one surviving money-making machine, the James Bond series. Now, though, it appears interested in reviving its film-making activities.

Under the terms of the deal announced by MGM yesterday, Ms Wagner will serve as UA's chief executive. Mr Cruise will appear in UA productions, but he will be free to appear in films produced at rival studios.

UA had several golden periods following its founding in 1919, first as the production company behind Charlie Chaplin's classics, then, in the 1950s and 1960s, as a home for Billy Wilder, Stanley Kramer and others, and in the 1970s, for Robert Altman and Woody Allen.

It is also, however, a byword for film-industry debacle because of the disastrous failure of Michael Cimino's 1980 film Heaven's Gate. UA almost went bankrupt and was never the same again - not least because of its association with another famous clunker, Showgirls, from 1995.

Mr Cruise has had a rough time of his own recently. His romancing of Katie Holmes, the mother of his newest daughter, felt fake to the entertainment press. His outbursts against psychiatry on national television, inspired by his adherence to Scientology, earned him ridicule and widespread indignation, especially after he picked a fight with Brooke Shields over her experience of postnatal depression.

Meanwhile, last year's supposed blockbuster Mission: Impossible III did not live up to Paramount's revenue expectations. Since a big chunk of the box-office revenues went to Mr Cruise upfront, the studio and its corporate parent, Viacom, appear to have decided the deal with Cruise-Wagner productions was no longer financially viable.

Viacom's chief executive, Sumner Redstone, alluded to both the diminishing financial value of his 44-year-old superstar and also to his "outrageous" public behaviour to justify the severing of the 14-year-old deal.