On one side is the chairman of Viacom, Inc., which owns Paramount Pictures.
On the other is the industry's biggest and most bankable star, whose last seven films have each generated over $100 million.
Redstone said Tuesday that Paramount would sever its long and profitable relationship with Cruise/Wagner Productions, Cruise's company with producing partner Paula Wagner. Redstone told the Wall Street Journal that Cruise's "recent conduct has not been acceptable to Paramount."
But Wagner told The Associated Press that agents for Cruise/Wagner Productions stopped negotiating with Paramount over a week ago and since secured independent financing, effectively taking any contract-renewal deal off the table.
"For some reason, Paramount has chosen to negotiate in the press," Wagner said, calling Redstone's announcement "surprising."
"It's not really the most businesslike approach," she said. "We've had virtually no dealings with Mr. Redstone."
Paramount referred all calls on the matter to Viacom. Viacom spokesman Carl Folta had no comment late Tuesday.
"As much as we like him personally," Redstone is quoted as saying, "we thought it was wrong to renew his deal." He then cited Cruise's "recent conduct" as the reason.
In the past year or so, Cruise couch-hopped on Oprah Winfrey's talk show while proclaiming his love for Katie Holmes, criticized the use of antidepressants and claimed that postpartum depression doesn't exist. He also got into an angry exchange with Matt Lauer on the "Today" show while defending his opinions.
Cruise/Wagner Productions has been based on the Paramount lot since 1992.
"We viewed ourselves as partners with Paramount," Wagner said, adding that the collaboration has produced $2.5 billion worth of business.
With "War of the Worlds" and "Mission: Impossible 3," Cruise helped earn nearly $1 billion for Paramount this year alone, Wagner said. Cruise/Wagner Productions brought "M:I3" director J.J. Abrams to the studio, she said, which recently inked a five-year arrangement with Abrams.
She and Cruise had been considering independent financing for their company "for a long time," she said.
"For us, this is a very new and exciting direction. We look forward to working with all the studios."