LOS ANGELES - Studio bosses Brad Grey and Ron Meyer have scaled Hollywood's ruthless ranks to become two of the most powerful men in the entertainment industry.
On their way to the top, both enlisted the help of private eye Anthony Pellicano, who is now accused in a federal indictment of wiretapping celebrities and others to dig up dirt to help clients in legal disputes.
Federal authorities have looked into Pellicano's links to the two executives as part of their ongoing investigation. Neither has been charged, but the unwanted attention has come at a critical time.
Grey, chairman and CEO of Paramount Pictures, is trying to revive the studio that struggled under previous leadership. Meyer, president of Universal, has been working to steer his company through a succession of corporate owners.
"It is a major distraction for them at a time when they have lots of other important business issues to deal with," media analyst Harold Vogel said. "No one can be happy in being associated with this."
Both executives have been questioned by the FBI and testified before a federal grand jury. They denied wrongdoing.
Grey, 48, declined further comment through studio spokeswoman Janet Hill. In April, he received a vote of confidence from executives of Viacom Inc., Paramount's parent company.
"I know it has been a stressful period for him, but professionally I haven't seen any difference," said "Saturday Night Live" creator-producer Lorne Michaels, who is working with Paramount on the film "Hot Rod." "All he's focused on is making Paramount the most successful studio in town."
Meyer's camp said his relationship with Pellicano was more personal than professional.
The two men have been friends for more than a decade. Meyer once offered to pay for the schooling of Pellicano's autistic son and visited the private eye in prison while he served a 2 1/2-year sentence for possession of explosives.
Meyer refused a request for comment made through Kelly Mullens, his spokeswoman.
"This is not a distraction at all," she said. "Mr. Meyer has been fully cooperative and we have no reason to believe he is under investigation."
Fourteen people have been charged so far in the case, with six pleading guilty to a variety of charges, including conspiracy and wire fraud.
Federal prosecutors have said more charges would be filed before the start of trial in October. But the case has dragged as authorities try to decrypt audio files of telephone conversations seized from Pellicano's office.
"I think there has been an indication that prosecutors have their sights on Hollywood's higher-ups," said Laurie Levenson, a professor at Loyola Law School and a former federal prosecutor.
"But Pellicano's clients are pretty insulated. Prosecutors have to prove his clients knew there were illegal methods being used," she said.
Among other things, Pellicano is accused of wiretapping Hollywood stars such as Sylvester Stallone and paying two police officers to run names, including comedians Garry Shandling and Kevin Nealon, through a government database.
Prosecutors have been interested in two lawsuits filed against Grey in which his attorney, Bertram Fields, used the services of Pellicano. Fields, one of the most feared litigators in Hollywood, has acknowledged being a subject of the wiretapping investigation and denied being involved in any illegal activity.
The first lawsuit was filed in 1998 by Shandling, who accused Grey, his former manager, of taking excess commissions and fees from the HBO hit "The Larry Sanders Show." The federal indictment said a Los Angeles police officer took bribes from Pellicano to run Shandling's name through a government database.
Six months later, Shandling settled the lawsuit for an undisclosed amount.
In a 2001 lawsuit, producer Vincent "Bo" Zenga claimed Grey reneged on a deal to equally share profits from "Scary Movie." Prosecutors contend the same police officer conducted illegal background checks on Zenga and his attorney. The case is ongoing.
Meyer, 62, met Pellicano 11 years ago and the two men developed a friendship about the same time Meyer was hired as president of Universal.
Meyer sought Pellicano's help collecting money lent to businessman Bilal Baroody. In March 1999, Baroody's name was run through law enforcement computers, according to the indictment.
Grey and Meyer both built their reputations by spotting and grooming talent. Grey scouted comedians in New York before heading to Los Angeles and teaming with agent Bernie Brillstein to form a production company.
Grey was behind the "The Larry Sanders Show" and "The Sopranos." He also produced films such as "The Wedding Singer" and "Scary Movie."
Before Grey was hired in early 2005, Paramount green-lighted what turned out to be a string of flops, including "Aeon Flux," "Elizabethtown" and the remake of "The Honeymooners." In its most recent quarter, profits at the studio fell 28 percent to $51.1 million.
Its fortunes could improve with the acquisition of DreamWorks, maker of the animated comedy "Over the Hedge," which has grossed nearly $140 million in recent weeks.
Grey helped broker "Mission: Impossible III," only to see the high-octane thriller sputter at the U.S. box office with just over $130 million.
Meyer co-founded Creative Artists Agency with several other talent agents in the mid-1970s. The talent agency became one of the most powerful in the nation, signing such A-list stars as Tom Cruise, Al Pacino and Warren Beatty.
Since Meyer took over at Universal, the studio has gone through three owners - Canadian liquor distributor Seagram Co., French media company Vivendi and now NBC parent General Electric Co.
Once one of the most profitable studios, Universal has fallen to the middle of the pack. GE doesn't break out separate profit figures for the studio.
It has had several hits this year, including "The Break Up," with Jennifer Aniston and Vince Vaughn, that is approaching the $100 million mark. Last year, the studio released its remake of "King Kong," which grossed about $550 million in theaters worldwide.
No matter how their studios perform, some observers believe the reputations of Grey and Meyer will suffer because of their association with Pellicano.
"They will have a cloud over their heads," Levenson said. "It's a long-term stain."