10.05.09

Hollywood Studios' Day of Reckoning

The shakeups at Universal and Disney, while far from shocking, show a movie business undergoing such a dramatic transition, says Kim Masters, that even its usual arrogance might be tempered.

The guard changed at two major studios on Monday.

Both announcements, while not really surprising, reveal a movie business in dramatic transition.

Universal replaced the co-chairmen of its studio, Marc Shmuger and David Linde. Disney chairman Robert Iger tapped television executive Rich Ross, who is credited with resuscitating the Disney Channel, to run the Disney film studio. (Iger had ousted Disney veteran Dick Cook earlier this month, to the surprise and consternation of talent including Johnny Depp.)

Universal has suffered through a very bad streak with Land of the Lost, Brüno, and Funny People. The firings there had been expected for so long that they had actually stopped being expected. And given last week’s story that cable giant Comcast may acquire a controlling interest in NBC Universal, it seemed that Shmuger and Linde might get a stay of execution. After all, why get rid of people when a change of ownership may be imminent? And who would take a job running a studio that might be controlled by new bosses soon?

“Most of these media companies now—they don’t seem to feel the need to make nice with flesh peddlers such as me,” said a leading movie agent.

The thing to note here is that no one from outside is being brought in. The new chairman of Universal’s film studio is Adam Fogelson, the former head of marketing and distribution. The co-chairman is Donna Langley, the erstwhile head of production. The moves are consistent with what happened on the NBC side of NBC Universal when Ben Silverman departed as head of the network in July. There was no splashy new hire; instead, longtime insider Jeff Gaspin got a promotion. It seems that even then parent company General Electric was keeping its entertainment operations slim as a prelude to seeking a buyer.

Ron Meyer, the president and COO of Universal Studios and presumably the architect of the changes there, told me there’s nothing odd about shuffling the deck now because “we don’t know what’s going to happen with this [Comcast] deal and it’s not in our purview to do anything about it.” He pointed out that Universal has been through five ownership changes in the past 15 years. Since he’s been in charge all that time, why not continue to run the studio without worrying about who’s in the ownership on-deck circle? The studio will say nothing about the duration of the contracts of its newly promoted executives.

Hollywood observers speculated Monday about the reason for Meyer’s decision to act now. (His explanation—“It’s time for a change”—only goes so far.) The best guess I heard was that Meyer figures he may as well put new managers in position because it gives him and his team the best possible chance of surviving another change of ownership. Comcast doesn’t know the movie business, and finding strong executive talent is hard at the best of times. With the newly promoted team, Meyer can argue that he’s actively addressing the studio’s problems and that Fogelson and Langley deserve a chance to turn things around. And it gives him some time to work his considerable charm on his new bosses, assuming some kind of deal goes through.

At Disney, Iger has also stayed in-house, but clearly for different reasons. Rich Ross is a television executive entering a new world—and it’s hard to imagine a bigger collection of egos waiting to greet him. Among the producers with deals at Disney are Jerry Bruckheimer, Robert Zemeckis, and—what’s his name?—Steven Spielberg. One of Cook’s strong suits was his relationships with talent, and Ross will need to start pretty much from scratch there.

His strength, from Disney’s perspective, is that he built up the cable channels with shows like Hannah Montana—and was sufficiently cooperative with other divisions that Hannah Montana merchandise achieved absolute ubiquity far sooner than would usually be the case. Ross also worked a lot of magic making the most of the High School Musical franchise. Disney, which has had a tough year at the box office with films like G-Force and Bedtime Stories, is hoping he’ll bring some commercial mojo to this position—especially now that the company is looking to squeeze all the juice out of the Marvel acquisition.

It’s been a proud tradition in the movie business to rip bright television executives to bits unless they approach with humility. Gail Berman, who did so well running the Fox network, was rapidly dispatched from Paramount. Even the storied Brandon Tartikoff, who became famous for turning NBC around with hits like The Cosby Show and Cheers, didn’t last long in movie land.

But perhaps the usual arrogance of the movie business might be tempered at this point. As the events of the recent past have abundantly illustrated, these are scary times in the industry. When I asked a leading film agent whether Ross had called yet to make nice, he said no. And he added, with a rueful laugh, “Most of these media companies now—they don’t seem to feel the need to make nice with flesh peddlers such as me.” In a buyer’s market, it’s the flesh peddlers who need to make nice, even if the writers at Entourage haven’t quite noticed yet.

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Kim Masters covers the entertainment business for The Daily Beast. She is also the host of The Business, public radio's weekly program about the business of show business. She is also the author of The Keys to the Kingdom: The Rise of Michael Eisner and the Fall of Everybody Else.