HOLLYWOOD WAS JOLTED LAST WEEK by rumors that Warners prexy Terry Semel had run into a snag in his contract talks and that he might even be weighing other offers. Gossip of this sort would be routine at most companies, but this was Warners, Hollywood’s bastion of continuity.The Bob and Terry Show, as it has come to be known, has been in place for an astonishing 13 years. While myriad other regimes have come and gone at rival studios, Robert Daly and Terry Semel have thrived. Talk to any new studio boss in town and the first thing he’ll say is, “How do I compete with Bob and Terry; they’ve been here forever!” By week’s end, Semel had punctured the rumors. Negotiations were on course, he assured, and a new deal would soon be struck. It’ll be business as usual at Warners. Spend any time with Daly and Semel and you come away with a sense of calm and order that’s in sharp contrast with the frenzy that seems to grip other entertainment companies. These are not men who issue pronouncements or seek attention; they are not uniquely colorful or even quotable. They don’t like being interviewed and, while they don’t hide from the press, would prefer that attention be lavished on the stars and filmmakers whose careers they foster. Yet on their low-key watch, they’ve expanded Warners from a tiny little business doing $ 700 million in revenues annually to a $ 4 billion-a-year gorilla. Earnings have spiraled from $ 70 million to $ 410 million. Some of this growth stemmed from prudent acquisitions, such as Lorimar or the United Artists film library. But much of it came from internal growth from successful films and TV shows, from overseas distribution entities, from licensing and from the burgeoning new retail operation. The recession notwithstanding, this growth mentality is exemplified by the burst of construction activity in and around the lot. The Warners studio had grown a bit musty and ramshackle under the joint ownership with Columbia, but now buildings have been refurbished and a campuslike Steve Ross Plaza has been completed. A 500-seat theater has been started and other assorted buildings and parking structures are popping up on and near the studio. THE BOB AND TERRY SHOW has hit some bumps along the way, to be sure, but Daly and Semel have shown a keen ability to alter course when necessary. A few years ago the studio seemed locked into old deals and relationships that were only marginally productive, but a vigorous offensive by management put Warners in business with Kevin Costner and Mel Gibson, among others, and even the venerable Clint Eastwood was suddenly experiencing a renaissance. Last week, Semel had just returned from a visit with Stanley Kubrick in London, Daly was about to travel to see John Hughes, and it was clear the team was fiercely intent on building its ties with its constituency of filmmakers. Though Warners, like most studios, exhibits a propensity toward “safe,” market-driven movies, management has been consistently out on the limb with daring projects like “JFK” and “Malcolm X.” And its superb new political comedy, “Dave,” opened promisingly last weekend. On the TV side, the combined product of Warners, Lorimar and HBO is so vast that Warners distribution mavens almost have more on their plate than the market can handle. Ask the team about management philosophies or formulas, and you get a blank stare. The only rule, insist Daly and Semel, is simple pragmatism. “We don’t set out to make a certain ratio of big-budget pictures a year,” says Daly. “If we have ’em we make ’em, if we don’t we won’t.” This summer the most expensive Warners picture, “The Fugitive,” came in at under $ 40 million and several films cost well under $ 20 million. Warners’ exposure is hedged, to be sure, not only by lavish output deals but also by co-financing arrangements with such well-heeled suppliers as New Regency or Morgan Creek or David Puttnam’s operation. If no one in top management has issued a public memo lately, it’s mainly because there’s no gospel to preach. Take a subject like the high price of movie stars. “We’ll pay for a top star if his presence will help the movie,” Semel says matter-of-factly. “If you start making public statements that no star is worth more than X or no director more than Y, you should get into another business.” Significantly, Warners was eager to make “Dave” with Warren Beatty, but when Beatty backed out the studio went right ahead with Kevin Kline. Though some feel Warners and Disney are getting locked in a battle over market share, Daly denies it. Indeed, Warners has not responded in kind to Disney’s acquisition of Joe Roth’s company or Miramax; Warners studied the Miramax deal and opted to pass. DO TENSIONS EXIST BETWEEN DALY AND Semel, beneath the seamless surface? In all the times I’ve talked to them, I’ve never detected a symptom; like most good partners, they even interrupt each other gracefully. “You’re dealing with two tough-minded realists,” advises one Warners exec, “who understand that they complement each other excellently. It’s as simple as that.” Semel, who came out of distribution, is the more articulate and exhibits flashes of self-deprecating humor. “Terry is one of those totally self-contained individuals,” says a WB alumnus. “There’s not a single crack in his armor.” Daly, by contrast, can be more bottom-line, even fiercely blunt. He also can be more vulnerable. “I remember the pain Bob went through after Warners passed on ‘Home Alone,’ ” says another Warners exec. “Bob Daly is so goddamn competitive, he practically nailed himself to a cross. He didn’t sleep for weeks.” Daly and Semel have become fabulously wealthy in the past few years and, despite their modesty, they look it. Impeccably groomed, expensively attired, they rank up there among Hollywood royalty, princes of production. But their work ethic remains fiercely egalitarian. “A big part of our job is akin to agenting,” says Semel. “We have our stars, both actors and filmmakers. We meet with them. We work with them. Their success is ours and vice versa.” Will the curtain ever come down on the Bob and Terry Show? Entrenched as they are, not even Daly and Semel can be totally insulated against the downdraft of corporate politics. Though Steve Ross’ name decorates many structures on the lot, a new chief, Gerald Levin, now presides over Time Warner. Only a few insiders know whether “the suits” from New York might try to impose constraints on their California colleagues, and what impact this would have on the Daly-Semel regime. One fact is clear: Debt-ridden Time Warner needs big profit from Hollywood and, over the years, Daly and Semel have delivered. That fact not only bespeaks longevity, it sustains it.
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