Lieberfarb ouster to stir controversy

In a move that shocked the entertainment industry, Warner Bros. chairman and CEO Barry Meyer has fired the 20-year president of Warner Home Video and the “godfather of DVD,” Warren Lieberfarb.

Lieberfarb, in the middle of a long-term contract, was informed of the decision a week ago. But the announcement was held up until the close of the stock market Friday. Settlement terms have not been agreed upon.

Lieberfarb’s longtime second-in-command, exec VP James Cardwell, and fellow WHV exec Marsha King are expected to be given additional duties, with Cardwell likely to assume leadership in a slight restructuring of the unit to be announced in early January. Jeff Calman is expected to remain head of pay-per-view and video-on-demand.

“Warren is a true visionary and a world-class executive,” Meyer said in a statement. “He constantly pursued how best to maximize our profits and how best to position Warner Bros. for the digital 21st century world. Warner Bros., as well as our industry in general, will be reaping the benefits of his efforts for decades to come.”

Though Warners execs tried to put a positive spin on developments, Lieberfarb’s firing is sure to stir controversy in the industry.

Manny Gerard, at one time a top aide to former TW topper Steven Ross and now chairman of investment banking firm Gerard Klauer Mattison, called Lieberfarb “a master strategist.”

“That’s what makes him unique,” he said. “This company is throwing out its best and brightest.”

With the homevid division bringing in some $4 billion in revenues this year, sources said Lieberfarb had been pushing to examine the potential merger of theatrical and homevideo marketing. At other companies, such as Paramount, theatrical and homevid marketing have been put under the command of a single executive. Warners studio management, however, has resisted any sort of restructuring.

Insiders have suggested that Lieberfarb tried an “end run” by arguing his case in New York, a version unequivocally denied by Lieberfarb. It was a similar alleged end run that led to the departure of WB film exec Lorenzo Di Bonaventura in September.

Lieberfarb holds a large number of stock options in the company, whose shares have languished since the merger with AOL. He has voiced his displeasure over that situation vociferously at corporate meetings.

Lieberfarb’s exit comes as he has reached the pinnacle of his career, with his DVD peaking as the most successful launch of a consumer electronics format. DVDs have brought billions of dollars in incremental revenue to all studios and represent a lone bright spot at most media companies this year.

Lieberfarb’s division is the single biggest profit center at AOL Time Warner and the dominant player among studios. What’s more, just 48 hours before his ouster, he was rejoicing in the stock plunge of Blockbuster, a company with which he has long battled and sought to undermine as the retailer increased its power and leverage against studios.

The homevideo industry generates about $20 billion per year in consumer spending, more than twice as much as the theatrical side, with DVD pushing revenue on the purchase of movies on homevideo to a projected $12 billion this year. Warner, with the largest library of movies of any studio, is the market leader, even though Disney charges more and Sony has the year’s biggest titles led by “Spider-Man.”

Visionary in field

AOL Time Warner CEO Richard Parsons said: “Warren is unique among every motion picture executive I have ever met. He combines being a visionary and strategist with being a hands-on, first-class operating executive.”

Lieberfarb, who has been with Warner for 27 years, is credited with having the initial vision for a digital form of home entertainment that evolved into the DVD. Over initial opposition, Lieberfarb spearheaded the creation of one of the fastest growing and most profitable sectors in the motion picture industry.

In 1999, the Academy of Television Arts & Sciences presented Lieberfarb with an Emmy for the development of DVD technology. In May he received the inaugural Wharton Infosys Business Transformation Award, which recognizes an individual who has been a key driver of the use of technology as a transformation tool.

Started in 1982

Lieberfarb joined Warner Home Video as senior VP sales and marketing in 1982, having originally joined Warner Bros. in 1975 as VP of marketing. Subsequent positions included executive assistant to chairman of the board the late Ted Ashley and VP of international marketing.

He previously held positions at Ford Motor Co., Paramount Pictures and 20th Century Fox. As VP of telecommunications at Fox, he was instrumental in initiatives that led to the growth of cable, pay TV and homevideo outlets for motion pictures.

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