Warner Bros. Embraced Digital Future With

Can this nice guy reshape the studio for the next generation?

Photos by Bryce Duffy

Kevin Tsujihara is feeling the weight of his triumph. Eleven days into his tenure as CEO of Warner Bros., his inbox is still inundated with well wishers. Necks stiffen a bit when he walks around the Burbank lot. Everyone, it seems, wants to get a little face time with the man who is routinely described by friends and colleagues as “amiable” and “nice.” Some call him “sweet.”

On this sunny Monday afternoon, Tsujihara heads back from lunch with CAA’s Richard Lovett into the small conference room adjacent to the office of his predecessor, Barry Meyer. He takes a seat at a large round wooden table, glances out a window that overlooks Olive Avenue and eases into a discussion of the most pressing issues he faces as the new leader of Hollywood’s largest and most prosperous studio.

Job One is nothing less than redefining how Warner Bros. distributes its wares to audiences around the world. The challenge is to turn the studio, by degrees, to be competitive in the not-so-distant future when the rules of the road for high-end content providers will be very different than they are today.

“We need to think about redefining how we distribute content, and therefore how we organize ourselves around the distribution of content, both today and tomorrow,” Tsujihara told Variety in his first lengthy sit-down since he became CEO on March 1. “Everything doesn’t have to change today but you have to have a vision of how you see the world evolving.”

Tsujihara’s vision of that future won him the CEO crown. He emerges battle-tested after enduring a competition to succeed Meyer that was unusually messy and public for a studio that prides itself on executive stability. Time Warner chairman-CEO Jeff Bewkes took his time in making his decision, a process that left some emotional scars on the Warner Bros. lot.

For Tsujihara, a 19-year studio vet who most recently headed the home entertainment wing, the biggest internal challenge is not only to restore harmony among the units but to have them work together more closely than in the past. That kind of collaboration is essential, biz observers say, at a time when business models are in flux and the boundaries for exploiting intellectual properties are blurring.“The biggest change that will occur over the next three to five years — and has already started over the last five years — is the continuation of consumers having more choice, and having the ability to ask for more from us in terms of when they get access to our product and how they receive it,” he says. “They’re not going to experience things in just one way. Different consumers want different things. People want to personalize their experience. … I think we need to be more cognizant of what consumers want, and work backwards from that when we develop our businesses.”

Simply put, Tsujihara got the job because he gets digital.

He has led Warner Bros.’ drive to become a player in vidgame publishing with a string of savvy acquisitions. By all accounts, he’s also a master consensus-builder. His diplomatic skills were engaged in 2010, when Meyer put Tsujihara in charge of the negotiations that allowed WB, MGM, New Line and Peter Jackson to come to terms in order to greenlight the “The Hobbit” trilogy. And over the years, Tsujihara has championed a few radical moves by the studio that position it to embrace, rather than fight, the promise of new technology.

“Kevin is unusually well-rounded in his business and personal mix of skills,” says Brandon Burgess, chief exec of Ion Media, who has known Tsujihara for years.

Adds Gary Barber, chairman-CEO of MGM: “He sees the big picture. He thinks about the future in a very analytical way. He’s also very fair. He listens to both sides and then will evaluate it. He’s not about making quick decisions.”

Barber, too describes Tsujihara as very likable. “People may misconstrue that being too nice as not strong enough,” he says. “But he has a very good point of view, and once he believes in something he is behind it.”

Beyond his professional credentials, Tsujihara is known as a “regular guy”: a family man to his wife, Sandy and two children — son Matthew, 13, and daughter Morgan, 11 — and a major sports buff. A third-generation Japanese American, he grew up in Petaluma, Calif., where his father ran an egg distribution business, and he remains a devoted fan of his hometown teams, notably San Francisco’s 49ers football team, baseball’s Giants and basketball’s Golden State Warriors. (At one point he dreamed of playing pro basketball. “It didn’t pan out,” he says with a grin.) He readily displays a quirky sense of humor and a curiosity about others that puts people at ease.

Tsujihara recently took up owning racehorses as a hobby, and he’s quick to note that his late father loved horses. He’s made several equine investments with Barber and producer Roger Birnbaum, a friendship that blossomed after they labored together on the deal for Hobbit.

“You can tell when you’re in a conversation with somebody in the business when they’re actually listening to you and their responses are genuine,” says Birnbaum.

While many in Hollywood dismissed Tsujihara as “the homevideo guy” — the dark horse behind WB TV chief Bruce Rosenblum and film topper Jeff Robinov in the race to succeed Meyer — those who know the exec say he was the obvious choice, given the demands of the job.

“What I love about Kevin is that his ego is in check,” says Bob Daly, former Warner Bros. chairman-CEO. Daly headed the studio when Tsujihara joined in 1994, after serving as an auditor in the entertainment division of Ernst and Young.

“He’s not an “I” person, he’s a “We” person,” Daly says. “He’s very, very conscientious, and understands the importance of having everybody rowing together. He can be very firm and strong, but he can also be nice and gentle.”

Tsujihara will need all of those skills in the coming months as he establishes his regime. Because change at the top does not happen often at Warners.

Meyer served as CEO for 14 years, following the 19-year reign of Daly and Terry Semel. That duo took over from Ted Ashley, the onetime superagent who reinvigorated what had been a dying studio during his 1969-1980 tenure.

But the CEO handoff this time comes after the studio has endured more than two years of uncertainty. The contenders were clearly defined in September 2010, when Bewkes appointed Robinov, Rosenblum and Tsujihara to ill-defined Office of the President posts, once Meyer set his final two-year contract, and his long-serving No. 2, Alan Horn, was ushered out to give Robinov more authority on the movie side. (Horn has since relocated to Disney.)

The situation for the threesome was as awkward as the corporate moniker. Internally and externally, the move was interpreted as a “bake-off.” WB staffers were quick to note that the acronym for the new positions spelled out “OOPs.”

The intramural competition turned the studio — already known for the high level of autonomy afforded to division heads — into factions, each rooting for its own thoroughbred.

“This was a big distraction for people (at WB) that went on too long,” says one industry vet with close ties to the studio. “It left a lot of bad feelings, and that makes it harder for Kevin to come in and be a leader.”

The hurdles are made higher by WB’s tradition of allowing film, TV and other content businesses to operate largely as fiefdoms, so long as the overlords make their numbers every quarter. But the business of exploiting intellectual property is moving into the age of transmedia, which means that stewards of film, TV, videogames and digital content production, not to mention consumer products and marketing mavens, have to work together more often. A drive to bring WB’s divisions closer together was part of the impetus for creating the Office of the President, in order to give the heads of the three largest division insight into the pressure points and opportunities within their respective realms.

Tsujihara demurred on questions regarding the bake-off process. Insiders say he definitely felt the pressure at times, and was unhappy with the strain it put on what had been otherwise friendly relations with Robinov and Rosenblum. He emphasizes that the two have been “absolutely fantastic” in working with him since his appointment was announced on Jan. 28. “They’ve both made it incredibly easy for me, and I’m incredibly grateful to them, and to Barry,” he says.

To move forward, Tsujihara has to decide whether to appoint a strong No. 2 executive, in keeping with WB tradition. (New Line Cinema chief Toby Emmerich is a rumored possibility.) And he may have other crucial jobs to fill if Robinov or Rosenblum, or both, wind up moving on. (Will-he-or-won’t-he speculation remains rampant about both execs.) A search for a new CFO is also under way. With so much in play, Tsujihara asked Meyer to stay as chairman through the end of the year.

Among the priorities for the studio, which enjoys enviable market share in film and television, is finding fresh tentpole franchises now that the “Harry Potter” series has run its course; mining more content from the wealth of material in the DC Entertainment vault; and expanding WB’s activity in consumer products and international markets, in tandem with other Time Warner units, notably Turner Broadcasting.

Observers say Tsujihara is up for the challenge, judging by how he approached the problem of a collapsing homevid market. When he was named president of Warner Bros. Home Entertainment, the exec rolled up several disparate units under one roof for the first time, including homevideo, digital distribution, videogames, antipiracy and technical operations, with the realization that those activities could not operate in a vacuum without losing valuable opportunities.

“Kevin straddled some of the peak years of the homevideo business, and then had to manage a business that institutionally was going through some real rocky times,” says Bruce Berman, chairman of Village Roadshow. “Having the biggest library in the industry to deal with, Kevin handled the changes as well as anyone could have under the circumstances.”

Barely six months after he was appointed, Warner Bros. surprised the biz in 2006 by inking a licensing deal with file-sharing service BitTorrent, known to be a major purveyor of piracy. In consultation with the MPAA, Tsujihara persuaded Time Warner to dance with the devil to help tame the threat.

“He went to the top of the organization and said: ‘We should experiment, because the piracy problem isn’t going to be won through legal actions alone.’ He vouched for me personally and said this is a guy we can do business with,” says Ashwin Navin, co-founder and former president of BitTorrent.

“Tsujihara had created a new culture within (WB) by bringing in people with technical backgrounds, encouraging them to take risks and make bets, and not sit on the sidelines,” says Navin, who is CEO of Flingo, a developer of TV-centric apps.

Tsujihara had the ear of Meyer and Time Warner brass on strategic issues long before he became a division head. In 2000, just after AOL and Time Warner agreed to merge, Tsujihara was named WB’s head of new media, which initially meant cleaning up the excesses of previous execs (remember Entertaindom.com?). He also had the tricky assignment of being a liaison for the studio with corporate during the AOL interregnum.

In 2002, he convinced Meyer to throw Warner Bros.’ weight behind Movielink, an ambitious but ultimately unsuccessful movie download venture that was initiated by Sony. Yair Landau, who spearheaded Movielink as prexy of Sony Pictures Digital, knew he needed WB to give the project legitimacy, and he was impressed that Meyer had enough trust in Tsujihara, then in the corporate strategy and development group, to let him oversee the studio’s involvement with Movielink.

“Kevin really embraced (Movielink) as an affirmative response to piracy, as opposed to negative response,” says Landau, now an investor/producer and partner in MK Capital.

After working with him on other projects, including the DC Universe Online massively multiplayer online game, Landau says he was surprised Tsujihara stayed with WB for so long.

“He’s a very entrepreneurial guy. I don’t think he’s always wanted to be a Hollywood guy,” Landau says. “The hard thing was to not go and run other businesses during the dot-com bubble, or to leave more recently. But it wasn’t like he was going to go work at Fox. He would have gone and run a startup in Silicon Valley.”

Indeed, Tsujihara thinks Hollywood in general needs to be more welcoming of innovation, and learn how to embrace failure. WB is the biz’s chief champion of the UltraViolet homevideo initiative offering cloud-based storage of movies in order to make them more accessible to consumers across multiple devices and platforms. The majors, other than Disney, have signed on to the philosophical concept of UltraViolet, but marketing the option to the public remains a weak link. Tsujihara sees cloud-based storage as vital for stemming the decline in the video sell-through market.

“If we’ve learned anything from our friends in Silicon Valley, it’s that they haven’t been afraid to put out products and innovate from them vs. waiting for the perfect solution,” Tsujihara says. “As an industry we tend to want to be perfect. Because we make such incredible products, we often want to wait until we get something 100% right. I think that if consumers feel like you’re trying to work toward giving them something they want, they’re willing to be patient with you. Apple is a great example of that.”

Another critical test of Tsujihara’s leadership skills came around the time the Office of the President troika was formed. Meyer pressed Tsujihara into service to help Horn sort out a host of complicated issues on “The Hobbit.”

The rights issues on “Hobbit” were particularly complicated, because MGM had international and New Line had domestic rights to the Tolkien adaptation. MGM at the time was on a roller-coaster heading toward bankruptcy, and thus in no position to bankroll a Peter Jackson epic. Tsujihara, meanwhile, was part of a team evaluating the possibility of Time Warner acquiring MGM (as he had when TW fielded a bid for the Lion in 2004). As the clock was ticking for Jackson and helmer Guillermo del Toro (who eventually dropped out), Tsujihara worked with the Lion’s then-chairman Stephen Cooper to secure “Hobbit” plans even through the bankruptcy filing and reorganization, which saw Barber and Birnbaum come in as CEOs.

“There were a lot of different parts to this puzzle and (Tsujihara) was the one really coordinating all of those pieces. There were a lot of factions that had to be satisfied,” MGM’s Barber says. “He kept it on a path moving forward to production.”

After the dealmaking was finally done, and just as production was about to start in Jackson’s home base of New Zealand, local unions threw them a curveball, threatening to disrupt the production in a dispute over the use of non-union labor.

Even as Warner Bros. and MGM began looking for alternate shooting locations, Tsujihara led a delegation of WB execs who met with New Zealand Prime Minister John Key to calm the waters and secure tax-incentive coin for the pic. “He was really critical in the negotiations in New Zealand,” Barber says.

Still, Tsujihara’s deep business background raised questions of whether he has the experience to make the gut calls that studio chiefs often have to make — especially big calls on expensive creative decisions. Tsujihara has been a member of WB’s film “greenlight committee” for some time, and he is a voracious reader. But he also knows his limits.

“The CEO and corporate managers should be problem solvers and foster an environment that nurtures creative talent,” he says. “You’ve got to maintain your excellence from a content perspective, so you want to make sure you’ve done everything in your power to ensure that the great people who make our films, television and games are successful.”

Tsujihara admits to being overwhelmed by the response to his new gig from every quarter — from Japanese-Americans saluting him as a trailblazer to the horde of industryites who want to be on his radar. As he settles in, he’s leaning on Meyer and is receiving the wisdom of Daly and Semel and others.

One thing he’s taken to heart is the importance of preserving the storied culture at Warner Bros., something current and former studio employees talk about as if the company were a sovereign nation. Which in Hollywood, it is.

“You realize what a privilege and an honor it is to have this position,” Tsujihara says. “When you’re on the way up (as an exec), you don’t appreciate it as much, because you’re just trying to get wherever you’re going. But now it hits home. (WB) really is a very special place to work. I’m determined not to lose that culture.”

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