MGM’s board of directors has big ambition for growing the once-troubled studio into a major force in film and TV. Gary Barber, the MGM CEO who was abruptly ousted on Monday evening, was the right fit for the studio as it emerged from bankruptcy eight years ago, but the board ultimately decided unanimously earlier this month that he was not the person to lead MGM into the future.
Barber’s dismissal apparently blindsided the executive and shocked the industry as word spread Monday night. MGM has been a rare Hollywood success story in terms of the company’s financial turnaround on Barber’s watch. The company has solid cash flow thanks to its large library and capital on hand to fuel acquisitions and investment in content. Barber has earned much praise for building a firm foundation for MGM after it went through bankruptcy proceedings in 2009.
One source close to the situation said Barber’s biggest handicaps in the eyes of the board were his reputation for being a micro-manager on decisions large and small, and that he was too good of a negotiator. He was naturally inclined to drive a hard bargain with talent and with production partners. This came even as Barber was encouraged by the board to take bigger risks — to spend generously on talent if the project seemed worthy.
Kevin Ulrich, chairman-CEO of MGM majority owner Anchorage Capital Group, plans to take a firmer hand in high-level guidance of the studio going forward. The source emphasized that the decision to replace Barber as CEO was not just Ulrich’s but was unanimous by its seven board members.
Ulrich declined to be interviewed on Tuesday and Barber could not be reached for comment. On Monday evening, he told Variety: “I’m very proud of all the accomplishments at MGM over the last eight years I’ve led the company. We’ve taken MGM from the depths of bankruptcy to one of the greatest turnarounds in corporate history.”
The management of the pay TV network Epix became a flashpoint with the board. MGM acquired full control of the channel last year (it had been a joint venture with Paramount and Lionsgate), and Barber had talked up MGM’s intent to make Epix more a competitive player in the premium TV arena. At the same time, Epix was offering prospective talent and producers deals and license fees that were far less lucrative than its larger rivals. That was seen as an example of inflexibility in dealmaking on Barber’s part. “To build something, you have to be the friendliest place in town,” a source close to MGM said. “It was really hard for him to do that.”
The management of Epix was also a source of frustration within MGM. After MGM bought out its partners, Epix’s newly appointed president, Amblin and Turner alum Michael Wright, wound up reporting directly to Barber rather than tucking in to the MGM TV and Digital division led by producer Mark Burnett and his team.
Barber brought Burnett into MGM in 2014 when he bought out Burnett’s One Three Media. Barber gave Burnett a lot of leeway to continue working as a hands-on producer rather than serving as a more traditional corporate division head. But the decision on Epix management still raised some hackles.
There was also unhappiness at the board level that the studio seemed to operate as silos, with little interaction between the film and TV groups. MGM’s TV division has capitalized on the Peak TV demand for series to deliver a big hit in Hulu’s “The Handmaid’s Tale” and a host of other financially successful series, some derived from MGM movie titles such as FX’s “Fargo” and Epix’s “Get Shorty.” The film division, however, has had little traction outside of its James Bond movie franchise.
Moreover, the board questioned whether Barber had the strategic vision to lead MGM at a time of rapid change for content-focused companies.
The board’s about-face on Barber reflects a sense of urgency in the business overall and the feeling that the studio needs to make big moves sooner rather than later. Despite the appreciation for Barber as a businessman, the board had doubts about whether Barber had the right strategic vision and willingness to take big risks. “There’s no time to sit around and wait for things to happen,” the source close to MGM said.
The timing of Barber’s departure was also surprising as he had just five months ago signed a new five-year deal. The source close to the situation chalked that up to a realization by the board that despite Barber’s strong points, the industry is changing at warp speed and they needed to act decisively.
The source said MGM expects to recruit its new leader from the outside.