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Paging Mr. Thalberg

Studios search for new production chiefs but struggle to redefine their responsibilities

The question has become exasperatingly familiar: Who will succeed Sherry?

The succession flap at Paramount has ramifications for Viacom and other studios. But it also raises a bigger question: Who has the qualifications in today’s fast-shifting media environment to be a studio chief?

From Irving Thalberg’s era to the dawn of the Bob Daly-Terry Semel regime at Warner Bros., the signature roles of a studio boss were corraling talent and choosing the right movies. But managing a studio has in the last decade become a game of corporate chess whose rules are constantly changing.

“The job of a studio chief is no longer about picking pictures,” producer Scott Rudin says. “That’s done four levels down.”

“The guts of the film business have changed,” says one longtime studio insider. “It’s not about making movies. It’s about video deals, overseas co-productions and protecting your downside.”

The regime change at Paramount is only one wrinkle in what could soon be a realignment of Hollywood’s senior-most management.

Disney is interviewing possible successors to Bob and Harvey Weinstein to run the Miramax label. DreamWorks production toppers Walter and Laurie Parks are ankling to run an indie production company based in Santa Monica. MGM will soon be folded into Sony, likely casting several film execs onto the job market.

And on the horizon is a wave of retirements that could shake up other top media companies.

Disney has hired search firm Heidrick & Struggles to find a successor to Michael Eisner, who’s announced he’ll step down as CEO at the end of 2006. Succession issues continue to swirl around News Corp.’s Rupert Murdoch and Viacom’s Sumner Redstone.

Any one of these shifts could set off a domino effect, putting top posts at play at other studios. None of them will be easy to fill.

Studio execs face a topsy-turvy corporate landscape. After-markets (homevideo, TV and foreign) are now primary markets. Theatrical box office now tends to generate less than 25% of revenues on a first-run film, and the window between exhibition and homevideo can be as short as two months.

Studio toppers like Universal Studio prexy Ron Meyer, Warner Bros. CEO Barry Meyer and, to some extent, Sherry Lansing’s boss, Viacom co-prexy Tom Freston, are extremely deft at staying in power by delegating responsibility for hits and flops to the vast operation beneath them.

They’re not on the hook if a movie tanks. Greenlight decisions are too risky to be left to gut instinct and are now largely the product of interdepartmental group-think. Costs are leveraged across a widening array of ancillaries and a range of financial partnerships.

But the pressure from Wall Street and the media to deliver instant success is intense. “Your average decision costs $100 million,” says Bill Mechanic, former CEO of Fox Filmed Entertainment. “Your mistakes are magnified. There’s no forgiveness in the marketplace for failure.”

In Hollywood, failure can be swift and ruinous: Just consider the spectacle now unfolding in a Delaware courtroom, where Disney’s Eisner is seeking to justify the hiring and no-fault firing of his erstwhile No. 2, Michael Ovitz.

Freston hasn’t indicated whether Lansing’s replacement will be a high-profile defection, as when Barry Diller bolted Paramount for Fox in 1984, or a low-key internal hire, as when Eisner tapped Dick Cook to run the Mouse House in 2002.

Media speculation has focused on Paramount production chief Donald De Line and a few outside candidates, including Fox Searchlight boss Peter Rice. The names of other studio chairmen, producers and even agents have been linked to the job.

But hiring a turnaround artist from another company has its risks.

Eisner recalled last week that Ovitz couldn’t overcome the expectations that followed him to Disney. “He was a .400 hitter who came in, and everyone expected him to hit it out of the park every time,” Eisner said on the stand. “It wasn’t the same park. It wasn’t even the same game.”

Freston has never run a film studio, and those who’ve talked to him about the Paramount job says he’s intent on studying the deep structure of other studios before choosing a chairman.

If so, he’s certain to find that the corporate underpinnings of each studio are different. As the Hollywood majors have evolved into separate fiefdoms of mega-congloms, they’ve also grown apart.

“Today none of the members of the MPAA look exactly alike,” says one studio exec. “It used to be we were all fairly homogeneous.”

“The world changes so fast and each company is so different and requires different expertise,” says Bob Daly, who with Terry Semel, ran Warner Bros. for 20 years.

“There’s a world of difference between Paramount and Disney. The job qualifications are so different. There’s only a handful of people that can do these jobs and then there are others on whom you’d be taking a chance.”

History shows that studio chairmen often succeed despite their limitations.

Boy-wonder Thalberg had a genius for script material and star talent but no managerial instincts. Daly and Semel were architects of the Warners’ tentpole system, but spent lavishly to build it.

Such limitations were less glaring in a day when studio chairmen concentrated on talent deals, scripts and production budgets. But today, those are just dance steps in a far more complex corporate waltz.

To be sure, picking movies is still a big part of the job – earlier this year, Lansing flew to San Antonio with her production chief De Line to persuade Robert Rodriguez to direct “A Princess of Mars” (never mind that Rodriguez is now off the movie). Lansing was also responsible for Par’s first-look deal with “Sideways” producer Michael London and Adam Sandler’s starring role in “The Longest Yard.”

But Lansing’s creative forays were, more often than not, nullified by corporate numbers cunchers.

No job in Hollywood could prepare an executive for all these economic imperatives, or for the expertise required in so many areas of the media. Whatever their prior experience, whoever replaces Lansing will face a steep learning curve – and there will be precious little time for them to get their footing.

“If a studio is well-run, it’s easier to move people in because the trains are already running,” Mechanic says. “But generally, change comes when things are not orderly run.”

Dave McNary and Jill Goldsmith contributed to this report.

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