From the time the first movie studios were founded, Wall Street has viewed the entertainment business somewhat like the Tea Party views Washington: Spending is too high, ambitions are too grandiose.
That’s why investors see the continuing wave of executive changes in Hollywood as propitious, while Hollywood sees corporate turbulence as disruptive and counterproductive.
The body count lately has been especially high among production and marketing chiefs: Adam Fogelson and James Schamus at Universal, Marc Weinstock at Sony, Jeff Robinov at Warners, Tom Rothman at Fox, Terry Curtin at Relativity, Oren Aviv and Tony Sella at Fox, Eric Kessler at HBO, among others. The TV seas, too, have been stormy.
Here’s the anomaly: All of these executives arguably were doing a damn good job. Fogelson’s most recent slate at Universal was successful. Schamus was a defining force at Focus in the culture and commerce of cinema. Further, in most cases the execs were blindsided by their bosses. “There’s nothing collegial about corporate life any more,” observed one of those on the hit list.
Talk to the money men in New York, and you come away with the sense that the continuing turbulence reflects a basic tension between two powerful forces. On the one hand, Wall Street understands that the ground is shifting — that the basic business model of the entertainment industry is undergoing a major change, both in distribution platforms and financing schemes — and that strategic accommodations must be made. Still, the CEOs in New York are demanding continued short-term improvements to the bottom line. Strategy is keyed to quarterly performance, as though Hollywood were producing widgets, not volatile entertainment products.
CEOs clearly have the right to fire key executives, but Hollywood firings in times past were more justifiable — and more colorful.
Sumner Redstone fired Tom Freston as Viacom president because he failed to buy a company (MySpace) that no one ended up wanting anyway. Columbia ousted David Begelman for allegedly embezzling funds, just like the MGM board canned Giancarlo Parretti before he could flee the country to avoid incarceration after being sentenced on charges of securities fraud. Jack Warner fired Hal Wallis because he tried to take Oscar credit for “Casablanca.” Darryl F. Zanuck fired his son Richard mainly because he was his son.
In Old Hollywood, corporate beheadings usually had a delicious subtext of scandal or secret swindles. In ’70s Hollywood, firings related to cocaine as often as to policy differences.
By the ’80s, however, as the conglomerates moved in, corporate egos spun out of control. Paramount’s Martin Davis felt he could run his company better without Barry Diller, Michael Eisner and Jeffrey Katzenberg, thus arming rivals with strong new management for years to come.
In bygone years, top CEOs like Steve Ross of Warner Bros. and Rupert Murdoch in his early days at News Corp. took time to explain their strategic thinking to the Street. Comcast’s Steve Burke and Time Warner’s Jeff Bewkes have made their changes without ever explaining the redesign.
Though the changes in structure have been massive, the demand for immediate returns has remained absolute, as has the pressure to produce higher international revenues. The late John Calley, who at one time or another presided over Warners, MGM/UA and Sony Pictures, once explained to me that his bosses started insisting on precise forecasts quarter by quarter when “I don’t even know what’s happening next week.”
While Calley disdained forecasts, I will nonetheless hazard a few of my own: Given the tensions of the moment, corporate heads will continue to roll. And the bankers will continue to nod their own heads sagely and remind us that the ground is shifting, as though they’d just discovered both the ground and the shift.