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Universal Strives to Close Its Ever-Revolving Door

Steve Burke’s new managers need to establish stability and strategy

MEMO TO: STEVE BURKE
FROM: PETER BART

Your sweeping changes at Universal last week reflect a recognition that two elements have been missing at the movie studio over the past two decades: a strategy and a strategist. The big question: Have you now found either?

In announcing Jeff Shell as your new Universal uberboss, you emphasized that his knowledge of international markets will impose a fresh global perspective. Translated from corporate-speak, and looking at the studio’s recent history, that means he doesn’t know the movie business.

Look back at the takeover pronouncements of U owners (all Hollywood outsiders) from Matsushita to Seagram to Vivendi to General Electric, and you’ll find that all were going to show Hollywood how to think globally and act tactically.

By and large, their initiatives tanked. In fact, it turned out that the only way Vivendi boss Jean-Marie Messier knew how to try to make money was to lie about the bottom line (he was convicted in a French court).

I’ve watched you study Hollywood over the past three years, Steve. While you’ve said all the right things in your speeches, here’s the question you never directly asked or addressed: Why has Universal kept sputtering? Why has the studio’s performance in the post-Lew Wasserman era never matched the sort of momentum achieved by Warner Bros. starting in its Daly-Semel days?

One obvious factor has been churn. With successive ownership changes, Universal’s regimes have kept capsizing, one after another. The only constant has been Ron Meyer, who you have now appointed as NBCUniversal’s statesman-at-large.

Over the years, Meyer has seemed like the conductor of a runaway train that keeps jumping tracks. As a former agent and consummate insider, Meyer never tried to pass himself off as a corporate visionary. Over his long tenure, he never developed the sort of long-term game plan hatched by Disney’s Bob Iger, whose succession of acquisitions (Pixar, Marvel, DreamWorks and Lucasfilm) has created a protective base of franchises for the Mouse.

Given your long tenure at Comcast, Steve, not to mention your father’s corporate savvy, you’d have had no trouble identifying the fatal flaws in each of Universal’s previous owners. Starting in 1990, the Japanese hierarchs at Matsushita put $6.6 billion on the line, but they were totally clueless in grappling with Hollywood’s power structure. They coveted the asset but distrusted both the product and their chosen native guide, Michael Ovitz.

Five years later, Seagram’s Edgar Bronfman Jr. was unable to mobilize a successful strategy or marshal the needed resources. Once, in touring the studio, Bronfman confided to me that he hated Wasserman’s black tower (Wasserman liked everything in black). Said Bronfman: “I’m going to get it painted white even if that’s all I accomplish here.” He never managed the paint job — or the corporate overhaul.

The takeover by Vivendi in 2000 seemed to augur well for Universal’s global ambitions, but its messianic leader, Messier, was big on bluster and wobbly on follow-through. GE took over ownership in 2004, but the GE style never clicked with the culture at the studio. U’s production and marketing execs found themselves locked in a numbing succession of boot camps and conferences, trying to share management goals with those trained in nuclear energy or airplane parts.

Given this bizarre history, skeptics who assess Jeff Shell’s background will inevitably conclude, “Here’s another Harvard MBA who thinks the global film business can be reduced to an algorithm.” The global markets beckon. Production costs can be harnessed by smart bean counters. It’s not that tough a game.

Unless you are careful, Steve, you may even find yourself repeating the scenario enacted when Sony Corp. took over Columbia Pictures and summoned Peter Guber to an urgent meeting. “Our analysis demonstrates that Hollywood makes only two kinds of movies,” the Japanese executives advised. “There are hits and there are flops. Your job is to just make the hits.”

Well, Steve, that’s now Jeff Shell’s assignment. The problem is that hit movies are not the offshoot of an algorithm, they are usually the result of a filmmaker’s passion. And passion is a tough product to package.

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