Knocking on Kevin’s door

Choice of Tsujihara signals deeper digital emphasis at WB

Kevin Tsujihara
Photograph by Bryce Duffy

Kevin Tsujihara owns a racehorse, Comma to the Top, that ran poorly in the Kentucky Derby nearly two years ago, finishing last. But the president of Warner Bros. Home Entertainment Group won an ever bigger race Monday, pulling off a huge upset no Hollywood handicapper would have ever predicted.

Tsujihara emerged the dark-horse winner of a three-way battle with Warner Bros. Picture Group president Jeff Robinov and Warner Bros. TV Group president Bruce Rosenblum for the role of CEO. He succeeds Barry Meyer, who will remain chairman through 2013.

But as unlikely as his promotion once seemed, it was probably the most logical move Time Warner CEO Jeff Bewkes could make considering Tsujihara best exemplifies the increasingly digital orientation media congloms are taking to their businesses. It didn’t hurt that Tsujihara, say insiders, was personally closer to Bewkes than either of his rival candidates.

But don’t expect signficant changes right off the bat when he assumes the CEO post on March 1. “One thing we want to do is get this right,” he told Variety. “I’m not coming into a situation where something is broken.”

Tsujihara, 48, has been president of WBHEG since 2005. While principally charged with managing the studio’s DVD business, he has a broad portfolio of responsibilities that encompass pretty much everything that isn’t part of the TV or movie fiefdoms.

Tsujihara told Variety that he’s very much hoping that Robinov and Rosenblum remain in their posts in order to maintain stability at Warner Bros. — a theme that was emphasized in recent conversations with Meyer and Time Warner chairman-CEO Jeff Bewkes.

“In each conversation, we agreed that we don’t want to change the culture at Warner Bros. — not just for the management team but also the creative community and our partners such as Village Roadshow, Legendary and Alcon,” Tsujihara said.

If there’s a throughline to his varied 20-year career at Warners, Tsujihara has diversified the studio’s interests beyond its successful film and TV divisions to counterbalance the decline of the once hugely profitable DVD business. In addition to amassing a somewhat checkered history exploring new opportunities online and videogames, he’s led the charge on distribution across digital platforms — and thwarting those who illegally appropriated Warners content in that arena through his anti-piracy efforts.

Tsujihara is not expected to make drastic changes at the studio but could move to increase synergies across a conglom that has seen its primary business units operate on an almost standalone basis.

Under Tsujihara’s leadership, WB has been an aggressive player in digital distribution on a number of fronts. The studio played a leading role last year in the launch of UltraViolet, a platform backed across a consortium of industries that enables cloud-based distribution of content to a wide array of devices. While UltraViolet is far from a success story after one year on the market, amassing over 9 million accounts, the technology is seen as Hollywood’s best hope for encouraging purchasing of films and TV series, as opposed to lower-margin but more popular rental options.

Tsujihara has also been instrumental in engineering the growth of Warners’ videogame business through a series of acquisitions and partnerships including a 2007 purchase for $200 million of publisher Traveller’s Tales, which continues to generate bestselling titles through its Lego Games line.

The California native has been steadily rising through the ranks at Warners since 1994, following a stint at the entertainment unit of Ernst & Young and an MBA degree from Stanford U. His ascension to the top homevid post came despite the same missteps that are on the resume of any exec who cut his teeth on the online side of the entertainment business during the 1990s. He led Entertaindom.com, a ballyhooed Internet portal Time Warner attempted during its AOL years that was shuttered in 2001, leading to 200 layoffs.

What likely helped Tsujihara’s CEO bid was his international experience, an asset to a studio that sees an increasingly significant portion of its revenues come from overseas. He led the studio’s Singapore division for a few years before returning Stateside in 2003.

In the top job, Tsujihara will remain active dealing with some of the same thorny issues that have been a challenge in his previous post. He’s tangled with the likes of Netflix and Blockbuster over extending the timespan between disc sales and rental windows. He played a lead role in 2011 experiments on the premium VOD front that saw the release of select movies 60 days after theatrical release for $30. Exhibitors have made any experimentation on that front a tough sell, but he’ll continue to have a hand in ongoing adjustments to the traditional exhibition windows.

Tsujihara’s ascension will open up the top post at his homevid unit. While it remains to be seen whether he restructures the portfolio he’s leaving behind, Ron Sanders, president of Warner Home Video, could step up. Or, in keeping with the growing importance of digital at Warners, Tsujihara could end up handing the reins to Thomas Gewecke, president of Warner Bros. Digital Distribution.

A married, mild-mannered father of two, Tsujihara co-owns thoroughbreds with MGM CEO Gary Barber and will no doubt be rooting on his beloved San Francisco 49ers at Sunday’s Super Bowl. Perhaps now the highest ranking executive of Japanese descent in Hollywood, he eschews the spotlight many at his level so actively cultivate — which insiders say may have helped him as the so-called “bake-off” for the top job took on a visibility many at the studio found distracting.

A successful run in a fast-changing entertainment business could set Tsujihara up for an even bigger job if Bewkes, 60, retires at the end of his contract in 2017.

“It’s a good stepping stone whenever Bewkes leaves,” said media and tech investor Harold Vogel. “Whoever is in that job will have a great advantage, will be front-runner. It’s why it was so intense and valuable to make that move,”

Wall Streeters noted the challenges faced by that particular venture and others like HBO Go, which Bewkes is passionate about, as well as the recent resurgence of Netflix after its landmark output deal with Walt Disney in December. “So what is your strategy? You’ve got to hire a guy who can help. This is the one guy who can help you,” said John Tinker, analyst of Maxim Group.

Tsujihara’s appointment also signals the growing importance of Hollywood’s homevid chieftains as new digital platforms turn into growing sources of revenue for the studios.

Over the next several years, such platforms are expected to pump out even more coin, giving homevid execs the kind of clout they enjoyed when DVD was a cash cow for the studios.

While overall homevid sales were flat in 2012, earning $18 billion in domestic consumer sales, the biz is showing signs of growth, according to the Digital Entertainment Group, with the digital sales of films and TV shows rising 35% last year.

In the past, studios put their marketing mavens into more powerful positions when they believed that greenlighting movies that the studio could easily promote seemed like a less risky way to pick projects.

Warner Bros. isn’t alone in turning to execs like Tsujihara for the future. In 2011, Disney upped Bob Chapek, from homevideo honcho to president of the Mouse House’s consumer products division, another lucrative division at the company.

Homevideo represented $2.35 billion in revenues for the studio in 2012, according to an estimate from Morgan Stanley analyst Benjamin Swinburne.

“Given the talent, depth and strength of the Warner Bros.’ leadership, selecting our next CEO was not a decision that could be made hastily or lightly,” read a joint statement from Meyer and Bewkes. “But we both agreed that Kevin is the right person to lead Warner Bros. and to build on its proud heritage as the world’s most storied content producer.”

(Stuart Levine, Jill Goldsmith, Dave McNary, Cynthia Littleton and Marc Graser contributed to this report.)

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