While putting tough cost-cutter and hard-charging producer Tom Rothman as chairman of Sony’s Motion Picture Group, studio chief Michael Lynton also reaffirmed his position atop the embattled entertainment company.
Some in Hollywood had questioned whether Lynton could also be in danger because of the studio’s financial struggles and the devastating computer hack in November that temporarily crippled Sony’s operations.
But Tuesday’s announcement of Rothman’s promotion also revealed that Lynton’s contract had been extended for an undisclosed period of time. Lynton remains chairman and chief executive of Sony Pictures Entertainment and also CEO of Sony Entertainment. In the latter role, he oversees businesses around the world, including the company’s music and music publishing operations.
A subsidiary of the Japanese conglomerate, Sony has been struggling to gain momentum at a time when it fields just one comicbook franchise, “Spider-Man,” against competitors like Disney manned with a phalanx of superheroes and their lucrative merchandising deals.
The studio came under additional pressure in November when a computer hacking attack purportedly launched by North Korea unleashed waves of confidential information and left Sony workers unable to even operate their computers. The cyber-attack appeared to be in retaliation for the Sony-backed satire “The Interview,” which belittled North Korea’s supreme leader, Kim Jong-un.
Even without the computer debacle, Sony has been deeply challenged. It ranked sixth among studios in 2015 box office share as of mid-Feburary, according to Boxofficemojo.com, with 6.2% of the total on gross receipts of less than $100 million. It finished fourth in 2014, with a 12.2% share, behind leader 20th Century Fox at 17.3%.
In May 2013, major shareholder Daniel Loeb sent a series of letters to Sony Corp. executive Kazuo Hirai, castigating Lynton and Pascal for the studio’s low profit margins and profligate spending. Loeb, an investor in Penske Media Corp., parent of Variety, slammed the Sony duo for a lack of “discipline and accountability.”
The studio had become known for being top-heavy with management and the expensive deals it lavished on producers — not unlike the one that Pascal reportedly secured when she was bounced out of her top job. Despite the pain and derision her emails visited on Sony, the studio agree to pay her an average of at least $10 million a year over four years, according to published reports.
Despite years of speculation, Hirai has said he has no intention of shrinking his commitment to Sony Pictures Entertainment or selling the U.S.-based entertainment business altogether. The Japan-based corporate chief rejected Loeb’s proposal of spinning off some of the entertainment assets.
Lynton was not immediately available for comment.