How the Academy Is Fighting to Get Past Its Oscar Nightmare

llustration by Bartosz Kosowski

The board of governors is set to meet on March 28 following the infamous best picture snafu.

The Motion Picture Academy's 54-person board of governors is set to convene March 28 for the first time since the chaotic ending of the 89th Academy Awards. That follows a brief phone conference, when the governors were told that accounting firm PricewaterhouseCoopers is creating new protocols for handing out award envelopes because of the error that tarnished the Feb. 26 show.

With those proposals, to be presented at the board meeting, PwC and the Academy's leadership believe the matter will be put to rest. But there's a split between those who attribute the snafu to "human error" (as Disney CEO Bob Iger put it to shareholders following a damage-control call from PwC chairman Tim Ryan) and others who see deeper flaws. "The Academy was at fault for not doing a regular, systemic operational review," says one exec.

Ironically, sources say the Academy had begun making such moves in 2014, when it brought in management consultancy firm Insigniam (the same company hired by the American Film Institute in 2015 following a kerfuffle between its dean and staff). After attending a November 2014 governors' retreat, Insigniam put together a pro bono report recommending a refined governance structure, with Academy officers each given oversight of various committees. Since then, Insigniam has come in once a year to give a presentation to the newly elected boards.

A clearer operating structure begs the question: Who will lead the Academy? Though CEO Dawn Hudson has been a polarizing force, insiders believe she will be reappointed when her contract expires in May. Less certain is who'll succeed Cheryl Boone Isaacs as elected president when she terms out in July. The first place insiders say to look is the officers within the board of governors.

Each of the officers is now attached to one of its various committees: first vp Jeffrey Kurland (awards and events), vp John Bailey (preservation and history), vp Kathleen Kennedy (the Academy museum), vp Nancy Utley (education and outreach), treasurer Jim Gianopulos (finance) and secretary David Rubin (membership and administration).

Sources say the Academy’s next president will most likely come from this group, though there’s nothing to prevent other governors from running, and some staff are urging the board to choose a figurehead who's less present day-to-day than Boone Isaacs. So far, no candidate has stepped forward. Two possible contenders, producer Hawk Koch and ex-Lionsgate executive Rob Friedman, aren't currently on the board and are thus ineligible.

The new president likely will aim for a better relationship with Hudson than Boone Isaacs'. Though the two are said to get on better than before, their relationship got off on the wrong foot in 2013 when Hudson supported Friedman for president against Boone Isaacs; in turn, Boone Isaacs opposed extending Hudson's three-year contract a year later. (After then-Sony chairman Amy Pascal did some shuttle diplomacy, the board narrowly approved that extension, prompting Hudson to email Pascal, "Thank you for saving the Academy (and my job) from blowing up," the Sony-hacked emails revealed.)

One factor contributing to the tension may be their disparity in pay: Boone Isaacs, 67, receives no salary in her volunteer office, while Hudson, 61, earns more than $600,000 per year, Academy tax filings indicate. Boone Isaacs' income, with no full-time job, includes revenue from a part-time teaching gig at Chapman University and occasional work as a PR/marketing consultant.

Among her successor's tasks will be stabilizing personnel turnover following a period in which the Academy has lost such high-level execs as COO Ric Robertson (who left in 2013) and chief marketing officer Christina Kounelias (who exited in 2016).

Another challenge will be successfully opening the Academy Museum, delayed for two years but now set to debut in 2019. Raising the necessary $400 million is said to be back on track after some hitches, and several key employees are in place, including newly named COO Rich Cherry (a former Broad museum deputy director), who last month joined recent hire Katharine DeShaw, the managing director for advancement and external relations, and museum director Kerry Brougher.

Several insiders say they would like the next Academy president to be more comfortable with the press than Boone Isaacs, who long has been suspicious of the media. She made a rare public appearance Monday at SXSW in Austin, where she said that the awards telecast had a "beautiful ending" and showed "a respect and graciousness from the La La Land filmmakers and the Moonlight filmmakers in a way that I thought was very special." She took no questions.

The governors' meeting comes as The Hollywood Reporter has learned of further industry tension with PwC, the accounting firm whose Brian Cullinan handed the wrong envelope to Warren Beatty at the Oscars. In 2012, sources say, SAG-AFTRA's health and pension plans severed links with PwC for reasons that are unclear. Following the Oscar outcry, Cullinan and fellow accountant Martha Ruiz were assigned security details, but reps for PwC say those have since been called off.

While Cullinan has shouldered most of the blame, Ruiz was not faultless: One reason it took so long for her to react to the best picture mistake, sources say, was that she already had closed and locked her briefcase, then had to check before alerting staff.

That disaster was foreshadowed by a less serious mishap at an Oscar rehearsal, when, multiple sources say, presenter Seth Rogen may have been handed the wrong envelope, though PwC was not present. (The Academy denies this; Rogen's reps had no comment.)

The Academy now will have to ensure no grave disaster occurs again. With most of its revenue dependent on the telecast, that's especially important. Longtime partner ABC has renewed the Oscar contract through 2028 and pays the Academy the bulk of its earnings, with $113 million coming from the show and related activities. The telecast itself cost $44 million to produce in 2016.

Network sources say ABC would like Michael De Luca and Jennifer Todd to return as producers, along with host Jimmy Kimmel, though no talks are yet underway.

ABC may be the only player in the equation that the Academy doesn't have to worry about, given that its executives were thrilled with the show and even its ending. "I don't consider it a flub," ABC senior vp alternative programming Rob Mills recently told the podcast SoundCloud. "I consider it the greatest moment in Oscar history."

Rebecca Ford, Stephen Galloway and Tatiana Siegel contributed to this report.

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