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Secrets of Executive Chemistry and What It Means for Warner Bros. (Analysis)

Missing Executives Illustration - P 2013
Illustration by: Mr. Bingo

Diller and Eisner, Daly and Semel -- strong chemistry is what makes studios succeed. Can Jeff Bewkes and Kevin Tsujihara build a team that maintains Warners' dominance?

This story first appeared in the July 26 issue of The Hollywood Reporter magazine.

Hollywood was built by fiercely independent moguls, but longtime industry observers know that real success depends on teams. Sometimes the pairings are easily discerned -- such as Bob Daly and Terry Semel, who ran Warner Bros. for 20 years starting in the early 1980s. In other cases, a strong individual is in charge but the machine runs on the power of the team. Leslie Moonves dominates CBS, for instance, but it's no accident that the industry's most successful network also has an exceptionally stable executive organization.

That's why the drastic shifts at Warner Bros. in recent months have so many wondering what comes next. Successful executive teams depend on delicate chemistry, much as hit sitcoms are built around ensembles that magically click. No one is irreplaceable, perhaps, but change is risky. There are proponents and detractors of former Warners studio president Alan Horn, now at Disney, as well as former television division chief Bruce Rosenblum, now at Legendary, and former film-studio head Jeff Robinov, whose future is not yet set. But for a long time, Warners was the dominant film and television studio in the business. Its operation could still work with CEO Kevin Tsujihara overseeing teams of film and TV execs, but Time Warner chief executive Jeff Bewkes certainly has rolled the dice.

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There have been earlier examples of winning teams that were dismantled despite -- or maybe even because of -- success. Among the most dramatic was the late Martin Davis' 1984 decision to unseat a dream team at Paramount headed by Barry Diller. Davis, who took the top job at Paramount's parent company in 1983, resented both Diller and Diller's No. 2, Michael Eisner -- especially their generous bonuses -- despite the studio's dominance.

Years later, Diller told me that soon after Davis took the helm, he urged Diller to fire Eisner. Davis understood the power of partnership. "That was the way he weakened people -- to go after their No. 2 man," Diller said. In the poisoned atmosphere, Eisner started to suspect that Diller was undermining him with Davis. Diller denied that but later acknowledged that he also began to resent Eisner.

All this came to a boil in the same year that Paramount's Terms of Endearment mopped up five Oscars and Indiana Jones and the Temple of Doom hit big. The former film represented Diller's taste while the latter, a quintessential popcorn movie, was very much Eisner's. In July, an article appeared in New York magazine headlined "Hollywood's Hottest Stars," with Diller and Eisner on the cover. It celebrated the 8-year-old management team and proclaimed Paramount "the leading studio in Hollywood." The New York Times followed, calling Paramount "perhaps the best-run, most stable and most consistently successful movie company in Hollywood."

By the time those words appeared in print, the team had been torn to pieces. Diller was off to Fox, where he would defy skeptics by launching the fourth broadcast network. Eisner, Jeffrey Katzenberg and two dozen others from Paramount would end up at Disney, where they would engineer one of the most dazzling turnarounds in corporate history.

Maybe partnerships have a maximum life span -- and maybe success is a toxin. Ten years later, Eisner ousted Katzenberg as chairman of the Disney studio just before the company announced record revenues and profit, and just before the film studio became the first in history to gross more than $1 billion at the box office. (Disney's hits included Aladdin and The Lion King, both of which sprang from Katzenberg's resuscitation of the animation division, as well as the sleeper hits The Santa Clause and Miramax's Pulp Fiction.)

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What gradually became clear in the aftermath was just how dependent Eisner had been on the team that surrounded him. It was not only Katzenberg; Frank Wells -- nominally Eisner's No. 2 (though he could have been No. 1) until his death in a 1994 helicopter crash -- had been an essential element. Eisner also had lost an exceptionally able public-relations exec named Erwin Okun, who died at 58 in 1992. Without the team, Eisner became imperious and eroded the goodwill that he had built up in his first decade at the company. He made a disastrous attempt to force a new partnership with his sometime friend, uber-agent Michael Ovitz, that ended after Ovitz was on the job for only 14 months. Eisner himself was out in 2005. (Ovitz is another example of the power of teams. When his bullying was leavened by Ron Meyer for years at CAA, Ovitz dominated in the industry. On his own? Not so much.)

Partnerships cannot be forced, as Universal proved when it tried in 2006 to pair Marc Shmuger with David Linde (they were out three years later). Successful teams depend on luck and sometimes are forged by accident. The decision in the early '90s by Sony Pictures' Japanese owners to pair producers Peter Guber and Jon Peters as co-chairmen of the studio didn't work out so well for Sony, which took a $3.2 billion loss in 1994. But there was a period when the studio had a decent run with films including A League of Their Own, Dracula and Mo' Money. What had suddenly gone right? An executive then at the studio gave me the answer for my 1996 book, Hit & Run: How Jon Peters and Peter Guber Took Sony for a Ride in Hollywood.

Mark Canton had become chairman of Sony's studio in 1991, replacing the far more cerebral and deliberative Frank Price. "Frank Price is the guy to have when you want to pick the movies," this executive said at the time. "But Frank Price couldn't finish a movie and market it to save his life. That's all that Mark is good at. The irony is, all those movies Frank greenlit, Mark edited and marketed. That's a hell of a team." (Of course, the two did not see themselves that way and Price excoriated Canton for grabbing credit for "his" movies.)

Warner Bros., on the other hand, deliberately built the strongest executive team in the business, whatever the tensions might have been. Having now gone through a dramatic upheaval, one longtime insider says the successful partnership at the studio began to fizzle in 2009, when Bewkes started pushing out chairman Barry Meyer and Horn. "The town, and [Time Warner executives in] New York, completely underestimated the alchemy of Alan and the team and Jeff," this executive says. Horn was the four-quadrant guy and the elder statesman while the more emotional Robinov pursued filmmaking talent that had not yet been recognized, including Todd Phillips and Ben Affleck. "Alan would never have made [their] movies," this person says. But Horn was a key ingredient in the winning formula.

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With Horn and Robinov gone, says a top agent, "there's a void and they have got to fill it. It's still confusing. It's not like there are clear delineations." Robinov, who had green-light authority, has been replaced with the pairing of marketing chief Sue Kroll and production president Greg Silverman. The positive is that both are big talents, this agent says. But Kroll and Silverman -- the two top film executives -- are on a learning curve. And their boss, Tsujihara, has little experience in developing content, having risen through the ranks in the studio's home entertainment division. "Can you pick movies, can you solve problems when you're shooting a movie? Can you make a joint production with Paramount work?" this observer asks. "Until you do it, you don't know."

And regardless of individual strengths, the question at Warner Bros. is whether the group can work together to deliver continued success. Given the rhythms of Hollywood, it will take a couple of years to begin to evaluate the impact of the changes. "The question is whether Bewkes is building a team at Warner Bros.," says an industry veteran with no ties to the studio. "Every success is a team and every failure is a team. The job of the person at the top is to build a team."