Warner Bros.' Kevin Tsujihara on Studio Plans, Digital Critics and Lunch With Clint Eastwood

12:12 AM PST 03/26/2013 by Kim Masters
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Kevin Tsujihara

The new WB chief looks to navigate a hazy outlook as the digital space drives entertainment -- but not yet revenue: “We don’t want … to lose focus."

On the morning of March 5, Kevin Tsujihara addressed the Warner Bros. division heads for the first time since his January promotion to CEO of the studio and successor to retiring chairman Barry Meyer. But anyone hoping for a glimpse into the future was disappointed.

Tsujihara, a 19-year studio veteran who had run its home entertainment division since 2005, told executives his top priorities include strengthening the studio’s international footprint and fostering greater cooperation among divisions. And he thanked his rivals for the top job, television chief Bruce Rosenblum and studio chair Jeff Robinov, for supporting him -- which they hadn’t, exactly. But Tsujihara did not address informed speculation that big changes are afoot at Hollywood’s most prolific studio, notably at Rosenblum’s highly profitable television unit, home to such hits as The Big Bang Theory and The Voice.

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In fact, in an interview with The Hollywood Reporter, Tsujihara says his initial goal is to maintain stability at a studio that has seen only five leaders in its 90 years. “It’s not a situation where anything per se is broken,” he says. “[But] we haven’t had a lot of transitions here. What we don’t want is for us to lose focus.”

Coming after a grinding two-year bake-off that raised tensions and lowered morale, Tsujihara’s promotion was met with relief by many inside and outside the storied studio. In part, executives were just glad the waiting was over. The 48-year-old victor also is seen as a less polarizing figure than his ambitious rival, Rosenblum. Still, even some of his fans acknowledge that a question lingers: Did Tsujihara get the top job because he’s on the cutting edge or because he lacks a cutting edge?

The answer to that is critical because Tsujihara takes over at a time when all of Hollywood is struggling to write a winning playbook for the digital age. Warners long has been dominant in film and television, so he must keep it in front while leading it into the future.

Some think Time Warner CEO Jeff Bewkes picked Tsujihara because his experience and willingness to experiment in the digital domain have prepared him for the challenges ahead. “Everybody is trying to find a winning path,” says Jeffrey Katzenberg, CEO of DreamWorks Animation. “The good thing about Kevin is he’s willing to try. Many of his peers are utterly entrenched, and the world is going to pass them by.”

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But others believe Bewkes primarily chose a comfortable match who might be comparatively malleable in a company that has been pared down from a conglomerate that once included cable, music and Internet units.

For years, the corporate overlords running studios have favored smooth-talking suits who make a good impression on Wall Street. Tsujihara, says one colleague, is “a card-carrying MBA” who went to Stanford -- Bewkes’ alma mater. (Alan Horn, who ran the studio along with Meyer for a decade, had a Harvard MBA but cast his lot early with creative types.)

During his tenure as head of home entertainment, Tsujihara has been responsible for a steady stream of announcements, including many that have not borne fruit. In 2011, for example, he appeared on CNBC to tout a game-changing “mega app” called Digital Everywhere. But that app has yet to be seen anywhere. Pointing to the digital aspect of Tsujihara’s job, one insider asks: “Has there been any great revenue generated by it? If you find it, let me know. And the television and film production areas are completely new to him.”

But Bewkes was correct if he calculated that Wall Street would endorse Tsujihara as a man with the keys to the digital future. Analyst Michael Pachter said of the choice, “Kevin isn’t a creative guy, [but] I don’t think that matters to Bewkes as much as having a guy in charge who understands the opportunities and threats posed by digital distribution.”

Tsujihara also has been working to establish personal ties with key Warners talent. For instance, he recently had lunch with Clint Eastwood, whose relationship with the studio goes back nearly 40 years. “I didn’t have any experience with game developers or with any people within the game industry, and I’ve built those relationships,” Tsujihara says of his tenure overseeing Warners’ game unit. “Warner Bros. has a history of really deep, strong relationships with people. It’s my responsibility to continue to maintain those.”

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There is no question that Tsujihara has had a tough job. As DVD sales started to shrink, he had to do his best to keep selling to consumers who increasingly want to rent, not own, and who want instant, on-demand viewing. At the same time, he had to serve them without antagonizing either theater owners or big retailers.

Supporters credit him with being ready to try any number of digital experiments, from an early attempt to partner with the file-sharing site BitTorrent to a plan that would have allowed customers to burn DVDs in kiosks at Wal-Mart stores. Many such initiatives didn’t succeed or were considered disappointing, from the social movie site Flixster to UltraViolet, the cloud-based service that allows DVD customers to own digital copies of movies.

“I don’t think the industry has the benefit of being able to wait for the perfect solution,” Tsujihara says. “I think the company has responsibilities as the market leader to lead. You leave yourself vulnerable to people saying you’re being too aggressive. But I don’t think we’d have 11 million UltraViolet accounts set up right now if we weren’t that aggressive.”

A senior executive at an Internet company that does business with Warners agrees that Tsujihara’s innovative spirit is more important than a film or TV background. “I’m sure a lot of old-school people at Musso & Frank’s would appraise Kevin and say, ‘This is what’s wrong with Hollywood -- the rise of the MBA,’ but digital people would perceive it in an entirely different way,” this executive says.

Old-school or not, a leading agent says putting Warners in the hands of a person with no background in making the product that drives the studio’s profit -- whether it’s Two and a Half Men or The Dark Knight Rises -- is “playing with fire.” Based on the performance of their respective divisions, a former Warners executive says: “Bruce won the metrics. Kevin didn’t. He didn’t hit the ball out of the park -- period. Bruce did. So this became about personality.”

Former Warners co-chairman Bob Daly dismisses that assessment. “On the outside, he didn’t have the visibility that Bruce or Jeff have, but he knows the inner workings of the company,” Daly says. “This is a monstrous company, and somebody has to be in control of it. He has great people to pick the television shows and the movies working for him. He’s bright, he’s a good negotiator, he understands the economics of the business, and he has a winning way of dealing with people. That’s enough qualifications as far as I’m concerned.”

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Tsujihara, who has described himself as a Buddhist who meditates on the treadmill, has said he never set out to make a career in Hollywood.

He grew up in Petaluma, Calif., the youngest of five siblings. His father, Shizuo, was an egg distributor, and Tsujihara delivered eggs during the summer as a teenager. His family was interned during World War II even as his father worked for the armed services as a translator. Tsujihara told an interviewer that when he was growing up, “My parents wanted me to feel as American and to fit in with everyone else as much as possible.” His father even urged him to take up golf. 

A few weeks after his promotion, Tsujihara said he was saddened that his father, who died in 2003, would never know that his son had become the first Japanese-American to head a studio. “He would be shocked,” he said.

After graduating from USC in 1986, Tsujihara worked in Ernst & Young’s entertainment division. In 1992, after getting his MBA, he co-founded a storefront tax company based in the L.A. suburb of Commerce. Tsujihara was forced to sell at a loss, an episode he has described as “really embarrassing.” At that point he reached out to contacts he had made at Warners while at Ernst & Young. The resulting job opened the door for his then-girlfriend, Sandy, to move to L.A. and marry him. They now have two children.

As he rose within Warners, Tsujihara’s affability served him well. He worked with other studio heads on antipiracy initiatives and played a key role in the enormously complex negotiations to set up the Hobbit movies. In that capacity, Tsujihara befriended Gary Barber and Roger Birnbaum, who were running MGM, Warners’ partner on the film. (Barber remains in that job.) The trio decided to invest in racehorses and acquired Comma to the Top for $22,000 in 2010. Since then, the horse has earned nearly $1.2 million. (In 2011 the three owners watched him compete in the Kentucky Derby, though he finished last due to an injury. But he has recovered and is racing well again.)

When Meyer put the then-41-year-old Tsujihara in charge of the newly combined home-entertainment operations, overseeing sometimes warring fiefdoms, in 2005, it provided rehearsal for the current challenge. “The day we announced the new structure, it was uncomfortable,” Tsujihara said a few months after taking the job.

Although Tsujihara was supposed to be in charge of all things digital, there was blowback from the TV division. Meyer then realigned responsibilities so that home entertainment handled “transactional” video distribution, such as ordering a movie on demand, but the TV group held on to app-supported and subscription VOD, such as Netflix or Amazon. The competitive friction between Rosenblum and Tsujihara, already palpable, grew more intense.

Now that Tsujihara has prevailed, sources believe he will make no effort to keep Rosenblum when his contract expires in August. Many say Peter Roth, who oversees the studio’s television production company, wants a promotion. “Peter cares about having a direct report to Kevin,” says one source. “He is not power-crazed. He loves developing television shows.” That has led to speculation that Tsujihara might pair him with Jeff Schlesinger, who oversees international TV sales, and possibly Rosenblum’s number two, Craig Hunegs. (Tsujihara and Rosenblum declined comment.) But any big moves on the TV side likely will have to wait until after the selling season ends in May.  

Reordering TV could help allay Daly’s only concern about Tsujihara: that he might be a little too nice. “This is a tough job,” he says. “You’ve got to be prepared to mix it up sometimes.”

As for the film side, sources say Tsujihara and Robinov were at one time quite close, though the bake-off created a strain. For some time, Tsujihara has sat in on greenlight meetings, though it’s unclear whether he will continue to do so. But most observers believe that he has no plans to interfere with Robinov who, despite a rough start this year marked by five straight box-office misses, is considered one of the top movie executives. Robinov has said he has no intention of leaving.

Overall, Daly expects Tsujihara to grow into the job. “Warner Bros. has great people and great assets," he says. "Kevin’s going to do very, very well.”

Email: kim.masters@gmail.com; Twitter: @kimmasters

Matthew Belloni and Paul Bond contributed to this report.

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