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This story first appeared in the Feb. 20 issue of The Hollywood Reporter magazine.
With Amy Pascal‘s resignation Feb.?5 as co-chairman of Sony Pictures, the spotlight inevitably shifts to her boss, Sony Entertainment CEO Michael Lynton. Less than two years after he re-upped his contract for an unspecified duration (and an annual salary of $3?million, plus big bonuses), questions linger about his and the company’s future and his plans for its revitalization after the devastating hack — especially because some wonder why Pascal was shown the door while Lynton remains.
Lynton and Sony Corp. CEO Kazuo Hirai spent time together before the Grammy Awards in Los Angeles and attended Clive Davis‘ Feb.?7 bash before Lynton flew to Boston for a board meeting of his alma mater, Harvard. But sources say they did not engage in any substantial discussions about his future. Lynton is said to be looking at an early March deadline to lock in Pascal’s replacement or restructure the studio, though insiders say he has not fully determined his course of action. He isn’t hiring a headhunter, which implies he intends to promote internally.
Sources add that Lynton has not formed an advisory committee, nor has he turned for advice to the industry’s eminences grises (including former Warner Bros. CEO Bob Daly, who helped broker Alan Horn‘s move to Disney). By contrast, he has consulted with Pascal, who will remain in place until May. “He and Amy are discussing who might come in and what the structure might be,” says a studio source.
Further complicating the matter: THR has learned that Lynton, 55, has decided to move to New York and expects to do so shortly. That’s motivated partly by wife Jamie’s desire to live there and partly by Lynton’s need to keep an eye on Sony’s Eurocentric TV businesses. But insiders insist the 11-year Sony veteran is “100?percent committed” to remaining at the company.
Leaked emails might indicate the contrary. One message that surfaced in the late 2014 cyberattack revealed Lynton joshing with pal Malcolm Gladwell about how much fun it would be to run New York University. He followed that up with several more serious emails about his interest. Lynton also had two conversations with Time Warner CEO Jeffrey Bewkes about running Warner Bros., though they never led to active negotiations. “He’s very ambitious,” says one colleague, “but he comes from a wealthy family, and he wants the prestige more than the money.”
Lynton’s Sony future might rest on three factors: his relationship with Hirai; how well he rights the company’s movie division; and his performance in other areas he also oversees. Sources maintain the Sony board is blaming neither Lynton nor Hirai for the hack attributed to North Korea, despite their consent to move forward with The Interview.
In June 2012, Lynton was given responsibility for all of Sony’s worldwide entertainment operations. Those include music and music publishing as well as the film division, TV production and TV networks. Lynton has made clear to investors that he sees TV as most important.
One scenario involves a trio of promotions for Sony Pictures TV president Steve Mosko, Columbia Pictures president Doug Belgrad and Columbia production president Michael De Luca. Another involves elevating Tom Rothman, a former chairman of Fox Filmed Entertainment who runs the studio’s TriStar Productions. Lynton and Pascal jointly approached Rothman about the TriStar job in August 2013, after he left Fox. But Pascal alone lured another studio honcho, Jeff Robinov, who came to Sony after leaving Warners in June 2013. Insiders say Robinov has been ruled out for the top Sony post, given that he is locked into his deal to head financing entity Studio 8.
Sources also note previous reports stating that Pascal was attached as producer on the new Spider-Man and Ghostbusters films were premature: While a deal is in place for the former, the latter is less certain. “It’s going to be a question of how the backend [profits] will be impacted,” says the source.
Pascal’s exit deal largely was put in place when she re-upped in 2010, at which point she was guaranteed a production pact. However, that deal recently was revised (The New York Times reported it is worth as much as $30?million to $40?million over four years, close to what Pascal was guaranteed in her executive role) as talks heated up about her stepping down and as her relations with Lynton became fractious.
“Everyone said, ‘What a generous deal Lynton gave her,'” notes a studio source, “but those guys give deals like that to pave the way for their own exit, so they’ll be treated just as well.” It is not expected that Pascal will be joined in her new role by any of the current production staff, including protege Hannah Minghella.
The studio is only part of Lynton’s purview, and his masters in Japan will look at his entire portfolio moving forward. In November, Hirai boasted that SPE has been profitable for 18 straight years, and in Lynton’s 11-year tenure, SPE has grown from $7.3 billion in revenue in fiscal 2004 to $8.3 billion in fiscal 2014. Hirai also said revenue should grow to as much as $11?billion by 2018, driven largely by television. “TV is important to every studio, and they’d be right to emphasize that,” says veteran analyst Hal Vogel.
But it’s the movie division, struggling to create the types of franchises that have proved bonanzas for other studios, that remains a problem. This year’s releases include Paul Blart: Mall Cop 2 in April, the Adam Sandler comedy Pixels in July and the animated Hotel Transylvania 2 in September — none the type of must-see films on which other studios are counting. The studio’s weakness exists not only because of the films themselves but also because Lynton has failed to score a Disney-esque coup, buying a Marvel or Lucasfilm or even bringing in a prominent producer like Chris Meledandri to bolster animation, as Universal has done. Sony’s Feb.?9 reveal that Spider-Man will be relaunched in a Marvel Studios movie (likely 2016’s Captain America: Civil War) before returning in a 2017 Sony movie is a small step but not the type of game-changing deal that remakes a studio. Without one of those, the sky might clear for Sony in the near term, but the long-term forecast looks cloudy.
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