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This story first appeared in the Jan. 3, 2014, issue of The Hollywood Reporter magazine.
For top Hollywood executives, this has been one of the most challenging years in a generation, with seismic shifts rippling through the studios. It is a year in which the studios bet big on franchise hopes only to be met with some staggering failures — notably Disney’s The Lone Ranger, which led to a loss of about $190 million. It also was a year of instability that could be characterized as the March of the Suits. In January, Warner Bros. home entertainment chief Kevin Tsujihara, an executive lacking experience in film or television production, was named chief executive at the studio, leading film chairman Jeff Robinov, a contender for the throne, to depart. If the decision to promote Tsujihara shook the industry, NBCUniversal went even more extreme, abruptly dispatching Universal president Adam Fogelson in September and replacing him with Jeff Shell, a well-liked Comcast executive but such a newcomer to the movie business that many even at the industry’s highest levels never had heard of him.
Under great pressure to improve its margins, Sony Pictures announced it would slash costs and cut back its number of releases even as it added seasoned executives: former Fox co-chairman Tom Rothman to revive the TriStar label and The Social Network and Captain Phillips producer Michael De Luca to be co-president of production.
In late November (before Paul Walker‘s death rocked the Fast & Furious franchise’s home, Universal), THR sat down with Fox chairman Jim Gianopulos, Universal chairman Donna Langley, Disney chairman Alan Horn, Paramount vice chairman Rob Moore and Sony Pictures Classics co-president Tom Bernard for a wide-ranging discussion about the business and awards-season hopes as well as the challenges facing the world of independents as Universal reconfigures Focus Features, and Sony Pictures Classics — one of the last art house labels associated with a major studio — plots its future in a universe where its parent company cuts back.
Some of you have had a big, troubled movie this year. Was there a point along the way when you realized a movie wasn’t good?
ALAN HORN: You’re not going to bring up The Lone Ranger again, are you? There’s a scene in the movie where a character cuts another character, opens his chest and he takes his heart out and eats it. And I did say to Gore [Verbinski], “When we said we wanted heart in our movie, you weren’t kidding.” (Laughter.)
Are you trapped at that point?
HORN: First of all, it’s hard to make any movie. I guess [2006’s] Beerfest wasn’t that hard, but it’s hard to make any movie. The problem is, the process is sort of imperfect. The perception of the picture changes every time the variables change. It’s going be directed by Steven Spielberg. No, it’s Francis Lawrence. Oh, no, it’s Chris Nolan. We’re greenlighting based on a leap of faith.
Rob, you had one of the more spectacular saves of the year with World War Z, which you reworked. Is there a lesson in there?
JIM GIANOPULOS: Never lose hope.
HORN: They kept trying to improve the film, and I think they deserve a lot of credit for doing so.
ROB MOORE: There are a lot of times when you have a movie that doesn’t work, and it may be unfixable. There are times where, however it happened, the characters didn’t work or there was no chemistry of your cast. And that’s nothing you can go back and reshoot. Here, you’ve got a movie where you could see where the audience got disconnected from where the story had been and what the filmmakers were looking for. It’s rare that you’re reinvesting $20 million in a movie that you’ve already shot.
What developments over the past year have made you most concerned about the business?
HORN: When we evolved to a business strategy of having event movies like The Lone Ranger: When they are profitable, they’re very profitable. When they work, they really work, and when they don’t work, they are high-profile failures. So all of a sudden, they are making headlines on every medium. It doesn’t mean that the strategy — or the philosophy — is flawed. But it goes with the territory.
GIANOPULOS: I think the difference is that we’ve allowed ourselves to make movies with budgets that exceed our comfort zone. The appetite of the audience — and especially internationally — for big-scale, effects-driven movies is greater than ever. Things have gone wrong throughout movie-business history — it’s just now the numbers are a little bigger.
MOORE: Part of the reason you end up justifying and deciding to make those big investments is, when it works … you have two or three or four or six of those that come behind it. And so that’s the trade-off you’re constantly making — how much you’re willing to put in upfront, because in success, the global audience has continued to turn out for the big franchises and the big sequels.
DONNA LANGLEY: For the most part, I think franchises have been growing. But this year, we’ve certainly seen a couple that didn’t work. It points to quality. With what’s going on in television, and the quality that audiences are starting to enjoy there, I think it does put the emphasis back on the quality of films and the quality of storytelling in a big way.
TOM BERNARD: One thing I’ve noticed over just the last couple of years is the movie-going experience is very uneven around the country. There’s a new audience that’s coming up that I think is trained to stay home. So I think that the exhibitors needs to step in there and create this experience so people want to go to the theaters again.
GIANOPULOS: That’s a really good point. I think all of us have had those conversations with exhibitors. The only place we’re asking audiences to sit stock-still and allow the movie to come to them, with no relationship to any external stimulus, is in the movie theater.
HORN: I believe prospective members of the audience ask themselves, “Do I have to see it now,and do I have to see it on the big screen?” And if the answer to both of those is no, I think we have a problem.
GIANOPULOS: To be clear, I’m not suggesting that we change the best way to experience a film, which is in a theater. But the conversation I’ve had is that when there’s a kid next to me texting, and the phone lights up, and I’m focused on the film, that’s annoying to me. When I tell him to stop texting, that’s annoying to him. So I’ve suggested … put him in the back row, find a way for people to enjoy their movie experience in their way and still not ruin mine. And then you’ve got two customers.
What is the reason for all the executive changes? In some cases, the studio actually was doing well, like Universal, which is having a record-breaking year.
BERNARD: It’s cyclical. People get older. People have new sets of skills. Back in the old days, the people who ran the studios didn’t have high school educations.
HORN: They also owned them. (Laughter.)
GIANOPULOS: And they did pretty well.
HORN: You think because it’s tougher and because there are more high-profile failures, that contributes directly to management turnover at the highest levels? I don’t think there’s any obvious linkage.
MOORE: We went through more than our share of turnover. And then we found a strategy that was working for the group of people who came together. And you’re either then connecting with what’s happening in the marketplace and you keep going. Or there are times when people go on a cold streak, and then people can’t think of any other way to solve it but to change the management team.
LANGLEY: It goes beyond market share success. It’s about profitability, and I can speak for my own studio. Our owners [Comcast] are here for the long haul. Our business fits very nicely into their portfolio. I think they were very happy with the way the movie studio was running actually.
So happy they fired the chairman?
LANGLEY: No. There are some big wins and there are some big losses. There’s volatility in that product line, but the understanding is that that volatility is always going to be there. You can manage it as best you can, and you can make sure that you’ve got people around you who know what they’re doing. But how do you manage the profitability? And how do you find profitability in a business model that is changing, with the DVD market in decline.
Are you saying that Jeff Shell, who has no experience in the film business, brings a fresh outsider’s perspective?
MOORE: And he brings trust. Jeff is somebody whom I happen to know from Disney who then had great success at Comcast. So then they trusted him in that job, no different than Jim trusting the people [Paul Hanneman and Tomas Jegeus] who have done great work for him internationally and putting them over at domestic marketing.
LANGLEY: And I would argue he comes to the table with television experience and was leading our overseas operation for two and a half years. He certainly comes to the table with a lot of expertise that is helpful.
HORN: I don’t think we can overstate the importance of international as a component of the decision-making process. It really has represented the big growth opportunity.
BERNARD: Don’t forget these are not movie companies anymore. They are entertainment companies. What’s under that umbrella is diverse, and it’s changing every day. I foresee gaming becoming a major part of the studios down the road. Half the people in the U.S. are gamers. Games are virtual movies. It’s not just guys making movies anymore. It’s much bigger.
Tom, you have a parent company, Sony, that is looking to belt-tighten. How are you managing?
BERNARD: Our belt is tight. What we do is, we sort of go between the trees. We’re like the swamp fox. When we have a film that we think is going to have a long tail, we go for that picture. In our world, we can stay in one theater for a long time because those theaters offer something to a specialized audience. We don’t need a huge break in three weeks to make our money back.
There’s been a major change at Universal’s specialty unit, Focus Features, with Peter Schlessel coming aboard to replace James Schamus. Donna, why did you decide to go in that direction?
LANGLEY: It started with the premise of really wanting to find a way to justify staying in a specialty business. We love the Focus label and the Focus brand. We were looking at a business model that just required some updating. The business model worked really well 10 years ago, when the company was started. And that was primarily selling off international rights and leveraging the downside risk of the movie that way. And so, every greenlight discussion would start with, “Well, this one really can’t lose money.”
So you want Universal’s international operation to release more Focus titles overseas?
LANGLEY: We have a whole distribution and marketing system set up over there that could handle these kinds of movies, plus TV output deals that were desperate for that kind of material. We needed to cut some costs, for sure, but the structure of it is designed to actually protect the specialty business inside a bigger umbrella of what I call “specialty adjacent” and “elevated genre.” That’s my fancy-pants way of saying we need movies that make money and then we can take some fliers on movies that are a bit more risky.
Does it make you wince when the media says you are abandoning the art house business by getting rid of James Schamus?
LANGLEY: I understand how the sort of actions that we took could have resulted in that perspective and that point of view.
Are the studios still committed to the specialty business? What challenges face that sector of the industry?
MOORE: I don’t think there is any secret sauce. We can all name 5, 10, 15, 20 small movies, specialty movies, that have done very well and they sound so attractive. But there are over 500 pictures released in a year, and there are 400 of them that no one can name.
GIANOPULOS: The challenge of marketing [a specialty film] in an increasingly fragmented media environment is more difficult than ever. That’s where word-of-mouth comes in, and that’s why you do see so many platform releases in that space. The hope is, once a movie is launched into the market, people will talk about it and embrace it. But that’s the challenge.
Rob, you recently pushed back the release of Jack Ryan from Christmas to mid-January to make room on Dec. 25 for The Wolf of Wall Street. How much control does the filmmaker have when that happens?
MOORE: You’re always trying to find a way that everybody is happy. But it’s complicated. And if you try and communicate that in terms of how realistic you’re being about a movie and what it could be, that’s when people can get their feelings hurt.
HORN: It’s an issue if everybody wants July 10. But we just have to navigate those waters.
MOORE: Like I said, the analytical, practical part of it is lost at times in the filmmaking creative process, where they just want to feel like you believe in their movie.
Speaking of release dates, a big Valentine’s Day showdown is set for Feb. 13, 2015, when Universal’s Fifty Shades of Grey opens against Fox’s The Longest Ride, based on a Nicholas Sparks book. Donna and Jim, what are your thoughts?
LANGLEY: We’ve always had a thesis about Fifty Shades of Grey, and we really do believe — and I believe as a woman — it’s a love story. It’s a fractured love story, it’s a tragic love story, but it’s a love story. We’re hoping for the best, and we’ve planned for the worst, in all honesty. It’s not an expensive film to make. We believe that we’ve got the right actors playing the parts. And you know, to our earlier point about how [event pics] are created, they come in all different shapes and sizes. I do believe that this is a destination event for women.
GIANOPULOS: I know you’d love to see a discussion of whose book is bigger. Nicholas Sparks is certainly a literary phenomenon. I’m very confident about the movie. I think it’s silly for anyone to say, “OK, we’re staying [on that release date],” or “We’re not moving,” or any of that. You see how films develop. You see how the calendar develops. You see what opportunities develop. The reality is, both of those movies could succeed on that same day.
Considering Universal is owned by Comcast, a cable giant, could Fifty Shades debut simultaneously on VOD and in theaters? This could be a perfect opportunity.
GIANOPULOS: I think that’s a great idea.
LANGLEY: We’re not looking at Fifty Shades of Grey as something that women will have a hard time getting themselves into the theater for. I think they’re going to go in groups to maybe protect themselves. The book started as a thing that people were embarrassed to read, and then it became airport reading or beachside reading or poolside reading.
MOORE: There is one big potential issue — the rating. If it were my movie, and it ended up where you had a situation where you’re going to have an NC-17 movie or an R-rated movie, that’s when your question becomes a particularly compelling one.
LANGLEY: I don’t think that exhibition is excited about having something like that as NC-17. And it’s certainly not the intention.
HORN: The NC-17 rating was designed for a reason, but it has not been embraced. It’s box-office death.
BERNARD: There should be a PG-15. I’ve always said that, you know? It would eliminate a lot of the problems.
How important is it for you to have a movie in the awards race?
BERNARD: It’s incredibly important for us, and when we buy movies, or make them, we have that in mind. With Blue Jasmine, we saw that in the long run.
Are you resentful that the major studios are back in the Oscar race in a big way?
BERNARD: I think to have all these movies now from the studios as well as the independents excites the moviegoing public. And so I think it really helps in getting people off their butts again to start to go to the movies.
GIANOPULOS: Part of it is, yes, the prestige and a lot of it is about having movies that wouldn’t otherwise get that kind of attention.
MOORE: There is no question that, as in the summer where you’re looking for big tentpoles, you love the opportunity to just find great scripts with great filmmakers. And so this is a window in time where these movies have the best chance to be commercial successes.
HORN: It’s always highly prestigious and exciting to have a picture as an Oscar contender. But when you think about what it really means, think about Hurt Locker beating Avatar [in 2010] — it’s almost like having a best animal contest where a giraffe wins over a water buffalo. What do they really have to do with one another? Nothing.
Do the six major studios — Disney, Fox, Paramount, Universal, Sony and Warner Bros. — exist in a decade?
HORN: I would argue that the major studios will absolutely be here because the growth and change in our business has really been international. In fact, it gives the major studios a competitive advantage. It’s hard to make movies with that kind of size. And the audiences have come to expect special effects that are perfect. Everyone’s raving about China right now. There are 1.3 billion people [in China] but only 13,000 screens. They’re building 10 a day.
Does that mean a China company will own a studio someday?
HORN: I wouldn’t bet against them. They will not be denied.
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