Galloway on Film: The 10-Year Studio Bloodbath

Galloway on Film - 10-Year Studio Bloodbath - H 2016

Once every decade, Hollywood commits hara-kiri. That's what it's doing right now.

In February 1983, Charles Bluhdorn, the profanity-spewing tycoon who had turned Gulf + Western Industries into one of the biggest corporations in America, stepped into the private jet that was waiting on the runway of his Dominican estate, ready to fly back to his base in New York.

The estate was more like a feudal empire than a getaway home. Gulf + Western owned thousands of acres in the Dominican Republic, replete with a sugar plantation, cattle, and servants waiting to do anyone’s bidding, whether Bluhdorn’s or the guests he regularly whisked away for some sun and fun.

But the days of sun and fun were over. On the trip back, Bluhdorn suffered a massive heart attack and died at age 56, plunging his company into uncertainty.

His replacement, Martin Davis, began to shed the disparate holdings of the onetime auto parts and sugar manufacturer, turning it into a media giant dominated by Paramount Pictures. There, however, Davis locked horns with studio chief Barry Diller.

Diller initially had supported Davis’ promotion, but now he chafed under his abrasive boss, who seemed to resent the success and fame that had accompanied Diller’s rise to the top. Paramount had been living through something of a golden age, with one hit spilling out after another, including Flashdance, Top Gun, Beverly Hills Cop, Raiders of the Lost Ark, Terms of Endearment and Reds. But all this was about to be upended. Within months, Diller had decamped for 20th Century Fox, his proteges Michael Eisner and Jeffrey Katzenberg had ankled the studio for the Walt Disney Co., and Paramount was placed in the hands of Frank Mancuso.

Almost overnight, three studio leaderships were transformed. It was the biggest and most bruising change the industry had seen in years.

But it wasn’t the first or the last.

Once every decade, it seems, the movie business goes through a period of seismic convulsion when entire studio regimes resign or get tossed out on their ear, with the inevitable uncertainty and anxiety this provokes for hundreds and even thousands of other employees. It’s an industry-wide hara-kiri, with the knife plunged into the good and the bad alike.

I couldn’t help but think of this last week when news broke that Fox chairman Jim Gianopulos was being eased aside in favor of Stacey Snider. Words like “stability” and “orderly succession” were uttered by studio reps. But that wasn’t what any of us were hearing on the street.

“How could they do that to Jim?” was a frequent refrain. Another was, “I’ve heard of them kicking out failures, but never someone who’s had so much success.”

One Fox staffer called me to say she was afraid this was just the beginning of wholesale change wrought by the Murdochs junior, James and Lachlan, as they seek to remake their father’s company in their own image.

Certainly, there’s a lot more going on than just the shift from Gianopulos to Snider, which theoretically will take place when the former’s contract is up at the end of June 2017, but which most insiders expect to happen much sooner.

In recent months, hundreds of Fox workers have been laid off; many departments are still in a sort of post-traumatic shock after more employees than anticipated took the buyouts they were offered; and the remaining staff are up to their necks figuring out how to parcel out their ex-colleagues’ responsibilities, if they’re able to do so at all. Change is messy.

While there’s no indication of further layoffs, nobody will be shocked if a few more high-level heads roll. Production president Emma Watts, anyone? Fox 2000’s Elizabeth Gabler?

What’s surprising is that this is happening even as Fox is enjoying such a solid run at the box office — despite this weekend’s disappointment with Independence Day: Resurgence.

The only memorable times that top executives have exited while enjoying success are: 1. When there’s an uneasy relationship between them and higher-level management (you can go all the way back to Louis B. Mayer and Irving Thalberg to see that; but a more recent instance is Time Warner’s Alan Horn and Jeff Bewkes); 2. When they wish to leave for personal reasons (see Warner Bros.’ John Calley and Paramount’s Sherry Lansing); 3. When they die on the job (see Disney’s Frank Wells and Bluhdorn); and 4. When they rob, cheat and steal — no, not as many executives as you might think (see Columbia’s David Begelman).

It used to be that success meant stability. Not any more. Today, even when you’re doing great, you’re not safe.          

 * * *

The tremors at Fox aren’t the only ones we’re witnessing. Elsewhere in the film business, change is even more profound.

Paramount, which is largely owned (but not necessarily controlled) by Sumner Redstone, seems on the verge of losing its chairman, Philippe Dauman, as he carries on a war of attrition with Redstone’s daughter Shari. If he goes, that will probably have a domino effect across the studio.

Warners, which for so many years seemed to be going through the best of times, is now going through the worst with a dismal run at the box office that has led insiders to point fingers at studio chairman Kevin Tsujihara as well as his underlings. That’s after several decades in which just two leadership teams ruled the studio with astonishing stability (first, the regime of Bob Daly and Terry Semel; second, that of Horn and Barry Meyer).

And Sony, recuperating from the devastating 2014 hack that exposed its innermost workings to the world and led to the fall of Sony Pictures Entertainment chairman Amy Pascal, is still finding its feet, just a little over a year after Tom Rothman was named to replace her.

Rothman, of course, was edged out of his job at Fox, where he had served as Gianopulos’ partner. It seems almost karmic, then, that Gianopulos is being edged out, too — and could even land at another studio, like Rothman. (Hello, Warners.)

* * *

No shakeup had more profound consequences than the temblor (or series of temblors) of 1994.

Following the death of Wells, Disney’s president, in a helicopter crash, Disney CEO Eisner had a vacancy to fill.

A decade after Katzenberg had followed him to Disney from Paramount, he wanted Wells’ old job and most industry observers fully expected it would be his. But Eisner said no, so Katzenberg left the company and filed a multimillion-dollar lawsuit.

He then got together with Steven Spielberg and David Geffen to form a new studio, DreamWorks SKG, while Eisner plucked Michael Ovitz from his job as Hollywood’s “most powerful man” — he was chairman of CAA — and named him Disney’s president, instead of Katzenberg.

The changes that ensued were enormous, not least at the top of CAA. (Ovitz’s longtime partner, Ron Meyer, had just left for the president's office at Universal Studios, adding to the upheaval.)

In a few months, Disney had been transformed, Universal restructured, the agency business thrown into confusion, and a new studio, DreamWorks, had been born. Call it Hollywood’s version of The Year of Magical Thinking.

It took many years, however, for dust to settle on a new industry power structure. And — surprise — when the new order was firmly in place, Hollywood was ready for yet another game of executive musical chairs.

* * *

In early 2005, Sherry Lansing stepped down from her position as chairman of Paramount Pictures after more than 12 years on the job. It seemed evident that her two key deputies, Robert G. Friedman and Donald De Line, would succeed her. But that was not to be.

Instead, Redstone (who had bought Paramount in that magical year, 1994) opted for a producer-manager, Brad Grey, to become chairman of the studio.

Grey in turn replaced many of the studio’s top staffers, including Friedman, who left to form the mini-major Summit Entertainment with indie kingpin Patrick Wachsberger.

The result of all this was not just a flood of new executives to Paramount — which then went through a string of production presidents — but also a big shift in the management business as Brillstein-Grey Entertainment lost its leader and other managers swooped in to replace him.

It also resulted in a whole new buyer in the form of Summit, which helped launch the YA movement with its megahit The Twilight Saga.

As if this weren’t enough, 2005 was also the year that a beleaguered Eisner stepped down from Disney, having reinvented the Mouse House as a media conglomerate that had merged with ABC TV.

Eisner left without many tears being shed, but his departure was seen as the end of an era in the studio world, as one of its most famous and inventive executives finally called it quits. The man who replaced him: Robert Iger.

Nobody expected much from the former TV executive. Now he's the king of Hollywood — and who knows what kind of tsunami his own exit will trigger in 2018.

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* * *

None of this is to say that other changes of great importance haven’t also taken place in the last few decades. But the regularity with which Hollywood spills blood is notable, not least for the exiting executives whose power often vanishes overnight, just as they do, lost in the collective miasma of Hollywood's indifference to the past.

The underlying causes of these tectonic change are mysterious.

In 1984, change came in part because of Martin Davis’ jealousy of his subordinates at Paramount. He loathed Diller, Eisner and Katzenberg’s success, and they in turn loathed him.

A decade later, at Disney, it was prompted by Wells’ death, along with the deep dislike Eisner felt for Katzenberg. (The impact of personality clashes should never be underestimated at the nexus of Hollywood power.)

At Paramount in 2005, it followed from Lansing’s wish to leave Hollywood for the nonprofit field, and perhaps a sense that her team needed freshening up after so many years of working together.

Each individual change can be readily explained. But it’s much harder to analyze the origins of the virus that seems to possess the industry all at once, when management turbulence spreads across multiple studios, just like today.

Maybe dissatisfaction is contagious. Maybe things need to be thrown up in the air once a decade — as if Hollywood creates its own term limits for those at the very top. Maybe that’s the natural length of time it takes for a regime to get settled, do things its own way and then go stale.

Whatever the reasons, change is almost destined to happen. And given that, can the changes of the past teach us anything about the changes of the future? The answer is yes: Curiously, out of all this turmoil, some sort of new creativity emerges.

When Diller went to Fox, the shift didn’t just lead to a revitalized studio but also to the creation of a fourth broadcast network that threw the traditional model of the three major networks on its head.

When Katzenberg left Disney, the result was the birth of a new studio, with an animation division that helped spur the explosion of feature film animation that we’re seeing right now.

When Eisner went to Disney, it led to of a complete reinvention of the company and indeed our very idea of a corporate media behemoth — which, for good or bad, is what all top executives have lusted to run ever since.

The period of turbulence we’re going through in 2016 is making everyone’s life difficult. But it might just be the harbinger of better things to come.