Sony’s Executive Upheaval: More to Follow? (Analysis)

AP Images
Amy Pascal

The exit of the Sony co-chairman may simply be the first domino to fall, with a series of others to follow in both directions.

There’s more at play to Amy Pascal’s swift exit from Sony than simple dissatisfaction on the part of her Japanese bosses: There’s outright fury.

Under normal circumstances, Sony Corp. might have waited for her to have a full-blown hit or at the very least a prestige production before announcing her departure. For Pascal to be pushed out as the studio’s co-chairman Thursday morning, just two months after word surfaced that Sony computers had been hacked by North Korea, indicates serious anger — and possibly an attempt by Sony Corp. CEO Kazuo Hirai to shore up his own position.

Sony Corp. clearly was furious with Pascal for proceeding with the Seth Rogen comedy The Interview, and for allowing Rogen to make North Korea’s leader Kim Jong Un its villain. But leaked emails indicate that Hirai was aware of the decision, and he must therefore take a share of the responsibility for allowing it to proceed.

Hirai was faced with a Sophie’s choice: step in and cancel the movie, thereby breaking Sony’s promise to give its studio artistic independence, a promise that dates back to concerns when Sony bought the then-Columbia TriStar Pictures in the early 1989; or allow it to proceed, potentially creating a political nightmare. In Japan, where the threat posed by North Korea is a far more clear and present danger than it appears to many in the U.S., his willingness to go along with the film (even though he insisted it be toned down) must make his own judgment seem questionable.

We have no inside knowledge of how Sony’s board reacted to this, and what the fallout was for Hirai, but it is hard to imagine that it considered him blame-free, any more than it did Pascal or her partner in running Sony, CEO Michael Lynton.

This means Pascal may simply be the first domino to fall, with a series of others to follow in both directions, above and below her. Far from indicating that Lynton is safe, the proximity of her removal to the hacking shows that Sony Corp. wants rapid and significant change.

So why has Pascal gone, while Lynton has remained? The answer lies in stability. No studio wants to see a massive overhaul of its top executives all at once; that would send a message that the company is in free fall. When Time Warner CEO Jeff Bewkes chose to replace Warner Bros. chairman Barry Meyer and president Alan Horn, he did it in stages, keeping Meyer for a while after nudging Horn aside. Even then, he positioned a troika as possible replacements (Jeff Robinov, Kevin Tsujihara and Bruce Rosenblum), allowing Tsujihara to get completely up to speed before promoting him to chairman.

The question that remains now is whether Lynton will stay, or whether he too will be edged aside once the dust has settled. Chatter in the leaked emails that he was looking for a university job certainly indicates he also is contemplating change.

Lynton’s immediate task (and that of Sony Corp.) will be to replace Pascal. Obvious candidates include Columbia Pictures president Doug Belgrad, production president Michael De Luca, Robinov and former Fox Filmed Entertainment chairman Tom Rothman — the two latter both now based at Sony. Let’s consider their chances:

De Luca is a filmmakers’ favorite (and has produced his own movies, including Captain Phillips and The Social Network). When he left the producing ranks last year to become production president, speculation was rampant that he would be promoted and that Pascal-favorite Hannah Minghella might go. That hasn’t happened, but De Luca has never sat comfortably in the corporate world: as an executive he flourished under the go-go regime of Robert Shaye and Michael Lynne at New Line Cinema, then floundered when he was hired by Steven Spielberg and Jeffrey Katzenberg at DreamWorks. Does Sony really want a non-corporate type running a battered and tarnished studio, no matter how liked and likable? Unlikely.

The stolid and reliable Belgrad would seem a more evident choice, especially if Sony wants to create an aura of stability in the ranks. But Belgrad has built his career as a Pascal protege, and with his boss’s removal, there is insufficient proof that he would have the independent skills and contacts to replace her. The leaked Sony emails, furthermore, indicated that Lynton and Pascal were already considering pushing him out as a cost-saving scheme — hardly an indication that the upper echelons of the studio saw him as ripe to become her replacement.

That leaves Robinov and Rothman, both promising candidates, and both recently brought onboard by Lynton and Pascal. Neither owes his career to the latter — a major advantage. Robinov was a talent agent who then spent years at Warner Bros.; Rothman, a onetime Columbia exec, built his reputation at Fox.

Here two factors will come into play: First, will each man’s sometimes-bull-headed personality mix well with Sony’s corporate culture? And secondly, will the pacts they now have in place with outside financiers allow them to become Sony’s top movie executive?

Robinov’s Studio 8, largely funded with Chinese money, would seem to have greater restrictions, and, unlike Rothman, he has never held a studio-chairman position, making him a less certain bet. Rothman, on the other hand, is already in an executive post as head of Sony division TriStar Pictures, and is ready to slide over far more easily — if the Sony brass see him as the right fit. Certainly, his box-office record at Fox would indicate he’s the right man.

THR reported that both contenders were surprised to learn of Pascal’s exit — which would seem to show that neither has won Sony Corp.’s confidence just yet; but that can change, if indeed they were truly caught unawares.

As to Pascal herself, Sony announced that she was moving into a four-year producer deal that will immediately see her attached to two valuable properties, Ghostbusters and Spider-Man. While the deal seems to position Pascal as a major producer, in all likelihood it was part of a golden parachute negotiated when she last renewed her contract several years ago.

Top-level studio executives almost always are granted producer deals at studios, and the question then becomes whether they want to take them. Usually it’s a mistake for an executive to remain at the studio where he or she has toiled for years, given that the exec’s ouster shows a studio has withdrawn its support.

Robinov and Rosenblum left Warners quickly after being passed over. And when Brandon Tartikoff was pushed out from his post as Paramount chairman in the early 1990s, he was wise enough to turn down a generous producer deal. Other ousted executives have usually chosen to leave their home base, either immediately or soon after losing their exec posts — hence Lorenzo di Bonaventura went from Warner Bros. to Paramount, while Donald De Line went from Paramount to Disney.

Staying at the studio where you once reigned supreme is usually a sign not of power but the lack of it, not of a plethora of options but rather a dearth. Even if Pascal now joins the ranks of producers with rich movie plums, insiders would be advised to look for her to move elsewhere in the not-too-distant future.

Regardless of what she does, everything about her ouster indicates this is just the first of many changes in store for Sony. If the past is indeed prologue, and Hollywood history is any indication for the rest of the team currently in place, Pascal’s departure doesn’t bode well for any of them.