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Disney Studios drama might alter the industry

COMPANY TOWN

Chairman Rich Ross has begun restructuring operations and set in motion a plan that could pit the film unit against business partners.

November 23, 2009|By Claudia Eller and Dawn Chmielewski
  • Rich Ross has dismissed several top executives since becoming head of Walt Disney Studios. Above, Ross, center, and actress Bridgit Mendler, right, at the Burbank studio last week for the premiere of "The Princess and the Frog."
Rich Ross has dismissed several top executives since becoming head of Walt… (Irfan Khan / Los Angeles…)

If you thought President Obama moved quickly, that's nothing compared with the first 50 days of the Ross administration.

In less than eight weeks, Rich Ross has swiftly stamped his imprimatur on Walt Disney Studios. The novice movie chairman and his boss, Walt Disney Co. Chief Executive Bob Iger, want to create a new business model for Hollywood to address the sweeping changes that are roiling the entertainment industry, including slumping DVD sales and the growing role the Internet plays in movie marketing.

Seeking to recast the studio for the digital era, Ross and Iger have set in motion a plan to dramatically challenge entrenched practices, potentially pitting Disney against theater owners, retailers and other business partners. The gambit, if it works, could be emulated by other studios.

If it backfires, it could undermine what has historically been the creative heart of Disney.

In meetings with producers, filmmakers and agents, Ross attacked the industry custom of spending $40 million on a TV advertising blitz two weeks before a film's opening, rather than enlisting more targeted campaigns that harness social networks and the broader Web. And he's raised again the touchy subject advanced by Iger that consumers are demanding that movies become available for home viewing sooner after release in theaters than has traditionally been the case.

Hollywood might finally be absorbing the message.

"Any of us that are sitting around protecting old business models unfortunately are destined to have a hard time succeeding in the coming years," said Sam Gores, chairman of talent agency Paradigm. "We have to maximize our existing models and, more importantly, build new ones."

It's too soon to know whether Ross, a seasoned TV executive, can pull off his ambitious plan as well as successfully transition to the movie side of the business -- the track record in Hollywood is mixed. Ross declined to be interviewed.

In September, Iger stunned the industry when he ousted Disney's movie Chairman Dick Cook, a 38-year veteran who began as a Monorail operator at Disneyland. By installing Ross, who built the Disney Channel into a global juggernaut, Iger gains more control over a key division he believed had long operated too independently.

Since Ross took over in early October, he has dismissed several top executives and begun restructuring operations. In the process, some say, the hyperkinetic executive displays flashes of brusqueness and impatience. The upheaval has created anxiety for employees and even at times disrupted business dealings. An important meeting with director Tim Burton and producer Joe Roth, who once ran Disney's studio, to discuss marketing plans for the upcoming release of their film "Alice in Wonderland," for example, was abruptly canceled pending an executive shake-up, leaving the filmmakers flummoxed.

Since then, Disney watchers have needed a score card to track all the comings and goings.

Last month, Ross flew to New York to fire Daniel Battsek, the head of Disney's struggling specialty movie label, who, despite the unit's recent poor track record, was caught off guard. A week later, he pushed out another company veteran, Mark Zoradi, who was president of Walt Disney Motion Pictures Group, in a prelude to an overhaul of the marketing and distribution operations that he oversaw. Ross next let go marketing President Jim Gallagher and elevated former home video chief Bob Chapek to an expanded role that encompasses all aspects of film distribution from movie theaters to home and digital delivery, breaking with the conventional role of solely booking movies into theaters.

In the coming weeks, Ross plans to hire a new marketing chief -- Disney has retained an executive search firm to find candidates outside and inside the movie business -- who will have an equally broad mandate to handle the promotion of films from multiplexes to living rooms.

Beyond organizational changes, Ross' vision for the types of movies that will ultimately define Disney is beginning to emerge. His main focus will be developing family-friendly movies under the Disney label. Iger's overarching strategy is to amass a stable of recognizable entertainment brands -- Pixar Animation Studios and the pending acquisition of Marvel Entertainment Inc. -- and exploit the films across its TV, theme parks, consumer products and game divisions.

"It's brand over everything else," said Roth, referring to movies that come with built-in, pre-sold concepts, such as sequels. It's a strategy, he notes, that although designed to reduce risk is not without a downside. "What may get lost in the shuffle are non-branded original ideas that have no pre-awareness."

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