The decision Monday to oust Universal's two top movie executives comes at a time when the studio's corporate parent, NBC Universal, may be facing dramatic upheaval of its own.
Universal Studios President Ron Meyer's move to force Universal Pictures Chairmen Marc Shmuger and David Linde from their posts had been months in the making as the studio suffered from a string of costly box-office flops and infighting that had become a major disruption among the executive team.
But changing of the guard at the studio, which is now led by Chairman Adam Fogelson and co-chair Donna Langley, does not mean that Universal Pictures will be immune from further tumult, according to people close to the situation. It may not be enough that Fogelson, who had been the studio's marketing head, and Langley, who was production president, find a way to calm the executive staff and devise a more disciplined movie strategy, these people said.
Universal's future is clouded by uncertainty over the fate of NBC Universal, which is owned by General Electric Co. The industrial giant is in talks to sell a controlling 51% stake in the media company to cable TV operator Comcast Corp. Any change in owners could trigger further upheaval at NBC Universal, which includes NBC, Universal Studios theme parks, the Telemundo Spanish-language operation and cable channels USA Network, Bravo and MSNBC.
Monday's ouster of Universal's Shmuger and Linde after 3 1/2 years is the second management shake-up in recent months under NBC Universal Chief Executive Jeff Zucker after the departure of his top NBC executive, Ben Silverman, who left after two tumultuous years as the network's ratings plunged.
With the dismal box-office year that Universal has experienced -- capped by the poor showing of its current release "Love Happens" and this summer's high-profile disappointments "Land of the Lost," "Funny People" and "Public Enemies" -- Meyer, Shmuger and Linde have been under intense scrutiny from Zucker and GE.
Universal currently ranks last among the major studios in U.S. box-office market share at 8.6%, a standing also attributable to disappointing returns from such adult dramas as director Ron Howard's "Frost/Nixon," "State of Play" starring Russell Crowe, and "Duplicity" with Julia Roberts.
In light of the studio's glaring downturn, the Universal executives were grilled this summer by Zucker and pushed to explain why the studio's movies weren't clicking with audiences and to present plans to get back on course. Zucker has been upset by the high costs of some of Universal's big-event pictures, including "Land of the Lost," which cost about $200 million to make and market and lost tens of millions of dollars. Several of the team's 2010 releases, among them "Robin Hood," "The Wolfman" and the Iraq war drama "The Green Zone," each have production budgets that exceed $100 million.
Universal will now be on a shorter leash. Meyer and his new team, which also includes Rick Finkelstein, the studio's vice chairman and chief operating officer, are going to be held more accountable to their corporate bosses for the performance of the studio, according to a person close to NBC Universal. That includes Zucker assuming a more hands-on role, the person said.
Meyer's plan to force out Shmuger and Linde was initially met with some resistance from Zucker, people familiar with the matter said. Zucker leaned toward giving the executives room to change course since they had presided over two of Universal's most profitable years in 2007 and 2008 with such hits as "Mama Mia!," "The Bourne Ultimatum" and "Knocked Up."
But Zucker ultimately concluded that Shmuger and Linde had lost the confidence of their executive team and powerful producers who work closely with the studio. Several complained about a leadership vacuum at the studio, conflicting agendas among the executives and a lack of a clear strategy that led to a bottleneck in decisions.
"Adam and Donna are going to create an energized and united front," said Brian Grazer, a longtime Universal producer whose credits include the Oscar-winning hit "A Beautiful Mind." "And that means a lot to the creative community. Artists look for clarity."
Zucker said in a phone interview, "The studio needed a change in direction and I believe that with this team, Ron has the right combination of people to take us forward."
Meyer credited Shmuger and Linde with helping "transition the studio at a crucial time" after their predecessor, Stacey Snider, left to join DreamWorks. But he acknowledged that the disruption under their leadership made for an untenable situation.
"The company became destabilized," said Meyer, who has been at the studio 15 years. "We needed a change in direction. In a company like this, it's very much about the culture, the people and the way we're all interacting with each other."