Firmly Committed to Show Biz, Coca-Cola’s Chief Says
Ever since Coca-Cola acquired Columbia Pictures Industries five years ago, Hollywood has debated whether the Atlanta soft-drink company had the stamina--or the instincts--for show business.
Coca-Cola underscored its seriousness by investing in four smaller movie companies and buying two leading suppliers of television programs, but some competitors ridiculed Coca-Cola for taking a “multiflavored” approach, and asked just where Coca-Cola intended to go.
This week, Coca-Cola provided some answers. The company is combining all of its entertainment ventures in one company, reducing its stake to 49% and tapping a non-Coke executive (Tri-Star Pictures Chairman Victor A. Kaufman) to run it.
To call the move a disinvestment is “totally inaccurate,” Coca-Cola Chairman Roberto C. Goizueta declared Wednesday in an interview in Los Angeles. To those who think Coca-Cola is moving away from its operational role to that of an investor, Goizueta responded: “Look who is (to be) the chairman.”
Donald R. Keough, the 60-year-old president and chief operating officer of Coca-Cola, has agreed to serve as chairman of the new entertainment company. (Under the proposal, Tri-Star-- already 39%-owned by Coca-Cola--will absorb the other businesses and be renamed Columbia Pictures Entertainment.)
“I’m certainly not going in there as chairman because I was wondering what I was going to be doing next week. We’ve got a huge investment in this operation,” Keough said, sitting at Goizueta’s side in a suite at the Bel-Air Hotel.
The two Coke executives said they actually began considering the proposed structure as long ago as 1983, but as Goizueta explained, “We did not have a critical mass large enough to do it.”
In the Coke chairman’s view, “We should have done it last year . . . after the acquisition of Merv Griffin (Enterprises),” but the action was delayed because Coca-Cola’s top management was taxed by the spinoff of its bottling operations in a new company in which Coke also retained 49%. That deal was one of the largest initial offerings ever made to the public, Goizueta noted.
By contrast, the combination of the entertainment holdings might be a simpler undertaking. “We had the advantage in filmed entertainment that we already had the public vehicle in Tri-Star,” the Cuban-born executive explained. “So we put the assets of the business of entertainment in Tri-Star; that way we don’t have to have a road show, (an initial public offering) or any of those things, because we already have a public vehicle.”
Key Officers Briefed
Goizueta and Keough said they flew to Los Angeles to meet with their key entertainment executives, “to spend 10 minutes with each one of them just to let them know how this will develop,” the Coke chairman said.
He identified the executives as Columbia Pictures Chairman David Puttnam, Coca-Cola Telecommunications Chairman Herman Rush, Columbia/Embassy Television Chairman Gary Lieberthal and Brian McGrath, newly appointed president and chief executive of international operations for Coca-Cola’s entertainment business sector. Reaction of the Columbia executives to the deal could not be ascertained Wednesday.
The two executives said they would dine Wednesday night with producer Merv Griffin, then return to Atlanta today.
Asked what he has enjoyed most about show business, Goizueta replied: “For me to say that I enjoy coming to Hollywood, or anything like that--I would not be honest. But what I do enjoy--to me, about this business No. 1, is how vibrant it is, and No. 2, probably I would say you would be hard-pressed to find another industry that has a higher percentage of really very, very brilliant people in it.”
Brilliant is also the adjective he chose to describe Kaufman, the 44-year-old chief executive of Tri-Star. “Victor knows where he wants to go,” Goizueta said, using Tri-Star’s recent acquisition of the 300-screen Loews Theaters chain as an example.
Kaufman “doesn’t want to own 1,000 or 2,000 theaters. But he wants to control the main cities, i.e., Manhattan. I think the Loews theaters do 40% of Manhattan’s (box-office business),” Goizueta said.
The Coke executives insisted that Columbia’s disappointing performance at the box office recently--including a $25-million writedown on the recent “Ishtar”--played no determining factor in the decision to restructure Coca-Cola’s entertainment holdings. With the exception of this year, Goizueta said, the entertainment group has exceeded its goal of improving operating profits by 20% each year.
