Paramount Resignation Stirs Debate

Brandon Tartikoff’s abrupt resignation Thursday as chairman of Paramount Pictures stirred fresh debate about the studio’s immediate future and the parent corporation’s long-term direction.

Stanley R. Jaffe, president of the studio’s parent, Paramount Communications, was named Thursday to temporarily succeed Tartikoff.

The naming of the 52-year-old Jaffe, a seasoned movie producer in his own right, may temporarily quell concerns that the studio is adrift. But the company must still find a permanent successor and has failed to spell out a long-term strategy.

Capping months of speculation that the free-wheeling former NBC programming whiz was chaffing under the short leash of Paramount’s senior management, Tartikoff’s departure again highlights the executive parade that has unfolded at the Hollywood studio in recent years.

Jaffe shared credit for the hit “Fatal Attraction” but more recently was associated with the disappointing “School Ties.”

“It’s the best short-term Band-Aid available,” said John Tinker, an analyst with Furman Selz in New York. “But it raises the question who they will get to run the studio over the long term.”

Paramount Communications stock closed off 37.5 cents a share at $43 in New York Stock Exchange trading Thursday. Volume was high, with nearly 1.5 million shares changing hands. Some analysts speculated that the company might be purchasing stock itself to bolster the price, which has traded as high as $48.75 in the last year.

Wall Street had already reduced its expectations for the next few quarters because relatively few Paramount films are scheduled for release until next summer. A downgrade by Goldman, Sachs last week prompted heavy trading, and this week, Oppenheimer & Co. analyst Jessica Reif advised clients to “switch out of Paramount and into Disney.”

Privately, analysts focused on reports of friction between Jaffe and Tartikoff, and questioned how difficult it will be to find a successor if Jaffe is as demanding and volatile as he is inevitably portrayed.

But Paramount Communications Chairman and Chief Executive Martin S. Davis--no shrinking violet himself--declared: “This is not going to cause a blip. The organization is intact. We have one job to fill, period.”

Davis was featured years ago in Fortune magazine as one of America’s toughest bosses, and he has been criticized for losing a series of talented studio executives. Since Davis took the helm in 1983, the exodus has included Barry Diller, Michael Eisner, Jeffrey Katzenberg and, most recently, Frank Mancuso.

But Tartikoff was the first studio chief recruited by Davis and touted to Wall Street.

“Of course it’s a disappointment,” Davis said, but his tone softened as he expressed his compassion for Tartikoff and his daughter, Calla, still recuperating from a 1991 car accident.

Davis confirmed that he has offered a “back-end,” or production, deal to Tartikoff, but he said the departing executive is in no position to make a decision. “He has a home here anytime he wants it,” Davis said.

Jaded observers, however, were not wholly surprised by Tartikoff’s resignation.

It was widely known on both Wall Street and in Hollywood that New York-based Davis and Jaffe have kept tight reins on operations of the Hollywood studio.

“I was surprised it happened when it did, although it didn’t surprise me that the conflict between Brandon’s wanting to spend time with his family and what was going on in business ultimately led him to make a decision that he had to spend time with his family,” said Jerry Katzman, president of the William Morris Agency.

Davis bristled at Hollywood and Wall Street speculation that Tartikoff’s departure was hastened by clashes with Jaffe. “(Would he) use his daughter as a shield? Come on!” Davis said. The Paramount chairman said he had no inkling of Tartikoff’s decision until last Thursday and said that no successor has been chosen. “Let’s find out who is available first.”

Among the most frequently mentioned names are Sherry Lansing, a former partner with Jaffe in his production company and former studio head at Fox. Other prospects are TriStar Pictures’ Mike Medavoy and Fox’s Joe Roth, both of whom are rumored to be leaving their posts.

“The problem with the Paramount job,” said one senior Hollywood attorney, “is that Stanley Jaffe is kind of the head of production in his own right. He has run a studio. He has made a bunch of pictures. He has great taste. He knows everybody in town. I think the difficulty is how much room are they going to give (Brandon’s successor) to make movies? . . . It’s a tough job.”

Tartikoff leaves behind a recently assembled studio management team that was only beginning to get its feet wet. The movie division has 17 films set for release over the next year and the TV division has 13 series on the air.

Paramount has also been a pioneer in “first-run” syndication, a highly profitable area of the TV business, and is a partner with Universal in the new Sci-Fi Channel cable TV network.

But the impact of Tartikoff’s departure shouldn’t be dismissed, some analysts cautioned. Oppenheimer’s Reif, for one, noted that a change in studio management often prompts a firm to write down the value of its film inventory.

And the turmoil calls attention to Paramount’s larger strategy, which has been criticized for a lack of focus. Although Paramount is cash-rich from its sale of non-entertainment businesses, Davis lost his bid for Time Inc. in 1989 and has not made any major acquisitions.

“What are they going to do now?” asked one analyst privately. “In the end, people are going to question Davis’ judgment.”

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