Company Town : News of Sagansky Hiring Rocks Sony

The pundits and prognosticators had the wrong Jeffrey last week, as it turned out. While most people in Hollywood focused on outgoing Walt Disney Studios Chairman Jeffrey Katzenberg as a possible Sony hire, the company was quietly pursuing contract talks with former CBS executive Jeffrey Sagansky.

Sony Corp. of America President Michael P. Schulhof is expected to confirm this week that Sagansky has been named president of Sony Software, as The Times reported Monday. Company sources say he will focus primarily on strategic planning. But there remains widespread speculation that Sagansky will also take over the company’s troubled Sony Pictures unit.

Schulhof is on the studio’s Culver City lot this week for meetings that were planned beforehand. While he declined to comment on Sagansky, sources say the hiring culminates a months-long search for an executive with creative and business experience. Others mentioned for the job were Katzenberg and MCA Executive Vice President Thomas (Skip) Paul, though Katzenberg denies he was approached and Paul could not be reached for comment.

News of Sagansky’s job rocked employees at Sony Pictures and Sony Music. Sony Pictures executives worried that the move would touch off another round of management changes at the studio, which has been bedeviled by turnover. At red-hot Sony Music, President Thomas D. Mottola and other executives were said to take the appointment as an affront.

“The feeling is that Schulhof has completely panicked and that all the pressure over (Sony Pictures) has caused him to antagonize his one profitable division: Sony Music,” said one company source.

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Hollywood’s response to Sagansky on Monday was more positive. The lanky Harvard Business School graduate is known as a cunning executive and won high marks for lifting CBS from the ratings cellar to first place during a 4 1/2-year stint as CBS Entertainment president (ending in April). The prime-time hits during his tenure included “Murphy Brown” and “Northern Exposure.” Those shows and others also appealed to the younger audience that advertisers favor.

“Sagansky’s the best, absolutely the best,” said William Morris Agency President Jerry Katzman, a former TV agent. “He handles things right away. If you have a problem, he addresses it. If he has a problem, he’s right up front about it. And he has no personal agenda.”

Sagansky also has experience in the movie business, though the reviews were less glowing. During a four-year run as head of TriStar Pictures, which is now part of Sony, he clashed with talent and complained about spiraling costs. Some colleagues considered him a fish out of water, since he was also openly hostile to the industry’s ‘round-the-clock socializing.

Sagansky left the job in 1989, when Sony bought the studio for more than $6 billion, counting debt, and later moved to CBS.

“He was the happiest puppy in the world when he got the CBS deal and didn’t have to deal with the motion picture world,” said one associate. “He didn’t like the people. He thought they were all phonies.”

Sagansky pocketed $10 million from his stock plan after the studio was sold to Sony, according to published reports. He continued to rack up big paydays at CBS. With his compensation tied to the network’s performance, Sagansky earned $6.1 million in 1992 and $7.8 million in 1993.

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Sony was one of the companies rumored to be interested in Sagansky when he left CBS last spring. Sources predict that one of his first missions in his New York-based post will be breathing life into Schulhof’s unsuccessful efforts to sell a 25% stake in Sony Pictures. Another scenario has Sagansky orchestrating an initial public offering in Sony Software, which consists of Sony Pictures, Sony Music and the company’s new-media division. Company sources say his role will be non-operational, with the division heads continuing to report to Schulhof.

But Hollywood executives say it may be impossible for Sagansky to ignite Wall Street’s interest in the company without cleaning up the problems at Sony Pictures.

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The parent of Columbia Pictures and TriStar Pictures is having a rocky run at the box office with such disappointing releases as “I’ll Do Anything,” “Blankman” and the current “Wagons East,” produced by Carolco Pictures. It ranks last among the major studios in domestic market share. The company’s television division is more successful but is still hampered by a paucity of prime-time hits and delays in starting a game show channel.

Sony Pictures’ image as a rudderless ship has been aggravated by recent defections of such respected executives as Jonathan Dolgen, who left to take over Viacom Inc.’s entertainment operations, and the marketing team of Buffy Shutt and Kathy Jones, who moved to MCA Inc.

News of Sagansky’s deal brought renewed speculation that beleaguered Sony Pictures Chairman Peter Guber will resign by the beginning of next year. “Everybody thinks he’s leaving now,” one high-ranking entertainment executive said. “That’s the absolute consensus.”

But people close to Sony continue to insist that Guber will serve out his contract, which runs until 1998. One source said it was Guber who recruited Sagansky. Sagansky “will be focused on where the company will be going, not . . . what movies we should or shouldn’t green-light,” the source said.