Guber Leaves Sony Pictures to Form Own Firm

Peter Guber, the mercurial movie producer tapped five years ago by electronics giant Sony Corp. to build its movie business, quit Thursday as the company’s top executive in Hollywood, finally dissolving one of the priciest and most tumultuous regimes in recent motion picture history.

Guber, who with fellow producer Jon Peters was lured by Sony’s Japanese owners with an outlay of more than $700 million to lead the company to the top of the Hollywood heap, will leave his post as chairman and chief executive of Sony Pictures Entertainment immediately to form a Sony-backed entertainment company.

Guber’s departure--the topic of speculation all year because of the poor performance of Sony’s movie business--comes at a critical time for Sony Pictures. The company has lagged behind other major studios in movie production and, critics say, lacks a clear strategy for taking advantage of today’s rapid shifts in the entertainment business.

Despite Sony’s well-publicized problems, Guber and Michael P. Schulhof, Sony’s top official in the United States, insisted in interviews that leaving was Guber’s idea.

Still, Guber’s move was viewed by Hollywood executives as a graceful way to give Guber and an increasingly impatient Sony the fresh start both wanted. Guber leaves with a lucrative payout, including an unspecified share of a special $50-million bonus he is said to be splitting with a handful of Sony executives.

“Are my interests, my passions and concerns with this kind of job? Clearly, right now, they are no longer. That’s what motivated the change,” Guber said in an interview.

Guber is the second major film studio chief to leave in two months. Jeffrey Katzenberg disclosed last month that he will leave as chairman of Walt Disney Studios effective this week.

Guber’s departure is yet another chapter in Sony’s five-year ordeal of trying to build a movie business, or “software,” to complement the company’s electronics “hardware,” as its executives call it. The company by some estimates has sunk $6 billion to $7 billion into Hollywood, an investment that so far remains far from paid off.

Despite such early movie successes as “City Slickers,” “A League of Their Own” and “Sleepless in Seattle” during his time at Sony, Guber’s tenure the past 15 months has brought the studio an unprecedented level of scrutiny and criticism.

Beginning in the summer of 1993, Sony has suffered through such public embarrassments as the debacle “Last Action Hero,” said to have lost around $25 million, and the media frenzy surrounding the scandal involving the alleged Hollywood madam Heidi Fleiss, which was linked to Sony when one of its Columbia executives publicly denied that he had no ties to her.

Lately, Sony’s movie business has been plagued by a string of money-losing flops, including “North,” “Little Big League” and “I’ll Do Anything.” Its combined market share of the movie business for its Columbia and TriStar units continues to trail all of its major competitors. One top financial analyst estimated its negative cash flow at $250 million in the first half of the year.

In addition, Sony has suffered through turmoil in its executive ranks, complaints from producers about a logjam in getting projects approved, and the inability of Sony officials to attract a strategic partner to invest in the studio. Columbia’s release schedule also slowed to a trickle early this year, with only two movies released in the first five months compared to seven during the same period in 1993.

In explaining his move, Guber said he wanted to take the “ee” out of his title and add an “er” to it--becoming an employer instead of employee. He added that changes in his personal life--including turning 50 in 1992, the recent adoption of two children by Guber and his wife, and his receiving a full professorship at UCLA--caused him to re-evaluate his career.

“This is the third act of my life,” said Guber, who is expected to work the next few weeks raising money overseas for his venture.

Schulhof, who developed a close friendship with Guber to the point where their children once dated, said he supported Guber’s plans.

“Four months ago, Peter came to me and said, ‘I think my time is up,’ ” Schulhof said. “When he told me what he had in mind, to create an entertainment company, I said, ‘Not only will I support it, I’ll invest in it.’ ”

Sony said it will not replace Guber, and that Sony Pictures will be run by Alan J. Levine, a low-profile lawyer who has been at the studio for five years.

Levine retains his current title of president and chief operating officer, and has signed a new contract, believed to be for five years. The arrangement is similar to the structure Schulhof set up at Sony Music, where he oversees the operation but allows Tommy Mottola, also chief operating officer and president, to run it.

Levine said he did not expect to make many changes, and defended Guber’s tenure, saying that critics have unfairly blamed Guber for movie operations and ignored more successful operations such as television and its movie theater business.

“People always focus on just the movies. They say they had a good movie, so it must have been Peter. They had a bad movie, so it must have been Peter. He was chairman and CEO of the whole company,” Levine said.

Levine suggested that there would be little change, although others have suggested that Guber’s departure might lead to further combining of the Columbia and TriStar operations.

Levine and Schulhof adamantly denied speculation that former CBS Entertainment chief Jeffrey Sagansky--recently hired as a Sony executive vice president--will play a bigger role in the studio’s operations. Other sources said that Sagansky is not that interested in the movie operation. Sources also discounted talk that Katzenberg will be involved in Sony.

Speculation also has increased that Mark Canton, who oversees Columbia and TriStar, has been given a set amount of time to turn things around.

Canton, who recently extended his contract, suggested that he has no plans to leave.

“When Sony decided to extend my deal a month and a half ago, they made all the statement they need to make about my ability. I have no plans to leave. My sole interest is doing this job as well as I can. . . . I’m not nearly living up to my own standards.

“For six or eight months, things went awry,” Canton said. “I’m not trying to sweep that under the rug. But the only paralysis these days is in my neck from reading so much material. Between Columbia and TriStar, we’ll release eight movies before the end of the year.”

Guber’s deal was worked out late Tuesday. A dozen or so department heads were called together for its announcement Thursday morning. One participant said no one expected the news.

Guber and Peters, his production partner on such 1980s hits as “Batman” and “Gorillas in the Mist,” were an odd couple when Sony picked them in 1989. Guber cut his ponytail and shed his T-shirts for suits. The two attracted attention for spending lavishly to upgrade the Sony lot, and stories abounded about elaborate spending, such as the use of a corporate jet to deliver flowers.

One producer who has worked with Guber said that Guber’s personality is more cut out for creative work than corporate jobs. “He’s a way better maker of movies than 99% of the producers around town. He may have miscast himself as the mogul,” the producer said.

Guber’s office once housed legendary mogul Louis B. Mayer when Sony’s lot was the old Metro-Goldwyn-Mayer facility. On Thursday, Guber said a picture of Mayer he keeps on his desk helps him keep the latest developments in perspective.

“Every time I get full of myself, I look at it and remind myself that I’m only renting,” he said.

HIGH ANXIETY: Guber steps down at a critical time for Sony Pictures. D1