COMPANY TOWN : ‘The Defining Decision of His Career’
For months, the talk among Hollywood insiders has been that Warner Bros. Inc. Co-Chairman Terry Semel would be leaving his longtime post to become chairman and chief executive of MCA Inc. It has been widely reported that Semel, who’s close buddies with MCA President Ron Meyer and is also highly regarded by new MCA owner Edgar Bronfman Jr., has an out in his Warner contract that would allow him to make a move in January.
The fast approaching date and endless speculation that Semel might well exercise that right has undoubtedly been weighing on Time Warner Inc. Chairman Gerald Levin. Until recently, Semel and his close associate, Co-Chairman Bob Daly, had been exasperated for some time about the direction of the company. Their compensation is based in part on stock options and the company’s value has been flat. The executives were also shaken by extended management turmoil in the music division.
But Levin’s proposed merger of Time Warner and Turner Broadcasting System Inc. was strongly favored by both Semel and Daly.
Now Levin faces several huge challenges in marrying the companies, not the least of which is figuring out just how to appease his valued executives at Warner Bros.
Sources say Levin has been making a full court press to keep Semel because of how much he values the partnership the executive has shared with Daly for 15 years. The two--Hollywood’s longest-reigning management team--have together managed one of the industry’s most consistently successful movie and TV studios with such hits as the “Batman” and “Lethal Weapon” series, “The Bodyguard” and “The Fugitive.”
This weekend, the Burbank-based studio is expected to have yet another box office windfall with the release of the highly-anticipated Jim Carrey sequel “Ace Ventura II: When Nature Calls.”
Semel has told some close associates that he now has every intention of staying at Warner Bros. if he and Daly can be guaranteed more management responsibilities under the merged company. Semel, according to one source close to him, is in the process of defining the terms under which he will remain.
“There will be a whole new corporate restructuring with the merger,” said one source with close ties to Warner Bros. “And they [Semel and Daly] need a bigger piece of pie to play with.”
Their current purview includes movies, TV and retailing, consumer products and theme parks.
The problem for Levin is that there may be little he can promise Semel and Daly unless the merger actually happens. And the merger, currently under federal antitrust review, can’t be completed until well after Semel has to make up his mind.
How then can Levin induce Semel to stay? And, how would a restructuring of the Time Warner-Turner assets affect other divisional heads?
And, if Semel were to agree to stay on, what happens if the merger falls through? Semel would have missed his window of opportunity to leave unless he was guaranteed another out if the merger were to fail.
Time Warner management, which has been under siege for the massive management upheaval and executive firings in the company’s music group over the past year, can ill afford a top-level executive shake-up at Warner Bros.
With the kind of instability that permeates Hollywood’s executive suites, solid management teams are both rare and hard to come by. Recently, the industry experienced the break-ups of such partnership fixtures as Lew Wasserman and Sidney Sheinberg, Michael Eisner and Jeffrey Katzenberg and Michael Ovitz and Ron Meyer. Certainly, the last thing Levin wants to see is Bob and Terry’s names added to that list.
In 1993, Levin persuaded Semel to stay aboard after it became obvious that he was restless and was considering a change. It was widely reported at the time that Semel was being wooed by MGM parent Credit Lyonnais to rescue the beleaguered studio and as part of the deal was being offered an equity stake. He also was reportedly considering other business options such as teaming with his pal Ronald O. Perelman, whose corporate empire now includes entertainment interests. Ultimately, he was persuaded to stay at Warner Bros. and signed a new five-year deal.
That deal reportedly contains a complex provision that would allow Semel to leave the company in January.
A native New Yorker who is an accountant by training, Semel (unlike the 58-year-old Daly, who began his industry career as a TV executive at CBS) has spent most of his professional life at Warner, cutting his teeth in movie distribution in 1966. He left the studio for four years in the early ‘70s to work at CBS Center Films and Walt Disney Co. before rejoining Warner in 1975 as president and general sales manager of the studio’s distribution arm. Three years later, he was promoted to executive vice president and chief operating officer of Warner Bros. and in 1981 became vice chairman. A year later he was named president/COO.
In March, 1994, after reporting to Daly for a decade, Semel won parity in title with his colleague as co-chairman of the studio.
Whether he will wind up being satisfied with the new terms of his deal and stay at Warner is yet to be seen. But as one of his close friends puts it, “At 52, this will be the defining decision of his career.”
Goldwyn Clock Ticking: Under mounting financial pressure, the Samuel Goldwyn Co. has some actively interested parties looking at its library and theater assets but so far a potential buyer for the entire company is elusive. The ailing independent, which has more than $60 million in bank debt, may be forced to sell the two assets separately if one doesn’t materialize soon. Sources say there’s now a short list of four strategic players--all in the exhibition business--who are doing due diligence on the company’s 125-screen Landmark Theatres chain. However, none of the parties has yet made an official bid for the art-house circuit, for which Goldwyn is seeking more than $50 million.
While Miramax would love to get its paws on the theaters as a natural fit for its specialized movies, at the moment, its parent, Disney, has made a bid only for the library. Sources say the offer is substantially less than the $60 million to $70 million that Goldwyn is hoping to get. PolyGram, which has been eyeing the Goldwyn Co. for some time but has balked at its $100 million-plus price tag, is also seriously looking at the library, according to sources familiar with the discussions.