A day after ousting its top U.S. executive, Sony Corp. acknowledged that the move had spawned confusion in its U.S. operations and issued a batch of internal memos pledging support for the managers of its electronics and entertainment divisions.
The memos--as well as Sony sources--suggest that the company plans to scale back its New York-based Sony Corp. of America office, which had served as the nerve center for the company's U.S. assets, including Columbia Pictures, TriStar Pictures and Sony Music. Sources said the umbrella-like operation is costing the company $100 million annually, much of which could be cut if its units reported more directly to Sony headquarters in Tokyo.
In a memo to Sony Pictures and Sony Electronics employees, Chairman Norio Ohga and President Nobuyuki Idei sought to counter perceptions that the Japanese parent is seizing more control of the company's U.S. operations after ousting Michael P. Schulhof, who was chief executive of Sony Corp. of America.
Idei and Ohga reiterated that Sony is "placing the responsibilities for the strategies, performance and results of our operating units in the hands of our local executives and managers."
Despite the attempt by Sony brass in Japan to quell nervousness, a studio insider said Sony Pictures executives "are so panicked, it's unbelievable. . . . They're wondering if there will be another sneak attack."
Senior executives at Sony Pictures are still mystified about their roles in the future of the studio and the overall plan of their company's Japanese parent.
"Nobody knows anything," one senior executive said.
The Sony memos were seen in the entertainment industry as a form of day-after damage control. In announcing Schulhof's departure Tuesday and saying little about it, Sony left itself wide open to speculation about whether it will remain in the entertainment business, as well as the status of its top executives. In a business as unstable as Hollywood, such uncertainty causes angst among executives and can make people reluctant to negotiate deals with a company in flux.
The memos assert that Sony's "full support" is behind Sony Pictures Entertainment President and Chief Operating Officer Alan Levine, but made no direct mention of Jeffrey Sagansky, the former head of CBS Entertainment who in 1994 was brought in as a strategist under Schulhof.
"If they dismantle the central infrastructure of Sony Corp. of America, that leaves Jeff without a country," said one source.
Others, however, insisted that Sagansky can't be counted out and may well emerge as the head of entertainment operations. And some sources said Sony in the next few days may issue a further vote of confidence in Levine, possibly in the form of an additional title.
Levine and Sagansky have been in disagreement at times since Sagansky was hired in a vaguely defined strategic role. Sources said these tensions could be exacerbated by the departure of Schulhof, to whom both reported.
Some Sony Pictures sources believe that the other shoe is yet to drop.
"Getting rid of Mickey [Schulhof] was a half-step in the right direction, but who do you put in to make sure the studio makes better movies at better prices?" asked one source.
Ohga and Idei, who have been in New York all week for meetings, are expected to arrive on the West Coast today for regularly scheduled meetings in Burbank and San Francisco, where they reportedly will sign a deal to build another big-screen Imax theater similar to one the company built in Manhattan.
Sagansky, traveling with them, will stay on for meetings at Sony on Monday and Tuesday. Those meetings were planned weeks before Tuesday's actions.
No changes are expected at Sony Music until March, when Epic Records Chairman David Glew is likely to take the reins at sister label Columbia Records, replacing Don Ienner, who is expected to be given his own start-up label. Sources said the move, approved by Schulhof, would include the promotion of Richard Griffith from president to chairman of Epic. Sony officials have told Sony Music chief Thomas D. Mottola that he has the company's support.