Sony Ousts the Head of Entertainment Unit

Sony Corp. ousted Alan J. Levine as head of its entertainment unit on Wednesday, the second move in three weeks to clean up what has been an embarrassing management and financial mess for the Japanese electronics giant during its seven-year ownership.

The departure of Levine, the last remaining top executive from the regime led by former Chairman Peter Guber, follows the firing last month of Mark Canton as head of Sony’s Columbia and TriStar pictures units. Levine’s fate was all but sealed then when his plan to bring in William Morris agent Arnold Rifkin to replace Canton was rebuffed by Sony President Nobuyuki Idei in an embarrassing rebuke.

Sony also confirmed Wednesday that it is in discussions with United Artists President John Calley, 66, who helped turn around UA parent Metro-Goldwyn-Mayer, to join the company as a top executive overseeing operations that would include Sony’s struggling film group.

Sony would not elaborate on the Calley talks, which are expected to be wrapped up this week, saying that the company hopes to provide more specifics in the next few days. In a brief interview, Calley said he is “optimistic and encouraged” but said “I don’t have a deal with Sony. I haven’t signed anything yet.”

Calley’s appointment is expected to be part of a larger plan to form a new management team that would include New York-based Sony executive and former CBS entertainment chief Jeff Sagansky. Some sources said Sagansky would oversee the television group.

The new management team is expected to report directly to Idei, who ousted Levine as Sony Pictures Entertainment president and chief operating officer. Idei is expected to take a much more hands-on role in the entertainment operation, and is also expected to reorganize other areas of Sony’s U.S. operations.

The departure of Levine is a partial victory for Sagansky, who had been engaged in a fierce internal power struggle with Levine. Sagansky had repeatedly expressed his frustration to associates about his limited and poorly defined role at the company, and had been lobbying for more responsibilities. A former top executive with CBS and TriStar, Sagansky may relocate to Los Angeles.

Calley is highly regarded by Hollywood’s creative community and in the 1970s he was one of the top executives at Warner Bros. If he comes to Sony he would have the monumental challenge of turning around an operation plagued by a long string of expensive box office bombs that include “The Fan” and “Multiplicity” as well as such disappointments as “The Cable Guy.”

Even if Calley, viewed as the kind of savvy and seasoned executive Sony badly needs, comes to the studio, top Hollywood executives say Sony needs a clearer overall strategy in entertainment to compete with such media giants as Walt Disney Co. and Time Warner Inc. Some sources close to the studio speculated that Sony wants to “dress up” the company with a respected manager as part of a plan to eventually spin off a chunk of the operation to the public. “Calley looks good in a prospectus,” one former top Sony executive said.

“Calley is a great, solid movie guy, but Sony still hasn’t solved its problem of having a visionary point of view. The company still feels rudderless,” said one senior studio executive.

Since plunging into Hollywood seven years ago, Sony has fallen further behind its faster-growing rivals, plagued by management turmoil in its operations. Under former Chairman Peter Guber, the studio spent excessively. In 1994, it disclosed a staggering $3.2-billion loss on the operation.

Sony euphemistically described Levine’s departure as a resignation. But sources said Idei forced the issue Wednesday morning by refusing Levine’s request for a vote of confidence that he would run Sony Pictures long term. Sources close to Levine said that he was offered a token position at Sony, which he quickly refused.

A low-key lawyer who for years was nicknamed “the invisible man” at Sony, Levine became the top executive at the operation when Guber was forced out as chairman of Sony Pictures in 1994.

Levine cut overhead costs and established a more businesslike atmosphere at the company. But one of Levine’s biggest skills, according to Sony insiders, has been his savvy at corporate politics and a remarkable ability to survive even the most jarring earthquakes on the Culver City lot.

Levine outlasted all of the other top members of the management team that Sony brought in to run the studio in 1989 such as Guber and executives Jon Peters and Jonathan Dolgen. After Guber left, Levine sought to portray himself as the antithesis to that free-spending era even though he was an integral part of Guber’s management team.

Levine is said to have more than two years left on his contract, with his salary and bonus estimated by sources at about $3 million annually.

Although Levine’s departure had been expected by Hollywood for some time, Sony nonetheless had periodically issued statements supporting him, reportedly at his urging. But there were also subtle signs of tension between Levine and Idei, such as when the Japanese executive told Los Angeles Times Magazine earlier this year that Levine “thinks too much,” described him as “always so nervous” and even imitated the way he sounds on the phone.

In a statement, Idei said Levine will stay on for a brief period to assist in transition and thanked him for his work there.

The timetable is uncertain for Calley’s possible arrival at Sony.

Even some of Calley’s closest friends were surprised that he would be attracted to such an all-consuming job at his age and because he places a premium on his life outside of work.

Calley, who recently married Oscar-nominated actress Meg Tilly, dropped out of Hollywood for some 13 years after more than a decade as one of the top executives at Warner Bros., producing an occasional movie with director and best friend Mike Nichols. Spurning a lucrative $21-million, seven-year contract at Warner, Calley in 1980 retreated to Fishers Island in New York, acknowledging that he did so because he was tired of the corporate life.

In a 1994 Times interview, Calley summed up his decision to drop out at age 50: “I wasn’t enjoying it. . . . I knew who I was in the movie business, but I had no idea who I was anywhere else.”

Sources said Idei has met with Calley on several occasions over the past few months, but talks were complicated by the ongoing sale of MGM by a French affiliate of the bank Credit Lyonnais. In July, billionaire Kirk Kerkorian agreed to buy the studio for $1.3 billion in partnership with MGM management led by Chairman Frank Mancuso.

The sale, expected to close next week, apparently triggers an escape option for Calley from his contract.

At MGM, Calley had teamed up with Mancuso and former talent agent Mike Marcus, Calley’s counterpart as president of MGM Pictures, to revive the ailing studio. He came aboard at the urging of then-talent agent Michael Ovitz, who was advising MGM’s owner, the French bank Credit Lyonnais, at the time.

Calley oversaw such UA hits as “The Birdcage” and “GoldenEye,” along with such flops as “Wild Bill.” Before Calley joined Mancuso’s team, United Artists was a dormant operation.

Sources close to the MGM deal said that although Calley will be missed, Mancuso is the key executive as far as Kerkorian, Australian investor Seven Network and the company’s financial backers are concerned.

“To the financial community, there’s only one make-or-break player and that’s Frank,” one source close to the deal said.

Added Alex Yemenidjian, Kerkorian’s top lieutenant: “It’s a big loss for us. We’re going to miss him. Ultimately, Frank Mancuso has a great management team and a deep bench.”

Sources at MGM said it is unclear what action Mancuso might take to fill the void, such as reorganizing the MGM and UA units under Marcus or recruiting another executive.