Tension Mounts as Box-Office Flops Take Toll at Warner

Warner Bros. co-heads Bob Daly and Terry Semel seem to be in serious denial.

While they readily admit that the overall performance of their movies have “absolutely been disappointing” this year and that morale at the historically stable studio is dismally low, the pair say they’re staying the course in the expectation that a few box- office hits will lift the film division out of the morass.

No heads will roll. No restructuring of the movie division’s management is envisioned. No changes in the studio’s tried-and true-strategy of attaching big movie stars and big name directors to their big movies. And, no apologies for continuing to rely on old familiar movie franchises like “Lethal Weapon” or their stable of veteran talent--including Clint Eastwood, Kevin Costner, Joel Silver and Richard Donner--to deliver the big hits.

Some executives at the studio say all of this suggests Daly and Semel are unwilling to admit that the system that worked so well for nearly two decades may require an overhaul.

“They’re not looking at themselves,” says one. “They won’t admit things have changed.” Another industry veteran said, “The business changes every few years and you have to change with it.”

Sources at the studio say Daly and Semel don’t want to hear anything negative about their product and can be intolerant of differing opinions, which the Warner heads dispute.

When a top Warner executive expressed an honest, but skeptical opinion about the box-office prospects for the recent film noir release “L.A. Confidential,” Daly was said to have barked back, “Don’t tell me bad news, I only want to hear good news.”

When some executives protested that Warner shouldn’t put its gritty adult drama “Mad City,” starring John Travolta and Dustin Hoffman, up against TriStar’s sci-fi action adventure release “Starship Troopers,” and the Keanu Reeves-Al Pacino drama “Devil’s Advocate” up against Columbia’s teen thriller “I Know What You Did Last Summer,” Daly and Semel turned a deaf ear.

Daly stands behind the release dates, noting that the market is glutted with films every weekend, and insists that “We allow people to voice different opinions, but we make the final decision--that’s what a boss does.”

He was equally incensed at the suggestion that he and Semel are in denial. “For anybody to say I don’t want to hear bad news is ridiculous,” Daly said in an interview Thursday. “My job is problem solving--that’s what I do for a living.”

In June, when The Times first raised questions about some fundamental problems at their movie studio, Daly and Semel basically shrugged them off, saying that their then-yearlong box-office slump would be reversed by a promising summer and holiday lineup.

“We’re going to have a record-breaking year in our film division, and we have some fantastic potential ahead of us,” Semel said then, pointing to the summer release of “Contact” as “potentially one of the biggest movies we ever had.”

Of course, that hardly turned out to be the case.

Relative to its $100-million cost, “Contact,” starring Jodie Foster and directed by Robert Zemeckis, was far from a profit center. The same held true for another Warner hopeful, “Conspiracy Theory,” a Mel Gibson-Julia Roberts vehicle that cost $72 million.

Since then, Warner’s box-office woes and internal turmoil have only worsened.

The Warner chiefs now find themselves getting the kind of unwanted attention they’d like to avoid and that usually is paid to their rivals.

Daly and Semel have long been the darlings of Hollywood. As the longest reigning management team, they’ve jointly run the studio for 18 years, having nearly unparalled success with such blockbuster franchises as “Batman” and “Lethal Weapon,” and only sporadic downturns over the years with flops like “Bonfire of the Vanities” and “Mars Attacks!”

Despite its current prolonged drought at the box office, Daly is quick to remind how Warner Bros.’ earnings overall, which include results from TV, video, consumer products, retail outlets and theme parks, have been at a record high for the past nine months and are expected to continue in that vein when year-end figures are reported in February.

Daly notes that he and Semel have worked for years to build a studio that isn’t solely dependent on the often volatile theatrical movie market. Still, he admits, “If theatrical is off, it can affect other ancillary rights.”

Warner’s dramatic turndown at the box office--underscored by such high-profile misses as “Father’s Day,” “Mad City” and “Midnight in the Garden of Good and Evil”--has weighed heavily on employees. One studio insider compared the morale on the lot to “a funeral parlor,” while another said that fear and insecurity in the executive suites were rampant.

Daly’s response?: “Of course they’re disappointed . . . why would morale be good? People here are conscientious and care about what is going on. I tell them to put their heads down, work on marketing, make the movies better and get some hits--that’s when morale gets better.”

Many say that problems at the studio, a unit of Time Warner Inc., intensified as Daly and Semel took on added responsibilities that include its hugely successful global music empire, along with oversight of retail stores, theme parks and its vast television business.

The pressing question continues to be are the two executives spread too thin?

Billy Gerber and Lorenzo di Bonaventura, the 30-something executives who have been put in charge of movie production, have no managerial experience to speak of and don’t share the kind of partnership and comaraderie that Semel and Daly have enjoyed over the years.

In fact, the young executives have totally different operating styles and have long clashed, though since August they have agreed to agree, at least publicly.

Daly said he and Semel have no plans to place any executive between them and their production heads--not even former Warner production chief Mark Canton, who recently became a producer on the lot after a stormy reign as head of Sony’s movie operations.

“We hired Mark Canton to come into the studio as a producer. . . . No plan exists today about Mark coming back as an executive at our company,” Daly said.

Daly also wanted to debunk rumors that either Gerber or di Bonaventura would face the chopping block, leaving only one executive in charge of production.

Rather than defining who has the authority to green light which movies get made, Daly prefers to say he and Semel have “red light ability,” meaning their job is to stop projects from going into production if costs seem out of line.

The prospects of two of Warner’s most expensive upcoming movies, Kevin Costner’s “The Postman” (due out Christmas Day) and Barry Levinson’s spring release “Sphere,” are causing nervousness inside the studio.

Warner’s last best hope for 1997 rests with “The Postman,” a 2-hour, 45-minute post-apocalyptic tale about a drifter masquerading as a mail carrier out to save the American West. However, some Warner executives doubt the movie can save the day at the beleaguered studio.

Those same executives also question the wisdom of continuing to rely on aging franchises to work box-office magic. Warner is betting big that “Lethal Weapon 4,” starring Mel Gibson and Danny Glover, will be able to compete next summer against such original, youth-oriented, effects-driven event movies as TriStar’s “Godzilla” and Disney’s “Armageddon,” with Bruce Willis.

One executive at the studio predicted that “things are not going to get better here for a long time.”