Sony Extends Calley’s Contract Until 2003

Sony Pictures Entertainment Chairman John Calley, who at 71 was expected to retire at the end of this year, will instead remain head of the studio until early 2003.

The contract extension from Calley’s boss, Sony Corp. of America chief Howard Stringer--expected to be announced today--is a stop-gap measure that does little to alleviate uncertainty and instability at the studio caused by the nagging question of succession that has plagued Sony for more than a year.

However, it buys Stringer--who oversees all of the Japanese electronic giant’s U.S.-based entertainment and technology assets from New York--more time to figure out what its studio of the future should look like in the digital age.

Stringer has made it clear that his first choice for a successor to Calley is former Disney Studios chief Joe Roth.

If Roth does take the job, it’s not apparent what that would mean for his independent movie company, Revolution Studios, which is partially bankrolled by Sony. But Stringer told The Times this week from the studio’s Culver City lot that Roth will take on an expanded role over the strategic direction of Sony Pictures after his noncompete agreement with Disney expires in November.

Sony at that point may formalize Roth’s expanded role at the studio, sources say, perhaps placing him on the Sony Pictures board--in effect the studio’s management group. That, of course, would further position Roth for the possibility of taking over from Calley.

Neither Roth nor Stringer would comment or even speculate on such a move. Roth would only say, “I’m happy that John is going to continue on and I’m looking forward in November to taking on a broader role for the company.”

The move to re-up Calley comes as Sony is struggling to produce some breakout box-office hits after a string of mixed results. The studio also is reeling from a public relations debacle two months ago when the studio was forced to acknowledge that its marketing executives had used a fictitious movie critic in its ads and used employees for what appeared to be man-on-the-street testimonials to hype its movies.

In his expanded role at Sony, Roth will continue running Revolution and will not be involved in the selection of movies at Sony’s Columbia Pictures, a responsibility that remains with Columbia Chairwoman Amy Pascal. At Revolution, however, Roth expects to make seven or eight movies next year, which represents as much as one-third of Sony’s annual release slate.

Meanwhile, by granting Calley the contract extension, Stringer said, “I effectively buy myself a year and a half.”

By that time, Roth will presumably have decided whether to once again run a studio after having done that job twice before at Disney and 20th Century Fox.

“We’ll know if Joe is willing to make the commitment and we’re willing to make the commitment that he wants,” Stringer said. “It works both ways. I’m not here to reproduce the past with earlier Sony deals.” Stringer was alluding to Sony’s costly deal to bring former Warner Bros.-based producers Peter Guber and Jon Peters to the studio in 1989.

Stringer said he does not plan to offer any outsiders the Calley position until Roth decides, though he has been approached by various interested candidates. Stringer said he has not had any serious talks with anyone.

Stringer said over the next year or so, while Calley is still aboard, he plans to tap Roth’s knowledge and experience to help strategize a plan and direction for Sony Pictures.

“The business is changing and we are designing a studio for a broadband entertainment world,” Stringer said. “I’d like to get Joe into a dialogue about the studio of the future. He will support John and I and [Sony Pictures President] Mel Harris in discussing strategies for the future of movie industry.”

Stringer, 58, said his mandate now is to “fit the whole jigsaw puzzle together and decide what our priorities are” in marrying Sony’s content with all its hardware gadgets--from PlayStation 2 to memory sticks to hand-held devices.

Stringer began laying the groundwork in June 2000 for the possibility of Roth taking over when he brought him and his newly formed Revolution into the Sony fold.

After resigning as head of Disney Studios in January 2000, Roth set up Revolution with $250 million in equity financing from Sony (which invested $75 million for a 7.5% stake), Fox Entertainment Group ($25 million for 2.5%) and Starz Encore Group ($150 million for 15%). Roth is committed to making and delivering 36 pictures over the next five years.

So far, the company has released three movies with mixed results. Its first release “Tomcats,” a teen comedy that grossed just $13.5 million, was followed by “The Animal,” which sold $55 million worth of tickets. Its current release “America’s Sweethearts, “ starring Julia Roberts and directed by Roth, so far has grossed $75 million.

Sony bankrolls 42.5% of Revolution’s film budgets and shoulders all the domestic and most of the international marketing costs for the movies. The studio collects a distribution fee of 12.5% for movies it releases in all territories it controls.

Sony executives acknowledge the studio lost money on “Tomcats” (estimates of the deficit run between $6 million and $8 million), but will make some money on the other two releases.

It is still murky how and if Roth could run Sony Pictures given Revolution’s contractual commitment to its other equity investors.

When asked if he envisions running Sony Pictures, Roth remained noncommittal. “I’m having a great time running Revolution and 18 months will give me a better feeling both about Revolution and Sony,” he said.

And, if in 18 months Roth decides to remain independent, Stringer quipped, “A year and a half is a lifetime in this business.”

Stringer readily admitted that struggling with the issue of succession has created “a lot of instability” at the studio “because we believed John wanted to leave.”

Calley, a seasoned studio executive who joined Sony in late 1996 from his former post as head of United Artists, had intended to move to Canada and retire at the end of his contract in November. But changes in his personal life led him to remain in Los Angeles.

At the end of his contract extension, Calley is expected to have a production deal at Sony.

From 1968 to 1981, Calley was a top executive at Warner Bros., then took a 13-year self-imposed exile from Hollywood’s executive ranks. From 1989 to 1991, he was an independent producer and partnered with his best friend, director Mike Nichols.

He reemerged in 1993 at United Artists, then a dormant label of MGM, and helped revitalize it.

Since joining Sony, Calley has had a decidedly mixed track record overseeing such hits as “Stuart Little,” “Big Daddy” and “Charlie’s Angels” and such expensive flops as “What Planet Are You From?” and “Random Hearts,” both of which lost tens of millions of dollars.

So far this year, Columbia has had unspectacular box-office results (though Stringer insists a number of movies are profitable), with its highest-grossing in-house release “The Wedding Planner” at $60.4 million.

There is positive buzz on Columbia’s Dec. 7 release “Ali,” a Michael Mann-directed movie starring Will Smith as Muhammad Ali. Sony also has as much as $500 million in production money riding on such highly anticipated potential summer hits as “Spider-Man,” “Men in Black II” and “Stuart Little 2.”