For Warner Bros., a Return to Autonomy

So much for synergy.

For Warner Bros., the appointment of HBO chief Jeffrey Bewkes to oversee AOL Time Warner’s entertainment units appears to signal a return to the days when the studio operated from its Burbank lot as an autonomous unit so long as it churned out hit films and TV shows.

That approach differed markedly from the philosophy of the last 18 months since the America Online and Time Warner merger. Under now-departed AOL Time Warner Chief Operating Officer Robert W. Pittman, numerous “synergies” linking entertainment and Internet divisions were forced on skeptical division heads. All AOL Time Warner units were strong-armed into spending additional advertising dollars at America Online that executives believed were unnecessary.

The new, broader strategy set by AOL Time Warner Chief Executive Richard D. Parsons is reminiscent of the management style Warner Bros. enjoyed under the late Time Warner Chairman Steve Ross. In pre-merger days, division heads were encouraged to run their own businesses and find ways to link with other units when it made sense, a philosophy Bewkes is expected to bring to the company.

“We have a shared philosophy, which is to run the divisions as best as you can and let the cooperation rise organically. It only works when it’s organic. When it’s mandated, it doesn’t work at all,” said Warner Bros. Chairman Barry Meyer.

But Warner Bros. executives said the studio is not likely to return to the freewheeling Ross style because the company is so much bigger. In Ross’ day, units were so independent it was like “each division had a moat around it,” one company source said. Meyer agreed, saying, “It would be very hard in today’s world to run a kibbutz of divisions running totally independently.”

At Warner Music, insiders also responded favorably to Bewkes’ appointment, saying it would mean more autonomy for the division, which has picked up market share amid declining worldwide music sales. But some speculated that one of Bewkes’ mandates from Parsons--to combat digital piracy across AOL Time Warner--means he will begin weighing in on strategic decisions in the music division.

A personable, popular executive within the company, Bewkes enjoys close ties to Warner Bros. Bewkes helped heal strained relations between HBO and the studio, which deteriorated when former HBO chief Michael Fuchs helped bankroll the now-defunct rival movie distributor Savoy Pictures.

Meyer, a 30-year Warner Bros. veteran, was elated at the appointment of Bewkes, whom he has known for more than 20 years. Bewkes also comes from the Time Warner camp that has been at odds with the America Online faction Pittman led. Time Warner executives believe that their company and its stock price have been dragged down by AOL’s performance, and that the two companies were combined when AOL was at the peak of the Internet hype.

For Bewkes, Warner Bros. will be one of the crown jewels in his group, which scored big with its “Harry Potter” franchise and this summer’s hit “Scooby-Doo.”

If the Time Warner faction wasn’t encouraged enough that the management shifts have given it the upper hand with AOL, Warner Bros. insiders read between the lines of Thursday’s news release. Since the merger, AOL Time Warner’s boilerplate description was “the world’s first Internet-powered media and communications company.” In Thursday’s announcement, it was “the world’s leading media and entertainment company.”

Times staff writer Jeff Leeds contributed to this report.