Comcast Corp.'s naming of Jeff Shell as head of Universal's movie studio may have taken many by surprise last week, given his lack of experience and profile in Hollywood's notoriously insular film industry.
But when viewed as a reflection of (or window into) where the business is today and where it may be headed, his appointment shouldn't come as a shock.
Such industrywide tumult has no doubt led to an extraordinary amount of management change atop four of the major studios in the past year.
Media congloms like cable giant Comcast are increasingly turning to leaders with a new constellation of business skills, who can anticipate, navigate and respond quickly and boldly to the seismic changes under way in the creation, consumption and multiplatform delivery of movies in theaters, at home and on hand-held devices.
Shell, a respected Comcast executive with extensive experience in international TV and cable programming, is the latest example of what a studio chief in the 21st Century looks like.
Earlier this year, Time Warner tapped Kevin Tsujihara to lead its Warner Bros. studio, where for years he oversaw home entertainment and digital initiatives. Likewise, when News Corp. pushed out 20th Century Fox's movie co-chairman Tom Rothman, a veteran steeped in the content-creation side of the business, it bet on his more multifaceted partner Jim Gianopulos, a forward-looking executive schooled in the international marketplace and keen on new media and antipiracy efforts, to guide the studio into an ever-changing future.
Walt Disney Co. honcho Bob Iger, the former head of ABC, who is not known for having a passion for movies, nonetheless has made strategic acquisitions of market leaders such as Pixar Animation, Marvel and "Star Wars" producer Lucasfilm to ensure a more reliable revenue stream coming from the Burbank studio.
Comcast, the first of Universal Studios' previous four owners to install one of its own executives at the top, opted to kick aside movie chairman Adam Fogelson in favor of someone who it believes can best manage the asset by looking out at the industry from 30,000 feet.
"You have to really understand thebusinesses that studios are in," says Fred Bernstein, an attorney with Katten Muchin Rosenman who ran Columbia Pictures from 1994 to 1997. "It's not just about making hit movies anymore â¦ the pure producer/production executives have become the anomaly because their perspective and skill set is deemed too narrow."
Of course producing hit movies is still imperative, which is why if these new business-centric studio bosses are to succeed, they must stay closely aligned with their creative counterparts, whose jobs are focused on wrangling the best talent and material they can muster while assembling their yearly film slates.
"Creative origination is now more of a group process," says Matthew Harrigan, a media analyst at Wunderlich Securities. "Studio heads are now experts on tech road maps and feeding benefits to other divisions rather than gut greenlighting of projects."
Veteran entertainment attorney Ken Ziffren, who estimates that movie business margins are 17% at best, agreed, noting that the future health of the film industry "will depend on how studios can anticipate and maneuver new technologies."
As was the case with U's Fogelson, even strong box office results can't necessarily save someone's job. The studio had a good year, bolstered by such blockbusters as "Despicable Me 2" and "Fast & Furious 6." And, Hollywood at large witnessed a record summer, with ticket sales of $4.75 billion -- and it's on track to break another record at year-end if the momentum keeps up.
But such positive news masks underlying fault lines in the business, which recently saw hundreds of millions of dollars lost on such costly flops as Universal's "R.I.P.D." and "Battleship," Disney's
"The Lone Ranger" and Sony's "After Earth," among several others.
Production costs have skyrocketed as the majors increasingly bet on bigger, more expensive tentpoles that frequently cost upwards of $200 million to make. As the costs to market and distribute these movies worldwide also have continued to balloon, the international box office has become crucial to a studio's bottom line.
"What this industry needs right now," says Jean-Luc de Fanti, managing partner at studio co-financier Hemisphere Media Capital, "is more fiscal discipline, more cost controls, because the business is challenged."
Veteran movie producer Jordan Kerner says that the huge losses Hollywood has been incurring from box office misses has driven the price of failure to steeper-than-ever levels.
The Role of Today's Studio Chief Has Been Redefined
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