Bloodbath in Hollywood: Do recent high-level studio sackings reflect the changing tastes of the public?

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The Independent Culture

Forget football. If you want to see a cut-throat profession where a short run of poor form will see balding managers who wear very bad suits get publicly sacked, just wander into the air-conditioned offices of a major film company.

This week has seen yet another round of hirings and firings at Hollywood's biggest studios, continuing a summer-long executive bloodbath that is now being compared, only half in jest, with the sort of fare that attracts popcorn-guzzling punters to late-night horror screenings.

The latest heads on the chopping block belonged to Marc Shmuger and David Linde, chairmen of Universal Pictures, who were called into a meeting at the company's Burbank headquarters on Monday morning and told that rumours of their impending demise were entirely accurate. Their sacking followed a year that has seen Universal release expensive misfire after expensive misfire, from Sacha Baron Cohen's heavily marketed Bruno, to Johnny Depp's Public Enemies, Will Ferrell's Land of the Lost, and Adam Sandler's critically lauded but publicly ignored Funny People.

Yet no sooner had they joined the roughly 10 per cent of Californians now seeking work than iPhones and BlackBerries began bleeping across Los Angeles with news of a major shake-up on Disney's nearby back-lot. Rich Ross was unveiled as the replacement for studio head Dick Cook, who got the bullet last month thanks a series of flops that included the unfortunately timed Confessions of a Shopaholic, released in the depths of a consumer recession.

Across the film industry a sense of turmoil is palpable, as the media companies that control major Hollywood institutions struggle to cope with a shifting marketplace that has seen DVD sales decline disastrously – the market fell 9 per cent last year and is down 13.5 per cent in 2009 – while film marketing costs continue to soar, and cheap finance vanishes.

Fewer films are being made, particularly at the quirkier end of the spectrum, which had traditionally relied on DVD to help adult-orientated titles (which sometimes struggle at the cinema) break into profit. Independent production houses like New Line and Disney's Miramax, which announced a slew of redundancies at the weekend, are being scaled back or closed completely.

Distributors are reluctant to foot enormous marketing bills for bringing risky titles to market.Even Steven Spielberg has been struggling to raise cash. It took him almost a year to get hold of enough money to take his firm Dreamworks independent: the collapse of AIG, which was due to provide a portion of the $1.2bn start-up cost, left him frantically searching for new backers.

Less robust moguls are being elbowed aside, after failing to cope with changing public appetites for film, and an evolving business environment that now means the lion's share of income from successful movies comes from franchising: video games, theme park rides, TV spin-offs.

In August, the debt-ridden MGM got rid of Harry Sloan as its CEO, replacing him with a team of restructuring experts. A month earlier, Paramount replaced its two most senior production executives, John Lesher and Brad Weston. Universal's sister TV company NBC recently axed its top man, Ben Silverman.

Recent years have seen a sea-change in the nature of blockbuster movies. Film-goers are tending to ignore star "vehicles" – the latest Eddie Murphy flick, for example, cost $55m and made back just $18m – in favour of concept-driven titles like Transformers, The Hangover and the recent Star Trek prequel. Some of the biggest financial success stories, such as Iron Man and Batman, have been inspired by comic-book heroes. Others, such as GI Joe, owe their creation to hit toys. Still more have revolved around literary franchises like Harry Potter.

If you want to be a successful studio executive, this trend represents a game-changer: it totally alters the nature of your job. In the past, the most successful film moguls were old-fashioned impresarios, who tried to put the right script in the hands of the right A-list director and stars.

The new Hollywood is different. The most important ability for any would-be movie executive of the future is to be able to identify promising concepts. A previously unknown studio called Summit, for example, has become a major player in just 12 months after hoovering up rights to the Twilight novels: the first film in what will become a long-running franchise cost just $37m to make, yet returned an astonishing $383m.

In Hollywood's recent game of musical chairs, none of the recent sackings illustrate the implications of this trend more readily than that of Disney Studios head Dick Cook. A popular figure, who joined the Mouse House 40 years earlier, as the driver of a theme-park monorail car, Cook enjoyed unparalleled relationships with talent.

On the day Cook was fired by his boss Bob Iger, Johnny Depp was so perturbed that he decided to phone the Los Angeles Times from London, where it was the middle of the night, to tell a shell-shocked reporter that he was "shocked and saddened" at the demise of "the sweetest man alive" and might even quit the next Pirates of the Caribbean movie in protest. But in today's market, Cook's greatest strength was also his biggest weakness. While he was brilliant at persuading stars like Depp and John Travolta to say "yes" to projects, he was rather less adept at saying "no" to some of their more outrageous demands, particularly in the arena of salaries and budgets.

Cook's replacement, Rich Ross, made his name at The Disney Channel, where he nurtured franchises like High School Musical and Hannah Montana. He will refocus the studio on family-friendly blockbuster franchises that can be turned into theme-park rides, music albums and other spin-offs to boost the bottom line.

This may not, of course, represent entirely good news for film-lovers. But rightly or wrongly, as the string of executives now seeking fresh employment will be only too aware, all Hollywood ever really does is follow the money.

Hits and misses

Flop: Surrogates

Disney chairman Dick Cook was fired after releasing a long run of star-driven titles that underperformed, including Confessions of a Shopaholic, Bedtime Stories, and Race to Witch Mountain. The Bruce Willis vehicle Surrogates, which hit theatres a week after Cook's demise, on 25 September, was the last straw. It has so far taken $34m; normally, not so bad. But Cook allowed production costs to reach $80m – leaving the Mouse House in hock for $46m.

Flop: Land of the Lost

A year ago, Universal's Marc Shmuger and David Linde could do no wrong. The years 2007 and 2008 were two of the most profitable in Universal's history thanks to mega-hits like Mamma Mia, Knocked Up and The Bourne Ultimatum. This summer, however, has been one horror show after another. Expensive, heavily marketed titles like Public Enemies, Bruno, Funny People, and Love Happens all disappointed. The biggest flop was Will Ferrell's Land of the Lost. Made for $100m (twice the usual rate for a Ferrell vehicle), worldwide receipts so far total just $62m.

Flop: Fame

You can't just blame Harry Sloan for the financial crisis that has driven MGM, one of Hollywood's most celebrated institutions, to the verge of bankruptcy, with debts approaching $4bn. But the failure of Sloan's plan to turn The Lion from a distributor of other people's titles into a producer of its own material hardly helped. The recent release of the remake of Fame, which hit cinemas a month after he was moved aside as CEO, and was their first film of the year, is a case in point: it opened third in the box-office charts, and has so far made just £20m.