Eyes Wide Open

That resounding thud you heard when the two most powerful and senior moguls in the entertainment industry resigned last Wednesday night was the sound of a T-rex crashing to the pavement outside Rockefeller Center. Bob Daly and Terry Semel told the Time Warner board they’d had enough after two decades running Warner Bros., a reign that began when they were hired to run the movie studio and later included TV shows, music, the WB network, and merchandising as well.

Sure, it’s the end of an era and all that. But it also signals the beginning of a long-overdue generational shift in Hollywood, a time to finally bring new blood into an industry staggering on its last dino legs. Nothing this momentous has happened since 1969. Easy Rider was a stunning success for Columbia Pictures, and the ensuing sex, drugs, and rock-and-roll takeover of the motion-picture industry saved it from its own stodgy self.

Back then, the over-fifty fogies in the executive suites were considered dinosaurs by the new young mavericks like Bob Evans, Thom Mount, and John Calley. Today, there’s a similar layer of aging, overcompensated, entrenched managers. This time around, however, there’s no young talent to fill their Cole-Hahns. Daly and Semel made their decision to call it quits the night after the Los Angeles premiere of Eyes Wide Shut. They rocked Hollywood when they announced they were ready to move out and “move on.” The question is, who will take their place? For years, whenever a top studio executive has jumped or been pushed, the same usual suspects have been bandied about as possible replacements, the same people who have been deciding which projects get made in this town for the past two decades. Only the studios change; the names remain the same.

That’s why the dream factories of legend are suffering such severe anemia: It’s as if an invisible but universally understood addendum had been hung from the fabled Hollywood sign: vacancies. nice surroundings, good perks. no one new need apply. There’s something unseemly about graying studio bosses making movies for horny 15-year-olds. Daly is 62, Semel, 56. Bob Shaye at New Line is 60. Ron Meyer at Universal is 54. Disney’s Joe Roth is 51. Sherry Lansing at Paramount is almost 55; Michael Eisner is 57. John Calley at Sony is, gulp, 69.

In a time when the Internet is making multimillionaires of 27-year-old entrepreneurs, the Hollywood veterans have been locked in a seemingly perpetual round robin: David Begelman went from Columbia to MGM to Columbia again. David Kirkpatrick went from Paramount to Disney and then back to Paramount. Frank Mancuso went from Paramount to MGM. Sherry Lansing went from 20th Century Fox to Paramount. Jonathan Dolgen went from Columbia to Fox, back to Columbia, and then to Paramount. Michael Eisner went from ABC to Paramount to Disney. Barry Diller went from Paramount to 20th Century Fox to Savoy/USA Broadcasting. Mike Medavoy went from Orion to TriStar. Bill Mechanic went from Disney to 20th Century Fox. Mark Canton went from Warners to Columbia then back to Warners. Peter Guber went from Warners to Sony and then to Paramount. Jon Peters went from Warners to Sony then to back to Warners. Jeffrey Katzenberg went from Paramount to Disney to DreamWorks. Jeff Sagansky went from CBS to TriStar to Sony to Paxson. David Picker holds a record of sorts for having presided over four Hollywood studios (United Artists, Paramount, Lorimar, and Columbia). And in 1993, John Calley, the president of production at Warner Bros. back in the Deliverance days, was coaxed out of hibernation in Connecticut to come back to L.A. and run first United Artists and later Sony; now he’s doing business with pups who weren’t even born when he had his biggest successes.

The difference with Daly and Semel is that they managed to do it all by staying in one place. For them, of course, it was the place that changed. (Obviously, other studios had new parent companies, too, but their top executives seemed to morph each week.) From Warner Bros. to Time Warner, from Steve Ross to Nick Nicholas to Jerry Levin to Ted Turner, Warners and the world in which it exists is a far cry from Daly and Semel’s salad days, the years when they gave the studio Saturday Night Live-generation hits starring Chevy Chase (National Lampoon’s Vacation), and later, with the Lethal Weapon and Batman franchises.

When Daly first came to Warner Bros., it was for him the promised land. He had been mired in television, that ugly stepsister of the film industry. In his first eight years as chairman of Warners, beginning in 1980, Daly turned the studio from a $1 billion company to an $8 billion company, with Semel his ever-present right hand and COO, later co-chairman. Semel, for his part, began his career as a trainee in Warners’ New York office. Nothing could have thrilled Daly and Semel more than watching Warners become part of the biggest media enterprise in the world: Time Warner became their personal playground, and they were grabbing all the toys. They were the constant in an ever-changing universe.

Once they found themselves working for Jerry Levin, they managed to keep him at arm’s length. After all, Time Warner’s stock was disturbingly static, thanks to the huge debt the company accumulated in its merger, and Levin had his hands full. The hyperambitious pair ruled in kingly fashion. Nurtured by Steve Ross, they were not about to renounce his legacy of corporate excess, what with the jets, the splendiferous vacation villas, the full-frills production deals for the favored few. Even when latecomer Ted Turner tried to reel them in, they reacted as if cost-cutting were for mere mortals. For a while, Levin seemed almost superfluous, dabbling as he was in that cable nonsense. But then a sea change occurred. Cable became king, and Wall Street’s view of Time Warner’s lackluster stock turned around.

“The dream factories of legend are suffering from severe anemia. At a time when the Internet is making multimillionaires of 27-year-olds, Hollywood veterans have been locked in a seemingly perpetual round robin.”

This was still tolerable so long as they remained successful. Daly and Semel’s winning streak ended abruptly around the time, 1995, that Levin fired Michael Fuchs – generally regarded as his heir apparent – and put Warner Music under Semel and Daly’s purview. With so much power concentrated in the Warner Bros. pair (the music division alone accounted for a quarter of Time Warner’s revenues), rumors were constantly swirling that by this time the following year – any year – Daly, with Semel in tow, would be the new head of the parent company.

But Levin managed to save his neck with the surprisingly bold move to bring Ted Turner’s sprawling cable empire into the Time Warner fold. For years, the unpleasantness between Turner the control freak and the decidedly uncontrollable Daly and Semel was the talk of Hollywood. The tensions eased somewhat when the TW stock finally began to take off, though the pressure was still on Daly and Semel, this time from outside as well as within. After decades of enjoying the best press of any studio heads, they found themselves the targets of vicious criticism as one by one their movies tanked (Mad City, Father’s Day, The Postman, The Avengers), the music division fell into disarray, the merchandising unit foundered, and even that bright spot, TV, began to lag. They allowed top producers like Art Linson, Arnold Kopelson, and Arnon Michan, to flee and didn’t replace them. They built their partnership on production deals with superstars like Mel Gibson and Kevin Costner but hardly pursued young Hollywood. For the first time, Daly and Semel were at a disadvantage, starting this contract negotiation with a strengthened Levin, who not only didn’t need them anymore but, like Turner, was prepared to show them the door.

When all is said and done – and much will be said in the coming weeks – perhaps the most lasting aspect of the Daly-Semel legacy is that Warners has lost a generation of leaders to draw upon in their wake. It can be argued that in the film division alone, a shocking number of able executives have passed through the exit door: Billy Gerber, Lucy Fisher, Bruce Berman, and Lisa Henson are just a few of the hot young production executives who, realizing they could rise no higher, left for other studios or production deals.

But Daly and Semel are not alone in this. With the exception of 20th Century Fox – whose head, Peter Chernin (who got his job after first Barry Diller and then Joe Roth vacated the executive suite), was promoted into parent company News Corp., thus making way for Bill Mechanic – Hollywood studios are literally ossifying. And it couldn’t come at a worse time.

Most Hollywood stocks have failed to realize the recent huge run-ups (nor the comparable executive-compensation packages full of generous stock options that made semi-billionaires of Daly and Semel) that other sectors of the market have seen. And look: Earlier this month, at Herbert Allen’s famed Sun Valley, Idaho, retreat, that longtime conclave for the entertainment elite, Hollywood had definitively ceased to be the big draw, no longer viewed as the most glamorous business in the world. The new stars were the Internet entrepreneurs whose world has come to dwarf Hollywood in terms of money and attention, drawing away the visionaries and the best management talent.

No one wants to be the first to say it, but the entertainment business as we know it is dead, done in by $20 million deals for actors, greedy agents, and wildly overaccommodating studio bosses. The product, too, has been under lethal pressure from politicians and interest groups. Traditional Hollywood, increasingly balkanized by the conglomerates that own it, is hemorrhaging money; while the studios bleed, actors and agents and directors and independent producers walk away with the gold. And the Web only expands: In a matter of months, making movies and TV shows and records may merely be just part of yet another expansion: no cooler, no better.

No such fate awaits Daly and Semel, who have more money than they could ever need. They certainly don’t have to take Levin’s or Turner’s guff any more. (Reportedly, they were about to have music taken away from them.) Now they’re talking about their third act, which is fine for them. But many able younger executives never got a first act and have already given up on Tinseltown and gone elsewhere. Lust – for power, for money – is what kept Daly and Semel in the game so long. Levin wants to fill the vacancies from within the corridors of Time Warner. If he’s the visionary he’d like us to think he is, he’ll fill them with people few beyond those corridors have ever heard of. Yet.

Eyes Wide Open