In the five years since the Japanese conglomerate spent more than $3.4 billion for a hunk of Hollywood, its entertainment business has foundered. Sony Pictures Entertainment, which includes Columbia and TriStar, ranks last among major studios in market share. On average, every one of its 1993 films lost money; 1994 offerings such as “Wolf” and “City Slickers II” also disappointed, though not on the scale of last’s year Schwarzenegger bomb “Last Action Hero.” Sony’s TV divisions have had little success beyond the comedy “Mad About You.” Only Sony Music, home to Mariah, the Michaels Jackson and Bolton and Pearl Jam, has prospered.
It’s not immediately clear what Sagansky’s role will be, though boosting profits would be a start. Sony Corp. of America president Michael Schulhof, who flew to Los Angeles to work out the details last week, hadn’t even settled on Sagansky’s title when the news leaked. Sony executives said Sagansky would be a kind of synergy czar who would wring greater cooperation and profits out of the company’s diverse entertainment units – from movies to music to electronic publishing. “As far as I can tell,” a bemused Sony source said, “he’s going to be crowned king of software.”
Speculation is that Sagansky will start work in the troubled film division. The most Machiavellian observers believe he may even replace chairman Peter Guber, the formerly ponytailed “Batman” producer who, along with Jon Peters, established Sony Pictures for the Japanese. Executives close to Schulhof, whose son dates Guber’s daughter, deny he is pushing Guber out. “The picture company has a series of well-publicized problems, but our profitability is far above a year ago,” he says. But insiders see Schulhof “warehousing” Sagansky until Guber can be bought out next year – for perhaps as much as $50 million. “People are saying with great regularity inside and outside the company that [Guber] is less and less engaged in the studio,” a Sony source says.
Despite what producer Barney Rosenzweig once called Sagansky’s “golden gut,” the lanky 42-year-old can hardly be considered a cinch to succeed outside the television world. As a Harvard undergrad and business-school student, he told everyone his lifelong goal was to head a network and even subscribed to Variety so he could check the weekly TV ratings. Yet he had an unspectacular tenure as TriStar’s head of production (greatest hits: “Look Who’s Talking” and “Glory”) just before taking over CBS and has professed misgivings about the film world. “He was the happiest puppy in the world when he got the CBS deal and didn’t have to deal with the motion-picture world. He thought they were all phonies,” a source told the Los Angeles Times.
If Schulhof keeps his word by maintaining Sagansky in his new position and out of the film department, the future is just as uncertain. The profitable music division, that bright spot on the Sony ledger, is said to have been particularly nervous about an outsider meddling with its success. A week before the Sagansky news leak when Katzenberg-mania was at its peak, Schulhof took the unusual move of announcing that the heads of all divisions would stay in place. Some say Schulhof wants Sagansky to gussy up the place so he can sell a chunk of the film division. Sony has reportedly been looking for a buyer to take 25 percent of Sony Pictures off its hands. “The notion that we would bring somebody in to dress it up is not true,” one source says. “The real test of what our businesses are worth is how well they are managed.” When you look at it that way, Sagansky has nowhere to go but up.
