UPDATED: 9:30 p.m. ET
In a Monday morning surprise, Kevin Tsujihara
was named CEO of Warner Bros, beginning in March.
Tsujihara, who had been president of Warner Bros. Home Entertainment Group,
will succeed Barry Meyer, who will remain chairman through the end of the year.
The role of new CEO had essentially been a three-way
competition with Warner Bros. Television Group president Bruce Rosenblum and
Warner Bros. Pictures president Jeff Robinov over the past two years. After Alan Horn
departed in 2011 (later to surface at Disney), Time Warner chief Jeff Bewkes
created an "Office of the President" shared by the three executives as Meyer
moved toward retirement.
Warner Bros. said Meyer and Tsujihara will work together to ensure an orderly
transition.
"Kevin is one of the most effective and respected executives within Time
Warner, and the right leader to ensure Warner Bros.' preeminence into the
future," Bewkes said in a statement. "He brings the perfect
combination of strategic thinking, financial discipline, digital vision, and
management style to build on Warner Bros.' track record of success under Barry
Meyer."
Given
the growth of Warners' television assets in recent years, Rosenblum was thought
to have a solid chance at the top job. Tsujihara, a respected and poised
steward of the company's digital, home entertainment and gaming operations, has
the lowest profile of the three in traditional film and TV
production/distribution circles.
"Obviously,
I'm disappointed; who wouldn't be?" Rosenblum said in a statement. "Warner
Bros. is a unique and special place and I know it will be in good hands with
Kevin at the helm. I continue to be proud of our accomplishments and I have the
most respect and admiration for our amazing team at the studio -- a team that
is thriving in an ever-transforming business."
Through
a spokesman, Rosenblum said it is "too soon to say" whether he will
extend his 24-year tenure at the studio. He has headed the TV Group since 2005,
Warner's most profitable division. While Time Warner doesn't break out WBTVG in
financial statements, revenue from "film and TV entertainment"
accounted for $8.3 billion in the nine months ending Sept. 30, 2012, or 40% of Time Warner's total $20.6 billion
in revenue through the third quarter.
Warner
Bros. is the largest supplier of programming to the broadcast networks, with 25
primetime series for the 2012-13 season, including top comedies like The Big Bang Theory and Two
and a Half Men, which each earn $2 million an episode in syndication.
Even
beyond Rosenblum's domain, the landscape under the famous Burbank water tower is
certain to change. In the stunned silence that followed the announcement, it
was difficult to discern the exact nature of that change. But there are
certainly aspects of Time Warner to keep a close eye on in the aftermath.
One
is the media company's rep on Wall Street. Time Warner's big promise to the
Street is increasing subscriber fees starting in 2014. In the meantime, ratings
will be scrutinized, particularly at the Jeff Zucker-led CNN and TBS. One
analyst who tracks Time Warner noted that Tsujihara's approach to digital
distribution was fairly well aligned with Bewkes'. In both film and television,
Warners has shown conservative flashes in the digital space (remember Bewkes'
jabs about Netflix being the Albanian army?) That might change with the digital
alum managing the studio.
Another
space to watch is UltraViolet, an industry consortium and cloud-based consumer
technology aggressively backed by Warner Home Entertainment, the leading
moneymaker in the still-viable sector. Last year, for the first time, revenue
from digital media began to replace the losses that the studios and other major
content providers had suffered from declining sales of physical media-DVDs and
Blu-ray disks.
The
industry backed Digital Entertainment Group (DEG) recently reported that total
digital home entertainment revenue increased by a hefty 28.5% in 2012 to $5.13
billion, with electronic sell-through jumping 34.6% to $811.5 million, VOD increasing 10% to
$1.98 billion and subscription streaming growing 45.8% to $2.34 billion. That
overcame, for the first time losses in physical media, where sell through of
DVDs and Blu-rays dropped 5.5% to $8.46 billion.
Against
these swirling cross-currents, Tsujihara had steered the company into a
position to try to keep growing, no easy task among the major media conglomerates.
More than nine million UltraViolet accounts have now been created and that over
8,500 titles are now available. And the studio bought Flixster, a social
sharing site built on the same concept as UltraViolet. The thinking was that
with more people sharing the same cloud, the more vibrant the market for Warner
video titles.
Tsujihara's
mandate will now be to undertake similar initiatives on the TV and movie fronts.
Andrea Morabito and George Winslow contributed to this story
