Marc Shmuger, David Linde out at Universal Pictures [Updated]

After a prolonged box-office slump, too many high-cost movies and executive turmoil, Universal Pictures chairmen Marc Shmuger and David Linde have been ousted after their 3 1/2 year run as the studio’s top movie lieutenants.

Rather than recruit an outsider for the top movie job, Universal Studios President Ron Meyer has promoted two insiders to succeed the duo. The studio's marketing chief, Adam Fogelson, has been named chairman, and production president Donna Langley, co-chairman, reporting to Fogelson.

Meyer is banking on the pair to reverse the studio’s box office slump and end the infighting that's disrupted the studio’s executive suites for several months.

Shmuger and Linde’s removal is the fourth senior-level shake-up to hit one of Hollywood’s major studios in the last few months, coming on the heels of the abrupt departure of Walt Disney Studios chairman Dick Cook two weeks ago. Earlier this month, Metro-Goldwyn-Mayer Inc. chief executive Harry Sloan was pushed out, and a few weeks earlier Paramount Pictures removed its two top movie executives, John Lesher and Brad Weston.

Such upheaval comes at a particularly treacherous time for the movie industry when studios can no longer rely on once-robust DVD sales to prop up their business, making it increasingly difficult for them to recoup costs on their flops and make healthy returns on their more expensive hits.

The long-rumored management changes at Universal come as the studio’s parent company NBC Universal and owner General Electric are engaged in talks with cable giant Comcast Corp. to sell a 51% controlling stake in the media company.  A broader housecleaning at NBC Universal could come down if and when there is a change of ownership. This is the second major upheaval in recent months under the watch of NBC Universal chief executive Jeff Zucker following this summer’s departure of his hand-picked top television executive, Ben Silverman, who left after two tumultuous years

With the dismal box office year that Universal has had — capped by the poor showing of its current release “Love Happens” and this summer’s high-profile disappointments “Land of the Lost,” a costly misfire starring Will Ferrell, Judd Apatow’s “Funny People” starring Adam Sandler, “Public Enemies” with Johnny Depp, and Sacha Baron Cohen’s “Bruno” -- Meyer, Shmuger and Linde have been on the firing line of Zucker and NBC Universal’s owner General Electric

Universal currently ranks last among its rivals in market share so far this year, with just 8.6%, a poor standing also attributable to disappointing returns from such adult dramas as director Ron Howard’s “Frost/Nixon,” “State of Play” starring Russell Crowe, and “Duplicity” with Julia Roberts.

In light of the glaring downturn, the Universal executives were asked by NBC Universal chief executive Jeff Zucker and GE honcho Jeffrey Immelt to explain why their movies weren't clicking with audiences and costing so much, and what plans they had to get back on course.

Meyer’s ultimate decision to dismiss Shmuger and Linde was months in the making, and had been met with some initial resistance from Zucker, according to several people close to the situation.

Zucker, these people explained, leaned toward giving the pair a chance to change course, especially since they were the same executives who presided over two of Universal’s most profitable years in 2008 and 2007 with such hits as “Mama Mia!,” “The Bourne Ultimatum” and “Knocked Up.” Shmuger and Linde were also each given four-year contract extensions in January, which would mean that GE will be looking at hefty settlements.

But, in recent weeks, the pressure on Meyer to make a change began to mount as some of Universal’s biggest producers, including Marc Platt, Brian Grazer and Scott Stuber, continued to lodge complaints and frustration about a leadership vacuum, the lack of a clear strategy and decision-making that they found untenable.

Shmuger and Linde have also come under fire for the high costs of some of their big event movies, including “Land of The Lost,” which cost some $200 million to make and market and will lose about $70 million, according to people close to the matter. A number of the team’s 2010 releases, among them “Robin Hood,” “The Wolfman” and the Iraq War drama “The Green Zone,” each have production budgets that exceed $100 million.

But, in the end, Shmuger and Linde’s undoing was not limited to their ill-fated movie picks and budget overruns.

Meyer privately told close associates that he would not fire the pair over a bad slate of films, since no studio is immune to the vagaries of the movie business and difficult-to-gauge audience tastes. People close to the studio said Meyer became unhappy with Shmuger and Linde’s inability to sustain a spirit of teamwork and put a stop to the turmoil that has roiled the studio's executive suites.

In recent months, agents and producers who work  with Universal privately voiced complaints that production and marketing executives were openly disparaging one another, assigning blame for movies that didn’t work and taking credit for those that did. Moreover, it was widely known that Langley and Shmuger did not get along.

People said that due to the infighting, Universal devolved into a counterproductive culture — something antithetical to the team-building environment Meyer had always insisted on both as a former partner at Creative Artists Agency and for the past 15 years at Universal.

Some blame Meyer for having put Shmuger and Linde in charge in the first place given their lack of experience at the difficult task of putting a slate of movies together and guiding them through the often arduous process of development, production and editing. Producers complained privately that they were sometimes frustrated by too much indecision at the studio. One filmmaker who declined to be identified said that he was put off by Shmuger’s “unsympathetic” bedside manner when, for example, the executive had to deliver bad news about a movie’s poor test screening.

Both Shmuger and Linde had been quite successful in their former roles at Universal. Shmuger was overseeing marketing and Linde was running Universal’s specialty film label Focus Features when Meyer paired them up in March 2006 to succeed movie chairwoman Stacey Snider when she left to join Steven Spielberg’s DreamWorks.

Initially, Meyer’s strategy to promote from within so he could maintain stability worked. Shmuger and Linde also moved quickly to shore up key relationships with Universal’s biggest movie suppliers Imagine and London-based Working Title Films and in short order helped build Universal’s international distribution organization into a profitable operation after the studio’s longtime partnership in the overseas distributor United International Pictures ended.

By promoting Langley and Fogelson into the jobs, Meyer is once again counting on two of his trusted executives to stabilize the studio and make some hit movies. The British-born Langley, who earlier this month returned from maternity leave, joined Universal in 2001 after seven years with New Line Cinema, where she oversaw and executive produced such films as “Austin Powers: The Spy Who Shagged Me” and “The Cell” starring Jennifer Lopez. Langley had a pre-existing contractual guarantee to become vice chairman.  [Updated 10:49 a.m.: An earlier version of this post said Langley's contract called for her to become vice chairman next year.  It is not clear whether that agreement was for this year or next year.]

Fogelson, who’s known for creating innovative marketing campaigns for the comedy hit “The 40-Year-Old Virgin” and franchises “Fast & Furious” and “American Pie,” started at Universal in 1998 after working as a top marketing executive at Trimark Pictures.

-- Claudia Eller

Related stories:

Universal Pictures in the dark about Comcast talks with parent NBC Universal (Oct. 1)

Universal execs under fire for a flop-filled season (Q-and-A with Shmuger and Linde; Aug. 17)

Studio plans a summer without sequels (June 5)

How I made it: Adam Fogelson (April 19)

Two are named to head Universal Studios (March 17, 2006)

Photo: L to R Universal Pictures' Rick Finkelstein, Adam Fogelson, Donna Langley. Credit: Universal Pictures.

Comments

[Doug]

OK and we as the audience care because . . ? Who in the real world gives a damn about the executive chair at a movie studio? Does it mean the cost for a ticket will drop? Will the pictures be any better? Will the popcorn concession charge reasonable fees? NO! It means nothing to anyone that has a real job. Most of us can't fathom the multi-million dollar salaries, the posh luncheons, the limousine rides from one gala to another, or the rationale behind the industry's support of rapist & child molester Roman Polanski. These folks live in an bubble far, far insulated from the rest of us.

[Mimi]

Oh great, more crappy movies to look forward to from the crew who specialize in dumbing down films to pander to the lowest common denominators.

The more dumb movies that get made, the more discriminating audiences will leave theaters to the dumbest of the dumb. The studio may make money off them in the short run, but what happens then? Even young geeks grow up.

[Jack Meoph]

Note to studio heads: stop using DVD's as your personal cash machines. Price the garbage movies for what they're really worth($4), and cap all movies at $15 (double disk with features disk included). Single DVD's shouldn't be more than $10. People are tired of paying for your Ferrari's and condos in Italy.

[ABG]

Whomever decided to make Land of the Lost a comedy shouldn't have a job in Hollywood. Hello, the Sleezestacks were evil creatures. Black is not white, and the Deathstar isn't a happy place.

[vic]

To Doug...
yes it does matter to us, the folks with real jobs and who are not in the business.

A change in hollywood executives means different types of movies. Maybe something we will like.

Isn't that something you would want? Don't you want them to make movies, shows etc. that you will like?

There's nothing on TV or in the theaters that I enjoy or have enjoyed in a LOOOONG time.

[Jack Sparrow]

Maybe these execs would get a clue their movies suck when pirates won't even download them for free!

[Moviefan]

I must say Hollywood elites are out of touch with reality.

$12 ($10.50 matinee) movie ticket price in my area no longer puts movie going as an impulse buy. Many of my friends wait to go see movies until they end up in local discount theatres or DVD rentals. Also, theatres charge outrageous amount of money for concession items regardless of current state of economy.

In this era of tax payer financed bail out of big banks, stories of multi-million dollar CEO salaries and severances and so called A-list actor salaries put off movie going public who are struggling through the recession.

Such arrogance can also be seen at red carpet events. Overzealous arrogant security and publicists treat fans with disdain.

Wake up, Hollywood. Before you end up in the unemployment line like rest of us.

[woody]

To doug. Wake up pal this is the LA Times. Anywhere else in the world people probably don't care about studio executives but IT's LA! A lot of people reading this probably are familiar with this situation or are effected by it. And by the way, making movies is a real job. If they do their job then you have a good time at the movie theatre. And just because a few people in "the industry" support Roman Polanski doesn't mean the entire industry supports him. Your whole post is ignorant.

[CJK]

So?

[christina]

Independent film is taking over everything and hollywood is obviously folding!

[Lynne]

Yes, changes at the tops of the big studios DO affect those of us with "real" jobs in LA. The industry is the main economy in this town, and earthquakes at the top of Universal, Fox, etc. ripple down and affect this city in ways you may not fathom.

[mary]

“Public Enemies” is not a box office failure; this $100 million film is on track to gross more than $200 million worldwide. (This film won’t be released in Japan until 12/2009)

http://boxofficemojo.com/movies/?id=publicenemies.htm

“Public Enemies” had already becaome Michael Mann's second-highest grossing film ever.

[Stupefied]

This is an excellent article. Great research!!

[Less than human January 21, 2011 at 01:33 AM]

Just saw this again for the first time. I wonder whatever happened to everyone involved. Maybe the NBC/Comcast shakeup will also shake up some opportunities in the film studios? Just as TV and Internet are merging, I think the future will see a lot of TV and film starting to merge too. Now that everyone is shooting digital, the old reel-to-reel junkies are going to have to accept digital, and all the techs who knew digital from television can work features. When the dust settles, we're going to see some new roles for these guys.

[Also]

Another thing; some of the other people commented on ticket prices. My anecdotal experience is that ticket prices have been pretty steady at the big theaters in LA. I mean, it will always end up costing $20 to see something at the IMAX theater at Universal Citywalk, but anywhere else is pretty much the same these days.

[I'm with stupid --> content=noindex>]

I can't believe that the producer of Austin Powers is being trusted to revive a studio. Austin Powers was great and all, but nothing that Mike Meyers has made since then has been any good. Maybe Austin Powers is evidence that Langley caught lightning in a bottle rather than evidence of any particular skill. Also not sure about the marketing mind behind Fast and the Furious, another over-done franchise that has dragged on way too long and nobody watches. But I'm sure they'll help.

[New stats are in]

The new stats are in for 2010 and the prediction of a bad year for DVD is true. Looks like DVD sales aren't going to prop up the studios much longer, and Amazon "rentals" and other digital plays haven't picked up enough. We'll still see the occasional $100 million blockbuster, but there will be a lot fewer good $20 million movies. Instead, it'll be a flood of hobbyist indie films and crummy sequels beat to death ("The Fast and the Furious 15: Grandpa Races to the Toilet"). Sad for the industry.

[Consumer February 11, 2011 at 09:23 PM]

Now that LionsGate is turning to micro-movies, this move to change the studio heads looks even worse. If LionsGate is so desperate that it's giving up on traditional movies, then something has to be in the environment to drive down revenues rather than just the studio decisions. There is such a strong headwind against studios now that digital technology has made content and distribution instant and free. The new wave of YouTube-connected set-top-boxes are going to make the problem worse.

[Consumer --> Just another comment]

Also, remember the wars over piracy that were being fought in the late 200_s, they are just going to get worse as set top boxes start to resemble computers. Eventually somebody is going to find a way to stream a torrent straight to STBs, making companies like Universal even more vulnerable.