Word: schulhofer
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EVEN BY HOLLYWOOD'S STANDARDS, Michael Schulhof was a notoriously big spender. As the chairman of the U.S. operations of Sony Corp. and protege of company founder Akio Morita, Schulhof set out to build an entertainment empire that would create movies, records and other "software" for Sony's hardware: TV sets, vcrs and gadgets of the future. He started slowly at first by acquiring CBS Records for $2 billion in 1987. The real spree began in 1989 when Schulhof paid $3.4 billion for perennial also-ran Columbia and its sister TriStar studios. He immediately spent some $800 million more...
...until last week, however, that Sony finally removed Schulhof, the architect of its Hollywood dreams and the only American ever to sit on its board. With Morita sidelined since his 1993 stroke and unable to protect him, and new president Nobuyuki Idei, 57, clearly ascendant, Schulhof, 53, resigned after conferring with Sony chairman Norio Ohga, his remaining Tokyo mentor. Ohga "felt he had no choice but to support Mr. Idei," Schulhof told Time in an interview. "Therefore I could not stay here...
After years of minimizing his studio's financial problems, Schulhof decided that with Guber's exit it was time to come clean. He urged Sony to take a substantial write-off of its Hollywood assets. (The music and television operations remain big moneymakers.) Around the same time, Schulhof recruited Jeff Sagansky, the former president of CBS's entertainment division, to be his second in command. But observers wonder what role Sagansky has been playing as a long-term strategist. "He's a mystery to everyone," says a Hollywood agent. Though he may have helped save Sony Pictures, Schulhof...
...manage the studios, Schulhof quickly hired Jon Peters and Peter Guber, independent producers who had also never run a major studio. In retrospect, the amounts the Sony team spent verge on the hilarious. The company paid $200 million to buy the Guber-Peters company and gave the two men annual salaries of $2.7 million, as well as $50 million in deferred compensation. Sony then shelled out assets worth $500 million to settle a lawsuit that had been filed by Warner Bros., which had Guber and Peters under contract. "This was an obscenely expensive arrangement," says Porter Bibb, an analyst...
With losses like that, it helps to have friends in the right places -- and Guber did. He and Schulhof became great pals, sharing family vacations in Spain. So entwined were the couples that for a time, Schulhof's son dated Guber's daughter. Guber was finally pushed out in late September, but he exited smiling. He reportedly pocketed $40 million in cash and received a commitment from Sony to invest an additional $200 million in his new production company...