Ross and Iger on Ross’s Firing and “moving on” from John Carter

Jennifer Reingold has a comprehensive article in Fortune that includes unusually good access to Rich Ross, before he was fired from Disney, and Robert Iger, Disney’s CEO.  Reingold recounts visiting Ross in his office on March 19:

The day I visit Walt Disney Studios, March 19, is not a great day for the live-action division, or for its chairman, Rich Ross. As I take a seat in Ross’s airy office, news has just crossed the wire that the company is going to take a $200 million write-down on the film John Carter, one of the most colossal bombs in movie history. Ross answers questions gamely, but he looks as if he would rather be having a root canal. “What Bob would like us to do,” he says, “is follow through and learn lessons to do a better job going forward.”

She then indicates as the the John Carter “debacle” unfolds after that, she has the opportunity to talk to Iger about it:

As the John Carter debacle unfolds in subsequent weeks, I ask Iger what it means for Ross and for the company. He makes a show of not pointing fingers, saying the failure belongs to everyone. “The leadership moment for me,” he says, echoing Ross, “was making sure that we … accepted it for what it was, which was clearly a big disappointment and failure, and that we moved on.”

But on April 20, Ross is out, a public humiliation in a town where schadenfreude is the favorite snack. Iger insists that Ross’s departure “had absolutely zero to do with John Carter” and that he was simply the wrong fit — something that had become increasingly clear as time went on. “Once you conclude that person is not right for the long term, you have to move,” says Iger. “I take full responsibility for it. I made the decision to put him in.”

Jeffrey Katzenberg, CEO of rival DreamWorks Animation (DWA) and a friend of Iger, says, “Bob is someone who is genuinely admired, respected, and incredibly charming. But underneath that is a really very determined executive, and when the killer instinct is required he has got it in a big way.”

For all the commotion that attends a flop like John Carter, in today’s Disney it’s not that big a deal for the business: The write-down will hurt second-quarter earnings, but the effect on the full year’s profit will be minor. What is a big deal for Disney is ESPN, the sports network it acquired in the Cap Cities deal. ESPN is now the single largest profit driver, bringing in an estimated 45% of Disney’s operating income, according to Drew Borst, an analyst at Goldman Sachs.

The idea that Ross’s departure was not a reaction to John Carter per se tracks with what others have said to us — it was something that was evolving for a period of time; Iger and Ross both knew he was not a good fit; and John Carter was simply one piece to a puzzle that had a large number of pieces.  Ross came from a TV background; the world knows that by now, but it may not be as clear to those outside the industry as it is to those inside, just what that means.  While it is true that the development and production process for TV and film are similar, it the selling of the two is entirely different.  A film, in order to be successful, has to, first of all, be attractive enough to motivate millions of people to break their couch routine and get up, go out, and pay $12 to see the movie on opening weekend.   Others will see it later — but that all important opening weekend crowd is, for a big budget, mainstream movie, the absolutey sine qua non for success.   A slow burn, word of mouth success is sometimes possible, but only at the lower budget levels. At the level where Disney operates – opening weekend is critical and a great opening weekend plus a great word of mouth are the “holy grail”.

TV is vastly different. Shows have at least a few weeks to get their legs under them; the majority of promotion is within the network itself; and there are lead-ins to deliver audiences to new shows, and so forth.  And of course,the audience is already there on the couch and there is no financial transaction involved for the viewer.

But aside from this film/tv culture clash, Ross also inherited a situation that was of Iger’s making and was one which is creating a problem now for Disney, as they search for a replacement — the role of Studio Chief as more of a coordinator of outsourced production, rather than the head of his own production and distribution fiefdom.  Disney now relies increasingly on outsourced product; Marvel Studios for the Marvel films; Dreamworks; Pixar.  The number of Disney produced live action features in 2012 will be the lowest by far in the history of the company.  Meanwhile the heads of Pixar, Dreamworks, and Marvel have become a constituency that the Studio chief must please — and Ross did not please this constituency.  Not one of the three heads; Lasseter ad Pixar, Spielberg at Dreamworks, or Kevin Feige at Marvel, had confidence in Ross. That, more than any other reason, and definitely more than John Carter, is why Ross is out.

We’ll have much more to say about this topic in Hollywood vs Mars — coming soon.

Read the full article in CNN Money