IE 11 is not supported. For an optimal experience visit our site on another browser.

Hollywood moguls wither on jobless line

Once, they had it all, but for some Hollywood dealmakers, the fall out of the movie business was as swift as it was irreversible.
/ Source: Reuters

In April, a man in a dark suit stepped out of a black SUV, walked past a passel of paparazzi and entered a shabby downtown courtroom.

The man was Michael Ovitz, a veteran dealmaker once regarded as the most powerful man in Hollywood. Soon, he would take the witness stand in a mesmerizing trial, that of disgraced private eye Anthony Pellicano.

"It was an extraordinarily difficult time for the company and me," he told the jury, speaking of 2002 and his then-enterprise, Artists Management Group, when he turned to Pellicano for help. "There was all this negative press saying we had client problems and financial problems. There were morale problems as well."

He added: "All I wanted was a graceful exit from the business."

Exiting the business has never been easy. But exiting a top-level executive post in Hollywood and then trying to rebuild a career has proved even harder, as Ovitz found out.

Looking back, he says, "I find the entertainment business to be a very entrepreneurial business. It has a great freedom for people that have good ideas."

After the former head of talent powerhouse Creative Artists Agency was forced out as president of Walt Disney Co. in December 1996, he managed a short-lived comeback with AMG but effectively ceased to be a player with its demise in 2002.

No room at the topHollywood is strewn with moguls who dominated the major entertainment companies in the 1990s and who never climbed back to the top, from Ovitz to former HBO chairman Michael Fuchs to former Viacom president Tom Freston to another former Viacom president, Frank Biondi -- all men who once held jobs of breathtaking power.

"There are very few jobs at the top," says William Simon, senior client partner in the entertainment and media practice of executive search firm Korn/Ferry. "The pyramid is smaller at the top than at the bottom."

Fuchs, who has not held a major executive job since leaving HBO in 1995, has a different take on entrepreneurial instincts.

"If you've been in a big company for 20-some-odd years, you are not an entrepreneur," he says. "You may have entrepreneurial spirit and capacity, but your instincts are dead."

Meanwhile Freston, who left Viacom in 2006 with a $50 million-plus package, has not held a full-time post since then.

As for Biondi, after a near-decade run at the top of Viacom that ended in 1996, he briefly returned to power as chairman of Universal Pictures, only to leave the executive suites for good in 1998.

"People would say, 'Gee, you look great,"' he says wryly. But, he wonders, "What did I look like before?"

There may be exceptions to F. Scott Fitzgerald's dictum that there are no second acts in American lives. But few are found in Hollywood.

True, there are executives like Ovitz's former CAA colleague Ron Meyer, who started a whole other career as president of Universal Studios, and Barry Diller, who parted ways with Rupert Murdoch's 20th Century Fox only to become a mogul in his own right.

But far more typical is Bill Mechanic, who left his post as chairman of Fox in 2000, then failed to raise several hundred million dollars to form his own company and since has toiled in the ranks as a producer.

That has been the fate of such other studio toppers as one-time Walt Disney Studios chairman Joe Roth, his old boss Michael Eisner and former Sony executives Mark Canton, Peter Guber and Jon Peters.

Terry Semel, the former Warner Bros. chairman who chose his own exit date, was one of the few to trade up when he became the top dog at Yahoo in 2001 -- only to get the boot within a few years.

The transition from power has been difficult for many of these one-time toppers.

Shortly after leaving his job as chairman of Disney Studios seven years ago, Peter Schneider was shopping with his daughter in Beverly Hills when he arrived outside that industry watering hole, the Grill. Convinced he'd still be ushered immediately to one of the A-list booths, he stepped inside.

"We walked in," he recalls, "and we couldn't get a table." He realized, "Oh, I get it. I am no longer important to the Grill."

Schneider, who left Disney of his own accord, is now finding fulfillment producing and directing plays -- and avoiding the Grill.

For many of these executives, such perks as having their own booth at a restaurant or using the company jet to send a girlfriend flowers quickly dry up.

Even worse, the deference many have grown used to vanishes overnight.

"There's something you have to adjust yourself to, which is what I call 'being in the chair,"' Schneider says. "People come to you because you are 'in the chair' for the studio. Therefore they must be nice to you; they have to call and talk to you. The day you say you are leaving, the chair moves on. People continue to talk to that chair."

Adds Guber: "You think they're kissing you, but they're actually kissing your ring. You are just renting the space."

Guber was lucky. When he resigned as chairman and CEO of Sony in 1995, he was able to move into a lucrative production deal on the lot, then signed another deal at Paramount when that expired.

But the shift wasn't easy.

When you are suddenly out of a big job, "you can emerge or you can submerge," he says. "You've got to be active in your own rescue. You can't just lie down in the river. The river will sweep you down the falls. You have to decide that you are in charge of your story."

Guber has been active with media and real estate investments but says he decided not to seek the sort of executive post many former moguls crave.

Type As battling Type AsBiondi is that rare executive who has held several top-level posts. And he got used to being fired.

"After the first time, you look at it a bit more philosophically," he says. "It's like getting traded if you are a professional athlete: It has less to do with what you've done than the perceived needs of the owners."

But succeeding in a new job proved especially challenging when he was being undermined by ex-colleagues. His one-time friends at HBO were particularly resentful when he became the overseer of its great rival, Showtime.

"Most of the people doing these jobs are competitive, type-A personalities," he explains. "They need to go out and prove they are right and the other guy is wrong."

After leaving Universal, Biondi became managing director of Waterview Advisors, a private-equity fund that specialized in new media but saw its bubble burst. At the time new investments ceased in 2006, it had written down a reported 61% of $170 million raised.

Two years ago, Biondi came close to returning to power when billionaire investor Carl Icahn said he would appoint him to the top of Time Warner if Icahn's hostile takeover attempt succeeded. It failed.

Like Biondi, Freston has maintained a low profile since exiting Viacom.

After receiving a contract settlement, he formed an investment company, Firefly 3, which has dabbled in new media, including the online service Veoh.

He also has traveled to Cambodia, Myanmar and Africa. And he joined the board of DreamWorks Animation in what many saw as a snub to Viacom executive chairman Sumner Redstone by the DreamWorks leadership.

Freston seems to have no interest in another high-level job. During the annual Sun Valley Conference recently, he was overheard being asked by a Scripps executive when his noncompete agreement with Viacom would run out. Freston reportedly said he didn't even know -- a sign that he also didn't care. (He declined comment for this article.)

When Fuchs was forced to resign from HBO after a boardroom coup, he too made no attempt to re-enter the business. "I didn't really have much of a desire to do it," he says.

Instead, he made a series of investments in computer and Internet companies, with mixed results. One of the lessons Fuchs learned was how hard it is to reproduce what you have done elsewhere.

"It's hard to build anything without a currency, a stock," he says. "No matter how much money you get when you leave, it's peanuts next to what it takes to build these companies."

Now, he is a general partner in an oceanfront real estate development in Hawaii and serves as CEO of Concourse Health Sciences, which is developing pharmaceutical drugs based on natural ingredients. Only recently, he says, did he have any desire to return to entertainment. He is producing an edgy comedy that he describes as "close to the bone" for -- who else? -- HBO.

"It's sort of come back to me now," he says.

It hasn't come back to Ovitz.

"For the last five years, I had (had) no interest in that," he says.

True, the former uber-agent has a few movie projects in development, but he also keeps busy traveling and collecting art.

"It takes an enormous amount of time and I enjoy it," he says of his passion for art. "But when you do that, it really fills the day."