July 21, 2006

Changes at Disney signal 'strange tides'

By Anne Thompson
The Hollywood Reporter

Hollywood is still reeling from the Walt Disney Studios' move this week to consolidate its global distribution and marketing operations, cut way back on its release slate and reduce its work force by some 650 positions worldwide. The question is whether the newly pared-down studio is the face of things to come industrywide.

Certainly, folks in the film business are feeling the sands shifting under their feet. "Nothing seems assured or certain," ICM literary agent Ron Bernstein says. "Everything is insanely expensive. Pictures that you think are going, suddenly get pulled. The rules aren't being followed. There's a sense that the way things happen is up for grabs. You have to ride with these strange tides."

Even the timing of Disney's announcement was considered strange by some, given the record-breaking boxoffice success of the studio's "Pirates of the Caribbean: Dead Man's Chest." Many industry insiders assumed that Disney aimed Tuesday's announcement (which was rushed out because of press leaks) at Wall Street, which likes to see corporate cost-cutting, especially at a company whose stock has been relatively flat for some time. "It's all about the stock," one senior agent asserts. "Slimming down makes the company look good. Come in and fire people, and it makes the bottom line look better."

But 30-year Disney veteran and studio chairman Dick Cook, who started to look at restructuring the studio more than a year ago, says that it only makes sense to focus on what Disney does best. "This is not something so appropriate to the entire industry," he says. "It's very specific to us. We have a real brand name known around the world."

There is no plan to spend less money on production or to cut any producer deals, Cook insists. When he looked at the top 100 movies of all time, he says, "The top 80 movies could be Disney, if you take out a word or two or modify a scene. You see that when we do what we do well, like 'Cars' or 'Pirates.' The lift it gives to the other parts of the company is major."

"Disney is a brand," one envious studio chief says. "Why mess around with the bonehead movie business, competing in live action? They owned the world for a while with animation, and now with Pixar, they can do it again. They're in a great spot. They don't have to make all these bad films."

Is Disney, under its forward-thinking CEO Robert Iger, zigging where the other studios are zagging? And if Iger's maneuver proves to be a smart strategy, will the rest of the industry be forced to play catch-up?