On June 19th, I emailed Sony Pictures Entertainment Vice Chairman Jeff Blake and asked if he was leaving the studio. "Up in the air. Will know soon. Promise to tell you," he replied. To which I responded, "OK. Please tell me first." His Sony bosses Michael Lynton and Amy Pascal were trying to force Blake into retiring rather than demonstrate to Hollywood that they were firing the beloved 22-year studio veteran as the sacrificial lamb for all of Sony Pictures’ many problems. During the last 3 years, the studio’s summer event pictures had not lived up to expectations beginning with 2012′s reboot of The Amazing Spider-Man. What no one knew is that Lynton and Pascal had nearly fired Blake exactly a year ago as the fall guy for Summer 2013′s box office disappointments like After Earth, White House Down, Smurfs 2, and Elysium. Just like she’d done during last summer referring to Blake’s health, Pascal a few weeks before Blake’s forced departure on Tuesday was again mentioning to media that, after 22 years in his very exacting big job, it was time "for Jeff to take care of himself". What she really meant to say, but didn’t, was "for Jeff to take the heat off Michael and myself".
But, at only age 61, Blake felt he wasn’t finished overseeing worldwide movie marketing and distribution at the job and the studio that he loved. "They wanted me to say I am going to retire, and I wouldn’t," Blake told a pal. "If I really thought I was losing something, I’d kind of know it in my heart of hearts." Lynton and Pascal finally were able to buy him off. "It was done very nicely. Jeff has less than a year left on his contract so Amy and Michael gave him a lot more money than that. And with no contractual responsibilities after August 1st because Jeff wanted to find a new job immediately," an insider told me. And he will, no doubt.
The announcement of Blake’s departure was made on Tuesday. He kept his word and tried to tell me first but Lynton had already made a deal with Deadline. (Blake did call me early that morning, only I was fast asleep after a late night of reporting.) Later that day Blake turned in his Sony Blackberry and set up a personal gmail account. He was out. It followed a dismal Sony Summer 2014 box office when the reboot sequel The Amazing Spider-Man 2 disappointed (more on that in upcoming Part Two), several other films fell short, and last weekend when Sex Tape bombed. The timing made it look as if that was his fault, too. "What I’m telling my people on the way out is, ‘Tell the truth’. You just can’t give everybody what they want to hear. And to test films outside of Los Angeles. They loved Sex Tape in LA but not in Kansas City," Blake told me when we finally spoke. "We’re the only ones touching the consumer, so I encouraged people to find out what the real world thinks. You don’t have to be out on a ledge to relay what the rest of the world is saying. But the truth is the only way out of here."
As for his replacement/s, Blake openly wondered if Doug Belgrad’s recent promotion from Columbia Pictures president to Sony Pictures Entertainment’s Motion Picture Group presidency means he’ll be taking on larger responsibility. (I’ve learned that in a few weeks Belgrad is leading a presentation to the Japanese brass including CEO Kazuo "Kaz" Hirai. "It looks to me like they’re grooming him. He’s good financially and creatively, which is unusual," a source just told me.) Blake conjectured: "Or somebody on the outside. I hope not. I hope it’s some combination of internal people. They’ve got Rory Bruer [distribution] and Dwight Caines [marketing]. You always have to hope and be optimistic. It is difficult when targets keep getting higher. It worked for a long time. When it gets tough, sometimes the luck runs out."
Blake and I had an unusually close professional relationship after years and years of emailing one another on most days and every weekend to talk box office. "I always was trying to do my best and not be a fucking liar. You were tough, and you still are tough. I don’t even try to snow you. I gave you at least as much truth as I could tell you and not get myself killed," he explained to me. Only on a few occasions did I ever hear him complain abut his job. Once, about being sleep-deprived from staying up late every weekend night and early every weekend morning to follow the grosses. Another time, when tracking started to become meaningless. And a third time when Lynton and Pascal came after him during Sony’s lousy Summer 2013.
"Last summer was no damn good," Blake recalled.
Looking back at when the Sony saga started, I date it to last summer and an unusual confluence of bad choices, bad timing and bad marketing. First, unfortunately, came After Earth on May 31st. Even the studio’s own tracking indicated that the Will Smith/Jaden Smith space actioner was going to fail. Execs thought its domestic cume would likely end up in the mid to high $90sM. It made only to $60M. International was stronger but nothing like Will’s other big budget pics which have averaged $600M in global grosses. After Earth‘s problem was that its net cost was $149M ($170M budget, less $21M in production benefits) and Will received not just his full salary but also 20% first dollar gross participation. Some complained about the marketing. ("They paid Smith full freight. Yet why they didn’t put his name in big letters at the top of the billboards or have him smiling in the trailers is mystifying," one source told me at the time.) But people were clearly turned off by After Earth not only as a Jaden Smith pic, but as an expensive vanity project Will Smith pushed through for his son that simply didn’t look like any fun. Since this wasn’t a Will Smith picture, what was there left to market? Certainly not the pic’s director M Night Shyamalan, whom Smith had handpicked. Not only was the pic a conceptual failure, it lost a lot of money. Blake’s marketing prowess couldn’t overcome this meltdown, which Pascal belatedly admitted she had put into production simply because Will had made billions for the studio and she felt she just couldn’t say no to its most successful film partner.
At the time, Third Point hedge fund master of the universe Dan Loeb was destabilizing the Sony studio with his complaints as a major investor in the parent company. First, the After Earth failure played into his hands, and then the White House Down disaster on July 28th. That pic’s marketing was uninspired, first with action-oriented trailers and then ones making it look like a buddy action comedy. Toughest of all, though, was that it followed the very similar Olympus Has Fallen. Also, Channing Tatum’s most proven audience is female and this was an actioner. Its net negative cost plus P&A came to $280M, and I’m told it lost as much as $90M.
The very next day after White House Down‘s Friday’s release, Loeb got nasty in a letter to his investors. “We were surprised that after Entertainment’s highly touted big budget summer releases — After Earth and White House Down — bombed spectacularly at the box office, Sony CEO Kazuo Hirai, speaking at the Allen & Co Sun Valley conferences a few weeks ago, brushed off these failures saying: ‘I don’t worry about the Entertainment business, it’s doing just fine’”. Calling the films “2013′s versions of Waterworld and Ishtar,” Loeb wrote it was “perplexing” that Hirai gave “free passes” to Lynton and Pascal whom he called “the executives responsible for these debacles.”
I learned that immediately after that Loeb letter, Sony Pictures actually phoned Universal to find out what Waterworld‘s red ink had been (only to be told that Waterworld broke even) and checked internally to see how much Ishtar had lost, and provided the info to their board. The studio considered hitting back publicly at Loeb and had a report written denouncing his claims. "A little reactive and sensitive?" a source told me at the time. "That’s Amy. This has been very tough, and she is a nervous personality. Wonderfully creative but very excitable. Michael was always very calm. But he started to get downright angry when Loeb started complaining."
I learned that, in reaction to Loeb, Sony Pictures had a major meeting the week before July 4th. Lynton, Pascal, Belgrad, the CFO, and three other execs attended. Blake was not there. Sources told me at the time Lynton led the meeting where a revised greenlight strategy was outlined and agreed upon.
The greenlight criteria was to become more stringent: that the numbers would drive everything, but also that there had to be a passionate belief in the project’s success from multiple execs, and that they must know the audience they’re targeting before they commit. Plus the studio now intended to view the North American market as a territory and make pictures aimed at the international audiences. That made sense: overseas theatrical box office was growing at a sustained rate and then accounted for 69% of global box office. Multiplexes were being built worldwide. New middle classes were emerging throughout the world and showing interest in movies. New markets in Asia, Russia, the Middle East, and Latin America were all growing. The MPAA reported that box office in China had grown 36% alone.
The Sony Pictures executives further pledged that third party participation would be reduced, first dollar gross deals would be the exception, and more cash break even deals would be the norm for talent. They also agreed that there was no more reason to spend the type of money they’d previously spent on pics such as The Amazing Spider-Man, Men in Black 3, etc. So budgets on franchises would no longer be gigantic and P&A expenditures should be approximately 10% less going forward.
Also discussed was that the studio needed to build more franchises and have more sequels and develop more brands, and these should be the key to the slate going forward. I’m told that the feeling after the meeting was, in the words of one source, "positive. I think it was smart and productive for them. I liked their plan going forward."
I soon learned why Blake was not invited. Because more then one top exec inside Sony was telling people they thought it was likely that Jeff Blake would be let go. That’s when I first realized the studio was nearly ready to unfairly fire Blake. Despite the fact that he had an unparalled reputation and record of excellence in Hollywood where his peers considered him a ‘god-like’ and ‘very cool" exec completely in control of his domain and staff.
But Pascal was battling for her own job that June – truly hanging by her fingernails – as Loeb kept bitch-slapping the studio’s leadership. Even Lynton was contemplating forcing out Pascal to save his own skin. "Michael was the co-chairman when all the pictures were greenlit, so he can’t completely back away from the slate," a source explained to me at the time. Lynton and Pascal have "always had a culture clash. Michael is empirically driven, Amy creatively. He has always wanted her to understand the numbers and she has always felt that creative decisions should overrule financial decisions. The disharmony is not personal: it is business and based on the results. To her credit, Amy has learned more about the numbers recently. It wouldn’t surprise me if Amy got fired if the rest of the summer doesn’t perform. But if the next three pics work this summer, then I think she gets more time."
Pascal was asking people that July if they’d been told she was being replaced. She’d heard 3 names: Matt Tolmach, Jeff Robinov, Neil Moritz.
When I told Pascal that I planned to write about Sony Pictures right around this time, she completely freaked out. The summer before she’d screamed at me for posting that 2012′s The Amazing Spider-Man reboot had disappointed at the box office – even though it had. In May 2013, she kept insisting to me that After Earth would do fine – until the day it was released and clearly a domestic disaster. Only then did she start talking candidly.
That mid-July, I point-blank asked Pascal whether Blake would be fired, and she told me she didn’t know. Immediately, she sought to use Blake’s health as the reason he should go, telling me it was time "for Jeff to take care of himself". (She repeated those exact same words to me earlier this month.)
I told her how I felt and what I would do: that if she dared to touch a hair on Blake’s head, I would post what I really thought. That she should be fired, and moreover that the studio was blaming marketing when she should be falling on her own sword instead for making bad movies. I said it would be a miracle if Blake was able to get any filmgoers to buy tickets for the dreck produced by Sony that summer. And I told her that I knew about the meeting where Sony Pictures decided to change its film focus because of Loeb’s outside pressure.
Pascal lied to me and claimed that meeting never took place to get me not to write the Sony story. (But the meeting did take place – and was confirmed in a letter to Loeb a month later by Sony Corp chief Kazuo Hirai.)
I loathe those calls I sometimes have to make telling Hollywood bigwigs they’re in danger of getting axed. To my surprise, Blake verbally shrugged it off except to say "Water rising here". But he also asked for a favor, something he’d never done in all the years I’d known him: to "take a beat" before writing about the studio and him at least until after Elysium opened on August 9th. Rightly or wrongly, I agreed.
Pascal at the same time turned to Blake (of all people, but because she knew we were close) to convince me to include in my Sony piece that, even though some pics were failing at the box office, the summer would end profitably. I told Blake how I didn’t think that was true and wasn’t going to write it.
Then Smurfs 2 opened on July 31st and bombed domestically. Even Disney’s toon Planes had been out-tracking the Sony sequel, causing the Sony brass to sweat. The pic shocked by opening to merely half the U.S./Canadian grosses of the first. ("But even the $30M we expected would be disappointing, and the outside perception would be very bad," a source wrote to me at the time.) The studio blamed too many PG films at the multiplex but the real story is that critics panned it because it stunk. Even the foreign cume was blah at first. The negative cost for Smurfs 2 was $125M ($146M less production benefits of $21M). The disappointment was sure to put more pressure on the studio from cantankerous investor Loeb. Plus, it was Lynton’s baby: he’d taken the first Smurfs out of turnaround from Paramount only to have it catch lightning in a bottle and gross $563M worldwide. Smurfs 3 was already scheduled. My sources said the sequel had to make greater than $300M worldwide to show a small profit. It did, thanks to overseas, but grossed nothing like the original.
As a source told me at the time, "when you have a Will Smith pic, a Roland Emmerich pic, and two sequels in your summer, you should make big money." And Sony wasn’t. On the other hand, it’s a cyclical business, as everyone except Loeb seemed to know.
In those first days of August, a source emailed me to say, "I think Sony is going to fire Jeff. I also think Michael could fire Amy. I don’t know either for a fact." The question was whether Lynton, who was on his way to Tokyo, had read the tea leaves correctly about what big Sony wanted in terms of keeping management stability vs making changes. As for Lynton keeping his job, the source told me, "I think Michael has strong support within the board."
Then Sony Pictures decided to fight back against Loeb by deciding the best defense against him was offense. Lynton and Pascal got behind George Clooney, who had Monuments Men with the studio later in the year (and which didn’t break even), to go public telling Loeb to eff off. Parent Sony also rebuffed Loeb’s proposal urging it to spin off a minority stake in its movie, TV and music entertainment assets. Loeb pals told me privately he was uncomfortable attracting so much bad press and decided to publicly stop bitching about Sony for a while. (I wrote, "Apparently, The Most Hated Man In Hollywood just wasn’t comfortable being labeled “The Most Dangerous Man To Our Industry” by George Clooney for all the world to read." And I congratulated Hirai for not panicking or pressuring top executives to leave just to appease Loeb.)
For now Blake was safe even though August releases Elysium and then Mortal Instruments both disappointed at the box office. This Is The End made money. ("It’s a nice piece of business but didn’t play overseas.") Yet someone’s head still had to roll after the summer flops if marketing was going to be blamed. Instead of Blake, Marc Weinstock who was president of worldwide theatrical marketing at Sony Pictures was shockingly ousted that September without any warning. "That one I never understood," an insider told me. "But Michael and Amy wanted it done. They claimed some of the team didn’t like him." Blake had to fire him. "I hated to do it. I thought he was a talented young guy." By the end of 2013, Weinstock had landed at 20th Century Fox as president of domestic film marketing.
I never wrote that Sony piece because I became consumed by employment problems with my then boss. All I can say, in summary, is that what people in Hollywood will do to save their own skins never surprises me anymore.
(Part Two coming soon.)