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Warner Bros. chiefs quit
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July 15, 1999: 5:53 p.m. ET
Daly and Semel ending 20-year reign at powerful Hollywood studio
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NEW YORK (CNNfn) - Robert Daly and Terry Semel, who helped build Warner Bros. into one of Hollywood's more profitable movie studios, announced plans Thursday to resign, creating a management void at the world's largest entertainment company.
The move caught many in Hollywood by surprise because Daly and Semel have presided over the Burbank, Calif.-based studio for two decades, bringing a rare level of stability to an industry known for big salaries and even bigger egos in the executive suite.
The two men, co-chairmen and chief executive officers of Warner Bros. and Warner Music Group, announced their intentions at a Time Warner (TWX) board meeting Wednesday at the New York headquarters of the firm, which also owns the CNN News Group and CNNfn Interactive.
In a statement, Daly and Semel said they have been contemplating their decision for months. They will step down when their contracts expire at the end of the year.
"For some months now, we have been giving careful thought to the possibility of pursuing new professional challenges and opportunities," they said. "And we reached a final decision when we returned home from our recent vacations."
"As a result of all our many hours of shared thinking and discussion, we concluded that now is the right time for us to move on," they added. "Having started our unique partnership together here two decades ago, we have each decided that it is appropriate for us to leave together as well."
Time Warner said Chairman Gerald Levin and President Richard Parsons will work with Daly and Semel to "ensure a smooth transition.''
"I am deeply saddened by Bob and Terry's decision to leave Time Warner," Levin said in a statement. "The partnership between Bob and Terry has lasted over 20 years and has been more productive than any other in our industry."
Daly and Semel had been under fire for the last two years and had been criticized privately by Levin, according to trade publications, and publicly by Vice Chairman Ted Turner.
In 1993, Premiere magazine voted the two the most-powerful executives in Hollywood. But they were also criticized for spreading themselves too thin -- across TV, film and music.
Daley and Semel took over Warner Music Group four years ago after a longtime feud with then-chief Michael Fuchs, who eventually resigned. Profits fell nearly 30 percent in 1997, and market share for the music group began to shrink.
Also that year questions arose about their expanding empire, as the movie studio slipped to third place in box office tally, after holding the No. 1 or No. 2 spot for years.
The resignations come just as Warner Bros. seems to be on a roll with recent box office successes such as "The Matrix'' and the "Austin Powers'' sequel. Stanley Kubrick's final film, "Eyes Wide Shut,'' debuts Friday and the early buzz is generally positive.
A dynamic duo
Daly and Semel were well known in Hollywood for their collaborative style of management, with each executive relying heavily on the other for advice. For years, they seemed to have the Midas Touch when it came to picking scripts, scoring huge hits with films such as "Lethal Weapon'' and the "Batman'' movies.
The duo built Warner's movie and television studio from $1 billion in revenues in 1979 to more than $6 billion at the end of 1998. Together with music, the entertainment business had $10 billion in revenue last year.
"Due to them, the Warner Bros. studio has been one of the most consistent, steady and stable studios of in the last decade," said Ed Hatch, an entertainment analyst with SG Cowen.
While reports of conflict between Levin and the Daly-Semel team have cropped up over the years, a spokesperson for the studio said Levin "did everything humanly possible to beg them to stay."
Hatch said "They've been there through all of Levin's reign. It's like any relationship, there have been some ups and downs."
Shares of Time Warner fell 1-7/16 to 75-7/8.
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Time Warner
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