Inside David Zaslav’s Overhaul of the Warner Bros. Movie Division | Analysis

With the ousting of veteran studio chief Toby Emmerich on Wednesday, Warner Bros. Discovery CEO David Zaslav is moving full speed ahead in reshaping one of Hollywood’s legacy studios, making clear that he will be the person in charge.

As the well-regarded Emmerich leaves for a production deal, the studio is being broken up into three distinct divisions — Warner Bros. and New Line, DC Entertainment and Warner Animation Group — with a Disney-style structure that reports directly up to Zaslav.

“It seems pretty obvious to me that he wants to front a real challenge to Disney,” one Wall Street bank analyst told TheWrap. “And you need a new team in place, not the same team that couldn’t make a run at Disney before.”

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Multiple insiders at the studio tell TheWrap that the new normal at Warner will be one where Zaslav will be very hands-on in the creative development of all the studio’s franchises and verticals, which include DC Entertainment, Warner Animation Group, and J.K. Rowling’s Wizarding World, which may be headed for a reset after the box office disappointment of “Fantastic Beasts: The Secrets of Dumbledore.”

That means that former MGM execs Michael De Luca and Pam Abdy, now tapped to run Warner and New Line, will be managing the vision of their ambitious boss, whose background is in television.

“A big part of Mike’s [De Luca] job will be to keep David comfortable and focused on making the team win,” another veteran Warner executive said.

How much of the old guard will be part of Zaslav’s new vision?

The transition was made easier by Zaslav and Emmerich’s mutual decision to have the latter remain on the Burbank lot as a producer. That will allow Emmerich to strike out on his own rather than go through the umpteenth integration of a new team and new structure (he’s weathered transitions in corporate ownership from Time Warner to AT&T to Discovery). Warner Bros. Discovery sweetened the deal with a five-year financing and distribution deal for Emmerich’s new role.

But insiders said it’s unclear at this point whether Zaslav will hire from within or outside Warner for the top positions at the studio’s two other major verticals: DC and Warner Animation. In the case of DC, it all depends on whether DC Films production president Walter Hamada stays on at Warner (which is a possibility, according to one insider) or leaves after a new leader is chosen for all of DC Entertainment (including publishing and TV).

However, a top executive at WBD made clear that Hamada would only be staying until his replacement is chosen, and until that time will report to De Luca and Abdy.

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Zaslav is following the Disney playbook… and his own

Both studio insiders and analysts pointed out the similarities between Zaslav’s new three-division structure and Disney’s stable of production outlets. One insider said that former Disney co-chairman Alan Horn, who also spent a dozen years running Warner Bros. with Barry Meyer, has been advising Zaslav on this transition.

Just as Marvel Studios’ Kevin Feige and Lucasfilm’s Kathleen Kennedy report to Disney CEO Bob Chapek, each branch of Warner will have a single head reporting directly to Zaslav. Despite the similarities, this is something that Zaslav himself hinted would happen during his company town hall with Oprah Winfrey in April, promising that Warner Bros. Discovery’s corporate structure would be more streamlined.

“We’re going to focus on less layers because that means more empowerment. We could be faster, more entrepreneurial, which means that in some areas that there will be less people,” Zaslav said.

This new three-silo system gives Zaslav the ability to run Warner Bros. “like an old-school film mogul,” one Warner insider said.

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DC stuck at a crossroads

Whether or not Hamada remains in charge at DC Films, Zaslav will have to determine how to move the superhero mega-franchise forward. Under Emmerich and Hamada’s leadership, the studio has finished production on “The Flash,” a film that, according to insiders, is intended to reset the DC film universe going forward. However, that film doesn’t arrive for another year and is currently in postproduction.

If Hamada exits, DC Films would be going through its third overhaul in just six years since Geoff Johns and Jon Berg first replaced former production chief Greg Silverman, with that duo in turn replaced by Hamada. As part of Zaslav’s restructuring, the new head of DC will not only manage the film side of the imprint, but television and publishing as well. It would be a tall order for any executive, as even Marvel Studios head Kevin Feige had to find blockbuster success at the box office first before being given the chance to tackle publishing.

What could the new DC plan be going forward? Will the new DC chief follow the plan laid out by “The Flash” movie or start something new altogether?

“If anything, they’ll go back to individual movies unless De Luca has some plan,” according to a DC insider. “They need to get a f—ing Superman movie off the ground, and if the plan is a shared universe, a [Henry] Cavill-led Superman needs to be the focal point.”

The DC insider added that Zaslav’s team “should scratch every Superman project in development and start fresh with Cavill.”

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“The prodigal son is back”

What makes De Luca and Abdy’s hire as the new heads of Warner Bros. and New Line particularly interesting is that for De Luca, his career has come full circle as he returns to New Line 21 years after he was fired following a series of high-profile flops at the box office.

De Luca first joined New Line as an intern in 1985 at the age of 19 and rose up the ranks to become president of production. His run at New Line included overseeing production on some of the biggest hit films of the ’90s like “Austin Powers” and “Rush Hour,” as well as acclaimed films like Paul Thomas Anderson’s breakthrough films “Boogie Nights” and “Magnolia.”

But in 2000, New Line suffered a series of box office flops, most notably the Adam Sandler comedy “Little Nicky” and the Warren Beatty comedy “Town & Country,” which saw its budget balloon from $44 million to $90 million amid repeated script rewrites and extensive reshoots. Early in 2001, days after the AOL Time Warner merger was completed, De Luca was ousted from the company and then headed to DreamWorks. Meanwhile Emmerich, then a music executive at New Line, took over and began his rise at Warner.

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Ironically, De Luca’s producing work on big-budget, auteur-fueled projects had its biggest payoff for New Line after his firing.

“I do find it funny that Toby is being credited with the ‘Lord of the Rings’ success, when in fact that was all De Luca,” one talent agent told TheWrap.

After New Line’s founding CEO Bob Shaye picked up Peter Jackson’s acclaimed fantasy films from Miramax and agreed to make a trilogy of films, principal photography on all three movies took place in New Zealand from October 1999 to December 2000 under De Luca’s oversight.

One producer who has worked on New Line projects told TheWrap that he saw De Luca’s return to the studio where he got his start as an improvement over Emmerich, saying De Luca’s ability to maintain relationships with talent will better serve the Zaslav regime.

“When New Line had difficulties during ‘Town & Country,’ they sacrificed De Luca, who was a one-of-a-kind visionary,” the producer said. “And now the prodigal son is back in charge of New Line and Warner and I suspect this means a bold, bright future. I think now you have people running it who are going to service Warner Bros. Discovery and not themselves under strategic relationships at the expense of the company.”

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Does this mean theatrical is king again?

One of the biggest questions about Warner Bros. under Zaslav’s leadership is whether the studio would return to a theatrical-first strategy as opposed to the directive under WarnerMedia chief Jason Kilar to boost HBO Max subscriptions as much as possible.

While the plan under Kilar was to pivot to a new post-pandemic strategy in which franchise and low-budget horror films would get theatrical releases while almost everything else would be produced for HBO Max, Zaslav has made overtures in earnings calls and press interviews toward recommitting to Warner’s pre-pandemic strategy of releasing around 20 films per year with exclusive theatrical runs.

On the one hand, the hiring of De Luca and Abdy, two old-school film executives who prioritized theatrical releases during their run at MGM, would signal such a shift. However, Kilar’s downsizing of the theatrical slate, while aimed at making HBO Max a top priority for the company, was also in response to the struggle of several mid-budget theatrical releases from Warner like “Doctor Sleep” and “The Goldfinch” in 2019.

So far in this COVID-era box office, films similar to those box office flops have fared as poorly or worse. Universal/Focus Features’ “Downton Abbey: A New Era,” for example, posted a decent $16 million opening weekend but fell 63% in the following frame. Once De Luca and Abdy navigate Warner Bros. out of the current production backlogs that film studios are still dealing with because of the pandemic, their first batch of project greenlights will go a long way in showing what the new vision for Warner’s theatrical output will be like.

Additional reporting by Joe Bel Bruno and Sharon Waxman.

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