Tsujihara Named CEO of Warner Bros.

UPDATED: Exec succeeds Meyer in March; WBTV Group president Rosenblum disappointed but wishes Tsujihara well

By Jon Lafayette -- Broadcasting & Cable, 1/28/2013 1:07:46 PM

UPDATED: 9:30 p.m. ET

In a Monday morning surprise, Kevin Tsujihara was named CEO of Warner Bros, beginning in March.

Tsujihara, who had been president of Warner Bros. Home Entertainment Group, will succeed Barry Meyer, who will remain chairman through the end of the year. The role of new CEO had essentially been a three-way competition with Warner Bros. Television Group president Bruce Rosenblum and Warner Bros. Pictures president Jeff Robinov over the past two years. After Alan Horn departed in 2011 (later to surface at Disney), Time Warner chief Jeff Bewkes created an "Office of the President" shared by the three executives as Meyer moved toward retirement.

Warner Bros. said Meyer and Tsujihara will work together to ensure an orderly transition.

"Kevin is one of the most effective and respected executives within Time Warner, and the right leader to ensure Warner Bros.' preeminence into the future," Bewkes said in a statement. "He brings the perfect combination of strategic thinking, financial discipline, digital vision, and management style to build on Warner Bros.' track record of success under Barry Meyer."

Given the growth of Warners' television assets in recent years, Rosenblum was thought to have a solid chance at the top job. Tsujihara, a respected and poised steward of the company's digital, home entertainment and gaming operations, has the lowest profile of the three in traditional film and TV production/distribution circles.

"Obviously, I'm disappointed; who wouldn't be?" Rosenblum said in a statement. "Warner Bros. is a unique and special place and I know it will be in good hands with Kevin at the helm. I continue to be proud of our accomplishments and I have the most respect and admiration for our amazing team at the studio -- a team that is thriving in an ever-transforming business."

Through a spokesman, Rosenblum said it is "too soon to say" whether he will extend his 24-year tenure at the studio. He has headed the TV Group since 2005, Warner's most profitable division. While Time Warner doesn't break out WBTVG in financial statements, revenue from "film and TV entertainment" accounted for $8.3 billion in the nine months ending Sept. 30, 2012, or 40% of Time Warner's total $20.6 billion in revenue through the third quarter.

Warner Bros. is the largest supplier of programming to the broadcast networks, with 25 primetime series for the 2012-13 season, including top comedies like The Big Bang Theory and Two and a Half Men, which each earn $2 million an episode in syndication.

Even beyond Rosenblum's domain, the landscape under the famous Burbank water tower is certain to change. In the stunned silence that followed the announcement, it was difficult to discern the exact nature of that change. But there are certainly aspects of Time Warner to keep a close eye on in the aftermath.

One is the media company's rep on Wall Street. Time Warner's big promise to the Street is increasing subscriber fees starting in 2014. In the meantime, ratings will be scrutinized, particularly at the Jeff Zucker-led CNN and TBS. One analyst who tracks Time Warner noted that Tsujihara's approach to digital distribution was fairly well aligned with Bewkes'. In both film and television, Warners has shown conservative flashes in the digital space (remember Bewkes' jabs about Netflix being the Albanian army?) That might change with the digital alum managing the studio.

Another space to watch is UltraViolet, an industry consortium and cloud-based consumer technology aggressively backed by Warner Home Entertainment, the leading moneymaker in the still-viable sector. Last year, for the first time, revenue from digital media began to replace the losses that the studios and other major content providers had suffered from declining sales of physical media-DVDs and Blu-ray disks.

The industry backed Digital Entertainment Group (DEG) recently reported that total digital home entertainment revenue increased by a hefty 28.5% in 2012 to $5.13 billion, with electronic sell-through jumping 34.6% to $811.5 million, VOD increasing 10% to $1.98 billion and subscription streaming growing 45.8% to $2.34 billion. That overcame, for the first time losses in physical media, where sell through of DVDs and Blu-rays dropped 5.5% to $8.46 billion.

Against these swirling cross-currents, Tsujihara had steered the company into a position to try to keep growing, no easy task among the major media conglomerates. More than nine million UltraViolet accounts have now been created and that over 8,500 titles are now available. And the studio bought Flixster, a social sharing site built on the same concept as UltraViolet. The thinking was that with more people sharing the same cloud, the more vibrant the market for Warner video titles.

Tsujihara's mandate will now be to undertake similar initiatives on the TV and movie fronts.

Andrea Morabito and George Winslow contributed to this story