Rich Ross’ departure sends aftershocks at Disney

Walt Disney Studios film chief Rich Ross’ abrupt departure Friday comes at a difficult time for one of the largest, oldest and most successful of Hollywood’s historic entertainment companies.

It has also called into question Walt Disney Co. Chairman and Chief Executive Robert A. Iger’s ambitious attempt to modernize the 89-year-old studio by placing a TV executive in charge of his film division and accelerates uncertainty at a time when all entertainment companies are struggling to come to terms with a dying DVD business and long-term declines in movie ticket sales.

Dismissed after less than three years in the top movie job, Ross leaves a legacy of costly box-office flops, including last year’s “Mars Needs Moms” and the recent Martian adventure film “John Carter,” for which Disney plans to take a $200-million write-down — one of the largest losses in movie history.

PHOTOS: Rich Ross’ Disney Studios hits and misses

Iger’s loss of confidence in his handpicked film chairman suggests that he may have overreached in his attempt to set a new course for Disney’s movie division and miscalculated Ross’ ability to make the transition from television to film.

Industry observers said that Ross, a former Disney Channel executive, never effectively adapted to the world of film. He all but conceded as much in his resignation email to staff Friday, acknowledging that the chairman’s job was not “the right professional fit.”

“It’s hard to make that transition — there’s a steep learning curve,” said veteran film and television producer Jerry Bruckheimer, who is responsible for Disney’s very successful “Pirates of the Caribbean” franchise and the upcoming Johnny Depp Western “Lone Ranger.”

To run a film division, he said, “You have to get people off their couches and go spend 12 bucks to go to a movie. With the Disney Cable Channel it is easy to do — people just turn on their TVs.”

When Iger picked him to run the film studio in October 2009, Ross was charged with remaking it for the 21st century realities of an industry challenged to adapt to new forms of digital distribution that deliver lower profit margins.

Ross set about eliminating jobs, cutting overhead and reducing the number of films Disney releases each year. He placed increased emphasis on established entertainment brands Marvel and Pixar, which the company had paid billions to bring into the Disney family. The Iger-Ross game plan was to make big, ambitious films with the potential to create a cultural tsunami that would spawn sequels, theme park rides, merchandise sales and spinoff television shows.

But in shaking up the studio, Ross removed seasoned film executives — who could have helped him learn the intricacies of the industry — and brought in outsiders, such as New York ad agency executive MT Carney, as head of marketing, ostensibly to inject the venerable Burbank studio with new ideas and approaches.

As a result, Ross put few films into production. There are just three Disney live-action movies this year that did not come from Pixar, Marvel and DreamWorks Studios, whose films the studio distributes.

This failure to surround himself with strong people who knew the business contributed to Ross’ undoing, say people in the industry with knowledge of the situation. Agents, managers and filmmakers perceived him as lacking a fundamental understanding of the film business.

That inexperience was reflected at the box office. Although the company continued to make money with “Pirates of the Caribbean: On Stranger Tides” and “Alice in Wonderland,” both of which grossed more than $1 billion worldwide, Ross presided over two terribly costly flops. The $150-million 3-D animated 2011 release “Mars Needs Moms” grossed just $39 million worldwide and ended with a $100-million write-down for Disney; “John Carter,” a live-action adventure tale which cost at least $350 million to make and market, has grossed $269 million worldwide.

“There are real problems in Disney’s core content business — Disney studios and ABC — that are still both troubled, and Iger hasn’t fixed them,” said Laura Martin, senior media analyst at Needham & Co. “You can’t let an executive lose $200 million or $300 million on his watch and not fire him. If Iger loses another $200 million, his job could be on the line.”

The Carter debacle was damaging beyond its financial toll on the company, say people with knowledge of the situation.

Ross spoke negatively about the film, according to people familiar with the situation but not authorized to discuss it publicly. Ross sought to blame Pixar Animation Studios for the “John Carter” debacle, they said. That prompted key Pixar executives to turn against Ross, whose abundance of self-confidence and abrasive style had alienated many within the studio. It set the stage for Iger to remove the studio chief from his post, say people familiar with the matter.

Iger sought to take the high road Friday, lauding Ross for his contributions to the company.

“For more than a decade, Rich Ross’ creative instincts, business acumen and personal integrity have driven results in key businesses for Disney, redefining success in kids and family entertainment and launching franchises that generate value across our entire company,” Iger said in a statement. “His vision and leadership opened doors for Disney around the world, making our brand part of daily life for millions of people.”

Ross’ exit came without a clear successor in place, signaling a highly unusual era of instability at the studio.

Iger has told certain individuals who do business with the company that he has not made a decision about Ross’ replacement, and did not indicate an urgency about doing so. In the meantime, Iger will rely on his production head, Sean Bailey, and president, Alan Bergman, to oversee the studio.

Investors are unlikely to be concerned with the latest executive shake-up at the movie studio, which is a relatively small contributor to Disney’s bottom line. But the misstep is a mark against Iger, who is expected to report the company’s second-quarter earnings results May 8.

“As CEO, Iger makes a lot of decisions and most have been successful and he’s guided the company very well over the years,” said veteran media analyst Hal Vogel.

“But this is one unpleasant mistake. When the failure comes it’s spectacular — it feeds back on his decision to change the leadership of the company. I can’t object to shaking things up and taking risks. But not all risks work out.”

[email protected]

[email protected]

Los Angeles Times staff writers Nicole Sperling and Ben Fritz contributed to this report.