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Rich Ross and His Decentralized Magic Kingdom — Is It Working?

Under the former DIsney Channel chief, the studio is more synergy focused and bottom-line oriented, but the price could be its famous brand

On Friday, moviegoers will get their first chance to see a Rich Ross film in theaters.

“Prom,” about a group of teenagers getting ready for you-know-what, is precisely the type of project you’d expect from a former head of the Disney Channel: Budgeted around $10 million, it’s inexpensive, wholesome and features telegenic young stars.

Also read: Rich Ross and the High-Stakes Gamble at Disney

When Disney chairman Robert Iger installed Ross as top movie boss a year and a half ago he made his mandate clear: Ross was expected to work well with all divisions of the company, and maximize its growing number of brands. This is something that Iger felt that Ross’s predecessor, the avuncular Dick Cook, failed to adequately do.

In discussions with TheWrap, analysts and former and current studio executives painted a picture of a radically different corporate environment under Ross than Cook. They say Ross’s Disney is more decentralized, more synergy focused, more profit driven.

It is also more profitable.

According to one film executive with knowledge of the company, Ross and his team are less effusive and more difficult to read than Cook, and that has led to some friction both within the company and among its constellation of sub-brands.

 There are also questions about what it means to be a Disney movie with so many brands under one roof.

This year, the company will release 13 movies, more than half of them DreamWorks and Pixar titles. The company will also receive revenue from two Marvel releases, “Thor” and “Captain America,” which Paramount is releasing.

To make sure that all properties are maximized, Ross insists that Disney executives and regular workers know what’s going on throughout the company.

Just last week, for instance, Sam Raimi, who’s directing the upcoming “Oz: The Great and Powerful,” visited the studio for a meeting with 200 Disney employees from a range of departments, including music, consumer products and media networks.

The director presented early concepts for the movie for various business lines. The message was clear: It’s Raimi’s movie, but Disney’s product.

And that more bottom-lined oriented approach may just be smart business for a corporate juggernaut like Disney.

“Rich brings a financial accountability mindset which is more prevalent in the television business, which is his background,” Laura Martin, an analyst at Needham and Company, told TheWrap. “It’s not just about return on capital, it’s now been re-framed, so if they make a live action film it has to be applicable to other profit centers in the company.”

Disney is trying to further expand its reach, looking at projects that don’t on the surface fit the Disney image by attracting directors such as David Fincher for “20,000 Leagues Under the Sea: Captain Nemo” and Guillermo Del Toro for “Haunted Mansion.”

Sean Bailey, president of production, acknowledges that Disney is partnering with talent that is outside its comfort zone. 

“Chrome & Paint,” for instance, is a collaboration with Ice Cube – a star better known for rap than family fare — and his Cube Vision.

After reviewing the script, Disney executives realized they could tone down the language and cut out the violence and drugs, and have a story about a father and son. In doing so, they could make the sort of “inspirational” movie the studio is looking for and broaden its audience.

Some partners, such as DreamWorks, are quick to praise Ross’s leadership style.

“The relationship with Disney could not be going better,” Stacey Snider, DreamWorks partner, told TheWrap via email. “Rich has put himself on the line for us and we feel his enthusiasm for what we’re doing.”

But some believe that the decision to farm out movie production to partners has diluted the Disney brand and distanced the studio from its core function of making movies embraced by families around the world.

“They’re not in the moviemaking business,” one former Disney executive told TheWrap. “They’re in the product business.”

Ross and Iger both have television, rather than motion picture backgrounds: Ross made his name invigorating The Disney Channel. Iger is a former TV weatherman who worked his way up to president and COO of ABC-Capital Cities – which Disney bought in 1996.

“The irony of this is, Disney is the one (studio) name on a movie that actually brings emotional resonance,” another former executive told TheWrap. “It’s definitely a conundrum, because you have to figure out are they just a releasing company?”

Also Read: Trouble at Paramount, Marvel Leaves & Katzenberg’s Restless

The studio appears positioned to have a big summer, with sequels to “Pirates of the Caribbean” and “Cars” both generating strong buzz. It needs the big box office.

Just this spring, Disney took a $100 million bath on “Mars Needs Moms,” a movie directed by Robert Zemeckis and a legacy of the old regime.

A pillar of Ross’s infrastructure — the marketing department — has come under sustained criticism among industry professionals. New York advertising outsider MT Carney has, instead of shaking things up, become a lightning rod for criticism and undermined by rumors she lacks influence. 

Though the various Disney sub-brands have key personnel in place to guide the marketing of their films, Carney’s boosters and the studio’s partners maintain that she has the final word on strategy.

“MT has built a first-class team and the work I’ve most recently seen from ‘Muppets’ to ‘John Carter’ is certainly reflective of that,” Bailey told TheWrap.

Her detractors, though, counter she doesn’t have what it takes.

“Nobody trusts Rich’s choice and everybody wants their own marketing person. That hurts,” an executive told TheWrap. “It was too sad, to have Rich think people would embrace this outside the box choice, but there aren’t too many outside the box choices going on in a business that does well inside a box.”

Wall Street, however, likes what it sees under Ross so far. The studio is more profitable than it was in the latter years of the Dick Cook reign.

“Their margins are way up,” Tony Wible, an analyst at Janney Montgomery Scott, told TheWrap. “They were operating at break-even levels and they are back in very healthy territory.”

Under Ross, studio revenues jumped 9 percent to $6.7 billion and operating income more than tripled from $175 million to $693 million on the strength of such four-quadrant fare as “Toy Story 3” and “Alice in Wonderland.” To be fair, both properties are holdovers from earlier regimes.

Disney’s studio revenue fell in each of the last five quarters of Cook’s reign. Battered by the poor performance of expensive would-be blockbusters such as “A Christmas Carol,” Instead of profits, Disney’s movies unit reported $12 million in losses as Cook was shown the door.

It’s a measure how far from grace Cook has fallen that, last month during a dinner honoring him at CinemaCon, Ross and the senior members of his team were noticeably absent.

“Prom,” Ross’s first movie as chairman of Walt Disney studios since he took over in October 2009, is hardly the kind of blockbuster fare that made Disney great. But the studio is so convinced that the movie is on the right track, it already plans a sequel.

“If we get it right, we get not only some short term upside,” Bailey said, “but we set ourselves up for really good longterm upside potential.”