Rich Ross's second summer as Disney's studio chief was starting to look like a dud. He had been in the top job for 19 months, and movies that he'd green-lighted, rather than inherited, were beginning to hit theaters. The first one, a teen dramedy called Prom, had fallen flat a few weeks back, but now it was prime time, the main event, the first punch of a one-two summer combo—Pirates of the Caribbean 4: On Stranger Tides and then Cars 2—that would shape the studio's financial fate for the year. The Pirates 4 indicators were particularly discouraging. Disney executives were counting on big revenue from 3-D screens, but ticket sales in the U.S. for such films had been flagging all spring. The reviews had not been pretty: The closest Rolling Stone's Peter Travers had come to praise was to write that Pirates director Rob Marshall deserved credit "for polishing a giant turd."
Ross could not afford a failure. Since being launched in 2003 by Ross's predecessor, Dick Cook, the Pirates franchise had generated more than $2.7 billion in global ticket sales alone. Ross had cleaned house at the Walt Disney Studios, a broad shake-up designed to streamline operations and increase efficiency, the kind of corporate engineering required to maintain margins in an era of declining ticket-buying audiences—and guaranteed to antagonize Hollywood's old guard. Cook, who started working at Disney in 1970 as a rides operator, was much beloved; Ross had dumped a slew of his senior officers. Not surprisingly, much of the town was primed to see him capsize. And here he was praying that Cook's famous galleon could bring home one more treasure. For the studio to have any shot at keeping pace with last year's performance (in 2010, Disney became the first studio ever to release two movies—Toy Story 3 and Alice in Wonderland—that topped $1 billion at the global box office), Pirates 4 would need to crack the $1 billion mark.
During the afternoon of Friday, May 20, and well into the night, Disney executives emailed Ross and one another with the latest box-office data and anecdotal evidence. The big question on their minds was this: How would media reporters spin the opening-weekend numbers? And more specifically, what was Nikki Finke going to say on Deadline Hollywood? The most influential—and, to studio executives, terrifying—entertainment reporter in town, Finke would set the tone with the initial report on her website. As the results filtered in, Ross and his team wondered if Finke would cackle over the film's failure to crack the magic $100 million mark in the United States.
Finke's post hit her site late Friday night with the headline "Yo Ho-Hum to 3-D But Not Overseas." The domestic box office was soft, in other words, but Pirates 4 had been saved by the biggest international opening in history. Finke pointed out that flagging 3-D ticket sales were befuddling studio executives all over Hollywood. She spent the rest of the week trumpeting the film's huge international tallies. So did everyone else. Pirates 4 cruised to $700 million faster than any movie in history and became just the eighth picture to crack $1 billion worldwide. More than 75% of that gross has been generated outside of North America.
For Ross, it was an indisputable hit, and the studio began cranking up a possible fifth installment in the series. But the studio chief also had reason to worry. The declining domestic audience indicated that Disney's single most important live-action moneymaker was beginning to run out of steam. Pirates 5 or no, Ross's biggest challenge was to find Disney's next killer franchise.
The movie division has not been Disney's most profitable arm for many years. Yet it remains the company's big intellectual property "wave maker," to use the phrase you hear a lot these days inside Disney's executive suites. Bob Iger, Disney's CEO, used those words during an interview with Charlie Rose in March. But what, exactly, did he mean? Most hit television shows build an audience over time, so they're like the flood that results from a long season of rain; a hit movie, however, can sweep the world suddenly, like a tsunami, generating tremendous buzz and a lingering hunger among consumers for more—products, soundtracks, sequels, theme-park rides, spin-off shows, adaptations for the stage. At Disney, a train metaphor works just as well to describe the strategy. Says production chief Sean Bailey: "Our big movies need to be IP [intellectual property] locomotives."
Ross's official title is chairman of the Walt Disney Studios, but he's really just a brand manager. He is responsible for protecting and growing the Disney brand, encouraging the creation of characters that can be distributed to consumers across a wide array of platforms (movie theaters, television, the web, digital devices, stage, CDs, theme parks, cruise lines, resorts, consumer products) and monetized around the world. Put plainly, his job is to make more money this year than last—that's the growing part. But if he's successful, he'll be asked to make even more the next year—that's where the protecting part comes into play.
This brand stewardship is the source of controversy surrounding Ross, Iger, and Disney in general these days. A lot of movie fans—ticket buyers, critics, and industry professionals included—hate seeing films reduced to such crass commercial terms. Hollywood still promotes itself as our manufacturer of dreams, relishing the cultural currency and aesthetic cachet that comes with the territory. Movie fans, too, have a deep emotional connection to the medium. One former high-level motion-picture agent laments that the brand focus at Disney now typifies the multinational, corporate way of thinking: "Nobody wants ideas and imagination anymore. They want presold products, and attendance is down because consumers are wise to it. The movie business has been taken over by nonmovie people. They're account executives and brand managers. That's why audience is declining. They don't know the audience." Of course, Ross and his colleagues can offer reams of data about who their audience is and what they want. But Ross is a newcomer to the film business who has been handed the keys to a storied movie studio. His roots are not only in television but in packaging shows for basic cable.
Ross's office suite is located on the sixth floor of the Team Disney building in Burbank, California. Back in 1995, this was the home of the most powerful man in Hollywood—a title former superagent Michael Ovitz frittered away in 15 disastrous months as president of Disney under Michael Eisner. Ovitz reportedly spent much of that time redecorating his office, at a cost to the company of more than $2 million. Ross appears to have spent a couple million bucks less on the space. The office is comfortably appointed—a red-striped accent rug over hardwood floors, club chairs, and a couch arranged around a glass-topped Noguchi coffee table. Rather than adorning the walls with masterpieces, Ross has filled the room with personal mementos. Over the door hangs a large handmade sign reading "Rich Ross for President," a souvenir from his bar mitzvah that Ross's parents dug out of storage to deliver to their son after he earned that title at Disney Channels Worldwide. His desk and shelves are cluttered with family photos—including several of his parents, who visit once a year and then spend a weekend playing the tables in Vegas. (Ross seems unconvinced that he may be sitting on a great family comedy—it's Cocoon meets 21!) There are snapshots of Ross as a kid at Disney World with Tigger; Ross with his sister, Randi; and Ross with his longtime partner, Adam Sanderson. The most conspicuous objects in the room are the two gleaming Oscars at one end of the office. "Bob gave those to me when I took the job," says Ross. By "Bob" he means his boss, CEO Iger. "He told me I'd have to go get the next one on my own."
Ross looks younger than his 49 years. He is tall, lean, and fit—casually crisp in jeans and a Faconnable shirt. His relaxed attentiveness and easy smile belie a focus on details, on punctuality, on order. He has a broad and generous grin and could pass for the suave and more athletic kid brother of Charles Martin Smith, to pull a comparison from Disney's own film library. You get the feeling he's probably made a career feasting on arrogant suckers who make the mistake of confusing his affability with some kind of weakness. He grew up in Eastchester, New York; his father was a garment-industry executive, his mother a former teacher turned real-estate agent. His most memorable childhood moviegoing experience was a double feature he attended with his parents when he was about 14—A Clockwork Orange and Deliverance. "Back then, it was easier for parents not to know as much about the movies they were taking their kids to," he says, laughing as he recalls the experience. "We sat through all of Clockwork and, like most people, didn't really know what to make of it. I think we only got about seven minutes into Deliverance when my mom looks at me and says, 'We're going for ice cream.'"
Ross began his career at Nickelodeon, booking talent. The first actress he ever booked was an unknown by the name of Winona Ryder. After eight months, Ross was hired full time, and while reporting early for work on his very first day as a regular employee, he struck up a conversation with the only other person at the office, a woman named Anne Sweeney. She would become Ross's boss for much of the next 17 years and a mentor ever since. "We were always the first two in the office, before the lights were on in the building," recalls Sweeney, now head of ABC and cochairman of Disney Media Networks. "We had great conversations about the world and what Nickelodeon could be outside the United States. He was the first person I hired to help execute the next step in what Nickelodeon could be globally."
When Iger later hired Sweeney at ABC, Ross followed, joining Disney Channel as senior vice president of programming and production in 1996. He rose quickly through the ranks, and in 2004 became president of Disney Channels Worldwide. During his run there, Ross established Disney Channel as the premier source of tween hit programming, developing shows such as Lizzie McGuire and Hannah Montana. He also created the channel's original-movie franchise, High School Musical.
Ross sees his ascent from small screen to big as a natural transition. "A lot of studio leaders come out of TV, including Bob," he says, "so he did not have a bigotry against television people in those roles." To Ross, the television work was an ideal balance between creative work and "the mechanics" of selling to and satisfying the consumer. "My mandate to him was really twofold," Iger says. "One, to further enhance the strategy already created at Disney films, which is to make branded films from Disney, Pixar, and now Marvel. And two, to make great films. The second one is the single most important thing the studio can do."
Seeking greatness at Disney, of course, is not necessarily the same as seeking great art. Greatness is another box-office monster that rakes in billions of dollars in worldwide gross, yielding multiple sequels and intellectual property that can be leveraged across every Disney platform. The Oscars that Iger gave Ross for his office decor are each for best picture: Chicago, directed by Rob Marshall, who "polished" that "turd" known as Pirates 4, and No Country for Old Men, the Coen brothers' translation of Cormac McCarthy's gritty yet lyrical novel about a drug deal gone bad, a Miramax coproduction that seems about as far from a Disney movie as you can get these days. Ross admits as much. "I don't see doing a film like No Country," he says, "but I certainly believe that we can do films of Oscar-winning caliber." How, then, does Ross define the aim of a Disney film? "If a 10-year-old can't sit through one of our movies, then it should not be Disney-branded," he says. Then he adds, "That does not mean we make movies for 10-year-olds."
Skeptics who may have questioned whether Ross could attract A-list talent to brand-obsessed Disney have received an early answer. The filmmakers currently working on projects for the studio include Sam Raimi, Niki Caro, and Tim Burton. Meanwhile, the stars attached to current projects include James Franco, Amy Adams, Ice Cube, and Johnny Depp—as someone other than Captain Jack Sparrow. (He has signed on to play Tonto opposite Armie Hammer's Lone Ranger.) Angelina Jolie is circling a Sleeping Beauty reboot called Maleficent. Sophia Loren signed on at the eleventh hour to record a voice for Cars 2—a last-minute bit of casting suggested by Ross. As he puts it, "I turn to these directors and say, 'I want you to make a movie that you can bring your own family to.' "
[UPDATE: Ross has one less opportunity to prove those skeptics wrong. Disney said on Friday that it's shutting down the Depp-attached, Gore Verbinski-directed Jerry Bruckheimer Lone Ranger production. The studio, which has already eaten box office dust with pricey, lackluster performers Mars Needs Moms and Tron: Legacy, is digging its spurs into the Lone Ranger's $250 million price tag. A source close to the project tells Fast Company the film is still "a high priority" for Disney with all parities trying to figure out a way to make the film work. But for Disney's Rich Ross, it's unmasked a new set of challenges in already risky new role: The Lone Ranger was one of the first franchises in his stable—and now that it's on indefinite hiatus, trying to scramble a new plan for Lone Ranger, while making his mark with a slimmed-down slate of film projects, could take a lot more than an A-list Tonto.]
Doug Creutz, a media analyst at Cowen, suspects filmmakers are less interested in making a movie they can take their kids to than in making a movie that will help buy their kids a house in Malibu. "I don't think the fact that Disney makes family-friendly fare is the key factor for these folks," he says. "This is a business, and these visionary directors are in it for the money. Whatever else you want to say about Disney, it knows how to market domestically and globally. Ross's success or failure will not be defined by whether he gets good people to work for him. It'll be determined by how good the projects he green-lights are and how good the execution is."
At Disney, though, execution depends only partly on directors and actors. Not long after he was promoted, Ross embarked on a major project to restructure the studio's top brass. Within a month, he had issued pink slips to about a dozen high-level Disney executives. His new appointments were met with skepticism, if not outright derision, by many in Hollywood, including the hometown paper of record: When Ross promoted Disney's head of home entertainment, Bob Chapek, to a new position overseeing worldwide distribution, Los Angeles Times "Big Picture" columnist Patrick Goldstein sniffed that Chapek was "viewed by some insiders as a midlevel bureaucrat"; when Ross replaced his production chief with Sean Bailey, the Times commented, "Bailey, who has no experience as a studio executive, faces a steep learning curve in assembling slates of movies and managing dozens of executives and filmmakers." Several months later, when Ross finally named a new head of marketing, an industry outsider named MT Carney, the Times described her as "a fast-rising New York-based brand strategist who has no background in movie marketing but lots of new-media credentials." Ross's moves seemed consistent with what Goldstein had identified as Iger's larger strategy—to turn "Disney into a brand factory, with Pixar, Marvel, Jerry Bruckheimer, and DreamWorks all on board as brand vehicles to provide movies that can be exploited by the Disney marketing and distribution machine."
Ross's other moves only reinforced this observation. He began consolidating the studio's key divisions— production, marketing, communications, distribution, and finance—into two nearly adjacent buildings. He also started to enforce new levels of collaboration. For instance, he ordered the production and marketing teams to give earlier previews of creative work so that teams in consumer products, music, television, and theater could start brainstorming franchise extensions and tie-ins. If you wait for something to be finished, Ross says, "you're never going to have enough time to plan. So it's just incumbent on us to engage both internally and externally, for people to feel comfortable that it's okay to show things early. Not only okay but mandatory." Though this kind of basic, behind-the-scenes management is easy to overlook, one senior creative executive at another major media company gives Ross credit: "It's not sexy, but this is the absolute key to developing content successfully. The separation that existed between groups at the studio is changing."
As his new team began settling in, Ross shepherded movies that were conceived, launched, and in production before he took over the studio reins. He stewarded the 2010 slate he inherited to some notable successes, such as Alice in Wonderland, Tangled, and Toy Story 3. He also oversaw some surprising disappointments, such as The Sorcerer's Apprentice. If he had to grade Ross, what would Iger give him? "You think I'm going to give him anything less than an A?" the CEO says, laughing. "He hit the ground running, has a great work ethic, he's very smart and principled.He has done a great job. He is also a great collaborator, which is necessary to leverage success and increase value at the company." Still, it will be at least a couple of years before most of the movies Ross is feeding into the Disney pipeline get released. His first, Prom, always sounded a little too much like a Disney Channel production (an unknown teen cast, a wholesome story line, a young director), and that's pretty much how it performed at the box office—gone from theaters after only a couple of weeks, having earned just under $10 million. (The movie opened the weekend after the documentary African Cats, earning 27% less on more than twice as many screens. Ouch.)
Pirates 4 was Ross's second green-lighted film. While the poor reviews and a dwindling domestic audience might have blemished its billion-dollar success, the larger lesson is in how Ross and his group anticipated America's Pirates fatigue. In preparation for the release, they constructed a global marketing and distribution strategy that included such hard-to-crack and enticingly huge markets as Russia, China, and India. Working with director Marshall and production head Bailey, Ross made sure that the new film featured an international cast of stars committed to help with the film's overseas marketing—a blitz that included premieres in Cannes, Madrid, Sydney, and Moscow, where Johnny Depp made his first Russian visit. Ross views such cast diversity as an important part of the global strategy. "It's our responsibility, but it's also good business," he says. "I think it helps us both inside the U.S. and certainly outside the U.S. because people see themselves. We are exporting stories and characters, not necessarily our culture."
Cars 2 was Disney's second major release in the summer of 2011. Despite the worst reviews of any Pixar movie to date, it became the studio's 12th straight film to open at No. 1. Ross worked with Pixar chief John Lasseter to customize the film for foreign audiences. Lasseter embraced Ross's suggestion to include one character that could be edited for regional cuts of the movie, so seven international markets have seen the Jeff Gorvette character voiced by one of their own native race-car drivers. These casting stunts are only a small part of Disney's canny international sell. The studio's marketing and distribution organizations are based in Burbank but have local teams in key regions around the world. Ross has made an effort to convene them early in the production cycle to screen movies and discuss the best strategies for each particular area. If the head of Disney's marketing team in Russia needs a Cars 2 trailer that emphasizes the story's slapstick qualities, for instance, Disney now provides the custom preview. "It's vitally important to understand the mores of what people expect and want around the world," Ross says.
Not all of Ross's international initiatives have panned out. Disney produces a number of inexpensive local films in key countries—this year one in Russia, two in China, and two in India, all featuring native actors and created by native filmmakers. Early in his tenure as studio chief, Ross established a corporate group to increase these local productions' output, focusing on limited-release Disney-branded movies in BRIC (Brazil, Russia, India, China) countries. "It shows that Disney actually cares," Ross said in late April. "You win economically, but you win from a brand standpoint as well." But it turns out, that the economics were not so compelling, and by midsummer, with both Pirates 4 and Cars 2 performing well internationally, Ross decided to shutter the small Burbank-based group. (The studio will still consider funding local productions on a case by case basis.) Ultimately, what Disney cares about most is the bottom line, and Ross concluded that the better bet is to invest in distribution and marketing strategies to boost the studio's big franchise films rather than the small local productions.
It's the big bets, of course, that will determine Ross's success: the very small number of Disney-branded films that will be released in the U.S. and around the world. Less than a decade ago, Disney released 20 or more movies a year. That number is now down to around 15, but about half are essentially distribution deals for movies made by Pixar, Marvel, or DreamWorks. The Walt Disney Studios will produce and distribute only about eight original movies a year over which Ross exerts significant control. To a certain extent, Ross and his executive team conceive of the success of these films in terms of their appeal to different audience "quadrants." Next year, in Ross's eight-film portfolio, he will likely make two hugely expensive franchise films that aim for all four audience quadrants (men under 25, men over 25, women under 25, women over 25). He will make two less expensive movies, targeting two quadrants, that could yield sequels and consumer products if they catch fire. Of the four shots he has left, two might be family comedies, which can be relatively inexpensive but have four-quadrant potential. His final two bets will be on inspirational dramas.
The formula presents Ross with huge creative and marketing challenges. When you're down to making just eight movies a year, the big ones, at the very least, have to work. It might easily lead Ross to avoid risk at all costs. Yet so far, there's not much evidence that Ross is doing that. He knew that shaking up the studio was bound to piss people off. Most of his major hires were not the safest bets. He went with his gut on Prom, and he's placing a large bet on nostalgia, banking that audiences of all ages will flock to The Muppets, which he approved and is due out this Thanksgiving. ("The family comedy is the holy grail," he believes.) To the extent that he can, he is mitigating the risk of big-budget projects by putting them in the hands of directors who've managed to earn both critical acclaim and box-office success.
On a Monday morning in late April, this strategy is plain to see. Ross has convened a presentation for about 200 key Disney executives at Disney's Studio Main Theatre in Burbank. This is where they will get an early look at creative material from two of the studio's most ambitious new projects: John Carter, a sci-fi film set on Mars, based on the Edgar Rice Burroughs series, that's directed by WALL-E vet Andrew Stanton; and Oz, the Great and Powerful, directed by Raimi. With the Pirates franchise aging, nothing is more important to Ross than launching the next multi-billion-dollar global live-action franchise. "The big opportunity for us," he says, "is wave-making live-action pictures. There's no doubt with Pixar we make wave-making animated movies. I've seen the vitality of Tangled, and certainly Disney has a tradition of doing it with animated films. Live-action has been more sporadic."
Jim Morris, a producer for John Carter, introduces Stanton, who appears via video from the set, where he is in the middle of some reshoots—to show off some of the alien creatures his team has created. The audience then watches about 10 minutes of raw but compelling action footage of actor Taylor Kitsch as John Carter. Production head Bailey then introduces the Oz team. The new story is set about 20 years before the Kansas tornado swept Dorothy and Toto to the Yellow Brick Road in MGM's 1939 classic. Raimi describes it as the origin story of the Wizard, "a selfish man who becomes a selfless man." He shares with the crowd vivid renderings of the lush land of Oz and some preview sequences of James Franco in the title role.
Granted, this is a partisan crowd, but they are enthralled. Rough footage aside, the presentations convey energy and intelligence and ingenious direction. It is not hard to imagine either of these movies finding healthy audiences. "Story, characters, worlds," Ross tells the crowd at the end of the two-hour presentation. "That's what we're focused on."
That, and making sure the studio can market and distribute those stories and characters and worlds to as many eyeballs as possible around the globe. And if either of these movies winds up connecting with audiences, there will be plenty more for Ross's intellectual-property machine. Burroughs wrote 11 novels featuring John Carter, and L. Frank Baum's Oz series consists of 14 books. Disney's IP locomotive could soon be pulling a very long train.