International Herald Tribune, France
Sept 27 2004
Kerkorian’s main man looks to post-MGM life
Andrew Ross Sorkin NYT
He says sale wasn’t goal for him or boss
LAS VEGAS Alex Yemenidjian, the chairman and chief executive of
Metro-Goldwyn-Mayer, was sitting at his private pool outside his
high-roller villa at the Bellagio Hotel and Casino here recently.
He had just struck a $5 billion deal to sell MGM, the Hollywood studio
famous for its roaring-lion mascot and film franchises including
James Bond, to Sony and a group of investors after an agonizingly
long auction.
But he was not interested in talking about the deal. He wanted to
discuss why he never wanted to sell the company and why his boss,
the elusive billionaire Kirk Kerkorian, who controls MGM and who
has now bought and sold the studio three times since 1969, did not
especially want to give it up, either.
“There is a perception out there that Kirk is a seller if somebody
gives him a good price,” said Yemenidjian, cutting a Bond-like figure
in a double-breasted blue blazer with a yellow silk handkerchief
protruding from the breast pocket. “That isn’t true. I think it bothers
him that Hollywood thinks that he treated MGM as an investment toy. Not
one time did either Kirk or the board tell me, ‘I want you to clean
this company up and prepare it for sale.’ Not once.”
Yemenidjian, 48, has been dogged by his reputation as MGM’s
flipper-in-chief ever since Kerkorian installed him as its boss
in 1999. Back then, the company was beaten and battered, written
off as a has-been, a debt-laden stepchild of the studio that once
produced films like “Gone With the Wind” and “The Wizard of Oz.” And
when Yemenidjian arrived on the scene, he was a virtual unknown
in Hollywood. If anything, he was considered Kerkorian’s henchman,
an accountant experienced in making deals, not movies.
Yet within five and a half years, Yemenidjian turned around the
business by drastically scaling back productions, scoring a few
unexpected hits like the comedy “Barbershop” and the documentary
“Bowling for Columbine,” and by milking its library of more than
4,000 films.
He won respect on Wall Street, if not fans among the Hollywood elite.
Then he performed the final scene of the script that had been written
by critics the day he arrived: He sold the studio. In doing so,
he made a bundle for Kerkorian – who banked at least $2 billion –
as well as a small fortune for the company’s minority shareholders.
“Bringing an outsider’s viewpoint to Hollywood may not have
necessarily endeared him to the agents, movie stars and the rest
of the quote-unquote Hollywood community,” said Jack Liebau, the
principal at Liebau Asset Management, one of MGM’s largest minority
shareholders. “But from a shareholder’s standpoint, he’s exactly what
you’d want in the CEO of a publicly held company.”
But as Yemenidjian leaned back in his faux 17th-century Tuscan chair,
he said he still wished he could have ordered a rewrite and made his
own blockbuster acquisitions instead of selling.
“We tried to acquire other companies and they weren’t available,”
he said in a rare interview.
He listed targets that he said he had pursued vigorously: Vivendi
Universal, Sony Pictures, Paramount Pictures.
“There was nothing left to buy,” he said with a shrug. “There was no
place for us to go.”
How Yemenidjian, who, like Kerkorian, is of Armenian descent, became
Kerkorian’s top lieutenant, to run the last independent studio in
Hollywood and to sell it in a heated auction between Time Warner and
Sony could be its own dramatic release. There is even a potential
sequel: for all the sniping in the industry, Yemenidjian is being
talked of as a possible successor to Michael Eisner, who will step
down as chief executive of Walt Disney in 2006.
Yemenidjian was born in Argentina; his father was a shoemaker who
had fled Armenia. The family moved to Los Angeles when Alex was 13.
Yemenidjian graduated from California State University at Northridge
in 1977 and founded his own accounting firm. In 1989, Yemenidjian
went to a lunch that would change his life. A mutual friend of his
and Kerkorian’s, George Mason, a managing director of Bear Stearns,
planned for them to meet.
Two days later, he recounted, “Kirk asked me if I would take a leave
of absence from my firm for six months to work on a special project.”
Yemenidjian continued: “He never told me what the project was and
I never asked. When I showed up on January 1, 1990, I found out the
project was selling MGM.”
That was the second time Kerkorian would sell MGM. He had bought it in
1969, sold it to Ted Turner in 1986 and bought back a large chunk of
it only months later, when Turner’s financing fell apart. The second
sale, with Yemenidjian’s help, was to the Italian financier Giancarlo
Parretti in 1990. But Kerkorian would buy it back again in 1996.
The two hit it off immediately, creating what friends and associates
describe as almost a father-son relationship.
“He was the perfect man for Kirk – just perfect,” said Mason, who
plays a doubles tennis game at Kerkorian’s house every Sunday with
Yemenidjian and other friends. “People say Alex would throw himself
off a cliff for Kirk. He’s always had that attitude.”
Kerkorian, 87, who has not given an interview to the news media
in decades, said through a spokeswoman, “Alex is one of the most
accomplished CEOs I have worked with, and I am very happy with what
he and his team have achieved at MGM.”
Throwing himself into the role of Kerkorian’s right-hand man,
Yemenidjian worked on his mentor’s attempted takeover of Chrysler,
an effort to rescue Trans World Airlines and a bid for Pan Amercan
Airways. In 1995, Kerkorian sent him to Las Vegas to become the
president and chief operating officer of the hotel and casino company
now known as MGM Mirage.
But his Las Vegas act was cut short in 1999. Kerkorian had assigned
him to help find a replacement for Frank Mancuso, who was retiring
as MGM’s chief. Kerkorian rejected all the candidates and gave the
job to Yemenidjian, who had never worked in movies.
It was an audacious move. Yemenidjian hired Chris McGurk, president
and chief operating officer at Universal Pictures, as his own chief
operating officer, and the two went about shaking up MGM’s business
model.
Out went high-priced, risky picture deals. The James Bond films,
which had been released every two years, were moved to a three-year
schedule. Production budgets were cut.
The centerpiece of the turnaround was a renewed focus on additional
sales from the company’s library, typically an afterthought at other
studios. Bonuses were attached to sales of digital video disks and
marketing was redesigned. By 2003, the plan had succeeded. They may not
have created the next Miramax, but the company was no longer bleeding.
The New York Times