GOODBYE TO A PRODIGAL SON

EVEN BY HOLLYWOOD'S STANDARDS, Michael Schulhof was a notoriously big spender. As the chairman of the U.S. operations of Sony Corp. and protege of company founder Akio Morita, Schulhof set out to build an entertainment empire that would create movies, records and other "software" for Sony's hardware: TV sets, vcrs and gadgets of the future. He started slowly at first by acquiring CBS Records for $2 billion in 1987. The real spree began in 1989 when Schulhof paid $3.4 billion for perennial also-ran Columbia and its sister TriStar studios. He immediately spent some $800 million more to recruit Batman producers Jon Peters and Peter Guber, who had never headed a major film company, to run the acquisitions. Next, Schulhof popped for a $175 million make-over of Columbia's movie lot in Culver City, California, and threw in daily deliveries of fresh fruit and flowers to studio executives. Peters was forced out in 1991, and Guber followed three years later. With little more than a string of box-office flops to show for the spending, Sony had to write off $2.7 billion last year in one of the largest such charges for a Japanese company.

It was not until last week, however, that Sony finally removed Schulhof, the architect of its Hollywood dreams and the only American ever to sit on its board. With Morita sidelined since his 1993 stroke and unable to protect him, and new president Nobuyuki Idei, 57, clearly ascendant, Schulhof, 53, resigned after conferring with Sony chairman Norio Ohga, his remaining Tokyo mentor. Ohga "felt he had no choice but to support Mr. Idei," Schulhof told Time in an interview. "Therefore I could not stay here."

The ouster is the most dramatic move so far by Idei, a former marketing executive who was Ohga's surprise pick in April as president and heir apparent. In the past few months on the board, Idei persuaded Ohga, who has always been partial to Schulhof, that it was time for his protege to go. Like Morita and Ohga, Idei is a cosmopolitan blend of East and West. He speaks fluent English and French, loves gadgets and rock 'n' roll, and favors stylish Italian attire. A high-energy executive who has trouble sitting still, Idei navigates Tokyo streets in a Jaguar sports car. His vision for Sony goes well beyond Walkmans and vcrs to future generations of products that can combine the functions of TVs, computers and other gear, and draw information and entertainment from sources as varied as satellites, cable lines and the Internet. That vision, however, did not include Schulhof. Sony Entertainment will now be run out of Japan, not the U.S.

Schulhof, a physicist with a Ph.D. from Brandeis University, rose through the technical ranks of Sony's U.S. operations, where he caught the eye of Morita. "From the beginning, Mr. Morita and Mr. Ohga took a liking to me," Schulhof proudly recalls. For 20 years "there was a chemistry that worked. I talked to Mr. Ohga at least once a day and Mr. Morita once every three days. We operated in a collegial fashion. There was almost nothing in writing."

Armed with his broad mandate from Morita, Schulhof scooped up CBS Records and Columbia. "CBS asked, 'Are you authorized to sign this?' when we were ready to close the deal," Schulhof remembers. "It never occurred to to me that I needed authorization. Mr. Morita had to fax it."