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The Evolving Film Industry

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wilberfan

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Reply #15 on: December 10, 2020, 04:02:00 PM
Interesting conversation with Jason Kilar (CEO of Warner Media)--the guy that pulled the trigger on this new exhibition model for WB.

https://www.radio.com/podcasts/sway-43436/movie-theaters-are-dying-did-jason-kilar-deal-the-final-blow-351965617

"Trying to fit in since 2017."


wilder

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Reply #16 on: December 11, 2020, 05:12:26 AM
From Brian Newman’s mailing list



Bye Bye Equity Pie
December 9, 2020

Another week of Covid-19, another accelerated demise of a business model seemingly central to the life of the movie industry. You would think in light of the hand-wringing and gnashing of teeth caused by the Warner’s decision to launch its entire slate on HBO Max that I’m thinking of windows again, but no, folks – I’m talking about the death of equity financing for films. Or once again, I’m writing about something no one wants to discuss.
 
Like so many accelerated changes, this is a death that was coming prior to the virus; a change that had been happening for at least a year or longer, but that can no longer be ignored. It’s also so shocking that when I discuss it with my friends and colleagues – or bring it up on panels – I get the long, blank stare of disbelief.
 
So, let me turn to two recent pieces that kinda flew below the radar, but speak directly to the reality we face. As Exhibit A, I give you James Schamus during a virtual keynote Q&A at the Film London Production Finance Market (back in Oct) as reported in Screen:
 
Schamus pointed out that the competition between the streamers is taking place “in the absence of a time-honoured approach to the financing and selling of independent media”, with “egotistical, bloviating, ridiculously self-centred individuals and family members who’ve made it in the used car business, the laundromat business, real estate, whatever business” no longer putting their capital into independent film.
 
The former Focus Features boss noted there are now only “a tiny handful of gatekeepers” financing independent content. “They have very little incentive to acquire more than a tiny handful of things, especially feature-length films,” Schamus said.

 
That was Schamus speaking about independent media. Exhibit B would be Richard Rushfield in The Ankler speaking about Hollywood (just yesterday), which is now facing the same death thanks to the Warner’s announcement:
 
“beneath the surface of people trying to make movies and do well for each other, there's the real Hollywood, which is a business of fleecing the arrivistes for every penny they've got while they still have stars in their eyes.”

In both instances, you have some super smart folks reading the writing on the wall for those of us not willing or able to slow down and look more clearly at what’s going on – as the industry has shifted to SVOD and original content, there’s no longer any incentive for equity investors to get involved, because there is no upside.
 
What Warner’s made abundantly clear this past week was that there is no path to profits (much less riches) for investors in their individual movies; all in the hopes that Wall Street investors will take a chance on their overall fortunes as tied to HBO Max (so far, Wall Street doesn’t seem super-impressed, but business writers are giddy). In this particular case, they only gave their investors, folks like Legendary Entertainment, about 90 minutes notice before they announced that there would be no back-end, and those partners are hoppin’ mad.

But it’s not just Hollywood. The fact is none of the major streaming services have much appetite for buying finished feature films anymore. While it was always a precious few who got lucky and sold Netflix for the big bucks out of Sundance, you’re increasingly seeing a world where they don’t bother to compete for indie or other arthouse films – and especially not documentaries, anymore. Nope. It’s all about originals and series now. Yes, there are exceptions, but they are increasingly rare, and Covid-19 has only accelerated this trend.
 
Time was – just about two years ago, even – I could honestly look an investor in the face and say that while the film business was a tricky one, and a bad investment most of the time, there was a path forward to potentially recoup your investment. That’s not a pitch I think I’ll be making again anytime soon. But while coronavirus has brought this trend to the fore, it was happening B.C. Over the past year, it’s become increasingly apparent that one can’t produce “on spec” anymore – you have to work on commissioned work, where distribution and financing are locked-in from an early stage. That’s because you can’t count on a decent sale – because not only are the major buyers (SVOD) not buying, that also trickles down to the mid-tier buyers. It becomes really difficult to see a path towards recoupment. Now that we can add that it’s impossible to get insurance for an indie film, and if you manage to get it made, there might not be any buyers, the dynamics around investment are going to change/disappear, and fast.
 
This is a profound shift, and the implications are still being sorted out. While there will remain some exceptions – most smart producers and talent will have to move to a model that relies a lot less on equity. The smart equity that remains should probably be focused almost solely on IP development and early-stage financing, where the dollars needed are lower, and the “out” is more focused on an early pre-buy or commission, with a smaller profit margin. I think a lot of companies will go out of business as well, because the profit margins on commissioned work (and TV in general) are much lower. An entire eco-system of support for indie films – from programs like Catalyst at Sundance, to Impact Partners for docs, will have to be re-thought (oh wait, that was already underway). Efforts like the DPA’s waterfall guidelines (which just came out in September (!)) will need to be re-written. Heck, the definition of indie film will have to change (again), once you can’t make much of anything as an independent anymore (if you want to reach an audience and recoup; there will always be soft money docs and crowdfunding, but that can’t sustain an industry). And while the industry will adapt, I think it will lead to a lot more safe-choices and thus less surprises and less artistic risk being taken.
 
Of course, this brings many opportunities as well. I can think of many ways to “bridge” this gap, and coming from the branded entertainment world, that’s near the top of my list. But it’s also a very tough puzzle to figure out – and those who can do so will be best positioned to thrive for the next five-ten years, before this all shakes out again and we try to build another new model. In the meantime, we need to add to our list of conversations to be openly had – and problems to solve – what to do when the equity vanishes?


WorldForgot

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Reply #17 on: December 22, 2020, 11:30:54 AM
Amazon was my first guess. Jeff Bezos made more than five billions since the tweet was posted. They're also the worst streaming service: I'm sorry, but I can only think of packages when I see the Amazon logo. Or a warehouse...

Interesting conversation with Jason Kilar (CEO of Warner Media)--the guy that pulled the trigger on this new exhibition model for WB.
https://www.radio.com/podcasts/sway-43436/movie-theaters-are-dying-did-jason-kilar-deal-the-final-blow-351965617

In this conversation, Kilar uses a rhetoric against that service as some sort of consumer distinction that affects content (so they say)
(23min ish, Kara kinda walks jason into it)
"For them (Amazon and Apple TV) it's not existential to be great at storytelling --- nobody's staying up late at night worrying about what happens if their pipeline of movies and television doesn't resonate"


jenkins

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Reply #18 on: December 22, 2020, 11:32:50 AM
that’s a fun use of existential and resonate


WorldForgot

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Reply #19 on: December 22, 2020, 11:38:17 AM
that’s a fun use of existential and resonate

 Corp AI generated romanticism broadcast straight outta the WB tower ~


jenkins

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Reply #20 on: December 22, 2020, 12:25:51 PM
the human condition is like my favorite topic ever but whenever it’s talked about in terms of audience appeal i feel gross


wilder

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Reply #21 on: January 13, 2021, 07:08:01 PM
DGA Sides With Writers Guild In Its Dispute With WME Over Endeavor Content
Januar 12, 2021
Deadline

The Directors Guild has sided with the Writers Guild in the WGA’s ongoing legal battle with WME over the agency’s ownership interest in its affiliated production entity – Endeavor Content. In a letter obtained by Deadline (read it below), DGA national executive director Russell Hollander told WME president Ari Greenburg that the DGA has “been closely following the negotiations and litigation and believe now is the right time to communicate our strong support for the WGA’s efforts to remedy the affiliated production company issue.”

In his letter dated December 31, Hollander also told Greenburg: “This continued conflict of interest is not acceptable to the DGA. Absent prompt resolution, we intend to take all necessary and appropriate steps to protect our members.”

The DGA declined comment.

Here’s the full text of Hollander’s letter:

Quote
Dear Ari,

The issue of talent agencies owning production entities is, and always has been, an issue of great concern to the DGA. While we have not commented publicly on these concerns, we have raised them on numerous occasions with representatives from WME and Endeavor Content. As discussions between WME and the Writers Guild of America have reached a critical point, it is time for us to make our position clear.

The issue of avoiding conflicts of interest is exceedingly important to the DGA and our members. Affiliated ownership carries with it inherent and obvious conflicts of interest. Agents should be free and unencumbered to carry out their duties to their Director clients with only the Directors’ interests in mind and should procure work for Directors without the incentive to make cost-effective deals with production companies owned by the same parent company as their agency.

We are aware that the issue of conflicts of interest arising from affiliated production ownership remains the last outstanding issue preventing a resolution between the WGA and WME. We have been closely following the negotiations and litigation and believe now is the right time to communicate our strong support for the WGA’s efforts to remedy the affiliated production company issue. We share their concerns and urge WME to resolve this issue with the WGA in a manner that will enable talent agents to satisfy their fiduciary duty to their clients free of conflicts of interest.

This continued conflict of interest is not acceptable to the DGA. Absent prompt resolution, we intend to take all necessary and appropriate steps to protect our members.

Sincerely,

Russell Hollander
National Executive Director

WME is the only major talent agency that has yet to sign the WGA’s franchise agreement, and reducing WME’s ownership stake in Endeavor Content to just 20% is one of the last remaining issues holding up an agreement. The WGA also wants WME and its private-equity owners, Silver Lake Partners, to agree to the same terms as CAA and its private-equity owner did last month when they signed the guild’s franchise agreement.

The day before Hollander sent the letter, a federal judge denied WME’s request for a preliminary injunction that would have ended the WGA’s boycott of the agency until the antitrust case can go to trial. It was a major legal victory for the WGA and adds pressure on WME to settle the 21-month dispute and sign the WGA’s franchise agreement, as have all the other major talent agencies.

WME has said that it wants to reach a deal with the WGA and offered a proposal last month that it hoped the WGA would accept, saying, “We want to find a way forward with the Guild and return to representing our writer-clients.” The WGA, however, rejected that offer, saying that “WME has yet to grapple, in a serious way, with its own conflicts of interest.”

The WGA’s battle to reshape the talent agency business began in April 2018, when it notified the Association of Talent Agents of its intent to renegotiate its Artists’ Manager Basic Agreement, and a year later, writers voted overwhelmingly to terminate the AMBA and all unfranchised agencies. Since then, the WGA has negotiated 10 successive versions of its franchise agreement to accommodate reasonable agency proposals – beginning in May 2019, when it signed Verve; again last summer, when it signed UTA and ICM, and last month when it signed CAA.

The DGA last weighed into the dispute between the WGA and the talent agencies in April 2019 – just days after the WGA told its members to fire their agents who refused to sign its new Agency Code of Conduct, modified versions of which will now phase out packaging fees by 2022 and sharply limit their corporate affiliations with related production companies.

At that time, the DGA told its hyphenate members that they didn’t have to fire their agents for DGA-covered work even if they were also writers who were being told by the WGA that they must fire their agents who refuse to sign its Code of Conduct. “There are important issues that we are examining in the context of the DGA agency agreement,” the DGA said back then. “As our franchise agreement is currently in effect, we are not instructing hyphenate members to terminate their agents with respect to DGA-covered services at the present time.”