If there’s one thing Patrick Whitesell knows how to do, it’s cut a deal.
Whitesell, the executive chairman of Endeavor, represents some of the biggest names in Hollywood, including Matt Damon and Ben Affleck. Over the past year, Whitesell and many of his peers, perhaps most notably CAA’s Bryan Lourd, have expressed dismay that media conglomerates are trying to cheat big movie stars by dumping projects on streaming services.
Concerns about the way streaming services compensate talent have simmered for many years. Netflix blazed the path by not releasing viewership, which robbed agents of a negotiating tool. It also keep the programs on its service, which erases the lucrative syndication market. The company doesn’t grant any actor or director a share in a film’s profit because there is no profit in the traditional sense. Every new show or movie exists to drive new subscribers.
These concerns grew larger when all the other media companies started copying the Netflix model, and then the pandemic forced them to change the way movies — once destined for theaters — are released. It became a national story last December when Warner Bros. decided to drop its entire 2021 slate on HBO Max at the same time as those movies appeared in theaters. Agents, including Whitesell, screamed betrayal. Directors threatened to boycott. Warner Bros. mollified the angry mob by writing large checks. (WarnerMedia CEO Jason Kilar said this week they rushed the decision.)
The frustration burst forth once again over the summer when Disney shifted some of its titles to streaming. Scarlett Johansson sued Disney, a rare escalation. But that suit, like the angry tweets and statements that preceded it, was all just part of a negotiation. When you hear Whitesell say he was disappointed with HBO Max, he means “give me a heads up next time.” And when an agent accuses Disney of self-dealing, what they really mean is “pay my client more money.”
With both the pandemic and the streaming upheaval unfinished, I stopped by Whitesell’s office in Beverly Hills last week to get a clearer picture of how he sees it playing out. We did this before Johansson settled her suit with Disney, though you will find that outcome did not surprise anyone.
Let’s start with the easy one: Is the transition to streaming good or bad for your clients?
It’s great. The entertainment business has been disrupted from the beginning. You had people to do vaudeville, disrupted by silent movies, disrupted by talkies. Every time new technology has come, it’s made the pie bigger.
This company’s legacy goes back over 100 years, and today is the best day to be a client or someone we represent. There was always a linear footprint to fill. If you were going to create content, there was only 24 hours a day and seven days a week. It was finite. The proposition with streaming has changed. There is now an unlimited amount of content. It’s overwhelming.
That right there is spectacular for creators. When you’re looking at the streaming landscape, there will be big winners and losers. The one thing that distinguishes every platform is unique, elite talent. Shows that are only on their platform. These networks develop, finance, distribute and market shows. But they don’t make them. Our clients make the movies, and you need great talent to make the movies.
If streaming is so good for talent. Why do we see so many unions, whether it’s the crew or the writers, complaining about getting screwed over?
I am not the person to speak to physical production. We have a division, but it’s for the high-end cinematographer, people who are economically not as unhappy as others.
On the writers guild and unions, they were used to royalties from TV and film. There was a real methodology that had been negotiated over a series of years. Now something goes on streaming and there’s no transparency, fewer optics into how the show performed. How do you get your fair share of your royalty fee?
Are you comfortable with the level of transparency?
No, we want more. And we’ll get it over time. There will be a necessity for streamers to share more. The real question is what metric are going to be important? Right now acquisition and engagement are the most important. I would like to see, even when they buy out a back-end on a client, I’d like to see something if it goes over X million streams.
A performance bonus.
This is where history repeats itself. A new technology comes in, and you try to get your arms around it. It’s no different from selling a TV show to HBO instead of broadcast. There was no syndication. Even if it’s a huge hit, there was no back-end. Parties worked through it, and figured out how to deal with it. It was the same with the DVD. Studios didn’t want to disclose how much they made from it. We worked through it.
Streaming is a new way for content to be exhibited, but also its economic value is different. It used to be you could see how much it made and profit and loss for studios. Now there’s a situation where the individual project doesn’t matter.
Does that risk devaluating any one asset?
When you have a hit show they matter tremendously. Shawn Levy is our client. ‘Stranger Things’ was a huge hit. The economic value to [Netflix] going forward has been tremendous. And in that they’ve recognized the need to share that with the creators of it.
Will Ryan Murphy or Shonda Rhimes make as much as the creator of ‘The Office’ or ‘Friends’?
It could be comparable, but only over multiple shows. The idea of one piece of content like a ‘Friends’ or ‘Seinfeld’ or ‘The Big Bang Theory’… it’s just going to be harder for one show to generate that amount of economics. Those ran over 7 to 10 years. Everything in streaming is faster.
Are any of your clients still reluctant to take the plunge into streaming?
There are a few. Not reluctant in the sense that they don’t like the platform. They are conscious of their brands if they’ve only done movies their entire career. People only went to the movies to see them. They are conscious of changing that dynamic and the ramifications of it.
How many actors do people actually go to the theater to see?
People say stars don’t matter anymore, but they matter at every level, particularly in film. With Free Guy,” they showed up because of Ryan Reynolds.
Disney is seen as putting their machine and their IP first. But Marvel movies do have the biggest stars in the world.
You can have the biggest IP in the world, but if you don’t have great talent making it… Take Batman. There’s ‘Batman and Robin’ and ‘The Dark Knight.’ Same IP. Same studio. Different filmmakers and wildly different movies that are perceived differently. What Marvel did really well is they attracted really good talent to take their IP and make it into what it is. Look at what Robert Downey Jr. did on ‘Iron Man.’ It changed everything for them.
What do you make of the Scarlett Johansson lawsuit?
They chose to file a lawsuit as a lever. Typically you don’t see that. Why it got there? You’ll have to talk to both of those parties. But at this point, they have a franchise that’s basically at the end. Marvel has moved onto the second generation of stories.
Some people have argued this case demonstrates a big difference in leadership between Bob Iger and Bob Chapek. Is that fair?
Bob Iger was one of great all time executives. Unbelievable with talent. It’s hard to compare anyone to Iger. But to cast Chapek as if he’s going to the mattresses… There is not a mandate from the top to not respect talent. They got caught with a bunch of movies in the midst of Covid, and they are trying to figure out what to do. Disney’s business was one of the most hurt. They are cruises, theme parks, movie theaters. Everything shut down immediately.
That suit made Disney appear callous. Did that drama present an opportunity for you to take advantage with your clients?
We were in a parallel conversation. We were on a path to figure it out with Disney, amicably. Fortunately we did in the situation with Emma [Stone] where we want to continue to make movies with them. The creative experience was great. Disney was excellent to deal with. When we settled on a deal, it was about how to compensate her not just for movies she did but models for when we make many more Cruellas. However they are distributed, we already have economics models in place.
What different models?
These were movies that were contemplated to be theatrically distributed by everyone. There was no bad faith in the original deals. They weren’t intended to be streaming. What happened cause of covid is people made new decisions. The deals structured then didn’t contemplate this type of exhibition. That’s what caused the unease and tension.
Going forward, if you’re going to make a movie with a studio with a streaming platform, you negotiate all scenarios upfront. You talk to the studio or financier and make a deal for pure theatrical like we’ve always done it. If it’s a hybrid you have a deal for that. And if it’s streaming they buy you out. You don’t need to make a decision today. We probably won’t. That will take some of the combativeness and angst out .
One complaint I hear all the time is that streaming movies don’t reach the zeitgeist. Does Netflix launch big movies?
We’ve seen TV shows become zeitgeisty. We’ve gotta see if that happens with films on streaming. It happens in the movie business. Movies in theaters become part of the cultural conversation. That will continue to happen.
Everyone is talking about ‘oh streaming, you don’t need to leave your house.’ Since I’ve been doing this, there’s been ample content on your couch at home between network TV, cable, stuff I can rent, sporting events. There’s more now, but we just had the biggest Labor Day in history at the box office.
Why don’t streaming movies have the same cultural impact?
It’s early days. During covid, Netflix was the greatest beneficiary of viewing habits. Everyone was stuck at home. There was not a lot of new content out there. It’s hard to draw a thesis from this. We need some time. These studios have just started in the last 12-18 months making feature films for streaming. They started out taking stuff studios didn’t wanna make. Now they’ve gone after the best people and most coveted talent.
Some of the anxiety about streaming is long-term. In a few years, the companies won’t feel the same need to pay a premium to grab a particular talent or audience. The industry will settle down and be dominated by 4 or 5 massive companies.
You keep saying they are paying premiums. I think they are paying fair market price. Let’s say it gets down to four or five players who are all spending $15 billion a year. They can’t go backwards. They need the same amount of overwhelming content. They are still going to need the same people to make that. You now have more subscribers, so you’re feeding a larger and larger audience and need to keep them happy with more and more content.
What are you watching right now?
I watched ‘White Lotus.’ Everyone watched ‘White Lotus,’ right? I watched ‘Manifest’ right now with my kids.
What service pays your clients the most?
You may get a great deal at Netflix, HBO Max, Apple and Amazon. This is the scale of company. It’s really understanding what their priorities are and matching talent with them. Michael B. Jordan with Amazon was a natural fit.
Are they working on a ‘Without Remorse’ universe?
They are trying to expand it. There are rights with the Clancy estate they need to lock up.
Disney is not on your list.
Disney typically has a lot of their own IP. It’s not that they won’t buy movies, but the perception of Disney is they have a lot of their own stuff they can make. Netflix owns nothing. Apple owns nothing. Amazon up until MGM didn’t own anything.
I didn’t talk about Peacock or Paramount+, but they are in different categories.
They aren’t at the same scale.
They need to decide to commit the same amount of money.
Does the success of HBO Max this year help with any of the talent upset about how their movies were released?
I don’t know. They made a strategic decision; we can debate if it was right or not. It was just about how it was handled at the time that was frustrating. But once it got out of the gate in a clumsy way, we could engage with them. It was productive, and we got results that were satisfying on our end. I don’t know if the performance on the platform had any real bearing.
Are there people who wouldn’t work there?
There are probably some people who’d be hard-pressed to go back. But now you look at it. With new leadership coming in to the company, that will have an impact.
What do you expect from David Zaslav when he takes over WarnerMedia?
It’ll be great. He comes from content, and he understands the value of great content. He is an excellent executive. Warner Bros. has this great legacy with filmmakers and actors, they have great IP. The challenge for him is Discovery, HBO Max and their own streaming service. What should it offer? — Lucas Shaw
The best of Screentime (and other stuff)
What is CAA’s next move?
My colleague Matthew Levine has a running joke in his newsletter that everything is securities fraud. The corollary in the entertainment business is that everything is about streaming.
When Creative Artists Agency announced on Monday that it is buying ICM, many executives jumped to the conclusion that this is about streaming. As the entertainment industry consolidates, so too must the talent agencies. Buying ICM gives CAA more leverage when negotiating with Disney about movies.
But is that really true? Buying ICM doesn’t make much of a difference when CAA’s Bryan Lourd is negotiating Scarlett Johansson’s next contract. CAA was already one of the two biggest agencies in town, representing clients such as Chris Paul, Brad Pitt and Jennifer Aniston. Adding a few more big names doesn’t change its status.
The logic for this deal feels a bit more prosaic. CAA is always looking for ways to strengthen itself, and ICM possesses a good publishing business, a complementary sports representation business and a handful of major clients. Shonda Rhimes, Spike Lee and Ellen DeGeneres are all good names to have on your sheet.
CAA explored a deal for UTA, the third biggest agency, but that deal would have been a harder one to pass through regulators in Washington D.C. In ICM, the fourth, it adds a company with a very similar approach to doing business.
That being said, this deal resurfaces two larger questions looming over CAA: succession and exit.
There has long been speculation that CAA will go public. TPG invested in the agency a decade ago, and private equity firms typically look to cash out. CAA executives have made the rounds at major investment conferences.
This deal reinforces CAA’s commitment to being a traditional agency, and representation businesses have almost never been the foundation of public companies. Endeavor may have started as a talent agency, but it went public as the owner of Ultimate Fighting Championship.
So does CAA try to go public as an agency, or does it have another play?
There is one other explanation for this deal. Being an agent is now volume game. You used to sign a client and hope they created the next “Friends” or starred in a huge movie franchise. That one project could generate tens of millions of dollars for years to come.
The biggest TV producers now make several shows a year. With shorter seasons and no profit sharing, actors and writers need to appear in multiple projects to make as much money. That means agencies need more clients working more times to make as much money. And that translates to more agents. I guess everything is about streaming.
The most popular TV show in the world is…
“Squid Game.” The Korean “Hunger Games” is on track to be the most-watched TV show in Netflix history. It has reached the top of the charts in more than 90 countries.
Netflix didn’t see this coming. It seldom anticipates its biggest hits, an dit still has a unique ability to take a marginal TV show or movie and turn it into the most popular program in the world.
And yet this still feels like a *moment* in pop culture, in large part because this is a Korean show that has taken over the world. We are used to shows in English being popular everywhere. But thanks in large part to Netflix, three of the most popular shows in the world this year, “Lupin,” “Money Heist” and “Squid Game” hail from Europe and Asia.
Friend of the newsletter Franklin Leonard had a good perspective on it this week:
“Just a few years ago, Squid Game would have been something shared within the industry primarily as particularly strong American remake fodder. It’s a glorious thing that we live in a world where the show is becoming as popular as it is just as it was made by its Korean creators.”
Amen.
- The No. 1 movie in the world is “Venom: Let There Be Carnage.” It grossed more than $90 million in North America, the biggest opening of the pandemic.
- The No. 1 song in the world is “Stay,” a song by The Kid LAROI that has been atop the Spotify global songs chart for nine weeks in a row. Nine!
Spotify’s live podcast plan
Spotify plans to fold its live podcast app, Greenroom, into its main app, according to people familiar with its plans.
The exact timeline on this shift is still being determined. Many of the podcasting executives at Spotify have wanted this to happen ever since Spotify bought Locker Room, as the app was previously known. But integrating a live audio experience into Spotify takes time.
Spotify, Facebook and Twitter have all spent a lot of money on live audio over the past year, itching to compete with Clubhouse, the darling of the deep pandemic. But recent moves like this suggest they see live as a feature to be offered in an audio app or social network as opposed to a standalone experience.
Also in audio…
- Apple released a list of its 10 most popular subscription podcast channels. #1? Wondery+, which is owned by rival Amazon.
Amazon’s big win in Japan
Amazon is the most popular streaming service in Japan, the world’s third largest economy. We talk a lot about Disney’s dominance in India, and Netflix’s dominance just about everywhere else. But far less has been said about Amazon’s success in Japan, a media market that has been notoriously difficult for foreign media enterprises.
Amazon Prime Video has 15 million subscribers in the country, about one-third of all paid streaming customers. It is sometimes hard to know if all the people who have Amazon video are watching much of it. They get it for free with their Prime account. But Amazon also accounts for the largest share of viewing, per Media Partners Asia.
The story of the week: the Ozy drama
Digital media startup Ozy shut down Friday, just six days after the New York Times’ Ben Smith published a column examining potential fraud and mismanagement at the company.
I have never seen a story lead to the shutdown of a company so quickly. But I also never met anyone who read Ozy, watched its videos or listened to its podcasts. Perhaps those facts are related.
Deals, deals, deals
Weekly playlist
I listened to John Carreyou’s “Bad Blood” three years ago, often while hiking around Hong Kong. When I heard Carreyou had a new podcast about the Theranos scandal, I figured I had learned everything i needed to know. Then I listened to the first episode, and realized I can never get enough.
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