The stunning velocity of change in the entertainment and media industries shows no sign of slowing.
And of all the things I learned over two days of intense conversation at TheWrap’s TheGrill conference last week, the most important was this: change is now a permanent state of affairs in media, and the speed with which it occurs will continue to increase.
- More Consolidation, Like it or Not
The conversation among top dealmakers was like watching a business master class among the smartest guys (and woman) in the room. Jeff Sagansky, who led the way on creating the model on Special Purpose Acquisition Corporations (SPACs) years ago, did not mince words when asked about who would get consolidated, by whom and how soon.
His answer was that he expected NBCUniversal to be spun off from Comcast in the coming years, that ViacomCBS would have to merge with another content company and that even Warner Discovery – a merger that hasn’t yet happened – will ultimately be too small to survive as a standalone company. That basically leaves Disney and Netflix as the only two current conglomerates to remain standalone businesses, according to Sagansky. (I will note that former Disney exec Tom Staggs’ eyebrows went up when he said this.)
Me: ViacomCBS has to merge?
Sagansky: I think they will. It’s completely unclear what the steady state streaming margin is. We’re coming off a legacy business where the margins were 40%-plus for the cable business. We have no idea what the steady state (profit margin) of streaming is.
Me: Who are the buyers?
Sagansky: Apple, Amazon and Netflix. Google certainly has the scale to do it.
He cited a second tier of buyers as Spotify and Activision.
2. Casey Wasserman isn’t going public anytime soon but keep an eye on his namesake agency.
In the coverage of the agency wars that usually focus on CAA and Endeavor, Wasserman is often quietly left out. That’s a mistake. Casey Wasserman, with the pedigree of Hollywood royalty and an evident desire to live up to the legacy of his grandfather Lew, likes the business he’s in: talent representation.
He likes it so much that he bought Paradigm’s music representation assets, even though the live music business has flatlined during COVID. Wasserman is biding his time, paying music agents despite the current lack of concert bookings. His main business is sports talent representation and the quiet truth is that fundamentally this is a better business than representing actors. Athletes sign contracts every few years. Movie and TV actors need agents to feed them work a lot more often than that. (In fact, the big X factor for ICM in its recent sale to CAA was its acquisition of two European sports agencies.) Sports is Wasserman’s main business, and it sure sounds like it’s doing fine; the company is private and does not disclose numbers. And Wasserman said he has no intention of going public, or following the Endeavor model of bigger-is-better and then you IPO.
Of note, Wasserman says he is also aggressively diversifying his company, noting that for 15 years his intern classes have been largely women and people of color. So he intends to diversify from the ground up, rather than the top down. He believes that is the path to long-term diversification. Time will tell, but it makes sense to me.
3. Kevin Merida has his work cut out for him at the L.A. Times.
I pressed the new executive editor of the Los Angeles Times on the specifics of how he intends to lead the newspaper to the renaissance it has long promised after two decades of decline. Obviously, there is no magic button, no simple fix.
Merida, a Washington Post veteran who most recently served as ESPN’s editor-in-chief, talked about a desire to use community-based events, or local initiatives like having the Times commission a series of murals. These are fine ideas, but candidly they are not particularly new. More fundamentally, Merida talked about making sure that the newsroom feels empowered to do its best work.
“First is culture, who you work with every day,” he said. “You want people to feel great about their work.”
As amorphous as that sounds, I really think that’s the ticket.
4. Gaming gets a “C” for diversity, at best.
Everybody (including TheWrap) talks a lot about how much we need diversity in entertainment, now. But talk is cheap. I asked Xbox head Phil Spencer how he would grade his own company for diversity, and the gaming industry in general.
Me: How would you grade gaming around diversity and inclusion at this time? How do you think you’re doing?
Spencer: It’s not lost on me that there are two white men on this panel. I think about our grade… I think our team should represent the players and customers. I look at the planet as our opportunity. That’s our aspiration. So if we talk about a grade…
Me: A C? Sounds like a C?
Spencer: I think a C might be generous.
Props to Spencer for being honest.
5. In the streaming world of movies, “Great is everything.”
Scott Stuber has to make 70-80 movies a year as the head of global film at Netflix. That is a stunning amount of content to oversee, probably four times more than the average movie studio produces annually. So it was eye-opening to hear Stuber talk about how he approached this gargantuan task: “Great is everything.”
I pushed back: “You can’t make 80 great movies.”
Stuber’s acknowledged that was true but noted, “You have to decide who it is ‘great’ for.”
But the former Universal Pictures executive remains enthusiastic about the process. “Making a movie, I still get giddy about it,” he said. “We’re trying to hit people with lightning. That’s really the job. Can you strike someone with a lightning bolt so he or she, wherever they are in the world go: I want to be that person.
He concluded: “I just want to make great.“
I can only endorse that kind of ambition. And that’s a Wrap on this year’s Grill!