Big Little Buys
So much for a laid-back summer. These past few weeks have seen a flurry of outsized entertainment deals for seemingly small-scale production outfits. Reese Witherspoon sold her production company for $900 million; the creative duo behind South Park landed their own $935 million deal; and French and German media giants Mediawan and Leonine acquired a majority stake in the U.K.’s Drama Republic in their quest to build out a pan-European production studio.
What makes these deals significant, as you will read, is not so much their hefty price-tags, but rather the underlying strategies designed to keep the door open to future windfalls and annuities, rather than just survive on upfront fees. With streaming platforms in the hunt for long-term exclusive global rights to the shows they air, content ownership has become the new industry battle-front. This has created a vexing situation for content creators, as producer Jonathan Glickman highlighted in a recent interview with The Hollywood Reporter:
“It’s a remarkable time if you’re entrepreneurial and you look to see the opportunities to create stories and to do so where you have skin in the game. That’s where the producer occupation has lost itself, with the birth of the streamers and becoming a more fee-based business instead of an ownership business. It’s hard to find something where you have longevity and are tied to a project for life.”
JONATHAN GLICKMAN, FORMER PRESIDENT, MGM MOTION PICTURE GROUP
Glickman says that while it’s great to earn a guaranteed fee these days, nothing beats the thrill—and financial reward—of being economically involved in a project that goes on to become an unexpected success and then keeps on giving. Glickman point out that if fellow producer Neal Moritz were to make Fast & Furious today, “he’d get a buyout deal and Netflix would own all the rights.” Had that happened, Moritz and his collaborators would have lost an undoubted fortune—a loss of potential income that Scarlett Johansson has decided to confront head-on in her legal battle with Disney over the release of Black Widow. Stars like her that have enjoyed lucrative profit participation spoils, fear the end is coming for those “backend” deals. It’s just one of several news stories analyzed in this week’s newsletter:
- Witherspoon’s Hello Sunshine snapped up for $900 million. Too much?
- Scarlett Johansson feels shortchanged by Black Widow release. What’s next?
- Paramount Plus, Peacock join forces with Sky in Europe. Prelude to a merger?
- Ad bonanza puts pressure on subscription services. Will Netflix turn to AVOD?
- Brits spend a third of waking hours watching TV. Does this justify the studio gold-rush?
- The latest streaming experiment: a one-night-only PVOD premiere.
After you ponder the implications of all these and other stories we’ve gathered from the world of steaming this week, we would welcome your snap answer to the following poll question:
Purely poll question
Who came out on top in the $900 million Hello Sunshine acquisition deal?
Send response to firstname.lastname@example.org
- Reese Witherspoon.
- Blackstone-funded media company.
- Good deal for both sides.
Poll questions—and their published results—will be a regular feature of this Streamonomics newsletter going forward. These sample surveys will be run here in conjunction with similar polls on the much-followed LinkedIn profile of Purely Capital‘s founder & CEO, Wayne Marc Godfrey. We welcome your engaged responses on either platform.
Chart of the week: In the meantime, we leave you with one of this week’s more revealing data points, illustrated in the chart below by The Wrap. Google’s YouTube reported $7 billion in Q2 advertising revenue, a figure that doesn’t include revenue from subscriptions to services like YouTube TV and YouTube Premium. Such a growth rate suggests the ad-supported video platform will very likely bring in more money than Netflix this year. Analysts are now wondering how long can Netflix keep relying on just subscription revenues.