One issue many on the creative side of the industry have lamented for years if not decades is the very fuzzy accounting that takes place in Hollywood studios. There were very notorious stories from ages past wherein the studios made bombastic claims such as “ET the Extra Terrestrial” lost the studio millions of dollars.
Studios in the past have taken line-items from their overall budget, such as rewiring an entire backlot and studio facility for digital, and listing that as an expense on movies or series in production at the time. I only mention this because one consequence of fewer shows and movies in the pipeline is the overall cost of things can’t be spread across as wide a proverbial net. So it might be more difficult for a Warner to seem like it is making money in the long or short term. Given the propensity of that in the industry, On Wed, Aug 24, 2022 at 4:40 PM PGage <[email protected]> wrote: > Julia Alexander, a relatively new columnist at Puck News who is also > Director of Strategy at Parrot Analytics, which does quantitative analysis > of digital media, tried to make sense of Zaslav’s recent HBOM decisions in > a piece today. It is either fully or partially paywalled at: > https://puck.news/zaslavs-disappearing-act/. > > A couple of points related to what has been discussed here: > > > 1. > > She says it is residuals Zaz is saving when he removes titles from the > service. She estimates the savings will be in the “high tens of millions > annually over the next few years” - lets (this is me spitballing, not > Alexander) call that $80M/year for three years, so it would be $240M of > savings for the 36 series he killed. That is more than he saved by killing > Batgirl ($90M tax write off). This is all on the road to getting to the $3B > in savings he promised Wall Street. So, killing the HBOM kids shows gets > Zaz about 12.5% of the $2B more in savings he needs after the estimated $1B > he saved by aborting CNN+. > > > 2. > > As many other analysts are pointing out, these savings come with a > high price - alienating the creative artists that HBO and Warners (but, not > so much Discovery) need to make profitable content. Alexander seems to > think that while it is not clear that Zaz can run a successful film and > scripted cable TV service when he has pissed off writers, producers, actors > and agents, it is very clear that if he can not deliver the $3B in (itself > only a down payment on the total debt he took on to do the merger) in > savings he has promised investors Zaz will find himself with his his throat > cut, bleeding out on a dark and dingy corner of Wall Street (violent > imagery mine, not Alexander’s). > > > 3. > > Because WBD is opaque in regards to actual utilization numbers for its > streaming operation (not unique in that industry), most Makers of other > current content on HBO have almost no idea where they stand in the line to > get cut for even more savings. It is not even clear (at least not to me) at > what point a program is worth more alive than dead, as presumably the more > popular a show is, the most residuals Zaz has to pay, though presumably the > glamor titles on HBO are safe (though, will there come a time when WBD > saves more money killing The Wire than it does from showing it? - Alexander > does not address things like this). Alexander does say there has been a lot > of worried chatter in Hollywood from makers and involved creatives trying > to find out if they are next, and nobody seems to know, or, as Alexander > put it: “a thousand phone calls, texts and emails have been sent, but > people you would normally talk to have been fired, moved or quite, so no > one has any idea how to get the information they need right now.” > > > 4. > > One of the unanswered questions is what is the ultimate fate of > programs licensed to a streaming service that get yanked? The makers often > do not have physical masters of their work, and apparently usually have no > control over making it available on other platforms (though a few of the > titles recently pulled from HBOM are now doing brisk business for sale on > iTunes and Amazon). Makers may try to get language in contracts to protect > their creation from total and permanent disappearance, but the streaming > companies are likely to dig in. Alexander quotes a lawyer as explaining: > “Part of paying to own something is paying for the right to kill it.” > > > One of the justifications for heavily leveraged corporate takeovers and > mergers originally was that the debt service imposed a discipline on the > new company that allowed it to operate more efficiently, “doing more with > less.” There probably are examples of that actually happening, but there > are more examples of the company either choking on its debt and doing much > less with less, or getting sold off for parts. Maybe Zaz will have the last > laugh in 5 years, having squeezed the waste out of indulgent and lazy > creatives, running a film and TV company that makes lots of money off of a > bunch of small, sensible projects and a few big tentpoles, but for now it > looks to me more like in 5 years Zaz will be laughing not at how successful > these new companies he bought are, but at how much money he and his > accomplices were able to suck out of their dead or dying corpses. > -- > Sent from Gmail Mobile > > -- > You received this message because you are subscribed to the Google Groups > "TVorNotTV" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > To view this discussion on the web visit > https://groups.google.com/d/msgid/tvornottv/CAKGtkYJrDU2hzPFZAHo7GR8P%2Ba4gd4u%2B89dw44YummcZupCqSw%40mail.gmail.com > <https://groups.google.com/d/msgid/tvornottv/CAKGtkYJrDU2hzPFZAHo7GR8P%2Ba4gd4u%2B89dw44YummcZupCqSw%40mail.gmail.com?utm_medium=email&utm_source=footer> > . > -- Kevin M. 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