Industry Insider: The Best & Worst of Hollywood’s Financial Decisions
2023 was a divisive year for the business of entertainment. The historical and financial significance of both the Stage Actors Guild (SAG)-AFTRA and Writers Guild Association (WGA) strikes created monumental effects in the industry. Films and Series alike made impactful waves as well, this past summer of the Barbenhemier extravaganza should be summation alone. Yet, the financial market had seen better when looking at the second half of this year. So, the final Hot Set of this year will revise each media aspect and assign the ‘best’ and ‘worst’ moments for each.
To begin, media conglomerates this year have stayed afloat throughout the year. Some quarters delivered better performance from high-yield assets than others. Some conglomerates progressed past the pitfalls and demonstrated a prepared financial plan to correspond with the market’s testy waters.
2023 Earnings
The Best: Warner Brothers Discovery’s catalog for 2023 was full of excitement even without immediate access to their talent to maintain the consistency of the marketing experience. The Barbie movie dominated the box office during the summer months and drew in the highest profit of WBD property this year. This was a large reason for the 3 percent increase in studio revenue. During the last quarter alone the company had profited $2 billion in free cash flow. About that, WBD has stressed intentions for the upcoming year toward their Max platform. As Max expands, the subscriber base will inevitably see a greater pushback in the streaming realm with emphasis on these final weeks as Barbie has also been released on the platform.
Honorable Mentions: AMC is a company that saw exponential growth directly from the success at the studios across the board. There was hardly a hit for the financial capital at AMC as there was largely advancement to their consumer base. The overall gross equity rounded out to $325.5 million for the third quarter. The third quarter enhanced the significance of AMC’s stable by 30 percent in tickets sold for the quarter. In the words of Adam Aron (CEO), the third quarter alone was some of the best numbers the company has seen in its history. Therefore about that expression and value AMC would have also been a prominent contender for having the best financial year in entertainment.
The Worst: Vimeo has positioned itself as an interactive video-sharing site for the majority of its existence. Although this model is one of the company’s highest priorities, it has also left Vimeo in a compromising position. Subscribers to their highly marketed self-serving add-ons were reduced by 9 percent year-over-year. Of course, with such a negative impact affecting the brand the financial components would reflect the adjusted EBITDA of $13 million in its most recent quarter.
It would be immensely difficult to present the worst and best on the entertainment market as a whole by reducing conglomerates to their market profits from a financially finicky year as the WGA faced an eventually complicated battle that lasted 148 days. The strike initially began due to the lack of compromise between the AMPTP and the WGA for an increase in residual percentage and protection against AI among other issues. So, when an agreement was settled upon in September of 2023 there would be good, bad, and ugly on both ends of the bargaining bench.
Union Deals
Markus Spiske
The Best: The residual compensation for writers has exceptionally increased as it is now written that writers will receive 50 percent of their initial pay for the viewership and runtime. This was a specifically new addition to the breakdown of residual payment. However, this payout would only be in effect if 20 percent of the platform’s domestic subscriber audience were to re-watch the media within the same 90 days.
While the AMPTP had to concede on the A.I. training tools to use as a revision tool. A.I. As it stands, this deal is meant to be up to the individual writer’s discretion on when and how A.I. is used. And, if a writer is given an A.I. generated script then the writer will be compensated at a full rate with writing credits. This was a major bargaining chip that the writers used to their advantage to allow a tentative deal to be positioned in front of WGA members.
The Worst: Another demand that the WGA was looking forward to was the transparency of streaming data. This fell slightly flat as the deal seemingly dodged this point by claiming that streaming platforms would release this data to the guild regarding self-produced high-budget projects. The guild will then have to share the information in aggregation, and it is still yet to be defined the terms of this aggregation. Since the information is not fully transparent to the guild member directly it would appear that this was not a point that the studios were willing to move on.
Of course, the WGA was simply the beginning of prioritizing the union and the need to readjust the details of the industry’s features. As widely known, SAG-AFTRA followed shortly behind on July 14th this year. SAG-AFTRA had a very similar agenda to the WGA and chose to stand in solidarity against the AMPTP’s intentions for the future of entertainers. The SAG strike lasted 118 days, with both parties conceding on November 9. The proposed contract would last 3 years but this would set a new standard in future negotiations. Yet, there has been intense discourse on the first draft of the proposal brought to the members of the acting association.
The Best: The best part of this deal for the studios was the usage of Artificial Intelligence (AI.) As A.I. tools become a larger part of development; the studios argue that it will make for an easier process to fine-tune. This would include the actor’s image, likeness, and voice. This will be a consent-based process that differs from the production to post-production aspects, so here is where SAG seemingly caved on one of its primary issues.
However, the actors weren’t entirely at a loss when it came to this tentative deal. There were significant strides for pay raises in the minimum wage for projects across the board. All performers will receive an initial 7 percent increase with an added 4 percent in July 2024 and another 3.5 percent in July 2025. This deal was also extended to background performers as well. An 11 percent wage increase began after the agreement was finalized with the same increases in 2024 and 2025 to look forward to.
The Worst: The worst of the deals seem to fall onto that of the responsibility of the individual actor. Specifically, that of which concerns the A.I. features detailed within the agreement. Yet the component that SAG was not able to meaningful change in would be the residual configurations. Each format that the residuals compensation covered was slightly increased by an additional $1,000 to $2.000 from its original base.
The worst of this deal for the AMPTP came in the form of transparency disclosures. It is now a requirement that streaming platforms will need to share viewership data quarterly. This was something that many studios were against as seen above in the breakdown of the WGA determination. However, actors will have this information to use for future negotiations of their salaries moving forward to other projects.
While the strikes held impactful weight to the industry and occupied much of that space throughout the year; there were major events taking place behind the scenes as well. There were also major buying efforts from viable executives in the space for a tempting asset currently owned by the Walt Disney Company. Aiming for such highly targeted capital would amplify any portfolio of the individual that will eventually obtain it. For a while, there has been one person who has been biding their time and demonstrating a sense of tact for the process the cable network has been under. Here at A Hot Set, this would qualify this CEO as an Executive on the move and that title would belong to Byron Allen.
Executive On The Move
Bryon Allen - ALLEN MEDIA GROUP
Byron Allen was among those contenders who were attempting to develop ABC’s brand while returning the cable network to its roots. Throughout 2023 the CEO of Allen Media Group has spoken with media outlets regarding the bid and claimed that he would be the most qualified of those that are interested. One of his main reasons was that he had purchased linear channels previously and had a bright sense of the advertisement market considering the nature of his company’s mastery. Byron also put down a $10 billion bid at the time about his assessment of the asset’s value.
Now, in the final hours of 2023, there has been an update to this ongoing sale. Specifically, regarding his bid made earlier this year for the BET network currently held under Viacom. Byron’s initial offer for BET started at $2.7 billion yet the recent resubmit increased the amount to $3.5 billion. This was after he learned that there were movements to the network to a management investor group as Paramount began discussion with WBD about a potential merger.
2023 has exhibited a monumental transformation in the entertainment sphere. Much of the discussion isn’t centered on one facet of this ecosystem. Instead, the rippling effect that one action has on the rest of society has revealed a sense of fragility and codependence that wasn’t seen before. Of course, the system can’t collapse overnight but it wouldn’t be true that the results would be the same without the fabrics holding it together. There is an overwhelming idea that the public is on the brink of a renaissance to redefine the structural basis of day-to-day living. So, this rebellion from creators, advertisers, and the larger conglomerates to consolidate will more than likely bleed into the new year. These developments are potentially only the beginning as the rest of civilization grows from this restrictive state.
