Most Important Story of the Week and Other Good Reads – 21 June 2019: Overall Deals…Explained!

Here’s a fun factoid about the news:

JJ Abrams hasn’t actually closed his deal with Warner Media for $500 million.

By the news coverage I read, I assumed he had. And by coverage, of course, I mean Twitter and Linked-In headlines. It’s only when you read Lesley Goldberg’s actual story that you find out that the deal is in “final negotiations”, not actually signed, sealed and delivered. Still, let’s call it 94% that it happens, so the biggest piece on the showrunner chess board has been officially removed, so it’s my….

Most Important Story of the Week – JJ Abrams/Bad Robot Land at Warners Bros.

Like a giant NBA trade—cough Lakers cough Anthony Davis cough—everyone wants to immediately determine if this free agent signing was a good deal.

Unfortunately, I can’t tell you that.

Someday, I hope to evaluate all these deals like a Zach Lowe of entertainment business, but we’re currently at an information deficit. Consider what we don’t know about the deal…

Length?

Type of projects included?

First look or true overall?

Overhead paid?

Fees for TV and Movies?

That’s a lot to not know! And while I’d love to trot out my POCD framework for all overall deals—it’s a pretty flexible framework and it fits easily here too—we just can’t determine if the price was too high without knowing what they’re paying for. Then, on the TV Top Five podcast, Lesley Goldberg even admits that the $500 million is really just an estimate.

(Here’s a good summary of who has overall and first look deals and with whom, but not price tags, lengths or type of deal by Variety. And it’s from 2018.)

Instead, I think there is still a lot of confusion about overall deals in general. So today I’m providing a mini-explainer on the key pieces of an overall deal, and how they can impact the bottom line. Let’s start with the “what” you get in an overall deal, because it differs.

The Differences between Showrunners, Creators, Executive Producers and Development Executives

Have you ever looked at Steven Spielberg’s IMDb page? Here’s his IMDb clip for just producing for 2019 and beyond:

Screen Shot 2019-06-20 at 9.01.03 AM

Holy cow. Here’s one of the showrunners of Game of Thrones for comparison, David Benioff, for his entire producing career:

Screen Shot 2019-06-20 at 9.02.34 AM

Those two IMDb extremes capture the range of participation in a producing/overall deal. On one end of the spectrum, you have the showrunner, who is in the trenches everyday ensuring the writing gets done and the product is great. Benioff & Weiss, Michelle and Robert King’s on The Good Wife and Vince Gilligan on Breaking Bad are examples of this.

On the other end of the spectrum are famous producers who lend their name as “executive producers” to a whole host of projects. Spielberg, Ridley Scott, and the emerging Jordan Peele are all examples of famous directors who still make movies, but find time to attach their names to a host of projects as executive producers.

Understanding the differences in these titles and roles explains a lot of the value a creative can add to the final TV or film project, meaning it’s likelihood to succeed. Which reminds me of my “creative to business” spectrum. The less involved the showrunners are, the more “business” they become, and hence less value they add to the ultimate quality.Creative vs Biz SpectrumSo here are the definitions keeping that in mind:

Showrunners – A showrunner is the person who runs the day-to-day operations of a TV series. This includes managing the writing of the series–either supervising the writer’s room, or sometimes by writing all the episodes–overseeing day-to-day production, sometimes hiring of directors, and producing the show.

Value – Immense, but limited in output (about one show/film a year)

Creator – Usually, a showrunner is a creator of a given TV series. But commonly, some of the great TV showrunners launch a TV series as the creator, but then pass day-to-day showrunning to another writer, while continuing  as an executive producer. The epically prolific Greg Berlanti follows this framework. He has creator credit on most of his shows, but in many cases hasn’t written an episode in years. Shonda Rhimes also fits this mold, though with her and Ryan Murphy I don’t know their day-to-day involvement in all their shows.

Value – Big, and potentially for multiple show launches simultaneously.

Producer/Executive Producer – These are the fuzziest terms in the list of definitions I’ll give you. For this reason, the Producers Guild of America has actually worked to define the roles of producers on TV series to try to limit the list of people being called producers who aren’t actually producing something. To get the “p.g.a.” after your name on a project, you actually have to be heavily involved making a show or movie happen.

This is opposed to “executive producers”, which means an executive who oversees a project. Again, look at that Spielberg list of projects. Is he really reading the scripts of all those projects? Add the fact that some top tier actors and directors insist on EP credit (with bonus producer payments), then the value of an EP ranges from vital to totally unnecessary.

Value – A huge range, but mostly little value added to final project, besides increasing odds of initial greenlight.

Development Executives – The development executive is the person at the studio who helps pick out and shepherd projects from pitch to pilot to series and beyond. But you don’t give overall deals to development executives, so why are they included? Because the difference between a development executive and many executive producers is just a matter of perspective. In some of these overall deals, they’re really just elevated development executives.

Value – Great development execs are worth their weight in bitcoin; the rest are average, meaning interchangeable.

Additionally, some overall deals are with directors who can direct projects, but everyone knows what a director does.

When you ask, “Is the JJ Abrams deal a good deal?”, the question should be, “To do what?” How many movies is he directing? How many shows is he creating? How many is he writing? How many will he just EP and slap his name on it? I don’t know, but then it begs the next question: does Warner Bros own these projects, or just get the first look?

The Difference Between a First Look Deal and an Overall Deal

In a few articles, I saw the summary of Goldberg’s reporting as “Warner Bros will have a first look” at Bad Robot’s projects. But the initial reporting doesn’t back that up all. Frankly, we don’t know one if this is this an overall deal or a first look deal. What’s the difference?

Well, an overall deal is like EXTREMELY well-paid indentured servitude for a creator. For a true overall deal, you get all of a person’s work and they only work for you. And you sell all their stuff to the town. If they aren’t busy, you find work for them.

A first look deal, on the other hand, just means for new projects you have to give the studio the first bite at the apple. They’ll come in, pitch the studio a TV show, and if the studio doesn’t like it, they can take it somewhere else. But the studio still pays them an annual fee for the privilege to get pitched first. (And you still try to buy their stuff to make the deal worthwhile.)

If the Abrams deal isn’t a true overall deal, I’d be stunned at the current price tag. But Abrams had an overall movie deal with Paramount and he, um, still went to Disney to make Star Wars. So even for indentured servitude, you have some flexibility. Again, we’d have to see the contract to know for sure.

What is the current hit rate of huge overall deals?

I have no idea. I want to dig into that a lot more, but need a lot more data, and this isn’t the type of thing consolidated in one place (that I know of). Moreover, as the deals have expanded and gotten bigger, we need to reevaluate. Top it off with the fact that Netflix isn’t giving us data, and we’ll have to extrapolate a lot.

That said, my gut is that some of the EP deals are likely huge overpays, while some creators don’t have a true success rate above average. Further, when looking at the “biggest shows”, they usually come from unexpected places. I mean, Benioff & Weiss were unknowns before Game of Thrones. Same with the creators of The Sopranos, Breaking Bad and Mad Men. The counters to this is Chuck Lorre, Greg Berlanti and Shonda Rhimes. They’ve had multiple hit shows. The final result for the hit rate is we just don’t know.

Why have the prices gone up?

Netflix! (There, I handled my obligatory Netflix mention in the weekly column. I’ll have more.)

As Netflix shifted into making “wholly-owned” series, they needed writers to write them. That meant poaching top talent when they became available. Like any arms race, each side responded in kind, and you can pretty easily make a list of top creators who’ve signed huge deals (or renewals) in recent years. Netflix grabbed Ryan Murphy for $300 million per year and Shonda Rhimes for $150 million. Amazon grabbed Lisa Joy & Jonah Nolan and Jordan Peele on first look deals. So Warner Bros responded by reupping Greg Berlanti for $400 and now JJ Abrams too. And Viacom grabbed Tyler Perry. And so on.

Even though I said earlier the biggest piece was off the board, like the sports analogy that started this, well free agents will keep popping up for renewal. David Benioff and D.B. Weiss are up next and even Chuck Lorre will need to get resigned next year.

(One point on the “people” portion of POCD and these overall deals. It does amaze me that of all the people J.J. Abrams interviewed for the head of his production company the most qualified person ended up being…his wife. How very convenient. Who says Hollywood isn’t a meritocracy.)

Other Contenders For Most Important Story

Since I’m going long, I’ll need to be quick with these other topics.

FuboTV gets a deal with Discovery (and Scripps)

This is one of those deals I’d love to see the term sheet on to see how digital AVOD are negotiating. But if you’re Discovery looking to survive in an OTT world, joining the AVOD world makes sense. Whenever someone wins the AVOD/FAST shakeout, you’ll just start asking for retransmission fees.

WGA Rejects Another Talent Agent Deal

Meanwhile, the WGA not-strike/firing-their-agents drags on. I like the WGA’s strategy here to split the agencies off one at a time.

ICYMI – Athletic Director U – Are College Baseball and Softball the NCAA’s Best Bets for Growth?

I’ve started a new series–about one article per month–at Athletic Director U looking at revenue opportunities for college athletics. I start by asking, “What about college baseball and softball?” Check it out.

Lots of News with No News – Many More Datecdotes (Leaked Ratings)

Here’s what we didn’t “learn” in the last week:

We don’t know how long viewers watch SnapChat originals.

We don’t know how many people watched Adam Sandler’s previous movies. (Maybe Jenifer Aniston is the draw?)

We don’t know how many people watch HBO’s Euphoria on-demand, but HBO says a lot.

– We don’t know how well You’ll Always Be My Maybe, The Central Park Five documentary, Too Old to Die Young, Good Omens and tons of other shows released on streaming have done.

Contrary to some people online, I really do believe that some data is worse than no data. For two reasons.

First, the scientific method. The best source of truth in the world is the scientific method, which means setting a hypothesis, gathering all the data and testing it. You can’t test hypotheses with incomplete data sets. Garbage in, garbage out. Netflix is releasing a fraction of data with no context, which means we can’t use the data to make decisions, account for correlations and context or really judge success. Not with any certainty.

Second, the availability heuristic. By only giving high case examples, when you think Netflix, you only think success. Meanwhile, for network shows, we have every single data point every week, with an emphasis on the bombs and duds. Same for the box office with its weekly results. If you’ve read the work of Kahneman and Tversky, you know this effect is very real. So yes, some rigged data points can help us make bad decisions. (This goes especially for investors.)

Meanwhile, another high budget Netflix show, Chambers–that many had never heard of —didn’t make it to a second season. With Marco Polo, Maniac, The Get Down, I think Netflix’s big budget TV shows have a fairly low hit rate. Moreover, that’s the type of data point that would help refute the Netflix narrative of inevitable success on every project.

Data of the Week – TV Long View!!!

I just discovered Rick Porter’s TV Long View column. Where have you been in my life? This is a great feature that provides a ton of data context. Sample his latest column that shows that, despite declines, broadcast still drives higher viewership than most cable series.

Listen of the Week – Planet Money “Are Cities Overrated?”

This is a great read for challenging a piece of conventional wisdom that cities are good for anyone who moves to them. The true situation might surprise you. Take a listen.

(Bonus listen is KCRW’s Martini Shot on “Flywheels”, since it is a call back to this Twitter thread on me musing on “flywheels”.)

Long Read of the Week – CJR Debunks a Bad NY Times Headline

I’ll admit, I saw the original New York Times headline and was all in on it. I even almost tweeted it. Then Mathew Ingram from Columbia Journalism Review digs into the references and the headline is hardly supported by the study underneath. It’s actually just bad math from an industry trade group. (Hat tip to Todd Spangler for the initial article.)  A great example of why you should always interrogate the data.

  1. […] Is little Netflix data worse than no data? I’d argue yes, because it skews our perspective because of the “availability heuristic”, a concept pioneered by behavioral economists Kahneman and Tversky. Here’s the Wikipedia article, and my key quote from a few weeks back I’ve been sharing repeatedly: […]

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