Well, living through the last two weeks of news has shown that the pace of news in 2021 isn’t slowing down. The most notable story for entertainment–though it was pushed off the front page within 24 hours–has to be the Democratic Senate wins in Georgia last Tuesday. This week we’re seeing the ramifications of it in policy. So let’s make it the…
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Most Important Story of the Week – What the Georgia Election Could Mean for Hollywood
(A caveat before I start: this section is not trying to explain what should or shouldn’t happen in a Biden administration from a political standpoint. Meaning, I’m not advocating for or against any given policy, but merely trying to sketch out what could happen. So you can be prepared for what may come next. Whether you agree with those policies is up to you.)
To start, President-Elect Biden winning in November was itself a defining moment in the course of American history. I don’t subscribe to the school of thought that both parties are identical. They clearly have different perspectives on everything from regulation to taxes to unions. Switching out one party for another has a big impact on the conduct of business. When Biden won the presidency, that meant things would change.
However, if you’ve followed US politics for the last twelve or so years, it is clear that if a President’s party doesn’t have control over both chambers of Congress, then they can’t get much done. Given that control of the US Senate ended up in a stalemate in November, the question of how much Joe Biden could change was left open.
Then the Democrats took control of the Senate last Tuesday. And, frankly, now the potential impacts are even bigger. Lots of things that could be contested no longer are, including cabinet, judicial and regulatory appointments. Essentially, all the jobs required to run the executive and judiciary. And some things that weren’t possible now are. Like passing bills through budget reconciliation, which only requires a bare majority in the Senate. Democrats control the agenda in both legislative chambers. That itself is meaningful.
We’re already seeing the unleashing of Biden this week. For example:
– Biden appointed Gary Gensler as SEC chairman. Gensler is fairly progressive and was a tough regulator in the Obama administration. In a Republican controlled Senate, he may not have gotten approved. Now he will sail through.
– Biden announced a huge new stimulus bill. Specifically, $1.9 billion in additional stimulus. This will be targeted for both Covid-19 and just economic recovery. In a Republican controlled Senate, this bill would be dead on arrival.
So what happens to Hollywood in this environment? Is it good? Bad? Or somewhere in between?
Probably somewhere in between. And that starts with the idea that “Hollywood” is now fairly amorphous. In Los Angeles specifically, actors, celebrities and Hollywood power brokers love to host fundraising parties for big politicians. As a result, they have Democrat’s ears on a lot of issues.
Do their corporate leaders? Maybe. A few years back Hollywood tried to pass a suite of content protection legislation and Silicon Valley basically shot it down. So Hollywood influence isn’t without limits. And while Silicon Valley–which is now entwined with Hollywood–used to curry the same favor, they’re now enemy number one.
In all, we’ll have to see. A lot of positions remain unfilled in Biden’s team, and some of those decisions could definitely impact Hollywood for good or ill. But here are some ways that a unified Congress/Presidency could help or hurt Hollywood:
This is the biggest area. If Senator Mitch McConnell controlled the Senate, likely there would be no additional stimulus to the U.S. economy. Or it would have to be heavily negotiated and come nowhere near the price tags Biden wants. Given the general economic consensus that we need to drive to full-employment, and that means stimulus, this is good news for Hollywood. (In general, good economies are better than bad, though entertainment is somewhat recession proof.)
Responding to the virus is as important as repairing the economy. Winning control of the Senate likely won’t have as big an impact on this as simply taking over the Presidency. That said, if the Biden administration really does approve an extra $400 billion to fight the virus, that will supercharge efforts at vaccine distribution. (I’d toss in that even if America gets to 100% vaccination, the rest of the world will lag, and a true recovery will need to be global.)
Targeted Aid to Theaters.
The last stimulus contained some aid for independent theaters and concerts, but notably only smaller venues. Under intense lobbying, I could see bigger theater chains convincing lawmakers they need help as well. Again, good news for Hollywood in general.
Antitrust (Big Tech)
I’ve written about this a few times. So read those articles to get a flavor for how I think renewed antitrust could impact Hollywood. As for how the Senate changes this, it means that if Biden considers corporate consolidation a problem, he can appoint folks to the DoJ, FTC and FCC who take it much more seriously. If you are traditional Hollywood, part of you would love to see the big Tech Titans taken down a peg!
Antitrust (Old Hollywood)
But what if they come for the rest of the industries? There are hardly any two industries more reviled by customers than cable or cellular phones. Or more consolidated. The biggest risk for very consolidated industries is that antitrust fever spreads from the Big Tech Titans to cable, cellular and entertainment companies broadly. We still need to hear about the specific appointments before we make a judgement call. Depending on which company you are (the big or the small) this could be good or bad.
This is another wildcard area. There aren’t a lot of hot button policy issues that Democrats want to pursue, though net neutrality is one. The FCC also can regulate the size and consolidation of media companies, which relates to antitrust above. Make this a wildcard for now.
Labor power has ebbed over the last few decades in America. Entertainment is one of the few industries remaining with strong unions for its members. Biden has said he’s going to be the most “pro-union” president America has seen. If he’s successful, and his pick Marty Walsh can follow through as Secretary of Labor, this could be good for below-the-line and above-the-line talent in Hollywood. It would be bad for companies, since profit margins could be squeezed. A Democratic controlled Congress could also help by passing labor-friendly laws. That said, of all the areas I’ve discussed, this the one I’m most skeptical of. I’ll believe unions are making a comeback when they start to make a comeback.
Other Contenders for Most Important Story
Two weeks into 2021 and we’ve seen a new streamer launched, a new one announced and an old one shutting down. That’s right, a lot of other stories to get to.
AT&T is Shutting Down AT&T Now
In AT&T’s quest to confuse customers, it rebranded DirecTV Now a few years back as AT&T Now, while then launching a product called AT&T TV. DirecTV Now was one of the first vMVPD (digital cable bundle) to run the “start at a cheap price that rises dramatically” playbook. And it was punished the most harshly for this bait and switch. (Youtube TV and Hulu Live TV seemed to avoid quite as severe cord cutting.) Now, AT&T is shutting down AT&T Now.
Overall, the vMVPD market is fascinating. Customers desperately want cheap cable bundles. So they sign up for them in droves. When they go up in price, they drop them in droves. So bundles are good; expensive bundles are not.
Univision Launches a Streamer
While there are Spanish language streamers out there, there doesn’t seem to be one that dominates the market. (This is an area I’d love to research more.) Netflix obviously has lots of Spanish language content. And Peacock incorporates Telemundo into its offering. And there are smaller services that most English speakers haven’t heard of. But no one has dominated this market yet.
Which makes Univision’s new streamer a fascinating entrant and potential disruptor. One of my theories is that local content can rival Netflix if it is targeted to the local situation. Univision is about to test that thesis. Can they offer a more authentic experience to a targeted demographic than a service trying to be everything to everyone? We’ll see.
Netflix Announces a Big 2021 Film Slate
The widely repeated headline is that Netflix is planning to release a new film every weekend for 2021. Not to be that guy, but didn’t they already do this?
By my count, they’ve released more than a hundred films in 2019 and 2020. And nearly 100 in 2018. That’s why I made charts like these…
Of course, many of those films were documentaries or in other languages. So sure, maybe this is a change.
The challenge for Netflix’s film group, which I’ll write about more next week, is that for all the quantity Netflix has not delivered the quality. So looking at this slate, I can’t tell you if this new 2021 slate will dramatically improve Netflix’s fortunes or not. We’ll have to see.
Disneyland Cancels Annual Passes
Lastly, Disney announced that they are cancelling annual passports for Disneyland, and this news shocked me. These have been an institution for decades in southern California. So is this a good sign or a bad sign for their finances? Probably a good one.
A few things likely influenced Disney. First, the price tags are getting so high that the value proposition for an annual pass is no longer there. If you aren’t making customers happy, then it probably shouldn’t continue. (Not to mention actively antagonizing them with big price increases.) Second, with variable pricing, Disney thinks they can keep the parks at full capacity, and maximize the profits of a given day. If Southern California residents want to go for cheap, they can go in off-peak times of year.
Lastly, this may be some indication Disney sees upside in attendance this year, whenever parks reopen. Because there might be lots and lots of pent up demand. In other words, Disney may not need annual passports to keep parks at capacity.
Data of the Week – Nielsen in Growth of OTT Usage
Here’s a fascinating tidbit in Nielsen’s 2020 annual report on streaming:
Wouldn’t you have thought it was higher? I mean, the narrative in March was that everyone was streaming all the time now. But while viewership of TV went way up, streaming “only” took 3% of the usage.
By the way, if you want my take on Nielsen’s annual list, see this thread: