Their share of the profit suffers
Changes brought on by streaming leave producers anxious. They might unionize.
Earlier this summer Jeff Sagansky, veteran media executive and investor, delivered a veritable call to arms to producers and other creatives.
“The producer-studio bond … has been irrevocably broken,” he said at a TV producers convention in Miami, Deadline reported. “We are in a golden age of content production and the dark age of creative profit sharing.”
The June speech hit home for a lot of producers, including the incoming presidents of the Producers Guild of America.
“We feel the wellspring of the moment of producers feeling that we’ve lost this opportunity, and so I think we want to galvanize that feeling and see if we can make some changes,” Stephanie Allain, a former executive at 20th Century Fox and Columbia Pictures, told me in a recent interview.
Last month, Allain became the first Black woman to be president of the PGA, elected along with former Paramount Pictures President Donald De Line at the trade group’s annual mem
bership meeting.
The world of streaming is having what you would call in finance a correction, as my colleague Ryan Faughnder has reported in this newsletter recently.
Some background: As far back as 2019, my other Company Town colleagues Stephen Battaglio and Wendy Lee wrote about the disappearing profit-sharing model as traditional studios like Walt Disney adopted the streamer “cost plus” model.
And for a time, this model, which paid out the cost of the budget plus a fixed premium, has been lucrative for creators, including some producers.
Think of the Ryan Murphy and Shonda Rhimes mega Netflix deals, each reported to be worth hundreds of millions of dollars. Or Netflix spending a staggering $400 million for two sequels to Rian Johnson’s popular whodunit movie “Knives Out.”
But now streaming companies are in belt-tightening mode. Netflix laid off hundreds of workers after the industry leader experienced a slowdown in subscriber growth. Warner Bros. Discovery, and its HBO business, have shelved numerous film and TV shows and also slashed staff at its streaming platform HBO Max to cut costs.
“They have stopped buying our back-ends, particularly for producers,” said Travis Knox, an independent movie producer and associate professor at Chapman University.
In recent years, as streamers like Netflix pared back how much they will spend to buy out the back-end of films or TV shows, another reliable source of income — the box office bonus — has eroded along with theatrical attendance.
“Being the shepherd on projects and then losing out on what used to be the possibility of compensation by not having a back end ... it’s just kind of antithetical to what we do,” Allain said.
Streaming platforms typically don’t share viewing data with producers, making it hard for them to determine how well their movies or TV shows performed.
Unlike their director, writer or actor colleagues, producers don’t have a union that can negotiate how they are compensated or secure healthcare and pension benefits on their behalf.
That could change. A group of producers has taken steps to form a union, which so far has had its constitution ratified by about 100 producers. They are working to establish their Producers Union ultimately as a bargaining group.
“We’re not trying to buy multiple houses,” Effie T. Brown, a supporter of the union effort, told me last year. “I just don’t want to be poor. I want to be able to put gas in my car.”
More than 50% of producers don’t see any back-end compensation, and over twothirds have been asked to defer fees on more than two projects, according to a study by the nascent union conducted last year of 550 U.S.based feature film and documentary producers.
Over half of those who answered the survey earned $25,000 or less from producing in 2020, compared with 41% in 2019, and most said producing was not a sustainable career.
“There’s two versions of people who are a little frustrated right now with the situation: One is making a whole lot less than what they used to make, but they’re still making money, and then there are people who continue to be asked to make and produce movies for not even minimum wage,” said Chris Moore, treasurer of the Producers Union and a producer of the hit movies “Good Will Hunting” and “American Pie.” “And so both of those things are bad for producers at the moment.”
Moore is not as optimistic as some that powerful streamers like Apple and
Netflix are going to give third parties the necessary internal data to accurately measure profit-sharing deals, when payments are made after distribution and production costs are recovered.
“I think what will start happening is producers will have to start renegotiating deals from a position of leverage,” Moore said. “But unfortunately, the leverage is still really going to be your relationship to talent and your relationship to the intellectual property.”
But Knox believes studios may be more open to sharing back-end profits with producers as they move toward ad-based tiers and minimize their exposure to costly movies that may misfire.
“The problem is the producers will never have the power to demand it on their own,” Knox said. “But directors and actors and showrunners — they will. So once it becomes the norm to them, producers can jump on board as well.”
This article is taken from the Sept. 6 edition of the Wide Shot, a weekly newsletter about everything happening in the business of entertainment. Sign up at latimes.com/newsletters.