A warning on streaming deals
UTA’s Jeremy Zimmer says compensation of talent falls short and a reckoning looms.
Jeremy Zimmer is on a mission.
The chief executive of Hollywood’s third-largest talent agency, UTA, wants to see a new deal with streaming services.
Studios are in crisis mode, slashing costs, yanking shows and laying off hundreds of workers in a desperate effort to boost profits and justify massive investments in streaming. Meanwhile, writers, directors and actors are increasingly agitated about dramatic changes in how they are being compensated and the lack of transparency from streaming platforms.
Zimmer believes the time is now to reexamine how talent is compensated, whether that means sharing in ad revenue or getting a share of back-end profits when shows become hits and make money in secondary markets.
“For the last year, there’s been a lot of people across the industry understandably really concerned,” Zimmer said. “Now we’re at a place where we can start having conversations around what are the solutions to get out of this? Cost cutting is rarely a solution that leads to growth.”
In a wide-ranging interview, Zimmer discussed the challenges facing the streaming industry, the strong likelihood of a writers’ strike and how a headon collision might be avoided through betterstructured deals. He also addressed the changing environment for talent agencies and how UTA is expanding its reach in literary representation, digital media and other areas outside the core film and TV business.
Below are excerpts from conversations with Zimmer and UTA President David Kramer, which have been edited for brevity and clarity.
We’ve seen a wave of show cancellations at Netflix, HBO Max and other streamers. How has this affected you and your clients?
Zimmer: Any time that an artist has a show canceled, particularly in an abrupt or preemptory manner, it’s really distressing. They’re hurt. They’re insulted. They feel like they weren’t given a chance. But it also shows the tremendous economic strain that these companies are under. They had so much growth for so long and everything was going great and then suddenly [the environment changed] and it’s like, “whoa.” So instead of, “How are we more thoughtful, how do we rearrange the economic relationships with artists?” it’s “Oh, my God, we’ve got to throw shows away and fire people,” and so on.
I’m hoping that constituents in our business wake up and go, “Wait a minute. Are there more thoughtful, intelligent ways for us to pursue our business?”
Jeremy, you’ve written an op-ed and spoken out about exploring changing the structure of deals between talent and streaming ser vices. What do you think needs to change?
Zimmer: There’s a lot of conversation going on now about how do the deal structures evolve. How do we create more risk-sharing among talent, producers and streamers? How do we create additional revenue streams for the financiers of the content, so they’re not a one-source economy, where the only way that you make money is to sell subscriptions? Now, Netflix will start to sell ads, and beyond that we’ll start to see the streamers selling their content to other broadcasters. It’ll allow artists to share in [the] success, because the most successful shows will sell for the most money in a secondary market. And suddenly, we’ll all be talking about a business that makes sense.
Kramer: My hope is that we get to a place where [it’s] more of a partnership with some of our buyers in terms of transparency around who’s watching what and how the clients participate in that, versus the system that was set up not too long ago with a lot of these companies buying out the back end [profits].
When we started with Netflix, they were the only game in town that did this. Now, most of the big companies do this. [They said], “We’re not going to do ads, now we are doing ads.” We’re going to see companies like Warner Bros. Discovery announcing their deal with Amazon and having a bunch of their product in France on the Amazon platform. So how do the artists participate in that? I think that’s really important to figure out.
How receptive have the streamers been to changing how deals are structured?
Kramer: There’s more and more of these conversations today than before, probably because of what we saw happen during the pandemic, [when] things were getting flipped from theatrical to streaming and all of a sudden you saw streamers changing their approach. So I feel like
they’re getting more receptive to it. We’re not done.
There is rising frustration among talent that they aren’t fairly sharing in streaming profits, which is fueling labor tensions. What’s the likelihood of a writers’ strike this year?
Zimmer: I think there’s a very good [chance] of a strike, and really what the complaint comes down to is, if you’re a writer, it used to be that a television show would have eight, nine or 10 people on a staff . They’d be paid on an episodic basis for 24 episodes over a 40-week schedule. And now, they’re working on eight episodes being paid on an episodic basis, [and] there’s only three or so [writers] on the staff. It’s really impacted their ability to make a living while the cost of living has gone up tremendously.
As much as streaming was great because there were so many more shows and you could make a lot bigger variety of shows, there was more creative freedom and there was less scrutiny in terms of ratings, for the day-to-day writer it’s not nearly as good a living as it used to be. I think that is a legitimate concern.
So is a strike inevitable?
Zimmer: I’m not a believer in “Oh, you have to have a strike.” The way that this has been set up and the way collective bargaining seems to work is it becomes this sort of very acrimonious battle and there’s good guys and bad guys. It seems like we all have the same interests at heart. If we can
pierce through to [address] the adjustments we all need to make this work for everyone, things tend to get solved that way.
Where will writers get the potential additional revenue? From advertising?
Zimmer: There could be the ad revenue, or there could just be a different kind of allocation in terms of how much the overall budget of the show is and where does that money go. The money ultimately usually comes from the revenue or the budget. It’s not that hard to figure out and we’ve got to create a fair living wage for our writers.
What is your agency doing to prepare for a potential strike?
Zimmer: We’re working as aggressively as we can with our clients to find our clients opportunities to help get things done, get things written and get deals closed so writers can start writing and get work in. Right now, there’s not much we can do other than really try to be of service to our writers, directors, actors who really want to work before the strike.
Are studios making preparations for a walkout?
Kramer: I am starting to hear that some of the companies are trying to look at the calendar for when they’d be in production and when they can’t be in production, given they don’t want to be in the middle of production when a strike hits.
It’s been a challenging period for agencies, with shutdowns caused by the pandemic, the fight with the Writers Guild of America over packaging fees and changes brought by streaming. What do you see as major challenges ahead and where the industry is headed?
Zimmer: The outcome of the potential writers’ strike I think is a challenge. Inflation is a major challenge to the agencies because even though our revenues have grown and continue to be strong, the cost of running a business — any business — has gone up significantly. The cost of making a television show has gone up dramatically.
[But] there will only be more ways and more avenues of opportunity for us to pursue. We would have never thought of being in the esports business a few years ago. That’s a very fast-growing area for us. None of us could have foreseen the power of digital talent five or 10 years ago. The growth of the streaming business is a giant thing and that has endured beneficially to our clients in a tremendous way.
UTA is the third-largest agency behind Creative Artists Agency and WME. As your rivals grow bigger, how do you compete?
Zimmer: We’re not, like, waking up every day going, “We’ve got to get bigger.” We’re waking up every day saying, “We’ve got to be better.” We’ve got to consistently evolve and pay attention to what’s changing in the marketplace and how those changes are going to affect our clients, and I think that’s really what makes us as successful as we are and why we have the place we have in the marketplace.
What are the biggest growth areas for UTA?
Zimmer: Our sports business and our music business are going to continue to grow significantly in 2023. We’ve had [an] amazing partnership and growth with Klutch Sports and we’ve had incredible growth in our music business. A lot of our digitally native businesses, whether it’s digital talent or esports or DBA (Digital Brand Architects), our beauty and lifestyle management company, are also going to grow dramatically.
Like other agencies, you’ve been expanding, acquiring five companies since 2021 including U.K.-based literary and talent agency Curtis Brown Group and most recently literary management firm Fletcher & Co. What was the rationale for that acquisition and what else are you looking to buy?
Zimmer: Fletcher & Co. is a great business. Christy Fletcher’s an incredible agent. She’s got an amazing roster of authors and at the heart of everything has great ideas and IP (intellectual property). Popular IP is frequently the source of great projects, great movies, great television series. More central to that — people still love to read books.
Our platforms are changing, so it requires more imagination. We have to figure out where is the world going and what potential acquisitions are out there that could really be of value to us as the world continues to change. We’re certainly looking to grow our sports business [and] for smart opportunities in music.
Following the murder of George Floyd in 2020, several studios and agencies vowed to push for greater diversity. Still, only one of the top firms — WME owner Endeavor — has released companywide diversity figures. Why hasn’t UTA done the same?
Zimmer: I don’t feel that it’s my job or responsibility or obligation to release figures to people. My business is to run my business in a way that I think is right and fair and the best thing for my people. I think we’re doing that and I feel very comfortable with where we are. Diversity is a really important initiative at United Talent Agency. I’m really proud of the work we’re doing here and we’re gonna continue to do that work.
Can you give any examples of the steps you’ve taken?
Zimmer: DEI [diversity, equity and inclusion] is an area of long-term investment for us that includes focusing on the success and advancement of our people. We have ongoing programs around onboarding, mentorship and education.