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Friday STATTS Are Here To Get You To The Workday Finish Line (8/6)

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Welcome to Friday Afternoon STATTS (Stories, Thoughts, and TikToks), a weekly column where you can kill a half hour on your way to a much happier hour. Last week, we dove headfirst into a nasty story of pool party haircuts and loose bro butts. This week, instead of putting another of my friends on blast, I figured we’d go in a different direction with our STATTS opening monologue and talk some entertainment business. Don’t worry, though, there’s still plenty of dirt to dish out. In some ways, maybe even more than a bachelor party.

When I say entertainment business, I mean all facets of media, from scripted, to digital, all the way to news (why ‘news’ has become entertainment is a conversation for a different day). Today’s talk, though, will be specifically focused on the business of consolidating talent, content, and brand structure. Because of the industry’s abrupt transition from traditional profit centers into streaming and digital releases, the conversation of consolidation rules every Hollywood dinner party at the moment.

Getting down to brass tacks of the media landscape might not be everyone’s cup of tea, and that’s fine. It’s a ruthless business with lots of unsavory characters angling for their piece of the pie. But seeing as this is a media-driven website, not to mention one that was recently purchased by FOX, one of the largest media companies in the world, I thought you may enjoy the perspective of someone who has actually seen how the sausage is made (movie & music sausage is slightly different than sports and pop culture reporting sausage, but it all ends up on the same grille at the end of the day). To be fair, there are so many moving parts right now in Hollywood, and so much private equity flowing into the sector, that it’s hard to keep up with all the nuances of the business. But I think having a decent understanding of how media gets made, and who stands to profit off of its varying iterations, is extremely important in this sensory overload era.

Understanding the content and media business means understanding how your information gets delivered, and more importantly, who stands to profit from your eyeballs. This stuff influences people in drastic ways, just look at superhero IP or the Star Wars universe. Knowing why a financial decision was made and who really makes decisions about information makes you an informed consumer. Hopefully savvy investors can gain a few nuggets of good info from my synopsis, but I think the information will also benefit anyone looking to gain a clearer vision of entertainment production in general. It’s a fantastic business to be in right now, if you have the stomach for it and can navigate the pitfalls.

Let me know in the comments (or email me outkicktommy@yahoo.com) if a bit of behind-the-scenes education is something you like sprinkled into your columns, or if we should keep it to fart jokes and hot chicks. Trust me, I have no problem scouring Instagram and telling war stories, if that’s what you prefer.

PART I

Control the narrative.

Vertical integration. Remember that term. It means controlling all of the delivery mechanisms needed to get a product to market, from origin to final sale. Why is vertical integration so desirable for business owners? Because when it works, you no longer have to buy from outside suppliers. In other words, you have total control over the fate of the product, and boy, do entertainment executives love to control things.

It’s a concept that matters in all businesses, but especially in creative ones, because the creators of content rarely (if ever) also control the money which finance their visions. This isn’t very newsworthy information—anyone who’s ever watched a documentary about making movies knows that the producers often spar with the studio—but what’s so fascinating is that this age-old song and dance is beginning to play out on a macro-level between entire businesses, not just creatives. In other words, the entertainment business is trying to move towards vertical integration (top-down control), even though the very nature of the business itself has always bucked that evolution and preferred a horizontal structure. This is why you often see multiple production companies, in addition to the studio, in the opening credits of films; creativity has always been a joint affair. The result? Massive amounts of money are being thrown around to basically flood all proven creative quantities out of their horizontal islands (where historically the most money was made in the film business, which explains why every actor also owns a production company) and into a few very well-funded towers of vertical control. I’ll give you one guess as to who has the juice, both financially and infrastructurally, to pull off this massive realignment of creative media.

If you guessed ‘big tech,’ then you’re half-right. Wall Street cohorts in the form of private equity technically make up the other half, but their end goals are slightly different. We’ll talk about that more as we go. For now, just know that private equity is typically interested in eventually selling to big tech or licensing to big tech, which means we can reasonably say that all roads lead to a few major players in Silicon Valley.

And why do tech companies/equity firms value entertainment IP so much right now (looking at you, Amazon, who just spent north of $8 billion to acquire MGM)? It’s not because the movie business is the safest or most lucrative business in the world. And it’s also not as much of an ego flex as you might think, i.e. living a lavish Hollywood life by producing movies. Remember, vertical integration. These big tech backers (and non-tech shops like Disney who are sorta kinda becoming a tech company by default) want to sell products and ad space at the end of the day, and they know that powerful streaming services give them the most curb appeal; and more importantly, the most control over their own visions.

A few savvy business owners saw the move toward verticality coming and decided to diversify their own companies themselves to include a wide array of products. Nashville native Reese Witherspoon recently made headlines for selling her company Hello Sunshine to faceless equity firm Blackrock for $900 million*, but she wasn’t bought out because she’s a movie star who will continue to make hit shows and flicks. In fact, her company owns very little of what they’ve made for the screen (another perk of vertical integration that studio executives love: owning what others make for them…an entire column could be dedicated to shady industry accounting for backend points and the lawsuits that ensue), and just turned their first profit this past year after five years of operations. So why did Blackrock value Hello Sunshine at nearly nine times projected 2021 revenue? Because Reese already vertically controls much of her other branches of the company, including podcasting, branding work, fashion, social media e-commerce, and the country’s most popular Oprah-esque book club. In other words, Blackrock paid for her entire mythical universe, not her ability to make a hit show.

(*The $900 million price tag is deceiving; it’s actually between $500 million and $600 million cash, which will fund operations and cash out early investors, including AT&T. The difference in reported price versus actual price, or about $400 million, is imputed equity that Hello Sunshine/Blackrock will roll into a new unnamed company meant to snag other producers, too. This new company is expected to have around $2 billion behind it. Basically, Reese and her team are only getting that ~$400M if they’re able to grow even larger and one day resell [this time probably to tech], or go public. Either way, that incentive is years away. The lesson? Don’t believe all headlines, even the straightforward ones.)

So now Blackrock owns and operates an A-list star with lots of irons in the fire, tons of media connections (two ex-Disney guys help her run the show, in addition to others), and even more money to throw at projects. Technically, Blackrock horizontally integrated to become a major media company (like big tech did over the last ten years by gobbling up all the little fishies), but now they have a significant seat at the table, and can proceed vertically in many ways from here on out. In essence, they’ve become a little bitesize tech giant themselves, even though they aren’t really into technology, yet. Definitely something to keep an eye on in the future.

As for the rest of the major players in media acquisition, it’s an arms race to secure talent and IP to multi-year deals; or just acquire them outright. Everything is moving to streaming, so everyone is having to adapt and become a streaming, i.e. technology, company as well. Why do you think FOX sold all of its film studio rights to Disney? They saw this reckoning coming, and decided that cash was more valuable than redefining their entire business model.

Hollywood agencies, the necessary evil of the entire industry, are talking out of both sides of their mouths, as per usual. On one hand, they will keep fighting for horizontal integration because they represent talent, and talent is hard to come by. On the other, the agency itself is also a valuable asset in many ways, unafraid (and maybe quite willing) to be gobbled up by a deep-pocketed vertical machine.

On the talent front, agents are fighting a losing battle; if not losing, perse, rapidly changing. A Hollywood power agent would argue that small production companies provide more value as an independent entity (unsurprising, because most agencies also have production arms now, as well), but proponents of consolidation like Hello Sunshine’s Kevin Mayer, the ex-Disney exec who had his fingers in lots of different pies over the years, would argue that the ‘whole’ is more powerful than the sum of the parts. Why? You guessed it, vertical integration. Mayer may have made a detour into independent producing by latching onto Hello Sunshine, but he’s a big company guy through and through, and knows that his bread is best buttered when he’s making deals to bring everyone under one roof.

Creative content producers typically make the splashy headlines, but distribution is the most important aspect to the entertainment business, which leaves creative businesses with a choice. Basically, execs like Mayer can either package their original content and sell to big tech, who for now is always buying, or…wait for it…acquire companies which specialize in international licensing. And who has the best licensing negotiators in the world? Hollywood power agencies, who both oppose vertical integration for their talent in one breath and secretly champion it when it comes to cashing in on their own services (Endeavor Content, the production arm of WME, is currently for sale as we speak). What a wild, wicked web this industry weaves, no?

There’s a glut of money floating around town right now, and a lot of content creators/producers/agents rushing to the bank to cash in on the impending streaming wars. This town is a weird mix of posturing, gossip, and cheerleading. Everyone is competing against each other, and yet high tides lift all boats. Everything is both real and fake at the same time. Reese Witherspoon may have set the market, but many more deals are in the pipeline, that I can assure you. Her enormous price tag both made competitors vomit and salivate simultaneously.

So there you have it, a small glimpse into the world of creating and procuring media for you, the consumer. A lot of this information is pretty obvious to anyone paying attention, but if you’ve never stopped to consider how all of these little industries overlap in Hollywood, it can be very eye-opening (and weirdly incestuous, as is much of Hollywood). It’s like modern day espionage, where the news media often gets used as a mouthpiece for very specific agendas to be leveraged in very specific circumstances.

So why write all of this? Because becoming a vigilant consumer matters in my opinion. How you soak up information matters, because much of it is purposefully created to create leverage. I don’t worry too much about OutKick’s demographic being swept away in salacious or misleading information, but much of the world is addicted to it. Teach your kids to read between the lines.

Let’s get back to the fun stuff.

PART II

Random STATTS

1. Hack of the week (of the century, really): Have wrinkled clothes but hate to iron? Don’t even own an iron? Spray the garment with some regular water just so it’s damp, and then throw in the dryer for fifteen minutes or so on high. I’ve even flicked a handful of water beads onto shirts and then dried; works fine. The final product won’t be as perfect as ironing, but it’s 90% better. You can also skip the spraying and just toss a very wet towel in the dryer with the wrinkled garment. It may take a few minutes longer, but works just as well.

2. Olympic story you may have missed: Ryan Crouser, standing at 6’7” 320 pounds, matched or broke the incumbent Olympic shotput record in EVERY one of his throws en route to a second straight Olympic gold. The giant redhead doesn’t look as burly or capable as the other competitors at first glance, but he absolutely wrecked shop once the bright lights came on. Turns out, Crouser’s skill in the field is a family affair, as his dad and two uncles were all successful throwers in their own rights back in the eighties.

3. Embarrassing story of the week: Reader Flounder from Knoxville writes, Love the STATTS, 6’0” 230 lbs (writer’s note: unit), your sh*tty story last week made me remember one of my own. My wife and I moved a couple years ago, and my wife’s dad helped me load the van. He’s the kind of guy who uncomfortably walks out of rooms when two movie characters start kissing. Anyways, we were loading the wife’s bedside chest of drawers and her vibrator starts going off like crazy. Not only that, but it was rattling on uncovered wood. Honestly, the horsepower on those things is pretty impressive.

4. Speaking of happy endings, I want to start compiling a list of movies and shows that nailed the landing. Basically, give me the exact opposite of Game of Thrones (I’m not even going to italicize the title; that’s how much it hurt me). We all know that good endings can make a bad show decent and a decent show good. They’re the reason I love horror movies so much: give me a good twist or satisfying conclusion to a horror movie, and it sticks with you for weeks. The debate probably works best for movies, given the contained arc of a single story. But occasionally television surprises me, too (most TV has to lean on nostalgia instead of good storytelling, considering that so many storylines have been weaved over the run of the show). Here’s a VERY quick list of a few that come to mind:

  • Pulp Fiction
  • Raiders
  • Breaking Bad
  • Se7en
  • Shawshank Redemption
  • The Wire

What are some others? This needs a deeper dive.

Snowflake' Channel 4 bosses CUT key Nazi face-melting scene from Raiders of  the Lost Ark | Daily Mail Online
Paramount Pictures

5. Dirty joke of the week: What’s the difference between a chickpea and a garbanzo bean? Nobody pays extra to have a garbanzo bean on their face.

6. Vintage bombshell of the week: She doesn’t really get remembered as such, but Kim Basinger was one of the most famous actresses of the 80s and 90s. She posed for Playboy in 1988, and never shied away from steamy scenes in her movies. The day we make the “Dad, I’m a man now” movie list, some of Kim’s early work will be on the masthead. She was basically Pamela Anderson but with a real body and real talent to match. Do yourself a favor, hop in the DeLorean and take a spin around 1992. Or if you feel like slumming it a little, 2002 8 Mile crackhead Basinger is also sexy in a K-Mart lingerie kind of way. Either way, you won’t be disappointed.

Kim Basinger - the younger years | Pictures | Pics | Express.co.uk
61 Kim Basinger Sexy Pictures Will Make You Skip A Heartbeat | CBG

7. Dad joke of the week: Did you hear the one about the constipated math teacher? He worked it out with a pencil.

8. Music video to get Friday lit:

I dare you to watch this video and not have a good time. This banger used to be required listening before hitting the bars at midnight in our primes. These days, I’m yawning by 9:30, but the song still kicks, even if I’m fast asleep by the time we used to be calling a cab. Plus, it gets you in the right mind for some late night snacking after your pickup lines fall flat.

9. Lib pretzel of the week: I’ve learned that the best and most fun way to mess with liberals is to play their exact game, but to an absurd degree. Let me explain.

Lately I’ve been telling everyone who will listen that my dog is a lesbian. Why? Because she likes to hump other girl dogs, has started pissing with a leg hiked up for special trees, and has a pretty thick neck. Apparently dogs do this sh*t all the time, regardless of gender or breed. They also roll around in the grass and eat cat poop. Why? Because they’re just dogs doing dumb dog things. But to the lib, all roads lead to subversion; nothing can ever be just funny. So knowing that, the key is to take that topical evidence, explain it to a lib in passing conversation, and then double down on the rhetoric, all the while keeping a very serious tone and straight face.

Yeah, she’s either a lesbian, or maybe non-binary. Then again, she could be transgender and just exploring her feelings. She really likes peeing on trees, so she also may be exploring pansexuality. Whatever she chooses, we’ll support her.

Spoiler alert: she chose to lick her own ass, because she’s a dog.

10. STATTS Book Club: In honor of Basinger’s steamy performance in L.A. Confidential, we’re headed straight to the source material for this week’s book club. Chances are, you either haven’t seen the movie or haven’t seen it in a long time, so go pick up a copy of the noir and enjoy with a fresh slate. The story of corruption and salacious yellow journalism in Hollywood also packs a punch in the form of a twist ending, so it checks that box, too. If you enjoy crime, character details, and sprawling events, you’ll love L.A. Confidential.

“L.A. Confidential is epic ‘noir,’ a crime novel of astonishing detail and scope written by the bestselling author of The Black Dahlia. A horrific mass murder invades the lives of victims and victimizers on both sides of the law. And three lawmen are caught in a deadly spiral, a nightmare that tests loyalty and courage, and offers no mercy, grants no survivors.”

PART III

TikTok Roundup: City Tikkers (1991) (volume up)

Marlin/Pnue dart gun | Great Lakes 4x4. The largest offroad forum in the  Midwest

What a takedown! I don’t know what this scumbag did to earn the wrath of US Marshals, but I would pay extra to see these busts as a PPV special. The ankle tackle, the flying leg kick, the rogue “shut up” at the end after threatening to blow his head off; it’s a scene straight out of Hell in a Cell. Plus, I can’t imagine how triggering this video must be for the ‘defund the police’ crowd, which makes me warmer than a happy hour whiskey sweater.

This reminds me, everyone should go on a police ride-along at least once in their life. It’s truly one of the most eye opening experiences you can have: by-and-large, cops deal with absolute losers having the worst day of their lives, all day every day. The patience to get through one smelly crackhead interaction is impressive, the ability to do it a hundred times per day as a career is unfathomable. Seriously, go sign up; you may even get to see a Stonecold Stunner if you’re lucky.

Solid Dad effort here. Shows a lot of old man intangibles that just can’t be coached. Traversing the watermelons like a damn spider monkey, looking for the perfect mix of size and freshness, is top quality. After all, everyone knows the best melons are the ones that don’t get poked and prodded all day on the fringes. But what’s really impressive is the pace at which he gets there, like he’s just been unleashed in Disney World front of the line and wants to catch every ride before the crowds start showing up. Great instincts all around. Just imagine this guy in the egg department.

Fellas, when the wife asks what you want for Christmas (141 days away, WTF), don’t go with new golf balls or a pair of slacks. This is what you want, the pinnacle of living. I mean look at this kid’s face, he’s absolutely loving life, ripping ass loud and proud as the good Lord intended. Not to mention he’s getting a nice mobility stretch in as well. Let’s be honest, nothing feels better than beating the bloat before bedtime. And hasn’t the wife been saying that she wants to do more activities together? It’s a win-win for everyone.

Thanks for stopping by, and hopefully you’re well on your way to a cold beer on this summer Friday. If you want to be featured, drop me a line at outkicktommy@yahoo.com or shoot me a message on Twitter @outkicktommy. Have a great weekend!

Written by TK Sanders

TK is a southerner who has lived on both coasts and definitely prefers sunshine to snow. A former entertainment executive in Los Angeles, he was run out of Hollywood for misgendering a director's dog, and is now forced to blog for a living. Breaking 80 will always be his number one goal in life.

Follow him on Twitter @outkicktommy.

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