The defining film industry events in 2017 — the revelation of sexual assault allegations against Harvey Weinstein and Disney’s $50-plus billion acquisition of most Fox assets – will continue to be the dominant narratives of 2018. The two are only related in the long-term ripple effect each will have on the movie business, but it was interesting that in the 15 or so conversations with top industry players/prognosticators, I came away thinking it might be easier to hear a good word about Weinstein than about the Disney-Fox deal. At least Weinstein’s downfall will mean a safer workplace for women as the industry heads for zero tolerance of men who took advantage of their position as gatekeepers to the dream factory and used it to exercise sordid agendas against ambitious young women and men. Forget all the Oscars; this will be Weinstein’s lingering legacy.
Which Media M&A Dance Partners Will Hook Up In 2018?
The Disney-Fox deal is widely being viewed as the death of a vibrant major studio at a time when the community can’t afford to lose one. Now, Rupert Murdoch had every right to sell the studio he built and Bob Iger will burnish his reputation as arguably the most successful and forward-thinking media company CEOs in Hollywood history. But most everyone else in town looks at the deal as overkill; the combined entities will be a colossus that basically takes one major studio off the board and forces rivals to seriously consider consolidation as a means for survival.
One of the prime reasons given for the Disney deal was that it would fortify that studio against the expected encroachment by visionary tech companies like Apple, Facebook, YouTube, Amazon and Microsoft, likely with configurations that will stress digital distribution to complement traditional theatrical releases. Netflix’s global streaming success, initially built on library titles from the very studios now on their heels, has gotten it a multibillion-dollar Wall Street valuation, and it has what might be an insurmountable head start in building a global constituency that enables it to spend billions more creating original film and television content as rival studios pull away their library titles.
If that rationale behind Disney-Fox is true, how can studios like Sony, Paramount, Lionsgate and MGM stand pat and Warner Bros stand still waiting for an AT&T linkup that the Trump administration is suing to stop, when Disney was already the studio best fortified to withstand this expected onslaught? The short answer — they can’t — is the collective opinion of the sources I spoke to.
Is NBCUniversal big enough? Will Shari and Sumner Redstone revisit an effort to reunite Viacom/Paramount with CBS? Those plans proved difficult because Viacom’s stock value plummeted under Philippe Dauman and his strategy of cost-cutting and stock buybacks; sources in the financial community said it would have led to reams of lawsuits by CBS institutional stockholders who wanted no part of a company whose film fortunes plummeted and whose cable networks lost their mojo as Viacom jettisoned DreamWorks and passed on acquisitions of Marvel and Lucasfilm, at a time when Disney had the nerve to buy both Marvel and Lucasfilm and Universal bought DreamWorks Animation. Will Sony, Lionsgate and MGM stay as they are?
Also, if Disney-Fox is such a trailblazing deal that will promulgate the same kind of long-term, industry-changing implications as Weinstein’s downfall, why is impossible to find anyone outside the Disney kingdom who thinks this mashup between the Mouse and Fox will be good for the movie business?
The reasons are many. There has never been a case where as vibrant a major studio as Fox stands to be taken off the board by an even more dominant major studio. Fox has its own lot, strong film and television production units, a major network, and a strong global film distribution and marketing machine to support the 25 or so films its collective divisions released last year.
For agents, the Disney-Fox marriage means one fewer substantial buyer in the competition to acquire material and in paying writers, directors, stars and below the liners to make the movies. The regulatory approval needed to make Disney-Fox official could take as long as a year, and Disney would be prohibited from managing Fox from a distance while that process plays out. But several doubted if Fox would bid on a script, project package or a star’s slot its executives know Disney also covets.
Disney hasn’t shared its plans for how it will sort the combined film elements of Fox. It is believed that Alan Horn, the exec who was shoved out by Warner Bros and brought so much stability to the Disney ship by harmoniously managing its silos system, will lead the fused companies. Right below him, supervising all Disney-Fox live-action films, is rumored to be Sean Bailey, the exec whose live-action family film division cracked the billion-dollar mark in 2017 with Beauty and the Beast and who has Aladdin, and The Lion King upcoming as Disney continues to mint money remaking its 2D animated classics. Bailey’s lieutenant Tendo Nagendo presumably steps into Bailey’s job.
How much of Fox’s executive talent will find room in this already humming machine and how many more movies will Disney make? Observers fear it will play out like a season of Game of Thrones. Will there be a job big enough for Fox chief Stacey Snider, who could eventually succeed Horn, but has been rumored as a possible leader for one of the tech companies expected to enter the content game? What about Emma Watts, who was upped to vice chair last February and would fit building slates for a cash-rich tech company or another major studio if she isn’t happy heading up a Disney silo? How about Fox Searchlight’s Steve Gilula and Nancy Utley, who guided films like 12 Years a Slave to Best Picture Oscar wins, and this year have The Shape of Water and Three Billboards Outside Ebbing, Missouri in the hunt? Disney hasn’t had a dominant prestige film presence since Miramax. What about Fox Animation chief Vanessa Morrison and Fox 2000 chief Elizabeth Gabler, the latter of whom made Best Picture nominee Hidden Figures? Will they acclimate and make some films for the Disney streaming service that will be stronger competition if it complements the Disney and Fox library titles with original content? How many movies will Disney make and manage in a calendar year?
Disney chief Bob Iger has said the merged entities will mean a savings of $2 billion, and that drew a collective groan as the community sees bloodshed all over the place as duplicative positions — marketing, distribution, HR, publicity and physical production – undergo painful consolidation.
The one entity that might be cheered by the deal is AT&T and Time Warner, which was sued by Donald Trump’s Justice Department. Despite a year that saw Warner Bros score with Dunkirk, It and Wonder Woman, observers see the studio somewhat stuck in limbo.
If government can object to a linkup of two giant companies with largely compatible assets that seem to fit together like AT&T and Warner Bros does, how can it approve a Disney-Fox deal that will give one studio a stranglehold on the theatrical release market, able to use its clout to dictate compensation for stars – no first-dollar gross – and high splits and longer runs in theaters, to prime retail shelf space for DVDs and merchandising? What’s the release calendar going to look like when Disney adds the X-Men universe to Marvel chief Kevin Feige’s fiefdom, and James Cameron’s four Avatar sequels embellish a Disney slate already replete with superheroes, Pixar animated films, live-action family fare, Star Wars and the still-to-come Indiana Jones tentpoles? Disney-Fox is positioned for unprecedented box office dominance, as close to a monopoly as the film business has seen in decades.
If as result of this, Sony, Viacom/Paramount, Lionsgate, MGM, Annapurna or a fortified Legendary head for courtships, several believe the movie business could winnow to four massive major studios before too long that will take greater control of its content in all areas. That could potentially further starve a foreign distribution market. That sector is already ailing, and has forced prestige filmmakers to make films for smaller budgets, similar to the way they had to learn to do more with less after the financial collapse 10 years ago, when the indie business cratered as studios shuttered prestige shingles. Filmmakers who could pay for films by pre-selling foreign and make domestic deals when their leverage was greatest, now are more dependent than ever on U.S. theatrical distribution deals.
Back to Weinstein.
The gutsy reporting on alleged sexual assault and harassment even as Weinstein threatened lawsuits against the New York Times’ Jodi Kantor and Megan Twohey and the New Yorker’s Ronan Farrow burst a dam of pent-up shame and anger among women and men who went public with stories of godawful, sickening behavior they’d endured silently for decades at the hands of powerful men. The surprise was how quickly those men, who pressed women into silence with payouts and threats they’d be blackballed, became pariahs themselves. It got to where, if an exposé appeared that morning, the subject was already out of a job or packing their belongings by lunchtime.
Weinstein was fired by The Weinstein Company three days after the first NYT story; Kevin Spacey was quickly dismissed from House of Cards and later excised from All the Money in the World in an unprecedented last-minute reshoot effort led by Ridley Scott; on the heels of reports he masturbated in front of female staff writers (was he raised by wolves?), Louis C.K.’s myriad TV projects were scrapped, and a Toronto deal for his film I Love You, Daddy canceled by The Orchard; multiple scandalous accusations against Brett Ratner left him ousted from the top post at RatPac, and from his office on the lot of Warner Bros where RatPac co-financed most films on the studio’s slate. Pixar’s John Lasseter was beached for six months following allegations he behaved around attractive women like a grabby drunk uncle; Amazon Studios’ Roy Price lost his job after Kim Masters finally got producer Isa Hackett Dick to publicly reveal the lewd anatomical pickup lines Price made to her; and Primary Wave co-CEO David Guillod was quickly dropped amid accusations he drugged women and took advantage of them.
While Adam Venit was reinstated after a WME investigation of lewd behavior toward actor Terry Crews, he was stripped of his Motion Picture head title. Documentary director Morgan Spurlock saw a Toronto YouTube Red deal for his Super Size Me sequel rescinded after he posted a Jerry Maguire-like “mission statement” on social media in which he decided he was part of the problem, confessing he cheated on his spouse and former girlfriends, and once, in college, pressing a sexual encounter in college that left a woman feeling like she might have been raped. Andrew Duncan, financier of up-and-coming prestige film producer June Pictures (The Florida Project), stepped down last month as allegations were about to break, with former ICM agent Alex Saks now leading the company into the future. APA fired agent Tyler Grasham amidst a litany of young men charging he groped them or tried to barter career opportunities for sex.
Never mind that most of the alleged perpetrators denied many of the allegations or that there were no police reports, DNA or physical evidence, or even criminal investigations. Turns out there is no statute of limitations on bad behavior that will likely hinder criminal prosecutions going forward and possibly the rash of civil lawsuits that are coming. There was a deer-in-the-headlights quality to the denial statements by the accused who did comment: Weinstein’s defense ranged from regretting he behaved like a dinosaur to threatening to take on the NRA; Louis C.K. said he thought what he did was OK since he asked permission in advance; Spacey came out as gay in response to allegations he threw Anthony Rapp on a bed when the actor was just 14. Things got so toxic that PR firms turned down lucrative fees to crisis counsel heavyweights in free fall, after their longtime publicists resigned both for moral reasons and also for the desire to not be tarred by the taint of scandal. The sweep and suddenness was unprecedented.
The Weinstein Company also bore the brunt of the scandal, ending the year hoping to stay afloat as its few remaining beleaguered board members weighed bids for the film and TV projects and library from the likes of a consortium led by Maria Contreras-Sweet, the former head of the Small Business Administration under President Barack Obama; Killer Content, with financial backing by Abigail Disney; Lionsgate; Shamrock Capital; and Vine Investments. The fate of the managers and staff that hung in there, and the producers whose film and TV projects are in limbo, should become clear shortly.
Even as the sexual harassment discussion turns toward meaningful permanent reform – Hollywood heavyweights pledged their support to a task force to be headed by Anita Hill, and numerous prominent women started a legal defense fund to embolden women to speak up without fear of reprisal, and even the majority of people in Hollywood who are upstanding and respectful will have to get used to new rules. Because they work ceaselessly and have no other opportunities to meet potential partners, many agents and executives have fallen in love with assistants, co-workers and clients, and now every relationship or attempt to start one will have to be carefully weighed.
There will clearly be other men who take precipitous tumbles in 2018, as journalists have gotten it down to a formula: the need for one alleged victim on the record, and friends of hers to corroborate she mentioned alleged abuse when it happened. A Dana Goodyear article in this week’s New Yorker accurately described the mind-set of even reformed bad boys as hiding under their desks, holding their breaths, and praying they won’t be caught in the purge as they wonder what lines they might have crossed when a frat boy mentality permeated the corridors of agencies and studios. As Masters told the magazine, “There are people on the job right now exhibiting very dubious behavior. They know who they are.”
Beyond that, Mrs. Lincoln enjoyed the play. The star system remains in slumber as no performer is considered a sure bet for a strong opening weekend like years ago before Rotten Tomatoes aggregated ratings. As for the year ahead, Hollywood studios will once again rely on a heavy diet of sequels to past hits, encompassing everything from Deadpool to Avengers: Infinity War, Pacific Rim, Jurassic World, Mamma Mia! The Equalizer, Fantastic Beasts, Wreck-It Ralph and Mary Poppins.
This won’t please a lot of film purists who want moving movies, but these movies are meant to move things like popcorn, turnstiles and toys. The current box office success of films like Jumanji: Welcome to the Jungle and Star Wars: The Last Jedi, and earlier entries from Despicable Me 3 to The Fate of the Furious to Guardians of the Galaxy 2 and Spider-Man: Homecoming and Beauty and the Beast show that while familiarity might breed contempt, it remains the fastest path to potential billion-dollar global grosses.
That doesn’t mean that franchises are any easier to hatch, as Baywatch, King Arthur: Legend of the Sword, Ghost in the Shell and Valerian didn’t do nearly enough to warrant sequels. This is the Battleship lesson relearned, when studios take big swings that are more reliant on what execs call “VFX porn” and not good enough storytelling. While this outlook piece has questioned Disney’s dominance, that studio’s knack for finding the right overseers (Feige, Lasseter, Lucasfilm’s Kathleen Kennedy and Bailey) is hugely important. Warner Bros deserves points for hiring Patty Jenkins – who went 14 years between directing Charlize Theron to an Oscar in Monster and a second film job – to steer Wonder Woman, a film perfectly cast with rising star Gal Gadot and Chris Pine, but Justice League’s inability to please moviegoers and critics shows how difficult it is to establish an overall tone like Feige once again showed in the thoroughly enjoyable Taika Waititi-directed Thor: Ragnarok.
DC overseer Jon Berg left to become the Warner Bros exec suites to become a producer and Ben Affleck, who was going to be a storytelling influence as exec producer, stepped away when he exited plans to relaunch a new Batman iteration that will be steered by War for the Planet of the Apes helmer Matt Reeves. Perhaps Reeves, or Aquaman’s James Wan (who rarely seems to miss in genre films and blockbusters), could lend the sense of overall authorship that Christopher Nolan gave to his Batman films and Man of Steel. Similarly, Universal whiffed in its much vaunted attempt to turn its classic movie monsters into a vibrant franchises. Despite the presence of Tom Cruise, The Mummy was a confusing pastiches of set pieces and effects, but never fully decided whether it wanted to be an action adventure or a truly scary movie, the latter of which is difficult to do with less than an R rating.
Universal is redrawing its monster plans, even though it will likely move forward with a Bride of Frankenstein film that would team Bill Condon with Angelina Jolie, with handshake deals for films that would have Russell Crowe as Jekyll/Hyde, Johnny Depp as The Invisible Man and Javier Bardem as Frankenstein. The studio once had Guillermo del Toro under a deal that left him in control of several of those properties, but the bond between director and studio frayed when he left to co-write and direct The Hobbit, and when Universal would not bow to his insistence he might make an R-rated Tom Cruise-starrer At the Mountains of Madness at a $150 million budget. Del Toro’s price-conscious accomplishment with awards contender The Shape of Water demonstrates that a visual genius has turned a corner. Universal would be hard-pressed to find a better impresario for its Dark Universe initiative than del Toro; it is doubtful that any A-lister is more steeped in monster lore than he. Indeed, his homes are full of life-size and lifelike renderings of not only those classic monsters, but also of the authors and directors who created them.
It is worth noting that even the sequels that didn’t please critics still rang up big numbers, especially overseas where 75% of a film’s revenue is earned. Justice League will surpass $700 million global ticket sales, Pirates of the Caribbean: Dead Men Tell No Tales grossed $792 million globally, Transformers: The Last Knight grossed $605 million worldwide, and The Mummy grossed $409 million globally. It is not a bad business.
From del Toro’s The Shape of Water to Jordan Peele’s Get Out, the Fede Alvarez-directed Don’t Breathe and the Andy Muschietti-directed It have shown that some of the most terrific work at studios is being done in the genre sandbox. The last three entries show just how profitable a match between a breakout filmmaker can be. Peele’s groundbreaking film cost $4.5 million and grossed $254 million worldwide, Alvarez’s Don’t Breathe grossed $157 million worldwide on an under $10 million budget, and Muschietti’s It grossed $698 million worldwide on a $35 million budget. The latter was always meant to be a sequel that is being fast tracked; Peele and Alvarez (the latter of whom has an ownership stake) are pondering sequel possibilities that might be too lucrative to ignore.
The other most intriguing storyline to follow in film this year will be the continuing emergence of Netflix as an original maker of theatrical films. The growth curve, and the concept of claiming that films viewed at home constitute theatrical features, still has awkward moments, like when Okja and The Meyerowitz Stories got Cannes premieres only to see the festival buckle under pressure from French distributors. It remains to be seen whether Netflix can ride a film like the Dee Rees-directed Mudbound to Oscar glory. And who knows how many actually watched the Will Smith thriller Bright? But the ambitions of the film division that Reed Hastings and Ted Sarandos empowered Scott Stuber to build is growing quickly, with films from directors like Martin Scorsese and Paul Greengrass already in the works. Over the next five years, there could be more bitterly competitive subscription streaming services than major studios, and it seems only a matter of time for barriers to fall and any stigma to disappear.
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