Peter Bart and Mike Fleming Jr. worked together for two decades at Daily Variety. In this weekly column, two old friends get together and grind their axes, mostly on the movie business.
BART: The major studios like to complain about the cost of finding a receptive young audience for every new movie. I was intrigued, therefore, to learn that one vast but secretive company that “owns” just that audience now wants to try its hand at movies. The Hollywood party keeps growing, it seems. The maker of Red Bull, the energy drink, has decided to pour some of that energy into film, mobilizing its promotional army of paid reps on 270 U.S. college campuses for the cause. The mysterious, privately held, multi billion dollar Austrian-based company is circumspect about details, but will open its first film, DxM, billed as “a mind-bending sci fi thriller,” with a promotion involving hundreds of live events. The new-agey company, which sells over 3 billion cans of energy drinks a year, already is ubiquitous worldwide with everything from from cliff diving events to skate board racing. Red Bull’s entry into the movie business, presided over domestically by TriCoast Worldwide, the indie distributor run by Strath and Marcy Hamilton, will be focused on opening DxM, in mid February with Universal distributing home video and likely also theatrical, but nothing has been announced. Red Bull, which covets its vast fraternity of millennial consumers, disdains announcements or, for that matter, most corporate rituals. But the company has quietly become a powerful force worldwide in music, gaming and docs dealing with social issues, such as the ivory trade.
FLEMING: That’s a good scoop. They become the second energy drink-maker to enter the movie fray. Remember that 5 Hour Energy founder Manoj Bhargava backs Bleecker Street, the distribution company started by former Focus Features co-chief Andrew Karpen. They released Trumbo to an Oscar nomination for Bryan Cranston and handled the theatrical on Netflix’s Beasts of No Nation. They opened Eye in the Sky and are at Tribeca with Elvis & Nixon. They are off to an energetic start.
BART: I’m always fascinated by that web of influential but low profile companies like Red Bull that exert a major presence in the young market. The Red Bull lexicon is heavy on expressions like “psychographic magnets” and “neuro-tech experience.” It’s proud of its success in building its ‘escape room’ championship, which has a big online presence, but emphases its focus is on live experience, not merely social media. Hence, DxM is heralded as a “collision of technology and human consciousness.” Film initiatives, embracing several new movies, are run through a wholly owned company called Terra Mater headed by an Austrian, Walter Koehler and a Brit, Joanne Reay, a veteran producer who holds the title “head of cinema.” Other movies and docs are on the drawing board as is an expanded gaming initiative. “We intend to develop “action films – but action films of the mind,” observed one Red Bull executive who, consistent with company practice, did not want to be quoted.
FLEMING: Relativity’s Ryan Kavanaugh always felt he had logarithms on audience wants for his niche films, but that hasn’t worked out well, at least not so far. The Netflix and Amazons feel they know how to reach their customers, and can tell which films and stars they prefer. It’s all a means to improving the current scattershot marketing strategy by studios, which consists of pricey inefficient P&A spends. It will be interesting to see if these guerilla marketing strategies bring more success.
Next topic. I don’t usually look to USA Today for breaking news, but they made me sit up and take notice Friday. In a Money Section front page story that listed the 11 CEOs that have busted through the $30M a year salary barrier, the newspaper reported that Viacom chief Philippe Dauman earned $54.2 million, considerably more than Disney chief Bob Iger’s $44.9 million.
Viacom’s stock is down a whopping 43.5%, while Disney stock is up 15.7%. The latter has lots to do with the returns of Star Wars: The Force Awakens, which won Deadline’s recent 2015 film revenue tournament. That film came directly from Iger having the stones to pay $4 billion for Lucasfilm. That is the same amount he paid for Marvel and less than the $7.4 billion he paid for Pixar. Now, Dauman or any of these studio chiefs could have made those deals. In fact, Marvel released its films through Paramount, when Iger brought the superhero business over to Disney. It has borne one hit after another for the Mouse House. I attended the Hollywood premiere last week of the latest, Captain America: Civil War, which was so good that everyone I spoke to at the after party was positively giddy. It seamlessly managed a slew of superheroes, and unveiled Black Panther (Creed‘s Ryan Coogler will direct the standalone film with Chadwick Boseman) and Spider-Man (a delightful Tom Holland, who’ll be directed by Jon Watts in a coproduction between Marvel and Sony). This was the second Captain America directed by Joe and Anthony Russo, who move right into the next two installments of Marvel’s biggest franchise, The Avengers. Iger foresaw the value of this silo system, took a big financial risk to do it ($15.4 billion) and made sure each silo had superb managers. Star Wars will destroy the prestige film holiday corridor for rivals for years to come with sequels, prequels and spinoffs, and the silos have Disney sitting pretty for the next decade or two. It removes pressure from its live action family film division, the one that delivered this past weekend’s big hit, Jungle Book, and has Alice in Wonderland, Pirates of the Caribbean and Maleficent sequels percolating. Peter, you understand this CEO stuff better than I, but it seems that while Disney built, Dauman put resources into stock buybacks, and didn’t rebuild its branded TV networks, or compensate for the exits of Jon Stewart and Stephen Colbert. He’s in the middle of Sumner Redstone’s succession talks, with mixed reports lately on whether Redstone even wants to sell part or all of Paramount. How is it possible this man makes so much more than Iger, and the Viacom shareholders don’t come to those meetings with pitchforks and torches?
BART: Dauman’s pay is scandalous but I would argue that CEO compensation levels are outrageous across the landscape. I am reminded of the first time I asked for a raise when I was at Paramount. The then uber-boss, whose name was Charles Bluhdorn, told me he didn’t believe in raises because “when you overpay executives they become self important.” On that criterion American industry (and especially the media industry) is filled with very self important people. Top execs in the U.S. make four times as much as their co-equals in Europe (in the oil industry as much as six times as much). CNBC says CEO pay rose about 10% last year. What is the rationale for this escalation? Larry Ellison was paying himself about $100 million a year by 2010 on the grounds that he owned the store. OK, but Apple’s Tim Cook has graciously agreed to readjust his pay so that it’s at least geared to the level of the shares. On that basis, Dauman of Viacom would be making less than you, Mike.
FLEMING: You might create sympathy for him with that last line.
BART: I agree with your thesis, Mike, that Iger deserves higher pay than other media CEOs based on his macho acquisitions. But, once again, corporate compensation has become a game of corporate narcissism. Maybe Bluhdorn had a point: Everyone has become too self important.