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Less than an hour after Disney CEO Bob Chapek said that the company is undergoing a “reset” in trying to cut deals with talent to reflect the rapidly changing entertainment landscape, Endeavor CEO Ari Emanuel said that the entertainment giant “is doing the right thing” as it holds talks with clients.
Emanuel, speaking at the Goldman Sachs Communacopia Conference Tuesday, said that the company “has created a formula, and each one will change over time.” Specifically, compensation plans may vary depending on whether the movie gets an exclusive theatrical release, a day-and-date release, or goes to subscription streaming platforms only.
Emanuel added at the Tuesday investor conference that, for many deals, a guaranteed buyout (a trend Netflix started) would be better than the prior model, which saw only a small percentage of films secure enough box office revenue to lock in lucrative backend bonuses.
“When Warner Bros moved the 12 movies they had to [HBO] Max, … it is not publicized, but they paid $200 million in backends,” Emanuel said. “We negotiated those deals throughout the process, and our clients made a lot of money.”
That being said, Emanuel also argued that the traditional backend formula for TV won’t be disappearing anytime soon either.
“I do not believe the linear business is going away. That is a $150 billion marketplace,” Emanuel said. “That marketplace is going to be around for a while. You have to buy programming for that, so that is a big requirement on a lot of the SVOD services.”
In addition to updates on UFC and the company’s live events business, Emanuel also provided an update on the sale of Endeavor Content.
The company has to sell 80 percent of its stake in Endeavor Content’s movies, TV and scripted businesses, though it will be able retain its unscripted, sales, and advisory businesses.
Emanuel said that there have been “a lot of bidders” for the company, noting that Reese Witherspoon’s Hello Sunshine was valued at $900 million in its recent equity sale.
“We feel very good about the players that have come to the marketplace to bid on it,” Emanuel said. “That will play itself out over the next several weeks.”
He also said the company will continue to be active in M&A even as it seeks to reduce its leverage.
“On the M&A side there are two strategies on the future: We go after things that put large moats around our existing business, … we will continue to do that across our portfolio, … and then we will look for our On Locations, our UFCs, our [Professional] Bull Riding, that really move the needle.”
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