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In its second quarterly earnings report since going public in April, Endeavor reported revenue of $1.1 billion, just missing Wall Street expectations for revenue. Endeavor CEO Jason Lublin said that three shows from Endeavor Content were pushed into Q3, and were responsible for some $90 million in revenue. And while the company turned a modest profit in Q1, it had a net loss of $319 million in Q2.
Significantly, despite the Delta variant of COVID-19 causing uncertainty in some of Endeavor’s key areas (live events, sports, and TV and film production), the company says it is raising its guidance for the year to $4.80 billion to $4.85 billion, up from $4.76 billion to $4.83 billion.
Endeavor’s different lines of business continue to be impacted by the pandemic, to varying degrees. The Delta variant, which has caused a spike in cases and forced states and localities to issue new mask and vaccine mandates, has only further clouded the short and medium-term picture.
“We have had some cancelations here and there, but by and large we aren’t getting hit too hard,” Endeavor president Mark Shapiro told The Hollywood Reporter Monday. “The pent-up demand is electric right now. Consumers are coming out in droves and spending more because they have the cash. There is so much discretionary income out there right now. Don’t get me wrong, there are cancellations such as the Jazz festival in New Orleans, where we had artists performing, but then Lollapalooza in Chicago, where we also had artists performing, was bigger than anticipated.. People want to get out.”
While its cash cow, the UFC, continued to hold live events in full arenas, the Delta variant and new mandates make predicting future live events more challenging. Still, it was the success of UFC and the gradual return of other events that spurred on the change in guidance, as well as new opportunities driven by the NCAA’s decision to allow student athletes to strike name, image and likeness (NIL) deals, which opens a new line of business for the company.
“Talk about parting the Red Sea here, that space is wide open,” Shapiro tells THR. “All of a sudden, we can sign these college players to advertising and endorsements deals. And if we do right by them, ultimately, we sign them down the road for their on the field contracts. The heavens have opened up on this one.”
Still, the company believes content will be its major growth center with the company remaining, as CEO Ari Emanuel said on the earnings call Monday, “platform agnostic.”
“Whether it is Discovery and Warner Bros. or Amazon and MGM, they become super competitors on the likes of Netflix and Disney,” Emanuel said. “The competition for content and talent is at its highest level that I have seen in 26 years.”
The company had turned a modest profit in Q1, driven largely by UFC. The mixed martial arts outfit once again was Endeavor’s cash cow in Q2, with the owned sports segment (which also includes Professional Bull Riders) up 70 percent year over year to $258.9 million.
Similarly, while production on film and TV projects has ramped up to pre-pandemic levels, agencies like WME are grappling with new streaming economics, which were accelerated by the pandemic. These disputes, which largely been happening behind closed doors, spilled into public view in recent weeks after Black Widow star Scarlett Johansson sued The Walt Disney Co. over the decision to release the Marvel film on Disney+ Premier Access on the same day it was released in theaters.
Shortly thereafter, Cruella star Emma Stone (who is repped by WME) revealed a deal to star in a sequel to the film, which was given a Premier Access debut as well.
On the earnings call, Shapiro noted the lawsuit and the Stone deal, adding that “we are getting the front end for their clients for our clients for movies and TV, like we always get, increasingly, we are getting the backend bought out … the Netflix model.”
However, he also previewed the next fight for talent representation: The lifetime value of a streaming subscriber. Shapiro used to example of Disney’s Jungle Cruise, which debuted in theaters and on Disney+ Premier Access on the same day. “Yes it goes into the box office math in terms of how many people pay for Jungle Cruise, but if we have actors and actresses that are driving you to subscribe, where is their piece of that?” he said.
The company’s representation business was also up 70 percent year over year to $328.2 million, while its live events and experiences division saw its revenue rise by more than $400 million to $528.7 million.
Emanuel said talent bookings were up double digits from the same quarter in 2019, which was pre-COVID.
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