it’s been a month Jeff Saganskyis furious speech announced at a NATPE event that “we are in the golden age of content production and the dark age of creative profit sharing.” This put major media investor and producer and former top entertainment executive at the center of conversations about the adverse impact the streaming-driven “cost plus” business model has had on profit sharing and the potential Hollywood producers, agents and guilds can have. Huh. Mobilizing and fighting to restore the backend for creative talent. The issue of the missing backend, which is estimated to result in a loss of $1.5 billion annually to creative talent, is expected to be front and center in the WGA and other unions’ negotiations with studios on the new film. TV basic agreement.
I caught up with Sagansky to discuss Hollywood’s reaction to his speech and what he wants to see next. Once again he minced words, referring to “backend piracy” and “predatory behavior on the part of streamers” and called for immediate action to end the new streaming “business model-dominus”, which “naturally is wrong.” He used the “carefulness lesson” of the 1997 DVD deal that cost creatives billions of dollars in backend dollars to urge them to fight now because a year or two may be too late. “The fight is now,” he said.
time limit: What has been the reaction to your NATPE speech? Do you have any more thoughts on the new streaming business model?
Sagansky: Let’s start by reviewing what we know. First and foremost, streaming services are going to represent an increasing percentage of total production spend going forward. Today I estimate that 2/3 of total TV series spending is being done by streamers and will increase every year as consumers unbundle and the cable and broadcast businesses become increasingly challenged.
Second, all streamers, save maybe for Apple, have converged on top of the line talent around a single business model—dominant backend. This backend theft happened very quickly: in less than 18 months and during covid. I think streamers/studios were so surprised that they could get away with eliminating 50 years and backend profit sharing, which they all piled on as quickly as they could.
Third, it’s going to affect potentially every writer, producer, actor, and director because we never know where the next hit is going to come from. Some people have said that this issue is only going to affect the brand name talent. but from strange things To Magician And Bel Air, Streaming services are full of shows for which this could be the creative genius’s first big hit. So all creative talent is potentially affected by this violent behavior of streamers.
But many others are also affected. Talent agencies, whose clients are being looted, are also bearing the brunt. and more importantly, the communities in which talent lives and works; Especially Los Angeles and New York. Backend partnerships support many aspects of these communities – schools, restaurants, real estate and taxpayer-supported services. Many streamers are based in locations that don’t have the same vested interest in health as LA or New York, which will be negatively affected at a time when these communities are already facing so many challenges.
time limit: What would you like to see in the coming months as we move on to the next film and TV contract talks between the studio and the Guild?
sagansky: The most important thing I’ve learned these past weeks is that the fight is on now. The longer this new “business model” is allowed to run, the harder it will be to change. I often think that the introduction of DVDs became a cautionary tale 25 years ago when you choose to fight. DVD based on the Sony Philips format was introduced in 1997 and shortly thereafter AMPTP negotiated that only 20% of DVD net profit would be counted in the backend definition of participation profits. The Coalition argued and convinced the Guild that this was a “new technology” and required the investment and nurturing of the studio. This new technology quickly became a $30 billion annual business. But the 20% attribution never changed. Creative participants gave up billions of dollars in backends because they agreed to the formula early on. To date, even when DVD has been superseded by streaming backend attribution, it still accounts for only 20%. Against the creative community are some of the biggest companies in America and the world. Amazon, Netlfix, Apple, Disney, Comcast, Warner Discovery. There would be no harm to these companies by sharing the backend with the talent creating all these shows, without which there would be no studios and no streamers.
So this new streaming business model needs to be thrown in the dustbin. Not in a year or two, but now. And winning this battle will require prominent names in every guild, every agency and among actors, writers, directors and producers. We will soon see who has the courage, perseverance and leadership to lead this fight. I’m glad to hear from many of my friends in the creative community, at agencies, and even in studios and streamers.
Many of these studio executives serve two masters—the company they work for, but also the community they live in. They know this new model is inherently wrong.