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Speaker 1: Welcome to Strictly Business Varieties, weekly podcast featuring conversations with

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Speaker 1: industry leaders about the business of media and entertainment. Today,

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Speaker 1: my guests are Andrew Kossov and Broderick Johnson, co founders

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Speaker 1: and CEOs of Alkhon Entertainment. Kosovan Johnson are veteran producers

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Speaker 1: who are in the trenches daily in a fast changing market.

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Speaker 1: The two speak candidly about the deal making seven years

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Speaker 1: ago that allowed them to own outright the fantasy series

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Speaker 1: The Expanse, which has its fifth season finale on Amazon today.

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Speaker 1: Alcon is the rare animal in Hollywood that brings its

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Speaker 1: own financing to the table in many cases. The two

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Speaker 1: co founded the studio in as a partnership with Fred Smith,

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Speaker 1: founder and former head of FedEx. Having money in the

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Speaker 1: game gives Kossovan Johnson more clout when setting up projects

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Speaker 1: and a better ability to call the shops. Over the

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Speaker 1: plast twenty plus years, they've built a library of wholy

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Speaker 1: owned films, including such hits as The blind Side, The

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Speaker 1: Book of Eli, and Dolphin Tap. In our conversation, the

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Speaker 1: producers speak candidly about the leverage game in the content business.

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Speaker 1: These days. It's all about who has in demand. I

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Speaker 1: p the pair also speak really frankly about the state

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Speaker 1: of the film business. Simply put, the economics have deteriorated

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Speaker 1: so badly over the past decade. At Kosovan Johnson think

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Speaker 1: it requires a massive rethink from those who love the

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Speaker 1: industry and the art form. And that's all coming up

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Speaker 1: today on Strictly Business. Welcome back to Strictly Business. Andrew

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Speaker 1: Koso and Roderic Johnson, founders and co CEOs of Alcon Entertainment.

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Speaker 1: Thank you so much for joining me. Thank you you're

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Speaker 1: happy to be here. So I wanted to talk to

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Speaker 1: you about your television series, The The Expanse, and you

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Speaker 1: know kind of there's a there's a really interesting kind

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Speaker 1: of backstory of how this show came to be, how

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Speaker 1: it how it started on Sci Fi, and how it

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Speaker 1: moved to Amazon and along the way, how YouTube managed

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Speaker 1: to craft deals that worked for you and worked for Alcohn.

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Speaker 1: That we're very unusual in the television landscape today. So

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Speaker 1: I think start by telling me about what it was

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Speaker 1: about this project that made Alcon, which primarily does features.

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Speaker 1: What was it about the expense that made you want

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Speaker 1: to invest in a show that you know that is

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Speaker 1: now about to go six seasons product would you like

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Speaker 1: to start? You know? Well, uh, you know the thank you,

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Speaker 1: the the the underlying I P. The book series the

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Speaker 1: expanse was which is written by the pen named James S. A. Corey,

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Speaker 1: but is is too wonderful. Uh two wonderful writers uh

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Speaker 1: and Uh Sean Daniel, who's an established feature producer, brought

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Speaker 1: the material to outcome. Um and uh we've known Sean

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Speaker 1: for a long time and then we worked with him

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Speaker 1: and uh we brought on uh two wonderful feature writers

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Speaker 1: and Mark Fergus and Hawke Osby who wrote Children of

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Speaker 1: Men in the first Iron Man feature and uh they

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Speaker 1: excited us tremendously with what their vision was for this,

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Speaker 1: this vast universe. UM. And so we decided to uh,

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Speaker 1: you know, to use our own financial resources, which we

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Speaker 1: always do, to develop and package the show. UM. We

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Speaker 1: then um brought on drain narrain Shanker, who's a wonderful

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Speaker 1: showrunner and TV who ran C s I for many years,

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Speaker 1: to be the show runner the show. So we put

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Speaker 1: an entire package together uh for the show. Our philosophy

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Speaker 1: as a company, going back to our origins, is we've

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Speaker 1: always believed in Fred Smith, who's our third partner and

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Speaker 1: financial backers, the founder and chairman and CEO of fed X,

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Speaker 1: have always believed in the value of of program of

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Speaker 1: programming and content before everyone started calling a content a

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Speaker 1: couple of years ago. Because look at the history of media,

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Speaker 1: there's always some new distribution technology that comes along that

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Speaker 1: increases the value of content. It has been it was

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Speaker 1: the TV in the fifties, it was VHS in the eighties,

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Speaker 1: it became the D E D you know, late in

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Speaker 1: the twentieth and early in the twenty one century, and

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Speaker 1: of course now it's become this new technology of streaming

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Speaker 1: and so oh, our attitude has been we're always willing

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Speaker 1: to risk our own financial resources to create content, uh,

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Speaker 1: with the intention of owning the content that we create.

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Speaker 1: And we recognize sometimes we have short term victories on

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Speaker 1: our content that is very rewarding, and sometimes we have

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Speaker 1: short term losses on our content which is disappointing. But

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Speaker 1: in the long term, we've always believed in the appreciation

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Speaker 1: of the value of owning content, and so we took

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Speaker 1: that same approach and television that we've always taken with features.

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Speaker 1: So when we approach sci fi at the time and

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Speaker 1: they had an executive there named Bill McGoldrick was very

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Speaker 1: enthusiastic about the project and is a very talented TV

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Speaker 1: executive and you know, expressed to the creative enthusiasm when

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Speaker 1: we began to get into the business affairs because we

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Speaker 1: had multiple bidders for the project at the time. The

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Speaker 1: nature of the deal was they would provide us for

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Speaker 1: a license fee for certain basket of rights. We would

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Speaker 1: be sponsible for financing the deficit of the show, and

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Speaker 1: then we needed to recoup that deficit out of rights

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Speaker 1: we were retaining international rights electronics, sell through DVD, so

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Speaker 1: on and so forth, and at the time, and it

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Speaker 1: was only for the linear rights, correct, So that it's

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Speaker 1: important if when looking at this from a business context,

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Speaker 1: that was the structure of the deal. Now that deal

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Speaker 1: was struck, she's I think it's ten Cynthia, late early fourteen,

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Speaker 1: So that deal is kind of a relic today because

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Speaker 1: just at the moment where streaming was starting to really

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Speaker 1: take hold. I don't think House of Cards had probably

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Speaker 1: been on the air or been on Netflix for more

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Speaker 1: than probably a year and a half when we struck

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Speaker 1: this deal. So it was the early days when they're

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Speaker 1: when when when liney solely linear rights were still perceived

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Speaker 1: to have specific value, and so we struck this deal.

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Speaker 1: The deal worked out very well for us because we

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Speaker 1: were able to monetize the other rights and over time

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Speaker 1: not only cover our deficit on the show, but earn

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Speaker 1: a nice profit on the show. As we went along

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Speaker 1: and made the show. The challenge became, and this is

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Speaker 1: something that's been reported in the press that's um uh

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Speaker 1: been misunderstood a little bit, is the show was quite

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Speaker 1: a successful show from the beginning by the metrics of

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Speaker 1: sci Fi as a basic cable platform. French challenge was

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Speaker 1: that overall, and when I say that, I mean specifically,

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Speaker 1: it's numbers relative to other shows on sci Fi were

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Speaker 1: quite strong. But the problem was is that more and

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Speaker 1: more people, of course, we're migrating off of linear television,

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Speaker 1: watching onto binging and watching things on screaming and so

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Speaker 1: on and so forth. So the deal became very difficult

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Speaker 1: for sci Fi. The creative success of the show from

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Speaker 1: the beginning, from our point of view, was never in question.

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Speaker 1: We love this show really, I think from the first

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Speaker 1: episodes we shot, remember Water turning to me and saying,

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Speaker 1: I think we've got something special here. And sci Fi

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Speaker 1: and Bill mcgugert, to his credit, were very big backers

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Speaker 1: of the show. Artistically, it just became a a victim

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Speaker 1: of a changing business landscape and that point where they

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Speaker 1: could no longer afford the show on the basis that

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Speaker 1: we had made a deal with that and see so

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Speaker 1: in other words, when we when I think it was

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Speaker 1: after season one, we made a deal actually with Amazon

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Speaker 1: for the um spot rights after airing on sci Fi,

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Speaker 1: and the issue was is that more and more people

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Speaker 1: were finding it more attracted to see it on Amazon

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Speaker 1: um and so the economics for sci Fi I think

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Speaker 1: just for their window and the advertising they're collecting on

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Speaker 1: their windows started not to make sense because they did

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Speaker 1: not have global rights in order to justify the cost

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Speaker 1: of the of the show. And so you know, ultimately

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Speaker 1: they made a tough decision that they were going to continue, right,

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Speaker 1: I mean, unlike the way that it's phrased, which I've

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Speaker 1: always had an issue within the press, they didn't cancel

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Speaker 1: the show because they couldn't cancel the show. We own

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Speaker 1: the show. It's out cancel our show. What they did, specifically,

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Speaker 1: to be very specific, is they elected not to continue

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Speaker 1: to license the show for their sir for their rights

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Speaker 1: based upon the contract we had, and it was very

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Speaker 1: you know, it was ladies and gentlemen. Everyone was very

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Speaker 1: upstanding about it. And at that point, what Broader and

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Speaker 1: I felt is that we had such exceptional show artistically

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Speaker 1: that at that point had been recognized as really, you know,

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Speaker 1: at the top of its class in the sci fi genre.

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Speaker 1: We had won multiple awards at that point notices we

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Speaker 1: were a hundred percent of rotten tomatoes. We were like, well,

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Speaker 1: we have to figure out another way to keep this living.

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Speaker 1: And we were very fortunate in that we had a

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Speaker 1: very committed audience of people, and frankly pretty intelligent audience

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Speaker 1: of people who figured out how to use you know,

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Speaker 1: there's so much negativity about social media. Of course, this

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Speaker 1: happened to be one of those instances where social media

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Speaker 1: was used in a constructive way in that a group

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Speaker 1: of people how to shared interest in seeing a storytelling continue,

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Speaker 1: got together, banded together and really spoke loudly to their

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Speaker 1: desire to continue to see the show. And so the

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Speaker 1: logical newl ending place for the show was it Amazon,

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Speaker 1: because then his Broaduct points out, Amazon already had the

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Speaker 1: second windows streaming rights and the show was always already

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Speaker 1: performing very well on Amazon, and Jeff Bezos, who's a

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Speaker 1: fellow Prince stone In he graduated a few years before

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Speaker 1: me and product but all in the Princeton family. He

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Speaker 1: personally was a big fan of the show, and so

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Speaker 1: it was sort of a very fortunate synergy going into it.

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Speaker 1: Did you have any concern about the potential or the

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Speaker 1: you know, like in success you could be on the

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Speaker 1: hook for financing something for you know, five six five

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Speaker 1: six years versus the feature, which is a more contained

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Speaker 1: kind of economic transaction. It was all The business model

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Speaker 1: for the Expanse was always an attractive one, even when

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Speaker 1: it was on sci Fi, because it's because of the

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Speaker 1: underlying I P it's it's a pretty attractive project in

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Speaker 1: nationally and it's pretty broad, broad appeal content. And so

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Speaker 1: we were never really um concerned about being on the

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Speaker 1: hook for some unsustainable despicit because I mean and jerinized

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Speaker 1: background is his economics and business and in addition to

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Speaker 1: being creative, and so we had pretty we had a

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Speaker 1: pretty good sense of the business parameters of this and

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Speaker 1: never really were concerned about um somehow getting behind the deficit.

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Speaker 1: It wasn't justifiable. M hmm. And when you when you're

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Speaker 1: still on sci Fi and you were making your deals

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Speaker 1: for your you know, your second week D O D

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Speaker 1: and I imagine your international deals. Did you too pick

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Speaker 1: up the phone and call somebody in Amazon or did

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Speaker 1: you engage a distribution company to help you for international

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Speaker 1: originally you mean or or are you talking about the

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Speaker 1: transition from sci Fi to Amazon like which I'm talking

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Speaker 1: about originally Originally when it's on the site, we had

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Speaker 1: we had one fire that came to us that wanted

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Speaker 1: to buy all international rights to the show, which was

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Speaker 1: very fortunate because it allowed us to uh get a

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Speaker 1: single check from a single source as opposed to having

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Speaker 1: to license the territory by territory. Now, we didn't know

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Speaker 1: that was going to happen, and we would have been

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Speaker 1: fine to license it territory by territory. Indeed, on the

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Speaker 1: feature side, sometimes Warner Brothers distributes our movies globally and

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Speaker 1: frequently we licensed our films territory by territory, so that's

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Speaker 1: in Indeed, indeed, we had multiple offers to distribute international

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Speaker 1: on the show, and do you have your own infrastructure

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Speaker 1: for international distribution or we'd hire we'd hire someone to

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Speaker 1: do that for them and pay them a distribution fit gotcha. Um,

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Speaker 1: but you know, in this world now it I think

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Speaker 1: your experience shows how much it's changing. And in you know,

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Speaker 1: ten years ago it would have you would have gotten

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Speaker 1: out of map and done a market by market in

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Speaker 1: in this world. And like you said that that that

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Speaker 1: it had I'm sure real advantages and that you knew

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Speaker 1: also that you knew kind of what you had to

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Speaker 1: work with in terms of budget by getting so once

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Speaker 1: we got through seasons one through three with uh sci Fi,

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Speaker 1: and sci Fi said, look, we love the show, but

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Speaker 1: we can't afford it anymore. We then almost immediately began

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Speaker 1: discussions with Amazon, and for reasons I just mentioned, there

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Speaker 1: was real synergy there. Um. You know, Vernon Sanders, who's

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Speaker 1: uh co headed TV, and Albert Chang uh stepped up,

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Speaker 1: you know right away with the supporter of Jen Salki,

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Speaker 1: who at that time had just really taken over at Amazon.

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Speaker 1: And you know, they were fantastic from the beginning and

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Speaker 1: they have been fantastic partners the whole way through. So

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Speaker 1: what we had to do, without getting too much into

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Speaker 1: the super boring folks, is we had to restructure the

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Speaker 1: nature of the deal where what has happened now is

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Speaker 1: Amazon is effectively the global district, the global platform for

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Speaker 1: the show. Through a lot of of negotiations and working

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Speaker 1: back and forth with different parties, we were able to

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Speaker 1: consolidate all those rights with Amazon and now the deal

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Speaker 1: with Amazon is very straightforward and that they have paid

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Speaker 1: us one license fee. We're responsible for delivering the show,

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Speaker 1: producing the show. If God forbid, there was some budgetary overage,

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Speaker 1: that's our responsibility, and you know, we earn a profit

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Speaker 1: in the differential between the license fee and our show.

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Speaker 1: What is unique and is that going again back to

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Speaker 1: our very original you know, the philosophy of al Khn

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Speaker 1: is we've continued to own the show. So once the

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Speaker 1: show is done on Amazon and it's aired for a

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Speaker 1: handful of years, they all the episodes come back and

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Speaker 1: are part of our library with all our other assets

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Speaker 1: over these many years, and the underlying ip belongs to us.

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Speaker 1: So as it relates to interactive or graphic novels or

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Speaker 1: continuing the storytelling in features, those are all things that

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Speaker 1: are on the table that we're talking about. Because it's

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Speaker 1: such a rich world and there's such a fan base

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Speaker 1: for the property that we're considering all kinds of interesting possibility.

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Speaker 1: We'll be right back with more from Andrew Kosov and

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Speaker 1: Broderick Johnson right after this. Welcome back to strictly Business.

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Speaker 1: Here's more from al khin Entertainments, Andrew Kosov and Broderick Johnson.

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Speaker 1: Let me ask you, was it a negotiation and Amazon

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Speaker 1: to allow you to continue to own this rockets? You know,

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Speaker 1: well when you say evertation, everything is a negotiation. Um.

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Speaker 1: It helped us that that was the legacy of the

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Speaker 1: arrangement we already had. Um. You know, it's it's it's

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Speaker 1: harder and harder to do a deal like that. What

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Speaker 1: you need is a competitive situation where multiple outlet one

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Speaker 1: a piece of content and you know, and therefore you

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Speaker 1: have the leverage to do it. I think the other

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Speaker 1: the other thing, which was sort of the one of

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Speaker 1: the main impetus is for us to get into the business,

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Speaker 1: is we own the film library. Now that's pretty much.

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Speaker 1: You're a film library that has a lot of premium

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Speaker 1: titles for television, and given that we own those underlying rights,

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Speaker 1: it gives us leverage to retain ownership of those shows

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Speaker 1: as well as opposed to you know, if if we're

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Speaker 1: if we funded tens of millions of dollars to create

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Speaker 1: the i P, it doesn't make a lot of sense

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Speaker 1: to just hand it over to someone and have them

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Speaker 1: only it going forward. You have to have some sort

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Speaker 1: of sharing proposition that um generally is a little more

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Speaker 1: favorable to us as the owners of the I P. Yeah,

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Speaker 1: I think SYNTHI as you look, because you well understand

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Speaker 1: the business is constantly evolving. And let's let's even talk

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Speaker 1: pre pandemic for a moment, because it was evolving it

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Speaker 1: at a rapid speed before the pandemic. Kit and I

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Speaker 1: think initially the sort of Netflix streaming model circut, you know,

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Speaker 1: sort of cost plus twenty when they wanted something, they

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Speaker 1: gave you a deal they buy out for it was

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Speaker 1: kind of a formula or whatever. That's less and less

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Speaker 1: the case now. It's really the deals are bespoke and

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Speaker 1: they depend upon the marketplace. And as Broaduct said, it

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Speaker 1: depends upon how many people desire the you know, the

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Speaker 1: watch that you're selling out of your French coat, so

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Speaker 1: to speak. You've got a lot of people who who

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Speaker 1: are interested, then you can, uh, you know, you can

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Speaker 1: negotiate very favorable terms if you have only one buyer interested,

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Speaker 1: you're gonna get relatively less favorable terms. It's really as

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Speaker 1: as simple and as complicated as that. What did the

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Speaker 1: move to Amazon mean for the show? UM, I'm sorry, Oh,

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Speaker 1: I was just saying, it's funny when you when you

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Speaker 1: started to ask the question. I was like, Oh, it

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Speaker 1: meant a lot. I'm sure, you know, for the for

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Speaker 1: you to show, for the just the like the value

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Speaker 1: of the show. And I'm wondering if you've got more information,

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Speaker 1: more data about who's watching the show, Like, were their

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Speaker 1: benefits for it, for it going on to be, you know,

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Speaker 1: be incredible Amazon platform. Well, I think there are multiple

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Speaker 1: benefits to the show heading to Amazon. UM. One. Um,

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Speaker 1: it was important to them, um and to us, but

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Speaker 1: especially important to them that they felt like they could

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Speaker 1: give us more resources to make the show a richer

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Speaker 1: experience just from a production value standpoint. So we've the

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Speaker 1: subsequent seasons there was an increase in budget for the show. UM,

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Speaker 1: thankfully to them. UM. You know, I think the show

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Speaker 1: benefits from not having commercial breaks and stuff like that.

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Speaker 1: Because of the nature of the show and the cadence

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Speaker 1: of the show. I think it's always been a show

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Speaker 1: that would would have would have benefited in that way.

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Speaker 1: So I think both in a lot of creative ways.

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Speaker 1: I think the show benefit being on a platform like Amazon,

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Speaker 1: and Amazon was very aggressive in their um support from

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Speaker 1: the ship. Yeah, I think synthian today's world from a

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Speaker 1: marketing standpoint, having the power of big data, which you

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Speaker 1: just sort of alluded to a moment ago, being able

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Speaker 1: to identify who your audience is, being able to get

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Speaker 1: to them efficiently, being able to coordinate across borders is

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Speaker 1: really really important. And so you know, I just for

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Speaker 1: the profile of the show and the ability to build

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Speaker 1: the art of the show further. Um, I think Amazon

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Speaker 1: has been very beneficial and they've been wonderful, uh wonderful

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Speaker 1: partners and supporters with the show. Yeah. More more, the

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Speaker 1: audience has grown on their platform. So that and that's

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Speaker 1: a it's it's a it's a testament of the show itself,

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Speaker 1: which is which is continued to be. Uh. The creators

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Speaker 1: and and everyone who works on the show has done

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Speaker 1: a magnificent job sort of up in the anti every

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Speaker 1: year creatively. But also Amazon has been very as student

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Speaker 1: how they market and promote the show, and so together

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Speaker 1: it's it's just been It's been a wonderful process. Do

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Speaker 1: they give you any do they give you a glimpse

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Speaker 1: behind the curtain? Do they give you any data terms?

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Speaker 1: Truth and where these companies, not really tech companies, really

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Speaker 1: don't like to share information and their emplays. Even their

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Speaker 1: most senior employees are told not to do that. And so,

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Speaker 1: you know, I think the a couple of inters, the

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Speaker 1: information we receive is limited from them. However, as was

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Speaker 1: always going to be the case, what has happened now

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Speaker 1: is that third party vendors are now able to provide

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Speaker 1: sort of independent in information as I'm sure you know.

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Speaker 1: So you know, Business Insider picks up a company called

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Speaker 1: parad Analytics, uh, and you know they've talked about how

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Speaker 1: the Expanse has been one of I think the Expanse

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Speaker 1: was the number five streaming show in the month of December,

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Speaker 1: you know, when it was on Business Insiders list. We

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Speaker 1: were right up there with the crown Um And we

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Speaker 1: have another company that we work with, its market cast Um,

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Speaker 1: you know, and Ben Carlson started a company called Physiology

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Speaker 1: that was acquired by market cast Roderick and I have

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Speaker 1: been close to Ben for many years, and so we

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Speaker 1: certainly talked to him. So we have a we we

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Speaker 1: know what's going on with the show, and we we

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Speaker 1: we know we can see how the show has can

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Speaker 1: consistently built its audience. What's interesting is instead of particularly

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Speaker 1: strong season, in season five now I think we'd like

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Speaker 1: to think that that's in part because it's the show

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Speaker 1: gets better and better. I think probably the fact that

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Speaker 1: we're in a pandemic and therefore viewing of streaming is

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Speaker 1: up all over the place as a factor as well.

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Speaker 1: But to some extent, TV shows are like book series, right.

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Speaker 1: I mean, there are a lot of great books out there.

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Speaker 1: It's just a question of time and when you can

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Speaker 1: get to them. And so the more people that discover

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Speaker 1: your TV show, your book series, the more word of

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Speaker 1: mouth tells other people to discover it. And that's how

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Speaker 1: you become, you know, a bigger and bigger property. And

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Speaker 1: that's what we've been fortunate to be able to do

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Speaker 1: with the Expanse. Really, I think from a business standpoint, look,

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Speaker 1: we were a feature company first, so I think there'll

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Speaker 1: always be a certain love for features that can't be replaced.

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Speaker 1: But if one is looking at this from a a

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Speaker 1: sort of a cold asked business point of view, one

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Speaker 1: of the biggest benefits of television versus features is the

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Speaker 1: feature business has been through the course of our consistory,

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Speaker 1: not pre outcome, but from certainly certainly the time we

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Speaker 1: went into business, has been about getting out of the

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Speaker 1: gate opening night, opening weekend, determining the trajectory and outcome

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Speaker 1: of a particular film. It's like an election function. You

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Speaker 1: have to motivate a large group of people to come

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Speaker 1: out and vote very quickly in order to succeed. And

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Speaker 1: while that can lead to tremendous success, and we've been

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Speaker 1: blessed over the year to have more than our fair

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Speaker 1: share of it, it's also leads to a fair amount

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Speaker 1: of randomness because they're all kinds of things that can

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Speaker 1: happen that can affect a movie on opening weekend that

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Speaker 1: may be related to the artistic success of the product

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Speaker 1: or not. It maybe about the trailer you cut then

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Speaker 1: the movie itself, or a Northeast or norrisoria or god forbid,

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Speaker 1: you know, whatever the case is, so you know, um uh,

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Speaker 1: the intellivision jan Conversely, there's an opportunity for audiences to

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Speaker 1: have a moment for word of mouth to kick in

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Speaker 1: where you really can discover something and so shows like

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Speaker 1: Breaking Bad that did not become a hit until it,

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Speaker 1: you know, was picked up in Netflix and its second

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Speaker 1: window for streaming, uh, you know, in other examples of

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Speaker 1: shows and now of course the expanse were given time

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Speaker 1: to find its audience. And that just from a from

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Speaker 1: a creation standpoint, is very gratifying and from a business standpoint,

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Speaker 1: makes TV a very attractive addition to al Khon's overall

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Speaker 1: business plan. If you talk to any major studio, Warner Brothers,

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Speaker 1: you know, even lions Gate, you know what is Television

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Speaker 1: is really the backbone of these businesses. I mean even

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Speaker 1: even taking into account giant hit movies like Harry Potter,

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Speaker 1: I mean properties like Two and a half Men and

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Speaker 1: TV shows like that are are are multibillion dollar assets

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Speaker 1: and they really form the backbone of the business. So

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Speaker 1: I think we understood when we really got into television

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Speaker 1: back in two thousand and twelve, where if we were

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Speaker 1: really gonna grow our company into something that had tremendous value,

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Speaker 1: we needed to add television to our business our business

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Speaker 1: mix um. And so individual projects you have to just

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Speaker 1: on a case by case spaces that depends how they

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Speaker 1: were financed. What writes you held onto, what rights you sold,

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Speaker 1: so on and so forth. But overall, television is a

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Speaker 1: better business, has been a better business than the feature

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Speaker 1: of business. I don't know that any CEO would argue

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Speaker 1: that point. Problem, Yeah, it's much more it's I mean,

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Speaker 1: the feature business is much more of a random hit

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Speaker 1: or a miss, high low, unpredictable um sort of, I

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Speaker 1: call it activity um. Television is actually a business with

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Speaker 1: you know, more steady cast flows and whatever. And while

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Speaker 1: it certainly has it's it's um its share of unpredictability

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Speaker 1: as it relates to which exactly shows work or not

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Speaker 1: once the show is going. I mean, you know, it's

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Speaker 1: a it's a business. I mean, there's a there's a

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Speaker 1: there's a sustainable cash flow that comes in pretty regularly

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Speaker 1: and whatnot. As opposed to a movie which you're relying

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Speaker 1: on you know, everything working on a on a single

432
00:28:34,320 --> 00:28:38,000
Speaker 1: weekend generally speaking, and you know something else product. I

433
00:28:38,040 --> 00:28:40,120
Speaker 1: think we should touch on it, of course, is is

434
00:28:40,200 --> 00:28:43,400
Speaker 1: you don't have the massive cost element of prince and

435
00:28:43,480 --> 00:28:47,600
Speaker 1: advertising and correct just the way you haven't film. I mean, now,

436
00:28:47,960 --> 00:28:51,680
Speaker 1: I think an interesting topic, maybe not for this podcast,

437
00:28:51,720 --> 00:28:57,320
Speaker 1: but worth discussing is is is the is the film

438
00:28:57,480 --> 00:29:02,200
Speaker 1: business going to be able to find anally capitalized on

439
00:29:02,400 --> 00:29:06,800
Speaker 1: big data the way that the TV business has, and

440
00:29:06,840 --> 00:29:10,320
Speaker 1: that's really where the streamers play into this. I mean, fundamentally,

441
00:29:10,800 --> 00:29:13,680
Speaker 1: the biggest problem with the feature business is is is

442
00:29:13,720 --> 00:29:17,960
Speaker 1: the historically no one's really known who their audience is

443
00:29:18,160 --> 00:29:21,400
Speaker 1: on any given from film to film, right, There's never

444
00:29:21,520 --> 00:29:26,080
Speaker 1: really been a consistent metric to understand and even and

445
00:29:26,080 --> 00:29:28,360
Speaker 1: even if you know who they are, there hasn't been

446
00:29:28,400 --> 00:29:31,880
Speaker 1: an efficient way to really get to them. So you

447
00:29:31,880 --> 00:29:35,160
Speaker 1: you're ending up spending a massive amount of money in

448
00:29:35,280 --> 00:29:38,720
Speaker 1: order to market for that one weekend that you're trying

449
00:29:38,720 --> 00:29:42,160
Speaker 1: to get to. It's very inefficient. And then you and

450
00:29:42,200 --> 00:29:45,720
Speaker 1: then you're waiting for another home entertainment window that's months

451
00:29:45,760 --> 00:29:49,400
Speaker 1: down the road, and you're readvertising the same film over again.

452
00:29:49,480 --> 00:29:55,000
Speaker 1: So it's a very inefficient uh business model traditionally. I mean,

453
00:29:55,200 --> 00:29:58,560
Speaker 1: I think Broderick and I may be in the minority

454
00:29:58,640 --> 00:30:03,520
Speaker 1: in this school, we actually we believe um uh that

455
00:30:04,000 --> 00:30:06,720
Speaker 1: solely as it relates to the film industry. I wouldn't

456
00:30:06,720 --> 00:30:09,239
Speaker 1: say this about really anything else because it's been a

457
00:30:09,280 --> 00:30:13,360
Speaker 1: horrible human tragedy and and and and and so hard

458
00:30:13,400 --> 00:30:17,360
Speaker 1: for so many people, but in the specific, very narrow

459
00:30:17,480 --> 00:30:20,840
Speaker 1: prism of the film industry, we actually think that the

460
00:30:20,880 --> 00:30:25,840
Speaker 1: economics of film may improve substantially post pandemic, because it

461
00:30:25,880 --> 00:30:31,440
Speaker 1: has brought forward certain changes to the business that will

462
00:30:31,520 --> 00:30:37,320
Speaker 1: ultimately benefit everybody involved by making the economics more more tolerable.

463
00:30:38,400 --> 00:30:41,680
Speaker 1: And guessing that part of that would be starting with

464
00:30:42,240 --> 00:30:46,240
Speaker 1: the shortening of the window of the between the theatrical

465
00:30:46,360 --> 00:30:50,160
Speaker 1: and home entertainment. Certainly, can you put a I mean,

466
00:30:50,240 --> 00:30:52,560
Speaker 1: you can put a price on that in terms of

467
00:30:52,600 --> 00:30:55,720
Speaker 1: like what that means for you in terms of spending

468
00:30:55,760 --> 00:30:59,160
Speaker 1: money on it, on marketing and and just getting you know,

469
00:30:59,560 --> 00:31:03,080
Speaker 1: getting people to to see your product, however they do,

470
00:31:03,200 --> 00:31:07,360
Speaker 1: whether in theater or in them by a DVD or whatever. Yeah,

471
00:31:07,440 --> 00:31:13,520
Speaker 1: I mean, you know our view because we personally, professionally

472
00:31:13,520 --> 00:31:17,960
Speaker 1: we have a tremendous love and belief in the theatrical

473
00:31:18,200 --> 00:31:21,280
Speaker 1: experience and we believe very much that it will continue

474
00:31:22,000 --> 00:31:26,240
Speaker 1: a very important part of not American only American global

475
00:31:26,320 --> 00:31:31,360
Speaker 1: culture once the pandemic receives So our view is that

476
00:31:31,600 --> 00:31:36,360
Speaker 1: what's required is a pricing model that gives consumers a

477
00:31:36,520 --> 00:31:40,280
Speaker 1: genuine choice, gives theater is a real chance to succeed

478
00:31:40,720 --> 00:31:44,840
Speaker 1: while at the same time providing consumers with the most

479
00:31:45,280 --> 00:31:48,000
Speaker 1: work and we say differently the least amount of friction

480
00:31:48,160 --> 00:31:51,280
Speaker 1: to watch content, how they want to watch it, and

481
00:31:51,320 --> 00:31:55,800
Speaker 1: where they want to watch it, and so um uh

482
00:31:55,960 --> 00:31:57,719
Speaker 1: we think that will be the case. We think there

483
00:31:57,720 --> 00:32:00,840
Speaker 1: are a lot of different interesting uh ideas that are

484
00:32:00,880 --> 00:32:05,520
Speaker 1: being tried now and ultimately there'll be an equilibrium that

485
00:32:05,600 --> 00:32:09,680
Speaker 1: will allow for better economics for the business and therefore

486
00:32:09,880 --> 00:32:15,120
Speaker 1: more um different types of content to be created without

487
00:32:15,320 --> 00:32:18,440
Speaker 1: one having to sort of risk their shirt every time

488
00:32:18,480 --> 00:32:20,960
Speaker 1: they go out and make a movie, which benefits everyone,

489
00:32:21,640 --> 00:32:25,080
Speaker 1: m right. But before the pandemic and looking over the

490
00:32:25,160 --> 00:32:28,560
Speaker 1: years you're talking about with the expanse, it's just it's

491
00:32:28,640 --> 00:32:32,240
Speaker 1: it's hard to argue the economics of the non temphole

492
00:32:32,360 --> 00:32:36,480
Speaker 1: film business, not not Marvel, not Pixar, but the non

493
00:32:36,480 --> 00:32:39,440
Speaker 1: tempole business. We've been in The blind Side and p

494
00:32:39,720 --> 00:32:42,040
Speaker 1: S I Love You in Book of Eli and Dolphine,

495
00:32:42,080 --> 00:32:45,200
Speaker 1: and overall the years, all the successful mid range films

496
00:32:45,240 --> 00:32:49,360
Speaker 1: we've had, the economics for the business have deteriorated through

497
00:32:49,960 --> 00:32:53,520
Speaker 1: you know, two thousand eleven, two thousand twelve through two

498
00:32:53,600 --> 00:32:57,880
Speaker 1: thousand twenty, and it's incumbent upon everyone who loves film

499
00:32:57,960 --> 00:33:00,640
Speaker 1: as an art form and is in the business financing

500
00:33:00,720 --> 00:33:05,920
Speaker 1: film to find better models. Uh that worked for everyone,

501
00:33:06,400 --> 00:33:11,880
Speaker 1: uh more efficiently than they have. Have you Obviously, we've

502
00:33:11,920 --> 00:33:15,960
Speaker 1: seen some you know, some really groundbreaking moves with titles,

503
00:33:16,320 --> 00:33:19,240
Speaker 1: you know, premiering day and even you know, given these

504
00:33:19,240 --> 00:33:22,800
Speaker 1: extraordinary pandemic conditions, have have you had any titles affected

505
00:33:22,800 --> 00:33:24,960
Speaker 1: by that? Have you had some? Have you had to

506
00:33:25,080 --> 00:33:28,960
Speaker 1: you know kind of rewire release? Not not yet. I

507
00:33:29,000 --> 00:33:33,800
Speaker 1: mean we've been in a very heavy UM development cycle.

508
00:33:33,960 --> 00:33:36,080
Speaker 1: I mean, so it's gonna be interesting for us because

509
00:33:36,080 --> 00:33:39,479
Speaker 1: we have a lot of product projects that are coming

510
00:33:39,920 --> 00:33:43,440
Speaker 1: that that are ready to be made UM it come

511
00:33:43,520 --> 00:33:48,760
Speaker 1: this year once the UM pandemics subsides. Indeed, we we

512
00:33:48,920 --> 00:33:54,880
Speaker 1: made a horror movie UM in September UM up in

513
00:33:54,960 --> 00:34:00,120
Speaker 1: Toronto and it was it was actually a very satisfying,

514
00:34:00,520 --> 00:34:04,200
Speaker 1: uh fulfilling experience. And then we we came up to Toronto,

515
00:34:04,360 --> 00:34:09,759
Speaker 1: we had a very uh rigorous testing UM regimen and

516
00:34:10,400 --> 00:34:12,800
Speaker 1: you know, we ended up having no cases and we

517
00:34:12,800 --> 00:34:15,120
Speaker 1: we wrapped the film and we're in post production and

518
00:34:15,640 --> 00:34:18,560
Speaker 1: we had it was it was it was wonderful to

519
00:34:18,640 --> 00:34:21,319
Speaker 1: see people who were happy just to get back to

520
00:34:22,120 --> 00:34:24,480
Speaker 1: to working and whatnot. And so it was, it was,

521
00:34:24,760 --> 00:34:28,360
Speaker 1: it was a wonderful experience. Actually. So we have a

522
00:34:28,440 --> 00:34:31,440
Speaker 1: lot of stuff that's coming up, and indeed, we have

523
00:34:31,520 --> 00:34:35,600
Speaker 1: a couple of animated movies that we're getting pretty far

524
00:34:35,640 --> 00:34:38,400
Speaker 1: down the road on. So we were able to continue

525
00:34:39,080 --> 00:34:44,120
Speaker 1: to produce those because you know, you're its animation and um,

526
00:34:44,560 --> 00:34:48,240
Speaker 1: and that's both in film and television. We have animated projects.

527
00:34:48,239 --> 00:34:55,560
Speaker 1: So we've been able to uh sustain our our productivity

528
00:34:55,680 --> 00:34:59,400
Speaker 1: during during the pandemic and hopefully in the coming years

529
00:34:59,480 --> 00:35:03,160
Speaker 1: a lot of it will get seen. Um. What what

530
00:35:03,200 --> 00:35:05,920
Speaker 1: we've adjusted to what brought her saying is, you know,

531
00:35:06,000 --> 00:35:08,799
Speaker 1: like Lullaby Sent for example, which is the horror film

532
00:35:08,840 --> 00:35:12,680
Speaker 1: that we made in Toronto this this past fall, is

533
00:35:13,280 --> 00:35:16,880
Speaker 1: we didn't establish distribution on the front end with the movie,

534
00:35:16,960 --> 00:35:19,680
Speaker 1: which is not which is the opposite of how we've

535
00:35:19,719 --> 00:35:22,759
Speaker 1: worked historically. We're still very close to our friends at

536
00:35:22,760 --> 00:35:25,200
Speaker 1: Warner Brothers, and we talked to them about doing things,

537
00:35:25,239 --> 00:35:28,960
Speaker 1: but we've we've we've we made a decision we no

538
00:35:29,040 --> 00:35:32,520
Speaker 1: longer wanted to be locked into one distribution model and

539
00:35:32,560 --> 00:35:35,799
Speaker 1: this pretty endemic because we saw what was going on

540
00:35:35,840 --> 00:35:39,160
Speaker 1: in the marketplace. Where we believe we have a unique

541
00:35:39,239 --> 00:35:43,879
Speaker 1: competitive advantages is not only our expertise, but our financial

542
00:35:43,920 --> 00:35:48,920
Speaker 1: abilities to actually proactively create content and then find the

543
00:35:48,960 --> 00:35:54,080
Speaker 1: best distribution m O for that content depending upon the circumstances.

544
00:35:54,400 --> 00:35:58,040
Speaker 1: So Lullaby is something that will establish distribution for coming

545
00:35:58,120 --> 00:36:01,920
Speaker 1: up here over the next few months, and you know,

546
00:36:02,040 --> 00:36:05,840
Speaker 1: depending upon how things are going, that maybe something we're

547
00:36:05,920 --> 00:36:08,719
Speaker 1: one of the first films out theatrically, which would be

548
00:36:08,880 --> 00:36:13,000
Speaker 1: absolutely something we'd love to do as the marketplace reopens,

549
00:36:13,400 --> 00:36:16,680
Speaker 1: or if we determine a streaming option is the best sport,

550
00:36:16,840 --> 00:36:20,160
Speaker 1: we're open to that or some hybrid version. So we're

551
00:36:20,200 --> 00:36:24,080
Speaker 1: trying to keep as much optionality now in terms of

552
00:36:24,120 --> 00:36:30,480
Speaker 1: distribution as the marketplace shakes out. Do you have I

553
00:36:30,520 --> 00:36:34,560
Speaker 1: mean you you expressed your faith in the theatrical the

554
00:36:34,560 --> 00:36:38,680
Speaker 1: theatrical experience, But is any of the turbulence in the

555
00:36:38,680 --> 00:36:42,400
Speaker 1: marketplace coupled with the pandemic? Is there any curving of

556
00:36:42,440 --> 00:36:45,239
Speaker 1: any of your ambition at this point? Are you would

557
00:36:45,280 --> 00:36:47,000
Speaker 1: you say that you are going you were you were

558
00:36:47,040 --> 00:36:51,359
Speaker 1: going at the speed and velocity that you would even

559
00:36:51,400 --> 00:36:55,759
Speaker 1: if the pandemic hadn't happened. Um, well, Roder, I think

560
00:36:55,760 --> 00:36:58,239
Speaker 1: both of us should answer this. I'll answer, well, let me.

561
00:36:59,680 --> 00:37:04,760
Speaker 1: I think I think I mean as as as generally speaking,

562
00:37:04,800 --> 00:37:07,600
Speaker 1: over the last twenty years, a big part of our

563
00:37:07,680 --> 00:37:12,600
Speaker 1: job is risk management, and therefore I think we are

564
00:37:12,960 --> 00:37:16,880
Speaker 1: going at the pace that we think the business dictates

565
00:37:17,080 --> 00:37:20,600
Speaker 1: based on our best judgment. Um. You know, yes, we

566
00:37:20,640 --> 00:37:25,720
Speaker 1: went ahead and made a relatively modest budget horror movie,

567
00:37:25,800 --> 00:37:29,200
Speaker 1: but we didn't go out and make some huge drama

568
00:37:29,840 --> 00:37:32,719
Speaker 1: you know, in the fall. So I think I think

569
00:37:32,800 --> 00:37:40,240
Speaker 1: we we're adjusting our um, you know, progress to production,

570
00:37:40,320 --> 00:37:44,560
Speaker 1: let's say, based upon how we see the business itself evolving.

571
00:37:44,680 --> 00:37:49,520
Speaker 1: So it's it's something that we're monitoring making decisions on constantly.

572
00:37:50,480 --> 00:37:53,440
Speaker 1: Um yeah, I think just to follow up on that thing,

573
00:37:53,680 --> 00:37:56,240
Speaker 1: I would say, I don't think our ambition in terms

574
00:37:56,239 --> 00:38:00,840
Speaker 1: of either our creative appetite for different type of movies

575
00:38:00,880 --> 00:38:05,080
Speaker 1: and TV because we have a very broad, diverse portfolio

576
00:38:05,200 --> 00:38:07,840
Speaker 1: of content we've made over the years, that hasn't changed

577
00:38:07,880 --> 00:38:11,719
Speaker 1: at all. Nor is our our our our our desire

578
00:38:11,840 --> 00:38:16,240
Speaker 1: to to produce as much as possible change. What is different,

579
00:38:16,280 --> 00:38:19,640
Speaker 1: I think is when you are making content where you're

580
00:38:19,640 --> 00:38:23,440
Speaker 1: not setting up distribution ahead of time, it does change

581
00:38:23,480 --> 00:38:26,840
Speaker 1: the budgetary prime was one. One wouldn't go out and

582
00:38:26,920 --> 00:38:30,840
Speaker 1: make a hundred million dollar movie without having distribution as

583
00:38:31,000 --> 00:38:34,000
Speaker 1: established in place ahead of time. Certainly we would not

584
00:38:34,120 --> 00:38:38,200
Speaker 1: do something. And so, you know, as we look at

585
00:38:38,239 --> 00:38:43,480
Speaker 1: individual projects, you know, if it's a moderately budgeted horror film,

586
00:38:43,480 --> 00:38:45,440
Speaker 1: we'll write the Jack will make the movie, and then

587
00:38:45,440 --> 00:38:50,480
Speaker 1: we figure out distribution. If we're making you know, uh

588
00:38:50,920 --> 00:38:53,680
Speaker 1: a a big feature film, and we have some big

589
00:38:53,680 --> 00:38:56,239
Speaker 1: features coming up, you know, broad recognized, everyone knows. Have

590
00:38:56,320 --> 00:38:59,719
Speaker 1: worked very closely with you know, danive Veneuve over the

591
00:38:59,760 --> 00:39:02,040
Speaker 1: year as we get Prisoners together, we did played Runner

592
00:39:02,719 --> 00:39:06,360
Speaker 1: nine together. We're about to do another big feature film together.

593
00:39:06,800 --> 00:39:09,640
Speaker 1: That movie will be something we will figure out distribution

594
00:39:09,680 --> 00:39:12,040
Speaker 1: ahead of time because the budget will dictate that we

595
00:39:12,160 --> 00:39:15,080
Speaker 1: do such. So we are that I think that's what

596
00:39:15,160 --> 00:39:18,400
Speaker 1: we mean by risk management and being you know, I

597
00:39:18,440 --> 00:39:20,719
Speaker 1: don't know that I called I say the word conservative,

598
00:39:20,960 --> 00:39:24,719
Speaker 1: but certainly sensible in our decision making the process. Well,

599
00:39:24,760 --> 00:39:27,279
Speaker 1: there's nothing more valuable out there right now than I

600
00:39:27,440 --> 00:39:30,400
Speaker 1: p and since again, since you have a library, I

601
00:39:30,480 --> 00:39:32,640
Speaker 1: have to imagine that people have been knocking on your

602
00:39:32,680 --> 00:39:36,080
Speaker 1: door for acquisitions We get calls, but it's not something

603
00:39:36,160 --> 00:39:38,600
Speaker 1: we you know, it's not. If you spend your time

604
00:39:38,640 --> 00:39:42,240
Speaker 1: worrying about that, then you lose focus on what matters,

605
00:39:42,320 --> 00:39:45,680
Speaker 1: which is to continue to make great content. If you

606
00:39:45,760 --> 00:39:55,880
Speaker 1: do that, everything else takes care of yourself. Thanks for listening.

607
00:39:56,360 --> 00:39:58,960
Speaker 1: Be sure to leave us a review at Apple Podcasts.

608
00:39:59,280 --> 00:40:02,279
Speaker 1: We love to here from listeners, and be sure to

609
00:40:02,360 --> 00:40:05,640
Speaker 1: tune in next week for another episode of Strictly Business.

610
00:40:06,760 --> 00:40:11,279
Speaker 1: Yeah h