Content Digestors,
Hope you’re feeling full.
Remember last summer's permanent fire skies? Till yesterday it had been downright balmy, but I'm good with the heat so long as I'm seeing blue.
Well, the coming change of seasons (lololol) means the fall fests are upon us. Marcel The Shell is about to summit the mountain in Telluride. Meanwhile, ten thousand people at Netflix already have access to the Jane Campion movie. Do any of them care?!?!
Today, I’ll tell you about what “dumb money” looks like at staggering scale, beyond the Ellisons. We’re talking Blackstone-ian, even Amazonian…
Reese
So it has been weeks since Reese sold Hello Sunshine for nearly a billion dollars, half of which is cash. The financial press reported that as "only half in cash," but that's still five hundred million dollars.
Why would this deal happen? I could tell you that there's "enormous demand for content" or that ours is a "creator-driven economy" or that "celebrity entrepreneurship, in the age of Ryan Reynolds, Clooney, and ALBA, has never been hotter."
But none of that seems directly applicable.
Pause to consider the assets actually purchased: a company that merely produced -- but didn't finance or create or own a stake in -- a few recent hit TV shows, including The Morning Show; that owns Reese's Book Club (that's it's official name), with 2MM Instagram followers; and that operates a web address with some merch you can cop for the girlboss in your life. But there's no library, no guarantee she'll star in a slate of movies, and no Casamigas.
What gives?
Kevin Mayer
I want to try capturing what I imagine were the circumstances -- or at least the conditions of possibility -- in which Reese sold Hello Sunshine for nearly a billion dollars.
The key player is Kevin Mayer. He was supposed to succeed Iger at Disney, which didn't pan out. But per Matt Belloni's newsletter, Mayer has been busy:
“In just 18 months, Mayer has taken the top job at TikTok, bailed four months later after President Trump forced its Chinese owner to sell (that never happened); launched a SPAC with his fellow Disney alum Tom Staggs and a hodgepodge of figures including Shaquille O’Neill; merged that SPAC with a fitness app called Beachbody; launched another SPAC with Staggs; was in talks for a senior role at Redbird Capital; tried and failed to buy part of Scooter Braun’s company; joined Russia-made billionaire Len Blavatnik’s Access Industries as a senior advisor; became chair of Blavatnik’s sports streaming company DAZN; and, oh yeah, this week he convinced Blackstone, the private equity firm, to buy Reese Witherspoon’s Hello Sunshine company in a deal valued at $900 million.”
Mayer's grand ambition here is to buy other production companies, presumably talent-driven ones, and cobble them together into an independent studio that'll supply the streamers. I think the plan is premised on a misunderstanding of how projects actually get developed. But that's besides the point...
Infinite Money People
Mayer has crossed over from Hollywood into another realm. "Wall Street" doesn't quite capture it. He's in with the Infinite Money People.
The Infinite Money People might be billionaires themselves, but that wouldn't be ideal for Hollywood's purpose, lest the check-writer get too emotional. The best "whales" or "dumb money" -- the true Infinite Money People -- merely oversee yuge amounts of capital & feel so secure in their jobs that they're willing to invest lots of it, knowing deep down they'll lose it, just to hang out with Chris Evans like 2-5 times. This is the same logic that funds nearly all independent films, but at enough scale to get written up in the Wall Street Journal.
The Infinite Money People might run a division with Distressed Debt or Alternative Assets in its title for a new-school financial goliath. Or they might be the first cousin of a foreign despot, lording over a petro state's sovereign wealth fund. The most common way for these people to enter the business was through co-financing whole slates for studios. A prototype here is Kevin Ulrich, whose fund bought & sold MGM & who has an elaborate "surfer" hair highlight treatment (pictured below). Another would be the Qatari dude, whose name I can't find, who arranged for his country to buy Miramax from Disney in 2012.
Everybody in Hollywood would like to be in with the Infinite Money People. That's because our business is bad, and in order to raise money for splashy moves, you can't approach sober-minded bankers. You can't even go to Sand Hill Road (yet... though who knows if VC will join Big Tech in disrupting content). You have to get in with people who control bottomless pools of money and are feeling reckless.
It's not as if Hollywood woos this level of investor regularly. Ari has, raising billions from the Middle East to buy the UFC. Brett Ratner did, in his brief moment of moguldom, backed by James Packer. More recently, Zaslav has too, raising tens of billions to take over Warners/HBO/CNN, with the help of Aryeh Bourkoff, the M&A banker who takes a hefty cut for introducing these deals' participants.
The introduction here seems awfully important. You can't merely be looped over email. These guys aren't diligently sitting at their desks at Goldman. They are out and about, on an Icarian vacation circuit, hanging with each other, entertaining a select few entrepreneurial psychopaths who've caught their attention. To pull off these deals, one has to be in a scenic enclave with the money, on just the right weekend, say Ari & Aryeh. Ari's New Yorker profile was an exhausting travelogue back and forth to the Emirates. Aryeh repeats his story about flying to Roland Garos for just one match so Zaslav could see him across the court.
Enter Whim Theory: These deals -- the predominant type of reshuffling of assets in Hollywood -- aren't deliberated in normal business hours, because they'd never stand up to scrutiny. The Infinite Money People could only agree to them on whims.
To buy Hello Sunshine, Kevin Mayer got a billion dollars from Blackstone, a publicly-traded company worth $150B. Naturally, it doesn't make anything. It's a private equity fund that manages $700B of other people's money.
So spending $500MM on Reese-- 1/1400th of its reserves -- doesn't have to make sense. For a company that typically thinks on the multi-billion scale about assets as sexy as single family housing in the southwestern U.S., the Reese deal is a "that sounds cool!" A "why not?" A "you know, I've never tried their pistachio..."
Whim Theory: Big Tech Corollary
I'm trying to conjure up why I think that the social seductions & mere whims of a very small number of money people determine the course of events in Hollywood -- more so than rational profit-motive or genuine insight about the trajectory of the business. I think there's a cauldron of dudes talking each other into bad deals that might make for fun stories.
Then again, the deals cooked up in that orbit may not shift the plate-tectonics of entertainment. Reese's won't, unless several others like it quickly follow suit & give the stars new kinds of power.
In contrast, the sale of MGM -- where Big Tech bailed out Infinite Money -- feels more significant in the grand scheme, as it marks the effective end of a century-old independent studio. Surely, in contrast to the whims of the Infinite Money People, Big Tech's takeover of Hollywood, where the real power rests, obeys a cold, capitalist logic. So while it's sad for us to watch as Big Tech remakes the pictures, it's a market democracy after all, and this is what the audience wants. It was always going to go this way.
But... what if the Big Tech Streaming System is premised on a whim?
This is a tricky argument. I can't conjure up the social milieu. I have no sense of Tim Cook's lifestyle, except that it probably sucks.
There are also undeniable counterarguments. Netflix is coldly running the Amazon playbook: spend & grow till it reaches monopoly power. (Then what?!?!) So while the company might habitually pick the wrong movies & deals at an alarming rate, those are still business decisions that failed. And in the world Netflix has wrought, some legacy media companies are plainly fighting for their lives... or at least for their shareholders' best exits.
But what about all the other companies racing into streaming?
Apple's market cap is $2.54 trillion. Amazon's is $1.75 trillion.
I get that Amazon wants to keep Prime customers happy and that feeding them Bosch is one way to do so, but there's nothing they can do in Hollywood that actually matters to the bottom line.
Prime Video and Apple TV+ are shiny, loss-leading Los Angeles outposts whose value to their Big Tech parents' is primarily reputational & financially speculative, if not specious. And for the top brass, dipping toes in Hollywood must be fun, given that their normal responsibilities are like... I don't even know, streamlining supply chains predicated on exploited labor & strategizing about how to discredit AOC.
Hollywood is their extracurricular. Even for Comcast, which pales in comparison to Apple and Amazon, its presence in entertainment, NBCUniversal, only represents a fourth of yearly revenue. So it's important to the bottom line, but it's not make or break. Brian Roberts, who inherited Comcast from his dad, likes being at the Oscars (and at golf tournaments and SNL etc. -- a party boy, but dignified).
The marching orders in Hollywood used to be pumping out star vehicles with happy endings & Dr. Detective, Attorney-at-Law procedurals. For the 2010s, it was faithfully adapting all the books people liked... and then doing them again, immediately. Those dictates weren't exciting -- the great work nearly always cut against them -- but they were clear.
Now, things just feels messy. There's no Louis B. Mayer to cater to or fight against. There's not even a Bob Iger. The business has been swallowed by streaming. The streamers' mandates are confounding, because half of their parent companies aren't serious about being in the business anyway. There are vague requests for "positivity" that none of them knows how to implement. Apple only wants soft prestige with yuge names and yuge budgets, or like soft sci-fi with yuge budgets. 20th Century Studios -- a blip at Disney, run by the patron of Ridley Scott's epics -- very specifically requests $40MM-$60MM movies for Hulu. I truly don't know where to start on Amazon. Meanwhile, Netflix's buying strategy feels coherently schlocky... which is an enemy we know, but an enemy no less.
I suspect the feeling of rudderlessness in the business isn't just because of tech or the pandemic. It stems from the fact that the industry's course is being charted by people who don't think of themselves as navigating something important through a storm. They're just playing.
But it's at such gargantuan scale, with thousands and thousands of livelihoods, & with "products" that shape the world's imagination.
So they're playing ball in the house. We'll see what breaks.
Hollywood Forever Y'all,
Max
P.S. I caught Pig last night at the Laemmle Noho. I dug it, even N95'ed, sans popcorn. It's a good mix of a batshit premise, stunt casting, yuge heart, and, yes, stellar animal acting. I didn't expect it to be the kind of movie that could pull of having three monologues.
But it does! And maybe that's because they're all of a piece: How do we live in the presence of death? The movie is entirely devoted to grief and what we do with our hurt. The three leads are all defined by loss. They cope differently, none healthily. The story condescend to sadness. It makes space for it. But in the end, a guy with a lot of schmutz (& blood) finally washes his face, which feels like an honest victory.
Reflecting on Pig, I can’t help but First Cow, another tender, earthen little drama set in the Pacific Northwest that isn't really about animals. They're among my favorite new movies in the pandemic.