Endeavor is “well positioned” for a potential writers’ strike, says CEO Ari Emanuel

Endeavor CEO Ari Emanuel isn’t making many predictions or taking sides as the WGA deadline approaches.

But on the quarterly call with Wall Street analysts, the executive said his company, parent company of talent agency WME, is “well positioned” in the event of a strike.

“There are important issues on both sides,” Emanuel said. “We support our customers to solve their problems with the studios.” He added that over the years he has “experienced many strikes”, which gives him a good idea of ​​the current labor market. “Compared to last time [in 2007-08,] It’s very different and our business is very different,” he said. “So I think we’re pretty well set up.”

WGA and AMPTP will begin negotiations on March 20 before the company’s current contract expires on May 1. Emanuel said if there was a strike, it would likely be “later in the year”, although he said he had “no idea how long it would last”.

For years, Emanuel and his leadership team have emphasized how diversification into areas such as esports, fashion, live events and technology has helped reduce the company’s vulnerability to any pressure WME faces. This topic was prominent on the results conference call. CFO Jason Lublin noted that more than 50% of WME’s revenue comes from non-film or television activities.

In addition to the threat of strikes, a cool breeze is blowing through the media business when it comes to streaming spending. Even top player Netflix has kept things in check, and newer competitors are promising moderation. Emanuel was asked about the possible impact of a downturn on office work. There are “some spend more, some spend less,” he mused. “Strategy changes.” However, in addition to subscription streaming, sports rights and box office are poised for strong growth in 2023, which the company says will provide a boost.

During his prepared remarks earlier in the call, Emanuel said Endeavor’s “unique portfolio” “offers multiple growth opportunities and helps protect against volatility in a particular area.” For example, the revenue from WME’s top three SVOD buyers accounted for just 2% of the company’s total revenue in 2022.

At the time of the last writers’ strike, which lasted from November 2007 to February 2008, no Hollywood talent agency was part of a public company. Endeavor’s IPO in April 2021 changed that and also unlocked enormous wealth for Emanuel and management. Proceeds from the offering were $511 million on day one, but the company’s shares have spent the past year below the $24 IPO price.

Frictions with the WGA and other guilds sometimes led to business changes, even outside of contract negotiations. Endeavor Content, the former subsidiary that caused friction with the WGA and other guilds, was sold to Korea’s CJ ENM last year and renamed Fifth Season. The deal was necessitated by an agency agreement with the WGA, which designated Endeavor Content and other agency-affiliated production entities as independent packagers or projects. Endeavor retained a 20% stake in Season 5, but CJ is directing.