Jeff Sagansky Hits Streaming TV Business Model: “We’re in the Golden Age of Content Production and the Dark Age of Creative Profit Sharing”

Media investor and producer and former entertainment CEO Jeff Sagansky warns of the negative impact of the current business model, Price Plus, on profit-sharing. Initially promoted by Netflix and later adopted by most major TV broadcasters and studios, the facility breaks down decades-old talent practices in hit series that have been perfectly rewarded with profit cuts that have continued to yield revenues for decades. After creating the show.

In his speeches as part of the NATPE event on Wednesday, Saganski paints an uncertain picture of what will happen if no one opposes the new paradigm, including the disappearance of bonus craters and the disappearance of major joint deals and cries of support. producers, writers. . Actors and agents went to the Justice Department and Congress to “argue against this anti-competitive behavior” to “level the playing field”, as the government did by following Finnish rules in the 1970s. They will have to do this without their main allies because “the producer-studio link… is irreversibly broken”.

While there is growing frustration in the creative community with people privately mourning the end of traditional deals, this is the first time I’ve seen a leading figure in the industry speak out openly and very directly against a new talent compensation. schema. “It’s a bad time to be a producer in the sense that you get paid fairly for the work you do,” and points to a possible conspiracy between studios and publishers to impose a pattern.

Saganski, former chairman of CBS Entertainment and Sony Pictures Entertainment and former CEO of TriStar Pictures and Paxson Communications, called the deals they had forced writers, directors, producers and actors to sign as “highly unfair” and “ridiculous”. . Meanwhile, Netflix, Amazon, Disney, and Warner Bros. agreements employed by today’s shows allow today’s shows to come to life 50 years from now, with “licensed and re-licensed and what is seen around the world as a digital revolution.” It’s possible now, but the show’s creators and producers only get paid once (10-20% more than your regular producer) and never get paid for all those billions of views, all that revenue from all those licenses. He. . Relevant ad revenue.”

“This has to be the best time in the history of our business for filmmakers,” said Sagansky. In our annual business, I don’t think there’s ever been a worse time to be a producer in terms of getting a fair share for the work you do,” he said, adding that the comments apply to all of the above talent line.

“We are in the golden age of content production and the dark age of creative profit sharing,” he then continued.

Describing the current situation as a repeating case of history, Sagansky explained how we got here. At the beginning of the American television business, studios and producers owned television royalties in the 1950s and 1960s, but networks (only 3 at the time, ABC, CBS and NBC) accounted for 90% of the ancillary economy. .

“Out of desperation, producers and studios got together with Congress, the Department of Justice, and the FCC to address this compelling anti-competitive behavior of the networks, and they were largely successful,” Sagansky said. Said. In 1970, the FCC passed the Financial Interest and Syndication (fin-syn) Rule, which largely prohibited networks from running programs with financial interests.

Sagansky spoke of the “incredible creativity and success coming out of the fin-syn rule” as studios license the first window of their programs across networks, as they are forever committed to the second window and internationality.

“The forty years since 1970 have truly been a golden age for the producer,” he said.

In addition to the fin-syn rule that led to the creation of Indians, such as MTM, Viacom and companies Aaron Spelling, Stephen J. Canel and Norman Lear, several other factors indicate that the property is “increasingly valuable”, Sagansky said. . These include the rise of cable in the 1980s, which became a major buyer of network programming, the opening of the international television market following the privatization of television in Europe and Asia in the 1990s, and the DVD boom of the late 1990s and early 1990s. Shows of the 2000s costs $600,000 per episode in DVD sales.

“Successful TV shows earned $1.5 million or more per episode in 2010: Producers, writers, directors and actors were all part of the fruits of their labor,” said Sagansky.

“Then a neutron bomb was dropped on a business that started with Netflix launching streaming in 2010,” Sagansky said. “Suddenly, the calculus of the television business changed very quickly.”

Thanks to net neutrality and early preparation from TV studios, streaming was quickly licensed on Netflix, but traditional media companies soon changed course and focused on their own direct client platforms in linear terms. The world of television after the cord was cut fast.

Of the original seven studios in Hollywood, six are currently owned by Disney, Warner Bros., all but Sony. Discovery is affiliated with a streaming platform owned by Paramount and NBCUniversal.

“These studios are part of the great walled gardens where the primary teacher they serve is the medium of flow,” Sagansky said. “And for whatever reason, everyone was quick to adopt the production model made by Netflix Studios, which claimed 100% ownership of Netflix and ‘backed up mostly from the producers’.

The so-called “price-plus” model has spread beyond the original Silicon Valley-based streamers on Netflix and Amazon for many years and secretly for several years, especially when the Writers Guild and major talent agencies have come into conflict with packaging and writers. Industry watchers note that they are not represented by agents.

Where old linear world shows took over their original network broadcasts before returning to the studio basement in the second window and in anticipation of international performance, now series are uploaded to servers almost forever, streamers can keep track of who’s watching. to them. When, where and for how long. The paradigm raises questions for Sagansky that respond to antitrust concerns.

“We have never had this much information and data since we started the media business. “So, is it even remotely fair to sell a product forever just because these publishers/studios have agreed to let you enjoy the backend?” said. “Did the Producers Guild, Directors Guild, Writers Guild, or SAG-AFTRA ever meet with these media giants to end over 50 years of illegal ownership?” “This is the world’s largest media company. Don’t they have the opportunity to participate in the profits of all these programs that have no role?

He made another comment on monopoly nomenclature, explaining why a new model had sprung up that actually bypassed Beckend.

“First of all, these streaming services want to be global, so broadcasters want global rights, and secondly, because broadcast and cable have lost their importance, they control most of the show dollars and oligopoly when all of the big players are in demand. It’s hard for a manufacturer to implement the same model. It is not possible to disrupt the behavior.”

While in the early days of the broadcast there were “great intro bonuses that could in some cases come close to some hit shows, my guess is and now we see that these entry bonuses will drop dramatically. “Also, I predict that as publishers converge and a competitive environment converges 3 or 4 major services, those big deals to brand manufacturers will disappear,” Sagansky said. Said.

That’s exactly what happened 50 years ago, by a big margin, he said.

“Whereas 50 years ago producers and studios fought together, today these studios serve all these broadcast giants,” he said. “The producer-studio connection, which has served a common purpose for the last 50-60 years, has been irreversibly broken. Studios are happy to dominate the creative community: give me your best and you’re set. We don’t want to share the benefits you create.”

The prospects for creative talent are so dire that Sagansky sees a way forward, and that is government intervention.

“The creative community – producers, writers, actors and directors – and obviously talent agencies must go to the Justice Department and Congress to counter this anti-competitive behavior,” he said. “Bringing all these different groups together is not early work, but it may be the only way to level the playing field.”