>>Andy Serwer: All right. I would like to
bring up our next two guests and they are Ari Emanuel and Patrick Whitesell, the co-CEOs
of WME Entertainment. [ Applause ]
Good to see you. Thanks a lot, guys, for coming and for patiently waiting in the wings. You
probably know who these guys are. They run, you know, what’s likely the most powerful
agency in Hollywood or the world. It is an incredibly dynamic place with a client list
that blows me away. I mean, Patrick –>>Patrick Whitesell: You’re one of them.
>>Andy Serwer: That’s true. I should disclose that. Boy, I forgot about that. That’s a real
conflict of interest here, isn’t it?>>Ariel Emanuel: Depending on the questions.
>>Andy Serwer: I’m not a very good client, am I?
>>>No, you’re good.>>Andy Serwer: That’s right.
Anyway, can you mention some of your clients, you guys? Because it is a pretty awesome list.
>>Ariel Emanuel: It is Larry David, Marty Scorsese, Michael Moore, Sacha Baron Cohen,
Adam Sandler, Matt Damon, Lady Gaga. You want to keep on going?
>>Patrick Whitesell: In the movie business we have, I don’t know, probably a good majority
of — good chunk of the movie stars that you have seen are the people behind the cameras,
as Thomas was talking about. And in television, I think the majority part
of the shows people watch in this room, I think —
>>Ariel Emanuel: If they watch TV here.>>Patrick Whitesell: — are “30 Rock,” “The
Office,” and “Entourage.” So, we have a real dominant kind of television business.
In the touring business, we book about 25,000 tours a year. It is all types of music from
Lady Gaga to country western music, Braid Paisley, or hip-hop. So it is a real cutting
big cross-section.>>Andy Serwer: Right. You guys merged Endeavor
with William Morris about 15 months ago. Ari, I want to throw this to you. Let me just ask
you: What was the point of the deal? What were you trying to do? And how’s it going?
>>Ariel Emanuel: Well, as you guys have — in this crowd have all ruined our lives a
little bit, Patrick and I probably about seven years ago looked at the world and said, There’s
going to be — when we had Endeavor, there’s going to be more distribution than ever. And
that if we believe that content is king when we were at Endeavor, we had two big pockets.
We had the television business and the movie business.
And the premise was that we needed more content as the world expanded on the distribution
side and that our leverage inside that conversation would become greater as the world kept on
expanding on the distribution side. If you just took television, in ’95 when we
started endeavor, there was four networks. If you look at it now, it’s an ungodly amount
of television being consumed and even greater amounts of television being consumed.
So when we looked at it, we could add a publishing — an author business, a theater business,
a lecture business and a music business. And then as we pushed in on the conversation
as relates to distribution, we would have a different seat at the table.
And then off of that as distribution changes, whether it be in social media, et cetera,
how we used our branded content and how we had the conversation in the traditional manner
into the expanding kind of world of content and how you define content gave us more leverage.
So that was the basis for it.>>Andy Serwer: So, Patrick, how’s it going
with the new model? You hear a lot of people saying that, Oh, you know, the old Hollywood
model, the whole Hollywood agent model is dead. What does that mean? And what are you
guys doing to get out of that trap?>>Patrick Whitesell: Well, first of all, I
don’t think the old model, if that’s what you call it, is dead. We are probably doing
more television. Our traditional businesses, we’re doing probably more television work
than we have ever done. The movie business is, as Tom mentioned, is not going away. There’s
1.3 billion tickets sold ten years ago. There will probably be 1.3 billion sold in ten more
years. So the film and television business — And music actually, the byproduct of the
changes there, acts have to tour more. Our core business and what we have done for a
long time hasn’t changed a lot. I think where you are seeing the biggest change
is the type of people we represent has expanded. The people that are going to come up here
— the people that will come up here you are going to see in a little bit are clients
of ours. You know, the idea that you can take a company
like Hasbro that is a toy manufacturer and they can become intellectual property and
creators of movies and also own a television channel or cable channel, that can happen,
right? And I think as you will see the next phase,
which Ari is talking to, is as the economics start making people that we represent incentivized
to do branded content for the Web, you will see that content get really good.
So as you start seeing the marriage of our people with people like Demand Media and Richard
or Anthony Borges and Grab and social gaming and you start seeing the people we represent
starting to play in those areas, then you will see the content and how — and the spike
of the quality of content go up. So what Ari and I are trying to do with the
company is to position ourselves and our clients for those opportunities. And I think that
is a kind of new model.>>Ariel Emanuel: I mean, one of the things
we have to do kind of going into the future — and I think for everybody, it’s a requirement
— is the definition of “content.” What I defined it as 20 years ago, 15 years ago,
has completely shifted. So that what Patrick says, you know, what
Demand Media is doing or anybody else is doing as it relates to content, that is a form of
content. What we’re doing with LinkedIn and a bunch
of our authors — right? — and what we’ve talked to you about, that is a form of content.
The important thing for people on our side of the business is, one, we have to stay curious
and we have to kind of keep on changing as the needs for content and the different forms
of content start to change, and then utilize what we believe are people that actually know
how to tell stories and know how to express themselves that other people are interested
in and find distribution for them. That will be our task into the future.
I don’t know if you can write an algorithm for that, but I do think there’s a place for
it, and, you know, the big question and the push/pull in this environment is how people
remain — enable people on our side of the ledger to get paid while permitting an open
source to everything. And I think it’s incumbent on the two kind
of areas of California to get to that conversation so that there can be expansion in their —
in their business model but it can’t erode our business model, and I think that’s a very
big issue that we’re getting to, we’re — you know, everybody’s discussing. I don’t
think the answer is there yet, though.>>Andrew Serwer: Yeah. It sounds like —
I don’t know if I’d hear Ari Gold talk about this, right? I don’t think he’s quite up to
this.>>Ariel Emanuel: Well, I mean, as somebody
said, you know, there’s a lot of four-syllable words here and there hasn’t been any four-letter
words here? There will be on this panel.>>Andrew Serwer: Right. Good. Okay. We’ll
separate the television personality from —
>>Ariel Emanuel: Yeah.>>Andrew Serwer: Right. You know, it’s interesting
because when you talk about the two Californias, you know, I’ve seen that a lot and that’s
also sort of the New York versus San Francisco and L.A. versus San Francisco content versus
distribution and technology. Hollywood has — what I was talking about in the beginning
— I think has always followed, you know — you know, we talked about the film, TV,
and radio, but, you know, you’re seeing, you know, the Ashton Kutcher people laughed. It’s
for real. You know, what he does. I think Will Farrell. You saw what Matt Damon and
Ben Affleck have been trying to do, and now what you guys are trying to do.
Is there a new feeling in Hollywood that you guys aren’t just sitting there and waiting
for stuff to hit you, that you guys are getting to be more proactive with technology? Do you
think, Patrick?>>Patrick Whitesell: Well, I think the one
thing that most of our clients are talking about and what we spend a lot of time talking
about the answer to is, you know, they drive a lot of this activity on Twitter or on Facebook,
and mostly it’s disruptive to their lives. There’s a few people who embrace it, you know,
and relish it, but a lot of people — and with “Us Weekly” or whatever it is, most of
it is invasive, but it drives all these economics for other people, not themselves.
And so we spend a lot of time — we know what their value is to consumers. We know what
they are to the advertisers. So we’re — the next step for us is, okay, how can they
economically benefit from those things that are out there and are happening. And I think
that’s probably the biggest thing that comes up for us right now.
And then secondly, how do you take all of that information and activity and drive it
back to their movies and to their properties. And those two things, and our ability to kind
of — you know, kind of figure that out with the advertisers, I think is going to be a
real big business for us.>>Andrew Serwer: Right. Do you guys like to
talk to people like Dennis, you know, at Foursquare and, you know, how can you bring entertainment
ideas to Foursquare? I mean, that must be a really cool brainstorming
conversation when you’re talking about –>>Ariel Emanuel: Well, we just had a pretty
big and a continuous conversation with LinkedIn. We’re doing it with other people, as Patrick
pointed out. So from our perspective, you know, there’s
some content — you know, there was that big article today in the “New York Times” and
I think in “Wired” this week about, you know, is it an apt world or, you know — we’re constantly
in this conversation. There are some clients that need to be in that conversation, and
then there are some clients that just — Larry David could give a ____, right? He’s
making “Curb,” that’s what he’s doing, and it doesn’t matter to him.
There’s other people like the Lady Gagas and other clients that that is an important conversation
that they want to explore. From our perspective, as Patrick said, we
think we have clients that move product and move economics, and how we monetize their
relationship with the consumer through distribution is going to be where we think there’s going
to be innovation for a bunch of our clients and where there’s a monetization formula for
a bunch of clients — a bunch of distribution that might not have economics underneath them
that kind of work right now.>>Andrew Serwer: You and I were talking about
that story you mentioned in the “New York Times” today. I think it was an excerpt from
— a book, I believe, that Nick Bilton is — the two-four-ten? Did you all see that?
About how content will be consumed from two feet, four feet, and —
>>Ariel Emanuel: Search it on Google. [Laughter]
>>Andrew Serwer: Right. And — yes. Nicely played.
And that, you know, your mobile is your two feet, your computer screen is four feet, and
your TV is ten feet. And of course, you know, they’re not going to all drive each other
out of existence and you have to play across all the platforms.
>>Ariel Emanuel: Right. I think it was a pretty good article.
>>Andrew Serwer: What about, you know — about live, live events on the Internet?
I mean, are you guys — is that ever going to happen, and — or having on-demand on the
Internet or live events on the Internet? We were talking about that as Patrick. That seems
to be kind of far off. Is that something, you know, you consider
at all?>>Patrick Whitesell: I think that is far off.
You know, I don’t think that’s an immediate — like I don’t think the economics around
that are immediate. I think what you are seeing, just as an example
I just came from the Toronto Film Festival, and, you know, up there what’s been dying
is the independent movies that have had a hard time getting out there and being seen.
Because in the old model, with all the windows taking so long, the marketing dollars, and
to try to find an audience, is getting harder and harder. And actually cable television
has really hurt it, because a lot of great dramas are on television, so people — it’s
eroded the movie-going audience. But what you’re seeing now is that the VOD
model for independent film is a great thing, because what’s happened is it allows the economics
of guaranteeing someone distribution and advancing them some money against a theatrical distribution
as long as there’s a quick window into the VOD. It allows more people to see it, everybody
to make more money, and therefore, you’re seeing, consequently, in Toronto we just sold
two movies that probably wouldn’t — well, they may have been sold but they certainly
wouldn’t have been sold at what they got sold for.
So I think in some ways you’re going to see, you know, kind of this — you know, the collapsing
of windows, and in the big movies, it’s going to be longer and it shouldn’t be. But I think
a lot of the more niche film, I think it’s going to be a good thing and you’re starting
to see that, and I think that’s — I think that’s going to be the most fascinating to
me when I look at the four studios, four primary studios of Newscorp and Disney and now Comcast
and — who did I miss?>>Ariel Emanuel: Warner.
>>Patrick Whitesell: Warner. Yeah. Of course. But they all have slightly different kind
of agendas, but I think that you’re going to see them all kind of play around with this
windowing, and I think that will be a good thing.
>>Andrew Serwer: Talking about products, we have to talk about product placement and that’s
kind of a, you know, big topic these days. You know, I was looking at “Wall Street: Money
Never Sleeps,” the second iteration of “Wall Street,” and I think they’re in a bar and,
what’s it, Gekko asks him, “Would you like a Heineken,” you know, and Shia says “Yes,”
and it’s just, you know, pretty blatant. I mean, are you guys doing more and more of
those kind of conversations –>>Ariel Emanuel: Television — in fact, on
television it is happening more and more. So we’re having conversations with the WPPs.
I mean, our business — in our business model, we have a whole marketing/advertising business
that, as we see the business, that coupled with marketing is going to be a very important
relationship. How we handle the big advertising agencies
I think is — you know, they built a distribution model that they have to execute, but we’re
having more and more conversations with advertisers every day, whether it be the P&Gs, the GMs
of the world. Almost on a daily basis now you’re having those conversations.
You know, in the television business, in cable, in 2007 there was 30 scripted shows. Now there’s
130, right? So it’s not like it’s — that window is closing. It’s expanding. There’s
more television being watched. The economics behind it are — on the network
side are stressed a little bit, but only — and, you know, during the recession, the
— you know, the ad rates were down, even though CPMs were going up.
So I think the advertisers are going to be the bigger players in this conversation and
they’re pushing in on the relationship with the distribution model in the core business.
So yes.>>Andrew Serwer: Are you guys surprised that
there isn’t actually more interactivity between television and the web? Because, you know,
I remember talking to Ben Affleck and Matt Damon. They had this show call showed “The
Runner” that they pitched.>>Patrick Whitesell: A Foursquare show.
>>Ariel Emanuel: Great show for Foursquare.>>Andrew Serwer: Yeah. Exactly. That was Foursquare
before there was Foursquare. There was a guy set loose in a —
>>Ariel Emanuel: Rights are available. Talk to me about it.
>>Andrew Serwer: And I don’t know if you heard about this —
>>Ariel Emanuel: We’ll just charge you 50, okay?
>>Andrew Serwer: That’s good for him. And they turn this guy loose in America and
you had to find him. And the show would run once a week, I guess — I’m kind of getting
this maybe not so right — and then — but then you could keep following the show online
and he would appear in a doughnut shop in Paducah and then people would go.
And I believe that ABC said they would do it but their lawyers —
>>Ariel Emanuel: After 9/11, it got cancelled.>>Andrew Serwer: — nixed it because — right.
Because — so there were security concerns or people — people were also scared they
were going to shoot the guy when they found him to get a prize, and it sort of had some
problems, but — [Laughter]
— anyway, you could see the potential to do these things. And I think “Lost,” you know,
has done some of this stuff where, you know, you could crowdsource plot changes. I’m just
surprised that there’s not more of that going on.
Is that something you guys think about?>>Patrick Whitesell: I don’t think — I think
now is actually — I think you can for the first time to really have the conversation.
I think “The Runner” was a little bit ahead of its time. It was a great idea but I don’t
think you could actually execute it the way you could now. But I think you will see more
of that and I think you’re going to see it in social gaming particularly.
You know, I think that’s an area where whether it’s woven into the narrative of a television
show or if it’s just your celebrities driving traffic to that and participating and coming
in and out of the game with you, I think that’s going to be an exciting place, too.
>>Andrew Serwer: Yeah. Does anyone have any questions? I’ve got a bunch more to ask these
guys, but if anyone wants to, just maybe pop up to the mic.
There, we’ve got — we have a brave soul making his way over. You go.
>>>A lot of news about “The LeBron Show” that you guys packaged. Maybe you want to
talk to us a little bit about that and implications going forward.
>>Ariel Emanuel: I have no implications going forward. I mean, you know, it came out of
sitting at the game with his manager. And I think they’re probably going to win
down in Miami. How about that? That’s a prediction for you.
[Laughter]>>Andrew Serwer: What the hell was that? Very
good.>>Ariel Emanuel: I mean, you know, I sold
the show.>>Andrew Serwer: That’s good. Yeah. All right.
Talk it up a little bit.>>Patrick Whitesell: Advertisers are happy.
>>Ariel Emanuel: Advertisers are very happy.>>Andrew Serwer: Let me ask you about another
thing that you may be involved with a little bit that might be —
>>Andrew Serwer: ESPN is happy too. No.>>Andrew Serwer: — just as interesting or
maybe even more interesting to this audience which is “The Social Network,” the movie about
Facebook, and I believe Mr. Sorkin is a client of yours, so can you talk a little bit more
about that? [Laughter]
>>Ariel Emanuel: Um…>>Andrew Serwer: Because that seems kind of
–>>Ariel Emanuel: It opens at the New York
Film Festival on the 23rd. I think the movie is — I’m hoping the studio doesn’t do any
advertising because I think it’s just going to work on its own.
And I think probably the people at Facebook are a little nervous.
[Laughter]>>Ariel Emanuel: How about that?
>>Andrew Serwer: That was good. What’s that?>>>(Speaker is off microphone).
>>Ariel Emanuel: I don’t think so. I think the movie is — listen, I’m a character on
a show. It’s been pretty good for me. I think it’s going to be pretty good for them.
[Laughter]>>Ariel Emanuel: Huh? Yeah, you want me here.
>>Andrew Serwer: That’s the Ari we know. Now we got Ari going. All right. How do you put
up with this, Patrick?>>Ariel Emanuel: It’s hard for him.
>>Patrick Whitesell: 12 years.>>Ariel Emanuel: 12 years.
>>Andrew Serwer: That’s good. Nicely done. Okay. Good.
So I wanted to ask you — I was talking to you about this earlier, about —
Any more questions, please feel free to just pop up.
>>Ariel Emanuel: I dare you. No, go on.>>Andrew Serwer: I don’t know, it was pretty
brutal. You got no one after that. It was, like, quiet.
The global nature of what you do, are you surprised that the — is the movie business
or the entertainment business more or less global than you would have thought, say, 10
years prior? If you — if I had asked you in 2000 or nineteen
ninety- –>>Patrick Whitesell: Oh, it’s definitely,
definitely more. It’s only — but I don’t think 10 years ago you saw it coming. You
know, the international marketplace in the film business is bigger than the domestic,
so that’s not a surprise. I think what you’re now seeing, though, is actually studio —
there’s film finance companies all over the world that now we actually cover like we do
Warner Brothers or Universal, and we go to them to kind of make — and that never would
have happened, one. Also, two is, it used to be that you would
always take your best content or your best ideas always to the studios first, and now
you still obviously will do that a lot of times, but weirdly enough as — if you want
to bifurcate rights and hold back more of the control, when you’re really hot, you actually
want to take it to the studio last, which we talk to Thomas about a lot, where you would
maybe partner with someone and then go to them at the very end just for domestic distribution.
So that part of it has changed and the — and there’s a lot of — you know, more people
wanting to get into the movie business. I think it’s smarter money, though, and it
used to be a lot of people would get into the film business, particularly just for vanity
reasons, and now people, you know, more and more are serious about making money and making
— building a proper business model. And so yeah, I’d say it’s definitely —
>>Ariel Emanuel: Internationally also, like in France, they’re making English movies but
they’re paying for them just for their market. It’s — it’s great right now.
>>Andrew Serwer: Some of those French banks have had some bank experiences in Hollywood,
if we can think back a bit.>>Ariel Emanuel: Yes, they have.
>>Andrew Serwer: Yeah. Let me just follow up a little bit and talk about the two —
two of the biggest markets in the world which are equally — you know, they’re interesting
but both problematic for different reasons, which are India and China.
Do you guys do a lot of business in China? Is it — I mean you — it’s such a difficult
place to do IP work, though, right? I mean, I know our company, Time Warner, has a very
difficult time conducting business. You know, our films just get pirated right away and
we just kind of say, “You know what? We’re just not going there.”
What do you guys think?>>Ariel Emanuel: Well, there’s some — in
India, a lot of the animation — also in China — kind of coming out of their innovation
and production houses, a lot of the studios have moved — Sony, Fox — on the television
side there and making some local movies. I think there’s probably some constraints on
the economics as it relates to getting money out of China, but they’re all trying to figure
that out. So…>>Andrew Serwer: Can you do stuff in India?
I mean, we hear about Bollywood but as far as I can tell there’s like Bollywood and Hollywood.
You know, one or two huge movies being exceptions, but is there anything — is there any connectivity
there? Not so much?
>>Patrick Whitesell: Not so much really. You know, there was a big announcement about all
these deals they made with talent a few years back.
>>Andrew Serwer: Right.>>Patrick Whitesell: They made kind of production
deals. But in Hollywood, there are what are called
second-look deals, so what happens is if you’re a producer in Hollywood and you have a deal
with a studio, you make what’s called a first-look deal or an exclusive deal, but normally a
first-look deal, where they’ll pay you some overhead and your only obligation is you got
to bring them all your ideas there first, and then if they don’t want them, they pass
on them, you can take them to everyone else in town.
They made — most of those deals were second-look deals. So a second-look deal doesn’t really
have a lot of teeth in it because usually if something is really great, it’s usually
been sold the first time, and if your only obligation is to take them to a second time
— So it was a big announcement but I don’t think
a lot of movies have come out of it yet because it doesn’t, you know —
>>Ariel Emanuel: How many people in Silicon Valley would do second-look deals? Not a lot,
so…>>Andrew Serwer: Interesting. Yeah. Good point.
Why is it that people — and we got to wrap things up here in a minute. Why is it that
people are always saying, you know, “The Hollywood studios are dead,” “Oh, you know, they’re
dinosaurs,” and yet, you know, they keep — they keep lingering on.
I mean, they seem more powerful than ever. You know, we always hear about independent
— the wave of independent studios, and those actually are the ones that ended up, I think,
kind of getting killed over the past 10 years, right? I mean, how does that whole —
>>Patrick Whitesell: Well, I think the studios are not — I mean, the film side, they certainly
aren’t dead, by any means. I think that the biggest challenge they’ve had is the variety
of types — the variety of movies they can make has been challenged. I think if you’re
Warner Brothers, you know — and Tom works for them, but they are — you know, they were
making two Temple movies a year, now they make eight, I think, right? And that’s where
they make the lion’s share of their money. Or if you’re Disney, you want a movie that
kind of you can — you can monetize throughout all your platforms, the theme parks, the merchandising,
ESPN, whatever it is. So that constraint causes a lot bit of a challenge for them because
everybody has this idea that people who work at studios don’t want to make creative, original
movies. They do. It’s just the economics get so expensive that it puts them in somewhat
of a box.>>Ariel Emanuel: I mean, you’re sitting there
— you know, everybody thinks a movie is the movie business. The movie business is
the DVD business. You know, with Netflix and their economics and then the economic downturn
and what happened at Walmarts of the world, the economic underpinnings of the business
kind of started to implode, so that’s why they reduced.
I do think, though, technology is going to — and as Patrick said, on the independent
side, those two elements and how you deal with the Netflix issue as it relates to DVDs
— when Warner Brothers held back “26 Days,” you saw the DVD numbers spike.
So when you look at the movie business, the movie business is a DVD business. It’s not
— I mean, theatrical drives it, but it really is the economics behind the business is there,
and that is challenged right now. Until those things kind of — VOD, Blu-ray,
all those things start coming back in the economy, I think they’re still going to be
challenged for a while.>>Andrew Serwer: And it’s interesting. You
know, we hadn’t talked about Netflix, an amazingly successful and adaptive company, right? I
mean, so how are they being so successful right now if that business is so weak?
>>Ariel Emanuel: Well, because it’s a subscription business —
>>Andrew Serwer: Right.>>Ariel Emanuel: — right? And then they’re
building out other models on the VOD side and on the pay side, so…
>>Patrick Whitesell: And the business isn’t weak. Here’s the thing, is that what happened
was when a studio would make a movie and they’d underwrite their costs, they would budget
in what they thought it would do on a DVD sale. And so when you — when you have a movie,
you would much rather have someone buy it than rent it. At least currently, in the current
model. Netflix doesn’t care about that. They’re not underwriting the model, so they’re just
in the rental business, and what they did was they got aggressive about online and taking
kind of their mail system online in some kind of — moved there faster. They’ve just done
a great job of that. But I think, you know, you may read somewhere
Netflix has a ton of rental sales. That may or may not be great news to the studio.
>>Andrew Serwer: Right. And it’s interesting. We were talking about, you know, TV and the
Internet and I was saying, you know, we’re still a long way from being able to watch
live TV on the Internet. There are people in this room I know who are going to disagree
with me but for the average consumer especially with sports, they’re sitting there at home
without a TV, it’s hard to watch an NFL game or an NCAA college football game still on
TV, so there’s still a ways to go with that. Just last question, Ari, just about a TV question.
So do you see TV — people who make independent television production companies, are they
thinking about making shows for the web the same way they are about making shows for television?
>>Ariel Emanuel: Well, there’s no independent scripted business. The really independent
business is in the reality side and I think it will be the kind of driver that you have
multiple plays on it — right? — where a story line is — can end up on the web and
come back to the reality show. So I think that’s where it will start and
that’s where it will happen. Eventually, there will be a — a scripted
show that really kind of incorporates all the elements of what’s great about — about
the web or apps or games or whatever, and the normal scripted story line.
>>Andrew Serwer: Right. I mean, you see people trying it like there are —
>>Ariel Emanuel: I think it’s going to, but I think it’s first going to start on reality.
>>Andrew Serwer: Right. Okay. We’re going to have to leave it at that. Please join me
in thanking Patrick Whitesell and Ari Emanuel. [Applause]