Endeavor CEO Ari Emanuel sees the wave of M&A transforming the media business is “further proof that content is in high demand and short supply.”
Regardless of the form mergers take — a tech giant like Amazon swallowing MGM, or two legacy peers, WarnerMedia and Discovery getting together — they all need what Endeavor is selling, Emanuel said. Many of those bulking up in streaming, he added, naming Disney and ViacomCBS as examples, also have to continue to support their legacy platforms. As a result, he said, current levels of content investment will continue for at least the next five years.
“Our position in the ecosystem favors long-term growth and the investments will continue,” Emanuel said. “There’s a finite number of creators and intellectual property to meet the demand, therefore increasing the value. … Prices are going up in every situation.”
The exec offered the comments during a conference call with Wall Street analysts to discuss Endeavor Group Holdings’ first quarterly financial report as a public company. The parent of WME, IMG and mixed martial arts circuit UFC said it swung from a loss to a net profit of $2.4 million in the quarter ending March 31. Revenue in the quarter slipped 10% to $1.07 but execs painted a rosy recovery picture during the hour-long call.
As far as shifting release windows, Emanuel said experimentation has gone on for at least six months. He cited Warner Bros.’ move to put its 2021 slate on HBO Max at the same time it reaches theaters.
“We’re going to find the floor,” he said, but “it’s going to take a little bit of time.” Endeavor has “navigated that whole situation,” he added, and is “one of the big players in that ecosystem. And we’re negotiating on behalf of our own clients and our own properties to make sure that we get the proper economics.”
The Warner/HBO Max move and other smaller ones have resulted in dozens of settlements with profit participants as studios trade box office dollars for streaming subscribers.
“We’re flexible with the studios,” said Endeavor president Mark Shapiro. “We’re having these conversations up front, and they are paying for that flexibility. So that moves right to the benefit of all of our clients.”
As far as Amazon’s $8.45 billion acquisition of MGM, Shapiro offered the view that deals are about an exploding array of content forms. In addition to film and TV, it can be podcasts, audio, music, licensed goods and other fare. “You can bet that Amazon didn’t buy MGM just to leverage the library,” he said. “There’s going to be a lot of buying. There’s going to be a lot of original programming and there’s going to be a lot of spending.”
Across the entire Endeavor portfolio, Shapiro added, the company’s operations are going to be “fueled by this consolidation.”
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