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“It’s the Wild West”

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By the end of last year, it quickly became apparent that the Hollywood bargaining machine of the past 30 years was down. The pandemic had changed the way people watched feature films – with some debuts on streaming services and others in theaters – and a new approach to talent contracts would be needed, especially for A-listers accustomed to significant backend bonuses based on box office returns that can be reduced or eliminated altogether.

Fast forward to September 2021: What does trading really look like?

“It’s everywhere,” an entertainment lawyer who has been at the forefront of making deals last year told TheWrap. “It’s the Wild West, the Wild West. The pandemic is twisting everything. “

According to interviews with several Hollywood insiders, each studio is handling the situation differently, and as a result, no widespread industry standard has emerged on how to pay top actors, directors, and producers on films that may or may not air. exclusively in theaters.

Warner Bros. took a preemptive approach to negotiating potential streaming broadcast buyouts, a leading lawyer said, after the studio rushed to renegotiate talent deals on big movies like “Wonder Woman 1984” and “The Little Things ”by Denzel Washington following his decision. to release its entire 2021 slate simultaneously in theaters and on its nascent streamer HBO Max.

Disney, which is currently involved in a lawsuit with Johansson over its compensation for “Black Widow,” has made deals for future projects that pay top talent for streaming opportunities, insiders said. Last December, TheWrap reported that Marvel had already started exploring new talent deals to provide flexibility in case the pandemic or other factors cause the studio to bypass theaters and send movies straight to Disney +.

Under the new contract wording, key talents above the line receive compensation adjusted depending on whether the film is hitting theaters or debuting on the subscription streaming service Disney +, according to an insider with knowledge of the situation.

Scarlett Johansson in “Black Widow” (Marvel Studios)

But like a lot of things in the Magic Kingdom, it gets complicated. While the studio is offering “a negotiated buyout” if a movie doesn’t hit theaters, a second lawyer said, “there are nuances as well as there is direct SVOD and then the day and date, where uptime on service leads to a depressed return to theaters, “the lawyer said.” In this case, the talent has the opportunity to take the buyout. “(Indeed, Johansson argued that sales of “Black Widow” tickets were depressed because the film was simultaneously available in premium version on Disney +.)

Other studios are handling things on a film-by-film basis, often depending on the strength of their parent company’s streaming operations. This is especially true for Universal and Paramount, whose affiliate streamers (Peacock and Paramount +, respectively) are recent arrivals to the streaming party and lack the stature and subscriber base of more established streamers like Netflix. (Paramount is also hampered by a deal with Epix, which holds the first pay-TV window on studio releases until the end of 2023.)

And while Sony doesn’t have a streaming service, the studio will negotiate talent buyouts when selling a finished movie to a streamer, like with Tom Hanks’ WWII drama “Greyhound”.

Representatives from Universal, Sony, Paramount, Disney and Warner Bros. did not respond to requests for comment on this story.

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Emma Stone in “Cruella” (Disney)

The best stars always see big wins. But after years of resistance to sharing streaming revenue, a leading agent said studios are finally ready to incorporate some of that revenue into compensation packages. Netflix Pays $ 30 Million To Leonardo DiCaprio For His Role In Adam McKay’s “Don’t Look Up,” Including Streaming Buyout, Says Business intern. Will Smith gets $ 40 million for “King Richard” Variety reported, including a backend buyout as the film will be released in theaters and on HBO Max simultaneously this year. And Dwayne Johnson wins $ 50 million for Netflix’s “Red Notice,” with a backend buyout.

Even Disney made a new deal with Emma Stone for a sequel to “Cruella” – a film that, like “Black Widow,” had a hybrid release in theaters and premium streaming. Although the terms were not disclosed, his agent Patrick whitesell called the new package “a fair way forward … for members of the creative community to participate in the success of new platforms.” (Read: She’s going to get a big check, regardless of the size of the screen the movie opens on.)

But not everyone benefits from the new compensation models.

A lawyer who recently entered contract negotiations with studios said the majors were in fact “fighting back”, willing to make streaming concessions only for A-List talent or the people they care about. really at heart. “Compensation for license products from studios to streamers has become a major issue in talent negotiations,” Peter Nichols of Lichter, Grossmann, Nichols, Adler, Feldman & Clark told TheWrap. “Those artists who have influence can make progress, but those who don’t are forced to take whatever the studio offers them, if any.”

According to the senior agent, the current mess over talent deals is “just echoes on the radar” amid more seismic changes in film distribution that the pandemic movie theater shutdown has helped accelerate. “By 2022 or 2023,” the agent said, “all of those negotiating barriers will be lifted and ironed out and it will be business as usual – although” usually “will mean more streaming distribution than before. 2020. “

The good news is that the explosion of streaming services has led to a demand for more content – what Hollywood’s second lawyer called “a lot of movie production that might not have been made.” But since most of these films aren’t for theaters, the old box office-based pay model is being lost.

For big stars, the loss of income from backend theatrical transactions can be substantial. Disney said Johansson received $ 20 million upfront for “Black Widow,” although insiders told the the Wall Street newspaper she could make up to $ 50 million in total after factoring in box office bumps.

Some agents and talent representatives are concerned about the lack of transparency surrounding studios’ decision-making on how to distribute individual films. “Media companies can do their calculations based on estimates they don’t share with anyone else,” the second lawyer said. “And then how do we get paid for that on the talent side?” “

“When subscription revenue is a big driver for media companies and that revenue isn’t shared with talent, then you disconnect talent from the financial incentives available to the studio,” the lawyer said. “Maybe someday there will be a streamer who tries to get out of the crowd and attract talent by allocating a share of the revenue based on how many people watch your show or movie, but I don’t don’t think that’s likely to happen, as much as I hope.


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