Endeavor Takes on the SVoDs
By Kate Bulkley
For Broadcast June 05, 2019
Talent agency-turned-content company makes a compelling business case, says Kate Bulkley
Not every public share offering by a US media company is of crucial interest to the UK media industry, but the IPO by LA-based Endeavor is an exception.
The firm’s growth from Hollywood talent agency to content company has been in response to the big changes disrupting the media business and putting pressure on broadcasters to compete with the super-streamers.
For example, Endeavor was key in helping BBC America finance and distribute Killing Eve, and worked with BBC Studios’ distribution arm to place forthcoming Phillip Pullman BBC series His Dark Materials (pictured) on HBO.
Now Endeavor plans to list on the stock exchange at a value mooted to be more than $6bn (£4.75bn), underlining a perceived need for a big, independent agency to package great deals for its writers, directors and on-screen talent when media is increasingly consolidated.
Endeavor’s transformation includes acquiring the William Morris Agency in 2009 and IMG in 2014, and buying the Miss Universe organisation from then-presidential candidate Donald Trump and MMA organisation the Ultimate Fighting Championship.
Endeavor chief executive and founder Ari Emanuel says an independent broker with its own significant media assets is crucial as the number of distribution platforms increases and traditional players wrangle with global digital players for rights.
Emanuel describes today’s media landscape as an “infinite distribution model”, where the endgame is a proliferation of direct-to-consumer VoD platforms that act as walled gardens.
In this ‘closed ecosystem model’, Endeavor can act as an alternative for its clients, helping them package better deals with platforms and also introduce them to its own assets and direct-to-consumer services.
Ironically, the business case that Endeavor lays out in its 372-page IPO document is at the centre of an ongoing contract dispute between Hollywood screenwriters and their agents, Endeavor included.
It’s a dispute that has been rocking LA for months and is at best bad timing, and at worst could undermine Wall Street’s interest in buying into the business vision.
Agents have traditionally been called the ‘ten-percenters’, in reference to their 10% fee, but Endeavor and its kin have become talent packagers, which means they offer to shoulder some cost and demand a percentage of backend sales.
The screenwriters believe moving from ‘agent’ to ‘principal’ in the negotiation process puts agencies’ clients at a disadvantage.
Of course, Emanuel believes his strategy is the only way to fight against the ‘Netflixisation’ of media. The SVoD model is too much of a closed shop, he argues, whereas Endeavor, with 200 offices across 20 countries, can provide a diversified and credible alternative.
“Endeavor and like-minded agencies want to play a role as media coalesces around the biggest streamers”
Television’s traditional, ad-supported pay model is not going to go away for “at least another five years”, Emanuel said at Mipcom last year. But the multibillion-dollar SVoD business continues to grow apace, especially in the UK, where Barb research shows Netflix has 11.5 million subscribers, Amazon has 6 million and Now TV has 1.6 million.
The launch of Disney+ and Warner Media’s streaming service later this year are only going to supercharge SVoD growth, according to media analyst Digital TV Research. The firm predicts SVoD subscriptions will double over the next five years in Western Europe, from 65 million at the end of 2018 to 131 million by 2024.
Of course, direct-to-consumer platforms stand out on the quality of their content. Endeavor and like-minded agencies want to play a role as media coalesces around the biggest streamers, while broadcasters struggle to keep pace.
To wit, Netflix has just announced a 20% UK price hike based on the idea that it offers a superior service that people will continue to pay for, even as Disney and others roll out lower-priced alternatives. Emanuel is hoping that this only makes Endeavor’s proposition even more compelling.