WME’s Dan Limerick on the Current State of Hollywood: THR’s Power Business Managers Event
The WME COO talks to THR’s Co-Editor-in-Chief, Maer Roshan, about mergers, consolidations and where the industry goes from here at The Hollywood Reporter’s 14th annual Power Business Managers event presented by City National Bank, held at Spago Beverly Hills.
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00:00Please welcome Dan Limerick.
00:07Thanks for having me. Good morning to everybody. Just before we get started, I'd just love to, you know, thank you to Hollywood Reporter and City National Bank for having me.
00:15And really, we don't get to meet a lot. Like a lot of our business managers are like we're one step removed and we don't always meet.
00:22But I know just how important you are to this process. Our clients are brands and companies and you guys are there to keep the trains on the track.
00:29And I know how difficult it can be to do so. So really want to thank you guys and really happy that you're being honored in this.
00:36And John, in particular, congratulations on your Icon Award. Really loved your remarks.
00:44Hollywood is in a glum mood. Peak TV is officially over. The fault from the strikes lingers on.
00:51Studios and streamers are laying off thousands. The market for new content is shrinking.
00:58We are sitting in a room with some of the biggest money managers in the industry.
01:02Should they have listened to their moms and gone to med school?
01:07It's a rough time. No question. And I still think you made a good choice.
01:11So, you know, this business is always changing. Right.
01:16You know, I think we always have the illusion that it was always like that, that there was ever a steady moment.
01:21I don't think there ever was. It's always moving. It's just not always perceptible.
01:25You know, I think a lot of the things that we're seeing right now, as you were mentioning in the opening, is kind of a repeat of some of the things we saw before.
01:33So like when I came into the business, it was really the height of broadcast TV.
01:37It was kind of like a locomotive. You had pilot season. It happened at a certain time.
01:42Then series came on and it was like clockwork. Right.
01:45So I think we all liked it because there was a certain predictability on one hand because you knew what would happen each year.
01:52But it was also unpredictable because it was always changing. Like, you know, there were there was a lot of windowing.
01:57Then windowing started going away and it was not so perceptible at the time.
02:01And then at one moment you realize, wait a minute, this whole business has changed.
02:05So I think what's interesting about that is at that time it was there was a lot of consolidation that happened.
02:12You know, independence kind of went away because I started when there were still independent companies, Carsey, Werner and many others.
02:19Then they started selling to themselves. I found that the product got a little not as good.
02:25Right. Because there wasn't as much diversity of programming that gave way to actually what Netflix,
02:32where Netflix came in was at this point really trying to solve the problems of the industry.
02:36You know, lack of a lack of a place to sell the shows that we had made, not enough outlets to sell to.
02:43And as a result of that, that also brought more independence.
02:46And it brought a diversity of program and quality of program and got much better, actually.
02:50So I think there's always a moment like this that also gives rise to other technologies that come in to help us out of these problems.
02:58So you've been through a lot of booms and busts. Does this feel different than other inflection points you've experienced?
03:05Yeah, I'd say it feels different in that we always had legacy media companies at the at the at the forefront of these conversations.
03:13And I feel like the relationship with talent was a little different, like historically.
03:18You know, obviously I work at WME and we believe in talent. We believe that's the lifeblood of the industry.
03:23And and what what this whole everything we do is really driven by these artistic talents.
03:29And I think there was very much an appreciation for that historically, you know, with with the studio system.
03:35I think right now it's more tech companies coming into the business. And I think there's a little bit of a shift in that regard.
03:40So I think, you know, one of the things is we have to just kind of keep the focus on the talent.
03:45You know, I think sometimes we talk about is a distribution or is it the content of the distribution?
03:49I believe it's really about the content personally. And I think we have to keep our eye on that.
03:54And I also believe in independence because I think we need a healthy ecosystem.
03:59Running an agency has always involved lots of handholding and reassuring. And I imagine that's especially true now.
04:06Yeah. How hard have your clients been hit by the past few years?
04:13And are there kinds of clients that fare better than others or is the pain kind of equally shared?
04:19Look, I think there's pains across the board, right, because we have clients, you know, kind of up and down the chain.
04:24You know, so I think there's I think one of the challenges of the business has been the middle is a lot harder.
04:31There's a lot of focus on the top level of deals and a lot of kind of finding new people are coming into the business.
04:37I think the middles is actually feeling it. But I think that's kind of in all businesses.
04:42But I do feel the uncertainty and the anxiety around it is certainly challenge.
04:48Obviously, we're all adjusting to coming out of covid in two strikes.
04:52We're only just starting to get our legs under ourselves again and figure out what that business looks like.
04:57And obviously the things I'm sure we'll want to talk about, AI and other things on the forefront are really on people's minds.
05:04So I imagine you're thinking of things other like with content shrinking, other ways that your clients could make money and take care of their bottom line.
05:14What what are those strategies that you have and how are you pursuing them?
05:18I think one of the unique things about WME is, you know, we really want our clients to kind of work across all different businesses.
05:26Most of our clients are doing something in another discipline and we're really trying to expose them.
05:30That's kind of the challenge of the agent is to kind of expose our clients to things that might be outside of their comfort zone.
05:36So if you're if you're an actor, are you are you just acting or are you working with brands?
05:42Are you starting a production company or you could be working in non scripted?
05:45Are you looking at the digital area? Are you looking at theater?
05:49You know, we really want to expose expose our clients to these options.
05:52But at the end of the day, they're the architect of their own careers. They're the CEOs.
05:56So it's up to us to kind of challenge them. But it has to be really bespoke and really germane to like what they're interested in.
06:03You guide them to say, like, here's this vodka that you couldn't.
06:08Yeah, we we've we've done quite a quite a bit of that.
06:10I mean, we have a talent ventures group that that works with a lot of our clients kind of up and down the chain.
06:17You know, obviously, Ryan Reynolds with Aviation Gin, Dwayne Johnson with Terramana, you know, I think more recently, Selena Gomez with Rare Beauty.
06:27So that's definitely something that a lot of our clients are interested in.
06:30And they have, you know, a lot of them have a really large social media reach.
06:34And I think that's one of the differences. That's one of the things that's changing a little bit, is that you're finding that our clients almost it's imperative that they have a social media following and that they build it and service that audience.
06:44And I think our clients are starting to have more of a direct relationship with their audience, which is also a change, which I think is actually a welcome change and portends some interesting opportunities for the future.
06:55Actors can do endorsement deals or start Vodka Lines musicians sell merch and go on tour.
07:02What avenues are available to, say, writers or directors and producers?
07:07You know, obviously, I think the digital space is evolving, right?
07:10Like how we perceive it. I think sometimes we think in fixed terms.
07:13But like my kids, I have a 20 year old, a 19 year old and a 17 year old.
07:18They watch, you know, they watch. They don't really watch the main TV.
07:22They are on their computer. They're watching digital. They're on YouTube all of the time. They're playing video games.
07:27They're working across a lot of different forms of media.
07:30So I think as talent, we have to kind of figure out how are we going to meet the audience where they are, the new audience that's coming up.
07:37I think right now it works one way. But tomorrow, who's to say that YouTube should be a certain type of programming?
07:43I think people are going to evolve how they program on those different outlets.
07:47The reach of YouTube is massive. And I think we're going to have to figure out ways to kind of move into these other areas.
07:53Video games as well. I think you'll start seeing clients working in places you're not used to seeing them, including writers.
07:59So you mentioned social. Is there any world in which it does everyone have to have a social presence these days?
08:07Or could you be a talent that just acts and doesn't post?
08:12I think there's a place for people who don't who don't post.
08:16It's really why these people there's no money. There's not one size doesn't fit all.
08:22Right. So I think we really want to just provide the opportunity for clients to be where they want to be.
08:27I mean, it is our job to kind of push to the clients to try to work in different areas that are maybe not so germane.
08:32But I think there's some interesting opportunities that it opens up if you're if you're interested in doing so.
08:38And there's not a one way to do it. So I think you'll see there's quite a lot of diversity in the way that people are showing up online and the manner in which they communicate with their audience.
08:47So we've seen the streamers in just remarkably short time and Silicon Valley ethos transform the way Hollywood does business.
08:55What do you think is the biggest impact of the streamers and the tech platforms that has had on Hollywood in good ways that were bad?
09:04Well, I think in good ways, it's it's there's been a lot of money that's come into the system.
09:08So there's far more content than there's ever been. And even though like the economics, we had a pretty big boom, which I think was a bit of a bubble like a few years ago.
09:18But where it's even settling in now is actually way ahead of where we were before they were here.
09:23So I think we sometimes don't aren't able to look back and have that perspective.
09:27So there's there's more there's more shows. There's more ability to produce at a much higher level.
09:34And there's a lot more opportunities and outlets to produce for. And there's a lot more companies to work with.
09:41I think the challenge we have is that when we're doing fewer episodes, so that's less less episodic fees.
09:49The you know, AI is going to be an interesting challenge that will either on one hand, like the way we look at that is both from an offensive and a defensive perspective,
09:59you know, defensive and protecting our clients likenesses and image in their work,
10:04offensive and trying to find ways to make for more efficient production, which obviously creates better economics and also different ways from when they do want to license their their image that they have the ability to have control over that.
10:18The AI was a huge issue in the strike and people are fearful about lots of people.
10:24Do you think that fear is overblown?
10:27I don't know that it's overblown. I think it's it's it's we should be rightfully fearful and cautious about it.
10:33At the same time, I think we should also be figure out how we're going to use those tools to our advantage.
10:38I mean, all new technologies come with a reason to be cautious.
10:42And there's great reason to be in that it'll move very fast, faster than we're kind of used to with other technologies.
10:48But I also think it's going to be here. And I think that the winners will be those who are able to use these tools effectively to work alongside what we do in our creative endeavors.
10:57And I think we're going to that's that's going to be the biggest challenge.
10:59But on the other hand, I think we're going to have to, you know, back legislative backed initiatives that seek to protect our clients images and their rights and their works are going to be very important because this is moving quickly.
11:12It's going to be a conversation around existing contracts and how those are interpreted.
11:16And I think we need to be on the front lines of fighting those fights.
11:21I was in the Aspen Ideas Festival with Ari Emanuel where he said, no one should trust Sam Altman.
11:27He's a piece of shit or something like that.
11:31So you don't agree with that?
11:33Look, I don't I it's not for me to decide whether to trust him.
11:39But what I would say is our role is to look ahead at where the ball is going and to try to figure out what we're going to do to protect our clients.
11:49It's the same with, you know, with tech companies right now.
11:52Like, we're always trying to look to how do we get the most value for our clients and what they're bringing to bear?
11:57But also how do we protect the way that their rights and images are used?
12:00It's the same thing as it relates to how it's used in streaming, as it's how it's going to be used in AI.
12:04It doesn't really change. It's just for us to figure out these new technologies and to make sure that they're not working in ways we are not aware of.
12:11So, like, if you were to take, you know, the dispute around Scarlett Johansson and the use of her voice.
12:17What's interesting in this is not just the straightforward example of using someone's image and trying to recreate it.
12:23But what about the scenario where you use a portion of their voice or a portion of their work and it's kind of buried inside of the system?
12:30That's actually where it gets much more complicated.
12:33So we have an arrangement with Vermilio and Loti that have been announced that really seek to kind of get at those things.
12:39It's like far more nuanced and a little wonky.
12:42But at the same time, I think that's actually some of the more concerning uses is where it's not so perceptible that they're using the work of one of our clients.
12:50And I think that's why when I speak of, like, you know, legislative-backed agendas, we have to figure out how to get at those things,
12:57how to have controls and how to have third parties that can kind of audit these systems.
13:02Well played on that Altman thing, Dan.
13:07Let's talk about the buyout, the shift from buyout.
13:11Netflix obviously made a big splash when it replaced traditional buyouts with a back-end model.
13:17You had Amazon, Apple following suit.
13:19We're now seeing a reversal of that trend.
13:22How do you think that's going to all end up?
13:25Yeah, we're spending a lot of time on this, right?
13:27Obviously, the buyouts were really to get into the business and to get feature actors to start working in the space as well as writers and directors.
13:36And now, as inevitable, there's a turn.
13:39So for us, the challenge of this is really one around transparency in that everything that's being proposed right now,
13:46and we're in a lot of conversations with all the streamers, is really looking to kind of go to some kind of metric around viewership and or engagement.
13:54And for us, that means transparency is everything, right?
13:58So, one, what's the measure of success on a streamer, right?
14:01Is it the cost of it versus the viewership, which they call efficiency?
14:06Is it customer acquisition, which is actually for them a very big metric?
14:12Is it the number of views?
14:14So, one, getting to even – I don't know that there'll ever be a common understanding because I think each of these are distinct businesses.
14:20You know, Amazon is there to really program for prime customers as opposed to Netflix, which is really a little more traditional in that regard.
14:28So, we need more information and more data because at the end of the day, we want our clients to get paid when things are successful.
14:35And right now, it's a black box.
14:37So, you know, there's a little more information than there has been in the past, but still not nearly enough.
14:42And all of the value of our clients' content is getting squeezed by some of these models.
14:48When you asked earlier about the difference, you know, when we had a lot of windows, you could actually window something over time,
14:55and people were getting paid on shows that were done, you know, 30 years ago today.
15:00If you're in closed systems that are exclusive, that keep the content exclusive, and it's not used downstream,
15:06when are those other residual payments, which I think we're all very familiar with in this room?
15:12So, I think that's one of the challenges we want to fight.
15:15But also, it's creating other opportunities because I think at some point, Netflix probably will sell off their platform,
15:22and I do think there will be some other windows to sell into.
15:26So, we want to make sure that we construct back ends that kind of account for all of it.
15:29As you mentioned, transparency is key, and yet you're dealing with companies who've been famously not transparent and resisting transparency.
15:38Do you see that changing, and can you trust their information?
15:44I think they're going to be pretty resistant to that change, but I think it's going to have to happen over time.
15:51One of the things we don't talk about is for our clients, they want to know where their artistic endeavors resonate.
16:00Like, how do you know how well you're doing?
16:03Is your show best suited at Amazon or at Netflix when you don't know how it's performing in a really specific way?
16:11So, we're kind of trying to figure out where things go best.
16:14I think they're going to fight it, historically, but so did HBO.
16:17When it started, they didn't give out any information initially.
16:20They also didn't sell off their platform initially.
16:23Now, they give more information, and they sell off their platform.
16:27We've seen a ton of mergers in the past few years, and more consolidation seems all but certain.
16:34I know you have strong feelings about that.
16:37How has all this M&A affected the talent community?
16:41Yeah, I think fewer buyers is not good for the business.
16:46So, I think as there's a lot of consolidation initially, that's a challenge for us.
16:52So, we want to see more studios.
16:54It'll be very interesting to see how the Skydance-Paramount combination plays out and what that looks like on the other side.
17:02Can I ask you, what do you think that's going to look like on the other side?
17:05Just between us.
17:06Yeah, just between us in this small room.
17:08You know, I think that's highly speculative.
17:12There's so many ways that can go.
17:15You gave me a little speculation here.
17:16You could, but I'd say, look, I'm really impressed with David Ellison.
17:20We get to work with him a lot and his company.
17:24They've grown pretty greatly over the years.
17:27I feel like the CBS company is obviously – CBS is obviously a very strong brand.
17:33And I do think – at the end of the day, I can't really speak to them.
17:40I guess what I would say is I could see probably, when all is said and done, four or five more – ultimately four or five big outlets, be it Netflix, Apple, Disney, Amazon.
17:53Some combination of the version of Skydance and Paramount, however that plays out, and some other combination involves Universal, Warner, and something in between those three companies.
18:04I wouldn't be surprised to see something happen that's a little different where we're going.
18:08YouTube still kind of looms on the outside.
18:11I don't think we tend to think of them as an outlet in this way, but I don't think we're going to see them in the way we see them now.
18:17You came from indies.
18:18With all this consolidation happening, you see companies becoming more cautious.
18:23Even things like The Apprentice have a hard time getting made.
18:26Where does this leave smaller projects and more challenging projects?
18:32How do they get made in this environment when you have just a few dominating everything?
18:36Yeah, I think it's challenging.
18:37It really becomes about price point.
18:39I think there's price point, and then ultimately, can we produce things for a price that allows them to want to buy at that level?
18:48Maybe in some instances we're going to have to take a little less up front at times in order to have bigger back ends.
18:54I think we have to figure out some slightly different models because I think right now there's a lot of compression that's happening on the budgets of shows and on the budgets of our movies.
19:04I think if we can figure out ways to make things for a price and then play for more back end and more upside, I think that's one way we'll have to do it.
19:13Then as a result, a lot of what you talked about earlier with the back end is really we're going to put our focus because it's really just about getting the most value for what we're doing.
19:22How do you feel good about that?
19:23I feel it's going to be a huge challenge where we're going.
19:27I feel like at the end of the day, what they put into the world wins out.
19:33At the end of the day, other outlets will come up to solve the problems that we're dealing with now in the same way that Netflix came up in the first place.
19:41We're talking about David Lawson, but speaking of David's, what's again between us?
19:46How do you feel about the zazzle of rain at WWD?
19:50It's very different.
19:52I came from Warner Brothers, as you know.
19:54You might have some special insight into David.
19:57Warner Brothers is a very different place.
20:01I came up under Peter Roth, who really taught me a lot of what I know and the way I see the business and the way I look at the world.
20:09A lot comes from working with Peter Roth for 13 years.
20:13I was always admirable.
20:15I always admired how focused he was on the creative.
20:19It was really always about the show.
20:23I feel like when we talked earlier about the differences between now and then, I think it's people like that that were the difference.
20:30Right now, we're shifting.
20:32He has a tough job.
20:34It's an independent studio.
20:36At the end of the day, it's an independent studio that's trying to navigate a world that's gotten much bigger.
20:43I think his challenges are how do you make the world work from an economic standpoint, but then also how do you end up in a way to compete against the big companies?
20:51I don't envy the job, but I think at the end of the day, they have a really strong library, a really strong history and brand, and I think they will endure in some way, shape, or form.
21:02The new mantra is stay alive until 25.
21:05What's happening in 25?
21:07That's a good question.
21:08It starts shifting to 26, though.
21:10I heard it's like—
21:13I think the idea is we're still coming out of what we talked about before, still coming out of strikes and COVID, getting some normalcy.
21:21I'm excited to see that some of the theatrical productions are starting to come in.
21:26I really believe in the health of the theatrical system.
21:29It's important for us to do that.
21:31I think one of the things we're losing in all of this is a lot of the IP that we enjoy now that's coming back was created mostly through features, some long-running TV shows.
21:44I think some of the challenges with streaming movies are they come and then they go, and it's not hitting the zeitgeist in the way that a true theatrical hit like Oppenheimer creates.
21:57It creates much more long-term value over time.
22:01For us, we obviously want to have our clients everywhere, but we really do believe in that.
22:07I'm hopeful that we're going to see a lot more robust marketplace in that regard.
22:13What's the one thing you're most excited or hopeful about?
22:16To be honest, I joined this business because I'm a lawyer, but at the end of the day, I love being around creative people.
22:24I'm not creative, but I like empowering creative people in their vision.
22:29What I always wanted to do was use my knowledge and business acumen to help them get where they need to go.
22:35I'm really excited about the future because where we sit, we work with our talent.
22:40I'm excited with the team that I work with, some of whom are here today.
22:43Richard Weitz and Christian Mirrorhead are our co-chairmen.
22:48I just feel like we have a really, really strong team, and I'm really hopeful about navigating the future with them.
22:54Great. Well, thank you so much.
22:56Very great.