The new millennium began with a sigh of relief about what
didn't happen: Y2K. But since then, the past decade has offered nonstop action.
In 2000, the iPod had yet to be introduced. Xbox, iTunes, YouTube, Hulu and Facebook didn't exist. Twitter was something young hearts did in spring. High-speed Internet access was found in less than 5% of U.S. homes (today it's about 63%). DVDs were just starting to take off at the expense of VHS while DVRs were just starting to uproot VCRs.
Change is good, but it's also unsettling and exhausting. A survey of the last 10 years offers ample evidence that Hollywood hasn't lived through such a decade of change since at least the 1920s — which also happened to correspond with a roller-coaster of a business cycle and technological advancements that touched every corner of the industry. Once Mickey Mouse whistled in "Steamboat Willie" and Al Jolson crooned in "The Jazz Singer," the town knew it was all over for silent pictures.
Perhaps the single biggest change that showbiz has grappled with this century is the loss of so much of the control it once wielded over the production, distribution and exhibition of filmed entertainment. Consumers have more say in when and how they decide to see a movie or watch a favorite TV show, or forgo those leisure-time traditions entirely for a vidgame or an online pursuit.
It's maddening to many in the biz that ticket buyers and TV watchers are more fickle, simply because there are so many more options, or that a $15,000 horror pic with great Internet buzz can outshine movies with budgets 1,000 times bigger.
The cost of making a movie or TV show used to be an insurmountable barrier to entry for nonpros, but the dawn of YouTube and the high-def digital videocamera changed all that. Just ask "Paranormal Activity" helmer Oren Peli, who was working as a vidgame programmer in San Diego when he decided to invest in a camera and venture into moviemaking, on his own terms. For a biz that has traditionally been incredibly insular and pampered by its unique ability to generate riches and exert far-reaching cultural influence, that kind of party-crashing is hard to get used to.
Merger of the millennium
The event that foreshadowed all of this came nine days after New Year's 2000: The $165-billion marriage of AOL and Time Warner wasn't merely going to accelerate the digital revolution and rewrite the rules of media and showbiz. It was going to change lives, AOL chairman Steve Case and Time Warner chief Gerald Levin gushed in announcing the deal Jan. 10, 2000. "We're going to try and make a better world," Levin told PBS' Jim Lehrer.
Well, it certainly changed
their lives, not to mention the huge dent it put in the retirement accounts and stock options of thousands of Time Warner employees, who bore the brunt of $125 billion in write-downs taken on AOL's value over the past seven years.
The deal is now regarded as the worst corporate marriage in history. But the AOL-Time Warner union did deliver on at least one of its implicit promises: For Hollywood, the decade would be driven largely by the upheaval wrought by the explosion of digital media.
The merger came together at the height of the dot-com bubble, an era that seems almost quaint by comparison with the disruptions of the current moment. Remember Digital Entertainment Network? Flooz.com? Excite@Home? Pop.com? How can you not look back fondly on an era when college-age kids became overnight billionaires, and companies with no revenue to speak of bought Super Bowl spots?
By the time AOL-Time Warner received the last of its regulatory approvals, on Jan. 11, 2001, the high-flying NASDAQ index had collapsed and the value of AOL Time Warner shares ($46.47) was 37% lower than the price AOL shares fetched just before the announcement.
Mass layoffs became a fact of life for showbizzers in the '00s (as they had in the 1990s) as Hollywood's dominant congloms continued the M&A juggernaut — and as they became increasingly attuned to quarterly results and Wall Street's whims. When times get tough, heads get lopped. It's been a pattern throughout this decade, most recently in response to the economic meltdown that hit in fall 2008.
Labor's lament
The tension between Big Media and its worker bees hit a breaking point on Nov. 5, 2007, the day the Writers Guild of America, West and East, went on strike for the first time in 20 years. The 100-day strike amounted to a referendum on how creative talent, producers, distributors and financiers would come to terms on new release platforms, new windows of exhibition and, of course, new definitions of profits. But it also reflected the David-vs.-Goliath angst that many creatives feel after watching the majors grow into vertically integrated giants dominating virtually every aspect of the biz, particularly in television. Nothing illustrated this better than the sight of multimillionaire showrunners and screenwriters hoisting picket signs.
The majors have taken advantage of the post-strike shakeout to hack away at above-the-line talent fees at a time when CEOs are worried about diminishing returns from the box office, networks, syndication and other traditional profit centers.
The town's top talent wrangler, CAA, was among the superpower talent reps that aims to represent top earners who become brands, e.g. artists who can open movies, but also can launch a line of apparel, record a pop hit or land a fat endorsement contract.
Meanwhile, medium- and smaller-sized agencies are struggling to stay in business on reduced commissions and reduced job opportunities for midrange talent. And as those shingles go, so goes representation opportunities for plenty of unknowns or little-knowns looking for their big break.
Band of outsiders
For the majors, one of the biggest behind-the-scenes changes in the way business is done is the new openness to outside entities owning a stake in a movie or an entire slate of pics outright. There was a time when majors would turn away offers from outsiders to put up P&A money in exchange for ownership. Studios didn't want to give up control of marketing or the negatives over the long term. Nowadays, studio toppers solicit the Ryan Kavanaughs and Thomas Tulls of the world to bring in investors to help shoulder their risk.
Deep-pocketed foreign congloms are also making inroads. Witness the financing deal between DreamWorks and India's Reliance Big, or the free flow of Middle Eastern coin into showbiz coffers, such as Abu Dhabi's Imagenation and its pacts with partners as disparate as Warner Bros., Participant Media and National Geographic Films.
The real deal
Showbiz heavyweights continued the trend of consolidation and vertical integration that began in the 1990s, though of late there has been a challenge to the theory that bigger is better. There has been a recent flurry of de-consolidation as congloms look to focus on core businesses. And then there's Sumner Redstone, who can always be counted on to swim against the tide. Five years after the Viacom-CBS merger was completed in May 2000, Redstone decided that splitting them apart — and shuffling a few key assets — was the smart move.
One of the decade's lower-profile transactions that had a profound effect on the broader market was News Corp.'s $5 billion acquisition of 10 TV stations, including WWOR New York and KCOP Los Angeles, owned by Chris-Craft Industries in July 2001.
The deal was a syndication sales exec's worst nightmare, because it meant there was one less bidder in top markets for off-network program packages that are crucial to the bottom line of every studio.
Meanwhile, the Fox station group's clout was considerably enhanced, and Tribune Co. became the only other active contender for sitcom reruns and other packages in key top 20 markets where shows draw the highest license fees.
Meanwhile, at Disney, the Mouse had little trouble fending off Comcast's advances, but an internal revolt set in motion the CEO handoff from Michael Eisner to Bob Iger in September 2005. Iger endured a kind of corporate hazing in the months leading up to his appointment, as biz pundits and others publicly debated whether he was fit to be captain of the ship.
Two weeks after taking the reins, Iger rocked the showbiz world by embracing digital distribution, licensing "Lost" and "Desperate Housewives" and other Disney shows to Apple's iTunes. Six months later, Disney blazed the trail in ad-supported Web streaming by making full-length episodes available on ABC.com.
Iger has also shown his mettle as a dealmaker. He pulled off stealth negotiations with Steve Jobs to acquire Pixar, for $6 billion in 2006, and he surprised again in August by announcing a $4 billion deal for Marvel Entertainment.
The revolving door of owners at Universal continued in the first half of the decade. In late 2000, French utility company Vivendi bought Canuck conglom Seagram Co., which had acquired Universal from Japan's Matsushita Corp. five years earlier. By 2003, Vivendi's financial situation was so dire that it had to hold a fire sale of assets. After nearly 20 years of owning NBC, General Electric got over its aversion to Hollywood by cutting a deal to buy 80% of Universal from Vivendi.
Unfortunately for GE, its studio acquisition came just as Hollywood's business fundamentals were about to be seriously challenged — just the kind of unpredictability that had kept the nation's largest conglomerate out of the smoke-and-mirrors trade for so many years.
And here's where Comcast comes back in. The cable guys in Philly never stopped wanting a bigger footprint in the content and cable programming arena. Comcast and GE came together at the end of a tumultuous decade to craft a joint venture that will see Comcast acquire a 51% stake in NBC U, with a framework to buy up the rest of GE's stake over seven years. Despite the gloomy specter of the AOL-Time Warner debacle, Comcast CEO Brian Roberts is unabashed in proclaiming that the deal was driven by the desire to make movies and TV shows available in as many on-demand ways as they can find.
Comcast and GE announced their agreement Dec. 3. But it is only fitting that a decade of seismic shifts would draw to a close with the formal separation of AOL and Time Warner on Dec. 10 — nine years and 11 months to the day after their shotgun nuptials. It seems especially appropriate that Jeff Bewkes, the former HBO boss who was one of the earliest and loudest critics of the merger, presided over the cord-cutting as Time Warner's chairman and CEO.
"With the separation of AOL, we've returned to our roots as one of the leading content companies in the world," Bewkes said in a statement. You could almost hear a chorus of Time Warner employees adding, "Sweeeeet."
Contact Cynthia Littleton at
cynthia.littleton@variety.com