Disney CEO Bob Chapek acknowledged the ongoing tensions developing among high-profile talent and studios that have put their blockbusters on streaming channels instead of releasing them first in theaters.
"The talent deals going forward will have to reflect the fact that the world's changing," Chapek said, speaking virtually at the Goldman Sachs Communacopia Conference. "There's a bit of a reset going on right now."
"Black Widow" star Scarlett Johansson sued Disney in July for releasing the film directly to Disney Plus instead of theaters, and argued that was a breach of her contract. Chapek didn't reference the lawsuit or name Johannson directly, but he implied it could change how Disney does business.
Johannson was to be compensated based on box office performance and could have lost up to $50 million from the movie skipping theaters, according to the Wall Street Journal.
Chapek said that many of the deals brokered with stars were done so before the pandemic altered the theatrical window.
"So we're sort of putting a square peg in a round hole right now, where we've got a deal that's conceived under a certain set of conditions," he said.
"We'll think about that as we do our future talent deals and plan for that, and make sure that that's incorporated. But right now we've got sort of this middle position where we're trying to do right by talent," Chapek added.
The dispute is unfolding amid larger concerns for Disney. Chapek warned investors that Disney Plus subscriber growth is likely to slow in the fourth quarter adding users in the "low single-digit millions" as pandemic-fueled production delays limited their movie debuts.
Coronavirus pandemic lockdowns and regulations put a massive strain on Disney's ability to churn out content for its streamers at the rate it typically targets and it has also thrown a wrench in their theatrical release schedule.
"COVID-induced production delays is a kink in the supply chain for new content," Chapek said, adding that "this is short term."
He reported Disney has 61 movies and 17 shows in production right now. The Disney TV division has over 200 active productions globally.
Former NBC Studios president and UCLA School of Theater, Film and TV Lecturer Tom Nunan said production delays are standard for an industry reeling from the pandemic.
"The production footprint around the world has been forever changed by COVID," Nunan said. He added there's a sort of post-coronavirus "hangover from just the obscene kind of buying that consumers went on (subscribing to streaming services) during the height of the pandemic, here and abroad," as people begin to resume normal life.
Nunan said it was surprising Disney only had 200 global TV productions active given the number of properties they own across film and television.
Disney shares closed down 4.17% on Tuesday.
The company reports fourth quarter earnings Nov. 11.
- Disney CEO: Movie Fans Want Flexibility - dot.LA ›
- Disney Plus Subscribers Are Growing Faster Than Expected - dot.LA ›
- Disney Q2 Revenue Reinforces Streaming As Top Priority - dot.LA ›
Filming activity in L.A. has returned to pre-pandemic levels, driven by television dramas like Netflix's two new series "Lincoln Lawyer" and "Monster", but it's unclear if it will last.
From April through June, production in L.A. ramped up to a total of 9,791 shoot days, the highest number since late 2019, just before the coronavirus pandemic froze the motion picture industry, according to data released Thursday by FilmLA, the nonprofit that manages film permitting in Los Angeles County.
"By almost any available measure, the second quarter was good for filming in Los Angeles," said FilmLA President Paul Audley in a statement. "With local COVID-19 cases rising it's not clear whether that will be sustainable."
Shoot days rose about 40% from the prior quarter, making those shoot days about 7% higher than the average quarterly figure across 2019.
Television dramas and reality shows more than doubled their five-year quarterly average, with TV series like Hulu's "The Dropout," Starz's "Gaslit," FX's "American Crime Story: Impeachment" and TNT's "Animal Kingdom" being filmed.
Each of the four categories that FilmLA tracks saw increased activity. Compared to the previous quarter, shoot days rose over 55% for commercials, over 43% for feature films, and about 30% for television.
Feature films included Netflix's "Day Shift", Disney Plus' "Hollywood Stargirl", HBO Max's "Kimi" and Steven Spielbeg's "The Fabelmans," which is expected to be released in theaters, before the famed director's partnership with Netflix kicks in.
In June L.A. county eased restrictions on film production. FilmLA declined to predict how COVID may impact production moving forward.
- Film and TV Production in Los Angeles is Still Mostly Paused - dot.LA ›
- LA Film Production Slows, As Pandemic Locks Down Hollywood ... ›
- Film and TV Production Could Drop 80% in Los Angeles - dot.LA ›
Mayer and Staggs' yet-to-be-named company is backed by investment capital group Blackstone. The acquisition is the first by the new company, which hopes to use Hello Sunshine to establish itself as an independent, creator-friendly media company.
Launched in 2016, Hello Sunshine produces series for Apple, Hulu, HBO and Amazon. It's best known for "Big Little Lies," "Little Fires Everywhere," and "The Morning Show," but it also creates a host of unscripted shows, and is in production with several films including an adaption of the novel 'Where the Crawdads Sing,' one of Reese's Book Club picks.
Witherspoon and Hello Sunshine's CEO Sarah Harden and its senior management will continue to oversee day-to-day operations. Witherspoon and Harden will also join the company's board.
The cash shelled out for the five-year-old company speaks to the soaring value of high-end content as streamers compete to fill their bottomless libraries. Media companies have increasingly foregone licensing out their productions in lieu of retaining them for their owned-and-operated streaming platforms. That could create an opportunity for an independent studio with no ties to a specific streamer.
Fellow star-driven independent production studio, LeBron James' SpringHill Company, has also been rumored to be exploring a sale. Earlier this year Amazon acquired MGM Studios for $8.45 billion to fill the pipes of its Amazon Prime Video.
"This is a unique time in our world where the intersection of art, commerce and media makes it possible for these creators to tell their stories and Hello Sunshine is here to put a spotlight on their amazing creations," Witherspoon said in announcing the deal.
- EVgo Tries to Predict the Future of Car Charging - dot.LA ›
- Meta Software Moves Its Data SaaS Operations to LA - dot.LA ›
- The Pandemic Has Erased Many Gains for Female Founders in LA ... ›