The Financial Problems of Johnny Depp: Mismanagement and a Crisis of the Hollywood Lifestyle

The Hollywood Reporter this week highlights the case of Johnny Depp, who has recently sued his agency for mismanagement as the source of his financial troubles. The article, which details Depp’s behavior and lifestyle on set, with testimony from Jerry Bruckheimer, Tracey Jacobs, his agent, and Joel Mandel, owner of The Management Group, the agency, claims that it is Depp’s lifestyle choices that have led him to his current financial situation. The details are many and complicated, but in terms of the lawsuit itself, here is what THR reports:

“The possible catalyst for the lawsuit was a multimillion-dollar bridge loan TMG made to Depp in 2012. The managers say they tossed their client a lifeline as he faced default on a $5 million loan.

In his own lawsuit, Depp says he was kept in the dark about his finances and it was his ex-managers who weren’t handling his money wisely. (Waldman [Depp’s attorney] maintains that it was Depp, not Mandel and Bloom, who called the October 2012 meeting.)

Among other charges, Depp alleges that TMG disbursed almost $10 million in “loans” to his sister and other parties close to the actor without his knowledge and took out loans for Depp…TMG says the loans were needed to keep Depp afloat and that the actor was fully aware of them.

In addition to the loans, two other matters are central to the lawsuits.

First, the Depp suit claims, TMG failed to pay Depp’s taxes on time, resulting in $8.3 million in interest and penalties over the years — a claim TMG also denies, arguing that it had no choice, because the funds to pay the taxes were never available in April.

Second, perhaps most incendiary, Waldman alleges the Mandels were acting as both lawyers and business managers. Because they offered legal assistance, he says, they were bound by a California law forbidding attorneys from taking a percentage of clients’ earnings unless they have a contract expressly allowing them to do so.

Waldman’s case hinges on the question of whether the Mandels did indeed serve as de facto lawyers. Both were trained as attorneys but say they never did anything for Depp that would constitute legal work. (The law does not apply to agents, Waldman notes, even those operating without a contract.)”

While ultimately the case remains unresolved, one thing is clear, something is going to change in Hollywood as a result. Here are some of my predictions of what will happen as a result of the case:

  • Break Johnny Depp’s career or propel him forward
  • Bring in other similar cases that actors have with their agents if Depp wins
  • Change the actor-agent relationship in Hollywood from a personal and legal standpoint
  • Hurt Depp’s franchise ability, the actor being labeled as a liability risk

The full article can be found here: http://www.hollywoodreporter.com/features/johnny-depp-a-star-crisis-insane-story-his-missing-millions-1001513

 

 

The Business of Television: Rob Long

Recently on The Business, host Kim Masters talked with Rob Long, a television producer with CBS of Cheers fame, and his efforts to save the sitcom Kevin Can Wait, Kevin James’ return to television, after the previous showrunner’s exit. Most of the talk is dedicated to how a producer goes about running a television show, specifically, how the different elements work together.

Long, on the problems with Kevin Can Wait:

“The problem was there was a bunch of people doing a different show, and you can feel that way when you’re in pilot production, but you can’t when you get to the episodes…I think there’s no room for error.”

“It’s not a business known for its decisiveness; and when you’re faced with some of these issues, you have to be decisive. Making a bold choice is almost better than waiting and making a slightly  better bold choice. The trick is making a choice and get moving.”

This is a common theme among television shows, but particularly sitcoms, as most are filled with different clashing personalities and opinions, all wanting the same thing. Given the recent tension among the WGA however, it is unlikely that Kevin Can Wait, will have much luck on CBS. Until the negotiation are resolved, Long’s job is mostly going to consist of juggling internal issues, like fostering up synergy between the crew and cast. Given his past experience, it shouldn’t be an issue, as long as he makes the choice to move forward.

 

The WGA Negotiations: the Art of Making the Deal

Deadline reports on the current WGA negotiations with the AMPTP, specifically the initial concerns which led to a strike authorization proposal. In an interview with one of the WGA negotiators, Chris Keyser, he explains how the negotiations are generally supposed to work and where things ultimately went wrong:

“The truth is that what needs to happen here is that we each get close to what our bottom lines are – what things we need to make this deal. And in doing that, we take things off the table, back and forth. The first week or so of the negotiations was a good conversation where we identified – and I say we, that means David Young, who’s our chief negotiator, and Carol Lombardini, who’s the companies’ chief negotiator – we identified, through signaling, which things matter to us in the long run – what we’re gonna need to make a deal. And then the sides begin to take things off the table. That’s a necessary part of the process.”

This back and forth negotiating, when due correctly, produces results that are mutually beneficial; which is why is it called negotiating. Words such as “winning” and “losing” do not apply in this scenario, for if one side loses, than both sides loose, if one side wins, both sides win. At least that’s the ideal. But because nothing is ideal, and negotiations with unions always have a way of favoring the bigger player in the onset, problems arise. In this case, the problems came about in terms of what the AMPTP took off the table and what they added on:

“Instead, they made a tactical move, which they’re allowed to do, in which they put stuff back on the table. They put stuff back on the table which they had taken off before. They added a rollback of health care, at the same time as not putting a single penny on the table for writers’ economic demands.”

This is not to say that AMPTP are the bad guys in this situation, for such distinctions are grossly unfair and generalized, especially in the world of business, where such emotion rarely exists in meaningful form. In response to these demands, the WGA has issued a strike authorization form, which no one wants. It is still hopeful that a reasonable deal can be made, but that will require some give and take for both sides in order to benefit. Neither party can afford to be greedy or modest; a healthy middle ground must be found in order for the negotiation to have any affect. This is common sense; something that both parties recognize, but somehow, despite knowing this, are unable to agree on the right path to take.

 

WGA Negotiations: The Alliance of Motion Picture and Television Producers

On Friday, March 31st, the Hollywood Reporter issued an update on the current status of the WGA, the Writers Guild of America; specifically, it’s contract negotiations. The talks between the WGA and the Alliance of Motion Picture and Television Producers (AMPTP) has apparently been a heated one, as many of the proposals of WGA were denied:

“Earlier, the WGA West, in a letter to Alliance of Motion Picture and Television Producers head Carol Lombardini, proposed just a week of negotiations, April 10-14, although the parties appear to be some distance apart in their positions on such issues as relief for middle-class writers, shoring up the health plan, solidifying the pension plan’s foundation and other matters”

The talks will resume next week on April 10th, given that the current contract expires May 1st, it is an issue that needs to be resolved quickly; which given the circumstances, is a likely occurrence, especially if both parties want to avoid another strike, like the one in 2007.

What does this ultimately mean for unions? Well, it means that they continuing to be used and used somewhat effectively. However, it does beg the question: is all of this trouble really worth it? It depends on your stance of the relevancy of unions and the general effectiveness of Hollywood. As for myself, I like to remain cautiously optimistic. Hopefully, in the coming days, we will know the effects of the negotiations and what it means for the future and whether or not screenwriting will continue to be a profitable enterprise worthy of people’s time.

The Heir to the Disney Kingdom

The Hollywood Reporter this week details the account of Bob Iger, the CEO of the Walt Disney Company, and his retirement announcement in two years time; bringing up once again the question of succession for one of the Big Six studios. Unlike the Paramount situation, Disney is a thriving company with several franchises, and thus, is able to survive a transition of power, given the right person takes the job. THR provides the setup:

“ronically, the CEO is trapped in the same vise as his predecessor, Michael Eisner, who named Michael Ovitz his No. 2 in 1995, only to fire him a little more than a year later, with a subsequent settlement of more than $140 million”

On potential candidates:

“But by Wall Street consensus, no internal candidate has emerged as a clear heir apparent since Disney jettisoned Iger’s first pick, Tom Staggs, in 2015. While Ben Sherwood, who serves as co-chair of Disney Media Networks and president of Disney/ABC Television, oversees a key profit center, it’s unclear whether Iger favors him. Bob Chapek, who chairs Disney’s parks and resorts, has broad experience and also appears to have Iger’s trust; James Pitaro, the head of consumer products and interactive media, has digital experience, having served as head of Yahoo Media; and CFO Christine McCarthy has been working closely with Iger but lacks operational experience”

On a personal level, Iger needs to pick someone he trusts and understands the needs of the company; which on some level is all of them; from this then Bob Chapek and Christine McCarthy seem to be the best bets for CEO, Chapek because of his park experience and Iger’s trust; and McCarthy because of her close work with Iger. Regardless, the success of a company is not based on the strengths and weaknesses of one individual; it is a collaborative effort one that requires, in the case of Disney, the support of its Board of Directors and the various department heads. It is unlikely that Disney will falter during the transition process, given the company’s history with corporate synergy and their business model, but what happens after 2019 will remain somewhat ambiguous; but it is perhaps an ambiguity that is worth it, for it presents opportunity and new potential directions, including exploring some old avenues worth a second pass.

 

The World’s Most Expensive Episodic TV Show: The Franchise

The Business this week hosted James Mangold, the director and co-screenwriter of Logan, released earlier this month. He discusses one of the many problems that filmmakers face when dealing with studios, specifically, when a filmmaker is called upon to produce a franchise film: a loss of control.

The power of the filmmaker in a studio environment in regards to the franchise is almost nonexistent; and it goes all the way back to the structure of the franchise themselves. This is especially true with the Marvel Cinematic Universe, even more so with properties like X-Men, who are not technically under the umbrella of the MCU, being owned by Fox instead of Disney. Mangold makes the point:

“And I don’t think anybody with a human brain and ears and eyes is not starting to think that more is not more. And that adding more heroes, more characters, more effects, more sound…The fact is that the unspoken feeling is that this is a very weird trajectory we’re on. Less is coming back and the movies aren’t as good”

Of course Mangold is generalizing, he says as much. However this generalization makes a point that speaks to franchise structure.

“This is endemic. I think if you’re just going to use Marvel’s grosses and somehow use their movies to make them free of this kind of criticism that’s not fair….Outside of comic books, I’m talking about tent-pole movies in general, they’re not movies generally, they’re bloated exercises in two hour trailers for another movie they’re going to sell you in two years.”

There is of course a bright side to this, for Mangold does not deny that there are some good movies that emerge from the woodwork, referencing Guardians of the Galaxy  (2014) and Iron Man (2008) as being notable exceptions to the rule. The problem lies in what successful films such as these ultimately produce-repetition.

Mangold and host Kim Masters discuss a bit about the specifics of Logan, involving the desire to include a Marvel comic in the film, something that was ultimately denied by the studio resulting in the production of a fake comic book, and then proceeds to get to the treatment of studios when it comes to creative directors.

“The reality is that all you have to do is experience…what it feels like when you don’t have control of your movie”

This brings up an interesting point and speaks to the current studio system, but at the same time also speaks to Mangold and others like him, showcasing, almost entirely in subtext, the narcissism of filmmakers and creative artists. This narcissism is not entirely their fault nor it is necessary a bad thing (see the work of Spike Jonze’s Adaptation, 2002) as long as it has a direction. In the case of franchises that direction often leads to “soullessness” and repetition. If directors and others in the industry are allowed to be creative in the confines of mainstream Hollywood, the repetition will cease and the quality of franchises will ultimately improve. This will require, in the most extreme cases, a new brand of Hollywood, one that is based on mutual trust and respect between all parties. That day is unfortunately far off, but hopefully, as long as there are creators, there will be films worth seeing, some of them part of a franchise.

The Netflix Ratings System

IndieWire posted an article early today detailing the upcoming changes to Netflix, specifically the rating system, that are set to appear sometime in April. While by no means a perfect analysis, neglecting for the most part the business side of the issue (i.e. why Netflix thought it would be a good idea in the first place), it does however, bring up some interesting points concerning the company and other streaming services like it such as Amazon.

Consider if you will, for your approval, the following excerpts:

“Five stars feels very yesterday now,” said Netflix VP of product Todd Yellin in a press briefing. He went on to suggest that star ratings hurt its business investments in catalogs of titles, noting that “bubbling up the stuff people actually want to watch is super important.”

“It{the new system} suggests that there’s no value in divisive material…By depriving viewers of the opportunity to broaden their range, Netflix denies an essential aspect of the maturation process for the critically engaged viewer”

The new rating system, which will be a thumbs up-thumbs down system reduces film selection on Netflix to the quality of a Facebook post or Twitter tweet and frankly, films regardless of overall quality, deserve better critical review than that- even from their audiences. Such an action is insulting to the viewer and belittles their intelligence to a four year old who doesn’t know any better. Netflix should treat their audiences as if they were their business partners (because they are) and let them decide for themselves what is good and bad and to what degree. Furthermore, to beat an already dead point into the ground, this rating system is especially insulting to the filmmakers, whose work has been reduced, for the sake of convenience to 50-50 chance.

“The thumbs up/down system has been a negative force in the critical landscape ever since Gene Siskel and Roger Ebert first applied it from the couch of their television show nearly 40 years ago…Over the years, however, this binary approach has encouraged reductive assessments that depressed the value of nuanced opinion. It’s that same impulse that has led to our current age of Rotten/Fresh polarities determining a movie’s fate with the ease of a flipped coin. By judging any culture through the limited range of binary possibilities, it’s always one step away from outright dismissal.”

This kind of behavior is not surprising from a company such as Netflix, or Amazon, or any of the streaming services. Through no fault of their own. These companies were brought up, as real competitors in the film industry, in an age when films began to mean less and less to the general audience. If it sounds cynical it’s because it is; if it sounds insulting, it is, but only because of its small nugget of truth at the time. It is not to say that film audiences today do not care about films, they most certainly do- but the companies, like Netflix and Amazon, seem to have temporarily forgotten that.

Hopefully, the rating system is just a fad that will eventually fade itself out; and if by some chance it doesn’t then it can only be hoped that audiences in April will be able to tell for themselves what makes a good film.

The New Paramount Decision: Michael De Luca

Variety this week reports that Michael De Luca, a producer at Universal, has turned down Paramount’s offer to be the studio’s 2nd after the new CEO, presumably Jim Ginaopulos. If one considers De Luca’s record, it makes sense as to why Paramount would want him on board:

“He is considered one of the most prolific and respected producers working with the studio, guiding key projects like the “Fifty Shades of Grey” films. Universal was particularly intent on keep De Luca in the fold because another key producer, Scott Stuber, is reportedly mulling an opportunity to run the feature film unit at Netflix”

Paramount, which has been consistently ranked last place among the major studios for the past five years, seeks to hire Ginapulous, in the hopes of revitalizing the company. Deadline reports:

“The development ratchets up the importance of finding a way to make things work with Gianopulos. He had a stellar track record at Fox, but his expertise isn’t as a creative executive as much as in areas like global distribution”

Ginaopulos’ experience in global distribution is not a bad thing for Paramount if he accepts the position for it allows the company to tap into the international market and gain international arbitrage through business deals (eventually, for Paramount, in its current state, is in no position to make such deals). Of course, if the opposite occurs Paramount will be back at square one and without Michael De Luca or Ginaopulos, they will be hard-pressed to find anyone capable of fixing and turning around the company’s hardships.

 

 

 

The Failed Management Practices of Paramount and Why Disney, Universal, and Warner Bros. Succeed

The Business, this week, released their podcast focusing on the issue of pay-to-play auditions as well as taking some time for the Oscars. But what is even more interesting from a business perspective, is not the pay-to-play audition practice (illegal) or the endless machination that has become the Academy Awards, but their brief discussion on Brad Grey, as head of Viacom. Kim Masters makes the point:

“What we’re looking at is sort of a cultural thing…to many people nowadays these jobs of running studios are not about having a tremendous vision that you really want to bring and green lighting these movies, it’s about managing up.”

Matt Belloni of The Hollywood Reporter chimes in:

“If you look at the way Paramount was managed they weren’t  releasing a lot of films which can juice the numbers for a year…they weren’t creating these franchises that can move on to the next level. If you’re just doing another Star Trek, you’re not making enough movies to have that hit that generates a franchise; and they didn’t have the investment from the parent company to really invest in the top tier talent that can do that stuff. I think it’s an example of how you’re seeing the movie business bifurcate into this have and have-not system.”

Masters and Belloni make an excellent point. The reason why Paramount is falling behind in terms of the other major studios, and why Grey ultimately left the company, is because of poor management technique and the inability to make a franchise. The issue involves much of what Guy Kawasaki (The Art of the Start), Eric Reis (The Lean Start-Up) and most entrepreneurs caution in the corporate world. Management techniques are often very by-the-book and focus more on getting results fast and profit margins than on efficiency  and doing things right. They also do not address corporate synergy and fail to adhere to their mission and vision statements, which should be like their Bible in terms of operations. Poor management techniques are what drove companies like Big Idea Entertainment (the makers of the popular children’s show VeggieTales) into bankruptcy in 2006. While more information is needed in regards to the future of Paramount and the direction they follow, it would be wise for the new managers to focus on the lessons of Reis and Kawasaki- take things slow, develop corporate synergy, focus on efficiency instead of mass production, listen to your audience, and step back from previous projects to find the flaws and improve on them. That is the some of the steps of the learning process and explains the success of Disney, Warner Bros., and Universal; not because they made better films( which they did) but because they were able, and willing, to go back to square one and learn.

Why the Oscars Mattered

The 89th Academy Awards, the biggest night in Hollywood, will undoubtedly draw a crowd, and that crowd will mostly be people looking to see who won Best Picture. However, the Best Picture nominee is not the only thing that is interesting about the Oscars; if it was, the multi-million dollar production would be over with in five minutes. So, the question is, why, on the most basic of levels, do the Oscars matter? Here’s a hint: it has absolutely nothing to do with film-making and everything to do with people.

On Saturday February 25th, Bill Paxton, after complications with a heart surgery, died. The Hollywood Reporter, taking a break from the Oscar hype, decided to report Ron Howard’s tribute to the late actor:

“Bill was playful — yet dutiful — in his work as an actor, and likewise capable of being a strong and serious leader when directing a challenging scene on a movie set.

He loved adventure, and no one was happier than Bill when we were filming our zero-G scenes for Apollo 13 out over the Gulf of Mexico in NASA’s KC-135, nicknamed The Vomit Comet. For the record, Bill never lost his lunch through all those weightless scenes.”

The tribute, which can be viewed in its entirety on THR’s website, makes an important and often overlooked piece of the Oscars and the movie-making experience in general; one that now is only ever recognized in the In Memoriam section- the people who make films in the first place. Today, it is difficult to find a celebrity who doesn’t voice their political opinions for the entire world to see, and politics, frankly, are exhausting and incredibly divisive, especially when from an ideological standpoint Hollywood alienates half of its viewing audience every single year whenever politics are brought into the Oscars.

The day that the Academy rediscovers the reason behind the Oscars, will be a day that Hollywood will be forced to take a long look at itself and its values.