Endeavor Group Holdings CEO Ari Emanuel pledged loyalty to company clients involved in Hollywood’s dual strikes and the company said it expects a $25 million monthly hit to revenue from the labor impasse.
“I’ve been through many strikes in my more than 35 years of representing actors, writers and creatives of all types, whose livelihoods depend on the entertainment economy,” Emanuel said during the company’s second-quarter earnings call with Wall Street analysts. “Time and again, our industry has navigated change and now is no exception as we adjust to new distribution models and technologies. There are real issues to work through, and we continue to stand with our clients, advocate on their behalf and push for a resolution that protects their creative and commercial interests.”
The exec also noted that while the quarter included the impact of nearly two months of the WGA strike, which began May 2, the company’s representation division also saw growth in Broadway, comedy and country music. Fashion, a speaker’s bureau and non-scripted programming also are helping keep things moving forward, the company said. But the onset of the SAG-AFTRA strike in July will dramatically cloud the picture. He said the process will take “months, not days” to be fully resolved even if parties agree to terms in the fall, as many observers have predicted.
Representation division revenue grew 6.5%, helping Endeavor beat Wall Street forecasts for the second quarter.
CFO Jason Lublin said the company expects a $25 million monthly hit to revenue from the strikes, with much of that amount flowing through to the bottom line, but he said the situation’s unprecedented nature makes forecasting difficult. He said monthly updates would be provided to investors as the situation unfolds, or as events warrant, though full-year projections are being suspended pending the resolution of the strikes. Unlike media companies producing film and TV titles, who can reshuffle their slates and defer costs as production is shut down, talent agencies are affected as soon as work stops and deals can’t close.
Endeavor President Mark Shapiro called the strikes a “once-in-a-generation event,” and said there is a wide range of potential financial consequences for the company depending on when the disputes are settled.
Asked for the outlook on the cost side of WME, Shapiro said, “You can bet we’re lifting all levers” in terms of looking to adjust operating costs, staffing and potentially the client portfolio. As the company learned during Covid, the exec said, “Never waste a crisis.”
MORE to come ….