Welcome back to What I’m Hearing, coming at you from an undisclosed Spring Break location…

Programming notes: This week on The Town, Lucas Shaw and I debated Apple’s motivation for movies in theaters, Chris Lee revealed new reporting on Marvel’s CGI problems, and author Matthew Ball assessed the latest video game adaptations. Also, I broke down Disney’s various controversies on The Business (here), and explained how Bob Iger threw a Reedy Creek pie in Ron DeSantis’s face on CNBC (here) and NPR (here).

Discussed in this issue: Rupert Murdoch, Leo DiCaprio, Ari Emanuel, Lisa Nishimura, Meredith Stiehm, Mooky Greidinger, Arianna Bocco, Scott Stuber, Bill Kramer… and Peter Guber’s Israeli adventure.

But first…

A few early thoughts on this:

1. The deal would give WWE an enterprise value of $9.3 billion. That’s slightly above even the high end of estimates, but as contemplated, this would be an all-stock and equity transaction. (Let’s see where it lands.) Plus, Endeavor could arguably wring more value than others out of the combination with UFC, especially with TV rights deals coming up for renewal. (WWE’s market cap was under $7 billion on Friday; Endeavor’s was $10.5 billion.)
2. Structuring the transaction that way—more like a merger and a split into two companies, with Emanuel sitting atop both—addresses what many thought might be an impediment to an Endeavor acquisition: the company is already highly leveraged and has made debt servicing a priority.
3. Remember that UFC, a cash cow, was a major reason that Ari was able to take Endeavor public. So even if the deal structure allows Endeavor Proper to benefit from the new company’s financials, shifting UFC to a separate unit should put more focus on Endeavor’s other businesses—especially if Ari sells IMG Academy, as is being explored. Wall Street has always undervalued the WME agency on the theory that its assets could succumb to the charms of Bryan Lourd at any time. Now the pressure might be raised.
4. Both WWE and UFC will certainly outlive their carnival-barker impresarios, but both Vince McMahon and Dana White are problematic figures whose personal scandals will hang on their companies as long as they do.
5. In related news, CAA signed Michael C. Hall!

Puck’s Eriq Gardner has good background on the case here, including Leo’s nightclub antics with Low and manager Rick Yorn’s effort to milk the relationship for cash. DiCaprio has been supportive of the Feds’ investigation, he appeared previously before the grand jury, and his testimony this week is expected to be brief. In fact, I’m betting it’s waaaay shorter than the reported 4 hour-ish running time of Killers of the Flower Moon.

Seems bad for Fox! I have opinions on this case, but I asked Eriq Gardner, who’s been following every detail for his Rainmaker newsletter, for a more sober takeaway…

Now the case comes down to just two things: First, who is responsible for the lies? (Is this Trump’s fault or was Fox plainly aware it was bullshit?) And second, what’s the price for smearing Dominion? Will the jury really write a number with three commas? Probably no, so it’s not completely hopeless for Fox, and in the weeks ahead, I’ll share what I’m hearing from its lawyers, but Rupert Murdoch nevertheless should be nudging his insurers. He’s now a huge underdog in this battle.

Now for labor contributor Jonathan Handel’s takeaways from the first round of Writers Guild negotiations and the perhaps-misguided optimism around town…

A Friday media report suggested that “the two parties are closer than expected on a number of key issues” and that an additional, previously unplanned bargaining session may take place this Tuesday. I’ve confirmed the extra session, but what that actually portends isn’t necessarily clear. A well-informed and impartial source, albeit from outside the room, tells me that the report’s spin was “nonsense” and the alleged movement is a “charade.”

So what’s actually going on? Here’s how the first week or so went down, per multiple sources. Imagine a small office building at a nondescript mall in Sherman Oaks. Behind massive doors, a large conference room is filled with 50 to 100 people, maybe more. Like a bilateral diplomatic meeting, the guild leadership, with newly elevated chief negotiator Ellen Stutzman, and the Alliance of Motion Picture and Television Producers, led by president Carol Lombardini, sit in rows face to face, while others occupy seats in the back.

What were all these people doing? Arguing? Parsing the details? Negotiating? No. The leaders were mostly reading speeches at each other. Over and over this went, each side presenting its positions but seldom really engaging with the other. Who could stand this? You’d have to love being lectured at. The presence of Stutzman as chief negotiator, rather than the WGA’s fiery executive director David Young, sidelined on medical leave, may have improved the climate somewhat, says a source, but the process was hardly what most people would call productive.

Thus, Kabuki theater, not back-and-forth negotiating. “The AMPTP tries to get the WGA to talk through the WGA’s proposals and the WGA refuses to negotiate or even talk through them,” one inside source emailed last week. “They act like the AMPTP people don’t exist, won’t say hi or look at them, and won’t negotiate.”

That’s just one person’s report, but it echoes what I’d been hearing second-hand, and it’s the same stone-cold approach the WGA took in its recent campaign against the talent agencies. And 15 years ago, ahead of a 100-day work stoppage, the WGA allegedly refused to provide sufficient seating for studio reps during a negotiating session at the guild’s headquarters. (Another source says the AMPTP itself has done the same thing to SAG-AFTRA.) “It truly seems like they just want to strike and have no intention of coming to a deal,” lamented the inside informant. The union responded to me, “The WGA negotiating committee [is] committed to productive negotiations.” (The AMPTP had no comment.)

We now expect two weeks of inactivity (punctuated with that extra session and perhaps some bargaining), during which the union will likely seek (and surely obtain) a vote from its members that will authorize leadership to call a strike at any time after May 1. Then comes another two-week bargaining session—a mad dash towards a deal or a walkout. Minor issues may be resolved in that time, but it’s still hard to see how the parties will reach a comprehensive deal ahead of contract expiration. Please prove me wrong—but as a reminder, the union says its issues are existential, pointing especially to a compensation squeeze that worsens year by year, while the companies paint a dire picture of layoffs and cratering market caps.

Does it have to work this way? The Director Guild takes a different approach, usually pre-negotiating and whittling down a host of issues before holding focused talks to reach a deal months in advance of contract expiration, which for them is June 30. Many wish that the WGA would adopt this model, too. But that technique didn’t work for the directors this cycle, which is why the WGA is going first and the DGA will commence bargaining May 10, very possibly while the writers are on strike. (SAG-AFTRA’s contract also expires June 30, but the actors have not publicly scheduled negotiations.)

Fifteen years ago, the DGA cut the legs out from under the Patric Verrone-led WGA strike by reaching a deal while the writers were picketing—a deal that then served as a template for the WGA, thus ending the strike. But that might not happen this time, as the DGA is focused on residuals while the WGA is foregrounding initial compensation (which the DGA’s contract already robustly protects). A first-out-of-the-gate DGA deal could serve as a residuals template for the writers, but it won’t address the scribes’ initial comp concerns, or such other writer-specific anxieties as AI-written scripts.

In any case, before congratulating the directors for their approach and scolding the writers for theirs, recall the WGA’s retort, that the DGA would never have achieved an adequate deal in ’08 had the WGA not struck. That’s probably true, though some disagree. And for those who doubt whether past is prologue, former president Verrone is also on this year’s negotiating committee, which is co-chaired by the leaders of the recent agency campaign, David A. Goodman and Chris Keyser, and which includes Stiehm, who was also a co-chair of the agency campaign. That’s a lot of familiar faces from battles past.

Still, again, in an industry that’s rapidly changing, are we doomed to cliffhanger bargaining and periodic strikes? Alternatives occasionally glimmer. In the 1990s, the WGA maintained a so-called Contract Adjustment Committee, which was supposed to ease the stress of triennial negotiations, but that experiment fell into disuse in 2000 for reasons unclear.

More recently, Covid drove management and labor to negotiate concurrent mid-cycle amendments to more than a dozen collective bargaining agreements. That delicately-balanced effort to reboot and sustain production—which included the DGA, IATSE, SAG-AFTRA and Teamsters, but not the WGA—produced the Return to Work agreements that kept the industry working through the pandemic. (Those agreements expire May 12 and are not being renewed.)

Even last year, SAG-AFTRA achieved specific midcycle contract gains, but only after invoking a legislative threat. This time around, though, there’s a good chance the action will be in the streets. Can entertainment companies make a profit, build out streaming platforms, placate Wall Street, and pay writers sustainable wages? The union says they have to. So, while any suggestion of a recent breakthrough is welcome, it’s probably misplaced or at least premature. These negotiations will come down to the wire.

And what drink pairs best with a picket line? Company execs might try a boilermaker, while for the WGA, it seems, the cocktails will be strictly Molotov—or more precisely Mockotov, with words substituting for gasoline. The town is witnessing a distasteful and possibly destructive way to negotiate, but Hollywood writers seem convinced that for them it’s the only way that works. And if May 1 instead brings a deal, it’ll be strictly champagne all around.

Jonathan Handel is an entertainment/technology attorney, author, executive and journalist. He regularly represents producers and others in their dealings with guilds, was previously outside counsel to SAG-AFTRA and was on the legal staff of the WGA in the early 1990s.

Related: Eric Kohn mourns an “extraordinary” week in indie film, with the Netflix exits, John Vanco bailing on IFC Center, and Arianna Bocco leaving IFC Films after 17 years. [Indiewire]

Warner Bros. Discovery C.E.O. David Zaslav only made $39 million last year, so please consider him in your year-end charitable giving. The company’s incentive-based comp likely will reverse that decline, my Puck colleague William Cohan argues. [Puck]

R.I.P. Greidinger family at Regal’s bankrupt owner Cineworld. Current C.E.O. Mooky, whose grandfather started the theater chain in 1930, will likely be replaced by Regal’s former C.F.O. while its creditors figure out what to do. Turns out that taking on debt to go on a spending spree before a pandemic wasn’t a great strategy. [Financial Times]

As the baseball season begins, a check-in on how screwed the regional sports networks that power those $300 million salaries are. Very screwed! [Bloomberg]

Everything you ever needed to know about the rats in New York City. [WSJ]

“I’m not sure what the new rule is trying to accomplish except to get streamers to subsidize movie theaters and make more obscure best pic nominees better known, which maybe benefits the Oscars, but I don’t see how that increases the ratings. I’d call it a ‘streamers tax.’ It will force their hand to pay for a wider theatrical release, which is a minimal expense for Apple, Amazon, and Netflix. At the same time, smaller films like Triangle of Sadness and Women Talking will need a money-losing theatrical wide release to qualify. For films coming out of a festival pick up, it means that the cost of qualifying for best pic goes up. The bottom line IMO is that this works against small films, actually favors the streamers, and of course the major studios, and is intended as a lifeline to subsidize theaters, while not making any difference to the audience in general.” –A producer

“What a profound statement of the Academy’s values. For decades, the TV networks produced great [made-for-TV] movies that were honored at the Emmys. Why the Academy ever let streaming movies compete for Oscars is beyond me.” –An executive

“Keep your eye on the board of governors in the next few weeks. Netflix gonna Netflix, and they’ll all have projects picked up before the vote.” –An agent

“At BEST, it’s a subsidy to theater owners in those cities and a virtually valueless public statement that ‘We think theaters are important,’ but it doesn't do anything to address the forces that are actually undermining the theatrical experience. And it COULD really screw the economics of film at the lower end, specifically films made by women and people of color AND international films.” –A different producer

“Definitely feels like they'll include some big loophole to accommodate for international, docs, and indies. As much as the board thinks of themselves as needing to protect the Oscars (and industry), most of the members feel like the purpose of the Academy is to protect the little guy.” –Another executive

“[This] might be another step closer to allowing dirty exhibitors into the Academy… I wish.” –A theater executive

Have a great week,
Matt

Got a question, comment, complaint, or a suggestion for Ari’s wrestler name? Email me at Matt@puck.news or call/text me at 310-804-3198.