The Mail Room: Netflix’s Data Dump and Zaslav’s Next Deal Headache

challengers movie zendaya
Challengers is not yet a hit by traditional standards, because of that $55 million budget—including more than $10 million up front for Zendaya. Photo: Courtesy of MGM
Matthew Belloni
May 28, 2024

Back in the day, most information at a talent agency ultimately flowed through the mail room, so I stole the name for my periodic reader question column. If you’d like something answered, just respond to this email and I’ll put it in the Google doc for a future issue. Today, questions about a quiet rights negotiation at Warner Bros. Discovery, what top film composers make, the future of Starz, and one of the most enduring hits in television, among many other topics…

Everyone’s talking about David Zaslav and Warner Bros. Discovery probably losing the NBA, but nobody’s talking about the other rights deal he’s about to bungle: All Elite Wrestling. Why?

Because WBD’s Turner Sports is still in the exclusive negotiating window with AEW. The upstart WWE competitor signed a multi-year deal with Turner in 2020 with an option that Turner exercised, and now Zaslav and deal makers Kathleen Finch and Jason Sarlanis would like to keep the five hours of AEW programming per week on TNT and TBS. 

But the clock is ticking. I’m told the exclusive window closes in July, and AEW leader Tony Khan is said to be disappointed with the offer currently on the table. Khan also surely knows that Zaz losing the NBA would give AEW more leverage, even though the money to re-up AEW is a mere drop in the NBA bucket. If the window closes without a deal, others could swoop in for those rights, as Comcast has done with the NBA. (Extra awkward because WBD is said to own a stake in the league.) 

I’m not sure how alluring AEW would be to another platform, especially since only non-WWE partners could bid. But the wrestling shows still do okay on the Turner networks, it’s reliable programming, and a rival suitor could further push Zaslav into hot water in his cable carriage deals. For now, though, both sides are playing nice. Last night, after the league’s “Double or Nothing” pay-per-view event (yes, I watch pro wrestling press conferences now), Khan said, “I’m happy working for Mr. David Zaslav and I’m hoping we can do it for a long time.”

What’s your takeaway from the latest Netflix Engagement Report data dump?

There are the easy lessons: People really love global crime stories (Germany’s Dear Child, the U.K.’s Who Is Erin Carter?, and the third season of France’s Lupin all ranked in the top 5) and Julia Roberts (Leave the World Behind was the top movie, no doubt thanks to that very famous face on the tile). Five other less obvious takeaways for me:  

  1. The weirdest mystery: Obliterated, the outrageous action-comedy from the Cobra Kai guys, landed in the top 20. Yet it was canceled after just one season. I know this show was expensive and profane, but a renewal seems like a no-brainer here…
  2. The least regal fade-out: When The Crown first became a sensation in 2016, I’d have guessed the final episodes would be huge. But Season 6 failed to crack the top 20, a sign that the post-Diana Windsors became far less compelling to viewers. 
  3. Maybe the most impactful stat: The competition series Squid Game: The Challenge increased viewership for the original Squid Game by 34 percent. Reality producers should start working up pitches for spinoffs of big shows. How about Bridgerton: The All-Corseted Dating Spectacular?
  4. The Netflix audience isn’t the HBO audience: There’s something kinda perfect about the middling football dramedy Ballers topping all licensed HBO series on Netflix. Bigger than the prestige classics Band of Brothers, Six Feet Under, and Insecure.  
  5. Viewers binge and purge: The movie business lives and dies on opening weekends, and Netflix is looking the same. Despite the noise about algorithms perfectly matching content to viewer, most top Netflix shows started big and then fell off as people binged and moved on, as shown by this chart from the Owl & Co. consultancy…

Yellowstone, Challengers & More

I saw Yellowstone started production on the final episodes and Kevin Costner was not in the announcement. What’s going on with him and with the sequel series now that Horizon was so poorly received at Cannes?

No change with Costner, who didn’t exactly mend any fences with Paramount and Yellowstone producers through his GQ comments claiming he was essentially pushed off the show via late scripts and the whims of creator Taylor Sheridan: “Other shows became more important,” and it “really fucking bothered me, that none of them would actually try to set the record straight”—meaning the studio wouldn’t back his version of events that led to his exit.

I still have a feeling Costner will end up in the series finale—the incentives for him, Sheridan, and Paramount are too great—but as of now there’s no plan. In better news, as I predicted, Yellowstone breakouts Cole Hauser, Kelly Reilly, and Luke Grimes have ended their standoff and are wrapping up deals to return for the sequel series. No movement on Matthew McConaughey or Michelle Pfeiffer, both of whom will need to be satisfied with the creative direction before signing on.

What kind of money do Trent Reznor and Atticus Ross make for a film score? Their music was the best part of Challengers.

Totally agree. The Oscar winners and their elevated synth-pop sound are among the most in-demand for film and TV, and their fee fluctuates depending on the size of the project. While the duo made $600,000 for Sam Mendes’ small Empire of Light, for instance, they made much more—I’m told it’s about $1 million—for the music-heavy and bigger-budgeted Challengers.

Speaking of that movie…

Challengers is at $80 million worldwide, which seems pretty good for an original, star-driven romance. Are we ready to call it a hit?  

No, we are not. Not by traditional standards, because of that $55 million budget—including, as I reported when the film went into production, more than $10 million up front for Zendaya. That movie probably should not have cost that much, but it was one of those late-stage MGM greenlights under Mike De Luca/Pam Abdy, and now the Amazon team is handling the release. It’s all so muddled these days for the streamers that dabble in theatrical. They want box office, but they mostly want a higher profile for the film when it eventually debuts on streaming. Challengers will succeed less on the former metric and more on the latter.

I analyzed this phenomenon on last year’s Air, which did fine in theaters ($90 million worldwide) until you factor in Amazon’s outrageous $130 million cost to acquire the package, and tens of millions more in marketing. Those economics would be considered disastrous for a traditional studio, but if you ask Amazon’s Jen Salke whether she’d make Air again, she’d probably say yes, given the quality of the ultimate film, the decent-enough box office, and the digital viewership numbers.

On Challengers, Amazon will at least make back in theaters a big chunk of its marketing and distribution costs before the film drops on Prime Video. I still don’t understand why Amazon didn’t throw two arguably more commercial titles, Road House ($85 million budget) and The Idea of You, with Anne Hathaway, in theaters. But both are performing really well on Prime Video. I guess that’s the ultimate goal for Amazon. 

Theatrical followed by streaming is the model for all studio movies these days, though. Even Sony, which doesn’t have an affiliated streamer, makes more money from its Netflix Pay 1 output deal when its movies do well in theaters. We just don’t judge traditional theatrical releases the same way. It’s silly. Given how few Amazon projects break through, they’re probably happy with Challengers, and they’re planning at least a small awards campaign for director Luca Guadagnino and the other talent. But the real win would be a film that justifies its marketing and its production cost with the streamer’s share of the theatrical gross. I know, what a concept.   

And on this subject…

Hit Man seems like a fairly commercial movie with an emerging star in Glen Powell that could have done well on its terms in theaters. Yet instead it will just disappear on Netflix. How does this keep happening?

Ask Tom Rothman at Sony. Last fall at Toronto, where Hit Man was for sale, Rothman knew he had Powell’s Anyone But You in December and could have secured the star’s follow-up, from a prestige director in Richard Linklater. Sony could have then put Hit Man in theaters this spring or summer, before Powell’s Twisters in July. But the studio didn’t even bid on it, I’m told.

Rothman can be forgiven for not suspecting Anyone But You would do the big business it did, and Netflix was willing to pay $20 million up front and offer 44 theaters for two weeks of exclusivity. So now a commercial indie with a hot star and a 98 percent fresh rating is banished to a few non-AMC theaters and then, on June 7, subject to the whims of the Netflix algorithm, where the film will likely chart for a week or two then disappear. And Powell and his agents are focused on leveraging Twisters to try to elevate him further toward movie stardom.    

Netflix Pay Transparency, Survivor & Starz

You’ve recently lamented the pay situation for writers and talent at Netflix, while also pointing out its transparency issues. I’m curious to learn more about how those two things could be at odds with one another. If Netflix has to pay incentives based on metrics only Netflix sees, or ones that can be gamed via the Netflix algorithm, it seems like a stacked deck in their favor. Can you make us smarter here, please?

First of all, Netflix claims it doesn’t put its thumb on the algorithmic scale. Meaning, if you are being served a show or movie, it’s because your viewing history dictates that choice, not because Netflix executives want you to see it. 

I’ve always been skeptical of that claim, specifically for the reason you state: Different pieces of content come with different encumbrances. For instance, Netflix is incentivized to promote its owned stuff over outside shows or movies, which must be licensed. Second, Netflix maintains favored relationships with creators such as Ryan Murphy, whose shows curiously pop up in my recommendations despite the fact that I haven’t watched a Murphy show since The People v. O.J. Simpson. Third, if Netflix is gonna spend $160 million on an eight-episode season of, say, 3 Body Problem, its leaders probably want to promote it beyond the sci-fi fan cohort. But again, Netflix says it doesn’t do this.   

On the transparency issue, I agree Netflix will need to hand over more data if it wishes to convert the buyout model to contingent compensation. Only a fool would trust what Netflix says to be true, without at least third-party audit rights. But so far, we haven’t seen what Netflix will offer on that front.   

Any truth to the rumor that your BFF publicist Steph Jones is segueing to producing, like Kelly Bush tried to do a few years back?  

I have no idea, and I refuse to ask Steph after our last interaction ended with an email from her that seemed written for her lawyers, not me. But I can confirm she finagled a “consulting producer” credit on the recent Netflix roast of client Tom Brady. I’m sure she was an integral and collaborative member of the production team.

Do you have any thoughts on Survivor becoming the No. 1 entertainment show of the 2023-24 season among adults 18-34, 18-49, and 25-54?

Thoughts? Only that it’s truly a remarkable feat for a show in its 46th cycle. I know the broadcast ratings bar has been lowered almost to the ground, but this is the first time Survivor has won all three demos since its second season in 2000-01. Wild to think how much of a flier Les Moonves took on this bizarre game show when his CBS deputy Ghen Maynard pitched it from the unknown producer Mark Burnett nearly 25 years ago. (Little did Les know he’d start a chain reaction that would lead to President Trump.) Then Moonves ordered two a year, a risky expansion that could have drowned the show like overexposure drowned Who Wants to Be a Millionaire?. Instead, it worked, and the show is now basically unkillable.  

What’s the fate of Starz, post-Lionsgate separation?

Good question! Lionsgate has been trying to split its studio operation from the languishing Starz platform since shortly after it paid a whopping $4.4 billion for the platform in 2016. Now it’s finally happening via a SPAC merger. By the end of 2024, Lionsgate Studios will house the film and TV studio assets, leaving the Starz cable network and its streaming service behind in its own entity. Then what?      

Lionsgate C.E.O. Jon Feltheimer hasn’t really said—I saw him lunching at Toscana a couple weeks ago but I forgot to ask—though Wall Street expects both sides of the company to pursue investors and consolidation. Starz, with 19.4 million subscribers across streaming and linear (12.6 million streaming-only members at the end of 2023), could be an acquisition target by an existing streamer looking to boost its numbers with Black audiences (the Power franchise) and horny moms (Outlander). CBS kicked the tires back in 2019, and Roku and Apollo Global have together been looking recently at acquiring a piece of the platform, although they couldn’t agree with Lionsgate on a valuation, according to the Journal.  

A transaction would be tricky because so much of the Starz content comes from Lionsgate, but long-term supplier deals are in place for both film and TV. And remaining independent is an option in the short term. AMC Networks, with its sports-free basic cable channels and small AMC+ streamer, has stayed independent far longer than some thought possible.

Who is the most powerful movie producer under 40? Anyone? 

Honestly, I’d probably say Margot Robbie. She’s been on fire lately, almost too active. But the biggest non-talent, non-manager producers? That list is way shorter. I asked around and the one name that kept coming up was Eli Bush, the former Scott Rudin protégé. New Line seems to like J.D. Lifshitz and Raphael Margules. Maybe David Hinojosa in the indie space? It’s tough. As one experienced producer responded when I asked him: “Really no competition sadly. This business fucked young people.”

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