Front Burner - Encore: Is high finance killing Hollywood?

Episode Date: January 3, 2025

What is the point of Hollywood? There are two obvious answers, right? To make good stuff that entertains people. And to make money for the big studios and the people who work for them.Those two things don’t have to be mutually exclusive. But writer Daniel Bessner believes increasingly they have been.Bessner spent a year working on a deep dive into how Hollywood has evolved for Harper’s Magazine, called “The Life and Death of Hollywood”. Bessner is also a historian and host of the podcast “American Prestige”. He spoke to host Jayme Poisson last April.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hey everybody, it's Jamie. The holidays are traditionally a time for big movie releases. This year, for example, Mufasa, The Lion King, and the long-awaited Bob Dylan biopic, A Complete Unknown, came out around Christmas. in the long-awaited Bob Dylan biopic,

A Complete Unknown, came out around Christmas. It's when the potential for big box office numbers is high, which is ultimately one of the main goals for Hollywood, to make money for the big studios and the people who work for them. In a piece called The End of Hollywood, writer Daniel Bessner makes the argument that this goal, to make money, has increasingly become the only point of Hollywood

at the cost of making good stuff to entertain people. He spent a year working on a deep dive into how Hollywood has evolved over the last few decades. He wrote it out for Harper's Magazine. Daniel's also a historian, writer, and host of the podcast American Prestige. I spoke to him back in April. Hi, Daniel. Thanks so much for coming by.

Hi. Thank you so much for having me. It's great. It's great to have you, and I'm really looking forward to this discussion. So the title of your piece in Harper's is called The Life and Death of Hollywood. So I guess before we get to the death, could we start with the life? I'm thinking the 90s, the early aughts, Sex and the City, The Sopranos. These were huge shows shaping the conversation, big cultural juggernauts. And what did TV writers tell you about what it was like to work in Hollywood during this time? Well, yeah, I mean, it was a really excellent time from the TV writers I spoke to for this piece to work in Hollywood. One made a lot of money being a writer. And that's really what the piece refers to in terms of the life and death of Hollywood. It'sunerated for producing that work remains to be seen. But beyond the pay that one received in

the 90s and 2000s, it was also a very creatively fertile period. Like you mentioned, Sex and the City and The Sopranos. What line of work are you in? Waste management consultant. And of course, the other famous shows from the era, The Wire, Breaking Bad, Homeland, Girls. I mean, these were, Girls in Homeland are a little bit later, but these were really creatively adventurous shows that said new things about what it meant to be an American, what it meant to be someone who worked during particular times. I don't want to freak you out, but I think that I may be the voice of my generation, or at least a voice of a generation. And they ran for a long time and people were well paid to produce them. And so I think it was a very good time to be a writer. But we could get into, you know, even back then there were glimmers of the problems that would come to define

Hollywood, though they were not yet fully felt. So tell me a bit about those glimmers. What are we starting to see? Hollywood was essentially quite a regulated industry from roughly the 1940s, the late 1940s until the early 1980s. Before that, it functioned in a way that's referred to as the studio system, where most people who worked in Hollywood were on literal contracts with studios, and they were basically like any other salaried employee. That begins to change in the 1940s, late 1940s and 1950s, as Hollywood is literally regulated in effect by the Supreme Court. Studios used to own movie theaters, and that was made illegal. And that really is the beginning of the end of the studio system. So you get a move away from salaried work to basically freelance work over the course of the 50s and the 60s.

Nevertheless, if one was able to break into Hollywood during this period, it was regulated enough that there was actually a relatively robust market for people to buy and sell. This begins to change in the 1980s as the Reagan Revolution, which swept the United States and I would say the world, including especially the United Kingdom with Margaret Thatcher and Thatcherism. So in effect, to make a very complicated story very simple, the guardrails on how large companies in general, and in this case, media companies in particular, were allowed to become basically went away. So you get the rise of these large conglomerates, which over the course of the last 40 years have really become gigantic.

And so take me through when it really starts to change. So like you mentioned in the 90s and early 2000s, there is still a really great time to be a writer in Hollywood. But when does that scale start to really tip? It was always difficult to break into Hollywood. That was always tough going back to at least the 50s, if not earlier. But once you broke in, you were able to have a more stable career. And I think that's what's really changed over the last 10 or 15 years. But anyway, when things really start to change, a couple of very large economic things happen. First of all, you get the dot-com crash. Then you get the 2007-2008 Great Recession. And then you get the government actually providing a significant amount of capital

to the financial industry. The details of the loans became public only after Bloomberg News took the case all the way to the Supreme Court. The loans were part of an unprecedented intervention in the financial system. In all, the Federal Reserve made available more than $7.7 trillion in loans, commitments, and guarantees to financial institutions around the world. Moreover, in 2008, the Federal Reserve starts reducing the interest rate to almost zero. So investors and financial companies have lots of cash and access to cheap credit. And they're basically looking for new companies to invest in. And I want to highlight in particular two, it's kind of confusing. There's asset management companies, and that's BlackRock, Vanguard,

and State Street. And they basically manage large numbers of assets. And then there's something different. There's private equity companies, which basically I think have more of a cultural resonance because they're a little bit easier to understand. They kind of buy companies and then strip them for parts and sell them hopefully for a profit, though not always. And that happened to a lot of journalism and a lot of, know this happened to toys and other companies new tonight the owners of the chicago tribune have signed off on a 630 million dollar buyout tribune publishing has agreed to sell to a new york-based hedge fund called alden global capital company known for oppressive cost cutting and eliminating newsroom jobs.

And so they basically start to get into Hollywood. And so I think it's very difficult to understand because there's not a one to one causal thing happening here, right? It's not like an analyst from BlackRock is ever even standing over the shoulders of a screenwriter or an actor, or in many cases, even an executive and telling them precisely what to do. But it's a, I think the way to understand it is it's a climactic metaphor, right? So we can understand that, that any single storm might not be linked directly to climate change, but the trend of more and more storms or rising temperatures could be something that's linked to climate change. So that's what essentially starts happening in Hollywood, is that finance, high finance

and financial incentives start entering into the picture. And moreover, with the entry of high finance into Hollywood, you allow gigantic companies to become even bigger. And probably the one that people are most aware of is Disney, which purchased in the 2000s and 2010s Pixar, Marvel. We're incredibly excited because we're not only combining the great characters and storylines of Marvel with those of Disney, but we're bringing together two groups of talented and dedicated people whose creativity and passion have made their companies successful. Lucasfilm, 21st Century Fox. For major deal for Disney and 21st Century Fox, as well as consumers, the new combined company

will include Fox's movie and TV studios and cable networks, And together, the two companies will have 46 million subscribers around the world. Disney was already a fairly large company in the 2000s, and now it's an absolute leviathan. So you get a transformation in Hollywood over the course of the 2000s and 2010s. And one point I just want to end on is that you'll notice in the piece for people who read it, I don't really talk about individual executives, right? There's no Bob Iger name here. There's no Jeffrey Katzenberger. There's no David Zaslav. And that's because these companies are just doing what unregulated companies are going to do. They're getting bigger, bigger, and they're taking more profit for themselves. So it's really the failure of the government here

to regulate these sorts of transactions and these sorts of high finance industries at all that I think is mostly to blame. Right, and of course, in recent years, as you mentioned, this is not just an issue that's popped up around Hollywood. We've seen like a big antitrust movement around big tech. Certainly, it's been a discussion around

journalism all over the place. I mean, these high finance firms, some of them you're talking about, they own like most of the S&P, right? Or they're invested in a huge amount of the S&P. Yeah, they're the largest shareholders of 88% of the S&P 500. Vanguard, for example, it owns the largest stake as of the end of last year in Disney, Netflix, Comcast, Apple, and Warner Brothers Discovery. And again, the problem is that it's not like Vanguard is telling these companies what to do, but it creates a particular climate where particular incentives to cut costs, to invest less in labor, to take fewer risks are basically established.

And so what I wanted to do in the piece, the way I view it, it's kind of like, you know, to unveil the gods that actually run our system. Vanguard is almost like Zeus. You know, it's outside of our purview, but it is having a profound effect on the entire structure of the American and, I would argue, the international media. Elaborate on that for me, like just paint a picture for me. Give me some examples of how that's actually playing out and how that affects the stuff that you and I are watching, that people are able to consume.

What it does, above all, is that you see a large disinvestment in labor and the industry as a whole, that the idea is to cut costs. There's not much of an interest in maintaining a stable working career, in this case for writers. So I have Howard Rodman, great guy. He wrote on The Idol. He was a former president of the WGA West, talking about how when he first got into the business in the late 1980s and 1990s, studios would develop something like 30 to 40 screenplays to get one. And part of the reason they did that was not because they loved spending money on things that never get made, but because it's part of the

creative process is that you kind of have to throw things at the wall and see what sticks because there's an alchemy to creativity that is just not quantifiable, that is just not able to be represented on quarterly reports. Now, in terms of the content, I think the story is different in television and film. So in film, I think that the largest phenomenon that you've seen in the last 30 or so years is the rise of intellectual property franchises. Shauna Kidman, who's a wonderful scholar, showed that there was just an explosive growth in franchises. For example, according to Kidman, franchise movies accounted for around 25% of all studios' ride release features in the year 2000. And then in 2017, franchises accounted for more than 64%. So you can see it's an almost trebling in 17 years.

Is Marvel like 80% of that? No, it's a lot. I mean, remember all those companies tried to copy Marvel. You had DC, you had the Universal's Dark Universe, remember with the monster characters and Tom Cruise, I believe starred in The Mummy, if I'm remembering that correctly. Oh my God, The Mummy.

So yeah, you got a bunch of different franchises being made, in effect, all chasing Marvel. But one of the reasons that they did that is IP is tested, right? At least in the theory of executives who are ultimately operating according to financial incentives. The story has been tested before, it supposedly has a built-in audience. There's less risk. But at the same time, the entry of finance allows you to fund these movies to an incredibly high degree. So that's basically the film story, the rise of IP and the decline of original screenplays and also the decline of the working screenwriter's life. In TV, it's actually kind of ironic because deregulation actually leads to an explosion in cable networks. And one of the ways that cable networks try to

sort of diversify or make themselves identifiable in an increasingly crowded marketplace is make shows like Sex and the City and The Sopranos. So you see an explosion of cable television shows over the course of the 2000s and 2010s called Peak TV. I think it's John Landgraf from FX who coined that term. And you really get an explosion in the number of scripted television shows. Mad Men, I'm thinking. Breaking Bad. Breaking Bad, yeah. Yeah, yeah. So those are like the most creatively successful, but you get like a bunch of other

shows, like hundreds, literally hundreds of shows over the next decade. And this leads to genuine creative, creative, adventurousness, one might say, like BoJack Horseman, a show, a cartoon about an alcoholic sitcom star horse was probably not going to be greenlit, maybe would have been greenlit by Fox in the late 1980s or early 1990s, but outside that moment, it probably wouldn't have been greenlighted. Or you get the show I Love Dick, which is based on a small kind of arty novel by Chris Krause. Or you get a show like Dickinson that I begin my piece with by Elena Smith, who's show ran that show, which is a pretty adventurous creative project about Emily Dickinson. So there is genuine creative work being done that wouldn't have been allowed earlier. The problem, though, is like always in capitalism, the party was eventually going to end because it was built on an incredibly shaky financial foundation. So basically, the second in 2022, when the US Federal Reserve started raising interest rates and Netflix lost subscribers at

around the same time, Wall Street effectively starts calling in the streamers bets. And so you now have this gigantic contraction, where just from writers I speak to, it's very, very, very difficult to find work in Hollywood right now, because there's a gigantic transformation, where a bunch of people who entered the industry in the last 10 or so years are not going to be able to make careers as working writers anymore. And it's pretty sad and tragic. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections.

Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people, and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo, 50%.

That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Another observation I took from your piece that was really interesting and I didn't know is this kind of risk that creators and writers have to take on themselves now, which they didn't before. And so just elaborate on that for me. Now, Hollywood has always been gig work since about roughly the 50s and the 60s,

but it was a small enough town and a stable and regulated enough industry that if you were somehow able to break in, which was always difficult, you could basically count on having a relatively stable career, at least for a few years, not always, but much more so. Today, that's virtually impossible. And I want to talk about the breaking in for a moment, because as we all know, with inflation and everything else, most importantly, rents and home prices just skyrocketing over the last two generations. It's just much more expensive to be a person, let alone to live in a very expensive city like Los Angeles, where the entertainment industry is headquartered. So the only people who are going to be able to do that are people who come from money, in effect.

So you get an increasing number of, for lack of a better term, rich kids going into the business. And you see this with the rise of nepo baby discourse and all that stuff. One person I spoke to for the piece actually said, you know, the nepo baby discourse is misleading. Sure that that happens, but the problem is the real issue is that they're all rich. So they're all able to spend their 20s or even into their 30s acting, writing, directing for no money or funded by their parents or their trust funds. So you get basically the class stratification of Hollywood, which wasn't always true. Hollywood famously was more of a working class industry. It invited people in from across the class spectrum, and that is increasingly not happening.

numbers what is also being pumped out of the system right like people do seem happy uh watching the 20th marvel movie uh that actually no longer tries to form a coherent plot or you know love is blind the 45th season or the 900th season of gray's anatomy and you know how does that play into all of this? In cases like this, I really do think that the blame is with first the government for not regulating and then the studios and finance industries for focusing only on short-term profits. We're meant to consume television, and we do consume television and film. Not only that there's been uh actually a decline in the success of a lot of these ip projects famously the marvels didn't do very well actually flopped uh the new indiana jones movie flop indiana jones and the dial of destiny the fifth film in the indiana jones saga raked in 60 million dollars in its domestic

opening this weekend film is being hampered by some reviews dial so there is a so bad sorry yeah i actually didn't see it i actually didn't see it i couldn't even finish it yeah so so they're not so people aren't just going to watch crap forever um and i think that is beginning to change but you also see something like Barbie, which is basically as intellectual property, quote unquote, like literally based on one of the consumptive goods of postwar America. And people seem to really love that movie, probably because Greta Gerwig and Noah Baumbach, the writers and Greta Gerwig, the director, were given a lot of creative freedom. So you might see something along those lines that people are still going to be making IP or consumerist products, but given some degree of

creative freedom, I think that that remains to be seen how structural that change is going to be. Personally, I have my doubts. And just not to end this conversation on too much of a depressing note, not to end this conversation on too much of a depressing note um like there is good stuff out there right that's absolutely i just finished the bear it was a delight uh abbott elementary is you know i think a really good show on tv right now yeah i i think people should check out blue eye samurai on netflix i think that's a one of the best shows i've seen in a really long time there's great stuff being made. Yeah. But I guess the point that you're trying to make here is that these are the exception, right? Not the rule. Or at least, you know, most things aren't The Sopranos, let's just say, to say the least. So the degree to which financialization transformed content, I think the argument would be made that it basically got rid of the system that allowed writers, particularly in television, to learn their craft over time and prepare to become showrunners.

runners. So people without experience were required to run shows in a way that they weren't necessarily ready to do. And this was both very professionally and personally taxing, but also creatively taxing. I hope to explore the issue of how financialization actually shaped content going forward. But right now I have glimmers. And my basic guess is that the undermining of the structure undermined the content as well. Thank you so much, Daniel. This is great. It was really nice to talk to you. Thank you so much for coming by. Thank you so much for having me. I really appreciate it. That's all for today. I'm Jamie Poisson. Talk to you on Monday. For more CBC Podcasts, go to cbc.ca slash podcasts.