How WarnerMedia’s CEO Pick Will Change the Hiring Strategy for New Hollywood
WHAT HAPPENED:
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On April 1 WarnerMedia announced that Jason Kilar, the founding CEO of Hulu and Vessel, would be its new CEO.
WHY IS THIS INTERESTING:
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Jason’s CEO appointment signals a new hiring strategy for next-generation Hollywood and the future of consumer entertainment.
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We at RockWater believe this new hiring strategy will comprise five primary leadership characteristics.
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Traditional studios and TV networks will reevaluate the leadership pedigree and skill sets needed to win in the new operating paradigm. Boards of directors and HR teams that don’t hire well over the next 18 months will cement their demise.
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The evolution of media companies into consumer and digital-first business models will materially accelerate, resulting in rapid (and much needed) innovation, new competitive dynamics and increased M&A.
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WarnerMedia’s new CEO, Jason Kilar, is a most welcome shock to the Hollywood system.
Jason reflects a new breed for the entertainment C-suite, and his profile embodies key traits required for new Hollywood success:
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Content and fan sensibility: Although Jason is somewhat unproven in the world of premium content he has demonstrated an ability to identify creative partners and galvanize them around a unified vision through his time at Amazon, Hulu, and Vessel. Kilar will have a strong complementary leadership team of seasoned executives with a distinctive POV on programming – but Kilar will need to unify them under a cohesive creative vision. As the leader of a vast portfolio of properties, we’re curious to see how Kilar will handle the delicate task of managing creatives.
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A consumer and digital-first executive: In addition to the content, the product has become an equally essential consumer touchpoint to master. Kilar has a longstanding history of building towards new consumer delight by unshackling users from poor UX and business models of times past. Jason has been both a mentee and mentor of this doctrine throughout his career and under various mentors like Jeff Bezos. Jason also has a keen understanding of traditional Hollywood via his early years at Disney, as a DreamWorks Animation board member, and of course the fact that original Hulu owners were Disney / Fox / NBCU.
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An Industry visionary and disruptor : Launching two of the most well capitalized and earliest streamer bets in Hulu and Vessel (re Vessel, it’s ok to fail and learn. Humbling experiences are good for the soul and brain).
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…Yet also an industry unifier and collaborator. Jason treats partners and owners with the utmost respect and dutifully listens to their needs, allowing him to attract and execute groundbreaking industry partnerships (we observed this first hand while structuring talent and content licensing deals directly with Jason / Vessel during our tenor at multi-channel networks like Awesomeness and Big Frame).
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A passionate team builder, with former colleagues who are incredibly loyal to and praiseworthy of him…not out of fear (i.e. old Hollywood), but out of mission and values-based leadership.
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NOTE: Jason doesn’t buck all hiring trends…he is also a white male with a Harvard MBA. We definitely won’t fault him for these “traditional” credentials, but note them along with our excitement to profile other leaders with more untraditional pedigree.
Undoubtedly, Jason as the new CEO will apply a massively revamped mandate, and leadership culture, across ALL of WarnerMedia. This is an incredible signal by WarnerMedia’s board for how seriously it will enact meaningful transformation over the next decade. The rest of the media industry is taking serious note.
We at RockWater predict a watershed moment over the next 18 months, when an entire new class of executives who embody the above leadership traits, will take the helm of next-generation Hollywood and steer us into the future of media / entertainment.
We therefore profile these characteristics below, along with industry leadership benchmarks that include A24, Roblox, Team Coco / Conan O’Brien, Quibi, Disney, and Barstool Sports. With this Through Line article we hope to help guide the new hiring strategies needed to drive more shareholder and audience delight for the media industry. And, to bring one of America’s most beloved and longstanding institutions, into a new golden age.
Content and Fan Sensibility
In today’s fragmented media landscape, where time and attention are finite, yet consumer entertainment options are limitless, attention has become the most valuable commodity. And beyond passive attention, active and engaged fandom is the fuel that powers any successful entertainment brand.
Many of the characteristics that make for a great media executive are based on how he or she is able to innovate and execute around monetizing passion / fandom / attention. We often praise companies and their leaders who rethink how content is distributed, consumed, or monetized. Our favorite companies are typically those who can translate a single piece of IP into a diversified, multi-platform revenue generator. However, that piece of foundational IP, and the passion / fandom / attention it aggregates, cannot be overlooked or underestimated.
Part of what’s so exciting and rewarding about working in media / entertainment is that the central product isn’t some commoditized, interchangeable “widget”. It’s not a product that one can perfect just by outspending the competition (although as we’ve mentioned, “Streaming Wars” can not be won without well-capitalized war chests). Content is somewhat of a meritocracy in this sense.
A successful media executive must therefore understand A) quality content and B) how fans connect with it (not to mention, how to monetize it!). In the end, all of the innovative “flywheel” strategies for generating and diversifying revenue (via DTC, events, commerce, licensing and more) are rendered impotent if the underlying content isn’t effectively building an engaged and passionate community.
CASE STUDY: Daniel Katz and David Fenkel (A24)
Unlike most creative powerhouses, A24 was the result of a financier identifying a market inefficiency. As the head of Guggenheim Partners’ film finance group, Daniel Katz saw that there had to be a better way to market and distribute mid-budget films through utilizing social media and data analytics to create cultural buzz. Although this thesis isn’t groundbreaking, it was ahead of its time and has since been validated and imitated.
However, vision means nothing without execution.
For A24, execution comes down to A) identifying and fostering films and filmmakers that will resonate with audiences (one producer labeled them “auteur-enablers”) and B) understanding how to create campaigns that authentically connect with its loyal community of cinephiles and culture junkies to create organic cultural moments (Slate once commented “an A24 film is a happening. Good A24 films anticipate the zeitgeist, and the best ones galvanize it”). A24 executives have thrived by having a keen nose for talented filmmakers with distinct voices, and empowering / prioritizing their creative processes. Jonah Hill commented on this style: “When you make a movie at a big studio, you don’t get to know the people whose hands it’s going to pass through. [But A24] asked me to come to their offices and walk the whole staff through the movie, so now everyone who’ll be putting out trailers, doing the artwork—doing everything—is deeply familiar with the emotions and ideas going into it, before it’s even been made.”
A24 not only understands how to get the most out of their creative partners, but their understanding of how to manipulate the zeitgeist to market their films in a way that organically resonates culturally is also a key reason for its success. For example, for A24’s promotion for its horror film “The Witch”, the company created a cryptic social media presence for “Black Phillip”, the ominous goat featured in the movie. It went viral amongst horror fans and film buffs, creating an organic word-of-mouth excitement about the film’s release. Co-founder David Fenkel commented on this strategy: “A lot of the money issues in Hollywood have to do with trying to manufacture something cultural. Buying billboards and big TV spots and forcing a movie down people’s throats…If we build a campaign around a cool interactive goat who creeps you out on his own website and on Twitter, saying crazy things that go viral, it becomes cultural organically.”
As a result, A24 has become a brand in itself – not unlike record labels like Def Jam and Sub Pop in the 90s – with a loyal following that will watch any movie with an A24 logo in the promotion or opening credits. The company has its own podcast, a print magazine that can be found for free in certain trendy hotels, and limited-release merch. For a film distributor in 2020, it can’t be overstated how impressive this is. And it wouldn’t be possible without an executive team that understands content, the people that create it, and the culture that consumes it.
CASE STUDY: Dave Portnoy and Erika Nardini (Barstool Sports)
Barstool’s recent $460M valuation is a testament to the power of content that can cut through the clutter to cultivate and activate a passionate fanbase. Penn National Gaming’s recent investment in Barstool was in large part due to the brand’s unique ability to capture the attention and enthusiasm of its audience. This inimitable knack for content and community was on display last week, as Portnoy hosted an “unboxing” stream on IG Live, going head-to-head with live streams from A-list celebrities like Joe Jonas (15k concurrent viewers), Matthew McConnoughey (15k), Kevin Hart (17k), and Lebron James (38k)…Portnoy’s stream dwarfed them all with a peak of 60k live viewers (“Unboxing” merch was of course made available on the Barstool store soon after).
Upon its initial investment from The Chernin Group in 2016, Portnoy insisted on maintaining 100% creative control over all content and interviewed over 50 CEO candidates until he found an executive prospect that truly understood Barstool’s content and its fanbase, Erika Nardini. Upon taking over the role of CEO Nardini said her first priority was, “let’s start to see what this brand looks like in more podcasts, on the radio, on television, on Facebook, in ‘live’, in video”.
Although she’s not a “creative” herself, Nardini’s feel for Barstool’s content and how / why it resonates with “Stoolies”, has enabled her to grow Barstool’s talent roster from under 10 to 60+ creators, its IP portfolio to 60+ franchises, its platform footprint from a single blog / app to a platform-agnostic media brand with endless consumer touchpoints, and its valuation from $15M to $430M in just four years….without diluting the content and community that made Barstool powerful in the first place. Nardini explains her approach to managing creatives: “We basically just have really creative people. We let them run…Some of it’s best suited to be in a podcast format. Some people are brilliant at radio, some are exceptional writers and they stick to the blog. Some are just funny on social. Some are great in person, so there’s a chaos to the content creation, which I think really works for us…most people in [legacy digital media] companies don’t understand the Internet…If you don’t have eyes for the thing you’re creating, you can’t create something that breaks through and resonates and has trust.” In 2017, Verizon spent “at least” $200M on content (and $80M on marketing) and reached 2.1M monthly users via its Go90 mobile VOD service. Barstool Sports’ content and marketing spends are a tiny fraction of those costs, and the brand has a monthly unique audience of 66M viewers / listeners.
Audience passion can’t be bought. It can only be earned through hard wok and incredible content and fan sensibility.
A Consumer and Digital-First Executive
Powerful IP and best-in-class content is only half the battle. Distribution touchpoints are no longer static and undifferentiated (i.e. all DVDs and cable channels are the same….what mattered was what was on them). Delighting the end consumer now means providing them with great content to watch, and an intuitive platform to watch it on.
Winning over today’s media consumer thus requires an obsession with user product experience and intimate familiarity with, and respect for, the ongoing evolution of consumer media models.
Today’s primary distribution channel, the Internet, is a relentless opportunity machine. It powers new ways to delight audiences on an almost real time basis. And, it is a canvas with an infinite number of permutations. The best-performing media executives of the future must therefore be able to effectively harness emerging Internet connectivity models (5G, OTT, metaverse) for consumer good.
This requires serious product chops, which means leaders with extensive experience in technology-first product development, user experience design, consumer to content data feedback loops, and in building and leading successful technology-first teams. Next-generation media companies will not realize their audience and revenue potential without outstanding product.
Of note, product chops might be a bare minimum. Online creation, consumption, and interactivity is entering a new paradigm.
The idea of truly immersive, interactive, and socially-augmented entertainment has captured our collective imagination. Typically this has been predicted to arrive in some distant future via “choose your own adventure” movies (e.g. Bandersnatch) or VR / AR technology. However, Hollywood will soon wake up to the fact that this technology is already here in the form of gaming engines which are now creating more digital narrative content than traditional Hollywood, and virtual worlds that are creating brand new forms of community and DIY expression that are disrupting everything from education and theme parks to music concerts and marketing.
Collectively, we are likely on a path to where the metaverse will define the future of content creation, distribution, marketing, monetization and interactivity as we know it.
What does this mean?
If the media / entertainment business is about harnessing and monetizing passion and engagement (or simply, eyeballs), then it’s time to expand our definition of “entertainment”. Video games are quickly coming to replace traditional mediums as the go-to source for entertainment and storytelling for an entire generation (in 2018 global video game revenues hit $138B, a 50% increase from 2015…compared to global film box office revenues, which hit $41B in 2018, a 5% increase from 2015). Hollywood executives may not follow end-user consumption trends as closely as they should, but they do typically follow the money.
The “Streaming Wars” might be a historical footnote within the next five years, and Hollywood’s BIG future winners will be victorious in defining new IP-powered virtual environments. CEO’s with a product / UX / platform-focused background may be the new normal. However, as consumer delight continues to shape strategic vision, the definition of “product” will expand from OTT platforms, to metaverses that will redefine user identity, social connectivity, and transactional economies. We therefore believe some of the most powerful future entertainment executives will be found amongst the leaders actively building within the metaverse.
CASE STUDY: David Baszucki (Roblox)
Roblox’s recent $4B valuation validates the approach of building an entertainment company that prioritizes consumer experience above all else, and using the Internet (social connectivity, UGC, AR, etc) and storytelling as means of optimizing that core objective. Just as OTT platforms are a more engaging and interactive evolution of static mediums like DVDs and cable, Baszucki has built a platform that can be seen as the next phase of this product evolution; blurring the line between content and platform, between creator and consumer, all with the aim of maximizing consumer delight. Roblox is a fully autonomous digital ecosystem – comprising social communities and transactional economies – that is perpetually evolving, becoming more immersive each day to better fulfill consumer desires. Baszucki describes this consumer-first mission:
“I feel we have the opportunity of being part of a new and emerging category for human co-experience. Less than a challenge, I almost think of it as an opportunity and responsibility to participate in the formation of this human co-experience category, to make it civil and make it safe and make it a place where people can learn and create and even practice life skills, as well as having fun. I see this as an enormous opportunity for us.”
Roblox intentionally forgoes “brand building” (it has passed on doing a Roblox movie or TV show). It is not concerned with defining its own brand identity, or even shaping the consumer experience. Rather, its goal is to provide users with the tools and the canvas to define the experience for themselves and their communities.
As Hollywood seeks to redefine itself, in order to not just adapt to, but lead this next generation of entertainment, we expect that executives from the online gaming space will play a formative role.
Industry Visionary and Disruptor
Wayne Gretzky’s advice to young hockey players is also incredibly relevant for today’s media executives:
“Skate to where the puck is going, not where it has been.”
We at RockWater admire executives with the vision to see not just what is, but also what can be. This trait has always been nice to have. But it’s never been as essential as it is today.
Entertainment has always gone hand-in-hand with technology. However, for nearly a century there were few technological advancements that fundamentally shaped the media business (color / sound in movies, personal TV’s, cable / satellite, VHS, DVD, FM radio, vinyl / cassettes / CD’s, etc.).
And then, the Internet arrived and the pace of innovation sped up tenfold. Whereas an “Old Hollywood” executive could preside atop a company for decades, and the underlying business models would remain relatively unchanged, now the media landscape of just three years ago looks unrecognizable today and the world of 2023 seems virtually unknowable.
Therefore, now more than ever, we believe it’s necessary for an executive to not only be able to operate in the present moment, but also to have the vision and gumption necessary to make bold bets on the future, sell stakeholders on that vision, and build towards that future (speaking / willing it into existence).
CASE STUDY: Jeffrey Katzenberg and Meg Whittman (Quibi)
Although their thesis hasn’t yet been validated, Katzenberg (in particular) and Whittman deserve serious kudos. Their thesis paints a bold and differentiated picture of the future of mobile entertainment and premium content. They’ve identified what they perceive to be a gap in the marketplace (premium short form, mobile-first storytelling), envisioned how to fill it (hiring best-in-class product engineers, partnering with best-in-class filmmakers using unique deal structures), and have successfully sold that vision to investors (raising $1.75B pre-launch), studios and filmmakers / talent (working with Steven Spielberg, Zac Efron, and NBC), and consumers (1.7M downloads in its first week).
Noone knows for sure (though we all love offering up our Quibi opinions) whether or not the future will align with Quibi’s vision. But, we are nonetheless inspired by the vision and execution displayed by Katzenberg and Whittman to date.
The Quibi-as-disruptor bet is more impressive when considering how, at this stage of his career, Katzenberg seemingly has so much to lose and so little to gain. Resistance to innovation by the executive class is so often a result of the innate instinct to conserve and protect, rather than double down. It’s a double-edged sword, as in many cases, this cautious risk-averse approach is a tremendous asset that helps CEOs ascend to their positions of power. And many times, this cautious outlook is warranted, as CEOs of media behemoths have thousands of employees and billions of market cap to protect – in addition to a board and stockholders to answer to every quarter.
But although we sympathize with caution, we applaud forward-thinking ambition, and we admire Katzenberg refusing to rest on his laurels. We’re hopeful that the hiring of Kilar, who “failed” with Vessel, signals to New Hollywood executives that swinging and missing is better than not swinging at all.
CASE STUDY: Bob Iger (Disney)
It wouldn’t be an article about inspiring media executives without mentioning Bob Iger. With all of the resources, capital, and legacy assets that Disney has at its disposal, it’s a common misconception that Disney has a divine right to sit atop the entertainment food chain, and that by sheer momentum and manifest destiny it would always remain on top. However, the entertainment industry is littered with fallen giants who failed to navigate the rapidly changing tides of disruption. Yet, through a series of shrewd acquisitions (which weren’t viewed as home runs at the time), Iger increased Disney’s market cap from $55B when he took over in 2005 to $260B when he announced he’d be stepping down in January 2020.
Iger foresaw the increasing importance of premium IP assets in an increasingly fragmented ecosystem. Through his acquisitions of Pixar ($7.4B), LucasFilm ($4B), Marvel ($4.24B), Fox ($71.3B), BAMTech ($3.8B), Iger perfectly positioned Disney to lead the next generation from the front. The first four acquisitions provided the IP that powers Disney’s flywheel (consumer products, parks & cruises, etc.), and the BAMTech M&A set Disney up for success in the “Streaming Wars”, making Disney+ an instant Netflix competitor and positioning ESPN to continue its reign as “The Worldwide Leader In Sports” well into the streaming age.
Positioning the most “traditional” and “legacy” brand in entertainment to be a leader of “New Hollywood” is no easy task. These acquisitions may seem obvious in retrospect, but that’s only because Iger’s vision of the future and his strategy for building towards it were spot on.
Passionate Team Builder and Unifier
As the underlying business models of the entertainment industry remained unchanged for decades, therefore, so did the “Old Hollywood” executives, operating principles, hiring practices, and company cultures.
After all, if the cash making machine ain’t broke, why fix it?
So for decades, Hollywood org charts and career paths have adhered to institutional customs and norms (mailroom > assistant > executive). This has manifested in a particular brand of workplace toxicity that is somewhat unique to the entertainment industry (e.g. the ongoing cycle of overworked, underpaid assistants who are treated like new “pledges” being hazed as a fraternity right of passage – and the overpaid, underworked executives with limitless expense accounts who perpetuate the cycle of workplace hostility by treating junior employees as they were once treated). Thankfully, the #MeToo and #PayUpHollywood movements have exposed these toxic traditions and triggered reform.
However, if our goal is to rebuild “New Hollywood” into an institution we can be proud of, there is much more work to be done.
But, it’s also important not to throw out the baby with the bath water. For all of the negatives associated with the traditional “Old Hollywood” approach to team building, this unique apprenticeship style of management has also proven to be capable of providing incomparable training and has groomed many of today’s most inspiring industry leaders like Jeffrey Katzenberg and Barry Diller. So as we look to reshape Hollywood from the top down, how can we preserve the good while reforming the bad?
The leaders of this “New Hollywood” must not only embody the tactical skills outlined in the sections above, but they must also understand how to build and inspire high-performing teams and corporate cultures.
There is no big industry win without world-class teams who are passionately energized and relentless in their pursuit of a shared objective. And there are no world-class teams without world-class leaders, who recruit, nurture, and empower via mission and values-based leadership.
This easy-to-talk but hard-to-walk approach results in two key wins: A) team continuity and loyalty, which powers endless workflow optimization and cohesion, and B) enabling team members to reach incredible potential.
The result? The whole becomes exponential multiples of the sum of its parts.
CASE STUDY: Conan O’Brien (Team Coco)
Traditional entertainment is plagued with A-listers that attempt to build companies around their individual celebrity. Most attempts fail miserably, burning through cash preserves and investor capital, and serving as large distractions to the core celebrity business. The failures primarily stem from leaders who aren’t capable of (nor have the interest in) empowering team members to help build towards the celebrity vision, and then beyond it. Conan O’Brien is a rare exception. Conan enjoys traditional entertainment success from his late night talk show run, which has lasted over 27 years. But, back in 2013 Conan, savvy to the evolution of social media and digital as a powerful content marketing engine, he launched Team Coco. While many traditional celebrities belittled and resisted the online evolution, Conan saw the business potential early on and leaned in. He began building a digital-first team with longstanding Executive Producer Jeff Ross.
Today, Conan has a multi-million dollar diversified next-generation entertainment business in Team Coco that includes short-form video formats ranging from UGC to scripted across YouTube / Instagram TV / Facebook, various pop-up events and festival activations, and a fast-growing comedy podcast network that includes the most downloaded and award-winning comedy format (Conan O’Brien Needs a Friend aka CONAF). And, his digital empire is growing more quickly by the day, driven by a team of executives, colleagues, and talent that he has nurtured and bet on over the years.
In early 2018, Conan recruited Adam Sachs, a podcast exec who was previously the CEO of Midroll Media (and who spearheaded its sale to E.W. Scripps), and took a bet on Adam’s vision to build a high profile comedy network. Conan had many hesitations (and still voices some of them in his shows), but the results speak for themselves. Now, many of Conan’s celebrity friends are launching their own podcast shows, inspired by both the success and fun (yes, seriously) that Conan is having as he grows his podcast empire.
Further, Conan has elevated his longstanding assistant, Sona Movsesian, into a digital celebrity in her own right. Sona is on every single CONAF episode (and is a fan favorite), was interviewed by Conan on his talk show when Kumail Nanjiani bailed last minute, and now has her own Instagram TV series on the Team Coco network. And Sona is far from an exception (see Jordan Schlansky and others)
Yes, Conan has good taste, training, and pedigree. But, his ability to create one of the most innovative and fast-growing digital media businesses comes from his sensibility for team. A quote from Team Coco COO Adam Sachs (a good friend of the RockWater family), well captures Conan as the Hollywood exception:
“Conan has built his brand on taking risks and embracing change while creating a warm, familial environment. As the company continues to grow, legacy staffers and new leadership together continue the tradition of creating a caring, passionate, and progressive culture.”
Conclusion
It took way too long for Hollywood to adapt to new consumer behavior.
Legacy (and highly profitable) business models, and old-guard leadership incented to protect these eroding revenue streams, kept Hollywood studios and TV networks stuck in their old ways. In turn, more than a decade had passed beyond when it was time to enact meaningful change.
But, the media industry may finally be at a major turning point. And we at RockWater are energized to work with our inspiring community to build a “New Hollywood” that better reflects the values and business dynamics of a new generation.
…Onward!
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