Endeavor President and COO Mark Shapiro said the ultimate resolution of the WGA strike will improve the fortunes of the company’s representation business.
“This is a growth opportunity for us,” Shapiro said during an appearance at a media conference hosted by Wall Street firm JP Morgan. “When this gets settled, however some of these issues get sliced, the writers are going to do better. That’s just a fact. They’re not coming back for lesser deals or the same deals. They’re going to do better economically. And as they do better economically, that plays into the ecosystem. And then we, as a leader in that space, WME, we’ll take our fair share of that ecosystem.”
Shapiro also reiterated points Endeavor execs have made recently about the company’s diversification across fashion, digtial, sports and other areas. TV and film, the company has said, represent about half of core agency revenue.
Endeavor is “in a good place” despite the current production shutdowns during the WGA impasse’s fourth week and soon-to-expire contracts for the DGA and SAG-AFTRA, Shapiro maintained. Compared with 2022, “our back ends are significantly up,” he said, with revenue from residuals “stemming the tide.” Ultimately, Shapiro continued, the strike “is temporary. That’s what this is. Is it two months? Is it three months? I don’t know. Is the debt ceiling going to get figured out before the deadline? These are negotiations that take place, and both sides are really trenched in and there are significant issues, but it’s temporary.”
Recent cutbacks by media companies coping with an advertising slowdown and sluggish economy have amplified the perceived impact of the labor strife, but Shapiro predicted a bounce-back. The strike “happens to be coming at a time of content contraction, so when they get their stuff figured out and streaming gets rolling and content comes back the other way, it’s going to come back in spades,” he said. “Development is still going on right now, and demand for premium content will never, ever die.”
Shapiro, who had a lengthy tenure as an ESPN exec before arriving at Endeavor, also weighed in on sports rights, cord-cutting and ESPN’s deliberations about a more bulked-up direct-to-consumer streaming offering. He said cord-cutting will “normalize” at about 2% a year, meaning that the pay-TV bundle will remain at 50 million to 60 million households in the coming years.
“As the bundle erodes and you have to move more and more customers to streaming, where you have to charge higher prices, which makes it harder to get acquisitions, you are going to need premium content,” he said. “There’s no other way around it.” That means a continued seller’s market in terms of sports rights, Shapiro said. As evidence, he cited NBCUniversal’s decision to spend $110 million for exclusive rights to an upcoming NFL playoff game to stream on Peacock.
Returning to his alma mater, he said, “If ESPN+ wants to go up from 25 million subs to 50 million and charge more than $9.99 a month, it isn’t going to be tertiary or secondary content that moves the needle. It’s going to be the big stalwarts.”
Shapiro conceded a bias in the analysis, of course. Endeavor acquired full control of the UFC two years ago and has announced plans to merge the mixed-martial-arts circuit with the WWE into a new entity in the coming months. As far as the UFC’s rights outlook, he said so far it has worked well to have a single media partner, Disney. The WWE and others have found it productive to combine partners and divvy up rights among multiple media and streaming companies. “Different strokes for different strokes,” Shapiro shrugged.