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Bloomberg Businessweek (February 26, 2024)

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Год выпуска: February 26, 2024

Автор: Bloomberg Businessweek

Жанр: Бизнес

Издательство: «Bloomberg Businessweek»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 72

How an indie studio became a $2.5 billion Hollywood hit machine

Over the years, indie film companies have tackled freakish cultural abnormalities, from unutterable sexual taboos to all manner of other transgressive topics. But not long ago, executives at A24, arguably the reigning champion of American arthouse films—which recently put out a movie called Dicks: The Musical that featured a flying, animated vagina— attempted to do something truly beyond the pale by even the libertine standards of its cohort. A24 pursued a deal to make league-sanctioned films for the NFL. “For us, it was like, how do you take this thing that’s so well established and so Americana and have an A24 look and vibe?” says A24’s head of TV and nonfiction, Ravi Nandan, without irony.

The odd pairing ultimately didn’t happen. (David Ellison’s Skydance Media, producer of the star-spangled megahit Top Gun: Maverick, ultimately won out.) But A24’s flirtation with the NFL, one of the last vestiges of an American monoculture, speaks to something larger afoot at the enigmatic New York-based entertainment company. For years, A24 has distributed and produced singularly conceived, auteur-driven Oscar bait, such as Uncut Gems and Lady Bird, as well as cringey, award-winning TV hits like Euphoria and Beef. Along the way the company has cleverly channeled the fervor of its film aficionado fandom into a culty niche brand. It auctions off movie props—such as a stuffed raccoon from Everything Everywhere All at Once that went for $90,000 last year—and has its version of sneaker drops, but with A24 merch that gets flaunted by the brunching downtown celebrity crowd. The essence of the A24 vibe: Cease and desist, normies.

But these days it’s not just creative dexterity driving the hipster outfit to sniff around all forms of middlebrow fare. In 2022 the company raised $225 million from a group of investors, including private equity firm Stripes LLC. The deal valued A24 at $2.5 billion, a staggering amount by the penurious standards of the indie film world. Now, bolstered by Wall Street riches, it’s making a run at scaling up its indieness. The company is moving into more costly genres such as sports and action while mining existing franchises, including a Spike Lee remake of the Akira Kurosawa classic High and Low and a new Peacock horror series, Crystal Lake, a prequel to the Friday the 13th series. In the works is a biopic of Elon Musk, based on the bestselling biography by Walter Isaacson, the whale of heroic, mass-market business yarns. (In the A24 spirit, it’ll be a Darren Aronofsky affair.) Apple TV+ recently scooped up A24’s drama series from hitmaker David E. Kelley, and in January Amazon Prime Video began airing Hazbin Hotel, the studio’s first foray into adult animation. Even 260-plus pounds of tender, primecut action hero in the form of Dwayne “the Rock” Johnson is making an A24 debut, in the martial-arts drama The Smashing Machine. “We get very excited by the idea of changing the mainstream,” says Noah Sacco, A24’s head of film. “Broadening or scaling up or whatever you want to call it, is a part of that.”

If the past is any guide, A24’s evolutionary leap up the Hollywood food chain will not be easy. Once-promising indie film companies including Cinecom, Vestron Pictures, Skouras Pictures and the original October Films and Orion Classics all got tripped up during earlier eras. “The historical roads in Hollywood are littered with the bodies of independent film producers,” says longtime media analyst Harold Vogel. “Free cash flow is always the stumbling block.”

A24 finally has the cash, but it’s at a moment the rest of the entertainment world is retrenching. The company’s rise over the past decade has taken place during a uniquely go-go era in the industry, fueled by an arm’s race among Disney, Apple and Netflix. Now, on the heels of last year’s dual Hollywood strikes, the industry has reemerged in a belt-tightening phase. According to a recent report by data firm Luminate, there was a 21% drop in TV premieres across all genres and platforms in the US in 2023, and most analysts expect the contraction to continue. Prospects are even grimmer in theaters. In 2023 the domestic box office brought in $9 billion, about $2 billion less than in the last years before the pandemic. Even if A24 can flood streamers and theaters with everything from game shows to medical procedurals, there’s no guarantee it can do so and preserve its fans’ maniacal devotion.

A24 executives and investors, who say the private company is profitable but decline to share specifics, aren’t particularly rattled. Ken Fox, the founder of Stripes and an A24 board member, says his firm invested in the indie film brand because of its fans’ unusual level of loyalty. “North of 60% of the people that go to see an A24 movie in a theater go because it’s an A24 film,” he says. “They’ve watched A24 content, and they know that the quality is going to be exceptional and interesting and compelling. Basically, A24 and Disney are the only two companies that test that way.”

Fox and A24 point to several of its recent critical triumphs, including The Zone of Interest and Past Lives, which are both nominated for the 2024 Oscar for best picture, and Beef, which just won the Emmy for outstanding limited or anthology series. Since the investment, the company has doubled down on its die-hards, from the obvious to the eccentric: It started an A24 podcast on Spotify; created a $5-a-month AAA24 subscription membership program, which includes a mobile app and a monthly zine; invested in the music label startup Gamma Tech Inc.; helped launch a Euphoria-inspired cosmetics line; and dropped roughly $10 million to acquire an off-Broadway theater in Manhattan. “Our thesis is that they can build a big, independent, public company,” Fox says. “They have the opportunity to be their generation’s global juggernaut.”

First A24 has to prove it’s not just a well-financed art house with a prolific library of one-offs. The real money comes with hatching the next great entertainment franchise and the intellectual property that follows. Suddenly it seems nothing is off limits, including reality TV. “What’s an A24 version of The Hills or Laguna Beach, which I truly loved just from an audience perspective?” wonders Nandan, A24’s TV head. “We could crush something like that.”

In an industry that runs as much on ego as money, most thriving independent media companies tend to have a recognizable frontman. There’s Jason Blum at Blumhouse Productions. Tyler Perry at Tyler Perry Studios. Megan Ellison at Annapurna Pictures. While A24 has created one of entertainment’s most distinct voices through its flexes as a cultural tastemaker, its co-founders are rarely photographed, soundbitten or seen giving interviews in public. When they are, it’s a fleeting occurrence, always with an earnest nod to their cherished filmmakers. The absence of a big, charismatic personality has lent A24 an air of mystery. But instead of some introverted, artsy J.D. Salinger-type who’s simply sworn off the long tradition of modern self-promotion, the reality is a bit more mundane. What may most distinguish A24 from other once-hot, indie film companies is its roots on Wall Street.

A24’s co-founder and chief executive officer, Daniel Katz, moved to New York City in the twilight of the Quentin Tarantino-era indie renaissance. After graduating from Emory University in Atlanta, the suburban Chicago native worked briefly at Merchant Ivory Productions and Lions Gate in the early 2000s, before joining ThinkFilm, an indie upstart. There he learned the fundamentals of picking and supporting projects. The company enjoyed some success with films like Half Nelson, starring Ryan Gosling as a drug-addicted history teacher, and Spellbound, a documentary about winsome spelling-bee competitors. But cash flow was a constant problem, and Katz saw up close how hard it is to build a film company.

In 2007, angling to learn more about the financing side of the business, Katz joined Guggenheim Partners, a New York investment firm better known among bond traders than cinephiles. When the financial crisis hit the following year, ThinkFilm, along with many other indie studios, mostly shut down its operations. With banks scrambling to offload their positions in various movie-investment vehicles, Guggenheim’s entertainment finance group was perfectly positioned to scoop up bargains. As it did, Katz won over a valuable supporter, his then-boss, billionaire sports and media investor Todd Boehly. “I watched a lot of rivals dive into the industry only to end up with returns which were really quite abysmal,” Boehly says. “Daniel was very patient and very calm.”

In 2012, with $14 million in backing from Guggenheim, Katz launched A24 with two fellow indie film veterans, David Fenkel and John Hodges. Katz assumed the role of CEO while Fenkel—who’d previously co-founded the studio Oscilloscope Laboratories with the late Adam “MCA” Yauch of the Beastie Boys—oversaw the film team. (Hodges, who declined to comment, would leave several years later.) “It was like four or five of us with folding chairs, tables, laptops in one room,” recalls Sacco, one of the first hires. “We didn’t even have a separate room to take meetings in.”

The indie film industry was trudging through a gloomy phase, with American ticket buyers flocking to superhero movies. But the A24 crew saw a counterprogramming opportunity. For the first few years, it worked solely as a distributor—a relatively unsexy role in which a company scours festivals, picking up finished films financed by others, then engineers their release, making the posters and trailers and getting the movies onto theater screens. If everything goes right, it ekes out a small profit...

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