Disney chief Bob Iger has been forced to defend executives at 21st Century Fox after an arbitrator ruled that they owe $179 million to producers and actors.

February 28, 2019 | Hollywood


Good morning. While you were sleeping, President Trump and North Korean leader Kim Jong Un failed to reach a nuclear deal. "Sometimes you have to walk," Trump said.


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Fox tests Bob Iger's patience


Talk of Tinseltown: Disney chief Bob Iger has been forced to defend executives at 21st Century Fox after an arbitrator ruled that they owe $179 million to producers and actors because, the arbitrator says, they lied and deceived in order to keep tens of millions of dollars for themselves.


• Top Fox executives Peter Rice and Dana Walden, who will soon take on top television roles at Disney following its Fox acquisition, are implicated in the arbitrator's ruling, as is outgoing Fox TV chairman Gary Newman.


• The arbitrator says the Fox executives used what's known as "Hollywood accounting" to shortchange the creators and talent of the show "Bones" when selling digital rights for the show to Hulu.


• 21st Century Fox calls the ruling "categorically wrong" and says it "will not allow this flagrant injustice, riddled with errors and gratuitous character attacks, to stand and will vigorously challenge the ruling in a court of law.”


The Big Picture: This humiliating scandal portends a larger culture clash between Disney and Fox as the two companies close their merger. Disney is buttoned up and bureaucratic; Fox is scrappy and less risk averse. But the Fox execs work for Iger now, and sources who know Iger say he will not tolerate "fast and loose."


Iger's statement: "Peter Rice and Dana Walden are highly respected leaders in this industry, and we have complete confidence in their character and integrity. Disney had no involvement in the arbitration, and we understand the decision is being challenged and will leave it to the courts to decide the matter."


• That's not exactly the sort of thing you want your boss to have to say publicly before you even start the job.


The Bigger Picture, via NYT's John Koblin and Ed Lee: "The award spotlights a longstanding gripe among even well-compensated Hollywood players over the value of their work, especially as deep-pocketed newcomers like Netflix, Hulu, Amazon and Apple come courting."


Bryan Bedder/Getty

Disney moves on Hulu


Streaming Wars: With the Fox deal set to close, Bob Iger is in talks with AT&T to acquire its 10% stake in Hulu, which would ultimately give Disney 70% control over the streaming service.


Disney currently has a 30% stake in Hulu, which will double after it acquires Fox, and could own 70% through a deal with AT&T.


Comcast, which owns the remaining 30%, does not appear ready to give Iger full control. “I don’t think anything’s going to happen in the near term," NBCUniversal chief Steve Burke said last month.


The Big Picture, via Variety's Todd Spangler: "If Disney ends up controlling 70% of Hulu, that would give the media conglomerate even more incentive to invest in Hulu and expand it to international markets."


• "Under Disney’s control, Hulu will stay focused on adult-oriented, general entertainment fare while the forthcoming Disney+ subscription product will be in the family-friendly wheelhouse."

Oh/and: Two weeks after returning from Brazil without approval for the Fox acquisition, Iger has finally secured the South American republic's blessing — so long as he sells the local Fox Sports channel.


• Variety reports that with Brazil and Mexico's approval, there's "speculation that the historic union of two Hollywood studios could be completed as early as next week."

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Today's theme is perseverance. If at first you're blocked, try, try again. (hat tip, Dwayne Wade).


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John Stankey eyes new unit


In yesterday's Market, I reported that AT&T/WarnerMedia chief John Stankey has been in talks with former NBC Entertainment chairman Bob Greenblatt about taking on a new role overseeing the company's creative content.


What's Next: WSJ's Joe Flint now reports that Greenblatt could oversee "a new unit that would combine HBO and Turner entertainment networks and an upcoming streaming service."


And: "Entertainment executive Peter Chernin ... has been serving as an unofficial strategic adviser to AT&T."


Meanwhile, Vanity Fair's Joe Pompeo says Stankey and his boss, AT&T chief Randall Stephenson, are in it to win it:


• "They want to put efforts and focus and spend into making content," one WarnerMedia source tells him. "They want to compete and win."

Market Links 


Ren Zhengfei leads Huawei's fight for hearts and minds (Bloomberg)


Zhang Yiming faces a $5.7m fine for children's privacy violation (TechCrunch)


Ev Williams launches a new tech and science publication (Medium)


Joe Biden seeks campaign advice from social media executives (CNBC)


Adam Silver sees big revenue in the NBA's ad patch program (NBC Sports)


Emma McIntyre/Getty

Ted Sarandos shifts course


What's Next: After failing to win best picture for "Roma," Ted Sarandos is planning a more conventional box office run for Netflix's next big Oscar bid: Martin Scorsese's "The Irishman."


• “Expect Netflix to further soften its position with theaters for 2019’s The Irishman," one Hollywood insider texted me the morning after the Oscars, "so as to not ruffle feathers like they did with Roma.”


The Playbook, via THR's Rebecca Keegan:


• "Scorsese wants a wide theatrical release for his more than $125 million gangster movie, and ... the streaming company is working to get him one."


• "Netflix is facing pressure from other industry groups to conform to Hollywood norms to a greater degree than it did on ['Roma'], which ... lost best picture ... in part ... because Oscar voters penalized the company for its business model."


• "In addition to The Irishman, Netflix also is looking at its theatrical strategies for at least five other potential awards films."


Will "The Irishman" be a hit? The film is certainly "likely to entice wider audiences than ['Roma']," Keegan writes, as it casts Robert De Niro, Al Pacino, Joe Pesci and Harvey Keitel in a script by Gangs of New York and Schindler's List screenwriter Steve Zaillian.


Bonus: FastCompany's Nicole Laporte looks at how Netflix created a $1 billion arms race for TV writers ... while Variety's Brent Lang talks to Alfonso Cuarón about what it's like to work with Netflix.

Moving the Market: The James Beard Foundation has unveiled this year's list of Restaurant and Chef Awards semifinalists. Best New Restaurant nominees include Los Angeles' Bavel and Majordomo ... San Francisco's Angler and Nyum Bai ... Seattle's Sawyer ... New York's Adda, Atomix and Frenchette ... and Washington's Ellē and Spoken English.


• Nominees for Outstanding Bar Program include LA's Old Lightning ... SF's Bar Agricole ... Seattle's No Anchor ... NYC's Dead Rabbit and Leyenda ... and DC's Columbia Room.


See you tomorrow.


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