Chief Executive Officer, Lionsgate Studios Corp.
Keynote: Jon Feltheimer, Lionsgate | MIPCOM 2010 Personality of the Year
Jon Feltheimer is being recognised for his leadership of Lionsgate, for driving creative productions and developing award-winning ...
About Jon Feltheimer
Jon Feltheimer, CEO of Lionsgate, has emphasized the enduring value of the company's content library, describing it as having "incredible value" that increases over time. During a 2020 earnings call, he noted that the COVID-19 pandemic demonstrated the existence of an at-home audience for movies and suggested that distribution models could change, while reaffirming the company's commitment to theatrical exhibition. He also stated that the company was "pretty well positioned for this new world" and was continuing to explore potential transactions that would leverage the library and unlock value. Feltheimer has long advocated for a disciplined, entrepreneurial approach to the media business. In earlier remarks, he described the industry as "vibrant and ripe with opportunity" and argued that new digital windows, such as the Netflix deal, carry "tremendous value" for content creators. He has stressed the importance of keeping overhead low—noting Lionsgate's overhead was less than nine percent of revenue—and of mitigating risk through cost discipline rather than relying solely on financial partners. Feltheimer has also said that the key to success is allowing talented people to make decisions and learn from mistakes, stating that "the magic comes from entrepreneurial people who really can take ideas that other people haven't thought of."
Transcript (70 segments)
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Jon Feltheimer27:17
million viewers but in addition to more than a hundred million in DVD revenue, it has also dominated iTunes charts, is available for streaming on Netflix's Watch Instantly service, and is sold by episode or season on Amazon, Xbox, Cinema Now, MovieLink, and Vudu. Overall, it has already generated nearly five million digital transactions and counting.
Now, it is a lot harder to make money with a show that has five million viewers than one that has twenty-five million. But the combination of analog dollars and digital pennies is adding up pretty quickly as our business changes. So to all the indices of success, shows will be prized for the loyalty of their viewers and their ability to migrate to multiple platforms that generate extended revenue streams, not just their ability to reach tens of millions of eyeballs at a single sitting.
As we've seen with Tyler Perry, premium content is distinguishable more by its value as a repeatable brand than by the magnitude of its initial impact. Tyler's one of the most unique talents in the entertainment industry today, and while many of you may not have heard of him, listen to these numbers: $483 million in worldwide theatrical box office for his first nine films, 40 million DVDs sold of his films and stage plays, 3,000 stage performances over the past 12 years attended by 20 million customers, and more than 6 million weekly viewers for his two television shows.
The point is that with a fan base of only 20 to 30 million people, he can be one of the most successful artists and entrepreneurs in the world. Tyler and Debmar-Mercury created a brand new model for his shows that was both risky and different. They took the chance to produce and distribute 10 episodes of his first television show, House of Payne, with no network attached, and look what they got: an initial 100-episode order for House of Payne and another 100 episodes of its spin-off, Meet the Browns, airing first on TBS and then within two years airing in an accelerated syndication window led by the Fox station group.
In just two years, those orders have grown to 352 episodes for the two shows, and Tyler's TV shows alone have generated nearly half a billion dollars in revenue, almost exclusively from the United States. And that's what I call repeatable business.
All of this focus on niche audiences isn't to say that the network business isn't still relevant. The strong upfront performances this year reinforce that. Shows like Modern Family and Glee prove that the networks haven't lost their touch in creating quality, enduring programming, even if the ratings that define a hit today are much smaller than they were 10 years ago.
And if we've learned one lesson already from this year's network season, it's that content and the internet continue to intersect in new and interesting ways. In the brave new world of television, the new CBS show Bleep My Dad Says was taken from a Twitter feed and turned into a hit by one of the few constants in our business today: find something avant-garde, cutting-edge, fresh, and relevant, and then just drop William Shatner into the middle of it.
Whether it's a big-star vehicle for 20 million viewers or a niche cable show for 20,000 fans, the defining constant of content, wherever it appears and whoever the audience is, is that it needs to be good. Whether it's Jerry Bruckheimer making CSI for CBS, Lionsgate producing Mad Men for AMC, or Gustavo Bolivar producing Cien Porciento Paraiso for Colombian television—which for some reason has become a big hit sensation in Latin America—there are certain rules about content that don't change.
The first of these rules: get it right the first time. If you create the right content, the buyers, sponsors, partners, and audience will follow. When you're making a show, don't let the results you want to achieve shape the content; let the content shape the results.
I remember back fondly to one of the only international co-productions done with a US broadcast network—a co-production that we did at New World with ABC, TF1, and London Weekend Television called A Fine Romance. It was great fun trying to include all of the different voices, and while we got the show on everywhere, it didn't last long anywhere.
The moral of the story is: don't make a deal, make a show. When you create a show to fit the structure of a deal or to satisfy the needs of several different markets or a variety of audiences, the 'something for everyone' approach usually leads to nothing for anyone.
Now, it's fine to have shows with lots of buyers as long as they share a unified vision. Pillars of the Earth, which debuted on Starz in the US, followed anything but a traditional path to the screen. It was a book that I read and loved over 20 years ago, and it finally made it to the screen because its producers pieced together financing led by licenses to ProSieben in Germany, CBC and The Movie Network in Canada, Antena 3 in Spain, ORF in Austria, and TV2 in Hungary, all before it was attached to a US broadcaster or cable network.
Stanley Park is a pilot that we produced in the UK for the BBC, and although it's a fantastic show, its fate remains uncertain in the UK. However, we screened the completed pilot for the Fox network in the US and they loved it. We just concluded a deal to adapt it to the US market, and the writer-creator Leo Richardson is now in Los Angeles working on the pilot script.
These shows have a single unifying thread: if you make good content in a world marketplace that is hungry for it, you'll find plenty of buyers, as long as you don't limit yourself to old models. Least-common-denominator television just doesn't work.
The shows with the least longevity and the most limited appeal are ironically the ones that set out to pander to the widest and most diverse audiences. But a successful show in any territory will almost inevitably lead to success in other territories. It will live on in sequels, be sold as a format, and will have an afterlife in syndication.
Two decades after its debut on network television, Seinfeld's fans and progeny live on in Larry David's Curb Your Enthusiasm, which is enjoying a new life with original material created each episode on our TV Guide Network. Forty-two years after its first network premiere, Hawaii Five-O is booking big audiences again as the retooled Hawaii Five-0 is an early ratings winner for CBS.
From Bewitched to The Fugitive, The Honeymooners to Get Smart—the list goes on and on. The message is clear: get it right the first time, and they will come for generations.
Look at the hit series Modern Family and Glee. While syndication may now be defined more broadly as three or four platforms sharing the back end, these shows amazingly sold into syndication for big numbers in only their second season.
But when someone else gets it right, don't expect to duplicate their success by using the same concept and the same formula, because the corollary of 'get it right the first time' is 'me too television' just doesn't work. There are a million great scripts waiting to be written, produced, and distributed. Be original, because there's only one Survivor, only one American Idol, there's only one Sopranos, and only one Mad Men.
Great television shows are a testament to the power of a bold idea conceived with genius and executed with skill. 'Me too television' has no longevity, but fresh, original, and daring shows are the gifts that keep on giving.
There's just one more rule I'd like to talk about that probably applies to all of us. I can remember when I was given the first draft of the pilot episode of Wonder Years when I was at New World in 1988. If you all recall, it won an Emmy for best comedy after only six episodes on the air.
I took this script home and read it and shared it with a few close friends whose opinions I trusted, and we all agreed that it was very special. And then I made one of the best executive decisions I've ever made: I left it alone. I didn't touch the script, I didn't influence the casting, I didn't argue with the showrunner's choice of director. That's right—I just let the creative process work its magic, and I stayed out of the way.
Sometimes we lose sight of the fact that as executives, we're only the facilitators of the creative process. We're not the story, we're not the audience—just the connection between the two. Our job is just to bring the storyteller and his or her audience together in the most efficient, effective, and entertaining ways possible.
For all the new formats in the world, all the new technologies delivering them, and all the new markets for consuming them, our business is still built on stories and the best ways to tell them. What did we learn from this past 3D summer at the theatrical box office? We learned that advanced technology, properly harnessed, can make a good story even better. It can help it achieve its resonance, extend its reach, and not so parenthetically boost its profit margins in the process.
But even the state-of-the-art in technology cannot make ordinary content extraordinary, and the greatest magic in our creative arsenal remains our storytellers' gifts for capturing our imaginations. No matter how much our business changes, that simple truth won't change.
It seems a little scary to all of us, just as it did to my daughter Gillian. And change is hard. Launching Epics, especially in the midst of a recession and in the face of industry skepticism, was difficult. Cracking the Latino moviegoer market and the Asian pay television markets would be tough. Growing TV Guide into a leading general entertainment channel is a great challenge. And cobbling together the various analog and digital revenue streams for the next Mad Men or Weeds will make me long for the simpler broadcast network paradigm of generations ago.
But there's no going back, and the status quo isn't an option for success in a world evolving as rapidly and a business changing as profoundly as ours. Like the blind men measuring the elephant, we're still trying to figure out the most basic elements of the digital content equation. But over time, I am confident that we will get it right, and we're going to find that the new era of our television business is more promising for our companies, more exciting for our consumers, and more rewarding for all of us than anything that has preceded it. Thank you all very much.
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Anna Kugti37:52
Good afternoon. I'm Anna Kugti. I'm the group editorial director of World Screen. I am absolutely delighted to be here, and I thank the executives at Lionsgate and at Reed MIDEM for asking me to conduct this question and answer session with Jon.
I first met Jon in the mid-'90s. He was at Sony. I was a lot greener as a reporter back then. He was a top studio executive, and I was a little nervous. He answered my questions beautifully. He was very kind. It was a phone interview, and I hung up and that was it. I wrote my article, and then I came to the market and the article I had written was published in World Screen, which was being exhibited here at the market.
Coincidentally, I had to go up to the Sony booth to meet another executive. I was waiting for the hostess at the booth to go get this other executive, and I see a gentleman come out. Now, I had never met Jon in person, I had only spoken to him on the phone. I see an executive come out, and I see his badge, and the first thing I think was, 'Oh my God, I screwed up, I got something wrong.' Instead, he came up to me, he shook my hand, and he said, 'Hello, I wanted to introduce myself, Anna. Thank you for interviewing me. You did a great job. You got it right.'
And that was my first impression of Jon. He is a wonderful person, and now in my questions and answers, I hope you get to see a little more of the person that he is beyond the amazing company that he's built. So ladies and gentlemen, once again, Jon Feltheimer.
Well, I'd really like to learn about your background as a singer and songwriter, but we'll get to that later. I thought we'd start—let's go back in time a little bit to when you took the reins of Lionsgate. Was targeting unserved niche audiences something that you had already thought of, and how did all that come about? Because that's certainly a strength that you've built the company upon.
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Jon Feltheimer40:00
Yeah, well, I think it was kind of what was left for us. The studios had done a pretty good job of figuring out how to do broad-based entertainment. It seemed to me that again, people were even 10 years ago watching television, watching movies more in large affinity groups than they had done before. And it seemed like an interesting opportunity for us to be able to do with less capital and with perhaps a more focused approach to how to reach those niche audiences.
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Anna Kugti40:35
Mad Men, Weeds, Nurse Jackie, Running Wilde, the Tyler Perry shows—just to mention a few—are not ordinary shows by any stretch of the imagination, by any definition. What kind of creative environment do producers and writers find at Lionsgate?
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Jon Feltheimer40:50
You know, we have a much smaller staff, I think, than most studios, and I think that both the kind of empowerment that we give our executives is very similar to how we treat showrunners. We don't believe we write the scripts, and as I said about Wonder Years, I think that's probably not that typical. I think that we want the writers and showrunners to do what they do. I think we try to guide them, we work with the networks, we try to help make sure we can market them, get them out to the right audience at the right time. But at the end of the day, I think they're given a lot of freedom to create.
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Anna Kugti41:25
And consequently, given the reputation of the shows that you have produced, what reputation does Lionsgate have in the creative community?
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Jon Feltheimer41:35
Well, you're only as good as your last hit. And so I think if people look at Nurse Jackie and Mad Men and Weeds, I think perhaps we have a pretty good reputation as a company that cares about quality, that gives showrunners and talent the opportunity to be empowered and follow their own creative direction. So I think we have a very good reputation. I think we have an entrepreneurial reputation. I think we've been mostly involved with shows that I'm proud of. And I think certainly we always try to do the best that we can, and perhaps not try to always attract the money as much as get the show right, and then figure we'll figure out how to bring the money in through various platforms.
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Anna Kugti42:19
Now, I know that Lionsgate is known for being cost-conscious and careful about how you spend your money. And yet, how do you ensure that you get quality on the screen—whether it be the big theatrical screen or the small television screen—and still watch those dollars?
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Jon Feltheimer42:37
Yeah, I'm not so sure Carl Icahn agrees that we're pinching the pennies that much. But you know, I think the interesting thing about it is you can't be that much smarter than anybody else. We do use a lot of tax credits. We've made interesting deals in New Mexico and Pennsylvania. We're pretty mobile about where we shoot our shows. We don't have a big studio lot. We don't feel compelled to use a studio lot. But I think the main thing is to make sure that you just do shows that you know you can produce efficiently. And so you've got to turn down—there were a couple shows this year that I remember Kevin brought to me and we talked about them, and they just seemed like great shows, but they seemed like shows that really weren't for us, that we couldn't do the best that we could do. And so we said to the creator, 'You may be better off somewhere else.' So I think it's very much picking the shows that you think you know how to do, where you can do them, how you're going to do them to be efficient, to be profitable, but to do great shows.
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Anna Kugti43:38
Now you mentioned during your speech—which, by the way, I've been lucky enough to do a lot of Q&As after keynotes, and that was an extraordinary speech, I'm not just saying it, really was—when you mentioned how years ago you could make a show, sell it in the US, recoup most of your production costs, international was icing on the cake and your profit, and then if you got a syndication deal, you were living happy. Tell me, what was the time frame for that process compared to today—that quilt, patchwork deals that you have to make for cable, maybe more than one cable, and the windowing and the iTunes and the Netflix? What's the time span?
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Jon Feltheimer44:21
Surprisingly enough, it could just be that the old model was slower in some ways, because you have to look all the way through to syndication to even believe that there was going to be a profit. If you didn't have your show on for at least, I would say, four years, you might never get there, or your backend value would be so diminished. Right now we're looking at the possibility of being profitable well before that. It just requires a lot more arm-wrestling with a lot of different platforms. But you might get there. And some of the choices we made—for example, Running Wilde, one of the reasons that we decided to go ahead and produce that show was that we had seen with Arrested Development how significant the DVD revenue was, and thought if we can keep the show on for a couple of years, we can actually be in profit significantly earlier. So I think it's interesting. One would think it was the opposite. It was perhaps safer in some ways, or at least it was simpler, but not necessarily faster.
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Anna Kugti45:17
Okay, wasn't necessarily a faster path to profitability. Interesting. The last two years have not been easy for anybody in the media industry, given the downturn and the advertising slowdown. Certainly it's not been easy for independents. First the credit crunch, as I said, the sluggish ad market, the economy—how did you navigate those difficult times? Because you've come out of it in a good position, haven't you?
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Jon Feltheimer45:43
Yeah, I think we took our lumps like everybody else. 2008, early 2009—those were pretty rough years. But I think the key thing for us is diversification. We never set out to be a film company. We never set out to be a television company. We built a very large library early on. It throws off about $100 million of free cash flow every year, and it enables us to actually make sure that we can pay everybody and that we can obviously fulfill all of our obligations. And you know, it's worked pretty well. Some years, even some quarters, the film business carries us. In the next quarter, it may be the television business. DVD has been actually pretty solid for us. We still convert at a very high level. So I think diversification.
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Anna Kugti46:30
Okay. Do you care to talk about your singer-songwriter past now?
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Jon Feltheimer46:38
There wasn't that much to talk about. I wasn't that bad, I just wasn't that good.
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Anna Kugti46:41
Okay, all right. Was that a career option for you for a while?
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Jon Feltheimer46:46
Could have worked.
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Anna Kugti46:47
What, college or high school? When was it?
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Jon Feltheimer46:49
Well, college and after that.
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Anna Kugti46:51
And do you dabble in it now?
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Jon Feltheimer46:53
Do I what?
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Anna Kugti46:54
Do you dabble in it now? Do you sing or write?
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Jon Feltheimer46:55
You know, there's a rumor that I've got an electric guitar in my office, and that every now and then I pick it up and play it. But I can't confirm that rumor.
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Anna Kugti47:04
You won't? Oh, darn it. You won't make me think—no? I'm here, you can give me the scoop.
I have, as you know, I've interviewed you several times. I've interviewed many of your executives over the years. And the word on the street is that you're a really nice guy to work for. So share with us a little bit—what's your management style like? How do you get the best out of the people who work for you?
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Jon Feltheimer47:28
Well, I'm glad to hear you say that, and I hope my wife is listening to that. But I don't know. Again, I think people tend to care more. This is—people, probably a lot of people, would say, 'No, that's not true.' But I think at the end of the day, the most important thing is not how much you pay people, it's how much you respect them. And the way you show how much you respect them is by letting them make decisions, giving them the ability to make mistakes.
I was—you know, part of my speech, I really believe that. And I think what does sometimes happen, maybe more in more established organizations that have a big legacy for 50, 60, 70 years—I think there's perhaps less of that. It's a little more mechanized. And I think that I tend to let people make mistakes, and sometimes afterwards, if it is a mistake, I kick myself—why didn't I exert more influence over that decision? But I think that's where the magic comes from. The magic comes from entrepreneurial people who really can take ideas that other people haven't thought of, that therefore look like they're probably a mistake, and make them work. That's the whole game, as far as I'm concerned.
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Anna Kugti48:40
Over the many times that I've—well, the few times that I've interviewed you, I think my final question to you has always been, 'Are you satisfied with what you've built up to now?' So I know Kevin made mention of this earlier, I have to ask you—are you satisfied? And what else do you still want to do that you haven't done yet?
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Jon Feltheimer49:00
Well, you know the answer. The answer is I'm definitely not satisfied. I love the growth that we've got in our television business. I love the growth we've had in our channel platforms. I think the international marketplace is very exciting right now. And I think, as I've certainly said before, I think there's a digital explosion about to happen. I think again, our Netflix deal, the NBC-Netflix deal—every day now you're reading about Netflix. But it's not just Netflix. It's Amazon and Microsoft, and you're going to start seeing—Google, obviously—you're going to start seeing significant deals being made by these companies. It's not necessarily a replacement for the traditional distributors, but there's big, big, big money there. And these guys have huge install bases and tremendous connection with the consumer. And I think once we tap into this together, there's an amazing amount of money on a worldwide basis that we can actually generate. And I think that's very exciting. So no, I'm not satisfied, but I'm happy.
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Anna Kugti50:04
Well, that's good. Are there areas of opportunity that you see as you steer the company forward in what is very much uncharted territory, isn't it? Because today it's Facebook and Twitter, and who knows what it's going to be tomorrow, and what device—it's the iPad, and what will Google come out with?
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Jon Feltheimer50:18
Yeah, again, I think people don't understand this point about precedents and favored nations. So when—who knew that when we made our deal with Netflix, for example, for Epics, who knew that there wasn't another billion of dollars sitting there that we left on the table? You don't know, because you can't compare it to some other deal that they did. And so again, I think that's the uncharted territory that's so exciting, that's going to be so interesting. That's really the new frontier of what we're talking about. Again, as I say, the demand is there. The demand is there. And I think, you know, you always hear people say, 'Oh, television used to be better 10 years ago, 20 years ago.' Television's never been better. It's the best it's ever been, by far—it's not even close. You've got great content being created all over the world. So I think we're going into a tremendous period of growth for the business and for our company. I'm very excited about it.
I can see a couple of—two or three or four different interesting companies with whom we might partner, but I'm not going to tell you who.
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Anna Kugti51:21
Another scoop you're not giving me.
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Jon Feltheimer51:23
But I do think they're out there. I think there are other entrepreneurial, likeminded companies out there that would be interested to do other deals with, to partner with, to be in business with. And I think those are the things we're looking at right now.
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Anna Kugti51:41
What's more difficult—deciding a new way to navigate this uncharted territory and make a new deal, or dropping your daughter off to college and seeing her go?
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Jon Feltheimer51:54
Well, dropping my daughter off, as I said, that was a great experience, actually. It was a little scary for us. It was obviously a little scarier for her. The hardest thing I ever do—I've got an 18-year-old and a four-year-old, so the hardest thing I do is navigating around those kids. I think my wife would say the same thing. But no, our business is actually at a crossroads. I think it is difficult right now, but I think again, there's a lot of magic left for us to all create, and I'm looking forward to being a part of it.
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Anna Kugti52:29
And finally, you're back at MIPCOM after a number of years. How does it feel to be back?
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Jon Feltheimer52:33
It feels great. It feels great. Well, we had two great days of weather and one not so great. But you know, I love pulling down the Croisette and seeing so many people from so many different countries engaging in the monetization of our content. I think it's very exciting, and each has a different priority. And you know, I love the energy, I love the action. It's great to be back.
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Anna Kugti53:00
It's great to have you here. Well, everybody, please thank Jon Feltheimer.
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Jon Feltheimer53:05
Thank you. Thank you all very much. I appreciate it. Thank you.