ENTERTAINMENT & SPORTS INDUSTRY PROFILE

In 2007, the Writers Guild of America and Alliance of Motion Picture and Television Producers couldn’t reach an agreement on issues such as low pay, revenue-splitting from new media, and the non-unionization of reality shows. And so American was left watching re-runs, catching up on old seasons available on DVD, sampling a seemingly endless array of new reality and game shows. Strikes in Hollywood don’t only have an effect on the big studio execs and union workers at the center of negotiations. Reuters reported in January that Warner Bros. could cut up to 1,000 employees at its Burbank, Ca., location due to lack of work, stating that recipients could be subject to layoff after 60 days. The notices represent the first sign of the strike’s potential implications for Hollywood employees, and could launch a major spree of lay-offs similar to the result of the WGA strike of 1988. Many TV production companies had already laid off workers not necessary without new scripts when Warner Bros. revealed it had gone through the necessary steps to legally pass out pink slips. Some big names came back with new episodes in order to save their own employees from being let go. Late night show hosts including Jay Leno, David Letterman, Conan O’Brien returned to work in the new year with fresh scripts.

Some argue a long-lasting strike would only push the younger generation further toward Internet media as the primary source of entertainment-which would have a direct effect, of course, on job opportunities in the more traditional entertainment sectors. Another concern raised is that the striking could become even more complicated when the 120,000-member Screen Actors Guild heads to the negotiation room in June 2008.

With the rise of the Internet and other new communications technologies, the field of entertainment is increasingly difficult to define. The film, television, and music, as well as sports-each a form of entertainment raking in millions of dollars. The first three of these businesses are dominated by enormous, vertically integrated companies such as Sony, Time Warner, and Walt Disney, which have interests in multiple segments of the industry. But there are also thousands of jobs in the entertainment industry at smaller, less corporate companies-film and television production or distribution companies, for instance, and small independent record companies, talent agencies, and management companies. Similarly, pro sports is dominated by the four biggest spectator sports-baseball, football, basketball, and hockey-but there are many other sports out there with varying degrees of business sophistication, and even at the Big Four there are numerous, albeit unglamorous and low-paying, jobs in minor-league outfits.

When Seagram followed its $10.4 billion purchase of PolyGram with the announcement that it would fire thousands of employees in a major restructuring, it initiated a trend among the Big Five (BMG, EMI, Sony Music Entertainment, Universal Music Group, and Warner Music Group) toward making record label companies smaller and “smarter”-that is, focusing on a smaller number of “surefire” acts. And the merging continued. In any case, the industry doldrums, which began in 2001, continue to put a damper on hiring.

The culture in this industry is one of anti-corporate, studied casualness. There are still uniforms: an ever-changing array of baseball caps and jackets in the music business, for example. But they’re invariably less starchy, more expressive of individualism, than anything worn to work in the fields of finance or law. The people? Well, there’s no people like show people, and the same can be said for those in the sports world. This is a high-energy crowd. It’s also a crowd jammed with inflated egos, which can make its members both stimulating and frustrating.

The box-office success of independent films over the past several years has sparked significant changes in the film industry. Hollywood has bought into the appeal-and lower production costs-of character-driven films, and studios have established subsidiaries that solely produce such films. Consumers and critics alike have rewarded them for this endeavor. Moreover, many studio distribution departments are looking more seriously at foreign markets and other outside producers as sources of film “product”-partly because these ancillary sources are making movies that filmgoers are responding to, and partly because when they buy a finished film, they have complete control over costs.

While these trends translate into less work for film crews, they heighten the demand for office personnel, who must find new writers, directors, and actors to put together these back-to-basics productions. “It takes talent to find talent,” as the industry maxim goes. And studios’ efforts to mimic the style of independent films and curtail production costs have meant less reliance on special effects and consequently a greater need for a steady stream of new writers, directors, and actors.

Perhaps the most contested and conversed about issue within the music industry today, even more than Britney Spears’ latest breakdown, would have to be digital music downloads. No industry is more paranoid about a technological advance eating into its profits than the music industry. Though other factors (e.g., a perceived lack of compelling artists, artificially high CD prices, competition from “higher-value” DVDs, and the sluggish economy) are involved, file sharing has clearly had a negative impact on album sales.

To counteract the consumer-spending slump, labels first began trying to find new ways to bring in revenue. These include new contracts that entitle them to a cut of an artist’s tour and merchandising revenues and an increased emphasis on placing songs in films, television shows, and-the most lucrative of all-commercials.

Then they adapted the “if you can’t beat them, join them” mentality, and major labels partnered with Apple’s iTunes, Napster, RealNetworks, and Wal-Mart, increasing the legal digital distribution of music. In a move BusinessWeek reported as ending a digital music era, Sony BMG revealed in January 2008 it would make at least part of its collection digital rights management-free. Sony BMG would therefore become the last of the top four labels to allow its songs to be sold from various outlets, such as Amazon.com. UMG and WMG both announced plans to do the same in 2007.

As we move into the digital age, it’s getting more difficult to cleanly break down the industry into traditional categories. One reason for this is the proliferation of new forms of entertainment-DVDs, the Internet, and the like. Another reason is that many film, television, and music companies have united to form entertainment conglomerates.
While the landscape of the industry is changing, for the purposes of this profile we break entertainment into three traditional categories: television, film, and music, and then follow these up with a look at sports entertainment as its own standalone category.

In entertainment and sports, profit comes from discretionary spending, so these industries enjoy the most success in economically stable countries where leisure dollars flow freely. Industry companies supply their audiences with large-scale sporting events, music concerts, TV situation comedies, and silver-screen masterpieces. Simply put, they’re in the business of fun-at least most of the time.

Even during economically depressed periods, this industry flourishes as an escape for all walks of life. And standing at the pinnacle of entertainment culture are the celebrities: the movie stars and quarterbacks and rock stars and talk-show hostesses who either realize our dreams and give us hope, or make us fearful of the kind of values and environment of which current future generations will become a part. This is the only industry whose product is an illusion-neither a good nor a service, and yet both at the same time.

In 2004, Sony Music and BMG merged to become Sony BMG Music Entertainment, and EMI merged with Vivendi, which then purchased BMG Music Publishing for $2.2 million to form Universal Music Group. A year later, the European Union’s approval of the Sony-BMG merger was annulled in European court, making an investigation of potential antitrust problems necessary. In 2007, the deal was cleared. Still, Universal Music Group continues to hold its top position as the world’s largest record company, a title it’s held since acquiring PolyGram in ’98.

American Association of Independent Music
Association of American Publishers
Copyright Alliance
Creative Future
Entertainment Small Business Alliance
Entertainment Software Association