by Ben Fritz
She established her own company, Annapurna, which she initially ran out of a trio of multi-million-dollar houses high in the Hollywood Hills—one for her to live in, one for filmmakers to work in, and one for “corporate” offices. Now Ellison had the ability to fully finance whatever she wanted.
She certainly wasn’t the first member of the 1 percent who decided to start spreading her wealth in Hollywood. The movie industry has relied on “dumb money” from rich people enamored by show biz all the way back to Howard Hughes in the 1930s. Around the same time that Ellison came onto the scene, Gigi Pritzker, heir to the Hyatt Hotel fortune, Molly Smith, daughter of the founder of FedEx, and Jeff Skoll, employee number one at eBay, were also putting their money into films—primarily original, mid-budget ones that studios were wary of making.
But Megan Ellison stood out. For one thing, she wasn’t in it only for the opportunity to become a celebrity. In fact, she actively shunned the spotlight, refusing every single request to be interviewed. “The control freak in me really clashes with the social anxiety in me, which drives me to drink in social situations,” she wrote on Twitter. “It’s a real lose, lose.” She was almost as much of a recluse as Marvel’s chief, Ike Perlmutter, when it came to the media. But unlike him, Ellison could often be found at premieres and other events celebrating her films, usually wearing a black suit and quietly talking to the talent while avoiding photographers and press.
She quickly insinuated herself among the crème of the A-list. At one post–Golden Globes party thrown by the giant talent agency William Morris Endeavor and packed with the Hollywood elite, she casually chatted with Leonardo DiCaprio and Jonah Hill before they and other friends headed upstairs for their own ultra-exclusive gathering.
Ellison was also unique in her ability to throw caution to the wind on the most prestigious projects from some of the best filmmakers. Say what you will about her financial acumen—nobody could question her taste. When Paul Thomas Anderson, the director of Boogie Nights and There Will Be Blood, wanted $32 million to make The Master, an exploration of a group akin to Scientologists, Ellison wrote the check after meeting the filmmaker at Jerry’s Famous Deli, a famous L.A. lunch spot. Kathryn Bigelow, Academy Award winner for The Hurt Locker, needed $45 million to make Zero Dark Thirty, a controversial movie about the hunt for Osama Bin Laden? Done. Spike Jonze (Being John Malkovich, Adaptation) wanted to make a meditation on technology and love in the future with a simple title, Her? It couldn’t be more obviously challenging at the box office, but Ellison put up $23 million.
Most independent producers would say they wanted to make a movie but then take many months to cobble together the financing from foreign distributors, lenders, and other sources. Even if their bank balance had many zeroes on the end, they weren’t crazy enough to take on all of the risk. Like any savvy investor, they needed to hedge their bets. Megan Ellison wasn’t against selling foreign rights and other efforts to make her film investments a little safer. But those decisions often came after the fact. When she said yes, it meant yes right now, backed up by her personal wealth. Many of her movies, unsurprisingly, didn’t do well enough at the box office to justify their sizable budgets and likely lost money or made a very small profit at best (since Annapurna is a private company, we’ll never know for sure).
Ellison’s first real hit was 2012’s Zero Dark Thirty, which also forged her bond with Amy Pascal. Sony released the picture, which grossed $133 million. It narrowly lost the Oscar for best picture to the blander Argo, directed by Ben Affleck.
The next year, when Pascal had another mid-budget adult drama that she wanted to make that seemed too risky for her studio to back, Ellison stepped up to provide half the $40 million budget. David O. Russell’s 1970s crime caper, American Hustle, was another hit and, once again, came close to winning the Academy Award for best picture for Sony and Annapurna.
One Final Restart
So when Steve Jobs started crumbling in Pascal’s hands, Megan Ellison was naturally the person to turn to. To make an inexpensive movie she believed in, the head of a multi-billion-dollar, ninety-five-year-old studio needed a twenty-eight-year-old to say yes.
At first, Ellison expressed enthusiasm for the movie and deference to the more experienced Rudin. “I have such admiration for you and you make all the best films that I want to be involved with, it doesn’t make sense for us to be at odds with each other,” she wrote to him. “Steve Jobs was and always will be an important part of my family. He was my father’s best friend, he was the witness at his wedding, he is the only person my father has ever truly admired. So this is also incredibly personal for me. It would be a great joy to be a part of shepherding his story.”
Relying on the whims of a wealthy young woman, however, was very different from negotiating with a major company. To move forward, everyone involved wanted Ellison and Boyle to meet, and to do so quickly. But just getting them on the phone proved nearly impossible.
“We left messages for her everywhere. And I e-mailed her twice,” Pascal told Rudin. “She just broke up with her girlfriend and is quite distraught. But I didn’t want to say anything. Maybe that’s why she didn’t call.”
“Well, that’s professional,” shot back Rudin.
“For a twenty-six-year-old,” said Pascal, underestimating Ellison’s age by two years.
“How long will she be twenty-six?” asked Rudin. “Four or five more years?”
A few days later, they tried for an in-person meeting in New York. But that turned into a fiasco too when nobody could reach Ellison or her assistant.
“We’re in crazy-land here,” a furious Rudin, who labeled Ellison a “lunatic,” told Pascal. “Danny is literally sitting by the phone in a hotel room with nothing to do in NY but this. She has never returned his call. This is going to flame out in about ten seconds as Megan Ellison is on the verge of costing us the film when Danny says ‘fuck it’ and moves off this movie.”
Ellison and Boyle finally met the next day. “Very interesting discussion about the script and the approach—she ‘sees’ it like we all do,” reported the director. “And of course her own relationship with her dad, as well as his relationship with Steve, made for a great discussion. She’s keen.”
But the ego-bruised Rudin was hardly assuaged. “Megan ‘sees’ it. She has a vision,” he snorted. “Thank God I can sleep at night now.”
And then, two days later, Megan Ellison delivered a very different message. Even she wasn’t sure the movie made sense at $33.5 million, and she was just as doubtful about its star as Pascal was. “It would depend on who it was and how much it costs,” Pascal reported to Rudin, the young financier had told her.
“When I say say that,” the Sony movie chief added, “it means no.”
But Ellison wasn’t saying no because the numbers didn’t work out on a spreadsheet. She was using the same internal compass that used to guide Pascal and so many other studio moguls: “I simply have to do what I feel is the right thing for me and what my gut is telling me,” Ellison told Rudin.
“Why did she do this??? Why put us all through this?” an exasperated Rudin asked Pascal.
“I don’t know why anyone does anything they do,” she replied.
What they couldn’t know is that Ellison was about to radically reassess her approach at Annapurna. Rather than let Sony or Warner Bros. get credit for the risks she took with her money, she was building her own independent studio, which would do all the work and enjoy all the glory. She hired a former president of HBO to get her company into the more lucrative TV business, and she hired veteran executives from Fox and the Weinstein Company to make Annapurna a self-sufficient, fully operational studio. It could now release and market its own movies, starting with Detroit, the director Kathryn Bigelow’s drama about race riots in the 1970s, released in August 2017.
The new Annapurna also signed a deal making it the new home of Brad Pitt’s production company, Plan B, which had made the Oscar winners 12 Years a Slave and Moonligh
t, and had agreed to spend $50 million on a biopic of Dick Cheney with the director of The Big Short, Adam McKay.
Megan Ellison was still a patron of the arts, betting big sums on daring, original films for adults. But her days as fairy princess who made dreams come true for studios that wanted to release original dramas without taking a financial risk were over. Now that Annapurna was releasing its own films, studios like Sony would be forced to narrow their vision even more to the “safer” big-budget franchise movies.
End of the Road
When Ellison pulled out of Steve Jobs, Amy Pascal knew it meant only one thing: “We are fucked. Or at least in a fucked situation.”
Under pressure from Rudin and from Boyle’s and Sorkin’s agents to let them find another studio to make the film if Sony couldn’t pull the trigger, Pascal reluctantly agreed. She was doing the “fair and honorable thing,” she told Rudin. “You know how much I care about making good movies and how much I wanted to make this one.” She hoped that nobody else would want to take the risk either, and Sony would get the film back, with time to find other financing or to develop it into a less costly or more potentially profitable picture. “I hope I get another shot to make it wtih you,” Pascal wrote at the end of a wistful note to the producer.
But within a few days Universal Pictures, a studio whose 2015 schedule was packed with huge tentpoles and thus had room to take a flyer on one mid-budget drama, had picked up Steve Jobs. That’s when Pascal went into full crisis mode, e-mailing from her doctor’s office in hopes of finding some way to reverse her decision and keep Sony involved in the film.
She offered to find the money after all (“ILL DO IT ALL OF IT” she proclaimed to Boyle, too late) and “cried and acted like an idiot,” in her own words, but she couldn’t take back her decision. “You . . . love movies and always aspire to greatness,” said the Sony production executive Elizabeth Cantillion, trying to console Pascal. “And that’s a difficult thing to do right now.”
But for Pascal, it was a painful moment of self-reflection. “I am devastated,” she wrote to her friend Bryan Lourd, the CAA partner. “Who have I become?” She would eventually decide the experience had left her “without jobs but much wiser.” But she was also left with a searing psychological analysis by her old friend and verbal sparring partner Rudin, who questioned what the Steve Jobs fiasco said about Pascal and, perhaps, the role of any modern movie mogul:
Why have the job if you can’t do this movie? Stop and think about it—you’re at a crossroads and you’d be very smart to recognize it . . .
So you’re feeling wobbly in the job right now. Here’s the fact: nothing conventional you could do is going to change that, and there is no life-changing hit that is going to fall into your lap that is NOT a nervous decision, because the big obvious movies are going to go elsewhere and you don’t have the [intellectual property] right now to create them from standard material.
Force yourself to muster some confidence about it and do the exact thing right now for which your career will be known in movie history: be the person who makes the tough decisions and sticks with them and makes the unlikely things succeed. Fall on your sword—when you’ve lost that, it’s finished. You’re the person who does these movies. That’s—for better or worse—who you are and who you will remain. To lose that is to lose yourself.
But Amy Pascal had already lost herself. Or rather, Hollywood had lost a place for people like her. It certainly didn’t have a place for the films she still desperately wanted to make.
Nearly one year later, Universal released Steve Jobs. It got good but not great reviews, earned a pair of Academy Award nominations for Fassbender and Winslet, and bombed at the box office, grossing a dismal $35 million worldwide. It lost about $50 million.
9
Trading Places
How TV Stole Movies’ Spot atop Hollywood
In early 2014, near the end of a fiscal year in which his studio weathered bombs like After Earth and White House Down and was battered by the activist investor Daniel Loeb, Steve Mosko canceled dinner plans with his boss, Amy Pascal. He was, he said, tired of feeling disrespected.
“There is now a narrative being told that . . . devalues the efforts of myself and others in the tv group,” the president of Sony Pictures Television told the co-chairman of Sony Pictures Entertainment, his e-mail filled with ellipses between his thoughts. “I think people in the know understand what we have overcome and accomplished over the past 11 years . . . the more disturbing piece is the personal attack that has been launched at me by people that work in the company for you and Michael to raise your profile . . . I’ve always delivered for you guys in every way . . . this year alone is going to be off the charts . . . and it’s gotten lost in all this bullshit . . . and as I sit here thinking about what i’ve sacrificed this year to get the company thru a trying year . . . and getting thrown under the bus and treated like the help . . . it’s fucked up.”
Pascal was aghast at the accusations. “Of all the people in the world to think that I would want to take credit away from you . . . You just can’t possibly believe that,” she wrote back.
The fact was, Mosko had been stewing for years. Under his leadership, Sony’s television business had grown from a small division of the company that made less than half the profits of the motion picture business in fiscal 2002 to one that regularly outperformed movies in the 2010s, earning about twice as much by 2015. And yet he was clearly second banana in the Sony Pictures hierarchy. If Lynton and Pascal were the royal couple, he was a governor in a far-off land who provided most of the kingdom’s tax revenue and constantly grumbled about how justified he would be to revolt.
Mosko made little secret of his unhappiness, internally, throughout Hollywood, or, via surrogates, in the press. Among his biggest complaints:
Mosko’s title was president of Sony Pictures Television, while Pascal, who ran the less profitable film business, was co-chairman of the entire studio. Which meant that, technically, he reported to her, even though she, by her own admission, knew practically nothing about television and had almost no involvement in it.
At Michael Lynton’s senior executive meetings, Mosko was typically the only executive present from television, while several from the movie business, with big titles such as vice-chairman and president, got to sit alongside Pascal.
Because Sony lumped film and TV results together when reporting its earnings, there was no way to demonstrate just how big a part of the studio’s success he accounted for. The world, he felt, needed to know because then it would see how successful his team was and how unjustly he was being treated.
Nobody could accuse Steve Mosko of having a modest opinion of himself and his accomplishments. Or of being a gracious team player. But the growth of his business over a number of years, during which Sony’s movie unit kept struggling, was undeniable.
Television’s new ascendancy over film culturally and economically, after nearly a century during which the dynamic was the opposite, has caused tensions, anxiety, and resentments throughout the entertainment industry. That conflict was more acutely felt at Sony than at most of its competitors, though. It’s one of only two studios, along with Warner Bros., where TV shows and movies are made in the same business unit and report to the same boss. At other entertainment companies, the film and television operations were sufficiently separate to keep their conflicts more theoretical. At Sony and Warner, they were a day-to-day reality.
No matter where you look in Hollywood, though, it’s impossible to understand what has happened to movies in recent years without understanding what has happened to television at the same time.
Where the Real Money’s At
For those who pay attention to fiscal reports, it has long been obvious that television is a better business than movies. Networks, particularly cable ones, are far and away the most profitable parts of media conglomerates like Disney, Viacom, and NBCUniversal. At Time Warner, a single network, HBO, regularly earns more profits than
its entire Warner Bros. studio, despite generating about half as much revenue. HBO’s profit margin, financial-speak for the percentage of revenue that becomes profit rather than covering costs, is about 33 percent. Throughout most of modern history, movie studios have considered it a good year when their profit margins exceed 10 percent.
Nonetheless, film has long been the higher-profile, more prestigious business, while TV, the workhorse of the bottom line, never got respect. As far back as 2009, before the age of “peak TV,” television accounted for 32 percent of Warner’s revenue but 50 percent of its profits, thanks to hits like Friends, ER, and Two and a Half Men. But to the outside world, it was mostly known as the home of popular movie brands: Batman, The Matrix, and Harry Potter.
Studios produce television, just as they do movies, but they don’t actually air it. Instead, they sell it to networks or, more recently, to streaming services, which are looking for content. So while The Big Bang Theory plays on CBS, it is Warner that earns hundreds of millions of dollars of profits from selling the show—including new episodes to CBS and repeats to TBS, where it airs twenty-two times per week.
Some networks, like HBO, produce many of their own programs. But Sony doesn’t own any networks in the United States (save for a stake in GSN, formerly known as the Game Show Network), so all of its shows appear on channels owned by other companies. It gets little public acclaim for hits like Outlander on Starz or Masters of Sex on Showtime.