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Hollywood’s Diversity Problem: Change Needs to be Both Top-Down and Bottom-Up (Column)

For most of us in the business (whether we admit it or not), the findings in the recent USC Annenberg study documenting a lack of progress on diversity in the entertainment industry were no surprise.

For a smaller group of us who are people of color in front of or behind the camera, we were not stunned to read about a reality we live everyday in Hollywood that the report calls out as an “epidemic of invisibility.”

“Inclusion or Invisibility? Comprehensive Annenberg Report on Diversity in Entertainment” is cold rain on Hollywood’s recent parade of excitement, lip service and much-talk-but-no-action famously on display over the last few years around the topic of “inclusion”.
It should be no shock to anyone who works in the business that the same groups are underrepresented time and time again on the screen, in the writers’ room, in the director’s chair and in the executive ranks of the studios, networks and now – the premium streaming services that have rapidly become the new kids on the block.

The Annenberg study highlights the main reason I urge my clients (many of whom are people of color) to actively forge their own opportunities, curate their own brands and diversify across a variety of content platforms to create multiple streams of income as a strategy to achieve financial stability and sustainable careers. That’s important advice for any artist in today’s fragmented media landscape, but it’s a matter of professional life or death for women, minorities and members of the LGBTQ community.

How do we bust open the doors of opportunity so that the next Annenberg report reflects meaningful progress? Clearly, our current inclusion efforts aren’t working. Is the industry capable of making film, television and digital entertainment content that truly reflects the rich diversity of the American experience while also achieving its business goals? Are the executives who subjectively decide what content to green-light capable of working outside of their safe zones and taking risks on new creators and new talent? Are audiences capable of demanding more diversity from Hollywood by using their dollars to force real change?

The answer to each of these questions is yes, but it will require both a top-down and bottom-up transformation of the value proposition between Hollywood and its consumers.
At one time, the film industry was led proudly by individual visionaries who were all about creative risk-taking, innovation and entrepreneurism. Today, it is controlled by a few profit-driven mega-corporations that appear to have created an executive culture that is risk-averse, predictable and all too ready to say “no” to innovation, thinking outside the box or unknown talent.

Major distributors play it safe, relying on a homogenous, franchise-heavy, blockbuster-dependent content formula that’s not really working to move the inclusion needle forward, but has been great for the corporate balance sheet. At least somewhat. While 2018 box office has been strong, it comes on the heels of disappointing 2016 and 2017 results, and the industry faces significant future structural challenges.

Even after “Black Panther” destroyed decades of well-worn assumptions about movies featuring minority characters in lead roles, some in the industry are still slow to recognize it as a game-changer. One of the biggest films of 2018 and reportedly a major contributor to Disney’s financial bottom line, “Black Panther” —still running—is approaching $700 million in domestic box office, and an equally impressive $650 million internationally. This for a film many doubted would find a global audience.

The leading premium digital media companies such as Netflix and Amazon have rapidly risen to challenge traditional networks by effectively spending their way to the top, but they have also grown by hiring significant creative and executive talent from the traditional Hollywood studios and networks. This trend has begun to crack open the inclusion door by giving access to diverse shows like “Luke Cage” and “Orange is the New Black” on Netflix and “Transparent” on Amazon. However, it remains to be seen if this new class of media companies will have a lasting impact on the results of future diversity reports.

To truly break the cycle, studio executives must receive clear and convincing support from the top to actively seek out and build relationships with content creators, artists, producers and aspiring young executives who reflect their increasingly diverse audiences. There are plenty of them out there: talented women, minority and LGBTQ performers, directors, producers, writers and candidates for the executive ranks.

In the long run, the companies that embrace diversity will gain the creative and financial advantage. But that has been a tough sell in an industry that is quick to imitate success, eager to “chase the fire” or operate like a “heat seeking missile,” but slow to go out on a limb to be first. One fix to this epidemic is more diverse executive leadership at the vice president levels and higher.

It all boils down to access, which I often tell my clients is 80 percent of success in Hollywood. Hollywood has always been a town where the gatekeepers wield the power. Where those on the outside (no matter how talented) don’t get to play. To get your project made, your film picked up, your script produced, or even a job in the executive ranks, you need to know someone who can get you a fast introduction when opportunities arise or help you get your foot in the door.

Unfortunately, entertainment industry decision-makers operate today in a bubble of their own creation. The USC Report describes it as a “straight, White boy’s club.” People tend to do business with people they know and feel comfortable with. It’s human nature. It’s our reality. But, is it any wonder women, minorities and members of the LGBTQ community find it more difficult to break through or to even be heard? And will it ever change unless outside or new forces from the top become invested in busting the bubble to let new voices in?

According to the Annenberg study, just one in five board members, C-suite executives and executive management team members at major entertainment distributors are women. The study doesn’t provide the same breakdown for minority groups and the LBGTQ community, but in my experience, those numbers were probably too nonexistent to get on the report’s radar.

That must change. We can do better. Major studios, networks and Hollywood in general must take public steps to improve minority, female and LGBTQ participation at the highest levels. It will require taking bold chances on talent and executive candidates who might not at first glance fit the mold. There is no shortage of stories about non-diverse candidates with limited or no experience in Hollywood who get premium jobs, rare opportunities or are pushed up the proverbial ladder because of “who they know.” The well-worn excuse that there is a “lack of qualified diverse candidates” simply won’t cut it any longer.

Bringing in diverse high-level decision makers and their networks of contacts will open the doors to new, more diverse talent, and inevitably new revenue streams. True industry-wide change will only come when the executives leading the major content producers and distributors recognize that diversity is critical to their companies’ financial success and not a hollow statement to be worn like the latest lapel pin.

There is a way media consolidation may actually work in favor of inclusion. Film studios now account for a significantly smaller portion of parent companies’ overall balance sheets. In the second quarter of 2018, NBC Universal’s film and broadcast operations accounted for less than 19 percent of Comcast’s total revenues. The recently merged Time Warner has been reported to account for just 20 percent of its new parent company AT&T’s total revenues. With a more diverse revenue mix, media company executives have an opportunity to free-up their entertainment divisions to take more chances and spend more to boost new voices. Let’s see if they take advantage.

As a meaningful first step, Comcast and AT&T could challenge Hollywood to at least match the diversity numbers that have been achieved in the cable industry’s executive ranks. The 2017 NAMIC and WICT Industry Diversity Survey showed 23 percent of executive positions in the cable business were held by people of color, more than the 14 percent national average; while 38 percent of executives were women, higher than the national benchmark of 30 percent.

Is there a role for A-list artists in all of this? Inclusion riders have garnered plenty of attention recently, especially since the 2018 Academy Awards. Where artists wield the negotiating power to insist on diverse representation in their films, it certainly can’t hurt.

A-list actors, directors and producers are very influential players and opinion leaders who can have a major impact on diversity and inclusion. However, this class is fighting their own battles for survival in today’s rapidly changing business and it is not realistic to believe that they (or more accurately their agents, managers, attorneys or other representatives) will meaningfully advocate for changes by pushing Inclusion Riders over their own self-preservation.

In the end, the consumer wields the true, bottom-up power to compel the studios, networks and streaming services to make lasting changes.

Consumers have the right to entertainment that reflects the world they live in. They have the right to insist on it by voting with their feet and their dollars. There are some signs of this around the margins, but generally, it hasn’t happened in any widespread way, as it has in some other industries.

Ultimately, major studios, networks and streaming services should be forced by the consumer from the bottom-up and senior management from top-down to produce films, television and digital content with storylines that feature more women, minorities, LGBTQ and disabled characters. Studios should be compelled to hire more diverse corporate executives, producers and directors by consumers and top executives at these newly formed vertically integrated mega-corporations.

There should be public diversity scorecards for executives that impact their personal financial and career advancements or demotions.

The wise executive shouldn’t wait for this to happen. Throughout our industry’s storied history, successful business leaders, studios and networks boldly broke new ground. They didn’t sit back, ignore compelling fact-based research and wait to react to change. They embraced change, anticipated consumer needs and got out ahead of the competition. They took chances, led the industry and consumers rewarded them for it.

Consumers have already forced drastic changes in Hollywood by shifting when, how and where content is watched. Consumers have given life to streaming services that didn’t exist 15 years ago. Consumers have crushed the traditional fiefdoms of Hollywood and forced meaningful and rapid changes in every way, except in the area of diversity. This is a paradox we cannot continue to hide.

The same visionary leadership of yesterday is urgently needed on the issue of diversity and inclusion today.

Darrell D. Miller is a partner at Fox Rothschild in Los Angeles and serves as the chair of the Entertainment Law Department. With more than 20 years’ experience in entertainment law, Darrell focuses his practice on transactional law with an emphasis on the motion picture, television, music, theatre and multimedia industries.

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