Ken Ziffren Looks Back on a Year of Media Mayhem

Ken Ziffren Looks Back on Year
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As Hollywood attorneys go, there is Ken Ziffren … and then there is everybody else.

The man is more than a mere partner at Ziffren Brittenham LLP. He is an oracle capable of telling you which way the winds will blow in the media business before the weather vane starts spinning. And he knows because he and his colleagues are frequently in the room when decisions of high importance are made in the industry’s corridors of power.

So when he gives his annual presentation on the state of the business at the Beverly Hills Bar Association, as he did via Zoom on Monday, it’s a great opportunity to read the tea leaves on a broad assortment of industry subjects worth noting. Here’s a selection:

Network neutrality: FCC chairman Ajit Pai’s announcement Monday that he intends to step down on Jan. 20 struck Ziffren as a crucial moment toward determining what direction net neutrality is going after waffling in either direction over the past decade. The Trump administration seemed to be fine with letting internet service providers do what they want but Ziffren believes President-elect Biden will elect three Democrats to tilt the FCC in his direction and move to impose his will on ISPs, similar to the stance taken by the Obama administration.

“How this plays out is important as to whether companies — the ISPs in particular — will be investing in the infrastructure of television spectrum or whether it’s going to be optional for the ISPs in terms of investing, and whether that will be with stronger rules in place today or more regulation,” said Ziffren. “And that will be a big clarification, one hopes, of the back and forth that was going on before now.”

Guilds grey area: Two intersecting trends Ziffren took note of were (1) the radical shifts film distribution has been making during the pandemic, altering the typical sequence of windows movies followed in the past and (2) the progress the guilds had made in their negotiations with the talent agencies that still have a ways to go and will likely get settled in the courts. Though a big priority for the guilds is maximizing revenues its constituents make from their content on digital platforms, Ziffren points out a current lack of transparency on the revenue breakdown from the recent tide of films that studios steer to their own direct-to-consumer streaming hubs — i.e., Disney+. “The mystery to me is what metrics are going to apply when the feature is on in-house subscription or AVOD, a matter of great interest to the guilds and individual backend participants,” he observed. “This was unfortunately a crucial subject that was not covered in the guild negotiations, so we’ll have to wait for two and a half years to see if that’s going to get resolved at the guild levels.”

Cinema pessimism: Ziffren didn’t mince words on how grim his outlook was for the domestic movie business at a time when the exhibition businesses has been badly damaged by the pandemic. He forecast that the global box office is likely to decrease by at least 70% compared with 2020, and by as much as 80% in the U.S. even in a scenario with a better-than-expected Christmas season. “It isn’t too hard to figure out that in the absence of legislation, there will be a major reduction — at least 20%, I think — in the number of theater venues in the U.S.” Ziffren forecast. “I don’t think we can predict an upside to theatergoing for a long, long time.”

TV’s Achilles’ heel: Analyzing the many signs of decline being experienced by the TV business is under right now, Ziffren zeroed in on an important indicator to keep an eye on that few take notice of these days: retransmission and reverse transmission revenues. While he marveled at how a revenue stream that was zilch a decade ago has mushroomed into a $12.2 billion business today, he noted with concern that  both retrans streams barely grew 2% versus 2019 after 20-30% annual increases years ago. ”Station and cable channel owners are in for rough times,” said Ziffren. “What will become of the broadcast networks over this decade when retransmission and reverse retransmission are barely making cost-of-living increases, and yet they’re going to be close to 40% of the profitability of any of the networks?”