In The Financial Fine Print, A Glimpse Of Fragile Oscar Economics

Michael Cieply
·3 min read

The really interesting stuff is always in the fine print, especially when it comes to the Academy of Motion Picture Arts and Sciences financials.

When the latest numbers popped up in a bond disclosure statement on Christmas Eve, it was easy to brush past the footnotes. But Note 1 on Page 6, as it turns out, contains an intriguing clue about the fragile economics of the Oscar show, which historically has accounted for about 80 percent of the Academy’s income (with most of the rest coming from investments, plus a separate fund-raising campaign for the Academy Museum).

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Note 1 tells us that in the fiscal year ended June 30, 2020, long-term contractual guarantees for the Oscar show—mostly, the ABC domestic television contract and a Buena Vista contract for international distribution—accounted for 95 percent of some $131.9 million in Academy Awards-related revenue for the year, or about $125.3 million. The remaining $6 million-plus will have come from odds and ends like ticket sales, red carpet access fees, mailing fees, and anything else that can turn a buck on the ceremony.

But in the fiscal year ended June 30, 2019, the long-term contractual guarantees contributed 97 percent of about $131.1 million in Awards-related revenue, or about $127.2 million. Again, the balance will have come from ticket sales and such.

So, while Oscar revenue rose slightly last year, income from the guarantees—worldwide television, and perhaps about $2.65 million from a licensing agreement with the owners of a hotel and retail center adjoining the Dolby theater—actually fell by about 1.5 percent. That matches a 1.5 percent decline in worldwide television revenue, to $122.1 million in 2019 from $123.9 million in 2018, as reported in an earlier bond filing.

As the ratings drop, air has slowly been leaking from the financial bag. In 2019, the decline came principally from a drop in domestic television payments, which fell about 2 percent, to $109.2 million from $107.1 million the year before. International revenue, which totaled only about $15 million in 2019, wasn’t growing quickly enough to offset the domestic decline, and it looks like the situation last year—even with the Korean-language Parasite win—remained pretty much the same.

This doesn’t portend a collapse. The Academy, thanks to fund-raising and its bond sales, has a substantial investment portfolio that was valued at $635.3 million on June 30, when the last report was dated.

But it does mean that the next show, delayed by the pandemic until April 25, is playing from weakness. With just 23.6 million viewers, a record low, the last broadcast didn’t lay much of a base for the next. Given the late date, a crop of relatively small and indie- or streaming-oriented contenders will have to sustain interest for two full months after the Golden Globes deal with most of them on Feb. 28. The television folks, whose contribution has been down or essentially static in each of the past two years, will have to figure out what could possibly make this year worth more. All that, and some of those financial patches—the ticket sales, or the hotel/retail license at the Dolby—could be in trouble if the virus, as seems likely, persists.

As usual, it’s all in the fine print.

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