THB #727: Hollywood & Racism, The $10 Billion Question

I was sitting in the homestead, minding my business, when some kind of communication reminding me that Richard Rushfield was doing a live thing with Franklin Leonard. I think Franklin is smart. A hustler. But I’m good with that. He turns a bit abusive when his ideas are challenged. And I am not one to roll over when someone makes claims that seem unreasonable.

One of Franklin favorite tunes is the $10 billion the industry is throwing away by not be more focused on raising and supporting Black cinema. I agree with him in the cause. But I don’t accept all his details. Especially the $10 billion claim, which is so simplistic and fantastical that it defies serious discussion.

So after listening to him sell the spin yet again yesterday (I would happily link, but there is none available yet), I am going to the source, McKinsey.

Here is the top line of their 2021 epic, Black representation in film and TV: The challenges and impact of increasing diversity

Our findings, which build on and corroborate McKinsey’s recent research on the Black experience in corporate America, include the following:

By addressing the persistent racial inequities, the industry could reap an additional $10 billion in annual revenues—about 7 percent more than the assessed baseline of $148 billion. (Based on 2019 industry revenues of $148 billion, which includes US-produced global theatrical box office, US streaming services, US cable, and US broadcast; excludes sports and unscripted programming.) Fewer Black-led stories get told, and when they are, these projects have been consistently underfunded and undervalued, despite often earning higher relative returns than other properties.

The handful of Black creatives who are in prominent off-screen, “above the line” positions (that is, creator, producer, writer, or director) find themselves primarily responsible for providing opportunities for other Black off-screen talent. Unless at least one senior member of a production is Black, Black talent is largely shut out of those critical roles.

Emerging Black actors receive significantly fewer chances early in their careers to make their mark in leading roles, compared with white actors, and they have a lower margin for error.

Both film and TV still have very little minority representation among top management and boards; film in particular is less diverse than relatively homogenous sectors such as energy, finance, and transport.

A complex, interdependent value chain filled with dozens of hidden barriers and other pain points reinforces the racial status quo in the industry. Based on our research, we catalogued close to 40 specific pain points that Black professionals in film and TV regularly encounter as they attempt to build their careers.

268 words in a document of more than 5000 words… and I basically agree or don’t disagree with it… with all but 28 words of those 268.

By addressing the persistent racial inequities, the industry could reap an additional $10 billion in annual revenues—about 7 percent more than the assessed baseline of $148 billion.

This notion is intriguing… it was intriguing when the report came out. It remains intriguing. It is repeated and emphasized throughout the report as though it was a fact.

The problem is, it is not a fact. Not even close.

It is a guess. And it’s not even a guess based on any realistic foundation.

As best as I can figure, from the report itself, the $10 billion figure comes from the idea that the Black American population is 13%, that there is a roughly 6% penetration of Black talent in film and television in front the camera, and this leaves 7% of potential improvement, which based on 2019’s total industry revenues would be approximately $10 billion.

Four years later, we have Franklin Leonard on Richard Rushfield’s podcast suggesting that people in the industry should be fired - he’s always careful not to be specific about who - because they are not making the adjustments suggested in this McKinsey report.

In his conversation with Rushfield, Leonard reports that no one ever contradicts him when he brings this number up in meetings.

This, too, does not make it a fact.

It makes people who talk to Franklin either friendlies who also believe in the mythology of the McKinsey report or people who are smart enough to protect themselves by not engaging in a serious conversation about the $10 billion fallacy.

But before I get firebombed, let’s deal with something other than race… a kind of movie that is also not being made for theaters these days. The Comedy.

In 2015 (10 years ago, chosen with the intention of being random), there were 11 American-made non-animated comedies that grossed over $100 million at the worldwide box office and totaled just over $2 billion in revenue. 6 of them were even “originals”

In 2024, there were really 0 comedies that grossed $100 million worldwide. And if you stretch the outside of the notion of a comedy, you could claim there were 4.

Of course, all 4 of these 2024 films were sequels or spin-offs and looking at the 2015 list, you could make a comp with Pixels as being as much action as one of 2024’s films. Kinda. But none of this year’s films are really Straight Comedies, relying on a central performance of a comedian or comedians to drive the movies and box office.

How the hell did this happen? Why aren’t studio executives being fired for not making comedies for theatrical release? Straight comedies, not action movie with comedy in them, were more than 5% of the industry and probably more than 15% of the profitability. Aside from Pixels, which was wildly expensive and perhaps the only movie in the 11 that didn’t make a significant profit, the most expensive of these comedies was a reported $60 million for Daddy’s Home, accommodating the salaries of both Farrell and Mark Wahlberg.

Cut To 2025: Adam Sandler is at Netflix. Will Ferrell hasn’t made a major studio comedy in 7 years, since Holmes and Watson. Melissa McCarthy hasn’t made a major studio comedy in 7 years, since Life of the Party. Amy Schumer hasn’t made a major studio comedy in 7 years, since I Feel Pretty. Even Kevin Hart, the most ubiquitous of stand-up movie stars, hasn’t made a major studio comedy in 7 years, since Night School… and even Jumanji 2 is now 6 years in the rear view.

And don’t even get me started on Eddie Murphy, who was once one of the kings of the box office and more importantly, profitability, making mostly Straight Comedies, who hasn’t made a major studio comedy in 14 years, since Tower Heist.

What excuse are studios making to themselves about not making Straight Comedies for theatrical anymore? “Well, if they aren’t coming out to see Jennifer Lawrence beg to get screwed by a teenage boy, stripping naked on a beach and doing cartwheels, what the hell are they going to come out to see? Comedies must be dead.”

Do you know what the #1 theatrical Straight Comedy was last year? Fly Me To The Moon. And it performed so much below expectations that it closed the door on theatrical for Apple for almost everything else they were making.

The biggest Straight Comedy hit in years was 2023’s Anyone But You, which managed $220 million worldwide, made a ton of profit, and resulted in… nothing else happening.

This year, the only Straight Comedy released by a major has been One of Them Days, which was born from a deal Sony made with Issa Rae and was co-funded by the production/distribution major… though they only took US distribution. The marketing budget was too small, in my opinion, and they were not aggressive about the release… and it still did $52 million against its $14 million reported budget. Had the studio believed in the film more - and the sequel’s been greenlit - it could have doubled that number.

And now… back to the discussion of race and theatrical releases, particularly internationally. (Are you sensing the connection… good!) Speaking to Franklin Leonard’s arguments, many of which I agree with, One of Them Days had spotty international distribution, not via Sony, and less than $2 million of its gross came from overseas. That is absolutely not on the film itself.

But then we - not always Franklin - have to deal with the reality of American comedies doing business internationally.

Going back to 2015, when 11 Straight Comedies grossed over $100 million each. The percentage of revenue for those films was 42% international. But for the Top 189 other movies in the Top 200 Worldwide that year, the percentage was 71% international.

Moreover, the 3 films of the comedy group that were under 30% international were Get Hard (19%), Trainwreck (22%), and Ride Along 2 (27%). Amy Schumer had no profile internationally. And the other 2 films, even with support from Ice Cube and Will Ferrell, both starred Kevin Hart.

Kevin’s Hart’s Box Office History of Straight Comedies

Think Like A Man - $4m vs $92 domestic
Ride Along - $19m vs $135 domestic
Think Like A Man Too - $5m vs $65 domestic
The Wedding Ringer - $16m vs $64 domestic
Get Hard - $22m vs $90m domestic
Ride Along 2 - $34m vs $91m domestic
Central Intelligence - $90m vs $127m domestic
Night School - $26m vs $77m domestic

What’s the one standout on the list? Central Intelligence. What made that unique. The Rock, who had the film in the center of a sandwich of Furious 7 ($1.2 billion international), San Andreas ($320 million international, 67%), Moana ($396m international, 61%) and The Fate of the Furious ($1 billion international). For Dwayne, Central Intelligence was an international disappointment, though it built his comedy cred with studios.

Arguing hypotheticals makes for endless arguments. No one can prove a hypothetical. And the smart guys at Sony reteamed Dwayne and Kevin, along with Jack Black, for the Jumanji franchise reboot and got 2 $800 million+ movies that were international positive… but just barely. 58% and 60%. And these were action movies as much as comedies.

I don’t know how to have the discussion with Franklin calmly and based on facts when his response to all this is will be, more likely than not, “Well, these numbers are a result of the studios not trying hard enough internationally because they are still stuck on the old tropes that Black films don’t play internationally.”

From The McKinsey Report

Okay. Wow. I don’t know from where McKinsey pulled the market count stat from. The stat itself is more than a little weird. Also, Mojo and related platforms are worthless in these kind of research claims, so I dearly hope those sites were not used as resources for claims about things like the number of markets.

In the sidebar, McKinsey offers, broadly, “we leveraged extensive film and TV data, including such sources as Variety Insight by Variety Business Intelligence, to draw additional conclusions and to size the business opportunity for increased diversity.”

All I can say about that is… yikes!!!

Moreover, some stats are not the same… like 2019’s Shaft sold international distribution to Netflix, meaning there was no international box office as such, and part of the agreement was to put it on Netflix domestically after 2 weeks, killing the theatrical run here. Did the McKinsey report count that as a Black-led film with 80 to 100 fewer markets? Likely so. Is that honest? Not really.

Netflix apparently paid about $20 million (maybe more) against the reported $35 million budget of the film, which given marketing expenses, was apparently more than Paramount expected to net internationally. And for the record, the 2000 Shaft with Samuel L. Jackson did $37 million internationally. That’s roughly $18 million coming back to the studio minus $20 million or so for marketing, making the international effort a loss or if the marketing was less, breakeven. Thus Paramount’s skittishness.

But this is a side story.

This is what I can tell you in the affirmative. 5 movies with Black leads in 2019 did just about or more than 2/3 of their business internationally. 2 of them (Gemini Man and Men in Black: International) did poorly domestically, twisting the percentage of international, where Will Smith in the former and a very well established franchise in the the latter took them to decent, but also pretty underwhelming numbers. The strongest by percentage internationally was Hobbs & Shaw, attached to the Fast & Furious franchise, starring Dwayne Johnson. Pikachu was the real star of Pokémon: Detective Pikachu, but new Academy member Justice Smith was the human lead and the film did well overseas. And Will Smith as the blue genie in Aladdin had the biggest numbers, though in terms of percentage, it was just under 2/3 with 66.2% international.

I don’t think McKinsey has any complaints about the distribution or marketing of those movies. And probably not Jumani: The Next Level, at $802 million and 60% international (or Glass or the animated Will Smith-led Spies in Disguise).

I have to assume they are basing their stat on the 8 Black-led movies that did under 1/3 of their business internationally (and perhaps others that grossed under $20 million worldwide that I am not fussing with).

By far, the biggest of these films was US, the Jordan Peele movie that, amazingly, did almost exactly as much as the surprise smash Get Out did 2 years before. US appears to have been released to a few more international markets than its predecessor. 2022’s Nope didn’t open as well as US and did about a third less business internationally than its 3 predecessors.

So here is my question… does McKinsey think that Universal did less for Nope (which by the way, leaned hard on a western U.S. theme) than it did for the first 2 Jordan Peele movies, in spirit or dollars? I do not.

The other 6 movies… 2 comedies… 1 American civil rights drama… a Blumhouse horror movie being sequeled this year… a remake of a French worldwide smash hit that did almost no U.S. business and conversely did little international business… and a roadtrip drama from a first time director with 2 black leads, 1 of them the star of Get Out and the other a first-timer model turned actress.

I don’t know any inside details about Queen & Slim, but it is the only one of those 6 movies that I can see being argued to being undersupported. It looks like it had minimal distribution outside of Europe… no signs of a Japanese release, for instance. But I don’t completely trust my limited resources on this.

The other problem? Universal didn’t make Queen & Slim, as best I can tell. It was an output deal. So they made money. And the funders, it seems, made money. If the film truly cost $18 million and grossed $48 million worldwide, the film is in black ink (officially or not).

Unless the facts are wrong, Queen & Slim was a win for Black Cinema. It may not have played as many international markets. It may not have gotten a giant marketing spend in the US and the UK, amongst other countries. But it made money. Jodie Turner-Smith has an acting career, Daniel Kaluuya has an Oscar, most of the 20 producers seem to be doing well…

This is one of the problems with trying to simplify big problems… it’s ain’t so simple.

Getting back to the McKinsey’s report… it goes on to offer exhibits…

And I agree with all of these in principle. The numbers have changed a little for the better over the last 4 years, but only a little. The report actually tells us that on-screen, things are pretty much along the lines of the US population… even though no one has ever made and distributed content aiming at a specific percentage,

The next section is Barriers To Entry and it bounces between 100% reasonable but makes some reaches that mistakenly, in my opinion, present core issues with the industry that are not specific to race (or gender, btw) as though they were not industry-universal. Some of the claims actually present as almost-racist, like the idea that Black kids don’t have the wherewithal to stumble through the first years of a career but others do.

McKinsey research has shown that there is a wide and persistent gap in wealth between Black and white families in the United States, with the median Black family having about $150,000 less than the median white family. The result: low or no pay excludes many Black Americans from Hollywood from the start. Work in the industry also tends to be temporary and contract based, making it less accessible to those who do not have personal savings, an inheritance, or family money to fall back on.

To start with, it’s not just Black and White. This is a built-in problem with the entire study. The country is at least 20% Hispanic (for lack of a more universally accepted term) and the boundaries that McKinsey examines are much, much more dramatic on every level, in terms of Hollywood, for Hispanics than for Blacks. But I don’t want to digress.

What does McKinsey offer as the corrective to this national wealth gap? It really doesn’t have a direct suggestion. But it does suggest targeting percentages (quotas), recruiting more widely (not at film schools, I guess), and paying people better early in their careers. That last one seems like some good Bernie thinking.

But the other things… does McKinsey think they are recruiting rich kids in Beverly Hills? Going to USC or UCLA is a foot further in the door than all but a couple other film schools in America…. and money (and rowing) may well be a factor in who attends those schools. But this is not a choice that the industry is making without purpose. Getting to and through those schools is a purposeful barrier. Sorry.

Barry Jenkins went to Florida State Film School in 1998. He left school with an award-winning short and a group of filmmaking partners he still works with. He got himself to Telluride, volunteering and within a few years, becoming a manager and presenter at their festival showings. He got himself on the set of a movie Oprah produced. He worked his ass off. And in less than 5 years, he made his first feature, Medicine for Melancholy, which got him awards and notice. He kept hustling and made shorts for the 7 years before he finally made Moonlight in 2015, releasing it in 2016, putting him on the A-list.

It’s a high mountain and a long climb, even for the best of them. And Barry is at the highest level, as a filmmaker and as a human being.

And yeah, some people get an easier path. That isn’t so fair. But those express pass holders are in a small minority, not the majority.

I have been talking about seeding the industry for decades. For me, too many of these conversations are about what is happening at the top instead of in the middle, where any group looking to rise has to be to get to the top. Smaller jobs lead to larger jobs… bit by bit… over time. (I think the McKinsey report actually supports this.)

Personally, if I was hiring and 2 candidates were - and this is all kinda magical thinking - 50/50 or even 55/45, I would lean to the person who had a harder road to the job. I don’t think that is wrong… though those choices are always brutal, even if the imagination leads to a lot of people assuming there are a lot of people in Hollywood leaning back in their chair, not looking up from their Wall Street Journal, and sneering, “I’ll take the white guy!”

Of course, we went a lot of decades with, “I’ll take the white guy!” I am not pretending otherwise for a second. But we live in the now, not the past… like it or not.

The next to last section is Ongoing Challenges and this too is filled with mostly truths and some reaches when it comes to being specific to Blacks trying to break in and have a career in the industry.

Sub-heads…
Getting fewer at bats
Stereotyped and set apart
Undervalued and held back
Unsupported and passed over
Quick to be cut

Yeah… I hear you. But I also hear 95% of people in the industry saying all of those. Even, amazingly enough, I hear it from a lot of the most successful among us.

I’m not suggesting for a moment that it is more difficult for anyone who isn’t a white male. That is the history. And even as white males have felt pressured in recent years, I agree that we not only earned the pressure, but that it is less intense and less constant than we have made it for others forever.

But as they say at Swinger’s - at least when Drew Carey isn’t picking up checks - “Ass, Cash or Grass… everyone pays.”

How many times have each of us been asked, “How do I break into this business?” And how many times have we restrained ourselves from saying, “You don’t. Stop making your parents cry. Get on a plane, go back home, and get a real fucking job!”

I’ll tell you my welcome to Hollywood story. I was incredibly lucky. I had a very close friend of a close relative who got me into the one of the guys running Paramount TV back in the late 1980s. “What do you want to do?” How the hell did I know? I wanted to flip from TV, which I was doing in NY, to movies. But I had the access to the TV guy. My answer, that I hope I didn’t say out loud, was “run the world,” of course.

I was an idiot kid… a very smart, well educated idiot kid with years of experience in theater and TV… but an idiot kid nonetheless. If I knew what I was doing, for real, I would have bowed my head and offered to kiss his ass. But I thought I knew too much and I understood too little.

It’s been a really interesting ride since. I’ve been very lucky and worked my ass off for most of these years. But if I had found a place inside when all I needed was a little humility and perspective, I would probably be running a studio by now (or have run a studio by now). I’m not unhappy… but I do wonder what I could have done sometimes.

I guess my point is that we all have very different journeys. Judging the road that people took is dangerous. Judging is dangerous. Seeing yourself as too small is, in my view, as dangerous as seeing yourself as too big.

Of course, none of this means that woman, people of color, people who have accents and looks from where they started, and others unnamed are not at a greater disadvantage than I have ever suffered, even as I grow into a group that is enormously discriminated against, the aged.

But that doesn’t mean I haven’t suffered.

And it doesn’t mean I have.

Measuring the impositions of the world on each of us and comparing them like baseball stats is, to my eye, insane.

Which brings us to this really, really good chart. They should hand this out at LAX to every person coming to make it in show business…

from the McKinsey report

The problem is, however, that with 3 exceptions, this chart isn’t really specific to the Black experience of Hollywood. The 3 exceptions, in my view:

1. Pitches from Black talent generate lower rates

2. Black creators lack networks and sponsorship to build out team and secure effective funding

3. Lack of critical mass of Black crew creates blind spots and less accommodating work spaces

And honestly, in the last 6 years of very high industry awareness of inclusion, I don’t know that all 3 of these still apply to a degree significantly higher than for non-Blacks.

But take the word “Black” out of it entirely and it explains how hard this thing is exceptionally well.

Finally, the report focuses on Changing The Industry.

1. Ensure diverse representation, especially among off-screen talent and executives

2. Increase transparency and accountability

3. Seek and financially support a wide range of Black stories

4. Create an independent organization to promote diversity

Yeah! Except for the diversity police, I am down with all of these.

Of course, these are lovely ideas. The white devil is in the details.

How do you “ensure” diverse representation? Quotas? Dangerous.

Suddenly, in the report, McKinsey is worried about the 40% of the population that isn’t lily white getting theirs too. “Matching the share of the US population that is Black (13.4 percent) and nonwhite (40 percent) would seem a logical place to start.”

Ambitious. So ambitious, considering The Academy isn’t even 20% non-white amongst its American membership.

Transparency in show business… funny.

Seek and financially support a wide range of stories, including those that are Black and Hispanic and Female, etc. Yay!

Create an independent organi… oy.

“To effect genuine, sustainable change, industry leaders should strongly consider creating a dedicated, independent advocacy organization to advance racial equity in their field—a move that has proven successful in a number of other contexts.”

No, thanks. You start one of those and everyone’s gonna want one… and many will deserve them equally.

We have enough organizations. Maybe we can work on getting those to put their collective thumb on the scale more honestly, huh?

I think the McKinsey report is of value. I think that Franklin Leonard’s advocacy is of great value and to be admired. I believe that DEI - like all things, in moderation - is challenging and absolutely necessary. I believe that more diversity will make the industry better and stronger… and probably not change the output nearly as much as we like to imagine.

But the $10 Billion thing… it’s a con. McKinsey and Franklin (who apparently used to work at McKinsey) talk about this like it’s putting gas in a car that’s empty. But it’s more like going to the gym, hoping it will get you laid. It’s possible. But you probably need to get some game to go with the muscles. And even then, the road is filled with the unknown.

There is no question to me… being more inclusive is right. And better. And better for business in general.

Regardless, this industry will still be cruelly competitive, unfair, mean-spirited, unexpected, thrilling, scary, and joyous week after week, year after year, decade after decade. Welcome all.

Until tomorrow…