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Coronavirus Could Be A $12 Billion Hit To Entertainment And Audiences May Never Be The Same

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They’re all closed.

Movie Theaters. Bars. Nightclubs. Arenas. Cafes. In New York, Broadway and museums are shuttered. In San Francisco it’s even more dire. Across the country and the world, cities are shutting down, leaving humans from Seattle to Shanghai without traditional ways of finding distraction.

The mandate for social distancing that has proven essential at slowing the spread of the coronavirus will cut about $12 billion of entertainment revenue from the U.S. if the shutdown lasts until July, as President Trump signaled. Billions more are not being spent on creating new content as film and television production is frozen. 

Things could get a lot worse.

“This is definitely unprecedented and turning everyone’s lives completely upside down,” says Ryan Borba, managing editor at concert tracker Pollstar.

The concert and live event industry brought in $34 billion last year, according to market research firm IBISWorld. Simple math suggests that a three-month shutdown at this time of year could cost that industry $7 billion of lost revenue. Any longer and it starts to cut into the popular summer concert season, which for LiveNation, the world’s biggest concert promoter, is when 70% of its attendance begins passing through the turnstiles. That’s bad news for the producers, songwriters, technicians and the 269,025 concert employees, including janitors, security personnel and ticket collectors. That’s not to mention the world’s top-earning musicians, all of whom make the majority of their money performing. 

“We’re beginning to see it affect the entire music ecosystem,” one prominent artist manager who told Forbes on the condition of anonymity. “We’re getting calls from our agents about promoters canceling individual shows. Songwriters and producers have canceled flights into L.A. for sessions, so it’s starting to trickle down to the songwriting and production communities as well.”

On New York’s Broadway, where all 41 theaters are closed, the hit could be about $600 million, based on the amount they pulled in between mid March and July of 2019. During the 2016-2017 season, those theaters also supported more than 87,000 jobs and contributed $12.63 billion to New York City’s economy, according to Broadway League.

The effect on movie theaters is far more drastic. A complete shutdown across the U.S. will mean a $4 billion hit on the box office if they remain closed until July. On March 18, less than a month into the crisis, the national association of theater owner requested a bailout from the government.

“From the point of view of studios they are hemorrhaging money on the movie side,” says Mike Bloxham the senior vice president of global media and entertainment at research firm Magid. “There is a lot of money disappearing in China while 70,000 theaters are still closed.”

Once they do reopen, distributors will begin battling to squeeze a large number of films into a limited number of opening dates, including some major releases that include the latest James Bond movie, Disney’s Mulan and Marvel’s Black Widow, all of which have been pushed back.

“No one can precisely predict when public life will return to normal, but it will return,” Patrick Corcoran, the president of the National Association of Theater Owners, said in a statement on Match 17. “When those titles are rescheduled, they will make for an even fuller slate of offerings than normal as they are slotted into an already robust release schedule later in the year.”

Last year, entertainment companies spent $121 billion to create original content and they were expected to spend even more this year as new platforms, like short-form video platform Quibi, emerge and streaming giants like Netflix and Amazon Prime continue to plow through cash to produce new shows that lure in subscribers. Disney, Netflix, Universal and a number of other studios have all but shut down U.S. production. In California alone, that activity supported more than 722,000 jobs and $68 billion in wages, according to the Motion Picture Association of America. In New York City, television and film production support about 10% of total employment, whether directly or indirectly, and generates almost $9 billion each year.

“Right now, we’re working to keep everyone safe, support the industry and find ways to help it come back stronger than ever,” a spokesperson for Mayor’s Office of Media and Entertainment said.

The sentiment mirrored that of Colleen Bell, the executive director of California’s Film Commission who said, “The entertainment production industry in California has overcome challenges in the past, and it will endure this sudden shutdown. Until the COVID-19 situation improves, the focus is rightfully on the public health crisis. After that’s behind us, the industry will once again thrive here in the Golden State.”

While those logistics will reverberate widely across show business sectors, consumers may be in for even bigger, long-lasting changes. 

For TV shows, the near-term effects could be disappointing for fans looking forward to fresh episodes of their favorite shows. FX’s Fargo has shut down production and will have to delay new episodes. More series are sure to follow. Streamers have already changed the way we watch TV—introducing binge-watching and slowly eliminating cable subscriptions—and the more that cable and broadcast series are delayed, the more likely we will continue to move away from the appointment viewing of television’s past.

In film, a far more dramatic shift just happened: consumers may no longer need to fight crowds at movie theaters on opening nights. Universal Studios announced Monday that it would begin releasing films like Invisible Man, Emma and The Hunt available for in-home, on-demand rentals despite the fact that these films were only recently released, blowing up the entrenched windowing schedule that gave theater chains exclusive rights to show movies first before they were released to in-flight entertainment, rental platforms and then television. Sony followed, releasing Vin Diesel’s Bloodshot for digital purchase only 11 days after its theatrical release.

Others will likely do same and if they do, it could lead the Academy of Motion Picture Arts and Sciences to change their theatrical-release rule, which only allows films that open in a theatre and stay there for seven days to be considered for Oscars. It may also prompt Netflix to tighten its grip on the entertainment business with the purchase of a theater chain of its own. In 2018, the streaming giant looked at buying Landmark Theatres, but Cohen Media Group beat Netflix to the arthouse chain.

“If this continues for a long time, that will cause a change in how we consume content and allow newer titles to get to home video much faster,” says Asaf Ashkenazi, the COO of Verimatrix, a technology company that works with distributors in Hollywood. “If it’s a new title, you can delay it, continue to follow the traditional system and just wait. Or you can be more experimental and go directly to selling or renting online, which will allow more people to access it and get the revenue now.“ 

Other businesses are also turning to streaming, including concert-streamer StageIt. The startup, which offers concerts from the likes of Jon Bon Jovi and Sara Bareilles, is on track to have revenue of $250,000 this week—about the same as its best month until now—and added 10,000 subscribers in two days while hosting virtual festival “Shut In & Sing.” Even New York’s Metropolitan Opera is in on it, streaming nightly performances.

The stars themselves are also shifting their approach to how they entertain and communicate with fans. “Together, at Home,” a new series of online concerts presented by the World Health Organization (WHO) and Global Citizen, has recruited Chris Martin and John Legend to give casual concerts from their living rooms via Instagram Live, taking requests from fans and singing songs like David Bowie’s “Life on Mars.” Using Instagram, pop star Lizzo led a meditation, Frozen’s Josh Gad read kids a story, and, on Twitter, Yo-Yo Ma played a “song of comfort.” Entertainers have already fully embraced this kind of direct connection with fans and the pandemic may only accelerate that.

Madeline Berg, Forbes Staff, Media

Billionaires

How The Billionaire Behind The Movie ‘Contagion’ Is Working To Stop This Pandemic—And The Next One

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Producer Jeff Skoll attends a special screening Q&A of 'An Inconvenient Sequel: Truth to Power' at The Cinerama Dome on July 27, 2017 in Los Angeles, California. (Photo by Frazer Harrison/Getty Images for Paramount Pictures)

Jeff Skoll has been funding pandemic preparedness for more than a decade, even longer than Bill Gates. In recent months, he’s increased his philanthropic giving to help combat Covid-19.

Nine years ago, Jeff Skoll’s film company Participant Media partnered with Warner Brothers to put out Contagion, a movie about a global pandemic that started with a virus from a bat. An American businesswoman (played by Gwyneth Paltrow) came home from a trip to China and unknowingly spread a novel, and at times, deadly disease. While many viewed the film as pure science fiction, Skoll had ulterior motives. He hoped the movie would help build support for funding the U.S. Centers for Disease Control and Prevention and also warn the world about the potential dangers of a global pandemic.

Skoll, 55, became a billionaire just over two decades ago as a result of stock he received as eBay’s first president. He left eBay in 2001 and has since co-produced more than 100 films and TV programs, all with socially relevant themes including the climate change documentary An Inconvenient Truth featuring Al Gore, factory farming documentary Food Inc., the miniseries When They See Us and the 2016 Academy Award best picture winner Spotlight, about The Boston Globe’s investigations into child sexual abuse by Catholic priests. 

While his impassioned film-making pretty much ground to a halt temporarily with California’s shelter-in-place orders, his 2011 movie Contagion has become the must watch-at-home hit of the pandemic—it’s the number one selling title to date this year, according to Warner Brothers, the distributor. (It won’t disclose the number of times it’s been rented or sold.) In late March, Participant, Contagion screenwriter Scott Z. Burns and director Steven Soderbergh worked with Matt Damon, Kate Winslet, Laurence Fishburne and other cast members to produce public service announcements about washing your hands and staying home.

Beyond backing a movie about a pandemic, Skoll has been funding pandemic preparedness and prevention since 2009 — six years before Bill Gates’ now well known TED talk warning about them — through the Skoll Global Threats Fund, to which he pledged $100 million. (The other threats: climate change, water scarcity, nuclear weapons and conflict in the Middle East.)

Since the start of this year, Skoll has contributed an additional $200 million to his charitable foundation—$100 million of which was announced in late April and will go toward fighting Covid-19. He put the other $100 million in earlier this year, he tells Forbes, adding that he hadn’t bothered to publicize it. “I don’t see this as a money squirt,” Skoll explains. “This is a resource allocation to an area we know well. And this is an emergency.”

Newly bulked up, the Skoll Foundation promised to quadruple its grantmaking this year to $200 million. New beneficiaries in 2020 include some of the poorest folks in Los Angeles and the contact tracing program being launched across California.“This is the rainy day we’ve all been saving for,” Skoll says of his charitable giving. “If not now, when?” 

He’s been working up to 20 hours a day in his kitchen in Beverly Hills — on a call in early June, he jokes that it’s his “command center,” equipped with a couple of iPads, a MacBook and some bluetooth devices — talking to people around the globe, taking the pulse of the pandemic and searching out individuals, organizations and companies with new ideas. “Just the science, the learnings of the virus — almost every day there’s some revelation that we didn’t know,” says Skoll.  

The pandemics research that Skoll started funding through the Skoll Global Threats Fund spun off into a nonprofit called Ending Pandemics in January 2018, with a seed grant from Skoll. “It’s all about early detection and rapid response,” says Ending Pandemics President Dr. Mark Smolinski.


Skoll has been funding pandemic preparedness and prevention since 2009 — six years before Bill Gates’ TED talk warning about them — through the Skoll Global Threats Fund, which he spun off into Ending Pandemics in 2018.


Skoll got wind of the novel coronavirus early on, back in December —where it started. “We had colleagues on the ground in Wuhan. We had an idea that a zoonotic disease had jumped to humans,” he says. By January he and his team began to be concerned about countries with trade ties to China — particularly in Africa, where some of the social entrepreneurs that the Skoll Foundation has supported are operating. 

In early February, the Skoll Foundation made its first Covid-19 related grant: $3 million to the African Field Epidemiology Network, a group working with the African Centres for Disease Control and Prevention (the Africa CDC) to help coordinate African countries’ response and to boost surveillance and detection. The Bill & Melinda Gates Foundation donated to the same group around the same time. Beginning with those two grants, says Africa CDC Director Dr. John Nkengasong, “we were able to rally rapid responders to Addis Ababa [for training] and send them to Nigeria and Cameroon. We were able to scale up diagnostics.” Funding from others then followed, including the MasterCard foundation, Germany, Sweden, the U.K. and the U.S.  

In  March  it made a grant to the Southern African Center for Infectious Disease Surveillance Foundation (SACIDS) and a similar group in East Africa. One outcome: Mozambique, which had the infrastructure to test for Covid-19 but limited money to buy tests, got the needed funds and ramped up testing four-fold, according to Smolinski. 

The Skoll foundation’s next move was to quickly create a fund for both its current and past grantees — mostly social entrepreneurs. Sixty-four organizations were given $50,000 grants. “We figured they would need emergency funding,” Skoll explains.

Though the Skoll Foundation has traditionally supported social entrepreneurs who work in lower income countries, in the past few months it has made some donations closer to home. Because Los Angeles County has been particularly hard hit by the pandemic, Skoll reached out to Los Angeles Mayor Eric Garcetti to offer assistance. In late April, his foundation made a $2 million gift to the Mayor’s Fund for Los Angeles, which is providing cash assistance to families hit hardest by Covid-19. 

Skoll also connected with California Governor Gavin Newsom and his senior advisor on social innovation, Kathleen Kelly Janus. The Skoll Foundation is donating $8 million to support California’s response to Covid-19, starting with $4.1 million for the public awareness campaign around contact tracing, which Janus says “will be really critical to preventing a second wave of Covid-19.” 

Smolinski’s team, which had already partnered with Harvard and Boston Children’s Hospital to build a crowdsourced symptom reporting tracker called Flu Near You in 2012 to show flu trends in neighborhoods and cities, rolled out Covid Near You in early March. The app lets people anonymously report if they’re feeling healthy or not, with zip code info, as  a way to track current and potential hotspots. 


Skoll’s Ending Pandemics has partnered with governments and public health authorities in 36 countries — 11 of which have surveillance systems tracking Covid-19 and other infectious diseases.


Ending Pandemics has partnered with governments and public health authorities in 36 countries — 11 of which have surveillance systems that Smolinski says are “up to speed.” One is Cambodia, a country of 14 million people, where all four telecom companies support a free mobile app that both receives info about disease and provides information. Calls have gone from 600 a day before the pandemic to 15,000, and the vast majority of the Covid-19 cases in the country were first identified through the hotline, Smolinski says. Cambodia, the country that took in a cruise ship no one else wanted, so far has just 129 cases and no deaths, he adds.

Through the Audacious Project, a philanthropic group with about 30 members launched by TED conference curator Chris Anderson with Jeff Skoll and Richard Branson, Skoll and others are supporting Boston-based Partners in Health, which responded to the Ebola crisis in 2014. The multi-million dollar grant from the Audacious Project enables Partners in Health to share its contact tracing expertise over the coming year with roughly 19 public health departments across the U.S. “We started by helping the state of Massachusetts put together a contact tracing system, and everyone else wanted to know what we were doing,” says Joia Mukherjee, Chief Medical Officer of Partners In Health. “This funding has allowed us to expand our team. What we are hoping is that state and federal money will be forthcoming.” 

Mukherjee applauds Skoll’s approach to philanthropy. “Jeff has always been a systems thinker, and that has been transformative for Partners In Health,” she says. 

Skoll also contributed funding to an ambitious global project called the Global Infectious Disease Epidemiology Network — GIDEoN for short —being spearheaded by Columbia University epidemiologist Ian Lipkin, who directs the university’s Center for Infection and Immunity. Lipkin has lined up the equivalent of the National Institutes of Health in 12 countries including India, Brazil and China and together they’ll share information about outbreaks and disease samples. With GIDEoN,  Lipkin explains, “we’re trying to upgrade the capacity for detecting infectious agents and toxins, particularly in the developing world.” 

While Skoll has been involved in global philanthropy for nearly two decades, he now has an even more personal reason for being involved in the fight against deadly diseases. While working on Ebola in 2014, he contracted a rare tropical disease that took two years to diagnose. He took an 18 month medical leave of absence and is feeling better now.

Despite many challenges, Skoll is an optimist, even about pandemics. Yes, the number of cases will likely increase as U.S. states open back up, he says. But he’s hopeful that a treatment for Covid-19-an existing drug—can work and be scaled up for distribution sometime this summer. “I hope we can get the solutions in place in the next few months. I see a path to it,” he says.

As for future pandemics, Skoll sees a silver lining.  “There are so many zoonotic viruses that jump over from animals to humans. Most of them peter out and turn into something less lethal. I don’t think it’s likely that we’ll see any terrible new pandemic any time soon, says Skoll.  “If anything, the world is on watch now.”

Kerry A. Dolan, Forbes Staff, Billionaires

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Kim Kardashian West Is Worth $900 Million After Agreeing To Sell A Stake In Her Cosmetics Firm To Coty

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In what will be the second major Kardashian cashout in a year, Kim Kardashian West is selling a 20% stake in her cosmetics company KKW Beauty to beauty giant Coty COTY for $200 million. The deal—announced today—values KKW Beauty at $1 billion, making Kardashian West worth about $900 million, according to Forbes’estimates.

The acquisition, which is set to close in early 2021, will leave Kardashian West the majority owner of KKW Beauty, with an estimated 72% stake in the company, which is known for its color cosmetics like contouring creams and highlighters. Forbes estimates that her mother, Kris Jenner, owns 8% of the business. (Neither Kardashian West nor Kris Jenner have responded to a request for comment about their stakes.) According to Coty, she’ll remain responsible for creative efforts while Coty will focus on expanding product development outside the realm of color cosmetics.

Earlier this year, Kardashian West’s half-sister, Kylie Jenner, also inked a big deal with Coty, when she sold it 51% of her Kylie Cosmetics at a valuation of $1.2 billion. The deal left Jenner with a net worth of just under $900 million. Both Kylie Cosmetics and KKW Beauty are among a number of brands, including Anastasia Beverly Hills, Huda Beauty and Glossier, that have received sky-high valuations thanks to their social-media-friendly marketing. 

“Kim is a true modern-day global icon,” said Coty chairman and CEO Peter Harf in a statement. “This influence, combined with Coty’s leadership and deep expertise in prestige beauty will allow us to achieve the full potential of her brands.”

The deal comes just days after Seed Beauty, which develops, manufactures and ships both KKW Beauty and Kylie Cosmetics, won a temporary injunction against KKW Beauty, hoping to prevent it from sharing trade secrets with Coty, which also owns brands like CoverGirl, Sally Hansen and Rimmel. On June 19, Seed filed a lawsuit against KKW Beauty seeking protection of its trade secrets ahead of an expected deal between Coty and KKW Beauty. The temporary order, granted on June 26, lasts until August 21 and forbids KKW Beauty from disclosing details related to the Seed-KKW relationship, including “the terms of those agreements, information about license use, marketing obligations, product launch and distribution, revenue sharing, intellectual property ownership, specifications, ingredients, formulas, plans and other information about Seed products.”

Coty has struggled in recent years, with Wall Street insisting it routinely overpays for acquisitions and has failed to keep up with contemporary beauty trends. The coronavirus pandemic has also hit the 116-year-old company hard. Since the beginning of the year, Coty’s stock price has fallen nearly 60%. The company, which had $8.6 billion in revenues in the year through June 2019, now sports a $3.3 billion market capitalization. By striking deals with companies like KKW Beauty and Kylie Cosmetics, Coty is hoping to refresh its image and appeal to younger consumers.

Kardashian West founded KKW Beauty in 2017, after successfully collaborating with Kylie Cosmetics on a set of lip kits. Like her half-sister, Kardashian West first launched online only, but later moved into Ulta stores in October 2019, helping her generate estimated revenues of $100 million last year. KKW Beauty is one of several business ventures for Kardashian West: She continues to appear on her family’s reality show, Keeping Up with the Kardashians, sells her own line of shapewear called Skims and promotes her mobile game, Kim Kardashian Hollywood. Her husband, Kanye West, recently announced a deal to sell a line of his Yeezy apparel in Gap stores.

“This is fun for me. Now I’m coming up with Kimojis and the app and all these other ideas,” Kardashian West told Forbesof her various business ventures in 2016. “I don’t see myself stopping.”

Madeline Berg, Forbes Staff, Hollywood & Entertainment

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Gap Stock Surges After Kanye West Signs Deal To Sell A New Yeezy Clothing Line With Struggling Retailer

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The Ye Effect may be the new Oprah Effect: This morning Kanye West’s fashion and shoe company Yeezy and clothing retailer Gap GPS announced a ten-year partnership for a Yeezy Gap clothing line. 

Yeezy Gap will hit stores next year with a line of “modern, elevated basics for men, women and kids at accessible price points,” according to a statement from both partners announcing the news. West will receive an undisclosed percentage of royalties and, potentially, an equity stake, dependent on sales achievements.

Shares of Gap, which has struggled over the past five years to keep up with fast fashion retailers, surged nearly 40% when markets opened Friday morning in response to the news, but then tapered off. As of shortly after 1:50 pm ET, the stock was trading at $12.50, up 22% from Thursday’s close. The deal is welcome news for the retailer, whose namesake brand has lost its iconic status, and, as of earlier this month, had cash flow of negative $1.1 billion compared to negative $136 million last year.

“Gap has been a challenge for us,” Gap CEO Sonia Syngal said on a conference call earlier this month, adding that “years of inconsistent execution have depleted brand health.” Other brands under the Gap umbrella include Banana Republic, Old Navy and Athleta.

Years ago, West, who worked at a Gap store in Chicago as a teenager, expressed interest in partnering with the brand, whose product is quite different from his pricey Yeezy high-fashion line that sells shoes for more than $1,000 a pair and $925 cardigans.

“I’d like to be the Steve Jobs of the Gap,” he said in a 2015 interview on the now defunct Style.com. “I’m not talking about a capsule. I’m talking about full Hedi Slimane creative control of the Gap.”

But last year the rapper and designer, who is known to often change course, told Forbesthat  “What makes celebrity products sell so well is scarcity. … So if they make it too broadly available, I think it crashes the business model.”

That said, the Yeezy clothing line wasn’t selling “so well.” While his deal with Adidas to sell Yeezy shoes makes up the bulk of his $1.3 billion fortuneForbes estimates that his stake of the partnership is worth $1.26 billion—the Yeezy fashion line has struggled. His high-fashion line, meanwhile, is nothing more than a rounding error when it comes to his net worth. 

Partnering with a celebrity has been good—at least initially—for the stock of other companies.  When Oprah Winfrey announced she was partnering with and investing in WW (then Weight Watchers) in 2015, its stock surged 92%. Earlier this month, shares of the beauty giant Coty COTY rose 7% when it announced that it was potentially pursuing a partnership with West’s wife, Kim Kardashian West.

 It’s too early to say whether West’s Yeezy line can  help turn Gap around for good, but it will be another chance for him to do what he loves.

“I am a product guy at my core,” West told Forbes last year. “To make products that make people feel an immense amount of joy and solve issues and problems in their life, that’s the problem-solving that I love to do.”

Madeline Berg, Forbes Staff, Hollywood & Entertainment

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