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Michael Cieply: Deal Anxiety – Why The Oscar Bump Isn’t Enough

We’ve raised a cheer for the March 10 Oscar broadcast’s audience bump, up 4 percent, to 19.5 million viewers from 18.8 million a year ago. The total should stretch toward 21 million when digital viewers over seven days are finally added in. (Social media presence will also have grown.)

That’s not bad, given precipitous declines in prior years.

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But it’s not enough – not by a long shot, as the Academy of Motion Picture Arts and Sciences braces for a contractual reckoning that is only a few short years away.

Almost everyone in Hollywood knows about deal anxiety. You’ve barely signed a new contract when that nervous feeling starts to creep in. The clock begins ticking on Day One. By the halfway point, you start to sweat. What happens when it ends (yet again)? Will they renew you? Dump you? Promote you? What?

In the Academy’s case, several key contracts governing guaranteed revenue for the Oscar show are set to expire simultaneously in 2028, which, coincidentally, will mark the 100th anniversary of the Academy Awards.

The big contract, of course, is the domestic television broadcast deal with ABC. It delivers about $110 million to the Academy annually, which is roughly 75% of the group’s Oscar-related revenue, far exceeding income from foreign television or various fees.

The ABC contract pays the bills, not just for maintenance of the film Academy and its awards show, but for the adjoined movie museum, whose ticket, merchandise and membership sales don’t come close to offsetting costs. In fact, it’s the ABC contract, with its rock-solid annual guarantees, that gave the Academy enough financial stability to borrow hundreds of millions of dollars for museum construction, through bonds some of which will be outstanding into the 2040s.

The contract was a gold mine.

But that deal, which was signed in August 2016, was born in a completely different ratings environment. The five Oscar shows preceding the new contract, from the Spotlight year back through The Artist, averaged 39 million viewers each. And not a single show since has come close to that number. Weakest was the lockdown year, 2021, when 10.4 million people watched Nomadland win the Best Picture Oscar.

This year, the vastly popular Oppenheimer drew twice as many viewers. But when it comes to dealmaking dynamics, that isn’t enough.

As the Academy creeps toward its triple expiration in 2028 — of the domestic television, international television and Dolby Theatre agreements — its options, whether with new or existing partners, will be limited by a new audience environment. Now, 20 million viewers is considered a good year, something to cheer about. But that’s half of what was considered average back when the expiring domestic television deal was negotiated.

Tactically, Academy officials were probably wise to align their expiration dates. That opens the door to an across-the-board reboot, if needed. But unless something changes radically — and this year, with both Oppenheimer and Barbie in the mix, had seemed a perfect comeback opportunity — it seems unlikely that any next domestic television contract will offer full-sized guarantees for a half-sized audience.

So for the Academy, some serious deal anxiety is in order. All options are worth exploring. Alternative revenue, internal tightening and still more fund-raising will be a must. Academy officials are aware. You can count on it.

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