DIS Shareholders and Stock Info ONLY

[Elijah Abrams]

Disney owes an additional $438.7M to complete the acquisition of Hulu from NBCU. Deal will be considered finalized as of July 24, 2025.

https://otp.tools.investis.com/clie...&FilingId=18537883&CIK=0001744489&Index=10000

On November 1, 2023, a subsidiary of NBC Universal (collectively with its subsidiaries, “NBCU”) provided notice to a subsidiary of The Walt Disney Company (collectively with its subsidiaries, “Disney”) of its exercise of its right under a put/call arrangement to require Disney to purchase NBCU’s 33% interest in Hulu, LLC (“Hulu”) at a value based on NBCU’s equity ownership percentage of the greater of Hulu’s equity fair value, determined pursuant to a contractual appraisal process, or a guaranteed floor value of $27.5 billion (the “guaranteed floor value”). In December 2023, Disney paid NBCU approximately $8.6 billion, which reflected the guaranteed floor value less NBCU’s unpaid capital call contributions.
During the initial phase of the appraisal process, Disney’s appraiser arrived at a valuation below the guaranteed floor value, while NBCU’s appraiser arrived at a valuation substantially in excess of the guaranteed floor value. The final equity fair value, which was completed on June 9, 2025, takes into account the valuation of a third appraiser, which if it had been equal to or below the guaranteed floor value would have resulted in no additional amount payable to NBCU and if it had been consistent with the NBCU’s appraiser’s valuation would have resulted in an additional amount of approximately $5 billion payable to NBCU as its share of the difference between the equity fair value and the guaranteed floor value.

Pursuant to the contractual appraisal process that was completed on June 9, 2025, an additional $438.7 million is payable by Disney to NBCU to purchase NBCU’s interest in Hulu.
This amount will be recorded in “Net income attributable to noncontrolling interests” and thus reduce “Net income attributable to Disney” in our Condensed Consolidated Statements of Income for our fiscal third quarter. This amount is also expected to be excluded when Disney reports Adjusted EPS, the non-GAAP measure representing diluted earnings per share excluding certain items, and therefore is not expected to impact Disney’s previous guidance on fiscal 2025 Adjusted EPS.

The acquisition of NBCU’s interest in Hulu will close on or before July 24, 2025.
The following statement was provided to media outlets:

“We are pleased this is finally resolved. We have had a productive partnership with NBCUniversal, and we wish them the best of luck. Completing the Hulu acquisition paves the way for a deeper and more seamless integration of Hulu’s general entertainment content with Disney+ and, soon, with ESPN’s direct-to-consumer product, providing an unrivaled value proposition for consumers.”

Thank goodness that Hulu saga is over.

 

[wabbott]

https://ca.finance.yahoo.com/news/moguls-aim-zaslav-vision-wbd-002155602.html

Moguls Take Aim at Zaslav’s Vision of WBD as Company Splits: ‘It Was a Failure’

Said one top executive: “It’s a deal that never had a shot and shouldn’t have been done. But they’ve also done a terrible job running the company”

by Sharon Waxman - The Wrap

June 9, 2025 @ 5:21 PM PDT

 

[wabbott]

Yet another sad chapter in the saga of some major players in the industry. Remember back in the days when CNN was a juggernaut? When Time Warner thought AOL was a great investment? So many bad decisions.

They saw your comment and wrote this:

https://www.hollywoodreporter.com/b...-discovery-breakup-failed-mergers-1236260379/

It’s Not You, It’s WB: A Brief History of Warners’ 21st Century Mergers and Breakups

The pending split of Warner Bros. Discovery will be the third undone merger for the media giant since 2009.

June 9, 2025 - 2:01pm PDT
by Rick Porter - Television Business Editor

 

[HokieRaven5]

If Comcast didn’t also have $90B in debt on the books, them acquiring the streaming/Studios sector of WBD would make sense as far as bringing a portion of what they license for the universal parks in house.

 

[OKW Lover]

They saw your comment and wrote this:

https://www.hollywoodreporter.com/b...-discovery-breakup-failed-mergers-1236260379/

It’s Not You, It’s WB: A Brief History of Warners’ 21st Century Mergers and Breakups

The pending split of Warner Bros. Discovery will be the third undone merger for the media giant since 2009.

June 9, 2025 - 2:01pm PDT
by Rick Porter - Television Business Editor

Thanks for the link. Really sad history lesson there. One that doesn't give much optimism for success this time around either.

 

[Elijah Abrams]

If Comcast didn’t also have $90B in debt on the books, them acquiring the streaming/Studios sector of WBD would make sense as far as bringing a portion of what they license for the universal parks in house.

They’re not really interested in WBD, not even the streaming/studios side. No one wants another Disney/Fox situation, yet some common people want it, just because of the Universal parks.

 

[Cfabar1]

Looking at the fate of Bugs Bunny vs. Mickey Mouse is quite something when comparing the brand equity of those two IPs...

 

[wabbott]

Of interest as to how/where the adverting dollars are migrating.

https://www.hollywoodreporter.com/b...r-platforms-overtakes-pro-content-1236258118/

Global Ad Forecast Downgraded as Creator Platforms Poised to Overtake Pro Content

WPP Media, the media buying firm formerly known as GroupM, released its mid-year forecast Monday.

By Alex Weprin
June 9, 2025 4:25pm PDT

The media buying giant WPP Media (recently rebranded from GroupM) is downgrading its projected ad revenue forecast for 2025. After initially forecasting 7.7 percent growth in December, the firm is now projecting only 6 percent growth for the year, thanks largely to an uncertain economy and limited visibility for global trade.

At the same time, it is noting that 2025 will mark a significant shift in advertising when it comes to the makeup of professional content and user generated content. WPP Media says that this year, more than half of all content driven ad dollars will flow to creator-driven platforms like YouTube, TikTok and Instagram.

 

[wabbott]

https://www.wsj.com/business/media/...hine-is-revving-up-c86c1592?mod=hp_lead_pos10

The Media and Entertainment Deal Machine Is Revving Up

Warner’s new plan to split up marks companies’ latest effort to adapt to streaming. More moves are expected.

By Joe Flint
June 10, 2025 - 8:00 pm EDT

The ranks of media owners and entertainment companies are poised for their biggest makeover in a generation.

Media titans such as Comcast and Warner Bros. Discovery are cleaving off their cable-television channels, while television-station operators such as Allen Media and Apollo Global Management are exploring selling dozens of stations. Cox and Charter, two of the biggest cable and broadband companies, have agreed to merge.

Warner said on Monday that it will split into two publicly traded companies. One will house its flagship movie and television studios and HBO Max streaming service, while the other will consist primarily of cable channels such as CNN, TNT and Food Network.

Such changes promise to remake the television firmament, creating a new media and entertainment landscape.

Media and entertainment companies are trying to “get their own houses in order,” said Jon Miller, an industry veteran who is chief executive of Integrated Media Co., an investor in digital media.

The year could be even more transformative if station groups such as Nexstar Media Group, Sinclair Broadcast Group and Gray Media—and possibly some private-equity firms—seize the opportunity to roll up local television stations and cable networks.

“We are prepared to capitalize on deregulation through M&A,” Nexstar Chief Executive Perry Sook said last month. Sinclair executives also expressed optimism that the door to dealmaking will eventually get cracked open.

Gray has also said that it is open to purchasing more stations or swapping assets with other broadcasters.

“Everybody is talking to everybody. There is a lot of three-dimensional chess being played here,” said Gray Executive Vice President Kevin Latek.

And if Skydance closes its merger with Paramount Global, it will likely look to acquire more local TV stations to boost its CBS broadcast network, a person familiar with the company’s thinking said.

To date, the Trump administration has sent mixed signals on its openness to consolidation.

Federal Communications Commission Chairman Brendan Carr has said that he wants to ease broadcast ownership rules limiting how many stations a company can own, but that effort could take a year or more.

Sinclair has pushed for such a change, saying in an April FCC filing that broadcasters are competing with big media and tech companies “with both hands tied behind our backs due to archaic regulatory structures that fail to reflect current competitive conditions.”

Run-ins with President Trump have chilled some companies’ appetite for dealmaking, according to industry officials and analysts.

CBS parent Paramount Global has offered $15 million to settle Trump’s lawsuit against “60 Minutes,” but Trump’s team wants more than $25 million and is also seeking an apology, The Wall Street Journal has reported.

Meanwhile, the FCC has been reviewing Paramount’s $8 billion deal to merge with Skydance.

Once one of the most desirable assets because they generated sizable profits, cable networks are now considered a relic of a bygone media era. A big reason is changing consumer habits.

Cable penetration of America’s TV households has dropped to 51% from 86% over the past decade, according to media-measurement firm Nielsen. That shift, driven by streaming, has led to ratings plummeting at once top-rated cable networks.

Warner-owned TLC’s average prime-time viewership has more than halved since 2019, according to Nielsen. During the same period, HGTV’s viewership dropped 44% to 663,000.

Ad revenues, which are tied to ratings, have fallen as a result, and programming costs have risen since the pandemic. Most cable networks are still profitable, but not as profitable as they had been.

Networks with a heavy diet of sports, such as Warner’s TNT and Disney’s ESPN, have fared better. Live sports, especially professional football, have proven to be ratings winners, though the cost of sports rights has skyrocketed.

Industry officials and investors now view traditional television channels as slow-melting ice cubes. Wall Street is encouraging spinoffs.

Comcast’s NBCUniversal is nearing completion of a spinoff of NBCUniversal cable networks. Last month, Lions Gate Entertainment separated its cable and streaming platform Starz from its movie and television studios.

“It was only a matter of time before the dominoes started falling,” said Paul Verna, vice president of content at research firm Emarketer.

Some industry analysts expect Skydance to explore spinning off the Paramount Global cable networks including MTV and Comedy Central.

Disney, which had explored unloading its cable networks and TV stations, now has no interest in uncoupling. Disney Chief Executive Bob Iger said on CNBC earlier this week that there are still enough traditional TV subscribers to “generate a significant amount of revenue in both cases, in advertising and in subscription fees.”

Scooping up such offerings would make sense for buyers, analysts said. Scale could help during carriage negotiations with distributors and offer the opportunity to cut costs.

TV station chains such as Nexstar have argued that they need to gobble up rivals to withstand big-tech companies that have sapped their viewership and the ad dollars that follow them.

The FCC’s Carr has echoed that point. “Localism is one of the key guide stars of our policy,” he said in a recent interview. “We don’t want local broadcasters to ultimately go the way of newspapers.”

Carr’s deregulation plans hit a setback after two commissioners resigned, robbing the chairman of the quorum he needed to make some major rule changes. He still has the power, however, to grant waivers on a case-by-case basis to TV groups looking to enlarge.

All of the maneuvering though may not solve a fundamental problem: customers prefer streaming.

Traditional media “are moving deck chairs around,” said Steve Schiffman, a Georgetown University adjunct professor who worked in the industry. “At the end of the day, they need new ideas,” he said.

Write to Joe Flint at Joe.Flint@wsj.com

 

[wabbott]

https://www.hollywoodreporter.com/l...aming-services-cable-alternatives-1236085223/

As Shoppers Cut Back on Spending, Live TV Streaming Services Aim to Attract Subscribers with No-Contract Deals

After YouTube raised its monthly subscription rate last year, online cable alternatives are now competing to offer the best deals, channel lineups, sports networks and more — here's how to choose the right one for you.

by Danielle Directo-Meston
E-Commerce Editor
June 11, 2025 - 9:12pm PDT

 

[wabbott]

https://www.wsj.com/business/media/...-split-f7e5f8ed?mod=business_feat9_media_pos4

Why Warner Boss Zaslav Is Having to Split Up the Media Empire He Built

The studio and cable conglomerate that David Zaslav created couldn’t overcome outside forces and massive debt

By Joe Flint
Updated June 12, 2025 - 2:33 pm EDT

Warner Bros. Discovery Chief Executive David Zaslav loves the 1941 Humphrey Bogart classic “The Maltese Falcon” about a group of unsavory characters searching for an elusive statuette of a gold jewel-encrusted falcon.

The falcon is “the stuff dreams are made of,” Bogart’s character famously says, driving people to do just about anything to possess it. Combining Warner with Discovery was Zaslav’s Maltese falcon. And like the movie’s protagonists, Zaslav couldn’t secure it.

His old world entertainment titan’s ambition collided with the realities of a media business in turmoil. Now, three years after he closed on a deal that merged his Discovery cable TV networks with AT&T’s WarnerMedia business, Zaslav is breaking it into two separate companies.

The CEO, who has enjoyed industry-topping paydays throughout the tumultuous three-year marriage, will sit atop the company home to Warner movie and television studios and HBO Max streaming service. The second will consist primarily of cable channels such as CNN, TNT and Food Network, and own a 20% stake in the other.

“We now have healthier, sturdier businesses that can be separated and grow and soar,” Zaslav said in an interview.

Accelerated cord-cutting, streaming’s ascendance, Hollywood labor strikes and AI’s rapid development reshaped the media and entertainment industries while the merged company grappled with a hefty debt load and deep cost cuts. But the company was also plagued by Zaslav’s own bad bets and missteps.

The biggest problem: Zaslav took on more than $50 billion in debt to do the deal.

The company couldn’t shoulder a sum that large. To pay it off, Zaslav cut $5 billion in costs. Warner laid off thousands of workers. It scrapped high-profile movies and canceled television shows and the CNN+ streaming service.

The belt-tightening hurt the company’s ability to compete and grow. Morale sank. Workers were especially angry with Zaslav’s opulent lifestyle and $140 million in compensation over the last three years.

In Warner’s most recent employee survey in February, 5% of employees disagreed that they were satisfied working for the company, a spokesman said after this story was initially published.

“The merger of the companies was ill advised because of the massive debt it took to make it happen, and because the brands never fit together as neatly as advertised,” said Paul Verna, Emarketer’s vice president of content. Ultimately, Zaslav’s “only option was to undo much of what he engineered with the merger of Discovery and Warner Media.”

Warner’s fortunes sank. Last year, it took a $9.1 billion write-down on the value of its cable networks. Wall Street soured. Since the company’s creation in 2022, the stock has lost 60% of its value. Under pressure from an activist, the company earlier this year added a private-equity veteran to its board.

A protégé of the late Jack Welch, who ran General Electric when it owned NBC, Zaslav got his start as a lawyer at the conglomerate making deals for its cable networks. He helped launch CNBC and MSNBC and quickly rose in the industry.

After taking the helm of Discovery in 2006, Zaslav doubled down on low-cost reality shows, rather than the low-rated educational fare the company was built on, boosting ratings and revenue as well as expanding globally.

He also laid off 20% of the staff.

Zaslav built Discovery through acquisitions, culminating with the 2018 $12 billion deal to buy Scripps Networks and its channels including Food Network and HGTV.

Yet he feared Discovery was too small—and wanted movie and television studios to help build a global streaming service for the new era of television. When AT&T was looking to unload WarnerMedia, he pounced.

The deal went through a lengthy regulatory process. When the companies combined, Warner staffers hoped Zaslav would put an end to AT&T’s restructuring.

Yet more and more consumers were cutting the cord, hurting cable viewership and sinking ad revenue. The pandemic wreaked havoc on production, then was followed by strikes.

Zaslav lost support inside and outside Warner. Hollywood jeered his gutting of much of the staff of the Turner Classic Movies network, which industry officials view as a sacred cow. The decisions to cancel the movie “Batgirl” and other projects were also unpopular. Company insiders noted that Zaslav and his lieutenants talked about investing in the future, but killed off forward-looking, albeit expensive, projects such as the CNN+ streaming service.

Warner also initially struggled to execute its vision for its “Max” streaming service. Launched in 2023, executives touted the appeal of the service’s breadth of offerings, from prestige TV in HBO to Harry Potter films and TV from Discovery networks including HGTV, Food Network and TLC.

But after trying to catch up to larger rivals like Netflix, executives realized they should focus more on distinct content than being everything to everyone, and take better advantage of the HBO brand. It was renamed “HBO Max” earlier this year.

The streaming business boosted its adjusted earnings before interest, taxes, depreciation and amortization to $677 million last year from $103 million a year earlier. The company projects it will rise to $1.3 billion for the current year.

Then there was the National Basketball Association, a reliable source of viewership, which called Warner’s TNT network home for more than three decades. The league grew irritated after Zaslav said at an industry conference in late 2022 that the company didn’t “have to have the NBA.”

Negotiations were difficult. Ultimately, the NBA signed a new deal with Disney’s ESPN and brought in NBCUniversal and Amazon Prime Video as new partners.

Some Warner staff grew disenchanted with Zaslav’s leadership. Early on, he challenged executives over greenlighting a Clint Eastwood-directed movie that was a box office disappointment. “Alto Knights,” a mob movie starring Robert De Niro and written by his Hamptons neighbor and “Goodfellas” scribe Nicholas Pileggi that Zaslav championed, was a commercial and critical flop.

A chunk of the CEO’s compensation is based on free cash flow, which soared as the company cut costs. Many division heads, in particular, chafed at having to rein in production and marketing budgets to help pay down the debt and increase free cash flow.

Warner employees grimaced at the optics of Zaslav sitting courtside at New York Knicks and Los Angeles Lakers games, next to pals such as John McEnroe, David Geffen and Dustin Hoffman while staff lost their jobs.

Some of Zaslav’s strategic moves might pay off in the long run. Keeping the NBA would have meant more than doubling the $1.2 billion average annual rights fees TNT was paying, money it has since used for other sports rights.

Despite losing the NBA, Warner was able to negotiate new long-term distribution agreements for TNT and its other cable networks at increased fees with big cable operators Comcast and Charter. That will help position the cable networks company for the future.

After a tough start to the year, the Warner movie studio is on a hot streak as of late thanks to hits “Sinners” and “Minecraft.” The company is also releasing a much-anticipated new “Superman” movie this summer.

The company’s debt has been cut by $19 billion, and most of the remaining $34 billion will sit on the global networks company, led by Warner’s current finance chief Gunnar Wiedenfels.

The global networks company could benefit from the cash-generating channels, but a good chunk of that ad revenue will go to paying down debt. The studio and streaming company, meantime, could prosper from hits such as HBO’s “The Last of Us” and box office successes, and if HBO Max keeps adding subscribers.

Yet most industry officials and analysts expect Zaslav’s endgame is for each to be acquired.

Write to Joe Flint at Joe.Flint@wsj.com

 

[HokieRaven5]

Elio with an actual budget of $150M and likely minimal advertising cost based on current marketing.

https://deadline.com/2025/06/box-office-preview-28-years-later-elio-1236436173/

 

[Brian Noble]

So, I am Extremely Online in the Disney universe, and I genuinely did not know Elio was coming, let alone opening this weekend. So, yeah, minimal advertising cost is probably about right.

It does look like fun though!

 

[kilik64]

None of my kids are hype for it, it's definitely a maybe watch it when it hits D+ in 90 days.

From tracking it seems like that's where most families are with it.

 

[afan]

So, I am Extremely Online in the Disney universe, and I genuinely did not know Elio was coming, let alone opening this weekend. So, yeah, minimal advertising cost is probably about right.

It does look like fun though!

I've seen more.on TV for it than I have online.

 

[Brian Noble]

Yeah, I don't have any linear TV, and my streaming services are generally not ad-supported, so I don't see any direct marketing. But I'd've expected to see something about it in the various corners of the Disney Internet.

 

[Duckbug.Ducktales]

So, I am Extremely Online in the Disney universe, and I genuinely did not know Elio was coming, let alone opening this weekend. So, yeah, minimal advertising cost is probably about right.

It does look like fun though!

I think it'll be pretty good. I think less marketing has to do with a lot of competition this summer from known franchises, including from Disney's own Lilo & Stitch. Maybe it'll be like Elemental, though, and generate good word-of-mouth

 

[HokieRaven5]

I think it'll be pretty good. I think less marketing has to do with a lot of competition this summer from known franchises, including from Disney's own Lilo & Stitch. Maybe it'll be like Elemental, though, and generate good word-of-mouth

Disney did put forth an ad before Lilo & Stitch showing Stitch going to a theater to check out a “Sneak Peak” of Elio. Figure your best marketing is probably at what is likely to be the highest grossing movie of the summer

 

[Obi-J Kenobi]

Yeah, I don't have any linear TV, and my streaming services are generally not ad-supported, so I don't see any direct marketing. But I'd've expected to see something about it in the various corners of the Disney Internet.

D+ has had a 5 minute (+/-) preview of Elio for quite some time. Not an ad for Elio, per se, but a sneak peek special.

 

[wabbott]

https://www.wsj.com/economy/all-the...hS1NPtcVADannLqwCoj-7s_SCoabJDa3NBgXuRiiGfA==

All the Hollywood Action Is Happening Everywhere But Hollywood
As in New York and Silicon Valley, jobs in Los Angeles’s core industry are moving elsewhere in search of lower costs and incentives

By Greg Ip
June 18, 2025 - 8:00 pm EDT

LOS ANGELES—If budget were all that mattered, “Way of the Warrior Kid,” in which a former Navy SEAL helps his nephew deal with bullies, would likely have been filmed in Atlanta, Canada, Australia or Britain. But when producer Ben Everard showed the script to Chris Pratt, the star of “Guardians of the Galaxy” and “Parks and Recreation,” Everard said he agreed to do it on one condition: “You gotta shoot it in L.A. because my wife’s pregnant.”

Everard counts that as a victory for his adopted hometown—and a warning. Increasingly, raw economics favor shooting projects somewhere else. For Los Angeles to get the nod often takes something idiosyncratic, like a star with an expectant wife. The 41-year-old Everard has made five of his seven films here, and in three, it was because of the star’s family.

If Los Angeles County were a country, its economy would be among the world’s 20 largest. But that economy is ailing. Payroll employment is 1% lower than at the end of 2019; before the pandemic; it’s up 5% for the country as a whole.

A big reason is the malaise in film and video production. Los Angeles County employment in motion picture and sound recording is down 10% since 2019, according to Labor Department data. The number of “shoot days” across all types of production, including feature films, television and commercials, fell for the third straight year in 2024, according to FilmLA, a nonprofit that coordinates film permitting in most of the county. California’s share of global projects fell to 18% in 2023 from 23% in 2021, FilmLA has found.

After hearing from actor Jon Voight on Hollywood’s plight, President Trump last month proposed his favorite solution: tariffs on foreign-made films. The idea got a tepid reception here. Hollywood prefers more generous tax incentives. Gov. Gavin Newsom has proposed more than doubling California’s film and television tax credit budget to $750 million annually. The industry also wants less red tape and more housing to reduce the cost of doing business here.

Locals rattle off the omens. Disney’s Marvel Studios makes its superhero movies near Atlanta or in the U.K. Netflix just expanded a production facility in Albuquerque, N.M., and broke ground on a huge new complex in New Jersey. The U.K., by one measure, has more square footage of soundstage than Los Angeles.

There are two key reasons. First, other jurisdictions are offering more lucrative, less restrictive incentives. Second, Los Angeles—always an expensive place to do business—has become more so. Housing shortages, aggravated by wildfires in January, have made the cost of living prohibitive.

Los Angeles has formidable natural advantages. With ocean, mountains and desert within a few hours drive, you can shoot almost any movie here, and thanks to fabulous weather, on almost any day.

Everard, a former chairman of FilmLA, maintains it’s worth paying more for the talent pool here because the superior quality shows on the screen. But, he said, “We’re living off Hollywood’s endowment.” The difference in cost is now so great that other jurisdictions don’t have to be as good—just good enough.

The recent immigration raids and the protests that followed won’t help. “Disruption of law and order creates uncertainty, which is the enemy of productive filmmaking,” says Everard. “Plus, it’s irresponsible for a film to draw city resources away from emergency needs in times of crisis.”

Off a thoroughfare in Hollywood, editors are putting together “Way of the Warrior Kid” at the offices of director Joseph McGinty Nichol, who goes by McG. The offices sit inside a studio complex that was once home to Charlie Chaplin and later Muppets creator Jim Henson.

McG ticks off the recent blows Hollywood has suffered: Covid-19, then the writers’ strike in 2023, and now artificial intelligence. “I feel like it’s musical chairs and there’s a hundred people walking around, but 25 seats just got pulled.”

McG, who was born in Kalamazoo, Mich., worries Hollywood is headed the same way as Detroit. True, the major studios and streamers are all based here. The auto manufacturers are also still based in Michigan, but auto assembly has moved to “right-to-work” states or other countries.

Like finance in New York and tech in Silicon Valley, film in Los Angeles benefits from the economics of network effects. The top actors, lawyers, agents, studio executives and directors have to be here to work with each other.

But New York and Silicon Valley are cautionary tales: in both, a prosperous top masks a shrinking middle. While Wall Street’s top executives, traders and investment bankers are still in New York, mid-tier jobs migrate to places with cheaper housing and lower taxes like Denver, Miami and Dallas. The top tech firms such Nvidia, Apple and HP are still in Silicon Valley, but they make their hardware elsewhere, predominantly Asia.

Richly-compensated actors, directors and studio executives will be fine. It’s the grips, camera operators, costume and set designers, makeup artists, and editors, mostly middle-class, being squeezed between a shrinking pool of work and the high cost of living.

John Dietrick, an editor on “Way of the Warrior Kid,” said his wife, who also works in film, can’t work abroad because they have young children. “When they’re not shooting much in L.A.,…there’s less work for her,” he said. “So it’s harder to keep our heads as much above water.”

L.A.’s chronic shortage of housing finds its way into the cost of film production. “People in high-cost cities demand more,” said Azeen Khanmalek, executive director of Abundant Housing LA, a pro-development group. “We saw the same dynamic play out in the tech sector. The amount of money you needed to live in the Bay Area was so great, salaries had to be higher, so some folks packed up shop and moved to Bozeman or Austin.”

Producers complain high wages are killing them, while unions say members need them to stay above water, said Adam Fowler of CVL Economics, a consulting firm specializing in the creative economy. “Nobody is wrong. Everyone loses.”

Some production staff have spent so much time in Atlanta they moved there, lured by housing that’s half as expensive as in Los Angeles.

To retain a competitive advantage, McG maintains Los Angeles must be a nice place to visit and live. He’s doing his part. Last fall he and musician John Mayer bought the run down Henson complex and are spending millions to restore its Chaplin-era look and feel.

As McG shows a visitor the historically protected facade topped by Kermit the Frog dressed as Charlie Chaplin, a half-naked man shuffles along the sidewalk. Probably a “homeless guy going to score fentanyl somewhere,” McG said. “We can’t keep the city clean enough to make it hospitable…That’s deeply problematic.”

Crew members tick off the costs of producing here: $700 to use a dog on set. A building permit and structural engineer to move a wall for a better camera angle (they dropped that idea). Gasoline to power generators that costs nearly $2-a-gallon more than in Georgia.

Much as American tech companies chasing subsidies and cheap labor nurtured skilled workforces in Asia, American film companies have done the same in Europe, Canada and Australia. “We’ve saturated the entire world with trained professional talent,” said Bruce Gillies, line producer (effectively, the budget guy) on “Way of the Warrior Kid.” “Then we left and we put ourselves outta work.”

In animation, where physical presence is less important, California’s share of production dropped from 67% in 2010 to 27% in 2023, according to a report by CVL Economics. It attributes that to foreign incentives and talent pools such as in Canada that built a pipeline in related skills such as videogaming.

But what if the industry and the state are chasing jobs that are doomed anyway? Last month Google released the latest version of its AI video generator, Veo. As my colleague Joanna Stern demonstrated, you can dictate scenes into it to produce an entire show.

Everard insists the public will always want human-created stories played by familiar humans such as Pratt. “Why hasn’t there been a hit AI-written song yet?” he asks.

He might be right. But to take away jobs, AI doesn’t have to be as good as what Everard, McG and Pratt can accomplish with a $90 million budget in Los Angeles; it only has to be good enough. Soon, it may be.