The Digital Revolution in the Entertainment Industry with Drew Buckley

Drew Buckley: 00:00:01

We're always trying to think through ways that we can create programs that have a permeance. That could be its own brand, but then could also sell products and services.

Matt Waller: 00:00:12

Excellence, professionalism, innovation and collegiality. These are the values the Sam M. Walton College of Business explores in education, business, and the lives of people we meet every day. I'm Matt Waller, Dean of the Walton College, and welcome to the Be Epic podcast. I have with me today, Drew Buckley, Group President and Chief Operating Officer of Propogate. Thank you Drew for taking time to visit with us today. I really appreciate it.

Drew Buckley: 00:00:43

God, it's great to be here.

Matt Waller: 00:00:44

Drew, you have a really interesting business model. And I would love to learn more about how you started and where you're going as a business. How does your business model work?

Drew Buckley: 00:00:59

In my career, I always, like grew up with a passion of being in media and entertainment. And I went to college at SMU, and at SMU I got a marketing degree but also worked in radio, worked for the Titchener family who owned a number of radio stations in the Texas region. When I graduated, it was one of two choices whether go to New York or Los Angeles. And as luck would have it, I got a job with USA Today in Los Angeles working for kind of you will the distribution end of USA Today kind of the how you get newspapers out in the time, if anybody recalls, if you ever stayed at a hotel, the next morning, you'd usually have a USA Today at your foot mat. And so my area was kind of get distribution, but also work closely with the life section to market that so love that was a lot of fun. Around that time, it was kind of the evolution of what some people called early on the information superhighway, which ended up becoming the internet. And it was looking to evolve from, you know, just working at a newspaper center company and Gannett to that of going to more of a tech based company. And it was really interesting at the time. I got, I think it was a magazine a Fortune magazine on the cover. It was the CEO of AT&T, a gentleman by the name of Bob Allen. And the article said will AT&T rule the world and I was like, wow, this is really cool and could be where I want to go next. And so I ended up figuring out a way I went to go work at AT&T and worked in their entertainment division where they kind of worked on all entertainment accounts, and also kind of getting people on the internet. The other benefit at that time was AT&T was so gracious enough to pay for my MBA at nights that I got an MBA in finance, and so ended up working for them got my MBA at USC, and then went to work with an entrepreneur, which was really amazing. So I'd left two big companies and worked for one entrepreneur, a guy by the name of Kevin Wall, it was a web development company. And we then raised capital, merged the business, ended up taking it public, the business was doing websites for big corporations, mostly entertainment corporations. We took the company public, he was the vice chairman. And then we left to start a venture capital arm to invest in companies in the 2000s. So just to flash forward from that I left that firm went to go work at Yahoo, and the Yahoo media group. And within Yahoo, my role was to create original content within Yahoo. So whether it was for the Sports Group, where if you go to Yahoo Sports, you would watch maybe our fantasy football live show, whether you went to our music, Yahoo music, we had a big program called Nissan live sets where we did original music, and then anything from finance, all the different verticals within Yahoo. We ended up doing video programming early on in the mid 2000s. And that was successful. And that was fun kind of really learning how to produce that type of content for web and doing it short form kind of hitting the mark early and learning how you get attention and getting people to stay with program. I then got a lot of awareness from the CEO at the time, Terry Semel, the end of 2007, Terry tapped me on the shoulder and said, I'm leaving Yahoo, you're coming with me. We're starting a private equity group, knowing that I had a finance background and kind of an operational background and so worked for Terry for a couple of years. And it was great. We're looking to acquire a number of companies but unfortunately was a time of the 2008 2009 debt crisis. So it was pretty hard to buy some companies at the time. And in late 2009, a very, very good friend of mine, Ben Silverman, had reached out to me at the time he was considering leaving NBC he was the chairman, one of the youngest chairman of NBC at the time, and reached out to me and said let's go start a company. So we started a company together in 2010. And we are funded by the public company IAC, which is mostly controlled by Barry Dillard. And we created a company called Electus. Our goal there, and to answer your question about what we do, was to be an independent content studio, where we came up with ideas to create, whether it's a unscripted show, whether it's a scripted show, whether it's a documentary was the film, kind of come up with ideas, produce those, and then distribute those to buyers. The good news for us was in 2010, early on, the buyers were broadcast and cable networks, right. And as we were building this business, the evolution ended up happening of Netflix, as we all know, which was just a aggregator of movies, which they would ship to you through mail ended up started creating original content. The same is true with Amazon over time. Same is true of a number of different and some had started and stopped in terms of who was going to buy original content. And so we built that business and we had a number of great shows within that we had Chopped if anybody loves the Food Network and watch Chopped, that's one of our shows. We also have another show, Running Wild with Bear Grylls where we take celebrities in the wild. On the scripted side, we had a great franchise called Jane the Virgin, which ran for about 100 episodes, we built all those out and continue to have great success in around creating original video programming. IEC is a conglomerate big company has a number of different investments. Match, which owns Tinder, Vimeo. And their goal was to as they build companies up was either to sell them or spin them off. And in our growth, we were able to sell our company at the end of 2018 to an entity backed by private equity, that ironically enough, Ben Silverman who had left Electus in 2015, started another company raised capital ended up buying Electus from IEC. And so now we're all back together as one happy family at Propagate Content.

Matt Waller: 00:07:00

One thing interesting about this business is, it's in one of the areas that has been most affected by the digital revolution. I would guess as you were going through this, as your company was maturing, and you were making strategic decisions and planning for the future, that things change faster than you thought they were or not as fast and how has that dynamism been difficult to navigate? Or what are your experiences with that?

Drew Buckley: 00:07:31

So it's a great question. I mean, it has moved extremely quickly. If you look at the business models, as I said, when we started this business in 2010, you know, there was a select number of buyers. And they had a lot of control on when this idea that we have could get bought and could get shown right? Like it was a broadcast networks cable network, and, and they have a finite number of is a lot of people in this podcast may know, shelf space right it's a 24/7 network broadcast is only prime time, whether it's eight to 11, or seven to 10. That's kind of you know, your shelf space, being able to sell shows that goes on to those hour blocks or half hour blocks. And then as the evolution of Netflix and Amazon and others came about the shelf space kind of you know, was shifted, right? Like is this omnipotent sea of time, right? That you could put a video on, it didn't have to be on a set appointment of that shelf space, it could be any time that people wanted to see on demand, consumer behavior has changed so dramatically because of that shift. That now I think a lot of people are trying to figure out what the best cadence of delivering video is, right? It's it's one of those things that when Netflix did do something, instead of saying like, hey, every week, Thursday night, at eight o'clock, you're going to get this video that your your gonna want, and we're going to pace it because we're gonna give you one installment. And then a week later, we're getting another installment. And then Netflix said, we're gonna give you all right now it's like, you know, we're gonna let you binge and people didn't know what that kind of meant. But it was something where we give you the program let you watch it. As we all know, sometimes it's like reading a great book where you may want to go to bed and you're like, let me just do one more chapter and then I'll fall asleep after it. But same is true with sometimes when you binge programming is sometimes you want to go to bed at 11 o'clock. And next think you know, it's 12:30 because you ended up watching a couple of extra episodes. So that's changed dramatically. And then I think we started seeing a shift back to people saying, well, maybe it makes sense to go back because HBO Max had done this thing where they have some hit shows recently and it was always on this cadence of hey, we're still delivering it week on week whether it's a White Lotus show or a Succession so that it gets back to this time where everybody's together to be able to watch it at one set time and have whatever he likes to say that water cooler chat about what's happening. When are you watching it because the change of the dynamics have that shelf space at the same time where, you know, you may have been ahead of Ozark and I and you want to talk about it oh my god, stop. Because I haven't seen that episode yet. I don't know what you're talking about don't don't want to know what you're talking about. So, you know, not only has the business model change, but the whole environment of how we think about programming has changed as well.

Matt Waller: 00:10:21

From an outsider, it looks to me like you're in a business where there's a lot of competitors. And to make money, you've got to be able to differentiate. So how are you differentiated from the competition?

Drew Buckley: 00:10:34

It's a great, great question. It kind of also evolved over time, because when there was only a finite number of hours to compete against the competition was up. Now the significancy of content that happens changes a lot of dynamics, there's more competitors that come to the fold. But to answer your question, specifically, how we differentiate I think, number one is taste. I think we in our lineage of really understanding what is a good program, what is something that we think audiences like is one of our key differentiators, whether it's coming up with shows like Jane the Virgin like Chopped, like Running Eild with Bear Grylls and Ben Silverman, Sister, even the Office, Ugly Betty and things that he had done in the past. But one of the things when we think about how we come up with these ideas, it's when we talk about all these distribution platforms, you know, it's like we weren't talking about tiktok, three years ago, and now we're talking about tiktok, three years from now we're going to talk about a new tiktok. We don't know what it is yet, but it's going to happen. So as we've been evolving, distribution has evolved, right? Some have stayed constant, some change. So one of the things when we think through what is one constant in all that flow, one is taste, and another one is talent. And talent is a differentiator of when we get closer to talent, and whether that talent is a recognizable actor, or actress, or it's a recognizable writer, or director, we want to get closer to that relationship. And so we made investments in talent management firms to basically just have the ability to have relationships with these different firms. And I think more than anything, the evolution of talent has changed, right? Going back to that example, the shelf space, it's like to break through as an actor, you would have to be on the hit TV show. And once you got on the hit TV show, then you got the accolades. And then you got into the new hot movie, and then you got into another hot movie, and you became this great actor or known actress. Today's time has changed, right? Like, a lot of people nowadays are saying, where is this next talent coming from? And before, it's like you needed to get discovered to be on that hit TV show. Now, you can just take a camera from your computer and start talking and have people like what you're doing and find a following on Instagram, or Tiktok, or YouTube, and then build up your relationship with those people directly. And so talent has evolved, right, like the floodgates have opened for talent to be like, hey, I don't have to wait to be discovered, I can build this out on my own. And whether that format is video, or even audio podcast, or others, like the walls to entry have been decreased. And so nowadays, what I think more than anything is, how can we work with talent to give them opportunities to be in that star vehicle? But then how can we get around talent to, to build businesses around them? If they decide to take that digital path?

Matt Waller: 00:13:31

That's really interesting. Where does this go? What is the next step in this world of talent? And what do they do?

Drew Buckley: 00:13:38

It's a great question. I don't have a blueprint or a guide to tell me exactly what's next. But what I do know is the fact that talent nowadays has so much more power because of this direct to consumer approach that they have, right? Again, before they would have to be in a couple of episodes to get traction to the people known, and now they can on their own, talk to their audience directly. Whether that's through, you know, as I mentioned, Instagram or Tiktok, or YouTube. And that gives a great opportunity for them right, before it was maybe certain brands would come to the talen, be our spokesperson and then be in our commercials. And then, you know, that's on a linear network. And the commercials are something that are viewed on a 30 or 60 second execution in between a program. But now you can have talent going directly to an audience, whether it's with a known product, whether it's you know that you're the Tide spokesman or now you can actually take instead of having to wait for that Tide commercial, you can do that directly to your audience. What's were happening now is you're starting to see a lot of talent saying, okay, instead of maybe endorsing a product, how do we start a product? Like what is the product I can start and get behind? And, you know, there's been this run up in alcoholic spirits, right, so you had the George Clooney had sold Casamigos, you had Ryan Reynolds sell Aviation Gin. And so you know, it was, instead of them being the spokespersons, they had equity in those businesses, sometimes they started those businesses. And now you're seeing the evolution to more of Lady Gaga has her own cosmetics line. And you see, we've seen the build up of from an unscripted standpoint with the Kardashians had started up their own lines of products and services, and were able to sell those and, and using different platforms to market it, whether when they were on their E show, or now on their Hulu show, but just gives more awareness to their lifestyle and what we're trying to build. And so whether it's SKIMS, you know, which Kim Kardashian has, or some of the cosmetic lines that Kylie has, but that then shows you that they have the ability to be able to sell these products and services. And so in our talent group, we have a great asset called select. And the Select team represents Mindy McKnight came from YouTube, a very well known personality. And she has two beautiful daughters Bailey and Brooklyn. And she understands hair very well, she created a hair line product called heritage, and it's being sold at Walmart, it's doing quite well. But again, it just shows an execution that talent has the ability now to start products and services instead of waiting to buy commercial. Sometimes they can do that on the digital level.

Matt Waller: 00:16:20

That is so interesting. I remember 12 years ago or so longer, I think when consumer packaged goods companies discovered, oh, hiring influencers can help us sell products. But now the influencers are creating their own products that compete against these very same companies. So what is your role in that process?

Drew Buckley: 00:16:48

Well, it's more the talent management role. I think, at the end of the day, as we all know, it's very important for anybody to realize that there are certain areas that you really have to authentically and sincerely like that product and service to be able to start that product, right? What's going to happen a lot of times you have certain talent that may get paid a good sum of money to endorse a product and service and they're saying, hey, that's, that's cash to me to be able to basically promote and endorse this product, one that I like, but I'm going to get paid to be a service representative of that brand or product. On the flip side, you had some people that say, I love this so much, you know, I want to start this product and service knowing that they're not going to get a check handed to them to say, here's your cash, because you're gonna get paid and also own this product. I think a lot of times, these people have to understand that. And they do the ones that they're really passionate about, is that I'm not going to get a check off the barrel, I am going to build this product and service up and get equity for that in the hopes that it becomes profitable. And I'd get a nice dividend from that. Or it ends up potentially getting sold as George Clooney did with casamigos or Ryan Reynolds did with Aviation Gin and, and Kylie Jenner did and then when those check sizes are sometimes much larger than, you know, maybe a endorsement check. So as we also know, as I'm sure your audience well know, not every product and service is going to work just like we know in television, not every show is going to work. And so the ones you really hope that work you get to spend the time the quality of of your focus to be able to execute and have a differentiated great product or service.

Matt Waller: 00:18:28

I can see how you know if a company's hiring an influencer to promote their product, the influencer may like the product. But if the influencer has designed the product, it's their baby. Probably the authenticity might be noticeable by consumers, I'm not sure. What are your thoughts on that?

Drew Buckley: 00:18:52

I mean, I think that as everyone knows, in marketing, you're also trying to sell kind of your value and your lifestyle, right? Going back to Nike, like Nike, never want to ever have a commercial, they never showcased that. Oh, look at the foam around our shoe. And let's look at you know, kind of the lift in the back heel. And that's why you'll be faster, they never do that. They always sell lifestyle, they always sell great athletes, great athletics, let's honor them. And I think that's the same sometimes when you do buy into certain talent is that you're buying into their lifestyle, you believe them you value them you think they are cool, you want to emulate who they are, and therefore you want to buy that product and service. And so at the end of the day, that's kind of the driver, but then the attributes of that product are things that you hope separate themselves and maybe a part of that product is a part of that lifestyle that you're speaking to. But ultimately, I think that you're following these people or you're a big fan of watching their movies or television shows because you really value them you value your thought of them and so that you want to emulate why you want to get those cool Ray Ban sunglasses because Tom Cruise wore them in Top Gun, right. But you think that's really cool. You want people to know that you like that so much you want to wear those same is true with a lot of these influencers. And so I think what's really interesting nowadays is because of the walls of distribution open, you're having more opportunities to, to actually market these products and services to people. If you represent yourself and your lifestyle, you'll have better chances to do that. It just comes down to ultimately what is it that you are passionate about the you're willing to bet long on? Right? A lot of people may not go create a car, right? So sometimes you're like, hey, I'll just take that endorsement check. I'm good to do that, because I really liked that car. And I'm a big fan of that car. And so I'm happy to endorse that as it relates to aligning my brand or my lifestyle with that set, ongoing product.

Matt Waller: 00:20:57

So Drew, let's pull this together. How do you go about marrying the talent and the programming together?

Drew Buckley: 00:21:05

That's a great question. That's kind of our big goal of trying to figure out how we execute programming with talent with potentially product. And I think we've also differentiated ourselves in doing that in terms of thinking through how we can create a show that has our talent involved in product potentially, and I'll give a couple examples. So a couple of years ago, we created a show called Fashion Star. And it was on NBC. And within that show, it was a competition design show, but different from a number of creative designers coming in and getting voted on like a Project Runway type show, we actually got the head buyer of Macy's, the head buyer of Saks Fifth Avenue and the head buyer of Express, and they were in the show. And basically, we had the designers come in, and then we had Macy's, Saks and Express, compete and bid on the product or service. So if I had my shirt and I came on, basically, you'd have those three different buyers competing against who was going to buy that shirt. So obviously, you know, if Saks Fifth Avenue bought it, this shirt would probably have very high quality, and would probably cost at a price point in the hundreds of dollars. If Macy's bought it, it's probably in between, you know what the execution of the quality of the materials would be. That would be, you know, a certain price point along that line, and Express would probably be on the lower end, right. So it was kind of those three different things. And so what we then did was, whoever bought that shirt that night after the program, people would go online and buy the inventory. So it was probably on this time the show aired, I think 2011 and 12. It was on NBC. And we had a number of celebs, we had Jessica Simpson and Nicole Richie, John Barbados is kind of our mentors and the buyers who I had mentioned, but that's a great way, we're always thinking about ways that we could do a creative show with our talent and with product execution. Another show we did, it was on ABC for two seasons called Toy Box. And we did that in partnership with Mattel. And that was where we had toy inventors, you know, coming into a competitive show. And they would take their inventions and the judges, in this case were kids, and the kids would decide whether the toy was good enough to be able to be sold, and then be at retail. And so that show Eric Stonestreet hosted for us. And we had that on ABC for two seasons. So we're always trying to think through ways that we can create programs that have a permeance that could be its own brand, but then could also sell products and services. And so my two partners, Ben Silverman, and Howard Owens created a show in their prior company to Electus and Propagate called Reveley. And they had a show called The Biggest Loser, and that was on NBC for many years. And I think the thing that people may remember about that was the biggest loser was a brand. It was one that even when it went off air, people still bought goods and services from The Biggest Loser, whether it was their weight loss program, whether it was people signing up to their five and 10k branded, specific, biggest loser run, there was a subscription service online, you could go and get meal plans. And so those are ways that we're always thinking of like what is a great idea that we can immerse brands into, and then have the way that we could ultimately sell products and services, but do it in a really entertaining way.

Drew Buckley: 00:21:05

What great examples. I'm going to have to look that up. I'm particularly interested in the Toy Show. Well, Drew, thank you so much for taking time to visit with us. I really appreciate it.

Drew Buckley: 00:24:47

Yeah, thank you. Really appreciate it. And thanks for the opportunity to talk with you.