RANDY LENNOX IS beloved in the music business. Leading Universal Music Canada for close to 20 years, he was instrumental in finding and developing Canadian talent and growing the Canadian music industry into an acknowledged international force.
The Weeknd, Shawn Mendes, Justin Beiber, Shania Twain, Drake, Hedley, The Tragically Hip are all artists Lennox signed or helped build up. He probably could have remained at Universal until he was old and grey, if he wanted. Earlier this year the Canadian Academy of Recording Arts and Sciences (CARAS) awarded Lennox (pictured*) the Walt Grealis Special Achievement Award for his longstanding commitment to Canadian music.
However, in 2015, he was asked to do something new – to come to Bell Media and bring some of that music mojo and dealmaking ability – to television and radio as head of entertainment, production and broadcasting. Then, when former Bell Media chief Mary Ann Turcke left earlier this year, he was promoted to president.
Some in the business have looked askance at what he’s trying (the musical Bat Out of Hell? Deals with Netflix and Hulu? Buying into a kids production company? A new international music show created here?) because it’s not the way things have usually been done.
What’s “usual” anymore though? Media is global and the Canadian industry must try new things in order to more than survive under old protections, but thrive in a new reality where competition is all around, even if that means tapping the resources of a “rich uncle” to finance some of those ideas.
We sat down with Randy Lennox last week in his Toronto office. What follows is an edited transcript.
Greg O’Brien: I'm going to start off on a different tack, because you're the first guy in a while from the content side of the world to lead Bell Media. Mary Ann (Turcke), and Kevin (Crull) before her came from the Bell Canada corporate side – but you’re from the creative side – and what TV and music struggles with all the time is what makes a hit? So, what makes a hit? Whether you're talking about music, whether you're talking about TV, radio?
Randy Lennox: Having spent 30 years at Universal trying to do some of that… The first thing is what I call “no wine before its time.” You have to mitigate your risk… you have to be very cognizant that Ty Cobb is the best hitter in the history of baseball and he had a (batting average) of .361. So, out of a thousand (at bats), 361 hits is the best in the history of the game.
So the minute you know that in the content business and you understand the ratio of odds… which is exacerbated by the pure volume of content that's coming out against you. You have to look at those two things. You have to look at your realistic risk mitigation on content, and you have to look at, competitively, what your timing and your true trajectory is.
For example, this Broadway production we're doing, Bat Out Of Hell, people could not believe that I opened it in Manchester instead of Canada, because it's a Canadian, Bell production. But, like the development of any hockey team, we need to ankle skate before we get to the main stage. So, by going to Manchester we had, what we knew was a very active audience for that music, a very engaged audience. But also, because of the level of engagement, a very critical one.
And our learnings coming out of that helped us open in London with a 35% better show, which comes full circle to my risk mitigation point, and my Ty Cobb point. Then in London we realized that we hadn't figured out the choreography right. The music we were now getting right, but the choreography we hadn't figured out. Then in Toronto last night, where we saw this for the first time in previews, we changed it another 30%.
So now we've sold 350,000 tickets to this show, and we have mitigated and tightened our content risk by experience, by going into the right markets at the right time, by paying attention to what's out there competing, like Come From Away and Beautiful and all the other shows that are out there. We're different from those shows. We wouldn't be smart if we were out against We Will Rock You and Rock Of Ages. So, content also needs its own time and place. You need to be cognizant, as you're spinning the plates of content, you need to be very cognizant of the when.
And you need the when to have several volumes. So, that's what any content person might answer.
GOB: How do you carry that thinking into television?
RL: The exact same thing: Audience research. And you don't have to pretend you know what you're doing and put it on CTV and then it hope it works. Analogous to the Manchester-London-Toronto story in live theatre, we’re doing the exact same thing – kicking around a script until 10 people like it instead of 1. Calibrating upwards and taking a risk.
We have this new show called The Disappearance that just started on CTV. We got Peter Coyote to come in as the grandfather because, he's brilliant, even more brilliant in this role, but the point is that's a risk mitigation in and of itself because he's amazing and he's a great catch. So, surround yourself with the right cast, the right writing, the right people – its very analogous whether it's music, whether it's a play, whether it's television, it's really the same principle.
GOB: And you have to keep in mind that your batting average might only be around that .361…
RL: Put it this way, it's important that you set expectations of a .361 batting average, but it's way more important that you do better than that.
The difference is, he got to bat and just took swings at stuff and what I'm saying is in today's very cluttered, competitive, content universe, not only from the creation standpoint, but from the exhibition standpoint, there was a world where you'd go down to L.A. to pick up Designated Survivor, and you were against Global and Rogers.
"Now… the meetings are Hulu, Amazon, Apple, YouTube, Global, Rogers, Facebook and Netflix. So I just tripled the pipes that are now showing the same amount of content. So what is the risk?"
Now… the meetings are Hulu, Amazon, Apple, YouTube, Global, Rogers, Facebook and Netflix. So I just tripled the pipes that are now showing the same amount of content. So what is the risk? The risk is that you end up in a content bubble… where you're in a situation where there is too much choice. And, as I learned in the music business, too much choice numbs the engagement of the viewer. It's sort of like Bruce Springsteen's song from years ago, 57 channels and nothing on. If you look at it that way, that's what he was saying 25 years ago.
GOB: The grocery business went through an entire rationalization across North America where they would have, say, 15 brands of peanut butter. And then they brought it down to five and the sales went up because there was physically less choice, people were overwhelmed by too much on the shelves.
RL: I think that's exactly what we're both saying, and I think that's our risk. Not Bell Media's risk, that's the world's risk.
GOB: You've got to manage all of that. There used to be so much less TV shows being made… Now there's somewhere between 400 and 500 shows on offer where, even five years ago there was half that.
RL: Well Netflix has taken their content budget from six to seven to eight billion dollars, in a short period of time. Hulu's budget is exponentially going up. So is Amazon's, and so is ours.
GOB: So, what do you say to those who look at that and wonder how can little Bell Media – little in a global sense, big in a Canadian sense – how can Bell Media compete against that? And what's the future, for that matter, of linear TV?
RL: Well, the answer is joining them. If you look at the advent of these brands, these ubiquitous world brands… As much as, as you say, we're Goliath on some levels, we're certainly David on all the levels, to your point. So, I look at Frontier that we did with Discovery with Netflix. I look at the Tragically Hip documentary that we just finished, we did that with Netflix. I look at The Indian Detective with Russell Peters, we did that with Netflix. Cardinal, we've done it with Hulu.
So, that is helping us produce better quality content, in partnerships with what I call “rich uncles”, and these ubiquitous brands are just that.
It does two things. One, is it helps calibrate-up. I mean we had literally double the budget for Jason Momoa's Frontier when Netflix signed up. We doubled the calibre of what was on the screen. So, it brings upward that rising tide for all the boats. Secondly, it mitigates risk. So instead of spending a hundred dollars an hour, making up that number, on one program, I'm spending fifty and so is Hulu.
"So, do I get less of the upside? Well, sure, but I'll take that because we're in 102 countries ."
So, do I get less of the upside? Well, sure, but I'll take that because we're in 102 countries on Frontier … Netflix picked it up and it's an eOne joint venture with us. But there is a return on investment in the 102 countries that aren't your own because Canada is 3.6% of the known media market, 3.6. We have four million people less than the population of California in this country. That's not a negative thing, it's just a friggin’ fact, and you have to not be in denial about your juxtaposition to the world, relative to 3.6% of (the market).
So, on that basis, you need the rich uncles. You need them to make better content, you need them to help you get that content to extrapolate outside of your own borders, given the population point I'm making.
GOB: So, you get that rich uncle to help you make that content, then they more or less stay out of your backyard and let you monetize it here – and then you can make some money on the backend as its monetized around the world?
RL: Both of those things, exactly right. So, we will monetize The Indian Detective by Russell Peters on CTV and Comedy Network and other stuff, and Netflix will monetize it on their vehicle, and everybody's happy.
GOB: What do you think about the future of linear, ad-supported television? We have a lot of channels here. You just bought two more off of Corus and Corus’ CEO has said there's too many. You have some in your lineup that are taking up space, I guess, if you want to look at Fashion Television and Book Television, for example. What do you think of linear TV in that respect? I know you have the big tent with CTV, but then there's all these other channels as well, but who knows what their futures are.
RL: I agree with (Corus CEO) Doug (Murphy) that there are too many channels. I wholeheartedly agree with him. But, it's not the existence of the channels that's the negative, it's what you do with them. So Series+, which we've just purchased from him, has a strategy to it that we will undertake when we take over the business. Historia has a strategy that we will undertake.
Book and FashionTV are dormant, non-strategic, so there's a very big difference… it's the old adage, right? It's not what you say it's how you say it. Well, that's how specialty works. You could have it as resting channels, or you could do what we do with Comedy Gold, where I took Comedy Gold and horse traded it to become a worldwide partner with Wow Unlimited, with Micheal Hirsh who's the founder of Nelvana. Now, anything that he does worldwide… we're a significant shareholder, as a part owner. That would be a good example of a dormant existing channel, in that case Comedy Gold, that extrapolates into something useful.
GOB: Sticking with linear TV, when it comes to buying shows in the States and re-airing them here, using simultaneous substitution, all the advantages that you have, how much runway left is there in that versus, populating more of your schedule with original content?
RL: It's a really good question, but we have to ask ourself will Netflix and Hulu, down the road, have pre-roll or mid-roll curated advertising as part of their content mix in the way that Facebook and Google do? Facebook certainly didn't start as an ad-based thing, until they realized that they were trading at billions of dollars and they had no revenue model. So, let's take a look at the actual facts, which are that the old school model, which is an ad-based content exhibition, is in fact replicated by the most modern companies in the world, like Instagram, part of Facebook, Snapchat – there's nobody more ad-based than the brand new entrants into the very market using our own system.What that tells us is that should come full circle to one thing, and that is the calibration and quality of the content of being exhibited.
"The highest form of flattery is imitation and they're imitating the very linear thing that everybody is saying is dying."
The highest form of flattery is imitation and they're imitating the very linear thing that everybody is saying is dying. So help me understand that intuitively. Why is Facebook doing what I do on CTV, and they're calling CTV a dinosaur? The only difference is that yes, CTV tells you when to watch it, but that's also flexible because of PVR. So, you're still in charge on some content that's free to you that's ad-based.
I'm fairly qualified, having lived this in what we did in my previous life which was we over invested in digital to get ahead of the eventual curve that we knew was going to be a la carte downloads of songs albums, evolving to streaming. Well, we're the only media company in Canada that has Crave, aren't we. Aren't we doing the same thing that we did in the music business? And actually, and we have pretty decent partnerships with HBO and Showtime and the like, and their content is on Crave.
We're in an interesting vertical, in that we are a linear broadcasting company that's vertically integrated in mobile, SVOD, iHeart – all those things are coalescing into one vertical and there is a very specific strategy, which I'd have to take you in on an NDA on, to be able to monetize all of those things. Obviously, you can't pretend that if CTV was once (the bulk) of the business, that it's always going to be (that). But, if Bat Out Of Hell works, and The Launch works, and the various other things we're doing worldwide with content works, that'll easily supplant the differential from what the 2005 the revenue was, benchmarked against 2019.
There is a very specific strategy on what I call the teeter teeter-totter of life, which is managing the ebbs and flows of balancing your portfolio and revenue, versus IP. And, I mean, I'm not going to be right all the time, because, as I said, Ty Cobb was .361. What I am is going to say that, in both of my vocations, my history has been okay in those areas and we intend to really help CTV in that regard. We're not putting things just on CTV. They're going on CTV and then they're moving over to Crave. You know what I mean? We're moving the men around the board.
GOB: And I'm one of those people who think that people will tune in on Wednesday at eight, or whatever, if the content is good enough. They'll still make the appointment to see it if it's something they really want to see.
RL: Or they'll make the appointment to PVR it and see it when they want. But I agree with you 100%. Designated and This Is Us, and currently The Good Doctor. The Good Doctor – we're getting 2 million with no drop every Monday night. By the way, not PVR, that's a real-time viewer. The plus-7-live on it brings that 2 million upwards. So people are actually going there at 10 o'clock to watch because they don't want to wait. I love that – and that's a healthy number for a population the size of Canada.
GOB: So, you helped develop a ton of music stars in Canada. So that we have a strong music business. I mean, my daughter is growing up with Justin Bieber and The Weeknd. She's 13-
RL: God bless her.
GOB: I don't remember, when I was that age, Canadian stars of that magnitude, who went beyond Canada like that. So, how do we, because, we still struggle with this on the TV side, find a way to do that with TV, here so that our talent doesn’t have to go to LA to find international success?
RL: The Weeknd was signed to Universal Republic in New York, a rich uncle. Justin Bieber, Def Jam in New York, a rich uncle. Shawn Mendes, Island in New York, a rich uncle. So, when I say that I have experiential issue, I have an experiential issue that we were not in denial, in music in this country. We had a plethora of immense talent that we couldn't scale ourselves, so what we then did was we redirected our energy in 2002 to finding partnerships that could help us scale that – and which, I'm obsessed with doing here, and am doing here.
"I didn't leave Universal to come here and fill quotas. Why would I do that?"
So, that's the way out. That's the way to not have a brain drain, which is what you're describing, creatively, and to have people interested in coming home not because of CMF money and yada yada, and some obligatory thing. I didn't leave Universal to come here and fill quotas. Why would I do that?
So, we're doing it because we actually think we can change the direction of the content of this country, with help. Now, there are instances where Netflix might come up here and say they can do it without us, and that will happen. Particularly in light of possible recent decisions – although, there's not enough context for me to comment on those decisions.
GOB: Creative Canada, you mean?
RL: Yes.
GOB: I mean, nobody knows what their deal says.
RL: Right, so there's no point in me even commenting on it. But the point I'm making is that we do believe that there's a need for local broadcasters to act locally, which we do. We spend $900 million a year at Bell Media on content, in the combination of local news, local sports, local Cardinal, local etalk, local Your Morning, radio shows – I mean, it's almost a billion dollars. It's a formidable amount of money that we spend on nurturing Canadian culture, and we all share in the responsibility, like in music, of traveling that outside of our own borders. I mean, I'm stating the obvious, but we're going to do it. We're in Cannes this week entertaining offers on a new CTV show coming in January called The Launch.
We're in discussions with seven international companies, seven, that are interested, authentically, in representing and partnering with us around the world, because they love the format, the concept and the caliber of talent.
GOB: The list of judges is pretty impressive.
RL: They see that as, wow, that's a world-class Canadian owned production, 100% owned by us, in partnership with Scott Borchetta who's our host – and they're not buying the Amazing Race franchise and doing a Canuck version of it. They're actually making a franchise that I have people that tell me is as interesting as The Voice and American Idol ever were in terms of the nuance and everything that it is. We're trying to make it evidential here that that is how we're going to roll. We're going to own the format and we're going to sell it to them, which is sort of like in music.
In music, we didn't get a 100% of the proceeds, because of the rich uncles. Here I don't need a 100% of the proceeds either, I'm not greedy, but if I fund 100% of it and I get a win in Canada of 35 million people, I'm only missing 3 billion more, so that's not a win.
GOB: When you speak about the quotas, that's the history part of it – and you went through this in music. It’s always been that the broadcasters were forced to make Canadian content. It was a tax on the system. They were making tons of money off U.S. content, and then had to make this Canadian content, too. So people my age, your age, have seen some really lousy shows made… and that kind of infects, I think still, the thinking of the industry in the present day.
RL: I agree. Look, this is all of those challenges, Greg. That's why I'm here.
GOB: Let's talk a little bit about sports television. Do you think it's still the savior that people say it is going to be. Prime time programming ratings are down all around the world, sports are down as well, the NFL is struggling in the States. I don't know what the ratings are in Canada, to be honest with you, but-
RL: They're up.
GOB: They're up? Okay, well, good. (Ed note: A Bell Media spokesperson confirmed "total consumption is up 10% this year for NFL broadcasts on TSN and CTV, driven by strong audience growth across all primetime game windows, including an increase of 12% for Thursday Night Football, an 18% increase for Monday Night Football, and a 53% increase in Sunday Night Football viewership compared to the same time last year.) But is sports still going to still be that key driver that drags everything else in subscription TV along with it?
RL: Well, I think so. I frame the answer this way, where I would say events. The more you can get to live events, bringing urgency, whether that is a Super Bowl, or a Grammys, or an Oscars, or Golden Globes, or an iHeart event, that is the thing that we offer that brings the mass scaled viewers in where you don't want to PVR, because you actually want to experience it for the first time as it happens – particularly an award show. So I think events is really the sustaining helper of linear television, period.
GOB: Let's turn towards Bell Media Studios, and how you're using that to shake up the way you make TV. Now, Sides that was just announced, did that come from there?
RL: Yep. Sides is an online television show and then at the end of the week it'll go on linear. It's a great example of keeping linear and digital coalescing if you will. Sides will be on both formats – and we're working with agencies in terms of co-funding deals. Bell Media Studios is our in-house experiment. Not experiment as in we're testing it, because we're committed, but experiment in that that's where we're trying our new stuff. Sure we're sustaining our shows that we have, but that's where we're really doing a lot of pilots, we're doing a lot of live testing, it's a big part of our priorities It's an R&D arm because, as you know, R&D really is pilot testing.
GOB: Maybe we'll talk a little bit about the radio side, as well. You chose to go iHeart radio, the whole rest of the industry has Radioplayer. How come?
"I underestimated how much they didn't love Bell."
RL: Well, I want to make sure we clarify that. When I arrived here I saw the need for a ubiquitous digital brand that serviced the community, so the first thing I did was approach all of the other radio stations and said, "Why don't we all go on the iHeart platform?" But, I underestimated how much they didn't love Bell. So, they collectively went with Radioplayer and then I read five or six quotes saying, "Well, Bell doesn't play well with others," and, "It's too bad Bell won't be a part of this."
GOB: I heard the same thing.
RL: We are on record with me personally, and then (Bell local broadcast executives) Rob Farina and Dave Daigle following up going to a CAB broadcasters meeting, and doing PowerPoint presentations on how we should all do iHeart together… and everybody patronizing us. iHeart's a fantastic brand, we can do events, we can do community and at Universal I was used to community behavior, because music is very community oriented, so I was really quite taken aback that everybody just went and gathered, rewrote the truth, which is that we weren't part of Radioplayer, which is in fact the opposite of that. We invited this in the first place, and so, I'm very disappointed in that.
Now we're competing with Radioplayer and to my information, we have three to four times the subscribers that they do. That may be false, but that's what I'm being told, but we're well into seven figures now.
And iHeart has yet another event being announced, the Jingle Ball on December 9th. So, we're very happy with it, and we sure as heck would be happy to do a reciprocal deal with everybody. That offer still stands, the one that I apparently didn't make a year and a half ago.
There's 19 iHeart events in America, that spill into Canada and before we launched that, we had a 37% recognition factor. Radioplayer had zero. We did the launch, and we did a focus group, and almost 4 in 10 Canadians knew the brand. There's no brands in this country that start at a 40% recognition level. That's huge. And… trading on that brand, when I phoned and say I need Fifth Harmony and I need Kelly Clarkson at the iHeart event, they say “yes” because it's an iHeart event. It’s a known brand.
GOB: Last question, given all that's going on and what we’ve talked about, where is the growth going to come from? Radio's kind of flat, linear TV ads, ratings are generally trending downwards, where is the growth?
RL: Growth is coming from getting our arms outside of our borders, and letting that be a subsidy to some of the challenges that we have in our country. Could you imagine – now I'm making this number up, I want to be very clear about that – could you imagine where 25% of all of our revenue came from outside of our borders, like the music business, versus 2% or 3% or 4% which is probably what the industry is currently?
I'm talking about revenue now, and I'm talking about EBITDA now. That, to me, is the surefire way to offset any of the challenges we have in terms of our own viewership – plus making great content and keeping that viewership good.
I mean, CTV this fall is up plus one. We're 1% higher than last year in a marketplace that's challenged. Why is that? Because I think we made some really good programming decisions. Plus one.
* Photo of Randy Lennox with Bat Out Of Hell stars Christina Bennington and Andrew Polec courtesy of Bell Media.
