The StudioCo Story
Act 1: A Legacy on the Brink
StudioCo was a small independent film studio with 16 sound stage lots in the heart of Los Angeles, which began as a beacon of Hollywood’s Golden Age. Founded in 1918 during the Silent Film Era, it produced cinematic landmarks such as Gone With the Wind (1939), Citizen Kane (1941), and E.T. the Extra-Terrestrial (1982). Yet, by the late 2000s, the studio found itself amongst the ruins of the great financial crisis.
Once owned by Lehmann Brothers, it was now part of the company’s Liquidating Trust, whose raison d’etre was to dispose of what remained of the once great financial institution. It was time for StudioCo to be sold, but by this time, the Company wasn’t worth much more than the sum of its parts.
Many financial owners often don’t have the industry experience or capacity to actively manage every company in their portfolio. Furthermore, these particular owners were running an asset liquidation, and production studios are already infrequently seen assets. As a result, StudioCo was one of the last assets in the portfolio to liquidate. That passage of time contributed to two key characteristics of this sale. First, the Studio was staggering toward a slow collapse under ineffective leadership. Second, as a result of the success of the previous assets’ liquidations, the owners had a war chest, and they were ready to use it.
By 2012, the studio operated at a dismal 30% capacity. Its aging infrastructure hosted a handful of dated productions like Cougar Town and The Ricki Lake Show, struggling to secure new clients. The strangely bucolic StudioCo was being run by a CEO known to take out their own shortcomings on employees and customers alike. Their self-serving attitude had driven the company into a fearful malaise, and prospects for future revenue were not good.
Indiana University Professor Pekin Ogan often told his graduate business students that “Fish rots from the head!” He was an accounting professor and saw where the rot landed from a review of financials.
The decay in leadership contributed to a survivor culture: Everyone was out for themselves and protecting themselves, sometimes at the expense of others. Unfortunately, self-protection is the accepted and dominant culture in the production industry. It is a very challenging industry to make a career (i.e.” cutthroat”). Power is concentrated and protected once it is gained. Relationships are highly transactional. Geographically, it’s LA and wherever else. Once you’re known, you have a target on your back. Until then, you’re nobody.
Couple that outside cutthroat culture with the toxic culture inside StudioCo, and employees would hide to feel safe, avoiding action at the risk of making an error. They were afraid to raise important issues for fear of retribution, so preventable mistakes turned into costly errors, which snowballed into crises.
One notable blunder involved a client producer ordering an expensive moving light system for a pilot production. StudioCo’s head of lighting filled the order without proper due diligence. Once it arrived, they realized the order cost more than the entire budget—not just the lighting budget but the entire production budget. A production flop may limit a filmmaker’s ability to make future productions, but having a production flop and also blowing the budget can be career-ending.
The need for change became undeniable, and in the summer of 2012, the Owners took decisive action by replacing the President, a day that would become known as “StudioCo Independence Day” – which was celebrated annually by the employees. That leadership change set the stage for the resurrection of StudioCo and a renewal of the culture.
Act Two: Reviving a Fallen Giant
Culture Eats Strategy For Breakfast
When a management team gets sacked, the result is further retrenchment into foxholes as people fear they might be next. Often, people think of fleeing the situation, as walking out can often be better than getting kicked out. With a change in leadership, you only get one chance to intervene or risk losing trust and personal forever.
Without fixing the company culture, performance improvement wouldn’t be possible. Changing the most obvious things had simply become too risky. The previous zero-sum leadership didn’t support change agents because doing so would be inviting a critique of their operational leadership, which they didn’t tolerate. If a change did occur and it did work, it was perceived as undermining leadership. Progress, learning, and individual development was getting squashed.
Cooper Crouse, Meadowlark’s Managing Director and part of StudioCo’s new interim management team took the opportunity to refocus the organization. The StudioCo Mantra became “Mission, Team, Individual.” Prioritize the mission, rebuild the team, and take care of the individual.
Taking care of the individual meant empowering frontline workers to get the job done and providing them with meaningful support – not just words and waves, but real help. The Company used the Belbin Team Role Inventory tool to help teams identify strengths, address weaknesses, and foster collaboration.
A striking example of this approach involved the Facilities Leader, a creative problem-solver overwhelmed by the mounting demands of studio renovations. Through team feedback, it was determined he needed a right-hand assistant to handle execution. Humbled yet receptive, he agreed, and this addition significantly accelerated project completion, generating momentum and morale across departments.
Taking care of the individual also meant identifying talent and promoting within. One individual who had been given a closet-size office and was in charge of creating ID badges for hundreds of production team members was promoted to running the entire parking and security department of the productions’ day-to-day operations – a role they thrived in. This was all made possible because the company prioritized giving people opportunities to succeed, providing support, and training whenever possible.
To rebuild the team, all of StudioCo’s operational leaders would need to become congruent, consistent, and customer-focused in a manner that directly supported the Mission. This required assessing all the studio’s processes, starting with marketing and sales. The Studio revamped marketing efforts, redesigned the company website, modernized rate cards, and launched targeted campaigns.
Eventually, all key functions were aligned and engaged when new production kick-off meetings were held between the production team showrunners and staff, the StudioCo salesperson, and the department leaders. The meetings would review the executed contract and the studio support commitments. Everyone was encouraged to ask questions, get clarity, and look for potential issues before production teams ever came onto the Lot. Often, the teams would find items missing from the contracts, which became a way of avoiding costly surprises for production clients and opened up incremental revenue opportunities for StudioCo.
These efforts led the company to execute its mission of being the best independent studio for productions that needed flexibility and accommodations not always available on larger studio lots.
Fill The Box!
The market was dominated by a few major studios that were incredibly well-financed and had the latest and greatest technologies. At the other end of the spectrum, places like Vancouver, Texas, New Mexico, Ireland, etc.… were offering aggressive tax incentives and cheaper labor to attract production budgets. In this competitive environment, StudioCo would have to differentiate itself.
The company switched to a customer-centric model and rebranded the studio as a retro studio (given its rich history) with modern sound stage capabilities. They elicited feedback from prospective customers and implemented the necessary changes. Is the commissary not making the cut? It was remodeled and expanded. Did the offices seem old and dingy? They were cleaned up and painted. Are our production office security controls not adequate for the most secretive projects? Facilities were renovated, and access systems were upgraded.
The company also reinvented its pricing model. The large studios always offered studio space at a flat rate on a per-day basis. StudioCo committed to doing the opposite and created a new pay-per-use model. In some instances, the company gave the box away for free but then charged customers for all add-ons with sufficient margin. Electrical power would be metered and priced by Kilowatt-hour usage, food would be charged by the meal, and office space next to the production box would be rented out so producers could watch dailies over lunch without having to leave the studio. This approach offered clients transparency and budget control while generating incremental revenue for StudioCo
The culmination of these efforts led to StudioCo landing their first large customer in a long time: The Agents of S.H.I.E.L.D
Act Three: The Streaming Wars
By 2013, one of the greatest corporate blunders of the decade was well underway. Netflix’s relationship with the production companies broke down. Netflix, which was on its way to becoming the cable provider for the digital era, ended up producing its own content. Overnight, Netflix went from a distribution provider for the major content creators to a competitor. The production companies responded by sunsetting their current distribution contracts while building their own networks. All the production companies would go on to pour billions into creating new original programming to get subscribers to their emergent platforms. This period became known as the Streaming Wars.
StudioCo’s positioning as an agile independent studio became a strength. Netflix, Amazon, and other newcomers turned to StudioCo for productions like The Roast of James Franco, A League of Legends Competition, Silicon Valley, Betas, and more.
For the first time in years, all 16 sound stages were fully booked, the company even ran out of parking space and had to rent additional parking space across the street. To manage the surge, StudioCo implemented a production planning model that optimized stage utilization, accommodating the fast-paced schedules of multiple productions. Simply put, business was booming.
In spring 2014, less than two years after its dramatic turnaround began, StudioCo was acquired by a private equity group for $85 million—a staggering 300% increase in value.
Disclaimer: The company name has been changed for confidentiality
