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Kate Linebaugh: Hollywood is making a lot of expensive television these days, and every show has something. House of the Dragon has dragons.

Speaker 2: And all the dragons roared as one.

Kate Linebaugh: The Mandalorian has space battles.

Speaker 3: Alert. Alert.

Kate Linebaugh: And Succession has billionaires on yachts.

Speaker 4: Not everyone can live this life.

Kate Linebaugh: But there’s one show that stands out, Yellowstone. It’s a Western set on a Montana ranch. Our colleague, Erich Schwartzel says one episode can cost close to $20 million.

Erich Schwartzel: Yellowstone is a TV show that 20 years ago, we would’ve thought had the production quality and scale of a big screen theatrical movie. It stars Kevin Costner as the kind of patriarch of this ranching dynasty, and it’s trying to be as true to the setting as possible.

Speaker 6: This might be the only man who can outride him.

Speaker 7: This might be.

Erich Schwartzel: A film on location, they have a lot of horses, they have a lot of cattle. It’s taken off with this really potent combination of just kind of messy family drama and frontier justice. So it seems like it’s kind of taking us back to the John Wayne days in some ways, but it’s also like Gray’s Anatomy on a ranch.

Kate Linebaugh: Yellowstone was created by the writer and director, Taylor Sheridan. And not long after the show debuted on Paramount, it became one of the most popular shows on cable. Paramount ordered more and more shows from Sheridan, making him one of the most powerful showrunners in Hollywood, power that Sheridan has used to create an empire. But last week, Paramount announced a $1 billion loss last quarter, in part because of increased spending on streaming content. Which begs the question, why is Yellowstone so expensive?

Erich Schwartzel: I think this is a story about the very weird, very idiosyncratic way that Hollywood does business and what can happen when a hit maker in Hollywood finds that perfect storm of having a hit show and having a studio that can’t afford to alienate him.

Kate Linebaugh: Welcome to The Journal, our show about money, business and power. I’m Kate Linebaugh. It’s Friday, May 12th. Coming up on the show, why the man behind Yellowstone can’t be corralled. Paramount spends a lot of money on Yellowstone and its universe of spinoffs. The first season of its prequel series, 1923, which is set in 1923, cost the studio $200 million to produce. Erich says that comes out to roughly $500,000 per minute.

Erich Schwartzel: It makes 1923 among the most expensive shows on TV or ever made. We’re talking more expensive than the Game of Thrones spinoff. More expensive than HBO’s video game adaptation, The Last of Us. There’s really a voracious appetite behind the scenes too for every possible location, every possible prop, every possible collection of cattle. Everything that can be put on screen should be put on screen.

Kate Linebaugh: It’s like every single thing on Yellowstone’s set is drenched in excess.

Erich Schwartzel: You might allocate $35,000 for props, but then the bill comes in and they cost $70,000. At one point on this latest season of Yellowstone, there were invoices put into the show’s production offices for 24 horse saddles, and they came to about $23,000. Catering bills would come in double what you would expect. And the show was filming in Montana, and they needed a farrier who is, which is a word I learned, reporting the story. A farrier is someone who comes and applies horseshoes to horses. And they needed a farrier to work the horses. And so they flew two farriers from Texas to Montana to work with the horses. And at this point, David Glasser, who’s managing the production, is asking his colleagues, “Are you serious? We can’t find a farrier in Montana?”

Kate Linebaugh: One of the bigger expenses on the show are the sets. Yellowstone has filmed on ranches, which can be costly to rent, but there’s something unusual about the ranch’s Yellowstone uses. Some of them are leased from its creator, Taylor Sheridan.

Erich Schwartzel: And he charges, in some cases, $50,000 a week, which our understanding is higher than the going rate. And so this goes beyond someone having absolute creative control on a production. He’s also developed a web of other revenue streams for himself that feed off of the productions, and that is particularly unusual. One example that I thought was really telling that we learned of is that Taylor rents a number of his horses to the production, and they use horses that Taylor Sheridan owns for filming, and he gets paid for that on top of the money he already is making to create the show.

Kate Linebaugh: Sheridan declined to comment. Paramount says that Sheridan works with an established team of experts while making the show and that the company ensures the production is making cost effective decisions. So let’s talk about Taylor Sheridan. Who is he?

Erich Schwartzel: Taylor Sheridan is a man who was born in North Carolina and soon after moved with his family to rural Texas and lived on a ranch. He has said in interviews that he was a bit of a ne’er do well growing up. Flunked out of college, didn’t really have a real sense of direction until he moved to Los Angeles and started trying to make it as an actor. And he had this kind of Marlboro Man look. He had a bit of a Texan rancher vibe to him, and he started getting cast in roles that needed someone who looked like that.

Kate Linebaugh: Sheridan was on shows like Walker, Texas Ranger and Sons of Anarchy, but he never became a big star as an actor. So he started writing screenplays and quickly discovered he was more successful as a writer. His calling card was a western bank robbery movie called Hell or High Water.

Erich Schwartzel: Hell or High Water, I believe, taught him that there was a real market for a return to that kind of western storytelling. I also think at that time, he started to really embrace his persona as a cowboy writer. And today, it’s hard to separate Taylor Sheridan, the TV writer from Taylor Sheridan, the ranch owner, Taylor Sheridan, the cowboy.

Kate Linebaugh: And how did he connect with Paramount?

Erich Schwartzel: So several years ago, Paramount was looking to get into the prestige TV game. They had watched as AMC and FX had really kind of owned the world of top-rated dramas like Mad Men, and they wanted to get into that space.

Kate Linebaugh: Sheridan’s pitch to them was a story of ranchers trying to protect their land, and it was a personal story for him.

Erich Schwartzel: There’s this story that he tells time and time again of his parents getting a divorce while he was in college. And in the divorce, giving up the family homestead, giving up the family ranch. And when he found out that the ranch that he had grown up going to and learning how to be a cowboy on was not going to be in the family anymore, his mother has said that he didn’t talk to her for more than a year.

Kate Linebaugh: When Yellowstone premiered in 2018, it focused on a part of America that doesn’t typically get the prestige TV treatment and it became a national hit. Here’s Sheridan talking about the show.

Taylor Sheridan: My goal with Yellowstone, primarily, and then a lot of these other things I do too, was really just to introduce the world to this way of life. There’s so many people that now live in big cities and they have no idea where the food comes from. They don’t know what it takes-

Kate Linebaugh: Yellowstone was so popular that its latest season premier drew in 12 million viewers. And Paramount decided to expand the Yellowstone universe, but to do that meant relying even more on Sheridan. He’s a unique writer in television because he works alone, not in a writer’s room, and creates entire seasons on his own. Sheridan and Paramount put out two Yellowstone prequels as well as green lit two other shows. Paramount told Erich that these shows are among the networks “most successful and profitable”.

Erich Schwartzel: Taylor Sheridan shows were leading people to sign up for Paramount’s streaming service, which, I guess, subscribers are like cattle, more is better. And so Taylor was helping Paramount amass subscribers in a very crowded marketplace.

Kate Linebaugh: So it seems like this is a great partnership. You’ve got a creative with a hit national franchise, working with a studio and spinning off all these other remakes. What’s the rub?

Erich Schwartzel: Well, the rub is that behind the scenes of all of this success were frustrations, tensions, and mounting problems within Paramount over how much the shows were costing and how the productions were being run. And not only that, the costs were accruing on set in ways that many working there thought were completely unnecessary and really beyond the usual boundaries that are set on these kinds of productions.

Kate Linebaugh: And how do these costs connect to Sheridan?

Erich Schwartzel: Hollywood doesn’t have a reputation for frugality, but I think even people who have worked on many different kinds of shows or movies who work on Taylor Sheridan shows describe them as unusual and as another level of spending. And then there also was a sense that what Taylor says goes. It goes beyond writing and producing, Taylor is also renting the shows his horses, his cattle. In some cases, using his personal employees to service the shows. And in other cases, hosting the productions at his properties.

Kate Linebaugh: The address of one of Sheridan’s ranches is 1102 Dash for Cash Road. And earlier this year, he talked at a cattle convention called Cattle Con about how profitable this arrangement is.

Erich Schwartzel: He said to the group of cattle owners, he said, “There’s nothing better than having a movie studio show up, film on your location and pay you a bunch of money for it.” And he said, “It’s about the greatest deal going.”

Kate Linebaugh: These deals are great for Sheridan, but what about for Paramount? That’s next.
Last week, Paramount’s stock dropped nearly 30% after it reported it lost $1 billion in the first quarter of the year.

Bob Bakish: We’re also navigating a challenging and uncertain macroeconomic environment, and you see the impact of that in our financials.

Kate Linebaugh: That’s Paramount CEO, Bob Bakish on an earnings call earlier this month.

Erich Schwartzel: Over the past several years, we’ve seen streaming companies just pour billions and billions of dollars into programming because there was a mentality that you had to acquire subscribers at any cost. That model really came home to roost, and a lot of those expenses started to really add up. And Paramount really seems to have hit that moment last week with these earnings. And they had said on the call that part of the reason for the losses were costs in their streaming division.

Kate Linebaugh: And is that because of Yellowstone?

Erich Schwartzel: Well, Paramount would argue that their losses would be higher if they didn’t have Yellowstone because Taylor Sheridan shows are profitable for them. But it was really telling that one of the reasons that Paramount CEO, Bob Bakish said that the losses were so steep was because their costs were so high. I was listening to the earnings call and thinking about the emails and invoices I had seen and the emails I had seen of production executives pulling their hair out and saying, “Wait, we really have to spend this amount of money on horse saddles? We really need this amount of money on prop jewelry?”

Kate Linebaugh: And what has Paramount said about this?

Erich Schwartzel: Paramount, whenever we spoke to them for this story, really came to Taylor Sheridan’s defense and Paramount has been facing some real headwinds in its streaming business, but they would argue that those headwinds would be even greater if they didn’t have Taylor Sheridan and his shows in their arsenal.

Kate Linebaugh: 101 Studios, the production company that makes Yellowstone said that it works with Sheridan to balance saving money and making the show as high quality as he expects. The company said the franchise is so successful that it’s worth the costs. So Yellowstone is paramount to Paramount.

Erich Schwartzel: Well said, yes. Paramount is really struggling in a market where much bigger and deeper pocketed competitors are trying to win subscribers and eyeballs. So think of it this way, Paramount is a small fish in a big pond, and Taylor Sheridan is a big fish in that small pond. It’s really this perfect storm that has allowed Taylor Sheridan to compound his power and leverage over Paramount because they can’t afford to lose him because he’s really all they’ve got to compete with much bigger competitors.

Kate Linebaugh: Has anyone raised concerns about Taylor Sheridan’s unusual relationships with his productions where he’s renting his own ranch to the show?

Erich Schwartzel: Paramount and the production company behind Taylor Sheridan’s shows were very quick to say we love being in business with this guy. But we learned through private correspondence and interviews with executives that, yes, there are concerns that this is gotten out of control and that Taylor Sheridan’s leverage has given him really outsized influence over how the productions are run.

Kate Linebaugh: Right. He’s like the bottom Jenga block.

Erich Schwartzel: I think when it comes to Paramount’s streaming strategy, he’s the bottom block, but he also made the block and runs the cafe where you play it.

Kate Linebaugh: Last week, Paramount announced that Yellowstone would end after this latest season, but Sheridan’s contract with Paramount runs through 2028.

Erich Schwartzel: The world of Taylor Sheridan stories really is functioning almost without Yellowstone at this point. Yellowstone is still a big hit, but he’s got other shows that he’s working on of a similar vibe. He’s really hit on something and he’s got a lot of other things cooking. And so I don’t think Taylor Sheridan and his kind of particular brand of frontier narrative is going away anytime soon.

Kate Linebaugh: What does this story say about Hollywood right now?

Erich Schwartzel: I think the narrative had been Taylor Sheridan, the industry’s most prolific TV writer and creator, is just racking up one success after another. And what I think our reporting showed is that there is a shadow to that success. We’re accustomed to hearing stories out of Hollywood of producers or writers or directors having a lot of perks or getting what they want because of their track record. This took it to a whole other level. And in the case of Taylor Sheridan, that success has been parlayed into remarkable power and remarkable leverage, and really, a dynamic we haven’t seen in a long, long time.

Kate Linebaugh: That’s all for today, Friday, May 12th. The Journal is a co-production of Gimlet and the Wall Street Journal. The show is made by Jade Abdul-Malik, Annie Baxter, Ariana (Bow), Katherine Brewer, Maria Byrne, Pia Gadkari, Rachel Humphreys, Brendan Klinkenberg, Ryan Knutson, Matt Kwong, Jessica Mendoza, Annie Minoff, Laura Morris, Afeef Nessouli, Enrique Perez de Rosa, Sarah Platt, Alan Rodriguez Espinoza, Jonathan Sanders, Pierce Singgih, Jeevika Verma, Lisa Wang, Katherine Whelan, and me, Kate Linebaugh. Our engineers are Griffin Tanner, Nathan Singhapok, and Peter Leonard. Our theme music is by So Wiley. The theme in today’s episode was remixed by Nathan Singhapok and Griffin Tanner. Additional music this week from Catherine Anderson, Peter Leonard, Bobby Lord, Nathan Singhapok, Audio Network, Extreme Music, and Blue Dot Sessions. Fact checking by Nicole Pasulka. Thanks for listening. See you Monday.

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