Hollywood’s $10 billion opportunity: McKinsey study says anti-Black bias hurts revenue

If Hollywood were to address racial inequities in the film and TV industry, annual revenue could rise by 7%, or about $10 billlion, according to the findings of a new study from McKinsey.

The consulting firm’s research found that Black-led stories are underfunded and undervalued.

“A complex, interdependent value chain filled with dozens of hidden barriers and other pain points reinforces the racial status quo in the industry. Based on our research, we catalogued close to 40 specific pain points that Black talent regularly encounters as they attempt to build their careers,” the authors of the report wrote.

Franklin Leonard, the CEO and founder of The Blacklist, which aims to democratize writers’ access to the entertainment industry, and a former McKinsey employee, prompted the consulting giant to undergo this study last June.

“I reached out to some of my former colleagues and said that if you’re interested in studying racial inequity, one place that you can do that is Hollywood,” Leonard said. “Especially because not only does that economic inequity exist within our industry, but we export and amplify stories around the world, that also then has material effects of the lives of Black people and people around the world.”

The management ranks of the film and TV industry are disproportionately white. Ninety-two percent of all film executives are white, the report said. McKinsey noted that that’s more than any other industry, including finance and energy. The TV industry is slightly more diverse than consumer goods, finance and transport/travel, at 87% white, according to the report.

And while the U.S. population is roughly 13.5% Black, the report finds that 6% of Hollywood film’s writers, directors and producers are Black, while 8% have at least one Black producer.

McKinsey said there are key barriers to entry, including the fact that entry-level entertainment jobs often offer low or no pay. The research underscores that industry jobs are often shared among small, overwhelmingly white elite networks.

Another challenge is bias — both unconscious and overt.

“We have extraordinarily talented Black community in Hollywood and they’re doing extraordinary work,” Leonard said. “One has to wonder what they’d be capable of and what Hollywood would be capable of if we actually remove those obstacles and allowed everybody to participate on a level commensurate with their ability, and frankly commensurate with their ability to deliver a return on the investment.”

Leonard said he was “most shocked” by numbers regarding return on investment.

“Black content, despite being underfunded, under-supported, under-distributed, still delivers a better ROI by about 10%,” he said.

To help level the field, the study recommends that studios embrace transparency and accountability about their own ranks, and expand recruiting to state schools and historically Black colleges and universities. That could be accomplished with the help of a third-party organization.

Leonard noted that the potential $10 billion windfall that could be derived from diversity efforts is specifically tied to underrepresentation of Black talent and executives. The total opportunity is significantly larger than that if other underrepresented minorities are added as well.

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