The Evil Genius of Tyler Perry

First of all, let’s get this out of the way, there will be race talk in here. Get over it. People buy stuff that resonates with them, and much of that is driven by a mutual connection with the content in entertainment, and Tyler Perry’s target audience is the black community. If that makes you uneasy to admit, then grow up and let the big people talk.

“So who is making all the money in Hollywood these days?” you ask.

“The horrible woman who wrote Twilight” would be my shameful answer. But the problem is in the question. The real money being made in media entertainment these days is Peach State money, in Atlanta.

“Was it the creators of amazing, heroic characters like Captain America, Green Lantern (sorry, that movie sucked), or Iron Man 2 or rich dramatic films like Moneyball, Midnight In Paris, or Drive?”

Sorry, wrong again. It was the mind behind these costumed stooges:

Yeah, Tyler Perry has created an empire off of this stuff.  I recently read that Tyler Perry made the most money in entertainment last year, taking home $130 million, and I just could not believe it. So, I started looking into what this guy is up to.

Spike Lee said the following about Tyler Perry:

"I think there's a lot of stuff out today that is coonery and buffoonery. I see ads for 'Meet the Browns' and 'House of Payne' and I'm scratching my head. We've got a black president and we're going back. The image is troubling and it harkens back to Amos 'n' Andy."

To which Perry responded that Spike “can go straight to hell.”

But this beef is unfounded, in that you have a great filmmaker arguing with a great businessman. Art and business never work in mutual self-interest.

Perry has a formula:

1. 1.Black characters, setting, community.
2. 2.Have one outrageous character with a sassy mouth who’s not afraid to offend you.
3. 3.Include stupid or evil white people.
4. 4.Jesus is the answer to the problem.

BOOM, you got a movie! This is Blaxploitation 2.0 (but not awesome as I’m Gonna Git You Sucka! or Super Fly).

I agree with what Spike is saying: Perry is selling shit sandwiches, but the dude is slaying it. Here’s how:

1. 1. Find an underserved segment of the market and exploit it
   

Look at the box office offerings. Do you see anything where the stars are black, set in a black community, and centered on issues within the black community? Nope. 

This is a hugely underserved segment of the marketplace, and one dying for some content that is relatable. Perry writes, casts, and distributes his work in ways that reach this market, and he does it better than anyone. Most of his movies/shows stem from his plays, like a grass roots campaign. Whatever is well-received on stage, then makes it to theaters, then makes it to TV, then makes it to syndication.

2. 2. Create a rock-solid brand
   

Tyler Perry Presents... Everything he puts out features his name, which is synonymous with black entertainment. Like Oprah and Trump, it really doesn’t matter what comes after those 3 important words.  He could come out with Tyler Perry Presents: Madea Plays “Words With Friends” While Taking a Dump and it will sell at this point.

3. 3. Own Everything
   

This guy controls almost every aspect of the life of a movie/show. He writes, produces, finances, distributes. If you pay $10 for a Scorsese movie ticket, Marty gets a nickel. If you pay $10 for a Tyler Perry movie ticket, Perry gets $5 (but consider he's handling all the cost too). 

4. 4. Maximize Returns
   

Does he ever cast a movie star? Hell No.

CGI? Not a chance.

Elaborate set? Get real.

Perry’s 8 films have grossed $418 million. That’s an average of $52 million each. This is in a world where Avatar cost nearly $500 million to produce and market.

But the average Perry movie costs less than $10 million.

Here is a VERY basic cash flow model for an average Perry movie, all figures are in $ millions:

This shows average cost and average sales numbers.  The DVD and TV Rights numbers are capitalized. All cash flows are net to reflect what comes to Perry.

So, he makes 4 TIMES his money back and an annualized rate of return of 1000%. HOLY SHIT!

I cannot think of another investment that generates that kind of yield. Now I know why Ice Cube is trying to copy Perry’s business model with Are We There Yet.

So in summary, Perry is a creative hack who is not exactly trying to change the social consciousness. He writes/produces a movie or two a year and has 3 TV shows- so how much can he really pour himself into on any of them? He is to the black entertainment consumer what the Twilight creators are to lonely middle-aged white women.  But this guy knows how to push product and make a nasty return.

Spike Lee can talk all the shit he wants, but Tyler Perry could buy his beloved Knicks and move them to Decatur just to piss him off.

This is how to become a billionaire in America:

This ain’t rocket surgery. 

Is Greece Really the Linchpin for the Biblical Apocalypse?

OK people, every day for God knows how long, I have been reading in Section A of the Journal that Greece, and thus the world, is on the brink of financial collapse.  The European Union debated about whether to bail them out, Tim Geithner sounds off about how they should do so, and it appears that it is going to happen.
 
My question is, if Greece were a publicly-traded company (which is many ways countries are with foreign exchange, sovereign debt trading, etc.), would you buy this stock?  Does Greece have a viable business model  (yes, I realize governments aren’t supposed to be profitable, but at least consider them non-profits, in that they should still maximize the resources available to them to sustain and grow the organization on its own)?  Does it make sense to provide ridiculous entitlements to employees such as retirement around 50 years of age, the cost of which can only be funded by debt that you know you cannot pay (think GM)?
 
If you answered “yes” to any of the above questions, I’d love to talk to you about making an investment in a Myrtle Beach timeshare.
 
Because you’re an idiot.
 
So, why are the world’s central banks all for bailing Greece out?  Let’s take a look-see:
 
Of course the European Union wants to bail out Greece.  The Euro was a bad idea from the beginning; essentially have one currency for several nations that all have their own best interests in mind.  Would you support replacing the US dollar with a confederated currency alongside Canada and Mexico?  We could give it a cute name like the Ameri!  This sounds like an amazing plan: you could pay for a fresh Molson draft in Toronto, a $150 ticket to Disney Land in California, and a live donkey show in Tijuana without ever having to go to the bank to for a currency exchange.  Think about it, sounds good, huh?  How could it go wrong?
 
Well, it’s going quite wrong in the Eurozone, and the EU nations are looking out for their own individual best interests.  Of course, I get it, but why would the US support such a foolish idea?  
 
Here’s an excerpt from yesterday’s Los Angeles Times:
 
“Federal Reserve Chairman Ben S. Bernanke noted in comments on June 22 that the funds have had major holdings in short-term debt or certificates of deposit from large European banks in Germany, France and Britain. Fitch Ratings said in a report last week that the biggest U.S. money funds had about 50% of their assets in paper from those banks.”
 
Yes, when you put your savings into a money market account, half of those funds are invested in Eurozone treasuries, repos, commercial paper. etc.  After the fallout from the Lehman collapse, we saw a far greater proportion of money market funds funneled overseas and away from American short-term debt obligations.  In 2008, we saw a near run on the money market funds in the US, so they sought to diversify away from American investments, and into countries with whose fiscal/monetary policies the US starkly disagrees.  
 
And that would be why the typically unsnuggly Tim Geithner has such a sympathetic spirit towards Greece.  He’s really just a big sweetheart, when you think about it.
 
When you have a fiat currency where money is really worth nothing other than a relative amount of some other country’s money, which is really worth nothing other than a relative amount of some other country’s money, which is really worth nothing other than a relative amount of some other country’s money…  Well, you get the picture.  When the US was on the gold standard, we could just say, “screw those crazy assholes, they deserve to go bankrupt.  Now I know where to get a really cheap gyro.”  But no, everybody has to prop everyone else up.  
 
And everyone warns that if Greece defaults, it will set off another worldwide financial crisis.  Well, if you invested in Bernie Madoff (Greece in this case, just in case you’re not a fan of parallels) or any of the “feeder funds” that just forwarded the money to him (Eurozone debt/commercial paper/The Euro/50% of US money market funds), you did not get your money back.  Bernie took that money and bought yachts, houses, and really expensive porcelain cats that his wife loves.  Similarly, Greece took all that money, and gave it to people who work 30 hours a week and retire at 50 while scoffing at how hard Americans work.  In other words, the money’s gone.  Let them go bust and have those retirement checks to 52-year-olds bounce, so they can get back to work .  
 
And if their default causes worldwide defaults, so be it. All these countries running up ridiculous debt (the US included) need a reality check.  Government debt yields have no business being so low, as it incentivizes more bad behavior.  Borrowing needs to sting!  A 6-26-11 Financial Times article titled “Threat of $100bn Hit if US Top Rating Lost” predicts that the US would have $2-4 billion more yearly interest expense if they lose their AAA credit rating.  Well, they should!  If I ran my credit card up beyond its limit, the bank would jack up my interest rate.  Why are governments any different? Again, would you buy stock in a company that lends to failing banks, cannot grow revenues and refuses to cut costs, buys “clunkers” to just be scrapped, pays it’s people to stay at home, and pays the most profitable companies on the planet to drill for oil on its land?  Hell no.

Also, just to touch on that CATASTROPHIC interest rate increase of $2-4 billion per year- The wars in which we are currently engaged cost about $1 billion per DAY.  So, politicians who demand a continued presence in the Middle East but decry the idea of leaving the debt ceiling untouched should pull their heads out of their asses and get some perspective.
 
I could also go into how insane it is that the Fed can buy Treasuries to manipulate interest rates (all with more borrowed money), but that’s another discussion in itself.
 
Will Greece defaulting on its debt result in worldwide collapse, frogs falling from the sky, oceans turning red, Road-Warrior-esque gangs of mutants fighting in the desert for gasoline, or Kim Kardashian’s ass to suddenly deflate to the size of a mere mortal's?  Maybe, or it might just be the “come to Jesus” moment we need about debt on a national level.