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8 months ago
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EXCLUSIVE: By his own admission, Angel Studios CEO Neal Harmon does not fit the bicoastal profile of the typical film executive.
At the start of an hour-long interview with Deadline at New York’s Greenwich Hotel, the Tribeca venue owned by Robert De Niro, Harmon acknowledged that he was on only the second trip of his life to New York City. Asked for his impressions, he marveled, “It’s amazing to see so many people coming together and creating something like this city.”
The exec is the third of nine Harmon children raised in a Mormon family on an Idaho dairy farm. Two of his brothers are also execs working at Angel, and another runs one of its episodic series. The family business has hit new heights over the past year, releasing left-field blockbuster Sound of Freedom and selling global TV rights to its Biblical series The Chosen to Lionsgate. This year, Angel Studios plans to release six wide-release films, including period biopic Cabrini on Friday.
Despite all of the headlines, Angel remains shrouded in mystery for many in Hollywood. Harmon hasn’t given many interviews, but he is starting to tell Angel’s story more widely, recently explaining its unique business model to talent agencies seeking alternatives to the tempest-tossed major studios. While faith-based films are Angel Studios’ wheelhouse, the company defines the category broadly. Sound of Freedom used an action-thriller framework to tell the story of a real-life activist against child trafficking, grossing $250 million worldwide. Cabrini, by contrast, has an overtly Christian storyline, depicting the life of 19th century Catholic missionary Francesca Cabrini. Comedy and sci-fi are two of the many other genres in the mix.
Harmon and his brothers acquired digital marketing expertise in the early days of YouTube before making an awkward showbiz entrance a decade ago with the streaming service VidAngel. The company’s distribution of sanitized versions of Hollywood titles drew a lawsuit from Disney, Warner Bros. and other studios. During the case, Harmon raised $10 million from individual investors, using half for legal fees and the other half, when the studios prevailed in court, to launch Angel Studios. Instead of a green-light committee seated around a Hollywood conference table, Angel uses a “guild” comprised of 250,000 online volunteers evaluating materials and screening rough cuts. Some guild members (about 6,000 in the case of Sound of Freedom) also invest money in the films, and all guild feedback is used to fine-tune projects on the way to the screen. Another tool for the company is a “pay-it-forward” ticketing setup, which lets enthusiastic moviegoers pay for a stranger’s ticket, putting money where the word of mouth is.
In this wide-ranging conversation, Harmon described overcoming “spectacular” business failures and and challenges during his childhood and his plans for Angel Studios in the coming years. The following transcript has been edited for clarity and length.
DEADLINE: Before we get to any present-day stuff, I want to ask about your origins. I read that you grew up in Idaho, but can you fill out the picture a bit?
NEAL HARMON: About 12 miles outside of Burley, Idaho. Our closest neighbors were more than a quarter-mile away. We had to put a hanger on the antenna to get it just right to get three channels.
DEADLINE: What were you experiencing in terms of pop culture? Those three TV channels? Movies?
HARMON: We worked a lot. I started moving pipe when I was 9 years old. I bought a calf when I was 11, and we did anything we could to make ends meet. My dad lost his farm when I was probably 5 or 6. So, with all that work, it was wonderful to escape, once in a while, and I have some very distinct memories of films that had an impact on us because we were out there, in the middle of the desert, working on these farms. I was at my grandparents’ house in Utah, and they pulled out the 1977 New Hope [Star Wars, Episode IV]. I don’t remember if it was on TV or if it was on VCR. I was born the year after that movie, and that was like one of those moments where I bought the story hook, line, and sinker. I was part of it, and so, when we would work on the farm, we would play and pretend that we’re out there and that the Empire is coming to attack us, and this is the way we’d play. Also, Swiss Family Robinson had a big impact on us because we had a bunch of trees behind our house, and we built a city in the trees after that movie.
DEADLINE: Did you have an entrepreneurial bent early on?
HARMON: At 11, I bought a cow and built a plan to make a dairy, because that was what I knew. I had calculated the percentage of the cows that would have heifer calves versus the bulls, and then what the mortality rate would be, and when I would buy the land, the neighbor’s land, and support the growth of my cattle business. I only ever made it to 9 cows, and my first calf was a bull. It was not heifer twins, which was part of the plan.
DEADLINE: In college, did you end up studying anything related to business or marketing?
HARMON: I served as a missionary. When I was young, I was very interested in business. I was interested in money and helping my family get out of our circumstances. Then, I served a mission and taught the scriptures and taught the Gospel in Mexico, and I came back feeling like I wanted to be a professor or a teacher, and my mom encouraged me because she felt like our lives were very stressful, and so I started down that path, and I even had a full-ride scholarship to Penn State to do a Ph.D.
When I finished up my Master’s degree, I stopped at the very end of the program, I went outside, and I said, ‘I am so sick of being in buildings, reading and writing stuff for very, very few people.’ I went home and said to my wife, ‘I know I can become a professor, but I don’t know if I can become an entrepreneur. And I don’t want to live my life not answering that question.’ So, I went home and talked to her, and she said, ‘You know, I’d support you if you went that route. We did. We failed spectacularly on the first business. I got an offer someone to buy it right before 2008, and I should’ve sold, but I didn’t. Then we ran out of capital.
DEADLINE: Rough timing with the financial crisis.
HARMON: Yeah. So, it took me about seven years to pay off. I had taken money from family and friends, and I paid everybody back. My wife, she was a trooper, and she grew up poor, and she wasn’t afraid of being poor, so she stuck with me through all that. I learned all the lessons I needed to know in order to actually make a business successful, by failing.
DEADLINE: You ended up with a front-row seat for the YouTube revolution, using it to market products like Orabrush and Squatty Potty and being a charter sponsor of VidCon and getting to know creators. How did that lead to VidAngel?
HARMON: We started an agency before VidAngel. Jordan, the brother who is 13 years younger than me, was living in my basement, and we started VidAngel together in the basement.
DEADLINE: Did you have kids at that point?
HARMON: I had a 9-year-old boy, and I had younger daughters.
DEADLINE: Were you watching things with them and suddenly something you didn’t anticipate would be on the screen?
HARMON: My son was trying to learn honesty, and I wanted to show him Cinderella Man, because there’s a scene where the boy steals a salami, and his dad, Russell Crowe, bends down with him and says, ‘Son, we don’t steal.’ That moment was so powerful that I just wanted him to see that moment. But I didn’t want him repeating all the words that the coach said to the Russell Crowe character with his younger sisters. So that’s why I went and wrote a program to make it so that he could watch that movie and learn the principle of honesty.
DEADLINE: Whatever your intentions, for the creative community, let alone the rights holders and the studios, it rubbed them the wrong way. It’s a very provocative thing to alter someone’s work.
HARMON: Sure.
DEADLINE: Eventually, VidAngel was successfully sued and you decided to change direction and launch Angel Studios. In making that transition, did you feel you needed to repair any of the reputational damage or rethink your strategy?
HARMON: I think most mothers have covered their kids eyes or pulled them out of a movie before because they didn’t want their kids to experience something that they weren’t ready for. This is not unusual. So, all I did was just create a tech to help Trisha and me do that with Michael, and that was it. That was the only motivation at that time. The company started a year later [in 2014]. And the reason the company started is because a new technology became available, where we realized it could be product-ized and that if we product-ized it, we’d would attract an audience of people large enough that we could then tell stories for them better than was being done by Hollywood. We thought, ‘If we do this, we’ll grow the audience to a certain size, a million paying customers, and then we’ll launch our own stories.’ But we got sued before we hit 200,000 customers a month. And then the court sided with Disney in the injunction, and then we announced the studio literally the next day. So, what we’re doing today was the original goal.
DEADLINE: And did you see it as pushing back against the major studios?
HARMON: We even had the symbol of Darth Mickey, a little David-and-Goliath-type imagery, that said we were fighting the big, bad Goliath. I think that our audience also had a lot of anti-Hollywood messaging and that they resonated with that. We’ve had to pivot that messaging, where we’ve gone from saying, ‘Hollywood is the enemy’ to, ‘No, Hollywood is the best story-telling creative group in the history of the world.’ And they love their craft, they’re very good at it. The only issue is the people who are deciding what stories should be told. Those are the gatekeepers, and if we can flip the script and let the audience be the gatekeeper, or the gate opener, then everything else about Hollywood, we want to embrace. I don’t know how well we’ve executed on that, but that’s kind of the transition that we’ve been making.
DEADLINE: Has Hollywood been receptive?
HARMON: We’re working right now with the Screen Actors Guild. We have a good relationship with them. During the strikes, they gave us interim agreements and we were able to keep our productions going.
DEADLINE: Was Cabrini one of those?
HARMON: It was done before the strikes. SAG/AFTRA had a good experience working with us, and we with them, and so, we’re just learning this industry as farm boys trying to…in fact, [our publicist] set up some meetings with WME and with UTA, and we met with those guys and had the most amazing reception. They had projects that they were working on that they thought were right for Angel. They were just saying how much they want to make sure that they can translate our model to language that the industry can understand, because we’re just a bunch of farm boys who are trying to make sense of the way this works, and make sure everybody wins and makes money, as long as the projects win, and we don’t know exactly how to communicate that.
DEADLINE: Sound of Freedom was such a phenomenon last summer, but it confused a lot of people. There was the pay-it-forward model. And there was also the way it was marketed. You’ve been quoted as saying that it’s not a political film, that you were not trying to hitch your wagon to any particular movement or to the QAnon conspiracy crowd. But it did benefit from the overlap and that was at least an ingredient in how it got to $184 million in domestic box office. Of course, the financial result was massive, but I think the film is interesting in light of your mission statement, which talks about choosing stories that “amplify light.” How does Sound of Freedom amplify light and would you do a sequel or something similar? Cabrini and other projects on your slate seem completely different.
HARMON: One of the things that’s a little tricky for the industry to understand is the fact that the Angel Guild – a quarter-million people who vote on which projects we take – that we truly don’t take anything to market without them. I don’t think people truly understand that or believe it, and over time, they will. They’ll understand because I think we’ll outperform the rest of the market because of their knowledge. They’ll understand because they know that they can join as a guild member. Anybody can join the movement to have audience-guided, audience-decided releases, but the Angel Guild not only selects the winners, they help refine them, they help invest in them, and they help launch them. When we take a project to market, it comes with this launch base who believe in it, who believe that that’s what the brand, what it represents, that it and Angel are the same, that this film being launched represents them.
So, when you ask why did we take on Sound of Freedom, how does that amplify light? Well, the definition of light is actually, the ones who identify it are those 250,000 people. We had a thousand of those people watch Sound of Freedom, and they said, ‘Yes, this is it.’ Now, they were looking at a film that was made years before the conspiracy theories that were claimed against the film ever existed. It was made before any allegations were ever made about [real-life anti-child-trafficking activist Tim Ballard], or even when those allegations would actually be dated.
Now, would we do it again? Well, it just so happens that July 4 of 2024, we are launching Possum Trot, this film about 22 Black families from Possum Trot, TX, who adopted 77 children from the foster care system. They went through so much because some of these kids were trafficked, some of these kids had been abused by their parents, one of these kids, their mother was murdered right in front of them. Difficult, difficult, hard, hard stuff, but this little community changed the face of the entire foster care system of Texas just because of that selfless act, and we’re telling that story because, for one, it’s excellently made, two, is that the guild overwhelming voted for this film, and then, three, the government says that 90% of trafficking in the US is connected to the foster care adoption system. And so, it is a natural answer to the problem that was presented by Sound of Freedom, on July 4, last year, and we’re following it up with a release on July 4, this year, that is an answer. Now, would we choose to politicize a movie? No. That’s the one thing that we feel like Angel…people are saying, I saw an article recently that says we can’t figure Angel Studios out, because they saw Sound of Freedom. The common thread is that the guild has reviewed them, and the guild say, yes, these stories, they’re filled with light, they’re filled with hope, they are dark topics, sometimes, but then the way that they’re handled is in a way that the guild thinks that they match our mission.
DEADLINE: And when you say the guild refines films, do you mean in test screenings?
HARMON: Yeah. So, I’ll give you a good example of a film that’s coming out May 24. It’s called Sight, which stars Greg Kinnear. It’s about a Chinese man who comes to the States learns to be an eye doctor and invents a brand-new procedure to save a child’s eyesight, a child who is from India. That movie came to us as a finished film. It scored 55 in the guild, which is not high enough for us to release the film. So, we said, ‘We can’t take this film. Sorry, the guild didn’t pass it, and they said we really feel like this should be an Angel Studios release, what can we do?’ We said, ‘You can recut the film. We think that the film has good potential. There’s a set of feedback. In fact, we’ve got somebody that we could refer you to that could take that feedback and do another cut.’ And sure enough, that’s what happened.
DEADLINE: What form does that feedback take?
HARMON: People watch. Right inside the Angel app, guild members will watch and leave comments. Some people will be willing to be specific, and others will just say it was too long or boring, they didn’t like the music.
DEADLINE: OK.
HARMON: You’ve got to have somebody who’s actually an expert to go take all that noise and turn it into signal, but they decided that they wanted to do that, at their expense. They went back and recut a version that was 18 minutes shorter, not that we cared whether it was shorter or not. It just needed to have the right pacing, and they brought it back to the guild, and it scored 66. So, it jumped 11 points from the very first time we reviewed it, and now we’re releasing it Memorial Day weekend because the guild knows the film, and it’s willing to get behind it.
DEADLINE: Are these films done as acquisitions?
HARMON: We don’t acquire projects the way that the industry thinks of it. We partner. Another thing that you’ll see when we look at what’s coming out is, out of the box office receipts of Sound of Freedom, so, about $130 million goes to the theaters, and there’s a bunch to taxes. The filmmakers [and their investors] are getting a paycheck of $35.5 million, so far, on the film, and then there’s $43 million that went into print and advertising costs.
DEADLINE: The filmmakers compensate cast and crew out of their share?
HARMON: That’s right. Then the distribution costs were about $4.4 million, and then Angel’s portion was $17.8 million. So, we did about a third, and then the filmmakers get about two-thirds, because we feel like that a third of the reward should go to getting the eyeballs, a third should go to the filmmakers and their abilities, and about a third to the investors.
DEADLINE: So these are not rent-a-system deals.
HARMON: No. We partnered with Sound of Freedom LLC. So, and they own two-thirds of it … On a traditional Lionsgate/Disney/Universal deal, they’re going to take a distribution fee off the top and then put in the marketing dollars.
DEADLINE: What about the IP for filmmakers you partner with? If the results are so successful that there’s potential to do spin-offs, or franchise it, or create a series, can they theoretically do that without you? Does the arrangement of the partnership contemplate any of the IP that is part of that universe?
HARMON: It is a partnership. If we’re going to go blow an idea up, then we’re going to share in the results of the IP, two-thirds/one-third, across the IP. To other windows, to ancillary and derivative rights and such.
DEADLINE: What’s your view on episodic series? You’ve had this huge hit with The Chosen. Do you intend to kind of go down that path and do more? In the streaming era, there’s a logic to emphasizing series given the economics.
HARMON: Our very first show was a series, Dry Bar.
DEADLINE: Right.
HARMON: To this day, it has almost 5 billion views. The Chosen, Tuttle Twins, Wingfeather Saga, Homestead … We believe in series. We believe that they are economically viable, that they provide benefit.
And there’s been a lot of innovation that’s happened in the industry around series because the traditional theatrical model is so hard to crack that it seems like the only thing that gets any attention there is the big tent pole IP brands that you have to have hundreds of millions of dollars and a gut of steel for roulette that people don’t think it works, but we actually, we just did $300 million last year in the box office.
Yeah, 250 of it was from Sound of Freedom, but 50 was from three other films. And there are smaller-budget projects. We think that with this guild model, where the guild actually determines what should go to the theaters, that we can bring back innovation into the theatrical system.
Like, we just did an incredibly risky move, launching a sci-fi retelling of the story of Job. We also did an incredibly risky move launching a film with an unproven director, unproven actors, on His Only Son, or a documentary. These just are not the kinds of projects that you would say, ‘Those can work in the theatrical market.’ But they’re working.
DEADLINE: When you talk about the power of the guild, you could also flip that around, though, right? Hollywood has learned over and over that the audience isn’t always right, that distributors can be too beholden to audience feedback. A current example is Oppenheimer – a 3-hour period biopic about a scientist in a fedora – who would want to watch that?! How do you reconcile what you’re doing with the lore of people in a creative industry succeeding by trusting their instincts and not test scores?
HARMON: The guild is 250,000 members today. It’s up 50% from last year. It has members from 155 countries, all different types of cultures. It is the most diverse group that you can test with in the world. So, to know whether or not your movie is resonating with an audience, there’s just not anything like that built out there today, and it is not exclusive. Anybody can join the guild and put in their vote.
But I think that the results, you know, show for themselves. I think Christopher Nolan could’ve used a little feedback loop, to be honest. Nobody’s perfect. When we become insular, and we think we are the end-all, then that becomes maybe our Achilles heel.
DEADLINE: What kinds of returns have there been for investors?
HARMON: We just got in a theatrical last year, and all four projects got…the investors from the Angel Guild 120% returns in a matter of months on all of those projects. That’s an important part of the model. It’s not just a feedback loop of touchy-feely, like the world’s getting a better place, but there’s also a feedback loop that we’re actually getting a profit here as a group. We’re winning. That needs to be an important part of our story.
DEADLINE: Are these all individuals or do you have funds or companies also investing?
HARMON: Yeah, so 6,000 people invested in the launch budget for Sound of Freedom, 2,000 in the launch budget for His Only Son, a couple thousand for After Death. There were 7,000 people who put into The Shift, and all the P&A returns have already been paid out. Everybody’s got their money, and they’re getting a return.
DEADLINE: How do people join the guild?
HARMON: Just go to Angel.com/guild, and it has all the information there for how to join.
DEADLINE: Do you choose who gets to be in the guild? Is there a vetting process?
HARMON: No. If somebody wants to shape the future of entertainment and they’re willing to either invest in a show or to join a monthly membership or annual membership, then they can have a vote, and they not only get a vote. They get complimentary tickets to every single Angel theatrical release, and they get early access to everything on streaming before anyone else.
DEADLINE: Where do you see Angel Studios in three to five years? Do you have specific goals or benchmarks you’re looking to achieve?
HARMON: There’s a business answer to that and then there’s a personal answer to that. Do you care?
DEADLINE: I’ll take them both.
HARMON: On the personal level, we started this company for our children and for their children, and if there is a profitable path for stories that amplify light to be available, flourishing, for our grandchildren, we will have been successful. On the business side, we want to double our guild members this year. We are required [under SEC rules] to be a public company by April 30. At some point, we’re going to have to list our stock. We see that the natural path for listing the stock will be when the guild is large enough that we have a steady, growing business, because the media business has so many ups and downs.
We also see being a brand where when people see the Angel brand, they’ll know that it represents them and that they trust it, and we see a cadence of film release that we did 4 last year, we’re doing 6 this year. We’d like to build to 12 releases in a year, but not at the expense of quality. We want the Angel brand to always stand for excellence in the kind of storytelling. We have, like I said, 8 show releases this year, and so, we see building up the amount of content that’s being released digitally growing as well.
So in five years, if we’re successful, we’ll be publicly traded stock, we’re releasing content a regular basis. If the Angel Guild member says, ‘I’m investing 20 bucks a month, or whatever I’m investing, because I’m investing in projects, and then they can see the impact of what their work is doing on culture,’ and we have a way to feed that back to them. You created these laws around trafficking, there’s a story of a married couple from Florida whose marriage was saved because of The Shift story, you know, this kind of feedback loop that’s happening to where the guild knows I am making the world a better place for my children and my grandchildren, then we’ll have succeeded.
