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[upbeat music] This week's episode of the Rebooting show is brought to you by Permutive.

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As the open marketplace collapses, publishers are offsetting these losses with direct sold programmatic by unlocking the seventy percent of consumers brands can't reach in the open marketplace today.

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Find out more at permutive.com. That is P-E-R-M-U-T-I-V-E dot com. Thanks so much, Permutive.

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[upbeat music] Welcome to the Rebooting show. I'm Brian Morrissey. This week, I'm joined by Andrew Rosen.

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Andrew is the founder of Parcore. He's a former Viacom executive who writes The Medium, an essential newsletter that unpacks the strategy behind the entertainment business.

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I wanted to have Andrew on to discuss what's going on right now in Hollywood. It's sort of the best and the worst of times.

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On one hand, Hollywood is enjoying a pair of summer blockbusters with sold-out theaters and, at the same time, a once-in-a-generation strike that's proving intractable because the business models of these companies is in flux.

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Like publishing, they're between eras. The streaming era has moved on from wars to acquire customers to figure out how to make these profitable businesses. And I like how Andrew frames this challenge.

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Hollywood is moving from a wholesale business to a retail business, and the structure, skill sets, and personal incentives of top executives all revolve around the wholesale business.

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And that's why right now and the years to come will be fascinating as the industry undergoes wrenching transformation.

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I hope you enjoy this conversation, and please leave this podcast a rating and review wherever you get it and send me your feedback. My email is brian@therebooting.com. Hope you enjoy the conversation.

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[upbeat music] Andrew, thank you for joining today to talk about where the hell Hollywood is going. Well, thank you for having me. Longtime listener, first time caller. This is exciting. [laughs] Excellent.

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Just to set the stage, you're a longtime Viacom executive who made the wonderful pivot into newslettering. How and why? So it's a funny story.

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So I started in digital media under Jason Hirschhorn, a mutual, uh, friend- Yeah.

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-introduced us in two thousand and five, and then I was there, Jason left, and then a gentleman named Nick Lehman, who's now at ASCAP, I was reporting to-- sort of was working with him, and then I was working with another executive named Denmark West.

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Denmark went over to BET, and I wanted to do some, some things entrepreneurial. Denmark said, "Why don't you come over and consult?" And that ended up being just kind of a long-term consulting gig.

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And while I was doing it, one of the things that I did on the side was a newsletter. It was a free newsletter for a while. It was, you know, it was going to a handful of executives in my network.

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But fast-forward to two thousand and nineteen, I saw the video marketplace-- I mean, I was focused on digital video, and I saw the video marketplace splitting into streaming video on demand, advertising video on demand, and I thought, "Okay, I should be writing about this because this is the future."

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And then I moved into a subscription model because I was invited to be on-- If you're familiar with Hedgeye, it's like the, the consumer facing retail research and media company.

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I know the founders, and one of them invited me to be on with their telecom lead, a guy named Andrew Friedman, and we chatted for about an hour, hour and fifteen minutes live on a live stream for their paying customers.

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And I was sitting across from a guy who's paid to do, you know, Wall Street level research, and I'm this g- former executive who- Yeah...

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had been writing about the marketplace, and I was going toe-to-toe with him and pointing out the holes in his thinking. And I realized, okay, I can do this.

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And so I launched a subscription product about a month or two later, actually about a month later. And then it just kind of organically evolved from there.

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I was way ahead of the curve on streaming in terms of, I think, how people in the marketplace were thinking about it versus how people in streaming were thinking about it, and in the marketplace meaning legacy media.

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But the thing that I saw that I thought was missing in the marketplace, the voice that was missing, was that I'd, I'd worked hand-in-hand with digital media executives, C-suite, and, you know, the, the heads of digital within Viacom in multiple businesses.

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I mean, you know, when I was working with MTV, MTV Networks in the digital media group, I mean, that was across Nickelodeon, that was across Comedy Central, that was across the music group, and so very different businesses in terms of the target customer and very s- different services they offered.

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And then BET was really interesting because they had a really valuable target demographic.

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They'd built a business that advertisers really valued, and, you know, as, you know, I think-- and so I think back then, like, the, the African American demographic in the US was, was increasingly one of the most active smartphone users.

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And so being on top of the digital curve was, was important for the brand.

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And so the question became for a legacy media business that I de-- and this is the problem I dealt with at MTV Networks was, well, how do you evolve? But- Right.

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But, but the thing that I really experienced was, how do you evolve when everybody in the building is looking at operating income and looking at cash flow and saying, "If we disrupt this, we are the stupidest people that's ever, like, happened to these positions, so that's not going to be my legacy"?

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And so everything that I, I experienced in digital media, and I even saw this on consulting gigs that, and, and this is in the, in more in the, even in, like, the magazine and newspaper space, is that-You were dealing with senior management who are counter-incentivized to innovate.

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And this isn't just innovator's dilemma. It really is people are paid money not to innovate because they look at their P&Ls and they say, "Why should I innovate?" Yeah.

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And that was particularly true in linear TV, where people looked at recurring revenues, looked at the op- you know, at the profits from both advertising and affiliate fees, and they're looking at young up-and-comers like myself who are really fascinated by where digital media was going to go, and they said, "I mean, sure, you're gonna...

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You'll be fine, but you're making pennies and we're making dollars, so we're not gonna prioritize you." Right.

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And in the worst case, I saw digital media businesses basically relegated to services businesses before- Yeah... like the other guys did. Well, that was the year, I mean, when you think back, was it, was it Suckers?

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Who said that, that we were trading d- analog dollars for, like, digital pennies? Oh. I don't even remember. I know. I mean, it's, it's... I mean, the quote, yeah, I mean, it's, it's a- Yeah.

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I mean, look, and- I know what you're talking about... what, what I really like, I mean, so Parkour is, is the name of the, of the brand you have, and I think sometimes these things, and then we'll get into the- Yeah...

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the Hollywood stuff, but, like, I think sometimes these things are, like, put in opposition of, like, quote, quote, "journalists" versus, like, operator executives who now...

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And I think everyone comes at things with a different perspective and different strengths, and honestly, different weaknesses, right?

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And, like, I get, I get emails from people who are, like, the, on the journalist side, like, in this area who are like, "I kinda feel like I'm missing because I don't have that, like, experience," but they have different, like, strengths.

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A- and, but I think the perspective of knowing, like, firsthand, not just reporting through, like, you know, and there's value to that, right? Yep.

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But, like, knowing firsthand what these executives deal with creates a different type of product, you know? Yeah, and, and, and I appreciate that 'cause, I mean, I feel like that's, that's what's been...

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I mean, that was what I thought was missing, but it was never because I thought journalists weren't doing their job- Right... is that journalists were asked not to report on that, right? I mean, they were asked not to.

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Nobody's saying, "Go in and figure out, look at the P&L, and ask why that executive's not doing something." It's our readers want to know what just happened and, and why it matters and go find- Yeah... the next thing.

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And then, but then the other thing that I found was, you know, financial analysts get really hung up on, on their hypotheses or their core metrics, right?

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That, that there is an, a myopia to, to their coverage of a company that often misses a lot of what's going on behind the scenes, and that's not, again, that's not because they're not good at their jobs.

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It's qui- it's the opposite.

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People are paying them to be myopic, or they're paying them to be so narrow-minded on a hypothesis that it's about information gathering and helping to prove a particularly, a particular perspective.

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But then the other thing and, and, and the thing that I think is missing also, that this is sort of a newer one, but it's, it's come out while I'm talking to readers a- as I've interviewed them, is that, you know, management consultants are not battle tested.

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I mean, you know, I've, I've suffered through awful things as, as, as, and a- as an executive. And, and I think that it's those things- At the hands of management consultants? No. [laughs] Actually, no.

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Are we gonna, are we gonna do, like, McKinsey war stories or? No, no. Actually, funny, I never, I never, we never... I, I, I think in, I don't think I ever dealt with them.

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The funniest story I heard was somebody at a legacy media business saying that McKinsey, a McKinsey presentation started off with somebody saying, "Your business is Blockbusters."

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And the entire room was going, "Okay, like, we just paid for this?" I don't [laughs] understand. Yeah. Just as long as we're, you know, up and to the right in that quadrant, like- Right... you know, that's fine.

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No- Everyone just wants to see where they are in the quadrant and make sure they're in the upper right quadrant. Yes. That's, so but yeah, it's fair enough. The, the optics matter, too.

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And but I do think the, the point, though, is not that ba- that, that they don't, it's not that they're worse because they're not battle tested. Yeah.

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It's just that when you've been in it, and when you've, when you've, when you've confronted the problems and realize that the constraints are much more human or much more financial or, you know, may have more to do with somebody worrying that they're not gonna have a salary in six months, that you start to understand why decisions don't get made.

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Yeah. Or why at the end of the day, like, linear TV is still a great business. So let me ask you- And still will be. So yeah. Let me ask you this, like, 'cause I, I like to ask this to people. Like,

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what, what is your theory of the case when it comes to the media business? So when, when you ask that question, like, specifically what do you mean?

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'Cause I wanna make sure that I- Well, like for instance, like my theory of the case, 'cause I, I mostly come at things from like the publisher side, is that, you know, the media business is hard, it's gonna get harder, and that its future is smaller.

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Like, that's basically overall [laughs] my, my theory of the case. But I'm interested because, like, you know, I, I read your stuff and I, I, I wonder like...

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And you, and you're basically creating, I believe you, you call it, like the handbook for like executives and stuff.

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And like when you're in it the day-to-day, you have to just, like, you're doing the sort of samurai thing and fighting the person in front of you and stuff like this. But I think- Yeah...

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the advantage of, of hopefully what I do, but what you do, is that you can take like a broader view and have, like, you know, a theory of the case.

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And I think you, you have a very structured way that you approach things. So I thought you would have like, you know, an overall theory of the case of like where the media business is going, because- Sure...

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it is definitely at an inflection point, and I wanna get into the, the details and the nitty-gritty of that next. Yeah, no, I went to law school, so when you said, "Do you have a theory of a case?"

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There's like two parts in my brain going, so [laughs] Oh, okay. I see. I didn't... L.A. law, that's the difference. Oh, wow. Nice. Which one? Ear- the early years or the later ones? It was cheaper, so...

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But [laughs] no, the, the theory, the, the, the thing that I've always been fascinated by, it- it's related to what we were just talking about, is... So, so very quickly, so the brand, my company's Parkour.

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I rebranded my newsletter to The Medium recently. We can talk about why in a second.

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But, and that's basically just a reflection of Marshall McLuhan, the medium is the message, and the idea that technology, as technology changes, the nature of the media that's going to be consumed is also going to change.

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And, and so focusing on how the constraints of the marketplace are changing, changing technologically, financially, operationally, is, is valuable. And so I pick three trends per quarter.

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A lot of the, the, but the theory of the case that those trends are typically around is-You know, I, I do naively believe that media companies are positioned to evolve from legacy media into direct to consumer.

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And I say naively just because there's a lot of evidence out there that tells me that's not true [laughs]. We're gonna get into the evidence that is arguing against your, your theory of that.

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But, but, uh, but it is, you know, it's, it's one thing to s- it, it's very different now than it was about eighteen years ago, 'cause eighteen years ago, nobody...

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And, and even, like, for the past two decades, I, I'd, I'd say b-but just until maybe, like, two thousand and eighteen when you really start to see streaming services emerge from legacy media.

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But what you, what you saw before was a complete disinterest from owning and understanding the consumer relationship, right?

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That, that, that what I saw within Viacom was basically we are going to focus on Omniture data because we have advertisers paying for data, perhaps are paying for advertising inventory, and they're paying for it across digital and linear.

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And so trying to k- trying to reinvent the wheel and come up with direct-to-consumer business is, number one, we just don't understand it as senior management with our linear background because it's a wholesale business.

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And then second, and then secondly, number two, the minute we start gathering data on our consumers, our affiliates are gonna look at us and, and try and screw us in the next negotiations- Yeah...for, for our affiliate deals.

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And number three- At a time where we need to increase the rates. And number three, for, like, those affiliate deals were pretty sweet. They're only getting sweeter as, like, as, as everything's going down. Yeah.

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So I mean, so, so everybody has a story, has, I mean, I think the only reason- Logical decision to, to, to make that, particularly if you're looking ahead ten years and, you know, you've got bonuses and stuff like that, and- Yeah...it's like.

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Nobody wants to be in the position of, of, of missing out on increasing affiliate fees as, as, as the, as market dynamics push cord, as cord cutting was gonna push demand down 'cause on- those c, those c-consumers are only- Yeah...gonna be more valuable to advertisers and, and to, and to, also to the distributors.

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[gentle music] So for me, that makes it an interesting and sometimes contrarian writer and, and as a read, which is, so if that's the way I think that things could evolve, then where's the evidence that reflects that?

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Where are the business case studies? Who are the executives that are doing things that are really interesting?

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So, for example, I was totally fascinated by D- when Bob Chapek was, was CEO of Disney, of his Disney Prime initiative, right?

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That, that, you know, that, that D23 in September twenty twenty-two where he was tying all these deals to across parks and merchandise to the Disney Plus membership. And two months later, he was out of a job.

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But- Yeah...I thought, when I thought about what he was doing, it was much closer to where media is headed in terms of how D2C, you know, how streaming should be part of a media ecosystem and what the consumer relationship should be than the way that I think Bob Iger believes it is, which, uh, Bob Iger, I think, believes streaming is, is the point of contact with the consumer, and it's a distribution channel, and people wanna consume Disney content.

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And Chapek's point was that may be true, but they love Disney. They, they're, they, they love the characters, they love the worlds. And so defining it narrowly just around streaming is a mistake.

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We should borrow Amazon's playbook.

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And, you know, Jason Kilar was saying the same thing on his farewell tour, you know, when he was interviewed by, I believe it was Peter Kafka, but there was also- Mm-hmm...a Matt Belloni interview.

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But the, but he where he was like, "Look, like we, we know it's beloved characters and worlds.

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That's, that's what we wanna focus on, and that's why we're building a gaming business because people that we know the, the hardcore fans of our content n-don't not only love watching our content, but they love being the characters or participating in those worlds."

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And so, and so what he was talking about was the Multiversus game where you play the characters, you know, in, in battles, and he was talking about Harry Potter, the, you know, the Wizarding World game that they, they released recently.

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And so it's just a very different way of looking at the marketplace. It has nothing to do with the wholesale model, right? It's purely retail.

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I mean, and it's, you know, my, my favorite quote on all this is James Dolan in, in, in February, I believe, in the, in the earnings call where he said, "Hey, you know," it may even been like last year, maybe last November.

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Mm-hmm. But, but he said, he said, "Look, we're a retail business." Sorry, "We're a wholesale business. That's what we've always done.

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Now we're a reta- now we are a retail business, and that is a, that is a cultural and operational change." And it was succinctly said maybe like fifteen years too late, right?

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That, that, that is that anybody who's worked in digital media for the past seventeen years, I mean, even longer, maybe twenty years, that's the first time any linear executive has said, "You know, maybe we need to change things in order to really succeed in this marketplace, that we're not a wholesale business anymore."

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But, you know, ten years ago, two thousand and ten, when, when there was the maximum penetration in household, right, over a hundred million households had cable, there was no argument. Yeah.

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I mean, it was just a losing argument.

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But to be, to be fair, like, I can remember listening to even Peter's podcast with, like, John Skipper, who was just like- For sure...oh, cord cutting, what-- And like, it was obvious, I think, that you didn't need to be, like, i-in the seats that they were in, what was happening on the consumer side.

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Like, everyone was cutting cords. But there was a lag, and the economics were, were still amazing and so- And they still are. Like that, and that's the problem, right? Yeah.

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I mean, I mean, if you think about it, ESPN, you know, for all the talk from Disney that ESPN is gonna go D2C someday, I mean, they're in sixty-seven million households right now.

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ESPN Plus is in twenty-four, and I think at least eighteen million of those twenty-four people are just hanging around for Hulu, like, and, and the Disney Plus, right? And they're part of that bundle.

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So it's not like this premise that, that there's some immediate, and to your point, that the, that there's some immediate replacement for the, the economics of, of cable is still a hard argument even today in the streaming era.

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Yeah. So is streaming just a terrible business model?

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Is this just like, you know, 'cause it's like I-I like see Disney, you know, earnings and, you know, they're like, "Well, we only lost six hundred and fifty-nine million on streaming this quarter, and that was good.

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And [chuckles] we might, we might break even like next year." Is this just a bad business for...

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I mean, look, they have-- It seems like the weight is going towards direct to consumer a-across the board in most industries. Yep. But like the economics just look brutal. Yeah. I mean, I, I think...

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So I do think it's a bad business model on its own if you treat it as a one-to-one substitute for the loss of linear and any sort of loss of theatrical. That's when it's a bad business model.

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The, the-- Where it gets really interesting, and you're starting to get a little bit more transparency on it, is when you start going down the path of like a Crunchyroll or even like a New York Times, right? Yeah.

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Which-- And, and New York Times doesn't have streaming, but New York Times is basically like, "Hey, we're a bundle of products that make people who love the New York Times happy." And Crunchyroll is,

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"We're a bundle of products that help make like passionate fans of anime happy, so it's easier for them to access anime wherever they wanna access it," right? That-- And so it's like they...

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Crunchyroll's fascinating because they have a streaming service, that's where a lot of people understand it as, but Sony bought Crunchyroll, merged it with another streaming platform called Funimation, but then also Sony already had VOD distribution channels, and then I think it bought a merchandise business within those two.

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And so it packaged it all together and all of a sudden they have one consumer relationship, but then they figure out which channels are optimal to, to monetize the consumer.

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And I think the problem that w- that you're witnessing in subscription streaming across legacy media is that you have a lot of wholesale executives, right?

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Guys with a wholesale background who are used to selling their content on a channel being like, "Okay, well, here's the new channel, and therefore we're gonna distribute this content on this channel and people will be happy."

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But what you're seeing, and I think what Chapek was even seeing, was like to make people happy, you need multiple quivers and, you know, arrows in the quiver.

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And if, and if you-- And you have to understand that there are-- they don't-- they all don't like your brand the same way.

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They don't all, all engage with the same characters, so you really have to figure out what the passion points are and hyper-serve them there.

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And they already do that in parks, which is why Chapek was such a logical successor in, successor in this moment. But it was interesting that, that the ecosystem rejected him the way that it did. Yeah.

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Um- It sounds like you might be on Team Chapek. You don't see that a lot. Oh. Yeah, I get, I get that. That makes for interesting Twitter conversations. But yeah, I, I, I think- I like it. I mean, look, I, I, I...

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My understanding is there's things that he just didn't do organizationally, but it's also- Yeah... pretty clear that there are things that Iger chose to do from the sidelines.

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So it, it just is-- it just struck me as even if he was right, you know, he-- I mean, Chapek and Kyler suffered basically the same fate, which is rejection from an ecosystem, right? That, that...

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And, and it's, and it's n- they're different types of rejections, but they ended up losing their perch. And they lost their perch in saying, "Hey, this world is changing.

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We have to figure out how to understand the consumer, hyper-serve them, because they're, you know, they, they're, they're not here for the content, they're here for things that are much bigger than the content that we own."

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And that's an advantage. And I just think that it's still early days for that. And, and I just think it's a fascinating model for looking at the marketplace to see what kinds of decisions businesses make.

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'Cause just very quickly, I-- when I, when I- Yeah...

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I brought up The New York Times because, you know, the-- when David Perpich was interviewed by The Wall Street Journal, one of the things he was saying is, you know, he was basically saying that

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I, I, I, I r- I forget the specific quote, but he's basically saying I, I always, I always...

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I never r- he thought of The New York Times as a bundle of information, which means that he thinks of now as The New York Times as a bundle of products.

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And so basically he s- he, he, he went from sports as a sports section to saying, "If you really like sports and you like The New York Times, then you'll pay a little bit more, and we make marginal res- revenue from that."

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And that's a better business model. Because already their model is if you like games and you like The New York Times, then you're gonna pay a little bit more for both. And so there, there is that logic out there. It's...

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But it's not... But the problem with it, and this is again, this is me sort of shouting against the wind, but it's, you know, it's not a one-to-one replacement for what came before it. It's a growth model.

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That-- I think that's what Crunchyroll is proving, and I think what The New York Times is proving. But I don't, I don't... But I don't...

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It's -- It, it strikes me as the kind of model where understanding where the holes are tells you a lot more about where the marketplace is than- Mm-hmm... ignoring the fact that people are trying it. Yeah.

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Explain, explain to me the doom loop that y-you recently wrote. You wrote the, I love the doom loop of the mogul, 'cause I've used doom loops a lot. Yeah.

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It was- I think they're, they're across publishing, there's a lot of doom loops. A lot of across media, sorry. It, it was, it was sort of...

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It was this thought that when it w- when I was looking at the-- When I was reading about the negotiations and reading up on residuals, I'd sort of, I'd forgotten a detail, and I gotta give the, the entertainment strateg-strategy guy credit for this 'cause he, he made it-- he explained it very well in, in a piece for The Anchored, but it was that, you know, that the s- the studios are engaging with self-dealing with their platforms, right?

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So in other words, they are incentivized to negotiate the lowest possible costs internally and the lowest possible residuals.

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We don't know if they do or not, but there's evidence right now in the form of a strike that suggests that maybe they are.

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And so what I thought was, okay, we're in this moment where CEOs like Bob Iger, David Zaslav, Bob Bakish, have been unable to deliver shareholder value in streaming within the constraints of their strategic, financial, or management structures.

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And what I mean by that is, I was referring to The Curse of the Mogul, the famous book and theory that says- Mm-hmm...

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effectively that CEOs waste shareholder va- waste shareholder values, and creators just reap the, the benefits of that.

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You know, that, that they overpay for creators and, and, but they don't-- that doesn't result in stock growth and doesn't result in smart or savvy business fundamentals.And so I thought, all right, well, what's going on now is much worse than the curse of the mobile because what you're basically hear-- the curse of the mobile always said is it's just an inefficient business model.

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But the doom loop of the mobile says, well, actually, maybe streaming is just a bad business model, and it incentivizes really bad decisions by CEOs.

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And so if you think about-- So if you sort of think through how those decisions play out, it's that legacy media management, you know, given everything we described before, right, the wholesale relationship with consumers is their, is their strength.

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The Jim Dolan point that they're on an learning curve, and that right now, you know, somebody like Taylor Sheridan is making more money off of Paramount than any shareholder.

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You know, the, the, the Taylor Sheridan, the writer of Yellowstone. And so they, they're proving that they're unable to devel-- deliver shareholder value in streaming.

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And so now they have to make decisions that ensure that they still have cost-effective business and, and a profitable business, so they engage in self-dealing to keep costs low, which I think is what...

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And, and I think that's, that's-- I don't think we really knew of that until recently when we started learning about the residual checks. And so that means that actors and talent go on strike.

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And because the actors and talent go on strike, now we're in a period where we're about to see less content produced. Yeah.

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And so if there's less content produced, that means they're going to- I mean, near term it's good because reporting better results, right? Right. It's profitable. Yeah.

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But, but in the long run, if you have less content- Yeah... then you're unable to deliver shareholder value and streaming within the constraints of your strategic financial management structures. And guess what?

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People are gonna churn. Right. People are gonna- And it's gonna get worse...

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I mean, the whole thing is, is I, I think that this strike has set off-- I mean, I, I hate to say this because I think that it, uh-- 'cause I don't wanna make light of the circumstances, and I'm trying not to.

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But at, and, and at the same time, I, I, I do think that I find it very hard to figure out what the common ground is going to be between talent and the legacy media companies, you know, and AMTP at this mo- uh, after, during, you know, during the negotiations and even after.

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Because you just don't have, you don't have retail-minded CEOs running legacy media businesses. And I-- But that's going to be

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e-e-even to your point, I, I think you're right, streaming is going to be a smaller business than, than linear, linear TV or theatrical have been.

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But at the same time, when you start thinking about how many different bells and whistles you can add to a direct-to-consumer relationship,

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and, you know, Disney, if you, if you grew merchandise sales this year by ten, fifteen percent, that's somewhere between seven hundred and fifty million to one billion dollars, right?

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That all of a sudden, the ecosystems work in ways that, that they haven't before and generate shareholder value. I, I do think, though, I mean, I, I think part of the problem is legacy media management.

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The other problem, I think, is, are the investors in these companies who are risk-averse to change and, and see the cash flow from, see the recurring revenues and cash flow from linear and, and don't wanna disrupt that either.

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So I, I just think that it's, it's, it's a really... There's, there's so many constraints on this marketplace that it, it becomes very difficult to understand what the way forward is.

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But I'd like to imagine the way forward, it looks something like Crunchyroll or, or, or The New York Times. Yeah. Because, like, I think we're in a weird... This is a weird summer for Hollywood, right?

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[chuckles] Like, we're coming right off a massive, massive opening weekend for Barbie and Oppenheimer, and it's a little-- it was a little bit of a throwback, right?

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Like, I saw people here in New York walking around in, in Barbie outfits and whatnot, and it was a big deal. And, like, it almost, to me, it was just like, it was almost nostalgic to some degree.

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I don't think that is the way forward, but maybe. I d- I don't know what your take is. Was this just, like, kinda like I described it as, like, a dead cat bounce of nostalgia in some ways?

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I, I mean, it's, it-- I mean, I think it's just, I, I think you're right that it, it isn't, that it's the exception to the rule. I mean, I- Yeah... I watched it because, I mean, I went to, I went to Mission Impossible.

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It was great. It was a sold-out theater, but it wasn't in IMAX because Oppenheimer, like, the Oppenheimer premieres had pushed it out for that week, so I didn't get to see it in IMAX. But, you know, but it, but...

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And it was fun, but it wasn't, you know, it wasn't high on my to-do list. It was just something I wanted to do with family.

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And so, but then you, but then, you know, I would have liked to see Oppenheimer this weekend, but it's just a matter of time and, and, and, and constraints on my side. But, but, you know, is it...

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One of my favorite memories is seeing Jurassic Park at the Ziegfeld, like, opening night, I think, or, like, opening day, and waiting in line for an hour, right?

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It's like forty-five minutes or an hour just to get in so you could get the seats- Yeah... 'cause there weren't assigned seats, and you just get there at the... You know, and it was...

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And I don't think you, I mean, you just can't recreate that now- Yeah... unless you took away Fandango. But, but, but the point is, I, I think when...

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The, the thing that struck me about that weekend, this past weekend, is that it just, it, it was all these... I guess one of the things which struck me, just all the stars aligned, right?

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That, that everybody was so tired. Everybody-- The market had basically said, "Hey, we're just tired of all these sequels. It's not the thing that we really need."

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And, you know, sadly, in Disney's case, it was a market saying, "I mean, you told me to watch Pixar at home, so what are you doing asking me to spend money in the theater?"

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[chuckles] But I, I just think it's, you know, I think the fact that it was became Barbenheimer, that it became sort of this mutually reinforcing marketing campaign.

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The fact that what, that, that the Warner Brothers spent a hundred and fifty million dollars on Barbie marketing.

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Like, I just think that it, it's just, it i- you're right, it is a throwback to old times, but it also struck me as a bit of a, a market reaction to everything that came before it, right?

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That there's pent-up demand for something else, and it's kind of, it seems evident that there's something about the life cycle of theatrical where they're less in touch with what consumers want. Yeah.

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I mean, just speaking as, as, as one consumer, I want less superhero stuff. I don't like it. I don't want it.

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Oh, I- I don't want, I don't want, like, to be mining, like, the most minor Marvel characters for, like, ano- I just don't care. But that's, maybe that's me. I like- No, no, no. I-... movies and all that stuff.

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I don't know...

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I, I watched Ant-Man on a plane, and about thirty minutes in, I just felt like, "Oh, Disney just hates me."They just assume that I'm gonna watch this.

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They don't care. It was really-- I mean, it was, it was truly awful. Like, it was a really bad movie. And, and so it just ends up being... And I just think consumers kinda know that now too.

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I, I mean, they're, I mean, they're smarter. And I, I don't know. But the other thing is, like, I don't know how you compete with YouTube or TikTok and Netflix where people are just hyper-served in that- It's great.

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You, you, you open up Instagram, or I, I still try to stay away from TikTok. You'll waste, like, an hour on, on these things.

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I mean, Instagram in particular is just great right now at putting me in buckets, whether it's, like, dogs having a spa day or, you know, the Spanish mead videos on the soccer four, or...

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Now I'm, I get all these, like, meme videos of people complaining about, like, working [laughs] or why I have to- [laughs] Those are much better... maybe they are listening. Maybe they are listening to us.

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Now I get all this, like, there's an entire genre of people who just make fun of, like, having to go to the office every day. I don't know. So l- how does this strike end? [laughs] Ah. Is it... It has to end.

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Uh, all strikes, it's like wars. Like, wars all end, and strikes and strikes end. How does it end? I mean, so the short answer is, like, I've... I mean, I've no... The funny thing was- This is a podcast.

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You, you don't need to know I don't need to know. Fair enough. Just, just make it up. I can just riff.

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Yeah, I, I, I think the, I think the problem is, you know, I, I, I'm so used to stri- I mean, aren't you used to getting the headline of, "Hey, the strike's about to happen," and then, you know, four hours before the deadline, it's like, oh, they magically resolved- Yeah...

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right? Or- Just everything goes down to the dead- It's, it's why I don't pay attention to the Washington DC debt ceiling, debt limit- Right... whatever. I'm like, "Okay, yeah. Okay." I mean, UPS- Yeah, yeah, no.

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The entire world's gonna collapse, I believe you.

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But I- my problem with this, I mean, and I just wrote about this, like, like, if you just focus on the issue of transparency and, and they're asking for more transparency, you know, if you look at transparency from the pers- The, the actors- The actors-...

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and, and the writers... and the writers.

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Like, if you r- look at it from the perspective of, if you look at it from the perspective of the, of Netflix, you know, even any of the other streamers, what you're basically sharing is, you know, like, you have multiple stories to tell.

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So you have stories you have to tell investors, you have to sell stories to an actors, you have to tell story internally, you know, to stakeholders.

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Like, you know, the ri- the, the right data in the wrong hands is a real risk to the business, especially to a share price.

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And in fact, like, that, that was, and that's why I highlighted in this, in today's essay the, the Google, the recent Google kerfuffle, right?

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The, that the, there's accusations of ad fraud on the, on their third party sites, right? That eighty percent of impressions- Never, never. Such a thing would never happen in digital publishing. That's offensive.

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I, [laughs] I mean, if you make enough money, you look the other way. I mean, the margins are in opacity. Let's be real here. In, in digital, one of my- Yeah, you're right. I mean, it's like, it's like the mafia.

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It's like, "Okay, pay me, I'll look the other way," right? Or not the mafia. Yeah. It's like the, it's like the... It's not the mafia, it's the, the old school like cops. Well, you had mentioned Dave [inaudible].

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Dave, years ago, had told me when he got into the TV business, I hope I'm not speaking out of school here, Dave, if you're listening, is he said, "It's not, it's not, it's not a fraud, it's a conspiracy."

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Yeah, it's, I mean, yeah, it's, it's, it's, it is. I mean, a- and he wrote this, and recently. Yeah. I think it was last week or two weeks ago, but it was a really good piece about opacity and, and, and I quoted it.

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But I, I mean, his basic point was, nobody's, nobody's being unethical because they're unethical people. It's that they're making so much money, it's like, like, I mean, it's- It's just incentives, it's not morality.

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Yeah, that's right. And, and I think that's the, that's the thing that really, when you think about incentives and you think, coming back to the negotiations, who's incentivized to, to be more transparent?

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It's, Netflix is going to be really reserved.

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But you know who's gonna be more reserved than Netflix are the likes of, of Warner Brothers Discovery and Paramount and even, like, NBC Universal, because their stories are worse, right?

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That their stories are, "Hey, we have a hit," and maybe everybody else, and sometimes people consume everything else on our platform.

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And so I think, uh, the thing that worries me is this thing might drag on much longer than, than people are imagining, simply because something like transparency, nobody's incentivized really to solve that.

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And it's, and it's something where the, where the, uh, the creative talent will just inevitably get sh- inevitably get shafted if a deal is going to get done. I think that's a fair bet. I mean- Okay...

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to be negative here as we g- head into August and, and beach and vacation season, but that's usually how it goes. Look, there was a lot, there were some op- there's been some bad optics too on the studio side.

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Obviously, you know, Bob Iger stepped on a rake by, like, getting off his private jet [laughs] and talking about the greedy writers making, like, twenty-six K and having no health insurance.

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That was, like, basically his private jet fuel. Yeah. And this always happens. David Zaslav is notoriously well compensated, I would say.

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I think he has, like, a, I was reading it, it was, like, a townhouse for meetings in Lake Rancho Village. Yeah. Which, great. Would love that.

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And, you know, the, and the longer it goes on, the more personal it gets, and the more people dig in and it becomes, I don't know, emotional to some degree.

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But you're hitting on the doom loop point I was hitting on, which is, you know, at what point do investors- Yeah...

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who are, who have signed on for all this look at these CEOs and they say, "Why are you the person in charge of this business?" You know? That, like, if you can't solve retail, then, then there should be somebody else.

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And look, I think there was a recent shareholder meeting where Zaslav got, what, like f- fifty percent of the vote approving him to stay on. It was, it was a really narrow vote. Yeah.

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Um- And those things are usually rubber stamps. Yeah. I mean, they're just people like, "Sure," you know, "Okay." Sure. But, but at the same time, nobody, nobody... I mean, he wasn't, he didn't lose, right?

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So it was, I don't know. You know, the question becomes what happens next?

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And it's an interesting question, just as, like, a thought exercise is, if he was that close and they were serious, then what needs, what happens over the next six months that really puts him at risk?

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Because, you know, there is, again, going down the James Dolan path of we are, we are wholesale guys who need to figure out retailThat is David Zaslav.

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He is, he has aced the wholesale marketplace and, but he does not get retail. And And, and the weight is moving to retail, and I think that's the, the big show.

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So I would guess, I mean, but tell me if I'm wrong, but I want your, like, handicapping as far as who's best positioned among these companies. Netflix is, is, is at the top.

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I think, you know, it, it, it went through its little like, you know, speed bump and, and whatnot, and people got down on Netflix, and then they cracked down on the password sharing, and they're back up on the growth trajectory.

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And they're not-- they've never had a wholesale business, and their DNA is, is retail and direct to consumer, right? Yeah. Where do you, where do you rank the, the next companies? Like, who's the best positioned then?

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Is it Disney, then Warner Brothers, then Paramount? Like, how do you... What are your league tables? So, so I'm gonna, I'm gonna sort of edit your question a little bit, which is- Okay. I like that...

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I, I think number one- I take notes... N- and Netflix, I think you're totally right on Netflix.

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I think it's really important to note how Netflix has launched both a gaming window on its platform and an ad, ad tier, what, in eighteen months. Nobody's going to do that, right?

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I, I, I don't, I, I don't, I, I can't-- It's one of those things that gets lost on a lot of observers, but that just doesn't happen. That's hard to do, right? Yeah.

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Very hard to do, and extremely hard to do if you're still on the learning curve of operational going from wholesale to retail.

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But they did that largely because with Gen, Gen Z and Gen Alpha spend fifty-fifty on streaming and gaming. And so that's at very least a churn retent- attention tool.

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But coming back to the logic of beloved characters and worlds, you know, if you love Teenage Mutant Ninja Turtles, well, you're gonna go to, to the Netflix app to play the game.

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And I, I don't know where the v- the movies, I don't know if they-- I don't know where the cartoons are. It might be on Paramount Plus.

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They might, that might be something they've licensed, Paramount has licensed to Netflix.

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But the point is, the minute that Netflix becomes a destination for Teenage Mutant Ninja Turtles, that's beloved worlds, beloved characters. But then after them, YouTube is, is a very big factor here. Mm-hmm.

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And, and, and, like- Yeah, they usually get overlooked. Yeah. Not overlooked, what am I saying? They're like a massive- But I, I don't, I don't think people don't know how to think about the creator economy.

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I mean, you know, if, if, if you watch, what is it, a hundred and fifty million people, forgot the numbers.

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I mean, I know that's a hundred and fifty million people watch it each month on their, on their TVs in the US on the connected TV devices.

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And let's say, and, and I believe that over fifty percent of, around or just over fifty percent of the consumption of content is creator content.

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Then, you know, then what you're really looking at is when Nielsen says, you know, eight point two percent of people consumed TV in the US last, you know, in June, half of that consumption is creator content. Yeah.

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And, and I just think that that is... And, and the most fascinating thing about creators, by the way, is that they set themselves up to be the center of a universe with multiple, multiple touch points with the audience.

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And so, you know, say what you will with the likes, about the likes of, like, KSI and, and Logan Paul, but, you know, they've, they've built multiple businesses and multiple touchpoints with their audience, right?

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That, that, you know, they have that drink Prime, which I've tasted. It made me feel ill. I don't recommend it, but that's just me.

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But the, but they, they have built-- They were able to, to just go from guys who's really tried to figure out how to make, entertain people and how to make them laugh to...

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You know, KSI has multiple hit records in the UK, like, album, album charts and, and k- and Logan Paul is a, is a WWE wrestler.

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I mean, these are individuals who just make videos for YouTube, but they have other- Wait, is he a wrestler now? Isn't he a boxer? Yeah. He's a wrestler. Oh my God.

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And he's gonna be wrestling next weekend on the August fifth. Only on Peacock. Exactly. [laughs] But also let's, um, let's cite in the fact that, like, YouTube is, has like...

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I mean, this was last November, they, they said they crossed eighty million paying subscribers for- Yes... YouTube Music and, and- Yep... Premium. I mean, [chuckles] they have a massive- And I'm one of them...

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PPC business. Yeah. And I, I, I've canceled everything, I've canceled most of everything else. Yeah. I would c- and I would cancel my Disney bundle if it wasn't free. They got Sunday Ticket. They just send me an email.

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There's Sunday Ticket. I'm like, "Okay, I'm back." Oh, nice. All right. Yeah. Yeah, I've gotta... I mean, again, like, those things I just gotta, I just don't, I, I just don't...

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Uh, the way I watch TV is so different now. After I cut the cord, it became a very different, it became very different for me. But, but w- I wanna continue answering your question. Yeah.

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So after them, Peacock is interesting. I, I think Peacock is, is actually well-positioned for, like, a very kind of wonky reason, which is, you know, they, it's... You know, Comcast has this platform.

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It has a Xfinity platform.

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It had a plat- it has a platform called Xfinity Flex, which it just rebranded into Xumo, and that's for all broadband consumers within Comcast, which I think is over around, like, I think it actually went down nineteen thousand, so about thirty-two million as of this morning.

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But then they, but then they signed a deal with Cox and Charter, which expands their reach to, like, sixty-eight million homes.

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And so when you have a platform like Xumo and you can put Peacock on it and, and it's, and it's just applied, it's a, it's a hardware device for hard, for, for broadband phone, h-homes, they're probably not gonna reach all sixty-eight million, but you have instant access via the software, whether it's on a hardware device or software.

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There's, there's, so there's something, it's, it has built-in advantages by being a part of, of Comcast network, a sort of network of, a software network of homes that it's built with its, with the other linear providers, distributors.

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But, but I don't... It, it, that's, it's still early days, and I, Peacock's such a, it, the app is a really frustrating app to use. I, I really only use it w- to watch Saturday Night Live highlights, sometimes EPL.

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Disney's in a weird place. Disney, I think twelve months ago, eighteen months ago, I would've told you it was, like, number two or number three, and the same thing goes for HBO Max.

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I just think both of those were just really digitally savvy businesses.

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But again, just hearkening back to our earlier convers- part of the conversationI think Disney, if it can't figure out the retail model beyond streaming and can't define re-- the, the business model beyond streaming, meaning, like, connecting the dots between why people buy merchandise and why they consume Pixar films at home, and how to enable more Pixar merchandise acq-acquisitions.

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But also, like, for the record, like, even basic tune-in, right? I didn't know that...

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I, I looked in my emails to see if-- whether ESPN+ had sent me a notification that the final with Jok-Djokovic and who's the Spaniard who just won? Carlos, who just won Wimbledon. Why am I blanking on his name?

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I don't remember. I don't, I don't watch tennis. Fine. But, but the twenty-year-old Spaniard who, who won the Wimbledon. But I would have liked to have watched that. I just thought it was gonna be on TV.

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But then I found out, you know, maybe with four games to go in the final set that it actually was on ESPN+ and so I ended up watching that.

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Um, which was fine, but there were no emails in my inbox from ESPN+ saying, "Hey, drop everything you're doing, this amazing final's gonna be on."

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Like, there's, there's a lot that they don't do from the retail customer relationship perspective that explains a lot of their struggles at this moment, right? Why they're not- Yeah....

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why they're, why they're no longer on that rocket ship arc that they were on.

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And it's, and I can't, and, and I say this as an observer but also as a user, and, and, and I know in, in the thing that you learn from looking at and studying, like, E- Netflix's model or, or YouTube's model is they do everything they can to probabilistically get you to use their platform.

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And ESPN or rather Disney has three platforms, and they do very little to probabilistically get you to use their platforms.

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And, and Hulu's interesting only because that's the third best algorithm, I guess, personalization algorithm in a streaming app after YouTube and Netflix.

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So if you throw that in, right, they're not doing enough to get you to tune in to a platform that actually knows you better than Disney+ or ESPN+. So there's, there's, there's too many disconnects in that business.

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It could be the James Dolan explanation of wholesale to retail, but it's-- they're just, they're, they're obvious, and you understand how they impact people's choices- Mm-hmm... in, in, in, in a sea of attention.

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A sea of opport-- a sea of products that, that compete for people's attention. Yeah. And then after that, I mean, I mean, Paramount+ I don't, I don't think that's gonna last much longer. I, I, I think it's...

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And, and it's not a knock on my former colleagues and employees, it's much more of it's just so difficult to compete in this marketplace and- Well, markets coalesce around three usually- Yeah... or four. Yeah.

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And, and it, right? Yeah. I mean, I, you-- did you skip over, like, Warner Brothers Discovery? Like the facts? Oh, I did skip over that. I, I mentioned it and I forgot. I mean, I, I canceled after the, the relaunch.

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Okay.

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And, and, and, and but that was mainly because we'd watched Succession, and I just didn't really wa- there was nothing else that they have coming up that was interesting to me, and I'm not, I'm not a fan of Discovery content, so I've just-- they, they, they took me from being a customer to, you know, now that what Band of Brothers is gonna be on Netflix, like, I'm gonna watch Band of Brothers on Netflix, 'cause I know Ba- I know, I know Netflix will know that I like Band of Brothers, and they'll serve it to me without asking as an option.

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And so I, I, I think that in that, you know, I, I know the bet that they were trying to make, but I think again, that's kind of a wholesale mentality in a retail world.

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Like, if-- it's, it's one thing to assume that I would want Discovery and HBO Max together, but the minute you put it in front of me, it's useless. Like, it's just not, it's...

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Maybe I'll sign back on if they have something, but I, I don't know if that's the same-- I don't know if HBO's gonna be able to produce the same stuff as it, as it has in the past. Yeah.

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So like, just to, like, sort of wrap it all up- Yeah... it seems like, you know, a lot of this is, like, I like that term, I'm gonna use it for, like, the headline, like, wholesale mentality in a retail world. Yeah.

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Because a lot of this is like it's cultural and it's, it's, it's strategy, but it's like really comes down to cultural and that, like, you have-- you build up muscles for a certain, you know, for a wholesale world, and then the world changes on you.

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Yeah. And, and it's, I mean, it's the, it's the m- it's, you remember the comic Mitch Hedberg? I, I use the joke, I, I, I mean, at this point I'm a broken record- Yeah... with the joke, but where he says, you know, you,

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you, when you go to LA, they ask you if you can act or if you can write, and he says, you know, you spent-- it's like being a cook, and you spent your whole life learning how to cook, and you, you get to the restaurant, and they say, "All right, you can cook, but can you farm?"

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Like, it's, it's just that there is that moment of can you, you know, can you just do this thing that's totally unrelated to what you've been doing?

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And but, but to put it from an executive's perspective, it's, it's the stakes are a bit higher, right?

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Which is like, can you do this thing that your MBA didn't teach you beyond sort of the basic economics of it, that the computer guys next to you understand much better than you?

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And oh yeah, you have a mortgage to pay and kids, kids school to pay for. Like, there's, there are very, there are human costs associated with this that I think get, that have gotten lost in, in the love for innovation.

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And the older I get, I understand where the pushback comes from, right? That somebody celebrating this thing that can really destroy somebody's life, but also destroy a business if it's done totally wrong.

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And so there's, we, I think there's a lot of businesses that we don't talk about anymore that, I mean, you're seeing a lot of cable channels disappear now, but that's a, a function of cord-cutting, but it's also a function of the fact that people just weren't invested in making them anything more.

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They just took them w- to their logical conclusion, and that was that. I mean, it, and so I hope that made sense. I think that made sense. Yeah.

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But, but they, that's, that's why I try not to, as a rule, I really don't... I, I try not to critique- Yeah... executives as bad executives.

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I critique the decisions based on whether or not they map to where things seem to be headed.

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I focus on the disconnects and then talk about, like, why the disconnects exist or why they may exist, you know, what evidence we have about the impact of those disconnects, and whether there's a solution in the marketplace.

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Typically, that's what I like to do.

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And so the point is not to say, "Aha, I have the solution," but much more to say, "Here's how the pieces have lined up," or, "Here's how the pieces have changed, and here's how to think about it," because I know at the end of the day, somebody is much more informed than I am.

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And the best thing that I can do as, as a writer is to say, and as an analyst, is to say, "All right.

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I know you're thinking about it this particular way, but let me give you some other things you maybe n- may, may have not considered or, or, or see, see things in a new light."

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And so that's, that, that's, that's my- I mean, we've talked about this. A lot of this is, like, I think what both of us do to some degree is, like, helping people connect dots. Yep. You know? That's right. Yeah.

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That's exactly it. Awesome. Well, thank you for helping me connect the dots. I wanna do this again regularly if you'd be up for it. I've always enjoyed your podcast. It's a thrill for me to be on this, so thank you.

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Okay. Awesome. Thank you, Andrew. All right. Thank you, Ryan. [upbeat music] Thanks so much for listening. Thank you to Jay Sparks for producing this podcast.

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If you have a podcast that you're considering making, you should check out Podhelpus and what Jay can do for you. Go to podhelp.us.

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