Latest / The Ben Ferguson Podcast / Entertainment is a Matter of National Security w Rich Greenfield & Clete Willems

Transcript

Entertainment is a Matter of National Security w Rich Greenfield & Clete Willems · The Ben Ferguson Podcast

• 0:01
  Speaker 1: Congress is gonna hold a Senate antitrust hearing on Tuesday
• 0:06
  Speaker 1: focused on the proposed acquisition of Warner Brothers Discovery by Netflix. Now,
• 0:12
  Speaker 1: it's a blockbuster media deal, and that's why there's a
• 0:14
  Speaker 1: lot of attention around it. And it's roughly seventy plus billion,
• 0:19
  Speaker 1: all right. Lawmakers want to examine whether the deal could
• 0:21
  Speaker 1: reduce competition in the entertainment and streaming markets and if
• 0:25
  Speaker 1: there could be quote harm to consumers. Now you may
• 0:30
  Speaker 1: be saying, wait, what, how is this all happening?
• 0:32
  Speaker 2: What's this? Why is this happening? The world that we
• 0:36
  Speaker 2: are living in now.
• 0:37
  Speaker 1: Has changed drastically because of streaming and how we consume things.
• 0:41
  Speaker 1: So you're gonna have the Netflix at co CEO. He's
• 0:45
  Speaker 1: scheduled to testify before the Senate Judiciary Committee an anti
• 0:48
  Speaker 1: trust subcommittee, and answer lawmakers questions about the merger.
• 0:51
  Speaker 2: Then you're gonna have Warner brother.
• 0:53
  Speaker 1: Executives who are also expected to participate and explain their
• 0:56
  Speaker 1: perspective on the deal. And what lawmakers are focused on
• 1:00
  Speaker 1: is antitrust and competition. So to break some of this down,
• 1:05
  Speaker 1: I decided I'd call a man that deals with us
• 1:07
  Speaker 1: every day, Rich Greenfeld is a partner and TMT analysts
• 1:12
  Speaker 1: at light Shed Partners the GP, light Shed Ventures, Media
• 1:16
  Speaker 1: Futurists and cohs so the light Shed podcast and grab
• 1:19
  Speaker 1: it wherever you get your podcasts, and I decided we'd
• 1:22
  Speaker 1: have him on to talk about what this means for
• 1:24
  Speaker 1: the average American. So let's just start with the overall
• 1:28
  Speaker 1: bigger picture here, Rich and I appreciate you coming on.
• 1:32
  Speaker 1: The way that we consume things has changed drastically. YouTube
• 1:37
  Speaker 1: is a great example of that. It is an entertainment marketplace.
• 1:41
  Speaker 1: It's evolving right now into literally TV and streaming. You've
• 1:46
  Speaker 1: got social media platforms that are also vying for all
• 1:49
  Speaker 1: of our attention with reels and stories and shows that
• 1:51
  Speaker 1: are up there as well. So you look at the
• 1:54
  Speaker 1: current landscape, why is this relevant in context of the
• 1:58
  Speaker 1: acquisition with Warner brought there's discovery by Netflix and what
• 2:03
  Speaker 1: question should consumers be asking?
• 2:05
  Speaker 3: No, look that big from first of all, to keep
• 2:08
  Speaker 3: having me. It's a fascinating time in the media landscape.
• 2:11
  Speaker 3: I'm sure all of your listeners around the country are realizing.
• 2:17
  Speaker 4: The way we consume.
• 2:18
  Speaker 3: Entertainment has changed pretty dramatically. I mean the fact that
• 2:21
  Speaker 3: the single largest platform. You know, when you look at
• 2:25
  Speaker 3: what people are watching on a TV screen, so like
• 2:27
  Speaker 3: this is actually on the big screen TV in your
• 2:30
  Speaker 3: living room. The number one place or piece of content
• 2:35
  Speaker 3: that people are turning to on that big screen television
• 2:38
  Speaker 3: in twenty twenty sixes YouTube.
• 2:41
  Speaker 4: That's pretty crazy, Ben, because I think if we were to.
• 2:43
  Speaker 3: Go back twenty years ago, obviously that was zero, you know,
• 2:46
  Speaker 3: ten years ago, that was tiny. And the fact that
• 2:49
  Speaker 3: it is literally exploded really over the last five or
• 2:53
  Speaker 3: six years to become the dominant place. You know, there's
• 2:56
  Speaker 3: more times watching new to the TV than editing together. AVC, ESPN,
• 3:03
  Speaker 3: Disney plus Hulu is the entire Disney Armada.
• 3:08
  Speaker 4: YouTube is bigger.
• 3:09
  Speaker 3: And so that's a tremendous change in how can I
• 3:14
  Speaker 3: have three kids myself. I look at their media behavior.
• 3:18
  Speaker 3: I look at what they turn on when they get
• 3:20
  Speaker 3: home from school. Like the way that we are consuming
• 3:24
  Speaker 3: content has traumatically changed. And that's part of the challenge.
• 3:27
  Speaker 3: You know, I think what Congress on Tuesday and what
• 3:31
  Speaker 3: regulars were looking at this transaction to the Department of
• 3:34
  Speaker 3: Justice and even the court system if it ends up there.
• 3:38
  Speaker 3: The challenge that they all have to think about is
• 3:40
  Speaker 3: what is.
• 3:41
  Speaker 4: The relevant market?
• 3:43
  Speaker 3: Is the market streaming meaning preemium streaming, So a Netflix
• 3:46
  Speaker 3: or a Hulu is the market all of TV, which
• 3:50
  Speaker 3: includes broadcast TV, where the Grammys are tonight, where the
• 3:54
  Speaker 3: Oscars are going to be on YouTube eventually. So do
• 3:56
  Speaker 3: you include YouTube? You know, you can watch the NFL
• 4:00
  Speaker 3: now on YouTube. There was a game out of Brazil someday.
• 4:02
  Speaker 3: Ticket is on YouTube? So do you include streaming free television?
• 4:06
  Speaker 3: Do you include broadcast TV? Do you include ESPN and
• 4:10
  Speaker 3: all of able TV? Do you include things like TikTok
• 4:14
  Speaker 3: which are not really things you watch on the TV,
• 4:16
  Speaker 3: but are where you consume entertainment. So the challenge for
• 4:20
  Speaker 3: everyone is what is the actual market that we're analyzing.
• 4:24
  Speaker 4: Who competes with who?
• 4:26
  Speaker 3: Obviously there's going to be some people in Congress and
• 4:30
  Speaker 3: regulators who want to define this really narrowly, like this
• 4:34
  Speaker 3: is just Netflix versus Hulu or Netflix versus Amazon Prime Video.
• 4:39
  Speaker 3: That seems like a very primitive way or a very
• 4:43
  Speaker 3: overly simplified way of looking at it, and certainly not
• 4:45
  Speaker 3: the way your listeners think about their choices when they
• 4:48
  Speaker 3: get home from a hard day at work. I think
• 4:50
  Speaker 3: they're literally thinking about YouTube in the same breath that
• 4:54
  Speaker 3: they're thinking about turning on Netflix or CBS. They're all
• 4:58
  Speaker 3: competing for time.
• 5:00
  Speaker 1: Yeah, they're all commuting for time and eyeballs. Which look,
• 5:03
  Speaker 1: when I looked at this deal in general, my first
• 5:05
  Speaker 1: question was, Okay, are Americans gonna get hurt?
• 5:09
  Speaker 2: And I'm talking about jobs.
• 5:11
  Speaker 1: Are they gonna be lost if one in a big way,
• 5:13
  Speaker 1: if one side gets it or the other. I look
• 5:16
  Speaker 1: at Netflix, I'm like, all right, well that's American. They're
• 5:19
  Speaker 1: gonna do a lot in America. They also are in
• 5:21
  Speaker 1: a studio, but this would make them into one, which
• 5:23
  Speaker 1: would mean I would assume more job creation here. That
• 5:26
  Speaker 1: was obviously a big perk for me. There's also questions
• 5:30
  Speaker 1: that I've asked about, all right, well, where's the money
• 5:32
  Speaker 1: coming from to buy this, because this is a big
• 5:34
  Speaker 1: price tag. Talk to me and break that down a
• 5:37
  Speaker 1: little bit.
• 5:37
  Speaker 3: Well, okay, so John's interesting, right, because you know, if
• 5:40
  Speaker 3: you look, first of all, we should step back and say,
• 5:42
  Speaker 3: for your listeners, part of the reason we're having this
• 5:45
  Speaker 3: conversation is not there's not just one person that wants
• 5:48
  Speaker 3: to buy Warner Brothers in Netflix. There's another company, Paramount,
• 5:52
  Speaker 3: that's very interested and has made a hostile bid. After
• 5:55
  Speaker 3: their first or after the first several offers were rejected,
• 5:59
  Speaker 3: they are still trying to buy company. But if we're
• 6:01
  Speaker 3: simply going to look at job creation or even job
• 6:04
  Speaker 3: status flow, you know, Netflix is not in the theatrical business.
• 6:08
  Speaker 3: They are not in the syndication. They don't take TV
• 6:10
  Speaker 3: shows and license them around the world. As you said,
• 6:14
  Speaker 3: While they are building a studio, and they've been building
• 6:16
  Speaker 3: a studio for many years, they don't have a studio
• 6:20
  Speaker 3: the scale and the size of the studio, depth and
• 6:23
  Speaker 3: catalog that Warner Brothers does. And so I think if
• 6:26
  Speaker 3: you look at this, you can say that Netflix has
• 6:28
  Speaker 3: probably put more money into the entertainment business on an
• 6:30
  Speaker 3: manual basis securely into entertainment in any other company, not.
• 6:35
  Speaker 4: Just in America but around the world.
• 6:36
  Speaker 3: And so I think you can very much point to
• 6:38
  Speaker 3: this and say Netflix, from a job standpoint, will be
• 6:42
  Speaker 3: good for the entertainment industry. They are not looking to
• 6:46
  Speaker 3: This is not about cost cutting. I don't think any
• 6:48
  Speaker 3: part of the Netflix acquisition has been built around cost cutting. Now,
• 6:52
  Speaker 3: Paramount is also trying to buy Warner Brothers. They have
• 6:55
  Speaker 3: said they're going to keep both studios running fully independently.
• 6:59
  Speaker 3: I'll tell you they're also talking about, you know, billions
• 7:03
  Speaker 3: upon billions of dollars of cost savings. And I'll just
• 7:06
  Speaker 3: be honest with you. I remember back when Disney bought
• 7:09
  Speaker 3: Fox and the whole fact with you know, this was
• 7:11
  Speaker 3: one during the first Trump administration, if you remember, a
• 7:14
  Speaker 3: big part of that was we're going to keep Fox
• 7:17
  Speaker 3: fully independent. Well, i'll tell you now what is. It's
• 7:20
  Speaker 3: seven years later. Fox is a shell of itself, and
• 7:23
  Speaker 3: yes it does release some movies, but you've seen dramatically,
• 7:28
  Speaker 3: a dramatic strength and a tremendous amount of the overhead,
• 7:32
  Speaker 3: meaning jobs of the two studios was eliminated. Like there's
• 7:35
  Speaker 3: a tremendous amount of duplicative jobs between Paramount and Warner
• 7:39
  Speaker 3: Brothers that certainly doesn't exist in Netflix. Now there's a
• 7:43
  Speaker 3: Netflix skeptic out there that says, oh, Netflix won't release
• 7:45
  Speaker 3: movies and movie theaters.
• 7:46
  Speaker 4: They're just saying that to get approval.
• 7:49
  Speaker 3: You know, obviously there's no way to know what Netflix
• 7:51
  Speaker 3: ultimately does. But I will say they seem more committed
• 7:55
  Speaker 3: to being in the theatrical business than I ever expected
• 7:59
  Speaker 3: them to be. If you were to have asked me
• 8:00
  Speaker 3: about this transaction on your show. Six months ago, I
• 8:03
  Speaker 3: would have said there's no way they're going to do theatrical.
• 8:06
  Speaker 3: They seem pretty committed to getting into this theastical business,
• 8:09
  Speaker 3: which surprises me but is also to your point, good
• 8:11
  Speaker 3: for jobs.
• 8:12
  Speaker 1: For the next sixty seconds, can you hit pause on
• 8:15
  Speaker 1: your life and just think about this.
• 8:17
  Speaker 2: In communities around the world, millions.
• 8:20
  Speaker 1: Of children like Lucy faced the crushing weight of poverty, hunger, illness,
• 8:25
  Speaker 1: and a lack of opportunity dim their bright futures. But
• 8:30
  Speaker 1: through Compassion International and local churches, everything is changing. Lucy
• 8:35
  Speaker 1: receives nourishing food, vital medical care, and the chance to
• 8:40
  Speaker 1: go to school. She learns life skills, develops God given talents,
• 8:45
  Speaker 1: and builds a loving relationship with Jesus. It's a journey
• 8:49
  Speaker 1: from vulnerability to empowerment, and it's sparked literally by your love.
• 8:54
  Speaker 1: This transformation echoes far beyond Lucy, impacting her family, the community,
• 9:00
  Speaker 1: and shaping the future of her nation. And you can
• 9:02
  Speaker 1: make this profound difference right now. So join me in
• 9:07
  Speaker 1: sponsoring a child. Visit Compassion dot com today, you'll empower
• 9:12
  Speaker 1: life and change the world. That's Compassion dot com to
• 9:16
  Speaker 1: learn more, there is a concern I'm one of them,
• 9:20
  Speaker 1: about foreign influence, and I want American made movies and
• 9:26
  Speaker 1: entertainment to be made here without outside influence. A great
• 9:29
  Speaker 1: example of some of that outside influence we've witnessed was
• 9:32
  Speaker 1: uh when Todd Gren Maverick was not even allowed to
• 9:34
  Speaker 1: be shown over in China because of a patch that
• 9:38
  Speaker 1: was on his bomber jacket that that was in favor of,
• 9:41
  Speaker 1: you know, supporting Taiwan. Like, I see things like that,
• 9:43
  Speaker 1: and I'm like, all right, I want to make sure
• 9:45
  Speaker 1: those movies still get made without foreign influence. So break
• 9:49
  Speaker 1: that down for me. Where's the money coming from the
• 9:51
  Speaker 1: for for all this to get done?
• 9:54
  Speaker 4: Well?
• 9:54
  Speaker 3: I mean, look, you know, the reality is, you know,
• 9:58
  Speaker 3: when you look at private equity broadly defined, more and
• 10:02
  Speaker 3: more of it has certainly come from overseas. Certainly the
• 10:05
  Speaker 3: Middle East has been the huge driver of major transactions
• 10:10
  Speaker 3: in the US. I mean then, I don't know if
• 10:12
  Speaker 3: you're folks how much you focus on it. But EA,
• 10:15
  Speaker 3: which you know, makes big games, like you know, the
• 10:19
  Speaker 3: the games that your listeners play, that is being acquired,
• 10:24
  Speaker 3: you know, by sovereign wealth. You know, it's being acquired
• 10:26
  Speaker 3: by Saudi Arabia's you know, public investment fun so if
• 10:31
  Speaker 3: and so Middle East is not just targeting you know, Sollywood.
• 10:36
  Speaker 3: They are really looking across the entertainment ecosystem and making
• 10:40
  Speaker 3: big acquisitions.
• 10:41
  Speaker 4: Now, you know, we'll.
• 10:42
  Speaker 3: See, obviously, from a regulatory standpoint, whether all of these
• 10:45
  Speaker 3: things are quote unquote allowed.
• 10:48
  Speaker 4: You know, I think there are certainly going to be.
• 10:50
  Speaker 3: Challenges and questions of whether this is good and what's
• 10:53
  Speaker 3: the longer term impact. Obviously, we saw what happened to
• 10:56
  Speaker 3: Pitcock and how much the government did not want something that,
• 11:01
  Speaker 3: forget about even the spying, that there was a fear
• 11:03
  Speaker 3: that China could influence the algorithm, China could manipulate, and
• 11:07
  Speaker 3: whether it was true or not, there was enough fear
• 11:10
  Speaker 3: regulatory wise to force a sale of the algorithm and.
• 11:14
  Speaker 4: Of the US business to US investors.
• 11:17
  Speaker 3: And so this is clearly, in the government's mind, a
• 11:21
  Speaker 3: clear and present danger. We'll see whether what happens with TikTok,
• 11:25
  Speaker 3: what happened with EA. And then obviously there's no issue
• 11:28
  Speaker 3: with foreign money for the Netflix Warner Brothers transaction because
• 11:31
  Speaker 3: Netflix is obviously a US company. They are funding this
• 11:35
  Speaker 3: transaction entirely themselves. But the bidder against them paramount. While
• 11:41
  Speaker 3: Larry Nelson is putting up some of the capital from
• 11:44
  Speaker 3: his family's wealth, the majority of the actually of the
• 11:47
  Speaker 3: equity of the transaction is being financed from three sovereign
• 11:51
  Speaker 3: wealth funds in the Middle East. And while they are
• 11:53
  Speaker 3: quote unquote giving up all governance in control, they certainly
• 11:57
  Speaker 3: are investing the single largest dollar amount in this transaction.
• 12:01
  Speaker 3: And so look at you know, whether there is a
• 12:03
  Speaker 3: Siffiist regulatory concern TVD.
• 12:06
  Speaker 4: They've obviously said there is not.
• 12:08
  Speaker 3: I assume that will take time to actually ascertain if
• 12:12
  Speaker 3: in fact they end up winning the bidding for this transaction.
• 12:15
  Speaker 3: But look, I think you're actually raising a really important
• 12:18
  Speaker 3: point of forget about whether we're talking about Hollywood and
• 12:21
  Speaker 3: movie or TV broadenness to whether it's video games, things
• 12:26
  Speaker 3: like TikTok social media feeds. Do we want any of
• 12:29
  Speaker 3: these things that have such an impact on culture, especially
• 12:33
  Speaker 3: on young people and the culture they grow up on.
• 12:35
  Speaker 3: How much do they do we want outside foreign influence
• 12:39
  Speaker 3: in the control of these things. And it's a great
• 12:41
  Speaker 3: and important question that everyone should be asking.
• 12:43
  Speaker 1: Yeah, it's it's an important one, and you talk about
• 12:46
  Speaker 1: I mean, even with live golf and the PGA Tour.
• 12:48
  Speaker 1: We've seen that battle play out with outside influence be like, wait,
• 12:51
  Speaker 1: what do you why are there certain people trying to
• 12:53
  Speaker 1: throw so much money getting into American households and American
• 12:58
  Speaker 1: you know, different products or Europe. I mean, golf's a
• 13:00
  Speaker 1: great example of that. There's been a lot of debate
• 13:04
  Speaker 1: over that one, and it's certainly on this one as well.
• 13:06
  Speaker 1: Let me let me go back to the jobs question
• 13:08
  Speaker 1: and expand on that just a little bit. Paramount, by
• 13:10
  Speaker 1: the way, they're relatively small for a media company, uh
• 13:14
  Speaker 1: as was by the way, Skydance when it acquired it.
• 13:17
  Speaker 1: So is there a concern should there be a concern
• 13:20
  Speaker 1: about Paramount being able to operate a business that is
• 13:23
  Speaker 1: of Warner Brothers Discovery size, especially when they're already so leveraged.
• 13:28
  Speaker 3: Look, we have a we have We are very excited
• 13:31
  Speaker 3: by David Ellison coming in. Paramount has been a company
• 13:35
  Speaker 3: I don't know how long you follow sort of the
• 13:37
  Speaker 3: Redstone family struggles and the challenges that this has been
• 13:40
  Speaker 3: a trouble company for a long time and bringing in
• 13:43
  Speaker 3: someone like David Ellison, who not just has a tremendous
• 13:48
  Speaker 3: amount of family wealth, but also has a love of content,
• 13:54
  Speaker 3: really wants to build and leverage technology. This has been
• 13:57
  Speaker 3: great thing for Paramount, you know how a fresh start
• 14:02
  Speaker 3: to life. And I think you know you mentioned the
• 14:05
  Speaker 3: word leverage. The beauty of the Paramount's guidance transaction is
• 14:08
  Speaker 3: that leverage was brought down. They actually gave it a
• 14:11
  Speaker 3: point where they could be aggressive investors. I don't know
• 14:13
  Speaker 3: if you watched the UFC either of the last two
• 14:15
  Speaker 3: Saturday nights, but they went out and they spent a
• 14:17
  Speaker 3: billion dollars plus on the UFC rights. Like, they are
• 14:20
  Speaker 3: aggressively investing in their business. Really for the first time
• 14:24
  Speaker 3: in probably a decade. Look, you are seeing Paramount actually
• 14:27
  Speaker 3: in the you know, take control and actually be an
• 14:30
  Speaker 3: aggressive investor.
• 14:32
  Speaker 4: That is great.
• 14:33
  Speaker 3: The challenge with Warner Brothers is that they're then trying
• 14:35
  Speaker 3: to because they don't have enough cash because they are
• 14:38
  Speaker 3: a smaller company. As you point out, they're levering up aggressively.
• 14:42
  Speaker 3: And that's what worries me is I don't like in
• 14:44
  Speaker 3: a business of TV with so much is changing. We
• 14:47
  Speaker 3: talked about it at the top of the segment, how behavior,
• 14:52
  Speaker 3: consumer behavior is shifting. Levering up is not you know,
• 14:56
  Speaker 3: having a tremendous amount of debt is not really where
• 14:58
  Speaker 3: you want to be as a media being twenty twenty six,
• 15:01
  Speaker 3: and so I actually think Paramount would be better off
• 15:04
  Speaker 3: not buying Warner Brothers and simply investing in itself, you know,
• 15:08
  Speaker 3: if it doesn't have more capital from Larry directly. I
• 15:11
  Speaker 3: actually think going to solo paths would actually be a
• 15:14
  Speaker 3: better outcome for investors than over levering the company. But
• 15:19
  Speaker 3: you know, we'll see, obviously, you know, it all comes
• 15:22
  Speaker 3: down to money, and if they can raise enough money,
• 15:25
  Speaker 3: I am sure there is some price where they could
• 15:27
  Speaker 3: beat Netflix or Warner Brothers, but it's going to take
• 15:30
  Speaker 3: a lot of firepower to convince the board to switch
• 15:33
  Speaker 3: from Netflix over to Paramount.
• 15:36
  Speaker 1: Final question for you, if you could be at this
• 15:38
  Speaker 1: hearing on Tuesday, what's the number one question you'd want
• 15:41
  Speaker 1: to ask?
• 15:42
  Speaker 3: Well, I mean, I think it's funny. I think I
• 15:46
  Speaker 3: would literally start off by just saying to each senator
• 15:49
  Speaker 3: who's interviewing, I'd love for them to answer the question,
• 15:54
  Speaker 3: what is the number one use in terms of content
• 15:59
  Speaker 3: consumption of television?
• 16:02
  Speaker 4: Like do they even realize?
• 16:03
  Speaker 3: I'm actually curious how many senators in the hearing actually
• 16:08
  Speaker 3: realize that there's more time spent watching YouTube than everything
• 16:12
  Speaker 3: that the Walt Disney Company creates than everything that Netflix
• 16:16
  Speaker 3: and Amazon create, Like.
• 16:17
  Speaker 4: Are they aware of that? I think that would be
• 16:20
  Speaker 4: a big one.
• 16:21
  Speaker 3: And then the second piece bend that I think is
• 16:23
  Speaker 3: important is I do think I would question them on
• 16:26
  Speaker 3: are they aware of what happened with Disney Plus and Hulu?
• 16:29
  Speaker 3: Because remember Disney brought Fox and by getting Fox, Disney
• 16:32
  Speaker 3: got control of Hulu. And if you look at what's
• 16:36
  Speaker 3: happened with Disney Plus and Hulu, So right now, if
• 16:40
  Speaker 3: your listeners have either Disney Plus or Hulu individually, and
• 16:44
  Speaker 3: they kick it with ad so they take the cheapest
• 16:45
  Speaker 3: plan possible for Disney Plus, your listeners are paying eleven
• 16:49
  Speaker 3: ninety nine. For Hulu, your listeners are paying eleven ninety nine,
• 16:54
  Speaker 3: but the bundle of Disney Plus and Hulu is twelve
• 16:57
  Speaker 3: ninety nine. So when you think about the consumer value
• 17:01
  Speaker 3: of bundling and how much bundling channels creates really cost
• 17:06
  Speaker 3: savings for consumers, the Hulu Disney Plus a study is
• 17:11
  Speaker 3: a great example of how Netflix plus Hbo would be
• 17:15
  Speaker 3: a great thing for consumers because you may end up
• 17:18
  Speaker 3: with a lot more content for a very slight increase
• 17:23
  Speaker 3: in price relative to what you're paying for each of these.
• 17:26
  Speaker 2: Individually depends on the dollars.
• 17:28
  Speaker 1: Basically what you're saying, it's like, it's almost like a
• 17:30
  Speaker 1: buy one, get a huge. It's a bogo, right, you
• 17:32
  Speaker 1: buy one, you get one at dirt cheap er.
• 17:35
  Speaker 3: I mean, that's what it is with Disney and Hulu,
• 17:36
  Speaker 3: Like you're basically getting If you buy Disney Plus, you
• 17:39
  Speaker 3: get Hulu for a dollar.
• 17:40
  Speaker 4: If you get Hulu, you get Disney Plus for a dollar.
• 17:42
  Speaker 3: Like that is a pretty tremendous deal for consumers. I
• 17:45
  Speaker 3: don't know that that's what Hbo and Netflix. It would
• 17:48
  Speaker 3: be a good question to ask them to think about
• 17:50
  Speaker 3: how they're thinking about pricing the combined services. But if
• 17:54
  Speaker 3: you certainly look at Disney Plus and Hulu, the end
• 17:57
  Speaker 3: result has been a tremendous win for consumer.
• 18:00
  Speaker 4: There's no doubt about it.
• 18:01
  Speaker 2: Rich.
• 18:01
  Speaker 1: I appreciate your time, Rich Greenfield. Don't forget grab the
• 18:04
  Speaker 1: podcast the Light Shed podcasts. Wherever you get your podcasts,
• 18:08
  Speaker 1: they dive into a lot of this type of stuff.
• 18:10
  Speaker 1: I hope this helped answer a lot of questions. You've
• 18:13
  Speaker 1: heard me talking a lot about protecting American jobs and
• 18:17
  Speaker 1: also talking about there was the big hearing in Washington,
• 18:21
  Speaker 1: the dealt with Netflix and Warner Brothers and Discovery in
• 18:24
  Speaker 1: all of this, and I want to continue that conversation
• 18:28
  Speaker 1: now and really dive into what you can expect moving
• 18:32
  Speaker 1: forward and what's going to be happening. Join me now
• 18:35
  Speaker 1: talk about this is Cleete Williams. He's the chief Global
• 18:37
  Speaker 1: Affairs officer with Netflix. Include I appreciate you coming on
• 18:41
  Speaker 1: to talk even more about this. I want to get
• 18:44
  Speaker 1: into the American job aspect of this first and foremost,
• 18:47
  Speaker 1: because I don't think people realize, number one, how many
• 18:51
  Speaker 1: jobs are being created in this country and directly with Netflix,
• 18:56
  Speaker 1: but also indirectly with others that are making content that
• 19:00
  Speaker 1: you guys are then buying and that supports the development
• 19:03
  Speaker 1: of it as well.
• 19:03
  Speaker 5: Yeah. No, thanks so much. Done for having me on,
• 19:06
  Speaker 5: And obviously I'm I'm thrilled to talk about this because
• 19:09
  Speaker 5: this is one of the reasons I was so excited
• 19:12
  Speaker 5: to join Netflix in the first place, because Netflix is
• 19:14
  Speaker 5: a company that is really committed to growing investment and
• 19:18
  Speaker 5: growing jobs in the United States. And just to give
• 19:21
  Speaker 5: you a little bit of detail on that, you know,
• 19:23
  Speaker 5: Netflix is a company who has you know, we started
• 19:27
  Speaker 5: mailing DVDs around, we got into streaming, and recently we've
• 19:31
  Speaker 5: been getting into content. Right, it's really this classic American story,
• 19:34
  Speaker 5: something that only could have happened in the United States.
• 19:37
  Speaker 5: But as we've been getting into content, what we've done
• 19:40
  Speaker 5: is we've tripled our workforce in the last couple of
• 19:42
  Speaker 5: years and we are now filming in all fifty states
• 19:46
  Speaker 5: in the United States. We've got a total of twelve
• 19:48
  Speaker 5: hundred locations that we filmed in. And what this has done,
• 19:52
  Speaker 5: it's supported one hundred and forty thousand production jobs in
• 19:55
  Speaker 5: the country. It's supported two hundred and twenty five billion
• 19:58
  Speaker 5: of economic output. And we're trying to do even more.
• 20:02
  Speaker 5: You know, we're investing more into content as others in
• 20:05
  Speaker 5: the industry are pulling back. And one of the really
• 20:07
  Speaker 5: exciting stories is up in New Jersey where the Fort
• 20:11
  Speaker 5: Monmouth base used to be. This base was closed down
• 20:15
  Speaker 5: and now we're building a world class studio there. One
• 20:17
  Speaker 5: point two billion dollars into that economy. And so look,
• 20:20
  Speaker 5: it's a really exciting story for what's going on at Netflix.
• 20:23
  Speaker 1: You know, for people that again and I go back
• 20:25
  Speaker 1: to this is for me America first, American jobs.
• 20:28
  Speaker 2: I also wrote an op at Fox News dot Com.
• 20:31
  Speaker 1: You can grab it there talking about why I believe
• 20:32
  Speaker 1: that Ron Reagan would be in favor of this merger
• 20:37
  Speaker 1: between Netflix and Warner Brothers because of it doing so
• 20:41
  Speaker 1: much to keep production and American interests first and foremost.
• 20:45
  Speaker 1: He understood the value of exporting American ideals and American
• 20:49
  Speaker 1: movies is an amazing way to have influence.
• 20:52
  Speaker 2: All over the world.
• 20:54
  Speaker 1: You look at the other side of this, so people
• 20:56
  Speaker 1: understand just the context that there has been a re
• 21:00
  Speaker 1: pedd hostile attempt to acquire from Paramount and skuideiance. What
• 21:06
  Speaker 1: worries me about that side is a lot of outside of.
• 21:09
  Speaker 2: The US money that can come in.
• 21:11
  Speaker 1: I as a as a look, I want America to
• 21:14
  Speaker 1: be shown in the best slide. I don't want there
• 21:16
  Speaker 1: to be outside influenced. I worry about that. And you guys,
• 21:20
  Speaker 1: to be very clear, your core is the United States
• 21:23
  Speaker 1: of America. I want to make sure everybody understands that.
• 21:26
  Speaker 5: Yeah know, look, that's absolutely right. And you know I
• 21:28
  Speaker 5: just mentioned this studio in New Jersey. What we're hoping
• 21:31
  Speaker 5: to do with this studio in New Jersey is do
• 21:34
  Speaker 5: a bunch of filming in the United States that would
• 21:36
  Speaker 5: have otherwise been done in other places like the United Kingdom.
• 21:39
  Speaker 5: And so this really is about strengthening the American industry,
• 21:44
  Speaker 5: making sure that America remains number one in the world
• 21:47
  Speaker 5: for production. And look, you brought out the situation with Paramount,
• 21:53
  Speaker 5: who is making the hostile bid, And I think one
• 21:56
  Speaker 5: of the points that you raise in some of the
• 21:58
  Speaker 5: things that you've written is is that there's really a
• 22:01
  Speaker 5: clear contrast here, right. I mean, there's the job story
• 22:04
  Speaker 5: and the fact that we've been creating jobs and they've
• 22:07
  Speaker 5: been cutting them. Right, they had three and thirty five
• 22:09
  Speaker 5: hundred jobs cut with their Skydance merger. Just yesterday they
• 22:13
  Speaker 5: announced they were going to reduce their workforce at CBS
• 22:16
  Speaker 5: by fifteen percent. They've they've identified six billion in synergies,
• 22:20
  Speaker 5: which is code for job cuts. You know, that's actually
• 22:22
  Speaker 5: probably going to be higher because this is the largest
• 22:24
  Speaker 5: leverage buyout in history. But you know, speaking of the
• 22:27
  Speaker 5: leverage buyout and speaking of the financing, here's where here's
• 22:30
  Speaker 5: a big difference, and I think you know you will
• 22:32
  Speaker 5: find very important, which is Netflix is an American deal
• 22:37
  Speaker 5: with American dollars. Yeah, and the Paramount deal. Paramount has
• 22:40
  Speaker 5: more equity from the Middle East than the United States.
• 22:43
  Speaker 1: Hold on to say that again, because that's what that
• 22:45
  Speaker 1: is my biggest warning. And when I was looking at this,
• 22:48
  Speaker 1: I was I was one of those full disclosure. I've
• 22:51
  Speaker 1: I've been critical of Netflix in the past on certain
• 22:54
  Speaker 1: things I did, I did, I like or don't like you.
• 22:56
  Speaker 2: It's a big company.
• 22:57
  Speaker 1: That would be normal, but my big red flag here
• 22:59
  Speaker 1: with hold on a second, we're talking about major influence
• 23:04
  Speaker 1: that would come into a collection flash studio and production
• 23:09
  Speaker 1: from the Middle East. I do not like that or
• 23:11
  Speaker 1: feel comfortable with it at all.
• 23:14
  Speaker 5: No, I mean I understand the concerns you're raising, right,
• 23:17
  Speaker 5: I think you've written about that very eloquently, and just
• 23:20
  Speaker 5: the difference here American deal with American dollars versus something
• 23:24
  Speaker 5: that has the majority of its equity from the Middle East.
• 23:28
  Speaker 5: And look, there are concerns about what that would do
• 23:31
  Speaker 5: on influence and what it would do for American soft power.
• 23:34
  Speaker 5: But I think you know, the interesting thing that a
• 23:36
  Speaker 5: lot of people haven't focused on is that this also
• 23:39
  Speaker 5: causes regulatory problems for Paramount that we don't have. Right
• 23:42
  Speaker 5: And in the US, you've got the Trophy Department and
• 23:45
  Speaker 5: their scithious review process, you know, which is going to
• 23:48
  Speaker 5: have to look into whether this is you know, problematic
• 23:51
  Speaker 5: foreign control. You've also got the European Union, you know,
• 23:55
  Speaker 5: who may be concerned about you know, Middle East ownership
• 23:57
  Speaker 5: of CNN and some of these other networks. And so,
• 24:00
  Speaker 5: you know, I think that's a clear contrast between these
• 24:03
  Speaker 5: two deals.
• 24:04
  Speaker 1: Let's also talk about some of the misconceptions and we
• 24:07
  Speaker 1: saw I think some of this come out and that
• 24:09
  Speaker 1: antitrust hearing that was in Washington, d C. There are
• 24:13
  Speaker 1: a lot of people that just assume that Netflix is
• 24:15
  Speaker 1: a company that has a massive studio and you guys
• 24:18
  Speaker 1: are creating a lot of this content in your own studios.
• 24:22
  Speaker 1: That is not the case at all. That is exactly
• 24:25
  Speaker 1: the reason why this paramount Warner Brothers Discovery deal is
• 24:29
  Speaker 1: what you guys are wanting to do, because you do
• 24:32
  Speaker 1: want to get into that as well.
• 24:34
  Speaker 5: Yeah, that's absolutely right, and the contrast here is clear
• 24:37
  Speaker 5: as well. You know, the Netflix deal is primarily a
• 24:41
  Speaker 5: vertical merger, and what I mean by that is that,
• 24:44
  Speaker 5: you know, we're proud of what we've done in the
• 24:47
  Speaker 5: content production business in the last couple of years, but
• 24:49
  Speaker 5: we've only been making our own stuff for around a decade.
• 24:53
  Speaker 5: And you know, you contrast that with Warner Brothers, who
• 24:56
  Speaker 5: has one hundred years of production in this business, who
• 25:00
  Speaker 5: has all that iconic intellectual property, and so this is complementary.
• 25:05
  Speaker 5: We're going to be able to bring that into the
• 25:07
  Speaker 5: network Netflix platform. You know, you also have this legacy
• 25:11
  Speaker 5: studio out in Hollywood that that Warner Brothers has. You know,
• 25:16
  Speaker 5: we're building this new, world class studio in New Jersey,
• 25:19
  Speaker 5: but we haven't had that kind of thing yet, so
• 25:20
  Speaker 5: we're bringing that together. Then there's this theatrical distribution business,
• 25:24
  Speaker 5: another area where we have not been active, and we're
• 25:27
  Speaker 5: going to bring that together. And so that's a vertical
• 25:29
  Speaker 5: merger with complementary assets where we're going to be able
• 25:32
  Speaker 5: to get more content to consumers for less and we're
• 25:35
  Speaker 5: going to keep all these major players and major buyers
• 25:37
  Speaker 5: in the market. And then the Paramount deal is your
• 25:40
  Speaker 5: classic horizontal merger with the Noah's Ark problem. You know,
• 25:44
  Speaker 5: they're going to have two of everything, right, they already
• 25:47
  Speaker 5: have one of those big legacy studios out in Hollywood,
• 25:50
  Speaker 5: so they're going to have to cut one there. Already
• 25:53
  Speaker 5: have a major theatrical distribution business, so that's going to
• 25:56
  Speaker 5: get cut and consolidated. And then look, you can also
• 25:59
  Speaker 5: look at the news and the sports and all these
• 26:01
  Speaker 5: other things where they're going to double up as well.
• 26:03
  Speaker 5: And so I think, you know, if you look at
• 26:05
  Speaker 5: these vertical mergers which have traditionally been treated very favorably
• 26:09
  Speaker 5: by competition authorities versus a horizontal merger which traditionally has
• 26:13
  Speaker 5: not been Again, I think on the regulatory front, it's
• 26:16
  Speaker 5: pretty clear, you know that the Netflix deal has a
• 26:19
  Speaker 5: clearer path, and I do think that's a misconception that
• 26:22
  Speaker 5: the other side has tried to perpetuate.
• 26:24
  Speaker 2: Let me ask you one question.
• 26:25
  Speaker 1: It's a concern that I and many others have had
• 26:27
  Speaker 1: that are conservatives, and that is that Netflix has been
• 26:32
  Speaker 1: seen through many conservatives as an advocate for more of
• 26:35
  Speaker 1: the left and woke type programming. Without going into you know,
• 26:39
  Speaker 1: exact details, in general, that has been a major concern
• 26:43
  Speaker 1: and there has been a real concern that, look, if
• 26:45
  Speaker 1: you guys get even more powerful, bigger than what you
• 26:48
  Speaker 1: are now, that that is going to explode in some way.
• 26:51
  Speaker 1: And then the choice of hey are our conservative stories,
• 26:55
  Speaker 1: our traditional stories are historically traditional you know, context stories
• 26:59
  Speaker 1: not going to be told because of quote propaganda. How
• 27:02
  Speaker 1: would you answer and respond to that? Because that is
• 27:04
  Speaker 1: a question. At Center, Holly talked about the hearing some
• 27:08
  Speaker 1: of those clips people saw.
• 27:09
  Speaker 2: I think it's a fair question ask.
• 27:11
  Speaker 5: Well, Look, I appreciate you asking it, and I appreciate
• 27:14
  Speaker 5: the opportunity to clear up what I think is a
• 27:16
  Speaker 5: misconception here. Look, our mission at Netflix is to entertain
• 27:20
  Speaker 5: the world and to run a profitable business. And in
• 27:23
  Speaker 5: order to do that, you know, we need to provide
• 27:25
  Speaker 5: something for everyone all across the spectrum, whether you're left, right, center,
• 27:30
  Speaker 5: And look at the content we have. Right, We've got
• 27:32
  Speaker 5: action movies, We've got rom coms, we got faith based shows,
• 27:36
  Speaker 5: we've got documentaries about the military, westerns, you name it.
• 27:40
  Speaker 5: And look, one of my favorite shows, not one that
• 27:42
  Speaker 5: you would traditionally think of as conservative, but I think
• 27:45
  Speaker 5: it really is, is Cobra Kai, Right, And the main
• 27:48
  Speaker 5: character there, Johnny Lawrence, not only does he kick bud
• 27:51
  Speaker 5: at Karate, but this is a blue collar guy who's
• 27:54
  Speaker 5: set up that American has gotten too soft, too politically correct,
• 27:58
  Speaker 5: and throughout the show he pushes back on that. And
• 28:01
  Speaker 5: I think it's great Look, I'm a conservative. I worked
• 28:04
  Speaker 5: in the Trump White House, and I'm look, Ben, I'm
• 28:07
  Speaker 5: not going to deny that there are shows I don't like, right,
• 28:10
  Speaker 5: but I can just turn those off, right, I can
• 28:12
  Speaker 5: just put on something else, because we have a lot
• 28:14
  Speaker 5: of content on our platform. And I will say, as
• 28:17
  Speaker 5: a conservative, what I'm proud of at Netflix is that
• 28:21
  Speaker 5: we stand up for the First Amendment and we stand
• 28:23
  Speaker 5: up for free speech. And there have been times in
• 28:26
  Speaker 5: the past where we have had folks on the left
• 28:30
  Speaker 5: who have wanted to cancel us and to cancel our
• 28:32
  Speaker 5: programming because it was offensive to them. There was a
• 28:35
  Speaker 5: very famous example a couple of years ago with Dave
• 28:37
  Speaker 5: Chappelle made some jokes that they didn't like, and we
• 28:40
  Speaker 5: stood up for it and we said, no, we're not
• 28:42
  Speaker 5: going to pull that down. We don't censor. And look,
• 28:45
  Speaker 5: that's the same reason we're not in China. You know,
• 28:47
  Speaker 5: we're not in China. We're not going to do that.
• 28:49
  Speaker 1: Yeah, it's a great point and we're going to keep
• 28:52
  Speaker 1: following this. Clett Williams, I appreciate you so much coming
• 28:55
  Speaker 1: on chief Global Affairs Officer with Netflix, and I appreciate
• 28:58
  Speaker 1: you answering that question what you did. I also so
• 29:00
  Speaker 1: I think it's great to know that there are people
• 29:01
  Speaker 1: like you that, by the way, came out of the
• 29:02
  Speaker 1: Trump White House that are now high up at Netflix.
• 29:06
  Speaker 1: I find that comforting to know I have an ally
• 29:08
  Speaker 1: or a friend there that's looking out for my interests,
• 29:10
  Speaker 1: in my family's interests as well. So I appreciate you
• 29:12
  Speaker 1: coming on and talking about that. Don't forget. Share this
• 29:14
  Speaker 1: podcast with your family and friends, share it on social media, please,
• 29:18
  Speaker 1: and I'll see you back here tomorrow.