Pod Insights Decoder What’s next for Netflix and Paramount in the Warner Bros. battle About this episode Hey everyone, it’s Nilay. Decoder is on our holiday break. We’ve got a lot of fun stuff coming up in the New Year, though, including a special Decoder Live at CES. Stay tuned for more details, including how to RSVP for free tickets.
In the meantime, we’ve got a great episode of the podcast Channels, featuring two of the best media reporters in the business. Host Peter Kafka sat down with Bloomberg’s Lucas Shaw to talk about the bidding war between Paramount SkyDance and Netflix over Warner Bros. Discovery. It’s the biggest story in entertainment right now, and this episode breaks down everything you need to know about the contentious acquisition.
Links:
"Neither Side Is Used to Losing”: Lucas Shaw on the battle for Warner Bros. | Channels
Five things we’re getting wrong about Warner Bros.′ Netflix deal | Bloomberg
Warner Bros.’ bidders brace for a fight that will last months | Bloomberg
WBD wants its shareholders to reject Paramount’s latest offer | The Verge
There are no good outcomes for the Warner Bros. sale | The Verge
Netflix is “100% committed” to releasing WB films in theaters | The Verge
Netflix is buying Warner Bros. for $83 billion | The Verge
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Credits:
Decoder is a production of The Verge and part of the Vox Media Podcast Network.
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Transcript 8,369 words · 13 speakers
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0:59 Speaker 03 Cospo Ball is back. So Hilton called to me, the superstition concierge, to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky jersey? Oh, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition, even a marching band wake-up call at 5:55 and 55 seconds. Hit it! When you need a team that will do whatever it takes on game day, it matters where you stay. Hilton, for the stay.
1:31 Speaker 04 Hey, everybody, it's Eli. Decoder is on holiday break. We've got a lot of fun stuff coming up in the new year, though, including a special Decoder Live at CES. We'll be recording on Wednesday, January 7, at 12:30 PM at Brooklyn Bowl in Las Vegas. Stay tuned for more details, including how to RSVP for free tickets to the event. In the meantime, I wanted to share this great episode of the podcast Channels, featuring two of the best media reporters in the business. Host Peter Kafka sat down with Bloomberg's Lucas Shaw to talk about the bidding war between Paramount Skydance and Netflix over Warner Brothers' Discovery. Who gets to buy Warner is one of the biggest stories in the entertainment industry today, and it shows no signs of resolving anytime soon. There's a whole lot of complex issues in this one. The Trump administration and its weaponization of regulatory oversight,
2:15 Speaker 04 the Ellison family and their push to exert money and influence over the media business, and then, of course, what a deal like this might do to Hollywood, regardless of which company wins in the end. There's almost no one better to talk about this than Peter and Lucas. I think you're really gonna like this episode. Okay, here's Channels on the fate of Warner Brothers Discovery. Enjoy.
2:38 Speaker 05 From the Vox Media Podcast Network, this is Channels with Peter Kafka. That's me. I'm also chief correspondent at Business Insider. And today, as promised, we are going deep on Warner Brothers Discovery slash Netflix slash Paramount. And as promised, we are doing it with Bloomberg's Lucas Shaw, who has been the dominant reporter on this story. This sounds like deja vu. There is a reason for that. Less than two weeks ago, when Netflix shocked us by landing the Warner Brothers deal, at least landing it temporarily, I had Lucas on for a quick emergency pod. As you know, the story is far from finished. Paramount and the Ellison family are still trying to buy Warner Brothers Discovery, so
3:21 Speaker 05 this one could go on for weeks or months. With that in mind, I had some practical questions for Lucas. Like, what happens if Warner Brothers Discovery formally turns down Paramount again? But also some big picture ones, like, why exactly do Paramount and Netflix want to spend so much for essentially HBO and a movie slash TV studio? And what does this deal or potential deal tell us about the state of media in 2025 and beyond? It's good stuff, right? This is also a year-end pod, so I talked to Lucas a bit about AI, because we're legally required to talk about AI. And we got some recommendations for your listening and viewing pleasure. This is a good one. Okay, here's me talking to Lucas Shaw.
4:08 Speaker 05 Lucas Shaw from Bloomberg. You're laughing because I'm bad at podcasting, but I'm glad to have you back on the show. We did an emergency pod when Netflix won. I'm putting scare quotes around the Warner Brothers deal. Yeah, that was, that was two weeks ago. Two weeks ago, maybe. Let's call it two weeks ago. The intent was for this previously scheduled conversation to be a look back at 2025 and a look ahead at 2020.
4:33 Speaker 05 We can do some of that, but honestly, the whole thing is Warner Brothers Paramount Netflix. It's the story of the year. I think it's the story of our careers.
4:44 Speaker 06 Really?
4:45 Speaker 05 It's the rise of streaming, right? Manifested and it's
4:48 Speaker 06 Got it. It's taking a huge step back.
4:50 Speaker 05 Yeah.
4:51 Speaker 06 Yeah.
4:51 Speaker 05 And displacing, you know, could potentially, whatever it's, it's, it's. We oversell these stories all the time. People try to tell you why this thing is momentous, but it really is momentous. Especially I think if Netflix does end up buying Warner Brothers. We are recording this on Monday. You guys will hear this on Wednesday. Things can change between now and then, but let's just start where the state of play is. Technically, right? Paramount had just said, hey, we would like to buy Warner Brothers Discovery. Consider our bid, Warner Brothers Discovery, and they have not yet responded. We expect them to respond any day now. What do you think will happen?
5:33 Speaker 06 Warner Brothers Discovery will say, thank you for this generous offer. We decline. We already declined this offer. The big question is whether they will say, we don't want this offer and please stop trying, go away. We are happy with our deal with Netflix. Or we decline, but if you want to offer us even more money, we're open to having a conversation. Cause at the moment, they're not really supposed to be talking to other parties. There's kind of no shop provisions in their deals with Netflix. But they have the ability to open things back up where they can, you know, basically until the shareholders of Warner Brothers bless a deal.
6:15 Speaker 06 Someone else can, can come around and try to wow them. And I, I think it'd be pretty strange if they said, go away. I think they'd be more than happy to use Paramount and Netflix to try to get another three to $5 a share for their shareholders.
6:28 Speaker 05 So basically what we were describing more, we were describing as a done deal when we talked a couple of weeks ago, but saying, you know, Warner Brothers has picked Netflix as their buyer. You're suggesting that they haven't fully picked them yet, like someone could still come in, would be paramount.
6:42 Speaker 06 I think they picked them, but they are never, the board is never going to turn away an even better offer. And if Paramount has, which has now made six offers to buy Warner Brothers Discovery, every single one of them rejected. If they make a seventh that is even higher, the board would have a fiduciary responsibility to engage with it.
7:02 Speaker 05 And I'm going to ask you to just do some prognostication and it won't hold you responsible if you're wrong, because that's how the world works. Do we expect Paramount and then Netflix to then get in a ongoing bidding war where each goes back to Warner Brothers, says, here's another dollar a share?
7:17 Speaker 06 I think they both, Paramount has said that, that this isn't the last and final, which implies that, or outright just says, like, we can, we can go higher. My understanding is that Netflix, in studying the deal and doing its models, has also created room to go higher. Whether they will is harder to guess. I would, I think they would because they seem very committed to this. And what, one of the things that's interesting about this dynamic is you have two companies that are not, or two entities that are not used to losing, right? The Allison's are used to getting their way, Netflix is used to getting their way, and one of, one of them has to lose here.
8:00 Speaker 06 The wrinkle for Netflix is that unlike the, unlike Paramount Skydance, which is a fully controlled company, Netflix isn't. It's a proper public company. And so if shareholders really don't like this deal, which it seems like some of them are lukewarm on it, this share price of Netflix has been inching down. If Netflix adds $3, $5 to its bid, you'd imagine shareholders would be even less satisfied with it.
8:21 Speaker 05 This is messaging that I hear, I assume you hear from people, particularly in the Paramount sphere, saying, look how much Netflix shares have gone down since last fall. Netflix really doesn't, Netflix shareholders really don't want this deal. They've lost $100, $140 billion in value.
8:36 Speaker 06 Not all, not all of which is
8:38 Speaker 05 Correct.
8:39 Speaker 06 Related to this.
8:41 Speaker 05 So let's, let's play this out. So if, assuming, if for whatever reason. If Warner Brothers says, you know what, all, all things being equal, we, we want to stick with Netflix. Sorry, Paramount.
8:52 Speaker 06 Yep.
8:53 Speaker 05 Do we, what Paramount could sue, they could, could go again directly to shareholders?
8:59 Speaker 06 They could sue and say that this was an unfair process. That feels like a, a risky endeavor. You don't see a lot of those in, in M and A land. They could continue with going direct shareholders at their current offer, $30 a share. They have been adamant that it is superior to the Netflix offer and they have had enough dialogue. They're, they're meeting with and talking to a lot of shareholders to try to get a sense for how supportive they are. From the conversations that, that people on my team at Bloomberg have had with shareholders, it feels like, you know, they'd all obviously like to see the number go up. I don't know that there is a clear preference for one versus the other. So that is also risky.
9:44 Speaker 06 The, the safest move for, for the Ellison's, if they really want Warner Brothers would be to come back with more money.
9:50 Speaker 05 And then we have the, the Trump wildcard, right? And we've gone back and forth for months and, and recently, um, last few days intensely about what role will Donald Trump have in this, right? He can't compel someone to buy Warner Brothers Discovery. He's in theory, not supposed to have an active role in this at all. He said, I'm going to have an active role.
10:12 Speaker 05 Many of us assumed ultimately the Paramount would win the deal because the Ellison's, Larry Ellison has a deep connection with Donald Trump. Semaphore had a story where they were quoting an unnamed Treasury executive saying, we're offended by this idea and this has backfired. How active do you think Donald Trump will be in this process, which could go on in theory for, for many months, right? He can order a, a review. There, there will be a review, most likely anyway.
10:38 Speaker 06 Yeah.
10:38 Speaker 05 Through antitrust. So how, how, how much do you think Donald Trump is going to play? How, how big a role do you think he will play?
10:45 Speaker 06 In the negotiations over who wins the current auction bidding, more whatever, almost none. I think, I mean, I think his name will be invoked a lot and he will get. Asked about it all the time, which means that he will comment on various things and people will try
11:00 Speaker 05 Which he loves.
11:00 Speaker 06 Which he loves. And people will try to read into his comments and he likes being at the center of attention. I mean, he just made the, the death of Rob Reiner about himself and he likes making it appear as though he is the person who, you know, decides things. But I don't think that he exerts any real influence until someone has been selected. I think that the winner of this, you may, you may factor odds of regulatory approval into who you, the side that you pick. But the company that wins Warner Brothers is going to be the company that offers the best deal.
11:33 Speaker 05 And then.
11:34 Speaker 06 And then. And then Donald Trump will, you, he's currently having fun sort of making it seem like both sides are going to owe him something. Right? He, he was very, he was, he, he lauded Ted Sarandos, co-CEO of Netflix. He talked about how Netflix was a great company. And then said, but this will need to be reviewed. And he's been very effusive in his praise for the Ellison's while also saying, but we have to look at market share. So he's setting himself up to either way, demanding something of the winner.
12:05 Speaker 05 He's throwing out this idea that CNN has to have new owners, no matter how this deal goes down. If you took that at literal face value, it means that only the Paramount deal works. Those are the ones who want to buy Warner Brothers. Again, it's Donald Trump. Who knows what he will say tomorrow. But, you know, we all reference the Time Warner AT&T deal, which the first Trump administration tried to stop with a pretty conventional antitrust challenge. There was a lot of speculation that this was done at Donald Trump's behest. Lots of folks in the DOJ say it was a legitimate thing for us to talk about. We're in a different era of Trump dumb where he just literally says to Pam Bondi, go ahead and pursue this.
12:47 Speaker 05 If she then did pursue a real antitrust challenge, does she have grounds to, to take one up?
12:54 Speaker 06 Both of these deals relative to the AT&T Time Warner would.
13:01 Speaker 06 Be kind of almost more traditional deals to have reviewed because you have competitors merging, creating greater consolidation and greater concentration of power within an industry. So I think while the, you're right that it's almost impossible to predict what the administration will do and they don't seem to follow any of the traditional norms or rules for what they, what they review, what they don't, what they care about. I think in a traditional administration, either deal would get reviewed.
13:31 Speaker 05 And getting reviewed is different than.
13:33 Speaker 06 Suits to block, which is what happened with AT&T and Time Warner. And I don't, so I think there will be close scrutiny of either deal. You already have politicians on both sides of the aisle, at least in the case of the Netflix deal, saying that we'd want to scrutinize that. You have prominent industry organizations, you know, unions and filmmakers speaking out and saying, we're worried about it. And so it's inevitable that there would be some examination. Whether they would sue to block it is much harder to predict. And the, the cases against each deal are a little bit different, right? The Netflix, the case against Netflix is they're already the number one player in streaming. If they add Warner Brothers Discovery, they become unbeatable, as well as sort of these ambiguous concerns about the movie theater business, which I don't think would generally
14:18 Speaker 06 matter in terms of antitrust. With Paramount, there is like a little bit of where's the money coming from? Does CFIUS need to review it? Which they say it doesn't because there's Middle Eastern money and there's Middle Eastern money involved in the deal.
14:30 Speaker 05 Twenty-four billion dollars.
14:32 Speaker 06 Comes from three different sovereign wealth fronts in three different countries, Saudis, Qataris, Emiratis, and an organization called CFIUS tends to review kind of foreign ownership of US businesses. The Ellison's have tried to structure this deal in a way they say will not require CFIUS review because none of those entities will have any governance rights. Whether that's actually true, we'll see. And on top of that, Paramount and Warner Brothers Discovery, if you combine their TV network assets, they control a lot of what's on linear television. Obviously a declining business, but still incredibly influential. And both, you know, obviously both sides are saying the other one requires more scrutiny than themselves.
15:12 Speaker 05 You're one of many people who says CFIUS review, which I think maybe it's correct to say it. But I think it's a euphemism of saying, hey, it's kind of wild that $24 billion of Middle Eastern oil money. And again, it's not from companies in those countries. It's the country's sovereign wealth funds.
15:29 Speaker 06 It's from the countries.
15:30 Speaker 05 Direct extension of those countries. It's, by the way, that $24 billion number is double what the Ellison's themselves plan on putting into this deal. And you would think from the right, from the left, from people who are, who are just flat out against people from the Middle East and people who have real concerns about, you know, Crown Prince of Saudi Arabia had a, had a Washington Post journalist murdered in 2018. You would think there'd be more outcry about that. I have been surprised there hasn't been or really much coverage of it at all.
16:05 Speaker 06 Do you think there would be if they were the, if they had been the winning bidder, though?
16:09 Speaker 05 I, well, that's kind of one of the questions because I've, I've been asking a bunch of folks, this relates to another question, which was, I was a little shocked to see how strong the initial reaction against Netflix winning this was from Hollywood. And I kept thinking, they're both, they're both of concern if you're in the business of making movies and television shows and you make a living in Hollywood. But I would think you'd be equally concerned about, about the Ellison's and the Saudis in particular owning this entity. And so why do you think that group of people has not complained?
16:43 Speaker 06 Well, I think the, the entertainment business would have pushed back on either deal. If they, like, if, if Paramount had won, which was the expectation for going into it. All of the noise that there's been about, you know, Netflix and movie theaters wouldn't really exist, right? Because Netflix wouldn't have won. Or all the concerns about, oh my God, is Netflix gonna, you know, own all of Hollywood? People would be focused on aspects of Paramount's deal. They would be lamenting the loss of a movie studio. They would be probably talking about foreign ownership. There'd be a lot more discussion of what are the Ellison's planning for CNN and what's going to happen with the news business. So
17:27 Speaker 06 I think the fact that Paramount didn't win, at least yet, is, is a big part of it. The other is just. Even though Netflix has spent so much money on programming over the years and Ted Sarandos has worked very hard to become kind of a leading figure in the industry and they are still treated by many as something of an outsider in the very
17:54 Speaker 05 An outsider who's wrecked the business is the other part of it.
17:57 Speaker 06 Right. Well, that and that's what I was going to say next is a lot of the changes over the last decade, people blame on Netflix. Now Netflix has obviously been a primary instigator of that, but rather than just say, you know, all of our studios fucked up, this internet threat came about and none of them responded very well. And so we ended up in a situation where now the most powerful player is Netflix. They, they, they would rather just say, damn you Netflix, you do things differently. We don't like you. And there are, there are some things about the way Netflix has done business that you have, have written about, podcasted about all of that, that are kind of legitimate gripes. And then some of it is just kind of people upset.
18:40 Speaker 05 I thought you were going to say a big reason Hollywood can't complain about Middle Eastern money is they're all flying out to the desert, looking for Middle Eastern money, including some very mainstream names, some, some liberal, well-known liberals are out there either doing deals or hoping to get deals made with Middle Eastern oil money.
18:59 Speaker 06 I think that's true at the top level. I don't think that's true at the worker level, right? And I, but I also, but also the Middle East feels like a somewhat nebulous threat to some of them. I think it's not as tangible as like, I know what Netflix, if you're a writer or a producer, you are living day to day feeling how Netflix has affected your life.
19:23 Speaker 05 Right. If you're a grip, you know, there's less work being done in town.
19:26 Speaker 06 Right. And you, even if, whether that's Netflix's fault or not, there is a part of you that is blaming them. If you have to worry about like Saudi Arabian influence on CNN or the death, murder of Jamal Khashoggi, it doesn't feel like an immediate proximate threat. Most people are self-interested. So they're, they're thinking about. You know, it's the same reason in any presidential election. It's like, can I afford my life week to week? If I feel good about my life, I'm, you know, I vote one way. And if I don't, I vote another.
19:54 Speaker 05 One more thing on the oil money. Warner Brothers Discovery has not said anything on the record about this. They have not produced, and they will any day now, a filing that says, here's how we came about deciding to pick Netflix as the buyer, or sort of Paramount or Comcast. But Paramount in their filing has suggested, basically you read between the lines, it looks like Warner Brothers was at least concerned to some degree about the sources of financing is that it was. But it's unclear to me. Is it, do you think that is because they're saying, well, we're uncomfortable with Middle East money? Or just that every time you come to us, the deal is a little different? Or we have some other concern?
20:35 Speaker 06 All of the above. From the conversations I've had with, with people involved in the deal, there was concern that the, the kind of the paperwork and the way the money worked seemed to change with each offer. There was concern about Middle Eastern money. If not ethically, that it would invite greater regulatory scrutiny that they didn't want. And then the, I guess, the more conspiratorial argument would be that it was also a really good pretext for accepting the Netflix deal that they wanted more in the first place.
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23:07 Speaker 05 And we're back. What prompts one of these two titans to tap out?
23:12 Speaker 06 It's out.
23:13 Speaker 05 When do they say, "All right, we cannot, it's a done deal"?
23:15 Speaker 06 I mean, it's too much money, too much hassle.
23:18 Speaker 05 Mm-hmm.
23:19 Speaker 06 I assume.
23:20 Speaker 05 I mean...
23:20 Speaker 06 They've been in it for months now, so it can't just be, "We change our mind," right? It's gotta be... We have officially reached a price that we don't want to pay. And how like, if you think back to what happened where, you know, Disney agreed to buy most of the entertainment assets from Fox. And then Comcast comes in and says, hey, wait a minute. We're going to come up over your offer so that the board has to really think about it, which then forced Disney to pay even more. Yep. We're in a very similar situation here. I mean, a little bit different in that there, there hadn't been sort of this, and you can correct me if I'm wrong, I don't remember there being sort of like a, you know, a public auction between multiple parties with that one. Nothing close to it. Disney and Fox just said, we have a deal.
24:05 Speaker 06 And everyone went, holy crap. And then Comcast came in. But in this, it is similar in that Warner Brothers has agreed to a deal with Netflix. Paramount is, has come back, is, is not going away. And it may get to a price where either side finally says, too rich for my blood. I don't want to do it. We haven't actually added to the offers yet, so we're not there yet. And it doesn't feel, from the behaviors, both Paramount and Netflix have really dug their heels in their, you know, Netflix issued, issued something this week that was essentially like a Q and A, answering questions, which was presented as for our employees, but was clearly as much as anything for the public.
24:47 Speaker 06 They're real, you know, each side is very focused on combating the narratives that they think hurt their cases. But a lot of that is about kind of public perception. And this, I still say that this deal comes down to dollars and cents. Who needs this deal more? Oh, Paramount. Because? Uh, because it's a smaller, it is a fundamentally weaker company, right? David Ellison bought Paramount or merged it with his company, Skydance, because that was his way of sort of getting in the, the big leagues. But he bought the, the smallest and weakest of the big Hollywood companies, right? It's, it's a kind of last place or second to last place movie studio. It's a kind of a third tier streaming service.
25:32 Speaker 06 It's, it still makes pretty much all of its money from these cable networks that are slowly dying. Are rapidly dying. And so if you were trying to position that company for the future, look, he can take all the money that they're going to spend on this deal and just invest it in Paramount. That is the argument against these deals is like, rather than dealing with two years of pain in the ass process, like, just buy a bunch of stuff, right? Go out and buy some IP, spend a bunch of-
25:59 Speaker 05 This is what Netflix would do when they, when they didn't bid on deals.
26:03 Speaker 06 So Netflix is obviously in a much stronger position in terms of its stock price, in terms of how much money, in terms of our streaming services. However, I would say that the fact that Netflix is seriously going after this deal signals to longtime Netflix watchers that maybe the company is not on a secure footing as the public would be led to believe.
26:23 Speaker 05 Yeah, that's what you and I were talking about a couple of weeks ago, is a strength or weakness. It can be some of both.
26:28 Speaker 06 Right.
26:30 Speaker 05 I mean, you, I guess you could make the argument if you're on the Netflix side, like, look, we haven't done any of these deals before, but we never had the chance to buy HBO-
26:38 Speaker 06 This is a, this is a one of a kind asset. We don't have to deal with the cable networks anymore. And, you know, the, the, the odds of anything like this coming up again are very slim because if David Ellison buys it, he's not getting rid of it. Universal is not going anywhere. Disney's not going anywhere. What else is there for us to buy?
26:56 Speaker 05 All of Warner Brothers Discovery, Netflix and Comcast, uh, only wanted to buy the studio and basically HBO. What, what is the most valuable asset there? Is it the movie studio or is it HBO, which is a very good streamer, but not the most popular?
27:13 Speaker 06 I don't know what the, the, which asset would be given like the, you know, the greatest valuation if it were to be traded on a standalone basis. But I think for both of the companies trying to buy it, that the studio film, yes, but even more importantly, the television studio is the most valuable asset because Warner Brothers, if you combine a film and TV studio is either the number one studio or maybe the number two studio in Hollywood. It's television business, you know, they make Ted Lasso for Apple and they make a bunch of hit shows already for Netflix and for, they produce for, for everyone.
27:46 Speaker 05 Yes.
27:47 Speaker 06 And they own a deep catalog of Friends and I believe Big Bang Theory and just like a bunch of things that would be great in any streaming catalog.
27:56 Speaker 06 So that to me is the, the most valuable asset. The streaming service and HBO's- Obviously also has a strong brand, strong catalog. I think is, um, is maybe as if valuable for Paramount because of how it can supercharge them in streaming. For Netflix, it's, it's largely about catalog. It's almost as valuable as the Warner Brothers catalog, but I don't think quite as.
28:24 Speaker 05 And when this deal gets done, one way or another, we've been talking, you and I have been doing versions of this podcast for years, saying, when's all the consolidation happening? When's all?
28:33 Speaker 06 It's happening.
28:33 Speaker 05 It's happening. We will be left with some version. I mean Comcast will still be here. Disney is around. Like, is there more merging left to happen? Comcast had been getting out of the media business, then it was signaling it wants to spend more money on media. Do they go buy something else? Their line, by the way, is sort of the Netflix line now. Well, the money that we weren't going to spend on, on, on buying this asset, we can now put into programming. They don't quite say that, but that's sort of the suggestion.
29:00 Speaker 06 Right. And that they, you know, there was no way that they were going to come to the price that these two parties have come to. Um, I mean, what happens next might depend a little bit on who wins this. I think if Paramount wins, then there's less of a knee jerk reaction from other players because you have two smaller, somewhat struggling entities combining. Um, and people will wait and see what David Ellison does. I think if Netflix gets it, it's a bigger problem for, it's, it's one where Disney sits there and goes, uh-oh, like, our big advantage on Netflix has always been that we are sitting
29:42 Speaker 06 on, you know, the greatest library of intellectual property and characters in the world. And now Netflix has something that's almost as good as ours, maybe better, you know, depending on how you're valuing what you're looking at. So it could provoke a response from them, but, um, but I don't really know. I mean, that's, that's a year or two down the line. And also.
30:02 Speaker 05 But I mean, can you even move the pieces around much more after this?
30:05 Speaker 06 Well, it, I think it'd be different type, it'd be different types of pieces, right? Like Comcast had that flirtation with Electronic Arts, the video game company.
30:13 Speaker 05 Bought by Saudi Arabia instead.
30:15 Speaker 06 Bought by Saudi Arabia. What is there something like that out there? Does someone try to buy Take-Two Interactive, the Grand Theft Auto game studio, among others? Does, again, there are not that many huge companies.
30:28 Speaker 05 Do one of those get sold to a giant tech company?
30:31 Speaker 06 Sure. Does, does Comcast say, you know what? We'll sell NBC Universal to Google. I mean, I don't think that deal's gonna happen, but we'll sell it to Google. Or does Disney finally do the thing that everyone's been wondering about? Like, is Apple gonna buy Disney? But.
30:45 Speaker 05 Why do you think that none of the traditional tech players, obviously Netflix is considered a tech player, but none of the traditional tech companies that we know of made a real bid for these assets? We've been told forever that they wanted no part of a cable network, so that made sense. But if you could buy Warner Brothers Studio and HBO, that seems like the kind of thing a big tech company with interest in streaming would take a run at. That's certainly what David Zaslove was hoping and saying. He wanted Amazon or Apple, someone like that to come in.
31:16 Speaker 06 Apple and Amazon are the only ones that would make any plausible sense, right? This is just not in the wheelhouse for a Google or a Meta or a Microsoft. They don't, there's, there's no place for the, nothing for them to do with it unless they were, wanted to fundamentally change their approach to streaming and entertainment. So Apple and Amazon are the ones who sort of play in the same pool as these others. I mean, Apple never does big deals and their entertainment business still feels like a flirtation, not a flirtation, but like a nice little side project, right? It's not like central to the Apple business. Entertainment has become a little more central for Amazon. They have invested real money, committed to long-term sports rights. I don't know, they did the deal for MGM, which was like a half measure compared to this.
32:01 Speaker 06 I don't, I think it's been a mixed deal for them at best. They've gotten a little bit out of it, but it's not like been transformational for streaming. I believe for either company, it would be the biggest deal that they've ever done. And why are you going, how are you going to your shareholders and saying, the biggest deal we need to do is in this business that is not our most important business? It's not our second most important business. It may not even be our third most important business.
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34:24 Speaker 05 And we're back. If we didn't start off this conversation talking about the fate of Warner Brothers, I'd say, wow, it seems like a big year for AI in Hollywood. We've been hearing about this. Maybe this is the year it's, things are finally clicking in. Last week, Disney and OpenAI did a deal. Disney is apparently writing a check for $1 billion, which is surprising to me. I thought they were just getting in-kind equity because they don't have that much cash. But they're writing a $1 billion check to OpenAI. They're going to license some of the characters.
34:55 Speaker 05 Do you think that deal is meaningful or symbolic or both?
34:58 Speaker 06 I think it's more symbolic than commercially meaningful right now. It is a huge deal that the kind of biggest, most, one of the most storied companies in Hollywood. That is also one of the more risk averse companies.
35:15 Speaker 05 Famously protective about their IP.
35:18 Speaker 06 Did a deal with kind of the, the, the big new player on the block in artificial intelligence. So I think for that, it's a huge deal. It will, it will usher in other companies trying to do similar deals, whether it's with OpenAI or with Google or with someone else.
35:36 Speaker 06 How much what they've agreed to really matters? You know, getting a billion dollars worth of stock in OpenAI at the current valuation, you know, not that great. I mean, if it becomes a multi-trillion dollar company, it's a nice return for Disney, but it's not that significant. Allowing people to use the Disney characters within the Sora app is probably the biggest, the, the single, you know, it's, it's the biggest deal. And it's, it's, it'd be like Disney, it'd be like the companies that did licensing deals with, with YouTube in 2007, eight, what have you.
36:13 Speaker 06 We don't really know what popular, like really popular AI video looks like yet. We don't know how important it will be to be able to include a character, although not their voice.
36:23 Speaker 05 And, and whether frankly, whether users generating this stuff is meaningful. We all sort of have been trained to know that that is meaningful, but we don't really know if.
36:32 Speaker 06 Well, and whether Sora is going to be the app or whether it's going to be the Google app or it's going to be another app we don't even know about yet or that is lesser known. So I, I think it's a little wait and see on, on how much it matters.
36:45 Speaker 05 When's the last time you used Sora?
36:46 Speaker 06 I don't use it very often.
36:47 Speaker 05 Yeah, I think that's the answer.
36:51 Speaker 05 And then you wrote about sort of the, the AI's year in Hollywood and for Bloomberg Business Week, you should check it out.
37:00 Speaker 05 There's people who are afraid of it. There's people who say this is inevitable. The other cleavage that I think is more practical for us is it seems like it to me that it's quite clear that AI, like any kind of technology, is going to be used to in production, right, to decrease costs, increase speed, whatever it is, all variations of that. And that seems inevitable. It might make you feel uneasy, but that's just how
37:25 Speaker 06 It's gonna happen.
37:26 Speaker 05 It works. The other is, is AI gonna fundamentally change what gets made and what we consume?
37:32 Speaker 06 Is it, is it just better visual effects? Or is the movie, is the medium itself gonna be different?
37:38 Speaker 05 Is the medium itself gonna be different? Do we create entirely new kinds of work that supplant movies? That can always be the case. When you talk to people in Hollywood who are excited or fearful of it, which, which is the version that stir, I'm assuming the thing people get most emotional about is sort of AI just coming in and replacing huge swaths of the creative business.
38:01 Speaker 06 Correct. Nobody is gonna be, if it just becomes a tool to make visual effects more efficient or better, or you can use it, I mean, though some of the ways it's already being used for like pre-visualization so that you can rather, you can more quickly create, you know, a model for what you think something could look like. Like, that's not a huge deal. But if suddenly, you know, what is a 90-day production is 30 days, or you have certain jobs that get replaced, or you have, you know, an example that people come up with as a good thing is like, okay, rather than having to reshoot something and have people go back on set and all of that, you can just, you've already captured them and you can, you know, do a reshoot with AI.
38:46 Speaker 06 That sounds efficient and great, but it also does mean less work.
38:52 Speaker 05 You were gonna pay those actors to come back on the set.
38:55 Speaker 06 And you were, not just the actors, but you, you talked about grip or sound people or costume people, right? Like, there's the concern about what if, like, do we, are we gonna have makeup artists still? Or is it just all gonna be done digitally? So that's the Part where people get anxious and and we're still in a phase where people don't know, right? Like the these you had both the actors and writers in Hollywood went on strike in 2023. And AI wasn't the issue, but over the course of that strike, it became a bigger part of it. And at the time, they people really knew nothing, right? Now you know a little more, but it's still not really clear.
39:31 Speaker 05 Right, because like there's this idea of like, hey, I was a, we saw them extras. Now we call them background actor in this production. And it turns out that I may have signed my rights away and I'm never going to get hired as an extra slash background actor again, because they're just going to digitally reproduce me. That seems pretty plausible now, less plausible.
39:53 Speaker 06 You'd like to believe.
39:55 Speaker 05 Less plausible is is Harrison Ford's image and likeness is going to be used without his consent. But he may, he may sell those rights for a lot of money and wouldn't complain about that.
40:06 Speaker 06 I think that consent is the key word, right? Even when you're talking about background actors, and I don't know the the ins and outs of whatever they, whatever deals they strike. But in theory, if they capture you for a movie, they should be able to continue to use whatever they capture for that movie. They should not be able to use you in all movies going forward without paying you. And I don't think if you are someone who is already famous, you are in the catbird seat, as they say, because yeah, if you were to try to use Harrison Ford again without his permission, you'd get sued, it would look really bad publicly. It just wouldn't be worth the hassle.
40:48 Speaker 05 Right, but background, yeah, and we and we, we talked about this a while back. I mean, whenever you go on stage and very often do a media hit, someone gives you some boilerplate language to to sign. If you look at the release, it says your likeness can be used in perpetuity around the world. Blah, blah, blah, we'll never compensate you for it again. And at least in my case, I just don't think people are going to be repopulating their movies with my talking head.
41:14 Speaker 06 Right.
41:14 Speaker 05 But I think I will probably look at those contracts a little more closely going forward.
41:17 Speaker 06 Depends how long they are.
41:19 Speaker 05 How's your deal with Spotify on the Matt Bellany Show?
41:22 Speaker 06 My deal? It's non-existent.
41:24 Speaker 05 That was my inside joke. You were featured in the Matt Bellany profile in the New York Times. There was a cameo for me, a photo.
41:32 Speaker 06 I was featured in photos.
41:33 Speaker 05 Did your life change after appearing in the New York Times print?
41:38 Speaker 06 It did not. I heard from a lot of, just so we're clear, I get the New York Times print on Sunday, but primarily I heard from publicists and family, friends and relatives 65 and up.
41:50 Speaker 05 Fan, fuck, that's who listens to this podcast, too, in some cases. Luca Shaw, it's the end of the year. Give me some awesome media you consumed this year that you think other people might want to read, listen to, watch.
42:05 Speaker 05 Doesn't have to be one of each, whatever you like.
42:07 Speaker 06 Yeah, the movies I've been struggling with, because I've seen a lot of stuff that I've liked, but nothing that was clearly, I just went to see this Brazilian movie, The Secret Agent, which I really enjoyed and I would recommend people seeing. But I keep waiting for a movie to knock me away and say, that was my favorite movie of the year. That has not happened yet. The last TV show that I watched, other than The Guilty Pleasure, that is Landman, that I would recommend, is the Martin Scorsese docu-series on Apple. If you care about him or his movies, it's really great. And it is not hagiography. It does not pull punches about the complicated person that he is, or drug use, or any of that.
42:47 Speaker 06 We've had a really good run of new music over the last few months, the new Lily Allen, the new Rosalia. People are in love with this band, Geese. I would recommend all those.
42:58 Speaker 05 Said like a really middle-aged guy, like, this band, Geese, yes. Did you see the clips of Cameron Winter, who's the Geese frontman?
43:06 Speaker 06 He performed.
43:07 Speaker 05 At Carnegie Hall, when Paul Thomas Anderson was filming him there?
43:11 Speaker 06 He performed in L.A., I believe, Sunday night, and I'm sad that I missed it. But yeah, those are all good things. If you want something slightly less popular, one of the most fun shows I've been to this year was a British punk group called The Lambreini Girls. I've never really cared about punk music, but I've gotten a little into it this year. So, they're fun.
43:35 Speaker 05 Okay. Luca Shaw, semi-old man.
43:37 Speaker 06 Semi-old man.
43:38 Speaker 05 Punk music a little bit. Luca Shaw, great to see you again.
43:41 Speaker 06 Likewise.
43:41 Speaker 05 Thanks for coming on once again. Enjoy the rest of 2025. See you next year.
43:46 Speaker 06 See you then.
43:47 Speaker 05 Thanks again to Lucas Shaw, who's awesome. We'll have him on more often next year. How about that for a New Year's resolution? Thanks again to Charlotte Silver, who produces and edits this show. I'm delighted to work with her. She's great. Thanks to our sponsors. You know why we love our sponsors. They bring this show to you for free. And thanks to you guys. Literally, there is no point in making this thing unless you guys are listening and engaged and writing and talking and sharing this stuff. I'm very appreciative. Thanks a lot. We've got a couple of cool bonus shows coming for you in the next couple of weeks. You'll see what those are when we drop them. And I'll see you in January. Thanks.
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