David Zaslav - Exclusive Interview

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0:20We have some bonus content from our discussion with Chris Yogurst on his book, The Warner Brothers. We're going to call this episode 222.2. And like the four of a kind the episode has, I think we're going to have quite a bit of fun today. we're going to be having Warner Brothers Discovery CEO David Sazlav join us for this discussion. Joining me to host that alongside is my father, Bill Smead, our chairman and chief investment officer here at Smead Capital Management. To give our listeners a little background on David, David originally joined NBC in 1989, where he was the president of cable and domestic TV and media distribution.

0:56He then joined Discovery in 2006. He became the CEO there. He developed brands like the Oprah Winfrey Network, Investigation Discovery, and eventually took over Scripps Network Interactive in 2018, which our listeners probably would note that we were shareholders of Scripps at the time. Fast forward, David became the CEO of Warner Brothers Discovery. So we're very excited for our discussion with David as we talk and think about the legacy of the Warner Brothers. David, thanks for joining us today. Nice to be with you guys. So to kick us off, David, the Warner Brothers were refugee Polish Jews.

1:33Their success was not foreknown, though everyone knows the name today. How do you look at the story, this American tale of, you know, really this family led by mom and dad, but the brothers as this beautiful American story? Well, it's an extraordinary success story, but the big piece of the story is shared by millions of Jews that left Eastern Europe. My family was not that many miles away from where the Warner Brothers family was from. And they came, my family came through Ellis Island with nothing and ended up in Brooklyn. and my grandfather sold plumbing supplies out of a wheelbarrow and saved up to owner's own plumbing supply store.

2:24Zaslov and Sons and my dad's brother ended up in that business. And they ended up in Ohio, the Warner Brothers, and they had a general store. And so at that point, it's basically the American story. what's extraordinary about that story is that they went to hollywood and the impact that they had and and what they accomplished against odds really is a great american story of an immigrant family and the impact that they had on america and our culture i agree yeah harry uh was kind of the heart and soul of warner brothers uh i personally became a huge fan of his through this book. What do you think about his distinct legacy today?

3:13Look, I think, you know, one of the sad things that there's a lot of great drama, this great accomplishment within this story of the Warner Brothers. But, you know, the father's mantra was stay together, stronger together. And, you know, the it's also a great American story in that it's imperfect. And one of the brothers ended up dying young from influenza. And Harry and Jack and Sam fell apart in a way that was not acrimonious. So in the end, the family was broken. And so the one thing coming to America, that theme of stronger together. And I think he probably felt that way because they had different skills.

4:05Sure. And, you know, Harry really was passionate about storytelling and content. And he was behind this idea together with Sam, who was the technology, the driver behind Vitaphone. He was the real technology player. And he and Harry together saw in the late 20s that the future was not going to be a silent film. And they risked the whole company and barred against this idea of investing in Vitaphone. And it changed the business. And they were able to get real advantage out of that in being the earliest with the best technology to the talkies. And Harry was the older brother. and you know for many years he drove the narrative of of of the core of the warner brothers values which is it the success of the company was going to be driven by great storytelling and talent and making warner brothers a place where talent wanted to be and telling stories that made a difference not just stories that were popular but telling stories that made a difference And you can kind of contrast that with Jack, who what we learn from the book is that he was quite a good producer and had a great knack for, you know, finding good stories.

5:27But then his personal life kind of helped tear the brothers apart to a certain extent. But, you know, it's hard to go back in time and give credit or discredit in the end. Sure. Sure. If you look at the 30s, the Warner Brothers were doing over 100 films a year. And at that time, there was no television. And the only thing that were in the homes was radio. And people didn't travel the way they did today. And so when you think about what was America like in the 30s, if you were on a farm in the south or if you were on a ranch out west, or if you were in New York City, there's so much that you didn't see.

6:15And so what those films did, you got to see what does New York look like? What do people dress like on a farm? What does California look like? What about Paris? Who wears the black hat and white hat? How do I get dressed for a date? In many ways, the Warner Brothers played an important role in the 30s. It was the only place you got to see what does this world look like? And how do we, how do we, they defined in many ways what it was to be an American. They helped define for all of us the values of this country. Not just the Warner Brothers, but together Hollywood did that. And so people went on Saturdays and Sundays and Friday nights to see double features.

7:00And this idea of coming together, of community, the lights go out and there's the big screen. And, you know, this is something that I believe in for today that we need desperately is community. And when those lights go out, you know, it's very primitive. You know, this idea of tell me a story. You know, thousands of years ago we were doing that on the campfire. The lights go out. You're with people in your neighborhood, your friends. And afterward you're having a pizza or having a beer. And it affects the way you see yourself. It affects the way that you see the world. And, you know, throughout the 30s, they really pushed the envelope with Confessions of a Nazi Spy.

7:42That was a very bold movie. And Harry had a lot to do with that because he had been abroad and he had seen what was going on in Germany. And there was actually, it wasn't effectively government regulated, but the studios had agreed to be guided by a series of principles of what they would show and would not show. And it's hard to believe this, but back at that time, distribution in Europe had just begun and was a significant revenue driver for the business. And multiple countries in Europe would talk about that would play into the guidelines of what was acceptable and unacceptable. And the designee within Germany was Goebbels.

8:28And so any content that would reflect badly on the Nazi party was against guideline. And it took a lot of courage for the Warner Brothers to do that movie. And it was quite controversial at the time. I think that there was even in the Midwest, there was a theater that was burned down and people died. So they recognized that content is powerful and that it affects real narrative and how people feel about issues and see issues. And they understood the responsibility of their studio in having an impact on this country. So let's talk about that because Casablanca is one of the greatest movies of all time.

9:17Probably could be thrown up as the greatest studio movie for what it brought. But, you know, the American cafe is iconic. Bogart's character was this wheeling dealing American businessman who liked making money on effectively a carry trade of having people trying to get out of Europe. But at the same time, he ultimately sacrificed for others. And I, you know, I think of like the Maltese Falcon touched on the same idea of like, do the right thing. Those are great movies. Those are great American movies. They fulfill all the things you just said. Well, the Maltese Falcon incorporates, you know, when we finished our deal with Time Warner from AT &T, you know, I think this designation of the name Warner Brothers Discovery.

10:04Because Warner Brothers stands for, you know, we're a storytelling company. That's all we really are. Exactly. Great talent and great stories. And they understood that. And our tagline is the stuff that dreams are made of, you know, from the Maltese Falcon. But these these films had a big impact. You know, Casablanca was not just a great film. It was a film about immigration and people being displaced and having nowhere to go. Sure. What that feels like. You know, if you look back after World War II, the majority of film, not just by Warner Brothers, but by the studios, more than 50 percent of the films was about healing America.

10:49What happened over there? And how do we get back? How do we heal? And we think there's hundreds of movies, you know, that were just on that simple basis of the idea that we've been through something terrible. How do we make sense of that? We think of Gran Torino where basically Clint Eastwood played my mother's father. He was that grumpy 80-something-year-old guy. All honor to Clint Eastwood as that storyteller. Isn't that the type of story in telling the legacy of Harry Warner that can be seen in the last 10 to 15 years? Isn't it being honest, instructive society about what is right and wrong?

11:31You know, Clint's about to make his 50th movie for Warner Brothers. An extraordinary, really extraordinary, the legacy of Clint Eastwood. He's important to the history of Warner Brothers in that sense. Gran Torino is a fantastic film. The scene for me, not only did he sacrifice himself for those that in the beginning of the film, you would think, you know, he hated these people. Yeah. But he was a tough guy. But in the end, he had core American values. And, you know, one of the scenes in that movie that meant a lot to me watching was, you know, he began to mentor this young man, this young... The barber shop.

12:25Yeah. He started to mentor him, and they started out as enemies because he had stolen, but he started to mentor him. And there was so much distrust among people based on, you know, ethnicity or based on age. It was just a complete distrust of others. And you saw that bearing down a little bit as the film went on. But there was a moment where we didn't know who this young man was. and across the street, a woman who he never met, who he didn't know, she was walking with her groceries and the bag broke. And he crossed the street and picked everything up for her and walked into her house. It's a simple thing, but it was an act of kindness.

13:14And it was powerful. It's one of the most powerful things for us as human beings to see that. You know, when no one's looking, when you have nothing to gain, it's just an act of kindness. You know, in everyday life, when we see it, it still is very powerful. When that touches on a theme, David, that movies bring a sense of community. Yeah, the sense of community that you touched on earlier. And Barbie did this through making things fun and making fun of many things. But I view it as she made kind of a Mel Brooks style comedy. and she made fun of women she made fun of men this balance is something everyone can laugh at how important is making movies and and it hasn't that movie done more to gather people in community look barbie is the most successful movie in the history of warner brothers which is exciting for us but it comes at the right time and it shows the power of the motion picture everywhere.

14:16People didn't just go to Barbie. They went to the store and they bought shirts, pants, socks in pink, hats. You saw, we did a number of tie-ins with retailers. But if you walk down Main Street on any street in America or any city in the world, every retailer went back into their inventory and they put everything they had that was pink out front and people bought it. It was a shared experience. And people won't just remember that they went to the movies. They'll remember whether it was with their mom or their daughter or their friend or their significant other. And many people went multiple times.

14:56They went for a reason, which is that it's a tough time in America and around the world. You know, you go to Europe, it's almost 15 years of no GDP growth. The last time that happened was in the 20s and 30s. There's a lot of challenge and struggle around the world, maybe, you know, more than I've seen. And, you know, really in most of my life, we were so prosperous in the 80s and 90s. So there's a lot of challenge with all the disruption and the technology revolution. How do we, what do we make of all this? different jobs. The jobs that we're doing aren't necessarily the jobs we would train for.

15:36They're not as good as the jobs we had. So it's just a difficult time. And this was a welcome escape. It was fun. The thing about Barbie, it was just pure, joyful fun. You know, our CFO Gunnar was in Germany and he passed a line of people all in pink, holding hands and laughing. It was a great escape. And it's sort of what we needed. But it also the whole world, everywhere in the world, it was pink. And there's nothing that can do that, you know, other than the motion picture, a shared community experience, a pink blanket around the world. It was a very it was a very important moment, I think, and a great moment for Warner Brothers Discovery.

16:20I think the Petri dish for that, David, is going to be Halloween this year. I think the Ken cowboy outfit is pretty much sold out of every online auction and costume house out there. But we look at that as that will give the reflection of America. And I think that was another theme we drew out of the story of Warner Brothers is sometimes people criticize the theaters and say, oh, look what they're bringing to our culture. When in reality, it's a mirror. That's what movies tend to be, is they're a mirror of our culture. And I think that's something that— Or they help us understand who we are. Correct.

16:56And they can change in many ways, you know, the way we see ourselves or what we want to do. You know, all the president's men. After all the president's men, applications to journalism schools went up 20 or 25 percent for a decade. People saw that and said, that's what I want to be. That's who I want to be. And, you know, that's the impact. If you think about, you know, in 1960, Otto Preminger did Exodus. It was the Leon Uris book by the same name. And a whole generation, when they think about Israel, they think about Paul Newman coming out of the ocean. And they think about the Haganah and the Ergun.

17:38And they think about a nation that was built, you know, with the promise of a democracy, you know, in the Middle East, with all that sense of hope. It's never perfect. But for two generations, when people thought about Israel, that narrative, that film had an impact in how people see that. So we look the power of film to do good is significant. But, you know, we also have to recognize that and that, you know, what stories are we going to tell? I say this to our team all the time, you know, with all the people I've spoken to, you know, everyone wants to talk about the stories that they got to tell.

18:16And, you know, when when our leadership team is gone, the question for us will be, what stories did we tell and what impact did we have? So let's let's bring it because our last two questions are kind of touch on that personal. So first off, Greta totally had us stereotyped. We are like every other man. We love the Godfather. And that's just a pure, simple fact of life. You own the former home of Robert Evans, the famed studio head of Paramount, where people can go watch The Offer, which really tells the story of, you know, Miles Teller back. Which I love. Robert Evans. Great. Great show. Not exactly the story.

18:58Like, like, like every, it's a great story. But I know most of the people that were involved. And everybody has a, everybody has a different version. But it was, but it was very good television. So that begs the question, since I've watched this Robert Evans caricature through Matthew Goode, what's your best Robert Evans story or your favorite? Maybe not the best for audience purposes. No, I think one of the things about Evans is he made films driven out of great characters and more importantly, great books, real stories. He understood story. You know, Love Story and The Godfather were both number one bestsellers.

19:40He did a early on, the way he got started was he bought a book called The Detective. And it ended up selling that movie. And as a result of selling that, that was his how he transitioned from being in the movies to being an owner of content. He bought the movie rights to the detective. That movie ultimately got made with Frank Sinatra as the lead. You know, the interesting anecdote is that the detective was being made with Frank Sinatra, and that was a book that he owned. And in the person that was supposed to star in that movie was Frank Sinatra's new wife, who's now married, who was married for a period of time to Woody Allen.

20:29Mia Farrow. So Mia Farrow was supposed to be in that movie. But Mia Farrow was starring in a movie for Robert Evans that was set at the Dakota called Rosemary's Baby. And there was a conflict in who was going to get Mia Farrow. And Sinatra was newly married, but she had already committed to doing Rosemary's Baby. And Sinatra called and said, you know, you better finish by this date because I need Mia Farrow for the detective. And that's what she's going to do. And Evans said, I can't do it. You know, Roman Polanski is producing, is directing Rosemary's Baby and we're going to need another two months.

21:18And there was a big blowout between Mia Farrow and Sinatra and Sinatra drew the line. And, you know, if you don't come back and do that film, you know, the marriage is over. And she went to Evans and said, look, I don't think I can I can finish this movie. Frank doesn't want me to do it. And Evans took her to the screening room in in in the pool house at Woodland and put her her takes on the big screen. and when at the end of watching for about 20 minutes, he turned to her and he said, this is going to be, this is Oscar performance. You have to stay with this. It's the performance of a lifetime.

22:00Look at you up at that big screen. She said no to the detective and she was served on the set of Rosemary's Baby with divorce papers. So he understood story and he had a tremendous amount of success for Paramount and he was quite a character. He was quite a, he did, he got to tell the stories he wanted to tell, which you have to admire. David, let's just switch a little gear. How do you look at your personal legacy at Warner Brothers Discovery and further role in Hollywood? What's the weight you feel for that legacy that will be left behind? Well, legacy, we'll see. We're just getting started.

22:43This is a very different company than the Warner Brothers ran. You know, this is a, we're a global sports company. We're in sports with all around the world, with Eurosport and TNT, with the NBA and March Madness and Major League Baseball. And we're also a leader in news with CNN. We're in the TV business. We're in the motion picture business We're probably the most global media company in the world. So I think my legacy is really going to be driven by transitioning this company for the future. We have great legacy assets. Warner Brothers, Warner Brothers Television, HBO, all the leagues that we represent on the sports side, CNN, and our gaming business.

23:34We're maybe the only media company that owns its own gaming business. So we're really a global media company that owns a huge amount of great content. We call it IP, but Harry Potter, DC, Game of Thrones, Lord of the Rings. And the question, the two questions are, what stories will we tell? And can we transition this very big global company so that, you know, as great as its legacy of all those assets are, that more people are watching us tomorrow and we're healthier tomorrow and we're more relevant tomorrow than we are today. Awesome. We appreciate your time, David. Thank you so much. Thanks so much.

24:17All right. Take care. We're really thankful that David could join us for this bonus content off of our discussion from Chris Yogersburg book, The Warner Brothers. Again, this is episode 222.2. If you enjoyed this podcast, go to Apple, Spotify, YouTube, or wherever you listen to a book with legs. Give us a review. Tell others about the books, the great authors we have, and also the guests like David Sazlav that just joined us. For our tribe, if you have a great book you'd like to recommend, email podcast at smeedcap.com. That's podcast at smeedcap.com. You can also send your suggestions to us on Twitter.

24:50Our handle is at smeedcap. Thank you for joining us for A Book With Legs. We look forward to the next episode. Thank you for listening to A Book With Legs, a podcast brought to you by Smeed Capital Management. The material provided in this podcast is for informational use only and should not be construed as investment advice. You can learn more about Smeet Capital Management and its products at SmeetCap.com or by calling your financial advisor.