Kevin Reilly got to the top of the TV heap. Now he's in AI.

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1:04Peter Kafka:From the Vox Media Podcast Network, this is Channels with Peter Kafka. That is me. I'm also chief correspondent at Business Insider. Two of the themes we've been covering this year are AI, for obvious reasons, and the last gasps of the TV business, also for obvious reasons. And today we're talking to someone who can tie both of those ideas together. other. That's Kevin Riley, who used to make some of your favorite TV and is now trying a second career as an AI CEO. As we discuss in this conversation, Riley spent basically his entire career in TV and has run programming just about everywhere. Fox, FX, NBC, Turner.

1:44Peter Kafka:That phase of his life ended in 2020 after a brief stint at what was then called HBO Max. Now he is trying a new thing as the head of Cartel. And well, I'm still not 100 % sure exactly what Cartel does. It sounds like they are working that out too, but you can listen to my conversation and decide for yourself. This is a chat that's partially looking backwards, and then it's very much looking forward as we talk about the ways old media can and can't grapple with the new digital reality and what role AI will play in all of that. Okay, let's hear from me, Talking to Kevin Reilly. I'm here with Kevin Reilly, who I last spoke to when he was running entertainment at Turner.

2:29Peter Kafka:I think we were on stage with Sam B in New York. Does that ring a bell? Oh, my goodness. That is. Yes, that is exactly right. A long time ago. Samantha Bee was on television. You were running television entertainment. Donald Trump was president. That part is the same. Time flat circle. Kevin has a long history in TV. If you watch TV, Kevin probably brought one of the shows you like to the screen. He's been at FX, Fox, NBC, Turner, HBO Max. Now he's in an AI startup called Cartel. We are going to talk about that. Welcome, Kevin. Great to see you, Peter. I do want to talk to you about your adventures in AI, but I want to start off by talking a little bit about the past because I'm wondering, I'm assuming that now that you've been out of television and media broadly for a couple years, it's giving you perspective.

3:18Peter Kafka:When you look back at your time making television, are you nostalgic for that? You're like, that was kind of a weird era, and I'm glad we've moved on to something else. Both. Both. You know, very nostalgic. It's all I ever wanted to do as a kid. I was lucky. I, you know, found my way into the business. I had no idea what that was. I just had my nose pressed up against the television, and my mother said, you've got to stop watching so much television. And— Aha, I'll show you, Mom. Yeah, exactly. So I packed the car with$500 in my pocket and drove West and kind of did the American dream and wound my way through it.

3:54So I felt lucky. I loved it. It was great to be at the forefront of driving culture. I, it was a great experience. It was not easy. It was, you know, on a trend line, it all went up to the right. But, you know, like anything, it's a rocky up and down. Yeah.

4:12Peter Kafka:Give people a sense of some of the stuff you're most proud of in terms of your time at all those networks, a handful of the shows that that would resonate with people and or that you think you had a major role in bringing to the screen. Well, look, the the the crazy thing about it is, you know, it's interesting working in an early stage company right now because every series is a startup. You know, you really have just from the beginning, the pitch. It would be great if when you bought something, everyone said, oh, that's the greatest idea. that's going to work. Most people go, wait, what? A musical?

4:43A thing about a mobster? No one wants to watch them. Oh, ER room? That's depressing. Who wants to see any of that? So my experience is, you know, as my friend and God, Lorne Michaels always said, they're all happy accidents. And, you know, if you put yourself right in the middle of it, you know, I can tell you like my experience on The Sopranos, you know, we developed that script for Fox. And two years later, it found its way into HBO and we did a pilot and then it became this cultural icon. And I remember people calling me up saying, oh my God, who's this kid David Chase? I was like, well, he's 50, I think he was 54 at the time, you know, and it had a long career.

5:27You know, The Office on NBC was an extraordinary thing, you know, at a time when they were down and it was not clear this thing was going to end up being one of their most proper, you know, valuable properties in their entire library. It was a low rated, cool show that I just fell on my sword multiple times to keep on the air. And that was a great experience.

5:48Peter Kafka:You have that reputation of being a suit that creatives like that went to bat for creatives that did stuff that was out of the ordinary. Obviously, you're working for giant entertainment companies. The business is to make money. Did you feel that was something that you were particularly good at, sort of balancing the two sides of the equation? Show me something I haven't seen before. Show me something made by an interesting talent versus deliver me something that makes profits. Yeah, because to me, that was the game. You know, everything began with this little piece of creativity, an original idea from somebody that was quite often very personal, you know, to them.

6:31They might have not been a mobster or a cop, but they were basing it on themselves, their mother, their brother. The story they really wanted to tell. Yeah, the story they wanted to tell. And that had to be protected because they knew if you protected that, that would pay the dividends. And if you didn't, you probably had nothing. Anytime you try to do it inside out and say, well, let's find something the public wants, it's usually a failure or uninspired at the worst, at the least rather.

6:58Peter Kafka:The top of your career, right, when you're running these big entertainment divisions for big television companies, basically coincides with what we now call peak TV slash golden TV, golden age of TV, which is also the rise of streaming. Those two things were happening at the same time. How were those linked, right? Because for a while, a lot of the shows people were most interested in were shows from traditional linear television. And then at some point over time, that switched over to streaming. Yeah. But that wasn't necessarily evident for a long time. We were just used to seeing great stuff on AMC or FX or whatever.

7:34Peter Kafka:And we weren't expecting it from Netflix. So how did that flip happen? Yeah, I think I was, you know, not taking credit for it, but I was on sort of the front end of both of those waves. I generationally, when I got a network television, there was still these rules like the good guy always wins and people don't want to watch depressing things on television and, you know, rules like that. And I just kind of felt like, I don't think that's true. I think if we change it up, people are going to find that really exciting. So I did things that kind of fell in line with that. You know, I, my first show in the business was Saved by the Bell.

8:06It was a super fun show. You know, it was a, went on to be a lot of people getting stoned on Saturday morning at college, watched it forever, I realized. It wasn't just a kid show. I may have watched it stoned out of college. But the other side of the equation was, okay, let's do things like ER that were intense and, you know, and the good guy didn't win. And then cable, when I went to FX, that was really one of the most fun chapters of my career because it was the very early days of basic cable. I had been at the production company, did the Sopranos. We did the Larry Sanders show, management company the brilstein company and i was like wow that's in a limited amount of homes cable is beginning to really lean into this and it's in a lot more homes basic cable fx wasn't at the time but all of a sudden we started doing the shield and nip tuck and doing these things that you know then the press had labeled it hbo for basic cable and then we grew right basic cable

9:05Peter Kafka:was basic cable was an epithet there were no expectations that you would get any basically it was just a play uh just real estate people were using to park infomercials and reruns it was reruns and we were too i mean i was sitting there talking to great creators were finding their way in our door by articulating this ambition and i was telling him we were hbo for basic cable and on the monitor above my head was cops running 24 hours a day keeping the lights out of the network i was like don't look at the monitor and um but yeah all of a sudden we were able to do stuff that really wasn't fit for broadcast, not just by broadcast standards, but by, you know, being very particular and being a little bit more forward reaching in what they were doing.

9:46And so for us, I mean, the shield was the show that just put it on the map and honestly was kind of lit the candle for a bunch of stuff breaking bad and everything else that came after.

9:55Peter Kafka:And when you saw streaming pop up, right, Netflix starts doing House of Cards in 2013. It is expressly supposed to be an HBO style show and it's treated kind of, you know, there's a lot of fascination, novelty. Jeff Bukas, then running Time Warner is famously dismissive of it. This is the Albanian army. They're never going to really challenge regular television like the kind of Time Warner runs. Did that, did you, did you believe the Jeff Bukas point of view back in 2013, 2014, 2015? Or did you think, no, this is a real thing? uh look jeff i think jeff is an extraordinary leader and i loved working for him uh at the time though i was like i think he had to do what he what he needed to do in his job you don't think even he really i don't know i actually have never asked him but i think at that point i'm sure i'll ask look throughout the entire business everyone was dismissive of netflix of we're picking these guys pockets they're going to go out of business we're selling them all you you were you were selling them we're selling them the stuff that we can't sell their idiots like look at their taking We can't air this stuff.

10:58Peter Kafka:They'll give us, we get full cash for this. They're idiots. They're the suckers of the table. We're doing great. Now, the part that I personally found just insane was all anybody was talking about all day long. I remember flying to Detroit to be in with a big client on, you know, one of our series. This was going to be like a 50 million, $60 million transaction. And all they were talking about was Netflix. And they were buying advertising. And I was like, and then telling me how all their kids are only watching things on their phones all day long. And I was like, isn't this ironic that you, an advertiser, are talking about a non-advertising-based service and how your kids don't watch TV anymore?

11:39And I was saying to myself, don't you think that's a problem? Isn't that a canary in the coal mine here? So, look, to be honest with you, I heard a lot of leaders talking about how they were surprised that the deceleration of the universe and these legacy problems were bigger than we thought. You don't have to be an MBA student to watch when a trend line goes down like a ski slope. And that is what was happening not only with the audience, but if, you know, very steep decline, the younger you were, the less they were watching in that fashion. But to answer your question, when Netflix started doing the original stuff, then I was like, holy shit, now this is a real problem.

12:15Peter Kafka:So there was no consideration that, oh, well, these guys are tech guys, so they won't know how to make television. I will tell you if you had hooked me up to electrodes at the time, I thought like, well, they'll experiment and they'll do stuff, but maybe not at scale. I mean, they don't have the system for that and it's really hard. Well, you know, first of all, they did what we did. They took a real page out of the HBO, out of the play, which is fire a money cannon at it and say, hey, we'll do just dream. Bring us in your dreams. Do what you want to do. And by the way, here's the irony for writers, though.

12:49This is where the writers really took the bait. And you don't have to do 22. We'll do like 10 or 12. And the writers are like, this is awesome. I can do this show. I dreamed of and I only did 10. Unfortunately, the writers didn't really do the math where they go, wait a minute. I need 22 fees here to live. Like 10 over two years doesn't pay my rent. And then they marched and, you know, went on strike.

13:13Peter Kafka:When I was talking to you on stage again, 2017 with Samantha Bee, you were already sort of, you could sort of, you didn't have to see the writing on the wall. It was there, right? And you were reacting to it, I thought in pretty interesting ways. You were saying like, there's structural parts of television that we need to change, like the pilot season. And then you were doing stuff with late night TV, like with Conan O 'Brien, which was a traditional talk show when that format was basically. We already did. We were going into podcasts. Yeah. Yeah. And you cut that show in half. You said there's just no point in doing a traditional talk show when podcasts, et cetera, exists.

13:44Peter Kafka:When you look back at sort of those efforts you made to sort of fight back against the streaming digital landscape, do you think you were doing the right stuff just not fast enough or there was no way that you were going to be able to stop what was coming no matter how many tweaks you made to traditional TV? I think one of the real disappointments of my career would be that, and it was, I don't know to take it personally, but I naively thought, hey, clearly the powers that be are going to see that we have, while we still have this incredibly valuable real estate, we can actually lever off that and push into different lines of business and really put the best minds against that and extend into that.

14:29and what I really underestimated was how when it got into the suite of the you know I don't I don't know whether it was the McKinsey's of the world in cahoots with the investment bankers but the problem was at that end was well we needed the value we're going to create is by M &A value uh not not by retooling what we do I did get in the room at the near the end of his life with Clayton Christensen, who we had hired, he's the author of The Innovated Dilemma, a truly brilliant man. And really, I had a front row seat to his thesis, which was, you know, your own demise is baked into your own success because you can't really retool the factory or you're going to.

15:15That's the problem for a public company.

15:17Peter Kafka:And the people who are going to kill you look like streamers, right? They are giving you a product that is not as good as your product. You are hands down making better stuff than they are, but people like it and it's cheaper and it's more effective and it's hitting some niche and it's going to displace you. Yes. And, you know, look, the challenge of running a public company on quarterly profits, you know, when you're Netflix that's being fueled by cheap credit and, you know, a great time to scale that tech based business, you know, it wasn't just a complete lack of vision in the corporate suite.

15:51They were beholden to shareholders and they had to grow. So at a certain point, well, could we grow it organically? Can we push it? Or do we just kind of sell the whole thing and let it reconstitute with someone else?

16:02Peter Kafka:And I mean, your last go around right at HBO Max, when that was then owned by Warner Media, which was owned by AT &T. Yes. That was, we're going to, the premise of that one, which they didn't really say until afterwards, was we're going to But basically, buy this media company, tell Wall Street it's Netflix, and then we'll be rewarded with a Netflix stock price. And that didn't work. Yeah, I mean, the product itself works and has been a success. But, you know, to take the entirety of, you know, AT &T and an$87 billion acquisition of Time Warner, and then this was all of a sudden going to be a one product system that we would, you know, single handedly launch.

16:43and they were going to build an ad play around it and all of a sudden compete with Google and Netflix. I don't know that even Wall Street ever bought that narrative. And, you know, no matter how hard we sold it. And that is, I remember going to some of my early retreats and that and watching the whiteboard and going, either I didn't pay close enough in class or none of this adds up, you know. So I really believed in the product. I thought we should have gone sooner. You know, unfortunately for some of the, you know, legacy systems, you know, I've used this analogy before, like when a light turns yellow, you want to go briskly through the light.

17:22You do not want to slow down and then gun it through the red light, which is what I think we did in streaming. We waited, waited, waited, and then lurched all the way into that business, further declining some of the other assets we had, like the ones that were making money, cable. And, you know, there was never any focus with our frenemies. I really felt like if we had one cosmic do-over, if we had gotten with our frenemies in the cable, with our cable companies and said, let's put more money on VOD and create a killer VOD experience for your consumer versus the really crappy or non-existent ones, it would have at least muted Netflix and there would have been another option.

18:02Or you could rent show?

18:04Peter Kafka:Is the premise to make these shows easier to rent? Man, watch, you know, if you remember the whole rolling five nonsense we went through where, you know, we put all of our business problems in front of the consumer. First of all, there were not great VOD experiences. If you could find it, they weren't all the episodes. You couldn't binge them. Yeah, the best was on Netflix because you could watch the entire run of Breaking Bad. Of course. So at that moment in time when consumers were clearly signaling, and this to me was my ultimate frustration, how much more do they need to scream at the top of their lungs?

18:35They're just not going to watch the way we, and we would say it. Oh, they want to watch anywhere, anytime. Great. Well, what are we doing about it? Nothing. Nothing.

18:43Peter Kafka:Nothing. Or we'll give them a product that it's called literally TV everywhere, but really isn't. There's a bunch of restrictions and it's not as good as what they can get on Netflix. So all that for me, look, all of that leads up to, you know, I've got, you know, trophies, if you will, for amazing experiences and amazing times in career. I'm thankful for all of it. Even the very worst of my days, looking back, I would do them all over again. but I got battle scars too. I've been at the center of those wars. I watched companies lurch into bad strategy, sit back and wait too long. And, you know, that's where I'm looking now as, you know, AI comes into the marketplace, some of the same problems, but on hyperdrive.

19:20We'll be right back with Kevin Reilly,

19:22Peter Kafka:but first a word from a sponsor.

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