What the Disney–YouTube Battle Tells Us About the End of Cable

15:24Peter Kafka:They got it this summer. Before that deal had even closed, we heard they were actually now going to pursue Warner Brothers Discovery, which you and others have reported they have done. They just call this a rumor and speculation, but you have seen their offers they have submitted to the Warner Brothers Discovery.

15:39Alex Sherman:Yes, I've seen the actual letter that was sent. Yes, so it is not rumor and speculation.

15:42Peter Kafka:They want to buy Warner Brothers Discovery. I have a bunch of questions about this. Let's start with why they want to. What is their stated reason for buying Warner Brothers Discovery? And what do you think the real reason is? Are they the same?

15:58Alex Sherman:Yeah, to some degree, I think they're the same. I think they want a larger scaled media company to compete with these gazillion dollar companies that are in the media space.

16:09Peter Kafka:That they bought Paramount knowing that's an undersized company. They were going to have to grow it one way or the other. They want to grow it through buying programming, but they also just figure we'll just merge it to a bigger thing.

16:19Alex Sherman:Yeah, I mean, in the end, Paramount is going to have to compete for the best creators, the best content, the best sports rights with companies like Apple, Amazon, Google, Netflix that have very large balance sheets, market caps that allow them to spend a lot of money on the prized media assets. And Paramount doesn't want to constantly be fifth, sixth, seventh in line for all of these things because they just are a subscale media company. So if you add the size of Warner Brothers Discovery and you add the prestige of HBO, then you immediately catapult yourself up to a company that can better compete for these assets.

17:03Peter Kafka:Why do you think they bought Paramount first and then chased after Warner Brothers? If you wanted to buy Warner Brothers, why not just go after that from the get-go?

17:11Alex Sherman:Yeah, good question. I mean, certainly I think Paramount was desperate to sell, and I don't think Warner Brothers is desperate to sell, and we're seeing that play out in real time. In other words, Paramount now has made three bids to David Zaslav and the Warner Brothers board, and they've all been rejected.

17:25Peter Kafka:Well, let's come back to that in a minute. Let's keep talking about the Ellison's motivation. I believe and other people I talk to believe that the reason they say they want to buy all of Warner Brothers Discovery is they think they don't actually want to own a bunch more cable channels. Everyone, your employer is spinning off their cable channels. That's why you're going to be part of Versant. Versant. Versant. I like Versant better. I know. But everyone's ditching cable channels. They're saying we want to buy HBO and the Warner Brothers Studios and all these cable channels. And a lot of folks believe they don't really want to own that stuff.

18:02Peter Kafka:They're just making an offer for the whole thing because they know no one else wants to bid on the whole thing. And they'll say, well, buy the whole thing and then we'll deal the cable channels afterwards. Last night on the Paramount call, David Ellison said, we're going to keep the cable channels. We're going to keep cable. He didn't say the cable channels we're going to buy.

18:18Alex Sherman:Jeff Schell also said, we don't really like the cable business. That's a declining asset. Right. And we don't want to spin it off.

18:22Peter Kafka:So do you think they actually want to own CNN and TNT? or do you think this is just a way to get a deal done and then you deal with it later?

18:31Alex Sherman:Yeah, I think getting a deal done by buying the whole thing is the advantage Paramount has. If Paramount is the only buyer for the entire company, that may be of interest to shareholders who feel like a bid for the whole thing is cleaner and potentially more lucrative for them if they can sell out now than splitting the company and then having Discovery Global wither into nothing as its own separately traded asset on the public markets. So if they can convince the shareholders, you can buy it all now. You can get out now. That may be fair enough to play. Because if they don't, if they say, we don't want cable, we only want the streaming assets in the studio.

19:17Alex Sherman:Now you have to compete directly against Comcast, maybe Netflix. But at least you're competing against at least one other bidder there. And now you're in a bidding war, whereas in the other side of things, you're not competing against anybody. So maybe you can get a full deal done. I think that absolutely plays into this. I also think that there is a reason to actually own these cable networks, which is why we haven't seen any company spin them out prior to Comcast spinning out what will be known as VERSID, which is that these cable networks still make money. So in essence, you use the cash. They are declining money-making operations.

19:54Alex Sherman:Correct. You use the cash to fund other operations. And clearly we've seen David Ellison really be active already about spending a lot of money on certain content. He's done it with South Park. He did it with UFC. He's done it with several other more minor properties already. But, I mean, he's only been on the job for a couple months now. He's already made several of these large content acquisitions. So the cash would be useful to make more of these content acquisitions from these cable networks as they wind down. I do think that that is a legitimate reason to own them.

20:24Peter Kafka:There is a theory that says, oh, this is all part of a Larry Ellison, David Ellison plot to control all media, that this is politically motivated. They want to own a conservative network. And you take Paramount and Warner Brothers Discovery and also Larry Ellison's Oracle is supposed to be a major player in this TikTok deal that we keep hearing is done. but it never gets actually announced. And this is all part of a grand scheme. Do you buy any of that?

20:51Alex Sherman:I don't know. I mean, if that is part of the grand scheme, like that's beyond me. I certainly don't get this. Like David Ellison is a filmmaker by heart.

20:59Peter Kafka:He's a guy who wanted to be in movies, moved to producing movies, was donating Democrats, doesn't seem to have a lot of political motivation.

21:05Alex Sherman:I don't see anything in his background that suggests that he wants to own a news network and make it right wing. They are explicit about the fact that they have a good relationship with a Trump fan. Absolutely. But they need to in order to get these deals done. You saw the hoops they had to jump through to get the Skydance Paramount deal done, the 60 Minutes settlement. They hired Barry Weiss, which was an obvious front-facing move to say, hey, look, we hear you. We're going to try to make these news assets more, which Donald Trump said, that's great. I love that. Correct. So obviously they're doing that for a reason.

21:33Alex Sherman:And the reason would be we're now going to try to buy a much larger media company in Warner Brothers Discovery. and we don't want you guys, meaning the Trump administration and your regulators, to muck up that deal for us. One last question on the Ellison front. Yeah, and I actually have a question for you on the Ellison front, but you ask me first and then I'll ask you. I'll ask you first.

21:50Peter Kafka:So, and I always say David and Larry Ellison because it's really Larry Ellison's money. Sure is. Second richest man in the world. A lot of it if they buy Warner Brothers Discovery. So they bought Paramount for essentially$8 billion. Most of that came from the Ellisons, some from this company, Redbird Capital. they're talking about a$60 billion deal, give or take, for Warner Brothers Discovery. Even for Larry Ellison, that's a lot of money. He hasn't shown the inclination to spend$50 billion,$60 billion at a time. He gave Elon Musk a billion dollars via text message once when Elon was buying Twitter.

22:28Peter Kafka:But that's a different scope. So where would all that money come from? Would it all come from the Ellisons? Would it come from banks? and or this is what I'm very interested in because people don't talk about it. Is there a version of this where a petrostate helps fund this deal like Saudi Arabia just did with Electronic Arts? Is that something where a foreign investor with a ton of money says, all right, we're going to help buy this? And does that work?

22:51Alex Sherman:In the letter I saw, there was a little bit about the financing, but the alternative financing source was redacted. So I don't know exactly who that is. I mean, the reports of Farvin,

23:03Peter Kafka:you know, the private equity companies.

23:06Alex Sherman:Right, for sure. So like, you know, Apollo always hovers around the hoop on these deals. And we already know that Redbird invested in the first one. Could they kick in some more money for this one? Of course. But by and large, I think the bulk of this does come from Larry Ellison and also potentially a large loan that Larry Ellison would take, which I think is a great question because to me, it does seem slightly out of character for him to be spending tens of billions of on a traditional media company. He's never done that type of thing in the past. Part of this simply could be, I'm getting older, this is what my son wants to do, and, you know, I don't get the money.

23:43Peter Kafka:My parents bought me a Toyota Tercel.

23:46Alex Sherman:Right, so this is the equivalent of that at this echelon. That certainly could be a part of this. Again, I don't know that the history of David Ellison and Larry Ellison exactly suggests that that's what I would have predicted, but I do get the sense that quite a bit of this money is in fact going to come from Larry Ellison if this deal gets done. You got a question for me? Yes, I have a question for you, which is part of the rationale in this deal, repeatedly, from David Ellison, has been that the reason he feels like he can make Paramount into a much more modern, profitable business is you can merge tech and media.

24:28Alex Sherman:And I listened to their earnings conference call I think it was Jessica Reef-Ehrlich who asked, can you kind of go explain what do you mean by this? And he said, well, you know, there's a couple different initiatives. And the first thing he talked about was putting Pluto, BET +, and Paramount +, in the same tech ecosystem, tech stack. That is not a new idea. We've already seen Disney do the same exact thing.

25:00Peter Kafka:By the way, the company he's going to work with is Oracle, his father's company.

25:04Alex Sherman:And so that was initiative number two was like, well, we also have this Oracle fusion, which has to do with sort of the enterprise cloud software base of this. OK, fine. And then the third one was a lot of hand waving around AI. Is there some tech strategy here that they're hiding in your mind or is that sort of discourse and rhetoric about we're going to modernize this company and make it the most tech, cutting edge tech media company? Is that kind of just nonsense? I think it is politely bullshit.

25:44Peter Kafka:I will say they backed off that a bit during when the deal was was in the works. There was lots of references in various stories. Maybe you wrote one of these where people around the Ellisons were whispering about how David Ellison was going to bring his tech chops and Larry Ellison's tech chops. And it didn't make any sense. The day they announced the deal, they went out of their way to portray David Ellison, who, again, is just a producer in Hollywood, who's Larry Ellison's son, but he's not a tech guy. all of his tech bona fides. He was talking about how he was mentored by Steve Jobs, which doesn't really make sense if you look at the dates.

26:22Peter Kafka:And just kind of overstating the case, it is important for these companies to have good tech. When I talk to the other streamers who aren't Netflix, they're like, oh man, we got to really fix our UI. It's not so good. Our recommendations are terrible. Those things all have to get better for everyone. But it's not why you sign up for Paramount. You could argue that it helps engagement if your tech is better, But that's just table stakes. That's just me saying I have a lock on my door, right? It just comes with the thing. And so arguing that you have some secret tech sauce, I think, strains credulity.

26:53Peter Kafka:And I think it's why they're kind of not leaning into it that heavily anymore.

26:56Alex Sherman:Yeah, that's my read, too.

26:57Peter Kafka:Okay. Well, we agree. So let's just call a podcast. That's right. Sure. We'll be right back with CNBC's Alex Sherman. But first, a word from a sponsor.

27:08Alex Sherman:When I got a new car, I thought my insurance premium would increase and empty my bank account. Like if a tween won the lottery.

27:15Peter Kafka:I've invested most of my winnings in chicken tenders because they're bomb. But bro, I bought a house and it's sick, bro. I'm thinking the floor is going to be all trampoline, bro. With the helipad on the roof. The contractor said it's structurally unsound. They're just being babies.

27:30Alex Sherman:But switching to Geico saved me hundreds, so my bank account is safe.

27:33Peter Kafka:It feels good to save some hard-earned cash. It feels good to Geico.

27:43Alex Sherman:You make that thing a thing. Canva is a simple online tool thing.

27:48Peter Kafka:It's a way to design with our magic AI tool things.

27:52Alex Sherman:You can social media your thing,

27:54Peter Kafka:generate images or videos of your thing, make decks for presentations to show your thing. Whatever needs to be done for your thing,

28:02Alex Sherman:Canva can make it an even better and bigger thing. Canva, the thing that makes anything a thing. Support for the show comes from Cotton,

28:12Peter Kafka:the fabric of our lives. Once you look for it, it's everywhere. Just take a peek in your closet. Your favorite sundress, your comfiest concert tee, your most breathable bed sheets. All of your staples and a whole lot more are made from cotton. It's the comfortable, breathable, and durable material that only gets better with every wash.

28:32Alex Sherman:So next time you shop, check the tags for cotton. It's the fabric of our lives.

28:45Peter Kafka:let's talk about the warner brothers discovery side of this deal you said oh they you know warner discovery has been proven right that their their stuff is worth more up until larry and david ellis started bidding for them their stock was in the tank they had discussed like a year a year and a half ago splitting the company as a way to juice up the stock it just was the the combination of discovery and the company formerly called Time Warner and called many things since, has not worked. It maybe has worked for David Zaslav personally, but it has not worked for the company, has not worked for shareholders.

29:18Peter Kafka:They are now trying to convince everyone that, well, I guess that there are multiple bidders really for their property and that by splitting that, by offering to sell part of the company, the good part of the company, they can get more value there. there are reports that bankers are, you know, working with Netflix and Comcast to take a look, but that doesn't just means they're looking. Do you think there are real bidders for beyond the Ellisons? Are they competing with anyone in reality?

29:48Alex Sherman:I think Comcast is a legitimate bidder for HBO and the Warner Brothers studio. I think Comcast needs to do a major deal of significance. Peacock continues to lose money. Comcast shares have been in the tank now for quite a while. So the long-term future of Comcast, I think, is probably a world where Comcast tries to merge with Charter. That may necessitate.

30:19Peter Kafka:But why does Comcast need? Comcast is ditching a big chunk of their media properties, right? The cable companies, what you included. They're keeping their film studio. They're keeping their amusement parks. But they're really a broadband company. That's their core company. Why do they need another media deal?

30:37Alex Sherman:So I give you two possible explanations, which is, one, three to five years ago, investors would have panicked at this deal, assuming that the structure of this deal is simply a straight up acquisition of Warner Media's properties that will become a part of Comcast. because there had been so much saber rattling among investors that the media assets were weighing down the cable company. And if you looked at how Charter, a pure play cable broadband company traded versus Comcast, Charter wildly outperformed Comcast because the thinking was the media assets were weighing down the growth potential of this company.

31:21Peter Kafka:And, you know, back in however many years ago when Comcast bought what was then NBCUniversal, there was this discussion, again, a lot of hand-wavy stuff about Synergy. There really isn't a lot of Synergy. They own a cable and broadband company and they own a media company.

31:35Alex Sherman:They bought NBC for cheap coming out of the financial crisis, and that's about it. There's a lot of, exactly, a lot of hand-waving about Synergy and stuff. There's not that much there, and there never has been. However, what's changed in the past year or two is that the growth in the broadband business has stopped. And so now if you look at either Comcast or Charter shares, they've been terrible.

31:54Peter Kafka:They're getting the, it's not that people aren't using broadband, Yeah, and it's that there's competition now from fixed wireless, basically T-Mobile, Verizon. Yes, and there's been more.

32:02Alex Sherman:You can get internet beamed into your home now. Right, more competition, I think, that people have expected there. There's this existential Starlink thing where, like, maybe that could become a true replacement for home broadband at some point. So now maybe media doesn't look so bad? So now maybe media doesn't look so bad. So that's one possible reason why Comcast could be going in this direction. Again, the other possible reason is that the structure of this deal will allow NBCUniversal and Warner Brothers Discovery to be spun out separate from Comcast, which will allow Comcast no longer encumbered by media assets to more easily merge either with Charter, the other major large cable company in the United States, or potentially even a wireless company.

32:47Peter Kafka:Wait, so you buy part of Warner Brothers Discovery. Yes. And then you'd basically spin it into a new company.

32:53Alex Sherman:You spin merge it. You spin NBCUniversal out and merge it with one of our discovery. The banker's wet dream. Correct. All the fees. And by the way, this was what Jeff Schell thought was the end game when he was at NBCUniversal. And now he's at Paramount. Now he's at Paramount. So he would have nothing to do with that. But he always assumed that this was going to happen, this spin merge. So this isn't just my own invention here. I do think that we will get a little bit of clarity on that in the next month or so when we figure out the endgame here. Because I was told, I just reported this, that Warner Brothers Discovery plans on making an announcement for the future of their company around Christmas time.

33:34Alex Sherman:So I think we will get a sense then about how real was Comcast. Are they actually the bidder that Warner Brothers Discovery decides to do something with? And if they are, we'll know exactly what the structure of that deal looks like.

33:45Peter Kafka:And and for the same reason we were saying, look, the Ellisons have a political in Larry Elson, longtime supporter of Trump, supported him the first time he ran for office. And David Elson, a new supporter of Trump explicitly. We like Donald Trump. He likes us. And this is one of the arguments you hear about why this can't be a Comcast deal, because he supposedly hates Brian Roberts and Comcast supposedly because MSNBC. Comcast had its earnings call last week and they made a point of saying it was very much a point of saying we think there's a deal that can be done. They didn't say specifically Warner Brothers Discovery, but they were signaling to Wall Street.

34:20Peter Kafka:We think we can get away with this essentially politically.

34:23Alex Sherman:Yes.

34:23Peter Kafka:Among other things. Why do they think they can pull this off?

34:26Alex Sherman:I think they feel the law is on their side. So if you think back. It's 2025. It won't shore. But I mean. We're not doing laws anymore. So the first Trump administration, we kind of weren't doing laws either. Trump decided that he wanted to block AT &T buying the same company, in essence, Time Warner at the time. That deal did get blocked, but it got overturned.

34:45Peter Kafka:And we should and we should we should posit that that was a two year long lawsuit. There are there are real people who believe the Trump administration had a point in trying to block that deal. And their antitrust enforcer to this date has never said this is something that Donald Trump made me do, as opposed to the era we're in now where Donald Trump literally tweets out, do this thing, Pam Boddy. And then she does.

35:10Alex Sherman:So that issue. Correct. That issue, I think, is the more minor of the two, which is I think the real reason that Comcast feels like they can get a deal done is there are levers to be pulled to get deals done. We've just seen it. And perhaps what Comcast is signaling is, you know, we're willing to pull some of those levers if you make us.

35:30Peter Kafka:OK, well, what's I'm going to say Rich Greenfield's name? I like Rich Greenfield, but he had a ridiculous blog post the other day saying the lever they should pull that that Brian Roberts of Comcast should do is sorry, we're getting so inside here is he should appoint Erica Kirk head of NBC News or MSNBC or whatever it is. He's trying to be provocative. It's ridiculous for many reasons. But are you thinking of some version of that where you sort of kiss the ring in some really gross way, but that pleases Donald Trump and then he sends a deal through?

36:01Alex Sherman:Yeah, I'm thinking of that in a less gross way, you know, in a more nuanced way where Comcast says, look, we're already spitting off MSNBC. That's your main problem, I think, with us. So we are left with NBC News, but can we hire our own version of Barry Weiss that will placate some of your concerns here? It doesn't need to be Charlie Kirk's widow, but it can be someone that states very publicly that they're willing to, you know, make sure that NBC News is, you know, whatever, fair and balanced, yada, yada, whatever.

36:38Peter Kafka:Leaving aside the moral degradation of all of the scenario we're discussing, even if you go ahead and do that and you're Brian Roberts, you have now tried to placate Donald Trump. You've tried to tell him that you like him as much as the Ellisons like him. You're still going to end up fighting the Ellisons for a bit, isn't why? Why would you think that he's going to favor you over the Ellisons?

37:01Alex Sherman:Well, you. You're you don't need to worry about him favoring you over the Ellisons. if you get a deal done with the Warner board that sticks. You only need to worry about him favoring you over mystery box X. In other words, it's binary. It's either yes or no on you. They're no longer competing against the Ellisons if they're able to convince the Warner Brothers Discovery board to do a deal with them.

37:27Peter Kafka:Brian Roberts, the Warner Brothers Discovery board, reach a deal. They're all happy with it. We're going through with it. Larry Ellison suggested Donald Trump, this is a bad deal.

37:36Alex Sherman:Sure. Sure. And he very well might. But that's one voice of many. And Brian Roberts is going to be convincing him on the other side. This is not a bad deal. And here are the goodies that we are about to present you with why this deal is not as bad as you think it is. Is it possible that that could happen? Yeah, I think it is. I think it is possible that Comcast could get a deal done here. That's all I'm saying.

38:00Peter Kafka:In 2025, that's what we say. We say everything is possible for better and for worse. Netflix is also going to kick the tires. They seem to always be in a debate about whether they want to buy something. They have not done a major deal really ever in their history. Their argument is always we can build. We don't need to buy. But they've looked at stuff. Are they serious bidders for a Warner Brothers, for half of Warner Brothers, for HBO and the studios?

38:24Alex Sherman:If they are, it would be a big surprise to me. Their entire DNA suggests that they don't do deals like this. The intel I had gotten from several months ago was that Netflix doesn't want this asset to go for cheap, but in the end, it's still a legacy asset. It still involves acquiring a company and they would have to, from a cultural standpoint, you know, Netflixify all these people that they were bringing on. And so I would be very surprised if they are the buyer that ends up winning here just because it doesn't fit their history. Will they take a look? Absolutely. Why wouldn't they? There's no harm.

39:03Peter Kafka:But what about the other big tech guys? What about Apple has been interested in what used to be called Time Warner in the past?

39:09Alex Sherman:Yeah, HBO in particular. Again, I'd be shocked if it was Apple. Just same reason as Netflix. It's not part of their DNA. They never do these big deals. so previous big deal to date was like three billion dollars for Beats I think is that still their biggest deal yeah

39:22Peter Kafka:well their biggest media issue yes right

39:24Alex Sherman:and then Amazon did buy MGM but that really was just a library it wasn't really like a large people acquisition I know David Zaslob certainly believes all of them are interested bidders so I am I you know things are are always no until they're yes I could be proven wrong here It could be one of those three companies, but I would put them in the far less likely candidate than Comcast, which I think really does need to do a deal. None of those companies need to do a deal.

39:57Peter Kafka:So says Comcast employee Alex Sherman.

40:00Alex Sherman:Yes, but again, for two more months now.

40:02Peter Kafka:We'll be right back with Alex Sherman, but first a word from a sponsor. We're all feeling it. Getting pulled in a million directions. In a world full of distractions, focus is increasingly hard to find. And when you're needing to reset and refocus, you'll want something revitalizing. Pure Leaf Mental Focus is a new line of sparkling, real-brewed iced teas made with naturally occurring caffeine, from black tea and added L-theanine to help support attention and focus, without the sugar or calories. And it's available in two delicious flavors, peach and raspberry. time for a tea break time for a Pure Leaf try it yourself check out the product locator at pureleaf.com slash find dash us

41:09Peter Kafka:Anything online makes sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. Uncovered windows can make your home feel up to 20 degrees hotter. Stay cool and save up to 45 % off custom window treatments during the 4th of July VIP access sale at blinds.com.

41:28Alex Sherman:From outdoor shades to room darkening blinds, finding the perfect fit is easy. Get free samples, expert design help, and professional measure and install services.

41:37Peter Kafka:or DIY it with confidence and support every step of the way.

41:40Alex Sherman:Shop up to 45 % off site-wide right now during the 4th of July VIP access sale at blinds.com.

41:54Peter Kafka:And we're back. It seems like the major story that you and I have covered for a long time has been, you know, technology sort of swamping the existing media business and how was that going to play out? And how are the digital upstarts going to do against the old media guys? And how are they going to fend them off? And it seems like a lot of that's kind of resolved, right? Cable TV, at least, seems to be in a permanent death spiral. Netflix has won the streaming wars. So the battle there is just about who's going to be second, third, fourth. We know that the other digital upstarts, really YouTube and TikTok, are major, major competitors for time.

42:34Peter Kafka:and it kind of seems like that's been set for a while. And so what we're dealing with now is just sort of the last pieces on the board and how they're going to get moved around. Am I missing something? Is there something more fundamentally interesting going on? Not that we should stop doing our jobs.

42:49Alex Sherman:Well, I think the part that's interesting now is if you are one of those smaller chess pieces and you're left, so if you're, let's say Discovery Global ends up being a thing and that exists, or Versa, for instance, and you are a hodgepodge of declining cable networks, how do you survive? I mean, I think that is a legitimate question. And I think the versant playbook, if I believe our soon-to-be CEO, Mark Lazarus, is he wants to diversify into other businesses, other nontraditional media businesses. So in my mind, that's sort of the interesting piece here is are we going to see these smaller media companies find their way into non-cable television businesses with any success?

43:35Alex Sherman:And will you be able to convince an investor base that, you know, if you feel like... The example that Verson always uses is this Golf Now business that they own, which is this tea time reservation business that's apparently very profitable. Which they have been talking to me about since like 2016. The thinking there is you can use your media assets as a funnel for other digital businesses through promotion, et cetera. Again, can that play out? Can they actually prove that that is a winning formula? And does that set off some of these media companies in a new direction that we haven't seen before?

44:19Alex Sherman:That is an interesting question that we're going to find out in the next couple of years.

44:22Peter Kafka:I mean, it's kind of financial engineering. And if you're a consumer of media, it doesn't matter to you. Correct. Like an interesting one is Hearst, which is still a magazine and newspaper publisher. But for years, and they own a little chunk of ESPN, and for years have been taking all the money they make from those businesses and using them to buy non-media businesses that are incredibly boring and we'll never talk about on this podcast, but are real businesses. And they really have sort of moved themselves out of the media business. Do you see a Versant Discovery Global eventually becoming like something else that also has TV?

44:53Alex Sherman:I think that's on the table. I think that's one of a variety of directions that could happen. Another possibility is that you see these companies merge with broadcast TV companies and you come up with some sort of hodgepodge of cable and local affiliates that we've never seen before, really. And maybe that's the next step. But it's really going to be, I think, a hunt for survival for these companies. That's at least interesting to the media journalist, if not the consumer.

45:23Peter Kafka:Okay, well, that's not a great sign. If the consumer stops paying attention, we're screwed. They do care about sports, to bring this full circle. And that is one of the things that I think we still haven't sort of figured out how that is going to play out. sports, as anyone who listens to this podcast, consumes your content, knows, is the most valuable stuff to advertisers, to subscribers. It is the one place you can still get a mass audience. The value of these rights deals keep going up and up and up. We're always told consumers will stop paying increased rates, but they're still paying increased rates.

45:56Peter Kafka:And then we have been playing around with the idea for years that some of these sports rights would get detached from traditional media companies. Either a digital player like an Amazon would come in and buy an entire sports league. Netflix has talked about this. Apple has talked about this. Or that the sports leagues themselves would just go direct to consumer. Those last two things really haven't happened. Amazon and Apple and those guys are all nibbling at sports rights, but they haven't bought the NFL and the Apple deals that they've done. They've done smaller things. They bought MLS soccer, which is a minor soccer league.

46:28Peter Kafka:They bought F1, which is big around the world, but not in the US.

46:32Alex Sherman:and their deal is only for you.

46:34Peter Kafka:It's a deal is only for the U.S. And like ESPN telling me, I said, we don't want it. You can have it for X million dollars more than we want to pay. So do you think we move towards something where where you really do you really the idea that you can turn on your television on Sunday and reliably watch eight hours of NFL, which is the core thing that you can do that without having to go to a digital platforms or paying extra? That's what we have today. Do you think that remains the case?

47:03Alex Sherman:What's your window? Because all these rights are locked up for a while, and I don't see the NFL dramatically changing it, even if they move up the renegotiation rights.

47:11Peter Kafka:Yeah, the NFL rights are going to get renegotiated the next three to four years, right?

47:15Alex Sherman:Maybe sooner.

47:16Peter Kafka:Maybe sooner. So that's not that far off.

47:19Alex Sherman:No, but their deal, I think, will be basically the same.

47:21Peter Kafka:You think they're going to stay like broadcast networks are the equivalent? And yes, we will find other ways to slice an additional game and sell that to TikTok or whatever. But it's going to remain the same. That's for the NFL.

47:34Alex Sherman:I certainly believe so. I think there'll be six media companies in the deal and it'll be here's your smorgasbord of options and you buy this game on this service.

47:44Peter Kafka:And you, the consumer, complain about this, but whatever you're going to watch.

47:47Alex Sherman:Yeah, it's a game here and a game there. And by and large, you can get your games, your local games that you want for free over the air and that will remain there.

47:54Peter Kafka:And you never had a right to watch every game anyway, so don't complain about that. Right, yeah.

47:58Alex Sherman:No other sport lets you just watch every game for free or whatever.

48:01Peter Kafka:What about the sports that aren't the NFL? Baseball, basketball. I don't want to get deep into the decline of the RSNs, but if you're a regular sports consumer and you like to watch some sports, but not all sports, are you going to have that option without having to pay a crazy fee?

48:19Alex Sherman:Well, again, the NBA is now locked up for another 10 years or so. I don't think their deal ends until 2033. And there's no out as far as I know of in that deal. Major League Baseball will renegotiate after the 2028 season. And I think the pressure will be on Major League Baseball to get a dramatic rights increase because the NFL and the NBA both did. And they're not going to want to be seen as this sort of not dying league, but like second tier, but second tier weaker league. And so how do you maximize your media revenue if you're a league? As far as I know, the best way of traditionally doing that is to slice and dice your media rights so that you can get a whole bunch of different packages and a whole bunch of different players.

49:01Alex Sherman:And that's the best way of doing it. Is it possible that some company like Apple comes over the top and just offers a gargantuan amount of money? Yes. But like, I don't really even think that makes sense for baseball exactly. Like there's just too many games. So maybe I'm wrong. And maybe that's the gameplay here. And there'll be some sort of deal where Apple could somehow like buy every baseball game.

49:24Peter Kafka:If you're the league, the lens is, right? Well, we could get a bunch of money up front. But if we put it essentially behind a paywall or behind one service, that means a bunch of people aren't going to watch it. And long term, maybe we're actually shrinking our sport. This is the problem.

49:38Alex Sherman:This is the problem with what Apple wants to do. Because Apple is the one company that has stated over and over again, we want all the rights. We want them global. And Netflix has said this, too. We want, well, yes, but Netflix has not been so open about even getting into this. Right.

49:51Peter Kafka:But when they said one of the reasons we would don't do this is we, but if we did, we would want a global. Right.

49:55Alex Sherman:But Apple has actually done it with the MLS already where they have all the games for MLS. And that's what they've said is their stated model. And basically what Eddie Q told me was like, well, wait, we'll wait. Eventually, you're going to see that like we're going to be able to get our way. Like I have no idea if that's right or not. But logic indicates to me that it is not right because Apple TV, unless they do something dramatic, is a small streaming service. And every league is going to be like, we don't want your reach. Your reach is far smaller than. We'll take your money.

50:26Peter Kafka:Here's a special game you can air on Christmas or whatever.

50:29Alex Sherman:We'll throw you a game or two. Absolutely. But they're not going to give them any package of major significance because they're going to fear irrelevance if they sell the games in that direction. And sure, some fans will follow, but a bunch of fans won't. And no league wants that. All right.

50:43Peter Kafka:You've taught me many things, including how to save Versant.

50:46Alex Sherman:Yeah. I still need to, a lot of people at my own company haven't figured out that.

50:50Peter Kafka:What happens when you, when you stop being a Comcast employee and start being a Versant employee? Does anything for you change? Different email?

50:57Alex Sherman:I stopped getting my NBC Universal perks, like my free park tickets. Ooh. Yeah. That's not a great one. Okay. Anything else? I believe, not 100 % sure, but I believe my subsidy for Comcast internet TV phone also goes away.

51:13Peter Kafka:This looks like a bad deal for you.

51:14Alex Sherman:So it's so far two things in the negative. Are they throwing in any sweeteners besides you get to keep your job? Here's the positive, which is that by definition, CNBC becomes a more important part of this new company. It's a smaller company and CNBC is a bigger part of it. And I do believe the I am drinking the Kool-Aid on this one a little bit that the money that this company makes will be more dramatically reinvested in CNBC than it ever has before, because the priorities for NBC Universal were the parks business and Peacock. Those those things will not exist in Versa. They will stay with NBC Universal.

51:49Alex Sherman:So now the priority is going to be, well, how do we grow CNBC? How do we grow the brand? And that, I think, is an exciting place to be as an employee because it probably means that we're going to take bigger swings and new swings. So that I'm looking forward to. What's a bigger swing for CNBC? It probably means utilizing the brand in new ways. And so I don't— CNBC Hotel. I don't know. We're already at the airport. We already have those little CNBC. That's not a great sign. Ask BuzzFeed about that. Exactly. That's true. I guess we've outlasted BuzzFeed on that front. I don't know if those things still exist.

52:22Alex Sherman:The BuzzFeed one still exists. I haven't seen them yet. That's a horror show. That's like frightening. But no, I think, for instance, again, I have no idea if this is the direction that CNBC is actually going to go in. But could we get into prediction markets or betting or some sort of financial instrument like that and integrate that into the CNBC experience? Modernize investing in a way where our product is not just focused on 75-year-old retirees watching linear TV.

52:52Peter Kafka:Alex Sherman, King Media Reporter, I am betting on you. Right. See how I did that?

52:56Alex Sherman:Did you see that South Park episode, last South Park, where all the kids are on their phones betting?

53:00Peter Kafka:I'm not a South Park consumer. Oh, really? Interesting.

53:03Alex Sherman:I feel like everything gets told to me now. You Google it on YouTube, and you don't have to pay Paramount any money, and probably get the same thing.

53:12Peter Kafka:Thank you for the tip. Thank you for your time, Alex. Thank you, Peter. Thanks again to Alex Sherman for coming in to chat. Thanks to Charlotte Silver for producing our chat. thanks to our advertisers for bringing this chat to you for free. And thanks to you guys. We are in the homestretch of 2025 here, which is wild to say. I'm thinking about end of the year, start of the year, content, programming we could do on this show. If you've got ideas for me, send them along. Thanks. See you soon.

53:44Peter Kafka:We all do it. You have a night for yourself, but don't like the sound of the silence. So you turn on the TV just for the ambience. It's a little trick that helps you feel like you've got company and aren't alone. And other insurers, well, they may make you feel alone. But when you switch to Geico, you've got claims reps available around the clock. So whenever you need, you'll have people around to help. And let's turn on the washing machine, just for good measure. Wow, isn't that soothing? It feels good to have support. It feels good to Geico. Ryan Reynolds here from Mint Mobile. The message for everyone paying big wireless way too much.

54:19Peter Kafka:please for the love of everything good in this world stop with mint you can get premium wireless for just 15 a month of course if you enjoy overpaying no judgments but that's weird okay one judgment anyway give it a try at mintmobile.com slash switch up front payment of 45 for three-month plan equivalent to 15 per month required intro rate first three months only then full price plan options available taxes and fees extra see full terms at mintmobile.com