IF NETFLIX WINS WITH WARNER BROS... They’ll STILL Lose to YouTube

0:00You might not think of YouTube as competition for Netflix and HBO and Paramount and Paramount and in the world. We're here on the Newcomer Podcast. We have Tom Doton, who lived in Hollywood. Your Twitter handle, I believe, is still City of a Town, which is some LA reference I don't even understand. I never want to explain it, but sure. As far as people know, it's a LA reference. You're like a page. Is that the right? On a G.I. Joe? I think you got fired from some Hollywood job. I was an assistant. I worked on movie sets. I did the whole thing. I was a gopher. I drove put this in my official bio, but I once held an HVAC vent over David Hasselhoff's head during a taping of a unaired pilot episode of American Top Gear.

1:07So Tom spent time in Hollywood and now is a business reporter. So who is more expert to talk about this deal than Tom? Then you have Madeline and I, who we cover Silicon Valley. I don't understand Hollywood. uh madeline you you spend much time in la i have a very limited understanding of the business of hollywood my my film knowledge extends beyond just you know my high school and college uh filmmaking prowess all right you're a theater kid that's your uh you're like kind of like a new york hipster a24 type right yeah i'm a you can see the glasses madeline we know i say actually more of a neon type thank you but um but yes i am interested in the world of movies however it's not been my forte on reporting.

1:53However, this deal, we love when all of our worlds can collide in one mega conglomerate bidding war a la succession. I feel like most people following along have the context, but we all write for Newcomer. We host this podcast together. We're technology journalists, but sometimes the things that happen in Hollywood are so big and have the potential to change the technology world. And Netflix is sort of a technology company that we are going to spend some time giving you sort of the tech world business angle on Warner Brothers Discovery. Tom, you wrote a whole piece about it for Newcomer. Give us some of the facts here.

2:36It's not just Netflix, obviously. There's already this competing offer from Paramount. Just give us some of the fast facts on what's going on. So everyone's been talking about this deal, basically the fight between Netflix and now Paramount over who's going to buy this asset. And what I guess I kept thinking about in writing the story was like, they've all lost. There's no good outcome for Hollywood. And the real beast that they're all fighting against isn't among each other, it's YouTube. And you might not think of YouTube as competition for Netflix and HBO and Paramount and stuff. But the fact is when it comes to watch time, Silicon Valley is just dominating right now.

3:20They dominate on television. They obviously dominate on your phones. And I am very pessimistic about the future of high quality content when the game is increasingly about watch time on television. I don't know how you guys feel about it. Generally, what do you guys spend most of your time watching in your consumption era? Like what, what takes up most of your like wake waking hours of entertainment? You know, it's TikTok. It's TikTok and YouTube. I would say take up the most time for me. We put YouTube on the TV on our smart TV, but YouTube has, you know, creators with informative documentaries.

3:57And I watch, um, all of those historical documentaries about like the Roman empire meme core stuff. and I watch like political explainers and um fascinating recaps of podcasts and podcasts on on the big screen like you just sit back on the couch and watch I don't watch a lot of YouTube like I don't know I don't understand it personally like I listen to podcasts like but it's just like if I'm consuming podcasts I want to be out and about like you know I don't know that I'm when YouTube absorbs the entire western media sphere you'll watch more YouTube well I was just going to say you're going to watch more because esters is going to be like cranking that shit constantly like she's going to be all about coco melon my two month kid baby content and children's tv content children's tv doesn't really exist anymore it's entirely youtube that's another big piece of the market too so they're kind of taking the the meta you know we're not a monopoly because tiktok exists argument here and i think that's a fair comparison i think that's a fair take.

5:02Yeah. What's interesting, I guess, from the media side of things is you're seeing, you know, this is really a great cycle for media reporters. There's all these scoops and fascinating stories about, you know, David Ellison went to Trump and begged for, you know, his, you know, basically begging him for his sign off. And Larry Ellison met with him too. And Ted Sarandos all went to Trump. So the political angle for it, which media reporters don't always get to, you know, indulge is like very at the forefront of this whole thing. And to me, it's kind of like the last story of media. It's sort of like the last studio that really is in play.

5:37That's going to be some sort of a, you know, football passed around, you know, the various players. And it's kind of, I don't know, I'm very negative on media reporting. And generally, I stopped doing it because I kind of saw this whole thing. It's so funny to follow Hollywood from Silicon Valley because the companies are so small. And, you know, it's like business reporters profess to cover things because of how valuable they are in the scale of their business. And it's like, there's no way the amount of obsession over Hollywood matches the actual value of the companies. Now, obviously, you know, they move the culture and they're hugely important just societally, which is, I think, part of the issue here that like we all come at it from a business story perspective and sort of like, oh, maximizing shareholder value, whatever.

6:26But really what matters is like Netflix doesn't seem like it has very good taste. Warner Brothers at least has some high quality movies. And here we're going to hand it over to like Netflix, which just is going to make more slop. And Netflix is the worst of both worlds, right? Like this deal, one takeaway is that it highlights that Netflix isn't like a real technology company. As you wrote in your piece, Netflix sort of shrugged off being a technology company and sort of realized that it was still in the movie business or in the small phones, staring at your iPhone screen business. And so it's not like an interesting technology company where they're really betting on the future.

7:05And yet they don't have like the taste of old Hollywood studios. And so they're just ruining movie theaters, the quality of the content while not being an interesting, innovative company. The press release that Netflix had when they announced their agreement to acquire WBD and they were talking about like how we're going to be combining our ip and they're like hbo which has produced some of the greatest stuff yeah like the greatest shows in history combined with netflix which i know i remember was is it which is stranger things one of them yeah stranger which fine i'll give it i'll give that to them most viewed shows of all time is it cake like where you see if it's a cake i don't know if it's one of the most but it is one of their shows it was a top show for a while i'm sure it's a top show yeah so they mentioned stranger things i'll give them a pass on that i wouldn't put in my top 50 best shows of all time but sure right and then the next two were k-pop demon hunters and squid games and like this is the press release this is them championing 15 years of original content that granted they've had other k-pop demon hunters they didn't even shepherd right like they sort of bought it out from under they just acquired i actually don't know yeah i like k-pop demon hunters it did remind me how much their prestige brand has fallen and that they've become the mass commercial brand because if you remember you know 10 years ago when they went into television for the first time they dropped with orange is the new black and house of cards like those were their two first major shows and they were playing a popularized breaking bad in some ways yes sure they had no hand at all in that i mean you know everyone has their one netflix show that they claim is like oh but that's the good one.

8:42That's the one I like. It's like Ozark or I don't know, the crown. I'm sure people have their one thing that they can claim is like, well, at least they have that. But by and large, in your press release, if you're championing squid games and K-pop demon hunters, you have not added to the artistic thing. But this is how it's going and this is where it is. And honestly, even HBO hasn't. I mean, you can point to Succession and Veep as great shows. But in general, My like snobby whatever film guy take is like television has generally been going downhill as a medium like kind of series. It just hasn't been that good.

9:17I find myself just watching movies more anyway. I'm so down on like the series format. And also this is where a culture is going among all of these apps. And it's all very sad to me. I love Severance. Severance is great. That's Apple TV though. Yeah, I know. But he just attacked all of television. Yeah. Fucking come at me. I think Severance is a fucking mediocre show. I think it had a fun first season. I think season two went like majorly downhill. And like the season three is going to prove me right. That it's, that it's, that it's trash, that there's nothing really good. You had a very artful ending.

9:49I thought, but then you see Apple got Vince Gilligan to do pluribus for them. So it's all going to come back around and they'll be okay. Which I like. I mean, Vince Gilligan is, is the goat. And, um, you know, he's also very anti AI, which I find funny. Um, he's definitely holding out. And there's an interpretation of Pluribus as like an anti-AI show. Like that's kind of the core theme of it is AI is sort of conformist. I haven't watched it yet. And, oh, it's, I mean, as I trash TV, I'm like, yeah, it's worth watching. It's good. But I'm not bullish on the medium. And I think, you know, Hollywood is, when I was doing that piece for Vanity Fair that everyone should go read about AI in Hollywood, One of the most interesting things that a director told me, David Ayer, who did Training Day and End of Watch and kind of this gritty police procedural movies, was like Hollywood two decades ago, three decades ago is where all the smart people used to come.

10:43All the best lawyers, all the best business people, they wanted to come to the industry. And like you can really judge like which industries have momentum by like where the Ivy League grads, frankly, want to go. So, you know, and there was a time where if you were a smart guy or smart, whatever, if you were an accomplished, you know, type A freak, you would want to come to Hollywood and you would want to be a studio chief or you'd want to be an agent or you'd want to be. Silicon Valley, baby. I mean, I think I went to the financial industry for a while, like 2008, the financialization, all those companies and that imploded and we found out that they were, you know, evil at their core.

11:16Then it was Silicon Valley now. And clearly that's where the momentum is. And Hollywood is like third tier, fourth tier. I mean, no one really wants to work in the industry. And it's like, that's a real kind of, you know, death spiral. I know. I had a friend who I really wanted to be a movie producer. He's running a startup. But just where things go. And it makes me sad because I love movies. And like, this is all very indicative of, you know, like the reason Succession was such a funny show was because it was all these people, you know, a family, obviously, but fighting over this like shrinking ice cube of an industry.

11:51It's like there's so much deterioration and degeneration of a business that it's just, you know, personal family peak and fights over. Totally. But is that not why we're intrigued by the Warner Brothers deal right now? Like it kind of captured that moment where it was like the intrigue of this family voices, you know, fighting over tooth and nail of controlling a dying industry with less power wielding and strong leaders for this next generation. Well, the family is the Ellisons, right? It's like Larry Ellison putting in the call for Paramount to sort of step in the deal and David Ellison, who's all around a source of fascination in LA.

12:36Like, why is David Ellison looming so large in LA right now? Because no one knows what to make of the guy. I mean, he was running Skydance. So the whole Ellison drama is really interesting because you've got David Ellison, who ran Skydance, which was a fairly successful, as far as these things go, media company made the Mission Impossible movies. And then you have Megan Ellison, his sister, who ran this very high-end, very high-end, just like an independent kind of boutique media, indie media studio called Annapurna, which made pretty high-quality movies. And then that goes bankrupt. And Larry has to step in and save this thing and backstop the whole operation.

13:15It's effectively dead. And then you have David Ellison, who's the more successful son, but he doesn't really make high-quality shit. No one knows what to make about the guy. And then he comes in with a lot of money to buy Paramount, this storied but also dying studio. And, of course, the political angle of it is always so fascinating in this era because he installs Barry Weiss to be the head of 60 Minutes, which is funny. Who says she's going to be cutting edge by having people like Alan Dershowitz be on TV? And they have their Erica Kirk long-form interview coming up, too. Right. Right. It's just like new Fox News, basically.

13:52A morning anchor to put on. She doesn't seem to have inspired ideas. Like, I'm not convinced. There are no signs so far that she's really, like, even if you were a conservative, that she's really bringing, like, the heat in terms of, like, Yeah, she's kind of doing Fox News, too. Creating a culturally exciting. Fox, at least, though, they're so, like, cynical that they keep it exciting. Like, I'm not convinced that she even has sort of the level of cynicism that is going to get people to watch. cbs yeah i don't know what to make of the free press as a as a i mean like as a business i think it was a very intelligent niche like you must appreciate it eric is like oh yeah because it has like it's it's very clear like you know sort of i don't know resistance but anti-woke sort of person you know not so trump and they're all wealthy so it's like tell to put it distinctly telling wealthy people what you already believe is a-okay like sign up for my subsec and we'll tell you you don't you can be angry at these people telling you to change and telling you that you should vote against the republicans because of fascism just you're fine keep doing what you're doing rich person and like yes people love that message and she is great at delivering it like 50 different ways right right i mean we got into a bit of a fight with mike solana about this.

15:12Um, because I totally agree with you. They've built a company around comforting the wealthy and powerful, uh, in, in their world. But don't forget that it has this posture of being like iconoclast because also the way they want to hear that too. They want to know that they have exactly that's why I asked to come up with cool people. She can't exactly. No, that's 100%. Right. Yeah. Right. Right. And so you can have based articles about, I don't know, anti-trans stuff for virginity and like fixating on things like that. So, right. They're also a little edgy in the way people like Mark Andreessen think that he's really, you know, disturbing your, you know, upsetting the dinner plate by, you know, saying stuff that like might get you a little, you know, unlike the dinner party.

15:54Anyway, we got to the free press because Barry Weiss found it. The free press, she's running CBS, thanks to David Ellison, son of Larry Ellison, who's running Paramount, which owns CBS, which speaks to how, you know, if you get to pull the strings in Hollywood, you get to make a lot of decisions about the news Americans consume if they're still watching TV and not free thinkers out on YouTube chasing their own content. And this, it's all very appealing in the Trump era, or at least you can position it as like, we're mainstream because we want to have debate within like the acceptable 40 yards or whatever of what debate is.

16:31And by the way, if Paramount buys, if they manage to win and get at Warner Bros. Discovery, they're actually going to buy the cable channels, which Netflix was not. Netflix is just buying the streaming services and movie studio from Warner's Discovery. But the sort of increased offer that Paramount is making is that they're also going to buy all their dying cable channels, which nobody wants, which were going to be spun off into a different company. And that means CNN. And however you feel about CNN as an important cultural news institution, it would be the same thing. They're going to shift CNN in the way that they're trying to supposedly shift 60 minutes into this kind of centrist, right wing, center right media organization.

17:09And so that's, of course, got liberal Hollywood freaking out because it's the Trump approved media deal that's going to change other cable channels. So it's really a nightmare for these people. So Hollywood loses either way. It's just the direction of the industry. And from like as a Silicon Valley reporter now, you know, doing what we do, like Like, I don't want to be condescending about it, but it's hard not to feel like they're, yeah, they're fighting a battle that's already lost. And you want to talk about numbers. Like we've, you know, we're dealing with companies that are valued at hundreds of billions of dollars at this point, you know, Anthropic and open AI.

17:49And what those actually turn out to be is unclear, but the amount of money and power imbued into like tech industry is like vastly greater than media. And this is the result. What's sad about the whole situation is that we desperately need good popular art, clearly. Like I think of something like, not to be a normie millennial, but like Andor, which is, you know, good like anti-fascism programming in the sort of popular wrapping of a Star Wars franchise. Like I think that is important content and stuff we need more of, you know. And so it's sad that Hollywood's weak because Silicon Valley has no cultural answer for where we should go as a country.

18:42They just know it's like bad as they like fuck it up even more by, you know, trying to introduce social features or whatever into, into AI. Um, and yeah, and I don't know. It's, it's to me, Hollywood is, is such an important American institution. And, uh, yeah, I don't think the consolidation is going to be good for it. Right. And, and the approaches to engagement, I don't want to like give Hollywood a free pass and say like, they're engaging us by making us think and feel good. Like there's a lot of garbage, obviously, that is appealing to the masses that gets churned out regularly by Hollywood.

19:20But at least there's like a core of art and an approach to storytelling that comes from the engagement process from movie studios in Hollywood that from the tech industry, it's just like it's a slot machine. It's a casino. It's like, how can we, you know, eke out a couple more minutes of attention from you by algorithmically pleasing you, but challenging you in zero ways. And basically like getting you addicted like a drug to our products rather than like giving you some sort of like cultural nourishment through storytelling that Hollywood is, you know, built a business off of for 100 years. It's a pretty stark contrast.

19:58Yeah. And also, I mean, even though it's been brutal after the strikes, um warner brothers just came out with the winning slate of popular and interesting thematic movies like sinners and one battle after another both box office successes this year and both you know bets on auteur creators to do complicated you know stories for adults is one battle i didn't think one battle after another was a huge success definitely not a huge success i think you could offend it. I mean, Sinners was a blockbuster, but I mean, for it's, it was a big budget expense for a movie that will earn them tons of prestige and awards and is like on everyone's list of like culturally significant movies this year.

20:38Definitely. Glad they spent the money on it. I haven't seen it yet, but yeah, it seems like it's awesome. I need to see it. Yeah. Well, you would have missed your chance to see it in a theater. Yeah. But anyway, I just, it's, It's for a studio like Warner Brothers to put out these hits this year and to have, you know, this culturally setting the tone of culture this year, you know, to have this be sort of the concluding story of their journey. To your point, Tom, does kind of feel like we're at the end of something rather than the beginning of something else. Last point on this. Who owns Warner Brothers Discovery in two years?

21:15Well, it looks like the process is going to play out for the next six or seven months. months i think there was a really good article in semaphore that reported that ellison and paramount has overplayed their hands in terms of our closeness to trump and like there's a lot of resentment on the part of the trump circle sort of saying like you think you can just get everything you want because you know larry talks to trump every so often and you sort of have curried favor and they may have actually blow up in their face but that's until Trump says something. I feel like all the staff is saying that.

21:51But then if Larry does get Trump to be convinced of something, they'll change their tune. I mean, Larry obviously is an obsession of mine. And I think he cares a lot more about Larry Ellison owning TikTok. I mean, you want to talk about like where the power lies right now. Like that's something Oracle is on the path to being, you know, a significant owner of. He cares a lot more about making sure Trump is continuing down that path i think than like making sure his son's media play uh you know has slightly larger scale so i you know obviously it's an investment it's going to cost them a bunch of money but i think things like that are where the energy is for for larry ellison um i want to say i think it's going to be netflix um i think getting out in front with the acquisition announcement um you know Paramount is launching a hostile bid.

22:44How often do hostile bids work over the course of time? I don't have the answer to that. And it's not a true hostile bid. Matt Levine had an assessment of it. It's like ultimately Warner Brothers Discovery still has to come around to the idea that it's a good proposal for it to work. Right, right, yeah. And I don't know how the shareholder structure works with those guys. Matt, do you have a prediction? Oh, my prediction? I mean, I don't want to keep it all consensus, but I think it's going to be Netflix. I also think there's just, you know, some, I think they're further along. The deal is announced.

23:20It seems like the teams are working more closely together. And just on a personal level, I think there's a lot of public that would take that ownership and have the money there and it be solid and done and will be sad about movie theaters compared to whatever happens with the Paramount financing. And if that gets done, too many uncertainties. What do you think, Eric? I do think Netflix wins either way. I mean, they jam this whole thing up and undermine a competitor. So I think it's savvy from Netflix. You know, never bet against Trump corruption. I don't know. Those Netflix guys, they seem like Democrats to me.

23:59They are. I know. Yeah. And I don't know if they're willing to hold their tongues on it. I mean, they have a pretty big, the breakup fee is like$5 billion. So it would be brutal for Netflix to just have to pay that. But yeah, I wonder, I'm betting against Netflix. And a lonely nation, a lonely nation turns its eyes to Lena Kahn, the ascendant Lena Kahn. I don't know. Early Democratic Dark Horse, 2028. She's like part of the MomDami transition team, right? Yeah. Yeah. Yeah. We got to get Lena on the podcast. I want to talk to Lena. Thank you for tuning in to this week's episode of the podcast. If you're new here, please like and subscribe.

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