FOX's Pete Distad on building FOX One, the Venu Sports setback and lessons from a decade at Apple

0:05Pete Distad:So I'm here with Pete Distad, who is the CEO of Directed Consumer at Fox One, or Fox, I should say, actually. Let's go with Fox. Pete, you started as a consultant, wrapped your consultancy life with McKinsey, went to join Hulu, a pretty critical time and were there for just under six years as SVP. At Apple, also a pretty critical time for their sports and TV business for nearly 11 years. then Venue Sports, which got a lot of coverage from us for about a year. And now you're at Fox leading their direct-to-consuming business. Heck of a ride through some of the biggest tech companies, tech sports media players.

0:41Pete Distad:So, Pete, given all this background and everything you do within the sports and streaming space, who is Pete Diestad?

0:46Patrick Crakes:Who am I? It's a good question. I think at my core I'm a technologist. and what got me very excited outside of just not working on PowerPoint and Keynote all my life, coming out of consulting and getting into industry, was at the time that Hulu was getting started, I happened to get introduced to the team that was pulling it together. And I was just a general consumer of entertainment. And what I saw, though, was that the entertainment experience in general at that point, and there's an analogy here to what we're seeing in sports right now, but basically it wasn't evolving. It wasn't the, the consumer experience wasn't where it needed to be because it was all locked into a traditional business.

1:30Patrick Crakes:I got exposed to the team and I realized, well, maybe this is a really great place for me to sort of work at the intersection of what I love to do, which is technology, but applying it to something that consumers can use, which is media. And at that time, the entertainment business was going through a massive transition. And I was like, I think let's try this. And so I joined the Hulu team. I think, you know, there was definitely less than 20 of us in 2007. And spent six years there basically helping grow the business and built out a distribution team, built out no one. I mean, there was no deals.

2:07Patrick Crakes:There was no construct for how people put content on connected TVs. We figured that out. Netflix was still a DVD business at that point. They weren't even doing streaming. and so we sort of evolved the business and figured it out you know we started with a relatively you know it was a VOD business and then we evolved it into a subscription business and as the industry evolves we evolved the business it was an incredible experience I worked you know for Jason Kyler who's a great leader learned a lot from him and then coming out of it once he left I got approached by Apple to come and help lead up what they call their TV business and I worked on the Apple TV product for a long time, the platform, and then I migrated over.

2:53Patrick Crakes:I migrated. I moved over to the service. You said you're a tech guy. I mean, that's a pretty tech firm. Nerdy way of saying I moved to a different team to work on the services side of the business, which my experience at Apple was incredible, as was my experience at Hulu. I learned a ton at Apple under incredible leadership. And I think the one thing that I learned at Apple was focusing on the product first and the consumer. And to me, I think that's a thing that sometimes in certain areas of this industry, they don't spend enough time on. They think about all the other components, the distributors, the leagues.

3:31Patrick Crakes:I think the one thing that I keep trying to remind myself in all my roles is if you start with the consumer, build the right thing, eventually you're going to get there in terms of where the business goes.

3:44Pete Distad:And it's an interesting point because obviously the industry has been so focused on typically those big deals that you see. And if they buy those rights and they're going to change the world for everyone as soon as you acquire those types of opportunities. But talking about the product consumer, how did you, through the different businesses you're working across, how were you able to focus more on those sides than perhaps what others might be doing? Were there any specific things you would focus on in your team?

4:09Patrick Crakes:You know, without getting specific about the Apple experience, I think that was easy there because that's what they do. I think, you know, the technology companies start with the consumer and and that's how the whole company works. Right. So it's like when you're thinking about what you're building, it starts from what's a customer experience first. And then you sort of figure out what's a business model that you wrap around that, make sure that you can build a sustainable business. and we're trying to do that even within Fox One. And I think it was a component of the venue business. Everybody would tell me, hey, this venue doesn't make sense because it's not all of the content.

4:45Patrick Crakes:Like, why would somebody buy this? And I was like, in this particular industry, nothing ever starts in panacea, right? You never are gonna be able to start with all of the content or the perfect experience. You have to start, you have to prove that you're getting traction and then the others will come if it's successful. If consumers are engaging in it, everybody's going to say, hey, that's working. I need to participate in that. And so I think that was also, you know, me sort of thinking about it from, and all of us thinking about it from consumer first, which is somebody needs to solve this problem of aggregation of sports digitally.

5:19Patrick Crakes:There's no perfect answer. Let's start somewhere and get out there. And I still believe that's a real problem today of sports aggregation from a digital perspective. and again the pay tv providers are going to play they're already playing a massive role in that they'll continue to play a role platforms will play a role programmers will play a role and to me that's you know as long as we look at it from the customer first perspective and solve this fragmentation problem then eventually we'll get there but if we don't this will be an ongoing

5:50Pete Distad:problem but how is there any sort of thoughts as to how that can be solved because it feels like with everyone doing their own thing trying to build their own success and their own journey their own paths. Is there some way that it can be solved at an industry-wide level? Or you think it's just going to have to happen almost by osmosis with changing ways of approaching the customer and the monetization that goes around it as well?

6:13Patrick Crakes:I mean, I think we're seeing progress, right? Like if you think about, you know, I mean, YouTube TV is incredibly successful. We're a partner with YouTube TV. They've got a great customer experience. I think they look at things heavily through the customer lens first and you're seeing traction there i think that's a great product um i think yeah they're evolving their packaging i think other pay tv providers are evolving their packaging and we think that's great we think that needs to happen like you need to basically move to work the customer expectation is it's great that all of us have the expectation on how that from a programmer perspective and from an industry perspective on how that should occur but customers have spoken 60 million of them are outside of the pay tv ecosystem them, you need solutions for them to bring them back in, especially to pay for the sports rights and for the media rights costs that it costs to make this stuff.

7:02Patrick Crakes:So I don't think there's a silver bullet, but I do, I'm optimistic that it can be solved and that you're starting to see it happening across the industry, both in terms of traditional distributors and more sort of platform-based distributors like Amazon and Roku and, and Google, um, via YouTube and Android TV. So I think, you know i think it's going to start at the platforms you know doing a good job of sort of like aggregating our channels and applications and providing them in bundles um and then it'll even be you know bundled solutions like some of the stuff we're doing like what we did with espn

7:38Pete Distad:i'm starting but it's going to take a while yeah but evolution clearly is a big part of it now you would have had some interesting experiences through your journey of all these different types of tech companies what were some of the biggest learning curves you experienced going from from big company to big company after obviously you came from an agency background you would have been working with a lot of different major uh sorry a consultancy background you're working with a lot of different organizations but how was that transition into jumping from tech tech environment to tech environment i mean you know i think all of them are unique right like i mean

8:08Patrick Crakes:hulu was a relatively small company and even as it grew when i left it was still a relatively small company so um and then going into apple obviously completely different culture but an incredible experience I learned a ton in those 10 to 11 years. I owe a lot to that leadership team. I learned a ton about how to create products, how to think about the products first. And then going into Fox is a completely different transition. It's been an incredible transition into Fox because they're incredibly focused on entrepreneurialism, building things, and they're smart about how they've approached the business.

8:46Patrick Crakes:They didn't just dive in and start throwing money at it. And so every single piece of the experience coming together, you know, I don't even think I tried to do it this way, but I think what's interesting for me right now is I'm realizing the perspective that I have from generally sitting on the disruptor side to now sitting on a little bit of like a slightly disrupted side. It allows me to sort of work with the team and figure out where do we take this to make sure that we're building the right thing for the future and that's exciting um and honestly there's nobody better in the industry to do it with you know if you look at fox sports and 30 plus years of producing some of the greatest programming out there obviously fox news is good at what they really great at what they do our entertainment team's doing a great job like we just need to figure out the business model on the digital side and get that content in front of the audience so if i look at all three of my experiences whether it's Hulu, Apple, and Fox, the problem is the same problem.

9:47Patrick Crakes:It's content sitting out there. What's the customer experience and how do you get it in front of the right people?

9:53Pete Distad:What do you think that, I mean, I'm sure you talk to a lot of people across, not just the industry, but outside of it as well. What do you think some of the biggest misconceptions people have when it comes to working in sports and sports media?

10:05Patrick Crakes:I mean, I think they, it's funny. I think they assume all you do is go to games and matches and sit. It's just all sexy, right? And the reality is, just like any industry, it's a lot of work. It's an expensive industry for the rights. A lot of pressure to figure out how you grow the business to support paying those bills. And so I think the misconception that it's, you know, everybody grows up playing a sport. I want to go work in sports. That's going to mean I get to go to the Super Bowl or I get to go do that. Yeah, that occasionally occurs, but the reality is it's like any other business. It's hard work and it's a grind.

10:45Patrick Crakes:So I think really that's probably the common misconception. I know my son's in college and he's like, Dad, I want to work in sports. It looks awesome. And I was like, you should look at sports for sure, but just realize it's not exactly as it appears from the outside. And so I think that's probably the big point.

11:01Pete Distad:Do you think, because the organizations that you worked with largely were media and platform businesses that leaned into sports. Do you think there's anything that sports needs to come to better grips with in terms of improving that relationship or understanding how, whether it's the product and consumer angle, that they just need to have a better understanding of how the media and tech world think and look and operate?

11:27Patrick Crakes:Yeah, it's a good question. I think there's a ton of analogies. And I think that I wouldn't say that the sports people are doing anything, the sports side of it is doing anything wrong. I just think that they're under it. You know, they've been, because they've been the core of the pay TV bundle and it's been, you know, one of the sports and news has been one of the primary reasons that there's been sustaining the pay TV bundle at the pace that it has. I think now they're just getting to the digital transition a bit later than entertainment did. And so I think it's just about not relearning the same lessons that, you know, the entertainment business learned over the 10 years on how much you invest in original programming and how you package these things.

12:11Patrick Crakes:So I think there's some benefit to having sat out of it for a while, like Fox has, and look at what we've learned and then applying those learnings to, you know, this transition. So I think there is some analogies. It's obviously some of the most important programming and there's no more important sort of original programming than live sports. There's the passion, the fan base. And so I think there's a lot of analogies, but it's also just a different type of programming. right like it's all live it's not as valuable in BOD so even if you look at the product we're building right now it's heavily centered around live where most of the products I've worked on have been heavily centered around BOD I'm not I mean my background is building consumer products I happen to be a sports fan I work in sports because it's the sound I guess I work in sports because I have to take our sports product and get it in front of sports fans but you know I'm just as much a sports person as I guess I am a news person as I guess I am an entertainment person now.

13:15Pete Distad:From those experiences, do you see sports going industry-wide here as it being, I know the financials show that it's more valuable than ever, but do you think that that is the case when it comes to in the eyes of the consumer? Do you think it's more valuable to them than it ever has been or it's just staying strong? Is that consistent? No, I actually think it's incredible.

13:39Patrick Crakes:I think that if you look at like, if you look at the Nielsen data, if you look at the top 100 programs, like sports is as valuable, if not more valuable than it's ever been. I mean, I think there's a reason why consumers are still staying in the pay TV bundle, paying what they pay to get access to sports. I don't think anything's changed. If anything, you know, there's more. It's becoming a challenge in that there's more and more sport coming out. But if you look at the popularity of, you know, the growing popularity of things like the WNBA and NWSL and some of these new sports leagues that are launching, like, I think sports becoming even more and more, you know, more and more important.

14:20Patrick Crakes:And building platforms that allow these new leagues to reach their fans at scale is a real challenge and a real opportunity.

14:31Pete Distad:what you were obviously a part of the the venue sports um movement product development uh initiative what was the one of some of the biggest takeaways and lessons you took from that that whole whole journey oh boy um the biggest takeaway i would say i mean first of all it was like we it

14:48Patrick Crakes:was a great experience we built what i would say is a great product we were ready to release it um you know we felt we were doing the right thing um some some legal folks may have thought we weren't doing the right thing um and i think ultimately the takeaway i was i was severe i mean i was disappointed right like we built a great product we thought we were solving a customer need um ultimately for legal reasons it didn't launch i still believe that customer need exists um so the biggest takeaway i guess is you know sometimes you can build great products and and that are solving a real problem.

15:25Patrick Crakes:But you can't control everything. You can't control the legal environment around it. So, you know, it was a bummer for the team, but we moved on and we're continuing to build.

15:36Pete Distad:How quickly was the transition for you from that experience then to Fox? Because obviously Fox was part of that initiative. They were. Was it a quick transition?

15:44Patrick Crakes:The three investors were Disney, Fox, and WarnerMedia. It was a quick transition. I mean, essentially we wound down the venue team and then quickly wound up Fox One because we recognized that, okay, it was the same problem. We have this 60 million plus households that don't have paid TV. We were going to lean into Fox or to venue as the way to get our sports content in front of that. And without venue, we still needed to solve that problem. So Fox One is the next step. And so I joined the Fox team about, you know, just less than a year ago in March. So early March of last year, I guess, but right now, about a year ago.

16:29Pete Distad:Do you think that Fox one would exist anyway, even if the venue platform still existed?

16:37Patrick Crakes:It's a good question.

16:37Pete Distad:I don't know.

16:38Patrick Crakes:I mean, candidly, I don't know. I think it probably wouldn't exist in the same timeline. I think we would have been focusing on that and then over time figuring out, you know, because that would have solved the sports thing. We still would, you know, we would still have the news content and the entertainment content. But, you know, I think it probably would have been a while out.

16:59Pete Distad:Looking, taking a step back to, we'll start wrapping up here. Again, you've been part of a lot of interesting product development journeys, particularly in the sports streaming tech world. What would you say is the biggest success story you've been part of?

17:13Patrick Crakes:it's a great question i think i mean i worked on a lot of things that at apple that i'm very proud of i would say working through um um i would say for me when i look back i think navigating what we had to navigate at hulu in the early days in terms of um the complexity of the market the fact that we you know we're dealing with products that already existed out there. You know, the sensitivity of the existing partners in terms of not disrupting their world. I think I'm very proud of sort of that team and getting Hulu off the ground. But I would say in general, like there's a bunch of, you know, I'm proud of the fact that we launched Hulu.

17:56Patrick Crakes:I'm proud of the fact that we launched Hulu, the subscription version of Hulu. I'm proud of a lot of the work that we did at Apple around, that it's not me, it's the team did around Apple TV and the Apple TV service. So I wouldn't say there's one. I mean, I think it's just a collection of many. By the way, it has nothing to do with me. It has to do with the teams that I had the opportunity to work with.

18:17Pete Distad:Every good CEO says thanks to the team. Going the other way, is there any major regrets or misses that you think you had along the way, whether it be strategic decisions, just things that...