Why Spider-Man Broke Records, and Why Peacock Partnered With YouTube

0:04Matt Belloni:This episode of The Town is presented by HBO Max. HBO Max presents Hacks, nominated for 25 Emmy Awards, including Outstanding Comedy Series. In the aftermath of mistaken news reports that Debra passed away, she and Ava returned to Las Vegas determined to secure Debra's legacy as a comedian. Don't miss the series Variety is calling one of TV's best comedies ever. Hacks is now streaming on HBO Max. This episode is brought to you by Accenture. When your advertising operations fall out of sync, campaigns slow down, insights get buried, and opportunities get missed. That's why Spotify and Accenture are working together to reinvent the rhythm of ad sales.

0:43Matt Belloni:Using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. To learn more, check out Accenture.com slash Spotify. It is Monday, August 3rd. Most of the chaos in the entertainment business these days can be attributed to the desperate battle for scale. The old cable TV model is dying. The internet has enabled massive hyperscalers like Google and Amazon to gobble up attention and advertising. And what's left of the remaining Hollywood studios are scrambling to figure out their place in the new hierarchy.

1:26Matt Belloni:See the Warnermount merger for an example of that. That's why this latest deal between Peacock and YouTube is so interesting. If you didn't see it, last week Comcast announced that it would allow Peacock, its U.S.-only streaming service that has struggled to rise above 48 million subscribers and only just recently became profitable, it's going to be available on the premium tier of YouTube. That's the ad-free tier that currently costs about$16 a month in this country for the individual plan. and it has about 125 million subscribers worldwide. That will instantly put Peacock in front of a lot more people.

2:00Matt Belloni:Good for Peacock. Though we'll have to share that revenue with YouTube for the privilege. And on the YouTube side, this is probably even more beneficial. When the deal kicks in early next year, YouTube will have a whole bunch of premium programs and universal movies and sports like Sunday Night Football and the NBA without having to pay explicitly for them. It also sets a precedent where all of a sudden in a few years from now, most of the other streamers content could live on YouTube premium for a price, of course. So who's the real winner here? We're going to get into that today with Lucas Shaw, our Monday guy.

2:32Matt Belloni:We'll hit the massive Spider-Man opening weekend as well. 360 million domestic and 932 million worldwide, the biggest ever. And we'll get into a little bit more on the WarnerMount merger as well. So today it's a news dump day and mostly it's the Peacock YouTube deal. Is this really a game changer. From The Ringer and Puck, I'm Matt Bellany, and this is The Town.

2:58Matt Belloni:All right, we are here with Lucas Shaw from Bloomberg. Back again. Welcome, Lucas. I was out last week on vacation, so I have not seen Spider-Man. But did you see Spider-Man? Yes. The folks at Sony were kind enough to invite me to the premiere they had in Hollywood a week ago, I guess. It's excellent. So you were not surprised that it became the biggest movie of all time no i am surprised because i don't you know it's so funny how this stuff works it feels like culturally for the last few weeks right like the odyssey has been ubiquitous you know yeah the press tour and the stories about the lengths people have gone to for the right tickets and and some of that is also just sort of our probably age group and social class where it's like everyone i know wants to see that movie or is talking about should i see that movie all that i listened to Derek Thompson's interview with Emily Wilson, for God's sake.

3:49I heard her on a different podcast. But yeah, silence on Spider-Man. It's not something that people I know are talking about. And so it's hard for me to judge. I knew it would be big. It's why I ended up taking it first in our box office draft.

4:03Matt Belloni:Oh, you already went there. All right. So you took it first. You were going to win the draft. I am not conceding. The year is not over. I thought it would be big because all Spider-Man movies are big. I just, like, it's hard to know how or why a movie goes from like, yeah, it's going to make, you know, a billion two, a billion four, to biggest opening ever, at least domestically. Avengers is still going to be bigger globally, but this movie is now on a glide path. Like, now it's going to hit one, five, two, who knows how big it's going to get. Like, what accounts for that movie being that big?

4:40Why have the last two Tom Holland Spider-Man movies been the biggest movies since the Avengers?

4:46Matt Belloni:That is the question. And I have theories on this one. I actually think there are a few factors. Obviously, the star power. This movie caught two of this generation's biggest stars right at the beginning of their ascent and has followed them upward. They had a huge movie two weeks ago. People knew them, knew they were in this movie that was coming, and it just all, everything hit at the same time. and they benefited from the star power of Tom Holland and Zendaya. But I think there's more going on here. First of all, the scarcity issue. This is the first Spider-Man standalone in almost five years.

5:25Matt Belloni:And that matters these days. It's, you know, the theatricality question is all about feeling special and unique. Got to see it now. Got to see it on the big screen. And when you don't do a movie for five years, you build up that anticipation. and there wasn't even a Spider-Verse animated movie for the last three years. I mean, that's more for the delays that they've had with Lord and Miller, but they've very nicely spaced this out where they have five years of pent-up demand for this. And it's something that I think other franchises could learn from given what we've seen this summer. You know, Supergirl tanked a year after a Superman movie.

6:09Matt Belloni:Minions and Monsters is disappointing because they had a previous one two years ago. And you go back, even something like Mandalorian and Grogu, that, you know, obviously there hasn't been a Star Wars movie in seven years, but there has been Disney Star Wars shows recently, including Mandalorian. Moana is another example where they had Moana 2, and that completely usurped the demand to see this live-action remake. So I think the scarcity issue is real. I think scarcity and time away is one of the sort of defining stories of the summer. Actually, a colleague and I are doing an essay for the upcoming issue of Business Week all about sort of the lessons from the year in movies.

6:55and one of them is about this issue and sort of this, there's been a rushing of titles or we've sort of exiting the MCU era of where everything is interconnected and you get something new every six months and people like sort of the, it's in music sort of like what Drake did where he just like flooded the zone with new music every six months and then at a certain point people got a little burnt out, right? And I think now it makes more sense to sort of take your time with franchises. You can have touch points with people, whether it's on social or something like that. But people don't want a new installment of a movie every year.

7:36Matt Belloni:They just don't. And they don't want to have to follow along. It feels like homework. And these Spider-Man movies, they exist in their own universe. You don't have to have seen all the other stuff. You can be a casual Spider-Man fan. and all you have to know going into this one is that he forgets his friends and he's got to start over so there you go like it's it's all there plus i do think and i know this sounds a little bit of a shill for sony but the movies are good like people generally have liked the past three spider-man movies and you build up that brand equity when the movies are good they like tom Holland and the partnership between Marvel Studios producing Sony distributing and producing that has worked.

8:21Matt Belloni:So you, you get that built up demand. You know, it's funny. People in Hollywood love to say that the reason, like, if you're trying to figure out what works and what doesn't, it's about what's good and what's not. And I think that's kind of total BS. We see bad movies do well all the time when we see good movies underperform. But yes, they have done a very good job with the franchise, where by and large, the Spider-Man movies are kind of well-made. They get solid reviews. They're entertaining. And they don't have the problems that some of the DC and Marvel movies have had in recent years. And again, they haven't overdone it.

9:02Matt Belloni:Spider-Man has not popped up in Thunderbolts or Fantastic Four or any of these other movies. where they could have diluted the brand value. Now, obviously, they're using Spider-Man to, spoiler alert, launch X-Men and lead into Avengers Doomsday. So good for them. Maybe it will rub off on my big movie for the year Avengers. This one also did pretty well in China, which is like unusual for Hollywood movies these days. I think it hit north of$100 million there or something like that. $121 million for the opening five days. Yeah, not bad. All right, issue number two. I feel like John McLaughlin here.

9:38Matt Belloni:Issue number two, we're moving on to things that I missed while I was on vacation. Updates in the Warnermount merger. We're now waiting for the trial date. Paramount wants November. The state has said they want April. We're probably going to see something in the middle, right? Can I ask you a question off that? Yeah. If you are Paramount and Warner and you want to trial like tomorrow, why throughout November? Well, they don't want to trial tomorrow. It takes time to put together the factual record that they want, that they feel they need to show this judge that their merger is pro-competition, yada, yada, yada, all the things they say.

10:19So even though they think it's such a slam dunk case, you think they need, you know, they need two or three months to get there, get ready.

10:27Matt Belloni:That's what they, yeah, I do think. Listen, having been a litigator, it's not easy. You got to get the witnesses. You got to depose them. You got to get all the stuff together. You put together your motions, all of it. And that's going to take time. I mean, I think they would have loved to have an early determination that the preliminary injunction was denied, but they saw where this was going with the judge. And if they feel that this judge is inclined to side with the states on that issue, then they've got to really put together a great case. That's why they brought in this new lawyer, Beth Wilkinson.

10:59Matt Belloni:She has tons of experience on antitrust trials. She got the Microsoft Activision deal approved, or she won that case, and she's working on a bunch of others, Tenga. And she actually went up against the state's lead lawyer, James Weingarten, in that Microsoft Activision case. So it doesn't surprise me they're going for November. What's interesting now, though, is the impact of this delay, because everyone's focused on the ticking fee. And after October 1st, it's seven million dollars a day. What people are talking about less, I think, is the impact of this delay on the two companies. They're sort of paralyzed here.

11:39Matt Belloni:A good example, you and I both know that they're planning at HBO, they're planning a massive subscriber acquisition event for Harry Potter. The Harry Potter show is going to be, they hope, the biggest subscriber acquisition moment in the history of HBO Max. That's scheduled for December. Paramount wanted to take advantage of that to help bring people into their ecosystem and start getting them accustomed to whatever the Paramount HBO Max joint service is going to be. Now, they can't do that. They got to operate separately. And there's a million different examples. We saw it this past week. My colleague Kim Masters wrote about these dueling Nightmare on Elm Street movies where Paramount has the domestic rights now to Nightmare on Elm Street, while Warner Brothers has the international rights.

12:29Matt Belloni:And they're currently developing competing projects like that's insane for companies that want to merge. So there's all sorts of reasons why this is going to F up these companies if this lasts six to eight months in additional purgatory. because Warner Brothers is the kind of the talisman for all the the problems and changes over the last decade think back to the AT &T Warner Brothers deal where that deal got held up by a legal challenge in many ways led by the man who is now Paramount's top lawyer and the two-year delay on that deal really handicapped HBO in its efforts to build up its streaming business and figure out kind of the response to Netflix.

13:13Yeah, these deals are not the biggest argument or not the biggest, but one of the big arguments against these deals, when folks say that we need them in order to compete, is that if there's a legal challenge, that is time consuming and it delays you. And even when you then do merge, it takes years to figure out how to properly integrate your backend technology, your front end technology. What is the strategy, we're going to rebrand all this stuff. It slows you down and it does not make you nimble. And it does not, in fact, let you really address the problem. You have to be really confident that you have a clear strategy that's going to work.

13:50And yeah, this only weakens both companies. You know, I guess the good news for them is who, it's not like their competitors have entered a place where they're sort of like racing ahead. We're in a slightly more stable place.

14:07Matt Belloni:Yeah. The situation AT &T was in was that was a key moment in the development of the streaming wars and putting them back two years really let Netflix just go to town. Now, I think they overstated the fact that this was a problem for them. I think AT &T was doomed with WarnerMedia from the start. They just were not equipped to do it, but it definitely didn't help that they got held up for two years. The Larry Ellison question is hovering over this entire deal now because your point is, you know, the company they're buying in eight months may not be the same company or even worth the same amount of money as it was when they announced this deal months ago.

14:46Matt Belloni:The Larry question is really fascinating. Did you read that New York Times Magazine piece about Larry's finances? Very good story. Listeners should read that story. 130 billion dollars in debt that oracle has taken on in the ai race the stock of oracle is down more than 50 there's lots of speculation about how larry ellison could end up becoming the face of the ai bust or the bubble and that trickles down to this deal he has backstopped 47 billion dollars worth of this$110 billion deal, all the partners that came in, all the Middle East money, they're all there because of these relationships that Larry Ellison has in the region due to Oracle and their efforts in AI.

15:34Matt Belloni:And if that company comes crashing down, how likely is it to trickle into the willingness or the ability even to close this deal? Well, obviously, if Larry has real financial problems, it dooms the deal, right? This deal is contingent upon him financing it. Some of the recent coverage of Larry Ellison and the state of Oracle is probably the first time I've really had any doubt because I think that when people make the point about, oh, Oracle stock is up or is down however much, I don't think that someone who is as wealthy as Larry is and who has access to the financing that he does is going to allow the day-to-day fluctuations of the stock price impact whether he is backing his son and doing this deal, right?

16:19He has made this commitment along, you know, he made the commitment he's going to stick with it. He knows that if he needs money, he can get it. The thing that would really get in the way is if Oracle entered a tailspin that was sort of more dramatic than just what we're at now, right? Yeah, the dot-com bubble. Yes. If there is, in fact, the AI bust that people are predicting, then yes, things get really, really hairy. But we are not there yet.

16:46Matt Belloni:Now, to be clear, when you ask Paramount about this, they say the money is all lined up, everything is locked, the deal was consummated with certain things contemplated, and that the fluctuations of the Oracle stock will not impact this deal. But I agree with you that if this starts to get really bad, I mean, according to this story, I didn't know this, of how much Larry has borrowed against his shares. And to the point where the board is monitoring how much, and he's the only Oracle employee that gets to do this. And he spent a lot of money borrowing against those shares. Now he's still among the richest people in the world.

17:22Matt Belloni:And he's best buddies with the richest person in the world who will undoubtedly help him out if he needs it. Elon. Yes. Yeah, that could be true. Although that would be, that would add another regulatory issue if Elon Musk somehow becomes involved in the ownership of CNN. Yeah. Well, when people push for the sale of CNN, that's, you know, that's one of the possible outcomes. Oh, that Elon buys it? Yeah. That's hilarious. It would be funny if all of these Democrats are like, sell CNN. Okay, Elon, yes, it's going to be part of Twitter and Grok is going to now host, you know, the CNN morning show.

17:58What, um, what has your ratio of confidence in the deal changed at all?

18:03Matt Belloni:I was actually just going to ask you that. I, you know, listen, I have been hesitant to declare that this deal will or won't happen. I do think there's still a high likelihood, especially if they can come to some kind of settlement that makes everybody happy. I think that that's where this has all been headed. I did notice in your newsletter, you did not cite the journal's reporting on Gavin Newsom's reluctance to back this deal. I assume that's because you are skeptical of that or or are you just until he says it publicly, you are not willing to put words in Gavin Newsom's mouth. Well, what? So there was there was the journal story, which I think followed a California Post story, which is all about Gavin Newsom's silence on this issue.

18:50Matt Belloni:No, the journal story said that he has internally said that he does not support the that he's been trying to broker a settlement. Yes. He would prefer that Rob Bonta settle this matter. He's worried about jobs in California. Sure. It's kind of weird because this merger is going to kill thousands of jobs. I don't think Gavin Newsom matters that much. Oh, he does. He's the leader of the party in the state. Yeah. If he went to Rob Bonta and said, would you like a future in the Democratic Party, especially in this state? Fair. Do what I say. But I don't think I mean, that's that's not the way it should work.

19:28Matt Belloni:Like, obviously, in the federal government, it seems that that's the way it does work now. That is true. But also, he will, if this trial actually happens, he will no longer be governor when it happens. That is true. And he is a lame duck and he is running for president. And he's been saying lots of things that might not be that popular in California, but are much more popular nationally. I was. Yes, I did not intentionally omit the journal piece. I was more focused on the, I guess, the rhetorical war of words, including the column in the Wall Street Journal by your friend Ari Emanuel. Oh, yes.

20:04Matt Belloni:Ari has amazingly come out in favor of the David Ellison takeover of Warner Brothers. I can think of 7.7 billion reasons Ari would write that piece. Yeah. The exact price of the UFC deal he got from David Ellison. But whatever. Listen, everybody's got an agenda here. What do you read into Gavin Newsom's silence? Do you think that he is actively against the suit? I do, actually. I think that Newsom has always been savvy about balancing the Silicon Valley contingent with the rest of the state. And he does see what's going on. This is why he's against the billionaire tax. He sees risks here to the state if these billionaires get really pissed off and start leaving for Tennessee or Florida or Texas or wherever, that that could impact the state.

20:56Matt Belloni:And he is, you know, I don't know that he'll come out in favor. He's going to be asked about it publicly. But he sees this as a potential problem. And he's not running for anything right now in the state. Rob Bonta wants to appeal to all of these people in California that want him to be populist and progressive. Gavin Newsom is trying to position himself as the centrist. Right. The rational guy. Yeah. Yeah. The pro-business Democrat. And that's where he is right now. That's my take, at least. This episode is brought to you by LinkedIn Ads. Ever invest in something that seemed incredible at first but didn't live up to the hype?

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22:17Matt Belloni:Just go to linkedin.com slash the town. That's linkedin.com slash the town. Terms and conditions apply. Adobe Firefly is the all-in-one creative studio with AI-powered image and video editing for today's creative process. Built for creators of every kind, Firefly helps you generate, edit, and experiment. Fast. Because the asks aren't getting smaller, the budgets aren't getting bigger, and the timelines, oh yeah, still tight. With all the best creative AI models in one place, Firefly brings your ideas to life. Unlock a better way to make with Adobe Firefly. All right, issue number three. The Peacock YouTube deal.

23:00Matt Belloni:This happened last week. I think it's a pretty significant move here because for the first time, I think Brian Roberts, the CEO of Comcast, co-CEO, he is throwing up his hands here. He is saying, we have tried to build Peacock. We have spent billions and billions of dollars acquiring sports rights and original programming and putting the Universal movies there first. And they are stalled at 48 million subs. They are barely profitable. They are not a scaled player. It's U.S. only. and this is why he makes the call to Neil Mohan at YouTube and says, bring us your sweet, sweet subscribers. We are willing to give you our content and let's do a deal.

23:47Matt Belloni:Is that the correct take? I understand your reaction and why a lot of people have framed it that way. I think it's a little over the top. On which side? Let's go both sides. So let's take the Peacock Comcast side. Why do they do this deal? Because they are trying to incrementally add customers to Peacock, and they have structured the deal in a way where they are going to get paid a bunch of money, even if it's not directly to do this, but that basically offsets Peacock's NBA commitments. Yeah, it's to pay for the NBA. And allows Peacock to sort of remain profitable because they don't want to suddenly, you know, they finally got their first profitable quarter at Peacock.