YouTube’s NFL Debut, A Surprise Box-Office Hit at the Sphere, and Warner Bros. Merger Candidates

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1:45Advertise on LinkedIn, the network that works for you. Spend$250 on your first campaign on LinkedIn ads and get a$250 credit for the next one. Just go to linkedin.com slash the town. That's linkedin.com slash the town. Terms and conditions apply. It is Monday, September 8th. Greetings from Toronto. I'm here for the film festival. But the news around town isn't just which films are getting longstanding ovations here. Spoiler alert, all of them. We're going to talk about a couple different topics today. First, it's officially the fall TV season, which doesn't really mean anything anymore, except it's NFL season, which definitely means something.

2:25It's the first NFL season where every single game is available on a streaming service. Big implications there. And we have big numbers from the YouTube exclusive game on Friday. We'll get into that. Also, there were some pretty interesting and surprising numbers from the first couple weeks of the Wizard of Oz at the Sphere in Vegas. If you remember James Dolan, the proprietor of the Sphere, he spent about$100 million editing down the famous movie to 70 minutes, some would say butchering it, and using AI to enhance it to an interactive experience. He's charging up to$200 a pop in Vegas. People are paying it to the tune of$2 million a day.

3:01So we'll break that down. Also, we've got some interesting comments from this past week from John Malone. If you're not familiar, he's the billionaire media investor and so-called cable cowboy who helped engineer the merger of Warner Brothers and Discovery. Now he's trying to get investors excited about the split of that company into the studio and HBO side, the crappy cable networks. Malone is on a press tour for his memoir and maybe laying the groundwork for more deals. Lots to discuss there. So for all three, we've got Lucas Shaw from Bloomberg back today. It's a lightning round pod, NFL on YouTube, the sphere as a movie theater, and the John Malone playbook.

3:37From The Ringer and Puck, I'm Matt Bellany, and this is The Town.

3:45okay we are here with lucas shaw from bloomberg welcome back lucas we missed you at the oasis concert in la this weekend i'm more upset that i didn't make it to toronto which i was actually supposed to go to than the oasis show i did see a lot of people sharing on instagram not a band that means that much to me oh come on you know what it was a gen x 90s reunion yeah i get it Let us have it. No, please have fun. I'm like three to five years too young to give a shit about Oasis. All right. We've got a lightning round today. A lot going on. Football. Let's start with football. Okay. YouTube says that 17.3 million people watched the LA Chargers win against the Kansas City Chiefs on Friday from Brazil.

4:28And 16.2 million of those were in the US, according to Nielsen. What do we think about the first ever YouTube-exclusive NFL game kicking off the season, well, the day after, and generating those kinds of numbers? They're up from last year's Friday game, which appeared on Peacock. As a consumer, it was kind of cool to open YouTube and be able to click on and watch an NFL game. Maybe for you, I think a lot of older people were confused. Well, I was going to say, I think for a lot of people, it was confusing. thing. You know, my initial reaction on the number was I thought it would be bigger, but I think I've revised the opinion.

5:09It's like it's a good first effort. Yeah, I think this is pretty big win for YouTube. I mean, they didn't produce it. They had NBC produce the telecast. There were no gigantic glitches. There was a little Mr. Beast action. So, you know, as YouTube. But I think that this is a win for the NFL and for YouTube, getting a comparable audience to a regular game to find it on YouTube. Are you surprised that the international number isn't bigger? Yeah, a little bit. I would have thought, I mean, literally, only about a million people watch outside of the U.S. We know football isn't huge elsewhere, but you would have thought with the accessibility of YouTube, that number would go up.

5:48Yeah, but the international games always air in the morning in America. This game aired at night, so the timing didn't make sense for a lot of the international audiences. No, the timing definitely wasn't great, but I feel like that number is even smaller than the international audience that Netflix delivered for its Christmas game. Yeah, although I think the timing was a little better on that. Plus, people are sitting around. This is an unusual night for football. Friday night, it's not usually what you would think of for NFL. So I think just getting that kind of audience on a Friday to YouTube, I think that's pretty good.

6:19I know people that had to be told that you can watch YouTube on your TV. Like, oh, yeah, you can get the app. Certainly better than some of those initial Amazon Thursday night numbers. Yeah. It does raise this larger issue about Nielsen and the ratings for this season because they are launching this, what they're calling Big Data Plus panel, which is a new amalgamation of audience and, you know, from their smart TV set-top boxes and surveys. And the thinking is that it's supposed to increase the ratings across the board because they're now going to be capturing a more accurate snapshot of who is watching this.

6:59But the NFL is already complaining about this. And some of the other non-YouTube NFL partners were complaining about the ratings for this YouTube game saying it was artificially inflated. I don't know what to make, Toto. Maybe we should have someone from Nielsen on the show because I don't know what to make of these new revised ratings and how they relate to football. I mean, anytime an entity complains or fights with Nielsen, it's usually a contract dispute where they either want to pay less money for the service or massage the numbers so that they look better and better, right? A lot of the Nielsen out-of-home measurement, which has boosted the sports viewership in recent years, was for that reason.

7:40Because as the number of pay TV households plummeted, sports leagues and TV networks didn't want the ratings for their sporting events to go way down. So they're like, no, no, no, we're going to measure out of home viewing now. Right. And as much as these new competitors have popped up, they are still not Nielsen in terms of accepted metrics. But what they are doing is they're putting pressure on Nielsen to make its clients happier. And the way to make them happier is to formulate the audience in a way that boosts ratings. Well, it's really crazy that we can't just have a service measure the number of people watching all of these things, right?

8:16People can complain about Netflix numbers or YouTube numbers or any of that, but at least those are companies that can measure the number of people viewing and tell you how many people viewed. Yeah, but why should we trust them? The whole point of Nielsen is that we can trust them because they are not beholden. Well, they are, to your point about the feeling pressure. They're a little beholden. Yeah, but that's the whole issue. But yes, it would be much better if we could have an independent third-party measurement system. And it just feels like we can't get that. All right, let's move on to our second topic.

8:49You did some reporting this weekend. The Sphere gave you some numbers on how well the new Wizard of Oz is performing there. If you're not familiar, of course, the Wizard of Oz and it's, some people say butchered. The nice way of saying it is truncated version of the Wizard of Oz, 70 minutes, AI enhanced to make it look good or at least look shiny on the Sphere giant screen with interactive elements. There's the tornado wind. There's apples that drop. There's all sorts of stunts in there. Jim Dolan is charging 200 bucks or up to 200 bucks for tickets to this thing. He's getting 4 ,000 to 5 ,000 people in there every day, generating about$2 million a day from just the one location any theater in America would kill for those numbers.

9:41I actually did the math on that point. And I was thinking about, I do think that there are theaters in the U.S. that probably make more than that, but they don't keep the same share. Sure. Maybe like the AMC in Lincoln Square or like the Burbank or Century City AMC where there's tons of theaters and they're packed all day on a Saturday in the middle of summer. But this has been doing pretty robust business every day. Executives there at the Sphere are estimating that it will gross hundreds of millions of dollars over the next year or so and ultimately could top a billion dollars. Now, I have thoughts on this.

10:16Well, give me your thoughts. I did the reporting. Give me your thoughts. I think they're full of shit. It's easy to say this after two weeks. And don't get me wrong. I am a proponent of the Sphere. I think it's an amazing venue. I have now gone twice, U2 and Backstreet Boys, very different shows. But I think it's an amazing venue. And I think this is exactly the kind of thing they should be doing, turning these movies into stunts, into theme park rides, into whatever you want to call it, and getting an audience in there to fill the time between big acts. But you can't extrapolate over years from the first two weeks.

10:54This has been highly publicized. Everybody in the Vegas area is curious what this is going to look like. Tourists are there and they're checking it out. But is the Wizard of Oz still going to be grossing$2 million a day in a year or two years? No. But it doesn't have to gross$2 million a day in a year. If they're dealing with typical movie theater occupancy levels of whatever Adam Aaron said, it was like 14 % or 15%, that would be bad. But if they can even have it more than half full at a slightly reduced ticket price, then it works. I mean, the movies are the engine of the sphere because the sphere cannot make enough money on the music to justify it.

11:36It will lose money perpetually if it has to do that. And they had the Aronofsky movie and that did okay, but that's a new original movie. Yeah. I think the question is, can they really play The Wizard of Oz for like six months, nine months, a year? Or do they need to have two or three movies that they're cycling between at any given time, right? Because what they do with the concert is like they have an extended residency, right? Where the Backstreet Boys come and play for two or three months. But it probably would be more interesting if it wasn't just The Wizard of Oz for nine months, right? Well, that's why they're putting out these numbers, is they want other studios to do deals with them to edit the movies and AI enhance them and make them into theme park rides.

12:22And they feel like if people think it's successful, then they're going to do more of this. Disney has not come to any deals with them. They've tried to get Disney movies because Disney wants more control. and the guilds hate this thing. I got a statement from the DGA when they digitally put in the faces of Jim Dolan and David Zaslav saying this is a butchering of this movie essentially they were saying. Like this filmmaker had no say in what this presentation was. The filmmaker is long since dead. But if you're going to put in Harry Potter movies like they want to do, you're going to have to get the sign-off of J.K.

12:57Rowling. You're going to have to get the sign-off of the filmmakers of all of those movies or else it's going to become a big controversial name. People already are saying this was a desecration of The Wizard of Oz. But do we think that those voices are going to have a really negative impact on people who want to go check it out? I get it if it's a more contemporary movie and you've got like, they couldn't reach a deal with Disney. If they had gotten a deal with Disney for Star Wars, right? Which Disney now owns outright. George Lucas doesn't get to tell them what to do with it. That would make$10 billion if Star Wars was in the sphere.

13:29A 70-minute version of Star Wars in which the entire B-plot is omitted? But if they did it right, to be honest, I don't think average people care about the sanctity of the Wizard of Oz being cut down. No, no, no, they don't. That is absolutely true. But I'm saying that that's not the whole point. The point is, if you did that and George Lucas went absolutely crazy and told his fans never see this, it's an abomination, that would matter. Yeah, but one of the reasons they couldn't do a deal with Disney is Disney wanted to have more creative input, which would also meant that they had to put up money.

14:01David Zaslav was happy to just say, look, this movie is 86 years old. Jimmy, we're old pals. Do what you want to do, right? I think it does become more complicated if the studio wants to be involved. Yeah, I agree. Fast and Furious would be fun, right? If they went to Universal and were like, let's do a Fast and Furious movie in the sphere. But I bet Universal would want to have some control over how this existing property of theirs is used. Sure. And also, this is a license. You kind of intimated in your report that this is a perpetual license, that Dolan can have this movie as long as he wants.

14:37That cannot be true. There is an end date, but I think with his sort of adaptation, he's got a lot of rights. Okay, so he can play that adaptation forever? No, I don't imagine forever. You say this movie's old, but Wizard of Oz is one of the most enduring properties that Warner still makes a lot of money on licensing it all over the world and on streaming. So like they're not giving up the store here to have a hit for a few months in Vegas. No, he can't do anything with the Wizard of Oz, but this version of it. It's not like he can do a bunch of other stuff with it. Yeah, he spent over$100 million on it.

15:14You wouldn't go to see it if you were in Vegas? No, I would. What I don't get, and I asked a couple people about like, Who is paying$150,$200 for this? It's Vegas, man. Money is treated differently in Vegas. People do crazy things. I mean, this is essentially the new version of a showroom show in Vegas. People were paying$200 to see White Tigers for many years. They paid$200 to see a magician. They pay for this kind of random stuff in Vegas. And this is just the new version of Carrot Top or Siegfried and Roy or Terry Fator or any of these acts that are successful in Vegas, and you look at them and you're like, what the hell?

15:56This is the new version of that. The question is, how long can it go? Because like you pointed out, the Vegas audience overturns every four days. So there's a constant stream of people, although Vegas tourism is down right now. But there is a constant audience that is coming to Vegas and they're curious about the sphere. I just don't know that it's going to last as long as the projections think it's going to. Yeah, it might not. But they do have another movie coming early next year. Or sometime, maybe next spring. I forget the exact time. They need to just go nuts on it. Like, what movie would you most like to see in the sphere?

16:32I mean, Star Wars would be really cool. Yeah. A lot of the obvious ones, right? Like, Lord of the Rings would be cool. Harry Potter would be cool. Stuff with good visual effects. Jaws would be kind of cool. Or Splatter Horror. I also think, like, Dunkirk or something like that would be very cool. Oh, good luck getting Nolan to sign up on a butchered version of his movie playing for 70 minutes. Watching that first 30, 45 minutes of Saving Private Ryan, that's not a mass appeal enough. But Dunkirk isn't. And that's depressing also. You need something that everybody knows, right? It's got to be mega famous.

17:06Star Wars is probably the answer. Or Jurassic Park is a great one. Yeah. But Spielberg, again, these big filmmakers do not want their movies shown. But if you're Steven Spielberg, you don't want to mess around. If you could be involved, Yeah, if he's involved, great. But if Jim Dolan is deciding where to cut my movie and to like, you know, because they didn't just cut it. Why does it have to be cut down? You keep saying that. Because the perception in Vegas is that audiences will not sit through an entire movie and there are stunts. It's essentially a theme park ride where they have wind tunnels and they have smells and they have apples falling from the sky and things like that.

17:45And it's hard to sustain that for two hours. what if he just did a deal with Steven Spielberg and took a bunch of his movies? Indiana Jones would probably be fun there. Jaws would be fun. But he would want to be involved. No, no, I know. Why wouldn't Jim Dolan allow... Of course he should allow Steven Spielberg to... The question is really, does Steven Spielberg want to have any... Yeah, I feel like it's obvious that you would allow Steven Spielberg to have creative input. Yeah, I mean, they do that with the theme park rides at the parks, like at Universal, when they're going to do an E.T. ride or anything like that.

18:16they involve Spielberg and pay him a lot of money to do that. The prospect of Jim Dolan deciding how to display and cut your movie up, like, cause it's not just editing. Like there, there are scenes that are changed in wizard of Oz where like they would go back and forth cutting between characters. And now it's just one scene where they're talking to each other. That is the kind of thing that drives filmmakers crazy. There's also an obvious director who would probably be most interested in this. And it's James Cameron. Do you think so? Yes. But he would want to do something where he would shoot an original movie from inception for the sphere.

18:51Totally. He would do some undersea exploration thing and then put it at the sphere. My question about this whole thing is, do you guys think this is the beginning of kind of the future of 4D augmented reality movies becoming the norm or the mainstream or a yearly trip that people want to take to go see stuff like this? Will the spheres that are going to pop up all over the world, are there going to be other versions of the sphere that try to do stuff like this? Like, do you think this is the beginning of a new era? I think we're going to go this direction as AI and other stunt type technologies allow for different presentations of movies and different kinds of content, then we will see more of this.

19:32But it's not totally new. I mean, it just doesn't get that much traction because it's more expensive. And there isn't this audience that there is for the sphere. The sphere is a tourist attraction and that people want to go to. They land in Vegas and they see this giant orb and they're like, that's cool. I want to check it out. So maybe, I mean, the Sphere reported an operating loss of$83 million last quarter. So the Sphere has not proven that it is a ongoing long-term business. They need to do that first. And maybe this will help them get there. But if the Sphere becomes a big global brand and they have multiple places you can go, maybe then it becomes like, oh yeah, you take your movie on a tour and Wizard of Oz can travel around the world and meet, reach all these people and have a constant audience.

20:19And then where the money is, the studios will follow. I guess I'm kind of skeptical because it still feels stunty. Yeah. The sphere itself, I think will remain popular for a while, but I don't know that this is like the future of movie going. I'm not ready to say that. Also the sphere makes so much more sense in Vegas than it does. Like if they open a smaller one in Miami or LA or whatever, I just don't know that it would have the same appeal.

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21:51Moving on, our guy, John Malone, he has a memoir. John Malone, the big investor, cable cowboy, rich guy, owns a lot of property. He's getting his message out there. And what he's saying is, in my interpretation, that he would very much like somebody to buy the studio and streamer portion of Warner Brothers Discovery, which is about to be splintered off from the Crapco, the cable network company that has been dragging down the stock. And one of the things he said in a New York Times interview last week was that he got together with David Ellison at Sun Valley and to, quote, talk about further consolidation in the media industry, declining to be more specific.

22:37I take this as Ellison wants Warner Brothers and Malone is going to be more than happy to sell it to him. Well, I would probably flip that, which is that Wonder Brothers Discovery has been telegraphing everything it can to say, someone please come and buy us. And David Ellison is one of the most likely buyers. True. Okay. I mean, the split that they're doing is all about, you can come and buy one, you can come and buy the other. Yeah, and the CFO is going to be the CEO of the Krapco, Gunnar. He says they already have a buyer for the 20 % stake that the Krapco is going to have in the studio and streaming company post-split.

23:20So we don't know who that buyer necessarily is, but he says they're out there. Yeah, and look, bankers all see an opportunity here to do some deals. and if David Ellison's ambitions are as grand as they seem, a deal for WBD would solve a lot of his problems. But also having just gotten the Paramount deal through, does he immediately want to turn around and do another one? I don't know. I mean, there was a lot of reporting on him waiting until after the split, but I've heard that it could go sooner, that he could actually do it pre-split and just kind of pair it off. They also are interested in TikTok.

23:56They're interested in a lot of things. And, you know, it's funny, the Paramount logo is now appearing on movies and it says Paramount, a Skydance Corporation. Right. Which I think is setting everything up to be X media company, a Skydance Corporation. TikTok, a Skydance Corporation. Warner Brothers, a Skydance Corporation. That seems to be the plan. Yeah, could be. So you think they would keep the Paramount and Warner Brothers brands separate, which makes no real strategic sense. but for Hollywood Legacy would be nice. Yeah, and I think the pitchforks might be out if he just eliminated an entire studio brand after 100 years.

24:36But Malone seems to know that something is up here because he intimated in these interviews that he thinks the Ellison family will be very important to the next generation of media, aka they're going to buy a whole bunch of shit. Yeah, but would this get approved? Can Ellison buy Warner Brothers? From an antitrust standpoint, Warners doesn't own a broadcast network, which was the entire problem with the previous transaction. The Trump administration had to approve the purchase of CBS's broadcast license by the stations. Well, that was the issue with the FCC. This would be more of a DOJ, maybe FTC question.