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- [00:00]
A
Indiana University is shaping the future of healthcare, advancing discoveries that become treatments for Alzheimer's, obesity and cancer and training the providers trusted to deliver them. See how IU solves what's next iu Edu Impact.
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Bloomberg Audio Studios Podcasts Radio News.
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A
Let's go live now to L. A.
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Where Lucas is speaking with Paramount Skydance Chairman and CEO David Ellison.
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B
We got to start with with Paramount, you chase this company for a couple years, if not longer. If you look at what they own, they have a bunch of cable networks that have been in decline for almost as long as I've been doing my job. They have a movie studio that is by most metrics the last place movie studio the last few years and a streaming service that in terms of at least engagement is sort of in the third tier. So why were you so interested in it? What do you see in the company that investors and a lot of other potential bidders did not?
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C
Yeah, no, absolutely. It's a great question. First, I just want to say we couldn't be more excited about the place that we're starting with the asset that we purchased, right? We have 80 million streaming subscribers. We have one of the best basically content libraries in existence with Paramount and cbs. And I also think you need to distinguish when you talk about the linear business, right? There's cable, which yes, has been in decline, but if you look at CBS, it actually is a remarkable asset that's been number one in primetime for 17 straight seasons. Incredible sports rights which were growing and is still highly profitable from a cash flow perspective, and I agree with you, has not been run in the best manner for the last 15 years. And for me, that's all opportunity, an opportunity to really reignite the creative content engines to navigate the transition that's required to really turn Paramount into a leader in streaming. And we believe we have the ability to both win in content and also become the most technologically capable media company to effectively navigate this transition. We always looked at, you can look at the music business 10 years ago, we believe we can navigate that. We also really looked at where traditional tech companies were, call it 10, 15 years ago. There was a period of time where the Microsofts of the world, the oracles of the world were being disrupted and those companies that actually disrupted themselves and transitions are now trading at all time highs, which we believe we have the opportunity to do the same thing.
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B
So you talked about streaming. You mentioned the 80 million subscribers earlier. You look at it those monthly Nielsen reports that people pay a lot of attention to YouTube's at 13% of TV viewing. Netflix is at between eight and nine most months. Paramount, when you combine Paramount plus and Pluto, it sort of sits around 2%. You can correct me if I'm off there, but I think that's about right. So how do you get that up? Forget about 13 or 8, like Disney's in the 4 or 5 range. How do you, how do you get that up there? And you've talked about content and tech. Can you get specific on those fronts, like what you're going to do?
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C
Absolutely. So look, one of the things we really believed in, look what I'll say. We're nine weeks in and I'm really proud of the momentum the team has been able to build over the last nine weeks. One of the things we really believe, being the first owned and operated studio, to my knowledge, since actually Walt Disney built his own shop, was that we would have the opportunity to really think long term. That means long term partnerships with talent where you can basically say, don't just think about your next movie or your next show. We want to build a relationship with you over a decade and actually say we're going to make your next four or five movies, your next four or five series and really think long term and invest for long term growth. The great news, when you look at we had to win in content and I think we're well on our way to being able to do that. If you look at specifics right, we were able to get obviously the UFC deal is one of the first things we announced when we came over. We are incredibly proud that Activision chose to partner with us on Call of Duty and which is the most successful video game franchise of all time with 500 million units sold. We're able to have James Mangold come over and obviously call his, you know, as one of the greatest filmmakers working to call Paramount home, Boulderlight, who obviously had incredible hits like Weapons earlier this year. In addition to that, you know, we've been able to secure high profile packages for streaming with basically Paramount Plus. And then we're also really reinvigorating what we're doing in news with CBS News with the acquisition of the Free Press. And then I think when you look at CBS's broadcast lineup, I think we have the strongest lineup maybe arguably in the company's history. And so I think we've really successfully reinvigorated the creative content engines of the company in a really short period of time. And I think we're going to be able to do that at scale. So that's one, two, you know, I Think when you look at kind of 10,000ft, Silicon Valley has done an excellent job of really coming into Hollywood. I mean, the platform that Netflix has built, the platform that basically Amazon has built, and these are incredible companies.
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B
I'd say the platform that Amazon has built is not very good, but they do have the benefit of Amazon behind. Even people who work at Amazon would acknowledge the product could be better.
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C
I think when you look at the number of subscribers, I think they're doing okay. Just. And, you know, from, from that standpoint, but what we really want to become, we talk about becoming the most technologically capable media company, believe we have the capability to do that. We're bringing in the appropriate leadership. We just obviously hired our cpo, Dean Glasgow, who was formerly obviously running product at Meta for Facebook, who is obviously a phenomenal leader to come into the business. And we have really deep tech partnerships that are really going to enable, we think, Paramount for the first time to actually build platforms that are competitive with Netflix, that are competitive with Amazon and actually successfully grow in scale. I think you've said this, you've talked about this a lot. Given this moment in time that we exist in, great art and great technology need to work hand in hand together to effectuate the transition the overall business is in.
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B
Is there something concrete about the Paramount platform right now that you think is clearly substandard? I've heard you talk about the recommendation algorithm and how you think that could be better. Does having a better recommendation algorithm really going to bring in 10 million new customers or make people spend an extra two hours a day with your, with your service?
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C
So you have to do two things. One, like, let's just talk about the asset that we acquired, we inherited, right? Paramount, as it exists today, operates three streaming platforms, three separate tech stacks on two different clouds, which is both inefficient and wildly expensive. So if you actually said, I'm gonna, if I had unlimited resources, this is not how you would.
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B
And for those who don't follow, the three services are Paramount, Pluto TV and bet.
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C
Correct. So we're in the process right now of basically consolidating all of those onto a single stack, which will both significantly improve the operational capabilities of the product. And we're doing a lot to basically overhaul every single aspect of the stack. But also the more data that you obviously get in there, which is the more users, the better you're going to be able to recommend content. So we are definitely overhauling basically the product right now. But in addition to that, to me, technology is really in service of the content, not the other way around. And we're going to make significantly more shows at Paramount plus we are investing in sports rights. You know, when you look at the acquisition of the ufc, that is the largest sport that is basically not shared between multiple platforms and to basically they have 100 million fans, they've grown 25% from 2019 to date. They grew at that level sitting behind a double paywall. So we think when you eliminate that double paywall, it's going to open it up and make it much more accessible. Literally one pay per view fight is what a Paramount plus subscription is. And then basically those 100 million fans are going to be able to get access to everything they love. And in addition to that, when you look at the overall sports strategy, which cannot be more important to us, Paramount had a really strong fall and spring sports calendar, but really light. In the summer you have football, in.
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B
The fall, you have March Madness.
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C
In the spring you have the Masters, which we are incredibly proud to be partners with. And now with ufc, we have a year long sports strategy. And that in addition to all of the new originals that we're going to be making for P, there's going to be more content, there's going to be a better tech product that's going to yield additional engagement and scale.
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B
So I have a follow up on that. But I'm curious because you mentioned Pluto. You've talked a lot about combining the back end. How likely is it that you just combine all those services into one consumer facing app where if you want to watch Pluto, you're just going to Paramount Plus.
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C
So right now we're basically combining the back end, the backend. It's certainly something we've discussed and explored, but not something we're planning to do right now.
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B
Got it. And you're in the fun spending money, showing people you're here to reinvigorate the company phase. When does the less fun part?
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C
So look, one of the things that I think is actually important is this business can be operated a lot more efficiently than it was operated in the past. And we've obviously announced $2 billion in obviously run rate synergies. We've said we're going to meaningfully, obviously exceed those targets. And from our perspective, we intend to do that as quickly as possible so that we can basically get that behind us and then have the entire team just building for the future.
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B
So do cuts start before the end of the year?
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C
You know, I can't answer that question.
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B
Let's go to a couple other questions. You probably can't answer.
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C
We're going there already. All right, all right.
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B
Have you made an offer yet for Warner Bros. Discovery?
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C
All right, we're talking about tennis.
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B
We'll get to tennis at the end. I don't know if you saw it. I asked Greg Peters who was better at tennis, him or Bill Gates. You can probably answer that question.
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C
He dodged, but the audience answer, I actually can't answer that. Tennis. I've never seen either of them play tennis. So I don't feel equipped to be able to do that.
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B
Let's go back to the offer for Warner Bros. Discovery.
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C
So. So look, we're a publicly traded company and I think, you know, we're not in a position to be able to comment on rumor speculation of any kind because there's a couple of rumors and speculations obviously out there in terms of what we may or may not be doing. But look, what I can't comment on is people to kind of understand our mindset. Right. And I actually think, you know, ironically, it was David Zaslav last year that said, you know, consolidation of media business is important. And the way we approach everything is first and foremost what's good for the talent community, what's good for our shareholders and value creation and what's good for basically storytelling at large. From our standpoint, whether we were approach any acquisition, I actually do think there's a lot of options out there in terms of what actually might be actionable in the near future. We would approach that through the lens of wanting to make more, not less.
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B
Because the natural conclusion is if you were to merge with Warner Brothers Discovery is you take two companies that combine, I don't remember the content, spend between the two of them, but spend billions of dollars. And much as you're combining Skydance and Paramount, you take money out, you would take money out there. Companies that merge don't tend to spend more money on the other side of it.
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C
So what I would say, and again, I'm not going to comment on Warner Brothers Discovery, but you said it when you talked about Paramount, you actually need more content to yield more engagement. And so we would actually want to be in the business throughout whatever lens we were looking at of actually producing more, more movies, more television series, more to get to scale because you need that content, you need that great storytelling to yield engagement. And from that standpoint, we're also in the business first and foremost of creating long term value creation. And one of the things I think, I hope we've proven obviously with our family is we are in the business of building long term value for shareholders. And I think we've done that successfully.
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B
You mentioned there are a lot of other things out there that could be actionable. What else is on the list?
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C
Same thing. I can't comment on it.
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B
Okay, I'll do one more. So we were told that you actually made an offer for Warner Brothers discovery that was rejected.
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C
Same answer.
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B
It seems like most people think this is. I promise it's not the same question. It's a bridge to something else. Most people think that you guys are the only ones who. And one of the reasons is because of the relationship between your father and the current administration. How would you characterize the relationship between your family and the president at the moment?
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C
Great question. I think we have a good relationship with the administration. And look, I think if you look to that, I do believe other things that have been rumored about right are very large scale players that could potentially create monopolies obviously in the ecosystem. And, and again, I think when you look at the lens of consolidation for us, I'll keep going back to it. It's always how do you create long term value creation? How do you put yourself in a position to produce more content, not less? And how do you ultimately build something that is better for the consumer, not opportunities that will create things like too much pricing power. And I think if you look at our business, I hear it all the time, the notion of going to seven different apps is not the greatest experience from the consumer's point of view. And I think what we look for is really how do we serve the consumer, how do we serve the talent community who we are so grateful for, the fact that they have really embraced us since this acquisition and how to create long term value for shareholders. Those are going to be the lens in which we always approach everything. And I think we have the capital and resources to be opportunistic when those opportunities arrive. And we do have a good relationship.
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B
So one opportunity you took and you mentioned earlier was buying the Free Press. The track record of big media companies like Paramount buying digital media companies like the Free Press is abysmal, at least over the last several years. So why are you buying this company and what was the thought behind it?
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C
Absolutely. So one, what our goal is in news is we want to become the most trusted destination in news media. That is our goal. And I don't think it's a controversial thing to say right now that the civil discourse that currently exists is, is not in a great place. And we basically believe in all the things that the Free Press believed In which is the, you know, we want to speak to the 70% of the audience that identifies themselves as center left, as center right. We believe in the, you know, open exchange of ideas and then, you know, fundamentally presenting both sides and allowing the audience to ultimately make their determination about how they feel about it. But that it. But they're presented with the facts. And we think that the Free Press recognized some of the issues that have been occurring and built a company as part of the solution to that.
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B
What issues are you referring to there?
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C
The notion of really just saying we want to get back into the trust business, we want to get back into the truth business. And then in addition to that, when you look at news. Right, we have. I cannot properly express how much respect and admiration I have for the legacy of CBS News in 60 Minutes. It's remarkable. But also the company does not have a digital strategy, which is why the Free Press was a critical part of that acquisition. Because you need to be able to meet people where they are.
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B
I'm just curious though, isn't it remaining independent? Ish.
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C
So basically, the Free Press will obviously stay in the digital landscape in which they're going towards. But I also think when you talk about meeting people where they are, that's in broadcast news, that's obviously on the Free Press website, that's in podcasts, but that's also eventually going to be in direct to consumer. And we do want to actually build a home in the DTC platform, which to my knowledge our competitors are not doing, where you can actually go get all of that in a digital environment. Direct consumer. And the Free Press is an accelerant to be able to accomplish that goal.
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B
Doesn't CBS already have a digital news network?
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C
They do, but we think that this basically accelerates and supercharges it.
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B
Based on what you said, you have a lot of respect for CBS News, but in bringing in someone to completely overhaul it, it would suggest that you thought that things weren't operating as well as they could have been. And how would you assess it? Not just from a business standpoint, but from a content standpoint. Do you feel like the news that they were putting out there was where you want it to be? Do you think there are things they could be doing better or worse?
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C
So as I've kind of said this before, I'm not going to be in the position of ever making political statements like, we're an entertainment company first and we have the viewpoint of if you're breathing, you're our audience. And we basically. And so from that Standpoint, we want to entertain our audiences first. What I will say, and I've said this, and I said this in a letter I sent out to the team earlier this week, is that I do believe that this is an opportunity, when you look at where things sit, that we want to be able to get back to a place where everyone can have dialogue. We believe in civil discourse. We believe in the open exchange and debate of ideas is how you get to the right answer. And we think that there is a responsibility with news to make sure that you are promoting that. But at the end of the day, it's always up to the viewer and the audience to decide. And we're in the business of first and foremost earning their trust. And that is done over time. And we hope that we, you know, we're going to work really hard to earn our audience trust every day.
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B
You can understand, though, why when you're talking about restoring trust and speaking to everyone, you, you know, you put someone in. Barry's background is primarily as an opinion columnist. Right. She's not a kind of dyed in the wool news reporter. And there are going to be people at CBS News and there have been a lot of people outside of journalists, outside of CBS News already who are seem very concerned because opinion and news are typically kept separate. And now you have kind of the editorial leader of this news group whose background is in opinion.
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C
Yeah, I mean, look, I'll continue to say the same thing. Like, I'm not going to make a political statement. I'm really not going to do it.
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B
I'm not asking a political statement. But you can understand maybe why some of the staff is nervous or I'm sure you've got. You and your team are already ready for there to be a bunch of leaks over the next few weeks of people who don't like whatever direction it's going in.
- [18:03]
C
Yeah. Lucas, what I think I said is like, again, I'll keep going back to it. I think if you look at the value system that basically the free press has been operated under really does align with the value system that we believe in, which I also believe is in line with the legacy of CBS News. And if you actually go to that, I do believe there are areas where we collectively can and will do better. But I also have the utmost respect for the team that exists there. And again, I wouldn't judge us based on what I sit here and say today. Judge us basically over time as we basically prove to that. I mean, you know, I mean, again, like, this is going to be one where Going to need to demonstrate every single day that we're obviously earning people's trust. I obviously deeply believe in the free press. I believe in the team at CBS News. And I believe we're going to accomplish the goal of building that trusted destination, news and media.
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B
Now, you and Barry, I don't know if this counts as politics for you, but you have a lot of common ground on a big issue, which is Israel. And you have spoken publicly about it. Your company issued a statement expressing concern about how some artists were speaking about it. Why did you feel the need to speak out on that issue and how has the blowback been?
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C
Yeah, so look, just to go back to the statement that we made, right, was very simply, we made a statement that was effectively discriminating based on where somebody is from is wrong. And I stand by that statement. In addition to that, when you look at what's going on in the world, the fact that we are effectively at a historic peace deal with hostages being returned home as early as this weekend or Monday, I think that is a historic, historic accomplishment and one that we should all be happy so that those hostages can get home to their families.
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B
I believe that there was a piece about sort of some employees of yours who were upset about the statement that you put out. And I'm just curious, have you heard from it? And I know just from day to day life that there are a lot of people in the talent community who've put. Feel a little bit differently about this subject than you do. Have you heard from any of them? Has there.
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C
You know, so obviously I saw that piece. And look, we believe in the First Amendment. They are 100% entitled to their opinion, we're entitled to ours. And then, no, we haven't heard from anybody else directly.
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B
Got it. We haven't talked about your dad at all. Who is the biggest shareholder in your company, I believe, or one of. Yeah, absolutely. The deal that you don't want to talk about that you might do would also be thanks in part to his largesse. What advice has he given you about running a big company and what is the relationship between the two of you like?
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C
So, look, my father and I couldn't have a better relationship. We talk just about every day or every other day. Look, he's a pretty phenomenal mentor and I think, especially when you look at it from a shareholder capacity, I think he has about as good of a track record as you can get for actually creating value. If you look at the growth of Oracle this year across everything he's done in our businesses, and as well as our stock, has obviously also performed since we closed. From that standpoint, he is focused on how do we maximize value for our shareholders. I think he's one of the best in the world at doing that. I think that's a voice that everyone should be really happy about. The fact that that's obviously helping to guide and steer the company. So from that standpoint. And look, the other thing I would say is I've had phenomenal mentors that I'm grateful to, including Steve Jobs and David Geffen. And honestly, I'm grateful for everything I've been able to learn from them. And we couldn't have a better relationship.
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B
And when you say guidance, how often you talk to your dad? Every day. Are you talking about the company every day? I think a lot of people who work there wanna know is. Is ultimately, how involved is Larry Ellison going to be in Paramount?
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C
Look, I run the company day to day. Make no mistake about that. He is the largest shareholder in the business. And I think what's important for everybody to know is the way he approaches this is how do we maximize value for our shareholders? And he's exceptional at that.
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B
Given the amount of money that you guys have at your disposal. You mentioned shareholders. Why not just take the company private?
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C
So, great question. 1. We actually think it's very simple. It goes back to that question of value. We think there is actually more value and more opportunity in being a public company than being a private company.
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B
And given. So your dad's. You've got Paramount, Your dad seems to be involved in the new ownership consortium for TikTok in the US you maybe have the Warner Brothers discovery deal. What do you say to people?
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C
You're going right to questions I can't actually answer.
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B
No, no, no. But this is. I think you can answer this one. What do you say to people who are concerned that there's just like an Ellison, Ellison Trump plot to just, like, corner the media business? You've got Elon with Twitter.
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C
No, I know where you're going. Look, it's under the headline of doing better. I can only speak to. Look, I think I can speak to my personal state of mind, right? Is that fair? Am I permitted to do that? What I can tell you is that conversation has never once been discussed or brought up. When we basically approach things, it is going back to always. How do we create basically value for shareholders? And look, go back to what I've been doing, like, the last 15 years of my life, right? I mean, like, this is. It's. Sorry, I Kind of look at this and I'm like, can we. Does the last 20 plus years of my life not equate? And what I mean by that is I went to film school at usc, right? I started when I literally started in this business when I was 18 years old. I fell in love with movies when I was literally a little kid. And, you know, my mom and I would go to the movies every single weekend. That's literally what we did without fail. We went 52 weeks a year and just saw anything that was playing. And, you know, we had a. We had a VHS collection of, you know, at home where, like me and my sister's idea of like the Greatest Day on a Sunday was let's go watch all the Rocky movies back to back in one day or let's go watch the Star wars trilogy. So I have literally loved this business and loved storytelling since I was a kid. I went to school for it. I built Sky Dance and launched it in 2010, really with the understanding that the disruption between the bridge that has been built between Silicon Valley and Hollywood was going to happen. We saw that over 15 years ago. We built a company that was the tip of the spear for that disruption on the content creation side, with one of our guiding thematics always being where entertainment is heading. The slate deal we did where we got all of the Crown Jewels and Paramount's franchises without taking things that are normally put into those kind of deals was revolutionary at the time. Our second series, Grace and Frankie, we took to Netflix before House of Cards was released because we believed in the anything, anywhere, anytime and any device before it had been proven. We've taken early bets into interactive and virtual reality and we took tentpole movies direct to consumer during a time period where we thought that that was the right thing to do. So from that standpoint, I have always loved and believed in this business. I love storytelling. I believe in the value of basically entertainment and media and what these stories mean. And it's a privilege to get to tell them in our culture. And as it relates to news, which is the other part of the question you're asking, we really do want to be in the trust business first and foremost. We really do want to talk to that 70% of the audience and we want to get back to having that level of civil discourse. So none of those things that have been talked about have ever been discussed inside of my relationship with my dad.
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B
On the tech front, because you talk about that, seeing the friction between Hollywood and Silicon Valley early, the other sort of big boogeyman in the news right now is AI. What is your perception of Sora? Are you guys opting out of your product being in there? How are you thinking about using AI?
- [26:23]
C
Yeah, so I'd say two things to that, right? Like fundamentally, we are in the business of building, creating and protecting value of intellectual property. So we have been in that business, we always continue to be in that business. Look, there's a really healthy debate around inputs that I don't really want to get into because we don't have enough time. But I think when you look at the outputs, those need to be protected. Copyright basically needs to be protected on the outputs of those businesses. But what I would also say is as an industry, we do need to embrace technology. And I think if you look at artificial intelligence, there are several areas to where AI is going to impact our business. And I actually think it's important to do it in a way that is responsible, that is fundamentally a tool for artists. So I'll go back to a Pixar story and forgive the semi long answer to this, but I'll go to this as one that I happen to be able to live through. I remember basically when Steve and John Lasseter basically built Pixar, the attack on them at the time was that they didn't like animators and they didn't like the medium of animation, which when you talk to either John or Steve, John, who was a classically trained Walt Disney animator, they loved storytelling, they loved animation. What they said was, we are just giving the artist a new pencil to actually enable them to draw and create something they've never been able to create before. And I think the reality is much like when James Cameron in 1992 basically started doing digital comps as opposed to optical comps. And that was a controversial thing at the time as well. I do think you are in one of these inflection point moments where the software CPU pipelines are going to start to be augmented or replaced by model driven GPU pipelines. And there's a responsible way to do that and there's an irresponsible way to do that. We're going to err on the side of basically partnering with that technology to do it in a way that we think is good for artists.
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B
My last question is a short one so that the folks in the back don't kill me. Who's a better pilot, you or Tom Cruise? I'm pleading the fifth on that one.
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C
I'll plead the fifth on it. It's no, look, what I'll say is Tom is an exceptional pilot. Like, I'll actually say I was serving as I started flying when I was 13 years old. By the time I was 20, I was one of the top 10 aerobatic pilots in the country. So literally flying air shows like 300 miles an hour, 15ft off the ground. So that was a wonderful chapter in my life. But I think the training that he did to be able to do the sequences in Mission Impossible, the fact that he captured all of that filming in camera on Top Gun Maverick. For me he's just the gold standard and I have nothing but the utmost admiration respect for him.
- [29:15]
D
There are two kinds of people in the world. People who think about climate change and people who are doing something about it. On the Zero podcast we talk to both kinds of people. People you've heard of, like Bill Gates.
- [29:26]
C
I'm looking at what the world has to do to get to Zero, not using climate as a moral crusade and.
- [29:33]
D
The creative minds you haven't heard of yet. It is serious stuff, but never doom and gloom. I am Akshat Ratty. Listen to Zero every Thursday from Bloomberg Podcasts, on Apple, Spotify or anywhere else you get your podcast.