The Sporting Class: Welcome to the Spinoff Era

Summary

Podcast Episode Summary: "The Sporting Class: Welcome to the Spinoff Era"

Release Date: June 13, 2025

Introduction

In this episode of Pablo Torre Finds Out, host Pablo Torre engages in a dynamic discussion with his co-hosts, David Samson and John Skipper, delving deep into the recent strategic maneuvers within the media and sports industry. The primary focus centers on the recent split of Warner Brothers Discovery (WBD) into two distinct publicly traded companies, exploring the implications of this move for the industry, shareholders, and consumers.

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Warner Brothers Discovery Split: An In-depth Analysis

The episode opens with Pablo Torre outlining the recent announcement by Warner Brothers Discovery to split into two publicly traded entities: WBD Streaming and Studios and WBD Global Networks. This strategic division positions David Zaslav to oversee the streaming and studios arm, while Gunner Weidenfels takes charge of the global networks segment.

[05:14] Pablo Torre: "Warner Brothers Discovery, the parent company to cable channels such as CNN, TBS, TNT, they announced Monday that it's splitting into two publicly traded companies."

Handling of Debt Post-Merger

A significant portion of the discussion revolves around the allocation of WBD's substantial $37 billion debt following the merger. There is a debate between Samson and Skipper regarding which of the new entities will bear the majority of this debt.

[16:26] John Skipper: "It's safe to assume the majority of WBD's roughly 37 billion in debt will exist with the spun-off global networks."

[17:27] Pablo Torre: "All of this is kind of because nobody can say a clear sentence, either you guys or the people writing this stupid press release."

Samson counters by clarifying that the debt distribution may not be as uneven as initially presumed.

[17:53] John Skipper: "It's saddling one company with a disproportionate amount of debt, consigning that company to failure."

The hosts agree that the mismanagement of debt post-merger undermines the original strategic intent of the consolidation, leading to the spin-off.

Impact on Shareholders and Executive Compensation

The conversation shifts to executive compensation, particularly focusing on David Zaslav's reported $51.9 million salary for 2024. There is a critical examination of whether this compensation is justified given WBD's underperformance in the market.

[15:17] John Skipper: "David Zaslav's compensation is set and agreed to by the compensation committee of the board and the shareholders have zero say over it."

[15:50] David Samson: "It’s a shockingly high salary for what cannot be viewed as a successful performance to date, can it?"

The hosts highlight the disconnect between executive rewards and company performance, questioning the governance practices within WBD.

Role of Consulting Firms in Corporate Strategy

A significant segment discusses the influence and effectiveness of consulting firms like McKinsey in shaping corporate strategies during mergers and spin-offs.

[22:13] John Skipper: "They come in and have a PowerPoint presentation of what they will do for you."

[23:15] David Samson: "They tell everybody the same damn thing, which is, yeah, we're going to come in and help you and we're going to help you cut costs."

The hosts express skepticism about the value these firms add, suggesting that their involvement often leads to superficial solutions rather than addressing core strategic issues.

Future of Sports and Media Assets

The split of WBD leads to discussions about the future of sports media assets, particularly ESPN's potential spin-off and its implications for the sports broadcasting landscape.

[39:18] David Samson: "It's bigger than these next two businesses combined, the parks and the studio."

[40:58] David Samson: "I have no disagreement with that."

The hosts ponder whether further consolidation or mergers will follow, echoing concerns about reduced competition and its impact on consumers.

Antitrust Considerations and Government Intervention

The episode touches briefly on the role of government and antitrust authorities in overseeing large mergers and spin-offs to prevent monopolistic practices.

[42:24] John Skipper: "The Justice Department... would start to get involved because when you see consolidation at that level, the theory is it's bad for consumers."

The conversation underscores the complexities and regulatory challenges inherent in such large-scale corporate restructurings.

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Light-Hearted Banter: Credit Scores and Resumes

Towards the end, the discussion takes a humorous turn with the hosts sharing personal anecdotes about credit scores and the necessity of maintaining an updated resume. This segment serves as a relatable interlude amidst the heavy industry analysis.

[33:40] Pablo Torre: "But also like how does it."

[48:05] Pablo Torre: "What I found out today is that as much as I thought that I have no debt was going to be the tagline for rich guys only fans. I've never had a resume. Has just taken the top spot."

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Conclusion

The episode concludes with the hosts reflecting on the challenges and uncertainties surrounding the WBD spin-off and its broader implications for the media and sports industries. They emphasize the importance of strategic clarity and responsible debt management to ensure the long-term success of the newly formed entities.

[50:35] Pablo Torre: "We specialize in that."

Key Takeaways:

• Strategic Spin-offs: The division of WBD into streaming and global networks highlights a trend towards specialization in the media industry.

• Debt Management: The allocation and management of corporate debt post-merger are critical to the viability of spin-off companies.

• Executive Compensation: There's growing scrutiny over executive salaries, especially when company performance lags.

• Consulting Firms' Influence: The effectiveness of consulting firms in driving meaningful corporate strategy is debated.

• Future Consolidations: The media and sports industries may continue to see further mergers and acquisitions, raising concerns about market competition.

• Regulatory Oversight: Government intervention remains a significant factor in overseeing large corporate restructurings to protect consumer interests.

This episode offers listeners a comprehensive analysis of a pivotal moment in the media and sports business landscape, enriched by candid discussions and insightful commentary from industry insiders.

Transcript

[Pablo Torre]

Welcome to Pablo Torre finds out. I am Pablo Torre. And today we're going to find out what this sound is.

[David Samson]

When you're getting high with your friends, you talk about credit scores right after this ad.

[Pablo Torre]

Are we rolling? Oh, sweet. Okay. David got a haircut.

[David Samson]

David got a haircut.

[John Skipper]

This just came up on Dan show and they put. They put a picture of Cameron Diaz from There's Something About Mary. And I was annoyed because days one through six, post haircut, I'm able to do this with my hair. Day 7 through 21, it combs to the side.

[David Samson]

It's a. It's a fine part. I think that's why people are noticing the part.

[Pablo Torre]

Do we call it a widow?

[David Samson]

Very strong. Very strong. No, it's not a widow's peak. I'm talking about the line.

[John Skipper]

Totally different.

[Pablo Torre]

Are you sure?

[David Samson]

I think the line that goes the.

[John Skipper]

Widow'S peak is this is my receding hairline. Thank you, Pablo. Believe me, you'll be there.

[Pablo Torre]

This is the peak. I will not be there one day.

[John Skipper]

Genetically speaking, it is a guarantee. You're gonna have a full head of hair exactly as you are when you're 57.

[Pablo Torre]

That's right.

[John Skipper]

Okay. We'll know each other.

[Pablo Torre]

We'll still be at the next boarding class. And what year will that be? I'm 39 right now.

[John Skipper]

It's just 18 years from now.

[Pablo Torre]

18 years.

[John Skipper]

It's really not that long if you think about it. 2043.

[Pablo Torre]

Oh, yeah.

[John Skipper]

This is the same as 2007.

[Pablo Torre]

This hairline's not going anywhere. Yeah, you got the Carolina. I was gonna say Carolina coastline. You have the California coastline. I got the Carolinas.

[John Skipper]

Go look at yourself in 2007 and see if you have the same. I refuse to do that from 07.

[Pablo Torre]

I don't want to do that.

[John Skipper]

I'd like a side by side if you have enough staff, John, I don't.

[David Samson]

Actually think it would do you any good, so I wouldn't do it.

[John Skipper]

I agree. Time beats everyone.

[Pablo Torre]

John's haircut strategy, I feel like, is different from David's and mine.

[David Samson]

Yeah, I would like the least to do. When I take a shower, I put a towel on it and rub it, rub it down, and I'm done.

[John Skipper]

You look healthy and tan and happy. Because everyone's doing what you wish according to your schedule.

[David Samson]

Yeah.

[John Skipper]

David is like.

[David Samson]

Yeah.

[Pablo Torre]

David is literally twiddling his thumbs, which is.

[John Skipper]

It's been a stressful moment to make sure now to get to a place exactly at the moment you said in New York City. Not as Easy as people may think.

[David Samson]

No, I know New York City, greatest.

[Pablo Torre]

City in the world.

[David Samson]

You take the subway.

[John Skipper]

Not here. Because my deal with you, thankfully, is that I get to Uber one way. So I don't Schwitz before a show, but subway home, because doesn't matter if I look terrible when I get home. I'd like to not look like I just got off the subway to do a show with you. That was your last give negotiation already.

[David Samson]

Before you got here, I used the word handled.

[John Skipper]

Oh, that's. That's got pejorative connotations.

[David Samson]

Well, it was meant to.

[John Skipper]

Oh, it was nice. I don't think you meant it in the way that I'm saying. It's pejorative. People who say Handel, it can be viewed as anti Semitic, which I know you don't mean to be.

[Pablo Torre]

This is another. It's rooted in another name for Honshu, which is the largest of the islands forming Japan.

[John Skipper]

That's not what Handel does.

[David Samson]

No, no, no. At least you may want to cut that out. As it used to be defined in Leroy Leo Ro Austin's Joys of Yiddish. It was to be manipulated, right? It was.

[John Skipper]

It's to be scammed.

[David Samson]

Yeah.

[John Skipper]

Yes.

[Pablo Torre]

Okay, here it is. There's a whole Esquire article about the word handle.

[John Skipper]

Why were you talking about being handled? Were you referring to me?

[Pablo Torre]

Because we're talking about sports business.

[John Skipper]

I internalize that it would need a.

[David Samson]

Little more context and we need have time or would be helpful to the audience, but we can probably move on.

[Pablo Torre]

Well, now that we've been scared off by David's claims, which I believe. I believe we have full now context to establish the innocence of us citing a word that was cited in the OED in 1965, earliest known usage in the 60s. Esquire magazine. I think we're all right. I think we're all right.

[John Skipper]

It's not a great word.

[Pablo Torre]

It's a. Okay, well, UrbanDictionary.com has it as a conjunction of fondle and handle, which maybe is a modern. That's etymology.

[David Samson]

I don't think so.

[John Skipper]

That's Yiddish. There is nothing to do with fondling.

[Pablo Torre]

Agree to disagree.

[John Skipper]

Okay.

[Pablo Torre]

So I want to get though to, I suppose conscious uncoupling to a separation of bodies of entities because we are in the season of spincos and wbd, which I guess has another meaning before my time, but currently it's Warner Brothers discovery. Isn't there another thing? WD40. WD40.

[John Skipper]

That's the thing that makes things stop squeaking. No. WD40 is what you use.

[David Samson]

Oh yeah, you put it on.

[John Skipper]

Stop the squeak of a hinge.

[Pablo Torre]

Very good.

[John Skipper]

That has nothing to do with wb.

[Pablo Torre]

While that may be possibly another metaphor I could see as the fun, I will just keep it moving. Warner Brothers Discovery, the parent company to cable channels such as cnn, tbs, tnt, they announced Monday that it's splitting into, into Twain, two publicly traded companies. Funny enough, we have spent a lot of time talking about David Zaslav, the head of this, of this entity, the larger entity, showing up at Knicks games wearing his very, very new Knicks cap courtside. But now the two companies are WBD Streaming and Studios, which he will run. That's hbo, Warner Brothers Pictures, DC Studios, WBD Global Networks will be cnn, TNT Sports, US and Discovery. And Zaslav will be the former. Gunner Weidenfels I believe will be the latter.

[John Skipper]

Former CFO, former of the larger company. CFOs can do business, it seems.

[Pablo Torre]

So what is. John, I want to start with you. What is the big picture thing that is happening here? Was this surprising to learn?

[David Samson]

No, it wasn't surprising to learn because what they're doing is taking the. I know what you'd call them, declining assets, but you would call them not high growth assets and put them in one company and they've taken the new streaming services and what people would regard as the future and put into another company the library. Yes. They loaded the debt primarily into the old company, almost ensuring that it will not grow as fast. So I assume, David, you probably understand this better than I do. I assume that that's the general reason they did this.

[John Skipper]

So you have to go back a little bit. Let's go back to the merger of how Warner Brothers Discovery came to be. It was not. There's people in the audience who may not realize Warner Brothers Discovery was already a merged ENT and there was a huge amount of debt that happened in that merger. And the thought was much like with CBS and Viacom, which hasn't happened and now CBS is trying it again with Skydance. The thought is that if you put two companies together that together they will be a greater company, you'll get better earnings, you will be able to have positive cash flow and you will be able to have economies of scale. So instead of two different news departments or sports departments, sales departments, combine them, fire people. So that is the form of layoffs. Not pleasant, but always part of post merger life.

[Pablo Torre]

Yep.

[John Skipper]

And then you have a healthier company. Well, Warner Brothers Discovery never got to that point. Never got to the panacea of health Their debt actually kept increasing after the merger and it's become choking. Let's explain why. When you borrow money, you have to pay it back and it comes with interest.

[David Samson]

There's an insight.

[John Skipper]

Well, listen, there are people who believe, like with the national debt, hey, that never has to be paid back. Why do we care if it's a trillion dollars debt? Why do we care about refinancing costs for national debt? These are major economic issues that people just don't want to think about. Because what you're doing, Pablo, you don't. You're not interested.

[Pablo Torre]

Well, but, but I want to distinguish between the kicking the can down the road on the national debt versus the pressures that force a decision like this, which is, to my view, as the layman, relatively speaking, on, on the panel here is embarrassing. Is it embarrassing to you that WBD had this grand vision? And of course, this was, we're going to make HBO max. We're going to undo that. And this merger, which you just characterized is now being split in a way that feels like, okay, the strategy clearly has adjusted yet again.

[John Skipper]

Yeah, it happens in business all the time. So I'm not as gobsmacked as you are where companies get together or people get together with an idea and they put money behind it and resources and it just doesn't work. It's sort of like research and development and science. You're not going to get a cure for everything, but you're going to spend a lot of money trying. So what happens is the debt increases, and then what happens when you have too much debt is that you're using too much of your open cash flow to actually pay interest on all the debt you have. So instead of that cash flow as earnings or dividends or for growth of the company, you're just paying someone back. So you're earning money to do nothing with because you're using to pay back money. So that's not very helpful.

[Pablo Torre]

Why didn't it work, though? Fundamentally? Why could they not figure this equation out?

[John Skipper]

Well, John, I'd like to hear you, but I'll tell you, my view is that when that merger happened, there was not a thought that the decline in cable revenue and in what we call, just for fun, cord cutting, no one had in their proforma projections during that merger that it was going to be so quick and so significant and cause such a dilapidation in their earnings.

[David Samson]

When was that merger?

[John Skipper]

Oh, I think you're going on. Is it 15 years? It's in the 2000s. What, what year was there's several of them. But you can go Back to the AT&T merger if you want and get a date on that Coca Cola. You can go back.

[Pablo Torre]

WBD was formed from Warner Media's spin off by AT T and merger with Discovery Inc. On April 8, 2022.

[John Skipper]

Three years only.

[David Samson]

Man, what's.

[John Skipper]

When was the AT and T merger?

[Pablo Torre]

Discovery and AT&T acquired Scripps Networks Interactive and Time Warner renamed it to Discovery Inc. And WarnerMedia respectively, in 2018.

[John Skipper]

And there was a merger earlier than that. I thought back in 2016.

[Pablo Torre]

Time Warner then known as Time Warner Entertainment acqu. Turner Broadcasting System in 1996. AOL, that merger was 01 Time Warner because that previous one, the AOL one, was disastrous. They went back to Time Warner in 03. They spun off its cable division in AOL in 09. Time Inc. Where I used to work. That one, Sports Illustrated was 2013. That was that spin off. They got sold to Meredith. There's a lost track. There's a lot here.

[David Samson]

Look, I would suggest that it is often the case that high powered executives think that they need to accumulate more scale. They really want to accumulate more power. Also, they want to be in other businesses. They have a certain kind of business hubris that they figured out things so far. So they'll figure out things later. And they then end up with a bunch of MBAs and McKinsey folks who come in and say, here's how we'll make it work. And they make a big bunch of assumptions. The person who has hired them wants them to figure out how to do it. And they made some bad assumptions. They believe that things would happen that didn't happen. They did probably run into the cable TV, but they should have 22. They should have known what was going on by that point. So I don't think that's it. I think they just thought. By the way, all those other mergers you talked about, they didn't work either. It was the hubris of AT T thinking we can figure out how to be in the entertainment business. Remember that?

[John Skipper]

I do. But they were using their cable money. They were using subscriber money to power all of these thoughts. You need money to do everything they were doing. And when the mergers happen, it turns out that the person in charge. So I want to think about David and this merger. We're saying he's now part of the company, which is keeping the debt, which is a major thing. It's getting rid of sports. It's keeping the old guard.

[David Samson]

Wait, I thought it was the Opposite. I thought that the other companies took on most of the debt.

[John Skipper]

No, the, the, no, I believe I, I am 99.9, John. That the company with the debt is the company that David's got.

[Pablo Torre]

John is breaking out the glasses. Coca is fact checking for me. And while we do that, I have a question that was sparked by John's reference of McKinsey. Because in college for me, you know, consulting gigs out of school, you get my friends showing up at Bain and McKinsey and BCG and they would walk into these corporations that would hire these very high powered, very historic consulting firms to change things. And my question always, and my question for you guys is how much of that is them actually asking the consulting firm, please tell us what to do and how much of it is them telling these 20 something year olds and more. But like often young people, we need you to be the reason and the COVID for the thing we've already decided.

[John Skipper]

The justification, the, the excuse for us.

[Pablo Torre]

Doing a million things and then undoing them and then doing them back again and it being embarrassing. Except for the fact that whoa, whoa, whoa. This was the consulting firm we keep on hiring.

[John Skipper]

You know, you say, we say embarrassing. And I would say that the people who are running these companies when their comp is, you know, 10, 20, 30, 40, $50 million. There was a great story that happened this week where the shareholders of WBD got together and it was reported and commented on mistakenly that the shareholders got together and said that they did not approve of David Zaslav's salary. I don't know if you saw that, John.

[David Samson]

Wait, who did not approve of the.

[John Skipper]

Shareholders got together and they were asked as part of compensation committee process, where do you stand on compensation for David.

[Pablo Torre]

Which was 51.9 million in 2024.

[John Skipper]

And they came out with a, hey, we don't like that, that seems too high. And it was reported that that had some sort of impact on David's compensation. Here's a shocker for you. 0 does not matter what the shareholders thought, felt, said, whatever the PR was, David Zaslav's compensation is set and agreed to by the compensation committee of the board and the shareholders have zero say over it. And I found it interesting that shareholders were spreading the rumors like, hey, we've got the power here.

[Pablo Torre]

So.

[David Samson]

Well, I have a different reaction which is it's a shockingly high salary for what cannot be viewed as a successful performance to date, can it?

[John Skipper]

Their shares, WBD shares are not outperforming the market. As a matter of fact, they're underperforming the market. So if that is the correlation, he is quite overpaid.

[Pablo Torre]

So John, speaking about David Sampson slid a piece of paper across the desk and tented his hands. Because bullet point H in the doc, David Samson is a correction because. Do you want to read the quote?

[John Skipper]

It's safe to assume the majority of WBD's roughly 37 billion in debt will exist with the spun off global networks. The new company's new president said the not insignificant portion will remain with streaming in studios. But dbd. So David Zaslav is with streaming in studios.

[Pablo Torre]

Yes.

[John Skipper]

So not insignificant portion. Are we assigning that to be a dollar?

[David Samson]

Well, no, no. It I'm assuming was $37 billion.

[Pablo Torre]

The majority.

[David Samson]

Gunner and I do not know if that's the way his name is pronounced. I'm sorry, I believe it. But he is taking the substantial majority. Now a stantial majority would be 25.

[John Skipper]

So majority to me is just 50 plus one.

[David Samson]

Well, it could be. But you. Why would you call that a substantial majority? That's not a substantial majority.

[John Skipper]

So it says it's safe to assume the majority. It didn't say substantial fact check. And it says that not insignificant portion will stay, will remain with David.

[Pablo Torre]

All of this is kind of because nobody can say a clear sentence, either you guys or the people writing this stupid press release.

[John Skipper]

Debt is a major thing. If you are splitting into two public companies and David Zaslav is running one of them and it is saddled with a disproportionate amount of debt, you are consigning that company to failure.

[David Samson]

But he's not saddled with a disproportionate. He's saddled with a minority portion of the debt.

[John Skipper]

But he's also, it could be argued, getting a minority portion of the assets.

[David Samson]

Well, he's getting the assets that the future is based on.

[Pablo Torre]

I love it when a negotiation breaks out about a negotiation on this show.

[John Skipper]

You're saying you'd rather be Zaslav in this or.

[Pablo Torre]

God, great question. Who'd you rather be?

[David Samson]

Who you got Zaz?

[John Skipper]

I'd rather be Gunner because. Because Gunner has an opportunity. It's. It's a. It's a new company. You get a benefit of the doubt. It's the SP. It's SpinCo. And the reason why you do Spincos is that there's a story that you tell that may not end up being true. But you've got the support of the board, you've got the support of the shareholders saying, hey, we're going to get a percentage of something that has an opportunity not to be burdened by the existing debt and we can be free and fly.

[David Samson]

It is burdened by the existing debt. Debt. They take the majority. I don't know why you would think 50.1 and 49.9. If Gunner is saying we're taking the majority but a not insubstantial portion. That's even a negative. He doesn't say they're taking a substantial portion. They're taking a not insubstantial portion.

[Pablo Torre]

So.

[David Samson]

Right.

[John Skipper]

Would you say not insignificant portion is two negatives. That makes it significant.

[Pablo Torre]

A. But hold on. This is, but this is, but this is the, this is the, this is the stupidity of this entire conversation. So it is safe to assume that the majority of the 37 billion in debt load will exist with global networks which are the Zaslav sports rights and news stuff, CNN and others. A not insignificant portion feels like a very clear attempt to be unclear because it's going to be something that is, you know, uncomfortable but also not nearly as much as the majority. That the news and sports side of it is going to be that Zaslav's side is going to be.

[David Samson]

No, no, that's. It's the other way.

[John Skipper]

Yeah, I don't, I, I had it the other way, but I could totally.

[David Samson]

And it's counterintuitive because you would think you would not attach the most debt to the company unlikely to grow.

[John Skipper]

And I think that's what they did.

[David Samson]

Well, and it's because David is, I believe Gunner reported to David. So there's no way that Gunner is going to get a better deal than David.

[Pablo Torre]

Well, yes. So the whole idea is that Gunner is taking on more debt. David Zaslav is getting less debt. That is the very simple takeaway amid all of the mealy mouthedness of the statements, my now included.

[John Skipper]

Well, it's not that it's me mouthed, it's that these are complicated transactions and by the way, these aren't done. It should be pointed out that what was announced was not a completed approved transaction. Much like when the merger was announced with CBS and Skydance. There's so many things that have happened, including an announcement this week that there are going to be further layoffs at CBS Paramount because they're not exactly sure when the deal is going to close. It was supposed to close by the end of June and what it's all going to look like after. So these were complicated issues dealing with billions of dollars and millions of people.

[David Samson]

No disagreement. But I'll read you A little bit of gobbledygook. By operating as two distinct and optimized companies in the future, we're empowering those iconic brands with a sharper focus and strategic flexibility. They need to compete most effectively in today's evolving media landscape.

[Pablo Torre]

Inspire an say.

[John Skipper]

Great quote, dad.

[David Samson]

That's right up there with four score in seven years.

[John Skipper]

Except that one really meant 87 years.

[David Samson]

Ago, but also reminded me of.

[Pablo Torre]

Call me Ishmael.

[David Samson]

They just put two companies together, but in order to optimize them in the future, they must break them back apart. So why do they put them together to start with.

[John Skipper]

Foreign.

[Pablo Torre]

So this is. This brings me back to the consulting question. Guys, can I just return to that for a second? Because, like, how and why are very interesting questions to me. And I just want to know, when it comes to John, I presume at some point you have to deal with, like, a consulting firm in some regard or.

[David Samson]

Almost. Almost never.

[John Skipper]

Well, you personally.

[David Samson]

Me personally.

[John Skipper]

Disney does.

[David Samson]

Disney does. I. I probably will be forgetful. I did hire a few consulting companies, by the way. I hired somebody to help diversify the company.

[Pablo Torre]

Right.

[David Samson]

I'd probably go to jail now for doing that, but I did.

[John Skipper]

You were doing Di before. Di.

[Pablo Torre]

You need a consulting firm to tell you. Dan Levittard. All right, fine.

[David Samson]

No, but what? I. What? I never get it. I don't. Well, I do know why. I never understood why people hire consultants. To me, it's like hiring somebody to do your media rights. Who knows your company better than you? Why is it I realize you and by the way, I read the book on McKinsey. I don't know. You read the book on McKinsey? No, but it is really, really awful.

[Pablo Torre]

The book or McKinsey?

[David Samson]

Both. I mean, well, the book is about how awful they are. Right. They tell everybody the same damn thing, which is, yeah, we're going to come in and help you and we're going to help you cut costs. And by the way, that's why they're hired. They're hired because the current management doesn't have the backbone to actually make these decisions themselves, face their own employees and say, sorry, but we have to. We have to get leaner so they bring the kids.

[John Skipper]

I'm surprised by that. Most executives don't want to be delivering bad news. They don't. I mean, we're a little different in that way. I'm totally fine with being straightforward and honest with people. I understand that layoffs are hard, but the thing about McKinsey and all consultants you're talking to A person who's been blackballed because I built a stadium and bought and sold the team without consultants. And that doesn't happen. Everyone hires Allen and company.

[Pablo Torre]

Right. Another one who blackballed you.

[John Skipper]

The groups of people who are consultants were very angry lobbyists. I did all public financing without lobbyists. We had one group called Poole and McKinley, but they didn't do much.

[David Samson]

So, wait, what does blackball mean in this?

[John Skipper]

It means they do not speak nicely of me. And they tell other owners, hey, if you're selling your team, don't do it the way Sampson did it, because you only get 1.2 billion. You have to do it the way we'll do it. And by the way, those deals fall apart. They don't happen. And you've got the nationals, the twins, the angels, who can't sell at any price because these consultants have no way of putting a deal together that is reasonable or rational. So the amount of money that's spent, it gets budgeted in a big company's budget. Disney has a huge budget line item for consulting. And you bring them in and what they do, as John specifically stated, it's staggering what a grift it actually is. They come in and have a PowerPoint presentation of what they will do for you.

[Pablo Torre]

I love a deck.

[David Samson]

It's the same deck of gobbledygook.

[John Skipper]

All they do is change the name. It's the most amazing thing.

[David Samson]

The other things in the book is that they work for competing companies, which strikes me and strikes the authors of the book as a bit of a conflict. Now, I want to go back. I thought you were suggesting that because you didn't use the consulting companies, they blackballed you from using them.

[John Skipper]

No.

[David Samson]

Which would be interesting.

[John Skipper]

No, they would. Of course, like CAA has a whole department where they want to help with media rights deals.

[David Samson]

Right.

[John Skipper]

And we negotiated our media rights deals without them. We didn't want to pay them a percentage. We wanted the money. We didn't want it. The whole thing about consulting percentages, yes, you're paying fees, you're paying monthly fees, then you're paying success fees. We would get offers all the time while negotiating with Cablevision and then negotiating with Fox, saying, hey, we think that you could get 30 million a year, but we'll only take money above 30 million that we'll deliver to you. So if we get 50 million, we want a percentage of that incremental 20. I was like, forget it. I'll get the 50 million.

[Pablo Torre]

There is something fascinating to hearing this side of the conversation. Because as I say, a lot of my friends became consultants out of college. And what I admired was that they are trained in like rigorous, quantitatively oriented, data driven strategic thinking. And that is real. But it's also funny because it's like those are the guys I'm getting high with and you guys deal with them and they either tell you what to do or are the again, face of a decision that you just don't want to have your fingerprints on. And both of those scenarios is very funny to me.

[John Skipper]

Do you remember the Blue Ribbon panel was a committee put together by Bud Seligan baseball to deal with steroids.

[David Samson]

Oh my gosh.

[John Skipper]

It had Rick Levin in it. It had Senator George Mitchell. Yeah, it was a pretty famous committee. And it gave a report soon after I got into baseball. So I want to say the report was done in 2000, 2001, 2002, somewhere in there called the Blue Ribbon Report. No one's ever heard of that.

[Pablo Torre]

Wait, this is different from the Mitchell Report.

[John Skipper]

This is. This is. It was a blue ribbon. Okay, you search it as blue ribbon and name names. But you did not get the commissioner's.

[Pablo Torre]

Blue Ribbon panel on bas. Economics.

[John Skipper]

That's what we called it. But it was really just about steroids. It was about figuring out who's doing steroids and why. It was 2000. So it was right when I got into the game. Coca. And what, what you do there, much like an economic benefit analysis for your ballpark, is you hire a company, you tell them exactly what you want the results to be, and then they go through their special Dr. Seuss machine and out comes a report that says what you want it to say. And I don't want to say. I. I don't want to be the one. I guess I'll be the face of selling these reports and these consultants. But you can bet that no report ever is released by Disney by consultant that is consultant driven that Disney didn't approve.

[David Samson]

I would assume that's correct again.

[John Skipper]

So you're not neutral in that?

[Pablo Torre]

Well, this is the whole idea of you've hired someone to independently. Do they even claim independence?

[John Skipper]

In this case, big time. If NFL teams do it right now.

[Pablo Torre]

They hire these law firms, they hire.

[John Skipper]

Consultants, investigate my company for harassment. Dan Snyder had more people hired on the side to tell him about his front office, which is always funny to me.

[David Samson]

Just gave him more people to harass.

[Pablo Torre]

Allegedly.

[John Skipper]

Or Corn ferry is a great corn ferry. Do you know what Korn Ferry did? And I don't want to yuck on them, but okay, Here we go. They were hired by baseball for Bud Selig's replacement as commissioner, and they were paid a ton of money to run, quote, unquote, the search. And it was Rob Manford. Because it's not like what you need help with is if you can't identify people to do a job for you, and a search firm can find someone in the semiconductor business that works for a firm that you don't know about to help you. How to split the atom when you're doing a commissioner search or a GM search. Korn fairies hired to do gm. So, my God, it's so funny.

[Pablo Torre]

You're saying, you're saying that they're also Googling stuff. They're also using LinkedIn. They're also watching games.

[John Skipper]

Maybe they can't do anything that we can't do as presidents or front office people.

[Pablo Torre]

But again, not to be maximum cynical about this, but it's hard not to be. It's also helpful when you, I presume, know who you want to hire and need to say, we did an exhaustive search conducted by this reputable thing that is clearly reputable because you know them.

[John Skipper]

That's what you do. That's what you're paying for.

[David Samson]

Remember in the Big Short where they discover that the rating agencies are paid to rate the company that they ran? And of course those companies pay them, so they have zero incentive. Remember, there's a.

[John Skipper]

There's a woman whose business. Hey, you're a triple B minus. You're fired.

[David Samson]

There was a. I forget, there was a woman in, in the film who I think Steve Carell or somebody went to see and he says, tell me how this works. And she's like, well, if we don't give them a good rating, they'll just go across the street and get the other company. I forget what the names of those companies were.

[John Skipper]

The Bond, Standard and Poor. And what's funny is it gets press in all of the trade newspapers, etc. Hey, MLB's debt is now triple A minus. Or the Mets are now a triple B plus, and everyone's looking like, oh, it means health. No, it means Stevie wants a casino.

[David Samson]

Yeah, I'm going to get my debt rated. See? What if I got triple A?

[Pablo Torre]

Triple A podcast. You do have a rating agency?

[David Samson]

What?

[John Skipper]

You do have your debt rated. It's called your credit score.

[David Samson]

Huh?

[Pablo Torre]

That's what that is.

[John Skipper]

Do you know what. Do you know your credit score?

[Pablo Torre]

I. I know that sometimes I have to freeze my credit score because I've.

[John Skipper]

Been hacked by various, like, off the Top of your head, you can't name it.

[Pablo Torre]

I just know.

[John Skipper]

Am I the only one who can do that?

[Pablo Torre]

Of course you are so weird.

[David Samson]

I have not the slightest idea.

[Pablo Torre]

I just know that it's excellent. I just know that it's excellent.

[David Samson]

By the way, I have no debt.

[Pablo Torre]

John just spread his arms out wide for those not watching on YouTube. The proudest I've seen him doing this show. No day he is debtless, undebted, no.

[David Samson]

Mortgage, no car loan, no nothing.

[Pablo Torre]

Cannot say the same, very different position in my life.

[John Skipper]

Your credit score can still be excellent with mortgage.

[Pablo Torre]

Oh, and again, for those listening, it is excellent. Cuz people are listening and they absolutely are. And please don't hack me or downgrade my rating, but it is excellent. And I am also carrying a mortgage which was thankfully signed pre pandemic. Pretty good. Pretty good rate. I digress.

[David Samson]

Yeah, I digress.

[John Skipper]

Blown away that people don't know their credit score. It's one of the things. You know your Social Security credit score. Why would you need to know your credit 7.

[Pablo Torre]

807.

[David Samson]

Is that good?

[John Skipper]

It works for me.

[David Samson]

But. But there must be a scale. How would as a scale go from. And do.

[John Skipper]

There are people who have no credit score.

[Pablo Torre]

Okay.

[John Skipper]

And I think does it go to 900? I don't know what it goes to.

[Pablo Torre]

Highest achievable credit score is 850. Okay.

[John Skipper]

So I'm not where I need to be.

[Pablo Torre]

I'm in the eight hundreds. I know that because I had to unfreeze my credit score.

[John Skipper]

So now you know.

[Pablo Torre]

Disclose on this podcast recently you didn't.

[John Skipper]

Remember, but now you remember because you have to have a higher credit score than I do.

[Pablo Torre]

Definitely higher than 800 6.

[David Samson]

Why would you. 7. What is the advantage? What is the advantage of knowing your score?

[John Skipper]

What's the advantage of knowing your Social Security number? It could come up in conversation.

[David Samson]

I've never had it come up in conversation before this.

[Pablo Torre]

Are you the one who's hacking me?

[David Samson]

And by the way, is David Samson hacking me your Social Security number? You have to know because it gets cited many, many times. So if you. When you say you want to sign your bank account, suddenly I'm not putting in my credit score to get anything.

[John Skipper]

I flash my credit score around like at a bar. At a bar, when you're meeting people, that's not like a subject of conversation.

[Pablo Torre]

I feel safe to say that that has never been a subject of any conversation except for the conversations you have.

[David Samson]

When you're getting high with your friends. Talk about credit scores.

[Pablo Torre]

Oh yeah. All the time. All the time.

[David Samson]

Because it's funny. Right? I. I can see you guys giggling. Is giggling. Mine's 807.

[Pablo Torre]

But also like how does I. I presume it's calculated in a very rigorous way and not the thing that it makes me think of which is that like you know, you get statistics.

[John Skipper]

No, it's. It has to do with.

[Pablo Torre]

I want my statistical personal game log.

[John Skipper]

You should you.

[Pablo Torre]

That's what I want by the way. Who I'm going to get started. Think about my credit score.

[David Samson]

Who is the arbiter of credit scores?

[John Skipper]

What There are different companies who.

[Pablo Torre]

Exactly.

[David Samson]

Excellent. I can probably get 808. I'm going to go find me a company that I'm not paying unless they give me 808.

[John Skipper]

So the reason why you pay a monthly fee to these companies is that in case of a hack or in case of a theft identity these people are on the case and you are protected. I strongly suggest the $19 a month or a year. I don't remember which to have that. Do you have that service you're paying.

[Pablo Torre]

For premium credit score rating?

[John Skipper]

Well no, no, no. Although I do have it at my fingertips whenever I want it. But no. And I may check it like email. But no because that's how you know if you're getting hacked or somebody.

[Pablo Torre]

This is why I had to freeze and unfreeze multiple agencies ratings.

[John Skipper]

So this is real. You're making a joke of it but people tend to get into your bank.

[Pablo Torre]

Account or I mean 2017 Equifax if we recall that major data breach exposed the personal information of approximately. And this is a fun number. 147.9 million Americans.

[John Skipper]

I can't be the only one then, can I?

[David Samson]

I think. Isn't that the number of people that Kristi Noem said lives were saved by the President's seizure of fentanyl.

[John Skipper]

That would be a coincidence that. Yes. 2. It's a lot of lives.

[David Samson]

More than two thirds of every person in this country. It's. He's going to get elected for a third term. If he has saved the lives of 265 or 281 zillion people.

[Pablo Torre]

I believe is the number.

[David Samson]

By the way he sent the marines to LA and they got the violent stop before they even got there.

[John Skipper]

That is a much bigger discussion we could have.

[Pablo Torre]

I feel so safe now.

[John Skipper]

It's not ideal what's happening and it's scary if you have people loved ones in LA because they're not making it better and my daughter is there and it's not pleasant.

[David Samson]

I don't want to see tanks on the streets of American cities.

[Pablo Torre]

We aggregate those two quotes. It's not pleasant. I don't want to see tanks.

[David Samson]

No, it's not a high bar.

[Pablo Torre]

I mean, like I have so much to say about this that it's probably preemptively annoying to everybody listening.

[David Samson]

The last time troops were sent in was when the troops were sent in by the Kennedy administration to enforce the Civil Rights Act. I mean, think about that. It's like that Obama tape when he killed bin Laden in the tape when Trump announced that they had killed somebody else who died like a dog. I mean, I think they'd go in through the front door.

[John Skipper]

They're going through the front in for Kent State.

[David Samson]

That was National Guard brought in by the state. Right. That's what Newsom is saying. This is the governor's prerogative. The president is not well.

[Pablo Torre]

This is why my old classmate, by the way, speaking of my college years, Vivek Ramaswamy, gubernatorial candidate in the state of Ohio, has compared this week Gavin Newsom, governor of California, to wait for it, Alabama Governor George Wallace, because of this parallel of gotta send the tanks in and they're resisting. So, you know, not a, not a great economic indicator of the health of the larger enterprise that is the United States.

[John Skipper]

It brings you back to the merger because when you have a part of your business that you know, you have no path to profitability. And I don't want to be a doomsday person because I'm not in general. But there are those who think there is no path to improvement over the next three years. And much like with the company, if you know that you just can't see the path forward, you have to do something different or else you will be letting your shareholders down and putting your own comp at risk. And so what WBD did is it's something and what shareholders want, what analysts want on Wall street, they need something, they need a story to tell their institutional investors like, hey, this is no longer a sell, not even a hold. We're going to do a modest buy rating on this new split company in order to give them the benefit of the doubts of that they're doing something right. That's how Wall street works.

[Pablo Torre]

So Spincos right to now continue into the world of, of media and sports media and sports business. Obviously what Comcast NBC Universal has done, they spun off CNBC and MSNBC and Golf Channel into their own sports and news division called Versant. That's what that thing is now the rest of it remains in that very parallel way, right? News and sports stuff. But in this case, actually NBC News proper is still with. Anyway, it's getting more complicated than it needs to be. But the point is this is a thing. It's a thing. And John, I've been sort of attuned to this ever since it was mentioned to me what espn, when you were in charge of it, would be if it was spun off from Disney. Which is to say, to restate what I always have to remind people, which is that you have said when ESPN was at its peak under you, it made more than the rest of Disney combined.

[David Samson]

I think what I said or meant to say was it's bigger than these next two businesses combined, the parks and the studio. I'm not sure it was bigger than the rest of the company. So I may have misspoke.

[John Skipper]

I think the interesting thing about spinning off ESPN is a story about franchises. So picture a business that has different franchise locations and one of your franchise locations is not making money, but two of them are. Do you want to take the money you make from the two locations that are profitable and support the one that is not profitable? Or do you just shut it down or do you spin it off so you don't have to support it and let it stand on its own or die on its own? And that's how franchisees think about life. And I am totally fine with I don't want to take money that's good money and throw it after bad money. Bad money is throwing money into a project that loses money no matter what you do. Why does that get supported? There are reasons people want to be certain locations. They want to say they're in certain countries or certain cities. What Warner Brothers is saying and what the media companies are saying is we can't really say that growing and the conglomerate that we've built has worked. So let's try it this way. It's the same assets, by the way. We're going to split it and we're going to have two share prices now because remember, two public companies now we have two measuring sticks. And the next step after that is if one of them is flailing, it's going to go bye bye. I think that is the reality of what all these mergers will end with, which is a further consolidation if not eradication of some of these businesses.

[David Samson]

I have no disagreement with that.

[Pablo Torre]

Well, that's why the rumors already are that the aforementioned less, no more is it the sports and news part of wbd? There is rumor of Course that the natural partner would be another merger with Versant.

[John Skipper]

And what you're doing there, Think about it. You're taking two sides of two big companies that have become four companies. And what you're doing is a merger where it's now. So I said you're splitting and then you're reforming.

[Pablo Torre]

It's a real island of Dr. Moreau.

[John Skipper]

Still, it's something because what happens is when those merge, someone has to be the one in charge, someone has to be the daddy. And you've got the. The level of ego when you are doing mergers like this on who stays in charge. It's not as plain and simple as when it's David Zaslav and his CFO. When you've got two CEOs going at it, who gets the power becomes the biggest point of negotiation actually.

[Pablo Torre]

Right.

[David Samson]

The. It does strike me that NBC buying the sports assets of this new spinco might be a good idea, which is.

[Pablo Torre]

To say Versance assets, NBC's spun off company buying the Global Network's WBD SpinCo.

[David Samson]

Yes.

[John Skipper]

The Justice Department, the government, the commissions would start to get involved because when you see consolidation at that level, the theory is it's bad for consumers. And that's the threshold they use when they decide what mergers. By the way, CBS Skydance may not be approved. Forget that. It may not happen. It may not be approved by the government because of the lawsuit with Trump and cbs. Etc.

[Pablo Torre]

I was going to say which brings us back to the government and the standard of. I mean do we have an episode coming up about the Neo brand dicey in school of just like of of, you know, antitrust, which is a whole other McGilla to quote David Sampson. But it also McGill McGilla.

[David Samson]

It is Ron.

[Pablo Torre]

All of this though makes me wonder if our. Is the arc of justice bending towards Venue Sports. Are we just back. Are we. Is that what we're doing? Have we accidentally remade Venue, the thing that we were making fun of 9,000 shows ago?

[David Samson]

No.

[Pablo Torre]

Are you sure?

[John Skipper]

Hold on. What he's. I think if I could translate what you're saying is that Venue was a combination of enemies coming together in an effort to be friends because the sum will be greater than the parts a skinny bundle. And so what. What really is sports is what you said, which is all of these streaming services. If you add up, we're back to this and it matters for the consumer if you're paying more. Have you really saved anything by quote unquote cutting the cord? Why wouldn't you replug in the cord and is there a possibility that we will end back at that? And what these companies are betting with these mergers is no, that we are past chords, meaning we're past cable and we will go knee deep into streaming. Even if people are spending more money monthly.

[David Samson]

I believe that's what they've decided. I mean you clearly burden the company is not going to grow with more debt. They're going to be engaged in layoffs, cost cuts. And that's why there's some discussion about maybe TNT sports get sold. Now remember, NBC was not in venue. Oh, they were not in venue.

[Pablo Torre]

They did another key fact checking clarification.

[David Samson]

And, and look, generally NBC runs very. It's a very well run company. Yeah. And their sports has always been well run. And my guess is taking those assets would give them more scale to continue to matter more. It actually might be slightly good for consumers. I know that generally when things are consolidated. But since now you have too many companies that people won't if they want to get all the sports they want. If you had less companies, you probably could be good for consumer.

[Pablo Torre]

As I remember though, that the Olympics are staying with NBC proper and Golf Channel is being spun off into Versant and I've already lost track of what is where. As I'm trying to fact check and correct myself. I just know that with certainty maybe what I found out today is that there will be more consultants and that it will not be easier to find where the hell sports are when I'm trying to watch them.

[John Skipper]

Are we at the end?

[Pablo Torre]

Almost.

[John Skipper]

That's why you're saying found. That's my trigger. When you say what you found out that we're at the end of the show.

[Pablo Torre]

We got, we got a couple minutes.

[John Skipper]

I don't want to tell you what I found out during the show. There's still time left.

[Pablo Torre]

Okay.

[John Skipper]

Well, it was a very premature.

[Pablo Torre]

Premature find out. Ification.

[John Skipper]

Yes.

[Pablo Torre]

I have a. I have a passage here that has been brought to my attention. Speaking of finding stuff out, I want to give you a quote. I explored the idea of being a consultant and actually formed an LLC and spent a little time talking to people, got several clients and resigned all of those clients in the first week because it took me about three days. There's at least a couple people who laugh when they hear this. Took me about three days to realize I'm not a consultant, end quote. Who said that?

[John Skipper]

Quote?

[David Samson]

I said it one time.

[John Skipper]

Yeah, that's you.

[David Samson]

Yeah.

[John Skipper]

God, we have good research. Way to go.

[David Samson]

No, no, I figured out.

[John Skipper]

Did that sound familiar to You?

[David Samson]

Yeah. Once you actually have spent as much time as I have running something mostly consultant free, you don't want to go tell other people, but have no power to actually have them do it. So I didn't want to tell other people what to do. First of all, it's not interesting to me. It's. What's interesting to me is the holistic.

[Pablo Torre]

Practice of bidding one more dollar than the richest.

[John Skipper]

Did you do the resume trick? You know the resume trick, right?

[David Samson]

No.

[John Skipper]

So you don't have a gap in your resume. You start a consulting firm and you name it after your own initials. So it's JS Consulting. And coincidentally, it's open for business the day after you leave a place and closes for business the day you get to your next place.

[David Samson]

Well, it won't surprise you to know I've never, I haven't had, I've never had a resume. No, I never had a resume.

[John Skipper]

There's no difference. My resume is updated.

[Pablo Torre]

The greatest trick John Skipper ever pulls.

[David Samson]

Why would you update your resume?

[John Skipper]

My resume is ready to go at any second since I was in high school.

[David Samson]

But at this point, you're going to be trying to get a job that you don't have a resume for. You have a reputation and a track record for.

[John Skipper]

So the reason I have a resume.

[Pablo Torre]

You update your resume today.

[John Skipper]

My resume has the most recent that nothing personal is two hours.

[Pablo Torre]

Yeah.

[John Skipper]

It's ready to go. So here. The reason why is that, you know.

[David Samson]

You'Re wasting a lot of time. Credit scores, updating your resume.

[John Skipper]

I couldn't disagree more. I literally couldn't disagree more. Here's the waste of time when you don't do this stuff and then all of a sudden you have to start from scratch.

[David Samson]

Let me tell you, I've never had a resume. I got.

[John Skipper]

You're going to be sorry.

[David Samson]

It's kind of too late. I'm going to be 70 years old this year. I, I, I got my first job as an intern and, and I stayed 11 years and then I got the other job by calling a few people. And then I got recruited. They might have asked me to, maybe they did a resume for me and they asked me questions and filled it out. But what's the point?

[John Skipper]

Okay, I, I'm not going to argue with you because no one who's listening to this possibly relate to what you're saying. I think more people relate to what I'm saying than what he's saying. And maybe that's just my blind spot.

[Pablo Torre]

What I, I haven't updated. Conclusion for today's show. What I have found out. What I found out today is that as much as I thought that I have no debt was going to be the tagline for rich guys only fans. I've never had a resume. Has just taken the top spot.

[John Skipper]

It's not relatable in any way. So I it there.

[David Samson]

Everyone should have a resume.

[John Skipper]

It's a bio. Do you have a bio?

[David Samson]

No.

[John Skipper]

Wow.

[David Samson]

Well, the company. Some of the companies I've worked for.

[Pablo Torre]

Yeah.

[John Skipper]

You didn't approve it and you don't update your bio. I have my bio ready to go too.

[Pablo Torre]

Genuine confusion.

[David Samson]

If I had, I. I would embellish mine. I think if I had approval you get.

[John Skipper]

You actually lose jobs that way. We would check.

[David Samson]

I didn't say I was gonna lie. I said I might embellish it.

[John Skipper]

But we'll check that.

[Pablo Torre]

Now we're back to etymology.

[John Skipper]

Yeah, it's a major issue.

[Pablo Torre]

David, John, we've officially talked too much. Thank you both for doing this.

[David Samson]

We specialize in that.

[Pablo Torre]

Put that on a resume. Pablo Torre finds out is produced by Walter Averroma Ryan Cortez Sam Dawig Juan Galindo Patrick Kim neely Lohman Rob McRae Carl Scott Matt Sullivan Claire Taylor Chris Tominiello RStudio Engineering by RG Systems Our Sound Design by NGW Post Our Theme song, as always, is by John Bravo. We will talk to you, Sam.