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Prof G Markets
$TRUMP, What’s Next For TikTok, and The State of the Streaming Wars — ft. Rich Greenfield
00:55:09
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- [00:01]
Scott Galloway
Support for the show comes from the Fundrise Innovation Fund. One thing really matters in venture capital investing in the best companies. And that's exactly what the Fundrise Innovation Fund is aiming to do. Amassing a $150 million portfolio of some of the biggest names in tech and AI. Visit fundrise.com profg to check out their portfolio and start investing in minutes. Carefully consider the investment material before investing, including objectives, risks, charges and expenses. This and other information can be found in the Innovation Fund's prospectus@fundrise.com innovation. This is a paid sponsorship.
- [00:33]
Ed
Today's number $1.3 trillion. That's the net worth of the billionaires who had a front row seat at Trump's inauguration. Ed. True story. I have determined that I need to get to the next inauguration and I'm going to sit next to Mark Zuckerberg and I'm just going to stare at his tit. Also add, I can't figure out if Melania Trump is about to go to the Capitol to get someone to give tribute in the Hunger Games or if she's trying out to be the new Hamburglar.
- [01:10]
Rich Greenfield
By the way, everyone's saying she looks great. I don't think she looks good at all. I think she. Yeah, I think you're right. She looked like that.
- [01:15]
Ed
I think she looked pretty up. By the way, I got to give it to the Republicans. They understand it's like this is about optics. Let's put the rich people in front. Let's put the governors, the freely elected, important people in the overflow room.
- [01:26]
Rich Greenfield
You saw congressional representatives couldn't bring their spouses, but the billionaires code.
- [01:31]
Ed
My favorite was to hear the Fox. We're talking about politics again. To hear the Fox host criticize Michelle Obama and what a narcissist she is and selfish for not showing up. And I'm like, well, you guys are going to love this. Did you hear that President Trump didn't show up for the inauguration four years ago and they actually inspired a riot. You're going to, you're not going to believe this. Oh, yeah, but Michelle, but First Lady Obama, oh, she's totally out of line. I thought. I loved the fashion. I thought it was. I love the optics. I think they were smart to move it inside. I think, you know, at Trump and Biden's age, one of them is going to get pneumonia and die if they're outside like that. That's just not a good idea. Anyways, enough of that. Welcome to Prop G markets, Ed. Today's episode is presented by fundrise and we're speaking with Rich Greenfield, co founder, partner and media and technology analyst at LightShed Partners. I've known Rich for a long time. He's, I think he's probably the primary analyst in media. But before we get to that, Ed, what is on? Give us the headlines. Now is the time to buy. I hope you have plenty of the wherewithal.
- [02:38]
Rich Greenfield
We'll start with Trump's inauguration and how the markets reacted. The dollar fell after Trump said he wouldn't immediately impose tariffs. Bitcoin hit a record high of $109,000, but it dipped back down during his speech. And when markets reopened the day after the inauguration, all three major indices rose. Donald Trump and Melania launched their own meme coins last weekend. The fully diluted market value of Trump memes peaked at $72 billion, but fell more than 45% after Melania launched her coin. The websites for the coins say these tokens are not intended as investment opportunities, but rather as a way to show support for the Trumps. And finally, some non Trump news. Global ETF inflows reached a record one and a half trillion dollars last year. Meanwhile, total assets hit 14 trillion. That' times higher than a decade ago. So, Scott, let's just get your initial reactions to the inauguration, perhaps how the market reacted. Actually, I'll just point one thing out. Did you see the inaugural prayer from this? Pastor Lorenzo Sewell, did you see this?
- [03:45]
Ed
I did not watch the inauguration because I just cannot handle.
- [03:48]
Rich Greenfield
Oh, so how did you know about all these things? When we discussed at the top. Have you been online or.
- [03:53]
Ed
Yeah, I see memes and I see reels and things like that.
- [03:57]
Rich Greenfield
So you purely watched this inauguration via memes?
- [04:01]
Ed
I didn't want to put myself through watching the inaugural live. I saw a lot of the photos and the memes. I thought it was hilarious. So I feel as if I'm, you know, I know everything I need to know, I think, but I did not see this long winded way of saying I did not see the opening prayer.
- [04:15]
Rich Greenfield
Okay, well, I bring it up because there was this inaugural prayer from this, this pastor and he essentially cosplayed as MLK Jr. I mean, he was basically repeating, wait.
- [04:26]
Ed
Is this the guy that launched the meme coin?
- [04:27]
Rich Greenfield
Ye. Yes. So I'm watching this and I'm like, this guy, there's something seriously wrong with this guy. It almost felt racist the way he was like cartoonishly doing this whole MLK thing. And then after it, I see that he's gone and launched his own crypto token called Lorenzo Coin. And it went up for four hours, and then it crashed, likely because he sold it all. So I was absolutely just blown away by this. The fact that we are. And we'll get into this with Trump Coin in a second, but the fact that these shit coins are becoming sort of a staple of this presidency and all of the people associated with him. A fricking pastor who delivered the inaugural prayer. An hour after he does it, he goes online, he says, hey, guys, I'm launching Lorenzo Coin. Please buy.
- [05:16]
Ed
I got to give it to these guys. I do think they're brilliant. And that is while everyone's looking over here. At the inauguration, they decided to figure out, I mean, up until this point, the grift or the corruption that is the Trump administration. They said, okay, book rooms in our hotels, buy Donald Trump. Which is kind of an inefficient way of getting people money, right? Okay, now buy shares in Donald Trump Media, but we have to disclose when we're selling shares, which might crash the share price. And also, we're going to get a lot of shit because of the Stock act, and we're going to have the New York Times all over our ass. And so that's not quite efficient. These guys are playing chess, not checkers. And they've come up with the ultimate strategy to get really wealthy without creating any value solely based on, you know, corruption. And that is a meme coin. And this is a conversation I think has happened or will happen, and I'm purely speculating, but I can't imagine why it wouldn't happen. President Trump, it's your buddy Vlad. Hey, check this out. We're thinking of putting $10 billion or approximately 700 billion rubles and pulsing it into the crypto market. And we're looking at the Trump coin. And my economists here in Moscow tell me that if we do this and we were to pulse it correctly, over the next, I don't know, four to 12 weeks, it would take the market cap of the Trump coin up to about 50 billion. And if you were to, say, sell a third of your stake, which you could do without crashing the price, slowly but surely in a measured way, over those same 12 weeks, you would be, get this, one of the five wealthiest men in the world. Oh, and unrelated news. I want you to seize arms shipments to Ukraine. I mean, this is going to happen if it hasn't happened. So the idea that anyone in the world now can deposit money, put money into Trump's pocket, and there is no record of it, and you don't know that one army in Sudan all of a sudden gets US intelligence and heavy artillery and it starts killing more people on the other side. You don't know. If Xi all of a sudden goes into Taiwan and we decide that oh we're not gonna move on it and oh it's too late, sorry Taiwan, we don't know.
- [07:28]
Rich Greenfield
I do just want to correct before the crypto bros come at you, it can be tracked and it can be traced and there is a record of it but it's anonymous. So it's. They say oh you know, we can see everything. It's like well actually you can see everything where it's going but it's coming from you know. Dancing Panda 69 they could create so.
- [07:47]
Ed
Many different accounts, so many different wallets. I think there is a, well, I would imagine there's a well oiled industry in figuring out a way to mask and create anonymity. Now right now it'd be difficult because they own almost all of it but I would imagine they will be able to figure out ways and if this thing's at 6 billion and someone could take it to 50 billion which wouldn't be that hard given the float and they start slowly doling it out across different wallets and different accounts. I mean here's the thing and Democrats are just as guilty of this as Republicans. America has been for sale for a long time. Or specifically American misery. And that is, well you're a diabetic and you're obese and you're not making very much money. But we're going to bankrupt you by charging you 3400 bucks for insulin even though it costs 20 bucks in Canada. You want GLP1 drugs potentially save your life. Get your body mass index down. Well okay true they're 120 bucks a month in UAE but we charge $1000 a month despite the fact that we manufacture Most of the IP was originated here in the U.S. this industry donates massive amounts of money. Donates gives buys off Griffs massive amounts of money to both Democratic and Republican representatives who then trade or traffic in misery and US quality of life. Because we pay more for just about everything. Despite the fact American workers are more productive and gener a lot of income. We then turn around and let Congress be weaponized to extract and shake all that money from them. Okay, America's been for sale for a while, but now the world is for sale. And you could see bidding wars, it's geopolitical ebay, who's going to buy more coins? I mean I admire how brazen they are. It's like the Washington Post said, democracy dies in the dark. And based on the shit show over there, I would argue democracy is dying in the light, a full day. And typically, corruption used to be somewhat clandestine. Now it's just out in the open.
- [09:41]
Rich Greenfield
That's what's new about this. All the other things you mentioned are instances of COVID surreptitious corruption and grift. This is the most shameless, most obvious daylight robbery grift of all time. Corruption is happening right now. This isn't a question of what will happen. It already happened. So it launched very late on Friday night and it immediately raised a billion dollars in these initial token sales. By Saturday morning. The next morning, it had surpassed $20 billion in market cap. By 3am on Sunday, Trump Coin was valued inclusive of Trump stake at more than $70 billion, which is more valuable than FedEx, more valuable than Target, more valuable than Ford, these iconic American companies, which of course have taken decades to build. Meanwhile, it took this trump coin roughly 24 hours to hit that value. But the most important number is 80%. That is the share of tokens that are owned by Trump and his team, which means that they essentially printed themselves $56 billion overnight. Now, of course, the value has since plummeted. So those who bought at the peak at around $70 billion market cap, they have lost, as of this recording, roughly 50% of their investment. Now, of course, we don't hear those stories in the media. All we're hearing about are the stories of all the people who made money. But if you look at the on chain data, thousands have already lost money. You know, they all bought high, they all sold low. So the sheer scale of the financial damage that this thing is going to have on regular Americans, it's going to be enormous. There is absolutely no question. And there is this data that our team put together, which is that, you know, some lawyers or some legal experts are putting the chances of a civil case in the next few months so at 100%, which I think is definitely correct. Now, the next question that we have to ask is who are the people who are actually making the money off of this thing? Now, I think a lot of people think that the people who are making money off this are kind of like regular people who are fans of Trump or whatever. But if you knew to buy on Friday night at 1 or 2 or 3am or whatever time it was, that means you are one of two people. Either you are a full time crypto trader and this is your entire life or more concerningly, you were tipped. So you're probably a friend of Trump or a friend of a friend of Trump. And someone, maybe Don Jr. Maybe Eric, said to you beforehand, hey, this is happening. You should buy on Friday night.
- [12:23]
Ed
This is literally, it's so grifty, it's almost sort of comical.
- [12:27]
Rich Greenfield
I think this is the lowest of the low. I think this is the worst thing I've ever seen him do. And I think this goes down as the most shameless grift in the history of America. Not necessarily the biggest in terms of just size, but the most shameless, the one that made the least effort to pretend that it is anything other than a scam. And I think what we're seeing now with Lorenzo Sewell, the pastor, and with Trump and this meme coin, there has basically never been a time in history where grifting has been as easy, as accepted and as rewarding as it is now. And so this is confirmation, like, we are officially in the grift era. This is how things are going to operate over the next four years.
- [13:14]
Ed
Agree. I thought that was well said.
- [13:16]
Rich Greenfield
Your thoughts on global ETFs and this explosion in global ETFs, we're seeing more investment, more allocation. Why do you think this is happening?
- [13:25]
Ed
Well, because the active, the entire sector of alternative investments could best be described as expensive but bad. And that is 90% of active managers have underperformed their index with greater fees. So I've gotten very lucky on some big, big wins. So I think I'm still above the market. But I think most of us, nine out of ten of us, if we do the math, would have just been better 15, 20 years ago, putting in a Vanguard QQQ or spy. And that's essentially everyone is waking up to. You want to talk about a grift? It's a slower grift. It's not illegal. But some guy coming on CNBC and claiming that he or she has special insight into which stocks are going to overperform, it's kind of turned out to be a bit of a grift. And that is if you charge 2 and 20 around just picking equities, it's almost impossible over the medium and long term to beat the market. Because with perfect information, which we almost have right now, it's very hard to maintain any sort of advantage. And I think, quite frankly, the public has figured it out. Private equity is still sort of outperforming because of its long lockups and access to really cheap capital. And there's still a Lot of, I'd say dislocation. And you have to, you know, to go roll up 50 dental clinics takes real work. But the alternative investments universe, I feel like that jig is up. And I wonder, I mean, just the notion. I just laugh when I see when, you know, these folks on CNBC, my favorite was Trade Like Chuck, that for 39.95, he was going to send you on CD Rom his trading strategies. And all I can tell you is if the site is really slick and they're charging more than whatever it is Vanguard charges, be clear, that's just coming out of your returns.
- [15:10]
Rich Greenfield
Yeah, exactly. I just want to back up your statements with some data here. And in the past 10 years, the hedge fund industry has had net outflows of more than $200 billion. Last year, there was a survey of institutional investors. More than a third of them said they were decreasing their hedge fund allocation by more than 10%. So we are definitely seeing a trend away from hedge funds. We're also kind of seeing this. In last year, the Number of new VC funds fell 42%. Deal value fell 8%. The number of transactions fell 14%. Now, you mentioned PE there, that PE is resilient. But I think back to what Andrew Ross Sorkin told us last week in the context of private equity, that firms are just struggling to find exits. And so pension funds are kind of at least beginning to opt out of pe. So it feels as though what is happening, we're definitely seeing it in hedge fund land. We are maybe seeing signs of it in VC land, and maybe we'll start to see signs of it in private equity. But it does feel as though, as you say, alternative investments are on the way out and people are just opting for very simple passive ETFs, S&P. NASDAQ, Russell, the very simple stuff. What happens then to the VC industry and the private equity industry and the hedge fund industry? I mean, these are gigantic industries filled with money. And we're basically saying that those guys are on the way out, which is a bold claim, though I think our data supports it.
- [16:47]
Ed
Well, I think there's some nuance because if it's just picking stocks where they have mandatory disclosure and you can get so much information and everyone has access to the same information now around a publicly traded stock. Stock. It's really hard across multiple stocks over any extended period of time to beat the market. It just is. And the thing is, the S and P and these indices are kind of amazing in the sense that they naturally automatically, as a function of the way they operate, pick the best companies. They kick out Ford Motor and they put in Salesforce.
- [17:20]
Rich Greenfield
It's picking for you. It's great.
- [17:22]
Ed
They do a better job of picking companies on the way up than you ever would. And they're more efficient so they can charge lower fees. You know, Vanguard was in the business. Vanguard. I love the statement of Jack Bogle. You don't need to find the needle in the haystack, which you have no ability to do. You just buy the whole haystack. And with demographic growth and innovation and productivity growth, mostly the hands of technology, the markets over the medium and long term are generally up into the right. And also it saves you human capital. But I was just doing quick math. I wrote down my eight friends who were in the hedge fund business. Six of them are out of the business. I mean, they're just out. And these were people making 3 to 15 million dollars a year. They thought this was going to go forever and they're out. In terms of the asset classes, I think you need to discern between asset classes. In venture capital, I think there's more dislocation and it's about deal flow. Private equity is its own animal because it has access to cheaper capital and also it has access to small and medium sized businesses that aren't publicly available. So there's not as much price discovery. Again, there's more dislocation. But the era of stock picking, thinking that you can manage a hedge fund and go short and long, certain stocks and outperform the market, I think that is drawing to a close.
- [18:36]
Rich Greenfield
We'll be right back after the break for our conversation with Rich Greenfield. If you're enjoying the show so far, hit follow and leave us a review on Prof. G Markets. Wherever you get your podcasts.
- [18:53]
Scott Galloway
Support for the show comes from the Fundrise Innovation Fund. The investing world seems to be bending towards democratization, but venture capital always felt like it may be one of the last ivory towers to fall. It requires a lot of capital, the right relationships, et cetera, et cetera. That's probably why when the Fundrise Innovation Fund launch, promising to democratize venture capital, there was a lot of skepticism. But the progress they've made in a few years is hard to argue with. The Innovation Fund has now built a $150 million portfolio of some of the most highly sought after private tech companies in the world. And their minimum investment is just 10 bucks, which is virtually unheard of for venture capital. Look, even the best venture funds should be categorized as high risk investments. Venture investing is not for everyone see above high risk. But at a minimum, you can visit funrise.com profg to check out the Innovation Funds portfolio for yourself. Visit funrise.com profg to check out the Innovation Funds portfolio and start investing today. Relevant disclaimers can be found at the end of the show and@fundrise.com innovation.
- [20:01]
Rich Greenfield
Welcome back. Here's our conversation with Rich Greenfield, co founder, partner and media and technology analyst at LightShed Partners. Rich, thank you very much for joining us.
- [20:10]
Ed
Thanks for having me.
- [20:11]
Claire Miller
It's been a wild week in tech, media and telecom.
- [20:16]
Rich Greenfield
For those that don't know, Rich is kind of the best in the business when it comes to TMT and TMT analysts. And I want to start with TikTok, which, you know, it's been a very confusing couple of weeks. It went dark on Saturday. It then came back online. And then when you opened up your TikTok, they thanked Donald Trump for bringing it back. You predicted actually earlier this year, way earlier this year, that Trump would save TikTok. So let's just take us through your prediction there. Why did you think that would happen and how do you think this TikTok saga is going to unfold over the next few months?
- [20:56]
Claire Miller
Well, I think reading sort of or listening to what the president elect at the time, now president was saying, he talked pretty decisively, decisively about the importance two things. One, about the fact that he liked using TikTok and that it was instrumental in reaching young people. And I think it's hard to disagree. If you sort of look at things that are changing among, you know, in terms of consumer behavior, it's hard not to look at the rise of Internet video. I think, you know, obviously YouTube, which has now become the single largest destination on televisions for consuming content. If you look at short form, just look in the last three years, I think it's pretty astounding how think about how Instagram has shifted to reels. So short form vertical video, Facebook short form vertical video with reels, Snapchat with Spotlight, Google moving from YouTube to YouTube shorts. Like the impact that TikTok previously musically has had on the entire sort of mobile content and entertainment ecosystem is astounding. And I think that its power and impact wasn't lost on Trump. And I think he's going to figure out a way to keep it alive regardless of the US Law that was passed.
- [22:22]
Rich Greenfield
What do you think changed for him? Because of course, he was the first one to say that we should ban it in some form or that we should at least lessen its influence um, but now he's sort of changed his tune. Do you think what changed is what you said? The fact that TikTok is now so powerful and he's now recognizing that he's.
- [22:41]
Claire Miller
Changed his views on lots of things. Like this is not an isolated case of him flip flopping on, you know, individual issues. So, you know, sort of that's the macro, 10,000 foot overlay for all of this. But, you know, I think, you know, more specifically, I think it is honestly understanding its power and how he could harness it to win favor, win votes among younger people. I mean, look how he used this. We're sitting here on a podcast. Look how he used the podcast medium. And I don't just mean Joe Rogan, I mean all of the smaller podcasts, many that you've never even heard of, and how he used them to change opinions. And understanding how those clips show up on TikTok, get pushed out all over the world. Not only on TikTok. Remember, a lot of the content you see on reels and on shorts and on Spotlight came from TikTok, right? So it's not even like the actual using of TikTok itself. It's how that sort of impacts culture and then flows through all the other platforms. And I think he really understood that.
- [23:46]
Rich Greenfield
Yes. It's your job to sort of predict what's gonna happen in media and in digital media. If you had to put like a probability on it, what would you say is the prob. Possibility that TikTok won't exist, or is that even possible in the next year or so?
- [24:02]
Claire Miller
Well, first of all, let's be very clear for your listeners, viewers, we're talking about in the US I don't think we're at all talking about outside the U.S. right? I mean, even with what happened on Saturday for 14 hours, where everyone under the age of 25 was in panic about what they do with their lives for a few hours as it went down. The reality is it will continue to operate regardless around the world other than China, where TikTok doesn't exist, India, where it's been banned, and obviously the US is the question mark. I think it's highly likely that you're going to end 2025 and TikTok is still going to exist. Will there be some subtle shifts in its ownership? The word salad that came out of Trump, you know, when he was signing the executive orders about, you know, needing to own or someone in the US owning 50%, it's hard to understand what that means, you know, Ed, because TikTok is already 58% owned by international investors, you know, well known international investors.
- [25:06]
Ed
Right. So more broadly, looking at all the kind of video streamers or online short, short form video, whether it's Reels, YouTube, YouTube Shorts or TikTok and you could argue, I don't know if you'd put Snap in there, that's more of a messaging platform. But stack rank which ones you are most bullish and bearish on.
- [25:28]
Claire Miller
For 2025 we're saying we're leaving TikTok aside for a second. We're sort of putting that to the.
- [25:33]
Ed
Side because or, or include TikTok if you think it's going to be fine and be bullish if you, you're an analyst at the end of the day people, people hire you because they want to find dislocation in alpha. Look at, looking at these companies and their parent company stocks, which are you.
- [25:48]
Claire Miller
Most bullish on or if there was a dislocation. If you think about who benefits the most from TikTok being banned and I don't think that's going to happen. I mean I think we're going to figure out a way to survive. But the companies that are leaning in the most and probably have the most to gain because certainly their focus on creators, you would certainly look at YouTube shorts. I mean, I think a lot of people focus on meta and reels, but nobody's making money on meta and reels. I think YouTube really, I think if you look at what Neil Mohan and Susan before him, what they were able to sort of build in terms of helping creators really make a living, I would think if there was any place that sort of got a nice tailwind from the end of TikTok, it would certainly be YouTube shorts. That being said, look, what's fairly obvious is that all of these short form platforms are taking timeshare away from other mediums. And when you look at what's happening to viewership on linear television, we spend a lot of time talking about the Netflix effect and what Amazon prime, now that they have Thursday Night Football and soon going to have the NBA, we spend so much time looking at that sort of macro trend, TV to TV effectively. But Scott, what you're hitting at is the growth of these short form platforms is eating into just total time spent with entertainment. And I think most consumers don't go, oh my God, this is an hour long, this is 10 minutes long. They are literally just that cure for boredom is going through TikTok, going through reels, going through shorts and YouTube and that's sucking away time that you would otherwise be spending watching video, whether it's linear or stream. It's probably Netflix's biggest long term threat, honestly.
- [27:41]
Ed
Yeah, I would agree with that. Now it's where I was headed. Let's look at the. We have the apex predators, if you will. Let's talk about prey. I want to put forward a thesis that's purely pulse marketing, anecdotal, but what I have noticed with my own viewing behavior and my sons and I pay more attention to my sons because they're the folks that advertisers want to reach. I think of it as, quote, unquote, size matters. And that is we'd watch a ton of video. But now we're no longer even bothering to turn on the tv. We're not even bothering to open our computers, we're watching all the short form video on our phones. And to me, obviously, you know, the easy horse that everyone's kicking right now is linear TV, cable news. My understanding is, you know, some of the viewership on CNN and MSNBC is now off 30, 40%, but also Netflix and you know, it feels like anything that makes its primary living on that screen in your living room. I would think we just, it's so strange. Just in the last year we don't even turn on the TV anymore unless it's for Premier League football. What are your thoughts?
- [28:44]
Claire Miller
I want to just sort of frame that the single fastest growth engine on TV screens like that living room TV screen is YouTube. I mean, the growth of YouTube, it's now 11% of total time spent watching TV. You know, watching that big screen device is now YouTube. I mean, it is staggering how large YouTube has become. And they've done that, Scott. They haven't gone out and bought expensive sports rights. They haven't invested billions and billions of dollars of, you know, in terms of licensing Hollywood content. They've just provided an incredible platform for creators and allowed you to spend video length. Remember when YouTube started, it was like Charlie bit my finger and double rainbow in these really short videos now you can watch, you could watch something like this podcast or hours of content now in a single stream. The length of time. And so when you say short form, short form certainly getting longer. Even TikTok videos that used to be 6 and 10 and 15 seconds now are 10 minutes plus. And so short form is getting longer and short form in that sort of online content is feeding more and more into the TV. TikTok, it's been the one place they've completely failed to date is on the TV YouTube's done an incredible job. Meta's completely failed the TV. Like, it's interesting that nobody's really broken through onto that tv, but look, your comment is sort of, hey, isn't all of TV ultimately in trouble because of short form? And look, I do think that it is just one more problem. When Netflix has a big show. There's no doubt that people turn on Netflix and watch it and they're investing more and more in content. I think it's a headwind for everybody. And I think it's probably one of the reasons you're seeing Netflix try to diversify into gaming is that they realize that they need to leverage their platform into more than just what they are. They certainly haven't figured out short form. I don't know if they ever will. You know, UGC is a very different practice than what Netflix does today. But it's a really interesting long term thing to think about. Obviously, given that Netflix is 8, 9% of TV viewing today, there's still a lot of market share to grab, even if that whole TV pie ultimately comes under pressure. But I would say just the one thing that pushes back on your thesis, overall, time spent with TV is growing. It's just all of the linear forms are losing.
- [31:21]
Ed
That's interesting. So let's talk, let's keep on this, this topic of prey. Let's now talk about the traditional folks. Warner Brothers, Disney, Comcast. Am I missing a Paramount stack rank from like bad to worst?
- [31:37]
Claire Miller
Well, remember, you lump all of these companies and it's, it's not you, Scott. I do the same thing. We lump all these companies together because they create entertainment content. Historically, we lump them together because they all had you cable networks, right, like that was the unifying element. Cable networks and studios. And so we threw these major media companies into a bucket for years and years. But when you look at the scale of Comcast, which owns NBCUniversal and is primarily a broadband provider of connectivity in this country, or Disney, which has, you know, half or more of the value of the company coming from its theme park business, which includes its cruise lines, it's sort of hard to lump those companies into the same bucket that you put Warner Brothers, Discovery and Paramount did. The relative market caps, enterprise value scale, balance sheet depth is completely different. And look, it's one of the reasons why Paramount is now being acquired by Skydance, which is essentially being acquired by the Ellison family. It wasn't able to stand on its own because you're looking at a world where the core businesses are in secular decline being in the cable network business, you mentioned you don't even turn on the TV. You think about how much money. Because remember, 68 million people are still paying for cable television today, meaning $100 plus a month bills for something that they're actually not using nearly as much as they used to. They still watch broadcast because lots of sports on broadcast, but they're watching less and less cable television. And when you think about WWE Raw, which used to be on cable, now it's on Netflix. Thursday Night Football used to be on Fox, now it's on Amazon. NBA moving from Turner on cable, moving over to Amazon and NBC Broadcast like the cable network. Headwinds should scare everybody who is investing in these media companies. And look, it's no surprise, right? Comcast looking to spin off. You look at what the sort of internal restructuring that Warner Brothers is doing. Disney did that same ESPN internal restructuring last year. They're all realizing the alarm bells have gone off over the last six to nine months. And I think the problem is that funny cartoon where the the door isn't wide enough for everyone who's trying to exit. You can't get out of it because who are the buyers of these assets? That's the problem right now.
- [34:09]
Ed
But of those four, who are you most bullish or bearish on relative to the fact that they look inexpensive compared to the other companies we were talking about?
- [34:19]
Claire Miller
It's always interesting when everyone has the same thesis, right? And so I think there was a really consistent thesis across Wall street that, hey, Warner Brothers was losing the NBA. Turner's dead, Warner Brothers is dead, Zaslav's gonna get fired. Activists are gonna come in, company's gonna be completely restructured. And the reality is they lost the NBA, which wasn't a surprise to us, and they didn't get dropped by any of them. Comcast didn't drop them, Charter didn't drop them, DirecTV didn't drop them. Dish didn't drop them. Nobody's dropped them. And the reality is it is a lot harder to exit a large chunk of cable networks for any of these distributors. And so you sort of look at the one where everyone has been skeptical and where David Zaslav's taken a lot of hate and has he made mistakes? There's no doubt there's been unforced errors. I wouldn't have sued the NBA per se. But the reality is, it's certainly interesting to me how wrong investors have been about the fortunes of WBD relative to where they are today. And I think that sort of hasn't really been reflected in the stock. And look, it's hard. The core fundamentals, as we just talked about, are clearly for everyone, heading in the wrong direction. But I do think it's interesting that they have weathered this storm far better than anyone expected.
- [35:51]
Rich Greenfield
We'll be right back.
- [36:03]
Scott Galloway
Support for the show comes from the Fundrise Innovation Fund. Think of the five biggest names in AI today. How many of those companies do you own shares of? Probably not many.
- [36:11]
Ed
Maybe one, maybe two.
- [36:13]
Scott Galloway
Why is that? Because the OpenAI's and anthropics of the world are still private. That means unless you're an employee or a vc, you're out of luck. So it isn't hard to see why venture capital has been one of the most prized asset classes in the world. But unless you're worth eight or nine figures, you likely don't have access to these funds. The Fundrise Innovation Fund is different. It's already raised more than 150 million. It holds a portfolio of pre IPO tech companies that are valued at tens or even hundreds of billions of dollars. And most importantly, it's open to investors of all sizes. Visit fundrise.com propg to check out the Innovation Funds portfolio and start investing today. Relevant disclaimers can be found at the end of the show and@fundrise.com innovation.
- [36:58]
Rich Greenfield
We're back with Prof. G Markets. Rich, you mentioned the purchase of Paramount Global by Skydance, which is of course owned by David Ellison, who is the son of Larry Ellison, who is the founder of Oracle. I have written about this and called it the dumbest purchase of the year. And my view is that he, along with a lot of these guys who are part of this transaction, suffer from what I would call Hollywood derangement syndrome, where they think they're still fixated on this bygone era of a glitzy, glamorous world of Hollywood, and they're paying all this money to try to relive it, or they maybe think it still exists, but actually Paramount just doesn't have any of the cultural currency that it used to have. I'd love to get your reaction to specifically, specifically David Ellison's purchase of Paramount Global. Am I being too harsh or is this not kind of dead on arrival?
- [37:51]
Claire Miller
Well, I have a lot of gray hair, as you probably can tell. I've seen a lot of people say they're coming into Hollywood, they've got a better plan, they're gonna fix it, they're gonna make better films, they're gonna make better TV shows, and they're gonna Win. And we've seen, you know, you've seen international companies from Asia and Europe. Like it's not like a new thing of people trying to come into Hollyw Big Splash with a supposedly better model. When people say I'm going to make better movies or I'm not going to lose money on movies, there's always that special sauce. And look, some of this of just simply loving film and technology may be behind this, but I will say what's interesting about this purchase is it's essentially a family, right? Like it's basically the Ellison family putting their money where their mouth is. And we'll see if this is just about cost cutting and running the business as we see today. You're probably right, Ed. This is a mistake and probably was something they shouldn't have done. Maybe it's just completely sort of the glamour and excitement of being in Hollywood. On the other hand, there is an opportunity if you take a long term, and I don't mean when I say long term. 10 years, 20 years if you're. Ellison is what, 41? If he's really taking a 20 plus year approach to this and he's going to invest aggressively, not worry about what people like, I think, not worry about what Wall street does to his stock, who cares if his Stock goes from 10 to 1? If the goal is to win, to truly build a great sustainable long term company, to really build a streaming service that can rival meaning going out and hiring not talent, but the best tech talent. Because Paramount plus is not a great app today. Could it be a lot better? Absolutely. Could there be a ton more content? I mean, how many times, Scott, do you ever hear anyone talk about, hey, did you watch this on Paramount? If it isn't part of the Yellowstone franchise, no one even mentions it. Unless you have kids who are watching SpongeBob. How do you get sort of the goal of every streaming company? Actually the goal of any company in this new world is all about winning time spent. It's why we started off this conversation talking about what short form is doing because it's all this war for your entertainment time spent. Netflix understands that, right? Like they, they don't create more content. You go, oh, could they still survive and have the same price if they had half as much content? Sure. But the goal is to win time spent so that you grow your subscriber base at a higher and higher price. Like it is all about engagement and time spent. If you're Paramount and Skydance's new owners in the Ellison family. If you're really Gunning for time spent, you need to put a ton, I mean, multiples of the content that's on Paramount plus today and really build an incredible put tech. The quality of your technical team and technical infrastructure has to be on par with the content. I don't think most media companies do that or even think about that issue today. But if they're serious about it, could you build a real player? I think everyone believes Netflix, Amazon and Disney will be around for many, many years to come. I don't think Comcast, no matter what you think of Peacock, they're not shutting it down. They're certainly in it for the long term. Everyone sort of believed a year ago, if we had done this one year ago today, I would have stood up here and said Paramount plus in a year doesn't exist. Now, I think we can all know under Ellison it's going to exist. And my guess is of every company that's going to invest incrementally from today through the next two or three years, my guess is the one that has the most increase relative to where we are today is going to be Paramount Plus. I think that's why they bought it. And they want to win. Whether they can, we'll see. But they are. At least the vision is to win in streaming, which is a pretty bold vision.
- [41:49]
Rich Greenfield
Yeah, absolutely. I just want to pivot us to news and political news. So, Rupert Murdoch. So Rupert has been trying to hand control of his media empire to his son Lachlan, whose political views he agrees more with. And he did so by attempting to amend the rules of his family's trust, which ultimately failed when the courts determined he was acting in bad faith. So this is sort of an ongoing story. Your prediction coming out of this was that Rupert Murdoch will now sell Fox News, which would be quite the move. Tell us why you believe that and what you think is gonna happen to the future of the Murdoch empire.
- [42:31]
Claire Miller
First of all, this was step one. You know, I mean, the probate commissioner that came back and ruled against Rupert and Lachlan in changing the trust. And there is zero visibility into this process. You know, the ruling wasn't made public at least yet that some reporters have gotten copies and read some of it. But we certainly have not seen the whole thing from what the reports have been. It does sound like an appeal is challenging. Doesn't mean it'll stop them from appealing and maybe tying this up for one to two years. But the important thing for everyone to understand is regardless of whether Rupert is Alive at age 100, the trust kicks In So his control over Fox and News Corp, two large public companies, ends at age 100. And automatically the trust kicks in. And so the question is, how is the trust controlled and whether it is Lachlan in sole control, which is what he was trying to do, versus the four children, where that might not lead to an outcome that he likes for the assets that the trust controls, which is all of the Fox assets and all of the News Corp assets. The reality is, if he can't change this trust over the next couple of years, I would certainly think that any form of unwind dispositions he wants to do during a friendly President Trump era. So that doesn't give you all that much time when you think about it's going to take one to two years for this trust to play out, then any type of sales or disposition. It takes time for these things to clear regulatory hurdles, as you know. So I do feel like time is of the essence and I wouldn't be surprised if the trust appeals do not go well. I think Rupert's gonna look for some solution. Is that putting Fox into News Corp and trying to buy out two of his children, is that gonna be a sale and disposition of all of the Fox assets? I mean, everyone talks about media M and A coming off of coming into a Trump presidency. I don't think Comcast is selling Peacock. You know, Ellison just took over Paramount. We just talked about why Zaslav is not under the same pressure he was before. I think the only asset that might come available over the next 12 to 18 months could be Fox. And it's a really interesting chess piece. If you're David Zaslav, that is a chess piece you want to figure out a way to own. Because if you could get broadcast, you think about how Zaslav stepped up from discovery. He bought a better asset in Scripps, then he bought a better asset in WarnerMedia and HBO and Warner Brothers Studio. The next logical step was, well, how do you get from cable networks into broadcast? You would do that through that type of a transaction. So I don't know. I'd keep my eye on what happens to Fox. It could be one of the biggest media shifts over the next 12 to 18 months that not enough people are talking about.
- [45:31]
Ed
Yeah.
- [45:32]
Rich Greenfield
And one last question here on sports, which I find sports programming the most confusing, complicated thing in all of media.
- [45:41]
Claire Miller
Like meaning where to find where to.
- [45:43]
Rich Greenfield
Find it and who owns these things and who owns the rights and what do exactly those rights entail and do people share it? So, and I'll start This with this attempted merger that we saw between ESPN and Fox and Warner Brothers Discovery, and they all try to create this new streaming service dedicated to sports, which, by the way, sounds pretty great to me, regardless of any monopoly power or monopoly abuse we might see there. But as of a week ago, it was called off, so the whole thing is just a little confusing. So could you just give us an overview on sports programming right now? Who's winning in sports content, who's losing, and what does the future of this content look like?
- [46:24]
Claire Miller
Ed, I'd love to say your life is going to get easier, but I think unfortunately it's not. Because even when you mention venue, you still have the fact that more sports are flowing to things like Amazon that are not part of it. Amazon, which was losing money they now believe based on their allocations, and I know that's some magic, but they believe that they are now profitable spending over a billion dollars a year for the NFL, where Fox was losing money at 660 million a year on the NFL Thursday night. So what does that tell me? Whether or not you believe the math? If they believe it, they're going to buy more sports. They obviously did that with the NBA. Netflix, I think, has been very happy with how Raw is doing on Netflix since they took over wwe, which I know is not sports, but it's in the live entertainment world. I think you're going to see more and more sports flowing to streaming. Keep an eye on what happens with ufc. Brandon, my partner has talked about whether it ends up on Amazon or do you see part of it on Netflix. There's going to be more sports on streaming. And so sort of how much sports is left for linear TV is going to shrink. And so even those bundles of linear channels that you're talking about, DirecTV is launching a sports bundle even after Venue's demise. You're going to see lots of SP bundles. But remember, that's only what's on linear tv. Then you have to deal with what's on all of these streaming services. Do you subscribe to them? What's where? And I think I feel like as you've seen a big advertising push out of Amazon and Netflix, it really emboldens them to put more money into sports because once you can amortize it across everyone. Because remember NFL on Christmas Day on Netflix, it didn't matter whether you were an ad free subscriber or an ad subscriber. Everybody saw ads during that programming. And so sports has that benefit of you expect ads during the programming. And so it actually Makes it easier to spread the cost and to build your ad business by investing in sports now that you're in that business for those two companies.
- [48:33]
Ed
So, Rich, I'd love for you to talk about or touch on the motion picture business. Box office receipts I keep hearing filmmakers talk about. It strikes me that any sign of life, we say, oh, dad's back from the dead, and then it resumes its structural decline. I don't know how cynical that is.
- [48:52]
Claire Miller
But no, Scott, you nailed it. I mean, look, first of all, I should answer your question from earlier in the podcast where you asked me, like, which of the four, do you have a favorite? Like, the problem is it's hard to have any. And this will relate to box office. It's hard to have a favorite on a bad block, right? Like when the headwinds of these industries are going in the wrong direction. Fragmentation like it is is really challenging, especially as advertising is moving to the metas and the Googles and the Netflixes and Amazons. It's really hard to be excited. And I think things like box office just add to it. Like, movie business isn't fixed. Is it better than it was during the pandemic and during the strike? The strike impacted last year. This year will be better, I assume, than last year, but you're still dramatically below where you were in 2019. So the pre pandemic box office. Do certain movies do incredible box office? Have we proven that when you make good content, people still come to the movies? For sure. There's no doubt about it. People love getting out of their homes and seeing content. I don't think that's ever gonna change. But, you know, we did $11.3 billion of box office in 2019. You know, I don't know if we're getting above 10 this year. That seems like a stretch, you know, can next year, like, people are already saying, well, just wait till next year. Like, it's always just a wait till next year. It'll get better. I think it's just tough. There's so much incredible content in your pocket, let alone on your laptop or your TV screen, leaving home for a movie, especially if the reviews are terrible and you can all see what those reviews are on social media and beyond. You need great content to leave the home, and there's more and more great content without leaving the home. So there is a natural sort of headwind facing the theatrical business. It's not dying. Like, it's not gonna die, but can it ever recover to where it was?
- [50:40]
Ed
That's a challenge last Question as we wrap up here. Podcasts, your turn.
- [50:47]
Claire Miller
I think it's an amazing medium. I mean, I look at our own podcasts and yours, and you think about what it meant to the election. I mean, the medium is incredible because there's a sort of emotional, intimate relationship you develop with your listener or viewer. And I think video only takes it to another level when you can introduce video. And I think Spotify deserves a lot of credit for what they've done. You know, obviously YouTube started it, but making. I think this is going to be the real year of video podcasting on Spotify. You know, I think that creates a much bigger advertising business that in turn gives creators ways of making more money and making you want to do podcasting in a bigger way. So I do have a. A strong love of what the business can do. It's still a relatively small business when you think about the overall media universe. Again, I think this is an interesting opportunity where you think about what's happened. Amazon really hasn't invested heavily in podcasting. You haven't really seen Apple do anything. And Spotify is just creating yet another growth lane to really take advantage and to build a bundle of audio and video products that are differentiated. And it's why that stock's been great. Why I think it will continue to be great, is that they understand the power of this medium.
- [52:10]
Rich Greenfield
Totally agree, don't you think? Just one final comment. Don't you think they also understand the power of interaction in terms of comments on the platform? And now they let you put out polls. It feels like they're taking another page out of YouTube's book, which is that YouTube is a highly interactive space where you get to talk to your friends and talk to strangers about the content you're watching, as opposed to just consumer.
- [52:32]
Claire Miller
Daniel is a tech CEO. He truly understands and, you know, he's been very good friends with Zuckerberg from the very beginning. You know, I think he truly understands engagement. You know, this goes back full circle, like, it's all about minutes per day. Daniel doesn't ever want you. He wants you. Listening to Spotify doesn't matter whether it's an audiobook or whether it's a podcast or whether it's music or maybe it's education, which they've started in the uk. Like, I think you'll see more categories. Like, I'm surprised they don't own the comedy category. I think there's so much they can do to win minutes per day. And I think that is something that as a tech executive, he. If you think about what Netflix is trying to do. Like there's just a really different strategy in how tech executives approach media than how media executives approach media. And it shows in the results. This is all about winning. Time spent Absolutely.
- [53:23]
Rich Greenfield
Rich Greenfield is a co founder, partner and media and technology analyst at LightShed Partners and a general partner at LightShed Ventures. Prior to LightShed, Rich was a managing director and analyst at BTIG and Pali Capital, where he started his career at Goldman Sachs in 1995, where he spent eight years covering entertainment, cable system and leisure industries. Rich, this was awesome. Love getting your perspective and thank you for joining us.
- [53:45]
Claire Miller
We should do it again.
- [53:46]
Rich Greenfield
We will 100%.
- [53:47]
Claire Miller
I love it.
- [53:48]
Ed
Thanks Rich.
- [53:48]
Claire Miller
Thank you guys.
- [53:51]
Rich Greenfield
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our Associate producer is Alison Wilson. Mia Silverio is our research lead, Jessica Lang is our research associate, Drew Burrows is our Technical director and Catherine Dillon is our Executive producer. Thank you for listening to Profg Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
- [54:23]
Claire Miller
You have.
- [54:27]
Ed
In kind reunion as the World Turn.
- [54:51]
Scott Galloway
Support for the show comes from the Fundrise Innovation Fund. You've heard me talk about the Fundrise Innovation Fund before, so I'll keep this short. Venture capital was and to a certain extent is still an old boys club. You had either to be filthy rich or an insider to get access. The Innovation Fund is trying to change that. Building a blue chip portfolio, making it available to everyone and with 150 million raised from tens of thousands of investors is just getting started. Carefully consider the investment material before investing, including objectives, risk, charges and expenses. This and other information can be found in the Innovation funds perspectives@fundrise.com innovation this is a paid sponsorship.