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Foreign.
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Welcome to the male mass hysteria episode of Slate Money, your guide to the business and finance news of a pretty big news week. We saw exactly what's promised in the title. A bunch of male mass hysteria surrounding cryptocurrencies and bitcoins and blockchain blockchains and ethereums and all of that kind of stuff. We're going to talk about that. Wait, who's we? It's me. It's Felix Salmon of Axios.
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It's.
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Let me just start that one from the beginning.
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C
That is so amazing.
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A
That's good.
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B
All right. It's me. It's Felix Ammonif Axios. It's Emily Peck. Welcome.
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C
Hello.
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B
It's Stacey Marie Ishmael. Welcome.
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D
Hello.
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But most excitingly, this is the Ed Show. Edmund Lee, welcome back to Slate Money.
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Always fun to be here. Thank you.
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B
We love you on this show so much. And you are here partly to talk about cryptocurrencies and partly to talk about burnout in the workplace, but mainly to talk about the biggest news of the week, which was Discovery, WarnerMedia, Disco Warner.
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A
Aka AT&T, you know, wants a redo on its media strategy.
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B
It's taking a mulligan.
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A
Yes.
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B
So we are going to talk a lot about media because Ed's here and Ed's awesome. And we're even going to have even more in Slate, plus a bit less AT and T and a bit more Amazon. It's all coming up on Slate Money. So, Ed, since you're here, we really have to start with the mega merger of the. Not even a week. This is the mega merger of at least the month, right?
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A
Or is it a mega demerger?
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B
A mega. What's the opposite of a divestment? Definitely spin off.
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C
Isn't it an unwinding?
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D
It's an unwinding conscious decoupling.
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There you go. There you go.
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C
Perfect.
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A
A conscious corporate decoupling.
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B
So the big headline news here is the AT and T under the M and A honcho, John Stankey, spent $100 billion buying Time Warner and now at&T, under their CEO, John Stankey, no relation, spinning it off and saying, that was a terrible idea.
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A
Yeah. Oh, yeah. The doppelganger came in and said, wait, why? Who bought this? Why do we own this weird thing? So, first of all, look, five years ago is when they announced a deal, right? I wrote a cheeky column for Recode at the time saying, this deal makes no sense. Right? I'm not the only one who said that. A lot of people said that. And five Years later, here we are, right? The deal never made sense from the get go, even after it closed three years ago, because there was a Justice Department attempt to block it. Trump did not like cnn, of course, which is part of Time Warner. Even for all that time that they had, that they had to look under the books, look under the hood, figure out how this business actually works. They still thought, you know what? We need this. So it's astounding to me that they never figured out how the business works. And it goes also back to their purchase of DirecTV, again led by John Stanke, their chief merger strategist. They thought when they bought DirecTV, they were buying content. They were like meetings that they had with analysts saying, now that we're buying this content, we're going to put it on our systems. And people are like, you're just buying more distribution. Right. It's just a satellite service. They don't actually own content. After they bought DirecTV, they looked under the hood and said, oh, wait, there's no content here. It's just expensive licensing deals we have with the content companies. So then they said, oh, we should go buy some content. That's what they did. The Time Warner deal. Now it's all being unwound.
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B
It's all being unwound. And the weird thing is, you thought it would made no sense. I thought it made no sense. Literally everyone I know basically thought it made no sense. The only place where it seemed to make any sense or people who seemed to think it made any sense were the Justice Department. Right.
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A
So, yeah, I love how you put that. The irony here is Justice Department under Trump thought, oh, they're going to have way too much market power if they own this content. Right. It's a, it's a vertical integration. Right. It's like the distribution, the pipes that AT&T owns doesn't necessarily have anything to do with the content on the other side. Right. Meanwhile, at the same time as they were challenging this deal, Disney, led by Bob Iger at the time, was talking to Rupert Murdoch about gobbling up Fox. Right. So that's a content company buying more content companies. Now, that actually would typically raise more red flags for, for antitrust concerns. It's like now you're owning more of the marketplace by adding another content player. We should take a closer look at that. What Justice Department do? They cleared it in six months. Right. Which is incredibly fast. Typically, deals of that size take at least a year to clear the Justice Department or government regulators. AT&T, meanwhile, a deal that really made no sense. That argument is the best argument they had for why the Justice Department should not be suing them. It dragged on for two years, right? And arguably that lost two years may have hurt AT and T's chances of making Time Warner a better company. I still disagree with that. If they had. If Justice Department never stepped in, if they had closed it two years earlier, you know what? HBO Max would still be HBO Max. What it is now. It's just a weird streaming entity that's sort of tied to a legacy cable channel that a lot of people still don't know how they get if they have hbo. Right? So it's a marketing boondoggle. It's a structural boondoggle just in terms of how linear channels work and how streaming services work. So it never made sense.
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C
So now in the unwinding, Time Warner is going to another. Is joining up with another content player, which I guess makes sense in Discovery, which is the content is like the Food Network and myriad trash TV shows. Tv, or I like to call it.
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A
Ambient tv, I like to call it background tv. Right? Like HGTV and Discovery and all the home stuff and sprucing. Like, it's pleasant to watch, it's easy to watch. It's the kind of basic cable that plays sort of in dentist offices and doctor's offices and you might even have it on at home on a Sunday or a Saturday. And it's. You're kind of half watching it. And it's just very pleasant and it's easy. Right? It's sort of the light FM of basic cable. And so it's very different kind of content business.
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B
This makes a huge amount of sense to me, strategically. Right. Is that what Netflix has always wanted to do is just be tv? And anyone who wants to compete with Netflix, which absolutely includes HBO Max, has to be able to be TV in the same way. And sure, you are gonna want to tune into HBO to watch the big headline, you know, season three of Succession or whatever it is that you're gonna wanna watch. But you're also going to just want to be able to turn it on and have something on in the background, because that is just a way that people live. And you don't want succession on the background, you want HGTV on in the background. And so it provides all of that. And then the other thing it provides, which I think is potentially even bigger, is cnn. Right. If they can bring CNN into this, then that's actually reason to turn on the TV on an everyday basis. Like news never get stale.
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A
That is Very true. But there's still, again, a structural challenge here. And what do I mean by that? So look, there's this sort of industrial complex around how the television business works, right? So Discovery owns a whole bunch of cable networks. WarnerMedia owns a whole bunch of cable networks like CNN and TNT and tbs. They enter into contractual agreements with all the distributors like Comcast or Charter or DirecTV for that matter, and they sell them in a bundle, right? So as soon as you want to take CNN out of that bundle and start selling it over the top, right? Meaning through a streaming service, Charter and Comcast, and say, hey, they're going to point to their contract and say, you can't do that. I pay good money for this. Now you're selling it over me, right? You're going directly to my consumers, you're going around me, whatever metaphor you want to use. And, and that's why the streaming business is still weird business for traditional companies to try to enter because they either have to create new content for the streaming or go back to the, to their distributors and rework their deals so that they can bring it onto streaming.
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B
Which is the same reason why. Why ESPN isn't on Disney.
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A
Exactly. And why there's this thing called ESPN plus, which is sort of everything that's not on espn, all the stuff that you didn't really want to watch anyway, right? So even Disney has not made that big switch, right? So I think David Zaslav, who's the CEO of Discovery, who will now be the head of this new big enterprise yet to be named, but most likely something like Warner Discovery, he's got a big decision to make, which is he says that combined Discovery and Time Warner already spend 20 billion a year on content. Right? And it's a nice round figure, and it's a figure that exceeds what Netflix spends on content, which is maybe 17 or 18 billion a year and rising. The problem is that 20 billion is spent mostly on things like sports rights, right? There's TNT and TBS have NBA and MLB rights, and then all the other things that they already fund for their existing cable networks, right? How much of that 20 billion is going to be spent towards streaming, towards HBO Max, Discovery plus or whatever other new streaming that they want to create. And how he allocates that money will tell you how, what he really thinks the future is if he keeps it more for the linear, for the regular basic cable channels. It's not a transformative deal in that way.
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D
I want to go back to something that you said about cnn and my question is what does all of this mean for Jeff Zucker and for the CNN in the world of Jeff Zucker?
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B
I want to jump in here and just say there's lots of high minded strategic stuff going on here. But there's also, as Stacy pointed out on Twitter this week, a bunch of just like old boys club going on. And David Zaslav is the ultimate so of back slapping, cigar chomping old boy. And his BFF is Jeff Zucker. And that personal relationship could well be important here.
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A
So there's definitely a club. There is a club of media titans and Zaslav is part of that. It includes people like John Malone, probably the biggest, Rupert Murdoch, et cetera. Right. Jeff Zucker is sort of a kind of a minor player in that club, but is part of that club. And for CNN and Jeff Zucker it's likely a very bright spot, right? Because now all of a sudden a more known entity, a guy that Jeff Zucker golfs with on a regular basis, David, these two guys are golf buddies, they live near each other, they go to vacations together, they go to each other's birthday parties. David is going to do everything he can to try to accommodate Zucker without going too far. But look, if Jeff comes in says, you know, I want to run the whole thing, that might be a problem, but they'll probably be a place for him, right? It's calming effect in the halls of CNN to this deal, right? Because AT&T, red state company, right? Red state executives buying a blue state CNN blue state Time Warner, New York company that never fit. And I think it showed interest in terms of executive turnover. Richard Plepper left, David Levy who ran Turner Networks left, KE Tsujihara who ran Warner Brothers, left though that was more of a scandal situation. And AT&T just they didn't know what they really wanted out of it. And so that never there was a culture clash between Discovery and Time Warner or WarnerMedia between David Zaslav and Jeff Zucker. There's much more of a close relationship and much more understanding and the same vocabulary, right, the old boys club vocabulary. And I think that it's good for Jeff basically. It's good for Zucker. So he'll have a bigger remit, he'll have a bigger. Or he'll get back more of the business that he lost under AT&T. @.
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D
Least. Who is this bad.
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A
For? Who is it? That's a great question. It's. Well, first of all, there's the obvious, right? It's bad for and he's sort of a lesser known name, but become certainly again reappeared. Jason Kyla are right. So we're not going to cry for him necessarily. He's a millionaire, he's going to be perfectly fine. But he definitely got, you know, there's whiplash around this, right? Because he was brought in just last year to run WarnerMedia. And when he came in, he cleaned house, he did his own thing, he brought in his own executives, he cut 2,000 employees. So those guys lost out certainly. And barely a year in, his boss and parent company says, oh, by the way, we're just going to spin this off now. We're getting rid of.
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D
This. Is Kyler the person who was responsible for deciding to piss off half of Hollywood by saying, we are going to stream movies day.
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A
Of. Yeah, he's that guy. He's exactly that guy. The thing to understand about Jason Cuylar is his early days he worked in media, but really he's a tech guy. Right. And his sort of biggest claim to fame is that he was the founding CEO of Hulu, which launched in 2007, the same time that Netflix started streaming. So Hulu was actually as early on streaming as Netflix was. The idea at the time though was Hulu was a joint venture between these big conglomerates, which basically meant NBC and Fox and ABC were just available to watch on Hulu two or three days after the shows aired on the regular tv, right? It was free, it was ad supported. And Jason Kylar, who had spent a portion of his career at Amazon, sort of took the Amazon lesson of like customer service with him, right? And so he felt Hulu was best as a free service with fewer commercials, easy to use with great technology. And in other words, he's not beholden to the traditions of media. He never was as far back as 2007. So when he came on board at WarnerMedia, he's like, you know what? We have all these great movies. We're trying to goose subs for this, our new HBO Max. Why don't we just make it available right on HBO Max the same day, Right. As a consumer. That's great. That's exactly what you want. I already pay for this thing and it's now like what, 15 bucks a month. But family of four can watch a movie that would. Otherwise I'd have to pay 50 to go to the movie theater. Awesome. Now, of course that sucks, quote unquote for the Hollywood creatives, right, because they lose money, right. That potentially lose money on that because they get back end on the gross receipts from the theater. So Kyler had to go back to all the agents, all the big stars, and kind of rework a deal and say, you know, we'll give you a few extra hundred million to make up for that. So Kyler basically screwed that up. He didn't involve them. Right. He didn't sort of check with him, basically, very simply. And then he kind of reversed course a little bit, says, okay, well, after this year, we'll probably go back more of a regular schedule. Right? And I suspect that David Zaslav will probably hold to that as well. Zaslav is going to be more beholden to the traditions of Hollywood than Kyler ever was. So in a weird way, ironically, it might be bad for consumers all around, right? Or at least not as good as it might have, you know, that Jason Kyler tried to make it for.
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B
Consumers. And what about AT&T shareholders? They spent $100 billion buying this thing. They're spinning it off at a valuation much below that. That sounds bad for them. Maybe it isn't. If you do, like a bunch of weird math with debt and dividends and stuff, maybe AT and T is getting out of this relatively.
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Unscathed. I spent like a day on the phone with AT&T and they did the math for me, and I'm like, are you serious? This is the math you're giving me? Basically. Look, this is the math they come up with. They spent $107 billion to buy time Warner, including debt, right, in this new deal. Well, so since they bought it, they sold off a bunch of stuff. Their stake in Hulu, a bunch of real estate assets, some foreign businesses, and netted 5 billion, right? So that's 5 billion back in the bank, right? This deal, this spinoff merger, one of the brilliant things about this deal for AT and T is that they get to delever about 43 billion in debt, right? So they're just taking 43 billion of the 170 billion in debt they have in the books and then transferring it to this new entity. Right? They're just sort of here, not our problem. Right? So that's another. They're getting close to 50 billion just there. Then the last part of it is, they presume, look, we're going to own 71% of this new entity. Discovery is going to own 29%. What were discovery shares trading on the Friday close before we announce this deal? By all that math, they figure, oh, so our 71% stake will be worth about 59 billion. So that gets them to exactly 107 billion. So they're arguing they didn't even, they didn't lose a penny. Not only that, they're also saying, guess what? We've taken about 15 billion in cash flow out of the business in the last three years. So we actually made some money. I mean, come on. Right? That's not. First of all, Discovery shares could fall and they probably will by the time this deal closes. Also, all the time and money you spent fighting the doj, hiring bankers to advise you on this, that is not an efficient use of capital, regardless. Even if I buy your executive time. Exactly.
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B
Right. But one of the things we can see just presumptively is that from here on in, Discovery shares are going to be trading as a proxy for the future Time Warner Discovery combo. And we're going to be able to put a, a market cap on that, like an implied market cap on that of how much the combined company is worth. We're going to be able to compare that to Netflix. We're going to be able to compare that to Disney and we're going to be able to see, does the market think that this combined company really has a chance of muscling into being a real competitor to Disney and Netflix, or.
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A
Not? That's a great point. And just pure numbers, just in terms of their revenues coming in. I mean, this combined business would be the second largest media company in the country after.
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B
Disney. Like bigger than.
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A
Netflix. Bigger than Netflix. Right. It'll have more operating profit and more revenues than Netflix. Now that's fine and good, but it's more a question of where are they going to put their money. Right. Because again, they spend 20 billion of content year. David Zaslav claims that there's going to be more cash flow, free cash flow coming out of this business than they had before as separate businesses. But they also have will have about 50 plus billion in debt on their books. Right. So I don't think that's a nice start, frankly, for them. So they'll be a big business, have a lot of revenue, have a lot more muscle. That is true, but they'll also have a lot of debt and they're going to need to service that debt going.
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B
Forward. And the fact of the debt is going to make it much more difficult for them to do the Netflix thing of losing a lot of money and really investing in the catalog and maybe like transferring money, as you said, from the linear to the streaming. Because the linear is what's throwing off the cash and services, the.
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A
Debt. Exactly right. That the profits are still fat on linear even though subscribers are falling. Streaming subscribers might be rising, but streaming is a money losing business. I mean, it didn't become a money making business for Netflix until just last December after they crossed 200 million subscribers paying an average of $11 a month. Right. So that is the benchmark. You know, it's like you need 200 million people paying an average of $11 a month around the world just to be a break even business. Right. So the economics of streaming are terrible, but people love it, it's great for consumers, it works very well. That is the future. And these other companies, you know, they're going to have to bite the bullet and figure out how quickly they can get to that same.
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C
Benchmark. I wonder what this will mean for NBC and CBS going forward. I heard some people speculating they're going to merge and maybe because they can't be out there being small anymore.
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B
And that's there's no way an NBC CBS merger is going to pass. Antitrust, Right. That would never.
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A
Happen. Well, so that's a great.
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C
Question. Dying.
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A
Industry. I like that question because I do think, and Felix, you're right, like through a traditional antitrust lens, you can't have a company own two broadcast networks, period. Right. You can't own NBC and cbs. But the Biden administration, as hard as they are on tech, I do think they have a lot of sophisticated people thinking about antitrust. And if they really want to apply true sophistication to looking at these media deals, they would or should, would, should define the marketplace differently than previous regulators had. And what I mean by that is what is media competing against? They're competing against Facebook, they're competing against Amazon, they're competing against YouTube, they're competing against Twitter. Right. And you can't define the media marketplace as just sort of the media companies and whatever revenue they're generating and what portion of that revenue they have. This new Warner Discovery might be the second biggest media company, but it's probably like sort of the 20th largest tech media entity.
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B
Right. If you include Facebook and Google as media companies, which they are, then it's a fraction of their.
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A
Size. Exactly. Maybe they allow those deals.
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B
Right? Yeah. So if, if owning Time Warner made no sense for AT&T, which is a pipes company, not a content company, then does owning NBCUniversal make no sense for Comcast, which is a pipes company content.
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A
Company? It never made sense. But here's why Comcast is the exception. And I do give Brian Roberts the CEO credit for this. They bought NBC, NBC Universal, but they operate NBC Universal as just another company within the portfolio. Right. There's no real synergies between these two. They've been trying to create ad targeting synergies, but in reality, the way they've been operating it is they've operated Comcast as a cable company and left it to do that, and operated NBC Universal as a media company and left it to do that. So as long as you operate both businesses well, yeah. Then you're realizing some extra cash flow that flows to the corporate overhead. But even then, they don't even take a ton from the. From corporate overhead. Right. So there are just two businesses that happen to be owned by the same entity and are operated fairly well, and that's why it works. But it doesn't mean one plus one equals 2.1. Right. One plus one still equals two in that sort of scenario. So it's more of an execution thing in that case, why it works versus what? AT&T. They failed execution utterly around.
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C
That. My takeaway from this and from other experiences that I've maybe had this year is that phone companies are bad at content and they're bad at innovation. Like, these are businesses set up to just take the money. Like they run a network, they take the money, they compete for people with phones, and they don't really innovate or invent and they don't understand that content requires both of those things, innovation and.
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A
Invention. They're widget.
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C
Makers. I guess Comcast is an exception in that it's smart enough to know it doesn't know what it's doing and just gets out of the way. But these other companies, they don't know that. They don't know what they're doing. So they're trying to do stuff and they do it badly and then it all falls apart. And then they make up some funny math and try and convince you that it was totally.
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B
Fine. Talking about funny math, let's talk about.
- [23:37]
D
Crypto. Oh.
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B
Man. Which the thing that has never made any sense. I've been a crypto skeptic, I guess, since what, 2011, but we had a fun little episode this week in the crypto markets. Crypto. I will admit I was wrong. Crypto is not dead as I thought it would be. Bitcoin is not dead as I thought it would be back in 2011, 10 years later. It is alive. But it is alive in a weird way. It is alive as a speculative financial asset that people can park money in in the hopes that it will go up in value and maybe be some kind of inflation hedge or something like that. All the promise about a payments network and a currency has basically gone out the window. And it's very much. The world has decided it is a commodity, not a currency. It has answered that question. And so there was a big test of Bitcoin as a store of value this week. Not so much in terms of the volatility of the price. We thought, you know, bitcoin prices, crypto prices go up and down a lot. And they went up and down a lot. And that's normal for crypto, but more in terms of can you actually do the thing that you need to do if you have a store of value or a commodity, which is convert that store of value into dollars at whatever price? And that was the big failure this week. The two big exchanges, Coinbase and Binance, both basically went down and failed. And you couldn't do that thing. You couldn't convert your bitcoin into dollars. You couldn't convert your ether into dollars, or for that matter, the other way around. You couldn't buy them if you wanted to buy them with dollars. And that seems to me to be a really big problem with crypto in general. If that avenue doesn't work when you need it to, then it just isn't a store of.
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C
Value. But, Felix, I will say I was just reading an interesting piece on Bloomberg Opinion this morning. I'll link to it in the show Notes, because I don't remember the author, but he was saying that actually Coinbase and I think Binance, you said, are centralized exchanges, and they went down. They didn't function as they should have during this volatile period. But the decentralized exchanges where people trade bitcoin outside of like Coinbase for the normies or whatever, they didn't go.
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B
Down. Correct. But you can't trade dollars on those exchanges. All you can do is trade your Bitcoin for Tether or stablecoins and like, who the hell wants that? As we found out this week, or was it last week, 3.7% of tether is actually backed by dollars. Used to say it was 100% and now it's 2%. So y. You can convert coins into other coins, but in order to be a commodity, I really do think you need to be able to convert it into.
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C
Dollars. But that seems like something that will get fixed. I mean, other exchanges, like Robinhood has the same kind of problems. It's not like a crypto problem, per se, that those exchanges didn't work. It's more like a tech.
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A
Problem.
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B
Right. I think it's a crypto problem. I genuinely do think you have.
- [26:37]
C
That problem when there's like a lot of trading as far.
- [26:39]
B
As. No, I think it is a crypto problem because it need, you need to be able to trade this. The one thing which didn't go down was like the CME Bitcoin coin futures, they kept on trading. And so so long as you stay outside cryptocurrency itself and inside the world of regulated exchange traded futures and options, then it can work. But if you actually want to buy the commodity itself, the Bitcoin or the ether, then there's really no way of getting in and out when you want to. There's certainly no guarantee that you can do.
- [27:08]
A
That. Well, it's also why, I mean, bitcoin goes up and down when you buy it with dollars. That's where, that's what we're tracking. We're tracking the value of bitcoin relative to dollars all the time. And so if you can't spend your dollars to buy bitcoin, the bitcoin goes down or go, you know, it just, it goes sideways. And so the way I see it, and I could be wrong, what happened with these crypto exchanges is ultimately a settlement issue, right? Which is what the issue was with GameStop when Robinhood and those guys like sort of halted trades. Like, they didn't halt trades, they halted buying and selling on their platforms. You could still buy GameStop stock, but just not through these particular entities. So the fact that there are so few entry points for converting dollars into Bitcoin or for normies to do so, which is the masses. And if it's a settlement problem, there's something sort of ironic about that, right? Because the whole point of crypto is that settlement shouldn't be a problem. Right. The whole idea of a blockchain system is that it's a settlement easy solution. You don't need like banks to have agreements with each other and have the Fed sort of back certain kind of ach settlement.
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B
Issues. It's all decentralized, it's built into the blockchain. And that is actually the single biggest problem with crypto right now. Certainly the big two, Bitcoin and ether, used to be able to transact on Bitcoin and ether very quickly, within a couple minutes for like a few cents. Now it can take hours and it can cost you upwards of $50 to do a single transaction on the Ethereum network. The settlement just isn't working. The demand for transactions has completely exceeded the capacity of the network to settle those transactions to the point at which most People just don't transact on these blockchains at all because it's so unbelievably cumbersome and expensive to do.
- [29:03]
A
So. Also, blockchain settlements still require something like five or six ledgers to agree with each other before it's considered closed, right? So that takes time. There's a lot of computing power.
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B
That needs to have a lot of computing power and increasing amounts of computing power, increasing amounts of carbon emissions and increasing amounts of money. Like, it's all moving in the wrong direction. I remember talking to the people at Swift who transfer trillions of dollars every day, and they were saying, like, our goal is to reduce the price of a transaction by 90% every few years. And they've been doing that for decades. Meanwhile, the price of transactions has been going up on blockchain and ether every year for, like, however many years. It's going completely in the wrong direction. It's not working at all.
- [29:46]
A
Well. So can I ask just a very fundamental question that is, like, maybe stupid. Why does crypto exist exactly? Like, what do people use it for? When Elon Musk said, oh, you can now buy a Tesla with crypto, and then now he backed off of that. Even that didn't make sense to me. If you own Bitcoin, you own bitcoin because you think it will go up in value relative to the dollar, right? So if you are then forking over your Bitcoin to buy the Tesla, you're losing out on whatever gains you presume are going to happen in the value of Bitcoin. You'd be better. Like, you don't want to give Elon that extra margin ultimately, right? What you would be better off doing is converting that bitcoin to dollars than buying your.
- [30:29]
B
Tesla. Well, either way, you're losing the.
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A
Bitcoin, you're losing the bitcoin. True, but, like, then you wouldn't use the Bitcoin, is my point. If you're invested in bitcoin, it's because you think it's going to go up in value, right, Relative to the dollar. Why would you ever use it as a form of currency, is what I'm.
- [30:43]
B
Saying. It's not a currency. We've given up on the currency.
- [30:46]
A
Thing. Well, then, okay, great. It has no value as a currency if it's a store of value, if it's a commodity. What do I look at to decide how I allocate my dollars, my portfolio, right? Move it out of bonds into bitcoin. Move it out of equities into what? What are the signals that I look at just Elon Musk Twitter feed. Seriously, is that what it is? That, like, tells me there's nothing.
- [31:07]
B
Fundamental. Can you think of.
- [31:08]
D
Anything? It's mostly Elon Musk's Twitter feed. When I was doing some research for this segment, I. I basically Googled that exact question to see how different people have answered it over the years. And there was a columnist in. Let me look at the date December 2020, who essentially said, and I quote, bitcoin's value obtains from its under. I was like, cool, so it's a derivative. This, I understand this. And even on Bitcoin.org which is a website, you know, one of the things that they say is like, no, there's no intrinsic value. The values in the utility and kind of the community and the security features and the settlements which we've just discussed is not necessarily reliable. I am totally fascinated by cryptocurrency as a set of solutions in search of problems. And I continue to not have seen examples of there being a good fit between the problem this is claiming to solve and an actual.
- [32:04]
B
Problem. A very good fit that we talked about last week. Right. We know what the mainstream. There's the dark web and ransomware that is the main actual utility for Bitcoin, that the problem that only bitcoin can solve, that other currencies cannot solve. So in a weird way, if you are buying Bitcoin on the basis of its utility as a commodity, like, you know, you'd buy oil, say, because people burn it and create, you know, they can drive cars with it. If you're buying Bitcoin on that kind of a basis, what you're doing is you're betting on crime. Yay. Good for.
- [32:38]
C
You. I think there's some use cases for Ethereum also that I don't, to be honest, fully understand. I was reading some Joe Wiesenthal today and Ethereum, apparently it's not just about Ether. There's like a blockchain network that's used for other stuff like trading NFTs, for example. That makes it slightly different from Bitcoin, which really is just a thing that people trade for money.
- [33:01]
B
Like. Yeah, Ether is so many. It is like a distributed computer and you can do things like NFTs. Although to be fair, people were creating NFTs long before ether.
- [33:10]
C
Existed.
- [33:11]
D
Right. I do think it's.
- [33:12]
B
Useful.
- [33:12]
D
Yeah. To separate blockchain from.
- [33:14]
C
Cryptocurrencies. Yeah. And my other thought is that Bitcoin has filled a Trump void, like Trump left a void in Our, like, news brains, and we needed to fill it with something. And bitcoin plus Elon Musk kind of fulfills that need for, like, some kind of volatile, emotional news story because it's such an emotional. Bitcoin is so emotional. The crypto guys get really excited about it and angry about it on Twitter. And I know men are not supposed to be emotional, but I feel like around. Around this area, it's very. It's like a story. It's a culture. It's not just a currency. It's like a whole. It's a. Yeah, it's a culture. It's a. It's a new part of.
- [33:55]
A
Society. It's mostly men, maybe, who are actually emotional. And the value of bitcoin, then, is fueled by male mass.
- [34:07]
B
Hysteria. Yes.
- [34:09]
A
100%. Way to understand what bitcoin really.
- [34:14]
B
Is. And not just men in general, but a man in particular. Can we just say who is the man who got caught up in the mass hysteria around Trump, became like a massive Trumpist, disavowed Trump, and has now got caught up in the mass hysteria about.
- [34:29]
D
Bitcoin? Elon.
- [34:31]
B
Musk. Oh, Anthony.
- [34:34]
D
Scaramucci. Oh.
- [34:35]
A
Man, oh.
- [34:38]
B
Man. The Moochie's embrace of bitcoin is so. So it is 100% tracking his embrace of Trump. Right. The way that he used to hate it and then embraces it. And it's like, oh, no, I was completely wrong. This is wonderful. And then jumping in with both.
- [34:55]
D
Feet. I mean, to Emily's point, though, this is the theory of, like, meme stock summer, the idea that people were mostly men were looking for something to do when everything else was terrible. And I don't discount it entirely because trading has always been an emotionally fueled activity. However, you might want to believe in efficient markets hypotheses. If you think about CNBC at the height of CNBC, when it was just Jim Cramer literally screaming at you and telling you you were an idiot if you didn't take advantage of this particular thing. I'm also really reminded, Ed, in terms of your description of folks who get really passionate about crypto gold books. Right? Like, there was also a time in financial blogging where if you wrote literally anything about gold, you would have to moderate your comments for the next two days because it would just be a lot of people who were also convinced that there was about to be an electron bomb of some kind and everyone had to hunker down in a bunker. So it certainly appeals, at least in the rhetoric that is visible in a lot of these forums, to Certain of the same types of personalities that have historically piled on to other types of speculative.
- [36:10]
A
Assets. And remember, like the whole point of blockchain was to get out, you know, was to oppose a centralized government system. Centralized Fed. Right. So the early bitcoin holders, who are probably long holders, are effectively a lot of them have anti government sentiments. These sort of. And so I think that's the baseline, right, of who the big holders are. And for a while it became like the fear trade. If you were afraid of what's happening in the world that you thought the world was going to collapse, you bought bitcoin.
- [36:41]
D
Right? Yeah, that was the gold idea as.
- [36:43]
A
Well. And that was a gold thing too. Right. So it kind of matched that. And I think to some degree it still is that the people who convert their dollars to this thing that I still don't quite.
- [36:53]
C
Understand. But if you, if the world collapses, like, the Internet's not going to.
- [36:57]
D
Work. These are details, Emily.
- [36:59]
B
Details. The Internet doesn't work, Emily. You can wave your USB thumb drive. If you ask me, I have.
- [37:05]
D
Coins. This is the same problem with gold. What are you gonna do, eat bricks? So, yeah, in the zombie apocalypse.
- [37:11]
C
Movies, there's always some scene where the guy steps on the dollar bills, you know, in the bank there's always that scene. Either dollar bills or gold, it doesn't.
- [37:18]
B
Matter. The preppers are not into bitcoin. The preppers are into.
- [37:22]
C
Guns. See, now that makes sense because if the world ends, a gun is probably a good thing to have, to.
- [37:27]
D
Be honest, it's one of the reasons ammunition is so expensive right now. That is a true.
- [37:32]
B
Story. Tell us, what was the new circuit? I can't even remember.
- [37:35]
C
Anymore.
- [37:36]
B
Burnout.
- [37:37]
C
Burnout. I mean, it's evergreen and I think people are talking about it a lot right now. And it's. As the pandemic, I guess, ends a little bit or is winding down, at least in the US I feel like it's a good time. We've not talked about it throughout and it's been a big topic of.
- [37:53]
B
Conversation. We have spent a year, what, 14 months in just this mental state of whatever insanity, what has it done to.
- [38:02]
D
Us? I think burnout is one of those words right now, much like critical race theory that a lot of people are using and few people have taken the time to define. So I want to take some time to define it. The clinical, clinical word burnout. And this is like an actual the who in there. It's a manual called the International Classification of Diseases, which is the thing that medical examiners Use to be like, what did you die of? Is it in the ICD? They in 2019 accepted burnout as what they call an occupational phenomenon, which is important, and I think we need to talk about that piece. But not a medical.
- [38:43]
A
Condition.
- [38:43]
D
Right? And so it's described in this gigantic manual as a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed. And to me, that's important for two reasons. It's important because it emphasizes that it's a function of a dysfunctional workplace and it emphasizes that it isn't just something like somebody wakes up and decides that they.
- [39:07]
A
Have.
- [39:08]
D
Right. Like there is a sense of this is chronic, this is ongoing. You arrive at the realization that you are exhausted or you hit your job, or you're not as able to do the things that you were doing before versus what I would describe as like an acute stress moment or a panic attack or something else. And I think a lot of the dismissal of the idea of burnout has come from people who are like, oh, it's just a bunch of privileged techies quitting their cushy jobs or a bunch of media people who can't handle how hard life is. And actually, no, the people who are most affected by burnout are like health care workers, people who have been on the front lines of trauma. It's something that's been widely reported in a media context among war correspondents. So this isn't a particularly new phenomenon, but it is more widespread and more visible because we have spent the past however many months at this point in unprecedented conditions collectively while still trying to work or find work through.
- [40:16]
C
It. And I think it's important maybe to talk about who is most susceptible to burnout. You already mentioned healthcare workers and veterans. And Jill Lepore points out in her New Yorker piece that the term kind of comes out of the free clinics of the late 1960s and 70s. And it's sort of like a drug term. Like you're burnt out from, like drugs. But then if you dive deeper into that, the people burnt out from drugs were like Vietnam vets. So it comes full circle. But in addition to those groups, I think in the modern day workplace, and especially in the past year, it's been women of color and people of color who have experienced burnout at higher rates. Sort of the combination of, for women, like maybe more caretaking responsibilities at home for people of color, it's been a really hard year with COVID has been disproportionately hitting those groups. George Floyd and the everyday sort of discrimination those groups are facing in the workplace maybe is even harder to handle, more stressful to handle in the past few years than maybe even usual. And I was looking at a survey of Harvard Business School grads which found that women twice as likely to be burnt out as men, and then women of color even more likely to be burnt out in the workplace, because it's like, work is stressful, and then there's added stress when you're a member of these groups that face higher hurdles all the time. So I think that's something to sort of layer on top of the phenomenon.
- [41:41]
D
Too. Yes, there is a key element of burnout, which is the idea of being expected to maintain a certain kind of performance, whether it's the performance of caring, in the case of teachers, healthcare workers, et cetera, whether it's the performance of professionalism and whatever that means. And that's a term that's often weaponized against people from these historically marginalized groups. And the idea that you have to perform wellness, even when, because of all the circumstances that you're describing, you are not having a particularly good time of.
- [42:17]
A
It. I have something to add to this. So. So I want to talk about that sense of burnout, especially amongst people of color, even before pandemic. Right. Because. So I did a story not that long ago about Conde Nast. I did several stories about what it's like to be a person of color working at Conde Nast. And generally, it was pretty terrible for all the obvious reasons. But one of the people I spoke with explained it to me in this. Really. In this way that sort of made sense. That is a nuance that I think a lot of people don't understand. She was Anna Winter's personal assistant. Black woman. Anna treated her with respect, treated her no differently than any of her other assistants, which meant, like, harshly. But she herself knew it wasn't discriminatory. It was just like, that's how she does everything. I think a year into it, or barely a year into it, she quit. And Anna was surprised. She was dumbfounded. And she said to Anna, no, it's not you. And she couldn't quite articulate it, but the way she explained it to me was I was exhausted because of the Persona, the doppelganger she had to create. Yep. Coming into work every day in an office, that it was peculiarly, particularly acutely sort of the white, privileged, rich, blonde world, which it very much was. And so she was treated with respect, largely, with a few exceptions here and there. But she never felt a community there for herself. And she had to put on a certain face and she did her job well, but she had to do her job and then do this other thing right? Of putting on a certain Persona. And that was a very commonplace response that I got from people of color who worked at a place like Conde Nast. So in general, the workplace is already exhausting for people of color, especially sort of these white collar jobs. And couple that with a pandemic. I mean, it's just that much more.
- [44:17]
D
Difficult. It's absolutely correct, that performance. I have good group texts. It's one of the things I'm most grateful for in my life. And I think about the fact that whenever there is a bad thing happening in the world that sort of disproportionately affects people who aren't white, the group texts sort of blow up with two types of observations. One is, oh, this is when I find out if, like, white people think I'm their friend, right? Because you start to get the messages of, I'm thinking about you today because unarmed black man died. And that made me think about the one black person that I know. And the other is the weird schism of being in places in which you are not fine. Like something is really affecting you, but everybody else around you is fine and utterly oblivious in some cases to whatever you might be experiencing, even if that thing is very profound and very visceral. If we think back to, for example, the Atlanta shootings that targeted mostly Asian and Asian American women, that was a really hard time for people who have AAPI backgrounds. And they were like, yo, we need to talk about this. And a bunch of people around them were like, la, la, la, la. Just another normal week. And that is difficult to keep explaining to people. It is difficult to keep explaining to people that what your interior world, the destabilization of your interior world on a given day isn't something that you are allowed to project onto, like the zoom or the work meeting. And it isn't only that sense of you're not being allowed to project it. It's also the sense of people on the other end of it aren't even aware of how much you're holding it together despite all of.
- [46:06]
A
That. And then if you broach it, that's a whole other layer of interaction that you have to kind of create so institutionally that vocabulary, that language doesn't really exist. So you have to kind of create it every single time. And that's exhausting. But that's a contrast to. I mean, there was another article that we read.
- [46:24]
D
Right? Kevin Rooses in the New York.
- [46:26]
A
Times, the YOLO article which described basically a lot of fairly well off, fairly privileged people, especially in tech, who had enough money to decide that, you know what, I'm going to quit my job and I don't know, live in a trailer for a year, tour the country kind of a thing, or go back to that passion I had over whatever art thing I was into once upon a.
- [46:49]
C
Time. Someone said, move to the beach and mine.
- [46:52]
D
Crypto. That is an anecdote that was in there. I think the challenge with that article, and this is often the challenge of the significant cultural clout that the New York Times has, is it really contributed to that conflation of, eh, I'm out with people like Olivia Messer, who was one of the people mentioned in that piece, who was a former reporter for the Daily Beast, who at length on Twitter sort of went through here are all of the ways in which I'm dealing with actual diagnosed trauma from being one of the people who was covering families who had experienced incredible tragedy from dealing with a lot of stuff herself. And that is next to people who are like, I'm going to spend some time with my wife and my dog, which valid, but a different set of underlying dynamics, right? And look, we're generally not great at nuance, but when you're talking about things that people are experiencing in very different ways, I think that nuance is really.
- [47:48]
C
Important. And I think there is a kind of a split even at the origins of the word between the Vietnam vets with PTSD who are experiencing burnout. And then the words use rising use in the, in like the 1980s as like something that yuppies were going through that like really high.
- [48:09]
D
Earnings. Too much cocaine.
- [48:10]
C
Working. Yeah, too much cocaine and too much, I don't know, Gordon Gekko.
- [48:14]
B
Blah.
- [48:15]
C
Bl. Shiny hair. I don't know how to talk about it. There's two ways of thinking about burnout. It's like a fancy thing that happens, but also a very. A response to trauma and stress. And there should be better words, I.
- [48:28]
A
Guess. Places like Goldman are examining this.
- [48:31]
D
Stress thing, law firms, private equity. But look at those three examples, right? The people that we can reflexively reach for are high visibility, high functioning, high bank account, access to media coverage. And that leaves out the healthcare workers, the grocery store workers, the people who still had to take care of other people's kids over the course of this pandemic. And that to me is like the real problem is because in the same way that everybody who gets diagnosed with anxiety has often employer funded healthcare and easy access to therapy in a way that a lot of folks would also benefit from but don't have. The same, like burnout has become a conversation about relative privilege in a way that's super.
- [49:16]
B
Unhelpful. One of the interesting market signals I've seen here is the skyrocketing price of Lyft and Ubers, which is, on one level, it's just like a first world problem of people having to pay more to be driven somewhere by a chauffeur. But on another level, is entirely a function of massively reduced supply. And drivers, especially during the pandemic, just realizing what an incredibly stressful and dangerous job this was, was, and just saying, there's no way I can do this. And dropping out of that particular labor force without, as you say, any of the safety nets or professional support. They didn't even have an employer or New York Times stories, or New York Times stories. And of course, Uber and Lyft were adamant that they weren't their employers, so they had no responsibility to look after their mental health. And so these people just dropped out of those jobs. You know, the, the second order effect that we can see is that it's the higher prices for those car journeys. But the first order effect is just like a bunch of people losing the way that they made their money, made a.
- [50:22]
C
Living. I mean, that opens the door to a whole conversation that we should probably have another time about the current labor.
- [50:28]
D
Shortage. Labor shortage, yes.
- [50:30]
C
Absolutely. And yeah, maybe burnout does play a role in that. There are some jobs just not worth the stress right.
- [50:36]
A
Now. Labor shortage. But guess what? Corporate profits are up. That conundrum is amazing to me that there is. I mean, the danger in that dynamic is that companies are realizing, oh, we can be productive and have fewer workers or more productive and have fewer workers. Automation is becoming a bigger part of the mechanism of companies now. So, yeah, that's definitely a whole other.
- [51:02]
D
Episode. But I mean, please, let's do an episode on this. But in terms of, like, food service workers, like, we've talked a couple of times about wage pressures in hospitality, and I want to give a shout out to iter because they've been doing really phenomenal coverage of the perspective of people who work in food service and the fact that a lot of their calculation is we have been at risk. We were essential workers during the pandemic. We have historically not had great labor conditions. And just like folks who are gig economy participants in terms of Uber and Lyft drivers, food service workers are also thinking is this worth it to me. Is this like sub minimum wage or tip only wage? Worth it to me for the conditions under which I'm providing my.
- [51:45]
A
Labor. Always.
- [51:46]
B
Fun. Okay, numbers round. I'm going to kick off this week because it's a little bit. We're going to stick to media because this is an Eddy extravaganza. I had a highly scientific Twitter poll this week with 1,223 votes, so you can take this one to the bank. And I basically said the AT&T decision to buy WarnerMedia, did that make any sense? And the answer was 86% of people, unsurprisingly, said no, that made no sense at all. I also, however, said, what about Amazon's decision to try to become a Hollywood power and the streaming giant? Did that make any sense? And 55% of people said that didn't make any sense either. So that is actually going to be what we're going to be talking about in Slate plus with Ed about whether any of this stuff makes any sense. So, yeah, I guess I should say what my number.
- [52:40]
C
Is. Which Is your.
- [52:41]
B
Number? 55. 55 is the number is the percentage of people who think that Amazon's streaming strategy makes no.
- [52:49]
D
Sense.
- [52:49]
B
Amazing. That was a dog's breakfast of a number. I need Emily to come in and rescue this show. Emily, what's your.
- [52:56]
C
Number? My number, Felix, is 39 million. That is the number of families who will start getting money from the government directly, either via check or into their bank accounts starting in July. And then every month, if they have children, you get $300 per kid under six or $250 per kid over six. And this is a temporary program that I think the White House wants to make permanent. And 39 million families is like. I think it's in the high 80 percentage of families, if you make more than 75,000 a year, starts to phase out for the checks. If you are a couple that makes more than $150,000, it phases out. And I think this is cool that people are going to just start getting money every month. I don't have a big insight from that. I think people need money. Conservatives are upset because I don't even understand why. I read a quote from Marco Rubio about how this is terrible, but I don't get why it's terrible. He says, bad for family.
- [53:53]
A
Values.
- [53:54]
C
Why? I don't know. You can use the money to buy stuff families need. Bad for.
- [53:58]
B
Cohesion.
- [53:59]
C
Why? The more money a family has, the easier it is to be cohesive. So I think all Those arguments are dumb and it's great news for.
- [54:06]
B
Everybody. All right, who's going to step up and like at least straw man argument against this? This is why we need Anna Shymansky on this show. We need someone who can at least explain why these 39 million households, somehow it's not a good idea to pay the money.
- [54:22]
C
Anyone. It's not even enough money to disincentivize.
- [54:25]
A
Work.
- [54:26]
C
Right. It's not, oh, I get an extra $600 a month so I can stop working. That. That's not quite.
- [54:31]
B
Enough. Right. And it doesn't go away if you work. The argument with the unemployment checks is that it goes away if you start working, but this one doesn't go away if you start working. Maybe it's, you know what it is? It's a disincentive to make more than $75,000 a.
- [54:43]
D
Year.
- [54:43]
A
Exactly. There you.
- [54:44]
D
Go. Rubio's camp, as they always do, they put out a statement on this and they're essentially arguing that it's a disincentive to work. It doesn't require one parent to have a stable job. It removes incentives to marry. Yeah, I'm quoting the Rubio statement. And it is not pro family to direct cash payments to single parents without ensuring child support orders are established. So. Oh, my God. There are several. I mean, these are bullet points. They're in bold. Most of the arguments are kind of a very typical rehashing of the, you know, welfare makes people weak and it wrecks the family structure and it disincentivizes productive values.
- [55:27]
C
Frame. Yes. No one ever says that about, like tax breaks for super rich.
- [55:32]
D
People. No, because super rich people are obviously highly productive, family oriented members of society.
- [55:38]
C
Emily. But their families are breaking up at record rates. Look at the Gateses. Look what all that.
- [55:42]
D
Money. They're still richer than us, though, so it must be.
- [55:45]
B
Working. Stacy, do you have a.
- [55:47]
D
Number? I do have a number. My number is 50 billion. So next, next week, or I guess this part of me is the one year anniversary of the murder of George Floyd, which is a wild timeline to think. And the Financial Times reported that although American corporations pledged to spend $50 billion on racial equity, they've actually spent something closer to like 250 million, which is a significantly smaller number than 50 billion. And that it's yet another example of different types of corporate greenwashing. Right, where it's like, like Black Square is for everyone, but no real money. And I am going to be very interested to see, as this sort of deadline approaches, whether there is a sudden flurry of activity among corporations who have spent the past several quarters saying racial justice on earnings calls, but not necessarily doing anything to put their real money where their mouth has.
- [56:47]
B
Been. It's a bit like stock buybacks, right? It's a lot easier to announce a stock buyback than it is to actually spend money on, since you get the rally in the stock price from just making the announcement. What you often find is companies just announcing stock buybacks and then never doing.
- [57:00]
C
It. I was also going to mention during the burnout conversation that companies have tried to hire more people of color after George Floyd, and it'd be interesting to see if they're going to do anything about the burnout problem and the cultural problems that are in their workplaces when they bring new people.
- [57:16]
D
In. Companies have tried to launch internship and apprenticeship programs at generally lower rates and fixed contracts for more people of color. You haven't seen an attendant increase in folks being hired into significantly senior positions, which is what I'm interested in understanding. Because to your point, Emily, it's very hard to fix all the reasons that you didn't have those people in the first place by keeping your exact same management structure in.
- [57:42]
B
Place. Ed Lee, what's your.
- [57:44]
A
Number? Is this going to be fun or interesting or weird? I have the same exact number as Stacy Woo. 50.
- [57:51]
D
Billion?
- [57:52]
A
Yeah. The amount of shareholder value at AND T destroyed in their Time Warner.
- [57:58]
D
Escapade. What is.
- [57:59]
B
Money? Okay, so this is. You're kind of backpedaling a little bit on the.
- [58:04]
A
Math. Well, I was being a good journalist. By asking questions and writing down answers and reporting the answers doesn't mean I necessarily agree or buy the answers. The context, by my own math, is that they destroyed $50 billion of shareholder value in that.
- [58:23]
B
Deal. And this is just instead of looking at enterprise value, you're looking at.
- [58:28]
A
Market cap, basically, pretty much. Plus some enterprise plus debt, plus banker fees. They spent 150 million on advisory fees. Total about 90 plus million to buy Time Warner and then now another 60 million plus to sell. So what was money could have been spent on? Lowering cell phone bills more.
- [58:54]
B
5G. But still, that's 150 million is a small part of 50 billion. What's the bulk of the 50.
- [59:01]
A
Billion? It's mostly market cap. Right. It's mostly where shareholders were just sort of treading water for this whole.
- [59:06]
B
Period. So let me just get this clear. If you look at the enterprise value of of Discovery plus Time Warner pre ATT acquisition, and then you look at the enterprise value of the combined company when they're merged, value will have been destroyed. It will be smaller coming out than it was going.
- [59:29]
A
In. Yes, I'm going to go say that just.
- [59:32]
D
Ed. So you know, the FT did this math from a very different perspective and got to exactly the same number as.
- [59:38]
A
You. Oh, well, there you go. I mean, if the FT says so, then who am I to argue with the ft? Come on.
- [59:45]
B
Please. Okay, on which note, because congratulations, John stankey, for destroying $50 billion of value. Not many people can make that.
- [59:54]
D
Claim. Oh, maybe we should have a.
- [59:55]
B
List. We should have a list. Yeah, let's come up with a list of top value destroyers destroyed the most value. I feel like Time Warner is going to be like three out of four positions on that.
- [60:05]
D
List.
- [60:06]
B
Seriously. I think that's it for us this week. Unless you are a Slate plus listener, in which case you will be able to listen to evil. Even more eddily disquisitions on the future of media. Ed plus, it's a good one. Thanks for listening. Thanks for emailing us on slatemoney.com thanks to Jessamy and Molly for producing from Seaplane Armada. And we will be back next week with even more Slate.