Colbert’s Next Home, and Netflix Earnings Flexes and Anxieties

Summary

Podcast Summary: The Town with Matthew Belloni Episode: Colbert’s Next Home, and Netflix Earnings Flexes and Anxieties Release Date: July 21, 2025

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Introduction

In this episode of The Town with Matthew Belloni, host Matt Belloni engages in an in-depth discussion with Bloomberg’s Lucas Shaw and industry veteran Kim Masters. The conversation navigates through the recent cancellation of The Late Show with Stephen Colbert, Netflix’s latest earnings report, the evolving landscape of streaming services, and the ongoing litigation involving Rupert Murdoch and Donald Trump.

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Stephen Colbert’s Show Cancellation

The episode begins with an analysis of the unexpected cancellation of Stephen Colbert’s late-night show. Belloni and Masters delve into the potential reasons behind this decision, weighing financial constraints against possible political influences.

• Financial vs. Political Factors

  • Kim Masters ([04:29]): “If you just follow the facts, then I lean pretty heavy on the financial, the timing and the circumstance. [...] Neither you nor I are in a position to be able to say that definitively.”
  • Matt Belloni ([05:54]): “I call it a cloud. There is a cloud of politics over this entire thing. It may not be the reason for the decision, but it's a factor.”

• Implications for CBS and Paramount

  • Masters ([06:45]): “There is about to be a lot. [...] If they think there's been a lot of layoffs and cost cutting at Paramount to date, it's only going to get worse.”
  • Belloni ([07:03]): Discusses the potential ripple effects on other CBS programs and the broader shift towards reality and celebrity-focused content.

• Future of Late-Night Shows

  • Masters ([10:25]): “...the only type of television or one of the only types of television that like Netflix has not figured out how to copy.”
  • Craig Horback ([12:05]): Questions why streaming platforms like Netflix haven’t successfully adopted the late-night format.

Netflix Earnings Report and Market Reaction

Transitioning to Netflix, Belloni and Masters analyze the company’s strong financial performance juxtaposed with a surprising 5% drop in stock price.

• Earnings Performance vs. Stock Decline

  • Belloni ([12:05]): “They grew revenue 16%. They got a record 11 billion in revenue profit. [...] Yet on Friday, The Netflix stock dropped 5%.”
  • Masters ([13:08]): “A lot of this was already priced in and we're seeing it not just with NetFL. [...] their share of US TV viewing is basically flat over the last year.”

• Engagement Metrics and Content Performance

  • Belloni ([17:55]): “So imagine if Ms. Rachel was exclusive to Netflix.”
  • Masters ([19:01]): Highlights top-performing shows like Ms. Rachel, Peppa Pig, and the dominant viewership of Adolescence with 145 million views.

• Competition with YouTube and Talent Acquisition

  • Belloni ([15:29]): Discusses Ted Sarandos’ openness to acquiring YouTube talent.
  • Masters ([15:42]): Counters that Netflix is unlikely to poach major YouTube creators, emphasizing the strong ties creators have with their platforms.

• Use of AI in Production

  • Belloni ([20:44]): “They used AI on this. And it is not a SAG AFTRA production, it is a foreign production.”
  • Masters ([22:14]): Notes Netflix’s acknowledgment of using AI tools, contrasting it with the resistance from American guilds.

Strategic Challenges and Future Outlook for Netflix

Belloni and Masters discuss Netflix’s strategic challenges in capturing a larger share of the television viewing market amid stiff competition.

• Market Share and Growth Concerns

  • Masters ([24:01]): “They talk pretty openly. They need to grab more time of viewing.”
  • Belloni ([25:06]): “It’s a land grab. [...] And right now, it doesn't look like they are capturing more of it.”

• Potential Strategies and Content Development

  • Belloni ([25:46]): Suggests that acquiring high-profile personalities like Colbert could rejuvenate Netflix’s position.
  • Masters ([26:10]): Acknowledges the difficulty in transitioning traditional late-night formats to streaming platforms.

Rupert Murdoch vs. Donald Trump: Implications for Fox News

The latter part of the episode shifts focus to the legal battle between Rupert Murdoch and Donald Trump over a Jeffrey Epstein-related story in the Wall Street Journal.

• Details of the Lawsuit

  • Belloni ([26:12]): “Trump called him to kill the story. And he's like, f you, we're doing the story. Sue us.”
  • Craig Horback ([27:16]): Discusses the likelihood of a settlement and its impact on the potential sale of Fox assets.

• Impact on Fox News and Murdoch’s Empire

  • Belloni ([29:46]): Highlights Fox News’ reluctance to cover the lawsuit to avoid alienating its pro-Trump audience.
  • Masters ([30:00]): Points out Rupert’s tightrope walk in balancing The Wall Street Journal’s journalistic integrity with Fox News’ partisan stance.

• Future of Fox News Coverage

  • Belloni ([30:00]): Speculates on how increased scrutiny over Epstein may force Fox to adjust its coverage, potentially risking audience loss.

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Conclusion

Matt Belloni wraps up the episode by summarizing the key discussions with Lucas Shaw and Kim Masters. The conversation underscores the precarious balance Netflix maintains in a saturated streaming market and the internal and external pressures faced by traditional media giants like CBS and Fox News. The episode highlights the ongoing transformations within Hollywood, driven by financial imperatives, technological advancements, and shifting audience behaviors.

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Notable Quotes

• Kim Masters ([04:29]): “If you just follow the facts, then I lean pretty heavy on the financial, the timing and the circumstance.”
• Matt Belloni ([05:54]): “I call it a cloud. There is a cloud of politics over this entire thing.”
• Kim Masters ([13:08]): “A lot of this was already priced in and we're seeing it not just with NetFL.”
• Matt Belloni ([15:29]): “I think Netflix is increasingly a scale game as well.”
• Kim Masters ([22:14]): “It was notable in that other than the Amazon House of David show, this is probably the foremost example of a major Hollywood studio company streaming service kind of owning to use of AI.”

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This comprehensive summary encapsulates the critical analyses and discussions from the episode, providing listeners with valuable insights into the current dynamics of Hollywood, streaming services, and media litigation.

Transcript

[Matt Bellany]

If you care about Hollywood, and I assume you do, if you're listening to the Town, you should really be getting the whole story about Hollywood. That's what you get with Puck. I'm a founding partner Puck and I write a newsletter called what I'm Hearing. It's got exclusive news for insiders and analysis of the biggest stories. Puck has a bunch of great journalists. We just hired Kim Masters, who also covers Hollywood from the inside, plus media, sports, fashion, politics and finance. It's a must have for plugged in people. Fans of the Town get a discount on the description page of this episode or at Puck News. The Town Go further into Hollywood by becoming a Puck member today.

[Lucas Shaw]

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[Matt Bellany]

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[Lucas Shaw]

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[Kim Masters]

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[Lucas Shaw]

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[Matt Bellany]

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[Lucas Shaw]

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[Matt Bellany]

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[Kim Masters]

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[Matt Bellany]

Johnny now.

[Lucas Shaw]

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[Matt Bellany]

It is Monday, July 21st. Amid all the craziness of the Stephen Colbert cancellation and Rupert Murdoch getting sued by Donald Trump over a Jeffrey Epstein story, Netflix released its earnings on Thursday. Strong numbers yet again. Remember, Netflix doesn't release subscriber numbers anymore, but the financials all topped analyst targets and the CO CEOs Greg Peters and Ted Sarandos, they said they were raising revenue and profit forecasts for the year. Despite all that, the Netflix stock then dropped 5% on Friday. It's holding steady today. And why is that? Well, Netflix has enjoyed an incredible run over the past few months. It's up about 40% in the past six months and the company is now worth about $500 billion, far more than all the other traditional Hollywood studios combined. So while the results were good, Wall street now expects great out of Netflix and the dollar weakness probably boosted revenue outside North America. There's that. There's also another concern about Netflix, namely its share of viewing. The share of viewing on TVs has stopped growing in the U.S. according to Nielsen, Netflix generated 8.3% of all TV viewing in June. The that is down slightly from last year at this time. It's partly due to More competition, especially from more people watching YouTube on TV as the other services have also kind of gotten their acts together. And maybe that's because there weren't as many breakout hits this quarter. Netflix did have more Squid Game and Adolescence has been a monster hit. The most viewed show of the first half of the year, actually. But new seasons of Stranger Things and Wednesday are coming later this year. That should juice engagement, exactly what Netflix wants right now. So today we've got Lukas Shaw from Bloomberg back. We're going to discuss the Netflix engagement report and the issues they're having. Should they be worried what's working and not working based on new numbers? We'll also touch on a couple angles in the Colbert situation that hasn't been reported on yet. Here are Lucas's take on what's happening there. It's a combo platter today from the ringer and puck. I'm Matt Bellany and this is the. All right. We are here with Lucas Shaw from Bloomberg. Welcome back, Lucas.

[Kim Masters]

Hello. From 30 blocks south of ground Zero. I'm very close to the Colbert studio.

[Matt Bellany]

Oh, you are? Okay. We're referring to it as ground zero now. You mean the Ed Sullivan Theater that will likely be sold in the next year or so? I think that's part of this. They are looking at that real estate portfolio and saying what can we offload and they can get some money for that Ed Sullivan theater. All right, you bring it up. So we will start with that. We're going to talk about Netflix. But first we got to get your take. The people must hear your take on the Stephen Colbert cancellation. I have offered mine. Where on the politics versus economics scale, are you landing on the Colbert cancellation?

[Kim Masters]

Well, look, I can only go based off of what we know, right? If you just follow the facts, then I lean pretty heavy on the financial, the timing and the circumstance. There's a lot of extenuating circumstances or circumstantial evidence, shall we say, that would lead you to believe that politics play a big factor. But neither you nor I are in a position to be able to say that definitively and be irresponsible to do so.

[Matt Bellany]

Oh, but wait a second. People on the Internet are definitely in that position to say so. And many, many celebrities are in the.

[Kim Masters]

Position to say that it is obvious that the business of late night has gotten worse and worse. Now we can ask questions about why now. And I've heard the well crafted explanations for why it had to be. Now.

[Matt Bellany]

We've talked about it. They had producer deals with all these producers on the show that go from September to August, Right. So if you're thinking about canceling the show after Colbert's deal is up in May, you have to tell those people now that their next deal is going to be September through May, not September through August.

[Kim Masters]

You and I have heard this, and it is a very credible, plausible explanation, which is why we're going with it. The fact that it also happened right, as this deal is getting approved the day before David Ellison is meeting with Brendan Carr. No, not the day before, the week that David Ellison is meeting with Brendan Carr. All of these things make it hard to accept that that is the only thing going. But it's all we got.

[Matt Bellany]

I call it a cloud. There is a cloud of politics over this entire thing. It may not be the reason for the decision, but it's a factor.

[Kim Masters]

In ordinary circumstances, if you took the deal out of the equation, right, the need for approval, all of that, you would buy the financial decision. It's a show that the audience keeps getting smaller. It's not a huge hit on Social. They're losing a bunch of money. And you would maybe even give them credit for saying, rather than sort of squeeze this thing dry, we're just going to cut it and move on. But they have lost the benefit of the doubt in a lot of people's minds because of everything else. Because they settled the Trump suit against CBS because of all the things that they have done to get this deal across. It's very hard for people to take everything that they do at face value. Whether that's fair or not. That's just how it's played out.

[Matt Bellany]

I also think people in town are kind of in denial about what's about to happen at paramount in general.

[Kim Masters]

100%, which is what I tried to get at in my newsletter a little bit. There is about to be a lot. Like, if they think there's been a lot of layoffs and cost cutting at Paramount to date, it's only going to get worse.

[Matt Bellany]

Yeah, Colbert is only the beginning. I mean, these Star Trek shows are in jeopardy. The Taylor Sheridan shows, do they go after Lioness or one of the like lower rated Taylor Sheridan shows? He's never had a show canceled by Paramount. Plus, I mean, CBS programming is going to start to look a lot like ABC and NBC. Less screen, scripted, more reality, more news filler, more celebrity stuff. I mean, are Paramount plus and Pluto about to merge? Is the Daily show in play? Dick Wolf, the FBI shows? I'd be nervous if I were him. Amazing Race, all of these things that we associate with CBS and have just kind of continued on. The model increasingly doesn't support all that. And Cindy Holland, who's coming in to do her TV slate, she's got to find the money to make her TV slate. And I think it's going to come out of a lot of these things that we consider sacred cows at cbs. And it's only beginning.

[Kim Masters]

For all of the uproar about the show, setting aside political or not, you asked Bill on his podcast last night, like, how many of the people who are up in arms about this have been regularly watching late night. Right.

[Matt Bellany]

I know I put it to Bill. I'm like, tell me right now, the last time you watched Stephen Colbert or any of these guys live in linear. Nobody does.

[Kim Masters]

I was never a late night viewer. But, like, if I have ever watched any of these shows, it has always been clips on YouTube or Instagram. Always.

[Matt Bellany]

Yeah.

[Kim Masters]

And there's just not as much money in that.

[Matt Bellany]

Yeah. The question is, can they find the model to do that?

[Kim Masters]

It's also like the only type of television or one of the only types of television that like Netflix has not figured out how to copy.

[Matt Bellany]

I know Craig's been asking, like, why doesn't Netflix just have a late night show? It's a good question why it hasn't worked on Netflix. I don't think they've had the perfect match of program and platform. Like they've had the traditional late night type. People do shows for them like Hasan, Minaj, Letterman and John Mulaney. But, like, those shows weren't the perfect match for the Netflix platform. Like, they got to figure that out.

[Kim Masters]

Yeah.

[Matt Bellany]

Is it Colbert? Would Colbert work on Netflix?

[Kim Masters]

If you had to bet. What do you think is Colbert's next landing spot? Does he do anything like this again or does he do something totally different?

[Matt Bellany]

I think he does something totally different. And by totally different, I just mean probably a weekly show, something more in the John Oliver vein. Maybe he creates another character like Colbert or does something with sketch comedy incorporated. That's his background. I don't think he does a four or five night a week show for another platform. I just think those are dead. Unless it's a podcast where he could do a podcast five days a week or three days a week and then reverse engineer it via video to get it on some platform via video. Which would be ironic if he ended up, you know, on Paramount plus or one of these other platforms as a podcast to video situation.

[Kim Masters]

And then you guys can do some cross promos together.

[Matt Bellany]

We could, yeah. So, yeah. I mean, what do you think? Do you think he's going to come back?

[Kim Masters]

Well, not in hosting a nightly topical talk show, just because I think that that format is on fumes.

[Matt Bellany]

I think they all look at John Oliver and say, I want that.

[Kim Masters]

Or some of the podcast hosts or maybe a YouTube star.

[Matt Bellany]

I don't think Colbert is going to do YouTube native. He's just not. That's just not him.

[Kim Masters]

Right.

[Matt Bellany]

I do see him. Maybe HBO or Netflix or I don't think Amazon. I think the, the politics of the leadership at Amazon likely would prevent Colbert from going there. But the others, I think they're open for business.

[Craig Horback]

I just don't get it. I've never understood why the, oh, late night can't work on streaming, particularly can't work on Netflix. I've never understood that argument. They have like 90 million subs in America, which is similar to like the peak of cable subscription. Why can't Netflix have a Colbert show that they push in front of people's face and in the evening every night? I don't understand.

[Matt Bellany]

People don't watch Netflix that way. It's not a lean back type format.

[Craig Horback]

Netflix is not a lean back type.

[Kim Masters]

I think Netflix is becoming a lean back type place.

[Matt Bellany]

Okay, that's a good point. But I'm saying, meaning it's. It's video on demand is what I'm saying. These late night shows were largely a product of. You'd watch primetime, then you would watch your local news and then you would stay on the channel and just keep watching the, the comedy interpretation of the news. And that's not how people watch Netflix.

[Kim Masters]

There's also no long term value for any of these. And Netflix is still figuring out. The only live programming that they do is sort of the big loud event where like they only have to make you come in for that like once every month or two. They have struggled at directing people to something every night.

[Matt Bellany]

And Bill Maher and John Oliver do draw an audience to HBO Max. And I know that they are churn preventers. People subscribe to HBO Max because of their favorite host being there. And Colbert does have an audience. And if Netflix were to host a show, they'd probably be people that would subscribe just for that.

[Craig Horback]

Do you think it's possible that Stewart would leave his show and him and Colbert would team up for something together somewhere else at like a Netflix?

[Matt Bellany]

Love it. Maybe. I think you just pitched something called Baby Doll.

[Craig Horback]

Yeah, he definitely hasn't thought of that.

[Matt Bellany]

Yeah, Baby Doll could make it happen. All right. Speaking of Netflix earnings last Week Thursday, the numbers came out typically very strong. They grew revenue 16%. They got a record 11 billion in revenue profit. Their term net income up more than 45%. $3.1 billion in profit for Netflix. For the first half of this year, Netflix has already generated $6 billion in profit. For all of 2024, it generated 8.7 billion. So we can see where this is all going. Yet on Friday, The Netflix stock dropped 5%. And there are these concerns about slowing growth. So what is going on at Netflix, Mr. Netflix's favorite reporter?

[Kim Masters]

I'm just gonna ignore that your my slander. Yeah, the first is expectation. A lot of this was already priced in and we're seeing it not just with NetFL. My colleagues had a piece on how it's happening across the earnings and the economy where you have pretty strong earnings reports with a lot of companies. But the stocks aren't popping because the stock market has been on a tear for a lot of these companies for much of the year. So Netflix going into its earnings, its shares were up more than 40% over the previous year. Its stock had doubled. When you already had a company that was being valued at more than $500 billion, it beat its numbers, but they were all relatively small beats. And so the only way the stock was going to pop was if it was a big beat or they made some news that got people really excited. And so the fact that it was just like solid numbers didn't get people excited. The stock went down a little bit. I think the other factor is what you're getting at, which is it's probably too early to say people are worried about it, but their share of US TV viewing is basically flat over the last year. Plus, and by their own numbers, their engagement report, the global viewing was pretty much flat. And since they've added more customers, that means the amount of time that every customer spends watching is probably down a little bit. But however you look at it, the total amount of time that people are spending with Netflix has not been going up at the same time that streaming.

[Matt Bellany]

Is growing and that YouTube has been growing its audience pretty significantly, which is.

[Kim Masters]

Why they're so obsessed, at least on television. It's a company that is like just everything is running really smoothly. But you want to see stock market is looking into the future. And is this a company that has a ton of growth ahead of it or is it becoming one of these very profitable but not fast growing media companies?

[Matt Bellany]

Yeah, I mean, one of the interesting things on the earnings call was when Stephen Cahal, the analyst he raised the question that he raised on this show when he was a guest on whether Netflix should start poaching YouTube creators. And Ted Sarandos basically said, yes, we're interested. I mean, he couched it as, we want the best talent from all over the world, wherever they originate. But it was interesting for him to say, like, oh, we are interested in more YouTube talent. And I think that is a reflection on this kind of YouTube anxiety that Netflix has because they're growing and Netflix is not.

[Kim Masters]

Can I tell you why that framing is? I want to be nice because I like Stephen, but, like, wrong.

[Matt Bellany]

Please.

[Kim Masters]

There is no world in which Netflix can or will poach talent from YouTube.

[Matt Bellany]

Why?

[Kim Masters]

Because they're not going to leave YouTube. There is a world in which Netflix can make shows with talent that also wants to be on Netflix.

[Matt Bellany]

Sure, but you know what? People said the same thing about Shonda Rhimes. People said the same thing about Ryan Murphy. Money talks. Why wouldn't a YouTube drop their current following in order to take hundreds of millions of dollars at Netflix?

[Kim Masters]

It fails to understand the relationship between a lot of those big talent and YouTube. They see YouTube as the home base where they're going to be for years and years and years. And just leaving to do a show at Netflix that may or may not work is not worth it to them. Look, MrBeast, biggest star on YouTube. He made an Amazon show, but he didn't stop posting to YouTube.

[Matt Bellany]

But that's the example. But not everybody is MrBeast.

[Kim Masters]

I don't know that there is anyone else out there that is going to get as much money as Amazon paid Mr. Beast to make that show.

[Matt Bellany]

And by the way, you don't lose that YouTube audience. It's still there. You just go to Netflix for a few years and make content exclusively for them. Ryan Murphy ended up going back to Disney after he was at Netflix and he still had his franchises at Disney that he could go back to. And you know, your audience sits there for a while on YouTube, but then you get 2,300 million dollars to be at Netflix.

[Kim Masters]

Maybe there, there are one or two people who will do it, but I do not think you will see some stampede of 10 or 20 top YouTubers saying, We're going to go exclusive to Netflix. That would require probably hundreds of millions of dollars. And I don't know that this is high enough on their priority list from a programming perspective to do that. The competition with YouTube. Yes, but I don't know that their answer to that is going to be, we need to take the 10 biggest stars. Because the other thing to keep in mind about YouTube is YouTube is not dependent on any one talent or any few talent. It is a volume scale game. So you could take the 10 biggest stars off YouTube and it would not matter.

[Matt Bellany]

That's true. I think Netflix is increasingly a scale game as well. They do depend on specific talents.

[Kim Masters]

They are, but it's a totally different type of scale.

[Matt Bellany]

Yeah, I agree. But then you look at something like Ms. Rachel and how well Ms. Rachel did in the recent Netflix engagement report. I mean, the numbers are insane.

[Kim Masters]

One of the 10 biggest shows on Netflix, the new cocomelon.

[Matt Bellany]

So imagine if Ms. Rachel was exclusive.

[Kim Masters]

To Netflix, but she doesn't have to be. That's exactly my point.

[Matt Bellany]

She doesn't have to be. But imagine the benefit to Netflix if she was exclusive to Netflix.

[Kim Masters]

I don't know how much it would benefit Netflix if she were exclusive to them. Because how much of it is that people are going to Netflix for Ms. Rachel? And how much of it is that people are already on Netflix? They want a kid's programming and they pick Ms. Rachel.

[Matt Bellany]

I don't know, man. You don't have a toddler. When the toddler starts screaming, Ms. Rachel, Ms. Rachel. You got to turn on fucking Ms. Rachel or else you're going to have hell to pay. It's an interesting argument, and I don't know the answer to that. Clearly, Netflix will tell us what it thinks over the next year or two and whether it starts poaching YouTube talents.

[Kim Masters]

Yeah, YouTube is top of mind for all these companies. I just don't know that that exact strategy is how it's going to play out. Other than the Ms. Rachel, was there anything else in the Netflix engagement report.

[Matt Bellany]

That really stood out to you on the kids front? I think the Power of Peppa Pig.

[Kim Masters]

Yeah, it's the number one show if you add together all the seasons for kids.

[Matt Bellany]

Yeah, I mean, it's kind of insane. And that's another one where, like the kids audience, I think is so undervalued by the mainstream media people like you and me, because we don't watch that stuff ourselves. And it's just such a driver of value for these services. It's kind of amazing. The top Netflix movie was back in action. The Cameron Diaz Jamie Foxx movie. Not a surprise there to me.

[Kim Masters]

Those huge talent fees, well worth it.

[Matt Bellany]

Yeah, exactly. And the fact that they can put Cameron Diaz on a tile and people haven't seen her in a while. The top non Netflix movie was Secret life of pets. 75 million views. No surprise there. The Last Dance was up there, which is pretty surprising given how much people hated that movie but did well on Netflix, the top docuseries. Not surprising. American murder, Gabby Petito, 56 million views.

[Kim Masters]

Were you surprised by how big the gap was between Adolescence and everything else?

[Matt Bellany]

A little bit. Adolescence in the streaming report was 145 million views. And that is at least double the viewership of every other show except Squid Game season two and three. So everybody on Netflix has watched Adolescence. It's kind of crazy.

[Kim Masters]

I have a confession to make. I still haven't seen it.

[Matt Bellany]

No, I haven't either. So I guess everybody except us.

[Kim Masters]

Yeah, we really got to get on it. Are you going to do a box office over under, even though it doesn't count as box office for Happy Gilmore 2?

[Matt Bellany]

Oh, we should. That's a good one. Yeah. I do think Happy Gilmore 2 would do well in theaters. If Universal made that movie and put it in theaters. They chose to let Netflix make it. Probably had something to do with Sandler's deal at Netflix and him saying, I will do this if it's at Netflix. But yeah, that's a big whiff for theatrical. That movie would have done well and it's probably going to be huge on Netflix. I want to talk a little bit about something else they talked about on the call, which was AI. There is an Argentinian post apocalyptic thriller called the AI Eternaut. I'm gonna. I think I mispronounced that. And they acknowledged that they used AI tools developed by the Netflix in house, what they call the Production Innovation Shop. That is a very intentionally vague term. And they used AI on this. And it is not a SAG AFTRA production, it is a foreign production. And to me that just highlights the kind of farce of what the guilds are doing here on AI. They can prevent the American based productions from using AI in certain situations. They can always make sure that everyone's getting paid and getting credited. But Netflix and Amazon and the others, these are now global platforms. They are hosting content from all over the world. And the stuff that's made outside of the US not under the guilds, is gonna have AI on it.

[Kim Masters]

It was notable in that other than the Amazon House of David show, this is probably the foremost example of a major Hollywood studio company streaming service kind of owning to use of AI.

[Matt Bellany]

Yeah, everyone's using it, but they're not talking about it.

[Kim Masters]

Ted Sarandos in particular has been very consistent in his messaging saying that it's not all about saving money. We think this will make our stuff better. Whereas you've had some people really pushing about how it's cost savings. They're trying to make it not just about cost savings. At the same time, they said that what they did in this program wouldn't have been possible without it.

[Matt Bellany]

Yeah. I think that we've seen a subtle shift in the messaging from the executive class in Hollywood. I think that the messaging now is about the ability to save money and to, quote, do more on these movies if we are able to save money. I mean, Kevin Feige at Marvel has been talking about that in his press rounds and Ted Sarandos, and you're hearing it more and more. As you know, this is an innovation tool. This is coming to help all of our creatives, and we are able to be more efficient. And that's a subtle shift from, I think, the head in the sand to aspect of the public discourse for a while on AI.

[Kim Masters]

Well, everybody can agree that film and TV is too expensive to produce right now.

[Matt Bellany]

It's the number one problem right now. If you're talking about the studio business.

[Kim Masters]

You don't need to have every summer blockbuster cost $200 million.

[Matt Bellany]

Especially if the box office expectations are coming down for a lot of these movies, then the cost has to come down. All right, so you're at Netflix. What are you most nervous about right now?

[Kim Masters]

Viewers share being flat. Their whole goal with adding more types of programming, expanding all over the world, doing the live sports as they need to grow their ad business. They talk pretty openly. They need to grab more time of viewing. They used to say we're about 10% of TV time. We want to go after the next 90% now because they're trying to quiet the concerns about YouTube, which obviously they're worried about it. They're like, well, YouTube and Netflix combined is about 20%. So we're really focused on getting that next 80%. But no matter how you look at it, they want people who are leaving television, linear television, and coming streaming to watch Netflix. And right now, they're not grabbing very much of that share.

[Matt Bellany]

Yeah, it's a land grab. It's like when America opened up the west to anyone who would go there and set up a homestead. And Netflix sees this vast swath of linear viewership that is still out there and up for grabs, and they want to capture more of it. And right now, it doesn't look like they are capturing more of it.

[Kim Masters]

It's one of the reasons they just did that deal in France with TF1, the big broadcaster There they want people who are leaving TF1 on TV, if they come to stream, don't go to Amazon, don't go to somewhere else, go to Netflix. Because they're looking at the numbers in the US and even though their share is steady and they still have the depth, but like at the top with the big hits, some of their competitors are starting to have more and more big hits and they don't have the depth to keep people going. But if people are coming into HBO for the Pit and White Lotus, if they're coming into Apple for Severance, if they're coming into Paramount plus for the Sheridan shows, there is a greater risk that they will stick around instead of defaulting back to Netflix, which has been the default for so long.

[Matt Bellany]

Exactly. The answer is Colbert. If they put Colbert on Colbert Stewart.

[Kim Masters]

Mashup and Craig can get can get put on as an executive.

[Matt Bellany]

Craig needs a producer credit on the Colbert Jon Stewart mashup show. They switch off one night's Colbert, one night Stewart Friday nights, they team up and it's like the big end of the week, it's the two of them. Done. Baby doll, give him a call. All right, thank you, Lucas.

[Kim Masters]

Thanks, Matt.

[Matt Bellany]

We are back with the call sheet. Craig, did you see what I referenced at the beginning of the show? This Donald Trump lawsuit against Rupert Murdoch and the Wall Street Journal over the Jeffrey Epstein doodle story.

[Craig Horback]

Yes. The birthday letter. Yes.

[Matt Bellany]

Kind of an interesting story. This is why, honestly, as much as Rupert Murdoch has kind of poisoned a lot of the old people in this country with the Fox News stuff over the past few decades, I've always liked Rupert. I believe that deep down he is a news person. He values the story over all of the politics stuff. And this is where Rupert Murdoch's true self comes in. He has a television network, Fox news, that is 100% pro Trump and doing the president's bidding. But he also owns the Wall Street Journal, which does actual journalism and reports pretty aggressively on the president. And Trump called him to kill the story. And he's like, f you, we're doing the story. Sue us.

[Craig Horback]

Do you think this will result once again in kowtowing to Trump and settling and paying him?

[Matt Bellany]

Well, that's what my prediction is today because I think the consequence of being in litigation with Trump is that we are not going to see a sale of the Fox television empire anytime soon. For those who haven't been following, Rupert is involved in this pretty elaborate probate case in Nevada where he is essentially suing or involved in litigation with his children. Very succession like. But there was a negative ruling for Rupert and Lachlan earlier this year that said essentially that the children, the non Loughlin children, the three others could potentially have disposition over whether Fox is sold or what Fox News looks like once Rupert dies. And my reaction to that was that I thought Rupert would engineer some kind of a sale or transaction that puts the Fox assets in some kind of private equity hands or some big Republican billionaire's hands with the caveat that Lachlan be in charge and that would be a way for him to pay off his children and keep the empire in Lachlan's hands once Rupert dies. I don't think that's gonna be possible now, at least for the foreseeable future. I don't think Trump is going to let that happen while they're involved in litigation unless Rupert writes him a big check like Disney and Paramount and Amazon and Meta have done to settle this. So maybe we'll see a settlement. But for right now, I think this makes it significantly less likely that Fox will be sold in the next year or so.

[Craig Horback]

Who would you have said would have been a buyer?

[Matt Bellany]

There's a bunch of private equity firms that could do a blood pact with the Murdochs to take control of these TV assets and agree that Lachlan will run them. You know, maybe offshoot of the Koch brothers, maybe even Elon. I don't think Elon would get involved in that anymore.

[Craig Horback]

Do you think this is gonna change the Fox coverage of Trump in the coming months?

[Matt Bellany]

No, it hasn't so far. In fact, Fox hasn't really even discussed or mentioned this lawsuit, which is pretty extraordinary. It just shows that Rupert has big discipline when it comes to the audience of his various outlets. The New York Post has covered it, but the Wall Street Journal is fighting its own fight here. And Fox has not taken a stand because they know that the Fox News audience doesn't want to hear about that. They want to hear stuff that is pro Trump. They don't want to hear about some scandal involving Jeffrey Epstein. So it's kind of amazing.

[Craig Horback]

It's been interesting to see some of the Trump supporters starting to turn.

[Matt Bellany]

That's the thing, is that if the noise around Epstein gets loud enough, I think Fox will have to cover.

[Craig Horback]

Right. Like when the Tucker Carlson start to turn and cover this stuff, it'll be.

[Matt Bellany]

Interesting to see if Fox follows because they'll lose audience. You know, that's the problem with Fox. They're not afraid of the left, they're afraid of the right. They're afraid of the audience getting sucked away by Newsmax and OAN and Tucker Carlson and all of these people online. And that's what they did after the election, after the whole Arizona call for Biden is that they pivoted, right, because they were losing audience to these outlets that were denying the election. So that's what got them into the whole Smartmatic and Dominion lawsuits in the first place, is they were feeling pressure from the right. And if they start to feel pressure on Epstein, then I think they will. But for now, it's the Journal in one media ecosystem and Fox News in another. And Rupert kind of balancing on that tightrope. So you know what he is, who he is 94 years old. All right. That's the show for today. I want to thank my guest, Lucas Shaw, producer Greg Horbeck, artist Justin Lopez. I want to thank you. We'll see you a couple more times this week.