← The Town with Matthew Belloni
The Town with Matthew Belloni
Investor Gerry Cardinale on Why WarnerMount Will Work, Middle East Money, and Layoffs
00:40:37
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- [00:00]
A
This episode is brought to you by AMC. The critically acclaimed series Dark Winds returns for a fourth season from executive producers Robert Redford and George R.R. martin. When a young girl disappears, the Navajo tribal police are pushed beyond their limits, forced to confront unfamiliar land, twisted obsessions and a trail of grisly murders. This season, one thing becomes clear. Justice has no boundaries. Watch Dark Winds Season 4 Sundays at 9pm watch on AMC or stream anytime on AMC. Plus. This episode of the Town is brought to you by the Madison, the new original series on Paramount. Plus Academy Award nominee Taylor Sheridan's most intimate story yet unlike anything he's ever done before. The Madison follows a family raised in a world of digital distraction, forced by tragedy to truly see one another and come together. Authentic, multi layered and did I mention starring Michelle Pfeiffer and Kurt Russell. Don't miss the Madison new series streaming March 14th only on Paramount plus it is Wednesday, March 4th. Warnermount week continues on the Town as we further digest Paramount buying Warner Brothers Discovery, one of the biggest and most impactful studio mergers in the history of the entertainment business. We discussed the Hollywood angle with Lucas on Friday. Then we did the Wall Street Perspective with Rich Greenfield on Monday. You should listen to both those episodes today. It's the view from inside this $111 billion megadeal. What the investment thesis was for the Ellison family, how they plan to pare down that $79 billion debt they took on to fund this deal, whether they'll sell one or both movie studio lots of and if these Saudis and other Middle east investors will be among those backers. Lots of questions. So we've got the chief architect of this deal back on the show to discuss. Jerry Cardinal is the founder and managing partner of Redbird Capital. It's the private equity fund that backed Skydance and then Paramount, Skydance and now the takeover of Warner Brothers Discovery. Jerry does a lot of other deals too, especially in the media space. He's arguably the biggest and most influential dealmaker in the space right now. He's agreed to let me grill him on the contours of this transaction. Why he says the coming cost cuts will not primarily focus on employee layoffs and ultimately why he and David Ellison believe this megadeal is good for Hollywood. From the ringer and puck, I'm Matt Bellany and this is the Town. Okay. We are here with Jerry Cardinal who is the founder and managing partner of Redbird Capital, also a Paramount Skydance board. Welcome back.
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B
Good to be here.
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A
You survived the first outing on the Town and you dared Return for another grilling by me.
- [02:55]
B
Well, we had fun the first time around, so I'm glad we did.
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A
No, it's all. It's all in good fun. So let's talk about this company. I have many, many questions about this deal, about this company that you have now formed, about all of it. The debt question. I've heard people already referring to this company as debt. Mount Debt Bros. Paradet Sky High debt. $79 billion in debt attached to this company. How is that a surmountable hurdle?
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B
Well, look, I mean, on the surface, you know, that amount of debt is a large amount of debt for any company. But our cash flow is also a large amount of cash flow for any company. You can't talk about debt in a vacuum. Leverage is an important corporate finance tool for growth. To enable cash flow generation and cash flow generation, there's a circularity. Cash flow generation enables you to take on debt and pay it down. So we have a tremendous amount of cash flow generation in the assets that are coming together here. One of the reasons why from an industrial logic standpoint, Paramount Warner Brothers coming together and our ability to buy the whole company was so important was that it unlocks tremendous cash flow and synergies that all gets reinvested back into content and it also helps us delever. So, you know, when we close, you know, we will have net leverage of 4.3 times. That's why you have to link cash flow and leverage.
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A
Not 7.
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B
I thought it was 7.4.3 times pro forma for the 6 billion of synergies that we have underwritten and we have.
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A
You're accounting for the $6 billion you're taking out of the company.
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B
I'm giving us 100% credit for those synergies we've shown. First of all, this is what we do for a living.
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A
Yes.
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B
Number one, it's not just spreadsheet math. Number two, in the short track record that we've already established with Paramount, we've shown an ability to execute and outperform on synergies. So this is not just deal jockeys playing spreadsheet math. We got a real, you know, don't forget, you know, the, the industrial logic of this whole thing is led by the owner operator model. And I said to you before, that is important. Not only important for alignment, the fact that the Ellison family and we will be the largest shareholders in this pro forma entity is very instructive. We, we are putting our money where our mouth is and therefore you were wholly aligned with shareholder value creation. You can't do shareholder value creation unless you're driving revenue and you're driving cash flow. You can' that unless you're reinvesting in the business. And that all leads to the derivative effect of providing, you know, real value creation for not only shareholders but subscribers. So the whole thing is connected.
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A
How is this different from the Warner Brothers Discovery leverage buyout, which essentially is what that was because they had some pretty lofty predictions of where their revenue would be and that they would be able to pay down their debt. And almost from the get go, those revenue projections came in below what they were forecasting. Due to the same headwinds that you guys are up against. The linear television model is collapsing. Yet you make most of your money on the linear television model. So how are you going? How are you distinguishing this and how is this not just a super sized version of Warner Discovery which was not working to the point where they had to sell?
- [06:29]
B
Well, look, as you point out, I mean, synergies were not the problem in the original Warner Discovery merger. I mean, they guided to 3 billion of cost savings up front and by the end of 23 they were looking at 4 billion in real life savings, excluding content. So cost savings. The challenge for that deal is that the cost savings were offset, as you know, by declines in their linear revenue.
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A
Right.
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B
I mean, they started 24 billion down to 21 billion.
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A
Yeah, but how is that different from you? You've now inherited that melting iceberg and you now have all of these other cable networks that you're throwing on top of it.
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B
Right. Our linear portfolio is not comparable, number one. And importantly, it includes cbs. The CBS broadcast network, as you know, is best in class with eight of the top ten shows on TV are our shows. And that reach will continue. That reaches, you know, very synergistic in terms of the partnerships that we have on the programming side, particularly with live sports and news. You know, our sports portfolio is best in class. It rivals espn.
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A
It's about to get a lot more expensive with the NFL though.
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B
Sure. And that's why this is all connected. You've got to invest in content. Sports rights like all other content spend are continuing to go up and we've got to be able to run this whole pro forma entity very efficiently to be able to continue to compete and reinvest in the business. And so I like the fact that, you know, we're buying the whole company. It gives us real foundations for synergies both on the revenue side, on the cost realization side. CBS is the crown jewel in the linear portfolio. And that is why we're different than what, you know, Warners and Discovery had to deal with when they did their deal.
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A
So Fitch just downrated Paramount's credit rating to junk after this deal. Ted Sarando's called your deal irrational. Greg Peters told the Financial Times he can't make sense of this deal that you did. And this is his quote. And if Netflix can't make it economically viable, I don't know how they can. So I am quite frankly a little bit nervous for the industry. Care to respond?
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B
Sure. What I would say there is that the, you know, the Sour Grapes tour is amusing to a point. But you know, I don't let guys with no track record in, in the areas that are instructive here be the pace car for the narrative. So, you know, Netflix, if we want to, if we want to look at apples to apples, Netflix has no track record in any kind of large scaled M and A. Oh, how dare you.
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A
The Roald Dahl estate was a huge deal for them.
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B
Yeah, 700 million is not $110 billion deal, number one. Number two, they don't, you know, 70% of what they, they carry content wise is licensed as you know, they don't even do their own distribution, does it? They don't want to make content for theatrical. They want to basically their deal, the North Star and their deal was just really killing competition. They have a great business model. They don't need to kill competition. Our deal, you know, actually creates competition. That's what it's always been about. And the comp. And you know, when you look at the narrative here, which is very interesting is, you know, they wanted to shift the definitions to TV viewership. Now this is about direct to consumer. Direct to consumer is about pricing power. You got pricing power both at the consumer level and you got it on the content supplier level. We're going to open that up and we're going to really reinvest in the content. This is, this is a shot in the arm for Hollywood and for, but
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A
how do you do that? How do you reinvest so much when the first couple years of this are going to be about debt reduction and cutting costs?
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B
Yeah, but, but Matt, you know, the cash and capital are fungible. So these things are not, you know, bifurcated into all debt reduction, all content spend. The money's fungible. And our job, every dollar of cash flow we generate, you know, will go to debt reduction and content spend. Those two things can exist very synergistically. Our job is to run the business more efficiently. Than any content production company in Hollywood has ever been run.
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A
And again, you guys can do this in a way that others who have tried this cannot. You have a 43 year old CEO who has never done this before and he's going to do it where others have failed.
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B
Yeah, well, that's that. When, when you say never done this, he's got a 15 year track record, 16 year track record. Having built, you know, a very dynamic content production company like Skydance from scratch in the, in the short time that we've had Paramount look at what we've done. And then you got to look at, you know, you're, I've always said you're only, particularly in these content businesses, you're only as good as the people you put around you. And if you look at what we've done, I mean we hired former Meta executive Dane Glasgow as our chief Product officer. We're going to be a real destination for top tech talent. It's the first time really in Hollywood that you've seen that kind of venn diagramming between Silicon Valley and Hollywood.
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A
Well, Netflix would beg to differ there. I think Amazon probably would as well.
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B
I don't think Netflix is the standard for technology. We're taking it up to a real standard.
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A
But what does that mean? You guys have, and I've made fun of this as the sort of Oracle pixie dust. What does that actually mean?
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B
Well, look, we've got our Oracle fusion implementation going on that's going to consolidate finance and our HR systems. That's on schedule. We're going to make sure we really lean into the back end convergence of Paramount plus and Pluto. We're transitioning to studio in the cloud as a model to accelerate content creation.
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A
So all of this is going to be built on the Paramount tech. The, the Warner Discovery tech is going to go away.
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B
Matt, you know, Paramount had no tech. Okay, we are putting that in place. So this is going to all be predicated on the synergy and the industrial logic of, you know, the Ellison family and Redbird and the way we build businesses, the way we embrace technology. Look, what's, what's the investment thesis in Hollywood largely defined? The investment thesis in Hollywood is you've got to embrace technological disintermediation if you're going to level the playing field. And for the good guys, the content generators, the IP in the equation here from an investment thesis standpoint is the ip, it's the content creation. And Hollywood has never had a fair shot at leveling the playing field with the guys who think they're the ip, which is the distribution side of the equation. And a lot of that comes out of Silicon Valley. A lot of that is driven by direct to consumer and streaming. But now what we're doing, we're going to really lean into content generation. We're going to be. It's not only going to be derivatively beneficial to consumers, both from a diverse, a diversification standpoint. They should be able to get everything that they want in a very easy way. But it's going to be great for content suppliers because it's going to be a shot in the arm to Hollywood in terms of taking running these businesses the way every other industry runs them, with driving revenue growth, driving cost rationalizations, driving cash flow generation. Those are not bad work. Cost rationalization is not a bad word. These businesses have not been run cutting edge the way every other industry has had to get their head around technological disintermediation and evolution. We're going to do that and that's why this is going to work. When we talk about the synergies, Matt, you know, the inference here is, is that, you know, it's all going to be cost reduction, it's all going to be labor, we're going to be firing.
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A
That obviously is of interest to people in Hollywood. They see this horizontal merger and horizontal mergers equal layoffs. But Andy Gordon, your COO says no, it's not primarily employees. How is that possible?
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B
The majority of our synergies that are cost related have nothing to do with firing people.
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A
Then what are they?
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B
Okay, let's go through it. Okay, follow me on this because I'm going to give you the answer. And it's and. And the devil is always in the details. Guys can BS all they want. At the end of the day, all of this is sophisticated and needs to pay attention to the details. Number one, I got a few buckets here on how we're going to drive synergies and it's real stuff. Okay? And there's a whole business plan around this that we've developed. Number one, we're going to consolidate our streaming technology stacks and our cloud providers across Paramount plus and HBO Max. By the way, that's the same plan as we're executing at Paramount right now and consolidating the tech stack of our three streaming services, Paramount plus, Pluto and BET Plus. So that's number one, very important. Number two, we're going to optimize the combined real estate footprint and corporate overhead. Same plan we're executing at Paramount across excess office space and redundancies in Back office.
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A
Does that mean selling one or both of the lots?
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B
No, we're going to keep, we're going to keep them.
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A
You're going to keep both going to
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B
develop them more efficiently? Yes.
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A
What does that mean? Condos on the Paramount lot? No, I mean what does that mean?
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B
Everything We're. No, no, no, we're not, we're not real estate developers.
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A
I'm just asking the question. There was a rumor that Larry saw this as a real estate play to make a couple billion dollars on the lot.
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B
Okay, well then anybody saying that doesn't know Larry. And it's, and it's just complete, you know, garbage.
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A
So you're keeping both lots.
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B
Everything we're going to do is going to be synergistic around the pro forma company. So we're not going to do that. But you know, again, we're still, we'll work through and when we have something to announce, we'll announce it. You should assume that we're keeping that footprint and it's all going to be utilized for the benefit of IP monetization across the whole flywheel of IP monetization.
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A
Okay, so, but, but, but you are confirming right now that you will not sell the Paramount or Warner Brothers lots in Hollywood and Burbank.
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B
That is correct. That is the intention right now. Look, there's a lot of global efficiencies we can drive in procurement and in just general business services. Again, we've shown already in the short time that we've owned Paramount, we've demonstrated significant savings by leveraging the benefits of scale and purchasing from vendors across it travel. All the stuff that the well run corporate enterprise world takes for granted we're now bringing to this. Okay, so that's another area then. There's efficiencies in marketing, optimizing, spending on agencies and tooling. Again, you know, Paramount, you may have seen we announced new agency partnerships and that drove a tremendous amount of savings and better analytics for allocating marketing dollars. And then importantly, you know, we're migrating the combined company to a single enterprise resource planning system. I mean this is stuff that, you know, a lot of companies today take for granted. Really? You know, you don't really hear.
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A
Listen, listeners might be snoozing through this because it sounds very like back office. Yeah, but if, if what people will care if this is where the 6 billion comes from and not wiping out an entire distribution arm or wiping out an entire creative arm.
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B
Absolutely. That is the point here. And that's why it's completely disingenuous to have, you know, guys like Netflix or others just. Just lobbying in over the top. They have no track record in this. Nobody can speak to this level of proficiency and expertise in these kind of, as you call them, back office things that are incredibly important in terms of the infrastructure of ip, the way the Ellison family can. Right. And keep in mind, you know, why that's important. I'll say this. I said it last time, and I'll say it again. And this is not just us talking our book. This is the first time since Walt Disney that you've had a family in an owner, operator model putting their money where their mouth is to drive innovation, content, spend and reinvigorate that whole IP monetization flywheel. That's why this is significant. And you can't do that with just a bunch of words. You have to go in and actually execute and implement. So those buckets I just took you through are instrumental to that. That's why, you know, the sound bite that, you know, the misinformation campaign that, you know, Netflix went, you know, is continuing to do is, you know, 16 billion.
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A
They say you have to cut 16 billion.
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B
Yeah, well, of course, you know, they don't. Once again, they're talking about things they don't really know. We know how to manage cash flow, generation and leverage.
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A
Okay, you, you. But it's not just the Ellison family. Back in December, you announced that a consortium of Middle east money, Saudis, Qataris, Abu Dhabi, they are in this deal to the tune of $24 billion. But these entities were not in the press release announcing this deal. Are those Middle east backers still in this deal?
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B
Look, the Ellison family in Redbird are backstopping the entire $47 billion.
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A
No, I get it. But are the Middle east and ether still in this.
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B
We haven't syndicated anything at this time. We do expect to syndicate with strategic domestic and foreign investors, but at the end of the day, that alchemy shouldn't matter because it'll be done in the right way. But at the end of the day, it doesn't matter because Ellison and Redbird are backstopping the whole thing.
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A
I get it. But you understand why people might be concerned about Middle east money having an ownership stake in a company that owns cnn.
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B
Okay, so it's. So do we want to be a global company?
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A
You answer that question. I don't care.
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B
I think we want to be a global company. Okay, you look at what's going on right now geopolitically. What's going on right now geopolitically. Out of the Middle east wouldn't be. The positives of that would not be happening without some of those sovereigns that you're referring to. Okay, the world is changing. We can stick our head in the sand and pretend it's not, or we can embrace globalization and the derivative benefits, both geopolitically and otherwise, that come from that content generation coming out of Hollywood is one of America's greatest exports. I firmly embrace the global nature and orientation that we bring to this from a capital standpoint, from a footprint standpoint, et cetera. At the end of the day, I do understand some of the concerns that you've raised, but that will work itself out between signing and closing. Because at the end of the day, worst case scenario, Ellison and Redbird own 100% of this thing.
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A
Will these global, you call them investors get board seats?
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B
You know, right now, the way we set it up is. I don't know, right now. I think that, you know, we.
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A
Because previously you said no, that the Middle east investors would not get board seats. Now you're saying maybe no.
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B
That's the premise on. We're going on right now. But I haven't revisited that since the last time we talked about it. What's important is the lead here, from a governance standpoint is Ellison and Redburn. None of that changes. That's how we set up Paramount, Skydance, and that's how this pro forma will be set up.
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A
But you understand why Middle east investors having a board seat on a company that owns CBS News and CNN might be concerning to certain people.
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B
Yeah, and I. And I gave you the answer to that just now.
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A
Okay, our guy, David Zaslav, will he have a role at this company?
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B
You know, we're talking to David. We offered him a role early on in the conversations before we had to buy the company.
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A
You also basically accused him of committing fraud in the process and said that this was not a fair process. And you guys had some very harsh words for the Warner Discovery people that went with Netflix over you guys.
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B
Well, that's. First of all, I never accused him of committing fraud. I have a tremendous amount of.
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A
You did not. You're right. But it was. It was on the border.
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B
No, I think. I think what we were talking about was, look, we had to buy this company 10 times, okay? And the difference between our December 4th offer of $30 a share and $31 a share is, you know, less than 4%. So, you know, you got to look at that and say to yourself, you know, when Netflix says that they were price Discipline. And the reason they walked away, because they were price discipline. You're telling me price discipline is a dollar a share on $110?
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A
Well, you guys wanted to buy this company for $19 a share at the beginning. 19.
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B
And at the end of the day, that's the. Thank God. There's, you know, I understand there's rule of law and there's competition. Our issue was that the offer we made December 4th isn't that much different than the offer today. We perfected the deal. The board, ultimately, the board came around and did, did, did their job in engaging with us. All we asked for was engagement. They did their job in engaging with us.
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A
And so bygones.
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B
That led. Well, that led to. Again, I come back to the three criteria that we always focused on. Value, timing, and certainty. And in the interactions between December 4th and last week, you had value on the margin came up a bit, but it was really around timing and certainty. And that whole package made. I always said to you, you can't just look at the value. You got to look at risk adjusted value. Risk adjusted is timing and certainty. And that's why we prevailed.
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A
Yeah, we're not going to get into the regulatory stuff. We've discussed that extensively. I think you guys are pretty much in the clear federally, states and overseas, maybe not as much, but. So you're open to having Zaslav and his team have some role at this company.
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B
I'd say, David, the two Davids are going to be speaking a lot. David, Zaslav's been terrific in embracing, you know, us at this point and really helping us think through all the things that we have to do. To his credit.
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A
Well, you're making him $800 billion personally.
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B
He is. And look, but I would say to you, to his credit, David, Zaslav is a man of the people. He really cares.
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A
Oh, he's a man of the people. Oh, my God, please don't say that. Just.
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B
He cares. No, honestly, he cares about his people. I've talked to him directly.
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A
He cashed out $114 million of shares yesterday as all of his employees are freaking out about their own jobs. Come on. Not a man of the people.
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B
I'll let you cover that in the podcast.
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A
Good Deal Maker. Absolutely. But not a man of the people.
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B
All I'm saying is that, you know, he's been. He's been very focus on making sure that, you know, his people are integrated in the right way, and he's going to work closely with us. And so we'll let the two David, steal.
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A
Honestly, you should bring in Gunner, the cfo. If your goal is cost cutting, he's your guy. By the way, nobody believes you guys that you're going to make 30 movies a year for theaters.
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B
Why is that?
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A
Because it's really effing difficult to do that at that scale.
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B
But, Matt, once again, here's the problem with the sound bite ecosystem that we live in. We're already doing more than 30. Okay. When we bought Paramount, it was doing eight. And we're on track this year to do 16.
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A
Okay.
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B
And then Warners will be 14 to 15. So we're already at the 30, 31 level. That's not the issue. That's not the thing to focus on. Both of the studios can do that. What's instructive is the cost side of it and how we rationalize the ability for us to continue to lean into that kind of content.
- [25:06]
A
I agree. Because it's easy to. I shouldn't say you can't make 30. Netflix has been doing that. But it's difficult to make 30 movies a year that justify theatrical releases with big marketing spends. And if that is the plan, it's. It's really difficult to do that. And ultimately, you're going to be competing against yourself some weekends.
- [25:25]
B
We are not daunted by that at all. This is about. Again, this is. You can do it. The question is, how do you enable it to be consistent? You can't. Look, the budget we inherited on the. On the original Paramount slate, you know, it's one of the worst movie slates that we've seen, right?
- [25:43]
A
Well, they were hampered by uncertainty and a lack of resources and ip.
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B
Yeah, look, I think the eight films, the eight films we inherited, you know, the theatrical releases, you know, I don't think any. I don't think any of them were hitting budget. So, you know, we're turning that on.
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A
Scream. Scream 7 did pretty well, but that's Spy.
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B
That's what I'm saying. Not only have we turned it around, look at the first thing we've had right out of the gate that we can call our own.
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A
Yeah, that's a big win.
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B
Yeah, it's the largest win on the. On the.
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A
You guys don't own that one. That's Spyglass. But it's still a big win.
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B
That's a huge win.
- [26:14]
A
This episode is brought to you by the Walt Disney animation studio, Zootopia 2. Now nominated for the Academy Award for Best Animated feature. The Hollywood reporter hails Zootopia 2. Knocks it out of the park with its dazzling Visuals, sophisticated humor and genuine emotion. For your consideration for best animated feature, this episode is brought to you by Hotels.com Save youe Way is a new feature on Hotels.com and it's as simple as it sounds. When you book a trip as a Hotels.com member, you decide how to use your savings. Take the instant savings now or bank the savings as rewards for later. It's your call only@hotels.com Save your way is available to loyalty members in the US and UK and hotels with member prices. Other terms apply. See site for details. Speaking of your guys, Jeff Shell, your president, came from Redbird. He's now under investigation for allegedly leaking company information. Is Jeff Shell part of the future of this company?
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B
Look, I'm not going to get ahead of that right now. So I had nothing to say on that right now. I have a tremendous amount of love and respect for Jeff. He's very talented. We got to look into this internally and I'm going to leave that to the senior management team. I can't comment on it.
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A
So I want to. What is your message to Hollywood as the chief dealmaker behind this transaction? What do you want to communicate to Hollywood about the fear and the kind of anger that has swept through the industry since this was announced?
- [27:48]
B
Yeah. My message would be the following. Number one, this is a win for the good guys because we're wholly aligned with the talent community and the content creation community. That is very important if you take nothing away.
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A
The good guys include the billionaire and the private equity guy. Okay, I get what you're saying.
- [28:06]
B
Well, the billionaire and the private equity guy, each of whom have a career in content generation. We put our money where our mouth is. I mean, you know, I've got a track record in partnering with talent. You saw what we did with artist equity with Ben and Matt. You know, we are very pro Hollywood in that way. So that's number one. Number two, change is scary. And in all these intellectual property related industries, whether it's sports or, you know, news or Hollywood or streaming, you know, everybody's scared of change. But here's the reality. The reality is you've got to bear hug change in order to win. And the win for us is pro talent and pro content creation. But you got to embrace technology. You can't be scared of it. And that's what we're going to be doing. And so everyone should expect that we are going to absolutely make good on 30 movies a year and on a greater variety of content available in a very seamless and easy way for consumers. To access through our direct to consumer platforms, the bundling of news and sports and live event entertainment. All of that stuff, you know, that's the stuff of the future. That's how we continue to compete and make, you know, this stuff, that one of America's greatest exports. That's what this is about. I'm excited for Hollywood on this.
- [29:20]
A
You just did an $8 billion deal to combine two unscripted producers, all three media banijay. Jeff Zucker is your partner at Redbird IMI. He's now in charge of that. Jeff obviously has a background in news, background in management of big studio properties. Might you bring him over to run the combined cnn, CBS News or more.
- [29:45]
B
Yeah, well, look, I mean, you know, we just announced all three and ban coming together. Right. As you said. And that's the. That's now created the world's largest independent production company. So Jeff has now. Jeff will be the executive chairman of that. And that is going to be a tremendous amount of his time. And I'm going to be very involved in helping him think through that. That's very exciting.
- [30:06]
A
But you don't think he's got it in him to run news again?
- [30:09]
B
Look, Zucker's formidable. I mean, and he definitely has it in him. You know, we've got to see what we're going to do there. I don't have an answer for you.
- [30:19]
A
So Barry Weiss is not the plan for both of those.
- [30:22]
B
Not saying that at all. Not saying that at all. Barry, again, you know, it's premature. All we know is that, you know, the possibilities of CBS News, 60 Minutes and CNN coming together. I start with the blocking and tackling, and the blocking and tackling is a tremendous opportunity. Same. Same. I'd answer that same way I answered your Hollywood question. The answer to news and the newsrooms is that finally you're going to see a win for the good guys. I view news and David views news as great intellectual property. It's no different than what we're doing in Hollywood. And it's got to be, you know, it needs to evolve. There needs to be cost, you know, cost rationalizations.
- [31:01]
A
Yeah. Does it take 3,000 employees at CNN to produce a product that they.
- [31:06]
B
But look, it's a highly competitive marketplace. The content's critical. And so, you know, I think, you know, I think Barry's fantastic. Let me tell you, Barry's fantastic because the message there, instead of the kind of things that you're pointing to, should be that we have to embrace change and innovation. Bring someone that isn't at A central casting in to sort of that's passionate about news, that's passionate about bringing news back to the truth business. That's what this is about.
- [31:36]
A
Yeah. Well, if her talent leaves and they start doing things that are so openly aligned with the Trump Organization, they might alienate their audience. But I don't want to get into the politics of news.
- [31:47]
B
No, that's fine. But let me, Let me say this to you. When you look at these brands, okay, I come from a very respectful place. It should be a privilege to work if you're in the news business from a career standpoint, it should be a privilege to work at the home of Walter Cronkite and Edward R. Murrow and Mike Wallace. I mean, I have Chris Wallace works for Redbird right now, Mike's son. He's passionate about this. So, you know, what's gotten lost here is some of these individuals on the talent side think they're the brand. Okay? The brand is the IP and the brand is the institution. We owe a tremendous amount of respect to those institutions.
- [32:24]
A
It's true. It's also a talent business. These people have audiences.
- [32:27]
B
They are. But there's a lot.
- [32:28]
A
Barry wanted to keep Anderson, but we all.
- [32:31]
B
But we all have to. We all have to march to the same drummer. And the starting point in ground zero for all of this is respect for the institution, respect for the ip, and that's what we'll see. And there's plenty of talent out there that has that respect. And, you know, they've all approached us.
- [32:46]
A
Okay, you just had some harsh words for Netflix. Yet you also just completed a deal for Artist Equity, a company that you are a partner in. Ben and Matt's company, Ben Affleck, Matt Damon, they now signed a new deal with Netflix. I saw that and I laughed a little bit because you're at the center of both of them. But I also see this as a bit of a capitulation by those guys. They came out guns blazing saying, we are going to reinvent this model and have these movies be for theaters and everybody gets paid and it's going to be a talent first company. Now they're in bed with Netflix. First of all, are they still keeping the economics in this deal where if the movies do better, their people make more money? Are they getting a form of quote unquote, back end in this deal?
- [33:35]
B
Look, it's an output deal that locks in a margin on the films. What's important about the deal is it's for not only the Ben and Matt movies, but it's Also for the non Ben and Matt movies. And it really is a validating point for Artist Equity.
- [33:51]
A
It's safety for them. They get a guaranteed buyer for these movies rather than taking each one to the market.
- [33:56]
B
But, but, you know, but, but, but when you look at this thing and you step back, guess what, Matt? Competition is a good thing. Isn't that great? I can, I. We can have the bruising battle we did for Warner Brothers and at the same time turn around in another part of my portfolio and have a very productive collaborative relationship with Netflix. How about that?
- [34:14]
A
But are they still getting the economics that they got on the rip because they did a whole big New York Times piece about how everyone on the movie is getting paid if the movie does well?
- [34:23]
B
Yes. Artist Equity's model is not going to change. It's. It's very much aligned with our model. Yes.
- [34:28]
A
When Netflix strategizes on how to kill Paramount by stealing the NFL, well, that. Will that change your mindset towards Netflix?
- [34:36]
B
I'm very happy that Netflix is come around to our pro talent position. You can't be any more pro talent than Ben and Matt, right?
- [34:45]
A
Sure, sure. Yes.
- [34:47]
B
I think it's great.
- [34:48]
A
Okay. All right. Well, this has been interesting. I always appreciate you letting me grill you. This is probably not the last time we will talk about the evolution of this deal. Long way to go. Thank you very much.
- [34:59]
B
All right, pal, great to see you.
- [35:02]
A
We are back with the call sheet. Craig, before we get into this very interesting weekend, some accountability corner on my recent box office predictions. I've actually been doing okay, right?
- [35:11]
C
You have. You are three. For your last three. You hit the over on Scream. You barely hit the under.
- [35:18]
A
Way over. I, I had 45 on the over and then it was like, what, 59.
- [35:23]
C
You barely got in under 16 million for crime. 101. And then you barely hit the over on Goat, which barely hit over 27 million, right?
- [35:32]
A
Yes, I had the over on 27 million and it was 27.2, which counts.
- [35:37]
C
The only miss you've really had in the last month or so was Wuthering Heights, but it seems like everybody got that wrong.
- [35:42]
A
Yeah, I took the over on 50 for that one and it came in about 38, so. So way under. So I'll take the L on that one. But overall, not bad. And this weekend got some pretty interesting movies. Hoppers, the Pixar movie. You're excited about that one?
- [35:57]
C
The marketing is working on me. I'm excited about Hoppers. I want, I want to go see
- [36:00]
A
Beaver with the front teeth. Irresistible.
- [36:04]
C
Yeah. And this is. It's tracking to be the biggest opening for a Pixar original film since Coco in 2017.
- [36:10]
A
Yes. Which is still not huge. The NRG has it at 38 million. I've seen lower for some of the tracking services. Why don't we put the line at like 36? I'm going to take the over on 36 for hoppers. I think that the Rotten Tomatoes score for this one is great. It's skewing a little younger because it's talking animals. So it's not like some of the more kind of teen and adult Pixar movies. But I still think the families are going to show up. So I'm going to take the over on that one.
- [36:38]
C
Is Elemental the last original Pixar film to come out? 20. 23.
- [36:42]
A
No, Eliot last year, Right? Yeah. Which was a big bomb.
- [36:45]
C
Elemental open to around 30.
- [36:47]
A
Yeah, but and then Elemental had legs and ultimately got to about 500 million worldwide.
- [36:51]
C
And Elio open to around 21.
- [36:54]
A
Yeah, this will definitely beat Elio. So the question is, will it be up there with the pre Covid Pixar movies? I hope so. I hope they're back. You know, this is everything you want out of the Pixar movies. It's fun, it's smart, it is cute and it's original. Like these movies should work also, you
- [37:12]
C
know, kids movies about animals work, man. Look, I mean, you see Zootopia 2 drafting off of the momentum.
- [37:20]
A
Talking animals work.
- [37:21]
C
People love talking animals. And pics. This, this look. It feels like Pixar getting back on
- [37:26]
A
track, you know, it doesn't work. Movies with exclamation points in the title.
- [37:31]
C
Is that right? The Bride you don't like Never Punctuation
- [37:34]
A
other than Airplane never works. Tell me a movie with an exclamation point in the title that works other than Airplane.
- [37:41]
C
Have you researched this? I would have to.
- [37:43]
A
I have not. But there. But they come up every once in a while. The bride is tracking at about. NRG has it at 15. This is the Maggie Gyllenhaal reinterpretation of the Bride of Frankenstein. Christian Bale, unrecognizable stars in this. Jesse Buckley also stars. They claim they moved it from last year to this week to take advantage of her Oscar heat for Hamnet. I beg to differ. I think this movie was troubled. They did a bunch of reshoots. The budget about 92 million. We do have to have Lucas redraft because he gave me this movie as his potential bomb for the year. But I don't believe. Ultimately, after my reporting, I think the Overall budget is 92. It is not 100. So we will have to make him redraft. So let's set the line at 16. I will take the under on this. It's been dropping and the buzz is bad. They did not make this available for reviews. The reviews have not dropped. We are taping this on Wednesday. And usually for this kind of movie, when they the reviews haven't dropped yet, it means that it's not great.
- [38:44]
C
It feels impossible to take the over because like the way you map it out, you're like the tracking is going down. They, they move this movie.
- [38:51]
A
Why? That's now. But you never know. Maybe hardcore Frankenstein people are going to show up.
- [38:56]
C
We saw a little clip of this at Cinemacon last year.
- [38:59]
A
We did. And neither of us was very impressed.
- [39:01]
C
It looks very experimental.
- [39:03]
A
Yeah, there def. It's definitely choices were made. Yeah, choices were made.
- [39:07]
C
And this is now. This happens all the time in Hollywood where it feels like some topic becomes popular and then there's like three movies about it in the same year. We just had Frankenstein and now we have the bride six months later.
- [39:17]
A
And Warner Brothers did not expect that Frankenstein to get a bunch of Oscar nominations and be well received. So not great. Okay, that's the show for today. I want to thank my guest, Jerry Cardinal, producer Greg Horlbeck, our editor Jon Jones and I want to thank you. We'll see you one more time this week. 2 Good Co Coffee creamers are made
- [39:38]
B
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A
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B
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A
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B
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A
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- [39:59]
B
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- [40:04]
A
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