Is Hollywood Broken? A Savvy Investor’s View of 2026.

Summary

Podcast Summary: Is Hollywood Broken? A Savvy Investor’s View of 2026

The Town with Matthew Belloni | The Ringer | January 10, 2026
Guest: Jeff Sagansky (Media investor & executive; Eagle Equity Partners)
Host: Matthew Belloni

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Episode Overview

In this episode, Matthew Belloni sits down with seasoned media investor and former studio head Jeff Sagansky to examine Hollywood’s current dealmaking landscape, the streaming oligopoly, the shifting economics for creative talent, and what investors are watching for in 2026. The discussion is a candid, behind-the-curtain analysis of major M&A, antitrust scrutiny, the free-streaming boom, short-form content, and the existential threats to Hollywood’s legacy business—told via the lens of someone who's seen fifty years of industry upheaval.

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Key Discussion Points & Insights

1. The Streaming Oligopoly, M&A, and Warner Bros: The Big Auction

• Major Ongoing Deals: Belloni frames the year as pivotal, zeroing in on the Warner Bros. Discovery auction, Netflix’s bid, and Paramount’s efforts ([00:40]).

  • Netflix’s acquisition is “both an offensive and defensive” play, aiming to absorb HBO's subs and bolster growth ([07:35]).
  • Paramount’s bid presents less of a concentration risk but triggers different regulatory scrutiny, including state-level antitrust concerns ([08:51]).

• Industry Memory: Both agree that the Disney-Fox merger has proven damaging in hindsight, with impact beyond shareholders:

  "I think of that as an absolute disaster for both the business and Los Angeles... the only people that really made out were the investors in Fox."
  — Jeff Sagansky ([04:22])

• Antitrust Politics: Both federal and state authorities are now much more sensitive to media consolidation, and job loss in LA will be a political motivator ([09:32]):

  "The governor and the attorney general have a lot of power here to enforce the law, despite what the federal government wants."
  — Jeff Sagansky ([09:47])

• What if No Merger?

  • Warner Bros. could thrive independently, perhaps through additional acquisitions (like Lionsgate), given “an incredible year” and reduced debt ([12:12]-[13:01]).
  • Sagansky warns of “private equity vampires” if no strategic or industry player wins out ([11:45]).

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2. The “Dark Age” for Creative Talent

• Profit Participation Dwindling: Sagansky revisits his 2022 thesis:

  "We're in the golden age of content production and the dark age of creative profit sharing."
  — Jeff Sagansky (paraphrased by Belloni at [02:56])

  • The “Netflix model” has eliminated traditional back-end residuals for most ([14:12]):

    “Imagine if we said to all the authors in this country and all the singers in this country and the composers, 'Hey, you are no longer going to get any back end from your creation.' ...That's exactly what's happened in our business.”
    — Jeff Sagansky ([14:39])

  • Notable exceptions (like Ben Affleck & Matt Damon’s Artist Equity deal) are “rare victories,” but Netflix maintains it’s not changing its policy ([15:06]-[15:31]).

• Prospects for Change:

  • Belloni asks if a Fin-Syn (Financial Interest and Syndication Rules) style reversal is possible. Sagansky says important people are discussing it and that it first passed in 1971 under Nixon due to political gamesmanship, despite industry disbelief ([15:51]-[17:14]):

    “No one thought it could happen then either. ...It was a political process.”
    — Jeff Sagansky ([16:49]-[16:51])

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3. The 2026 M&A Landscape: Capital, Consolidation & Uncertainty

• Flood of Deals Expected:

  • Cheaper debt, more equity (especially from Middle Eastern sovereign funds), and pent-up private equity ownership mean an “active year” ([19:01]-[20:18]).
  • Key legacy media assets (Versant, Warner, Stars, etc.) are in play. Even agencies and management companies could trade hands ([21:37]-[22:15]).
  • Short-form video companies, generative AI, live events, and private transactions are hot verticals ([20:50]-[21:37]).

  “We're in a period where private equity has been sitting on assets for far too long and they need a monetization event, either an IPO or a sale.”
  — Jeff Sagansky ([21:45])

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4. The Rise of Free Platforms & The Return of “Cable”

• “Free” is Booming:

  • With streaming prices rising, viewers flock to free ad-supported streamers (YouTube, Tubi, Pluto, Roku, etc.), which now account for 18% of TV viewing ([23:29]-[24:15]).
  • Netflix and the streamers have essentially reconstituted many of the consumer pain points from the old cable model:

    “Because of the prices, the incredible acceleration of price increases of streaming, people want some free content.”
    — Jeff Sagansky ([24:15])

• Quality Slippage and Viewer Trends:

  • Gen Z and young millennials are increasingly avoiding traditional TV; growth is happening in betting, games, and social media.
  • A shrinking number of services per household could hit streamers’ valuations hard ([26:54]).

    “If that happens, you're going to see the valuations of streaming really start to come down.”
    — Jeff Sagansky ([27:42])

• Netflix’s Strategy:

  • Netflix is “desperately” trying to diversify (video games, podcasts, shorter-form) to fight YouTube and TikTok, but faces structural challenges:

    “I am certainly not betting that Netflix can become TikTok or YouTube, which have a much better business model. YouTube and TikTok...they revenue share, they don't pay for content. It doesn't work.”
    — Jeff Sagansky ([28:06])

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5. The Short-Form Revolution & AI Content

• Short-Form Surges:

  • Services like Real Short Drama Box offer “minute, two-minute episodes” at a fraction of Hollywood production cost. Some predict a $10B market by 2027, larger than theatrical film ([29:32]-[30:13]).
  • AI tools could “clipify” movies and shows, allowing viewers to watch condensed versions ([30:47]-[31:18]).

  “Imagine watching True Detective or Stranger Things in one hour rather than six...these viewers being trained on real shorts...they won't have any issue with it.”
  — Jeff Sagansky ([31:18])

  • Belloni jokes about which directors would allow their films to be cut down for new formats, highlighting creator ambivalence ([32:00]).

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Notable Quotes & Memorable Moments

• On the “Rotten Time” to Be a Producer:

  “75 years...profit sharing has been part of our business...overnight it's eliminated.”
  — Jeff Sagansky ([14:39])

• On Hollywood Leadership:

  “Those guys in that generation, they felt a responsibility to the business and, and to Los Angeles...my hope is that those leaders are going to step forward...”
  — Jeff Sagansky ([11:04])

• On the Looming Wave of Private Equity:

  “If neither Netflix nor Paramount gets Warners...they are just going to restart the process and...potentially some private equity vampire that's going to just break it up and...suck all the juice out of it.”
  — Matthew Belloni ([11:45])

• Clipification & AI:

  “It suggests a whole other use for these massive film libraries...taking AI, taking movies, condensing them to much shorter experiences...there may be others who welcome the additional revenue.”
  — Jeff Sagansky ([30:47]-[31:50])

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Timestamps for Key Segments

| Timestamp | Topic/Quote | |-----------|-------------| | 03:40 | Disney-Fox acquisition post-mortem, new mergers comparison | | 05:33 | Streaming consolidation and the new oligopoly | | 06:19 | Netflix’s acquisition motives and market share talk | | 08:18 | Antitrust obstacles, state vs federal roles | | 12:17 | Warner’s case for surviving as an independent studio | | 14:12 | The collapse of profit participation for creatives | | 15:51 | Will Fin-Syn–style rules return? History lesson | | 19:01 | M&A landscape for 2026; private equity and sovereign funds | | 23:29 | “Free” streaming services’ rise and the consumer shift | | 26:54 | Gen Z’s disinterest in TV, implications for streaming | | 28:06 | Netflix’s attempts to become more like YouTube/TikTok | | 29:32 | Short-form content, microdramas, and AI-enabled clipification | | 32:00 | Directors’ reactions to film “condensing” |

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Tone and Style

The conversation is sharp, unsparing, and sometimes sardonic. Both Belloni and Sagansky blend institutional memory with current deal skepticism, never shying away from tough assessments or regulatory politics. Sagansky, in particular, is critical of what’s been lost in Hollywood’s recent evolution—most of all for the creative workforce.

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Final Thoughts

• Hollywood’s 2026 is shaping up as a battle between legacy consolidation, investor appetites, and cultural/technological shifts toward free and short-form experiences.
• The return of antitrust as a major force—and the emergence of state regulators—suggest mergers won’t be easy.
• Creators face new challenges amidst the triumph of the platform, and a return to profit-sharing is far from certain.
• The rise of free ad-supported content and AI-driven “clipification” may fundamentally reorder how Hollywood monetizes storytelling.

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For readers: This summary captures the essence of the conversation and key points of analysis, but the episode is rich with asides, industry history, and off-the-cuff moments. For Hollywood watchers and investors alike, Sagansky’s seasoned skepticism is both a warning and a roadmap.

Transcript

[A]

This episode of the Town is brought to you by Netflix. Presenting Frankenstein Nominated for five Golden Globe Awards, including best Motion Picture Drama, Best Director and best Adapted Screenplay by Guillermo del Toro, the New York Times hails Frankenstein is stunning. The movie Guillermo del Toro was born to make. Starring Golden Globe nominees Oscar Isaac and Jacob Elordi, Esq. Raves Frankenstein will be considered a classic for lifetimes to come for your awards consideration. This episode is brought to you by Warner Bros. Pictures. Presenting Sinners, written and directed by Ryan Coogler and starring Michael B. Jordan. Hailed as the best picture of the year, the New York Times calls Sinners a big screen exultation, a passionate, effusive praise song about life and love, including the love of movies. And timeout says Ryan Coogler's bold vision makes Sinners a true event, an exuberant widescreen experience that stirs the soul. Sinners is awards eligible in all categories, including best Picture, Best Director and Best Actor. It is Friday, January 9th. By most accounts, this is going to be a pretty big year for big money deals in Hollywood. It's not just the ongoing saga surrounding Warner Brothers discovery and who will end up owning Batman and HBO Max, although that's still a pretty important and open question. And we'll have an update there today, now that Warners has rejected Paramount's hostile offer again and is sticking with its Netflix deal, despite the fact that the value of the Netflix transaction is dependent in part on the leftover networks like CNN and tnt. And what's going on with Versant, the spinoff of Comcast's cable networks that is down about 25% since it launched publicly this past week. Not great, but bigger picture. I'm talking about the shifting landscape within the entertainment business where the smart investors are putting their money these days. Trends like the rise of the creator economy, vertical video and free services like YouTube and Tubi as Netflix and the other subscription streamers become more like the old cable TV model to preview the year and what the investor community is thinking, I invited Jeff Zaganski to come on the show. He's a longtime investor and producer and the former president of CBS and Sony Pictures and Paxton Communications. He's always smart on where the money is really being made in Hollywood, and you can often see where the business is going. He predicted a few years ago that the power of these streaming services would grow to consume the entirety of Hollywood and that the creative talent would suffer as a result, he said. We're in the golden age of content production and the dark age of creative Profit sharing. That was during peak tv. Now, three years later, that content recession is here. And Jeff has some new thoughts on where everything is going next. So today it's the year ahead in Hollywood dealmaking. The big trends and where the money will be made and invested. With Jeff Zaganski from the Ringer and Puck, I'm Matt Bellany and this is the town. Okay, we are here with Jeff Zaganski, who's media investor, producer, former top executive at several studios, currently the founder and proprietor with Harry Sloan of Eagle Equity Partners. Am I getting everything right there?

[B]

Pretty good.

[A]

Okay, there we go. Listen, I wanted to have you on for a while now because you're very smart about this stuff and you have a great sense of what's really going on in the business of Hollywood and you aren't afraid to speak your mind, which I enjoy. So we're going to get into a bunch of topics here and I. But I gotta first ask you about the state of play in the Warner's Netflix Paramount threesome auction situation. What are you seeing? Where do you think this is going next?

[B]

You know, the best way to think about this is sort of reflecting back to the Disney acquisition of Fox in the spring of 2019, because as you remember, it faced relatively muted opposition. There was concern about Disney using their combined clout to get the best playdates. Theaters now wish that was the case. And there was some concern about the cutback in volume of movies, which of course was 100% correct. But in retrospect, I think of that as a absolute disaster for both the business and Los Angeles. And, you know, the only people that really made out were the investors in Fox. And I'm not sure even Disney benefited from it.

[A]

Right. Still unclear.

[B]

Yeah, well, the Disney stock is where it was six years ago, but there was a loss of an estimated 7,000 jobs. And, you know, you never really heard from these people who lost their livelihoods. Some people lost their homes during the process. You know, they work for the company that's getting acquired and their job is just to shut up and hope that they're not one of the redundant employees. And there was virtually no protest at all. Just like, you know, what's happened in the local and state government failed the people of Altadena and the Palisades. I think the Justice Department failed both the consumers and the entertainment industry with allowing the deal to be consummated.

[A]

Well, I don't think the Trump people were going to go against what Rupert wanted, given they care about his news network very much. And also I feel like the people in Hollywood were sort of like, either bamboozled or just didn't understand. There was this sense that Fox was not big enough or strong enough to survive on its own and kind of needed this, and it wasn't making the size of movies that it wanted to. And I don't know. I think there's a lot of people that are remorseful now that they didn't go after that. And I think we're going to see that manifested even more and more in what's going on with Warner Brothers.

[B]

So, yeah, so here we are six years later, and we're starting with a streaming business that has really consolidated into a very strong oligopoly. And it has all the characteristics of one. One, you have four players, big pricing, power prices. Consumers have far outstripped inflation. Two, led by Netflix. You know, the terms of doing business with the creative talent that makes the show dictates that there's no back end for anybody. You want to be invited to the oligopolis ball for producers and top talent, you have to give up your back end.

[A]

We'll get to that part. We'll get to that part. But so do you believe Netflix when they say that their true competitor here is YouTube and not the other subscription streamers that they are going to own more than 40% of the market of?

[B]

I think it's coming. But no, I think, you know, I think for this, for Netflix right now, you know, you see they've got 29% margins. Those margins are approaching the margins of the, you know, the legacy cable business. They're in, you know, the catbird seat, and they've got an unbelievably strong business. And that business is dictating the terms for everybody in the business. And, you know, you've got a decrease in production the last three years because this is another thing that the oligopoly can do. They can. As long as everybody cut cuts back together, then no one's hurt. The churn is the same. And that's what you're seeing. So, you know, you've got a really toxic sort of start, I think, for this, looking at it from the next Netflix point of view. And, you know, I don't think that Netflix is going to prevail because I think that, you know, for Netflix, this is a. Both an offensive and defensive acquisition. Offensive because it gives Netflix the ability to have a lot more subs and revenue growth and the ability, most importantly, to take those HBO subs and monetize them more effectively. HBO has got One of the highest churns in the business, 7 or 8%. Netflix has 2% for now, five years running. And if they can go and bundle these things, they can make this a very, very powerful package.

[A]

So why don't you think it will happen?

[B]

Because. Well, let me give you the defensive part of this. If all of the studios, Paramount, Universal and Disney, which are the big parts of this 44% of viewing that Netflix has from licensed content, if they were to pull back their licensed content from Netflix, it would be a huge and very expensive hole to fill with original programming.

[A]

Sure.

[B]

But I think that given the combined streaming share of over 30%, the Justice Department is going to block this.

[A]

You think so? They seem pretty confident, but you think they will ultimately block it.

[B]

Trump's already making noises about concentration. We know that he favors the Ellison's and I think the both the Democrats and Republicans on the Hill, you can see them now coming together and most of the town as well will coalesce around blocking this. So I don't think if Netflix is winning, I think they're going to end up losing this and paying the $5.8 billion breakup fee.

[A]

And so what about the Paramount side? Do you think they can get this through or do you think they're going to raise their bid?

[B]

So Paramount, if they're chosen, you don't have the concentration risk. Together they maybe represent only 3.5% of TV viewing. But what's interesting here is not what the Justice Department will do, but rather what the states will do. You know, the Sherman antitrust Act of 1890, together with the Clayton Act 25 years later, to this day, they are the key pieces of legislation that prohibit restraint of trade. However, what I don't think people really focus on is before the Sherman act, there were 12 states that had already passed their own antitrust legislation. States have always been active and effective in their attempts to enforce antitrust.

[A]

We've had Elizabeth Warren on the show and she basically said as much that they're going to go after this, but not because of necessarily the, you know, the big bad Paramount swallowing another studio. They just don't want the proprietors of CBS News now to have cnn.

[B]

Well, I think though when you look at California, which is going to be most effective, you know, they have, you know, it's probably 125-year-old Cartwright act and that antitrust legislation can be applied to mergers that affects jobs in worker competition within the state. So the governor and the attorney general have a lot of power here to enforce the law, despite what the federal government wants.

[A]

And they have David Ellison's own words to throw back at him. He's talking about $6 billion in cost savings.

[B]

There have to be if you're paying that kind of money. And the question is whether the guilds, the unions, the talent agencies, the legal community can coalesce to lobby the state and Congress to block this merger. You know, when I started in the business 50 years ago, there were industry leaders who really cared about the welfare of the LA entertainment community. You know, when I got my first big job at TriStar Pictures, Sid Sheinberg, who I didn't know from Adam, called me up to say, congratulations, you're now going to be sitting on the ncc.

[A]

Ran Universal, and one of the most powerful people in the history of the business.

[B]

Yeah, I didn't know him at all, but I think he could hear my bewilderment from the other side of the phone. And, and he said, you know, we have a responsibility of the community to make sure it thrives.

[A]

Yeah, David Zaslav has a responsibility to the $600 million that he thinks he's going to get out of this deal.

[B]

Yes. And when I moved from Sony to cbs, you know, he called me again, Sid, he said, okay, here are the new boards you're going to be sitting on. And by the way, Sid sat on every board. He really, those guys in that generation, they felt a responsibility to the business and, and to, to Los Angeles. And you know, my gut, my hope is I don't know if there, if that selflessness, and maybe you do, Matt, exists anymore. But my gut, my hope is that those leaders are going to step forward and neither Netflix nor Paramount will give. Will be given permission to buy Warners.

[A]

No, the modern leadership cares about themselves and their shareholders and keeping their jobs. And it's not about that. But, but I want to get to this question of what happens if neither Netflix nor Paramount gets Warner's. Because the Warner board is not going to go away. They are just going to restart the process and try to find another buyer and potentially someone who's even worse. Potentially some private equity vampire that's going to just break it up and, you know, suck all the juice out of it.

[B]

Yeah, you know what? Look, Warner's does. You know what, what backs. Warner's got $5 billion a year of library revenue, but, you know, David Zaslav has done a great job of reducing the net debt by $20 billion. When these two companies are spun off separately, the studio and HBO Max, it's going to have less than three times leverage on it. It's going to have lots of liquidity to go into other businesses if it wants. And it will, it can, it can thrive on its own. It doesn't have to be bought.

[A]

So. So you think they could buy Lionsgate? They could buy other stuff to bulk up and they could survive?

[B]

Yes, I think they could survive. And by the way, I mean, this past year we've seen what a standalone studio is capable of. They've done an incredible job. They've had an incredible year.

[A]

They have. And it didn't move the stock at all until a suitor came along. And that's the whole problem here.

[B]

Okay, but Matt, that stock is tethered to a bunch of cable assets which we know trade for less than four times. We've saw it. We see, we, we saw it this week. You know, Versant got spun off. It's trading for less than four times.

[A]

No, the Ellison say the value of the Cable Networks is $0.

[B]

Yeah. And by the way, when it's got $15 billion of debt on it might be very true.

[A]

Yeah, maybe. I know, I looked at that. I was like, oh, maybe I should buy cnn. You and me, we'll go in, we can get it.

[B]

I think you got a better gig, by the way.

[A]

Maybe so. Maybe so. Certainly. Yeah, certainly in PrimeTime. All right. Three years ago you said that it was a rotten time to be a producer in terms of being paid fairly for the work you are doing. And that was at the kind of height or just the kind of very end of peak tv. What about today? I mean, what is going on? Do you think that there is any chance of a reversal in what's going on in the business right now?

[B]

Well, look, I think given what we're seeing in terms of the cutback in production, even if you look at the residuals, which was a way for people to have some back end, when you look at the individual residuals of talent, they have gone down. Everybody is suffering. And it's because somehow Netflix, and then it was quickly adopted. Who wouldn't adopt it? You don't have to pay anybody after they create something. Imagine if we said to all the authors in this country and all the, the, the singers in this country and the, the composers, hey, you are no longer going to get any back end from your creation. I mean, what kind of shitstorm would that start? But that's exactly what's happened in our business. 75 years. That's how long this profit sharing has been part of our business. 75 years and overnight it's eliminated.

[A]

Yeah, well, not if you're Ben Affleck and Matt Damon. They just did a big, splashy New York Times piece about their deal for the rip, this Netflix movie where they're getting everybody on their cast and crew paid, just like some of the other movies they've made for Artist Equity. And they say they have broken the Netflix model. Netflix is very cheerily saying, we have not changed our model. We just agreed to do it for them. Is that the model for others to go for?

[B]

Well, the model for others to go for is basically what John Void, I think, is talking a little bit about. And that is reinstituting the FinCEN model. And that is you can license the product, you can pay for it, but it reverts back to the creators and the creative participants as well as the financiers after four, five, six years.

[A]

That sounds great, but I just don't see that happening. Is there any path to that happening? Yes, there is. Do you know something I don't? Do you know of a movement? Do you know something that's going to be public soon?

[B]

I think there's a lot of people talking about this. I know there are very important people talking about it. And I think that, you know, it could happen because of the way that these streamers, you know, basically have trouble, change the business overnight. And I think it would be the single best thing for our business. You know, when it happened the first time in 1971, no one thought it could happen then either. By the way, there were three networks. They owned 95% of all the ancillary rights of anything they put on the air. Now that 95% has become 100%, no one is able to benefit after, you know, after the run.

[A]

So how did they get it passed?

[B]

They got it passed. Interestingly enough. It was a political process. And what happened was Nixon, who was right at was going after the media in 1971, he felt like that he wasn't getting a fair shake on the Vietnam War. He basically did it to punish CBS and the other networks in the way that they were.

[A]

Oh, man. Sounds familiar.

[B]

Certainly does sound familiar.

[A]

Oh, wow. So Hollywood has to engineer some controversy that would allow Trump to screw someone over by reinstating FinCEN.

[B]

Well, is he screwing somebody over, or is he basically helping to rectify all the people that have been already screwed over?

[A]

Right, right, right. I know we got to get, like, Kid Rock and Scott Baio and those guys to talk about all the residuals that they have lost. This episode is brought to you by Universal Pictures presenting the film Wicked for Good. Directed by John M. Chu. Wicked for Good is the epic, electrifying and emotional conclusion to the untold story of the witches of Oz. Deadline calls it a masterpiece and the movie that we need now for your awards consideration in all categories including best Director, John M. Chu, Best Actress Cynthia Eribo, Best Supporting Actress Ariana Grande and best picture of the year, Wicked for Good now playing in theaters. This episode is brought to you by HBO Max. For the doctors and nurses on the pit, the work never stops. The Emmy award winner for outstanding drama series is back for a new real time shift with 15 high stakes hours told across 15 must see episodes. Starring Emmy award winner Noah Wiley. Season two of the critically acclaimed Max original series is now streaming on HBO Max with new episodes on Thursdays. Check out the official companion podcast on HBO Max and all major podcast platforms. All right, so let's move on to the M and A landscape for the year. You keep hearing about how deals are back. Money's out there, people are looking to buy stuff. What are you seeing on the media landscape in media and entertainment?

[B]

So it's going to be a very active year in the M and A markets for basically both media and non media assets and for two reasons. One, debt is becoming cheaper as the Fed lowers rates and this is going to accelerate as soon as Trump appoints his new Fed chair. And then equity is plentiful from both traditional private equity shops and also from the sovereign wealth funds in the Middle East. We saw that this year, Electronic Arts, one of the biggest deals in all of the capital markets this year, $45 billion and funded by PIF, the Saudi Arabian Private Wealth Fund, and the PE fund Silverlake, which also owns WME. So looking to 2026 here, you have a number of legacy media companies in play. Obviously Versant, which, you know, the spinoff that just happened this week, which has a lot of cash but had a very, very rough outing. And but you've got a number of these. You know, I think Warner's will spin out in April at least to separate the two companies. And you've got stars also already spun out of alliance gate. We helped make that happen. But they're also looking to do deals and we've already seen that A and E, the fourth big cable network player, is already in play. They announced that they're looking for, you know, sort of strategic help there.

[A]

Don't forget OnlyFans, they're for sale.

[B]

Okay. And only fans, by the way. He would love to be public. I'm sure, but who's going to do that? So, you know, look for a continued consolidation of cable assets, but you know, as well as the actual cable themselves, you know, Charter and Cox announced their merger. It's going to create the largest cable company ahead of Comcast.

[A]

And you think this will happen despite the uncertainty with the Trump administration and the kind of haphazard way in which antitrust and mergent laws are being enforced right now?

[B]

I do, I, I do. You know, I think if you look at from 22 to 24, there was virtually no IPO market. They were the lowest new issuance in, you know, in decades. But then last year it started to pick up. There was $44 billion raised last year, 202 IPOs. And that recovery is going to continue this year and it's going to be led, by the way, by some huge names. OpenAI, SpaceX, Anthropic, they're all going to excite the market. But in the entertainment media business, you're mostly looking at private transactions. Short form video, generative, AI tools, live events, social media. We're going to see a lot of deals announced. And by the way, it wouldn't surprise me if one of the agencies, big agencies, changes hands. You know, two of them are still owned by private equity.

[A]

Yeah, well, CAA just got put into a family office, so I don't think anything's happening there. But uta. UTA might. Yeah.

[B]

And you know, we're in a period when private equity has been sitting on assets for far too long and you know, they need a monetization event, either an IPO or a sale. And when you look at the assets that are in private equity, everything from Candle Media to Content partners to Boardwalk Pictures, DirecTV, Yahoo Soundstages, Legendary Media One, the Huge, you know, big European production company, Cast and Crew, you know, these are all in private funds that need to be monetized.

[A]

You think that there will be consolidation in the management world, like talent management? I know that TPG is trying and Blackstone has made some noise and Carlyle's in management 360 and entertainment 360.

[B]

Yes, it's going to happen because it worked in the agency side.

[A]

I know. It's just funny because managers are not agents. Very different. But maybe they don't know that or they don't care.

[B]

Yeah, I mean, look, they basically got clients that stay for a long time.

[A]

True. And they can produce and.

[B]

Yeah, and they're, you know, and these things are selling at 15 times, you know, so those are big multiples.

[A]

What would you do With Candle Media. Blackstone went into this, bought Moonbug with Cocomelon, bought Reese Witherspoon, overpaid for her. They got an amalgam of assets they've tried to sell off Some Kevin Mayer is like, depending on what you read, either involve that not that much or a lot. Like, what would you do with them?

[B]

You know, I. I don't know because I haven't seen how productive those assets are. But look, Moonbug, I think is everybody's acknowledged was a pretty good purchase. I'm not sure about the rest of.

[A]

It, but I just hope Reese finally gets paid. I'm kidding.

[B]

Yeah. Yeah, exactly. Well, we don't have to throw any benefits for her, right?

[A]

Let's talk about some other trends that you are watching this year. What's the big one? It's gotta be the rise of the free services, right?

[B]

Totally. Absolutely.

[A]

If you're putting your chips on the table in media, you're gonna bet on free.

[B]

Right now you have to, because 18% of total TV viewing is just free services. You got YouTube, Roku, free V, all these things.

[A]

No, no more free V. Free V is gone. All right?

[B]

Free V is gone. You're right. You're right.

[A]

It has. Yes. It was sucked into Amazon prime video, which most people believe anyways. But there's Tubi, there's Pluto tv. You know, there's. There's a lot of them, and they are growing. And people like. It's been true since the very beginning of media. People don't like to pay for shit. They just don't.

[B]

Well, but they also don't like to pay. I mean, because of the prices, the. The incredible acceleration of price increases of streaming, people want to, you know, people want some free content. You know, by the way, you know, I wonder all the time whether the business practices of the streamers is the root of this free trend.

[A]

Oh, explain.

[B]

Well, we saw this in cable. You know, cable 13 years ago was a juggernaut. 88% of all American homes were subscribing to pay cable. And yet every year that they did these marketing studies, they had a negative net promoter score, or nps, meaning more consumers dislike them than had a positive feeling about them. It was obviously because of that cable. The cable guy.

[A]

Yeah. And the box, and you can't cancel and they screw you. And there's a lot of ways that.

[B]

They consumers felt more importantly, they were getting ripped off. They were being charged 100 bucks a month for 300 channels. They were watching 12 of them, and they couldn't Buy on an ala carte basis. Those 12. So streaming comes along from Netflix 27 and then Amazon 2009 with just library product. And you looked at those first NPS scores and by the way, it had three great things going for it. No ads whenever you could, low price and you can watch whenever you want. So Netflix launches just with library product. It's got an NPS score of like 68, which is unbelievable, unheard of. These are the highest in American industry Now because of the, the price increases now because most users and Netflix and all the services are being driven to ad supported tiers. You're seeing NPS scores that are still good, but have come down considerably.

[A]

Yeah, it's becoming just like regular old cable, regular old media.

[B]

Right.

[A]

One thing that I see and notice is Netflix became Netflix because its vast reach, being a Internet enabled television network enabled it to basically become the first global TV network. And it produced economics of scale that could fund this constant fire hose of high level a list actor shows and movies that rival the movies you see in theaters and essentially outdo what has traditionally been possible on the television networks. Now it seems like the economics of free are threatening to do the same thing to Netflix that Netflix did to movie theaters and cable systems. Am I right there?

[B]

I think you're absolutely right. And the canary in the coal mine is when you look at the TV usage of the sort of the Gen Z younger millennials, they are doing everything but watching tv. They're betting, they're on social media, they're playing games, they're, they're doing all these other businesses by the way, that are growing much faster than streaming. And that is for me the sort of the canary in the coal mine. You know what happens as these, you know, people go along here and get older. Are they going to be subscribing to four plus services, what the average American consumer is, you know, buying now on streaming or are they going to be doing two or three? And if that happens, you're going to see the valuations of streaming really start to come down.

[A]

And I think that's why Netflix wants to buy Warner Brothers. Because they realize that if YouTube wants to, they can become Netflix. They can just spend some of the $50 billion a year that YouTube brings in and start buying content they've already started and yet they can't replicate hundred year old franchises and DC Comics and Harry Potter. So Netflix is going to get those.

[B]

It also explains why Netflix is so eager to get into video gaming and shorter form programming. You know, I remember in I don't know, I think it was 2012. Ted Sarande says, oh, you know, you know, what's going to be faster in Netflix becoming HBO or HBO becoming Netflix? And now, you know, Netflix, by the way, became much greater than HBO because they successfully created a much broader offering. But I am certainly not betting that Netflix can become TikTok or YouTube, which have a much better business model. YouTube and TikTok, you know, they revenue share, they don't pay for content. It doesn't work.

[A]

Yeah, but they're going to try to become more like it. We've talked about this. I mean, the ringer, where we do the show for the ringer. They have a deal and it's going to, you know, the podcast will work or not work, but it's their swing to try to make more YouTube like content. And we're going to see that throughout the year. I think.

[B]

You think they'll succeed?

[A]

I think there is an audience for the podcasts on Netflix. It's not going to be as big as YouTube because it's not as easy. There's still that barrier to entry. But I think that Netflix is enough of a utility for most people that they may just throw it on and keep it on in the afternoon. I mean, they're really going after daytime viewing here because YouTube dominates in daytime viewing and try to increase that share of viewing to get them closer to YouTube. And I do think podcasts eat up time. They're like the middle relievers, you know, they eat up innings.

[B]

Yeah. I also think though that, you know, I think the whole content moat that has served streaming's rise and as well as cable and broadcast before that, I think it's really diminishing. You know, I mean, this is what Hollywood was built on. No one can make the quality shows that Hollywood can make. But now you've got all these short form microdrama series services like Real Short Drama Box, they're serving a minute, two minute episodes. They garner big audiences. They cost only fifteen hundred dollars an episode, you know, and this is going to, I don't know if it's going to be as big a business as they say it's going to be, but they're, you know, they're saying it's going to be 10 billion in 2027. That's bigger than theatrical movie business.

[A]

Yeah. And it takes out the bottom quadrant of professionally produced content. You know, there was always. Hollywood was, yes, that place where only they could do it. But you know, there's a spectrum of quality from the Hollywood content. And now if it's below, you know, in the bottom half of what Hollywood does, you'd rather just watch Instagram and those are all going to be on your tv. So why would you watch Hollywood crappy stuff to pass the time. You could just watch what everyone else is putting out into the world and it's more entertaining anyways.

[B]

I'm actually fascinated with the success of this truncated short form program because I think it suggests the whole other use for these massive film libraries and that is taking AI, taking the movies, the TV shows, condensing them to much shorter experiences. Imagine watching True Detective or Stranger Things in one hour rather than six. Now, it may not be some way that you know your listeners or you or I want to watch, but you know, all these viewers being trained on real shorts and drama box, they won't have any issue with it.

[A]

No, I just saw the hour and 10 minute version of the wizard of Oz at the Sphere and most people who watched it were not missing the clips that they cut out for this and Amazon fire. Now if you go, if you go on Amazon, you can ask it to go to the scenes you want in a movie. You know, play the part of the hangover where the tiger comes out and that, that's where we're going, where the, the clipification of everything is going to revert back into the actual content and people are going to be able to enjoy stuff however they want it.

[B]

By the way, big, big guilt issue I think because there's probably a lot of directors and writers who don't want to see their work in this form. But you know, there may be others who welcome the additional revenue. I don't know.

[A]

I know we were talking about this and which directors would want their movies at the Sphere and you know, everyone's like, oh, Jim Cameron, he would. I'm like, I don't think Jim Cameron is going to watch, want to watch an hour and 10 minute version of Titanic. He's just not going to want to do that because you would have to just cut out everything except the ship sinking. And that's not the essence of what he thinks Titanic is. So I know it's a whole bunch of things, but. All right, I appreciate you coming on the show. It's going to be a fascinating year ahead. Thanks so much.

[B]

All right, see you, Matt. Thank you.

[A]

Today's call sheet is brought to you by Searchlight Pictures. Presenting is this thing on this intimate and hopeful new film from director Bradley Cooper stars Will Arnett and Laura Dern as a couple on the precipice of divorce as they navigate, Reinvention, reconnection, and whether love can take a new form. All right, Craig, we've got two classic January movies opening this weekend. I mean, it's amazing. How familiar are you with the IMDb page of one Gerard Butler?

[C]

Look, he's been a couple. He's been in a couple of rewatchables movies. So, you know, movies like Den of thieves.

[A]

Den of Thieves 300 Olympus has fallen quality.

[C]

Yeah, Den of Thieves is a big rewatchables movie. Bill Simmons is a fan of Gerard Butler. My mother a big fan of the movie Greenland.

[A]

Jerry Butler at 56, still got it. Still doing the action movies. Remember Plane from a couple years ago? The movie's so great, they kept the working title.

[C]

Yeah, that was the title, like, in emails, as they were figuring out if they wanted to make this movie. Plane Movie, Jerry Butler.

[A]

It would have been better if they just called it Plane Movie rather than Plane. Plane is like the artistic version of the Plane movie.

[C]

Plane made 75 million bucks.

[A]

Amazing. I love Jerry Butler. He's one of those guys that's been around forever. He has this manager, Alan Siegel, who is one of the classic Hollywood characters. I once saw him, like, dancing solo at a premiere party, like, by himself on the dance floor for, like, 20 minutes, solo, as everyone's, like, mingling and talking. He was just, like, grooving to his own beat. Classic guy.

[C]

I respect that. When the song is good enough, when.

[A]

The music moves you, man, when Gimme.

[C]

Gimme, Gimme comes on, you have to dance.

[A]

Exactly. So if it's January, there's gotta be some Jason Statham or Gerard Butler movie. And this time we've got Gerard Butler. Greenland 2. Migration was not familiar with the original Greenland, which came out in 2020, did not get a US theatrical release because of COVID but somehow still made $50 million overseas. So at Lionsgate, $50 million means sequel. And now we have Greenland 2. The tracking is 10 million over, under, over. Oh, you're taking the over on this.

[C]

Yeah.

[A]

Okay. I have seen some indications that it is going to get to over, but I am still going to take the under on this. I just. That seems like a lot to me for a movie that did not get a US Theatrical release, a sequel is going to, like, GROSS More than 10 million? I don't. I don't think so.

[C]

I bet this movie did really well on HBO Max and then Amazon prime when it came out on VOD in the pandemic, and the fact that it made 50 internationally and it's Gerard Butler who is always who's in the Statham camp.

[B]

I don't know.

[C]

These are, these are like Earth disaster movies. I believe the first one is about a comet coming to Earth and they have to try to survive the comet.

[A]

Yeah. There's an Earth message about these things.

[C]

Yes. Yes.

[A]

All right. Is it going to beat the killer chimp movie primate from Paramount? That one is also tracking to about.

[C]

10 million that I know less about and have seen less about.

[A]

It's another classic January. It's a slasher movie, although the reviews have been pretty good for this one. People seem to like it in that world. I am still taking the under on it because I just think they're both going to get bowled over by Avatar and the Christmas movies. I don't think it's going to resonate, but the reviews are okay.

[C]

So you're taking the under on both.

[A]

Under on both. Got to. I don't know. It's January. These movies are not being dumped. They are classic January movies, but they just feel like out of another era. So I think they are biding their time on screens for their eventual P. VOD and streaming consumption. All right, Today's call sheet was brought to you by Searchlight Pictures presenting Is this Thing On? Starring Will Arnett, Laura Dern, Andra Day and Bradley Cooper. Deadline hails the film as a quote, brilliant and profound exploration of marriage now playing in theaters everywhere. For your consideration in all categories. All right, that's the show for today. I want to thank my guest, Jeff Sagansky, producer Craig Horlbeck, editor Jesse Lopez and I want to thank you. We will see you next week.

[D]

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[B]

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[D]

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