Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Jason Kelly,
Speaker 1: and welcome to the Bloomberg Business Week Extra. It's where
Speaker 1: we bring you the entire conversation that we had with
Speaker 1: one of our favorite guests from the week this week,
Speaker 1: Chris Fenton. He's a trustee over at the US Asia Institute,
Speaker 1: a Hollywood producer. He's got a new book. It's called
Speaker 1: Feeding the Dragon, Inside the Trillion Dollar Dilemma facing Hollywood,
Speaker 1: the NBA, and American business. A must read right now
Speaker 1: as tensions unbelievably continue to escalate between the US and China.
Speaker 1: Check it out. Great to be back, and I'm glad
Speaker 1: Scarlett's here too, because I know she's a fellow Cornellian.
Speaker 1: I know, I feel like we could this whole interview
Speaker 1: could just take a turn with you guys just doing
Speaker 1: something very well. Start talking about hockey and Lina Rank
Speaker 1: and you know exactly Gorges and all of that stuff,
Speaker 1: all that stuff, all right, talking talking about the big
Speaker 1: red of China here too a little bit. Yeah, I
Speaker 1: see what you did there. You're a creative guy, Chris Fenton.
Speaker 1: Um so put the book in some context for us,
Speaker 1: because the title is so intriguing, and Scotan and I
Speaker 1: were talking about it throughout the day and sort of
Speaker 1: trading notes, and I mean, it's very much as our
Speaker 1: colleague Tom King would say in the Zeitgeist in many ways,
Speaker 1: and a reminder that it's not all just trade wars
Speaker 1: and sort of obscure things like soybeans and whatnot. We're
Speaker 1: talking about pop culture, we're talking about sports and so
Speaker 1: many different things. Remind us what you set out to
Speaker 1: do with this book. Yeah, what's sort of amazing. I UM.
Speaker 1: I was in the process of meeting with publishers last
Speaker 1: time I was on the show, which was in October,
Speaker 1: just after Darryl Moorey, the GM of the Houston Rockets,
Speaker 1: sent out that tweet supporting the hues of the Hong
Speaker 1: Kong protesters, and we we talked quite deeply about the
Speaker 1: NBA's issues. And then Lebron James had just landed back
Speaker 1: in the US and he had um issues explaining exactly
Speaker 1: where his point of you was on it. And it's
Speaker 1: amazing because the book, Yes, the timing of having a
Speaker 1: book like this is fantastic, um in regards to selling books.
Speaker 1: But if it's a little bitter sweet because UM, we're
Speaker 1: also facing probably one of the worst relationships the two countries,
Speaker 1: the U S And China have had in the last
Speaker 1: forty years. So it's a bit concerning, But yes, UM,
Speaker 1: a lot of it has to do a lot more
Speaker 1: than with than just with commodities or tech. UM. I
Speaker 1: was in the middle of definitely the cultural and commercial
Speaker 1: exchange between the two countries, and the culture between us
Speaker 1: is really a very strong glue, whether that's in the
Speaker 1: sports industry or or in the movie business. Basically you're
Speaker 1: talking about soft power. I mean the NBA, Hollywood movies.
Speaker 1: That's America's soft power, and that's what people in China
Speaker 1: kind of fell in love with, and um, it's one
Speaker 1: of our most powerful ways of influencing the rest of
Speaker 1: the world. How much did that get hot up in
Speaker 1: the trade war, the trade discussions or was it something
Speaker 1: on the side, Well, it's it's funny because you you have,
Speaker 1: UM a lot of hawks that want to decouple completely
Speaker 1: from the relationship. And I argue to the hawks that UM,
Speaker 1: some of the most powerful, if you want to say
Speaker 1: the words weapons are our products in the cultural business,
Speaker 1: because not only can we monetize that market, because there
Speaker 1: is a large demand in the consumer market of China
Speaker 1: for things like movies are television program and our sports
Speaker 1: um are sports industry um. But on top of it,
Speaker 1: there is real money to make from those products and
Speaker 1: services too. So every time a kid puts on a
Speaker 1: pair of Nike shoes, or every time they watch a
Speaker 1: Transformers movie, or they see an episode of Game of
Speaker 1: Thrones or House of Cards, they're getting a little seepage
Speaker 1: of Western democracy into that market. So there's this soft
Speaker 1: power influence that comes even with the money that we're generating.
Speaker 1: It's sort of a two handed sword. So let's talk
Speaker 1: more about that because and and I'm glad you alluded
Speaker 1: to that time that we talked in October, because it
Speaker 1: was a banana's time to use a very technical term,
Speaker 1: because of what was going on with the n b A,
Speaker 1: I mean, with everything else that's happened in the world,
Speaker 1: that issue with Daryl Morey and Lebron James's response to
Speaker 1: it has largely faded, although with the Lebron issue it
Speaker 1: sort of came up again with the Hong Kong protests,
Speaker 1: you know, heating up again and everything that's happened between
Speaker 1: Beijing and Hong Kong since then. But remind us kind
Speaker 1: of where the NBA sits in all of this, because
Speaker 1: the estimates for the money lost around that freakas as
Speaker 1: it were, was measured in I think a couple of
Speaker 1: hundred million dollars. Yeah. Well, the NBA's issues are still ongoing.
Speaker 1: I mean, obviously Covid has has caused other issues with
Speaker 1: the NBA, but um, up to now, they are still
Speaker 1: not broadcasting the games in China. Um, there are still
Speaker 1: quite a bit of merchandise, definitely from the Houston Rockets,
Speaker 1: but various other teams that aren't even sold over there. Um,
Speaker 1: there are some games that are delayed streamed on various platforms,
Speaker 1: but a lot of that the lion share of the
Speaker 1: revenue that NBA was generating out of that market is
Speaker 1: non existent right now, and they're having a real hard
Speaker 1: time trying to get it back. So Um. Part of
Speaker 1: that has to do obviously with the Darryl Morey situation
Speaker 1: back in October, which by the way, seems like ten
Speaker 1: years ago at this point. But then the the the
Speaker 1: second thing is just that the relationship between the two
Speaker 1: countries is so fraid right now it's very difficult to
Speaker 1: make any progress. Um. In the in the correct path
Speaker 1: that the NBA has to go at this point. You know,
Speaker 1: when you talk about the NBA in China, I can't
Speaker 1: help but think about Joseph Tie who's a co founder
Speaker 1: of Ali Baba, and how he's an owner of the
Speaker 1: New Jersey Nets or is it New York Nets. I'm
Speaker 1: showing my age here. That's a that's a callback Starlett
Speaker 1: it is. Um, how critical is that to mending some
Speaker 1: of the damage from between the NBA, between China and
Speaker 1: and kind of putting the best foot forward for both
Speaker 1: the league and the country. Well, I'm a little torn
Speaker 1: on that issue. I'm glad you brought him up. Um.
Speaker 1: You know, I don't know him personally, but I think, Um,
Speaker 1: the fact that he labeled what Darryl Moorey brought up
Speaker 1: and brought to the attention of Americans, Um, he called
Speaker 1: it a third rail issue and wants to keep it
Speaker 1: a third rail issue. I think is really a poor
Speaker 1: UM decision and a poor influence that he's trying to
Speaker 1: put through. We really need to put this stuff on
Speaker 1: the front burner and make it part of the national
Speaker 1: discussion right now. Mean, what happened in Hong Kong what's
Speaker 1: happening with the weakers, what's happening in various unfair trade
Speaker 1: balance issues, UM, quotas, protectionist policies, forced j vs UM,
Speaker 1: text swaps, and intellectual properties, um, you know, protection issues.
Speaker 1: These all need to be brought up, talked about buy
Speaker 1: our legislators, um, by our business leaders. And we need
Speaker 1: to construct a proper path forward. Um. The time of
Speaker 1: sort of putting our ostrich heads in the sand is
Speaker 1: over and and quite frankly, if we figure out the
Speaker 1: right way to engage China moving forward, where it's a
Speaker 1: much more balanced relationship and we're addressing things that are
Speaker 1: American values and principles in the right way, so we
Speaker 1: feel good about it, the bilateral relationship is going to
Speaker 1: get repaired. In the process. It will be disruptive and
Speaker 1: a little messy in the interim, but will come out
Speaker 1: the backside of it in a much better situation where
Speaker 1: quite frankly, they'll be strategic compel editors and and partners, um,
Speaker 1: just simply because we both need each other. So Chris,
Speaker 1: let's talk about Hollywood, uh, and the movie business and
Speaker 1: the entertainment business, because you have sat right at that
Speaker 1: nexus between the US and China. And if the NBA's
Speaker 1: relationship with China is complicated, I feel like the entertainment
Speaker 1: industry's relationship with China is ten times more. So. What
Speaker 1: are the issues? But everyone needs a lot of therapy? Seriously,
Speaker 1: what break down the key issues for us and how
Speaker 1: you navigated them? Because you did UM in your former
Speaker 1: job over at DMG Entertainment. Yeah, well, I mean the
Speaker 1: micro issues UM are is varied. As for instance, when
Speaker 1: we when we get a movie into that market, um
Speaker 1: our share of that that that receipt from that film
Speaker 1: is of the overall box office, whereas the global norm
Speaker 1: is closer to They also have a quota there where
Speaker 1: only thirty to to maybe thirty five movies internationally which
Speaker 1: includes Bollywood and Europe in that mix, are allowed into
Speaker 1: the market. And then on top of it, they have
Speaker 1: strict censorship rules, very strict marketing and distribution rules, etcetera, etcetera.
Speaker 1: UM that all needs to be figured out, and obviously
Speaker 1: that sits behind a lot of other big macro trade issues.
Speaker 1: But then there's things that really affect all Americans and
Speaker 1: just essentially what makes us UM the people that we're
Speaker 1: proud of, And one of those is our freedom of speech.
Speaker 1: And what Senator Ted Cruz and various other members of
Speaker 1: Congress that brought up is this cross border censorship that
Speaker 1: has been um such a big issue right now between
Speaker 1: US and China, whether it's them trying to silence Darryl
Speaker 1: Morey outside of their borders and talking on behalf of
Speaker 1: Hong Kong protesters wore a jacket that Tom Cruise is
Speaker 1: wearing in top Gun, where not only do they want
Speaker 1: to censor in their country, but they want it censored
Speaker 1: when it showed in Argentina, Germany or in pure Illinois.
Speaker 1: And that's something that we need to address because quite frankly,
Speaker 1: we need to protect that right of free speech. And
Speaker 1: in China they can fire wall that from their populace anyway,
Speaker 1: So they're really imposing on us what they want the
Speaker 1: rest of the world to think in their narrative. And
Speaker 1: how do we deal with that right now? Is it
Speaker 1: just kind of ad hoc? We we it's case by case.
Speaker 1: You know, it's funny, it's not an ad hoc situation.
Speaker 1: If it's one filmmaker and one film studio taking a stand,
Speaker 1: it will become a sacrificial lamb and almost a whack
Speaker 1: a mole situation where say Paramount takes a stand and says, no,
Speaker 1: we're gonna allow the Taiwanese flag on Tom Cruise's jacket
Speaker 1: for the rest of the world to see. Well, then
Speaker 1: that slot in those movie slots for Paramount will go
Speaker 1: to the Universals and the Disneys, etcetera. It essentially has
Speaker 1: to be a united front where everybody is on board
Speaker 1: with what are rules of engagement are with China, where
Speaker 1: we all abide by those same rules and principles, and
Speaker 1: we have a leverage situation because they do. They know
Speaker 1: their consumer wants Hollywood product, they know their consumer wants
Speaker 1: NBA and sports product out of our country. They know
Speaker 1: their consumer wants Starbucks and Apple and Nike. So if
Speaker 1: we can actually figure out what we're okay with in
Speaker 1: engaging that country and cultural and commercial exchange and abide
Speaker 1: by those principles, will have the leverage to be a
Speaker 1: will make this a much fairer situation. But if it's
Speaker 1: just left up to one CEO or one studio or
Speaker 1: one filmmaker or one basketball player, we're just not going
Speaker 1: to get anywhere. So Chris, I hear you say, we,
Speaker 1: which is a noble idea. There's not a lot of
Speaker 1: we going on in the United States right now. There's
Speaker 1: a lot of them and a lot of us. And
Speaker 1: I do wonder who does this ultimately come down to?
Speaker 1: Is it the industry getting together? Is it those CEOs
Speaker 1: that you described as is happen have to happen on
Speaker 1: the federal level from the administration? Does it have to
Speaker 1: happen via Congress? Like? How does this get if not
Speaker 1: solved at least with some progress being made? You know,
Speaker 1: it's a it's a great question. I'm I'm advising a
Speaker 1: couple of members on the China Task Force for Congress
Speaker 1: right now, and they've asked those questions of me and
Speaker 1: much smarter people than myself, and and some of the
Speaker 1: things that I come up with is is literally like, look,
Speaker 1: you guys have certain pressures from your constituents that make
Speaker 1: you sit up on a soapbox and say Lebron James
Speaker 1: do this, or David's you know, or you know, Bob
Speaker 1: Iger do this. But there are pressures on Lebron and
Speaker 1: and Bob Iger from investors, shareholders, uh, sponsors that endorse them, etcetera.
Speaker 1: Everybody's got pressures. Essentially, what you have to do is
Speaker 1: know where those pressures are coming from and figure out
Speaker 1: how to abate them on both sides. There are there
Speaker 1: has to be a ven diagram where the circles have
Speaker 1: some sort of overlap, and we need to figure where
Speaker 1: that is. You know out where that is, and and
Speaker 1: be okay with the fact that there will be some compromise.
Speaker 1: There will be human rights issues that we do not
Speaker 1: agree with in China. There will be political issues we
Speaker 1: don't agree with in China. There will be national security
Speaker 1: issues we don't agree with with China. But some of
Speaker 1: that stuff we're gonna have to agree to disagree with
Speaker 1: because that market means so much potentially to our GDP
Speaker 1: two jobs here and to our efforts over time to
Speaker 1: influence them through our soft culture. Is soft power of
Speaker 1: our culture and our aspirational qualities of democracy. So, Chris,
Speaker 1: he's become known as an expert at negotiations with China.
Speaker 1: What's the single most important strategy or tactic when negotiating
Speaker 1: with China? You know what, There's there's probably much more
Speaker 1: uh much more depth experts out there than myself. But um,
Speaker 1: if I just go by a typical rule of engagement,
Speaker 1: I mean number one is to really understand where they're
Speaker 1: coming from and what their point of view is and
Speaker 1: where their pressures are themselves. I mean, the Chinese are
Speaker 1: human just like us, but they definitely have big issues
Speaker 1: that they're dealing with. And a lot of the times
Speaker 1: you're not just dealing with a private sector company or
Speaker 1: a consumer base or something that seems very relevant to
Speaker 1: what we deal with here in the US. A lot
Speaker 1: of times it's the government. And if you look at
Speaker 1: the most top layer part of that onion, they need
Speaker 1: to keep one point four billion people just happy enough
Speaker 1: that they don't revolt and have another Tienamen square situation.
Speaker 1: That means you need to provide them middle class jobs,
Speaker 1: create that aspiration that they will get into the middle class,
Speaker 1: and create the messaging that you're continuing to build upon
Speaker 1: that because they've brought six million out of poverty into
Speaker 1: the middle class, but there's one point four billion people there. Yeah, alright, Chris,
Speaker 1: I'm not to make you sing the alma mater, but
Speaker 1: you are a graduate of Cornell University. You went to
Speaker 1: the engineering school. I believe, how on earth did you
Speaker 1: end up in media and movies in Hollywood and writing?
Speaker 1: That's not a yeah, Well, it's it's a it's a
Speaker 1: good question. I actually I saw Kurt Vonneguet speak when
Speaker 1: I was at Cornell. He was a physics major, and
Speaker 1: he said the only reason he was able to write
Speaker 1: a book is that he had no idea whether he
Speaker 1: was any good at good or not at writing, whereas
Speaker 1: all his English majors said, every time they read, you know,
Speaker 1: wrote three pages, they would look at it and trash
Speaker 1: it and throw it away. So he finished books simply
Speaker 1: because he didn't know if he was good or not.
Speaker 1: So I took a swing at it and and had
Speaker 1: one that was actually uh. I wrote in college that
Speaker 1: Fox bought to make a movie out of it. Never
Speaker 1: got made, but um, I was always very interested in
Speaker 1: the writing career. Uh. And I ended up getting into
Speaker 1: the mail room at William Morris and worked my way
Speaker 1: up as a literary agent in the movie business and
Speaker 1: sort of learned the craft of of writing screenplays from
Speaker 1: great clients that I represented, And then ultimately I just
Speaker 1: lived a really colorful journey that I fell into the
Speaker 1: middle of between the US and China for twenty years,
Speaker 1: and I thought, wow, that's great fodder. The right that
Speaker 1: Michael Lewis type of memoir and here I am today.
Speaker 1: It's just been sort of a lucky chain of events.
Speaker 1: And that was Chris Fenton, trustee of the US Asia Institute,
Speaker 1: on his book Feeding the Dragon Inside the trillion dollar
Speaker 1: Dilemma facing Hollywood, the NBA, and American business. And what's
Speaker 1: so interesting is it just came out already on reading
Speaker 1: lists for lots of colleges and business schools across the world.
Speaker 1: We need to understand all of us, these tensions between
Speaker 1: the US and China and what the economic and consumer
Speaker 1: implications are. Well, you've been listening to Bloomberg business Week Extra,
Speaker 1: be sure to tune into Bloomberg Business Week Radio Live
Speaker 1: Monday through Friday, starting at two pm Wall Street Time
Speaker 1: on Boomberg Radio. I'm Jason Kelly, and this is Bloomberg