WEBVTT - Businessweek Extra-Chris Fenton

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<v Speaker 1>This is Bloomberg Business Week from Bloomberg Radio. I'm Jason Kelly,

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<v Speaker 1>and welcome to the Bloomberg Business Week Extra. It's where

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<v Speaker 1>we bring you the entire conversation that we had with

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<v Speaker 1>one of our favorite guests from the week this week,

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<v Speaker 1>Chris Fenton. He's a trustee over at the US Asia Institute,

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<v Speaker 1>a Hollywood producer. He's got a new book. It's called

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<v Speaker 1>Feeding the Dragon, Inside the Trillion Dollar Dilemma facing Hollywood,

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<v Speaker 1>the NBA, and American business. A must read right now

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<v Speaker 1>as tensions unbelievably continue to escalate between the US and China.

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<v Speaker 1>Check it out. Great to be back, and I'm glad

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<v Speaker 1>Scarlett's here too, because I know she's a fellow Cornellian.

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<v Speaker 1>I know, I feel like we could this whole interview

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<v Speaker 1>could just take a turn with you guys just doing

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<v Speaker 1>something very well. Start talking about hockey and Lina Rank

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<v Speaker 1>and you know exactly Gorges and all of that stuff,

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<v Speaker 1>all that stuff, all right, talking talking about the big

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<v Speaker 1>red of China here too a little bit. Yeah, I

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<v Speaker 1>see what you did there. You're a creative guy, Chris Fenton.

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<v Speaker 1>Um so put the book in some context for us,

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<v Speaker 1>because the title is so intriguing, and Scotan and I

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<v Speaker 1>were talking about it throughout the day and sort of

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<v Speaker 1>trading notes, and I mean, it's very much as our

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<v Speaker 1>colleague Tom King would say in the Zeitgeist in many ways,

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<v Speaker 1>and a reminder that it's not all just trade wars

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<v Speaker 1>and sort of obscure things like soybeans and whatnot. We're

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<v Speaker 1>talking about pop culture, we're talking about sports and so

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<v Speaker 1>many different things. Remind us what you set out to

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<v Speaker 1>do with this book. Yeah, what's sort of amazing. I UM.

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<v Speaker 1>I was in the process of meeting with publishers last

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<v Speaker 1>time I was on the show, which was in October,

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<v Speaker 1>just after Darryl Moorey, the GM of the Houston Rockets,

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<v Speaker 1>sent out that tweet supporting the hues of the Hong

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<v Speaker 1>Kong protesters, and we we talked quite deeply about the

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<v Speaker 1>NBA's issues. And then Lebron James had just landed back

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<v Speaker 1>in the US and he had um issues explaining exactly

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<v Speaker 1>where his point of you was on it. And it's

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<v Speaker 1>amazing because the book, Yes, the timing of having a

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<v Speaker 1>book like this is fantastic, um in regards to selling books.

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<v Speaker 1>But if it's a little bitter sweet because UM, we're

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<v Speaker 1>also facing probably one of the worst relationships the two countries,

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<v Speaker 1>the U S And China have had in the last

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<v Speaker 1>forty years. So it's a bit concerning, But yes, UM,

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<v Speaker 1>a lot of it has to do a lot more

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<v Speaker 1>than with than just with commodities or tech. UM. I

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<v Speaker 1>was in the middle of definitely the cultural and commercial

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<v Speaker 1>exchange between the two countries, and the culture between us

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<v Speaker 1>is really a very strong glue, whether that's in the

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<v Speaker 1>sports industry or or in the movie business. Basically you're

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<v Speaker 1>talking about soft power. I mean the NBA, Hollywood movies.

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<v Speaker 1>That's America's soft power, and that's what people in China

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<v Speaker 1>kind of fell in love with, and um, it's one

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<v Speaker 1>of our most powerful ways of influencing the rest of

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<v Speaker 1>the world. How much did that get hot up in

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<v Speaker 1>the trade war, the trade discussions or was it something

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<v Speaker 1>on the side, Well, it's it's funny because you you have,

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<v Speaker 1>UM a lot of hawks that want to decouple completely

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<v Speaker 1>from the relationship. And I argue to the hawks that UM,

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<v Speaker 1>some of the most powerful, if you want to say

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<v Speaker 1>the words weapons are our products in the cultural business,

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<v Speaker 1>because not only can we monetize that market, because there

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<v Speaker 1>is a large demand in the consumer market of China

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<v Speaker 1>for things like movies are television program and our sports

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<v Speaker 1>um are sports industry um. But on top of it,

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<v Speaker 1>there is real money to make from those products and

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<v Speaker 1>services too. So every time a kid puts on a

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<v Speaker 1>pair of Nike shoes, or every time they watch a

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<v Speaker 1>Transformers movie, or they see an episode of Game of

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<v Speaker 1>Thrones or House of Cards, they're getting a little seepage

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<v Speaker 1>of Western democracy into that market. So there's this soft

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<v Speaker 1>power influence that comes even with the money that we're generating.

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<v Speaker 1>It's sort of a two handed sword. So let's talk

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<v Speaker 1>more about that because and and I'm glad you alluded

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<v Speaker 1>to that time that we talked in October, because it

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<v Speaker 1>was a banana's time to use a very technical term,

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<v Speaker 1>because of what was going on with the n b A,

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<v Speaker 1>I mean, with everything else that's happened in the world,

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<v Speaker 1>that issue with Daryl Morey and Lebron James's response to

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<v Speaker 1>it has largely faded, although with the Lebron issue it

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<v Speaker 1>sort of came up again with the Hong Kong protests,

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<v Speaker 1>you know, heating up again and everything that's happened between

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<v Speaker 1>Beijing and Hong Kong since then. But remind us kind

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<v Speaker 1>of where the NBA sits in all of this, because

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<v Speaker 1>the estimates for the money lost around that freakas as

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<v Speaker 1>it were, was measured in I think a couple of

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<v Speaker 1>hundred million dollars. Yeah. Well, the NBA's issues are still ongoing.

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<v Speaker 1>I mean, obviously Covid has has caused other issues with

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<v Speaker 1>the NBA, but um, up to now, they are still

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<v Speaker 1>not broadcasting the games in China. Um, there are still

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<v Speaker 1>quite a bit of merchandise, definitely from the Houston Rockets,

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<v Speaker 1>but various other teams that aren't even sold over there. Um,

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<v Speaker 1>there are some games that are delayed streamed on various platforms,

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<v Speaker 1>but a lot of that the lion share of the

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<v Speaker 1>revenue that NBA was generating out of that market is

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<v Speaker 1>non existent right now, and they're having a real hard

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<v Speaker 1>time trying to get it back. So Um. Part of

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<v Speaker 1>that has to do obviously with the Darryl Morey situation

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<v Speaker 1>back in October, which by the way, seems like ten

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<v Speaker 1>years ago at this point. But then the the the

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<v Speaker 1>second thing is just that the relationship between the two

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<v Speaker 1>countries is so fraid right now it's very difficult to

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<v Speaker 1>make any progress. Um. In the in the correct path

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<v Speaker 1>that the NBA has to go at this point. You know,

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<v Speaker 1>when you talk about the NBA in China, I can't

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<v Speaker 1>help but think about Joseph Tie who's a co founder

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<v Speaker 1>of Ali Baba, and how he's an owner of the

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<v Speaker 1>New Jersey Nets or is it New York Nets. I'm

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<v Speaker 1>showing my age here. That's a that's a callback Starlett

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<v Speaker 1>it is. Um, how critical is that to mending some

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<v Speaker 1>of the damage from between the NBA, between China and

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<v Speaker 1>and kind of putting the best foot forward for both

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<v Speaker 1>the league and the country. Well, I'm a little torn

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<v Speaker 1>on that issue. I'm glad you brought him up. Um.

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<v Speaker 1>You know, I don't know him personally, but I think, Um,

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<v Speaker 1>the fact that he labeled what Darryl Moorey brought up

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<v Speaker 1>and brought to the attention of Americans, Um, he called

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<v Speaker 1>it a third rail issue and wants to keep it

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<v Speaker 1>a third rail issue. I think is really a poor

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<v Speaker 1>UM decision and a poor influence that he's trying to

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<v Speaker 1>put through. We really need to put this stuff on

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<v Speaker 1>the front burner and make it part of the national

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<v Speaker 1>discussion right now. Mean, what happened in Hong Kong what's

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<v Speaker 1>happening with the weakers, what's happening in various unfair trade

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<v Speaker 1>balance issues, UM, quotas, protectionist policies, forced j vs UM,

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<v Speaker 1>text swaps, and intellectual properties, um, you know, protection issues.

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<v Speaker 1>These all need to be brought up, talked about buy

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<v Speaker 1>our legislators, um, by our business leaders. And we need

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<v Speaker 1>to construct a proper path forward. Um. The time of

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<v Speaker 1>sort of putting our ostrich heads in the sand is

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<v Speaker 1>over and and quite frankly, if we figure out the

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<v Speaker 1>right way to engage China moving forward, where it's a

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<v Speaker 1>much more balanced relationship and we're addressing things that are

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<v Speaker 1>American values and principles in the right way, so we

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<v Speaker 1>feel good about it, the bilateral relationship is going to

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<v Speaker 1>get repaired. In the process. It will be disruptive and

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<v Speaker 1>a little messy in the interim, but will come out

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<v Speaker 1>the backside of it in a much better situation where

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<v Speaker 1>quite frankly, they'll be strategic compel editors and and partners, um,

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<v Speaker 1>just simply because we both need each other. So Chris,

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<v Speaker 1>let's talk about Hollywood, uh, and the movie business and

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<v Speaker 1>the entertainment business, because you have sat right at that

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<v Speaker 1>nexus between the US and China. And if the NBA's

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<v Speaker 1>relationship with China is complicated, I feel like the entertainment

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<v Speaker 1>industry's relationship with China is ten times more. So. What

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<v Speaker 1>are the issues? But everyone needs a lot of therapy? Seriously,

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<v Speaker 1>what break down the key issues for us and how

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<v Speaker 1>you navigated them? Because you did UM in your former

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<v Speaker 1>job over at DMG Entertainment. Yeah, well, I mean the

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<v Speaker 1>micro issues UM are is varied. As for instance, when

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<v Speaker 1>we when we get a movie into that market, um

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<v Speaker 1>our share of that that that receipt from that film

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<v Speaker 1>is of the overall box office, whereas the global norm

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<v Speaker 1>is closer to They also have a quota there where

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<v Speaker 1>only thirty to to maybe thirty five movies internationally which

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<v Speaker 1>includes Bollywood and Europe in that mix, are allowed into

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<v Speaker 1>the market. And then on top of it, they have

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<v Speaker 1>strict censorship rules, very strict marketing and distribution rules, etcetera, etcetera.

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<v Speaker 1>UM that all needs to be figured out, and obviously

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<v Speaker 1>that sits behind a lot of other big macro trade issues.

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<v Speaker 1>But then there's things that really affect all Americans and

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<v Speaker 1>just essentially what makes us UM the people that we're

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<v Speaker 1>proud of, And one of those is our freedom of speech.

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<v Speaker 1>And what Senator Ted Cruz and various other members of

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<v Speaker 1>Congress that brought up is this cross border censorship that

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<v Speaker 1>has been um such a big issue right now between

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<v Speaker 1>US and China, whether it's them trying to silence Darryl

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<v Speaker 1>Morey outside of their borders and talking on behalf of

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<v Speaker 1>Hong Kong protesters wore a jacket that Tom Cruise is

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<v Speaker 1>wearing in top Gun, where not only do they want

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<v Speaker 1>to censor in their country, but they want it censored

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<v Speaker 1>when it showed in Argentina, Germany or in pure Illinois.

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<v Speaker 1>And that's something that we need to address because quite frankly,

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<v Speaker 1>we need to protect that right of free speech. And

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<v Speaker 1>in China they can fire wall that from their populace anyway,

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<v Speaker 1>So they're really imposing on us what they want the

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<v Speaker 1>rest of the world to think in their narrative. And

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<v Speaker 1>how do we deal with that right now? Is it

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<v Speaker 1>just kind of ad hoc? We we it's case by case.

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<v Speaker 1>You know, it's funny, it's not an ad hoc situation.

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<v Speaker 1>If it's one filmmaker and one film studio taking a stand,

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<v Speaker 1>it will become a sacrificial lamb and almost a whack

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<v Speaker 1>a mole situation where say Paramount takes a stand and says, no,

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<v Speaker 1>we're gonna allow the Taiwanese flag on Tom Cruise's jacket

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<v Speaker 1>for the rest of the world to see. Well, then

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<v Speaker 1>that slot in those movie slots for Paramount will go

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<v Speaker 1>to the Universals and the Disneys, etcetera. It essentially has

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<v Speaker 1>to be a united front where everybody is on board

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<v Speaker 1>with what are rules of engagement are with China, where

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<v Speaker 1>we all abide by those same rules and principles, and

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<v Speaker 1>we have a leverage situation because they do. They know

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<v Speaker 1>their consumer wants Hollywood product, they know their consumer wants

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<v Speaker 1>NBA and sports product out of our country. They know

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<v Speaker 1>their consumer wants Starbucks and Apple and Nike. So if

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<v Speaker 1>we can actually figure out what we're okay with in

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<v Speaker 1>engaging that country and cultural and commercial exchange and abide

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<v Speaker 1>by those principles, will have the leverage to be a

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<v Speaker 1>will make this a much fairer situation. But if it's

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<v Speaker 1>just left up to one CEO or one studio or

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<v Speaker 1>one filmmaker or one basketball player, we're just not going

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<v Speaker 1>to get anywhere. So Chris, I hear you say, we,

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<v Speaker 1>which is a noble idea. There's not a lot of

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<v Speaker 1>we going on in the United States right now. There's

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<v Speaker 1>a lot of them and a lot of us. And

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<v Speaker 1>I do wonder who does this ultimately come down to?

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<v Speaker 1>Is it the industry getting together? Is it those CEOs

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<v Speaker 1>that you described as is happen have to happen on

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<v Speaker 1>the federal level from the administration? Does it have to

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<v Speaker 1>happen via Congress? Like? How does this get if not

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<v Speaker 1>solved at least with some progress being made? You know,

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<v Speaker 1>it's a it's a great question. I'm I'm advising a

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<v Speaker 1>couple of members on the China Task Force for Congress

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<v Speaker 1>right now, and they've asked those questions of me and

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<v Speaker 1>much smarter people than myself, and and some of the

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<v Speaker 1>things that I come up with is is literally like, look,

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<v Speaker 1>you guys have certain pressures from your constituents that make

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<v Speaker 1>you sit up on a soapbox and say Lebron James

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<v Speaker 1>do this, or David's you know, or you know, Bob

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<v Speaker 1>Iger do this. But there are pressures on Lebron and

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<v Speaker 1>and Bob Iger from investors, shareholders, uh, sponsors that endorse them, etcetera.

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<v Speaker 1>Everybody's got pressures. Essentially, what you have to do is

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<v Speaker 1>know where those pressures are coming from and figure out

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<v Speaker 1>how to abate them on both sides. There are there

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<v Speaker 1>has to be a ven diagram where the circles have

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<v Speaker 1>some sort of overlap, and we need to figure where

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<v Speaker 1>that is. You know out where that is, and and

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<v Speaker 1>be okay with the fact that there will be some compromise.

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<v Speaker 1>There will be human rights issues that we do not

0:13:16.120 --> 0:13:18.840
<v Speaker 1>agree with in China. There will be political issues we

0:13:18.920 --> 0:13:21.880
<v Speaker 1>don't agree with in China. There will be national security

0:13:21.920 --> 0:13:24.480
<v Speaker 1>issues we don't agree with with China. But some of

0:13:24.520 --> 0:13:26.960
<v Speaker 1>that stuff we're gonna have to agree to disagree with

0:13:27.600 --> 0:13:31.240
<v Speaker 1>because that market means so much potentially to our GDP

0:13:31.920 --> 0:13:36.000
<v Speaker 1>two jobs here and to our efforts over time to

0:13:36.160 --> 0:13:39.360
<v Speaker 1>influence them through our soft culture. Is soft power of

0:13:39.400 --> 0:13:44.160
<v Speaker 1>our culture and our aspirational qualities of democracy. So, Chris,

0:13:44.160 --> 0:13:47.640
<v Speaker 1>he's become known as an expert at negotiations with China.

0:13:48.240 --> 0:13:52.720
<v Speaker 1>What's the single most important strategy or tactic when negotiating

0:13:52.720 --> 0:13:56.440
<v Speaker 1>with China? You know what, There's there's probably much more

0:13:56.760 --> 0:14:00.920
<v Speaker 1>uh much more depth experts out there than myself. But um,

0:14:00.960 --> 0:14:03.920
<v Speaker 1>if I just go by a typical rule of engagement,

0:14:03.920 --> 0:14:07.600
<v Speaker 1>I mean number one is to really understand where they're

0:14:07.640 --> 0:14:10.080
<v Speaker 1>coming from and what their point of view is and

0:14:10.120 --> 0:14:13.360
<v Speaker 1>where their pressures are themselves. I mean, the Chinese are

0:14:13.440 --> 0:14:16.840
<v Speaker 1>human just like us, but they definitely have big issues

0:14:16.880 --> 0:14:18.880
<v Speaker 1>that they're dealing with. And a lot of the times

0:14:18.880 --> 0:14:23.280
<v Speaker 1>you're not just dealing with a private sector company or

0:14:23.320 --> 0:14:27.240
<v Speaker 1>a consumer base or something that seems very relevant to

0:14:27.280 --> 0:14:28.880
<v Speaker 1>what we deal with here in the US. A lot

0:14:28.920 --> 0:14:31.240
<v Speaker 1>of times it's the government. And if you look at

0:14:31.240 --> 0:14:35.240
<v Speaker 1>the most top layer part of that onion, they need

0:14:35.240 --> 0:14:38.360
<v Speaker 1>to keep one point four billion people just happy enough

0:14:38.400 --> 0:14:41.560
<v Speaker 1>that they don't revolt and have another Tienamen square situation.

0:14:42.000 --> 0:14:45.080
<v Speaker 1>That means you need to provide them middle class jobs,

0:14:45.480 --> 0:14:48.840
<v Speaker 1>create that aspiration that they will get into the middle class,

0:14:49.160 --> 0:14:52.720
<v Speaker 1>and create the messaging that you're continuing to build upon

0:14:52.800 --> 0:14:55.720
<v Speaker 1>that because they've brought six million out of poverty into

0:14:55.760 --> 0:14:59.680
<v Speaker 1>the middle class, but there's one point four billion people there. Yeah, alright, Chris,

0:14:59.720 --> 0:15:01.400
<v Speaker 1>I'm not to make you sing the alma mater, but

0:15:01.480 --> 0:15:04.080
<v Speaker 1>you are a graduate of Cornell University. You went to

0:15:04.080 --> 0:15:06.960
<v Speaker 1>the engineering school. I believe, how on earth did you

0:15:07.080 --> 0:15:10.400
<v Speaker 1>end up in media and movies in Hollywood and writing?

0:15:11.240 --> 0:15:15.280
<v Speaker 1>That's not a yeah, Well, it's it's a it's a

0:15:15.280 --> 0:15:18.280
<v Speaker 1>good question. I actually I saw Kurt Vonneguet speak when

0:15:18.280 --> 0:15:21.520
<v Speaker 1>I was at Cornell. He was a physics major, and

0:15:21.520 --> 0:15:24.200
<v Speaker 1>he said the only reason he was able to write

0:15:24.200 --> 0:15:26.480
<v Speaker 1>a book is that he had no idea whether he

0:15:26.520 --> 0:15:29.480
<v Speaker 1>was any good at good or not at writing, whereas

0:15:29.480 --> 0:15:32.440
<v Speaker 1>all his English majors said, every time they read, you know,

0:15:32.520 --> 0:15:35.000
<v Speaker 1>wrote three pages, they would look at it and trash

0:15:35.040 --> 0:15:37.600
<v Speaker 1>it and throw it away. So he finished books simply

0:15:37.640 --> 0:15:39.120
<v Speaker 1>because he didn't know if he was good or not.

0:15:39.560 --> 0:15:41.720
<v Speaker 1>So I took a swing at it and and had

0:15:41.760 --> 0:15:44.560
<v Speaker 1>one that was actually uh. I wrote in college that

0:15:44.680 --> 0:15:47.000
<v Speaker 1>Fox bought to make a movie out of it. Never

0:15:47.080 --> 0:15:49.920
<v Speaker 1>got made, but um, I was always very interested in

0:15:49.960 --> 0:15:54.120
<v Speaker 1>the writing career. Uh. And I ended up getting into

0:15:54.120 --> 0:15:56.400
<v Speaker 1>the mail room at William Morris and worked my way

0:15:56.520 --> 0:15:59.560
<v Speaker 1>up as a literary agent in the movie business and

0:15:59.600 --> 0:16:03.440
<v Speaker 1>sort of learned the craft of of writing screenplays from

0:16:03.640 --> 0:16:07.120
<v Speaker 1>great clients that I represented, And then ultimately I just

0:16:07.200 --> 0:16:09.920
<v Speaker 1>lived a really colorful journey that I fell into the

0:16:09.920 --> 0:16:12.440
<v Speaker 1>middle of between the US and China for twenty years,

0:16:12.480 --> 0:16:15.240
<v Speaker 1>and I thought, wow, that's great fodder. The right that

0:16:15.440 --> 0:16:18.680
<v Speaker 1>Michael Lewis type of memoir and here I am today.

0:16:18.760 --> 0:16:21.760
<v Speaker 1>It's just been sort of a lucky chain of events.

0:16:22.040 --> 0:16:24.840
<v Speaker 1>And that was Chris Fenton, trustee of the US Asia Institute,

0:16:24.840 --> 0:16:27.240
<v Speaker 1>on his book Feeding the Dragon Inside the trillion dollar

0:16:27.280 --> 0:16:31.680
<v Speaker 1>Dilemma facing Hollywood, the NBA, and American business. And what's

0:16:31.680 --> 0:16:35.400
<v Speaker 1>so interesting is it just came out already on reading

0:16:35.520 --> 0:16:39.440
<v Speaker 1>lists for lots of colleges and business schools across the world.

0:16:40.400 --> 0:16:43.560
<v Speaker 1>We need to understand all of us, these tensions between

0:16:43.600 --> 0:16:46.119
<v Speaker 1>the US and China and what the economic and consumer

0:16:46.480 --> 0:16:49.640
<v Speaker 1>implications are. Well, you've been listening to Bloomberg business Week Extra,

0:16:49.960 --> 0:16:52.640
<v Speaker 1>be sure to tune into Bloomberg Business Week Radio Live

0:16:52.680 --> 0:16:55.360
<v Speaker 1>Monday through Friday, starting at two pm Wall Street Time

0:16:55.480 --> 0:16:58.920
<v Speaker 1>on Boomberg Radio. I'm Jason Kelly, and this is Bloomberg