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Speaker 1: Welcome to Strictly Business, Variety's weekly podcast featuring conversations with

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Speaker 1: industry leaders about the business of media and entertainment. I'm

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Speaker 1: Cynthia Lyttleton, co editor in chief of Variety. This is

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Speaker 1: a special bonus episode of Strictly Business for April twenty second,

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Speaker 1: twenty twenty five. As this week has already seen two

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Speaker 1: days of wild swings in US stock markets, I reached

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Speaker 1: out to industry veteran Tom Rogers to help make sense

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Speaker 1: of what's happening. That interview is followed by a discussion

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Speaker 1: with Variety Business editor Todd Spangler on why Google and

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Speaker 1: Meta are both in the thick of antitrust court fights

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Speaker 1: in Washington. That's all coming up after this break, and

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Speaker 1: we're back with a bonus episode of varieties Strictly Business

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Speaker 1: podcast for April twenty second, twenty twenty five. Tom Rogers

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Speaker 1: is the definition of a media industry insider. He's a

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Speaker 1: founder of CNBC. He's been in the C suites at NBC,

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Speaker 1: Universal and TiVo. He's a veteran marketwatcher who is now

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Speaker 1: executive chairman of Playgrid, a cloud AI company. We started

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Speaker 1: the week off with another nail bider of a trading

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Speaker 1: frame and big swings for the Dow and NASDAC on Monday.

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Speaker 1: Here Rogers ways in on how to navigate this unprecedented volatility,

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Speaker 1: and he offers his insight as to how this kind

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Speaker 1: of macroeconomic storm can affect the day to day decision

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Speaker 1: making for leaders of large enterprises. Tom Rogers, thank you

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Speaker 1: for joining me, Thank you for helping us sort out

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Speaker 1: what is going on in equities markets right now.

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Speaker 2: Thanks for having me.

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Speaker 1: Let me just start with can can you think of

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Speaker 1: any analogous time to the last couple of weeks we've

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Speaker 1: had since the faithful pen strokes of April second.

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Speaker 2: Well, certainly there's been other times of market volatility, some

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Speaker 2: greater than this, but I can't think of any other

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Speaker 2: time when it was self inflicted by the United States

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Speaker 2: government taking shot after shot at the US equity market

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Speaker 2: and an effort to do something that very few people

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Speaker 2: can make any sense of and is clearly having all

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Speaker 2: kinds of negative consequences on not only the equity markets,

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Speaker 2: but the bond markets and the currency markets.

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Speaker 1: Tom, you've been in big publicly traded companies at the

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Speaker 1: high levels, NBC, Universal, TVO. What does this level of

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Speaker 1: volatility do sort of how do they feel it immediately?

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Speaker 2: Well, immediate and what may flow from all this or

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Speaker 2: obviously two different things. We're seeing. Equity prices clearly get hit.

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Speaker 2: The stock market itself being volatile in it does not

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Speaker 2: necessarily impact day to day life on main street, although

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Speaker 2: it's gotten to the point that as some are saying,

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Speaker 2: it's no longer what's happening to your four O one K,

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Speaker 2: it's what's happening to your one O one K, So

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Speaker 2: clearly there are some main street implications there. Bond market

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Speaker 2: is obviously getting hit, meaning interest on rates on bonds

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Speaker 2: are going up, the dollar is weakening, and the currency

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Speaker 2: market is having the opposite effect, which is leading people

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Speaker 2: to believe that really there's something going on in the

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Speaker 2: world markets, which is saying, hey, if you're going to

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Speaker 2: invest in the United States, you're going to need more

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Speaker 2: of a risk premium. That there's instability in the United States,

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Speaker 2: and no one's quite sure where this is going. So

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Speaker 2: those are kind of unusual variables to be playing out,

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Speaker 2: to say the leavest, when you're in a big company

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Speaker 2: and you're seeing this and there is a real prospect

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Speaker 2: that we are dealing with either a recession or maybe worse, stagflation,

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Speaker 2: where you have stagnant or recessionary economic issues and inflation,

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Speaker 2: that gets scary because that means slow down, That means

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Speaker 2: earnings are going to be lower, and that's when people

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Speaker 2: start drawing off plans for belt tightening, which generally means layoffs.

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Speaker 2: We're not seeing that on a major scale yet, but

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Speaker 2: obviously a recession means greater unemployment than that gets scary

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Speaker 2: for people.

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Speaker 1: We're talking here on Monday at just at one o'clock

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Speaker 1: specific just as the markets are wrapping up, the Nasdaq

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Speaker 1: is down four hundred and fifteen points, the Dow Jones

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Speaker 1: is down nine hundred and seventy one points. If you're

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Speaker 1: at the top of the Lew Wasserman Tower right now

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Speaker 1: trying to make decisions for Universal Pictures, long term television,

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Speaker 1: long term theme parks, how does all of this affect

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Speaker 1: that process.

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Speaker 2: You're dealing with a lot of uncertainty. Uncertainty makes it

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Speaker 2: very difficult to plan. I've noticed on some earnings calls

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Speaker 2: you're not hearing people making forecasts of what their next

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Speaker 2: quarter is the life going to be like, but scenarios

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Speaker 2: of what it might be like under various circumstances, and

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Speaker 2: you hear multiple scenarios well once people are not providing

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Speaker 2: projections or forecasts because they don't have enough clarity, and

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Speaker 2: they're talking about what it might be under various scenarios.

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Speaker 2: They're basically saying, this is clouding the pictures significantly enough

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Speaker 2: that we don't have a real view of where everything

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Speaker 2: may be going, and that effects all kinds of planning, expenditures,

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Speaker 2: cap aacs, etc. Going forward.

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Speaker 1: In a bloodbath like what we've seen the last couple

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Speaker 1: of weeks, nobody is spared. But have you seen some

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Speaker 1: stocks do better than others? Are any of the magnificent

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Speaker 1: seven tech stalks big enough to buck this downturn?

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Speaker 2: I think Netflix may be a very interesting and unique case.

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Speaker 2: Not only are its fundamentals going so well, not only

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Speaker 2: here but around the world. And not only is it

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Speaker 2: a service that is less not about manufacturing and therefore

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Speaker 2: may not be in the im mediate sites of a

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Speaker 2: trade war, but it is something that has built up

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Speaker 2: a lot of local following in its key markets with

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Speaker 2: its local productions and all, and therefore more integrated into

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Speaker 2: the local media fabric, and therefore may not be something

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Speaker 2: that that other governments want to touch in terms of

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Speaker 2: doing things to raise its price. So they were pretty

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Speaker 2: clear that they didn't see anything given what was going

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Speaker 2: on now, that was going to fundamentally undermine where their

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Speaker 2: financial forecast may go over the course of the year,

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Speaker 2: and in fact gave a forecast, not scenarios. I don't

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Speaker 2: think we're going to hear that from a lot of

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Speaker 2: other companies.

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Speaker 1: If your Disney or Universal, are you nervous about these

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Speaker 1: reports that Europeans and Asians and other people are you

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Speaker 1: know that would have otherwise come to America planned a

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Speaker 1: big trip to come to Disneyland or Disney World or

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Speaker 1: one of the Universal theme parks, They're going to explore

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Speaker 1: other places that are not America.

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Speaker 2: Theme parks in a recession are going to get hit.

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Speaker 2: And it's not just the international travel you're mentioning. You know,

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Speaker 2: a lot of those parks are based on domestic attendance.

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Speaker 2: In a recession, people cut back, They cut back on

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Speaker 2: big trips and discretionary family expenditures, and so that's a

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Speaker 2: real point of vulnerability. At the same time, advertising generally

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Speaker 2: for media companies is a big point of vulnerability. Disney

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Speaker 2: and NBC Universal both obviously have that vulnerability as well.

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Speaker 2: So you compare that to a Netflix, where you know,

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Speaker 2: maybe four percent of its revenue is advertising today, even

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Speaker 2: though that's a big growth area for it going forward,

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Speaker 2: that really needs to be a catalyst for its continued growth.

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Speaker 2: But today it's four percent of its revenue. If it

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Speaker 2: got hit to the tune of thirty percent, you're talking

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Speaker 2: about one percent of its revenue. On the other hand,

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Speaker 2: when you're talking about Disney, the combination of its steam

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Speaker 2: parts and its advertising revenue, you're somewhere between forty five

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Speaker 2: and fifty percent of the revenue of a company being vulnerable.

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Speaker 2: That's a very different place used to be in a recession.

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Speaker 1: Tom, What are you going to be watching for the

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Speaker 1: rest of this week?

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Speaker 2: The administration has tried to calm the waters as these

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Speaker 2: as the markets are volatile, but I'm not quite sure

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Speaker 2: what else it can say unless it totally backs off,

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Speaker 2: which I don't see, are going to be terribly calming.

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Speaker 2: And you combine that with the increased rhetoric about removing

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Speaker 2: FED chair Powell from his position and doing something to

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Speaker 2: undermine the independence of the FED. And unless that rhetoric

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Speaker 2: backs off, which I don't think is very likely either,

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Speaker 2: there's not a lot of coming words that can be said.

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Speaker 2: They off ramp that I think may save the administration

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Speaker 2: and with it, save the markets from this ongoing turmoil.

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Speaker 2: But it's not going to be near term. As a

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Speaker 2: Supreme Court ultimately ruling that the President does not have

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Speaker 2: the power on tariffs that he has said he has,

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Speaker 2: it may well be that they find what he has

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Speaker 2: done here as beyond the authority of the executive But

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Speaker 2: again that's not near terms. So I think we're in

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Speaker 2: for continued volatility. I don't think it's clear yet that

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Speaker 2: we're in for a recession, but the markets are clearly roiled,

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Speaker 2: and I don't think anything is going to combat for

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Speaker 2: the near term.

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Speaker 1: Tom, thank you so much for your time in helping

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Speaker 1: us sort all this out.

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Speaker 2: Thanks for having me.

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Speaker 1: Okay, so there are two big federal antitrust trials going

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Speaker 1: on right now, ones in DC, ones in Virginia might

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Speaker 1: as well be DC. Ones involving Google, and one's involving Meta.

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Speaker 1: Let's start with the one that's involving Google, because there

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Speaker 1: was a ruling in this trial last week. Can you

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Speaker 1: break it down for us in terms of tell us

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Speaker 1: the scope of what they're fighting over right.

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Speaker 3: Now, so the judge in this case found that Google

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Speaker 3: has a monopoly and has worked to illegally preserve that

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Speaker 3: monopoly in two areas. It's the Internet ad server market

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Speaker 3: and the Internet ad exchange market. Now, these are two

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Speaker 3: pieces that are really the lifeblood of Internet advertising. And

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Speaker 3: what the judge fan was that Google unlawfully tied it's

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Speaker 3: ad server and ad exchange together with locking customers in

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Speaker 3: essentially so they were forced to use these tools. So

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Speaker 3: that's illegal. You know, that violates the Sherman Act. So

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Speaker 3: the next stage, and this is going to be for

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Speaker 3: the judge to determine potential remedies.

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Speaker 1: So this is not all of Google's advertising business. This

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Speaker 1: is targeting a component of it.

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Speaker 3: Right, This is the networks that they used to buy

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Speaker 3: and sell ads on websites across the Internet. And so

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Speaker 3: what the judge said was, look, this didn't harm just competitors.

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Speaker 3: This harmed the publisher customers that used Googles tools and

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Speaker 3: were forced to use Google's tools, according to the ruling,

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Speaker 3: and ultimately consumers of information on the open Internet.

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Speaker 1: In terms of the significance of an ad server and

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Speaker 1: the ad networks, Google's superpower in digital advertising is being

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Speaker 1: able to get gazillion ads to the right spots at

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Speaker 1: the right time, and when you think about the vastness

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Speaker 1: of the Internet, that's a lot harder than it sounds,

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Speaker 1: am I.

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Speaker 3: Right, Yes, they're the match maker essentially.

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Speaker 2: Right.

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Speaker 3: They run a network and exchange lets people buy and

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Speaker 3: sell ads on multiple websites. Now, as you point out,

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Speaker 3: this is just a portion of Google's overall business, where

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Speaker 3: the big chunk is Internet search. And here's another significant

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Speaker 3: point to make. A different federal court in August twenty

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Speaker 3: twenty four found that Google had a monopoly in Internet

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Speaker 3: search and the company broke the law by doing these

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Speaker 3: multi billion dollar deals to make it. Search engine did

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Speaker 3: a fault on web browser and smartphones, including in these

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Speaker 3: very large deals with that Apple and Samsung. So that's

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Speaker 3: been decided and remedies in that case are yet to

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Speaker 3: be determined.

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Speaker 1: So Google is just waiting for all kinds of shoes

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Speaker 1: to drop in DC.

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Speaker 3: Yes, they're in the antitrust crossers. Let me just say that.

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Speaker 3: You know, Google, for its part, has said, look, this

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Speaker 3: is the government trying to pick winners and losers, and look,

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Speaker 3: people use our products because we have the best products

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Speaker 3: on the market. And you know. Oh, by the way,

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Speaker 3: technology moves faster than the wheels of the legal system

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Speaker 3: turn anyway, So technology will make all of this mood

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Speaker 3: in a couple of years anyway. Yes, is essentially what

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Speaker 3: their argument.

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Speaker 1: Is, and this is also the crux of the Meta

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Speaker 1: case as well. The Federal Trade Commission pursuing the argument

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Speaker 1: that Meta has used acquisitions, in particular of Instagram and

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Speaker 1: WhatsApp to platform two services that are no stranger to

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Speaker 1: people in Hollywood, that buying those essentially was designed to

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Speaker 1: squash competition. It does seem like what has been standard

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Speaker 1: operating procedure for tech for a long time, a hot

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Speaker 1: startup with a hot patent, or that whole paradigm of

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Speaker 1: how business has operated for decades in Silicon Valley seems

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Speaker 1: rather suddenly under threat from DC regulators.

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Speaker 3: Well, I think there's been a desire and political capital, frankly,

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Speaker 3: for many years to do something about the tremendous power

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Speaker 3: that these tech companies have amassed. So, you know, in

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Speaker 3: the me A case, basically the FTC is saying, hey,

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Speaker 3: these acquisitions that you guys made going on now more

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Speaker 3: than ten years ago were anti competitive and designed to

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Speaker 3: knock out a rival or a potential rival, and Metta

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Speaker 3: is saying, hey, you can't just decide that you now

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Speaker 3: think that's not okay.

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Speaker 1: No vaccas right.

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Speaker 3: Their position is that like if no acquisition is ever final,

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Speaker 3: you know, that really would insert a lot of uncertainty

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Speaker 3: into the market. So that's their position, and they do

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Speaker 3: have a case there. The other thing that's squishy about

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Speaker 3: the government's case against Meta here is they're trying to

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Speaker 3: prove hypothetical what would have happened if Mark Zuckerberg had

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Speaker 3: not decided to buy Instagram for a billion dollars. Just

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Speaker 3: in the legal technicalities here, they're trying to say that

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Speaker 3: Meta has a monopoly in social networks, and you know

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Speaker 3: Meta's response to that. Again, to this point of technology

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Speaker 3: moves pretty fast, and there's a whole set of competitors

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Speaker 3: that didn't even exist when this case was in the

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Speaker 3: earliest stages. This was filled in twenty twenty. Now you know,

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Speaker 3: YouTube and TikTok are huge competitors to Instagram and they

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Speaker 3: have evidence to show that. So there is, again there's

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Speaker 3: this political capital on both the left and the right

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Speaker 3: to do something to rein in the power. How they

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Speaker 3: get there and their viewpoint on what the harm actually

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Speaker 3: is a little bit different, but you know, there is

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Speaker 3: a consensus that these big tech companies are too big

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Speaker 3: and something should be done about it.

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Speaker 1: Now. Of course, it was one of the big stories

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Speaker 1: coming out of President Trump's inauguration in January. You know,

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Speaker 1: you couldn't help, but notice there was quite a contingent

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Speaker 1: of Silicon Valley CEOs that attended the inauguration, and it

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Speaker 1: was the most symbolic effort to kind of cozy up

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Speaker 1: to the new administration after some strained times between the

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Speaker 1: major tech platforms with President Trump. Do you think that

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Speaker 1: those that showed up at the inauguration in January, do

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Speaker 1: you think that some of those thought that writing some

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Speaker 1: checks and being there and applauding the new president would

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Speaker 1: change the dynamic for them in some of these cases.

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Speaker 3: I don't know if they specifically were hoping that this

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Speaker 3: would make these anti trust actions go away. I mean,

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Speaker 3: I'm not sure that that was anyone's expectation, but sure

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Speaker 3: they thought that, you know, look, careering favor with the

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Speaker 3: person in power, especially a personality like Donald Trump who

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Speaker 3: trades on you know, cachet, you know, this would flatter

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Speaker 3: him and you know, get him to kind of be

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Speaker 3: on her side and some of these agreements and perhaps

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Speaker 3: reach settlements in various matters that would be favorable to them.

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Speaker 3: I sure think that was part of the expectation. And

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Speaker 3: in any case, you know, like, how could it hurt,

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Speaker 3: except you know, the optics made it look like big

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Speaker 3: Tech was suddenly bending the knee to salute President Trump

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Speaker 3: and in his victory back into the White House.

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Speaker 1: All of this focus on size and monopoly power would

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Speaker 1: seem to raise interesting questions for TikTok. As we know,

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Speaker 1: the Trump administration right now is busily trying to find

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Speaker 1: a US buyer for the US component of TikTok. With

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Speaker 1: all of this scrutiny, it certainly would suggest that TikTok

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Speaker 1: is not going to go to one of the existing

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Speaker 1: Magnificent seven stocks as Wall Street calls them these days.

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Speaker 3: I mean, there had been chatter about Amazon throwing its

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Speaker 3: hat into the ring for potentially buying a piece of TikTok.

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Speaker 3: And another point, you know, Oracle, it could still be

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Speaker 3: in the running. Oracle is not quite in the same

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Speaker 3: space as that we've been talking about, but still and

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Speaker 3: Microsoft has at one point or another expressed interest in TikTok.

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Speaker 3: I mean, it's a valuable asset. But yeah, I don't

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Speaker 3: think Mark Zuckerberg has any illusions that they would give

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Speaker 3: the green lights to meta buying TikTok.

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Speaker 1: No shortage of stuff for us to cover. Todd, thank

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Speaker 1: you as always for being on the case. Thanks for listening.

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Speaker 1: Be sure to leave us a review at the podcast

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Speaker 1: platform of your choice. We love to hear from listeners.

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Speaker 1: Stay tuned on Wednesday for our regular episode. This week,

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Speaker 1: we'll hear from producer Wheelhouse Entertainment President Courtney White,