Speaker 1: Welcome to Strictly Business, Variety's weekly podcast featuring conversations with
Speaker 1: industry leaders about the business of media and entertainment. I'm
Speaker 1: Cynthia Lyttleton, co editor in chief of Variety. This is
Speaker 1: a special bonus episode of Strictly Business for April twenty second,
Speaker 1: twenty twenty five. As this week has already seen two
Speaker 1: days of wild swings in US stock markets, I reached
Speaker 1: out to industry veteran Tom Rogers to help make sense
Speaker 1: of what's happening. That interview is followed by a discussion
Speaker 1: with Variety Business editor Todd Spangler on why Google and
Speaker 1: Meta are both in the thick of antitrust court fights
Speaker 1: in Washington. That's all coming up after this break, and
Speaker 1: we're back with a bonus episode of varieties Strictly Business
Speaker 1: podcast for April twenty second, twenty twenty five. Tom Rogers
Speaker 1: is the definition of a media industry insider. He's a
Speaker 1: founder of CNBC. He's been in the C suites at NBC,
Speaker 1: Universal and TiVo. He's a veteran marketwatcher who is now
Speaker 1: executive chairman of Playgrid, a cloud AI company. We started
Speaker 1: the week off with another nail bider of a trading
Speaker 1: frame and big swings for the Dow and NASDAC on Monday.
Speaker 1: Here Rogers ways in on how to navigate this unprecedented volatility,
Speaker 1: and he offers his insight as to how this kind
Speaker 1: of macroeconomic storm can affect the day to day decision
Speaker 1: making for leaders of large enterprises. Tom Rogers, thank you
Speaker 1: for joining me, Thank you for helping us sort out
Speaker 1: what is going on in equities markets right now.
Speaker 2: Thanks for having me.
Speaker 1: Let me just start with can can you think of
Speaker 1: any analogous time to the last couple of weeks we've
Speaker 1: had since the faithful pen strokes of April second.
Speaker 2: Well, certainly there's been other times of market volatility, some
Speaker 2: greater than this, but I can't think of any other
Speaker 2: time when it was self inflicted by the United States
Speaker 2: government taking shot after shot at the US equity market
Speaker 2: and an effort to do something that very few people
Speaker 2: can make any sense of and is clearly having all
Speaker 2: kinds of negative consequences on not only the equity markets,
Speaker 2: but the bond markets and the currency markets.
Speaker 1: Tom, you've been in big publicly traded companies at the
Speaker 1: high levels, NBC, Universal, TVO. What does this level of
Speaker 1: volatility do sort of how do they feel it immediately?
Speaker 2: Well, immediate and what may flow from all this or
Speaker 2: obviously two different things. We're seeing. Equity prices clearly get hit.
Speaker 2: The stock market itself being volatile in it does not
Speaker 2: necessarily impact day to day life on main street, although
Speaker 2: it's gotten to the point that as some are saying,
Speaker 2: it's no longer what's happening to your four O one K,
Speaker 2: it's what's happening to your one O one K, So
Speaker 2: clearly there are some main street implications there. Bond market
Speaker 2: is obviously getting hit, meaning interest on rates on bonds
Speaker 2: are going up, the dollar is weakening, and the currency
Speaker 2: market is having the opposite effect, which is leading people
Speaker 2: to believe that really there's something going on in the
Speaker 2: world markets, which is saying, hey, if you're going to
Speaker 2: invest in the United States, you're going to need more
Speaker 2: of a risk premium. That there's instability in the United States,
Speaker 2: and no one's quite sure where this is going. So
Speaker 2: those are kind of unusual variables to be playing out,
Speaker 2: to say the leavest, when you're in a big company
Speaker 2: and you're seeing this and there is a real prospect
Speaker 2: that we are dealing with either a recession or maybe worse, stagflation,
Speaker 2: where you have stagnant or recessionary economic issues and inflation,
Speaker 2: that gets scary because that means slow down, That means
Speaker 2: earnings are going to be lower, and that's when people
Speaker 2: start drawing off plans for belt tightening, which generally means layoffs.
Speaker 2: We're not seeing that on a major scale yet, but
Speaker 2: obviously a recession means greater unemployment than that gets scary
Speaker 2: for people.
Speaker 1: We're talking here on Monday at just at one o'clock
Speaker 1: specific just as the markets are wrapping up, the Nasdaq
Speaker 1: is down four hundred and fifteen points, the Dow Jones
Speaker 1: is down nine hundred and seventy one points. If you're
Speaker 1: at the top of the Lew Wasserman Tower right now
Speaker 1: trying to make decisions for Universal Pictures, long term television,
Speaker 1: long term theme parks, how does all of this affect
Speaker 1: that process.
Speaker 2: You're dealing with a lot of uncertainty. Uncertainty makes it
Speaker 2: very difficult to plan. I've noticed on some earnings calls
Speaker 2: you're not hearing people making forecasts of what their next
Speaker 2: quarter is the life going to be like, but scenarios
Speaker 2: of what it might be like under various circumstances, and
Speaker 2: you hear multiple scenarios well once people are not providing
Speaker 2: projections or forecasts because they don't have enough clarity, and
Speaker 2: they're talking about what it might be under various scenarios.
Speaker 2: They're basically saying, this is clouding the pictures significantly enough
Speaker 2: that we don't have a real view of where everything
Speaker 2: may be going, and that effects all kinds of planning, expenditures,
Speaker 2: cap aacs, etc. Going forward.
Speaker 1: In a bloodbath like what we've seen the last couple
Speaker 1: of weeks, nobody is spared. But have you seen some
Speaker 1: stocks do better than others? Are any of the magnificent
Speaker 1: seven tech stalks big enough to buck this downturn?
Speaker 2: I think Netflix may be a very interesting and unique case.
Speaker 2: Not only are its fundamentals going so well, not only
Speaker 2: here but around the world. And not only is it
Speaker 2: a service that is less not about manufacturing and therefore
Speaker 2: may not be in the im mediate sites of a
Speaker 2: trade war, but it is something that has built up
Speaker 2: a lot of local following in its key markets with
Speaker 2: its local productions and all, and therefore more integrated into
Speaker 2: the local media fabric, and therefore may not be something
Speaker 2: that that other governments want to touch in terms of
Speaker 2: doing things to raise its price. So they were pretty
Speaker 2: clear that they didn't see anything given what was going
Speaker 2: on now, that was going to fundamentally undermine where their
Speaker 2: financial forecast may go over the course of the year,
Speaker 2: and in fact gave a forecast, not scenarios. I don't
Speaker 2: think we're going to hear that from a lot of
Speaker 2: other companies.
Speaker 1: If your Disney or Universal, are you nervous about these
Speaker 1: reports that Europeans and Asians and other people are you
Speaker 1: know that would have otherwise come to America planned a
Speaker 1: big trip to come to Disneyland or Disney World or
Speaker 1: one of the Universal theme parks, They're going to explore
Speaker 1: other places that are not America.
Speaker 2: Theme parks in a recession are going to get hit.
Speaker 2: And it's not just the international travel you're mentioning. You know,
Speaker 2: a lot of those parks are based on domestic attendance.
Speaker 2: In a recession, people cut back, They cut back on
Speaker 2: big trips and discretionary family expenditures, and so that's a
Speaker 2: real point of vulnerability. At the same time, advertising generally
Speaker 2: for media companies is a big point of vulnerability. Disney
Speaker 2: and NBC Universal both obviously have that vulnerability as well.
Speaker 2: So you compare that to a Netflix, where you know,
Speaker 2: maybe four percent of its revenue is advertising today, even
Speaker 2: though that's a big growth area for it going forward,
Speaker 2: that really needs to be a catalyst for its continued growth.
Speaker 2: But today it's four percent of its revenue. If it
Speaker 2: got hit to the tune of thirty percent, you're talking
Speaker 2: about one percent of its revenue. On the other hand,
Speaker 2: when you're talking about Disney, the combination of its steam
Speaker 2: parts and its advertising revenue, you're somewhere between forty five
Speaker 2: and fifty percent of the revenue of a company being vulnerable.
Speaker 2: That's a very different place used to be in a recession.
Speaker 1: Tom, What are you going to be watching for the
Speaker 1: rest of this week?
Speaker 2: The administration has tried to calm the waters as these
Speaker 2: as the markets are volatile, but I'm not quite sure
Speaker 2: what else it can say unless it totally backs off,
Speaker 2: which I don't see, are going to be terribly calming.
Speaker 2: And you combine that with the increased rhetoric about removing
Speaker 2: FED chair Powell from his position and doing something to
Speaker 2: undermine the independence of the FED. And unless that rhetoric
Speaker 2: backs off, which I don't think is very likely either,
Speaker 2: there's not a lot of coming words that can be said.
Speaker 2: They off ramp that I think may save the administration
Speaker 2: and with it, save the markets from this ongoing turmoil.
Speaker 2: But it's not going to be near term. As a
Speaker 2: Supreme Court ultimately ruling that the President does not have
Speaker 2: the power on tariffs that he has said he has,
Speaker 2: it may well be that they find what he has
Speaker 2: done here as beyond the authority of the executive But
Speaker 2: again that's not near terms. So I think we're in
Speaker 2: for continued volatility. I don't think it's clear yet that
Speaker 2: we're in for a recession, but the markets are clearly roiled,
Speaker 2: and I don't think anything is going to combat for
Speaker 2: the near term.
Speaker 1: Tom, thank you so much for your time in helping
Speaker 1: us sort all this out.
Speaker 2: Thanks for having me.
Speaker 1: Okay, so there are two big federal antitrust trials going
Speaker 1: on right now, ones in DC, ones in Virginia might
Speaker 1: as well be DC. Ones involving Google, and one's involving Meta.
Speaker 1: Let's start with the one that's involving Google, because there
Speaker 1: was a ruling in this trial last week. Can you
Speaker 1: break it down for us in terms of tell us
Speaker 1: the scope of what they're fighting over right.
Speaker 3: Now, so the judge in this case found that Google
Speaker 3: has a monopoly and has worked to illegally preserve that
Speaker 3: monopoly in two areas. It's the Internet ad server market
Speaker 3: and the Internet ad exchange market. Now, these are two
Speaker 3: pieces that are really the lifeblood of Internet advertising. And
Speaker 3: what the judge fan was that Google unlawfully tied it's
Speaker 3: ad server and ad exchange together with locking customers in
Speaker 3: essentially so they were forced to use these tools. So
Speaker 3: that's illegal. You know, that violates the Sherman Act. So
Speaker 3: the next stage, and this is going to be for
Speaker 3: the judge to determine potential remedies.
Speaker 1: So this is not all of Google's advertising business. This
Speaker 1: is targeting a component of it.
Speaker 3: Right, This is the networks that they used to buy
Speaker 3: and sell ads on websites across the Internet. And so
Speaker 3: what the judge said was, look, this didn't harm just competitors.
Speaker 3: This harmed the publisher customers that used Googles tools and
Speaker 3: were forced to use Google's tools, according to the ruling,
Speaker 3: and ultimately consumers of information on the open Internet.
Speaker 1: In terms of the significance of an ad server and
Speaker 1: the ad networks, Google's superpower in digital advertising is being
Speaker 1: able to get gazillion ads to the right spots at
Speaker 1: the right time, and when you think about the vastness
Speaker 1: of the Internet, that's a lot harder than it sounds,
Speaker 1: am I.
Speaker 3: Right, Yes, they're the match maker essentially.
Speaker 2: Right.
Speaker 3: They run a network and exchange lets people buy and
Speaker 3: sell ads on multiple websites. Now, as you point out,
Speaker 3: this is just a portion of Google's overall business, where
Speaker 3: the big chunk is Internet search. And here's another significant
Speaker 3: point to make. A different federal court in August twenty
Speaker 3: twenty four found that Google had a monopoly in Internet
Speaker 3: search and the company broke the law by doing these
Speaker 3: multi billion dollar deals to make it. Search engine did
Speaker 3: a fault on web browser and smartphones, including in these
Speaker 3: very large deals with that Apple and Samsung. So that's
Speaker 3: been decided and remedies in that case are yet to
Speaker 3: be determined.
Speaker 1: So Google is just waiting for all kinds of shoes
Speaker 1: to drop in DC.
Speaker 3: Yes, they're in the antitrust crossers. Let me just say that.
Speaker 3: You know, Google, for its part, has said, look, this
Speaker 3: is the government trying to pick winners and losers, and look,
Speaker 3: people use our products because we have the best products
Speaker 3: on the market. And you know. Oh, by the way,
Speaker 3: technology moves faster than the wheels of the legal system
Speaker 3: turn anyway, So technology will make all of this mood
Speaker 3: in a couple of years anyway. Yes, is essentially what
Speaker 3: their argument.
Speaker 1: Is, and this is also the crux of the Meta
Speaker 1: case as well. The Federal Trade Commission pursuing the argument
Speaker 1: that Meta has used acquisitions, in particular of Instagram and
Speaker 1: WhatsApp to platform two services that are no stranger to
Speaker 1: people in Hollywood, that buying those essentially was designed to
Speaker 1: squash competition. It does seem like what has been standard
Speaker 1: operating procedure for tech for a long time, a hot
Speaker 1: startup with a hot patent, or that whole paradigm of
Speaker 1: how business has operated for decades in Silicon Valley seems
Speaker 1: rather suddenly under threat from DC regulators.
Speaker 3: Well, I think there's been a desire and political capital, frankly,
Speaker 3: for many years to do something about the tremendous power
Speaker 3: that these tech companies have amassed. So, you know, in
Speaker 3: the me A case, basically the FTC is saying, hey,
Speaker 3: these acquisitions that you guys made going on now more
Speaker 3: than ten years ago were anti competitive and designed to
Speaker 3: knock out a rival or a potential rival, and Metta
Speaker 3: is saying, hey, you can't just decide that you now
Speaker 3: think that's not okay.
Speaker 1: No vaccas right.
Speaker 3: Their position is that like if no acquisition is ever final,
Speaker 3: you know, that really would insert a lot of uncertainty
Speaker 3: into the market. So that's their position, and they do
Speaker 3: have a case there. The other thing that's squishy about
Speaker 3: the government's case against Meta here is they're trying to
Speaker 3: prove hypothetical what would have happened if Mark Zuckerberg had
Speaker 3: not decided to buy Instagram for a billion dollars. Just
Speaker 3: in the legal technicalities here, they're trying to say that
Speaker 3: Meta has a monopoly in social networks, and you know
Speaker 3: Meta's response to that. Again, to this point of technology
Speaker 3: moves pretty fast, and there's a whole set of competitors
Speaker 3: that didn't even exist when this case was in the
Speaker 3: earliest stages. This was filled in twenty twenty. Now you know,
Speaker 3: YouTube and TikTok are huge competitors to Instagram and they
Speaker 3: have evidence to show that. So there is, again there's
Speaker 3: this political capital on both the left and the right
Speaker 3: to do something to rein in the power. How they
Speaker 3: get there and their viewpoint on what the harm actually
Speaker 3: is a little bit different, but you know, there is
Speaker 3: a consensus that these big tech companies are too big
Speaker 3: and something should be done about it.
Speaker 1: Now. Of course, it was one of the big stories
Speaker 1: coming out of President Trump's inauguration in January. You know,
Speaker 1: you couldn't help, but notice there was quite a contingent
Speaker 1: of Silicon Valley CEOs that attended the inauguration, and it
Speaker 1: was the most symbolic effort to kind of cozy up
Speaker 1: to the new administration after some strained times between the
Speaker 1: major tech platforms with President Trump. Do you think that
Speaker 1: those that showed up at the inauguration in January, do
Speaker 1: you think that some of those thought that writing some
Speaker 1: checks and being there and applauding the new president would
Speaker 1: change the dynamic for them in some of these cases.
Speaker 3: I don't know if they specifically were hoping that this
Speaker 3: would make these anti trust actions go away. I mean,
Speaker 3: I'm not sure that that was anyone's expectation, but sure
Speaker 3: they thought that, you know, look, careering favor with the
Speaker 3: person in power, especially a personality like Donald Trump who
Speaker 3: trades on you know, cachet, you know, this would flatter
Speaker 3: him and you know, get him to kind of be
Speaker 3: on her side and some of these agreements and perhaps
Speaker 3: reach settlements in various matters that would be favorable to them.
Speaker 3: I sure think that was part of the expectation. And
Speaker 3: in any case, you know, like, how could it hurt,
Speaker 3: except you know, the optics made it look like big
Speaker 3: Tech was suddenly bending the knee to salute President Trump
Speaker 3: and in his victory back into the White House.
Speaker 1: All of this focus on size and monopoly power would
Speaker 1: seem to raise interesting questions for TikTok. As we know,
Speaker 1: the Trump administration right now is busily trying to find
Speaker 1: a US buyer for the US component of TikTok. With
Speaker 1: all of this scrutiny, it certainly would suggest that TikTok
Speaker 1: is not going to go to one of the existing
Speaker 1: Magnificent seven stocks as Wall Street calls them these days.
Speaker 3: I mean, there had been chatter about Amazon throwing its
Speaker 3: hat into the ring for potentially buying a piece of TikTok.
Speaker 3: And another point, you know, Oracle, it could still be
Speaker 3: in the running. Oracle is not quite in the same
Speaker 3: space as that we've been talking about, but still and
Speaker 3: Microsoft has at one point or another expressed interest in TikTok.
Speaker 3: I mean, it's a valuable asset. But yeah, I don't
Speaker 3: think Mark Zuckerberg has any illusions that they would give
Speaker 3: the green lights to meta buying TikTok.
Speaker 1: No shortage of stuff for us to cover. Todd, thank
Speaker 1: you as always for being on the case. Thanks for listening.
Speaker 1: Be sure to leave us a review at the podcast
Speaker 1: platform of your choice. We love to hear from listeners.
Speaker 1: Stay tuned on Wednesday for our regular episode. This week,
Speaker 1: we'll hear from producer Wheelhouse Entertainment President Courtney White,