1 00:00:11,119 --> 00:00:14,360 Speaker 1: Welcome to another episode of Strictly Business, the podcast in 2 00:00:14,360 --> 00:00:16,599 Speaker 1: which we speak with some of the brightest minds working 3 00:00:16,640 --> 00:00:20,400 Speaker 1: in the media business today. I'm Andrew Wallenstein, chief media 4 00:00:20,440 --> 00:00:26,120 Speaker 1: analyst at Luminate Intelligence and a variety contributor. On October twelve, 5 00:00:26,239 --> 00:00:30,160 Speaker 1: two thousand and five, exactly twenty years before this podcast 6 00:00:30,200 --> 00:00:34,360 Speaker 1: episode was released, Apple CEO Steve Jobs was on stage 7 00:00:34,400 --> 00:00:37,600 Speaker 1: at the California Theater in San Jose doing what he 8 00:00:37,760 --> 00:00:41,239 Speaker 1: did better than anyone else, hyping up the release of 9 00:00:41,280 --> 00:00:44,519 Speaker 1: a new Apple product. This time around, it was the 10 00:00:44,560 --> 00:00:48,120 Speaker 1: first version of the iPod to feature a video screen. 11 00:00:48,800 --> 00:00:51,360 Speaker 1: But if that wasn't amazing enough, he signaled to the 12 00:00:51,400 --> 00:00:53,760 Speaker 1: crowd what would become the most memorable part of the 13 00:00:53,800 --> 00:00:58,400 Speaker 1: product unveil by using his trademark three word phrase, Jobs 14 00:00:58,400 --> 00:01:03,160 Speaker 1: always reserved for introducing his most groundbreaking moves, those words 15 00:01:04,000 --> 00:01:04,960 Speaker 1: one more thing. 16 00:01:05,200 --> 00:01:09,360 Speaker 2: But we do have one more thing today, one more thing. 17 00:01:10,160 --> 00:01:14,360 Speaker 2: It's a pretty big thing. You know. We've talked about 18 00:01:14,400 --> 00:01:18,480 Speaker 2: how you can buy music videos off the store, you 19 00:01:18,520 --> 00:01:23,000 Speaker 2: can subscribe to video podcasts off the iTunes music store, 20 00:01:23,080 --> 00:01:26,320 Speaker 2: and you can buy Pixar short films. Well, there is 21 00:01:26,440 --> 00:01:30,759 Speaker 2: one more thing that we're announcing today that you can 22 00:01:30,760 --> 00:01:33,680 Speaker 2: buy off the iTunes music store, and that. 23 00:01:34,360 --> 00:01:35,480 Speaker 1: Is TV shows. 24 00:01:37,040 --> 00:01:40,720 Speaker 2: Now, if we're gonna get TV shows, we ought to 25 00:01:40,760 --> 00:01:44,880 Speaker 2: get the biggest hits, right. Well, what's the number one 26 00:01:45,480 --> 00:01:49,520 Speaker 2: hit show on television? Desperate Housewives? What's the number two 27 00:01:49,960 --> 00:01:56,000 Speaker 2: hit television show? Lost? And what network are they on? 28 00:01:56,880 --> 00:02:01,760 Speaker 2: They're both on ABC? And who owns AB's see Disney. 29 00:02:02,800 --> 00:02:13,360 Speaker 1: I know these guys, And there you had it. Twenty 30 00:02:13,440 --> 00:02:16,520 Speaker 1: years ago, Apple began doing what no other tech company 31 00:02:16,560 --> 00:02:20,200 Speaker 1: had ever done before, obtained the rights to sell the 32 00:02:20,200 --> 00:02:24,000 Speaker 1: primetime TV shows that had always been exclusive to the 33 00:02:24,040 --> 00:02:28,000 Speaker 1: PayTV system. Today, on Strictly Business, we're going to look 34 00:02:28,040 --> 00:02:31,799 Speaker 1: back on this milestone moment in television history and what 35 00:02:31,880 --> 00:02:35,520 Speaker 1: it meant for the entertainment industry. And who better to 36 00:02:35,639 --> 00:02:38,680 Speaker 1: do that with than a key architect in the deal. 37 00:02:39,160 --> 00:02:42,639 Speaker 1: One Disney CEO Bob Iger cited in his own remarks 38 00:02:42,680 --> 00:02:45,800 Speaker 1: on the same stage in San Jose that jobs grace 39 00:02:45,960 --> 00:02:46,440 Speaker 1: that day. 40 00:02:47,240 --> 00:02:49,000 Speaker 3: I want to mention one person who's in the room 41 00:02:49,320 --> 00:02:51,600 Speaker 3: who made this all possible, and that's Ann Sweeney, who 42 00:02:51,680 --> 00:02:54,399 Speaker 3: was the co chairman of our Media Networks and got 43 00:02:54,440 --> 00:02:58,519 Speaker 3: on board early on and accepted the mission so to speak, 44 00:02:58,639 --> 00:03:00,400 Speaker 3: or the challenge to figure out a way that we 45 00:03:00,440 --> 00:03:03,520 Speaker 3: could make content that's been available on more traditional platforms 46 00:03:04,000 --> 00:03:07,400 Speaker 3: to this new platform. And it wouldn't happen without Ann Sweeney. 47 00:03:07,880 --> 00:03:09,760 Speaker 3: And so before Steve comes out, I just want to 48 00:03:09,800 --> 00:03:12,760 Speaker 3: say one more time that I think that this is 49 00:03:12,800 --> 00:03:16,359 Speaker 3: an incredibly exciting venture for us. It is the future 50 00:03:16,400 --> 00:03:17,600 Speaker 3: as far as we're concerned. 51 00:03:17,919 --> 00:03:21,040 Speaker 1: It is my distinct pleasure then to welcome and Sweeney 52 00:03:21,120 --> 00:03:22,800 Speaker 1: to the Strictly Business Podcast. 53 00:03:22,840 --> 00:03:25,560 Speaker 4: Thanks for coming in. Hey, Thanks Andy, thanks for having me. 54 00:03:25,840 --> 00:03:28,120 Speaker 1: Well, I'm so glad you were willing to take this 55 00:03:28,320 --> 00:03:31,640 Speaker 1: walk down memory lane about such a pivotal deal that 56 00:03:31,720 --> 00:03:34,800 Speaker 1: you were so instrumental in. But before I do, I 57 00:03:34,880 --> 00:03:37,240 Speaker 1: just want to get listeners a little more background on you. 58 00:03:37,920 --> 00:03:40,760 Speaker 1: As Bob mentioned in that clip, you were co chair 59 00:03:40,880 --> 00:03:43,600 Speaker 1: of Disney Media Networks, a job you held for about 60 00:03:43,640 --> 00:03:47,440 Speaker 1: a decade until twenty fourteen. No exaggeration to say you 61 00:03:47,480 --> 00:03:50,880 Speaker 1: were one of the highest ranking entertainment executives of that era, 62 00:03:51,360 --> 00:03:54,720 Speaker 1: presiding over a pretty mind boggling portfolio at that time 63 00:03:54,760 --> 00:03:59,400 Speaker 1: that extended from the ABC broadcast channel to cable networks 64 00:03:59,400 --> 00:04:03,560 Speaker 1: like Disney Chain, also encompassing TV studios, news, sports, and more. 65 00:04:04,360 --> 00:04:06,720 Speaker 1: Prior to Disney, you were also instrumental in the rise 66 00:04:06,760 --> 00:04:11,800 Speaker 1: of some other cable powerhouses, including FX and Nickelodeon. Since 67 00:04:11,880 --> 00:04:15,040 Speaker 1: leaving Disney in twenty fourteen, you've been on varied boards, 68 00:04:15,040 --> 00:04:18,320 Speaker 1: from Lego and its parent company, to the Mayo Clinic 69 00:04:18,400 --> 00:04:21,440 Speaker 1: to a little company called Netflix, where you've been on 70 00:04:21,480 --> 00:04:24,520 Speaker 1: the board now for ten years. So there's a lot 71 00:04:24,600 --> 00:04:26,800 Speaker 1: we could talk about, Anne, but today we're going to 72 00:04:26,800 --> 00:04:30,000 Speaker 1: focus on that one deal, and let's put it right there. 73 00:04:31,040 --> 00:04:33,320 Speaker 1: As you look back in your career, where there was 74 00:04:33,320 --> 00:04:37,239 Speaker 1: obviously many highs, where does this rank, where does this loom? 75 00:04:37,279 --> 00:04:37,960 Speaker 5: And why. 76 00:04:39,480 --> 00:04:43,840 Speaker 4: This deal it is at the top? 77 00:04:44,920 --> 00:04:45,480 Speaker 6: Is it the top? 78 00:04:45,520 --> 00:04:49,039 Speaker 4: Because when we did this deal, we can actually look 79 00:04:49,080 --> 00:04:52,480 Speaker 4: at it now and say, that is the moment that 80 00:04:52,640 --> 00:04:57,919 Speaker 4: everything changed. We talk so often about the coming together 81 00:04:58,160 --> 00:05:03,120 Speaker 4: of creative and technology, but this was that moment. This 82 00:05:03,279 --> 00:05:06,480 Speaker 4: was the moment really for the consumer, much more so 83 00:05:06,560 --> 00:05:10,320 Speaker 4: than for the entertainment companies and the tech companies. This 84 00:05:10,680 --> 00:05:15,480 Speaker 4: was the moment the consumer took full control and would 85 00:05:15,520 --> 00:05:20,000 Speaker 4: continue to take full control for everything they wanted to 86 00:05:20,040 --> 00:05:22,800 Speaker 4: consume from the media, whether it was news or sports 87 00:05:23,080 --> 00:05:24,160 Speaker 4: or entertainment. 88 00:05:24,320 --> 00:05:28,360 Speaker 1: Sure and we'll obviously dig into all sorts of particulars here, 89 00:05:29,040 --> 00:05:30,760 Speaker 1: but the way I want to start is sort of 90 00:05:30,760 --> 00:05:35,680 Speaker 1: setting the stage for I don't think our youngest audience 91 00:05:36,120 --> 00:05:40,240 Speaker 1: here on Strictly Business even remembers this deal, and so 92 00:05:40,480 --> 00:05:43,200 Speaker 1: I want them to understand the time in which it came, 93 00:05:43,360 --> 00:05:47,719 Speaker 1: because this was an era before Netflix had put anything 94 00:05:47,760 --> 00:05:50,680 Speaker 1: on for streaming. I think that happened maybe a year later. 95 00:05:51,120 --> 00:05:55,559 Speaker 1: YouTube had barely begun, and certainly premium content was really 96 00:05:55,800 --> 00:06:01,000 Speaker 1: only illegal there. Maybe there was cable on demand, MAYBEABC 97 00:06:01,160 --> 00:06:04,279 Speaker 1: dot Com which was a Disney property, was it even 98 00:06:04,600 --> 00:06:07,279 Speaker 1: not even yet, So that's where that's I feel like 99 00:06:07,400 --> 00:06:09,840 Speaker 1: people need to understand context here. 100 00:06:10,040 --> 00:06:14,520 Speaker 4: Okay, So imagine a world where you have five hundred 101 00:06:15,080 --> 00:06:18,400 Speaker 4: or close to five hundred cable channels, and they range 102 00:06:18,440 --> 00:06:21,680 Speaker 4: from kids programming to sports to news too, you know, 103 00:06:21,760 --> 00:06:25,120 Speaker 4: everything that we grew up with, that we were accustomed to. 104 00:06:25,839 --> 00:06:28,799 Speaker 4: So that said, it was also a time of great 105 00:06:28,920 --> 00:06:33,280 Speaker 4: fragmentation of the audience. We were saying to people, you 106 00:06:33,320 --> 00:06:35,159 Speaker 4: have all of these interests, we have all of these 107 00:06:35,200 --> 00:06:39,520 Speaker 4: cable channels, go for it. So you started to see 108 00:06:39,560 --> 00:06:44,640 Speaker 4: a disaggregation of the stalwarts. You started to see a 109 00:06:44,720 --> 00:06:50,520 Speaker 4: decline in network television because well, you had so many 110 00:06:50,520 --> 00:06:54,680 Speaker 4: more competitors than you had had thirty years prior. You 111 00:06:54,720 --> 00:06:59,480 Speaker 4: also had a time of many many cable operators. Consolidation 112 00:06:59,760 --> 00:07:05,000 Speaker 4: had not had started, but it wasn't moving at as 113 00:07:05,080 --> 00:07:08,240 Speaker 4: fast a pace, so you had a very different environment. 114 00:07:08,800 --> 00:07:12,720 Speaker 4: We didn't have cell phones that walked around with us. 115 00:07:12,760 --> 00:07:17,840 Speaker 4: We had blackberries, We had car phones, so we could communicate, 116 00:07:18,280 --> 00:07:21,480 Speaker 4: but we didn't have that moment where we could take 117 00:07:21,520 --> 00:07:24,280 Speaker 4: it with us when we wanted to. We were tethered 118 00:07:24,320 --> 00:07:28,640 Speaker 4: to our cords. We were tethered to someone else's idea 119 00:07:28,880 --> 00:07:31,600 Speaker 4: of when we would want to watch television. 120 00:07:32,240 --> 00:07:34,920 Speaker 1: So we've I think done some good level setting here. 121 00:07:35,680 --> 00:07:39,840 Speaker 1: Now let's talk about was it you or others at 122 00:07:39,840 --> 00:07:43,600 Speaker 1: Disney saying, hey, let's imagine a world where our content 123 00:07:43,680 --> 00:07:46,920 Speaker 1: can live, and let's go seek out a company like 124 00:07:47,000 --> 00:07:49,320 Speaker 1: Apple or does Apple come to you? Walk us through 125 00:07:49,360 --> 00:07:50,480 Speaker 1: the genesis of all this. 126 00:07:50,880 --> 00:07:55,600 Speaker 4: Remember, we also had DVRs, and as we were doing 127 00:07:55,960 --> 00:08:00,800 Speaker 4: our negotiations with cable operators, they were very did in 128 00:08:01,400 --> 00:08:07,200 Speaker 4: how fast consumers would be able to spin through commercials. 129 00:08:06,480 --> 00:08:11,400 Speaker 4: Not good news for advertisers. Advertisers. Advertisers were saying no, 130 00:08:11,560 --> 00:08:13,640 Speaker 4: I'm paying good money to be on your system. So 131 00:08:14,240 --> 00:08:18,560 Speaker 4: we were already on somewhat of a tightrope. So you 132 00:08:18,600 --> 00:08:22,760 Speaker 4: could save programming to your DBR, you could watch it 133 00:08:23,000 --> 00:08:25,960 Speaker 4: video on demand, but a lot of the video on 134 00:08:26,000 --> 00:08:29,000 Speaker 4: demand systems were pretty complicated and you had to be 135 00:08:29,040 --> 00:08:33,000 Speaker 4: a subscriber. It just wasn't easy. And just when we 136 00:08:33,040 --> 00:08:35,760 Speaker 4: thought we had gotten a new piece of technology that 137 00:08:35,800 --> 00:08:40,960 Speaker 4: would make it easier, it just wasn't there yet. So 138 00:08:41,200 --> 00:08:45,280 Speaker 4: we weren't out there actively looking for someone. You know, 139 00:08:45,320 --> 00:08:48,120 Speaker 4: we had you know, big inventions at that point, you know, 140 00:08:48,160 --> 00:08:51,080 Speaker 4: the Sony Walkman had come and gone. At that point, 141 00:08:51,320 --> 00:08:55,320 Speaker 4: m P three players were around, but we didn't have 142 00:08:56,360 --> 00:09:02,560 Speaker 4: that device that freed us from schedule. And it really 143 00:09:02,640 --> 00:09:08,280 Speaker 4: started with Steve Job's approach to the Walt Disney Company, okay. 144 00:09:08,280 --> 00:09:12,880 Speaker 1: Which I soon came through then CEO Bob Iger, and 145 00:09:12,920 --> 00:09:14,720 Speaker 1: he what does he say to you, Hey, Steve would 146 00:09:14,760 --> 00:09:16,880 Speaker 1: like to talk about the future, Like how does one 147 00:09:16,920 --> 00:09:17,400 Speaker 1: broach this? 148 00:09:17,840 --> 00:09:20,680 Speaker 4: Well, actually that's exactly what he said. Bob called me 149 00:09:20,720 --> 00:09:23,400 Speaker 4: and said, hey, I just got a call from Steve 150 00:09:23,520 --> 00:09:27,000 Speaker 4: Jobs and he would like to talk to you about 151 00:09:27,080 --> 00:09:29,520 Speaker 4: you know, they have a new device and I said, 152 00:09:29,760 --> 00:09:33,080 Speaker 4: that's cool. You know, how how many times a day 153 00:09:33,080 --> 00:09:35,760 Speaker 4: do you get the message from your boss? Hey, Steve 154 00:09:35,800 --> 00:09:38,400 Speaker 4: wants to talk to you. So I picked up the 155 00:09:38,440 --> 00:09:44,920 Speaker 4: phone and I can still remember that first conversation. 156 00:09:44,720 --> 00:09:46,160 Speaker 1: Mm hm in person. 157 00:09:46,480 --> 00:09:48,440 Speaker 4: No, it was on the phone and he said, Hey, Ann, 158 00:09:48,440 --> 00:09:55,280 Speaker 4: it's Steve. I my guys have created this device that 159 00:09:55,360 --> 00:09:58,920 Speaker 4: we think is pretty cool. And I understand you have 160 00:09:59,320 --> 00:10:03,040 Speaker 4: some really good you have some hit programming, and we did. 161 00:10:03,080 --> 00:10:07,000 Speaker 4: We had Desperate Housewives, which was a runaway we had 162 00:10:07,120 --> 00:10:12,000 Speaker 4: lost and coming up. Actually, Grace Anatomy had already been 163 00:10:12,040 --> 00:10:13,040 Speaker 4: on the yard at that point. 164 00:10:14,040 --> 00:10:16,720 Speaker 1: Well, I'm tempted to interject with a trivia question here 165 00:10:16,760 --> 00:10:18,640 Speaker 1: because the deal that we're going to eventually talk about 166 00:10:18,679 --> 00:10:21,839 Speaker 1: included five shows, two of which you mentioned. And what 167 00:10:21,920 --> 00:10:23,800 Speaker 1: I'm curious, and I did not prep you for this. 168 00:10:24,160 --> 00:10:27,240 Speaker 1: Can you remember the other three shows? 169 00:10:27,800 --> 00:10:28,240 Speaker 4: Uh? 170 00:10:28,280 --> 00:10:28,960 Speaker 6: Wife Swap? 171 00:10:29,320 --> 00:10:31,800 Speaker 1: I don't think that was one of them. I'm so sorry. 172 00:10:31,960 --> 00:10:34,360 Speaker 4: Well, I know from the Disney Channel perspective it was 173 00:10:34,440 --> 00:10:37,119 Speaker 4: Zach and Cody and that's so raven. 174 00:10:37,040 --> 00:10:40,720 Speaker 1: Right right, And the fifth show was something like night Stalker. 175 00:10:41,679 --> 00:10:46,800 Speaker 1: That's right. I knew i'd get you. You got me 176 00:10:47,040 --> 00:10:49,400 Speaker 1: you got me anyway, you were saying. 177 00:10:50,120 --> 00:10:53,720 Speaker 4: So Steve said, we'd like to fly down and you know, 178 00:10:53,840 --> 00:10:56,880 Speaker 4: show you, you know, what we've made. And I said great. 179 00:10:57,760 --> 00:11:01,240 Speaker 4: And they flew down about a week week later, and 180 00:11:02,040 --> 00:11:05,920 Speaker 4: we were all familiar with iTunes. We all had iPods, 181 00:11:06,640 --> 00:11:09,240 Speaker 4: and he said, hey, you know, I'd like to show 182 00:11:09,280 --> 00:11:13,480 Speaker 4: you the new iTunes store. We started there and he 183 00:11:13,520 --> 00:11:17,320 Speaker 4: opened his MacBook and there was a space for video 184 00:11:17,920 --> 00:11:21,840 Speaker 4: and I was thinking, okay, that's interesting, and then he said, 185 00:11:21,880 --> 00:11:25,560 Speaker 4: and here's the device we created. And it was an 186 00:11:25,720 --> 00:11:30,760 Speaker 4: iPod with a screen. And I'm looking at my phone 187 00:11:30,800 --> 00:11:33,400 Speaker 4: thinking it was bigger than my phone. I mean, this 188 00:11:33,600 --> 00:11:36,360 Speaker 4: was a pretty in its first iteration, it was a 189 00:11:36,360 --> 00:11:39,680 Speaker 4: pretty clunky device, but it was a good size screen. 190 00:11:40,679 --> 00:11:44,480 Speaker 4: He said, look, you can go into the iTunes store 191 00:11:44,640 --> 00:11:48,240 Speaker 4: and you're going to be able to buy television shows. 192 00:11:48,559 --> 00:11:52,000 Speaker 4: And he said, you know, he said, my guys in 193 00:11:52,160 --> 00:11:58,040 Speaker 4: Kupertino really love Lost. And he showed me how to 194 00:11:58,120 --> 00:12:02,560 Speaker 4: work the video iPod and an episode of Lost came up. 195 00:12:02,640 --> 00:12:04,960 Speaker 4: He showed me how to buy it, and then it 196 00:12:05,040 --> 00:12:08,400 Speaker 4: came up on the screen and it was at that 197 00:12:08,920 --> 00:12:13,400 Speaker 4: moment I looked at the picture quality was pristine, and 198 00:12:13,440 --> 00:12:17,920 Speaker 4: I knew from having my iPod, you know that Steve 199 00:12:18,120 --> 00:12:23,280 Speaker 4: was very, very very conscious of sound quality. Sound was exceptional. 200 00:12:24,080 --> 00:12:28,320 Speaker 4: And as I sat there in retrospect, I was sitting 201 00:12:28,360 --> 00:12:33,040 Speaker 4: there as a consumer. I was not a Disney employee 202 00:12:33,040 --> 00:12:33,600 Speaker 4: at that moment. 203 00:12:33,720 --> 00:12:35,360 Speaker 6: I was not running the division. 204 00:12:35,679 --> 00:12:38,880 Speaker 4: I was a consumer, and I was reacting to this 205 00:12:39,000 --> 00:12:43,280 Speaker 4: and thinking, Wow, I travel a lot for business. I 206 00:12:43,280 --> 00:12:46,120 Speaker 4: would love to take this on my next trip because 207 00:12:46,160 --> 00:12:49,680 Speaker 4: at that point I was carting around my laptop and 208 00:12:49,720 --> 00:12:53,880 Speaker 4: do you remember the laptop. Oh, yeah, the attachment attachments, 209 00:12:53,920 --> 00:12:56,760 Speaker 4: and I could run the DVDs so I could stay 210 00:12:56,800 --> 00:13:00,280 Speaker 4: ahead of a clunky the series. Everything was clunky, and 211 00:13:00,320 --> 00:13:03,160 Speaker 4: I sat there watching them and I thought, screen's not 212 00:13:03,200 --> 00:13:08,679 Speaker 4: too small, sound is great, picture quality is great. And 213 00:13:08,960 --> 00:13:11,000 Speaker 4: that's when the conversation started. 214 00:13:11,320 --> 00:13:14,600 Speaker 1: Wow, but I wondered, because, as you know better than anyone, 215 00:13:14,640 --> 00:13:17,800 Speaker 1: the TV business is there are so many I guess 216 00:13:17,840 --> 00:13:22,559 Speaker 1: they're called profit participants or constituents, and actually extends beyond 217 00:13:22,240 --> 00:13:28,520 Speaker 1: to the guilds, to advertisers, to measurement companies too. So 218 00:13:29,280 --> 00:13:32,440 Speaker 1: the very thing you're trying to do here, and let's 219 00:13:32,440 --> 00:13:34,680 Speaker 1: not forget the most important partner of all, which is 220 00:13:34,760 --> 00:13:37,200 Speaker 1: the PATV distributor that thinks they're going to get this 221 00:13:37,280 --> 00:13:41,680 Speaker 1: content exclusive. So were you really all excited as a 222 00:13:41,720 --> 00:13:44,199 Speaker 1: consumer not nervous as an executive? 223 00:13:44,840 --> 00:13:49,280 Speaker 4: Well, you know, we just have to look at the 224 00:13:49,360 --> 00:13:54,840 Speaker 4: recent history. In that time, we were already releasing our 225 00:13:54,880 --> 00:13:59,560 Speaker 4: shows on DBD. You could get the box at you know, 226 00:13:59,679 --> 00:14:02,119 Speaker 4: shortly after the season ended. 227 00:14:02,000 --> 00:14:03,800 Speaker 1: And that I think people don't even remember how huge 228 00:14:03,840 --> 00:14:05,520 Speaker 1: a business that was, particularly with TV. 229 00:14:05,800 --> 00:14:10,280 Speaker 4: Yes, that was a gigantic business for TV and an 230 00:14:10,280 --> 00:14:14,800 Speaker 4: even bigger business for film. So we already had precedent. 231 00:14:14,880 --> 00:14:18,439 Speaker 4: We weren't shredding. The tricky piece of all of this 232 00:14:18,760 --> 00:14:21,480 Speaker 4: was that we had to sign an NDA. We could 233 00:14:21,520 --> 00:14:24,760 Speaker 4: not talk to our broadcast affiliates, we couldn't talk to 234 00:14:24,800 --> 00:14:29,720 Speaker 4: our advertisers, We couldn't you know. It really boiled down 235 00:14:29,760 --> 00:14:35,040 Speaker 4: to five people who had to work through so many issues. 236 00:14:35,080 --> 00:14:36,880 Speaker 4: I mean, it wasn't as simple as can we get 237 00:14:36,920 --> 00:14:42,480 Speaker 4: a deal done? There were technical issues that we really 238 00:14:42,520 --> 00:14:44,080 Speaker 4: need to figure out. 239 00:14:44,280 --> 00:14:45,520 Speaker 6: How do we what is. 240 00:14:45,480 --> 00:14:50,320 Speaker 4: It we are transferring digitally to Apple in Cooper Tino 241 00:14:50,520 --> 00:14:55,000 Speaker 4: to get this into the iTunes store right, And they 242 00:14:55,040 --> 00:14:58,800 Speaker 4: had an equally small team on the other end. And 243 00:14:59,320 --> 00:15:02,880 Speaker 4: funny story long after the deal has been signed, we 244 00:15:02,960 --> 00:15:07,480 Speaker 4: have to get the product up to Copertino. So Vince Roberts, 245 00:15:07,520 --> 00:15:12,680 Speaker 4: who was our CTO, wrapped everything in brown paper and 246 00:15:13,080 --> 00:15:15,920 Speaker 4: we got a hold of the company jet and sent 247 00:15:16,000 --> 00:15:18,480 Speaker 4: him up I believe with Preston Davis, who was our 248 00:15:18,560 --> 00:15:24,840 Speaker 4: CTO of ABC, and hand delivered the materials to Apple. 249 00:15:25,400 --> 00:15:28,600 Speaker 1: Wow, it's almost like something out of a Bond film. 250 00:15:28,800 --> 00:15:31,880 Speaker 4: I know, I know. It was a very funny moment. 251 00:15:32,200 --> 00:15:34,640 Speaker 1: Was there ever a point where, because it's interesting, I 252 00:15:34,640 --> 00:15:37,720 Speaker 1: hadn't heard about the notion that there was technical challenges here? 253 00:15:37,840 --> 00:15:39,880 Speaker 1: Was it ever at a place where, oh, no, this 254 00:15:40,040 --> 00:15:43,040 Speaker 1: isn't going to work. This specific issue is you know, 255 00:15:43,080 --> 00:15:43,960 Speaker 1: we can't make it work. 256 00:15:44,200 --> 00:15:48,720 Speaker 4: You know, there were issues around how will our current 257 00:15:48,760 --> 00:15:53,240 Speaker 4: set of constituents respond to this? Yes, And I found 258 00:15:53,240 --> 00:15:56,560 Speaker 4: out very quickly the day the day that Steve announced 259 00:15:56,600 --> 00:16:02,040 Speaker 4: it that yes, I mean the affiliate were my phone. 260 00:16:02,160 --> 00:16:05,840 Speaker 4: I flew up to the announcement and then flew back 261 00:16:05,880 --> 00:16:09,640 Speaker 4: and my phone had just exploded on my desk, and 262 00:16:10,000 --> 00:16:13,920 Speaker 4: I had to explain to the affiliates that yes, we 263 00:16:13,960 --> 00:16:16,840 Speaker 4: did have the right to do this, and we were 264 00:16:17,240 --> 00:16:21,120 Speaker 4: observing our contracts. We were not in violation of anything. 265 00:16:21,800 --> 00:16:25,760 Speaker 4: And then at the same time, I had the advertiser saying, hey, 266 00:16:25,800 --> 00:16:29,400 Speaker 4: we understand why you couldn't take us with you this time, 267 00:16:29,880 --> 00:16:34,320 Speaker 4: but whatever you do next, would you include us because 268 00:16:34,560 --> 00:16:38,040 Speaker 4: they could see the writing on the wall. And eventually 269 00:16:38,120 --> 00:16:41,520 Speaker 4: the affiliates did come around. But then you had, you know, 270 00:16:41,600 --> 00:16:44,920 Speaker 4: the all of the retail that sold the DBDs for 271 00:16:45,040 --> 00:16:49,640 Speaker 4: us saying, well, wait, so you're selling episodes. It was 272 00:16:49,680 --> 00:16:53,000 Speaker 4: a dollar ninety nine at that point, and we're selling 273 00:16:53,040 --> 00:16:56,080 Speaker 4: the box sets for X and they were worried that 274 00:16:56,240 --> 00:17:01,480 Speaker 4: this would, you know, cannibalize their business. So to say 275 00:17:01,480 --> 00:17:04,920 Speaker 4: there were many, many hard conversations after the announcement is 276 00:17:04,960 --> 00:17:09,040 Speaker 4: an understatement because anytime the world changes. I mean, this 277 00:17:09,320 --> 00:17:11,840 Speaker 4: literally tilted our media world on. 278 00:17:11,840 --> 00:17:16,040 Speaker 1: Its axis, absolutely so. But I you weren't even able 279 00:17:16,080 --> 00:17:20,720 Speaker 1: to warn these key constituents prior to the announcement. Okay, 280 00:17:21,800 --> 00:17:25,439 Speaker 1: I guess that's just Apple and NDAs there, But I 281 00:17:25,480 --> 00:17:29,280 Speaker 1: guess also I want to clarify, when you're talking about affiliates, 282 00:17:29,880 --> 00:17:33,720 Speaker 1: there's TV stations and what they can do, and then 283 00:17:33,760 --> 00:17:37,840 Speaker 1: there's the cable operators who are So when you say affiliates, 284 00:17:37,840 --> 00:17:39,560 Speaker 1: are you talking about both or. 285 00:17:39,520 --> 00:17:42,240 Speaker 4: Actually, when I say affiliates, actually, when I say affiliates, 286 00:17:42,240 --> 00:17:45,720 Speaker 4: I'm only talking about broadcast stations. And at that point, 287 00:17:45,800 --> 00:17:49,520 Speaker 4: I believe ABC had two hundred and thirty eight affiliates. Sure, 288 00:17:49,640 --> 00:17:53,280 Speaker 4: and at that point we also owned ten stations. 289 00:17:53,760 --> 00:17:58,000 Speaker 1: That's right. But okay, So, whether you're talking about cable 290 00:17:58,680 --> 00:18:03,199 Speaker 1: companies or local stations, was it so clear cut that 291 00:18:03,440 --> 00:18:06,840 Speaker 1: you were within rights to take this content that I 292 00:18:06,920 --> 00:18:09,880 Speaker 1: presume they thought was exclusive to them. 293 00:18:10,520 --> 00:18:15,520 Speaker 4: Yes, that was their presumption. But we fully vetted this 294 00:18:16,000 --> 00:18:21,360 Speaker 4: through our legal department. Look, the future's coming, but it's 295 00:18:21,440 --> 00:18:24,879 Speaker 4: not going to happen if you're tied up in lawsuits 296 00:18:24,920 --> 00:18:27,600 Speaker 4: and in court. So we made sure that we fully 297 00:18:27,720 --> 00:18:31,000 Speaker 4: vetted all of our contracts and made sure that we 298 00:18:31,000 --> 00:18:33,040 Speaker 4: were well within our rights to do this. 299 00:18:34,040 --> 00:18:38,480 Speaker 1: I see. Okay, So moving past sort of the deal 300 00:18:38,560 --> 00:18:43,160 Speaker 1: making involved, I'm just also curious about you know, again, 301 00:18:43,240 --> 00:18:47,120 Speaker 1: here's a context point where we talk about streaming and 302 00:18:47,280 --> 00:18:50,879 Speaker 1: entertainment video today. It's nothing like the model you guys 303 00:18:51,320 --> 00:18:55,680 Speaker 1: started with, which was you can own the episode. It's 304 00:18:55,720 --> 00:18:59,159 Speaker 1: not a rental. It stays in your iTunes store, you 305 00:18:59,240 --> 00:19:01,600 Speaker 1: buy it at an episode at a time. Here's this 306 00:19:01,720 --> 00:19:07,720 Speaker 1: dollar ninety nine price point. How did you get there? Okay, 307 00:19:07,760 --> 00:19:10,520 Speaker 1: but it's not something that was going to vanish from 308 00:19:10,600 --> 00:19:11,800 Speaker 1: their right. 309 00:19:12,680 --> 00:19:17,959 Speaker 4: So those experiments came later on. So to the price 310 00:19:18,040 --> 00:19:23,040 Speaker 4: point was not a point of contention. But neither Disney 311 00:19:23,080 --> 00:19:28,639 Speaker 4: nor Apple had figured out what was the breaking point 312 00:19:28,840 --> 00:19:32,560 Speaker 4: for the consumer? Sure, when would they say yikes? You know, 313 00:19:32,720 --> 00:19:35,600 Speaker 4: I think they probably would have said yikes at two 314 00:19:35,720 --> 00:19:40,320 Speaker 4: ninety nine, five ninety nine, But at a dollar ninety 315 00:19:40,440 --> 00:19:45,080 Speaker 4: nine it it hit the right note. And there were 316 00:19:45,119 --> 00:19:49,720 Speaker 4: many people who thought, yeah, I'll invest, you know, a 317 00:19:49,760 --> 00:19:52,879 Speaker 4: couple of bucks and try out this new series. Sure, 318 00:19:53,400 --> 00:19:56,800 Speaker 4: or I missed an episode, it didn't set my DBR. 319 00:19:57,680 --> 00:19:58,840 Speaker 4: What's a dollar ninety nine? 320 00:19:59,520 --> 00:20:03,920 Speaker 1: And look in retrospect it made sense. But again, here 321 00:20:03,960 --> 00:20:07,479 Speaker 1: we are twenty years later and that model has gone away, 322 00:20:08,119 --> 00:20:10,520 Speaker 1: And so I was curious, was there ever consideration of 323 00:20:10,560 --> 00:20:13,720 Speaker 1: something that like what Netflix eventually did and the other 324 00:20:13,840 --> 00:20:16,160 Speaker 1: spods did, where yeah, you could stream it, it's all 325 00:20:16,200 --> 00:20:16,879 Speaker 1: you could eat. 326 00:20:17,119 --> 00:20:20,840 Speaker 4: No, it was really envisioned as a transactional business, right, 327 00:20:20,960 --> 00:20:25,280 Speaker 4: and Netflix was envisioned as a subscriber business. Do I wish, 328 00:20:25,640 --> 00:20:27,560 Speaker 4: you know, we had all had the great foresight that 329 00:20:27,640 --> 00:20:32,520 Speaker 4: Netflix did to say hey, this much a month. You know, 330 00:20:32,920 --> 00:20:37,840 Speaker 4: here's your amazing menu of television shows and films. 331 00:20:38,359 --> 00:20:38,679 Speaker 2: Got it? 332 00:20:39,680 --> 00:20:43,439 Speaker 1: And what was also interesting looking back then and reflecting 333 00:20:43,480 --> 00:20:47,800 Speaker 1: on how you guys at Disney talked about this deal 334 00:20:47,840 --> 00:20:51,520 Speaker 1: in the press, was the notion that this was going 335 00:20:51,560 --> 00:20:53,720 Speaker 1: to deal a blow to video piracy. 336 00:20:54,720 --> 00:20:58,639 Speaker 4: Yes, And Steve had a great line, which was, I 337 00:20:58,760 --> 00:21:05,120 Speaker 4: believe this keeps honest people honest. I don't forget bit 338 00:21:05,200 --> 00:21:07,840 Speaker 4: torrent was alive, sure at that point, and they were 339 00:21:07,880 --> 00:21:12,440 Speaker 4: able to transfer big files in small bits, totally legal business, 340 00:21:13,200 --> 00:21:19,520 Speaker 4: but used by some unsavory players. And I remember we 341 00:21:20,280 --> 00:21:25,360 Speaker 4: had the season finale of Desperate Housewives first season. I 342 00:21:25,400 --> 00:21:28,520 Speaker 4: walked into my staff meeting. The numbers were off, but 343 00:21:28,880 --> 00:21:32,160 Speaker 4: you know, the early numbers were off the charts. And 344 00:21:32,200 --> 00:21:37,679 Speaker 4: again our CTEO Vince Roberts said, well, based on some 345 00:21:38,000 --> 00:21:44,560 Speaker 4: outside data that we've collected, probably two to three hundred 346 00:21:44,560 --> 00:21:50,679 Speaker 4: thousand people pirated the episode and watched it without the 347 00:21:50,680 --> 00:21:55,200 Speaker 4: commercials had been stripped out. And you realize that piracy 348 00:21:56,160 --> 00:21:59,960 Speaker 4: it has will always be a problem. But again Steve's word, 349 00:22:00,359 --> 00:22:04,399 Speaker 4: you know, honest people want to stay honest. They want access, right, 350 00:22:05,280 --> 00:22:08,200 Speaker 4: It's not that they're out there to steal it. They 351 00:22:08,320 --> 00:22:10,359 Speaker 4: just want to be able to have access to it. 352 00:22:10,520 --> 00:22:12,359 Speaker 1: Yeah, And I guess I just thought it's important to 353 00:22:12,400 --> 00:22:15,520 Speaker 1: note because nowadays, I mean, video piracy still exists, but 354 00:22:15,600 --> 00:22:19,480 Speaker 1: it's completely left the conversation, whereas back then it was 355 00:22:20,200 --> 00:22:23,280 Speaker 1: very prominent in the conversation. And it sounds like a 356 00:22:23,359 --> 00:22:25,440 Speaker 1: driver for even doing this deal. 357 00:22:25,720 --> 00:22:28,080 Speaker 4: It really was, and I think it was one of 358 00:22:28,119 --> 00:22:32,280 Speaker 4: the early things we discussed after seeing the presentation the 359 00:22:32,320 --> 00:22:35,919 Speaker 4: iTunes store and how everything would work, and we realized 360 00:22:35,920 --> 00:22:41,359 Speaker 4: we actually created criteria after the Apple deal because we 361 00:22:41,440 --> 00:22:44,359 Speaker 4: knew there would be someone else coming to us and 362 00:22:44,480 --> 00:22:47,800 Speaker 4: somebody else and somebody else, so we were very focused 363 00:22:47,840 --> 00:22:51,560 Speaker 4: on working with real companies. We were very focused on 364 00:22:51,920 --> 00:22:56,679 Speaker 4: working with companies that respected our creative product. We were 365 00:22:56,760 --> 00:22:59,639 Speaker 4: very focused on security. We didn't want to work with 366 00:22:59,640 --> 00:23:05,040 Speaker 4: people who were not adamant about securing our product and 367 00:23:05,119 --> 00:23:07,760 Speaker 4: securing their devices makes sense. 368 00:23:08,760 --> 00:23:13,400 Speaker 1: I'm also, though, curious whether did you guys think about, like, yes, 369 00:23:13,480 --> 00:23:15,879 Speaker 1: there's a lot of unsavory characters, but there could be 370 00:23:15,920 --> 00:23:19,680 Speaker 1: some savory, legitimate tech companies that aren't Apple, and maybe 371 00:23:19,720 --> 00:23:22,600 Speaker 1: it's worth doing, you know, three or four of these 372 00:23:22,680 --> 00:23:26,200 Speaker 1: kinds of deals with I don't know Samsung, Microsoft, and 373 00:23:26,280 --> 00:23:29,640 Speaker 1: also looking at it the other way, did Apple say, Yeah, 374 00:23:29,640 --> 00:23:31,600 Speaker 1: it's nice to launch with Disney, But what if we 375 00:23:31,720 --> 00:23:35,159 Speaker 1: launched with the companies that would eventually join iTunes, like 376 00:23:35,240 --> 00:23:36,920 Speaker 1: NBCUniversal and Fox. 377 00:23:37,080 --> 00:23:39,840 Speaker 4: We always expected they would, Okay, you know, we knew 378 00:23:39,880 --> 00:23:43,320 Speaker 4: they couldn't exist on our product alone. It was great 379 00:23:43,359 --> 00:23:46,879 Speaker 4: that we were first because our learning curve was that 380 00:23:47,000 --> 00:23:50,439 Speaker 4: much farther ahead of everyone else's. Sure, but it was 381 00:23:50,520 --> 00:23:53,679 Speaker 4: really and it was good for us because when Netflix 382 00:23:53,760 --> 00:23:57,960 Speaker 4: launched its own service, you know, as a subscriber, when 383 00:23:58,000 --> 00:24:01,040 Speaker 4: they went online, you know, we knew how to sell 384 00:24:01,080 --> 00:24:03,840 Speaker 4: to them. We knew what questions to ask. 385 00:24:03,920 --> 00:24:04,320 Speaker 3: Got it. 386 00:24:04,960 --> 00:24:09,840 Speaker 1: We also, you know, we talked about certain key constituents, advertisers, affiliates. 387 00:24:10,400 --> 00:24:13,439 Speaker 1: Let's go back to the creative community though, because I 388 00:24:13,440 --> 00:24:17,240 Speaker 1: would imagine, you know, a they didn't know before anyone else, 389 00:24:17,280 --> 00:24:20,280 Speaker 1: and they may have had their own reactions, including perhaps 390 00:24:20,320 --> 00:24:24,960 Speaker 1: like you're reducing my beautiful production to a screen the 391 00:24:25,000 --> 00:24:26,399 Speaker 1: size of a postage stamp. 392 00:24:26,680 --> 00:24:30,320 Speaker 4: You know, there were very few in the creative community 393 00:24:30,520 --> 00:24:34,680 Speaker 4: who complained about that, and I think it's because everyone 394 00:24:35,320 --> 00:24:37,600 Speaker 4: at least had a BlackBerry at that point. So we 395 00:24:37,720 --> 00:24:42,359 Speaker 4: knew small was in the system. We just didn't know this. 396 00:24:42,920 --> 00:24:46,119 Speaker 4: And everyone in the creative community that I knew had 397 00:24:46,680 --> 00:24:50,359 Speaker 4: an iPod that they were using for their music. So 398 00:24:50,600 --> 00:24:53,000 Speaker 4: it was a little bit of a you know, you 399 00:24:53,040 --> 00:24:57,040 Speaker 4: can imagine, you know, Mark Cherry, creator of Desperate Housewives, 400 00:24:57,080 --> 00:25:01,000 Speaker 4: and you've got jj Abrams and Damn Lie and carlt 401 00:25:01,040 --> 00:25:06,320 Speaker 4: McHugh's at Lost and there look back at that presentation 402 00:25:06,440 --> 00:25:09,359 Speaker 4: that Steve did that way day and there are floor 403 00:25:09,400 --> 00:25:13,720 Speaker 4: to ceiling images of these shows. And as a creator, 404 00:25:13,880 --> 00:25:18,879 Speaker 4: to be part of the next great thing, not just 405 00:25:19,000 --> 00:25:22,320 Speaker 4: one more thing, but the next great thing was a 406 00:25:22,320 --> 00:25:22,800 Speaker 4: big deal. 407 00:25:24,000 --> 00:25:26,280 Speaker 1: And you know, we kind of put some pretty big 408 00:25:26,320 --> 00:25:28,720 Speaker 1: stakes on what this deal meant. But to sort of 409 00:25:28,760 --> 00:25:32,000 Speaker 1: come back around here, so we're in a very different 410 00:25:32,080 --> 00:25:36,040 Speaker 1: media world now in terms of video streaming options. Could 411 00:25:36,119 --> 00:25:40,320 Speaker 1: that world have existed without this deal sort of blazing 412 00:25:40,359 --> 00:25:41,119 Speaker 1: the path. 413 00:25:42,119 --> 00:25:44,760 Speaker 4: You know, I don't know the answer to that. It 414 00:25:44,800 --> 00:25:49,600 Speaker 4: could have, it could have happened, but I do believe 415 00:25:50,320 --> 00:25:54,840 Speaker 4: it gave a lot of media companies the courage to 416 00:25:54,880 --> 00:26:01,320 Speaker 4: be more experimental with tech, to learn about it, to 417 00:26:01,359 --> 00:26:05,800 Speaker 4: figure out the benefits and also the deficits. One of 418 00:26:05,800 --> 00:26:09,840 Speaker 4: the things we did when we knew the Apple iPad 419 00:26:10,000 --> 00:26:15,439 Speaker 4: was coming, was to create WATCHBC, which was then ABC 420 00:26:15,600 --> 00:26:18,760 Speaker 4: dot com. And that was really in response to what 421 00:26:18,840 --> 00:26:22,320 Speaker 4: had happened as I mentioned earlier with our advertisers, which 422 00:26:22,440 --> 00:26:26,159 Speaker 4: was when you do your next thing, take us with you. 423 00:26:27,359 --> 00:26:32,040 Speaker 4: And we also worked with our broadcast affiliates to have 424 00:26:32,280 --> 00:26:36,800 Speaker 4: them offer the player, you know, in an effort to 425 00:26:37,320 --> 00:26:39,639 Speaker 4: you know, there's a world where we can get local 426 00:26:40,119 --> 00:26:43,880 Speaker 4: advertising into this new world because this is where everything 427 00:26:43,960 --> 00:26:48,560 Speaker 4: is going. This is we can see the road ahead, 428 00:26:49,359 --> 00:26:52,000 Speaker 4: and this is how you need to be thinking about 429 00:26:52,640 --> 00:26:55,920 Speaker 4: where you go with your business because you just learned 430 00:26:55,960 --> 00:26:57,719 Speaker 4: a lot about being in this space. 431 00:26:58,080 --> 00:27:00,760 Speaker 1: Was there a confidence that if you had the ability 432 00:27:00,840 --> 00:27:04,040 Speaker 1: to create a new market for this content, that the 433 00:27:04,119 --> 00:27:07,639 Speaker 1: audience would be there. Did you have expectations of like, Okay, 434 00:27:07,640 --> 00:27:09,879 Speaker 1: we're going to do this and the following number of 435 00:27:09,960 --> 00:27:11,760 Speaker 1: people are going to be downloading and we're going to 436 00:27:11,800 --> 00:27:15,200 Speaker 1: make X revenue or was it like who knows? 437 00:27:15,560 --> 00:27:20,480 Speaker 4: We didn't have that level of hubrisk. We couldn't even 438 00:27:20,520 --> 00:27:26,840 Speaker 4: write a business plan because we were reliant on Apple 439 00:27:27,000 --> 00:27:32,080 Speaker 4: sale of these devices. And I think it was the 440 00:27:32,160 --> 00:27:37,119 Speaker 4: charisma of Apple of Steve. I think it was the 441 00:27:37,200 --> 00:27:42,679 Speaker 4: charisma of our shows. That really was the alchemy needed 442 00:27:43,600 --> 00:27:47,320 Speaker 4: to take this next big step forward. 443 00:27:48,240 --> 00:27:50,840 Speaker 1: And I mean we should point out, you know, Disney 444 00:27:50,880 --> 00:27:53,320 Speaker 1: and Apple, it's not some sort of random pairing. There's 445 00:27:53,359 --> 00:27:58,000 Speaker 1: been a relationship in place through jobs and Eiger that 446 00:27:58,119 --> 00:28:00,199 Speaker 1: paved the way. I mean, was that sort of he 447 00:28:00,400 --> 00:28:02,240 Speaker 1: do you think if it were not for that sort 448 00:28:02,280 --> 00:28:06,320 Speaker 1: of special relationship, that a deal like this couldn't even 449 00:28:06,320 --> 00:28:06,920 Speaker 1: have happened. 450 00:28:07,880 --> 00:28:12,159 Speaker 4: I remember negotiating the last five points with Steve, and 451 00:28:12,200 --> 00:28:14,440 Speaker 4: I was standing on a street corner in New York 452 00:28:15,359 --> 00:28:18,000 Speaker 4: and I said to him, I'm going to go back 453 00:28:18,000 --> 00:28:20,520 Speaker 4: to my hotel, grab my bag, and I have to 454 00:28:20,880 --> 00:28:26,119 Speaker 4: fly back to LA. And I said I'll sign the 455 00:28:26,160 --> 00:28:29,400 Speaker 4: signature page because it had We had lawyers on the phone. 456 00:28:29,440 --> 00:28:33,080 Speaker 4: We were really buttoned up. And I got back to 457 00:28:33,240 --> 00:28:38,480 Speaker 4: LA and my phone rang and he Hey, Anne, it's Steve, 458 00:28:39,400 --> 00:28:42,040 Speaker 4: and he said, I can't believe I just got a 459 00:28:42,080 --> 00:28:47,040 Speaker 4: deal done with Disney. Wow. And I never thought we 460 00:28:47,080 --> 00:28:51,280 Speaker 4: wouldn't get a deal done. You know, I hadn't been 461 00:28:51,320 --> 00:28:57,360 Speaker 4: a part of the Pixar Disney distribution relationship. I had 462 00:28:57,400 --> 00:29:01,040 Speaker 4: never been on the film side. So with Steve, I 463 00:29:01,160 --> 00:29:02,680 Speaker 4: was starting from scratch. 464 00:29:03,200 --> 00:29:05,080 Speaker 1: I mean, I have to say, to some degree, I'm 465 00:29:05,160 --> 00:29:09,400 Speaker 1: actually surprised Steve would even be the one who would 466 00:29:09,440 --> 00:29:12,400 Speaker 1: be doing the negotiating. I would have assumed he was like, 467 00:29:12,840 --> 00:29:16,560 Speaker 1: on a whole other level interesting. 468 00:29:16,520 --> 00:29:19,640 Speaker 4: And the two of us were really having to beat 469 00:29:19,720 --> 00:29:24,280 Speaker 4: back our own way of doing business. I mean, I 470 00:29:24,440 --> 00:29:31,200 Speaker 4: wasn't negotiating with another studio. I wasn't negotiating with a 471 00:29:31,240 --> 00:29:34,880 Speaker 4: broadcast affiliate. I wasn't negotiating with a cable company. I 472 00:29:34,920 --> 00:29:39,400 Speaker 4: didn't have a template, and neither did he, because this 473 00:29:39,480 --> 00:29:44,120 Speaker 4: hadn't been done before. At one point, I remember our 474 00:29:44,840 --> 00:29:47,800 Speaker 4: business affairs person Marcutowood saying, well, you should ask for 475 00:29:47,880 --> 00:29:50,840 Speaker 4: this because that's what we get from X. And when 476 00:29:50,880 --> 00:29:53,160 Speaker 4: I put it in front of Steve, he went nuclear, 477 00:29:53,880 --> 00:29:57,600 Speaker 4: and so why would I ever do that? That's not 478 00:29:57,680 --> 00:30:00,600 Speaker 4: the way we operate. And then we realized we really 479 00:30:00,680 --> 00:30:04,360 Speaker 4: had to come together in a new way, and not 480 00:30:04,560 --> 00:30:07,840 Speaker 4: just this wasn't just you know, putting our shows on. 481 00:30:08,520 --> 00:30:09,800 Speaker 6: The video iPod. 482 00:30:10,560 --> 00:30:14,120 Speaker 4: This was creating a template for the future, or at 483 00:30:14,200 --> 00:30:18,160 Speaker 4: least the first template for this mobile digital world. 484 00:30:19,120 --> 00:30:21,000 Speaker 1: I mean, was there ever a sense as you were 485 00:30:21,080 --> 00:30:24,840 Speaker 1: doing this unprecedented thing that you had doubts that this 486 00:30:24,880 --> 00:30:28,680 Speaker 1: could come together, that a deal like this could even happen. 487 00:30:29,400 --> 00:30:33,160 Speaker 4: Look, there were rocky moments, and again it really was 488 00:30:33,560 --> 00:30:37,080 Speaker 4: you know, twenty years later, I can say it's because 489 00:30:37,120 --> 00:30:41,720 Speaker 4: we didn't neither side knew if this would work, so 490 00:30:41,800 --> 00:30:45,000 Speaker 4: we were both taking a risk. But you know, when 491 00:30:45,000 --> 00:30:49,640 Speaker 4: we sat down, we realized we were the two best 492 00:30:49,680 --> 00:30:53,920 Speaker 4: companies to take the risk. You know, we were sure, 493 00:30:54,000 --> 00:31:00,040 Speaker 4: we felt secure and competent in our creative abilities. And 494 00:31:00,120 --> 00:31:03,480 Speaker 4: even Apple, they'll create just the same. 495 00:31:04,160 --> 00:31:06,640 Speaker 1: So I got it. Just one more Steve question, like, 496 00:31:07,040 --> 00:31:09,600 Speaker 1: you interacted at Great Lens with a man who is, 497 00:31:09,640 --> 00:31:12,320 Speaker 1: you know, like a historical figure, almost a deity at 498 00:31:12,320 --> 00:31:15,080 Speaker 1: this point. Did you take anything away from having so 499 00:31:15,160 --> 00:31:16,720 Speaker 1: much exposure to someone like that. 500 00:31:17,120 --> 00:31:22,760 Speaker 4: Oh, yes, there were I think my biggest lesson was 501 00:31:23,360 --> 00:31:30,000 Speaker 4: to be constantly brief. Don't hang on to you know, 502 00:31:30,920 --> 00:31:34,200 Speaker 4: pastways of doing things, don't hang on to Well, this 503 00:31:34,280 --> 00:31:35,680 Speaker 4: is the way we do it, this is the way 504 00:31:35,720 --> 00:31:38,880 Speaker 4: we produce, this is the way. No be ready to 505 00:31:39,000 --> 00:31:42,960 Speaker 4: reinvent every single day, be ready to adopt or adapt 506 00:31:43,680 --> 00:31:49,640 Speaker 4: because technology is going to don't let technology drive you. 507 00:31:50,040 --> 00:31:54,200 Speaker 4: Figure out how to drive with technology toward what. 508 00:31:54,120 --> 00:31:58,200 Speaker 5: You need, and I think when I started talking to him, 509 00:31:58,480 --> 00:32:03,280 Speaker 5: I was very focused on on what ABC and Disney needed, 510 00:32:04,000 --> 00:32:06,520 Speaker 5: and by the time I was done, I realized I 511 00:32:06,600 --> 00:32:10,440 Speaker 5: was very focused on where the consumer was going and 512 00:32:10,480 --> 00:32:14,320 Speaker 5: making sure that wherever they went, we were with them. 513 00:32:14,600 --> 00:32:18,280 Speaker 1: When you put it in that term, it really hit 514 00:32:18,440 --> 00:32:22,760 Speaker 1: hits home just what a big deal this was. But 515 00:32:22,880 --> 00:32:25,320 Speaker 1: let's talk now about so you put it out there, 516 00:32:26,040 --> 00:32:29,680 Speaker 1: and this was a platform that over the years evolved, 517 00:32:29,720 --> 00:32:34,600 Speaker 1: different models came in, different partners. I wasn't just about 518 00:32:34,640 --> 00:32:39,040 Speaker 1: ABC anymore. So what was that like? Did it progress 519 00:32:39,080 --> 00:32:40,480 Speaker 1: in a way that you expected? 520 00:32:41,240 --> 00:32:44,760 Speaker 4: Well, again, I didn't know what to expect. Yeah, it 521 00:32:44,800 --> 00:32:49,480 Speaker 4: did progress, and we learned a lot, and the pricing changed. 522 00:32:49,600 --> 00:32:51,960 Speaker 4: You know, we went down to ninety nine sinse with 523 00:32:52,360 --> 00:32:56,120 Speaker 4: some episodes at certain times, and there were, you know, 524 00:32:56,280 --> 00:33:02,160 Speaker 4: different ways that you know, Apple would push the store forward. 525 00:33:02,960 --> 00:33:08,360 Speaker 4: But I think the the biggest learning led to what 526 00:33:08,400 --> 00:33:13,240 Speaker 4: we did on the iPad, which was the next years later. 527 00:33:13,440 --> 00:33:18,040 Speaker 1: So talk about how iPad became sort of the next 528 00:33:18,240 --> 00:33:20,720 Speaker 1: big deal moment, as it were. 529 00:33:20,880 --> 00:33:24,720 Speaker 6: It became the next big moment of annoyance, to be 530 00:33:24,920 --> 00:33:29,040 Speaker 6: honest with you, So you know, I'm thinking, Wow, we 531 00:33:29,080 --> 00:33:34,080 Speaker 6: did this landmark deal with Apple first in the iTunes. 532 00:33:33,640 --> 00:33:36,560 Speaker 4: Store, We you know, get word that the iPad is 533 00:33:36,640 --> 00:33:40,480 Speaker 4: coming out. So I called and I said, hey, I 534 00:33:40,520 --> 00:33:43,440 Speaker 4: called EDDIEQ and I said, you know, we really want 535 00:33:43,480 --> 00:33:48,440 Speaker 4: to get into the building and you know, look at 536 00:33:48,440 --> 00:33:51,760 Speaker 4: this and be a part of it. And he said, no. 537 00:33:51,920 --> 00:33:53,120 Speaker 1: Okay, thanks. 538 00:33:53,200 --> 00:33:56,720 Speaker 4: Eddie's like, what do you mean, no, we we were 539 00:33:56,840 --> 00:33:59,960 Speaker 4: with you from day one, and he said, no, You're 540 00:34:00,240 --> 00:34:03,280 Speaker 4: have to figure this out just like everybody else. So 541 00:34:03,320 --> 00:34:10,560 Speaker 4: we had a really, really small but just insanely smart 542 00:34:10,600 --> 00:34:17,360 Speaker 4: team that operated under Albert Chang Disney, and those guys 543 00:34:17,719 --> 00:34:23,120 Speaker 4: were determined to build an app that could live on 544 00:34:23,719 --> 00:34:31,240 Speaker 4: the iPad. And they worked day and night. They experimented, 545 00:34:31,480 --> 00:34:36,800 Speaker 4: they tried. It was It was just a magnificent moment 546 00:34:37,239 --> 00:34:44,480 Speaker 4: in watching leadership, watching experimentation, watching people who you know, 547 00:34:44,960 --> 00:34:48,680 Speaker 4: kept you know, had moments of great failure trying to 548 00:34:48,840 --> 00:34:51,760 Speaker 4: pull this together and pull it together by a certain 549 00:34:51,840 --> 00:34:56,239 Speaker 4: date so we could be there at the launch with 550 00:34:57,320 --> 00:34:59,840 Speaker 4: Apple for the iPad and we were. 551 00:35:00,080 --> 00:35:02,319 Speaker 1: Sounds like some perseverance there. 552 00:35:02,560 --> 00:35:04,759 Speaker 4: So there's a lot of perseverance. And the nice thing 553 00:35:04,800 --> 00:35:08,200 Speaker 4: that happened after that, Steve was coming to Burbank for 554 00:35:08,239 --> 00:35:13,200 Speaker 4: a Disney board meeting. Pixar had joined the fold, and 555 00:35:13,200 --> 00:35:16,239 Speaker 4: I called and said, hey, I'd love you to meet 556 00:35:16,239 --> 00:35:21,560 Speaker 4: the guys that put the ABC Watch app together. And 557 00:35:22,080 --> 00:35:24,720 Speaker 4: we gathered them in a conference room over at Team Disney. 558 00:35:24,760 --> 00:35:27,279 Speaker 4: And he walked in and he said, hey, are you 559 00:35:27,480 --> 00:35:31,000 Speaker 4: the guys who made the app? And they couldn't speak 560 00:35:32,120 --> 00:35:36,000 Speaker 4: because this was their hero was walking into the room and. 561 00:35:35,920 --> 00:35:38,279 Speaker 1: He's impressed with them. 562 00:35:38,840 --> 00:35:41,920 Speaker 4: And then they were all standing and he said, would 563 00:35:41,920 --> 00:35:44,200 Speaker 4: you sit down and tell me how you did it? 564 00:35:44,960 --> 00:35:48,400 Speaker 4: And one by one they started to tell their story 565 00:35:48,880 --> 00:35:51,920 Speaker 4: and he started to question them about, well, what did 566 00:35:51,960 --> 00:35:54,320 Speaker 4: you do here? Why did you do that? It wasn't 567 00:35:54,400 --> 00:35:58,239 Speaker 4: why didn't you call me? It was wow, And it 568 00:35:58,280 --> 00:36:01,680 Speaker 4: was a real tell me how you think? Tell me 569 00:36:01,719 --> 00:36:04,600 Speaker 4: how you put this together, because it truly was, you know, 570 00:36:04,640 --> 00:36:07,560 Speaker 4: some things that we bought off the shelf, as well 571 00:36:07,600 --> 00:36:09,600 Speaker 4: as a lot of internal ingenuity. 572 00:36:10,040 --> 00:36:12,960 Speaker 1: Sure, although you know, when you talk about the iPad, 573 00:36:13,160 --> 00:36:16,560 Speaker 1: ultimately I don't would you say that the tablet was 574 00:36:16,600 --> 00:36:20,280 Speaker 1: as much a breakthrough moment for you know, digital TV 575 00:36:20,440 --> 00:36:23,680 Speaker 1: distribution as that iPod moment was. 576 00:36:23,960 --> 00:36:30,800 Speaker 4: In a different way, it didn't have the same wow factor, 577 00:36:31,680 --> 00:36:34,880 Speaker 4: I think because there wasn't a lot of content, right 578 00:36:35,080 --> 00:36:39,440 Speaker 4: you could access same with the video iPod, but it 579 00:36:39,520 --> 00:36:41,920 Speaker 4: was so new, right, and it was the first of 580 00:36:41,960 --> 00:36:42,520 Speaker 4: its kind. 581 00:36:43,280 --> 00:36:47,439 Speaker 1: Also, what people may not remember from that time was, hey, 582 00:36:47,480 --> 00:36:50,040 Speaker 1: it was a great product, but you would have to 583 00:36:50,080 --> 00:36:54,719 Speaker 1: take into account something called broadband speed, which it would 584 00:36:54,760 --> 00:36:57,200 Speaker 1: take hours. I don't remember what exactly, was maybe a 585 00:36:57,200 --> 00:36:59,640 Speaker 1: few hours to download a movie that would take a 586 00:36:59,640 --> 00:37:03,920 Speaker 1: few hours to watch. So again it's just to somedy. 587 00:37:03,920 --> 00:37:07,440 Speaker 1: We also a reminder that it wasn't just about Apple 588 00:37:07,520 --> 00:37:12,200 Speaker 1: and Disney. You had to rely on broadband infrastructure speeding 589 00:37:12,440 --> 00:37:15,200 Speaker 1: up and becoming more ubiquitous the way it did, which 590 00:37:15,640 --> 00:37:17,080 Speaker 1: there was never a guarantee of that. 591 00:37:17,400 --> 00:37:21,279 Speaker 4: Now, look, eighty percent of Americans were online at that 592 00:37:21,360 --> 00:37:25,960 Speaker 4: point when the video iPod came out, so online existed. 593 00:37:26,040 --> 00:37:29,880 Speaker 4: But you're right, but you know, again, think of this 594 00:37:30,040 --> 00:37:35,560 Speaker 4: moment as sending a clear message to another piece of 595 00:37:35,600 --> 00:37:39,600 Speaker 4: the universe that speeds need to increase. Right, this is 596 00:37:39,640 --> 00:37:40,600 Speaker 4: where we are going. 597 00:37:41,880 --> 00:37:49,680 Speaker 1: Absolutely So I'm also curious in terms of we talked 598 00:37:49,719 --> 00:37:53,680 Speaker 1: earlier about it's interesting that the model was what it was, 599 00:37:53,800 --> 00:37:59,319 Speaker 1: individual episode purchases and now where things went today with 600 00:37:59,840 --> 00:38:03,000 Speaker 1: flicks and streaming and rental and a whole different model. 601 00:38:03,800 --> 00:38:07,880 Speaker 1: Was there ever a time as the Apple ecosystem the 602 00:38:07,920 --> 00:38:11,680 Speaker 1: iTunes ecosystem evolved over those years where there were conversations 603 00:38:11,680 --> 00:38:15,839 Speaker 1: about like, hey, what if we did it differently? Like 604 00:38:16,200 --> 00:38:19,880 Speaker 1: how come that never happened? Because had things done gone differently, 605 00:38:19,960 --> 00:38:22,239 Speaker 1: Apple could have been what Netflix was. 606 00:38:23,120 --> 00:38:26,839 Speaker 4: It could have Apple was very much a tech company. 607 00:38:26,680 --> 00:38:31,480 Speaker 4: They had their store and then they had stores, you know, 608 00:38:31,560 --> 00:38:35,440 Speaker 4: starting and I remember somewhere around oh seven, Remember the 609 00:38:35,800 --> 00:38:39,279 Speaker 4: people who used to sleep at the Apple stores on 610 00:38:39,360 --> 00:38:42,280 Speaker 4: the sidewalk or waiting for the vacs launch to come. 611 00:38:42,840 --> 00:38:45,839 Speaker 4: But that was the business they were in. And you know, 612 00:38:46,520 --> 00:38:49,680 Speaker 4: Apple TV plus came much much later. 613 00:38:49,760 --> 00:38:53,200 Speaker 1: Now that you're twenty years removed from this. So you 614 00:38:53,239 --> 00:38:57,279 Speaker 1: were talking about being brave and let technology drive with 615 00:38:57,440 --> 00:39:02,000 Speaker 1: technology perhaps how you put it, couldn't you take that 616 00:39:02,080 --> 00:39:06,040 Speaker 1: attitude in a different Hollywood era like twenty twenty five, 617 00:39:06,239 --> 00:39:09,000 Speaker 1: where I would argue, it's maybe not as easy to 618 00:39:09,160 --> 00:39:12,960 Speaker 1: be brave now as it was twenty years ago. Maybe 619 00:39:12,960 --> 00:39:13,399 Speaker 1: I'm wrong. 620 00:39:13,560 --> 00:39:15,920 Speaker 4: Well, we didn't know that. You know, it was a 621 00:39:16,040 --> 00:39:20,799 Speaker 4: very different time, and you know, our affiliate base was 622 00:39:20,920 --> 00:39:25,239 Speaker 4: very powerful, Our advertisers were very powerful. We did not 623 00:39:26,080 --> 00:39:29,920 Speaker 4: own our platform, so we weren't used to owning a platform. 624 00:39:30,000 --> 00:39:32,880 Speaker 4: And I think that you know, probably, you know, to 625 00:39:32,920 --> 00:39:36,440 Speaker 4: your point about could any of you have been Netflix? 626 00:39:37,120 --> 00:39:40,480 Speaker 4: You know, we didn't have that mindset. You know, we 627 00:39:40,480 --> 00:39:44,880 Speaker 4: were in the business of leasing our programming and on 628 00:39:44,920 --> 00:39:46,320 Speaker 4: a global basis. 629 00:39:46,480 --> 00:39:49,239 Speaker 1: Would there have been anything looking back in how it 630 00:39:49,280 --> 00:39:51,440 Speaker 1: all played out that you would have done differently. 631 00:39:52,920 --> 00:40:00,359 Speaker 4: You know, I probably would have invested more heavily and 632 00:40:01,000 --> 00:40:07,040 Speaker 4: much faster in ABC dot com. But the problem remained 633 00:40:07,880 --> 00:40:11,759 Speaker 4: its scale. Sure, can you exist? You look at the 634 00:40:11,800 --> 00:40:17,160 Speaker 4: size and scope of Netflix in their programming. ABC didn't 635 00:40:17,200 --> 00:40:22,239 Speaker 4: have a chance of achieving that, hence the Hulu partnership, 636 00:40:22,880 --> 00:40:27,919 Speaker 4: or you had ABC, you had NBC. CBS never came 637 00:40:28,000 --> 00:40:32,560 Speaker 4: into it, that I remember, But you know, we realized 638 00:40:33,120 --> 00:40:38,560 Speaker 4: none of us could scale without the other. So you know, 639 00:40:38,800 --> 00:40:41,920 Speaker 4: could it have gone differently for local stations? 640 00:40:42,400 --> 00:40:48,440 Speaker 1: Oh that's a whole other interesting interesting to think about that. Well, 641 00:40:48,680 --> 00:40:51,520 Speaker 1: I guess, as Bob Ayger pointed out on that stage 642 00:40:51,560 --> 00:40:54,960 Speaker 1: that day twenty years ago, the credit does go to you, 643 00:40:55,040 --> 00:40:59,319 Speaker 1: and so thank you for walking me through something that 644 00:40:59,360 --> 00:41:03,239 Speaker 1: you was so close to your career and your heart. 645 00:41:03,280 --> 00:41:05,399 Speaker 1: If I'm reading, you're right. Thanks for taking the time 646 00:41:05,440 --> 00:41:08,560 Speaker 1: to walk down memory lane with me. Thanks Andy, Thanks 647 00:41:08,560 --> 00:41:10,920 Speaker 1: for listening. Be sure to leave us a review with 648 00:41:11,040 --> 00:41:14,200 Speaker 1: the podcast platform of your choice. We love to hear 649 00:41:14,239 --> 00:41:17,120 Speaker 1: from listeners. Please go to Variety dot com and sign 650 00:41:17,200 --> 00:41:20,239 Speaker 1: up for the free weekly Strictly Business newsletter.