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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. Today. My

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Speaker 1: guest is Jeff Schultz. He's the newly appointed CEO of

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Speaker 1: Radial Entertainment. Radio was formed last year when private equity

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Speaker 1: firm oak Tree Capital Management brought together Film Rise with

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Speaker 1: Shout Studios. Those are two indie content ventures that focus

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Speaker 1: on distinct fan niches. Schultz is a Paramount and Pluto

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Speaker 1: TV veteran who has plans to rev up radio on

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Speaker 1: all fronts, from fast channel streaming to original production to

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Speaker 1: international licensing. Right now, he's out in the marketplace shopping

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Speaker 1: for libraries to buy. Earlier this week, Radio announced the

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Speaker 1: acquisition of New Dominion Pictures, which is the home of

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Speaker 1: evergreen unscripted series including The New Detectives, The FBI Files,

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Speaker 1: and a Haunting. In our conversation, Schultz maps out his

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Speaker 1: growth plan for Radio and why he's so bullish on

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Speaker 1: the company's potential to grow in this fast changing marketplace.

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Speaker 1: Jeff Schultz, CEO of Radio Entertainment, thank you so much

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Speaker 1: for joining me.

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Speaker 2: Hi, Cynthia.

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Speaker 1: I got to know you during your tenure at Paramount,

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Speaker 1: where you were very senior in building their streaming businesses,

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Speaker 1: both Paramount Plus and working on the Pluto TV side

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Speaker 1: as well. What was it about Radial Entertainment? What was

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Speaker 1: it about the company and its assets and its ambition

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Speaker 1: that made you want to take the reins as CEO.

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Speaker 2: Let me start by describing radio at a high level,

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Speaker 2: and then I'll share how it came together, how I

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Speaker 2: got involved. So I'll describe Radio in three parts. One.

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Speaker 2: Radio is the largest independent catalog of film and television

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Speaker 2: in the industry, So that's seventy thousand films in shows,

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Speaker 2: classic TV, massive factual and reality catalogs, Deep film catalog

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Speaker 2: and then major new films. And by independent, I mean

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Speaker 2: we're not a studio, We're not a division of a conglomerate.

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Speaker 2: We're truly an independent player. Two with integrated distribution, So

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Speaker 2: we operate a diversified distribution portfolio, distribute through AVOD s,

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Speaker 2: FOD broadcast, cable, transactional, even physical, theatrical international. We operate

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Speaker 2: a portfolio of hundreds of fast channels and generate directly

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Speaker 2: billions of streaming hours annually. And then the third part

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Speaker 2: is integrated capital. Oak Tree is a two hundred billion

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Speaker 2: dollar plus alternative asset manager and is our strategic partner

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Speaker 2: in growing the business. So the way to think about

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Speaker 2: Radial is the largest independent catalog of film and television

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Speaker 2: in the industry, with integration distribution and integrated capital. So

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Speaker 2: here's how it came together. In twenty twenty three, oak

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Speaker 2: Tree acquired Shout Factory, which Garson Fuz and his team

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Speaker 2: had built over a couple of decades into a super

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Speaker 2: respected independent film and TV distributor, acquiring and distributing genre content,

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Speaker 2: classic TV shows, horror, anime. I remember twenty fifteen we

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Speaker 2: launched the Mystery Science Theater channel with a Shout at Pluto.

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Speaker 2: We actually Radio Now own that as of January of

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Speaker 2: this year. And then during the two years between the

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Speaker 2: investment in Shout and the merger with film Rise, there

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Speaker 2: were deals with Gravitas and Millennium, Open Road, Golden Princess,

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Speaker 2: and so you can look at each of these as

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Speaker 2: catalog or company acquisitions that were based on the same

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Speaker 2: premise of content being fragmented and under valued and using

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Speaker 2: Shout as the platform to pull it all together. And

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Speaker 2: and so then in July of last summer, you have

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Speaker 2: two businesses that are actually sort of roughly the same

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Speaker 2: size in terms of scott Catalogs scale. This is Shout

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Speaker 2: and all of its platform roll up, and then film Rise,

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Speaker 2: which was super early in fast and free streaming, one

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Speaker 2: of the first players to make fixed feed bets against

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Speaker 2: sort of variable upside in free streaming. Are these are

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Speaker 2: deals that, to be honest, like I would have loved

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Speaker 2: to do myself at Pluto, but in the early stages

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Speaker 2: we didn't have the access to capital. We were independent startup,

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Speaker 2: and then as part of Icon and then Paramount, we

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Speaker 2: were focused on our internal library, like you know, monetizing

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Speaker 2: our proprietary library. So film Rise moved quickly to capture

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Speaker 2: large catalog licenses and in some cases acquisitions. That was

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Speaker 2: that was likely based on their data perform very very

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Speaker 2: well in free streaming.

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Speaker 1: When did you come into the equation for being the

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Speaker 1: person to lead this the combined entity.

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Speaker 2: I wasn't aware of what oak Tree was up to.

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Speaker 2: I didn't understand the scale and ambition of their strategy

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Speaker 2: until I read the shout in film Rise News, and

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Speaker 2: then it was still a few months before oak Tree

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Speaker 2: and I started talking about it, how I'm looking at

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Speaker 2: at oak Tree having put these pieces together. I look

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Speaker 2: at the combined platform, the pieces being sort of catalog

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Speaker 2: breadth and depth, distribution infrastructure, and then the capital behind it.

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Speaker 2: And by the end of a couple of conversations in September,

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Speaker 2: I saw something that I legitimately hadn't felt since the

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Speaker 2: early days of Pluto, which is that this was an

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Speaker 2: opportunity to build something transformative. The fact that our starting

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Speaker 2: point is the largest independent catalog of film and television

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Speaker 2: in the industry. The creation of Radial with these acquisitions

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Speaker 2: culminating in the merger with film Rise, was just the

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Speaker 2: starting point. So the integrated capital element of the business.

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Speaker 2: It wasn't just the capital to assemble the platform. Our

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Speaker 2: plan is to aggressively deploy new capital to grow the

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Speaker 2: catalog and grow the business again based on a thesis

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Speaker 2: that the independent content space is fragmented and undervalued. There's

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Speaker 2: hundreds of libraries sitting in disconnected companies, undermonetized and distributed,

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Speaker 2: and we think we're in a position to unlock their value.

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Speaker 2: And actually the acquisition of New Dominion Pictures is a

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Speaker 2: perfect illustration of how.

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Speaker 1: That model works, right that's a deal you unveiled earlier

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Speaker 1: this week.

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Speaker 2: We've been working on it a while. It's a business also,

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Speaker 2: a business that I know very well from the Pluto days.

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Speaker 2: I'll just say that when I learned that New Dominion

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Speaker 2: was in the pipeline late last year, I was thrilled

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Speaker 2: and pushed as quickly as we could. The New Dominion

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Speaker 2: Pictures is one of the largest independent factual production catalogs

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Speaker 2: in the industry. There's about eight hundred hours in the catalog,

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Speaker 2: but there's three genuine franchises, New Detectives, FBI Files and

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Speaker 2: a Haunting. So by franchises, I mean shows that are

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Speaker 2: known shows that have scaled on television previously but now

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Speaker 2: on streaming and free streaming, and that actually have huge audiences,

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Speaker 2: you know, and significant scale and streaming. So Radio already

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Speaker 2: today distributes the New Detectives and FBI Files, two of

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Speaker 2: those three franchises that I mentioned. So by operating the

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Speaker 2: those titles in the in the ecosystem, we already have

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Speaker 2: really like real performance data. We know how the content

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Speaker 2: performs and how drives data dollars hours. As a result,

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Speaker 2: this was less of a bet than a sort of

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Speaker 2: conviction buy based on proprietary data. It's a flywheel. So

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Speaker 2: we invest in content based on proprietary data and insights.

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Speaker 2: We're in a position to see the performance across the ecosystem,

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Speaker 2: so we know what works, what platforms need, what might

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Speaker 2: be undervalue, and then that gives us conviction that other

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Speaker 2: buyers don't have. We distribute the content through this integrated

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Speaker 2: distribution engine that we already have on day one, multiple platforms,

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Speaker 2: multiple territories, increasingly globally. Then we monetize it and that

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Speaker 2: cash flows back into the business to fund the next investment.

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Speaker 2: Greater volume, greater speed, and then better data. Every deal

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Speaker 2: creates intelligence and that feeds back into the decision making

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Speaker 2: for the next deal, and so that makes us a

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Speaker 2: compounding advantage, which is why I call it a flywheel.

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Speaker 1: Let me ask you sort of the really thirty thousand

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Speaker 1: foot view question. Oak Tree clearly is giving you capital

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Speaker 1: to work with the largest companies Disney, Warner Brothers, Paramount, NBCUniversal,

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Speaker 1: The largest companies are struggling with their streaming strategies.

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Speaker 2: Here.

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Speaker 1: What is oak Tree seeing that is giving them so

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Speaker 1: much confidence to put money into this and to give

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Speaker 1: you that capital upfront.

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Speaker 2: The Tree is a long term investor in this business

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Speaker 2: to have a long term time horizon, which is critical,

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Speaker 2: which allows us to inform the investment case not just

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Speaker 2: steady state where it stands today, but as we grow

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Speaker 2: the business over time. Again, the platform, as big as

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Speaker 2: it is, is just the starting point. The reason why

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Speaker 2: oak Tree has such confidence in the investment is that

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Speaker 2: we continue to see the same sort of dislocations in

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Speaker 2: the market in terms of content independent content, content not

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Speaker 2: owned by a conglomerate or a studio or in cases

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Speaker 2: where they are being underutilized and under monetized, and that

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Speaker 2: it's undervalued, and that you know, we increasingly as we scale,

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Speaker 2: will be sort of the highest value use of this content.

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Speaker 2: So we're evaluating an acquisition pipeline that's based on their

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Speaker 2: criteria and rigor and acumen, as well as our content

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Speaker 2: expertise and distribution data. Oak Tree isn't underwriting the value

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Speaker 2: of a catalog for an investment in a vacuum. They're

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Speaker 2: underwriting the value of the catalog in our hands right there.

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Speaker 1: And your primary monetization vehicle is the fast channels or

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Speaker 1: do you do a lot of licensing in different territories.

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Speaker 2: The diversity of the distribution model is in my mind,

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Speaker 2: one of the huge strengths. So there's a concentration in

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Speaker 2: AD supported streaming engagement driven streaming. Now that's not to

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Speaker 2: say in our portfolio of fast channels, that's just one piece.

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Speaker 2: So licensing in content for someone like Pluto to maybe

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Speaker 2: publishing their own fast channels, for someone like two B

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Speaker 2: to program on an avon basis, but because of the

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Speaker 2: volume of the catalog and the type of content that

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Speaker 2: it is, where it drives just incredible engagement. Free ad

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Speaker 2: supported streaming is sort of a lynchpin of the distribution portfolio,

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Speaker 2: but it's just one piece, So we're licensing it regardless

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Speaker 2: of business model, to really every streamer. We're still licensing

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Speaker 2: into network and broadcast television. We have a theatrical release

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Speaker 2: business and a physical business, digital transactional business, and so

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Speaker 2: all of these pieces roll up into sort of the

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Speaker 2: total value of a piece of content or a catalog

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Speaker 2: in our hands. So we're leveraging the market trend in

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Speaker 2: streaming and in free streaming, but we're able to diversify

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Speaker 2: the business model across really all different categories.

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Speaker 1: Is it largely domestic or do you have do you

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Speaker 1: also have international outlets as well.

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Speaker 2: We do operate internationally. The scale of the business is considerable.

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Speaker 2: We distribute in fifty markets give or take right now,

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Speaker 2: but the relative size of that business for US is small,

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Speaker 2: maybe even very small, which along with every other sort

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Speaker 2: of shortcoming of the business that oak Tree and I

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Speaker 2: talked about in the months between you know, September and January. First,

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Speaker 2: we are just scratching the surface of the opportunity outside

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Speaker 2: of the US, and that's reflected in the relatively very

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Speaker 2: small percentage of our revenue and EBITDA generated outside the US.

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Speaker 2: You know, days into the job, we announced the appointment

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Speaker 2: of a new head of international who previously worked at Fremantle,

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Speaker 2: and so that this is not a twenty seven plan,

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Speaker 2: It is a front half of twenty six plan for

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Speaker 2: us to put some real big levers in place to

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Speaker 2: grow internationally. So another great example is the Golden Princess

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Speaker 2: Library out of Hong Kong. So this is one of

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Speaker 2: the largest catalogs of Hong Kong films. But the crown

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Speaker 2: jewel is the John Wu Library. And so we brought

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Speaker 2: John Wu back to the market in the US for

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Speaker 2: the first time in decades. We actually did four k restoration.

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Speaker 2: We did a theatrical limited theatrical release that's still underway,

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Speaker 2: and then began distributing this. So there is a Hong

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Speaker 2: Kong Fight Club fast Channel that we're able to program

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Speaker 2: with the Golden Princess Library.

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Speaker 1: Let me ask you, as you are building this and

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Speaker 1: organizing the company now under a different structure, how are

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Speaker 1: you thinking about AI at a time when you're doing

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Speaker 1: a lot of restructuring, you have a lot of opportunity.

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Speaker 1: I'm curious how you're thinking about this.

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Speaker 2: Yeah, we are thinking about it. I've sort of broken

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Speaker 2: the thinking into two categories. One is how does AI

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Speaker 2: enhance the business, and then the other is how does

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Speaker 2: AI potentially disrupt the business. So on the first you know,

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Speaker 2: AI isn't a standalone initiative that we sort of charge

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Speaker 2: somebody with a radial where where in early days, but

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Speaker 2: we're going to embed it in everything we do out

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Speaker 2: provide some illustrations by what I mean by that, so

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Speaker 2: function by function, like imagine content valuation. It's just so

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Speaker 2: much of the story we've been talking about so far

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Speaker 2: is about the proprietary insights that we're able to glean

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Speaker 2: from our proprietary catalog and distribution, Well, imagine what happens

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Speaker 2: when AI helps us analyze the engagement patterns across tens

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Speaker 2: of thousands of titles, and much as that has been

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Speaker 2: a historical strength of the businesses, we're scratching the surface

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Speaker 2: and so that's where it will only enhance our ability

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Speaker 2: to make high conviction investment decisions. International expansion, which is

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Speaker 2: localization of content, has been just a cost and time

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Speaker 2: barrier that every business that wants to grow outside the

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Speaker 2: US has had to take into account. And AI driven

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Speaker 2: localization is a real thing. It's moving so so fast,

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Speaker 2: and so we'll be able to lower that bar in

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Speaker 2: terms of investment and time horizon to globalize our business

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Speaker 2: with AI much faster than we ever could on our own.

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Speaker 2: And then on the disruption side, here we're talking about

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Speaker 2: primarily synthetic content. Things are going to get weird. They

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Speaker 2: already are, but we need to focus on the slope

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Speaker 2: of the curve which is sharp up into the right

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Speaker 2: with no prospects for decelerating, which just means we kind

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Speaker 2: of have to operate from a not too distant future

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Speaker 2: where AI is capable of producing content that at least

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Speaker 2: in its appearance, can be regarded as a direct substitute

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Speaker 2: for what we call premium content. And so that's what

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Speaker 2: I mean by things getting weird is their value in

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Speaker 2: fake true crime, right, fake true crime, So true crime

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Speaker 2: being one of our strongest categories. Those stories are compelling

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Speaker 2: because someone actually died and someone else actually.

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Speaker 1: Killed them, because the stakes were as real as they get, right, And.

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Speaker 2: So yeah, one hundred percent. And I think that that

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Speaker 2: is a great illustration of the human connection with an

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Speaker 2: authentic story that even if pixel by pixel, fame by frame,

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Speaker 2: it can be replicated by AI and the form of

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Speaker 2: synthetic content what makes those stories compelling won't actually translate

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Speaker 2: to that synthetic form. And then if through that lens,

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Speaker 2: if you look at our content strengths, my point of

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Speaker 2: view is that the radio catalog is extraordinarily well positioned

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Speaker 2: to actually not just survive the growth and synthetic content,

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Speaker 2: but maybe even grow in value. Authenticity is an asset

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Speaker 2: that appreciates over time.

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Speaker 1: Jeff, my last question for you, just when you think

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Speaker 1: every content library has been bought up by some combination

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Speaker 1: of six companies and tech firms that are coming in,

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Speaker 1: but it sounds like you are finding pockets of content.

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Speaker 1: I'm thinking about the early days of cable original unscripted content,

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Speaker 1: when people didn't think it was going to be worth

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Speaker 1: a nickel as soon as it aired. I'm guessing there's

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Speaker 1: a lot of small and medium sized firms that might

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Speaker 1: have had some traction with a couple of shows at

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Speaker 1: some time, and we're able to amass those rights.

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Speaker 2: Yes, we think that there is plenty of unrealized opportunity

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Speaker 2: in unscripted factual reality. Also in classic TV. I think

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Speaker 2: it's fair to say that Fast uncovered value there that

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Speaker 2: a lot of people didn't understand was there. The way

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Speaker 2: to look at it is that some players might have money,

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Speaker 2: some might have distribution, some might have an existing catalog

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Speaker 2: in the independent space. We're want with all three of those,

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Speaker 2: and so for that reason, we're super optimistic and we

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Speaker 2: expect to be very active in acquisitions this year and

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Speaker 2: going forward.

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Speaker 1: There's a lot of people out there that will be

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Speaker 1: very interested to hear that. I have no doubt that

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Speaker 1: your phone is ringing quite a bit, Jeff. Anything else

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Speaker 1: you want to leave us with about your vision for

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Speaker 1: the company or ambition for the rest of this year,

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Speaker 1: or anything else we should be looking out for from radio.

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Speaker 2: When I look at radio all that has happened and

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Speaker 2: taking place, all the investment and hard work that was

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Speaker 2: required to create radio as a platform and a foundation,

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Speaker 2: and to look at it and realize that despite the scale,

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Speaker 2: once again, we're just getting started.

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Speaker 1: I love your optimism at this moment of intense consolidation

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Speaker 1: and everybody squeezing everything. Green shoots from well capitalized independence

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Speaker 1: are really important signs. Jeff, thank you so much for

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Speaker 1: taking the time to walk us through what's going on

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Speaker 1: at radio. Thank you, Cynthia, Thanks for listening. Be sure

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Speaker 1: to leave us a review at the podcast platform of

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Speaker 1: your choice. We love to hear from listeners. Please go

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Speaker 1: to Variety dot com and sign up for the free

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Speaker 1: weekly Strictly Business newsletter, and don't forget to tune in

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Speaker 1: next week for another episode of Strictly Business.