Speaker 1: Welcome to Strictly Business, Variety's weekly podcast featuring conversations with
Speaker 1: industry leaders about the business of media and entertainment. I'm
Speaker 1: Cynthia Lyttleton, co editor in chief of Variety. Today. My
Speaker 1: guest is Jeff Schultz. He's the newly appointed CEO of
Speaker 1: Radial Entertainment. Radio was formed last year when private equity
Speaker 1: firm oak Tree Capital Management brought together Film Rise with
Speaker 1: Shout Studios. Those are two indie content ventures that focus
Speaker 1: on distinct fan niches. Schultz is a Paramount and Pluto
Speaker 1: TV veteran who has plans to rev up radio on
Speaker 1: all fronts, from fast channel streaming to original production to
Speaker 1: international licensing. Right now, he's out in the marketplace shopping
Speaker 1: for libraries to buy. Earlier this week, Radio announced the
Speaker 1: acquisition of New Dominion Pictures, which is the home of
Speaker 1: evergreen unscripted series including The New Detectives, The FBI Files,
Speaker 1: and a Haunting. In our conversation, Schultz maps out his
Speaker 1: growth plan for Radio and why he's so bullish on
Speaker 1: the company's potential to grow in this fast changing marketplace.
Speaker 1: Jeff Schultz, CEO of Radio Entertainment, thank you so much
Speaker 1: for joining me.
Speaker 2: Hi, Cynthia.
Speaker 1: I got to know you during your tenure at Paramount,
Speaker 1: where you were very senior in building their streaming businesses,
Speaker 1: both Paramount Plus and working on the Pluto TV side
Speaker 1: as well. What was it about Radial Entertainment? What was
Speaker 1: it about the company and its assets and its ambition
Speaker 1: that made you want to take the reins as CEO.
Speaker 2: Let me start by describing radio at a high level,
Speaker 2: and then I'll share how it came together, how I
Speaker 2: got involved. So I'll describe Radio in three parts. One.
Speaker 2: Radio is the largest independent catalog of film and television
Speaker 2: in the industry, So that's seventy thousand films in shows,
Speaker 2: classic TV, massive factual and reality catalogs, Deep film catalog
Speaker 2: and then major new films. And by independent, I mean
Speaker 2: we're not a studio, We're not a division of a conglomerate.
Speaker 2: We're truly an independent player. Two with integrated distribution, So
Speaker 2: we operate a diversified distribution portfolio, distribute through AVOD s,
Speaker 2: FOD broadcast, cable, transactional, even physical, theatrical international. We operate
Speaker 2: a portfolio of hundreds of fast channels and generate directly
Speaker 2: billions of streaming hours annually. And then the third part
Speaker 2: is integrated capital. Oak Tree is a two hundred billion
Speaker 2: dollar plus alternative asset manager and is our strategic partner
Speaker 2: in growing the business. So the way to think about
Speaker 2: Radial is the largest independent catalog of film and television
Speaker 2: in the industry, with integration distribution and integrated capital. So
Speaker 2: here's how it came together. In twenty twenty three, oak
Speaker 2: Tree acquired Shout Factory, which Garson Fuz and his team
Speaker 2: had built over a couple of decades into a super
Speaker 2: respected independent film and TV distributor, acquiring and distributing genre content,
Speaker 2: classic TV shows, horror, anime. I remember twenty fifteen we
Speaker 2: launched the Mystery Science Theater channel with a Shout at Pluto.
Speaker 2: We actually Radio Now own that as of January of
Speaker 2: this year. And then during the two years between the
Speaker 2: investment in Shout and the merger with film Rise, there
Speaker 2: were deals with Gravitas and Millennium, Open Road, Golden Princess,
Speaker 2: and so you can look at each of these as
Speaker 2: catalog or company acquisitions that were based on the same
Speaker 2: premise of content being fragmented and under valued and using
Speaker 2: Shout as the platform to pull it all together. And
Speaker 2: and so then in July of last summer, you have
Speaker 2: two businesses that are actually sort of roughly the same
Speaker 2: size in terms of scott Catalogs scale. This is Shout
Speaker 2: and all of its platform roll up, and then film Rise,
Speaker 2: which was super early in fast and free streaming, one
Speaker 2: of the first players to make fixed feed bets against
Speaker 2: sort of variable upside in free streaming. Are these are
Speaker 2: deals that, to be honest, like I would have loved
Speaker 2: to do myself at Pluto, but in the early stages
Speaker 2: we didn't have the access to capital. We were independent startup,
Speaker 2: and then as part of Icon and then Paramount, we
Speaker 2: were focused on our internal library, like you know, monetizing
Speaker 2: our proprietary library. So film Rise moved quickly to capture
Speaker 2: large catalog licenses and in some cases acquisitions. That was
Speaker 2: that was likely based on their data perform very very
Speaker 2: well in free streaming.
Speaker 1: When did you come into the equation for being the
Speaker 1: person to lead this the combined entity.
Speaker 2: I wasn't aware of what oak Tree was up to.
Speaker 2: I didn't understand the scale and ambition of their strategy
Speaker 2: until I read the shout in film Rise News, and
Speaker 2: then it was still a few months before oak Tree
Speaker 2: and I started talking about it, how I'm looking at
Speaker 2: at oak Tree having put these pieces together. I look
Speaker 2: at the combined platform, the pieces being sort of catalog
Speaker 2: breadth and depth, distribution infrastructure, and then the capital behind it.
Speaker 2: And by the end of a couple of conversations in September,
Speaker 2: I saw something that I legitimately hadn't felt since the
Speaker 2: early days of Pluto, which is that this was an
Speaker 2: opportunity to build something transformative. The fact that our starting
Speaker 2: point is the largest independent catalog of film and television
Speaker 2: in the industry. The creation of Radial with these acquisitions
Speaker 2: culminating in the merger with film Rise, was just the
Speaker 2: starting point. So the integrated capital element of the business.
Speaker 2: It wasn't just the capital to assemble the platform. Our
Speaker 2: plan is to aggressively deploy new capital to grow the
Speaker 2: catalog and grow the business again based on a thesis
Speaker 2: that the independent content space is fragmented and undervalued. There's
Speaker 2: hundreds of libraries sitting in disconnected companies, undermonetized and distributed,
Speaker 2: and we think we're in a position to unlock their value.
Speaker 2: And actually the acquisition of New Dominion Pictures is a
Speaker 2: perfect illustration of how.
Speaker 1: That model works, right that's a deal you unveiled earlier
Speaker 1: this week.
Speaker 2: We've been working on it a while. It's a business also,
Speaker 2: a business that I know very well from the Pluto days.
Speaker 2: I'll just say that when I learned that New Dominion
Speaker 2: was in the pipeline late last year, I was thrilled
Speaker 2: and pushed as quickly as we could. The New Dominion
Speaker 2: Pictures is one of the largest independent factual production catalogs
Speaker 2: in the industry. There's about eight hundred hours in the catalog,
Speaker 2: but there's three genuine franchises, New Detectives, FBI Files and
Speaker 2: a Haunting. So by franchises, I mean shows that are
Speaker 2: known shows that have scaled on television previously but now
Speaker 2: on streaming and free streaming, and that actually have huge audiences,
Speaker 2: you know, and significant scale and streaming. So Radio already
Speaker 2: today distributes the New Detectives and FBI Files, two of
Speaker 2: those three franchises that I mentioned. So by operating the
Speaker 2: those titles in the in the ecosystem, we already have
Speaker 2: really like real performance data. We know how the content
Speaker 2: performs and how drives data dollars hours. As a result,
Speaker 2: this was less of a bet than a sort of
Speaker 2: conviction buy based on proprietary data. It's a flywheel. So
Speaker 2: we invest in content based on proprietary data and insights.
Speaker 2: We're in a position to see the performance across the ecosystem,
Speaker 2: so we know what works, what platforms need, what might
Speaker 2: be undervalue, and then that gives us conviction that other
Speaker 2: buyers don't have. We distribute the content through this integrated
Speaker 2: distribution engine that we already have on day one, multiple platforms,
Speaker 2: multiple territories, increasingly globally. Then we monetize it and that
Speaker 2: cash flows back into the business to fund the next investment.
Speaker 2: Greater volume, greater speed, and then better data. Every deal
Speaker 2: creates intelligence and that feeds back into the decision making
Speaker 2: for the next deal, and so that makes us a
Speaker 2: compounding advantage, which is why I call it a flywheel.
Speaker 1: Let me ask you sort of the really thirty thousand
Speaker 1: foot view question. Oak Tree clearly is giving you capital
Speaker 1: to work with the largest companies Disney, Warner Brothers, Paramount, NBCUniversal,
Speaker 1: The largest companies are struggling with their streaming strategies.
Speaker 2: Here.
Speaker 1: What is oak Tree seeing that is giving them so
Speaker 1: much confidence to put money into this and to give
Speaker 1: you that capital upfront.
Speaker 2: The Tree is a long term investor in this business
Speaker 2: to have a long term time horizon, which is critical,
Speaker 2: which allows us to inform the investment case not just
Speaker 2: steady state where it stands today, but as we grow
Speaker 2: the business over time. Again, the platform, as big as
Speaker 2: it is, is just the starting point. The reason why
Speaker 2: oak Tree has such confidence in the investment is that
Speaker 2: we continue to see the same sort of dislocations in
Speaker 2: the market in terms of content independent content, content not
Speaker 2: owned by a conglomerate or a studio or in cases
Speaker 2: where they are being underutilized and under monetized, and that
Speaker 2: it's undervalued, and that you know, we increasingly as we scale,
Speaker 2: will be sort of the highest value use of this content.
Speaker 2: So we're evaluating an acquisition pipeline that's based on their
Speaker 2: criteria and rigor and acumen, as well as our content
Speaker 2: expertise and distribution data. Oak Tree isn't underwriting the value
Speaker 2: of a catalog for an investment in a vacuum. They're
Speaker 2: underwriting the value of the catalog in our hands right there.
Speaker 1: And your primary monetization vehicle is the fast channels or
Speaker 1: do you do a lot of licensing in different territories.
Speaker 2: The diversity of the distribution model is in my mind,
Speaker 2: one of the huge strengths. So there's a concentration in
Speaker 2: AD supported streaming engagement driven streaming. Now that's not to
Speaker 2: say in our portfolio of fast channels, that's just one piece.
Speaker 2: So licensing in content for someone like Pluto to maybe
Speaker 2: publishing their own fast channels, for someone like two B
Speaker 2: to program on an avon basis, but because of the
Speaker 2: volume of the catalog and the type of content that
Speaker 2: it is, where it drives just incredible engagement. Free ad
Speaker 2: supported streaming is sort of a lynchpin of the distribution portfolio,
Speaker 2: but it's just one piece, So we're licensing it regardless
Speaker 2: of business model, to really every streamer. We're still licensing
Speaker 2: into network and broadcast television. We have a theatrical release
Speaker 2: business and a physical business, digital transactional business, and so
Speaker 2: all of these pieces roll up into sort of the
Speaker 2: total value of a piece of content or a catalog
Speaker 2: in our hands. So we're leveraging the market trend in
Speaker 2: streaming and in free streaming, but we're able to diversify
Speaker 2: the business model across really all different categories.
Speaker 1: Is it largely domestic or do you have do you
Speaker 1: also have international outlets as well.
Speaker 2: We do operate internationally. The scale of the business is considerable.
Speaker 2: We distribute in fifty markets give or take right now,
Speaker 2: but the relative size of that business for US is small,
Speaker 2: maybe even very small, which along with every other sort
Speaker 2: of shortcoming of the business that oak Tree and I
Speaker 2: talked about in the months between you know, September and January. First,
Speaker 2: we are just scratching the surface of the opportunity outside
Speaker 2: of the US, and that's reflected in the relatively very
Speaker 2: small percentage of our revenue and EBITDA generated outside the US.
Speaker 2: You know, days into the job, we announced the appointment
Speaker 2: of a new head of international who previously worked at Fremantle,
Speaker 2: and so that this is not a twenty seven plan,
Speaker 2: It is a front half of twenty six plan for
Speaker 2: us to put some real big levers in place to
Speaker 2: grow internationally. So another great example is the Golden Princess
Speaker 2: Library out of Hong Kong. So this is one of
Speaker 2: the largest catalogs of Hong Kong films. But the crown
Speaker 2: jewel is the John Wu Library. And so we brought
Speaker 2: John Wu back to the market in the US for
Speaker 2: the first time in decades. We actually did four k restoration.
Speaker 2: We did a theatrical limited theatrical release that's still underway,
Speaker 2: and then began distributing this. So there is a Hong
Speaker 2: Kong Fight Club fast Channel that we're able to program
Speaker 2: with the Golden Princess Library.
Speaker 1: Let me ask you, as you are building this and
Speaker 1: organizing the company now under a different structure, how are
Speaker 1: you thinking about AI at a time when you're doing
Speaker 1: a lot of restructuring, you have a lot of opportunity.
Speaker 1: I'm curious how you're thinking about this.
Speaker 2: Yeah, we are thinking about it. I've sort of broken
Speaker 2: the thinking into two categories. One is how does AI
Speaker 2: enhance the business, and then the other is how does
Speaker 2: AI potentially disrupt the business. So on the first you know,
Speaker 2: AI isn't a standalone initiative that we sort of charge
Speaker 2: somebody with a radial where where in early days, but
Speaker 2: we're going to embed it in everything we do out
Speaker 2: provide some illustrations by what I mean by that, so
Speaker 2: function by function, like imagine content valuation. It's just so
Speaker 2: much of the story we've been talking about so far
Speaker 2: is about the proprietary insights that we're able to glean
Speaker 2: from our proprietary catalog and distribution, Well, imagine what happens
Speaker 2: when AI helps us analyze the engagement patterns across tens
Speaker 2: of thousands of titles, and much as that has been
Speaker 2: a historical strength of the businesses, we're scratching the surface
Speaker 2: and so that's where it will only enhance our ability
Speaker 2: to make high conviction investment decisions. International expansion, which is
Speaker 2: localization of content, has been just a cost and time
Speaker 2: barrier that every business that wants to grow outside the
Speaker 2: US has had to take into account. And AI driven
Speaker 2: localization is a real thing. It's moving so so fast,
Speaker 2: and so we'll be able to lower that bar in
Speaker 2: terms of investment and time horizon to globalize our business
Speaker 2: with AI much faster than we ever could on our own.
Speaker 2: And then on the disruption side, here we're talking about
Speaker 2: primarily synthetic content. Things are going to get weird. They
Speaker 2: already are, but we need to focus on the slope
Speaker 2: of the curve which is sharp up into the right
Speaker 2: with no prospects for decelerating, which just means we kind
Speaker 2: of have to operate from a not too distant future
Speaker 2: where AI is capable of producing content that at least
Speaker 2: in its appearance, can be regarded as a direct substitute
Speaker 2: for what we call premium content. And so that's what
Speaker 2: I mean by things getting weird is their value in
Speaker 2: fake true crime, right, fake true crime, So true crime
Speaker 2: being one of our strongest categories. Those stories are compelling
Speaker 2: because someone actually died and someone else actually.
Speaker 1: Killed them, because the stakes were as real as they get, right, And.
Speaker 2: So yeah, one hundred percent. And I think that that
Speaker 2: is a great illustration of the human connection with an
Speaker 2: authentic story that even if pixel by pixel, fame by frame,
Speaker 2: it can be replicated by AI and the form of
Speaker 2: synthetic content what makes those stories compelling won't actually translate
Speaker 2: to that synthetic form. And then if through that lens,
Speaker 2: if you look at our content strengths, my point of
Speaker 2: view is that the radio catalog is extraordinarily well positioned
Speaker 2: to actually not just survive the growth and synthetic content,
Speaker 2: but maybe even grow in value. Authenticity is an asset
Speaker 2: that appreciates over time.
Speaker 1: Jeff, my last question for you, just when you think
Speaker 1: every content library has been bought up by some combination
Speaker 1: of six companies and tech firms that are coming in,
Speaker 1: but it sounds like you are finding pockets of content.
Speaker 1: I'm thinking about the early days of cable original unscripted content,
Speaker 1: when people didn't think it was going to be worth
Speaker 1: a nickel as soon as it aired. I'm guessing there's
Speaker 1: a lot of small and medium sized firms that might
Speaker 1: have had some traction with a couple of shows at
Speaker 1: some time, and we're able to amass those rights.
Speaker 2: Yes, we think that there is plenty of unrealized opportunity
Speaker 2: in unscripted factual reality. Also in classic TV. I think
Speaker 2: it's fair to say that Fast uncovered value there that
Speaker 2: a lot of people didn't understand was there. The way
Speaker 2: to look at it is that some players might have money,
Speaker 2: some might have distribution, some might have an existing catalog
Speaker 2: in the independent space. We're want with all three of those,
Speaker 2: and so for that reason, we're super optimistic and we
Speaker 2: expect to be very active in acquisitions this year and
Speaker 2: going forward.
Speaker 1: There's a lot of people out there that will be
Speaker 1: very interested to hear that. I have no doubt that
Speaker 1: your phone is ringing quite a bit, Jeff. Anything else
Speaker 1: you want to leave us with about your vision for
Speaker 1: the company or ambition for the rest of this year,
Speaker 1: or anything else we should be looking out for from radio.
Speaker 2: When I look at radio all that has happened and
Speaker 2: taking place, all the investment and hard work that was
Speaker 2: required to create radio as a platform and a foundation,
Speaker 2: and to look at it and realize that despite the scale,
Speaker 2: once again, we're just getting started.
Speaker 1: I love your optimism at this moment of intense consolidation
Speaker 1: and everybody squeezing everything. Green shoots from well capitalized independence
Speaker 1: are really important signs. Jeff, thank you so much for
Speaker 1: taking the time to walk us through what's going on
Speaker 1: at radio. Thank you, Cynthia, Thanks for listening. Be sure
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Speaker 1: next week for another episode of Strictly Business.