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Speaker 1: Welcome to Daily Variety, your daily dose of news and

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Speaker 1: analysis for entertainment industry insiders. It's Wednesday, February fourth, twenty

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Speaker 1: twenty six. I'm your host, Cynthia Littleton. I am co

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Speaker 1: editor in chief of Variety alongside Ramin Setuda. I'm in

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Speaker 1: LA He's in New York, and Righty has reporters around

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Speaker 1: the world covering the business of entertainment. In today's episode,

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Speaker 1: we'll depart from our usual format to unpack Tuesday's news storm.

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Speaker 1: February third started at the crack of dawn on the

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Speaker 1: West Coast with news of regime change at the Mousehouse.

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Speaker 1: It ended with Netflix co CEO Ted Sorrandos and Warner

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Speaker 1: Brothers Discoveries Bruce Campbell being dragged into political theater in Washington,

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Speaker 1: d C. At its most pitched. But before we get

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Speaker 1: to highlights and low lights of the Senate hearing, let's

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Speaker 1: talk about what happened at Disney just about twenty four

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Speaker 1: hours ago. On the surface, the story looks simple. The

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Speaker 1: Park sky one Josh Tomorrow, the head of Disney's powerful

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Speaker 1: Experiences division, will succeed by Biger as CEO as of

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Speaker 1: March eighteenth. That's the date of Disney's annual shareholders meeting,

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Speaker 1: which will be held virtually at ten am Pacific time.

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Speaker 1: Dana Walden, the mouse House's head of TV and Streaming,

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Speaker 1: was the other final contender for the CEO job. It

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Speaker 1: became clear over the past six weeks or so that

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Speaker 1: the board was leaning toward tomorrow. I remember talking to

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Speaker 1: people at CS in the first week of January about

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Speaker 1: how this seemed to be the way things were going.

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Speaker 1: Walden had a hand in crafting the scope and the

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Speaker 1: parameters of the job that was created for her President

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Speaker 1: and Chief Creative officer. It's a big new gig with

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Speaker 1: the level of authority that Disney has not had since

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Speaker 1: the days of Jeffrey Katzenburg. Disney's move was made by

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Speaker 1: a unanimous vote of all ten of its board members,

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Speaker 1: and those include Bob Iiger, who has been Walden's biggest

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Speaker 1: champion ten years ago now. Eiger became very impressed by

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Speaker 1: the TV studio and network operation that Walden ran for

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Speaker 1: Rupert Murdock at Fox. Disney's twenty first century Fox acquisition

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Speaker 1: was done in part because Disney really needed a boost

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Speaker 1: for its TV activity. Fox and twentieth had commercial hits,

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Speaker 1: and they were winning Emmys. That was what Eiger wanted.

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Speaker 1: Walden and her team are among the very few leaders

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Speaker 1: from the Fox side who are still at Disney seven

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Speaker 1: years after the twentieth Century Fox acquisition, so it made

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Speaker 1: sense that Hollywood saw her as Eiger's heir apparent. But

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Speaker 1: that's not what happened. The board went with the parks guy.

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Speaker 1: Wait didn't they try that six years ago with Bob

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Speaker 1: Chapek to disastrous results. Yes, but Bob Chaypek didn't have

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Speaker 1: an empowered Dana Walden in place to help guide him

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Speaker 1: through the byzantine business of storytelling and deal with the

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Speaker 1: personalities that drive it. Nobody knows that world better than Dana,

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Speaker 1: who has earned her stripes and her success the hard way.

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Speaker 1: Tomorrow seems to be universally well liked at Disney and

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Speaker 1: highly regarded as an operator. People use that word over

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Speaker 1: and over. Josh is a great operator. This isn't a

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Speaker 1: big company, it's a Leviathan. Walden is now in place

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Speaker 1: to be the ballast for the part of the company

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Speaker 1: that is absolutely at the core of everything Disney does.

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Speaker 1: You don't sell lunchboxes and T shirt without a hit movie,

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Speaker 1: a TV show, a video game a digital short to

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Speaker 1: drive demand. You don't build cars land in a theme

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Speaker 1: park without having a few cars movies to rev up

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Speaker 1: the demand. You don't have adults all over the world

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Speaker 1: recognize the Disney brand name as quality and premium without

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Speaker 1: the stories and characters to back it up. Forgive the

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Speaker 1: marketing speak, but Disney is a flywheel. The company is

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Speaker 1: at its best when it has a big hit property

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Speaker 1: that can be expressed across all of its many avenues

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Speaker 1: and many levers for reaching consumers. Yes, Disney today has

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Speaker 1: a smaller market cap than Nvidia or Meta or Google,

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Speaker 1: but nobody goes to bed hugging an Nvidia microchip plus toy.

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Speaker 1: If Tomorrow and Walden can make this partnership work, Disney

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Speaker 1: will be well positioned for its next generation. Tuesday mark

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Speaker 1: the end of the line for one process at Disney.

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Speaker 1: Now the really hard work begins, and now it's time

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Speaker 1: for conversations with industry leaders about the business of media

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Speaker 1: and entertainment. I watched the entire two hour Netflix Warner

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Speaker 1: Brothers Discovery Senate hearing last night. Thank You c spam

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Speaker 1: Ted Sarandos was pretty unflappable in the face of some

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Speaker 1: crazy questioning some of it was just uninformed about how

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Speaker 1: the media business works, and some of it was off

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Speaker 1: the charts alarming. In the Trump era, many in the

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Speaker 1: GOP have been emboldened to say the quiet parts out loud.

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Speaker 1: Sirandos was grilled on the high volume of political donations

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Speaker 1: made to left leaning candidates and causes by Netflix employees.

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Speaker 1: He was grilled about the company's past statements about DEI

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Speaker 1: equality and civil rights. Sirandos and Warner Brothers Discoveries Bruce

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Speaker 1: Campbell were pressed as to why Netflix and HBO just

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Speaker 1: don't have any programming designed to appeal to conservatives. Hearing

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Speaker 1: that in the voice of Eric Schmidt, the junior Senator

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Speaker 1: from Missouri, and Ted Cruz, the bombastic Texan, is chilling.

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Speaker 1: This isn't okay in a country protected by the First Amendment.

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Speaker 1: First up, we'll hear Ted Sarandos articulate to the Senate's

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Speaker 1: Judiciary Subcommittee on Antitrust Issues on why he doesn't see

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Speaker 1: Netflix as having anything like a monopoly on the streaming marketplace.

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Speaker 1: Just look over at YouTube, he says.

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Speaker 2: Point you to the comments of the of Neil the

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Speaker 2: CEO of YouTube, who just drow a point to the

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Speaker 2: fact that YouTube creators are buying Hollywood studios and producing

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Speaker 2: content at very competitive levels today, and he himself calls

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Speaker 2: it TV and I would say, you know, but people

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Speaker 2: also miss is about fifty percent of the engagement on

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Speaker 2: YouTube today happens in the living room on a TV,

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Speaker 2: not on I think people largely think of YouTube as

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Speaker 2: a mobile device service, and it is fifty percent today

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Speaker 2: and growing very fast on television and but Netflix, though

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Speaker 2: very small percentage of our content is ever watched on

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Speaker 2: a mobile device, it's primarily on television and on that.

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Speaker 3: Screen, Sir, it is a zero sum game.

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Speaker 2: So if you're watching YouTube, you're not watching HBO Max,

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Speaker 2: You're not watching Netflix, You're not watching CBS. So that

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Speaker 2: is why when we talk about competing for the moment

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Speaker 2: of choice, competing for the viewer's attention, competing for their

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Speaker 2: for their for their the ad dollars, competing for the

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Speaker 2: subscription dollars, it is all the same pool of content

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Speaker 2: and all the same pool of.

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Speaker 1: View Sirrandos also outlined more than once his commitment to

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Speaker 1: maintaining a forty five day theatrical window for Warner Brothers

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Speaker 1: Pictures releases in old fashioned theaters if the deal is completed.

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Speaker 1: He very patiently explained that they are not buying Warner

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Speaker 1: Brothers just to dismantle it. In this questioning California Senator

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Speaker 1: Adam Schiff gets a plugin for his tax incentive legislation.

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Speaker 1: That legislation probably has zero chance of going anywhere in

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Speaker 1: this Congress, but Shift doesn't miss the moment.

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Speaker 2: We're going to operate Warner Brothers Studio largely as it

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Speaker 2: is today, including releasing the movies in the theater with

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Speaker 2: the traditional forty five day window.

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Speaker 4: Now.

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Speaker 2: I know I've earned some skepticism over there over the

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Speaker 2: years on this because I was talking a lot about

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Speaker 2: Netflix business model, which was different from that. We didn't

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Speaker 2: own the theatrical distributor before. We do now and a

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Speaker 2: great one. They did four billion dollars in box office

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Speaker 2: last year. So we want that's all baked into the

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Speaker 2: price of this company that we're looking at, and to

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Speaker 2: keep that going and invest further in that. Most media

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Speaker 2: mergers have fared poorly. I agree, mostly because what two reasons. Either,

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Speaker 2: you have the nozarc problem. You bought a company that

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Speaker 2: has the exact same sets of assets that you do,

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Speaker 2: so that's all you do is cut everything in half

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Speaker 2: and look for the profit squeeze it out. That's not

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Speaker 2: what we're doing. We don't have any of these assets

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Speaker 2: that we're buying from Warner Brothers. The other problem usually

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Speaker 2: is a company that doesn't have particular expertise in that

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Speaker 2: business and they wind up just sucking cash out instead

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Speaker 2: of putting cash in. We have a particular expertise in

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Speaker 2: this business, and we have a strong, healthy balance sheet

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Speaker 2: to keep investing in this business.

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Speaker 5: Now.

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Speaker 2: It is different from previous media mergers. I know that,

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Speaker 2: but I will tell you I've been in Netflix for

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Speaker 2: over twenty five years. We have done every year. We've

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Speaker 2: been successful by doing things differently.

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Speaker 6: Well, this gives me a perfect final opportunity to do

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Speaker 6: a little self promotion, Miss Chairman. I have a bill

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Speaker 6: that would provide a film tax credit analogous to what's

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Speaker 6: been driving film production overseas that's offered other countries, and

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Speaker 6: would welcome anyone who'd.

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Speaker 4: Like to work together.

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Speaker 3: They supports you on that, Senator, thank you very much.

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Speaker 1: Now we get into a truly disturbing exchange with Senator

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Speaker 1: Eric Schmidt of Missouri. Schmidt shocked Official Washington in September

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Speaker 1: with his remarks in a speech entitled what is an

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Speaker 1: American that he made at the National Conservatism Conference. You

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Speaker 1: could look it up here. He is purely trying to

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Speaker 1: score points in one quadrant of the court of public opinion.

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Speaker 4: Do you think Netflix is a politically biased company? No? Sorry,

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Speaker 4: did not? Okay? Would it surprise you if I told

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Speaker 4: you that what percentage of donations from Netflix employees and

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Speaker 4: other folks affiliate with Netflix? Good at Republicans versus Democrats?

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Speaker 2: Do you think I saw a number of published a

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Speaker 2: while ago. It's very high.

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Speaker 4: Democrat like ninety nine percent could be Yeah, yeah, that

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Speaker 4: seems pretty high. Do you think that indicates any kind

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Speaker 4: of bias by the company. Netflix doesn't have a political

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Speaker 4: giving arm.

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Speaker 2: It does not have We don't have an active We

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Speaker 2: don't influence our employees to do anything, and our employees

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Speaker 2: can support issues and candidates that there.

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Speaker 4: Will, okay. Netflix also said on June tenth, twenty twenty,

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Speaker 4: that to implement the BLM, the Black Lives matterg and

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Speaker 4: the Netflix Understood quote that our commitment to true systemic

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Speaker 4: change will take time. Do you still think that takes time?

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Speaker 4: Where you still actively engaged in this effort?

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Speaker 2: Again, so, we're not engaged in political efforts like that.

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Speaker 4: Okay, any longer you're not. You were, but you're not

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Speaker 4: now again.

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Speaker 2: I'm I can't think of a period of time. Okay,

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Speaker 2: I think of the time you're talking about. Was it

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Speaker 2: quite all of the time for many come.

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Speaker 4: I think a lot of people said things they regret then.

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Speaker 4: I'm just trying to figure out if they actually regret

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Speaker 4: it or not. I don't. I'm not gonna get into

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Speaker 4: your quotes on DEI, but it seems that both you

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Speaker 4: and Netflix both have made a habit of promoting DEI

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Speaker 4: and woke this. I'll just give a few examples. Netflix

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Speaker 4: content is synonymous for the modern phenomenon of race swapping,

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Speaker 4: both historical and real and fictional characters. Just a few examples,

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Speaker 4: Netflix made black Viking, Netflix change Cleopatra from Macedonian to black,

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Speaker 4: Achilles change from Greek to black. Netflix. It continues to

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Speaker 4: push sexual and gender theory on kids, and maybe this

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Speaker 4: is what was being referred to earlier. Fort of G

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Speaker 4: rated kid approved series contain LGBTQI plus content. You are

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Speaker 4: the co CEO, You were the chief content officer until recently.

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Speaker 4: Yes or no? Does Netflix stand by its content content

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Speaker 4: production decisions.

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Speaker 2: Tender Schmidt. We have a great deal of programming on

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Speaker 2: Netflix for all left, right and center. We have state

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Speaker 2: of the art tools for parents to manage whether their

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Speaker 2: kids see on Netflix.

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Speaker 4: You could black anything.

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Speaker 2: And the point, the larger points is that of all

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Speaker 2: the American values that we all share, and I understand,

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Speaker 2: parent it is hard.

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Speaker 3: I understand, it's a difficult world.

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Speaker 2: That we all navigate. The one we value a lot

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Speaker 2: is the First Amendment. A lot of that is freedom

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Speaker 2: of speech, and in I get it. What I want

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Speaker 2: to do is give creators a place to tell their

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Speaker 2: story and parents a place to control.

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Speaker 4: I have no problem with a wide variety of content.

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Speaker 4: That's not the issue. This is America. But I guess

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Speaker 4: the point I'm making is that your company has made

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Speaker 4: overtly political statements, has moved an agenda of DEI of

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Speaker 4: Susan Rice on your board, the founder of sort of

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Speaker 4: Barack Obama's DEI agenda. Ninety ninety percent of your employees

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Speaker 4: contribute to Democrats to the tune of hundreds of millions

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Speaker 4: of dollars. Your content's over sexualized for kids you're engaged in.

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Speaker 4: It's very woke programming overwhelmingly. You do have some other options,

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Speaker 4: but overwhelmingly so. The question before this committee you come

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Speaker 4: before Congress, why in the world would we give a

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Speaker 4: seal of approval or a thumbs up to make you

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Speaker 4: the largest behemoth on the planet. Related to content, it

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Speaker 4: seems as though you have engaged in creating not only

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Speaker 4: a monopoly content potentially, but the wokest content in the

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Speaker 4: history of the world. So forgive me if I'm a

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Speaker 4: little concerned not only is a parent but also that

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Speaker 4: somebody believes that we ought to have a wide variety

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Speaker 4: of content options. There are some, but the overwhelming majority

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Speaker 4: of your stuff right now is overwhelmingly woke and it's

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Speaker 4: not reflective of what the American people want to see.

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Speaker 6: Thank you, Sedta Spidde. Senator Booker, you're next.

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Speaker 3: I'm getting back to the subject of antitrust.

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Speaker 1: As you heard there at the end, Senator Corey Booker

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Speaker 1: of New Jersey brought the discussion back to the ostensible

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Speaker 1: focus of the hearing on antitrust concerns. But no question,

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Speaker 1: Booker is also scoring points too with some of his

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Speaker 1: most ardent supporters in Hollywood.

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Speaker 3: I just want to enter into the record statements and

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Speaker 3: letters from stakeholders and entertainment industry. From a lot of

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Speaker 3: respected groups that believe they be harmed by this merger,

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Speaker 3: and they include Cinema United, the largest trade organization in

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Speaker 3: the world representing exhibitors and the owners of movie theaters.

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Speaker 3: A statement from the Future Film Coalition, a national alliance

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Speaker 3: representing filmmakers, producers, distributors and other impacted workers. A letter

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Speaker 3: from the National Hispanic Media Coalition Committee for the First Amendment,

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Speaker 3: Writers Guild of of America West than other organs that

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Speaker 3: are posed to this Warner Brothers acquisition by either Netflix

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Speaker 3: or Paramount, and a letter from the International Documentary Association

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Speaker 3: opposing any consolidation between major studios in Hollywood as well. Finally,

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Speaker 3: as a letter from the American Economic Liberties Project urging

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Speaker 3: the State Attorney's General to block the proposed anti competitive

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Speaker 3: Netflix Warner Brothers Discovery transition. And I guess my first

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Speaker 3: question would be why such a universal set of concerns,

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Speaker 3: if not fears that organizations who represent theater companies, who

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Speaker 3: represent artists, who represent producers and directors.

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Speaker 2: Yeah, I would have to start centerer with the fact

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Speaker 2: that the industry has been under attach for five years now.

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Speaker 2: The pandemic, a prolonged strike production downturn for companies trying

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Speaker 2: to squeeze more profits to that of their businesses. And

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Speaker 2: we've not been doing that, and we've got through the strikes.

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Speaker 2: So we got through the pande and keep producing and

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Speaker 2: keep growing. But anytime there's change, the parties that you

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Speaker 2: just discuss get nervous, and rightfully so they need to

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Speaker 2: know that people are looking out for them. We are

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Speaker 2: looking out for them. These I mentioned in the theaters.

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Speaker 2: I have been asked to give a blood oath about

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Speaker 2: the forty five day window. I think giving my testimony

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Speaker 2: to you under oath is good enough.

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Speaker 1: And now here comes Senator Amy Klobuchar of Minnesota with

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Speaker 1: a solid question about the deal's potential impact on jobs,

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Speaker 1: and she can't help but plug a piece of her

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Speaker 1: pending legislation.

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Speaker 7: We have seen more and more production of movies shift overseas,

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Speaker 7: and while announcing its planned acquisition of Warner Brothers, Netflix

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Speaker 7: said the deal would quote significantly expand US production capacity

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Speaker 7: and continue to grow investment in original content over the

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Speaker 7: long term. Could you talk about the effect this is

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Speaker 7: going to have on film production in the US and

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Speaker 7: what will happen here Senat.

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Speaker 2: We believe that this deal will make it possible for

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Speaker 2: us to expand what was one ER's output and what

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Speaker 2: did we know or they already planned Netflix output to

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Speaker 2: continue to produce, and we produce primarily in the United States.

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Speaker 2: Most of what we make outside of the United States

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Speaker 2: is local language, local production for local audiences. And some

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Speaker 2: of the incentives that we were able to work on

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Speaker 2: with Governor Murphy and New Jersey have made it so

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Speaker 2: it's so competitive to film in New Jersey that there's

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Speaker 2: no reason to go overseas for a film production, not

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Speaker 2: just Netflix, for for others.

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Speaker 4: So I think so we're very.

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Speaker 2: Invested in creating more American jobs created, keeping production in America.

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Speaker 2: I think that we do this better than anyone else

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Speaker 2: in the world, tell stories to the rest of the world,

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Speaker 2: and we want to keep investing in it.

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Speaker 7: Okay, last words, I want to ask a questions, but

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Speaker 7: just the importance of a thorough antitrust review of this

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Speaker 7: major mega merger. I continue to believe that we need

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Speaker 7: to update our laws. That's the Cholarra bill that I

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Speaker 7: have introduced, the Competition Anti Trust Law Enforcement Reform Act,

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Speaker 7: just because I think major megamerger like this should be

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Speaker 7: held to the burden of do they actually hurt competition

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Speaker 7: or not? And I think that would be a much

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Speaker 7: better way to run things in a.

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Speaker 1: Capitalist society that believes in the marketplace. And now we

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Speaker 1: come to Ted Cruz, the Senator from Texas. He has

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Speaker 1: a lot of feelings about Netflix. He has a lot

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Speaker 1: of feelings about CNN, even though Netflix isn't buying the news.

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Speaker 5: Cabler, it's another aspect of this merger that I think

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Speaker 5: is raising significant concerns, which is an ideological aspect. Would

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Speaker 5: you agree there's a difference between entertainment and propaganda, sir.

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Speaker 6: Look, Netflix.

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Speaker 4: Has long been a left wing company.

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Speaker 5: Your founder, Read Hastings, is one of the biggest Democrat

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Speaker 5: donors in the country, including giving millions recently to the

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Speaker 5: massive jerrymander in California, making it one of the most

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Speaker 5: jerrymandered states in the Union. Because your founder desperately wants

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Speaker 5: a Democrat House of Representatives. Susan Rice from the Obama

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Speaker 5: White House is on your board of directors. You guys,

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Speaker 5: gave fifty million dollars to the Obamas, as far as

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Speaker 5: I can tell, to produce no discernible content whatsoever. How

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Speaker 5: would you tell a Texan sitting at home to feel comfortable.

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Speaker 5: CNN is already a dumpster fire. There's nothing resembling objectivity,

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Speaker 5: there's nothing resembling journalism anymore. How are people at home,

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Speaker 5: how should they feel even remotely confident that if this

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Speaker 5: merger happens, the combined entity would not simply be a

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Speaker 5: propaganda outlet pushing one particular political view with much greater

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Speaker 5: market power than you have now.

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Speaker 4: Well, so we would fail.

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Speaker 2: We would fail pushing a political view or propaganda. We

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Speaker 2: deliver entertainment to consumers. Our consumers see our business pretty

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Speaker 2: much the way they see the America. About forty percent conservative,

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Speaker 2: about forty percent liberal, about twenty percent don't know, and

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Speaker 2: they've put when we turn on when they turn on TV,

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Speaker 2: they're tune in to be entertained. And if we fail

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Speaker 2: to entertain them by trying to promote propaganda or something

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Speaker 2: out or something anything other than entertainment, we fail.

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Speaker 1: Shout out to whoever prepped ted for this two hour

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Speaker 1: boxing match. Sarandos never got too rattled, not enough to

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Speaker 1: become a meme. He made his old colleagues at Arizona

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Speaker 1: Cassette's West very proud As we close out today's episode,

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Speaker 1: I want to reinforce the questioning that we heard on

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Speaker 1: Tuesday on ideological and political grounds was shameful for the Senate,

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Speaker 1: which is supposed to be a bastion of reason and debate.

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Speaker 1: Over my long career, I have watched innumerable congressional hearings

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Speaker 1: related to media, media mergers, media issues. I covered the

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Speaker 1: long slog of the v CHIP in the late nineteen

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Speaker 1: nineties and whether Republicans or Democrats were in charge. Never

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Speaker 1: did you hear this level of ideological driven questioning. It

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Speaker 1: really reminded me of the powerful play by Tracy Letts

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Speaker 1: the Minutes. And let's not forget that this is the

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Speaker 1: environment in which President Trump and his cronies can change

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Speaker 1: the name of the Kennedy Center at will. Even a

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Speaker 1: tribute to the beloved slain President isn't off limit. And

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Speaker 1: now they're closing the Kennedy Center for two years for

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Speaker 1: a renovation, in part because of the backlash from the

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Speaker 1: artistic community that no longer wants to perform there given

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Speaker 1: recent events. When will it end? Thanks for listening. This

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Speaker 1: episode was written and reported by me Cynthia Littleton. Stick

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Speaker 1: Snick's Hick picks, Please leave us a review at the

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Speaker 1: podcast platform of your choice, and please tune in tomorrow

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Speaker 1: for another episode of Daily Variety, and don't forget to

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Speaker 1: tell us what you think at podcastsat variety dot com.

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Speaker 1: Thanks