Speaker 1: Welcome to Tech Stuff, a production from I Heart Radio.
Speaker 1: Hey there, and welcome to tech Stuff. I'm your host,
Speaker 1: Jonathan Strickland. I'm ad executive producer with I Heart Radio
Speaker 1: and I love all things tech. And this is the
Speaker 1: third part of the continuing story of the evolution of
Speaker 1: Warner Media, which A T and T plans to spin
Speaker 1: off to merge with Discovery, and we will talk a
Speaker 1: lot about that at the end of this episode. Our
Speaker 1: first episode in this series trace the very early history
Speaker 1: of Time Incorporated, that is, the publishing company that was
Speaker 1: on you know, one side of the episode and Warner
Speaker 1: Brothers known as the Movie, TV and music studio on
Speaker 1: the other side of that podcast, and trace their evolutions
Speaker 1: up to their merger in the late night teen eighties.
Speaker 1: Our second episode backtracked a little bit to talk about
Speaker 1: the early days of cable TV and the emergence of
Speaker 1: HBO and then how Time invested in that particular endeavor
Speaker 1: and thus brought HBO into the mix upon the Time
Speaker 1: Warner merger, so HBO became part of that group. And
Speaker 1: we also talked about the disastrous merger between Time Warner
Speaker 1: and America Online or A O L and how that
Speaker 1: deal went sour even while it was being executed. Between
Speaker 1: the announcement that the merger was going to happen and
Speaker 1: the completion of that deal, which took about a year,
Speaker 1: the whole dot com industry had a massive financial collapse.
Speaker 1: So that acquisition completed in two thousand one, and in
Speaker 1: two thousand two, A o. L. Time Warner had the
Speaker 1: worst financial quarter ever of any company up to that point,
Speaker 1: losing fifty four point two four billion dollars in a
Speaker 1: single quarter that is just three months. Yikes. For about
Speaker 1: a decade, A O. L. Time Warner struggled to get
Speaker 1: its footing and tried to become the new model for
Speaker 1: all media companies, you know, combining traditional media like music, publishing, movies,
Speaker 1: and TV with the futuristic world enabled by the Internet,
Speaker 1: which is what we're seeing today, by the way, Only
Speaker 1: back then it just totally didn't work. Now, to be fair,
Speaker 1: there were a lot of extenuating circumstances that contributed to that,
Speaker 1: like the aforementioned dot com crash that was a big one. Uh,
Speaker 1: there was the terrorist attack in two thousand one that
Speaker 1: was another big one that There were general economic recessions
Speaker 1: that contributed to them. Also, the company at that point
Speaker 1: had changed its name to Time Warner Incorporated in two
Speaker 1: thousand three, dropped the A O L. I mean A
Speaker 1: L was still part of the mix. But because of
Speaker 1: that dot com drop and because of some scandals that
Speaker 1: A O L was pulled into or was you know, uh,
Speaker 1: some scandals that involved A O L. It's not that
Speaker 1: A was pulled into it. They were complicit in them.
Speaker 1: I feel like the company felt it was in the
Speaker 1: best interests of the organization to rename itself and kind
Speaker 1: of you know, not advertised, that was part of A
Speaker 1: O L. Still for me and for a lot of
Speaker 1: folks of that time period, we still called it A
Speaker 1: O L Time Warner for a while, and I mean,
Speaker 1: like I said, A O L was still part of
Speaker 1: the company at that point. Well, anyway, we're gonna look
Speaker 1: a little bit more today at what happened towards the
Speaker 1: end of the A O L Time Warner days and
Speaker 1: then see what happened with Warner following that failed marriage
Speaker 1: between old and new media. And one of the things
Speaker 1: I failed to mention in my last episode, and honestly,
Speaker 1: I hadn't even seen this bit of the history while
Speaker 1: I was doing my research, So this was due to
Speaker 1: my own ignorance. Was that during the time of A. O. L.
Speaker 1: Time Warner, the company divested itself of a major part
Speaker 1: of its assets, and that part was that in two
Speaker 1: thousand three, the company sold off its music division to
Speaker 1: the tune Ha Ha of about two point three billion
Speaker 1: dollars according to the New York Times, although some other
Speaker 1: sources put it as high as two point six billion,
Speaker 1: so I'm not sure who's in the right there. Anyway,
Speaker 1: the reason for that move was that A. O. L.
Speaker 1: Time Warner was in a lot of debt. And I've
Speaker 1: talked about this previously, like whenever you're talking about mergers
Speaker 1: and acquisitions, typically you're talking about companies that are really
Speaker 1: over extending themselves in order to acquire another company, and
Speaker 1: then they have to figure out how are they going
Speaker 1: to manage all the debt that results from that. And
Speaker 1: that's that's before you get into things like you know,
Speaker 1: market crashes in really bad years. So there's this enormous
Speaker 1: amount of debt to settle. And when the two companies
Speaker 1: initiated their merger, Time Warner was struggling a little bit
Speaker 1: and A. O. L. Was was king of the mountain,
Speaker 1: but then just a few months into the acquisition process,
Speaker 1: we saw that switch places right A O L suddenly
Speaker 1: saw a massive drop in its market value as its
Speaker 1: stock price plummeted, and suddenly the company that had been
Speaker 1: flushed with cash as an Internet giant was now in
Speaker 1: a really rough place financially as a giant media company.
Speaker 1: So who bought the music group? Well, the party that
Speaker 1: made that purchase was led by Edgar Bronfman Jr. Bronfman's
Speaker 1: family had run the company Sea Gram since the nineteen twenties.
Speaker 1: Uh So, the Bronfman family had a whiskey distillery company
Speaker 1: and then Seagram. The Seagram family also had a similar company,
Speaker 1: and the two companies merged. The Bronthman's effectively took over,
Speaker 1: but they kept the Seagram name. Edgar Bronfman Senior was
Speaker 1: chairman and CEO of this company from the nineteen seventies
Speaker 1: until the mid nineteen nineties, and in that time the
Speaker 1: Seagroom company diversified and through a complicated series of events,
Speaker 1: ended up becoming the largest shareholder of the DuPont Company,
Speaker 1: which you might remember played a really big part in
Speaker 1: our episodes about General Motors a few months ago. So
Speaker 1: Edgar Jr. Took over the business for his dad in
Speaker 1: nineteen and he made the controversial deal to allow the
Speaker 1: DuPont family to buy back the shares held by Seagram
Speaker 1: for around nine billion dollars. They said, well, Seagram holds
Speaker 1: these enormous shares in DuPont, That's where a lot of
Speaker 1: money is coming from. But I kind of want to
Speaker 1: use that money to do other stuff, so I'm gonna
Speaker 1: sell it back to them. Now. I say that this
Speaker 1: was controversial because Seagram's ownership of that steak accounted for
Speaker 1: nearly seventy percent of the company's revenue, So, in other words,
Speaker 1: Seagram's dependence upon DuPont was very high, So getting rid
Speaker 1: of that meant that sevent of your revenue source is
Speaker 1: just gone. Then Ed Junior began to invest that money
Speaker 1: into the entertainment industry, buying up controlling interests in m
Speaker 1: c A, which was the parent company for Universal Pictures.
Speaker 1: We'll talk more about that a little bit later in
Speaker 1: this episode two, and he also purchased PolyGram record label.
Speaker 1: Things did not go smoothly, and so Ed Junior led
Speaker 1: Seagram into a deal that would see Vivendi acquire Seagrum
Speaker 1: in an all stock transaction into thousand. Vivendi then sold
Speaker 1: off the beverage division of Seagram, you know, the part
Speaker 1: of the company that was the core of the business
Speaker 1: at the beginning. Anyway, things didn't work out, and within
Speaker 1: a couple of years Bronfman had stepped down from his
Speaker 1: position within Vivendi slash Seagrum. Perhaps he viewed the acquisition
Speaker 1: of Warner's Music division as a second chance to have
Speaker 1: a go at running a company in the entertainment industry.
Speaker 1: So he had already had this one go of trying
Speaker 1: to become an entertainment mogul, and that didn't work out,
Speaker 1: and Vivindi came in and took up the gap. So
Speaker 1: now he was trying it again. He was going to
Speaker 1: buy the Warner Music Group. Part of the negotiation included
Speaker 1: the rights to use the name Warner Music Group, even
Speaker 1: though this new company was no longer part of the
Speaker 1: Warner family of companies. So w MG would go public
Speaker 1: in two thousand five, and Bronfman would hold on to
Speaker 1: w MG until two thousand eleven, when he would sell
Speaker 1: it to a company called Access Industries for more than
Speaker 1: three billion dollars. Bronfman would step down as chairman of
Speaker 1: the board in two thousand and twelve. Apparently at one
Speaker 1: point was considering purchasing Time Incorporated. But that's kind of
Speaker 1: peaking ahead a little bit. So by two thousand four,
Speaker 1: the Warner Media empire no longer included all those music
Speaker 1: studios like Warner Records, Electra Atlantic, Rhino Entertainment, and more.
Speaker 1: All of these were part of Warner Music Group. Word
Speaker 1: Music Group still existed, but was no longer connected to
Speaker 1: Time Warner. Again super confusing. Now I mentioned that the
Speaker 1: company spun off its cable service division in two thousand nine.
Speaker 1: That was Time Warner Cable, so we're gonna jump over that.
Speaker 1: And that was also the year that Time Warner and
Speaker 1: A O L would part ways, and Time Warner spun
Speaker 1: off A O L to do that, which still makes
Speaker 1: me think that businesses all food do because effectively A
Speaker 1: O L acquired Time Warner back in two thousand and
Speaker 1: then we see in two thousand nine Time Warner spinning
Speaker 1: off A O L, which really just shows how far
Speaker 1: the mighty had fallen at that point. All right, so
Speaker 1: now we're up to Time Warner, freshly divorced from A
Speaker 1: O L, tried to find its new path Turner Sports
Speaker 1: division within Time Warner, because remember at this point, time
Speaker 1: Warner includes the Turner family of products like Turner Broadcasting. Well,
Speaker 1: Turner Sports signed a fourteen year deal with the National
Speaker 1: Collegiate Athletic Association or n C Double A, and that
Speaker 1: agreement gave Turner the job of managing all the digital
Speaker 1: platforms for the n C Double A and also gave
Speaker 1: Turner more access to coverage of all eight eight inn
Speaker 1: C Double A championships, So that was a pretty big deal.
Speaker 1: That year also saw Time Warner expand operations in Chile.
Speaker 1: So the company already operated CNN Chile, but in it
Speaker 1: acquired a television station called Chile Vision from the former
Speaker 1: president of Chile. And this gives me a quick chance
Speaker 1: to talk about the cable channel side of business. I
Speaker 1: have some insight into this because I used to work
Speaker 1: for a company that, among other things, was a cable
Speaker 1: channel company. So let's say you happen to own a
Speaker 1: group of cable channels. You've got one that's your primary channel.
Speaker 1: This is the one that lots of people are familiar with.
Speaker 1: It's the most famous of your channels, and maybe you've
Speaker 1: got a few second tier channels that are popular, but
Speaker 1: they're just not as widely known as your primary one.
Speaker 1: And then you've got maybe a few other channels that
Speaker 1: are more niche in appeal and so they have lower
Speaker 1: viewer numbers. Now, as a cable channel owner, your job
Speaker 1: is to get your channels carried on various cable service providers. Right,
Speaker 1: you're making the content, you have to make the deals
Speaker 1: for the cable companies that service homes to carry your content.
Speaker 1: So you want to make these deals with these various
Speaker 1: cable service companies that provide cable feeds to customers. So
Speaker 1: they're the ones who own the pipes. You're the one
Speaker 1: who's making the content. So you negotiate deals that are
Speaker 1: called carriage agreements with these various cable companies. And typically
Speaker 1: the way this works is that you, as an owner
Speaker 1: of these cable channels, you want all of those channels
Speaker 1: to find a space on the feeds of these various
Speaker 1: cable television providers. Now, the television providers might only really
Speaker 1: be interested in that primary channel, or maybe they want
Speaker 1: the primary and maybe the secondary channels. But you end
Speaker 1: up drafting a deal that requires the cable TV providers
Speaker 1: to carry all of your channels or else they don't
Speaker 1: get any of them. So for the beginning of your business,
Speaker 1: that's really your focus, your negotiating and then renegotiating carriage
Speaker 1: agreements with various cable TV providers and satellite providers. But
Speaker 1: eventually you're gonna hit market saturation. You're going to get
Speaker 1: your channels on pretty much every major provider, and then
Speaker 1: there's nowhere else to go. So now you're also going
Speaker 1: to make money by selling ads space on your programming
Speaker 1: to various advertisers. Assuming you're not just an outright pay
Speaker 1: TV channel, you're gonna have ads, so the primary channel
Speaker 1: is likely going to be your premium products, right, advertisers
Speaker 1: are going to spend more money to put ads against
Speaker 1: those popular programs because of course more people are watching
Speaker 1: those and it is harder to sell ad space on
Speaker 1: the niche programming channels, so often add deals will actually
Speaker 1: include ad space on some of the smaller channels in
Speaker 1: addition to prime space on the big ones. It all
Speaker 1: tends to get wrapped up into these very complicated ad deals.
Speaker 1: But again, eventually you start to maximize your profits and
Speaker 1: you don't have really anywhere else to go. So what
Speaker 1: do you do? I mean, you pretty much saturated your market,
Speaker 1: you don't have more channels to put on cable, so
Speaker 1: you can't add stuff you've already carried. You're already carried
Speaker 1: about all the major cable service providers, so there's no
Speaker 1: one to else, you know, to jump onto. So unless
Speaker 1: you knock it out of the park with a few
Speaker 1: real big hit shows, your ad revenues are going to
Speaker 1: start to plateau. And if you do hit it out
Speaker 1: of the park, if you do make like the next
Speaker 1: Blockbuster TV show, well, in order to grow in subsequent years,
Speaker 1: you've got to do it again. It's hard enough to
Speaker 1: get that to work once, let alone multiple times. So
Speaker 1: one solution at this point is to expand into new markets.
Speaker 1: This is why if you follow news about cable companies,
Speaker 1: as in you know, the companies that are making cable
Speaker 1: television content, you'll frequently see that they announced that they're
Speaker 1: expanding into places like South America or Asia. The companies
Speaker 1: will develop regional offices that are dedicated to creating programming
Speaker 1: for those markets or their localizing content that you know,
Speaker 1: originated from somewhere else. And this is one of the
Speaker 1: few opportunities for growth once you reach this stage, and
Speaker 1: if it weren't for the fact that we typically judge
Speaker 1: the health and success of a business by how much
Speaker 1: it grows year over year. This wouldn't be a big deal.
Speaker 1: You know, you could just operate as is and you'd
Speaker 1: be fine, But that's not how things work. We do
Speaker 1: judge companies on that metric of growth. That means that
Speaker 1: an entity like Time Warner or Discovery often has to
Speaker 1: look at ways to grow beyond regional borders in order
Speaker 1: to appear healthy, because it's not just good enough to
Speaker 1: do good business, You've gotta grow. So what happens once
Speaker 1: a company starts to approach a global reach, Well, I
Speaker 1: suppose they could weep like Alexander, for there are no
Speaker 1: more worlds to conquer. Or they could try something else,
Speaker 1: like merging with another big media company. We'll get back
Speaker 1: to that anyway. Beyond Chile, Time Warner made some moves
Speaker 1: to increase its ownership stake in various regional HBO networks.
Speaker 1: So HBO was kind of operating like a franchise. So
Speaker 1: Time Warner owned some, but not all, of these regionally
Speaker 1: focused branches of h BO, which were you know, co
Speaker 1: owned by other partners. So companies like HBO Latin America
Speaker 1: Group UH. Time Warner HBO purchased a larger stake of
Speaker 1: that particular group in two for more than two hundred
Speaker 1: million dollars, which gave HBO an eighty percent ownership in
Speaker 1: the Latin America Group. Similarly, over in Europe, HBO bought
Speaker 1: out its partners that had some ownership in HBO Europe UH.
Speaker 1: The companies spent about a hundred thirty six you know
Speaker 1: million bucks in order to buy those partners out. And
Speaker 1: Time Warner also purchased a company called Shed Media in
Speaker 1: twenty for one dred million pounds. Now, as that implies,
Speaker 1: Shed Media was a UK based TV content creator and
Speaker 1: distributor and behind such shows as Waterloo Road and Footballers Wives.
Speaker 1: I admit I'm not familiar with those shows, but anyway.
Speaker 1: In twenty ten, Time Warner acquired a majority share in
Speaker 1: shed Media. The the management team still owned a bit
Speaker 1: more than of the company at that point. In fourteen,
Speaker 1: Time Warner increased its ownership and purchased the remainder of
Speaker 1: the company. Then they transformed Shed Media into Warner Brothers
Speaker 1: Television Productions UK in the Warner Brothers Home Entertainment Group
Speaker 1: division of Time Warner acquired an online social platform dedicated
Speaker 1: to helping people discover movies that they might be interested in.
Speaker 1: That site was called flick Ster, and at that point,
Speaker 1: Flickster was also the parent company of another site that
Speaker 1: relates to movies, one called Rotten Tomatoes, and that would
Speaker 1: raise a few questions which I'll talk about after we
Speaker 1: take this quick break. Run Tomatoes started out as a
Speaker 1: pet project for Sinduong. It was just a site at
Speaker 1: aggregated movie critic film reviews so that people could, you know,
Speaker 1: pop on over to the site, look at the reviews,
Speaker 1: and get an idea about whether or not they might
Speaker 1: like a particular film. So it was a pretty simple idea.
Speaker 1: Now obviously that grew quite a bit, with the site
Speaker 1: developing its own metrics to judge the quote unquote freshness
Speaker 1: of a movie. Uh. This is essentially looking at all
Speaker 1: of the positive reviews and all of the negative reviews
Speaker 1: and doing some quick math on that ratio. So if
Speaker 1: there are more positive than negative reviews of a film,
Speaker 1: then that film is fresh, even if those positive reviews
Speaker 1: are just lukewarm. So if you see a high freshness
Speaker 1: rating on a movie, it doesn't necessarily mean that movie
Speaker 1: is spectacular or better than movies that have lower ratings.
Speaker 1: It just means that more critics gave it a positive review.
Speaker 1: But that positive review might have been like, it's okay,
Speaker 1: right as opposed to this thing is amazing anyway. I've
Speaker 1: done a full episode about Atten Tomatoes, so I'm not
Speaker 1: gonna go over the whole thing here. I g N
Speaker 1: Entertainment bought Rotten Tomatoes in two thousand four, but then
Speaker 1: News Corps, the parent company of Fox at the time,
Speaker 1: acquired I g N in two thousand five. Five years later,
Speaker 1: the I g N division of News Corps sold Rotten
Speaker 1: Tomatoes to flix Stir. Okay, so let's flip over to
Speaker 1: flixster just really quickly surround. Chari and Joe Greenstein founded
Speaker 1: flixter back in two thousand six. Flick Stir was a
Speaker 1: social media platform centered around movies, and you could watch
Speaker 1: trailers on the site and explore posts about new and
Speaker 1: upcoming films. Clearly, the site grew large enough to purchase
Speaker 1: Rotten Tomatoes from I g N, and then in Warner
Speaker 1: came calling. People began to express some concern that a
Speaker 1: company that was in the movie business, that is Time
Speaker 1: Warner with Warner Brothers Studios was purchasing a different come an,
Speaker 1: this one being Rotten Tomatoes that was in the movie
Speaker 1: review business. So would that mean that Warner Brothers would
Speaker 1: pressure Rotten Tomatoes to make sure that Warner Brothers films
Speaker 1: got a fresh rating. Turned out that concern was largely
Speaker 1: not a problem, though people would occasionally make accusations otherwise. Um,
Speaker 1: but it was, you know, something to think about, Like,
Speaker 1: there is clearly a conflict of interest if you are
Speaker 1: the owner of both a movie production studio and a
Speaker 1: movie review aggregator. Anyway, the incorporation of flick Stir into
Speaker 1: Warner Brothers was supposed to lead to a bunch of
Speaker 1: new digital products that would give Time Warner opportunities to
Speaker 1: reach customers in new ways, not that different from how
Speaker 1: you were looking at a O L and Time Warner
Speaker 1: just a couple of years earlier. But by twenty sixteen
Speaker 1: things had changed. Either Time Warner had gotten all it
Speaker 1: needed out of the arrangement or the arrangement just didn't
Speaker 1: work out, and so Time Warner sold off Flixster and
Speaker 1: Rotten Tomatoes to fan Dango. Now, Time Warner got a
Speaker 1: little stake of ownership in fan Dango as a result
Speaker 1: of that, which is also complicated because fan Dango's parent
Speaker 1: company is NBC Universal, and that means that now two
Speaker 1: major media companies, both of which have film divisions, have
Speaker 1: some ownership of Rotten Tomatoes. The conflict of interest concerned
Speaker 1: remains intact, though again from what I've seen, there's been
Speaker 1: little evidence of any actual manipulation. The Rotten Tomatoes scores
Speaker 1: for movies out of w B and Universal don't seem
Speaker 1: like they've been boosted at all, so at least there's that,
Speaker 1: all right. So that Time Warner acquisition of flick Ster
Speaker 1: happened inven and we're gonna skip forward a little bit
Speaker 1: because a lot of the nitty gritty stuff is just
Speaker 1: not that interesting, gets tiresome. It's mostly like smaller acquisitions,
Speaker 1: so we're gonna move up to twent that year, Time
Speaker 1: Warner was looking to actually offload a property rather than
Speaker 1: make another acquisition, so in this case, it was the
Speaker 1: publishing arm of Time Incorporated. So originally, Time Warner entered
Speaker 1: into discussions with another company called Meredith Corporation. Like Time Warner,
Speaker 1: Meredith is a media conglomerate company, and one of the
Speaker 1: things Meredith owns is a Publishing arm a magazine publishing arm,
Speaker 1: and arguably I would say it's best known for the
Speaker 1: magazine Better Homes and Gardens, which always makes me think
Speaker 1: of the musical Little Shop of Horrors. But this is
Speaker 1: not a show where you know, I sing stuff typically,
Speaker 1: so to endure that kind of punishment, you should listen
Speaker 1: to large nerd Dron Collider. Anyway, the talks between Time
Speaker 1: Warner and Meredith Corporation focused on the two companies combining
Speaker 1: their publishing divisions into a single independent entity, but Meredith
Speaker 1: eventually backed away from that deal, so Time Warner went
Speaker 1: with their backup plan, and that was to spin off
Speaker 1: the publishing to vision of Time Incorporated into its own
Speaker 1: independent company. And it's easy to understand why they wanted
Speaker 1: to do this, by the publishing world in general was
Speaker 1: really struggling. The Web had disrupted the industry. Subscriber numbers
Speaker 1: were dropping, advertising revenues were following suit. So across the board,
Speaker 1: companies were scrambling to find solutions as they saw revenues decrease.
Speaker 1: For Time Warner, this became a point of concern because
Speaker 1: you had a company that you know, kind of wanted
Speaker 1: to restructure more around television and film. So Time Incorporated
Speaker 1: got spun off from Time Warner. In Time Warner retained
Speaker 1: the name Time Warner even though the Time part was gone.
Speaker 1: Now as for Time Incorporated, that company became a publicly
Speaker 1: traded media company, and then in another company came around
Speaker 1: and acquired Time inc. So what company was that? Well,
Speaker 1: it was Meredith Corporation, you know, the same company that
Speaker 1: had been in discussions with Time Warner about combining their
Speaker 1: publishing arms of the respective entities, and now Meredith had
Speaker 1: scooped up Time all for its own. In fourteen, Time
Speaker 1: Warner got another suitor. This time it was twenty first
Speaker 1: Century Fox. So just imagine how different our world would
Speaker 1: be if that deal had gone through. If Fox had
Speaker 1: purchased Time Warner, and then subsequently, if Disney had continued
Speaker 1: to go on and purchase Fox, that would mean that
Speaker 1: Disney would own both Marvel and d C Comics at
Speaker 1: the same time. Imagine those possibilities, except, of course, I
Speaker 1: suspect that the US government would have thrown up some
Speaker 1: major roadblocks to that kind of merger. At that point.
Speaker 1: The US allowed a lot of really big media companies
Speaker 1: to get really really bigger, sometimes in extremely questionable ways.
Speaker 1: But I think if Disney were to own the sets
Speaker 1: of both Fox and Warner Brothers, that might be a
Speaker 1: bridge too far. That would probably be saying that Disney
Speaker 1: owns way too many of the movie studios that still exist.
Speaker 1: So it's a moot point because it never went through.
Speaker 1: Fox made an offer of eighty five dollars per share
Speaker 1: of Time Warner stock, which was a deal valued at
Speaker 1: around eighty billion dollars at the time, but the board
Speaker 1: of directors over at Time Warner said, yeah, nah, thanks,
Speaker 1: we're good. So Fox's bid to acquire Time Warner fizzled out.
Speaker 1: If the deal had gone through, we would have seen
Speaker 1: CNN gets spun off in some way because Century Fox
Speaker 1: also owned you know, the Fox News Network, competing twenty
Speaker 1: four hour news channel, so that would have also been
Speaker 1: a conflict. So CNN would have had to have gone
Speaker 1: if that deal went through. Of course it didn't. Okay,
Speaker 1: Now we got to take a step back and see
Speaker 1: what else was going on in the media landscape around
Speaker 1: this time, that time being you know, the decade between
Speaker 1: twenty and twenty twenty, because that's going to help explain
Speaker 1: the next stage of events for Time Warner and Honestly,
Speaker 1: the key to the whole story is the concept of consolidation,
Speaker 1: or of various companies coming together to form truly enormous organizations. Now,
Speaker 1: the really big one we need to talk about was
Speaker 1: and still is Comcast. We got to do a super
Speaker 1: fast summary of a ton of stuff that happened with Comcast,
Speaker 1: and that involves a lot of other properties. So here
Speaker 1: we go, all right, way way way back. Just after
Speaker 1: World War One, you had the Radio Corporation of America
Speaker 1: or r c A, which in turn ended up being
Speaker 1: you know, owned by General Electric or g E. So
Speaker 1: our c A created a couple of different radio station networks,
Speaker 1: both of which were called NBC for National Broadcast Corporation.
Speaker 1: One of those two would split off to become ABC,
Speaker 1: but the other one remained n B e C. Upon
Speaker 1: the rise of television, NBC branched out being just a
Speaker 1: radio network and also became a television network as well.
Speaker 1: Now we're gonna skip forward to the nineteen eighties. Through
Speaker 1: a story that I have covered in other episodes, General
Speaker 1: Electric reacquired NBC. UH they had been forced to divest
Speaker 1: themselves of NBC and r c A back in nineteen
Speaker 1: thirty two, but by nine six, apparently it was tote
Speaker 1: school for GE to buy them back. Apparently, whatever the
Speaker 1: anti competitive nature was back in the thirties no longer
Speaker 1: existed in the Grand Old eighties, so g E bought
Speaker 1: our c A and NBC back then. They ended up
Speaker 1: selling off most of our CIA's assets, but they kept NBC.
Speaker 1: NBC then began to acquire other companies to diversify its holdings,
Speaker 1: so it acquired cable channels like Bravo. It also acquired
Speaker 1: the Spanish speaking channel Telemundo. And in parallel with that
Speaker 1: story we've got the story of Universal Studios is in
Speaker 1: the movie studio originally founded back in nineteen twelve, it
Speaker 1: had changed dramatically, Like like Warner Brothers. It had a heyday,
Speaker 1: and then the Department of Justice and various UH anti
Speaker 1: monopoly parties really broke up the movie industry, probably probably
Speaker 1: for the best in the nineteen fifties and sixties. So
Speaker 1: by the nineteen sixties they were in a very different
Speaker 1: place than the company was when it was at its
Speaker 1: height in like the twenties and thirties. So the Music
Speaker 1: Corporation of America or m c A, which I mentioned
Speaker 1: earlier in this episode acquired Universal in the nineteen sixties.
Speaker 1: But there's always a bigger fish, right, So skip ahead
Speaker 1: to and then Hannah Sonic, which at the time was
Speaker 1: known as Matt Sushida Electric, acquired m c A. Because
Speaker 1: all these media stories are really messy. In ninety five,
Speaker 1: Matt Sushida sold off eight of its ownership in m
Speaker 1: c A and thus, by extension Universal to Seagram, which
Speaker 1: again I mentioned earlier in this episode. And as I said,
Speaker 1: Seagram was best known as a whiskey distillery, so you
Speaker 1: know all of this tracks anyway. In two thousand a
Speaker 1: French water and utility and media company called Vivendi acquired
Speaker 1: Sea Graham because again bigger fish. So now Vivendi owned
Speaker 1: Sea Gram and thus by extension, owned controlling interest in
Speaker 1: m c A, and thus by extension in Universal, so
Speaker 1: the overall company became known as Vivendi Universal. Then in
Speaker 1: two thousand four, Vivendi Universal sold off eighty percent of
Speaker 1: Vivendi Universal Entertainment to drumroll please General Electric. Yeah, the
Speaker 1: same company that had purchased, or rather bought back NBC
Speaker 1: in bought up of the control of Vivendi Universal Entertainment.
Speaker 1: So ge renames this now mega media company NBC Universal
Speaker 1: all one word, combining the media assets of both companies.
Speaker 1: NBC had eight share in this concern, with Vivindy holding
Speaker 1: the other. G E would then end up buying up
Speaker 1: the rest of Vivendy steak In, and thus GE had
Speaker 1: full ownership of the full thing by that point. That's
Speaker 1: same year as when Comcast, the cable company, swooped in
Speaker 1: and then purchased from g E a steak in NBC Universal. Now,
Speaker 1: the fact that the FCC cleared this deal still blows
Speaker 1: my mind because Comcast is a cable television and internet
Speaker 1: service provider and it was buying up one of the
Speaker 1: largest media companies in the world. So now you had
Speaker 1: a corporation was not only in the business of providing
Speaker 1: the pipes, but also in the business of creating a
Speaker 1: lot of content going through those pipes. This was the
Speaker 1: kind of stuff that was making people nervous about net
Speaker 1: neutrality and anti competitive practices. It was the kind of
Speaker 1: thing that the US government had frowned upon just a
Speaker 1: few decades earlier, when the government had told movie studios
Speaker 1: that they weren't allowed to control production, processing, distribution, and exhibition.
Speaker 1: So clearly we were in a different world at this point. Anyway,
Speaker 1: Comcast bought out the remainder of g S stake at
Speaker 1: NBC Universal in and that story is, as you probably guessed,
Speaker 1: way more complicated than what I've just laid out in
Speaker 1: that quick summary. It really shows that the history of
Speaker 1: media companies is incredibly challenging to tell, just because of
Speaker 1: all the different entities that become involved over the years.
Speaker 1: But for the purposes of our story, the important bit
Speaker 1: here is that comcasts acquisition of NBC Universal sent shock
Speaker 1: waves not just through the entertainment industry, but also the
Speaker 1: telecommunications industry, and A T and T, a major competitor
Speaker 1: to Comcast, began to consider an acquisition of its own.
Speaker 1: This brings us back to good old Time Warner. Yeah,
Speaker 1: the company had ditched Time Incorporated, but it kept the name.
Speaker 1: It no longer had Time Warner Cable that got spun
Speaker 1: off years earlier. That probably was a good thing, because
Speaker 1: if A. T and T was making a move to
Speaker 1: buy Time Warner, it probably would have had to get
Speaker 1: rid of Time Warner Cable anyway, because otherwise that would
Speaker 1: have been a conflict. Uh. It also was no longer
Speaker 1: the owner of Warner Music group, but it did still
Speaker 1: have its movie and television production units, plus it's digital assets.
Speaker 1: A T and T decided that it needed to make
Speaker 1: a move to get on the same playing ground as Comcast.
Speaker 1: There was also another player and upstart in the media
Speaker 1: game that was putting pressure on both A T and
Speaker 1: T and Comcast, as well as other media companies. This
Speaker 1: company had started off as a kind of humble competitor
Speaker 1: to video rental stores in general and the company Blockbuster
Speaker 1: in particular, and that company is, of course Netflix see
Speaker 1: Netflix represented a threat to cable channels and cable companies
Speaker 1: With streaming media. The number of new subscriptions for cable
Speaker 1: TV ended up changing directions and began to go on
Speaker 1: the decline, which meant that companies like Comcast and A
Speaker 1: T and T had another thing to worry about. If
Speaker 1: you were people were subscribing to cable TV services, or
Speaker 1: worse yet, if existing subscribers started to cancel their service,
Speaker 1: well that's a major hit to revenue. And if people
Speaker 1: were relying more heavily on the Internet as the delivery
Speaker 1: system for entertainment, that threatened the whole media structure. So
Speaker 1: with those factors in mind, A T. T made a
Speaker 1: move to acquired Time Warner in two thousand sixteen. When
Speaker 1: we come back, I'll talk about how that shook out
Speaker 1: and why today A T n T is looking to
Speaker 1: divest itself of Warner Media. But first, let's take another
Speaker 1: quick break, all right. So A T and T announces
Speaker 1: its plan in to acquire Time Warner. The US government
Speaker 1: had something to say about that. The U s Department
Speaker 1: of Justice, under the administration of Donald Trump, filed a
Speaker 1: lawsuit in an attempt to block the merger. Now, according
Speaker 1: to Trump, the merger would put quote too much concentration
Speaker 1: of power in the hands of two few end quote.
Speaker 1: And you know what, I find it hard to disagree
Speaker 1: with that, though I do need to point out that
Speaker 1: if you do the full quote donald Trump's statement, it
Speaker 1: indicates that he was also kind of upset about CNN
Speaker 1: in general, and CNN would have been part of this
Speaker 1: deal because CNN was part of Time Warner, and then
Speaker 1: A T and T would be buying CNN, and his
Speaker 1: personal gripe against CNN was enough to make him speak
Speaker 1: out against this kind of thing. Now, I also mentioned
Speaker 1: that with Comcast and NBC Universal, there already was a
Speaker 1: massive precedent for exactly this kind of merger, Like, it
Speaker 1: would seem pretty hypocritical for the U. S. Government to
Speaker 1: tell A T and T, hey, you can't buy a
Speaker 1: media company when Comcast had just gone and done the
Speaker 1: same thing a few years earlier. So I just happened
Speaker 1: to think that the government should have raised some concerns
Speaker 1: back during the Comcast an NBC Universal deal. Honestly, well,
Speaker 1: this matter went to trial. The trial lasted six weeks
Speaker 1: and ultimately Judge Richard Leon found in favor of Time
Speaker 1: Warner and A T and T and said that the
Speaker 1: merger would be allowed to proceed, which it did. The
Speaker 1: Department of Justice appealed this decision, which sent the whole
Speaker 1: matter to the Court of Appeals, but by that time
Speaker 1: the merger had finalized, so A. T and T did
Speaker 1: officially own Time Warner. Um, I suppose this would be
Speaker 1: more about undoing a merger than preventing one from happening,
Speaker 1: which would have been an enormous deal. Right if the
Speaker 1: government could come in and reverse a merger, that that
Speaker 1: would have been enormously huge. But A T and T was,
Speaker 1: you know, fighting that and ended up winning the appeal,
Speaker 1: so it ended up not mattering. So A T. T
Speaker 1: was also looking to create its own digital advertising division,
Speaker 1: something akin to what we see with web based companies
Speaker 1: like Google and Facebook, and A T. T was also
Speaker 1: looking forward to the ability to play hardball with other
Speaker 1: cable TV providers by owning the means of production for
Speaker 1: certain TV and film properties. That means that the A
Speaker 1: T and T could demand higher prices in carriage agreements
Speaker 1: with competing cable service providers that wanted access to that content.
Speaker 1: The US government was making an argument that this process
Speaker 1: would likely result in higher costs to US consumers as
Speaker 1: these big cable companies started to fight against each other
Speaker 1: using their own content divisions as weapons, and the result
Speaker 1: would be that the consumer, you know, people like you
Speaker 1: and me, we would end up facing higher fees as
Speaker 1: a result. But ultimately, as I said, A T and
Speaker 1: T won the appeal, and the court said that the
Speaker 1: Department of Justice just failed to meet the burden of
Speaker 1: proof that this merger would actually lead to that kind
Speaker 1: of thing, those higher fees for consumers, and the Department
Speaker 1: of Justice dropped the matter. In twenty nineteen, shortly after
Speaker 1: the acquisition completed, in A T and T renamed Time
Speaker 1: Warner again and thus gave us the name Warner Media.
Speaker 1: So if I do a quick rundown memory lane, we
Speaker 1: had Warner Brothers or Warner Bros. If you want to
Speaker 1: be if you want to be silly about it, because
Speaker 1: it's B R O S with A with a period.
Speaker 1: But you had Warner Brothers. Then you had Warner Brothers
Speaker 1: seven Arts. Then you had Warner Brothers Incorporated when it
Speaker 1: was part of Kinney National Company. Then you had Warner
Speaker 1: Communications after Kinney had to split the entertainment division away
Speaker 1: from its other companies. Then you had Time Warner after
Speaker 1: the Time Incorporated merger. Then you had a O L
Speaker 1: Time Warner. Then you had Time Warner again once they
Speaker 1: dropped a O L from the name, and now you
Speaker 1: have Warner Media under a T and T. We isn't
Speaker 1: this fun? While all that was being settled, Time Warner
Speaker 1: slash Warner Media purchased a ten percent steak in video
Speaker 1: streaming service Hulu for more than half a billion dollars.
Speaker 1: This really does show how the big media companies were
Speaker 1: getting super concerned about streaming services like Netflix. We've seen
Speaker 1: several companies launched their own streaming efforts, but it's tough
Speaker 1: to go toe to toe with the really big players
Speaker 1: that are already established. So Netflix had had built up
Speaker 1: a really strong head start. Hulu launched as a cooperative
Speaker 1: effort between multiple studios, But then you've got Disney with
Speaker 1: Disney Plus. HBO has tried a few different streaming services
Speaker 1: before it's settled on Hbo Max, NBC Universal has Peacock, Viacom,
Speaker 1: CBS has Paramount Plus previously known as CBS All Access,
Speaker 1: and so on. And that big, messy situation helps explain
Speaker 1: why A T and T, just a few years after
Speaker 1: having acquired Warner Media, is now looking to divest itself
Speaker 1: from that very same property. And it might seem weird
Speaker 1: at a casual glance. I mean, here's an example of
Speaker 1: a really big telecommunications company spending around eight five billion
Speaker 1: dollars to acquire Time Warner. Then the company had to
Speaker 1: spend even more money because it gets pulled into a
Speaker 1: series of trials to fend off efforts from the US
Speaker 1: government to block that merger. Those legal battles stretched into
Speaker 1: twenty nineteen. Then we get the global pandemic, which obviously
Speaker 1: had an enormous impact on various entertainment industries, and as
Speaker 1: we seem to be moving to the other side of
Speaker 1: the pandemic. Now we see that A. T and T
Speaker 1: wants to ditch Warner Media for a proposed forty six
Speaker 1: billion dollar deal in order for Warner Media to merge
Speaker 1: with Discovery. What A T and T discovered and didn't
Speaker 1: mean to right discovered rafter Discovery, but I did, was
Speaker 1: that it was going to have to fight battles on
Speaker 1: multiple fronts in order to succeed as a business. It
Speaker 1: was going to have to dedicate assets to growing the
Speaker 1: telecommunications side of the business, and it was also going
Speaker 1: to have to dedicate resources to the entertainment the media
Speaker 1: side of the business and all Stimately, the company leaders
Speaker 1: decided that this was not really realistic. It they needed
Speaker 1: to be able to focus. So in order to do
Speaker 1: that and to focus on A. T and t s
Speaker 1: traditional core business, it would need to say goodbye to
Speaker 1: Warner Media. Maybe part of that decision also came out
Speaker 1: of some of the controversial choices the company made during
Speaker 1: the pandemic, controversial at least within the entertainment industry. I
Speaker 1: should add, so with the pandemic, we had obviously lockdowns
Speaker 1: in various countries all over the world, and that meant
Speaker 1: that businesses like movie theaters were empty for most of
Speaker 1: movie production. Studios thus had some tough choices to make.
Speaker 1: For any film that was essentially in the can and
Speaker 1: thus ready for distribution, what do you do? Do you
Speaker 1: sit on it for a year and hope that things
Speaker 1: get better than you just wait? Do you wait for
Speaker 1: various cities to start opening up and then aggressively market
Speaker 1: the film in those regions and make it available to
Speaker 1: those theaters. I mean, if some cities opened up much
Speaker 1: later than others, how does that affect your strategy? Does
Speaker 1: that mean you have to have a rolling movie premiere
Speaker 1: where it's going to launch in like five cities one week,
Speaker 1: maybe three cities the following week. You know, that kind
Speaker 1: of rollout is tough to manage, and it all gets
Speaker 1: really really complicated. And you also just didn't know if
Speaker 1: people would go to the movies, right, Like, even with
Speaker 1: movie theaters open, people might be too concerned about their
Speaker 1: health to go and sit in a big room with
Speaker 1: a bunch of other people. So there was no guarantee
Speaker 1: that releasing a film in theaters would even be a
Speaker 1: success in the first place. So back in twenty we
Speaker 1: just didn't know how long things were going to be
Speaker 1: really bad, and to be fair, even as I record
Speaker 1: this in early June, we still don't know how long
Speaker 1: things are going to be really bad. Things in the
Speaker 1: United States are opening up like crazy, but we don't
Speaker 1: yet know if that's a good thing. So A. T
Speaker 1: and D and Warner Media made the decision to make
Speaker 1: all of the theatrical releases out of Warner Brothers studios
Speaker 1: available on the HBO Max streaming service. That decision caused
Speaker 1: some major waves in the entertainment industry. Of course, had
Speaker 1: the movie theater chains that were really upset with films
Speaker 1: available to watch at home, how are movie theaters going
Speaker 1: to convince people to come into a theater. Various filmmakers
Speaker 1: also got upset because they envisioned their work being experienced
Speaker 1: on a big screen, not in someone's little home theater
Speaker 1: set up, at least not on its initial run. Other
Speaker 1: movie studios also got upset because now they also had
Speaker 1: these properties that were sitting on a shelf, and they
Speaker 1: felt the pressure to release them digitally so as not
Speaker 1: to lose ground to Warner Brothers. But they also didn't
Speaker 1: want to upset the same folks that Warner Brothers had.
Speaker 1: It is a very ugly situation in the industry for
Speaker 1: our consumers. On the other hand, I think it was
Speaker 1: a pretty darn good deal. I mean, seeing a film
Speaker 1: on your television is always a different experience from going
Speaker 1: to the movies. But if it means that you can
Speaker 1: enjoy some entertainment and you're not risking yourself or others
Speaker 1: with regard to a deadly infectious disease, I think that's
Speaker 1: a pretty good option. And it did drive people to
Speaker 1: subscribe to HBO Max, which was something the company really needed.
Speaker 1: They needed that win. With Disney and Netflix and other
Speaker 1: players like Amazon and Hulu already taking up a lot
Speaker 1: of mind share and a lot of home budgets in
Speaker 1: the streaming media space, what are media needed a hook
Speaker 1: to convince people to try out their own digital streaming
Speaker 1: service and making it the go to location for warners
Speaker 1: One Releases was a big part of that. Now I
Speaker 1: haven't really covered Discovery, which, if you don't know, used
Speaker 1: to be my employer, And mean, that's another story, right,
Speaker 1: the story of how the division I work for and
Speaker 1: I heart Radio. That one started out as part of
Speaker 1: the How Stuff Works dot com and it changed hands
Speaker 1: a few times. Arguably, the story of the department I
Speaker 1: work in is a microcosm for the sorts of journeys
Speaker 1: that we see with these really big media companies. Anyway,
Speaker 1: Discovery has its own suite of channels across different parts
Speaker 1: of the world, and recently the company revealed the name
Speaker 1: of what this new merged entity with time Warner will
Speaker 1: be or Warner Media will be, and it will be
Speaker 1: Warner Brothers Discovery. Okay, upon the merger, assuming that it
Speaker 1: goes through Discoveries CEO David Zaslov will head up the
Speaker 1: new media company, which is also interesting because Warner Media
Speaker 1: is the larger entity of these two groups. Despite Discoveries
Speaker 1: global reach, Warner Media is just bigger, and yet it's
Speaker 1: Discovery CEO who will take charge. The motto for the
Speaker 1: company appears to be the stuff that dreams are made of,
Speaker 1: and The Verge points out that this is a line
Speaker 1: from The Maltese Falcon, which is a classic Warner Brothers film. However,
Speaker 1: I would like to point out that it really is
Speaker 1: in itself a reference to a much older line written
Speaker 1: by William billy Bard Shakespeare. It comes from The Tempest.
Speaker 1: Prospero says the line, He's the old magician in the tempest,
Speaker 1: and he proclaims, we are such stuff as dreams are
Speaker 1: made on. So I think it's a Shakespearean reference. Ultimately, anyway,
Speaker 1: as it stands, the companies expect that this merger will
Speaker 1: complete in mid twenty two. A majority stake in the
Speaker 1: new company will belong to a T and T shareholders,
Speaker 1: who will keep a little bit more than sev ownership
Speaker 1: of this new media company presumably will also see these
Speaker 1: two companies attempt to combine forces to create a more
Speaker 1: unified and powerful streaming service. Both of them individually operate
Speaker 1: those kinds of services. You've got HBO Max on the
Speaker 1: Warner side and you've got Discovery Plus on the Discovery side.
Speaker 1: There's no telling yet if those two are going to
Speaker 1: combine into a single service. Uh. If it does, it
Speaker 1: wouldn't surprise me. If I had to guess, I would
Speaker 1: say that the HBO Max name would stick around. I
Speaker 1: think it might have slightly better name recognition, But we'll
Speaker 1: have to wait and see. And of course that does
Speaker 1: assume that the merger actually does go through. This has
Speaker 1: been one of the most convoluted, complicated histories I've ever
Speaker 1: had to trace. The the ownership of the various Warner
Speaker 1: properties has changed so frequently in so many different ways,
Speaker 1: sometimes in spectacular fashion, sometimes in a very sad way. Obviously,
Speaker 1: one of the big issues with all the major media
Speaker 1: companies is that most of them don't actually own all
Speaker 1: of their content anymore. With the exception of companies like Disney,
Speaker 1: most of them, at some point or another have sold
Speaker 1: off parts of their libraries, usually in an effort to
Speaker 1: take care of some debt that the companies had accrued.
Speaker 1: And that means that, you know, if you look at MGM,
Speaker 1: which Amazon is trying to acquire, you realize, oh, that
Speaker 1: deal doesn't include The Wizard of Oz. That movie is
Speaker 1: not part Even though the Wizard of Oz was an
Speaker 1: MGM movie, that doesn't belong to MGM anymore. Instead, that
Speaker 1: belongs to Warner Media because Ted Turner bought the rights
Speaker 1: to all those old MGM films and that ended up
Speaker 1: being part of the Time Warner deal, which thus eventually
Speaker 1: evolved into Warner Media. So yeah, very complicated stuff, but
Speaker 1: really important. Um also really important just to keep an
Speaker 1: eye on where the landscape of modern media is, like,
Speaker 1: how is shaping up and what it means for us. UM.
Speaker 1: I think competition is always a good thing. So in
Speaker 1: some ways it's good to see lots of competing streaming services,
Speaker 1: but in other ways it's very frustrating, right because you
Speaker 1: probably don't want the burden of having to subscribe to
Speaker 1: all of them, right, But it may be that each
Speaker 1: one of them has a few pieces of content you
Speaker 1: really want and there's no other way to get them,
Speaker 1: so that remains kind of a difficult situation for the consumer.
Speaker 1: On the flip side, if some entity, and let's be honest,
Speaker 1: if Disney were to ever really completely monopolize the industry,
Speaker 1: that wouldn't be good for us either. We need to
Speaker 1: have those different perspectives and those different outlets in order
Speaker 1: for good stories to continue to be told. But that
Speaker 1: wraps up our epic, long and winding road to follow
Speaker 1: the history of Warner Brothers. I hope you enjoyed those episodes.
Speaker 1: The other two episodes, as I said, published last week,
Speaker 1: so if you missed out and you're thinking, well, sure,
Speaker 1: we'd be good to know where they started, you can
Speaker 1: go back and listen to those. If you have suggestions
Speaker 1: for topics I should cover in future episodes of tech Stuff,
Speaker 1: reach out to me on Twitter. The handle is text
Speaker 1: stuff h s W. That's a hold over from the
Speaker 1: old house stuff works days that hs W. But you
Speaker 1: know what, that's the Twitter handle and I haven't tried
Speaker 1: to change it. I'm pretty sure someone else already has
Speaker 1: just tech stuff, so I can't do that anyway. Send
Speaker 1: me a message that way, whether it's a topic I
Speaker 1: should cover, or maybe you have some questions or suggestions
Speaker 1: for things, let me know and I'll talk to you
Speaker 1: again really soon. Text Stuff is an I Heart Radio production.
Speaker 1: For more podcasts from I Heart Radio, visit the i
Speaker 1: Heart Radio app, Apple Podcasts, or wherever you listen to
Speaker 1: your favorite shows.