Lucas Shaw on the Paramount-Warner Bros. merger, Netflix vs. YouTube creator war, and Hollywood's box office rebound

Speaker 1: on Science and Technology, which abbreviates to PCAST, which sounds like podcast. It sounds like he's the podcaster in chief. Isn't that isn't that a random title? He just happens to be the the co chair of PCAST. Yeah. I I thought that was a fun fact. Anyway, we have Lucas Shaw in the waiting room. Let's bring him in to the TV game.

Speaker 2: To show, Lucas. What's going on? Great to be here. How you guys doing? Been wanting to make this happen for a while. Yes. Anytime. We are we we go live from Hollywood most days of the year, but I still don't fully understand Hollywood. So stuff is happening in the news. I usually just think I'm gonna wait till you write about it, then I'll get a good understanding of it. So it's an honor to have you here today to talk about everything with Paramount, and then I wanna get into Netflix and YouTube as well. Yeah, please. I'm sorry I did not bring my hat. Then we could all be mad. We should have we should have prepared you. We're trying these out. John has a theory that

Speaker 1: I think you do have a pair of sunglasses that you could put on him potentially with a button if you if you wanna give him a pair of shades at some point in the We we can figure that out. Anyway But John John's trying to bring back the fedora. So I'm just I'm just trying for emotional support. Yeah. I'm just here to I'm just here to support. It looks like old Hollywood. I think we can pull it off. I think with with the suit and tie, it it it reads a little bit more like like nineteen fifties. Insane over overconfident.

Speaker 2: You think I I'm gonna bring back the fedora. I can pull it off. I can do it. Anyways, how was how was your weekend covering everything going on with with Paramount?

Speaker 6: It was fine. I was actually at a a relative's wedding in Rhode Island. So I I helped where I could. We also had some really good colleagues of mine who handled it. I mean, I've been covering Ellis and Paramount, this deal for the last year and and the players in it for far longer. I think we're all happy that it is finally over. Obviously, there are some people who are not happy that the deal is gonna go forward, but those of us covering it didn't need the the proceedings to drag out for forever Talk and

Speaker 2: about your read today on on the sort of winners and losers and and where where the different parties kind of gave ground and and where they they kind of maybe came out on top.

Speaker 6: Well, settlement looks, for the most part, like a big win for David Ellison. Right? He was looking at, you know, months of uncertainty. This trial wasn't gonna start until next year. Yes. There were hearings between now and then, but if that had happened, he was gonna owe hundreds of millions, if not billions of dollars, to this ticking fee that he had in the deal between Paramount's Guidance and Warner Brothers Discovery. And instead, he mostly agrees to do things he's already said he was gonna do, you know, release 30 movies a year in theaters, only 20 of them have to be wide releases. There's a commitment to, you know, production or make a certain amount of movies and television in this country. But, again, I think he was gonna do that stuff anyways. Maybe this, you know, forces him to do it because there's always a chance, you know, he says he's gonna do x and gets in and he he he instead does y. But it doesn't seem like Rob Bonta, the attorney general of of California, or any of the attorneys general who are involved in the suit or the Writers Guild got some big win where they can say, you know, they they were calling for structural changes, which would have meant selling something, and there is nothing being sold. Yeah.

Speaker 2: Is this real cause for optimism for the entertainment industry in LA? Is there is there is there already plenty of cause for optimism? Living here, I don't I don't you know, when I when I talk to folks, I don't get this sort of sense that, like, they're super excited about the state of things, but maybe it's it's darkest before dawn.

Speaker 6: Well, the last few years have been pretty rough. Right? There was kind of an unprecedented explosion, particularly on the television side, kind of starting around Netflix and House of Cards. And really, like, the TV business was a cash machine for the for decades. Streaming seemed like a really great business for for a lot of these people. And then around 2223, there has been this kind of correction or rightsizing and from which the industry has never fully recovered. So, yeah, you're right that most people who work in Hollywood don't feel great about it. I don't think that they believe that this deal is gonna be the the solution for that. Right? They're looking at what will likely be thousands in in job cuts and the combination of two of the original kind of six Hollywood studios. But other people feel great because it means they they think that David Ellison will finally be the one to kind of create a scaled player to compete with Netflix and Amazon and and Disney. Look. Warner Brothers has traded hands a lot over the last decade. It got bought by AT and T, then it got bought by Discovery, now it's getting bought by David Ellison. Everyone has said that they're gonna be the ones to figure out how to make HBO kind of a a real competitor in streaming. They haven't done it so far, but maybe David Ellison will have the magic touch.

Speaker 1: How is Hollywood processing the it seems like, TV's in a rough spot, but it it it feels like it's starting to be a good year for movies, at least financially. I mean, we had the three breakout sort of, like, crossover YouTubers, obsession, iron lung, backrooms. Then you have $2,000,000,000 outcomes with the Odyssey and Spider Man. And then you're going into the back half of the year, it's tech focused and you get the Theranos, Elizabeth Holmes documentary. There's an OpenAI movie. There's another Facebook movie. Like, at least from my world, I feel like there's more stories around the movie business. But how is Hollywood perceiving this year? Will this be remembered as, like, a good year for the movie making business potentially?

Speaker 6: I think it depends on who you ask. Top line, it's the highest grossing year since before the pandemic, since 2019. You have the second most billion dollar movies ever. You know, you have the Odyssey. You have the Spider Man movie. You had Toy Story five, you had the new Super Mario Brothers movie, and then a lot of the ones that you referenced, whether it was kind of the YouTube breakouts or even Devil Wears Prada two was a big hit. Sure. I think where people counter that is that if you look just in terms of ticket sales, ticket sales are still down a lot. The reason that grosses are stronger is in part because going to the movies is just more expensive. Mhmm. And so we've entered a phase where movie going as a habit is just not what it used to be. But, yeah, I think this is if you talk to people in the movie business, they feel better about it this year than they have since before the pandemic closed theaters. And the question that they all have is, is this gonna continue? How do we make sure that this isn't a blip and we actually are back on out of a growth trajectory which the business hasn't really been on? Yeah. I've seen some some crazy stats about movie going

Speaker 1: before the dawn of television. I think in, like, the forties and fifties, like, the average American bought, like, something like 10 or 20 movie tickets a month. Like, it was, like, the only thing to do. And so everyone was going to movies constantly. And then and then once people could watch Gotta get your screen time somehow.

Speaker 6: Well, maybe think about think about when you yes. There there is what happened, you know, before television where it was like the yeah. So it was pretty much it was that or reading books or playing playing cards. Yeah. But even when when you were growing up, going to the movies on a Friday night was Every weekend. Correct. Every weekend. And that's just not the case now. Right? No. You go when there is an event. A movie is competing Yep. With TikTok. It's competing with YouTube. It's competing with live sports. It's competing with concerts. It's competing with, you know, anything and everything. And so it has to be loud and it has to feel like something one needs to leave the house to go see. Yeah. And that's something that the movie business struggles with because they were in the habit of people just showing up on a Friday night and saying, where do I wanna see? Mhmm.

Speaker 2: Switching gears. Please. YouTube and Yeah. Netflix. You had an interesting post this morning on a creator that was potentially trying to rework rework their deal with Netflix seemingly because they're worried about losing something to do with their their the Golden Goose, which is their YouTube channel. Oh, interesting. Break it down.

Speaker 6: Yeah. There's been this fight for talent between YouTube and Netflix over the course of this year. Right? They're the two leaders in streaming video for most of their existence. They were competitive but operating in different lanes. Right? You know, Netflix was Hollywood programming, professional film and TV. YouTube was UGC and Yep. And just shorter form videos. Over time, they've gotten closer and closer together. And what's happened this year is Netflix, in trying to increase the amount of time people are spending and stay relevant with people under the age of 25, 30, in particular 20, they have done deals with a lot of big YouTube talent. And that's they you know, they've done business with YouTube before. It used to be, okay, Cocomelon, package together your videos and make highlights for Netflix. Now it's like with this with this person I mentioned, the chef Nick DiGiovanni, and they've done it with with a bunch of people. It's post your new videos to Netflix and YouTube at the same time. We will pay you millions of dollars on top of what you already get from YouTube, and we're happy to talk about whether we should, you know, work on some kind of original programming. YouTube got upset about this. Right? YouTube, even though they are the the the biggest player on the block, they seem to, you know, break records in terms of how much time people are spending it with it every quarter. I think Netflix trying to get people to post sync at the same time on both places just How irritating

Speaker 2: dare you? How dare you? No. It's so funny to me because they they've been through this like, oh, it's like everything. It's like rainbows and butter flies like Yeah. We put you in YouTube. It's about you, the creator. We're all creators and like we're here to just empower creators. And it's like we're here to empower creators that maintain our monopoly on human attention. Know? It's like it's really kind of exposing just the realities of like business. They're gonna make a bunch of like rational decisions to try to maintain their monopoly on like streaming UGC and and but but having to go kind of it feels like they just had to go very much like mascot. Mascot. Like, if you do this, we're gonna kill your reach.

Speaker 6: Yeah. Right. And We will punish you. And by the way, if you go back and work with us, we will reward you. It is very Machiavellian. They do they did not care. Yeah. It was interesting when I first started reporting on it how and what YouTube was doing in response. Like, thought what they were doing, to your point, was very reasonable and rational and just what any business would do. And then Netflix folks were like, can't I believe what YouTube is doing. And probably some of that comes from what you're talking about, which is YouTube has cultivated this reputation as this very creator friendly platform, which, of course, they're, you know, they're ultimately about the bottom line and creators are a means to an end for them. Yeah. And the other thing that's interesting is like when when podcasters

Speaker 2: were like, hey, I could just I'm posting my podcast to the RSS feed. I could just post it on YouTube at the same time. Maybe I get some additional views. Creators are now just trying to do that. They're like, I'm creating this video asset that I slaved away making for any number of hours. I made this thing. It's my IP. I own it. I should be able to post it anywhere. And now YouTube is saying like we're gonna cut your reach, you know, by however much. And it just feels like it is deeply misaligned with the creator which is the person that built YouTube. And it's my hope that it's my hope that that the creators like win here because it's so much better. It 'll be so much better if a creator can be like, yeah, I get I get views all over the place. And and but but I don't know. YouTube It won't be better for YouTube shareholders though.

Speaker 6: They may be misaligned, but it it I would actually say that this competition for creators, at least in the short term, is a net positive because there are multiple people. It's not YouTube for the longest time was kind of the only game in town. Right? Yes, you had TikTok and Instagram and Twitch. Well, that's what I'm saying. I'm saying the competition is, like, amazing. I want more I want permanent competition, not be this brief That might be the state because because right now, if YouTube is that stick,

Speaker 1: then Netflix has to increase the amount of carrots to say, hey. Yeah. You are gonna get crushed, but we're gonna double what we were gonna pay you. So and then all of a sudden, somebody says, you know what? Yeah. I'll get rid of my YouTube channel at that price. I'm down. Right? And then that's good, potentially. Yeah. And you see Disney and Fox and other we have legacy entertainment companies trying to get into. And so if there are just more people trying to compete for Creator's Dollar, that's good. Right? We've seen it you brought up you were you're talking about podcasting earlier.

Speaker 6: When there were a bunch of companies trying to get podcast deals and trying to sign podcast talent, that's when you started to see people like Joe Rogan and Al Cooper and all those folks getting huge paydays. So, yeah, the the more folks who want their Yeah. You know, want their videos back. Do you think that

Speaker 2: Netflix could think about trying to cultivate, like, emerging talent. They're so used to being like, hey, let's put a million dollars towards this single production. If you take a million dollars, you divide it by 20, you could seed 20 creators that are just showing any I'm very excited for a lot of the content that I like most on YouTube is is like highly produced twenty, thirty minute videos from a super passionate creator that just and spent it's like real time, right? And so what Netflix has been missing is just like and they've kinda done this with some documentary projects where they'll come out with a documentary on Trump's flight from Turkey. Right. They're doing these quick turn documentaries But right they should be doing that across like Insta every single every single category, basically. Sure. Like

Speaker 6: They could. I think Netflix is really wary of they would sort of categorize that maybe as user generated programming, and I don't think they feel like they can win at that. But it like Netflix's strength has been yes. That that really high production value type of programming and YouTube strength has more been the long tail of being the place that you can go for anything and everything. Mhmm. And I think if you most people at Netflix feel like they they can't beat YouTube at at that game. But it would be interesting certainly to see them, you know, go to twenty, thirty creators they like and say, here's $50,000 to make whatever you want. Mhmm. Yeah. Well, I would just like to see that because those creators, if they're just

Speaker 2: starting their journey, have nothing to lose. Like, they don't have this amazing platform and business built on YouTube yet. So it would take a lot of money. But some way or another, they're gonna need to get to the point they're gonna need to benefit from having creative talent that's distributed all over the world that can make this more real time content. And I've always felt like Netflix in the slop era that we're in, Netflix has amazing opportunity to just curate UGC better than YouTube because I actually can't stand when YouTube surfaces some video to me. And historically I would have been like, oh cool, there's a video, it looks like it's well produced, it only has 4,000 views, maybe it's someone great. And then now more than ever, it's like some like AI script from a and and and there's actually no substance to the content. And I think, like churning it out. Yeah. If Netflix can create a slop shield of sorts Slop shield. Curation layer, I'd be optimistic.

Speaker 1: I like that. What's the status or the status of Apple in this ecosystem? I talked to I talked to a filmmaker before they really launched, you know, real Apple TV plus productions, and he was saying, like, it's gonna be challenging for them because movies are it's a hits driven business. You're going to have flops, and that's sort of antithetical to the Apple culture of, like, everything needs to be polished and perfect. And then I think they've done well, and developed a portfolio of really well reviewed and Emmy winning, Golden Globe winning, you know, they've won a whole bunch of awards. But how do people in Hollywood see them? Are they an important buyer in the ecosystem? Are they just one of many? It feels like they're sort of sitting sitting out this YouTube versus Netflix battle, but is there a battle coming, you know, years down the line as they try and expand, or are they sort of happy with where they are?

Speaker 6: They're definitely sitting out the the Netflix YouTube skirmish. I mean, when they first showed up, I think they were seen as, you know, Captain Moneybags. They just they would outspend anyone and everyone. They're kind of seen as Starfuckers because every show that they do, they want to have big name talent in. Mhmm. But over time, they've developed a reputation as one of the of the best program or one of the best streaming services in terms of programming. Right? You you mentioned Emmy Awards. They just won the most Emmys of of any streaming service, of any company. Is that Widow's Bay? It was Widow's Bay was their biggest winner, but they, you know, they got a lot of nominations across that and Your Friends and Neighbors and Shrinking and a bunch of their shows. They get really good critical praise. Yeah. It feels like they've sort of jumped straight into more of an HBO competitor than a Netflix Yes. They have. Well, net that's but remember, that's where Netflix started. Right? Netflix started as competing with HBO and then went mainstream. Yeah. I don't know. Amazon started as competing with HBO and then decided to speak to the middle of the country with Reacher and other stuff like that. I don't know that I see Apple making that same transition to your point about sort of what Apple is. It doesn't feel like in keeping with their brand to try to be CBS. Yeah. The the knock that most people have on Apple is just their shows aren't very popular or Sure. You know, they they do really well with a particular type of viewer. Yeah. But

Speaker 1: only a couple other shows have broken through in the culture in a big way. But I You know, I saw estimated ratings and it was like 70,000

Speaker 6: views an episode or something, which is like a small podcast. Right? It's not They they may not care. Right? That if you're John Ternis and you're like, oh, I just went to the Emmys and we won all these awards and talent

Speaker 1: wants to work with us, that's good for our brand. Well, that's been the the four d chess argument in tech is that it gives them something to talk about that's not just App Store rents because they're like, oh, yeah. Our services business you wanna talk about services? Let's talk about, you know, Windows Bay, not Right. We've made another $10,000,000,000

Speaker 2: charging 30%. Think any of the major platforms will take a are are taking a hard look at at short form dramas or any of these these apps that are charting. I think a lot of them are basically, like, adult content that's sort of, like Romantic skies.

Speaker 1: People would say. Yeah. To see. Yeah. But there's also, like, horror and and and, like, true crime stuff in there.

Speaker 6: They're all looking at it. I think Peacock, I think, has already added some verticals. I know that Netflix and others have said that they're looking at it. That, again, doesn't feel like one for Apple per se, but most of the other ones look. All these services because streaming isn't growing as fast as it once was. They're all looking at ways to bring in more people. So they're all looking at YouTube creators. They're all looking at podcasts. They're all looking at vertical dramas. Anything that people are paying attention to, if they can find a sensible way to integrate it, they will.

Speaker 1: Makes sense. Is it fair to say that the Warner Brothers story was somewhat predictable just by the actions of David Zaslav even before the first bid came out? Was this was something that you and other folks in the industry were tracking. Correct?

Speaker 6: There was a feeling that what was happening that Warner Brothers Discovery wasn't working as a public company. Right? The stock was low. The stock was doing badly. Mhmm. The company was shrinking just in terms of revenue. The streaming service was doing okay. Mhmm. And so we we knew they had to do something. What they were doing was they were splitting it. Right? They were gonna cast off the cable networks into one business because that's the part that generates a lot of profit but isn't growing. And then they were gonna put the the studio and the streaming service into another. And my belief is that is what David Haslam wanted because he liked being the mayor of Hollywood. He wasn't the mayor, but he liked being a big shot in Hollywood. Right? He's in Bob Evans' house. He gets to hang out with movie stars and get dinner with those people. He didn't wanna give that Sure. And that's why when David Allison first came calling or one of the reasons that David Oslo and his board said, you're not valuing us high enough. We don't want this. We don't want it. And Allison just kept coming. You know, you gotta give him credit In the case of both buying Paramount from from Sherry Redstone and in this Warner Brothers deal, he faced a lot of resistance. And he, you know, in in part because he has the resources from his family, but he just kept coming. Mhmm.

Speaker 1: You have any predictions? Negotiating

Speaker 2: against himself.

Speaker 1: Do you have any predictions for what what what the next big Hollywood story might be either through the end of the year or next year, something that people are feeling like, okay, we're in act one or act two there. There might be a crescendo, some big deal, some change, some structural moment. Could be sort of across any any storyline. But what what are you tracking?

Speaker 6: Well, look, in the immediate, there's gonna be a lot of attention paid to what does David Ellison do. Combining two companies is gonna mean Sure. Not only firing a lot of people, but who's gonna run the streaming business. He's got a high profile person in charge of streaming at Paramount and a high profile person in charge streaming at at Warner Brothers Discovery. Mhmm. Setting that aside, a lot of people are wondering what is going on at Netflix. I think, you know, they've had a pretty rocky year ever since they walked away from Warner Brothers Discovery. It's led to a lot of questions about the future and, you know, whether they have a plan for their next act and how they're gonna grow. There's been a lot of rumors about changes in leadership there. Mhmm. And so I think people are keeping an eye on that. Mhmm. Comcast is doing what Warner Brothers Discovery once was planning to do. Know, they're splitting their cable business from the entertainment business. And a lot of people are wondering, is that the first move in, you know, NBCUniversal ends up getting combined with something? You know, AI is a much bigger conversation, I'd say, in the music business than in Hollywood right now, but it's lurking, obviously, as it is in all sectors of society. Those are probably the big ones. No. That makes sense. Oh, and and the federal film tax credit. A lot of people are wondering. There there's a there's a push to, try to pass a a tax credit for shooting in in The United States, which would bring a lot of production back from Europe and Canada. And Trump came out for it, and people are trying to get that done basically between now and when the next congress seats in January. I I think Avengers is going to London or The UK.

Speaker 1: And I don't know if that's because that's where they actually wanna shoot or it's a financial decision, but it'd be exciting to get back to making movies in Hollywood.

Speaker 2: It's a good town. Hopefully, we get booted out of our studio. Would That'll be a bullish indicator for for It

Speaker 1: was way too easy to find studio space in Hollywood for us. Yeah. Way too easy. Well, thank you so much for joining, Lucas. Really, really enjoyed it. Let's do it again when you have more stories. We'll talk to you soon. Thanks, guys. Cheers. Bye. Bye. Well And that's our show, folks. Thank you so much for tuning in to TBPN. We'll see you tomorrow at 11AM Pacific. Leave us five stars on Apple Podcasts and Spotify. Sign up for our newsletter at tvpn.com. We wish goodbye.