Sony Investment in Immersive Experiences

This episode is brought to you by Holiday In by IHG. Everyone knows Holiday Inn, right? Or they think they do? Be though they have the same name, they've got a whole new energy They kept the global icon status and upgraded pretty much everything else We're talking modern rooms with real reset mode vibes Spaces that feel like your living room, just a little more low key chic And dining done right from breakfast to dinner and drinks Whether you're traveling for work or getting away for a minute, it's comfort that hits different. So yeah, holiday in It's a new day and a new st. Book your next day at holidayin. com This episode of the Town is presented by HBO Max. For your awards consideration, Max presents Hacks, the Emmy Aard winning series starring Gean Smart and Hannah Einbinder. In the aftermath of mistaken news reports that Deborah passed away She and Ava return to Las Vegas, determined secure Deborah's legacy as a comedian Don't miss the series Variety is Cing one of TV's best comedies ever Pax is streaming on HBO Max. Watch now It is Monday june twenty ninth. Never adult moment in the business these days, we've got another studio sale. Not a sale, really, a spinoff. Comcast is separating NBC Universal, creating two publicly traded companies, O for the connectivity business, that's Comcast wireless and cable, and a new unit for the media business. That's NBC, Peacock, Sky overseas, and the Universal Studio and theme park business that it acquired about fifteen years ago Remember, Comcast already spun off its cable networks into Verscent earlier this year. And now, according to Comcast leadership, NBCU on its own will be quote Poise for growth Maybe Or maybe this is a prelude to another sale. The Roberts family will retain control of both companies. So the question is why are they doing this First off, the stock is down about thirty percent over the past year and has been stagnant for more than a decade many analysts, including people on this show, have noted that they kinda need to do something And obviously, they're seeing what happened with Warner Brothers Discovery the leadership there moved to split that company into a pure play studio and streaming unit. and Warnererss was rewarded by a bidding war that included Netflix and Comcast, and ultimately was won by Paramount at a huge preremium But a move like this could open the floodgates of more MNA and media, reshaping the content landscape at a time of pretty massive up peoplee And of course, this spinoff involves NBC, the broadcast network, so it must be approved by the Trump administration, which is no fan of Comcast or Brian Roberts, thanks to MS now This is not about separating what we built together, Roberts, the current CEO, stepping down, told investors this morning. It's about positioning two exceptional businesses to move forward with greater focus, agility, and the ability to fully capitalize on the opportunities ahead Okay, so what does this mean for Comcast's vast Hollywood operation? Everything from the Tonight show to the mininions in the Odyssey And is NBC Universal now a buyer or a seller in the frenzy to compete with big tech We've got Luucas Shar a Monday guy from Bloomberg. He's back today and we're going to go into it. It's the spin off of NBC Universal and does this put another studio in play From the Ringer and Park, I'm Matt Ellany and this is the town Okay, we are here with Lucas Shaw, our normal Monday guy back from his wedding, Lucas, How is your wedding? I am not offended that Craig and I were not invited. I think the invite might still be in the mail. No, no, Craig. I know it was a small wedding. I am one hundred percent not offended. The only and I would actually like to thank you for not inviting Craig and not me. That I would have been very offended by. That would have been very understandable. It would have made sense if you invited Matt and not me, That would have been acceptable. Craig, it's ten times more fun at weddings So I would have understood a little bit, but I thank you for not inviting both of us. There were zero people whom I know professionally who were at my wedding Besides the entire C suite of Netflix, I assume you invited them None of them were invited I did have one person at a certain point ask who like knew nothing. was like, So you can to invite Ted Serando to youredding and I was like Nor would he go? Nor would It would just be awkward. He'd have to get you a gift. It would be very awkward All right, welcome back. and luckily for us News dropped this morning. prettyretty big news. This to me is pretty transformational cast splitting off NBC Universal into its own company that will trade and be controlled by the Roberts family What is going on here? Is this just Deal andV They saw what happened to Warner Brothers' discovery and the mere prospect of splitting the company up into a pure play streamer and television. that caused a bidding war to occur and an outrageous price to be paid. Is this deal envy by the Roberts family or is this something more strategic DLNB can be strategic, but I think this is a company that's been in need of some kind of dramatic change for a little while, right? Their stock has been going down for years. You know, their core business, which is connectivity, cable, broadband, wireless You know, the cable business, as we all know, has been in freefall. Wireless has kind of stopped growing There's a bunch of competition from phone companies. and The people who are investing Comcast for that, especially the last few years as sort of their optimism about the media business has gone down, they're just like, why do you own this entertainment business? How does this help you win when you're under a lot of threat with connectivity. and same on the media side. I mean, they already took the step of spinning off erson. I just think they looked at it and said, can tradeed a higher multiple and have more optionality if we separate them because you know, they they'd explored other deals and not done them. Yeah, they've tried everything they could possibly try this company together to try to raise that share price and nothing's worked You know, they've had great years at the movie studio. The parks business is Going great The you know, television stuff was siphoned off to the loser cable networks and now they have NBC, which is potentially a stable business going forward. Nothing worked And the question then becomes is this An indictment of the entire synergy argument, the Ccast symphony and the the kind of vertical integration argument that has been so prevalent in Hollywood for the past twenty years And we've seen it now where AT and T couldouldn't make distribution and content work Verizon couldn't make distribution and content work And now Comcast is essentially saying, we can't really make this work. They were always held up as the one successful example Yeah, we've talked about it because it seems on the surface that it's worked. Yeah. And I think it worked for a time and then it didn't. And it's also up for debate You know, when we say it worked, the company did well. were they really benefiting from being part of the same? And again, maybe they were at this point. it certainly seems like they're not. And the logical question is do they do now? Is splitting it really all they're trying to do or is this ing them up for for some next move. Yes. and we will get there. because I think this is a sign of Forces beyond. the initial business strategy behind this company Whereas they said, if in an age where distribution matters and we are a main distributor of content via Ccast, it's meaningful to own all this media asset stuff Now When the means of distribution are so far beyond and they have struggled with global scale. This company is not global in the same way that many of their competitors are And peacock is really not a scaled player. Well in fairness, in their main business which is connectivity There basically aren't global companies Maybe Starlink is sort of being that. but if you think about Pone companies, internet companies, cable companies, it tend to be domestic or at least regional, right? You'll have a Starling wants to be global and it's pushing down their share price because everyone's looking at this behemoth owned by Elon Musk and saying Why wouldn't Sarling kick their ass? Right? Or it's going down because of ition from the Verizons and T moobiles and AT andPs of the world which have siffoned away some of their customers Yeah, I mean, look, it's hard for them to not look at the processes they've just been through where they were interested in Warner Brothers discovery and just didn't have the balance sheet to really compete with Netflix or the Allllison family I think they, you know, they took a look at Roku and decided it wasn't really in their best interest but also that it was, you know they wanted too much money Um and so now they have to This is I guess akin to what Warner Brothers did R where they decided to tried were They're fine going this way. They think it'll unlock value because the people who want to invest in Comcast can do that. peopleeople who want to invest in NVC Universal can do that. And if, oh by the way, sometime in the next six to twelve months, someone comes along and wants to try to buy one of them, it's much cleaner to do that because the type of company that wants to buy NVC Universal doesn't want to own Comcast and vice versa And that's a key point here because Peter Zupino, the analyst, he wrote today in a note said We doubt that this breakup will occur Instead, we expect one or both comcast units to merge with peers or competitors That's what Warners did, right? The mere prospect of a split Awakened Netflix, awakened these other companies to say, oh These are great assets that are being undervalued as part of this conglomerate We can swoop in and get these The stock of charter. went up, That's a comcast competitor The stock of charter went up today because the street thinks that if Comcast is separated from NBC Universal, it's a prime target to merge with Chter, which is already trying to merge with Cx to create one mega cable connectivity company, perhaps even a national either duopoly or monopoly over this And NBC Universal will be laugh to merge with Netflix or or one of these other companies and it's the same thing we went through with Warers where one of them will all one of them will ultimately win out absorb the NBC Universal Studio. We will all get our people or internet from one company or one company competing with Starlink and competing with some of these other big tech player companies. And it'll be one sort of legacy roll up competing with those. Yeah. This split they can kind of do pretty easily, but in terms of future M andA, do you think that the Trump administration would try to thwart the Roberts family from doing anything. I think that it would be difficult. I mean, obviously doesn't like the Roberts family because M MSNBC now MSMBC now or MSN now. and could muck that up, pererhaps, but also perhaps there's a scenario where NBC goes to another buyer If Netflix looks at these assets and says, yes, We would like the studio We would like the branded content from Bravo. We would like the theme park business. We do not want NBC a broadcaster. Maybe that becomes an opportunity to spin that out from the spinoff and get someone more Trump friendly to buy it and grease that deal. Yeah. Well, I actually think that NBC Universal is is just as good a fit for Netflix as Warner Brothers discovery was, whether they' are going to it's better. Yeah. I think it's actually better other than NBC The theme park business is something that Netflix, I think would like Because I've said this before in the show. If you look at the Disney theme park business, that is one hundred percent branded Disney content. It's going to be very difficult for anyone else to buy that and incorporate. But the universal parks, most of the IP in those parks is not universal IP. It's transrformers Simpsons, It's Harry Potter Netlix could buy that and then slowly take it over. Transformers become stranger things Simpsons's ride becomes a Bridgerton ride That's a much better way for Netflix to get into experiential in a bigger way and then have all these amazing film properties that they could exploit. Of course, whether Netflix shareholders are keen for them to to do a deal given that they didn't want the Werner Brothers deal We'll see about that. I mean, do you think they'll I mean, Netflix stock is still down thirty, forty percent from before they went after Warners the shareholders are pretty clearly said they didn't like that or at least pursuit opened up B fears of a slowdown at Nept. I think it make the argument that it makes them a little bit more keen to go after IP because of the engagement problems they may be having. could be. I don't know that that necessarily solves the question for them. But its as much as Netflix said that Warner Brothers was a one off thing This has always been the other shoe to drop, the other thing hanging out there. there is one other. can I want to take a step back th. When you think about the consolidation and the merger and just like all the stuff that's happening Doesn't it feel like all of the like All of the media companies that sort of ran the world for so long or sort of slowly disappearing or maybe butly disappearing Yeah. think about when you were at THR when you started and like what were like the six or seven biggest companies Sure. You guys mean Fox was in there. Fox time Warner was in there. Warner Bothers is about to be gone Universal NBC Universal was owned by GE at the time, but it was a major player. Sony was I mean Mo there, CBS Yeah, and they've been replaced by Netflix, Amazon, Apple Basicallyically on Google. And those are the only ones that are in the professionally produced content business YouTube and meta and you know, mean but that's the landscape we're in right now. I totally agree and we've covered it. I just when these when these big moments happen, I sometimes have to take take a step back and think about it, especially because the Warner Brothers thing is ongoing and who knows now it's going to happen with Universal. It's just very symbolic of sort of what has happened to this industry over the last fifteen or twenty years. And it begs the question, could the Ellisons go after NBC universal and make it a full legacy Hollywood roll up to compete with Big tech Can you imagine that h? I think Lena Khan's head would ex. I don't understand how regulators would allow that to happen I don't either I mean, T broadcast networks And two bers networks Three major studios bas like But you know what Larry Ellison writes another big check. And they can get it in before twenty twenty eight or President JD Vance has a similar opinion of the Ellison family. Who knows? This episode is brought to you by Fanual Predicts. 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Less time spent on operations, more time connecting brands with the moments and fandoms that matter most To learn more, check out accccenture d. com slash Spotify Are you at all surprised that It is Mike Kavanaugh, currently co CEO of Comcast, sort of formerly a Wall Street guy who's going to be the CEO of NBC Universal Does that Solve the sense of strategic drift any has had over the last couple of years where there hasn't they've said he's the leader, but people because he's also been running Ccast, people haven't really felt like he's the leader. Well, I think you sort of answered your own question is that he is the Gooner Weedenfells scenario where he is in charge of this entity If it's spun off If it's not spun off and it's sold, then he gets a gigantic payout and goes away And it's the most interesting thing about this entire transaction from a people perspective is that Brian Roberts is stepping down as CEO. You used the phrase stepping down. I don't want to be semantic, but I sort of view it as like stepping up or stepping aside where victim's a little It's a little like, you know, Brian Roberts is pretty friendly with John Malone And John Malone spent years sitting on top of this constellation of businesses where he had some of Live Nation and Sirius XM and the land of Braves and Formula One and all this other stuff And he wasn't really the CEO of anything. but he was in a lot of ways, the ultimate decision maker of sort of big strategic moves at those places And And he sat on on all the boards. And you also see a guy like Barry Diller who sort of bought and sold and aggregated a bunch of companies. And so maybe that's what Brian Roberts is seeing for himself where he's, you know, hess he's effectively split one company into three and he can have different leaders for all of them. But his family is still a major shareholder in all of them and he's a major decider and he can be He can he can work twenty percent less hard. I know, he's sixty seven years old. So does that mean that five years these three companies will still exist in the way that they are today. I mean, it seems to me that these companies position to either be buyers or sellers And we don't know whether NBC Universal is a buyer or a seller at this point? No, I think it would be surprising if they were exactly the same as they did five years from now. And I think that Brian Roberts and Mike Kavanaugh would own that, right? They They split off Verson and said, okay, it might go and buy other businesses in the cable digital media space. Now NBC Universal is sort of a an unencumbered entertainment company that go and try and hoover up some of the other businesses, although I don't know why it would buy a bunch of cable networks since it already spun off cable networks. I know, peopleeople are joking that they're going to buy erson. I don't know that's going to happen. But And I don't know why they'd suddenly be a buyer for Lion Gate. I don't know what that gets them. But they could they could certainly do something. and if they don't if they don't buy something, it it could be appealing for someone else. We already talked about Netflix. And yeah, the connectivity business. is now rid of this asset that most of its investors didn't want it to have at this point But what is there for NBC Universal to buy that's meaningful? Like Lions Gate. Okaykay, whatever. They already have a way better studio. They'd have a bigger library Cool What else is That doesn't that doesn't help them with the number one goal for NBC Universal is very clear, right? They have a very successful studio and a very successful parks business and the NBC helps them with sports and', you know, NBC and Bravo are fine Their streaming business is been a disaster They say it's about to be profitable. We'll see if it stays that way when they end up having to pay more for the NFL. But it's figuring out what to do in streaming. So does that mean that they they buy something else in streaming? I don't know. they have not. ive outlined what the strategy is for that business. And here's the issue. and I think this is the core Problem they have now is that without all the revenue from the cable and connectivity business and without all of the cash flow that gets thrown off of the cable networks, how is this NBC universal entity going to compete in the future for sports rights and for big deals like the Taylor Sheridan deal that they've already done They want to invest in making NBC Universal a big competitor, but How is this not just another version of Warner Discovery that was too small and had too little cash flow to really compete. Well, the problem for Werner Brothers discovery was all the debt. the debt. and sure some of this some of also had the cash flow from the networks that NBC Universal is not going to have because those are adersant. Yes, but NBC Universal still has NBC and Bravo and they also have the Parks business, which generates a meaningful amount of cash. It is a smaller company. is it going to be if they go head to head on something with Netflix or Amazon, are they going to or Apple, are they going or even Disney although Disney doesn't do that much of that. Are they going to have the advantage? Probably not. They will be the smallest of those That seems like a bigger issue for sports than it does for entertainment. If I'm looking at Sunday night Fotball right now and I'm Netflix I start salivating becausecause all of the sudden, NBC Universal is a much smaller company and maybe isn't going to be able to keep Sunday Night football when the NFL demands a huge rights increase. and NFL wants that weekly number one show event of the week to power its ad business Certainly could be or they could split the rights in some way. I think that's a meaningful thing because NBC has spent the past five years. They've made Pacock all about sports and now they have a lot less money to spend. And like the NBA deal, even though the ratings for the finals and the playoffs were good you know, there are a lot of people who questioned whether it was worth it considering what they get in the regular season out of those games. Yeah. This transaction doesn't really solve the peacock problem I mean we knew NBC was going to do something. We knew Comcast was going to do something here I thought whatever they did would come with a quasi solution, a joint venture, a sale or something Peacock. And This is't this isn't that. They still got to figure out the Beacock question dont Well, I've never understood how the joint venture stuff works. I don't know how you sol I don't I don't know how you solve the streaming question. The answers that other people have had have basically been huge mergers, right? Paramount and Warner Brothers combining Fox and Roku combining. this is how people have chosen to address being subscale in streaming. Well, there's been a rumor going around that Peacock is going to become a tile on Netflix And there was there would be some kind of a joint venture or arrangement where Peacock goes globallyia Netflix like they've done with those cable channels in Europe And then there's a revenue share or some kind of data share or something that makes it worthwhile for both sides I hear you, but my feeling on that is that's not really a streaming joint venture. That is Netflix absorbing Pa They don't own it. They don't own it, but it's like a massive licensing deal. Yeah. It's a distbution arrangement It's Netflix doing Amazon channels with cast streaming service. but also if yeah, anyways, Those types of things are they're called joint ventures, but ultimately someone has to be The in control and Netflix is in control in that scenario Yeah except they don't own it. and the Robert's family would to say we still own these assets evenven though sure they've had to bend the knee And it would make peacock profitable because they'd make hundreds of millions of dollars, presumably or billions of dollars a year from the licensing which they could put under the peacock bottom line So maybe that'll still happen So if you're if you're a banker, Field view pitch What deal or is this all preordained? This is the step step three of a five step transformation process that began with spinning off personers and is going to end with a new media conglomerate or with Comcast simply going away. I mean, Comcast Charter is the one that's the loudest right now. Um, It doesn't really solve the fundamental challenge for either business, but it does give them enough scale to just seemingly impregnable imp preregnant. Yeah.. But if I'm trying to fish for a deal, I feel like You try to make the Netflix NBC Universal thing happen. You call up Ted Serandos and Greg Peters and say, I know you didn't I know you walked away from the other one. What about this one David Elson who was your two competitors in that. One of them is off the table and the other one you're now swallowing. So who's really going to compete with you for this? That's probably what I would do. Yeah. And the question then becomes how open Ted and Greg to doing another deal. And how willing is in that scenario, like Brian is doing all this stuff for the Roberts family still retains a lot of control. Yeah if they did a charter deal uh, which which By the way, it was ' been part of the Malone portfolio could also be is that something that they could still have some control over? You do the Netflix still you yourre out. Yeah. So is he ready to say, you know I don't need entertainment's been nice, but I don't need it any Would would NBCU be much more expensive than Warner Brosers was? Good question. The market cap of the whole company right now is about eighty five billion or it was before the stock went up Today Yeah, but remember what Warner Brothers Met cap was and then what it traded. Exactly. It would all depend on who else is in If it's one buyer, The Netflix is not going to overpay like they like Paramount did. Yeah. Warner Brothers felt more limited, right? Like their sports rights weren't as good. They don't have a theme park business. likeike NBCU feels a little bit more varied. I haven't done the numbers in a while, but I believe that NBC Universal is larger and command a lot more for the reasons you just said and is not making most of its money from a shrinking business At least not anymore. They got rid of that. Not anymore Um All right, well, another fascinating development. Thank you, Lucas. Thanks, Bat All right, we are back with the call sheet. Craig. didid you see this investment news? Sony is investing in this shared viewing experience company Cosm Cosm. I never loveved the name of Cosm, but yes that so now Sony has Alama Draft House and now they have Cosum in the live evvent space. Yes, they own Alamo Draft House and they now have a hundred million dollars minority investment in Cosm, which has they launched in LA in Inglewood But they have venues in Atlanta, Dallas, I think a couple more are coming. And it's basically sort of like the sphere, but on a downscaled, It's to watch sports in an immersive environment. They have movies. they show the Matrix, Harry Potter. It's kind of a good business, I think. It makes sense they would do this. Yeah, this is like the lower budget competitor to the sphere I wonder if there's just going to be more of these popping up all over to compete with this fear They've invited us to come over there and we haven't gone yet. We need to go. I have to say, I was skeptical at first and then I saw some photos of what their dome like sports viewing experience looks like. It does kind of look look like you're in the stadium should take your fantasy football pods sir guys and go to experience that. We should. We should actually that's a good idea. We should do that. My prediction today is I think this is only the beginning that Sony will ultimately end up owning this company and that that will happen in the next few years. Sony clearly looking at the content landscape. It's already a Japan based hardware technology company. and they're looking at the content market right now for Sony Pictures and the CEO Raviah Huja, who's now going to be on the board of Cosm They're looking at these AI proof, quote unquote experiential businesses that everybody's interested in right now. And I think Sony will try to build up this theaters, but not theaters. They don't want to own AMC. They don't want to get into the, you know, the the mass market theater business, but something like Cosm to go with Alamo Draft house makes a lot of sense for Sony. I think they will buy it. When you say AI proof, what do you mean? L like Cosm is and like live experiences are something that can't be corrupted by AI Yeah, there's this whole movement right now in the investment community for live experiences, things that you cannot replicate at home and that cannot be disrupted by AI. Doesn't matter if we're all sitting in pods experiencing entertainment on our headsets in five years, people will still want to go to concerts and out of home activities like festivals Ari Emmanuel has this whole company Maari that is buying up businesses that support live entertainment. He said it on the show. He thinks that because of AI productivity and work from home and all these things that there is going to be a four day work week and three days of the week are going to be for out of home experiential things, that's going to give a big opportunity to live nation and all these businesses that focus on the out of home community That's what this is. Cosm is a experience you can't get at home, you can't replicate it via any kind of algorithm or anything that will serve you content at home or on your phone This is where it's going to be at Yeah, it'll be interesting to see if if theseese types of things can pop up more at a more affordable price because Cosum is still kind of expensive. Obviously this sphere is expensive. Finding the middle ground where it's something that a normal person could just kind of go do on a Saturday that doesn't cost like two hundred fifty bucks That's kind of like in between a sports bar and going to Dodger Stadium is interesting. They position it is exactly that, but for a special occasion type thing it's you know, dynamic pricing. So if you go to a Tuesday night doodger game, it's less expensive than going to an NFL playoff game to watch there. Maybe we should do our box office draft live from the cosm. so people can could watch there.'ll have a big stadium event and you can go to the cosoms in various cities and experience our box office. Let's not commit too quickly. We'll see if Dolan's interested mayaybe we'll do an atosphere anymore Bidding war for this. Yeahes, Sere would be amazing. Yeah. Lucas' face on the giant big screen at the Sere. All right, that's the show for today. I wanna thank my guest, Luas Sha, producer Craig Horrbeack, editors, Johon Jones and Justse Lopez. And I wantan to thank you. We willll see one more time this week