Netflix and the Fall of Television | The Mouse Strikes Back | 2
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Wondery Plus subscribers can binge all episodes of Business Wars Netflix and The Fall of Television early and ad-free right now. Join Wondery Plus in the Wondery app or on Apple Podcasts. It's November 12th, 2019 in Burbank, California, Disney headquarters. Kevin Mayer marches into the IT department, his brow furrowed. He's the chairman of Disney's direct-to-consumer services. Mayer's barely crossed the threshold before he starts demanding answers. What the hell is going on?

Every head in the room turns away from the computer monitors and stares at him, but no one needs to ask what he's referring to. Today is what's been dubbed D-Day, the launch of Disney+. Now it's late morning. The service has been live since midnight Pacific time. It's not the company's first foray into streaming. Disney has been a part owner of Hulu since 2009. They also operate ESPN+, the streaming version of their sports cable network.

But those are both relatively small endeavors. Disney Plus is different. It's launching with a library of 500 feature films and 7,500 episodes of television and a new slate of high-budget original programming. And it's Disney's big bet in taking on Netflix. They've invested $3 billion into building the service, and they've rolled out a massive coordinated marketing campaign over the past month.

It's all been building toward today, launch day. And right now, their worst fears have come true. Disney Plus is not working. Mayor holds up his phone. My Disney Plus experience is underwhelming. Black screens. You know where that came from? Twitter. Here's another one. Me after being excited to spend my day off watching Disney Plus, only to wake up with connection errors. And then there's an unhappy face. How about that?

If I see one more Wreck-It Ralph screenshot with a Wi-Fi signal and unable to connect to Disney, I am going to scream. Someone tell me we're fixing this. Sir, we're working on it as fast as we can. I don't understand. We have the best streaming technology in the world. These kinds of errors are not supposed to happen.

Two years ago, Disney purchased a large stake of BamTech, the software behind Major League Baseball's streaming app, among others. And that's widely considered the most advanced streaming software on the market. The IT worker shakes his head.

Best as we can tell, there's a coding error in the app, but we're still trying to find the exact problem. Are you kidding me? This is exactly what we were afraid of. Unfortunately, some things don't reveal themselves until you're under pressure, and the system is under way more pressure than we thought it would be. What do you mean? Well, millions of people are signing up. That's way more than we expected. Mayer feels a wave of relief come over him. They're exceeding sign-ups.

Even though this isn't the bright start he promised for the service, the day could still be salvageable. But he can't get complacent. We still need this fixed ASAP. We need more than one day of strong signups. We need years of subscriber growth. And if people think our service isn't reliable, we're doomed. Sam, we're working as fast as we can. I never want to see that Wreck-It Ralph screen grab ever again.

Mayer heads back to his office. He needs to report to Disney CEO Bob Iger on the status of the bug fix. Iger has bet his legacy and the future of one of the most storied companies in American history on this pivot into streaming. And Mayer's not going to let him down. But does Disney have the right strategy to cement them as a must-have streamer? Because they have to prove that today's wave of sign-ups isn't just a flash in the pan.

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From Wondery, I'm David Brown, and this is Business Wars. You know, by the time Disney got into the streaming game with Disney+, Netflix had more than a decade's worth of a head start. Netflix first moved into streaming TV and movies online in 2007. Then in 2013, they expanded into original content. And by 2017, Netflix was poaching major producers away from the legacy studios.

Over the 2010s, the legacy studios were caught flat-footed. They were slow to realize that Netflix was disrupting the entire industry and was now major competition. Adding insult to injury, Netflix was using the studio's own content to grow and cut into their revenues. Disney realized that if it wanted to succeed in this new streaming era, it couldn't keep providing the tech company with premium content. It needed to wall off its high-demand content on its own streaming service.

Changing its operating model and going up against the chief disruptor would be a risky undertaking. But with Netflix's dominance growing and more streamers coming online, joining the game was the only option. This is Episode 2: The Mouse Strikes Back.

In building a streaming service, Disney has made big promises to analysts and spent a gargantuan amount, more than $3 billion. It's promised the service will have between 60 and 90 million subscribers within five years. That's an ambitious goal, effectively aiming to reach around half of Netflix's massive subscriber numbers in just a few years. And to achieve it, Disney Plus needs to start out of the gate strong with pre-enrollments and first-day sign-ups.

But despite all the effort and resources Disney's putting behind its new streaming service, it's by no means a guaranteed hit. Disney is the first legacy studio to really try to take on Netflix. And no one really knows how much capacity the American public has for subscribing to multiple streaming services.

Disney Plus isn't the first streaming service to launch post-Netflix, but it's the first one to really try to rival the streaming giant with a broad-based service and a steady flow of original content. Other services are more modest in their aspirations. Along with Hulu, Disney's joint venture, several premium cable channels like HBO and Showtime have services that allow audiences to watch their shows without a cable subscription, but they aren't producing original content specifically for their streaming apps.

And while Disney is one of the most iconic brands in history, it's a brand that has an extremely strong association with children's and family entertainment. To be on track to hit at least 60 million subscribers in five years, well, they need to convince adults without children that this service has content for them, too.

They've been emphasizing in ads that Disney Plus isn't just home to the animated classics people remember from their youth. It's a place to watch National Geographic's nature documentaries, as well as Marvel and Star Wars productions. And to hammer home this point, Disney has invested heavily in a new show called The Mandalorian.

The first live-action TV show set in the Star Wars universe, the show follows a masked bounty hunter who's forced to take care of a being who becomes known as Baby Yoda. Hey, let's make the baby do the magic hand thing. Come on, baby, do the magic hand thing. Disney reportedly spends $15 million per episode, an order of magnitude higher than the first season of HBO's Game of Thrones, which cost about $6 million per episode.

You know, business is often a gamble, and most of us believe the bigger the bets, the shakier the risks. But it doesn't have to be that way. Those who succeed know the landscape better than the other guy. And then, of course, they pray there isn't an earthquake lurking along some unforeseen fault line. The streaming wars have now become about bigger and bigger budget tentpole shows that can draw in new subscribers and keep them hooked. And for Disney, the gamble on The Mandalorian pays off.

The series becomes a cultural phenomenon. The first season racks up over 5.4 billion minutes viewed. Memes inspired by the show plaster social media, and Baby Yoda merchandise sells like hotcakes. But while The Mandalorian may have turned Baby Yoda into a merchandising juggernaut, one hit show isn't a business model. It's a teaser trailer.

Disney Plus does manage to back up the hit. Over the next few months, households keep signing up for the service, drawn in by a steady release of shows based on Star Wars and Marvel, as well as other Disney properties. And in February 2020, with Disney Plus looking like a success, Bob Iger announces he's stepping down as CEO of Disney. After nearly 15 years at the helm, he's ready to retire.

Bob Chapek, head of Disney's theme park division, is named the new CEO. Iger stays on as chair of the board as well as in a temporary position called executive chairman to oversee Chapek's transition. But global events make Chapek's new job harder than anyone imagined, requiring an even fuller pivot to streaming.

In March 2020, the COVID pandemic forces Disney to close its theme parks and dock its cruise ships. Movie theaters and retail stores shutter. The one bright spot for Disney is their streaming service. By August 2020, eight months after its launch, Disney+ hit 60 million subscribers. That was their target for five years after launch.

But all those subscribers want fresh content, and the pandemic has shut down production. And Disney's no longer the only legacy studio with a streaming service either. NBC has launched Peacock, and Warner Bros. has debuted HBO Max. Amazon's Prime Video continues to grow its original content output. And of course, Netflix looms large, recording record growth thanks to the pandemic lockdowns.

To keep growing, Disney needs high-profile products that will lure in new subscribers. Sure enough, without that fresh content, by fall 2020, Disney+'s subscriber growth begins to slow. And thanks to Disney's corporate structure, JPEG is hamstrung. After investing $3 billion in Disney+, the company can't feed the streaming beast that holds the key to a profitable future.

Now let's pause to talk about Disney's structure at this moment in 2020. Disney has a bunch of different studios. You got Marvel, Pixar, Disney Animation, Fox, and so on. And each studio head gets to decide how to release the products their studio makes.

They can decide if a film should have a theatrical release or go straight to streaming. And almost all of them are holding their biggest movies back, waiting for theaters to reopen. Leaving Disney Plus without enough high-profile content. But Chapek knows they can't afford to wait. So in the fall of 2020, Chapek calls up Jennifer Lee, the head of Disney Animation. Hi, Jennifer. Hi, how are you holding up?

As well as anyone, I guess. Look, I really need you to send your best material straight to Disney+. Skip the theatrical release, okay? Oh. Uh, okay. We're launching right in. J.P. cringes. He's been told numerous times over the years that he lacks emotional intelligence and needs to improve his bedside manner.

He's been working on it, but it's still not his forte. In days like today, he wishes he was a little better at it. I know it's not ideal, but this is the world we're living in. Streaming is king.

I appreciate where you're coming from, but these are movies we've worked on for years. Our stars, our animators, they deserve these movies to go into theaters, not go straight to streaming. They want to see these movies be events, not just get lost in a sea of content. We have no idea when the theaters are going to reopen. We could be delaying the release of these films by six months or more. They're timeless. They'll be fine.

I know going straight to streaming has negative connotations, like the days of going straight to video, but that's not the reality anymore. Right now, in this day and age, there's just no stigma around streaming only. I'm telling you. That may be true, but this is my call, and I want to hold off. It's not just Lee who's refusing to go straight to streaming. The heads of Pixar and Marvel are also holding back their biggest films, too.

Without those movies, the content well is drying up, and Disney Plus' growth could very well move from slowing to declining. Chapek cannot let that happen. He comes to a decision. A streaming service is a beast that needs constant content, and he's going to feed that beast by any means necessary, even if he infuriates a whole lot of people. Because if he doesn't,

Disney will fail to meet Wall Street expectations, the stock price will plummet, and not only will that mean his head on the platter, but a full-on downward spiral.

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In early October 2020, Disney CEO Bob Chapek coasts along the 101 freeway in Los Angeles, California.

Thanks to the ongoing lockdowns, traffic is minimal and Chapek zips along, taps his fingers on the steering wheel in time with the beat of the music. His phone rings. Caller ID says it's Alan Bergman, chairman of Walt Disney Studios. Chapek turns down the music and accepts the call. Alan, how's it going? Hey, I just talked to Iger. He says we're not going through with a reorganization. We're not going to create the new division.

Chapek nearly swerves off the road, he's so shocked. He's literally driving home from a meeting with former Disney CEO Bob Iger about creating a new division within the company. Chapek thought the meeting was a success. Iger had more or less agreed to the idea.

For the past month, JPEG's been pitching Iger on an idea for reorganizing Disney. As CEO, JPEG wants to have central control over the content each studio creates. Right now, each studio head sets their project's budget and distribution path. To JPEG, the result feels like every studio is its own horse, each pulling in a different direction. JPEG wants them all headed in the same way, all geared towards streaming first as a central strategy.

So, JPEG wants to create a new division that supersedes the various studios and he will have the ultimate authority over how each movie or television show gets out into the world. He's calling it the Disney Media and Entertainment Division. This new division will decide if a movie or show will go into a movie theater, air on traditional TV, or go directly to streaming. And naturally, this division will prioritize streaming, ensuring that Disney Plus will have premium content that will continue to bring in new subscribers.

Some executives have expressed skepticism, including Iger. But today, after a two-hour meeting, Chapek finally got Iger's blessing. Or so he thought. But now, according to Alan Bergman, Iger has not in fact agreed to his plan. Chapek badgers Bergman. What are you talking about? He says he hates it. Chapek grips the steering wheel so hard his knuckles turn white as he seethes with anger.

I'm going to call you back. He hangs up the phone and calls Iger. Bob, it's me. Just got off the phone with Alan. I think there's been a miscommunication. He said you hate my plan for the new organization. No, there's no misunderstanding. I do hate it. Why? For all the reasons we've talked about. It's going to be a disaster. The studio heads are going to feel demoted. Creatives are going to be furious if a project they thought was heading to theaters goes straight to streaming.

You could be jeopardizing our standing with top talent with this move. But we talked through all of this. That's all just growing pains. We need to reorganize the company to put streaming at the center. Not like this we don't. Okay, fine. We can keep discussing this. But what I don't understand is if you hated it, why didn't you just tell me so over the past two hours I was at your house? Why am I hearing it from Alan? Iger doesn't say anything.

Chapek shakes his head in frustration. "'I gotta go.' He hangs up the phone, furious. But then Chapek realizes something. He wanted Iger's blessing, but he doesn't need it. He has the board's backing. That's all that matters. In his gut, he knows this is what needs to be done. And he's the one who's CEO now. He has to do what he thinks is best for Disney, no matter what Bob Iger thinks."

A few weeks later, in mid-October 2020, Chapek publicly announces the new corporate structure. And at first, it seems like he was right to push forward with it. Because by June 2021, despite being hit hard by the pandemic, Disney's stock is approaching record highs thanks to the continued growth of Disney+. Chapek takes this as a sign his plan is working. But then, the strategy begins to unravel.

As part of the reorg, Disney plans to release the Marvel movie Black Widow simultaneously into theaters and onto Disney+, charging subscribers an additional $29.99 to watch it. The movie stars Scarlett Johansson and dives into the history of the title character. Before I was an Avenger, I made mistakes and a lot of enemies. Disney's Black Widow makes $80 million at the domestic box office on its July 9th opening weekend.

That's significantly less than what other recent Marvel movies brought in. But it brings in $60 million through Disney+. It seems like Chapek's strategy worked. But when Chapek runs into Johansson's agent at the Sun Valley Conference in Idaho not long after the release, he learns that Johansson is furious. Her contract stated that the movie would be exclusively released in theaters, and part of her compensation is tied to box office performance.

By simultaneously releasing the film on Disney+, Johansson claims Chapek drastically cut into those receipts, reducing her payout. Soon after, Johansson sues Disney for breach of contract. This is exactly the reaction from A-list talent that Iger warned Chapek about. But Chapek is undeterred. He signs off on Disney lawyers taking an aggressive response, including releasing a harshly worded statement about Johansson's actions.

And he doubles down on his streaming first strategy. As the company heads into 2022, Disney announces that it's planning on spending $33 billion on content, $8 billion more than they spent the previous year. That number is all-inclusive, meaning it will include theatrically released films, TV shows for linear channels, live sports rights, as well as streaming content.

But JPEG makes it clear that the increase in spending is to boost streaming content. They're planning a barrage of shows and movies in the Star Wars and Marvel universes to debut on Disney+. The figure is almost double what Netflix is spending on content in 2021. JPEG's message is crystal clear. Disney Plus is coming for Netflix. And as 2022 kicks off, Disney gets the opportunity to strike blood.

At the end of the first quarter, Netflix announces that it lost subscribers for the first time in over a decade. As a result of the announcement, Netflix's stock tanks. But it's not just Netflix. Other entertainment company stocks fall as investors start to question the entire business model behind streaming. Disney's stock price is caught at the downturn, but Chapek isn't too worried. In fact, he's confident it'll quickly rebound.

Disney continues to add subscribers at a steady clip as Netflix struggles. Across all of its streaming platforms, which include not only Disney+, but also Hulu and ESPN+, Disney surpasses Netflix in total number of subscribers in late summer 2022. And to make sure Disney Plus keeps growing, JPEG takes a page from Netflix's book and creates a cheaper, ad-supported subscription tier to launch at the end of 2022.

From JPEG's perspective, his strategy is working well. Streaming is now central to Disney's business, and it's growing. But in the fall of 2022, when he meets with Disney CFO Christine McCarthy to review the company's earnings report before they present it to the board, McCarthy expresses some concern. Disney's revenue is short of Wall Street's forecasts. That could trigger the stock price to drop.

But Chapek assures her it'll be fine. There are global problems affecting it. The economy's sluggish. Inflation's on the rise, making consumers hesitant to spend.

This has meant that Disney's core businesses of theme parks, cruises, and movie theaters have been slow to recover from the pandemic. Given the economic climate, it's really not that bad at all that Disney's earnings are just a little off from the forecast. It's not a reflection on the streaming strategy. Disney Plus remains a bright spot, continuing to gain subscribers. JPEG is confident that investors will note the strong growth of the streaming service, and the stock price will hold fast.

For startups, growth without profit is a fairy tale Wall Street will believe, at least for a while. But Disney is not just another startup. Its name alone is what many investors are banking on. Growth without profit at Disney? That's a horror story, with shareholders holding the pitchforks. But a few weeks later, when McCarthy presents the numbers to the board, she relays that Disney missed its earnings forecast by far more than the amount she and Chapek had estimated.

There's no way the stock price won't be affected. JPEG is right that the streaming service is continuing to grow, but so is the cost of programming and marketing. Disney Plus is operating at a $1.5 billion loss in just the third quarter. Board members are appalled, and they grill JPEG on how this could happen. JPEG feels blindsided and struggles to answer. During a break in the meeting, JPEG pulls McCarthy aside.

He's furious.

Chapek looks down, embarrassed. He didn't read that packet. He assumed nothing had changed from his previous meeting with McCarthy. You still should have given me a heads up. I looked like an idiot in there. I reported the numbers as they were to the board. That's my job. I'm never going to not report the numbers. I'm not asking you not to report the numbers for crying out loud. I'm asking you to report them to me first, so at least I can be prepared.

McCarthy holds his gaze for a minute, her eyes sparking with anger. I need a cup of coffee. I'll see you back in there. And then she spins and walks away, leaving Chapek staring after her, seething. Confidence is one thing. Overconfidence is another. Chapek didn't read the updated earnings packet before the board meeting. That's not just a slip. That's walking into a boardroom knife fight with a Nerf bat.

A few days later, when it's time for Chapek to conduct an earnings call, he tries to paint as rosy a picture as he can. He breezes right past the $1.5 billion in losses, focusing on subscriber growth. For decades, Wall Street has given startups a pass on profitability so long as they're growing. And analysts assume that once a startup achieves market dominance, those profits will come. But legacy companies, they don't get the same pass.

And stockholders don't let Disney coast on growth. They want to see profits. Disney's stock plummets. CNBC host Jim Cramer predicts a lot more streaming revenue losses in Disney's future. I mean, this was one of the most disappointing quarters I have come across of a major. Wouldn't it have been a lot worse if they had pushed back their direct-to-consumer profit target? I think that, frankly, I think that those projections are fatuous.

Eight days later, on November 17th, 2022, the Disney board terminates Chapek's contract and reinstates Bob Iger as CEO. Chapek spent $33 billion on content, doubling Netflix's content budget in just one year. Netflix doubled down on profits. I'll let you guess who investors liked better. Well, that's not lost on the board either.

The Disney board expects Iger to return Disney to its former glory, but the problems Iger faces are immense. It's starting to look like the House of Mouse didn't pivot hard enough or fast enough to streaming to turn things around. The company will have to become more aggressive in going after cord cutters, and that could get costly.

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It's November 2023 in New York City, one year after Bob Iger's return as CEO of Disney. Iger sits on stage at the New Amsterdam Theater. Next to him are high-level Disney executives from key departments including Disney Studios, ESPN, and theme parks. Across from them is ABC News anchor David Muir, who clutches a stack of index cards. But this interview isn't being broadcast publicly. It's a company-wide town hall for Disney employees.

The year since Iger retook the reins at Disney hasn't been easy.

Rather than doubling down on the streaming service first strategy, Iger has reversed a lot of Chapek's agenda. He dismantled Chapek's Disney Media and Entertainment division, returning power to the studio heads. He also cut content spending and laid off workers in an attempt to slow Disney's losses. He revoked his own previous ban on licensing Disney content to Netflix. He's in the process of working out a deal to provide Netflix with 40%,

14 of Disney's hit shows, bringing in quick revenue. But these belt-tightening moves haven't been enough. Strikes by both the writers' and actors' unions, a string of box office disappointments, along with softer-than-desired theme park revenues, have left Disney in a vulnerable state. Activist investors are circling, and employees are worried they're on a sinking ship. So Iger is at this town hall to try to assuage their fears.

On stage, Muir quizzes Iger on the past year and his hopes for the future. But Iger remains vague. After a beat, Muir turns to the head of ESPN, Jimmy Pitaro. Well, we all know that any efforts to set Disney up for the future will likely involve a direct-to-consumer version of ESPN. What can you tell us about that endeavor?

While there is a streaming service of the channel called ESPN+, it requires a cable subscription or a streaming service that mimics cable like Sling or YouTube TV to access it. It's not possible just to pay for ESPN+ on its own. Historically, Disney's determined that keeping ESPN tied to cable subscriptions is more valuable than offering a direct-to-consumer streaming service. But as more and more consumers cut the cord with cable, Disney's finally shifting its strategy with ESPN.

Yes, we're planning to launch a direct-to-consumer version of ESPN by 2025 at the latest. Independently? Because I think we've all heard that you were looking for partners. We're having conversations with many people. Such as? Various stakeholders.

Muir opens his mouth, about to ask a follow-up question when Iger interjects. Look, partners aren't a requirement. We could create a direct-to-consumer sports streaming channel completely on our own. It's just a little more challenging. Muir gives a curt nod. The message is received. That topic is closed. Iger wraps up the town hall, doing his best to assure employees that Disney is stable and the future is bright. The truth is that Iger has big plans for ESPN.

Plans that could be a total game changer for the future of live sports and alter the course of the streaming wars. Around the same time as the town hall, Iger makes a call to Lachlan Murdoch, the CEO of Fox. Iger has a proposal. ESPN and Fox Sports should team up and offer a streaming service together. Between the two of them, they have the rights to some of the most popular sports in the United States, including Major League Baseball, hockey, the NFL, and more.

Murdoch tells Iger that he's been thinking along similar lines and has already reached out to Warner Bros. Discovery head David Zaslav about partnering with him. Warner Bros. Discovery owns TNT, which has the rights to most NBA games. What if the three of them teamed up together to form the ultimate sports streaming app?

Together, they would be a formidable opposition to the tech companies, including Netflix, Apple, and Amazon, who have all made moves into live sports in recent years. It would be a major win for the legacy studios. In February 2024, just days before the Super Bowl, the three companies announced their new sports streaming venture, which they eventually name Venue. They plan to launch it in the fall of 2024, in time for the next football season.

And while they don't set the price in the announcement, industry analysts estimate it will cost between $40 and $50 per month. Pricey for a streaming service, but considerably less than most cable subscriptions. The press calls it a blockbuster deal that could spell the end for cable companies and threaten the existing sports streamers.

But just a few weeks later, FuboTV, a sports streaming service that advertises itself as a sports-first cable TV replacement, sues Disney, Fox, and Warner Brothers Discovery. They claim that by partnering together, the media companies are participating in anti-competitive behavior.

A judge agrees. A judge on Friday temporarily blocked Venue Sports. It's a joint venture of media companies Disney, Warner Bros. Discovery and Fox, launching their sports bundle. This injunction comes just weeks ahead of the start of the NFL season. The launch of Venue is delayed while the court case plays out. Although the lawsuit and delayed rollout are seen as blows to Disney and the other studios, Iger sees an opportunity.

In January 2025, Disney makes a surprise announcement. Walt Disney announced Monday it will merge its live TV streaming service, Hulu Plus Live TV, with sports-focused Fubo TV. Disney will own 70% of Fubo and will combine Hulu Plus Live TV's 4.6 million subscribers with Fubo's 1.6 million.

The new venture will be the second largest internet paid TV service in North America, behind YouTube TV. As a result of the deal, Fubo drops its lawsuit and the venue venture is officially kaput. There will be no partnership between the three legacy studios. Disney doesn't need them. Analysts consider it a strong move on Iger's part. Like Disney kind of gets a free play here. So they want an independent sports network. Now they essentially have one. They don't have to build it.

When the company reports its fiscal year first quarter earnings in February 2025, it delivers news of its strongest bottom line in years. Disney's streaming businesses, which include Disney+, Hulu, and ESPN+, turned a profit for all of 2024, a milestone for the division. The company seems to have finally figured out how much money needs to be put into content to keep subscribers happy, but not operated a loss.

Think about it. When Disney got into the streaming game, many outsiders thought it was a bit of a no-brainer. Now, after an ugly slog, Disney's finally profitable in streaming. But it only took six years, two CEOs, and one baby Yoda. Not exactly a plug-and-play success story, by any means. Netflix is still more profitable. But with Disney's new sports streaming business and Disney Plus pulling its weight,

Disney finally has the tools to make a real run at the streaming behemoth. It was a tumultuous journey, but nearly six years after Disney entered the streaming wars, they're finally a real threat. So, what did we learn from the mouse's streaming saga?

First, if you're launching a billion-dollar platform, triple-check the login screen. Tech hiccups aren't charming when the world's watching, or better said, wanting to watch. Second, contracts are like lightsabers. Elegant weapons, but they can cut you if you get sloppy with it. Feeling rather confident? Add some caution to your mindset. Third, big budgets don't beat smart strategy.

JPEG spent like that proverbial pirate. Netflix spent like a ninja. And finally, if you want to reorganize a legacy empire, maybe don't blindside the folks who create your actual magic. Or the CFO who, you know, reads the numbers. The House of Mouse may have found its way back. But the lesson? Even the most iconic brands need a roadmap when they try to reinvent the wheel.

But Disney isn't the only legacy company nipping at Netflix's heels. On our next episode, Warner Brothers makes some surprising alliances to compete in the streaming wars, risking the company's most iconic brand, HBO, in the process. From Wondery, this is Episode 2 of Netflix and the Fall of Television for Business Wars.

A quick note about recreations you've been hearing. In most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical research. If you'd like to read more, we recommend The Palace Coup at the Magic Kingdom by James B. Stewart and Brooks Barnes, published in the New York Times Magazine. I'm your host, David Brown. Austin Rackless wrote this story. Sound design by Kyle Randall. Voice acting by Cat Peoples. Fact-checking by Gabrielle Jolet. Our

Our producers are Tristan Donovan of Yellow Ant and Kate Young. Our managing producer is Desi Blalock. Our senior managing producer is Callum Clues. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louis for Wondery.

In the first half of the 20th century, one woman changed adoption in America. What was once associated with the shame of unmarried mothers became not only acceptable but fashionable. But Georgia Tann didn't help families find new homes out of the goodness of her heart. She was stealing babies from happy families and selling them for profit. Hi, I'm Lindsey Graham, the host of Wondery Show American Scandal. We bring to life some of the biggest controversies in U.S. history. Presidential lies, environmental disasters, corporate fraud.

And in our latest series, a young adoption worker moves to Memphis, Tennessee and becomes one of the most powerful women in the city. By the time her crimes are exposed decades later, she's made a fortune and destroyed hundreds of families along the way. Follow American Scandal on the Wondery app or wherever you get your podcasts. Experience all episodes ad-free and be the first to binge the newest season only on Wondery+. You can join Wondery Plus in the Wondery app, Apple Podcasts, or Spotify. Start your free trial today.