How does Wall Street think about Trump, media and tech?
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From the Vox Media Podcast Network, this is Channels with Peter Kafka. That's me. I am also the chief correspondent of Business Insider. Man, it is busy, right? At least in the news business. It's been a real challenge for me to keep up, and it is literally my job to keep up with the news. I can't imagine what it's like for a normal person, i.e., perhaps you.

And to get pretty meta about it, this is one of the challenges I have on this podcast, figuring out when we should be talking about what just happened, what's going to happen tomorrow, and when we want to pull back and talk about bigger ideas or ones that aren't exactly driven by the news. I don't really have a good answer, except that I'm constantly trying to figure it out. The good news is you folks seem to like both kinds of chat, so we're going to keep doing them.

This week, we have a conversation that tries to do both things at once. I'm talking with Michael Nathanson, the longtime media and tech analyst about what 2025 looks like. That involves a lot of sort of future speculation about Trump, obviously, but also about the way consumers are changing their viewing and crucially their spending habits that's independent of politics and regulation.

And in the course of our conversation, we talk about very recent events like Meta's hard pivot to accommodate Donald Trump. What investors think about that. Talk about the demise of Venue, the streaming sports network that never actually launched. And there's lots more here. Michael is always worth listening to. So let's go do that now. Michael Nathanson, it's been a while. Thank you for coming back. My pleasure, Peter Kafka. Thanks for having me.

I always rely on you and your firm for smart insights, which I often try to pass along as my own. But sometimes I fess up and say, actually, I got this from Michael Nathanson and crew. So thanks for joining. So I can I can get it straight from the source. Just before I got on with you, I wrote an entirely speculative story about Elon Musk and whether he is or isn't going to own TikTok. And I won't ask you for. Well, I could ask you for that. But but it does lead us to sort of where I wanted to start this conversation, which is we're recording us on January 14th.

which means in less than a week from now, we're going to have a new president. And there's lots of stuff going on in tech and media I want to talk to you about, but you cover a wide range of companies in tech and media. And I want to know how you're thinking in general, and then specifically about how a Trump administration affects this landscape, because it seems like

it could affect it in ways that we really haven't seen before, at least in modern history. Yeah, that's a huge question, right? Peter, what's hard about this is that it feels like the administration's policy is a very fluid and transactional, right? So about two weeks ago, you would say Mark Zuckerberg was the enemy of the people. And now he's spending every day at Mar-a-Lago like Elon Musk, right? I mean, you have paramount global that's going to be taken over by Larry Ellison and David Ellison.

The Ellisons are close to Donald Trump. Who knows what happens there, right? You have a new FCC commissioner who's been very outspoken.

about the power of stations relative to broadcast networks. So I start by saying more than any other time, it is very fluid. And these are just guesses, right? These are just purely guesses. When you talk to your clients who are paying you or relying on you- Informed opinion, right? Yeah, informed opinion. And you basically give them the equivalent of an emoji shrug and saying, who knows? Yeah.

What is their reaction? Yeah, yeah, we know, but we were hoping you would tell us something else. Or I mean, do the companies you talk to think they have any clear lines as to what they think will or won't happen? No, what we try to do is look at the cases that are in front of us, right? So you have the Google antitrust case. What's going to happen there? You have the TikTok Supreme Court argument last week. That's where we could add value, we think, right? We'll talk to antitrust specialists. We'll talk to first amendment specialists.

When it comes to what is David Zaslav playing for by whispering a separation or Brian Roberts, what's he thinking? Or what happens, you know, what will Google be allowed to buy post antitrust? In a new regime, yeah.

I think it's incredibly hard, right? It's incredibly hard. I do think what we're learning is that this administration wants to really protect US companies. And I think they see our structural advantage around the world is in our US technology platforms. And I don't think they want to do anything that's going to really hurt the positioning of those tech giants, especially when it comes to AI.

and new compute powers. I think when I'm reading the tea leaves, they don't want to really gut some of these companies, right? So I think they're going to tread more carefully on some of the punitive actions that may be in the first administration where it was thinking about. And I...

both because I'm a journalist and I'm also a cynical journalist, skeptical journalist. You know, you talk about fluid and transactional. I think I lean on the transactional part. Yeah. Right. That's but what you're describing, right, is that's Donald Trump in a nutshell. Right. In his first administration, he wanted to ban TikTok. Now he says he's against it.

There doesn't seem to be any sort of logical explanation other than then there's been transactional things happening in the background. With that mindset, I mean, does that help you go, all right, maybe maybe Brendan Carr will give Paramount a rough hearing or something. But in the end, is he really going to prevent.

the fourth richest man in the world who's also a big Donald Trump backer from buying the thing he wants. There's no way, right? He'd be crazy to take that on. The interesting thing is, well, he'll go after companies like Disney where they're seen as part of the woke agenda. And you've seen him go after the ABC retrends

battles, right? And even the question last week of venue closing quickly and the Fubo transaction, you know, what was Disney thinking, right? Where they just probably just want to get this moving along quickly and probably stay out of the spotlight as best they can, right? So I think the risk from the FCC is they just basically will become more activist and

and go after parties that they think are not friendly to the MAGA agenda, right? So I think everyone's going to have to toe the line more in the next four years so they don't get slowed down. Don't forget, and Peter, you and I know this well,

When AT&T was trying to buy Time Warner, that deal took way too much time. It should never have been blocked by the first DOJ. And that really slowed down. Under the Trump administration and Trump's antitrust enforcer, I always say this here for the record, always insisted that he did this not for political reasons. He still insists that to the case. No one else believes that. You're rolling your eyes. Yeah. For those of you not watching what you can, I'm rolling my eyes because

It was a crazy, that was a crazy place to draw the line, right? To go out, yeah. So,

I think there's always a risk going forward that if you're on the wrong side of this future administration, you're going to be harmed by just this, you know, maybe not justice itself, but the speed of justice slowing things down. You might get what you want, but it might take you a while or cost you more. And so why not try to get on the right side in advance? Exactly. But when I hear people who are close to the administration tell me what they're thinking, they want the U.S. to continue to be the leader of

in all things technology and to really create a bigger separation between the EU and China when it comes to our technology advantages, right? So I think they see the formation of capital in the US as an advantage.

light touch regulation versus the EU. So I think, I actually think this administration is going to be really informed by all those technology leaders who are spending time there explaining, you know, how we've got to where we got to. The musks and the Andreessens of the world. Yeah, totally. Which

Which, I mean, again, I've read three reports now on what China and Musk might do regarding TikTok. It seems very, very embryonic at best. But can you imagine a world where it's presented that Elon Musk slash some American buyer essentially forcing China to sell TikTok to the U.S. is a win for China?

the US economy somehow, but that's... Oh, with that, basically you argue, you know, TikTok and Elon Musk's hands will create another competitor in digital advertising and in theory, lower the price of advertising and create more investment. Oh, you're already creating the anti-antitrust case for me. This is helpful. Yeah. Yeah. No, no. Look, Twitter is subscale, right? And we always...

when we covered it as a public company, Peter, we would laugh about like the valuation because it was, they never were able to build what Meta has built. It was more Snapchat than it was Meta, right? It's sub Snapchat. Yeah, it really is. So why wouldn't I think the economy benefit from consolidation with him taking over TikTok, right? And getting the algorithm and get all that scale, right? Yeah, I can see that happening. If that was, if the Chinese were to allow it,

That's an elegant win for Twitter or X. So, I mean, I could ask you about, you know, what would the RFK Jr. push to ban pharma ads on TV? What would that mean? But it sounds like you can sort of sketch that out, but you're most comfortable sort of waiting to see if there is one and then stepping in and saying, this is what this will mean. Yes. I think on the TikTok case...

I'm comfortable saying, let's see what happens next or this weekend, right? By the end of this week, we'll know. And I, you know what? Musk has been successful in China. He and Apple have built businesses in China, right? There's a reason why he's allowed to do that. And we'll see what the Chinese government decides, right? It's really interesting. But, you know, like, I think to your bigger question, anyone buying media stocks, because they're...

thinking that you're going to own 100% of the stations in the country or three broadcast networks, all of a sudden having 50% share of voice in America is okay. I think there are just some rules

you know, constructed over many years by the Congress that will be enforced in courts if people would breach those rules, right? Like the typical, just the ownership rules the FCC has to abide by or establish, right? So I think there's some rules that I don't see easily thrown away. Even though, again, like Brendan Carr is getting attention for, you know, sort of waving a saber at NBC and CBS. I mean, he's also made it very clear that he wants as much consolidation as possible.

Do you see a tension there? On the station side, yeah. But like there are just rules in place about you have to change the ownership rules, right? The ownership caps, right? We'll be right back with Michael Nathanson. First, a word from a sponsor.

Support for this show comes from Attentive. Phones work pretty well for communication, but it doesn't always mean it's easy to communicate with them, especially when it comes to marketing. All of the marketers and decision makers out there know that, and it's also why you want to use Attentive. Attentive is the SMS and email marketing platform designed to help brands build and connect with their ideal audience.

It helps marketers create unique messages for every subscriber, transforming the consumer shopping experience and maximizing marketing performance. Here's how it works. Attentive's AI learns what subscribers want based on their real-time interactions with your brand. That means it customizes the content, tone, and timing of every message so they always resonate. You can send out truly personalized messages at the perfect time, and you'll be able to keep supporting customers throughout the buying process with conversational AI that's actually helpful.

When you market with Attentive, you'll connect with the right customers because they'll feel a connection with the messages you send. Visit Attentive.com slash channels to get started. And we're back. You mentioned this briefly, but most of the major tech companies have antitrust suits filed by the U.S. government, including in a couple cases suits that were originally filed by Trump's administration the first time go around. Right.

Do any of the folks you're talking to expect any relief from that? I mean, in the Google antitrust case, for instance, that's, you know, we're already into the remedy phase of that hearing. It doesn't seem like that's something Trump could even interfere with at this point. But is there any expectation that maybe he could be convinced to do that? Or in the case of the meta suits to sort of get his attorney general to back off that case? I don't.

I think once you're down, and we've talked to experts, the cases won't be pulled. The question is, if Judge Mehta comes in with a modest decision on remedies. This is the judge in the Google case. Yeah, sorry, with a Google judge, with a DOJ appeal or remedy that they think is too light, right? And think about Judge Mehta, the judge in the Google case, ironically named Judge Mehta,

He's not seen as an activist judge, right? He's someone who, if you just listen and read the transcripts, I don't think he's going to come up with a very aggressive outcome here, right? So...

It may be the right judge at the right time and maybe the DOJ just doesn't push as far as they can. Right. The Biden DOJ has called for all kinds of breakups, really severe remedies, which doesn't mean that would be the case to begin with, no matter who was president. Yeah. What do you think the most meaningful outcome of that Google antitrust case is?

You know, our working thesis is, and Craig covers Apple, so he just started covering it after all these years. We heard there's a company called Apple, probably should look at it. So we decided to cover Apple. Our assumption is that Google will not be able to

to pay a tax, you know, track acquisition costs. It pays 20-some-plus billion dollars a year to Apple to make Safari the de facto browser. That's incredibly useful money to Apple because it's free. It drops the bottom line, right? And Apple has said, you saw Eddie Cue a couple weeks ago saying, we have no interest in getting in the search business.

The U.S. government wants, needs a competitor to Google. The irony, again, another ironic thing here is that you could argue in a couple years time, chat GPT,

And Grok and Meta, the company, could actually be search competitors and TikTok could be. Like the world's changing very quickly. We did a lot of work in this about AI and shopping and e-commerce. You could argue in a year or two, you will have AI agents telling you, Peter, the best headphones to buy without having to go to Google Shop. Right. And this is why Google has spent the year rapidly trying to

give you AI answers even if you don't want AI answers. Right. And it's also underscores sort of the nature, the difficulty of any sort of well-meaning attempt to do regulation around tech is that by the time you get to any solution,

you know, the problem you're trying to solve is probably well, it's probably long gone. Right. Or it's old news. Right. And I think if you want to push a narrative, the narrative could be from the U.S. side is, look, the EU is anti-U.S. technology. They're anti-innovation. They're anti-AI. They're anti all the things that we're doing here. And why would it be in our national interest to handicap these companies that are investing in data centers and jobs and

and will basically drive us forward on things like defense and AI. It just seems to me like it's a very pro-US stance to back away a bit from regulating these companies relative to where the EU is right now. So let's keep talking about AI. We can get out of politics for the minute. Aside from politics, I mean, we spent the last year with all the big tech companies saying we're pouring enormous amounts of money into AI.

Wall Street seemed more or less okay with that. Some concern about when are we going to see results. And then you would sort of see Meta or Google say, well, you know, we're building code. We're doing stuff that's internal. You can't really see it. We're going to, by the way, continue to spend a ton of money on servers and people and software. This is going to be a big expense for us going forward.

How long do you imagine investors will, how long of a rope do you think investors will give those companies? Both stocks have been on enormous terror, so they seem fine with it right now. How long can the Googles and Metas of the world tell Wall Street, we're going to build the future, you can't see it yet, but it's coming? I think the story, the answer is in the top line. It's in the revenue number, right? And I think with Meta and Google, you're seeing the benefits of their investment play out

on the ad front, clearly a meta. And Google and the cloud businesses are selling more AI-based applications. But I think you give them enough rope until the revenues start to disappoint one or two or three quarters in, right? So we're in this really interesting question, Peter. We're now in this phase where the capital expenditures to build these data centers, the CapEx is starting to show up on the

income statement, the cost of the build-out starting to hit the next couple of years, you'll see it. And the revenues have been coming through. But there could be a point the next couple of years where your question comes to be, will the scaling expenses be offset by the growth in revenues? So far, yes. But we're really only in the first innings of this equation, right? The answer is going to be probably a year from now,

Oh, do these lines intersect or will the revenue still accelerate faster than the growth? Because they've either got to convince you guys that either the money they're putting into AI is legitimately affecting their business today, that they're making more money because of today with the existing products, or that it's going to create new revenue lines. Right. And in the case of meta, it's interesting because this is like the third or fourth transition. Now they're doing reals.

And reels has become really effective because of AI, right? And all of a sudden you're getting surfaced content that you never knew about. And even with the whole decision last week that you want to talk about with content moderation coming down, I almost think in a world of AI driven reels, it doesn't matter because if I don't want to see, you know, pro-Trump videos or pro-Biden videos,

I want to be fed whatever I like. And so in many ways, the algorithm gets better and better. And whatever you post, Peter, I'll never see if I'm not consuming it, right? And that was my next question. So you said last week, Mark Zuckerberg made an announcement saying we're making a series of major changes, some of which seem like window dressing, some of which seem really meaningful, like you just referenced, the way we're going to moderate content.

Stocks seemed unfazed by that. Investors basically seemed to yawn at that.

What do we make of that? Basically, what you're saying that investors don't think the product is fundamentally going to change and also crucially for Meta that its ability to make money from advertising won't be changed, all of which means this is not going to be another version of Twitter's transformation to X where advertisers flee. Right, right. So what we've been saying to folks, look, if you think about Twitter and the point of Musk buying it, it was very much a brand advertising driven platform, right? Where brands...

were not doing performance-based marketing. They were launching movies, they were launching streaming services, right? And if you're in between some Nazi-based content and ISIS-based content, if you're Disney, you don't want to be there, right? But in Meta's big universe, a lot of the companies are small and medium enterprises who don't have choices, but also performance-based marketers

who are basically buying the product for an outcome. And they're able to test that outcome, right? Right. We don't care what our ads sit next to. I mean, we probably can find a line where we care about, but as long as people are clicking and interacting and taking an action and we're getting a result, that's what we're paying you for. Exactly. So the challenge that Twitter had or X at that point is they couldn't prove...

the valuable return on ad spend, right? So we were, it's like television, we were spending on Twitter and really not proving value. So therefore, if you say, hey, the brand equity is really being run down by the content quality, I don't want to be there. It's not a must buy. I don't need to be on Twitter, right? I could go anywhere in the world. But meta is a must buy. It's scaled and it's marketing and people build businesses online.

off of meta, you know, Instagram and Facebook, right? So I think the market got it right. Plus the amount of money, I remember sitting in a Facebook, when it was Facebook investor day, they're going through the cost to moderate content and all these people sitting in front of computers around the world.

There's like 40,000 people looking at content every day. Like that's going to go away. Right. It won't go to zero, by the way. Right. And he's been talking way before Trump about wanting to automate this. They always wanted to automate. The reason they had humans is it's such a difficult job to do that you haven't been able to train computers to do it. And to be clear, like there will still be moderation. You won't be able to behead someone and put the video up on meta, I'm assuming. It's funny. We had a conference last month and we had...

The head of BuzzFeed, Jonah Paredes, spoke. I thought he made a great comment. He said, look, the challenge going forward in a democracy is that some of the best content you want that will inform you is behind paywalls, right? So it's almost like an, you know,

Yeah.

to educate their people about actually what's real and what's not real. By the way, Jonah Pratt, he's been making that argument for a long time, but he used to make it to sort of argue why he was spending money on BuzzFeed News, that it was important to have free, non-paywall information. But when push came to shove, he said it's too expensive to operate. It's too expensive. Yeah, it's hard. Yeah, but I think he's totally right. I really do. I think, you know, someone who pays for information, someone who sells information for a business, I read all these articles about companies we cover that are free online that people just have it wrong. But yet,

I'm overwhelmed by the number of people who post about the companies we think are badly positioned. They think they're great companies, you know. We'll be right back with Michael Nathanson. But first, a word from a sponsor.

Support for this show comes from Attentive. Phones work pretty well for communication, but it doesn't always mean it's easy to communicate with them, especially when it comes to marketing. All of the marketers and decision makers out there know that, and it's also why you want to use Attentive. Attentive is the SMS and email marketing platform designed to help brands build and connect with their ideal audience.

It helps marketers create unique messages for every subscriber, transforming the consumer shopping experience and maximizing marketing performance. Here's how it works. Attentive's AI learns what subscribers want based on their real-time interactions with your brand. That means it customizes the content, tone, and timing of every message so they always resonate. You can send out truly personalized messages at the perfect time, and you'll be able to keep supporting customers throughout the buying process with conversational AI that's actually helpful.

When you market with Attentive, you'll connect with the right customers because they'll feel a connection with the messages you send. Visit attentive.com slash channels to get started. And we're back.

Thinking of companies and industries that are challenged, let's talk about television. You and I talk about this all the time. And you mentioned venue and Disney, so I want to come back to that. But let's just broadly talk about the state of TV because it means more than one thing. There's broadcast television. There are broadly distributed basic cable networks. There's premium, what we used to call cable networks like Macs. There's streaming-only services like Netflix, which are really TV for most people.

Do you think about it all as sort of one big pie and then sort of divide up, all right, well, this part of the pie is challenge and this isn't? Or do you look at them all as really distinct businesses? What we've found very helpful is we look at broadly consumer spending on all things video. So what you described is video.

And we also add in movie tickets and home video and broadband. And we basically try to go back and look at the top down and say, what is the US consumer's propensity to pay for video? And what's really interesting, Peter, you and I have known each other a long time. We've spoken at events together.

About five years ago, right during the pandemic, before the pandemic, U.S. consumer spending on all things video started to slow down. It had been growing 3% a year for as long as you and I were young kids. People found money in their pocketbook to pay for more video.

But the combination of COVID, cord cutting, cheap streaming packages just has put a chill in U.S. consumer spending on all things video, right? So that's the mindset we go into this. We're like, okay, consumers have become smarter. They're not paying for everything. So to your question, we try to figure out how do we parse out the different types of consumer products

Into a world where we're not growing consumer spending anymore, right? So there's a limit on number of streaming products people take three or four The number of people taking the bundle is client decline at six percent a year. Yeah, so we're basically that's the kind of the the algorithms that we look at right it's just trying to solve for consumers have stopped spending and and companies themselves have making mistakes because the companies have

have created deflationary products that have kind of destabilized what was... Explain what a deflationary product is in this context. Oh, Peacock for two bucks a month around Black Friday, right? Or Paramount Plus with all the CBS sports you want for four bucks a month, right? We're going to give you all this stuff that's economically not sustainable for us to sell to you. But in the meantime, we're going to lower the price that you expect to pay, not just us, but everyone in the market.

Right. And therefore you look at your bundle going, holy moly, I'm paying 120 a month. And then what we're going to do, Peter, we're going to put all our best content and then some in streaming, right? So all the Yellowstone, put it there, right? We'll put all the great Disney content there. So you basically created a world where you're just deflating what was a bundle. Now the challenge is,

The bundle has value, the linear bundle has value, and I've been saying this forever, for sports fans. Because as a sports fan, I want to have all my sports in one place. I don't want to have seven different apps going in and out of stuff, right?

And the venue approach was trying to build a sports-friendly package, but you only had three players. This is the thing. I mean, if you're listening to this podcast, you probably know what venue is supposed to be. But just to sum up, this was the joint venture between Disney, Warner Brothers, and Fox to bring you a lot of sports, but not all the sports for $43 a month. It was supposed to launch last fall.

That got held up by court ruling. We thought it was going to launch this spring. And now last week, the company's all said, actually, forget it. We're not going to do it at all. Instead, and then DirecTV today announced a package of sports-driven bundle that's cheap, but probably not cheap enough. But the idea is right. The idea is like your family and my family is not valuing the entertainment options anymore in the bundle. So you need to strip that out. And the answer there is it's uneven because some of the companies like Disney and Fox are fine with that.

Most of their economics are tied to sports and news and broadcast, right? The point being, we have stuff that you're going to pay for regardless. Somehow you're going to pay for it. We know it's important to a lot of you. We're not quite sure how you're going to pay for it, but you're going to pay for it. Right. And the challenge then is the long-tail cable networks that were fully distributed, the MTVs of the world and the discoveries of the world, AMCs of the world, where we're

You were distributed on 100 million homes, but you'd argue that content is not the driver of the bundle. And therefore, when the bundle is under pressure, distributors of the bundle need to start throwing things over. And you have to start throwing non-sports content over the side. So you're kind of getting what I was – one of the things I was asking about, which is why –

networks seem to value or seem to be desperate to get rid of their cable networks. Yes. No matter how they phrase it, right? That's Comcast doing a spin out of almost all its cable networks or Warner Brothers basically saying we're open to that idea, but they want to keep broadcast TV into a

Any normal person, there is zero distinction, right? They're all just channels on a dial and they're channels that do or don't have the program. Sorry. Well, also, I was laughing at the word dial. There are things you can watch and that you probably are paying for. So why do the TV company owners make a big distinction between broadcast and cable nets? Okay, great question.

What broadcast still offers is reach, meaning in any given month, week, year, I can reach a majority of Americans in one sitting, right? So the playoff games this weekend, you have 35% of the country reached, right? So to let you know how much things have changed, when we first started this business, broadcast networks were reached 95% of the country. Now it's down to about 50%. So half the country's reached. But if you look at the best cable networks,

They only reach 15, 20 percent of the country at best. Right. So the cable network consumption is becoming more and more fragmented. Right. So if you look at a broadcast network, you're like, well, I can use a broadcast network to build brand equity, either sports or my own shows. I don't you know, it's really going to be diminishing returns to own all these products.

low penetrated cable networks in time, right? You'll have like Fox News, which is everyone says the fifth biggest network, reaches 12 to 15% of the country, 12 to 15% of the country, right? So play that out and mostly old people. So the broadcast networks are still the biggest way and the best way to reach Americans. If you want to launch a brand or launch content, that's still the place to

relative to B, you know? So it's as simple as they're bigger, so they're still more valuable, even though those low-rated cable nets still generate value, right? You still, people who are watching them are paying for them, even if they don't know they're paying for them. Right, right. That still has some value. So in that case, Bravo becomes Peacock. The Discovery Networks become Macs.

in theory, right? The Disney Channel becomes Disney Plus, right? So you basically try to peel off those networks where you can and put them in streaming services where you can. The line from Comcast is, oh, we're not sending these cable networks out on a Viking funeral. These are valuable. We're going to capitalize this company and they could go out and buy other cable networks. Is there any reason to think there's a future for this cable net spinoff that Comcast is

pulling off. I mean, in theory, Comcast owners will own a chunk of that. Should you be valuing that as an asset if you're an investor? Craig Moffitt covers Comcast. Robert Fishman's working on the media side for us. My own personal belief is we've seen AMC Networks as a pure-plate company for a long time. The stock chart does not look good. I don't think there's a real appetite amongst public equity investors to own these assets. Now, full stop,

Private equity could say look we could take out a ton of cash right like look what happened to DirecTV Which AT&T sold or partnered with a private equity group. It's been a home run So maybe in the public market phase we investors want growth you take a private

I think you'll be very happy with 20% returns on your cash. So I think that's what's going to have to happen. They become private. Right. So it's a publicly traded company, and eventually it gets taken over by private equity. Exactly. And they get run over for cash. Yeah. Back on the broadcast cable distinction, just one other note. I mean, you and I have talked, everyone's talked about the fact that the most popular programming on television, full stop, sports, and really that's NFL football. Yeah. And cash.

you could sort of argue that the main reason for television broadly and also broadcast TV to exist is to deliver football to you. It seems pretty clear that the NFL would like to continue distributing via broadcast. It seems important to them.

That said, this weekend, I can't remember which playoff game it was, but I went to watch for one of them and couldn't find them on my Hulu live TV. And I realized, oh, that's an Amazon Prime playoff game. So is there a world where even though broadcast TV has value because it delivers football games, that because those games are now increasingly spread out on other platforms, Netflix, Peacock, Amazon, that even that value goes down?

it would go down on the margin. I think the NFL, you know, we've seen over time, they're incredibly smart about how they use technology and how they slice and dice rights. It's still in their interest and also, I think, in the regulatory interest to have local games on for free in local markets, right? So you and I are in New York. Unfortunately, the Jets and the Giants are on for free. And I think, in general, the NFL is going to owe you honor

And it's good for the business to have all this content available in the local markets. But I think over time, they'll keep on creating new packages. They'll add another week, by the way. So they'll add another week of football. It'll be 18 weeks, another game. They will find ways to slice and dice these packages where there'll be an A package for Amazon, a B for Netflix, C, D, E, and F, right? The demand is there. The

customer to your point I had the same experience on Saturday night oh I gotta find Amazon Prime now if it was on Peacock no respect no respect to Peacock I get mad about it because I'm like look I don't pay for Peacock it's not a top four service you're just jamming me for 10 more bucks a month right but Amazon Prime and Netflix are so widely distributed like broadcast networks it's fine you know

If I'm Roger Goodell, Brian Rolap runs media for them, and I know full well that the value of CBS, Fox, the other networks is primarily because of my programming.

How do I extract more value out of that? Do I, is it just literally when it comes to renegotiation time, got to pay up even more? Do I eventually try to take an equity stake in some of these companies since I'm kind of the reason they exist in the first place? How do they think through that? I don't want equity in these companies. I want to leave enough air in the company as they can keep going.

But, you know, the NBA, Comcast is paying more for the NBA than they're paying for the NFL, right? So that was a good mark for Brian Rolap to figure. I think they just come back when there's... Meaning you're paying this much for the NBA with a product which is declining in value at the moment. Our product remains as basically as popular as ever. Maybe it's flat. But you can't live without it. Right. I would say they'll use the NBA as a marker. They think they're superior. And they'll say...

Yeah, clearly you found excess money in the cushions for this, for these guys. You know, they can pull their deal in 20, 20, 29, 2030 that they have an out. And we're assuming they basically excise the out of the NFL and reprice it. Right. And the question is going to be, but here's what's happened, Peter, as sports rights values go up.

Spending on non-sports content is going down, right? So, you know, it wasn't that long ago that Fox programmed, you know, non, you know, they programmed scripted shows, you know, five nights a week, right? Right.

They don't anymore. If you look at what's on NBC, very few nights are scripted, right? So, you know. The money's going to, we're going to give you sports and then whatever leftover we're going to do as cheaply as possible, which means basically game shows, reality shows. Exactly. Shiny floors, right? And reality shows. Without a doubt. And that, so there's no great, I mean, for many years, people have been asking us, is there a bubble in sports? I remember asking Neil Pilsen, who was president of CBS 15 years ago.

He said, Michael, 15 years ago, before you asked this question, that was a question we got. It's always the questions that are a bubble. But in a world of time shifting and individualized streaming, it's the only thing that basically creates live reach in scale, right? We have this massive viewing capacity

you know, engagement around sports and it's monetizable. It really is. But the, is there a bubble? Isn't there a bubble, right? We ask this about everything all the time. Eventually, most things where we say, is there a bubble? Turns out there is a bubble. We just couldn't see when it was going to pop. Yeah. In your case, you guys discuss something, you have a doom loop chart, which talks about this, right? Do you want to explain what the chart means? I mean, it's what we're talking about. And it's like, we should post a graphic. So it started with this.

Sports rights kept going up. So the value of the price of the bundle to consumers had to go up to cover sports rights. And therefore, for the non-sports fan, paying $100 a month for the cable bundle made no sense. So the non-sports fan cut the cord, which meant that the price of the bundle had to go up. It was a constant doom loop. Then the second doom loop is...

In order to build streaming businesses, we had to move some of our better content to streaming. And therefore, the non-sports fan said, oh, why am I paying for the bundle when I can get all this great content for five bucks a month? I'm going to cut the cord. And therefore, in order to drive more people to the streaming platforms, they put more content on. I think we have a third to loop we just added, which I think it's basically distributors saying,

enough already. We basically want to cut these bundles down. And therefore, if you're not a fan of whatever we're cutting it down to, you're going to leave the bundle. So you're going to ask me, Michael, you always thought 50 million subscribers was the floor of pay TV.

Do we still believe that today? And my answer is I'm hedging because these doom loops are kicking in and the companies are responding more aggressively to move their content to streaming and to basically become a streaming first world.

And you guys had a line last fall. You put up a cord-cutting update every quarter and basically at some point last fall said, we don't know that there is a Florida this. We used to believe that there was 50 million. At some point, there'd be 50 million people who wanted to pay for TV in some form. And now we can't say that with any confidence. Yes. So when it comes to the sport, people will always pay for sports. It seems like these loops...

Argue against the idea of perpetually increasing sports rights because eventually there won't be enough people to pay enough money. Even though football is so popular, if it became very expensive to watch football, let alone other sports, some number of people would stop watching, right? Right. You're totally right. And the best example of that is in the UK where the Premier League was the rights were majority owned by Sky for many years. And pay TV in the UK never reached pay TV penetration in the U.S.,

because the price of football is so high that people decided to go to the pub, you know, watch it on their phone one game a week or something like that. So the risk here is at some point, to my point about U.S. consumer spending on video, you breach a data point, you breach a price point that people then just say,

It's too much for me. And I've done that with like RSNs, right? So I always tell people I'm a Yankee and Ranger fan. These are the regional sports networks. But I don't have YouTube TV, but I made a decision in my home not to pay for YES, which is the Yankee Sports Network, or MSG, the Ranger Sports Network, which I could have got a la carte. But I've learned to live without them because it's $30 a month. And the reality is, okay, when they start playing playoff-like games in –

the end of the season, I'll pay more attention. I love, I love the Rangers and the Yankees, but I've decided to live without it. I think at some point the price of these things gets to be too high that people would just say, that's it. I'm, I'm good. We're not there yet. We're probably like by the next four or five years heading to the next contract, we're

That's when the next ad of all contracts, that'd be the question, right? All right. We're not there yet. And I have many more questions for you, but it's January. So I'm probably going to come back to you later this year. So let's table the rest for now. We've been speculating about what's going to happen in 2025. We're going to start to learn a lot more in the near future. And I'll come back and ask you about it. Awesome, Peter. Thanks. Thank you, Michael. Be well. You got it. Thanks again to Michael Nathanson. Really is a treat to talk to.

Thanks to our advertisers who bring you this show for free. Thanks to Jelani Carter who produces and edits the show. Thanks to you guys for listening. We will see you back next week. Maybe we're going to talk about TikTok. We'll see if TikTok still exists in the United States then. See you soon.

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