From Twitter to TV, Are We in a Media Reckoning?

From a New York Times story headlined “From Twitter to TV, Are We in a Media Reckoning?”:

I’m Kara Swisher, and you’re listening to “Sway.” It’s been a crazy few months for streamers and media. There was a nasty battle within the AT&T, Warner and Discovery deal culminating in the shutdown of CNN Plus. Netflix is bleeding subscribers. Vice is up for sale, and of course, you might have heard, Elon Musk is trying to take over Twitter. Here to talk about it are two of my pals, Matt Belloni, founding partner at Puck News, and Ben Smith, the former New York Times media reporter who is gearing up to launch a new startup called Semafor.

Welcome, you guys. Thanks for coming.

So we’re going to go through this bang, bang, bang. OK? Bang, bang, because you guys are that kind of people. So Ben, let me start with you. Does it seem like particularly crazy in the media space, or it’s always been like this, and we just get to hear about it on Twitter so much?

Ben Smith

No. I think there are these periodic spasms and moments of change, and we’re in the middle of one.

Kara Swisher

And how would you characterize it?

Ben Smith

I think a lot of the forces that people have been talking about for a long time, a shift from trust in institutions to individuals, a shift toward subscriptions, a you know — sort of end of a social media age, are all really like beginning to become real around the same time. And people are trying to build businesses in a new moment, the way a lot of us tried to 10 years ago or 15 years ago.

Kara Swisher

So Matt, talk a little bit about where you think it is right now. You write a lot about the changing things. And it’s interesting, because I read you religiously, and you go back and forth on a lot of stuff of where it’s going. So I’d love to get your high level idea of what’s happening right now, because it seems like everything is up for grabs.

Matt Belloni

Absolutely. If you look at what’s happened over the past three decades in the entertainment business, there’s been a pretty solid business model built on the linear cable business, and everybody knows that that is not going to last forever. So over the past five to seven years, you’ve seen all of these legacy companies completely discard their business model and chase these streaming customers, because Netflix had been so successful to get to 220 million subscribers around the world.

So then, what happens when the business model that you are chasing is absolutely under attack by Wall Street? Netflix has lost about 70 percent of its value in the past few months, and there’s a real sense of dread and anxiety around Hollywood. Oh my god, what did we do?

We tossed aside a pretty good business to chase this bottomless pit of money that it takes to compete in the global streaming race. And what if the promised billion subscribers that are supposedly going to be there, thanks to the Netflix model, what if those don’t materialize? Where does that leave us now?

Kara Swisher

But the old model wasn’t particularly going to stay. It’s like saying what about the print subscription, if this internet thing doesn’t work out?

Matt Belloni

I think that’s real, and I think that’s the problem, because nobody knows what to fall back on. You can’t just go back to the cable business, because everybody knows that that is ultimately not going away. The problem is the cable business still throws off billions of dollars in profit each year. So there’s this push-pull among these companies, where they have this revenue generator, and they have this other business they know they need to be in, but the other business is not going to be as good as the current business.

Kara Swisher

Correct. So it’s that digital dimes for analog dollars thing, but Ben, talk about that idea of how you — because you’re starting a media company right now, which is always a good time to start, in a downturn, honestly. That’s the old trope, essentially. How do you look at the idea that they don’t have a business to go to necessarily that’s ready, but the old business isn’t going to come back.

Ben Smith

I mean ultimately, you’ve got to start with consumers who are in this new place and have been trained to get what they want on demand digitally, whose problems that they’re worried about, which is to say that they’re overwhelmed with choice and with quantity. They don’t know what to trust. Those are new problems that aren’t really solvable by going backward either. And so I think, right, I think that does make for a really good time to start something, if you really can stay focused on what people actually want.

And I do think in a way that the other era that’s ending is this notion that Netflix embodied also, that you just spend unlimited money, all you care about is growth. You make up your losses on volume. I think if you’re starting something now — and this is certainly true of us. I think it’s true of Puck and a lot of the other people starting — you’re thinking a lot about building a business.

Kara Swisher

That’s correct. So let’s talk about Netflix. Netflix has been losing subscribers and expects to keep losing them. Stock fell 35 percent in one day. It’s really down quite far.

What is the situation, Matt, in Hollywood with that? Because they were the free spenders. Ted Sarandos swaned around all of Hollywood. What is their situation now? Because there’s also schadenfreude about Netflix, which I think is probably partly deserved. But at the same time, they liked what Netflix was doing, which is changing the relations between talent and studios.

Matt Belloni

Yeah. Beyond the normal schadenfreude that you see when the outlet that has been completely overpaying talent for the past 10 years, which has been picking off executives one by one, doubling their salaries, bringing them over to this upstart that has been fueled by a stock market run up and free debt that they have just been spending, spending, spending. The correction has absolutely caused everyone in Hollywood to be like, oh, see, maybe we weren’t so dumb to have these other businesses. But then they look at their own business and say, wait a second, our stock is down too, because we are all tethered to this anchor. And if they go down, we’re all going down with them.

So I don’t think that there is a feeling that people want Netflix to go out of business. It is pumping $17 billion to $18 billion of spending into the content ecosystem every year. Even if they pull back, it’s a huge, huge spender. So I think that there’s this love-hate relationship within the Hollywood community towards Netflix, where at this point, Hollywood sort of needs Netflix.

Kara Swisher

What do you think, Ben, in terms of what it represents? Because I still believe in the model, the digital content model.

Ben Smith

Yeah. I just think there have been these distortions that came with just massive amounts of private capital, of capital from public markets flowing into businesses from Netflix to taxis, and that among other things subsidized all of our lifestyles and also subsidized elements of our — particularly if you were in the studio business of our businesses. And that’s rationalizing and going away, and there’s a lot of reckoning across all sorts of things from how much you pay for an Uber to how much studio revenue should you be expecting as a media company that I think are going to have to readjust.

Kara Swisher

Meaning upward and downward, because Ubers now are expensive and —

Ben Smith

That doesn’t mean these things are fake businesses or that you’re going to go back to standing out on the street hailing a taxi. I mean, I think there’s often an overreaction in these moments as well.

Kara Swisher

So when you look at something like Netflix, what replaces it, first Ben, and then Matt. What is it? Apple which has come in, they bought “Slow Horses.” They seem like they have a little bit of momentum and endless cash.

Ben Smith

I just think — and Matt is much wiser on this than I am. But it just seems like the old realities of Hollywood being a hit business, in which you watch shows that you get obsessed with because the creative is great, is ultimately clawing back a lot of Netflix is smoke and mirrors. And HBO Max, which had the worst imaginable launch, whose tech is still totally unusable, has better content.

And so I’m forcing — and I think a lot of other people are forcing themselves to watch that. And ultimately, they’ll figure out how to make a video player work. We’re not talking about sending people to Mars here.

Kara Swisher

Yeah, it’s been a while. What do you think, Matt? Is it Apple? But you didn’t mention Apple or Amazon, which have scads of money.

Ben Smith

No, and I think it will probably continue to spend, but I guess I’m just going back to the truism that this is a content business not a tech business in the end.

Kara Swisher

Matt?

Matt Belloni

Yeah. There are two things about Apple and Amazon. First is they have no actual accountability or even business model around their content plays. I mean, this has been purely a — I don’t want to say a vanity play, but it really is. I saw Eddy Cue and Tim Cook at the Oscars, at the Governors Ball, right after the show, when they won Best Picture, and the look on their faces was we’re in the game. We’re players now, and like that intoxication is very powerful.

It’s also very dangerous, because it keeps people in businesses that aren’t necessarily great businesses. And Apple has been spending hundreds of millions of dollars on content. Are they getting a return on it? They seem to be interested in spending more. We don’t know.

Ultimately, they may be playing the long game, saying we have a valuation that nobody else can top. So we’re just going to spend to be the ultimate winner in this space. Hollywood loves Apple right now, because they’re spending like Netflix was spending. They’re buying all the big packages.

Kara Swisher

With a little more respect. Correct?

Matt Belloni

Yeah, and they’re trying to be HBO. They’re not trying to be CBS which is what Netflix ultimately was trying to be. And if they can spend, spend, spend to become a version of HBO for the digital age — they’re not quite there yet, then that’s—

Kara Swisher

Yeah. That’s exactly where they’re going actually.

Matt Belloni

The second thing is that the actual winner — Apple and Amazon are trying to become the gateway for all content online. They want the interface to not just be where you go to watch Apple TV Plus and “Severance” or “CODA.” They want you to go there to get any channel, any movie, anything on the internet.

And if you go there to rent pay-per-view or to go through to another network, if it’s an HBO channel or something else, that’s the ultimate goal. Because those two, unlike the other competitors in media right now, those two are the distributors. They are the platforms. And ultimately, the platform is where the real value to those companies is.

Kara Swisher

Yeah, which was the weakness of Netflix for a long time. I always thought they should have got bought by one of those. But what does it mean that Netflix is adding ad-supported tier, something they said they’d never do, Ben?

Ben Smith

It’s just a reminder that these companies, the notion that people have principles around where they get their revenue from is ridiculous. And I think it’s something that probably Matt and I have also both learned in our startups, again in the last few years, is you have a theory, but you have to be really — it’s just that you shouldn’t be ideological about this stuff. And Netflix was positioning itself in a certain way which made absolutely perfect sense, until they had one really bad quarter.

Kara Swisher

Right. What about you, Matt? What do you think?

Matt Belloni

Yeah. I think that this is absolutely a recalibration. They’re looking at the total addressable market, as they say, for streaming video. And they’re saying, wow, we are probably not going to get to that 600, 700, 800 million subscriber number, unless we offer a cheaper product. They have actual competitors now, which they didn’t for the first five to seven years of their streaming business. They have these companies pulling back their content.

The big drivers of Netflix over the years has been, yes, the originals, but also the library movies, all of these old movies. Until three or four years ago, you could watch Disney movies on Netflix. I mean, it’s not that long ago. And the fact that Disney now has pulled all that stuff back, they’ve got to grow somehow. And the way you grow, all of these streaming companies are going to offer less expensive, ad-driven tiers, because that’s what the consumer wants.

Kara Swisher

All right. So will Netflix get bought? Is that a possibility? Roku was also a possibility.

Matt Belloni

It’s much more likely now than it was six months ago. Look at the stock. They were out of reach for most companies, until recently. I think, ultimately, that makes the most sense for them. Because if they’re looking at the long term play here, these other legacy companies have 100 — but their competitors have 100 years of experience in the content business and the library and the intellectual property to compete.

Netflix is trying desperately to create intellectual property that is meaningful to the consumer. They haven’t been able to do it, because movies on streaming do not create franchises. I think that’s pretty well established at this point, and they don’t have, you know, the Disney library or these characters. They bought the Roald Dahl estate.

Kara Swisher

“Squid Game” did pretty well. They do pretty well at a lot of things.

Matt Belloni

Oh, yeah. Absolutely. Netflix has hits. Don’t get me wrong. They can launch a hit on streaming like nobody else. “Squid Game” is not possible on any other streaming service right now, but “Squid Game” is one show. You can’t build a service off one show.

Kara Swisher

Unless they do. Unless they build the thing. What do you think, Ben, about them getting bought? They could merge with Roku. There’s all kinds — and who would buy them?

Ben Smith

I don’t have a real theory on this. They remain very expensive for almost anybody, and I also think it’s not a political environment, where I don’t think either a Republican or a Democratic administration is going to be thrilled about more consolidation.

Kara Swisher

Yeah, unless it’s a Hollywood company, for example, or Roku, Netflix, Hookup or something like that.

Matt Belloni

Even Hollywood companies. Only at this point Disney maybe —

Kara Swisher

Yeah, only Disney, probably.

Ben Smith

And if it’s Disney, then you have real antitrust issues.

Kara Swisher

Yes, indeed. You do. All right. Speaking of which, things aren’t so rosy for Hollywood companies. Movie theater issues, Matt, you’ve written a lot about. Talk a little bit about this. You know, “Top Gun’s” about to come out. I’m going to a premiere. I’m not telling you where, but it’s a good one, and there are British people there. But nonetheless,

Matt Belloni

I know where it is, the London Royal Screening.

Kara Swisher

I’m not telling you, but I’m going. And I’m wearing a tuxedo, and I’m wearing my aviators — my aviators, not Tom Cruise’s aviators.

Ben Smith

Oh, wow. Is that your fashion inspiration?

Kara Swisher

No. He got it from me.

Ben Smith

Like your original fashion inspiration?

Kara Swisher

No, no, no.

Ben Smith

No? OK.

Matt Belloni

Do you wear leather jackets, too?

Ben Smith

Just thinking kind of as a mood board. All right.

Kara Swisher

No. What are you — that was back in the old lesbian days, but so “Top Gun” is coming out. That’s the latest one. Obviously, Doctor Strange the sequel Doctor Strange came out. There’s a whole bunch of stuff on tap. You did pull back a little bit, because you were talking about lost moviegoers. I am one of those, I suspect, except for “Top Gun.”

Matt Belloni

Well, you’re a perfect example, because you are a lost moviegoer, except for the big franchise movie.

Kara Swisher

That’s correct.

Matt Belloni

That you care very much about, and you’re going to go back to the theater for that. And what we’ve seen over the past couple of years, the pandemic absolutely changed the movie theater business. Pre-pandemic, it was very common to — it was enforced, basically, that you had to have a 90, 120-day theatrical window, where movies would play exclusively there. Now, that’s all gone.

Most of the studios are using either a 45-day window or sometimes less. Sometimes, if you’re “Top Gun,” and your Tom Cruise, you can push for that 120 days, and he’s actually getting that. But for the most part, this is a hybrid business now, where only the biggest franchises play in movie theaters. We’re seeing a third fewer movies in theaters this summer than in 2019. That is gigantic.

Kara Swisher

And the numbers are down significantly.

Matt Belloni

Absolutely. The first quarter was down 40 percent. Now, that was Covid-impacted. The summer, this is being called the first post-Covid summer.

It’s not really, because the studios are still pretty squeamish on what they’re putting in theaters. So we’re seeing the box office, probably for 2022, will be down, depending on the estimates, 20 percent to 40 percent from 2019, and I think it’s going to be a real struggle to get back to that normal. Even the C.E.O> of AMC Entertainment, the biggest theater owner in the country, they say it’s not going to get back to normal until 2025.

Kara Swisher

Maybe. Oh, no way. It’s not even going to get — that’s just made up. I’m sorry. My kids do not go to movie theaters, not for nothing. They watch everything on the big screen at home.

Matt Belloni

Even Marvel?

Kara Swisher

No. Don’t care. Don’t care, and all their friends don’t care.

Ben Smith

Yeah. Actually, I took my son to the IMAX screening.

Kara Swisher

Maybe the IMAX, yeah.

Ben Smith

And he was suitably impressed. And I think IMAX talks about themselves as the best house in a bad neighborhood, and there is some sense of AMC just putting one foot in front of another in trying to get people back to miserable, filthy, old theaters seems very, very difficult, but I don’t know. I do think the cultural pendulum is swinging.

Restaurants in New York City are very, very full. People are looking for in-person experiences. I wouldn’t rule out that somebody figures out a creative way to do something that feels different.

Matt Belloni

It needs to be a premium business. I mean, it’s pretty clear the United States is over screened. There are too many movie theaters in the U.S. for the product that is out there. So there needs to be a thinning of the herd of these low performing, bad, dirty, awful movie theaters. I mean, look at the music business. The music business is absolutely thriving right now. Live comedy, thriving. All of these in-person experiential businesses are going through the roof. Its movie theaters that are considered low rent and down market.

Kara Swisher

Right. What movie did you see at IMAX, Ben?

Ben Smith

The new Marvel, “Doctor Strange.”

Kara Swisher

Doctor Strange, so your son liked it. Did he beg to go again? He would have gone to see it in the theater anyway because of the window, and we wanted to see it. But he was like definitely impressed. It felt like, OK, like this is different from watching it at home, not just because of the window. I think that’s the difference.

Matt Belloni

One thing, Kara, that I push back on a lot is this notion that the consumer choice is always going to win in these situations. Because I think in all media —

Ben Smith

What a Hollywood perspective.

Matt Belloni

I know. It is a very Hollywood perspective.

Kara Swisher

Yes, it is. And I said nothing. Ben, I said nothing, but go ahead.

Matt Belloni

But you know what, it’s proving to be right. Because I think it’s very clear at this point that the day and date strategy — which means you release the movie on a streaming service the same day it’s in theaters — that is not a sustainable business for big budget entertainment in Hollywood. It’s just not. You need that window of exclusivity.

Ben Smith

Right.

I think it’s partly that. It’s partly you have somebody who’s running a bunch of food programming comes in and says why are you making all this expensive food programming at CNN? Like we have the Food Network.

But I don’t know, I think actually people underestimate what a difficult position, as you were talking about before, these cable companies are in. They have this incredibly profitable business which prevents them contractually from moving anything interesting to the internet and yet are under obvious pressure to build a new digital presence. And so I don’t think it was crazy for them to think, OK, we better try to find a path in digital.

But by the way, the obvious path is you put CNN, which is incredibly high quality and valuable in breaking news moments, on the internet. You can’t do that. So it’s not like they’re total idiots. They’re in a really difficult box.

You could have gone either way. Zaslav killed it because it was expensive, but I don’t really know, in 10 years — the numbers watching CNN, most of the time, are trivial. It spikes up during breaking news, but increasing numbers people aren’t going be able to go there and will go somewhere else during breaking news. It’s a real challenge for them.

Kara Swisher

So cutting it was what? So what? Who cares kind of thing?

Matt Belloni

I think it was absolutely an acknowledgment of the challenge that company is facing. They have to cut $3 billion in order to make this deal make sense. You had this $400 million albatross just sitting there.

It was just launched. They didn’t want it to launch. They had a C.E.O. battle over whether it would launch before the deal closed. Cut bait. It’s very easy. That’s the easy decision.

Ben Smith

Oh, straightforward call.

Kara Swisher

Yeah. Straightforward call.

Matt Belloni

One thing it means is that they’re not going to sell CNN. One way to resolve their huge debt issues would have been to sell CNN. I think they’ll wind up regretting that. News organizations as part of entertainment companies are a massive headache, unless you, like Rupert Murdoch, just want to use them as a political cudgel to drive your profit margins.

If you’re not willing to do that, which Zaslav probably isn’t it’s, you know, just going to be — I don’t know. I don’t really see how that integrates with the rest of their business, and it’ll cause them huge political problems.

Kara Swisher

So what happens to it, CNN? What does he do?

Matt Belloni

What happens to CNN?

Kara Swisher

What does David Zaslav do?

Matt Belloni

I actually disagree. I think CNN is a really valuable brand and, ultimately, where all of these companies are going is one fully integrated streaming service that can be all things to everybody around the globe. And if you are Warner Brothers Discovery, and you have HBO Max, you have the best premium scripted content.

You now, with the Discovery stuff, you have — the best I use that with air quotes — reality programming. You now have sports via the Turner networks, and you now have the number one news brand around the world. CNN as a tile on HBO Max is a very valuable proposition, I think.

Kara Swisher

Gosh, I feel like the tile thing is a dog’s breakfast. I don’t know. I just feel — that’s not how I think of these things.

Ben Smith

Yeah. I think there’s always this idea that news works well as part of a conglomerate, and I think newspaper companies are ultimately —

Kara Swisher

So where does it go? Ben, where does it go? Does it get sold? Elon Musk could buy —

Ben Smith

No. I think they made a decision by killing — by deciding there’s no immediate digital future for CNN, that there’s no standalone future for CNN.

Kara Swisher

And therefore no — that couldn’t get bought by another organization.

Ben Smith

Then it’s a — CNN’s a tile. Yeah.

Kara Swisher

Just a tile.

Matt Belloni

If you’re trying to distinguish yourself from Netflix and truly compete around the world, what are two things that Netflix does not currently do? Sports and news. And HBO Max can potentially do both and do them at a premium level. That if you are a news consumer, and you’ve cut the cord, there is some version of a CNN product that might make sense as part of a HBO Max service.

Ben Smith

You could rebrand it. You could call it HBO Max Now or HBO Max Next Now. I think it’ll be great, very hot.

Matt Belloni

Plus, Plus, Plus.

Kara Swisher

Oh, for the love of Jake Tapper. OK. His book show, really good. No, I’m kidding.

Matt Belloni

What was his initial book recommendation? Sadly, I did not watch Jake Tapper’s book Club.

Kara Swisher

I don’t know. I don’t know. I think Warner Discovery is going to get sold to someone else. That’s my predictions.

So finishing up with CNN and cable news, you did a fantasy draft of streaming services. Zaslav, HBO Max was your first pick, followed by Netflix and Amazon Prime. Why is that, and then Ben, your picks.

Matt Belloni

Why did I pick HBO Max first?

Kara Swisher

Yeah.

Matt Belloni

I think because they have the killer app. They’ve got all of the things that people want to consume. They have news. They have sports. They have premium scripted content with HBO and 30 years of experience doing that. And they have the —

Kara Swisher

They have Guy Fieri. They have Guy Fieri.

Matt Belloni

They have Guy Fieri. They have the reality stuff. It’s a fully integrated — they have it all, as long as they deploy it correctly. And there’s a lot of challenges, because HBO is a wholesale business around the world. Meaning the HBO Max brand does not exist yet in places like the U.K., where they have the Sky deal for all the content. But in 10 years, HBO Max, if they play their cards right, will be the service around the world.

Kara Swisher

OK.

Matt Belloni

Bigger than Netflix, in my opinion.

Kara Swisher

And what about you, Ben?

Ben Smith

I agree with Matt on HBO Max. Their biggest problem is they can’t make their video player work, and YouTube solved that 20 years ago, and I’m sure they’ll be able to figure it out.

Matt Belloni

It really is bad. It really is bad.

Kara Swisher

And that debt.

Ben Smith

It’s embarrassing. But it’s embarrassing but extremely easy to fix.

Kara Swisher

I know. It is embarrassing. You’re right.

Ben Smith

And beyond that, yeah, they have the content. I actually think that I would put Amazon’s — I think that marketplace notion is a really major threat to all these guys. And you know, if you’re willing to pay $3 every couple of nights for a movie, you obviously have so much more choice than you ever will on Netflix. And obviously, Apple and Amazon are competing for that space, but I think that is a really viable space.

Kara Swisher

All right. Vice Media Digital Media is considering a sale. Who’s going to buy it? Once, it was valued over almost $6 billion. Is that a realistic price? Obviously, not.

Matt Belloni

Isn’t that — I mean, Vice will probably be sold for parts. Right? The Vice studio, actually, is a decent asset. You have this incredible boom right now in non-fiction content.

The streamers all want these quasi-elevated docuseries things that can go three, four, 10 episodes, true crime, scandal of the month, that kind of stuff, and Vice is good at that. They can produce that stuff. So that would be valuable to someone the rest of it I don’t get.

Kara Swisher

Ben?

Ben Smith

Yeah. I think there are challenges. They have four different businesses, all of them losing money. I agree. Studio has a library that I think they’re licensing to Hulu right now.

Agree with you, that’s a valuable thing. James Murdoch, whose mission in life appears to be building a competitor or some check on Fox News, is now an investor. Jesse Angelo, who he’s close to, is the president. The notion that Vice News could become James Murdoch’s news property, shearing off a lot of the rest of — selling off the studio, the agency, that makes sense to me.

Kara Swisher

Yeah. OK. I feel bad for Nancy Dubuc. I think she — God’s work in there.

Ben Smith

Tough job.

Kara Swisher

Tough job, absolutely. Last thing, Twitter. Twitter, what’s going to happen? Is the deal going to go through?

Matt Belloni

I’ll let Ben take this one.

Ben Smith

I would not — I think betting against this deal in public has led to the collapse of many of my best friends’ reputations, so I’m not going to do that. I mean, who knows. One thing I would say that I think people underestimate is that social networks are very, very fragile, and we’re watching Facebook collapse in real time right now that we thought would never happen. I don’t think this is inevitable or even likely, but somebody leans the wrong way on the wrong part of Twitter, and we could just all leave and never come back. That is what has happened to every social network and other fashionable gathering place in history.

Kara Swisher

Right. Right.

Ben Smith

And so could happen here.

Matt Belloni

What shocks me is that it appears that Elon Musk has not really thought through the whole content moderation problem.

Kara Swisher

Yeah.

Matt Belloni

He seems to think that, oh, we’ll just invite Trump back. Well, Trump was banned because of multiple violations of the terms of service of Twitter. So what are the terms of service of Twitter going to be going forward, if Donald Trump is going to be let back on? And the content moderation is a real problem.

This is why Disney never bought Twitter. They looked, and they said, you know what, we can’t deal with this problem. This is why advertisers are skittish of the Twitter platform.

If he thinks that he’s going to switch it over to a subscription site, good luck on that. You already see people like, really, I’m going to pay for the nonsense that I see on Twitter? No. Nobody’s going to pay for that. So I think that they’re really going to have a problem on monetizing it, and these rosy projections that he has put out are really naive.

Kara Swisher

Well, he’s making them up. Just be clear.

Ben Smith

But that said, I do think there’s some sort of Gordian —

Kara Swisher

He’s just saying them.

Matt Belloni

He’s what?

Kara Swisher

He’s just saying them.

Matt Belloni

I know. That’s true. And yes.

Kara Swisher

Quintuple. Quintiple.

Matt Belloni

You don’t think he actually believes that he can turn Twitter into a diversified business?

Kara Swisher

I think he could bring it into a private thing and then send it public again, possibly. That’s one.

Ben Smith

Yeah, and there are definitely some Gordian knots around Twitter and some endless hand-wringing conversations that he could quite well just push through and maybe that’ll be really valuable. I’m still addicted.

Kara Swisher

You’re still addicted, but the stock of Tesla is dropping like every other tech stock right now. That could be problematic, as things continue to run. So that’s my last question.

Stock market, dropping like a stone, largely because of tech. What happens with media? Ben, you’re starting a media company. How does it feel out there right now? VCs are losing their minds. Someone’s called it a shit show, et cetera, et cetera.

Ben Smith

I think we are a small business. We’re getting a lot of excitement, confidence and have largely closed our fundraising. So I don’t maybe have the absolute latest on that, but yeah, but it’s obviously a different climate now than it was a few months ago. The way in which crypto is falling in tandem with the market is obviously new and pretty meaningful.

Kara Swisher

What do you think is going to affect Hollywood and media in that regard?

Matt Belloni

Hollywood’s been an interesting outlier in previous recessions, because people tend to retreat into cheaper forms of entertainment. But it is a fiction to think that these companies will not be impacted, because they’ve all changed their models to imitate the tech companies. Disney rose in the stock market throughout the pandemic, because investors were convinced that the Walt Disney Company, a 90-something year old media company, was now a tech player. So they’ve really had a correction based on that.

I think there’s going to be some real hard looks at the models that these companies have been on, and they’re going to fall back on a more diversified strategy. Meaning yes, we want a global streaming platform, but we’re not going to pay through the nose to create one. We’re going to have our different businesses.

David Zaslav at Warner Discovery has already said this. We’re not going to overpay to win the streaming wars. We don’t think that there’s much marginal value in having 15 great HBO shows rather than 10 great HBO shows. And I think that is going to be the model going forward for the next couple of years to ride this out. Spend to compete. Don’t spend to win.

Ben Smith

Yeah, and maybe don’t bet on — and maybe the notion of these stocks as vehicles for ideological fantasies about the future is also a casualty of this. The happiest investors right now are the ones who have invested in arms and oil and not ESG and not the bright future of Tesla, and I do think that’s also a real shift.

Kara Swisher

A shift. All right. Last thing, one quick prediction from each of you or one company you think is going to shine over the next — I’m going to just make it a year, because who the fuck knows? Matt?

Matt Belloni

You know what, I actually think a company like Roku is pretty well positioned. Roku has been known as dongle company, a connectivity to streaming services. And they’ve really been hit hard because all of these other companies are now coming up with their own connectivity. Roku is pushing into the content space as a differentiator here and trying to create real shows and library of content. And I think that’s probably the best strategy for them, because they could be a real player here.

They do have this captive audience of people that use the Roku service to connect to their streaming services. And that’s the real power play here is going after people not on a hit-by-hit basis, but based on their actual platform that they use. And it’ll be interesting to see if Roku can utilize that platform to also supplement it with different shows and movies and things, and I think you’re going to see them bounce back.

Kara Swisher

All right. Ben?

Ben Smith

You know, I find it strange that in conversations like this that we don’t say the words TikTok as much as we should, but just obviously, TikTok just remains an unbelievable juggernaut, just leveling everything in its path. At some point, the U.S. government will probably cause it a massive amount of trouble, but probably not this year.

Kara Swisher

I literally spent an hour and a half last night listening to ASMR sand cutting. It was fantastic.

Ben Smith

Wow.

Kara Swisher

I know.

Ben Smith

TMI.

Kara Swisher

Try it. Try it. You’ll see. I was very pleased and very happy.

Matt Belloni

You’re saying the Reels is not going to kill TikTok?

Kara Swisher

No. No. I love TikTok, and I use it on a burner phone.

Ben Smith

Joe Biden and Donald Trump will kill TikTok.

Kara Swisher

They have to do something. You’re 100 percent right.

Matt Belloni

Really?

Kara Swisher

I do. I do.

Matt Belloni

You’re OK with Mark Zuckerberg having your information but not the Chinese government?

Kara Swisher

I do not use Facebook.

Ben Smith

That is so irrational.

Kara Swisher

I don’t care. I feel good about it. I feel good about my sand cutting and my burner phone, and it’s a great experience for Kara Swisher.

Ben Smith

Now that you’ve said it, you need a new burner.

Kara Swisher

No. They’re not going to find this one. All right. OK. Thank you guys so much.

“Sway” is a production of New York Times Opinion. It’s produced by Nayeema Raza, Blakeney Schick, Daphne Chen, Caitlin O’Keefe and Wyatt Orme. With original music by Isaac Jones, mixing by Sonia Herrero and Carole Sabouraud, and fact checking by Kate Sinclair, Michelle Harris and Mary Marge Locker. Special thanks to Shannon Busta, Kristin Lin and Kristina Samulewski. The senior editor of “Sway” is Nayeema Raza, and the executive producer of New York Times Opinion Audio is Irene Noguchi.

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