Investor Gerry Cardinale on Why WarnerMount Will Work, Middle East Money, and Layoffs

So, you have to give it a day to you. Tamara is. This feeling can be done now. Tamara is a man. She is a school for all life moments.

“You find you on Tamara's.com and go out.”

With the code Spotify 10, you get 10% of her school on Tamara's.com. Perfect for you. And now, for me. Tamara is.

This episode of The Town is brought to you by the Madison, the new original series on Paramount Plus. Academy Award nominee Taylor shared in his most intimate story yet. Unlike anything he's ever done before,

the Madison follows a family raise in a world of digital distraction forced by tragedy to truly see one another and come together. Authentic, multilayered, and did I mention starring Michelle Fiverr and Kurt Russell,

don't miss the Madison. New series, streaming March 14th, only on Paramount Plus. It is Wednesday, March 4th. Watermount, we continues on the town

as we further digest Paramount buying Warner Brothers Discovery.

“One of the biggest and most impactful studio”

mergers in the history of the entertainment business. We discussed the Hollywood angle with Lucas on Friday. Then we did the Wall Street perspective with Rich Greenfield on Monday. Should listen to both those episodes.

Today it's the view from inside this 111 billion dollar mega deal.

What the investment thesis was for the Ellis and family, how they planned to pair down that $79 billion debt they took on to fund this deal, whether they'll sell one or both movie studio lots. And if these Saudis and other Middle East investors

will be among those backers. Lots of questions. So we've got the chief architect of this deal back on the show to discuss. Jerry Cardinal is the founder and managing partner of Redbird

Capital. It's the private equity fund that back skydance and then Paramount skydance and now the takeover of Warner Brothers Discovery. Jerry does a lot of other deals too,

especially in the media space. He's arguably the biggest and most influential dealmaker in the space right now. He's agreed to let me grill him on the contours of this transaction. Why he says the coming cost cuts will not

primarily focus on employee layoffs. And ultimately why he and David Ellison believe this mega deal is good for Hollywood from the ringer and puck. I'm that felony and this is the town. (upbeat music)

Okay, we are here with Jerry Cardinal, who is the founder and managing partner of Redbird. Capital also a Paramount skydance Ford member. Welcome back, good to be here. You survived the first outing on the town

and you dared return for another grilling by me. - Well, we had fun the first time around some of that. - We did, yes, no, it's all in good fun. So let's talk about this company. I have many, many questions about this deal,

about this company that you have now formed about all of it, the debt question. I've heard people already referring to this company as debt mount, debt bros,

Heradette, sky high debt, 79 billion dollars in debt

attached to this company. How is that a surmountable hurdle? - Well, I mean, on the surface, that amount of debt is a large amount of debt for any company. But our cash flow is also a large amount of cash flow

for any company. You can't talk about debt in a vacuum, leverage is an important corporate finance tool for growth to enable cash flow generation. And cash flow generation, there's a circularity, cash flow generation enables you to take on debt

and pay it down. So we have a tremendous amount of cash flow generation in the assets that were with that are coming together here. You know, one of the reasons why from an industrial logic standpoint, you know,

Paramount Warner Brothers coming together in our ability to buy the whole company was so important was that an unlocks tremendous cash flow and synergies. That all gets reinvested back in the content and it also helps us deliver.

So, you know, we close, you know, we will have net leverage a 4.3 times.

“That's why you have to link cash flow and level.”

- Not seven, I thought it was seven.

- 4.3 times pro-forma for the six billion of synergies

that we have underwritten and we have to... - So you're counting for the six billion dollars you're taking out of the company. - I'm giving us 100% credit for those synergies. We've shown, first of all is it what we do for a living.

- Yes. - Number one, it's not just spreadsheet math. Number two, in the short track record that we've already established with Paramount, we've shown an ability to execute and outperform on synergies.

So this is not just deal jockies playing spreadsheet math.

you know, the industrial logic of this whole thing

is led by the owner operator model. And I said to you before, that is important, not only important for alignment, the fact that the Ellison family and we will be the largest shareholders

in this pro-forma entity is very instructive. We are putting our money where our mouth is and therefore you are wholly aligned with shareholder value creation. You can't do shareholder value creation

unless you're driving revenue and you're driving cash flow. You can't do that unless you're reinvesting in the business and that all leads to the derivative effect of providing real value creation for not only shareholders,

but subscribers. So the whole thing's negative. - How is this different from the Warner Brothers discovery

“leveraged by out, which essentially is what that was?”

Because they had some pretty lofty predictions of where their revenue would be and that they would be able to pay down their debt and almost from the get go, those revenue projections came in below

what they were forecasting due to the same headwinds that you guys are up against. The linear television model is collapsing yet you make most of your money on the linear television model. So how are you distinguishing this

and how is this not just a supersized version of Warner Discovery which was not working to the point where they had to sell? - Well, look, as you point out, I mean, synergies were not the problem

in the original Warner Discovery merger.

I mean, they guided to three billion

of cost savings upfront by the end of 23. You know, they were looking at four billion in real life savings excluding content. So, you know, cost savings, the challenge for that deal is that the cost savings were all set

as you know by declines in their linear revenue, right? I mean, they started 24 billion down to 21 billion. - Yeah, but how is that different from you? You've now inherited that melting iceberg and you now have all of these other cable networks

that you're throwing on top of it. - Right, our linear portfolio is not comparable number one and importantly it includes CBS. The CBS broadcast network as you know is best in class, we ate at the top 10 shows on TV

or our shows and that reach will continue. That reaches, you know, very synergistic in terms of the partnerships that we have on the programming side, particularly with live sports and news, you know, our sports portfolio

is best in class at rivalry as well. - It's about to get a lot more expensive with the NFL though.

“- Sure, and that's why, you know, this is all connected.”

You've got to invest in content sports rights, like all other content spend are continuing to go up and we've got to be able to run this whole pro-formanity, you know, very efficiently to be able to continue to compete

and reinvest in the business. And so I like the fact that, you know, we're buying the whole company. It gives us real foundations for synergies, both on the revenue side, on the cost realization side.

CBS is the crown jewel in the linear portfolio. And that is why we're different than, you know, winners and discovery had to deal when they did their deal. - So, Fitz just downrated Paramount's credit rating to junk after this deal.

Ted Serando's called your deal, irrational, Greg Peters told the financial times, he can't make sense of this deal that you did. And this is his quote, "And if Netflix can't make it economically viable,

I don't know how they can." So, I am quite frankly, a little bit nervous for the industry. - Do you care to respond? - Sure.

What I would say there is that the, you know, the sour grapes tour is amusing, to a point. But, you know, I don't let guys with no track record in the areas that are instructive here be the peace car for the narratives.

So, you know, Netflix, if we wanna look at Apple's Apples, Netflix has no track record in any kind of large scale of M&A. - Oh, how dare you, the raw doll estate was a huge deal for them. A $700 million is not a $110 billion deal,

number one, number two. They don't, you know, 70% of what they carry content lies is licensed, as you know. They don't even do their own distribution, Amazon does it. They don't wanna make content for theatrical,

they wanna basically, their deal, the North Star and their deal was just really killing competition. They have a great business model. They don't need to kill competition. Our deal, you know, actually creates competition.

That's what it's always been about.

In the company, you know, when you look at the narrative here, which is very interesting is, you know, they wanted to shift the definitions to TV viewership. Now, this is about direct to consumer. Direct to consumers, about pricing power.

You got pricing power, both at the consumer level and you got it on the content supplier level. We're gonna open that up and we're gonna really reinvest in the content. This is a shot in the arm for Hollywood and for... - How do you do that?

How do you reinvest so much when the first couple years of this

“are going to be about debt reduction and cutting costs?”

- Yeah, but Matt, you know, the cash and capital are fungible.

bifurcated into all debt reduction, all content spend.

“The money's fungible in our job, every dollar of cash flow”

we generate, you know, we'll go to debt reduction and content spend. Those two things can exist very synergistically. Our job is to run the business more efficiently than any content production company in Hollywood has ever been run.

- And again, you guys can do this in a way that others who have tried this cannot.

You have a 43-year-old CEO who has never done this before

and he's gonna do it where others have failed. - Yeah, well, that's when you see never done this. He's got a 15-year track record or 16-year track record having built, you know, a very dynamic content production company like Sky Dance from Scratch.

In the short time that we've had Paramount, look at what we've done. And then you gotta look at, you know, your iPhone we said, you're only, particularly in these content businesses, you're only as good as the people you put around you.

And if you look at what we've done, I mean, we hired a former meta executive Dane Glasgow as our chief product officer. You know, we're gonna be a real destination for top tech talent. It's first time really in Hollywood

that you've seen that kind of end diagramming between Silicon Valley and Hollywood. - Well, Netflix would beg the differ there. I think Amazon probably would as well. - Yeah, I don't think Netflix is the standard for technology.

We're taking it up to a real stand. - But what does that mean? You guys have, and I made fun of this as the sort of Oracle Pixie does. What does that actually mean?

- Well, look, we've got our Oracle Fusion implementation going on. That's gonna consolidate finance and our HR systems. That's on schedule. We're gonna make sure we really lean into the back end

convergence of Paramount Plus in Pluto. We're transitioning to studio in the cloud as a model to accelerate content creation. - So all of this is gonna be built on the Paramount tech. The water discovery tech is gonna go away.

- Matt, you know, Paramount had no tech, okay? We are putting that in place. So this is gonna all be predicated on the synergy, on the industrial logic of, you know, the Ellison family and Redbird and the way we build

businesses the way we embrace technology. But what's the investment thesis in Hollywood

“largely to find the investment thesis in Hollywood?”

Is you gotta embrace technological disintermediation if you're gonna level the playing field and for the good guys, the content generators. Now, the IP in the equation here from an investment thesis standpoint is the IP.

It's the content creation.

And Hollywood has never had a fair shot

at leveling the playing field with the guys who think they're the IP, which is the distribution side of the equation. And a lot of that comes out of Silicon Valley, a lot of that is driven by direct to consumer and streaming.

But now, we're gonna really lean into content generation. We're gonna be, it's not only gonna be derivatively beneficial to consumers, both from a diversification standpoint, they should be able to get everything that they want

in a very easy way, but it's gonna be great for content suppliers because it's gonna be a shot in the arm of Hollywood in terms of taking, running these businesses the way every other industry runs them with driving revenue growth, driving cost rationalizations,

driving cash flow generation. Those are not bad work. Cost rationalization is not a bad word. These businesses have not been run cutting edge the way. Every other industry is sad to get their head around

technological disintermediation and evolution. We're gonna do that. And that's why this is gonna work. And we talk about, when we talk about the synergies map, you know, the inference here is that you know,

it's all gonna be cost we got. It's all gonna be labor, we're gonna be firing. Yeah, that obviously is of interest to people in Hollywood. They see this horizontal merger and horizontal mergers equal layoffs, but Andy Gordon, your COO,

says no, it's not primarily employees. How is that possible? A majority of our synergies that are cost-related, have nothing to do with firing people. - Then what are they?

- Okay, let's go through it, okay. Follow me on this because I'm gonna give you the answer

and the devil is always in the details.

Guys can be as all they want at the end of the day. All of this is sophisticated and needs to be attention to the details. Number one, I got a few buckets here

“on how we're gonna drive synergies and it's real stuff, okay?”

And as a whole business plan around this that we've developed. Number one, we're gonna consolidate our streaming technology stacks and our cloud providers across Paramount Plus and HBO Max. By the way, that's the same plan

as we're executing at Paramount right now and consolidating the tech stack of our three streaming services in Paramount Plus, Pluto and BET Plus. So that's number one, very important. Number two, we're gonna optimize the combined real estate

footprint and corporate overhead. Same plan we're executing at Paramount across excess office space and redundancy's in back office.

No, we're gonna keep, we're gonna keep them. We're gonna keep both. We're gonna develop them more efficiently, yes. What does that mean, condos on the Paramount Lot? No, no.

That means, what does that mean? We mean we're, no, no, no, no, we're not real estate developers. Well, let's just ask you the question. There was a rumor that Larry saw this as a real estate play

to make a couple of billion dollars on the lot.

Okay, well, then anybody saying that doesn't know Larry and it's just complete, you know, garbage. So you're keeping both lots. Every thing we're gonna do is gonna be synergistic around the pro-forma company.

So we're not gonna do that, but, you know, again, we're still, we'll work through and when we have something to announce, we'll announce it.

“You should assume that we're keeping that footprint”

and it's all gonna be utilized for the benefit of IP monetization and across the whole flywheel of IP monetization. Okay, so, but you are confirming right now that you will not sell the Paramount or Warner Brothers lots in Hollywood and Burbank.

- That is correct, that is the intention right now. Look, there's a lot of global efficiencies we can drive in procurement and in just general business services. Again, we've shown already in the short time

that we've owned Paramount. We've demonstrated significant savings by leveraging the benefits of scale and purchasing from vendors across IT, travel, all the stuff that the well-run corporate enterprise world takes for granted

we're now bringing to this, okay, so that's another area. Then there's efficiencies in marketing, optimizing spending on agencies and tooling. Again, Paramount, you may have seen we announced new agency partnerships

and that tremendous amount of savings and better analytics for allocating marketing dollars. And then, importantly, you know, we're migrating the combined company to a single enterprise resource planning system.

I mean, this is stuff that, you know, a lot of companies today take for granted. Really, you know, you don't really hear about this. Listeners might be snoozing through this because it sounds, it sounds very like back off as he,

but people will care if this is where the six billion

comes from and not wiping out an entire distribution arm or wiping out an entire creative arm. - Absolutely, that is the point here

“and that's why it's completely disingenuous”

to have, you know, guys like Netflix or others just just lobbying you know, but they have no track record in this. Nobody can speak to this level of proficiency and expertise in these kind of as you call them back office

things that are incredibly important in terms of the infrastructure of IP monetization. The way the Ellison family can, right? And keep in mind, you know why that's important? I'll say this, I said it last time and I'll say it again

and this is not just us talking our book. This is the first time since Walt Disney that you've had a family in an owner operator model, putting their money where their mouth is to drive innovation, content spend, and reinvigorate

that whole IP monetization flywheel. That's why this is significant and you can't do that with just a bunch of words. You have to go in and actually execute an implement. So those buckets I just took you through

are instrumental in that. That's why, you know, the sound bite that, you know, the misinformation campaign that Netflix is continuing to do is, you know,

“16 billion, they say you have to cut 16 billion.”

Yeah, well of course, you know, they don't, once again, they're talking about things they don't really know. We know how to make money. - Okay. - All right. - We're creating a region in leverage.

- Okay, you, but it's not just the Ellison family. Back in December, you announced that a consortium of Middle East money, Saudis, Qataris, Abu Dhabi,

they are in this deal to the tune of $24 billion.

But these entities were not in the press release announcing this deal. Are those Middle East backers still in this deal? - Look, the Ellison family and Redbird are backstopping the entire $47 billion.

- Well, I get it, but are the Middle East, and that's what's still in this. - We haven't syndicated anything at this time. We do expect to syndicate with strategic domestic and foreign investors, but at the end of the day,

that alchemy shouldn't matter because it'll be done in the right way. But at the end of the day, it doesn't matter because Ellison and Redbird are backstopping the whole thing.

- I get it, but you understand why people might be concerned about Middle East money, having an ownership stake in a company that owns CNN. - Okay, so do we want to be a global company? - You answer that question, I don't care.

- I think we want to be a global company. - Okay. - You won't get what's going on right now geopolitically. What's going on right now geopolitically out of the Middle East wouldn't be the positives of that

would not be happening without some of those sovereigns that you're referring to. Okay, the world is changing. We can stick our head in the sand and pretend it's not where we can embrace globalization

and the derivative benefits both geopolitically and otherwise, it comes from that. Content generation coming out of Hollywood is one of America's greatest exports. I firmly embrace the global nature and orientation

that we bring to this from a capital standpoint,

At the end of the day, I do understand some of the concerns that you've raised, but it will work itself out between siding and closing because at the end of the day, worst case scenario,

Ellison and Redbird on 100% of this thing. - Will these global, you call them investors, get board seats? - You know, right now, the way we set it up is,

“I don't know, right now, I think that we--”

- It's previously said no that the Middle East investors would not get board seats now are saying maybe? - That's the premise that we're going on right now, but I haven't revisited that since the last time we talked about it. What's important is the lead here

from a governance standpoint is Ellison and Redbird. None of that changes. That's Ellison, Paramount's guidance, and that's all this program will be set up. - But you understand why Middle East investors

having a board seat on a company that owns CBS News and CNN might be concerning to certain people. - Yeah, and I gave you the answer to that. - Okay, no. - Okay, our guy, David Zazla,

will he have a role at this company? - Yeah, we're talking to David. We offered him a role early on in the conversation before we had to buy the company. - You also basically accused him of committing fraud

in the process and said that this was not a fair process, and you guys had some very harsh words for the wanted discovery people that went with Netflix and what were you guys?

- Well, first of all, I never accused them

of committing fraud, I have a tremendous amount of research. - You did not, you're right, but it was on the border.

“- No, I think what we were talking about”

was look, we had to buy this company 10 times, okay. And the difference between our December 4th offer of $30 a share and $31 a share is less than, you know, of 4% so, you know, you kind of look at that and say to yourself, you know, when Netflix says

that they were priced to supplint in the reason they walked away because they were priced to supplint. You're telling me, priced to supplint is a dollar a share. On 110. - Well, you guys wanted to buy this company for $19 a share at the beginning of the day.

- At the end of the day, that's the thank God, I understand, there's rule of law and there's competition, our issue was that the offer we made December 4th isn't that much different than the offer today. We perfected the deal, the board, ultimately,

the board came around and did their job in engaging with us. All we asked for was engagement. They did their job in engaging with us and-- - So if I got-- - That led to, well, that led to, again, I come back to the three criteria

that we always focused on, value, timing, and certainty.

And in the interactions between December 4th and last week, you had value on the margin, came up a bit, but it was really around timing and certainty. And that whole package made, you know, I always said to you, you can't just look at the value,

you got to look at risk adjusted value, risk adjusted is timing and certainty, and that's why we prevailed. - Yeah, we're not going to get into the regulatory stuff. We've discussed that extensively.

I think you guys are pretty much in the clear, federally states, and overseas may be not as much, but so you're open to having Zazloff and his team have some role at this company. - Zazloff, I'd say, David, the two Davids

are going to be speaking a lot. David Zazloff's been terrific in embracing, you know, us at this point and really helping us think through all the things that we have to do to his credit.

- We're making him $800 billion, personally.

- He is, and look, but I'm telling you, to his credit, David Zazloff is a man of the people. He really cares-- - Oh, he's a man of the people. - He cares-- - Actually, I got-- - Please don't say that.

- He cares, no, honestly, he cares about his people. I've talked to him directly. - He cashed out $14 million of shares yesterday and all of his employees are freaking out about their own jobs.

Come on, not a man of the people. - I'll let you cover that in the pocket. - Good deal maker, absolutely. But not a man of the people. - All I'm saying is that, you know,

he's been very focused on making sure that, you know, his people are integrated in the right way and he's going to work closely with us. And so, we'll let the two David's deal.

“- Honestly, you should bring in Gunner the CFO.”

If your goal is cost cutting, he's your guy. (laughs) But we know what he believes you guys that you're going to make 30 movies a year for theaters. - Why is that?

- Because it's really effing difficult to do that at that scale and that. - But Matt, once again, here's the problem when you sound by ecosystem that we live in, we're already doing more than 30, okay.

When we bought Paramount, it was doing eight and we're on track this year to do 16. - Okay. - And then one is we'll be 14 to 15. So we're already at the 30 31 level.

That's not the issue. That's not the thing to focus on. Both of those studios can do that. What's instructive is the cost side of it and how we rationalize the ability

to continue to lean into that kind of content. - I agree because it's easy. I shouldn't say you can't make 30. Netflix has been doing that, but it's difficult to make 30 movies a year

And if that is the plan, it's really difficult to do that.

And ultimately, you're going to be competing

against yourself some weekends. - We are not dunted by that at all. This is about, again, this is, you can do it, the question is, how do you enable it to be consistent?

You can't, the budget we inherited on the original Paramount slate. It's one of the worst movie slates that we've seen, right? - I mean, they were hampered by uncertainty and a lack of resources and IP.

- Yeah, okay, I think the A films we inherited, you know, the theatrical releases, you know, I don't think any, I don't really get any of them we're getting budget. So we're turning--

- Well, screen seven did pretty well,

“but that's by the-- - That's what I'm saying,”

not only have we turned it around and look at the first thing we've had right out of the gate that we can call our own. - Yeah, that's a big one. - Yeah, it's the largest win on the, on the,

- You guys don't own that one, that's by glass, but it's still a big win. - That's a huge win. - This episode is brought to you by the Walt Disney Animation Studio, Zootopia II.

Now nominated for the Academy Award for Best Animated Feature. The Hollywood Reporter Hales, Zootopia II, knocks it out of the park with its dazzling visuals, sophisticated humor, and genuine emotion.

For your consideration, for Best Animated Feature. Speaking of your guys, Jeff Shell, your president came from Redbird. He's now under investigation for allegedly leaking company information.

Is Jeff Shell part of the future of this company? - Look, I'm not gonna get ahead of that, right now. So I had nothing to say on that right now, I have a tremendous amount of love and respect for Jeff, he's very talented.

We gotta look into this internally, and I'm gonna leave that to the senior management team. - Okay. - I can't comment on that. - So I want to, what is your message to Hollywood

as the chief dealmaker behind this transaction? What do you wanna communicate to Hollywood about the fear and the kind of anger

“that has swept through the industry since this was announced?”

- Yeah, my message would be the following. Number one, this is a win for the good guys because we're holy aligned with the talent community and the content creation community. That is very important.

If you take nothing to do with it, - The good guys include the billionaire and the private equity guy. (laughing) - Okay, that's the one I get where you're saying.

- Well, the billionaire and the private equity guy, each of whom have a career in content generation, put our money where our mouth is. I mean, you know, I've gotta track record and partnering with talent.

You saw what we did with Art of Security with Ben and Matt. You know, we are very pro Hollywood in that way. So that's number one, number two, change is scary. And then all these intellectual property related industries, whether it's sports

or news or Hollywood or streaming. You know, everybody's scared of change. But here's the reality.

The reality is you've gotta bear hug change

in order to win. And the win for us is pro talent and pro content creation. But you got to embrace technology. You know, you can't be scared of it. And that's what we're gonna be doing.

And so everyone should expect that we are gonna absolutely make good on 30 movies a year. And on, you know, a greater variety of content available in a very seamless and easy way

for consumers to access to our direct-to-consumer platforms, the bundling of news and sports and live event entertainment. All of that stuff, you know, that's the stuff of the future.

That's how we continue to compete. And make, you know, this stuff that, I mean, one of America's greatest exports. That's what this is about. I'm excited for Hollywood on this.

- You just did an $8 billion deal

to combine two unscripted producers, all three media, banaget. Jeff Zucker is your partner at Redbird, IMI. He's now in charge of that. Jeff obviously has a background in news,

background in management of big studio properties.

“Might you bring him over to run the combined CNN CBS news?”

Or more. - Yeah, look, I mean, you know, we just announced all three and banaget coming together, right? As you said, and that's now created the world's largest independent production company. So Jeff has, you know, Jeff will be the executive chairman

of that, and that is gonna be a tremendous amount of his time, and I'm gonna be very involved in helping him think through that. That's very exciting. - But you don't think he's got it in him to run news again?

- Look, Zuckers are formidable. I mean, and he definitely has, has it in him. You know, we've got to see what we're gonna do there. I don't have an answer for it. - So Barry Weiss is not the plan for both of those.

- Oh, I'm not saying that at all, I'm not saying that at all. Barry, again, you know, it's premature. All we know is that, you know, the possibilities of CBS news, 60 minutes in CNN coming together, I start with the blocking and tackling,

and the blocking and tagging these are tremendous opportunities. Same, same, well, I'd answer that.

The answer to news and the newsrooms is that, finally, you're gonna see a win for the good guys. I view news and David views news as great in a natural property. It's no different than what we're doing in Hollywood.

And it's gonna be, you know, it needs to evolve. It needs to be cost-ret, you know, cost-rationalizations. - Yeah, does it take 3,000 employees at CNN to produce the product that they-- - But look, it's a highly competitive marketplace,

the contents critical, and so, you know,

“I think, you know, I think Barry's fantastic.”

Let me tell you, Barry's fantastic, because the message there, instead of the kind of things that you're pointing to, should be that we have to embrace change and innovation. Bring someone that isn't at a central casting in

to sort of, that's passionate about news, that's passionate about bringing news, back to the truth business. That's what this is about. - Yeah, well, if for talent leaves,

and they start doing things that are, so openly aligned with the Trump organization, they might alienate their audience, but I don't want to get into the politics of news. - No, that's fine, but let me say this to you.

When you look at these brands, okay? I come from a very respectful place. It should be a privilege to work, if you're in the news business from a career standpoint, it should be a privilege to work at the home

of Walter Cronkite and Edward Armero and Mike Wallace. I mean, I have Chris Wallace works for Redberg right now, Mike's son. He's passionate about this. - So, you know, what's gotten lost here,

are some of these individuals on the talent side, think they're the brand, okay? The brand is the IP and the brand is the institution. We owe a tremendous amount of respect to those institutions.

- Sure, it's also a talent business. These people have audiences. - They are, but there's a lot to do. - Very one of the key banners in. - But we all have to,

we all have to march to the same drummer and the starting point in ground zero for all of this, is respect for the institution,

“we respect for the IP and that's what we'll see.”

And there's plenty of talent out there that has that respect and, you know, they've all approached us. - Okay, you just had some harsh words for Netflix. Yet, you also just completed a deal for artist equity,

a company that you are a partner in, then in that company, Ben Affleck, Matt Damon. They now signed a new deal with Netflix. I saw that and I laughed a little bit because you're at the center of both of them,

but I also see this as a bit of a capitulation by those guys. They came out guns blazing, saying, "We are going to reinvent this model "and have these movies be four theaters

"and everybody gets paid

"and it's gonna be a talent first company."

Now, they're in bed with Netflix. So, first of all, are they still keeping the economics in this deal where if the movies do better, their people make more money, are they getting a form of quote unquote back end in this deal?

- Look, it's an output deal that locks in a margin on the films. What's important about the deal is it's for not only the Ben and Matt movies, but it's also for the non-Ben and Matt movies,

and it really is a validating point for artist equity. - It's safety for them, they get a guaranteed buyer for these movies rather than taking each one of the market. - But when you look at this thing and you step back, guess what Matt?

Competition is a good thing. Isn't that great? We can have the bruising battle we did for Warner Bros. and at the same time, turn around and know the part of my portfolio

and have a very productive collaborative relationship with Netflix. How about that? - But are they still getting the economics that they got on the rip?

Is they did a whole big New York Times piece about how everyone on the movie is getting paid if the movie does well? - Yes, artist equity's model's not gonna change. It's very much aligned with our model, yes.

- When Netflix strategizes on how to kill Paramount by stealing the NFL, will that change your mindset towards Netflix? - Very happy that Netflix has come around to our pro talent position.

(laughing)

“You can't be any more pro talent than Ben and Matt, right?”

- Sure, sure, yes. - I think it's great. - Okay, all right, well this has been interesting.

I always appreciate you letting me grill you.

This is probably not the last time we will talk about the evolution of this deal long way to go. Thank you very much. - All right, pal, great to see you. (dramatic music)

- We're back with the call sheet, Craig, but before we get into this very interesting weekend, some accountability corner on my recent box office predictions. I've actually been doing, okay, right? - You have, you are three for your last three.

You hit the over on scream. You barely hit the under. - Yeah, yeah, I had 45 on the over, and then it was like, what, 59? - Uh-huh, you barely got in under 60 million

for crime 101, and then you barely hit the over on go, which barely hit over 27 million. - Right, yes, I had the over on 27 million, and it was 27.2, which counts. - The only miss you've really had in the last month,

or show is weathering heights, but it seems like everybody got there wrong.

and it came in about 38, so way under. So I'll take the L on that one, but over on that bad, and this weekend got some pretty interesting movies. Hoppers, the Pixar movie, you're excited about that one. - The marketing is working on me, I'm excited about hoppers.

- Yeah, I want to go top. - The TV with the front TV, irresistible. - Yeah, and this is, it's tracking to be the biggest opening for a Pixar original film since Coco, in 2070. - Yes, which is still not huge.

The energy has it at 38 million, I've seen lower

for some of the tracking services. Why don't we put the line at like 36? I'm gonna take the over on 36 for hoppers.

“I think that the Rotten Tomatoes score for this one”

is great, it's skewing a little younger, because it's talking animals. So it's not like some of the more kind of teen and adult Pixar movies, but I still think the families are gonna show up,

so I'm gonna take the over on that one. - Is Elemental the last original Pixar film to come out, 2023? - No, Leo, last year. - Oh, Leo, right?

- Yeah, which was a big bomb. - Elemental opened to around 30. - Yeah, but then Elemental had legs,

and ultimately got to about 500 million worldwide.

- And, Elio opened to around 21. - Yeah, this will definitely beat Elio. So the question is will it be up there with pre-COVID Pixar movies? I hope so, I hope they're back. This is everything you want out of the Pixar movies.

It's fun, it's smart, it is cute, and it's original. Like, these movies should work. - Also, you know, kids movies about animals work, man. I mean, you see, as you told me it's too, "Drafting off of this great theme."

- "Drafting off of this great theme." - Talking animals work. - People love talking animals, and it feels like Pixar getting back on track. - And you know, it doesn't work.

Movies with exclamation points in the title. - Is that right, the bride?

- You don't like-- - Never work.

- Never work. - Other than airplane, never works. Tell me a movie with an exclamation point in the title that works other than airplane. - Have you researched this?

I would have to-- - I have not, but they come up every once in a while.

“The bride is tracking at about energy, has it at 15?”

This is the Maggie Gillin Hall reinterpretation of the bride of Frankenstein, Christian Bale. Unrecognizable stars in this Jesse Buckley, also stars. They claim they moved it from last year to this week to take advantage of her Oscar Heath Ramnet.

I beg to differ. I think this movie was troubled. They did a bunch of reshoots. The budget about 92 million. We do have to have Lucas Redraft

because he gave me this movie as his potential bomb for the year. But I don't believe ultimately after my reporting, I think the overall budget is 92. It is not 100. So we will have to make him read draft.

So let's set the line at 16. I will take the under on this. It's been dropping and the buzz is bad. They did not make this available for reviews. The reviews have not dropped.

We are taping this on Wednesday. And usually for this kind of movie, when the reviews haven't dropped yet, it means that it's not great. - It feels impossible to take the over.

It's like the way you map it out.

“You're like, the tracking is going down.”

They move this movie-- - That's why we're not allowed to now, but you never know. Maybe hardcore Frankenstein people are going to show up. - We saw a little clip of this at Santa Macan last year.

- We did, and neither of us was very impressive. - It looks very experimental. - Yeah, there are definitely choices for me. - Yeah. - Choice is for me.

- And this happens all the time in Hollywood where it feels like some topic becomes popular. And then there's like three movies about it in the same year. We just had Frankenstein and now we have the bride six months later. - And Warner Brothers did not expect that Frankenstein

to get a bunch of Oscar nominations and be well received. So, uh, not great. - Okay, that's the show for today. When they make guests, Jerry Cardinal, he'll spread coral back, party to John Jones,

and I want to thank you. We'll see one more time this week. (upbeat music) (speaking in foreign language) - Yeah, that's a music for your oron.

(speaking in foreign language)