David Rosenthal: belief

Transcript context

…The last one that I want to bring up is why does scale matters so much and why are we in this era of scale and consolidation? The comment that Rupert Murdoch made to Iger when they started the discussion was just alluding to the idea that, "Hey, you have the scale to succeed and thrive in a world where you need that and we at Fox don't. We're not set-up to do that in the way that you at Disney are." Now sort of the way that they said, "Hey, we want to sell to you guys." Why do you think that's so important right now? Well, I have a bull and bear case here. The bull case is the same reason that it's the stated rationale for buying Fox. The scale is if you believe they are only going to be a couple of streaming services that survived in the long run, you need to have enough critical mass of content that somebody is going to be willing to pay you, in a way that Netflix is the only one that really has this, that stand alone as people want to pay for. There's enough content on here, I'll pay $13 a month. Disney alone probably, even with all the great franchises they have, wasn't going to have that. And Rupert saying things like, "We have in Fox like we would have in Avatar. Who's going to pay $13 a month for Avatar?" My bear case here though is like having used to work for Rupert Murdoch. He's crafty. He's wildly like a fox, especially given the bidding more on how much Disney ended up paying here. Was he really just trying to play into Bob's vision for the future just like off-load Fox for a boat-load of money? I think both things actually may be true here. It may be the right thing, it may be a good strategic decision for Disney. Rupert value maximized here, especially given that we haven't talked about the whole family business drama and dynamic around Fox. That's my take. I like it. The only thing I'll add to that is that, again, moving into my bifurcated long tail and head of the curve thing, we've moved into an era where the head of the curve productions are so expensive and they're sure things. When you go and produce Infinity War, you know that, that is going to be in the billions of dollars of grossing. You can spend $200 plus million producing it. That's what that's what these category is now. A lot of innovation, creativity, and trying new stuff has moved down to TV and these OTT services. It's like you need scale of distribution down to amortize the cost of creating this content across so many people. This is the classic Ben Thompson comment about why Netflix wins versus anybody that is trying to be like Netflix. Obviously Disney Plus is a different strategy because they are coming from a very different place, but in order to finance the type of shows that Netflix is financing or to pay to acquire the rights of any given show, it's a pretty simple model of how many paying customers can we amortize across? And that plays a big role in this, too.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.