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Let's talk about Larry and David
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Ellison. They're making massive media
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moves both in legacy and social media.
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Let's talk about the legacy stuff first.
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Paramount Sky Dance merger is basically
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a month old and already CEO David
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Ellison, that's Larry Ellison's son, is
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looking to acquire Warner Brothers
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Discovery. As you probably know, they're
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run by David Zazlov. They own CNN, HBO,
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DC Comics, Discovery, a bunch of other
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brands. And that would put the Ellison's
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in charge of not just CBS News, which
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owns 60 Minutes, they would also own
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CNN,
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as everybody knows, Larry Ellison, big
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GOP donor in the past. And there also
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are reports, interestingly, that David
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Ellison wants to buy the free press from
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Barrett Weiss for 200 million and put
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her in charge of CBS in 60 minutes. That
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would be seismic in the news business.
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If you put those assets together, 200
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million paid subs. HBO Discovery, 120
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million paid subs right now. CBS reaches
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80 million paid with Paramount Plus and
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The Free Press is obviously niche and
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brand new. Uh but they're growing. They
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got 136,000 paid subscribers and, you
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know, almost a million followers across
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their social media. The second piece to
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this puzzle that's super interesting is
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social media. Oracle is now the heavy
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favorite to acquire Tik Tok and uh Trump
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said that was going to happen as part of
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the US and China
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negotiations that are ongoing for trade.
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So what are your thoughts here Freedber?
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You wanted to talk about this is an
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interesting collection of assets coming
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under the Ellison umbrella. Is this
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strategic? Is this vanity? Is it a nepo
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baby with a huge pay, you know, blank
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checkbook? What are we seeing here? And
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what do you think? I mean, what do you
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do when you're worth a couple hundred
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billion dollars and you're 81 years old
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and you're thinking about what legacy
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you want to leave behind, except to
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perhaps empower your kid to build the
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largest, most influential media company
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in history.
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And I think that's the story that's
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unfolding in front of us. Not to
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mention, I think that the Tik Tok deal
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and Ellison's role in Tik Tok is going
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to be instrumental in realizing
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potential future distribution. So, if
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you think about the way media has
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evolved, it used to be kind of
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centralized studio-based production
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models, the old Paramount, the old
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Warner Brothers, etc. And then there's
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been a lot of streamers that have come
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on that started to syndicate that
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content and contract for production of
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content like Netflix. And obviously,
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Paramount Plus and HBO Max have their
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own streaming services to deliver their
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own content. But at the end of the day,
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there's kind of two big behemoths that
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each come at it from a different place.
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One is YouTube and the other one is
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Netflix. Netflix has historically been
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in the kind of scripted production or
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contracted production side and YouTube
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in the social production side. The
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alternative to that might be this
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consolidated merger and Tik Tok and now
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Larry Ellison's going to have a hand in
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both. And so there may be and I do think
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that there's going to be this
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convergence between this kind of
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socially generated content platform like
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a YouTube like a Tik Tok and the high
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value produced content like the studios
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like Netflix has been doing. And the
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reason is Netflix has had to compress
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margins on the content creators, and we
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talked about this at our summit last
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week, where a lot of the creators now
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that went to Netflix to get good deals
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or went to Amazon, they're all finding
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that the budgets are getting cut and
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that the only way these folks are going
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to get paid is like cost of production
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plus 10%. with cost of production
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getting squeezed and budgets getting
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squeezed by Netflix. So, as a creator,
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you may actually make more money by
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taking your content to a bigger audience
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with sponsors or advertisers on YouTube.
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And so, a lot of big-time creators, by
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the way, the audience at YouTube is over
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10x bigger than it is on Netflix. So,
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Netflix is only paying to retain
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subscribers now. You know, subscriber
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growth is kind of slowed down a bit. At
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the end of the day, Netflix is just
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spending money on content to keep people
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on the platform. So if you take the
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incredibly rich content and production
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capabilities of HBO and all the Warner
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Brother discovery media properties and
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production houses underneath this
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combined company and you combine that
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with the direct to consumer distribution
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of Tik Tok, there may in the future be a
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merger between this media company and
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Tik Tok or a deep commercial
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relationship where imagine going on Tik
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Tok and you can now get premium content
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for 10 bucks a month or two bucks an
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episode and watch all of your HB shows
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in the Tik Tok app or watch all of the
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discovery shows or all of the other
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content that's available. So, I do think
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that the distribution that has been
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delivered by this kind of social media
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model like YouTube and Tik Tok combined
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with the premium model may end up
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creating a real category killer that can
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challenge both YouTube and Netflix. And
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so, I would kind of look at this story
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as like a beginning of an unfolding of
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something that may rewrite the entire
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media landscape. I mean, when you look
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back on it, Freeberg Katzenberg ha was
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maybe ahead of his time with Quibby. He
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wanted to try to make this bridge
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between the two the and and he just
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might have been too early or just didn't
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execute.
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Well, think about the network effects.
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What made Tik Tok so big and what made
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YouTube so big is the long tale of user
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generated content and that's what drove
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the audience and that's what built the
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the platform mainstream, right?
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And Yeah. Well, then you can do the the
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premium stuff on top of it. Yeah. Yeah,
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but when you try and create premium
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content in a small way like Katsenberg
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tried to do, it's very hard to build the
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audience to make the economics make
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sense.
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And the economics are really challenging
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already with premium content in the big
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players as you can see with Netflix.
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They're they're compressing budgets. So
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I would I would argue that you really
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need to have them both to make the model
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work now because the audience is so
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attuned to user generated content.
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Here's what our partner Poly Market,
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shout out to my guy Shane, 84% Larry
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Ellison or Oracle kind of the same thing
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here. They put a slash acquire Tik Tok
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that's up over 20 percentage points in
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the last couple of days. What do you
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think all this means? The the
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divevestature of Tik Tok, Larry Ellison
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getting it as opposed to Google, Apple,
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Microsoft. I mean, there was so many
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people maybe even Elon who might have
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wanted Tik Tok. What do you think of
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this divevestature? And then uh our
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government gets the golden vote now. I
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understand that the US government will
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have a seat on the board of uh Tik Tok.
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So the Chinese have given it up except
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for the algorithm. What are your
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thoughts?
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Remember it's Tik Tok. It's Tik Tok US.
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It's only 5% of the over it's only 5% 5
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to 8% of the overall Tik Tok business.
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So Tik Tok US is what's being spun out.
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Yes. Correct. Chimat what do you what do
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you think here?
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I think there's two things that are
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important. The first is that in the
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future and this may sound very dystopian
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but he who controls the algorithm will
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control what people think. And if you
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think about it in that context, you
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need, as you've said before, a
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marketplace of very different approaches
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and algorithms that are essentially
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fighting for mind share. If you don't
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have that, you'll have a massive zombie
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group think culture. So from that
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perspective, you have to put Tik Tok
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into the hands of a completely different
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owner than any of these other social
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media sites so that they are motivated
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to compete against each other. That's
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one. The second thing is there's been a
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lot that has been said about the Tik Tok
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algorithm called Monolith
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and a bunch of it has been already put
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out openly and Tik Tok was very
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transparent and they published a paper.
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You can find it on archive. You can show
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the link to it, Nick, maybe in the show
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notes, but it's an incredible paper that
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describes a very simplistic approach to
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essentially moving people into different
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directions of thought.
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So if you put all of these ideas
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together, I think where we are maybe all
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the way coming back to where we started
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this discussion about Charlie Kirk,
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it is increasingly important to make
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sure that the overwhelming majority of
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how people get ideas is understood by
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the rest of the people. Because if you
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start to go down these rabbit holes in
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ways that are algorithmically programmed
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in models that you don't understand that
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then push you into extremism, you will
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end up in a very very very bad place as
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will society.
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And then the the outcomes of that are
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completely avoidable as we're seeing.
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Yes.
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So I think that the Tik Tok thing is
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going to be one of these important
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moments where we shine a light on the
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importance of these algorithms. It's
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poorly understood. It's not well talked
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about, but I think what the Trump
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administration doing is important to
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keep it away from everybody else so that
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there's more competition.
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Yeah, I'm gonna um strongly agree. I
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think the Trump administration did a
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great job on this one. Just calling
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balls and strikes of not making sure
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meta got it or somebody who has already
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a lot of algorithmic control over what
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society seeing. And back to
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just just on this, you know, the I give
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a lot of credit to Elon too because his
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algorithm is open source. We know what's
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happening there.
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He just did it two weeks ago. Yeah.
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If that's open source and Monolith is
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open source, then I think the next big
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question we have to ask is what is going
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on in Reddit? What is going on in meta?
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How are we
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how are we guiding and shaping people?
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Why does YouTube sometimes for example
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like our Tulsi Gabbard video is
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apparently deemed too risque an adult
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content? Who decided that? How did that
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happen?
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An algorithm. Yeah. Not not any human.
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And you know the thing I think is
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important to start thinking about here
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is as an industry we're going to either
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need to regulate this ourselves or be
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regulated. I think that there should be
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regulation and I'm not like super a fan
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of regulation that algorithms must be
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disclosed and you must have the option
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given to you upfront to switch your
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algorithm. There should be a b ya bring
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your own algorithm. There should be an
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algorithm store. And I I talked to Elon
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about this publicly on on X many times.
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If you could say, I want one that just
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gives me a chronological feed. I want
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one that is from the highest quality
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sources. And then you should be required
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to show what the default algorithm is
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doing. And if you don't do that, I think
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you should lose your section 230 because
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an algorithm is more powerful than an
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editor at the New York Times or an
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editor at HBO or Netflix deciding what
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we see, deciding what goes on the
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homepage. The algorithm is a black box
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and who knows who's controlling it. And
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then what happens in society when young
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men are pushed towards more and more
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fringe content, more and more dark
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content? Why not just have all this be
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transparent? Why not let people see?
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Unfortunately, they don't need to be
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pushed to fringe content. All they need
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to do is go to a school where the woke
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curriculum has been mainstreamed. And
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bingo.
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Randy Weingard's foot soldiers are
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saying that conservatives are fascists.
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So you're acting like you got to go
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through some weird rabbit hole to embibe
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these ideologies when all you have to do
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is attend a public school and probably a
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lot of private ones, too. I think
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Dalton's probably the worst. So again, I
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you're acting like the radicalization's
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coming from the fringes. I think what's
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so concerning about where we are as a
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society is that radicalization is coming
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from our institutions or a lot of these
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institutions.
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You're not going to get an argument with
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me. I think these schools should be
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teaching, you know, basic skills and
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they should not be involved in the
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culture wars in any way. I don't think
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any parent is sending their kids there.
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And if you are a parent and you're in
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California, I I would encourage you to
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figure out what they're teaching your
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kids. Uh, and here in the great state of
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Texas, it's quite
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totally agree. But hey, can I can I
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It's quite different here, by the way.
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And it's quite different here in the
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great state of Texas. I can tell you
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having lived in both places with three
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kids,
