The Pioneer Newsletter #15

Wednesday, January 17th

Introduction Poem

“Last Night at the Tavern”

A Haiku by The Pioneer

Did I close my tab?

*Lock my card on the Chase app*

Wait. It’s in my pants.

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Half-Baked Rant: What is Scale?

In the entertainment biz, what is scale? I guess I know what the word literally means but its merit and the values we associate with it are becoming increasingly convoluted. This is where anyone with an M.B.A. can let me know to sit back down and stick to ranking hats in movies. But dare I say it - I’m beginning to think like a big baller and ready to get in the cage with the goddamn wolves. Unfortunately, I still just don’t understand scale. This thought quest hit a breaking point last week. I was listening to Disney CEO Bob Iger’s memoir on my favorite app - Libby. He was discussing a conversation he had with Rupert Murdoch in which the two media titans discussed you guessed it - scale. “We don’t have scale! The future of this business is scale!” Murdoch exclaimed to Iger over a glass of wine. Months later, Murdoch’s 20th Century Fox would be purchased by the Iger-led Walt Disney Company. The deal was monumental for Disney. Iger will be the first one to tell you, in his own writing, that it gave Disney an incredible amount of scale. Its newly launched Disney+ streaming service would include the 20th Century Fox film library and National Geographic. Star India, Fox’s Indian cable and streaming giant, would be included as well. This is another key takeaway I have from my limited business research. India = scale. India is like the white whale for 71-year-olds in Peter Millar vests. They all want India so badly. But I digress. Iger got his scale, anointed the Head of Parks - Bob Chapek as CEO, and rode off into the sunset with The Walt Disney Company’s stock price through the roof of the Magic Kingdom.

Plenty of us know it quickly went south in 2020. COVID closed parks and movie theaters, Marvel Television failed to continue the momentum of its theatrical releases, and the Pixar prestige animation machine began to show its cracks. As we all hunkered down, the discourse on growth potential was reserved for Zoom and Charmin Ultra Strong. Disney as well as Warner Media,  Paramount Global, and Comcast joined Netflix in a streaming-exclusive strategy. Christopher Nolan lost his damn mind over Tenet, Tom Cruise locked up the final cut of Top Gun: Maverick in a vault next to L. Ron Hubbard's frozen head, and with all the streaming chips at the table - unable to hide behind a growing stock price, we all learned there just isn’t much revenue in $10.99 a month. Password sharing aside, only so many people in the world wanted to watch The Office superfan-extendo episodes on Peacock or 3-hour episodes of Stranger Things on Netflix (spoiler alert…I wasn’t one of them). In turn, Wall Street saw the ceiling and responded accordingly. It’s been a near-scramble ever since.

Last Sunday, you may have seen Comcast pull a bait and switch with their NFL Wildcard matchup, pulling it off NBC and sending it exclusively to Peacock. This felt desperate as hell. Warner has begun cannibalizing Max by renting out its content library for quick cash. Also desperate as hell. Paramount, with the massive weight of bottoming out linear cable channels [insert joke about MTV running Ridiculousness for 24 hours straight] and a streaming service that exclusively consists of Yellowstone spinoffs and Zoey 102, has lost significant value and will most likely be sold at a bargain bin price. Paramount’s beyond desperate as hell. But the tech-first Netflix, once known to churn out 100 terrible original things (and one very good thing) a month recovered from its dwindling stock price like no other. They pumped the breaks on original content significantly, cracked down on password sharing, and returned to what made them the go-to originally - buying/renting from other studios like Warner Brothers or Sony.

And at The Walt Disney Company?

Bob Chapek got canned for his lack of focus on creative and streaming-only distribution strategy and Bob IGER returned to the CEO chair he vacated not even two years before. But has he stepped into a mess of his predecessor’s or his own? Well, Iger did acquire some of the highest earning pieces of intellectual property in entertainment - Marvel, LucasFilm, Pixar, and Stephen A. Smith - and that did give Disney some real juicy fall-off-the-bone scale. But this year, we’ve seen disastrous critical and box office results from Marvel as well as a dud in Indiana Jones 5. The next Star Wars feature to hit production will (maybe) be a spinoff Mandalorian movie. The next Marvel release? A WandaVision spinoff titled Agatha: Darkhold Diaries…sure. Is this really where scale gets you? How many times can you really tell the same captain who-gives-a shit story before the world collectively spends a billion dollars watching untapped legacy I.P. like Barbie?

Is scale exponential growth? Hyper-growth? Warpspeed-growth? (wait that’s Star Trek). If so, growth potential seems directly correlated with the ability to pivot and adapt, especially in an industry this unpredictable. Pivotability (word?) is challenging for a conglomerate forced to map out 10 years and 5 billion dollars of a cinematic universe. It’s safe to say Peacock, Paramount Plus, and Max seem destined for consolidation. They hold respectable content libraries but cannot hold an audience to supply it. They in turn sell it all to Netflix - which holds a stellar audience but cannot churn out content at a high enough quality to keep it. Two ends of the same problem. A problem brought on by the false hope of controlling both distribution and creative. And as Iger would have you believe in his memoir - it was Disney that came near closest to full-scale monopolization. He acquired Pixar, Marvel, and Lucasfilm (along with already owning ESPN and ABC) and then integrated all of this into theme parks, a streaming service, and a merchandising business. It really looked like, just as Rupert Murdoch confided to Bobby that night, that Disney had all the goddamn scale. But we’re instead watching the history of American business unfold all over again. The pursuit of vertical and horizontal integration gone awry. Will anyone ever monopolize entertainment? The industry where everyone famously knows nothing? Even the all-seeing scale-gods, Apple and Amazon, are wildly inefficient with their premium content creation - even if their studios are just a drop in the bucket. It’s just a matter of time before they shrug and simply use their massive reach to run ad-supported (or super-duper expensive subscription-only) streaming hubs.

So seriously, what the fuck is scale?

In this biz, I’m not really sure what scale, exponential growth, hyper-growth, or whatever you’d like to call it really means. I understand a publicly traded company needs to grow. I UNDERSTAND SHAREHOLDER EXPECTATIONS. But when the product is storytelling (or dare I say ART) is scale just a mirage? If so, do CEOs or shareholders even care?

That’s what makes Iger’s return to Disney confounding. He already accomplished what CEOs set out to accomplish. He…scaled? And now, he’s facing two expensive but obvious truths - the world might not exclusively want the Hero’s Journey told as the superhero’s journey and absolutely nobody believes an 81-year-old Harrison Ford can still ride a horse and crack a bullwhip. So, as Warren Buffet loves to say - stick to what you know. These media conglomerates need to figure out what that is quickly. In the meantime, I’ll take that advice and get out of the cage. I’ll stick to writing about hats in movies or power breakfasting. Because clearly, I have no idea what scale truly is.

P.S. Read here about Warren Buffett’s questionable investment in …Paramount Global.

Dammit Warren.

Conclusion Paragraph

This is a picture of Diane Keaton exiting a tennis club in Annie Hall. Her fit has been discussed, written about, and pinned on many occasions since the film’s release in 1973. But I first watched Annie Hall in 2018, which anyone with a calculator knows, is 45 years after 1973. So any opinions I may have about how cool she looks will inevitably be conventional or trite. But this week, she’s still my hero. Because I rewatched Annie Hall over the weekend. For anyone who still has their calculator out, that’s 6 years after my first watch in 2018. I completely forgot Diane Keaton exited a tennis club in a goddamn tie. What a move. Why don’t I wear ties? Why am I not part of a tennis club? The latter requires membership or at least reciprocity. But a tie? I’ve got a few right in my closet. I had plans that night at the High Low Bar in Los Feliz and I knew how much the neighborhood of Los Feliz would appreciate A CHOICE. So I consulted with a trusted third party who endorsed said choice and for the first time in a long time - put on a tie. Just like Diane Keaton in Annie Hall, I was met with widespread critical acclaim. So readers, I really don’t care how old the Diane Keaton Looks Cool in Annie Hall opinion is now [get your calculators out again] 51 years after she first exited that tennis club. Just like the necktie itself, the opinion is timeless.