Welcome back to What I’m Hearing, a little shorter tonight and proudly free of Elon/Trump breakup news… 💫 💫: A big welcome to Ian Krietzberg, who is joining Puck as our A.I. correspondent and will write a twice-weekly email about the business of artificial intelligence. Ian ran The Deep View, one of the most widely read A.I. newsletters. He starts July 7, and all WIH members can add him for free here. Discussed in this issue: Bob Iger, Bryan Lourd, David Zaslav, Bob Chapek, Shari Redstone, Kathy Kennedy, Tara Duncan, Gunnar Wiedenfels, Barry Diller, David Ellison, Oprah Winfrey, Kevin Huvane, Ana de Armas, Paul Gould, Dana Walden, Lauren Sánchez, Sam Di Piazza Jr., Richard Fisher, Paula Price, Bryan Freedman, Debra Lee, Hugh Johnston, and… Bezos’s towering hedges. Still not a Puck member? Just click here. Got a news tip or an idea for me? Just reply to this email or message me on Signal at 310-804-3198. Let’s begin…

Thursday Thoughts…

Parsing Shari’s big reveal: If you haven’t seen, Shari Redstone told the Times that she has thyroid cancer, she underwent surgery two months ago, and her “prognosis is excellent,” according to her rep. First, that’s terrible news, and hopefully Redstone recovers quickly. Second, close observers of this whole Paramount circus are already wondering why this is coming out now, as the board and Trump’s lawyers remain far apart in settlement talks over the 60 Minutes case that many believe is holding up F.C.C. approval of the Skydance deal. One observer wondered to me tonight if Redstone revealed it to gain some sympathy from Trump, whom she knows socially. Another asked whether David Ellison, whom Shari told about her diagnosis, would want it out there to nudge the board toward paying Trump so Redstone can move past Paramount and focus on her health. I’m guessing it’s neither of these, and someone simply tipped the Times. But in this wild Paramount sale, pretty much nothing surprises anymore.
Don’t hate the player, hate the comp committee: You can almost feel David Zaslav shrugging his shoulders like Mr. Burns on The Simpsons after 59 percent of Warner Discovery shareholders voted against his $52 million pay package in 2024. That’s up from 46 percent dissenting in the previous year, a sign of increasing investor anger at their C.E.O. as he profiteers from a troubled company. I got a lot of emails encouraging me to call for Zaslav’s head (again), but honestly, nothing will come from this nonbinding vote except another round of bad headlines. So instead of slapping Zaz around, let’s just accept that he will suck as much money as possible out of his shrinking company and instead list the WBD “independent” directors on the compensation committee who continue to enable him:Paul Gould Sam Di Piazza Jr. Richard Fisher Paula Price Debra Lee

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Barry and the Bezoses…: Zaslav wasn’t there, but a decent group of Hollywood people turned out for the L.A. book party that Jeff Bezos and Lauren Sánchez threw last week for Barry Diller and his Who Knew. Kim Masters emailed me today that Bob Iger, Oprah Winfrey, Gayle King, Evan Spiegel, Michael Eisner, Berry Gordy, and Kris Jenner were among those invited beyond the infamously towering hedges at the Jack Warner Estate. (Who Knew also dropped off the Times bestseller list this week, no longer aided by those mysterious bulk buys.)
CAA back in arbitration: Bryan Lourd is finally scheduled to testify tomorrow in the big arbitration against the agents who defected to start Range Media Partners. The CAA C.E.O.’s grilling follows key depositions this week of the agency’s managing director, Kevin Huvane, and president, Jim Burtson, in the case over whether agents who launch a “competing” management-production firm are still entitled to their equity in the agency. One odd tidbit: Range litigator Bryan Freedman got so heated during questioning in another case that he suffered a broken blood vessel in his eye. (He’s okay now.) “Best wishes to Freedman”... said nobody he’s ever deposed.
Box office over/under: Ana de Armas is apparently less than half as popular as Keanu Reeves (though he’s in this one, too), as Lionsgate’s Ballerina is tracking for about $30 million (NRG has it at $33 million, others between $25 million to $30 million), way down from the $74 million opening for John Wick 4 in 2023. So I’ll take the over.

Okay, now on to the main event…

The Incredible Shrinking Studio System

Disney’s layoffs and the coming consolidation of Hulu, in addition to cuts at WBD and Paramount, all coalesce around a dreary reality: Less content requires fewer people. The studios avoided these cuts for years. Now, they don’t have any other choice.

Matthew Belloni

It’s been a bit since I checked in with my Disney text chain, a small group of Burbank employees who added me to their chat—Trump administration-style, except on purpose—way back when all the drama surrounding former C.E.O. Bob Chapek was going down. That was arguably the heyday for disgruntled white-collar Disney workers, and since Bob Iger re-arrived in late 2022, the group has been semi-dormant, save for the occasional outburst about the ABC News settlement, or Kathy Kennedy, or Snow White. But on Monday night, a new message hit the chain from one of my favorite texters: “Layoffs got me.” And then: “It’s been an honor and a pleasure.” Followed, of course, by the mouse emoji. Not surprising, these days. Disney’s reduction of a couple hundred employees is only the latest in a semi-constant downsizing spree since Iger came back—he laid off 7,000 in early 2023, just after he returned, and there have been at least five separate mass-layoff announcements since then, at divisions from Pixar to ABC News, plus the silent trims and forced exits that don’t get written about. The new cuts thinned teams and eliminated layers on the content side in marketing, P.R., corporate finance, and development, among other groups. And they came on top of the rolling employee blackout at Warner Bros. Discovery, which also laid people off this week at a cable TV unit that suffered a $9 billion write-down last year amid double-digit revenue declines. Add in the ongoing displacement associated with NBCUniversal’s Versant spinoff, and the steady stream of talent agency veterans who keep landing exciting new jobs not-agenting. And, of course, there’s the looming $2 billion in cuts promised by Skydance’s David Ellison and Jeff Shell if they ever get to take over Paramount Global. So much has been written about the dwindling opportunities for writers, producers, and actors in Hollywood. But since the Great Netflix Correction of 2022 and the dual guild strikes a year later, thousands of traditional studio jobs have also been lost. And this is likely only the beginning of the bloodletting. Part of this is just math. Leaders at each legacy studio have pledged publicly to make fewer films and TV shows. Less content requires fewer people. But this is also a slow-moving structural rebuild, part of the great slim-down and makeover that Hollywood is reluctantly (and belatedly) giving itself—finally reckoning with the bloat of the television era, the impact of past mergers, and the near certainty of a leaner, lesser digital future. The studios put off these cuts for years. Now, they don’t have that luxury.

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“Bell & Brody Are A Marvelous Pair.”

– New York Times

“One Of The Best TV Shows Of The Year.”

– Indiewire

Let’s not dwell on Warners too much. C.E.O. David Zaslav and C.F.O. Gunnar Wiedenfels missed their overall numbers again last quarter, and the lagging revenue in TV is weighing down the company’s EBITDA—which, in turn, is killing its debt rating and stock price. This despite Gunnar jockeying for the cover of Debt Reduction magazine with his heroic efforts to reduce the WBD number from $55 billion in 2023 to around $34 billion in net debt today. My corporate finance bro colleague, Bill Cohan, agrees with me that the recent downgrade of its debt by S&P Global to junk status is embarrassing, yes, but it might actually serve Zaslav’s goal of greasing the gears for a transaction that would spin off the cable networks. Those plans could be announced soon, but until that happens, the only real strategy Gunnar has to reduce costs is to make less content and cut employees.

The Hulu Question

Disney is similarly—if not as desperately—reducing its TV and streaming workforce under Dana Walden, and seems to be moving toward reorienting all of its content hubs around Disney+. That sounds obvious, but it’s kind of a big deal for a company that, as recently as five years ago, operated literally dozens of individual production and distribution outlets in TV and streaming, all with the requisite workforce supporting them. That’s not where streaming is going, of course. Privately, executives have really been pushing the narrative that Disney’s only hope to challenge Netflix is to become Netflix With Sports faster than Netflix can become Netflix With Sports. That means industry-leading family programming, plus the best sports brand in streaming, plus general entertainment. Two differentiators and just enough Shoguns and Kardashians and Only Murderses to make a play for the mass market that Warner Discovery recently conceded with its pullback from Max. Disney has already consolidated many of its production units. R.I.P. ABC Signature and ABC Studios, both merged into 20th Television. Onyx Collective, its specialized studio for diverse voices, has exactly one project in production under its leader, Tara Duncan, amid persistent rumors that its days are numbered. (Disney denies this and points to shows in development.) Non-sports cable networks like Freeform and Disney Channel are shells of their former selves, with FX having been salvaged mainly as a tile on Hulu. Specialized streamers like DisneyNow and FXNow are gone. All of Disney’s unscripted and documentary programming across platforms has been consolidated under Rob Mills, the scripted programming hierarchy was similarly streamlined, and the current layoffs further “centralized” P.R. and marketing functions across brands. To that end, Disney pretty clearly sees its TV future as smaller and focused on Disney+ as the main hub around which to array bundles of lesser, supporting TV brands, like its current offerings of D+ (family) with Hulu (general interest) and ESPN+ (sports)—which will get a boost in the fall from the ESPN stand-alone service—as well as its successful bundle with Max (general interest). That all requires fewer people than simultaneously operating tons of individual outlets and studios. Easy math. This is likely all leading to the long-rumored shuttering of Hulu as a stand-alone app, and either Disney’s own spinoff of its TV networks—an idea Iger once considered and shelved—or a Paramount-style strategy of near-zero investment and managed atrophy in linear. The integration of Hulu content into Disney+ has worked well. And remember, outside this country, Disney already puts Hotstar, its general-interest brand, under Disney+, without offering it as a separate service. It seems natural that the same fate will befall Hulu. This won’t be super easy. Amazingly, Disney still doesn’t fully own Hulu, and depending on an arbitrator’s decision, wresting it from archrival Brian Roberts and his Comcast may cost an additional $5 billion. There are a ton of other complications—everything from Hulu being primarily ad-driven and Disney+ being mostly ad-free (for now), to pricing challenges, to the tech stack, which is different for Hulu and Disney+. But that’s pretty clearly the goal, and while the latest cuts don’t constitute an explicit consolidation—and indeed, no teams were totally eliminated—it definitely sets the stage for what will likely be the end of Hulu as a service and its transition to a general-interest content hub. Is that worth the billions that Disney has paid and will still pay for Hulu? That gets to the question of whether Iger was smart to spend $73 billion on most of 21st Century Fox in 2019, which gave Disney a bunch of general-interest brands and studios, plus that right to own Hulu. Debatable. Indeed, part of the need for these ongoing layoffs has been the inability to properly absorb and consolidate the Fox assets from the get-go. There are still duplicative functions across the company, units that hold on to superfluous employees as power moves, etcetera. Which is why Disney can eliminate a few hundred jobs and most of the people I talked to there just kinda shrugged.

Platform Questions

In recent meetings with investors, Disney C.F.O. Hugh Johnston has been signaling the company’s aspiration to become a platform for content from Disney and other streamers. He’s mostly referring to bundling deals like the Max arrangement, which Disney sees as crucial to reducing customer churn. But long term, Disney would also love to host other services, like Apple TV+ or whatever the likely combination of Max and/or Peacock and/or Paramount+ becomes. Essentially, the gatekeeper role that Amazon and Roku and Google/YouTube have been aspiring to for years. Good luck to Disney if it tries to compete with Google, especially with tech that is, by most accounts, inferior to the digital natives. And good luck convincing rivals like Comcast and Netflix to offer channels on Disney+. Disney couldn’t even convince others to provide content for its planned ESPN dashboard. But it’s an intriguing idea, and it shows that Disney knows the real battle in the entertainment industry over the next 10 years is not necessarily about producing the most compelling shows or movies. It’s a platform game: Who can become the first or second streaming service that people turn on at night? Does Disney even have a chance to become that gatekeeper for all content—the new cable TV distributor for both professional and user-generated programming, on a global scale? Likely not—one analyst told me I was “misled” for even suggesting it—but the first step is turning the Disney of the TV age into a smaller version of itself for digital, as unpleasant as that may be now for my text friend.

See you Monday, Matt Got a question, comment, complaint, or an Elon/Trump meme that tops this one? Email me at Matt@puck.news or call/text me at 310-804-3198.

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