A New Model For Hollywood, Media & Entertainment | Iconoclast Summit 2024 - video Dailymotion

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Golden Globetrotters: A New Model for Hollywood, Media & Entertainment with interviewer: Maneet Ahuja, Editor-at-Large, Forbes and Founder, Iconoclast, and panelists Jay Penske, Chairman, Founder & CEO, Penske Media Corporation and CEO, Dick Clark Productions and Todd Boehly, Cofounder, Chairman & CEO, Eldridge Industries   Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

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00:00For our next conversation, Golden Globetrotters, a new model for Hollywood, media, and entertainment,

00:07please welcome interviewer Manit Ahuja, editor-at-large Forbes, and founder Iconoclast,

00:14and panelist Jay Penske, chairman, founder, and CEO, Penske Media Corporation, and CEO,

00:21Dick Clark Productions, and Todd Bowley, co-founder, chairman, and CEO, Eldridge Industries.

00:30Well, good afternoon, everyone. It's great to be joined by two incredible visionaries here who

00:38have teamed up to run one of the most iconic entertainment empires of our time, Todd Bowley

00:44and Jay Penske. Last year, Eldridge and Penske Media Corporation teamed up, acquired, and reimagined

00:51the Golden Globes, bringing the storied award show back to rarefied air in record time. While

00:58part of that story was told in our annual global billionaires issue, today's conversation will go

01:03beyond the page and take a deep dive into their custom playbook. Thank you both so much for

01:09joining us. Thank you, Manit. So nice to be here. Yeah, it's great to be here. So, Todd, Jay, you're both

01:16known for developing strong relationships, and Todd, you've spoken a bit about how relationships

01:21are an important form of currency. So, inquiring minds want to know, how did you two first get

01:27connected? Well, I had just bought The Hollywood Reporter because I lost my mind and thought that

01:36I would get into this intellectual property business. And really, it was after the global

01:42financial crisis, and the markets had healed, and we were kind of looking for our next idea.

01:47And so, I was trying to figure out who was going to run it, and I was given a name, and I started

01:56calling this individual to see if they would come run The Hollywood Reporter, and I got a cease and

02:02desist letter from Jay. So, he sent me a nasty ground, and he basically told me, you know,

02:12stay away, and if you try to hire this person, I'm going to sue you. I think we need to set the record

02:18straight that Todd was a wrestler in high school, and I think he wanted to make sure that

02:24I was at least tough enough or we were going to be good long-term partners. So, we wrestled a little

02:29bit as competitors before we became long-term partners, and Todd today and I are partnered on

02:35eight of the 35 businesses in our portfolio, and Eldridge and Todd have been super partners for us

02:41over the last bunch of years. So, what turned the tide? Well, we got together and spent some time, and

02:49we realized that we were more alike than different, and, you know, Jay had been working on me for

02:56quite some time to combine our businesses, and I kept being so frustrated because he was doing so

03:03well, and I wasn't doing quite as well. So, finally, I agreed that the combination of the businesses

03:10made a lot of sense, and, you know, I think that took probably five years or so, six years,

03:16until we first met, since we first met, and Jay's done an amazing job building this platform. I think

03:23there's every day one of three people hit one of his websites. So, by being able to transform these

03:30unbelievable brands away from a magazine and into a digital platform, you know, and then

03:37really scale those, you know, he's done just an amazing job. So, it's just been a pleasure to be

03:42his partner. And, Jay, what do you think about how it's really like working with Todd?

03:48Well, after the cease and desist, no. I think when you just think about the amount of things

03:56in companies that are in the Eldridge portfolio, it's just astounding. They've got, from what I

04:01know, over a hundred businesses, a couple thousand employees, but, you know, they believe in

04:07the entrepreneurs they back. They're long-term investors. They really, I think, unlike so many,

04:13don't just say that, but actually practice, you know, permanent long-term capital. And for people

04:19that want to build generational assets and transform businesses, there's not many better

04:23partners that we've found than Eldridge. So, taking a deeper dive into your businesses like

04:28you've talked about, media rights and intellectual property are a focal point in both of your

04:32investment portfolios. Talk to me a little bit about the investment thesis. Jay, why don't we

04:38start with you? Well, I'd say, you know, similar to Eldridge, over the last decade, we're constantly

04:44looking for unique, and what I'd say, sui generis opportunities for IP and brands. It is very,

04:51very hard to build brands today. Let me correct myself. It's very hard to build sustainable

04:56brands today with all of the noise and content and information that is across social media and

05:01the internet. You can build something quickly, but likely not sustainable. So, when we find that

05:05unique space where you've got a brand that has history, it's trusted, but needs some transformation,

05:10we think these intellectual property meets, you know, historic legacy brands is a really

05:15unique place for us to invest, and it's proven to be a very good thesis for the company.

05:20Todd? Sure. As distribution costs have come down, you know, intellectual property continues, in my

05:25opinion, to go up in value, and as Jay said, you know, trusted brands. I mean, if you look at

05:32Billboard, Hollywood Reporter, Variety, Rolling Stone, you know, these are all 100-year-old

05:38brands, right? And they've been around and stood the test of time, right? The Billboard charts,

05:44you know, are something that everyone thinks about. 1930. Launched in 1930, yeah. And you look at the

05:51top musicians, and one of the first questions always is, like, how do I make, how do I get

05:57onto the Billboard charts? What do I need to do, right? Because it's a sign of success.

06:02And one of the things that, you know, Jay's been really able to do is, you know, build on top of

06:09that intellectual property and really gather audiences. I mean, the audiences that he reaches,

06:15you know, every day, it's just a staggering amount of number because he's got these brands.

06:22And when you walk into, you know, an agency in Hollywood, what do you see? The first thing you

06:28see on the coffee table is you see Variety, Hollywood Reporter, Billboard, Rolling Stone.

06:33These are all very trusted. And then, of course, he's been able to take that and really build it

06:38into a digital business that, you know, is gathering just people all around the world,

06:43with his tremendous content. All that being said, though, there has been a retrenchment

06:49across the entertainment industry, and the world is being impacted across all mediums,

06:54from TV to film. How are you both future-proofing your brands to be successful in such a rapidly

07:01evolving environment? Well, I'd say, first and foremost, it's a fallacy that media businesses

07:07can survive on single forms of revenue or single streams of revenue. So I think in our case at

07:13Penske Media, we're constantly looking at what other areas do we need to be good to excellent

07:18in terms of monetization of our content. So whether it's licensing, it's subscription,

07:23it's direct and indirect advertising, it's live events like Forbes is doing here today,

07:27you have to do more. You have to be a multi-channel business. And when you see Netflix,

07:32I think it was announced 48 hours ago, when you see a business like Netflix, which is so strong

07:37in subscription, launching these new live experiential centers called Netflix Houses

07:43across the US, you see that even Netflix, with such a strong core business, is trying to expand

07:47its portfolio and also its revenue streams, just like Disney has done so well with its IP

07:52across the theme park. So we think to future-proof it, it's all about making sure that any of these

07:57big transformations that come or disruptions, you have to have revenue from multiple sources.

08:03Todd?

08:04Yeah, I think revenue from multiple sources is obviously key. I think you also have to

08:11be thinking about how are you differentiated? And how is it that you get the content that people

08:17want to see, that people want to read? And then, of course, in the business that Jay is in,

08:23you have to be super fiscally responsible. So watching him run the businesses day in and day

08:30out, he's constantly pushing people on where are they spending money, where are they investing

08:36money, how are they thinking about the future, where are they going to go get the revenue?

08:40But what he has is access to massive amounts of luxury brands. So if you look at the brands that

08:48want to associate with him, because of the equity that he has in these brands, he's got Louis Vuitton,

08:54he's got Chanel, he's got all the big brands that are super excited. He was also extremely

09:00well positioned during COVID, and we were able to buy half of South by Southwest. So now what

09:06he's doing is he's taking South by Southwest all around the world. So he launched programming in

09:11Australia, he's headed to Europe, he's headed to the Middle East. These are iconic ideas. And then,

09:18of course, he can activate them by using his sales force and really monetize them for the people who

09:25are actually putting on the South by Southwest all around the world. So you see kind of the

09:30playbook that he has, because he's got an unbelievable sales force, right? And he's got

09:35unbelievable content. And that content wants to connect with other brands that are seeking

09:41the attachment to the equity. It's that multiplier effect. Yeah, absolutely. And so let's take it

09:47back to the U.S. for a minute. And we mentioned the Golden Globes. Viewership was back in January

09:52up 51 percent, Nielsen reported. And you both inked a deal with CBS and Paramount Plus for the

10:00next six years. What's next for the Golden Globes? What's your vision there? I'd say to start, live

10:07TV specials is a team sport. You need everyone rowing the same direction. And I think when we

10:13bought this business a few years ago, the Golden Globes was definitely in last place. It was

10:19definitely at the bottom of the standings. And to fast forward to the things you just mentioned

10:24and to look at this year and see that the Golden Globes is larger than the Emmys, the SAG Awards,

10:30and the Tony Awards, which happened about a week or so ago, all combined is really extraordinary.

10:35And it's a real testament to the incredible team at Dick Clark Productions, the producers,

10:42the director, and also that CBS took a risk. This wasn't an easy risk. NBC had passed on the

10:47property. We were in a tough, tough space. George Cheeks, the CEO of CBS, really took a risk. And

10:54to go from where we were to where we are today and have a long-term deal with CBS,

10:58I think the sky's the limit for the Golden Globes, both domestically and the opportunities

11:03internationally for us to continue to expand the brand are many. And yes, hopefully one day

11:09we'll be knocking on the doors in terms of the size of audience of the Oscars. And I hope that

11:13happens very soon. And Todd, I was lucky enough to get a chance to observe both of you live there

11:20in January as part of the story process. What was your analysis and assessment of how things

11:28turned out? Well, I lived with it for a couple years and obviously they self-destructed

11:38and they ultimately were kind of stranded. They had a couple things happen to them. COVID happened

11:47and then there was a retaliation against the membership. And it was all self-inflicted,

11:55but it really came down to really bad governance. I mean, the governance of the organization

12:01dated back to decades and decades and decades ago. And when you have these organizations that

12:09make it so hard to change governance, they atrophy and they don't evolve. And so their

12:17inability to evolve put them in a tricky spot. I think now we have voters all around the world,

12:25we've expanded the voter base with experts, and we've really got people who are excited about

12:31being involved. And I think there's still, in my opinion, no better party, right? You've got this

12:40tremendous environment where you have a look into the social life of the

12:48celebrity and the stars that you grow up with. And that's unique. Instagram and everything,

12:52social media has taken away kind of that specialty of seeing a celebrity. But the idea

12:59of seeing a celebrity in an environment like that, where they're among their peers, they're having a

13:05couple cocktails, they're celebrating, and they're excited about winning.

13:11So it's now, hopefully, the way we see it, it's one of the big three, right? You've got the Oscars,

13:17the Grammys, and the Globes. And the Globes are well positioned because they're the only one who

13:23really combines both film and TV. So as those two mediums evolve, you're not

13:30exposed to one or the other, but you've got more of a portfolio approach. And like Jay did with

13:36South by Southwest and really started to think about how to expand that, I would expect

13:42that you'll see something similar with the Globes. So I want to transition to your broader investment

13:47portfolio, which we got a chance to kind of dive into a bit at Eldridge. Your investment strategy

13:53is quite similar to Warren Buffett's, you know, in terms of that at the center, the cash generated

14:01from the insurance benefit, from the insurance business, security benefit, helps to, you know,

14:06fuel your other investments. Can you talk to us a little bit about that approach? We're seeing a lot

14:12of, you know, a lot of that happening now in the asset management industry. Sure. An insurance

14:19company has to have its assets managed, right? So you have a choice on how do you want to do that.

14:26Do you want to build a team that does it? Do you want to build teams that then do it? Or do you

14:32want to outsource it? So you've got one team, you've got many teams, and you've got outsourcing.

14:38We chose to build many teams, you know, so what we can do is we can put some equity capital into

14:45a business, give a team a mandate, and then start an investment strategy where they have an anchor

14:51tenant, right? So we make the rates of return that come from the asset strategy, but then we also get

14:57the benefit of the enterprise value as we build it, right, that then we can do something with that,

15:03you know, and reinvest it back into continue to grow and compound the insurance company.

15:09So the liabilities that we have are pretty straightforward, right? They're annuities,

15:14right? And we're hitting peak 65 right now. Over the next four years, there's going to be more

15:18people that turn 65 in the U.S. than at any other period of time. So what do people want when they

15:27start to think about kind of the consumption stage versus the accumulation stage, right?

15:33They want to think about what am I going to get paid every month, right? They don't really start,

15:38they stop to care about rates of return and IRRs, and they want to know how much cash is showing up

15:43every month, right? So by having kind of credit and credit strategies, you know, we've been, you

15:49know, able to continue to grow and service those long-term liabilities. And the other thing that's

15:55great about them is that they aren't bullets, right? So they turn out and they have long tails,

16:03right? But there's never an event that causes a, you know, a big mark to market, right? Where

16:10you have a rush to kind of the bank, so to speak. A, there are tax advantages for keeping in place.

16:18And B, right, they're compounding. And, you know, depending on how we built and structured an

16:23annuity, right, sometimes the surrender value is less than the benefit base. And so when someone

16:30calculates how they turn on their income, right, if their benefit base is 120 percent of their

16:36account value, right, they're going to be loathe to want to take that money out because they want

16:41to convert it into income based on the benefit base. So, you know, it's, you know, it's been,

16:48you know, a good business. And I think that as the world continues to age and we're seeing

16:53lots of interest for building insurance companies overseas, right, there's literally not an insurance

16:59company, you know, in Saudi, for example, right? But Saudi wants an insurance industry and they

17:04just change the governance of it because they have very long-term projects and insurance liabilities

17:11go really nicely with long-term projects and long-term assets. They match very nicely.

17:16So, you know, I think the insurance industry is going to continue to grow.

17:21You also said being a lender gives you a front row seat to a lot of different industries. What

17:27industries are out there right now that you find are the most exciting that maybe you haven't

17:32really delved into yet or you have? So, yeah, I think right now we're looking at

17:39ideas on how to provide financing to companies that are in a transition period where they're

17:49going from being, let's call it, consuming capital to generating capital. And there's a

17:55whole host of these businesses where maybe they raised venture capital or growth equity in 2021

18:04or 2022 and they're not looking to do a down round per se, so they're looking to do some types

18:11of structured finance where, you know, you might be at the top of the capital structure, right,

18:16and you have to believe and do the work in order to get comfortable that there's value there,

18:23you know, because, of course, you know, if a business is right at that precipice where it's

18:27going from, you know, consuming capital to generating capital, you just have to make sure

18:33that there's a strategic reason, right, because one of the dirty little secrets of lending businesses,

18:38money to businesses, is that the businesses almost always never pay you back, right? It's

18:45someone else that comes in and pays you back. It's someone else who buys the company. It's a

18:48refinancing. But once the business establishes, you know, the debt, it's really not the business

18:55that pays it off, it's the attractiveness of the business to other forms of capital that pays you

18:59off. So you're always thinking about, right, what is the value of this business and to who is it

19:04worth what? And so, Jay, over the past decade and a half, you've made a ton of acquisitions,

19:11major print media brands from Variety, Rolling Stone, Hollywood Reporter, Billboard. These

19:17investments occurred at a time when interest in print media seemed a bit lackluster. What

19:23drove that confidence for you to drive right in? Let's say first give you a perspective on how we

19:29look at the media industry. I think we're not a traditional private equity fund or, you know,

19:35we really are an owner-operator of these media assets. And so I think we first take the look

19:41that, you know, this is going to be something that we're going to be invested in and operating for

19:4525 to 50 years. And so do we want to invest in something? We have to really get deep with the

19:51management team. Have we just fallen in love with the brand or are we really sure that the team

19:56that's there can handle this digital transformation? The second part is, you know, is this an industry

20:01that in the mid to long term that we think with that digital transformation this business will

20:05be able to climb out of? And then, as I talked about earlier, this ability to create new revenue

20:10streams for these businesses that were so reliant on just a single form of revenue for the last,

20:14you know, some as long as 100 years. But it's about the people. I mean, these are really

20:19people-intensive businesses, from the editors, as you know, to the sales teams, to the teams working

20:24on subscription and live events. It is very people-intensive. But when you have a long

20:29trajectory and when you really believe that you want to own this business 25, 50 years from now,

20:34you're making decisions that I think are so much healthier for the near-term success of these

20:38brands. So we're almost out of time, but I'd be remiss if I didn't ask a question about AI,

20:44as it's disrupting all industries, and what that means for the media industry personally and for,

20:51you know, frankly, everybody in this room. What are your thoughts there on the opportunity,

20:57but also the potential risk? Well, I'd say, first of all, I think AI is not a panacea

21:04for the media industry, and it's certainly not the death of the media industry.

21:09I think many of our peers have done deals, recent deals, with open AI and a couple others.

21:14But I think our strategy at Penske Media has been very different. We look at this and say,

21:19it's the wrong time to do a deal with an AI company when they haven't figured out their

21:24business model. When they don't yet know how they're going to generate long-term sustainable

21:28revenue, let's wait a bit and not just look at them as an ATM, but really look at them as a

21:34strategic partner to build applications, to build products, to try to transform our newsroom in

21:39terms of efficiency, to look at workflows. These are the ways we're looking at the AI companies,

21:45and as they continue to develop, this is still early innings, as it continues to develop,

21:49then lean in and try to find more strategic routes. But it's not going to be the end.

21:54We've already dealt with the internet, you've dealt with mobile, and now AI is, I think,

21:58the next big transformation. But it's something that I think can be managed well, but not looking

22:03at it as some kind of panacea or death for the media industry. So we have less than two minutes

22:08left, so I want to transition to a lightning round. So that's both of you, quick, fast answers.

22:15So Todd, let's start with you. Best and worst investment?

22:20Oh god.

22:24I'm right here.

22:24Or worst. Best or worst.

22:28I can't say Jay because he's sitting here, but I'm going to tell you what, when I did the deal

22:33to contribute Billboard and Hollywood Reporter, I was consuming about 20 million bucks, and now

22:39he's making, you know, EBITDA more than nine figures. So watching what he's done has been

22:45tremendous. My worst thing was I owned 1,100 Pizza Hut franchises.

22:53Oh yes.

22:54Yeah, which was, I thought when the world went to crap, everyone would eat pizza and drink beer,

22:59and they didn't want Pizza Hut, they wanted Domino's. So I chose poorly. So that was a

23:07frustrating one for a whole host of reasons that, you know, not really going to get into.

23:12Jay?

23:14The best investment, every time I leave the office and go watch my daughter play sports

23:19or in a play, the worst investment was when I had the opportunity to buy,

23:24to be one of the buyers of Forbes, and I didn't take it. Probably my worst investment.

23:28I'd agree with that. And okay, so final question, which city has the best sports fans? Todd?

23:38Best is so complicated.

23:40You're going to be stretched on this one.

23:41I mean, you know, this is a...

23:43Doesn't have to be in the US.

23:46No, I think all fans are passionate, no matter what city you're in. You know, so I'm not

23:53smart enough to tell you what's the best, but I know that they're super passionate,

23:58and whether you look at Dodgers fans or Lakers fans, you look at what's going on with the Dodgers

24:02with Shohei Ohtani, and you look at just the Lakers legacy, and obviously, you know, the fans

24:08at Chelsea and football are just absolutely committed. So I'm not going to answer the question.

24:15Jay?

24:17Jets, Mets, and Rangers. New York City.

24:19All right. All right, guys. Well, we're out of time. Thank you both.

24:22Thank you very much. Thank you, Monique. Really a pleasure. Thank you so much.

A New Model For Hollywood, Media & Entertainment | Iconoclast Summit 2024

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