CNBC EXCLUSIVE: JEFFREY KATZENBERG AND MEG WHITMAN SIT DOWN WITH CNBC’S JULIA BOORSTIN TO DISCUSS THEIR NEW STREAMING TV VENTURE, NEWTV
WHEN: TODAY, TUESDAY, August 7, 2018
WHERE: CNBC’S “SQUAWK ON THE STREET”
Q2 hedge fund letters, conference, scoops etc
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Jeffrey Katzenberg and Meg Whitman speaking with CNBC’s Julia Boorstin about their new streaming TV venture, NewTV, today on CNBC’s “Squawk on the Street.” Following are links to video of the interview on CNBC.com:
Jeff Katzenberg and Meg Whitman on new streaming TV venture
Jeff Katzenberg and Meg Whitman close $1 billion funding round for NewTV
Carl Quintanilla: meantime, former Hewlett-Packard enterprise CEO Meg Whitman and former Walt Disney studios chairman Jeffrey Katzenberg closing a 1 billion dollar funding round for their new mobile video start up NewTV. Nearly every major media company is getting in early including Disney, Alibaba, Fox and our parent company NBC universal. Let’s get out to Julia Boorstin sitting down with Whitman and Katzenberg in a CNBC exclusive.
Julia Boorstin: Carl thanks so much and Jeffrey and meg thank you both so much for joining us today after announcing this big news, a billion dollars from every major media company pretty much and Alibaba and a bunch of banks as well. What will you do with the billion dollars?
Meg Whitman: it’s about the billion dollars but more importantly every single major Hollywood studio joined in this round along with as you pointed out technology companies and strategic financial investors, and they share our vision in creating an entirely new entertainment platform that’s optimized for easy on the go mobile viewing and allows top talent in Hollywood to tell stories in an entirely new way. So we’re going to use the money for content and helping those story tellers tell stories in a new way which is going to be premium content delivered in bite sized formats.
Boorstin: does that mean all those investors are committed to provide a certain amount of content?
Whitman: the Hollywood studios want to provide content for the new platform because it’s a growth area for the studios and it allows storytellers to tell stories in an entirely new way and optimized for on the go viewing which is a very different use case.
Boorstin: what does it actually mean? When will it launch, how much with it cost and what will the app be like?
Jeffrey Katzenberg: keep going. Love it. Killing it.
Whitman: well, it’s going to launch we hope in the fall of 2019, Christmas of 2019. There’s a lot of work to do between now and then there’s a chance it slips a bit because we want to make sure we have exactly the right content and the right quality of content. Really today is the first day of the new company. We moved into our new offices in west Hollywood and in temporary work space, it’s like a temporary work -- like ’we work space called serendipity and we’re hiring and starting to commission content Jeffrey is leading the content charge and I’m leading the technology and business charge.
Boorstin: Jeffrey in terms of content, there’s so much out there, there’s Netflix and Hulu, over the top subscription services and a lot of concern maybe we’re at peak TV, more TV series out there than ever. Why do we need another app
Katzenberg: I think that what we’re filling is actually a completely different experience you get up every day, you leave your house and you take your television set with you. And in the course of that day, you’re spending right now, you are spending about four hours a day on this device on social media, communicating collaborating and playing casual games and watching over an hour of short form content. And what we want to do is to grab about 20 minutes of that time and offer people now a quality of story telling and the best of what Hollywood has to offer backed in a subscription service which allows us to invest the kind of money that you get in traditional television to make that experience exceptional so today, in short form, the high end of what you’re watching and by the way we admire the work that’s been done. It’s innovative and creative, it’s about 2,000 or $3,000 or 4,000 a minute on a typical scripted television show you’re referring to, it’s $100,000 a minute. And what you can do with that kind of resource and talent you can bring, is just quite unique and quite differentiated.
Boorstin: if you talk about the kind of content. Obviously people are used to getting content for free, short form content for free on f Facebook and YouTube and they may already subscribe to a Netflix or Hulu or HBO go people seem to be watching a lot of those half hour shows on their mobile devices how are you going to convince them it’s worth paying for content that’s the length they are used to getting for free
Katzenberg: there’s many use cases in the past that exemplify why when you come along with something that is exceptional and convenient and premium, people will migrate to it if in fact it delivers on the promise. Two great examples, HBO comes along in the 1990s and we’re not TV, we’re HBO and the content they made, even though there was all of the television in the world, all free, all available, many, many tens of millions of people went to HBO what they did offer was exceptional. Both in quality and standards and practices and no commercials, et cetera we believe what you have in short form today and what we’re delivering in new form will be the delta, the exception, the exceptionalist of that will be as great I’ll give you another example music. Six years ago it was all free and all music was available. 150 million people today paying $10 a month for music because Spotify and Apple came along and made it convenient they didn’t change the music or improve it, they made it a better experience for you to curate and get music and recommend it so I’m pretty confident that what we’re going to deliver is exceptional relative to what is available free today and there will be some percentage of people that will migrate to that and be attracted to it.
Boorstin: how big do you think the market is?
Whitman: we think the market is enormous, $2 billion spending over an hour a day viewing video today on their mobile. But as Jeffrey said the content needs to be differentiated but so does the tech platform. We need to optimize viewing video on your mobile in a way that is not done before.
Boorstin: how does Alibaba fit in are you partnering with them on the tech platform?
Whitman: they are going to be helpful to us. They are doing a lot of innovative things and it’s a collaboration around the technology as well as the content. So we’re excited about what they can bring to the table but we’re assembling a list group of engineers here in l.A., we decided to have the engineering team in l.A. To do something not done before, to get that video on mobile looking fantastic. Think about what you can now do in photography on mobile now we’re going to do that on video.
Boorstin: David Faber wants to jump in here
David Faber: thanks, Julia Meg, it’s been a little while.
Whitman: it has been.
Faber: all of those years every quarter. On the subject of wireless actually back to technology a bit. Your old haunt 5g is coming and it’s a ways away I do wonder for a service like this, do you have a vision of how it will enhance it and change it and what you’re able to deliver
Whitman: I think everyone agrees that 5g will enable video on mobile to look even better than it does today and just for historical perspective, you have to remember five years ago watching mobile -- watching video on the mobile was not a great experience do you remember the buffering and freezing that is largely solved think about what 5g will be able to do in terms of display and sound and instant discovery, there will be a lot of very powerful things brought to bear. We think it’s an element of the wind to our back for this new venture.
Faber: Jeffrey, a quick question as well, more from the investment perspective, barriers to entry, if you in fact are correct, as you very well may end up being here, that this is something that people want, what stops Netflix and Amazon and Hulu all of your well capitalized competiitors from making an offering to their customers as well and moving strongly into the area that you may pioneer will there be enough market share for everybody to share or do you risk getting dissermediated by them
Katzenberg: again, David, I think what we are building both in terms of what meg is designing in terms of the platform itself and to make this a mobile first product, that is not the case for any of the people that you just named and you take Netflix, literally less than 10% of Netflix is viewing less 10% of Hulu’s viewing is mobile it is not optimized for it either the content itself, which is primarily an hour length, is also not optimized for on the go in between viewing so at the outset, I think we’ll have a very strong first mover advantage. But like anything, if we are right and if it is successful, others will follow HBO succeeded, came Showtime and Starz, CBS started in network television quickly on the heels and NBC and ABC and Fox. So you know, I don’t think either of us sit here and think, this is -- we’re the only ones who are going to do this but I think with the financial backing, the incredible partnership from the content providers, our partners represent 75 or 80% of the top show running talent creators in the business as well as probably the best ip in the world. We’ve a lot of great wind in our sail as meg likes to say so I think we’ll be off to a good start will others follow probably
Whitman: I would also say, David, there’s something to be said for focus. You know, this is the only business that we’re in and we aim to make this business, which is for a use case that’s quite different. You take a TV in your pocket every day and ten minutes it happens all the time, waiting at the doctor’s office and on your commute and it’s taking longer and waiting for a friend for dinner and we want to take that ten minutes and want to make those moments extraordinary by the service we’re offering, which is a different strategy than the companies that you mentioned
Faber: well, meg, that was of course a focus was one of the themes that came out from our many interviews during the years you ran hp enterprise but another was the rate of change, which you continually said only increases and puts pressure on decision makers like both you and Jeffrey. So what gives you the confidence that given how quickly the world is changing you’re making the right decisions now and will be positioned properly for service you said not going to be available for some time?
Whitman: yeah, well, I think the good news is, we’ve done -- we’ve seen a lot of patterns, we’re good at pattern recognition having two long careers in Hollywood and Silicon Valley we are bringing the very best of Hollywood and silicon valley together we have to stay nimble I’ll tell you one other thing David, you’ll totally appreciate, it’s fantastic not having a legacy platform, to be able to build this platform with the latest technology and behavioral analytics and things is a real joy.
Boorstin: one of the patterns we’re hearing about in Hollywood is cord cutting will this be a tool for cord cutters and are you getting all of the media companies to invest in a platform that could cannalbaize their core business
Katzenberg: I don’t think -- this is not a zero sum game. People are already as meg said, 2 billion people watching an hour of this content a day we don’t think we contribute to or accelerate the cord cutting that’s a much bigger decision that people are making and certainly generationally since this is very targeted at 25 to 30-year-olds, this is the old thing, we’re skating to where the hockey puck is going we’re not looking back at it so -- to your question, David, I would say to you, these two old dogs, we still know how to hunt so --
Whitman: I prefer we are up and comers in the new space as opposed to old dogs but I’ll take it.
Boorstin: another big trend we’ve been watching in the industry just transform the business in the past year is media m& a the number of your investors are in the process of merging, Disney buying Fox, and Warner Media owned by at&t. How did this consolidation exchange your business
Katzenberg: the thing that is so fantastic about this and you know this because we’ve been talking about this for well over a year or 18 months, through all of that m&a, and the sort of realignments that have gone on, we’ve plowed forward in this and the reason is that I think every one of them look at this as something new, differentiated from their own strategy and complimentary that’s why every time someone says Hulu or HBO or Netflix or ABC or CBS or NBC, we’re actually going to allow there to be the next evolution into this new form which we think is a growth opportunity and most importantly our partners agree.
Boorstin: another big story in Hollywood over the past year has been this wave of allegations of sexual misconduct and gender discrimination as you build a new company today, how do you make sure it doesn’t fall prey to the issues that there have been accusations about a range of companies most recently last week with CBS?
Whitman: we’re really focused jointly on building a company for the long term with the right mission, the right vision and right values and we have to lay that down early the great thing about building a new company, you get to lay that culture down early and we have a really shared vision of how we want to do that, inclusiveness, fairness meritocracy and bringing out the very best in people. I think our careers, we embody that in many ways.
Katzenberg: listen, I’m -- I think we are both -- it is top of mind. It’s not incidental in a way we have the advantage of starting with a clean slate in a new era. And the rules of the past don’t apply anymore. You know, for me, I have always been blessed to work with incredibly strong women in every aspect of my career. You know at Dreamworks Animation, we had a tremendous representation of women in the leadership of the company and production of it you know, for me in reaching out and being lucky to be able to get meg Whitman, one of the most accomplished executives in American business in the last decades, you know is just a coo -- as I say to meg, I know what I know I know what I don’t know and I know she knows what I don’t know so having her as the leader of this and CEO of it, I think just puts us off on a great start.
Boorstin: and meg, you are a rare female CEO in this country just yesterday we had the news of Indra Nooyi stepping down. A final question, why do you think there are so few female CEOs and what will it take to change that?
Whitman: yeah, so I think first of all there are more than there were when I started in my career. I graduated from business school in 1979, there has been change but there needs to be more focus on women on boards of directors and bringing up and nurturing women in their careers and giving them the opportunities to
Prove what they can do and so I think every leader now in most major companies and certainly in our start up we’re going to be focused on giving women not only women, everyone an opportunity to shine and do their very best work.
Boorstin: we’re very curious to see what is going to come on new tv. Can’t find out when it will launch and how much it will cost and what it will look like I hope you’ll come back on.
Katzenberg: we can’t wait to see what the CNBC version is on new TV.
Boorstin: let’s do it great. Guys meg and Jeffrey. We appreciate it.
