First On CNBC: CNBC Transcripts: Hulu CEO Randy Freer and Grammy-winning Artist John Legend Speak with CNBC’s Julia Boorstin from Cannes Today
WHEN: Today, Tuesday, June 18, 2019
WHERE: CNBC’s Business Day programming – Live interviews from the 2019 Cannes Lions International Festival of Creativity in Cannes, France
Q1 hedge fund letters, conference, scoops etc
The following are the unofficial transcripts of FIRST ON CNBC interviews with Hulu CEO Randy Freer and Grammy-winning Artist John Legend. Both spoke to CNBC’s Julia Boorstin live from the 2019 Cannes LionsIn ternational Festival of Creativity in Cannes, France during CNBC’s Business Day programming today, Tuesday, June 18th. The following are links to video of the interviews on CNBC.com:
Hulu CEO on ad revenue growth, the streaming wars and more
Watch CNBC’s full interview with John Legend
All references must be sourced to CNBC.
Hulu CEO Randy Freer
BECKY QUICK: The world’s largest ad festival is taking place this week in France with marketing and media players from across the globe attending. Also, our very own Julia Boorstin. She joins us right now from Cannes with a special guest. Julia, good to see you again.
JULIA BOORSTIN: Becky, thanks so much. I’m joined now by Randy Freer, the CEO of Hulu. Randy, thanks for talking to us today.
RANDY FREER: Thank you for having me.
JULIA BOORSTIN: So, Randy, one of the big topics of conversation here at Cannes is concerns about the digital duopoly, Facebook and Google. Concerns about brand safety, a potential that these companies are maybe broken up, according to some of the Presidential candidates raising these issues of antitrust. But the real question that most people have been talking about is the safety of the content that advertisers are putting their ads next to. Are all of these discussions an opportunity for Hulu to gain ad revenue from Facebook and Google?
RANDY FREER: The reality is Hulu has been continuing to grow its revenue business and its ad revenue business. I think the most important element for brands and for others is to know that they are in a safe environment. And really that comes down to a choice. As long as we, as businesses, give consumers a choice as to what they want to watch, where they want to watch it, and ultimately, how the ad experience is in that scenario, I think we’ll be in great shape. As well as brands—giving brands the choice of what they want to advertise in. And I think that’s one of the things that’s made Hulu an incredible— incredibly popular with brands today.
JULIA BOORSTIN: We have been talking to some advertisers here including the Head of Marketing for Procter & Gamble, the biggest advertisers in the world, and he’s saying the fact that people are watching Netflix where there are no ads instead of TV in increasing numbers actually means they need to find new digital places to put their ads on videos. Are you reaching out to those brands and saying move more dollars because of Netflix to Hulu?
RANDY FREER: We’ve been talking to Marc and P&G and other brands for a long time. And I think the opportunity at Hulu, in a brand safe environment, with huge audiences at this point, with long engagement times, a young audience, 20 to 25 years younger than network television or other places, Hulu is a huge opportunity for brands to come in and talk to the consumers that they’re looking to reach the most.
JULIA BOORSTIN: Now Disney recently announced, along with NBCUniversal, that Disney is going to be taking over control of Hulu. What does that mean for Hulu’s future and your ability to plan for the long term?
RANDY FREER: Well, I think the first thing is: it’s clarity. I mean, there was always a lot of conversation about who was going to own, what is it like, three— how did they all get along? And honestly, they all got along great. But now there’s clarity of voice. There’s clarity of objective. And I think we’re really solidifying into a clarity around our strategic plan and what the next couple of years look like. So, we’re super excited about the opportunity.
JULIA BOORSTIN: Bob Iger has talked about potentially bundling in Hulu along with Disney Plus which is launching this fall, along with ESPN Plus. What does that kind of bundling mean for your subscriber-base going forward?
RANDY FREER: I think it’s opportunity. And we haven’t ultimately determined or been told what that bundle is going to look like and what the ultimate price is. But I think the opportunity to have the best of general entertainment direct-to-consumer, what ultimately will be a tremendous service with Disney Plus, the best for kids, from movies, like Pixar and others, is going to be terrific. And then when you think of ESPN Plus as an add-on as well to Hulu’s live product and what consumers are looking for, I think it’s another way for Hulu to extend and grow its already growing, fast-growing subscriber base.
JULIA BOORSTIN: We are about to get a couple new entrants into the market that will pose as a big competitor to Hulu. Because Hulu is – for the most part, most of your subscribers are using your ad-supported service, which is very different than an Ad-free Netflix. But, At&T has it said that it will have an ad-supported version. And then you have NBCUniversal, one of your co-owners at least for a couple years, is going to be launching an ad-supported streaming service. How do those coming rivals to this marketplace impact your business and your strategy?
RANDY FREER: Well, one, you have to get back to really thinking about the consumer and making sure your ad-supported experience is consumer friendly. It is even better – it used to be OK for Hulu used to say we have half as many – half the commercial load as network television. Well, it’s not okay anymore. And we have to actually begin to reduce that and find new ways to integrate the brands into the ad. That’s why we launched Pause Ads recently. We launched a number of other ad formats. Friends with Benefits is an integrated opportunity we’re using with Old Navy. So, there’s all kinds of ways to make the customer experience on Hulu better than any of our competitors out there. And we can’t forget that the most important thing to consumers is choice. So, it’s great to have an ad service. But also, what’s more important is giving them the option of an ad service and the option of an ad-free service so they can determine what’s the best way, what’s the best experience they have to view things.
JULIA BOORSTIN: There are other ad-free services like Apple TV Plus that are about to come into the market. And a lot of these players including Amazon and Netflix are spending billions and billions of dollars on original content. How does that – and now your full ownership and control by Disney – change your approach to investing in originals rather than just a lot of the network content that’s so popular on Hulu?
RANDY FREER: You will see over the next few years that our investment in original programming will increase significantly. We now have access to the best creators in the world. When you look at the capacity inside of the Walt Disney Company to create content, the IP that’s there, the access that we’ll have with that is, you know, terrific. And we are going to be able to invest more, invest more upstream and find the best stories and the best creators to make shows for Hulu’s customers.
JULIA BOORSTIN: Can you give us a dollar amount that you’ll be spending at this time?
RANDY FREER: Not at this time.
JULIA BOORSTIN: Okay. Well, I had to ask. Randy Freer, CEO of Hulu. Thanks so much for joining us.
RANDY FREER: Thank you.
JULIA BOORSTIN: Andrew, back over to you.
SARA EISEN: Let’s get to our Julia Boorstin now. Live from Cannes this morning, sitting down with E.G.O.T. Winning Artist John Legend. Julia, take it away.
JULIA BOORSTIN: Sara, thanks so much. And John Legend, thank you so much for joining us. In addition to being a ten-time Grammy winner, you are an entrepreneur. And you are here with one of your many businesses.
JOHN LEGEND: Yeah.
JULIA BOORSTIN: Your wine label.
JOHN LEGEND: Yes.
JULIA BOORSTIN: Tell us why you’re here in France.
JOHN LEGEND: LVE. This is my rose. This is our second year doing a rose. But we’ve also been doing a Cabernet Sauvignon, Chardonnay for four or five years now. And we expanded to doing some sparkling this year, too. Sparkling White and Sparkling Rose.
JULIA BOORSTIN: And so, what led you to launch a wine business? You’re so entrenched in the music business, the entertainment business, why wine?
JOHN LEGEND: Well, I’ve always loved wine, personally. But also, I felt wine and my music kind of went well together. My fans would tell me that, and so many of my fans would tell me they would have a glass of wine and listen to my albums. And I just felt like – I felt like there was some chemistry between the two and I felt like I should take advantage of that. And so, I was looking for a partner to work with, and we found Jean-Charles Boisset and Raymond Vineyards based up in Napa Valley, started working with them, and developing the wines together, developing the brand LVE. And it’s been so much fun to do it.
JULIA BOORSTIN: One thing I think people may not realize about you is before you became a full-time musician you worked at Boston Consulting Group.
JOHN LEGEND: Yes. For three years.
JULIA BOORSTIN: So, how did that experience influence your approach to entrepreneurship and to working in these different businesses?
JOHN LEGEND: I think it just helps you have better business acumen, and ask the right questions, hire the right people, understand, you know, how to interact with other business people. And, you know, it’s not the traditional route to becoming a musician but I think it served me well.
JULIA BOORSTIN: And did it serve your approach to the actual music industry itself? I mean, there’s so many different pieces of it: the recording, the touring, now you have these streaming music services. How did that influence your music career?
JOHN LEGEND: I think all in all, I think it raised the bar for me for the type of people I want to work with. Because it was such a high quality of kind of colleagues and peers I would work with there. And it made me realize these are the kinds of people I want to surround myself with, even in the music business, which may not be known for that. Just really high-quality, intelligent people. People who are nimble, conscious of what’s going on in the world-- conscious of kind of new developments and the way the business is evolving.
JULIA BOORSTIN: Speaking of the way the business is evolving, there’s this huge rise of streaming music.
JOHN LEGEND: Yes.
JULIA BOORSTIN: We have Spotify, Apple Music. How does that influence you, either in the way you’re creating music or marketing it or distributing it?
JOHN LEGEND: Well, it’s changed everything when it comes to how people receive and listen to music. I think the good side especially is that people are listening to more music than ever before. Of course, you know, the business is kind of – stumbled and tried to figure how to monetize that. But I think we’re coming into our own now, where everybody is figuring out this can be a lucrative area for us as musicians and we just have to make the most of it. But it does change the way you think about releases, the way you think about singles verse albums. It changes a lot of the kind of traditional thinking versus when we were releasing CDs.
JULIA BOORSTIN: So, more singles.
JOHN LEGEND: Yeah. I think it’s more of a single-driven thing. It’s more of a—just thinking about the experience of listening to things on streaming platforms versus listening to individual CDs. You just have to think about the way the consumer is going to receive the music more now.
JULIA BOORSTIN: Now, you also have a big entertainment business and you just signed a new deal with ABC Studios.
JOHN LEGEND: Yes.
JULIA BOORSTIN: Now, we have all these streamers here.
JOHN LEGEND: Yes.
JULIA BOORSTIN: What made you decide to go with a traditional broadcast network?
JOHN LEGEND: Well, we didn’t sign with the network itself, we signed with ABC Studios which allows us to sell to all kinds of platforms. But, of course, Disney owns it and they will have plenty of places to distribute the content we create there. But it can be distributed other places as well.
JULIA BOORSTIN: Also, worth noting, you also have a movie with Netflix.
JOHN LEGEND: Yes.
JULIA BOORSTIN: What’s it like working on all of these different platforms including the new digital ones?
JOHN LEGEND: Well, for us, the content is the most important thing. So, we care the most-- so my company Get Lifted Film Company. It started with two of my good friends and we’ve been creating content for years now and then we’ve been selling it to all kinds of platforms: to HBO, to Netflix, to the networks. And, for us, the content is the most important thing. So, we focus on working with great writers, working with great directors, working with great actors and then coming up with great content and then finding the right home for that content and getting it out to the people.
JULIA BOORSTIN: Now, I have to ask you about the advertising story here. Procter & Gamble is here, we just spoke to their Chief Marketing Officer Marc Pritchard yesterday and they are very excited to announce a big partnership with you. What is your relationship with Procter & Gamble going to be going forward?
JOHN LEGEND: We’re going to create branded content together. We’ve been doing a lot together in the past already. I worked with them on Pampers and that’s been a lot of fun. We’re going to announce a new collaboration with me and them for SK-II, as well. And so, we’re going to work with several other brands and develop some content together. Some of it will be more kind of pro-social messages, some of it will be more product driven. So, it will be really cool.
JULIA BOORSTIN: Speaking of social messages, one of the things you’re talking about here is your nonprofit focused on helping formerly incarcerated people to get into entrepreneurship.
JOHN LEGEND: Yes.
JULIA BOORSTIN: What is that connection, and why are you so focused on entrepreneurship for that community?
JOHN LEGEND: So, we started with an organization called FreeAmerica, which is all about addressing this issue of mass incarceration, freeing away more people, changing the laws, changing the way we vote so that we’re more mindful of criminal justice reform. One of the issues that we came across as we talked with a lot of formerly incarcerated people was that it’s really hard to start up your own business, it’s really hard to get a job, it’s really hard to reintegrate back into the society, into the economy. And a lot of entrepreneurs were being stifled by that. And we wanted to give them the opportunity to see their businesses through, see their ideas through and give them support. So, we partnered with Bank of America and with New Profit to give them advice, give them funding, give them access to our networks to help them make the most of their ideas and help them employ people, help them really contribute to society and to their communities.
JULIA BOORSTIN: Fantastic. Now, we were just talking before you came on-air about social media. And we were talking about Twitter. Your wife Chrissy Teigen is here at a Twitter event today.
JOHN LEGEND: She’s the mayor of Twitter.
JULIA BOORSTIN: She’s the mayor of Twitter. But, you use also Twitter. And you said you really use Twitter when it -- particularly when it comes to your social justice issues. You Tweeted about the Anti-Abortion Laws that have gone into effect in several states, including Georgia. Why did you decide to weigh in on that issue and what do you hope to accomplish with that?
JOHN LEGEND: Well, I care about freedom. And I believe that it’s important for women to have equality in our society. And the only way they can, among other things, is to have control over their bodies and when and with whom they decide to have a child. And if they don’t have that basic freedom, it’s hard for women to be free in any other realm. So, I care about that issue. I’m proud of the fact that my wife and I have two wonderful kids, but it was a choice that we made together. And I feel like every couple, every individual, every woman should be able to decide that for themselves and not have the state regulate their reproductive system.
JULIA BOORSTIN: It’s interesting, we’ve had a lot of different entertainment companies weigh in in alignment with you on this issue. Do you think that’s going to force change, either in the legislature or in terms of the way the state thinks about these types of things?
JOHN LEGEND: I hope it does. And Atlanta is a thriving metropolis. So many businesses are located there in that area. So many media companies are creating content there and shooting the content there. And I think a lot of them are putting pressure on the Governor to say, you all need to reconsider where you’re going, taking the state backwards, when you could be, you know, they’ve always claimed to be the New South and be kind of on the forefront of all of these great businesses and great technologies and all of these other things, but you can’t move the state backwards in that area and expect it to be considered a place of, you know, New South and modernity and progressiveness.
JULIA BOORSTIN: And just a final question about social media. Here in Cannes, we see the logos of the social media giants everywhere. In addition to Twitter, you said you use Facebook. How important are these different social platforms as a means for you to communicate with your fans and even get feedback from your fans?
JOHN LEGEND: Yeah, I don’t individually use Facebook, but use it with my team to spark discussions. There are certain platforms that are better for things than others. So, with Facebook, we use it to do a lot of our discussions around FreeAmerica and have people engage with each other and that. And so, each of the platforms, I think, makes sense for different reasons. And so, we’re careful about where we choose to post certain things, because they’ll be more effective in certain platforms.
JULIA BOORSTIN: But you’re an Instagram user yourself.
JOHN LEGEND: Myself. And Twitter for sure.
JULIA BOORSTIN: Thank you so much, John Legend, Multi-Grammy winner and many other entrepreneur titles as well. We really appreciate you joining us.
JOHN LEGEND: Thank you. Thanks for having me.
JULIA BOORSTIN: Guys, back over to you.