Businessweek Extra-Chris Fenton

the NBA, and American business. A must read right now as tensions unbelievably continue to escalate between the US and China. Check it out. Great to be back, and I'm glad Scarlett's here too, because I know she's a fellow Cornellian. I know, I feel like we could this whole interview could just take a turn with you guys just doing

something very well. Start talking about hockey and Lina Rank and you know exactly Gorges and all of that stuff, all that stuff, all right, talking talking about the big red of China here too a little bit. Yeah, I see what you did there. You're a creative guy, Chris Fenton.

Um so put the book in some context for us, because the title is so intriguing, and Scotan and I were talking about it throughout the day and sort of trading notes, and I mean, it's very much as our colleague Tom King would say in the Zeitgeist in many ways, and a reminder that it's not all just trade wars and sort of obscure things like soybeans and whatnot. We're talking about pop culture, we're talking about sports and so many different things. Remind us what you set out to

do with this book. Yeah, what's sort of amazing. I UM. I was in the process of meeting with publishers last time I was on the show, which was in October, just after Darryl Moorey, the GM of the Houston Rockets, sent out that tweet supporting the hues of the Hong Kong protesters, and we we talked quite deeply about the NBA's issues. And then Lebron James had just landed back in the US and he had um issues explaining exactly

where his point of you was on it. And it's amazing because the book, Yes, the timing of having a book like this is fantastic, um in regards to selling books. But if it's a little bitter sweet because UM, we're also facing probably one of the worst relationships the two countries, the U S And China have had in the last forty years. So it's a bit concerning, But yes, UM, a lot of it has to do a lot more

than with than just with commodities or tech. UM. I was in the middle of definitely the cultural and commercial exchange between the two countries, and the culture between us is really a very strong glue, whether that's in the sports industry or or in the movie business. Basically you're talking about soft power. I mean the NBA, Hollywood movies.

That's America's soft power, and that's what people in China kind of fell in love with, and um, it's one of our most powerful ways of influencing the rest of the world. How much did that get hot up in the trade war, the trade discussions or was it something on the side, Well, it's it's funny because you you have, UM a lot of hawks that want to decouple completely

from the relationship. And I argue to the hawks that UM, some of the most powerful, if you want to say the words weapons are our products in the cultural business, because not only can we monetize that market, because there is a large demand in the consumer market of China for things like movies are television program and our sports um are sports industry um. But on top of it, there is real money to make from those products and

services too. So every time a kid puts on a pair of Nike shoes, or every time they watch a Transformers movie, or they see an episode of Game of Thrones or House of Cards, they're getting a little seepage of Western democracy into that market. So there's this soft power influence that comes even with the money that we're generating.

It's sort of a two handed sword. So let's talk more about that because and and I'm glad you alluded to that time that we talked in October, because it was a banana's time to use a very technical term, because of what was going on with the n b A, I mean, with everything else that's happened in the world, that issue with Daryl Morey and Lebron James's response to it has largely faded, although with the Lebron issue it sort of came up again with the Hong Kong protests,

you know, heating up again and everything that's happened between Beijing and Hong Kong since then. But remind us kind of where the NBA sits in all of this, because the estimates for the money lost around that freakas as it were, was measured in I think a couple of hundred million dollars. Yeah. Well, the NBA's issues are still ongoing. I mean, obviously Covid has has caused other issues with the NBA, but um, up to now, they are still

not broadcasting the games in China. Um, there are still quite a bit of merchandise, definitely from the Houston Rockets, but various other teams that aren't even sold over there. Um, there are some games that are delayed streamed on various platforms, but a lot of that the lion share of the revenue that NBA was generating out of that market is non existent right now, and they're having a real hard

time trying to get it back. So Um. Part of that has to do obviously with the Darryl Morey situation back in October, which by the way, seems like ten years ago at this point. But then the the the second thing is just that the relationship between the two countries is so fraid right now it's very difficult to make any progress. Um. In the in the correct path

that the NBA has to go at this point. You know, when you talk about the NBA in China, I can't help but think about Joseph Tie who's a co founder of Ali Baba, and how he's an owner of the New Jersey Nets or is it New York Nets. I'm showing my age here. That's a that's a callback Starlett it is. Um, how critical is that to mending some of the damage from between the NBA, between China and and kind of putting the best foot forward for both the league and the country. Well, I'm a little torn

on that issue. I'm glad you brought him up. Um. You know, I don't know him personally, but I think, Um, the fact that he labeled what Darryl Moorey brought up and brought to the attention of Americans, Um, he called it a third rail issue and wants to keep it a third rail issue. I think is really a poor UM decision and a poor influence that he's trying to put through. We really need to put this stuff on the front burner and make it part of the national

discussion right now. Mean, what happened in Hong Kong what's happening with the weakers, what's happening in various unfair trade balance issues, UM, quotas, protectionist policies, forced j vs UM, text swaps, and intellectual properties, um, you know, protection issues. These all need to be brought up, talked about buy our legislators, um, by our business leaders. And we need

to construct a proper path forward. Um. The time of sort of putting our ostrich heads in the sand is over and and quite frankly, if we figure out the right way to engage China moving forward, where it's a much more balanced relationship and we're addressing things that are American values and principles in the right way, so we feel good about it, the bilateral relationship is going to

get repaired. In the process. It will be disruptive and a little messy in the interim, but will come out the backside of it in a much better situation where quite frankly, they'll be strategic compel editors and and partners, um, just simply because we both need each other. So Chris, let's talk about Hollywood, uh, and the movie business and the entertainment business, because you have sat right at that

nexus between the US and China. And if the NBA's relationship with China is complicated, I feel like the entertainment industry's relationship with China is ten times more. So. What are the issues? But everyone needs a lot of therapy? Seriously, what break down the key issues for us and how you navigated them? Because you did UM in your former job over at DMG Entertainment. Yeah, well, I mean the

micro issues UM are is varied. As for instance, when we when we get a movie into that market, um our share of that that that receipt from that film is of the overall box office, whereas the global norm is closer to They also have a quota there where only thirty to to maybe thirty five movies internationally which includes Bollywood and Europe in that mix, are allowed into

the market. And then on top of it, they have strict censorship rules, very strict marketing and distribution rules, etcetera, etcetera. UM that all needs to be figured out, and obviously that sits behind a lot of other big macro trade issues. But then there's things that really affect all Americans and just essentially what makes us UM the people that we're proud of, And one of those is our freedom of speech.

And what Senator Ted Cruz and various other members of Congress that brought up is this cross border censorship that has been um such a big issue right now between US and China, whether it's them trying to silence Darryl Morey outside of their borders and talking on behalf of Hong Kong protesters wore a jacket that Tom Cruise is wearing in top Gun, where not only do they want to censor in their country, but they want it censored when it showed in Argentina, Germany or in pure Illinois.

And that's something that we need to address because quite frankly, we need to protect that right of free speech. And in China they can fire wall that from their populace anyway, So they're really imposing on us what they want the rest of the world to think in their narrative. And how do we deal with that right now? Is it just kind of ad hoc? We we it's case by case. You know, it's funny, it's not an ad hoc situation.

If it's one filmmaker and one film studio taking a stand, it will become a sacrificial lamb and almost a whack a mole situation where say Paramount takes a stand and says, no, we're gonna allow the Taiwanese flag on Tom Cruise's jacket for the rest of the world to see. Well, then that slot in those movie slots for Paramount will go

to the Universals and the Disneys, etcetera. It essentially has to be a united front where everybody is on board with what are rules of engagement are with China, where we all abide by those same rules and principles, and we have a leverage situation because they do. They know their consumer wants Hollywood product, they know their consumer wants NBA and sports product out of our country. They know

their consumer wants Starbucks and Apple and Nike. So if we can actually figure out what we're okay with in engaging that country and cultural and commercial exchange and abide by those principles, will have the leverage to be a will make this a much fairer situation. But if it's just left up to one CEO or one studio or one filmmaker or one basketball player, we're just not going to get anywhere. So Chris, I hear you say, we, which is a noble idea. There's not a lot of

we going on in the United States right now. There's a lot of them and a lot of us. And I do wonder who does this ultimately come down to? Is it the industry getting together? Is it those CEOs that you described as is happen have to happen on the federal level from the administration? Does it have to happen via Congress? Like? How does this get if not solved at least with some progress being made? You know,

it's a it's a great question. I'm I'm advising a couple of members on the China Task Force for Congress right now, and they've asked those questions of me and much smarter people than myself, and and some of the things that I come up with is is literally like, look, you guys have certain pressures from your constituents that make you sit up on a soapbox and say Lebron James do this, or David's you know, or you know, Bob

Iger do this. But there are pressures on Lebron and and Bob Iger from investors, shareholders, uh, sponsors that endorse them, etcetera. Everybody's got pressures. Essentially, what you have to do is know where those pressures are coming from and figure out how to abate them on both sides. There are there has to be a ven diagram where the circles have some sort of overlap, and we need to figure where

that is. You know out where that is, and and be okay with the fact that there will be some compromise. There will be human rights issues that we do not agree with in China. There will be political issues we don't agree with in China. There will be national security issues we don't agree with with China. But some of that stuff we're gonna have to agree to disagree with because that market means so much potentially to our GDP two jobs here and to our efforts over time to

influence them through our soft culture. Is soft power of our culture and our aspirational qualities of democracy. So, Chris, he's become known as an expert at negotiations with China. What's the single most important strategy or tactic when negotiating with China? You know what, There's there's probably much more

uh much more depth experts out there than myself. But um, if I just go by a typical rule of engagement, I mean number one is to really understand where they're coming from and what their point of view is and where their pressures are themselves. I mean, the Chinese are human just like us, but they definitely have big issues that they're dealing with. And a lot of the times you're not just dealing with a private sector company or a consumer base or something that seems very relevant to

what we deal with here in the US. A lot of times it's the government. And if you look at the most top layer part of that onion, they need to keep one point four billion people just happy enough that they don't revolt and have another Tienamen square situation.

That means you need to provide them middle class jobs, create that aspiration that they will get into the middle class, and create the messaging that you're continuing to build upon that because they've brought six million out of poverty into the middle class, but there's one point four billion people there. Yeah, alright, Chris, I'm not to make you sing the alma mater, but you are a graduate of Cornell University. You went to

the engineering school. I believe, how on earth did you end up in media and movies in Hollywood and writing? That's not a yeah, Well, it's it's a it's a good question. I actually I saw Kurt Vonneguet speak when

I was at Cornell. He was a physics major, and he said the only reason he was able to write a book is that he had no idea whether he was any good at good or not at writing, whereas all his English majors said, every time they read, you know, wrote three pages, they would look at it and trash it and throw it away. So he finished books simply because he didn't know if he was good or not. So I took a swing at it and and had one that was actually uh. I wrote in college that

Fox bought to make a movie out of it. Never got made, but um, I was always very interested in the writing career. Uh. And I ended up getting into the mail room at William Morris and worked my way up as a literary agent in the movie business and sort of learned the craft of of writing screenplays from great clients that I represented, And then ultimately I just lived a really colorful journey that I fell into the middle of between the US and China for twenty years,

and I thought, wow, that's great fodder. The right that Michael Lewis type of memoir and here I am today. It's just been sort of a lucky chain of events. And that was Chris Fenton, trustee of the US Asia Institute, on his book Feeding the Dragon Inside the trillion dollar Dilemma facing Hollywood, the NBA, and American business. And what's so interesting is it just came out already on reading lists for lots of colleges and business schools across the world.

We need to understand all of us, these tensions between the US and China and what the economic and consumer implications are. Well, you've been listening to Bloomberg business Week Extra, be sure to tune into Bloomberg Business Week Radio Live Monday through Friday, starting at two pm Wall Street Time on Boomberg Radio. I'm Jason Kelly, and this is Bloomberg