Welcome to Strictly Business, Variety's weekly podcast featuring conversations with industry leaders about the business of media and entertainment. I'm Cynthia Lyttleton, co editor in chief of Variety. This is a special bonus episode of Strictly Business for April twenty second, twenty twenty five. As this week has already seen two days of wild swings in US stock markets, I reached out to industry veteran Tom Rogers to help make sense
of what's happening. That interview is followed by a discussion with Variety Business editor Todd Spangler on why Google and Meta are both in the thick of antitrust court fights in Washington. That's all coming up after this break, and we're back with a bonus episode of varieties Strictly Business podcast for April twenty second, twenty twenty five. Tom Rogers is the definition of a media industry insider. He's a founder of CNBC. He's been in the C suites at NBC,
Universal and TiVo. He's a veteran marketwatcher who is now executive chairman of Playgrid, a cloud AI company. We started the week off with another nail bider of a trading frame and big swings for the Dow and NASDAC on Monday. Here Rogers ways in on how to navigate this unprecedented volatility, and he offers his insight as to how this kind of macroeconomic storm can affect the day to day decision
making for leaders of large enterprises. Tom Rogers, thank you for joining me, Thank you for helping us sort out what is going on in equities markets right now.
Thanks for having me.
Let me just start with can can you think of any analogous time to the last couple of weeks we've had since the faithful pen strokes of April second.
Well, certainly there's been other times of market volatility, some greater than this, but I can't think of any other time when it was self inflicted by the United States government taking shot after shot at the US equity market and an effort to do something that very few people can make any sense of and is clearly having all kinds of negative consequences on not only the equity markets, but the bond markets and the currency markets.
Tom, you've been in big publicly traded companies at the high levels, NBC, Universal, TVO. What does this level of volatility do sort of how do they feel it immediately?
Well, immediate and what may flow from all this or obviously two different things. We're seeing. Equity prices clearly get hit. The stock market itself being volatile in it does not necessarily impact day to day life on main street, although it's gotten to the point that as some are saying, it's no longer what's happening to your four O one K, it's what's happening to your one O one K, So
clearly there are some main street implications there. Bond market is obviously getting hit, meaning interest on rates on bonds are going up, the dollar is weakening, and the currency market is having the opposite effect, which is leading people to believe that really there's something going on in the world markets, which is saying, hey, if you're going to invest in the United States, you're going to need more of a risk premium. That there's instability in the United States,
and no one's quite sure where this is going. So those are kind of unusual variables to be playing out, to say the leavest, when you're in a big company and you're seeing this and there is a real prospect that we are dealing with either a recession or maybe worse, stagflation, where you have stagnant or recessionary economic issues and inflation, that gets scary because that means slow down, That means earnings are going to be lower, and that's when people
start drawing off plans for belt tightening, which generally means layoffs. We're not seeing that on a major scale yet, but obviously a recession means greater unemployment than that gets scary for people.
We're talking here on Monday at just at one o'clock specific just as the markets are wrapping up, the Nasdaq is down four hundred and fifteen points, the Dow Jones is down nine hundred and seventy one points. If you're at the top of the Lew Wasserman Tower right now trying to make decisions for Universal Pictures, long term television, long term theme parks, how does all of this affect that process.
You're dealing with a lot of uncertainty. Uncertainty makes it very difficult to plan. I've noticed on some earnings calls you're not hearing people making forecasts of what their next quarter is the life going to be like, but scenarios of what it might be like under various circumstances, and you hear multiple scenarios well once people are not providing projections or forecasts because they don't have enough clarity, and they're talking about what it might be under various scenarios.
They're basically saying, this is clouding the pictures significantly enough that we don't have a real view of where everything may be going, and that effects all kinds of planning, expenditures, cap aacs, etc. Going forward.
In a bloodbath like what we've seen the last couple of weeks, nobody is spared. But have you seen some stocks do better than others? Are any of the magnificent seven tech stalks big enough to buck this downturn?
I think Netflix may be a very interesting and unique case. Not only are its fundamentals going so well, not only
here but around the world. And not only is it a service that is less not about manufacturing and therefore may not be in the im mediate sites of a trade war, but it is something that has built up a lot of local following in its key markets with its local productions and all, and therefore more integrated into the local media fabric, and therefore may not be something that that other governments want to touch in terms of
doing things to raise its price. So they were pretty clear that they didn't see anything given what was going on now, that was going to fundamentally undermine where their financial forecast may go over the course of the year, and in fact gave a forecast, not scenarios. I don't think we're going to hear that from a lot of other companies.
If your Disney or Universal, are you nervous about these reports that Europeans and Asians and other people are you know that would have otherwise come to America planned a big trip to come to Disneyland or Disney World or one of the Universal theme parks, They're going to explore other places that are not America.
Theme parks in a recession are going to get hit. And it's not just the international travel you're mentioning. You know, a lot of those parks are based on domestic attendance. In a recession, people cut back, They cut back on big trips and discretionary family expenditures, and so that's a real point of vulnerability. At the same time, advertising generally for media companies is a big point of vulnerability. Disney and NBC Universal both obviously have that vulnerability as well.
So you compare that to a Netflix, where you know, maybe four percent of its revenue is advertising today, even though that's a big growth area for it going forward, that really needs to be a catalyst for its continued growth. But today it's four percent of its revenue. If it got hit to the tune of thirty percent, you're talking
about one percent of its revenue. On the other hand, when you're talking about Disney, the combination of its steam parts and its advertising revenue, you're somewhere between forty five and fifty percent of the revenue of a company being vulnerable. That's a very different place used to be in a recession.
Tom, What are you going to be watching for the rest of this week?
The administration has tried to calm the waters as these as the markets are volatile, but I'm not quite sure what else it can say unless it totally backs off, which I don't see, are going to be terribly calming. And you combine that with the increased rhetoric about removing FED chair Powell from his position and doing something to
undermine the independence of the FED. And unless that rhetoric backs off, which I don't think is very likely either, there's not a lot of coming words that can be said. They off ramp that I think may save the administration and with it, save the markets from this ongoing turmoil.
But it's not going to be near term. As a Supreme Court ultimately ruling that the President does not have the power on tariffs that he has said he has, it may well be that they find what he has done here as beyond the authority of the executive But again that's not near terms. So I think we're in for continued volatility. I don't think it's clear yet that we're in for a recession, but the markets are clearly roiled, and I don't think anything is going to combat for the near term.
Tom, thank you so much for your time in helping us sort all this out.
Thanks for having me.
Okay, so there are two big federal antitrust trials going on right now, ones in DC, ones in Virginia might as well be DC. Ones involving Google, and one's involving Meta. Let's start with the one that's involving Google, because there was a ruling in this trial last week. Can you break it down for us in terms of tell us the scope of what they're fighting over right.
Now, so the judge in this case found that Google has a monopoly and has worked to illegally preserve that monopoly in two areas. It's the Internet ad server market and the Internet ad exchange market. Now, these are two pieces that are really the lifeblood of Internet advertising. And what the judge fan was that Google unlawfully tied it's ad server and ad exchange together with locking customers in essentially so they were forced to use these tools. So
that's illegal. You know, that violates the Sherman Act. So the next stage, and this is going to be for the judge to determine potential remedies.
So this is not all of Google's advertising business. This is targeting a component of it.
Right, This is the networks that they used to buy and sell ads on websites across the Internet. And so what the judge said was, look, this didn't harm just competitors. This harmed the publisher customers that used Googles tools and were forced to use Google's tools, according to the ruling, and ultimately consumers of information on the open Internet.
In terms of the significance of an ad server and the ad networks, Google's superpower in digital advertising is being able to get gazillion ads to the right spots at the right time, and when you think about the vastness of the Internet, that's a lot harder than it sounds, am I.
Right, Yes, they're the match maker essentially.
Right.
They run a network and exchange lets people buy and sell ads on multiple websites. Now, as you point out, this is just a portion of Google's overall business, where the big chunk is Internet search. And here's another significant point to make. A different federal court in August twenty twenty four found that Google had a monopoly in Internet search and the company broke the law by doing these
multi billion dollar deals to make it. Search engine did a fault on web browser and smartphones, including in these very large deals with that Apple and Samsung. So that's been decided and remedies in that case are yet to be determined.
So Google is just waiting for all kinds of shoes to drop in DC.
Yes, they're in the antitrust crossers. Let me just say that. You know, Google, for its part, has said, look, this is the government trying to pick winners and losers, and look, people use our products because we have the best products on the market. And you know. Oh, by the way, technology moves faster than the wheels of the legal system turn anyway, So technology will make all of this mood in a couple of years anyway. Yes, is essentially what their argument.
Is, and this is also the crux of the Meta case as well. The Federal Trade Commission pursuing the argument that Meta has used acquisitions, in particular of Instagram and WhatsApp to platform two services that are no stranger to people in Hollywood, that buying those essentially was designed to
squash competition. It does seem like what has been standard operating procedure for tech for a long time, a hot startup with a hot patent, or that whole paradigm of how business has operated for decades in Silicon Valley seems rather suddenly under threat from DC regulators.
Well, I think there's been a desire and political capital, frankly, for many years to do something about the tremendous power that these tech companies have amassed. So, you know, in the me A case, basically the FTC is saying, hey, these acquisitions that you guys made going on now more than ten years ago were anti competitive and designed to knock out a rival or a potential rival, and Metta is saying, hey, you can't just decide that you now think that's not okay.
No vaccas right.
Their position is that like if no acquisition is ever final, you know, that really would insert a lot of uncertainty into the market. So that's their position, and they do have a case there. The other thing that's squishy about the government's case against Meta here is they're trying to prove hypothetical what would have happened if Mark Zuckerberg had
not decided to buy Instagram for a billion dollars. Just in the legal technicalities here, they're trying to say that Meta has a monopoly in social networks, and you know Meta's response to that. Again, to this point of technology moves pretty fast, and there's a whole set of competitors that didn't even exist when this case was in the earliest stages. This was filled in twenty twenty. Now you know, YouTube and TikTok are huge competitors to Instagram and they
have evidence to show that. So there is, again there's this political capital on both the left and the right to do something to rein in the power. How they get there and their viewpoint on what the harm actually is a little bit different, but you know, there is a consensus that these big tech companies are too big and something should be done about it.
Now. Of course, it was one of the big stories coming out of President Trump's inauguration in January. You know, you couldn't help, but notice there was quite a contingent of Silicon Valley CEOs that attended the inauguration, and it was the most symbolic effort to kind of cozy up to the new administration after some strained times between the
major tech platforms with President Trump. Do you think that those that showed up at the inauguration in January, do you think that some of those thought that writing some checks and being there and applauding the new president would change the dynamic for them in some of these cases.
I don't know if they specifically were hoping that this
would make these anti trust actions go away. I mean, I'm not sure that that was anyone's expectation, but sure they thought that, you know, look, careering favor with the person in power, especially a personality like Donald Trump who trades on you know, cachet, you know, this would flatter him and you know, get him to kind of be on her side and some of these agreements and perhaps reach settlements in various matters that would be favorable to them.
I sure think that was part of the expectation. And in any case, you know, like, how could it hurt, except you know, the optics made it look like big Tech was suddenly bending the knee to salute President Trump and in his victory back into the White House.
All of this focus on size and monopoly power would seem to raise interesting questions for TikTok. As we know, the Trump administration right now is busily trying to find a US buyer for the US component of TikTok. With all of this scrutiny, it certainly would suggest that TikTok is not going to go to one of the existing Magnificent seven stocks as Wall Street calls them these days.
I mean, there had been chatter about Amazon throwing its hat into the ring for potentially buying a piece of TikTok. And another point, you know, Oracle, it could still be in the running. Oracle is not quite in the same space as that we've been talking about, but still and Microsoft has at one point or another expressed interest in TikTok. I mean, it's a valuable asset. But yeah, I don't think Mark Zuckerberg has any illusions that they would give the green lights to meta buying TikTok.
No shortage of stuff for us to cover. Todd, thank you as always for being on the case. Thanks for listening. Be sure to leave us a review at the podcast platform of your choice. We love to hear from listeners. Stay tuned on Wednesday for our regular episode. This week, we'll hear from producer Wheelhouse Entertainment President Courtney White,