A Short Essay on IAC Chairman Barry Diller’s Newest Opinions on AT&T, Comcast and Disney
IAC Chairman Barry Diller has been a favorite source of insights on streaming for me. I wrote back in August as to why:
The short answer is, Diller is a successful executive with both past extraordinary success in legacy media, and who is finding success in DTC after having taken his lumps in digital media.
Diller offers an interesting mix of business insights, hearsay and unvarnished judgment on other executives and businesses. He delivers his opinions with the conviction of someone who has given a lot of thought and analysis to reach his own conclusions. He also is occasionally snarky, which makes him entertaining.
Those opinions were on full display in an interview last Friday with Andrew Ross Sorkin on CNBC’s Squawk Box. The interview marked the opening of his Little Island park off the West Side of Manhattan. The entire interview is paywalled on CNBC.com, but thankfully the CNBC social media team tweeted out the important highlights.
I often quote Diller's snarky, bullish take on Disney as the only media company which “will remain relevant into the future”. So, it was notable that in this interview, he walked back that prediction based on Disney CEO Bob Chapek “pushing” former CEO and current Chairman Bob Iger “to the sidelines” (something Variety reported last week).
Diller’s basic two points are, first, he disagrees with the moral aspects of Chapek’s decision to push out his predecessor, despite the move being business-as-usual in most corporations. Second, he disagrees with the business rationale of the decision: Iger’s understanding of the DTC marketplace, and his courage to move Disney into it, are irreplaceable. So why is he being sidelined? It is a bearish take on Chapek’s decision-making and DTC strategy that emerges when questions about the Chapek-led reorganization are emerging publicly, too.
Diller was notably bullish on Comcast’s strategy in streaming because they are “the only ones with both feet on both sides” of the streaming marketplace with X1 software and Peacock.
He makes an interesting point about Comcast having “a route to the sea… a route to all ports”. He doesn’t explain the analogy in detail, leaving the audience to guess the reference. The implication is Comcast is better off than a ViacomCBS because its X1 software enables it to take a share of other streaming services’ success (a model similar to Amazon Fire’s and Roku’s share of advertising and/or subscription revenues), while also offering an ad-supported streaming service, allowing it to avoid the limits of subscription-only models.
He appears to be complimenting Comcast for successfully managing risk in the emerging DTC marketplace: it is betting on broadband (profitable), betting on ad-supported streaming (ad sales is a strength of NBCU and Comcast), and moderate content spend ($2B) relative to Disney ($14B-$16B) Netflix ($17B) and DiscoMax ($20B). I have long argued that Comcast values its broadband business more than Peacock, and sees Peacock as a tactical asset in support of that business. Diller offers a nuanced, alternative take on that perspective.
By implication, he thinks ViacomCBS is more “land-locked” (my term, not his) because it is all-on on streaming, which is expensive and is not yet profitable, if it ever will be. That is an implicitly bearish take on Paramount+ and Pluto TV.
Last, Diller had some thoughts on the merger of WarnerMedia and Discovery, calling it “the great escape” for both WarnerMedia and AT&T, and praising “the scrappy Mr. Zaslav” as the right executive to lead it.
Diller’s perspective is interesting for how it looks at AT&T’s purchase and then sale of WarnerMedia through the lens of monopoly. AT&T may no longer be a monopoly, but it still has the power to acquire Time Warner’s assets “with an idea, but certainly not… fully fledged” of what it was going to do with them. The outcome was “hurting Time Warner assets”.
That said, it is notable that Diller’s example of poor management is the “incredible insult” of how AT&T management treated WarnerMedia News and Sports Chairman Jeff Zucker, and how they drove out talented WarnerMedia employees. It is an odd example of what AT&T did wrong, and the second story of victimhood of media executives he knows (the first one being Iger, above).
It is one of two critiques in the interview that reflect a bias against the perceived wrongdoings against those executives he knows and admires (Iger, Zucker). It suggests that, to Diller, how these companies incentivize and reward the talent with the most valuable skillsets to stay and contribute is indicative of the future success of a streaming media service. It may be as indicative to Diller as the key attributes of a successful media company in 2021 (The PARQOR Hypothesis).
Given that Disney has been the embodiment of these key attributes (BEADS acronym), it is particularly notable Diller believes Disney post-Robert Iger will face challenges because it is not understanding the value of Iger’s talent. He is implying that under Chapek, Disney is on a path to be demoted to caddy “on a golf course it will never play”.
That is a surprisingly bearish take on Disney’s future from one of its biggest bull supporters, to date. The question is whether it is a reflection of Diller’s favorable bias towards Robert Iger, or whether its a bearish signal for Disney worth keeping an eye on.
My two cents is, as I argued in February, it is ok to apply a skeptical lens to Disney’s ongoing evolution in the streaming era because it helps to understand the moving pieces of the business better. Few understand those moving pieces better than Barry Diller, and he sounds unusually skeptical about Disney post-Robert Iger.