THB #389: Netflix and Dill(er)

Very few people know as much as Barry Diller about the film and television industry from 1964 - 2001. An amazing run that hit the wall when he tried to built a network of local stations that would combine local programming and national programming… kind of like starting another new network, but from the Owned & Operated stations up.

Weirdly, I happen to have worked at the fledgling Fox Network when it launched in New York in 1986 and had friends at the launching pad for Diller’s attempted network, WAMI (in Miami), in the late 90s. Ironically, the larger ambition of Fox was paced more slowly and while there were bumps, it was allowed a lot of space for Diller to build. The WAMI effort, as described to me from the inside at the time, was a bit more manic. I know for sure that in the year I was at the nascent Fox, I saw a lot more Rupert Murdoch in the building than the people in Miami saw Diller, who had a lot of big balls in the air. Many of his endeavors were big successes.

Diller basically got out of the media business in 2001, selling USA Networks and all connected assets to Vivendi (which had just purchased Universal from Seagram’s and was on its way to acquiring NBC).

22 years later, Diller calls in to talk to Kara Swisher from the yacht a couple of times a year, opining on the industry.

Listening to the latest podcast with Swisher and Diller, I found myself concerned that Diller, who says things that get reported on as though the Pope spoke, might not want these chats to be recorded anymore. There was a lot more hedging than I have ever heard from him.

When it came to an area that directly affects his business, which includes a major stake in publishing, he was dead on, discussing AI. His feeling is that legislation is too slow and too complicated a route to salvation and that the primary tool to push the genie back in the bottle will be litigation.

“If you create something, you have rights to it. And other people cannot infringe those rights. The copyright law as written must be changed. It's unlikely Congress will do it, although I think they may support it. But it will probably come from litigation. And there is a fairly fast path to that. It may be something that you could resolve within a year. At the base of all of this is something called fair use, which is inside the copyright law that says, well, you can't take anybody's stuff.”

“You have to get rid of fair use and you have to narrow the copyright law to say that no engine, no LLM, no generative AI system, can infringe upon your ownership of what you create and publish. Full stop.”

I disagree with Diller that getting rid of “fair use” altogether is a good choice. In the current world, a reasonable amount of “fair use” is fundamental to the online world and certainly to media and documentaries. But as regards AI, yes. That is what is needed. And for what it’s worth, it is what should be memorialized in the settlement of industry strikes.

But then, he gets around to the film and television industry and Diller is stuck, unable to get past an idea that he has had stuck in his head for quite a while now. Netflix, which I don’t ever dispute has been very successful, is like some kind of golden idol.

Diller is firmly in the “Netflix already won” camp, which I have found inherently ridiculous since I first heard it insistently from Jeffrey Katzenberg about a decade ago. The idea that any company will “win” Streaming is an anachronism, in and of itself, thinking of the media business as though it was still a competition to be won each year between 3 or 4 broadcast networks.

“There's an evil genius of Netflix that is almost incomprehensible to understand, which is Netflix obviously started all this. Netflix spent so much. Netflix induced, I would say to some degree, seduced. all these companies to go into streaming, to lose huge amounts of money to try and build a competitive streaming service.”

I understand what he is saying and I have been writing for years that the pursuit of the $18 billion a year content spend, matching Netflix, was a suicidal notion. This has actually become the truth for Netflix as well, as they have cut their content spend for each of the last few years.

The problem is, Diller leaves out the key element that has nothing to do with Netflix’s evil genius. (He later makes clear that he doesn’t literally see the company or its leaders as evil.)

Wall Street.