On with Kara Swisher - Peter Chernin on ‘Backrooms,’ Sequel Fatigue, and Hollywood Mergers

Episode Date: June 15, 2026

The low-budget horror film ‘Backrooms’ is the surprise hit of the summer so far, netting more than $200 million globally in its leap from YouTube to the big screen. But among the film’s producers is a Hollywood heavyweight: Peter Chernin. As the former president and COO of News Corp. and chairman and CEO of the Fox Group, Peter greenlit huge hits like “Titanic” and “Avatar,” before moving on to found both North Road and The Chernin Group. Kara and Peter talk about why “Backrooms” appealed to young audiences, how Hollywood has played it too safe over the last decade, and what it needs to do to get back to making the kinds of movies people want to see. They also talk about how AI could impact the movie-making business and why he’s not opposed to Paramount’s merger with Warner Bros. Discovery.  A note to listeners: This episode was recorded before the Justice Department approved Paramount’s acquisition of Warner Bros. Discovery late Friday.  Questions? Comments? Email us at [e-mail] or find us on YouTube, Instagram, TikTok, Threads, and Bluesky @onwithkaraswisher. Learn more about your ad choices. Visit podcastchoices.com/adchoices

I have no legacy. I'll be dead. That'll be that. Sir, you greenlit Titanic and Avatar. You did. Hi, everyone, from New York Magazine and the Vox Media Podcast Network. This is on with Kara Swisher, and I'm Kara Swisher. The indie horror movie Backrooms is one of the big surprise hits of the summer. The film is directed by 20-year-old YouTube creator Kane Parsons. It's so far grossed more than $135 million domestically and more than $200 million worldwide. For context, it had an opening weekend on par with the last Star Wars installment, despite costing a fraction of the price to make.

But behind backrooms is someone with a well-established reputation for making things people want to see, Peter Ternan. He's one of the producers on the film, and his production studio, Ternan Entertainment, co-financed the film. Ternan was Rupert's longtime Second in Command at News Corp, which is where I met him a long time ago. He was also the head of Fox movie and TV divisions, where he grew. greenlit major blockbusters like Titanic and Avatar, you might have heard of them. In 2010, he founded his own private equity firm, the Churnin Group, to invest in digital media companies. He also recently sold the global content studio he founded North Road to the French entertainment

giant Media Wan. I love Peter Churnan. I'm not going to pretend. I always used to go to him because he always told it to me straight, even it was not in his interest. He was always very smart and very honest about the entertainment industry. of course I was always wary because of the Murdoch Park, but he was very different, actually, very liberal in his politics, and at the same time was always focused on quality and just smarts.

And I just think when he went into digital media, I thought he did it right. I think a lot of Hollywood people didn't. And he also makes the Planet of the Apes movies, which I love. Anyway, he's just a really sharp person, and he really is willing to try things, and I really appreciate that. All right, let's get to my conversation with Peter Chernin. Our expert question comes from Ari Shapiro, co-host of the CNN. and Culture Podcast, Engagement Party. Don't go anywhere.

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Cohere.com slash box. Peter Chernin, thanks for coming on on. It's my pleasure. How you doing? Good. Let's start with what's happening now. Congrats on the success of Backrooms. It's now 824's highest grossing domestic film ever. They co-finance the film alongside Churnin Entertainment. And the film is directed by Kane Parsons. He was a teenager when you greenlit the movie. Talk a little bit about Churnin Entertainment, maybe for people who don't know what you've been up to

because it's been a wide range of things. And what stood out to you about this film? Because you've done lots and lots of traditional films. I mean, Planet of the Apes, things like that. So Churnin Entertainment is a 15-year-old film and television production company, ranging from Planet of the Apes to New Girl to Ford v. Ferrar, etc. But, you know, it's interesting. When I did Planet of the Apes People came to me immediate. It was the first movie we ever produced and said, you should brand the company, you should become the next action producer.

You should run the next big. And I said, yeah, that's a good idea, but I don't want to. I want to make a wide range of movies. You know, the next movie we made was a little searchlight movie called The Drop. We did a family comedy. We did some animated movies. And I've always been interested in doing a wide range of content. and churnan entertainment which i guess at this point is produced i know 35 movies um has done a wide range of things um you know backrooms is by the way is just a continuation of a wide range of interests and you know i was interested i was attracted to the idea of a really young filmmaker i was attracted to the idea of a piece of very organic youtube content um and It just seemed cool to me.

So talk about the YouTube content, because you had been, I recall you made me go visit an anime company that was doing a bunch of stuff and then some other things, and you had been dabbling in some of the other investments you made during the most recent years

after you left Fox. But initially, I don't recall you being reticent about YouTube stuff, but you were sort of watching it and putting little bets down all over the place. I recall at the time, everyone was sort of looking for that YouTube

that was going to leap from YouTube to the big screen? Yeah, I would say, so first of all, in terms of our early investments, we were never particularly focused on the leap from YouTube to the big screen. What I have felt is that over time, YouTube, and to some degree, TikTok, would serve as the incubator for a next generation of talent, you know, similar in some ways to the way Roger Corman did 40 years ago,

to the way MTV music videos did 25 years ago. You know, you have a bunch of very smart, talented young people making stuff. You know, like any other thing in life, half it will be garbage, half it'll be interesting, and 2% of it will be extraordinary. And I've consistently been interested in what that 2% is going to look like. I think a lot of sometimes Hollywood is just good guessing, right? It's like making the right choice. But explain to me what appealed to you about this particular.

project in Kane himself? I would say it's certainly good guessing, like anything else in life. But, you know, I guess you look at these things in two ways. One is you just look at the size of the audience and the engagement of the audience, which was quite extraordinary. But I felt from the very beginning that there was, what Kane did, that in my mind was so impressive. And he did it as a, originally did as a 15-year-old,

is he took, originally Backrooms was a meme on 4chan. It was one photograph of, I believe, a furniture warehouse being deconstructed. And that was posted on Fortran. That became something people talked about. When he was 15 years old, Kane had a vision of turning that into a science fiction storytelling mode. And I found that to be really impressive because I think that he took something which was just a meme and a meme in some ways for alienation, for, you know, alternate universes and turn that into a storytelling exercise. And I thought the ways he did that was extremely impressive, extremely, extremely

impressive. And he, you know, he did all those early, he started doing those early YouTube backroom's videos when he was 15, you know, and we optioned it and made a deal with him, I think, when he was 17 or 18. But, you know, but I think the other thing which Bear is saying is, you know, like most things Hollywood, every single meeting in Hollywood over the last 10 days has been Find Me My YouTuber. That's not the smartest thing on earth.

You know, it's no difference in saying, find me a sequel to something else. You know, it's worth noting we spent three years on this project. You know, we spent a period of time chasing, we spent a long time working on the script, we spent another year on production,

and, you know, it's not just saying bet on a YouTuber, It's not just saying it's betting on a very specific piece of content and bending on a very specific piece of talent. A person, a particular person, which is a story. You use the word storytelling, which I think gets lost in a lot of it. Because some of this can be very trendy and very ephemeral like many memes can be, right? Yes, and I think clearly our view was we were not betting on trendiness. Look, I said very clearly you're betting on a piece of IP, but you're also betting on the ability to convert that into a different medium.

and a storyteller, a talented individual is capable of doing that. And I think in some ways, in my opinion, our most significant contribution to this film, because this is not a case of we carried, this guy is extraordinarily talented, and I believe has an unmatched future ahead of him. What I think we did, which I'm very proud of,

is figured out ways to support him without in any way compromising usurping his vision. So, you know, we originally got him a very talented producer and production company, Chris Ferguson. And I think Chris was meaningful. And then we brought on Osgood Perkins as a producer as an extremely talented director. And I think Osgood was really sensitive about how to stand next to Kane without in any way imprinting his own creative. on him, just as there is support. There is someone who could help.

You know, he was 19 years old the time he's making this. And I think we were immodestly sensitive in understanding how to manage that process. So when you said, if everyone's like this week,

all the meetings are how do we find a YouTuber? What is the problem with that? Because, you know, YouTube's obviously been popular for a while now. I mean, my kids, my older kids use it as television. It's television to them.

It's the way they consume content. Even if it's, you know, a PBS, front line. You know, it's, look, the analog is, after a big book has been a hit, go find me a novelist. You know, it means nothing. It's meaningless. You know, 89, 95, 98% of all novels have no relevance for film. Ninety-eight percent of what's on YouTube, 99.9% has no relevance. And it's just a simplistic jump on the bandwagon. Somebody else was successful with this, find me my success. And, you know, like anything in life, you need to be discerning, you need to be discriminating.

need to decide which ones are relevant underlying material, which is the relevant talent, and it's going to be very rare that that happens. You know, it reminds me a little bit. I interviewed the creators of heated rivalry, and a lot of people in Hollywood sort of turned it down or was sort of cheapening them. But, of course, people in Hollywood hadn't been aware of the genre of romantic, the romantic fantasy book. You know, Hollywood does a number of things that are very smart. Look, it's like no other, it's like any other business.

do a lot of smart things, they do a lot of stupid things. You know, the smart people are every single thing is an individual bet, and you better be very discerning about that bet. The less smart people or people who just want to follow whatever has been previously successful and who think that because something was pretty successful, the next thing will be, and or who are unwilling to take chances on original visions. So Backroom has been, of course, a big hit with young people. One audience survey found that during the film's first weekend in theaters, close to 90% of ticket buyers were under 35 years old. Talk about that sort of bet that people don't want to stare at the screens. They want to actually physically, especially young people, go out to the movies.

Well, I guess I would say two things. One is clearly, to the degree any of us can remember being young, the only thing you want to do is get out of the house and get away from your parents and get someplace with your friends, along with your friends, et cetera. And so movie theater has always historically been a good place to do that. So it's, in my mind, silliness to somehow assume that five, eight years ago, young people woke up and said, I want to go home and have family dinner with my parents or, you know, that's never going to happen. I think what happened, which made people think this is, you know, Hollywood for decades made a wide range of movies for young people. They made youth comedies. They made horror movies. They made

don't be action movies aimed at young people. They made movies with young stars. And I think that what has happened over the last five years is they stopped making most of those things. You see very few comedies. You see very few youth comedies. No American pie anyway. Yeah, there's none of that stuff.

And so it's a self-fulfilling prophecy. They're not going to come. And I think the second thing that happened is they came to believe that it is fair to say that one of the roles of movie theaters, particularly in a world of ubiquitous television, ubiquitous screens, has been an opportunity to see big effects on a big screen, movies you mentioned. The problem with that is most of those big effects movies have been sequels and franchise movies,

and most of those original franchises are now 20, 25, 30, in the case of Star Wars, 50 years old. And it's a little bit, in my mind, fallacious, to assume, that, the best product for young people are remakes and sequels to franchises that were originated before they were born. And I think that's one of the things that's really resonated with backrooms is that this feels, there's a sense of ownership of young people. This is our IP. This is our content. This is something that we built into success on YouTube that was made for us, was made by people our own age, et cetera. And, you know, you can

Compared to, look, I don't mean to say anything. Compared to Star Wars, which came out the week before, which is 50-year-old IP, you know. Right, which shouldn't do as well. But one of the things that I've noticed, and I've mentioned this many times when people push back against movies was original horror movies are having a real moment now.

Last year, sinners and weapons were huge box office hits. Now we have backrooms and also Obsession. That's another film helmed by a young director who made the leap from YouTube. Talk about the genre, because it's not just comedy. Like you mentioned the other genres, horror is really seeing something much stronger. And I have a feeling it's because they're original stories. I don't necessarily think it's because it's horror.

I think it's because they're original in some fashion. And as opposed to say something that feels like it was made by AI, there's nothing about weapons or sinners or these movies that feels AI in any way. Yeah, you know, it's interesting if you're inside Hollywood a year and a half ago, people were really worried about horror. Horror had gone through a really bad year, sort of a year and a half ago or so. How many saws can you do?

Yeah, go ahead. So that I wouldn't say that this is all of a sudden. I think your point is correct, which they feel original. You know, they are, these particular movies have very young stars, well, not, Backrooms doesn't have young stars, but is a young director. But obsession clearly has young stars, or they feel original.

You know, and so, but look, I think it's a mistake. Human beings are desperate to be entertained. The major forms of entertainment have been around for centuries because they are appealing horror, comedy, tragedy. Right. It's not the genre is what you're saying. Yeah. And that, you know, people don't make comedies right now.

There are so few comedies being made, both in movies and on television. I don't get that at all. It's not as all of a sudden human beings woke up and said, said, I don't want to laugh anymore, they become self-fulfilling prophecies, which is people get nervous, they stop making them, and then all of a sudden everybody says, well, they don't work. There's point to a comedy that works right now. And a lot of the ones who made those are now older, right? They're a lot older.

And some of them seem to be going on streaming, whether, and Seth Rogen is older now, but, you know, he was an early person to do a lot of those comedies that did Well, Sandler. But the truth is, there aren't that many comedies on streaming either. Yeah, yeah, yeah, that's absolutely true. In a recent interview with Matt Bellany, you said the key to success is to be, quote, relentlessly focused on where the next generation is coming from. And right now, that's obviously YouTube and TikTok shorts. Now, of course, as you said, there's a rushed sign young content creators. How do you think the next generation's media habits will change filmmaking and storytelling?

I'm of the mind, because I have two kids in this age range, that it doesn't. They like a good story. I just don't, I don't see it that different. It may be slightly different. and it's sort of like, I don't know, they like hip hop, right? It's just a different version of different things. Yeah, I would say that, first of foremost, I'm inclined to agree with you, you know, which is people want good stories.

You know, there will be some, if you were to look at the evolution of movies over the last 50 years, there's certainly been changes in the vocabulary of storytelling. But the movies that are super successful have great stories, great characters, you care deeply better, you're moved, you're excited, you laugh, whatever those things are. They may be slightly faster cut. There's clearly different music in the background. There's way higher quality, special effects, et cetera. So there are certainly different storytelling vocabulary inside of them.

But fundamentally, you know, human beings are human beings. They want to be entertained. They want to be moved. They want to be loved. They want to be excited, et cetera. So I don't think that will change. I do think, look, I guess I can say this because I did step away from one of those jobs when I was getting to a, you know,

The infrastructure of Hollywood is too old. You know, people are, and by the way, I assume a lot of friends of mine will be unhappy to hear this, but, you know, these studios are, for the most part, run by people who are too old, you know. And, you know, going back forever, Irving Thalberg was in his 20s when he was doing this, but people were in their 30s and 40s. It's a peak of their careers. You know, I ran 20th Century Fox in my early 40s, and I certainly didn't. feel young at the time, I felt like.

But, you know, to the degree that, by the way, on all movies, the audience is still younger, because those are the people who want to go out, to the degree you are separated from the audience by 20, 30, 40 plus years. You're just not going to know. You're just not going to know. You're also sort of heavy. So the disconnect is that. I mean, welcome to Washington.

Come visit Washington. It's the same thing. But no one wants to make bad movies. Is it just age or is it not using these formats or not under the executives, charge. So it's certainly not just age him. You know, my very first job in Hollywood, I worked for a very well-known television producer who was an incredible micromanager. And probably 85% of what he did was really valuable and great. And 15% of what he did was really destructive. And I would watch that 15% ruin things. And it was a really valuable lesson for me because it made me realize these things are

so fragile. It's so remarkably difficult to make something great. There are literally millions of decisions from, and you know, you can have things with a great script and the wrong director, or a great script, the right director, and there's no chemistry in the cast, or there's

all sorts of reasons. You can have something that's not great, and all of a sudden the right piece in music transforms that there are, you know, insanely complex things to put together with lots of nuances. And there's all sorts of reasons why they don't turn out.

You're right to say people set out to make great things, but it's really hard to make great things. So when you think about yourself, like, as you said, you did this in your 40s, how do you then stay connected in some way where you're clocking the stuff? Because you could easily make, you know, the basic movie. You could do this in your sleep, right? Presumably a lot of the movies, since you've done so many. How do you continue to change, especially when these studios are run by people who are quite, you know, it's the same thing with media.

You know I've always sort of been agitating that. I'm like, you're not understanding, especially when I was younger, what was happening here. But how do you stay cognizant of what's happening, especially with this movie? Is there a moment when you would have missed back rooms? There's plenty of moments, yeah. Yeah. Any number of moments where I'll miss any number of things. You know, it's not like I'm so wonderful or somehow better or different than everybody else.

I think that, you know, what I used to say when I was running Fox, and I think it's still true, is that ultimately those jobs as an executive end or producer, is your job is to have some weird affinity for the zeitgeist of the world's public two years in advance. That's your job. You're supposed to guess what they're going to be interested in two years in advance from now. And I just say, if you were to design a job to isolate someone for you. the world's public. You would design the job of a studio head. You work behind gates. You generally live behind gates. You fly privately. The lunch is delicious. You're so isolated from people. And I think you need to do two things, which is you need to just force yourself, both force yourself

and I guess instinctively be relentlessly curious. Just, you know, you've got to be looking at TikTok, not as a study project, but just because you're interested. What's going on? What's this about? You've got to be looking at YouTube. You just have to be curious, and you've got to be relentlessly curious.

And then you have to surround yourself with as many young people as you can. And let me be really clear. Backrooms was not found by me at the company. It was found by a young executive named Corey Adelson who brought it to me. And I said yes to it, but she deserves the credit for her.

What did she say that convinced you? She said it's really, cool, read this. And, you know, I, she has real credibility with me, and I'm interested in those opinions. And, you know, I think the key is to both have young people trust them and be interested in what they have to say. I think it's the job of young people to force you to pay attention. You know, I used to say, again, I've always said to the people who work for me, if I pass on something that's good, that's your fault, not mine. And it's your fault for not convincing me and you need to do whatever it takes to force me to pay attention, to convince me.

And I used to say, you know, go burn down my car in the parking lot if that's what it takes. But you have to do whatever it takes to convince me that this is right because I'm by definition obtuse, out of touch, all those things. And, you know, you want to create that environment where you have aggressive, opinionated, passionate young people and somehow you don't put up enough stupid barriers so that you're not capable of listening to them. We'll be back in a minute. Support for this show comes from Delete Me. Have you ever thought I should really be doing something to protect myself from stalkers, scammers, and hackers, but you're not sure what.

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Download the free report at go-teleport.com slash on with Kara. Let's talk about the state of Hollywood broadly then, because as you and I know, since covering this, the slowness of the penny dropping about digital has been glacial. and everything else. So every episode we get an expert question from an outsider. Here's yours. Hey, Peter Chernin. I'm Ari Shapiro. I'm one of the hosts of the CNN podcast Engagement Party. And here's my question for you. I know Hollywood is going to try to do everything it can to replicate the success of obsession and back rooms, these two horror movies that have brought people back into the theaters, blown expectations out of the water and just dominated the movie-going experience so far this

summer. My question is, what do you think are the wrong lessons that Hollywood will reach. What do you think are the mistakes that Hollywood will make as it tries to chase the tale of these two movies that have been such runaway hits? Thanks. Thank you, Ari. Look, the lesson is what I just said, which is go find the next YouTuber, go buy something off YouTube. It's, you know, it has no relevance. Your job every day is to find something great, exciting, new, innovative, etc. You know, look, I would say, and you can understand this, character, managing innovation is an extraordinarily complicated thing, equally complicated for people in the tech world. Yeah. You know, everybody, you know, it's very easy to come up and say, Hollywood's old-fashioned, I touch the tech world.

I don't know. You know, how many tech companies can you point to that have innovated repeatedly over a 20, 25-year period? they are most of them built off of one extraordinary innovation. And then they go on, you know, it's no accident that there are very few companies in the world that stay among the top ten companies in the world for more than 20 years. You know, managing innovation is extraordinarily difficult. And it's difficult in Hollywood and you lose, you know, you reach the wrong lessons. I would also say that, you know, one of the challenges for tech is that, you know, on the one of the one,

hand data is an extraordinary gift and an extraordinary tool, it doesn't necessarily lead to innovation. It leads to extraordinary knowledge about how your audience, how your users are currently behaving. But if you just say this is the way they're currently behaving, this is the way they're going to behave forever, you'll fail. Somebody else who does something brand new out of the blue will come up with something new and better. And innovation is a very, very challenging thing to manage. And managing content is essentially managing a form of innovation. They have very different kinds of elements involved in them,

but it is managing innovation. And innovation and creativity are largely the same thing. There's some very different buttons and levers to push on both of them. But ultimately, you are trying to get something new and exciting and fresh and original. So one of the things that, let me just click on something you said earlier about, even though a lot of these original films are doing really well, most of the movies are franchises, right, in which you've been relying on existing IP, I'll say that way.

How do you get studios to be innovative and swing for the fences on a risky pitch when they can at least bank on some success with a safe, known quantity? You have management that thinks long term. Because by definition, these franchises, certainly over the last 10 or 15 years, have been much safer.

However, by definition, you're going to run out of them. And to the degree you are running one of these places, you should be thinking long-term, which is I should be both maximizing my ability to monetize the existing IP that I own, and I ought to be creating new IP that's vital and vibrant, that will have the same kind of economic success over long-term, and that you can't do it to the degree all you're doing is just making sequels. And you noted to CNBC that risk is ultimately the lifeblood of success. So how do you get Hollywood to take more risk given – we'll talk a little bit about the sort of the economic situation in these mergers, which will – you know, to me, that more mergery they get, the less risk-taking they get given all the huge debt, etc., and worries about taking risks. What needs to change? Because Hollywood does – has gone through periods where they're very safe and then they're very risky, right? I think the 70s was more risky. How do you get them to think if it's the lifeblood of successes, you know?

I think it's a couple of things. First of all, you know, I think the danger thing is to equate risk with recklessness. And there are a lot of people who think risk is reckless. Risk isn't reckless. You know, the wrong risk is certainly reckless. But your job is to figure out your job is ultimately make a series of bets all day long. And clearly, you know, you want to re-vite. these things are nothing, if not, repositories of valuable libraries.

There are two things. They are repositories of valuable libraries and lots of IP, and they're a manufacturing system that is allowing you to make creative choices 15, 20 times a year. You can certainly take risk inside of that portfolio without being reckless. A, the first thing is to think about as a portfolio, which is I ought to be doing X number of these things that feel big and say, if I ought to be doing X number of things in the middle that are less risky. Some bonds, some stocks, some cash, that kind of thing.

Yeah, I ought to be also taking some risk. That's number one. Number two is budgets. By definition, there's an inverse relationship between the size of a budget and risk-taking. And the creative community ought to understand that. To the degree, creative community wants to take risk, make things at lower budgets. And by the way, I think in my opinion, that's the really interesting question. question around AI. And then I think it's, it's, look, it's also the job of leadership. The job of

leadership is to have really talented people that you support taking risks. You know, I believe the best thing you can do is find really talented young people, figure out the good ones, and support them during failure. Because it's a really weird thing, because you are are basically trying to run a manufacturing process that is managing creativity. And creativity is very closely associated with failure. Very, very close. You know, you think about, and in lots of ways. One is, it's the scariest thing on earth.

Think about what it is to be an actor. You know, to put yourself out there and get judged by people and saying, I don't like her nose or she's, you know, he's getting fat or, you know, those are real. or look, he looks like an idiot with that choice. That's terrifying. Being a writer, you've been locked in a room for nine months. You bring your script down and say, well, that sucks.

And you want to create an environment that makes people feel safe being creative. And you want to do the same thing with the people picking those things. You want to have bold people who both understand enough about the business, who learn the lessons from when they failed, but who also take risk. is also starting to prove a little risky. We keep seeing these big movies underperform. The big one now is Star Wars, The Mandalorian, and Grogo, which is interesting. Back to the point you asked earlier, the second thing that will bring back risk is big failures.

You know, you mentioned the 70s. The reason the 70s Hollywood innovated so much is all these big bloated spectacles that were playing at safe. Big musicals, probably the biggest of them was Hello, Adali, which virtually bankrupted in 20th Century Fox at the time. All those movies started failing. all the things that they were doing, Hollywood Spectical musicals, big westerns, blah, started failing, and they were forced to take risk. Right, that's a really good point. Although now Hodel Dolly's seen all the time, like later, they have different lives,

which is interesting. One of the things, of course, is the center of Los Angeles being that there's been a big decline, as you know, and the number of projects being shot there. A lot of productions have moved out of state and overseas. As content becomes more global, is Los Angeles still the capital of the entertainment industry? Yeah, I would say two things. So jobs in Hollywood have declined by about 35, 40%. Some of that is tax credit related.

Some of that is global production related. Some of that, in my opinion, is about vertical integration. And by the way, I'm far more concerned with vertical integration than I am with mergers. And that's, let's think, you know, in essence, Hollywood has always been the center of global production. It has always been the center of looking for filmmakers in France, in Italy,

and Korea, and bringing them here. And it's just been a nexus for ultimately the financial underpinnings of that. You know, movies have always been made all over the world in Canada and England, you know, in other places. And so

probably, I don't think Hollywood has become less central. I do think that the world has become more global. And, you One of the things I mentioned earlier that I had sold my production company, which I have sold to a French company called MediaWaand. And one of the reasons I did that was that I believe that if you look at the platforms, Netflix, Amazon, Disney, Apple, have all become global. They are a global platform serving in a global community. The production companies have not. The production companies have never been global.

You know, the big European companies were never successful in the U.S. The U.S. companies never cared about the rest of the world. They were just like, we'll sell our stuff there. We won't make it. And I think there's a big opportunity for a global production company that is beginning to unite the highest quality talent all over the world. We'll be back in a minute. Support for this show comes from Fetch Pet Insurance.

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to be relentlessly interested in new technology. And it's something I've liked about you because there were like three executives who weren't terrified of tech, you, Barry Diller and Bob Eiger, I would say, not terrified of tech, essentially, or dismissive, one or the other. Obviously, AI is the latest,

and there's been many over the, many years. And your production company was one of the lead investors in an AI studio promise. Their goal was to actually make shows and movies using AI. Of course, it scares a lot of people in industry. Is there a real loss of jobs? I think there is in certain areas and certain areas not. But talk about the worries that go on, given you've got to be thinking of costs too. Yeah. Let me be clear. I said two minutes ago that jobs in Hollywood are down 35, 40 percent. Right. I don't think there's a single job in Hollywood that's been lost to AI yet, not one.

So what's going on Hollywood right now, which is devastating, and I'm deeply, deeply concerned about, I'd be happy to talk more about. Sure, please. Has nothing to do with AI. So this, and by the way, it's typical, which is people are afraid of the wrong thing, right? Which is, they're already in big trouble and has nothing to do with AI. Can I guarantee, by the way, you know, there's widespread terror about job loss everywhere because of AI. And certainly if you look at the economy today, inflation's a problem. Jobs aren't.

So we've yet to see that. It's always good to be paranoid. It's always good to be worried. But we haven't seen that. Look, what I would say, my instinct is the following, which is nobody knows. We should all be super interested in what it is. You know, there's certainly an easy analog in the transition from hand-drawn cell animation to computer animation.

That's something absolutely analog, which is it replaced humans with machines. Artistically, it was fantastic, and by the way, it was fantastic for jobs. There are more jobs in computer animation than there ever were in cell animation. And that's a pretty close analogy, is that it was if the guilds and people like that

said, you've got to protect human beings at all cost, we never would have had Toy Story and all of those wonderful CG animated movies. So, by the way, the same thing is true as special effects. Special effects all used to be analog. Every single one of them is digital right now, and there are more jobs in special effects than there have ever been, and they're higher quality of special effects than there have ever been.

So this sort of knee-jerk paranoia about technology as bad is going to kill humans, it's going to be kill jobs, et cetera, I think is not smart. Right. Well, you know, people are worried about the valuations these companies are getting, you know, that these all, like, for instance, you know, anthropic, open AI. But that's not a question about Hollywood.

That's a completely different question about AI. Right, right. But you think it's that they're worried about. I want to ask what you're most worried about in a second, but you are seeing some jobs from real actors, for example. There's Business Insider wrote, for example, about so-called microdramas and verticals that are using them, short-form series designed to be watched on the phone.

Viewers are mixed on the results. This is, you know, is it a sign to come or not? I've always found them to be not good yet. But whenever I see something in Internet that's not good, I just recall seeing early Yahoo. It wasn't very good. And I kept thinking it's going to get better, right? And The New York Times just did an interview with AI actor Tilly Norwood,

which was strange, I thought. It was very strange. At one point, the importer asked Tilly, what's to stop her from taking other people's jobs or alien in humanity? One of the responses she gave was, quote, whether the people building me are willing to say no to profitable but corrosive uses. So you think it's just overhyped this idea of that this will be what kills these companies or hurts them? I think it's completely overhyped.

By the way, you know, if you look at what most technology has done is extended the power of storytelling. And so to the degree of microdramas, and I tend to agree with you that most of them aren't very good now, we'll see if they become good, but they're not killing Netflix or YouTube or anything else or movies. They are in a new form. And to the degree they are valuable in new form, you'll start seeing more actors in. And the reason they have AI actors in them is they are done incredibly cheaply, and it doesn't matter, that they're not high quality. To the degree that they become all of a sudden super valuable, people will start casting actors.

actors in them. Yeah, right. You know, my simplistic view of AI is use it as a tool. Now, that tool, it may be just a tool. It may be a way to streamline the cost of pre-production. It may be a way to, yeah, it may be a way to, obviously, it has huge implications for special effects. I think it was Scorsese with the storyboarding. Yeah.

Correct. He was in that Ovid's company. By the way, it may also give you tools to actually create new art forms with. We'll see. And it's interesting to embrace. all those things. To the degree you're interested in, telling stories to human beings, you should be interested in. The other side of it is rather than trying to restrict Hollywood from using it, because to the degree it's meaningful, you know, all you're going to do is make Hollywood smaller

and smaller and smaller as these other things coming. Hollywood has generally been a place that is really good at, as I said earlier, the manufacturing process of storytelling. It should be extended to new art forms. Absolutely be really stupid, not to. do that. So it should be. The same time, I think it's important to say you should be relentlessly focused on copyright. You should be focused on you can't steal, you can't steal from these works to train large language models, you can't steal actors' likenesses, you can't do those things. Those are very valid in my point, in my view. Copyright is copyright and it should be sacrosanct. And I do believe that, by the way, I think Hollywood should be more aggressive about copyright. I agree.

Right? Much more aggressive about copyright. And I think it's going to be really, The copyright questions around AI are going to be fascinating over the next five to ten years. Yeah. But restricting AI, I don't get it. I don't think it makes any sense. And I think that to the degree, look, it may not be meaningful. It may be partially meaningful or it may be meaningful, but in any of those answers, Hollywood Beach page should be playing a part of it.

What's the most interesting thing you've seen and something you've seen, you're going, oh, come on, no. With AI? Yeah, with AI. The most interesting thing is, and I won't. name them because it hasn't come out yet. There is a cable network that has started experimenting with some large-scale documentaries, 100% AI. Pulling from archives, archival?

Just making stuff, just saying, you know, do a caveman drama, or do the fall of Rome. Ah, yeah. Right? Using AI. And I've seen 10 or 15-minute segments that they've done 100% AI that are fascinating and really impressive. There's little experiments like that online in little short form. Yeah. You know, it's usually around hardware or making something.

But that's to me the most impressive stuff. You know, look, we are the company that we invested in Promise Studios, which is doing a wide range of stuff, all of it interesting to me. and we invested mostly because we believed in the leadership and because we were really interested in learning. I would say if you asked me to judge today, television animation, good enough to make television animation today, good enough to make commercials today, good enough to make some reality show level quality stuff today,

good enough to make special effects, getting closer on feature film quality animation, and still pretty far away, of making true narrative storytelling with actors, right? Yeah, documentary is actually a great way to do that because there's so much stuff. Like, why do you need someone person to do with the fall of Rome when there's just history?

Nobody can say that's not what it looks like because we weren't there. But I want to go back to what I said earlier, which is what I think Hollywood and particularly young people should be excited about is to the degree that it's a valid tool to make things. It should play a meaningful role in driving down costs and if you can drive down costs, you can innovate more. And I think in some ways the thing I would be most excited about is the match of 22-year-old,

22-year-old genuine storytellers and AI. Because there are going to be some young people with great imaginations who are going to get better of the technology than anybody else, who are going to make $500,000 movies that are great. And there should be 100 of them being able to be, made. That's great for the art form. That's not a bad thing. That's a great thing for the art form. And anybody who's interested in the art form should be interested in any innovation that has the

opportunity to drive down costs. Because the single most challenging thing to the art form right now is how expensive it is to make things. You know, when the average studio movie is, whatever it is today, $80 million, plus has another $50 million of marketing behind it, it's a challenge to innovate at a $130 million bet. It is. And that's how the internet got started. Those are all small companies riding off of everyone else's, like, free stuff. Take some chances. You did say one thing that worries more than mergers. I did want to end talking about mergers in Hollywood. And as you noted earlier, as you sold your content studio North Road to the French entertainment giant, media won. As you said earlier, you felt like it was time for content companies to get bigger and become global as entertainment and tech platforms consolidate. When you think about, you said mergers aren't the problem. It's something else. Vertical integration. Vertical integration.

Explain that for people what that means. Vertical integration just means that one company is controlling the entire process. They are making things, owning things, and distributing things. So if you look at the big platforms, they produce, own the production, own all rights and perpetuity, and distributed only on their platforms. Netflix. Right. Netflix app, by way.

And Netflix is no worse than Apple, Amazon, right, Disney. All of these people want to control everything. There are a couple of big negatives to that. If you go back to the 70s, which you refer to as the 70s and 80s were really when Hollywood exploded, and you had two things that separated that. You had a consent decree, which said the studios weren't allowed to own movie theaters. And so it separated movie production for movie distribution. and you had the financial interest syndication rule in the television business,

which said the networks could not own the shows. They could only license them, right? It led to the explosion of the television movie business. Production companies, creative production. It led to every single one of those studios which were dying in 1970 became the dominance television producers, Disney, Fox, Universal, Paramount, Warner's, all became the biggest television producer. And it's really what led to their growth.

in that 25-year period. What you have right now is, so I believe it would make the ecosystem far more vibrant. That's number one. Secondly, is this idea that things don't go from one platform to another, because all rights are held in perpetuity, is just bad for things circulating. Right. So it stays in Netflix. It stays in Apple.

Yeah. And by the way, it becomes just an old piece of content on Netflix versus you look at the number of things that became hits on the second platform they were on when they got marketed again or, you know, look at Seinfeld, which was, by the way, a big success on NBC, not in the first year, but it was a big sister later, has become ubiquitous in syndication. The same since ubiquitous in syndication, et cetera, et cetera. So that's a bad thing. The third thing is, I believe it's bad for creativity because you have every single creative

decision funneling through one hierarchy. And creativity thrives where it's messy, where there are people arguing about things where, you know, if one person doesn't get it, somebody else is going to get it somewhere else and will innovate somewhere else. And so I believe it's very valuable to have creativity thriving. And then the fourth thing I would say is that what's happened in this process is there's no economic hits for talent. There's also much less economic failure for talent. There's unemployment for talent, and unemployment is meaningful. But once you make something, there's no failure. You're getting paid the same, whether something succeeds or it fails.

That's a terrible thing. So there's no incentive. There's both no incentive and there's no terror. And being terrified as a creative is a great thing. That's a really good point. Right? Yeah, you get paid. You get paid less, but you get paid, so it's safe.

You get paid. And you're also non-incentivized to kill yourself to make a great. They're not of incentivized to promote things as they used to be, et cetera. And so I think vertical integration is really bad for the system. I think to the degree I'm scared, you mention what else. What I'm terrified of is the impact of vertical integration on the Hollywood storytelling community, because the stronger those vertically integrated companies get, they will look to squeeze talent because it's just a cost.

It's a widget. It's the cost of a widget. If you're in the widget business, drive down the cost of widgets. So should there be regulation or maybe antitrust enforcement to force them to move away? I believe that that would be more valuable from a regulatory point of view than regulating consolidation. I don't think consolidation is wonderful, but I don't, I think that if you were to be able to regulate one thing, I think regulating vertical integration would be far more valuable. I hadn't thought about this. Yeah. Now, you said you're supporting the pending merger of Paramount and Warner Brothers because you want to see another strong competitor. Right now the antitrust grounds are pretty weak.

They're still 20% of the market in certain areas. And I think that, you know, I worry about, look, I think in the current situation, what would be the single best thing to happen is another strong competitor. And whether or not it becomes that, I can't tell you. It'll be a function of how smart and talented and strategic they are. But if they became another strong competitor, it would be good for the industry. It doesn't just make them a taller like umpalumpa. Like, you know, they're not big enough for these,

because a lot of these are tech-fueled, right? And I would not call, but Paramount is tech-fueled now, but not exactly the same way. It's not. It's not. Trust me, I know. I don't get that. It may be down the road, and that's what they're telling them.

But it's not yet. No. No, look, I think that it's, it is certainly a big, big challenge for Hollywood, and someone who understands something about both worlds like you should be thinking about this more, is that these are small companies. They are. You know, Larry Ellison personally is bigger than Disney.

It's bigger than Comcast. It's bigger than, you know, it's bigger than, and so, particularly when you look at YouTube, YouTube's part of a, what, $3 trillion company? You know, the biggest media company right now, I would call it Netflix a tech company. In that case, the biggest media company is Disney, which is $200 billion company, you know. Yeah, I was arguing at one point a couple of years ago that when they, when they were challenging the AT&T Warner, which didn't turn out to be a good merger,

but that had to do with dumbasses running it. But I was more like, I was arguing with one of the antitrust people. I go, they're too small compared to the tech people. You don't understand. I hate to say it, but consolidation is the only way they're going to survive. I just the only way they survive right now.

But I was like, I don't like it, but you've now got these tech companies in these poll positions where they control every bit of distribution. I think one of the giant questions, to the degree they end up controlling these things outright, is can they get good at managing creativity? And there are huge differences, which I'm not sure they've thought about,

between managing technological innovation and managing creative innovation. So when you have something like a Paramount one, Paramount Warner One, David Ellison has promised to make 30 theatrical films a year if the deal goes through. others, we'll see it is all likelihood going through but I'm looking at the math of $80 billion in debt and everything else and I watched what happened to Warner before that

and it seems to me they're still small even if they seem irritating in the news area which they are and they're somewhat boneheaded in the news area more than boneheaded. You can comment if you want but I don't see that they're big enough and I see the number

as a matter how rich Larry Ellson is, $80 billion in debt is kind of a big thing to drag behind you. Look, I think I said this before. I'm not inside their books. It's very challenging. You know, it's challenging to make 30 movies. It's challenging to continue to build the streaming service, and it's doubly challenging while your core business,

which is linear channels, is in decline. So they've got a, they're the ones making the bat, not me. they've got a really hard task ahead of them and God bless them, I hope they succeed because it would be good for the business, but... Would Netflix have been a bigger owner, or would that been more disastrous? Because I think Netflix is going to come in

and buy it all up at the end when they fail. That's my feeling. I think that, well, it depends on success. If Paramount could succeed, that's better because what the world badly needs is a competitor to Netflix, primarily. right now. So in that sense, Netflix wouldn't have been,

Netflix certainly wouldn't have been a better owner in the short term, but if it goes out of business, I guess it would be a better owner. Yeah. That's the sense in which I said I was rooting for it to be successful because I think... Which gets us back. You said Netflix is the one to meet, but YouTube is the one speaking of something. YouTube is absolutely the one to be, but to say, you know, I don't buy, you know, which is the Netflix argument,

or was the Netflix argument when they're in, I don't believe that YouTube and Netflix are direct competitors right now. I think everything is a competitor for people's times, everything, but that's like saying, you know, Netflix is competing with video games or Netflix is competing with sports or going, you know, there's enormous competition for people's times. Netflix is a streaming long-form video service. Netflix, YouTube right now is, I guess, largely a short-form video service with a little bit of a essentially, virtual cable channel, you know, virtual MSO thrown in there, though that's a small part of their business on a relative basis. So, you know, individual people who work in the business are not waking up saying, should I go with YouTube or should I go with Netflix? There's zero competition. So this idea that they're competing with each other, they're competing each other

in the same way that you're competing with Netflix or that you're competing with the New York Times or you're competing with, you know, video games. You're competing for people's times. Yeah, yeah, that's true. is absolutely true. So do you think this Warner thing has a change? I mean, you don't know yet, but I think it's not going to work out well. I just, I just have watched so far. I think it's challenging. Yeah, challenge. You're nice. They can't do it. I just don't think. I don't know. I'm not a fan of inherited wealth, so that's fine. But great movie. Top Gun, Maverick, I love it. So you've just turned 75 years old. You've been in the business a long time.

Have you thought about retiring? How do you look at what you want to do next and your legacy amid these monumental changes? You've worked through every aspect of this, including working for Murdoch and everyone else. The idea that business people have a legacy seems beyond silliness. Stop not being narcissistic, Peter. And it's the ultimate hubris. There are four or five business people a century who have a legacy. So that's a ridiculous thing to think about.

All right. So I have no legacy. I'll be dead. You know, that'll be that. You greenlit, sir, you greenlit Titanic and Avatar. Then I can remember that. Look, I am interested in being interested in stimulating. I'm interested in spending more time with my family.

You know, I have a charity that I've been involved with for a very long time, malaria, no more. I'm deeply interested. I have a new charity that I just started called Billion Scale Health, where we're doing extraordinary things, trying to use technology to build health-scale solutions for a billion, for potentially a billion people. I'm engaged in that. I still want to do creative things. I have projects that I'm producing and that I'm interested in. I will help this French company, of which I think I'm the largest shareholder.

So I'm interested in being stimulated and fulfilled, and I'm interested in helping, you know, the greatest satisfaction from a business perspective for me right now is helping talented young people. Absolutely. But I have no legacy. Yeah. All right. All right. Unfortunately, Carrie, you may not either.

I do. That's not true. I'm a media entrepreneur. No, all these people are chasing the stuff I invented. I am. I shall be remembered by my children, at least. It's interesting. I haven't seen you at the White House groveling to Trump at all once. I guess I haven't been there, no. You're not going to the UFC fight? What? I'm not going to the UFC fight. By the way, I never really liked UFC, so. No, I will not be at the UFC fight. Oh, damn.

Anyway, Peter, as usual, you're really smart. You do have a legacy. I don't care. I'm going to just say that. We'll see. We can ask each other that question in 20 years. You have enormous patience given some of the jackasses you worked for over many years. I'll tell you that.

Me too. Anyway, save that for you. Are you writing a memoir? I would never write a memoir. It's the least interesting thing on earth. It's so uninteresting. I'll just continue to go out to lunch with you and hear the stories. That's how I'm going to go with it.

Oh, that'll be a new memoir. Anyway, Peter, thank you. And it really is, backrooms is really interesting. And when I saw, I've always thought you made a lot of interesting choices and surprising choices. And I was very happy to see this work out for your company. Well, thank you. I enjoyed it. And congratulations on your new home.

Oh, thank you so much. Right. Yeah, right. Oh, I have another Murdoch. Yeah. What should I do? You're back. No.

I own my own IP, Peter. Okay. I mean, come on. And it's just, and it's also the best Murdoch. I have the best Murdoch now. And it is a low bar. but he is the finest Murdoch of the Murdox. No comment.

No comment. To be fair, I had a very good run with Rupert. You did. Rupert treated me extraordinarily well. He is a legend. And we had a huge amount of fun and we did great things together. Yeah, he did a lot of great things. He also did a lot of deleterious things.

But nonetheless, it's a mixed bag. Anyway, thank you so much. I really appreciate it. My pleasure. I enjoyed it. Today's show was produced by Christian Castor Roussel, Michelle Eloy, Catherine Millsop, Madeline LaPlante Duby, and Kaelin Lynch. Nishak Kerw is Vox Media's executive producer of podcasts.

Special thanks to Anika Robbins, Corinne Ruff, and Julia Sharp Levine. Our engineers are Fernando Aruda and Rick Kwan, and our theme music is by Trachidemics. If you're already following this show, you help make a YouTube series a box office smash. If not, you're watching an endless loop of bad sequels. Go wherever you listen to podcast, search for On with Kara Swisher, and hit Follow. Thanks for listening to On with Kara Swisher from Podium Media, New York Magazine, the Vox Media Podcast Network, and us. We'll be back on Thursday with more.