Acquired
02:50:16 · David Rosenthal, Ben Gilbert
[02:50:16] S1: That's... The argument I wanna make is that, actually, it was the best business decision that Jerry Seinfeld ever made. [02:50:25] S0: Okay. So let's explore that. So in the hypothetical world where they do season ten, season eleven, Jerry's making hundreds of millions of dollars out of each one. They're good, but, like, it's getting tired, kinda jumps the shark. You believe that there would not be the staying power to go through six syndication runs at very high dollar amounts, including recently here in 2026 with Netflix. Netflix. Maybe. I could I could see that. [02:50:54] S1: I think so. I think this is [02:50:56] S0: It's the taste left in people's mouth. [02:50:58] S1: It's the taste left in people's mouth, and the reason that three decades later, Netflix has paid $1,000,000,000 to the cap table of Seinfeld this decade Over [02:51:10] S0: a decade.
02:51:10 · Ben Gilbert, David Rosenthal
[02:51:10] S0: a decade. [02:51:11] S1: Over a decade, is because of the cultural relevance of Seinfeld. And it's Jerry's quote. It's Jerry's quote. If you can get off that stage when they are still screaming, they'll never forget you. And by our estimates, Jerry, so far, has earned somewhere around $750,000,000 from ongoing syndication sales, DVD sales, all back end deals of Seinfeld over the past thirty years. And, yeah, my argument is that a a huge part of that value was set up and protected by Jerry's decision here at Christmas nineteen ninety seven to end the show, go out on top. Because if you look at the data, over the twenty eight years since Seinfeld ended and the thirty one years since it first entered syndication, not only has Seinfeld never gone off the air, interest, viewership, basically, has remained constant, as in, like, very, very, very high. [02:52:15] S0: There are many times the number of people... I've seen estimates of three x to five x who have watched Seinfeld since it went off the air compared to when it was on the air. [02:52:24] S1: Right. Right. Right. So, yeah, if you take that, the majority of Seinfeld's audience have come after that Christmas decision. [02:52:31] S0: It's an interesting hypothesis. A, different hypothesis was put forward by the Harvard Business Review. This is... Listeners, David and I read this quote, I wanna say, like, a decade ago [02:52:43] S1: Yeah. [02:52:43] S0: And have referenced it a dozen times since because we think it's, like, one of the all time greatest business quotes. [02:52:49] S1: No doubt it is.
02:52:49 · David Rosenthal, Ben Gilbert
[02:52:49] S1: No doubt it is. [02:52:50] S0: And it is delightful that we get to do an an episode on Seinfeld and bring it up. [02:52:55] S1: So I've got the whole thing here. Somehow, Jerry ended up getting interviewed by Harvard Business Review in 2017 when he was doing one of the promotional cycles for Comedians in Cars Getting Coffee. The HBR interviewer says, so you cut off the show when it was so successful really as a result of the fact that you were burned out. Why didn't you try to come up with a more efficient, more sustainable way to make the show? What would McKinsey have said if they'd come in and said, there's a better way to do this? And Jerry says, who's McKinsey? The interviewer says, well, McKinsey is a big consulting firm. Jerry says, are they funny? The interviewer says, no. Jerry says, then I don't need them. The interviewer says, no interest in efficiency, or... And Jerry says, no. No. If you're efficient, you're doing it the wrong way. The right way is the hard way. [02:53:48] S0: Well, for him, it's it's it's extrapolation of the thing that he learned going on Carson when he was in his twenties, that if you don't just grind and find new material the hard way and write and think and rewrite and go through all the pain, then you're gonna run out of material and you're gonna become irrelevant. Like, you you must go through the fire.
02:53:48 · Ben Gilbert, David Rosenthal
[02:53:48] S0: Well, for him, it's it's it's extrapolation of the thing that he learned going on Carson when he was in his twenties, that if you don't just grind and find new material the hard way and write and think and rewrite and go through all the pain, then you're gonna run out of material and you're gonna become irrelevant. Like, you you must go through the fire. [02:54:07] S1: And and look. I think there's two things embedded in this McKinsey, you know, back and forth here that we love so much. One, for our purposes of the episode today, is the point that even in 2017, the consensus view was that this was a bad business decision that Jerry made. Two, more universally, Jerry is so absolutely right in what he says in response to the interviewer here. At least in any creative field, and I think any entrepreneurial pursuit is, by definition, a creative field, the efficient way is is is the wrong way. Like, if you're gonna do the accepted, efficient, what McKinsey will tell you to do, you are gonna get accepted, normal, efficient results. If you want outlier results, you need to take the [02:54:56] S0: hard way. It's the Bezosism that he likes to invent and wander. Yep. Without wandering, you cannot invent. They are intrinsically linked. [02:55:03] S1: Yep. Yep. So we're in the last season of the show. What happens next? Well, first off, the second syndication cycle kicks off. Sony goes to work again, and this time, they can add cable syndication in addition to local broadcast affiliates.
02:55:03 · David Rosenthal, Ben Gilbert
[02:55:03] S1: Yep. Yep. So we're in the last season of the show. What happens next? Well, first off, the second syndication cycle kicks off. Sony goes to work again, and this time, they can add cable syndication in addition to local broadcast affiliates. [02:55:24] S0: Which is the thing that has been true my whole life, which I said at the end of our last episode, which is you can't turn on the TV without finding Seinfeld on some channel, be it broadcast or cable. [02:55:34] S1: Yep. So here's the amazing thing that happens. Remember we told you in the last syndication cycle that Castle Rock got acquired by Turner, by TBS. When Sony goes out to bid the cable rights, TBS, Turner, makes an over the top bid of $1,000,000 per episode for four years of cable rights, which is almost $200,000,000. [02:56:01] S0: Wait. So TBS is buying the rights from themselves, but they have to go through Sony to do it because Sony owns the distribution rights? Yes. [02:56:12] S1: This is why the distribution rights remaining with Sony was so important to the business of the show because it means that bonafide real bids always have to happen for Seinfeld rights. [02:56:26] S0: I see. [02:56:27] S1: Because if TBS couldn't just say, nah. It's not going to market. We got [02:56:32] S0: it. Fascinating.
02:56:32 · Ben Gilbert, David Rosenthal
[02:56:32] S0: it. Fascinating. [02:56:33] S1: And then Turner, of course, gets acquired by Warner Brothers. So fast forward to today with the streaming rights, which we're gonna talk about in one second, Warner Brothers can't say, no. We're just gonna keep Seinfeld on on HBO Max. The thing we own. The thing we own. No. No. It's gotta go it's gotta go out to bid because [02:56:51] S0: Sony has the right to distribute it. Yep. Warner Brothers doesn't actually own the decision making for does it get to go on our service. They have to make a bona fide bid in addition to others like Netflix and the free market for it. [02:57:04] S1: Free market capitalism driving maximum shareholder value to the Seinfeld cap table. [02:57:11] S0: Alright. So what is the 1998 syndication fetch? [02:57:14] S1: So in total, across the renewed broadcast affiliate sales, cable now with TBS, and international, it brings in a reported $1,100,000,000 of total revenue here in 1998. [02:57:34] S0: So for those keeping track at home, the show's not even over yet, and syndication has already fetched $1,600,000,000. [02:57:41] S1: Sure making that, decision at Christmas time for Jerry go down a lot easier here when the second syndication cycle happens, which brings us to the finale of the show. I think the thing that people don't realize about the Seinfeld finale and that I didn't realize until doing this research was that it's a thank you. It's a thank you to all the guest stars that made Seinfeld what it was over the years.