Acquired
03:09:48 · Ben Gilbert, David Rosenthal
[03:09:48] S0: So it was interesting kinda going back and watching a lot of the commentary on that. Jerry offers up things like, well, you know, a comedian on stage is not actually that person. It's sort of a person playing a a role. But, like, if you look at it from a pure comms and and, like, business incentives perspective, you need to condemn the act enough to make people go, okay. Good. Jerry doesn't have his hand in the sand here. He realizes how awful that was, but not condemn it so much to make people go, well, then I don't like Kramer either. And I don't wanna watch Seinfeld because of that. So it's kind of interesting, the art of stewarding a business asset. It involves a lot of that, like, tightrope walking. [03:10:31] S1: Yeah. A business asset that is... Where the value is so tied to the present day cultural relevance. Yes. So... Yeah. Then there's the Internet that's associated with all this too. I mean, it's kind of amazing. Again, back to Seinfeld hitting its stride right as the Internet was going mainstream, the meme ability, the catchphrases, the GIFs on the Internet. GIFs. [03:10:57] S0: GIFs. GIFs. GIFs. [03:10:58] S1: GIFs. Ugh. [03:11:01] S0: It's like hearing a souring moment right there. Like an untuned piano. [03:11:06] S1: I'm sorry. I apologize. The GIFs on the Internet, you know, like the modern Seinfeld Twitter account becoming one of the early big mainstream Twitter accounts where the whole premise is, you know, Seinfeld episodes in the modern day. That's all part of it too. Yep. Which brings us to streaming.
03:11:06 · David Rosenthal, Ben Gilbert
[03:11:06] S1: I'm sorry. I apologize. The GIFs on the Internet, you know, like the modern Seinfeld Twitter account becoming one of the early big mainstream Twitter accounts where the whole premise is, you know, Seinfeld episodes in the modern day. That's all part of it too. Yep. Which brings us to streaming. [03:11:23] S0: Yes. So syndication is still a thing on broadcast networks and cable stations, but that's not where the big money is anymore. It's these streaming deals that really get started in 2015 with the Hulu deal. So that was a $150,000,000 five year deal. [03:11:41] S1: Yep. It would, go up from there. So two years later in 2017, Jerry signs a personal deal with Netflix to bring comedians in cars getting coffee onto Netflix. It was on Crackle. Right? It was like a web series? It was on Crackle. Do you do you know what Crackle was? I have no idea what Crackle is. Crackle was Sony's early in house web streaming network. Got it. That's why it was on Crackle, and then that went away. So that sets the stage for this Jerry Netflix deal to bring Comedians in Cars over and to do two new stand up specials for for Netflix. Because when the first renewal cycle comes around for Seinfeld streaming rates in 2019, Netflix does a landmark deal with Sony worth... Reported well over $500,000,000 for five years of worldwide exclusive streaming rights to Seinfeld. That is a huge amount of money.
03:12:44 · Ben Gilbert, David Rosenthal
[03:12:44] S0: And this is a result of Netflix had Friends and The Office, which I think became their top viewed shows, and they were losing them. Because Friends... It's so funny. All three of these shows were on NBC. Friends was produced just like Seinfeld in the Finson era, and it was produced by Warner Brothers, which is exactly where the rights are held for Seinfeld. So you might say Friends and Seinfeld are the same. But in the case of Friends, Warner Brothers also controls the distribution rights. Those were not ever owned by Sony. So HBO Max is about to become a thing. Warner Brothers is like, nope. Netflix, we'll take Friends back. We're gonna use that on our streaming service because we control the distribution rights. And The Office was produced after all the Finsin stuff, so NBC actually owned it directly. And they go, nope, Netflix. We'll take that back. We're gonna put that on what's about to come out and be called Peacock. So Netflix loses their top rerun sitcom shows. They need Seinfeld real bad. And Sony owns the distribution rights and is not coming out with a streaming service. So they're kinda the only ones to go to and say, give me a 180 episodes of people loving their nineties and 2,000 sitcoms. [03:14:00] S1: Yep. So it all goes down that same year in 2019. Friends with HBO Max and The Office with Peacock, they have to announce, like, a a dollar value for the deals that they do because they have to calculate all the guild residuals to come out of it.
03:14:00 · David Rosenthal, Ben Gilbert
[03:14:00] S1: Yep. So it all goes down that same year in 2019. Friends with HBO Max and The Office with Peacock, they have to announce, like, a a dollar value for the deals that they do because they have to calculate all the guild residuals to come out of it. [03:14:18] S0: And I think the creators did have some back end there. Yes. Kinda suck to have back end in a deal where the distribution wasn't independently owned. Right. Because it means that, like, you just kinda have to trust that the invisible wall between the sides of the company exist, and the the value is the real fair market value. [03:14:35] S1: Yep. So they announced that the friends deal is $425,000,000 for five years, and the office deal is $500,000,000 for five years. But, yeah, this is not real money. [03:14:46] S0: So all three of these are in the same ballpark, but Seinfeld is the only one where there's actually a company paying another company. [03:14:51] S1: And then that brings us to this year with the 2026 Netflix renewal reported as slightly lower than the original greater than $500,000,000 deal. But this time, it's exclusive for Netflix only in The US and Canada, not worldwide. So Sony is basically taking the bet here of, oh, we can start selling international streaming rates for Seinfeld separately and monetize those better, which they will begin selling shortly here.
03:14:51 · David Rosenthal, Ben Gilbert
[03:14:51] S1: And then that brings us to this year with the 2026 Netflix renewal reported as slightly lower than the original greater than $500,000,000 deal. But this time, it's exclusive for Netflix only in The US and Canada, not worldwide. So Sony is basically taking the bet here of, oh, we can start selling international streaming rates for Seinfeld separately and monetize those better, which they will begin selling shortly here. [03:15:22] S0: Yep. In addition to that, they're still doing the other forms of syndication. So basic cable to Paramount for 45,000,000 ish. They had a full cycle four and a full cycle five and a full cycle six. So all told here, all the syndication ever, all the off network and international and cable, the streaming, plus all the DVDs. This is around $5,000,000,000 to the cap table of Seinfeld from all of these deals, and it's real liquid cash changing hands every five years when they do a renewal cycle because Sony has no streaming service of their own. [03:16:02] S1: Yep. And all of that is just so far. I think at current course and speed, you can reasonably expect another billion plus in streaming rates to get stacked on top of that every decade from Netflix or whoever takes it next. [03:16:17] S0: Assuming it stays this relevant, but you would think if it fell off in relevance, it would have happened by now.
03:16:17 · Ben Gilbert, David Rosenthal
[03:16:17] S0: Assuming it stays this relevant, but you would think if it fell off in relevance, it would have happened by now. [03:16:23] S1: Yep. And it definitely hasn't. And then, you know, total total revenue, you stack the 2,000,000,000 in profits for NBC from first run, you're at easily 7 plus billion dollars for this little TV show that shouldn't have gotten made. [03:16:38] S0: And by my calculations, David, this thing probably in total, including everyone's salaries, even that crazy high last season, cost about $250,000,000 to make. And those costs stopped in 1998. So this is an asset that's now well above $7,000,000,000 in returns that keeps stacking another billion dollars every decade, and all the costs are paid for thirty years ago. [03:17:07] S1: It really is like a Silicon Valley startup type story Yes. As a TV show. I mean, it's not Google or or or Facebook. We're not talking about trillions of dollars or Nvidia here. But that that level of investment would continue returning cash flows for that period of time of that magnitude. [03:17:24] S0: And it's a 30 x on its costs. Yeah. Incredible. That's the other thing. Because if if you just divide 7 point something billion by 250,000,000, that's a 30 x return. [03:17:35] S1: Alright. Should we transition to analysis?