David Rosenthal

David Rosenthal says in 2019 Netflix paid Sony a reported sum well over 500 million dollars for five years of worldwide exclusive streaming rights to Seinfeld. Ben Gilbert says Netflix had Friends and The Office, shows he thinks became Netflix's top-viewed shows, and Netflix was losing both.

Ben Gilbert says streaming money for Seinfeld started in 2015 with a Hulu deal worth 150 million dollars over five years. David Rosenthal says in 2017 Netflix signed a personal deal to move Comedians in Cars Getting Coffee off Crackle, Sony's early in-house web streaming network, and to make two new stand-up specials. He says the first renewal of the Seinfeld streaming rights arrived in 2019. Ben Gilber

Ben Gilbert says Michael Richards' racist stand-up remarks in 2006 were a problem for the Seinfeld business. David Rosenthal says they put the business model at risk. Ben Gilbert says owners such as Castle Rock needed people to keep loving the show so the asset would keep going. Ben Gilbert says the episode could have spiraled into a boycott of Seinfeld.

Ben Gilbert says everyone had to walk a tightrope: feelings about the issue, feelings about Michael Richards as a friend, condemning words that deserved condemnation, and still preserving Seinfeld through the public-relations crisis. Ben Gilbert says the line offered in public was that a comedian on stage is not actually that person, but a

David Rosenthal closes the books on Seinfeld's first run on NBC. Ben Gilbert says to leave syndication out. David Rosenthal says NBC made about $2 billion in cumulative advertising profit from Seinfeld during its run. He says the figure vastly undercounts the actual value to NBC, because a buyer could not purchase Seinfeld alone and had to buy primetime around the show. Ben Gilbert says NBC owned nothing. The network rented it.

David Rosenthal says Castle Rock loses money on nine years of Seinfeld by design. Ben Gilbert likens the loss to the first nine years of an early stage venture portfolio, then says the likeness is not fair. He is unsure of the exact year and puts Castle Rock's syndic

Ben Gilbert says it is the taste left in people's mouths. David Rosenthal says that is why, three decades later, Netflix has paid a billion dollars over a decade to the people who own Seinfeld. David Rosenthal says the show stayed culturally relevant because Jerry Seinfeld got off the stage while the audience was still screaming. Leave then, Jerry says, and they never forget you.

David Rosenthal estimates that Jerry Seinfeld has earned somewhere around three quarters of a billion dollars from syndication sales, DVD sales, and other back-end deals over the past 30 years. David Rosenthal argues that a huge part of that value was set up and protected by the Christmas 1997 decision to end the s

David Rosenthal says Jack Welch told Jerry Seinfeld the show had not peaked. Ben Gilbert says Jerry was exhausted after 10 years on Seinfeld and felt he had not started his life. David Rosenthal says Jerry was 43. Ben Gilbert says Jerry worried the show would keep going past its peak. The only way to go out on top was to leave before the peak, because Jerry was not going to time it perfectly.

David Rosenthal says Jerry was not outright declining, but he started demurring. He told Jack he appreciated it and did not know he could keep the show going. The group told him not to decide yet. After the meal, Jack took Jerry Seinfeld to a corner, wrote on a piece of paper, and handed him a firm off

Ben Gilbert says Castle Rock sold to Ted Turner in December 93 for about $400 million. The owners got $100 million in cash, and about $300 million more went to paying off outstanding debt. Turner paid that sum out of pocket for Castle Rock, owner of a huge share of Seinfeld's profits, and the sale came before the first syndication cycle of Seinfeld.

Ben Gilbert had said it was a very good time to sell the company. David Rosenthal says Castle Rock should have waited anyway. Ben Gilbert says he is pretty sure that working through the whole waterfall shows Castle Rock made somewhere between two and two and a half billion dollars on Seinfeld syndication over the years, way more than the $400 mi

David Rosenthal says Sony, which he also calls Columbia, earned its keep on the first syndication cycle of Seinfeld. The cycle covered local broadcast affiliates only, and cable was still off limits.

David Rosenthal says Sony sold Seinfeld to a record 224 local television stations. Ben Gilbert says that is out of a thousand stations across America, one station in every market taking the exclusive local rights. David Rosenthal says the sale brought in over $500 million in revenue in a single event in 1995, for the first five-year syndication window on local affiliates alone.

David Rosenthal says stations that paid the money still got a pretty good deal. Reports showed that once Seinfeld ent

David Rosenthal calls Seinfeld the most perfect syndication show ever created. With no hugging, no learning, no character development, and no relationship development, a viewer can tune in anytime to any episode in any order and still get a full entertaining experience.

David Rosenthal says that right after the move to Thursday night, after the huge success, and after the internet starts to come online, Seinfeld hits syndication. Ben Gilbert reads Jerry Seinfeld's quote to the LA Times that the show will be in syndication next year, and that will probably help further the same way it helped Cheers. Most people are still just now discovering the show. Most of the audience watching on Thursda

David Rosenthal says that in February 1993, Seinfeld moved from Wednesday to Thursday and the ratings rose 57%. In one week it went from the 45th most popular show on television to the 5th.

David Rosenthal says a huge part of the jump was the time slot. Ben Gilbert says everyone at the network expected that a show after Cheers would get good ratings and still lose viewers on the way from Cheers to the next show. The only question was how large the drop-off would be. Ben Gilbert says Seinfeld gained audience over Cheers. It retained the Cheers audience, and new people tuned in just to see the next episode. David Rosenthal says on a first-run Thursday night it held the full lead-in. By the en

David Rosenthal says Seinfeld keeps the same people and the same rooms across years, and nobody grows. Jerry is always Jerry. George is always George. Elaine is always Elaine. A viewer can start on any episode. The characters never learn anything. The apartment is the same. The coffee shop is the same. Ben Gilbert says the characters stay static, vessels for humorous situations.

David Rosenthal says sitcoms before Seinfeld were dramas with jokes. Ben Gilbert says Seinfeld refuses that and builds situations that are inherently funny. David Rosenthal says the stories were almost always romantic relationships or family relationships, and the characters grew, learned, changed, and came together

Ben Gilbert says Jerry Seinfeld and Castle Rock took NBC's four-episode deal after Fox guaranteed 24 episodes. Jerry Seinfeld wanted the NBC imprimatur of a real network. Ben Gilbert says Jerry has phrased the choice as it wasn't the major leagues and he wanted to be in the majors.

Ben Gilbert says Jerry Seinfeld later said in other interviews that he and Castle Rock were looking around for other buyers because they assumed NBC was out. The assumption was fair. Fox made an offer and guaranteed 24 episodes. David Rosenthal says Fox was a startup network, not the Fox of later years and not one of the major broadcast networks in the US.

Ben Gilbert says they went with NBC's four episode deal

David Rosenthal says it is reported that Jerry Seinfeld and Larry David each own 15% of Seinfeld. He says they have all the leverage. Ben Gilbert says nobody thinks the show is going to be worth much, and there is no risk. David Rosenthal says they can take the project to any production company in Hollywood. Choosing Castle Rock lets them write the deal terms. The exact terms never come out. The only people who know are Jerry Seinfeld, Larry David, Castle Rock, and Shapiro and West.

Ben Gilbert says public reporting leaves about 65% for Castle Rock. Sony owns the distribution right and usually takes 15% off the top, which dilutes everyone else. Ben Gilbert says he has seen 15 and 30, and th

Ben Gilbert says Jerry Seinfeld decided that whatever format the project took, he would play himself. He would bring his own sensibilities and his observational humor about the world, and he would not cast himself as a character super different from him. Ben Gilbert says Jerry Seinfeld was not acting, because everyone already knew Jerry Seinfeld could not act.

David Rosenthal says Roseanne Barr, the comic behind Roseanne, did the opposite. On Roseanne she played a sitcom character, not Roseanne Barr. Ben Gilbert says Jerry Seinfeld on the show lived in a little shoebox apartment, while the real Jerry Seinfeld was making a million dollars a year and flying around. The lives did not match, bu

David Rosenthal says Jamie Dimon did not run Home Depot because a long courtship never became a hire. After Arthur Blank became chief executive, the board looked outside for the next leader and put Dimon first on the list. He had just been fired by Sandy Weill at Citigroup. Dimon later told the hosts, on stage at Radio City, that he loved the Home Depot founders. He also said he had barely been in a store. A friend sent him to one upstate, and he felt he was pretending to be in the home-improvement business.

The company spent about six months meeting him and trying to recruit him. He liked the culture, including the habit of calling headquarters the Store Support Center. At the end of those

David Rosenthal says Home Depot went public in 1981 because four Atlanta stores did not have the cash to take the Florida leases in front of them. The company had lost about a million dollars in its first months of 1979 and made about a million in 1980, which was not enough for the next cities. Interest rates were above 20 percent. Ken Langone was no longer an investment banker, so he pushed Bear Stearns to lead a deal aimed at $6 million, half for expansion and half to cash out the first backers at close to a double.

The week before the offering, Bear Stearns could sell only about $3 million. Ken told those investors to stay in so the money could stay in the company. The deal raised $4 mil

David Rosenthal thinks the Atlanta Falcons are worth a minimum of $10 billion, and arguably more. Counted with Arthur Blank's other assets and his remaining Home Depot stake, the same case makes Blank the wealthiest of the Home Depot co-founders.

Blank bought the Falcons in 2002, one year after fully leaving Home Depot, for $545 million. Later public valuations put the franchise at $7 billion. The Seahawks had just traded for $9.5 billion and then agreed to a sale at $9.6 billion, and the Lakers followed at $12.5 billion. Atlanta is about a 30% bigger market than Seattle, and Mercedes-Benz Stadium is a much better stadium deal than Lumen Field.

Ben Gilbert follows with a note from after th

Ben Gilbert and David Rosenthal say Home Depot turns inventory four and a half times a year, a pace they call totally unbelievable for high-dollar specialty goods.

Costco sells the items on its shelf faster than it needs to pay suppliers. Home Depot does not have that cycle. At any given time, about half of Home Depot inventory is financed by suppliers who have not been paid yet. The stores still carry 35,000 products in the aisle against Costco's 4,000, plus a million products online. About $11 million of inventory is tied up in a Home Depot store, and Lowe's is about the same.

A turn that fast sits on a wide specialty catalog, which is why the rate stands out.

David Rosenthal says Home Depot's largest acquisition was SRS in 2024, an $18.25 billion deal and the biggest in company history. SRS is a specialty trade distributor for professional roofers, landscapers, pool contractors, and other trades, an adjacency that grows the total addressable market.

Home Depot paused stock buybacks to use the capital to swallow the deal. The thesis is similar to HD Supply, with less focus on maintenance and more focus on net new exterior building projects. Bulk orders are planned ahead and delivered to job sites by a dedicated fleet, through distribution centers and vehicles outside traditional stores. Home Depot has already made another multi-billion dollar acq

David Rosenthal says Home Depot revenue started falling in 2007, bottomed in 2010, and did not get back to 2007 levels until 2014.

The housing bubble burst in 2006. The great financial crisis came in 2008, after a leadership transition in January 2007. Spending on home improvement supplies fell off a cliff from 2006 into 2007, and the halt in building new homes for unqualified buyers took 18 to 24 months to work through the financial system. Over a seven-year span, net income followed the same path, with Home Depot below its previous high watermark on revenue and profits.

The board had no bench it knew well enough to run the company, and most other executives were Nardelli people, so remov

David Rosenthal says Home Depot's stock stayed flat under Nardelli even though revenue and profits doubled, because the gains came mostly from doubling the store count while same-store sales stayed flat.

Same-store sales had already flattened before Nardelli arrived and stayed flat through his tenure. Wall Street treated the gap with Lowe's as a red flag. Lowe's kept growing same-store sales by taking the weekend sprucers. During the tenure he authorized $20 billion in share buybacks and dividends, and the stock price still did not move. Institutional investors running discounted cash flow models did not see the present value of future profits growing. Home Depot buying its own stock withou

David Rosenthal says customer satisfaction among Home Depot shoppers falls to the lowest level of any major U.S. retailer a couple of years into Nardelli's tenure. Nardelli replaces huge swaths of the floor workforce with part-time general retail labor and drops the idea that knowledgeable people make a 25 cent washer sale, fix a customer's kitchen sink, and turn the visit into something bigger later.

Associates per store drop from 200 to 170 from 2000 to 2006, a 15% cut, and 16-year-olds on part-time jobs ring shoppers up. Before Nardelli, store managers were promoted from associates and stayed focused on the store and the customer. Nardelli prefers candidates with college degrees, so asso

Ben Gilbert and David Rosenthal say Home Depot convinced manufacturers to supply a company that still had no proof it could sell in volume. The founders barely made a shoot-the-moon plan work by combining Pat Farrah's aggressiveness from HomeCo with Bernie Marcus and Arthur Blank's operations and finance skill, and by selling a dream.

They had $2 million and a scrappy team, yet the model needed a flood of customers on day one and deals from suppliers who had seen no volume. In Built From Scratch, the founders describe having to be psychologists, lovers, romancers, and con artists to get suppliers aboard. On paper they could not compete with Handy City or Handy Dan, and they lacked the buyin

David Rosenthal says Home Depot chose Atlanta for two reasons. Demographics in the Southeast looked promising, and the region was poised for lots of suburban expansion even in the tough climate of the 70s. California and the Northeast were already built up, while good real estate locations in the Southeast were still pretty cheap and available.

The second reason was a sweetheart deal from JCPenney, the big national department store chain, to sublease a couple of locations in Atlanta. JCPenney had started a Kmart copycat subsidiary. He thinks the copycat was Treasure Island. The subsidiary was in the Southeast, it was called Treasure Island, and the stores had great locations because JCPenne

Ben Gilbert and David Rosenthal say Bernie Marcus blew up a deal for Ross Perot to put $2 million into Home Depot in return for 70% of the company.

The group met Ross in Dallas and hammered out terms for Perot to fund what would become Home Depot. Bernie and Ross then fought over management style and management philosophy. The sticking point was the old Cadillac Bernie drove, his company car from Handy Dan, which he had managed to keep in the separation. The car was old and not expensive. Bernie treated the Cadillac as practical and in line with Ross's ethos, and held that they should be pragmatists instead of following virtue signaling. Ross held the car as a matter of principle. A second

David Rosenthal says Ken Langone had no intention of selling his close to 19% stake in Handy Dan. He was in it with Bernie Marcus and Arthur Blank, thought it was a great business, and treated loyalty as his whole way of working. He never sells.

Sandy Sigalov wanted him gone and sent his lieutenant, Jeffrey Chanin, to buy the stake back. The stock was selling for about $8 a share, and Chanin offered $10. Langone named $12. Chanin said no, and Langone went to the men's room. Barely two minutes later Chanin followed him in and agreed to $12. Langone told him the $12 offer was off the table, because Chanin had already turned it down in the office. The men's room price was $14. Chanin left in s

Ben Gilbert and David Rosenthal say do-it-yourself was not a real way to shop before Home Depot, because a homeowner could not trust one place to stock a whole deck, a bathroom, or another project. Little hardware stores left the shopper hoping for good luck.

Lowe's, a company out of North Carolina, was the biggest operator in hardware and still was not the Lowe's people know today. It had evolved from the general store concept. Store footprints were a fifth or less the size of a modern Lowe's and sat mostly in strip malls. The whole company was only doing about $150 million in annual revenue. In their understanding, each store was a hardware store with a small showroom, without concrete fl

David Rosenthal says Bernie Marcus became a pharmacist because his family had no money to send him to medical school.

Bernie Marcus is Home Depot's founding CEO. He comes from a poor family of Jewish immigrants in the rough neighborhoods of Newark, New Jersey in the 1930s, during the Depression. He was in a gang as a kid on the streets of Newark. He was super smart and became the first person in his family to go to college. He went to Rutgers, down the road from Newark in New Jersey. His dream was to go on to medical school and become a psychiatrist. Medical school does not work out because his family does not have any money to send him, so he becomes a pharmacist instead.

He tells the gan

Ben Gilbert says a $1,000 stake in Home Depot from the 1981 public offering would beat the same stake in Apple, which went public one year earlier as Apple Computer. With dividends reinvested, Home Depot compounded at nearly 25% a year for 45 years.

The record makes Home Depot the number one performing stock in the S&P 500 in total investment return from the day it went public to today. The $1,000 would be worth about $17 million. The same $1,000 bought in the S&P 500 would be worth $170,000. Ben Gilbert and David Rosenthal love Vanguard index funds, so they set the Home Depot result next to the index on purpose. A 45-year hold turned the original $1,000 into about $17 million instead of $1

Ben Gilbert and David Rosenthal split on how long Marvel, Pixar, and Lucasfilm can keep feeding Disney. One case says the three acquisitions were brilliant and then looks like fuel for about 20 years, not 50. Star Wars has no obvious next chapter, Marvel may be used up, and the parks and the sequels are tied to the same stories. Avengers Doomsday no longer feels like an event.

The other case treats those franchises like luxury brands. They have strong years and weak years, and they come back, because they are core myths passed from one generation to the next. The low point is when they surprise people again.

Ben Gilbert and David Rosenthal say Disney Plus opened the Disney Vault. The Fox deal closed in March 2019, and the next month an investor day announced the service. The product was the library: Disney, Pixar, Lucasfilm, Marvel, and the Fox assets, priced at $6.99 a month.

The stock jumped 11% the next day and was up 20% by the end of April. When the service launched in November, Disney got 10 million signups in the first 24 hours and 26 million in the first quarter. Pixar, Disney Animation, Lucasfilm, and the Marvel run were all near a peak, which is the setup that price and that open vault were built on.

Ben Gilbert and David Rosenthal say Disney announced an ESPN streaming service for 2018 and a Disney streaming service for 2019, and in the same announcement ended the Netflix deals. Disney, Pixar, Marvel, and Lucasfilm would leave Netflix by 2019.

Netflix was already paying hundreds of millions of dollars a year, close to pure profit. Disney-wide operating income was about $15 billion, so that one deal was roughly two percent of company profit. Disney tore it up to start from zero and own the customer. The remaining ESPN cable cash is what made that possible, which is also why the ESPN Plus service that arrived in 2018 left the games people wanted on the cable channel.

Ben Gilbert and David Rosenthal say ESPN paid for Pixar, Marvel, and Lucasfilm. Cable was a contractual cash gusher, and the three prices that sounded absurd line up against that profit.

Pixar at $7.4 billion, cash included, was about two and a half years of cable profit then. Marvel at $4 billion was less than one year of cable profit in 2009. Lucasfilm in 2012, another $4 billion, was well under a year. Together that is about four years of ESPN cable profits.

ESPN was the business that threw off cash. The studios were where Disney could put that cash back to work. Warren Buffett pairs a cash producer with a business that can reinvest, and this is the same shape.

Ben Gilbert and David Rosenthal say Disney bought Lucasfilm in 2012 for another $4 billion, the same kind of bet as Marvel. Take one of the great modern myths, the original Star Wars saga, and give it a bigger canvas. Bob Iger was collecting top-tier franchises that still had room to run, and much of the payment was newly issued Disney stock.

Lucasfilm and Marvel cost dramatically less than Pixar. Lucasfilm had no movies in production, so paying less than Pixar was the right call. Star Wars did not turn out to have as much left to exploit. The Avengers side reached 37 films. Disney still owned the saga.

Ben Gilbert and David Rosenthal say Disney bought Marvel in 2009 for $4 billion, and the price looked contrarian. People heard $4 billion for a comic book company. Iron Man was already out, and a few other films had been hits, but nobody could see what Marvel would become inside Disney.

Marvel had already licensed its best-known characters away. Fox had the X-Men. Sony had Spider-Man. Superman and Batman sat at DC. The deal looked like leftover characters plus a movie Marvel had already made. Marvel Studios and Disney then built the shared cinematic universe that became the blueprint for turning one franchise into a universe.

Ben Gilbert and David Rosenthal say George Lucas sold the graphics group because he was getting divorced and needed cash. He believed so deeply in Star Wars that he would not give his former wife any equity in Lucasfilm, so he sold the group instead of the studio. That sale is the accident that later let Pixar save Disney.

Steve Jobs, introduced by Alan Kay, visited Lucasfilm, then went dark while he was being pushed out of Apple. He came back wanting the team and the technology as the seed of a computer company that could rival Apple. The team refused. Jobs started that computer company on his own, then agreed to buy the film group out of Lucasfilm.

In 1986 he wrote a $5 million check to

Ben Gilbert and David Rosenthal say Bob Iger won by refusing to defend the past. He was number two to an unpopular lame-duck CEO, so every board question was going to be why the deputy should get the job. He hired a political campaign consultant and told the board the only subject was the future.

He offered three pillars. Spend time and capital on high-quality branded content, and revive Disney animation and the flywheel, because Facebook and YouTube were about to give people infinite choice. Embrace technology instead of suing it, at a moment when Viacom was preparing a lawsuit against YouTube and the music business was still living through Napster. Expand global reach, especially in China

Ben Gilbert and David Rosenthal say Comcast, the Philadelphia cable company, made a hostile bid to buy Disney for $54 billion in Comcast stock. Bob Iger was already president and chief operating officer. The news landed on the morning of a Disney investor day meant to shore up Michael Eisner.

Comcast wanted ESPN. ESPN was its most important supplier, and the two sides fought every year over carriage rates. Owning ESPN would end that war. To many people the bid was also proof of how far Disney had fallen, even while the parks were recovering from September 11th, Pirates of the Caribbean was a hit, and ESPN was still crushing it.

Ben Gilbert and David Rosenthal say one of the best things Michael Eisner did as CEO of the Walt Disney Company, other than buying ESPN, was the deal he refused. Steve Case approached him about combining AOL and Disney before the Time Warner deal.

AOL later merged a stock that was marked very high, and whose intrinsic value was close to worthless, with Warner Brothers, a durable company. That could have happened to Disney. In the dot-com era Eisner stayed skeptical and would not give Disney away in that kind of transaction. He watched the valuations, treated them as a trap, and kept the company out of a deal that would have swapped a real studio for a bubble.

Ben Gilbert and David Rosenthal say ESPN invented a second revenue line for cable networks: the affiliate fee. Before ESPN, channels showed up in the bundle and lived on advertising, and some startup networks even paid operators to be carried.

ESPN was buying sports rights and asked cable companies for cents per viewer so it could afford those rights. Sports then became leverage. ESPN could threaten to pull NBA, MLB, NFL, or SportsCenter, and angry subscribers would show up at the cable company. The fee climbed from a few cents to $1, then $2, then $5 a month. The average deal now is $9.42 per subscriber per month, by far the highest paid channel.

Ben Gilbert and David Rosenthal say Euro Disney cost $4 billion to develop and lost money for years. The line they like is that it took Disney a decade to figure out that European parents want to drink wine while their kids run around. Someone who lives in Paris thinks of themselves as French or Parisian, not Euro, so Disney renamed the park Disneyland Paris.

A string of changes, plus the end of the recession the park had opened into, eventually righted the ship. The rest of the Eisner, Wells, and Katzenberg years were the opposite of that miss. Operating profit went from well under $300 million when they took over in 1984 to just under $2 billion a decade later.