KEVIN MAYER: Well, there's an interesting combination between the tech culture and the Hollywood culture. And I think there's a little bit of nervousness there. How will the two intersect if they're actually under one roof? I'm not sure that it's an obvious thing to detect that a high growth tech-focused company that's really bad at engineering at its core and its product at its core is going to be a great home to-- for creativity, the type of storytelling creativity that Hollywood represents. So those cultural mismatches, I think, make buyers nervous.

And also, if you're Apple TV+ or if you're Google, you have access to plenty of programming from people, like Candle Media, my company, independent producers of content. And if you want to stream, if you want content for your streaming services, you can always buy it at an arm's length. So this combination of tech company and creative companies under-- being-- one buying the other, not obvious to me that that's going to happen at scale. It very well might, but it really might not also.

ALEXANDRA CANAL: One CEO who has preached creativity is Bob Iger, your former boss. And Disney is a big story right now. We have the stock trading near multi-year record lows, another activist investor fight with Nelson Peltz. You're serving as a strategic advisor. So in what capacity are you working with Iger? And what advice are you giving him right now?

KEVIN MAYER: Well, I can tell you what capacity I'm working, to some degree. I can't tell you what advice I'm giving him. That's between--

ALEXANDRA CANAL: Can't give all the secrets?

KEVIN MAYER: --Bob and I, I suppose, and the board. But look, he needed some part of his team back. He came back to a company that had vastly changed. The previous leadership under Bob Chapek making some decisions that probably Bob Iger would not have taken. He was CEO, free to do that. But when you come back into a situation that's vastly changed from what you left and a lot of the team that you had before and relied on before were gone, it left him in a position where he really wanted to have some people that he trusted tell them what they thought.

And that's what I'm doing. I'm not spending an enormous amount of time, but I was at the company for a long time. I've seen a lot of the dynamics that are happening out there in the world and have-- he trusts my judgment on some things. So I just-- I talk to him from time to time.

ALEXANDRA CANAL: So through your conversations with Iger, what do you think he is most focused on right now?

KEVIN MAYER: He's definitely most focused on making sure that ESPN, a company that he really believes in strongly, is well positioned for the future. So ESPN-- he said this publicly. ESPN is his first priority. And he has ideas to fix that and to strengthen it and to change his business model over time. He's there talking publicly about taking it out of the linear TV bundle where it has been exclusively, the main part of ESPN, the flagship, and moving that to also exist in an over-the-top world.

So that's going to be a really interesting transition. And if that transition can be helped by parties that could be partners in a substantial way, that's what he's looking to do.

ALEXANDRA CANAL: So let's talk about this transition because there's a lot of talk on how much this service will actually cost the consumer. Some analysts out there have said maybe 30 bucks a month, possibly more just to break even. How realistic is that price point when we're seeing prices balloon across the board?

KEVIN MAYER: People have always paid a lot for sports. They didn't always know it because back in the days when 95% of this country had pay TV bundles, probably 40% to 50% of the cost of that bundle was sports programming. Now, a lot of people didn't watch it, which that's created-- that was part of the impetus for this whole bundle kind of collapsing the way it is now and that pay TV business suffering. People have always paid a lot for sports. So now they can do so explicitly.

If it goes over the top, you don't have to buy sports if you don't want to, but if you are a fan of sports, I don't know. Those price-- the price that you just discussed, that's a reasonable price to get the full suite of sports that ESPN, for instance, would offer. It's expensive. It costs a lot. People have always paid a fair amount of money for it, although it was hidden behind a wholesale price. But I do think that the number you just talked about would be entirely reasonable.

ALEXANDRA CANAL: So that's fair, 30 bucks a month?

KEVIN MAYER: I think so, yeah.

ALEXANDRA CANAL: All right, is there--

KEVIN MAYER: I'm not saying that's how ESPN will price it. I don't actually know.

ALEXANDRA CANAL: Is there a ceiling? I mean, you just mentioned consumers are willing to pay a lot for sports. You have a lot of experience in the sports sector, streaming in general.

KEVIN MAYER: Well, let me tell you a story. So I was at DAZN, this company called DAZN. Some of you have heard of it. Some of you haven't. It's a streaming service. It exists around the world, but it's mostly centered in Europe. And we bought these rights. When I was chairman of DAZN, I thought the right strategy was to do-- basically, make it the ESPN of Europe. Buy the rights that really matter in the countries where they matter. And in Europe, it's what we call soccer, they call football. Those are the rights that matter.

So we went and bought, in Italy, something called [INAUDIBLE], which is the EPL of Italy. That's where the best soccer clubs are. La Liga in Spain, this thing called Bundesliga in Germany, which is the German equivalent of the EPL. In those countries, we had the sports that matter. So people-- we had the subscribers. And my idea is, having launched Disney+, was, let's go in at a low price. Maybe we can get some of these people that are pirating signals to buy it legitimately. And maybe we can expand the marketplace at a lower price.

So people were used to paying from Sky, which was the previous broadcaster, about 30 to 35 euros a month. We went in at 19 euros a month. And in Italy, we were expecting to get about 2.3 million subscribers. We got 2.3 million subscribers. So we were like, wow, there is like very little price elasticity here. We didn't win over any pirates, and we didn't expand the audience as much as we thought we might. In fact, it was imperceptible.

We took the price back up to 35 euros, and there was 2.3 million subscribers. So I'm not saying there's infinite price elasticity in sports, but by that one experiment that I actually undertook recently-- it was a couple of years ago-- I can tell you that sports fans who really want their sports will pay a lot for it. If you price it at 60 euros, of course, we would have seen a collapse in subscribers. If we priced it at 5, maybe we would have gotten some subscribers in. But in that sweet spot, 15 to 30 euros type of site-- and you can translate to $2 almost 1 to 1-- I think that the elasticity is pretty forgiving. And I think it could be priced at that level.

ALEXANDRA CANAL: And you mentioned those strategic partners. Who do you think would be an ideal partner to take ESPN over the top? I know that Disney was having conversations with major leagues like the NFL, MLB. Are those types of partnerships still in play?

KEVIN MAYER: We haven't talked publicly about the partners that we're talking to. There have been some people hypothesizing about who those might be. I'll leave it at that. The press is often pretty accurate about things like that. But look, we want to have content partners who can really strengthen our hand and allow us to create multiple tiers of offerings. And we want to have distribution partners. So you think digital, you think telcos, those types of players.

ALEXANDRA CANAL: So while ESPN definitely committed on the part of Disney, ABC maybe not. Bob Iger said himself he's looking for strategic options there. But you've said yourself that linear TV is in its final death throes. So what does that mean? When you want to sell a network, it's-- who wants to buy a dying linear business right now?

KEVIN MAYER: Well, it's like these linear businesses have historically been very profitable, profit margins in the 30 to 40 plus percent, which is incredibly high profits. Streaming will probably never get to that profitability level. Netflix, of course, is zooming into profitability, and it has a nice operating leverage, meaning a lot of fixed costs. So when its revenues exceed its costs, the profit margins can grow quite dramatically with small revenue growth.

So they're in a great position with this operating leverage, and I think a lot of the other streaming services are, too. But to get to a 40% margin or 35% margin like broadcasting and cable, you see [INAUDIBLE] not going to happen. But those--

ALEXANDRA CANAL: Netflix said it could.

KEVIN MAYER: Yeah, maybe it could. Reed Hastings, he's the chairman now. Who knows? I don't see it. I see maybe mid 20s to high 20s margins. That's probably where it will top out, I think, because of the competition between these services. But look, it's just hard to say where it's all going to end up and where the pricing can go. And-- I don't know.

ALEXANDRA CANAL: So you don't know what type of a buyer-- you think it's another media? It's a distributor?

KEVIN MAYER: I'm trying to avoid the question a little bit.

ALEXANDRA CANAL: Someone like Candle? I don't know.

KEVIN MAYER: You're inartfully not letting me avoid the question. Look, I don't know who the buyer is. You could see consolidation among these big media companies happening. You could see Warner Brothers combining with an NBC Universal or with a Paramount. There are some combinations to be had there. Stars are still sitting out there, owned by Lionsgate. That needs to be consolidated with someone.

Maybe a big digital player will buy a really-- a Hollywood player. I do think the dissonance between cultures, as we talked about previously, makes it a bit difficult, and not to mention, the regulatory issues. Whenever these big digital companies do almost anything, the regulatory scrutiny is massive.

So digital to Hollywood, maybe that vertical integration might make sense. Horizontal integration with Hollywood players getting a little bigger through consolidation to play so that there's more leveling up against in the competition, big against big against big, instead of all the small guys, probably more likely.

ALEXANDRA CANAL: Well, let's talk about the future of Disney succession down the line because whoever is the next Disney CEO is not going to run the Disney that it is today, that we all know today. So whoever that person is could possibly be you. Would you be open to that? If Bob Iger called you right now and asked you, would you hesitate? What would you say?

KEVIN MAYER: I'm running companies, and Candle Media is doing great. And I have a tech fund that I've invested in, so no obvious answer to that one.

ALEXANDRA CANAL: So what is that Disney, then? Whoever takes over the company, what does that look like?

KEVIN MAYER: Well, it depends on how Bob Iger ends up reconfiguring it. It really does. It could be a Disney that has a majority ownership of ESPN with some really great partners on ESPN and still running ESPN as an over-the-top service and in the bundle. It could mean the linear channels are either part of Disney or aren't. And what I mean by the linear channels are the cable-only channels, like A&E and Freeform and Disney Channel, and then the broadcast channel, ABC and its stations.

Those may or may not be part of the company. They may be-- maybe they're put in some sort of joint venture of some sort. You can imagine all sorts of different dispositions for those assets. But then you're left with the core of the company, which I think is an amazing core. You have Disney, Marvel, Star Wars, and Pixar, the four brands that mean anything in entertainment, I think. We ran the table on those brands.

The franchises that exist beneath those brands, you have all the different-- and they're hugely powerful business platforms on which those brands are exploited. There's streaming, which I think will become profitable very, very soon. I told you I'm a total believer in that. There's streaming. There's theme parks. People forget about consumer products. It's a massively profitable business for the Walt Disney Company. So you can exploit those franchises like no other company along those business platforms. And then you have theatrical releases and all the other ways to exploit content before it goes into streaming.

And then games is the one place where I think Disney has not yet made a substantial investment. It's also a place where people can interact with and spend a lot of time with their favorite characters in context. So in a game context, they're in the places that you want to see them. And you can interact with the characters. You can control them. And you can monetize it. So gaming is the last big sort of business platform. You plug that into those core assets, no matter what happens to those linear networks, and you have a really great growth company sitting there. So I think there's a really bright future for Disney.

ALEXANDRA CANAL: So bright future for Disney, still unclear on succession. Why do you think it's been so difficult to find a permanent CEO for this company?

KEVIN MAYER: There's a tradition at Disney that has been difficult to do. People thought-- if you go back to Michael Eisner's transition to Bob Iger, that was forced by the board, first of all, that Michael had to leave. And I'm a huge Michael Eisner fan. I think he did a great job. And people had their doubts about Bob Iger at the time. He turned out to be one of the best CEOs in American history, frankly. And I had the front row seat to that, and I can attest to it. But that looked like it was a tough transition at the moment.

And it's just hard. I think people, especially if you're a CEO as successful as Bob, I think it pained him to see the company not live up to the standards that he had set for it. So stepping back in is something I think he felt he just had to do. It was just, he had to step in to save the company. I think he'll do it.

I'm a huge believer in Bob Iger. He will pick the-- he and the board, by the way-- it's the board's decision, not just Bob's-- will pick a great successor. They have several of them in the company. There are people outside the company that they could go to. I think this one-- the next one will be a good process.

ALEXANDRA CANAL: And you've held a lot of C-suite positions, executive positions. How do you lead a company that's-- the stock is struggling. Morale is low. You're fending off activist fights. How do you determine long-term decisions when you're dealing with all these short-term problems?

KEVIN MAYER: It's-- Bob has his hands full, I got to say. You take someone like Bob. He's very capable. He's multifaceted. He has a lot of range, so he can handle it. Not everyone could handle a situation like that. But I think you have to be disciplined. And Bob's always been very strategic. So when we did M&A, we were very much about, let's look at the strategy. Let's look at the context. Look at where we want this company to be and then look at what assets can plug in there to get us there.

And we were very urgently-- we urgently wanted to have brands because we felt brands were the most important thing that could ever-- that any company can have, but especially entertainment. So that's something that we really felt was important. And he's very disciplined about that. So I think he's going to look at all his options. He's going to stack up where the end points were. He wants to be in the end.

And he'll do-- take the actions that he thinks will provide the most value to shareholders in the end. And he'll look at it that way. And when you do the right things, strategically, for the long-term, that don't impair you too much for the short-term, I think you can work through these multiple issues. I think people like Nelson Peltz will acknowledge, OK, that looks like the right strategic move. When the stock market starts to see less uncertainty, one of the things that they're reacting to the stock market is what's happening with Hulu. We're about to find out.

What's going to happen with ESPN? What's going to happen to the linear networks? What's Bob's vision for the overall company in three to five years? When all those uncertainty starts getting knocked down, and they're starting to get knocked down, I think you'll see the stock price react. So I think that when the stock price goes up, he articulates a great strategic vision. That'll take care of most of the problems he has.

ALEXANDRA CANAL: And real quickly, with your work at Candle Media, you've made a lot of investments. Would you ever consider selling yourself?

KEVIN MAYER: Well, we're owned by private equity, by Blackstone. Great partners for sure. And private equity wants an exit. In fact, you have to have an exit. So look, there's three things that could happen to Candle. We are at a scale right now. It could be a public company. So I guess we could IPO at the right time when the market's allowed and when the strikes are over, and we have our growth footing back and everything like that.

We could be bought by a strategic, a Disney or Warner Brothers. Any of those would be happy to have, especially Moonbug, which has Cocomelon, which is the biggest kids' property in the world right now. So it really fits with any of these media companies, and we bring a little bit of a new media mindset to it also, which I think modernizes whoever buys us, and we bring that perspective. So it could be a strategic buyer.

And private equity companies often recapitalize and sell to other private equity companies. So who knows? Maybe KKR owns us in three years or four years. But look, we're set up for any of them. Tom and I are working with Blackstone not out of ego or anything else. We want to create a great new company. We want to provide value to shareholders. And whatever that path is, that's what we're going to do.

ALEXANDRA CANAL: All right, well, we'll see. Kevin Mayer, co-CEO and co-founder of Candle Media, thank you so much.

KEVIN MAYER: Thank you.

ALEXANDRA CANAL: Thank you. Really appreciate the conversation. Sure.