John Antioch Blockbuster's chairman and ceo walked into the wood. Paneled confer room in the General Motors building high above Manhattan. As board members were taking their seats. It was February of two thousand and seven and antiocha was feeling pretty good about himself the board was about to learn that their nemesis Netflix and nazi a Reed Hastings or on the ropes in a final transparently, desperate bid to beat blockbuster things had offered to buy blockbuster on three million subscribers for two hundred dollars per, even though Santiago found Hastings. Descending attitude toward blockbuster insufferable. He had agreed to Hastings request to bring the proposal to the board What he didn't tell Hastings was that,

recommend the board, reject the offer and let Netflix wither and die Carl Icahn like to preside over these meetings, even though he was just a board member Tiako was chairman: Antioch an icon, regularly locked horns over blockbusters, huge debt, how much on Tiako spent on blockbusters online service. With this offer, though, on Thiago was expecting praise for my Khan. He sat back and let his lieutenant Shane Evangelist Layout Hastings Proposal and the recommendation to reject which Woodbury Netflix Blockbuster online is adding twenty five thousand subscribers a day. Thanks to total access at this rate, will have Four, four million subscribers in six months. We need five million subscribers just to break even to stop the losses we take on every time, a subscriber

Saturn online DVD for a free store rental We don't want to sell for the price Netflix is offering. Let's just keep doing what we're doing to make sure online grows. We have all the momentum. So, let's just hang on a little longer icon, barely looked at on taco. He seemed to not even be listening to what evangelist was saying. Instead, he was looking down at a document and pressing his lips together. The moment antiocha was savoring would be short, lived episode of business wars is brought to you by the Simpsons on Disney plus the Simpson This is one of the longest running and most award winning series in history, and you can stream the first thirty seasons of the Simpsons and so much more right. Now, when you subscribe to Disney plus in the US.

From wondering this is business, I'm David Brown. Traveled, a long rd to get to where he stood now before the board. With his foot on Netflix is throat, it had required hubris and dirty tricks on both sides: an inexpensive price war. That began for blockbuster three years earlier on July, 15th, two thousand and four. That's when Netflix initiated a conference, call on quarterly earnings with Wall Street analysts and investors. Hastings was

going about his growing subscriber base, its soaring stock price and it seemingly unstoppable future with Netflix looking to grow abroad. What Hastings didn't know at the time was that the blockbuster chiefs in Dallas we're quietly gleefully listening in on the call waiting for the moment to pounce Shane Evangelist in his lieutenants hung on Hastings. Every word One analyst asked Hastings about blockbusters. Rumored online service, What's new, this would be the moment. Hastings would step into the trap of Angela was silently waiting on. That conference. Call waiting to launch a giant screw you at Hastings for the months of insults, still rang in his ears. I dot com the approximately as successful against us as Barnes and noble it's against Amazon launch it. This is gonna, be fun

Netflix Conference call was still underway way. After online, launched its new website for the first time public blockbuster just launched an online movie and dvd side and the market They have been waiting for this move. It was a blue and yellow clone of netflix dot com. The subscription was two dollars cheaper and it came with coupons for free in store. Reynolds as Hastings was speaking to analysts. Netflix's stock price began plummeting Netflix so bearing Mccarthy began to frown, as he looked at share prices on his laptop Netflix had nothing but good news to report. So why was the stock price dropping on the NASDAQ ticker, but the answer from one of the analysts questions? The consumer blog hacking, Netflix reported that blockbuster had just launched a beta

if it's online DVD Rental Service blockbuster online as they wrapped up the call Hastings typed blockbuster online com into the address bar on this laptop back in Dallas evangelist and his team had expected this to they. Were you url tracker is Hastings in Mccarthy, created, accounts and click through the site. They didn't bother to disguise themselves Ben Cooper, blockbusters marketing. After spotted them right away. Welcome to blue Buster online reading berry on the site came up Hastings in Macau He sat staring at Hastings Laptop in utter shock. They stole it. They copied everything Mccarthy's voice was rising and fury. We are compete. With blockbuster we against ourselves. Hastings in his co mark. Randolph has spent seven years, 10s of

millions of dollars and thousands of hours with focus groups to develop Netflix is data gathering website what didn't know yet was that evangelist hadn't copy. The website he had sent spies, posing as Netflix subscribers into its distribution. Centers too, the blockbuster team didn't have a fraction of the technology that the Netflix founding team had they were all in their 20s and had one thing that qualified them to compete against Netflix at all the belief they could do it. Antiok oh gave Twenty five million dollars in six months to build a website. They could catch Netflix and they had done it. They survived a grueling three year, price war they had struggled to match. Netflix is superior technology. Seven year head start, they had battled against blockbuster zone, store operators and its board, and they had stop netflix from stealing customers.

Now, let's get back to that board meeting we don't want to sell for the price Netflix is offering, let's just keep doing what we're going to make sure online grows. We have all the momentum. So, let's hang on a little longer. Well after evangelist finished, icon, peered up from the agenda at Antioche, oh acting, purposefully unimpressed for two years he had been trying to oust Antiok. Oh this latest development would make it harder if he forced out on to ya, he'd have to give him his huge fifty four million dollar termination package, the next agenda item was routine, but its impact on block

and on the home. Entertainment world would be profound. The board turned to the approval of annual bonuses for Antioch in his executive team. The directors approved each executives bonus without discussion until they reach Antiochus name icon glanced at the amount typed. On the paper seven point: six million dollars. His face went white with rage. There is no way we're going to pay you all this money. What do you mean you approved it last year they're on the compensation committee? I didn't know going to be this big, well, I've done the math? How this is going to look to our investors. The stock is lost almost half its value in three years, and you barely posted a profit last year and you think you're in tight this kind of compensation I hit. All the tar

it's that you said the board ordered Antioco out of the room while it discussed his bonus, when he returned several board members averted their eyes. Icon looked straight at Antioche, oh, you will get half the bonus that is all going to get an. If you dispute this, you get nothing. We'll see about that. Antiok, a walk out of the board room. When he returned to Dallas there was a check NG for him on his desk for two million dollars, far less than that half bonus c been promised as the rage rose in him. He strode into the fish of a cfo and thrust the check under his nose. Send this back tell them, I'm not accepting this I'd rather take nothing. Antiok, oh called turning to demand arbitration over the bonus. You would have agreed to cut the amount as a good,

will gesture to a stockholders, but he was damned if he was going to let icon bully him into this as soon as icon heard about the ruckus. He went on the offensive in as public a way as possible on television and in the national press now battle inside blockbuster. Heats up as Carl Icahn goes on the offensive. I've said from the start that I found the contract to be unconscionable contracts of this type for a major problem in corporate America. It undermines accountability. It's not a personal thing. I like John on Tiako personally and wish him all the best in the future. Only days before the dispute was to go into arbitration Antioch when his wife LISA were at their ranch outside Dallas, watching a movie in their bedroom it. Midnight in New York. When I can called Don As soon as LISA heard on Tiako, say hi Carl, she made a beeline to the liquor cabinet to bring our house

in a bottle of tequila in a shot glass she could tell icon, was lit up with a couple of martinis himself and spoiling for a fight. Why are you dragging the company through another fight over your exorbitant package don't care how that double bonus looks to shareholders. Who've lost almost half their value in blockbuster just accept a lower bonus and let's call off the arbitrary instead of the usual adrenaline, that Anti Ohko felt at these moments. Something different came over him, something closer to common detachment. He realized he was done with icon and his power play. Antiok Owen accomplished what he set out to do with blockbuster and Now he wanted out I'll. Tell you what Carl. Let's negotiate my severance package. For the next hour, or so he an icon ham.

Out a new compensation package. This one was half the size. Of the fifty four million dollar package had threatened icon with two years earlier, but Anti Ohko got his full bonus of seven point: six million an he donated it to his favorite charity, the boys and girls clubs of America. After what was reportedly a fierce battle between Carl Icahn and blockbuster, see no John and Thiago is out and Jako agreed to stay on until icon in the board found a new ceo for blockbuster. What on Thiago could not have anticipated was that icon would perhaps out of spite bring on the anti anti aka. I can proudly announce the new blockbuster ceo in July of two thousand and seven. He was Jim keys. He in Antioch would work together earlier in their careers at the Southland Corporation parent company of the seven hundred and eleven convenience store chain keys, hated, Auntie, Ocho

Keys was a ruddy wrote man in his 50s brusque and all rough edges. It was affected that he would continue on winning strategy, but keys was Turman to erase all traces of his former rival keys to staunch the bleeding of capital, a reasonable proposition, except for where he wanted to make the cut shortly after he moved into a sleek office at the fifty six story, Renaissance Tower in Dallas jeez hum and evangelist from blockbuster online whether you're a Action is woo, hoo excellent or I karumba. This is dead. At least some exciting news, the Simpsons are now a part of Disney's new streaming service Disney. Plus you heard about that right. Homer Marge BAR

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first thirty seasons of the Simpsons and so much more right. Now, when you subscribe to Disney plus support business. Wars comes from capital, one with the spark cash card from capital you earn unlimited two percent cash back on all of your business purchases. Think about it. Unlimited two percent cash back on everything you buy for your business and that cash back and add up to thousands of dollars, which you can reinvest back in Your business, so you can keep growing. Imagine what unlimited two percent cash back could do for your business, learn more capital, one dot com. What's in your wallet, Jim Keys listened as evangelist made his pitch for blockbuster's online business. Jim. There are three things we have to do. First, we got a buy movie link to compete with Netflix is news

streaming service. Second, I have a plan to cut twelve million dollars in cost from our operations and third, we have a new market campaign for total access, evangelist waited. Then keys dropped a bomb the online business is killing blockbuster. You've spent four fifty million dollars, marketing total access and your way over budget, I'm cutting off your marketing budget, so we can focus on the stores. Evangelist was shocked, cheese. Suggesting essentially killing the online part of the business. The one thing blockbuster was finally getting right. Defying reason: She's wanted to return to the days of video rental stores. The for seven hundred and eleven exec, was proposing rolling back everything that had put blockbuster on top in his last month. So CEO Antioco had urged evangelist to work harder,

Grow total access. They needed five million subscribers to stop the losses and break even, and they were all who's there. Marketing and in store dvd swaps would stop growth, rightness tracks, evangelist, tried reasoning with Please you got a billion dollar asset gym. If you don't want to run it sell it. Who is going to want this money losing proposition well, how? that guy in LOS Gatos California, who offered us two hundred dollars a subscriber six months ago. Go talk to Reed Hastings in flicks he's losing subscribers to us. Maybe he'll give you three hundred dollars. This up keys, dismissed, evangelist and

used to listen to any further talk about selling blockbuster online after a bruising battle blockbuster, which had been solidly on top now finds itself at the mercy of Netflix by the end of the year. Evangelists part of the business had loste nearly half of its subscribers and he and most of his team had quit and Netflix. Well, Netflix has started growing again by seeking to end the bleeding and marketing keys. It only succeeded in opening an artery. Ultimately, it would turn out to be a fatal self inflicted wound a few months later at a dinner party in San Cisco thrown by board members of his new company US auto parts network. Evangelist saw familiar face sitting across the table, Reed hastings- they never met, but they knew who each other was, and, after a moment of awkwardness,

things open. The conversation you had us in checkmate. You know we would paid more for those subscribers. I know evangelist shook his head. Ruefully, you had a superior proposition, so How long do you think we have until keys, runs blockbuster right into the ground? Evangelist considered this for a moment. I'd say you have about two years. In fact, it was three years after that conversation that blockbuster corporation filed for chapter eleven bankruptcy September, 23rd, two thousand and ten. After his war with blockbuster Hastings learn to be more circumspect when speaking about the competition next time he resolved to replace bluster with subterfuge.

Now that promise to himself was about to be tested, Hastings and learn not to trash talk. His foes, which now included Red Box in the cable when he had the chance to go on C n, b c or something he down play Netflix's role in the new digital ecosystem and talk up the importance in staying power of cable companies like he meant it at the end of the day. Online services like ours are just drops of water in an ocean of viewing take cable, we're complementary to cable in the not too distant future. The studios, the tv networks will be their biggest customers, so everybody wins. You can tell Hastings is up to right. Hastings wanted to lure cable companies into complacency by getting them to think about all those licensing fees they would earn from Netflix, which was streaming thousands of cables.

The new movies and tv shows Jeff you kiss was chairman and ceo of time. Warner media giant definitely still view because looks at Netflix, and what does he see a good deal for Time Warner? I mean what how could an online video business? First, the big networks, the media giants like time, Warner oh come on as Bukas put it it's a little bit like. Is the albanian army going to take over the world? I don't think so, but viewers got used to what they wanted when they wanted for as long as they wanted studio executives, didn't know it Hollywood was already on fire and they hadn't even noticed the smoke, but before taking on the Hollywood gods, Netflix would first have to slay blockbuster on the next episode of business wars, evangelists fight to the end, including

corporate espionage. We got Netflix subscribers right. Let's get him down to those distribution. Centers tell him to bring along a Netflix envelope or something and pretend to be returning a dvd. I don't care we information about how the organizing their inventory pictures Pictures of the inside of those warehouses- I hope you enjoyed this episode of business wars, Please subscribe on Apple podcast, Stitcher, Tunein favorite, listening, app, find link on the episode notes, just tap or swipe over the cover art. You'll also see some offers from our sponsors, and you Support our show by supporting them, if you like what you've heard, love you to give us a five star rating and tell your friends how to subscribe to another way, to support this is to answer our short survey of one dot com. Slash survey, David Brown Keating author of the book. Netflix wrote this

Karen Lowe is our senior producer and editor sound designed by Jeff Smith are producers are Non Lopez. Ben Adair or one slash. Three. Hey, I'm Dan Rubenstein, the host of the Wondry show sports wars. This week we start anew five episode series on the battle between two of the greatest players to ever catch a football or talk trash, Jerry, Rice, Vs Deion Sanders, one loved, only football, the other loved only himself. They were like in one way, though both men hated each other's guts to listen to Dion versus Jerry and other great stories subscribe now to sports wars from wonder