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In Defense of CEOs Jonah Peretti and David Zaslav (But Not Really)

By Dustin Rowles | TV | May 22, 2023 |

By Dustin Rowles | TV | May 22, 2023 |


Before my own writers and our regular readers strangle me through their computer screens, let me preface this by saying it’s not actually a defense of Peretti and Zaslav. It’s an indictment of their legal obligations.

Allow me to explain: In law school, I took a corporations class with a professor who had clerked for Antonin Scalia. On the first day of class, he showed us a picture of Michael Douglas’s character in Wall Street, Gordon Gecko, and used Gekko’s catchphrase, “Greed is good,” as a constant refrain during his first lecture. I thought he was joking.

He was not.

In the context of corporations, greed is not only good, it is required. Here’s what every law student who takes a corporations class will learn: A corporation’s CEO has a fiduciary duty to the shareholders and the board of directors. A “fiduciary duty” means “the legal obligation a party has to act in another party’s best interest.” That is probably obvious. What is not as obvious is the fact that CEOs do not owe a duty to the employees or even the consumers. Their duty runs only to the shareholders. Failure to honor that obligation can get a CEO not only fired but sued.

It’s a messed up way to run a company, prioritizing rich people over everyone else. But it’s the law. What it means in reality is that the first and only real priority of David Zaslav — the CEO of Warner Brothers Discovery — is to the bottom line. If he can cut employees and turn a bigger profit, he’s obligated to. If Warner Bros. Discovery does better financially burying Bat Girl than releasing it, that’s what he does. If paying residuals to writers, actors, and directors cost more than a streaming title is worth to the service, the title has to be removed. People are numbers. That’s it.

Granted, if removing the title upsets enough consumers or stirs enough hard feelings with the existing talent to cost the corporation long-term financial damage, the CEO shouldn’t remove the title because it might cause more financial harm than not. That’s why it’s in our interest to raise hell whenever possible.

But the CEO does not necessarily have to consider the long-term financial implications of a decision, either. Look at Jonah Peretti, the CEO of Buzzfeed. His obligation to the shareholders meant throwing over the entire news division of Buzzfeed to save the sinking ship. That’s bad for the long-term value of Buzzfeed, where the news division has been largely responsible for returning visitors and the site’s minimally respectable reputation. Now it’s just quizzes and lists mined largely from their own comments section, although even the content they steal from their own readers will soon be replaced by “generative AI.”

This is mostly bullshit designed to prop up the share price. “Generative AI” is not going to save that company. Most of their posts are less than 50 words. It will take as long for an editor to feed instructions into an AI than it will to write the posts. Buzzfeed was a company built around social media traffic. Facebook traffic has dried up. Ironically, AI itself will probably eat into its search traffic enough to cripple it. The business model is not sustainable. Peretti is trying to keep the share price up for as long as possible for the shareholders before the company is eventually dissolved or sold off for spare parts. He has to as CEO because it’s the only play he has. Corporations have to increase profits or they fail. The employees and the readers are only part of that equation to the extent that they can contribute more revenue than they consume.

It takes a certain kind of person to be a CEO, and in a lot of cases, that type of person is someone who doesn’t give a damn about the people. They are born villains, people who can continue to give a commencement speech while being ferociously booed. They’re all Roger Goodells. They’re doing the job they are legally obligated to do so they won’t get sued. I’m sure they had souls at some point.

However, this is also why Jack Dorsey initially thought it was a good idea to sell Twitter to Elon Musk. A private owner could divorce “the digital town square” from the constant need to maximize shareholder value. That’s good, in theory. Unfortunately, capitalism — and the pressure to maintain shareholder value — sometimes is the only leverage the public has. Elon Musk is the second richest person in the world, and Twitter is already half the value of what he paid. He doesn’t care. He has enough money to ignore users and advertisers and turn the social media site into a white supremacist cesspool to the benefit of his own ego. It’s never going to get better because we have no leverage.

How is this going to play out in the WGA strike? Are the studios ever going to agree to the writers’ demands out of the goodness of their hearts? Absolutely not. There’s an equation. Math is involved. The studios will compromise only to the extent that it doesn’t hurt their bottom line. The picketers exist to create bad headlines, which will hurt stock prices, but more importantly, it shuts down productions. An inflection point will arrive when enough productions are shut down and enough content dries up to make it more profitable to meet the demands of the writers than continue the strike. The writers, meanwhile, are not getting paychecks, and collectively, they have to do some math, as well.

The good news is: CEOs are not allowed to operate out of spite. They can’t stick it to the writers. As soon as the strike starts to hurt shareholder value, the CEO is legally obligated to settle. Unfortunately, the financial and emotional harm goes both ways. Meanwhile, if the viewers have to wait until December to watch new episodes of The Rookie or NCIS, so be it. In the mind of a CEO, we do not matter. Greed is good. By law. Everything else is insignificant.