Terry Semel at TheGrill: Value of Hollywood Content Is on the Rise

The former studio head and Harry Sloan debate 3D, Netflix and Hollywood's digital future during the kickoff session of TheWrap's annual media conference

Content companies are about to see a rise in the value of content because Internet companies need what they sell, Terry Semel said at the opening of TheGrill conference on Monday. 

Semel, the former chairman of Warner Brothers and CEO of Yahoo, said that companies like Google, Apple, Netflix and others are realizing that they need what Hollywood creates to drive advertising revenue.

(Semel, at left, and Sloan; photographs by Jonathan Alcorn)

“Silly little Internet things are cute for a minute, but it’s not what big advertisers were looking for,” Semel said, at the kick-off panel discussion, "Hollywood's Future: Between Wall Street and Silicon Valley."

 “They’re looking for more stable content that could be on television, could be on cable.”

Also read: Harry Sloan to Obama: Tax Me

Semel said that Hollywood will soon have four or five more "HBOs" as customers for their content, pointing to the new media companies that need quality content. 

Watch Terry Semel and Harry Sloane's Full Session at TheGrill here.

"They’re now looking for how do we get our arms around content," Semel said, predicting a coming "groundswell."

Watch: Semel discusses Hulu's true value at TheGrill

"Their advertising business was missing one huge factor and that was first class important vehicles," he added. 

One thing he doesn't anticipate happening in the near future is that tech companies such as Apple or Amazon will actually buy a media company, as AOL did with Time Warner at the dawn of the aughts. 

But that could change. "I would predict that ultimately we will see that again," Semel said.

Harry Sloan, co-founder of the film fund Global Eagle, argued that media companies are challenged. 

“We have to figure out where this assault on traditional media by digital media is going,” Sloan said. He said he would not be investing in newspapers, but was worried about the future of "serious journalism" in a world of destabilized business models. 

Also read: Harry Sloan & Jeff Sagansky: The Future Is Content — and It's Outside the U.S.

Sloan, the former Metro-Goldwyn-Mayer head, whose Global Eagle recently rounded up $190 million to invest in media companies, said that advertisers have been slow to capitalize on the viewers movement from their living room television sets to their laptops and iPads. He noted that 18 percent of viewers watch television programming digitally, but only 5 percent of the advertising has transitioned with them.

Also read: Steve Levitan at TheGrill: We Need a Better Way of Counting Viewers on Emerging Platforms

The duo kicked off the TheGrill, which runs all day Tuesday, as keynote speakers. A broad array of industry figures, including Arianna Huffington of AOL Huffington Post Media Group, “Modern Family” co-creator Steve Levitan, and the Black Eyed Peas founder will.i.am, willl discuss the future of the entertainment business during TheWrap's conference.

During their session, Semel and Sloan emphasized that entertainment and technology businesses remain very much in flux.

Also read: Terry Semel Warns Yahoo: Don't Rehire Carol Bartz

Indeed, moderator Sharon Waxman, TheWrap’s Editor-in-Chief, noted in her opening that even digital leaders such as Netflix can lose their footing during this period of rapid technological change. Late Sunday, Netflix CEO Reed Hastings apologized for bungling a price hike and split its streaming service from its DVD by mail business, causing even more outrage.

Ultimately, both Sloan and Semel seemed to think that Netflix would be able to endure its stock plunge and subscriber blowback.

“I think they’ll get over it,” Semel said. “I think they overreached. They should have been more sensitive to pricing. It will slow them down until they find some way to come back to their customers.”

After all, Netflix’s subscription model and 24 million subscribers are still the envy of the Internet. It is a model, Sloan noted, that Hulu has tried to emulate with less success.

He said that for studios, “the issue is not just what to do with Hulu,” now on the auction block. “It’s how to make sure that a competitor to Netflix exists.”

More competition will allow studios to charge a higher price for their films and shows — helping to make up for the constriction in the DVD market.

Semel and Sloan both still have skin in the game. Semel said that he remained an active investor in several Silicon Valley companies and Sloan is actively on the hunt for a new acquisition.

They differed on the importance of 3D. Sloan admitted that he was very intrigued in the format as an investing opportunity, noting the recent success of “The Lion King's" 3D re-release and the potential for filming sports events and concerts with the technology.

But he admitted, “I don’t know how to play it.”

Semel said 3D is a "fad,” adding, “I think it went overboard a little bit. Are we really going to sit in our house and watch TV with those glasses?”