1 00:00:08,000 --> 00:00:11,319 Speaker 1: Welcome to another episode of Strictly Business, the podcast where 2 00:00:11,320 --> 00:00:13,280 Speaker 1: we talk with some of the brightest minds working in 3 00:00:13,400 --> 00:00:18,040 Speaker 1: media today. I'm Andrew Wallenstein with Variety. We're midway through 4 00:00:19,280 --> 00:00:22,000 Speaker 1: so what better time is there to step back and 5 00:00:22,079 --> 00:00:24,600 Speaker 1: taken the big picture for a media sector that has 6 00:00:24,640 --> 00:00:28,400 Speaker 1: been impacted by the pandemic in many different ways. To 7 00:00:28,480 --> 00:00:30,639 Speaker 1: sort through it all, I've brought back to the podcast 8 00:00:30,720 --> 00:00:35,600 Speaker 1: Navine Sarma, Senior director of SMP Global Ratings. He first 9 00:00:35,600 --> 00:00:38,920 Speaker 1: came on Strictly Business in early where he demonstrated a 10 00:00:39,040 --> 00:00:42,400 Speaker 1: keen eye for understanding the industry from his vantage point 11 00:00:42,400 --> 00:00:45,320 Speaker 1: as a credit analyst, and now he's back to offer 12 00:00:45,360 --> 00:00:48,559 Speaker 1: an updated perspective. It's all coming up today on this 13 00:00:48,600 --> 00:01:00,080 Speaker 1: episode of Strictly Business. Welcome back to Strictly Business is 14 00:01:00,080 --> 00:01:02,520 Speaker 1: where my guest is an E. Vins Arma, Senior director 15 00:01:02,560 --> 00:01:06,039 Speaker 1: of SMP Global Ratings. I wanted to start with sort 16 00:01:06,040 --> 00:01:10,039 Speaker 1: of the broadest possible context in terms of taking a 17 00:01:10,080 --> 00:01:14,360 Speaker 1: look at where the global economy is in the emergence 18 00:01:14,520 --> 00:01:18,479 Speaker 1: from the pandemic and then sort of put that within uh, 19 00:01:18,640 --> 00:01:22,280 Speaker 1: put the media business within that context because obviously one 20 00:01:22,319 --> 00:01:26,720 Speaker 1: impacts the other, sure absolutely, so it's A. It's an 21 00:01:26,720 --> 00:01:31,040 Speaker 1: interesting time right now because you know, we've certainly had UM, 22 00:01:31,080 --> 00:01:32,760 Speaker 1: you know, a lot of growth this year, a lot 23 00:01:32,800 --> 00:01:36,000 Speaker 1: of expectations. We expect in the US that GDP will 24 00:01:36,040 --> 00:01:39,759 Speaker 1: grow more than than six clearly off of a base 25 00:01:39,880 --> 00:01:42,759 Speaker 1: last year, but still that's really strong growth. But you're 26 00:01:42,760 --> 00:01:47,280 Speaker 1: starting to see signs of pressure on potential growth that 27 00:01:47,319 --> 00:01:50,000 Speaker 1: could lead to you know, slow different growth, and those 28 00:01:50,000 --> 00:01:53,040 Speaker 1: are primarily things around inflation. We've seen inflation step up 29 00:01:53,080 --> 00:01:55,240 Speaker 1: in the United States, and that's really from a couple 30 00:01:55,280 --> 00:01:57,640 Speaker 1: of reasons. Right you have the stimulus money that the 31 00:01:57,680 --> 00:02:01,120 Speaker 1: government has UM. The US government has it into UM, 32 00:02:01,240 --> 00:02:04,000 Speaker 1: you know, to to UH to the population. A lot 33 00:02:04,040 --> 00:02:05,800 Speaker 1: of that money is sitting in bank accounts and is 34 00:02:05,840 --> 00:02:08,360 Speaker 1: not being spent, and that's driving at prices. And the 35 00:02:08,400 --> 00:02:11,799 Speaker 1: other thing is you're having pressure from supply chains, which 36 00:02:11,840 --> 00:02:13,400 Speaker 1: is something that we're spending a lot of time looking 37 00:02:13,440 --> 00:02:15,680 Speaker 1: at as well, not just within media but across all 38 00:02:15,680 --> 00:02:19,280 Speaker 1: of our corporate ratings. UM is supply chains are under pressure, 39 00:02:19,520 --> 00:02:21,800 Speaker 1: and you're seeing pricing go up because of that. And 40 00:02:21,840 --> 00:02:24,600 Speaker 1: then the second thing is the pressure UM the potential 41 00:02:24,600 --> 00:02:27,359 Speaker 1: pressure from interest rates going up. And you know, we've 42 00:02:27,360 --> 00:02:29,000 Speaker 1: heard some some statements out of the FED over the 43 00:02:29,120 --> 00:02:31,520 Speaker 1: last couple of weeks. And then the case that maybe 44 00:02:31,720 --> 00:02:34,160 Speaker 1: an interest rates could go up sooner rather than what 45 00:02:34,200 --> 00:02:38,280 Speaker 1: people expected, which is twenty two maybe twenty three, And 46 00:02:38,280 --> 00:02:41,000 Speaker 1: and what that means from a media standpoint, and really 47 00:02:41,000 --> 00:02:44,000 Speaker 1: from a corporate standpoint, that you had a lot of 48 00:02:44,040 --> 00:02:47,240 Speaker 1: companies make it through the crisis by issuing a lot 49 00:02:47,280 --> 00:02:50,160 Speaker 1: of debt to sharp liquidity, um, you know, could cash 50 00:02:50,200 --> 00:02:52,680 Speaker 1: on their balance to try to you know, to survive 51 00:02:52,720 --> 00:02:56,200 Speaker 1: the pandemic. They've survived the pandemic, but they have balance 52 00:02:56,240 --> 00:02:59,360 Speaker 1: sheets that are are over levered, and so you know, 53 00:02:59,480 --> 00:03:01,519 Speaker 1: the last they want to see is inflation and you 54 00:03:01,600 --> 00:03:04,240 Speaker 1: know kick in and also interest rates go up. And 55 00:03:04,280 --> 00:03:06,400 Speaker 1: so that's a that's something that we're spending a lot 56 00:03:06,440 --> 00:03:08,760 Speaker 1: of time thinking about because we have a lot of 57 00:03:08,760 --> 00:03:11,400 Speaker 1: companies like that, and I'm sure we'll touch on some 58 00:03:11,480 --> 00:03:15,320 Speaker 1: of them. Sure. I'm also curious to hear your perspective 59 00:03:15,320 --> 00:03:20,120 Speaker 1: of what this sort of global economy means with regard 60 00:03:20,200 --> 00:03:23,919 Speaker 1: to advertising, because I would imagine, I mean, we're seeing 61 00:03:23,919 --> 00:03:27,080 Speaker 1: the data come in both on the TV side and 62 00:03:27,080 --> 00:03:30,320 Speaker 1: the tech side. It just seems like marketers are chopping 63 00:03:30,360 --> 00:03:34,040 Speaker 1: at the bit to get at consumers again. Yeah, yeah, 64 00:03:34,080 --> 00:03:37,680 Speaker 1: absolutely right. What's interesting. I mean we thought advertising would 65 00:03:37,720 --> 00:03:41,280 Speaker 1: be you know, weaker last year, it wasn't. Um and 66 00:03:41,440 --> 00:03:43,440 Speaker 1: and we can talk about you know what this year, 67 00:03:43,440 --> 00:03:46,400 Speaker 1: which is you're getting you know, a bifurcation some sectors 68 00:03:46,560 --> 00:03:49,000 Speaker 1: that are recovering faster than others. But let's just start 69 00:03:49,040 --> 00:03:52,840 Speaker 1: off by saying, you know, digital advertising was down maybe 70 00:03:52,920 --> 00:03:55,960 Speaker 1: negative for one month last year, April, and then it 71 00:03:56,000 --> 00:03:59,200 Speaker 1: came roaring back. And so you know that the shifts 72 00:03:59,240 --> 00:04:04,120 Speaker 1: in spending to digital really helped overall advertising recover much faster. 73 00:04:04,640 --> 00:04:07,520 Speaker 1: And if you look at more traditional advertising, whether it's UM, 74 00:04:07,600 --> 00:04:11,440 Speaker 1: you know it's on television or radio or outdoor television, 75 00:04:11,640 --> 00:04:16,000 Speaker 1: especially national television hung on really really well. Advertisers seemed 76 00:04:16,000 --> 00:04:18,039 Speaker 1: to back off a bit, but then realize that the 77 00:04:18,080 --> 00:04:20,039 Speaker 1: recovery was coming, and so they wanted to be in 78 00:04:20,040 --> 00:04:23,120 Speaker 1: front of consumers, you know, pitching their brands, and so 79 00:04:23,160 --> 00:04:26,080 Speaker 1: they didn't pull backs as quickly or as as thoroughly 80 00:04:26,120 --> 00:04:28,000 Speaker 1: as we thought they were going to. And then you know, 81 00:04:28,160 --> 00:04:31,400 Speaker 1: you had you had political advertising which really helped local 82 00:04:31,920 --> 00:04:34,960 Speaker 1: and really helped support local television UM and then you 83 00:04:35,000 --> 00:04:36,599 Speaker 1: know you kind of spring to this year. You have 84 00:04:36,640 --> 00:04:39,560 Speaker 1: outdoor coming back really strong. You have local when some 85 00:04:39,600 --> 00:04:42,440 Speaker 1: of these sectors are talking about already being in twenty levels, 86 00:04:42,800 --> 00:04:45,520 Speaker 1: which is far faster than we thought. Um, you know 87 00:04:45,640 --> 00:04:48,840 Speaker 1: National is trailing a bit, but you know a bit 88 00:04:48,880 --> 00:04:51,120 Speaker 1: of that as a secular trends as well. But I 89 00:04:51,160 --> 00:04:53,840 Speaker 1: think overall, when you look at advertising, it's a it's 90 00:04:53,920 --> 00:04:56,200 Speaker 1: a lot better shape then we thought it was going 91 00:04:56,240 --> 00:04:58,920 Speaker 1: to be at this point. But Navine, it seems a 92 00:04:58,960 --> 00:05:01,919 Speaker 1: little nutty to me the TV side, because what we 93 00:05:01,960 --> 00:05:06,760 Speaker 1: have seen clearly even before the pandemic, accelerated by the pandemic, 94 00:05:07,240 --> 00:05:10,599 Speaker 1: is linear television is I don't I don't know what 95 00:05:10,680 --> 00:05:15,880 Speaker 1: metaphor do we use, falling off a cliff, clearly declining precipitously. 96 00:05:16,560 --> 00:05:21,359 Speaker 1: So why are they getting more money for less viewers? 97 00:05:22,680 --> 00:05:26,200 Speaker 1: You and I talked about this recently. It's crazy because 98 00:05:26,240 --> 00:05:29,760 Speaker 1: you know, you think that, you know, given those dynamics, 99 00:05:29,760 --> 00:05:32,359 Speaker 1: you'd start to see a weakening and CPMs, but it 100 00:05:32,440 --> 00:05:35,600 Speaker 1: just isn't happening. And I think primarily it's because television 101 00:05:35,640 --> 00:05:38,360 Speaker 1: is really the best way and at the moment, the 102 00:05:38,400 --> 00:05:41,040 Speaker 1: only way to reach the broadest audiences. So if you're 103 00:05:41,080 --> 00:05:44,960 Speaker 1: advertising you know, to to generate transactional revenue, you're gonna 104 00:05:45,000 --> 00:05:47,880 Speaker 1: go digital. But if you're looking to build brands, you 105 00:05:47,920 --> 00:05:50,279 Speaker 1: still have to go to television. And so you know, 106 00:05:50,320 --> 00:05:53,240 Speaker 1: at the moment, advertisers still want television, and I think 107 00:05:53,240 --> 00:05:55,640 Speaker 1: you're going to see that start to weaken eventually. And 108 00:05:55,680 --> 00:05:58,080 Speaker 1: I think I think the other thing that's complicating it 109 00:05:58,160 --> 00:06:02,560 Speaker 1: is linear television is being combined and sold with UM 110 00:06:02,640 --> 00:06:05,080 Speaker 1: with with you know, with digital television, you know, the 111 00:06:05,080 --> 00:06:08,000 Speaker 1: streaming services, and so you're getting, you know, sales across 112 00:06:08,040 --> 00:06:10,560 Speaker 1: both platforms. If you were to break one and the other, 113 00:06:11,000 --> 00:06:13,480 Speaker 1: you'd see dynamics that are different. But if you combine 114 00:06:13,520 --> 00:06:16,360 Speaker 1: the two, um, the digital side is definitely supporting the 115 00:06:16,600 --> 00:06:20,480 Speaker 1: linear television side. Well, let's talk a bit more about streaming, 116 00:06:20,480 --> 00:06:24,360 Speaker 1: because advertising obviously isn't just the entire picture there. It's 117 00:06:24,400 --> 00:06:29,320 Speaker 1: the subscription dollar infusion that is been so interesting to 118 00:06:29,360 --> 00:06:34,480 Speaker 1: watch all these media companies chasing Netflix right now, and 119 00:06:35,080 --> 00:06:38,400 Speaker 1: you know, the pandemic again seem to have an impact there, 120 00:06:38,480 --> 00:06:42,200 Speaker 1: although very positive one, much more consumption than ever, all 121 00:06:42,240 --> 00:06:45,480 Speaker 1: these streaming service coming into the market at that time. 122 00:06:46,040 --> 00:06:48,280 Speaker 1: Where does that set us up in terms of the 123 00:06:48,320 --> 00:06:52,000 Speaker 1: next leg of the race for these streaming services. Sure, 124 00:06:52,680 --> 00:06:55,120 Speaker 1: it's it's interesting because you had a pull forward of 125 00:06:55,160 --> 00:06:57,560 Speaker 1: a lot of subscribers over the over the last year. 126 00:06:58,000 --> 00:07:00,480 Speaker 1: And so I mean Netflix is a perfect example call 127 00:07:00,680 --> 00:07:02,760 Speaker 1: of all of a sudden, all these new subscribers came in. 128 00:07:02,839 --> 00:07:05,719 Speaker 1: And I think just seeing part of that um manifest 129 00:07:05,760 --> 00:07:09,159 Speaker 1: and may call it, you know, slightly weaker subscriber growth 130 00:07:09,160 --> 00:07:11,960 Speaker 1: this year, but you know, comparing the last year is 131 00:07:11,960 --> 00:07:15,200 Speaker 1: is a bit unfair. UM. But I think what we've 132 00:07:15,280 --> 00:07:17,080 Speaker 1: what we've got now is we have a number of 133 00:07:17,080 --> 00:07:20,600 Speaker 1: companies that have decided that they want to be global 134 00:07:21,120 --> 00:07:22,880 Speaker 1: and and go after you know, in kind of the 135 00:07:22,920 --> 00:07:25,320 Speaker 1: Netflix model. But what you need for that is you 136 00:07:25,360 --> 00:07:28,160 Speaker 1: need too things. When you need um, scale of content 137 00:07:28,600 --> 00:07:30,320 Speaker 1: and scale of distribution, you need to be in a 138 00:07:30,400 --> 00:07:32,520 Speaker 1: lot of countries. Um. And if you look at all 139 00:07:32,600 --> 00:07:34,840 Speaker 1: the players, they're all have different they're all in different 140 00:07:34,880 --> 00:07:37,320 Speaker 1: stages of that kind of competition and that kind of 141 00:07:37,760 --> 00:07:40,800 Speaker 1: goose characteristics. If that's what they want to do. Um. 142 00:07:40,840 --> 00:07:44,400 Speaker 1: You know, clearly Disney has both the scale of content 143 00:07:44,640 --> 00:07:48,160 Speaker 1: as well as the geographic scale. They benefited from the 144 00:07:48,280 --> 00:07:50,600 Speaker 1: you know, the twenty one century Fox acquisition and so 145 00:07:50,640 --> 00:07:53,720 Speaker 1: they're pretty far along in terms of UM if you 146 00:07:53,760 --> 00:07:56,240 Speaker 1: want to call it, you know, compaion against a Netflix. 147 00:07:56,480 --> 00:07:58,400 Speaker 1: But if you look at UM some of the other players, 148 00:07:58,600 --> 00:08:02,480 Speaker 1: you know, they're either lacking scale yelled geographically. And I 149 00:08:02,480 --> 00:08:05,600 Speaker 1: would point to like you know, Concast, NBC and and 150 00:08:05,680 --> 00:08:08,120 Speaker 1: Time Warner, which we'll talk about our Warner brothers, which 151 00:08:08,120 --> 00:08:10,560 Speaker 1: we'll talk about. I'm sure UM, but they all are. 152 00:08:10,680 --> 00:08:12,960 Speaker 1: And then you have other companies that are lacking in 153 00:08:13,160 --> 00:08:16,080 Speaker 1: in content and I think Discovery is a good example 154 00:08:16,120 --> 00:08:18,800 Speaker 1: of that. They're certainly one of the um one of 155 00:08:18,840 --> 00:08:21,880 Speaker 1: the most diverse geographically media companies in the world, but 156 00:08:21,960 --> 00:08:24,920 Speaker 1: they don't have the same kind of content scale. And 157 00:08:24,960 --> 00:08:26,520 Speaker 1: so I think what you're seeing is a lot of 158 00:08:26,560 --> 00:08:28,720 Speaker 1: companies have decided we're going to go down that path, 159 00:08:29,160 --> 00:08:31,400 Speaker 1: or those companies have decided they're going to go down 160 00:08:31,400 --> 00:08:33,880 Speaker 1: that path looking at the assets that they have and 161 00:08:33,920 --> 00:08:36,800 Speaker 1: making decisions on do they have the right set of 162 00:08:36,840 --> 00:08:39,240 Speaker 1: assets and do they want to keep playing this game? 163 00:08:39,840 --> 00:08:41,920 Speaker 1: And you know, and I think Fox or I think 164 00:08:41,960 --> 00:08:45,920 Speaker 1: Discovery and Warner are clearly in that boat. Well, to me, 165 00:08:46,040 --> 00:08:49,120 Speaker 1: this is the biggest question mark looming over this space 166 00:08:49,240 --> 00:08:52,560 Speaker 1: because as you're describing it. There are these companies that 167 00:08:52,600 --> 00:08:57,760 Speaker 1: are trying to play by the Netflix playbook, spending what 168 00:08:57,880 --> 00:09:01,560 Speaker 1: I could would assume seem to be putting them well 169 00:09:01,840 --> 00:09:07,760 Speaker 1: in front of their skis as they cannibalized their core business. So, 170 00:09:08,240 --> 00:09:11,120 Speaker 1: you know, is the market taking it on faith that 171 00:09:11,480 --> 00:09:15,920 Speaker 1: the Netflix playbook can still be played years after Netflix 172 00:09:15,960 --> 00:09:20,920 Speaker 1: has already played it. It's a good question. Um. I mean, initially, 173 00:09:20,960 --> 00:09:22,480 Speaker 1: if you looked at some of the run ups and 174 00:09:22,559 --> 00:09:24,600 Speaker 1: let's let's you know, I mean, what happened to Discovery 175 00:09:24,600 --> 00:09:27,400 Speaker 1: and Viacom was a bit of you know, an anomaly 176 00:09:27,480 --> 00:09:29,240 Speaker 1: this year, but you did see her run up in 177 00:09:29,280 --> 00:09:32,520 Speaker 1: the like the Disney Stock where you know, investors looked 178 00:09:32,559 --> 00:09:34,880 Speaker 1: at this and gave them credit for two hundred and 179 00:09:34,880 --> 00:09:37,839 Speaker 1: fifty million subscribers. And then as we kind of got 180 00:09:37,840 --> 00:09:39,520 Speaker 1: into the first court and the name just came maybe 181 00:09:39,559 --> 00:09:42,120 Speaker 1: a little weaker than people expected, they pulled back a little. 182 00:09:42,280 --> 00:09:44,280 Speaker 1: And so I think you're going to have over the 183 00:09:44,320 --> 00:09:49,080 Speaker 1: next year, um, a separation um in in in the 184 00:09:49,080 --> 00:09:51,320 Speaker 1: market's eyes about who are the winners and who are 185 00:09:51,320 --> 00:09:54,360 Speaker 1: the losers? But you know what were we spent a 186 00:09:54,440 --> 00:09:56,560 Speaker 1: lot of time to getting asked this question and a 187 00:09:56,559 --> 00:09:58,200 Speaker 1: lot of times, and we're spending a lot of times 188 00:09:58,200 --> 00:10:00,360 Speaker 1: deflecting it at the moment because I think it's too 189 00:10:00,400 --> 00:10:03,160 Speaker 1: early to pick winners and losers. But I also think 190 00:10:03,160 --> 00:10:05,760 Speaker 1: it's a bit unfair to look at everybody and paint 191 00:10:05,760 --> 00:10:07,599 Speaker 1: them in the same brush and say everyone needs to 192 00:10:07,640 --> 00:10:10,839 Speaker 1: be like Netflix. We talked to Comcast about their you know, 193 00:10:11,120 --> 00:10:13,600 Speaker 1: about what they want out at NBC. It's different than 194 00:10:13,600 --> 00:10:16,280 Speaker 1: what Disney wants to achieve, and so I think you 195 00:10:16,320 --> 00:10:17,959 Speaker 1: have to look at it within the context of their 196 00:10:18,000 --> 00:10:21,160 Speaker 1: strategies and so and what they're trying to achieve. Well, 197 00:10:21,200 --> 00:10:23,360 Speaker 1: when you look at this, as you put it, this 198 00:10:23,520 --> 00:10:27,840 Speaker 1: separation that is happening in the streaming land, deals like 199 00:10:28,840 --> 00:10:32,480 Speaker 1: Warner Media and Discovery makes sense. Deals like Amazon and 200 00:10:32,640 --> 00:10:37,680 Speaker 1: MGM makes sense. They're trying to get into that top tier. Uh, 201 00:10:37,760 --> 00:10:40,800 Speaker 1: what do you think of Warner Discovery. Let's let's let's 202 00:10:40,800 --> 00:10:44,439 Speaker 1: start with that. That combination. Well, I think one of 203 00:10:44,480 --> 00:10:47,400 Speaker 1: the things, and I keep reminding investors of this point, 204 00:10:47,440 --> 00:10:50,760 Speaker 1: which is, prior to a t T buying, Warner Warner 205 00:10:50,960 --> 00:10:53,839 Speaker 1: was arguably the best media company in the world. And 206 00:10:53,880 --> 00:10:57,560 Speaker 1: this is before Disney merged with with we kind of 207 00:10:57,559 --> 00:11:00,240 Speaker 1: forget that right, because it got buried within any team take. 208 00:11:00,360 --> 00:11:02,320 Speaker 1: And so now you stand back and you look at Warner, 209 00:11:02,760 --> 00:11:07,079 Speaker 1: and what's interesting from the transaction I think was more 210 00:11:07,200 --> 00:11:10,920 Speaker 1: a function of both companies looking at what they had 211 00:11:10,920 --> 00:11:14,040 Speaker 1: and realizing they needed to do something. A T. T 212 00:11:14,240 --> 00:11:16,320 Speaker 1: looked at Warner and looked at frantically all of its 213 00:11:16,360 --> 00:11:18,800 Speaker 1: other businesses and says, you know, we have a limited 214 00:11:18,800 --> 00:11:20,800 Speaker 1: amount of capital. It's a T T. But it's a 215 00:11:20,880 --> 00:11:23,520 Speaker 1: limited amount of capital. What do we have to spend 216 00:11:23,559 --> 00:11:25,880 Speaker 1: it on? And it was Spectrum and it's five G. 217 00:11:26,400 --> 00:11:29,120 Speaker 1: And so the Warner's side of the business wasn't going 218 00:11:29,120 --> 00:11:31,760 Speaker 1: to be able to get the kind of investments aid programming, 219 00:11:32,360 --> 00:11:34,880 Speaker 1: but also an expansion overseas because they don't really have 220 00:11:34,880 --> 00:11:38,240 Speaker 1: that big a footprint overseas compared to some of their peers. 221 00:11:38,360 --> 00:11:40,160 Speaker 1: And so they realized A T. T. Realized they just 222 00:11:40,160 --> 00:11:43,680 Speaker 1: couldn't make the investments to make Warner a truly global 223 00:11:43,720 --> 00:11:46,360 Speaker 1: streaming service. And then you turn it around and you 224 00:11:46,360 --> 00:11:49,960 Speaker 1: look at Discovery, Discoveries and two odd markets, and so 225 00:11:50,000 --> 00:11:53,520 Speaker 1: they've got the um the global footprint. But I think 226 00:11:53,520 --> 00:11:57,040 Speaker 1: what they've discovered is that launching what the content they 227 00:11:57,120 --> 00:11:59,760 Speaker 1: have is a bit of a challenge. It's a good content, 228 00:12:00,000 --> 00:12:02,079 Speaker 1: it's niche content, and so if you're trying to get 229 00:12:02,080 --> 00:12:05,800 Speaker 1: the two hundred or three hundred David zaslofs at formimillion, 230 00:12:06,000 --> 00:12:07,240 Speaker 1: but if you're trying to get to it, you know, 231 00:12:07,320 --> 00:12:10,720 Speaker 1: hundreds of millions of subscribers. I don't think the Discovery 232 00:12:10,760 --> 00:12:13,320 Speaker 1: content on its own as it can do that, and 233 00:12:13,360 --> 00:12:15,679 Speaker 1: you need to have kind of you know, the the 234 00:12:16,280 --> 00:12:19,440 Speaker 1: the Warner Brothers, big movies and you know, you know, 235 00:12:19,480 --> 00:12:21,880 Speaker 1: big brands, and so the combination of the two I 236 00:12:21,880 --> 00:12:25,600 Speaker 1: think is a reflection of the limitations that both companies have. 237 00:12:26,559 --> 00:12:28,959 Speaker 1: And so that made a lot of sense. Yeah, And 238 00:12:29,600 --> 00:12:33,040 Speaker 1: it also creates another big question for this space, which 239 00:12:33,120 --> 00:12:35,640 Speaker 1: is you look at what's gone on now and if 240 00:12:35,679 --> 00:12:41,880 Speaker 1: you're Viacom, CBS, if you're NBC Universal, must you make 241 00:12:42,040 --> 00:12:46,720 Speaker 1: similar moves in the M and A arena in order 242 00:12:47,160 --> 00:12:50,520 Speaker 1: to be able to compete at the highest levels to 243 00:12:51,200 --> 00:12:53,840 Speaker 1: be among the top tier streaming services. Do you do? 244 00:12:53,880 --> 00:12:56,080 Speaker 1: You do you see much activity coming on in this 245 00:12:56,200 --> 00:13:00,160 Speaker 1: as a result of the Warner Discovery deal. I don't know. Oh, 246 00:13:00,160 --> 00:13:02,480 Speaker 1: I don't think so. And I say that because I 247 00:13:02,480 --> 00:13:04,320 Speaker 1: think there's been a lot of I would say there's 248 00:13:04,320 --> 00:13:07,360 Speaker 1: been probably a lot more internal discussions within both companies 249 00:13:07,400 --> 00:13:10,199 Speaker 1: and so what there, what their goals are, And I 250 00:13:10,280 --> 00:13:12,120 Speaker 1: think you have to look at them separately. I think 251 00:13:12,160 --> 00:13:15,480 Speaker 1: if you look at Comcast, it's a cable company. I think, 252 00:13:15,840 --> 00:13:19,680 Speaker 1: you know, I think Brian realizes that that NBC is 253 00:13:19,720 --> 00:13:23,679 Speaker 1: called limited scale, you know, compared to the other companies, 254 00:13:24,320 --> 00:13:27,520 Speaker 1: and and that's fine for him. If all of these, 255 00:13:27,640 --> 00:13:30,720 Speaker 1: all of these, if all off all he is thinking, 256 00:13:31,240 --> 00:13:33,920 Speaker 1: get that one out, is that NBC is there to 257 00:13:33,960 --> 00:13:37,120 Speaker 1: support the cable business and the Sky business in Europe. 258 00:13:37,280 --> 00:13:40,079 Speaker 1: And if that's all it is, it's plenty. It's plenty 259 00:13:40,200 --> 00:13:41,920 Speaker 1: large enough in terms of the amount of content it 260 00:13:42,000 --> 00:13:44,840 Speaker 1: has and the and the content that it produces, not 261 00:13:44,920 --> 00:13:47,080 Speaker 1: just as library but also um, you know, it's it's 262 00:13:47,120 --> 00:13:49,160 Speaker 1: production out of this film studio. To be able to 263 00:13:49,160 --> 00:13:53,040 Speaker 1: support that business. Vicom is a separate question because they 264 00:13:53,040 --> 00:13:56,280 Speaker 1: don't have, you know that those kinds of businesses to 265 00:13:56,400 --> 00:13:59,080 Speaker 1: lean on um and so if they really want to 266 00:13:59,080 --> 00:14:03,559 Speaker 1: be like you know, Disney, they've got more scale and 267 00:14:03,720 --> 00:14:05,679 Speaker 1: it kind of what's interesting is the guidance that they 268 00:14:05,679 --> 00:14:09,880 Speaker 1: gave so far for their global subscribers was the top 269 00:14:10,120 --> 00:14:14,400 Speaker 1: seventy five million. You know, maybe that's just something about 270 00:14:14,440 --> 00:14:17,880 Speaker 1: their intentions overseas, or you know, it's a question that 271 00:14:17,920 --> 00:14:21,119 Speaker 1: they have to answer. I don't know if Emine necessarily 272 00:14:21,160 --> 00:14:23,920 Speaker 1: solved that problem, but maybe they need to scale back 273 00:14:23,960 --> 00:14:30,200 Speaker 1: on their you know, on their expectations overseas. We need 274 00:14:30,240 --> 00:14:32,000 Speaker 1: to take a quick break, but we'll be back with 275 00:14:32,080 --> 00:14:42,480 Speaker 1: more from Navene Sarma. And we're back with Navin Sarma, 276 00:14:42,600 --> 00:14:47,600 Speaker 1: Senior director of SMP Lottal Ratings. I also mentioned a 277 00:14:47,720 --> 00:14:51,640 Speaker 1: very different deal Amazon MGM. Different in the sense that 278 00:14:51,680 --> 00:14:55,080 Speaker 1: it brings together entertainment and big tech in a way 279 00:14:55,120 --> 00:14:58,560 Speaker 1: we haven't really seen before, but also I think is 280 00:14:59,160 --> 00:15:03,280 Speaker 1: similarly motivated in terms of the Warner Discovery deal. This 281 00:15:03,360 --> 00:15:07,000 Speaker 1: is about competing in the streaming race. It's not scaling 282 00:15:07,080 --> 00:15:09,440 Speaker 1: up for the global push, but it is scaling up 283 00:15:09,600 --> 00:15:13,080 Speaker 1: the sort of the content arsenal. Anything I do, I do, 284 00:15:13,160 --> 00:15:15,560 Speaker 1: I agree with you. For the longest time, I was 285 00:15:15,600 --> 00:15:19,680 Speaker 1: a bit skeptical about whether or not either Apple or 286 00:15:20,160 --> 00:15:23,120 Speaker 1: or Amazon would really want to get into into the 287 00:15:23,200 --> 00:15:27,520 Speaker 1: entertainment business. To the media business, it's expensive, it's full 288 00:15:27,560 --> 00:15:30,840 Speaker 1: of I mean, you know, it's a difficult industry to 289 00:15:30,840 --> 00:15:32,880 Speaker 1: try to break into. You see other companies try to 290 00:15:33,200 --> 00:15:36,960 Speaker 1: get into media and realize it's it's got a bunch 291 00:15:36,960 --> 00:15:39,560 Speaker 1: of characteristic to make it very difficult for you to 292 00:15:39,600 --> 00:15:41,960 Speaker 1: get in and be successful, especially if you're not a 293 00:15:42,000 --> 00:15:45,480 Speaker 1: media company getting into there. Um So what Amazon is 294 00:15:45,520 --> 00:15:47,920 Speaker 1: doing is interesting because they've always kind of dabbled on 295 00:15:48,000 --> 00:15:51,320 Speaker 1: the side of the studio. They hired people, they want content. 296 00:15:51,920 --> 00:15:54,960 Speaker 1: This just seems to be a bigger push. Having said that, 297 00:15:55,480 --> 00:15:57,800 Speaker 1: it's I think there's their intention still is to try 298 00:15:57,840 --> 00:16:01,560 Speaker 1: to sell you know, diapers and retail stuff, and so 299 00:16:01,800 --> 00:16:04,640 Speaker 1: the content. How big they want to get in terms 300 00:16:04,640 --> 00:16:08,280 Speaker 1: of their content base, Um, it will be interesting to stay. 301 00:16:08,600 --> 00:16:10,640 Speaker 1: They don't want to get too big, I think, but 302 00:16:10,680 --> 00:16:12,560 Speaker 1: they also want to be able to offer enough content 303 00:16:12,800 --> 00:16:15,600 Speaker 1: that people will stay on their websites and use that 304 00:16:15,720 --> 00:16:18,640 Speaker 1: as a kind of a selling point to get people 305 00:16:18,640 --> 00:16:21,480 Speaker 1: to sign up for Amazon Prime, especially in those markets 306 00:16:21,640 --> 00:16:24,800 Speaker 1: where you know, either the shipping costs are higher or 307 00:16:24,840 --> 00:16:28,000 Speaker 1: you can't do one or two day deliberate got it. 308 00:16:28,800 --> 00:16:31,240 Speaker 1: I do wonder whether this will end up forcing the 309 00:16:31,320 --> 00:16:34,400 Speaker 1: hand of Apple in terms of its investments in this space. 310 00:16:34,480 --> 00:16:37,920 Speaker 1: They kicked the tires at MGM at the very least, 311 00:16:37,920 --> 00:16:40,840 Speaker 1: and there's other entities out there, like a lions Gate 312 00:16:40,880 --> 00:16:44,560 Speaker 1: and a MC that could make sense if Apple wanted 313 00:16:44,600 --> 00:16:47,760 Speaker 1: to make a similar move. Yeah, I a great. Great, 314 00:16:47,800 --> 00:16:50,560 Speaker 1: We'll see. They haven't done anything. They let a lot 315 00:16:50,600 --> 00:16:53,360 Speaker 1: of deals go. I mean, you know, they haven't completed 316 00:16:53,400 --> 00:16:55,720 Speaker 1: any deals. So we'll have to see if if they're 317 00:16:55,720 --> 00:16:59,400 Speaker 1: really serious about being a serious media player. So we're 318 00:16:59,440 --> 00:17:02,680 Speaker 1: talking about all these companies that are spending you know, 319 00:17:02,800 --> 00:17:06,240 Speaker 1: tens of billions, well not everyone spending tens of billions, 320 00:17:06,320 --> 00:17:09,159 Speaker 1: but single billions, tens of billions to be in the 321 00:17:09,200 --> 00:17:13,920 Speaker 1: programming space. What does this mean in terms of the 322 00:17:14,000 --> 00:17:18,199 Speaker 1: backlog of production that we've seen building up out of 323 00:17:18,240 --> 00:17:22,760 Speaker 1: the pandemic. It's amazing, isn't it. Every time I pick 324 00:17:22,840 --> 00:17:25,120 Speaker 1: up Variety or I get an email from Variety it's 325 00:17:25,160 --> 00:17:30,040 Speaker 1: another project that just got greenlit. You've gotta wonder how 326 00:17:30,080 --> 00:17:32,440 Speaker 1: they're gonna space us all out and actually produce all 327 00:17:32,480 --> 00:17:36,119 Speaker 1: this stuff. It's got to be years and years of backlog. 328 00:17:36,760 --> 00:17:40,200 Speaker 1: Um they called the Golden Age of television. There's a 329 00:17:40,280 --> 00:17:43,040 Speaker 1: lot of content. There's just a lot of content, and 330 00:17:43,119 --> 00:17:45,720 Speaker 1: you know, and and from our standpoint, it's putting stress 331 00:17:45,760 --> 00:17:48,879 Speaker 1: on a lot of companies balance sheets because you know, 332 00:17:48,880 --> 00:17:50,520 Speaker 1: the revenue is not going to come in for a while, 333 00:17:50,600 --> 00:17:53,400 Speaker 1: especially streaming services as you grow that and so you're 334 00:17:53,400 --> 00:17:58,399 Speaker 1: gonna see twenty three twenty four before any of these 335 00:17:58,440 --> 00:18:02,320 Speaker 1: streaming services even chief break even status. And so that 336 00:18:02,440 --> 00:18:04,560 Speaker 1: stresses the you know, the balance sheets of all these 337 00:18:04,600 --> 00:18:07,639 Speaker 1: companies and the cash flows of all these companies. Um. 338 00:18:07,680 --> 00:18:10,880 Speaker 1: You know, from a rating standpoint, it's a concern. And 339 00:18:10,880 --> 00:18:13,880 Speaker 1: and we've taken rating actions where we've downgraded some companies 340 00:18:13,920 --> 00:18:17,080 Speaker 1: because of that, um you know, and eventually and the 341 00:18:17,119 --> 00:18:20,320 Speaker 1: problem is, you know, if a company doesn't win and 342 00:18:20,400 --> 00:18:22,760 Speaker 1: spends all that money and doesn't grow out of that, 343 00:18:23,920 --> 00:18:26,440 Speaker 1: you know, then they're kind of locked in longer term 344 00:18:26,480 --> 00:18:30,800 Speaker 1: with with credit measures that are just are weaker. That's 345 00:18:30,840 --> 00:18:33,320 Speaker 1: to me a big red flag. And yet I also 346 00:18:33,359 --> 00:18:36,280 Speaker 1: wonder whether investors kind of as we saw with Disney 347 00:18:36,320 --> 00:18:40,000 Speaker 1: at the end of will still say, wait, I see 348 00:18:40,000 --> 00:18:43,760 Speaker 1: a big streaming service success story happening here hundreds of millions, 349 00:18:43,960 --> 00:18:46,280 Speaker 1: So we'll just give them a pass and they'll just 350 00:18:46,400 --> 00:18:49,520 Speaker 1: keep spending. I don't know, I think you're gonna get 351 00:18:49,520 --> 00:18:50,800 Speaker 1: some that are going to get a pass and some 352 00:18:50,800 --> 00:18:53,760 Speaker 1: companies that aren't gonna get a pass. Yeah, that's that's 353 00:18:53,800 --> 00:18:56,480 Speaker 1: that's basically how this competition is going to play out. 354 00:18:57,000 --> 00:18:59,760 Speaker 1: UM also wanted to ask, you know, we're we're talking 355 00:18:59,760 --> 00:19:03,880 Speaker 1: about streaming, but of course movie theaters remain a big 356 00:19:03,920 --> 00:19:06,919 Speaker 1: part of the business. Movie theaters, of course, took a 357 00:19:07,000 --> 00:19:09,960 Speaker 1: huge hit during the pandemic, and so I wanted to 358 00:19:10,000 --> 00:19:14,080 Speaker 1: get your sense of how you saw the exhibition business 359 00:19:14,600 --> 00:19:17,520 Speaker 1: as we return to normal. Yeah, it's a great question. 360 00:19:17,880 --> 00:19:19,679 Speaker 1: When we look at all of the sectors that we 361 00:19:19,760 --> 00:19:24,280 Speaker 1: cover print TV, UM, the one that that has popped 362 00:19:24,320 --> 00:19:26,120 Speaker 1: up on our raider screens and one as the one 363 00:19:26,119 --> 00:19:29,040 Speaker 1: that we think is the most impacted and the one 364 00:19:29,080 --> 00:19:33,040 Speaker 1: that's less most likely to be to change permanently because 365 00:19:33,040 --> 00:19:36,199 Speaker 1: of the pandemic. Our movie theaters. Other ones we think 366 00:19:36,200 --> 00:19:40,879 Speaker 1: we're gonna come back, whether it's theme parks or you know, um, 367 00:19:40,920 --> 00:19:43,760 Speaker 1: you know, live events. But you know, for us, you 368 00:19:44,240 --> 00:19:46,919 Speaker 1: had the rise of streaming, you've had the change of 369 00:19:46,960 --> 00:19:51,120 Speaker 1: the of of windowing. UM, people may be a bit 370 00:19:51,960 --> 00:19:54,720 Speaker 1: not reluctant to go back to the theaters, but certainly 371 00:19:54,920 --> 00:19:57,000 Speaker 1: less likely to because you're gonna have other options to 372 00:19:57,000 --> 00:20:00,159 Speaker 1: see the same piece of content. Um. Having said that, 373 00:20:00,320 --> 00:20:02,359 Speaker 1: you know, we've always thought for years that there were 374 00:20:02,359 --> 00:20:06,560 Speaker 1: just too many screens in the US, and UM and 375 00:20:06,560 --> 00:20:08,280 Speaker 1: and I just I don't want to sound like, you know, 376 00:20:08,320 --> 00:20:10,359 Speaker 1: we were hoping for this would happen, but we certainly 377 00:20:10,400 --> 00:20:13,959 Speaker 1: thought that the pandemic would be an opportunity for for 378 00:20:14,040 --> 00:20:15,720 Speaker 1: the the the industry to look at the number of 379 00:20:15,720 --> 00:20:19,120 Speaker 1: screens and to reduce those numbers of screens. It doesn't 380 00:20:19,160 --> 00:20:21,800 Speaker 1: appear that that's going to happen. UM. I think we've 381 00:20:21,840 --> 00:20:24,200 Speaker 1: seen a couple of comments by a couple of companies 382 00:20:24,200 --> 00:20:26,760 Speaker 1: that Cinemark talked about this the last week or a 383 00:20:26,800 --> 00:20:30,280 Speaker 1: couple of weeks ago, where they think, you know, maybe 384 00:20:30,320 --> 00:20:33,679 Speaker 1: it's five or five percent of screens might shrink. That's 385 00:20:33,720 --> 00:20:36,800 Speaker 1: probably not sufficient. But I think the ones who are 386 00:20:36,800 --> 00:20:39,080 Speaker 1: going to benefit from that are the larger guys. The 387 00:20:39,119 --> 00:20:42,360 Speaker 1: smaller guys, UM are the ones who are probably going 388 00:20:42,400 --> 00:20:46,040 Speaker 1: to consolidate or shrink. And we've seen some bankruptcies, but overall, 389 00:20:46,280 --> 00:20:49,960 Speaker 1: I think the fund, the small business funding that came 390 00:20:49,960 --> 00:20:51,600 Speaker 1: from the US government has supported a lot of these 391 00:20:51,640 --> 00:20:54,920 Speaker 1: smaller studies, the smaller exhibitors, and so they've managed to 392 00:20:54,960 --> 00:20:58,159 Speaker 1: survive their way through the pandemic. So you're saying a 393 00:20:58,240 --> 00:21:09,200 Speaker 1: smaller footprint overall consolid bigger companies. Um, you're you're not saying, 394 00:21:09,280 --> 00:21:12,320 Speaker 1: as as some seem to say lately that we're a 395 00:21:12,440 --> 00:21:15,480 Speaker 1: Vergin extinction for theaters, like there's a place for them 396 00:21:15,480 --> 00:21:18,560 Speaker 1: going forward. There's no. Yeah, yeah, we don't think that 397 00:21:18,560 --> 00:21:20,520 Speaker 1: that's gonna I mean every no, No, I won't happen 398 00:21:20,560 --> 00:21:22,920 Speaker 1: that quickly. I think I think there's still in need. 399 00:21:23,000 --> 00:21:25,600 Speaker 1: If you talk to all these studios, they still want 400 00:21:25,720 --> 00:21:29,080 Speaker 1: to put big blockbusters into the theaters. Um, you're you know, 401 00:21:29,119 --> 00:21:31,600 Speaker 1: I think what you're seeing this year, Um you know 402 00:21:31,640 --> 00:21:34,119 Speaker 1: with things like, um, what Disney is gonna do with 403 00:21:34,160 --> 00:21:37,000 Speaker 1: Black Widow or what Warners has done with this entire 404 00:21:37,000 --> 00:21:41,159 Speaker 1: slate is more a function of the pandemic and the 405 00:21:41,240 --> 00:21:44,440 Speaker 1: uncertainty over are all the theater is going to be reopen? 406 00:21:44,480 --> 00:21:48,040 Speaker 1: And even today I think we're like, and so Black 407 00:21:48,040 --> 00:21:52,159 Speaker 1: Widow and F nine comes out this weekend, next weekend, 408 00:21:52,200 --> 00:21:54,680 Speaker 1: comes out really soon. Yeah, and so you know it's 409 00:21:54,680 --> 00:21:57,119 Speaker 1: not gonna it'll do really well, but it's not going 410 00:21:57,160 --> 00:21:59,040 Speaker 1: to be in every theater, and so you're not gonna 411 00:21:59,040 --> 00:22:01,200 Speaker 1: get the kind of releases you got two years ago, 412 00:22:01,600 --> 00:22:04,040 Speaker 1: and so I still think the studios are heading their 413 00:22:04,080 --> 00:22:06,560 Speaker 1: bets this year. But I think going forward, you're going 414 00:22:06,560 --> 00:22:08,920 Speaker 1: to see Disney Point, it's Marvel movies, and it's Star 415 00:22:08,960 --> 00:22:11,919 Speaker 1: Wars movies into the theaters. What you're gonna see is 416 00:22:11,920 --> 00:22:16,159 Speaker 1: also a shrinking number of call it you know, um, 417 00:22:16,160 --> 00:22:19,640 Speaker 1: you know, smaller releases, drama and clearly dramas and comedies 418 00:22:19,680 --> 00:22:22,320 Speaker 1: have kind of already abandoned the theaters. But I think 419 00:22:22,320 --> 00:22:25,720 Speaker 1: you're gonna see more and more of that going forward. Um, 420 00:22:25,720 --> 00:22:28,800 Speaker 1: you know, will Netflix or Amazon step in and kind of, 421 00:22:29,000 --> 00:22:32,520 Speaker 1: you know, fill those empty screens. I'd like the things, 422 00:22:32,520 --> 00:22:34,760 Speaker 1: So I don't think that's gonna happen. I think Netflix 423 00:22:35,000 --> 00:22:37,879 Speaker 1: looks at the ex the theaters and says, you know, 424 00:22:37,960 --> 00:22:39,440 Speaker 1: you can put a couple of movies in there, But 425 00:22:39,480 --> 00:22:41,040 Speaker 1: at the end of the day, they're making movies for 426 00:22:41,080 --> 00:22:43,959 Speaker 1: their their subscribers, and so putting it into the theaters 427 00:22:43,960 --> 00:22:46,800 Speaker 1: doesn't benefit their subscribers or the subscriber totals. So I 428 00:22:46,880 --> 00:22:49,879 Speaker 1: think there's less likely that happening. So it sounds like 429 00:22:49,920 --> 00:22:52,760 Speaker 1: you're saying, you know, it's hard to have a monolithic 430 00:22:52,800 --> 00:22:55,880 Speaker 1: conversation here. Different kinds of movies are going to take 431 00:22:55,960 --> 00:23:01,199 Speaker 1: on different kinds of distribution strategies. Uh, you know, the 432 00:23:01,240 --> 00:23:06,000 Speaker 1: biggest and brightest blockbusters will go straight to theaters. I 433 00:23:06,520 --> 00:23:09,399 Speaker 1: think where we're headed, though, is in a period of 434 00:23:09,440 --> 00:23:13,800 Speaker 1: experimentation in the coming years for just about everything else, 435 00:23:13,840 --> 00:23:16,840 Speaker 1: in terms of the amount of time they're in theaters, 436 00:23:16,920 --> 00:23:20,879 Speaker 1: exclusively how much they'll be, if they'll be day and 437 00:23:21,040 --> 00:23:24,520 Speaker 1: date releases. I mean, do you think, as I do, 438 00:23:24,600 --> 00:23:26,880 Speaker 1: that there's gonna be a lot of experimentation or will 439 00:23:26,920 --> 00:23:29,879 Speaker 1: we move to a standard fairly quickly? I mean, you 440 00:23:29,920 --> 00:23:33,359 Speaker 1: could argue the easiest, simplest thing is one forty five 441 00:23:33,440 --> 00:23:36,400 Speaker 1: day window for everything, and there's something to be said 442 00:23:36,440 --> 00:23:40,240 Speaker 1: for simplicity, and there is, there is. But um but 443 00:23:40,440 --> 00:23:42,960 Speaker 1: I think you're right. I think it's going to be experimentation. 444 00:23:43,880 --> 00:23:46,199 Speaker 1: Universal signing with seventeen days and so I think you're 445 00:23:46,200 --> 00:23:49,959 Speaker 1: gonna get a lot of that kind of experimentation going forward. Um. 446 00:23:50,000 --> 00:23:52,199 Speaker 1: So yeah, I don't think I think they'll they'll all 447 00:23:52,280 --> 00:23:55,720 Speaker 1: kind of congregate around forty five days and so instead 448 00:23:55,720 --> 00:23:57,119 Speaker 1: of nine, you will be forty five. But I think 449 00:23:57,160 --> 00:23:59,440 Speaker 1: you're going to get, you know, decisions made. I don't 450 00:23:59,440 --> 00:24:01,280 Speaker 1: know how close a release, it's gonna be made, but 451 00:24:01,359 --> 00:24:03,560 Speaker 1: you know, the studio will look at the particular movie 452 00:24:03,560 --> 00:24:06,560 Speaker 1: and say, you know, we're gonna put it on the 453 00:24:06,560 --> 00:24:08,520 Speaker 1: streaming service and set and so I think you're going 454 00:24:08,560 --> 00:24:11,960 Speaker 1: to get that kind of variability, which, um, I don't 455 00:24:11,960 --> 00:24:14,679 Speaker 1: know how close to release we're going to see that, 456 00:24:14,720 --> 00:24:16,560 Speaker 1: but I think that's gonna be the case. And I 457 00:24:16,560 --> 00:24:18,600 Speaker 1: think based off of my conversations with all of the 458 00:24:18,640 --> 00:24:22,399 Speaker 1: studios and all the exhibitors, the contracts that they've signed 459 00:24:22,440 --> 00:24:25,360 Speaker 1: so far, aren't you know, one size fits all other 460 00:24:25,400 --> 00:24:28,359 Speaker 1: than what Warner did for the twenty one slate. Everything 461 00:24:28,400 --> 00:24:30,680 Speaker 1: else is based off of a film by film basis 462 00:24:30,960 --> 00:24:35,040 Speaker 1: for analysis. Got it? Well, we should also be careful 463 00:24:35,080 --> 00:24:37,240 Speaker 1: to note here. You know, we're we're kind of talking 464 00:24:37,280 --> 00:24:41,200 Speaker 1: pretty generally, but there's the US market and then there's 465 00:24:41,320 --> 00:24:45,600 Speaker 1: everything going on overseas. Um, do you see any fundamental 466 00:24:45,640 --> 00:24:49,480 Speaker 1: differences between what goes out here in this country and 467 00:24:49,520 --> 00:24:53,000 Speaker 1: everywhere else, especially in light of the pandemic is obviously 468 00:24:53,040 --> 00:24:56,879 Speaker 1: impacting the globe in different ways. Yeah, it's an interesting question, 469 00:24:56,880 --> 00:25:00,280 Speaker 1: and I think we as Americans tend to forget about 470 00:25:00,280 --> 00:25:03,320 Speaker 1: how diverse the world is. So, you know, talking about 471 00:25:03,400 --> 00:25:07,280 Speaker 1: windowing into somebody in France is a totally different conversation 472 00:25:07,359 --> 00:25:10,159 Speaker 1: because the French government basically becomes in and dictates what 473 00:25:10,240 --> 00:25:13,480 Speaker 1: the windows are and so um, and so I think 474 00:25:13,480 --> 00:25:16,800 Speaker 1: studios have to be well aware of of what each 475 00:25:16,880 --> 00:25:19,280 Speaker 1: market um is like. And especially as we come out 476 00:25:19,280 --> 00:25:20,840 Speaker 1: of the pandemic, right, not all of the theaters have 477 00:25:20,920 --> 00:25:23,560 Speaker 1: opened up around the world. And so you know, for 478 00:25:23,560 --> 00:25:26,919 Speaker 1: our movie like Black Wad Up, you know, if you 479 00:25:27,000 --> 00:25:30,960 Speaker 1: think it's going to do incredibly well in Europe, then 480 00:25:30,960 --> 00:25:32,600 Speaker 1: you've got to be a bit careful how you release 481 00:25:32,680 --> 00:25:35,480 Speaker 1: it because not all the European theaters are open. F 482 00:25:35,640 --> 00:25:37,320 Speaker 1: nine made a lot of sense if you saw the 483 00:25:37,359 --> 00:25:40,880 Speaker 1: release in China. China's theaters are all open. So um, 484 00:25:40,920 --> 00:25:44,480 Speaker 1: I think you can't look at the US alone and 485 00:25:44,480 --> 00:25:47,120 Speaker 1: and and draw conclusions off of what studios are going 486 00:25:47,160 --> 00:25:51,280 Speaker 1: to do based off of the U S market, got it? Uh? 487 00:25:51,280 --> 00:25:54,000 Speaker 1: It just I If you're at Disney and you're sitting 488 00:25:54,000 --> 00:25:58,160 Speaker 1: there with a Disney plus and you've got the ability 489 00:25:58,200 --> 00:26:01,160 Speaker 1: to make huge money with your best and brightest movies 490 00:26:01,359 --> 00:26:06,960 Speaker 1: in theaters, how do you navigate that balance, which which 491 00:26:06,960 --> 00:26:09,360 Speaker 1: Disney to some degree seems to be doing by not 492 00:26:09,440 --> 00:26:12,119 Speaker 1: just throwing movies on Disney. Plus they do some of 493 00:26:12,119 --> 00:26:15,320 Speaker 1: that as well, but they've got this window where they're spent, 494 00:26:15,480 --> 00:26:18,520 Speaker 1: you know, consumers have to uh spend I think it's 495 00:26:18,520 --> 00:26:21,440 Speaker 1: like thirty dollars to see a movie walls in theaters. 496 00:26:21,920 --> 00:26:26,920 Speaker 1: What do you think of that approach? I I'm guessing 497 00:26:26,920 --> 00:26:28,880 Speaker 1: that Disney is probably the only one who can get 498 00:26:28,880 --> 00:26:33,280 Speaker 1: away with something like that. Um, it's interesting, and you know, 499 00:26:33,359 --> 00:26:37,239 Speaker 1: it isn't clear what kind of viewing they're getting from 500 00:26:37,359 --> 00:26:39,800 Speaker 1: for those movies, you know, whether it was Milan or 501 00:26:40,080 --> 00:26:41,520 Speaker 1: you know, any of the other ones that they're released 502 00:26:41,520 --> 00:26:45,359 Speaker 1: that way. The only thing I can guess is because 503 00:26:45,400 --> 00:26:48,439 Speaker 1: they're continuing to do that, they're they're getting you know, 504 00:26:48,480 --> 00:26:51,600 Speaker 1: they're seeing either interesting data or data that's positive. Um. 505 00:26:51,720 --> 00:26:54,719 Speaker 1: And so my guest is Disney will be continuing to 506 00:26:54,760 --> 00:26:56,320 Speaker 1: do that kind of But I guess I guess they'll 507 00:26:56,320 --> 00:26:58,600 Speaker 1: experiment again. Right, some of those movies are going to 508 00:26:58,680 --> 00:27:00,520 Speaker 1: go to thirty dollars, Some of those are gonna be 509 00:27:00,880 --> 00:27:03,480 Speaker 1: day and date free, some of them. Every movie is 510 00:27:03,520 --> 00:27:07,280 Speaker 1: gonna have a different story, got it. So, So bringing 511 00:27:07,320 --> 00:27:11,240 Speaker 1: it back around to the broader view on these businesses, 512 00:27:11,280 --> 00:27:14,200 Speaker 1: as we move into the second half of the year. 513 00:27:14,800 --> 00:27:19,280 Speaker 1: I mean, are you anticipating that we're going to see it? 514 00:27:19,320 --> 00:27:22,040 Speaker 1: Seems right right now in terms of investors in the 515 00:27:22,119 --> 00:27:27,840 Speaker 1: media sector, it's not quite what it was maybe at 516 00:27:27,880 --> 00:27:29,840 Speaker 1: the end of twenty When I think about, you know, 517 00:27:29,960 --> 00:27:34,520 Speaker 1: Disney or how Viacom and Discovery went for some nice 518 00:27:34,640 --> 00:27:38,320 Speaker 1: rides earlier this year. How how do you see uh 519 00:27:38,359 --> 00:27:40,600 Speaker 1: it playing out for these stocks in the second half 520 00:27:40,600 --> 00:27:43,760 Speaker 1: of the year. Sure, well, I'm thinking I'm a credit analyst, 521 00:27:43,840 --> 00:27:47,680 Speaker 1: so I won't comment on but but I will say 522 00:27:47,720 --> 00:27:51,359 Speaker 1: the conversations we've had have gone from let's talk about 523 00:27:51,359 --> 00:27:54,040 Speaker 1: the pandemic and what the recovery looks like. Now we're 524 00:27:54,080 --> 00:27:57,440 Speaker 1: talking about secular trans same exact conversations we were having 525 00:27:57,440 --> 00:28:00,800 Speaker 1: with investors two years ago. What's a cutting a look like? 526 00:28:01,200 --> 00:28:03,639 Speaker 1: You know, once the decline of television look like? And 527 00:28:03,680 --> 00:28:06,879 Speaker 1: clearly you know what's streaming, and that's dominating every conversation 528 00:28:06,920 --> 00:28:10,280 Speaker 1: we're having. And the thing about cord cutting, we we 529 00:28:10,520 --> 00:28:12,720 Speaker 1: you know, we were were missed not bringing it up 530 00:28:12,760 --> 00:28:14,679 Speaker 1: because at the end of the day, it is the 531 00:28:14,720 --> 00:28:19,640 Speaker 1: biggest revenue stream in the business. Uh, it's sir, I mean, 532 00:28:20,440 --> 00:28:24,000 Speaker 1: if I if I'm the pandemic. Actually, I think it 533 00:28:24,280 --> 00:28:28,159 Speaker 1: wasn't quite the killer that people thought it would be 534 00:28:28,320 --> 00:28:31,400 Speaker 1: for cord cutting, which actually held up for a variety 535 00:28:31,400 --> 00:28:34,920 Speaker 1: of reasons. But do you feel that once we come 536 00:28:34,960 --> 00:28:38,960 Speaker 1: out of the pandemic more clearly that in this country 537 00:28:39,000 --> 00:28:44,080 Speaker 1: we're gonna see cord cutting re accelerate. It's a great question. 538 00:28:44,560 --> 00:28:47,480 Speaker 1: And every year we published our forecast, and every year 539 00:28:47,480 --> 00:28:50,760 Speaker 1: we're wrong. So I'm gonna say that I know I'm 540 00:28:50,760 --> 00:28:53,160 Speaker 1: gonna be wrong. Which is we think so last year 541 00:28:53,280 --> 00:28:57,080 Speaker 1: card cutting, you know, if you include them, both the 542 00:28:57,160 --> 00:29:00,520 Speaker 1: virtual operators as well as the physical operators, cutting was 543 00:29:00,560 --> 00:29:04,040 Speaker 1: summer on the order of about five UM. We think 544 00:29:04,080 --> 00:29:08,560 Speaker 1: it's going to accelerate a little to about six going forward. Um. 545 00:29:08,640 --> 00:29:10,200 Speaker 1: And and and you know, and we've looked at a 546 00:29:10,200 --> 00:29:12,000 Speaker 1: couple of years, and that's our forecast at least that's 547 00:29:12,000 --> 00:29:15,360 Speaker 1: where we're modeling to and and said that we're probably 548 00:29:15,360 --> 00:29:18,320 Speaker 1: gonna be wrong. Well, I mean it's just because to 549 00:29:18,400 --> 00:29:23,680 Speaker 1: some degree defies belief. You've for years now and will 550 00:29:23,720 --> 00:29:27,120 Speaker 1: be the biggest yet. You see how much is collecting 551 00:29:27,160 --> 00:29:30,600 Speaker 1: on the streaming side in terms of what they could 552 00:29:30,600 --> 00:29:33,680 Speaker 1: do to entice chord cutting. But at the end of 553 00:29:33,720 --> 00:29:37,240 Speaker 1: the day, isn't it really about sports? And that as 554 00:29:37,320 --> 00:29:41,240 Speaker 1: long as linear TV keeps a stranglehold on the best rights, 555 00:29:41,600 --> 00:29:44,760 Speaker 1: there's only so much we're going to see cord cutting happen. 556 00:29:46,120 --> 00:29:48,760 Speaker 1: That's the theory. I agree with you, that's the theory. 557 00:29:48,760 --> 00:29:51,400 Speaker 1: But then, you know, now the conversation becomes, you know, 558 00:29:51,640 --> 00:29:56,440 Speaker 1: ESPN Plus, when does Disney decide ESPN Plus will now 559 00:29:56,680 --> 00:29:59,080 Speaker 1: contain all of its kind because it's got it's gotten 560 00:29:59,120 --> 00:30:02,600 Speaker 1: streaming rights, you know, for every one of its sports. Um, 561 00:30:02,640 --> 00:30:05,000 Speaker 1: you know what happens with Sinclair and the RST that 562 00:30:05,200 --> 00:30:07,960 Speaker 1: the dd c rs n s that they're pinning on watching. 563 00:30:08,240 --> 00:30:10,680 Speaker 1: I mean all of these things, you know, peck away, 564 00:30:10,720 --> 00:30:14,240 Speaker 1: peck probably too smaller word. They chip away and they 565 00:30:14,240 --> 00:30:18,120 Speaker 1: take out big chunks of of of the cable bundle. 566 00:30:18,720 --> 00:30:21,760 Speaker 1: At some point we're going to reach, you know, an 567 00:30:21,760 --> 00:30:24,920 Speaker 1: inflection point where Disney is gonna say enough enough, you 568 00:30:25,000 --> 00:30:27,840 Speaker 1: want ESPN you can get it by a streaming and 569 00:30:27,880 --> 00:30:30,040 Speaker 1: then the model falls apart and there is that five 570 00:30:30,120 --> 00:30:33,440 Speaker 1: years away? Is it ten years away? I don't know. 571 00:30:34,400 --> 00:30:38,320 Speaker 1: That's the balancing acts. So any media companies are navigating 572 00:30:38,440 --> 00:30:40,640 Speaker 1: right now, and it's gonna be interesting to continue to 573 00:30:40,720 --> 00:30:43,760 Speaker 1: do that, um Levan, that's all the questions I have. 574 00:30:43,880 --> 00:30:48,200 Speaker 1: Appreciating you taking the time out for a big picture discussion, 575 00:30:48,640 --> 00:30:57,120 Speaker 1: Appreciate your having me. Thank you very much. This has 576 00:30:57,160 --> 00:31:00,360 Speaker 1: been another episode of Strictly Business. Tune in next week 577 00:31:00,400 --> 00:31:04,520 Speaker 1: for another helping of scintillating conversation with media movers and shakers, 578 00:31:04,600 --> 00:31:06,800 Speaker 1: and please make sure you subscribe to the podcast to 579 00:31:06,840 --> 00:31:10,640 Speaker 1: hear future episodes. Also, leave a review in Apple Podcasts 580 00:31:10,800 --> 00:31:12,240 Speaker 1: and let us know how we're doing.