Speaker 1: All right, thanks very much. AD. Ten minutes here before
Speaker 1: the top of the hour, it's time for the daybreak
Speaker 1: Asian media and Tea Leaves review from the Wall Street Journal,
Speaker 1: and this is a story we've talked a lot about
Speaker 1: this morning. China is preparing to impose a fine of
Speaker 1: about a billion dollars on d D Global. This would
Speaker 1: bring to an end a year long investigation. The inquiry
Speaker 1: has been into the company cyber security practices and protection
Speaker 1: of data. Once this penalty is unveiled, the story says,
Speaker 1: the government plans to ease an earlier restriction that bans
Speaker 1: d D from adding new users to its platform. It
Speaker 1: has tens of millions of users but wasn't able to
Speaker 1: add so this wrapping up of the investigation would pave
Speaker 1: the way for d D to kick start a new
Speaker 1: share listing in Hong Kong from a p and this
Speaker 1: is also from the Financial Times earlier. China will take
Speaker 1: resolute and strong measures should the Speaker of the U
Speaker 1: S House of Representative, Nancy Pelosi, proceed with a reported
Speaker 1: to visit Taiwan. Now this was originally reported by the
Speaker 1: Financial Times. She's originally scheduled, or was originally scheduled to
Speaker 1: visit in April, but had a postpone after she tested
Speaker 1: positive for COVID nineteen and from the Nick, Japan Airlines
Speaker 1: is planning to transfer about three thousand workers from its
Speaker 1: core business to its budget carriers and to non aviation units.
Speaker 1: And that's due to forecast of business travel not returning
Speaker 1: to pre pandemic levels for a prolonged period of time.
Speaker 1: That's from the Nick. And back to that Wall Street
Speaker 1: Journal story we mentioned d d U the A d
Speaker 1: r S did advance in the U S session. That
Speaker 1: is a rap on the media. Nine minutes eight minutes
Speaker 1: now before the top of the hour, Yvon, all right,
Speaker 1: let's get more on those Netflix earnings. Now. Things could
Speaker 1: be turning around for the streaming company, losing fewer subscribers
Speaker 1: expected in the second quarter, but the company isn't projecting
Speaker 1: a return to rapid growth anytime soon. Joining us now
Speaker 1: discuss all this is geta rocket, nothing, Bloomberg Intelligence, tech
Speaker 1: and media analysts and geta It's interesting because even read
Speaker 1: hastings at himself, losing close to a million subscribers can't
Speaker 1: be really seen as a success, but investors centainly are
Speaker 1: cheering the news what's your take overall, Yes, so Yvonne,
Speaker 1: definitely a mixed bag, you know, and I think right
Speaker 1: now we're we're you know, just with the stock having
Speaker 1: taken such a beating, I think the general sentiment is
Speaker 1: just less bad is good, which is why we're kind
Speaker 1: of seeing this uh short term relief rally. But if
Speaker 1: you kind of just dig through the numbers a little
Speaker 1: bit and look under the hood. As far as the
Speaker 1: three Q guidance sys concerned, there's really not a whole
Speaker 1: lot to cheer about. Um. So they are guiding to growth, yes,
Speaker 1: so you know they're guiding to about a million subscriber ads.
Speaker 1: But then you look at the number of subscribers that
Speaker 1: you've lost so far in the first half of the year,
Speaker 1: that's just over a million. So it's about one point
Speaker 1: two million or so. So this is really going to
Speaker 1: be a wash at the end of three Q. Uh.
Speaker 1: And there's really no clarity in terms of what the
Speaker 1: long term subscriber trajectory is going to be, uh, you know,
Speaker 1: especially with all these macro headmands kind of building. Um.
Speaker 1: But there are some positives, there are some positives to
Speaker 1: think about. I mean, one thing was the valuation of
Speaker 1: the stock had dropped so far that you know there
Speaker 1: was some room there. Uh. The the the advertising option, which
Speaker 1: is which is coming. I guess they're testing in Latin America.
Speaker 1: I want to ask you specifically about that. Uh, that
Speaker 1: would seem to suggest that there could be some positives
Speaker 1: from that, but that it might be really slow in coming.
Speaker 1: That's exactly right, brand, So this is all going to
Speaker 1: take a while. Yes, there are positives, Uh, definitely, as
Speaker 1: you pointed out, that they are trying to do their
Speaker 1: best in terms of monetizing all of these incremental revenue opportunities,
Speaker 1: whether it is cracking down or password sharing as as
Speaker 1: they are doing as they're testing out right now in
Speaker 1: Latin America, whether it's introducing that new ad vertizing tier.
Speaker 1: But again, remember none of these are inherently in their DNA.
Speaker 1: They have to build this from scratch, and so it
Speaker 1: is definitely going to take time. Uh, you know, and
Speaker 1: and before like it kind of uh has a material
Speaker 1: impact on financials, it's going to be We're we're looking
Speaker 1: at at least another twelve to eighteen months before this
Speaker 1: really kind of boost the top line and the bottom line.
Speaker 1: And what really drove these results was you know, as
Speaker 1: they said one single thing, which was stranger things. I
Speaker 1: wonder in terms of how much they're saying that they're
Speaker 1: going to put into putting generally new content, what's in
Speaker 1: the pipeline. Is there anything there to kind of sort
Speaker 1: of reverse this tide and actually beat the competition spending less? Yes,
Speaker 1: they are. They're actually holding spending flat at about seventeen
Speaker 1: billion dollars in cash content spend. Um. Is that a
Speaker 1: good thing? Well, yes, it does help them from you know,
Speaker 1: an overall financial perspective that is going to partly contribute
Speaker 1: to their free cash flow, their positive free cash flow
Speaker 1: guidance for about a billion dollars this year and substantial
Speaker 1: growth into three. But then, um, you know, you do
Speaker 1: have their competitors kind of really really ramping up, um,
Speaker 1: you know, when it comes to content, whether it's a Disney,
Speaker 1: whether it's an Amazon Prime that's going after football, that's
Speaker 1: going after all of these expensive new drama series. You
Speaker 1: have Apple foraying into sports. So you have all of
Speaker 1: their competitors kind of really going after a huge, big,
Speaker 1: massive pieces of content, taking big swings. And so I'm
Speaker 1: not necessarily sure it's a prudent move for Netflix to
Speaker 1: kind of hold back when you have competition ratcheting up
Speaker 1: so fiercely. That said, uh, and we always defer to
Speaker 1: you a gitab but just to challenge you a little
Speaker 1: bit um, you know, they did have the first mover
Speaker 1: advantage the name. I mean, you know you're gonna cancel.
Speaker 1: If you're going to cancel some streaming, Netflix wouldn't be
Speaker 1: first on your list. It would probably be last on
Speaker 1: the list for for a lot of people. And and
Speaker 1: the past word strategy is kind of interesting. Is there
Speaker 1: some room there? The past word strategy is definitely interesting,
Speaker 1: But remember you have trained people over so many years
Speaker 1: now to kind of do this. They almost encouraged it
Speaker 1: in many ways, and so now suddenly to kind of
Speaker 1: clamp down on it. Uh, is I don't know if
Speaker 1: if it's really kind of going to bring in the
Speaker 1: results that they're hoping it will. And remember that first
Speaker 1: introducing this in Latin America, and Latin America is is
Speaker 1: a very very price sensitive market. You have consumers who
Speaker 1: are you know, where the elasticity demand is extremely high.
Speaker 1: So I'm not really necessarily sure it's going to do
Speaker 1: a whole lot in terms of boosting top line revenue.
Speaker 1: That said, it's definitely a step in the right direction.
Speaker 1: We'll have to wait and water and see how that
Speaker 1: kind of plays out. Um, so yeah, I think they
Speaker 1: are taking a lot of that. There are a lot
Speaker 1: of good initiatives in in the in the pipeline. But again,
Speaker 1: this is still very much a weight and watch story.
Speaker 1: And one one of the interesting things with Ozark. I
Speaker 1: guess that was one of the first where they sort
Speaker 1: of delayed the final episodes or split it into and
Speaker 1: it is not a strategy that kind of helps rather
Speaker 1: than you know, blow everything out of the door at once,
Speaker 1: that you sustain your subscribers. That's actually a great point,
Speaker 1: and that staggered release schedule actually ted Sarandos just mentioned
Speaker 1: this on the call. He said, the main reason for
Speaker 1: the staggered release of you know, Stranger Things, for instance,
Speaker 1: one uh one drop in in in May and the
Speaker 1: second drop in July was really because they hadn't finished production.
Speaker 1: They hadn't wrapped up production on all of it. Of course,
Speaker 1: it does help, it does help with the with with
Speaker 1: the subscriber churn numbers. And I'm just wondering, alright, we
Speaker 1: we have to go You're one of our favorites love,
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