1
00:00:05,960 --> 00:00:09,600
Speaker 1: Welcome back to another episode of Strictly Business, a podcast

2
00:00:09,640 --> 00:00:11,920
Speaker 1: in which we talked with the brightest minds working in

3
00:00:12,039 --> 00:00:16,520
Speaker 1: media today. I'm Andrew Wallenstein with Variety, trying something a

4
00:00:16,600 --> 00:00:19,880
Speaker 1: little different this week. Instead of digging deep with one

5
00:00:19,960 --> 00:00:22,639
Speaker 1: particular company, We're gonna take a broader view of the

6
00:00:22,720 --> 00:00:26,960
Speaker 1: media sector with my next guest, Navine Psarma, senior director

7
00:00:27,320 --> 00:00:30,840
Speaker 1: at SMP Global Ratings. He's been covering the media and

8
00:00:30,880 --> 00:00:37,280
Speaker 1: telecom businesses for the past twenty years. Thanks for coming

9
00:00:37,320 --> 00:00:41,800
Speaker 1: into Vine. I knew you'd be great to get perspective

10
00:00:41,840 --> 00:00:43,680
Speaker 1: on as we take this step back and look at

11
00:00:43,720 --> 00:00:46,680
Speaker 1: the business from a more macro level and where I'd

12
00:00:46,720 --> 00:00:48,320
Speaker 1: like to start us to get a sense of where

13
00:00:48,320 --> 00:00:51,640
Speaker 1: the industry fits in the context of the broader economy,

14
00:00:52,040 --> 00:00:56,720
Speaker 1: particularly given persistent concerns that a recession could be looming

15
00:00:56,840 --> 00:01:00,240
Speaker 1: here in the US. Is that part of your Is

16
00:01:00,240 --> 00:01:03,640
Speaker 1: that on your radar now? It is? We've certainly, as

17
00:01:03,680 --> 00:01:08,039
Speaker 1: a firm UM been thinking about a potential recession over

18
00:01:08,040 --> 00:01:11,120
Speaker 1: the next couple of years. I think our economists recently

19
00:01:11,200 --> 00:01:13,800
Speaker 1: updated some numbers and suggested that the likelihood of a

20
00:01:13,800 --> 00:01:18,080
Speaker 1: recession would be over the next twelve months. UM In

21
00:01:18,120 --> 00:01:20,640
Speaker 1: the meantime, ahead of a potential recession, we've been doing

22
00:01:20,640 --> 00:01:22,440
Speaker 1: a lot of testing of a lot of our companies,

23
00:01:22,440 --> 00:01:25,440
Speaker 1: stress testing them, stress testing our assumptions to see that

24
00:01:25,520 --> 00:01:28,600
Speaker 1: I might perform in a recession scenario. Is there any

25
00:01:28,680 --> 00:01:32,360
Speaker 1: good scenario where I mean the talk a bit about

26
00:01:32,400 --> 00:01:35,119
Speaker 1: sort of the history with media companies, how do they

27
00:01:35,160 --> 00:01:38,399
Speaker 1: typically fair and recessions passed? So UM, if you go

28
00:01:38,440 --> 00:01:39,920
Speaker 1: back and you look at two thousand and one and

29
00:01:39,920 --> 00:01:43,240
Speaker 1: two thousand and eight is the most recent ones. UM.

30
00:01:43,240 --> 00:01:47,400
Speaker 1: Clearly advertising gets hit uh pretty hard. Right the the

31
00:01:48,080 --> 00:01:51,840
Speaker 1: the national advertisers cut back at a at a greater

32
00:01:51,960 --> 00:01:54,240
Speaker 1: pace than the decline in g d P. There's a

33
00:01:54,320 --> 00:01:56,720
Speaker 1: multiplier to EVERYBOT one and a half the two times

34
00:01:57,280 --> 00:01:59,600
Speaker 1: UM and and so that's been the biggest impact to

35
00:01:59,680 --> 00:02:04,240
Speaker 1: media companies historically because they were mostly advertising focused. It's

36
00:02:04,240 --> 00:02:06,240
Speaker 1: certainly that's changed over the past bunch of years. And

37
00:02:06,240 --> 00:02:08,400
Speaker 1: so this is this is probably the biggest takeaway from

38
00:02:08,440 --> 00:02:10,320
Speaker 1: all the testing we've done, is if you go back

39
00:02:10,320 --> 00:02:13,120
Speaker 1: and even look at thwo thousand and eight, there a

40
00:02:13,160 --> 00:02:15,600
Speaker 1: lot of the companies were still advertising focused. Now you

41
00:02:15,680 --> 00:02:18,880
Speaker 1: had the rise of retransmission revenue UM and so and

42
00:02:18,960 --> 00:02:22,680
Speaker 1: affiliate fees, and so that diluted the impact from advertising.

43
00:02:23,320 --> 00:02:26,880
Speaker 1: The question though, is in this environment where we have

44
00:02:26,960 --> 00:02:29,240
Speaker 1: a lot of cord cutting, what happens to card cutting

45
00:02:29,240 --> 00:02:33,520
Speaker 1: in a recession? Do more people drop their video services? Likely?

46
00:02:34,960 --> 00:02:37,079
Speaker 1: Do they move over to the virtual m v p

47
00:02:37,240 --> 00:02:40,320
Speaker 1: d s? Maybe, But you know, at the end of

48
00:02:40,360 --> 00:02:42,919
Speaker 1: the day, how much of how many of those customers

49
00:02:42,919 --> 00:02:45,720
Speaker 1: are lost over time? And so the ability for the

50
00:02:45,760 --> 00:02:50,200
Speaker 1: industry to rebound because it's got this second ancillary revenue

51
00:02:50,200 --> 00:02:53,680
Speaker 1: stream might be more mooded than what a lot of

52
00:02:53,680 --> 00:02:56,200
Speaker 1: people think because you will have that you know, that

53
00:02:56,280 --> 00:02:59,720
Speaker 1: increases um in in cord cutting. Yeah, I wonder if

54
00:03:00,080 --> 00:03:03,760
Speaker 1: along with that cord cutting, we could also see it's

55
00:03:03,840 --> 00:03:06,639
Speaker 1: interesting timing for a potential recession when you think about

56
00:03:07,360 --> 00:03:09,600
Speaker 1: media companies that are now going to a market with

57
00:03:09,639 --> 00:03:12,760
Speaker 1: a new breed of product. We're talking about Disney plus

58
00:03:13,520 --> 00:03:16,240
Speaker 1: Warner Media is going to have something in their Apple

59
00:03:16,320 --> 00:03:19,200
Speaker 1: will be there. This is sort of like a whole

60
00:03:19,320 --> 00:03:22,680
Speaker 1: new thing, and when you go back to the recession

61
00:03:22,720 --> 00:03:26,480
Speaker 1: as a backdrop, basically there's going to be a demand

62
00:03:26,560 --> 00:03:30,160
Speaker 1: for a whole new level of consumer dollars at precisely

63
00:03:30,240 --> 00:03:32,800
Speaker 1: the time where I don't think too many consumers are

64
00:03:32,800 --> 00:03:34,920
Speaker 1: gonna be flexible with their wallets. What do you think?

65
00:03:35,000 --> 00:03:37,880
Speaker 1: I think you're you're dead right about that. Um, it's

66
00:03:37,920 --> 00:03:40,000
Speaker 1: a very risky time for these companies to be doing

67
00:03:40,040 --> 00:03:42,360
Speaker 1: about Having said that, is there a better time to

68
00:03:42,400 --> 00:03:44,200
Speaker 1: do it? I don't think they want to wait. And

69
00:03:44,200 --> 00:03:46,320
Speaker 1: maybe they should have started a couple of years earlier,

70
00:03:46,360 --> 00:03:48,520
Speaker 1: but that's water under the bridge. They've already passed that point.

71
00:03:48,680 --> 00:03:50,480
Speaker 1: So this is the right time for them to start.

72
00:03:51,600 --> 00:03:53,320
Speaker 1: And you know, when we look at these companies, we're

73
00:03:53,360 --> 00:03:55,360
Speaker 1: looking at credit quality, so we're looking at cash follow

74
00:03:55,400 --> 00:03:58,280
Speaker 1: we're looking at margins, we're looking at leverage Atiba Dha,

75
00:03:59,040 --> 00:04:00,920
Speaker 1: and a lot of these companies are going to see

76
00:04:00,960 --> 00:04:04,280
Speaker 1: a significant at least a degradation and their and their

77
00:04:04,320 --> 00:04:08,320
Speaker 1: quite quality UM. Not only from the launch of these

78
00:04:08,360 --> 00:04:11,440
Speaker 1: new services, but if you layer in a recession, that

79
00:04:11,520 --> 00:04:15,040
Speaker 1: could also exacerbate that problem. And I would imagine the

80
00:04:15,120 --> 00:04:18,560
Speaker 1: costs of launching these services something that you're looking at

81
00:04:18,600 --> 00:04:21,920
Speaker 1: as you assess their financial health. I mean, billions are

82
00:04:21,960 --> 00:04:25,359
Speaker 1: going to be walking out the door to put the

83
00:04:25,400 --> 00:04:27,960
Speaker 1: amount of programming that's gonna be necessary to even be

84
00:04:28,320 --> 00:04:32,240
Speaker 1: remotely competitive with the likes of Netflix. Yeah, exactly, and

85
00:04:32,680 --> 00:04:34,719
Speaker 1: interesting as a as a lot of these companies start

86
00:04:34,760 --> 00:04:37,440
Speaker 1: to pull that programming off of Netflix and so they're

87
00:04:37,440 --> 00:04:40,440
Speaker 1: giving up licensing and syndication revenue. They're gonna be losing

88
00:04:40,480 --> 00:04:43,800
Speaker 1: that revenue as well as the investment that they're gonna

89
00:04:43,839 --> 00:04:46,240
Speaker 1: have to make. So we look at it a little

90
00:04:46,279 --> 00:04:49,520
Speaker 1: bit like the music industry was over the past dozen

91
00:04:49,600 --> 00:04:52,680
Speaker 1: or so years, where they were losing revenue to piracy,

92
00:04:52,720 --> 00:04:54,560
Speaker 1: and it took them a long time to figure out

93
00:04:54,600 --> 00:04:56,960
Speaker 1: a business model or to get the business model that

94
00:04:57,000 --> 00:04:59,480
Speaker 1: they were now progressing to, which was you know where

95
00:04:59,480 --> 00:05:01,920
Speaker 1: we are today. It was Spotify to finally work. And

96
00:05:01,960 --> 00:05:04,280
Speaker 1: so you're going to have this valley effect where you're

97
00:05:04,279 --> 00:05:07,000
Speaker 1: going to lose revenues and you're going to have increased

98
00:05:07,040 --> 00:05:10,120
Speaker 1: cost which is all going to impact cash flow and leverage.

99
00:05:10,440 --> 00:05:12,039
Speaker 1: And at some point you're gonna read a reach an

100
00:05:12,040 --> 00:05:16,000
Speaker 1: inflection point and how many years away that is, as

101
00:05:16,000 --> 00:05:18,919
Speaker 1: anybody's guess, Well, when you talk about the music business,

102
00:05:18,960 --> 00:05:23,280
Speaker 1: I also think about the consolidation that really shrunk that business,

103
00:05:23,680 --> 00:05:27,160
Speaker 1: and I've wondered whether really the media business is headed

104
00:05:27,200 --> 00:05:31,720
Speaker 1: down the same road. Disney Fox being perhaps just a prelude,

105
00:05:31,800 --> 00:05:34,560
Speaker 1: and yet things are actually kind of quiet besides just

106
00:05:34,640 --> 00:05:38,000
Speaker 1: some chatter that's always been there around Viacom and CBS.

107
00:05:38,240 --> 00:05:41,160
Speaker 1: What's your outlook in terms of where we are in

108
00:05:41,400 --> 00:05:45,320
Speaker 1: this consolidation trend. I think we're so we've we've gotten

109
00:05:45,320 --> 00:05:49,400
Speaker 1: through the bigger companies Time Warner is gone, Fox is gone,

110
00:05:49,640 --> 00:05:52,640
Speaker 1: but we still have a bunch of called smaller companies,

111
00:05:52,680 --> 00:05:55,400
Speaker 1: midsized companies. I think they eventually have to consolidate it.

112
00:05:55,400 --> 00:05:58,440
Speaker 1: It's just a matter of time. Um And it's not

113
00:05:58,480 --> 00:06:00,560
Speaker 1: just a question of taking few companies and putting them together. Right.

114
00:06:00,720 --> 00:06:03,720
Speaker 1: One of the problems, but that in any M and

115
00:06:03,800 --> 00:06:08,279
Speaker 1: A activity is social issues. Is who runs the company,

116
00:06:08,320 --> 00:06:11,880
Speaker 1: who survives in the transaction? Whose culture do you do

117
00:06:11,920 --> 00:06:15,080
Speaker 1: you end up absorbing? In which culture survives? Those are

118
00:06:15,120 --> 00:06:18,200
Speaker 1: big issues that that derail a lot of acquisitions, and

119
00:06:18,200 --> 00:06:21,240
Speaker 1: I think a lot of the companies that are remaining

120
00:06:21,400 --> 00:06:24,480
Speaker 1: have to work through those issues before we get consolidation

121
00:06:24,520 --> 00:06:27,760
Speaker 1: of those companies. Well, are there any particular players though

122
00:06:27,760 --> 00:06:31,320
Speaker 1: that are interesting you as you look anywhere from Sony

123
00:06:31,400 --> 00:06:35,000
Speaker 1: to MGM, two Lions, gay properties that are sort of

124
00:06:35,120 --> 00:06:39,039
Speaker 1: pinging on your radar, All of those, Um, we were we.

125
00:06:39,040 --> 00:06:43,200
Speaker 1: We believe strongly in the idea that owning a studio

126
00:06:43,680 --> 00:06:46,560
Speaker 1: that produces content and I pay is really important to

127
00:06:46,560 --> 00:06:49,960
Speaker 1: the long term healthway particular company. So I think the

128
00:06:49,960 --> 00:06:52,560
Speaker 1: tech companies would disagree with you, though. Why haven't we

129
00:06:52,600 --> 00:06:56,279
Speaker 1: seen acquisitions, you know, from the Googles and even back

130
00:06:56,279 --> 00:06:59,400
Speaker 1: to the Microsofts of the world, they've never bought studios,

131
00:06:59,440 --> 00:07:02,880
Speaker 1: And I feel alike, isn't this really just a reflection

132
00:07:02,920 --> 00:07:06,400
Speaker 1: of Silicon Valley looking at libraries as a business and saying,

133
00:07:06,520 --> 00:07:09,320
Speaker 1: we'll just build that up in time with our own people. Yeah,

134
00:07:09,360 --> 00:07:11,360
Speaker 1: I agree. I mean, Sony is the any one that right,

135
00:07:11,440 --> 00:07:13,640
Speaker 1: Sonny Sonny went out and did that a long time ago,

136
00:07:13,640 --> 00:07:15,679
Speaker 1: the sure the only ones to do that. I totally

137
00:07:15,720 --> 00:07:18,680
Speaker 1: agree with you, I think, um, I think there's a

138
00:07:18,720 --> 00:07:23,440
Speaker 1: differentiation between the guys like Amazon and Apple who call

139
00:07:23,520 --> 00:07:27,240
Speaker 1: themselves tech companies, and Netflix that calls himself a media company.

140
00:07:27,360 --> 00:07:30,440
Speaker 1: So I think it's much more strategic for Netflix to

141
00:07:30,640 --> 00:07:35,880
Speaker 1: own content on a library maybe down the road, versus

142
00:07:36,240 --> 00:07:39,560
Speaker 1: the tech companies, which I think, oh, you view media

143
00:07:39,800 --> 00:07:42,840
Speaker 1: as something to to bring customers to their websites or

144
00:07:42,880 --> 00:07:46,080
Speaker 1: to sell products. So I don't, I don't. I wouldn't

145
00:07:46,080 --> 00:07:48,800
Speaker 1: be surprised if none of those companies ever bought a

146
00:07:48,840 --> 00:07:53,320
Speaker 1: studio and Netflix, do you feel differently about that? I do, Um,

147
00:07:53,680 --> 00:07:56,840
Speaker 1: I I've thought I've always thought that Netflix should buy

148
00:07:56,840 --> 00:08:00,400
Speaker 1: a studio because as they're trying to build out their

149
00:08:00,520 --> 00:08:05,680
Speaker 1: own own content, this helps accelerate that process. They've got

150
00:08:05,680 --> 00:08:07,520
Speaker 1: their reasons for not doing that. They don't want to

151
00:08:07,520 --> 00:08:11,360
Speaker 1: buy content that's encumbered. I think longer term it helps

152
00:08:11,440 --> 00:08:15,960
Speaker 1: them as opposed to spending the billions of dollars in content,

153
00:08:16,120 --> 00:08:19,440
Speaker 1: you know, in an original content they do today. Having

154
00:08:19,440 --> 00:08:21,720
Speaker 1: said that, they've been very successful. So who am I

155
00:08:21,800 --> 00:08:24,960
Speaker 1: to question there? Well? Where do you stand though? On

156
00:08:25,000 --> 00:08:27,760
Speaker 1: the bowl to bear range? On Netflix? There are some

157
00:08:27,840 --> 00:08:30,840
Speaker 1: who say they don't understand this massive spending and that

158
00:08:31,000 --> 00:08:35,120
Speaker 1: ultimately debt will catch up to them. It's it's definitely

159
00:08:35,160 --> 00:08:39,040
Speaker 1: a risk. Um. We they are a very interesting credit

160
00:08:39,280 --> 00:08:41,320
Speaker 1: from a company from the credit from the standpoint of

161
00:08:41,320 --> 00:08:45,400
Speaker 1: the credit markets, people either hate them or they love them. Internally,

162
00:08:46,120 --> 00:08:49,400
Speaker 1: we have some very our most heated discussions and debates

163
00:08:49,440 --> 00:08:52,559
Speaker 1: over the credit quality is over the credit quality of Netflix.

164
00:08:53,200 --> 00:08:57,760
Speaker 1: So UM, I think we kind of fall probably more

165
00:08:57,880 --> 00:09:01,440
Speaker 1: on the bullish side. We think that there is a path.

166
00:09:01,600 --> 00:09:05,080
Speaker 1: I mean, they've got scale, they've got a lot of content. Um,

167
00:09:05,120 --> 00:09:08,880
Speaker 1: they're probably not as perfect in producing content as some

168
00:09:09,000 --> 00:09:11,960
Speaker 1: of their bulls think they are. There's a lot of

169
00:09:11,960 --> 00:09:15,960
Speaker 1: stuff that just doesn't work. But if they're on their website. Um,

170
00:09:16,080 --> 00:09:18,840
Speaker 1: for us, what we look at is the cash flow

171
00:09:18,880 --> 00:09:23,320
Speaker 1: burn and eventually in the margins. So eventually they're going

172
00:09:23,400 --> 00:09:25,560
Speaker 1: to get the cash flow break even, and it's a

173
00:09:25,600 --> 00:09:27,760
Speaker 1: question of how quickly do they want to do it.

174
00:09:27,760 --> 00:09:29,120
Speaker 1: It's really up to that how much are they going

175
00:09:29,200 --> 00:09:31,760
Speaker 1: to spend on programming? And when they do that, they

176
00:09:31,760 --> 00:09:34,760
Speaker 1: are arguably the most interesting well certainly most interesting are

177
00:09:34,760 --> 00:09:37,840
Speaker 1: they're arguably also the most powerful media company around, right

178
00:09:38,040 --> 00:09:41,440
Speaker 1: on par with the likes of Disney, which in our

179
00:09:41,440 --> 00:09:43,920
Speaker 1: eyes could make them an investment grade company, you know,

180
00:09:43,920 --> 00:09:47,520
Speaker 1: with investment grade ratings. How they get there a lot

181
00:09:47,559 --> 00:09:51,120
Speaker 1: will be driven by their desire to get there and

182
00:09:51,160 --> 00:09:55,320
Speaker 1: their desire to spend. So for us, an investment company

183
00:09:55,360 --> 00:09:59,000
Speaker 1: needs to have a certain amount of leverage, not too high.

184
00:09:59,080 --> 00:10:02,240
Speaker 1: They don't really have that higher leverage for us, they

185
00:10:02,120 --> 00:10:04,440
Speaker 1: the credit risk here is the cash flow burn and

186
00:10:04,440 --> 00:10:06,400
Speaker 1: the fact that they need to capital markets. The debt

187
00:10:06,440 --> 00:10:08,440
Speaker 1: markets to be able to go and fund their business model.

188
00:10:08,559 --> 00:10:10,440
Speaker 1: Eventually they're going to get a point where they're they're

189
00:10:10,800 --> 00:10:14,679
Speaker 1: cash flow generative. That's probably when they get to investment grade.

190
00:10:15,000 --> 00:10:19,280
Speaker 1: I see. Well, Uh, Netflix is estimated, along with Amazon,

191
00:10:19,360 --> 00:10:23,160
Speaker 1: to spend about twenty billion dollars on content this year,

192
00:10:23,840 --> 00:10:29,160
Speaker 1: staggering considering probably the whole content economy cost maybe eighteen

193
00:10:29,160 --> 00:10:32,800
Speaker 1: and ninety billion in terms of programming spend. So how

194
00:10:32,800 --> 00:10:36,040
Speaker 1: do you look at the broad competitive field here in

195
00:10:36,160 --> 00:10:38,880
Speaker 1: terms of we talked about these services like Apple and

196
00:10:38,920 --> 00:10:42,600
Speaker 1: Disney that are gonna get into Netflix's space. How do

197
00:10:42,640 --> 00:10:45,439
Speaker 1: you see this all playing out? I think this room

198
00:10:45,480 --> 00:10:49,079
Speaker 1: for all of these players. Um, I think so at

199
00:10:49,080 --> 00:10:51,360
Speaker 1: our estimate, and we're looking at a cash number rather

200
00:10:51,400 --> 00:10:54,480
Speaker 1: than a gap number. And they spent about twelve billion

201
00:10:54,520 --> 00:10:57,360
Speaker 1: dollars this last year. We think they're gonna spend somewhere

202
00:10:57,400 --> 00:11:00,920
Speaker 1: between fourteen and fifteen billion dollars. It's our estimate. On programming.

203
00:11:01,040 --> 00:11:03,720
Speaker 1: How does a lot especially when you consider it's all

204
00:11:03,920 --> 00:11:07,880
Speaker 1: original programming and it's not sports, um, which is you know,

205
00:11:07,920 --> 00:11:09,679
Speaker 1: if you look at their their peers, whether it's a

206
00:11:09,720 --> 00:11:14,199
Speaker 1: Disney or or an NBC, they're spending similar amounts of money,

207
00:11:14,360 --> 00:11:16,720
Speaker 1: but a lot of that is going towards sports programming.

208
00:11:16,800 --> 00:11:19,640
Speaker 1: So these guys are spending far more than anybody else

209
00:11:19,679 --> 00:11:23,640
Speaker 1: on programming. I mean, what's what's interesting when we do

210
00:11:23,679 --> 00:11:26,559
Speaker 1: our channel checks is we keep asking companies is are

211
00:11:26,559 --> 00:11:30,080
Speaker 1: there constraints? Is Netflix and Amazon and Apple all these

212
00:11:30,080 --> 00:11:34,000
Speaker 1: guys basically using up cruise and there's not enough scripts? No, Now,

213
00:11:34,000 --> 00:11:38,720
Speaker 1: there seems to be a lot of supply out there. Um,

214
00:11:38,920 --> 00:11:40,439
Speaker 1: it's just a question of you know, how do you

215
00:11:40,480 --> 00:11:43,400
Speaker 1: get viewers to watch your stuff? Yeah? And uh, I

216
00:11:43,440 --> 00:11:48,440
Speaker 1: mean Netflix, I think in nineteen has shown a an

217
00:11:48,480 --> 00:11:52,760
Speaker 1: ability to make programming work, is you know, getting certain

218
00:11:52,840 --> 00:11:55,560
Speaker 1: hits launched out there in the strongest possible way at

219
00:11:55,600 --> 00:11:58,760
Speaker 1: just the time where it feels like broadcasting cable has

220
00:11:58,880 --> 00:12:02,320
Speaker 1: lost that ability in recent years. I mean the narrative, Uh,

221
00:12:02,440 --> 00:12:05,520
Speaker 1: does not bode well for traditional media. I agree. I agree.

222
00:12:05,640 --> 00:12:09,800
Speaker 1: What's really interesting when you talk to Netflix is how

223
00:12:09,880 --> 00:12:12,760
Speaker 1: much they know about what their consumers, who their consumers are,

224
00:12:12,760 --> 00:12:14,559
Speaker 1: and what they're consuming. And this is where the media

225
00:12:14,640 --> 00:12:19,000
Speaker 1: companies historically haven't had that data and so their ability

226
00:12:19,080 --> 00:12:22,280
Speaker 1: to go and say, I mean Netflix is famously said this,

227
00:12:22,400 --> 00:12:25,240
Speaker 1: which is if you watch this TV show and Adam

228
00:12:25,320 --> 00:12:28,640
Speaker 1: Sandler movie, you know, we know you like another movie

229
00:12:28,760 --> 00:12:31,720
Speaker 1: by Adam Sandler or something similar. They're very good at

230
00:12:31,880 --> 00:12:35,600
Speaker 1: and matching up consumers with content. We'll see if the

231
00:12:35,600 --> 00:12:38,480
Speaker 1: media companies will will we'll get to that position. Now

232
00:12:38,600 --> 00:12:41,640
Speaker 1: you know they're working, They're starting from scratch. They're gonna

233
00:12:41,679 --> 00:12:43,640
Speaker 1: have to build that database. It's going to take them

234
00:12:43,640 --> 00:12:45,600
Speaker 1: a number of years to be able to replicate that.

235
00:12:46,080 --> 00:12:48,360
Speaker 1: I think you're actually hitting on on a very key

236
00:12:48,400 --> 00:12:51,600
Speaker 1: point because as we assess all these companies and their

237
00:12:51,600 --> 00:12:53,959
Speaker 1: ability to go to market with a good streaming product,

238
00:12:54,280 --> 00:12:56,640
Speaker 1: we talk a lot about content. We talk a lot

239
00:12:56,679 --> 00:13:02,400
Speaker 1: about pricing, but it's that you x uh driven algorithm

240
00:13:02,440 --> 00:13:04,880
Speaker 1: that I think is going to be probably just as

241
00:13:04,920 --> 00:13:07,040
Speaker 1: big an issue. But we don't hear people talk about

242
00:13:07,280 --> 00:13:10,720
Speaker 1: Netflix has developed a product that sophisticated is over many

243
00:13:10,880 --> 00:13:14,000
Speaker 1: years and I think no amount of content spending and

244
00:13:14,080 --> 00:13:17,839
Speaker 1: no amount of you know, the most aggressive slow price point.

245
00:13:18,880 --> 00:13:22,160
Speaker 1: I just have trouble believing that companies that are not

246
00:13:22,440 --> 00:13:25,080
Speaker 1: that don't have let's say D two C in their

247
00:13:25,160 --> 00:13:27,360
Speaker 1: d n A, that they're going to be able to

248
00:13:27,440 --> 00:13:30,880
Speaker 1: launch products that will be on par with the sophistication

249
00:13:30,920 --> 00:13:34,400
Speaker 1: of Netflix. Agree, totally agree. The other challenge here is

250
00:13:34,760 --> 00:13:37,720
Speaker 1: none of these media companies have historically dealt directly with

251
00:13:37,760 --> 00:13:42,120
Speaker 1: consumers outside of Disney and and I think what media

252
00:13:42,160 --> 00:13:44,679
Speaker 1: companies are going to be surprised with is the fickleness

253
00:13:44,880 --> 00:13:47,280
Speaker 1: of consumers. They don't want to pay a lot for

254
00:13:47,320 --> 00:13:50,120
Speaker 1: their content. Media companies have never had to deal with that.

255
00:13:50,200 --> 00:13:52,000
Speaker 1: Right They've told the cable companies, this is what you're

256
00:13:52,000 --> 00:13:53,599
Speaker 1: going to pay, and the cable companies are paid it.

257
00:13:53,800 --> 00:13:55,560
Speaker 1: Now suddenly they're going to be putting out a product

258
00:13:55,559 --> 00:13:58,360
Speaker 1: and they're gonna say we're charging X dollars for that product,

259
00:13:58,920 --> 00:14:00,680
Speaker 1: and they may be surprised at how many customers don't

260
00:14:00,679 --> 00:14:01,880
Speaker 1: want to take it because they don't want to pay

261
00:14:01,920 --> 00:14:04,520
Speaker 1: for it. Um. The other thing I think we've seen

262
00:14:04,559 --> 00:14:06,880
Speaker 1: historically with some guys who have tried to launch these

263
00:14:06,880 --> 00:14:10,439
Speaker 1: services is they don't have the back office. They their

264
00:14:10,720 --> 00:14:14,200
Speaker 1: servers crash, they can't deal with customer care, they can't

265
00:14:14,200 --> 00:14:17,559
Speaker 1: deal with building. It's a whole different world, and a

266
00:14:17,640 --> 00:14:19,640
Speaker 1: lot of these companies don't have the capabilities or trying

267
00:14:19,680 --> 00:14:22,600
Speaker 1: to build the capabilities today. And yet when I hear that,

268
00:14:22,680 --> 00:14:26,400
Speaker 1: I also wonder whether we're taking too dim a view

269
00:14:26,760 --> 00:14:31,440
Speaker 1: of media company's ability to change, whether that's culturally, whether

270
00:14:31,480 --> 00:14:35,480
Speaker 1: that's in terms of technical sophistication, bolting on and buying

271
00:14:35,560 --> 00:14:39,240
Speaker 1: what they don't have, you know, examples like Disney getting

272
00:14:39,320 --> 00:14:42,360
Speaker 1: Bam Tech, that kind of thing. I do wonder whether

273
00:14:42,520 --> 00:14:47,760
Speaker 1: people are potentially underestimating, especially given how desperate these companies

274
00:14:47,800 --> 00:14:51,880
Speaker 1: are to survive, their ability to change. That's a very

275
00:14:51,920 --> 00:14:57,880
Speaker 1: fair point. And yeah, you're right, You're right they I mean, yeah,

276
00:14:57,880 --> 00:15:00,840
Speaker 1: I agree, well, but I think the the other side

277
00:15:00,880 --> 00:15:04,160
Speaker 1: of it is to your own point. Though we've seen

278
00:15:04,240 --> 00:15:06,400
Speaker 1: some of these companies and thinking of what A T

279
00:15:06,520 --> 00:15:08,600
Speaker 1: and T did with Tiger Woods around the beginning of

280
00:15:08,640 --> 00:15:13,000
Speaker 1: the new year, this complete streaming fiasco, and you've got

281
00:15:13,120 --> 00:15:16,040
Speaker 1: to wonder whether either that's a sign like, look, there's

282
00:15:16,040 --> 00:15:17,920
Speaker 1: a lot more of this coming, especially when these new

283
00:15:17,960 --> 00:15:21,600
Speaker 1: streaming products come out, or they're learning from their mistakes,

284
00:15:21,920 --> 00:15:23,840
Speaker 1: they'll have it right when these products come out. What

285
00:15:23,840 --> 00:15:26,440
Speaker 1: do you think? I I I think I would hope

286
00:15:26,440 --> 00:15:28,960
Speaker 1: that it's the latter. I hope they're willing to experiment

287
00:15:28,960 --> 00:15:34,000
Speaker 1: and take the fall and and then start again. I

288
00:15:34,000 --> 00:15:36,840
Speaker 1: I think I think I'm gonna be I'm gonna be

289
00:15:36,880 --> 00:15:39,000
Speaker 1: pessimistic here and say there's probably only a couple of

290
00:15:39,080 --> 00:15:43,480
Speaker 1: companies that are probably courageous enough to go ahead and

291
00:15:43,480 --> 00:15:46,120
Speaker 1: try something of that. I think what you're I think

292
00:15:46,120 --> 00:15:47,800
Speaker 1: what the reality is is you're going to have a

293
00:15:47,800 --> 00:15:49,920
Speaker 1: lot of companies saying we don't know how the expertise

294
00:15:49,920 --> 00:15:53,040
Speaker 1: to do that, we don't think we have the time

295
00:15:53,120 --> 00:15:55,320
Speaker 1: to try to pivot that way, And I think they'll

296
00:15:55,320 --> 00:15:59,200
Speaker 1: sell themselves. I think I famously, you know, I think

297
00:15:59,200 --> 00:16:02,000
Speaker 1: Time Warner went through this. Time Wearner talked about these

298
00:16:02,000 --> 00:16:04,040
Speaker 1: this kind of evolution a long time ago. They were

299
00:16:04,080 --> 00:16:06,520
Speaker 1: way ahead of everybody else. I think they looked at

300
00:16:07,120 --> 00:16:08,880
Speaker 1: what they had to do to try to get to

301
00:16:08,960 --> 00:16:11,680
Speaker 1: that next step. They looked at the impact to the

302
00:16:11,840 --> 00:16:15,600
Speaker 1: income statement, they lost, revenues, the cash flow, the investments.

303
00:16:15,600 --> 00:16:18,280
Speaker 1: I had the mate and they said, you know, maybe

304
00:16:18,280 --> 00:16:20,240
Speaker 1: someone else should try to do this, and they sold themselves.

305
00:16:21,080 --> 00:16:22,120
Speaker 1: And I think you're going to see a lot of

306
00:16:22,120 --> 00:16:24,200
Speaker 1: other companies do that as well. I mean, what Disney

307
00:16:24,280 --> 00:16:27,800
Speaker 1: is doing is very brave, yes, and and they're going

308
00:16:27,840 --> 00:16:31,080
Speaker 1: to stumble and fall um and and having the vision

309
00:16:31,240 --> 00:16:33,480
Speaker 1: to say we'll stumble and fall, but we'll go back

310
00:16:33,520 --> 00:16:38,200
Speaker 1: and you know, experiment again, and we're willing to take

311
00:16:38,240 --> 00:16:41,920
Speaker 1: the hit for three, four or five, whatever number of years.

312
00:16:42,040 --> 00:16:44,320
Speaker 1: Very courageous on their part. Well, we talked a lot

313
00:16:44,360 --> 00:16:47,920
Speaker 1: about subscription businesses. I also want to get your take

314
00:16:48,000 --> 00:16:51,920
Speaker 1: on sort of the state of advertising today where the

315
00:16:51,960 --> 00:16:56,120
Speaker 1: dollars are going. Saw some interesting data recently, for instance,

316
00:16:56,160 --> 00:16:59,600
Speaker 1: about digital ad spending surpassing TV in the US for

317
00:16:59,680 --> 00:17:03,280
Speaker 1: the first time. It's a milestone moment, wouldn't you say?

318
00:17:03,400 --> 00:17:05,240
Speaker 1: Yes and no? I think one of the things that

319
00:17:05,320 --> 00:17:08,520
Speaker 1: gets lost when people look at digital is where's the

320
00:17:08,560 --> 00:17:11,560
Speaker 1: digital money coming from. Yes, it's coming a bit from television. Yes,

321
00:17:11,560 --> 00:17:14,600
Speaker 1: it's coming from radio and print. It's it's taken that

322
00:17:15,119 --> 00:17:17,280
Speaker 1: away a long time ago. But you have a lot

323
00:17:17,320 --> 00:17:20,359
Speaker 1: of you have a change in the way that companies

324
00:17:21,560 --> 00:17:24,280
Speaker 1: market that brought more broadly speaking, right, so you've got

325
00:17:24,280 --> 00:17:29,000
Speaker 1: advertising versus promotional dollars. The promotional dollars are the ones

326
00:17:29,040 --> 00:17:31,080
Speaker 1: that are moving, or the dollars that we used to

327
00:17:31,119 --> 00:17:34,520
Speaker 1: be uh spent on promotions are now going from promotions

328
00:17:34,520 --> 00:17:37,159
Speaker 1: to advertising. You're getting a lot of local mom and

329
00:17:37,200 --> 00:17:39,560
Speaker 1: pop stores who you never used to advertise maybe in

330
00:17:39,560 --> 00:17:41,600
Speaker 1: the yellow pages, are now moving their dollars as well

331
00:17:41,640 --> 00:17:46,439
Speaker 1: to digital. So, yes, digital is really important, clearly, But

332
00:17:46,840 --> 00:17:51,919
Speaker 1: I think those people who say that traditional media, especially television,

333
00:17:52,119 --> 00:17:54,920
Speaker 1: are gonna die because of that, I think you're mistaken,

334
00:17:54,920 --> 00:17:58,119
Speaker 1: because I think that both can coexist, okay, And do

335
00:17:58,160 --> 00:18:00,520
Speaker 1: you think TV when you look at you know, innovations

336
00:18:00,560 --> 00:18:04,080
Speaker 1: like what's going on with the addressible advertising can innovate

337
00:18:04,160 --> 00:18:06,919
Speaker 1: to the way where they'll protect their market share in

338
00:18:06,960 --> 00:18:09,639
Speaker 1: the long term. It will certainly help. The way that

339
00:18:09,640 --> 00:18:14,400
Speaker 1: advertisers allocate dollars is based off of the you know what.

340
00:18:14,520 --> 00:18:18,159
Speaker 1: They they send dollars to digital, they send dollars to print,

341
00:18:18,200 --> 00:18:22,280
Speaker 1: they send dollars to television because they think there are

342
00:18:22,640 --> 00:18:24,440
Speaker 1: each one of those is a good way to reach

343
00:18:24,800 --> 00:18:29,880
Speaker 1: customers rights either targeted or it's broad based. Television has

344
00:18:29,920 --> 00:18:34,360
Speaker 1: always offered broad based reach that no other media can

345
00:18:34,359 --> 00:18:37,159
Speaker 1: do to replicate today, and it's probably gonna take a

346
00:18:37,200 --> 00:18:41,000
Speaker 1: long time for digital to to to supplant television in

347
00:18:41,000 --> 00:18:43,680
Speaker 1: that regard. So we always thought that there is a

348
00:18:43,800 --> 00:18:49,240
Speaker 1: base for television advertising. Advertisers will continue to advertise on football,

349
00:18:49,520 --> 00:18:51,760
Speaker 1: on the oscars on television because it's the best way

350
00:18:51,800 --> 00:18:56,600
Speaker 1: for them to reach customers. So television will lose some

351
00:18:56,680 --> 00:19:00,680
Speaker 1: share because it's not gonna be growing as quickly as digital,

352
00:19:01,240 --> 00:19:02,920
Speaker 1: But it isn't going to fall off a cliff, and

353
00:19:02,920 --> 00:19:05,920
Speaker 1: advertising isn't going to disappear from television. And yet sometimes

354
00:19:05,920 --> 00:19:08,040
Speaker 1: I fear when you look at the numbers, that TV

355
00:19:08,320 --> 00:19:10,600
Speaker 1: ratings look like they could get to a place where

356
00:19:10,600 --> 00:19:14,320
Speaker 1: they'll fall off a cliff. How does not add dollars

357
00:19:14,600 --> 00:19:17,520
Speaker 1: drag down with that? I mean, yes, there'll always be

358
00:19:17,520 --> 00:19:20,199
Speaker 1: the Super Bowl and the Oscars, but there's thousands of

359
00:19:20,200 --> 00:19:23,360
Speaker 1: hours elsewhere on the calendar, and that's and that's the risk.

360
00:19:23,760 --> 00:19:27,359
Speaker 1: So I think advertising on live events and news and

361
00:19:27,400 --> 00:19:31,840
Speaker 1: sports will continue to get good CPMs. I look at

362
00:19:31,880 --> 00:19:33,680
Speaker 1: a lot of those other a lot of the cable

363
00:19:33,720 --> 00:19:37,640
Speaker 1: networks and wonder when CPMs are gonna start declining over time,

364
00:19:37,960 --> 00:19:41,480
Speaker 1: And and frankly, look, at some point advertisers are going

365
00:19:41,520 --> 00:19:45,639
Speaker 1: to get frustrated with paying double digit CPM increases and

366
00:19:45,640 --> 00:19:47,680
Speaker 1: and so I think they're there's gonna be a backlash

367
00:19:47,720 --> 00:19:50,560
Speaker 1: against that at some point, And so the ability for

368
00:19:50,600 --> 00:19:52,920
Speaker 1: even the broadcast networks to push up CPMs at double

369
00:19:52,960 --> 00:19:56,480
Speaker 1: digits will fade over time, got it. And then on

370
00:19:56,520 --> 00:20:00,760
Speaker 1: the digital side of the advertising coin. Uh still clearly

371
00:20:00,800 --> 00:20:04,080
Speaker 1: Google and Facebook getting the lion's share of the dollars.

372
00:20:04,119 --> 00:20:08,159
Speaker 1: Amazon's share starting to join those two. And I'm curious

373
00:20:08,240 --> 00:20:10,680
Speaker 1: what you think about the top, but I'm also curious

374
00:20:10,680 --> 00:20:13,480
Speaker 1: what you think about the rest of the pack and

375
00:20:13,560 --> 00:20:16,399
Speaker 1: what seems like in early nineteen was a bit of

376
00:20:16,480 --> 00:20:21,000
Speaker 1: a blood bath among digital publishers like BuzzFeed and Vice

377
00:20:21,160 --> 00:20:24,639
Speaker 1: and just general publishers in general that if you're not

378
00:20:24,720 --> 00:20:27,639
Speaker 1: Google and Facebook, man, is it hard to do business? Now? Well,

379
00:20:27,680 --> 00:20:30,719
Speaker 1: certainly Amazon is gaining a lot of share, and and

380
00:20:30,760 --> 00:20:34,520
Speaker 1: so for anyone, anyone who's looking for that third digital publisher,

381
00:20:34,640 --> 00:20:36,879
Speaker 1: it's going to be Amazon. Is there a triopoli? Is

382
00:20:36,880 --> 00:20:40,320
Speaker 1: that a word? Yeah? Okay, yeah, next time? Yeah, I think,

383
00:20:40,359 --> 00:20:42,919
Speaker 1: And I think that's the thing that we struggle with,

384
00:20:43,080 --> 00:20:46,480
Speaker 1: is I mean Amazon, Amazon, Verizon try this with Oath.

385
00:20:46,960 --> 00:20:50,080
Speaker 1: It didn't work. It takes a lot to build scale,

386
00:20:50,160 --> 00:20:53,159
Speaker 1: especially if you don't have a lot of subscribers. Um,

387
00:20:53,240 --> 00:20:56,560
Speaker 1: and so I struggle with the idea that there could

388
00:20:56,640 --> 00:21:02,160
Speaker 1: be a fourth player that emerges over time. So I'm

389
00:21:02,200 --> 00:21:05,359
Speaker 1: not that optimistic about about somebody stip planting Google or

390
00:21:05,359 --> 00:21:09,040
Speaker 1: Facebook and in Amazon. Yeah, although the growth of even

391
00:21:09,080 --> 00:21:11,600
Speaker 1: Google and Facebook is going to start to come down

392
00:21:11,600 --> 00:21:14,760
Speaker 1: over time. And I'm actually surprised, especially when you're looking

393
00:21:14,760 --> 00:21:19,840
Speaker 1: at the headlines lately regarding YouTube, that these companies seem

394
00:21:19,880 --> 00:21:23,440
Speaker 1: to be teflon despite all the brand safety issues out there.

395
00:21:24,080 --> 00:21:25,840
Speaker 1: Are they so strong that they will just get a

396
00:21:25,880 --> 00:21:28,800
Speaker 1: pass on anything, Well, they haven't gotten a pass. We've

397
00:21:28,840 --> 00:21:33,280
Speaker 1: had your hair eviscences where advertisers have pulled advertising from

398
00:21:33,280 --> 00:21:37,040
Speaker 1: from Google or Face or or YouTube and haven't and

399
00:21:37,280 --> 00:21:40,080
Speaker 1: haven't used them for years. Some really big publisher, really

400
00:21:40,119 --> 00:21:42,760
Speaker 1: big advertisers, So I don't think they're necessarily getting a

401
00:21:42,760 --> 00:21:46,840
Speaker 1: free pass. Maybe from Wall Street they are, but advertisers

402
00:21:46,880 --> 00:21:50,480
Speaker 1: I think are taking a more critical eye of those

403
00:21:50,520 --> 00:21:56,520
Speaker 1: platforms and they're they're demanding accountability. Um their demanded Hopefully,

404
00:21:56,640 --> 00:21:58,440
Speaker 1: you know, hopefully that will change. I mean, once the

405
00:21:58,520 --> 00:22:02,720
Speaker 1: dollars one of dollars don't come in from advertisers, or

406
00:22:02,760 --> 00:22:04,920
Speaker 1: once you start the slower, once it's pressure, maybe we

407
00:22:05,000 --> 00:22:07,639
Speaker 1: get changed that way. I see. It feels like Google

408
00:22:07,680 --> 00:22:10,719
Speaker 1: and Facebook have been taking their lums, certainly more so

409
00:22:10,840 --> 00:22:13,440
Speaker 1: Facebook over the past year. Do you think we're coming

410
00:22:13,440 --> 00:22:16,480
Speaker 1: out the other end of that now or we're still

411
00:22:16,520 --> 00:22:18,119
Speaker 1: in the middle of what's going to be a pretty

412
00:22:18,119 --> 00:22:20,800
Speaker 1: brutal phase for them. I think I wouldn't call it brutal,

413
00:22:20,880 --> 00:22:23,000
Speaker 1: but I certainly wouldn't say, well, we're coming to the

414
00:22:23,080 --> 00:22:26,560
Speaker 1: end of the regulatory process. So there was recent news

415
00:22:26,600 --> 00:22:30,240
Speaker 1: about Germany UM going after specifically Facebook, So I think

416
00:22:30,240 --> 00:22:33,920
Speaker 1: you're gonna get instances of that until you get comprehensive

417
00:22:34,000 --> 00:22:38,080
Speaker 1: regulatory or legislation. In the United States, you're gonna have

418
00:22:38,200 --> 00:22:40,760
Speaker 1: these one offs where California imposes rules and then other

419
00:22:40,760 --> 00:22:43,480
Speaker 1: states do the same thing. So I think it's in

420
00:22:43,520 --> 00:22:47,640
Speaker 1: the best interests of Google and Facebook to actually work

421
00:22:47,720 --> 00:22:50,440
Speaker 1: with regulators to try to come up with a comprehensive,

422
00:22:51,200 --> 00:22:57,480
Speaker 1: comprehensive legislation that puts in place, you know, regulatory regulatory

423
00:22:57,520 --> 00:22:59,560
Speaker 1: regime that they can live with, that that everyone can

424
00:22:59,560 --> 00:23:02,320
Speaker 1: love with. And I think that we'll see if that happens.

425
00:23:02,359 --> 00:23:03,840
Speaker 1: We'll see if that happens in the in the next

426
00:23:04,000 --> 00:23:06,639
Speaker 1: in the next Congress. But it's certainly something that when

427
00:23:06,680 --> 00:23:09,760
Speaker 1: you're talking to people in Washington, everyone seems to agree

428
00:23:09,840 --> 00:23:12,199
Speaker 1: that they need to have some kind of legislation to

429
00:23:12,240 --> 00:23:15,840
Speaker 1: impose regulation on those on the industry. Well, we've talked

430
00:23:15,880 --> 00:23:18,520
Speaker 1: about digital platforms. We've talked about some of the traditional

431
00:23:18,560 --> 00:23:20,919
Speaker 1: media companies. I know you also look at some of

432
00:23:20,960 --> 00:23:24,360
Speaker 1: the telcos. Uh, and it strikes me at this interesting

433
00:23:24,400 --> 00:23:27,560
Speaker 1: time is it seems like there's three very clear stories.

434
00:23:27,600 --> 00:23:30,960
Speaker 1: There's a T and T is all in on content,

435
00:23:31,440 --> 00:23:35,200
Speaker 1: Verizon is all out on content, and Sprint and Team

436
00:23:35,200 --> 00:23:39,240
Speaker 1: Mobile are doing something. Fair characterization of what's going on

437
00:23:39,280 --> 00:23:42,280
Speaker 1: in that sector. Fair characterization, yes, What else though, should

438
00:23:42,280 --> 00:23:47,080
Speaker 1: we need to know about these companies abilities to compete

439
00:23:47,080 --> 00:23:51,040
Speaker 1: with the biggest companies out there, whether they're from tech

440
00:23:51,200 --> 00:23:54,440
Speaker 1: or traditional media. Yeah, it's it's it's interesting that A

441
00:23:54,560 --> 00:23:57,119
Speaker 1: T and T decided to charge all in with media

442
00:23:57,520 --> 00:24:01,320
Speaker 1: and to buy a media company. The risk of doing that,

443
00:24:01,440 --> 00:24:03,680
Speaker 1: I mean, clearly the one of the big risks here

444
00:24:03,760 --> 00:24:07,640
Speaker 1: is you have differences in culture and you know, does

445
00:24:07,720 --> 00:24:09,960
Speaker 1: a T and T know how to run a media

446
00:24:10,040 --> 00:24:14,040
Speaker 1: company with media egos? I think it's going to be

447
00:24:14,080 --> 00:24:16,320
Speaker 1: a bit of a struggle for them to be able

448
00:24:16,359 --> 00:24:18,600
Speaker 1: to do that. The other thing is, if you're going

449
00:24:18,640 --> 00:24:20,560
Speaker 1: to go do a new vertical integration, you want to

450
00:24:20,560 --> 00:24:23,560
Speaker 1: be able to control um. You want to have a

451
00:24:23,600 --> 00:24:25,919
Speaker 1: bigger slice of the pie. So all they have is

452
00:24:26,119 --> 00:24:29,080
Speaker 1: Warner and that's not that big, you know, in the

453
00:24:29,119 --> 00:24:31,800
Speaker 1: grand scheme. Oftively speaking, it's big for a media company,

454
00:24:31,840 --> 00:24:33,800
Speaker 1: but still it's only a couple of networks and it's

455
00:24:33,800 --> 00:24:37,760
Speaker 1: only one studio, so their ability to do things with

456
00:24:37,960 --> 00:24:42,040
Speaker 1: Warner is limited. And I think they're gonna I don't

457
00:24:42,080 --> 00:24:45,960
Speaker 1: think they're going to get the kind of um benefits

458
00:24:46,320 --> 00:24:48,280
Speaker 1: they thought they were going to get by buying it

459
00:24:48,320 --> 00:24:51,640
Speaker 1: just because it's Warner is only one of the six studios. Well,

460
00:24:51,640 --> 00:24:53,720
Speaker 1: could you argue that then a T and T could

461
00:24:53,720 --> 00:24:58,480
Speaker 1: be in the market for another acquisition. Yeah, absolutely, absolutely

462
00:24:58,840 --> 00:25:00,879
Speaker 1: they I think they're going through realize that Warner does

463
00:25:00,920 --> 00:25:02,679
Speaker 1: not have the scale that they thought it was gonna have,

464
00:25:02,760 --> 00:25:05,159
Speaker 1: and so they wouldn't be surprised if they went and

465
00:25:05,160 --> 00:25:07,800
Speaker 1: they bought more more content. And are there companies that

466
00:25:07,880 --> 00:25:11,560
Speaker 1: you think you know at them? I mean, it's all gone, right,

467
00:25:11,840 --> 00:25:14,320
Speaker 1: let's unless by Disney. Not that I'm suggesting that gonna

468
00:25:14,320 --> 00:25:17,920
Speaker 1: buy Disney. There's even you know, unless it's unless it's

469
00:25:17,960 --> 00:25:22,360
Speaker 1: Sony or paramount paramounts of that biggest studio anymore. So

470
00:25:22,440 --> 00:25:26,800
Speaker 1: I wonder, I mean, we got this internal discussion going on,

471
00:25:27,000 --> 00:25:30,000
Speaker 1: how long before they decide they need to sell off

472
00:25:30,480 --> 00:25:33,160
Speaker 1: Warner because it didn't meet the needs that they thought

473
00:25:33,160 --> 00:25:36,200
Speaker 1: they were going to get out of it. Right, Well,

474
00:25:36,560 --> 00:25:40,400
Speaker 1: what about you mentioned paramount with via Common CBS. How

475
00:25:40,440 --> 00:25:43,200
Speaker 1: do you see that one playing out? It's interesting. So

476
00:25:43,240 --> 00:25:44,920
Speaker 1: if you look at all of the what we would

477
00:25:44,920 --> 00:25:51,240
Speaker 1: call the free radicals, it's Viacom, UM, CBS, Discovery, MGM,

478
00:25:51,359 --> 00:25:53,280
Speaker 1: lines get there's a lot of these companies that you

479
00:25:53,320 --> 00:25:56,880
Speaker 1: could in theory piece together to get the same kind

480
00:25:56,920 --> 00:25:59,960
Speaker 1: of scale that you would have. You know with Disney

481
00:26:00,240 --> 00:26:04,200
Speaker 1: Fox it's expensive and it's it's gonna take a long time, um,

482
00:26:04,240 --> 00:26:06,080
Speaker 1: and there's a lot of social issues as but you

483
00:26:06,080 --> 00:26:08,080
Speaker 1: could you could in theory piece all of these companies together.

484
00:26:09,640 --> 00:26:12,200
Speaker 1: Majing John Malone. I mean, wouldn't he be the guy?

485
00:26:12,440 --> 00:26:15,160
Speaker 1: He he could be the guy, although he is he's

486
00:26:15,240 --> 00:26:17,920
Speaker 1: I know he said this at his analyst days. He's

487
00:26:17,960 --> 00:26:21,280
Speaker 1: not interested in doing that. From there's a tax, there's

488
00:26:21,280 --> 00:26:23,239
Speaker 1: tax consequences to do in that, but I don't think

489
00:26:23,280 --> 00:26:26,680
Speaker 1: he wants to to do that. It's a lot of work.

490
00:26:27,240 --> 00:26:29,480
Speaker 1: So who else steps up and does that? Is it

491
00:26:29,520 --> 00:26:32,840
Speaker 1: is a cherry? Is she an empire builder? Is David Zaisov?

492
00:26:32,920 --> 00:26:39,080
Speaker 1: Who does he wanted to do that. The opportunity is there. Um,

493
00:26:39,320 --> 00:26:42,119
Speaker 1: let's see if anyone it seeses on it. If you

494
00:26:42,200 --> 00:26:44,359
Speaker 1: were to councel Sherry read sone about what move she

495
00:26:44,400 --> 00:26:48,480
Speaker 1: needs to make next, what would you say? It depends

496
00:26:48,480 --> 00:26:50,480
Speaker 1: on whether or not she's an empire builder or a seller.

497
00:26:50,800 --> 00:26:53,280
Speaker 1: She definitely needs scale, and I think putting CBS and

498
00:26:53,440 --> 00:26:57,080
Speaker 1: Viacom together makes a lot of sense. Um. And so

499
00:26:57,160 --> 00:26:59,080
Speaker 1: I think that that's the first step that I would

500
00:26:59,080 --> 00:27:00,840
Speaker 1: do if I were her. And then she's got to

501
00:27:00,880 --> 00:27:02,520
Speaker 1: decide whether or not she wants and now do the

502
00:27:02,560 --> 00:27:06,119
Speaker 1: work to try to add additional media properties, or if

503
00:27:06,160 --> 00:27:07,920
Speaker 1: she's gonna let someone else do it, then she should

504
00:27:07,920 --> 00:27:09,640
Speaker 1: sell it. This is the right time to do that.

505
00:27:10,040 --> 00:27:13,720
Speaker 1: So one last question, we're only a month or two into.

506
00:27:15,080 --> 00:27:18,679
Speaker 1: How do you feel about what the next ten months

507
00:27:18,680 --> 00:27:21,320
Speaker 1: could bring? Do you think we're going to see more

508
00:27:21,400 --> 00:27:25,200
Speaker 1: transformative deals as you look again at that broader economic climate,

509
00:27:25,520 --> 00:27:27,879
Speaker 1: Maybe it's just not conducive to the kind of say

510
00:27:28,359 --> 00:27:32,960
Speaker 1: M and A A lot of people are expecting. Um,

511
00:27:33,040 --> 00:27:36,720
Speaker 1: I think you're going to get M and A and

512
00:27:36,720 --> 00:27:39,199
Speaker 1: and CBS via com is clearly the one that everyone's

513
00:27:39,200 --> 00:27:40,840
Speaker 1: gonna focus on. I don't think it's going to happen

514
00:27:40,880 --> 00:27:43,959
Speaker 1: as soon as people think. Um, I think you have

515
00:27:44,040 --> 00:27:45,800
Speaker 1: a lot of these issues that they need to work through,

516
00:27:45,800 --> 00:27:49,119
Speaker 1: and so maybe if it, if it even gets announced,

517
00:27:49,119 --> 00:27:52,560
Speaker 1: maybe it's later on this year. Um. And then I

518
00:27:52,560 --> 00:27:54,359
Speaker 1: think everyone else is waiting for the that deal to

519
00:27:54,400 --> 00:27:57,280
Speaker 1: happen and to see what Discovery does. So I for

520
00:27:57,320 --> 00:27:59,840
Speaker 1: those who expect to see M and A happened quickly

521
00:27:59,840 --> 00:28:02,359
Speaker 1: and often, I think they're going to be disappointed. It'll happen,

522
00:28:02,560 --> 00:28:04,399
Speaker 1: but it's probably gonna be the next couple of years.

523
00:28:04,680 --> 00:28:07,239
Speaker 1: And yet this is all happening against the backdrop of

524
00:28:07,800 --> 00:28:12,879
Speaker 1: Netflix having built this seemingly insurmountable lead for the past

525
00:28:12,920 --> 00:28:15,399
Speaker 1: five or six years. And that's why I find the

526
00:28:15,440 --> 00:28:20,399
Speaker 1: notion of these things not happening quickly, whether it's consolidation,

527
00:28:20,480 --> 00:28:24,560
Speaker 1: whether it's the launch of these services as somewhat maddening.

528
00:28:24,640 --> 00:28:28,399
Speaker 1: Does it strike you the same initially? I would say yes,

529
00:28:28,640 --> 00:28:30,520
Speaker 1: but I think you gotta take a step back. The

530
00:28:30,520 --> 00:28:35,240
Speaker 1: ecosystem isn't falling apart as quickly as everyone seems to think.

531
00:28:35,240 --> 00:28:37,600
Speaker 1: The stocks seem to be holding up generally well at

532
00:28:37,640 --> 00:28:40,959
Speaker 1: figet valuations. I'm literally just talking about operating metrics. So

533
00:28:41,000 --> 00:28:43,360
Speaker 1: if you look at advertising trends or affiliate for your

534
00:28:43,360 --> 00:28:47,160
Speaker 1: card cutting, for example, none of those are really accelerating.

535
00:28:47,200 --> 00:28:50,000
Speaker 1: So cord cutting is running in about three for cable.

536
00:28:50,880 --> 00:28:54,480
Speaker 1: It's manageable. And so I think I think this is

537
00:28:54,560 --> 00:28:58,840
Speaker 1: a transition rather than a rush to extinction for the industry.

538
00:28:59,120 --> 00:29:02,000
Speaker 1: And so I don't think I don't think you have

539
00:29:02,200 --> 00:29:05,360
Speaker 1: to do something today. I think you can. You can

540
00:29:05,400 --> 00:29:07,160
Speaker 1: be more measured in your approach, especially for a lot

541
00:29:07,160 --> 00:29:09,680
Speaker 1: of these smaller guys, I think they can wait. Um,

542
00:29:09,720 --> 00:29:12,280
Speaker 1: it's interesting that Disney decided to do it today. Good

543
00:29:12,320 --> 00:29:14,280
Speaker 1: for them, But I don't think you necessarily have to

544
00:29:14,320 --> 00:29:17,400
Speaker 1: do something today, especially if you're some of the smaller companies.

545
00:29:17,920 --> 00:29:20,280
Speaker 1: Got it well, Nvin. Thank you for coming in and

546
00:29:20,360 --> 00:29:22,880
Speaker 1: sharing your perspectives one and you're given us a broad

547
00:29:22,960 --> 00:29:25,640
Speaker 1: look at what it is always an entertaining sector. Thank

548
00:29:25,680 --> 00:29:30,360
Speaker 1: you very much for happening. This has been another episode

549
00:29:30,400 --> 00:29:33,400
Speaker 1: of Strictly Business. Tune in next week for another helping

550
00:29:33,400 --> 00:29:37,320
Speaker 1: of scintillating conversation with media movers and shakers, and please

551
00:29:37,360 --> 00:29:41,200
Speaker 1: make sure you subscribe to the podcast to hear future episodes.

552
00:29:41,520 --> 00:29:44,320
Speaker 1: Also leave a review in Apple podcast, let us know

553
00:29:44,360 --> 00:29:46,520
Speaker 1: how we're doing