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Speaker 2: All right, more just monster numbers being thrown about in
Speaker 2: this AI game. Open AI heid erase one hundred and
Speaker 2: ten billion dollars in new investment at a seven hundred
Speaker 2: and thirty million dollar pre money valuation. Extraordinary, straordinary amounts
Speaker 2: of money being raised. All the big names are involved here.
Speaker 3: I need a little help.
Speaker 4: We all need a little.
Speaker 2: Help here, Caroline Hyde be tech co anker joints us
Speaker 2: Here in our Bloomberg Interactive Broker studio. The hits keep coming, Caroline,
Speaker 2: I mean the investments keep coming, and from big names.
Speaker 3: We all know.
Speaker 2: What do you make of it?
Speaker 5: It makes for an interesting relationship of Open Air Microsoft
Speaker 5: going forward, because this is Amazon coming in, which already
Speaker 5: has a very strong relationship with anthropic Remember, and we've
Speaker 5: seen a lot of crossover of big strategic investors and
Speaker 5: venture capitalism putting money into both key frontier labs. What's
Speaker 5: interesting in this agreement is not only the whopping scale
Speaker 5: of money. Fifty billion is going to be coming from Amazon,
Speaker 5: and we don't quite know if that is Thure cash
Speaker 5: or actually whether it's more in cloud costs that just
Speaker 5: get sucked up by Amazon instead, or indeed whether it's
Speaker 5: GPUs and chips.
Speaker 6: But we also think that thirty billions coming.
Speaker 5: From in video, so the deepening tie continues there and
Speaker 5: clearly therefore some gpusm in video are going to be
Speaker 5: intertwined in open AI's compute needs as well as Amazon
Speaker 5: Zone Tranium chips and the likes. But we're also seeing
Speaker 5: well as well as Massiyoshi Son being a big player
Speaker 5: in all of this, Microsoft being less of a player.
Speaker 5: And remember open ai first got its big chunk of
Speaker 5: change from Microsoft.
Speaker 6: Microsoft was the key backer of.
Speaker 5: The company, had exclusive rights to a lot of open
Speaker 5: AI's technology within the Azure platform. Well, now the frontier
Speaker 5: offering coming from open an that's basically the new offering
Speaker 5: to help build agents, which is all anyone can talk
Speaker 5: about at the moment, that's going to be exclusive on AWS.
Speaker 3: Oh wow.
Speaker 6: So all of this is just.
Speaker 5: An interesting rearrangement of technology partners and just how people
Speaker 5: are deepening their ties.
Speaker 7: I like your word rearrangement because we have open aico.
Speaker 7: Sam Altmann saying that he doesn't think his company's fundraising
Speaker 7: is looking called circular as long as revenue keeps going.
Speaker 7: And I feel like this is a conversation we've been having.
Speaker 7: It's like the self funding loop and is it risky?
Speaker 7: But he's saying it's not circular.
Speaker 6: Well, and Video has had to try and prove this
Speaker 6: point time and time again.
Speaker 5: And Video has been putting money into neo clouds like
Speaker 5: core Weave, which had its numbers today, putting money into
Speaker 5: the likes of an Anthropic and an open AI, which
Speaker 5: ultimately all want.
Speaker 6: Chips from in video.
Speaker 5: But many would say, look, it's not just circular financing,
Speaker 5: is actually strategic financing, because how better to understand how
Speaker 5: your technology works best is if you partner this closely
Speaker 5: and you can understand the way in which.
Speaker 6: Your GPUs, your CPUs be used in the future.
Speaker 5: So for the cynics among us, yes, it looks like
Speaker 5: the same big players are all moving money from one
Speaker 5: place to the other within each other.
Speaker 6: But for perhaps the more practical it's.
Speaker 5: That well who heals has the cash pile to be
Speaker 5: able to continue to build the flywheel effect to a
Speaker 5: generative AI here at the moment, and open ai has
Speaker 5: an enormous amount of compute needs. That's what they keep
Speaker 5: saying time and time against Sarah Friar as a CFO.
Speaker 5: Sam Altman is the CEO saying the thing that's holding
Speaker 5: back our revenue. And remember they guided us to a
Speaker 5: new kind of revenue stratosphere of to URN eighty billion
Speaker 5: by next year.
Speaker 6: The way they get there is by computer increasing, not
Speaker 6: anything else.
Speaker 5: They've got all the parts they need to build revenue
Speaker 5: from the twelve billion that they raise that they made
Speaker 5: in twenty twenty five. But what they really need is
Speaker 5: the galvanization of infrastructure, and that comes from power and
Speaker 5: that comes from compute.
Speaker 2: I mean, open AI says, chat GPT has more than
Speaker 2: nine hundred million weekly active users, more than fifty million
Speaker 2: consumer subscribers and more than nine million paying business users
Speaker 2: that rely upon chet GPT.
Speaker 3: That's deployment.
Speaker 2: That Are they the biggest yet, I'm not even sure
Speaker 2: how we define the market better. Are they the biggest
Speaker 2: in consumer?
Speaker 8: For sure?
Speaker 5: Like in terms of like this is the size and
Speaker 5: scale of people using the problem is is of course
Speaker 5: Google how are you measuring Google? Many would say, like,
Speaker 5: is it the person who my mum who goes onto
Speaker 5: Google Search and gets an AI overview? Or is it
Speaker 5: someone who downloads the Gemini app and uses it in
Speaker 5: a distinct kind of model.
Speaker 6: So there's two ways in which you can compare and contrast.
Speaker 5: But certainly open Ai has beaten out Anthropic from a
Speaker 5: how many people are using their standalone application, nine hundred
Speaker 5: million is a huge amount.
Speaker 6: But from an enterprise.
Speaker 5: Perspective, many would say Anthropic has led the charge there,
Speaker 5: and that's why open ai has really been doubling down
Speaker 5: on this agentic focus and AWS is going to be
Speaker 5: call to that, putting it in within Bedrock.
Speaker 7: There's also a headline from Anthropic they're refusing to Pentagon's
Speaker 7: lead as contract terms. They want to limit surveillance and
Speaker 7: autonomous weapons. Are those reasonable asks for a company supplying
Speaker 7: AI to the military.
Speaker 6: The military would say no.
Speaker 5: The military would say locking mar and has no power
Speaker 5: over us to dictate how we use the weapons. We
Speaker 5: just purchased them and us and there are laws that
Speaker 5: we have to abide by, and there's humanitarian things that
Speaker 5: we sign up for, and the way in which we
Speaker 5: police war worldwide. However, from anthropics perspective, and if you'd
Speaker 5: been keeping up with out Dario Amide, the CEO has
Speaker 5: been writing of late. He put out a big piece
Speaker 5: thought leadership piece in January talking about the adolescence of
Speaker 5: technology and his worries and concerns about geopolitics, the use
Speaker 5: of generator of AI for surveillance, the use of generative
Speaker 5: A biotech and warfare. So no wonder he's still thinking
Speaker 5: along these worklines. He's given us all the breadcrumbs to
Speaker 5: know that this is how it feels. They just earlier
Speaker 5: in the week, remember sort of put out this odd
Speaker 5: statement saying they're stepping back to from some of their
Speaker 5: safety as a core mission purpose. But within that statement
Speaker 5: they really made clear it's because the government doesn't care.
Speaker 5: The government has not been increasing their focus on AI
Speaker 5: ethics in the way that they thought they would.
Speaker 3: Stay with US war from Bloomberg Intelligence coming up, care
Speaker 3: for this.
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Speaker 3: Dell technology shares.
Speaker 2: They jumped pretty big here after the company gave an
Speaker 2: outlook for sales of its artificial intelligence service that exceeded estimates.
Speaker 2: As John said, stocks up nineteen point four percent today.
Speaker 2: Not bad for a big, big company. Ninety seven billion
Speaker 2: dollars in market cap. Would you know Joins is here
Speaker 2: senior technolog channels for Bloomberg Intelligence. That's a serious print
Speaker 2: for Dell. What's what's going on there?
Speaker 9: I mean John just said, look, you're having these massive
Speaker 9: investments by from OAI right open OAI. So essentially all
Speaker 9: of these data center deployments are really starting to materialize,
Speaker 9: un tell us starting to benefit from it, and.
Speaker 7: They're entering a year with a forty three billion dollar backlog.
Speaker 7: Does that give investors real visitibility? Or is the backlog
Speaker 7: vulnerable to supply chain constraints and maybe pricing resets.
Speaker 9: Well, that's a fantastic question. Right on the pricing reset,
Speaker 9: I don't think so. I think there's a little bit
Speaker 9: of a leverage on Dells side because and videos holding
Speaker 9: the cars with the GPU chips, right, But in terms
Speaker 9: of the supply environment, Dell does the supply chain very
Speaker 9: very well, and the revenue guidance not only for the
Speaker 9: AI server side but also traditional servers NPCs. They're managing
Speaker 9: it a lot better than we thought, so they should
Speaker 9: be fine on the supply side for the rest of
Speaker 9: the year.
Speaker 2: How big is the AI related product revenue for Dell
Speaker 2: and how's that grown and what do you expect it
Speaker 2: to go to?
Speaker 9: Well, if we think about just the AI server piece
Speaker 9: by itself, it is twenty five billion for this year,
Speaker 9: doubling to fifty billion. I mean, we're talking about incredible
Speaker 9: numbers doubling to fifty billion next year. We've also seen
Speaker 9: that sort of momentum from super Micro as well that
Speaker 9: they reported a couple of several weeks ago. But on
Speaker 9: the AI PC front, they just started to pick up steam.
Speaker 9: Still small portion of the business, but you know, quite frankly,
Speaker 9: every PC is eventually going to be an AI So
Speaker 9: what's an AI PC?
Speaker 3: What is that practicality?
Speaker 9: Yeah, you know, I'll tell you. In practicality, very little
Speaker 9: for you and I right, it's a chip that can
Speaker 9: handle a lot more processes, uh, and do it a
Speaker 9: lot faster.
Speaker 10: Right.
Speaker 9: I've been actually been playing around with cloud code as
Speaker 9: part of my work, and essentially what I'm doing is
Speaker 9: trying to use some of the processing that's on the
Speaker 9: on the PC. What I suspect is is that as
Speaker 9: corporates try to bring in AI into their workflow, they
Speaker 9: are going to look specifically for aipcs going forward.
Speaker 7: The company says memory chips memoryship prices are right thing rapidly.
Speaker 7: Do you think that the margins and those segments will
Speaker 7: be sustainable if the component prices also keep climbing.
Speaker 9: Yeah, So I think this is one of the reasons
Speaker 9: why the stock is up so much. Right, the sentiment
Speaker 9: going into the print was really really negative, primarily because
Speaker 9: of the component and memory pricing HPQ. HP said on
Speaker 9: just the other day that the memory pricing doubled over
Speaker 9: the past month, the round pricing alone, right, so that
Speaker 9: eight away margins. We actually did the math memory pricing
Speaker 9: plus a higher mix of AI servers. That's eating away
Speaker 9: one hundred, one hundred basis points of gross margin. And
Speaker 9: the thing is is that just a relative scale of
Speaker 9: the AI server revenues is helping to lift EPs altogether.
Speaker 11: So talk to us about the shortage of chips out there.
Speaker 2: So we hear from a lot of your companies and
Speaker 2: other companies in the tech stack, What is it?
Speaker 10: Why is it?
Speaker 3: How does it get fixed?
Speaker 9: We can blame AI on everything, yes, Right, So essentially
Speaker 9: AI servers take they use HBM high bandwidth memory that
Speaker 9: that's stacked, and it's sucking up a lot of the
Speaker 9: memory capacity that's out there. If we come off of
Speaker 9: the COVID period. Essentially, the memory makers, whether it's Microns,
Speaker 9: skhih Nicks or Samsung, they were hesitant to building out
Speaker 9: more capacity because they just didn't know if this AI
Speaker 9: thing was going to be real. And now it's starting
Speaker 9: to catch up to them. It's causing this domino effect
Speaker 9: of everything else, servers, smartphones, PCs, They're just scrambling for
Speaker 9: supply right now.
Speaker 7: How do you read the buybacks around ten billion dollars?
Speaker 7: Is that confidence in future cash flow or more like,
Speaker 7: oh no, the stock is still undervalued.
Speaker 9: Well, you know when the stock was at one twenty,
Speaker 9: I'm sure, Michael Delta the stock was undervalued and I
Speaker 9: wanted to read a lot more confidence not only in
Speaker 9: the business outlook, but also in cash generation. Right, we
Speaker 9: are hearing mixed things on the cash generation front from
Speaker 9: from my hardware companies.
Speaker 2: At least, did I d C takedown I d C
Speaker 2: is the the third party independent data provider for pretty
Speaker 2: much the whole technology industry. Did they take down their
Speaker 2: forecast for PCs?
Speaker 9: Was it took them long enough?
Speaker 11: Yeah?
Speaker 9: No, No, we had minus seven percent unit declines.
Speaker 2: Is that because there's enough chips to make the PCs?
Speaker 9: It's it's twofold, right, not enough chips? And number two,
Speaker 9: PCs are very very elastic, right from a demand supply
Speaker 9: demand perspective. And essentially what they did was they cut
Speaker 9: their forecast from minus three percent to minus eleven percent
Speaker 9: on the PC side, and they also cut their forecast
Speaker 9: the smartphones to minus thirteen percent. Right, there's a couple
Speaker 9: of things going on. The PC makers are going to
Speaker 9: focus more on the high margin businesses, right, so it
Speaker 9: leaves the lower end PCs at alert, so they're not
Speaker 9: going to start supplying those. And also the low end
Speaker 9: market tends to be a lot more price sensitive, so
Speaker 9: they're probably not going to upgrade.
Speaker 7: And then we have server and networking margins. I think
Speaker 7: those came above expectations. Is THELL gaining pricing power in
Speaker 7: AI hardware or is it just because maybe they're executing
Speaker 7: better than their peers? How do you read that?
Speaker 9: Yeah, so there's a couple of things going on as well.
Speaker 9: The first thing is is that they're raising prices right,
Speaker 9: and the term sheets are getting shorter. Instead of like,
Speaker 9: you know, three months, it's two weeks, so that that's
Speaker 9: happening as well, it's less price elastic. And then on
Speaker 9: top of that, from a margin perspective, as you we
Speaker 9: were talking about earlier, storage has a higher margin overall,
Speaker 9: and the storage business actually is doing very very well.
Speaker 11: Quite frankly, stay with us.
Speaker 3: More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 7: Got big earning Saturday, Core Weave, and it wasn't good
Speaker 7: because a stock fell by the most and more than
Speaker 7: six months. That's after the company reported a better than
Speaker 7: expected loss and boosted capital expenditure. So this s burred
Speaker 7: some concerns that the company is overspending on infrastructure. And
Speaker 7: who else can talk to us about this better than
Speaker 7: ANAA Grana. He's Bloomberg Intelligence technology analyst. All the way
Speaker 7: from Chicago. So ANAURAG revenue exploded to one point nine
Speaker 7: billion last year, but losses widen. Is this a classic
Speaker 7: gross at any cost when it comes to the AI
Speaker 7: story or is it something a little more concerning.
Speaker 8: Yeah, I mean that's what the CEO is saying that Listen,
Speaker 8: we have so much back orders of you know, sixty
Speaker 8: plus billion dollars in orders, and we really need to
Speaker 8: fill it and we're going to go spend as much
Speaker 8: as we can. And today it seems investors are not
Speaker 8: liking it. But you know, I think what happened was
Speaker 8: they gave a bit of a outlook of what the
Speaker 8: expenses are going to be and they missed on that.
Speaker 8: And I think people are extremely no, I wouldn't say extremely,
Speaker 8: but somewhat concerned that, you know, whether they have the
Speaker 8: capital down the road to keep on continuing this particular flow.
Speaker 8: I think that's really what it comes down to, is
Speaker 8: where is the profitability going to come and at what point?
Speaker 8: Because as we know, some of these businesses, you have
Speaker 8: to invest upfront and then realize the profit later.
Speaker 4: Yeah, you got to back up for me and explain
Speaker 4: the basis, what in gun's name is a neo cloud.
Speaker 8: Yeah, well that's just the nomenclature. But at the end
Speaker 8: of the day, this is just a cloud. At the end,
Speaker 8: you know, you are. What you do is you open
Speaker 8: a data center, you buy GPUs from Nvidia, and then
Speaker 8: you rent it out to people. It's a very simple
Speaker 8: business model, nothing so complicated about it. But what happens
Speaker 8: is you need to put that upfront capital to create
Speaker 8: that data center. Then you need to buy the chips
Speaker 8: and put it in there, and then after that is
Speaker 8: what you start realizing the revenue when people use it.
Speaker 8: We have enough evidence that the backlog of that is
Speaker 8: absolutely stellar. Right now, there is so much demand. These
Speaker 8: guys are running around and trying to you know, put
Speaker 8: the data centers together and then go out and service that.
Speaker 8: So there is a mismatch between how much you're putting
Speaker 8: in terms of cost versus what's coming in as revenue.
Speaker 4: Well, can you explain a little for what's how interwoven
Speaker 4: are they with Nvidia at this point and what's the
Speaker 4: significance of that.
Speaker 8: Well, think of this as Nvidia is selling the chips,
Speaker 8: they are really the distribution arm for the services around it,
Speaker 8: and Video is a shareholder in cod viave and this
Speaker 8: is a pure play you could say, in Vidia Shop
Speaker 8: where it's basically going out and renting their chips out there.
Speaker 8: Now it is and again this is not so much
Speaker 8: in Vidia trying to just you know, give them capital
Speaker 8: to stay in business.
Speaker 11: They actually have orders from.
Speaker 8: Everybody we know, whether it's Microsoft or Meta or a
Speaker 8: bunch of a lot of enterprises as well well. So
Speaker 8: I mean, core Weve has real orders that it needs
Speaker 8: to fulfill. The question again, as I said, is how
Speaker 8: much you have to put up front for those chips
Speaker 8: and services versus how much you're going to realize as revenue.
Speaker 7: And seventy seven percent of revenue came from just two customers,
Speaker 7: with Microsoft accounting for nearly two thirds. How big of
Speaker 7: a red flag is that, or if it's even a
Speaker 7: red flag for IPO investments.
Speaker 8: Yeah, to me, it's not a red flag. It is
Speaker 8: a concentration issue. I get that. But at the end
Speaker 8: of the day, I think Microsoft is good enough in
Speaker 8: terms of you know, they will pay the bill to
Speaker 8: code if they have promised some revenue, so I'm not
Speaker 8: concerned about that part. But Codevieve is now seeing a
Speaker 8: lot more demand from other vendors. That's also not an issue.
Speaker 8: As I said, this is not a demand issue. The
Speaker 8: question at hand is because one of the things code
Speaker 8: Weave has to do is it has to go out
Speaker 8: borrow money, issue some bonds, and then go out and
Speaker 8: create new data centers.
Speaker 11: So it's a financing question.
Speaker 8: How much the rate of that is going to be,
Speaker 8: how much they're going to charge for these services. So
Speaker 8: I mean it's it's pretty much a most of a
Speaker 8: cost overrun story at this point.
Speaker 4: Do they give much clarity on when this is all
Speaker 4: going to pay off?
Speaker 8: They basically said, listen, long term margins are very good.
Speaker 8: They are expecting margins to improve in the second half
Speaker 8: of twenty twenty six. But you know, they gave some
Speaker 8: guidance for operating income or adjusted operating income for four
Speaker 8: Q and they came below that. So the big question
Speaker 8: for the analyst is, you know, you're telling me that
Speaker 8: it's going to improve in the second half of twenty
Speaker 8: twenty six. You know, whatever, it doesn't happen. So I
Speaker 8: think there are some doubts around that capabilities as this point.
Speaker 11: And.
Speaker 7: So the company could ask for a valuation north of
Speaker 7: thirty five billion dollars in this market. Do you think
Speaker 7: that's justified by the fundamentals or do you think it's
Speaker 7: kind of driven by AI momentum.
Speaker 8: And I think the question always happens is, you know,
Speaker 8: one week, the entire AI infrastructure world is very happy
Speaker 8: and you know, bubbly, and then the next week people
Speaker 8: start getting concerns. The question what the code weave has
Speaker 8: to show right now is they have to go out
Speaker 8: and raise some debt.
Speaker 11: I mean, you know that's tied to their.
Speaker 8: Contracts, and we'll see what's the cost of that debt,
Speaker 8: because that's going to dictate how the next funding is
Speaker 8: going to be on the you know, I call it
Speaker 8: not so much funding ground but more so a debt
Speaker 8: raised round and how that's going to go about.
Speaker 3: Stay with us more from Bloomberg Intelligence coming.
Speaker 2: Up here for this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Coarclay and Android
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Speaker 2: Let's get dig into deeper this little deal there in
Speaker 2: the media space, Warner Brothers, Discovery again, the news being
Speaker 2: Netflix walking away.
Speaker 3: So now paramounts guidance.
Speaker 2: It's their deal.
Speaker 3: Good for them.
Speaker 2: And let's check in with Keitha Ranganath and she covers
Speaker 2: all the media stocks for Bloomberg Intelligence. Keith, we got
Speaker 2: Netflix stock trading higher. I guess the the shareholders like
Speaker 2: them kind of passing on this deal.
Speaker 10: Yeah, big relief rally, Paul, you know, I mean this
Speaker 10: was always kind of muddying the narrative. I mean we've
Speaker 10: spoken about this multiple times. Netflix is such a clean,
Speaker 10: organic growth story and them just pursuing Warner Brothers Discovery,
Speaker 10: I mean just kind of added so much of uncertainty.
Speaker 10: You know, you have the regulatory risks of course, integration
Speaker 10: execution risks. Plus we were talking about something like, you know,
Speaker 10: their dead levels going up to beyond hundred billion dollars,
Speaker 10: and yes, they do have the financial firepower, but at
Speaker 10: the end of the day, they have always been builders
Speaker 10: versus buyers. And once again they showed, you know that
Speaker 10: they deserved. You know, they've always gained this reputation of
Speaker 10: being very, very disciplined spenders when it comes to M
Speaker 10: and A, and I think they once again exercised that
Speaker 10: discipline and investors are cheering.
Speaker 7: So it seems that this is a smart move according
Speaker 7: to analysts, including you, This signal that the company is
Speaker 7: confident in its organic growth versus and a especially in
Speaker 7: a very crowded streaming market.
Speaker 10: Yeah, Isabelle, I mean that had you know, been the question.
Speaker 10: I think that's what spooked investors so much when they
Speaker 10: actually went ahead with this eighty three billion dollar deal
Speaker 10: for Warner, about whether they were actually seeing a slowdown internally,
Speaker 10: and them not just abandoning the deal but also going
Speaker 10: ahead and resuming buybacks once again just kind of signals
Speaker 10: confidence in their underlying growth model. So I think, you know,
Speaker 10: we know very well that they're operating metrics are really strong.
Speaker 10: I mean, this is a company that has guided to
Speaker 10: double digit revenue growth. We're we're going to see about
Speaker 10: twelve to fourteen percent revenue gains this year. We're looking
Speaker 10: at operating margin expansion of almost you know, a thousand
Speaker 10: basis points. It's gone up ten percent over the past
Speaker 10: two years. So and of course we also have fabulous
Speaker 10: you know, free cash flow generation. So all of their
Speaker 10: you know, financial lever levers and all of their growth
Speaker 10: drivers very much in play place, and you know, not
Speaker 10: having this disc action anymore just helps them kind of
Speaker 10: really double down on their organic growth story.
Speaker 2: On the other side of the equation, KEITHA, Uh, be
Speaker 2: careful what you wish for. So paramount They've got this
Speaker 2: great asset in Warner Brothers Discovery. What do we what's
Speaker 2: the street think about this management team at Paramounts pretty
Speaker 2: much unknown, untested this mister Ellison from the media community.
Speaker 2: Is there any report card to date? Do we think
Speaker 2: there's a market think that this is a man team
Speaker 2: that can make this acquisition work?
Speaker 10: They probably can, Paul, I mean they do have you know,
Speaker 10: financial Uh, they do have some financial firepower here, although
Speaker 10: I would point out that leverage at this company is
Speaker 10: going to be extraordinarily high. We're looking at pro former
Speaker 10: leverage of around almost seven times, so those are you know,
Speaker 10: dangerously high levels. Yeah, and it's something that they're going
Speaker 10: to have to contend with. But at the same time,
Speaker 10: you know, they've spoken to synergies. We're looking at about
Speaker 10: six billion dollars in synergies that they've committed to. And
Speaker 10: remember this is a team where the fairly tech heavy bent,
Speaker 10: so that might be something that kind of really serves
Speaker 10: them well as they poise themselves for this new streaming future.
Speaker 10: You know, you do have now they kind of are
Speaker 10: to turbo charging their content offering, their turbo charging their
Speaker 10: streaming business, and they have all of the you know
Speaker 10: pieces in place to make this a really good business.
Speaker 10: We'll have to wait and see how they execute, but
Speaker 10: you're right, I mean, the management team is a little
Speaker 10: bit of an unknown, although you know, we do have
Speaker 10: Jeff Shell who has experienced from NBC. But again, it's
Speaker 10: going to be a little bit of a weight and watch.
Speaker 7: And Netflix also said they plan to invest twenty billion
Speaker 7: this year in films and shows. Is that enough to
Speaker 7: keep them ahead again in this really competitive to streaming wars.
Speaker 10: Yeah, the twenty billion that they committed was actually a
Speaker 10: pretty significant step up, Isabelle, from prior years. I mean,
Speaker 10: we've seen them increasing content costs by roughly about six
Speaker 10: to seven percent. This year was going to be a
Speaker 10: much more significant jump to about ten percent. And this
Speaker 10: is just basically Netflix saying that they are willing to
Speaker 10: diversify into different forms of content. I mean, the big
Speaker 10: investments that they're making are in live in sports and
Speaker 10: international content just to kind of keep up that engagement
Speaker 10: metric and make sure that you know, they keep building
Speaker 10: on that competitive mode that they already have. And now
Speaker 10: you know the icing on the cake for them with
Speaker 10: this Warner Dealers that they're getting two point eight billion
Speaker 10: dollars in termination fees. So hey, much more K dramas,
Speaker 10: I guess.
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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Speaker 1: ten am to noon Eastern on Bloomberg dot com, the
Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You
Speaker 1: can also watch us live every weekday on YouTube and
Speaker 1: always on the Bloomberg terminal