WEBVTT - Property Brothers Talks Housing Affordability, New Show

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news depending home sales here

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<v Speaker 1>in the US seeing a surprise uptick in February as

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<v Speaker 1>mortgage rates fell to their lowest since twenty twenty two.

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<v Speaker 1>It's a good backdrop for the new HGTV show from

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<v Speaker 1>the Property Brothers Joe and Jonathan Scott. That show is

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<v Speaker 1>called Property Brothers Under Pressure. It just premiered on Sunday,

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<v Speaker 1>and it's a deeper look here, not just into the homes,

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<v Speaker 1>but really into the home buyers themselves and how they

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<v Speaker 1>navigate a competitive market and make budget conscious decisions for

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<v Speaker 1>their new homes. I had a chance to sit down

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<v Speaker 1>with them exclusively earlier today and talk about the state

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<v Speaker 1>of the housing market and their journey to HGTV stardom.

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<v Speaker 1>Take a listen.

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<v Speaker 2>Unlike anything we've ever done, because people always ask us, well,

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<v Speaker 2>what happens when the cameras aren't rolling, what happens behind

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<v Speaker 2>the scenes. We show it. We show it. You see

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<v Speaker 2>our crew, you see us disagree, you see moments that

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<v Speaker 2>the homeowners. You know. I think it's very relatable for

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<v Speaker 2>everyone out there because there's so much pressure on everybody

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<v Speaker 2>affordability crisis, like there is across the country here. The stories.

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<v Speaker 2>We have fourteen episodes and they're all very different stories.

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<v Speaker 2>We have families have lost their house from the fires

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<v Speaker 2>in la We have other families that are trying to

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<v Speaker 2>pull two families together to live in one house because

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<v Speaker 2>that's the only way they can afford. We have so

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<v Speaker 2>many stories that will be very relatable for Americans watching,

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<v Speaker 2>and we're trying to solve with really tight budgets. We're

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<v Speaker 2>trying to solve what everybody out here is trying to

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<v Speaker 2>solve to be able to get a home that they deserve.

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<v Speaker 1>We talk about the evolution of HGTV and just these

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<v Speaker 1>types of programs that choose to be more about the

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<v Speaker 1>homes themselves, and they are becoming a lot more about

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<v Speaker 1>the people and what they're going through. And you know,

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<v Speaker 1>here at Bloomberg, we've talked a lot about the affordability

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<v Speaker 1>crisis in the housing market, and particularly out West, where

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<v Speaker 1>you guys do a lot of your work. I am

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<v Speaker 1>curious if you've seen any sort of movement and maybe

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<v Speaker 1>a sort of a future where you have real starter homes,

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<v Speaker 1>real affordable starter homes for people in some of these markets.

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<v Speaker 2>There's definitely been a lot of movement unfortunate. It's in

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<v Speaker 2>the wrong direction. We have, you know about a four

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<v Speaker 2>million short house shortage of a healthy inventory right now

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<v Speaker 2>and the challenges People don't seem to understand that we

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<v Speaker 2>need affordable housing. Any successful city in the world that

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<v Speaker 2>has embraced affordable housing, the cities have flourished and the

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<v Speaker 2>costs have come down. But I love the idea that

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<v Speaker 2>people can live where they work. And I think some

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<v Speaker 2>people here affordable housing, they think, well, that's going to

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<v Speaker 2>be you know, drugs and crime and everything. Absolutely not.

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<v Speaker 2>These are teachers and you know, nurses and police, you know,

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<v Speaker 2>household workers, people who want to live in the same

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<v Speaker 2>community that they work. And so that's our goals from

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<v Speaker 2>a messaging standpoint, show people that it's okay, you don't

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<v Speaker 2>have to be a nimby. You don't have to stop

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<v Speaker 2>projects that are being built, you know, in your neighborhood.

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<v Speaker 2>On the flip side, we've invested in companies like modular Builders,

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<v Speaker 2>So we're trying to find new technologies that will physically

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<v Speaker 2>bring down the cost of construction and at the same

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<v Speaker 2>time a hard time though, because there's a lot of

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<v Speaker 2>time about rate cuts to help the you know, government

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<v Speaker 2>trying to stimulate. What the problem is, you have no inventory.

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<v Speaker 2>Cut rates if you want, that gets people excited to buy,

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<v Speaker 2>but there's nothing to buy, you're not really solving the problem.

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<v Speaker 2>We need to find ways to incentivize make it possible

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<v Speaker 2>for developers to really focus in. For example, I have

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<v Speaker 2>a real estate portfolio in Calgary in Canada. The government

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<v Speaker 2>in Canada really incentivizes builders to do affordable housing, so

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<v Speaker 2>it makes it worthwhile and I can keep rolling money

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<v Speaker 2>from one project to the next to the next to

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<v Speaker 2>actually make a difference down here, I don't have that

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<v Speaker 2>same opportunity.

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<v Speaker 1>Where do you see potentially where those incentives come from. Obviously,

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<v Speaker 1>in a city like New York, affordable housing has been

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<v Speaker 1>a huge topic of conversation. It pretty much swayed our

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<v Speaker 1>most recent mayoral election. I'm sure out west where you

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<v Speaker 1>guys in oh guys are, whether it's California, Vegas, Vancouver,

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<v Speaker 1>they're also seeing similar issues there. Are you seeing things

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<v Speaker 1>at the state level or the local level that could

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<v Speaker 1>potentially leave well.

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<v Speaker 2>One of the biggest things is I think federally there

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<v Speaker 2>needs to be better policy that allow and incentivize builders

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<v Speaker 2>and developers to pull out more cash. So for example,

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<v Speaker 2>in Canada, if you create a certain amount of affordable

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<v Speaker 2>housing units within your building that you can finance up

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<v Speaker 2>to ninety five percent, whereas here not even close. And

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<v Speaker 2>so a lot of builders are leaving forty percent of

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<v Speaker 2>their cash in a building and that prevents them from

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<v Speaker 2>building forward. Also on the building side, if we're if

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<v Speaker 2>you're using you know, say you're building a building for

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<v Speaker 2>easy figures twenty million dollar building, if you do that

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<v Speaker 2>as an affordable building using public funds for some of

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<v Speaker 2>that construction, there's all this regulation that all of a sudden,

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<v Speaker 2>the costs it's about forty percent more just to do

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<v Speaker 2>the exact same building. So I think we're getting tied

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<v Speaker 2>up in you know, the manula, and we're not stepping

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<v Speaker 2>back and looking at the fact that we haven't seen

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<v Speaker 2>rapid enough growth to solve the problem when it comes

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<v Speaker 2>to actually supplying inventory. And it's also adding density. There

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<v Speaker 2>are different areas that are doing great things, but when

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<v Speaker 2>you can add some more density, even in California, so

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<v Speaker 2>for example, my house, I'm allowed to have two suites,

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<v Speaker 2>I can have two ADUs, which is great because I

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<v Speaker 2>could read both those out and it's helping with the crisis. However,

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<v Speaker 2>the backlog to get to that point one of my ADUs.

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<v Speaker 2>It should have been approved in a week. I waited

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<v Speaker 2>five months and there's such a backlog and the process

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<v Speaker 2>is so archaic. We need to revitalize the process to

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<v Speaker 2>get people moving to add density. This is one of

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<v Speaker 2>the things where I'm hoping that AI is actually helpful

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<v Speaker 2>because the bureaucracy behind trying to win through the planning process.

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<v Speaker 2>Anyone who's taken on a renovation knows how annoying it

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<v Speaker 2>is to wait on your permits, wait for the city,

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<v Speaker 2>also wait for the utilities to go through and process everything.

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<v Speaker 2>I would love to see something that automates a lot

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<v Speaker 2>of that, to make sure that the eyes are getting

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<v Speaker 2>dotted and the teaser getting crossed. But you can actually

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<v Speaker 2>get in and do the work. And as I say,

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<v Speaker 2>this literally is right now in modern history, this is

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<v Speaker 2>the absolute worst affordable housing market in history for first

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<v Speaker 2>time home buyers. First time home buyers are less than

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<v Speaker 2>twenty five percent of the market right now, and that

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<v Speaker 2>should be a lot higher. It's just not feasible for

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<v Speaker 2>people to get into real estate like it used to be.

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<v Speaker 1>Obviously, you've had a presence, specifically on HGTV. Now for

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<v Speaker 1>more than a decade, you've had a lot of iterations

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<v Speaker 1>of your show and obviously shows that don't actually feature

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<v Speaker 1>you two. How much does that change in terms of

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<v Speaker 1>being able to produce a show like that at a

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<v Speaker 1>reasonable cost, have whatever relationship you have with HGTV, and

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<v Speaker 1>actually make it profitable.

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<v Speaker 2>Yeah, everyone, I mean so, we are one of the

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<v Speaker 2>largest unscripted producers in North America. We have fifteen series

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<v Speaker 2>that we produce, we host two of them. But we

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<v Speaker 2>we have found a huge shift because what we used

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<v Speaker 2>to have for budgets for our shows down here on

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<v Speaker 2>AGTV or with other partners, we don't have that anymore.

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<v Speaker 2>So we as producers have to get more creative, and

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<v Speaker 2>sometimes that means going to Canada, green lighting with a

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<v Speaker 2>copro out of Canada and then coming down with a

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<v Speaker 2>license or coprowing with the US down here. So we

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<v Speaker 2>were really good at getting creative. But plus, our company

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<v Speaker 2>stands out from other production companies because we are up

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<v Speaker 2>in Toronto for our production base, so we can actually

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<v Speaker 2>take advantage of a lot of tax incentives up in

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<v Speaker 2>Canada that are great that a lot of US producers

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<v Speaker 2>can't well. And we're also seeing explosive growth in digital

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<v Speaker 2>and other forms of media, you know, YouTube, everything else,

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<v Speaker 2>So you know, trying this, We've always stayed a step ahead.

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<v Speaker 2>We're always looking at where the industry is going right now, television,

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<v Speaker 2>traditional television. I mean, what's the word imploding? Everything is

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<v Speaker 2>everyone's uncertain. There's a lot of mergers happening, and so

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<v Speaker 2>things around are paused. But that's what I like is

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<v Speaker 2>the fact that we're constantly looking at so there's enough

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<v Speaker 2>opera tunity that we can still find placement.

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<v Speaker 1>As as some of the mergers, particularly a Warner Brothers

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<v Speaker 1>being absorbed into Paramount, has that affected at all, maybe

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<v Speaker 1>your outlook for what HUTV and Discovery ends up being.

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<v Speaker 2>Yeah, ammolutely, it's more of a pause. That's what is

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<v Speaker 2>right now, because nobody wants to jump in a direction

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<v Speaker 2>if they don't know who's going to own the company

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<v Speaker 2>or what the focus is going to be. If you

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<v Speaker 2>look at Netflix, they were only interested in studio science streaming.

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<v Speaker 2>They weren't interested in linear cable. So Paramount's taking everything.

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<v Speaker 2>So that does mean that we as were the largest

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<v Speaker 2>producer for HTTV for Warner Brothers on the unscripted. Now

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<v Speaker 2>we'll have that opportunity to do the same with Paramount

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<v Speaker 1>Jonathan and Drew Scott there at the property of Brothers

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<v Speaker 1>on the launch of their new program, but more importantly,

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<v Speaker 1>an interesting conversation there about housing affordability, particularly in the

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<v Speaker 1>markets that they're focused on, primarily out West and in Canada.