Paramount Skydance Reports Earnings, Announces Job Cuts

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Watch Paramount Skydance Reports Earnings, Announces Job Cuts - Bloomberg on Dailymotion

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00:00What's being cheered here? You know, sometimes cutting your way to profit and cutting your way

00:05into a good financial position is not the most exciting story. What is the Laura Martin main

00:09takeaway? Well, the Laura Martin main takeaway was I thought they left more questions unanswered

00:17than they answered. So I think one of the big questions is they just did an affiliated transaction

00:22with Oracle, which for enterprise software, which is the dad's company. So now you can,

00:27through pricing, move money between these two public companies. That sort of was weird. And then

00:33also they said they're going to spend a billion five on content and double their film slate from

00:37seven films a year to 15 films a year, starting in 2026. And the problem with that is the Skydance

00:43track record is one theatrical release a year. So, so going to five, 15 means not only you spending

00:51the money on the negative costs, but now you're going to spend about a hundred million each

00:54marketing, which all just sounds like an awful lot of money that you're spending in the near term,

00:59which is a tax on public shareholders before you get the return. It takes about three years to

01:04release a movie between green lining and a release, which means you have a couple investment years

01:08ahead of you, which doesn't sound like, you know, so we're going to stay on the sidelines here

01:13in terms of the shares.

01:15I want to go back to that relationship between Oracle and the affiliated transaction that you

01:22mentioned, implying that the value can be transferred between the two public companies.

01:26How much is that a help? If you're thinking about the sheer scale of money David Ellison needs,

01:31perhaps from Larry Ellison to keep on buying and WBD assets, or how much is it a concern just in what

01:38are you actually buying an entertainment company here or a tech and AI infrastructure bet?

01:41Beth. So I think that is one of the differentiated things they're saying is they're saying that our

01:47content storytelling is complimentary to our tech stack and our tech stack needs investment because

01:54Paramount, the old Paramount sort of starved it. So we're, we peace guy are going to invest in the

02:00tech stack. So from a fundamental point of view, they're going to try to marry storytelling with Gen AI

02:06tech, which is sort of a cool messaging, although expensive in the near term. I would say the

02:11Oracle point was just a new piece of information we got, um, having nothing to do with Warner

02:17Brothers. Like if, if the dad writes a $70 billion check to Warner Brothers, like, you know, that's a

02:23bigger deal than a contract might be several million a year. So it was just an affiliated

02:29transaction that I just would really like to see the pricing on when they have to disclose it in a

02:3410 K. But there's just a new piece of information. I think the big issue is you don't know what you're

02:39buying here. Are you buying a $16 billion subscale Paramount Skydance or are you buying a, are they

02:47going to use money to make a $70 billion acquisition of all of Warner Brothers? And then that's a hundred,

02:53that's round numbers, a hundred billion dollars scaled player with bigger everything, including

02:58studios. So then you wouldn't have to double the films because Warner Brothers got 15 by itself

03:03already. So I think they might be justifying of Warner Brothers bid in some ways with some of their cost

03:08estimates here. Laura, very quick pivot here. You just heard the Corweave interview. You published

03:14your research on hyperscaler capex. Just a quick reaction to what you heard. Yeah. So, I mean, I think

03:21one of the, the biggest, biggest question we get is, are the hyperscalers spending too much money on

03:25infrastructure? And we published a note this morning showing that the jet AI implementations

03:31at Amazon, Meta and Alphabet are accelerating their revenue growth and cutting their operating

03:39costs. So they're getting margin expansion by using generative AI tools, which gives them the

03:44confidence to invest in these infrastructure plays to then sell to third parties, those same

03:51capabilities to lower costs and drive, you know, faster product innovation for the rest of the US

03:58economy. So I actually think that the biggest funders of generative AI infrastructure are seeing the

04:04biggest benefits already in their own businesses.

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