Netflix Rewrites Hollywood

Transcript

00:00No, I don't think so at all. This is going to play out over who knows how long, probably the

00:05better part of 2026. The politics of this will be inescapable. How else could this turn out?

00:13Because it would be interesting, I think, if since they've offered a $5 billion breakup fee,

00:20Netflix had to walk away and then someone else would be able to make an offer that's essentially

00:26$5 billion lower than what Warner Brothers Discovery would have wanted.

00:31Yeah, I mean, that's absolutely a possibility. I don't think it's the case that Netflix is the one

00:36who would walk away. I think it's just that or not least voluntarily, I think it's the risk that the

00:41pressure that they'll face from governments. I mean, put the potential for crony capitalism aside

00:47here. There are real legitimate issues that will need to be considered by the European Union as well

00:53as the U.S., other jurisdictions, and it may just be outside of their control.

00:57Of course, though, I'm sure consumers would welcome one fewer streaming service bill, right? I mean,

01:06you're already paying for Amazon, HBO, Netflix, Apple TV. The list goes on and on.

01:16It's really the crony capitalism issue that I think is the most interesting because

01:20the Ellison's are so close to the Trump administration, I would have thought that

01:25Paramount is a slam dunk. Yeah, I know. I think that's that was my guess as well. Again,

01:32we can't rule out that this happens. It could very well happen. And I think that to your point,

01:37yes, I think consumers might welcome one fewer subscription. This could be a much more

01:43consumer friendly choice. But at the end of the day, there are a lot of people with Paramount Plus who

01:47could have a combined Paramount Plus HBO Max subscription, too. So what about the offer? I

01:53mean, twenty seven seventy five was what we got from Netflix. Warner Brothers Discovery right now

01:59trading at twenty five thirty five. Is this just, you know, typical deal mechanics that we don't get

02:07to the offer price right away? We certainly haven't gone above it. So it doesn't seem like the market's

02:12betting on Paramount's thirty dollars, reportedly thirty dollar bid taking at taking a win.

02:18There are so many possible scenarios to account for. Again, it could very well be that this is

02:22sort of where the price is, whoever ends up with it. Right. Because, again, Netflix may end up having

02:28to walk away whether they want to or not. So we don't know how that plays out.

02:32Brian, David Zaslov has been pretty clear that he wants to get the best deal for shareholders at the

02:38end of the day, which is great. That's his job as an agent of the shareholder. How much will a Warner

02:43Brothers Discovery shareholder actually get if they spin off their cable assets and then still get

02:51twenty seven seventy five a share from Netflix? What does that add up to? Well, again, I think that

02:57has to play out. I'll keep in mind that I think part of the deal involves actual Netflix shares and that

03:01could actually be worth something to individual shareholders. Again, we're much more focused on trying to

03:06understand what the business mechanics are of this and what it means for the industry, because I think

03:10that's where the most profound consequences are going to be when you have one player that might

03:14have 17 percent of content spend on our estimates, one player that might actually have all sorts of

03:20new bundles that would create a potentially new advertising business. Because, frankly, how are you

03:26going to justify a forty dollar monthly subscription to consumers who are used to paying twenty dollar

03:31monthly subscriptions for two separate services? That's going to be hard to handle. I think they might

03:36actually be really well positioned to expand the advertising business, if anything else.