00:00i think netflix is reacting to the changing marketplace for media and particularly for
00:16streaming more and more it seems that companies need scale and while we think of netflix as one
00:22of the biggest in the industry you look at a paramount you look at warner brothers discovery
00:29right now and they just don't have the scale to compete so i think that netflix is looking in
00:36the future to think what it's going to take to maintain their position
00:59you know warner brothers has really been struggling with a mix of assets some of them performing
01:21obviously hbo max being so powerful and the key to the library and the assets warner brothers with
01:30harry potter and other very valuable assets batman is in there as well so there is value there but
01:39they definitely have had trouble uncovering that value to shareholders partly because the
01:45difficulties of streaming these days
01:51so netflix is paying 82.7 billion and they're taking on 72 billion in debt it's a huge transaction
02:05for them it's a huge transaction in the market is it a fair price all of the bids were not far apart
02:13and we've talked about warner brothers has such incredible assets it probably is a fair price for
02:19anyone that can bring out the value in those assets
02:23you know we look at how netflix stock is reacting they're going to take on 72
02:43billion in debt which is huge it's really not about is there a fair price there every everyone was
02:51bidding within a similar range and again it's really hard to say what's the fair price for those assets
02:57with a company that can really bring out their value which warner brothers were struggling to do
03:03clearly investors have really pulled back netflix stock in anticipation of this the stock is now down
03:10about over 15 percent in the last month or so but it's still up over 15 percent for the year so you
03:18still have a very valuable company that's getting a lot of investor interest but certainly some pullback
03:25waiting to see can they do a big merger netflix has never done a major merger they've had incredible
03:32growth all organically internally the focus has always been on subscribers and streaming and now the
03:39focus is going to become on different ways of their ways to look at their profitability and certainly
03:45if they're able to execute and manage such a large acquisition
04:09some investors are saying the reaction of netflix is very negative the stock down double digit going
04:19into this is proof that this may not be a good transaction certainly we've never seen netflix do
04:26any big transaction and there's questions about their ability to execute but investors really need to
04:31keep in mind how volatile this stock can be in 2022 netflix was down almost 60 percent you know so it's had a
04:40tremendous run since then but to think of it as such a stable um outperforming of a stock anyone owning
04:47netflix has always been buying into a company that has had a volatile history as a stock
05:01i think an acquisition of this size is is really good to see in the market this year we've certainly
05:24seen plenty of activity but we've also talked a lot about what hasn't happened under the uncertainty
05:31this year throughout both uh financial markets as well as geopolitical markets so it's exciting to see
05:38a deal of this size coming to fruition i think it will give confidence to a lot of other companies to
05:45be thinking about strategic acquisitions uh going into 2026 they'll certainly be watching how the market
05:51reacts to this clearly the warner brothers stock has has done tremendously well uh again we said that
05:58netflix stock has has pulled back a lot in the interim but still you're looking at a stock that has had a
06:04tremendous run this year they haven't given all of that back so i do think those who are thinking about
06:10large strategic acquisitions are going to look at the market reaction to this and take it as a positive
06:15sign that the markets are amenable to more transactions like this
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