Netflix, Warner Bros. Face Road to Finalizing Deal

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00:00John, with respect to veteran of the media industry in this country, former president of CNN,

00:06a serial founder of media companies, modern day media companies, Lucas talked about what happens

00:14next. And the expectation, I believe you share this view, is that this will go on for many

00:18months. There will be challenges along the way in the antitrust context.

00:23This is going to be a saga that plays out longer than Game of Thrones did,

00:28because, you know, not only do you have shareholder issues, your questions potentially,

00:34but you've already got the creative community in Hollywood rising up. The Directors Guild wants to

00:40sit down with Netflix. The theater owners are worried that Netflix is going to severely reduce,

00:46you know, movies released in theaters. Overall, you know, it reduces competition for producers

00:53and writers radically. And then, of course, the biggest factor is going to be the political

01:00aspect. Not only does David Ellison's dad, Larry Ellison, who has funded the Paramap Takeover,

01:09have a close relationship with Donald Trump, who I think had been licking his chops at the idea of

01:15combining CNN with CBS News, which is already trying to veer a little more to the right.

01:20Right. But you have you have that in play. But then you've got Gavin Newsom, who's, you know,

01:31the entertainment economy drives so much job growth revenue in California alone that I'm sure he's

01:40going to get involved in this as well. So it's so so so buckle up and stay tuned. And maybe at the end of

01:47the day, you know, what WBD ends up with is the five billion kill value of this deal. We'll have

01:55to see. I mean, that's an extraordinary, of course, unwind value that they're offering, saying if this

02:00doesn't get through the regulators, we will hand you five billion Warner Brothers Discovery more than.

02:05But, John, I want to go back to how Netflix is already trying to front run this. They're already

02:08saying these are complementary strengths and assets. They're already saying there's going to be more

02:11choice, greater value for the consumer because you're going to get bundling and maybe a cheaper

02:15offering. They're saying this is a stronger entertainment industry because they're actually

02:19going to be leaning into theatrical releases. Do you buy any of that?

02:23Oh, I buy some of it. We just don't know how much consumers, how much more consumers are going to

02:28have to pay for this new and improved, bigger, better than ever. One big, beautiful streaming company.

02:35And and so we'll have to see that. But bottom line, there are going to be fewer buyers

02:41for creative product. Also left begging in this, though, and I think it's really worth talking

02:48about, especially on a tech focus show. Netflix's biggest problem is not market share versus Amazon

02:56or Disney Plus or what have you. The bigger problem is YouTube. YouTube commands far more viewing time,

03:04almost double the viewing time that Netflix does right now. And Netflix has been busy trying to

03:11poach YouTube creators. But what's really happening in the entertainment industry as a whole is this

03:20flood of creator content. And this deal does nothing to address that. They could have spent far less

03:29money and bought a creator studio that could very well have a much larger impact moving forward

03:36than gaining some really great titles. I mean, the IP of Harry Potter and Friends, that alone is worth

03:44a lot of money, too. So what you're debating here is value, right? This is where Warner Brothers

03:50Discovery is trading. I'm just making a sort of mechanical observation. The share price is around

03:55$25 a share. Guys, give me Warner Brothers Discovery for a sec, please. The Netflix offer is

04:00$27.75 a share, which Lucas explained gets you basically two thirds of the business. You seem to

04:09be questioning, like, the value. The shares aren't even trading at a kind of level that reflects two

04:15thirds of the business. I'm trying to do the math here on whether this is a deal that the market is

04:21saying, yeah, we think this is this is a fair value, a good value. I don't think the market has grasped

04:27the tidal wave that is being unleashed, even as we speak, and is only going to grow thanks to AI,

04:36which puts more tools into the hands of more creators. And so I think there's going to be a

04:42reckoning at some point, not this week, not maybe this year, over the next 12 months, but that's what's

04:49happening in the entertainment industry. So this could end up being looked upon as one of the last

04:55old media deals. And it's ironic to call Netflix old media. And I'm not saying they're blind to the

05:03challenge of YouTube or the creator opportunity, but it's placing a value on something that used to

05:09have a lot more value than it is going to have moving forward. John, what's so great about you is

05:14because you're building Hang, which is all about Gen Z interacting with brands, because you built an AI

05:19business that you sold to Apple, you are in the new media, but you also did help run CBS and CNN.

05:23What does it mean for TNT, for CNN? What does even that part of the business have value? Do you think

05:28it has $2 value or in excess of? Was it a miss, therefore, for Paramount Skydance?

05:32I would be shocked if David Zaslav is not working the phones this morning, drumming up buyers for

05:41that entity that he's going to spin off. He's been masterful at discerning what parts of his

05:47empire are valuable to whom. And there is still value in those linear networks, let's say to a

05:53versant, which just spun off its linear or is about to be officially spun off from NBC.

06:00Sinclair and Nexstar, the massive and growing local broadcasters, might be interested in becoming

06:09both, right? So there are potential buyers out there. And David Zaslav may have just figured,

06:16look, actually, the sum of the parts is actually greater than the whole, if I do this right.

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