'Hidden Gem' in Netflix-Warner is Ad Team: Mark Douglas

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00:00I'm going to first start with CNN because obviously news hits home, hits to the heart here.

00:05Any chance that they could stand on their own, CNN?

00:09I would say no. I mean, I think that they'll hopefully find a home. CNN is kind of a brand

00:17that I think most people have grown up in news. I think the tagline, right, is the first name in

00:21news. And so I think they do find a home, but it clearly doesn't make sense for Netflix to kind of

00:28go into that arena. So I'm sure, you know, there is the right home for that property and a few other

00:34properties involved. All right. Well, let's talk about the other core part of this business that

00:38Netflix really wants and how it sort of folds in to the Netflix ecosystem. I mean, you talk a lot

00:44here about some of the progress Netflix has made, not just in terms of content, but with the ad rollout

00:48and some of the other advances that they've made. How does bringing all of that content, as well as

00:54the debt and other burdens that come along with it, end up being a net positive for Netflix?

00:59Well, I think there's a couple of things here. So one is the property. And to some extent,

01:04HBO was the original Netflix in the sense of they had original programming that was kind of

01:11like just show after show, The Sopranos, you know, things like that, as well as the library and

01:17movies. Netflix obviously brought that to the internet and scaled it even larger. And so for,

01:22it fits right in. And I think what I'm hoping for is that Netflix has the resources to basically

01:30take Game of Thrones further, obviously to take White Lotus and more seasons. I'm not sure if

01:38Discovery Channel is part of the deal, but that would be a terrific property, I think, for Netflix

01:44to pick up. And most importantly, it can help them expand internationally. These are 10 poll names

01:49that I think, you know, resonate worldwide. And Netflix can take that to help their continued

01:54international expansion.

01:57Well, Netflix, perhaps they can actually redo the ending of Game of Thrones. I'm sure myself and a lot

02:02of fans would appreciate a little bit of a redo there. But when it comes to Netflix, I just want

02:07to zoom out a little bit because we've been covering this bidding war for weeks. And sort of the narrative

02:13around Netflix was that, okay, this would be a nice to have for them. It wouldn't necessarily be

02:18a need to have. And Mark, I wonder if you agree with that. And if so, are you surprised that,

02:24you know, Netflix went after this, this aggressively?

02:27Yeah, I agree with you that it's a nice to have. In other words, Netflix is a prolific funder and as a

02:35creator of content. But I think there's a hidden gem in this deal, which is the maturity of the

02:42Warner Brothers ad ad force, you know, basically ad sales team. Netflix, their biggest growth

02:49opportunity is actually in their ad business. But they have a very small team there that is kind

02:55of still getting their feet under the, you know, the feet under them. And Warner Brothers has been

03:00doing this literally for decades. And that whole team, I presume, is part of this deal. And I wouldn't

03:08be surprised if that played a role in the decision of Netflix to do that. And so how does that impact

03:14Netflix? Like from a stock, if they can accelerate the growth of their ad business, we're talking like

03:20another tier of growth for Netflix, which is something I've consistently said, is that the ad business

03:25for them is going to be a huge growth driver over the next few years. And this potential

03:30accelerates that. Well, when you think about the landscape coming from that perspective of the

03:35ad business, what do you think that this means for competitors such as Disney, such as Paramount?

03:41Yeah, I think both companies are in a good place. Disney definitely considers them, you know,

03:48like Netflix arch enemies. And they're very proud of the scale of their business with ESPN, ABC,

03:54Disney Plus, you know, all of their properties. And so this is kind of definitely continues this like

04:00battle between them. And I think Paramount, given the funding behind it with the Ellison family

04:06is right there. And this was a big loss for them, I think, in terms of their plans not to pick up the

04:12property. But I think they're determined to continue to be one of the consolidators in the

04:16industry. So I think these companies are going to compete. But Netflix definitely like this is a big

04:21coup for them in terms of bringing this kind of content, the DC universe, all of that into Netflix and,

04:28you know, continuing to bring consumers and bring them worldwide where this content wasn't as easily

04:34available.

04:34Did the other streaming services kind of step it up, though, assuming this deal does go through?

04:39Yeah, I think we were predicting or I was predicting certainly that the industry is ripe for

04:45consolidation. And it's like the last month of the year. You know, I think it's like still at least

04:51nine months before the deal can go through. And yet the it has to be approved by the government.

04:58But so it's going to be a while before Netflix officially owns these content. But I think it's

05:05sparks off even more consolidation. And it's necessary. I mean, the companies, the media companies

05:10that have good content, but maybe don't have the brand or the freshest new content to attract

05:16consumers, they're going to have to find a home someplace else. And, you know, Netflix, Disney,

05:22Paramount, you know, are some of the key leading candidates to be those acquiring companies.

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