00:00In your point, I see another point, which is that most people who subscribe to Netflix already subscribe to HBO.
00:10So not necessarily.
00:12I think Ted Sarandos has said 75 percent of their subscribers.
00:16That's not true. Our research shows it's roughly 30 percent.
00:19I see. So it wouldn't exactly blow their market share up or it would blow their market share up substantially.
00:24Well, I mean, when we look at this from the perspective, it's how you look at market share.
00:28And so if we look at all that streaming is about 46 percent of television viewing and you start looking at at the numbers, you've got 12 percent, roughly 12 percent is YouTube.
00:40You've got roughly 9 percent is Netflix.
00:44Four percent is Disney.
00:50And then you go all the way down at HBO Max is less than 2 percent.
00:54And so if you look at this, yes, they get their it's additive.
00:58But at the same time, the biggest the bigger competitors are going to be Amazon and and to be TV and people aren't talking about them.
01:07And then when you look at the number of titles each of these services have, it also makes it's also a huge difference.
01:14I mean, Netflix has roughly 7000.
01:18Disney has roughly 4000.
01:21You've got 3000 with three to 4000 for Paramount.
01:26But you've got Amazon has 25000 and to be has 70000.
01:31So but all these different sides, it's not clear that this is going to be a massive share of the of the business.
01:39It's interesting because when it comes to Warner Brothers, it's been framed as a must do deal for them or they need to figure something out.
01:45You frame it for Netflix that this is a must do deal for Netflix.
01:49And I think that's interesting because many people would say it's healthy on its own.
01:52It is starting to come up with these various titles that are popular.
01:56Why does Netflix need this deal?
01:58What's what there are going to be a couple of things that are going to drive success in streaming?
02:02One of them is really establish IP and then global global franchises and those and they have to be global.
02:10They can go everywhere with Warner Brothers.
02:13They get they get Harry Potter.
02:15They get Lord of the Rings.
02:16They get all the DC comics, which I could argue are way underexploited.
02:20They they they get a whole set of the shows.
02:23And even though even though if you look at what Netflix have been able to do with Bridgerton and and Stranger Things, it's nowhere close.
02:33The second thing, by the way, what is missing here is live sports.
02:37And and that that's a case where Paramount has an enormous amount of live sports.
02:44Amazon has been going deep on live sports.
02:47Peacock probably has more sports than anybody.
02:49So the I guess my point is that this game is not is not totally clear.
02:56And then YouTube, YouTube is basically eating the Internet and and YouTube for a lot of people is TV.
03:03Because Netflix has been trying to argue that it won't have an outsized market share because you need to count YouTube and TikTok.
03:09Because you should count it.
03:10But some people say that's not a streamer.
03:12Right.
03:12Others say I choose that over streaming services quite a lot.
03:15But I think the part that's most difficult to talk about is the role that President Trump plays in this.
03:25Netflix is seen as this sort of globalist bastion of liberalism.
03:31Right.
03:31The programs you mentioned, I think, can confirm that.
03:35And then Paramount is run by David Ellison, known by the Ellison family, which has very close ties to President Trump.
03:46Listen to what David Ellison told Lucas Shaw at our screen time event earlier this year.
03:50We have a good relationship with the with the administration.
03:52And look, I think if you look to that, I do believe.
03:58Other things that have been rumored about, right, are very large scale players that would affect that could potentially create monopolies, obviously, in the ecosystem.
04:06And again, I think when you look at the lens of consolidation for us, I'll keep going back to it.
04:10It's always how do you create long term value creation?
04:13How do you put yourself in a position to produce more content, not less?
04:16And how do you ultimately build something that is better for the consumer?
04:20So you could read Netflix into that when he talks about monopolistic position.
04:25And I wonder how important the CNN aspect of this is, right?
04:31Because President Trump would surely love to have allies running CNN.
04:37Well, I think that there's there are a couple other factors.
04:40One of them is the reception of the creative community, which which is much more interested in a Paramount deal.
04:46The second is is the the why is that, Michael?
04:51Why is the creative community much more interested in a Paramount?
04:53Because they look at Paramount as an established studio.
04:56Paramount has already said that they're going to increase the number of theatrical releases from what they have today to 30 by doing this.
05:03And they appear to be committed.
05:05They truly are today a movie studio as well as as it was a TV studio.
05:11And they're clearly committed to the theatrical business.
05:14So there may be an outsized influence, not just to the president, but also the creative community, as well as other businesses like the movie theater owners.
05:25It's hard to get a win, win, win.
05:27Well, it's a it's a win on their side.
05:29But, you know, it's hard to guess what will happen and how much this a lot of this is going to come down to not just not just Trump, but it's also going to come down to the shareholders.
05:40Paramount has a month to put this out for a shareholder bid.
05:43Winning those kind of bids is hard.
05:45I was going to say, and I've been talking about about this when that Paramount hostile bid came out, you immediately you can see it there on the screen.
05:51Shares go up five percent.
05:53Every time Netflix has talked about this deal, shares have fallen.
05:56Why do Netflix shareholders not like this deal?
05:59And to your point, if they need something like this, if they need the IP, if they need the movie studios, the different things that they have, why wouldn't Netflix be seen as more favorable in terms in the eyes of the shareholders to buy Warner Brothers Discovery?
06:11Well, first of all, investors believe that that Netflix doesn't need this and it's a huge cash outlay and money that Netflix doesn't necessarily have.
06:20And they're not that's not they're not expecting that.
06:22And then second of all, they're wondering whether or not whether or not it makes sense for Netflix, not just do they need it, but whether or not it's really going to it's going to be additive.
06:33By the way, Michael, I find it kind of a bummer, the whole like IP thing of it all, that the entire slate, it's like Toy Story 5, another Super Mario movie, another screen screen movie.
06:42And that Netflix wants part of that.
06:44It feels like creativity is all being sapped and it's just part twos of Toy Story for the rest of eternity.
06:49Yeah, but I mean, that's been going on for the longest time.
06:52I mean, Disney, which has which has had for the longest time the largest market share in.
06:57But does this make it worse?
06:58Also, Netflix can lean on that, too.
07:00I don't think it makes it worse.
07:01I think this is just consistent.
07:03I mean, when you look at at this, this is where this game is going to be played and nobody's going to invest hundreds of millions of dollars in an unproven franchise.
07:13I well, I I hear what you're saying, right?
07:15Like these things just become made by A.I. and all about marketing and there's no creative, creative force.
07:22And I think, Michael, what you're saying is Paramount does want to bring that creative force.
07:26At least that's what I took from David Ellis.
07:28And I thought that was a fantastic interview by Lucas Shaw.
07:30I listened to the whole thing.
07:31David Ellison seems genuinely interested in really making something special in terms of entertainment, not putting out Toy Story seven.
07:40You know, that may be the case.
07:43But when you look at the biggest hits, we're talking about Top Gun.
07:47We're talking about things that are established franchises.
07:50And also, by the way, it's also the biggest stars.
07:53And so once again, this is it's a huge risk in the film business.
07:57Of course, somebody who's much more creatively driven is going to be willing to take that risk on new IP, especially if it comes with established stars.
08:05Yeah, I mean, Tom Cruise, the man could use a rest.
08:08He looked he looked amazing in Top Gun.
08:09But I think Top Gun one and two.
08:12He looked great.
08:13No, I mean, yeah, he looked great.
08:15Well, we should expect more Mission Impossibles and more Top Guns.
08:18Poor Tom Cruise.
08:19All right, Michael, this has been more Star Trek.
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