00:00Simple question for you to start, Rich. What happens next?
00:04You know, it is really anyone's guess.
00:07You know, you've now got this hostile offer, tender offer from the Ellisons and from Paramount.
00:14Obviously, shareholders are going to have to, you know, really look at this.
00:17I mean, you've got, you know, the offers are very different, right?
00:21Because one is for just the streaming and studios, and you're going to end up with a resulting stub equity that is the cable network piece.
00:29And, you know, depending on how that's valued, it could be anywhere from, you know, a buck and a half to four or five dollars like a share.
00:36And so it all depends on sort of how that trades ultimately.
00:40And do investors want to sort of bet on the value of that entity, own some Netflix equity, as well as get 20, you know, plus dollars, $23 of cash?
00:51So this is not a simple equation.
00:53Obviously, we know from Warner Brothers that they believe that the Netflix offer was superior.
01:00They think it was $31 or $32 a share in effective value.
01:04Will some investors want to take 30 in cash?
01:07There may be, and I think that's going to be the question.
01:09But can they get enough of the shares to actually block the transaction?
01:13I think that's what essentially Paramount would now be hoping for,
01:16is that enough people tender their shares that they can stop Netflix and force them to abandon the offer.
01:23If I may, to recap, the Netflix offer was $27.75, but only for the streaming and studios bit, right?
01:30The Paramount Skydance $30 bid was for the entirety of it.
01:34If we put the deal making and the arbitrage to one side,
01:37which makes most sense based on the current state of the media and entertainment landscape?
01:44Look, we're at a point now in the entertainment landscape where the industry is going through seismic change.
01:52You know, movie theater attendance is down 50% from before COVID.
01:58You know, forget about box office, but actually, you know, sort of people attending movies in the U.S.,
02:03you're down nearly 50%.
02:05You know, you're seeing most of the major streaming companies out there really scale back their ambitions,
02:11and that's Warner Brothers.
02:13That's, you know, if you look at what's happened with Peacock, none of them are as aggressive.
02:17Disney and Hulu have certainly reduced their overall aggressiveness in how much content they're making.
02:23Like, everyone is realizing how streaming is so hard.
02:27And so the reality is consolidation is certainly necessary,
02:31and I don't think this is the last transaction we're going to see.
02:34I think you're going to actually see this set off.
02:36You know, there's going to be knock-on effects from whoever ends up buying this.
02:40You're going to see other things happen.
02:43You know, is there a story to tell for both companies?
02:46Absolutely.
02:47I mean, there's no doubt in my mind that if you, you know, put Warner Brothers into Netflix,
02:52the ability to do far more with that library than has ever been done before,
02:57looking at that global platform and how they've been able to sort of surface content.
03:02I mean, all of this content's been sitting on HBO Max, and no one really watches it.
03:07That's what Netflix does really well is they get people to watch things throughout the library in a way that others cannot.
03:14Right.
03:15That algorithm is so powerful.
03:17Paramount buying it?
03:18Look, Paramount needs more scale.
03:20If Paramount doesn't buy this, my guess is they're going to go after something else in the space,
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