00:00What difference is more time going to make for Paramount at this point?
00:03Well, they need a lot more than 7% of Warner Brothers Discovery shareholders to have tended the vote.
00:09And that's all they've got since January the 21st, which is an extended deadline on already the 8th that we were working towards.
00:16And now they've given themselves even more time until April is basically when Netflix hopes that Warner Brothers Discovery shareholders would have approved their own offer.
00:24But everyone, including Bloomberg Intelligence, have written, unless Paramount come back with at least $32 as an entry point, maybe $34 to really get this across the line, the board's not going to take this seriously.
00:36At the moment, it's not any more appealing than a Netflix all-cash deal that's currently going on.
00:43And indeed, we know that David Ellison has gone for the jugular here, and it's getting very hostile in its nature.
00:48So we've got a lot of work to do. Many investors out there just not willing to tender their offer until they perhaps see more money.
00:55And then Netflix is all-cash plus the cable assets, whatever that brings in, right?
01:00It gets spun off, maybe up to $6 in value is what the investment bank thinks.
01:02Right, so $27 and $6, $33. Paramount has to beat that.
01:06And I think the idea is, you know, for a long time I thought, wow, Larry Ellison is so rich.
01:11Sometimes he's the second richest. Sometimes he's the richest man in the world, depending on fluctuations of Tesla and Oracle stock.
01:18But they're just so stretched with the offer as it is, is what I'm understanding from Geetha Ranganathan at Bloomberg Intelligence.
01:25They're so leveraged with the deal as it is that they just can't really go any further. Is that the idea?
01:31I think many are wondering why they can't just dip more into the purse strings of Daddy Ellison
01:36and use a little bit more of his now overall trust that is unrevocable rather than revocable.
01:44But I think there's also just the strength and the firepower of Netflix.
01:47You put that into direct competition. Netflix has got a wash with cash.
01:51I mean, the fact that they upped it by that many billions and it's only putting them to 0.5x extra leverage,
01:58many are just feeling that, of course, this is a company that just has to stop giving buybacks for a little bit.
02:02But I was going to say, the irony of it feels like Netflix shareholders hate this.
02:06When they were talking on their earnings about spending more money, not just on their programming slate,
02:10but also this acquisition, the shares were sharply lower.
02:13So do the shareholders, I guess, see it differently that, sure, you're flush in cash, but we want to leave it that way?
02:18And they want to understand really how this is going to dial up growth.
02:21Is really having this much more of a content slate, rather than going to Sony,
02:25but having really owning and spending this much money, is that going to keep subscribers growing?
02:30Is that going to make us more engaged?
02:31Look, they had a phenomenal content slate just in the last quarter.
02:35And actually, we saw, what, a 2% increase in the amount that we were all that much more addicted
02:39and tiling into their content for the finale of Stranger Things and the next.
02:43So what really is that going to be accretive in terms of the overall business model?
02:46I think investors are just worrying that they're going to be pushed up in terms of their spending.
02:50And where is the bang for the buck more broadly?
02:52Are we seeing subscribers increase in any great amount?
02:54When are we going to see the turning on of advertising a little bit more?
02:57But actually, if you look at analysts, yes, investors are sort of paying, sending the shares lower,
03:03which I might say had been on a rapid run, and we do give off 30% since the announcement of the deal.
03:08In Netflix shares.
03:09In Netflix shares.
03:10But I think analysts are actually saying, look, the advertising part of the business model, phenomenal.
03:14Revenue growth, extreme.
03:16We're seeing fundamentals looking really solid.
03:19So actually, Warner Brothers Discovery is just a lock-in.
03:21But many still wonder about just how much a monopoly it then becomes in streaming.
03:24I mean, the hero here has to be David Zasloff.
03:30He has done for Warner Brothers shares so much.
03:34And himself.
03:35And himself, I'm sure.
03:37But he deserves it.
03:38I mean, the amount of value that he's giving back to shareholders is insane.
03:42The shares are double-tripled over the last 12 months.
03:45People can suddenly see the value in their content and maybe the value in the cable.
03:50This is what it's all going to come down to.
03:52Do investors of Warner Brothers Discovery think there's value in the cable networks?
03:55Can CNN and the others be spun off and get you more than the $1 at the lower end, which investment bankers think, up to the $6?
04:03And therefore, really push Paramount that much further in terms of how much they're going to have to put up and cough up for the business.
04:10All of us comes into the idea of a consolidation in media and people trying to understand what the business model of the future is.
04:17At the moment, the key winner is YouTube.
04:19How do any of these companies compete with them?
04:21How do you think they're going to have to put up and do the business model of the future?
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