00:00Why aren't you at Sun Valley? Do you usually go?
00:03This year, I happen to have a other conference to attend in Bay Area.
00:08Hey, maybe that says something on its own. You're too busy even to go to Sun Valley itself.
00:12I wonder what you make of the pace of media deals that we've gotten.
00:15We were just talking about some of them with Michelle.
00:18Just recently, whether it be Fox and Roku, NBCUniversal, spitting out of Comcast,
00:22what you make of the pace of those deals and whether it can sustain itself.
00:26I think the pace is quite amazing.
00:30And then there is a, I think I can make up two reasons why the pace has really picked up
00:36this year.
00:37One is a scale as a moat for the business.
00:40If you look at the capital markets, the capital markets willingness to pay for the scale on a premium is
00:46the highest in the recent decades.
00:48So that actually forces the company to build up their scale.
00:52And the subsequent effect of that is because of these highly levered mega-mergers,
01:00some of them will have to spin off some of their assets, which will be a follow-on spin-offs
01:05and carve-outs.
01:06And then there will be a new pipeline for the deal.
01:09So the second effect...
01:11Yeah.
01:11If I could just jump in, Grace.
01:14So does that mean something like the Paramount deal, for example, with Warner Brothers, that that big conglomerate now needs
01:21to spin off different assets?
01:23Is that kind of what you're leading to?
01:25And what are sort of the assets that might get cast aside?
01:29So I cannot talk specifically about, like, Paramount and WBD deals.
01:33But then given the fact that it is highly levered in order to service the debt and in order to
01:38find a invest in a sustainable growth levers going forward,
01:42they will have to force spin out some of the assets that they find non-strategic.
01:47And then that will feed into the pipeline of the carve-out and middle market activities.
01:52Just asking for a friend about the future of linear TV, not for my own interest, of course,
01:57but a lot of these linear TV assets, again, are getting spun off, whether it be Comcast and NBCUniversal and
02:03already before that, Versant.
02:04I mean, Versant, its public reception was to drop 18 percent since it listed.
02:10Grace, again, I know you can't talk about specific companies, but I wonder for that type of live programming, setting
02:15aside sports,
02:16if that's kind of the reception that you continue to expect,
02:19if that says something about the valuations of these parts of companies and maybe whether they're better served away from
02:27the parent company.
02:28Yeah, linear asset and then the reception and the advertising dollar goes into the linear is does not looking good.
02:37And I don't think like linear does a lot of things in order to prop up their value.
02:42But I in a long term, I think the trend will continue.
02:46The court carding will continue. So the linear asset valuation does not looking promising in a mid to long term.
02:53We've seen also this explosion around sports investments, whether it be sports teams, leagues, stadiums, media rights all around it.
03:01But that that media part of the ecosystem, Grace, it feels like valuations keep climbing higher and higher and higher.
03:09Just how competitive is the landscape and is there a ceiling to this thing?
03:14Well, I think for the sports, it's interesting content because it is the strongest glue and for all the bundle
03:21of the content.
03:22And it actually bifurcates the players as haves and have nots.
03:27What I mean by that is the big tech or new medias are willing to pay up for these global
03:34attractive leagues, whether it's the NFL or F1.
03:38Right. And also based on our experience of serving them, we know that they use a lot of their first
03:42party data as well as AI technology to understand the the uplift that these these content create for their subscription
03:50revenue.
03:50Whereas for mid tier sports, I don't think they will continue to demand high pricing going forward because they have
03:58they face aging population and then their attractiveness will go down at some point.
04:03So, Grace, you've talked about some of this idea of scale and what that's forcing with needing to spin out
04:08assets, some of the live sport opportunities.
04:11What else do you see is robust in terms of dealmaking in media and the sports landscape?
04:15Yeah, one of the key drivers in the dealmaking in media is AI and how the AI impacts the dealmaking
04:23in the media space is twofold.
04:25One is it actually props up the value of the AI, IP and data driven assets, whether it be ad
04:32tech or IP monetization or distribution.
04:35And also the recent activities around the gaming and interactive media is also part of the AI play, because those
04:41happen to be the subsectors that is heavy with the first party data as well as the IPs.
04:47And what it does, on the other hand, it continues to press the valuation of the studio created content.
04:54And also it creates a lot of uncertainties of future value of those contents.
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