00:00Heading into these results, you made the point that the market needs some clarity of their
00:05direction. Netflix is still the king here, but the market and investors looking for some direction
00:10as for what's next. We know that Netflix is towing into live sports. Do you think that
00:16they're doing enough? Well, yes and no. They certainly have made a lot of progress with live
00:22sports with some positive results and some negative results. I don't think that they want
00:28to or it makes sense for them to spend tens of billions of dollars buying sports rights. ESPN
00:33has already done that. So I like their approach to sports because they're trying to measure the cost
00:39to the return. But we're kind of getting sort of random sports on Netflix. But we will be getting
00:45more NFL games in the future. But I don't see that as sort of the end all be all for
00:50them because it
00:51costs so much for sports rights. Well, what do you think that end all be all is? I mean, as
00:57you
00:58say in your notes, still the king here, you do own Netflix in your fund. But what do you think
01:03they
01:04should be really focusing on at this point as you have these swirling concerns, especially around
01:08engagement and increasing competition? Well, as you saw with the, you know, attempt to buy Warner
01:15Brothers and this whole thing of consolidating streamers, like the streamer business has reached
01:20sort of its max in that we have enough streamers, we have plenty of content, there's lots of competition.
01:25So, you know, not to Netflix's fault, but there was, you know, a lot of competition this quarter for
01:31them for these viewing hours. There was a lot of choices that and people, you know, will follow
01:36the World Cup or the Winter Olympics or they're going to, you know, watch what they're going to
01:41watch. And right now, HBO has a really good lineup, for example, and that might change, you know,
01:47and it kind of goes back and forth. So what's the future for Netflix? And they've really made
01:51a commitment to video games and live entertainment. And I think it makes the most sense for them to
01:57continue into these two paths. You know, video games is a wonderful business if they can monetize
02:02their IP this way. And then live entertainment is really where they haven't been, which I think
02:07is a huge missed opportunity. Getting these movies into theaters, putting these shows in theaters
02:12and generating revenue from the theaters. In my estimation that Netflix could make billions of
02:18dollars a year just in the movie theaters, if they threw a few of these movies out there
02:22and nobody cares if they have to wait two or three weeks to get the movie on the streamer.
02:26You know, it's not that big of a deal. I think it actually helps build anticipation
02:30for those titles on, you know, on the streamer once it gets out of theaters. So I think that's
02:35the next thing. You know, it's live entertainment, it's sports and it's video games.
02:40But on the theater side too, I mean, let's get some leadership questions too, Ross, or strategy
02:43questions I should say too. I mean, it seems like they've been a little reticent
02:46to embrace that idea. I mean, there was a lot of talk about K-pop theme hunters and how quickly
02:51they pulled that from theaters, despite the fact that everybody wanted, seemed to want to see it
02:55in theaters and be part of that experience. And it seemed like it's just, they kind of missed the
02:59mark. You know, sometimes you have to read the room and realize that you have something there,
03:03just run with it, forget, you know, I mean, I don't know what their internal metrics are like
03:07when it comes to like, oh, what do we need to get on the streaming platform first relative to the
03:11theaters. But do you, do you have confidence that the management has the ability to pivot
03:16when they do sort of tap into something that clearly has grabbed everyone's attention? I mean,
03:21we're an attention economy.
03:23Right. And this is why I was buying the stock recently in the low 70s is because I very much
03:28believe Ted Sandro is sort of the genius of Hollywood right now. And, you know, they have
03:33the best management around. So I'm sure they get what they need to be doing. It's just a difficult
03:40time to make these kind of moves right now. Hollywood has so many cross currents going on.
03:44And so Netflix, after just going through this whole battle for Warner Brothers, which I was glad
03:50they lost, they have the capital, they can do things and they're very measured with their strategic
03:56focus. So I think that's all good. But when you look at the stock down here, you know, let's say
04:01it's 70 bucks, you know, you're paying less than 20 times forward for, for Netflix. Netflix isn't going
04:07anywhere. And I, I have to, you know, reiterate this. We're going to be watching Netflix. Our kids are
04:12going to be watching Netflix. So for investors, this is a wonderful opportunity. Whenever there's
04:17uncertainty over Netflix's future, they always seem to figure this out. And we value the company
04:22substantially higher than the current price today. So, so any pullback here on earnings,
04:27we think is an opportunity because these are very durable, good earnings reports with lots of cash
04:31flow. They buy back their stock. They're very shareholder friendly company. Well, yeah. And I don't
04:36want to dispute that. And I don't mean to be good, but I mean, we had you on last quarter
04:39and the stock
04:40was under pressure and you were like, you know, don't count this out. The stock will be back. It's
04:43three months later. It's still down. It's down in the after hours trading. You know, the buyback,
04:48you know, it, I guess, you know, provided a little bit of a floor, but not much going forward as
04:53you
04:53value this stock, Ross. And I mean, we had Keitha Raghunathan. I go through her decks and she's
04:57valuing this up against, you know, Warner Brothers and Disney, et cetera. I guess my question is,
05:01is that the right way to value Netflix? Should you be valuing this more? I know it's hard to get
05:05visibility into YouTube and other, and some of these other things that are under the umbrella
05:09of larger companies like Alphabet. But is that where we need to start looking at the valuation
05:13comparisons? No, I mean, valuations should be relevant to your track record as a company is
05:19certainly which industry you're in matters. So when you look at a company like Warner Brothers or Disney
05:24and you look at revenue and earnings growth, well, there is none. So that, you know, that's a totally
05:28different story than Netflix, which has had consistent, incredible earnings growth for a very long time.
05:34You know, I've owned this stock for a long time. And so you're talking about a company that just,
05:38you know, they beat on earnings. Let's be real. It wasn't like a bad earnings report by any means.
05:44The fact that they're not blowing it out right now, I get it. And I do think they need to
05:49articulate,
05:50like, where are they going to really grow? They said they're going to grow their business,
05:54you know, substantially over the next five years. So what's the strategy? And that's,
05:59I think they need to articulate more clear. But, you know, from an investment perspective,
06:03whether the stock's the same price as it was three months ago or not, isn't relevant to me.
06:08I'm a buyer of these securities. But where the stock will be in five years is what's relevant to
06:13me. And so I think if you're an investor, this is a great opportunity when there is uncertainty,
06:18when people don't believe in Netflix and you're willing to get an under 20 multiple
06:22for forward earnings, when people are paying ridiculous multiples for all kinds of stocks.
06:26So, you know, we own brand name companies that aren't going away. It's almost like a Warren
06:31Buffett pick at this point at this valuation. He added Google, maybe late. Maybe he's going
06:36to look at Netflix now.
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