00:00Let's kick it off, right? Going to Meta. Let's talk about it. Investors aren't impressed.
00:05You weren't with some of the aspects of this report either, were you?
00:09No, we're really worried about their strategy diffusion. Every quarter we come out and he's
00:14gone into competition with somebody new. So he's now designing chips, which competes with NVIDIA.
00:20You know, his glasses have been trying to take Apple's hegemony away from devices.
00:26And he's doing search and he's doing commerce. So against Amazon. So and now he says he's going
00:32to compete with Microsoft because he's going to do enterprise agents. So, you know, so he's just
00:37keeps doing more and more and against guys that are incumbents that are equally well capitalized.
00:42Do you think he should, in the words of Jerome Powell, stick to his knitting and stick to
00:46advertising? I think he should decide where to bet the farm and go do that better than anybody.
00:52Where should he do that? So I would guess that it starts with his really unique access to 3 billion
00:59people a day through his family of apps and go and do something consumer facing that basically
01:05Microsoft can't follow him into Google. I mean, Amazon's completely enterprise. There's a lot of
01:10enterprise players. Why go compete there? Which is what he said yesterday. He's going to go do,
01:14he's going to go into the enterprise business, you know, saying it's a new muscle for us.
01:18Why are you developing a new muscle? I don't get that. I just don't get that.
01:23Is that a sign of desperation? Listen, you cover media, you know about jumping the shark. Is that
01:27what this is, Laura? You know, I think he sees opportunities everywhere. And I think he's got
01:33really clever engineers and they want to work on interesting problems. So I think that's what's
01:37going on. Like, I do think that he's not wrong. There's an opportunity, but it's just too diffuse.
01:42You know, for the past 20 years, Microsoft has done a really good job of job of positioning itself
01:47as a company that is going after productivity. Right. I think of, I think of meta as like the
01:54anti-productivity. Like you don't go on Instagram to, to get work done. You go on Instagram to get
01:59away from work. This is why I take his phone away from him. Like it's, it's, it is a time
02:04suck.
02:04This stuff is a time suck. I mean, there are, there are literal, there are pieces of hardware you can
02:09buy
02:09to lock yourself out of Instagram because it is, it is so addicting. How does it, how does it get
02:15rid
02:15of that, that label and then go after companies that want to be use this for productivity? How does
02:22it do that? So, I mean, he hasn't said what he's going to introduce as productivity tools. I think
02:28he's thinking WhatsApp and having small and medium businesses do more communications that he's got a
02:33subscription product now on WhatsApp for businesses. I think that's the kind of enterprise he's thinking
02:38of not so much, you know, leisure time. Like what you're talking about is consumer leisure time,
02:45which as AI does more and more functions faster, we are going to have more leisure time. There will
02:51be more windows of time that consumer can spend money against. So his consumer business is really
02:57interesting. He's talking about super intelligent agents for each of us custom. Like no one else is
03:02talking about that. That's super interesting if he can execute that. But there's going to be an
03:07increase in leisure time and he's already sitting there to your point about wasting time.
03:13Okay. All right. Should we move on? Are you ready to move on?
03:22Let's talk a little bit about what's going on with Warner Brothers Discovery. I mean,
03:26why are we here at this point? And do you ultimately believe this deal is going to get done, Laura?
03:31How long have we been talking to you about this? A while, a year, I feel like.
03:35It feels like a year. I think it's less, but it feels like a year.
03:39Yeah, a little bit less.
03:39So the answer is, you know, I think two things. One, hubris definitely comes to mind. I think the
03:45Ellison's thought that since they had Donald Trump behind them, that was enough. In the U.S.,
03:49turned out it's not enough. I would say the second main point is, yeah, essentially this is
03:55politically motivated because there was almost no oversight. And these are important issues to
04:01consider. The unions in Hollywood really don't want this because there's going to be $6 billion
04:07of layoffs. That's what Paramount has said. And also just from a political point of view,
04:13the Democratic states are like, no, no, no. If the Republicans won't review this, we will.
04:17And the only, you know, redress they have is to do 12 states get together, all Democratic,
04:22and basically sue to block the deal. So I'm not sure how much this is really a problem of,
04:29I think they'll get through the courts. It's just going to delay the deal by a year,
04:33which is going to cost them $650 million a quarter after September. It's going to be
04:36really expensive for a peace guy. Yeah. Is there any chance Netflix comes in? Like,
04:43do they have an opportunity or no? Am I crazy? I just don't know if they can get through the
04:47Trump administration. I think Trump and the senior Ellison have a deal, wink, wink, nod, nod.
04:53So even though it could probably get through the states, I don't know that it could get through the
04:56FCC. So political sort of gatekeepers here. Laura, what is going on with Netflix? Shares
05:03down 45% from those highs of June 30th of last year. So a little over a year. You've got
05:10a buy
05:10rating at $120 price target. It's trading at about $73 a share. I remember in October at screen time
05:16last year, you were a little concerned about Netflix. What's going on with Netflix?
05:21Do you remember we were sitting there and you guys interviewed him on stage? You're like,
05:24we're not going to buy Warner Brothers. And within two months, they had a bid for Warner Brothers.
05:29We're like, wait a minute. Did all of us just hear the same thing opposite of what they just did?
05:34We were all scratching our heads.
05:37What is going on with Netflix right now?
05:40Right. So I think what's going on is this, that like essentially they've commoditized
05:44entertainment. And so now what's going on is they're going to have to keep buying more live
05:50sports. Like you just saw, they did the women's, I think the NBA for the women's WNBA. So they're
05:57going to have to keep buying live sports. And ultimately they are going to need to compete in
06:01every line item and genre that not only YouTube does, but Disney does and Warner Brothers does.
06:07And they're going to have to go into the film business because there's just so much money
06:10in films, especially these world building films like Odyssey or Oppenheimer,
06:16because you can have spinoffs and it sort of guarantees audience and it guarantees
06:21first look on your streaming service. So I think the returns on capital are now finished in the U.S.
06:27and the U.S. is going to get more expensive and all your growth is coming from offshore,
06:31which have lower ARPUs and they're not disclosing. Now they took away engagement from us.
06:35Every quarter they take away some kind of valuation metric that we can use to value them properly.
06:41So that hurts their valuation.
06:43All right. 20 seconds. Who could they buy? Who should they buy?
06:46If they can't. When Comcast spins off into its studio,
06:50they should buy Universal Studios. They still need to do the deal.
06:53They couldn't get done with Warner Brothers.
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