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00:05becky thank you thanks to the whole squawk team of course we're going to run into your show for
00:10the rest of it at least and i'm very happy obviously to be joined by david ellison indian
00:13cries you're going to be ringing the bell about 50 minutes from now or so it's been quite a
00:18journey david i followed it very closely of course as you know you know you started the
00:24bidding for warner at 18 a share you ended at 31 um when you include what you had to pay
00:31netflix
00:32for their break fee it was an increase of as much as 47 billion dollars from your initial bid
00:39why is it worth it well first david i don't know what you're talking about in terms of the journey
00:44here was smooth and easy and um no it truly is uh walking in here today was quite remarkable because
00:49i remember um the last time we're here was when we launched the hostel on your show so they're
00:53becoming full circle today is really quite remarkable and look the reason why we went
00:59through everything that we did is because with the combination and the completion of this transaction
01:04we are positioned to win in every single vertical that we operate in by combining paramount and warner
01:10brothers we have the greatest content engine with marquee intellectual property you're uniting lord of
01:16the rings harry potter the dc universe under the same house as mission impossible top gun maverick
01:21gi joe transformers you're immediately getting to scale and streaming between hbo max and paramount plus
01:27over 200 million global streaming subscribers with with in addition to pluto 80 million monthly active
01:33users we have an unmatched sports portfolio that includes the nfl mlb nhl uefa uh basically pga just to
01:43name a few not to mention the olympics internationally and an incredibly profitable linear portfolio anchored
01:48by cbs when you look at our primetime lineup the ncis tonight just launched 42 percent up basically from
01:54last year five of the top 10 cable channels and we will transform this business well what yeah let me
02:00start there then because i you know you start as well though i mentioned the 47 billion additionally
02:04nobody thought you're going to get it for 18 but i bet you didn't think it was going to cost
02:07you 31
02:08either when you started so you know 79 billion dollars in debt you're almost seven times leverage
02:12you have a uh target though of getting down to three times leverage let's call it three and a half
02:17years
02:18from now you talk about transformation you've got to deliver on that what gives you the confidence you
02:23can do it and get to that three times leverage from where you are right now absolutely so let's talk
02:28about the debt and the path to delevering there's there's multiple avenues to delever one is to to grow
02:33the business we're going to be investing more in content than any of our peers we're projecting you
02:37know mid single digits basically you know top line revenue growth on a company that's already producing
02:42close to 70 billion dollars of revenue we have six billion dollars of synergies in the deal and let's
02:47just look at what we did at paramount we were sitting here actually day one on your show at paramount
02:51we announced two billion dollars of synergies number we are going to over perform that by 50 percent
02:56we're going to complete 2.7 billion by the end of this year and so when you look at and
03:00then we're also
03:00going to be going from four billion dollars in cash flow next year when you remove transaction
03:04costs to 10 billion by 2030 so we are absolutely in a position to where we can grow the business
03:09and delever simultaneously and create a tremendous amount of value for all stakeholders you do i mean
03:14but you've got to invest as well you mentioned the four billion in cash you've got i think it's
03:17six billion in interest costs going out a year you've also got 800 million for a dividend by the way
03:22why have a dividend why bother given the constraints you're under it's it's it's good for shareholders and
03:27again when you look at the free cash flow conversion of this company
03:29we can absolutely delever the business to three times in three years and invest more in content
03:34than any of our peers to be able to grow and scale this company absolutely again i come back to
03:38it
03:38what gives you that confidence when you say absolutely why what are you seeing that you know
03:42many people are even rooting for you say well it's going to be a hard road that let's look at
03:48the
03:49overall platform that we're operating right now 12 of all television watch time that is second
03:55only to youtube so we have the scale we have the intellectual property we have the plan and we
04:00have the people to be able to execute and very thankfully i'm sitting here with an incredible
04:04partner and i believe the two of us are completely capable to the task at hand why did you hire
04:08enon
04:09so i've known enon for seven years i think he is an incredible operator he's a visionary leader
04:14there is candidly nobody in the world i would rather do this with and i believe that as a team
04:19we are going to we are incredibly strong but actually you know and i'll let you answer that
04:22you know what what you know and i'd love to come to you in terms of just
04:26the synergy opportunity is key here it does appear that is going to be one of your focuses day one
04:31i guess i'll ask the question what is your focus day one when you look at having to deliver
04:36on those cost synergies that are so important to making this deal work
04:40well let me start by saying that i could not be more excited to be sitting here and partner with
04:44an entrepreneur like david and everything that he's accomplished today is nothing but inspiration
04:50we have a unique opportunity to build the next generation media and entertainment global company
04:56that is powered by creativity and technology we have the assets that david mentioned we have the
05:02capability we have the people and all of this is happening at the point in time when the industry
05:08is at an inflection point where it's getting harder and harder to reach the consumer and aggregate fans
05:15we have what it takes we have what it takes and while everybody's focused on synergy
05:19and debt don't forget this is a growth story okay well a lot of people don't think it's a growth
05:26story
05:26when you say we have what it takes i'm trying to understand what i know the collection of assets
05:31is unparalleled in many ways but what does that so we have we have a multi-year plan let's start
05:35with the synergy we're looking to reduce our generate synergies of more than six million dollars
05:42over the next three years this will come from technology marketing consolidation real estate
05:47optimization and some labor although labor is not the majority of the savings those synergies
05:54will take our evita from 12 billion dollar pro forma for next year up obviously by at least that
06:00amount and in addition we're looking to grow the business at mid single digit growth kagar for the next
06:06three years by 2030 right with that looking at our plan we see a clear path to grow the business
06:13and
06:13achieve the profitability to get every 10 billion in free cash flow i guess by 2030 that is a goal
06:18and
06:18that will bring us to three-time leverage ratio and be no that will be success there's no doubt if
06:24you
06:24guys were able to do that you know you know we i look back you joined i think mattel as
06:28ceo in april of
06:292018 and not too many months later you got rid of 25 of the non-manufacturing jobs at the company
06:37um is a
06:38similar type of approach needed here well there's no question that we are already in full execution
06:44modes we have a plan this is my third day on the job but we're already deep into it we
06:51have an incredible
06:52team we have multiple work streams we have a clear vision and line of sight to achieve the savings
06:58we're aiming towards where do you start it's it's a whole concept of opportunities and you know
07:05while and when we talk about synergies it's important also to say this is not about cost reduction this is
07:11about re-engineering how we work this is about reinventing the business model so it's not just
07:17synergies and reducing costs it's also improving how we perform and we're looking to build a high
07:24performing company leveraging technology leveraging capabilities and build something that will stand
07:31out for years to come and this is a long-term plan this is not about a few days of
07:37share trading or
07:38you know or even managing synergies for three years we're building a company for future generations
07:45and we have an opportunity to stand out in a crowded market but reducing the workforce is a part of
07:50that
07:50yes and we said that we were public about it but yeah when it comes to to making those decisions
07:56of course we're thinking of our people we're going to do it in the right way respectfully
08:01transparently and communicate our plans this will be part of the plan this is part of the plan
08:07will be part of the process how do you divide the labor here what is your view i mean i
08:12asked you
08:12why you hired him but now what you know is there do you have a clear idea of how you
08:16delineate
08:17sort of responsibility so so we absolutely have clear lines of delineation first i want to say is
08:21we're going to do everything is as true partners and really sitting here today this caps a three-year
08:27journey we were talking about buying warner brothers discovery before we actually closed on paramount
08:31because we believe this gave us the scale and put us in a position to be able to win uh
08:36so this has
08:36been a long-term strategic vision and strategy that i've had for three years i'll continue to lead in
08:41strategy creativity technology um you know enon will obviously focus on day-to-day operations and
08:46overall of the company but we'll do everything in partnership and again there's nobody else to do
08:51this with right um david you know one of the key gating issues for warner brothers discovery and for
09:00many other uh companies that have cable networks has been the continued decline of the cable ecosystem
09:05and and and free to air as well that continues and you know you can create synergies and get cost
09:13savings and create more cash flow but then you're dealing with this decline on the other side how do
09:17you see that playing out so look i think we as edan said this is a growth story when you
09:24put the two
09:24streaming services together we do get to a world to where the studios and streaming business outpaces
09:29linear declines and obviously the company grows and creates long-term value over time but we're also
09:34bullish on the linear business again like let's look at the last year of owning cbs it is the tiffany
09:39network the number one broadcast network for over 17 years it's number one prime time lineup we
09:44delivered a record-setting nfl season last year and the linear businesses are separate right broadcast
09:50is incredibly stable yes cable is declining but it is still high margin highly cash flow generative
09:56by putting these companies together we can keep that business longer over time and make sure that
10:01we transition into a predominantly studios and streaming business and deliver long-term value
10:04for sure do you have a view on sort of where i mean we all wonder when are we going
10:07to hit the
10:08bottom is it 50 million subs is it when is it the answer is you're already seeing actually the decline
10:12start to asymptote so you think so you're you're already you're already seeing it happen now and
10:16again let's just go back to what just happened two days ago on cbs where viewership in prime time
10:21is up 42 percent year today so i do think you're seeing that starting to slow and when you contrast
10:27it to
10:27kind of the warner brothers discovery the linear declines were not well understood at that moment
10:32in time i think they are incredibly well understood now we've been very conservative about what we're
10:37projecting in our model and i think as a result of that we'll be able to over deliver for shareholders
10:41you know with that david just on you this is an important point is when you look at our linear
10:45tv
10:46portfolio it's anchored by cbs the crown jewel of broadcast television and then we have 50 channels 50 cable
10:54networks including seven of the top 10 in the key demo of 18 to 49 and that allows us to
11:02reach
11:02audiences all over the world across every entertainment vertical and as david said the
11:08way we manage this portfolio is for the long term so we believe we can still optimize profitability yes
11:14there will be top-line decline decline so there would be i've been a part of this world for 30
11:19something
11:19years now you know unfortunately it went like this and now we're going like this so can we step back
11:24actually like this let's look back at how we got here 10 years ago tech came into media and fundamentally
11:31disrupted the business yes companies didn't pivot fast enough we can talk a lot about the owner operator
11:37entrepreneurial culture of silicon valley versus the more steward culture of hollywood that candidly put
11:42the businesses in this position this transaction is the solution to those mistakes 10 years ago
11:49big tech took platform technology pushed into media what we're doing but by the people are still there
11:56for the content they're there for the stories they're there for the news they love the sports
12:00they love the stories they love we have assembled an unmatched portfolio of intellectual property sports
12:06and news assets and then we are building the product and tech organization that can compete with
12:11anybody coming out of silicon valley that is going to enable us to push back and and when you look
12:16at
12:16the late delay to pivot yes this accelerates streaming growth by years as a standalone company
12:22and you get to that inflection point very very quickly to where the growth businesses of studios
12:28and streamings no but outpace linear decline i get it i i i and that i want to let's focus
12:33on that
12:33because that is the key if you're going to succeed it's got to be the dtc portfolio it's got to
12:37be the
12:38international platform right as well absolutely and if you look if you look at that we have incredible room
12:43to run here in the states domestically these services are still nascent internationally so
12:48we have a tremendous amount of room to grow in the international business our fast business is growing
12:52rapidly both in terms of engagement and market share and then in addition to that we are investing
12:57more in content than any of our peers like just talk about the scale of it 30 movies a year
13:02over 180
13:03series cnn news assets cbs news asset unmatched sports portfolio plus the product and tech layer we are
13:10position to compete with anybody and to win by putting these companies together you know you and
13:14i i would not sorry for this on this point yes where we stand out is not just with the
13:20incredible
13:20assets that we own in terms of content but the ability to generate original content and find the
13:26next big hit this is something that david has done consistently consistently with skydance well
13:32it comes back to creativity exactly so we're looking to win in content this is the this is the main
13:38tenant of the strategy win in content right and if we do that it shows people are going to come
13:43this is something that no one does you know there are other platforms other d2c platforms other cable
13:47networks other broadcast okay but i want to understand what the real goal is though in terms of all right
13:51you know netflix is out there you you see yourself becoming a number two and you you've said you're and
13:57this is a quote unifying under a single service over time in terms of paramount plus and hbo max what
14:03does
14:03that mean how quickly does it happen what comes first no no so so the answer is it's already
14:08happening um you know we literally announced yesterday that we're unifying ad sales across
14:13the platforms the product and tech teams are literally already at work unifying the back-end tech
14:17stacks uh we actually just completed that for the three services at paramount a month ago when
14:22you look at agentic tooling and what you can now do with clod and codex we can bring those back
14:27-ends
14:27together significantly faster so because i mean that's i hear that from others who tried to do it it
14:31takes time they say i look you know disney and everything else do you think you can do it fast
14:36the answer is we know so and i will say when you look at legacy media companies have traditionally had
14:41it organizations not product and tech teams we are building a true product and tech team we've been
14:46doing it within a year with uh within paramount when you look at dain glasgow who runs that business
14:51for us prior to joining us he was running facebook for meta and you know has over 20 years basically
14:56working with the best technology companies in the world we have that team in-house and what you are
15:01seeing on average by deploying these ai tools across the company is on average a 50 acceleration
15:07in terms of how fast you can get things done for the high performers in the company they are 10xing
15:12what they used to be able to do before and when you talk about our synergy numbers we're not applying
15:17ai to any of that so when you look at how ai is going to transform every part of the
15:21business
15:23we are really well positioned but it's not going to transform movies these 30 movies are not going to be
15:27ai generated so what i would say is look we are a big believer that artificial intelligence is a tool
15:32for artists not the other way around and i don't think anything will disrupt that what i do think is
15:39going to be possible when you talk about storytelling and artificial intelligence i do believe it'll be
15:43one of the biggest unlocks for creativity for example 1983 james cameron made the first terminator movie
15:49four million dollars that movie shot for shot today 60 or 70 million dollars how many first-time
15:55directors with an original script and no movie star completely unproven get a 60 70 million dollar
16:01budget if you can use those toolings to be able to to be able to have that movie cost 20
16:06million
16:07dollars today it'll be a massive unlock for the creative well you need it i mean 30 movies is not
16:12going to be cheap and sometimes they don't work and so you're taking a loss on them but but we're
16:16doing it today i mean like let's just actually look at what's accomplished paramount in the first
16:20year of ownership we went from 8 to 15 movies yep warner brothers is over 15 movies on the calendar
16:25so we literally have 34 movies dated for next year we can absolutely handle that volume it's baked into
16:31the business plan and it positions us incredibly well and you talk about streaming what does 30 movies
16:35mean for streaming it means every 11 days a movie with a theatrical release window and a theatrical
16:42prints and advertising campaign debuts on service that's a lot it's incredibly powerful yeah that leads
16:48to engagement subscriber acquisition yeah um you know the tv side of your business the production
16:53side of warner brothers is pretty significant too they sell important shows to a lot of the streamers
16:57are you going to keep doing that do you have an opportunity to raise price or do you eventually bring
17:01it all in-house so we're going to increase production both for our own services so basically the
17:08you know we think first and foremost about the consumer and we want to make sure that we are
17:15offering the best storytelling in the world on our platforms uh and you're going to see us increase
17:20production for what is going to be available on our streaming service and linear networks and in the
17:23theater in addition to that we will absolutely continue to sell to third parties and again when
17:29you look at the overall television portfolio across the three studios it's over 180 shows a year more
17:34than any more than any other company in the world right uh you did lose taylor sheridan to nbc
17:38was that a blow how do you view that in terms of what that's going to mean given how important
17:42he has
17:42been at least to the success of paramount plus so i have so much admiration and respect for taylor
17:48uh he's still under contract with us till 2029 we actually have nine series that we're making
17:53together between now and the end of his contract if you haven't seen lioness season three it's truly
17:57spectacular we have a great relationship he's literally writing call of duty for us with pete
18:02burke as we speak uh and we also just greenlit another movie of his we're in in all that intellectual
18:07property we own and stays at the company so we're going to have a long relationship with
18:11and does paramount's content i mean in hbo max's content i'm just curious as to how you see that all
18:18mixing and matching so to speak in terms of on one service for the end customer and what they want
18:24so one of the things that is actually fantastic is the two services are highly complimentary it's
18:29actually the lowest overlap over any of the services and we want to be a service that actually
18:34speaks to everyone the lowest overlap in terms of subscriber bases correct so so the overlap is a lot
18:39less than people think and it puts us in a position to be able to talk to every audience we
18:43want to be
18:43something for everybody and we you know we want to be the the number one destination for the most
18:47talented artists and filmmakers in the world and we believe we're in a position to deliver a market
18:52leading service um i want to talk a bit news here obviously you now have cnn and cbs
18:58you merged the news gathering operations is that fair to assume i mean there's got to be some cost
19:02savings there right so this isn't about cost savings in this case we look to keep the businesses
19:08run in parallel with independent editorial operation this is really important and two separate
19:14businesses and we're so fortunate to have such successful well-established highly recognized brands
19:20in news yeah but news gathering though why have them both do the same thing can't you just do
19:26once they're absolutely operational efficiencies and i'll say the operational efficiencies we've looked
19:31at this deal for over a year we know where every single dollar is again i'll point to our track
19:37record at paramount and look when you when you are the largest shareholder in the business you are
19:42completely focused on how do we create long-term value for all of our shareholders and so from that
19:46standpoint we are 100 confident in the six billion dollar synergy number that we've outlined again our
19:51track record is over delivering quite significantly we know where those are you mentioned so many
19:57things you have to invest in though i mean marketing is going to be required for the new for
20:00the combination of the dtc platform all of those movies you feel confident you can deliver on all
20:05of that this is all part of the plan we have a multi-year plan and as we've said we
20:10expect to grow
20:11over the period at mid-single-digit CAGR through 2030 and achieve profitable growth increasing our
20:19EBITDA margin to mid to the 20 mid 20s right and generate the 10 billion dollar cash flow free cash
20:25flow
20:25that we talked about just this is all part of the plan go ahead one thing i just want to
20:29add because
20:29it couldn't agree more and again i would point to what we did at paramount right even when you look
20:34at the synergies that we executed we increased our investment in content we doubled the film
20:39slate from eight to 16 films we greenlit 40 new and returning series we invested in more sports rights
20:44while operating the business more efficiently we're going to do the exact same thing here it is all
20:49detailed out and now we get to do uh we have to go execute on now you get to write
20:53now you get to show
20:54us you mentioned sports right in the brief time i have left the nfl the change in control provision
20:59when you bought paramount was that exercise does it mean you're going to have to renegotiate with
21:05them sooner than you might have otherwise so we have a great relationship with the nfl i think one
21:09of the things that you know the nfl was actually an investor in skydance it is now an investor um
21:14well
21:14now today and also skydance so um we delivered last year a record-setting season with them we anticipate
21:21being in business with the nfl for the foreseeable future and based on all the conversations with
21:25roger i think he sees it the same way and cnn's future you know was the subject that would seem
21:30of so much so many column inches certainly david you kept mark thompson why um he's done a phenomenal
21:35job and we also given everything everyone's been through we want stability uh we believe in editorial
21:42independence across the news organizations we think cnn is a remarkable brand we think cbs news is a
21:47remarkable brand when you put these two businesses together it's an it's it has news under barry weiss
21:53has changed its approach to a certain extent do you expect similar moves from cnn uh right now i'd say
21:58you you have to talk to mark corporate stays out of editorial so again i would say that's a that's
22:02a
22:02conversation for mark it's a conversation for barry but we're going to support them all right i'm
22:06looking forward to future conversations with both of you when we sit down a year from now what are we
22:10going to be talking about in terms of your ability to deliver on these synergies you've talking about
22:14you've talked about so much and on the growth uh that you're talking about so i'll start what should
22:19i hold you to about performance both economically and strategically i'll i'll start with strategic
22:26we need to grow top line by by mid single digits we need to grow our we need to put
22:30our streaming
22:31businesses together we need to grow and scale our studio business our d2c business we need to execute
22:36on our platform and technological transformation at the company and i believe if we do all of that we'll
22:40be in really good shape i'll pass it over to you and talk about performance well you will see us
22:44progressing towards our our targets on in 2030 and specifically when it comes to synergies we expect
22:51to achieve a third of our synergy target in the first year there's more to come this is not just
22:58about synergies you will see the company start performing at the very high level you will see
23:03great content you will see engagement you will see excitement for fans all over the world and the
23:07company is positioned to win i feel like if i'm there i feel like i'm not happy to see him
23:11i'm not so
23:12sure i'm happy to see you i'm coming down the hall we're in it is that we're in it together
23:17we're in it
23:17together and remember this is a growth story it's easy to focus on synergies but ultimately this is
23:23about growth this is about creating long-term shareholder value and we could not be better
23:28positioned to achieve that and so right the last two days has not done that of course the stock
23:32price i mean it's only two days but but again we don't control basically the first few days of trading
23:37what we do control is the long-term future of this business and we're going to deliver we're going
23:41to create value for all stakeholders and we could not be more excited to get to work guys thank you
23:46i really appreciate your taking the time uh david ellison of course chairman and ceo of skydance and
23:51enon cries the co-ceo thank you both good luck ringing the bell thank you sure you do it 50
23:56seconds
23:57hit that button and don't don't let off on it okay