00:00Now that Paramount's guidance has settled those lawsuits, it can finally move forward with this acquisition of Warner Brothers Discovery.
00:06Since you're the expert, what questions do you have about the future of the company?
00:11Because David Ellison has to raise about $49 billion in debt, correct?
00:17Well, it starts with the numbers.
00:19This is a company that is going to have a lot of debt and isn't really growing.
00:24Look, we've seen other people try to buy Warner Brothers before and turn it into this competitor with Netflix, right?
00:31AT&T bought Time Warner, then they sold it to Discovery, which created Warner Brothers Discovery.
00:36Now that is merging with Paramount Skydance.
00:38And these companies all face the same problem, which is they make almost all their money from cable networks.
00:43Cable networks are shrinking.
00:45They have these streaming businesses, which are growing, but not fast enough to offset the declines in the cable business.
00:50And even though they're known as these kind of famous Hollywood studios, Paramount and Warner Brothers, those studios make up
00:56a relatively small amount of the revenue and profit.
00:59And so how is the math going to work, right?
01:02What is the plan to turn two struggling and shrinking companies into a growing and healthy one?
01:09That is the question.
01:10Can you expect to see more consolidation?
01:12Like what kind of message does this send to Hollywood?
01:16You know, there's been a lot of consolidation in the film and television business over the last decade.
01:21Could there be more?
01:21Of course, right?
01:22Comcast is in the middle of splitting in two.
01:25It's putting its connectivity business, which is your cable and wireless, in one.
01:28It's entertainment business, NBCUniversal, into another.
01:31You know, Amazon has bought MGM.
01:34Could they buy more?
01:35Netflix made a play for Warner Brothers Discovery.
01:37Would they be interested in something else?
01:38Any of that is possible.
01:40Other than the Comcast split, there's nothing that we know of that is imminent on that scale.
01:45But when you have a, you know, shrinking TV industry, it makes sense that all those assets are getting squished
01:49together.
01:50Now, how do you plan to push the Paramount conversation, the consolidation conversation forward at your screen time event coming
01:56up?
01:57Well, look, we've got Jerry Cardinale, who is the second biggest investor in Paramount Skydance, sits on the board there,
02:03sort of David Ellison's right hand with doing a lot of these deals.
02:06We have Casey Bloys, who is the CEO of HBO, which is owned by Warner Brothers Discovery.
02:10So we have two key players in that deal who can come and talk about it.
02:14At the same time, we have some of the most powerful people in entertainment who will have opinions about it.
02:19Ted Sarandos, the co-CEO of Netflix, who tried to buy Warner Brothers Discovery.
02:23We have Donna Langley, who's the chair of NBCUniversal Entertainment.
02:26Her company, Comcast, also tried to buy parts of Warner Brothers Discovery.
02:30And then Dana Walden, who's the president of Disney, all these people will have views on how this merger is
02:35going to reshape the industry and what it means for their companies.
02:37You mentioned a lot of names.
02:39There's Conan O'Brien, too, Ben Affleck.
02:41But the one you did mention, Ted Sarandos.
02:42So I'm curious because a year ago when Netflix came to your stage at Screen Time, the company was seen
02:48in a different light.
02:48I mean, the narrative has changed.
02:50The stock has really taken a hit this year.
02:53Where is the company headed and where do you see streaming headed?
02:58Well, look, that's part of what I want to talk with Ted about.
03:00You're right that when we had his co-CEO, Greg Peters, last year, you know, my first question was,
03:05Netflix seems like it's on top of the world.
03:07What could it be doing better?
03:08And that would not be how I would start the conversation with Ted right now.
03:11You know, the stock has been down.
03:12Basically, ever since they pursued Warner Brothers Discovery, people started to get nervous about it.
03:17You know, I think one of the questions is, you know, Netflix's focus for the longest time has just been
03:21streaming, streaming, streaming.
03:23But streaming's not growing like it once did.
03:24So does that mean that they have to do something different?
03:26They have tried to message that they have enough growth if they stay the course.
03:30It doesn't seem like investors believe them.
03:32And so, you know, they're experimenting in different types of programming.
03:35They might try to sell other services.
03:37There's a lot of avenues they could take, and I hope Ted will, you know, elucidate some of them for
03:41us.
03:42AI is probably going to be another big conversation over there.
03:45Does the AI threat feel a little bit more real this year, would you say?
03:50I think it feels more real in music.
03:52It's really the dominant, one of the dominant topics in the music business is what this company, Suno, we're going
03:57to have the co-founder and CEO.
03:59There's a surge in music being uploaded to streaming services because of AI.
04:04There's a lot of active litigation.
04:05There's a lot of deal making.
04:06It feels a little more distant in film and television.
04:09Yes, we have Ben Affleck, who started a company and sold it to Netflix.
04:12You know, when I talk to people who work at the big studios, they're still not using that much AI
04:18in production.
04:19And lastly, the movie business has certainly seen a change.
04:22I mean, to put it point blank, they're making money, finally.
04:26What do you think has been the secret sauce to that?
04:30You know, it's funny you say that.
04:31There's been this interesting reversal, I'd say, in entertainment where for the last, most of the last decade, people who
04:36worked in TV felt pretty good.
04:37That's sort of the growing, exciting part.
04:39And the movie business felt bad.
04:41It's totally flipped where people who work in TV now are feeling not so great about the business.
04:45People who work in the movie business sort of have their chests puffed, excuse me, their chests puffed out.
04:50I mean, what has worked has been, you know, a diverse slate, a lot of movies, and a lot of
04:57kind of fresh and original takes on things.
04:59You know, if you look at what's worked, it's been everything from micro-budget horror to sort of mid-budget
05:04comedy to, you know, your big classic blockbusters.
05:07And I think people in the business would like to see more of that.
05:09That's one of the reasons they're worried about Warner Brothers and Paramount getting together, because they worry it will suppress
05:14supply.
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