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Why Netflix Refused a $110B Deal (And Why It Was GENIUS) · Earn Your Leisure

• 0:00
  Speaker 1: Let's go into this Netflix Warner brother situation. What's your thoughts.
• 0:06
  Speaker 2: I think it's really fascinating.
• 0:08
  Speaker 3: Going back to the debt conversation, I don't know what
• 0:10
  Speaker 3: the parameters were, but my first thought was, as an executive,
• 0:16
  Speaker 3: is I'm happy. I would be happy to not have
• 0:19
  Speaker 3: the service a ninety billion dollar debt bill. Like, just hypothetically,
• 0:25
  Speaker 3: if the debt was two percent, what does that payment
• 0:28
  Speaker 3: look like. There's a lot of conversation about if Netflix
• 0:32
  Speaker 3: should have forced their way into a bid. But sometimes
• 0:36
  Speaker 3: the best investment is the one that costs so much
• 0:40
  Speaker 3: that is going to be a burden or a headed
• 0:42
  Speaker 3: to you. And also too, I know Larry personally guaranteed
• 0:47
  Speaker 3: the debt, but I want to ask you, guys, being
• 0:49
  Speaker 3: the media mogus that you are, is this investment in
• 0:52
  Speaker 3: linear TV worthd it? I get the swath of companies
• 0:58
  Speaker 3: being bundled together. This reminds me of the Big Short,
• 1:01
  Speaker 3: when you're having credit to false fops put together in
• 1:04
  Speaker 3: a bucket. It's like a media index fund they put together.
• 1:07
  Speaker 3: But in lending the television, is that worth what they
• 1:11
  Speaker 3: paid for it? So I think it's a win for Netflix,
• 1:15
  Speaker 3: but I want to get you guys perspective on the
• 1:18
  Speaker 3: media side, should they have paid as much? And was
• 1:21
  Speaker 3: Netflix smart to stay out of this deal?
• 1:26
  Speaker 4: A couple of things. I think, what was that Wednesday shot?
• 1:31
  Speaker 4: It came over to my house. I said, look, I
• 1:33
  Speaker 4: typed up this this piece you know about Netflix and
• 1:36
  Speaker 4: Warner Brothers. I think they might walk away from the
• 1:39
  Speaker 4: deal today. I was just like, I just had the
• 1:42
  Speaker 4: way things are looking the four days, you know, David
• 1:46
  Speaker 4: Ellison being at the State of the Union, tes Sarrahos
• 1:50
  Speaker 4: being at the White House the next day, I'm just like.
• 1:52
  Speaker 3: You're just ritting and Susan Rice if you guys get
• 1:55
  Speaker 3: the deal.
• 1:56
  Speaker 4: It just felt like all those things are happening, and then,
• 2:00
  Speaker 4: you know, it reminded me of the conversation we've been
• 2:01
  Speaker 4: having all twenty twenty five about Larry Elson and the
• 2:05
  Speaker 4: fact that he is one of the wealthiest people in
• 2:07
  Speaker 4: the world that doesn't have a quote unquote form of media.
• 2:11
  Speaker 2: They've all done it right.
• 2:12
  Speaker 4: Like Zuckerberg has it, Bezos has it, obviously, Elon has it,
• 2:19
  Speaker 4: and here is Larry Ellison without any form of media. Yes,
• 2:23
  Speaker 4: he's known for software, obviously in an oracle. I think
• 2:27
  Speaker 4: he was willing to pay whatever it took to get this.
• 2:29
  Speaker 4: In fact, that's why they made the bid so ridiculous
• 2:32
  Speaker 4: that Netflix said, you know what, sometimes walking away is
• 2:36
  Speaker 4: the best deal. And so they got CBS and they
• 2:40
  Speaker 4: got CNN right inside this deal, amongst other properties for sure,
• 2:45
  Speaker 4: But I'm just talking from the media standpoint. You got Fox,
• 2:48
  Speaker 4: and now you got CBS and you got CNN now
• 2:51
  Speaker 4: controlled by supporters of you know, the current administration, which
• 2:55
  Speaker 4: is interesting, and I think that was Larry Ellison's you
• 2:58
  Speaker 4: know goal the whole time for Netflix. Though, why I
• 3:01
  Speaker 4: thought like this would be a good opportunity for them
• 3:03
  Speaker 4: was that, Okay, you were on the hook for seventy
• 3:05
  Speaker 4: two billion, and now that goes back to the company.
• 3:10
  Speaker 4: In addition to that, you get two point eight billion
• 3:12
  Speaker 4: from walking away.
• 3:14
  Speaker 2: So now your next you got seventy five billion back
• 3:17
  Speaker 2: into the company. What does that do? Well?
• 3:19
  Speaker 4: How long is it going to take Warner Brothers in
• 3:21
  Speaker 4: sky Dance paramount to become profitable from this deal?
• 3:26
  Speaker 2: You want to talk about that.
• 3:28
  Speaker 3: How long they remind people how much they paid for
• 3:30
  Speaker 3: it one hundred and ten billion.
• 3:34
  Speaker 4: I don't they bought it at thirty two dollars a share.
• 3:36
  Speaker 4: All types of incentives. How long you think it's going
• 3:39
  Speaker 4: to take for them to become profitable? Right, Netflix goes
• 3:42
  Speaker 4: back into regularly schedule programming. Now they have actually more
• 3:46
  Speaker 4: money to now go out and pursue live sports to stay.
• 3:50
  Speaker 2: Further ahead in the streaming space.
• 3:52
  Speaker 4: I thought it was a great opportunity for them to say,
• 3:54
  Speaker 4: all right, let's walk away, Let's continue what we were doing.
• 3:56
  Speaker 4: We were going down the right path, let's keep going.
• 3:58
  Speaker 4: If you watched since day and now this merger, they've
• 4:00
  Speaker 4: been down twenty three percent. They've been hit hard. Obviously
• 4:03
  Speaker 4: they had to split. Like this is a good opportunity
• 4:06
  Speaker 4: for them. Sometimes walking away is the best thing you
• 4:09
  Speaker 4: can do. I like this for Netflix.
• 4:11
  Speaker 1: Netflix stock is up twenty one dollars this week. So
• 4:14
  Speaker 1: what's the what's the what's the trajectory for next for nextel?
• 4:17
  Speaker 1: For Netflix stocks.
• 4:20
  Speaker 3: I think they've gotten beaten up unfairly.
• 4:25
  Speaker 2: Well.
• 4:25
  Speaker 3: The number one thing that investors love a certainty. So
• 4:28
  Speaker 3: now that you know that this chess piece isn't on
• 4:31
  Speaker 3: the table, I think it's back to regularly scheduled programming.
• 4:34
  Speaker 3: Also too, for Netflix, like Trump said he was going
• 4:39
  Speaker 3: to come after a member of the board.
• 4:42
  Speaker 2: You don't want any.
• 4:44
  Speaker 3: Political combatants coming after your company. So now you're out
• 4:48
  Speaker 3: of the clear. Right, you survived, and like el Mincho,
• 4:51
  Speaker 3: from this corporate battle, they did a great job going
• 4:55
  Speaker 3: back to CAPEC spending of not over spending and also
• 4:59
  Speaker 3: too like said, they have capital. Now if they start
• 5:02
  Speaker 3: to make a creator's fund or pay creators more at Netflix,
• 5:05
  Speaker 3: which is one of the weaknesses of their alliance, I
• 5:11
  Speaker 3: think they can get some great headwinds. I think we
• 5:15
  Speaker 3: should see them to continue to rally, and I think
• 5:18
  Speaker 3: them and Meta are the two companies I'm looking to
• 5:21
  Speaker 3: see how quickly they rally to then give us an
• 5:24
  Speaker 3: indication of where the stock market is going to go.
• 5:26
  Speaker 3: Netflix and Meta are my two canaries in the coal
• 5:30
  Speaker 3: mine for twenty six to see how this market shakes out.
• 5:33
  Speaker 3: But shoddy for you, Like do you think this is
• 5:35
  Speaker 3: a great investment on Paramount? Like if you had one
• 5:38
  Speaker 3: sixty laying around, right, would you paid one ten for
• 5:42
  Speaker 3: the swath of companies that Paramount got and that deal?
• 5:45
  Speaker 3: Like I went and looked, I'm like, there are no
• 5:47
  Speaker 3: hit shows on none of them fucking broadcasts they have.
• 5:52
  Speaker 2: I get don't at the HBO. Don't do that to
• 5:54
  Speaker 2: HBO Man.
• 5:55
  Speaker 1: Definitely definitely outdated, But I also think that it's interesting.
• 5:59
  Speaker 1: I saw the I forget exactly what he was his title,
• 6:02
  Speaker 1: but he was he was a high ranking executive of
• 6:05
  Speaker 1: Netflix in the UK, like high like president or something
• 6:08
  Speaker 1: like that, and he was saying that I talked about YouTube,
• 6:11
  Speaker 1: and he was just saying, how YouTube has such an
• 6:13
  Speaker 1: unfair advantage because like NBC, and he was saying, like
• 6:17
  Speaker 1: the BBC, but like CBS, all of these shows they
• 6:21
  Speaker 1: put their content on YouTube for free yep. So he
• 6:25
  Speaker 1: was like, he was like, how can we compete? How
• 6:27
  Speaker 1: can we compete when network television is putting their content
• 6:31
  Speaker 1: on YouTube for free getting paid on the back end
• 6:34
  Speaker 1: through AdSense, but YouTube is not paying for their content.
• 6:38
  Speaker 1: They would never put their content on Netflix for free.
• 6:41
  Speaker 1: Netflix has to license one hundred million dollar deals to
• 6:44
  Speaker 1: get old shows.
• 6:46
  Speaker 2: Reruns for a two week run rate, even sports.
• 6:51
  Speaker 1: So it's like, yeah, to answer your question, I don't
• 6:55
  Speaker 1: think that was a good idea for him to pay
• 6:57
  Speaker 1: that much for that for that suite. But I think
• 7:00
  Speaker 1: the Netflix has other problems outside of that, not just YouTube,
• 7:05
  Speaker 1: but just other forms of streaming that is coming up
• 7:11
  Speaker 1: in short form content and different things that nature is like,
• 7:13
  Speaker 1: you know, they're spending a lot of money this podcast thing.
• 7:16
  Speaker 1: I have suspicions that it's not working. That's just my
• 7:19
  Speaker 1: that's just my suspicions. I don't know if it's true
• 7:22
  Speaker 1: or not. Question from and how much money. But you're
• 7:27
  Speaker 1: gonna throw at Floyd and Mike Tyson. It's like you're
• 7:30
  Speaker 1: doing a lot of spending and.
• 7:33
  Speaker 2: That's why they're gonna have those on Netflix. Yeah, all
• 7:35
  Speaker 2: of them.
• 7:36
  Speaker 1: Well, the Mike Tyson and Floyd one, I think, yeah,
• 7:39
  Speaker 1: pack yall two. So it's like, I don't know, I
• 7:42
  Speaker 1: don't know if if this model is really sustainable long term.
• 7:46
  Speaker 4: I think they're so far ahead the difference between the
• 7:48
  Speaker 4: free content that the paramounts of the world, the comcasts
• 7:51
  Speaker 4: of the world. That that's like the network linear and
• 7:54
  Speaker 4: they have obviously shows that are.
• 7:56
  Speaker 2: Meant for streaming.
• 7:58
  Speaker 4: ABC Disney would be an example of that, right Like
• 8:00
  Speaker 4: right now, if you don't have Hulu, how do you
• 8:01
  Speaker 4: watch Paradise?
• 8:03
  Speaker 2: You can't?
• 8:04
  Speaker 4: Right, Like you gotta wait, right, So, like they'll they'll
• 8:06
  Speaker 4: make specific things. I think what Netflix has done has
• 8:09
  Speaker 4: had original content that people have loved and come to
• 8:12
  Speaker 4: a door and they've they've done it, like every year
• 8:14
  Speaker 4: we think like, oh, that's it, they can't have another one,
• 8:16
  Speaker 4: and it's another one, right, It's it's Stranger Things, right, uh,
• 8:20
  Speaker 4: and then it's Wednesday, right like they're they're they're been
• 8:23
  Speaker 4: pretty good with that. I think now, I don't know
• 8:25
  Speaker 4: if it's original content now. I think they take the
• 8:29
  Speaker 4: Apple model where it's like, yeah, we could bring new
• 8:32
  Speaker 4: products to the table, or we can get new regions.
• 8:35
  Speaker 4: That's always been my thing with Netflix. How do we
• 8:38
  Speaker 4: become more of an international brand where it can be
• 8:41
  Speaker 4: serviced out of places? Disney has been able to do
• 8:44
  Speaker 4: that a little bit, right if you talk about some
• 8:46
  Speaker 4: some other countries. How does how does Netflix get into
• 8:49
  Speaker 4: that space? Because in terms of streaming outside of YouTube,
• 8:53
  Speaker 4: they're number one, Disney would be number two, and then
• 8:57
  Speaker 4: I don't even know. You can flip a corner who
• 8:59
  Speaker 4: number three? Now that paramount and all that's mixed together, but.
• 9:02
  Speaker 2: Those those are the two clear favorites.
• 9:04
  Speaker 4: I think the international play for them is there, and
• 9:08
  Speaker 4: they have the capital, so it'll be interested to see
• 9:10
  Speaker 4: what they do. I think this it goes, it crosses
• 9:11
  Speaker 4: back over one hundred. I wouldn't be surprised to see
• 9:13
  Speaker 4: that one fifteen.
• 9:14
  Speaker 3: Yeah, at some point I think it'll get to like
• 9:16
  Speaker 3: one ten, one eleven. But to business, okay, for my investors,
• 9:22
  Speaker 3: whenever you hear capital being spent, first thought has to be,
• 9:26
  Speaker 3: how are they going to five x or eleven x?
• 9:29
  Speaker 3: This rash out to your point, Netflix has to figure
• 9:34
  Speaker 3: out a business model where you're paying zero for the
• 9:37
  Speaker 3: content and it's high produced so you keep the same standards,
• 9:42
  Speaker 3: and you have to incentivize creators.
• 9:45
  Speaker 2: Bring me a hit show that.
• 9:47
  Speaker 3: Is shot, well lit, well edited, everything that you need,
• 9:51
  Speaker 3: and we'll pay you on the performance model, because how
• 9:53
  Speaker 3: much longer can you continue to pour out twenty to
• 9:56
  Speaker 3: forty million for a show for the retention rate for
• 9:59
  Speaker 3: them to be like I don't hear nobody talk about
• 10:02
  Speaker 3: stranger things about Vecna or will or like where's the
• 10:08
  Speaker 3: video game? There's no back end model and it sucks
• 10:12
  Speaker 3: just from a cost basis to put all this money
• 10:14
  Speaker 3: into a product and people burn through it through three.
• 10:16
  Speaker 1: Days and you could, yeah, you could watch the show
• 10:18
  Speaker 1: in four days. That's that's why they got podcasts, because
• 10:21
  Speaker 1: it's low cost and it's something that you could it's
• 10:23
  Speaker 1: sustainable for years.
• 10:25
  Speaker 2: Weekly