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WHO WILL BUY DISCO BROS? · The Media Odyssey

• Marion Ranchet: [00:00:00] I'm ready to rumble, let's talk mergers and acquisition, ladies and gentlemen. Evan Shapiro: That's great. That is Marion Ranchet. Marion Ranchet: and that is Evan Shapiro on the Media Odyssey. We're playing games this week, right? Evan Shapiro: Yeah. You came ready to play. Marion Ranchet: I am ready to play also because I'm gearing up for Vegas for the first time in my life. I'll be in Vegas next week. I'll be in Vegas, in Jan for CS. I've never been to Vegas and in two months I'm going to be twice in Vegas. So I feel like I'm, I wanna gamble. I wanna play. Evan Shapiro: So you are, you're ready to gamble with other people's money on mergers and acquisitions. Marion Ranchet: Yeah, exactly. And then when I'm in Vegas, I will just take $1, put it anywhere and be like, I've done it. There you go. And then go have a drink. Evan Shapiro: That's great. That's how I, that's how I gamble. I take $5 down to the floor and if it runs out, I'm done. But if I can make a go, I make it go and I don't usually win. [00:01:00] Marion Ranchet: Does that work for you? Evan Shapiro: No. Marion Ranchet: So that's the thing, right? Evan Shapiro: Does not usually work for me, which is why I'm not a good gambler, and by the way, and why I don't really play the stock market either. Although I do love to make prognostications and usually my mergers and acquisition prognostications do not come true. Marion Ranchet: Yeah, same thing. Evan Shapiro: I should tell people that. I've been telling people Apple's gonna buy Paramount for years. It hasn't happened. Marion Ranchet: Yeah. Everyone, when Apple I, or mine was actually Apple buying Roku, that was mine for a while. But actually I think there was wishful thinking on my part. We also, Apple and Disney. Evan Shapiro: yeah. Sometimes we, we talk about things that should happen and then they don't, doesn't mean they weren't a good idea. Marion Ranchet: Are we saying that maybe Wall Street is thinking backwards and we're thinking straight? Evan Shapiro: Yeah, I think what's been proven over the last number of years, especially if you look at what's happened to Warner Brothers Discovery. Just look at Warner Brothers, Warner Media and look at the number of times that's traded out and look at the value that's been lost in doing so. [00:02:00] It's terrible. Or if you look at the Fox Disney acquisition, here's an acquisition, I think it was $45 billion, something like that. It's produced no new value. Yes, there's been some films that have come out, and some might argue that the enterprise value has gone up somewhat. But if you look at the valuation of Disney over the last five years, it is flat. It has not risen a dime in five years despite buying all these things. And so I think sometimes Wall Street gets its priorities out of whack. Marion Ranchet: Yeah. Evan Shapiro: And it pushes companies to make moves that are not always great. And I think that's exactly why the media industry finds itself in such the sinkhole that it does right now. I'm hoping, I wrote this week about how I thought MIPCOM was a real turning point. Marion Ranchet: Yeah. Evan Shapiro: And I don't know if you felt that as well. Still, there are so many things to undo. Paramount's gonna lay off 2000 people next week, 2000 more people, and a lot of that's [00:03:00] due to look at the CBS, Viacom, Paramount, Skydance, all this horse trading and all this bullshit. And the only people who really wind up in the positive zone on a lot of the these moves from Wall Street are the bankers, the accountants, and the lawyers. Everybody else winds up losing, not always, but very often, especially in media M&A. So with all that said, here we are, we're gonna talk about a lot of the rumors that are swirling about mergers and acquisitions right now. We're gonna talk about some of the mergers and acquisitions we wish happens. Some of the ones that we hope don't, and we will make some predictions about what's gonna come out on the other side. You ready for that? Marion Ranchet: I'm ready. Game on. Evan Shapiro: Alright, we each brought our own categories. Do you wanna start? Do you want me to start? Marion Ranchet: So let's start with our friends from Warner Bros. Discovery. 'cause that's perhaps the hottest topic right now. And it does have an impact on both your side and my side of the ocean. So yeah, let's go with this one. That's the big next one everyone is waiting for. Evan Shapiro: Right. [00:04:00] So I actually made a chart, which is on my Substack, and I posted on LinkedIn about handicapping the players in the big Warner Brothers, I don't know, auction that's going on. First of all, I think there's the first thing to talk about, which is currently the plan is to split Warner Brothers and Discovery and Max and Discovery nets, or whatever the hell you wanna call 'em this month into two different parts. It would be the Studio plus Max. And then all the cable channels, the Discovery channels, the Turner channels, the Warner channels out on in a different public company. That's the plan as Zaslov has painted it today. On top of that, Paramount has made an offer of $20 per share, which is a premium of $2 per share over the price right now. And should be noted that Paramount is at not just a 52 week high, it's at a 36 month high. Marion Ranchet: Yeah. Evan Shapiro: And in part because the Skydance acquisition completed, and I think [00:05:00] also they have a very good business plan, which is doing business with the oligarch in power, firing the people he once fired, doing the things that he wants done. And it's led to a lot of really good things for the company in the immediate, in the immediate present, which is they're gonna wind up with TikTok probably as part of their enterprise in the very near future. So they are flying high, they have cash on hand, although they also have a tremendous amount of debt. $15.5 billion in debt. So I think that's one of the reasons why Warner Brothers Discovery rejected that offer outta hand. They didn't even really consider it very seriously. The other big rumor out there is that Netflix was going to buy or make an offer for Warner Brothers Discovery. You've heard that a lot and we've read it a lot. Marion Ranchet: We spoke about that a few episodes ago. Honestly, it makes sense for me. Evan Shapiro: It does make a lot of sense for them. Marion Ranchet: Yeah. I would love okay, love maybe is a big Evan Shapiro: It doesn't make that much sense for Paramount, frankly. It makes a lot more sense for Netflix. Marion Ranchet: Yeah. I think, yeah, I think Netflix would do great with that deep library Evan Shapiro: Daily programming. Marion Ranchet: Yeah, we [00:06:00] spoke about the value of adding some of those HBO max subscribers, although we don't know how many are actually subscribed to both Netflix and HBO. I quite like the pair and I think from a mindset perspective for those people who have stayed at that company for so many years, perhaps one of the few companies that look a lot like them. Very pay TV, edgy, moving, fast, et cetera. So I'd love to see that happen. Question Mark Studios, Netflix and theatrical. Evan Shapiro: Yeah. But Netflix doesn't really I know this is gonna sound weird, but Netflix doesn't really have a studio. Do you know what I mean? Yes, they make content and they, technically speaking, have a studio, but they don't have an output of TV and movies at the scale and level of most of the pay TV operations around the world. They just didn't start that way. That's an advantage for them. They're more nimble. They have less overhead. It's one of the reasons why they've been able to become profitable more quickly than the other streamers. On the flip [00:07:00] side, they don't have a CNN and CNN's a bit of a soccer ball politically right now, but they don't have a daily touchpoint of programming and that's something they're missing. It's why they did the TF1 deal. Marion Ranchet: Yeah. Evan Shapiro: In France. And I think they'll do other deals like that, but they have denied that they've, they're making an offer, that they're considering making an offer. They don't typically buy stuff, certainly not stuff of this scale. And the fact that they too have about $15 billion in debt makes me think that this perhaps at a 20 billion, 25 billion, $30 billion valuation is too big a pill for them to swallow. So then I go to some of the other people I think should be likely. And you would imagine, given the state of their television enterprises, would be likely. Apple being number one. So Apple just announced today a deal with Formula One. And they doubled the price of the license fee for Formula One from what [00:08:00] ESPN was paying. And I understand why they're doing that, but if one of the things that they most need is a lot more programming, which I think you and I both agree, they do. This answers so many problems for them. Then the subscriber issue that there's a hundred million subscribers globally that answers that for them. It takes care of the studio issue. It takes care of that for them. So I, and they have cash on hand. They have $55 billion cash on hand. They have a lot of debt too, but cash is not their problem right now. Right now, programming is their problem and their iPhone is hitting a wall in China and around the rest of the world, it's flattening. It's not a product that's gonna be able to sustain them for the next 25 years. Services has been the one area that has been growing for them over the last number of years, and it has hit a wall. It is starting to stop. Marion Ranchet: It's slowing. Yeah. Evan Shapiro: So I think this is the perfect answer for them. I would say the same thing for Amazon. Amazon has many [00:09:00] issues in their programming area. Their viewership is not, considering how much they've spent on programming, their viewership is not where it needs to be, which is why they just hired a brand new head of programming and content there. Freelander from Netflix or ex of Netflix. And so I just feel like this could be an answer for them as well. I just don't know why it's not a big purchase in the grand scheme of things for an Apple or an Amazon, and I just don't know why they don't get in the game. Marion Ranchet: So Apple number one, quite like it. I have to say, when I spoke about that DNA fit between HBO and Netflix, I actually see that happening as well with the Apple. And I have to say that despite the fact that you're saying that they have a programming issue, the programming is in the quantity, not the quality. If I look at all the shows that have lost most these last few years, it's coming from them. Evan Shapiro: A hundred percent. Marion Ranchet: But to your point, there's not enough to [00:10:00] keep people in. And I'll be honest with you I had one for a while and now I'm relying on the fact that Canal Plus actually super bundle Paramount and Apple. So all of their shows I'm watching as part of the Canal Plus bundle essentially. So I do like that and I don't understand the F1 deal not to that scale. I think it really felt like we've done this movie with F1. It's kicking ass, et cetera. Maybe there's gonna be a number two. Evan Shapiro: Yeah, I just feel like Eddy Cue likes Formula One. Marion Ranchet: So that, that I get. But when you look at the viewership numbers and the appeal of the sports, you had a bit of a, there was a, a wave these last. It was hype, but it's nowhere near any other Evan Shapiro: No, it doesn't get that kind of yeah. Not near. Marion Ranchet: Nascar, Nascar would make more sense for the US than F1 does, F1 would make Evan Shapiro: And the NCAA, and the NCAA basketball tournament. Yeah. And that completes their baseball [00:11:00] portfolio. It is a really, I just, I don't know why they don't get into it. I imagine that as this drags on and it will some other people will appear from the woodwork, but I don't know. I don't know. And what's, what frightens me is that the same or if no one else comes out to compete against Paramount Marion Ranchet: Yeah. Evan Shapiro: And Paramount ups their bid. The same organization that controls Paramount and CBS and CBS News who just made some interesting moves in the last two weeks with their management. We'll also control TikTok. Marion Ranchet: Yeah. It's, Evan Shapiro: And then could also control CNN. And so you have a real monolith of voice compressed into one family. Into one family, the Ellisons Daddy Ellison and Nepo Baby Ellison, and they clearly have politics on their mind when [00:12:00] they make their business decisions and it's just. It's worrisome for me as an American, as a lover of democracy, as a lover of freedom of the press, it concerns me. Marion Ranchet: Yeah. Again, we spoke to that. It's one less place where you can go sell your content. So for the creative industry, it is terrible. It is terrible. Especially if there's one way of doing content moving forward. And to your point, it's becoming very a monolith. But there's also the question of the integration, right? So they're just about to start the integration of Paramount, like that's gonna be a bloodbath, they have to do that. So they're gonna do that through next year. And then do that again with people from Warner Bros. So I don't know how many people from WBD are still there from pre all of those sales. Who has been able to survive? Evan Shapiro: There are a few, yeah. They're a lifer. Yeah. And that, I think that's part of the issue in the industry is when you see Warner Media being kicked [00:13:00] around and integrated and then reintegrated it and then reintegrated, and then you see the, remember it was Viacom and CBS and then it, they were apart, and then they were together, and now there's a new integration. And then separation at NBCUniversal and Versant, and then the separation of Warner Brothers and Discovery Nets, or an integration like that takes up a lot of bandwidth. It takes up a lot of energy. It eats up a lot of money. And it really disturbs the equilibrium of the ecosystem. It, it does. It's one of the reasons why media feels like it can't get ahead of itself. It can't, it takes two steps forward. It falls three steps back, and these M&As pushed by Wall Street and the Banker Industrial Complex are a major reason for that. It's a problem. Marion Ranchet: No, a hundred percent. It's, they're losing time when they really can't afford to lose time because we've seen right, that shift, whether that's about around linear, [00:14:00] around YouTube and social at large, how Netflix has won that specific SVOD, premium SVOD battle. So no agree with you. Could it be that it's gonna be so how about Apollo? How about private equity? Who wanted to have battle? Evan Shapiro: Yeah. It's a great question. That's a great question. I think Apollo, they could sneak out and jump into this game very easily 'cause they're making some interesting moves. I also think you could see them doing a rollup of Warner and Versant. And finding efficiencies there. So yeah, I think Apollo could really come out of the, out of the woodwork and be a major player in the Versant conversation, in the Warner Brothers Discovery conversation. And, who knows, like maybe they team with Paramount or maybe they team with Apple or Netflix watch that space. I think that's a very good call. Marion Ranchet: So I'm reading your things right? I'm reading what you write on LinkedIn. I love how you actually posted about this upcoming episode to see how people felt about that topic. And so [00:15:00] someone brought, yeah, one of our listeners actually brought up PIF, Saudi money. Evan Shapiro: Yes, the Public Investment Fund, which is one of the most Orwellian named things ever because the public of Saudi Arabia have nothing to do with that fund. It's just the princes. Should be called the Prince's Investment Fund, and they just were part of the largest leveraged buyout in history. $55 billion, the purchase with Silver Lake and a couple of other partners of EA. Marion Ranchet: Oh yeah. Evan Shapiro: Electronic Arts, which is one of the larger gaming publishers, they're making moves and they are investing in a number of different media properties all across the planet. So you could see them getting involved. One wonders. Marion Ranchet: Yeah. Would that be approved? Evan Shapiro: Yeah, it is a good question. It is a good question. In normal times, when humans run the government, probably not. Probably the, a Saudi owned Investment Fund would not be able to [00:16:00] purchase CNN. Marion Ranchet: Yeah. Evan Shapiro: But in this environment, with this motherfucker in the White House and his collection of kleptocrats in the Justice Department and in the FCC, you could see the Saudis who are deep in business with the Trump family getting approved to make that purchase. And then they, you could see the Saudi Arabian government owning HBO. So yeah that, that could happen. Marion Ranchet: Oh, wow. Evan Shapiro: Scary Marion Ranchet: Black mirror, very black mirror scenario. But let's, Evan Shapiro: that is, it's, we are living in the Black Mirror. Marion Ranchet: This is very much that. Three more years of that. Thank you. Thank you so much. Evan Shapiro: So what's your, so let's take it to your side of the Atlantic. 'Cause unlike usually in socialist societies we are seeing a lot of capitalistic moves and mergers and acquisitions happening on your side of the Atlantic. Marion Ranchet: Yeah, we still like money just like you do I guess. Evan Shapiro: You do you, yeah. You invented it. Marion Ranchet: We're a bit quieter in our [00:17:00] ways. Let's put it like that. But of course I have to mention MFE, which belongs to Nepo baby. Former Berlusconi recently passed away, but so his son. They've been pushing for years the European agenda, and so they have, they are from Italy. They control Mediaset there. They made moves in Spain and they recently bought they took over ProSiebenSat.1, which is a commercial broadcaster in Germany. It's the competitor of RTL. Evan Shapiro: So they, so this is, this is confusing for Americans. Marion Ranchet: Okay. Tell me why. How so? Evan Shapiro: So one of the lar the largest commercial media entity in Italy bought one of the largest commercial media entities in Germany. They also own something in France? Marion Ranchet: No, in Spain. Evan Shapiro: Spain, sorry. Marion Ranchet: And then making moves to Portugal. It's said that they're making moves to acquire or, get control of Impresa, which is a Portuguese media group. And so their [00:18:00] play, MFE means Media for Europe. It's in the name they wanna go, they wanna grow beyond Italy. Slowly but surely they've been growing their influence in Spain, Germany, and so potentially Portugal. And so the question is, what happens next? Is it France? M6 from RTL was historically up for sale. A few years ago they were supposed to merge with TF1. It didn't happen. Evan Shapiro: Why didn't, Why not? Marion Ranchet: So at the time it was a question of the competition authorities thought that it would be bringing, Evan Shapiro: Anti-competitive? Marion Ranchet: Yeah, it was anti-competitive. But I think it's because they were looking in silos and they were looking only at commercial TV broadcasting. But if you look more widely as what happens on digital advertising, it's a different story. So I think perhaps the same thing, the same merger could happen in the next few years now, but it, it didn't happen. But it doesn't change the fact that RTL wants to sell. They've sold, they've sold the Netherlands. It's done it's done and dusted. Evan Shapiro: Why are they in a [00:19:00] selling mode? Why is RTL in a selling mode? Marion Ranchet: They are keen to focus. It's part of Bertelsmann. And they are keen to they're keen to focus on the German markets. Evan Shapiro: And so they're going the opposite direction. Marion Ranchet: Exactly. Evan Shapiro: They're diversifying to focus more on the German market. Marion Ranchet: Exactly. Evan Shapiro: Which, by the way, outside of the UK and the us, the largest television market on the planet, I believe, or at least lucrative. Marion Ranchet: I think it's way of saying, perhaps you can be strong enough in a given market without having to be a Pan Europe. So it's completely opposite to what MFE wants to do. But M6 can't be sold for another three years. The reason being that in 2023, their TV license was renewed and so it blocks sales for five years. Evan Shapiro: The government blocks. Marion Ranchet: Yeah, exactly. So it's essentially MFE could go after M6, but only, in a three years time. But, time flies. And then there's the question of ITV. It's been said that it's up for sale. We haven't heard anything. Have you heard anything recently? Evan Shapiro: No, I have not. I've [00:20:00] not heard any rumors or any, anybody even kicking the tires. Marion Ranchet: So I think MFE is very much, there's still something to be done with commercial TV in Europe. We'll be stronger if we operate as a European, pan-European company rather than Evan Shapiro: That is your thesis, right? That is your main thesis. The only way the European. Marion Ranchet: Does that work? Is that enough? Evan Shapiro: You believe that too, right? Marion Ranchet: Yeah. I have to say that when I see, we talk a lot about American companies. Those are global players. And so as much as I love Europe, it's a piecemeal right, of media businesses. And how do you compete when everyone else in front of you, YouTube, Netflix, and others are really, are very much global, right? So I believe in the hypothesis. I don't know if that's gonna pan out. I don't know if that's gonna be enough. My assumption would be that it's not enough to put, and this is the point about Versant and Warner Bros, it's not enough to put a lot of, commercial legacy together, and all of a sudden [00:21:00] everything is fine and dandy. There's things that these guys will need to do to steal, make sure that they attract well, they keep attracted, they keep attracting all sorts of audiences that they make sure that from an ad perspective, they attract beyond the same, same old advertisers and that they go digital and et cetera. All of those things. But I like that hypothesis. I dunno if that's gonna work out so well. Evan Shapiro: There's two things though. Interesting. Yeah. Two things I would say. The first is it, I think. We can, even though both of us are, you're an actual socialist. I'm a wannabe socialist, but both of us I think agree that the regulations that have been prohibiting some of these combinations, especially these regional ones in in Europe, but also here in the United States, the regulation that would stop TEGNA from being bought by Nexstar because of limitation of voice. Or the rule that has prohibited Comcast from being able to buy charter or charter from being able to buy Comcast. These seem kind of silly and almost antiquated and [00:22:00] adorable compared to Google and Meta and Amazon and Apple and Netflix. The only way these companies can hope to compete is by combining forces and gaining scale that way, yeah. Marion Ranchet: What else can be done? Evan Shapiro: So I think it's time, but a regulator. Yeah, the regulators have to grow up and get behind this stuff. On the flip side Marion Ranchet: Especially you guys on your side of the ocean, keep making all of those deals happen, right? So it feels like right now it's very friendly to that type of deals. And so all of those companies are growing bigger and bigger, and yes, it has an impact on how things work in your market, but it does on ours too, right? With guidance by Paramount, they're cutting people here as well. They're closing down channels. So they've announced MTV gone, Game One gone. The stuff that goes with it is gone as well. And anything that you do is impacting us as well. And so those local markets are changing because of the US and what can be done to [00:23:00] mitigate that, and none of those companies are gonna become YouTube or Netflix tomorrow, right? So they have to play their strength and their strengths is being locally relevant from a production standpoint, still holding a lot of ad dollars, still holding a lot of audiences while finding a way to, again, fight against that decline in linear, the fact that that audience is aging, et cetera, et cetera. So I, I don't see anything else they could do honestly than trying to combine, but to your point, RTL feels completely different. Evan Shapiro: They're going completely other way. They're gonna other way, other, the other part I would point, I would make is, so these companies, they make the argument that we have to get together to gain scale, to compete with these major global big tech companies, mostly American companies. Then the first thing they do is they cut to the bone. Marion Ranchet: Yeah. Evan Shapiro: Do you know what I mean? Like the, and I understand efficiencies and that's one of the reasons why you do this, but if you take, [00:24:00] let's say, Warner Brothers Discovery and Paramount, and you add 'em together, and the only strategy you have is to cut and not enjoy the breadth of content and audience that the two companies bring to the table as a non duplicated audience, then you've defeated the whole purpose ofombining them in the first place. And that's, that, that's what confounds me about a lot of these moves is, Hey, we're gonna put the, put these companies together, but the vision is then we cut cut, cut. Yeah. Marion Ranchet: Yeah. Evan Shapiro: Then you wind up where Warner Brothers Discovery is. That's would be my fear of what's gonna happen with ProSieben and MFE and future purchases. Just to quick go back in time, Pierre Berlusconi, who now is the CEO of Media for Europe, his dad was Silvio Berlusconi, who was the original Trump. Marion Ranchet: Yep. Evan Shapiro: The original businessman, turned politician, media guy. Very much a model for the current president of the United States. Do you get a sense? I have no sense of Pier. I think it's [00:25:00] Pier Berlusconi. Do you get a sense of whether he's as much of a garbage pale as his dad was, or Marion Ranchet: No. I don't know. But then there's the question of course. And you've mentioned that for the US as well, right? So yes, I wanna have a stronger Europe, but I don't wanna have a uniform Europe, so I don't wanna have less diversity on screen, on topics covered just because, there's this one guy in his company buying his way into Spain, France, Germany, et cetera. Yeah it's tricky. Going back to your point about cutting, I get it. You come in and aside from looking for efficiencies, if you are buying two companies who have very similar businesses, it is likely that there's a lot of doubles, people doing the exact same thing. It does make sense to take a minute and be like, okay, how can we be more efficient? The only thing is, once you've done that, what is the strategy? I think that's, we're never gonna have those companies stop making cuts when they do that first exercise. [00:26:00] But the thing that we can change not a we, but I'm sure you think Evan Shapiro: The Royal We? Marion Ranchet: Yeah. Yeah. Anyone or that we wanna change is making sure that they have a strategy moving forward. And it's true that what they're missing is very often is that they tend to buy then cut and they cut amazing people who made this thing so great instead of maybe taking a minute or two and say, okay, who are the key people here? Who could make that work for me? Who could take this combined thing even more amazing? Instead of necessarily bringing someone from the outside fresh blood, just because you wanna have your guard of people with you. Evan Shapiro: Yeah I think one of the, we've done some Q and A with people around the industry over the last couple of months because we've been traveling so much. And one of the things we ask people is what would they change about the industry if they could? And one of the things that has been most answered is, I wanna leave behind, I wanna eradicate the CFO centric culture of a lot of these companies. The [00:27:00] reason why these companies have CFO centric cultures is because these M&As almost always center on the CFO, not the vision of the strategy. And I, and that's, I think one of the reasons why they've not worked so well is that they're not strategy driven. They're only numbers, dots and spots driven. They're only about cutting, getting efficiency. That's the whole strategy. And that's not building anything, that's buying stuff. And so when you look at Comcast, which was constructed entirely through acquisitions. When you look at Disney, which is mostly through acquisitions over the last 30 years or 40 years, when you look at Paramount, which was made again in large part, through acquiring and combining a bunch of companies, the strategy fell away. Marion Ranchet: Yeah. Evan Shapiro: It just became about the spreadsheets and the PowerPoint presentations and the firings. And that's my fear of the period we're heading into. That said, let's talk really quickly about two other potential M&A pools that are [00:28:00] coming up. I'm looking at gaming in the United States. So EA just talked about the largest leverage buyout in the history of business, $55 billion. I think that leaves companies like Roblox and Take Two and some of these other smaller gaming companies standing around looking at okay, so now what's happening in the game publishing business? It seems like Xbox is getting out of the console business and focusing only on publishing now that the Activision acquisition is over. You've got Sony, you've got Tencent, you've got Nintendo, but then these independent gaming companies. I just think that EA is basically waving the white flag and saying, we're not gonna be able to make it on our own, so we're gonna basically cash out and let the consoles fight it out. I don't know how much gaming you pay attention to, but I think you're gonna see a decent amount of M&A and combinations happen in the gaming business over the next 12 months. [00:29:00] Marion Ranchet: Yeah, I did not see that deal from the Saudis on EA. I didn't see it coming. I think at the top of the year, we're gonna need to grade our own homework, but in a very impartial way because I think we spoke about that in one of our first episodes. And you had mentioned EA, Take Two, Roblox. Roblox I'm very surprised, no one paid attention yet. Evan Shapiro: They're now worth too much to buy to a certain extent, they're worth almost $80 billion. And they're now worth more than they have been in quite some time. So they're gonna be a harder pill to swallow. But you could see some big companies out there saying to themselves Roblox is ripe for the taking. But certainly Take Two, I think, looks like a very attractive, addition they have Marion Ranchet: How much? Evan Shapiro: mobile gaming. They're at 80, they're at 50 billion, Take Two is at 50 billion right now. Marion Ranchet: I can spend that. Evan Shapiro: But they have Zynga. So they have massive massive mobile gaming, but they also have some of the biggest console games and cloud games of all times. So [00:30:00] I just think if intellectual property is being considered a premium right now, which is what the EA LBO says at least then I would imagine a Take Two and maybe some of these other these other like Epic, which is kind of owned by Tencent, but not really. Some of these others might get in play as well. Marion Ranchet: I do not Take Two enough to, I'm not so much into gaming, but I have to say it's fascinating to see where PIF has put money, sports and gaming. Yeah. So we haven't seen them on other things. Makes me wonder, if they see a value in those other businesses where we're so much talking about. Evan Shapiro: In my mind, if you had to categorize the PIF strategy, other than I won't get into it, Marion Ranchet: Yeah, hold your tongue on this one. Evan Shapiro: Other than carving up journalists? I think, I think that it is intellectual property. That it is Marion Ranchet: IP focused. Evan Shapiro: Investing in solid, timeless intellectual property that isn't dependent on a season or [00:31:00] a series or a hit, but just trods along. Sports teams, Grand Theft, Madden, FIFA whether it's not FIFA anymore but the football game that EA has, Call of Duty, all of their titles, they're gonna keep trundling along. So I think that's, it seems to me, staying away from like film slates and veering a little bit more towards long-term, repetitive, accrued intellectual property. Marion Ranchet: Which I think is smart. Too bad others don't really think the same way. And we have, another kind of money going after places like that. Okay, cool. I have one more, but it's not one that is, that we're saying is it gonna happen? It's happened which was, a few weeks ago Canal+ and MultiChoice. And I think I chose this one because it's interesting in a number of ways. Canal+, traditional pay TV, MVPD business who just split Evan Shapiro: Who just split out from their corporate entity. Marion Ranchet: Exactly. A French company showing [00:32:00] that French companies are able to go, maybe not global, but I have to say with this acquisition, it's global. I think they're in 70 markets. Evan Shapiro: Including South Africa And other. Marion Ranchet: Exactly. And they have both, you have a studio, you have TV channels. They've invested in, you just see it's it's a movie exhibitor, so just like a MC theaters for you guys on the French market, et cetera. Very much the type of companies that I love in the sense that they started on the French market doing this one thing. They've diversified and now they have a lot of bets across the world. They've invested in Via and the Nordics, they've invested in View in Asia. And so MultiChoice, they were shareholder for many years. And both Canal+ and MultiChoice have been competitors historically. And now Canal+ was at that percentage by law they had to take over. So they took over. Not sure they really wanted to by that time, let me explain why. I think last year, I think MultiChoice lost over 2 [00:33:00] million subscribers. So MultiChoice is pay TV, but they're feeling the economic pressure and they have a lot of churn. A lot of churn. So a lot of it is bleeding subscribers. Evan Shapiro: It's exclusively traditional pay TV? Marion Ranchet: Yeah. And they have Showmax, which is the streaming vehicle and actually belongs to both MultiChoice and NBC. See how everything is so intertwined. Evan Shapiro: All so confusing. Such a mess we make. But, Marion Ranchet: But that's an interesting one. And here we're, you're gonna have this same thing with the integration. How are you gonna have this myriad of companies from Canal+ find a way to integrate a myriad of companies from MultiChoice across so many countries. Cannal+ has been in Africa for years. I believe that MultiChoice had 40% market share pay TV when Cannal was around 18 or something. It is making a very big PTV player in the region, but they're really gonna have to rethink their strategy, and that's where Evan Shapiro: Everything. They're [00:34:00] gonna have to rethink everything. It's, Marion Ranchet: But Canal+ has done that. Evan Shapiro: Just like PTV here, it's dying. It's not going in the right direction. Marion Ranchet: Yeah. Yeah. It's absolutely, they have to rethink everything. But Canal+ has done that. They've operated that change. The only thing is that maybe there's a glass ceiling in Europe that you don't have in Africa. That is still, I wouldn't say virgin territory, but there's a lot of global players who don't wanna be there, and Canal has been there for 30 years. So they have that advantage vis-a-vis others. Actually, Netflix did a deal with Canal in that region, so they could really very much, win, so to say that super aggregator play with the right streaming for strategy and while keeping the pay TV business. Evan Shapiro: And Canal has done a nice job of transforming. They have a very progressive digital strategy. They are in streaming. They've done very well. And by the way you call this at the beginning of the year that France was gonna be the market to look at for a lot of major innovations in TV. If you look at this deal, you look at the France one [00:35:00] television I'm sorry, the TF1 Netflix deal. The France Television Amazon deal. There's just a lot of things happening in that market that I believe are the tip of the spear of what's gonna happen in media and specifically in television around the rest of the world. So you were right about that and it's impressive Canal+ how they've done. So maybe they can it, let's put it this way, it feels if anybody can take pay TV and transform it, it might be Canal+ in these markets. And that's a marriage of perfect circumstances, meaning they're not the US they're not the UK. They're on a continent where, it's a very young, this is the youngest population on the planet. 50% of the population in Africa under 20 and some of the fastest growing incomes in economies in the world are all in Africa. Marion Ranchet: Yeah. Evan Shapiro: Now they were starting from a low benchmark, but here that, here they are. So I [00:36:00] think they're, let's put this way, they had to do a lot of this. And it's gonna be interesting to see how they managed to manage transformation there. Marion Ranchet: Yeah. Very interesting. Evan Shapiro: We went all over the globe today, so that's our mergers and acquisitions conversation. We're at the question of the week. I'll ask you first if that's okay. Marion Ranchet: I dunno. Evan Shapiro: Or do you wanna ask me first? Marion Ranchet: No, go ahead. Go ahead. Evan Shapiro: So what's the one merger or acquisition that you think no one's talking about that should happen or everyone should be talking about? Marion Ranchet: Okay, so you mentioned it before the pod and now there's nothing else I can think of, and that is Netflix buying Banijay. So I don't know where that's coming from, but when I think of it, again, and another amazing French company, but with a hundred plus labels across the world, one of the deepest library when it comes to unscripted content, whether you're talking, game shows or doc, et cetera. And then, to our [00:37:00] point at the top that Netflix could use a library without the theatrical element of it. Will I put these movies on? It's only TV, mostly TV. I'm sure they do a few movies here and there. This could actually make sense. Evan Shapiro: Yeah, it's a rumor I heard. It's a rumor I heard on the last night. Marion Ranchet: At Brown Sugar? That's not a good one. Evan Shapiro: Yeah, at Brown Sugar. Yeah. Marion Ranchet: That's not a good source. Evan Shapiro: Which for those who don't go to MIPCOM, is basically a pub crawl. And but I was not drinking, so I should be, that should be noted. I wasn't sober, but I had stopped drinking many hours before. And so yeah, no, this was a credible rumor that I heard that it was more than just a rumor that talks had been had. I was not able to confirm it for many people. I did hear other people heard the same rumor, but from the same person. So it doesn't really count. Marion Ranchet: No, it doesn't count. And that person was drunk. Not counting, Evan Shapiro: Right? Yeah. Okay. But they're always drunk. But the, I think the key here is, yeah, it makes, it actually makes a lot of sense for both [00:38:00] companies. Banijay, Marion Ranchet: I dunno if Banijay needs Netflix. Evan Shapiro: I think, look, Marion Ranchet: Netflix I see the Evan Shapiro: I think anybody who's selling content right now would love to have a guaranteed buyer. And so the idea that you would fold this studio inside and change up the whole operation to make it, this is a I think a $4 billion company Banijay. And Netflix is a half a trillion dollar company. Marion Ranchet: Yeah. Evan Shapiro: So you could see how it could digest all of that and still make all of the content that Banijay is making, unwind the deals that they're doing and turn it into a vertically integrated content platform that, really own. Think about the shows that they make, right? Marion Ranchet: Yeah. Evan Shapiro: So I, I'm not saying this would happen. I can't imagine, actually it could be completed just by dint of so many different hoops to jump through, but I do think whether it's a Banijay or a Lionsgate. Or someone of [00:39:00] that ilk. I do think you're gonna start to see more and more production companies or studios like Banijay, Lionsgate, Sister in the UK start to become the target of these platforms who need reliable supplies of content. High quality, reliable supplies of content. And they can't afford to be paying market prices for them at a ad nauseum for the continued future. So I think that's a segment to look at. Marion Ranchet: So consolidation at the production level is your thing. This is the next thing. 'cause we've been talking a lot about Evan Shapiro: I think less consolidation of production like studios, buying studios and more. Platforms buying studios? Yes. Marion Ranchet: Okay. That makes sense 'cause, this thing of saying, oh, you need to build everything yourself. If you wanna be agile and go fast, it does make sense to tap into someone else's expertise at producing so Banijay and others. But it's [00:40:00] a good example of someone who's able to produce content across the globe. So at scale, both local et cetera, formats that are traveling easily. Netflix would never be able to do that on. Evan Shapiro: No, and to be blunt that the way that we sell and buy television is still really antiquated. Marion Ranchet: Yeah. Evan Shapiro: So much of it could be streamlined. And it does feel like the platforms are the arbitrage of content production and acquisition and all this other kind of stuff, is needs to be updated. The flip side of that is when you look at these platforms, take Apple aside, library content winds up being some of the most watched content on these platforms. Marion Ranchet: Yeah. Evan Shapiro: These companies have a lot of library. Lionsgate has a massive library, Banijay has a massive library. So Marion Ranchet: We come for new stuff and we stay for the library, right? Evan Shapiro: Yeah exactly. I come for the Joe, I stick. Marion Ranchet: Yeah. And you stick around because there's other things that you wanna devour. But yeah. Evan Shapiro: This was [00:41:00] a great conversation. Thanks so much. I'm headed to Europe and you're headed to the states. Marion Ranchet: Absolutely. I'm loving it. Evan Shapiro: We're gonna cross the air. Marion Ranchet: We're not gonna see each other, but it's okay. Evan Shapiro: And and we'll see each other next week on this space. Thank you so much for listening or watching. That is Marion Ranchet. Marion Ranchet: and that is Evan Shapiro. Evan Shapiro: This has been The Media Odyssey. We'll see you next week.