--:-- [Theme music fades out]
--:-- Host (Telis Demos): Welcome back to another episode of WSJ's Take on the Week. I'm Telis Demos. And I'm Miriam Gottfried.
--:-- Miriam Gottfried: Well, we've got a big episode this week. Our main conversation is about, well, our own business, the media. A lot going on. A lot of drama.
--:-- Telis Demos: But first, we've got a few hot topics to cover. A lot happening in the news this week and a lot coming up. We've got Donald Trump versus the Supreme Court. We've got Mayor Mamdani. And we've got, as always, especially when you're here, Miriam, private credit. One of my favorite topics.
--:-- Miriam Gottfried: More to talk about there.
--:-- Telis Demos: All right. Supreme Court. Well, of course, the president, well, the president's lawyers were in court to defend the president's use of a certain tariff power, the IEEPA or EPA, which I'm sure all of you know. IEPA, which all of you know, of course, stands for the International Emergency Economic Powers Act, which is one of the ways that he used to create the reciprocal tariffs. Basically, by declaring that we were in a state of emergency, and that was what gave him the power under this law to enact these tariffs, which would typically be the role of Congress.
--:-- Miriam Gottfried: And so now it's all the way to the Supreme Court. And it sounded like it didn't go great for the president this past week.
--:-- Telis Demos: The way that our Supreme Court reporters here at the Journal described it was that they seemed skeptical that the president is able to use the powers to act as aggressively as he did with tariffs.
--:-- Miriam Gottfried: Yeah, a number of even Trump-appointed justices seemed skeptical of this argument, of the government's argument. So that means it maybe isn't looking good for Trump in this case.
--:-- Telis Demos: And, you know, the question is, what does that mean? You know, what our reporters have said is that typically when the government is found to have illegally taken money from somebody, the court orders to give it back.
--:-- Miriam Gottfried: Normally, of course, we don't pay too much attention to the intricacies of trade law. But in this case, there's the fiscal question of whether or not the U.S. government would actually have to be ordered to give back the billions and billions of dollars that it collected in tariffs.
--:-- Telis Demos: And then there's the question for the stock market of whether companies that had been impacted by tariffs will no longer be impacted. Which has been one of the main narratives this year in the stock market.
--:-- Miriam Gottfried: And the huge, really, really the big story in the stock market this year. But that said, even if President Trump does ultimately lose this case, there are other authorities that President Trump can use to impose tariffs.
--:-- Telis Demos: For example, there's Section 122. I won't get into the super details of it, but that basically will allow tariffs of up to 15 percent for 150 days to address trade imbalances.
--:-- Miriam Gottfried: Which one of our reporters, Gavin Bade, wrote that that would give time to for Trump to devise individualized tariffs for trading partners. under a different provision, Section 301.
--:-- Telis Demos: So basically, tariffs wouldn't go away. They might just come back in some other form.
--:-- Miriam Gottfried: But tell us, you know, what this all boils down to is more uncertainty for corporate America.
--:-- Telis Demos: I mean, if you're a company that's been subject to these tariffs and now they may or may not be going away and there may or may not be another set of tariffs that could be put in their place, you really don't know.
--:-- Miriam Gottfried: And what does that mean for your stock price? And what does that mean for your ability to plan?
--:-- Telis Demos: I think uncertainty is the enemy here if you are a publicly traded company.
--:-- Miriam Gottfried: Yeah, but is it, though, because here we are at or near all-time highs for the stock market, and the companies have been living with this uncertainty for some time, it seems that the market maybe has moved on and that this uncertainty isn't holding people back the way it was.
--:-- Telis Demos: I think the uncertainty is holding people back, but people don't know whether to react positively or negatively to these particular tariffs being removed.
--:-- Miriam Gottfried: Like, let's say, you know, things are leaning toward, you know, Trump losing this case, this argument.
--:-- Telis Demos: What does that mean? We still don't really know because, as you said, there could be another set of tariffs.
--:-- Miriam Gottfried: So should I sell my stocks? Should I buy stocks? Like, I don't really know.
--:-- Telis Demos: And, of course, there's all other layers of uncertainty that are coming in to focus right now, which is what happened in politics elsewhere, which was we had some elections.
--:-- Miriam Gottfried: We had, of course, the New York City mayoral race. Zoran Mamdani won.
--:-- Telis Demos: We had a couple of other closely watched races too. We've got the governor's races in New Jersey and Virginia.
--:-- Miriam Gottfried: Democrats took those races.
--:-- Telis Demos: And we had Proposition 50 in California passed, which means the Democrats are able to redraw some of the congressional maps there and likely pick up some congressional seats in the next time around.
--:-- Miriam Gottfried: So what does it mean for the market if indeed Democrats are kind of succeeding, maybe going to be strong in these midterms?
--:-- Telis Demos: And what is the message that they have for Americans? What's helping them right now?
--:-- Miriam Gottfried: I think the unifying message across all of the candidates who won was affordability.
--:-- Telis Demos: Once again, you know, as our colleagues have written, the economy was front and center as it always is.
--:-- Miriam Gottfried: And, you know, inflation, which has been a big thing that we've talked about on this podcast, was, you know, was a big focus, I think, for these candidates.
--:-- Telis Demos: Daily life is unaffordable. That was something that Mom Donnie drilled home.
--:-- Miriam Gottfried: His, you know, campaign platform was all tied to affordability in the city.
--:-- Telis Demos: And that was a winning argument.
--:-- Miriam Gottfried: And of course, you know, that was part of how President Trump got elected by saying, you know, Biden was responsible for all the inflation and I can get us out of that.
--:-- Telis Demos: But live by the sword, die by the sword. Exactly. Right.
--:-- Miriam Gottfried: They've got to be wary of these inflation and kind of cost.
--:-- Telis Demos: I mean, it just shows that a lot of it isn't really within the control of politicians.
--:-- Miriam Gottfried: Probably.
--:-- Telis Demos: I was watching the market the day after the New York City mayor race and a bunch of banks who are lenders into the New York City rent regulated market.
--:-- Miriam Gottfried: Of course, Mamdani has promised to freeze the rent, meaning that he will not allow rent regulated, rent stabilized apartments, rents to go up.
--:-- Telis Demos: In theory, of course, that's bad for landlords and bad for their lenders.
--:-- Miriam Gottfried: But the stocks of several of these banks were actually up the next day.
--:-- Telis Demos: And the shares of one of the largest apartment developers, one of the largest apartment real estate investment trusts, which again, you know, has rent regulated properties in New York.
--:-- Miriam Gottfried: Their shares were up a little bit too.
--:-- Telis Demos: Some drama in the market that I cover in the past couple of weeks, the alternative asset managers, also known as the private equity and credit firms.
--:-- Miriam Gottfried: When Blackstone reported earnings, even though it beat earnings, its shares fell because people were really worried about the health of the private credit market.
--:-- Telis Demos: And private credit has become a very big business for Blackstone.
--:-- Miriam Gottfried: That narrative seems to have changed throughout the course of the earnings cycle.
--:-- Telis Demos: Over the weeks, as more and more of these lenders started reporting earnings and sort of continued to beat the drum, saying that recent bankruptcies tied to first brands and a subprime lender called Tricolor or Tricolor, however you choose to pronounce it, that these bankruptcies were isolated incidents.
--:-- Miriam Gottfried: They really didn't have to do with the thing that we normally call private credit that their businesses were still healthy there no major crisis going on.
--:-- Telis Demos: And as executive by executive continued to repeat this mantra people seemed to maybe sort of buy it a little bit more.
--:-- Miriam Gottfried: And we saw an improvement in their stock price performance after earnings.
--:-- Telis Demos: By the time Apollo reported, people were kind of cheery about it, although there were other factors in that Apollo report, too.
--:-- Miriam Gottfried: Yeah, although Jamie Dimon scared everybody earlier this cycle when he talked about cockroaches in reference to recent corporate bankruptcies that were scaring everybody about what other sort of disasters could lurk.
--:-- Telis Demos: But, you know, despite that, we haven't seen a wave of increased defaults for any of these markets yet.
--:-- Miriam Gottfried: Now, maybe there's still things bubbling under the surface.
--:-- Telis Demos: But, you know, So at some point, does the greed factor kick in for the market and overcome the fear factor that, OK, maybe there are some cockroaches, but maybe these things won't derail what has ultimately been this huge wave of money coming into the private markets, you know, in search of yield and alternative forms of credit and things like that.
--:-- Miriam Gottfried: The AI boom will continue to fuel all of this.
--:-- Telis Demos: And, you know, OK, so we have to smush a couple of cockroaches and then move on, right?
--:-- Miriam Gottfried: Well, and I think there's also this idea that stocks are at all-time highs.
--:-- Telis Demos: And our colleague Spencer Jacob wrote a very well-read column about how a very important metric, the Shiller P.E. ratio, is indicating that stocks are not going to really give us that much over the next few years in terms of returns.
--:-- Miriam Gottfried: So people are looking for alternatives, and there's an argument to be made that maybe private credit could be one of those alternatives.
--:-- Telis Demos: And that's an argument that Apollo made, too.
--:-- Miriam Gottfried: So I think that's kind of an interesting theory.
--:-- Telis Demos: We'll see if that pans out.
--:-- Miriam Gottfried: Obviously, another thing powering these alternative asset managers will be the improved deal-making environment.
--:-- Telis Demos: We're seeing a lot more M&A, a lot more deals taking place.
--:-- Miriam Gottfried: People predicted that earlier this year. It finally seems to be landing now.
--:-- Telis Demos: That could be good for these managers, too.
--:-- Miriam Gottfried: So that's, I think, something to really watch with them.
--:-- Telis Demos: And speaking of deal-making, that relates to our big conversation today, which is about media consolidation.
--:-- Miriam Gottfried: Specifically the possible deal between Paramount Skydance and Warner Discovery and what else might happen to Warner Discovery if that deal doesn't happen.
--:-- Telis Demos: Well, I'm glad we're doing this because I know even though I work in the media biz, I lose track of who owns what these days.
--:-- Miriam Gottfried: For example, I learned recently when CBS News was in the news itself, who owns them?
--:-- Telis Demos: Which of the firms owns them? Paramount Skydance owns CBS.
--:-- Miriam Gottfried: Okay, but then CNN is owned by?
--:-- Telis Demos: Warner Discovery.
--:-- Miriam Gottfried: Okay, great. So they could, in theory, be part of the same company at some point?
--:-- Telis Demos: I mean, wouldn't that be quite a convergence?
--:-- Miriam Gottfried: Well, that's wild stuff.
--:-- Telis Demos: And joining us remotely for this episode to talk about that are Michael Nathanson, senior analyst from Moffitt Nathanson.
--:-- Miriam Gottfried: And his colleague Robert Fishman, also a senior analyst at Moffitt Nathanson.
--:-- Telis Demos: These guys are both longtime media analysts.
--:-- Miriam Gottfried: They've been following this industry forever.
--:-- Telis Demos: And they say that this is potentially the very last stage in the long history of media consolidation.
--:-- Miriam Gottfried: Yeah, you recorded this interview earlier this week and I've been excited to hear it ever since.
--:-- Telis Demos: So let's get to it.
--:-- Miriam Gottfried: That's coming up in a bit.
--:-- Telis Demos: This episode is sponsored by Morgan Stanley's Thoughts on the Market.
--:-- Miriam Gottfried: Today's financial markets move fast.
--:-- Telis Demos: Morgan Stanley moves faster with their daily podcast, Thoughts on the Market.
--:-- Miriam Gottfried: Thoughts on the Market covers daily trends across the global investment landscape with actionable insights from Morgan Stanley's leading economists and strategists.
--:-- Telis Demos: And with most episodes under five minutes long, staying informed has never been easier.
--:-- Miriam Gottfried: Listen and subscribe to Thoughts on the Market wherever you get your podcasts.
--:-- Telis Demos: We are here with our guests, Michael Nathanson, Senior Research Analyst and founder of Moffitt Nathanson.
--:-- Miriam Gottfried: And Robert Fishman, Senior Research Analyst Moffitt Nathanson.
--:-- Telis Demos: Good to have you guys.
--:-- Miriam Gottfried: Good to be here. Thanks for having us.
--:-- Telis Demos: So the biggest story in media right now is what's going on at Paramount Skydance.
--:-- Miriam Gottfried: Fresh off the merger that created this company, it's now trying to buy Warner Discovery, which is itself a product of a 2022 merger.
--:-- Telis Demos: And a deal to combine these two companies would create a media behemoth.
--:-- Robert Fishman: I think the timing of when they're trying to do this signals to me, at least, that this was the plan all along.
--:-- Telis Demos: And the reason that they, I think, are pushing forward here is because they need to reach scale and scale in streaming specifically.
--:-- Miriam Gottfried: Most of the media companies are trying to compete with Netflix now, who's already won in terms of the scale war and in terms of profitability.
--:-- Telis Demos: So when you think about global scale, what I think Warner Brothers Discovery is looking to solve for Paramount is to achieve, get them closer to achieve that global scale ambition.
--:-- Robert Fishman: And that kind of gets to the next question I wanted to ask you, which is the media business is facing a lot of stress right now from a variety of factors.
--:-- Telis Demos: We have, you know, the changing economics of streaming, the ongoing decline of the cable ecosystem and the rise of short form video sites like TikTok.
--:-- Miriam Gottfried: What can consolidation and scale, as you said, do to change that?
--:-- Robert Fishman: So in terms of the global scale, really what these media companies need to achieve is having that global subscriber base that allows you to spread all of this investment costs over a much larger base.
--:-- Telis Demos: And so what they need from the scale, both in the US, if we want to start there, is the ability to better monetize the existing subscribers, both through subscription pricing, but also probably more importantly, going forward, advertising.
--:-- Miriam Gottfried: And as these ad dollars are shifting from the traditional linear ecosystem that you alluded to and going towards connected TV and different ways that the viewers are engaging with content today, that allows you to compete better for those ad dollars going forward, especially on a global basis when thinking about how these companies are looking to grow over the next 5, 10 years.
--:-- Telis Demos: Miriam, what's been the biggest change the past decade has been the advance of these really large tech companies who have enormous balance sheets, global reach.
--:-- Miriam Gottfried: So if you think about the people that are now competing with our coverage of media, it's the likes of Amazon, Amazon Prime, of course, YouTube and Google.
--:-- Telis Demos: Netflix is a massive company.
--:-- Miriam Gottfried: If you're a traditional media company, you have to get scale, scale of balance sheets, scale of cash flow, scale of cost cutting.
--:-- Telis Demos: It is a different playing field than what Robert and I encountered when we started our careers 20 years ago.
--:-- Miriam Gottfried: Things have flipped on its head.
--:-- Telis Demos: And in the days where we used to say international businesses and media were Australia, Canada, and the UK because we spoke English, that's no longer true.
--:-- Miriam Gottfried: And I think our companies, ours being the media companies that we started covering way back when, they've been slow to wake up to the fact that you need global scale in all markets of the world, at all price points.
--:-- Telis Demos: At all content types in order to compete longer term.
--:-- Robert Fishman: I think it's an incredibly high hurdle for them.
--:-- Telis Demos: I think, as Robert and I talk about it all the time, the media company's biggest strengths, you say right now would be sports contracts that they tied up for five to seven years.
--:-- Miriam Gottfried: And the library they have a great library They great IP
--:-- Telis Demos: And I think Robert and I would agree that they starting to chip away the tech companies at the sports rights
--:-- Robert Fishman: You're seeing that more and more.
--:-- Telis Demos: The harder part, Robert, has been they've not able to, the tech companies have not been able to build, even Netflix, this kind of recurring great library content.
--:-- Miriam Gottfried: Yeah, they have Stranger Things, but that's a one-off.
--:-- Telis Demos: They don't have the IP that Disney or Warner's, Universal, Paramount would have.
--:-- Robert Fishman: So it's still really an IP game.
--:-- Telis Demos: For the media companies.
--:-- Miriam Gottfried: Yeah, I was going to go there, too.
--:-- Telis Demos: So in terms of sports, I mean, clearly the tech companies that Michael referenced are all looking at sports as this last critical IP to the traditional media ecosystem.
--:-- Robert Fishman: And if they can disrupt that, that's like the next leg in terms of where traditional media has been holding on to as their last real asset to drive incremental advertising and to hold on to affiliate fee dollars as well.
--:-- Telis Demos: But if they lose control exclusively over the sports rights going forward, that's going to have another leg down in terms of the disruption that it's had on the traditional ecosystem.
--:-- Miriam Gottfried: So if you can bring the critical IP and franchises to the table and monetize that in both a streaming and non-streaming world, that's kind of like the ultimate solution here to compete.
--:-- Telis Demos: And, Miriam, to your first question, I think the market was telling us clearly that our Paramount Global audit zone and Warner Bros. Discovery audit zone, with the balance sheets that they had and their assets, were not going to be long-term winners in this business.
--:-- Robert Fishman: So in a way, it's almost like a race against time for Paramount's guidance to bulk up in some way to get there, it seems like.
--:-- Telis Demos: And Robert, given that, you know, we have Paramount Skydance reporting earnings coming up.
--:-- Miriam Gottfried: And given everything that's going on, what will investors be focused on in that report?
--:-- Telis Demos: I mean, are they just looking at the big picture or do they care about, you know, the actual numbers for the quarter?
--:-- Robert Fishman: Well, I think it's clear that the numbers for 3Q specifically are much less important in terms of the overall picture here, especially when thinking about the future of Paramount and what we're going to learn.
--:-- Telis Demos: In terms of the plans, that this is really the first unveiling to Wall Street in terms of where they want to go with this.
--:-- Miriam Gottfried: And it will be interesting to hear how much we hear about consolidation as part of that plan.
--:-- Telis Demos: But even without consolidation, clearly, Ellison and the whole Skydance team is thinking about the long term here.
--:-- Robert Fishman: You've seen that through a lot of their early investments and they might be head scratching and try to have difficulty in terms of making the math work initially, thinking about the UFC deal as one example.
--:-- Telis Demos: But if they're thinking about this from a completely different perspective about the next, call it five, 10 years and not the next couple of years, I think that's what investors are probably looking for.
--:-- Miriam Gottfried: How can you get returns on some of these initial investments?
--:-- Telis Demos: Can you tell us a little bit more about the UFC deal for those who weren't following it?
--:-- Robert Fishman: Sure. So ESPN had the rights to the UFC deal.
--:-- Telis Demos: And basically, TKO, who owns the UFC, took that to market and found a plus one bidder that was willing to pay, in our perspective, much higher than what the market suggested.
--:-- Miriam Gottfried: And so what it did was really signal to the market that Paramount is going to approach these investments in a very different way.
--:-- Telis Demos: Again, that might mean losing money initially, but I'm sure from Paramount's perspective, if they can drive incremental subs on a combined basis, that can help offset the upfront losses.
--:-- Robert Fishman: So making a splash here at the beginning, we'll see how that works out, I guess.
--:-- Telis Demos: I want to take a step back and zoom out a little bit.
--:-- Miriam Gottfried: And I want to turn to you, Michael, because you've covered media for a really long time and you have been following the ins and outs of these companies for a long time.
--:-- Telis Demos: And they're really part of a long history of, you know, big media companies getting together, breaking apart again.
--:-- Miriam Gottfried: And, you know, if you look back at history, have media deals, media tie-ups yielded positive, you know, results for shareholders?
--:-- Telis Demos: Have they been a good thing for shareholders?
--:-- Michael Nathanson: Yeah, thanks, Miriam. Thanks for saying that.
--:-- Telis Demos: You know, before I worked on Wall Street, I worked at a company called Time Warner.
--:-- Miriam Gottfried: And Time Warner was kind of poster child for big media tie-ups.
--:-- Telis Demos: If you remember in that time, these two companies merged, then they bought Turner and AOL.
--:-- Michael Nathanson: And that's always going to be kind of my exhibit one of why these tie-ups may look great on paper and strategically make sense.
--:-- Telis Demos: They just don't work.
--:-- Michael Nathanson: So I don't love seeing these massive tie-ups.
--:-- Telis Demos: I think what we've learned over the years, Robert and I, is that the small tuck-in deals, like buying a Pixar, buying a Tubi, which is what Fox did, like being strategic and investing in growing categories with entrepreneurial spirits, it's a better use of capital because trying to find scale through M&A.
--:-- Miriam Gottfried: You end up paying a big premium for businesses that really, at the end of the day, don't live up to the valuations that were paid.
--:-- Telis Demos: Robert, what do you think about that?
--:-- Robert Fishman: Well, from Warner Discovery investors, I think you're clearly rooting for these mergers.
--:-- Telis Demos: But from the Paramount side, as Michael was saying that, I was questioning to myself, is this time really going to be different because streaming is this X factor?
--:-- Miriam Gottfried: And clearly, from the linear media side, I think, you know, to Michael's point, we haven't seen a lot of success stories there.
--:-- Telis Demos: But for streaming, I would raise the question, is this almost a necessity?
--:-- Robert Fishman: Again, back to the scale issue, these standalone streaming services can't compete on their own.
--:-- Telis Demos: So I would argue it's almost a necessity that they have to come together.
--:-- Miriam Gottfried: Let's look at Discovery standalone before they were merged with Warner Media.
--:-- Telis Demos: Clearly, that has not worked out well, back to the Warner Brothers Discovery investors.
--:-- Robert Fishman: But at the same time, without it, Discovery standalone probably would have been even worse off, to be honest about it.
--:-- Telis Demos: So if we think about what is a necessity versus where the end payoff is, those two answers might be pretty different.
--:-- Michael Nathanson: Michael, after years of covering media, you now focus on big tech.
--:-- Telis Demos: And as we've been talking about, these companies like Amazon and Apple and obviously Netflix are big players in the media game now.
--:-- Miriam Gottfried: We know Netflix, it's a pretty focused company in terms of its strategy.
--:-- Telis Demos: But if I'm Apple or Amazon, what is my goal in media? What am I trying to achieve?
--:-- Michael Nathanson: OK, if you're Apple, I'm not sure what the answer to that question is.
--:-- Telis Demos: You know, they've been making great content for a while here.
--:-- Michael Nathanson: But Apple is an enigma.
--:-- Telis Demos: I don't understand, you know, why they haven't gotten more aggressive in sports rights, why they haven't looked at other companies to buy when they had a chance.
--:-- Miriam Gottfried: I think Apple knows what it wants to do when it grows up in media and their bigger challenge is really trying to build Siri to be a next AI platform that people love.
--:-- Telis Demos: So I'd be surprised if Apple broke thesis and went after media.
--:-- Michael Nathanson: Amazon, it's clear what they're doing.
--:-- Telis Demos: Their ad platform is growing like gangbusters.
--:-- Miriam Gottfried: And they have basically focused more and more sports on Amazon Prime.
--:-- Telis Demos: They started with the NFL.
--:-- Michael Nathanson: Now they have the NBA this season.
--:-- Miriam Gottfried: So I think if you're Amazon, you're like, look, this is a way to disrupt the linear world, add premium content, and drive ads through our platform.
--:-- Telis Demos: And we have all the first-party data.
--:-- Miriam Gottfried: We know what Miriam bought versus Robert.
--:-- Telis Demos: We have all this brand connectivity because we help brands sell more things on Amazon.
--:-- Michael Nathanson: Let's just find more surface areas to sell more advertising.
--:-- Miriam Gottfried: So I think their story is really tight and really complete.
--:-- Telis Demos: And I think, you know, we think that they're not going away anytime soon.
--:-- Michael Nathanson: And, you know, going back to Warner Discovery, what kinds of things, like if they were truly interested in some of the assets, like what assets might they be interested in?
--:-- Telis Demos: You have all the DC content.
--:-- Miriam Gottfried: You have a great history of DC comics.
--:-- Telis Demos: So you could see more Batman, more Superman coming through Amazon globally.
--:-- Michael Nathanson: CNN, you want to add CNN?
--:-- Robert Fishman: And HBO, which obviously is one of the crown jewels there.
--:-- Telis Demos: So HBO and Warner Brothers content, both on the TV side and on the theatrical side, what would be the reason that all of these other companies are going to at least look, right?
--:-- Miriam Gottfried: Our colleague, Craig Moffitt, covers Comcast.
--:-- Telis Demos: He's been a bit doubtful that, you know, Brian Roberts will find the regulatory approval necessary to buy these assets.
--:-- Robert Fishman: And we'll see if Brian Roberts is able to horse trade to get a deal done.
--:-- Telis Demos: So I'm not sure that Comcast is really out of this at this point.
--:-- Michael Nathanson: There's a bunch of reasons. One is Peacock, you'd argue, 41 million subs, not growing.
--:-- Miriam Gottfried: No global footprint is under scale, right?
--:-- Telis Demos: So HBO and Peacock solves a Peacock problem.
--:-- Robert Fishman: HBO is global.
--:-- Telis Demos: Universal Studios and Warners and NBC are all contiguous.
--:-- Miriam Gottfried: They all, between Burbank and Universal City, they share a footprint.
--:-- Telis Demos: You would build the most dynamic studio in the world by combining Universal and Warners.
--:-- Michael Nathanson: That'd be pretty interesting.
--:-- Telis Demos: You also have all these sports rights on place, right? to the NBA, which now Comcast has, the NHL and baseball.
--:-- Robert Fishman: You can also now, Comcast is spinning at Versant, which is a cable network company, and they can take out a lot of capacity in cable by combining Versant and Warner Discovery's assets.
--:-- Telis Demos: Right. Versant is basically all of the Comcast cable networks spun out into one separate company, right?
--:-- Miriam Gottfried: Everything but Bravo.
--:-- Telis Demos: But Bravo, okay. Because Bravo works on Peacock.
--:-- Robert Fishman: But yeah, it's like, to me, that's the perfect, that's a much better fit in my view than Paramount.
--:-- Telis Demos: So, Michael, let's say this mega media company, which I'm going to lovingly call Paramount Skydance Warner Discovery, or until it gets a better name, gets created.
--:-- Miriam Gottfried: What would that mean for the competitive landscape?
--:-- Telis Demos: I mean, if I'm Disney right now, for example, am I quaking in my boots at the thought that this could happen?
--:-- Michael Nathanson: I don't think you're cracking your boots because what's going to happen here is that these companies will merge.
--:-- Telis Demos: There'll be more discipline on the types of content they invest in.
--:-- Miriam Gottfried: Yes, they'll be bigger.
--:-- Telis Demos: They'll be afford, you know, maybe more expensive things.
--:-- Michael Nathanson: But at the end of the day, you will lose a competitor, right?
--:-- Telis Demos: Paramount or HBO will be merged into one.
--:-- Miriam Gottfried: You lose a competitor.
--:-- Telis Demos: You won't be able to make as many films because you're going to look to scale back your film investment, right?
--:-- Michael Nathanson: So at the end of the day, I would say everyone who's in this industry will be better off by having another competitor, no doubt, scaled, but just less competition for weekends and for new content investments, right?
--:-- Telis Demos: So I think it's really healthy for the incumbents to have this deal happen.
--:-- Miriam Gottfried: We're going to take a quick break.
--:-- Telis Demos: And when we come back, we've got one more question.
--:-- Miriam Gottfried: We are back with Michael Nathanson of Moffat Nathanson.
--:-- Telis Demos: Michael, you know, I used to cover media for Hurt on the Street, so I was following a lot of this stuff.
--:-- Miriam Gottfried: I've been doing it for a long time, too, so you're not the only old one.
--:-- Telis Demos: Viacom split into Viacom and CBS, which later merged back together to create Paramount, which then merged with Skydance and now wants to merge with Warner Discovery.
--:-- Miriam Gottfried: A decade from now, will we be talking about why these companies are breaking up again?
--:-- Michael Nathanson: That was the original sin, by the way.
--:-- Telis Demos: The breakup of the Vi coming to two pieces was one of the dumbest things ever.
--:-- Miriam Gottfried: We all knew it at the time.
--:-- Telis Demos: And look how badly the Redstone family has done as investors because of it.
--:-- Michael Nathanson: But I think we're at the end.
--:-- Telis Demos: That's kind of the sad part for me, truth be told.
--:-- Miriam Gottfried: We're at the end. This is probably the last mega deal we will see.
--:-- Michael Nathanson: If the cable network assets are the problem, not the broadcast asset, the cable networks, but that's going to be pushed off of people's balance sheets.
--:-- Telis Demos: And what's left will be studios, streaming, broadcast, in some combination of that.
--:-- Miriam Gottfried: And that's kind of the end of it, Mary.
--:-- Michael Nathanson: I go back to my Time Warner start.
--:-- Telis Demos: That was like the first mega conglomerate here.
--:-- Miriam Gottfried: I think we're almost done.
--:-- Michael Nathanson: That asset will no longer exist, sadly enough.
--:-- Miriam Gottfried: Wow. End of an era.
--:-- Telis Demos: Well, this has given me a lot to think about.
--:-- Miriam Gottfried: I love talking about media.
--:-- Telis Demos: You know, maybe it's because I work in the media.
--:-- Miriam Gottfried: Thank you so much for joining us, Michael Nathanson and Robert Fishman of Moffitt Nathanson.
--:-- Telis Demos: Our pleasure.
--:-- Miriam Gottfried: Thanks for having us.
--:-- Telis Demos: By the way, audience, I wanted to say that if you have a question on a hot news topic we'd love to hear from you and we can answer your question in a future episode.
--:-- Miriam Gottfried: We've mentioned some some comments before on the show that we've seen on social media so who knows maybe yours could be next.
--:-- Telis Demos: Drop us an email at take on the week at wsj.com.
--:-- Miriam Gottfried: And that's everything you need to know to take on your week.
--:-- Telis Demos: The show is produced by Anthony Bancy, Jessica Fenton, and Michael LaValle.
--:-- Miriam Gottfried: With additional support from Janna Heron.
--:-- Telis Demos: Michael LaValle and Jessica Fenton are our sound designers.
--:-- Miriam Gottfried: Michael also wrote our theme music.
--:-- Telis Demos: Jessica Fenton is also our technical manager.
--:-- Miriam Gottfried: Aisha Al-Muslim is our development producer.
--:-- Telis Demos: Chris Zinsley is our deputy editor.
--:-- Miriam Gottfried: And Philana Patterson is the head of news audio for The Wall Street Journal.
--:-- Telis Demos: For even more, head to WSJ.com.
--:-- Miriam Gottfried: I'm Talis Dimas.
--:-- Telis Demos: And I'm Miriam Gottfried.
--:-- Miriam Gottfried: Until next time.
--:-- Telis Demos: Should we expect fewer streaming platforms or higher costs?
--:-- Miriam Gottfried: Yes.
--:-- Telis Demos: 30 seconds or less as my dog's barking.
--:-- Miriam Gottfried: Hold on a second.
--:-- Telis Demos: Hold on.
--:-- Miriam Gottfried: This is a crazy day.
--:-- Telis Demos: Thank you.
--:-- Miriam Gottfried: Invest like the future is watching.
--:-- Telis Demos: Visit nuveen.com slash future to learn more.
--:-- Miriam Gottfried: Investing involves risk.
--:-- Telis Demos: Principal loss is possible.
