The Skydance deal has closed, bringing together Paramount Skydance and Warner Bros. Discovery. As Colin and I discuss on this week’s episode, numerous questions are swirling around the company. 

Chief among them are whether Paramount+ and HBO Max will be merged, or bundled? Another is how severe the job cuts will be? Yet another is how durable the cash flow from the unpredictable studios business will be? On the latter front, WBD’s flop with Tom Cruise’s latest film “Digger” underscores how fragile studio cash flow is. Nonetheless it will be counted on to help fund the interest on Skydance’s $80 billion of debt. 

We also discuss Disney’s new licensing deal with Netflix, Amazon getting the Emmys, and Google-Unity’s new partnership to enable user-generated games, leveraging Google’s AI and Unity’s game development engine. 
 
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Netflix seems to have lost the script for how to reaccelerate growth, as became clear in an interview this week between Co-CEO and Chief Content Officer Ted Sarandos and Bloomberg’s Lucas Shaw at the Bloomberg Screentime conference. 

On today’s Inside the Stream episode, we’re trying a new format where we share a number of short clips from the interview and then provide our analysis of what we heard.

The specific topics the clips focus on are: Netflix members’ engagement, growth going forward, competitive dynamics with YouTube, and the opportunity for a free, advertising-supported offering. We also discuss Netflix’s financials and a detailed discussion about how a free content offering could meaningfully move top-line revenue. 

The full interview is on Bloomberg’s YouTube channel. 

Please let us know your reactions to this format. 
 
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California’s Rob Bonta and 11 other Attorneys General signed a consent decree clearing the way for Paramount Skydance to acquire Warner Bros. Discovery. On today’s podcast we dissect the decree, with a particular focus on the $1.5 billion incremental spending on US production that Paramount agreed to (which translates to $300 million per year). 

As we explain, how and on what this $300 million will be spent is highly ambiguous. We question what the guardrails are, and indeed how enforceable they are in reality. Net, net, we believe that Bonta and the AGs had a weak antitrust case and faced a lot of pressure to settle. That’s what they did. The consent decree gives the Hollywood community only a small amount of ill-defined and short-term relief. 

Importantly, we believe that now the hard part really starts for company CEO David Ellison. $80 billion of debt to service. Fierce competitors with virtually unlimited resources. Constant technology innovation. Changing consumer tastes. It’s a witches’ brew that Ellison and his team are taking on. 

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Amazon is making all the rights moves in streaming, including launching a new specialty SVOD discounted bundle, investing significantly in marquee sports to drive the Prime “flywheel,” diving deeper into video podcasts and short-form, enabling product discovery and purchase within viewers’ experiences while also unifying these experiences across streaming services in just one app, plus much more.

Colin and I like the playbook Amazon is running which adheres to a strategy Jeff Bezos articulated over 10 years ago about how to use video to build value in Prime, its core revenue engine. Amazon is putting itself in a pole position for the future of streaming and TV. 

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