Bad Businesses In Bad Industries Lose Money

Doug McIntyre and Lee Jackson discuss their pessimism about Warner Brothers Discovery (NASDAQ: WBD), highlighting the company’s struggles due to its old media assets and the fierce competition in the streaming industry. They point out AT&T’s (NYSE: T) inability to manage these assets effectively and criticize the merger with Discovery as a failed strategy. The conversation also touches on the downfall of traditional media like CNN and the challenges faced by cable operators. They conclude that unless Warner Brothers Discovery is acquired, its prospects are grim, and they anticipate other old-line media companies like Disney might face similar issues.

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Transcript:

Companies I love to hate. Warner Brothers, Discovery.

This is the deal. AT&T has a whole bunch of media assets that they can’t run.

Because listen, they’re a phone company. Hardly. They just got hacked for 90 million customers.

So they’re really, really good in the phone business. But listen, it is their business.

So they’re convinced by the people at Discovery that they should take all the Discovery assets and what are called the Warner Brothers assets and manage together.

And somehow that that’s, instead of having one group of properties that’s doing badly, let’s just put it together with another legacy media company.

And of course everything will be better. So the stock has collapsed, absolutely collapsed.

It’s down over 40% in the last year. And the reason is, everything they do is old media except streaming.

And the streaming business is cutthroat. It’s absolutely, if you’re not Amazon, or you’re not Netflix, as far as I’m concerned, you’re toast.

Maybe you get out alive, but the chances are fairly low. So you’ve got all this traditional media stuff like CNN, which is another awful business, I think.

Their ratings dropped by 80%. They’re doomed. And the cable operators are ostensibly doomed because everybody’s going over the top.

Right. So what you’ve got is you’ve got all these old media assets and then you say, well, yeah, but think about streaming. Look at the Netflix valuation.

It’s like that’s not right. Netflix has like a quarter of a billion subscribers.

Amazon’s got as part of Prime, which is, this is a package at Amazon.

People want that because they get free shipping and all sorts of other stuff. And they get football, you know, you get all the football that, that, you know, they’ve acquired and that that’s, that’s the big reason for it.

Yeah. So here’s my opinion about Warner Brothers Discovery. And that is, is if somebody doesn’t buy them, like Paramount just got bought, they’re, they’re close to doom.

So here’s what I’ve got to say. That old Paramount deal reeks to high heaven as well.

So it’s just all these old line media companies, Disney, all of them are just in such deep trouble it isn’t even funny.

It’s bad. It’s bad. But we’ll keep an eye on who’s going down the tubes next.

Yeah. We’ll add somebody to the list next time. I’m sure we will.

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