Key Points:

• Warner Brothers struggles against tech giants like Netflix, Apple, and Amazon in the movie and streaming industry.
• Tech companies’ vast resources outmatch traditional studios, making Warner’s business challenging.
• Prediction: CEO David Zaslav may be ousted, and major cost cuts will be made within 89 days.
• Also: Media is a dying industry, while AI is taking off. Smart investors are loading up on ‘The Next Nvidia’ before it takes off.

Lee and Doug discuss the challenges Warner Bros. (NASDAQ: WBD) faces in the current media landscape, particularly as a traditional studio competing against tech giants like Netflix (NASDAQ: NFLX), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), and Hulu, which have become major content creators with vast financial resources. They note that while Warner Bros. was once a dominant player, it now struggles in a crowded market where even streaming platforms are dominated by a few key players with deep pockets. They also talk about the recycling of movie ideas, such as Marvel’s ongoing success, and the difficulty traditional studios face in generating new content. Lee predicts that David Zaslav, CEO of Warner Bros. Discovery, will be ousted within 89 days, and the company will likely cut costs significantly to manage its debt and improve margins.

Transcript:

Another problem they have is Warner Brothers, which is a studio that’s a century old.

You used to have six major studios.

They made all the movies.

The problem now is that Netflix is basically a movie studio.

Apple is basically a movie studio.

Amazon is basically.

Hulu.

Hulu makes movies.

So what you’ve got right now is that you have a lousy business now because you have a lot of competitors who have way more money.

Can you imagine if you were on Apple TV Plus?

And one of your jobs is to create movies and TV shows.

And it’s like, you can call Tim Cook and say, “Oh, gee, you know, we need another $3 billion to roll out some content for this quarter.”

So what I would describe as their anchor business is now a lousy business again.

Yeah.

Yeah.

And you make the…

And plus the fact that apparently there is no new ideas for movies because everything seems to keep recycling what’s worked.

And it makes sense.

The whole, you know, Marvel sort of legacy of Wolverine and Deadpool and all this stuff.

And it did huge.

This stuff does huge.

But they don’t have anything else to go with that.

So I guess there’s going to be a day when some of that falls apart.

But yeah, what do they do to compete against the legion of other people that can produce on a cheaper basis?

The other thing about those companies is that they not only have cash to make content, they also happen to have cash to support streaming.

And when you look at sort of a midsize streamer like Warner Bros. Discovery, it’s the same thing.

How do you compete with Netflix?

How do you compete with Amazon?

All of these streaming, I mean, Disney finally made like six cents a dime on, you know, Disney Plus and all that stuff.

Yeah, on the Hulu package, right, finally.

But they lost billions of dollars getting there after Iger launched it, I think in 2019.

But people think that streaming is the future of basically video media.

It’s the future if you’re one of like three people.

Yeah, and it’s also the future just for how delivery is, you know, taken care of.

I mean, cable will always be there for program delivery, but over-the-top streaming with better Internet protocol, better bandwidth, even at a smaller level, you can see if you’ve got 50 megabits, you can see everything pretty darn good.

You know, and low packages are 50 megabits.

Yeah, which is enough.

Yeah, it is more than enough.

And that’s going to make a huge difference going forward.

I think that the day, it won’t be probably in our lifetime, but the day of coax cable until they all, you know, Comcast and everybody charter until they figure a way to stream everything, which, you know, they do some, but, you know, the COAX has been there for 30, 40 years.

Yeah.

And so I’m going to make a prediction.

We’re going to come back to this in 89 days because earnings again.

So I have two predictions.

The first one is that David Zaslav, who I think they call the Zaz, or he’s some Hollywood nickname, will no longer be the CEO.

He will be pushed out.

And the second thing is, is that they will cut costs, which is usually people, in the tens of millions of dollars to try to, you know, get some margin out of the thing and start to, you know, have a shot at paying down a lot of that debt.

So there are my predictions for 89 days from now when we’re going to come back to this.

All right.

Well, we’ll see if Jessica is correct and we’ll see if it’s a donut.

Right.

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