Netflix vs. Paramount (EP. 442)

23:52Yeah, you're not rich. But guess what? This is just the millionaire next door. This is nothing new. So it says that like they have this psychological wealth threshold, but their income and spending doesn't match it. That's a good thing. How do you think these people became wealthy? because they have a middle-class household spending and income. This is how they did it. It's like they're trying to reverse, you know, if they spent like a typical millionaire, they wouldn't be millionaires. Duh. That's the thing. This is Millionaire Next Door stuff. Come on, people. This morning, I showed Kobe a movie that you might be shocked to learn that I saw this movie in the theater.

24:33no way when you're six okay what's that when you were six i was nine okay about his age all right 1994 i'm sure you saw this movie uh blank check ah yes so blank right you saw that movie blank check is i'm positive i saw that at somebody's birthday party blank check uh is on disney um james reborn the ultimate that guy yeah right the dad so he was the dad in blank check he was 45 in that movie i guess maybe that looks about right but he was he was your age in that movie right how and he looked that way his whole life pretty much seems like right so the story of that movie this kid gets a blank check and he he has like he's like oh no it's my boss's money it's mr mcintosh remember that because a car hits him or something the guy just gives him a check does he write it for a million dollars great recall ben wow credit to you i remember that does he write it for a million dollars i don't remember yeah yeah okay so his dad so he gets a blank check from his grandma.

25:30His dad asked, how much did he get last year? 10 bucks. And the kid goes, yeah, but what about inflation? So he gives him$11. He plugs into his computer. This kid was very savvy. He plugs into his computer. I forgot what the interest rate was. How much would it, how many years would it take to go from$11 to a million? It said like 340 ,000 years. Kobe lost it. He thought it was the funniest thing ever. Anyway, great movie for kids. It's on Disney. Did you ever see the movie from the eighties, Brewster's Millions? No. Okay. It's a John Candy classic. So it's, it's, um, John Candy and Richard Pryor.

25:58and he has 30 days to spend$30 million, but he can't just give it away. And if he does, gives away 30 million, he inherits 300 million. That's a good one. And he has a hard time spending that much money in the 80s. Today, I think that would be very easy. Okay, we didn't mention this last week, but Goldman Sachs bought integrated ETFs. We had our first talk-your-book interview with Bruce Bond, I think in 2018. Yeah. And we did it. We were in Chicago visiting our office there. and we were in like the basement. Where were we? We were in the basement of a WeWork building. Oh, okay. Right? So we interviewed Bruce Bond there and he told us the idea and the light bulb immediately went off for both of us.

26:37And we go, oh my gosh, this is going to be huge. And we've been saying this, like we could just tell for advisors and clients and retirees, this idea is going to be massive. And every time we talked to Bruce, we talked to him, I don't know, half dozen times over the years, maybe more. And every time we talked to him, the assets would get bigger and bigger and bigger. And last week, Goldman Sachs is going to buy them for$2 billion. Now, a lot of people looked at it and said, geez,$2 billion, and they managed$28 billion. That seems like a lot in terms of a multiple. It's going to be$100 billion.

27:09But also, a lot of other people said also, Goldman Sachs can do the option flow. So these are option strategies. So they can make money there somehow too. But there's a lot of people in the industry who don't like these kind of strategies. and don't get them. And they say they're suboptimal. And if you did, if you use this optimization strategy, you could do this and make the same return stream. And I think it just totally misses. That's a total spreadsheet mindset that misses the psychological component of these strategies. And I think that's the thing you and I latched onto immediately. It's a psychological thing, not a number spreadsheet thing.

27:46And that's why this thing was such a success and garnered so much money. And it's an interesting pairing, I think, for Goldman. But obviously they wanted to increase their ETF business. Shout out to Bruce and the whole team. Very happy for them. What an exit. It's awesome. Great guy, too. And his second huge exit, because he was at PowerShares as well, and they bought up. I thought it was PowerShares. Was it Power or Pro? What did I say? Okay, one of the Ps. One of the things you and I have been talking about for years now is, where does this money keep coming from? People, you know, putting more money into stocks and more money into money markets and Bitcoin and everything.

28:22Ryan Dietrich from Carson Group, also with the Facts and Feeling podcast, which is great. He says disposable income and employee compensation continue to grow faster than inflation. And he looks at it over the past three, six, and one-year periods. And he's looking at disposable income and employee compensation, then PCE inflation, which is the Fed's inflation rate that they look at. No, no, Ben, Ben, Ben. You have to say their preferred gauge. Sorry. Preferred gauge. True. And disposable income and compensation continues to grow at a pace that's faster than inflation. And this is the piece that we never talk about when people complain about inflation.

28:57it's also bringing up this. And I know because we know why this is. When people get a raise, they think it's them. When inflation happens, they think it's the government. But this, people just have more. I don't think people realize with inflation rising 25 % this decade, that also means pretty much a commensurate 25 % increase in wages and salaries. On a nominal, right? A nominal basis. And I think it's actually been a little bit more. That's where a lot of this money is coming from. People have more money to spend now. Yeah, you know what? I think if you pull a hundred people with the benefit of hindsight, I think most people would say, you know what?

29:33I'd rather like one and a half percent, uh, wage gains and 1.8 % inflation. I'd rather lose to inflation and have normal price increases than this. I agree. People would rather inflation be a invisible tax than this. It is funny though. Because with this, it feels like I can't get ahead. I got a 25 % raise and I'm still in the same spot. It is funny people. Well, I'm sure, yeah, the people prefer the 2010s, which was that situation. But it's funny, back then, remember, all the policy wonks were going, we need to get inflation higher. This is too low. Well, but not like this. Yes, exactly. Speaking of, like, where does the money keep coming from?

30:10We had Vlad on TCAV. Did you listen to that? Yes. Yeah. He's, I mean, they're going to, they think they're going to rule the world, I guess. I really enjoyed spending time with him. Frankly, more than I thought. I enjoyed his company. Did you really like his hair? Is that what it was? Dude, I really like his hair. Are you kidding me? He's got some nice hair. It's incredible. In the third quarter, their net deposits was like, I can't remember if it was$20 billion or$28 billion. Where's all the money coming from? I mean, it's just wages, right? Where else could it be coming from? Right. And yeah, and obviously the thing that they've done with the breaking down the barriers is you have the automatic deposits on, right?

30:46And that money just keeps coming and coming and coming. And every time you get new customers, their money keeps coming and coming. It's compounding on top of compounding. But not only is the market up, but more money is coming in on top of that. We spoke briefly about what it was like for him in the aftermath of the GameStop stuff. Like, I can't imagine how many death threats he got. He went from relatively unknown character to front page of every magazine. Like, overnight global villain. Like, that must have been a wild personal experience. Yes. Sometimes people do separate that there's people involved in these things too.

31:25Yes, it's... All right. The labor market is not doing very well. I think the stock market has probably overshadowed this. We'd be talking a lot more about the cooling economy if the stock market wasn't doing what it was doing. So Kevin Gordon tweeted last week, oof, businesses with 20 to 49 employees shed 74 ,000 payrolls in November. That was the sixth decline out of the past seven months and the largest drop since October 2020. That's really bad. These are pretty small businesses. Six declines in the last seven months. So you said that the stock market doesn't seem to care yet. Consumers don't care yet either.

32:04So this is from our friends at The Transcript. They always have good stuff. I feel like I'm pulling a Michael Badnick here. But they pulled stuff from the MasterCard CEO, the Visa CEO, and then Travel and Leisure Company. I don't know that one, TNL. And they talk about the difference between sentiment and actual behavior. Again, this is what we keep coming back to. So the labor market is not impacting consumer behavior yet, according to these CEOs. He says there's a divergence between the soft and hard data. We read all the headlines and some of the survey results around the consumer sentiment.

32:31It seems increasingly gloomy. But what we see in the hard data continues to be very supportive of consistent spend metrics. Through October and into the first two weeks of November, we've seen spending metrics across all our key drivers remain generally in line, and so we're encouraged by that. That's MasterCard. Same thing with Visa, right? If I had to use one word, it would be stable. If I had two, it would be stable and strong. People continue to spend. And then this travel and leisure person says, one thread for us that's been super consistent has been the performance of our consumer. Our consumer has held up very nicely and looking forward to stepping into 2026.

33:00People keep spending money. So even if the labor market on the edges, because I think that's what it is, their market is slowing on the edges. It's not, the unemployment rate is still below 5%, right? So I know when people lose jobs, that's tough. It's hardship. If the unemployment rate goes from 4.5 % right now to 5.5%, that's millions of people losing their jobs. There's still hundreds of millions of people who are still working and spending. So doesn't it seem like it could be a while before this labor market actually translates into a bad economy? It's going to have to get way worse, I think, before it really translates.

33:33That's my theory. Yeah, I think that's right. All right. For a while, at least, remember, I think you've pulled a Brett Favre a few times on the CAPE ratio and said like, hey, I'm retiring from talking about the CAPE ratio ever again. And then it comes back. I think I want to talk about this wealth and happiness thing one more time and put it to bed for a little while. Not forever, obviously. Can you not compare me to Brett Favre? Maybe use somebody else. That's just the one that comes to mind. Yeah, that's true. So I thought that Chris Arnade, how do you say his last name? Chris Arnade? Chris Arnade?

34:05He has this, Chris Arnade walks the world. So he's the guy who used to be a Wall Street trader. And now he just, he goes around the world and he travels and he walks and he talks to people. and he basically says like I want to kind of give my theory on this like why even if even if we're the wealthiest we've ever been in this country in the history of the world why are there so many people are still unhappy and why do we keep having these debates about what is wealth and are you rich or are they rich or why aren't rich people happier and um he says Americans are materially wealthy and unfulfilled the primary problem is cultural we've sacrificed community and meaning to emphasize an archetype built on acquiring as much stuff as possible but then we have made that unnecessarily hard to do.

34:40And his whole thing is like, you can have all the money in the world, but without meaning, it doesn't matter. And there's no community. And there's no... We're a material society. And it's all hollow. So yeah, that's the thing. That's why all the material, you can say, hey, we have iPhones now, and we have this, and we have this, and we have that, and everyone has two cars and three car garages. And that stuff doesn't bring happiness. And that's his whole point. If there's no meaning behind the money, it doesn't matter. And I thought that's a good stamp on this thing. and also we've realized we're never changing anyone's mind on this stuff, right?

35:13You should feel wealthier. You shouldn't feel you're in this class. You're in that class. Literally no one's changing their mind on that. That's never going to happen. Okay, let's move on. Okay, I've got a question for you on inflation. So I tweeted this out. We were at Target last week. We actually went to Target and made our kids because I'm trying the hardest we can to not raise spoiled kids because they're talking about all the stuff they want for Christmas. And so I found my wife and I said, all right, we're going to Target and we're picking out Toys for Tots stuff for other kids, right? You guys have to learn and you're not getting anything.

35:41Good for you. I love that. So we got a big Toys for Tots box at my Planet Fitness that I go to and I dropped them all off. So I said, I tweeted this. I saw a 65-inch TV at Target for$250. And I said, it feels like someday Netflix is just going to give us all TVs and say, hey, here's a TV for you. It comes preloaded with Netflix. That's part of your subscription. So phones are more expensive. Computers are more expensive. Automobiles are more expensive. Why do TVs keep getting so much cheaper? Every single year, TVs get better in quality and they go down in price. I do not get it. Why is it everything else is more expensive besides TVs?

36:15Please explain it to me. Okay. I would say the business model and the economics. That's like my knee-jerk reaction. Apple knows that you're going to replace the phone. Like they just know you're going to. The phone's going to slow down, technology's going to get better, and they can raise the price. I think the TV market is hyper-competitive. People don't replace their TVs every day except for me. and they need to compete on. And so that's why prices are cheaper. I don't get, and so I've, my new theory for TVs is we have a really decently nice TV in like the main family room, right? We have one of those frame Samsung ones.

36:46And then all the other TVs we have, because I love TVs all over the place, is a really, like I get the cheaper versions now. Because I know in three or four years, I'm going to just replace it. Because there's going to be a nicer, faster, better picture. And I just, I don't understand. Someone's got to give me an explainer why they keep getting cheaper. like there has to be a technological opponent to it like what's the inflation piece that this technology is getting cheaper well do you think do you think the cost to manufacture the iphone keeps going up i doubt it i mean maybe it does i don't know i mean there's more stuff i just um someone who knows this stuff oh how about this you know what you know the the technology of the iphone is incredible i know that they're spending gazillions of dollars in capix so i take that back i'm sure it is going up but is it going up commensurate with the price increases that part I doubt.

37:31I think obviously phones are an amazing leap forward, but I think just TVs from what we grew up with, the tube TV, the box, remember the Zenith brown stuff all around it? It was huge in the back. We had antennas. You'd put the tinfoil on them and hope the antenna would work for a channel. I just think the leap forward we've had in TVs in my lifetime has just been one of the great. Remember our parents saying, get away from the TV. Cause you were, cause you had to sit two feet in front of it. Otherwise you couldn't see. Yeah. Like it was so blurry. It's like, wait, is that, is that John Starks?

38:06I can't hit the side of the TV. I just think the, I think this is just one of the great leaps forward we've had in our lifetime in HD quality and size. And it's, can I, can I give another, I think I plugged this a couple of weeks ago, the Amazon, what is it called? Is it like the Echo Show? I'm not even sure what it's called. Did I say this on the podcast? I can't remember. Oh yeah. Where it's got the screen and. Okay. So it's like 15 inches. So in my, we don't have a TV in my kitchen area. Um, but we've got like this 15 inch thing. You pick it up, you can move it. It's a wire, but like the, the, the screen swivels, it has all of the apps that has Netflix, Disney, prime, whatever.

38:47There's Amazon TV now, but there's like channels on there, which I, I only saw briefly. I haven't really, um, looked into it. But my favorite part of this device is I synced it to my photo app, to my photos on my phone. And so it gives us memories. And every day I walk past it and I see a picture from 2019 or when Kobe was born in 2017 or whatever. Like, I love it. It's a, so highly recommend. I don't, I don't think it was that expensive, but great purchase. Phenomenal purchase. Nice to have a little TV in your kitchen too. A material purchase that made me happier. All right. I told you I'm on board.

39:20I've completely changed my tune on this. I think material purchases can make you happier. When I wear a nice new sweater, it brings joy to my life. That is a very nice sweater. One other material purchase that I've been plugging that I feel bad about is the Tommy John's stuff, which by the way, life changer. And I've had a lot of emails, Michael, these are really expensive. Yeah, they are really expensive. Guess what? They're like, what? 35, 40 bucks for an undershirt. I will wear these undershirts. How many times will I wear these before I throw them out? Let's be honest, 15, 20 at least. so it'll be two dollars a wear my life is so much better with these undershirts not sweating however i here's here's where i apologize there's two versions one of them is like a very skinny one that's like it like hugs your body i got that it felt really uncomfortable you got did you just wear it i get i asked my wife if she wanted because it was like it was so tight yeah it's Yeah.

40:14Not that one. Make sure you don't get that one. Okay. Here's a quote, Ben. Back to the transcript. Here's a quote from the CEO of IBM. So let's ground this in today's cost. This is on a podcast. I know which podcast. So let's ground this in today's cost because anything in the future is speculative. It takes about$80 billion to fill up a one gigawatt data center. That's today's number. If one company is going to commit 20 to 30 gigawatts, that's$1.5 trillion of CapEx. To the point we just made, you've got to use it all in five years because at that point, you've got to throw it away and refill it.

40:57Then if I look at the total commits in the world, in this space, in chasing AGI, it seems to be like 100 gigawatts with these announcements. that's$8 trillion of CapEx. It's my view that there's no way you're going to get a return on that because$8 trillion of CapEx means you need roughly$800 billion of profits just to pay for the interest. These numbers are so bananas. It's hard to wrap your head around. Okay. That doesn't make sense. The first ever computer that we had in our house was an IBM PC. BB gun to your head. What does IBM do? Because if you look at their chart, their stock chart, they're going crazy.

41:40They're up like 100 % of the last two years. What does IBM even do anymore? I have no idea. Like I used to use IBM for a word processor. What do you mean, what do they do there? It's the mainframes. It's just impressive to me that this company is still around. They were like - Enterprise software up in the cloud. Yeah, no. They were part of the nifty 50 back in the 70s. They're still around. I couldn't explain to you what IBM does. Going bonkers. But yes, okay, yes. These numbers are insane And I guess the whole point is that like, I think just like the open AI stuff, all of these estimates are no way anywhere in retro.

42:12Right. There's something, something has to give. It can't be, there can't be that much spend on this stuff. It can't. It won't happen. If you knew that there would be a trillion dollars of CapEx, what would you do? Nothing. I don't know. What, what am I supposed to do? What would you do? Get gig along. I guess so. And then get out before the top. Hello? Come on, Ben. All right, here's a chart. Last week, I think we skipped this last week by accident. Vanguard announced that they're allowing their customers to buy crypto. Did that really put a bottom into Bitcoin prices? I think it did. It seemed to coincide with...

42:53No, it definitely did. Because the day before, crypto had a really disgusting candle. Like, really ugly. and then that morning when this was announced it was the bottom so yes i do think it put a bottom do you think vanguard customers will buy bitcoin etfs um no because i bet if you looked at the percentage of clients who buy it at different you know trab and fidelity and all these different places robin hood of course it's going to be a tiny tiny percentage of vanguard i totally agree with you so i don't think that it matters i think for sentiment it mattered but will vanguard investors buy a meaningful amount of Bitcoin at Vanguard's brokerage?

43:33No. If they really wanted to, they would have just done it already. They would have gone somewhere else. Yeah. It's not like it's hard to do it. Anyway, it wasn't just them. Bank of America also announced that they're going to be letting their advisors at Merrill Lynch buy it. But flows have been pretty ugly. Going back to January 2024, this is the second worst. Todd has a chart showing this is the second worst 20-day flow for crypto. So it's like a chicken and the egg thing. Did the flows cause the price to fall or did the flows fall because the price was falling? Both. There you go. Yeah, good chart here, though.

44:06Let's talk about real estate. I said earlier that sometimes you have to separate the headlines from the data. So the Wall Street Journal had this article, when home sellers set prices too high, they're paying for it. It says more than half of homes sold in 2025 through October had at least one price cut. You look at that and you go, geez, the housing market must be getting killed. And they looked at this, and yeah, I think it's almost 60 % of houses that, but the average difference between the list price and the sale price is 3.7%. That's pretty tiny. Okay? That's not that much. Well, no, it's not.

44:36No, it's not. Percentage-wise, it's tiny, but like on a million dollars, it's not nothing. But it also says that, so 57 % of homes sold this year have had a price cut. But between 2020 and 2024, it was 47 % of homes. So don't you think almost all of these negotiations, there is a price cut involved when someone comes in? I think that's just how this selling process works. I just think the, yeah, you're right, 3.7 % on a big, but if you look at this chart here, share of active listing homes with a price reduction by month, it looks like we're just back to 2010 levels. It just was way, way lower in 2021 and 2022 when you had all these bidding wars, and it was 5 % of them because people weren't going to lower prices because the supply wasn't there.

45:17But now it's back up to 20, which looks to me like about what it was at the peaks in 2017, 2018. So it's not that much different. Let me ask you this. What's your outlook on 2026 housing? Because we're going to get another rate cut tomorrow, I think. I think that's the expectation. I think we muddle through again. It's like housing prices are up 2%. And even if mortgage rates get to - What about activity? Are we going to see a significant uptick in activity? I'd say it's more of a normalization. How about that? Is that a cop out? I mean, it didn't answer my question. This year was a normalization type of year.

45:53I asked if we're going to get a significant up to connectivity. You're saying no. I don't think activity is going to go bonkers, especially if the labor market continues to soften. I don't think that the housing market is going to go crazy. How about you? I agree. I own Rocket. I think I might sell it. Okay. Here's one more from Logan Motoshami. Just to put this one to bed again on the first-time homebuyers. Remember NAR said, hey, the median age of first-time homebuyers is now 40 years old, and people lost their minds. And if you compare this chart, it looks at all these other surveys and databases.

46:24And those numbers have not increased barely at all. They're still around 31, 32 years old. And the NAR is the only one that's going higher. So this was a survey problem, not a housing market problem. So the median first-time homebuyer is still around the same age as they've been for the last 10, 11, 12 years. Survey of the week. We haven't done these in a while. Almost half, 46 % of Americans say the cost of living in the U.S. is the worst. The noise that you just made was like Werewolves of London. What was that? Daniel should do a music over. Oh, good song. Say the cost of living in the U.S.

46:59is the worst they can ever remember it being. And they say the, they talk about whose responsibility is, and they say it's Trump's responsibility or whatever. I think that this is obviously like Trump and Biden have done themselves no favor on inflation. Like Biden spent more money. Trump has put tariffs on. Like they didn't do anything, but I don't really think there's anything they could have done to lower inflation that much beyond putting the economy into recession. Like I think whoever is in office is going to get blamed for inflation. And I think people who say, I'm going to come in and save us all from inflation.

47:32They, there's no way they can ever deliver on their promises. Trump had a great quote. I think it's way beyond their control. I saw a great quote yesterday about inflation from Trump. Um, I don't know. It was perfect. It was like, I don't know if he said it's beautiful. It's perfect. There's basically no inflation. It was so good. But politicians, I know they have to say, hey, we're going to come in and fix prices, but they can't. They literally can't. There's nothing they can do. They can make it worse. They can't make it better. How's that? Yeah. Unless they send us into a recession, I don't think there's anything they can do to really make it better.

48:04So people are always just going to be bad about it. Yeah, if they send us into a recession. If the tariff stayed on, like the Liberation Day tariff announcements, that would have put us into a recession and prices would have come down. Yes, yes, exactly. All right, so the Washington Post had this story about how baby boomers got so rich and why their kids are unlucky to catch up. And they say baby boomers have$85 trillion in assets. They're the richest generation by far. I keep seeing all these charts showing people over 70 have steadily increased their grip on wealth. And it's like people who are 60 or 70 or over have more wealth than they've ever had in history.

48:38By contrast, people in their 40s are losing ground comparatively on a relative basis, relative to history. But this is just, here's the thing. Millennials are going to be the richest generation someday because we know baby boomers are not going to spend all of their wealth. We've seen this. We've had these conversations. Wealthy people are not going to spend all their money. They're going to pass it down. And guess what? Then millennials will be the richest generation. Dude, this is like Brewster's Millions. Is it Brewster's, what's the name of the movie? Yeah, Brewster's Millions. Yeah, in real life.

49:05Yeah, so that's what's going to happen. And the fact that there's so many more people over 70 that are richer because the baby boomers didn't have an offsetting generation. Millennials have the baby boomers. Baby boomers had no one as big as them then. So like there wasn't a huge generation that could live so long and be so wealthy. So this is just a compounding thing. This is not like a crisis. That money is going to be passed down. It's not, I absolutely think young people are going to be just as rich or richer than their parents. Yeah. All right. Big news last week, this week, Netflix has an offer accepted from Warner Brothers to buy the stock for$72 billion in equity.

49:43It's another$10 billion in debt. I can't believe it. I mean, I guess I can believe it, but my initial reaction was, oh my God. I really thought that Paramount was going to take it. I think everybody did. Polymarket reflected that. So I don't want to take for granted that everybody knows what Warner Brothers does. I mean, everybody knows it's a big studio, but these are the directors that they've worked with, like exclusively for the most part. So Clint Eastwood's entire career only did movies with Warner Brothers. Stanley Kubrick, Todd Phillips, the Wachowskis, Nolan, Minus Oppenheimer. These are some good...

50:18Can I just say, Todd Phillips has some good stuff. I think it's funny you put Todd Phillips in this group. Well... That's kind of like Bigberg sitting at the... ChatGPT gave me Todd Phillips. Okay. Well, no, he doesn't because Joker was another huge one. He deserves to be there. No? Hangover? Hangover? Dude, those were... Fine. Anyway. Harry Potter, Barbie, Dark Knight, Lord of the Rings, matrix casablanca the exorcist superman all the president's men batman the shining twist of the fugitive dune it uh which by the way there's a new show welcome to some uh something something i watched the first episode i haven't heard anything about it i saw this morning on twitter like it's the finale i have literally not seen anybody talk about it all right there's obviously the the studio um i'm sorry the streamer hbo max you and i walked by the studio when we were in california that was so sick so sick walking by the uh the water tower they are so the deal does not include the networks.

51:08So no CNN, TNT, that's going to be spun off. Discovery, all that stuff. So the big freak out from people was, oh my gosh, this is going to be the end of movies, right? And so Lucas Shaw said, Netflix reiterates, it will release Warner Brothers movies in theaters. It'll produce their shows. It sounds like they still don't know what HBO, and I get the Ron Burger, I don't believe you. I think - For what? Let's say this net, huh? What don't you believe? that they're going to keep releasing these movies and they're going to play out their contracts that they have now if they acquire them. But then all those movies are going straight to Netflix from there on.

51:42No. See, I think you have, like you're a movie theater person. I think this is the beginning of the end for movie theater. Like this, I think that like, there's still going to be there, but the writing's on the wall, man. These things are going to be going straight to streamers for the most part. There's going to be, it's going to be really huge blockbusters in the theater and not as, like, these are going straight to Netflix, man. This is going to happen. This is the future we're living in. I don't think this is the beginning of the end. I definitely do. No, I think it's maybe the end of the beginning.

52:13Like, this was already emotion. It's not like, it's not like, I don't think that you're going to see in the data, and I'm going to save this data because Josh and I are having a Hollywood guy on TCAF next week. So I had Matt crank out some incredible charts that I'm very excited to talk through. The movie theater has been in secular decline, obviously. So I don't think that there's going to be in 10 years now, I don't think you're going to be able to look at the before and after. I don't think it's going to change the data. I think it already happened. So what Sarandos and Peter said, because they did a call on Friday after the announcement, what they're going to do, at least what they say they're going to do now, they've said a lot of things that they then changed their mind on, is that they want to shorten the exclusivity.

52:58So if a movie was going to be in the theaters for 45 days, they want to shorter that window, which in effect is going to continue to maybe be the final nail on the coffin for movie theaters, to your point. Because if a movie only has a two-week release, like Dune 3, for example, obviously I'm going to see that in IMAX. But for most people, if it's only going to be in the theater for two weeks, they're just going to wait. So I think that this is bad for movie theaters, but this is better for Hollywood than Paramount buying it. At least this is what Bellamy and the smart people are saying because Paramount already has a movie studio.

53:35So there would be a lot of cost cutting because there would be a lot of overlap between the two studios. Netflix obviously does not have a movie studio. So it's not like they're going to buy Warner and just gut the place because they need these people to produce a movie. So my biggest worry about, your biggest worry should be movie theaters. My biggest worry is HBO. Like I'm worried about how HBO is going to be handled here because I feel like that's like the best, To me, that's the top echelon of shows. It is. That's the crown jewel. So that's my worry here. If I'm having to choose between Netflix and Paramount, Paramount Plus is kind of garbage as a streamer.

54:05I would much rather have Netflix take this over and make it better because honestly, HBO Max too is so glitchy. If they put it on Netflix, I hope they keep the HBO people. The thing is, you mentioned all the directors and movies that have been made. The thing is, people aren't tied to these studios forever now. Like they'll just, if they're not treated well, because we've this, this studio, this company bought Warner brothers and they're not doing it as well, they're going to go somewhere else. Like the people are the thing that matter. Yeah. Obviously at Netflix wants the IP and the library and all this stuff.

54:34So you would rather have Netflix take it over. It sounds like. I don't, I don't know. I think for, for labor, Netflix is way better for theaters. It's, it's way worse. I think for consumers, this is a, it's a better deal of Netflix gets it. That's my Paramount came over the top with a hostile bid. They offered more. Who knows where this is going to shake out? Kushner is involved with the Ellisons now. So it's not like it's, the deal is far from done. I just, I don't know much about David Ellison, but I think that he should probably step back because Larry Ellison needs to save his money because Michigan needs the new wide receivers and new DBs.

55:09He's got to save his money for Michigan's NIL program. Stop getting into this bidding war. Let Netflix have it. That's my, that's my theory. They're not going to let Netflix have it. So what does this do for? So wait, does Netflix come back and try to go over top and try to just keep running the price up then? I don't think so. So the question is like, why did Netflix do this? Because they already won. And what people are saying is they're just competing with YouTube. They just need – it's a land grab. It's Netflix versus YouTube. That's it. That's what Ben Thompson at Stratetri said. He said like Netflix is worried about YouTube.

55:42That's like their biggest competitor now. There's this chart on the Wall Street Journal that shows share of U.S. TV viewing time by distributor. YouTube is going up and to the right. Netflix has sort of flattened out. Warner Brothers and Discovery have fallen. This makes a lot of sense to me that Netflix is, it's almost, because it seems like a little bit of a desperate move on their part. Why would they need to do this? It doesn't make sense to me. If I'm like, listen, they're great executives and they obviously know more about their business and the industry than I do. It does reek of desperation a little bit.

56:14But if they can pull this off, they have 300 million subscribers. Max is 130. There's obviously a lot. They said this on the call. I don't know what the overlap is. I'm going to guess 75%, right? They're not huge. They're not adding a lot of new subscribers. And their streamer, it's not that profitable. Most of Warner Brothers Discovery's profits are from the legacy cable channels. Now, they're obviously in secular decline, but I don't see the cost synergies, the profits. It's like they said there's going to be$2 to$3 billion of cost savings that's going to flow through. I don't think that this is economically a good deal for them.

56:52Here's the thing. In our lifetimes, there's never been an entertainment merger like this that has worked. Every single time. None of these big acquisitions or mergers in entertainment like this have ever worked. But this is so different. Yes, that's true. And also, there has never been this sort of content plus distribution strategy. Those are two separate businesses. There was never a Netflix type of thing. I would, the thing is I would have way more confidence that Netflix could pull this off. And still, I would be a little hesitant that like, again, we've never seen this work out very good for these companies to do this.

57:24HBO has been passed around to so many different companies at this point. That's, that's my biggest concern. Don't ruin White Lotus for us. Okay. Keep that stuff going. But I think that, I think the bidding war is going to be entertaining though. Yeah. And Polymarket has it pretty much dead even. They have Paramount at 43%, Netflix at 38%. I think Paramount steals it, if I had to guess, on the outcome. And in fact, I wonder if Netflix is counting on that. Could be. Do you think they'd really go through this whole thing just to drive up the price? Well, no, because the breakup fee is$5.8 billion.

57:56So if Netflix – no, that's stupid. If Netflix doesn't get the deal because it either falls through for regulatory purposes – So if Paramount steals it, then I believe Warner has to pay Netflix a two point something billion dollar breakup fee. But if the deal doesn't go through, well, maybe that is a strategy. I have no idea. So the question is, what matters more to the decision making? Is it the CEO who seems like he wants to get in bed with Netflix? Or is it the shareholders who have now been offered a much better deal? Yeah. Now, Paramount needs Warner. Like if Paramount, if Netflix gets Warner Brothers for real and Paramount is just Paramount, they're dead.

58:31Well, then Paramount will just buy Peacock, right? there needs to be consolidation that's what we know i don't know if peacock is for sale well it's going to be like it's if it's netflix and warner brothers and then disney hulu and then it's got to be paramount peacock like there needs to be consolidation just for me because i don't have any passwords that's all i'm asking anyway this is obviously the the most fascinating story uh it really is it's great stuff i mean a company like netflix who's never done a big acquisition like this, just fricking all in. Were you shocked? Like I, I, I, I couldn't believe it.

59:04Yeah. I, I guess I didn't, I did not expect that. It does reek of desperation, but it's also like, well, maybe they're going on the offensive. So I can see both ways. I just think. So they're, they're like, this is just, this is game over. It's like the disruptor bought Hollywood. I mean, Warner brothers is Hollywood. I just think it'll be a blessing in disguise if Netflix doesn't get this because these deals barely ever work out. That would be my baseline. If I knew, how about this? If I knew that Paramount was not going to, if I knew that Paramount was going to steal Netflix, I would buy the stock hand over fist today.

59:39You would buy what? Netflix. You'd buy Netflix? Yeah. Okay. And it's been falling a lot too, right? If I knew the deal wasn't going to go through, I would buy Netflix. I'd back up the truck. All right. I'm looking for a positive spin on Gen Z being so unhappy. And I hope that will mean we get better creativity from them. So there's two things I saw this week that people just love nostalgia, but they don't really know what was going on at the time. So I think people, I've been saying this for a while, people are going to be nostalgic for the 2020s in like 10 years. So there's a story in the New York Times saying - I won't let that happen.

1:00:10I'm going to be the nostalgic grunge. Listen, so is Gen X actually the greatest generation? And they say how one era changed everything about the culture and why we're so nostalgic for its creators. And they talk about everything that came out of the 90s and how great it was. And there was Kurt Cobain and there was reality bites and all this stuff. And they went through all this list of stuff that Gen X created. And it's a, it's a great list, right? And then I saw this tweet going around saying, apparently there is a Gen Z TikTok trend where they were romanticizing being a millennial in 2012. And it's saying like, I want to be in Brooklyn in 2012 because millennials were so happy and optimistic.

1:00:41I'm here to tell you, millennials were not optimistic about anything in 2012. We couldn't get jobs. No, this is, this is a totally rewriting of history but the thing is like they talk about how one of the reasons that gen x produced so much great content is because they're all unhappy like even in the 90s people think about the stuff that came out in 1999 at the height of the dot-com bubble uh fight club and in american beauty and all these movies it was in that movie book that we read the matrix yes all this stuff people were so unhappy and they're saying that's what led to them being so creative and making good stuff so gen z i get it you guys are all sad and depressed and you hate your lives and everything is bad.

1:01:17Make some good art for us then. That's going to be the positive. They can't. There's AI. Make good stuff, Jen. Okay. One thing from last week, I said my heater broke and we couldn't come with the word. A million people said, hey, it's a furnace, idiots. We couldn't come up with the word furnace. Okay. Fair enough. That's a middle-aged thing for me though. I can't come up with any words. Having a word at the tip of my tongue and not me will come up with it. All right. Let's do a recommendation. You got anything? I do. You're not a Wayne's World guy. I enjoy Wayne's role I rewatched it again last year actually okay I don't know if I have mono there's a line where Wayne goes I thought I I thought I had mono for a month turns out I was just really bored I I'm so tired all the time especially when I get into bed I can't I cannot watch anything in bed now maybe maybe it's because Jay Kelly is just really boring but I'm a I'm a I'm actually a no bad guy that might surprise you about me about you surprise you squid and the whale you liked well you're a family you're a child of divorce.

1:02:16You had to watch, you had to like the Squid and the Whale. Love Squid and the Whale. And I liked Marriage Game, Marriage Story, Marriage Story. Oh, I didn't, I didn't care for that one. Okay. Jay Kelly, what did you think? Did you like it? I was going to get on here, I was going to get on here and tell you don't watch it. Here's the funny thing. It was not a good movie. Like it was, it was surprising that it was a Noah Baumbach movie because it was like, it's kind of cheesy. It's very sentimental, but I enjoyed hanging out with Clooney and Sandler. It was the first time Sandler played a normal guy.

1:02:43And Laura Dern, I actually thought, I didn't like how he called everyone puppy. That was a little weird. But I thought Sandler was really good. I liked seeing Sandler and Clooney together. Yeah. Because I thought Sandler actually played just a normal guy for once, even though the movie itself was not good. I give it like a 6.1. Have they ever worked together? Not that I could figure, but I had this thing for you because Clooney is best when he just plays himself in a movie. He's obviously playing himself in this movie, essentially. I thought he was great. I thought he did a really good job. It was just boring.

1:03:13performance was good. The movie itself, I thought it got worse as it went on. I'm trying to think of who's the, I think Clooney might be the best actor who just plays himself. Like, his best role is playing himself. So I thought, like, Ben Stiller plays himself a lot in movies. Seth Rogan plays himself. There are actors who are just, they're better when they just play a version of themselves. And Clooney is the best at that. Owen Wilson? Yes. Wait, so the reason why I brought this up, I was just very bored. I think I watched it three times, four times. I just kept falling asleep. This was one of those movies, and this happens to me sometimes where I watch a movie and I'm like it and I could go either way like if the first person told me yeah that was a good movie like yeah it was pretty good or if you were like dude that stunk I would be like yeah right it did stink like I was yeah I actually I enjoyed it I enjoyed I enjoyed watching it I was entertained but I didn't think it was a good movie how's that you were entertained it was not entertaining it was pretty boring I I liked spending time with Clooney and Sam.

1:04:07Yeah, that's fair. And it was in Tuscany. So like that, so I was entertained. Yeah. Anyway, that's not going in the theater, ever. No, that's a movie that'll never be in a theater. I know, I think it played for two weeks, maybe, but you're right, that's the kind of movie that'll never be in a theater ever again. And nor did it need to be. No, but in the 90s, there was a lot of star power in that, and even like the people who played the side characters. Patrick Wilson was in it, and Laura Dern was in it. Oh, Billy Crudup. Yeah, I love him. He should have been a way bigger star. I had to Google it.

1:04:33I said, wait, is that him? I actually thought that was the best part of the movie, that whole conversation with him. I thought the first half of the movie was better. Anyway, yeah, it didn't feel like a Noah Baumbach movie. I got one for you because you're always looking for great airplane flicks. Caught Stealing is on Netflix. It's a movie with Austin Butler and Zoe Kravitz and Regina King. Was that good? And honestly, so I give it a 6.5. It's, I feel it's a trashy action movie. Like, hey, there's a crime going on and this guy gets pulled. it would have been like a Paul Walker movie in the 2010s or a Nicolas Cage movie in the 90s.

1:05:05I'm in. And then I watched it and it was entertaining and a little over the top. And then at the end of the movie, it said directed by Darren Arnovsky. And I thought, whoa, what? Yes, I couldn't believe it. He's like an artsy, right? Black Swan, isn't that him? Yeah. And I thought, I underestimated, I did the Shaq meme of, I did not know your game. Austin Butler, I thought he was like a guy who takes himself way too seriously. I love when actors will do movies that they don't take themselves too seriously in. That was the best part about Nicolas Cage. And I feel like I give Austin Butler credit for doing just a trashy action movie.

1:05:39Okay, I will definitely watch that. Finally, you talked me into listening to Unscripted. And I think that's how I'm going to consume all of my nonfiction reading now. I'm going to read fiction. I'm going to listen to nonfiction. Did you finish it? I'm three quarters of the way done. And I thought about it through the lens of succession. and I told you this is, it's even crazier than the stories in succession. It's, I think people with that much money and that much power, never say never. I don't think I'd ever want to be a billionaire with that much power. It does not sound like a good life to me.

1:06:11Everyone around them is just an enabler. The two women who were with him in his house were probably in the top 10 gold diggers of all time. Did you Google each of these characters to see what they looked like? I'm waiting till I finish reading and then I'm going to. Interesting strategy, okay. but I really liked the story of the guy who came in and he was kind of a lowlife, the Palmer guy or whatever. Great character. It probably should be a movie, but they won't because it's succession. And we obviously just missed that the first, when it came around, I just didn't follow the story of Summer Redstone.

1:06:42But I think just money and power and how it can consume you and make you just an evil person is, I would never want that. He was an evil person. The way that he treated his daughter and his family, just a despicable human being. So I'm glad that you enjoyed the book. I listened to, I finished Disney War, also by James B. Stewart, I think is his name. Phenomenal. Eisner and Ovitz and Katzenberg and great stuff. Doesn't it just make you never want to have that much ambition in your life? I mean, we're ambitious people, but the amount of ambition those people have is, it's like - Well, it's power.

1:07:17It's too much power. Because when you get the mantle, everybody is gunning for you and trying to stab you in the back. And it's no way to live. Like, yeah, I don't want that. Right. So, yes, good rec there. Anything else? Oh, Diddy Doc? No, thanks. Not for me. Okay. I did watch the Jeff Buckley doc on HBO because I was a child of the 90s and liked his music. and one thing about the 90s that I think is probably going to make a comeback is the video quality was just better back then. Like when you see a video recording of the 1990s, like a handheld camera or whatever, and it has that grainy quality, it just looks better on a documentary than like the HD stuff we have today.

1:08:10Doesn't that kind of make you nostalgic for that time here? Seeing the grainy quality, like the stuff you'd see in America's Funniest Home Videos or something, the date is in the bottom left corner. Something about that video quality. I don't know that I loved being 14 years old, but I like, I like memories of that time, even if I didn't enjoy it at the time. See, all this, this is what being a human being is. We're looking for moments that we can have, be nostalgic about. All right. Thanks to the production crew as always, Duncan and team. Remember, if you are listening to this, check it out on YouTube occasionally because all the charts and stuff are there and they do a great job making us look like idiots sometimes, making us look funny.

1:08:46Check out exhibit A for advice.com for all your charting needs. If you're an advisor, email us, animal spirits at the compound news.com. Also check out talking wealth. I think Josh is on this week. Oh, we got a banger. I'm glad you, I'm glad you plugged it. I almost forgot. The headline stat is something like 90 % of REAs are shrinking net of the market. Compound insights has a new research report out and Josh spoke with the author, Mark Bruno, and it is a banger. So check out talking wealth on YouTube or Spotify. See you next time.

1:09:20Thank you.