Netflix’s Amended Offer Puts Pressure on Paramount

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1:23This is Bloomberg Tech. Coming up, Netflix reaches an amended all-cash agreement to buy Warner Brothers Discovery's studio and streaming business aiming to expedite the sale. Plus, we bring you some of our top tech conversations from the World Economic Forum. CEOs from G42, Anthropic, DeepMind and many more. And VC firms continue piling into defence tech. This as geopolitical tensions escalate between the US and Greenland. And that takes us to the markets, Ed, because the tussle over Greenland, the concerns around further tariffs on Europe and what Europe's reaction to the United States might be has got volatility higher and risk assets lower, We're selling America again.

2:02Nasdaq off by 1.2%, having its worst day in over a month. The S &P 500 wipes out its gains for the year, and you're seeing money move into the havens such as gold. Ed, what are you looking at underneath the hood? I'm looking at Netflix reaching an amended agreement with Warner Brothers Discovery for an all-cash offer to buy the studios and streaming businesses. And remember, the plan is for them to then spin off the legacy networks. And this was the overhang. Paramount's argument was that its bid was superior because of the stock component that had been in Netflix's initial offer. Bloomberg reported last week that this was going to happen.

2:39So it's confirmation. That's where the names involved are trading. There's still a lot more to come, of course. Let's get the reaction and analysis to the new offer with Geetha Ranganathram from Bloomberg Intelligence. And you write two things in your research. The first, that this ramps up the pressure on Paramount, Geetha. but also it raises the stakes for Netflix. Let's start with why you think this ramps up the pressure on Paramount. Yeah, this really ramps up the pressure on Paramount because really the ball is now in their court. They've been arguing for the longest time that the Netflix offer obviously is not that great because it had that stock component.

3:15Now, obviously, Netflix making it an all cash deal. And now really what this hinges on is the value of the cable networks business. So remember, Netflix is only buying the studio and streaming assets. There is still that cable networks business from Warner, which they expect to spin out. And if you read a filing that was put out by Warner today, they have those cable networks valued anywhere from about one and a half dollars, depending on how you value it, per share, going up to as high as about seven dollars a share. So, again, I think they believe that they can actually extract more value if they go ahead and they complete that spin out.

3:50So now really, this is really kind of up the ante for Paramount. They have to raise their bid significantly, I would think, in order to sway Warner's board. Itha, you think$32 is the magic number. Why? I actually think, so$32, we think, is a starting point to get Warner back to the board. Just kind of looking at the value of the networks, looking at possible termination fees, financing costs. But really, again, we think that, you know, Warner really looks at its cable networks business. Yes, there is no doubt that this is a declining business. It faces a lot of secular pressure from cord cutting.

4:29But at the same time, I mean, they do have some great assets. They have international exposure. You know, they can possibly sell CNN. So they think they can extract a lot of value, which is why we think that Paramount might need to go up to about$34 to fully kind of get on board. Keith, again, Netflix adjusting to an all cash offer in part because its own stock that was part of its initial offer has been under pressure since this all started. We get earnings after the bell. What are you expecting to hear from Netflix and what do investors need to hear to give them confidence that this is the right path forward?

5:04Yeah, what really investors need to hear is, first of all, I think everybody's looking for really good 4Q numbers. And that should, I think that should absolutely, Netflix would absolutely deliver on that. But I think the major thing that investors are going to focus on, Ed, is going to be guidance for 2026. The magic number that consensus is looking at is 13 % revenue growth. Should Netflix guide to anything lower than that, I think they are going to be in trouble. Keith, it's always great to get your take and your analysis, which is so instant when we have this breaking news. We appreciate it from Bloomberg Intelligence.

5:37Let's stay with the context of earnings, with where MAG7 names are, whether they're set, of course, to begin reporting next week as the big ones like Microsoft, Tesla, Meta kicking things off on Wednesday. But, of course, Netflix is tonight. Tiffany Wade, Columbia Threadneedle, Senior Portfolio Manager, joins us as we are on the cusp of earnings and as geopolitical headwinds seem to just shift the narrative entirely. When you see down days like today, should people making the most of it, buying into weakness? I think that's the case. The backdrop for stocks still looks very good. Obviously, the headlines over the weekend are creating some volatility, and I'm not surprised to see some selling just given stocks have been very resilient.

6:15But the backdrop for the economy, and I think the market is still very strong. So yeah, I think this should be an opportunity. And then earnings coming up will bring the focus back to fundamentals. Are the fundamentals good? I think they should be pretty good. Demand, especially you mentioned the Mag7 and the hyperscalers. I think we're going to see great numbers out of those companies. Importantly, I think we'll probably continue to see very strong CapEx numbers, which is important for a lot of the tech sector. So I think those should be good indicators for the rest of the market. The reality right now, Tiffany, is that tech's a big underperformer in the session, right?

6:48It's a moment in time, but the S &P 500 has wiped out its gains from 2026. This is escalating, not de-escalating? Where do you expect markets to go from here based on the headlines that have come out from President Trump and what's happening with Greenland? Yeah, I think we could see some more consolidation, maybe a few points lower in the market. Certainly, volatility might lead to additional selling. But again, I think this is a good opportunity. And as we get farther into earnings, I think things will stabilize. The biggest declines are in the biggest names, some of the MAG7 names, is that just general sort of anxiety, geopolitical anxiety, as opposed to some direct read through where if this tariff threat is enacted, it is those names that are hardest hit?

7:36I think that's fair for today. I think it's just a general selling of the market. We're not seeing additional selling in names that might be hardest hit by the tariffs. We don't have a ton of additional details on what these tariffs might look like. So I think this is just a reflection of broader selling in the market that's hitting the largest names the most today. So I'm getting love. Intel is actually getting love at the start of the year more broadly. We seem to be betting once again, not just on the GPU Führer, but also CPU Führer and everything around AI. And they still going to be a winners.

8:04And how nuanced do you need to get on name by name? Yeah, I think we're definitely seeing people try to pick spots outside of the main winners so far. So outside of the NVIDIAs and the Broadcoms, trying to look for other ways to play the AI trade. Intel's been a case of that. We've seen the semiconductor equipment stocks have done well so far to start the year. The memory stocks are also ways that people have tried to play this sort of broadening AI exposure. Intel, I think, is a trickier one because they do still have trouble with their foundry business. But I think there's definitely some other opportunities where investors are looking for other ways to play the AI trade.

8:38Are you looking at other ways to play the AI trade? Like, NVIDIA is such an important part of some of the portfolios you run. And should people be expanding or are there still previous winners going to keep on giving in 2006? Yeah, I think the fundamentals for NVIDIA are still very good. But I think it makes sense that people are looking for what the next leg of the value trade may be for AI. So we're certainly looking at other parts of tech like the semi-cap equipment companies, but also companies that are involved in the infrastructure buildup for AI. So things like electrical equipment. Tying that all together, please, Tiffany, then, you know, next week is huge.

9:10What are the data points that you look for when those biggest technology names have earnings? Of course, we've studied capital expenditure closely, but we're trying to gauge this time. When does it transition to you guys saying we need to see really big top or bottom line growth to feel confident that this AI thing is real? Yeah, I think especially for the largest hyperscaler names, we need to see continued acceleration and growth of the cloud businesses. And then we also need to see the CapEx numbers remain stable or higher for the year. And I think those are kind of the two large indicators that we'll be looking at from those companies in particular.

9:45Which of the world's technology companies are you going to be paying most attention to, Tiffany? I think in the near term, it's, you know, the Mag7 and especially Amazon, Microsoft, Google, and then Meta also, which had a big CapEx announcement last quarter. That's all of them. So interesting to see what they have to say. I mean, we had nice tea leaves already, if you're looking at earnings from TSMC. And that's something that you've been looking at, semiconductor equipment manufacturing. How much resilience did you hear from that company? And how much do you just put AI bubble worries to one side?

10:19Yeah, I mean, they commented that they don't think that there is a bubble in AI, that they're seeing a ton of good demand from their customers. And I think that's reflective of the entire ecosystem for AI right now. And that's a great indicator for, again, like you mentioned, the semi-cap equipment names and also a good indicator of demand we're seeing from memory companies, which are part of the value chain as well. Tiffany, one of the things that's come back out of Davos is the idea of whether America should or should not allow technology to be exported to China. You know, when you're coming up through the ranks of Bloomberg Television, you kind of learn about China as the engine room of the world economy.

10:55And I've always been curious to ask you how much you worry about that. the balance between need to accessing that market and the competitive risks in exporting technology and national security risks to a market like China? Yeah, I think this is a very tricky one, right? Because we want to keep our dominance in AI and technology and development of new technology, but we also don't want to force China's hand to sort of replicate some of our technologies or develop their own technologies. So keeping them, you know, to some extent dependent on our companies is also an interesting balance to strike.

11:26So honestly, this is a very tricky one to figure out. Tiffany Wade of Columbia Fred Needle, great to have you on Bloomberg Tech. Thank you very much. Now, Bloomberg is in Davos this week speaking to leaders across finance and tech at the World Economic Forum. Coinbase CEO Brian Armstrong is speaking with Bloomberg's Emily Chang. Listen to this. About the flight risk concern. Yeah, so that's certainly one of the core parts of the debate. I think that some of the bank CEOs I've spoken with with have kind of said, hey, we have this really high regulatory burden for being a bank, and what you're doing kind of looks like a bank, and so we think it's super unfair.

12:04You should have to have a bank license too. And what I tell them is, well, we're not doing something very important that you do. We do not do fractional reserve lending, which means, for those who don't know, at a bank, you deposit your funds. They're not keeping your money there. They're actually lending it out and earning interest on that, and then they pay you a very small percentage of that, like the average savings account makes like 14 basis points or something. And that's called net interest margin, and that's the whole bank business model. And so that's why they have such high regulatory burden, because there can be a run on the bank.

12:34Like your money is not all there. In a crypto world, there's a 100 % reserve. So all your money is there. It eliminates this entire category of risk around a bank run. No such thing is possible if there's 100 % of the money there. And so we don't need a bank license. We're regulated by the SEC, the CFTC. We have a national trust charter. Like there's different entities and stable coin issuers can operate under these models as well. And so we've kind of said, you know, we don't need a bank license. That's what currently already exists in the law. The Genius Act even enshrined that further. And so there has to be some other solution here.

13:11How do we flip the banks from thinking of this as a threat to an opportunity where we can all go win? Let's talk about the opportunity. You know, we started off talking about how crypto has had a lot of momentum lately. A lot of that was when crypto was on a tear. The markets have definitely pulled back over the last couple of months. So here, I know this is always your favorite question, but is winter coming? Well, there's always short-term fluctuations in crypto, but I think, you know, if you look over the last two years, Bitcoin's up like 100%, pretty great outcome for anybody who invested.

13:44I've said publicly I think that Bitcoin could hit a million dollars by 2030. I still think that's true. So whatever happens in any given week or month, we try not to track it too much. It's the longer-term trend that I think is interesting. So Bitcoin hit an all-time high last year, 125 ,000. What about 2026? Let's do a shorter-term horizon. Where is it going in 2026? Well, I don't like to make short-term predictions because who knows? It's the market, short-term voting machine, long-term weighing machine or whatever. So I don't think people should be day trading unless you really want to do that.

14:19I'm more of a buy and hold kind of guy for the long term. And I think that the cool thing about Bitcoin is that it doesn't, unlike fiat currency, there's no money printer. So the supply of it is fixed. It's finite. Coinbase CEO, Brian Armstrong, there, along with Bloomberg's Emily Chang. You can watch the full Far Side Chat. Just go to LiveGo on your Bloomberg terminal. Meanwhile, coming up, we'll bring you our exclusive conversation with Peng Shao. He's the CEO of G42. We're going to discuss the UAE's role in global AI development. That's next. This is Bloomberg Tech.

15:02Back to Davos now, where Bloomberg's Germano Pesce sat down with Peng Shao. He's the CEO of G42. They discussed building AI infrastructure and the UAE's role in the global AI development. They spoke on the sidelines of the World Economic Forum, of course, starting with the chip imports amid existing restrictions. Just take a listen. In this complex world of AI, nothing is straightforward. But I must say that through the past half year, since the May summit in Abu Dhabi, we've made tremendous progress. I'm happy to share with you that the first batch of the most advanced AI chips will be shipped to the UAE probably in the next couple of months.

15:43And those are mostly NVIDIA chips? They are mostly NVIDIA, but we also received the export license for Cerebus chip, which is a company we backed to start up in California, and also AMD. Yeah. Did you have to give security assurances to the U.S.? Absolutely. In fact, it was not just a theoretical pledge. it's something we had to practice for the past three years now to physically demonstrate we have the ability to ensure the safety and security of this advanced technology from the US. I.e. that there's no possibility for that technology to be passed on elsewhere. Cannot be trans-shipped. Yeah.

16:19There's no backdoor for remote access by unapproved parties, so on and so forth. Yes. Let me ask you a big picture question, which is the fact that obviously 2026 was 2025 was a big year for AI just in terms of the mainstream discussion around it. And I think there are pockets of the market where people started to speak up and say, there's so much money going into this space, especially on capex investment. It's going to be really difficult to generate a return on investment. Where do you stand in that debate? I think there are three major factors to cause concern or doubt or even fear in this global AI movement.

17:01One is that it's clear now, as we discussed earlier, AI has entered our societies. AI is demonstrating it potentially can do many things humans are doing today. So job security is one concern. That's number one. number two as we have seen ai does require so much electricity especially on the in the us there are such debates already can these centers eventually take power away from people who need it to be left in the cold and have ai consume all the power this is power concern number number two number three really is a concern about a global race can we be actually left behind and what this means for government, for national security.

17:49I think all these are factors to cause certain pockets in the U.S. and elsewhere. People are confused, concerned, and asking for a pause. But I think it's a mistake. Because if we pause, say, in the U.S. or U.S. ecosystem or U.S. allies, many other nations...

18:15That was Peng Shao, CEO of G42, along with Bloomberg's Germana Bissetchi. Staying at Davos, Anthropics CEO Dario Amadei is warning the Trump administration against exporting advanced chips to China, calling it a mistake with serious national security risks. He sat down with Bloomberg editor-in-chief John Micklefwaite at Bloomberg House, where the discussion started on the state of China's AI models. Listen to this. I think they never really caught up that much. So, you know, of course, there was this huge excitement around DeepSeq, right? But, you know, the truth was a couple things. One, you know, those models are very optimized for the benchmarks.

18:55It's actually very easy to optimize a model for a finite list of benchmarks. When we go out into the world, right, when we're, you know, competing against other companies for enterprise contracts, we see just honestly and candidly, we see Google and we see OpenAI. Every once in a while, we see a couple other U.S. players. I have almost never lost a deal, lost a contract to a Chinese model. But now you have the Trump administration, and I think you've already protested about this, giving high-speed chips, NVIDIA chips to the Chinese. That's right. That's right. The thing that is holding them back, and they've said it themselves.

19:36The CEOs of these companies say it's the embargo on chips that's holding us back. They explicitly say this. And now, indeed, you know, there are some policies, and I hope they change their mind, to, you know, to explicitly send not quite our latest generation of chips, although it was reported that even that was being considered. But, you know, the generation of chips, that's just one back. That's still extremely powerful. And we are many years ahead of China in terms of our ability to make chips. So I think it would be a big mistake to ship these chips. You know, the analogy I thought of, if you think about the incredible national security implications of building models that are essentially cognition, that are essentially intelligence, right?

20:25I've called where we're going with this, a country of geniuses in a data center, right? So imagine 100 million people smarter than any Nobel Prize winner, and it's going to be under the control of one country or another. so I think this is crazy I think it's a bit like I don't know, like selling nuclear weapons to North Korea Anthropik CEO Dario Amadei there speaking with Bloomberg Editor-in-Chief John Micklethwaite coming up, just check out this list of investors backing the new startup HumansAnd we'll find out what's driving the excitement and the huge funding round for a company fresh off the blocks this is Bloomberg Tech

21:20humans and a new startup building a frontier ai lab has raised a 480 million dollar seed funding round at a 4.48 billion dollar valuation an unusually large haul for a young startup bloomberg's vc reporter Natasha Mascherinus joins us now. What is the news here? I mean, is it the seed round or the valuation? What do we need to know? Yeah, I mean, this is one of the largest seed rounds in private market history. I also like to say this is the new normal for Frontier Labs. This is five top researchers and technologists leaving Anthropic, XAI, Google coming together and launching, honestly, a competitor to their previous employers in a new way.

22:03So to me, the news is that the AI bubble talk is at least, you know, a step back for now because we are seeing investors back these early companies at very high valuation. And strategic investors like NVIDIA, for example, what new do we need in a frontier lab right now? Yeah. So the real question that we have is what does Humans and really going to launch with? We don't have a really strong idea of what their first product is going to look like. But to me, it's really being set up as the opposite of the set it and forget it agents. It's going to be more collaborative. When I spoke to the company, they said that it's going to be more focused on long-term outcomes for communities and individuals.

22:46And to me, that says, you know, maybe there will be a chat interface down the road, but it won't be instant. It might be more focused on memory or collaboration. So what I'm watching is really to see if that's going to be the follow-on that they promised. We just have 20 seconds, but I guess is the clue in the investors themselves? I would say NVIDIA coming out as an early investor is all you need to know about how serious they're taking the compute needs of what they're going to do. So that's what I would watch. It's Natasha Mascarenas. It's a great write-up. Thanks for coming and explaining it today.

23:16Meanwhile, coming up, Replit Investor, what we know about their funding round of late, Well, Georgian is the key investor in that. Margaret Wu joins us now to talk about her new portfolio company, that's Dominion Dynamics, and why she's getting into defense tech. This is Bloomberg Tech.

23:53Welcome back to Bloomberg Tech. Checking on these markets that are under pressure. Worst day that we've seen in, well, at least a month. The Nasdaq 100 are off by a percentage point. S &P 500 raises all of its annual gains. We are selling off risk assets, whether it's bonds, whether it's the dollar, whether it's Bitcoin as well, we're off by more than 2.6%. Your flight to safety is in gold and metals. Why? Because of geopolitics. Worries about Greenland. Worries about a dial-up in tariff threats going towards Europe and what their response might be. You keep your eyes peeled on what's happening from the focus of geopolitics and President Trump.