Paramount Beats Netflix in Battle for Warner Bros.

Paramount Beats Netflix in Battle for Warner Bros. | Pivot

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Paramount Beats Netflix in Battle for Warner Bros. | Pivot

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1954 segments

0:00

You sound smarter when you

0:01

catastrophize. It sounds scarier and

0:03

more interesting. And you put some bar

0:05

charts around you talking about the

0:06

zombie apocalypse in a downward spiral

0:08

doom loop.

0:15

Hi everyone, this is Pivot from New York

0:17

Magazine and the Vox Media Podcast

0:19

Network. I'm Cara Swisser

0:20

>> and I'm Scott Galloway.

0:21

>> Why don't you give us an update because

0:23

February is coming to an end. You've had

0:24

over 20 million views across social

0:26

media and over 1.5 million site visits.

0:28

obviously has a lot of momentum. People

0:30

mention it to me all the time. Your

0:32

website touts $242 million loss in

0:34

market cap. Talk a little bit about how

0:37

it's gone because we have something to

0:39

announce. But first, give me a little

0:40

update and then you can do the big

0:42

announcement. Yeah, look, I'm the honest

0:45

truth is I'm struggling because it's

0:47

taken a lot of time and a lot of effort

0:49

and it feels as if it's the momentum is

0:52

actually cumulative and building and

0:54

I've had a lot of different kind of

0:56

smaller I don't know resistance programs

0:58

reach out and say what are we are going

0:59

to do in March should March be should we

1:01

met March where we focus on one company

1:03

or focus on open AI should it

1:06

>> right so and how do we keep it going

1:09

because it does feel like it's

1:11

>> it's building momentum and to just shut

1:13

it down at the end of the month feels

1:15

like a loss of effort and momentum. So,

1:18

>> I'm quite frankly, Cara, and I want your

1:20

advice. I'm trying to figure out what to

1:21

do with it going into March.

1:23

>> Well, as I said, uh first of all, let me

1:26

well, before I say what we're going to

1:28

do to in March, um is uh I think you

1:31

should hire someone specifically, not

1:33

part of your team, but hire someone to

1:36

really keep it going. and someone who

1:37

wears Birkenstocks, lives in Brooklyn,

1:39

>> a lesbian,

1:40

>> someone with rich parents putting them

1:41

putting them through nonprofit.

1:43

>> Whatever it takes, Scott, whatever it

1:44

takes, but I think it's important to to

1:46

have someone at

1:47

>> Do you drive a Subaru?

1:49

>> No, my son does. Um, so

1:52

>> your son would be great at this. What's

1:53

Louis doing?

1:54

>> He's in San Francisco working for

1:56

>> Oh, perfect.

1:57

>> No, you're not. No,

2:00

>> I don't know if you've heard, but I pay

2:01

really well.

2:02

>> I know. Well, we have a lot of dick

2:04

jokes, but I compensate 50 to 100% of

2:06

market. True story. The dick jokes and

2:08

the compensation.

2:09

>> Wants to help. You know who you want is

2:11

Alex, but he wouldn't do it. Alex is so

2:13

like he would engineer this out of

2:15

>> Michigan. He's taking like organic

2:17

chemistry and computer science. He's

2:19

working for

2:20

>> and working out and like lifting lifting

2:22

buildings. And

2:23

>> this the title that he has for this

2:25

summer where he's working his advanced

2:28

manufacturing product integration

2:30

engineering intern.

2:32

>> That rolls right off the tongue.

2:33

>> I know. I was like, wow.

2:35

>> Can he just say pole dancer?

2:37

>> Pole dancer. Advanced manufacturing

2:39

product integration engineering intern.

2:41

That is what my second son is doing. Did

2:43

I tell you when I was on uh the college

2:45

tour with my son Alec, the first thing

2:48

the literally the first thing the first

2:49

impression we got of Michigan was Alex's

2:52

fraternity and we were both like just

2:55

scared

2:56

>> scared as he's leaving the floors were

2:59

sticky

3:00

>> sticky.

3:01

>> It I I lived in a fraternity and I don't

3:04

I don't I it like brought back I'm like

3:06

was it this bad?

3:07

>> Yes. And it smells like beer. Old beer.

3:09

>> Oh yeah. A beer.

3:11

deer and seaman. Um, yeah, I know. But

3:15

yeah, it just uh

3:16

>> Yeah. Yeah. He's he's going to live in

3:18

an apartment for his senior year. But so

3:20

he's leaving the frat finally. And my

3:22

little boy is

3:23

>> Yeah. And the house was clearly built

3:25

like 200 years ago. He looked like

3:27

Guliver roaming around.

3:28

>> Yeah. Yeah. You want to go back? I feel

3:30

like you want to go back for a party.

3:32

But speaking of I'm in.

3:34

>> Okay. All right.

3:34

>> I'm definitely that pathetic guy that

3:36

shows up at the fraternity party when

3:38

he's invited.

3:38

>> Yes. No. That's so sad. um that there

3:41

was there was a shot there was a Seth

3:43

Rogan movie like that. Anyway, listen,

3:45

>> we are going back to the Midwest. Let me

3:47

just say this is not ending. I think you

3:49

should hire someone. I think you should

3:50

keep going. But we are going back to the

3:52

Midwest. We're not going to Ann Arbor,

3:54

but we um uh Scott and I are coming to

3:57

Minneapolis. We talked about it on the

3:58

show and then we made it so along with

4:00

our great team here. And you can see us

4:02

live. We're going to celebrate, resist,

4:05

and unsubscribe and keep the momentum

4:07

going. We're going to do a live show at

4:09

the Is it the Pantages Theater?

4:11

>> Pantageous. I've been

4:12

>> Pantageous Theater on Sunday, March 8th.

4:15

We will be there.

4:16

>> I want to meet Roa from Mary Tyler

4:19

Moore. That's why I'm going. That's And

4:22

you know what? I hope she's wearing a

4:24

raspberry beret. Get it? Get it, Cara.

4:28

Little local. Little local humor there.

4:31

>> Talk about the tickets. They're not

4:32

available yet, right?

4:33

>> They go on sale. I think by the time

4:34

this airs, they're on sale. Yeah,

4:36

>> we're going to be donating all proceeds

4:38

to the Minneapolis Immigration Center, I

4:40

believe it's called.

4:42

>> But we want to do something. Well, a

4:45

very supportive and we've decided I

4:47

won't say we wait. I've decided I want a

4:49

fra I want my efforts off the [ __ ]

4:52

keyboard and off my to be a fraction of

4:55

the virtue signaling and action I claim

4:58

I claim to, you know, want to have. And

5:00

so I pitched you on this idea and we

5:03

thought, let's go to Minneapolis. We

5:04

want to bring some economic activity. We

5:06

want to salute them. We want to

5:08

basically say over and over that they

5:10

[ __ ] with the wrong cowboy when they

5:12

came to Minneapolis. It's going to be a

5:15

nice event. You, of course, are totally

5:16

wellconed. We're going to have a bunch

5:18

of fun and famous surprise guests.

5:20

>> Yes.

5:21

>> And we're going to do we're going to do

5:22

a live show and basically nod to the to

5:25

the incredible Americans known as

5:27

Minneapolis.

5:28

>> We love the Minneapolis. and the the if

5:31

you jump straight to the website the the

5:33

you can find a link to buy them when the

5:35

tickets are available. We think they're

5:36

going to be available on Friday uh at

5:38

resistandunsubscribe.com.

5:40

We've got a thousand tickets. Uh again,

5:42

the money goes straight to charity. We

5:44

will do we're going to run this show on

5:46

pivot too. So we'll talk about some

5:48

current events, but we're going to focus

5:49

on what's happening here with Resistant

5:52

Unsubscribe. And we know we have a lot

5:53

of fans there and we love Minneapolis.

5:55

We love what the city has done and we

5:58

want to give back in some way. And this

6:00

is one of the many ways because what

6:02

happened to you was heinous and at the

6:04

same time tech companies have a lot to

6:06

do with this like let's be clear. Um and

6:09

so we really what Scott is doing here is

6:11

giving you guys have resisted and we are

6:15

going to do our little part and it's a

6:17

little part compared to what Minneapolis

6:18

has done. But tech is not not it's not

6:20

the only reason obviously but it's

6:22

played a part in where we are today. And

6:24

so um we're going to resist and

6:26

unsubscribe and everyone's going to

6:27

unsubscribe. Speaking of unsubscribed,

6:29

Scott, I unsubscribed from One Medical,

6:31

which is an Amazon uh product. Um,

6:33

>> did you have the 99 a year or 199 a

6:35

year?

6:36

>> 199 a year.

6:37

>> And were you using it?

6:38

>> I a little bit. Yeah, absolutely. And I

6:40

love

6:40

>> I love the service. I just hadn't used

6:42

it in several years.

6:42

>> Yeah, I I I use it when I get like an

6:44

ear in every time I get an ear infection

6:46

or something like that or clean out my

6:48

ears or a cold or a flu.

6:49

>> That's a little too much information.

6:50

Tell us about the ear cleaning.

6:52

>> Okay.

6:52

>> Tell us about the ear. wax in my ears

6:54

and so I've unsubscribed our entire

6:56

family from it could be less attractive

6:59

to a heterosexual.

7:00

>> Um

7:01

>> anyway I'm I'm doing just fine by the

7:03

way. Anyway, we've got a lot to get to

7:05

today but March 8th Minneapolis tickets

7:08

will be on sale soon. Please come. Um

7:10

and we're super excited to see you.

7:12

We've got a lot to get to today. So

7:14

we're going to dig in. First, President

7:15

Trump delivered the longest State of the

7:16

Union ever on Tuesday, 1 hour and 48

7:19

minutes, where he of course said

7:20

Americans were telling him, "We're

7:21

winning too much." Uh, did you watch

7:25

Scott thoughts?

7:26

>> It was on too late. I watched I did what

7:28

I did with almost all media broadcast on

7:31

traditional cable. And as I watched it

7:32

in bits and pieces on, you know, Tik Tok

7:35

and reals the next day, I felt like

7:38

>> for Republicans, I felt as if they were

7:40

attending their ex-wife's wedding when

7:42

you're still on her health insurance and

7:45

but he but she controls the military. It

7:48

felt like dear leader in the Duma where

7:51

they thought I better stand and applaud

7:53

or I risk execution.

7:54

>> Yeah, totally.

7:55

>> So, I found it I don't know. I I quite

7:59

frankly I thought it was a bit of a

8:00

nothing burger. He didn't he didn't say

8:02

a hell of a lot. I thought he came

8:03

across as quite robust to be fair.

8:05

>> He came across as robust, but he moved

8:07

very quickly by the end into very

8:10

deflated. Like it was really, if you

8:12

watch the whole thing, he started off

8:14

real like energetic and then he got

8:17

mean. He was normalish for him and

8:20

that's a that's a very low bar, but he

8:22

as you as the night progressed, he got

8:24

super mean calling the Democrats crazy.

8:26

And then that [ __ ] idiot in the back,

8:28

Jo JD Vance, was like like he looked

8:32

like such a dope. He has he has no right

8:34

being to be president. Sorry, I'm going

8:36

to He's just such a dope. Um the Supreme

8:38

Court went and stonyfaced and every time

8:41

Trump did something like the Democrats

8:43

are crazy. The Republicans, as you said,

8:44

jumped up like a bunch of like like

8:47

dancing monkeys essentially. The Supreme

8:49

Court sat down, the military looked

8:51

straight ahead, which was really

8:53

interesting. And of course, the

8:54

Democrats sat down and they wanted the

8:56

Democrat to have photos of the Democrats

8:57

not agreeing with immigrants shouldn't

8:59

kill American citizens. They wanted

9:01

photos like that. I thought it was

9:03

mendacious and if you look at any of the

9:06

lie stuff, there's a lot of it. I

9:08

thought it was it veered into cruel as

9:11

usual. And then the worst part was it

9:14

was dull. It was actually dull. And

9:16

that's to me the worst part. And of

9:18

course the numbers show much less people

9:20

watch it. 28 million versus 36. It's

9:22

like um doesn't have any staying power

9:24

and he denied Americans were suffering.

9:26

That's one of the things which I thought

9:28

was a mistake. So

9:29

>> I thought from a political standpoint,

9:31

is it Abby Spanberger? Is that her name?

9:33

>> Yeah, Abigail Spanberger.

9:35

>> Uh Abigail,

9:36

>> governor of Virginia.

9:38

>> I thought her rebuttal was outstanding.

9:40

And I I came up with an idea. I want to

9:42

pitch you and I'm serious now. And I

9:43

actually called one of our favorite

9:46

senators and I said, "I have an idea.

9:48

Uh, I think they should hire,

9:51

if you think about essentially the

9:54

Democratic response should turn into

9:56

what the halftime show is to the Super

9:58

Bowl. And that is a halftime show had

10:00

almost no relevance 40 years ago. Now

10:03

it's bigger than the Super Bowl.

10:05

>> I said, "Hire Jay-Z's Rock Nation."

10:07

>> Oh,

10:08

>> fill a stadium with 10,000 rabbid

10:10

Democrats.

10:11

>> Yeah. And then you get all excited.

10:12

>> Music, cool,

10:15

cool intro. amazing artists,

10:18

uh, graphics, visuals, great lighting,

10:20

because the problem is the followup,

10:22

whether it's Marco Rubio responding, the

10:24

response always comes across as flat

10:26

because it lacks the sex and the majesty

10:28

of the

10:29

>> jazzed up. I agree. The lighting wasn't

10:30

good.

10:31

>> Let's sex it the [ __ ] up because if you

10:33

listen to what she said, if you read her

10:35

response,

10:36

>> yeah, it was good.

10:37

>> It was outstanding.

10:38

>> The lighting was bad. This the setting

10:40

was bad.

10:40

>> It's just they can't compare. It's like

10:42

going from

10:43

>> the Greek theater to you're, you know,

10:45

you're watching something on laser disc.

10:48

>> Yeah.

10:48

>> It reminds me of you, I think you'll

10:50

appreciate this.

10:50

>> myself for thinking that, but I'm like,

10:52

the lighting's bad and the setting is

10:53

bad. It's

10:54

>> um

10:55

>> away and it was too close.

10:57

>> When I was renovating a house in the

10:59

Hamptons, let's bring this back to me.

11:02

Um, I used to go to the g the 7-Eleven

11:04

and a bunch of guys uh uh would roll up

11:07

and I'd say, "Okay, I need some guys to

11:09

do stunt studing or something like this

11:11

in my general contract. I would just sit

11:12

in the passenger seat with a bunch of

11:14

cash." And I had no less than 12 or 15

11:17

workers at any time at my house doing

11:19

[ __ ] And at night I'd roll in and

11:22

they'd all be in the kitchen with a VCR

11:24

and a big like four pizzas and like 24

11:29

um it was either a Medelas or something

11:31

else and they'd have this bad black and

11:33

white TV and all these guys would just

11:34

be sitting around watching porn.

11:36

>> Oh

11:37

>> yeah. And I remember thinking this is

11:39

odd. This is odd.

11:41

>> Story is odd. But go ahead.

11:42

>> This is odd. No, that's it. That's the

11:44

whole story.

11:45

>> Okay. Okay.

11:45

>> That's the whole story.

11:46

>> Don't do that. Democrats do not have

11:48

Medela pizzas in Pol.

11:49

>> I had a This is what a douchebag I was.

11:52

>> I had a sand beach volleyball court.

11:55

>> Okay. Okay. You're losing the

11:56

resistance.

11:57

>> Optimized for the ladies.

11:58

>> All right. Okay. Let's move. You have

12:01

progressed to a better person and now

12:03

you're a lesbian going to Minneapolis.

12:05

I'd like you to wear Birkenstocks, by

12:06

the way. I think that would be great.

12:08

Anyway, it was a nothing burger and he

12:10

looked mean and I I thought he got he

12:13

real got and and started doing the blah

12:15

at the

12:16

>> he didn't say anything and he didn't

12:17

outline he teased tax cuts which I was

12:20

interesting to see. Okay. He didn't talk

12:21

about AI much. She didn't do anything

12:23

forward.

12:23

>> He didn't really He didn't really talk

12:25

about Iran much. He didn't

12:26

>> The show is The show is winding down.

12:29

That's what I thought. It reminded me at

12:30

the end of

12:32

>> The Apprentice. It wound down. It

12:34

suddenly wasn't interesting. It was

12:35

macdacious and cruel, but that that's

12:37

sort of table stakes with him.

12:39

>> Dull is what I thought. Hi everyone.

12:41

Scott and I just recorded earlier today,

12:43

but I'm jumping on because a major story

12:45

just broke. After a long battle,

12:46

Paramount has won the Warner Brothers

12:49

Discovery Bidding War. or at least for

12:50

now. Netflix has released a statement

12:52

saying the deal is quote no longer

12:54

financially attractive. It never was.

12:56

And it was quote always nice to have at

12:59

the right price, not a mustave at any

13:01

price. Perman had upped its offer to buy

13:03

all of the company for $31 a share and

13:05

added all kinds of bells and whistles.

13:07

And Warner determined the offer was

13:09

superior to Netflix because it was

13:11

actually. So I'm joined now by Puck's

13:13

Bill Cohen to break this all down. Bill,

13:16

we you and I have been texting about

13:17

this for a long time. You thought it

13:19

would be quick and Paramount would get

13:20

away. I said this was going to go on on

13:23

and on and it has. It's really been like

13:25

since December I think we've been

13:27

whenever it sort of broke

13:29

>> but talk a little bit about your

13:30

overarching things and we'll talk about

13:31

a few other things.

13:33

>> Oh look, I think this uh Carol is the

13:35

outcome that had to happen. U you know

13:38

uh whereas Netflix was saying it was

13:40

nice to have at the right price it was

13:42

getting to be nosebleleed territory.

13:45

Paramount this is existential. I mean,

13:47

without this, they're just like an 11

13:50

billion company, which once upon a time

13:53

would be nothing to sneeze at. But now

13:54

was a pipsqueak in this landscape. If if

13:57

they hadn't done this, then their their

13:59

original premise for the Parammont deal

14:01

wouldn't have made much sense, and their

14:03

equity wouldn't do anything. So, this

14:07

was kind of existential for them. They

14:09

had to pay up. They had to win. And

14:11

kudos to David Zazlov for running one of

14:13

the best AMA processes I've seen in a

14:16

long time. people who forget. Um,

14:18

yesterday was I had tweeted that Netflix

14:20

had to walk away from this because it

14:22

was just ridiculous. It was an insane

14:24

price and Warner was at uh was at $10 a

14:27

share recently and it popped to 31. Was

14:30

there $21 of of excellence that had been

14:34

created? Not at all. From nothing,

14:36

right? It's like whipped cream or

14:37

something.

14:37

>> Well, it it it actually got as low as $7

14:39

a share. And remember,

14:41

>> right, I do remember um

14:44

>> I was recommending people, you know, buy

14:47

at that price, but cuz I thought they

14:49

would pay down the debt and make

14:50

something of it. But, you know, he's,

14:52

you know, ever since September 11th when

14:53

Paramount first began to hint that it

14:56

was interested in buying this and it

14:58

offered $19 a share, uh, we've gone from

15:02

7 to 31 and and it's, uh, and what

15:07

not not because the companies have, uh,

15:09

performed, uh, particularly that much

15:12

better. I mean, they've performed fine

15:14

and and Warner Brothers had some hit

15:16

movies, but it's just because of the

15:18

scarcity value. The fact that he ran an

15:21

Zaz ran an incredible auction process,

15:24

kept them on both sides on their toes

15:25

the whole way. And uh especially this

15:28

last bit of uh of of jiu-jitsu was just

15:32

beautiful to watch.

15:34

>> Yeah.

15:34

>> Yeah. I I said he won the Jeff Buucas

15:36

award for turning chicken [ __ ] into

15:37

chicken salad and feeding it to a Nepo

15:40

billionaire. like

15:41

>> that's, you know, Jeff Buucis was the

15:43

last guy at uh Warner Brothers to, you

15:45

know, make a fortune selling the company

15:48

to AT&T and now Zaz has done it again,

15:51

>> been sold again. So, let's break it

15:53

apart a little bit because one of the

15:54

things that had begun to dawn on me and

15:56

you and I I always thought Netflix was

15:58

the better owner in terms of taking

15:59

these assets and doing something

16:01

significant with them. I felt like the

16:03

purchase the Paramount is not as good

16:05

going to be as good as owner. still too

16:07

small. Instead of a leaking lumbering

16:10

media ship, it's a bigger leap, you

16:13

know, lumbering ship. I don't see how

16:15

they're going to just cuz they're

16:17

slightly larger, be that much better

16:20

unless they are run by someone who's

16:24

more experienced. It's like I think

16:25

David Ellison should get out of the way

16:26

and you know I know they have Jeff Shell

16:28

very talented George Cheeks many others

16:30

but they really they they don't have the

16:33

executive

16:34

fortitude I think to do much with this

16:37

and Netflix later can come swooping in

16:39

and take off parts. How do you look at

16:41

it?

16:41

>> Look, I know they're very excited over

16:43

at Paramount about winning. I know

16:46

they're very excited about their

16:47

business plan and what they think

16:48

they're going to do with this. You know,

16:50

they're going to have to combine CBS and

16:52

CNN. I can only imagine what the

16:54

feelings are over there. Uh yeah,

16:57

probably not great. Uh you know, there's

16:59

a lot of bloat probably on the CNN side

17:01

that's going to once again come under

17:04

the come under the axe. Um you know, as

17:08

we've discussed many times, G, I think

17:10

that, you know, David Ellison has

17:13

blundered a few times already out of the

17:15

gate.

17:16

>> U Sheridan losing that. you know, that

17:18

was a big big loss, you know,

17:21

>> bigger than the CBS disasters,

17:24

>> which are not nothing either. Uh, you

17:27

know, overpaying for, you know, UFC or

17:30

whatever it is. I mean, uh, you know, so

17:33

I think there's, you know, they've got a

17:35

lot to prove is, but nevertheless, uh,

17:39

they've got a lot to prove, but they

17:41

also had, this was existential for them.

17:44

They had to, they had to win. And for

17:46

Larry Ellison, I mean, if if it weren't

17:48

for Larry Ellison, we wouldn't be here.

17:50

We wouldn't be talking about this. We

17:51

wouldn't have this discussion. They

17:52

would never have been taken seriously.

17:54

They never could have done the deal. So,

17:55

it's Larry's unbelievable amount of

17:58

equity that that he's willing to step

18:00

up. is something like $45 billion of

18:03

equity, 25 billion from Middle Eastern

18:07

private uh sovereign wealth funds and

18:10

the rest from Larry and and you know

18:13

Jerry Cardell at Redbird Capital uh with

18:16

most of it coming from Larry. I mean

18:18

this is an unbelievable amount of

18:19

equity, an unbelievable amount of debt.

18:21

It's probably going to be like the

18:22

largest LBO kind of in history except

18:24

they're not taking the company private.

18:26

uh there, you know, was remaining.

18:28

>> Let me ask you in that regard, you know,

18:30

would you compare it to what Elon did at

18:32

Twitter like that? I don't know. Someone

18:34

was like, well, can't they do what Elon

18:36

did, meaning the the bankers sort of

18:37

gave up and he managed to get his money

18:40

back cuz he squeezed it into a different

18:41

company. I don't think they have that

18:43

choice here. This is they're just have

18:45

the media company. Correct. Hey, well,

18:48

you know, if they want to create P AI

18:51

and create a AI company and have

18:53

everybody go crazy for it and then have

18:55

the AI company buy the media company and

18:58

then, you know, merge it with SpaceX.

19:00

Okay. I mean, you can do you want to go

19:02

do all those crazy things. Maybe they

19:04

can uh uh pass it off onto somebody

19:06

else. Maybe Elon will buy it. You know,

19:08

Elon could buy it out of petty cash.

19:10

>> He could. He could. Why did Larry

19:12

Ellison do this? because he seems to me

19:15

he's a smart customer about a lot of

19:17

things. This seems like buying a yacht

19:20

or something. Well, he has a yacht. What

19:21

am I talking about? But you know what I

19:22

mean? It seems so unlike him. Perhaps

19:25

he's old. Perhaps he wants to leave a

19:26

legacy for his son who likes to make

19:28

movies. What What is Cuz from a

19:30

financial point of view, this is not a

19:32

Larry Ellison move to me in my mind.

19:34

>> No, this is you know they're going to

19:36

have 70 plus billion of debt here. Cara,

19:40

it's a lot of debt. you know, maybe they

19:42

have 11 or 12 billion of cash flow.

19:46

Maybe um it's a lot of debt. Uh they're

19:49

going to have to make a lot of cuts. Uh

19:51

they, you know, they believe they're

19:53

going to delever quickly. You know,

19:55

every buyer, every buyer who puts

19:58

together a leverage company thinks

19:59

they're going to delever quickly. Uh

20:02

sometimes they do, sometimes they don't.

20:04

Maybe Netflix will get another chance at

20:06

this when the thing flounders. But why

20:08

did Larry do this? I think it's edible.

20:10

I mean, I think he wanted to do this for

20:12

his son and he started down the path to

20:14

do it. It, you know, it went it went

20:17

from 19 was their first bid to 31. Uh, I

20:21

think he felt like, you know, this ego

20:22

was involved if he didn't do it that

20:25

that, you know, he'd have egg on his

20:26

face kind of thing. And he's got now

20:28

Trump expecting him to, you know, change

20:30

the dynamic of the two companies in

20:33

terms of the politics. And so, I think

20:35

he felt like he had to do it. once he'd

20:37

started it and you know he basically

20:39

caved and gave Zaz everything he wanted

20:41

every little

20:42

>> which is so unlike Lariel I was like

20:44

sort of like what a chump I never called

20:46

Larry Ellison a chump before but I feel

20:48

chump that that Zazov ran circles around

20:50

them

20:51

>> completely got into deal heat and gave

20:54

Zazlov everything he wanted I mean

20:56

they're happy over there

20:57

>> I know cuz they're like they're like you

20:59

know they're pumping fists but honestly

21:01

I was like oh dear oh oh dear that's

21:04

what I there's going to be a hangover

21:05

for this there's definitely

21:07

So, two more questions. You mentioned

21:09

Trump. One of the things that everyone's

21:10

worried about, of course, is Larry

21:11

Ellison owning Tik Tok. He does. And

21:13

Oracle owns 15% of Tik Tok, which isn't

21:16

a huge amount. It's it's a significant

21:17

amount, but it's not the most amount.

21:19

Um, and owning CBS, which I think was a

21:22

falling knife. So, I'm not really clear

21:23

why everyone's they're obsessed with it

21:24

because it's a good story, but it's not

21:26

a I would say, you know, we just did an

21:28

analysis of Pivot and we have more

21:30

people in the demo advertising than see,

21:32

you know, all of these companies do, all

21:34

these cable companies. So, it's not that

21:36

it's the news organization and CNN has

21:39

been declining. Like, let's be clear,

21:40

like the numbers have been declining.

21:42

All of cable has, not just CNN. Um, what

21:46

do you think it's a political thing or

21:48

or what? Or or and also lastly, Trump's

21:51

running out of time, right? Trump is

21:53

absolutely running out of time. So, look

21:55

at address the political issue. And then

21:58

secondly, the regulatory issue could

22:00

still get very ugly with Democrats

22:02

attacking this if they get back in the

22:04

in control of the legislature. Correct.

22:06

Presumably.

22:08

>> Well, let's take the regulatory uh you

22:10

know, first they uh made a big deal of

22:14

them getting through Hart Scott Rodino

22:16

that which meant that there there wasn't

22:18

going to be a deep dive into this by the

22:21

DOJ. Although they could still come back

22:24

and take another look at this now that

22:26

it's a kind of a different deal, a new

22:27

deal. They could. They probably won't,

22:29

but they could. They got the EU. They

22:31

were definitely working the EU. You

22:33

know, David and Jerry Cardell were over

22:36

there working the EU. They think they're

22:37

in good shape with the EU. So they think

22:40

between uh the DOJ, the EU, and Trump

22:44

being on their side because he's going

22:45

to you know give them the political

22:48

uh you know format that he wants and be

22:52

supportive of him which you know

22:55

whatever. Uh it's ridiculous if you ask

22:58

me but um um you know that they they

23:00

think they've got the regulatory

23:02

situation in hand. Um, you know,

23:05

politicians make a lot of noise about

23:07

these mergers, but they have no say in

23:09

the approval of them. Um, so even if the

23:12

Democrats take the House in uh uh uh you

23:16

know, November, I'm not sure what what

23:18

this you know, this is going to be this

23:21

could very well be over by then. You

23:22

know, they put in the so-called ticking

23:24

fee. if it's not over by the end of

23:26

September, which is obviously before the

23:29

elections, they're going to owe uh uh

23:32

Warner Brothers shareholders another 50

23:34

cents a share or $650 million. So, um

23:38

they think

23:39

>> the impetus is to do something quick to

23:41

get it quickly done.

23:43

>> They some things they can't control, but

23:44

I mean, uh they obviously are very con

23:46

they're highly confident, Cara, they're

23:48

going to get this through the regulators

23:50

and uh you know, they'll give Trump what

23:53

he wants. And I'm not sure the

23:54

Democrats, even if they take the House,

23:56

can do anything about what CBS and CNN

23:59

broadcast

24:01

>> at all.

24:01

>> It's up to the FCC and that's still in

24:04

Trump's pocket. And, you know, Trump

24:06

blithering away, you know, asking for

24:08

them to give him favors and get rid of

24:11

Jake Tapper or whoever they want,

24:12

whoever he's mad at might be part of it.

24:15

When you think about where Netflix goes

24:17

from here, I think it was the smartest

24:18

move. The stock is going to soar. They

24:20

have plenty of money to do things.

24:22

They're so innovative. They're such

24:23

great operators, right? They're sort of

24:26

It's not a bad thing. They could do a

24:27

distribution deal for some of this

24:29

content and then later just wait until

24:31

the knife falls, right? Presumably, what

24:34

would you do if you were I thought this

24:36

is exactly what he was going to do?

24:38

>> Right. And this is what I wrote that

24:39

exactly he should do yesterday and then

24:41

I don't know whether he reads it or

24:42

listens to me or whatever, but he he did

24:44

exactly the right thing.

24:46

>> Um he he he looks smart. Stock is going

24:48

to move up after moving down like 30%.

24:51

He takes this 2.8 $.8 billion breakup

24:54

fee and uh builds out his new movie

24:57

studio in New Jersey and gets content

24:59

deals and you know looks smart and

25:02

disciplined and that's what investors

25:03

like.

25:04

>> Looks like the good guy.

25:05

>> He does. He looks like the He looks like

25:07

the good guy and he can move on from

25:09

this. It was going to be a headache for

25:11

him if he got this. Sometimes the

25:14

smartest thing you can do in a deal car

25:16

is to walk away and he did the smartest

25:18

thing. So he's going to get plottits all

25:20

around. He, you know, he could read the

25:22

tea leaves. He wasn't, it was going to

25:23

be a regulatory nightmare for him to get

25:25

this through. Trump was not going to

25:27

make it easy for him. He already

25:29

>> bloiated about firing Susan Rice and

25:32

>> Ted didn't do it. And so, you know, who

25:34

knows what was going to be in store for

25:35

Ted, but uh he he did the smart thing

25:37

here.

25:38

>> So, very last question. When you think

25:40

about what happens next for for

25:42

consolidation, this is it's obviously

25:44

Comcast has got to be like going what do

25:45

we do? Disney's got to go, what do we

25:47

do? Netflix now looks like it's willing

25:49

to play at least because it wasn't an

25:51

acquire very much like Apple but it is

25:54

they're very opportunistic now um and in

25:57

good now they've had this they've never

25:58

done this before now they know right

26:00

they've done they've worked on a big

26:02

deal what do you see next if you could

26:04

make a prediction

26:06

>> well I mean it's it's quite you know a

26:08

lot of people have been thinking that um

26:10

Comcast would you know uh spin-off NBCU

26:14

and maybe you know Netflix and NBCU get

26:17

together. Um, but you know, I don't

26:20

really think Netflix needs to do any of

26:22

that. You know, now they got a little

26:24

taste of it. Maybe they thought, well,

26:25

they walked around the, you know, the

26:28

Warner Brothers lot. That was kind of

26:30

fun. And now I guess maybe they could

26:31

walk around the Universal lot. They're

26:33

building their own lot. I'm not sure

26:35

they need to do it, but if they want to

26:36

do it, I think there would be

26:38

opportunities. You know, there's Amazon

26:40

Prime. There's uh I'm not going to do

26:42

anything with Disney, I don't think. But

26:44

NBCU, there are some smaller studios

26:46

they could, you know, get their hands

26:48

on. They, you know, AMC and things like

26:50

that. I I I don't really see that they

26:53

have to. I think Ted sort of had fun

26:55

here. He showed his medal. He showed he

26:58

can be a dealmaker. He got a merger

26:59

agreement. Uh and he showed himself to

27:01

be disciplined. And he comes out is he's

27:04

the big winner in all this. And him and

27:06

Zaz, of course,

27:07

>> right? Absolutely.

27:07

>> Zaz is the $600 million winner. I swear

27:10

this guy this guy Mr. Discovery.

27:13

>> Yeah.

27:14

>> Mr. Mr. Diner.

27:16

>> He ran the M&A deal of the century.

27:18

>> I I got to give it to him. I got to give

27:20

it to him. I always run him down when I

27:22

see him. I joke with him. I say he looks

27:24

like a lesbian. But he I have to say he

27:27

he did a great job here for his

27:29

shareholders, right? For the I mean

27:31

literally seven.

27:33

>> Amazing amazing deal. And good luck

27:36

Ellison's good luck on catching the car.

27:39

Good luck.

27:39

>> We'll wait for the sequel.

27:41

>> All right. The other winner here um is

27:43

you. You've done an amazing job in

27:45

covering this and I like debating with

27:47

you and uh it's really helpful because

27:49

it's smart and it's clear and uh and

27:52

you're you're non-romantic about any of

27:54

this. Anyway, uh I appreciate it. Go to

27:57

Puck to check out Bill Cohen's reporting

27:59

and we'll take a quick break and Scott

28:01

and I will be back with Nvidia's

28:02

earnings.

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29:07

Scott, we're back with more news. Nvidia

29:08

reported better than expected fourth

29:10

quarter earnings with a profit hitting

29:12

120 billion. Only a handful theirs was

29:15

revenue. Only a handful of other

29:17

companies including Alphabet, Microsoft,

29:18

and Apple have made over hundred billion

29:20

in profit in a in a year. Uh net income

29:22

for the company doubled to $43 billion.

29:26

Revenue in the data center business rose

29:29

75%.

29:30

um uh talk about that because Wall

29:34

Street was also rattled this week by a

29:35

viral memo from market an analysis firm

29:38

Citrini Research very good research

29:40

group the memo laid out a scenario where

29:42

the AI systems trigger mass white collar

29:44

layoffs push unemployment above 10% and

29:46

ultimately lead to a stock market crashi

29:48

said the post was designed to prepare

29:50

investors for potential uh left tailed

29:53

risks as AI makes the economy

29:54

increasingly weird stressing that it's a

29:57

scenario not a prediction even so the

29:59

S&P drops up 1% on Monday, though some

30:01

of it was over concerns about tariffs.

30:04

But companies specifically named in the

30:06

memo included Uber, Door Dash, American

30:08

Express, IBM, all saw steep declines.

30:10

Um, it was an interesting memo, a

30:12

thought, it was a thought experience,

30:14

and the markets were already rattled by

30:16

Blue Owl Capital, a major private credit

30:18

lender, announced its halting of

30:20

quarterly redemption for one of its

30:21

funds and selling uh $1.4 billion in

30:24

loan ads as the company's stock fell.

30:26

We'll get to that in a second. And I'll

30:27

talk a little bit about more but stick

30:28

with the first the first with with the

30:31

Catrini and um and the Nvidia earns.

30:35

>> Well, I'll talk about Nvidia before I

30:37

talk about Catrini. Revenue uh 68

30:40

billion versus 66 expected up 73%

30:44

yearonear up 20% quarteron quarter.

30:48

Non-GAAP earnings buck 62 versus A$153

30:51

up 82% year-on-year. Data center revenue

30:55

62 billion up 75% yearon year. The gross

30:58

margins 75%.

31:01

>> Yeah,

31:01

>> their fiscal 2026 revenues

31:03

>> margins were crazy.

31:04

>> 216 billion up 65%.

31:08

I think that's that may be more revenue

31:10

than like every streaming media company

31:12

and movie studio combined. Yeah. Since

31:14

the launch of Chat GBT, Nvidia has grown

31:17

its data center business roughly 13fold.

31:20

And this quarter marked the best revenue

31:22

growth rate of the entire fiscal year.

31:23

So, it's revenue growth on the law of

31:25

big numbers. It seems to be more like

31:27

network effects. It keeps getting better

31:29

at scaling. Q4 73% year-on-year growth.

31:33

Beat Q3 at 62, Q2 at 56, and Q1. As they

31:37

get bigger, they're growing faster.

31:39

They're literally defying,

31:42

you know, gravity. Uh, notably they're

31:45

leaving out China from its future

31:47

guidance. According to the CFO, while

31:48

small amounts of H200 products for China

31:50

based customers were approved by the US

31:52

government, we have yet to generate any

31:53

revenue, and we do not know whether any

31:55

imports will be allowed into China.

31:57

China was previously 20 almost a quarter

31:59

of Nvidia's data center revenue, but

32:02

that's now gone. It doesn't seem to have

32:03

hurt them. And the thing is, it's still

32:06

not expensive. It trades at roughly 24

32:08

times forward earnings, which is only

32:10

slightly higher than the S&P. So you

32:12

have a company that's the most do

32:13

arguably the most dominant company in

32:15

history at at that moment is trading

32:18

what the S&P is trading at and because

32:21

of the fears around AI and maybe because

32:24

of the stock acceleration it's only up

32:26

it's basically flat it's up 4% this year

32:28

>> that

32:29

>> and then you have all these companies

32:31

announcing they're spending 2/3 or 3/4

32:34

of a trillion dollars on capex this year

32:37

and most of it's or a lot of it is going

32:39

to Nvidia Alphabet is flat Amazon's down

32:42

7% year-to date. Meta is flat. Microsoft

32:45

is down 15% year to date. But big tech

32:48

is getting punished

32:50

uh for spending money and Nvidia is

32:53

getting punished uh for collecting it or

32:55

Nvidia's on the right side of that

32:56

capex. So, one of those one of those

33:01

must be wrong. Either these companies

33:02

are making good investments um or I

33:05

guess maybe the thesis is they're

33:06

overspending and it'll slow down.

33:08

>> Yeah.

33:08

>> Should we talk about Catrini? Yeah,

33:10

Catrini was interesting. I I you know,

33:12

there was the other one a couple weeks

33:13

ago that was another thing like

33:14

everything's going to change. That one

33:16

Schumer, Matt Schumer, whatever his name

33:18

is. Um there's been a couple of these

33:20

that have actually had real impact um as

33:23

they've been written. So because they're

33:24

thought experiments in many ways, um but

33:28

they're interesting, but go ahead,

33:29

Satrini.

33:30

>> Well, essentially, I would describe it

33:32

as an A+ creative writing project from a

33:36

super bright high school student. And it

33:38

is really it's written in the past

33:40

tense. It says, "Okay, this is how we

33:41

hit this massive recession and the

33:43

market lost a third of its value." And I

33:45

think it's a really interesting thought

33:46

experiment. What what they're

33:48

essentially saying is that AI is going

33:50

to create this negative feedback loop

33:52

where it makes white collar workers so

33:55

much more productive so quickly that

33:56

companies can do layoffs and hire fewer

33:58

workers which results in an unemployment

34:01

spike less consumer spending and because

34:04

companies fall under revenue pressure

34:06

they're forced to cut costs and how do

34:08

they cut costs more AI and it creates

34:10

this downward doom loop. Now you could

34:13

make the same argument for any

34:15

technology right at one point 90% of us

34:17

working in agriculture. Now it's less

34:18

than 2%. But that happened over 200

34:20

years. These guys are saying this is

34:22

going to happen over over two year uh

34:25

over 24 months.

34:26

>> Yeah.

34:27

>> And what's happened is it's really cut.

34:29

Obviously, we talked about last week

34:31

it's gone after the SAS companies, the

34:32

software companies who they believe

34:34

you'll be able to replace uh Adobe,

34:37

Figma or Salesforce just with thoughtful

34:39

internal prompts.

34:41

>> And they it's really well written and

34:44

it's got great branding. They coined the

34:45

term ghost GDP and that is economic

34:47

output can grow while the benefits of

34:49

that growth never actually reach most

34:51

people. And then the other the

34:53

surprising the other surprising victims

34:56

here and this will uh come back to my

35:00

prediction is a lot of publicly traded

35:02

PE or private credit companies whether

35:04

it's Apollo or TPG or Blackstone have

35:08

been their stocks are down 20 30%

35:11

because they own a lot of software

35:14

companies and there's a fear that as

35:16

private credit lenders basically they

35:17

act like banks to companies who are

35:20

non-traditional borrowers

35:22

that a lot of those companies might not

35:23

be able to make good on the money they

35:25

borrowed.

35:26

>> Let me just throw in some stats for the

35:28

this is you're talking about Blue Owl,

35:30

which is a major private credit lender.

35:32

The company stock fell 10% on the news

35:34

last week because of the these these

35:35

sell-offs. Shares are at a 52- week low.

35:38

The selloff did then rippled across the

35:40

whole private credit sector, which

35:41

probably wasn't fair. Apollo, Aries,

35:43

Blackstone, and others sliding. Blue Owl

35:45

said it is not halting investor

35:47

liquidity. It's accelerating the return

35:48

of capital. I love how they do that. Um,

35:52

Mohamad and it's uh El Aryan, former CEO

35:56

of Kimco, suggested this could be a

35:57

canary in a coal mine moment, comparing

35:59

it to the early warning signs for the 20

36:01

2008 financial crisis. Um, so there this

36:04

is all linked together. This this idea

36:07

of worries worry for all of these these

36:10

things, especially private credit

36:11

lenders. Um, some are not as concerned,

36:14

some are more concerned. Um it it we've

36:17

got a lot of letters from people saying

36:19

what should they be concerned of and

36:20

what's going on here but they are defin

36:22

as you're noting they're linked correct

36:24

all this is linked to this spending this

36:26

massive spending by the tech companies

36:29

>> the way I would try and describe the

36:30

dynamic here and to understand if you're

36:32

at risk and where you want to think

36:33

about investing your own human capital

36:35

your own financial capital is the

36:36

following my mom used to run the

36:40

secretarial poll at Southwestern

36:42

University uh school of law in downtown

36:45

Los Angeles where I actually worked in

36:46

the mail room in high school. And she

36:48

oversaw 20 secretaries who would write

36:50

up the exams and the the legal research

36:52

of all the professors.

36:54

That's gone. Word processing has taken

36:57

that away. At the same time, my mom then

37:00

became an executive assistant because

37:01

she has good EQ and she's smart and

37:03

reliable and can write well. If you look

37:06

at truckers,

37:09

the AI will be a substitute for

37:11

truckers. Truck drivers via autonomous

37:14

are in real trouble. At the same time,

37:16

accountants, you're going to see a lot

37:20

of their wrote accounting work go away,

37:22

but they there are now more accountants

37:24

than ever because they move upstream

37:27

into things like tax, wealth planning,

37:29

and estate planning.

37:30

>> So the question is,

37:31

>> which presumably AI eventually be able

37:33

to help you with that. I don't have to.

37:35

I call my accountant my amazing all the

37:37

time for little and big things, right?

37:39

So presumably at someday I won't be

37:42

talking to anybody but

37:44

>> yeah I don't

37:45

>> seem very artisal on my part. It seems

37:47

like a lot of work by Caros. It's like

37:49

pumping gas. I kind of like

37:50

>> that's the right example. I use a lot of

37:52

lawyers

37:53

>> right.

37:54

>> I used to send every agreement I did you

37:56

know advertising contract whatever it

37:59

was a employment contract I sent to our

38:01

lawyers. They charge me a,000$2,000

38:04

$3,000 to have an associate review it.

38:06

Now I said to now I say to our chief

38:08

growth officer, no use AI, review it and

38:10

you do it. I trust you more than with AI

38:13

you're smart as a as a low-level lawyer.

38:15

At the same time, I'm spending

38:18

dramatically more on a very talented

38:22

lawyer at a firm that's actually called

38:24

Citroen, uh, on this incredibly smart

38:28

woman named Lucy Lee who figures out

38:31

everything from immigration to tax

38:33

strategies to my estate plan because

38:35

that [ __ ] is complicated

38:36

>> because you want her to be using AI for

38:38

on your behalf, right? because

38:40

presumably she's also

38:42

>> Yeah. But she can call me and say,

38:43

"Scott, have you thought about turning

38:45

this company into an escore?" So you so

38:47

you can in 5 years qualify for 1202.

38:51

She's incredibly strategic and smart and

38:54

charges 1,500 bucks an hour. So the

38:57

bottom line is wherever you are in the

38:58

world, do you have an opportunity to use

39:00

AI to go upstream or is AI basically

39:02

going to take everything you're doing

39:04

and you have nowhere to go upstream? But

39:07

the story of technology disruption is

39:10

the same and I don't think it's any

39:12

different here in that is it will take

39:15

out the boring row work and you either

39:17

take that additional margin and go

39:19

upstream and invent new jobs new higher

39:21

paying jobs or you get outsourced. The V

39:24

here or the correction might be more

39:26

severe and America is bad at taking at

39:29

at taking care of those people. Again,

39:30

we spend 02% on retraining. Denmark

39:33

spends 2% of GDP on retaining.

39:35

>> We don't do it well when we try to do

39:36

it. It doesn't quite work right.

39:38

>> But look at what we're in the business.

39:40

I would have thought, so for example,

39:43

I've been writing books and I thought in

39:44

my latest book, I'm starting my newest

39:45

book. I thought, oh, AI is going to play

39:47

a huge role. It plays a role in

39:50

research, in improving, and in fact,

39:54

>> but the writing is still

39:55

>> Yeah, I agree. You know,

39:57

>> I've been trying to make it this fetch

39:59

is not happening for me on AI and

40:00

writing. It's not. It just isn't.

40:02

>> But even look at our business. I would

40:03

have thought, okay, AI can produce the

40:06

scripts. AI could edit

40:08

>> edit and it doesn't. We we're hiring I

40:11

know you are at Profit Media. We're

40:13

hiring more people.

40:15

>> So I don't And we use AI. What we might

40:18

do, we might launch two podcasts instead

40:21

of one because AI will help us produce

40:23

more produce more data sets that we can

40:26

talk about.

40:27

>> We got to we've got to figure out one of

40:28

the things I was talking about this

40:29

morning. We got to figure out how to

40:31

make fetch happen with it, right? And

40:32

that's sort of a slower process as you

40:34

know. One of the things someone was

40:36

like, oh, is it all going to be over?

40:37

I'm like, imagine at 2000 I went to see

40:40

a Hollywood executive, big name, and

40:44

when the thing crash happened, he goes,

40:45

I'm glad that's over. And I'm like,

40:47

what? You have no idea what's coming,

40:49

right? So, I think we're in the It

40:51

doesn't mean that all of them are going

40:53

to survive, but several will. And it is

40:56

a significant change. And the question

40:58

is, was it fair for Apollo to get

41:00

dragged down in this blue owl thing?

41:02

Probably not. But that's how Wall Street

41:04

reacts. So, you may

41:06

see an enormous decline in Nvidia or any

41:09

of these tech companies, but are they

41:12

really going away? Are they is this

41:14

really going to decimate them? What it's

41:16

going to do is have every company

41:19

refigure where this cost structure is.

41:21

That's what it's doing. You're going, do

41:22

I need all these lower level lawyers?

41:24

And that is a significant problem. And

41:27

one of the things that it creates is if

41:30

we throw all these people out of work,

41:32

they're going to be mad. And there's all

41:35

kinds of social issues there and

41:36

political issues. And the question is,

41:38

what do we do about it? And that's

41:40

that's hard because we've tried

41:42

retraining and it hasn't listen, it

41:44

hasn't always worked. Then we spent a

41:46

lot of money on retraining. It can get

41:48

sucked up into political [ __ ] which

41:50

is let's give everybody jobs. Then it

41:52

other times it works like during the

41:54

depression. We have wonderful things

41:56

that they did during um highspeed rail

41:59

up and down the west and eastern

42:01

seabboard. There's a lot of

42:02

infrastructure. But both Andrew Ross

42:05

Orin and and Josh Brown who I've had on

42:08

property markets a lot said something

42:10

that really impacted the way I I process

42:13

and how I approach markets and it's the

42:15

following and they're right. The

42:17

optimists have beaten the [ __ ] out of

42:20

the pessimists. So the key question you

42:23

got to ask yourself in something like

42:24

this with respect to the markets is ask

42:26

yourself

42:28

>> what could go right

42:30

>> because there's a temptation by

42:31

academics and thought leaders to

42:33

catastrophize because you sound too

42:35

>> well you sound smarter when you

42:37

catastrophize.

42:38

>> It sounds scarier and more interesting

42:40

and you put some bar charts around you

42:41

talking about the zombie apocalypse and

42:43

a downward spiral doom loop. Well okay

42:45

the doom loop around moving from

42:48

agricultural to manufacturing to

42:49

service. It wasn't a doom loop. who was

42:51

a job creator. So, let's talk about what

42:53

could go right here. And this is from a

42:55

guy named uh uh I think his name is Ze

42:59

Mashowitz in open quote. Actually, the

43:02

scenario does involve massive job

43:04

creation. Starting a new business,

43:07

creating a new product or providing a

43:08

service is now a turnkey thing you can

43:10

launch with an agent. All sorts of

43:12

barriers and costs involved are gone.

43:14

Marketing costs drop almost to zero

43:16

because their agent finds you. Logistic

43:18

costs are almost zero. Transaction costs

43:20

are almost zero. Wages for anyone you

43:22

hire are down and their productivity is

43:24

way up. The cost of living is weighed

43:26

down, which creates more margin, more

43:28

opportunities for new businesses. When I

43:30

got out of business school in 1992,

43:33

there were two people that started a

43:35

business and the other was my business

43:37

partner. There was only two of us. Now,

43:40

I would bet a third of the grads from

43:42

Stern are going to try and start some

43:45

sort of AI company.

43:46

>> Same with the media people. Same thing

43:48

with the media people. I started off

43:49

having to work for a big firm. I don't

43:51

need to. Anyway, we have to move on. But

43:53

it's it's a really we should keep this

43:55

discussion going because it's very

43:56

important because I I think you're

43:58

right. It's easy to catastrophize and

43:59

you should be thinking about those

44:01

things. It's just a question of what's

44:03

the other side of that? What's the where

44:05

are the opportunities? Just like we were

44:06

talking about Netflix. Um we do have to

44:09

go though. Um we're going to go to creek

44:10

break. When we come back, we have to

44:11

talk about Pete Heg as threatening

44:13

anthropic. We'll do that briefly. and

44:14

also of course the Epstein files.

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That's rubber ik.com.

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45:20

Scott, we're back. Anthropic has

45:22

rejected the Pentagon's demands for

45:24

unfettered access to claw as we thought

45:27

they might. Defense Secretary Pete

45:28

Hegath had given the company a deadline

45:30

to roll back certain safeguards or risk

45:32

losing a $200 million Pentagon contract.

45:35

Anthropic CEO Daario Emodi said in a

45:37

blog post that the quote threats do not

45:39

change our position and that the company

45:41

quote cannot in good conscious aced to

45:44

the request. Good for you Daario. Not to

45:48

a [ __ ] On the other hand, the AI

45:50

company that's been all about safety is

45:52

dropping his core safety pledge too. It

45:54

announced this week that it won't stop

45:56

training uh potentially dangerous AI

45:58

models if a competitor releases

46:00

something terrible or more advanced.

46:02

They're doing other things, but they

46:04

they say the move reflects the speed of

46:05

AI progress and the lack of federal

46:07

regulation, not of political pressure.

46:09

Thoughts?

46:11

>> The best performing organization in

46:12

history is the US military at close

46:14

second is the US corporation. It's

46:16

created more wealth in the last

46:20

in the last 17 years, US corporations

46:22

have created more shareholder value than

46:24

all of Europe

46:25

um since probably the 60s. Well, one

46:30

company, Nvidia, is worth more than

46:32

every publicly traded company in Germany

46:33

and Spain. Now, why is that? One, we

46:36

have incredible research universities.

46:38

We have a very risk aggressive culture.

46:40

And we have the deepest pools of capital

46:42

in the world. We have $5 million per

46:44

startup versus 1 million per startup in

46:47

Europe. And why do we have such deep

46:50

pools of capital? Because when people

46:52

invest here, they know the rules that

46:54

that company will have to play by. And

46:57

when governments start interfering and

46:59

picking winners and losers and saying,

47:00

"Oh, the rules have changed, you're

47:02

going to have an absence or a flight of

47:04

capital, which by the way has happened."

47:05

and this [ __ ] sclerotic blood sugar

47:08

level socialism where the government is

47:11

deciding who should get to acquire

47:13

Warner Brothers or that we should own a

47:15

share a golden share in a steel company

47:17

or which microchip companies the

47:19

government's going to invest in because

47:21

a failed casino owner and talk show or

47:24

reality show host seems to believe he

47:26

understands business better than the

47:28

private sector. And we are already this

47:31

isn't this isn't a theoretical

47:34

lesson in why I hate Trump reflecting my

47:37

biases. This has already happened. They

47:39

point to year over the last year the S&P

47:42

is up 14%. But it's not on a dollar

47:45

adjusted basis. The dollar has weakened

47:48

so much it's more up mid single digits.

47:50

And by the way every single

47:53

>> is up more as you noted. Every single

47:56

major market from South Korea to Germany

48:00

to the Footsie to the Cosby in South

48:02

Korea has massively outperformed the

48:07

S&P. And one of the reasons is when you

48:10

now invest in a US company, there's

48:13

unnecessary risk from the government if

48:16

you for whatever reason the Pentagon

48:18

decides that we don't like you. And

48:21

guess what? Andel and and Palanteer are

48:26

working very closely with the government

48:28

to help them track down spies to maybe

48:31

even track down immigrants using social

48:33

media. A lot of people would say that's

48:34

a violation of privacy rights. A lot of

48:36

people don't want to work for a weapons

48:38

company. Well, guess what? I love your

48:40

saying. You don't like Chick Chick Chick

48:42