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You know, need some more news today on this Warner Brothers Discovery transaction.
Again. Netflix is bidding here. They've got their bid in there.
They just amended that to make it on all cash bid, and Paramount Skuydants is also there and they just kind of extended their deadline today for trying to get some shares tendered.
I don't know, but so far it's not been good for them.
I don't know. I don't know what's going on there.
But let's talk to Semashaw.
She's a pro with this stuff, vice president Research and Insights at Censor Tower STEMA. Are you surprised that, I don't know, either Netflix or Paramount SKUIDANTCE hasn't raised their offer.
We kind of just seem to be waiting here.
Yeah.
Well, I'm more surprised that Paramount has a simply because I think they need the merger more based on their performance. They are significantly smaller, like four percent of monthly actor users share on a global basis compared to forty eight percent for Netflix and ten percent for HBO max very small percentage of ott AD revenue four percent again versus eight percent for Netflix and like thirty thirty five percent for Hulu. So for them, this deal would be much
more transformative. Right, and HBO has those tent pole shows like White Lotus and now like Heated Robbery that are in the zeitgeist and make people continue to remain subscribers.
Right.
Netflix already has the highest retention rate for them, the HBO acquisition is an opportunity to extend their growth rapidly, like internationally where HBO is growing at a much faster rate than anyone else. So I'm actually more surprised that Paramount has it. But from what I've read also, the Warner brother shareholders do not want that deal, so it would have to probably be a substantial jump in price to get over ninety percent of the shareholders to change their mind.
So Paramount of Skydance State extending its tender offer for those Warner Brothers' shares. The new offer expires February twentieth, does this change anything. I mean roughly, I mean about one hundred and sixty eight and a half million shares have been tendered as of yesterday. That's only seven percent of Warner Brothers shares outstanding. So does pushing out the deadline actually mean it's going to get more support?
I don't think so. I don't think the delay is simply because people haven't had a chance to tender their shares. I just don't think that they find the offer as compelling. And also, Warner Brothers management is sided with Netflix, right, It's a well capitalized business, highest retention rate, you know, content creation machine, especially on a global basis, you know, non English language content, and so I think it's just really hard for Amount, it's so much smaller to compete
with it. Like what does it bring to the table for Warner Brothers which And I think that's the question.
And if Paramount does not get it, and you suggest that you know, they probably need it, it's a mustag versus maybe a nice to have for Netflix. What happens you think the Paramount? If they don't get this deal, then what do they do?
Well? I mean I think you just pushed them further to the margin, right, as I said, they only have like four percent of active user share on a global basis, just to put that in perspective. Obviously, Netflix is the belhema that forty eight percent. Amazon and Disney Plus are about fifteen percent. So I'm not sure how they continue to really grow. They would have to really change their model.
How are they going to grow internationally? Are they going to try to get more sports, They're going to have local language content. All of those endeavors to grow and become larger require a lot of funding, right for sports,
right its content creation. So I feel like they'll sort of still be on the periphery in many cases compared to the larger streamers, and as a whole, by the way, the entire space is all still competing with short form video and just simply people's attention being pulled in other directions, right, So I think that's kind of where that leaves them if they don't get the deal.
So SIMA Sensor Tower is a digital market intelligence platform. You provide data, analytics insights into the mobile app ecosystem. What does your research what does your data show about people's engagement with Warner Brothers properties? I mean beyond HBO, the other stuff, and I guess that includes the cable networks that Warner Brothers wants to spin off, that Paramountain wants to buy, and that Netflix doesn't. And you know, how does that compare to say what Netflix offers people.
Well, Netflix has the highest retention rate across the space, right seventy four percent of its users are retained users. People spend about ninety one minutes per week eleven sessions per week on Netflix. In comparison, it's about six point four sessions per week on Paramount. And so you know, HBO is sort of in the middle. Our data is really focused on the digital side of the business versus
any linear TV and then also our advertising data. So I think what is also very attractive about HBO is its advertising and the space of the categories that it's in where it has decent share about five four percent in healthcare, which is the largest category where OTT is the largest channel for healthcare, and Netflix doesn't have that much exposure there. So I think that is a plus
for them. As far as like Warnerbug Sorry, Paramount wanting the other assets, I think it goes kind of goes back with like they want to get what they can get, so they can see how they can manage to figure out how to grow their own business, right, So I think that's why they're willing to take everything rather than sort of curate what like the way Netflix is.
You know, the Netflix stock is down ten percent this year and twelve percent over the trailing twelve months. Is that kind of the market saying, hey, you know, I'm not sure we want you guys to buy this thing.
Well, it also has done very well in the past. It might be, or maybe it's just simply the uncertainty of whether, even if they get the deal, if they'll be able to get through antitrust, you know, the FTC, will there be any issues getting the deal through? So I feel like it's more about that and maybe just the general idea that across streaming time spent is down, and it goes back to what I said about distractions for the consumer from short form video and other types
of technology that's taking time. So I think it might be that sort of the deal with regulation and then just sort of what's happening in streaming and the cost of streaming. To get the content that gets the most the highest audience costs a lot of money, right, and they have a lot of competitors, including the microdramas that you know have been growing very rapidly.
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Lots of earnings kind of get you know, overshadowed a little bit by on the news flow coming out of Davilas. But you know, one of the big American companies that we like to follow, General Electric, reported some numbers.
A little bit disappointed. I thought they were pretty good.
But the stock's down about five and a half percent today, and the stock is up over the tre past twelve months, up about sixty percent sixty zero, So maybe given back a little bit there. But let's break it down here. What's going on with our friends at GE. SID Philip Bloomberg, chief correspondent covers Global Aviation for Bloomberg News. SID talk to us about GE. What's going on with that story? They report its earnings?
Yeah, so GE's actually they reported better than expected results. In the fourth quarter. But unfortunately for the company, the shareholders and the investors were expecting a much higher expectation for the full yer next year this year, and so the fullier outlook has underwhelmed investors, which is why the share stumbled. And so they said that earnings will be seven ten to seven forty a share, and that sort of compares with about seven to ten which is what
the analyst expected. But that's still sort of they're talking about how there's going to be low double digit percentage of revenue growth, and that sort of after the sort of daring performance that they've had over the last year year and a half, that that sort of comes up as a break for the stock.
What I like about GE or just fascinating watching the GE story over the past twenty years. They've dramatically slimmed down the company. They were just jillions of different businesses, including one of the biggest financial services companies in the world.
They've slimmed that down to really a couple sectors.
Here, commercial engines and services number one, and then defense and propulsion number two.
What's the play, Here's where's the growth for this company?
Yeah, so Larry Culp has sort of focused the company on its core aerospace business, and aerospace has sort of become what GE is and that's actually a really good business for the company. I mean they have a large sort of share of the narrow body marketplace.
I mean they make any engines.
Yeah, make engines with CFM, which is the biggest narrowbody engine provider. They also make all the engines for Boeing's white body aircraft. So they've got a big aerospace division and that's sort of a business that continues to generate revenue as you get those aircraft. These engines come in for servicing and they come in for sort of overhauls. That sort of keeps the revenue going. And so that's
where Culpus focused on. He's sort of focused on cutting costs and as well as ramping up their aftermarket business as well as their like their maintenance and repair operation, and that's been one of the key businesses that they've been growing. They've also been growing their defense business, and I mean they're sort of getting a big share of
the overall defense by it. I mean that business may come up against some investor resistance because of trump recent announcements about gapping dividends and capping share.
By a back right, yeah, because I don't think of G as a defense contractor like a Lockheed Martin or something like that.
But they're not a defense prime. But they are a major supplier to the defense industry.
On the engine side, on the jet engine side. Do they sell to both Boeing and Airbus.
They sell to Airbus through CFM, which is their joint venture with Saffron Ah, and so they about seventy five percent of the overall narrow body market. So that's a big percentage of the market.
That's awesome.
So, I mean, I always feel good seeing a GE engine hanging on a wing.
You know, you feel like you're in good shape there.
Talk to us about just you know, we follow Boeing very closely, and they've had their problems with the production, as has Airbus. I mean, the whole supply chain for aerospace and building these big jet engines. It's kind of been tough on a global scale. What does G say to say about that?
So, I mean that that's been one of the I mean, Airbus famously called out G a couple of months ago, saying that they weren't producing engine CFM wasn't producing engines fast enough, and that's been a major sort of bottleneck for the aviation industry as they come out of the pandemic. I mean they've been struggling since the pandemic to actually ramp up production. I mean air Bus had to cut its annual outlook in December and they just about made
their target. And so we've seen the airspace the aerospace businesses talking about sort of growth and then having to come up against the reality of a supply chain and the supply chain being severely constrained. At the same time, all the suppliers, especially GE, RTX and others have been focusing on maximizing their profitability and making sure that while they grow and while they scale up their businesses, they
don't do that at the cost of profitability. And that sort of runs into the airframers their ambition of ramping up production so they won't growth at any cost, and the suppliers are saying, hey, we will grow, but it has to be profitable for us.
One of the things we've heard from Bowing is it's just hard to find employees. This isn't like making a car. You got to be really really skilled.
Does GE have that same issue?
It does, and that's the same issue that and it's not just GE but also supplies the GEM. The problem with the aerospace supply chain is that it's so intertwined that you need every single path to build those parts that you actually supply to Boeing and Airbus, and so if one part's missing, then you can't actually put together
a net engine that goes onto a plane. And so for the aerospace industry, hiring has been a major challenge, and that's been something that they've been doing and they've been trying to work on for the last couple of years. But I don't think they're out of the woods yet.
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What a couple of three days.
And Davos kind of went into the week thinking maybe we talked about big, big items like AI.
Well it all came down to Terrace Greenland and boy, we've had a bumpy ride this week. So we try to forget what's going on there.
Gota Maconda, he does his stuff for living, his a lecture at the Yale School of Management. He's a Bloomberg opinion contributor.
Got them, you know.
I guess this is a little bit of President Trump starting off the week with some very big rhetoric and then backing off a little bit. That's at least how the markets have been kind of gauging it here. Has there been any long term impact positive ord negative?
Here?
From what's happened the last several days.
There's been significant long term impact, and it's sadly all negative. So let's just break this out. The framework that the Trump administration is saying they have gotten. And it's to be clear, it's not clear they have actually gotten it, because the Europeans don't seem to be agreeing with that statement. But let's say the Trump administration got everything they said They got. Everything they said they got they could have
gotten with a phone call six months ago. Right like if we had told the Danes we want to put more bases in Greenland, we want more mineral rights in Greenland. We want you to you know, do more to keep the Chinese out of Greenland. Whatever, that means they would have said, awesome, we love the idea of you doing that. So there's no so like everything they got was on
the table just for the asking. The downside is we have now reached a situation where the Prime Minister of Canada, the United States is oldest, best, and most important ally is saying that the United States is a predator that is taking advantage of other countries, and that he needs to make allies alliances with other countries, including China, judging by his actions to protect himself from the United States. Like, it's almost impossible to overstate the level of the damage there.
If the United States had somehow managed to extract ownership of Greenland, that would not have been even close to being worth destroying the trust that the United States has built up with pretty much every other developed country in the world over the course of more than a century.
You go ahead, no, no, no, So this trust that the United States has built up, is it the trust that the White House is now put you know, putting at risk or this particular White House, I should say, versus the US government overall, because in three years time, in eight years time, you know, we could have a very different government in charge, and do we go back to the old ways.
Yeah, I think it started with this administration. And if it had, and if it we were just talking about one Trump administration, it would have been just that. And then I think that's exactly what would happened. We would have reset the old ways and everybody would have said, Look, every country has a hiccop once in a while.
These things happen.
But now you will hear Europeans say straight up that Trump is a reflection of some thing deep about what's happening in the United States right now. That is, it is not just the case that they do not trust the Trump administration. It is they do not trust the American public to not keep electing people like the Trump administration, and that creates a completely different set of constraints and circumstances.
Are you surprised, I guess going down that thread Gotham that we haven't heard really anything from members of Congress over the past week or were the last year.
Even I wish I could say I was, but but I'm not. And I think what's really striking is even members of Congress who said that they are who are not running for reelection, are still unwilling to criticize the president directly with you know, like a tiny handful of exceptions, but in the Revolican party. So even Fon Tillas, who's like, I'm out right, like he said, i am not running for reelection because I want to be able to speak truth to Trump. The president Trump is saying, Hey, I
don't actually have any criticisms as the president. It's all about his advisors. And just just be clear, like his advisors are not the people pushing the Greenland on this. You know, that appears to be sort of from within the president, the from within the president's own head. And so I'm not surprised, both because there's you know, his control of the Republican Party's total and people want to
get re elected. But more than that, I think people are scared, right Like, if you stand up to the president, if you are seen as his enemy, you are deluged by death threats and you know, things that are not a normal part of American politics. In some sense, I guess you could say that January sixth worked because there are quite a few Republicans who are in fear for their lives, not just their puular seats.
So got them, you know, Moving forward, with all of this, I'm curious, you know, you mentioned Mark Carney and the speech that he gave declaring there's a new world order here, the old world order has ruptured. How does Europe respond to this moment? Because they seem as disorganized and frankly as weak as ever, and you know, when President Trump pointed them as weak, it's hard to see how they can come to agreement on how to stand up to him.
So so I mean, I would never I would never underestimate the Europeans ability to fold under pressure. And I like that is that, I mean that is but I think first as you did see like they started to put troops into Greenland, right, like that is not a minor signal, right, I mean, so there's a lot of like we are really starting to push back in that
way in a way that we hadn't seen before. And I think if it had actually come down to an American use of force, that has a clarifying right, you know, as Oscar walt to the prospect of hanging clarifies the mind, right, that I think would have solidified the Europeans together. And second, the few gestures they did make, I mean it's very clear, right the Trump administration has backed down, right. They made lots of threats, they made lots of bluster, they got nothing in their declaring victory.
That is a back down.
So they are they were backing down from from your even what little counter push the Europeans did. But I think what you will see is you'll start to see real pushback on American companies, right because at this you know, no European country could seriously look at American defense contractors a trustworthy about the purchaser, right, Like Microsoft is already facing pressure from Europeans because there's some things that it did.
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