00:00 Brian
I think we all have an idea on what has been plaguing Netflix. I mean, they don’t have had a lot of hits lately. They didn’t get the Warner Brothers deal done. Would you be a buyer here into the earnings report?
00:23 Thomas
We think that Netflix is really a show me stock in here for the reasons that you’ve mentioned. Um and this earnings report will make somewhat of a difference, but what really has to be worked out is a couple of things. One is the slate for the second half. There aren’t any real blockbusters, uh but they are bringing back um some shows that should get some good viewership and engagement, you know, on second and third seasons, etc. We’ll have to see how that pans out. Um but the advertising is another issue where they’re gaining some traction there and they they have to, they have to have those tiers. Um but it really isn’t the most efficient as far as them making money. So how they uh the customer finally adjusts to ads versus um the higher tiers where they don’t have to see ads is another issue.
01:52 Brian
If I’m one to be so jazzed about getting involved in the media space from an investment standpoint, why not just kick the tires on Disney? They’re probably having a bang up summer at the parks as we’ve heard from the banks today. I mean, the consumer is still resilient, so the parks are probably doing good. Disney’s pushing through higher price increases. Consumers are still out there spending. And then oh yeah, they’re also involved with sports in a major way.
02:16 Tom
And they have, you know, potentially a a a successful reboot of the Marvel franchise coming later on this year with the Avengers and Spider-Man. So I actually think it’s a more compelling case than Netflix.
02:30 Tom
You know, over the past couple of years, Netflix has pulled levers to increase profitability by cracking down on sharing, by introducing, you know, more aggressive advertising, that sort of thing. But in the end, they’re now kind of being driven by their show slate and as you said, they have not had a hit in a while and that’s a problem.
02:51 Tom
Now, certainly the decline makes it, you know, somewhat attractive maybe on a value basis, but I agree with Thomas, it’s a show me stock. You have to see that there’s some sort of a of a turnaround or something coming down the pike that you can get excited about.
03:09 Tom
I actually agree with you, Brian. I think if I’m going to allocate some dollars to to entertainment and and sort of uh you know, content, I would prefer Disney.
03:20 Brian
Or Tom, what about even uh what about even Alphabet? Let’s say Netflix comes out here and the quarter’s not great, which I’m expecting to actually happen. I mean this is another big boost for for YouTube. YouTube has been an absolute juggernaut and it’s only getting stronger.
03:41 Tom
Absolutely. It’s uh YouTube is is sort of really hitting on all cylinders and you get a whole bunch of extra stuff with Alphabet as well, right? Related to AI and they’re obviously their core business. So I think that’s part of the problem for Netflix is that you look around this sector and without a compelling hit, there’s other alternatives for capital where you get some add-ons in addition to the content business.
