Had to read this a couple of times to try and figure out why, as of this moment, you’ve been downvoted because this seems like one of the more insightful comments on here. Maybe it’s too inside baseball about the post-deal opportunity? Anyway not supposed to talk about downvotes so…
You were there for a while. Was/is studio capacity still a constraint on production? You read so many stories about how LA studios are struggling to fill space because all of the productions have left town for tax credits elsewhere. Curious if you’re still plugged in enough and know that it’s still true about their studio space. I assumed their interest was strictly a content play and the extra studio space might actually be an anchor they were willing to drag along to get the content/IP.
Yeah, it's ok, can't win 'em all. Lots of negativity in this thread. Maybe people have a gut feeling that "Netflix buying WB" fits into the preexisting narrative about media consolidation, and they're reacting negatively to media consolidation being a problem. I think that's more of a problem in the news media than in entertainment media. In entertainment, the bigger story is the tech-centered transitions, esp. to internet distribution. I don't think the consolidation narrative is a perfect fit in this case; this is a pretty different type of consolidation than the others in recent memory.
I think this is about Netflix's model reflecting a fundamental technology shift; any company not participating fully in that shift will be operating less and less efficiently compared to those that are. Look at the inside history of HBO's attempts to build a streaming platform; in the early 2010s their leadership knew they probably should, but were their hearts in it? Did they have executives with competence in this area? No, they outsourced it and mismanaged it. Repeatedly. But like you said, my view includes being a former Netflix employee so maybe I'm biased.
I don't have current information on whether or to what degree studio production capacity is a constraint. Content spending was publicly projected to grow, so studio capacity had to grow, which is why Netflix decided to build giant new studio facilities in New Mexico and New Jersey. Those were referenced in the Q&A Netflix held Friday morning [1]. Wild guess: Netflix's own studios run at full capacity, which is why they're continuing to expand them. I'd love to know if WB studios run at capacity.
> I assumed their interest was strictly a content play and the extra studio space might actually be an anchor they were willing to drag along to get the content/IP.
Doubt it. Like I said, I'm not an insider on that question and I'm 6 years out of date. But if I had to guess, it would be that WB studio capacity will be a highly productive asset for Netflix -- most likely, it will be more valuable connected to Netflix's global distribution model that it was when operated under WB's model.
Couple of unrelated thoughts on this very long thread...
1. I'm sure multiple people have pointed it out, but for all the talk of a bubble, the AOL Time Warner merger was likely the biggest canary in the coal mine for what was to come. History repeats itself with literally the same brand and a lot of the same assets? Sort of depressing if the bubble does now burst because it's like we never learn our lesson
2. Trump wanted the Ellisons because they support him. There's almost no question in my mind the government will fight this. Will they win in court? Hard to say, but my quick thoughts:
If market cap was the basis for antitrust then the answer would be maybe, but that's not the basis for it. Is revenue the basis? No, but Disney generates more than Netflix, so does Comcast, so as a proxy for market share, which I think is somewhat the basis for antitrust (iamaal) it seems like there's no chance this creates some anticompetitive media juggernaut. But then the question is whether streaming is different than more general media. And if it is, how do you define the market when a company like Apple is involved in streaming but not fully a media company? Does that balance things out a bit? I don't think it does because I don't think anyone could claim that Apple counterbalances Netflix in streaming market share. If anything it would be a further argument against Netflix having Netflix and HBOMax.
Now having written all of that, I think the government would win because Paramount streaming with HBO would at least stand a chance in the streaming market against Netflix. And then also increase general media competition because you'd have Disney/ABC, Comcast/NBC, Paramount/CBS with the WBD addition improving Paramount's competitive position relative to the other two.
An aside on tariffs, it’s a tax (either literally depending on the upcoming SCOTUS ruling, or if not in name then in whatever language SCOTUS decides to call an additional fee consumers pay when buying goods. But a tax either way).
Relevant to the post, when supporters believe that “foreigners are swallowing 100% of the cost of the tariffs” they cheer them on. Those same supporters when they’re told the truth that consumers do end up with inflated prices because of them? Their support plummets.
I feel like that's how anyone feels about anything a politician says. They say great things (sometimes even lies) about whatever agenda they're pushing, like tariffs only affecting non US people, or deporting criminal illegals, and supporters buy it. But then when they find out they're paying the tariffs, or their innocent gardener is being deported, then suddenly they're like "wait I didn't vote for this" even though they literally did, just under a different frame.
These are people who vote according to their interests.
There are two economic systems in the US which are divided according to the parties, one is highly globalized and resides in the cities and includes most of the people here, and the other is local and is composed of older industries.
The local one was hit hard due to globalized policies and largely offshored, and these voters rightfully want to undo that, if that's possible is another case, but this is what Trump is doing.
Obviously this is against the interest and going to hurt anyone whose job is closer to Spotify, Stockholm than some Mining Town, Montana
Do you mind giving a bit more details in layman's terms about this assuming the $60k per subscriber isn't hyperbole? Is that the total cost of the latest training run amortized per existing subscriber plus the inference cost to serve that one subscriber?
If you tell me to click the link, I did, but backed out because I thought you'd actually be willing to break it down here instead. I could also ask Claude about it I guess.
It counted up the tokens that users on “unlimited” Max/Pro plans consumed through CC, and calculated what it would cost to buy that number of tokens through the API.
$60K in a month was unusual (and possibly exaggerated); amounts in the $Ks were not. For which people would pay $200 on their Max plan.
Since that bonanza period Anthropic seem to have reined things in, largely through (obnoxiously tight) weekly consumption limits for their subscription plans.
It’s a strange feeling to be talking about this as if it were ancient history, when it was only a few months ago… strange times.
So they're now putting in aggressive caps and the other two paths they have to address the gap is to drive the/their cost of those tokens way down and/or the user pays many multiples of their current subscription. That's not to say that's odd for any business to expect their costs to decrease substantially and their pricing power to increase, but even if the gap is "only" low thousands to $200 that's...significant. Thanks for the insight.
I think you hit the nail on the head with your "good enough" phrasing. It might actually not be good enough. It begs all sorts of questions about the state of things in the US that an extremely wealthy individual has the means to do this and at the same time that something like this doesn't already exist for the recipients via some other mechanism such as the entity that's responsible for a citizen's well being playing some role.
It is good, though. I think most folks who complain about it, though, wish it were better (better does not mean Dell spends even more of his own money on this, not directly anyway).
If only there was some sensible way for 25M children to be given a financial head start that wasn't Michael Dell directly funding it.
See his total net worth and the YTD increase:
https://www.bloomberg.com/billionaires/profiles/michael-s-de.... Google/ChatGPT his 2019 (pre-covid) net worth (I'll save you the trouble): $27B. It doesn't matter if it's super accurate because we all know the multiple is probably pretty accurate given what's transpired.
And before you go calling me a wealth hater, I just wish the US wasn't such a wealth lover. Just a bit less emphasis on people getting rich and a bit more emphasis on getting our shit together so that the government can fund savings accounts for kids and while they're at it teach them some basic understanding of investment/budgeting.
Yes, good call, you're right. Does that completely undercut my sentiment? That said, I'm all for Dell and every other billionaire jumping on board as well because you'd end up with a pretty nice entitle--err--nest egg for the future. I even have a clever name for it: pre-social security.
Why is private philanthropy not sensible in this case? Should all philanthropy be socialized and centralized and administered by the federal government?
No, it should not all be socialized and centralized. Think things are running smoothly in the US at the moment? I wish it were the case that Michael Dell would have to consider whether the deployment of that kind of capital is a layup for him or if it requires some major sacrifice on his part. And, yes, it's better that he does it than not, but I won't pat him on the back too hard given the math.
I hate to repeat this old adage, but in case it helps to see it here: if you've been wanting to buy something, and you see yourself staying in the area and the place itself for many years, and you have some savings buffer if things go south, then buy. Don't do it because you want to magically have paper equity gains in the next 12 months. Do it because you like the place you're looking at, the neighborhood it's in, and because you have enough funds in place to get through a downturn if a layoff happened.
Of course I say all of that and it's good to know what could happen if a terrible downturn does happen like in 2008 (even the nicest Bay Area hoods prices dropped 25%+).
Last thing, single family houses, especially in the Bay Area, are typically more insulated from price drops (insulated not immune). If you can afford a small single family then it might be worth it, especially if there's expansion potential (either for yourself or the next buyer if you decide to move on). And even better if there are some cosmetic problems that are tractable because let's say you do get laid off there's nothing like building some sweat equity in the downtime.
Just my two cents having gone through similar in the past.
FOMO is a powerful emotion, but like all emotions its a bad idea to make it a primary decision maker for any important matters.
Reading all this from distant Europe, its interesting (and logical) how in US the swings in prices are so extreme in both directions. In fact, most things in any regard are way more extreme in US compared to Europe. May be good for the lucky ones but long term stability or dependability this ain't.
If you're taking what I said as FOMO I didn't intend it that way. The opposite in fact unless your sentiment is that anyone who wants to buy and live in property in the US is solely doing so because of FOMO. If you're saying that then that's a tautology and so how can I argue with it?
But if that's not what you meant then there are few things we as people can do for "stability and dependability" that better accomplish those goals than owning property that you actually want to live in. Most importantly it puts a permanent roof over your head, which we all need in some way, shape or form to survive (no exaggeration there I don't think). And it makes the cost of that necessity predictable, especially in California where property taxes are almost perfectly-predictable. It pretty much de-risks the largest expense most people will have in their lifetimes. That's not to say that you don't lose something in the proposition, but calling that FOMO seems inaccurate.
There are entire nations which mostly spend their whole lives renting. Ie where I live - Switzerland, many nordics. Maybe correlation with highest happiness levels in the world is coincidental, maybe its not. Happiness simply comes from other things in life than 'my castle my kingdom'.
I know its a typical US mindset (and far from US only) to have a house on your own, but its still an emotion in same vein what you describe. Mixed with rationale of course since proper social net in US is nearly non-existing, if you fail out with you on the street.
Also a rationale would be about very high chance of good return on such investment so don't take this as some sort of attack. I also own my place (apartment) but took it as a location & social bonds stability point for kids mostly, whether it will earn something compared to inflation is not that important to me, it probably won't or very little. Good bigger apartment close to nature trumps a crappy house in my view but thats personal opinion. Even when owning, its almost impossible to retire here in Switzerland, the costs are prohibitive even on Swiss pensions. Unless you want to live as relatively poor, same money gets you much further almost everywhere else. So that stability is always temporary.
Yeah, "jd," the sibling reply here pretty much summed up my sentiment so I'll just say "ditto" to what they said and add: I wonder if maybe you're being a bit one-sided based on some assumptions about Americans in general. It isn't, as far as I'm concerned, as one-sided as you make it out to be. That's not to say that housing isn't an emotional purchase, it for sure can be and probably almost always partially is, but to say that's the primary reason doesn't reflect my experience here. Unless we're having a semantic disagreement about what financial prudence and practicality means. I just think those two things are decoupled from FOMO for the most part.
> Happiness simply comes from other things in life than 'my castle my kingdom'.
I know its a typical US mindset (and far from US only) to have a house on your own, but its still an emotion
This is a frustratingly uninformed take. You are comparing apples to oranges by equating your decision-making process with that of someone in the US. The drive to own a house in the US is not just mediated by “emotion” - the calculus is fundamentally different than in many nordic countries. For instance, very few places in the US have rent control, which means that renting represents substantial risk of either experiencing a large increase in cost, or being forced to move at irregular intervals. On the other end of the spectrum, the US is one of the only places that offers 30 year mortgages, which means that (taxes and repairs aside) buying a home on credit still offers a high level of predictable cost over the long term.
Also, at least historically, there are very many places in the US for which housing is very affordable, given that the USs overall population density is so much lower than the average European country.
This is of course not to suggest that buying is always a good call - but it is often a logical and financially sound one.
I know a lot of people in the Bay Area who did exactly the opposite in 2017-19, looking at how prices doubled, they assured me in 5 years their investment would double as well.
Do you mean the opposite as in they purchased because they wanted to make some money? If so, that makes sense since one of the many reasons people buy homes is to invest in them. Here's hoping you didn't follow their lead, though, given https://fred.stlouisfed.org/series/MEDLISPRIPERSQUFEE6075.
But even having said that, people will buy houses or condos in SF today and make a profit in spite of any broader market conditions. But that seems dumb for someone who has a full-time gig that's anything other than identifying underpriced residential investment opportunities given how crazy both housing prices and equity (tech in particular) prices are.
Yes, opposite meaning they purchased to make some money. I'm happy I didn't follow their lead and it made me way more mobile during the pandemic and investments that would be paid as a fat down-payment grew significantly (even if considering leverage housing enables).
So what you’re saying is, if you want a condo, just wait, because a price drop soon means your money will go a lot further. If you want a SFH, buy now, price drop will be small.
Not quite what I was saying, but now that you've put that so succinctly, if it were me, knowing the Bay Area and what's happening in tech/AI at the moment, I would hold off on the condo. The single family with some grit I'd probably say have at it assuming the most important part of what I said holds true: it's not for equity upside, it's because you want to own that place, and in that location because that's where you will be happy living.
If someone reads this thread once there's been another 2008-level reckoning in 2026 I'm not surprised the reckoning occurred.
A drop in housing prices might be the only silver lining if an actual recession hits (whether the official statistics will actually admit to a recession is debatable of course).
That said, even if housing prices drop materially and eventually bottom it will provide little opportunity for "normal" folks to buy in if they're jobless. Will be interesting to see if Fed interest rate cuts translate to mortgage rate cuts, and whether those rate cuts lessen any price drops.
I've said this before on here, but the historical price-to-income for housing has been something like 4x. Today it's 7x (that is as insane as it sounds). A long way to revert to the mean unless you really think "this time is different."
Housing prices dropping aren’t so good for those who own homes. It is also likely there will be a feeding frenzy of investors snatching up homes. I had a hard time buying a few years ago, because investors kept out-bidding me with all-cash offers. I had to raise my price target to move outside of their impulse buy range, which I was not too happy about.
> Housing prices dropping aren’t so good for those who own homes.
As housing prices are tied to the property tax it is a good thing for people who are not planning to sell anytime soon. Remember a home is a place you live, not an investment. People who treat homes as investments cause a lot of problems for people who just want to live somewhere that isn't propping up some middleman landlord.
The dynamic here is that investors accept 3% return for housing because there are no good alternatives.
The expected return is considerably higher now, this should mean that houses should be traded at PR at around 20 again (as opposed to upwards of 30 when there was no better investments to be made).
Investors will likely not be an issue as long as we don't go into zirp again.
Sometimes people need to move for family or work reasons that are beyond their control. Being underwater on a home in a situation like that isn’t fun. I knew people who ran into that in 2008.
You can use your real estate as collateral if you own it. To buy nice cars, fancy vacations, etc etc. And you want the real estate value to increase as much as possible. Even if that means destroying your nation forever.
Yes, the economy of the entire industrialized world runs on this.
People borrow money against their house to buy a car or a boat because rates are much better. The bank tells them to borrow a few ten thousands extra while they are at it, since the rate is so good. Why don't you take a vacation or get that new thing you wanted to buy?
From where do you think everybody has so much money to spend, while you are working full time and have nothing? It's not only credit cards...
In one case, it was a realtor that bought the home. She was just leaving the house when I went to look at it. Reading between the lines from what my realtor told me, I think she bought it and leased it back to the former owners so they didn’t have to move.
I think with the amount of corporations and existing homeowners buying homes that the demand is strong enough to keep prices high no matter what happens. There are billions of dollars set aside to gobble up homes in the event of a price drop. In my area, 20 percent of homes are owned by investors and realtors delist homes that don’t sell as opposed to drop price.
> In my area, 20 percent of homes are owned by investors and realtors delist homes that don’t sell as opposed to drop price.
This has been so weird to see over the last couple dips.
In the ‘08 crash, banks were sitting on houses that were developing mold issues because they had been sitting vacant so long. These houses were getting more damaged and less desirable by the day, and before long would require hundreds of thousands of dollars to fix (up from the low-tens already evident) but they still preferred to sit on them. They weren’t listed, or were listed but at too-high prices and they were just ignoring offers, not even responding.
Then you look at “depressed” housing prices that are still way over historic norms, so you’d think builders would keep going… but no, they totally halt all work, no new houses until prices are heading up again.
Something’s super messed-up about the housing market in ways that it wasn’t in the last millennium. Recessions don’t even fix it, they just make everything pause.
Already happening around me as the price of construction has been going up, while the value of homes is flat. Empty lots zoned and permitted for apartment and condo complexes lay empty.
Labor costs are unlikely to fall. The cost of living has been on an upward trend that shows no sign of stopping. The federal government waging a campaign of terror against the demographic that most house builders employ is certainly not helping either.
Desirable metros seem to have very sticky prices. San Francisco, where I lived for 15 years, turned into a grotesque caricature of what it once was, but prices barely budged (and for most of that transition, they surged wildly). Sure, it's no longer the single most expensive rental market in the country, but it's still one of the highest despite quality of life degrading massively and even a big decline in population.
People say this a lot, but it makes no sense to me. A recession comes with lower incomes and wealth for everyone, so affordability doesn't change for the average person. It only increases it for those who had a short position in their asset allocation, but that's just investment outperformance which you can have even without a recession.
You're generally right except it's not true for everyone. Every recession that hits a lot of folks just keep their jobs and their salaries. Maybe their stock portfolios (for the few who have those outside of 401k's) take a hit. But the key is that if there's a real estate downturn, almost every single home (house, condo and even land) takes a hit and so you end up with a situation where all the inventory drops in price, but not all the eligible buyers "drop in price" (i.e., not all eligible buyers suffer a downturn and so, net, you actually get more people into homes).
The key of course is that the downturn isn't so massive (hello 2008!), where the blood flows so freely that the layoffs/foreclosures/etc. overwhelm the eligible buyer pool in absolute numbers. That can for sure happen, but is atypical historically.
You've just listed a set of specific circumstances under which some number of people might find housing more affordable, but that's a lot more like "investment outperformance" driven affordability than "broad based housing price decrease" affordability. That can happen even without a recession. A small number of people could've found Bay Area houses more affordable in the last decade if they were HODLing some 10x stock.
FWIW I think I just listed a set of circumstances that happen every time there is a drop in housing prices historically, at least going back to the 90's savings and loan crisis. I'll tell you when people found Bay Area houses more affordable? 2009-2012. And during that time the unemployment rate was at roughly 10 or 12% (had to look it up just now but knew it was around there). Housing prices during that same time? Dropped as low as 40-50% in some parts of the Bay (best case they were down 20%+). 10x stock needed? No. A job? Yes. You can repeat the exercise for the start of Covid, but the timeline for the drop in prices, and the % drop, was muted in comparison to the housing crisis. Same for S&L crisis. Dotcom bust too, though, again, housing prices didn't crater like the housing crisis.
The US, today, is set up very well for wealthy people. The health care system works great for them. Their doctors are amongst the best in the world. Same with the hospitals they use. The costs are manageable if not reasonable for all of those people. And you can actually go beyond health care and find that almost everything in the US is pretty high quality for wealthy people. Housing, their neighborhoods, their schools, etc. That might help explain why the system is set up the way it is. Everything cascades from there.
A mate of mine (who allegedly has decent health insurance but that seems questionable) was trying to get a simple surgical procedure done, and the quotes he received ranged from anywhere between "We cant tell you" to multiple thousands, ultimately he found a small private hospital that sorted it out for him for 700 USD.
I actually think the 700 USD price is very reasonable. But I dont care how rich you are thats a terrible consumer experience.
All of these can be great, but the class of people that make a neighborhood in "the heights" won't have dog barking, basketballs, drugs and gunshots. The people that don't live in "the heights" could decide tomorrow to no longer have those 4 things either - but they don't because - it's a different class of people.
The equally insidious thing is that when they get hit with the new premium anyone who took better coverage, like a silver plan for the ACA, will likely be "forced" to downgrade to a lower (bronze) plan, which means that when they actually get services their costs will further skyrocket (higher deductibles and out of pockets).
Talking about all hell breaking loose... Marjorie Taylor Greene announces her resignation specifically because of rising health care costs (yeah, I'm cynical,there's maybe more to it). Mamdani gets elected on a platform that's essentially "shit costs too much." Maybe folks on both sides are starting to wake up. A guy can dream...
MTG just got her pension. I doubt healthcare costs have anything substantively to do with it. Someone just wants to avoid digging a hole any deeper than they have.
You were there for a while. Was/is studio capacity still a constraint on production? You read so many stories about how LA studios are struggling to fill space because all of the productions have left town for tax credits elsewhere. Curious if you’re still plugged in enough and know that it’s still true about their studio space. I assumed their interest was strictly a content play and the extra studio space might actually be an anchor they were willing to drag along to get the content/IP.
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