Lucas Shaw 2.8 13 ideas

The long term trajectory has obviously been down, which is one of the reasons why they did a deal with YouTube to try to bring in some fresh blood. Legacy media properties and live events are bleeding linear TV viewership. To survive and reach younger demographics, they are forced to partner with dominant digital video platforms. YouTube (Alphabet) is perfectly positioned to capture these premium live-event partnerships, driving higher ad revenue and platform engagement at the expense of traditional broadcast networks. LONG. Alphabet benefits from the secular shift of live event viewership and advertising dollars moving from linear television to digital streaming. Regulatory scrutiny on Alphabet's market dominance; YouTube's revenue share agreements with legacy brands might have lower margins than user-generated content.

The major studios are making fewer movies that are, you know, your classic Oscar movies... They've all defaulted to making fewer movies. And those movies that they do make tend to be bigger action adventure type movies that can travel globally. Studios are abandoning mid-budget adult dramas to focus capital on massive, globally scalable IP. This barbell strategy means studios are taking fewer, but larger, financial risks. Companies with established, globally recognized IP portfolios and theme park integrations are best equipped to execute this blockbuster-only strategy, while smaller studios will struggle to compete. WATCH. The shift toward global blockbusters favors mega-cap entertainment conglomerates, but the overall reduction in movie volume creates box office volatility. Audience fatigue with established franchises or a string of high-budget box office flops can severely impact quarterly earnings for these major studios.

The audience for the Oscars has gone down considerably from its peak... used to have north of 30, 40 million people who'd watch it. Now it's closer to about 20 million. The structural decline in viewership for premier, non-sports live events severely damages the value proposition of traditional linear television. Broadcast networks rely on these massive cultural events to charge premium ad rates. As audiences fragment to social media and streaming, legacy media companies heavily exposed to linear TV networks will continue to see ad revenue compression. AVOID. Legacy media companies with high exposure to linear television and lacking dominant digital or sports moats face continued secular headwinds. A successful pivot to streaming profitability or a wave of industry consolidation and M&A could cause these beaten-down stocks to rally.

You are supposed to upload your movie as you're making it or your TV show and the model will train on what you have put into it and can then help you change your shots... You're not going to run into copyright issues. Generative AI in video has faced massive pushback from Hollywood unions and copyright holders. By acquiring a closed-loop AI tool built specifically for filmmakers, Netflix secures a proprietary advantage. This allows them to drastically lower post-production costs and accelerate content delivery without triggering union strikes or legal backlash. LONG. Owning proprietary, copyright-safe AI infrastructure gives Netflix a structural cost advantage over rival studios, which will ultimately expand their operating margins. The $600 million price tag is steep for a sparse, unproven startup; Hollywood talent may still reject the technology out of broader job displacement fears.

Paramount CEO David Ellison was on the Warner Brothers lot this week talking to some senior staff. They're trying to get that deal approved by the fall so that they don't have to start paying the ticking fee. Legacy media is being forced into consolidation to survive against tech-enabled streamers. With Netflix officially out of the WBD acquisition picture, Paramount and WBD are aggressively pushing to finalize their own merger. This creates a catalyst for M&A arbitrage and signals a desperate move to achieve scale and cut redundant operational costs. WATCH. A potential merger between Paramount and Warner Bros Discovery is actively progressing on a tight timeline, which will drive volatility in both equities as deal terms and regulatory hurdles become clear. The FTC or DOJ could block the merger on antitrust grounds; combining two legacy media companies with massive debt loads could destroy shareholder value rather than create it.

You're not going to run into copyright issues in the way that Google, Facebook, OpenAI, etc. are. Broadly trained AI video models from Big Tech face severe copyright litigation risks and industry boycotts from Hollywood. Because their models scrape existing IP, they will face high friction in gaining enterprise adoption within the professional entertainment industry, leaving the door open for niche, proprietary tools to capture studio budgets. NEUTRAL. While Big Tech dominates general AI, their generative video tools will struggle to monetize directly within Hollywood due to legal and labor roadblocks. Big Tech companies have massive balance sheets and could simply buy their way into compliance by licensing massive studio libraries, rendering niche closed-loop tools obsolete.

Netflix dropped its bid for Warner Bros., stating the deal is "no longer financially attractive." Paramount is now the likely winner. Netflix's withdrawal signals capital discipline, which is bullish for its balance sheet (avoiding a bidding war). Paramount winning the deal is a "double-edged sword"—they get scale to compete, but inherit a heavily indebted company in a shrinking cable market. LONG NFLX (on discipline); WATCH PARA (deal certainty vs. debt burden); WATCH WBD (price action softer as the bidding war premium evaporates). Regulatory hurdles for the Paramount/Warner merger could derail the consolidation thesis.