Netflix is potentially spending over $70 billion to either cement themselves as the global media

giant or show their hubris. We're decoding it all today on Molley Full Money.

Today is Tuesday, December 9th. Welcome to Motley Full Money. I'm your host, Emily Blippin, and today

I'm joined by full analyst Jason Hall and Dan Kaplanar to discuss Netflix agreement to acquire

Warner Bros Discovery Studio and streaming business, as well as, of course, Paramount's hostile

retaliation bid and how investors can really evaluate

the veracity of these mega mergers. We're going to be unpacking what exactly Netflix is

buying for north of $70 billion. Why Warner Brothers not only wants to sell, but why they pick

Netflix amongst a slew of other options and how the market is reacting to the news.

And then, of course, we're going to zoom out to evaluate at this deal. Rhymes a little too closely with some of the entertainment mega mergers of the past and help build a framework. Yes, we do love that word for judging big acquisitions anywhere in your portfolio. Oh, my gosh, guys, I don't even know where to start. I mean, look, chances are if our listeners are listening to this podcast, they've already heard of this mega merger, right? If not as a consumer, at least as an investor, since I know we've already discussed it a couple times here on Motleyful Money, but I think we're going to be taking a bit of a deeper dive today. Still, for any uninitiated, Netflix is acquiring the film and TV studio segments of Warner Brothers Discovery, which includes HBO and its massive IP library.

Jason, I want to pass it off to you first. Netflix is coming into this deal with over 300 million global subscribers and a fundamental business performance that has just been really, really stellar, right?

They've been expanding margins, double digitdigit sales growth. And by comparison, Warner Brothers is coming into this deal with, I don't know, tens of billions of dollars in debt, a fraction of the

subscriber numbers, and of course, a lot of skepticism from Wall Street on its long-term

viability. When you saw this deal come out,

what was your thought process in terms of the strategic logic here for Netflix?

So I think this is both a defensive and an offensive move, and it's one that I actually

really like. I'm generally not a fan of large acquisitions. We'll talk about it later in the show, but history is

not good in measuring the performance of those sorts of deals. But in the video entertainment

industry, for the past couple of decades, we've seen a tremendous amount of consolidation,

especially amongst the studios. Just look at what Disney has accumulated. That went incredibly

well for a long time and hasn't gone so well over the past few years. But through that

consolidation, as streaming has become obviously the next phase in the way that this kind of

...