00:00 Dave Briggs
We're seeing some big names in the streaming space reporting earnings, including Disney on Wednesday and Warner Brothers Discovery on Thursday. Both those stocks have been under pressure as the battle continues for streaming rights, particularly for the NFL. We're navigating how to play the streaming sector with the Yahoo Finance playbook. Joining me now is Jessica Reif Ehrlich, senior media and entertainment analyst at BFA Securities. Jessica, now that we've heard from a fair amount of the streamers, I guess from a high level zooming out, what has been one of your bigger takeaways or maybe the biggest takeaway of what we're learning about the various companies in the space and sort of who's leading and where everyone's at in this process.
01:09 Jessica Reif Ehrlich
I mean, from the traditional media companies perspective, they are all turning the corner. They're starting to see profitability, they're reflating to profits. Um, Disney reported great numbers and raised guidance, the same with Warner Brothers Discovery. So their their businesses are have have turned the corner. Um, subs and revenue are growing, they're still rolling out Warner Brothers Discovery's case in more countries HBO Max with more to come in the first half of 26. But unlike Netflix, which of course has been doing a phenomenal job, traditional media companies are battling the the headwinds from the decline of or the secular headwinds from pay TV. So from a streaming perspective, it's it's it's actually been very strong, but from their the rest of their business, there are some still some significant challenges.
03:04 Dave Briggs
And and the big headline it felt like over the last week was the Disney NFL deal, right? And as a as a Red Zone watcher, the fact that Red Zone will now be on ESPN. How much does that mean for Disney's actual business to be able to have Red Zone and have that sort of product?
03:35 Jessica Reif Ehrlich
Disney had a ton of news in the last day or so. Um as you mentioned, like Red Zone with NFL, so the NFL deal doesn't technically close until the end of next year. So it doesn't affect these numbers until fiscal 27. Having said that, their relationship with NFL has been cemented. They will get an incremental three games, they'll move games around to different platforms. Um, and so it just strengthens their hold on sports significantly. We would not be surprised to see other sports networks platforms bundle with ESPN. ESPN is clearly the leader in that. Uh but there was other news in Disney's streaming besides the NFL, which of course is a really big deal. Um on the call yesterday, they you know, Bob Iger talked about um rolling Hulu into the Disney Plus app on a global basis. So they'll rebrand from the Star name which is was their Indian operation to Hulu. Um and it has puts and takes. So when when you see these kind of combinations, there has to be pressure on revenue. Um we'll see what the bundle price ultimately is. They have not announced that, but there will be a definitive benefit from a cost perspective from marketing and technology. Um should help engagement, should reduce churn. So you know we're trying to parse through these numbers is a little bit difficult. There were a lot of moving pieces in Disney's announcement yesterday related to streaming including the NFL.
06:14 Dave Briggs
And Disney of course has a broad other business, and several of these other companies have linear cable networks that are also part of the business. The the one that doesn't, as you mentioned, is Netflix, right? And that's sort of your pure play still for streaming. Is that if you're looking to invest in the streaming space, is that still the most attractive option because of the fact that it's a pure play streaming play or is it maybe not given the stock has been seems like running wild for for a while now? Not off earnings, but leading in earnings at least.
07:08 Jessica Reif Ehrlich
Yeah, but it's it's night and day valuations. So yes, it has a clearer path because it's not burdened by these legacy businesses. We'll see, um there's going to be M&A in media in the coming year. Does Netflix play a part in that? If if they choose to, then they may be burdened by some of these challenges as well, but they would I mean, they would only do it if they thought there would be a big benefit in terms of owning more IP. Um but on the other businesses, so yes, like Warner Brothers Discovery had a fantastic quarter led by streaming and studios. Uh but the the linear business, while it was actually fine this second quarter, there are some challenges in comparisons in the second half. So um that that is what is weighing on the shares today. Disney on the other hand had like phenomenal outlook on experiences which is basically their theme parks and cruise ships. So the theme parks, despite increased competition from NBC Universal's Epic opening in May, did extremely well in Orlando. Bookings are really strong and they have two new cruise ships coming on this year, this calendar year in November and December. So the outlook for Disney on the experience side is incredibly positive. So there's just puts and takes. So if you want a simple story, it would be Netflix, but you're paying for it at a significantly higher multiple like fourfold what the other companies are trading at.
09:29 Dave Briggs
Jessica, we're going to have to leave it there. Appreciate you joining us today.
09:35 Jessica Reif Ehrlich
Thanks.