OpenAI Finalizes $110 Billion Funding at $730 Billion Value

Summary

Bloomberg Intelligence Podcast Summary

Episode: OpenAI Finalizes $110 Billion Funding at $730 Billion Value
Date: February 27, 2026
Hosts: Paul Sweeney & Scarlet Fu (with featured analysts and reporters)

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Episode Overview

This episode examines the transformative investment landscape around OpenAI, following its record-setting $110 billion funding round at a $730 billion valuation. The conversation expands to the ripple effects across the AI sector—highlighting strategic investor alliances, infrastructure strains, rival tech firms, and the broader impact on hardware vendors and cloud providers. The panel also turns to key financial developments in media and tech markets, including a deep dive on Dell’s AI-driven performance and Netflix’s latest strategic moves.

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Key Discussion Points and Insights

1. OpenAI’s Historic $110B Funding Round

[02:08] Paul Sweeney, Caroline Hyde, Isabel Gottlieb

• Strategic Realignment of Tech Giants:

  • Amazon: Committing $50B (possibly part cash, part infrastructure credits—from cloud spend to GPUs).
  • Nvidia: $30B investment deepens hardware/software integration and positions Nvidia’s chips at OpenAI’s core.
  • Masayoshi Son (SoftBank): Active participator; Microsoft’s influence appears to be reducing as OpenAI diversifies partners.

• Operational Leverage and Revenue Growth:

  • OpenAI expects to jump from $12B in 2025 revenue to a forecasted $280B by next year, but infrastructure/computation is the major bottleneck.
  • “The thing that’s holding back our revenue… the way they get there is by compute increasing, not anything else.”
    — Caroline Hyde, [04:14]

• Redefined Tech Partnerships:

  • Microsoft once had exclusive access to OpenAI tech within Azure. Now, OpenAI’s new “Frontier” platform will debut elsewhere, signaling new alliances as Amazon’s cloud (AWS Bedrock) positions itself as a major AI resource.

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2. Investor Strategies and Circular Funding Concerns

[03:57] Isabel Gottlieb, Caroline Hyde

• The fine line between “circular” and “strategic” funding:

  • “Nvidia has been putting money into neo clouds… CoreWeave, Anthropic, and OpenAI—all [ultimately] want chips from Nvidia. Many would say it looks circular, but others argue it’s strategic financing—‘Who else has the cash pile to continue building the flywheel of generative AI?’”
    — Caroline Hyde, [04:14]

• OpenAI CEO Sam Altman asserts fundraising isn’t circular “as long as revenue keeps going.”

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3. OpenAI’s User and Revenue Explosion

[05:28] Paul Sweeney, Caroline Hyde

• User Metrics:

  • “ChatGPT has more than 900 million weekly active users, over 50 million consumer subscribers, and 9 million paying businesses.”
    — Paul Sweeney, [05:28]
  • Beating Anthropic in consumer use, but Anthropic “led the charge” in enterprise deals.

• Competitive Landscape:

  • Comparison with Google—depends on whether you count Gemini app users or AI features in existing search.
  • OpenAI intensifies its “agentic” (AI agent-based) focus for business differentiation.

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4. Ethics and Military AI Contracts: Anthropic’s Stance

[06:30] Isabel Gottlieb, Caroline Hyde

• Anthropic refuses Pentagon contract terms seeking limits on surveillance/autonomous weapons.
• CEO Dario Amodei’s published worries about AI in warfare and biotech shape their cautious approach.
  • “They put out this odd statement… making clear it’s because the government doesn’t care [enough about ethics].”
    — Caroline Hyde, [06:41]

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5. Dell’s AI Server Surge & Hardware Supply Crunch

[10:39] Paul Sweeney, Woo Jin Ho, Isabel Gottlieb

• Dell’s Outperformance:

  • AI server sales outlook stuns with a $43B backlog.
    — “Dell does supply chain very, very well… not only for servers, but also PCs.”
    — Woo Jin Ho, [11:28]
  • AI server revenues to double from $25B to $50B next year; every PC trending towards AI-capable.

• Memory Chip Shortages:

  • AI workloads “suck up” all high bandwidth memory (HBM); after supply chain caution post-COVID, now memory suppliers scramble to keep up.
  • “We can blame AI for everything… AI servers use HBM that’s stacked and sucking up a lot of the memory capacity that’s out there.”
    — Woo Jin Ho, [14:25]

• Pricing & Margins:

  • Memory prices surge; HPQ says DRAM doubled in a month.
  • Storage margins help buffer gross margin compression from pricier components.

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6. CoreWeave: Growth-at-all-Costs in AI Cloud

[19:42] Isabel Gottlieb, Anurag Rana

• Neo-cloud explained: rent data center GPU capacity to AI clients—capital intensive but high demand.

• CoreWeave’s losses widen despite $1.9B revenue and $60B+ in backlog for GPU compute.

  • “There’s a mismatch between how much you’re putting in cost vs. what’s coming in as revenue.”
    — Anurag Rana, [21:08]
  • Nvidia is both a major supplier and an investor in CoreWeave.

• Concentration Risks:

  • Microsoft accounts for 2/3rds of revenue; not an immediate red flag, but highlights dependency.
  • “CoreWeave has real orders. The question is… how much you have to put up front for chips and services versus what you realize as revenue.”
    — Anurag Rana, [21:59]

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7. Media: Netflix Walks from Warner Deal, Industry Implications

[27:08] Paul Sweeney, Geetha Ranganathan

• Netflix’s “clean, organic growth” story celebrated as it rejects Warner Bros. Discovery acquisition, avoiding regulatory and debt risks.

  • “They have always been builders versus buyers… once again exercised that discipline and investors are cheering.”
    — Geetha Ranganathan, [27:32]

• Paramount’s new Skydance deal faces “dangerously high” leverage but could turbocharge content and streaming if well-executed.

• Netflix resumes buybacks, signals confidence, and plans a substantial $20B content investment for the year (including sports, live, and international productions).

  • “This is Netflix… willing to diversify into different forms of content to keep building that competitive moat.”
    — Geetha Ranganathan, [31:09]

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Notable Quotes & Memorable Moments

• “Amazon coming in… which already has a very strong relationship with Anthropic… now bringing $50B—cloud costs, GPUs, chips?”
  — Caroline Hyde, [02:41]

• “900 million is a huge, huge amount.”
  — Caroline Hyde, [05:49]

• “Every PC is eventually going to be an AI [PC].”
  — Woo Jin Ho, [12:07]

• On AI hardware constraints: “We can blame AI for everything.”
  — Woo Jin Ho, [14:25]

• “There is a mismatch between how much you’re putting in in terms of cost versus what’s coming in as revenue.”
  — Anurag Rana, [21:08]

• “They have always been builders versus buyers…shown that discipline and investors are cheering.”
  — Geetha Ranganathan, [27:32]

• “They have all of the pieces in place to make [the Paramount-Warner] a really good business, but… it’s wait and see.”
  — Geetha Ranganathan, [29:59]

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Timestamps by Topic

| Segment | Timestamp | |-----------------------------------------------|------------| | OpenAI Funding, Strategic Partners | 02:08–06:00| | Circular Funding & Investor Strategy | 03:57–04:14| | User Metrics & Industry Comparison | 05:28–06:30| | Anthropic, Military & Ethics | 06:30–07:39| | Dell AI Servers & Hardware Supply | 10:39–14:25| | CoreWeave AI Cloud Analysis | 19:42–24:47| | Media: Netflix/Warner, Paramount/Skydance | 27:08–31:51|

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Summary

This episode paints a vivid picture of accelerated investment and competition in the AI space, underscored by OpenAI’s record-breaking raise and shifting alliances among the world’s largest tech titans. The panelists dissect the complex, sometimes circular financial relationships that fuel AI’s infrastructure, the hardware bottlenecks challenging the sector, and the evolving role of “neo clouds” like CoreWeave. The episode also highlights how strategic discipline, as seen at Netflix, can pay off in today’s volatile media and tech landscape.

Ideal for: Investors, business leaders, and tech followers looking to understand the stakes, pressures, and opportunities shaping the AI and media industries in 2026.

Transcript

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[Paul Sweeney]

All right, more just monster numbers being thrown about in this AI game. Open air to raise $110 billion in new investment at a $730 million pre money valuation. Extraordinary. Extraordinary amounts of money being raised. All the big names are involved here. I need a little help. We all need a little help here. Caroline Hyde Btech co anchor, joins us here in our Bloomberg Interactive Broker studio. And the hits keep coming, Caroline. I mean the investments keep coming. And from big names we all know. What do you make of it?

[Caroline Hyde]

It makes for an interesting relationship of open air Microsoft going forward because this is Amazon coming in which already has a very strong relationship with Anthropic, remember and we've seen a lot of crossover of big strategic investors and venture capitalists and putting money into both key Frontier labs. What's interesting in this agreement is not only the whopping scale of money, 50 billion is going to be coming from Amazon and we don't quite know if that is to a cash or actually whether it's more in cloud costs that just get sucked up by Amazon instead or indeed whether it's GPUs and chips. But we also think that 30 billion is coming from in video. So the deepening tie continues there and clearly therefore some GPUs from Nvidia are going to be intertwined in OpenAI's compute needs as well as Amazon's own Trainium chips and the likes. But we're also seeing, well, as well as Masayoshi sun being a big player in all of this, Microsoft being less of a player. And remember, OpenAI first got its big chunk of change from Microsoft. Microsoft was the key backer of the company, had exclusive rights to a lot of OpenAI's technology within the Azure platform. Well now the Frontier offering coming from OpenAI, that's basically the new offering to help build agents, which is all anyone can talk about at the moment. That's going to be exclusive on us. Oh wow. So all of this is just an interesting rearrangement of technology partners and just how people are deepening their ties.

[Isabel Gottlieb]

I like your word rearrangement because we have OpenAI CEO Sam Altman saying that he doesn't think his company's fundraising is looking quote circular as long as revenue keeps going. And I feel like this is a conversation we've been having. It's like the self funding loop and is it risky? But he's saying it's not circular.

[Caroline Hyde]

Well, Nvidia has had to try and prove this point time and time again. Nvidia has been putting money into neo clouds like Core Weave which had its numbers today, putting money into the likes of an anthropic and an OpenAI which ultimately all want chips from Nvidia. But many would say, look, it's not just circular financing is actually strategic financing. Because how better to understand how your technology works best as if you partner this closely and you can understand the way in which your GPUs, your CPUs we used in the future. So for the cynics among us, yes, it looks like the same Big players are all moving money from one place to the other, within each other. But for perhaps the more practical, it's like, well, who else has the cash pile to be able to continue to build the flywheel effect of generative AI here at the moment? And OpenAI has an enormous amount of compute needs. That's what they keep saying time and time again. Sarah Fryers, the cfo, Sam Altman is the CEO saying, the thing that's holding back our revenue. Remember they guided us to a new kind of revenue stratosphere of 280 billion by next year. The way they get there is by computer increasing, not anything else. They've got all the parts they need to build revenue from the 12 billion that they raise that they made in 2025. But what they really need is the galvanization of infrastructure and that comes from power and that comes from compute.

[Paul Sweeney]

I mean OpenAI says Chat GPT has more than 900 million weekly active users, more than 50 million consumer subscribers, and more than 9 million paying business users that rely upon Chat GPT. That's deployment. Are they the biggest yet? I'm not even sure how we define the market, but are they the biggest in.

[Caroline Hyde]

In consumer? For sure. Like, in terms of like this, the size and scale of people using their. The problem is, is of course Google. How are you measuring Google? Many would say like is it the person who my mom who goes onto Google search and gets an AI overview or is it someone who downloads the Gemini app and uses it in a distinct kind of model? So there's two ways in which you can compare and contrast. But certainly OpenAI has beaten out Anthropic from a How many people are using their standalone application? 900 million is a huge, huge amount. But from an enterprise perspective, many would say Anthropic has led the charge there and that's why OpenAI has really been doubling down on this agentic focus and, and AWS is going to be core to that, putting it in within bedrock.

[Isabel Gottlieb]

There's also a headline from Anthropic. They're refusing to Pentagon's latest contract terms. They want to limit surveillance and autonomous weapons. Are those reasonable asks for a company supplying AI to the military?

[Caroline Hyde]

The military would say no. The military would say Lockheed Martin has no power over us to dictate how we use the weapons we just purchase them and use. And there are laws that we have abide by and there's human humanitarian things that we sign up for and, and, and the way in which we police war worldwide. However, from Anthropic's perspective. And if you'd been keeping up with what Dario Amade, the CEO has been writing of late, he put out a big piece, thought leadership piece in January talking about the adolescence of technology and his worries and concerns about geopolitics, the use of generative AI for surveillance, the use of generative AI in biotech and warfare. So no wonder he's still thinking along these lines. He's, he's given us all the breadcrumbs to know that this is how he feels. They just earlier in the week, remember, sort of put out this odd statement saying they're stepping back to back from some of their safety is a core mission purpose. But in within that statement they really made clear it's because the government doesn't care. The government has not been increasing their focus on AI ethics in the way that they thought they would.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Paul Sweeney]

Dell Technology shares, they jumped pretty big here after the company gave an outlook for sales of its artificial intelligence servers that exceeded estimates. As John said, stocks up 19.4% today. Not bad for a big, big company with $97 billion in market cap. Woo Jin Ho joins us here, senior technology analyst for Bloomberg Intelligence. That's a serious print for, for Dell. What's, what's going on there?

[Woo Jin Ho]

I mean, John just said, look, you have these massive investments by from oai, right? Open oai. So essentially all of these datacenter deployments are really starting to materialize and those starting to benefit from it and they're

[Isabel Gottlieb]

entering the year with a $43 billion backlog. Does that give investors real visibility or is the backlog vulnerable to supply chain constraints and maybe pricing reset?

[Woo Jin Ho]

Well, that's a fantastic question right on the pricing reset, I don't think so. I think there is a little bit of leverage on Dell's side because Nvidia is holding the cards with the GPU chips. Right. But in terms of the supply environment, Dell does the supply chain very, very well. And the, the revenue guidance not only for the server side, but also traditional servers and PCs. They're managing it a lot better than we thought. So they should be fine on the supply side. For the rest of how big is

[Paul Sweeney]

the AI related product revenue for Dell and how has that grown and what do you expect it to go?

[Woo Jin Ho]

Well, if we, if we think about just the air Server piece by itself it is 25 billion for this year, doubling to 50 billion. I mean we're talking about incredible numbers doubling 50 billion next year. We've also seen that sort of momentum from Super Micro as well that they reported a couple of several weeks ago. But on the IPC front it is starting to pick up steam. Still small portion of the business but you know, quite frankly every PC is eventually going to be an AI.

[Paul Sweeney]

So what's an AI PC? What is that Practicality?

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Yeah.

[Woo Jin Ho]

You know, I'll tell you in practicality, very little for you and I. Right. It's a chip that can handle a lot more processes and do it a lot faster. Right. I've been actually been playing around with cloud code as part of my work and essentially what I'm doing is trying to use some of the processing that's on the PC. What I suspect is that as corporates try to bring in AI into their workflow, they are going to look specifically for AI PCs going forward.

[Isabel Gottlieb]

The company says memory chips, memory chip prices are rising rapidly. Do you think that the margins in those segments will be sustainable if the component prices also keep climbing?

[Woo Jin Ho]

Yeah. So I think this is one of the reasons why the stock is up so much. Right. The, the sentiment going into the print was really, really negative primarily because of the component and memory pricing. HP Q HP said on just the other day that their memory pricing doubled over the past month. DRAM pricing alone. Right. So that 800 way margins, we actually did the math. Memory pricing plus a higher mix of AI servers that's eating away 100%, 100 basis points of gross margin. And the thing is that there's a relative scale of the AI server revenues is helping to lift EPS altogether.

[Paul Sweeney]

So talk to us about the, the shortage of chips out there because we hear from a lot of your companies and other companies in the tech stack, what is it, why is it and how does it get fixed?

[Woo Jin Ho]

We can blame AI on everything.

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Yes.

[Woo Jin Ho]

Right. So essentially AI servers take, they use HBM high bandwidth memory that, that's stacked and it's sucking up a lot of the memory capacity that's out there. If we come off of the COVID period, essentially the memory makers, whether it's Microns, sk, Hynix or Samsung, they were hesitant to building out more capacity because they just didn't know if this thing was going to be real. And now it's starting to catch up to them. It's causing this domino effect of everything else. Servers, smartphones, PCs, they're just scrambling for supply. Right.

[Isabel Gottlieb]

Now, how do you read the buybacks? Around $10 billion. Is that confidence in future cash flow or more like, oh no, the stock is still undervalued?

[Woo Jin Ho]

Well, you know, when the Stock was at 120, I'm sure Michael Dell thought the stock was undervalued and wanted to breed a lot more confidence not only in the business outlook but also in the cash generation. Right. We are hearing mixed things on the cash generation front for my hardware companies at least.

[Paul Sweeney]

Did IC take down IDC as the third party independent data provider for pretty much the whole technology industry? Did they take down their forecast for PCs?

[Woo Jin Ho]

Was it took them long enough? Yeah, no, no, we had minus 7% unit declines.

[Paul Sweeney]

Is that because there's not enough chips to make the pieces?

[Woo Jin Ho]

It's, it's twofold, right? Not enough chips. And number two, PCs are very, very elastic. Right. From, from a demand, supply, demand perspective. And essentially what they did was they cut their forecast from minus 3% to minus 11% in on the PC side. And they also cut their forecast to smartphones to minus 13%. Right. There's a couple of things going on. The PC makers are going to focus more on the high margin businesses, right. So it leaves the lower end pieces at a large, so they're not going to start supplying those. And also the low end market tends to be a lot more price sensitive, so they're probably not going to upgrade.

[Isabel Gottlieb]

And then we have server and networking margins. I think those came above expectations. Is Dell gaining pricing power in AI hardware or is it just because maybe they're executing better than their peers? How do you read that?

[Woo Jin Ho]

Yeah, so. So there's a couple of things going on, Isabel. The first thing is, is that they're raising prices, right? And the term sheets are getting shorter. Instead of like, you know, three months, it's to two weeks. So that's happening as well. It's less price elastic. And then on top of that, from a margin perspective, as you were talking about earlier, storage has a higher margin overall and the storage business is doing very, very well, quite frankly.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Isabel Gottlieb]

got big earnings yesterday. Core Weave and it wasn't good because the stock fell by the most in more than six months. That's after the company reported a better than expected loss and boosted capital expenditures. So this spurred some concerns that the company's overspending on infrastructure. And who else can talk to us about this better than Anuragrana? He is Bloomberg Intelligence Technology analyst all the way from Chicago. So Anurag revenue exploded to 1.9 billion last year, but losses widened. Is this a classic growth at any cost when it comes to the story or is it something a little more concerning?

[Anurag Rana]

Yeah, I mean that's what the CEO is saying that listen, we have so much back orders of, you know, 60 plus billion dollars in orders and we really need to fill it and we're going to go spend as much as we Can. And today it seems investors are not liking it. But, you know, I think what happened was they gave a bit of an outlook of what the expenses are going to be, and they missed on that. And I think people are extremely. No, I wouldn't say extremely, but somewhat concerned that, you know, whether they have the capital down the road to keep on continuing this particular flow. I think that's really what it comes down to is where is the profitability going to come and at what point? Because as we know, some of these businesses, you have to invest upfront and then realize the profit later.

[Paul Sweeney]

Yeah, you got to back up for

[Woo Jin Ho]

me and explain the basics.

[Odoo Advertiser]

What in God's name is a Neo cloud?

[Anurag Rana]

Yeah, well, that's just the nomenclature, but at the end of the day, this is just a cloud. What you do is you open a data center, you buy GPUs from Nvidia, and then you rent it out to people. It's a very simple business model. Nothing so complicated about it. But what happens is you need to put that upfront capital to create that data center. Then you need to buy the chips and put it in there. And then after that is what you start realizing the revenue when people use it. We have enough evidence that the backlog of that is absolutely stellar right now. There is so much demand. These guys are running around and trying to, you know, put the data centers together and then go out and service that. So there is a mismatch between how much you're putting in in terms of cost versus what's coming in as revenue.

[Odoo Advertiser]

Well, can you explain a little further?

[Woo Jin Ho]

What's.

[Paul Sweeney]

How interwoven are they with Nvidia at

[Odoo Advertiser]

this point, and what's the significance of that?

[Anurag Rana]

Well, think of this as Nvidia selling the chips. They are really the distribution arm for the services around it. Nvidia is a shareholder in Cold Weave, and this is a pure play. You could say Nvidia Shop, where it's basically going out and renting their chips out there now it is. And again, this is not so much Nvidia trying to just give them capital to stay in business. They actually have orders from everybody, whether it's Microsoft or Meta or bunch of a lot of enterprises as well. So, I mean, Core Weave has real orders that it needs to fulfill. The question, again, as I said, is how much you have to put up front for those chips and services versus how much you're going to realize as revenue.

[Isabel Gottlieb]

And 77% of revenue came from just two customers, with Microsoft accounting for nearly two thirds. How big of A red flag is that or if it's even a red flag for IPO investors?

[Anurag Rana]

Yeah, to me it's not a red flag. It is a concentration issue. I get that. But at the end of the day, I think Microsoft is good enough in terms of, you know, they will pay the bill to go weave if they have promised some revenue. So I'm not concerned about that part. But Corvee is now seeing a lot more demand from other vendors. That's also not an issue. As I said, this is not a demand issue. The question at hand is because one of the things code we've has to do is it has to go out, borrow money, issue some bonds and then go out and create new data centers. So it's a financing question how much the rate of that is going to be, how much they're going to charge for these services. So I mean it's pretty much most of a cost overrun story at this point.

[Paul Sweeney]

Did they give much clarity on when this is all going to pay off?

[Anurag Rana]

They basically said, listen, long term margins are very good. They are expecting margins to improve in the second half of the 2026, but you know, they gave some guidance for operating income or adjusted operating income for Q and they came below that. So the big question for the analyst is, you know, you are telling me that it's going to improve in the second half of 2026. You know, what if it doesn't happen? So I think there are some doubts around that capabilities at this point.

[Isabel Gottlieb]

And the so the company could ask for a valuation north of $35 billion in this market. Do you think that's justified by the fundamentals or do you think it's kind of driven by momentum?

[Anurag Rana]

I mean, I think the question always happens is, you know, one week the entire infrastructure world is very happy and you know, bubbly and then the next week people start getting concerns. The question what the core we've has to show right now is they have to go out and raise some debt. I mean, you know, that's tied to their contracts and we'll see what's the cost of that debt because that's going to dictate how the next funding is going to be or the, you know, I call it not so much a funding round but more so a debt raise round and how that's going to go about.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Paul Sweeney]

Let's get dig into deeper. This little deal there in the media space. Warner Brothers discovery again. The news being Netflix walking away. So now Paramount, Skydance, it's their deal. Good for them. And let's check in with Geetha Ranganathan. She covers all the media stocks for Bloomberg Intelligence. We got Netflix stock trading higher. I guess the, the shareholders like them kind of passing on this deal.

[Geetha Ranganathan]

Yeah, big relief rally, Paul. You know, I mean this was always kind of muddying the narrative. I mean we've spoken about this multiple times. Netflix is such a clean organic growth story and them just pursuing Warner Brothers discovery, I mean, just kind of added so much of uncertainty. You know, you have the regulatory risks, of course, integration, execution risks. Plus we were talking about something like, you know, their debt levels going up to beyond 100 billion dol. And yes, they do have the financial firepower, but at the end of the day they have always been builders versus buyers. And once again they showed, you know, that they deserve, you know, they've always gained this reputation of being very, very disciplined spenders when it comes to M and A. And I think they once again exercised that discipline and investors are cheering.

[Isabel Gottlieb]

So it seems that this is a smart move according to analysts, including you. Does this signal that the company is confident in its organic growth versus M&A, especially in a very crowded streaming Isabel?

[Geetha Ranganathan]

I mean, that had been the question. I think that's what spooked investors so much when they actually went ahead with this $83 billion deal for Warner about whether they were actually seeing a slowdown internally and them not just abandoning the deal but also going ahead and resuming buybacks once again just kind of signals confidence in their underlying growth model. So I think, you know, we know very well that their operating metrics are really strong. I mean this is a company that has guided to double digit revenue growth. We're going to, we're going to about 12 to 14% revenue gains this year. We're looking at operating margin expansion of almost, you know, a thousand basis points. It's gone up 10% over the past two years. So and of course we also have fabulous, you know, free cash flow generation. So all of their, you know, financial lever levers and all of their growth drivers very much in play place and you know, not having this distraction anymore just helps them kind of really double down on their organic growth story.

[Paul Sweeney]

On the other side of the equation. Geetha, be careful what you wish for Paramount. They've got this great asset in Warner Brothers discovery. What's the street think about this management team at Paramount? Pretty much unknown, untested. This Mr. Ellison from the media community. Is there any report card to date? Does the market think that this is a mansion that can make this acquisition work?

[Geetha Ranganathan]

They probably can, Paul. I mean they do have, you know, financial, they do have some financial firepower here. Although I would point out that leverage at this company is going to be extraordinarily high. We're looking at pro forma leverage of around almost seven times. Those are, you know, dangerously high levels. Yeah, and it's something that they're going to have to contend with. But at the same time, you know, they have spoken to synergies. We're looking at about $6 billion in synergies that they've committed to. And remember, this is a team with a fairly tech heavy bent. So that might be something that kind of really serves them well as they poise themselves for this new streaming future. You know, you do have now they kind of are turbocharging their content, offering their turbocharging their streaming business, and they have all of the pieces in place to make this a really good business. We'll have to wait and see how they execute. But you're right, I mean, the management team is a little bit of an unknown. Although, you know, we do have Jeff Shell who has experience from NBC. But again, it's going to be a little bit of a wait and watch.

[Isabel Gottlieb]

And Netflix also said they Plan to invest 20 billion this year in films and shows. Is that enough to keep them ahead again in this really competitive streaming Wars?

[Geetha Ranganathan]

Yeah, the 20 billion that they committed was actually a pretty significant step up, Isabel, from prior years. I mean, we've seen them increasing content cost by roughly about 6 to 7%. This year was going to be a much more significant jump to about 10%. And this is just basically Netflix saying that they are willing to diversify into different forms of content. I mean, the big investments that they're making are in live, in sports, in international content, just to kind of keep up that engagement metric and make sure that, you know, they keep building on that competitive moat that they already have. And now, you know, the icing on the cake for them with this Warner deal is that they're getting $2.8 billion in termination fees. So, hey, much more K dramas, I guess.

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