Zuckerberg Plans to Cut Metaverse Group's Budget Up to 30%

Summary

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Bloomberg Intelligence Podcast

Episode: Zuckerberg Plans to Cut Metaverse Group's Budget Up to 30%
Date: December 4, 2025
Hosts: Ed Ludlow, Scarlet Fu, Paul Sweeney
Guests: Caroline Hyde (Bloomberg Technology Co-Anchor), Anurag Rana (Bloomberg Intelligence Senior Technology Analyst), Lindsey Dutch (Bloomberg Intelligence Analyst), Mark Douglas (CEO, Mountain)

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Episode Overview

This episode centers on Meta’s decision to scale back its Metaverse investment—reportedly cutting the Reality Labs (Metaverse group) budget by up to 30% for 2026. Hosts unpack what this means for Meta, AI spending, investor reactions, and the overall tech landscape. The episode includes a broader look at industry impacts: from tech rivalries and Apple’s internal shifts, to the evolution of streaming and media M&A, and consumer trends in retail.

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1. Meta’s Strategic Shift: Slashing Metaverse Spending

Key Segment

• [02:06–03:41]

Ed Ludlow sets the stage:
Meta, once all-in on the Metaverse (even changing its name from Facebook to Meta), is now slashing Reality Labs’ budget by up to 30%. This dramatic allocation shift comes after years of heavy investment in VR and immersive technologies.

Caroline Hyde’s Analysis:

• Zuckerberg and Meta execs convened in Hawaii to rethink priorities.
  • "They're going to make layoffs. They're going to cut about 10% across the entire business...How can he offset that? Well, 30% more cuts, therefore, going to this particular part of Reality Labs." (Caroline Hyde, 02:45)
• Reality Labs will still make Ray Ban Meta Glasses (grabbing consumer interest in AR), but less so with VR, which hasn’t gained expected traction.
  • "Virtual reality, we're not living in it yet. He really thought we'd all be doing our workouts there...it just hasn't caught on in the way that was expected." (Caroline Hyde, 03:22)

Notable Quote:

“For now, it’s becoming sort of a metaverse of AI and augmented reality rather than virtual reality right here, right now.”
(Caroline Hyde, 03:34)

Audience Reflection:

• Co-hosts ask if Meta was just “too early” to the VR push; guest concedes general tech adoption simply isn’t there yet, sharing a personal anecdote for color.

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2. Tech Talent Wars: Meta Poaches Apple’s Design Guru

Key Segment

• [03:41–05:23]

Caroline Hyde Exposes Apple’s Brain Drain:

• Apple’s Alan Dye, key to iPhone X design and software interface, leaves to join Meta—a “huge coup” that signals design talent shift.
• Apple’s ongoing loss of senior design and AI staff is traced to Jony Ive’s 2019 departure, flagging both morale and leadership transitions as issues.
  • “This is also turning of the guard...the real loss has been in the AI area...they might even be turning to Google for its large language model rather than building in house." (Caroline Hyde, 04:43–05:18)

Security vs. Scale at Apple:

• Apple’s insistence on "edge AI" (keeping all computation on-device) is characterized as noble but limiting—constraining their ability to build competitive large language models.

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3. Meta’s AI Pivot & Global Competitive Pressures

Key Segment

• [06:13–07:29]

Inside the AI Race:

• Meta is publicly shifting resources from the Metaverse to AI, evidenced by the success of Ray Ban Meta glasses and adoption of generative AI in advertising and user content recommendations.
• Nonetheless, challenges persist in having people actually use "Meta AI" apps, especially in markets like the EU where integration hurdles and regulatory scrutiny are significant.

Quote:

“They still have to show that they're the place that you're going to use large language models...they're the place you're going to come for a chat bot.”
(Caroline Hyde, 07:06)

• Meta is also eyeing cost savings via partnerships with Google’s AI hardware (TPUs).

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4. Market and Investor Response to Meta News

Key Segment

• [10:18–12:59]

Ed Ludlow:

• Meta’s stock is up ~4% on news of Metaverse spending cuts, revealing clear investor approval.
  • "The Stock's only about 13% year to date. Let's check in with Anurag Rana..." (10:18)

Anurag Rana’s Analyst Deep Dive:

• Funding billion-dollar AI/data center initiatives means Meta—despite good cash flow—needs to find savings elsewhere.
  • "It makes sense for them to cut in other regions or areas to fund this particular project." (Anurag Rana, 10:53)
• Investors now demand evidence ROI on these AI investments—impact on core business revenues or cost reductions.
  • "They will ask, you know, the management team...what is the net effect addition to your revenue or reduction to your expenses down the road." (Anurag Rana, 11:26)
• Consensus: Metaverse remains a tough sell to Wall Street; redirecting resources to proven or promising ventures is a market positive.

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5. Related Tech Industry Insights

Salesforce and AI, Broader Market Themes

Key Segment

• [12:17–14:38]

Salesforce’s Position:

• Results only slightly ahead of expectations; core business remains sluggish due to slower hiring by major clients.
  • "You have a revenue base of $41 billion, it takes a lot to move the needle." (Anurag Rana, 12:17)
• AI is not (yet) an existential threat for established enterprise providers—it’s macro IT spend and hiring that's the challenge.

Retail and Consumer Hardlines
(Segment beginning at [17:24], less relevant to Meta but covered for completeness):

• Discussion with Lindsey Dutch on Dick’s Sporting Goods, its acquisition strategies, consumer demand in retail, and similar sector shifts.

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6. The Changing Media Landscape: Streaming, M&A, and Content Wars

Key Segment

• [27:59–35:21]

Streaming & Media M&A:

• Mark Douglas (Mountain CEO) weighs in on the potential Warner Brothers Discovery M&A saga, where Netflix and traditional players vie to acquire blockbuster content libraries.
  • “Literal word on the street is Netflix. Netflix kind of has the inside track, but it’s some pretty serious bidders.” (Mark Douglas, 28:45)
• Antitrust not a major concern—industry is highly fragmented (200+ streaming services).
  • "I think it’s pretty hard even to look at this from an antitrust perspective." (Mark Douglas, 29:22)
• Streaming platforms need unique value propositions to survive; consolidation is both inevitable and healthy.
  • “If I name a streaming network and you can’t tell me immediately why you watch it, then it probably should not exist.” (Mark Douglas, 33:14)

Future of Streaming, Content is King:

• 2026 will see “the official death of cable”; sports moves rapidly to streaming.
  • "This is the year where like it's kind of the official death of cable in a sense...all content consumption is streaming, I think with the live sports in particular." (Mark Douglas, 34:25)
• Ad-supported streaming models are now almost universal.

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Notable Quotes & Memorable Moments

• On Meta’s strategic pivot:

  "They really got to understand the integration...For now, it’s becoming sort of a metaverse of AI and augmented reality rather than virtual reality."
  (Caroline Hyde, 03:34)

• On Apple’s dilemma:

  “They might even be turning to Google for its large language model rather than building in house.”
  (Caroline Hyde, 05:18)

• On investor sentiment:

  “I think most shareholders are like, I don't really get the whole Metaverse thing. So to extent you can scale back investment there, put it anywhere else, that's probably a good thing.”
  (Ed Ludlow, 11:56)

• On streaming survival:

  “If I name a streaming network and you can't tell me immediately why you watch it, then it probably should not exist.”
  (Mark Douglas, 33:14)

• On the demise of legacy TV:

  “This is the year where like it's kind of the official death of cable in a sense...all content consumption is streaming.”
  (Mark Douglas, 34:25)

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Timestamps for Critical Segments

• [02:06] – Meta’s Metaverse budget cuts announced and context
• [02:45–03:41] – Caroline Hyde details the internal strategy and Reality Labs’ focus shift
• [03:41–05:23] – Apple executive departures and implications for both Apple and Meta
• [06:13–07:29] – Meta’s AI ambitions, competitive context
• [10:18–12:59] – Analyst (Anurag Rana) interprets Meta news and AI funding priorities
• [27:59–35:21] – Mark Douglas on the streaming/media M&A landscape and the future of cable

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Summary Takeaways

• Meta is decisively cutting back on its Metaverse group (~30%) to free up resources for AI investment. The move is cheered by investors, who prefer clear ROI and proven consumer adoption.
• VR has not achieved mass market penetration; focus is shifting to successful AR products (Ray Ban Meta glasses) and AI-powered experiences.
• Major design talent migration from Apple to Meta indicates a shifting balance in hardware/software innovation. Meanwhile, Apple faces internal AI constraints related to its privacy-first approach.
• The streaming wars continue to heat up, with Netflix angling for Warner Brothers Discovery, signaling further industry consolidation and the decline of legacy cable models.
• Investors across tech sectors (including Salesforce and retailers like Dick’s Sporting Goods) are focused on practical growth amidst rapid technological change and shifting consumer preferences.

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This summary highlights the episode’s central insights, quotes, and major themes, providing a thorough briefing for listeners seeking to understand the episode’s business and technology implications.

Transcript

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[Ed Ludlow]

And one of the bigger, I think, stock news stories today. Kurt wagner, Bloomberg News Breaking the story that the folks at Meta cutting back some of their spending on the Metaverse in particular by as much as 30%, which is a big number because remember folks, this company pivoted, pivoted hard to the Metaverse several years ago to the point where they changed their name from Facebook to Metaverse. This was a big, big pivot for Mark Zuckerberg and now kind of dialing it back a little bit. So we want to get some more reporting on that. We turn to Caroline Hyde. She joins us here in Switi. Bloomberg Tech co Anchor so this is a kind of a big move, I think, for Mr. Zuckerberg, don't you Caroline?

[Caroline Hyde]

It's a signal. And what's interesting about it is, as usual, as they think about the budget for 2026, they're going to make layoffs. They're going to cut about 10% across the entire business. That tends to be what happens at this time of year. But he gathered his top executives in his house in Hawaii to discuss, okay, where should most resources be coming from? Because remember, they're spending a ton on AI and people have been worried about that. How can he offset that? Well, 30% more cuts, therefore, going to this particular part of Reality Labs. Now, Reality Labs are still going to be making your Ray Ban meta glasses. They've seen real interest in the air use in augmented reality. But virtual reality, we're not living in it yet. He really thought we'd all be doing our workouts, there would be working there. And it just hasn't caught on in the way that was expected. So of course, Paul pull out resources from there, reallocate them. And I do think that it's interesting. Of course they rebranded under this name. For now, it's becoming sort of a metaverse of AI and augmented reality rather than virtual reality right here, right now.

[Co-host / Interviewer]

So was matter just too early? Are we not ready yet for a virtual reality?

[Caroline Hyde]

I don't think we are. Okay. I mean, are you using it?

[Co-host / Interviewer]

I'm not.

[Caroline Hyde]

I mean, my husband loved getting. He got the. One of the original sort of Oculus versions of the headset and yeah, he was doing workouts and. And then he sold it in a garage sale because I think. And it got to a point where it's like, what are the applications? This. I love the idea of when I'm in working abroad and I need to not have. I need access to lots of screens, but I can't have just lots of screens. It was great to see how that could have been used, but I wasn't going to spend that many thousands on the piece of hardware. They really got to understand the integration. That's kind of why it's so interesting. It comes at that time. We also understand Alan Dye from Apple, one of the key interface design team, leads the person who's been behind the iPhone X, behind the operating system, behind, behind the applications of Apple. He's jumping ship to meta. This is a huge coup. He's going to be thinking about the design of these things in the future.

[Ed Ludlow]

You bring that up about the Apple thing. I see that's not the first person we've seen leave the Apple I. What is going on there?

[Caroline Hyde]

Yeah, they've really been shedding people in many ways. This is tied More back to Jony Ives departure back in 2019 and they lost a lot of their design prowess people then this is also turning of the guard a lot of these people in Apple for a very long time and we're thinking about Tim Cook himself coming to an age where he might be retiring. Many are wondering how executive executive shift but you're right, the real deluge, the real loss has been in the AI area particularly in the large language model department where they've just taken so many hits in terms of morale because look they might even be turning to Google for its large language model rather than building in house and they've been recently losing out or sort of waving goodbye to John Gian Andrea that's the the main lead of the so is that.

[Ed Ludlow]

The assumption that they're going to farm this their AI out to Google? Perhaps. And that's the perhaps and I think we'll talk to an argument in just a moment. He'll say from a stock perspective that's what investors kind of want. Yeah, I mean it's well I spend a gajillion dollars to be just do what you do a search.

[Caroline Hyde]

And it's been self limiting for Apple in many ways because they're all about safety on the phone. This is all about edge AI. It's not about therefore sending all your data into the cloud and doing enormous amounts of data analysis and therefore feeding it through large language models there they want to be secure. That means you have to only be able to really do the compute on your own phone. That's very limiting at the moment. So you're just not getting the parameters that you need to have a really effective large language model. So therefore maybe they do have to shift to a third party at least while they get their ducks in a row.

[Co-host / Interviewer]

So how are we thinking about how Metta is scaling against a lot of its competitors right now as we think about this AI race?

[Caroline Hyde]

Well isn't it interesting all dovetails together in the same way for many matter is showing that it's putting AI first and we understand the impact because everyone loves these Ray Ban meta glasses they selling very well. We've seen that people have really seen the revenue streams galvanize the advertising offering the marketeers loving how they've used generative AI within the product. We're all getting fed better content more specific to us that's going to be the help of generative AI. But are we really downloading Meta AI's own individual AI app? Yeah, I haven't I'm using it more in WhatsApp. But then we've also got the EU worrying about how they're fending off competition in WhatsApp because they're saying, Look, ChatGPT, even though you can put your ChatGPT within your meta WhatsApp at the moment, they, they're making it too difficult. They don't want to train their own APIs. Yeah. They don't want to be basically marketing OpenAI's ChatGPT, then only marketing copilot for Microsoft. They want you to use meta AI. So I think they've still got to show that they're the place that you're going to use large language models, they're the place you're going to come for a chat bot. And, and I think more broadly they're the place that all of this ends up working from a capital expenditure perspective. So I think for many over at bi, they love the idea that they're going to maybe use Google's TPU's because that's a cost saving.

[Ed Ludlow]

Yep, absolutely. Caroline Hyde, thank you so much for joining us. Caroline Hyde, BTECH Co Anchor along with Ed Ludlow, Bloomberg News they are on top of everything happening out there in the world of technology in Silicon Valley. We appreciate getting a few minutes of Caroline's time here. Stay with us. More from Bloomberg Intelligence coming up after this.

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[Ed Ludlow]

Piece of news coming out of the tech space is Metta, you know, stepping back a little bit from their investments in the Metaverse. And as Lisa Mateo was just reporting, that's pushing the stock up 4% today, which is a pretty big move here. The Stock's only about 13% year to date. Let's check in with Anuragran and we'll talk about a lot of tech issues out there. Anuragran is a senior technology analyst for Bloomberg Intelligence out there in Chicago. What do you make of this announcement or this report from Bloomberg News? Kurt Wagner is reporting that Matter may cut back investments on its Metaverse by as much as 30%. What do you make of that?

[Anurag Rana]

See, when you have to invest billions in the side of it, you got to find that money somewhere. I know they have good cash flow, but you know, right now everything is going towards building your infrastructure. So I think it makes sense for them to cut in other regions or areas to fund this particular project.

[Co-host / Interviewer]

It seems as though investors are clearly celebrating this. I mean we're seeing it up more than 3.8% right now and earlier a lot higher. What do you think about next steps from here? I mean, clearly they're trying to redistribute their funds into AI development. What are investors looking for from that?

[Anurag Rana]

So the same way they were looking at Metaverse a few years ago, they want to see an auto. Why? They will ask, you know, the management team as to you're investing all these billions to Create new data center super intelligence team. What do I have to see see in terms of the return on the core business? And I think that those questions are not just for Meta, but the entire ecosystem as to what is the net effect addition to your revenue or reduction to your expenses down the road. And I think that is not going to end anytime soon.

[Ed Ludlow]

All right. So I don't know. I'm just, I think most shareholders are like, I don't really get the whole Metaverse thing. So to extent you can scale back investment there, put it anywhere else, that's probably a good thing. And we also had Salesforce reporting results talk to us about that name because that name's been under pressure, I think maybe potential threats from AI in general.

[Anurag Rana]

Yeah, the results did come in, I mean, almost in line with how we were looking at it in terms of that the core business is still struggling, but when it comes to some of their products that are starting to do well, they gain momentum. But when you look at somebody like a Salesforce, when you have a revenue base of $41 billion, it takes a lot to move the needle. So even though these products are very small and you know, growing triple digits, but they are not, you know, right there in order to take down what is happening on the core business, which is a decline in seat growth or the, the, the less addition of seats because of macro IT spending. And, and that is probably going to be the story at least for the near term.

[Co-host / Interviewer]

So it seems as though analysts are still generally positive on, in terms of adoption trends when we think about this company though.

[Anurag Rana]

Yes, absolutely. And that's one of the things we saw really good numbers on both the data cloud side of it and also the agent force. But when you look at the stock reaction last night, it was up 5, 6%. And finally people have, when you really scrape the numbers and see that their commercial remaining performance obligations, which is the order book for next quarter, which they expect to grow about 13% in constant currency. 4 percentage point of that is informatica. So when you strip that out, you will see that that particular backlog number goes 11% this quarter to let's say 9 or 10%. So the core is still declining or the core is still under pressure.

[Ed Ludlow]

So the stock down 27% year to date on Iraq. Does that, does that reflect the fact that it's just it budgets are tight or that AI poses an existential threat to certain providers like a Salesforce?

[Anurag Rana]

I don't think that's the case because it's going to be very difficult for an established Fortune 2000 company to get rid of their core system of record. You know whether that's an hr, sales, sales, customer service and just deploy a model in there at least we are not there yet. Maybe five years down the road we may see a scenario like this. But that's not really why Salesforce is struggling. It is basically they are the largest provider of sales automation tool and customer service tool to Fortune 2000 companies. It's those companies that are not hiring at that same rate that they used to because outside of AI and AI infrastructure, everything else is still weak at this point.

[Ed Ludlow]

All right, Anurag, good stuff as always. Anurag Rana he is our Senior Technology Analyst, Bloomberg Intelligence from the burgeoning tech hub of Chicago, Illinois. We appreciate getting a few minutes of your time. Stay with us. More from Bloomberg Intelligence coming up after this.

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[Ed Ludlow]

Dick's Sporting Goods reported some numbers here. The Stock's off about 1% but boy, they put up some. I thought they were some pretty decent numbers, but what do I know about this stuff? Lindsey Dutch, consumer Hardline Senior analyst, she's the expert and she's a Bloomberg Intelligence. She joins us here. Lindsey, talk to us about Dick's Sporting Goods. What did you learn with their earnings release?

[Lindsey Dutch]

Positive I think that there's continued strength in the legacy business and sometimes that that's being overshadowed by their Foot Locker acquisition which closed in early September. But there's certainly pressure on this retailer to execute a very quick turnaround at Foot Locker and they are already planning to aggressively offload some stale inventory and close some stores. And we even saw some of that changes already over over the Black Friday and Cyber Monday shopping weekend.

[Co-host / Interviewer]

What's really been the focus there with Footlocker? What have been the issues at play?

[Lindsey Dutch]

So Foot Locker is a little bit of a different animal for Dick's. They have a lifestyle focus. They also have to be more on trend with their assortment and they really have to carry sort of the top of the line items across a variety of brands. Running shoes have been in lately. Dick's does have expertise sort of in that more sports focused arena. And so, you know, Dick's is looking to bring its strong partnerships with a Nike, for example, and other brands like that to elevate the assortment, which should help. They're also looking to bring in more apparel to the stores. And I saw that when I was out on Black Friday. You know, my Footlocker had a lot more apparel this year. They also had lots of other brands that were being highlighted, Crocs, Timberland, so doing a lot more than Just Nike.

[Ed Ludlow]

Dick's cause the World cup quote, the biggest sports moment the US has ever had. What are they telling us about the World cup and maybe how it might impact their company?

[Lindsey Dutch]

Yeah, so they mentioned that at the Morgan Stanley conference yesterday. All of these sports moments have been really big for their legacy business. People are really leaning into sports sport. They saw over the shopping weekend, you know, interest in their products that were marketed for the World cup and that could be a key event to drive sales going forward. But they touch lots of aspect of sport. Their golf business is doing excellent this year. They also do very well in just team sports. When you think about getting your NFL gear for your favorite teams and things like that, they're really seeing success across the, across the board. But those big events just give them an opportunity to advertise and bring people into their store.

[Co-host / Interviewer]

Who are their main competitors right now? Who do you see within this landscape?

[Lindsey Dutch]

Yeah, so that's a very difficult question given that. I think that they've done a really good job sort of breaking out of lifestyle and really focused on athletes and that's what makes them different than a footlocker, than a JD Sport. I think one of their closer competitors could be Academy Sports and outdoors. They're much smaller in size. But that retailer Academy does compete with Dick's and is looking to more focus on athlete and bringing sort of that athletic assortment to their customer as well.

[Ed Ludlow]

Lindsay, what is Dick's telling you? What are some of the other consumer hardlines companies telling you about the consumer right now?

[Lindsey Dutch]

So Dick's is also unique in that they typically cater to a higher income consumer. So you know, they have seen resilient demand. They have seen both ticket and transactions continue to rise, which is rather unique. A lot of other retailers are only seeing the transaction front rather than the ticket front. So it tells me that the demand from that higher income come consumer is steady to strong. We do also see that demand for new product that's being rolled out. People are willing to pay a high price point for that. We also see that in footwear. Right. Like on has a very high price point they haven't discounted. Dick's is also not discounting on those premium products and so that consumer is willing to splurge on those items. There is a little bit more pressure on the lower income consumer this year. I think that affects Foot Locker a little bit more. But the way Dick's is approaching sort of the turnaround and offering greater discounts, it might be an opportunity to continue to cater to that customer. This Holiday season.

[Co-host / Interviewer]

How are you thinking about the discretionary space? I mean, I know Ulta is reporting after the bell today. I assume maybe the beauty space can be call it discretionary. Some people might call it essential.

[Lindsey Dutch]

Yeah, I would agree. I think, you know, Ulta is. There are a lot of connections I can draw between Ulta and, and Dick's. You know, both of them had, you know, very conservative outlooks for the back half of the year, you know, baking in a lot of uncertainty about, you know, where demand would go. So Ulta, you know, better than expected results in the first half very similar to Dick's. We get third quarter results later today, but that outlook again is very low. So there's a low bar for them to hit at least on the top line. And they're coming off a two year best same store sales comp of almost 7% growth in the second quarter. So I'm optimistic for some strong top line numbers there. But I do think the number to watch for Ulta today is going to be on the profit line. They already have some pressure on profit with reinvesting in the business and we've seen some of the retailer stocks. Even if, you know, the quarter was good, if that profit line is missing, you know, investors aren't really liking that.

[Ed Ludlow]

Lindsey, we're not hearing a whole lot about tariffs this quarter. What are your companies saying?

[Lindsey Dutch]

So most of my companies have low direct exposure, meaning they're not, they weren't directly importing a lot of goods. So the direct impact on them is low. They're working with suppliers and raising prices where they need to manage that. You know, the biggest company in my space that's most exposed would be E L F Beauty. So also in the beauty space, 75% of their product, at least their namesake product is made in China. So highly exposed there to the China tariffs. But we'll have to wait and see because there are some legal action out there, you know, looking to get those costs back on the retailer side. But you're right, earnings calls have sort of left that topic mostly out of the third quarter commentary.

[Co-host / Interviewer]

What are the top major trends that you're keeping an eye on as we head into the next year?

[Lindsey Dutch]

So I do think costs in general, you know, still are facing some upward pressure going into next year. And discretionary as a whole, you know, demand has been quite soft since the back half of 22. So, you know, we're looking to see, you know, when is that going to turn? When are we going to see stronger discretionary demand across the board and that will help a lot of these, you know, more secondary retailers in the space. Someone like an academy who's sort of struggling to see growth. We can see a lot stronger of a year, you know, with a pickup in that discretionary spend.

[Ed Ludlow]

Lindsey, thanks so much. Appreciate it. Lindsey Dutch, Consumer Hardlines. She's a senior analyst at Bloomberg Intelligence down there in our Princeton office talking to us about Dick's Sporting Goods. Had some pretty decent numbers. Stay with us. More from Bloomberg Intelligence coming up after this.

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[Podcast Host / Bloomberg Intelligence Announcer]

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg business app Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Ed Ludlow]

Well, there's a lot going on in the world of media. I mean, we're waiting for a big M and a trade to happen. We've also got a lot of streaming services jockeying for competitive position relative to Netflix. We got AI impacting advertising. A lot going on out there. So let's check in with somebody who does this stuff for a living, Mark Douglas, president CEO of Mountain. He's zooming in from one of my favorite towns in this country, San Antonio, Texas, home of my former biggest client, Clear Channel Communications. That was a good company back in the day. Mark, how do you think you talk to a lot of advertisers, you talk to a lot of agencies, you talk to a lot of folks in the media business. How do you think this Warner Brothers Discovery thing is going to go down? Do you think anybody's got the inner track here?

[Verizon Business Advertiser / Mark Douglas]

Well, I mean, literal word on the street is Netflix. Netflix kind of has the inside track, but it's some pretty serious bidders. You know, kind of the Ellison family, who I work for, Larry Ellison, Netflix. I mean, a lot of people with resources and who seem to have a lot of vision and really are in building mode. So I think it's like exciting times watching this go down.

[Co-host / Interviewer]

I mean, as we're thinking about this potential deal if Netflix were to actually come out on the winning end, what does this mean potentially about antitrust concerns? Have you been hearing any conversation about that?

[Verizon Business Advertiser / Mark Douglas]

I don't think so. I mean, there are somewhat around 200 streaming networks, almost all of whom are billion dollar companies. I think it's pretty hard even to look at this from an antitrust perspective. Even if it's two of the largest. I think the library that. And honestly, some of those companies are hurting. And so, you know, having some consolidation I think is a healthy thing. And Warner Brothers Discovery, I think it's just a fantastic asset. I think in terms of acquisitions or mergers in the media space, I think it's kind of being number one on the list. I think the way people are responding to the opportunity is kind of validating that.

[Ed Ludlow]

You know, Terry Kwaja back at Solomon Smith Brothers, Solomon Smith Barney, he was the first one to trade this asset when he represented AOL buying Time Warner back in the day. So this is not the first go round for these Time Warner people.

[Co-host / Interviewer]

Yeah.

[Verizon Business Advertiser / Mark Douglas]

And look at the program. They have Harry Potter, Game of Thrones, White, loaded. I mean, it's, it's. In a lot of ways, HBO was kind of the original Netflix. You know, it wasn't obviously on the net, but it had like this incredible original content, which it continues to still have, along with just this broad library of content. And we all watched it on cable. Netflix kind of brought that formula to the Internet. And obviously it's, you know, kind of been this become this massive company as a result of that. But I think that's why that library of content, that ability to kind of keep doing it, like, they haven't really lost meaning. Warner Brothers Discovery haven't really lost their mojo in terms of creating content like that. And I think Discovery is under underappreciated in terms of the value, you know, that, that it brings. Shark. Yeah, Shark Week. And that kind of like, like documentary style and, and they turned kind of showing. And they turned that also into like reality TV with, with what's the show up in Alaska? The fishing show. Oh, yeah.

[Ed Ludlow]

The crab guys.

[Baillie Gifford Advertiser]

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[Ed Ludlow]

Last five.

[Verizon Business Advertiser / Mark Douglas]

Yeah. It's a lot to watch. It's a lot to watch. And I think that's why people want the asset.

[Co-host / Interviewer]

I've forgotten about Shark Week.

[Ed Ludlow]

Yes. Oh, no. That's big revenue.

[Verizon Business Advertiser / Mark Douglas]

Just imagine any of these players, especially on Netflix, who has the, you know, the resource to do it. Bringing back Game of Thrones, bringing back a lot of program. I think it's still going to play really, really well. And, and it might also play really well outside the United States. So, you know, where a lot of these companies need to expand to.

[Co-host / Interviewer]

So we talked about Netflix. What about Paramount, Skydance? How big of a deal could this be for them?

[Verizon Business Advertiser / Mark Douglas]

I think it makes a lot of sense. I mean, the Paramount is a good asset. I think this is meaning there's a lot of programming there and obviously they pick up CBS and things like that. But adding Warner Brothers Discovery, I kind of think puts them in a much stronger position to challenge Netflix and challenge a Disney. And that may be one of the Reasons reasons Netflix is interested is more is somewhat as a, you know, kind of to hold their ground, hold their turf by not allowing someone to put together a library of content that is, you know, potentially as in the range of strength as theirs is. So that, you know, this could be as much of a defensive move as an offensive move. But I think it makes a lot of sense for Paramount. I mean, once they committed to getting Paramount, I think, you know, the acquisitions can't stop. They have, they have to kind of double down. And so, you know, we'll see how this plays out.

[Ed Ludlow]

Mark, for 2026 in the streaming business, you mentioned there's, you know, a couple hundred streamers out there. Are there too many? Does there need to be consolidation or bundling or how do you think the streaming landscape is going to evolve next year?

[Verizon Business Advertiser / Mark Douglas]

Yeah, I mean, it has to consolidate. I've always thought. I mean, kind of one of the things I've always said on this topic is we could play a game. If I name a streaming network and you can't tell me immediately while you watch it, then it probably should not exist.

And so, and we played that game. You know, if I say Discovery, you would say documentary. If I say Netflix, you would say, you know, new shows every Tuesday and there'd be a range of things you want to watch. If I say espn, you say Sports. And so, you know, when you get into some of the names, you can as clearly say that then I, I think there has to be a consolidation both in terms of the health of those businesses as well as just what consumers are willing to spend and tolerate. We've gotten to this point where pretty much, you know, we went back to the future in terms of ad supported content. At this point, I think every streaming network except for Apple TV plus now has ads. So you can, you can do an ad model and, and do well. You're not as reliant on subscriptions, but you still have to have a reason for people to come and watch you. And that's the key.

[Co-host / Interviewer]

What are your major themes for 2026 as you're looking at the media landscape?

[Verizon Business Advertiser / Mark Douglas]

The, I mean, this is the year where like it's kind of the official death of cable in a sense. I mean, obviously it's a legacy business, but like there's nothing like live service. Sports is, is moving on the streaming as fast as it possibly can. It's the topic of the day. It's what everyone wants. We got, I think Netflix continues to expand in terms of their ad supported business, which is great for advertisers and great for consumers. But it's kind of that like all content consumption is streaming, I think with the live live sports in particular. And, and one of the things that's interesting about streaming is you can turn content that's not the NBA and not the NFL, and so content consumers want.

[Ed Ludlow]

To watch and just wait till the NFL reopens its contract with its media partners. That's going to be seismic. Mark Douglas, President CEO of Mountain this.

[Podcast Host / Bloomberg Intelligence Announcer]

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