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Streaming media skilled Dan Rayburn explains why he is targeted on packaging, bundling and distribution of content material providers (0:30) Netflix understands what shoppers need (11:45) Disney earnings; digital enterprise getting loads tougher to trace (16:30) Fubo enjoying the lengthy recreation (23:50) WBD undoubtedly one to regulate (27:10) Sports activities viewership information and methodology (37:30)
Transcript
Rena Sherbill: Dan Rayburn, media skilled extraordinaire. All the time nice to speak to you on Investing Specialists. Thanks for approaching.
Dan Rayburn: Respect you having me again on. You already know I really like speaking about my business, streaming, and all the pieces that is happening and that adjustments what looks as if each single day.
Rena Sherbill: And we love an skilled, so win-win as we wish to say and as we wish to expertise.
So speak to us, you are looking on the media panorama, what are you most targeted on lately?
Dan Rayburn: Packaging, bundling and distribution of content material providers. That is actually the place this entire business goes.
All people desires to take a seat round and argue about quite a lot of issues that buyers are usually not taking a look at on the know-how finish. I say on a regular basis, folks take a look at photos, not pixels. And I am not the primary one to say that. That dates again when nonetheless pictures was simply getting began on the earth, actually.
Nevertheless it all comes right down to frictionless shopper join issues which are straightforward, easy to make use of, has the content material they need within the enterprise mannequin that they need, whether or not that is AVOD, SVOD, FAST, these are simply sorts of enterprise fashions, these aren’t providers.
However I am all the time taking a look at how all the pieces is being packaged and bundled and offered to the patron, regardless that I am monitoring all of the know-how nerd stuff on the again finish.
Rena Sherbill: So while you’re taking a look at particular corporations, what are you taking a look at or who’re you taking a look at to start with?
Dan Rayburn: Nicely, I am overlaying all people within the ecosystem that is really delivering the providers behind the scenes that buyers do not learn about.
So sure, they know the hyperscalers of Amazon (AMZN) and Microsoft (MSFT) and Google (GOOG) (GOOGL), however there’s a whole bunch, if not hundreds of corporations behind the scenes which are doing ingestion, transcoding, storage, media administration, content material safety.
So I am monitoring the seller panorama on one facet after which flip facet, I am monitoring all of the providers out there accessible to shoppers from a pay TV standpoint, pay to personal, pay to hire, pay to obtain, subscription providers, free providers like FAST.
I am monitoring that facet of it as properly. So it is quite a lot of totally different corporations of which there’s about 50 that I observe which are public which are tied into video not directly, or type, however all of them look very totally different within the sense that Netflix (NFLX) will get its income from a content material service that it delivers through stream media know-how.
That appears very totally different than an organization like Disney (DIS) that has parks and different strains of enterprise. So evaluating the numbers and the providers from firm to firm, it is crucial you try this in a approach that is factual versus opinion-based.
Rena Sherbill: Info over opinion. We additionally love that. It is a good place to be targeted.
Dan Rayburn: I am all the time targeted on that. Sure. And I all the time say information over worry.
Rena Sherbill: That is even higher really. I’ve by no means heard that. I like that loads.
Dan Rayburn: Nicely, there’s quite a lot of traders on the market that do not actually perceive the market. Even on the Wall Avenue facet, PEs, VCs, institutional cash managers who I take care of loads, most of them are usually not specialists. So that they’re monitoring dozens, in some circumstances, 100 totally different corporations.
I keep in mind for example, when Disney introduced Disney Plus, all these totally different institutional cash managers reaching out to me and saying, uh-oh, we higher drop our Netflix inventory as a result of Disney goes to place Netflix out of enterprise. I used to be like, guys, simply relax right here. These are two totally different providers.
This is the distinction between them. This is who there’s focusing on. So quite a lot of it’s simply based mostly on how the funding mannequin works on the market. There’s only a few people who’re actually specialists in anyone specific business. So it simply means it’s a must to do quite a lot of training out there.
Rena Sherbill: The final couple of instances you’ve got been on one thing that I’ve considered subsequent to these conversations has been that you’ve got addressed the truth that every streamer has or every content material hub, be it Disney, be it Netflix, be it Amazon, be it YouTube, has its personal persona. And that is how they’re purveying or that is how they’re seeing the that is the lens that they are seeing their content material by means of.
Once you’re taking a look at these corporations, are you serious about them by way of the truth that they will comprise sports activities, they will comprise content material, they will comprise parks? Are you taking a look at these separate columns? Are you taking a look at them as corporations? Is {that a} query that is understood?
Dan Rayburn: Sure, I am all the time breaking it out based mostly on what are the strains of the enterprise. Firms get away companies otherwise by way of what they name it. And I do not care about phrases like enterprise. What does that imply? I do not know.
All people finds it otherwise or the phrase premium. We see that out there typically. What’s premium? Nicely, your model of premium and mine is likely to be totally different, however we’re each correct in our definitions as a result of shoppers have totally different habits. We outline high quality otherwise.
So phrases have that means. That is why each time I am writing for on LinkedIn or my podcast or speaking, I am all the time attempting to verify I am utilizing phrases which have a concrete definition. know, phrases that finish in in all probability, doubtless, normally, I see folks use these phrases on a regular basis.
There is not any concrete definition. So while you’re taking a look at corporations’ enterprise strains, while you’re taking a look at how they report metrics, while you’re taking a look at how they report numbers to Wall Avenue, I believe it is actually necessary you get that correct particularly due to all the pieces happening with AI.
There’s three or 4 issues I see each single day that I am correcting on LinkedIn the place, and that is on the Wall Avenue Journal, New York Occasions, decide whoever you need, the place they state issues as information, however then they do not say what the supply is and so they’re implying it is correct. We see this on a regular basis when folks say Netflix’s flip is 2%.
The Wall Avenue Journal not too long ago did an article on that and I reached out to the writer and mentioned Netflix and the historical past of their firm has by no means outlined their flip. The place do you get that from? Nicely, it is from third occasion information from antenna. Nicely, you do not say it is an estimate and you do not say it is from a 3rd occasion and you do not supply it wherever in your article.
So folks simply run with it. In order that’s a giant drawback I see in my area. I do not learn about different industries as a result of I do not observe them. simply it is unimaginable how many individuals cannot even report back to the market the precise numbers that these corporations are placing out.
And I see this on a regular basis with Disney when folks say, properly, Disney Plus had X quantity of income this quarter. That is not how Disney breaks out their income. They break it out D2C. D2C encompasses extra than simply Disney Plus.
I believe within the age of AI, accuracy is all the pieces and as an analyst within the area, the one factor anybody has, the one factor you are ever constructing in what I’ve targeted on for 30 years is belief. That is it. Belief with readers, belief with listeners. They need to belief the place you are getting your data and you’ve got to have the ability to supply it correctly.
Rena Sherbill: Yeah, could not agree extra. And to your level about worry over information, I believe many instances the purpose of the media that you just’re consuming is to get you scared or to get you agitated or to get you clicking by means of one thing and it isn’t to tell. So, yeah, double down on the folks which are really wanting to tell, which I really feel about your content material. So respect you being reliable, particularly in the present day.
So let me ask you this, while you take a look at the publicly traded corporations, as an instance Netflix, for instance, do you ever see them stepping into one thing like theme parks? Is that one thing that you just envision for them down the road or are going to be strictly content material?
Dan Rayburn: So I’ve no opinion on that as a result of it could not be based mostly on any information of any variety.
Rena Sherbill: That was fairly the segue that I put you thru, wasn’t it? From information to hypothesis.
Dan Rayburn: No, it is tremendous. Folks ask me questions on a regular basis. Now what I all the time say is I do not guess and make educated choices based mostly off of information.
Additionally, a few of the corporations we is likely to be speaking about, simply remember, I is likely to be underneath NDA with. So what they’re engaged on or what their future plans are, cannot launch.
Now why would I be underneath NDA? Nicely, in lots of circumstances, , I am not an internet site that is attempting to interrupt information. I am not promoting adverts. That is not what I do. I’ve relationships with corporations over 30 years and so they belief me. Generally after we’re speaking financials or future plans.
Or in lots of circumstances, I get to check new variations of streaming providers earlier than they hit the market, units as properly. That needs to be completed underneath an NDA. Nevertheless it’s actually only a handshake that they belief you and agree you are not going to place out the knowledge.
Netflix’s future plans, I could not say by way of if they will do one thing in particular person. I believe what folks would say is, properly, know, Dan, they mentioned they’d by no means get into stay and so they did. Yeah, they all the time mentioned they have been by no means going to do adverts and so they did. Yeah, they’re completely proper.
But in addition Netflix, like every good firm on the market, has to vary their enterprise mannequin and adapt it based mostly on what is going on on out there on the time.
Once you’re speaking about bodily, now they do personal some film theaters, they’re already within the enterprise of getting some bodily infrastructure. However while you’re speaking about theme parks and issues like that, that is a very totally different enterprise clearly than they’re used to operating the place they’re getting the vast majority of the income from an internet service. I do not know if they’d stray that far.
The query I get extra requested extra usually on Netflix is simply when are they going to get a full 12 months of NFL video games as a result of folks all the time say, properly, they mentioned they’d by no means do stay sports activities and now they’re, they’re doing baseball. They’re doing soccer. They’re bringing different sports activities into the platform. True.
However I believe the important thing level to remove on that query is that Netflix is co-CEO mentioned only a few months in the past after they have been at, when he was requested on stage, will you get simply what actually you are asking is will you increase what you are promoting while you get into doing a whole season of the NFL?
And what he mentioned was they did not have a approach to measure the success of what it means to their platform in the event that they went out and spent billions of {dollars} to get a whole season of NFL if it was one thing comparable like YouTube TV NFL Sunday ticket. So he is saying we do not even know the way to measure if we had that, if that might be helpful to our enterprise.
And I believed that was an enchanting reply as a result of it wasn’t sure or no. It was, we do not have the information to even make an informed resolution if that is one thing we should always take a look at. That also reveals you simply how early we’re out there.
A number of listeners will not know this, however streaming media know-how was first developed in 1994. Among the first stay occasions that myself and others labored on with Apple was in 1995. So we have really been streaming content material, OK, audio solely again then, actually poor high quality.
However the know-how is 32 years previous. The business itself, know, business is form of a broad time period, , that is 28, 29 years previous. So it is unimaginable three a long time later the place we’re simply attending to the purpose now of actually determining as an business, how do shoppers actually need to devour content material and for a Disney, Netflix, (WBD), Paramount (PSKY), their core enterprise is determining how do you value, package deal, productize, market and promote a service?
And is it greatest to try this standalone to sure buyer bundle aggregator? What kind of system system would possibly impression value based mostly on display dimension as we have seen in different nations. That is actually the place the enterprise goes proper now’s simply what do shoppers need and what’s the easiest way to package deal it for them.
Rena Sherbill: So what would you say about Netflix in the event you’re placing information to the narrative or to the depiction of the inventory? What would you say about Netflix lately?
Dan Rayburn: Netflix understands what shoppers need. I believe it is fascinating when folks need to argue that they do not like Netflix as a result of it does not have the content material they need. Nicely, they are not mistaken. Some folks, Netflix just isn’t going to be a match, however neither is Disney or WBD with HBO Max.
Shoppers have totally different preferences. They’ve totally different value factors. They deal with high quality otherwise. Some care about stay on demand. Some care about sports activities. Some do not.
It is not a one dimension matches all mannequin. And that is essentially the most troublesome half for all of those content material homeowners and broadcasters is the place do they make investments their cash in creating or licensing content material? How a lot do they make investments and the way do they unfold that out throughout totally different genres over the course of the 12 months?
I like taking a look at Netflix from a monetary standpoint as a result of their steadiness sheet may be very clear. They reported their Q1 outcomes final month in April. Income 12 months over 12 months was up 16%. Web earnings was 5.28 billion. We now have to take a look at which companies are worthwhile and which are not now.
The 5.28 billion, that was clearly boosting considerably by the $2.8 billion windfall from the terminated Warner Bros. deal. So you bought to take that into context. However in addition they talked about their advert enterprise, anticipating it to double this 12 months, reaching 3 billion in income.
That is actually necessary. Additionally, the quantity they gave out that in nations the place the promoting plan is obtainable, greater than 60 % of recent signups in nations with that tier are going for the advert plan.
And Netflix is clearly enjoying the lengthy recreation right here on the advert facet. If income on the advert facet is three billion this 12 months, simply consider the place that enterprise goes to go over time as they get extra focused with their adverts.
Additionally they launched a quantity in earnings that they mentioned they’re now working with over 4,000 advertisers, which is up 70 % 12 months over 12 months. So it is advert companies actually beginning to develop. Beginning to get traction within the US, they raised costs once more, between one to $3 that kicked off on March twenty sixth, which goes to assist them with complete income, which suggests they will make investments extra within the enterprise, create extra content material, decide and select the precise stay, giant scale stay occasions to go after.
So I believe they perceive their enterprise very properly. Now flip facet, somebody on Wall Avenue would say, their advert enterprise is not rising quick sufficient, we would like it to develop sooner.
They not get away ARPU, in order that’s very arduous to trace throughout their enterprise now. They not get away the variety of subs that they are gaining or dropping each quarter. Nearly no person’s doing that anymore. WBD simply eliminated that from their earnings, this Q1 reporting as properly.
However I believe Netflix may be very properly understood. I do not suppose anyone must be confused by Netflix’s enterprise. It’s extremely clear who they’re, what they do, and the way targeted they’re out there.
Rena Sherbill: Once you have been on the previous couple of instances, you have been counseling us to take the, to the purpose about, , the promise of headlines that are not essentially factual, that everyone was satisfied that Netflix and WBD, that the deal could be completed. And now it isn’t something of notice so as to add to that indisputable fact that, , that what ended up taking place with Netflix and WBD, something to notice there?
Dan Rayburn: I’d simply say I really like what Netflix got here out and mentioned. If anybody’s a Netflix shareholder, I am certain they noticed it, which they mentioned, the deal would have been a pleasant to have, however not a should to have.
The neatest folks within the enterprise world are those who know when to stroll away, those who know when to say no. It does not work for a steadiness sheet. This isn’t an excellent funding for shareholders. We’re not simply going to purchase no matter at any value.
Should you can take away feelings out of your resolution, you are going to make smarter choices. I believe that is the toughest factor all of us need to do in life and in enterprise, proper? Take away feelings from choices.
Netflix was actually clear, if it is above this value level, it does not make sense for us. Okay, it is above that value level, we’re out. It is not an excellent match. And so I really like the truth that they’re that disciplined.
Rena Sherbill: I really feel like anyone that was bullish on Netflix actually received to double down on that bullishness. I really feel like when that information got here out, was switching to Disney. Is {that a} good place to change? That they had earnings not too long ago. Ought to we get into Disney?
Dan Rayburn: Certain, so Disney did have earnings. Additionally they have a brand new CEO. Disney’s enterprise is getting on the digital facet, direct to shopper, whichever time period you need to use there, is getting loads tougher to trace. Like different corporations which have a direct to shopper streaming enterprise, Disney not breaks out ARPU, Common Admin per Consumer.
They not get away subscriber numbers for Disney Plus and Hulu. They, of their earnings and within the name afterwards, they gave out no subscriber information for ESPN Limitless.
So it’s totally arduous to trace with any actual readability quarter to quarter simply what their digital enterprise is doing.
Additionally keep in mind that not too long ago the deal’s lastly gone by means of the place Hulu plus stay subscribers at the moment are the place we’re at Fubo (FUBO). And with Fubo’s earnings, they stopped breaking out what number of of their subs are Fubo or Hulu plus stay TV.
So we are able to not observe which a type of providers between the 2 of them are rising or dropping subs as a result of they mix the quantity collectively.
Rena Sherbill: What’s your sense of why they did that?
Dan Rayburn: Nicely…the largest cause they did that’s as a result of each single certainly one of these corporations is following what Apple (AAPL) very well did a few years in the past.
Apple inventory was getting crushed at instances as a result of the variety of iPhones offered did not hit estimates that Wall Avenue would put on the market.
And what Apple was very clearly attempting to inform Wall Avenue was we may promote fewer iPhones one quarter, however have higher margins. And it is best to actually take a look at our enterprise as an entire, versus simply wanting on the variety of telephones we promote.
And I fully agree. You’ll be able to promote fewer telephones at the next value and earn more money. So the entire streaming providers moved, virtually each single one, have moved to that mannequin over the previous few years of we now have blended ARPU.
Have a look at Netflix for example. They solely had a subscription service. The second you add in promoting, that undoubtedly adjustments your income combine. And it is best to begin wanting on the general enterprise, not simply what number of subscribers, since you may have extra subscribers are available, however at a cheaper price level, and it will impression your numbers or vice versa.
So I am not stunned that everyone adopted the Apple mannequin right here of let’s deal with the enterprise and the margins and the profitability versus simply what number of subs did we achieve or lose?
Additionally, many of those corporations are taking a look at this enterprise over a multi-year interval. So in the event that they achieve or lose 1 million or 2 million or 3 million and even 5 million subs in 1 / 4, for a lot of of them, that is not a giant deal.
Particularly, since they name out to Wall Avenue on a regular basis, this quarter occurs to be 1 / 4 we anticipate low subscriber progress as a result of we do not have March Insanity or the Tremendous Bowl or a few of the different, these different issues that we all know drive subscribers or season two or three or 4 of a present that is tremendous well-liked.
There are ebbs and flows in content material. So I believe that is smarter than to try this on the flip facet as an analyst within the area. I need as a lot information as I can get. I need ARPU. I need to know what the typical CPM is. I need to know what churn price is.
Now, a few of these corporations will talk about that off the document that I then cannot publish. And I ought to in all probability additionally simply throw on the market. There’s quite a lot of corporations that we’re speaking about in the present day whose inventory I can’t personal and don’t personal due to the knowledge I get.
I ought to put that on the market. However Disney to me is a reasonably simple story of what they’re doing on the digital facet. Disney Plus and Hulu’s income was up 13 % 12 months over 12 months.
However extra importantly, its working earnings was 582 million. That is a giant deal. As a result of anybody who follows Disney will know at one level its DTC enterprise was dropping $100 million a day. They misplaced 1.1 billion in a single quarter on their DTC enterprise.
So it is nice to see them make that pivot to the place working earnings was 582 million 1 / 4.
However needless to say does not embody ESPN Limitless. That falls underneath a special bucket of how they report their income to Wall Avenue. After which you may have a brand new CEO. We do not actually have a lot from him but so far as main adjustments he is serious about. Perhaps he is not considering of many there.
There was slightly details about content material spending the place they did say that the rise in content material spending they are going to do that 12 months, a larger quantity of that’s going to go to worldwide content material and native originals.
That makes quite a lot of sense contemplating Disney Plus has actually expanded outdoors the U.S. very properly over the past couple of years. After which simply wanting on the inventory, prior to now 12 months, it is down about 5%. So it has been fairly flat, however prior to now 5 years it is down virtually 40%. So many are nonetheless ready for that inventory to get better.
Rena Sherbill: Do you may have a way of what would make it get better?
Dan Rayburn: No, and the explanation I say that’s I do not give out data or fake to be a Wall Avenue analyst, institutional cash supervisor saying, properly, if the corporate simply corrected this, the inventory would go up or down. I depart that to these individuals who try this for a dwelling.
I’ll say that general, we have seen out there for a few years in the past, proper after COVID, what did we see? We noticed all these corporations being rewarded only for rising subs. The mannequin was Get Large Quick.
Who cares in the event you’re dropping cash? Simply proceed to develop. After which at one level, rapidly, it appeared like in a single day, however inside two quarters, Wall Avenue mentioned, cease. You are dropping an excessive amount of cash. We would like profitability from these direct to shopper providers.
And that basically modified quite a lot of what these corporations have been doing with their providers. And also you additionally discover that is after we noticed the very best price of enhance of pricing going up throughout the board throughout just about each single service on the market and extra incessantly as properly as a result of they needed to offset the losses.
So in the event you’re taking a look at Disney or another firm, naturally you are all the time wanting on the steadiness sheet. However the different cause to not reply that query is everybody has a special strategy with regards to investing.
Brief time period, long run, are you enjoying quarter to quarter? Are you wanting extra on the parks enterprise? Disney simply had an important Q1 by way of the parks enterprise.
However then we have additionally identified there’s been instances the place the parks enterprise hasn’t completed properly. So sure items of their enterprise definitely fluctuate greater than others. Some are extra secure than others. You’ve gotten a brand new CEO in there. Generally that scares traders.
Different instances, traders are very excited. That is one thing else too that is arduous to weigh. However I am all the time taking a look at an organization’s steadiness sheet and the place they’re spending cash, the place they’re investing, and what positive aspects they’re getting from these investments.
Rena Sherbill: You talked about FUBO additionally reporting. What different earnings, completely satisfied to listen to extra about them in depth and likewise what different earnings you’ve got been taking a look at not too long ago.
Dan Rayburn: Certain, so Fubo is a reasonably simple one. Their income in Q1 was just about flat. It solely up 1 % over a 12 months. The important thing factor for Fubo is that they’d a web lack of $6.2 million. And that is down from $40.9 million 12 months over 12 months.
So Fubo has completed an important job, that administration workforce over the past, name it two to 2 and a half years, of actually fixing their steadiness sheet as a result of they have been dropping far an excessive amount of cash each quarter.
They misplaced 200,000 North American subscribers, however that features Hulu plus stay TV subs. So we do not know whether or not that got here extra from Hulu or extra from Fubo. They misplaced simply over quarter million subs in what they name remainder of world as properly.
I believe the best way to take a look at Fubo is admittedly the long run right here. As a result of they’ll begin promoting Hulu plus stay TV packages on their web site and Fubo Sports activities goes to be included in ESPN’s funnel subsequent 12 months. Fubo is enjoying the lengthy recreation right here.
They’re nonetheless saying that optimistic free money circulate is predicted in fiscal 2027 and monetary 2028 underneath their present working plan, clearly that would change. And so they ended the quarter with 244 million in money, money equivalents, restricted money, all that form of stuff.
So they do not have a money drawback. Their burn is admittedly low. What they have to do is determine how do they develop this enterprise? How do they scale it? How do they double in dimension by way of the variety of subs? And I believe what they’re actually enjoying on there and one thing they’ve talked loads about is simply what they get from the take care of Disney model, the advertising and marketing attain, the promoting gross sales.
They’re enjoying long run with their enterprise. That mentioned, once more, I do not personal any Fubo inventory, however prior to now 5 years, our inventory’s down virtually 95%. Previous 12 months, it is down 71%. Wall Avenue actually desires to see Fubo show that they will execute on the plan that they’ve outlined.
I believe they now have all of the items actually try to get there, however I am not going to handicap whether or not they can attain their aims within the subsequent two or three years.
Rena Sherbill: Another corporations you’ll add to the earnings dialog?
Dan Rayburn: Nicely, it’s a must to all the time take a look at WBD, particularly since we’re speaking about probably a merger with Paramount Skydance, which once more, that deal’s not going by means of, regardless that headlines say in any other case. It is not been authorized by regulators.
The DOJ remains to be taking a look at it. European regulatory companies are nonetheless taking a look at it. There was shareholders vote on April twenty third. They did overwhelmingly approve the adoption merger.
Nevertheless it’s not a completed deal. The most recent numbers we’ve from WBD is that they’re saying they anticipate the deal to undergo by the tip of Q3. So that might be, , final day in September. Their filings, that is what they’re speaking about by way of they imagine they will get by means of all of the regulatory hurdles they should by then.
WBD is certainly one to regulate.
In Q1 for the primary time ever they did not get away their streaming subs. So once more, one other information level faraway from the market. They did say that they’ve greater than 140 million world streaming subscribers and so they’re nonetheless on observe to surpass 150 million by the tip of 2026.
Their streaming income is simply up 7 % 12 months over 12 months. However the important thing factor right here is their earnings EBITDA, I ought to say adjusted EBITDA for D2C was 438 million. That is necessary as a result of once more, you you look again years in the past, these guys have been dropping some huge cash on their D2C enterprise.
Just like Netflix, fascinating that they put out a quantity saying 50 % of recent world subscribers on the retail facet are taking the ad-supported tier. And promoting income is up 19 % year-over-year. Nicely, not stunning. Should you’re getting extra ad-lite subscribers, you are undoubtedly going to get extra streaming income. Additionally they raised pricing. They mentioned they noticed quote restricted churn. That was the time period they used from the value enhance.
So one factor that we all the time have in my business is pricing goes up and all people throws up their palms and it is like, all these shoppers are going to cancel. No one likes value will increase. And but then on earnings calls from these public corporations, they speak about how little churn they’ve seen.
So what we’re watching within the business is what’s the threshold when clients lastly say, I am not simply going to complain about it, I am really going to cancel.
That is actually what we’re watching. Now on the identical time their promoting enterprise did very properly, in addition they talked in regards to the visibility within the promoting market stays restricted given all these broader macro uncertainty points happening out there.
Linear promoting revenues are down 12%. Nicely, that is not going to shock anybody listening who follows the pay TV enterprise as a result of that is the pattern we’re seeing. on one facet, pay TV associated income from linear goes down, however digital is making up for that. However sooner or later, it is received to go to the place digital is doing extra than simply making up for linear declines.
It actually needs to be the general progress of the enterprise shifting ahead. Their inventory previous 12 months, it is up 197%. Now that after all is coming from the thrill of the acquisition and the supply value and all the pieces else. In order that’s not stunning.
However in the event you take a look at the enterprise outdoors of that within the final 5 years, the inventory’s down virtually 24 % as a result of you may have a legacy enterprise. And we all know how Wall Avenue appears to be like at legacy pay TV companies. I must be extra particular, a legacy pay TV enterprise, a linear enterprise.
We all know how Wall Avenue appears to be like at that. So it is an fascinating time out there for Wall Avenue to placing valuations on corporations like Disney, WBD, and Paramount who’ve some or a big portion of their companies from the legacy linear area.
Others that I take a look at, I take a look at fairly a number of others, typically slightly extra particular simply by way of clearly Paramount Skydance.
I take a look at Apple, I take a look at others the place it is tied to Roku (ROKU), Fox (FOX).
A number of these corporations, nonetheless, do not put out actually any information. For example, Fox simply had earnings, however they put out no information on Fox One. They did not point out what number of subs they’ve. They did not say something about if it was rising or not. They gave out no income data on Pluto TV. They gave out no CPM information.
So whereas I observe all these corporations, quite a lot of them do not put out any or helpful information out there quarter to quarter.
Rena Sherbill: And I really feel like I’ve requested you this earlier than, however my sense is that if they’d one thing to have fun, it could be celebrated.
Dan Rayburn: Not essentially. You you’ll suppose that. Nonetheless, what we have seen out there, let me give the instance of the Tremendous Bowl. Tremendous Bowl has been streamed on-line 15 years, I imagine it’s. Should you go to superbowlstreaming.com, I do not know the way I nonetheless personal that area, however you’ll be able to see a chart damaged out of viewership over the past 15 years.
In 2026, it was the primary 12 months that viewership was not launched for the Tremendous Bowl tied to streaming or digital. NBC did not put it out. Now, the explanation they did not put it out is as a result of it was behind a paywall. It was on Peacock. In 2025, the Tremendous Bowl was free. Fox put it on Tubi.
So Peacock’s numbers are gonna be decrease than Tubi. We all know that, there’s nothing mistaken with that. One was free and one was behind a paywall. However they did not put them out. And the explanation they did not put them out is as a result of lots of people within the business would say, wow, that wasn’t profitable. They solely had X share of what Tubi had.
Nicely, that is not a good comparability. Free versus paid, why are you evaluating these two? However clearly it scared them sufficient to the place they did not even put out numbers. And I do know the numbers and what, the numbers have been fairly good contemplating it was a firewall, or I should not say firewall, it was behind a streaming service the place you needed to pay to get it. So it is fascinating how numbers many instances will scare corporations as a result of the notion out there is, wow, that is all they’ve?
It ought to have been larger than that. Why ought to it been larger than that? And so I would reasonably they put the numbers out and set correct expectations out there, which is your primary job as a public firm with Wall Avenue, is to set correct expectations.
The entire cause you do full 12 months income steerage, or most corporations, not everybody does that. You are setting expectations of the place the enterprise goes to go, or the place you suppose it will go, projecting it will go. However we’ve no numbers from Fox on Fox One, and I believe the quantity is fairly good based mostly on what I do know.
However you’ll have many individuals within the business the place in the event that they launch these numbers would simply say, , the headlines could be like, Fox One not displaying success out there as a result of the very first thing they will do is examine it to numbers at Disney Plus.
Nicely, these are two totally different providers. One is stay, one is on demand. One is ten {dollars} a month. One is thirty {dollars} a month. One is sports activities, one does not. So it is simply, sadly, it is what the media business does is examine one service or one firm to a different unfairly.
Rena Sherbill: Have you learnt, is that widespread like in a burgeoning, I imply, it is humorous that we’re calling media a burgeoning business, however it’s by way of its evolution.
Is that specific to have information that is launched that it evolves over time or does that come from strain? Does that come from shareholder strain? Or does that not change?
Dan Rayburn: It is a good query and I’ve no approach to reply that as a result of corporations consider this otherwise.
Let us take a look at not too long ago Amazon for the primary time broke out the run price of its chip enterprise. Beforehand they hadn’t on condition that out. Now why did they determine to offer out that data now?
I do not know. Perhaps to them internally they mentioned when it hits this run price, that is after we drop the quantity. So corporations have totally different causes for doing that.
What I all the time choose is for corporations to get in entrance of what the message is out there. Should you do not ship a message, another person will ship it for you.
So I say to corporations on a regular basis, hey, have you ever seen all these posts the place folks suppose you are gonna do 100 million simultaneous streams for the Tremendous Bowl in three years? And so they’re like, yeah, that is loopy. And I am like, it isn’t loopy as a result of no person out of your firm has mentioned the other.
So why do not you simply do a put up that talks about this is the historical past of streaming, for example, the Tremendous Bowl and simply these are information. We now have some numbers on that day. However most corporations do not actually try this.
And most on this, in my area, not less than the overwhelming majority of them, I hate to say this, but it surely’s factually correct. The overwhelming majority them are usually not taking the time to look something up. They don’t seem to be taking a look at 8K filings and so they cannot learn press releases.
It is unimaginable what number of instances we do get viewership information on a stay sports activities occasion. And individuals who learn that press launch make up their very own terminology or swap out phrases.
Netflix is a good instance. Netflix, NFL video games on Christmas didn’t get away the share of viewership that was really on Netflix.
They mix Netflix with NFL digital platforms outdoors the US with over the air, multi functional quantity, and but I’d say 90 % of the posts I noticed by the media mentioned Netflix had X variety of streaming viewers. It is not what the press actually mentioned. They did not use the phrase streaming. They mentioned viewers. So the media threw the phrase streaming in there.
In order that’s a giant drawback I’ve in my area is simply each single day folks have been reporting numbers inaccurately and it is actually simply, it comes down to only laziness. They actually do not care. They only need to get one thing up.
And now I see it fairly often on LinkedIn the place they’re utilizing an AI instrument simply to go and take a look at one thing and recap one thing. It is fascinating what number of instances the instrument does not know any higher. And it swaps out a phrase like simultaneous with common minute viewers with concurrent customers with distinctive units as a result of they suppose they’re all interchangeable and so they’re not.
And that simply goes again to the belief issue of the place you are getting your data and who you are studying it from.
Rena Sherbill: You higher be sure that AI is as dependable as a completely, virtually totally fashioned human. Talking of burgeoning, I imply, there’s so many established industries which have burgeoning issues coming by means of them.
Sports activities sensible, we’ve some NBA playoffs on Amazon, on Peacock, we’ve the World Cup coming this summer season. As you talked about, we’ve MLB. What are you taking a look at? How are you digesting sports activities?
Dan Rayburn: I am all the time wanting on the information that is put out from a viewership standpoint and searching on the methodology. The largest factor for listeners to know is any numbers they’re seeing, even after they’re straight from NBC Sports activities, Fox, Amazon, decide whoever you want, they cannot be in comparison with earlier years as a result of the methodology has modified.
That is a giant drawback. So I really like the businesses and most of them are superb at this. They’re placing out numbers.
However with their numbers, they’re clearly calling out, hey, by the best way, Nielsen did not embody out of residence viewing in its estimates till 2020. And it solely started doing so in 100 % of their markets a 12 months in the past. and by the best way, their new methodology that mixes its conventional panel with huge information from sensible TVs and set-top containers, that is only some months previous.
So a few of them actually will say, all of those adjustments are going to skew any historic comparisons previous to sure years or from final 12 months relying on how they’re monitoring it.
So we’ve numbers within the area. The massive drawback is that they are not likely similar to earlier years and lots of the corporations do not get away what share of viewership is digital.
Fox has by no means damaged out something viewership sensible of what was digital versus TV. And but NBC, shout out to them, for nearly each single factor they do, they get away the share of viewership that got here from Peacock versus NBC linear, which is superior.
Rena Sherbill: Could I ask, are these numbers sometimes, have they sometimes been spectacular?
Dan Rayburn: All relies on what you outline as spectacular.
Rena Sherbill: Business main?
Dan Rayburn: Once more, there is no such factor as business main as a result of we’ve nothing to match it to. So let us take a look at the NBA matchup between the 76ers and Celtics. This was this month in Could. It had a complete viewers supply, what we name a tad of 11 million viewers on NBC and Peacock.
Out of that, Peacock had a 1.8 million AMA, common minute viewers. Now NBC says it is essentially the most streamed NBA recreation on Peacock, 1.8 million viewers. So that you inform me, is that huge? I do not know. Outline huge. Is that spectacular to you? It is likely to be to you, however to not your good friend.
So all of it relies on how we worth numbers and we worth digital. If we take a look at Prime’s common season schedule, they averaged 1 million US viewers throughout 67 common NBA video games. One million viewers. So is that huge? I do not know.
Now, what Amazon says is throughout comparable recreation home windows introduced on linear networks final season, NBA and Prime averaged slightly below 1.1 million viewers, okay, properly that is down 12 months over 12 months. Now it is down by a really small quantity, but it surely’s nonetheless down.
Opening spherical NHL Stanley Cup playoffs, it averaged 1.2 million viewers on ESPN’s, all their networks and TNT Sports activities. Now of their press launch, I believed it was fascinating the place they mentioned it was up by some big share quantity, besides that once more, the methodology that is getting used this 12 months may be very totally different from earlier years. Fox is averaging 2.1 million viewers for MLB on TV and digital, however they are not breaking that out.
We transfer on to Apple with F1. Apple solely gave out one reference, not even a quantity, for the primary weekend of F1. And so they mentioned viewership was quote, up 12 months over 12 months in contrast with ESPN’s protection. Nonetheless, they offered no quantity and ESPN was utilizing Nielsen’s rankings to provide you with their quantity. Apple is not utilizing Nielsen for methodology for F1.
So what methodology is Apple utilizing when evaluating to ESPN? I do not know. We actually simply, we do not know. And to place it in perspective.
2025 season of F1 throughout ESPN, ESPN2, ABC, all their channels, 24 races, they averaged 1.3 million AMA. So the arduous half right here by way of evaluating viewership numbers is what folks worth or sorry, what folks outline as success and it is totally different within the business, the measurement is totally different.
I believe the large name out right here is Netflix. You have been asking earlier than about Netflix and we have been speaking stay sports activities.
That’s the one to take a look at. If listeners need to hear how complicated it’s out there and viewership, let us take a look at Netflix’s Main League Baseball opening evening. So they’d three million AMA, common minute viewers.
Nonetheless, Netflix used Nielsen’s Large Knowledge Plus panel, Stay Plus SD. So what many listeners do not know is it isn’t simply how many individuals watched the stay stream, it is how many individuals watched it probably as much as 24 hours after the occasion is over.
Now, Nielsen’s huge information measurement is new for the 2025-2026 season. So it fully skews viewership comparisons to earlier years. Nonetheless, regardless that that occurred by way of totally different methodology,
Netflix got here out and mentioned it is the very best primetime opening day viewership amongst 18 to 49 12 months olds and 18 to 34 12 months olds since 2017. The query I’d have is why are they evaluating a recreation from 9 years in the past?
The methodologies modified so many instances. And likewise the 2017 recreation was accessible on TV and Netflix’s recreation was solely accessible streaming. The TV recreation was accessible within the US. Netflix’s recreation was accessible globally. That is only one baseball recreation. And look how complicated it’s to take a look at who watched what when on what platform.
Rena Sherbill: How would you articulate, or is there a spot for articulating how you’ll standardize the business information?
Dan Rayburn: It is an important query and one thing the business has talked about for a very long time, however for listeners who do not perceive the streaming area, in 31 years of this business, we have by no means had a normal bitrate, codec, side ratio, participant, protocol, format, system, CPM measurement, nothing.
There is no such thing as a normal within the streaming world. We have began to maneuver to sure protocols for video supply, HLS, Sprint, a few of that kind of know-how, however there isn’t any normal.
And the distinction there even with high quality is you and I are in several cities and we each activate Fox and no matter metropolis we’re in, we get the very same high quality. There is not any deviation within the high quality.
Broadcast is a normal. Within the streaming world, there isn’t any normal and the units come from third occasion corporations, not the final mile supplier who’s offering that cable into your house onto a field that they personal and function. So it is a fully totally different business.
And I am all the time making the argument that everyone desires to measure streaming like TV. Why? Two fully various kinds of viewership on totally different units and they need to actually have totally different measurement.
I get why advertisers are doing it. I’d say for stay occasions, what I believe is simple is simply all people ought to return to simultaneous streams. Within the early days of the web, after a stay occasion, corporations would put out the full variety of simultaneous streams at peak that they hit at any given time. It is actually in the present day what we name AMA, common minute viewers.
And so they know these numbers in actual time as a result of the content material supply networks, the third occasion corporations are utilizing to ship it. They’re of their dashboards and so they can see it. Or in the event that they’re delivering it over their very own CDN, they will see it.
However no person makes use of these numbers anymore. So all the pieces is simply tied to how do advertisers need to see it or that is how we would like advertisers to get that methodology or that information. However this concept that the business goes to come back collectively to create some kind of normal, that’s by no means going to occur.
That is simply…It sounds nice, however that is the identical concept of you and I saying, in the future all of the streaming providers will bundle it into one place the place you may get all the pieces for one value. That is not taking place. It is simply not sensible.
Rena Sherbill: Sooner or later all of the streaming providers are going to carry palms and create the largest rainbow this world has ever seen.
Dan Rayburn: Nicely, what listeners do not know? About 20 years in the past, the 5 main film studios received collectively to create a streaming service the place you can go and hire or obtain the personal content material and it did not work out too properly.
And in a while, they have been really sued for getting collectively to cost repair content material, charging shoppers extra.
Once you’re serious about what we would like as shoppers, cease utilizing logic. As a result of this isn’t about what’s logical. That is about what makes corporations essentially the most cash, whether or not they’re sports activities leagues, they’re broadcasters, or they’re OTT platforms. That is what drives the selections.
Rena Sherbill: That is your hopeful second for the day.
Dan, I have been asking visitors on the finish of conversations if they’ve a motto that they make investments by or stay by. Do you may have one?
Dan Rayburn: Nicely, my job as I see it’s one factor and one factor solely within the business 30 years later is to tell, educate, and empower others. That is it.
If I put out the precise data, you can also make an knowledgeable resolution. My job is not to let you know this is what it is best to do based mostly on the knowledge, however to provide the proper data to make the precise resolution.
The opposite factor I all the time say in enterprise is I all the time spend money on folks, not concepts. As a result of 30 years in enterprise, I’ve seen quite a lot of nice concepts come to the market, nice know-how that involves the market, but it surely does not get adopted.
And it does not get adopted as a result of there is no enterprise use case. It simply does not make sense. It does not assist the steadiness sheet anyway. Should you spend money on the precise folks, the precise folks construct the precise tradition. The suitable tradition will construct the precise concepts.
So I’ve all the time invested, and I realized this early on, not simply from the army, however from individuals who actually mentored me early on that folks have been an important asset.
Within the army, there is a saying, people are extra necessary than {hardware}. All of it comes right down to whoever’s behind and operating that platform or system in any enterprise. That’s your most necessary asset. So these are two issues that I all the time try to simply make each resolution based mostly on, together with additionally simply attempting to take away feelings from conversations.
I additionally many instances once I write about inventory, sure corporations, I am going to put proper on the backside. I’ve by no means purchased, offered, a single share of inventory on this firm ever.
As a result of it is fascinating how many individuals then need to come and argue with me after which I ask, you personal the inventory? And so they’re like, yeah. Okay, properly, you’ve got misplaced cash on it. Naturally, you are upset. I get that. However that adjustments the way you suppose or write about corporations when you may have a, what I’d name a battle of curiosity. So I keep away from that fully.
Rena Sherbill: Respect that. Dan, the place can folks discover your content material?
Dan Rayburn: The easiest way is admittedly on LinkedIn. So I push up quite a lot of content material to LinkedIn, possibly in some weeks, at the same time as 30 posts, particularly throughout earnings. A number of the knowledge I get that the businesses do permit me to push out. It is not sufficient to show it into a whole weblog put up, however I put it up in little snippets on, on LinkedIn. So I’d say following me on LinkedIn is one.
Second, DanRayburnPodcast.com. I am breaking down each week the information you might want to know within the streaming area. No fluff, no nonsense. No one desires to know what my favourite sports activities workforce is or what restaurant I at. It is unimaginable.
All these podcasts in my business, they spend 20 minutes speaking about issues that no person desires to listen to about. I learn a thousand headlines a day, so you do not have to. I am taking all these headlines and determining what’s an important data you might want to know to make the precise resolution. I am condensing that to half-hour right into a podcast. No fluff.
No AI sourcing. AI does not supply something for me. I do not use any AI instruments once I write. So I’d say the podcast, LinkedIn, my weblog at Streamingmediablog.com has extra longer type articles. However then simply Google. Should you simply Google Dan Rayburn after which put in say Tremendous Bowl, that’ll take you to a put up the place, okay, this is 15 years value of information from the Tremendous Bowl.
Identical with World Cup. Should you go to WorldCupstreaming.com, you are going to see in 2022 when the final World Cup happened, this is the viewership throughout Fox, which was only one.28 million. This is the viewership when in comparison with TV around the globe. So you can additionally simply put my identify to Google, kind in a subject after that, Paramount, Netflix, Warner Bros. You may get much more content material as properly.
Rena Sherbill: Respect it, Dan. Thanks for being an actual one. Respect these conversations. Thanks for all the time giving us a lot. Thanks in your time and generosity and speak to you quickly, hopefully.
Dan Rayburn: Thanks, respect you having me on.
