Good morning, investors. Today we’re covering, Netflix’s streaming wars, Oracle’s bubble history, federal reserve’s secret warning, and much more.
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This Week’s Top Stories
NEED TO KNOW
Streaming Wars Explained
Netflix needs content it can own forever.
Not just shows — franchises, libraries, and IP with decades of gravity.
The Problem Warner Bros. Is Facing
Warner Bros. Discovery didn’t put itself up for sale because it wanted to.
It was forced.
AT&T offloaded WarnerMedia in 2022 to reduce debt and refocus on telecom.
Discovery took on ~$40B in debt as part of the deal.
Cable TV revenues collapsed faster than expected.
Streaming losses at HBO Max + Discovery+ ballooned.
For three years straight, WBD bled cash.
By late 2025, the reality was unavoidable:
Warner needed a buyer with a balance sheet strong enough to stop the bleeding.
Netflix’s Hidden Weakness
Netflix dominates distribution.
But it does not dominate franchises.
Disney owns Marvel, Star Wars, Pixar.
Universal owns Jurassic Park, Fast & Furious.
Warner owns Harry Potter, DC, Lord of the Rings, HBO’s entire catalog.
Netflix, by contrast:
Has hits, but few timeless, multi-decade IPs
Relies heavily on constantly funding new originals
Faces slowing subscriber growth globally
As the streaming wars mature, content libraries matter more than content velocity.
That’s Netflix’s gap.
Why Warner Bros. Solves That Problem
Buying WBD instantly gives Netflix:
A century-deep content library
Global franchises with built-in audiences
Prestige IP (HBO) + mass-market IP (DC, Harry Potter)
The ability to amortize content across streaming, theatrical, licensing, and games
Strategically, this turns Netflix from a streaming platform into a vertically integrated entertainment empire — with distribution and ownership.
This is the key takeaway echoed by analysts:
In a slower-growth streaming world, owning IP beats renting attention.
Why Paramount–Skydance Is Also Bidding
Paramount’s logic is completely different.
Cable is still core to Paramount’s ecosystem.
Adding WBD’s networks strengthens ad leverage, sports rights, and affiliates.
CNN alone adds political and advertising influence.
Scale helps Paramount survive — even if margins stay thin.
But this comes with risk:
Cable decline doesn’t stop just because you’re bigger.
Losses scale too.
The Strategic Fork in the Road
Netflix’s bet: IP + global distribution = long-term dominance
Paramount’s bet: Scale + cable + advertising = survival through consolidation
Warner’s goal: A buyer that stabilizes finances and protects its crown jewels
Netflix is currently the frontrunner — but integration risk is real:
Legacy studio culture vs Netflix’s speed-first model
Unions, guilds, and theatrical norms
Potential regulatory scrutiny (though lower than Big Tech deals)
The Bigger Picture
This isn’t just a merger.
It’s a signal that:
Streaming growth is slowing
Original-content arms races are losing efficiency
Owning franchises is becoming the real moat again
Whichever bid wins will reshape Hollywood — not just who controls content, but how entertainment is made, priced, and distributed for decades.
CHART OF THE WEEK
Oracle’s Bubble History
Oracle stock just dropped in a way investors haven’t seen since the dot-com era.
Ironically, this happened after Oracle beat earnings expectations.
So why is the market punishing $ORCL again — and why does this moment rhyme with its past bubbles?
Oracle’s problem isn’t demand. It’s how expensive that demand has become.
Oracle’s free cash flow has collapsed, swinging from +$10–12B at its peak to –$13B TTM.
And credit markets noticed.
According to Bloomberg, Oracle’s 5-year credit default swaps just hit a 16-year high.
The cost to insure Oracle’s debt against default rose to 1.41% annually, the highest level since 2009.
That move signals falling confidence in Oracle’s ability to turn massive AI spending into near-term cash generation.
Bond spreads are widening.
Hedging activity is exploding.
CDS trading volume surged from $410M last year to $9.2B in recent weeks.
Oracle has effectively become the credit market’s AI risk barometer.
Yes, cloud infrastructure revenue is growing fast.
Yes, backlog is massive.
But Oracle is now running tens of billions in annual capex, burning cash, and carrying over $100B in debt.
Even “creative financing” still means more leverage.
That’s why the stock dropped.
That’s why credit spreads widened.
And that’s why valuation compressed.
FED Meeting Summary
The Fed cut rates again.
But this wasn’t a “we’re confident” cut.
Yes, rates dropped 25 basis points to 3.5%–3.75%.
That’s the third cut this year.
The vote was split 9–3 — the most disagreement in years.
They basically admitted two things at once:
The job market is slowing.
Inflation is still too high.
In normal language: the economy is losing steam, but prices aren’t cooling enough.
What The FED Is Saying
Hiring is slowing and layoffs are creeping up.
Inflation is stuck around 2.8% and won’t hit 2% for years.
Future rate cuts will be rare and slow.
And policymakers don’t even agree with each other anymore.
On top of that, the Fed restarted a quiet version of QE — $40B in T-bill buying — because parts of the funding market are stressed.
So yes, they’re cutting rates.
But they’re also adding liquidity because something doesn’t feel stable.
What This Means For The Markets
Stocks may like this short term.
Long term? It’s fragile.
Bonds will stay choppy.
Rates will come down eventually — but not as fast as people hope.
Risk assets now have much less room for mistakes.
Adobe Still Sleeping
Adobe just posted record revenue, $10B+ in cash flow, and double-digit ARR growth — yet the stock is still flat over six years.
Here’s the problem.
AI Changed the Narrative
Adobe’s business isn’t broken.
Its perceived moat is.
AI tools now generate images, videos, and designs faster and cheaper — often without Adobe.
That threatens pricing power and future user growth, especially at the entry level.
Why the Stock Didn’t Re-rate
Even with:
~20% EPS growth
Strong subscription growth
Massive cash generation
Investors worry AI will commoditize creativity, shrinking Adobe’s long-term edge. Growth is solid — just not dominant enough to earn old valuations.
AI turned certainty into uncertainty.
Largest IPOs Ever
Elon Musk confirmed reports that SpaceX plans to go public in 2026 — and if it happens, it would be the largest IPO in history, with expectations of $30B+ raised and a valuation near $800B.
Why SpaceX Wants an IPO
Starlink dominates revenue (NASA <5%), giving SpaceX recurring, scalable cash flows.
AI + space infrastructure is the new growth story: satellites, data transmission, and orbital data centers.
Public markets now understand SpaceX as infrastructure, not just rockets.
Why It Matters
Could reset global IPO markets
Gives investors exposure to AI, connectivity, and space in one company
The Risk
Once public, SpaceX loses privacy. Delays, politics, and capital spending will be priced daily.
Other Big Things Going On
🏆 Time Names 2025 Person of the Year
📈 Cisco Breaks Dot-Com High
🤖 Roomba Maker Goes Bankrupt
🥈 Silver Falls From Record
💊 Hims Drops on GLP-1 Proposal