Broadcasters fight back; OOH growth; Accenture's new agency model and AI investment

Speaker 0 · 0:00

Hello. Welcome to the Media Unfiltered podcast. I'm actually filming this at home for a change. I've been a little bit around the world. Just came back from a holiday in Maui, as you know, and, wonderful trip to Australia and New Zealand. I just hosted the Future TV Advertising Forum in Sydney. And I tell you what, Ian, that's how you do it from a broadcast perspective. You know, they came out of the blocks with Mark Frayn saying, we can turn this around. You know, they've lost up to a billion dollars from the actual TV advertising market there. And what's interesting is talking to buyers there, the agencies and and, and clients. Once once you lose money from that ecosystem, it's really challenging to win it back. And, what Mark Frayn was was talking about was like, if we carry on, we could lose 200. If we change, that 200 loss could turn into a 500, $500,000 swing into a 300,000 gain. And they came out swinging. You know, they launched this outcomes, platform at the show. They've launched a, collaborative play around technology. Then the CEO's got up on stage and had a, had a great conversation about working together and the things that they need to do. That's how you do it. The narrative change when TV companies come out or any industry comes out and shows that they're working together and listening to the industry. What a change it it makes. What a what a positive bounce that that,

Speaker 1 · 1:30

that market had based on how the broadcast has showed up. Yeah. It's quite interesting. And and first of all, Justin, thanks very much for telling us you you're all around the world with your travels in the sunshine while I'm stuck in London with the gray. Although, it's a beautiful it's a beautiful sort of, evening day, so which is quite good. But, anyway, put that aside. I think that's absolutely right. I mean, it's if you go back, one of the things I mean, when I don't know if you remember. When I was speaking to the future TV conference back in December 2024, one of the main points that I would say to the broadcasters there was that one of the the critical things that they needed to do, even though it's not necessarily quantifiable, was that they needed to continue to have faith in their product. And that, actually, what was crucial here was they shouldn't get in the mindset of believing that, essentially, they were in terminal decline. Now I I Yeah. When I was sort of a a a sort of a a equities analyst, sort of back in the day, I covered the newspaper stocks. And I'd say that one of the critical mistakes that the newspaper companies made, and this is before the sort of New York Times and groups like the Telegraph turned things around, was essentially believing that their product was dead. And the yeah. This old comment that they used to say that was swapping analog pounds for digital pennies. Once you lose that critical belief in your product, then you're dead. Sun Tzu, the the sort of famous Chinese sort of, philosopher warrior, said that the easiest way to defeat an enemy in battle is to convince the enemy before the battle that they've lost. Mhmm. Because, essentially, what happens then is that the enemy just dissipates. You know, they they they think it's not worth fighting. And that was the mindset that pretty much a lot of the newspaper industry got back into in the late two thousands, early twenty tens. That's not to say that they could've, you know, they could've completely changed the course of history, but they probably would've been in a much better position now than actually they sort of, you know, have actually ended up in if they've had faith in their product. And I think that's crucial for the broadcasters. One thing that need to remember with the broadcasters is what they actually offer is fundamentally very valuable. And what they have, if you think about it in another way, is they have seventy years plus of selling premium video content to a mass market audience. That's incredibly valuable skill to actually have. The way that that content is distributed,

Speaker 0 · 3:56

you know, that obviously has changed. In fact, it was changing over time. But the actual core skill, I think that that's gonna be fundamental as their future success. And and coming out not talking about the declines and what you're gonna do about it and all that sort of stuff and and sort of being on the back foot, it changed the narrative a lot. They came out the front foot speaking positively about their product, showing that they can they can demonstrate it with outcomes and that they're listening to the market. It just it just changed the tone of the event. And I wanna give a sort of a really good, analogy, if you like. I was in New Zealand, and the market going gangbusters there is out of home. The TV industry is kind of a little bit fuming about it because it's it's they're taking they're taking share, but their their aim actually out of home is to look at social budgets budgets and digital and bring it back into local media. But they were decimated, obviously, in COVID. They collaborated around a measurement solution amongst all the different players in our home. They came up with a solution that buyers wanted, and they had good lean in as well from the agencies, and they are crushing it. It's a phenomenal case study on what happens when you work together and you deliver solutions that the market wants. You know, from out of nowhere, they are absolutely going gangbusters. And what's interesting is that the TV companies are picking up on this. And and as you know, channel nine are actually gonna buy an out of home business. And And I think there's gonna be a lot more announcements, around diversification from these broadcasters into out of home and radio because they're doing quite well. And it and it and it works nicely with local media and television.

Speaker 1 · 5:32

And I think out of home also as well, the other thing that it really plays into the strength sort of people may know that sort of I do quite a lot sort of quite a bit of work in the out of home industry. Mhmm. The the thing with out of home is it fits into the zeitgeist, but also as well, it fits into those nice areas where it's a product that inspires trust. Also as well, you know, it's also a product that quite frankly, you want to get younger audiences. It's very well suited to that because, of course, it's not as though, for example, it's not you know, you can argue with TV that people are either on their phones or not watching TV set. If people are outside, they're so they're exposed to the out of home product. It's very much in its space. And, of course, also as well what's happening is the range of formats sort of increasing. And I think particularly, you know, not all markets, but I would say, globally, what you're seeing is that advertisers are starting to realize that out of home is an extremely important component really for their media plans and not something which is, you know, should be on the sidelines, but increasingly becoming central. I would say one thing that I think has held it back is that historically, the buying of out of home was done by specialist groups within the agencies. And these groups tend to be very high margin, and consequence of what happened is they tended to actually keep their skill sets within the group rather than necessarily disseminate their knowledge across the whole of the agency. What therefore happened when agencies start to restructure and started to sort of break down these sort of out of home components was it wasn't as though the knowledge was therefore disseminated. Essentially,

Speaker 0 · 7:06

the agencies lost that knowledge. And so that has held back out of home to some degree, but I think we're now starting to see that reversing. Well, they're they're able to go after digital digital budgets too, which helps them. The Exactly. When you drive when you drive around Auckland, you should see the the the sheer number of screens, how they wrap around buildings. It actually looks they're beautiful pieces of inventory. I I have to admit. I was taken aback by it. And do you know what's really interesting is it's supermarkets actually advertising what they're selling this week on discount and all that sort of stuff. So it's actually quite a lot of bottom bottom of the funnel stuff that I was seeing. It wasn't just big, beautiful ads that you typically associate with At Home like, that massive screen at Houston Station. You know, the really big ones that you see at Times Square. These were these were marketing messages that you would typically see in digital formats for Out of Home. It looked fantastic, and it's a great it's a great illustration for any market out there that's feeling a bit sorry for themselves. Look at what the, Out of Home, industry did in New Zealand specifically and in other markets and how they are returning to growth. Another area that we discussed

Speaker 1 · 8:10

yeah. Another area we to point on that. Oh, go on, mate. It just go on. Be be very quick. It's not just digital budgets that they're picking up from. For example, the what you said in terms of, you know, the bug off sort of products that are out of home, often that will come from retail media budgets. And that's the other thing with out of home as well. It actually plays very well into the retail media sort of zeitgeist, if you want to call it. The other reason why I like out of home, by the way, is because humans see it. Right? And you just

Speaker 0 · 8:39

we're all super suspicious now of digital because it's so full of nonsense, but you actually humans see it. You cannot deny that. So the other thing that we saw we did in Sydney, which was really interesting, we had the a a premium TV discussion. And so I I shared the slides. We had a we had a panel about it. Oh, sorry. We had a podcast about it before I did the breakfast. And it was it was really interesting because all along during the discussion, and I'm convinced premium has a role and the advertisers were were supportive. Yes. It does this. Yes. It delivers. Yes. It's trust. But we couldn't get past this point of but if cheap delivers, does that make it premium? If I get an outcome and we just couldn't get around it. Right? And there's I posted about it recently and and and some TV companies were like, you know, maybe we need to stop talking about premium and call it quality, talk more about the environment. I'm not sure, but it was just we were stuck on this point of what's premium, what what does it do? Because you you need to pay for premium. Right? It's not cheap to adhere to all these the the standards and, human verification and all that sort of stuff that makes it premium. But when it came down to it, it came down to price and outcome.

Speaker 1 · 9:52

So I don't know where premium sits in that. What's your views on this? Well, I mean, I think, actually, I mean, this is this is bizarrely enough. I'd say that whole sort of debate is pretty much like the whole debate around brand and performance. And what what do I mean by that? You know, effectively, if you and you're right. I mean, you could look at it very simplistic way and say, well, the key thing is it delivers an outcome. You know, that's all that counts. But I think what you've got here is that you've got sort of outcomes that deliver an immediate effect, but then have, let's say, a negative longer term effect on the brand. And then you've got things which not only sort of deliver that short term effect, or maybe they take a little bit longer to deliver that effect, but also have a positive effect over the medium to longer term as well. So you could run yeah. Let's take an example. You could run, for example, an ad for a car using an AI slop using AI slop content. You may say, oh, that's great. You know, we've got we've got car sales and, you know, sort of, that's all that counts. We'll continue to run those ads. But if what's happening is that people are looking at those ads and associating your product with something that essentially is cheap and artificial, over time, what will happen is the perception of your brand will decrease. And therefore, what will happen is areas like pricing power, areas like how they see you in terms of premium quality, etcetera, they will all start to suffer as well. Now I'm not you know, I am not a lesbian. I'm not sort of a a, buy the shop or anything like that. But there are plenty of studies out there that will show the effect of essentially declining brand in terms of sales over time. And there, I think, is really where we've got to think about premium. It's not so much whether it actually delivers outcomes. What it's more about is actually does it fundamentally sustain the model over time. And that's where I would argue that essentially TV is is, for want of a better word, actually probably does a better job than, let's say, most of digital content. It's not so much about delivering the immediate result. It's delivering the immediate result and everything after. Because when you show an ad and it's this is again to go back to the whole debates about brand versus performance ads. If performance is a very much targeted at that specific moment in time, what a brand ad should do is essentially sort sort of not only produce an effect over the shorter term, but also as well produce that sort of halo effect going into the medium to longer term. It's the same sort of thing when it comes to content. You can have content that essentially people watch for ten minutes, and maybe they do something after that, but then they've forgotten about it. It doesn't have a sort of multiplier effect. On the other hand, you can have premium content, delivers the outcome as well, but also what it does is help support sort of of the perception, but also as well the effectiveness and ultimately the outcomes for the advertising over the medium to longer term as well. And that's how I view the debate. I think there's a you know, what people have to to sort of, delineate is there are outcomes, but, you know, there are different types of outcomes. There's the immediate outcome, and then there's the immediate outcome plus the medium to longer term outcome. And that's where I would put the line between premium and and non premium. Yeah. It just it just depends how, clients are,

Speaker 0 · 13:11

KPI'd and and measuring the media that they're they're using. It's interesting that Sameer, from ITV commented that he he thought this whole premium debate was was nonsense, and he actually did studies on it, made his team go over the, results because he had a particular bias and found out that actually premium does deliver better outcomes. But we just we just we just we just bad at approving it. But while listening to this debate, there's two things that that that I was thinking of. Just thinking, how does premium even survive if it's just an ad model if this is the if this is the way that that clients are viewing it? Clearly, diversification going into, you know, paid and subscription and all that sort of stuff is gonna have to happen in order for premium to continue. The other thing I was thinking is I had Uber on the panel. Uber had a real problem with trust because it was a really strange thing to do, I don't know, five, ten years ago whenever they launched to use an app and then get into a stranger's car. And they needed trusted environments to prove that you can trust this process. I know they did. I read the bloody case study. Despite that, I still couldn't really get Uber to go, well, this is worth paying extra for. They did they did kind of, but still, it came back to the outcome side of things. So Yeah. It's kind of interesting. Another thing I saw while I was in Sydney, which was right up your streak, because I know that, you consult and work with with agency groups. Sat down with Accenture, their team there. So they've got a new model, and I just think this is absolutely fascinating. So they are returning back to the old days if you like. Huge retainer and a percentage of your media spend. No kickbacks from technology. No principal media. No non transparent deals at all. They're launching it in Australia as a sort of test market. It's a good market for that. It's actually it's a good media market. Cost or, the amount that they spend on media per capita is is enormous. It's quite a large advertising market despite, the size of the population. So they're rolling that out to see if clients will value, you know, transparency over some of these other murkier deals. Given that you consult to the agency world, do you think that Accenture model has legs? And do you think they'll be able to roll that out globally? Yeah. I mean, yes. I think it does have, yeah, legs. Yes. It's also as well, you know, ought to be very positive. I mean, it's returned back to the future, if you wanna look at it particularly in terms of Isn't it? Yeah. Yeah. Commission element of it as well. And I think You know, in the sense that always hours of break. That we did previously. And I just wonder whether advertisers will value the transparency, whether they could get over the fact. You know, procurement teams have come in and they've obviously driven down the value of the the agency model, or the the pricing structure. I wonder whether for those companies who who have engaged in those, whether they'll come back to this model because I imagine the retainer fee won't be small. But it'll be interesting to see. And I think I think it's I think it's easier for Accenture in many ways because they'll have a lot of consulting agreements with very large blue shipped companies, and they could translate them into, they'll have that trust and that relationship with senior management, and they could translate those into intermediate deals. So I think it'd be easy for easier for them to do that than, say, other other other HoldCoast.

Speaker 1 · 16:32

Yeah. I mean, what what would say is look. I mean, there are a couple of things sort of of here. One is you are what you price. Okay? And one thing I think one of the fundamental mistakes the agencies did for the let's scale it past twenty years was move to a model that essentially incentivized efficiency, therefore it's centipized scale. And as Michael's pharma showed, essentially, what happened was, you know, the price of the product sort of, has been declining over years. Quite frankly, you know, that is that is sort of yeah. We're complicit in this. This wasn't just an advertising sort of, issue. Yeah. Second of all, what we'd also say is that these things don't tend to go there's not clean cuts. You know, if you think about how the commission model transitioned to essentially the the model that we have at the moment, I mean, that probably took around ten to fifteen years. So this is not going to be something that happens overnight. I think what will happen is you'll get these trials. You get clients who are thinking about sort of whether they should do this or not. But my feeling is is that once the agency start to price in this way, what you'll get is you will get a change in behavior on the client side as well. That's fine for you. You know? So I'd be relatively, optimistic there. I think the third thing is that this all this all feeds into the perception of advertising. And again, to come back to the first point, in terms of these, when they were pricing for scale and efficiencies, not only did they bring down the the value of their own product, they also brought down the perception of value of advertising. And so an argument to say that if you change the the pricing model, what will happen is that so of clients, sort of, advertisers view of advertising will naturally again, won't sort of, won't be overnight, but it will take time. And I think that also links in with what's happening in the world at the moment. I mean, given what's happening in The Middle East, which is still still continuing, and we talked about this on a previous podcast. There is an argument to say that in such a world, not only with AI, but also as well with what's happening with likely sustained inflation over time, changing dynamics. It's a lot more important for advertisers trying to put through price increase, protect their prices in a world where consumers increasingly angry at the cost of living. And also as well in a world where, you know, for American and they're facing increasing competition from Chinese exports because Chinese companies are to actually export because China's economy is slowing down. Mhmm. Yeah. There are all these factors when you look at it, what it should do is drive up the value of advertising. So I think it's the I think fundamentally, it's a it's a very positive development. Like with always, it will take time to to sort of balance. I'd go back there's one I'll give you an example from the financial markets from from the city. Nearly a decade ago, the European Union, in fact, more than decade ago, we'll call MiFID IIM. What it did was, it said that we previously had been bundled into all other services had to be priced separately. The idea was the theoretical idea was to increase transparency for for pension users. Now the fact was was nobody at the time knew how to price research, hadn't been priced before. And so everyone was going around with trying to work out what the value. And I always remember the tale of one of the premium boutique research houses going around to clients and saying, well, we're gonna charge you $250,000 for a retainer and so forth. And the client gone, you know, that could seem quite acceptable until one of the major US came in and said, actually, you can buy all our research for 10,000. And that immediately set the price for the market. Yeah. And the point sort of being here is that no right or wrong price for these types of services. It's effectively what clients are prepared to pay and the perception of the value of the product. And this is why I sort of come back to this point before. By pricing low, what's happened is the agencies that haven't just impacted themselves have impacted the product that they sell. Mhmm. What needs to happen, both for the sake of advertising and also as well for the sake of the agencies, is they need to reverse that out. And I think this has the potential to be the first step on that road. Yeah. It's it's good analogy that, and I use that a lot for TV companies who

Speaker 0 · 21:00

are insistent on discounting in order to win share. You end up devaluing the product and the pricing for the entire market. And in the long run, you end up shafting yourself. So Absolutely. You know, it's played out in so many different markets. It'd be interesting to see if this essential model also helps fund and support the creative industries within these organizations because as you know, the agency world is is struggling to find a business model for their creative arms. Most of them don't make any money or even are loss making.

Speaker 1 · 21:32

But the independent arm sorry. The the independent agencies, if you look at them, some of them actually are doing quite well, the creative agencies, and are charging high margins. And it's again Because they've got a different model. Yeah. Because they've got a different model. Yeah. So so that's actually a a really a really good point and

Speaker 0 · 21:48

and it points to actually, if we are interested in outputs and outcomes for clients, you know, changing these models would actually benefit the entire industry. Because, ultimately, if we're not delivering for brands, which Michael Farmer likes to point out as you mentioned, you know, they're gonna realize it soon. We're gonna screw ourselves over entirely. And this is a, you know, great industry to be in, and we don't need to, we don't need to kill the golden goose. Oh, something else happened sort of towards the tail end of last week while I was away. I missed all the news, but, Nielsen had a bit of a bit of a wobbly. Do you wanna just explain what happened there? I think it's worth just explaining it and then and then and seeing what the fallout is because some of us I think a lot of us would've would've would've captured it Yes. Happening in real time. But just explain quickly what happened and what the fallout is. Well,

Speaker 1 · 22:40

essentially, and, you know, do jump in because, you know, I am I am not a methodology sort of a, expert. So I I'm really sort of paraphrase. It sounds like a political issue rather than a meth methodological one. Yeah. No. And I think that's the sort of key point here. You know, what we'd say is actually, you know, it's a political one, but ultimately what this is is is really people trying to it's a fight for who controls the economics of television. So if you look at sort of what happened was, you know, Nielsen was supposed to release it its February gauge report. This was the report that would have been done under a new sort of new methodology. And what it reportedly shown was the broadcasting cable would have shown a sharp increase in it its share of viewing. Now of that would have been expected anyway just given the Winter Olympics, given sort of of the timing of sporting events in in The US. Super Bowl. Nevertheless Yeah. You know, what apparently and say apparently because we don't know exactly what's happened, is that the stream has pushed back against it. And now Nielsen has effectively said, we're gonna go back to the drawing board, and the February gauge report is gonna be delayed. It's already been delayed once. Now it's gonna be delayed again. There's obviously obvious implications there for the the sort of perception of Nielsen within the market, but there's a couple of points also here as well. You know, first of all, what I should say is measurement and advertise is not really, it's not neutral. You know, the simple fact is this is like the real world. If you set the currency, you set the terms of trade. And if you can set them in your favor or at least they advantage you, then you will ultimately benefit. And so, you know, if you look at what Nielsen has done for decades, it's pretty much held the power of how people perceive the value of TV. Now this is not to say that Nielsen is perfect, but what it is to say is that what people go for because everyone's busy and they need sort of very simple narratives that they can latch on to, Nielsen is a very simple narrative to say how TV and video is doing, how you you can see with the amount of of commentary that is generated by what's happening with the with the monthly numbers. And so, you know, this is this is why I say this is not really about the methodology issue. If the streamers can show that effectively they're taking, you know, an ultimately increasing share of TV viewing, they will gain an increasing share of TV advertising. So if cable and broadcast can show that actually the position is not as bad as what people have shown, then what they're likely to do is actually protect their share. And where it really got interesting was when the VAB CEO, Sean Cunningham, came out and said, what he accused Nielsen of wasn't technical language that he said. He called it obvious interference in markets. Now that's actually quite serious. And what he means by that, he didn't say it sort of directly, but what he means is, Nielsen, by postponing the February gauge, potentially impacted the share prices and the market capitalization of the broadcasters. Because if it had painted a more positive picture, then the share prices of those companies would have have risen. Now as I say, I think that's very much of a political leverage tool in The States. Yeah. The SEC takes it very seriously any sort of width of price manipulation when it comes to to the stock markets. So it was deliberately sort of aimed with this. I think increasingly, and you've seen it also as well with, you know, in The UK with what's happened with Bob. Methodology will become an increasingly sort of for over area because, again, it comes back to this point. Whoever sets the currency sets the terms of trade. And you see analogy also as well, quite frankly, when you look at political revolutions, one of the first things that the new incoming regimes will often do is they will often change the currency. Why? Because what they realize is if you control the money, then it impacts people's behavior of what they do. Similar sort of thing with with this methodology here. It impacts people's perceptions of who essentially on is on the decline and who's gaining. And that ultimately goes to, you know, decision makers who haven't really got that much time to go through the figures and detail, but often what they will do is take a nice headline number that they can grasp onto. And that's really what this is in the, yeah, this fight is all about. Yeah. When I speak to agencies

Speaker 0 · 26:55

who are investment guys and that that they're executing plans, they hate the gauge because clients come in and go, well, what about this? And that they have to explain it all the time. This is why I always tell other markets outside of The US is to build jigs that have have buyer buy in. So if the buyers are involved with the methodology, everyone agrees. That's why Barb works. It's because it has buyers on the board. Ireland, I believe, are doing a similar thing where the, major agency groups are buying into the, new measurement, platform that they're building there. Nielsen is is, is not focusing so much on the sort of markets outside of The US. So there's opportunities there for the broadcast community who are have been reliant on Nielsen to to build a new measurement infrastructure, if you like. And I've been I've been saying to them, get get the buying community to to lean in, even contribute and be part of those boards and committees, make it like a jig. Because then there's no argument. If everyone agrees the way that they're going to do it, then everyone is happy with with the currency, and that's pretty much what you see with Barb. And that's probably one of the reasons why The US is such a shit show. Okay. So then last thing, you track this. We're we're looking at the global financial markets. They've taken another battering today because Trump is all over the place with this war. Investment in AI, what's happening there? And this will, obviously wrap today's podcast.

Speaker 1 · 28:19

Yeah. I mean, you know, the thing is is to say the market sort of yeah. The market's been quite interesting at the moment, shall we say. Look. I think, yeah, the this has got a number of implications. Yeah. The particularly, if you look at in The Middle East, there are a lot of data centers, a lot of the funding sort of ultimately will come from there as well. Advising inflation is talk of rising interest rates. If it is rising interest rates, what normally happens is investors say, you know what? Your future returns, we discount them more, and therefore, what we're more concerned about is present profitability rather than future. And so if you look at the the spending that's been going on when it comes to AI, I mean, it's you know, you you've only got a look at the charts. It we're approaching nearly $700,000,000,000 spent by the major tech platforms in 2026. That's expected. And quite frankly, all the previous estimates have been below what's actually been sort of actually come through. So I think, you you what you're likely to see here, this is likely to feed into nervousness about what the major tech platforms are doing with AI. Now on the other hand, OpenAI is supposed to IPO and Tropic is supposed to IPO. If they do, what's likely to happen here, what's likely to happen is you then get a whole slew of companies that send the IPO, not just in the AI space, but, yeah, those that support the AI infrastructure as well. It's all, you know, they typically get this pattern of behavior coming through. And that will mean that the sector the AI sector is more important to investors. There's one so I think, you know, you've got that. There's an obvious question here as to whether how long this will last. And this source as well will be crucial in terms of whether this has a fundamental break on AI spending or not. If you look at the share price performance of the, the tech companies year to date, hasn't been great. You know, companies like Meta really getting slammed when it comes to shareholder shareholder sentiment. I think, of course, as well though, where this war potentially has yeah, another impact, and we haven't maybe it's been less thought of, is what happens for the Paramount Warner deal. Because what's interesting there, if you look at the, you know, the deal was priced at $31, if investors believe that this is a surefire deal, you should see the share price trade pretty much close to that $31. Because, essentially, what you're saying is, yeah, it'll go through yeah. If it if we're gonna get $31 for our shares, it should there might be a very small discount, maybe $15.20 cents on that price. But effectively, it's a done deal. Thank you very much. Yeah. The share price today should equal the share price of the deal. That's not the case with if you look at what's happening with, Warner. I think last time I looked, Warner was around $27. That's quite a substantial discount. And what that suggests is that the markets are thinking that and it's gone down since the sort of Iran conflict has started. That's suggesting that markets are thinking there's an increasing chance this deal doesn't happen because Wow. If you look at a substantial chunk of the funding is obviously coming from The Middle East. So that's one sort of factor. You've also as well got the guarantees that were offered by, yeah, Larry Ellison and Oracle. And if you look at the Oracle share price, the Oracle share price has been coming down quite substantially as well. So I would also take a look out as that as well as to what happens if this conflict continues to go on. And given Trump's comments to the yesterday, that's one possibility. Then it's not just AI that could suffer, but you could also see some of these other deals suffer as well. And I think, by the way, just as a final point, it won't just be AI. It won't just be Paramount buying Warner Brothers. This whole sort of I think the whole of the m and a space will be impacted if the Middle East sovereign wealth funds essentially decide to keep their money at home

Speaker 0 · 32:05

and not invest overseas. Yeah. That that that's actually a really interesting point because we we've been saying that m and a is gonna pick up, and then this war occurred. Our predictions there might be, might be wrong because you're right. So much investment even in the the media space is occurring from these sovereign wealth fronts. Yeah. That might completely dry up. We, for the sake of the markets and the sake of investments, a swift ending of this war would be would be welcome welcome news. So the yes, no question yes, no answer. This is not investment advice, but let's say open o AI IPOs, are you buying shares? You're never gonna give a you're never gonna give a yes, no answer. No. I as I say,

Speaker 1 · 32:46

I would say You can have a dabble. Come on, Ian. No. I look. When you buy shares, you gotta think about sort of several factors. Ultimately, if you buy shares, depends also on how long you expect to hold them. You know? Are you looking to essentially trade positions? Are you looking to hold them for the long term? Yeah. That will sort of, judge. You can get companies where, essentially, over the long term, the valuation doesn't seem to stack up, but you know that the short term momentum is very much behind it. And in a week, ten days, you know, two weeks and so forth, you may make a lot of money. So I think I'm not gonna I'm not gonna say yes or no to the, to that question. What I will say is that I think the valuations that have been implied at those companies, it raises a much bigger sort of issue here. Namely, that in order to justify some of the valuations that being talked about, not only are these companies gonna have to make substantial revenues coming out of advertising or subscription, but potentially what they're gonna have to do is they're gonna have to eat other industries as well. And Yes. You know, this is, you know, a lot of the reason why you're seeing areas such as software, the consulting companies such as Gartner, the specialist information firms such as Relex, and Molters Kluwer really getting impacted in the in the stock markets because what investors are realizing is the the sort of of these valuations for AI companies are so huge that there's no way that it can be satisfied just by taking a greater share of the ad market or by running a subscription model. What you essentially have to do is you have to collapse other industries' business models and effectively take over their revenue sources. Good way to end on.

Speaker 0 · 34:28

This is not investment advice. Yeah. I'm not sure. Saying to buy to buy shares when OpenAI and others IPO. Ian, it's been great. Have a lovely Easter weekend, listeners. And, Ian, have a nice break. We'll be catching up next week with another one. Take care. And thank you, Justin, and have a good Easter, everyone.