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Greetings! If you're watching the latest season of the HBO drama "The White Lotus," you'll know that the aging cable channel (represented on streaming through Max) can still capture the zeitgeist. That's not so true of HBO's owner, Warner Bros. Discovery, whose fourth-quarter results on Thursday—showing revenue fell 2% for the quarter and 5% for the year—demonstrated the sorry state of the traditional TV business that makes up much of WBD. The company's streaming operations are doing fine, expanding its subscriber base 20% in 2024, mostly overseas where Max is moving into new markets. But as the slowly shrinking cable channels account for half of WBD's revenue, streaming's growth can only do so much. Things would be much easier if WBD spun off the cable channels, as Comcast's NBCUniversal is already doing. WBD's streaming business is profitable, and a new company composed just of streaming, HBO and the Warner film studio should prosper—drawing a much better valuation than the company does now. Consider that WBD's stock price has been bobbing around the $10 level for the past 17 months, giving the company an enterprise value now of just $61 billion. That's roughly one-seventh the value Netflix enjoys, even though the two companies had the same revenue last year. Netflix deserves a good premium, no question. Apart from anything else, it's much more profitable: Netflix generated free cash flow of $6.9 billion last year compared with WBD's $4.4 billion. But the valuation difference is mostly owing to the fact that half of WBD is steadily shrinking. Recent signals from WBD suggest a spinoff of the cable channels may just be a matter of time. After the Financial Times reported last summer that management was contemplating such a step, executives didn't exactly shoot the idea down when asked about it later. WBD has introduced a new corporate structure that separates the cable channels from streaming and the studio, seeming to make a split-up along those lines more likely. On Thursday, CEO David Zaslav said the new structure would "enhance our strategic flexibility and also create potential opportunities to unlock additional shareholder value." That translates from corporate gibberish into plain English as: "Yes, we might dump these slowly dying channels the first chance we get." If you're one of those people who likes to download all the new artificial intelligence model apps—Grok, Gemini, ChatGPT, Claude, and so on—then prepare for another one. Meta Platforms is planning to launch a stand-alone app for its Meta AI chatbot, CNBC reported on Thursday. The company also plans to test a paid subscription version of the chatbot. Launching a stand-alone app suggests that CEO Mark Zuckerberg has realized the existing distribution strategy of making Meta AI available through the company's various social media apps isn't enough to get people to use it. Consumers now have so many choices of AI chatbots—with similar capabilities—that it's difficult to choose. At some point, there'll be a shakeout. Who will be the survivors? - Google co-founder Sergey Brin told staffers the company could lead in AI if people worked in the office daily and put in "60 hours a week," The New York Times reported.
- Apollo Global Management is in talks to lead a $35 billion debt financing by Meta Platforms to build data centers in the U.S., Bloomberg reported. On Tuesday, The Information reported that Meta is discussing building a data center campus costing as much as $200 billion.
- Payments processing firm Stripe said it had struck a deal with investors to finance a tender offer for current and former employees to sell shares at a valuation of $91.5 billion, only a little way from its peak valuation of $95 billion reached in 2021.
- Microsoft called on the Trump administration to roll back Biden-era rules that restricted the export of cutting-edge chips used to train and run AI models. The rules, which restrict the shipment of graphics processing units made by Nvidia and other leading chipmakers to certain countries around the globe, are impeding Microsoft's plans to build data centers in countries including Poland and India, Brad Smith, the company's president, said in a blog post on Thursday.
- The Federal Aviation Administration is considering terminating a $2.4 billion contract with Verizon—to upgrade the agency's communications platform for air traffic control—and awarding the work instead to Elon Musk's Starlink, according to The Washington Post.
- Airbnb co-founder Joe Gebbia has joined Elon Musk's Department of Government Efficiency to work on "improving the slow and paper-based retirement process" for federal employees, Gebbia announced on X Thursday.
- The CEO of one of the biggest advertising companies, WPP, said clients have returned to Elon Musk's X in the past few months, the Financial Times reported today.
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