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We've got a lot to get to today, so let's dig in. There's so much news. Scott even participated in the group chat. He was like, 'There's so much news.' But actually, his selections were correct. But because the first one is something I think I was a little — was I surprised? Comcast is spinning off NBCUniversal and Sky into a separate publicly traded company. The new NBCUniversal will include NBC, the Universal Film Studio, theme parks, and Sky. This is the satellite service they have in Europe. Comcast keeps Xfinity Internet and Wireless. So it's back to square one. I guess the market liked it. Comcast shares jumped 21% in pre-market trading Monday morning. It's not a total clean break. Comcast will hold a roughly 20% stake in the new NBCUniversal. I think they still have a big stake in MSN, too. And the deal is expected to close within about a year. There's a catch, though. Analysts say, well, the spin-off gives NBCUniversal more freedom to do deals. It leaves Comcast's broadband business more exposed at a time when cable is already under pressure. So, talk about this. The people they're putting in place are very good executives. But does NBC now remerge with MSN or what? You need to explain this to me. I really didn't quite understand why they're doing it now. What the troubles they're seeking. I know they had looked at buying Warner at one point. So could Netflix buy NBCUniversal? There's a lot there. There's a lot at those studios. So thoughts.
So this is why companies conglomerate. The board who decides to see his compensation hires a firm called Towers Perrin — because compensation is the hardest part and one of the most important things that a board does. And because boards don't want to do any work, they pay this firm, Towers Perrin, $200 or $300,000, and they come in with a survey. And the survey says on a scale of 0 to 100, 50 being the average compensation, and they look at the industry and the size of the business. And so if you're running a bank that does $10 billion a year in business, 50 might be three million a year. But if you're running a bank that does $80 billion in business or whatever, then the average compensation is 20 million. So the incentives, and also the ego, and also the testosterone, and the penis, and the midlife crisis all lead to incentives for the CEO to get bigger and bigger and bigger. And sometimes there are real synergies around different businesses, but almost always not. Typically what happens is you end up with a Frankenstein. And so the market, it gets to a point where you have these Frankensteins of businesses that had no synergy. And what the market has a tendency to do is it looks at the shittiest business because it says there's no synergy here. And it says, 'Okay, New York Times, you own 17% of the Boston Red Sox and the seventh tallest building in America. This is how much the building is worth. This is how much the Boston Red Sox are worth. But instead, we're going to look at your shittiest business, your regional newspapers, which traded four to five times, and we're going to assign that multiple to the entire business because they don't give you any credit for the stuff that's working really well.' So the disposition of assets becomes accretive to shareholders. And in this case, you have a media business that's strong and growing while the connectivity business is shrinking. And what they do is shareholders assign the multiple on the connectivity business to the strong and growing business. Last quarter, the media division — get this — reported a 40% increase in revenue to nearly $12 billion for the quarter. Theme parks grew 24%. Media grew 61% and studios grew 21%. And over the same period, the connectivity division shrunk revenues 3%. So what you have is connectivity that's not as — that's right, residential connectivity shrunk about 4% while business connectivity grew 6%. So what happens is if you split these things apart, you have one company, the connectivity business, which is a mature business that's in structural decline but still spins off a ton of cash. And then you have a growth business. When it becomes a pure-play growth business, it gets a much higher multiple. And the result is a stock that was up 25% based on these two companies.
Two companies. So what happens to each of them? Is there like — look, you have MSN, they split off MSN, and now it's trying to create its own little new division and doing well for what it is, right? It actually has seen some growth under those executives. And then you have the media business that has — by the way, there's some fine executives at the media part, like Donna Langley. It's a very smart group of people. Whenever I meet them, I'm always so impressed. But they weren't able to participate in the Warner thing, for example. And I know it was frustrating because they were actually the natural owner for that. You know, I was like, of all the things, I was like, Paramount, they're a bunch of incompetence. Netflix is too big and going to get in trouble. Comcast was the perfect buyer for that, you know, in terms of quality people and the theme parks and everything else. So what happens here? And the other thing, just as a sidelight, the other two things. Could Netflix come in and do something here? I think it's too much. Disney's CFO has signaled they intend to keep the linear and streaming businesses together for now. They don't own a cable division and not split it off. So they're keeping those together, the studios and the streaming and everything else. So the strategy seems like it's the same strategy if they're going to hold on to NBCUniversal, Film Studio, theme parks, and Sky, right? So that's a little connectivity, I guess. But thoughts on that? What happens to each of these parts? What happens to the cable parts? And then what happens to the — I mean, could like Elon come in and buy the cable parts for Starlink? Or there were rumors of him buying one of the phone service businesses.
Well, I mean, it's scary, but with a $2 trillion market cap, there's very little he couldn't buy right now. So Versant, their stock is down 21% since the spin-off. I don't know what happens. Okay, first off, Disney for the time being is holding on to its cable assets. That means no one's offered the price they want. It will make sense for them to shed that business because the parks, the IRL business, the parks is an unbelievable business. So this is all a long-winded way of saying I'm not sure what they're going to do, but they have simplified and created pure plays because here's the bottom line. If you put yourself in the shoes of an investor, they don't need the Roberts family to diversify for them. CEOs love diversification. Why? Okay, my connectivity business is down, but my parks were up 24%. In other words, right? Yeah, they sleep better at night because they can grow six, eight, 10% a year and not worry that, oh, I got a problem at MSNBC. Whereas, this is the thing though, investors, I don't need you to diversify for me. I can buy Versant stock if I think it's really cheap. I can buy the parks business stock if I think it's a grower and I want growth. But CEO's incentive and compensation and quite frankly wanting to sleep at night and be bigger and better leads to a conglomeration that eventually the stock market throws up on. And that's what's happened here. And you know what the next — really, there's a stock right now that if it broke up it would triple. You know what that company is?
I'll give you a hint. I went to their dinner last Sunday night.
I don't know. What is it? Maybe you've mentioned it before.
I'll give you another hint. The VR, but only subscale.
If Snap spun their Spectacles group, the stock would triple or quadruple.
That is the greatest unlock. Spectacles, though.
Well, that's the problem. It's a dual-class shareholder and Evan controls the company.
Yeah, he loves them Spectacles. Do you realize that? I think Meta gets about $400 in market cap per user. Snap gets 17.
Wow. Yeah, you're right. He should get rid of the Spectacles.
If they spun and did a deal with Shia or something. If they spun the Spectacles group and it was just a pure-play social media platform, rocket ship.
Get this. Do you know how much the stock — I like that idea. Do you know how much the stock is off the last five years?
93%. Oh, I like that little pure-play 500 million people a day social media network that has the most attractive user base for advertisers in history, that is people under the age of 25, is still inventive. You get rid of this weeping sore called the Spectacles unit that is subscale, rocket ship. What happens to each of these? So there's Versant obviously. Warner is its own little nightmare, although there's rumors that CNN will get spun off with Rob Bonta and the California attorney general. But what happens to each of these divisions?
Well, I think the media parks business has real synergy because if you put out a Harry Potter film, you can have a Harry Potter ride, right?
Yeah. Right. Right. Exactly.
The connectivity business should be — indeed. They just get focused. Now, in terms of Versant and the cable assets, those are declining businesses, but those can be amazing businesses. You go Yellow Pages, and that was — this is the weakest flex in the world. I was on the board of the world's largest Yellow Pages company, and all we did was just go around the world and buy other Yellow Pages companies and basically hold on to the salespeople, get rid of everybody else, and they're cash machines. And that's what you're going to see. It doesn't make — CNN should go into Versant and ABC should sell their — they need to consolidate the backend on these cable properties, and that's what they'll do, and they'll still be good businesses. They'll just be in decline.
Yeah, that's absolutely right. They could be the largest small player, right? It'll do well. It'll do well for a long time.
Well, they're hugely profitable businesses.
Yeah. Yeah. Yeah. It'll be interesting. I wonder if they'll bring Versant back. Will they? Why would you want them?
No, I don't think so. Again, the story has to be clean, right? I mean, Alphabet's learned their lesson. They're going to spin Waymo. Waymo is already spun. I guess it's an independent company.
Why didn't Sky stay with the cable business?
That's a correct question. I don't know.
That was the one that stuck in my head. So it'll be interesting. Yeah, because they do. You're right. Theme parks, the film studio, NBC. I'm not sure where that fits in exactly. A broadcast network.
I guess it just — why not? Probably doesn't cost that much. It's a good — Comcast and Hearst are the most underrated management teams in media.
I would agree. They're just very smart people who consistently do the right thing for shareholders. They're aggressive, they're smart, and they're totally under the radar. Like, they don't want their CEOs getting in trouble or making earnings doing — they also couldn't play in the Warner thing. I remember I went to the Wicked premiere and I ran into a bunch of them and they were like, 'We are the obvious right owner.' I was like, 'Oh, I know, but you're not getting it because Richie Rich over there and the crazies at Netflix — you can't beat them, right? You can't beat either of those companies.' But I think this does give them a cleaner shot at buying stuff up. You know, there's all kinds of things for sale like Lionsgate. There's all manner of stuff for sale in Hollywood. So we'll see what happens. You're going to see a lot of M&A, as Scott Galloway says. Anyway, interesting move by Brian Roberts, who I really like a lot. I have to say he's a classy guy. Everyone over there is classy. They're a classy gang. They're very competent.
They're from Philadelphia, which means they've killed people. That's all I know. I'm sorry. Anyone who's — any family that is self-made billionaires in Philadelphia, there's definitely people buried in the foundation of a building of that Comcast tower.
You know why I have a good feeling for Brian Roberts is because I was working for Murdoch and then I went over to Comcast and it was such a pleasure. Let me just tell you, it was — I went — it was such a different personality. Although Rupert was more fun at a party. Anyway, let's go on a quick break. When we come back, why OpenAI might delay its IPO. We're all tech this week.
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Scott, we're back. OpenAI is reportedly considering delaying its IPO until next year. According to the New York Times, the company has been planning to go public as soon as the third or fourth quarter this year. Valuation appears to be one of the sticking points. Sam Altman is reportedly holding out for a $1 trillion when they all want this. The company was valued at $850 billion back in March. $850 billion. There's also some hesitation in light of SpaceX's IPO, which is sort of bumpy, which has been trending downward after the sky-high debut, though it's doing a little better as we record. News of the possible delay led to a tech selloff, stock selloff, with shares of Oracle, CoreWeave, and SoftBank all falling. And there's a possibility that Anthropic is breathing down their neck, that they may delay, too. There was some chatter about that. So is it important for them to wait? As you talked about, the money is getting sucked out of the system. And their financials leaked a few weeks ago with losses increasing nearly 8x in 2025 and spending hitting $34 billion. It's not the greatest story in the world. And of course, they've got Anthropic right in front of them. Not breathing down their neck, right in front of them. They're riding behind it. I think this is not systemic, or I think this is an individual thing, and that is I believe Anthropic is still going to get out. This is what I call the great flipping, and that is —
Flipping. Is that a word you made up? Is that a vulgar word you made up?
Flipping. Yeah, there you go.
There you go. In the Lincoln bedroom tonight.
Sound like a sex act, doesn't it?
Flipping. What would that be?
Well, I feel as if I need to use my safe word right now.
Maybe. Anyways, the great flipping — I laugh at that every time. You've said it hundreds of times to me and I laugh every time. Go ahead.
So Q4 of 2025, OpenAI is the dominant leader. Right now, Anthropic is the — we've never seen Avis overtake Hertz this fast. This isn't even Pepsi overtaking Coke. It's like RCA one morning is the market leader.
And I think Anthropic gets out. But I think OpenAI, if they were going to have to show their wares or open their cupboards, there was just going to be evidence everywhere that Anthropic is eating their lunch. And I talked to a lot of CEOs about AI, and a company I'm an investor in, Securiti, talks — it does all this, helps companies upskill around AI. What they're seeing is the following, is quote-unquote 'blame the model,' and everyone's blaming OpenAI and swapping them out for Anthropic, believing they're going to get a much greater ROI. So I think that basically, if when we look back on the great drawdown that will be AI valuations, that is I think going to happen in the next 12 months. This will be seen as a real crack, that it kind of was a signal of what's to come.
Is it smart to wait? You talked about the sort of lack of capital. There's not enough money here, essentially.
I don't — if they could get out, they would. I think what this says is the CFO talked to the banker, and the banker said, 'Okay, there's no wallpapering over this. Your business has lost a ton of momentum.' And then you combine it with the second thing that is different than Anthropic. Altman has taken the Amazon and Netflix fake-it-until-you-make-it, spend more money than anyone else and your stock will go up. He's taken that to an extreme that is too much. And that is if you look at how much money they are burning, I think with the S-1s, they would be side by side immediately. Everyone would be comparing Anthropic and OpenAI's financials against each other.
And I think what you would see is the following. Not only has OpenAI massively lost momentum against Anthropic, it is also operating much more promiscuously with cash. And that is despite Anthropic's massive investments and massive losses, it's projecting that it'll break even by 2030. And Sam Altman's whole thing is, 'Oh no, I'm committing to a trillion dollars in capex because the future, there's only one winner.' And I think the market — I think the S-1 side by side would show a company that is losing momentum and is spending way too much money and losing too much money. And I think the bankers have come back and said —
They don't want the comparison.
Well, this is what's going to happen in the next six months. This is going to be the great exit from cost. This is going to be the great reduction in spending and capex commitments by OpenAI. They are going to massively decrease their expenditure and capex commitments because I think —
Oracle, it hits a lot of them. It hits all of them, right?
Still an amazing company. It's still growing really fast. But the amount of money they were committing to in terms of capex has gotten out of control. And then you couple that with a reversal in momentum. I think Goldman and JPMorgan and the CFO have said to Sam, 'This is going to be hard.' So —
So then what do they do? If Anthropic gets out at over a trillion, they've got to meet that, right? Speaking of dick-measuring contests, they kind of want that number. Can they actually get out then in 2027?
Oh, I think this is a cost story, and that is I think they're just going to have to reduce their —
Clean up. They got to clean it up.
Yeah. Because — okay, say they get out at 700 and not a trillion, that's still pretty good. I mean, at some point they're going to need to raise capital in the public markets, I think.
Or maybe could they raise in the private markets? The weird thing is I wonder if TPG and the private equity firms that got a 16 or 17% pick, which is really — or guaranteed return, which is really unusual in the private markets. I wonder if they would still do that deal today because the reversal in fortunes here has been like nothing I've ever seen in business without a scandal. And so — weird question, does it get bought?
There's so few players that could buy it. I mean, it's a handful of companies that could afford to buy it. It's one of the big tech companies or SpaceX. That's it. There's maybe five.
There was all this online plotting that Elon sort of bought — made sure the SpaceX IPO was too big and then failed a little bit to stop them. Just so you know, there was a conspiracy.
Well, if the next round — see, rather than do a down round, what Altman did was he offered —
He guaranteed it. Yeah, he offered these terms that typically you don't agree to, a guaranteed return, because he wanted the headline number to be whatever it was, $850 billion or whatever.
