Hims & Hers falls after a court ruling on a drug it never sold

On the surface, it’s easy to see why Netflix would be interested in bidding for Warner Bros. Discovery’s studio and streaming assets: the opportunity to add iconic franchises like DC Comics, “Harry Potter,” and “The Lord of the Rings,” as well as legions of HBO original shows that have stood the test of time.

However, the introduction of all this content, much of which has traditionally generated revenue in ways that Netflix does not, might be adding too many tentacles for even the creator of “Squid Games” to effectively manage, per Morgan Stanley, which also notes that it’s questionable if regulators would agree to such a tie-up.

“While Netflix is the largest of the reported bidders by a factor, it may have the smallest synergy opportunity and perhaps the toughest regulatory path,” analyst Benjamin Swinburne wrote. “NFLX shares have been under pressure over concerns that a WB acquisition, if announced, would complicate the investment thesis, distract management, and/or dilute EPS.”

The other interested parties are Paramount Skydance and Comcast, per reports.

In short, a successful Netflix acquisition may see the streaming giant need to be able to raise prices and/or subscribers to make enough money from the acquired properties under its distribution umbrella as it veers away from how these assets have made bank, oftentimes through theaters and third-party distribution.

This introduces many “strategic questions,” as Swinburne wrote:

“If acquired, Netflix could choose to shift all theatrical distribution at Warner Bros. to direct release on Netflix, believing that it can generate more value by keeping these films exclusive to Netflix rather than monetizing in other windows — including theatrical. Over time, it could similarly exit the third-party licensing business and distribute all TV series produced by Warner Bros. studios on its own platform.

Such a transition would take time, as TV distribution is built on run-of-series agreements and multi-year licensing deals and talent relationships would likely require some in-production films to still see theatrical distribution. Long-term, however, this kind of business model pivot would put downward pressure on the earnings power of the acquired businesses, which would need to be recouped through faster growth at core Netflix to justify the acquisition price, if a deal were to be announced.

If Netflix were to announce a bid for WB, HBO could bring some similar strategic questions for Netflix. For example, Netflix could shut the service down and shift all content, both originals and licensed, onto Netflix. That would be walking away from nearly $2bn of adj. EBITDA, but Netflix may feel the content can be better monetized on core Netflix.”

Congressman Darrell Issa has written to the attorney general expressing antitrust concerns over the potential for Netflix to purchase Warner Bros. studio and streaming properties, writing that it “currently wields unequaled market power,” adding that these assets would “further enhance this position” to a level “traditionally viewed as presumptively problematic under antitrust law.”

Oklo is soaring in early trading after the nuclear energy company signed a binding contract with Siemens Energy for steam turbine and generator systems to advance its nuclear power plant.

As part of the agreement, Siemens Energy will “begin engineering and design work to expedite procurement of long-lead components and initiate the manufacturing process for the power conversion system” for the Aurora powerhouse, a brand of advanced fission power plant under construction at the Idaho National Laboratory.

Building and getting power plants up and running is a necessary prerequisite for Oklo to shed its label as a “zero revenues” company as it aims to meet the growing need for power spurred by the AI boom.

Per the press release, “This contract with Siemens Energy for the power conversion system helps to de-risk supply chain and production timeline challenges and demonstrates concrete execution capability.”

Shares of Oklo lost nearly half their value from mid-October through mid-November as part of a broad downturn in speculative stocks.

Brookfield is launching an Artificial Intelligence Infrastructure Fund with the goal of buying up to $100 billion in (as the name suggests) AI infrastructure assets “across every stage of the value chain — from energy and land to data centers and compute.”

The fund hopes to raise $10 billion in equity, and has already received $5 billion in capital commitments from the parent company, Nvidia, and the Kuwait Investment Authority (the nation’s sovereign wealth fund).

“BAIIF will prioritize investments backed by highly creditworthy counterparties and contracted cash flows,” per the press release.

The four areas of physical infrastructure the fund will focus on are:

• AI factories primarily built on Nvidia’s DSX Vera Rubin-ready reference design;

• Dedicated behind-the-meter power solutions (that is, power generation installed on-site rather than drawing from the grid);

• Compute infrastructure including integrated solutions tailored for governments and leading global enterprises (read: Nvidia GPUs as part of a bundled full-stack offering provided by Brookfield); and

• Strategic adjacencies and capital partnerships across the entire AI value chain (or, anything else in the AI supply chain worth being a part of).

Again, like in Tuesday’s partnership between Anthropic, Microsoft, and Nvidia, there’s a bit of circularity in the deal: Nvidia invests money that will be used to invest in projects that utilize its GPUs.

Brookfield pointed to its recent $5 billion pact with Bloom Energy, which sees the fuel cell company become the preferred on-site power provider for Brookfield’s global AI factories, as an example of a project this fund would look to back.