WEBVTT 1 00:00:07.585 --> 00:00:10.495 Hello and welcome to this film which is devoted 2 00:00:10.515 --> 00:00:14.095 to a very famous company in the history 3 00:00:14.155 --> 00:00:15.975 of cinema Paramount. 4 00:00:16.835 --> 00:00:20.535 The company is currently experiencing business, economic 5 00:00:21.035 --> 00:00:22.655 and financial difficulties 6 00:00:23.155 --> 00:00:26.815 and unfortunately bouncing back might pro 7 00:00:26.835 --> 00:00:29.495 to be mission impossible for the firm. 8 00:00:29.955 --> 00:00:33.495 As a matter of fact, the story of the camp is a saga, 9 00:00:33.495 --> 00:00:36.775 is a movie by itself that mergers with the history of sign 10 00:00:37.635 --> 00:00:42.495 It start with Adolf Kar, uh, Hungarian immigrants. 11 00:00:42.715 --> 00:00:45.855 He arrived in New York in 1888 12 00:00:46.635 --> 00:00:48.895 and he started working in a four business. 13 00:00:48.915 --> 00:00:51.215 He made his fortune in a four trade 14 00:00:51.795 --> 00:00:53.815 and then generated some savings 15 00:00:53.955 --> 00:00:58.735 and invested in savings turning to cinema via the al 16 00:00:58.795 --> 00:01:01.855 or the precursors of the movie theaters. 17 00:01:02.005 --> 00:01:05.655 What does it mean? Audience Ion means place, sight, 18 00:01:05.765 --> 00:01:07.335 premise and nikal. 19 00:01:07.355 --> 00:01:10.815 You put a nikal in the box and you get music, short movies 20 00:01:11.155 --> 00:01:12.375 and so on and so forth. 21 00:01:12.765 --> 00:01:15.855 This is a precursor again of movie theaters. 22 00:01:15.995 --> 00:01:18.375 He invested and he made money out of that. 23 00:01:18.685 --> 00:01:21.975 Then he started producing films in 1912, 24 00:01:22.075 --> 00:01:25.135 he created a company which is famous players 25 00:01:25.405 --> 00:01:27.615 because he truly believed that the quality 26 00:01:27.835 --> 00:01:31.215 of a film is the player he invited. 27 00:01:31.435 --> 00:01:35.335 The most famous actress available at that time, s 28 00:01:36.635 --> 00:01:39.135 to play in the first movies, the lots 29 00:01:39.155 --> 00:01:42.175 of Queen Elizabeth 1913. 30 00:01:42.435 --> 00:01:44.415 But of course you have to produce great movies, 31 00:01:44.595 --> 00:01:46.055 but you have to distribute that. 32 00:01:46.605 --> 00:01:51.175 This is why he participated to the foundation of Paramount 33 00:01:51.995 --> 00:01:55.615 in 1914 in charge of distributing the fields 34 00:01:55.795 --> 00:02:00.015 and it took 10% equity with the intention to get 35 00:02:00.075 --> 00:02:03.135 to control, which he did by the way, 36 00:02:03.135 --> 00:02:07.415 because in 1916, as a consequence of default merges 37 00:02:08.155 --> 00:02:10.895 zoo core takes the control of parameters 38 00:02:11.035 --> 00:02:13.375 and then is in charge of producing 39 00:02:14.035 --> 00:02:17.615 and distributing integrated value shape. 40 00:02:18.385 --> 00:02:20.775 There will be plenty stars at the very beginning 41 00:02:20.775 --> 00:02:22.495 and this is why by the way, the logo 42 00:02:22.555 --> 00:02:26.135 of Paramount is a mountain in HTA state 43 00:02:26.535 --> 00:02:27.575 surrounded by stars. 44 00:02:27.755 --> 00:02:31.495 The stars are the players, so it's a period of style, 45 00:02:31.935 --> 00:02:35.335 a growth with very well known players such as Mary Pixel, 46 00:02:35.915 --> 00:02:38.735 Gloria Swenson, Ru Fino. 47 00:02:39.225 --> 00:02:43.815 There will be a period of prosperity in growth up to 1928 48 00:02:44.355 --> 00:02:45.815 and that's the ad of a period. 49 00:02:46.075 --> 00:02:48.775 That's a start of a seven period with a chunk. 50 00:02:49.755 --> 00:02:51.375 Now actors are talking 51 00:02:52.035 --> 00:02:54.775 and in the meantime the same year the company is taking a 52 00:02:54.775 --> 00:02:59.365 50% equity stake in Columbia broadcasting the 53 00:02:59.365 --> 00:03:00.645 famous CBS. 54 00:03:01.255 --> 00:03:03.005 We'll see a little bit later in the stories 55 00:03:03.035 --> 00:03:06.965 that CBS will be another interaction a year later we are in 56 00:03:07.205 --> 00:03:11.125 1929, stock market crisis, economic crisis. 57 00:03:11.665 --> 00:03:13.645 The campaign will experience difficulty. 58 00:03:14.045 --> 00:03:17.565 Somebody's going to try to make it bouncing back. 59 00:03:17.985 --> 00:03:19.645 His name is Mr. Herz 60 00:03:20.225 --> 00:03:25.005 and he made his fortune out of car leasing in 1973. 61 00:03:25.385 --> 00:03:28.205 It doesn't work anymore when the company goes into 62 00:03:28.455 --> 00:03:31.645 bankruptcy, but the bankruptcy won't last long. 63 00:03:32.105 --> 00:03:34.805 In fact, the company will restart again as very quickly 64 00:03:35.275 --> 00:03:37.325 with a list of very famous actors. 65 00:03:37.915 --> 00:03:42.165 Gary Cooper, Marlon Trench, Val in my west 66 00:03:42.805 --> 00:03:46.045 B Crosby is a Mars bra, WC Fields, et cetera. 67 00:03:46.585 --> 00:03:49.445 And the company went also start a new business which is 68 00:03:49.765 --> 00:03:53.045 animated films with a so well-known Popeye 69 00:03:54.265 --> 00:03:55.765 in 1935. 70 00:03:55.865 --> 00:03:58.605 The company is able to go back to the market. 71 00:03:59.715 --> 00:04:01.485 Then there will be a few difficulties. 72 00:04:01.705 --> 00:04:05.645 One difficulty is uh, about leagues of virtue 73 00:04:05.945 --> 00:04:09.245 and morality, which is going to force the company to 74 00:04:09.965 --> 00:04:13.045 rewrite a little bit of production code because my West 75 00:04:13.505 --> 00:04:16.645 and Betty Bob are not exactly how they should be 76 00:04:16.985 --> 00:04:19.325 and so they will have to change a bit the way they are 77 00:04:19.325 --> 00:04:21.165 dressed in order to improve the picture. 78 00:04:21.485 --> 00:04:25.605 I know the fight, but they will lose this fight is in 1948. 79 00:04:25.605 --> 00:04:28.805 They are forced to break out antitrust Act. 80 00:04:29.115 --> 00:04:31.925 They are not allowed to be in production 81 00:04:32.465 --> 00:04:36.125 and distribution completely integrated, so they have 82 00:04:36.125 --> 00:04:37.845 to split and it's a creation 83 00:04:37.945 --> 00:04:40.605 of Paramount television network. 84 00:04:41.215 --> 00:04:45.125 Again in 1948, a few years later, 85 00:04:45.605 --> 00:04:48.605 a very strange company, his name is Golf on Western. 86 00:04:49.795 --> 00:04:53.365 It's going to buy Paramount in 1966 87 00:04:53.785 --> 00:04:57.565 and it's a very curious industrial conglomerate with mining, 88 00:04:58.235 --> 00:05:01.445 with sugar production, different various industries 89 00:05:01.585 --> 00:05:03.245 and they are going to buy paramount. 90 00:05:03.245 --> 00:05:04.485 Nobody understands why, 91 00:05:04.545 --> 00:05:07.005 but they are going to be very, very successful. 92 00:05:07.725 --> 00:05:11.645 A list of, again, fantastic mur, Rosemary's baby 93 00:05:12.315 --> 00:05:15.325 love story, the Godfather 1, 2, 3, et cetera. 94 00:05:15.915 --> 00:05:19.685 Chinatown with Jack Nickolson three days a Congo breakfast 95 00:05:19.825 --> 00:05:23.125 at Tiffany in 1967. 96 00:05:23.355 --> 00:05:25.805 They are going to get into the TV business 97 00:05:25.805 --> 00:05:30.645 because TV is a very big competitor which is identified 98 00:05:30.865 --> 00:05:33.325 for the movie business, for the cinema business. 99 00:05:33.515 --> 00:05:35.085 They are going to buy de 100 00:05:35.465 --> 00:05:37.605 and they are going to start TV series, 101 00:05:37.705 --> 00:05:39.165 but they are going to start in a room. 102 00:05:39.835 --> 00:05:44.045 Star Trek, mission Impossible, Manix at the A 103 00:05:44.045 --> 00:05:47.525 of the TV team, there's a list of outstanding managers, 104 00:05:47.555 --> 00:05:49.565 Michael Eisner who is going 105 00:05:49.565 --> 00:05:51.445 to be later on the CEO of Disney. 106 00:05:51.835 --> 00:05:54.805 Jeffrey Katzenberg, who is going to go through Disney 107 00:05:55.065 --> 00:05:58.615 and become Dreamworks, CEO outstanding people 108 00:05:58.715 --> 00:06:01.775 and they are going to very much develop the TV business, 109 00:06:02.065 --> 00:06:04.095 which is going to be successful. 110 00:06:04.355 --> 00:06:06.015 An important date in the life 111 00:06:06.015 --> 00:06:08.615 of Paramount is the acquisition of the car 112 00:06:09.595 --> 00:06:14.095 by Viacom In 1993, Viacom is going 113 00:06:14.095 --> 00:06:18.695 to buy Paramount 50.1% of the shares 114 00:06:18.695 --> 00:06:22.495 for $10 billion to then the value of the companies 115 00:06:22.495 --> 00:06:25.655 between nine and 10 billion for 100% of the shares 116 00:06:26.035 --> 00:06:29.935 and Viacom is the CBS enterprises. 117 00:06:30.155 --> 00:06:33.815 The companies in charge of broadcasting CBS is in charge 118 00:06:33.815 --> 00:06:36.575 of also managing channels such as Nick Ode 119 00:06:37.435 --> 00:06:40.615 and a very famous editor Simon and Schuster. 120 00:06:40.615 --> 00:06:43.815 Simon and Schuster was sold quite recently by Paramount 121 00:06:44.435 --> 00:06:46.775 to reduce the debt of the cab cheese too high 122 00:06:46.965 --> 00:06:50.335 with this za there in 2000, Viacom is going 123 00:06:50.335 --> 00:06:53.735 to buy its parent company CBS. 124 00:06:53.885 --> 00:06:55.495 They're going to run the business 125 00:06:55.775 --> 00:06:56.935 together during a few years. 126 00:06:57.345 --> 00:07:01.495 There will be a split de merge in 2005 then 127 00:07:01.855 --> 00:07:05.815 stabilization, then they merge again in 2019. 128 00:07:05.875 --> 00:07:08.255 She says, well, when you look at the graph of the evolution 129 00:07:08.255 --> 00:07:12.735 of revenues of paramount in a long term, starting in 1980, 130 00:07:13.475 --> 00:07:14.775 it looks a little bit strange 131 00:07:14.775 --> 00:07:16.215 because at the very beginning it's only 132 00:07:16.215 --> 00:07:17.535 about film production. 133 00:07:18.085 --> 00:07:22.895 Then acquisition by Viacom stabilization, Viacom 134 00:07:23.155 --> 00:07:26.815 by CBS then splits, then mergers. 135 00:07:27.355 --> 00:07:30.095 You understand that to build consistent series 136 00:07:30.215 --> 00:07:33.415 of data in total to make some financial analysis is limited. 137 00:07:34.835 --> 00:07:36.895 But today the revenues, 138 00:07:36.895 --> 00:07:40.815 the annual revenues happen is $30 billion. 139 00:07:41.225 --> 00:07:44.215 We'll discuss the split in a few minutes now. 140 00:07:44.315 --> 00:07:49.015 Viacom is the work of a man whose name is signer Ray Stone, 141 00:07:50.055 --> 00:07:52.055 a personality, a character. 142 00:07:52.415 --> 00:07:55.695 I would say he was born in 1923 143 00:07:55.955 --> 00:07:59.975 and he passed away in 2020 at the age of 97. 144 00:08:00.315 --> 00:08:03.215 In fact, he was absolutely convinced that he would never die 145 00:08:03.685 --> 00:08:07.135 because in his life he experienced a very dramatic moment 146 00:08:07.925 --> 00:08:09.935 when he was about to die 147 00:08:10.275 --> 00:08:12.935 and he recovered kind of miracle. 148 00:08:14.005 --> 00:08:17.215 This is why in 2014 he's interviewed 149 00:08:17.235 --> 00:08:19.895 by journalist from the Hollywood reporter 150 00:08:20.675 --> 00:08:22.695 and the journalist says, uh, Mr. 151 00:08:23.035 --> 00:08:27.135 Reston, you are 91 years old. What about your succession? 152 00:08:27.675 --> 00:08:30.535 And he says, there's no discussion about my succession. 153 00:08:30.835 --> 00:08:33.135 You know why I'm not going to die. 154 00:08:33.915 --> 00:08:36.895 And he's mentioning his diet, his very strict diet, 155 00:08:37.965 --> 00:08:42.215 GoGy berries, tomato juice, fish, and each 156 00:08:42.215 --> 00:08:45.335 and every day in evening a shot of vodka. 157 00:08:46.325 --> 00:08:48.335 Unfortunately it did not work 158 00:08:48.635 --> 00:08:52.895 and at the end he passed away in again 2020. 159 00:08:53.875 --> 00:08:56.365 He had a very turbulent times 160 00:08:56.985 --> 00:09:01.805 and he could have been a very important target for me too 161 00:09:02.355 --> 00:09:03.885 because of his turbulent times, 162 00:09:03.985 --> 00:09:06.525 but he was also very impetuous character. 163 00:09:06.705 --> 00:09:09.325 One day he sacked Tom crude. Why? 164 00:09:09.435 --> 00:09:12.005 Because he was a little bit disagreeing 165 00:09:12.035 --> 00:09:14.885 with his behavior in a TV show 166 00:09:15.425 --> 00:09:17.805 and he was upset by the fact that he was quite close 167 00:09:17.865 --> 00:09:19.085 to the Scientology 168 00:09:19.945 --> 00:09:24.365 and so he said him Some narrate though on the asset side has 169 00:09:24.365 --> 00:09:27.805 plenty of fantastic achievers, but there is liability. 170 00:09:27.935 --> 00:09:30.245 There is a failure. Somewhere at the very 171 00:09:30.245 --> 00:09:31.405 beginning he's a juris. 172 00:09:31.705 --> 00:09:33.525 He was educated as a jurist 173 00:09:33.625 --> 00:09:35.605 but he did not want to become a lawyer. 174 00:09:35.905 --> 00:09:37.605 He said, I don't want to observe. 175 00:09:38.085 --> 00:09:42.405 I want to act, create unproduced. And he created something. 176 00:09:42.405 --> 00:09:46.205 He was a co-creator of what is named the multiplexes. 177 00:09:46.585 --> 00:09:49.485 In fact, he gave the name of Multiplexes, 178 00:09:49.815 --> 00:09:52.125 which is a fantastic innovation in a cinema 179 00:09:52.785 --> 00:09:55.565 and he was always saying, content is king. 180 00:09:56.395 --> 00:09:58.605 This is why you can sack Tom Cruise. 181 00:09:59.145 --> 00:10:02.205 It is opinion even though it was the most bankable actor at 182 00:10:02.205 --> 00:10:04.005 that time because the scenario, 183 00:10:04.585 --> 00:10:06.445 the writing is more important than the 184 00:10:06.445 --> 00:10:07.725 player, than the actor. 185 00:10:07.725 --> 00:10:11.125 Content is king. In final we say cash is keying. 186 00:10:11.125 --> 00:10:12.885 It used to say contact is king. 187 00:10:13.665 --> 00:10:18.005 Now you Viacom in 1987, a very interesting period. 188 00:10:18.225 --> 00:10:21.205 We are in the middle of this decay of the emergence 189 00:10:21.205 --> 00:10:22.885 of the market for corporate control. 190 00:10:22.885 --> 00:10:26.085 Plenty of hostile takeover everywhere, finance 191 00:10:26.345 --> 00:10:27.565 by junk boats. 192 00:10:28.105 --> 00:10:30.725 The King of John Bolts is Michael Micken. 193 00:10:30.835 --> 00:10:34.085 He's a chief trader and a very well known person in the bag. 194 00:10:34.485 --> 00:10:37.765 DBL Drexel Bernham Lambert, DBL. 195 00:10:37.765 --> 00:10:40.285 Later on will fail, we go bankrupt 196 00:10:40.665 --> 00:10:43.485 and Michael Micken will have some difficulties with uh, 197 00:10:43.485 --> 00:10:46.965 justice about potential your training, 198 00:10:47.505 --> 00:10:51.805 but at that time it's a very famous process to raise 199 00:10:51.875 --> 00:10:55.045 that in order to buy companies host, I take over 200 00:10:55.645 --> 00:10:57.605 leverage buyout, it's going to be a great success. 201 00:10:58.545 --> 00:10:59.925 So that's about the achievement, 202 00:10:59.925 --> 00:11:01.125 but there is a very big failure. 203 00:11:01.595 --> 00:11:06.525 Something is emerging, which is about streaming digitization 204 00:11:07.185 --> 00:11:10.485 and you know what is going to completely fail the picture. 205 00:11:11.235 --> 00:11:13.805 It's going to be a very late start. 206 00:11:14.275 --> 00:11:15.725 When you are late you have 207 00:11:15.725 --> 00:11:19.165 to invest more than your competitors to start getting back 208 00:11:19.165 --> 00:11:22.565 to the state, getting back to the leadership position 209 00:11:23.145 --> 00:11:25.765 and in fact it was not a success at all. 210 00:11:26.615 --> 00:11:28.965 Today there are three segments at Paramount. 211 00:11:29.305 --> 00:11:31.965 One is a tv, media with television 212 00:11:31.965 --> 00:11:35.165 and cable networks streaming direct 213 00:11:35.165 --> 00:11:36.765 to customer is a second segment 214 00:11:36.785 --> 00:11:40.045 and third one is a very historical one about producing film, 215 00:11:40.515 --> 00:11:41.725 film entertainment. 216 00:11:42.905 --> 00:11:47.565 TV media is about CBS. It's about Paramount Media Network. 217 00:11:47.955 --> 00:11:52.445 It's about a very successful music TV channel, which is MTV 218 00:11:53.105 --> 00:11:56.605 Direct customer is streaming Paramount plus 219 00:11:57.425 --> 00:12:00.885 and very much focusing on sport, soccer, 220 00:12:01.715 --> 00:12:03.005 golf, et cetera. 221 00:12:03.915 --> 00:12:05.365 What about film and entertainment 222 00:12:05.585 --> 00:12:08.965 and outstanding chat along 10 common months? 223 00:12:10.955 --> 00:12:14.365 Some years ago Titanic for Gum Breakfast Act, 224 00:12:14.365 --> 00:12:15.725 funny which I already mentioned. 225 00:12:15.725 --> 00:12:20.125 The Godfather, I already mentioned Vertigo, H C**k, the man 226 00:12:20.225 --> 00:12:22.685 who shot Liberty Balance, one 227 00:12:22.685 --> 00:12:25.405 of the most prominent western movies, Raiders 228 00:12:25.405 --> 00:12:28.885 of Lost Ark in Indiana, Jones, et cetera, et cetera. 229 00:12:28.885 --> 00:12:31.525 So the catalog has a fantastic value, 230 00:12:32.825 --> 00:12:34.965 but about the production 231 00:12:35.185 --> 00:12:38.605 and about the revenues, it's not fantastic at all. 232 00:12:39.075 --> 00:12:41.845 When you look at the evolution of the revenues by segment, 233 00:12:42.035 --> 00:12:45.475 what you observe, two thirds of the 30 billion, 234 00:12:45.535 --> 00:12:49.235 so $20 billion are generated by TV media. 235 00:12:50.135 --> 00:12:53.275 It was a little bit up up to 2021 236 00:12:53.815 --> 00:12:56.195 and then it's gradually down 237 00:12:56.655 --> 00:13:00.755 and it's probably quite predictable that TV is not going 238 00:13:00.755 --> 00:13:02.995 to be the business of the next decade. 239 00:13:04.185 --> 00:13:05.475 What about production, 240 00:13:05.845 --> 00:13:07.515 field production, filament entertainment? 241 00:13:07.985 --> 00:13:09.035 It's quite stable. 242 00:13:09.615 --> 00:13:11.835 Pluses and minuses depending on the success 243 00:13:11.835 --> 00:13:13.515 of the films which are producing. 244 00:13:14.225 --> 00:13:18.995 What is one a unique source of growth is streaming 245 00:13:19.455 --> 00:13:23.995 and streaming is probably the future of the company in terms 246 00:13:23.995 --> 00:13:27.395 of revenues, but unfortunately so far as far 247 00:13:27.395 --> 00:13:29.995 as profitability is concerned, it's dramatic. 248 00:13:30.415 --> 00:13:34.275 If you look at the different EBITDA by segmenting percentage 249 00:13:34.275 --> 00:13:36.915 to revenues, what you observe is TV media 250 00:13:37.785 --> 00:13:41.355 ulus 2% in operating profitability each and every year. 251 00:13:42.145 --> 00:13:46.035 What about film? It's breakeven plus minus. 252 00:13:46.615 --> 00:13:49.635 And what about streaming? It's a source of losses. 253 00:13:50.615 --> 00:13:53.235 It is difficult to make the business grow. 254 00:13:53.295 --> 00:13:54.675 You have to invest a lot 255 00:13:55.175 --> 00:13:58.195 and as you have not yet achieved economies of scale, 256 00:13:58.495 --> 00:14:01.835 the EBITDA is a negative percentage to revenues 257 00:14:01.895 --> 00:14:04.035 and it's difficult to get to break even. 258 00:14:04.455 --> 00:14:07.435 Now in this business you have small competitors. 259 00:14:08.335 --> 00:14:12.715 One is Netflix, 260 million subscribers, 260 00:14:13.415 --> 00:14:16.635 33.7 billion of revenues 261 00:14:16.655 --> 00:14:19.915 and a profit almost $7 billion of profit. 262 00:14:20.815 --> 00:14:24.395 Number two, not that far in terms of number of subscribers, 263 00:14:24.775 --> 00:14:27.475 Disney with 200 million subscribers, 264 00:14:28.255 --> 00:14:30.355 but if you understand that you have to multiply 265 00:14:30.415 --> 00:14:33.555 by 1.3 the number of subscribers to move from Disney 266 00:14:33.735 --> 00:14:36.275 to Netflix, you have to multiply by 1.6 267 00:14:36.275 --> 00:14:40.115 to move from revenues, Disney revenues to Netflix revenues, 268 00:14:40.615 --> 00:14:44.235 and in fact the capital is generating only $20 billion 269 00:14:44.415 --> 00:14:47.195 of streaming revenues and losses. 270 00:14:47.975 --> 00:14:50.275 And that's one of the difficulties today of Disney. 271 00:14:50.665 --> 00:14:53.805 It's very difficult to break even in a streaming industry. 272 00:14:53.805 --> 00:14:57.205 Netflix, das, Disney, not yet. 273 00:14:57.515 --> 00:14:59.125 Paramount, definitely not. 274 00:14:59.435 --> 00:15:02.725 Paramount is just one third of Netflix in terms of number 275 00:15:02.725 --> 00:15:06.125 of subscribers and it's one third of Disney in terms 276 00:15:06.125 --> 00:15:08.645 of revenues, but it's not one third 277 00:15:08.825 --> 00:15:10.565 of the losses of this net. 278 00:15:10.875 --> 00:15:13.845 It's about 60% of the losses of this net 279 00:15:14.065 --> 00:15:16.965 and in fact the capital generating very big losses. 280 00:15:17.305 --> 00:15:19.005 Why? Because it's far behind 281 00:15:19.585 --> 00:15:22.765 and then you cannot amortize your fixed cost if the revenues 282 00:15:22.765 --> 00:15:25.845 are too low, even though you have a capitals quality is 283 00:15:26.325 --> 00:15:27.845 matching with Disney quality. 284 00:15:28.705 --> 00:15:31.845 That's really what is struggling at the moment for the C. 285 00:15:32.625 --> 00:15:35.165 Now if you go back to the evolution of revenues 286 00:15:35.165 --> 00:15:38.445 and ebitda, it's again quite difficult to analyze, 287 00:15:38.505 --> 00:15:41.485 but there is something which is absolutely sure the maximum 288 00:15:41.945 --> 00:15:45.045 EBITDA was generated in 2019 289 00:15:45.865 --> 00:15:49.245 and then starting in 2020 it collapsed. 290 00:15:49.545 --> 00:15:53.205 And today the ibitda is absolutely Neil. 291 00:15:54.605 --> 00:15:56.265 Now you see Ibitda is Neil. 292 00:15:56.525 --> 00:16:00.185 It means that the return on sales is absolutely zero, 293 00:16:00.525 --> 00:16:03.545 but you remember the DUP Paul in formula return capital 294 00:16:04.375 --> 00:16:05.945 ibit divided by capital 295 00:16:06.085 --> 00:16:09.145 and private is a combination of commercial profitability, 296 00:16:09.285 --> 00:16:11.265 return on sales multiplied by assets. 297 00:16:11.265 --> 00:16:15.065 Productivity return on sales is current EBIT 298 00:16:15.065 --> 00:16:16.425 divided by revenues. 299 00:16:16.425 --> 00:16:20.265 Current EBIT is EBIT without any extraordinary items 300 00:16:21.825 --> 00:16:22.945 multiplied by assets. 301 00:16:23.345 --> 00:16:25.665 Turnover assets. Turnover is revenues divided 302 00:16:25.805 --> 00:16:27.945 by invested capital, fixed assets 303 00:16:28.245 --> 00:16:29.905 and working capital requirement. 304 00:16:30.555 --> 00:16:32.585 Fixed assets are big for two reasons. 305 00:16:32.675 --> 00:16:36.025 First, you have plenty of intangible assets films. 306 00:16:36.365 --> 00:16:39.465 Second, because of acquisitions and so on and so forth. 307 00:16:39.485 --> 00:16:41.185 You also have plenty of good work. 308 00:16:41.565 --> 00:16:44.505 So interestingly, the assets turnover of the company 309 00:16:45.205 --> 00:16:46.225 is less than one. 310 00:16:46.335 --> 00:16:48.705 It's quite capital intensive business. 311 00:16:49.445 --> 00:16:51.345 So at first, like if you look at the commercial 312 00:16:51.345 --> 00:16:53.065 profitability, you're going to say, well, 313 00:16:53.335 --> 00:16:54.465 it's quite volatile 314 00:16:54.465 --> 00:16:56.825 because the business is quite volatile by itself, 315 00:16:57.205 --> 00:17:00.905 but the maternal sales is within a range which is 10 to 20%. 316 00:17:01.325 --> 00:17:03.425 It looks okay, it looks okay, 317 00:17:03.425 --> 00:17:05.505 but return on sales is not return capital 318 00:17:06.045 --> 00:17:08.425 and return on sales by 0.4 319 00:17:08.445 --> 00:17:11.225 to one is less than the return on sales. 320 00:17:11.365 --> 00:17:14.785 And then the the return capital is not outstanding 321 00:17:15.765 --> 00:17:18.905 and during the last years it is not outstanding. 322 00:17:19.245 --> 00:17:21.545 It is collapsing, declining. 323 00:17:21.645 --> 00:17:25.185 And today return capital is near you. 324 00:17:25.545 --> 00:17:27.465 Remember that there is a strong correlation 325 00:17:27.465 --> 00:17:30.385 between economic performance return capital employed 326 00:17:30.805 --> 00:17:32.665 and relative value creation. 327 00:17:33.285 --> 00:17:34.705 We calculate the market book, 328 00:17:34.705 --> 00:17:37.585 which is enterprise value divided by capital employed, 329 00:17:38.365 --> 00:17:40.785 but the price value is market capitalization. 330 00:17:40.785 --> 00:17:43.825 Market value equity plus net debt 331 00:17:44.325 --> 00:17:45.865 and capital employed is the amount 332 00:17:45.865 --> 00:17:47.865 of money which we invested in business operations. 333 00:17:48.645 --> 00:17:50.965 Now the evolution of market to book is the evolution 334 00:17:50.965 --> 00:17:52.605 of your stock market credibility 335 00:17:52.905 --> 00:17:55.085 and there's a strong correlation between the Rosie 336 00:17:55.185 --> 00:17:56.205 and market to book 337 00:17:56.205 --> 00:17:59.685 because what drives value creation relative 338 00:17:59.685 --> 00:18:02.605 and absolute value creation is the economic performance. 339 00:18:03.265 --> 00:18:06.925 And it's true for any company including paramount, 340 00:18:07.505 --> 00:18:09.125 it you observe in the long term. 341 00:18:09.275 --> 00:18:13.125 This coronation, it works very well and for today it works. 342 00:18:13.125 --> 00:18:15.605 During the last years, the process collapsing, 343 00:18:15.605 --> 00:18:17.005 the market will is collapsing. 344 00:18:17.345 --> 00:18:20.245 The stock price is dramatically declining. 345 00:18:21.185 --> 00:18:22.205 If you look at the evolution 346 00:18:22.205 --> 00:18:24.765 of the stock price throughout the years, you understand 347 00:18:24.765 --> 00:18:28.045 that there was a period up to 2014, 348 00:18:28.425 --> 00:18:29.805 the stock price went up 349 00:18:30.225 --> 00:18:34.525 and then it stabilized with some volatility, it went down 350 00:18:35.445 --> 00:18:38.925 dramatic drop because of covid, then up because of streaming 351 00:18:38.985 --> 00:18:42.205 and then down in the meantime the nasda, 352 00:18:42.665 --> 00:18:45.165 the stock market index is up. 353 00:18:45.625 --> 00:18:48.765 But important, the paramount is absolutely not correlated at 354 00:18:48.765 --> 00:18:51.285 that time with the NASDAQ and it's falling. 355 00:18:51.715 --> 00:18:52.965 It's interesting to observe 356 00:18:52.965 --> 00:18:54.845 what the capital is doing with its cash. 357 00:18:55.795 --> 00:18:58.325 When you generate cash you can invest in 358 00:18:58.385 --> 00:19:00.205 or you can return at least part of it 359 00:19:00.205 --> 00:19:01.965 to your below shareholders. 360 00:19:02.755 --> 00:19:06.565 What happened during the period 2013 to 2023, 361 00:19:07.145 --> 00:19:11.085 the company returned $4.7 billion under the flow 362 00:19:11.145 --> 00:19:14.645 of dividends, but the company bought back its shares 363 00:19:14.705 --> 00:19:17.325 for $14.3 billion. 364 00:19:17.985 --> 00:19:20.565 You make the sum and you get 19 billion. 365 00:19:20.705 --> 00:19:24.405 So they return to shareholders, $19 billion cash 366 00:19:25.045 --> 00:19:26.405 dividend and share buyback. 367 00:19:26.905 --> 00:19:29.845 In the many times there was a capital increase in 2021 368 00:19:29.845 --> 00:19:31.805 because the cap had to reduce its debt. 369 00:19:32.185 --> 00:19:35.405 So the net shareholder return, shareholder return net 370 00:19:35.465 --> 00:19:37.885 of capital increase is 16 billion. 371 00:19:38.545 --> 00:19:42.045 So it's about $16 billion in the pocket of the shareholders. 372 00:19:42.105 --> 00:19:44.165 But what about evolution of the market? 373 00:19:44.225 --> 00:19:48.005 Capitalization of the capital, number of shares multiplied 374 00:19:48.105 --> 00:19:49.125 by stock price? 375 00:19:49.475 --> 00:19:52.605 Well, in 2013 the market capitalization was about 376 00:19:52.605 --> 00:19:54.325 38, 30 9 billion. 377 00:19:55.225 --> 00:19:59.885 And in 2024 today it's about nine to 10 billion. 378 00:20:00.705 --> 00:20:04.405 So the delta has a difference is $29 billion. 379 00:20:04.505 --> 00:20:07.965 So the market cap went down by $29 billion. 380 00:20:08.425 --> 00:20:10.925 So on the one hand you return 16 billion. 381 00:20:11.345 --> 00:20:14.405 On the other hand the wealth is down by 29, 382 00:20:14.825 --> 00:20:18.805 the net loss in terms of shareholder value creation, 383 00:20:19.105 --> 00:20:22.845 the net loss for the shareholders is $13 billion. 384 00:20:24.015 --> 00:20:27.745 This is what happens by the way, when you return the cash 385 00:20:27.745 --> 00:20:31.305 to shareholders instead of investing in the developed bond 386 00:20:31.325 --> 00:20:33.705 and the sustainability of your business operations. 387 00:20:33.805 --> 00:20:35.705 Now when you return the cash to the shareholders, 388 00:20:35.775 --> 00:20:37.425 what happens to your financial structure? 389 00:20:38.295 --> 00:20:39.985 Cash out debt is up. 390 00:20:40.645 --> 00:20:44.225 So gearing debt divided by equity is quite up 391 00:20:44.725 --> 00:20:46.985 and debt divided by EBITDA is named. 392 00:20:47.045 --> 00:20:49.165 The financial leverage is also up. 393 00:20:49.905 --> 00:20:53.325 The financial leverage is how many euro of EBIT tax 394 00:20:53.385 --> 00:20:56.805 to repairs the loan, which is a favorite scoring ratio, 395 00:20:56.805 --> 00:20:58.485 ratio and indicator for the banks 396 00:20:58.705 --> 00:21:00.245 and for the rating in geneid. 397 00:21:00.305 --> 00:21:04.085 By the way, now only the EBIT dies down if you have debt, 398 00:21:04.425 --> 00:21:07.445 the debt to EBITDA is mechanically up 399 00:21:08.225 --> 00:21:12.205 and as far as her amount is concerned to the EBITDA is meal. 400 00:21:12.545 --> 00:21:16.485 So the leverage is infinite, but the year before it was 12 401 00:21:16.625 --> 00:21:18.365 and the year before it was eight. 402 00:21:19.065 --> 00:21:21.725 So you understand that the financial leverage, 403 00:21:21.785 --> 00:21:24.005 the financial structure of the company is 404 00:21:24.195 --> 00:21:25.685 extremely aggressive. 405 00:21:26.065 --> 00:21:27.245 Why? Not? 406 00:21:27.245 --> 00:21:28.805 Because they invested but 407 00:21:28.805 --> 00:21:30.725 because they return the cash to the shareholders. 408 00:21:31.465 --> 00:21:34.085 The rating engine says they don't like that very much. 409 00:21:34.905 --> 00:21:36.205 In March this year, 410 00:21:36.455 --> 00:21:41.205 standalone pulls downgraded the company from triple B minus 411 00:21:41.865 --> 00:21:45.125 to double B plus is just one notch, 412 00:21:45.145 --> 00:21:46.645 but a very important notch 413 00:21:46.645 --> 00:21:49.485 because you move from investment grade to speculative grade. 414 00:21:50.265 --> 00:21:52.125 So the cost of that is going to be higher. 415 00:21:52.585 --> 00:21:54.765 And if you want to renew your debt, it's going 416 00:21:54.765 --> 00:21:56.885 to be a tough job because the liquidity is 417 00:21:56.885 --> 00:21:58.285 collapsing with a rating. 418 00:21:59.505 --> 00:22:02.845 Stable perspective is good news, but that's it. 419 00:22:03.035 --> 00:22:04.045 What about Fitch? 420 00:22:04.215 --> 00:22:06.285 Fitch keeps the triple B minus, 421 00:22:07.065 --> 00:22:11.125 but downgrades the perspective from stable to negative. 422 00:22:11.185 --> 00:22:14.205 So the rating agencies are not convinced 423 00:22:14.205 --> 00:22:16.965 that the company is in a very good situation as far 424 00:22:17.145 --> 00:22:19.805 as bonds, as far as debt is concern. 425 00:22:20.985 --> 00:22:24.005 Now today the person who is in charge of the company 426 00:22:24.145 --> 00:22:28.165 who owns the cannot company is the daughter of Sunner, 427 00:22:28.165 --> 00:22:30.165 Redstone, Sherry Redstone. 428 00:22:30.425 --> 00:22:33.925 And the question is what do you do in such a situation? 429 00:22:33.945 --> 00:22:37.845 You can try to bounce it back or you try to sell 430 00:22:38.105 --> 00:22:40.845 and if you want to sell, are you going to sell pieces 431 00:22:41.015 --> 00:22:44.285 after pieces or are you going to sell as a block? 432 00:22:44.825 --> 00:22:47.285 Do you accept the dismantling of the group? 433 00:22:47.705 --> 00:22:50.045 And in fact she says, I don't want to dismantle 434 00:22:50.115 --> 00:22:52.445 what my father did and so on so forth. 435 00:22:52.745 --> 00:22:54.605 But at the end of the day you have 436 00:22:54.605 --> 00:22:56.205 to accept the market as it is. 437 00:22:57.335 --> 00:23:01.155 Now the question is what do you sell when you sell Paramount 438 00:23:01.735 --> 00:23:04.275 and then you have to deep dive into the shareholding 439 00:23:04.515 --> 00:23:05.555 structure of the company. 440 00:23:05.725 --> 00:23:08.875 There are 653 million shares outstanding. 441 00:23:09.015 --> 00:23:12.355 So standing out of the company existing shares minus 442 00:23:13.155 --> 00:23:16.115 treasury stock, and you remember the company bought 443 00:23:16.115 --> 00:23:17.315 back plenty of it stock. 444 00:23:17.815 --> 00:23:19.035 But what is interesting is 445 00:23:19.035 --> 00:23:21.355 that there are two categories of shares. 446 00:23:21.715 --> 00:23:26.035 A shares B shares A shares just 41 million shares, 447 00:23:26.695 --> 00:23:28.555 one voting right per share. 448 00:23:29.395 --> 00:23:34.275 B shares 612 million shares, no voting rights at all. 449 00:23:34.735 --> 00:23:37.475 So you understand that the power is concentrated into 450 00:23:37.535 --> 00:23:38.635 the A shares. 451 00:23:40.055 --> 00:23:43.595 Mrs. Reon owes a company which is a family holding 452 00:23:44.215 --> 00:23:49.085 and which is near National Amusement Incorporated NI. 453 00:23:49.865 --> 00:23:52.085 She holds 100% of NI 454 00:23:52.345 --> 00:23:56.805 and NI holds 77.4% 455 00:23:56.905 --> 00:24:00.165 of PERS A shares at Thes a day. 456 00:24:00.275 --> 00:24:02.365 77.4% 457 00:24:02.365 --> 00:24:06.685 of AHA is about 31.7 million shares out 458 00:24:06.685 --> 00:24:11.605 of 653 it's about 5% of the total number of shares. 459 00:24:12.305 --> 00:24:14.885 But if you have 5% of the shares, 460 00:24:15.265 --> 00:24:18.405 you have 77.4% of the voting right? 461 00:24:18.545 --> 00:24:21.165 It looks like Snapchat in some sense. 462 00:24:21.465 --> 00:24:24.285 Now they have always been discussions about selling 463 00:24:24.425 --> 00:24:25.725 or not selling Paramount, 464 00:24:25.785 --> 00:24:28.845 but it seems that the story is accelerating at the moment. 465 00:24:29.305 --> 00:24:32.565 Offers have been accelerating since January. 466 00:24:33.275 --> 00:24:34.725 January 31. 467 00:24:35.295 --> 00:24:39.325 Allen Media Group makes an offer for enterprise value. 468 00:24:39.515 --> 00:24:43.325 Capital employed $30 billion on the stock market. 469 00:24:43.385 --> 00:24:46.245 The enterprise value at that time is 24 billion. 470 00:24:46.425 --> 00:24:47.725 So there's a premium, 471 00:24:48.785 --> 00:24:52.445 but uh, nobody is really sure about he the company is going 472 00:24:52.445 --> 00:24:53.805 to be able to finance 473 00:24:54.385 --> 00:24:57.405 and he says, oh, CA will be some named 474 00:24:58.085 --> 00:25:00.365 Strategic Partners, not that series. 475 00:25:01.125 --> 00:25:03.285 February 16, the announcement of a joint venture 476 00:25:03.395 --> 00:25:07.365 with Comcast Peacock in order to boost revenues 477 00:25:07.385 --> 00:25:08.925 and iCal scale. 478 00:25:09.625 --> 00:25:13.765 The first very serious offer is going to come from Apollo, 479 00:25:13.825 --> 00:25:15.645 the private investment firm. 480 00:25:16.065 --> 00:25:20.485 So Apollo one, March 23, it's got 481 00:25:20.485 --> 00:25:23.925 to be $11 billion but only for film 482 00:25:24.305 --> 00:25:28.725 and TV studios, not for TV media, not 483 00:25:28.745 --> 00:25:30.005 for the streaming activity. 484 00:25:30.305 --> 00:25:33.165 So it's an offer to dismantle the company. 485 00:25:33.475 --> 00:25:36.405 It's going to be rejected a few days later, 486 00:25:36.665 --> 00:25:38.845 the 31st of March, April over two. 487 00:25:39.585 --> 00:25:44.045 Now it's about 27 billion cash for Paramount Global 488 00:25:44.785 --> 00:25:48.205 all in one interesting moment on the 3rd of April 489 00:25:48.205 --> 00:25:51.045 and the KA is going to announce exclusive discussions 490 00:25:51.045 --> 00:25:52.885 with Skydance Media. 491 00:25:53.925 --> 00:25:55.965 Skydance Media is a company which was created 492 00:25:56.105 --> 00:26:00.965 by David Ellison, Larry Ellison's son, Larry Ellison. 493 00:26:00.965 --> 00:26:05.805 You remember Rockle founder and extremely wealthy person. 494 00:26:06.625 --> 00:26:08.125 But what is the deal about? 495 00:26:08.395 --> 00:26:12.525 It's about the acquisition of the shares, which are held 496 00:26:12.625 --> 00:26:15.245 by Share Range Stone in NI. 497 00:26:16.105 --> 00:26:19.845 So he's going to buy NI for $2 billion, 498 00:26:21.295 --> 00:26:23.195 not Paramount, just NI. 499 00:26:23.585 --> 00:26:26.595 Then there will be a share exchange between Paramount 500 00:26:26.655 --> 00:26:30.035 and Skydance, and Skydance is then valued at four 501 00:26:30.095 --> 00:26:34.895 to $5 billion with SCD Density is not a listed company. 502 00:26:35.045 --> 00:26:37.815 It's absolutely private, not liquid at all, 503 00:26:37.835 --> 00:26:39.775 and nobody knows exactly what is inside. 504 00:26:40.715 --> 00:26:43.565 And in addition to that, there will be a contribution, 505 00:26:44.105 --> 00:26:45.245 but to be defined 506 00:26:45.245 --> 00:26:49.245 and precise from Skylines to reduce the debt of Paramount 507 00:26:49.595 --> 00:26:53.325 with an amount of one, two or $3 billion. 508 00:26:54.345 --> 00:26:56.085 That's quite strange as a proposal, 509 00:26:56.505 --> 00:26:57.725 but the market will like it 510 00:26:58.105 --> 00:27:01.165 and the Paramount price is going to move up from 12 511 00:27:01.385 --> 00:27:04.405 to $13.50 per share. 512 00:27:05.225 --> 00:27:06.725 It is a market likes it. 513 00:27:06.785 --> 00:27:09.925 The minority shareholders of Angry High are 514 00:27:10.525 --> 00:27:12.525 absolutely outraged out of this offer. 515 00:27:13.215 --> 00:27:14.845 Let's make a Singapore calculation. 516 00:27:15.185 --> 00:27:18.405 31.7 million listed shares, 517 00:27:19.205 --> 00:27:23.205 B shares are worth $413 million. 518 00:27:24.065 --> 00:27:27.805 You see multiplies this figure by $13.50 per share, 519 00:27:28.625 --> 00:27:32.965 but for the 31.7 million shares owned 520 00:27:33.105 --> 00:27:37.605 by an AI share restaurant is going to be offered $2 billion. 521 00:27:37.825 --> 00:27:40.885 The difference between A and B shares are voting rights. 522 00:27:41.145 --> 00:27:42.805 So what makes a difference is the value 523 00:27:42.805 --> 00:27:43.885 of the voting rights. 524 00:27:44.025 --> 00:27:47.485 So 2 billion minus 400 million is 1.6 billion, 525 00:27:47.975 --> 00:27:50.205 which is four times the value 526 00:27:50.425 --> 00:27:52.845 of the stocks without voting, right? 527 00:27:52.875 --> 00:27:56.685 It's absolutely unbelievable is surrealistic. 528 00:27:57.195 --> 00:28:00.485 It's definitely over evaluation of voting rights 529 00:28:00.585 --> 00:28:04.725 and very largely there is also over evaluation of guidance. 530 00:28:05.645 --> 00:28:07.805 Guidance is concurring liquidity. 531 00:28:08.275 --> 00:28:12.085 It's a private company which goes listed simply exchanging 532 00:28:12.225 --> 00:28:14.325 shares between Paramount and Sky. 533 00:28:14.985 --> 00:28:17.525 And so it's going to be considered as a scandal 534 00:28:17.705 --> 00:28:20.245 by the minority shareholders of the A shares 535 00:28:20.425 --> 00:28:23.045 and they are going to bring the story to the court. 536 00:28:23.505 --> 00:28:25.445 In the meantime, there were a few accidents. 537 00:28:25.825 --> 00:28:27.325 The CEO of Paramount. 538 00:28:27.465 --> 00:28:30.485 Bob Batch was not that much in favor 539 00:28:30.505 --> 00:28:31.845 of the deal with guidance. 540 00:28:32.435 --> 00:28:35.765 Expressed some reservations about the deal 541 00:28:36.105 --> 00:28:40.245 and it was ousted by Sher Redstone on the 29th of April. 542 00:28:41.085 --> 00:28:42.885 A few other people left at that time. 543 00:28:42.885 --> 00:28:45.005 There were a few resignations from the board 544 00:28:45.005 --> 00:28:48.645 because at the end of the test deal is simply an acceptable, 545 00:28:48.935 --> 00:28:51.285 which has the latest news about the deal. 546 00:28:51.855 --> 00:28:54.965 There was a period of one month for exclusive discussions, 547 00:28:55.505 --> 00:28:57.285 end of exclusive negotiations, 548 00:28:58.065 --> 00:29:00.765 but we continue, we keep all the discussion 549 00:29:00.795 --> 00:29:02.205 with guidance and so on. 550 00:29:02.205 --> 00:29:05.485 So first the price is down from 13.5 551 00:29:05.505 --> 00:29:08.925 to $13 per share on the 3rd of May, apple low. 552 00:29:09.025 --> 00:29:11.405 Number three, there is another offer, 553 00:29:11.505 --> 00:29:13.245 but not Apollo by itself, 554 00:29:13.545 --> 00:29:16.805 but Apollo together with so pictures 555 00:29:17.425 --> 00:29:21.165 and then make an offer again in cash, not 27 billion, 556 00:29:21.305 --> 00:29:22.605 but 26 billion. 557 00:29:23.505 --> 00:29:27.485 And what is of interest for Sonic Pictures? The catalog. 558 00:29:28.785 --> 00:29:32.845 So definitely behind this acquisition there might be a kind 559 00:29:32.845 --> 00:29:37.005 of bracket, dismantling the catalog of fields might go 560 00:29:37.005 --> 00:29:38.085 to Summit pictures 561 00:29:38.665 --> 00:29:41.525 and probably Apollo would get the rest of it. 562 00:29:42.565 --> 00:29:43.835 These are the latest news. 563 00:29:44.175 --> 00:29:46.675 But when you look at the information of the stock price, 564 00:29:47.215 --> 00:29:50.075 the rhythm of the volution of the stock price is the rhythm 565 00:29:50.135 --> 00:29:54.155 of the offers made by the different actors on this stage, 566 00:29:54.405 --> 00:29:57.595 which is absolutely unbelievable when you observe that 567 00:29:58.705 --> 00:30:01.765 at the end of the day, we are at 13 568 00:30:02.745 --> 00:30:06.165 and two years ago we were in May, 2022. 569 00:30:06.305 --> 00:30:07.845 The price was not 13, 570 00:30:08.265 --> 00:30:11.645 it was $34 per share. 571 00:30:12.305 --> 00:30:14.965 So a number of investors are quite disappointed 572 00:30:15.265 --> 00:30:20.005 by the evolution in terms of shareholders value creation. 573 00:30:20.785 --> 00:30:22.685 In the list you have Warren Buffet, 574 00:30:22.795 --> 00:30:27.045 Berkshire Hadaway owes something like 10% of the shares. 575 00:30:27.245 --> 00:30:31.125 I said I lost a lot of money out of that. Why? 576 00:30:31.195 --> 00:30:33.925 Because the company failed the streaming. 577 00:30:34.195 --> 00:30:35.605 They started very late. 578 00:30:36.235 --> 00:30:38.605 They have the assets, they hold the assets, 579 00:30:38.605 --> 00:30:39.925 they have the catalog of it, 580 00:30:39.925 --> 00:30:41.805 which is absolutely prestigious, 581 00:30:42.305 --> 00:30:45.085 but by the end of the day you have to invest if you want 582 00:30:45.085 --> 00:30:48.125 to get back to the league on the tier one league. 583 00:30:48.585 --> 00:30:51.365 But if instead of doing that, you return the cash 584 00:30:51.365 --> 00:30:52.525 to shareholders, what happens? 585 00:30:53.105 --> 00:30:55.365 You don't invest, you return the cash 586 00:30:56.385 --> 00:30:59.325 and it does not create any value for the shareholders. 587 00:31:01.105 --> 00:31:03.825 Remember this sentence which I quote so often, 588 00:31:04.255 --> 00:31:08.185 Jeff Bezos annual report, Amazon each and every year. 589 00:31:08.285 --> 00:31:10.985 Letter to the shareholder, we will continue 590 00:31:10.985 --> 00:31:14.905 to make investment decisions in light 591 00:31:14.905 --> 00:31:18.545 of long-term market leadership considerations. 592 00:31:19.525 --> 00:31:22.025 And in fact, paramount lost this target 593 00:31:22.365 --> 00:31:24.385 of long-term market leadership. 594 00:31:25.055 --> 00:31:28.385 They looked at short term stock market considerations, 595 00:31:28.385 --> 00:31:29.945 such had maybe profit, 596 00:31:30.125 --> 00:31:33.625 but certainly shareholders return returning the cash 597 00:31:33.625 --> 00:31:36.985 to the shareholders and they miss the target of investing 598 00:31:37.125 --> 00:31:39.025 for the sustainability of the business. 599 00:31:39.685 --> 00:31:41.225 At the end of the day, you destroy 600 00:31:41.225 --> 00:31:42.265 value for the shareholders. 601 00:31:43.425 --> 00:31:44.175 Thank you very much.