Street growing impatient with media companies shifting to streaming, says media mogul Tom Rogers

There’s of Warner Brothers Discovery rising 3% today, the media giant reporting growth in its streaming business, though it did post a bigger than expected loss for the first quarter. Revenues also coming in soft. The earnings report coming a day after WBD and Disney announced they are bundling their streaming offerings reminiscent of old school cable TV packages. No word on pricing, though. The package will be available this summer. For more on the state of the streaming space, let’s bring in CNBC contributor Tom Rogers, former NBC cable president. He is now executive chairman at Orbit Gaming and Entertainment. Tom, always great to see you, particularly in person. Welcome. Thanks for having me. So for a long time, you’ve been saying that Netflix is the winner of the streaming war. So this week and all the earnings reports, they may prove that. Who can be #2 though? Well, that’s a a great question, but I think the Disney earnings report showed that Disney really hit a milestone. That takes away a lot of the skepticism I have had about Disney. You know, I’ve been cynical about Disney and always saying, hey, don’t just look at the sub growth on streaming, think about the linear business and its decline. But what happened? And no analysts really pointed to this, which was surprising to me for the for the first time you can see that the revenues of its streaming business are now as big as its traditional TV linear business. They have kind of hit equilibrium. They’re doing run rate 25 billion in revenue just about on the streaming side. Now they obviously have margin issues and profitability to prove and the entertainment pieces, Disney Plus and Hulu did hit profitability. But that’s the kind of scale you need to be able to show that the streaming growth can make up for the whole on the linear side of the equation, which is going to continue to be dug deeper. So when you say that the earnings report changed how negative you’ve been, how do you feel about Disney now? Do you feel good about that? I mean they’re on the right path. They’re they can make this work. Well, they they got a lot of challenges. Still, Hulu is a is a problem child. No doubt. It’s Subs have kind of stalled. Amazingly, even though it’s the granddaddy of ad tier streaming, its advertising actually declined and it’s done so for several quarters, which is a bit perplexing. But Disney, when you take away the duplication of ESPN Plus, Disney Plus and Hulu, has about 77 million unique users in the United States, which is about what Netflix has. So if you believe that Netflix is going to be in just about all streaming homes, you’d have to put Amazon in there too, because so many people get it for free. Now if you take the ad tier, Disney with those kind of numbers really looks like it has a claim for #3. And the problem is what hasn’t budged is it doesn’t look like consumers are taken more on average than four streaming services. So if three slots are taken, that really creates a lot of competition about who’s going to be in there for #4. If you look five years out, all these companies are probably going to make it, but the near term transition which is really hard for these public companies to face really looks tough and that four spot is the one that really creates all kinds of issues for the other streamers. So you mentioned the the granddaddy, I mean you being the godfather and you’re you’re playing the role of kind of what we do here. I mean that you’re calling Disney is is particularly interesting given where the analyst community was very negative. So let’s put you in your analyst chair and and ask you back on the one that you’ve loved. I mean the story at Netflix, the drivers now are what because you know, free cash flow could be, you know, you could have free cash flow percentage of, you know, north of 20%. You have a dynamic here where they have pricing power. What’s what’s the driver to the multiple? Do you see, we know they’ve won, they’ve won that, they’ve won the battles and the war so far. Well, I think that Netflix which not long ago people were saying hey this thing will never generate cash flow as you say is generating a lot of cash flow and it’s margins are increasing and they just up their guidance on their on their margins. So it’s in a category by itself. I always say the crown as a program may be over, but it has been crowned the most successful media company and most valuable and it will continue and the international story I think is the one to watch. They have 270 million Subs. They’re in 190 countries. They got a lot of running room internationally to grow. They have a unique programming development opportunity relative to the others in terms of the amount of local programming in other countries that they do that they’ve been able to import to the United States and elsewhere and make that successful on a global basis. And I think that formula has a lot of running room, not to mention they’re growing an ad tier and in the ad business now is very small, but that has real potential as well.