00:00:05 Seana Smith

Now time for some of today's trending tickers. We're watching Roku and Warner Brothers Discovery and joining me now is host of Morning Brief, Brad Smith. So first up, Roku announcing an exclusive partnership with Amazon ads to create the largest authenticated connected TV footprint in the US. That means everyone viewing content on Amazon and Roku systems and devices will be included in this pool. That gives advertisers access to around 80 million US households, according to the company. So Brad, obviously a huge play for Roku. We're seeing shares rise significantly off of this news team with Amazon, and it's interesting because usually in an environment where you have macro concerns, advertising is the first to go. So a little bit of risk there associated with Roku, but at this point, it seems like there's a lot of tailwinds for this company.

00:01:08 Brad Smith

Well, you talk about one of the fast growing parts of Amazon that actually doesn't get enough recognition within that advertising business. And so for the past few years, they've been making some strategic inroads. And I think this also signals how they want to be in more of the direct to consumer content hub in order to make sure that they're continuing to have partnerships that ultimately plunge them further into connected TV households. They mentioned that within this release as well, new collaboration delivering logged-in reach to an estimated 80 million US connected TV households, representing more than 80% of the US CTV households according to Comscore data here as well. And then they also had some early tests of the integration. They say that that showed some significant results. Advertising advertisers using this new solution reached 40% more unique viewers with the same budget and reduced how often the same person saw an ad because how much do you get annoyed when you see the same ad over and over and over and over again. So reducing how often the same person sees an ad by nearly 30% and enabling advertisers to benefit from three times more value on their ad spend, which is something that advertisers and marketers want to.

00:03:29 Seana Smith

And it's interesting because before this move higher today, Roku shares are pretty much flat year to date. Now they're up 9%. Thanks for the 9% gain that we're seeing here. So another space to continue to watch and track. But moving on, bond holders at Warner Brothers Discovery approving plans to split the company, dividing the streaming and studios arm from the cable networks. Bond holders also voted to buy back $37 billion in debt that came with the 2022 WBD merger. And Brad, I mean, this entire split announcement has just been so fascinating to me because it wasn't that long ago that we had this merger. And now that we're seeing this separation, it's basically CEO David Zaslov's admission that that merger did not work. And you're seeing shares, you know, rise on this news. The big question, though, is who are the buyers going to be? How is the market ultimately going to receive this?

00:04:49 Brad Smith

You know, this is where we're talking with some of the analysts, especially within this industry about how many companies are thinking about the sum of their parts right now. And for this particular move to separate Warner Brothers Discovery into what they call two leading media companies here, streaming in studios being on one side here, and just to reiterate to those who did not see the news or us talk about the news last week, streaming in studios is going to be Warner Brothers Television, Warner Brothers Motion Picture, DC Studios, HBO HBO Max, plus some of the film and television libraries where on the other side, Global Networks is going to be some of the premier entertainment sports news television and then brands around CNN, TNT Sports, US and Discovery. And so all of those things considered, if you think about how each of these businesses and the direct-to-consumer entertainment environment is using Netflix as the North Star on the streaming side, we had seen that really leveraged in some of the activist campaigns that made their way towards another entity in the house of mouse over at Disney. And so even as you're trying to extract even more value from your end users, it's really talking and really a nod to how the sum of the parts can create even more strength potentially in the form of making sure that you gets to a point where you're not having to rely on one part of the business to continue to fund a different part of the business in hopes of reaching those margins knowing that the profiles of them are vastly different and they should be valued as such.

00:06:52 Seana Smith

And you brought up a good point with Netflix. I don't think it would be surprising to see a lot of these legacy players try and join forces to compete against Netflix, which clearly is the cream of the crop and we think about content. I do think the linear network side probably will be bought by private equity, but the media side of the business, I think maybe a Comcast could come in here, who knows.

00:07:17 Brad Smith

Do you think we could see a mega team like we saw with the NBA, the hey day of the mega teams?

00:07:24 Seana Smith

Maybe, I mean, I wouldn't be surprised. I mean, Netflix, everyone talks about it being number one. So what do you do to compete against number one?

00:07:34 Brad Smith

We'll watch.

00:07:35 Seana Smith

You have to, if you can't beat them, you know, you join forces, I guess. But Brad Smith, thank you so much. And you can scan the QR code below to track the best and worst performing stocks of the session with Yahoo Finance's trending tickers page.