 Hi everyone, thank you for coming today. I'm here to talk about where TV is going from here. I think there's a lot of change going on in the industry. I would love to talk about it. So where does TV go from here? The industry is in a huge state of disruption. Let's begin with some examples. Last month, the $85 billion acquisition of Time Warner by AT&T was blocked. Regulators cited that it was not in public interest. Indeed, the merger would have made AT&T not only one of the largest telcos, but it also has satellite distribution by a direct television. And then it would have been owners of content spanning from the Sopranos to Wonder Woman to Harry Potter to Game of Thrones, plus famously, if you've been following our president Tweet, CNN, and other page channels. Of course, AT&T is contesting the decision. But really, this is but one move in a protected industry-wide Game of Thrones. Elsewhere, Disney is holding talks, unsuccessful so far, to buy 21st Century Fox. This can be seen as part of Disney's continuing plan to bolster its content ahead of plans to pull its content from Netflix in 2019 to launch its own service, more on that to come. And Disney isn't the only one sniffing around Fox. Sony, Verizon, NBC Universal, Concast are all said to be talking. So why this frenzy in M&A? What's driving this media merger madness? Before we get into it, let me come clean about who I am and where I work. I work at Hearst, the US media company. I work in the Ventures Group. We are major medias in this existing media world. We have traditional broadcast television, 32 US television stations, and we have large stakes in ESPN, A&E, Lifetime, the history channels. We also are owners and have stakes in a number of new next generation media companies, including Complex, Vice by A&E, Buzzfeed, iFlix, Awesomeness TV, and then we're an investor in Roku, which had a very successful IPO earlier this year and is a great disruptor in this space. And we'll talk more about them as well in the moment. So back to this, why is this all happening? Really, I would argue that there are three powerful forces that are driving this. First and foremost is market pressures. Advertising is being squeezed. The traditional television business model is troubled. According to Zenith Media, advertising expenditure globally, the pace of growth is going to fall behind that of overall economic growth over the next three years. In the US, there's also Facebook and Google combined. Not only are they making up over 70% of all advertising, but if you look at the growth in advertising, 99% of all growth in advertising in the US is being taken by Facebook and Google. At the same time, production costs are rising. I think the second reason why is OTT, otherwise known as streaming technology. It is just on the march. It is growing and growing. Let me speak a little bit about Roku on that point. Roku is one of the most successful tech IPOs this year. It's at the forefront of this OTT momentum. What Roku lets you do is allows you to watch streaming entertainment into your television. Roku wants to be the OS for TV. So while you and I all like to watch our content streaming on the go, on our various devices, all of us also like to watch television, and comfort of our own television in our own living room. That's what Roku allows you to do. The growth in Roku has been amazing. In 2015, it streamed 5.5 billion hours. In the first half of this year, it streamed 7 billion hours. That's over a 60 per year over year growth. So Apple, Google, Amazon all have products like this, but they're nowhere near the size of that of Roku. I think the growth that you're seeing in Roku, as an enabler in OTT, it's just an indication about the overall growth in the OTT market space. I think the third, and probably the most important factor that's driving all of this, is the rise of the technology players in this space. And the most, let's talk about the most important one here. That is that of Netflix. Let's talk about the pace of change and the enormous pace of change that this company has had. 10 years ago, it did introduce streaming. Five years ago, it became available in Europe. Just three years ago, it had 50 million subscribers globally. Two years ago, it produced 320 hours of original programming. This year, it has 110 million subscribers and it will have produced over 1,000 hours of original programming. This pace isn't expected to slow down. By 2020, it should have 160 million subscribers and the chief content officer said that they will be spending in excess of $7 billion, I believe, next year on content, which puts it far ahead of its competitors, such as HBO and Hulu. And while it's the leader of the pack, it's not the only one in technology that's really disrupting television. Amazon is spending four and a half billion in original content programming. They just announced that they're about to spend $1 billion taking Lord of the Rings and making a TV production show. Apple is saying that they will spend a billion dollars next year in original content. So it's against this backdrop that we start to piece together what the future of television will look like. Well, I don't think you'll be surprised to hear me say that the future is all about OTT. It's not a matter of if now, it's a matter of when. As we've seen, the technology players like Netflix and Apple are leading the way here. But in a world where streaming is the default, it's not just the major tech players that are gonna win, but it's also gonna be the major media players who already have sufficient brand cloud and content to muscle and win market share. Like we've talked about earlier, Disney is announcing its own plans to create its own streaming product and it will do the same with the ESPN. There are a few others that have the catalog of content and the range of content to create a audience for streaming services. Disney's one ESPN, Comcast, NBC Universal, these are a few players in the US, but those without that existing brand and backlog of content are going to struggle. I think the second trend is the impact of that first trend and how it reshapes the overall market. Now, we talked about what an amazing business Netflix is and it is an amazing business, but they are going to feel increased pressure. As players like Disney and Fox start to restrict their own content, Netflix is gonna be forced to become a major studio with all the intended costs. In effects, they'll be forced to be a traditional studio or have a network model. And as its growth is increasingly driven by international markets, it now has more international subscribers than it does in the domestic US. It will have to ramp up costly, locally produced original programming. I think secondly, the regional broadcasters, the mid-sized broadcasters are really facing existential threat. Indeed, the director general of BBC last year said that the UK market, which is a very rich and vibrant television market, is facing threat from the likes of Netflix and Amazon Apple. And he said that there's a half a billion deficit in the market there for him. And then cord cutting is just going to accelerate. I believe this year 22 million US people have cut the cord. That's a rise from 33% last year. So that pace is just going to accelerate. The third trend is data. It will do more. Look, TV has been immune to this upheaval for a very, very long time. That's set to change. It's well known that Netflix has been using data that they guard highly and preciously to drive personal recommendations. We now see that data is being driven to make decisions about programming in the same way that Supercell develops games and quickly kills off the ones that don't work. Netflix is doing the same. We saw that with the Naomi Watts psychodrama, Gypsy. It was cut very quickly. And Hastings is saying that he's going to keep on doing this, that this is the price and the proof of experimentation. This is a major shift about how television works. There's a flip side to using data as well, right? If it's data-driven decision making for what shows should be and how they should be produced, you can lose some of the originality. And then we've seen what data-driven products has done with the Newsbot scandal that happened in the recent US presidential elections and the scandals that have happened around YouTube and the kids and the programming that was rather dangerous that sat there and was computer-generated. But I'd like to end on a positive note. As viewers and as content creators, we are in the golden age. There is more shows than ever before being produced. There was a record 455 scripted shows aired in the US television markets this year. Niche distributive content creators will thrive. There were limited buyers for now. Now, thanks to OTT, you have multiple distribution channels, multiple buyers of your content. And then that's viewing. The technology around this is seamless, pleasurable, portable, personalized. As viewers, we really are in a new age of television. I think the reality is, at least for now, the business models, the distribution, it's all a bit of alphabet soup. It's unclear, but for us as viewers, we are in the golden age and we can benefit from it. Thank you very much.