Alex Morris
Key Views & Dialogues
A tour through the media landscape with TSOH’s Alex Morris
Netflix’s abandoned Warner Bros. bid exposed a discipline test: Alex Morris judged the price excessive because it transferred value Netflix itself would create to WBD shareholders. Paramount Skydance now faces a $100B+ integration in which linear businesses contribute over 50% of revenue and roughly 80% of EBITDA, after WarnerMedia-Discovery missed every major projection. Netflix may respond by accelerating sports and international expansion, while execution, regulation, and the unresolved reason for its withdrawal remain key watchpoints.
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- Alex Morris thought Netflix’s bid for Warner Bros. was excessive — not the absolute price, but the value transfer. “A significant percentage of the price tag making sense was from value that Netflix specifically could add,” and handing that upside to WBD shareholders was “a bridge too far.” His portfolio priors: Disney held for more than 10 years (“has not worked very well”), Netflix bought in 2022 as “the canary in the coal mine,” ran to the mid-teens of the portfolio and was then trimmed. Andrew’s summary of the decade: “Sell everything except for Netflix. That’s the only thing that’s worked in media for the past 10 years.”
- Andrew is deeply skeptical Paramount Skydance can execute the $100B+ WBD integration; Alex sees the strategic logic but warns that execution will be extremely difficult. Alex’s receipts: the April 2021 WarnerMedia-Discovery deck guided 2023 revenue of $52B (2025 revenue: $37B), DTC of $15B or more (2025: just shy of $10B), EBITDA of $14B (2025: $8B), and roughly $8B of free cash flow based on 60% conversion (2025: $3B) — “they missed every projection by a really wide margin” as cord-cutting accelerated from low- to high-single digits. Pro forma, linear is north of 50% of revenue and ~80% of EBITDA; the two linear/TV-media businesses together generated about $20B of revenue at an 8% EBITDA margin, while WBD’s domestic subscribers fell 10% versus peers at roughly 6-7%.
- Andrew’s flat verdict: “It is just an absolute disaster” — and he “wouldn’t be surprised if Netflix is buying the pieces in three, four, five years.” His precedent is Seagram buying MCA in 1995 and later doubling down with PolyGram — “a disaster, a family tragedy” per the Bronfmans. He has “absolutely no doubt” the $6B of synergies exist; his doubt is finding them “without destroying the core business,” while David Ellison simultaneously promises more content and, Alex believes, said they would increase product engineers 10×.
- The IP that everyone bid for may be worth less than the auction implies. Alex’s Sex and the City math: the show drove ~0.5-1% of all US Netflix engagement during periods when it was released on Netflix, 20 years after its finale — yet 800 other seasons had comparable or higher viewership in the same window, and three shows, including Squid Game and When Life Gives You Tangerines (plus one title Alex forgot), had more viewership in six months than Sex and the City had during its entire time on Netflix. “What does IP actually mean?” on a global platform is the open question, and “is it game-changing for six months or five years?” is one he’s “never been particularly confident” about.
- Netflix’s next act is acceleration, not pivot — sports gets more prominent and international gets supercharged. Alex says the failed deal would have given Disney a pricing umbrella and kept Netflix’s sports ambitions “a bit more of a sideshow”; he thinks that likely changes now. The scale gap is stark: WBD’s international DTC does $3.5B in revenue against Netflix’s $27B, and competitors “just can’t act with the level of aggressiveness that we can.”
- Why Netflix actually walked is contested. Andrew has “never seen” a signed buyer exit at the first superior bid, notes Ted Sarandos was at the White House the day Paramount’s bid landed and Netflix dropped out that afternoon, and leans toward Netflix receiving a quiet warning of U.S. government opposition. Alex leans discipline — Netflix told WBD upfront “best and final proposal” — but concedes “if going 5% higher was going to break it, you were too close to the line anyways.”
- Versant is the structural loser both criticize. Andrew: distribution deals roll off in 2027-28, distributors will “laugh them out of the room” without NBC’s umbrella, and the NASCAR split gives them “the worst of all worlds” — if rights work, NBC takes them; if not, Versant is a “tier four media asset.” Alex says the spin strategy is “not sound at all” and was “done for the wrong reasons.”
- The next NFL round goes “up up up” while Disney’s existential question stays open. Fox without the NFL is “basically the Masked Singer at that point” and can bid up to the EV of the company; CBS is nearly as trapped. ESPN would die without NFL rights, but Andrew says it is in the best position because of its partnership under which the NFL owns a 10% stake and should retain access to NFL rights in some form. Alex says Disney’s entertainment DTC has “made the turn,” but ESPN’s flagship launch was probably weaker than he expected, ESPN+ “was really the wrong strategy and cost them years,” and whether Disney goes all-in on the live-rights bundle or exits is “still an open question.”
Alex Morris, TSOH & Author of “Buffett and Munger Unscripted”, talks 2024 Berkshire Annual Letter
Buffett’s 2025 letter may foreshadow Greg Abel’s succession, while cash buildup, the public-equity decline from $354 billion to $272 billion, and vanished buybacks signal unexplained caution. With Berkshire’s scale making meaningful minority investments scarce, the next leadership team may need a significant capital-allocation shift; insurance’s rise from roughly $5 billion to $25 billion and OXY’s stalled buying leave durability and strategy unresolved.
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The 2025 annual letter may read like preparation for Warren Buffett’s eventual handoff to Greg Abel, but this was speculative. Buffett’s direct line—“it won’t be long before Greg replaces me as CEO and we’ll be writing the annual letters”—plus references to his age and cane led Morris to wonder whether Buffett might announce his retirement at the annual meeting. Walker separately read the insurance, culture and America-focused passages as future-setting.
Berkshire’s cash buildup and retreat from equities look at least directionally bearish, even if Buffett avoided saying so. Although 2024 was “better than I expected,” 53% of Berkshire’s 189 operating businesses reported lower earnings; meanwhile, marketable equities fell from $354 billion to $272 billion and repurchases virtually disappeared. Morris said Buffett “really avoided having the conversation” and used a reason that was “not entirely logical” to walk away from discussing what the shrinking public portfolio and excess cash imply.
The next leadership team will probably need a capital-allocation policy materially different from Buffett’s historical playbook. Berkshire’s scale has made meaningful minority investments extraordinarily scarce, while retaining every dollar could eventually produce an unwieldy company dominated by cash and punished with a conglomerate discount. Morris therefore struggles to believe the next generation will keep accumulating excess liquidity indefinitely; he expects “a pretty significant change” in capital allocation.
Occidental Petroleum is an unresolved tell because Buffett largely stopped buying after repeatedly supporting OXY below $60. At a price in the mid-to-high $40s during the recording, Berkshire’s purchases had dwindled to occasional small amounts rather than hundreds of millions of dollars. Morris offered two hedged explanations—an ownership ceiling or dissatisfaction with changed M&A and growth priorities—but stressed that he had not followed the situation closely.
Buffett’s willingness to discuss mistakes remains culturally valuable, but the letter rarely explains them deeply enough to teach shareholders. Morris’s best example is GEICO, a Berkshire “gem” that needed “major repolishing”: shareholders can infer issues involving telematics and GEICO’s poor relative performance versus Progressive over roughly five years, yet Buffett never really explains what Berkshire missed. The specific callout of Amazon’s 2021 report as a rare example of corporate candor also left both speakers “reading the tea leaves.”
Andrew Walker challenged Buffett’s framing of the Japanese investments as an easy dividend-versus-interest spread. Berkshire expects roughly $812 million of dividends against $135 million of interest, but Walker argued that this presentation understates the two-sided investment risk and the inflexibility of long-dated debt. Morris’s broader objection was editorial: the roughly $23.5 billion Japanese portfolio received nearly a full page while BNSF and Berkshire Hathaway Energy received only cursory treatment.
Insurance is already carrying far more of Berkshire’s economics, making managerial succession there as important as portfolio succession. Average annual pre-tax underwriting profit plus net investment income was roughly $5 billion from 2010 through 2020, versus about $25 billion in 2024; float also grew from $66 billion around the start of 2010 to $171 billion. That engine is powerful, but Morris said the durability of these advantages under Ajit Jain’s businesses, Todd Combs’s possible GEICO role and future managers remains “an ongoing discussion.”
Alex Morris on what you can learn in his new book: “Buffett and Munger Unscripted”
Reading 30 years of Berkshire transcripts in sequence reveals a rational, consistent process while exposing errors that standalone commentary can hide. GEICO’s telematics misjudgment around 2012–2013 may have constrained managers, while Berkshire’s headquarters cash model risks underinvestment in uncertain businesses such as Dairy Queen and See’s.
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- Alex Morris’s book “Buffett and Munger Unscripted” reorganizes three decades of Berkshire annual-meeting transcripts (released back to 1994 in 2018) by topic, and Berkshire replied that “Warren’s okay with you doing this.” Morris modeled it on Cunningham’s Essays of Warren Buffett, and says the payoff of reading 30 years in sequence is seeing a thought process that is “very well thought out, very rational, very consistent” — simplicity that people mistake for a ruse but is “combined with deep knowledge.”
- The GEICO telematics chapter is Morris’s favorite because sequential reading exposes a snowballing error: first discussed around 2012–2013, “they were effectively wrong” on competing with Progressive. His structural worry is conditional: if Warren’s public views tie managers’ hands, that may have contributed to a sustained problem Berkshire was still trying to address.
- Both agree Berkshire’s send-cash-back-to-headquarters incentive design can skew toward underinvestment: “the risk is in the Berkshire approach… to underinvest as opposed to overinvest, especially in situations that have iffy futures.” Walker’s exhibits are Dairy Queen — a possible counterexample among national QSRs, though he says it may not have failed but could be on the verge — and See’s, which might have been “2x as big” with more aggressive expansion.
- Buffett’s page-439 call that the internet would raise productivity but reduce profitability and “make American businesses worth less” is, per Walker, both deeply insightful (newsprint, retail, media) and arguably wrong — “American businesses are worth way more than they have ever been.” Morris calls it “a bit of a mixed bag,” and pairs it with the IBM/Apple reversal: around 2012–13 Charlie said they would not have comparable confidence in Apple’s 10- or 15-year future, yet Apple later became roughly a $175B position — showing they are willing to change their minds.
- On Nike, Morris says the company got “caught offsides” on high-teens-margin guidance, leaned on promotion-driven D2C, and skimped on demand-creation spend — down a couple hundred bips over years: “that’s not where you want margin expansion to come from.” He backs new CEO Elliott Hill — “he might be the anti-John Donahoe” — and highlights Hill’s point that 20 years ago athletes needed Nike, whereas “today they effectively don’t need Nike.”
- Morris reads Buffett’s current market view as “not particularly great,” with Apple selling partly tax-driven and possibly blank-slate cleanup for successors — but he’d expect Coca-Cola and AXP to “just stay there in perpetuity.” On Markel, his other insurer alongside Berkshire: Ventures (started 2005 with AMF Bakery) puts Markel roughly where Berkshire was in the mid-’90s. Walker adds that Markel likely will not scale as well as Berkshire.
- On banks, Morris’s hard-won lesson from Ally: decision-making “doesn’t need to be good 90% of the time. It needs to be good like 100% of the time” — and rereading Countrywide’s last annual report, he couldn’t find what foretold the blowup. Walker’s counter-synthesis of Buffett’s playbook: buy a good bank below tangible book value during a crisis and let it compound — but banking is uniquely vulnerable because a panic can become self-fulfilling.
- In the closing retail exchange, Morris is less interested in Academy after the legendary CEO’s exit and COVID boom — “maybe this is really low-moaty” — while Walker prefers Dick’s House of Sport, quoting Ed Stack: build “the store that if they put it next to a Dick’s Sporting Goods would kill the Dick’s Sporting Goods.” Academy went public at a $1.1B valuation and, Walker notes, earned roughly $700M the next year; Dick’s EPS later rose from roughly $3 to about $13 through the pandemic tailwind.