Netflix’s revenue growth rate significantly outpaces major streaming rivals.
Netflix generates billions in cash annually, valuing the company at $470 billion.
Netflix’s ad business is on track to more than double revenue this year.
Netflix’s quarterly earnings reports have lately lacked the drama that once made the updates a must-watch for investors and reporters. For the past eight quarters, the video streamer has routinely posted quarterly revenue growth averaging around 15%—hardly hypergrowth but a big improvement on the 2% to 4% growth rate it recorded between late 2022 and late 2023. Nowadays the results are so predictable that it would be easy to tune them out.
But Netflix is achieving something rarely seen in business. Since last fall, it has been growing at roughly double—or more—the rate of two of its biggest rivals in streaming, Walt Disney Co. and Warner Bros. Discovery, even though those companies have fewer subscribers and have been in the market for less time. As the biggest streaming firm, Netflix would be expected to grow more slowly than smaller rivals. (Other major rivals, such as Amazon Prime Video and YouTube, don’t disclose total revenue, making comparison impossible.)
That reality explains a lot of what is going on in streaming nowadays, including why WBD is now on the sales block—if the company had grown faster, its stock price would be higher and it wouldn’t be so vulnerable to a hostile takeover. It also explains Netflix’s premium stock price, which values the company at close to $470 billion, more than twice Disney’s valuation and several times WBD’s.
It also puts pressure on whoever will succeed Disney CEO Bob Iger, who is due to step down at the end of 2026. While both WBD and Disney have managed to turn their streaming operations into profitable businesses, that’s been at the cost of growth. Netflix, in turn, has sharply accelerated its growth even while continuing to churn out billions in cash every year. Last week, for instance, Netflix reported 17% higher revenue for the third quarter, while free cash flow rose 21% from a year-earlier to $2.7 billion.
In raw numbers, WBD’s streaming operations are generating around $2.8 billion a quarter in revenue, while Netflix’s quarterly revenue is running above $11 billion. Disney is in between (see accompanying chart). At its recent growth rate, Netflix is adding around $1.5 billion every quarter compared to the year earlier, while WBD is adding a couple of hundred million dollars. (Disney and WBD haven’t yet reported for the September quarter, although a report last month by Wall Street research firm MoffettNathanson estimated neither would show much improvement in their growth rate for the second half of 2025.)
At the current growth rates, Netflix is only going to get further ahead in streaming. The more cash it generates, the more money it has to spend on programming.
What’s driving the diverging growth rates of Netflix compared with Disney and WBD? Over the past 18 months, Netflix’s quarterly disclosures have attributed its revenue increases to adding subscribers and raising prices. In the past two quarters, it has also mentioned growth in advertising. That’s a sign that the ad business, which Netflix only entered in late 2022, is now becoming significant. But the company doesn’t disclose enough detail to show how much of the growth comes from either subscriber increases or advertising.
Adding subscribers should be harder for Netflix, which finished last year with 301 million global subscribers and therefore should be closer to saturating the market. Disney and WBD are much smaller—156 million for Disney and 125.7 million for WBD as of the end of June. (Netflix stopped disclosing subscriber numbers at the end of 2024 and Disney has said it will stop disclosing them in the fiscal year which just began).
Disney’s revenue growth slowed sharply in the past 12 months, along with its subscriber growth. Some of that is an accounting adjustment due to its transfer of its Indian streaming service into a joint venture in late 2024, to be sure. But its subscriber growth rate elsewhere in the world has slowed at the same time. That is likely a result of the price increases that have driven what revenue growth it has reported.
Meanwhile, WBD has done better at adding subscribers as it has expanded into new global markets. But the average price it can charge in most of these markets is a third of what it charges in the U.S., which means its revenue growth lags its subscriber growth.
The average revenue it gets from subscribers in the U.S., meanwhile, has been dampened by bundling deals with other companies where WBD gets less per subscriber than it would on its own.
Like Disney and Netflix, Warner has relied on regular price increases to juice revenue—and WBD CEO David Zaslav has indicated that’s likely to continue. He told a recent investor conference, sponsored by Goldman Sachs, that consumers nowadays are paying “dramatically less” for content than they were a decade ago. As a result, he argued that “over time, there’s a real opportunity…to raise price.”
Netflix may be doing a better job of balancing price increases with growth. Its lowest tier of service—the one that carries ads—is cheaper than rivals’ comparable services, according to MoffettNathanson’s recent report. That tier is only $7.99 a month, $2 or $3 a month less than most other services. That enables it to more easily draw in price-sensitive consumers.
Its top tier, on the other hand, is pricier than its rivals’. As MoffettNathanson analyst Robert Fishman said in last month’s report, “This pricing structure allows Netflix to capture the highest-value, least price-sensitive customers.”
Certainly the gap is closing at the top end. WBD announced this week that HBO Max’s top price would rise to $23 a month, $2 below Netflix’s top tier.
Both Disney and WBD might do better in streaming growth next year. In 2026 WBD is expanding HBO Max into the U.K., Germany and Italy, three markets where its pricing should be closer to the U.S. market. Disney, meanwhile, should be able to jump-start its streaming growth in the next year thanks to the recent launch of its ESPN streaming service.
Netflix, though, has its own growth driver, one that might accelerate—its ad business. The company hasn’t yet revealed how much money it is making from selling ad space, although co-CEO Greg Peters said on the third-quarter earnings call on Tuesday that the company was “on track to more than double ad revenue this year.” He noted, though, that the increase was “off a small base relative to the size of our subscription revenue.”
One issue that Netflix has had is that the proportion of its audience seeing ads may not be as high as it is for Amazon Prime Video, which introduced ads by putting them into every subscriber’s service unless they opted out. Over time, however, the fact that Netflix’s ad tier is cheaper than its rivals’ means it is likely to attract more subscribers. And because of Netflix’s popularity, advertisers will want to buy spots on the service.
Still, advertisers have some complaints about Netflix’s ad offering. One ad agency executive, David Nyurenberg, a senior vice president of digital at ad agency InterMedia Advertising, said Netflix differs from other streaming services in its unwillingness to give advertisers the data they need to assess whether its ads drive sales. Other streaming services give advertisers data allowing them to determine whether people who are shown an ad later make a purchase.
“I would love to be on Netflix, at least test it out, but the performance measurement makes it a nonstarter,” Nyurenberg said, adding that advertising on Netflix is also relatively expensive in terms of cost per thousand impressions, which also made the streaming service a tough sell for his clients.
Another ad buyer also said they invested first in Amazon Prime Video before spending money on Netflix, because Amazon had more experience in advertising.
Vinod Khosla Talks AI, Power and Why Businesses Struggle With New AI Services
The Takeaway
Enterprise AI adoption struggles due to unqualified internal staff.
AI product margins are expected to increase healthily into the 2030s.
AI’s circular financing deals pose no systemic risk, Khosla says.
Vinod Khosla thinks companies which say they’re struggling to get a return on their spending on artificial-intelligence services may be doing it wrong. In an interview with The Information’s TITV this past week, he said “most enterprises who are executing AI are doing it with their people who are not qualified to execute.” In contrast, when businesses hire an AI specialist firm to help them, “it goes swimmingly well.”
Khosla is one of the most experienced venture capitalists in Silicon Valley, whose firm was a very early investor in OpenAI, among many others. That makes his take on the state of play in AI worth listening to. In the TITV interview, he talked about current developments in AI, the risks inherent in the AI ecosystem right now, power generation and other topics.
Below is a lightly edited transcript of the interview. The full video is here.
Akash Pasricha: Our subscribers at The Information know your career very well. They will know that you are a steadfast optimist, and one of the guiding mantras in your career has been that skeptics never did the impossible. It feels like right now, even for people who are very bullish on AI, the technology, there is enough reason to be at least somewhat skeptical on AI, the business. Is there anything that you are skeptical about right now?
Vinod Khosla: Well, to start with, I think if you’re going to do something significant, you’re going to have to be an optimist. But not only just an optimist, a knowledgeable optimist. There are too many skeptics who live in the past and will extrapolate the past to invent the future. That’s a bad thing to do. Inventing the future you want is the right way, and optimism is key to that.
Having said that, I think the one thing I don’t know and there’s things I can reasonably project and things I can be uncertain about. The thing I’m uncertain about is timing of various breakthroughs that we expect to see in the next two years, five years, ten years. Almost certainly it’s easier to predict AI in 2035 and probably 2030, than it is to predict it today and what will happen next year. So I’m not skeptical, but I’m less certain about the pace of development of certain capabilities that are essential to expanding use of AI.
Right. Well, let’s talk about the current state of play. One of the topics that has been talked about a lot in our coverage are the margins that a lot of these companies have on their AI products, whether it’s cloud services or even AI application companies. And one of the challenges that we’ve highlighted is that margins are slim right now. How do you think this goes in the long run?
Vinod Khosla: I think the way to look at margins is when AI is a substantial business. Yes, it’s [a] large business, tens of billions of dollars, but it’s not hundreds of billions of dollars. And so the question to ask is where will margins stabilize? I think some of it depends on R&D breakthroughs by the various companies and knowing who gets what breakthrough, which is, as I said, uncertain with respect to who and timing. I’m pretty optimistic about what OpenAI is doing. I do think if you provide value and you have differentiated models, you will have good margins. Look, at the pace at which pricing is declining, both in supplying inferencing to the AI companies and the price at which things are sold, it’s hard to predict the dynamics. But it will settle down [with] good returns on capital invested. So I’d be surprised if we don’t have healthy increasing margins well into the early 2030s.
And which of the two levers do you think is more likely to get pulled on most? The idea that costs will go down for these chips that are very expensive right now. Or on the flip side, we had one of your founders on the show, Amjad Masad from Replit. He talked about this idea that the models might not get cheaper, but rather he’s looking to actually increase his prices to widen his margin. So which one of those two levers do you think is most likely to widen margins in the next couple of years?
Vinod Khosla: So there’s a number of ways in which cost of supplying inference will go down. One, chips will become more economical in per inference. I do think the algorithms will get much better, which means the software will get better in the amount of compute needed per inference. So there’s two vectors. You can make the algorithms 10X more efficient over time. I think that will happen. The cost of chips will go down for a given number of inferences. So both those are vectors for cost reduction.
The question of pricing on the input side, what customers will pay, will be a function of value. If Amjad—and I love that company and what Amjad is doing—if he keeps adding more and more value, he will be able to charge more. So that’s a question of value addition. And that’s where there’s lots of headroom. You know when you’re kicking something that costs, say, a professional, an accounting professional, for example, or a design product designer, and you’re paying them $100 to $300 an hour and your cost is $1 to $3 an hour, you have lots of pricing room if you can provide more complete solutions. So I do think, price per hour of worker-time equivalent will increase pretty dramatically. Also as well, as well the decline in costs per inference. This business will be healthy starting, let’s say, 2030 and beyond, when scale data centers will be in operation.
How do you square that with this matter of buyers of enterprise software—businesses in general—they are struggling to find the value right now, at least on an ROI basis, for much of this AI software. The reason I’m asking the question is because we’re talking about raising prices. They’re not seeing the value right now. They’re very slow to adopt this AI software. So how do you square those two realities right now?
Vinod Khosla: So you have to look at a couple of factors. One, where is the value being provided great. In software development it’s absolutely great value. So companies like Replit and Cognition, which we are both investors in, Cursor included, all growing very, very rapidly, because they’re adding real value. So there are functions in which the product isn’t complete or mature. And so you need almost so much hand-holding, the economics break down. I would say another factor that most people haven’t considered, most enterprises who are executing AI are doing it with their people who are not qualified to execute. It’s like saying, hey, we have a race car and Joe Blow can go drive it, and he’s not going to get most of that race car.
So they need to hire different people?
I think they need to take a very different approach. They take an online IT software person, say build an agent for me and hope it works great. It’s not the way it’s working. So generally if you take a company like Distyl, which is in our portfolio, if they execute a project for a large Fortune 500 company, it goes swimmingly well. If in-house people in the same company executed, it goes very poorly. So, and each of these, even the in-house people will get better over time, so the third or fourth generation of execution will do better because their people will get trained, but they’re really not qualified to operate in this area. While the AI native companies are able to get real value, and they’re even able to pick the projects that will be valuable and the projects that are more experimental.
I want to pivot to talking a little bit about some of the circular deals that we’ve seen happening in the AI sector. I mean, Nvidia, for instance, has been at the center of some of these circular financing arrangements. Do these concern you at all?
Vinod Khosla: Well, they don’t, they do and they don’t. It’s hard to tell what the details are behind each of these deals. If Nvidia is financing customers to buy their chips, that could be perfectly reasonable. Look, General Motors finances its cars too, when a consumer buys it, it’s just a regularized business. The question is hidden in the contracts that are mostly not publicly available: Who’s taking on what part of the risk? Is it an enterprise? Are you saying a customer you’re financing is viable or not? Are you saying the risk is the customers’ or their customers if they’ve done a contract with somebody else to buy X million dollars of inferencing? So where’s the risk hidden? Well, in fact is the key question before one can opine. And frankly, most of those risks and who takes what risk is in the fine print and not visible to almost anybody outside?
I take your point on the fine print. I guess what I’m sort of trying to assess here is the systemic risk in the circular financing at large. And of course, I take your point about, for example, General Motors financing the purchase of a car. But, you know, in a world where you have a chip company investing in OpenAI, OpenAI buying cloud compute from Oracle, Oracle buying chips from Nvidia. That is a sort of circular loop that I think a lot of people have sort of raised flags about. Does that whole cycle not raise any flags for you or cause any concern?
Vinod Khosla: Well, I would say I don’t care. I don’t care for the following reason. If Nvidia is taking a bad credit risk, that’s their problem, right? But if Nvidia loses $50 or $100 billion, does it kill the company? Probably not. And I suspect [Nvidia CEO] Jensen [Huang] is pretty smart about what credit risks he’s taking, with which customer. Is Oracle taking a larger risk? Possibly. It depends on the details of the contract between Nvidia and Oracle and Oracle and OpenAI or other people buying their cloud service.
So you have to think of it as traditional business and say where does the risk lie? If Oracle goes under, for example, because they took the risk of $100 billion spend and then get that back, then it’s their problem if Oracle disappears from the scene. Do I care? No. I hope they don’t. I think the ecosystem will be healthier, but people are selectively taking risk. You know, Coreweave’s taking a lot of risks with the money that belongs to certain lenders, to Coreweave. Do the lenders have risk? I don’t know. Does Coreweave have risk? And Oracle’s doing the same thing, it’s taking risk. But I don’t know the details of these contracts.
But broadly speaking the level of risk that this has has become sort of ubiquitous throughout this AI ecosystem that doesn’t concern you at all?
Vinod Khosla: I would say the fundamental notion of will there be more demand for API inference calls doesn’t concern me at all. The fundamental is how many inferencing calls we’ll see in 2030 and 2035. That generally doesn’t concern me because I believe AI will add a lot of value. Look, US economy’s $15 trillion of labor alone—just labor costs in the US economy $15 trillion. If you could replace 5 trillion of that, there’s plenty of room for inferencing to be paid for, if you can do that. So again I say the fundamental is, is there a demand for AI inferencing the next five years and next ten years, I’m not worried about that. has learned how clever a contract and who takes on risk if demand is slower or faster to emerge? … I’m not responsible for a lender financing a data center. If they fail, their problem, not mine. I care about the innovation ecosystem that drives more API calls in AI.
Who do you think has the best chance of challenging Nvidia?
Vinod Khosla: Well, obviously AMD is trying things, Arm is trying things, Broadcom is trying things. Nvidia is in an unenviable position because they have so many different things they can do in parallel because the cash flow they have right now. Do I know all of Jensen’s plans inside and how many different things he’s trying? No. In fact, nobody outside really knows when he’s going to announce what my bet is he has a pretty precise roadmap to 2030 and beyond. So hard to say.
So there’s no one company that you are really sort of putting your eggs in here in terms of… I think this company is closest on Nvidia’s tail right now.
Vinod Khosla: Well, AMD is doing pretty well by signing, looking at their deals. Broadcom is doing pretty well. But are they going to grab majority share and be larger than Nvidia. I wouldn’t expect that today. Can they take reasonable shares, especially at slightly lower margins? Yes.
And what about all these chip startups that are popping up.
Vinod Khosla: Well I’ve seen a lot of specialized chip startups that do one thing. You can run your whole model locally in your shop. Well that’s that’s a market. It’s not as large as the data center inferencing market. So there’s many submarkets that the chip startups can do ok in.But I haven’t seen the chip startup that could completely blow everybody away. Now, if you have a sudden breakthrough in photonic chips that can do multiply, accumulate inferencing functions, and cut the power consumption by 70% for inferencing, that’s entirely possible, even likely sometime in the next five years.
And I hope some of those show up because it changed the power equation, how much power we need for AI. Frankly, most of the data center investment can be repurposed with a new kind of chip that gets slotted in. Photonics is pretty promising. I suspect digital semiconductor chips are going to be hard to beat Nvidia at, in a massive way. In specialized segments of the market, you can beat them but generally you’d have to have a radical breakthrough in technology. Photonics is one of them. There’s a few others, but I see the most promising candidate for an alternative to Nvidia becoming from photonics if one can scale it, and photonics typically is hard to scale.
I want to close by talking about the energy side of of the AI equation. You, of course, have been an energy for a long time. You’ve made big bets on fusion among many other technologies. And the question that I want to help get your perspective on is this idea that a lot of these energy bets are going to still take years to scale? Meanwhile, the energy demands that AI will need to satisfy, those demands are right now. And so help us reconcile this idea that we need power now, and it’s going to still take several years for many of these new energy technologies to scale.
Vinod Khosla: So the simplest way, very, very short term, to address electricity demand in the country is pricing. This is why the economics of marketplaces work. Prices will go up some, as we consume more pricing for data centers. Data centers themselves can be aggressive sources of power management. You can consume at certain times of the day for training runs and other times of the day for inferencing. You can dial up the performance or dial down the performance. So data center input of electricity itself is a variable that’ll probably be part of electricity trading.
There’s some good startups in that area.
I think there’s a short term solution which I think is super hot geothermal. I think we can get to gigawatt scale. If you imagine a couple of extra gigawatts of demand emerging every year. Some of it will be met through pricing energy appropriately. Some of it will be met through shorter term projects. Geothermal is one that’s much shorter term than, say, fusion, fusion’s a possibility but fusion to me will take the longest…but we’ll have an array of factors. We’ll have more natural gas turbines coming on. We do have companies where you can start with natural gas and switch to hydrogen whenever the economics warrant it. So there’s a number of ways to adjust, but it is a non-trivial problem.
And so all these data centers that companies like OpenAI are springing up very quickly. I mean, the simple question I wanted to get your take on is, do we have enough power for these facilities?
Vinod Khosla: Well, first thing to keep in mind, it takes a couple of years to build a data center. There’s a few hacks, but fundamentally, if you’re trying to add a gigawatt of data center, which is about $30 billion of spend, it’ll take a couple of years. I don’t think that’s a six month or 12 month or even an 18 month project.
Then there’s demand-based electricity consumption as a tool. And then I think things like geothermal and other technologies will come along. Some of them will be natural gas fired. I hope there’s no more coal facilities. Mainspring installs capacity for data centers that can switch seamlessly from natural gas to hydrogen when you want to go clean, so you can decide how much you want to pay for power and what carbon reduction you want, and increase the carbon reduction over time. So that’s one solution. All I’m saying is there’s an array of tools …not non-trivial. This will be a serious issue. And policy is trying to address it. But I do think there’s many solutions.
Last question for you. You know, you wrote this op ed for us a couple months ago in The Information, about the bonkers valuations in AI right now. And one of the things that you mentioned in the piece was that you think that venture capital as an asset class is likely to shrink over the coming ten years. And I wanted to ask you what the repercussions of that are in your mind. The obvious one that I thought was perhaps startups might actually get better because there’s less capital to go around and the better ones would get picked. Is that the main repercussion of this, or what are the other repercussions that you see happening?
Vinod Khosla : I think that op ed was misinterpreted a little bit. What I said was AI valuations in general are bonkers. For the best companies they’re not bonkers and if as a venture capitalist, you have access to those two, three, 4% of the startups, there will be huge wins. You will do well. You will have great returns. The people who are plowing money in without having special access to these opportunities for whatever reason, will suffer in venture capital as a class, I think broadly, for funds raised in ‘24 and ‘25 will have decreasing returns, returns lower because they’re not getting access to good deals early. They’re paying higher prices much later. Some of the robotics valuations are getting bonkers. I would venture to guess 95% of those startups will lose money.
So the take home here is we need special access to deals essentially to be successful?
Vinod Khosla: It’s more than that. I think I like to say most AI startups will lose money, but more money will be made than lost. That means it’ll be highly asymmetric: 2 or 3% of the startups will account for 85-90% of the valuation by 2035 of market cap of companies. So that asymmetry, which has generally been true in venture capital, but will be significantly more asymmetric in AI because of this valuation wave, I think is the reason we will see average returns decline and the best returns for the top firms will do okay, will do well, in fact, because AI is such a large opportunity.
It’s Not Just Rich Countries. Tech’s Trillion-Dollar Bet on AI Is Everywhere.
As part of ‘AI decolonization,’ developing nations push Silicon Valley to build locally
Indonesia is emerging as an AI hub, with its market projected to grow 30% annually to $2.4 billion over the next five years.
The concept of AI decolonization drives developing nations to require local data processing, fostering domestic data centers.
Telecom provider Indosat plans to increase its AI-enabled server power to 500 megawatts by 2028, a significant investment in Indonesia’s AI infrastructure.
JAKARTA, Indonesia—Tap water isn’t drinkable. Power outages are common. The national average annual wage is $2,200.
Yet rising on Jakarta’s outskirts are giant, windowless buildings packed inside with Nvidia’s latest artificial-intelligence chips. They mark Indonesia’s surprising rise as an AI hot spot, a market estimated to grow 30% annually over the next five years to $2.4 billion.
The multitrillion-dollar spending spree on AI has spread to the developing world. It is driven in part by a philosophy known in some academic circles as AI decolonization.
The idea is simple. Foreign powers once extracted resources such as oil from colonies, offering minimal benefits to the locals. Today, developing nations aim to ensure that the AI boom enriches more than just Silicon Valley.
Regulations effectively require tech companies such as Google and Meta to process local data domestically. That pushes companies to build or rent data facilities onshore instead of relying on global infrastructure. These investments add up to billions of dollars and create jobs that foster national talent, or so developing nations hope.
“The model is shaping up where it has to be more fair to the country,” said Vikram Sinha, chief executive of Indosat Ooredoo Hutchison, a partially government-owned Indonesian telecom provider building data-center projects across the country.
AI decolonization is a twist on data sovereignty, a concept that gained traction after Edward Snowden revealed that American tech companies cooperated with U.S. government surveillance of foreign leaders. The European Union in 2018 pioneered data-protection laws that other nations have since mimicked.
Regulations vary by country and industry, but the principle is this: If a developing-nation bank wants an American tech giant to store customer data and analyze it with AI, the bank must hire a company with domestically located servers.
Combined with genuine business demand for AI computing, such regulations have made some less-wealthy nations beneficiaries of the AI boom, including in South and Southeast Asia.
Google recently committed $15 billion over five years to build an AI center in India. Amazon Web Services is investing $5 billion to increase infrastructure in Thailand.
Data centers in Indonesia earned $374 million in revenue last year, said research firm Mordor Intelligence, a figure estimated to sextuple by 2030.
Betting big on this new sector is Indosat, Indonesia’s second-largest telecom provider. Its CEO, Sinha, was emboldened by Nvidia Chief Executive Jensen Huang, who championed “sovereign AI” during a visit to Jakarta last year.
“No country can afford to have its natural resource—the data of its people—be extracted, transformed into intelligence and then imported back into the country,” Huang said at an Indosat event.
Sinha had a chance to ask Huang for advice during a dinner. He recalled the answer: “If you believe in something, go all in.” To Sinha, that belief is AI.
Indosat plans to increase its AI-enabled server power to 500 megawatts by 2028 from 20 megawatts currently, in data centers with backup electricity. By comparison, said research firm DC Byte, the American hub of Virginia has about 38,000 megawatts of capacity live or in planning.
The industry rule of thumb is $10 million a megawatt—so a $5 billion investment for Sinha. He thinks Indosat’s Indonesian economics can reduce the cost to 70% of that.
Potential clients include Indonesian customers and American tech giants, who outside the U.S. often use local partners instead of building their own facilities.
Sinha said Indonesia’s data-center boom would supercharge the economy and boost the tech talent pool. Other experts are less certain.
After construction, each megawatt of a data center supports about only one permanent job, said James Murphy, Asia-Pacific managing director of DC Byte. And even if built in developing nations, many data centers remain foreign-owned.
“The ultimate beneficiaries are the large tech companies and their investors,” said Govand Azeez, a political economist at Sydney’s Macquarie University who researches tech sovereignty in Southeast Asia.
Novartis set to buy Avidity Biosciences for more than $10bn
Deal would be biggest acquisition under chief executive Vas Narasimhan
Novartis is close to announcing a deal to buy Avidity Biosciences, a biotech focused on rare diseases, in the biggest acquisition by the drugmaker in more than a decade.
The deal, which is expected to be worth more than $10bn, will be Novartis’ biggest acquisition under the tenure of longtime chief executive Vas Narasimhan. The transaction is set to be announced later on Sunday, according to two people familiar with the matter.
Talks between Novartis and Avidity were first reported by the Financial Times in August. A takeover of Avidity would help in the large pharmaceutical group’s efforts to offset impending patent cliffs, by adding the biotech’s pipeline of potential drugs for muscular dystrophy — a potentially fatal muscle-wasting disease.
Shares in Avidity closed at about $49 a share on Friday, giving the San Diego-based biotech a market value of nearly $6.7bn.
The deal would value Avidity at a large premium to its closing price, the people said. Including an upfront cash component and further payouts when certain clinical trial milestones are hit, the deal could value Avidity at up to $12bn, they added.
In September, Avidity reported positive mid-stage trial results from its lead drug Del-zota, which is part of a new class of therapeutics that uses RNA. The company plans to submit an application for regulatory approval before the end of the year.
Novartis last month bought cardiovascular biotech Tourmaline Bio for $1.4bn. Earlier this year, it also acquired heart drug biotech Anthos Therapeutics for up to $3.1bn from Blackstone’s life sciences arm, and struck a deal of up to $1.7bn for kidney disease biotech Regulus Therapeutics.
It has also struck a collaboration worth up to $5.2bn for rights to a cardiovascular drug from Chinese company Argo Biopharma.
Novartis and Avidity did not respond to requests for comment.
US expects China to delay rare earth export controls as trade deal nears
High-level talks yield progress ahead of summit between Trump and Xi
US officials expect China to delay introducing sweeping export controls on rare earths, after two days of talks in Malaysia raised hopes that Donald Trump and Xi Jinping would agree to extend a trade truce at their high-stakes summit this week.
Beijing’s announcement of the controls this month triggered a sharp escalation in trade tensions between the world’s two biggest economies and threatened to torpedo plans for Trump and Xi’s first summit since 2019.
Following a weekend of negotiations in Kuala Lumpur, a senior US official told the Financial Times that Beijing’s likely delay was prompted by Washington’s threat of additional tariffs as well as pressure from other countries that rely on the minerals.
US Treasury secretary Scott Bessent told ABC News that he expected China would delay the controls on minerals used in fighter jets, smartphones and electric vehicles for a year while Beijing re-examined them. They are due to come into force in coming weeks.
Li Chenggang, the top trade negotiator in China’s delegation, did not comment on a possible delay but told reporters that Beijing and Washington had reached a “preliminary consensus” on export controls, fentanyl and extending a trade truce that is set to expire on November 10.
The truce, which the two sides last extended in August, paused the 145 per cent tariffs that Trump imposed on China when he started his trade war in April. Xi retaliated by slapping 125 per cent levies on US exports.
The US official told the Financial Times that they expected the truce would be extended by more than the previous 90-day period.
“We think it would give great stability and great certainty to the global economy and to the US-China relationship,” they said.
In a separate interview on CBS, Bessent said that Trump’s threat this month to raise US tariffs on Chinese imports by an extra 100 per cent was “effectively off the table”.
“I can tell you we had a very good two days,” the Treasury secretary said.
The prospect of the US and China extending their truce came after Trump arrived in Malaysia on Sunday as part of a week-long trip to Asia — and his first to the region since returning the White House.
The US president flies to Japan on Monday to meet Sanae Takaichi, the new prime minister, before heading to South Korea for his meeting with Xi on Thursday.
In a blitz of deals on Sunday, Trump struck trade and mineral agreements with Malaysia and Cambodia, as well as agreeing frameworks for others with Thailand and Vietnam.
He also presided over a peace treaty being signed between Cambodia and Thailand following their violent border dispute this summer.
On Sunday, Bessent, who led the US delegation, said the sides had agreed on a “very positive” framework for Trump and Xi to approve when they meet at the Asia-Pacific Economic Cooperation forum in South Korea.
China’s state-run news agency Xinhua said Washington and Beijing had reached a “basic consensus” on a framework to “address their respective concerns”. It said the negotiations in Malaysia — the fifth round between the parties this year — had covered exports controls, levies against Chinese shipping, fentanyl and agricultural trade.
Beijing’s plan to tighten its grip on rare earths triggered alarm in Europe, with European Commission president Ursula von der Leyen warning last week that the risk of a crisis in their supply was “no longer a distant risk”.
A second US official told the FT that “it was the president’s very clear message . . . that the rare earths regime was unacceptable and would result in massive countermeasures”, adding that it “was really important that other countries . . . stood up”.
“When you have the EU say we’re drawing up countermeasures against China . . . that is not something they usually do,” they said.
The weekend of talks had also yielded a commitment from China to buy American soyabeans, the first US official told the FT, adding that Beijing had agreed to “stop using soyabeans as pawns in the global trade game”.
The Trump administration has faced mounting pressure from US farmers after China curbed purchases of US soyabeans.
China had also shown interest in taking concrete measures to stop the export of chemical ingredients for fentanyl, the deadly synthetic opioid, that could merit “a little bit of relief from our side”, they added.
The US imposed a 20 per cent tariff on Chinese goods as a punitive measure related to the fentanyl problem.
The NBA returned on Tuesday night with a stellar display from San Antonio Spurs’ centre Victor Wembanyama. But by Thursday morning, all anyone was talking about was a betting scandal that has rocked the world’s top basketball league.
At a press conference in Brooklyn, prosecutors in the Eastern District of New York unveiled charges against Terry Rozier of the Miami Heat, accusing him of using inside information to help people make bets on games. Rozier’s lawyer described it as a “non-case”, and said his client “looks forward to winning this fight”.
The allegations are linked to an earlier scandal involving Toronto Raptors player Jontay Porter, who was banned from the NBA for life last year and is awaiting sentencing for conspiracy to commit wire fraud.
Prosecutors also charged Chauncey Billups, head coach of the Portland Trail Blazers, in a separate indictment related to poker matches. Both Rozier and Billups have been placed on leave.
But it is the Rozier case that really matters for the NBA because it raises serious questions about whether the explosion in online sports betting poses a real risk to the integrity of the competition.
The danger comes predominantly from what people in the US call “prop betting” — bets that relate to individual or team performances rather than the outcome of a match. That means how many points an individual player might score, for example, or how many rebounds they might collect.
Major League Baseball is also grappling with these issues, having put two Cleveland Guardians pitchers on leave in July amid a gambling probe. One of those players, Luis Ortiz, was reportedly placed under investigation by MLB after a betting-integrity firm flagged two individual pitches that had received unusual gambling activity.
In football, equivalents would be betting on a player receiving a yellow card, how many shots a player might have during a game, or how many times they might commit fouls. This is also where allegations of wrongdoing have surfaced in recent years. In tennis, another sport with a rough history when it comes to betting, it might be how many double faults a player scores in a single set.
Speaking days before the indictments were announced, NBA commissioner Adam Silver told The Pat McAfee Show that he had asked gambling companies to cut back on prop bets. “It’s too easy to manipulate something which seems otherwise small and inconsequential to the overall score,” he said.
Sports leagues across the world have been beefing up their ability to spot potentially dubious behaviour, largely through deals with technology companies such as Genius Sports and Sportradar.
These companies track patterns in the betting market, and have algorithms that set off alarm bells if someone, somewhere appears to bet an unusually large sum on a specific event. The smaller the market, the more likely a big wager will look out of place.
Betting companies can flag their concerns to the rest of the market too. Most are false alarms, but some lead to investigations, such as watching back live footage to see if there is any sign of foul play.
With more sophisticated defences evolving all the time, and the size of the market for many of these niche bets limiting returns, perhaps the bigger question is why highly paid sports stars would bother to get involved in such schemes in the first place.
If you want to understand Amazon’s approach to sport, it’s best to take a step back and remember what Amazon really is: a massive shop. The guiding aim is to sell goods to customers as often and as seamlessly as possible.
This week the company’s sports strategy was made even clearer when it announced a deal with the NFL to air a game globally as part of a special “Black Friday” schedule. The match between the Philadelphia Eagles and the Chicago Bears will stream on Amazon Prime Video in 240 countries and territories, with no membership required to watch. Later, two NBA games will also be shown worldwide.
Jay Marine, head of Prime Video US and global sports, said in a statement: “We cannot wait to provide fans with best-in-class coverage and a full day of action, holiday deals and surprises.”
The key words here are “holiday deals”. For Amazon, big ticket sport is still largely a mechanism for getting subscribers to log into their Prime accounts and sit there for hours. Once they are in, the company can deploy its arsenal of techniques to turn passive viewers into active shoppers.
That these games are going global is a sign of how successful US retailers have been at exporting the concept of Black Friday, despite the rest of the world having no cultural ties to the post-Thanksgiving tradition. Black Friday deals are now widely available at some of the most un-American retailers — such as John Lewis and Argos in the UK. Ask the average British person where Black Friday comes from, and you’ll likely get a shrug.
So how does that chime with the other Amazon Prime announcement this week — a further expansion of its pay-per-view offering to include a bunch of South American football games. A handful of French football and Nations League matches are already available in certain markets on a pay-per-view basis.
In this instance, Amazon is simply serving as a point of sale, much as it would if it were selling another brand’s underpants or kettles. The sport available on pay-per-view is typically the kind that has little or no value on the open market for media rights — traditional broadcasters aren’t going to pay to stock it. Amazon is offering to step in as a shop window, logistics hub and payment processor. Rights holders with nothing to lose get to see if someone, somewhere is willing to pay something for their goods.
Amazon’s approach of picking up a collection of premium sports assets likely to attract big audiences makes sense. It doesn’t need a huge inventory of stock, just enough to get certain groups of people logging on with predictable frequency. Hence it shows Champions League on Tuesdays, NFL games on Thursdays, and NBA on Fridays.
Meanwhile Netflix explained this week it has a different approach. On an earnings call, co-CEO Ted Sarandos said the streamer was not looking at “big season packages” but rather wanted more “big live events”. Presumably he means more deals like the one with the NFL, where Netflix shows two games on Christmas Day.
“We believe these big events that attract mass audiences are kind of differentially valuable for our members”, Sarandos said. “These events typically have outsized positives for conversation and for acquisition, and we strongly suspect retention.”
For rights holders, then, the future looks set to be about chopping things up into bite-sized pieces designed to hit the sweet spot with each of the various streamers looking at sport.
TotalEnergies ready to restart $20bn Mozambique LNG project
One of Africa’s biggest investment projects was halted after a terrorist attack in 2021
TotalEnergies is close to restarting one of Africa’s biggest energy projects four years after it was halted by a terrorist attack, with the French group and its partners judging that it is safe to proceed.
The $20bn plan for a liquefied natural gas project in Mozambique has been on hold since 2021 when a deadly attack by Islamist militants in the Cabo Delgado province where the project is located prompted TotalEnergies to activate a contractual get-out, known as force majeure.
On Saturday, Total said that the consortium behind the project had “taken the decision to lift the Force Majeure” and that it had informed the Mozambican government.
The decision is a key step towards resuming a project that has been touted as potentially transformative for Mozambique’s economy. Also backed by Japanese energy company Mitsui, the project will have a maximum capacity of up to 43mn tons of LNG per year.
Mozambique’s government must approve updates to the budget for the project, known as MozambiqueLNG, before it is relaunched, Total added.
MozambiqueLNG has been backed with loans from countries including the US government and is strategically important project for Total, as it seeks to increase its production of LNG.
Following the 2021 attack, Mozambique’s military collaborated with Rwandan forces to restore order to the province, including protecting the Afungi Peninsula where the Total-led project and a $30bn development led by US oil company ExxonMobil are based.
Lifting of force majeure is a positive development for Exxon’s planned project. Last month the company’s chief executive Darren Woods sought reassurances from Mozambican president Daniel Chapo about security of the region.
TotalEnergies move to lift force majeure is a signal that concerns over the safety of employees and the security of the project have eased.
Despite the potential economic benefits of MozambiqueLNG, it has been dogged by controversy, including allegations of human rights abuses by Mozambican soldiers protecting the project.
This year, the FT reported that the UK government was seeking legal advice over how to pull out of its $1.15bn backing for the project, while it has also commissioned a human rights review of the development.
