Billionaire Investor Mario Gabelli: 'There will be a gap in creative content' due to coronavirus

Billionaire Investor Mario Gabelli joined Yahoo Finance's Myles Udland, Andy Serwer, Dan Roberts, and Melody Hahm to discuss his outlook for the media industry amid the coronavirus pandemic.

Video Transcript

ANDY SERWER: Hey, Mario, Andy Serwer here. I want-- sorry to jump in. I just want to ask you about streaming entertainment, TV, Hollywood because you are the media maestro investor of all time. But here's the thing.

You know, we were talking about peak content just a couple of months ago. And, now, are we going to be looking at trough content, you know, going into 2020-21 because there's no production going on? Are we going to run out of content?

MARIO GABELLI: Well, you have a lot of stuff that was put in the pipeline, like classic films, that would have been enormous box office successes. You know, Tom Cruise had one, some of the Disney movies. They've all been pushed forward.

I just talked to a movie theater operator today. And, you know, how are they going to position themselves? They have an ability to the space everyone six seats apart. And how much of that is going to come back?

And China, which is 40-- the US box office, Andy, was $42 billion last year, $10 billion in China. They just shut the theatres down. Now that's going to come back slowly.

I mean, we have an office in Shanghai. We have an office in Hong Kong. And they give us an update of traffic patterns and what people are doing. So there will be a gap in creative content. Netflix mentioned that anybody reading the "Hollywood Reporter", "Variety" knows that. And that's a reality of the dynamics that we're facing.

Independent of that, who's got the library? And who's got some content? And how do they keep it fresh? Well, Sony, which has a great music-- what are they going to do with their film entertainment business?

Will they now look to find Tencent to do something? Will they do something with Alibaba? Will they do something with the companies in China? Or will they do something with the companies up in Seattle? Will Amazon say, hey, listen, let's do a deal where we put it together with Paramount?

You saw that in streaming in the music world. Today, John Malone and Greg Maffei put together a transaction which is classic, you know, quilting together their Formula One entity and shifting Live Nation over to Liberty Sirius. Liberty Sirius also has a great-- they own Sirius. They're trying to figure out what they do with Pandora.

So streaming music is up sharply. That helps companies like Vivendi, where they sold 10% of it to Tencent for a very interesting market cap. Will Sony do something like that?

Independent of that, clearly, there will be those that structurally change. Will direct-to-the-consumer of a theater bypass the window and not go to the theaters? Or will they have to open box office? Those are the questions we all ask.

On the advertising front for television, you know, if you're a TV station, the local-- 70% to 80% of your revenues were derived from local. No car sales? 40% to 50% or 60% down. What we thought with Bloomberg and Steyer would carry through the year, I still think you'll have significant political in the second half of the year. That's a plus. I think car sales have come not roaring back, but come back. And they've started advertising again.

So the local advertisers, unfortunately, their cash-- their debt to EBITDA has gone from, like, say 4 times to 8 times since that higher level, but they've got huge cash flow coming up in the next six months. So we're trying to figure out which ones we want to own, which ones we'll consolidate, which will be part of a consolidation process.

And the same thing with regards to spectrum. The FCC is going to have a new spectrum auction with the T-Mobile-Sprint deal being done. What does that mean? So those are the kind of dots in the environment of the film entertainment.

Then you get some strange things. You've got the WWE. Worldwide wrestling was considered essential in Florida, so they're opening up. You've got-- tonight, you've got the football draft. That's going to be quite entertaining. Then you've got Tiger Woods. And they're doing a foursome, golf carts apart.

And so we've got to bring it back. So one of the stocks I like is baseball. I still like the Atlanta Braves. The stock is selling at $17.18. With 60 million shares, you're talking about a billion dollar market cap. The real estate's worth the debt.

And can I buy a baseball team? Yeah, I want to buy it for your granddaughter. I want you to buy it for a grandson. You can buy Madison Square Garden, which went through financial engineering today.