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Speaker 1: This is what the Flux.

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Speaker 2: I'm Brett and I'm Justin and it's Wednesday, the seventh

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Speaker 2: of May. Boy.

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Speaker 1: Berkshire Hathaway's and Your Shareholder Meeting is the business equivalent

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Speaker 1: of Coachella, and this year Berkshire's CEO, Warren Buffett, ran

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Speaker 1: his typical five hour Q and A session with shareholders

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Speaker 1: and then at the very end, he announced he would

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Speaker 1: be retiring as CEO. And while his successor has been

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Speaker 1: known for years, not even the successor knew it was

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Speaker 1: coming up during this meeting. Talk about a surprise party.

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Speaker 2: As we get to the end of this financial year,

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Speaker 2: this is the time where you want to get your spending,

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Speaker 2: your saving all in order for a big twenty twenty

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Speaker 2: six financial year. There is one place to get visibility

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Speaker 2: of all your spending. It's in the Flux Budging tool.

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Speaker 2: Connect your accounts and automate all your spending and savings.

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Speaker 2: You can see where your money's going. Download the Flux

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Speaker 2: app to check it out.

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Speaker 1: Three revolutionary stories today Juzzy Boy, Let's do it for

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Speaker 1: our first. Westpac has seen a dip in its first

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Speaker 1: half profits, but its new CEO is ramping up instead

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Speaker 1: of squeezing costs.

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Speaker 2: Freewheeling new ceo vibes here b mantel were Yeah.

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Speaker 1: So Westpac is Australia's third largest bank with twelve point

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Speaker 1: seven million customers across its brands.

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Speaker 2: We'd be talking Westpac, Saint George Bank, SA and RAMS.

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Speaker 1: Now does it boy? Westpac's former CEO step down in

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Speaker 1: December last year after nearly five years.

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Speaker 2: And now Westpax new CEO delivered his first half year profit,

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Speaker 2: which dipped by one percent to three point three billion dollars.

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Speaker 1: Just three point three billion backs.

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Speaker 2: Yeah and be man. Despite falling short on profit and

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Speaker 2: their dividend forecasts, not everything was disappointing for the big rad.

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Speaker 1: Now Westpac grew its business loans by fourteen percent, and

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Speaker 1: it also grew its mortgages by five percent.

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Speaker 2: And now west Pax new CEO wants to double down

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Speaker 2: on these areas.

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Speaker 1: Yep, he's pulling out the company credit card and planning

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Speaker 1: to hire four hundred and fifty new bankers to drive

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Speaker 1: more growth and also to cross sell more products.

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Speaker 2: Mortgage today, business loan tomorrow. Maybe throw in a credit

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Speaker 2: card there for good measure.

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Speaker 1: But even with those green troots of positivity, he warned

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Speaker 1: that there is some serious uncertainty in geopolitics.

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Speaker 2: And this could hit west future funding costs.

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Speaker 1: Next minute, Westpac share price fell three percent.

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Speaker 2: So what is the key learning here?

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Speaker 1: Funding costs are the costs that banks pay to borrow money.

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Speaker 2: Yep, that's right. Banks borrow money from other sources in

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Speaker 2: order to lend it to you and I.

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Speaker 1: For Westpac, about sixty to sixty five percent of their

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Speaker 1: funding comes from customer deposits.

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Speaker 2: Thing customer savings accounts and term deposits.

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Speaker 1: But the remainder of their funding comes from wholesale markets.

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Speaker 2: They borrow money from investors here in Australia as well

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Speaker 2: as overseas and.

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Speaker 1: Jus boy, that part gets tricky when the political climate

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Speaker 1: turns a little gray.

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Speaker 2: Yeah. When the global mood swings with tariff wors and

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Speaker 2: economic uncertainty, investors demand high interest rates to lend their cash.

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Speaker 1: Which drives up Westpack's funding costs.

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Speaker 2: And if it costs more for them to fund loans,

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Speaker 2: the bank's margin shrinks.

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Speaker 1: And given Australian banks live and die by their net

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Speaker 1: interest margin, even a small rise in funding costs can

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Speaker 1: seriously hurt their profits. For our second story, Shell is

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Speaker 1: considering a whopping takeover of its rival BP, and this

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Speaker 1: could become one of the biggest oil mergers of all tag.

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Speaker 2: The oil soap opera might just end in a merger

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Speaker 2: b Man, So tell me what's going on?

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Speaker 1: Well, BP, previously known as British Petroleum, is one of

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Speaker 1: the UK's largest oil and gas.

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Speaker 2: Companies, been pumping oil and gas since nineteen oh nine

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Speaker 2: and it operates in over seventy countries around the world. Now.

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Speaker 1: Shell was started at a similar time back in nineteen

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Speaker 1: oh seven and is also one of the largest oil

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Speaker 1: and gas companies.

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Speaker 2: And the Man. These two have been the og oil rivals,

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Speaker 2: the cocin PEPSI of the petrol industry.

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Speaker 1: But while they were once bit of rivals juzzy Boy,

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Speaker 1: they've kind of gone down different paths over the last

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Speaker 1: few years.

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Speaker 2: Shell dull down on its climate targets.

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Speaker 1: Well BP, he's been trying to reinvent itself as Captain Planet.

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Speaker 1: He captained net zero as it pivoted hard into renewable.

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Speaker 2: And the Man. BP's pivot has come with a hefty

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Speaker 2: price tag because it shares have fallen thirty percent in

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Speaker 2: the past year.

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Speaker 1: So now Shell is reportedly chatting with advisers about whether

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Speaker 1: to make a bid for the BP entire company, and with.

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Speaker 2: BP's current market value more than fifty seven billion pounds,

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Speaker 2: this would be an enormous takeover.

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Speaker 1: But never say never, because activist investors are pushing for

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Speaker 1: big changes at BPHQ.

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Speaker 2: So what is the key learning here?

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Speaker 1: Activist investors are shareholders who use their equity stake in

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Speaker 1: a company to pressure management for change.

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Speaker 2: The man Elliott Investment Management, who's the owner of a

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Speaker 2: five percent stake in BP now, is one of the

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Speaker 2: most well known activist firms. YEP.

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Speaker 1: They have a standard playbook that they've used across a

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Speaker 1: number of major companies like Twitter, Perno, Ricard, Samsung.

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Speaker 2: Step one, buy a stake in the company.

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Speaker 1: Then step two is tell the whole world about their

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Speaker 1: demands for a change.

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Speaker 2: Step three push for moves they think will increase shareholder value.

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Speaker 1: By a major strategic shift or maybe a big asset

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Speaker 1: sale or yes, even a merger. Either way, when activists

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Speaker 1: like Elliott show up, things always get interesting real quick.

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Speaker 2: For our third and final story, Netflix made one point

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Speaker 2: three billion dollars in Australia last year and no surprises here,

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Speaker 2: they sent ninety three percent of it overseas.

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Speaker 1: Not a surprise after we spoke about Facebook with the

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Speaker 1: Shifty Shifty, So tell me more.

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Speaker 2: Netflix was founded back in nineteen ninety seven a It's

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Speaker 2: a humble DVD rental service.

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Speaker 1: And was laughed out the door by Blockbuster when Netflix

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Speaker 1: offered to sell its company two Blockbuster for fifty million dollars.

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Speaker 2: Now Netflix is the world's biggest streaming service and no

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Speaker 2: longer exists.

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Speaker 1: Who is laughing now?

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Speaker 2: In fact, be man. Netflix is so dominant it claims

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Speaker 2: that seventy seven percent of Ozzie households have a subscription

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Speaker 2: and now be man Netflix. Australia's local revenue for twenty

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Speaker 2: twenty four has been revealed and it generated one point

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Speaker 2: three billion bakarunis.

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Speaker 1: A nice little bump up from one point one bill

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Speaker 1: in twenty twenty three.

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Speaker 2: Bush It posted a teeny tiny profit of just twenty

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Speaker 2: three million dollars in Australia.

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Speaker 1: That's because it paid one point two billion dollars in

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Speaker 1: distribution fees to other Netflix entities overseas.

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Speaker 2: In other words, ninety three percent of revenue was shifted offshore.

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Speaker 1: But there might be some revenge served soon via Canberra YEP.

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Speaker 2: The federal government has floated plans to introduce content quotas

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Speaker 2: the streamers like Netflix.

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Speaker 1: To an interesting call, Jazzy boy. So I'm wondering over here,

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Speaker 1: what is the key learning?

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Speaker 2: Content quotas are regulations requiring media companies to produce or

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Speaker 2: show a minimum amount of local content.

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Speaker 1: Now right now, there are content quotas on traditional broadcasters

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Speaker 1: like Channel nine and seven and ten, but not the

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Speaker 1: streaming services.

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Speaker 2: And the Australian government wants streaming giants to invest more

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Speaker 2: in local productions.

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Speaker 1: All right, so how would this one work?

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Speaker 2: There are two models that have been explored. The first

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Speaker 2: is a subscriber based model.

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Speaker 1: That's where companies with more Oussie subscribers must spend more.

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Speaker 1: The other is a revenue based model that's where a

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Speaker 1: percentage of local income is invested into Australian content. And

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Speaker 1: b man Well, Netflix says it's already spent one billion

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Speaker 1: bucks on Ossie content since twenty nineteen. The local production

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Speaker 1: industry claims that ain't enough.

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Speaker 2: Bluck dame. If you get to the end of every

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Speaker 2: single month in one doubt, where did my money go

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Speaker 2: this month? There is only one way to find out.

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Speaker 2: It is straight in the flux app or It takes

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Speaker 2: thirty seconds to connect your accounts and see all you're

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Speaker 2: spending each and every month. If you want to learn

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Speaker 2: more about where your money's going, make sure to download

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Speaker 2: the Flux app and check out the budgeting tool.

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Speaker 1: Thanks for listening, and we'll send you on Friday