1 00:00:02,720 --> 00:00:10,559 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,880 Speaker 1: Eastern on Apple, Coarplay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business app. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,560 Speaker 1: or watch us live on YouTube. 6 00:00:24,320 --> 00:00:26,840 Speaker 2: Let's turn our attention to the media space. Lot's going 7 00:00:26,880 --> 00:00:29,320 Speaker 2: on out there. Spotify reported some earnings, but we want 8 00:00:29,320 --> 00:00:31,160 Speaker 2: to lead with Warner Brothers Discovery. 9 00:00:31,160 --> 00:00:33,520 Speaker 3: That MNA sag can continues to play out today. 10 00:00:33,920 --> 00:00:37,920 Speaker 2: Paramount kind of amended its bid to add some more 11 00:00:38,000 --> 00:00:42,520 Speaker 2: cash funding for a termination fee, instituting a ticking option 12 00:00:42,640 --> 00:00:46,479 Speaker 2: here for this thing. Keitha Ranganath and she file follows 13 00:00:46,479 --> 00:00:50,160 Speaker 2: this as the media analyst for Bloomberg Intelligence. Keith, let's 14 00:00:50,159 --> 00:00:53,440 Speaker 2: start with Warner Brothers Discovery here. I'm still surprised that 15 00:00:53,479 --> 00:00:58,240 Speaker 2: Powermount has not raised its bid from thirty dollars. That 16 00:00:58,280 --> 00:01:00,840 Speaker 2: are making changes and maybe some enhancement mins to the offer, 17 00:01:01,080 --> 00:01:02,720 Speaker 2: but not raising the bid in general. 18 00:01:02,720 --> 00:01:03,400 Speaker 3: What do you make of it? 19 00:01:04,360 --> 00:01:06,800 Speaker 4: Yeah, still playing the cat and mouse game here, Paul. 20 00:01:07,319 --> 00:01:10,080 Speaker 4: They did stop short of actually raising the offer, but yes, 21 00:01:10,120 --> 00:01:13,240 Speaker 4: you're right, they are offering now this almost one dollar 22 00:01:13,319 --> 00:01:17,560 Speaker 4: and eighty cents per share to cover the termination fee 23 00:01:17,640 --> 00:01:19,520 Speaker 4: with the Netflix deal, as well as some of the 24 00:01:19,520 --> 00:01:21,320 Speaker 4: financing costs, and then of course, as you just mentioned, 25 00:01:21,319 --> 00:01:23,360 Speaker 4: the ticking feed. I don't know though, if this will 26 00:01:23,400 --> 00:01:26,640 Speaker 4: necessarily fly with the Warner Brothers Discovery boat. I think 27 00:01:26,680 --> 00:01:30,080 Speaker 4: this is just Paramount exhausting all of its options before 28 00:01:30,400 --> 00:01:33,280 Speaker 4: you know, they actually raise the bid. But in my mind, 29 00:01:33,319 --> 00:01:35,480 Speaker 4: what this signals is, yes, they did stop short of 30 00:01:35,520 --> 00:01:37,960 Speaker 4: actually raising that thirty dollars bid, but I do think 31 00:01:38,000 --> 00:01:41,240 Speaker 4: that the signals that they are willing to kind of 32 00:01:41,280 --> 00:01:44,199 Speaker 4: go back to the table and probably raise that bid. 33 00:01:45,240 --> 00:01:47,760 Speaker 4: As you know, kind of this thing keeps dragging on. 34 00:01:48,320 --> 00:01:50,120 Speaker 5: Yeah, it does feel a little bit silly given that 35 00:01:50,200 --> 00:01:52,400 Speaker 5: David Ellison had said that thirty dollars a share was 36 00:01:52,400 --> 00:01:54,920 Speaker 5: not their best and final offer, So let's let's kind 37 00:01:54,920 --> 00:01:57,120 Speaker 5: of get to it. That begs the question, Keithan, this 38 00:01:57,160 --> 00:01:59,640 Speaker 5: is a dumb question. Do they have the money to 39 00:01:59,720 --> 00:02:00,360 Speaker 5: raise bid? 40 00:02:02,040 --> 00:02:04,800 Speaker 4: They do, But the question is really going to be 41 00:02:04,960 --> 00:02:08,000 Speaker 4: what happens after Scarlet. So you know, right now we're 42 00:02:08,040 --> 00:02:10,639 Speaker 4: looking at a company with the thirty dollars per share bid. 43 00:02:10,680 --> 00:02:12,720 Speaker 4: We're looking at a company that's going to be levered 44 00:02:12,800 --> 00:02:17,200 Speaker 4: about six and a half times, they raise that bid 45 00:02:17,240 --> 00:02:19,560 Speaker 4: to let's say thirty two, thirty three, thirty four, whatever 46 00:02:19,560 --> 00:02:21,760 Speaker 4: the number is. You're going to look at a company 47 00:02:21,760 --> 00:02:24,239 Speaker 4: that's value that's going to be levered at about seven 48 00:02:24,320 --> 00:02:27,799 Speaker 4: to maybe seven point three times. What happens with those 49 00:02:27,880 --> 00:02:31,600 Speaker 4: dangerous levels of debt is, you know, it just becomes 50 00:02:31,639 --> 00:02:33,960 Speaker 4: a distraction. You're not going to be able to invest 51 00:02:33,960 --> 00:02:36,639 Speaker 4: in growth, You're just going to be focused on deleveraging. 52 00:02:37,440 --> 00:02:40,800 Speaker 4: This is exactly what we've seen, you know, happen many 53 00:02:40,880 --> 00:02:43,680 Speaker 4: a time in the media world. It's happened actually to 54 00:02:43,720 --> 00:02:46,120 Speaker 4: Warner Brothers Discovery itself. You know, they had over fifty 55 00:02:46,120 --> 00:02:47,920 Speaker 4: billion dollars in debt and the only thing that they 56 00:02:47,919 --> 00:02:49,760 Speaker 4: were hyper focused on is Okay, how do we keep 57 00:02:49,960 --> 00:02:52,840 Speaker 4: you know, reducing that dead pile. And so the biggest 58 00:02:52,840 --> 00:02:54,960 Speaker 4: worry is that's what's going to happen to Paramount. So, yes, 59 00:02:55,000 --> 00:02:57,919 Speaker 4: they could get their hands on this absolutely world class asset, 60 00:02:58,520 --> 00:03:02,200 Speaker 4: but yes, leverage becomes this huge, huge headache for them. 61 00:03:02,720 --> 00:03:04,880 Speaker 2: If any sense of timing, it doesn't seem like either 62 00:03:04,919 --> 00:03:06,519 Speaker 2: side feels. 63 00:03:06,240 --> 00:03:08,400 Speaker 3: The need to, I don't know, be aggressive here. 64 00:03:09,800 --> 00:03:13,600 Speaker 4: So February twentieth. That's what that's the date that paramounts 65 00:03:14,120 --> 00:03:17,440 Speaker 4: a proxy bid actually expires. It was initially Jan twenty 66 00:03:17,440 --> 00:03:20,680 Speaker 4: at the extended to February twentieth, So that's the thirty 67 00:03:20,720 --> 00:03:25,120 Speaker 4: dollars hostile bid. That's the date of expiring. Remember, Paul 68 00:03:25,200 --> 00:03:28,560 Speaker 4: and Scarlett, only about seven percent of Warner Brothers shares 69 00:03:28,880 --> 00:03:31,480 Speaker 4: two date have been tendered at that thirty dollars bit, 70 00:03:31,520 --> 00:03:34,240 Speaker 4: so everybody's still kind of holding out for that higher 71 00:03:34,400 --> 00:03:35,280 Speaker 4: per share offer. 72 00:03:35,720 --> 00:03:37,680 Speaker 5: I think that tells you everything you need to know 73 00:03:37,760 --> 00:03:39,520 Speaker 5: right now. Then Februy twenty eight is the day we'll 74 00:03:39,560 --> 00:03:42,520 Speaker 5: watch for Geita. Let's also talk about Spotify here. It 75 00:03:42,560 --> 00:03:45,320 Speaker 5: added a record number of users thirty eight million users 76 00:03:45,320 --> 00:03:48,800 Speaker 5: to seven hundred and fifty one million, topping analyst estimates. 77 00:03:49,400 --> 00:03:51,720 Speaker 5: How much more room is there to raise prices because 78 00:03:51,920 --> 00:03:55,040 Speaker 5: increased price prices in the US was certainly part of 79 00:03:55,040 --> 00:03:58,360 Speaker 5: that story. And it looks like consumers continue to sign up. 80 00:03:59,160 --> 00:04:02,000 Speaker 4: Conzuomer's continue to sign up. Yes, we're seeing Spotify and 81 00:04:02,040 --> 00:04:04,200 Speaker 4: if you just look at the subscriber trajectory scuddled over 82 00:04:04,200 --> 00:04:06,800 Speaker 4: the past few years, they've added about twenty eight to 83 00:04:06,920 --> 00:04:10,240 Speaker 4: thirty million subscribers every year, and there's just no signs 84 00:04:10,280 --> 00:04:12,800 Speaker 4: of slowing down. They keep adding a record number of subscribers, 85 00:04:12,880 --> 00:04:15,960 Speaker 4: record number of active users quarter after quarter. So there's 86 00:04:16,000 --> 00:04:19,159 Speaker 4: just so much of appetite for this platform for music 87 00:04:19,200 --> 00:04:21,880 Speaker 4: in general, for audio in general, So that is definitely 88 00:04:21,880 --> 00:04:24,919 Speaker 4: good news. You talked about pricing power. I think, you know, 89 00:04:25,120 --> 00:04:28,000 Speaker 4: just with kind of the user interface that Spotify offers, 90 00:04:28,000 --> 00:04:29,840 Speaker 4: with all of the content that it offers in terms 91 00:04:29,839 --> 00:04:32,280 Speaker 4: of breadth and depth of content, and as they keep 92 00:04:32,320 --> 00:04:36,120 Speaker 4: adding more enhancements, they do have a lot more leverage 93 00:04:36,120 --> 00:04:39,160 Speaker 4: to keep raising those prices. So you know, they've made 94 00:04:39,200 --> 00:04:41,240 Speaker 4: a pretty bold move by raising their prices a little 95 00:04:41,240 --> 00:04:43,040 Speaker 4: bit earlier this year. So now now it is thirteen 96 00:04:43,120 --> 00:04:46,280 Speaker 4: dollars for an individual plan in the US. That was 97 00:04:46,320 --> 00:04:49,000 Speaker 4: a little bit above the rest of their competitors. But 98 00:04:49,040 --> 00:04:51,000 Speaker 4: then we just saw a few days ago Amazon Music 99 00:04:51,040 --> 00:04:53,479 Speaker 4: also kind of raising prices, which then I think just 100 00:04:53,640 --> 00:04:56,560 Speaker 4: speaks to the audio industry in general. I mean, everybody 101 00:04:56,560 --> 00:04:58,520 Speaker 4: there has a lot of pricing power, but I think 102 00:04:58,560 --> 00:05:02,719 Speaker 4: Spotify definitely has the most, just kind of again given 103 00:05:02,800 --> 00:05:05,120 Speaker 4: the fact that they are a best in class product. 104 00:05:05,440 --> 00:05:08,760 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 105 00:05:12,400 --> 00:05:16,119 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 106 00:05:16,200 --> 00:05:19,279 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 107 00:05:19,279 --> 00:05:22,599 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 108 00:05:22,680 --> 00:05:25,800 Speaker 1: you get your podcasts, or watch us live on YouTube. 109 00:05:26,279 --> 00:05:28,400 Speaker 5: We have markets in the green right now, and the 110 00:05:28,520 --> 00:05:31,960 Speaker 5: NASAC is among them. We've had seen this decoupling between 111 00:05:31,960 --> 00:05:34,159 Speaker 5: big tech and the rest of the stock market, but 112 00:05:34,360 --> 00:05:37,560 Speaker 5: big tech is back in the green once again, and 113 00:05:37,640 --> 00:05:40,800 Speaker 5: the big news really is Alphabet and all the hyperscalars. 114 00:05:41,080 --> 00:05:44,800 Speaker 5: It's going to need about one hundred and eighty five 115 00:05:44,839 --> 00:05:48,320 Speaker 5: billion dollars in terms of capex over the this year, 116 00:05:48,680 --> 00:05:50,080 Speaker 5: and so it has to raise a lot of money 117 00:05:50,080 --> 00:05:53,080 Speaker 5: in the debt market. Caroline Hyde is the co anchor 118 00:05:53,120 --> 00:05:55,719 Speaker 5: of b Tech and Caroline Alphed has had a banner 119 00:05:55,800 --> 00:05:58,440 Speaker 5: twenty four hours looking to raise almost thirty two billion 120 00:05:58,480 --> 00:06:01,160 Speaker 5: dollars or a pretty much to raise thirty two billion 121 00:06:01,200 --> 00:06:03,360 Speaker 5: dollars in less than twenty four hours. 122 00:06:03,440 --> 00:06:06,280 Speaker 6: I know we've got dollar denominated debt, you've got sterling, 123 00:06:06,360 --> 00:06:10,000 Speaker 6: you've got Swiss frank and what's extraordinary is the extent 124 00:06:10,040 --> 00:06:13,000 Speaker 6: of demand. They could have sold way more the thirty 125 00:06:13,040 --> 00:06:15,599 Speaker 6: two billion dollars. They had extraordinary, more than one hundred 126 00:06:15,600 --> 00:06:18,919 Speaker 6: billion dollars worth of orders for the upsized twenty billion 127 00:06:18,960 --> 00:06:22,120 Speaker 6: dollar US sale. We're ranging from you know, three year 128 00:06:22,160 --> 00:06:23,920 Speaker 6: to ten is out to as much as thirty year, 129 00:06:24,240 --> 00:06:26,360 Speaker 6: thirty two year. But then you're looking to the UK, 130 00:06:26,760 --> 00:06:30,599 Speaker 6: they're selling one billion pounds of my great British sterling 131 00:06:31,520 --> 00:06:34,160 Speaker 6: in one hundred year bonds, a century bond. Now you 132 00:06:34,200 --> 00:06:36,119 Speaker 6: haven't seen a tech company do that since motor rollers. 133 00:06:36,160 --> 00:06:37,120 Speaker 7: It's the nineties. 134 00:06:37,720 --> 00:06:40,720 Speaker 6: And look this, it's such a vote confidence. Yes, you 135 00:06:40,760 --> 00:06:42,320 Speaker 6: can say, is Google going to be here in one 136 00:06:42,400 --> 00:06:44,680 Speaker 6: hundred years time? A lot of these companies pay off 137 00:06:44,760 --> 00:06:47,320 Speaker 6: the debt well ahead of one hundred years. Disney they 138 00:06:47,360 --> 00:06:49,440 Speaker 6: issued back in the nineties, they paid it off in 139 00:06:49,480 --> 00:06:54,160 Speaker 6: the in twenty twenties. But really what this is a resolute, 140 00:06:55,680 --> 00:06:59,120 Speaker 6: clear signal of is that people believe in Alphabet, they 141 00:06:59,120 --> 00:07:01,240 Speaker 6: believe in their ability to pay for the AI infrastructure, 142 00:07:01,240 --> 00:07:02,920 Speaker 6: They believe in that one hundred and eighty five billion 143 00:07:03,200 --> 00:07:05,520 Speaker 6: of spending in capex is a wise decision, and that 144 00:07:05,560 --> 00:07:06,960 Speaker 6: they are going to be an AI winner. 145 00:07:07,000 --> 00:07:08,320 Speaker 3: More across the. 146 00:07:08,320 --> 00:07:10,920 Speaker 6: Board, we're seeing a record Swiss frame issuance. You haven't 147 00:07:10,960 --> 00:07:14,119 Speaker 6: seen a market been tapped to this extent and again 148 00:07:14,240 --> 00:07:15,920 Speaker 6: a record amount of demand for it. 149 00:07:16,200 --> 00:07:18,600 Speaker 2: Rob Schiffman covers the tech from the credit size for 150 00:07:18,640 --> 00:07:19,480 Speaker 2: Bloomberg Intelligence. 151 00:07:19,520 --> 00:07:22,480 Speaker 8: T says, the windows wide open for these companies. They 152 00:07:22,520 --> 00:07:25,080 Speaker 8: can keep coming to the market, which is amazing for 153 00:07:25,120 --> 00:07:27,480 Speaker 8: them and they are. We also got a piece of 154 00:07:27,480 --> 00:07:30,920 Speaker 8: news Thaiwan Semiconductor Manufacturing said their January sales worth their 155 00:07:30,960 --> 00:07:33,480 Speaker 8: fastest clip in months. So if you needed, I guess 156 00:07:33,480 --> 00:07:37,000 Speaker 8: another data point supporting this continuing AI spending, there you go. 157 00:07:37,120 --> 00:07:39,800 Speaker 6: Yeah, thirty seven percent increase year on year. In terms 158 00:07:39,800 --> 00:07:42,080 Speaker 6: of yes, it was probably a bit of a slower year. 159 00:07:42,480 --> 00:07:45,080 Speaker 6: It's a slower January previous year because of the way 160 00:07:45,120 --> 00:07:48,080 Speaker 6: that the vacations and holidays fell in China. But TSMC 161 00:07:48,320 --> 00:07:51,640 Speaker 6: is the chip manufacturer to the world in Nvidia Apple. 162 00:07:51,720 --> 00:07:53,840 Speaker 6: If you think about a consumer electronics, if you're thinking 163 00:07:53,880 --> 00:07:56,840 Speaker 6: about the AI data center story, this is the company 164 00:07:56,880 --> 00:07:58,520 Speaker 6: that has been dining out on it. The shares are 165 00:07:58,520 --> 00:08:00,280 Speaker 6: at a record when you're looking at them entire one 166 00:08:00,480 --> 00:08:03,800 Speaker 6: or indeed on their ADRs trading abroad, and it just 167 00:08:04,040 --> 00:08:07,440 Speaker 6: signals that the AI bubble that we're so concerned about 168 00:08:07,480 --> 00:08:10,080 Speaker 6: the idea that everyone's just passing money amongst themselves. There 169 00:08:10,120 --> 00:08:12,720 Speaker 6: is real orders going in from on a fundamental basis 170 00:08:12,760 --> 00:08:13,840 Speaker 6: for this particular chip maker. 171 00:08:13,880 --> 00:08:16,600 Speaker 5: Yeah, and it's the hardware maker TSMC. Let's talk about 172 00:08:16,640 --> 00:08:20,040 Speaker 5: other hardware companies because they are paying up for memory chips, 173 00:08:20,360 --> 00:08:23,520 Speaker 5: and those memory chip makers, some are winning, some maybe 174 00:08:23,560 --> 00:08:26,160 Speaker 5: are under more pressure, and investors are trying to discern 175 00:08:26,480 --> 00:08:28,680 Speaker 5: whose best place. How are you thinking about this? 176 00:08:28,960 --> 00:08:30,520 Speaker 6: I think a lot of people are trying to understand 177 00:08:30,520 --> 00:08:32,240 Speaker 6: where is the cost pressure. The cost pressure is for 178 00:08:32,280 --> 00:08:36,080 Speaker 6: those electronics companies. Apple has more control over its supply chain, 179 00:08:36,120 --> 00:08:38,600 Speaker 6: its own own chips, but still, more broadly, if you're 180 00:08:38,600 --> 00:08:41,000 Speaker 6: looking at an index of electronics makers, like thinking of 181 00:08:41,000 --> 00:08:43,559 Speaker 6: the Nintendos of this world, they've sold off about ten 182 00:08:43,600 --> 00:08:47,160 Speaker 6: percent in the beginning of this year. Meanwhile, the memory 183 00:08:47,200 --> 00:08:49,880 Speaker 6: makers are up about one hundred and sixty percent or so. 184 00:08:49,920 --> 00:08:52,280 Speaker 6: We're seeing Samsung being the winner here, you're seeing the 185 00:08:52,360 --> 00:08:54,760 Speaker 6: likes of Micron. You're seeing Yes, there is turbenance day 186 00:08:54,800 --> 00:08:57,000 Speaker 6: in day out, but more broadly it has been up 187 00:08:57,040 --> 00:08:59,760 Speaker 6: and to the right for these memory makers because not 188 00:09:00,120 --> 00:09:02,960 Speaker 6: only is there necessary to put them into your hardware 189 00:09:02,960 --> 00:09:05,560 Speaker 6: and your electronics but really the ferocious demand to put 190 00:09:05,600 --> 00:09:08,560 Speaker 6: them in AI data centers. Remember this is high bandwidth 191 00:09:08,600 --> 00:09:11,400 Speaker 6: memory that everyone's been going on about. The hk Heinex 192 00:09:11,440 --> 00:09:15,120 Speaker 6: has been winning in for Skhinex, for example, over in Korea. Well, 193 00:09:15,559 --> 00:09:17,760 Speaker 6: because there's so much demand there and it's so much 194 00:09:17,800 --> 00:09:19,719 Speaker 6: more profitable for them, they're having to sort of put 195 00:09:19,760 --> 00:09:23,679 Speaker 6: their boring, bog standard memory chips that you want in 196 00:09:23,720 --> 00:09:26,439 Speaker 6: your devices to the back burner, and it's really hurting 197 00:09:26,480 --> 00:09:27,200 Speaker 6: these companies. 198 00:09:28,280 --> 00:09:31,079 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up. Care 199 00:09:31,160 --> 00:09:31,440 Speaker 3: for this. 200 00:09:35,320 --> 00:09:39,040 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 201 00:09:39,120 --> 00:09:40,160 Speaker 1: weekdays at ten am. 202 00:09:40,200 --> 00:09:40,880 Speaker 3: He's done on. 203 00:09:40,880 --> 00:09:44,120 Speaker 1: Apple, Coarplay and Android Auto with the Bloomberg Business app. 204 00:09:44,240 --> 00:09:47,440 Speaker 1: Listen on demand wherever you get your podcasts, or watch 205 00:09:47,559 --> 00:09:48,680 Speaker 1: us live on YouTube. 206 00:09:49,760 --> 00:09:52,800 Speaker 5: Let's get to some more corporate earnings, because we are 207 00:09:52,880 --> 00:09:55,280 Speaker 5: knee deep in earning season. We're past the big tech 208 00:09:55,280 --> 00:09:57,800 Speaker 5: companies and now we're really focused on the companies that 209 00:09:57,840 --> 00:10:00,880 Speaker 5: make up this US economy. Companies like Has, the toymaker. 210 00:10:01,280 --> 00:10:03,480 Speaker 5: The shares are up more than seven percent right now. 211 00:10:03,559 --> 00:10:06,480 Speaker 5: Lindsay Dutch is joining us. She is the consumer Hardline 212 00:10:06,520 --> 00:10:11,440 Speaker 5: Senior analyst at Bloomberg Intelligence and Lindsay. This earnings report 213 00:10:11,559 --> 00:10:14,880 Speaker 5: shows it had a decent fourth quarter revenue and earnings 214 00:10:14,880 --> 00:10:17,520 Speaker 5: for share beat, but the guidance the outlook was seen 215 00:10:17,559 --> 00:10:21,800 Speaker 5: as fairly conservative, yet investors seem to be rewarding the 216 00:10:21,880 --> 00:10:24,880 Speaker 5: Stock's the what's the story here for Hasbro? 217 00:10:26,000 --> 00:10:28,760 Speaker 9: Hice Garlet, thanks for having me. So the story for 218 00:10:28,840 --> 00:10:32,319 Speaker 9: Hasbro is, you know, the result in twenty five, including 219 00:10:32,360 --> 00:10:35,040 Speaker 9: the fourth quarter, is really being driven by their Wizard 220 00:10:35,080 --> 00:10:39,440 Speaker 9: of the Coast digital gaming segment. That that segment has 221 00:10:39,440 --> 00:10:42,840 Speaker 9: been growing rapidly forty five percent on the year, sixty 222 00:10:42,880 --> 00:10:45,920 Speaker 9: percent I think for Magic of the Gathering in the quarter. 223 00:10:46,800 --> 00:10:49,200 Speaker 9: So just tremendous growth coming out of that brand, better 224 00:10:49,240 --> 00:10:53,160 Speaker 9: than expected, and that unit is really going to carry 225 00:10:53,200 --> 00:10:56,040 Speaker 9: the growth in twenty twenty six. The outlook for the 226 00:10:56,040 --> 00:10:59,760 Speaker 9: consumer products with their toy segment is still kind of weak, 227 00:11:00,480 --> 00:11:03,400 Speaker 9: so it's really coming out of that digital gaming segment. 228 00:11:04,040 --> 00:11:06,880 Speaker 9: But I think investors are pleased with the outlook there 229 00:11:07,080 --> 00:11:10,079 Speaker 9: just because they're lapping very difficult comps. So to see 230 00:11:10,080 --> 00:11:12,960 Speaker 9: solid growth in twenty six coming out of that, it 231 00:11:13,040 --> 00:11:14,200 Speaker 9: was a good surprise. 232 00:11:14,559 --> 00:11:18,960 Speaker 3: What's the competitive landscape out there? Hasbro Mattel others. How's 233 00:11:19,000 --> 00:11:19,559 Speaker 3: that playing out. 234 00:11:20,840 --> 00:11:23,200 Speaker 9: Yeah, So we get matel results later today and we'll 235 00:11:23,200 --> 00:11:24,800 Speaker 9: have to see how that goes. It was a very 236 00:11:24,920 --> 00:11:28,320 Speaker 9: challenging twenty twenty five, you know, with the tariffs, we 237 00:11:28,440 --> 00:11:32,160 Speaker 9: had retailers delaying the holiday orders and that really threw 238 00:11:32,200 --> 00:11:36,000 Speaker 9: a wrench into the entire year for these toymakers. Hasbro 239 00:11:36,160 --> 00:11:39,120 Speaker 9: did report, you know, a plus seven percent sales growth 240 00:11:39,120 --> 00:11:41,240 Speaker 9: in the fourth quarter for consumer products. 241 00:11:41,280 --> 00:11:43,920 Speaker 7: That was the first quarter of growth and quite some time. 242 00:11:44,400 --> 00:11:48,000 Speaker 9: They do expect toy growth in twenty twenty six, but 243 00:11:48,080 --> 00:11:49,800 Speaker 9: it could be low single digits. 244 00:11:50,120 --> 00:11:51,439 Speaker 7: You know, there's a lot of headwinds. 245 00:11:51,480 --> 00:11:53,960 Speaker 9: You know, we just saw you know, disappointing retailer sales 246 00:11:54,000 --> 00:11:57,559 Speaker 9: for December, so there's a lot of uncertainty about consumers 247 00:11:57,640 --> 00:12:00,679 Speaker 9: out there and a rebound in that category. And we 248 00:12:00,720 --> 00:12:03,120 Speaker 9: should hear more from Mattel, you know that they're the 249 00:12:03,160 --> 00:12:04,880 Speaker 9: dominant player in dolls. 250 00:12:05,880 --> 00:12:08,200 Speaker 7: So we'll heal more later today. 251 00:12:09,120 --> 00:12:11,800 Speaker 5: Lindsay, what about Tariff's Is this something that Hasbro has 252 00:12:11,840 --> 00:12:16,079 Speaker 5: figured out and it's no longer something that leaves its 253 00:12:16,080 --> 00:12:19,000 Speaker 5: earnings to be kind of unreliable and they've kind of 254 00:12:19,000 --> 00:12:20,000 Speaker 5: smoothed things out. 255 00:12:22,000 --> 00:12:25,520 Speaker 9: So it definitely affected the year, so about forty million 256 00:12:25,559 --> 00:12:29,800 Speaker 9: dollars in the fourth quarter. A headwind for margin there, 257 00:12:29,880 --> 00:12:33,520 Speaker 9: especially on that consumer products segment, so that margin did 258 00:12:33,559 --> 00:12:35,920 Speaker 9: decline year over year, which was a disappointment. 259 00:12:36,520 --> 00:12:39,000 Speaker 7: It's certainly going to be a headwind. 260 00:12:38,679 --> 00:12:42,360 Speaker 9: For profitability at least in the first half, and comps 261 00:12:42,400 --> 00:12:45,200 Speaker 9: will get easier in the second half. But Hasbro did 262 00:12:45,360 --> 00:12:49,360 Speaker 9: note that, you know, much of the cost savings program 263 00:12:49,360 --> 00:12:52,360 Speaker 9: that they're working on and other supply chain efficiencies, they 264 00:12:52,400 --> 00:12:56,000 Speaker 9: were able to offset a significant portion of that cost. 265 00:12:56,760 --> 00:12:58,920 Speaker 9: So that is a good sign, but there's still a 266 00:12:58,960 --> 00:13:01,319 Speaker 9: little bit of a headwind for the next two quarters. 267 00:13:02,120 --> 00:13:04,880 Speaker 2: I'm just looking at the FA function on the Bloomberg terminal, 268 00:13:04,920 --> 00:13:07,880 Speaker 2: gives me all the financial analysism. Boy, the operating income 269 00:13:07,920 --> 00:13:10,080 Speaker 2: profit for the Wizards of the Coast and the digital 270 00:13:10,120 --> 00:13:14,760 Speaker 2: segment is huge, whereas the profitability of their regular toy 271 00:13:14,800 --> 00:13:18,200 Speaker 2: business not so much. Is a company just throwing all 272 00:13:18,240 --> 00:13:19,920 Speaker 2: the resources into their digital stuff? 273 00:13:19,960 --> 00:13:21,640 Speaker 3: Is that the strategy? 274 00:13:22,000 --> 00:13:25,920 Speaker 9: So they have definitely been pushing for several years now 275 00:13:25,960 --> 00:13:28,840 Speaker 9: to become a bigger player in that digital world, but 276 00:13:28,880 --> 00:13:32,240 Speaker 9: also really to become known for that. So I would say, 277 00:13:32,280 --> 00:13:35,280 Speaker 9: you know, one of Hasbro's big brands, Monopoly that that's 278 00:13:35,320 --> 00:13:38,360 Speaker 9: what many people know that the company for is that 279 00:13:38,400 --> 00:13:41,760 Speaker 9: traditional Monopoly board game. But they are pushing into this 280 00:13:41,800 --> 00:13:44,440 Speaker 9: world of digital games. You know, they want to be 281 00:13:44,520 --> 00:13:47,360 Speaker 9: valued as such. And I will say, you know, they 282 00:13:47,360 --> 00:13:50,200 Speaker 9: do have a digital version of Monopoly Monopoly Go, and 283 00:13:50,200 --> 00:13:53,679 Speaker 9: that has done very very well over the past couple 284 00:13:53,679 --> 00:13:57,720 Speaker 9: of years. It continues to surprise, including in the fourth quarter. 285 00:13:58,200 --> 00:14:01,199 Speaker 9: So they're definitely moving in that direction. But that toy 286 00:14:01,280 --> 00:14:04,960 Speaker 9: segment consumer products, you know, still is pretty large. It 287 00:14:05,000 --> 00:14:08,240 Speaker 9: was still around fifty percent of revenue for twenty five. 288 00:14:08,800 --> 00:14:11,160 Speaker 9: I do think that will that mix will come down 289 00:14:11,200 --> 00:14:13,800 Speaker 9: over time, but it's still a big piece of their 290 00:14:13,840 --> 00:14:15,199 Speaker 9: business that they can't ignore. 291 00:14:16,040 --> 00:14:16,360 Speaker 10: Lindsay. 292 00:14:16,440 --> 00:14:18,560 Speaker 5: I also noticed that in this latest earning support, they 293 00:14:18,559 --> 00:14:22,200 Speaker 5: announced a one billion dollar stock buyback authorization. I believe 294 00:14:22,240 --> 00:14:24,880 Speaker 5: this is the first by back since twenty eighteen. What 295 00:14:25,000 --> 00:14:27,760 Speaker 5: does that signal to you? 296 00:14:27,760 --> 00:14:30,080 Speaker 9: You know, I think that their Hasbro was still working 297 00:14:30,160 --> 00:14:36,040 Speaker 9: through their capital allocation priorities. They're still focused on reducing leverage. 298 00:14:36,640 --> 00:14:39,400 Speaker 9: You know, their dividend has been flat for quite some time, 299 00:14:40,240 --> 00:14:42,440 Speaker 9: so I think they're looking at different avenues now that 300 00:14:42,480 --> 00:14:46,440 Speaker 9: they're in a much better financial position than they had been. 301 00:14:46,240 --> 00:14:47,640 Speaker 7: Maybe a year or two ago. 302 00:14:48,520 --> 00:14:50,320 Speaker 9: So I think it's just a signal that that that 303 00:14:50,360 --> 00:14:55,000 Speaker 9: position is solidly better and they're looking to redeploy cash 304 00:14:55,000 --> 00:14:57,440 Speaker 9: in different ways that they maybe couldn't have done a 305 00:14:57,480 --> 00:14:58,320 Speaker 9: year or so ago. 306 00:14:58,920 --> 00:15:01,520 Speaker 2: Again, using the PG function, you can see where the 307 00:15:01,520 --> 00:15:05,440 Speaker 2: revenue comes from geographically for this companigy, and the international business, 308 00:15:05,440 --> 00:15:07,320 Speaker 2: which was about forty percent of the revenue, has been 309 00:15:07,360 --> 00:15:11,080 Speaker 2: declining as a percentage of total revenue. Here, is there 310 00:15:11,080 --> 00:15:14,120 Speaker 2: a strategy there to focus on the US or are 311 00:15:14,120 --> 00:15:15,600 Speaker 2: they pulling back from international? 312 00:15:15,680 --> 00:15:17,320 Speaker 3: What's that strategy? 313 00:15:18,200 --> 00:15:20,520 Speaker 9: Yeah, so I don't think that they're necessarily pulling back 314 00:15:20,560 --> 00:15:21,479 Speaker 9: from international. 315 00:15:21,480 --> 00:15:23,280 Speaker 7: Toys is a global business. 316 00:15:23,600 --> 00:15:25,640 Speaker 9: I think a lot of that is reflecting the growth 317 00:15:25,680 --> 00:15:27,880 Speaker 9: and wizards of the cost and the digital gaming. So 318 00:15:27,920 --> 00:15:30,720 Speaker 9: the digital gaming, it's really picking up very quickly in 319 00:15:30,760 --> 00:15:32,680 Speaker 9: the US or seeing a lot of growth there, and 320 00:15:32,720 --> 00:15:38,800 Speaker 9: that's partly shifting that geographical concentration. That digital gaming business 321 00:15:38,880 --> 00:15:42,640 Speaker 9: is a global business, So some of that shift might 322 00:15:43,000 --> 00:15:46,400 Speaker 9: move back the reverse over time, but I think the 323 00:15:46,440 --> 00:15:48,600 Speaker 9: near term shift is just part of that growth on 324 00:15:48,640 --> 00:15:50,720 Speaker 9: the digital gaming side. 325 00:15:52,040 --> 00:15:54,480 Speaker 3: Stay with us more from Bloomberg Intelligence coming. 326 00:15:54,360 --> 00:16:00,000 Speaker 1: Up there for this, you're listening to the Bloomberg Intelligen 327 00:16:00,040 --> 00:16:03,040 Speaker 1: in the podcast Catch us Live weekdays at ten am. 328 00:16:03,080 --> 00:16:03,760 Speaker 3: He's done on. 329 00:16:03,760 --> 00:16:07,000 Speaker 1: Apple, Cocklay and Android Auto with the blue Berg Business App. 330 00:16:07,120 --> 00:16:10,360 Speaker 1: Listen on demand wherever you get your podcasts, or watch 331 00:16:10,440 --> 00:16:11,560 Speaker 1: us Live on YouTube. 332 00:16:12,160 --> 00:16:14,760 Speaker 5: All right, let's get back to earning season, because those 333 00:16:14,760 --> 00:16:17,240 Speaker 5: are not the only companies that reported. Coca Cola also 334 00:16:17,600 --> 00:16:20,640 Speaker 5: came out with its latest results and maybe perhaps a 335 00:16:20,640 --> 00:16:23,600 Speaker 5: bit underwhelming given the stock price reaction down two percent 336 00:16:23,640 --> 00:16:26,680 Speaker 5: at the moment. Kenshe is our consumer products analysts, our 337 00:16:26,720 --> 00:16:29,880 Speaker 5: senior consumer products analysts, and he joined us now from Princeton. 338 00:16:30,280 --> 00:16:32,600 Speaker 5: So what's the story from Coca Cola, Ken, What did 339 00:16:32,600 --> 00:16:33,200 Speaker 5: they tell us? 340 00:16:34,320 --> 00:16:38,800 Speaker 10: Yeah, hi, Scarlett. Well, Coke in the fourth quarter, revenues 341 00:16:38,840 --> 00:16:41,480 Speaker 10: are up to EPs was up six percent, pretty much 342 00:16:41,480 --> 00:16:46,240 Speaker 10: in line with expectations. But I think what maybe concerning 343 00:16:46,280 --> 00:16:49,040 Speaker 10: the mark a little bit about Coke is that the 344 00:16:50,200 --> 00:16:52,960 Speaker 10: mix was not as favorable as it had been well, 345 00:16:53,000 --> 00:16:54,800 Speaker 10: so the company with the past couple of years had 346 00:16:54,840 --> 00:16:58,440 Speaker 10: been relying heavily on price mix to boost the top line. 347 00:16:59,080 --> 00:17:02,080 Speaker 10: It was a considerable slow going in the quarter. Having 348 00:17:02,160 --> 00:17:04,400 Speaker 10: said that, there's always some noise in the fourth quarter. 349 00:17:04,440 --> 00:17:07,240 Speaker 10: It's hard to draw too many conclusions from the fourth quarter. 350 00:17:07,800 --> 00:17:10,359 Speaker 10: But I think the market is also being spooked a 351 00:17:10,400 --> 00:17:14,360 Speaker 10: little bit by the guidance for next year, which came 352 00:17:14,400 --> 00:17:17,080 Speaker 10: in a bit a little bit late. The company's long 353 00:17:17,160 --> 00:17:21,080 Speaker 10: term algorithm is to generate about four to six percent 354 00:17:21,200 --> 00:17:25,200 Speaker 10: organic revenue and from that it can generate high comparable 355 00:17:25,240 --> 00:17:27,880 Speaker 10: EPs growth, and it did that in twenty twenty five. 356 00:17:28,480 --> 00:17:31,320 Speaker 10: In twenty twenty six, other saying four to five percent 357 00:17:31,440 --> 00:17:34,399 Speaker 10: top line and four to five percent EPs growth, and 358 00:17:34,480 --> 00:17:40,160 Speaker 10: so that's EPs growth again, that's excluding currency effects. It's 359 00:17:40,200 --> 00:17:43,639 Speaker 10: not only below their long term algorithm, but also below 360 00:17:43,760 --> 00:17:46,120 Speaker 10: consensus expectations going in. 361 00:17:46,840 --> 00:17:49,960 Speaker 2: What's the You know, we always talk at a lot 362 00:17:50,000 --> 00:17:52,639 Speaker 2: of your companies, the contuber products companies as staples companies 363 00:17:52,640 --> 00:17:54,560 Speaker 2: that you think about them as kind of GDP maybe 364 00:17:54,560 --> 00:17:56,359 Speaker 2: a little bit GDP plus kind of growth here. 365 00:17:56,440 --> 00:17:58,040 Speaker 3: Is there any secret. 366 00:17:57,640 --> 00:17:59,480 Speaker 2: Sauce to the Coca Cola story or is that the 367 00:17:59,520 --> 00:18:00,640 Speaker 2: way we should think about it? 368 00:18:01,680 --> 00:18:04,520 Speaker 10: Well, there's a lot of truth to that, Paul, because 369 00:18:04,520 --> 00:18:06,760 Speaker 10: Coke is in the two hundred markets around the world. 370 00:18:06,840 --> 00:18:09,840 Speaker 10: You know, I guess the way for growth is lunar 371 00:18:09,880 --> 00:18:13,000 Speaker 10: at this point, I mean they're everywhere. But I think 372 00:18:14,480 --> 00:18:16,600 Speaker 10: there's gonna be a new CEO on March thirty first, 373 00:18:16,840 --> 00:18:19,480 Speaker 10: Henry Barraun. He's a long time veteran at Coca Cola, 374 00:18:19,800 --> 00:18:22,600 Speaker 10: was the COO used to head a Latin American operations. 375 00:18:22,760 --> 00:18:24,760 Speaker 10: I think there's a lot of confidence in his ability 376 00:18:25,040 --> 00:18:29,000 Speaker 10: to take the reins here. And I think what he's 377 00:18:29,000 --> 00:18:32,000 Speaker 10: going to spell out in his vision next week at CAGNY, 378 00:18:32,119 --> 00:18:33,919 Speaker 10: that's when they usually do it. 379 00:18:34,000 --> 00:18:36,880 Speaker 3: That's what you'll be Yeah. 380 00:18:37,280 --> 00:18:40,199 Speaker 10: Well, I think he's gonna say that they need to 381 00:18:40,200 --> 00:18:43,320 Speaker 10: step up their marketing and innovation here to boost that 382 00:18:43,400 --> 00:18:46,160 Speaker 10: top line growth. And I think they're going to talk 383 00:18:46,240 --> 00:18:50,320 Speaker 10: a lot about functionality, something that we talked about with Pesico. 384 00:18:50,880 --> 00:18:53,800 Speaker 10: What I mean by functionality, well, well, consumers want more 385 00:18:53,840 --> 00:18:56,440 Speaker 10: from their beverages than just taste good and hydrate them. 386 00:18:56,840 --> 00:19:00,879 Speaker 10: They want to not only have zero calies, zero sugar, 387 00:19:01,400 --> 00:19:04,520 Speaker 10: but if they wants to have more electrolytes in their water, 388 00:19:04,880 --> 00:19:07,680 Speaker 10: it wants to have more protein in their drinks. Particularly 389 00:19:07,720 --> 00:19:11,840 Speaker 10: the JLP one crowd, they want to have fiber coke 390 00:19:12,240 --> 00:19:14,800 Speaker 10: offers in its probiotics. So it is like simply pop 391 00:19:15,400 --> 00:19:16,639 Speaker 10: So these are the kind of things they're going to 392 00:19:16,640 --> 00:19:19,840 Speaker 10: talk about in terms of product innovation, I believe next week. 393 00:19:20,520 --> 00:19:22,159 Speaker 10: In addition to that, I think the company's going to 394 00:19:22,200 --> 00:19:25,360 Speaker 10: spend more in marketing, digital marketing, get the message out 395 00:19:25,400 --> 00:19:27,040 Speaker 10: to new young consumers. 396 00:19:27,400 --> 00:19:28,960 Speaker 5: I guess the idea is to just have your drink 397 00:19:29,040 --> 00:19:29,879 Speaker 5: or place your food. 398 00:19:30,320 --> 00:19:31,000 Speaker 3: I guess. 399 00:19:32,560 --> 00:19:36,080 Speaker 5: Zero Sugar actually was a standout, right with Coca Cola 400 00:19:36,160 --> 00:19:39,359 Speaker 5: Zero Sugar posting double digit volume growth in the quarter. 401 00:19:39,600 --> 00:19:41,119 Speaker 5: When you say that they want to focus on the 402 00:19:41,119 --> 00:19:43,240 Speaker 5: innovation and get the word out, what does that mean 403 00:19:43,280 --> 00:19:46,120 Speaker 5: in terms of spending on marketing. What does that mean 404 00:19:46,160 --> 00:19:48,480 Speaker 5: on in terms of capital expenses? 405 00:19:49,680 --> 00:19:52,840 Speaker 10: Well, I think, broadly speaking, more social media advertising. I 406 00:19:52,840 --> 00:19:55,160 Speaker 10: mean on a purview basis, that's a lot more cost 407 00:19:55,160 --> 00:19:59,119 Speaker 10: efficient than traditional ways like television poll You would know 408 00:19:59,160 --> 00:20:02,360 Speaker 10: that right analyst days. So it's more of that. It's 409 00:20:02,359 --> 00:20:05,439 Speaker 10: also working more closely with their bottlers in terms of 410 00:20:05,840 --> 00:20:09,240 Speaker 10: co marketing ventures. That could be a wide range of things, 411 00:20:09,320 --> 00:20:12,920 Speaker 10: not only digital marketing, but perhaps coming out new packaging, 412 00:20:13,160 --> 00:20:17,800 Speaker 10: whether it's multi packs to attract an economical consumer, to 413 00:20:19,280 --> 00:20:23,239 Speaker 10: spending more on its fountain dispenser. You see a lot 414 00:20:23,320 --> 00:20:26,520 Speaker 10: of a lot of fast food restaurants where they can 415 00:20:27,040 --> 00:20:30,360 Speaker 10: make their own sodas and so on. Spread that out 416 00:20:30,359 --> 00:20:33,760 Speaker 10: more to have more consumer engagement matter where they are. Yep, 417 00:20:34,000 --> 00:20:35,200 Speaker 10: so I see. 418 00:20:35,040 --> 00:20:35,440 Speaker 6: More of that. 419 00:20:36,160 --> 00:20:40,879 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 420 00:20:41,040 --> 00:20:45,000 Speaker 1: and anywhere else you get your podcasts. 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