WEBVTT - Paramount Sweetens Warner Bros. Bid Terms to Woo Investors 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.880 Eastern on Apple, Coarplay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business app. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.560 or watch us live on YouTube. 0:00:24.320 --> 0:00:26.840 Let's turn our attention to the media space. Lot's going 0:00:26.880 --> 0:00:29.320 on out there. Spotify reported some earnings, but we want 0:00:29.320 --> 0:00:31.160 to lead with Warner Brothers Discovery. 0:00:31.160 --> 0:00:33.520 That MNA sag can continues to play out today. 0:00:33.920 --> 0:00:37.920 Paramount kind of amended its bid to add some more 0:00:38.000 --> 0:00:42.520 cash funding for a termination fee, instituting a ticking option 0:00:42.640 --> 0:00:46.479 here for this thing. Keitha Ranganath and she file follows 0:00:46.479 --> 0:00:50.160 this as the media analyst for Bloomberg Intelligence. Keith, let's 0:00:50.159 --> 0:00:53.440 start with Warner Brothers Discovery here. I'm still surprised that 0:00:53.479 --> 0:00:58.240 Powermount has not raised its bid from thirty dollars. That 0:00:58.280 --> 0:01:00.840 are making changes and maybe some enhancement mins to the offer, 0:01:01.080 --> 0:01:02.720 but not raising the bid in general. 0:01:02.720 --> 0:01:03.400 What do you make of it? 0:01:04.360 --> 0:01:06.800 Yeah, still playing the cat and mouse game here, Paul. 0:01:07.319 --> 0:01:10.080 They did stop short of actually raising the offer, but yes, 0:01:10.120 --> 0:01:13.240 you're right, they are offering now this almost one dollar 0:01:13.319 --> 0:01:17.560 and eighty cents per share to cover the termination fee 0:01:17.640 --> 0:01:19.520 with the Netflix deal, as well as some of the 0:01:19.520 --> 0:01:21.320 financing costs, and then of course, as you just mentioned, 0:01:21.319 --> 0:01:23.360 the ticking feed. I don't know though, if this will 0:01:23.400 --> 0:01:26.640 necessarily fly with the Warner Brothers Discovery boat. I think 0:01:26.680 --> 0:01:30.080 this is just Paramount exhausting all of its options before 0:01:30.400 --> 0:01:33.280 you know, they actually raise the bid. But in my mind, 0:01:33.319 --> 0:01:35.480 what this signals is, yes, they did stop short of 0:01:35.520 --> 0:01:37.960 actually raising that thirty dollars bid, but I do think 0:01:38.000 --> 0:01:41.240 that the signals that they are willing to kind of 0:01:41.280 --> 0:01:44.199 go back to the table and probably raise that bid. 0:01:45.240 --> 0:01:47.760 As you know, kind of this thing keeps dragging on. 0:01:48.320 --> 0:01:50.120 Yeah, it does feel a little bit silly given that 0:01:50.200 --> 0:01:52.400 David Ellison had said that thirty dollars a share was 0:01:52.400 --> 0:01:54.920 not their best and final offer, So let's let's kind 0:01:54.920 --> 0:01:57.120 of get to it. That begs the question, Keithan, this 0:01:57.160 --> 0:01:59.640 is a dumb question. Do they have the money to 0:01:59.720 --> 0:02:00.360 raise bid? 0:02:02.040 --> 0:02:04.800 They do, But the question is really going to be 0:02:04.960 --> 0:02:08.000 what happens after Scarlet. So you know, right now we're 0:02:08.040 --> 0:02:10.639 looking at a company with the thirty dollars per share bid. 0:02:10.680 --> 0:02:12.720 We're looking at a company that's going to be levered 0:02:12.800 --> 0:02:17.200 about six and a half times, they raise that bid 0:02:17.240 --> 0:02:19.560 to let's say thirty two, thirty three, thirty four, whatever 0:02:19.560 --> 0:02:21.760 the number is. You're going to look at a company 0:02:21.760 --> 0:02:24.239 that's value that's going to be levered at about seven 0:02:24.320 --> 0:02:27.799 to maybe seven point three times. What happens with those 0:02:27.880 --> 0:02:31.600 dangerous levels of debt is, you know, it just becomes 0:02:31.639 --> 0:02:33.960 a distraction. You're not going to be able to invest 0:02:33.960 --> 0:02:36.639 in growth, You're just going to be focused on deleveraging. 0:02:37.440 --> 0:02:40.800 This is exactly what we've seen, you know, happen many 0:02:40.880 --> 0:02:43.680 a time in the media world. It's happened actually to 0:02:43.720 --> 0:02:46.120 Warner Brothers Discovery itself. You know, they had over fifty 0:02:46.120 --> 0:02:47.920 billion dollars in debt and the only thing that they 0:02:47.919 --> 0:02:49.760 were hyper focused on is Okay, how do we keep 0:02:49.960 --> 0:02:52.840 you know, reducing that dead pile. And so the biggest 0:02:52.840 --> 0:02:54.960 worry is that's what's going to happen to Paramount. So, yes, 0:02:55.000 --> 0:02:57.919 they could get their hands on this absolutely world class asset, 0:02:58.520 --> 0:03:02.200 but yes, leverage becomes this huge, huge headache for them. 0:03:02.720 --> 0:03:04.880 If any sense of timing, it doesn't seem like either 0:03:04.919 --> 0:03:06.519 side feels. 0:03:06.240 --> 0:03:08.400 The need to, I don't know, be aggressive here. 0:03:09.800 --> 0:03:13.600 So February twentieth. That's what that's the date that paramounts 0:03:14.120 --> 0:03:17.440 a proxy bid actually expires. It was initially Jan twenty 0:03:17.440 --> 0:03:20.680 at the extended to February twentieth, So that's the thirty 0:03:20.720 --> 0:03:25.120 dollars hostile bid. That's the date of expiring. Remember, Paul 0:03:25.200 --> 0:03:28.560 and Scarlett, only about seven percent of Warner Brothers shares 0:03:28.880 --> 0:03:31.480 two date have been tendered at that thirty dollars bit, 0:03:31.520 --> 0:03:34.240 so everybody's still kind of holding out for that higher 0:03:34.400 --> 0:03:35.280 per share offer. 0:03:35.720 --> 0:03:37.680 I think that tells you everything you need to know 0:03:37.760 --> 0:03:39.520 right now. Then Februy twenty eight is the day we'll 0:03:39.560 --> 0:03:42.520 watch for Geita. Let's also talk about Spotify here. It 0:03:42.560 --> 0:03:45.320 added a record number of users thirty eight million users 0:03:45.320 --> 0:03:48.800 to seven hundred and fifty one million, topping analyst estimates. 0:03:49.400 --> 0:03:51.720 How much more room is there to raise prices because 0:03:51.920 --> 0:03:55.040 increased price prices in the US was certainly part of 0:03:55.040 --> 0:03:58.360 that story. And it looks like consumers continue to sign up. 0:03:59.160 --> 0:04:02.000 Conzuomer's continue to sign up. Yes, we're seeing Spotify and 0:04:02.040 --> 0:04:04.200 if you just look at the subscriber trajectory scuddled over 0:04:04.200 --> 0:04:06.800 the past few years, they've added about twenty eight to 0:04:06.920 --> 0:04:10.240 thirty million subscribers every year, and there's just no signs 0:04:10.280 --> 0:04:12.800 of slowing down. They keep adding a record number of subscribers, 0:04:12.880 --> 0:04:15.960 record number of active users quarter after quarter. So there's 0:04:16.000 --> 0:04:19.159 just so much of appetite for this platform for music 0:04:19.200 --> 0:04:21.880 in general, for audio in general, So that is definitely 0:04:21.880 --> 0:04:24.919 good news. You talked about pricing power. I think, you know, 0:04:25.120 --> 0:04:28.000 just with kind of the user interface that Spotify offers, 0:04:28.000 --> 0:04:29.840 with all of the content that it offers in terms 0:04:29.839 --> 0:04:32.280 of breadth and depth of content, and as they keep 0:04:32.320 --> 0:04:36.120 adding more enhancements, they do have a lot more leverage 0:04:36.120 --> 0:04:39.160 to keep raising those prices. So you know, they've made 0:04:39.200 --> 0:04:41.240 a pretty bold move by raising their prices a little 0:04:41.240 --> 0:04:43.040 bit earlier this year. So now now it is thirteen 0:04:43.120 --> 0:04:46.280 dollars for an individual plan in the US. That was 0:04:46.320 --> 0:04:49.000 a little bit above the rest of their competitors. But 0:04:49.040 --> 0:04:51.000 then we just saw a few days ago Amazon Music 0:04:51.040 --> 0:04:53.479 also kind of raising prices, which then I think just 0:04:53.640 --> 0:04:56.560 speaks to the audio industry in general. I mean, everybody 0:04:56.560 --> 0:04:58.520 there has a lot of pricing power, but I think 0:04:58.560 --> 0:05:02.719 Spotify definitely has the most, just kind of again given 0:05:02.800 --> 0:05:05.120 the fact that they are a best in class product. 0:05:05.440 --> 0:05:08.760 Stay with us. More from Bloomberg Intelligence coming up after this. 0:05:12.400 --> 0:05:16.119 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:05:16.200 --> 0:05:19.279 weekdays at ten am Eastern on Apple, Cocklay and Android 0:05:19.279 --> 0:05:22.599 Auto with the Bloomberg Business App. Listen on demand wherever 0:05:22.680 --> 0:05:25.800 you get your podcasts, or watch us live on YouTube. 0:05:26.279 --> 0:05:28.400 We have markets in the green right now, and the 0:05:28.520 --> 0:05:31.960 NASAC is among them. We've had seen this decoupling between 0:05:31.960 --> 0:05:34.159 big tech and the rest of the stock market, but 0:05:34.360 --> 0:05:37.560 big tech is back in the green once again, and 0:05:37.640 --> 0:05:40.800 the big news really is Alphabet and all the hyperscalars. 0:05:41.080 --> 0:05:44.800 It's going to need about one hundred and eighty five 0:05:44.839 --> 0:05:48.320 billion dollars in terms of capex over the this year, 0:05:48.680 --> 0:05:50.080 and so it has to raise a lot of money 0:05:50.080 --> 0:05:53.080 in the debt market. Caroline Hyde is the co anchor 0:05:53.120 --> 0:05:55.719 of b Tech and Caroline Alphed has had a banner 0:05:55.800 --> 0:05:58.440 twenty four hours looking to raise almost thirty two billion 0:05:58.480 --> 0:06:01.160 dollars or a pretty much to raise thirty two billion 0:06:01.200 --> 0:06:03.360 dollars in less than twenty four hours. 0:06:03.440 --> 0:06:06.280 I know we've got dollar denominated debt, you've got sterling, 0:06:06.360 --> 0:06:10.000 you've got Swiss frank and what's extraordinary is the extent 0:06:10.040 --> 0:06:13.000 of demand. They could have sold way more the thirty 0:06:13.040 --> 0:06:15.599 two billion dollars. They had extraordinary, more than one hundred 0:06:15.600 --> 0:06:18.919 billion dollars worth of orders for the upsized twenty billion 0:06:18.960 --> 0:06:22.120 dollar US sale. We're ranging from you know, three year 0:06:22.160 --> 0:06:23.920 to ten is out to as much as thirty year, 0:06:24.240 --> 0:06:26.360 thirty two year. But then you're looking to the UK, 0:06:26.760 --> 0:06:30.599 they're selling one billion pounds of my great British sterling 0:06:31.520 --> 0:06:34.160 in one hundred year bonds, a century bond. Now you 0:06:34.200 --> 0:06:36.119 haven't seen a tech company do that since motor rollers. 0:06:36.160 --> 0:06:37.120 It's the nineties. 0:06:37.720 --> 0:06:40.720 And look this, it's such a vote confidence. Yes, you 0:06:40.760 --> 0:06:42.320 can say, is Google going to be here in one 0:06:42.400 --> 0:06:44.680 hundred years time? A lot of these companies pay off 0:06:44.760 --> 0:06:47.320 the debt well ahead of one hundred years. Disney they 0:06:47.360 --> 0:06:49.440 issued back in the nineties, they paid it off in 0:06:49.480 --> 0:06:54.160 the in twenty twenties. But really what this is a resolute, 0:06:55.680 --> 0:06:59.120 clear signal of is that people believe in Alphabet, they 0:06:59.120 --> 0:07:01.240 believe in their ability to pay for the AI infrastructure, 0:07:01.240 --> 0:07:02.920 They believe in that one hundred and eighty five billion 0:07:03.200 --> 0:07:05.520 of spending in capex is a wise decision, and that 0:07:05.560 --> 0:07:06.960 they are going to be an AI winner. 0:07:07.000 --> 0:07:08.320 More across the. 0:07:08.320 --> 0:07:10.920 Board, we're seeing a record Swiss frame issuance. You haven't 0:07:10.960 --> 0:07:14.119 seen a market been tapped to this extent and again 0:07:14.240 --> 0:07:15.920 a record amount of demand for it. 0:07:16.200 --> 0:07:18.600 Rob Schiffman covers the tech from the credit size for 0:07:18.640 --> 0:07:19.480 Bloomberg Intelligence. 0:07:19.520 --> 0:07:22.480 T says, the windows wide open for these companies. They 0:07:22.520 --> 0:07:25.080 can keep coming to the market, which is amazing for 0:07:25.120 --> 0:07:27.480 them and they are. We also got a piece of 0:07:27.480 --> 0:07:30.920 news Thaiwan Semiconductor Manufacturing said their January sales worth their 0:07:30.960 --> 0:07:33.480 fastest clip in months. So if you needed, I guess 0:07:33.480 --> 0:07:37.000 another data point supporting this continuing AI spending, there you go. 0:07:37.120 --> 0:07:39.800 Yeah, thirty seven percent increase year on year. In terms 0:07:39.800 --> 0:07:42.080 of yes, it was probably a bit of a slower year. 0:07:42.480 --> 0:07:45.080 It's a slower January previous year because of the way 0:07:45.120 --> 0:07:48.080 that the vacations and holidays fell in China. But TSMC 0:07:48.320 --> 0:07:51.640 is the chip manufacturer to the world in Nvidia Apple. 0:07:51.720 --> 0:07:53.840 If you think about a consumer electronics, if you're thinking 0:07:53.880 --> 0:07:56.840 about the AI data center story, this is the company 0:07:56.880 --> 0:07:58.520 that has been dining out on it. The shares are 0:07:58.520 --> 0:08:00.280 at a record when you're looking at them entire one 0:08:00.480 --> 0:08:03.800 or indeed on their ADRs trading abroad, and it just 0:08:04.040 --> 0:08:07.440 signals that the AI bubble that we're so concerned about 0:08:07.480 --> 0:08:10.080 the idea that everyone's just passing money amongst themselves. There 0:08:10.120 --> 0:08:12.720 is real orders going in from on a fundamental basis 0:08:12.760 --> 0:08:13.840 for this particular chip maker. 0:08:13.880 --> 0:08:16.600 Yeah, and it's the hardware maker TSMC. Let's talk about 0:08:16.640 --> 0:08:20.040 other hardware companies because they are paying up for memory chips, 0:08:20.360 --> 0:08:23.520 and those memory chip makers, some are winning, some maybe 0:08:23.560 --> 0:08:26.160 are under more pressure, and investors are trying to discern 0:08:26.480 --> 0:08:28.680 whose best place. How are you thinking about this? 0:08:28.960 --> 0:08:30.520 I think a lot of people are trying to understand 0:08:30.520 --> 0:08:32.240 where is the cost pressure. The cost pressure is for 0:08:32.280 --> 0:08:36.080 those electronics companies. Apple has more control over its supply chain, 0:08:36.120 --> 0:08:38.600 its own own chips, but still, more broadly, if you're 0:08:38.600 --> 0:08:41.000 looking at an index of electronics makers, like thinking of 0:08:41.000 --> 0:08:43.559 the Nintendos of this world, they've sold off about ten 0:08:43.600 --> 0:08:47.160 percent in the beginning of this year. Meanwhile, the memory 0:08:47.200 --> 0:08:49.880 makers are up about one hundred and sixty percent or so. 0:08:49.920 --> 0:08:52.280 We're seeing Samsung being the winner here, you're seeing the 0:08:52.360 --> 0:08:54.760 likes of Micron. You're seeing Yes, there is turbenance day 0:08:54.800 --> 0:08:57.000 in day out, but more broadly it has been up 0:08:57.040 --> 0:08:59.760 and to the right for these memory makers because not 0:09:00.120 --> 0:09:02.960 only is there necessary to put them into your hardware 0:09:02.960 --> 0:09:05.560 and your electronics but really the ferocious demand to put 0:09:05.600 --> 0:09:08.560 them in AI data centers. Remember this is high bandwidth 0:09:08.600 --> 0:09:11.400 memory that everyone's been going on about. The hk Heinex 0:09:11.440 --> 0:09:15.120 has been winning in for Skhinex, for example, over in Korea. Well, 0:09:15.559 --> 0:09:17.760 because there's so much demand there and it's so much 0:09:17.800 --> 0:09:19.719 more profitable for them, they're having to sort of put 0:09:19.760 --> 0:09:23.679 their boring, bog standard memory chips that you want in 0:09:23.720 --> 0:09:26.439 your devices to the back burner, and it's really hurting 0:09:26.480 --> 0:09:27.200 these companies. 0:09:28.280 --> 0:09:31.079 Stay with us. More from Bloomberg Intelligence coming up. Care 0:09:31.160 --> 0:09:31.440 for this. 0:09:35.320 --> 0:09:39.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:09:39.120 --> 0:09:40.160 weekdays at ten am. 0:09:40.200 --> 0:09:40.880 He's done on. 0:09:40.880 --> 0:09:44.120 Apple, Coarplay and Android Auto with the Bloomberg Business app. 0:09:44.240 --> 0:09:47.440 Listen on demand wherever you get your podcasts, or watch 0:09:47.559 --> 0:09:48.680 us live on YouTube. 0:09:49.760 --> 0:09:52.800 Let's get to some more corporate earnings, because we are 0:09:52.880 --> 0:09:55.280 knee deep in earning season. We're past the big tech 0:09:55.280 --> 0:09:57.800 companies and now we're really focused on the companies that 0:09:57.840 --> 0:10:00.880 make up this US economy. Companies like Has, the toymaker. 0:10:01.280 --> 0:10:03.480 The shares are up more than seven percent right now. 0:10:03.559 --> 0:10:06.480 Lindsay Dutch is joining us. She is the consumer Hardline 0:10:06.520 --> 0:10:11.440 Senior analyst at Bloomberg Intelligence and Lindsay. This earnings report 0:10:11.559 --> 0:10:14.880 shows it had a decent fourth quarter revenue and earnings 0:10:14.880 --> 0:10:17.520 for share beat, but the guidance the outlook was seen 0:10:17.559 --> 0:10:21.800 as fairly conservative, yet investors seem to be rewarding the 0:10:21.880 --> 0:10:24.880 Stock's the what's the story here for Hasbro? 0:10:26.000 --> 0:10:28.760 Hice Garlet, thanks for having me. So the story for 0:10:28.840 --> 0:10:32.319 Hasbro is, you know, the result in twenty five, including 0:10:32.360 --> 0:10:35.040 the fourth quarter, is really being driven by their Wizard 0:10:35.080 --> 0:10:39.440 of the Coast digital gaming segment. That that segment has 0:10:39.440 --> 0:10:42.840 been growing rapidly forty five percent on the year, sixty 0:10:42.880 --> 0:10:45.920 percent I think for Magic of the Gathering in the quarter. 0:10:46.800 --> 0:10:49.200 So just tremendous growth coming out of that brand, better 0:10:49.240 --> 0:10:53.160 than expected, and that unit is really going to carry 0:10:53.200 --> 0:10:56.040 the growth in twenty twenty six. The outlook for the 0:10:56.040 --> 0:10:59.760 consumer products with their toy segment is still kind of weak, 0:11:00.480 --> 0:11:03.400 so it's really coming out of that digital gaming segment. 0:11:04.040 --> 0:11:06.880 But I think investors are pleased with the outlook there 0:11:07.080 --> 0:11:10.079 just because they're lapping very difficult comps. So to see 0:11:10.080 --> 0:11:12.960 solid growth in twenty six coming out of that, it 0:11:13.040 --> 0:11:14.200 was a good surprise. 0:11:14.559 --> 0:11:18.960 What's the competitive landscape out there? Hasbro Mattel others. How's 0:11:19.000 --> 0:11:19.559 that playing out. 0:11:20.840 --> 0:11:23.200 Yeah, So we get matel results later today and we'll 0:11:23.200 --> 0:11:24.800 have to see how that goes. It was a very 0:11:24.920 --> 0:11:28.320 challenging twenty twenty five, you know, with the tariffs, we 0:11:28.440 --> 0:11:32.160 had retailers delaying the holiday orders and that really threw 0:11:32.200 --> 0:11:36.000 a wrench into the entire year for these toymakers. Hasbro 0:11:36.160 --> 0:11:39.120 did report, you know, a plus seven percent sales growth 0:11:39.120 --> 0:11:41.240 in the fourth quarter for consumer products. 0:11:41.280 --> 0:11:43.920 That was the first quarter of growth and quite some time. 0:11:44.400 --> 0:11:48.000 They do expect toy growth in twenty twenty six, but 0:11:48.080 --> 0:11:49.800 it could be low single digits. 0:11:50.120 --> 0:11:51.439 You know, there's a lot of headwinds. 0:11:51.480 --> 0:11:53.960 You know, we just saw you know, disappointing retailer sales 0:11:54.000 --> 0:11:57.559 for December, so there's a lot of uncertainty about consumers 0:11:57.640 --> 0:12:00.679 out there and a rebound in that category. And we 0:12:00.720 --> 0:12:03.120 should hear more from Mattel, you know that they're the 0:12:03.160 --> 0:12:04.880 dominant player in dolls. 0:12:05.880 --> 0:12:08.200 So we'll heal more later today. 0:12:09.120 --> 0:12:11.800 Lindsay, what about Tariff's Is this something that Hasbro has 0:12:11.840 --> 0:12:16.079 figured out and it's no longer something that leaves its 0:12:16.080 --> 0:12:19.000 earnings to be kind of unreliable and they've kind of 0:12:19.000 --> 0:12:20.000 smoothed things out. 0:12:22.000 --> 0:12:25.520 So it definitely affected the year, so about forty million 0:12:25.559 --> 0:12:29.800 dollars in the fourth quarter. A headwind for margin there, 0:12:29.880 --> 0:12:33.520 especially on that consumer products segment, so that margin did 0:12:33.559 --> 0:12:35.920 decline year over year, which was a disappointment. 0:12:36.520 --> 0:12:39.000 It's certainly going to be a headwind. 0:12:38.679 --> 0:12:42.360 For profitability at least in the first half, and comps 0:12:42.400 --> 0:12:45.200 will get easier in the second half. But Hasbro did 0:12:45.360 --> 0:12:49.360 note that, you know, much of the cost savings program 0:12:49.360 --> 0:12:52.360 that they're working on and other supply chain efficiencies, they 0:12:52.400 --> 0:12:56.000 were able to offset a significant portion of that cost. 0:12:56.760 --> 0:12:58.920 So that is a good sign, but there's still a 0:12:58.960 --> 0:13:01.319 little bit of a headwind for the next two quarters. 0:13:02.120 --> 0:13:04.880 I'm just looking at the FA function on the Bloomberg terminal, 0:13:04.920 --> 0:13:07.880 gives me all the financial analysism. Boy, the operating income 0:13:07.920 --> 0:13:10.080 profit for the Wizards of the Coast and the digital 0:13:10.120 --> 0:13:14.760 segment is huge, whereas the profitability of their regular toy 0:13:14.800 --> 0:13:18.200 business not so much. Is a company just throwing all 0:13:18.240 --> 0:13:19.920 the resources into their digital stuff? 0:13:19.960 --> 0:13:21.640 Is that the strategy? 0:13:22.000 --> 0:13:25.920 So they have definitely been pushing for several years now 0:13:25.960 --> 0:13:28.840 to become a bigger player in that digital world, but 0:13:28.880 --> 0:13:32.240 also really to become known for that. So I would say, 0:13:32.280 --> 0:13:35.280 you know, one of Hasbro's big brands, Monopoly that that's 0:13:35.320 --> 0:13:38.360 what many people know that the company for is that 0:13:38.400 --> 0:13:41.760 traditional Monopoly board game. But they are pushing into this 0:13:41.800 --> 0:13:44.440 world of digital games. You know, they want to be 0:13:44.520 --> 0:13:47.360 valued as such. And I will say, you know, they 0:13:47.360 --> 0:13:50.200 do have a digital version of Monopoly Monopoly Go, and 0:13:50.200 --> 0:13:53.679 that has done very very well over the past couple 0:13:53.679 --> 0:13:57.720 of years. It continues to surprise, including in the fourth quarter. 0:13:58.200 --> 0:14:01.199 So they're definitely moving in that direction. But that toy 0:14:01.280 --> 0:14:04.960 segment consumer products, you know, still is pretty large. It 0:14:05.000 --> 0:14:08.240 was still around fifty percent of revenue for twenty five. 0:14:08.800 --> 0:14:11.160 I do think that will that mix will come down 0:14:11.200 --> 0:14:13.800 over time, but it's still a big piece of their 0:14:13.840 --> 0:14:15.199 business that they can't ignore. 0:14:16.040 --> 0:14:16.360 Lindsay. 0:14:16.440 --> 0:14:18.560 I also noticed that in this latest earning support, they 0:14:18.559 --> 0:14:22.200 announced a one billion dollar stock buyback authorization. I believe 0:14:22.240 --> 0:14:24.880 this is the first by back since twenty eighteen. What 0:14:25.000 --> 0:14:27.760 does that signal to you? 0:14:27.760 --> 0:14:30.080 You know, I think that their Hasbro was still working 0:14:30.160 --> 0:14:36.040 through their capital allocation priorities. They're still focused on reducing leverage. 0:14:36.640 --> 0:14:39.400 You know, their dividend has been flat for quite some time, 0:14:40.240 --> 0:14:42.440 so I think they're looking at different avenues now that 0:14:42.480 --> 0:14:46.440 they're in a much better financial position than they had been. 0:14:46.240 --> 0:14:47.640 Maybe a year or two ago. 0:14:48.520 --> 0:14:50.320 So I think it's just a signal that that that 0:14:50.360 --> 0:14:55.000 position is solidly better and they're looking to redeploy cash 0:14:55.000 --> 0:14:57.440 in different ways that they maybe couldn't have done a 0:14:57.480 --> 0:14:58.320 year or so ago. 0:14:58.920 --> 0:15:01.520 Again, using the PG function, you can see where the 0:15:01.520 --> 0:15:05.440 revenue comes from geographically for this companigy, and the international business, 0:15:05.440 --> 0:15:07.320 which was about forty percent of the revenue, has been 0:15:07.360 --> 0:15:11.080 declining as a percentage of total revenue. Here, is there 0:15:11.080 --> 0:15:14.120 a strategy there to focus on the US or are 0:15:14.120 --> 0:15:15.600 they pulling back from international? 0:15:15.680 --> 0:15:17.320 What's that strategy? 0:15:18.200 --> 0:15:20.520 Yeah, so I don't think that they're necessarily pulling back 0:15:20.560 --> 0:15:21.479 from international. 0:15:21.480 --> 0:15:23.280 Toys is a global business. 0:15:23.600 --> 0:15:25.640 I think a lot of that is reflecting the growth 0:15:25.680 --> 0:15:27.880 and wizards of the cost and the digital gaming. So 0:15:27.920 --> 0:15:30.720 the digital gaming, it's really picking up very quickly in 0:15:30.760 --> 0:15:32.680 the US or seeing a lot of growth there, and 0:15:32.720 --> 0:15:38.800 that's partly shifting that geographical concentration. That digital gaming business 0:15:38.880 --> 0:15:42.640 is a global business, So some of that shift might 0:15:43.000 --> 0:15:46.400 move back the reverse over time, but I think the 0:15:46.440 --> 0:15:48.600 near term shift is just part of that growth on 0:15:48.640 --> 0:15:50.720 the digital gaming side. 0:15:52.040 --> 0:15:54.480 Stay with us more from Bloomberg Intelligence coming. 0:15:54.360 --> 0:16:00.000 Up there for this, you're listening to the Bloomberg Intelligen 0:16:00.040 --> 0:16:03.040 in the podcast Catch us Live weekdays at ten am. 0:16:03.080 --> 0:16:03.760 He's done on. 0:16:03.760 --> 0:16:07.000 Apple, Cocklay and Android Auto with the blue Berg Business App. 0:16:07.120 --> 0:16:10.360 Listen on demand wherever you get your podcasts, or watch 0:16:10.440 --> 0:16:11.560 us Live on YouTube. 0:16:12.160 --> 0:16:14.760 All right, let's get back to earning season, because those 0:16:14.760 --> 0:16:17.240 are not the only companies that reported. Coca Cola also 0:16:17.600 --> 0:16:20.640 came out with its latest results and maybe perhaps a 0:16:20.640 --> 0:16:23.600 bit underwhelming given the stock price reaction down two percent 0:16:23.640 --> 0:16:26.680 at the moment. Kenshe is our consumer products analysts, our 0:16:26.720 --> 0:16:29.880 senior consumer products analysts, and he joined us now from Princeton. 0:16:30.280 --> 0:16:32.600 So what's the story from Coca Cola, Ken, What did 0:16:32.600 --> 0:16:33.200 they tell us? 0:16:34.320 --> 0:16:38.800 Yeah, hi, Scarlett. Well, Coke in the fourth quarter, revenues 0:16:38.840 --> 0:16:41.480 are up to EPs was up six percent, pretty much 0:16:41.480 --> 0:16:46.240 in line with expectations. But I think what maybe concerning 0:16:46.280 --> 0:16:49.040 the mark a little bit about Coke is that the 0:16:50.200 --> 0:16:52.960 mix was not as favorable as it had been well, 0:16:53.000 --> 0:16:54.800 so the company with the past couple of years had 0:16:54.840 --> 0:16:58.440 been relying heavily on price mix to boost the top line. 0:16:59.080 --> 0:17:02.080 It was a considerable slow going in the quarter. Having 0:17:02.160 --> 0:17:04.400 said that, there's always some noise in the fourth quarter. 0:17:04.440 --> 0:17:07.240 It's hard to draw too many conclusions from the fourth quarter. 0:17:07.800 --> 0:17:10.359 But I think the market is also being spooked a 0:17:10.400 --> 0:17:14.360 little bit by the guidance for next year, which came 0:17:14.400 --> 0:17:17.080 in a bit a little bit late. The company's long 0:17:17.160 --> 0:17:21.080 term algorithm is to generate about four to six percent 0:17:21.200 --> 0:17:25.200 organic revenue and from that it can generate high comparable 0:17:25.240 --> 0:17:27.880 EPs growth, and it did that in twenty twenty five. 0:17:28.480 --> 0:17:31.320 In twenty twenty six, other saying four to five percent 0:17:31.440 --> 0:17:34.399 top line and four to five percent EPs growth, and 0:17:34.480 --> 0:17:40.160 so that's EPs growth again, that's excluding currency effects. It's 0:17:40.200 --> 0:17:43.639 not only below their long term algorithm, but also below 0:17:43.760 --> 0:17:46.120 consensus expectations going in. 0:17:46.840 --> 0:17:49.960 What's the You know, we always talk at a lot 0:17:50.000 --> 0:17:52.639 of your companies, the contuber products companies as staples companies 0:17:52.640 --> 0:17:54.560 that you think about them as kind of GDP maybe 0:17:54.560 --> 0:17:56.359 a little bit GDP plus kind of growth here. 0:17:56.440 --> 0:17:58.040 Is there any secret. 0:17:57.640 --> 0:17:59.480 Sauce to the Coca Cola story or is that the 0:17:59.520 --> 0:18:00.640 way we should think about it? 0:18:01.680 --> 0:18:04.520 Well, there's a lot of truth to that, Paul, because 0:18:04.520 --> 0:18:06.760 Coke is in the two hundred markets around the world. 0:18:06.840 --> 0:18:09.840 You know, I guess the way for growth is lunar 0:18:09.880 --> 0:18:13.000 at this point, I mean they're everywhere. But I think 0:18:14.480 --> 0:18:16.600 there's gonna be a new CEO on March thirty first, 0:18:16.840 --> 0:18:19.480 Henry Barraun. He's a long time veteran at Coca Cola, 0:18:19.800 --> 0:18:22.600 was the COO used to head a Latin American operations. 0:18:22.760 --> 0:18:24.760 I think there's a lot of confidence in his ability 0:18:25.040 --> 0:18:29.000 to take the reins here. And I think what he's 0:18:29.000 --> 0:18:32.000 going to spell out in his vision next week at CAGNY, 0:18:32.119 --> 0:18:33.919 that's when they usually do it. 0:18:34.000 --> 0:18:36.880 That's what you'll be Yeah. 0:18:37.280 --> 0:18:40.199 Well, I think he's gonna say that they need to 0:18:40.200 --> 0:18:43.320 step up their marketing and innovation here to boost that 0:18:43.400 --> 0:18:46.160 top line growth. And I think they're going to talk 0:18:46.240 --> 0:18:50.320 a lot about functionality, something that we talked about with Pesico. 0:18:50.880 --> 0:18:53.800 What I mean by functionality, well, well, consumers want more 0:18:53.840 --> 0:18:56.440 from their beverages than just taste good and hydrate them. 0:18:56.840 --> 0:19:00.879 They want to not only have zero calies, zero sugar, 0:19:01.400 --> 0:19:04.520 but if they wants to have more electrolytes in their water, 0:19:04.880 --> 0:19:07.680 it wants to have more protein in their drinks. Particularly 0:19:07.720 --> 0:19:11.840 the JLP one crowd, they want to have fiber coke 0:19:12.240 --> 0:19:14.800 offers in its probiotics. So it is like simply pop 0:19:15.400 --> 0:19:16.639 So these are the kind of things they're going to 0:19:16.640 --> 0:19:19.840 talk about in terms of product innovation, I believe next week. 0:19:20.520 --> 0:19:22.159 In addition to that, I think the company's going to 0:19:22.200 --> 0:19:25.360 spend more in marketing, digital marketing, get the message out 0:19:25.400 --> 0:19:27.040 to new young consumers. 0:19:27.400 --> 0:19:28.960 I guess the idea is to just have your drink 0:19:29.040 --> 0:19:29.879 or place your food. 0:19:30.320 --> 0:19:31.000 I guess. 0:19:32.560 --> 0:19:36.080 Zero Sugar actually was a standout, right with Coca Cola 0:19:36.160 --> 0:19:39.359 Zero Sugar posting double digit volume growth in the quarter. 0:19:39.600 --> 0:19:41.119