WEBVTT - ETFs, Disney, and CRE 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.600 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.279 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market Moven News. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot com Slash podcast. 0:00:55.600 --> 0:00:56.760 All right, let's talk stocks. 0:00:56.840 --> 0:00:59.720 Let's talk stocks that pay dividends, and we do that 0:00:59.720 --> 0:01:03.160 with David Bonson. He's a founder and chief investment officer 0:01:03.200 --> 0:01:04.800 at the Bonson Group. 0:01:05.360 --> 0:01:06.600 David, We've got. 0:01:06.520 --> 0:01:08.320 Probably since the last time we talked had a nice 0:01:08.360 --> 0:01:12.160 move up and rates kind of you know, and I 0:01:12.160 --> 0:01:15.160 guess the question is, you know, dividend paying stocks. How 0:01:15.160 --> 0:01:18.160 do you think about dividen paying stocks in the context of, Hey, 0:01:18.160 --> 0:01:19.800 I can sit in a two year treasury and get 0:01:19.800 --> 0:01:21.280 four point ninety six percent here. 0:01:21.480 --> 0:01:23.280 Yeah, it's a very good question. And I think that 0:01:23.360 --> 0:01:25.880 when the two year is at zero percent for fifteen years, 0:01:25.880 --> 0:01:28.600 people got a feel for what my answer is going 0:01:28.640 --> 0:01:30.360 to be. The two year is not going to stay 0:01:30.360 --> 0:01:33.240 at four point nine cents, right, And if let's say 0:01:33.360 --> 0:01:35.160 you buy it and then in two years it's still 0:01:35.160 --> 0:01:38.240 at four point nine to six, it won't be and 0:01:38.560 --> 0:01:41.360 it isn't growing. That's the issue of dividend growth is 0:01:41.360 --> 0:01:43.960 the growth. Not only do you get something that is 0:01:44.000 --> 0:01:46.160 consistently going to be at the level which you enter, 0:01:46.240 --> 0:01:49.800 it's going to grow year over year. With fixed income. 0:01:49.520 --> 0:01:50.480 They hopefully right. 0:01:50.640 --> 0:01:54.720 I mean, there have been companies like BP or Disney 0:01:54.800 --> 0:01:56.080 that have cut dividends. 0:01:56.160 --> 0:01:58.120 It would be very very important for a dividen growth 0:01:58.160 --> 0:02:00.280 manager to not allow dividen cuts to have and so 0:02:00.320 --> 0:02:02.720 in twenty five years, we've never had one, and I 0:02:02.760 --> 0:02:04.640 intend to go to the rest of my career without one. 0:02:04.640 --> 0:02:07.000 But there are certainly companies that cut dividends, and we 0:02:07.040 --> 0:02:07.960 really don't recommend people. 0:02:08.000 --> 0:02:10.560 You don't get blindsided by something like BP. 0:02:10.919 --> 0:02:14.560 I mean, yeah, BP gave plenty of forecast that what 0:02:14.720 --> 0:02:17.280 was happening. You had both President Obama and the former 0:02:17.360 --> 0:02:20.480 candidate John McCain recommending the same thing that they ring 0:02:20.560 --> 0:02:23.800 fenced twenty billion of liability damage around it. There was 0:02:23.840 --> 0:02:25.440 no way they were going to do that and keep 0:02:25.480 --> 0:02:28.360 the dividend, So it gave people months of time to 0:02:28.440 --> 0:02:30.680 sell before the dividend was cut. 0:02:30.960 --> 0:02:32.679 That's why I needed something like him, because I didn't know. 0:02:32.680 --> 0:02:35.079 I didn't know that a career maker for me was 0:02:35.120 --> 0:02:35.600 City Group. 0:02:35.600 --> 0:02:38.040 In two thousand and seven, they came out announced that 0:02:38.040 --> 0:02:40.160 they were continuing to pay the dividend. At that point, 0:02:40.200 --> 0:02:41.680 it was up to about seven percent yield. 0:02:41.680 --> 0:02:42.960 The stock was down, and. 0:02:42.919 --> 0:02:45.880 Then they borrowed eleven billion dollars from the Kuwaitis and 0:02:45.960 --> 0:02:48.600 Saudi Arabian Sovereign Wealth Fund. And I said, I don't 0:02:48.600 --> 0:02:50.600 think people taking advance on their credit card to pay 0:02:50.600 --> 0:02:53.320 a dividend counts. It has to come from free cash flow. 0:02:53.440 --> 0:02:55.120 They have to have lower leverage, you have to have 0:02:55.160 --> 0:02:57.120 a good balance sheet, you have to have a business 0:02:57.200 --> 0:03:00.400 model that leads to sustainable free cash flow. That's why 0:03:00.480 --> 0:03:01.880 we have to be actively managing. 0:03:02.200 --> 0:03:04.520 So how many names are in your portfolio right now? 0:03:04.560 --> 0:03:05.320 Thirty three names? 0:03:05.320 --> 0:03:05.680 Thirty three? 0:03:05.720 --> 0:03:07.160 I never had more than thirty five in my home. 0:03:07.600 --> 0:03:11.760 And again and you're focusing exclusively on dividend growth, right 0:03:12.160 --> 0:03:15.680 and what's how do you define what's a good policy 0:03:15.720 --> 0:03:18.440 if I'm a CFO to plan my dividends? 0:03:18.680 --> 0:03:18.880 Ash? 0:03:19.080 --> 0:03:21.000 Is it a percentage of earnings? Is a percentage free 0:03:21.000 --> 0:03:21.520 cash flow? 0:03:21.720 --> 0:03:22.080 Is it? 0:03:22.120 --> 0:03:22.280 How? 0:03:22.360 --> 0:03:23.160 Is It's interesting? 0:03:23.200 --> 0:03:26.160 Did payout ratios refer to a percentage of earnings that 0:03:26.160 --> 0:03:28.079 are paid out? But we like to look at the 0:03:28.120 --> 0:03:30.880 free cash flow and what percentage of that's being paid out. 0:03:31.200 --> 0:03:34.000 And I think most CFOs in America are used to 0:03:34.120 --> 0:03:38.040 annualizing a dividend, even if earnings or free cash flow 0:03:38.040 --> 0:03:40.480 may be somewhat lumpy throughout the year. I think it's 0:03:40.520 --> 0:03:43.200 a much better way to do it and affect their 0:03:43.240 --> 0:03:45.640 growth one time a year as opposed to kind of 0:03:45.640 --> 0:03:48.320 going up and down. We have I think three companies 0:03:48.320 --> 0:03:51.840 in the portfolio and then it's Blackstone, Apollo, and Blue Out. 0:03:51.840 --> 0:03:55.720 They're asset managers that get carry and carry is intrinsically lumpy, 0:03:56.080 --> 0:03:58.360 so they tend to pay it a little lumpier, but 0:03:58.400 --> 0:04:01.360 most just pay it in a systematic quarterly way. 0:04:01.480 --> 0:04:05.360 So you're so the ETF is TBG, the Bonson Group 0:04:05.400 --> 0:04:10.280 pretty easy to remember, and so I click TBG Equity 0:04:10.480 --> 0:04:13.080 DS into the Bloomberg and then I can click the 0:04:13.080 --> 0:04:16.920 holdings tab and I see Simon Properties as your top holding. 0:04:17.279 --> 0:04:19.359 Now, Paul and I, I don't. 0:04:19.160 --> 0:04:21.680 Know exactly what's in Simon Property's portfolio, but Paul and 0:04:21.720 --> 0:04:24.479 I talk about commercial real estate with angst and fear 0:04:24.640 --> 0:04:25.239 every day. 0:04:25.720 --> 0:04:28.440 Well, that's you're making a really bullish argument, by the way, 0:04:28.520 --> 0:04:31.640 for a contrarian investor, which is to say, a good investor. 0:04:31.680 --> 0:04:33.800 But let me explain what's going on with Simon Property. 0:04:33.839 --> 0:04:36.400 It's two hundred and seventy two of the best malls 0:04:36.440 --> 0:04:38.680 in America. They have given the keys back for four 0:04:38.720 --> 0:04:41.400 of them. They were non recourse, so they lost a 0:04:41.400 --> 0:04:44.360 little bit of equity and the lenders had to go fight. Okay, 0:04:44.680 --> 0:04:47.040 right now, they have the highest occupancy in the history 0:04:47.040 --> 0:04:49.880 of Simon Property, at the highest per foot in the 0:04:49.920 --> 0:04:52.960 history of Simon Property. The ninety six point nine percent. 0:04:53.279 --> 0:04:55.800 They've taken positions and some of the retailers that have failed, 0:04:55.839 --> 0:04:57.719 there are going to be more that fail. Now they've 0:04:57.800 --> 0:05:01.159 learned to monetize that. They took jp Jcpenny for five 0:05:01.240 --> 0:05:04.000 hundred thousand dollars a box. It was trading at twenty 0:05:04.040 --> 0:05:07.560 million a box. They're selling some to Amazon, They're reconverting 0:05:07.640 --> 0:05:12.680 some into condos and mixed use. It's this massive collection 0:05:12.760 --> 0:05:15.760 of real estate that can be repurposed, monetized into something 0:05:15.800 --> 0:05:19.120 more valuable. While they do that, we get over seven 0:05:19.200 --> 0:05:22.640 percent yield entirely covered by net operating income, and the 0:05:22.720 --> 0:05:25.600 leverage is at about forty seven percent. It was sixty 0:05:25.640 --> 0:05:27.440 five percent before the financial crisis. 0:05:27.520 --> 0:05:29.400 All right. Number two is Verizon. 0:05:29.680 --> 0:05:32.360 That makes total sense to me, obviously as a dividend play. 0:05:32.800 --> 0:05:37.359 Number three International business machine Big Blue. 0:05:38.240 --> 0:05:39.920 One of the great names people could buy. 0:05:39.920 --> 0:05:41.679 And this is an idea of a model. 0:05:41.680 --> 0:05:44.320 We like a lot. You have old businesses that don't 0:05:44.360 --> 0:05:46.159 grow a lot paying you a ton of free cash 0:05:46.160 --> 0:05:49.120 flow with new businesses that are sort of not priced 0:05:49.160 --> 0:05:52.239 in the represent a free call option. Will they become 0:05:52.279 --> 0:05:54.840 a real leader in artificial intelligence? I don't know. I 0:05:54.880 --> 0:05:56.880 think they will, but I do know this, it's not 0:05:56.920 --> 0:05:59.880 priced in the stock at all. The stock is entirely 0:06:00.000 --> 0:06:02.520 priced off a multiple of its book value of a 0:06:02.760 --> 0:06:06.599 kind of more old, stodgier businesses. But they have basically 0:06:06.680 --> 0:06:10.760 turned most of the business into software and consulting recurring revenue. 0:06:11.080 --> 0:06:13.560 So we love IBM. You get five percent dividend yield. 0:06:13.600 --> 0:06:16.720 The Red Hat acquisition was expensive, but they're monetizing it, 0:06:16.960 --> 0:06:19.440 so IBM's a great dividend grower for years to come. 0:06:19.480 --> 0:06:21.799 All Right, I'm heading down to Duke University this afternoon, 0:06:21.800 --> 0:06:23.920 and I may or may not bump into Tim Cook, 0:06:24.279 --> 0:06:25.120 CEO of Apple. 0:06:25.240 --> 0:06:26.760 If I were to get you two guys. 0:06:26.520 --> 0:06:30.640 In a room talking dividends, what would you tell him? 0:06:30.920 --> 0:06:33.479 Well, I would not tell him anything that others much 0:06:33.520 --> 0:06:36.400 smarter and more prestigious than me have not also told him, 0:06:36.480 --> 0:06:38.920 And they have failed, and so I'm sure I would fail. 0:06:39.480 --> 0:06:43.640 But what Apple's doing is shameful, and the inability to 0:06:43.800 --> 0:06:48.279 monetize that level of enterprise value I think is unacceptable. 0:06:48.880 --> 0:06:52.640 They will not do something with that two hundred billion 0:06:52.640 --> 0:06:56.400 as profitable as returning it to shareholders. They bought Doctor 0:06:56.480 --> 0:06:59.400 J's headphone company for three billion dollars. It wasn't worth 0:06:59.480 --> 0:07:02.360 nine hundred millions, soaking wet, But who cares. 0:07:02.440 --> 0:07:02.960 It's Apple. 0:07:03.279 --> 0:07:07.440 They make it in five minutes. My point is, in aggregate, 0:07:08.040 --> 0:07:10.520 you can set money on fire when you don't have 0:07:10.560 --> 0:07:13.720 an adequate shareholder return policy. They are a victim of 0:07:13.720 --> 0:07:16.440 their own success. This cannot be set as a criticism. 0:07:16.720 --> 0:07:20.000 They generate too much free cash flow to reinvest all 0:07:20.040 --> 0:07:22.880 of it. It has to be returned to shareholders. There 0:07:22.880 --> 0:07:25.520 ought to be a very large, juicy dividend coming back 0:07:25.560 --> 0:07:27.560 to shareholders. Now here's the thing. They're gonna do it. 0:07:28.080 --> 0:07:30.200 Steve Jobs wouldn't do it. Tim Cook did end up 0:07:30.240 --> 0:07:32.800 doing a small one. Yep, they grew so much the 0:07:32.880 --> 0:07:35.560 yield is now half of a percentage point. I don't 0:07:35.560 --> 0:07:37.560 know if it's in a year or ten years, but 0:07:37.720 --> 0:07:42.480 every one of these arrogant cool tech companies finds out 0:07:42.520 --> 0:07:44.880 that at some point you have a higher return on 0:07:44.960 --> 0:07:46.800 equity returning this to shareholders. 0:07:46.880 --> 0:07:47.520 So all of the. 0:07:47.440 --> 0:07:51.400 Companies from the nineties that didn't do it, Cisco, Microsoft, Qualcom, 0:07:51.560 --> 0:07:54.760 they all became great dividend growers later Apple will as well. 0:07:54.760 --> 0:07:57.320 They're just not there yet. You're gonna you said you're 0:07:57.320 --> 0:07:58.840 gonna talk to them. I'm going to talk to them, 0:07:58.840 --> 0:07:59.640 and you're going to tell them. 0:07:59.680 --> 0:08:01.600 I'm want to say, I talked to this guy, David Bonson. 0:08:01.840 --> 0:08:05.640 He has a firm, it's his firm, Yeah, in Newport Beach, California. 0:08:05.680 --> 0:08:06.320 That's the beach. 0:08:06.800 --> 0:08:07.040 Yeah. 0:08:07.160 --> 0:08:08.960 Yet he spends three weeks a month here in New York. 0:08:09.600 --> 0:08:12.680 What are you doing, my man, it's your company. It's 0:08:12.720 --> 0:08:14.720 three weeks there, maybe a week here to talk to 0:08:14.800 --> 0:08:15.920 the eggheads. 0:08:15.400 --> 0:08:15.840 In New York. 0:08:16.000 --> 0:08:18.760 I really love to work and I think you'll find 0:08:18.760 --> 0:08:21.200 the work ethic is a little more impressive in Manhattan 0:08:21.320 --> 0:08:22.000 the Newport Beach. 0:08:22.160 --> 0:08:24.520 Are there other people that do like this intensive dividend 0:08:24.680 --> 0:08:25.560 strategy that you do? 0:08:26.600 --> 0:08:28.920 There are other divnent growth managers? There are not You 0:08:28.960 --> 0:08:32.360 mentioned this ETF that is active. Most ETFs that people 0:08:32.440 --> 0:08:34.400 own in the divid and growth space are passive, and 0:08:34.440 --> 0:08:37.400 I vehemently disagree with that approach. I think it's better 0:08:37.440 --> 0:08:41.120 than nothing. But we have built quite a business around 0:08:41.120 --> 0:08:43.760 active dividend growth and it's what I built my career around. 0:08:43.760 --> 0:08:44.760 I believe in it very much. 0:08:45.080 --> 0:08:46.920 Sold us the boxing. 0:08:47.880 --> 0:08:51.959 I'm trying to get him on the ETF OQ program. 0:08:52.120 --> 0:08:52.400 Do it. 0:08:52.480 --> 0:08:54.520 I think, do a little remote out there in l. 0:08:55.160 --> 0:08:57.319 We should definitely do it from Newport Beach. 0:08:57.200 --> 0:08:59.640 No, but instead we're going downtown to lower Manhat. 0:09:00.800 --> 0:09:04.199 You're listening to the Team Ken's are Live program Bloomberg 0:09:04.280 --> 0:09:07.680 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:09:07.720 --> 0:09:10.840 the iHeartRadio app and the Bloomberg Business app, or listen 0:09:10.920 --> 0:09:13.040 on demand wherever you get your podcasts. 0:09:14.600 --> 0:09:17.120 Disney reported numbers last night. I thought pretty good. They're 0:09:17.160 --> 0:09:20.040 cutting costs, so the stocks up. But quite frankly, folks, 0:09:20.040 --> 0:09:22.079 I've been doing this media stuff for almost thirty years. 0:09:22.120 --> 0:09:23.719 I have no idea how these companies are going to 0:09:23.760 --> 0:09:25.319 transition to this new streaming model. 0:09:25.320 --> 0:09:27.359 But that who cares because we have somebody. 0:09:27.120 --> 0:09:30.839 Who's really, really smart on this stuff, Michael Nathanson. He's 0:09:30.840 --> 0:09:34.280 a founding partner and senior research channelist Moffatt Nathanson. Michael, 0:09:34.280 --> 0:09:36.720 thanks so much for joining us here. Again, I'm like 0:09:36.760 --> 0:09:38.840 most investors like I don't know where to go with 0:09:38.880 --> 0:09:42.079 these media stocks. What did you hear from Disney last night? 0:09:43.120 --> 0:09:45.400 Well, I think what we heard from Disney that made 0:09:45.400 --> 0:09:50.040 a difference was they gave you cash flow guidance that 0:09:51.200 --> 0:09:55.559 many people feel more comfortable with the valuation, and you 0:09:55.640 --> 0:09:57.640 also heard that they're going to spend less on content 0:09:57.720 --> 0:10:00.600 going forward, and again, like it feels, and you said 0:10:00.600 --> 0:10:04.040 this before bout streaming, there is just over spending on streaming. 0:10:04.040 --> 0:10:06.680 People are throwing money at it left and right, and 0:10:06.720 --> 0:10:09.319 it feels to me that there's some rationality coming back 0:10:09.880 --> 0:10:13.040 and that Disney is going to spend less on cash 0:10:13.200 --> 0:10:16.160 content spend and that's going to basically drive free casheling. 0:10:16.520 --> 0:10:18.559 And to me, if you look at the Disney's earnings, 0:10:18.760 --> 0:10:22.199 it's essentially a parks company, So I don't want them 0:10:22.240 --> 0:10:25.079 blowing money on streaming if there's no return on capital. 0:10:25.200 --> 0:10:27.840 So I'm pretty happy with this outcome because we've been 0:10:27.840 --> 0:10:30.520 saying forever like this is a parks company and media 0:10:30.559 --> 0:10:33.200 is becoming less and less important because it's going down 0:10:33.240 --> 0:10:35.880 every day and in terms of profitability, as you know 0:10:36.080 --> 0:10:36.520 very well. 0:10:36.840 --> 0:10:39.199 So is it important to you to know whether they're 0:10:39.240 --> 0:10:41.200 in or out of streaming. A lot of people have 0:10:41.280 --> 0:10:46.240 said I want to know their strategy in regards to streaming. 0:10:46.720 --> 0:10:51.360 Netflix obviously also spends like a drunken salor on content creating, 0:10:51.480 --> 0:10:55.760 but Netflix rules the roost, right, So I mean, what's 0:10:55.800 --> 0:10:57.040 the point of spending less? 0:10:57.040 --> 0:10:58.240 Why not just be out of it. 0:10:59.559 --> 0:11:02.320 We can't at this point, they can't be out of it. 0:11:02.400 --> 0:11:04.839 They you know, their view is that Disney Plus, that 0:11:05.000 --> 0:11:08.720 Disney should have a direct relationship with consumers as they 0:11:08.800 --> 0:11:11.120 do in the theme parks, right, and the long history 0:11:11.160 --> 0:11:15.679 of media, Disney never knew it's true consumer right. It 0:11:15.720 --> 0:11:18.440 was always a third party was doing distribution. So I 0:11:18.440 --> 0:11:20.560 think Disney can't be out of it. The question is 0:11:21.280 --> 0:11:23.640 how much should Disney be in it? Right, should they 0:11:23.679 --> 0:11:26.520 be competing with Netflix or should they be a smaller, 0:11:27.160 --> 0:11:30.160 more targeted service for Disney super fans. And that's been 0:11:30.200 --> 0:11:33.200 our contention all along. You don't have to be Netflix. 0:11:33.440 --> 0:11:35.559 You have to make a Disney Plus product for your 0:11:35.600 --> 0:11:38.760 core fans. There's less of them, you can charge more money. 0:11:39.040 --> 0:11:41.040 That's probably a better business. And we've been saying that 0:11:41.280 --> 0:11:43.240 they do not be Netflix. It's not a business you 0:11:43.280 --> 0:11:45.280 want to be in it, And they're listening. I think 0:11:45.320 --> 0:11:48.079 I think they're realizing that they have a great, great 0:11:48.120 --> 0:11:50.440 business model as is, and they need to basically just 0:11:50.520 --> 0:11:53.599 make sure their fans are being nourished, you know, and 0:11:53.720 --> 0:11:55.600 not overspend when things that are not core. 0:11:55.920 --> 0:11:57.880 All right, So if they're going to be focusing on 0:11:57.920 --> 0:12:00.840 their core fans, primarily through their parks business. 0:12:00.880 --> 0:12:02.720 What do you do with all the other stuff. 0:12:02.720 --> 0:12:05.920 They've kind of got a big studio operation that kind 0:12:05.920 --> 0:12:09.479 of got a bunch of linear cable and broadcast networks. 0:12:09.679 --> 0:12:10.920 What do you do with all that stuff? 0:12:11.640 --> 0:12:14.600 Okay, well, studio is key because you think about I mean, 0:12:14.600 --> 0:12:17.360 you've known this for your studio is a way to 0:12:17.640 --> 0:12:21.199 refresh the characters in the park, like the flywheel starts YEP, 0:12:21.280 --> 0:12:22.439 with studio and IP. 0:12:22.400 --> 0:12:23.040 It has to happen. 0:12:23.200 --> 0:12:25.560 I watched Cinderella last night, by the way, with my 0:12:25.679 --> 0:12:28.800 three year old daughter, and at one point one mouse says, 0:12:28.920 --> 0:12:31.200 let's lead the sewing to the women, and I thought, oh, 0:12:31.240 --> 0:12:33.600 I should not be showing her the nineteen fifty version. 0:12:35.120 --> 0:12:37.400 Well, there's a long list of movies from that area 0:12:37.440 --> 0:12:40.240 should be showing her for that same reason. But the 0:12:40.320 --> 0:12:43.320 view is, look, we've been debating with the company openly 0:12:43.360 --> 0:12:46.840 that we don't know why ABC and ESPN need to 0:12:46.840 --> 0:12:48.880 be part of that new company, right, and the company 0:12:48.920 --> 0:12:50.920 has not really said what they want to sell. But 0:12:51.000 --> 0:12:53.880 like our theory is at the heart of Disney is 0:12:53.880 --> 0:12:56.760 the IP. Then you have consumer products and theme parks 0:12:56.760 --> 0:12:59.720 and films, but that business is worth a lot, and 0:12:59.720 --> 0:13:02.080 then the other businesses that you see from valuations of 0:13:02.120 --> 0:13:05.360 all the peers doesn't worth that much. Right, They like sports, 0:13:05.400 --> 0:13:08.880 they like ESPN. That sounds like it's staying, but like 0:13:08.920 --> 0:13:10.920 they're still open debate about what do they do with 0:13:11.000 --> 0:13:13.800 ABC or the Fox assets they bought, and that's not 0:13:13.840 --> 0:13:15.880 going to end anytime soon. But our point is being 0:13:16.240 --> 0:13:19.840 it doesn't really much matter because the core is you know, 0:13:19.920 --> 0:13:23.600 Studio Film, Disney Plus and those other assets are so 0:13:23.720 --> 0:13:26.440 lowly valued and it's not going to matter. You really 0:13:26.480 --> 0:13:29.640 need to stop the wasteful spending and streaming and focus 0:13:29.679 --> 0:13:31.559 on the core, which is what we heard last night. 0:13:32.200 --> 0:13:37.440 So another issue Michael is Bob Biger. We love him. 0:13:37.480 --> 0:13:38.800 He's been great for shareholders. 0:13:39.360 --> 0:13:41.240 He's kind of put himself in a box once again 0:13:41.280 --> 0:13:42.840 in terms of timing and succession. 0:13:43.880 --> 0:13:45.120 Anything new there? 0:13:45.240 --> 0:13:48.960 Do we read anything into this new external CFO being heard? 0:13:48.960 --> 0:13:49.720 How do you think about that? 0:13:49.800 --> 0:13:49.959 Now? 0:13:50.800 --> 0:13:53.720 Yeah, that's a good question. The CFO externally is interesting 0:13:53.720 --> 0:13:56.000 because they I don't think there's being an external CFO 0:13:57.160 --> 0:13:59.480 in twenty five thirty in a long long time. So 0:13:59.600 --> 0:14:01.400 I think that person is going to come in. You 0:14:01.520 --> 0:14:04.000 Johnson from a PEPSI don't coming to look at the 0:14:04.040 --> 0:14:06.560 cost structure. I don't see him, I don't know him, 0:14:06.840 --> 0:14:10.280 but I don't see that as an air replacement for Bob. 0:14:10.520 --> 0:14:12.800 I think the question is going to be for the 0:14:12.800 --> 0:14:15.600 new CFO where they're wasteful spending, what can he do 0:14:15.720 --> 0:14:19.160 to bring kind of a Pepsi discipline to Disney. But 0:14:19.160 --> 0:14:21.400 I still think you still have an open, an open 0:14:21.480 --> 0:14:24.240 question about who replaces Bob. It's not easy because of 0:14:24.280 --> 0:14:27.880 the diversity of operations. You know, We've been saying, look, 0:14:27.880 --> 0:14:30.200 maybe break the thing into two again, and I think 0:14:30.240 --> 0:14:34.800 if that's the case, the Parkside will rise in value 0:14:34.840 --> 0:14:37.440 in terms of the management team. But I think as 0:14:37.440 --> 0:14:39.800 the company stays as Disney that it would change the structure. 0:14:40.240 --> 0:14:42.000 It's a hard job to fill. Yeah, I don't think 0:14:42.040 --> 0:14:45.040 the new CFO is on that short list yet because 0:14:45.040 --> 0:14:46.440 he's never worked in this industry before. 0:14:46.640 --> 0:14:48.640 Sure, all right, it looks like everybody's back to work 0:14:48.680 --> 0:14:51.640 in Hollywood, first the writers and now the actors. How 0:14:51.720 --> 0:14:52.960 is this going to play out over the next several 0:14:53.040 --> 0:14:55.960 quarters in terms of production and releases and all that stuff. 0:14:57.760 --> 0:15:01.280 That's a good question. Amazed that it's been personally so 0:15:01.440 --> 0:15:03.400 long that the strike has taken so long to us 0:15:03.400 --> 0:15:07.040 all because it's been really damaging to the ecosystem. I 0:15:07.080 --> 0:15:08.960 think people get back to work in the next well 0:15:09.160 --> 0:15:12.760 Thanksgiving coming up, right, so probably December January. You probably 0:15:12.840 --> 0:15:16.440 get yourself a content slate and output that starts looking 0:15:16.440 --> 0:15:21.800 more normal by the February timeframe. But you basically just 0:15:21.880 --> 0:15:24.640 had six months of training people not to watch broadcast 0:15:24.640 --> 0:15:28.400 TV for content, you know, not to go to the 0:15:28.400 --> 0:15:32.320 theaters anything besides Barbie and Oppenheimer. I think it's just 0:15:32.360 --> 0:15:35.600 really bad. I think people do change behavior and it's 0:15:35.600 --> 0:15:39.120 hard to get them back, and so, yeah, people will 0:15:39.160 --> 0:15:42.120 be back working, but I worry about what happened on 0:15:42.120 --> 0:15:43.680 the other side of this. I really do, all. 0:15:43.640 --> 0:15:46.080 Right, Michael, I always appreciate getting a few minutes of 0:15:46.080 --> 0:15:49.200 your time some of the really, really most thoughtful research 0:15:49.200 --> 0:15:52.000 out there in my opinion on the media entertainment space. 0:15:52.000 --> 0:15:55.360 Michael Nathanson, he's a founding partner and senior research analyst 0:15:55.400 --> 0:15:56.800 with Moffatt Nathanson. 0:15:57.480 --> 0:15:58.960 Good news from Disney last night. 0:15:59.000 --> 0:16:02.520 The stock is up seven percent here today, although it's 0:16:02.520 --> 0:16:04.720 only a four percent year today, kind of reflecting a 0:16:04.760 --> 0:16:08.000 lot of investors still remain really unsure as to the 0:16:08.040 --> 0:16:10.880 trajectory for this industry as it tries to pivot from 0:16:10.920 --> 0:16:12.120 the traditional. 0:16:12.160 --> 0:16:13.920 Media model that they had all enjoyed over the. 0:16:13.920 --> 0:16:16.400 Last thirty forty years, which is you and me paying 0:16:16.680 --> 0:16:18.800 eighty hundred bucks a month to our cable company and 0:16:18.800 --> 0:16:20.680 that a lot of that flowing right to the media company. 0:16:20.760 --> 0:16:24.440 So that model is no longer in the forefront here. 0:16:24.480 --> 0:16:26.960 It's all about streaming, and there are different economics there 0:16:26.960 --> 0:16:29.480 in these companies and these investors trying to figure out 0:16:29.520 --> 0:16:32.760 how that really plays out over time. Michael Methans and 0:16:33.040 --> 0:16:34.600 really one of the top folks on the street. 0:16:34.960 --> 0:16:38.080 You're listening to The tape cats are live program Bloomberg 0:16:38.160 --> 0:16:41.720 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:16:41.800 --> 0:16:45.040 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:16:45.080 --> 0:16:47.880 You can also listen live on Amazon Alexa from our 0:16:47.880 --> 0:16:53.000 flagship New York station. Just say Alexa, play Bloomberg eleven thirty. 0:16:53.880 --> 0:16:55.000 The market loves AI. 0:16:55.880 --> 0:16:57.400 The market loves ETFs. 0:16:58.040 --> 0:17:00.800 So let's create an ETF because it is on AI. 0:17:00.880 --> 0:17:03.280 And that's what our next guests are doing. Have done, 0:17:03.360 --> 0:17:07.320 will do? Uh, Francis oh apac CEO and head of 0:17:07.400 --> 0:17:10.840 AI E TFS for Craft Technologies A pac A lot 0:17:10.880 --> 0:17:14.160 to go there, Young Child, Director of AI Business Development 0:17:14.160 --> 0:17:18.040 and Strategic Partnerships at l g AI Research. A lot 0:17:18.040 --> 0:17:20.000 of stuff going on here, gentlemen. Thank you for joining 0:17:20.040 --> 0:17:23.720 us here in our Bloomberg Interactive broker studio. What are 0:17:23.760 --> 0:17:25.600 you guys building here? What are you guys launching off 0:17:25.600 --> 0:17:27.400 to let you guys figure it out right right? 0:17:27.440 --> 0:17:27.680 Thank you? 0:17:27.720 --> 0:17:31.359 First of all, thank you for let us sharing our stories. 0:17:31.400 --> 0:17:35.080 Then yeah, yeah, so the Craft techlounches and A and 0:17:35.280 --> 0:17:40.320 LGA Research, we just launched our latest AI powered et AF, 0:17:40.400 --> 0:17:43.800 the Taker l Q a I l Q Tuesday on 0:17:43.840 --> 0:17:46.840 the New York Sticky Change. So this one is special 0:17:46.880 --> 0:17:49.440 because so far we have in the craft we had 0:17:49.480 --> 0:17:51.760 the full et apps in n C, but this one 0:17:51.840 --> 0:17:54.520 is first ETAP that co branded one together with lg 0:17:54.760 --> 0:17:58.560 so retake and leveraging on the LGAI is their own 0:17:58.600 --> 0:18:02.560 AI model combined you so delivering to the a new 0:18:02.600 --> 0:18:05.640 altnative to entering into the Yuslaska markets. 0:18:06.040 --> 0:18:09.800 All right, so young what did you guys at LGAI Research, 0:18:10.040 --> 0:18:10.720 What do you guys do? 0:18:10.760 --> 0:18:14.400 What do you bring to the table here your model exactly? 0:18:14.560 --> 0:18:20.440 Yeah, So we basically power this product LGAI Research. Just 0:18:20.480 --> 0:18:22.280