1 00:00:00,240 --> 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 Coarcklay 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 --> 00:00:23,080 Speaker 1: or watch us live on YouTube. 6 00:00:23,880 --> 00:00:25,639 Speaker 2: A lot of news in the tech space. I guess 7 00:00:25,640 --> 00:00:27,440 Speaker 2: it's just every day. We have a lot of news 8 00:00:27,440 --> 00:00:29,280 Speaker 2: in the tech space. I want to jump out of me. 9 00:00:29,360 --> 00:00:33,440 Speaker 2: Is Amazon rush us out latest AI chip to take 10 00:00:33,479 --> 00:00:35,280 Speaker 2: on in Vidia and Google? 11 00:00:35,320 --> 00:00:36,880 Speaker 3: When that gets my attention, let me check in with 12 00:00:36,920 --> 00:00:38,960 Speaker 3: somebody who might know a thing or two about this stuff. 13 00:00:39,120 --> 00:00:42,560 Speaker 2: Man Deep Singh, senior tech industry analysts, Bloomberg Intelligence. He's 14 00:00:42,560 --> 00:00:44,320 Speaker 2: out there in San Diego. I don't know what's going 15 00:00:44,360 --> 00:00:46,199 Speaker 2: on in San Diego. I didn't get the invite, but 16 00:00:46,280 --> 00:00:47,879 Speaker 2: Man Deep's out there doing the. 17 00:00:47,760 --> 00:00:49,080 Speaker 3: Zoom thing, Man Deep. 18 00:00:49,520 --> 00:00:53,840 Speaker 2: Amazon chips, where do they stack up a relative to say, 19 00:00:53,840 --> 00:00:54,880 Speaker 2: an Nvidio or Google. 20 00:00:56,600 --> 00:00:59,920 Speaker 4: I mean, look, Amazon Reno is the largest cloud provide 21 00:01:00,400 --> 00:01:04,160 Speaker 4: with almost fifty percent share. And when it comes to 22 00:01:04,200 --> 00:01:09,880 Speaker 4: the GPUs, everyone so far except for Google has relied 23 00:01:09,920 --> 00:01:14,880 Speaker 4: on it media, you know, for training and what Amazon 24 00:01:15,000 --> 00:01:20,360 Speaker 4: is doing is really copying that Google playbook where they 25 00:01:20,480 --> 00:01:23,479 Speaker 4: want to use their own chips. It's just that they 26 00:01:23,840 --> 00:01:26,640 Speaker 4: haven't had that kind of success that Google has had 27 00:01:26,680 --> 00:01:30,280 Speaker 4: with TPUs, and they're trying to speed things up because 28 00:01:30,600 --> 00:01:34,360 Speaker 4: in the end, all these hyperscalers don't want to spend 29 00:01:34,440 --> 00:01:37,520 Speaker 4: you know, twenty to twenty five percent of their CAPEX 30 00:01:37,760 --> 00:01:41,800 Speaker 4: on procuring in videos chips, and that is what the 31 00:01:41,920 --> 00:01:45,280 Speaker 4: endgame is. I think Google so far is ahead in that, 32 00:01:46,040 --> 00:01:49,000 Speaker 4: but clearly Amazon is trying to catch up when it 33 00:01:49,000 --> 00:01:50,560 Speaker 4: comes to their own chips efforts. 34 00:01:51,160 --> 00:01:54,320 Speaker 5: Man deep, it feels like Amazon Google are becoming more 35 00:01:54,520 --> 00:01:57,880 Speaker 5: formidable competitors to Nvidia in this space. In Vidia the 36 00:01:57,920 --> 00:02:01,200 Speaker 5: AI darling. When you think about twenty twenty, who are 37 00:02:01,280 --> 00:02:04,560 Speaker 5: some of the winners in these AI arms race. 38 00:02:06,560 --> 00:02:09,920 Speaker 4: I mean, look, when you're running a cloud business, you 39 00:02:09,919 --> 00:02:14,639 Speaker 4: know you're trying to optimize things across the stack, and 40 00:02:14,680 --> 00:02:17,360 Speaker 4: that's where you know, a META is very different from 41 00:02:17,560 --> 00:02:19,960 Speaker 4: a Google or an Amazon, which have a big public 42 00:02:19,960 --> 00:02:24,080 Speaker 4: cloud business. I think what you're going to see is 43 00:02:24,360 --> 00:02:28,800 Speaker 4: focus more on capex efficiency. If Google can deliver you know, 44 00:02:29,560 --> 00:02:32,560 Speaker 4: a lot more with their ninety billion dollars in capex 45 00:02:32,600 --> 00:02:35,560 Speaker 4: in terms of training and printing and having a cloud business. 46 00:02:35,960 --> 00:02:39,120 Speaker 4: Everyone will be measured the same way, whether it's Amazon 47 00:02:39,440 --> 00:02:42,800 Speaker 4: or Meta, and that's where CAPEX efficiency will be a 48 00:02:42,880 --> 00:02:45,680 Speaker 4: much bigger focus in twenty twenty six than it was 49 00:02:46,120 --> 00:02:48,160 Speaker 4: in the past two years, where you know, there was 50 00:02:48,200 --> 00:02:51,919 Speaker 4: a gold rush going on in terms of getting these GPUs, 51 00:02:52,040 --> 00:02:55,240 Speaker 4: making sure you have chips for training your models. I 52 00:02:55,280 --> 00:02:59,280 Speaker 4: think we are moving into a phase where CAPEX efficiency 53 00:02:59,320 --> 00:03:00,960 Speaker 4: will be front end center going forward. 54 00:03:01,880 --> 00:03:04,919 Speaker 2: Mandy, if I see a Bloomberg News story Apple AI 55 00:03:05,040 --> 00:03:05,720 Speaker 2: head to leave. 56 00:03:06,680 --> 00:03:08,720 Speaker 3: This doesn't feel right to me. What's going on with 57 00:03:08,760 --> 00:03:09,959 Speaker 3: Apple and AI? And should I? 58 00:03:10,040 --> 00:03:11,760 Speaker 2: Am I reading too much into this? Seems like there's 59 00:03:11,760 --> 00:03:12,680 Speaker 2: a lot of turnover there. 60 00:03:13,919 --> 00:03:17,359 Speaker 4: I mean, look for a good reason, because Apple, when 61 00:03:17,400 --> 00:03:20,880 Speaker 4: you think about the back seven players, has trailed in 62 00:03:21,000 --> 00:03:25,480 Speaker 4: terms of having an AI strategy making those investments. And 63 00:03:25,639 --> 00:03:28,800 Speaker 4: right now we are seeing even you know, just yesterday 64 00:03:28,840 --> 00:03:32,600 Speaker 4: Deep Seek release their latest model by Dance is talking 65 00:03:32,639 --> 00:03:36,360 Speaker 4: about a model that can be run on your operating system. 66 00:03:36,480 --> 00:03:39,840 Speaker 4: So there is so much going on at the hardware 67 00:03:39,880 --> 00:03:42,800 Speaker 4: and at the operating system layer that you feel like 68 00:03:42,960 --> 00:03:46,360 Speaker 4: Apple is missing out one because they don't have any 69 00:03:46,720 --> 00:03:49,920 Speaker 4: AI models of their own and also in terms of 70 00:03:49,960 --> 00:03:53,840 Speaker 4: their partnerships, they haven't been that upfront about, you know, 71 00:03:53,880 --> 00:03:56,960 Speaker 4: whether it's Open AI or Google in terms of making 72 00:03:57,080 --> 00:04:00,840 Speaker 4: changes to their operating system. So even so the hardware 73 00:04:00,880 --> 00:04:03,760 Speaker 4: sales haven't really suffered because of that. I mean, when 74 00:04:03,800 --> 00:04:06,760 Speaker 4: you look two years out, if Apple doesn't have a 75 00:04:06,880 --> 00:04:11,000 Speaker 4: good AI strategy, a good model that works natively on 76 00:04:11,040 --> 00:04:14,000 Speaker 4: the operating system, I think you will start to see 77 00:04:14,000 --> 00:04:15,480 Speaker 4: an impact on the hardware sales. 78 00:04:16,720 --> 00:04:19,760 Speaker 3: Stay with us more from Bloomberg Intelligence coming up after this. 79 00:04:23,400 --> 00:04:27,119 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 80 00:04:27,200 --> 00:04:30,240 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 81 00:04:30,279 --> 00:04:33,599 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 82 00:04:33,640 --> 00:04:36,760 Speaker 1: you get your podcasts, or watch us live on YouTube. 83 00:04:37,720 --> 00:04:40,320 Speaker 2: Cyber Monday it's a thing, a lot of people spending 84 00:04:40,360 --> 00:04:42,320 Speaker 2: a lot of money at the click of a button. 85 00:04:42,560 --> 00:04:43,760 Speaker 3: Let's get some of the data here. 86 00:04:43,760 --> 00:04:46,680 Speaker 2: Put him Goyle, senior US e commerce and retail analysts 87 00:04:46,680 --> 00:04:50,240 Speaker 2: for Bloomberg Intelligence joints US here. Put them talk to 88 00:04:50,320 --> 00:04:52,360 Speaker 2: us about cyber Monday. What were some of the trends 89 00:04:52,400 --> 00:04:55,280 Speaker 2: you guys saw. There's more and more people if you 90 00:04:55,360 --> 00:04:56,480 Speaker 2: need to shop online. 91 00:04:57,760 --> 00:05:00,560 Speaker 6: Yeah, so people definitely came online to shop. But the 92 00:05:00,600 --> 00:05:04,400 Speaker 6: results came out this morning. According to Adobe, sales were 93 00:05:04,480 --> 00:05:09,000 Speaker 6: fourteen point two five billion dollars. That's just slightly ahead 94 00:05:09,000 --> 00:05:11,520 Speaker 6: of the fourteen point two billion estimated, so a seven 95 00:05:11,560 --> 00:05:14,800 Speaker 6: point one percent gain. So I'd say, you know, overall, 96 00:05:15,040 --> 00:05:19,400 Speaker 6: things were largely to me as expected, maybe slightly better. 97 00:05:19,839 --> 00:05:23,520 Speaker 6: We saw deals over Cyber Monday, which drew customers, but 98 00:05:23,640 --> 00:05:26,040 Speaker 6: in all honesty, Paul, you know, we looked at eighty 99 00:05:26,160 --> 00:05:30,360 Speaker 6: one brands online yesterday and what we found was that 100 00:05:30,520 --> 00:05:33,280 Speaker 6: the majority of them, the deals were in line to 101 00:05:33,440 --> 00:05:37,279 Speaker 6: last year. So we did see retailers pull back on 102 00:05:37,400 --> 00:05:40,680 Speaker 6: discounting because there's just more costs that are built into 103 00:05:40,720 --> 00:05:41,800 Speaker 6: this year from tariffs. 104 00:05:43,880 --> 00:05:47,520 Speaker 5: Consumers buying what were they buying up a Cyber Monday, 105 00:05:47,520 --> 00:05:49,080 Speaker 5: and what is that telling you about the health of 106 00:05:49,120 --> 00:05:51,400 Speaker 5: the consumer. Was it big ticket items? Were they trading 107 00:05:51,440 --> 00:05:52,480 Speaker 5: down to private labels? 108 00:05:53,720 --> 00:05:56,359 Speaker 6: Yeah, what we saw. So we saw electronics still being 109 00:05:56,480 --> 00:05:59,560 Speaker 6: very powerful this holiday season. The Apple air pods were 110 00:05:59,560 --> 00:06:02,200 Speaker 6: cited to be among one of the top sellers. We 111 00:06:02,279 --> 00:06:05,679 Speaker 6: also saw the PlayStation in high demand. People were shopping 112 00:06:05,680 --> 00:06:09,640 Speaker 6: for fashion apparel, they were buying for the home across 113 00:06:09,720 --> 00:06:12,800 Speaker 6: the news that we read, what we've seen sneakers, you know, 114 00:06:12,880 --> 00:06:16,479 Speaker 6: athletic where was probably a little lore than expected. But 115 00:06:16,800 --> 00:06:19,960 Speaker 6: once again, that's not really an item that you often 116 00:06:20,000 --> 00:06:22,360 Speaker 6: put under the tree as much as you buy for yourself, 117 00:06:22,400 --> 00:06:23,880 Speaker 6: So we think that could pick up. 118 00:06:26,120 --> 00:06:27,919 Speaker 2: I'm thinking about some of the folks that really do 119 00:06:28,000 --> 00:06:32,400 Speaker 2: a good job online, Walmart, Target, How are those guys, 120 00:06:32,560 --> 00:06:33,480 Speaker 2: how are they performing? 121 00:06:34,279 --> 00:06:37,440 Speaker 6: Yeah, so Walmart and Target, we think both actually had 122 00:06:37,440 --> 00:06:40,159 Speaker 6: a good holiday season, but in terms of promotional activity, 123 00:06:40,160 --> 00:06:43,160 Speaker 6: we think they were largely in line with last year. 124 00:06:43,200 --> 00:06:45,240 Speaker 6: That said, we were in the store on Black Friday. 125 00:06:45,279 --> 00:06:48,359 Speaker 6: We monitored their deals online over the weekend and say yesterday, 126 00:06:48,920 --> 00:06:52,200 Speaker 6: and we think their deals were good, but they weren't 127 00:06:52,400 --> 00:06:55,680 Speaker 6: aggressive or more aggressive i should say than last year, 128 00:06:56,040 --> 00:06:58,640 Speaker 6: which is in a way a good thing because they'll 129 00:06:58,640 --> 00:07:03,120 Speaker 6: help their margins or margins this holiday quarter won't suffer 130 00:07:03,240 --> 00:07:06,600 Speaker 6: because retailers had to discount more aggressively than they did 131 00:07:06,720 --> 00:07:07,200 Speaker 6: last year. 132 00:07:07,920 --> 00:07:10,400 Speaker 5: How are you thinking about the retail sector going into 133 00:07:10,440 --> 00:07:13,960 Speaker 5: next year? Do you expect that the strength will continue? 134 00:07:14,880 --> 00:07:17,440 Speaker 6: I think it'll be tough. You know, we've seen shoppers 135 00:07:17,480 --> 00:07:20,480 Speaker 6: come out to shop for events. Durven buying, whether that's 136 00:07:20,520 --> 00:07:24,600 Speaker 6: back to school or holiday or birthdays or events they're 137 00:07:24,640 --> 00:07:29,040 Speaker 6: coming out and their spending. But once we exit holiday, 138 00:07:29,280 --> 00:07:33,600 Speaker 6: there is really no catalyst in January to shop. So 139 00:07:33,640 --> 00:07:36,040 Speaker 6: we do think that you will kind of see the 140 00:07:36,080 --> 00:07:39,400 Speaker 6: normal lull that you see after the holidays also creep 141 00:07:39,400 --> 00:07:42,200 Speaker 6: into twenty twenty six. But next year it's really going 142 00:07:42,240 --> 00:07:45,920 Speaker 6: to be more about what happens with pricing. We've seen 143 00:07:46,160 --> 00:07:49,720 Speaker 6: retailers be able to hold prices study or raise them 144 00:07:49,800 --> 00:07:52,640 Speaker 6: just slightly into the back half from tariffs, But next 145 00:07:52,720 --> 00:07:56,720 Speaker 6: year will they have to implement bigger price increases because 146 00:07:57,240 --> 00:08:00,440 Speaker 6: all the inventory will likely be impacted by some sort 147 00:08:00,480 --> 00:08:01,680 Speaker 6: of tariff into next year. 148 00:08:02,120 --> 00:08:03,400 Speaker 2: That's kind of where I want to go put on 149 00:08:03,760 --> 00:08:05,840 Speaker 2: just lastly here, I mean, I don't know how to 150 00:08:05,880 --> 00:08:08,800 Speaker 2: think about the tariff impact because it seems like we 151 00:08:08,840 --> 00:08:11,720 Speaker 2: haven't really seen it too much at the consumer level, 152 00:08:12,080 --> 00:08:14,440 Speaker 2: And maybe that means that, you know, the retailers the 153 00:08:14,440 --> 00:08:16,720 Speaker 2: distributors that they've kind of taken it in their margin, 154 00:08:17,720 --> 00:08:19,760 Speaker 2: and the tariff is what it is. That doesn't look 155 00:08:19,760 --> 00:08:22,040 Speaker 2: like there's gonna be a second round of teriffs next year, 156 00:08:22,120 --> 00:08:24,720 Speaker 2: So the tariffs are what they are in the economy, 157 00:08:24,720 --> 00:08:26,800 Speaker 2: but you're saying that maybe there still could be some 158 00:08:26,880 --> 00:08:27,600 Speaker 2: impact next year. 159 00:08:28,720 --> 00:08:30,880 Speaker 6: Well, if you think about when the tariffs were implemented, 160 00:08:30,920 --> 00:08:32,959 Speaker 6: it really affected the back half of this year, right, 161 00:08:33,000 --> 00:08:35,080 Speaker 6: so when you go into the first half of next year, 162 00:08:35,360 --> 00:08:38,960 Speaker 6: you're up against comparisons where there really wasn't a tariff impact. 163 00:08:39,000 --> 00:08:41,040 Speaker 6: So that's one thing that you have to deal with. 164 00:08:41,080 --> 00:08:44,000 Speaker 6: The second thing is is that prices are going up. 165 00:08:44,040 --> 00:08:46,600 Speaker 6: I'm not you know, we did see select price increases. 166 00:08:46,640 --> 00:08:48,360 Speaker 6: In fact, you know, Nike came out and said that 167 00:08:48,400 --> 00:08:51,480 Speaker 6: they're directly raising prices but un select goods. And I 168 00:08:51,480 --> 00:08:53,800 Speaker 6: think that's the approach that most retailers have been taking 169 00:08:53,920 --> 00:08:56,320 Speaker 6: is we'll raise prices where we can, and where we 170 00:08:56,360 --> 00:08:59,040 Speaker 6: know we can't, will absorb it or we'll offset it 171 00:08:59,120 --> 00:09:02,679 Speaker 6: otherwise through a fit season supplier kickbacks. So that's what 172 00:09:02,720 --> 00:09:05,440 Speaker 6: we'll continue to see happen next year. But there is 173 00:09:05,480 --> 00:09:09,240 Speaker 6: still some pressure. Now. We'll see what happens next week 174 00:09:09,320 --> 00:09:12,040 Speaker 6: right where the court ruling could be that the tariffs 175 00:09:12,080 --> 00:09:16,600 Speaker 6: are just unwarranted and are unlawful. And if that happens, 176 00:09:16,960 --> 00:09:19,160 Speaker 6: then I think we have some positive surprises and for 177 00:09:19,280 --> 00:09:19,880 Speaker 6: us next year. 178 00:09:20,720 --> 00:09:23,840 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 179 00:09:27,760 --> 00:09:31,440 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 180 00:09:31,520 --> 00:09:34,600 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 181 00:09:34,640 --> 00:09:37,920 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 182 00:09:38,000 --> 00:09:41,640 Speaker 1: you get your podcasts, or watch us live on YouTube. 183 00:09:42,080 --> 00:09:45,400 Speaker 2: We are waiting for a huge m and a trade 184 00:09:45,480 --> 00:09:48,080 Speaker 2: to be announced Warner Brothers Discovery, with an enterprise value 185 00:09:48,080 --> 00:09:48,719 Speaker 2: of about. 186 00:09:48,520 --> 00:09:51,600 Speaker 3: Ninety billion dollars. It's up for sale. 187 00:09:52,120 --> 00:09:57,200 Speaker 2: Second round bids for the company we're due yesterday. We 188 00:09:57,320 --> 00:10:00,240 Speaker 2: understand that it's Netflix, it's Comcasts, and it's of course 189 00:10:00,280 --> 00:10:02,480 Speaker 2: it's Paramount sky Dance and all that kind of stuff there. 190 00:10:02,520 --> 00:10:05,080 Speaker 2: So Githa rang A Nathan. She is the senior media 191 00:10:05,080 --> 00:10:08,920 Speaker 2: analysts for Bloomberg Intelligence. Keith, what's the latest there in 192 00:10:08,960 --> 00:10:11,960 Speaker 2: Warner Brothers Discovery, because it seems like this is a 193 00:10:11,960 --> 00:10:14,640 Speaker 2: company that wants to be sold and be sold quickly. 194 00:10:15,880 --> 00:10:18,960 Speaker 7: Yeah, absolutely, Paul. I mean, things seem to be definitely intensifying. 195 00:10:19,000 --> 00:10:22,360 Speaker 7: So the second round bids were due yesterday. The reporting 196 00:10:22,440 --> 00:10:26,280 Speaker 7: so far seems to suggest that Netflix has mostly a 197 00:10:26,320 --> 00:10:29,640 Speaker 7: cash bid. That's a little bit of a surprise, given 198 00:10:29,720 --> 00:10:32,600 Speaker 7: that you know, when you compare Netflix with both comcasts 199 00:10:32,600 --> 00:10:36,800 Speaker 7: and paramounts guidance. Obviously that stock has the most value. 200 00:10:37,040 --> 00:10:39,680 Speaker 7: You know, they're treating it almost thirty times forwardy, but 201 00:10:40,000 --> 00:10:42,240 Speaker 7: compared to a Comcast, which trades it about five times. 202 00:10:42,400 --> 00:10:44,760 Speaker 7: So obviously, I mean, you know, it just goes to 203 00:10:44,800 --> 00:10:48,040 Speaker 7: show that Netflix is very, very interested. There was obviously 204 00:10:48,120 --> 00:10:51,520 Speaker 7: some you know, speculation earlier whether they were a serious 205 00:10:51,520 --> 00:10:52,120 Speaker 7: bidder or not. 206 00:10:52,200 --> 00:10:55,040 Speaker 8: I think this kind of puts that to rest. The 207 00:10:55,120 --> 00:10:56,280 Speaker 8: offers this time are. 208 00:10:56,160 --> 00:10:59,160 Speaker 7: Binding, means if the board likes something that it sees, 209 00:10:59,240 --> 00:11:02,600 Speaker 7: they can absolutely go ahead and bring this whole process 210 00:11:02,640 --> 00:11:05,439 Speaker 7: to a conclusion pretty quickly. So right now, just waiting 211 00:11:05,480 --> 00:11:08,800 Speaker 7: to hear on the actual numbers. We haven't heard any 212 00:11:10,000 --> 00:11:13,079 Speaker 7: any reporting on the actual bid numbers themselves. Warner Brothers, 213 00:11:13,120 --> 00:11:14,800 Speaker 7: of course looking for thirty dollars a share. 214 00:11:15,440 --> 00:11:17,720 Speaker 5: Githa Bank of America has a note that calls the 215 00:11:17,760 --> 00:11:21,360 Speaker 5: bidding war for Warner Brothers quote industry realignment. Is that 216 00:11:21,400 --> 00:11:24,320 Speaker 5: a fair characterization? And how do you see this bidding 217 00:11:24,360 --> 00:11:25,800 Speaker 5: war transforming the industry? 218 00:11:26,800 --> 00:11:28,120 Speaker 8: Absolutely agree with that. 219 00:11:28,200 --> 00:11:31,160 Speaker 7: I mean, you know, you have Warner Brothers, which is 220 00:11:31,200 --> 00:11:35,120 Speaker 7: one of the most iconic studios in Hollywood. You know, 221 00:11:35,160 --> 00:11:38,000 Speaker 7: you have a great streaming service in HBO Max. You 222 00:11:38,160 --> 00:11:40,840 Speaker 7: just look at the Warner Studio this week at the 223 00:11:41,120 --> 00:11:42,840 Speaker 7: I mean sorry, this year at. 224 00:11:42,720 --> 00:11:43,560 Speaker 8: The box office. 225 00:11:43,920 --> 00:11:47,480 Speaker 7: They've had an absolutely phenomenal run. So they're leading with 226 00:11:47,520 --> 00:11:51,240 Speaker 7: about a twenty eight almost thirty percent share of domestic 227 00:11:51,320 --> 00:11:54,240 Speaker 7: box office. So this is a huge studio that could 228 00:11:54,240 --> 00:11:56,960 Speaker 7: obviously or a huge company even that could you know, 229 00:11:57,040 --> 00:12:01,520 Speaker 7: completely reshaped the media landscape. And it is transform transformative 230 00:12:01,520 --> 00:12:03,640 Speaker 7: in many, many ways. So if you think about you know, 231 00:12:03,679 --> 00:12:07,400 Speaker 7: Paramount sky Dances streaming assets right now, with Paramount Plus, 232 00:12:07,480 --> 00:12:10,480 Speaker 7: they have about seventy million subscribers. You add HBO Max, 233 00:12:10,600 --> 00:12:14,560 Speaker 7: you get over two hundred million. Same is true for Comcast. 234 00:12:14,600 --> 00:12:17,320 Speaker 7: You know, these are this is kind of an existential deal, 235 00:12:17,320 --> 00:12:21,319 Speaker 7: I would say for both those companies, and absolutely transformative. 236 00:12:21,360 --> 00:12:24,640 Speaker 7: So you know, you take Warner Brothers and Paramount sky 237 00:12:24,760 --> 00:12:27,840 Speaker 7: Dance for instance, if those two companies combine, that basically 238 00:12:27,920 --> 00:12:33,240 Speaker 7: then becomes the second largest media company after Disney. So again, huge, 239 00:12:33,559 --> 00:12:37,720 Speaker 7: huge things that stake here for all of these three bidders. 240 00:12:38,440 --> 00:12:41,560 Speaker 2: How about valuation here, The company has said in the 241 00:12:41,559 --> 00:12:44,520 Speaker 2: past that they would like thirty dollars share. The stock 242 00:12:44,600 --> 00:12:47,040 Speaker 2: is trading at just north of twenty four dollars to share. 243 00:12:47,440 --> 00:12:51,400 Speaker 2: John Malone, the company's chair emeritus and of course one 244 00:12:51,440 --> 00:12:53,800 Speaker 2: of the biggest deal makers and media and telecom over 245 00:12:53,800 --> 00:12:57,400 Speaker 2: the last fifty years, he says that number is quote possible. 246 00:12:58,520 --> 00:13:00,440 Speaker 2: How do you think valuations can shake here? What's the 247 00:13:00,440 --> 00:13:01,840 Speaker 2: price that's going to clear? Do you think? 248 00:13:03,080 --> 00:13:05,760 Speaker 7: I think it's definitely going to be above twenty eight dollars. 249 00:13:05,840 --> 00:13:07,800 Speaker 7: Part so we know that, you know, when all of 250 00:13:07,840 --> 00:13:11,080 Speaker 7: this had started, Warner Brothers was trading at about twelve 251 00:13:11,120 --> 00:13:14,080 Speaker 7: dollars a share. We're already up to twenty four dollars. 252 00:13:14,120 --> 00:13:16,880 Speaker 7: We know that in the last bidding round, Paramount Guidance 253 00:13:16,960 --> 00:13:21,640 Speaker 7: offered close to about twenty four dollars, which was rejected. Now, 254 00:13:21,640 --> 00:13:23,120 Speaker 7: if you just think about the two parts of the 255 00:13:23,160 --> 00:13:26,040 Speaker 7: business for Warner Brothers Discovery, you have the TV network's 256 00:13:26,080 --> 00:13:28,640 Speaker 7: business again throwing out a lot of cash, but not 257 00:13:28,920 --> 00:13:31,720 Speaker 7: necessarily big interms of valuation. I mean, this is a 258 00:13:31,760 --> 00:13:34,200 Speaker 7: melting ice cube. You know, the multiple that you would 259 00:13:34,240 --> 00:13:36,319 Speaker 7: slap on this part of the business would be maximum 260 00:13:36,360 --> 00:13:38,559 Speaker 7: about a four or five x. But then you think 261 00:13:38,559 --> 00:13:42,080 Speaker 7: about the streaming and the studio assets. Now that is 262 00:13:42,120 --> 00:13:44,839 Speaker 7: where you have your scarcity asset. You have a lot 263 00:13:44,880 --> 00:13:47,480 Speaker 7: of the IP sitting there. You have a streaming business 264 00:13:47,480 --> 00:13:50,839 Speaker 7: that is that is turned profitable, that could become extremely 265 00:13:50,840 --> 00:13:53,439 Speaker 7: profitable over the next few years, and so that's where 266 00:13:53,559 --> 00:13:56,760 Speaker 7: most of the valuation is going to be. And you know, 267 00:13:56,800 --> 00:13:59,280 Speaker 7: we ran some numbers. We think that just the streaming 268 00:13:59,320 --> 00:14:02,400 Speaker 7: and the studio of the business alone could be worth 269 00:14:02,400 --> 00:14:04,320 Speaker 7: about twenty eight dollars. So when you think about that 270 00:14:04,320 --> 00:14:07,199 Speaker 7: thirty dollars per share that you know, John Malone says, 271 00:14:07,240 --> 00:14:09,280 Speaker 7: as possible, we absolutely think yes. 272 00:14:10,000 --> 00:14:11,880 Speaker 5: Etha, Can you please talk to us a little bit 273 00:14:11,880 --> 00:14:15,000 Speaker 5: about what some of the long term strategic advantages will 274 00:14:15,040 --> 00:14:17,800 Speaker 5: be for Warner Brothers when this deal closes. Whoever the 275 00:14:17,880 --> 00:14:19,040 Speaker 5: you know, the final winner is. 276 00:14:20,240 --> 00:14:22,680 Speaker 7: I think for the final winner you know, off the 277 00:14:22,680 --> 00:14:25,760 Speaker 7: Warner Brothers asset. One thing is that it obviously completely 278 00:14:26,440 --> 00:14:29,120 Speaker 7: transforms the business in terms of you know, increasing revenue, 279 00:14:29,160 --> 00:14:33,400 Speaker 7: increasing scale, increasing EBITDA. But I think the big thing 280 00:14:33,440 --> 00:14:36,040 Speaker 7: that everybody is looking for really is the synergy number. 281 00:14:36,640 --> 00:14:39,480 Speaker 7: And if you think about you know, paramounts guidance, which 282 00:14:39,520 --> 00:14:42,320 Speaker 7: is really looking to acquire all of Warner Brothers, so 283 00:14:42,400 --> 00:14:45,080 Speaker 7: not just the studio and streaming, but also the linear networks. 284 00:14:45,240 --> 00:14:46,800 Speaker 8: The synergies are going to be sizable. 285 00:14:46,840 --> 00:14:49,120 Speaker 7: We think it could be anything upwards of five to 286 00:14:49,200 --> 00:14:52,520 Speaker 7: six billion dollars. And that's really where you know, a 287 00:14:52,520 --> 00:14:55,160 Speaker 7: lot of this is going to kind of flow down 288 00:14:55,240 --> 00:14:57,360 Speaker 7: to the bottom line. Of course, you know, there's always 289 00:14:57,360 --> 00:15:00,000 Speaker 7: this question about how much of synergies can be extracted, 290 00:15:00,480 --> 00:15:03,800 Speaker 7: but actually Warner Brothers Discovery themselves have kind of provided 291 00:15:03,880 --> 00:15:06,720 Speaker 7: us with an excellent template. They've done a fantastic job 292 00:15:06,760 --> 00:15:09,200 Speaker 7: when it comes to extracting synergies both with the Scripts 293 00:15:09,200 --> 00:15:11,760 Speaker 7: transaction as well as with the most recent Warner Brothers 294 00:15:11,760 --> 00:15:14,320 Speaker 7: and Discovery merger. So we think if you know, they 295 00:15:14,400 --> 00:15:17,040 Speaker 7: lay out a good plan, it can definitely be done. 296 00:15:17,240 --> 00:15:19,760 Speaker 7: And so synergies really is the name of the game here, 297 00:15:19,800 --> 00:15:23,120 Speaker 7: apart from, of course, monetizing all of the IP because 298 00:15:23,160 --> 00:15:25,000 Speaker 7: they do have some of the best brands in the. 299 00:15:24,960 --> 00:15:28,360 Speaker 3: Business, Comcast. How credible are they? 300 00:15:28,440 --> 00:15:31,440 Speaker 2: I mean, we know the Roberts family, Brian Roberts loves 301 00:15:31,480 --> 00:15:33,600 Speaker 2: to do deals, rarely goes more than five or six 302 00:15:33,680 --> 00:15:34,920 Speaker 2: years without doing a big deal. 303 00:15:35,000 --> 00:15:38,880 Speaker 3: Here, how do you handicap them here? 304 00:15:40,360 --> 00:15:43,120 Speaker 7: You know, Paul so it you know, industry sources seem 305 00:15:43,200 --> 00:15:46,920 Speaker 7: to suggest that Warner Brothers Discovery actually wants Comcasts to 306 00:15:46,960 --> 00:15:48,880 Speaker 7: be the winner. And I think a lot of this 307 00:15:49,000 --> 00:15:51,480 Speaker 7: has to do with the fact that, you know, David 308 00:15:51,520 --> 00:15:54,280 Speaker 7: Zaslov obviously has this history with NBC. He used to 309 00:15:54,320 --> 00:15:57,800 Speaker 7: work there. He obviously knows Brian Roberts extremely well. But 310 00:15:57,880 --> 00:16:00,240 Speaker 7: I think they're all davids. Ozlav also kind of sees 311 00:16:00,280 --> 00:16:02,600 Speaker 7: this as a path for him to ultimately run NBC. 312 00:16:02,720 --> 00:16:05,920 Speaker 7: He doesn't necessarily want to exit Hollywood just yet, which 313 00:16:05,960 --> 00:16:08,840 Speaker 7: is what would happen if he's sold to either paramount 314 00:16:08,840 --> 00:16:10,840 Speaker 7: S Guidance or to Netflix. So I think in many 315 00:16:10,880 --> 00:16:13,400 Speaker 7: ways he does want to kind of sell to Comcast. Again, 316 00:16:13,440 --> 00:16:15,800 Speaker 7: it's going to come down to whether Comcast can put 317 00:16:15,880 --> 00:16:18,720 Speaker 7: up the money, because they are right now in a 318 00:16:18,920 --> 00:16:23,280 Speaker 7: very very tricky, precarious situation. Their cable business is struggling. 319 00:16:23,840 --> 00:16:26,520 Speaker 7: They you know, the stock is trading at historical lows 320 00:16:26,640 --> 00:16:30,640 Speaker 7: five times ebit, so really really in a tough spot, 321 00:16:31,040 --> 00:16:33,280 Speaker 7: and they have to come up with a majority cash 322 00:16:33,360 --> 00:16:35,720 Speaker 7: bid that you know, so we're looking at something like 323 00:16:35,720 --> 00:16:38,440 Speaker 7: about sixty billion dollars. This has to be debt financed, 324 00:16:39,000 --> 00:16:40,360 Speaker 7: and so you kind of think about all of that 325 00:16:40,400 --> 00:16:43,680 Speaker 7: incremental interest expense for them, Paul, I mean this is 326 00:16:43,720 --> 00:16:45,520 Speaker 7: going to be dilute up to free cash flow, and 327 00:16:45,560 --> 00:16:47,200 Speaker 7: I don't think investors are going to like it. 328 00:16:48,040 --> 00:16:51,200 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 329 00:16:55,080 --> 00:16:58,800 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 330 00:16:58,880 --> 00:17:02,240 Speaker 1: weekdays at ten am on Apple Coarclay, and Android Auto 331 00:17:02,360 --> 00:17:05,439 Speaker 1: with the Bloomberg Business app. Listen on demand wherever you 332 00:17:05,480 --> 00:17:08,880 Speaker 1: get your podcasts, or watch us live on YouTube. 333 00:17:09,240 --> 00:17:11,800 Speaker 2: We have some news this week, big news for New 334 00:17:11,880 --> 00:17:15,800 Speaker 2: York City, getting three casino licenses for the city, one 335 00:17:15,800 --> 00:17:16,920 Speaker 2: in the Bronx. 336 00:17:17,200 --> 00:17:18,120 Speaker 3: Two in Queens. 337 00:17:18,200 --> 00:17:21,640 Speaker 2: This is to build like real casinos, not just the 338 00:17:21,760 --> 00:17:23,760 Speaker 2: you know, some of the gaming stuff. This is real 339 00:17:23,880 --> 00:17:28,080 Speaker 2: time stuff and it's big for the greater New York 340 00:17:28,080 --> 00:17:30,119 Speaker 2: City metro area here. So we want to break it 341 00:17:30,119 --> 00:17:33,399 Speaker 2: down with Briannegger, Senior Gaming and Launching analyst for Bloomberg Intelligence. 342 00:17:35,359 --> 00:17:36,359 Speaker 3: So let's step back. 343 00:17:36,400 --> 00:17:38,760 Speaker 2: Brian talk to us about kind of what the licenses 344 00:17:38,840 --> 00:17:41,320 Speaker 2: represent and kind of where do we go from here. 345 00:17:42,320 --> 00:17:46,040 Speaker 9: Sure, so this is a fairly protractive process, involving ultimately 346 00:17:46,040 --> 00:17:48,200 Speaker 9: di selection of three recipients. By the way, the only 347 00:17:48,280 --> 00:17:50,959 Speaker 9: three left in the running after a few others were 348 00:17:50,960 --> 00:17:56,520 Speaker 9: eliminated and dropped out, and really it authorized resort casinos 349 00:17:56,600 --> 00:17:59,359 Speaker 9: for the downstate New York area, mostly in New York City. 350 00:17:59,400 --> 00:18:02,440 Speaker 9: And as it turned out, as you mentioned, the three 351 00:18:02,440 --> 00:18:08,120 Speaker 9: casino qualified casino applicants, if you will, really are are 352 00:18:08,119 --> 00:18:12,000 Speaker 9: in New York City, but outside the Borough of Manhattan itself. 353 00:18:13,320 --> 00:18:17,160 Speaker 5: Brian, just looking at your note on these license approvals, 354 00:18:17,200 --> 00:18:20,520 Speaker 5: you write that they face a narrow path to decent 355 00:18:20,600 --> 00:18:22,560 Speaker 5: returns on investment. Can you please talk to us a 356 00:18:22,600 --> 00:18:24,240 Speaker 5: little bit more about that idea? 357 00:18:24,880 --> 00:18:27,000 Speaker 9: Sure? So, what we assume for those resorts is they 358 00:18:27,000 --> 00:18:30,919 Speaker 9: will get what I would call a gaming revenue premium 359 00:18:30,960 --> 00:18:34,440 Speaker 9: and room rate premium of ten twenty percent to other 360 00:18:35,119 --> 00:18:39,199 Speaker 9: kind of high end urban area resorts such as the 361 00:18:39,240 --> 00:18:43,879 Speaker 9: Burgat and Atlantic City wins Encore in Boston. However, are 362 00:18:44,000 --> 00:18:46,880 Speaker 9: concerned if in terms of the return prospects are that 363 00:18:47,200 --> 00:18:50,280 Speaker 9: development costs are quite high and perhaps some of the 364 00:18:50,320 --> 00:18:54,600 Speaker 9: targeted non gaming contribution elements might be a bit ambitious. 365 00:18:54,640 --> 00:18:56,960 Speaker 9: So for that reason, when we work the numbers, we 366 00:18:57,000 --> 00:19:00,000 Speaker 9: came up with something like a ten percent return on investment, 367 00:19:00,160 --> 00:19:04,000 Speaker 9: which is certainly a bit less than most operators would 368 00:19:04,000 --> 00:19:06,600 Speaker 9: expect to attain in these regional markets. 369 00:19:07,200 --> 00:19:10,160 Speaker 2: So I'm thinking here, I mean again, I'm just thinking 370 00:19:10,160 --> 00:19:13,480 Speaker 2: about Steve Cohen's I was looking at his plans yesterday 371 00:19:13,520 --> 00:19:16,000 Speaker 2: for in conjunction with his city field. 372 00:19:16,280 --> 00:19:17,560 Speaker 3: He obviously he owns the Mets. 373 00:19:17,960 --> 00:19:21,320 Speaker 2: City field is out there, the national tennis centers out. 374 00:19:21,160 --> 00:19:22,240 Speaker 3: There the world. 375 00:19:23,640 --> 00:19:25,760 Speaker 2: You know that we had the world's fair situations, so 376 00:19:25,840 --> 00:19:27,840 Speaker 2: there's a ton of opportunity out there. 377 00:19:28,640 --> 00:19:29,920 Speaker 3: It seems like these are going to be. 378 00:19:29,880 --> 00:19:35,399 Speaker 2: More retail hotel than casino. How do you think the 379 00:19:35,440 --> 00:19:37,080 Speaker 2: mix of revenue is going to be there? 380 00:19:37,840 --> 00:19:40,160 Speaker 9: So there certainly is. I think when we work the numbers, 381 00:19:40,920 --> 00:19:45,560 Speaker 9: we assume that with respect to either food and beverage 382 00:19:45,600 --> 00:19:49,200 Speaker 9: or retail entertainment revenue, those will be fairly sizeable chunks 383 00:19:49,240 --> 00:19:53,480 Speaker 9: of the overall revenue PI probably cumuatively close to half, 384 00:19:53,600 --> 00:19:57,359 Speaker 9: which is true of many kind of gaming resorts in 385 00:19:59,000 --> 00:20:01,560 Speaker 9: attractive environment where you get a lot of non gaming revenue. 386 00:20:01,600 --> 00:20:04,320 Speaker 9: I think the same will be true here. The question 387 00:20:04,480 --> 00:20:06,960 Speaker 9: is will it be enough and will be margins which 388 00:20:07,000 --> 00:20:10,000 Speaker 9: we take to be about thirty percent, be sufficient to 389 00:20:10,040 --> 00:20:12,879 Speaker 9: get a good return. But certainly, you know the logic 390 00:20:12,880 --> 00:20:15,400 Speaker 9: of having a nexas city field makes a lot of sense. 391 00:20:15,440 --> 00:20:18,720 Speaker 9: You know, the other locations, valleys at a golf course in 392 00:20:18,720 --> 00:20:22,520 Speaker 9: the Bronx, you know, the resorts world in Queen's pretty 393 00:20:22,600 --> 00:20:25,639 Speaker 9: much expanding and existing facility all have their merit. The 394 00:20:25,720 --> 00:20:28,480 Speaker 9: question is will be enough to get a decent return. 395 00:20:28,560 --> 00:20:32,320 Speaker 9: But certainly some of these locations have rational prospects. 396 00:20:32,920 --> 00:20:35,479 Speaker 5: What does this victory for these three companies mean for 397 00:20:35,560 --> 00:20:39,159 Speaker 5: their competitors like Sands, MGM, When where do they go 398 00:20:39,240 --> 00:20:39,720 Speaker 5: from here? 399 00:20:40,680 --> 00:20:43,520 Speaker 9: So it'd be queer. You know Sans exited this process 400 00:20:43,640 --> 00:20:48,440 Speaker 9: back in April. When exited in May it's Hudson, York 401 00:20:48,520 --> 00:20:52,760 Speaker 9: project because of community opposition at MGM in October because 402 00:20:52,760 --> 00:20:54,720 Speaker 9: of the licensed terms. But bear in mind that they 403 00:20:54,720 --> 00:20:57,639 Speaker 9: do have other prospects. You know, win is developing a 404 00:20:57,800 --> 00:21:01,879 Speaker 9: UAE resort of its own, MGM is building in Osaka, Japan. 405 00:21:02,840 --> 00:21:04,480 Speaker 9: They all can buy back in their own stock, So 406 00:21:04,480 --> 00:21:09,360 Speaker 9: I think they're weighing this particular opportunity relative to other 407 00:21:09,440 --> 00:21:10,480 Speaker 9: development prospects. 408 00:21:11,520 --> 00:21:15,000 Speaker 2: All right, so we're gonna get the licenses by year end. 409 00:21:16,720 --> 00:21:19,800 Speaker 2: What's the timetame? Have anybody any of these three licensed 410 00:21:19,800 --> 00:21:21,840 Speaker 2: winners lay out of timetable for getting a shovel in 411 00:21:21,880 --> 00:21:22,240 Speaker 2: the ground. 412 00:21:22,520 --> 00:21:24,280 Speaker 3: And maybe even opening the doors. 413 00:21:24,880 --> 00:21:27,960 Speaker 9: So I think it'll vary by operator, but the expectations 414 00:21:28,000 --> 00:21:32,320 Speaker 9: that these resorts will generally open by twenty thirty or so. 415 00:21:32,720 --> 00:21:34,840 Speaker 9: It'll take a few years to develop. There's always the 416 00:21:34,880 --> 00:21:39,800 Speaker 9: possibility of construction challenges, but that's the target. And of course, 417 00:21:39,840 --> 00:21:43,880 Speaker 9: our related to concerns since you mentioned MGM was MGM 418 00:21:44,119 --> 00:21:48,199 Speaker 9: Bally's Caesars o operate casinos in Atlantic City, and you know, 419 00:21:48,240 --> 00:21:53,320 Speaker 9: the proximity to Alantic City of resorts with casino elements 420 00:21:53,320 --> 00:21:57,159 Speaker 9: at this caliber certainly presents a potential competitive challenge to 421 00:21:57,160 --> 00:21:58,200 Speaker 9: Atlantic City itself. 422 00:21:58,960 --> 00:22:01,720 Speaker 3: ACI. That's tough, tough. 423 00:22:01,760 --> 00:22:03,959 Speaker 2: That is tough because I would see, you know, on 424 00:22:03,960 --> 00:22:05,919 Speaker 2: the Parkway, Brian, I know you see it too. We 425 00:22:05,960 --> 00:22:08,200 Speaker 2: have for years, for twenty thirty years, we've seen the 426 00:22:08,480 --> 00:22:11,880 Speaker 2: limousines from New York City going down the Parkway to AC. 427 00:22:12,240 --> 00:22:13,880 Speaker 2: That's going to get impacted, isn't. 428 00:22:13,640 --> 00:22:17,880 Speaker 9: It It will? I think you know, some operators, Forgata, 429 00:22:17,960 --> 00:22:21,320 Speaker 9: for example, a hard rock may hold up better than others. 430 00:22:21,400 --> 00:22:23,440 Speaker 9: But you know, there's always a challenge when you've got 431 00:22:23,760 --> 00:22:27,560 Speaker 9: this much additional gaming capacity, with resort elements opening up 432 00:22:28,160 --> 00:22:32,080 Speaker 9: in relative close proximity to a to a key Atlantic 433 00:22:32,080 --> 00:22:33,160 Speaker 9: city feeder market. 434 00:22:33,520 --> 00:22:38,200 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 435 00:22:38,400 --> 00:22:42,360 Speaker 1: and anywhere else you get your podcasts. 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