1 00:00:03,160 --> 00:00:06,560 Speaker 1: Global business news twenty four hours a day. If Bloomberg 2 00:00:06,600 --> 00:00:09,680 Speaker 1: dot Com the radio plus mobile lap and on your radio. 3 00:00:09,960 --> 00:00:14,240 Speaker 1: This is a Bloomberg business flag from Bloomberg World Handquarters. 4 00:00:14,240 --> 00:00:17,480 Speaker 1: I'm Charlie Pada, move lawer on this Wednesday. The Dow, 5 00:00:17,640 --> 00:00:21,160 Speaker 1: the SMP NEZ stack Hall declining as investors await Friday's 6 00:00:21,200 --> 00:00:25,240 Speaker 1: speech from Fedshair Janet Yellen. The SMP five Hunted Index 7 00:00:25,320 --> 00:00:28,360 Speaker 1: down seven to twenty one seventy nine, a drop of 8 00:00:28,400 --> 00:00:31,640 Speaker 1: four tens of one percent, as Stack is down twenty eight, 9 00:00:31,680 --> 00:00:34,440 Speaker 1: a drop of six tens of one percent down. Industrials 10 00:00:34,479 --> 00:00:37,800 Speaker 1: down forty five, a drop of two tens up one percent. 11 00:00:38,200 --> 00:00:41,080 Speaker 1: The tenure down to thirty seconds that yield one point 12 00:00:41,120 --> 00:00:45,080 Speaker 1: five five percent. Gold down eighteen dollars an ounce now 13 00:00:45,159 --> 00:00:47,960 Speaker 1: to twenty four, a drop of one point three percent. 14 00:00:48,400 --> 00:00:51,440 Speaker 1: And crude oil is down one point three percent. Of 15 00:00:51,479 --> 00:00:55,240 Speaker 1: barrel of West Texas Intermediate actually down two point eight percent. 16 00:00:55,600 --> 00:00:58,000 Speaker 1: Uh w t I down a dollar thirty five now 17 00:00:58,600 --> 00:01:01,640 Speaker 1: six seventy five. Brand Crew it is down one point nine. 18 00:01:02,480 --> 00:01:07,440 Speaker 1: I'm Charlie Peloton. That's a Bloomberg business flash. You're listening 19 00:01:07,440 --> 00:01:10,440 Speaker 1: to taking stoff with Kathleen Hayes and Pim Fox on 20 00:01:10,480 --> 00:01:17,720 Speaker 1: Bloomberg Radio and up next on Bloomberg Radio, it's Viacom. 21 00:01:17,840 --> 00:01:20,280 Speaker 1: The gift that keeps on giving could be an entertainment 22 00:01:20,319 --> 00:01:23,880 Speaker 1: story in and of itself, just the moves at this company. 23 00:01:23,920 --> 00:01:27,520 Speaker 1: But today Emma or our corporate finance reporter at Bloomberg News, 24 00:01:28,000 --> 00:01:30,720 Speaker 1: is going to talk a little bit about a potential 25 00:01:30,800 --> 00:01:35,200 Speaker 1: twelve billion dollar down grade. What's going on here, Emma, Hey, Alex. 26 00:01:35,480 --> 00:01:38,480 Speaker 1: Uh So, with their legal troubles behind them, the next 27 00:01:38,560 --> 00:01:41,319 Speaker 1: big challenge via Common is facing is their twelve billion 28 00:01:41,319 --> 00:01:44,880 Speaker 1: dollars of debt, which is yielding higher than the investment 29 00:01:44,880 --> 00:01:48,480 Speaker 1: grade rating it currently has, closer to junk levels. Um, 30 00:01:48,520 --> 00:01:51,760 Speaker 1: they're on negative watch from the ratings agencies. Uh So, 31 00:01:52,040 --> 00:01:54,600 Speaker 1: they basically are faced with a choice. They have to 32 00:01:54,800 --> 00:01:58,080 Speaker 1: either accept a down grade or take some pretty drastic 33 00:01:58,080 --> 00:02:03,120 Speaker 1: measures like cutting their dividend um raising equity financing or 34 00:02:03,240 --> 00:02:06,360 Speaker 1: potentially the sale of Paramount or a merger with CBS Corp. 35 00:02:06,800 --> 00:02:10,080 Speaker 1: To d lever and decrease that debt so keep satiating 36 00:02:10,120 --> 00:02:14,840 Speaker 1: those uh dividend receivers, or kind of figure out some 37 00:02:14,880 --> 00:02:17,440 Speaker 1: structural changes. What are the kind of pros and cons 38 00:02:17,440 --> 00:02:20,639 Speaker 1: and on either side of this decision here, I mean 39 00:02:20,680 --> 00:02:23,720 Speaker 1: it's it's a complicated situation. You know, obviously the equity 40 00:02:23,760 --> 00:02:26,400 Speaker 1: holders would love to be receiving those dividends. On the 41 00:02:26,440 --> 00:02:29,880 Speaker 1: other hand, UM Viacom is paying a much higher dividend 42 00:02:29,960 --> 00:02:32,560 Speaker 1: at three point eight percent than the SMP average or 43 00:02:32,600 --> 00:02:36,200 Speaker 1: than their sister company cbs UM. There's also, you know, 44 00:02:36,280 --> 00:02:38,519 Speaker 1: been talk that if they are to cut that dividend, 45 00:02:38,800 --> 00:02:41,320 Speaker 1: they'll have more cash to reinvest in their networks, which 46 00:02:41,480 --> 00:02:45,320 Speaker 1: have been struggling. So UM that would be another perk there. 47 00:02:45,360 --> 00:02:49,000 Speaker 1: Decreasing that debt level would give them more flexibility in 48 00:02:49,040 --> 00:02:52,520 Speaker 1: other areas. So in terms of all of this executive 49 00:02:52,560 --> 00:02:57,560 Speaker 1: turnover that we've seen at Viacom, OUSTID CEO Philip Dalmont 50 00:02:57,760 --> 00:03:03,120 Speaker 1: has proposed a sale of the stake in paramount. How 51 00:03:03,360 --> 00:03:07,480 Speaker 1: how is that playing into this whole situation here? You know, 52 00:03:08,120 --> 00:03:11,359 Speaker 1: that would help them de lever It would decrease that 53 00:03:11,400 --> 00:03:14,840 Speaker 1: amount of debt, give them more capital. Delman thinks that 54 00:03:14,960 --> 00:03:17,160 Speaker 1: it could raise as much as four billion dollars for 55 00:03:17,200 --> 00:03:19,359 Speaker 1: the company and that would in theory help protect the 56 00:03:19,440 --> 00:03:22,160 Speaker 1: investment grade rate. Yes, absolutely, if that were to happen, 57 00:03:22,200 --> 00:03:24,120 Speaker 1: then they would have a lot more flexibility in terms 58 00:03:24,160 --> 00:03:26,280 Speaker 1: of being able to keep the dividend other things, UM 59 00:03:26,400 --> 00:03:30,360 Speaker 1: avoid you know, having to raise equity. UM. However, controlling 60 00:03:30,400 --> 00:03:33,919 Speaker 1: shareholders Sumner and Sherry Redstone are opposed to that deal. 61 00:03:34,160 --> 00:03:37,960 Speaker 1: Uh So it's unclear if that's really even a possibility 62 00:03:38,000 --> 00:03:40,240 Speaker 1: that's on the table. UM. That A lot of that 63 00:03:40,320 --> 00:03:43,880 Speaker 1: hinges on whether Dmon is able to convince the new board. Now, 64 00:03:43,920 --> 00:03:48,760 Speaker 1: Emma Mario Gabelli, who was a Viacom shareholder, he was 65 00:03:48,800 --> 00:03:53,080 Speaker 1: speaking on Bloomberg Television on Monday, and he opposes selling 66 00:03:53,080 --> 00:03:59,160 Speaker 1: the entire studio. Correct. And so would Philippe Balman actually 67 00:03:59,320 --> 00:04:05,880 Speaker 1: profit personally by this sale? I don't believe so. Okay, 68 00:04:05,880 --> 00:04:08,800 Speaker 1: but he has until September in order to gain the 69 00:04:08,840 --> 00:04:12,560 Speaker 1: board's approval for paramount sale. That's right, And what he's 70 00:04:12,600 --> 00:04:14,920 Speaker 1: looking to gain approval for is a sale of a 71 00:04:14,960 --> 00:04:19,760 Speaker 1: partial stake of forty percent. The company actually included UM 72 00:04:19,800 --> 00:04:21,599 Speaker 1: in a recent filing of by law saying that he 73 00:04:21,640 --> 00:04:24,760 Speaker 1: could not pursue a full sale of paramount. When you 74 00:04:24,839 --> 00:04:28,400 Speaker 1: look at from your side in the debt world, what 75 00:04:28,520 --> 00:04:31,880 Speaker 1: are debt investors betting are going to happen here? I 76 00:04:31,920 --> 00:04:35,040 Speaker 1: mean the bonds are up a lot this year. Actually, 77 00:04:35,120 --> 00:04:39,080 Speaker 1: they've performed since the legal uh settlement. I think the 78 00:04:39,120 --> 00:04:43,120 Speaker 1: second best of similar rated bonds in terms of total returns. UM. 79 00:04:43,200 --> 00:04:45,440 Speaker 1: So it seems like investors are betting that they will 80 00:04:45,440 --> 00:04:48,480 Speaker 1: take the necessary steps to keep that investment grade rating, 81 00:04:48,520 --> 00:04:50,680 Speaker 1: and that is what I've heard from analysts. UM. It 82 00:04:50,760 --> 00:04:54,120 Speaker 1: seems in this case that both equity and debt analysts 83 00:04:54,120 --> 00:04:55,760 Speaker 1: are kind of aligned in what they would like the 84 00:04:55,800 --> 00:04:57,760 Speaker 1: company to do, which is to take those steps to 85 00:04:57,800 --> 00:05:00,479 Speaker 1: keep that investment grade rating. H you think it's going 86 00:05:00,560 --> 00:05:04,120 Speaker 1: to turn into a Ben Her movie remake. That's a 87 00:05:04,160 --> 00:05:09,560 Speaker 1: Paramount movie. It is, it is, and it's not estimated 88 00:05:09,720 --> 00:05:11,960 Speaker 1: million at the box office. Yeah, that none of their 89 00:05:11,960 --> 00:05:13,440 Speaker 1: films in the past year have been doing so well. 90 00:05:13,440 --> 00:05:15,960 Speaker 1: Paramount has really kind of been a money sucking operation 91 00:05:16,000 --> 00:05:19,080 Speaker 1: in the past year. UM. I think people are hoping, 92 00:05:19,120 --> 00:05:20,800 Speaker 1: you know, that with a good film or two that 93 00:05:20,839 --> 00:05:24,520 Speaker 1: could turn around, but it has not contributed to profit 94 00:05:24,600 --> 00:05:27,359 Speaker 1: ord which seems like an issue of if it's a 95 00:05:27,360 --> 00:05:31,440 Speaker 1: money sucking organization and to retire this debt, if via 96 00:05:31,480 --> 00:05:35,560 Speaker 1: convert take out that option, they basically have little cash 97 00:05:35,760 --> 00:05:39,359 Speaker 1: left to do anything else. According to OURBC Capital analysts. 98 00:05:39,400 --> 00:05:42,880 Speaker 1: So it seems like they're they're in quite the spot here, right, Yeah, 99 00:05:42,880 --> 00:05:45,320 Speaker 1: and a lot hinges on, you know, the decisions that 100 00:05:45,400 --> 00:05:47,800 Speaker 1: this new board makes. So um, it seems like the 101 00:05:47,800 --> 00:05:50,839 Speaker 1: company really, you know, is sort of in a paralyzed state, 102 00:05:50,880 --> 00:05:53,600 Speaker 1: waiting for the board to come in and essentially decide 103 00:05:53,640 --> 00:05:55,400 Speaker 1: how they want to deal with this debt, if they 104 00:05:55,400 --> 00:05:57,240 Speaker 1: want to deal with this debt, or if they would 105 00:05:57,320 --> 00:06:00,120 Speaker 1: rather accept that ratings cut and you know, continue you 106 00:06:00,200 --> 00:06:04,679 Speaker 1: pursuing things like paying that dividend. Now, the Viacom shareholders 107 00:06:04,960 --> 00:06:08,800 Speaker 1: are kind of divided because there are multiple classes of stock. 108 00:06:09,640 --> 00:06:12,760 Speaker 1: Can you tell us what are the multiple classes? And 109 00:06:13,320 --> 00:06:18,400 Speaker 1: do they each receive the same dividend? Uh? They do not. Um. 110 00:06:18,440 --> 00:06:20,919 Speaker 1: The Class B shaleholders are the ones that received that 111 00:06:21,000 --> 00:06:25,400 Speaker 1: three point eight percent dividend, right, and this dividend, even 112 00:06:25,480 --> 00:06:27,800 Speaker 1: if it was cut, what would it save him about 113 00:06:27,839 --> 00:06:31,360 Speaker 1: six million a year? About six million? Yeah? Um? And 114 00:06:31,480 --> 00:06:33,720 Speaker 1: you know, debt investors I think are hoping that money 115 00:06:33,720 --> 00:06:36,840 Speaker 1: would be used to pay down maturities. Um. They do 116 00:06:37,040 --> 00:06:39,279 Speaker 1: have enough free cash flow to pay down all of 117 00:06:39,279 --> 00:06:41,800 Speaker 1: their maturities in the coming twelve months. So um, this 118 00:06:41,800 --> 00:06:43,719 Speaker 1: would be more of a long term solution, you know, 119 00:06:43,720 --> 00:06:47,440 Speaker 1: addressing that dad that comes in incoming years, and Viacom 120 00:06:47,480 --> 00:06:50,279 Speaker 1: also has its own governance issues that it's dealing with. 121 00:06:50,440 --> 00:06:54,680 Speaker 1: Is there any spillover from the fight in the boardroom 122 00:06:54,760 --> 00:06:57,640 Speaker 1: to the fight over whether these asset sales will take 123 00:06:57,640 --> 00:07:01,120 Speaker 1: place or a dividend cut will be enacted in order 124 00:07:01,160 --> 00:07:04,080 Speaker 1: to shore up their debt payment facilities. I don't think 125 00:07:04,120 --> 00:07:08,120 Speaker 1: there's spillover so much as that the company um is 126 00:07:08,520 --> 00:07:12,880 Speaker 1: kind of waiting until the board decides the next steps 127 00:07:12,880 --> 00:07:14,480 Speaker 1: they want to take. It seems like they're kind of 128 00:07:14,480 --> 00:07:17,120 Speaker 1: dependent on the decisions the board makes, so a lot 129 00:07:17,200 --> 00:07:20,000 Speaker 1: hinges on, you know, the changes that are coming in 130 00:07:20,080 --> 00:07:23,960 Speaker 1: governance and how that plays out. I'm just curious. Philippe 131 00:07:24,000 --> 00:07:31,440 Speaker 1: Doman is no longer the correct president and chief executive Viacom, 132 00:07:31,560 --> 00:07:34,320 Speaker 1: right right? Um? Yeah, So why does he have until 133 00:07:34,360 --> 00:07:38,040 Speaker 1: September to be involved in any of these decisions? I mean, 134 00:07:38,280 --> 00:07:40,520 Speaker 1: I think he was really pushing for that sale, and 135 00:07:40,560 --> 00:07:42,840 Speaker 1: I think that as part of the legal settlement, he 136 00:07:43,760 --> 00:07:47,000 Speaker 1: asked that he had that opportunity. Um. It seems that 137 00:07:47,040 --> 00:07:48,880 Speaker 1: he feels very strongly that that's the right choice the 138 00:07:48,880 --> 00:07:51,119 Speaker 1: company takes, so they've given him you know, the chance 139 00:07:51,200 --> 00:07:54,120 Speaker 1: to to pitch that to the board and too hopefully 140 00:07:54,120 --> 00:07:57,920 Speaker 1: convinced them. Do we know? Do we know what Sherry Redstone, 141 00:07:58,320 --> 00:08:02,040 Speaker 1: who is currently the vice chairman of the of the board, 142 00:08:02,320 --> 00:08:05,600 Speaker 1: she along with Sumner Redstone, does not seem to be 143 00:08:05,640 --> 00:08:09,680 Speaker 1: on board. Um they have. They have opposed the sale. 144 00:08:09,680 --> 00:08:13,560 Speaker 1: It's unclear to what extent they fully opposed the actual 145 00:08:13,600 --> 00:08:17,200 Speaker 1: sale and to what extent it's that they oppose. You know, 146 00:08:17,320 --> 00:08:21,000 Speaker 1: Philip Dolman as a sort of lame duck CEO making 147 00:08:21,040 --> 00:08:24,240 Speaker 1: that decision. So you know, right now, I think it's 148 00:08:24,240 --> 00:08:26,200 Speaker 1: it's in a stage where he's trying to convince the 149 00:08:26,240 --> 00:08:29,360 Speaker 1: Redstones that this is the right move, and I think 150 00:08:29,360 --> 00:08:31,760 Speaker 1: it's anyone's guests how that will play out. Well, we 151 00:08:31,760 --> 00:08:33,680 Speaker 1: know we're going to turn to you for more details 152 00:08:33,760 --> 00:08:37,400 Speaker 1: when if it does get resolved. Viacom shares the b 153 00:08:37,559 --> 00:08:40,319 Speaker 1: shares down twenty three cents right now forty one forty 154 00:08:40,520 --> 00:08:44,360 Speaker 1: seven cents. The shares are basically unchanged so far this year. 155 00:08:44,880 --> 00:08:47,880 Speaker 1: Let's turn our attention now to the world of politics. 156 00:08:47,880 --> 00:08:49,920 Speaker 1: I want to bring in Mike Nietz. He is our 157 00:08:49,960 --> 00:08:54,520 Speaker 1: executive editor for Bloomberg of politics and Mike Uh. The 158 00:08:54,559 --> 00:09:00,000 Speaker 1: Trump campaign is holding a rally of fifteen thousand Republicans supporters. 159 00:09:00,120 --> 00:09:05,560 Speaker 1: It will be held at the in Jacksonville, Mississippi. It's 160 00:09:05,640 --> 00:09:08,400 Speaker 1: taking place tonight and there's gonna be a special guest 161 00:09:08,559 --> 00:09:12,559 Speaker 1: appearing with Donald Trump. Who is it? Well that uh 162 00:09:12,720 --> 00:09:15,400 Speaker 1: the this is like the greatest rumor of the day. Uh. 163 00:09:15,520 --> 00:09:21,880 Speaker 1: Nigel faradge uh, the famous Brexit UH leader in Britain, 164 00:09:22,120 --> 00:09:24,680 Speaker 1: has said he told a Daily Telegraph in Britain that 165 00:09:24,760 --> 00:09:27,440 Speaker 1: he would be at the rally speaking on the same 166 00:09:27,480 --> 00:09:30,320 Speaker 1: platform as Donald Trump. We haven't been able to cook 167 00:09:30,320 --> 00:09:33,040 Speaker 1: for him that anywhere else today. Of that's a lot 168 00:09:33,120 --> 00:09:35,839 Speaker 1: of people. But with the new leadership of the Trump 169 00:09:35,880 --> 00:09:39,360 Speaker 1: campaign taking over, with including Steve Bannon, who is the 170 00:09:39,640 --> 00:09:43,920 Speaker 1: who is a great supporter of faradges Um, it seems 171 00:09:44,000 --> 00:09:46,920 Speaker 1: like it could just happen. What are the kind of 172 00:09:46,960 --> 00:09:50,760 Speaker 1: ideological parallels here between these two characters. So so if 173 00:09:50,800 --> 00:09:53,960 Speaker 1: you if you remember a few days ago, Donald Trump 174 00:09:54,040 --> 00:09:57,400 Speaker 1: treated they're gonna they're gonna be calling me Mr Brexit, right, 175 00:09:57,440 --> 00:09:59,360 Speaker 1: and it kind of came out of nowhere and everyone 176 00:09:59,400 --> 00:10:02,000 Speaker 1: was like, what does he talking about? And it's part 177 00:10:02,000 --> 00:10:06,160 Speaker 1: of it is uh is this uh this outsider populist 178 00:10:06,200 --> 00:10:09,920 Speaker 1: movement of people who who don't like the uh, you 179 00:10:09,960 --> 00:10:12,760 Speaker 1: know what elites have set up, including you know, trade 180 00:10:12,760 --> 00:10:15,360 Speaker 1: deals that that they view is unfair, and you know, 181 00:10:15,440 --> 00:10:19,160 Speaker 1: declining manufacturing jobs, those kinds of things, and UH Trump 182 00:10:19,280 --> 00:10:22,480 Speaker 1: and Steve ben and UH both see this, see this 183 00:10:22,600 --> 00:10:26,440 Speaker 1: not only as a movement that happens in and Britain, 184 00:10:26,480 --> 00:10:30,120 Speaker 1: but also in the US and across Europe. I want 185 00:10:30,120 --> 00:10:32,599 Speaker 1: to thank you very much for telling us, and I 186 00:10:32,640 --> 00:10:35,200 Speaker 1: guess we'll just have to see what happens if indeed 187 00:10:35,320 --> 00:10:40,280 Speaker 1: Nigel Farage, the head of the UK Party, shows up 188 00:10:40,280 --> 00:10:45,800 Speaker 1: in Jacksonville, Mississippi, with those fifteen thousand Republicans. Mike Nizza 189 00:10:46,000 --> 00:10:50,240 Speaker 1: is executive editor for Bloomberg Politics. You can follow him 190 00:10:50,280 --> 00:10:55,560 Speaker 1: on Twitter at Mike Nitze. This is taking Stock. I'm 191 00:10:55,600 --> 00:10:59,400 Speaker 1: pim Fox. My co host Alex Barrinka coming up on 192 00:10:59,480 --> 00:11:03,120 Speaker 1: taking Stock. We're gonna be talking about what to do 193 00:11:03,360 --> 00:11:07,480 Speaker 1: with your money when it comes to investing in commodities. 194 00:11:07,559 --> 00:11:11,319 Speaker 1: We're going to talk about glen Core's earnings. They dropped 195 00:11:11,440 --> 00:11:13,760 Speaker 1: sixty six percent. That's next