1 00:00:02,080 --> 00:00:05,880 Speaker 1: This is Bloomberg Intelligence with Alex Steinhl and Paul'sweenye. 2 00:00:05,960 --> 00:00:09,200 Speaker 2: The real app performance has been the US corporate high yield. 3 00:00:09,360 --> 00:00:11,680 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 4 00:00:11,800 --> 00:00:15,360 Speaker 2: The semiconductor business is a really cyclical business. 5 00:00:15,080 --> 00:00:18,680 Speaker 1: Breaking market headlines and corporate news from across the globe. 6 00:00:18,720 --> 00:00:21,360 Speaker 3: Do investors like the M and A that we've seen? 7 00:00:21,560 --> 00:00:24,640 Speaker 2: These are two big time blue chip companies. 8 00:00:24,800 --> 00:00:28,400 Speaker 3: The window between the peak and cut changing super fast. 9 00:00:28,560 --> 00:00:32,479 Speaker 1: Bloomberg Intelligence with Alex Steinhl and Paul'sweenye. 10 00:00:31,960 --> 00:00:33,200 Speaker 4: On Bloomberg Radio. 11 00:00:34,080 --> 00:00:36,800 Speaker 2: Today's Bloomberg Intelligence Show, we dig inside the big business 12 00:00:36,800 --> 00:00:38,839 Speaker 2: stories impacting Wall Street and the global markets. 13 00:00:39,080 --> 00:00:41,159 Speaker 3: Each and every week we provide in depth research and 14 00:00:41,240 --> 00:00:43,040 Speaker 3: data on some of the two thousand companies and one 15 00:00:43,120 --> 00:00:45,800 Speaker 3: hundred and thirty industries are analysts cover worldwide. 16 00:00:45,840 --> 00:00:48,280 Speaker 2: Today we take a look at momentum for cruise lines 17 00:00:48,280 --> 00:00:49,400 Speaker 2: in twenty twenty four. 18 00:00:49,240 --> 00:00:52,480 Speaker 3: Plus the future of award shows may be at risk. 19 00:00:52,680 --> 00:00:54,880 Speaker 3: But first, it was a real week of earnings with 20 00:00:54,960 --> 00:00:57,960 Speaker 3: names like Netflix, Tesla, and IBM reporting. For more on 21 00:00:58,000 --> 00:01:00,920 Speaker 3: the numbers from IBM, we spoke with Bloomberg Intelligence Senior 22 00:01:00,960 --> 00:01:02,840 Speaker 3: technology analyst an Arab Rana. 23 00:01:02,920 --> 00:01:05,000 Speaker 5: One of the biggest things we talked about was the 24 00:01:05,000 --> 00:01:07,840 Speaker 5: free cash flow number came out at twelve billion. I 25 00:01:07,840 --> 00:01:09,880 Speaker 5: think we were you know, we were slightly above the 26 00:01:10,160 --> 00:01:12,120 Speaker 5: street and saying that, you know, I'll be happy if 27 00:01:12,120 --> 00:01:14,959 Speaker 5: they do eleven billion. So I think that really speaks 28 00:01:15,040 --> 00:01:19,039 Speaker 5: both to the organic growth rate of the company, operational efficiencies, 29 00:01:19,200 --> 00:01:23,039 Speaker 5: you know, improving margins, taking care of accounts, receivers, all 30 00:01:23,080 --> 00:01:25,800 Speaker 5: sorts of things. So I think it's really good print 31 00:01:25,840 --> 00:01:29,320 Speaker 5: for IBM in terms of free cash flow, but also 32 00:01:29,400 --> 00:01:33,360 Speaker 5: the you know, the guidance on the you know, organic 33 00:01:33,400 --> 00:01:35,920 Speaker 5: growth rate because we were going in so in fourth 34 00:01:36,000 --> 00:01:38,679 Speaker 5: quarter they did three percent growth rate in constant currency. 35 00:01:38,920 --> 00:01:41,360 Speaker 5: We thought, at least for the first you know, few quarters, 36 00:01:41,400 --> 00:01:43,520 Speaker 5: they're going to talk about three to four percent and 37 00:01:43,560 --> 00:01:45,840 Speaker 5: then accel rate, but they strayed away went with a 38 00:01:45,880 --> 00:01:49,280 Speaker 5: mid single digit number. So I think overall, good for IBM, 39 00:01:49,400 --> 00:01:51,680 Speaker 5: good for the rest of the tech space, and I 40 00:01:51,720 --> 00:01:53,120 Speaker 5: feel pretty happy about it. 41 00:01:54,120 --> 00:01:56,040 Speaker 3: What I know, this is kind of a probably dumb question, 42 00:01:56,120 --> 00:01:58,320 Speaker 3: but like what in IBM's business model to let it 43 00:01:58,440 --> 00:02:00,960 Speaker 3: like me, are they doing well, like break down the 44 00:02:00,960 --> 00:02:02,960 Speaker 3: different categories in a way that makes sense to alex 45 00:02:03,800 --> 00:02:04,639 Speaker 3: So they I mean. 46 00:02:04,520 --> 00:02:07,360 Speaker 5: They still are a very big piece of the entire 47 00:02:07,440 --> 00:02:10,080 Speaker 5: tech ecosystem. They have very strong relationships, they have a 48 00:02:10,080 --> 00:02:13,960 Speaker 5: good consulting business, they have red hat, they tell mainframes. Now, 49 00:02:14,000 --> 00:02:16,160 Speaker 5: remember one thing, I mean, I know people got very 50 00:02:16,520 --> 00:02:20,000 Speaker 5: getting very excited. But if software spending is climbing between 51 00:02:20,040 --> 00:02:23,119 Speaker 5: ten to twelve percent, IBM still growing you know, six 52 00:02:23,200 --> 00:02:26,280 Speaker 5: to seven, So they are still underperforming the entire broader 53 00:02:26,360 --> 00:02:28,880 Speaker 5: software space. But that's okay because you know, when you 54 00:02:28,960 --> 00:02:31,600 Speaker 5: go from three to six, that's a big change. Also 55 00:02:31,720 --> 00:02:34,400 Speaker 5: in terms of the growth rates. This is just a 56 00:02:34,400 --> 00:02:37,240 Speaker 5: matter of overall tech spending improving after two years of 57 00:02:37,320 --> 00:02:39,800 Speaker 5: under investment. This is something that we have been saying 58 00:02:39,840 --> 00:02:42,720 Speaker 5: for so long. Tick as a portion of total GDP 59 00:02:42,880 --> 00:02:45,680 Speaker 5: is a very small number. Most of the companies around 60 00:02:45,720 --> 00:02:48,519 Speaker 5: the world, barring the consumer technology companies that we see, 61 00:02:48,720 --> 00:02:53,480 Speaker 5: have underinvested in technology. So when you have rail companies 62 00:02:53,600 --> 00:02:56,880 Speaker 5: or airlines or auto insurance companies, they really need to 63 00:02:56,880 --> 00:02:59,520 Speaker 5: be more digital. And one way to get digital is 64 00:02:59,560 --> 00:03:02,200 Speaker 5: to move a lot of their infrastructure to the cloud. 65 00:03:02,360 --> 00:03:04,520 Speaker 5: So all of those things play in well. We have 66 00:03:04,639 --> 00:03:07,160 Speaker 5: not seen good spending in two years. I'm pretty happy 67 00:03:07,160 --> 00:03:10,040 Speaker 5: that twenty twenty four May we may see a rebound. 68 00:03:10,880 --> 00:03:14,919 Speaker 2: How does IBM and fit into the AI discussion, because 69 00:03:14,919 --> 00:03:17,800 Speaker 2: I know the CEO called out the client demand for 70 00:03:17,840 --> 00:03:20,959 Speaker 2: AI is accelerating. How do they play in that space. 71 00:03:21,800 --> 00:03:23,680 Speaker 5: The majority of the stuff that they're going to do 72 00:03:23,800 --> 00:03:25,560 Speaker 5: is on the consulting side. So if you are a 73 00:03:25,639 --> 00:03:27,600 Speaker 5: large company, you need to figure out what to do. 74 00:03:27,919 --> 00:03:29,760 Speaker 5: They have a lot of consultants that can help you 75 00:03:29,840 --> 00:03:32,919 Speaker 5: clean up the data. You know, use whichever model we 76 00:03:33,000 --> 00:03:34,640 Speaker 5: want to use. You want to use something from open 77 00:03:34,639 --> 00:03:37,560 Speaker 5: ai Andthropic, all these companies that are out there. They'll 78 00:03:37,560 --> 00:03:40,160 Speaker 5: help you with that, help you train the models, and 79 00:03:40,240 --> 00:03:42,200 Speaker 5: then at the end of the day make it for 80 00:03:42,280 --> 00:03:45,120 Speaker 5: your business case. It's not as easy as just you know, 81 00:03:45,240 --> 00:03:49,240 Speaker 5: using chat, GPD and answering questions for this. For an 82 00:03:49,360 --> 00:03:51,720 Speaker 5: enterprise use, you need to do a lot of data 83 00:03:51,760 --> 00:03:55,160 Speaker 5: clean up, data aggregation because that's what's needed to clean 84 00:03:55,200 --> 00:03:57,360 Speaker 5: up your you know, the models itself. 85 00:03:57,840 --> 00:03:59,960 Speaker 3: How fast and long can that kind of growth rate 86 00:04:00,120 --> 00:04:01,560 Speaker 3: six seven percent go? 87 00:04:02,720 --> 00:04:04,480 Speaker 5: I think if this year they are able to go 88 00:04:04,560 --> 00:04:07,080 Speaker 5: to six seven percent, you know, I could expect then 89 00:04:07,280 --> 00:04:09,240 Speaker 5: you know, another one hundred to two hundred basis points 90 00:04:09,240 --> 00:04:12,240 Speaker 5: improvement next year. And that's actually not a bad deal 91 00:04:12,240 --> 00:04:14,640 Speaker 5: because you remember the old IBM just about four or 92 00:04:14,640 --> 00:04:17,120 Speaker 5: five years ago, they were not growing at all. So 93 00:04:17,279 --> 00:04:20,000 Speaker 5: in order for them to actually come up with a 94 00:04:20,040 --> 00:04:22,919 Speaker 5: high single legit number next year would be would be 95 00:04:23,000 --> 00:04:24,719 Speaker 5: really welcome by the market. 96 00:04:24,960 --> 00:04:28,120 Speaker 2: So what's the read through here, Anna rog for you know, 97 00:04:28,240 --> 00:04:30,840 Speaker 2: greater tech here from IBM? Is can I say I'm 98 00:04:30,880 --> 00:04:32,440 Speaker 2: just going to go out and start buying more of 99 00:04:32,440 --> 00:04:34,440 Speaker 2: these stats I'm looking at like Nvidia for example, up 100 00:04:34,440 --> 00:04:36,159 Speaker 2: twenty five percent year to date and of course up 101 00:04:36,200 --> 00:04:38,440 Speaker 2: two hundred and twenty percent over the trailing twelve months. 102 00:04:39,000 --> 00:04:40,599 Speaker 2: I guess this is a pretty good readthrough? Is that? 103 00:04:40,640 --> 00:04:41,159 Speaker 2: Can I do that? 104 00:04:41,880 --> 00:04:44,120 Speaker 5: Yeah? So, for you know, we had run a CIO 105 00:04:44,200 --> 00:04:46,480 Speaker 5: survey back in December, and you know, we were we 106 00:04:47,000 --> 00:04:49,359 Speaker 5: kind of got the indication that it's going to be 107 00:04:49,400 --> 00:04:52,360 Speaker 5: a year of spending more aggressively compared to the last 108 00:04:52,360 --> 00:04:54,880 Speaker 5: two in twenty twenty four. But you know, the way 109 00:04:54,920 --> 00:04:56,920 Speaker 5: we had built that and you know, we got the 110 00:04:57,000 --> 00:04:59,880 Speaker 5: chip strength going on right now that probably carries on 111 00:05:00,200 --> 00:05:02,719 Speaker 5: the summer, and then after that we see you know, 112 00:05:02,760 --> 00:05:05,800 Speaker 5: strength in the software and the consulting area, which are 113 00:05:05,839 --> 00:05:08,320 Speaker 5: more of the downstream play. But it's possible that we 114 00:05:08,400 --> 00:05:10,640 Speaker 5: may see that bounce back, you know, as early as 115 00:05:10,680 --> 00:05:14,080 Speaker 5: second quarter road, you know, going into it because you 116 00:05:14,120 --> 00:05:16,400 Speaker 5: know things, I think the leading indicators are good at 117 00:05:16,400 --> 00:05:19,880 Speaker 5: this point. So so I'm pretty optimistic that you know, 118 00:05:19,920 --> 00:05:22,680 Speaker 5: when we were thinking about a second half recovery for 119 00:05:23,000 --> 00:05:25,560 Speaker 5: tech spending, you know it may actually happen in second 120 00:05:25,640 --> 00:05:28,360 Speaker 5: quarter road, maybe even as late late as first. 121 00:05:28,160 --> 00:05:31,359 Speaker 3: Quarter our thanks to Bloomberg Intelligence senior technology analyst and 122 00:05:31,440 --> 00:05:32,560 Speaker 3: er Agrana. 123 00:05:32,160 --> 00:05:35,040 Speaker 2: Let's turn out to airlines or names like American, Southwest 124 00:05:35,040 --> 00:05:38,400 Speaker 2: and Alaska air surprised analysts by beating expectations for more. 125 00:05:38,400 --> 00:05:41,000 Speaker 2: We spoke with Bloomberg Intelligence senior defense and airlines analysts 126 00:05:41,040 --> 00:05:41,760 Speaker 2: George Ferguson. 127 00:05:42,120 --> 00:05:46,040 Speaker 6: You know we got American, Alaska and Southwest yields were 128 00:05:46,080 --> 00:05:49,280 Speaker 6: down in the domestic business on all three. Alaska yields 129 00:05:49,320 --> 00:05:53,599 Speaker 6: were down six or seven percent, American yields down similar number. 130 00:05:54,520 --> 00:05:57,839 Speaker 6: Southwest really just let a load factor fade away into 131 00:05:57,839 --> 00:06:00,760 Speaker 6: the seventies and took a yield down to two percent. 132 00:06:01,320 --> 00:06:04,360 Speaker 6: So to me, you know they're guiding to better results 133 00:06:04,440 --> 00:06:07,039 Speaker 6: is as you know, next year, as we get into 134 00:06:07,040 --> 00:06:09,120 Speaker 6: one que doesn't look great, but as we get past 135 00:06:09,200 --> 00:06:11,560 Speaker 6: one queue, the overall guidance for the year looks a 136 00:06:11,600 --> 00:06:14,040 Speaker 6: bit better. So airlines, I think, I think things are 137 00:06:14,200 --> 00:06:16,400 Speaker 6: going to affirm as they get into next year, but 138 00:06:16,440 --> 00:06:18,800 Speaker 6: I don't think it looks like a healthy market at all. 139 00:06:18,880 --> 00:06:20,600 Speaker 6: From the numbers I'm seeing huge. 140 00:06:20,360 --> 00:06:22,680 Speaker 2: Forour So give us a sense of where we are 141 00:06:22,760 --> 00:06:25,120 Speaker 2: and just in terms of air travel, have we established 142 00:06:25,120 --> 00:06:29,760 Speaker 2: a new post pandemic normality in terms of where leisure 143 00:06:29,760 --> 00:06:31,560 Speaker 2: traffic is and where business traffic is? Do we kind 144 00:06:31,600 --> 00:06:34,160 Speaker 2: of know how that market looks? 145 00:06:34,279 --> 00:06:37,360 Speaker 6: So comments from United where that business traffic wasn't back 146 00:06:37,400 --> 00:06:40,640 Speaker 6: to the twenty nineteen levels, They said they saw hopeful 147 00:06:40,640 --> 00:06:45,160 Speaker 6: signs in one queue, So business hasn't come back fully. 148 00:06:45,560 --> 00:06:47,839 Speaker 6: Is this the new normal? I would guess it is 149 00:06:47,920 --> 00:06:51,000 Speaker 6: right because we're, you know, we're I don't know when 150 00:06:51,000 --> 00:06:53,920 Speaker 6: the pandemic actually sort of ended, but we're probably a 151 00:06:54,040 --> 00:06:56,760 Speaker 6: year and a half passed, and I would expect most 152 00:06:56,920 --> 00:07:00,520 Speaker 6: of you know, normality to have returned to our lives. 153 00:07:00,839 --> 00:07:03,240 Speaker 6: So it seems like we still have some level of 154 00:07:03,279 --> 00:07:07,760 Speaker 6: deficit on pre pandemic business travel, but leisure travel has 155 00:07:07,760 --> 00:07:11,880 Speaker 6: definitely exceeded that. I think the airlines are just sold capacity. 156 00:07:11,920 --> 00:07:14,280 Speaker 6: They would have sold the businesses into the leisure side, 157 00:07:14,360 --> 00:07:15,960 Speaker 6: and I think that's making the fair softer. 158 00:07:16,800 --> 00:07:19,600 Speaker 3: So you say that the quarter did that great, first 159 00:07:19,640 --> 00:07:22,000 Speaker 3: quarter looks soft. I get that, But then you said 160 00:07:22,000 --> 00:07:24,679 Speaker 3: that after Q one things start to look a little better. 161 00:07:25,320 --> 00:07:27,920 Speaker 3: What's going to look a little better. Is it business travel? 162 00:07:28,080 --> 00:07:30,400 Speaker 3: Is it we just keep doing vacation stuff, we do 163 00:07:30,440 --> 00:07:33,320 Speaker 3: it domestically rather internationally, or is it still across the board. 164 00:07:34,560 --> 00:07:37,720 Speaker 6: I said that after Q one, the airlines, I think 165 00:07:37,760 --> 00:07:40,560 Speaker 6: it's going to look better. I don't see it right. 166 00:07:40,560 --> 00:07:43,680 Speaker 6: I think the big leisure bounce back was last year 167 00:07:44,360 --> 00:07:47,240 Speaker 6: twenty twenty three, and I think that you could see 168 00:07:47,240 --> 00:07:50,240 Speaker 6: software domestic yields all through the year. But you know, 169 00:07:50,680 --> 00:07:53,960 Speaker 6: we had Scott Kirby at United Airlines earning earlier in 170 00:07:54,000 --> 00:07:56,960 Speaker 6: the week and he's telling us how you know, he's 171 00:07:57,000 --> 00:08:00,000 Speaker 6: getting traction from premium products and that's going to help 172 00:08:00,040 --> 00:08:03,680 Speaker 6: and drive better profitability through next year. I mean, you know, 173 00:08:03,760 --> 00:08:08,640 Speaker 6: companies like Alaska they have premium product, but I think 174 00:08:08,640 --> 00:08:11,680 Speaker 6: they're a roughly the same amount, unlike United that's adding it. 175 00:08:12,040 --> 00:08:15,880 Speaker 6: Southwest has no premium products, and there's a lot of 176 00:08:15,880 --> 00:08:18,240 Speaker 6: other airlines that have no premium product, and I think 177 00:08:18,240 --> 00:08:21,120 Speaker 6: they're going to be fighting for the base leisure traveler. 178 00:08:21,520 --> 00:08:23,960 Speaker 6: I think it's going to be difficult. But George against 179 00:08:23,960 --> 00:08:25,880 Speaker 6: the airline that they see it coming. 180 00:08:25,960 --> 00:08:29,200 Speaker 2: Sorry, George, you're at in Los Angeles the Aerospace Supply 181 00:08:29,480 --> 00:08:33,840 Speaker 2: Chain Conference. How is the supply chain for the airline industry? 182 00:08:33,920 --> 00:08:35,360 Speaker 2: Can they get the planes they need? 183 00:08:36,480 --> 00:08:40,520 Speaker 6: That's rough. So we saw the news. I'm boeing about 184 00:08:40,600 --> 00:08:44,760 Speaker 6: not allowing them to increase the discussion that the Aerospace 185 00:08:44,920 --> 00:08:48,640 Speaker 6: Supplier Conference is all about labor, labor and labor. There's 186 00:08:48,679 --> 00:08:50,840 Speaker 6: been a lot of turnover. Yeah, there's a lot of 187 00:08:50,840 --> 00:08:54,559 Speaker 6: turnover in the industry. The backfill needs to be trained. 188 00:08:54,920 --> 00:08:57,800 Speaker 6: They're not fully trained, they're not efficient, and there's still 189 00:08:57,800 --> 00:09:02,280 Speaker 6: people having a hard time finding and so the US 190 00:09:02,280 --> 00:09:05,839 Speaker 6: aerospace industry is in pretty tough, tough straits. I think 191 00:09:06,679 --> 00:09:08,320 Speaker 6: I think young kids, you know, a lot of discussion 192 00:09:08,360 --> 00:09:11,600 Speaker 6: here is that young kids, you know, young professionals don't 193 00:09:11,600 --> 00:09:14,600 Speaker 6: want to come to this industry. They'd rather work for Amazon, 194 00:09:14,640 --> 00:09:17,280 Speaker 6: they'd rather work for Google than go to work in 195 00:09:17,320 --> 00:09:20,120 Speaker 6: the aerospace industry. And so having a real hard time 196 00:09:20,760 --> 00:09:23,800 Speaker 6: backfilling and training and keeping people in the industry. 197 00:09:24,360 --> 00:09:28,200 Speaker 3: So to that point, what happens if Boeing isn't allowed 198 00:09:28,240 --> 00:09:31,560 Speaker 3: to produce the plane that the FAA said, I can't 199 00:09:31,559 --> 00:09:33,760 Speaker 3: even treat keep track, to be honest with you. But 200 00:09:34,000 --> 00:09:36,280 Speaker 3: if they can't produce it, what happens to those that 201 00:09:36,320 --> 00:09:37,120 Speaker 3: have ordered it? 202 00:09:38,240 --> 00:09:40,080 Speaker 6: I mean, right now, what the FA said is that 203 00:09:40,120 --> 00:09:44,240 Speaker 6: Bowing can't increase production right, increase of the mits they're 204 00:09:44,280 --> 00:09:47,000 Speaker 6: already building. They were building about thirty one a month 205 00:09:47,080 --> 00:09:49,559 Speaker 6: last year. They were supposed to rate break to about 206 00:09:49,640 --> 00:09:51,360 Speaker 6: thirty eight a month at the end of the year. 207 00:09:51,840 --> 00:09:54,360 Speaker 6: The question is have they so will the FA let 208 00:09:54,360 --> 00:09:57,080 Speaker 6: them continue at thirty eight? And then as I understand that, 209 00:09:57,120 --> 00:10:01,440 Speaker 6: the FA is going to inspect their manufacturing processes because 210 00:10:01,440 --> 00:10:05,200 Speaker 6: they're quite concerned obviously after the Alaska incident, to make 211 00:10:05,240 --> 00:10:09,320 Speaker 6: sure it's stable, make sure that Bone can build aircraft safely. 212 00:10:10,040 --> 00:10:11,599 Speaker 6: So my guess is you've got something that's going to 213 00:10:11,720 --> 00:10:14,800 Speaker 6: last part of this quarter. I mean, there's only so 214 00:10:14,880 --> 00:10:18,000 Speaker 6: many sites that can really inspect, right. You've got a 215 00:10:18,000 --> 00:10:20,600 Speaker 6: lot of inspection down in Wichita, a lot of inspection 216 00:10:20,679 --> 00:10:24,080 Speaker 6: up in Renton, Washington. Those are the two main factories. 217 00:10:24,600 --> 00:10:26,840 Speaker 6: If they could go deeper into so many other suppliers, 218 00:10:26,840 --> 00:10:29,000 Speaker 6: which they probably will, but there's not a lot of 219 00:10:29,000 --> 00:10:33,000 Speaker 6: sites to inspect. My guess is that deliveries for customers 220 00:10:33,000 --> 00:10:36,280 Speaker 6: that expect the airplanes in twenty twenty four could get 221 00:10:36,320 --> 00:10:39,280 Speaker 6: pushed out, probably will get pushed out, maybe into twenty 222 00:10:39,320 --> 00:10:45,280 Speaker 6: twenty five. Could be customers core customers like United Southwest, Ryanair, 223 00:10:46,080 --> 00:10:49,440 Speaker 6: Alaska Airlines. They've taken the majority of the orders recently, 224 00:10:49,960 --> 00:10:52,560 Speaker 6: so you'll hear some howling from them. I think you 225 00:10:52,600 --> 00:10:56,160 Speaker 6: already hurd some howling from United CEO Kirby right on 226 00:10:57,160 --> 00:11:00,360 Speaker 6: the Max ten. So I think that's what's you go 227 00:11:00,400 --> 00:11:03,000 Speaker 6: to see deliveries getting pushed out and pushed into next year. 228 00:11:03,559 --> 00:11:06,760 Speaker 6: Hopefully boll And can recover that and bounce to higher rates. 229 00:11:06,880 --> 00:11:08,280 Speaker 6: That's all about their recovery. 230 00:11:08,840 --> 00:11:10,520 Speaker 2: I mean, I just kind of feel like they're kind 231 00:11:10,520 --> 00:11:12,520 Speaker 2: of too big to fail, or too big for anybody 232 00:11:12,559 --> 00:11:14,960 Speaker 2: to really do anything, because it's a daopoly them an airbus. 233 00:11:14,960 --> 00:11:18,360 Speaker 2: But what is it like a downside scenario here for Fox? 234 00:11:18,360 --> 00:11:22,320 Speaker 2: It would it be government regulation, would it be what's 235 00:11:22,400 --> 00:11:23,880 Speaker 2: kind of spooking the market? 236 00:11:24,960 --> 00:11:27,000 Speaker 6: Well, I think you already have part of that downside, 237 00:11:27,040 --> 00:11:31,880 Speaker 6: right and that's more intense oversighting regulation. Frankly, that probably 238 00:11:31,880 --> 00:11:34,680 Speaker 6: should have occurred anyways. You know, the FAA has also 239 00:11:34,720 --> 00:11:37,560 Speaker 6: going through some difficult time during the pandemic, lost a 240 00:11:37,559 --> 00:11:41,880 Speaker 6: bunch of personnel. They need their skill sets developed sharpened, 241 00:11:43,080 --> 00:11:45,280 Speaker 6: so this process could be slow. 242 00:11:45,760 --> 00:11:46,240 Speaker 1: But I don't. 243 00:11:46,280 --> 00:11:49,439 Speaker 6: I mean, I do think they're you know, I think 244 00:11:49,480 --> 00:11:51,280 Speaker 6: they are close to too big to fail, given that 245 00:11:51,320 --> 00:11:55,240 Speaker 6: there's such an important government contractor you know, one of 246 00:11:55,240 --> 00:11:59,320 Speaker 6: the few big primes that can make airplanes in serial production. 247 00:12:01,360 --> 00:12:03,080 Speaker 6: Question is, you know, what could the government do if 248 00:12:03,080 --> 00:12:05,720 Speaker 6: they had real big problems on the commercial side. I 249 00:12:05,720 --> 00:12:07,840 Speaker 6: don't think we're there yet, though, I think it still 250 00:12:07,920 --> 00:12:10,080 Speaker 6: isn't duopoly. If you wanted to get in the back 251 00:12:10,080 --> 00:12:12,480 Speaker 6: of the line for an Airbus eight three twenty, the 252 00:12:12,520 --> 00:12:15,920 Speaker 6: competitor right now, you know, if we just add up 253 00:12:15,960 --> 00:12:19,560 Speaker 6: all the orders they have in their production increases, you're 254 00:12:19,600 --> 00:12:22,640 Speaker 6: out eight years. I think some of those orders are 255 00:12:22,640 --> 00:12:24,959 Speaker 6: definitely long data orders, so maybe if you got in 256 00:12:25,040 --> 00:12:26,720 Speaker 6: the back of that mind, you'd be out five or 257 00:12:26,760 --> 00:12:29,959 Speaker 6: six years before you started getting airplanes. That alone is 258 00:12:30,000 --> 00:12:33,880 Speaker 6: going to keep Boeing, keep folks going towards Boeing for airplanes. 259 00:12:34,480 --> 00:12:37,000 Speaker 6: But that's only if things don't degrade from air things 260 00:12:37,040 --> 00:12:39,440 Speaker 6: degrave from here, you got a much bigger problem. 261 00:12:39,480 --> 00:12:41,960 Speaker 2: Thanks to the Bloomberg Intelligence senior Defense and Airlines analyst 262 00:12:42,040 --> 00:12:43,160 Speaker 2: George Ferguson. 263 00:12:42,800 --> 00:12:45,319 Speaker 3: All right, coming up on the program, Baker Hughes breaks 264 00:12:45,360 --> 00:12:48,120 Speaker 3: free from rivals with a lower shale view. This year 265 00:12:48,240 --> 00:12:49,360 Speaker 3: we speak to the CEO. 266 00:12:49,760 --> 00:12:52,880 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing depth 267 00:12:52,920 --> 00:12:55,360 Speaker 2: research and data on two thousand companies and one hundred 268 00:12:55,360 --> 00:12:58,079 Speaker 2: and thirty industries. You can access Bloomberg Intelligence via b 269 00:12:58,240 --> 00:12:59,240 Speaker 2: I go on the terminal. 270 00:12:59,320 --> 00:13:02,360 Speaker 3: I'm Paul Sweeney and am Alex Steel, and this is Boomberg. 271 00:13:06,880 --> 00:13:11,040 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Saturdays 272 00:13:11,040 --> 00:13:14,560 Speaker 1: at noon Eastern on Bloomberg dot Com, the iHeartRadio app 273 00:13:14,600 --> 00:13:17,520 Speaker 1: and the Bloomberg Business App, or listening on demand wherever 274 00:13:17,559 --> 00:13:20,320 Speaker 1: you get your podcasts. 275 00:13:20,720 --> 00:13:22,960 Speaker 3: Conflict in the Middle East and uncertainty in the global 276 00:13:22,960 --> 00:13:25,959 Speaker 3: economy have the energy sector facing a lot of unknowns. 277 00:13:26,120 --> 00:13:29,040 Speaker 2: Baker Hughes, the world's number three oil field contracted by 278 00:13:29,040 --> 00:13:31,800 Speaker 2: market value, is also filling the pressure. This week, the 279 00:13:31,840 --> 00:13:35,000 Speaker 2: firm announced earnings that will blow expectations and analysts are 280 00:13:35,080 --> 00:13:36,200 Speaker 2: raising concerns, all right. 281 00:13:36,240 --> 00:13:38,079 Speaker 3: To take us through how Baker Hughes plans to manage 282 00:13:38,120 --> 00:13:41,360 Speaker 3: all the risks facing oil, we spoke to Lorenzo Simonelli, Chairman, 283 00:13:41,480 --> 00:13:43,920 Speaker 3: president and CEO at Baker Hughes. 284 00:13:44,240 --> 00:13:46,679 Speaker 7: First of all, we're coming off some great results in 285 00:13:46,720 --> 00:13:49,280 Speaker 7: twenty twenty three, and also we've laid out a clear 286 00:13:49,360 --> 00:13:52,760 Speaker 7: strategy as Baker Hughes over the coming years. As you 287 00:13:52,800 --> 00:13:55,640 Speaker 7: look at twenty twenty four, we've given a guidance that 288 00:13:55,800 --> 00:13:59,240 Speaker 7: is the balanced approach with all of the geopolitical and 289 00:13:59,280 --> 00:14:03,040 Speaker 7: also onsetty that's happening around the globe. So we stick 290 00:14:03,120 --> 00:14:06,000 Speaker 7: to our guidance and we think that we're executing and 291 00:14:06,040 --> 00:14:08,760 Speaker 7: as you look at the guidance, we've got considerable growth 292 00:14:08,840 --> 00:14:11,720 Speaker 7: in twenty twenty four and great performance as well. 293 00:14:11,880 --> 00:14:15,360 Speaker 3: So if you're more conservative than your peers, where is 294 00:14:15,400 --> 00:14:18,120 Speaker 3: the question mark? Is it going to be the new 295 00:14:18,240 --> 00:14:21,280 Speaker 3: energy orders? Is it going to be on shore demand 296 00:14:21,360 --> 00:14:23,280 Speaker 3: or is it going to be offshore? Is it domestic 297 00:14:23,360 --> 00:14:26,520 Speaker 3: or international that has you thinking questioning the most. 298 00:14:26,840 --> 00:14:28,960 Speaker 7: You look at what's happening around the world, and you 299 00:14:29,000 --> 00:14:33,040 Speaker 7: see the geopolitics, you see what's happening from the opequ cuts. 300 00:14:33,120 --> 00:14:36,680 Speaker 7: You see what's happening from the consolidation in North America, 301 00:14:37,080 --> 00:14:41,120 Speaker 7: and that leads some uncertainty relative to the activity levels 302 00:14:41,120 --> 00:14:47,560 Speaker 7: within North America Land. We still see that North America 303 00:14:47,640 --> 00:14:50,880 Speaker 7: should be flatish, but US Land will likely be negative 304 00:14:50,920 --> 00:14:53,600 Speaker 7: for the year given some of the consolidation, and also 305 00:14:53,920 --> 00:14:56,960 Speaker 7: some of the activity international again will be in the 306 00:14:57,080 --> 00:14:59,920 Speaker 7: high single digits, So we still see that being robot 307 00:15:00,520 --> 00:15:03,200 Speaker 7: and I think again, as we look at giving guidance, 308 00:15:03,400 --> 00:15:07,040 Speaker 7: we're taking a balanced approach to what's taking place around 309 00:15:07,080 --> 00:15:10,720 Speaker 7: the world at this moment, and also giving a predictability 310 00:15:10,800 --> 00:15:13,720 Speaker 7: to our investors on what can be achieved and also 311 00:15:13,920 --> 00:15:15,400 Speaker 7: confidence in what we can achieve. 312 00:15:15,480 --> 00:15:17,960 Speaker 2: Lorenzo, I just looking at your business here and I 313 00:15:17,960 --> 00:15:19,840 Speaker 2: see that about three quarters of your revenue has comes 314 00:15:19,840 --> 00:15:22,880 Speaker 2: from outside of the United States. So obviously you are 315 00:15:22,920 --> 00:15:25,440 Speaker 2: attuned as much as anyone to the geopolitical risks around 316 00:15:25,480 --> 00:15:28,280 Speaker 2: the world. What are you telling your investors about what's 317 00:15:28,280 --> 00:15:31,360 Speaker 2: happening in Eastern Europe, what's happening in the Middle East, 318 00:15:31,400 --> 00:15:32,600 Speaker 2: and how that may impact your business. 319 00:15:32,680 --> 00:15:36,440 Speaker 7: We're telling them that we've taken every caution and also 320 00:15:36,520 --> 00:15:40,360 Speaker 7: we're managing the situation. We haven't seen any impact and 321 00:15:40,840 --> 00:15:44,680 Speaker 7: we don't anticipate a big impact, but we do think 322 00:15:44,760 --> 00:15:48,200 Speaker 7: some of the development plans may be delayed slightly over 323 00:15:48,200 --> 00:15:51,560 Speaker 7: the long term. No change in what the NOCs and 324 00:15:51,640 --> 00:15:55,080 Speaker 7: also large customers are laying out from a capital spend, 325 00:15:55,320 --> 00:15:58,080 Speaker 7: but there may be some i would say delays. Again, 326 00:15:58,240 --> 00:16:01,920 Speaker 7: as we look at the outlook internationally, we're still anticipating 327 00:16:02,320 --> 00:16:06,280 Speaker 7: high single digit growth and we think that international is 328 00:16:06,280 --> 00:16:08,240 Speaker 7: a key place for us to be and we look 329 00:16:08,280 --> 00:16:09,840 Speaker 7: to perform there over the coming years. 330 00:16:09,960 --> 00:16:12,600 Speaker 3: Lolrenzo, what's your take on the demand side. 331 00:16:12,360 --> 00:16:15,880 Speaker 7: Well, Alex, it's always difficult to predict some of these elements, 332 00:16:15,960 --> 00:16:18,240 Speaker 7: just like it is oil price and you know this 333 00:16:18,320 --> 00:16:22,800 Speaker 7: space well, I think demand continues to be robust. A 334 00:16:22,840 --> 00:16:26,320 Speaker 7: lot of it's going to depend on the economic situation 335 00:16:26,480 --> 00:16:30,000 Speaker 7: as you look at some of the events unfolding also globally, 336 00:16:30,440 --> 00:16:34,720 Speaker 7: and we anticipate that again demand will increase this year 337 00:16:35,200 --> 00:16:38,520 Speaker 7: and continue to be strong, especially in the developing world. 338 00:16:38,600 --> 00:16:41,280 Speaker 2: What are your customers telling you here? I know obviously 339 00:16:41,280 --> 00:16:44,240 Speaker 2: close contact with them. What are they telling you about 340 00:16:44,320 --> 00:16:47,000 Speaker 2: their spending plans over the next couple of years? 341 00:16:47,320 --> 00:16:52,160 Speaker 7: Again, it varies. You've seen in North America obviously some consolidation, 342 00:16:52,360 --> 00:16:55,440 Speaker 7: so people are going through that consolidation and they'll be 343 00:16:55,520 --> 00:16:58,720 Speaker 7: looking to adjust some of their spending plans in the 344 00:16:58,760 --> 00:17:02,760 Speaker 7: short term, but again continuing to be robust on the 345 00:17:02,800 --> 00:17:05,600 Speaker 7: long term as you continue to see the demand be there. 346 00:17:05,960 --> 00:17:10,800 Speaker 7: On the international side, these NOCs have multi year projects 347 00:17:10,800 --> 00:17:14,520 Speaker 7: that they're executing. There'll be some variation in the timing 348 00:17:14,560 --> 00:17:17,800 Speaker 7: of those, but again the long term continues to be solid, 349 00:17:18,200 --> 00:17:21,440 Speaker 7: and as you look at our guidance, again we're anticipating 350 00:17:21,800 --> 00:17:25,520 Speaker 7: that maybe there's some tempered view on some of the 351 00:17:25,640 --> 00:17:28,720 Speaker 7: case of the developments, but the developments are going to happen. 352 00:17:29,080 --> 00:17:32,680 Speaker 3: NC Paul just you know, national oil companies just pull 353 00:17:32,800 --> 00:17:37,320 Speaker 3: up with the oil jargon there, Lorenzo, you mentioned the 354 00:17:37,400 --> 00:17:39,800 Speaker 3: M and A situation, and I find that so interesting 355 00:17:39,840 --> 00:17:41,840 Speaker 3: because that was one of my questions to all these 356 00:17:41,840 --> 00:17:44,720 Speaker 3: CEOs when they announce these big mergers, is are you 357 00:17:44,760 --> 00:17:47,600 Speaker 3: actually going to be slowing your oil production growth over time? 358 00:17:47,600 --> 00:17:50,000 Speaker 3: And they're all like, no, no, no, no, no, it's 359 00:17:50,040 --> 00:17:51,800 Speaker 3: going to be really good, it's going to keep growing. 360 00:17:52,440 --> 00:17:54,919 Speaker 3: What do you think that timeline actually looks like? In 361 00:17:54,960 --> 00:17:57,040 Speaker 3: the beginning, their synergies, they get more out of the ground, 362 00:17:57,040 --> 00:17:58,920 Speaker 3: but then that tapers off. What do you notice? 363 00:17:59,080 --> 00:18:02,400 Speaker 7: So as you look at the normal evolution of consolidation 364 00:18:02,560 --> 00:18:05,840 Speaker 7: we've seen this cycle before. You are going to continue 365 00:18:05,880 --> 00:18:09,080 Speaker 7: to see production increases, but you're also going to see 366 00:18:09,119 --> 00:18:12,360 Speaker 7: synergies between the consolidation and as they go through their 367 00:18:12,400 --> 00:18:17,680 Speaker 7: integration activities, I think you'll likely see some temperate measures 368 00:18:17,720 --> 00:18:20,920 Speaker 7: relative to some of their procurement, but again production, they're 369 00:18:20,960 --> 00:18:24,440 Speaker 7: going to seize the opportunity to continue to increase production 370 00:18:24,800 --> 00:18:26,000 Speaker 7: as the demand is there. 371 00:18:26,160 --> 00:18:28,520 Speaker 2: You know, I'm not an expert in this, unlike Alex, 372 00:18:28,840 --> 00:18:30,760 Speaker 2: but a term you see here a lot, and I 373 00:18:30,760 --> 00:18:33,720 Speaker 2: don't hear it that much anymore is peak oil? When 374 00:18:33,720 --> 00:18:35,399 Speaker 2: are we going to be at peak oil? Are we 375 00:18:35,440 --> 00:18:38,479 Speaker 2: at peak? I don't hear that discussion anymore. So when 376 00:18:38,520 --> 00:18:40,879 Speaker 2: you're talking to investors, how do you talk to them 377 00:18:40,840 --> 00:18:44,399 Speaker 2: about the long term kind of demand for oil? 378 00:18:44,720 --> 00:18:46,600 Speaker 7: You've got to look at it from a standpoint of 379 00:18:46,760 --> 00:18:50,800 Speaker 7: the energy transition is going to be multi decades and 380 00:18:50,920 --> 00:18:54,640 Speaker 7: it's going to require an energy mix that is abundant 381 00:18:54,640 --> 00:18:59,920 Speaker 7: of providing as clean as possible fuel sources to the public, 382 00:19:00,119 --> 00:19:02,160 Speaker 7: and that means oil is going to have a role 383 00:19:02,240 --> 00:19:06,000 Speaker 7: to play, and we see oil and gas in particular 384 00:19:06,359 --> 00:19:09,320 Speaker 7: having a strong robust outlook as we go forward. And 385 00:19:09,760 --> 00:19:12,480 Speaker 7: the question on PEA coil has been asked many times. 386 00:19:12,920 --> 00:19:15,639 Speaker 7: There will be a time when PEA coil comes. I 387 00:19:15,680 --> 00:19:19,199 Speaker 7: think it's not at this stage, and we continue to 388 00:19:19,200 --> 00:19:22,040 Speaker 7: focus very much on gas and also LNG. 389 00:19:22,720 --> 00:19:27,840 Speaker 3: Lorenzo somehow restricting LNG exports in the US is becoming 390 00:19:27,880 --> 00:19:31,560 Speaker 3: something people are talking about. The permit process has gotten 391 00:19:31,640 --> 00:19:32,560 Speaker 3: a lot slower. 392 00:19:32,640 --> 00:19:36,400 Speaker 7: What is going on, alex It has gotten slower, and 393 00:19:36,480 --> 00:19:41,480 Speaker 7: again we're monitoring the situation, and I'm disappointed because as 394 00:19:41,520 --> 00:19:45,399 Speaker 7: you look at the benefits of USLNG not only for 395 00:19:45,480 --> 00:19:48,359 Speaker 7: the US, but also for the world and also what's 396 00:19:48,400 --> 00:19:53,160 Speaker 7: been achieved with the geopolitical uncertainty and also providing to Europe, 397 00:19:53,200 --> 00:19:55,840 Speaker 7: there's been commitments that have been made and we should 398 00:19:55,920 --> 00:20:00,680 Speaker 7: continue the USLNG exports and also the permitting of these projects. 399 00:20:01,160 --> 00:20:04,719 Speaker 7: That being said, international projects are continuing to move forward, 400 00:20:05,160 --> 00:20:08,200 Speaker 7: and we have an expectation that again in twenty twenty 401 00:20:08,200 --> 00:20:14,000 Speaker 7: four there'll be sixty five mtpa FIDD, and we're again 402 00:20:14,119 --> 00:20:18,480 Speaker 7: seeing about thirty to sixty mtpa FIDD in twenty five 403 00:20:18,520 --> 00:20:21,240 Speaker 7: and twenty six and by twenty thirty there'll be a 404 00:20:21,560 --> 00:20:25,879 Speaker 7: global capacity in place of eight hundred mtpa. So you know, 405 00:20:25,920 --> 00:20:29,399 Speaker 7: we'll monitor the US situation. It's disappointing. I think it 406 00:20:29,440 --> 00:20:31,880 Speaker 7: will sort itself out. There's been a lot of commitments 407 00:20:31,920 --> 00:20:34,400 Speaker 7: that have been made to international partners. 408 00:20:34,560 --> 00:20:38,239 Speaker 3: Lorenzo, I really appreciate that, the conservative approach and then 409 00:20:38,280 --> 00:20:40,480 Speaker 3: sort of moving a lot faster in the next couple 410 00:20:40,480 --> 00:20:42,320 Speaker 3: of years. Thanks a lot. I look forward to seeing 411 00:20:42,320 --> 00:20:45,440 Speaker 3: you next week in Florence, Italy. Thank you, Lorenzo Semonelli 412 00:20:45,520 --> 00:20:49,160 Speaker 3: for what good He's chairman, CEO and president of Baker Hughes. 413 00:20:49,320 --> 00:20:51,280 Speaker 3: Now we're going to do something that only Paul and 414 00:20:51,320 --> 00:20:53,920 Speaker 3: I can do. Talk to a CEO, then bring a 415 00:20:53,920 --> 00:20:56,640 Speaker 3: Bloomberg Intelligence analyst who's been covering the company for years 416 00:20:56,680 --> 00:20:58,480 Speaker 3: on to then talk about it. This is what we 417 00:20:58,480 --> 00:21:01,640 Speaker 3: can offer you. On the Bloomberg Inteligence Show every day 418 00:21:02,280 --> 00:21:05,560 Speaker 3: Scott Levine, he covers oil services for Bloomberg Intelligence. What 419 00:21:05,640 --> 00:21:07,399 Speaker 3: did you make of the numbers? And just talking with 420 00:21:07,440 --> 00:21:08,719 Speaker 3: Lorenzo in the last ten minutes. 421 00:21:09,240 --> 00:21:14,000 Speaker 8: Frankly, the guidance that Baker gave for mid teens EBITDA 422 00:21:14,119 --> 00:21:18,280 Speaker 8: growth is almost identical to what SLB gave. I think 423 00:21:18,320 --> 00:21:22,199 Speaker 8: the difference here is probably the conservatism around the messaging. 424 00:21:22,640 --> 00:21:27,480 Speaker 8: Number one, certainly the mid load to mid single digit 425 00:21:27,560 --> 00:21:31,000 Speaker 8: decline that they're calling for spending growth in North America, 426 00:21:31,680 --> 00:21:35,440 Speaker 8: high single digit growth in international trails what we saw 427 00:21:35,480 --> 00:21:39,240 Speaker 8: out of both of those two companies. And then secondarily, 428 00:21:39,800 --> 00:21:41,960 Speaker 8: you know LNG, as you mentioned, is a really big 429 00:21:42,040 --> 00:21:45,280 Speaker 8: driver for Baker, that's unique to them, certainly much more 430 00:21:45,320 --> 00:21:50,080 Speaker 8: so for them as a producer of modules for LNG plants, 431 00:21:50,480 --> 00:21:53,440 Speaker 8: which neither SLB and holl do. And I would say 432 00:21:53,440 --> 00:21:56,080 Speaker 8: that the commentary there was maybe a little bit more 433 00:21:56,680 --> 00:22:01,760 Speaker 8: downbeat as well. They're looking for modest growth FID capacity 434 00:22:01,840 --> 00:22:05,080 Speaker 8: this year. They focused more on some of the businesses 435 00:22:05,080 --> 00:22:07,320 Speaker 8: outside of that. So I think it's probably more so 436 00:22:07,520 --> 00:22:11,000 Speaker 8: the tone out of Baker being a bit more sober 437 00:22:11,520 --> 00:22:15,520 Speaker 8: than the guidance per se, which was in line with consensus. 438 00:22:15,720 --> 00:22:17,720 Speaker 8: And the growth outlooks similar to what we saw it 439 00:22:17,800 --> 00:22:19,040 Speaker 8: at the piers there. 440 00:22:19,119 --> 00:22:24,400 Speaker 2: So I'm looking at the an R function for Baker, Hughes, Hallibert, 441 00:22:24,560 --> 00:22:27,680 Speaker 2: all the comps. Street likes this stuff. They like these 442 00:22:28,119 --> 00:22:32,000 Speaker 2: oil services companies. What's the bull call on this? Is 443 00:22:32,080 --> 00:22:33,879 Speaker 2: this people you're going to need oil forever. 444 00:22:34,119 --> 00:22:37,000 Speaker 8: Yeah, well, you know, they are investing in the future 445 00:22:37,040 --> 00:22:40,480 Speaker 8: with the energy transition and the new energy business as well. 446 00:22:41,040 --> 00:22:42,040 Speaker 1: But I think you. 447 00:22:41,960 --> 00:22:44,479 Speaker 8: Know, so, look two years ago, twenty twenty two, this 448 00:22:44,600 --> 00:22:48,320 Speaker 8: group was outstanding, right, you know, the group was up 449 00:22:48,400 --> 00:22:51,200 Speaker 8: sixty percent, the market was down closed to twenty percent. 450 00:22:51,720 --> 00:22:55,840 Speaker 8: Last year, the group performed okay in a much stronger market, 451 00:22:56,520 --> 00:23:00,040 Speaker 8: and the growth expectations for the group have moderated and 452 00:23:00,080 --> 00:23:04,520 Speaker 8: are moderating still in twenty twenty four. I think within 453 00:23:04,560 --> 00:23:10,199 Speaker 8: that context, folks are still comfortable with large cap globally 454 00:23:10,359 --> 00:23:15,879 Speaker 8: diversified oil field service companies like Baker Hughes, like SLB, 455 00:23:16,000 --> 00:23:18,760 Speaker 8: to a lesser extent, Haliburton because they're more focused on 456 00:23:18,800 --> 00:23:23,000 Speaker 8: North America. But they're still comfortable with these companies. They're large, 457 00:23:23,040 --> 00:23:26,080 Speaker 8: they're global, the balance sheets are in good shape, they're 458 00:23:26,080 --> 00:23:30,600 Speaker 8: returning more than fifty percent of the free cash to investors, 459 00:23:30,640 --> 00:23:33,840 Speaker 8: and so that appeals to investors that kind of are 460 00:23:34,280 --> 00:23:38,720 Speaker 8: attuned to this new energy environment where it's discipline, growth 461 00:23:38,760 --> 00:23:43,159 Speaker 8: and capital returns rather than the wildcatter mentality. So I 462 00:23:43,160 --> 00:23:43,879 Speaker 8: think it's what I like. 463 00:23:44,040 --> 00:23:44,959 Speaker 5: I like the wildcatter. 464 00:23:45,280 --> 00:23:48,400 Speaker 3: I like that yeah, I called SLB slumbers. I'm definitely 465 00:23:48,400 --> 00:23:51,960 Speaker 3: gonna hear from them later, but SLB. So to that point, though, 466 00:23:52,440 --> 00:23:54,640 Speaker 3: I feel like if you talk to SLB they'll talk 467 00:23:54,680 --> 00:23:57,959 Speaker 3: a lot about digitalization and all that kind of stuff, 468 00:23:58,119 --> 00:24:02,160 Speaker 3: whereas Baker Hughes talks really about LNG and they build 469 00:24:02,359 --> 00:24:04,800 Speaker 3: these big terminals they help to do that, like with 470 00:24:04,840 --> 00:24:08,199 Speaker 3: the likes of Bechtel, for example. Do you feel like 471 00:24:08,240 --> 00:24:09,840 Speaker 3: at some point these guys are going to be you 472 00:24:09,880 --> 00:24:12,040 Speaker 3: can really bet on them different ways, Like I'm gonna 473 00:24:12,040 --> 00:24:14,120 Speaker 3: bet on Baker Hughes for LNG. I'm gonna bet an 474 00:24:14,160 --> 00:24:16,800 Speaker 3: SLB for an AI component and digitalization, Like can I 475 00:24:16,840 --> 00:24:17,440 Speaker 3: do that yet? 476 00:24:18,440 --> 00:24:22,159 Speaker 8: You can? And I think those are accurate depictions of 477 00:24:22,200 --> 00:24:27,040 Speaker 8: the business. But I wouldn't overstate their significance, Like I 478 00:24:27,080 --> 00:24:30,440 Speaker 8: feel like Halliburton gets maligned a lot for the North 479 00:24:30,480 --> 00:24:31,639 Speaker 8: American exposure, and. 480 00:24:31,640 --> 00:24:33,360 Speaker 3: They're also solid international. 481 00:24:33,680 --> 00:24:35,160 Speaker 8: It's over half their business. 482 00:24:35,240 --> 00:24:37,640 Speaker 3: I totally didn't know that until yeah, no the other day. 483 00:24:37,760 --> 00:24:41,400 Speaker 8: But SLB is eighty percent international, and these guys are 484 00:24:41,680 --> 00:24:44,080 Speaker 8: closer to SLB than they are to HOL in terms 485 00:24:44,119 --> 00:24:48,520 Speaker 8: of that geographic split. So you know, while the statement 486 00:24:48,640 --> 00:24:53,200 Speaker 8: is true, I think it's it's equal parts branding as 487 00:24:53,240 --> 00:24:55,919 Speaker 8: it is the business mix, and investors are naturally going 488 00:24:55,960 --> 00:24:58,479 Speaker 8: to look for ways to differentiate between the companies, and 489 00:24:58,520 --> 00:25:01,200 Speaker 8: so they'll, you know, they'll gravitate towards the differences more 490 00:25:01,200 --> 00:25:03,760 Speaker 8: than they will the similarities. But I think there are 491 00:25:03,760 --> 00:25:06,080 Speaker 8: a lot of similarities in the balance sheet. All the 492 00:25:06,080 --> 00:25:11,080 Speaker 8: companies are focused on global markets to more or lesser extent, 493 00:25:11,280 --> 00:25:16,199 Speaker 8: and so with Baker, the LNG emphasis is a differentiator. 494 00:25:16,280 --> 00:25:16,800 Speaker 3: For sure. 495 00:25:17,359 --> 00:25:20,639 Speaker 8: They have a much bigger equipment business than either SLB 496 00:25:21,359 --> 00:25:25,040 Speaker 8: or Halliburton does, and so it's natural folks to focus 497 00:25:24,800 --> 00:25:28,720 Speaker 8: on that specifically. And some of the weakness and demand 498 00:25:28,760 --> 00:25:30,840 Speaker 8: out of Europe maybe is weighing on that story a 499 00:25:30,840 --> 00:25:34,120 Speaker 8: little bit, but it's still a very strong business for them. 500 00:25:34,240 --> 00:25:37,920 Speaker 2: That's Bloomberg Intelligence senior Industrial Services analyst Scott Levine talking 501 00:25:38,400 --> 00:25:41,320 Speaker 2: outlook for oil. Following up on our conversation with Baker 502 00:25:41,359 --> 00:25:44,400 Speaker 2: Hughes Chairman, president and CEO, Lorenzo Simonelli. 503 00:25:44,600 --> 00:25:45,960 Speaker 3: Coming up on the program, We're going to get the 504 00:25:45,960 --> 00:25:48,960 Speaker 3: outlook on the cruise industry and our award shows Fading 505 00:25:49,119 --> 00:25:49,920 Speaker 3: from the Spotlight. 506 00:25:50,200 --> 00:25:53,080 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio providing in 507 00:25:53,080 --> 00:25:55,280 Speaker 2: depth research and data on two thousand companies and one 508 00:25:55,359 --> 00:25:58,400 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 509 00:25:58,480 --> 00:25:59,800 Speaker 2: b I go on the terminal. 510 00:26:00,000 --> 00:26:02,760 Speaker 3: I'm Paul Sweeney and a Malex Steel and this is Bloomberg. 511 00:26:08,680 --> 00:26:12,840 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Saturdays 512 00:26:12,840 --> 00:26:16,359 Speaker 1: at noon Eastern on Bloomberg dot com, the iHeartRadio app 513 00:26:16,400 --> 00:26:19,320 Speaker 1: and the Bloomberg Business app, or listen on demand wherever 514 00:26:19,359 --> 00:26:20,600 Speaker 1: you get your podcasts. 515 00:26:23,080 --> 00:26:25,960 Speaker 2: Royal Caribbeans Icon of the Seas embarks on its first 516 00:26:26,000 --> 00:26:28,520 Speaker 2: official voyage this weekend and the journey is short to 517 00:26:28,560 --> 00:26:29,200 Speaker 2: make ways. 518 00:26:29,000 --> 00:26:32,040 Speaker 3: Oh nice one. Bloomberg Intelligence Senior credit analyst Jody Lourie 519 00:26:32,040 --> 00:26:34,439 Speaker 3: covers a leisure sector and we spoke with her about it, 520 00:26:34,440 --> 00:26:36,960 Speaker 3: her sneak peek at the world's largest cruise ship, as 521 00:26:37,000 --> 00:26:38,919 Speaker 3: well as what to expect from the cruising business in 522 00:26:38,920 --> 00:26:39,720 Speaker 3: twenty twenty four. 523 00:26:39,960 --> 00:26:42,680 Speaker 9: So when you think of a cruise, it's your standard 524 00:26:42,680 --> 00:26:46,440 Speaker 9: cruise is you have just rooms on the outside right, 525 00:26:46,520 --> 00:26:48,800 Speaker 9: the balcony rooms that you can see the oceans. Then 526 00:26:48,800 --> 00:26:51,280 Speaker 9: you have the internal rooms with no windows, and so 527 00:26:51,320 --> 00:26:53,639 Speaker 9: you just have two rows of that of those sets 528 00:26:53,680 --> 00:26:55,280 Speaker 9: and then you have a bunch of floors that have 529 00:26:55,359 --> 00:26:59,400 Speaker 9: things like dining hall experiences that are main big dining room. 530 00:26:59,680 --> 00:27:00,960 Speaker 9: Then you have shows, right. 531 00:27:00,880 --> 00:27:02,880 Speaker 2: So this is Royal Caribbean owns Icon of the. 532 00:27:02,800 --> 00:27:04,920 Speaker 9: Seas, right, So Royal Caribbean owns Icon on the Seas. 533 00:27:05,000 --> 00:27:06,959 Speaker 2: Talk to us about the cruise business. You covered from 534 00:27:07,000 --> 00:27:09,960 Speaker 2: the credit side for Bloomberg Intelligence. Are these good credits? 535 00:27:10,240 --> 00:27:13,520 Speaker 9: These credits have been a very interesting set to cover. 536 00:27:13,920 --> 00:27:16,600 Speaker 9: You think about the pandemic and they were sort of 537 00:27:16,600 --> 00:27:19,320 Speaker 9: written off for dead yep. Now they've had this massive turnaround. 538 00:27:19,320 --> 00:27:21,639 Speaker 9: The momentum around them has been pretty palpable, and I 539 00:27:21,640 --> 00:27:23,280 Speaker 9: think the Icon of the Seas, the reason why it's 540 00:27:23,320 --> 00:27:27,320 Speaker 9: so important is that the narrative around it speaks to 541 00:27:27,440 --> 00:27:30,159 Speaker 9: this rebirth in the cruise market that we've been seeing. 542 00:27:30,480 --> 00:27:33,440 Speaker 9: These companies have been generating cash flow, they've been repaying debt, 543 00:27:33,480 --> 00:27:36,359 Speaker 9: they've been setting their sits on investment grade and have 544 00:27:36,400 --> 00:27:40,080 Speaker 9: been targeting it as much as they can. They're really 545 00:27:40,119 --> 00:27:41,840 Speaker 9: trying to bring down their debt loads. I mean, you're 546 00:27:41,880 --> 00:27:45,320 Speaker 9: talking Carnival's thirty six billion now down to thirty billion, 547 00:27:45,640 --> 00:27:47,600 Speaker 9: and it's going far farther down. 548 00:27:47,800 --> 00:27:49,760 Speaker 3: So I appreciate that Paul wants to make this about 549 00:27:49,800 --> 00:27:51,680 Speaker 3: finance and stuff because that's what we do. But I 550 00:27:51,760 --> 00:27:54,520 Speaker 3: want to go back to what it looks like. So okay, 551 00:27:54,520 --> 00:27:58,240 Speaker 3: so you laid out sort of what cruise ships normally are, right, 552 00:27:58,320 --> 00:28:00,080 Speaker 3: So then why is icon of the Seas different? And 553 00:28:00,119 --> 00:28:02,440 Speaker 3: I'm asking really, because that's where the money's going to 554 00:28:02,480 --> 00:28:04,120 Speaker 3: come from thro that paydown debt, So like it's kind 555 00:28:04,119 --> 00:28:04,920 Speaker 3: of a market question. 556 00:28:05,280 --> 00:28:07,919 Speaker 9: It is definitely a market question. So it's the wire 557 00:28:07,960 --> 00:28:09,520 Speaker 9: people going to be willing to be one of the 558 00:28:09,560 --> 00:28:12,040 Speaker 9: seventy six hundred people on this ship in addition to 559 00:28:12,080 --> 00:28:15,199 Speaker 9: the twenty three twenty four hundred crew. Well, they have 560 00:28:15,280 --> 00:28:19,080 Speaker 9: things like six water slides. They have ginormous areas for 561 00:28:19,200 --> 00:28:21,280 Speaker 9: children as well as, of course the Kids Club for 562 00:28:21,320 --> 00:28:22,919 Speaker 9: you to just check your kids in and leave them 563 00:28:22,920 --> 00:28:26,080 Speaker 9: there for the whole day. They have different specialty restaurants 564 00:28:26,119 --> 00:28:29,360 Speaker 9: where they try to rival something like a Las Vegas casino. 565 00:28:29,680 --> 00:28:31,439 Speaker 9: The feel of it, the look of it. If you 566 00:28:31,440 --> 00:28:33,080 Speaker 9: look at it at night, which I got to see 567 00:28:33,080 --> 00:28:35,639 Speaker 9: at the night before I drove by it, it looks 568 00:28:35,640 --> 00:28:37,600 Speaker 9: like it's lit up like your Vegas. It's like Vegas 569 00:28:37,640 --> 00:28:39,200 Speaker 9: on water, And I think that's what they're trying to 570 00:28:39,200 --> 00:28:41,120 Speaker 9: compete with. And I do know for a fact that 571 00:28:41,280 --> 00:28:43,880 Speaker 9: you know, we actually got to sit down with management 572 00:28:44,000 --> 00:28:47,800 Speaker 9: a month ago at the Celebrity Ascent naming and they. 573 00:28:47,680 --> 00:28:51,960 Speaker 3: Be Celebrity naming. What now what celebrity a scent? 574 00:28:52,120 --> 00:28:54,720 Speaker 9: So Celebrity is one of Royal Caribbean's cruise lines, right, 575 00:28:54,720 --> 00:28:57,680 Speaker 9: So they have Celebrity and they have Royal Caribbean. The 576 00:28:57,720 --> 00:28:59,880 Speaker 9: Ascent is their newest ship. It's one of their Edge 577 00:29:00,240 --> 00:29:03,840 Speaker 9: series and they had a naming so all ships have 578 00:29:03,960 --> 00:29:06,959 Speaker 9: this big naming ceremony where they break the bottle of champagne. 579 00:29:07,440 --> 00:29:10,040 Speaker 9: They have a godmother or godfather of the ship and 580 00:29:10,280 --> 00:29:12,120 Speaker 9: they have this whole big ceremony and it's a big party. 581 00:29:12,480 --> 00:29:15,200 Speaker 9: So they invited us finance folks on there as well, 582 00:29:15,240 --> 00:29:17,080 Speaker 9: and we got done with management and it was before 583 00:29:17,080 --> 00:29:19,520 Speaker 9: they were in their quiet period. They basically told us 584 00:29:19,600 --> 00:29:22,000 Speaker 9: that they don't see the other cruise lines as competition. 585 00:29:22,040 --> 00:29:24,880 Speaker 9: What they see is competition is on land vacations. 586 00:29:24,920 --> 00:29:25,479 Speaker 5: It's interesting. 587 00:29:25,800 --> 00:29:29,720 Speaker 9: So your casinos, your theme parks, that's where they see 588 00:29:29,760 --> 00:29:32,800 Speaker 9: them taking share or that's where they see people convincing 589 00:29:32,840 --> 00:29:35,240 Speaker 9: people to go elsewhere, not to the hotels. And the 590 00:29:35,280 --> 00:29:38,560 Speaker 9: casinos and the theme parks, but on the cruise ship entirely. 591 00:29:39,080 --> 00:29:41,600 Speaker 2: What are the cruise companies telling me about businesses? Revenge 592 00:29:41,640 --> 00:29:43,880 Speaker 2: travel over Hou's business in twenty four. 593 00:29:44,000 --> 00:29:46,480 Speaker 9: So more so than what management is saying. We actually 594 00:29:46,520 --> 00:29:49,840 Speaker 9: ran a survey that we did. The results quite a 595 00:29:49,840 --> 00:29:52,120 Speaker 9: substantial number of people want to travel and want to 596 00:29:52,120 --> 00:29:54,880 Speaker 9: spend more when they travel this year. So even though 597 00:29:55,000 --> 00:29:58,120 Speaker 9: revenge travel as they call it, post pandemic revenge travel, 598 00:29:58,120 --> 00:29:59,720 Speaker 9: that's the people who are cooped up inside want to 599 00:29:59,720 --> 00:30:01,880 Speaker 9: go play, don't care how much they spend, even though 600 00:30:01,920 --> 00:30:03,640 Speaker 9: that might be fading, and a lot of companies have 601 00:30:03,720 --> 00:30:07,160 Speaker 9: indicated that. At the same time, the conversation around people 602 00:30:07,240 --> 00:30:10,240 Speaker 9: spending on experiences is still very much there. Whether that 603 00:30:10,320 --> 00:30:12,240 Speaker 9: holds up into the end of the year as we 604 00:30:12,280 --> 00:30:14,520 Speaker 9: see what the FED does, as we see all the 605 00:30:14,520 --> 00:30:17,200 Speaker 9: different sort of economic points and pain points come out, 606 00:30:17,920 --> 00:30:20,080 Speaker 9: I think it remains to be seen. But we are 607 00:30:20,120 --> 00:30:23,680 Speaker 9: seeing that people are prioritizing experiences over stuff and they 608 00:30:23,720 --> 00:30:26,840 Speaker 9: continue to do so. And the way that the cruise 609 00:30:26,880 --> 00:30:31,320 Speaker 9: lines benefit is that they get to encourage people to 610 00:30:31,320 --> 00:30:34,120 Speaker 9: spend on onboard spending, so all the add on features, 611 00:30:34,760 --> 00:30:38,040 Speaker 9: so you go to their perfect day Coco Kae Island. 612 00:30:38,240 --> 00:30:40,520 Speaker 9: Guess what you want? A cabana and no other fifteen 613 00:30:40,560 --> 00:30:41,920 Speaker 9: hundred two thousand dollars for the day. 614 00:30:42,920 --> 00:30:45,320 Speaker 2: All right, Speaking of this research, you can go to 615 00:30:45,600 --> 00:30:49,320 Speaker 2: you can just get Jody Louri's bio if you're sitting 616 00:30:49,320 --> 00:30:51,480 Speaker 2: in front of a terminal and put a buyo up 617 00:30:51,480 --> 00:30:53,240 Speaker 2: there and the list all her research and that's the 618 00:30:53,240 --> 00:30:56,640 Speaker 2: top research notice point published today focus on cruising in 619 00:30:56,680 --> 00:30:58,920 Speaker 2: twenty twenty four BI survey. So check that out. 620 00:30:59,080 --> 00:31:01,320 Speaker 3: I'm still were well, here's the thing. 621 00:31:01,480 --> 00:31:03,120 Speaker 2: We went down to rub but we went to a resort. 622 00:31:03,720 --> 00:31:06,960 Speaker 2: They give you the little bracelet. Yeah, oh man, that's 623 00:31:07,000 --> 00:31:09,440 Speaker 2: your key to your room. You want to buy anything, 624 00:31:09,480 --> 00:31:10,120 Speaker 2: you just go bank. 625 00:31:11,040 --> 00:31:11,280 Speaker 1: Wow. 626 00:31:11,360 --> 00:31:13,800 Speaker 2: They make it so easy and you know you're. 627 00:31:13,680 --> 00:31:15,320 Speaker 3: Doing it, and all of a sudden you're paying. You're like, wait, 628 00:31:15,360 --> 00:31:16,040 Speaker 3: what this was all? 629 00:31:16,320 --> 00:31:19,120 Speaker 2: That's why this year we went to an all inclusive. 630 00:31:19,360 --> 00:31:20,320 Speaker 5: Yeah, oh that was the way. 631 00:31:20,520 --> 00:31:23,520 Speaker 3: Aren't there also addams for all inclusives too, Like all inclusive, 632 00:31:23,520 --> 00:31:25,440 Speaker 3: but this super fancy restaurant isn't included. 633 00:31:25,520 --> 00:31:27,040 Speaker 2: Now, I mean, if you want to buy like a 634 00:31:27,040 --> 00:31:29,800 Speaker 2: bottle wine, that was extra, but I should have done 635 00:31:29,800 --> 00:31:32,680 Speaker 2: that one I had four kids. Because you check out 636 00:31:32,680 --> 00:31:35,040 Speaker 2: every resort and your bill is like fifty pages. 637 00:31:35,360 --> 00:31:38,160 Speaker 9: I mean, we're seeing that Marriott, we're seeing four seasons. 638 00:31:38,160 --> 00:31:40,720 Speaker 9: They're going into the smaller vessel ships. We're seeing that 639 00:31:40,800 --> 00:31:43,680 Speaker 9: people who used to like Crystal, which was the high 640 00:31:43,800 --> 00:31:45,760 Speaker 9: end and it went through a little bit of a restructuring, 641 00:31:46,400 --> 00:31:50,120 Speaker 9: just a little bit that people are then going over 642 00:31:50,200 --> 00:31:52,800 Speaker 9: to these higher end ships, and they are also going 643 00:31:52,840 --> 00:31:55,200 Speaker 9: to the Norwegian higher end line. So Norwegian has a 644 00:31:55,200 --> 00:31:58,000 Speaker 9: few higher end lines, Carnival has a few higher end lines. 645 00:31:58,040 --> 00:32:01,360 Speaker 9: So people are moving to their from these other ships. 646 00:32:01,400 --> 00:32:04,160 Speaker 9: Because they are smaller vessel, they are much more manageable. 647 00:32:04,520 --> 00:32:06,880 Speaker 9: You're you're viewing it both as a way to lounge 648 00:32:06,920 --> 00:32:09,000 Speaker 9: but as a way to get to a room. 649 00:32:09,040 --> 00:32:10,640 Speaker 3: But what kind of like this reminds me of is 650 00:32:10,680 --> 00:32:12,640 Speaker 3: what people are doing with the airlines. Right, no one 651 00:32:12,680 --> 00:32:14,800 Speaker 3: wants basic economy. They all want to trade up. So 652 00:32:14,840 --> 00:32:16,840 Speaker 3: everyone goes to business class, and then all people who 653 00:32:16,880 --> 00:32:18,560 Speaker 3: normally fly business class, like get me out of here, 654 00:32:18,600 --> 00:32:20,160 Speaker 3: they go to first class, where they go to private 655 00:32:20,240 --> 00:32:21,560 Speaker 3: Like I feel like it's it's just sort of the 656 00:32:21,640 --> 00:32:23,200 Speaker 3: up tier at the end of all everything. 657 00:32:23,240 --> 00:32:25,000 Speaker 9: So everybody wants to feel like a VIP. 658 00:32:25,440 --> 00:32:26,800 Speaker 3: That's that we're not VIP. 659 00:32:27,120 --> 00:32:29,080 Speaker 9: I know, that's the model. I mean you look at 660 00:32:29,120 --> 00:32:31,160 Speaker 9: all the rooms. I mean they have the suite room, 661 00:32:31,200 --> 00:32:33,120 Speaker 9: and they have this sweet room, and the presidential suite, 662 00:32:33,200 --> 00:32:35,000 Speaker 9: and then this suite and then that suite, and that's 663 00:32:35,040 --> 00:32:37,560 Speaker 9: all designed to make everybody feel special and feel like 664 00:32:37,560 --> 00:32:40,440 Speaker 9: they're a VIP, and also to make it instagrammable, because 665 00:32:40,920 --> 00:32:41,640 Speaker 9: that's the age where. 666 00:32:41,600 --> 00:32:43,880 Speaker 2: Jordy was posting on social and she had a lovely 667 00:32:43,960 --> 00:32:45,400 Speaker 2: room with a lovely view. 668 00:32:45,400 --> 00:32:47,560 Speaker 9: That it was great fe I mean, any view of 669 00:32:47,560 --> 00:32:48,520 Speaker 9: the water is a great view. 670 00:32:48,600 --> 00:32:50,880 Speaker 3: So just to end for a moment on finance stuff, 671 00:32:51,760 --> 00:32:53,760 Speaker 3: would you like any of these credits? Like what's your 672 00:32:53,760 --> 00:32:55,200 Speaker 3: favorite play? 673 00:32:55,320 --> 00:32:57,560 Speaker 9: So I do think that the cruise lines in general 674 00:32:57,760 --> 00:33:00,840 Speaker 9: still have some room to run as compared to other 675 00:33:00,920 --> 00:33:03,120 Speaker 9: parts of leisure. I think that other parts of leisure, 676 00:33:03,160 --> 00:33:05,840 Speaker 9: it's really more of a company by company's story. So 677 00:33:05,880 --> 00:33:08,800 Speaker 9: something like a SeaWorld has been repaying debt, they've been 678 00:33:08,800 --> 00:33:12,560 Speaker 9: restructuring their capital structure and it's been very positive for 679 00:33:12,600 --> 00:33:15,600 Speaker 9: them in that sense. But from a momentum in terms 680 00:33:15,640 --> 00:33:18,640 Speaker 9: of travel, that top line isn't necessarily going to grow 681 00:33:18,680 --> 00:33:21,120 Speaker 9: as much. We're still seeing that the cruise lines are 682 00:33:21,280 --> 00:33:24,800 Speaker 9: benefiting from that booking. Similarly, we're seeing a mixed result 683 00:33:24,920 --> 00:33:27,560 Speaker 9: in the hotel space. So you have the Marryouts of 684 00:33:27,560 --> 00:33:29,880 Speaker 9: the world, you have the Hiltons of the world. Those 685 00:33:29,960 --> 00:33:33,440 Speaker 9: companies have been improving from a growth standpoint and have 686 00:33:33,520 --> 00:33:35,680 Speaker 9: been focusing on other parts of the market. But you 687 00:33:35,680 --> 00:33:37,800 Speaker 9: have something like a Choice that's in a hostile takeover 688 00:33:37,880 --> 00:33:40,320 Speaker 9: with Windham and so that kind of throws it out 689 00:33:40,320 --> 00:33:42,040 Speaker 9: the water and you say, Okay, we don't really know 690 00:33:42,080 --> 00:33:43,240 Speaker 9: what we're going to do with this, but this is 691 00:33:43,240 --> 00:33:47,120 Speaker 9: a company that is not necessarily in good standing from 692 00:33:47,120 --> 00:33:48,200 Speaker 9: a credit quality standpoint. 693 00:33:48,240 --> 00:33:50,800 Speaker 3: That was Bloomberg Intelligence and your credit endless, Jody Lori. 694 00:33:51,240 --> 00:33:54,479 Speaker 2: Let's turn out to entertainment, where waning audience numbers are 695 00:33:54,520 --> 00:33:57,240 Speaker 2: causing big concern for ward shows. 696 00:33:56,960 --> 00:33:57,560 Speaker 1: Like the Oscars. 697 00:33:57,640 --> 00:34:00,440 Speaker 3: We spoke with Bloomberg Opinion columns Bobby Ghosh about viewers 698 00:34:00,480 --> 00:34:02,680 Speaker 3: are less inclined to watch a three and a half 699 00:34:02,760 --> 00:34:04,240 Speaker 3: hour TV extravaganza. 700 00:34:04,400 --> 00:34:08,440 Speaker 4: So you know, all the award shows, Oscars, Emmy's Golden Globes, 701 00:34:08,680 --> 00:34:13,640 Speaker 4: the audiences have been dropping precipitously over the past decade, 702 00:34:13,640 --> 00:34:15,759 Speaker 4: It used to be that an Oscar night would be 703 00:34:15,840 --> 00:34:19,399 Speaker 4: forty million viewers, and then it became about thirties. Now 704 00:34:19,400 --> 00:34:21,800 Speaker 4: it's down to you know, if they get ten twelve, 705 00:34:21,800 --> 00:34:24,080 Speaker 4: then they're lucky. Last year there was a little bit 706 00:34:24,080 --> 00:34:26,520 Speaker 4: of an uptick. I think a lot of people sort 707 00:34:26,520 --> 00:34:28,200 Speaker 4: of basically dialed in to see if there'd be a 708 00:34:28,200 --> 00:34:31,640 Speaker 4: repeater of Will Smith's slap on Chris Rock. There wasn't 709 00:34:31,840 --> 00:34:36,080 Speaker 4: a slap This year. Ironically, the nominations are going to 710 00:34:36,080 --> 00:34:37,880 Speaker 4: get a lot of buzz for the reasons we've just 711 00:34:37,920 --> 00:34:42,040 Speaker 4: been talking about. Because Margot Robbie gets snubbed, because Greta 712 00:34:42,080 --> 00:34:44,240 Speaker 4: Gervik gets snobbed. There'll be a lot of buzz around 713 00:34:44,239 --> 00:34:48,040 Speaker 4: the nominations, but for those exact same reasons. I suspect 714 00:34:48,120 --> 00:34:51,280 Speaker 4: few people will watch the actual oscars. It's too long, 715 00:34:51,840 --> 00:34:56,440 Speaker 4: it's you know, they're just too much sort of pomp 716 00:34:56,480 --> 00:34:59,919 Speaker 4: and circumstances, very little actual content, and most people will 717 00:35:00,120 --> 00:35:04,120 Speaker 4: will consume the highlights on YouTube and on TikTok on. 718 00:35:04,960 --> 00:35:07,520 Speaker 2: That's not what the ABC Television network wants. They hear 719 00:35:07,800 --> 00:35:11,120 Speaker 2: that means because they I mean that's historically these events 720 00:35:11,160 --> 00:35:14,839 Speaker 2: which the CEO of former CEO of CBS would call 721 00:35:15,000 --> 00:35:19,400 Speaker 2: oh wow, events, that's what brings in huge advertising dollars. 722 00:35:19,440 --> 00:35:23,120 Speaker 2: So well, that's just another emblematic of the overall issue 723 00:35:23,160 --> 00:35:24,720 Speaker 2: of TV cord cutting. 724 00:35:24,719 --> 00:35:27,160 Speaker 4: And so yeah, they'll sell out the ads. They sold 725 00:35:27,160 --> 00:35:29,040 Speaker 4: out the ads the last time as well, last year 726 00:35:29,080 --> 00:35:31,640 Speaker 4: as well, but at a lower rate. So that's something 727 00:35:31,640 --> 00:35:34,160 Speaker 4: that they need to worry about. If they'll you know, 728 00:35:34,520 --> 00:35:37,960 Speaker 4: sufficient numbers of people will tune in that advertisers will 729 00:35:37,960 --> 00:35:42,719 Speaker 4: still remain interested in the event, but for progressively or 730 00:35:42,920 --> 00:35:44,560 Speaker 4: you know, smaller and smaller amounts of money. 731 00:35:44,600 --> 00:35:47,000 Speaker 2: Here goes this. This is the sales pitch that broadcast 732 00:35:47,040 --> 00:35:49,400 Speaker 2: and cable television have been making the Madison Avenue for 733 00:35:49,440 --> 00:35:51,799 Speaker 2: thirty years. Yeah, okay, here's the pitch. Right, I'm going 734 00:35:51,840 --> 00:35:53,920 Speaker 2: to give you no inferior product what I gave you 735 00:35:54,000 --> 00:35:55,439 Speaker 2: last year. I'm gonna charge you more. 736 00:35:56,040 --> 00:35:57,160 Speaker 3: That's not going this way. 737 00:35:57,200 --> 00:35:58,960 Speaker 2: And it works every single year. 738 00:35:59,239 --> 00:36:01,560 Speaker 3: So they're charge more for the space right now. 739 00:36:01,400 --> 00:36:03,319 Speaker 2: Every year up until the last couple of years when 740 00:36:03,360 --> 00:36:06,239 Speaker 2: court cutting became so bad. But broadcasting cable television, which 741 00:36:06,239 --> 00:36:08,120 Speaker 2: is yeah, I know my ratings are down because there's 742 00:36:08,120 --> 00:36:10,360 Speaker 2: five hundred and more channels, but still I have the 743 00:36:10,360 --> 00:36:13,120 Speaker 2: biggest audience at CBS. Yes, it's half of what it 744 00:36:13,160 --> 00:36:14,919 Speaker 2: was ten years ago, but it's still bigger than anything 745 00:36:14,920 --> 00:36:16,480 Speaker 2: else out there. Oh by the way, for that, I'm 746 00:36:16,480 --> 00:36:19,680 Speaker 2: gonna charge another five six seventy percent. And that worked forever. 747 00:36:20,239 --> 00:36:21,400 Speaker 2: Now the issue is, I. 748 00:36:21,360 --> 00:36:23,080 Speaker 4: Don't think that can be sustainedful very well. 749 00:36:23,160 --> 00:36:24,000 Speaker 2: So yeah, I don't know. 750 00:36:24,120 --> 00:36:26,040 Speaker 4: Yeah, I think again. You know, unless you're. 751 00:36:25,960 --> 00:36:27,600 Speaker 2: The super Bowl. If you're the super Bowl, you can go. 752 00:36:28,360 --> 00:36:32,960 Speaker 4: This is a different category. Yeah, But you know, sports, 753 00:36:33,000 --> 00:36:35,040 Speaker 4: if you're a fan, you don't want to just watch 754 00:36:35,040 --> 00:36:37,759 Speaker 4: the highlights. You want to watch the live performance. But 755 00:36:37,880 --> 00:36:41,040 Speaker 4: with Oscars, with any award show, more and more people 756 00:36:41,080 --> 00:36:43,560 Speaker 4: are quite happy just to see the highlights immediately after 757 00:36:43,600 --> 00:36:45,400 Speaker 4: the award is announced. They don't want to watch the 758 00:36:45,440 --> 00:36:49,960 Speaker 4: whole awkward moments, the awkward moments, the songs, the skits. 759 00:36:50,360 --> 00:36:52,400 Speaker 4: You know, it seems like too much of them. 760 00:36:52,360 --> 00:36:54,920 Speaker 2: Used to be that used to be must watch it really, 761 00:36:54,960 --> 00:36:56,960 Speaker 2: I know it does that. John Tucker's the whole World's 762 00:36:56,960 --> 00:36:57,480 Speaker 2: coming to an end. 763 00:36:57,680 --> 00:36:59,960 Speaker 3: I would have oscar parties. Literally, we'd like do both. 764 00:37:00,040 --> 00:37:02,040 Speaker 3: We put in money. We like people walk home with 765 00:37:02,080 --> 00:37:03,640 Speaker 3: a couple hundred bucks, like it was it was like, 766 00:37:04,520 --> 00:37:07,520 Speaker 3: I guess you can the people in my home. Sure, 767 00:37:07,840 --> 00:37:11,560 Speaker 3: I mean, oh, like in the reality of the maybe maybe. 768 00:37:12,120 --> 00:37:14,279 Speaker 3: But but what I also wonder too is do you 769 00:37:14,320 --> 00:37:16,480 Speaker 3: think that these kind of live events will go the 770 00:37:16,640 --> 00:37:20,000 Speaker 3: way of sports in different ways of viewing it like 771 00:37:20,040 --> 00:37:24,000 Speaker 3: we saw WW and Netflix for example, Like would Paramount 772 00:37:24,040 --> 00:37:27,000 Speaker 3: be like, hey, let's just air it streaming and save 773 00:37:27,040 --> 00:37:27,879 Speaker 3: something like that thing? 774 00:37:28,239 --> 00:37:31,160 Speaker 4: Well, I think you probably if the audience continues to shrink, 775 00:37:31,160 --> 00:37:33,800 Speaker 4: they'll have to find new ways of making it relevant. 776 00:37:34,000 --> 00:37:38,120 Speaker 4: You know. In time, I think you'll see the duration 777 00:37:38,239 --> 00:37:39,880 Speaker 4: of its shrink. I don't think a three and a 778 00:37:39,920 --> 00:37:43,440 Speaker 4: half hour program, which invariably goes closer to four hours, 779 00:37:43,560 --> 00:37:46,399 Speaker 4: I don't think that's sustainable anymore. This year, they're bringing 780 00:37:46,440 --> 00:37:49,239 Speaker 4: it forward. They're starting broadcast in an hour early because 781 00:37:49,280 --> 00:37:53,239 Speaker 4: they're conscious that in that last hour past bedtime in 782 00:37:53,280 --> 00:37:54,880 Speaker 4: the East Coast, a lot of people the next day 783 00:37:54,920 --> 00:37:56,600 Speaker 4: is a school day, lots of people just switch off, 784 00:37:56,800 --> 00:37:58,640 Speaker 4: and that's a real problem for them. So they're bringing 785 00:37:58,680 --> 00:38:01,200 Speaker 4: it forward to try and see can sort of juice 786 00:38:01,239 --> 00:38:04,520 Speaker 4: the audience that way. I think you'll probably see certain 787 00:38:04,520 --> 00:38:08,359 Speaker 4: amount of stunt casting in the in the people who 788 00:38:08,360 --> 00:38:10,759 Speaker 4: are host to presenters that we've seen that happen in 789 00:38:10,800 --> 00:38:13,720 Speaker 4: the in the Olympics, for instance. You know, Olympic audiences 790 00:38:13,760 --> 00:38:16,600 Speaker 4: have been down. NBC has been bringing in people like 791 00:38:16,640 --> 00:38:21,960 Speaker 4: Snoop Dogg right to try and get audiences interested. I say, okay, 792 00:38:22,200 --> 00:38:25,000 Speaker 4: let's have a let's have a switch and get some 793 00:38:25,080 --> 00:38:28,480 Speaker 4: Olympic performers to present the oscars. I'll watch them on bios. 794 00:38:28,680 --> 00:38:30,040 Speaker 7: ABC doesn't totally. 795 00:38:30,080 --> 00:38:32,279 Speaker 2: ABC doesn't have the rights of the Olympics, that's true, 796 00:38:32,280 --> 00:38:34,320 Speaker 2: but you can bring an athlete in. So yeah, exactly, 797 00:38:34,360 --> 00:38:36,640 Speaker 2: Well that's the good thing. I mean, bringing in athletes 798 00:38:36,800 --> 00:38:38,640 Speaker 2: to just some stunt hosting. 799 00:38:39,080 --> 00:38:39,239 Speaker 3: Yeah. 800 00:38:39,280 --> 00:38:42,320 Speaker 4: I think you'll see progressively more and more desperate attempts 801 00:38:42,360 --> 00:38:44,200 Speaker 4: to try and hold on to that audience. But I 802 00:38:44,200 --> 00:38:45,440 Speaker 4: think that ship has said O right. 803 00:38:45,440 --> 00:38:47,480 Speaker 3: Thanks to Bloomberg Opinion columnist Bobby. 804 00:38:47,200 --> 00:38:50,560 Speaker 2: Goesch, that's this week's edition of Bloomberg Intelligence on Bloomberg Radio, 805 00:38:50,680 --> 00:38:53,320 Speaker 2: providing in depth research and data on two thousand companies 806 00:38:53,320 --> 00:38:54,680 Speaker 2: and one hundred and thirty industries. 807 00:38:54,960 --> 00:38:57,920 Speaker 3: And remember, you can access Bloomberg Intelligence through b I 808 00:38:58,000 --> 00:39:00,880 Speaker 3: go on the terminal. I'm Alex Steel, Paul Sweeney, and 809 00:39:01,000 --> 00:39:04,800 Speaker 3: this is Bloomberg, m