Speaker 1: Hello everybody, and thank you so much for joining us
Speaker 1: for this special edition of Bloomberg Daybreak. US markets are
Speaker 1: closed for the Juneteenth holiday. I'm Nathan Hager. Coming up
Speaker 1: this hour. We look at the state of antitrust in
Speaker 1: America with a paramount Skydance takeover of Warner Brothers Discovery
Speaker 1: getting final approval from the Justice Department. But is it final?
Speaker 1: We'll discuss with Jenniferree of Bloomberg Intelligence. Plus, the official
Speaker 1: start of summer is just days away. We'll look at
Speaker 1: what's in store for summer travel season with Nicki Eckstein
Speaker 1: and Chris Rouser of Bloomberg Pursuits. But we begin with
Speaker 1: earnings because one of the big flyers in the tech space,
Speaker 1: Micron Technology, is set to report next week. For a
Speaker 1: look at that and more of what the tech landscape's
Speaker 1: looking like about halfway through the year, we are very
Speaker 1: pleased to welcome man Deep Singh, Global head of Technology
Speaker 1: Research at Bloomberg Intelligence, along with Bloomberg Intelligence Senior tech
Speaker 1: analyst anurag Rana. It's great to have the both of
Speaker 1: you with us on this holiday. I mean, you just
Speaker 1: think about the run, not just Micron, but pretty much
Speaker 1: all of the memory chip stocks have had this year.
Speaker 1: It has been mind boggling, Mandy, what are we expecting
Speaker 1: when we actually hear second quarter numbers from Micron in
Speaker 1: the coming week.
Speaker 2: When it comes to Micron, they have had a phenomenal
Speaker 2: upward revision this year simply because memory demand has inflected.
Speaker 2: First we saw that with HPM, the high bandwidth memory
Speaker 2: that was used with all the accelerator chips. Now we
Speaker 2: have seen the same with DRAM and nand and other
Speaker 2: types of memory. And you know, there is a lot
Speaker 2: of stockpiling going on, but for a good reason, because
Speaker 2: you know, when you look at the large ANGLEIG models
Speaker 2: and the inference in side of llms, there is no
Speaker 2: doubt that you know, these models are being used for
Speaker 2: you use cases like coding agents, and that has just
Speaker 2: resulted in a lot more demand for all types of memories.
Speaker 2: And that's showing up in the device upgrades, that showing
Speaker 2: up in the new server deployments. But this is a
Speaker 2: very big secular trend and which is why you're seeing,
Speaker 2: you know, Micron probably going to post to over two
Speaker 2: hundred percent growth, you know this year in twenty twenty six.
Speaker 1: That demand has led to huge increases as you know,
Speaker 1: in memory chip prices and huge increases in capital expenditure
Speaker 1: forecast by so many of these companies. I wonder when
Speaker 1: we start to see a top on both of those
Speaker 1: man deep do you see that on the horizon.
Speaker 2: The way these cycles work is, you know, as you know,
Speaker 2: Memories and oligopoly with Micron, s Kehinex and Samsung, and
Speaker 2: these companies haven't really expanded their capacity in a big way.
Speaker 2: So when you look at the capex of the memory companies,
Speaker 2: they've been more around you know, mid to high single
Speaker 2: digit type of capacity expansion and the sort of demand
Speaker 2: trends that I alluded to earlier, we have seen demand
Speaker 2: grow you know, two x three x. So when there
Speaker 2: is such big you know, supply demand mismatch, I mean,
Speaker 2: the pricing obviously is off the charge, which is a
Speaker 2: big driver of what the top line growth of over
Speaker 2: two hundred percent. But we don't see that you know,
Speaker 2: supply demand coming into equilibrium anytime soon, simply because that
Speaker 2: capacity expansion is so muted. And until these memory companies
Speaker 2: expand their supply in a big way, or we find
Speaker 2: you know, there is a new memory player out of
Speaker 2: China or somewhere else, it's hard to imagine, you know,
Speaker 2: what will resolve this mismatch anytime soon.
Speaker 1: I want to bring you into the conversation, Anna rog
Speaker 1: because I know you cover many of the hyperscalers that
Speaker 1: are behind so much of this memory demand, as well
Speaker 1: as the software stocks that could potentially be disrupted by
Speaker 1: what we're seeing in the AI build out. What's your
Speaker 1: view on where the demand pictures headed from here?
Speaker 3: So it looks like that the kapex is going to
Speaker 3: be revised upward again, which is obviously good for all
Speaker 3: the semi names and memory as when he was talking about,
Speaker 3: but that's really the big you know focus right now.
Speaker 3: We came into the ear with a very common trait
Speaker 3: that was everybody's long semis and shot software and that
Speaker 3: continues to be the case, although you know, we have
Speaker 3: seen some relief over the past few weeks for software names,
Speaker 3: but you know, the easy trade for everybody is Kapix
Speaker 3: is going up, so the hardware and the semi names
Speaker 3: should benefit because of all that's going into that realm.
Speaker 3: And we are uncertain how the software world is going
Speaker 3: to shape up because these models are getting smarter day
Speaker 3: by day. And if that's the case, you don't need
Speaker 3: to pay so much for packet software down the road.
Speaker 3: So that still remains the case if you look at it.
Speaker 3: You know, Microsoft is down over fifteen percent this year,
Speaker 3: and yet some of the other cloud vendors such as
Speaker 3: Amazon up is up this year. So that's that's your
Speaker 3: dichotomy over there.
Speaker 1: Well and Rock, how do you see the software name
Speaker 1: sort of navigating the potential for disruption at this point.
Speaker 1: We haven't just heard from the hyperscalers. You've heard from
Speaker 1: the likes of Adobe and Oracle as well.
Speaker 3: Yeah, I mean each one of them has a different
Speaker 3: story that's going through it at this point. So when
Speaker 3: you look at you know, we published a big report
Speaker 3: earlier in the year. When you look at bigger companies
Speaker 3: like SAP, we think they are a little bit better
Speaker 3: protected then maybe somebody like an Adobe, where the product
Speaker 3: or the LMS can do some of that model generation
Speaker 3: or the image generation as well as the as movie generation.
Speaker 3: And I think that's where a lot of the arguments is.
Speaker 3: We are not seeing a lot of fundamentals get eroded
Speaker 3: at this point only because we are still early in
Speaker 3: the AI model race. But down the road there is
Speaker 3: a high chance that some of them will lose business
Speaker 3: to the lower end of the market. The bigger question
Speaker 3: is whether enterprises will shift into their homegrown systems or
Speaker 3: they still depend on the likes of Workday and Salesforce
Speaker 3: and all the other companies. At this point, we are
Speaker 3: not seeing that mass shift over because again, as I said,
Speaker 3: it's early in the game, but I think that's the
Speaker 3: big risk for them.
Speaker 1: We're speaking with annorag Rana, senior tech analysts for Bloomberg Intelligence,
Speaker 1: along with bi's global head of Tech research Mandeep saying
Speaker 1: for a broad look at the tech space as we're
Speaker 1: getting closer to the second half of the year. Mandeep,
Speaker 1: of course, one of the big elephants in the room
Speaker 1: in tech right now is the arrival of SpaceX in
Speaker 1: the public market, not just a rocket company, but positioning
Speaker 1: itself as a major player in AI as well with
Speaker 1: these dreams of data centers in orbit at some point,
Speaker 1: how do you see SpaceX affecting the overall AI race
Speaker 1: Now that it's in the public market, That.
Speaker 2: Makes it even more exciting in terms of you know
Speaker 2: what we are witnessing with this big technology shift that
Speaker 2: we are talking about in terms of AI and with
Speaker 2: space really, you know, it's SpaceX with IPO has shown
Speaker 2: that it is iconic in terms of what they have achieved.
Speaker 2: And even with the orbital data center vision, I know,
Speaker 2: you know, right now we don't have anything tangible in
Speaker 2: terms of actual compute being done in orbital data center,
Speaker 2: but as a concept, you know, it is huge in
Speaker 2: terms of meeting some of the compute requirements that we
Speaker 2: are talking about with AI. And if that vision turns
Speaker 2: into a reality, which is what they laid out, you
Speaker 2: know with the road show, it could be huge for
Speaker 2: you know, just the technology dominance that these companies have had,
Speaker 2: and I think the aipiece of SpaceX is clearly a
Speaker 2: vertical strategy that they are pursuing. You know, not only
Speaker 2: do they have the compute with the terrestrial data centers,
Speaker 2: they also have this orbital data center capacity and they
Speaker 2: can deploy it within their own rock model, which is
Speaker 2: what they're hoping to improve with the acquisition of Cursors.
Speaker 2: So a lot of moving parts in that company, but
Speaker 2: you know, they have a grand vision and if there's
Speaker 2: anyone who can make that space vision a reality, I
Speaker 2: would bet on SpaceX. And so it is a big bet.
Speaker 2: And we still don't know how feasible it is to
Speaker 2: you know, send these one hundred ton loads to space
Speaker 2: because they've shown they can do that for up to
Speaker 2: twenty three fifty tons, but sending it one hundred tons
Speaker 2: of payload and then doing that in a reusable way,
Speaker 2: that is the part that I think technology challenge that
Speaker 2: still needs to be solved for, and I think SpaceX
Speaker 2: is best position to do that.
Speaker 1: Of course, it is early days in terms of how
Speaker 1: SpaceX is going to perform in the market, and to
Speaker 1: your point on a rock about it being early days
Speaker 1: in the AI race in general, in terms of the
Speaker 1: stocks that you cover, some of those software names. Is
Speaker 1: there a SpaceX impact on your coverage area.
Speaker 3: No, there is no SpaceX direct impact other than you know,
Speaker 3: the traders trying to you know, I would say fivoit
Speaker 3: more towards those kinds of names, and perhaps you know,
Speaker 3: selling some of the traditional technology names, whether it's in
Speaker 3: consulting or software. I mean, we have seen some pressure
Speaker 3: on that in the last few weeks, but you know,
Speaker 3: by and large, there is no direct impact.
Speaker 1: There are so many dynamics around the tech story as well,
Speaker 1: not just this huge amount of competition, the valuations, but
Speaker 1: you know, there's been some level of pushback as well,
Speaker 1: not just from many consumers who are concerned about AI's
Speaker 1: impact on their job prospects or society as a whole,
Speaker 1: but some government pushback as well when it comes to
Speaker 1: Anthropic in particular. Man, Deep, how do you see that
Speaker 1: potentially affecting how things go in terms of the fundamentals
Speaker 1: for these companies.
Speaker 2: Yeah, Look, Anthropic has had a phenomenal growth this year
Speaker 2: here to Their revenue has grown, you know, five x
Speaker 2: from where they were back in December, and you know,
Speaker 2: it's a forty seven billion dollar revenue run rate business.
Speaker 2: So if something like this happens where a government bands,
Speaker 2: you know, the use of its models outside the country,
Speaker 2: it is a big deal and it will have repercussions
Speaker 2: in terms of, you know, what kind of growth we
Speaker 2: can expect, especially outside the US for a frontier model
Speaker 2: like Entropic. But it's still early days. I think Entropic
Speaker 2: being labeled the supply chain risk was always a threat.
Speaker 2: And you know, they talked about the capabilities of this
Speaker 2: Mythos model, which they commercially released under a new name
Speaker 2: called Fable. This has capabilities that could be used for
Speaker 2: all sorts of purpose is not just for useful work,
Speaker 2: but also you know, for cyber attacks, and I think
Speaker 2: poses a lot of risks. So from that perspective, we
Speaker 2: are still learning about the capabilities of this model, and
Speaker 2: I think like all these frontier labs may have to
Speaker 2: take a pause and really highlight the risks involved in
Speaker 2: deploying these models at scale. And that's where I think
Speaker 2: the governments will step in and make sure that sovereign
Speaker 2: element is clear, and you know, they know exactly how
Speaker 2: to regulate this, so there will be a lot more
Speaker 2: emphasis on regulation and government involvement with the deployment of
Speaker 2: these models going forward.
Speaker 1: Really appreciate the perspective from both of you as we
Speaker 1: keep a closer eye on the tech space into the
Speaker 1: second half. That's on a rag Rana and man Deep
Speaker 1: sing covering tech for Bloomberg Intelligence. Up next, we're going
Speaker 1: to take a look at the current state of anti
Speaker 1: trust with Jennifer Reed of blaeg Intelligence. It's twenty minutes
Speaker 1: past the hour. I'm Nathan Hager, and this is Bloomberg.
Speaker 1: Welcome back to this special edition of Bloomberg Daybreak. US
Speaker 1: markets are closed for the Juneteenth holiday. I'm Nathan Hager.
Speaker 1: The Justice Departments closed, it's antitrust probe into Paramount Skydance,
Speaker 1: and it's one hundred and ten billion dollar purchase of
Speaker 1: Warner Brothers Discovery. But it's far from a done deal.
Speaker 1: For more, let's bring in Bloomberg Intelligence senior litigation analysts
Speaker 1: Jennifer Ree set up the leading question, Jen why is
Speaker 1: it not a done deal?
Speaker 4: Right?
Speaker 5: You'd think that that would be a big hurdle for
Speaker 5: them to cross, but it wasn't really much of a surprise,
Speaker 5: to be honest. But this deal needs approval from regulators
Speaker 5: in the UK and also in Europe before it can close.
Speaker 5: That's a term within their agreement, but also the laws
Speaker 5: of those jurisdictions say that they need to get clearance
Speaker 5: before they've closed. And so those are ongoing investigations with
Speaker 5: some important dates coming up in July and August, whereby
Speaker 5: each one will decide whether or not they'll move into
Speaker 5: an in depth investigation of the deal or cleared the
Speaker 5: deal with or without concessions.
Speaker 1: So, the UK and the EU, what are the main
Speaker 1: hurdles that they could potentially be putting up against Paramount
Speaker 1: sky Dance in that Warner Brothers acquisition, So.
Speaker 5: They're looking at a lot of what I think challengers
Speaker 5: or complainants in this country have looked at the overlap
Speaker 5: in the movie theaters. It's really kind of Big five
Speaker 5: going down to Big four. There's some other fringe studios,
Speaker 5: but specifically, I think in Europe the concern might be
Speaker 5: an overlap in children's television stations. Most children's television stations
Speaker 5: in both the UK and Europe are owned by American companies,
Speaker 5: And with this combination Paramount and Warner Brothers, you bring
Speaker 5: together cartoon network Nickel, Nick Junior, cartoon Nito, and they
Speaker 5: both have some international children's channels as well. So I
Speaker 5: suspect that there may be some concessions needed with respect
Speaker 5: to divesting some of those channels.
Speaker 1: Okay, I think there'd been some Bloomberg News reporting that
Speaker 1: Paramount sky Dance might be willing to work with some
Speaker 1: of the regulators overseas on potentially divesting some of those
Speaker 1: children's channels. Would that be enough? You know?
Speaker 5: I think it will maybe with a few behavioral concessions,
Speaker 5: like promises to license their content to other distributors. Streaming
Speaker 5: distributors in those jurisdictions on fair, reasonable and non discriminatory
Speaker 5: terms rather than favoring their own streaming products. A few
Speaker 5: behavioral concessions, but I think that'll probably be enough to
Speaker 5: get those deals over the line. You know, when Disney
Speaker 5: acquired Fox, this is what they had to do. In Europe,
Speaker 5: there was an issue there with an overlap in what
Speaker 5: they called factual channels. These were mostly channels operated by
Speaker 5: A and E, and in order to get that deal cleared,
Speaker 5: they did need to divest I think with something five
Speaker 5: or six channels that were A and E stations.
Speaker 1: Now, if the deal does get over the line in
Speaker 1: the UK and EU, would that be the ultimate clearance
Speaker 1: for this?
Speaker 5: So not necessarily. You have the California Attorney General investigating
Speaker 5: the deal now with apparently a group of about ten
Speaker 5: or nine other states. The states have the right independently
Speaker 5: to enforce federal antitrust law no matter what the Department
Speaker 5: of Justice does. So if the States determined that they
Speaker 5: think the deal could harm competition, they can still bring
Speaker 5: a lawsuit. And they keep saying, hey, this isn't over yet.
Speaker 5: We're investigating and we're not done yet, so it's possible
Speaker 5: they could still go to court to challenge the deal.
Speaker 5: Even though it's been cleared by the DOJ and will
Speaker 5: likely be cleared elsewhere too.
Speaker 1: And to that point, the Justice Department has said they
Speaker 1: don't think that joining these two companies would be unfair
Speaker 1: to competition. So what are the potential arguments that the
Speaker 1: States could make.
Speaker 5: Well, the first thing I'll say about this is that
Speaker 5: the Department of Justice did say that, but gave very
Speaker 5: very little detail. They basically just said, hey, it's a
Speaker 5: competitive market. And these companies have promised the world. They've
Speaker 5: promised to invest, They've promised to maintain employment, they've promised
Speaker 5: to increase their slate of movies they produce, and to
Speaker 5: maintain theatrical distribution before going to streaming. But usually that's
Speaker 5: not those kinds of promises aren't good enough in somebody.
Speaker 5: Usually the authorities want those to be put down on paper.
Speaker 5: So it may be that the states there are a
Speaker 5: couple options here. The States just simply want to do
Speaker 5: better than saying here's what the company said they would do,
Speaker 5: and we're okay with that. You know, they might want
Speaker 5: some kind of a settlement. So the States are legally
Speaker 5: bound to those the companies are legally bound. And again
Speaker 5: I think there's a lot of room here. You know,
Speaker 5: antitrust and harm to markets can really be very gray
Speaker 5: and can be subjective. You know, where one assessment could
Speaker 5: show unlikely harm, another could show likely harm. Because remember
Speaker 5: they're looking at what might happen in the future, if
Speaker 5: two companies come together, what might their incentives be, what
Speaker 5: might happen in the market, So everybody speculating. Obviously it's
Speaker 5: not out of the realm of possibility that two different
Speaker 5: speculators could come out differently on that. And in the
Speaker 5: markets here, it's really very close. We tend to think
Speaker 5: of about a thirty percent combined market share as kind
Speaker 5: of being that level by which below it you're probably
Speaker 5: not too worried, but above it, maybe you have some
Speaker 5: concern about harm. And I do have to say, in
Speaker 5: most of the overlap markets for this deal, the shares
Speaker 5: get to about that level, but don't exceed that level.
Speaker 5: So it's hard to make out kind of an initial
Speaker 5: case that this could harm competition. But in particular, I
Speaker 5: think California is concerned about labor and the labor market
Speaker 5: in those cities in the state where they're making movies
Speaker 5: and content.
Speaker 1: Yeah, to have California potentially leading the charge on a
Speaker 1: challenge to this merger. It makes you think that, you know,
Speaker 1: this is kind of the home state, right, I mean,
Speaker 1: this is where Hollywood is. So what's the track record
Speaker 1: or is there a track recw for California when it
Speaker 1: comes to mounting challenges to mergers in their sort of
Speaker 1: home state industry.
Speaker 5: I would say that that track record is pretty good,
Speaker 5: but it's very new.
Speaker 3: You.
Speaker 5: It is unusual in the past for the states to
Speaker 5: go out independently. They're generally aligned with the federal antitrust enforcers.
Speaker 5: But what we have seen as a bit of a
Speaker 5: departure in the last couple of years whereby states are
Speaker 5: striking out independently in cases where they deemed the Department
Speaker 5: of Justice having been to lax or not doing it
Speaker 5: their job, and they've had some success. So, for instance,
Speaker 5: Nextstar Integna have merged. They were cleared by the Department
Speaker 5: of Justice and Federal Communications Commission, but the States said,
Speaker 5: not so fast, we think this is a problematic deal.
Speaker 5: They went to court. They tried to get to court
Speaker 5: before the deal closed, but they didn't manage to do that.
Speaker 5: But they went to court and they successfully obtained a
Speaker 5: preliminary injunction stopping the companies for now from integrating until
Speaker 5: the judge can decide on a permanent block on the deal,
Speaker 5: So that's in litigation. They also had great success in
Speaker 5: a lawsuit against Live Nation for monopolization. That was a
Speaker 5: jury trial and the Department of Justice was a plaintiff
Speaker 5: with the States there, but settled during the first week
Speaker 5: of trial. But at a large group of states said no,
Speaker 5: this is a problematic deal. The settlement doesn't resolve the concerns.
Speaker 5: They went forward. They litigated the case and they have
Speaker 5: won a liability decision, so again a big success for them,
Speaker 5: and that's still litigating now. The remedy aspect of that
Speaker 5: is what we're looking at.
Speaker 2: Now.
Speaker 1: We're speaking with Bloomberg Intelligence senior litigation analyst Jennifer Ree
Speaker 1: on where the Paramount Skydance Warner Brothers merger could go
Speaker 1: now that the Justice Department has approved the deal. If
Speaker 1: we do get to a point, Jen where the States
Speaker 1: bring a lawsuit and it does come to court, what
Speaker 1: are the potential arguments that Paramount Skydance could make in
Speaker 1: their defense that you know, combining with Warner Brothers wouldn't
Speaker 1: be a harm to competition.
Speaker 5: Well, I think exactly what they've said to the Department
Speaker 5: of Justice. No, we're promising something like thirty releases, and
Speaker 5: if we're going to release that many movies, we need
Speaker 5: to maintain both of these studios and maintain the employment
Speaker 5: because otherwise we can't get to that volume that we
Speaker 5: promise a certain theatrical release window in big theaters, and
Speaker 5: so it's not going to harm theaters, and it won't
Speaker 5: harm labor and g and streaming. When we combine HBO
Speaker 5: Max and Discovery Plus and Paramount Plus, we're still much
Speaker 5: smaller than all the other big streamers out there, Netflix
Speaker 5: in particular, and combined we only get to about I
Speaker 5: think a fifteen percent share in the United States. And
Speaker 5: these are just simply not historically problematic figures in antitrusturisprudence.
Speaker 5: So I think those are the kind of arguments they'll make.
Speaker 1: And if it gets to that point that we do
Speaker 1: see those kinds of arguments, could we see the Justice
Speaker 1: Department looking for further commitments or even further concessions from
Speaker 1: Paramount I.
Speaker 5: Think not at this point, because as of June sixteenth,
Speaker 5: the Department of Justice cleared the deal and issued a
Speaker 5: statement saying, you know, we're done. We don't think it
Speaker 5: would harm competition, but you could see a settlement with
Speaker 5: the companies in the States whereby they make certain promises.
Speaker 1: Now, time is of the essence, isn't it for paramount
Speaker 1: s guidance to really get this deal done to avoid
Speaker 1: ticking fees to Warner Brothers Discovery? Right, So how does
Speaker 1: that affect things?
Speaker 2: Right?
Speaker 5: So, they have this ticking fee that'll kick in at
Speaker 5: the end of September. I mean interestingly, the end date
Speaker 5: in their purchase agreement it isn't until June of twenty
Speaker 5: twenty seven, so they technically have time in their agreement
Speaker 5: to litigate if they have to. But what they're going
Speaker 5: to need to do if they get this clearance, these
Speaker 5: clearances from the UK and the EU, but the States
Speaker 5: go ahead and sue them, they're going to have to
Speaker 5: fight hard against a preliminary injunction that would be a
Speaker 5: temporary or short term block on closing the deal, while
Speaker 5: a judge can decide on a more permanent solution, because
Speaker 5: that would absolutely extend well beyond that September thirtieth date
Speaker 5: by which the ticking fee would kick in. And I'm
Speaker 5: thinking they're probably going to want to avoid pay that,
Speaker 5: So they'll be fighting hard at that stage of the
Speaker 5: litigation or I think trying hard to settle with the States.
Speaker 1: Could that affect the further the terms of the deal
Speaker 1: to try to get out from under those ticking fees
Speaker 1: as fast as they can.
Speaker 5: You know, I don't think so. I think they're just
Speaker 5: going to do everything they can to fight hard and
Speaker 5: put resources into this and to be aggressive to try
Speaker 5: to prevent anything that stops them from closing before that
Speaker 5: September thirty date.
Speaker 1: So how do you see this shaking out as we
Speaker 1: get closer to that. You mentioned the dispute in the
Speaker 1: UK and the EU trying to get through that as well.
Speaker 1: What's the timetable? How do you see things playing out?
Speaker 5: You know, I think what the companies will do is
Speaker 5: offer up concessions in the UK and EU and get
Speaker 5: those jurisdictions to clear before going into in depth investigations,
Speaker 5: because if either one did open an in depth investigation,
Speaker 5: it would absolutely extend well beyond September thirty. Right now,
Speaker 5: they're in what they call a phase one, whereas an
Speaker 5: in depth would be phase two, and Europe has to
Speaker 5: make a decision about that July seventh in the UK
Speaker 5: on August seventh, But the companies can offer concessions before
Speaker 5: those dates, and I think that they will do that
Speaker 5: because then they can get these clearances before September thirty
Speaker 5: for sure, and I think that's how that'll probably play out.
Speaker 1: Do you see any chance of any of these factors
Speaker 1: scrubbing the deal? I wonder if Netflix is sort of
Speaker 1: still waiting in the wings there, or is that just
Speaker 1: way out of left.
Speaker 5: Field, you know, No, I think Netflix might still be
Speaker 5: waiting in the wings. There's been so much vocal opposition
Speaker 5: to the deal that I think many observers might think
Speaker 5: there's some chance of getting it blocked. I would say
Speaker 5: that when you really dive into the nitty gritty, it
Speaker 5: just doesn't really raise clear cut or slam dunk antitrust
Speaker 5: issues that a judge can easily rule on against the companies.
Speaker 5: Netflix may be waiting in the wings, but I do
Speaker 5: say Netflix has a bigger problem than Paramount on the
Speaker 5: anti trust because they are so big in streaming, so
Speaker 5: adding on HBO Max would probably be a problem for Netflix.
Speaker 1: And in our last minute, Jen, what other antitrust cases
Speaker 1: do you potentially see coming down the pike? That could
Speaker 1: pit States against the Justice Department. What's on your radar?
Speaker 5: Well, you know, I'm really mostly watching the litigation that's
Speaker 5: ongoing now with respect to Nextstar and Live Nation. What
Speaker 5: I think could happen down the road. We have these
Speaker 5: really big anti trust lawsuits against Apple and against Amazon.
Speaker 5: Amazon is the ftc, Apple is the United States Department
Speaker 5: of Justice, and if they follow the patterns that have
Speaker 5: been occurring since President Trump was reelected, there's some chance
Speaker 5: those cases could settle. So my question there would be,
Speaker 5: will the States go on in those two cases, one
Speaker 5: against Apple, one against Amazon, or either one as they
Speaker 5: did in Live Nation if the federal anti trust enforces
Speaker 5: decide to settle. So that's a little bit down the road, though.
Speaker 5: We're looking more into twenty twenty seven for activity in
Speaker 5: those cases. But I'm watching those all right.
Speaker 1: Well, it never stops, doesn't It doesn't. Thank you for
Speaker 1: this jet again, really great having you on with us.
Speaker 1: That's Bloomberg Intelligence Senior Litigation analyst Jennifer Rae And up next,
Speaker 1: we're going to look at some travel options this summer
Speaker 1: with Nicki Eckstein and Chris Rouser of Bloomberg Pursuits. It's
Speaker 1: thirty seven minutes past the hour. I'm Nathan Hager, and
Speaker 1: this is Bloomberg. Thank you so much for joining us
Speaker 1: for the special edition of Bloomberg Daybreak. US markets are
Speaker 1: closed for the Juneteenth holiday. I'm Nathan Hager, and we
Speaker 1: are just days away from the official start of summer,
Speaker 1: so we thought this would be a kind of a
Speaker 1: good time to think about travel. Many of us are
Speaker 1: getting ready to head out for vacations if we haven't already,
Speaker 1: but this year is different than most. The war in
Speaker 1: the Middle East has driven up gas, oil and jet
Speaker 1: fuel prices for more. We're pleased to welcome from Bloomberg Pursuits,
Speaker 1: Nikki Eckstein and Chris Rouser. Great to have the both
Speaker 1: of you with us. So while we think about travel,
Speaker 1: because you know, a lot of the airlines even as
Speaker 1: the war has been underway, we're predicting this summer was
Speaker 1: going to be busy, Nikki, are is that what we're
Speaker 1: seeing play out right now?
Speaker 4: You know, people are not really willing to cut back
Speaker 4: on travel this summer. There's data showing that sixty six
Speaker 4: percent of people are still spending more on their trips,
Speaker 4: even if forty three percent of them are using their
Speaker 4: savings in order to do that. So definitely, people are
Speaker 4: still very much hitting the road near, far and everything
Speaker 4: in between.
Speaker 1: Is it just the road or are we expecting, Chris,
Speaker 1: that the airports are going to be packed no matter
Speaker 1: what time of the summer this.
Speaker 6: Is, the airports are going to be chaotic. And yes,
Speaker 6: we expect that airports are going to be packed. People
Speaker 6: are going to be flying and you know, people are
Speaker 6: putting a lot of trips on credit cards. People are
Speaker 6: building in extra time to be in airports. The dwell
Speaker 6: time in airports has gone up over the past few years,
Speaker 6: and people are know that there might be chaos, so
Speaker 6: they show up early, they do some shopping, they eat it,
Speaker 6: they eat some restaurants, and they just they give themselves
Speaker 6: more wiggle room.
Speaker 1: So let's talk about you know, you mentioned how people
Speaker 1: are paying for travel with credit cards more this year, Nikki.
Speaker 1: Is there still a big need for travel points or
Speaker 1: are people sort of dipping into those credit cards to
Speaker 1: get their trips off the ground.
Speaker 2: Here.
Speaker 4: Oh, absolutely so. The use of rewards to pay for
Speaker 4: your travel is up eight hundred and twenty percent this summer, wow,
Speaker 4: which is a wild figure. I mean, we always have
Speaker 4: known that people love to use points and miles in
Speaker 4: order to get what they call free trips. Whether it's
Speaker 4: really free or not, you and I can just you know,
Speaker 4: we can debate that. But there's also a lot more
Speaker 4: tools out there to help you make better use of
Speaker 4: your points and miles. There's a lot more services that
Speaker 4: are popping up to make sure that if you book,
Speaker 4: for instance, a flight on points and that cost of
Speaker 4: the flight goes down in some kind of weird miracle,
Speaker 4: you can get automatically rebooked to make sure that you're
Speaker 4: not leaving miles on the table. The same is true
Speaker 4: for hotels. So I think people are getting very wise
Speaker 4: to those tools and trying to be very smart about
Speaker 4: how they use this currency that is more valuable than
Speaker 4: ever this summer. I would say, if that's something that
Speaker 4: you want to do, there's a website called Gondola for hotels.
Speaker 4: It automatically rebooks you when you're when your price drops
Speaker 4: if that should happen. And there's a couple also for
Speaker 4: for points and miles when you're booking flights. We've got
Speaker 4: a whole list of these, but point dot me and
Speaker 4: seats dot arrow are the two that really stand out.
Speaker 1: Well, I can't think of how many times I've been
Speaker 1: in coach and you know, heard from the flight attendant
Speaker 1: passing around the credit card application for their loyalty credit
Speaker 1: card and the points you can get. Chris, do those
Speaker 1: kind of offers still make sense these days?
Speaker 2: Yeah?
Speaker 6: I mean people, you know, the airline are basically miles
Speaker 6: and rewards companies. That's where they make all their money,
Speaker 6: and their strategy is oriented towards that. But something that
Speaker 6: we learned from Brian Kelly, the points guy, is actually
Speaker 6: that you should the best rewards come from getting like
Speaker 6: a multi brand card, so like you Chase Saphire Reward
Speaker 6: or an American Express Card Platinum card. Those gives you
Speaker 6: the give you the more broad points that you can
Speaker 6: use on lots of different things, and they're transferable. I
Speaker 6: am like a Delta loyalist and so I am addicted
Speaker 6: to my Delta Platinum card and but that really locks
Speaker 6: me in with Delta, and actually the benefits on other
Speaker 6: cards that have points and miles that you know you
Speaker 6: get three dollars for for gas purchases or grocery store purchases,
Speaker 6: that kind of stuff actually can be better.
Speaker 1: Yeah, I'm going to be admitting a little bit of
Speaker 1: something here. When I book tickets, often I try to
Speaker 1: get the you know, the lowest economy rate that I
Speaker 1: possibly can, you know, just to get the cheapest rate.
Speaker 1: But when it comes to things like being able to rebook,
Speaker 1: does it make more sense now to try to pay
Speaker 1: up for that higher tier just in case your plans change?
Speaker 4: Nikki, Well, certainly there's two ways to approach that question.
Speaker 4: There's the question of refundable bookings, where you can pay
Speaker 4: a little bit more. You know, it's a sliding scale
Speaker 4: cost to get a refundable either a plane ticket or
Speaker 4: hotel room, where you're not necessarily committed upfront to a
Speaker 4: locked in cost. You can always, you know, decide if
Speaker 4: your plans change, somebody get sick, the geopolitical situation evolves,
Speaker 4: you can make a change no matter what. The other
Speaker 4: way is to pursue something called cancel for any reason.
Speaker 4: Travel insurance. It can be a bit expensive. Sometimes it
Speaker 4: goes up to like fifteen percent of your total travel cost,
Speaker 4: and you have to sign up for these policies like
Speaker 4: immediately after booking your flights and hotels. You can't really
Speaker 4: delay between when you book your trip and you book
Speaker 4: your travel insurance. So those are the two things that
Speaker 4: exist to protect you from all of the different factors
Speaker 4: that might change your plans. I would price compare. There's
Speaker 4: a website called square mouth that helps you compare the
Speaker 4: price of various insurance policies and providers so that you
Speaker 4: can kind of just look side by side at what
Speaker 4: you're getting and what it costs. And I would do
Speaker 4: that next to your airfare search that shows you what
Speaker 4: a non refundable ticket looks like versus a refundable ticket.
Speaker 1: Yeah, I kind of bring issues up because I'm sure
Speaker 1: I'm not the only traveler who's thinking about ways to
Speaker 1: try to save money here and there, just because you know,
Speaker 1: there are so many fees nowadays as well, and you
Speaker 1: think about the bankruptcy of Spirit Airlines and a lot
Speaker 1: of commentary that maybe that was going to have an
Speaker 1: effect on pricing power for airlines as well. So, Chris,
Speaker 1: do you see any of this sort of deterring people
Speaker 1: or having them rethink how they're booking their travel this summer?
Speaker 6: I mean a lot of the airlines are really focused
Speaker 6: on the higher end of their travelers, so they break
Speaker 6: up the there's like elite tier, you know, there's the
Speaker 6: first class, there's you know, the second class, there's third class,
Speaker 6: and then they and then they have actually lowered what
Speaker 6: the bottom economy tier is. So like some airlines have
Speaker 6: a basic economy where you really got to look at
Speaker 6: what you what you're signing up for because it is
Speaker 6: the cheapest fair but you can't make changes, you don't
Speaker 6: get to pick your seat. You know, there's no check bags.
Speaker 6: So what we used to think of as sort of
Speaker 6: the floor of what you have, the grace that you
Speaker 6: kept during traveling, actually they found a way to sort
Speaker 6: of remove even some of that, so you know, paying
Speaker 6: a little bit for the additional perks actually kind of
Speaker 6: only gets you to where you sort of assumed we
Speaker 6: were at base level.
Speaker 1: Before speaking with Chris Rouser and Nikki k Stein of
Speaker 1: Bloomberg Pursuits, as we start to think about summer travel season,
Speaker 1: we've talked about, you know, some of the ways we
Speaker 1: can try to save money here, let's talk about where
Speaker 1: we can go now to put that money to you.
Speaker 1: So I want to start with you, Nikki, what are
Speaker 1: some of the best places to go this summer? Just
Speaker 1: if you're looking for value.
Speaker 4: If you're looking for value, then it's less about where
Speaker 4: you go than about how you go. Bear with me
Speaker 4: on this one. Okay, I am not a cruiser personally,
Speaker 4: no offense to all of the many many people who are,
Speaker 4: but it is not my usual preferred style travel. That said,
Speaker 4: this is the summer where even if you're like me,
Speaker 4: you might consider a cruise. There are more high end
Speaker 4: options than have ever existed before. There are a lot
Speaker 4: of hotel lines that have introduced yacht like sailing products
Speaker 4: on small ships. We're talking about a couple hundred passengers
Speaker 4: at most on a ship. These are not like floating megacities.
Speaker 4: And while the rates seem expensive on the surface, we're
Speaker 4: talking about maybe six hundred to one thousand dollars a
Speaker 4: night per room. If you compare that to what you
Speaker 4: get on land in the most popular places in Europe
Speaker 4: or in the Mediterranean, where a lot of these ships
Speaker 4: are sailing, the value is actually mismatched in a way
Speaker 4: that's really really pealing to cruisers, especially when you think
Speaker 4: about food being built in. Some of your excursions may
Speaker 4: be built in. Some of the on ship amenities, for sure,
Speaker 4: are built in. You're getting a much better deal for
Speaker 4: what is now a comparable product in terms of luxury. Certainly,
Speaker 4: trains are another thing that we don't think about quite
Speaker 4: so much. I was looking at a route on the
Speaker 4: Rocky Mountaineer in Canada, which hits a bunch of beautiful
Speaker 4: national parks as well as cities going all you know,
Speaker 4: from east to west across the lower border of Canada basically,
Speaker 4: and you can get away with paying five hundred dollars
Speaker 4: a day, which on land is a really tricky ceiling
Speaker 4: at this point to break.
Speaker 1: Well, I got to admit, you know, across transcontinental train
Speaker 1: trip is one of those bucket list items for me
Speaker 1: for sure, and it gets you thinking about, you know,
Speaker 1: whether all inclusive is a better option this summer than
Speaker 1: you know, maybe you know, going to a luxury hotel
Speaker 1: and then you know, separating the flight that sort of thing. Chris,
Speaker 1: does all inclusive make more sense this summer than it
Speaker 1: has in the past.
Speaker 6: You know, all inclusive has sort of been a little
Speaker 6: bit of a family secret and maybe like a bachelorette
Speaker 6: party or spring break secret. But yeah, in some cases,
Speaker 6: you know a lot of booking through a tour company
Speaker 6: that creates everything for you, working with a travel agent
Speaker 6: who can actually find you a package deal. Working with
Speaker 6: a human who can sort of steer you to something
Speaker 6: where all the costs are built in actually can be
Speaker 6: a real plus, and people don't always think of it.
Speaker 6: It like cruising, working on a package tour all inclusive
Speaker 6: thing can get a bad rep, but actually what we
Speaker 6: think of from twenty thirty years ago, in terms of
Speaker 6: the level of amenities and the food for example, actually
Speaker 6: can be quite cheap.
Speaker 1: Yeah, I'm so glad you brought that up, Chris, because
Speaker 1: so many travelers these days are probably booking their trips
Speaker 1: through artificial intelligence. Vicky, does it really make more sense
Speaker 1: to still work with a travel agent than to let
Speaker 1: the chatbot do it for you?
Speaker 4: You know what a lot of people don't realize is
Speaker 4: that it doesn't cost you anything to work with a
Speaker 4: travel agent almost you know, ten out of ten times,
Speaker 4: the cost of a travel agent is not passed on
Speaker 4: to the consumer. It's actually passed on to your hotel
Speaker 4: or different providers along the way, who pay commission to
Speaker 4: the travel agent for their services, not the traveler themselves.
Speaker 4: And what the traveler gets out of this is a
Speaker 4: backup policy. It's a safety net if anything should go
Speaker 4: wrong on your trip, if your flight is canceled if
Speaker 4: you know, whether it gets in your way, whatever it
Speaker 4: may be. And we know how hard it is to
Speaker 4: avoid anything going wrong on your travels. These days, you
Speaker 4: have a real human in your pocket who is really
Speaker 4: well hooked up to help you out and get you
Speaker 4: out of trouble in that exact moment. I've been caught
Speaker 4: in really tricky situations in the last couple of months,
Speaker 4: and I've been so thankful to have a real human
Speaker 4: to call who can rebook my flights, you know, whatever
Speaker 4: it might be. Gosh, it makes a huge difference.
Speaker 1: So just to close this out, Chris, when it comes
Speaker 1: to you know, sort of out of the radar destinations,
Speaker 1: places you might want to go to just to avoid
Speaker 1: the crowds that you talked about that there are going
Speaker 1: to be at the airports this summer. What are you
Speaker 1: thinking about?
Speaker 6: We have some great recommendations. Nikki in the BusinessWeek section
Speaker 6: of Pursuits did a whole summer travel package which has
Speaker 6: some really great ideas. One of my favorite stories was
Speaker 6: one that a writer named Paul Richardson did about Extremadura,
Speaker 6: which is in Spain. It's in southwestern Spain. You're Portugal
Speaker 6: and it's this mountainous region, beautiful towns and incredible culture,
Speaker 6: new museums, great luxury hotels. I've been to Spain a
Speaker 6: bunch of times. I lived there for a while, and
Speaker 6: I had never been there myself, and you know, when
Speaker 6: you go to Madrid, Barcelona, a lot of those places
Speaker 6: are quite crowded now because everyone has sort of, you know,
Speaker 6: woken up to the beauties of Spain and the amazing food,
Speaker 6: and so finding places that feel really authentic but also
Speaker 6: not really overrun is very special. And Extremodora has some
Speaker 6: really beautiful towns that are really great to visit and
Speaker 6: not packed.
Speaker 1: So great to get these summer travel ideas from the
Speaker 1: both of you. Thanks so much for being with us.
Speaker 1: That is Nicky Eckstein and Chris Rouser of Bloomberg Pursuits.
Speaker 1: We'd also like to thank Bloomberg Intelligence analyst Jennifer ree Man,
Speaker 1: Deep Sing and honorog Run. Of course, thanks to you
Speaker 1: as well for joining us on this holiday. I'm Nathan Hager.
Speaker 1: Stay with us. Top stories and global business headlines are
Speaker 1: coming up right now.