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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 2: my co host Matt Miller.
Speaker 1: Every business day we bring you interviews from CEOs, market pros,
Speaker 1: and Bloomberg experts, along with essential market Moven News.
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Speaker 2: All right, Herman chans in here and he covers the
Speaker 2: regional banks from Bloomberg Intelligence. I don't know why he's
Speaker 2: in here. I don't know why we got to talk
Speaker 2: to this guy, but Hermann what's happening with the regional banks,
Speaker 2: because I feel like a huge shoe is about to
Speaker 2: drop in terms of I know, commercial real estate loans,
Speaker 2: just higher rates, credit cards, stuff. Give us a sense
Speaker 2: of what's happening with the regional banks and is the
Speaker 2: FDIC concerned?
Speaker 3: Right, So the sentiment for regional banks has been poor
Speaker 3: since March and April after the failures of SVB and
Speaker 3: Signature First Republic, and shares haven't really rebounded since that time.
Speaker 3: There's been concerns on.
Speaker 2: What you told us was probably gonna happen. Then we're
Speaker 2: not going to rebound because this is a long term earning.
Speaker 3: We're facing a longer term earning issue from margins because
Speaker 3: of higher funding costs and higher interest rates. Banks aren't
Speaker 3: lending that much because they're focused on building capital because
Speaker 3: of tougher capital rules. And then you mentioned of commercial
Speaker 3: real estate and office cre a potential shooter drop there
Speaker 3: potentially next year with higher loan losses. So the sentiment
Speaker 3: has been poor. But also you've seen a bid recently
Speaker 3: over the past couple of weeks as inflation pressures seem
Speaker 3: to be easing. So the thought of interest rate cuts
Speaker 3: are positive for banks. And actually the regionals have rebound
Speaker 3: about fifteen percent since their lows earlier.
Speaker 2: And I look at M and T Bank is my proxy.
Speaker 2: I know there's an ETF out there that is probably
Speaker 2: much better, but I just like looking at MT. It's
Speaker 2: a baldy regional bank of fourteen percent off of that
Speaker 2: low back in late October. That's right.
Speaker 3: So there there is a bit of an inverse relationship
Speaker 3: with longer term treasury yields and regional bank stock. So
Speaker 3: that's something to look out for. In terms of the
Speaker 3: fdi C, the organization is expected to vote on a
Speaker 3: special assessment to replenish their depositive Insurance Fund, which was
Speaker 3: hit from the bank failures than the year. So the
Speaker 3: largest banks in the United States are set to have
Speaker 3: a hit in the fourth quarter, and so.
Speaker 2: The large like JP Morgan has got to pay for
Speaker 2: the regional banks. Yeah.
Speaker 1: And by the way, was it a was it an
Speaker 1: industry wide problem or were the manager's SVB group just
Speaker 1: to sleep at the wheel.
Speaker 3: SVB was a bit asleep at the wheel. I would
Speaker 3: concede that.
Speaker 1: Were passed out cold right blood alcohol content like four.
Speaker 3: Not really focused on interest rate risk at that Well.
Speaker 1: Why would you focus on interest rate risk as the
Speaker 1: head of a bank, right, who cares about that? And
Speaker 1: now Jamie Diamond has to pay the tab he must
Speaker 1: be very unhappy about it.
Speaker 3: Yeah, the bank, the surviving banks are paying for the
Speaker 3: sins of the guys that had the failed institution. So
Speaker 3: it is how the industry works, for better for worse.
Speaker 1: No, really, you think SVB group would bail out JP Morgan.
Speaker 3: Well, M and T like, like Paul said, is bailing
Speaker 3: out SVB as well. So everybody has to pay their
Speaker 3: fair share.
Speaker 1: Full disclosure. Hermann chand loves M and T. We used
Speaker 1: to work there, yes, yes, in investor relations.
Speaker 2: That's right. Yeah, and you are you're a proud mid
Speaker 2: market kind of regional bank.
Speaker 1: I mean I bank at the Huntington in Columbus, Ohio.
Speaker 2: A huge fan.
Speaker 1: Look because as a local I've grown up there. Generations
Speaker 1: of my family have banked there, so you know.
Speaker 2: Fuller name carry some weight there well.
Speaker 1: Or the benefit is when times are tough, they work
Speaker 1: with us, you know, whereas a bigger bank would say
Speaker 1: we'll see you later, Cinara, right, Huntington will will stick
Speaker 1: with us and work with us, because that's just how
Speaker 1: more localized banks work.
Speaker 2: So, but there are four thousand of these regional community
Speaker 2: banks out there. If I put my M and A
Speaker 2: hat on there, I feel like that's an industry ripe
Speaker 2: for consolidation. That is that fact the case? And if so,
Speaker 2: what would be the catalyst?
Speaker 3: Yeah, the regionals have talked about M and A being
Speaker 3: a factor later on, but not quite over the next
Speaker 3: one year time horizon. You have to remember that higher
Speaker 3: interest rates are are a factor and when banks do
Speaker 3: M A they have to mark to market the target's
Speaker 3: balance sheets. So and marking to market means that they
Speaker 3: have to set the current value on both the loans
Speaker 3: and assets and de posites, and that can create a
Speaker 3: hole in the acquires balance sheets. So they're waiting for
Speaker 3: maybe rates to come down a bit so they don't
Speaker 3: have this tangible value hits. The second factor is that
Speaker 3: regulation is still up in the air. The bidenmin administration
Speaker 3: has been a bit reticent for bank m and A
Speaker 3: despite some of the pressures earlier in the year. That
Speaker 3: seems to be easy, but there's still a lot of
Speaker 3: questions on that front.
Speaker 2: All right, So the commercial real estate, how big of
Speaker 2: an issue is that for the banks? And when will
Speaker 2: we see it.
Speaker 1: I guess by the way, you know where the phrase
Speaker 1: waiting for the other shoot a drop comes from. No,
Speaker 1: but you told me it's because back in the days
Speaker 1: when New York City was filled with these tenements, the
Speaker 1: walls and the ceilings and floors were so thin that
Speaker 1: you could hear when somebody would come home from work
Speaker 1: and take off his shoes. So you knew when one dropped,
Speaker 1: you were about to hear the next shoe drop.
Speaker 2: Okay, very good.
Speaker 3: Oh, you learn something new every day.
Speaker 1: I think it's great that it's tied to real estate,
Speaker 1: right because the next shoe to drop is also tied
Speaker 1: to real estate.
Speaker 3: Yeah, that's true. So in terms of commercial real estate,
Speaker 3: it creates more headline risk in my view than actual
Speaker 3: potential losses. For at least the regail banks that I cover,
Speaker 3: we're talking about two to four or five percent of
Speaker 3: their total long portfolio is tied the office commercial real estates.
Speaker 2: Who owns that stuff.
Speaker 3: Then it's it could be smaller regionals, it could be
Speaker 3: you know, securitized at CNBS.
Speaker 2: I'm thinking about I'm gonna go back to my Lipstick
Speaker 2: building on Third Avenue and fifty fourth Street here in Manhattan,
Speaker 2: right at some point that thing's going to reprice, and
Speaker 2: it's going to reprice it up big discount, and the
Speaker 2: equity is going to come out of that thing, and
Speaker 2: whoever's got the mortgage against that's gonna have to do something. Yeah,
Speaker 2: you're gonna have to just wonder who owns like those
Speaker 2: kinds of commercial real estate mortgage.
Speaker 1: My brother, by the way, it works in the Lipstick building.
Speaker 2: Such a cool building. Yeah, I think it's awesome.
Speaker 1: Yeah, so hopefully they do there. Oh yeah, but there.
Speaker 2: Yeah.
Speaker 3: So it is a headline issue, but I do think
Speaker 3: it's going to be manageable. But you will INVIBC losses
Speaker 3: for the regil banks, and they are already booking reserves
Speaker 3: against potential losses expected over the next few years.
Speaker 2: All right, So but if I'm looking at M and
Speaker 2: T bank, I mean, so, when do I say the
Speaker 2: earnings risk is behind this industry. I'm looking at the
Speaker 2: next year's numbers and it's not. Then, I mean, they're
Speaker 2: still going down. I guess in twenty twenty five is
Speaker 2: when you expect earnings to rebound for this sector.
Speaker 3: Yeah, I think at We've written that a note actually
Speaker 3: today on net margins potentially stabilizing and for most of
Speaker 3: the banks that I covered, that will happen by the
Speaker 3: first quarter of next year. If it's it's even stay
Speaker 3: where they are today, so that's positive. You're not getting
Speaker 3: any benefit from loan growth, so that's an issue. There's
Speaker 3: sticker shock in terms of how interest rates are for
Speaker 3: both commercial borrowers and retail customers as well, So that's
Speaker 3: going to be a factor for the foreso future. But
Speaker 3: in terms of net interest margins, that stabilization will help,
Speaker 3: you know, reduce some of the pressures on ANII net
Speaker 3: interest income for the regionals.
Speaker 2: All right, Man, Herman Chan, you're the man. You cover
Speaker 2: all the regional banks for Bloomberg Intelligence. We appreciate getting
Speaker 2: a few minutes of your time coming here in our
Speaker 2: Bloomberg Interactive Brokers studio here. Still a little bit of
Speaker 2: headwinds there for the regional banks, but I'm looking at
Speaker 2: some of these earnings astems out there. They start turning
Speaker 2: really noticeably positive in terms of growth rates in twenty
Speaker 2: twenty five for some of the regional banks. Who knows,
Speaker 2: that could be an interesting area.
Speaker 4: You're listening to the Team Cancer Live program Bloomberg Markets
Speaker 4: weekdays at ten am Eastern on Bloomberg dot Com, the
Speaker 4: iHeartRadio app and the Bloomberg Business app, or listen on
Speaker 4: demand wherever you get your podcasts.
Speaker 2: All, let's do a little C suite conversation here. Let's
Speaker 2: talk healthcare, biotech, cancer. Helen Sabzavari Joints So she is
Speaker 2: a CEO of Presgen. Presogen is a publicly traded company
Speaker 2: lists on nasak pg e N is the symbol for
Speaker 2: to type into your Bloomberg terminal. Helen, thanks so much
Speaker 2: for joining us here. Talk to us about Presagen. What
Speaker 2: do you guys do? Where is your focus right now?
Speaker 5: So we have been focusing on a sell and gen
Speaker 5: therapy and really bringing it to the next level. I
Speaker 5: think what we know that this is going to be
Speaker 5: the cutting edge for the next decades, and it is
Speaker 5: working for treatment. It's limited in a hemetological oncology setting.
Speaker 2: Okay, so we're talking cancer here.
Speaker 5: Yes, cancer setting. And however, the problems are basically the
Speaker 5: access to the patient, the cost that it's relevant half
Speaker 5: a million dollar tag prices for the treatments and you
Speaker 5: can only get advce precedent is bringing it to the
Speaker 5: next level. What we are doing is manufacturing overnight at
Speaker 5: the fraction of the cost done at the hospital, so
Speaker 5: you don't need centralized manufacturing.
Speaker 2: You make it at the hospital, at.
Speaker 5: The hospital and accessible to the patient and they can
Speaker 5: receive repeated doses because the cost is so much lower,
Speaker 5: and it can be produced overnight, and it's precise to
Speaker 5: the patient because thev use their own cells to modify
Speaker 5: them overnight and infuse them back to the patient. So
Speaker 5: this is why we say we are bringing the therapy
Speaker 5: to the next level.
Speaker 1: Better are my chance is now of surviving if I
Speaker 1: get cancer today, say versus ten or twenty years ago.
Speaker 5: Definitely, the field has been coming along in various immunological
Speaker 5: therapies and now with the cell engene therapy, so the
Speaker 5: chances of survival is much higher. The percentages still is
Speaker 5: not up where we need to be. When we look
Speaker 5: at our therapies with the VR in twenty thirty percent
Speaker 5: response rates, we need to do much better than that.
Speaker 5: And this is one of the aspects that for instance,
Speaker 5: even the cell engene therapy right now in the field
Speaker 5: of cancer for the liquid cancers, they do well in
Speaker 5: some of them, but they have not had any effects
Speaker 5: on solid tumors. And this is where we come in
Speaker 5: as well, because now our technology can address both sides
Speaker 5: overnight with the much lower price tag for the patient
Speaker 5: and specific to the patient cancer. And I think that's
Speaker 5: very important because then you avoid treatments that you know
Speaker 5: it will not work.
Speaker 1: I'm going to ask an ignorant question, so pretend I'm
Speaker 1: a complete moron. Are you there? Why haven't we cured
Speaker 1: this disease yet? I mean we've been throwing hundreds of millions.
Speaker 1: I mean, our boss throws billions of dollars at this
Speaker 1: disease for decades, and there are a lot of people
Speaker 1: out there, probably not medical professionals, but people who think,
Speaker 1: you know what, this disease is simply too profitable to
Speaker 1: the healthcare industry to actually cure.
Speaker 5: I think the issues with the cancer is multifaceted, and
Speaker 5: the mechanism of an escape of your own cells from
Speaker 5: your own army, which is your immune cells, is very complex.
Speaker 5: And the reason that over the years, you see, we
Speaker 5: have moved the bar from chemo to now immunological immunotherapies
Speaker 5: and now to your own cells recognizing it. And this
Speaker 5: is exactly what we do. We are bringing out your
Speaker 5: own cells there and train your army back and we
Speaker 5: reinfuse it back to you, so now they can recognize
Speaker 5: the enemy from within, which is your tumor self. And
Speaker 5: I think that's where the difference is. And what we
Speaker 5: have to do is obviously make this much more accessible
Speaker 5: to the patient very rapidly, because the patients don't have
Speaker 5: enough time and the current cell engine therapies will not
Speaker 5: address that, and also treat a much larger patient population,
Speaker 5: which is the presage and platform with the ultra cortee
Speaker 5: does that overnight at the hospital.
Speaker 2: So where are you in the development of your company, presaging,
Speaker 2: I mean, are you guys? Do you have your product?
Speaker 2: Are your or your pharmacistical in the marketplace yet?
Speaker 5: So what we have is our ultra car is already
Speaker 5: in the clinical trials across the United States and we
Speaker 5: have been reporting not only the safety but efficacy. For
Speaker 5: instance in AML patients that they don't have more than
Speaker 5: a few months to leave and we have shown complete
Speaker 5: and partial responses in these patients in ovarian cancer as
Speaker 5: well as triple negative breast cancers that we are moving,
Speaker 5: but also presgen is not just the ultra Car company.
Speaker 5: We have other gene therapies modalities that addresses the HPV cancers,
Speaker 5: and actually we are really excited because the twenty twenty
Speaker 5: four is going to be a breakout for a precegen
Speaker 5: as we are bringing the first drug for a recurrent
Speaker 5: respiratory papillomatosis, which are the benign tumors in the trachea
Speaker 5: and throat of the patients, and the FDA has given
Speaker 5: us the accelerated approval and we are moving toward the
Speaker 5: commercialization by twenty twenty four, which now changes the paradigm
Speaker 5: for our patients and.
Speaker 6: For our investors.
Speaker 2: I mean, are you I'm just going at EAR stock.
Speaker 2: It's down thirty three percent this year. I have no
Speaker 2: idea why it's got a market cap at two hundred
Speaker 2: fifty million.
Speaker 1: Trained at sixty five dollars a share in twenty fifteen,
Speaker 1: which was admittedly years before you came into the company,
Speaker 1: but it's trading for a dollar now.
Speaker 5: It was a different company. And I think what we
Speaker 5: have done is since twenty twenty that I have become
Speaker 5: the CEO, we have changed the company and focused mainly
Speaker 5: on health and in three years we have moved the
Speaker 5: platform from a discovery to the scaling up and to
Speaker 5: the commercial and we just received not only the prayer
Speaker 5: true designations from FDA, but accelerated approval, and the company
Speaker 5: by next year is moving toward the first commercialization of
Speaker 5: the drug in the HPV field, which, as you can imagine,
Speaker 5: it's a huge field in cancer as well as in
Speaker 5: infectious diseases.
Speaker 2: So we are going to get to a point where
Speaker 2: there will be treatments that will be better than chemo.
Speaker 5: Oh, absolutely, we are moving in that direction. And the
Speaker 5: cell engine therapy is exactly that. What we are doing
Speaker 5: currently at Precegen is really taking your own cells, immune
Speaker 5: cells and modifying them and returning them back to you.
Speaker 5: So the safety is much more favorable, the toxicity is
Speaker 5: much less because it's not chemo that kills across. This
Speaker 5: is designed to only kill the tumor cells and nothing else.
Speaker 5: And I think this is why Presogen is bringing the
Speaker 5: field of cell engine therapy to the next level.
Speaker 2: Who else is doing this?
Speaker 5: Like?
Speaker 2: Who else is doing kind of.
Speaker 5: There are a number of companies that they are doing
Speaker 5: the classical cartis, but this is.
Speaker 2: Exactly cart yeah, CARTI And.
Speaker 5: Whether the timeric antigen receptor T cells, these are modified
Speaker 5: tea cells. However, the way it's done, it's done in
Speaker 5: a classical fashion with the centralized manufacturing which takes almost
Speaker 5: between an on to two months. The cost of these
Speaker 5: parties are close to four hundred and fifty to half
Speaker 5: a million dollars. What we have done is do that
Speaker 5: in the completely differentiated way than everyone else, and the
Speaker 5: precedent is the only company that has this technology currently
Speaker 5: and we do that at the clean room of a
Speaker 5: hospital without.
Speaker 2: Expert all right, So all I know about biotext is
Speaker 2: it's a biner. It either works and a stock goes
Speaker 2: up through the roof, or it doesn't and it goes
Speaker 2: to zero. What's the what's the mile post for your
Speaker 2: company for that?
Speaker 5: So in the very near future, in twenty twenty four,
Speaker 5: we are moving our first adenoverse Gorilla, a dinniverse platform
Speaker 5: in an rr P patient rare disease patient, which FDA
Speaker 5: has given us the BLA, and we will be commercializing this.
Speaker 5: So that would be the first and that's why I
Speaker 5: think we have a great opportunity and very exciting year
Speaker 5: in twenty twenty four. And to your point, the stocks
Speaker 5: definitely has been under pressure. All the stocks have been
Speaker 5: including Presigen. However, we are confident at twenty twenty four
Speaker 5: with the new drug that we are bringing forward and
Speaker 5: already with accelerated approval from FDA, we are going to
Speaker 5: bring value to our patients as well as.
Speaker 2: To our fascinating story. As always, I mean, you know
Speaker 2: so many fronts on this fight against cancer. Helen Sabs
Speaker 2: the very CEO. Presigen is the company. It is. Pg
Speaker 2: e N is the ticker. With some new techniques and
Speaker 2: new therapy party car.
Speaker 1: We're learning something.
Speaker 5: We're learning something the Noverse platform, which addresses both oncology
Speaker 5: in HPV cancers and infectious.
Speaker 4: You're listening to the tape Cancer Live program Bloomberg Markets
Speaker 4: weekdays at ten am Eastern on Bloomberg Radio, the tune
Speaker 4: in app, Bloomberg dot Com, and the Bloomberg Business App.
Speaker 4: You can also listen live on Amazon Alexa from our
Speaker 4: flagship New York station, Just Say Alexa playing Bloomberg eleven.
Speaker 2: Let's bring on our next guest. Brian Stelter, a special
Speaker 2: correspondent for Vanity Fair. You know him from CNN. He
Speaker 2: was a longtime correspondent there at CNN. Producer of one
Speaker 2: of my favorite TV shows which I just finished, The
Speaker 2: Morning Show that's based upon his book. He's got a
Speaker 2: Top of the Morning, Top of the Morning. Right, he's
Speaker 2: got a new book at this Boys, Guy's Prolific Network
Speaker 2: of Lies, The epic saga Fox News, Donald Trump, and
Speaker 2: the Battle for American Democracy. Brian Stelter Joints says, Hey, Brian,
Speaker 2: thanks so much for taking the time to join us
Speaker 2: here kind of what did you learn in your reporting
Speaker 2: for your new book?
Speaker 4: Here?
Speaker 2: This is territory that you're familiar with.
Speaker 7: I had to write it because the last time I
Speaker 7: wrote a book about Fox, it was mostly anonymously sourced,
Speaker 7: and you all know that's how it has to be.
Speaker 7: Sometimes some sources insist on confidentiality, they won't go on
Speaker 7: the record. But then three years later, when Dominion was
Speaker 7: suing Fox News and Dominion was able to obtain all
Speaker 7: of those emails and text messages side Fox, I felt
Speaker 7: like all of my anonymous sources were now speaking on
Speaker 7: the record. Of course, it wasn't their choice, you know,
Speaker 7: they were forced onto the record through the legal process,
Speaker 7: through the document discovery process. But there were so many
Speaker 7: revealing messages, including emails with Ruper Murdoch, that I thought, hey,
Speaker 7: someone's got to turn this into a book.
Speaker 1: So what's your take on where Fox News goes now
Speaker 1: I mean post Tucker Carlson, you know, ahead of a
Speaker 1: new election season. They've got a new CEO. There's so
Speaker 1: many changes that have happened in the last I don't
Speaker 1: know year, six months to a year. What happens to Fox?
Speaker 7: That's right, we talked after Tucker Carlson was ousted on
Speaker 7: the air. Then Ruper Murdoch decided to step aside. Its
Speaker 7: actually takes effect this week yesterday at News Corp, Tomorrow
Speaker 7: Fox Corps. He becomes chairman emeritus, and he's really elevating
Speaker 7: his son, Lachlan, making it even more clear that Lachlan
Speaker 7: is the future of these companies.
Speaker 8: What's the future of Fox?
Speaker 7: Well, in the book, I quote an insider saying Lachlan
Speaker 7: just wants to minimize headaches and maximize profits. I think
Speaker 7: that's why we see in Attucker Carlson fire, and he
Speaker 7: wants to.
Speaker 8: Minimize those headaches, and then he wants.
Speaker 7: To try to figure out how to make as much
Speaker 7: as he can out of these declining cable businesses while
Speaker 7: also investing in two being in Fox Nation and other
Speaker 7: streaming ventures. Of course, Fox is one of these subscale
Speaker 7: media players. It's not nothing like Netflix or Disney. So
Speaker 7: I think, you know, in the future, anything could happen.
Speaker 7: I think the most likely scenario is we're going to
Speaker 7: see another attempt to recombine News Corp. And Fox Corps,
Speaker 7: but maybe not for another year or so.
Speaker 2: So, Brian, what's in some of this What are some
Speaker 2: of the new issues that you kind of unfounded or
Speaker 2: are founded here in this new book.
Speaker 7: Yeah, you know, what I get at is Rupert and
Speaker 7: Lachlin Murdoch's role within this company and this network, Fox News,
Speaker 7: that is the dominant player within the Republican Party. And
Speaker 7: what I found is that the times when Rupert and
Speaker 7: Lachlan should have stepped in and been more involved, they weren't.
Speaker 7: They were laid back. They were kind of letting others
Speaker 7: do the dirty work. Remember in Succession when Lucas Mattson
Speaker 7: says he's.
Speaker 8: Hiring a sponge.
Speaker 7: Well, I came to realize that's what the Murdocks really
Speaker 7: do in real life. You know, No wonder this show
Speaker 7: was so heavily reliant on the Murdoch story. They have
Speaker 7: their own pain sponges, you know, to clean up the messes.
Speaker 7: And so that that I found was interesting when reading
Speaker 7: these emails, and text messages that they keep there. You know,
Speaker 7: they have they have passible deniability sometimes with some of
Speaker 7: these scandals and lawsuits.
Speaker 8: And of course these lawsuits are ongoing.
Speaker 7: We know Dominion settled, but Smarmatic another voting company is
Speaker 7: suing Fox. There are a lot of shareholder lawsuits and
Speaker 7: other defamation lawsuits. It is really it's really remarkable that
Speaker 7: here we are talking to the end of twenty twenty
Speaker 7: three and there's still so much litigation about the last
Speaker 7: presidential election.
Speaker 1: What do you think about I mean, we've recently heard
Speaker 1: that Donald Trump was dead set against leaving the White House,
Speaker 1: and you know, more and more is coming to light.
Speaker 1: But it continues to shock me that he has such
Speaker 1: a stronghold on you know, place like Fox or the
Speaker 1: US Congress. How how does that How does he continue
Speaker 1: to have that kind of strength.
Speaker 7: I think it has a lot to do with the
Speaker 7: rewriting of January sixth, And I discovered this as I
Speaker 7: read through all these emails and texts that after January
Speaker 7: six Ruper Murdoch said very clearly, We're going to make
Speaker 7: Trump a non person. We are pivoting away from Trump.
Speaker 7: He was told by his number two that Sean Hannity
Speaker 7: is ready to lead the seventy five million Trump voters
Speaker 7: away from Trump. So clearly there was an attempt to
Speaker 7: make Trump a non person, but it didn't last. It
Speaker 7: didn't last. So why didn't it last? Why was Trump
Speaker 7: able to get back to center stage? Why was he replatformed? Well,
Speaker 7: I argue it's because Peter Really Tyler Carlson rewrote the
Speaker 7: story of January sixth to say it wasn't an insurrection,
Speaker 7: it wasn't a riot, it was just a tourist visit
Speaker 7: gone bad, that it actually wasn't that big a deal.
Speaker 7: That hey, maybe the FEDS were involved, Maybe the government
Speaker 7: plants were in the crowd ginging up the protesters. Basically,
Speaker 7: by presenting a conspiracy theory version of January six I
Speaker 7: think it helped to absolve Trump in the minds of
Speaker 7: his fans, to absolve Trump in the minds of Fox's viewers,
Speaker 7: and thus now here we are, Trump's still the dominant
Speaker 7: figure in the primary.
Speaker 2: Brian, what role do you expect Fox News to play
Speaker 2: in this upcoming presidential elections visa VI the former President Trump,
Speaker 2: who presumably is the publican nominee.
Speaker 7: Well, look, the first two GOP debates of the season
Speaker 7: both went to Fox. Now there's going to be a
Speaker 7: few more debates, but without Trump, they're becoming less and
Speaker 7: less important. Trump is in a little bit of a
Speaker 7: standoff with Fox. He thinks he's more powerful than Fox.
Speaker 7: You know, they go back and forth because you know,
Speaker 7: they're like, you know, it's like, I don't know if
Speaker 7: it's a buddy comedy or it's a horror movie, but
Speaker 7: it's a situation where they're they're kind of both battling
Speaker 7: each other at all times. But at the end of
Speaker 7: the day, what matters most is that the audience comes
Speaker 7: home and Trump comes home.
Speaker 8: He will come home.
Speaker 7: To Fox because they have the same interest. They want
Speaker 7: to see Democrats defeated. So even though there's lots to
Speaker 7: talk about Trump trashing Rupert Murdach complaining about Fox, I
Speaker 7: don't think that'll matter in a general election. I think
Speaker 7: what will matter is that Fox still has a stranglehold
Speaker 7: on a giant of the right in the United States.
Speaker 1: Does CNN want a piece of that? I mean, they
Speaker 1: did a town hall with Donald Trump. They've made some
Speaker 1: moves that media critics have questioned, as you know, what's
Speaker 1: CNN doing well?
Speaker 7: I think right now CENN is trying to report the
Speaker 7: truth as loudly and clearly as possible, and I think
Speaker 7: they've been excelling with coverage of the war between Israel
Speaker 7: and Hamas. I think there was an effort last year,
Speaker 7: and I think an understandable effort by David Zaslov and
Speaker 7: others to try to figure out how to appeal to everybody,
Speaker 7: appeal to.
Speaker 8: Conservatives as well as liberals and moderates.
Speaker 7: But I think we have to make a distinction between
Speaker 7: conservatives and MAGA loyalists. Okay, it's the same distinction Biden
Speaker 7: makes in his speeches between Republicans who he's known for
Speaker 7: decades versus MAGA Republicans who seem to want to burn
Speaker 7: it all down. You're not going to be able, in
Speaker 7: my view, to get through to Trump loyalists who have
Speaker 7: been told for almost a decade now that the real
Speaker 7: news is fake. So if that's the strategy of CNN,
Speaker 7: that wasn't going to work. But I don't think that
Speaker 7: was the strategy. I think the strategy was, and maybe
Speaker 7: to some of sense, is to try to show that
Speaker 7: it's real news coverage.
Speaker 8: Not the fake news that Trump lied about.
Speaker 7: And you know that's the problem for a lot of
Speaker 7: these brands, a lot of these media brands they have
Speaker 7: they're up against the disinformation campaign.
Speaker 8: So I have a lot of sympathy for the CNNs
Speaker 8: and the NBCs.
Speaker 7: Of the world that are trying to get the word
Speaker 7: out that they are actually just doing the doing their
Speaker 7: jobs reporting what's in the world, but they're up against
Speaker 7: this kind of this hurricane of noise and lies from
Speaker 7: Donald Trump.
Speaker 1: Brian What What? What's happened to Tucker Carlson? Do we
Speaker 1: know kind of how that has turned out yet, because
Speaker 1: for a while it seemed like there were a lot
Speaker 1: of maga Republicans that were going to switch away from
Speaker 1: Fox and go to I don't know what he's doing,
Speaker 1: but has he still got a big following.
Speaker 7: He doesn't quite know what he's doing yet either, but
Speaker 7: he's making a lot of videos on the site formerly
Speaker 7: known as Twitter, and he's reportedly raising money and making
Speaker 7: ad deals so he can grow that into a real
Speaker 7: media company. I think he has big ambitions because he
Speaker 7: wants revenge against Fox. He wants to show Fox who's boss.
Speaker 7: But right now his platform has diminished, He's not making
Speaker 7: as much of an impact he's not as influential. Yes,
Speaker 7: he still has a fan base, but it goes to
Speaker 7: show once again that the machine is bigger than the parts.
Speaker 8: The parts are replaceable.
Speaker 7: Fox News is the platform that matters, not the individual
Speaker 7: hosts and.
Speaker 8: Gosh for whether you love it or hate it.
Speaker 7: That's a credit to Rupert Murdoch for making that investment
Speaker 7: almost thirty years ago.
Speaker 4: Yep.
Speaker 2: And I always say what made the Fox Network was
Speaker 2: Bart Homer Simpson. So that's kind of when they find
Speaker 2: to turn the corner. Brian Stelter, thank you so much
Speaker 2: for joining us. Appreciate getting a few minutes of your time.
Speaker 2: Brian Stelter. He's a special correspondent for Vanity Fair, formerly
Speaker 2: a correspondent for CNN, and producer of Apple TV's The
Speaker 2: Morning Show.
Speaker 4: You're listening to the tape Cansur live program Bloomberg Markets
Speaker 4: weekdays at ten am Eastern on Bloomberg Radio, the tune
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Speaker 4: You can also listen live on Amazon Alexa from our
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Speaker 2: All right, let's switch gear. Let's get to our next
Speaker 2: guest Laura Martin. She's a managing director of senior Media
Speaker 2: and Internet analyst at need Him. She's based out in
Speaker 2: Los Angeles, right in the heart of Hollywood. Does all
Speaker 2: that stuff out there? She joins U via zoom. Hey, Laura,
Speaker 2: I want to start with Disney here. You know, Bob
Speaker 2: Iiger has been back now, I don't know, a couple
Speaker 2: of years, a year and a half something like that.
Speaker 2: What do we know about where he wants to take
Speaker 2: this company?
Speaker 1: You know?
Speaker 6: I think on the part we have two companies here now.
Speaker 9: One is Parks and it's on a tear at record
Speaker 9: high margins, really a big cash flow generator, and he's
Speaker 9: going to invest sixty billion dollars in that business so
Speaker 9: that that business has proven its growth you know, trajectory,
Speaker 9: and he's going to invest in driving that growth longer.
Speaker 6: Fine.
Speaker 9: I think what Nelson Peltz is arguing about, and I
Speaker 9: think where I think the long term media analysts are
Speaker 9: on this is I don't think he's actually shown us
Speaker 9: that he can grow the now that's streaming sort of
Speaker 9: hit mature and it's still never made money.
Speaker 6: Can the content business grow, Paul?
Speaker 9: And if not, why is he keeping all these people like,
Speaker 9: it's okay of a business. He doesn't have a dividend,
Speaker 9: so it's okay if business doesn't grow, if you cut
Speaker 9: your people and you raise your dividend, that's.
Speaker 6: Called a garb stock, that's called a value stock. Okay.
Speaker 9: But right now he's investing like the content business's growth
Speaker 9: and I think Wall Street is unclear that the content
Speaker 9: business is still a growth business.
Speaker 2: All right, So I mean it's still mist sacrilege to
Speaker 2: ask this question, but you could make the call here,
Speaker 2: like if I'm an investment banker, I'm a media m
Speaker 2: and a banker. Boy, there's a lot of pieces here.
Speaker 2: Do I try to break this company up and see
Speaker 2: if I can get better value in the marketplace for
Speaker 2: the pieces?
Speaker 6: You know, a lot of.
Speaker 9: These CEOs don't want to relinquish actual control of an
Speaker 9: asset because that's how they judge their powers. How many
Speaker 9: employees have reporting to them. I do like the idea
Speaker 9: Paul of spinning off ten percent of Parks, because I
Speaker 9: think Parks really is a growth engine. I think you
Speaker 9: would get a much higher valuation for Parks if somebody
Speaker 9: could buy it alone away from the content assets, where
Speaker 9: there are a lot more questions, and in creating that
Speaker 9: security but still keeping it for tax consolidation and teach,
Speaker 9: you know, keeping control over it, you would get a
Speaker 9: higher value for the aggregate Disney shareholder.
Speaker 1: What's going to happen to ESPN?
Speaker 9: Good quod Well, lots of speculation here, I do you
Speaker 9: know Bob Iger on the call did say he's looking
Speaker 9: for people or companies that can enhance his distribution, give
Speaker 9: him more content rights and or give the more marketing
Speaker 9: like Gravitas, so.
Speaker 6: He doesn't need need money.
Speaker 9: Yeah, Well, I like the NFL has an idea a
Speaker 9: lot or the MBA because like the NBA rights, NFL
Speaker 9: has got locked up for a decade, so he doesn't
Speaker 9: really need the NFL right now. But I do like
Speaker 9: the MBA, which is coming up, and they're saying that
Speaker 9: the that the cost of the MBA might go up
Speaker 9: by four billion dollars, and Bob Iger has promised us
Speaker 9: an extra two billion dollars of cash next year. Well,
Speaker 9: if the NBA writes BUTOK, by four billion and he
Speaker 9: pays that, he's going to wipe out that promise and
Speaker 9: make his free cash full even worse.
Speaker 6: So I like that idea as a strategy.
Speaker 9: Look NBA will give you a little less cash than
Speaker 9: you want, but we'll give you ten percent of ESPN
Speaker 9: and we'll sign a ten year deal.
Speaker 6: That's actually a better deal for the NBA, if you
Speaker 6: ask me.
Speaker 2: Interesting. Hey, So, Laura, I went to get your opinion
Speaker 2: on somebody. I mean, you're right, we're coming up in
Speaker 2: a business. The media moguls were Ted Turner, you know,
Speaker 2: Sumner Redstone, Ripper Murdoch. Is David Zaslov the new media
Speaker 2: mogul for the kids out there today coming up in
Speaker 2: the business? Is he it? Dude?
Speaker 1: Did you read the New York Times this morning? I
Speaker 1: did ripping on Jeff Zucker for having tears in his eyes. Yes,
Speaker 1: after Zucker was like I needed you as a friend.
Speaker 2: Yep.
Speaker 1: I mean that guy sounds pretty harsh. Do you want
Speaker 1: a friend like that?
Speaker 2: I don't know. I don't know.
Speaker 1: Do you want a boss like that? Do you want
Speaker 1: an employee like that? Would you want to be in
Speaker 1: the same room as a person like that? I mean,
Speaker 1: I don't know if it's true. I'm just reading the
Speaker 1: Time story, but you know it's rough.
Speaker 2: So Lauren, tell us about Zaslov.
Speaker 9: So I will I'm going to answer your question though,
Speaker 9: I think the new media mogul is Jeff Bezos, who
Speaker 9: now no longer runs Amazon, the guy who started Amazon
Speaker 9: Prime is a media mogul. I think it is possible.
Speaker 9: It is one of the few streaming services that survives
Speaker 9: because it's got Amazon e Commerce, right, and Amazon Music
Speaker 9: and Amazon and MGM's library. You know, I think the
Speaker 9: new definition of media mogul. It's too small. David Seslov
Speaker 9: is too small. The company runs is too small.
Speaker 1: But is Amazon kind of an also ran to Apple
Speaker 1: because Amazon Music? What I use Apple Music?
Speaker 2: You know?
Speaker 1: Amazon Prime, Yes, I have it, but Apple TV is
Speaker 1: much sexier.
Speaker 2: Right.
Speaker 1: Why Why isn't Apple the big media mogul.
Speaker 9: Well, I guess from a media mogul point of view,
Speaker 9: I mean somebody who runs around Hollywood, Okay, doesn't just
Speaker 9: mean you run a business like there's like literally, when
Speaker 9: I think of I do cover Apple. When I think
Speaker 9: of them, I think of these, you know, brainiac guys
Speaker 9: designing beautiful pieces of hardware, where services is sort of
Speaker 9: the add on to keep their hardware selling.
Speaker 6: None of them feel like moguls to me. Literally, the
Speaker 6: opposite of.
Speaker 9: Moguls, like down to earth engineers with beautiful design characteristics.
Speaker 6: None of that is about having lunch at Spagos.
Speaker 1: Meanwhile, Jeff Bezos is ripped. Yeah, he's got a trainer
Speaker 1: coming every day. I mean, I don't know, he looks
Speaker 1: like he does.
Speaker 2: So Laura talk to us about Meta. You got you
Speaker 2: have been kind of underperformed on the stock. It's just
Speaker 2: been ripping. What do you think is going on there
Speaker 2: with the stocks?
Speaker 5: What?
Speaker 1: He works in good shape too, Yeah, he is.
Speaker 2: So what do you think is happening over at Meta?
Speaker 2: And maybe what the street might be missing or maybe
Speaker 2: you know what you're seeing.
Speaker 6: Yeah, so I think I think near term, he cut
Speaker 6: a lot of people. Last year.
Speaker 9: He cut twenty five percent of his labor force, which,
Speaker 9: as you know, Paul destroys morale for an enterprise. So
Speaker 9: he cut twenty five percent of his people, and he
Speaker 9: had anniversaried the negative comps member. He said when iOS
Speaker 9: changed its privacy policy, when Apple changes privacy policy, he
Speaker 9: was going to lose ten billion dollars in revenue.
Speaker 6: He did that for a year, So his revenue went
Speaker 6: negative for a year.
Speaker 9: So he's back to positive revenue growth and acceleratingly positive
Speaker 9: revenue growth, and he has twenty five percent fewer employees,
Speaker 9: so right now that stocks on a tear this year
Speaker 9: because of those fundamentals. In the near term, our cell
Speaker 9: is predecorated on three things. One, he doesn't control his
Speaker 9: content or his distribution. His content is us as user
Speaker 9: generated content, and they're moving to TikTok, and they're taking
Speaker 9: their clients to TikTok, and they add revenues following them
Speaker 9: to TikTok.
Speaker 6: So the competitive situation in his.
Speaker 9: Core business is really bad, and the regulators are late,
Speaker 9: so they think he's a monopolist, so they're going after
Speaker 9: him for his market position three years ago. So he
Speaker 9: has regulatory headaches that cost a fortune and distract the
Speaker 9: whole enterprise. So he's got regulatory hassles of being a
Speaker 9: monopolist when early TikTok is shipping away at his base,
Speaker 9: and then the metaverse spending is coming back next year.
Speaker 9: And now he has a whole new spending category which
Speaker 9: is called jenerative AI, which should be a huge revenue generator,
Speaker 9: except he's giving away.
Speaker 6: His large language model. He's not charging for it.
Speaker 9: So here's another big cost like center called jenerative AI,
Speaker 9: and he's making his everything he does there. He's giving
Speaker 9: away in an open in an open large language model.
Speaker 9: So you know, none of this is good fundamental outlook,
Speaker 9: even though this year I'm getting really killed. My rating
Speaker 9: is wrong this.
Speaker 2: Year, all right, So what what are you? What are
Speaker 2: you really spending your time on these days? Is it?
Speaker 2: Is it? Apple? Where do you think your client should
Speaker 2: be thinking about it for the next one to two years, because, boy,
Speaker 2: you take a look at some of the traditional media
Speaker 2: companies that you and I grew up with, that's a
Speaker 2: tough call right now.
Speaker 9: Yeah, Unfortunately, I think I think all these media companies
Speaker 9: have become too small. I mean, when you have somebody
Speaker 9: like Apple generating ninety billion a year and Google meaning
Speaker 9: Alphabet generating sixty billion dollars a year of free cash flow,
Speaker 9: that's like bigger than the market cap of like a
Speaker 9: bunch of these companies combined. So I think the answer
Speaker 9: is the old media companies need to merge into these
Speaker 9: global distribution juggernauts.
Speaker 6: They need to get bought by them. The problem is,
Speaker 6: you know, Washington, d C.
Speaker 9: With Democrats at the head of every agency, it's very
Speaker 9: tough to get acquisitions done. So what these media companies
Speaker 9: need to be doing is shrinking meaning laying off people,
Speaker 9: increasing their dividend, and they've become value plays.
Speaker 6: They are no longer growth businesses.
Speaker 2: Is there a shakeout here? Is there still maybe consolidation
Speaker 2: of media company A media company b getting together last gasp?
Speaker 6: Yeah, I mean I think I.
Speaker 9: Think it's I think there's a widely almost a consensus
Speaker 9: rumor in a sense that Paramount's too small needs to
Speaker 9: get bought. It owns CBS, so it cannot be bought
Speaker 9: by NBC, which is Comcast. It cannot be bought by ABC,
Speaker 9: which is the Walt Disney Company, so it can't be
Speaker 9: bought by Fox, which it was Fox. So really, David
Speaker 9: zaslom Or, you know, I guess like Amazon could buy
Speaker 9: it or something. But I think there's sort of a
Speaker 9: consensus that probably Warner Brothers Discovery buys Paramount because it
Speaker 9: can own it doesn't donate in broadcaster already.
Speaker 2: Right, all right, Lauren, thanks so much for taking the time.
Speaker 2: I always appreciate getting some of your Timelare Martin. She's
Speaker 2: a managing director, Senior Media and Internet Analyst at Needham
Speaker 2: and Company. She's been based out on the West Coast
Speaker 2: her entire career, so she's kind of right in the
Speaker 2: backyard of kind of what's happening out there in the
Speaker 2: world of.
Speaker 1: Thanks for listening to the Bloomberg Markets podcasts. You can
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