Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm m keene
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Joining
Speaker 1: us now, I'm pleased to say as a man whose
Speaker 1: work has taken him from the Federal Reserve, to the
Speaker 1: International Monetary Fund, to city and now to the Milken Institute,
Speaker 1: where he joins us from it's Bill Lee, the chief
Speaker 1: economist of the Milken Institute. Its great to catch up
Speaker 1: with you, Mr Bill Lee. Um, can we just begin
Speaker 1: with the government shutdown? And how much longer does this
Speaker 1: need to go on before you start having to to
Speaker 1: revise your first quarter GDP estimate in the United States? Well,
Speaker 1: I think this is a lot of noise, and I
Speaker 1: think the mark It's treating it like a lot of noise.
Speaker 1: So I don't think we'll do anything to our GDP
Speaker 1: numbers because, let's face it, the government workers get paid regardless,
Speaker 1: and and the thing that's disruptive right now is the
Speaker 1: supply of government services, which on average really has been
Speaker 1: relatively smooth so as far as our GDP forecast is concerned,
Speaker 1: absolutely no effect. One of the things that we should
Speaker 1: be worried about is what this means for the prospect
Speaker 1: of further policies like infrastructure and the rest of the
Speaker 1: Trump agenda. If we have children arguing about politics, the
Speaker 1: best thing I think the president can do right now
Speaker 1: is get himself out of here, which is done. He's
Speaker 1: gonna go to dapost and talk about globalism and internationalism
Speaker 1: and how the world is going to have have this
Speaker 1: world in transition, how we're going to manage policy in
Speaker 1: that world, and to be an adult in a playground
Speaker 1: of children in here in Washington. Well, let's some use
Speaker 1: your phrasing the playground of children in Washington before we
Speaker 1: get to Dabo, Swissland with Tom Kane bill Um, what
Speaker 1: is this mean for the potential agreement if there could
Speaker 1: be one around the dead sailing which is set to
Speaker 1: come around in the next couple of months. Yeah, that's
Speaker 1: but that's key, Jonathan. I mean the act that we
Speaker 1: have a couple of months and and that we know
Speaker 1: the churchy can do something extraordinary measures to manage their
Speaker 1: cash flow. Uh markets as and as you know, just
Speaker 1: have not reacted to this. And if you look at
Speaker 1: past experience, the one thing that we always prioritize are
Speaker 1: the interest payments on the debt and and and not
Speaker 1: to go to technical default. So one of the things
Speaker 1: that that we should worry about then would be how
Speaker 1: it is that the politics starts to come into play
Speaker 1: here and whether or not the political capital is being
Speaker 1: used up on the part of the Republicans and Democrats,
Speaker 1: because neither side shows any sign of life. But then
Speaker 1: the policy, Remember the policy that worried about is immigration policy.
Speaker 1: This is a global problem. That's why we had Brexit,
Speaker 1: right because part of the reason is because the immigration
Speaker 1: policy was was threatening a national sovereignty. So so this
Speaker 1: is a big issue of global issue and and I
Speaker 1: think they have to address it. And I think right
Speaker 1: now Congress has passed the book for so long, it's
Speaker 1: about time the President says, look, do something about it.
Speaker 1: Building the Milk institu Chief Economists, you want to us
Speaker 1: to down Bloombecks advantage. I'm Jonathan Farall in New York City.
Speaker 1: Tom Kane over in Davos, Switzerland. Tom, good morning to you, sir.
Speaker 1: Good morning John Farrell, a snowy DeVos record snow and DeVos,
Speaker 1: I haven't seen a really detailed history of the January
Speaker 1: snow here, but I am certain it is record back
Speaker 1: fifteen and even twenty five years, easily a hockey goal
Speaker 1: of snow on the ground all the way up and
Speaker 1: down the mountain. And John, as you know, getting here
Speaker 1: can be a challenge, and you know, I think there'll
Speaker 1: be some real challenges and getting the warm bodies up
Speaker 1: the mountain here in the next twenty four hours, warm
Speaker 1: bodies not your south Tom, can you have to get
Speaker 1: the train all the way out the mountain. I suspect
Speaker 1: that the President the United States is going to take
Speaker 1: around a different route up to the mountains that I'm
Speaker 1: that you took. Tom, Well, that's true. I think I
Speaker 1: think the President's visit is clearly a high point here,
Speaker 1: but of many high points. And William Lee, what was
Speaker 1: so interesting this morning? And I guess it's not that
Speaker 1: I expected this, but it's the surprise of this Monday
Speaker 1: folks at the at the meetings is the talk of
Speaker 1: Mr McCraw. He is Ben Billy on an international mission
Speaker 1: for France and for a certain McCraw macrown international economics
Speaker 1: define that for our audience. What is the economics of
Speaker 1: the president of France. You know, Tom, we have both
Speaker 1: joked in the past about how France is sort of
Speaker 1: like the the hub of regulatory impass and policy impass,
Speaker 1: and how France really has seen it's better day in
Speaker 1: the past. Macrown is trying to change all that and
Speaker 1: trying to say our policies are gonna put France back
Speaker 1: into the center of the dynamic of capitalism again. Now
Speaker 1: I think we both are sort of chuckle and saying, well,
Speaker 1: good luck on that, because you have a lot of
Speaker 1: bureaucracy to overcome, a lot of historical regulation overcome. One
Speaker 1: of the things that that we need to make sure
Speaker 1: of is that the political leaders would come to Davos
Speaker 1: talk a good story, but let's see the action. Last year,
Speaker 1: the president of jen Pain came from China and said,
Speaker 1: I am a globalist. And what's happened since then, One Belt,
Speaker 1: one road is falling apart, trying to say TRYA is
Speaker 1: just too dominant here and we just can't lease our
Speaker 1: sovereignty to China. I think this this year, we need
Speaker 1: to watch out for what the political leaders say because
Speaker 1: it has to be backed by action. I've got to say, Bill,
Speaker 1: the point you make that, Tom, the idea that the
Speaker 1: president of China was able to go to Davil Switzon
Speaker 1: and claimed to be a globalist is something that's still
Speaker 1: still makes me shake my head to this day. I agree,
Speaker 1: and I will say this in folks, this is my
Speaker 1: fourteenth year up Happy Valley. I will say that this
Speaker 1: valley came to a total stop when the President of
Speaker 1: China spoke last year. I wonder if that's gonna happen
Speaker 1: on Friday with a scheduled speech of the President, Bill Ye,
Speaker 1: what kind of economy is a president bringing with us
Speaker 1: he wants to take a victory lab I'm now twenty
Speaker 1: six thousand. Is it a three percent GDP economy? Tom?
Speaker 1: It took Nixon to go to China, is going to
Speaker 1: take Trump to talk about globalism. And I think one
Speaker 1: of the things that we're gonna see is a new
Speaker 1: sense of globalism that includes national priorities. And I hope
Speaker 1: he makes that speech. I hope it makes that transition
Speaker 1: because it's so important. One of the things that we're
Speaker 1: going to worry about in our own milk and conference
Speaker 1: in in later April early May is navigating a world
Speaker 1: in transition, and I think one of the things that
Speaker 1: that that differs from what you guys are addressing is
Speaker 1: that you see, the world is fractured right now, and
Speaker 1: how do you deal with that fractured nous? Navigating that
Speaker 1: transition is part of that fractured nous, and I think
Speaker 1: one of the things that that that has to be
Speaker 1: done is to have policies in place that take into
Speaker 1: account the realities of the world. We have political fractured nous,
Speaker 1: we have economic fracturedness, and financial fractured nous. But now
Speaker 1: how do you navigate that? And I think that's one
Speaker 1: of the themes that we'll be discussing in Los Angeles.
Speaker 1: So come to the warm weather. It's on. But this
Speaker 1: doesn't have to be a difference between globalism and nationalism.
Speaker 1: When the President the United States goes to DAVL. Switzer
Speaker 1: and I go back to the idea that the Chinese
Speaker 1: president was able to go to Davos and claim to
Speaker 1: be a globalist, why is this administration failing to deliver
Speaker 1: what is quite a simple message that the current framework
Speaker 1: for global trade is not there, It is not a
Speaker 1: level playing field. The Chinese still have significant barriers to
Speaker 1: entry at the same time they are leveraging the open
Speaker 1: door to markets in Europe and to markets in the
Speaker 1: United States as well. Why is this administration really failing
Speaker 1: to deliver what is at his core quite a simple
Speaker 1: and basic message that I think many economists might agree
Speaker 1: with that there needs to be a leveling of the
Speaker 1: playing field here. Absolutely, And I think it's unfortunate that
Speaker 1: the election placed Trump in this in this box that
Speaker 1: characterized him as some wild man who's gonna shut down
Speaker 1: trade and shut down all the borders and shut down
Speaker 1: all of the entry into the US and make it
Speaker 1: an isolated or target economy. One that that is the
Speaker 1: image that he's got to get rid of and say, look,
Speaker 1: we're part of the global economy and we're trying to
Speaker 1: develop internationalism into a bilaber set of bilateral deals instead
Speaker 1: of this big, massive multilateral deal that nobody's happy with.
Speaker 1: And so so the essence is the new shaping of
Speaker 1: policy initiatives has got to be to deal more with
Speaker 1: the reality is the world and how to address them. Finally, Bill,
Speaker 1: can he do that? This week? Boy fingers crossed. I
Speaker 1: think the talk among the globalists and internationalist is the
Speaker 1: guy isn't smart enough to really pull this off. And
Speaker 1: I hope he's going to surprise him on the upside
Speaker 1: on that, because right now the British obleek crowd are
Speaker 1: writing it off and say he's just going to make
Speaker 1: a fool of himself. Let's see if he does. Bill
Speaker 1: Ye Milkin Institute Chief Economist. He joins us to discuss
Speaker 1: the global economy. This is Bloomberg Surveillance with myself, Jonathan
Speaker 1: Pharaoh in New York City and Tom Keane in Davos, Switzerland,
Speaker 1: all week on Bloomberg Radio. What better time to bring
Speaker 1: in a guest who has created and produced high profile
Speaker 1: platforms including the World Economic Forum and You're meeting at Davos,
Speaker 1: the Clinton Global Initiative, and the Noble Laureates Conferences, just
Speaker 1: to name a few you. His name is Richard Attias
Speaker 1: of Richard Attias and Associates. Richard, it's always great to
Speaker 1: have you with us on the program. Thank you for
Speaker 1: having me. Let's imagine you're putting together a big event.
Speaker 1: It's in the Mountains of Devils, Switzerland, and then all
Speaker 1: of a sudden, the President of the United States decides
Speaker 1: that he's going to attend just a couple of weeks
Speaker 1: before it kicks off. How much trouble does that cause?
Speaker 1: Oh you know, it happened in two thousand when President
Speaker 1: Clinton decided to come. I think it was the last
Speaker 1: one who came. Of course, it's a logistic nimer, usually
Speaker 1: Air Force one just landing Zurich when you have to
Speaker 1: probably take helicopters to go to Davos, and we don't
Speaker 1: know what would be the weather on Friday, which is
Speaker 1: the second potential nightmare with the snow, because if the
Speaker 1: snow do not allow helicopters to land, if they have
Speaker 1: to take cars, which is another backstory. And then definitely
Speaker 1: the city is much looked than any any other day,
Speaker 1: and usually when the room is backed, everyone wants to
Speaker 1: attend the station. Definitely, the president of your night state,
Speaker 1: whoever he is, is by definition or rock star, so
Speaker 1: it's definitely a nightmare, and the city is people are
Speaker 1: making big lines, so you can guess how it is
Speaker 1: when the President of the United States of America is
Speaker 1: going somewhere. So it's even worse than a very small
Speaker 1: ski resort with snow and and three thousand delegates, including
Speaker 1: big global CEOs, who do not understand why they should
Speaker 1: wait to to give room to the President of the
Speaker 1: United States of American. Kane also hates waiting, Richard, And
Speaker 1: it's a group of big egos, so you have to
Speaker 1: manage these egos, Rachel, I guess a big question and
Speaker 1: logistical nightmare. But surely this is a pr dream. Yes, no, definitely.
Speaker 1: You know, I think President Trump if he goes, because,
Speaker 1: to be honest, I would not be surprised depending on
Speaker 1: what happened with the government shutdown, if we suddenly learned
Speaker 1: that he's not going anymore. But I think it doesn't care.
Speaker 1: To be honest, he wants to go there. He wants
Speaker 1: to talk to this elite. I'm sure he wants to
Speaker 1: be a little bit provocative. And as you know better
Speaker 1: than me, his way of communication is direct communication. He
Speaker 1: cannot just continue to talk through Twitter. He doesn't want
Speaker 1: to make big interviews. So who will go and he
Speaker 1: will be on stage. What will be interesting to see
Speaker 1: and to watch is which format the Print of the
Speaker 1: United States will adopt, will be only a speech between
Speaker 1: behind the lecturing with no questions, or if he will
Speaker 1: accept to maybe take two three question, probably not from
Speaker 1: the floor from the audience, but president probably from the
Speaker 1: founder of the World Economic Farm, which probably will be
Speaker 1: with him on stage. I hope that this question, if
Speaker 1: they happen, will be very direct and it will help
Speaker 1: to learn what is happening and what is in the
Speaker 1: mind of the President Trump. That's a terrific summary. And
Speaker 1: of course, as comes from your your decades of experience
Speaker 1: for chard, well, when I look at the options that
Speaker 1: the president has, which would you would I will do?
Speaker 1: I would definitely do both. Which is delivering a twenty
Speaker 1: minute speech followed by probably a ten fifteen minute Q
Speaker 1: n A station Why because people need to understand really
Speaker 1: what President Trump has in mind, especially with all these reforms.
Speaker 1: We know that he would probably talk for twenty minutes
Speaker 1: about how America is great, the best place to invest,
Speaker 1: because he will be competing with many other destinations. You know,
Speaker 1: each single world leaders who are in divorce from President
Speaker 1: Macrie of Argentina, President mccron France, and probably even Theresa
Speaker 1: May in the big paradox of the Brexit, are going
Speaker 1: to divorce to explain to world leaders that their country
Speaker 1: is the best place to invest today. And at the
Speaker 1: time is now President mccron is hosting the minute We're
Speaker 1: talking in Paris a pre divorce forum at Versailles in
Speaker 1: the Castle of Oversailles with one d and fifty global
Speaker 1: CEO who accepted his invitation, which was sent on the
Speaker 1: end of December. So this is showing you how world
Speaker 1: leaders are in permanent now connection with global CEOs and
Speaker 1: how global CEOs wants to be connected to world leaders.
Speaker 1: So back to President Trump, I think definitely he should
Speaker 1: explain what he's doing. You know, everybody is watching the
Speaker 1: great stock markets in America, so people have to understand
Speaker 1: if it is a bubble or if it is solid,
Speaker 1: and why I should put my money in the American industries.
Speaker 1: And when I look at the list of potential members
Speaker 1: of cabinet coming with him, definitely they will have bilateral
Speaker 1: meetings talking about transportation, health, scare, energy. These are definitely
Speaker 1: the sectors where people wants to probably see opportunities in
Speaker 1: the country. Richards of Richard ass and Associates great catch
Speaker 1: up with you to kind of lean on your experience
Speaker 1: of putting up events like the World Economic Forum in
Speaker 1: Dallas Switzen together. As the President of the United States
Speaker 1: is sent to descend on Switzerland, John, the snow is
Speaker 1: so great here and it is not funny. It is
Speaker 1: very serious in Switzerland, and that of course is avalanches.
Speaker 1: I have never seen the warnings out. There's Zermont I
Speaker 1: believe is closed again, down to the south and um,
Speaker 1: it's just everywhere. It's here. Here's the report at five
Speaker 1: pm last night. John, you'll love this site. Psalms to
Speaker 1: go ben schnee gafallen as Edward teddy Off Montaugs invite
Speaker 1: there Stark schniffal voras gagnd. That's very helpful. That's about it.
Speaker 1: That is about as clear as a government shutdown language Washington.
Speaker 1: Which is a good way to migrate in German or
Speaker 1: fractured German, I should say to the fractured nation and
Speaker 1: is shut down, Greg Valier, where this is German is
Speaker 1: is better than anybody's. German is better than mine. Greg,
Speaker 1: good morning. You have seen you've seen many shutdowns. The
Speaker 1: one that's so different here is this White House response.
Speaker 1: What will you listen for or look for from the
Speaker 1: White House in the next forty eight hours? Well, Tom,
Speaker 1: something explicit, something coherent from the President. I mean, so
Speaker 1: far it's very unclear. Just what do you want? I
Speaker 1: I look at it, Greg, and I think all of
Speaker 1: us have read the obligatory articles, and we've looked at
Speaker 1: the obligatory things and open question. What sticks out to
Speaker 1: Greg Valier about what went down? What? What? What made
Speaker 1: you scratch your head at two am? All beyond any question, Tom,
Speaker 1: the fact that Schumer put the wall on the tape. Boy,
Speaker 1: he is willing to negotiate on the wall. Very unclear
Speaker 1: as to how much money. They're talking about different versions,
Speaker 1: but he did put that on the table, and I
Speaker 1: think that's important. Greg alone wants you a question about
Speaker 1: the term the white House. Tom asked you where the
Speaker 1: White House stands on this issue. It's not clear to
Speaker 1: me that the view of the say White House is
Speaker 1: necessarily the view of the President of the United States.
Speaker 1: That doesn't seem to be one coherent view within the
Speaker 1: White House. Is something that Tom's asked me about this morning.
Speaker 1: Do you see a coherent White House here? Greg, Well,
Speaker 1: when you look at two important aids, the chief is
Speaker 1: past John Kelly and this fellow Miller. I mean, they
Speaker 1: both are very hard line on immigration. They don't want
Speaker 1: consul citizenship, they want a wall, they don't want chain immigration,
Speaker 1: all this stuff, so that they are taking a hard line.
Speaker 1: The problem is when the president gets into a negotiating session,
Speaker 1: he spens he wants to be conciliatory, and then these
Speaker 1: advisors yanked him right back. So what leads to reconciliation
Speaker 1: here is that the polls went against one party versus
Speaker 1: the other. What leads to a break here? That could
Speaker 1: be it, But frankly, I think this is going to
Speaker 1: go on for a very long time. Even if there's
Speaker 1: a deal today to keep the government open until February eight,
Speaker 1: that just means we have another crisis on February eighth,
Speaker 1: and we could go that right back into a shutdown again.
Speaker 1: Here's the problem. Both parties have activists on the right
Speaker 1: and on the left who will not agree to a
Speaker 1: centrist deal, and these activists could preclude a deal quite
Speaker 1: a while. You do this, Greg, in your report this morning,
Speaker 1: you say the center may not hold. I get that,
Speaker 1: but there has to be a catalyst to common sense.
Speaker 1: What's the catalyst? Well, I think Ms McConnell plays a
Speaker 1: big role here. He he's very conscious that they could
Speaker 1: have big losses in the November elections. I think he
Speaker 1: also was a gas at this idea of changing the
Speaker 1: filibuster rule. I think he feels that many people do.
Speaker 1: Schumer overplayed his hand. So I think McConnell could play
Speaker 1: actually a very constructive role. Okay, So so he can
Speaker 1: play a constructive role, and I guess we need leadership.
Speaker 1: Let me circle back to my first question. If we
Speaker 1: all assume, whether we support Mr Trump or not, that
Speaker 1: this president is a political neophyte, where's the person to
Speaker 1: teach him what to do in these unusual circumstances. I
Speaker 1: I Lindsey Graham is clearly front and center, is a
Speaker 1: unique kind of Southern always intriguing Republican. But where's the
Speaker 1: helper of the president in this mess? It could be
Speaker 1: in McConnell. I think Graham is a bit tainted at
Speaker 1: the White House. You know another thing that could maybe
Speaker 1: chasing this president, since he's so obsessed with the markets.
Speaker 1: If the dollar in the market start to weaken based
Speaker 1: on a seer of utter chaos in this city, that's
Speaker 1: something that would get Trump's attention. Well, Greg, that's not
Speaker 1: gonna work because it's not happening yet. And I remember
Speaker 1: when the president, not his states she used to be
Speaker 1: called barracabam in President Obama came out and said things
Speaker 1: like the market should be worried, and it was the
Speaker 1: odd dead seating debate. And guess what, the market wasn't worried,
Speaker 1: so it wouldn't be the first one that try to
Speaker 1: lean on the market to move things along. Give framed
Speaker 1: this as an activist Democrats versus activists Republican story, and
Speaker 1: within the core of those parties, within the electorate remains
Speaker 1: those activists on either side. But are those activists willing
Speaker 1: to shut down the government for their cause? Does that
Speaker 1: support remain? Yes, I do. I think for now they are,
Speaker 1: and as we as we discussed earlier, maybe if the
Speaker 1: polls turn, it would change attitudes, but right now they're
Speaker 1: dug in pretty good. And again I would caution everyone
Speaker 1: if there's a deal in the next day or two
Speaker 1: or three, that does not mean we get anything by
Speaker 1: February eight. And this we could go right back into
Speaker 1: a crisis in two and a half week. So, Greg,
Speaker 1: what does a crisis actually look like? It's a strong word.
Speaker 1: What's the crisis in the nation's council? Yeah, I think
Speaker 1: a crisis is eight or nine hundred thousand people out
Speaker 1: of work and that eventually have an impact on consumer spending. Uh,
Speaker 1: it certainly has an impact on defense contractors who already
Speaker 1: are confused. We're four months into a new fiscal year
Speaker 1: and they don't know what their budgets are going to be.
Speaker 1: So this does become a confidence issue. We're not there yet,
Speaker 1: but at three or four or five weeks shutdown and
Speaker 1: I think confidence starts to erode. So correct, Let's get
Speaker 1: to the bigger issue. The markets looking the other way
Speaker 1: as far as the governments shutdown is concerned, at least
Speaker 1: for now, might change, but it isn't at the moment.
Speaker 1: Let's get to the debt ceiling debate. What's the read
Speaker 1: across from this to the debt ceiling debate and how
Speaker 1: ugly that could be in the coming months. Yeah, this
Speaker 1: is just like the order. This is like the appetizer.
Speaker 1: The death failing story probably will peak in early April.
Speaker 1: And here's here's the bottom line. There are not enough
Speaker 1: votes to raise the death failing, certainly not enough votes
Speaker 1: among Republicans who won't do it. Will Democrats go along
Speaker 1: and cooperate? I'm not so sure. Oh yeah, thank you
Speaker 1: so much. Greatly appreciate the briefing. After what has been
Speaker 1: and exhausted, we can we can. It's say enough about
Speaker 1: his Horizon investment effort to greet our morning with his
Speaker 1: perspective on capital. I have really been looking forward to
Speaker 1: this discussion. It's away from Davos, I guess, it's away
Speaker 1: from economics, I guess, And maybe it's just about where
Speaker 1: we're all heading in our homes. Yes, in our businesses,
Speaker 1: but in our homes with this thing called media. Craig
Speaker 1: Moffatt and Michael Nathanson have a shingle out of excellence
Speaker 1: on media and telephonic analysis at Moffatt Nathanson. They worked
Speaker 1: for years at Sanford Bernstein, and Michael Nathanson joins us
Speaker 1: right now. Michael, I could start with eight topics, but
Speaker 1: I'm going to give you an open question of the
Speaker 1: cliche of a decade ago, which is content is king?
Speaker 1: Is content still king? The morning? Tom Um? I think
Speaker 1: I think we're moving to something called platform is king.
Speaker 1: I think it's about getting massive aggregation, scale and content.
Speaker 1: Your Your content doesn't have to be the best content
Speaker 1: in the world, but if you have enough connected homes,
Speaker 1: enough subscribers, it's good enough. And I think that's what
Speaker 1: Netflix has proven. They've got some good content, but they
Speaker 1: also have a hundred million subscribers. So better content maybe
Speaker 1: squeezed out on smaller platforms. So I think we're now
Speaker 1: moving into an era where scale, maybe it's astitution scale,
Speaker 1: maybe it's a platform scale. Scales are gonna matter, Michael.
Speaker 1: For a moment, we thought that could be only one winner,
Speaker 1: and many people identified that one winner as Netflix. We're
Speaker 1: now seeing Netflix become less dependent compared to where they were,
Speaker 1: say a couple of years ago, on other people's content.
Speaker 1: Can there be more than one winner in this space? Oh, John,
Speaker 1: without a doubt. And since they've last seen you about
Speaker 1: a month ago, we've had that Fox Disney merger. Right,
Speaker 1: if you look at the content that they're going to
Speaker 1: a mass, they're in pretty good shade. Now they have
Speaker 1: to build their platform. But I think what the market
Speaker 1: to maybe missing here is that it is not a
Speaker 1: winner take all business. You see it in broadcasts with
Speaker 1: three or four networks, to see it on premium channels
Speaker 1: with HBO Showtime, you're gonna have more than one s
Speaker 1: FOD winner. Netflix is definitely one. Disney Fox could be
Speaker 1: the second. Amazon is going to be a third. Uh
Speaker 1: So yeah, I think it'll be a much more competitive landscape.
Speaker 1: And finally, Disney has woken up and said, you know,
Speaker 1: we should be in this business. Am I buying Fox?
Speaker 1: They've bought more long tail library content to put on
Speaker 1: that platform, so that's where they're moving towards. So it's
Speaker 1: gonna be interesting, Michael, to see what they do with
Speaker 1: the content they have acquired from Fox and how they
Speaker 1: treat Netflix with some of the content that runs on Netflix.
Speaker 1: They've already said on the Disney side of things that
Speaker 1: they're going to sever any license agreement with Netflix going forward.
Speaker 1: Are they going to do the same thing with the
Speaker 1: Century Fox assets? Do you think? Michael? Oh, without a
Speaker 1: doubt that we did a note about this a couple
Speaker 1: of months ago, and we went through Netflix's catalog and
Speaker 1: we said that Fox very quietly had supplied Netflix with
Speaker 1: some of their best shows a Family Guy or the
Speaker 1: f X shows, Um, It's always sunny in phil They
Speaker 1: basically gave them a lot of great content. They've been
Speaker 1: saying very quietly that they're pulling content off on Netflix
Speaker 1: and they've gotta put it on Hulu, which is now
Speaker 1: owned by Disney. So I think both Fox and Disney's
Speaker 1: content will not be on Netflix a year and a
Speaker 1: year and a half from now. I mean all this
Speaker 1: copyrighted material in the argument over writes it, does it
Speaker 1: make the valuations just go up up up? If there's
Speaker 1: I mean, there's too much stuff, Michael for me to
Speaker 1: watch or anybody in my family to watch. But does
Speaker 1: the glut of content just continue? Tom, It's funny. I
Speaker 1: was talking to my wife bat this morning. There's five
Speaker 1: dred new scripted shows on the air in in Countyr seventeen.
Speaker 1: Five scripted shows. There's no way that any family can
Speaker 1: stay on top of that, right, So you default to
Speaker 1: a couple of shows that you've heard of, But you
Speaker 1: also go back to cattle, you know, for comedies, you
Speaker 1: watch Scifel, Friends, Family Guy, it's you know, big bang theory.
Speaker 1: So there's definitely gonna be more and more content produced,
Speaker 1: but you'll have less time to consider that content. You'll
Speaker 1: stick to some of the long tail, big, big name content,
Speaker 1: and then you will probably go back to things that
Speaker 1: you're comproble with. So buying a library is gonna go
Speaker 1: up in value, you know, it really will be. It's
Speaker 1: gonna be. You don't want to be in the business
Speaker 1: of having small, you know, unknown shows like some of
Speaker 1: our cable networks, where you basically don't get traction. You
Speaker 1: keep investing in more and more shows, being you're getting
Speaker 1: no attraction. So that's a tough place to be. And
Speaker 1: we think a lot of cable networks are going to
Speaker 1: have to consolidate or basically stop spending because they can't
Speaker 1: make the money work anymore. So, Michael is a Giants fan.
Speaker 1: I won't ask you about the Super Bowl. Tom Kane might,
Speaker 1: that's up to him, but since we're sitting across from
Speaker 1: each other, I'll protect myself and will avoid that topic.
Speaker 1: But I do want to talk to you about the
Speaker 1: price of sports content. It's getting more and more expensive,
Speaker 1: whether it's over the Premier league rights in the United
Speaker 1: Kingdom and soccer rights there, or whether it's in the
Speaker 1: United States and in the NFL, etcetera. The price of
Speaker 1: sport and the content is getting more expensive. But as
Speaker 1: an asset, the eyes on that particular asset falling away,
Speaker 1: they're not increasing. So I don't see the growth in
Speaker 1: the viewership alongside the growth in the value that people
Speaker 1: are paying for these assets. That doesn't make sense to me. Michael,
Speaker 1: why are we still doing this? Okay, great question. We're
Speaker 1: doing this job because when when you turn on the
Speaker 1: TV set on a given night and there's a sporting event,
Speaker 1: you want that game to be on to last night's
Speaker 1: let's say last night's first game, because the second game
Speaker 1: is not good. But the first game Patriots, right, Pagriot Jacksonville.
Speaker 1: That's a game that you want to watch. And if
Speaker 1: you're distributor, if you're a cable operator, doesn't have that game,
Speaker 1: you're gonna switch cable operators. So I think what we're
Speaker 1: missing is the rate. Yes, ratings are coming down, with
Speaker 1: a passion for the people who remain to watch that
Speaker 1: is incredibly high. And therefore, if you don't have that
Speaker 1: as a strict you'll lose a customer. So unfortunately it's
Speaker 1: it's a shrinking contributor to the ecosystem, But as a
Speaker 1: as a passion play, it's nothing better, you know, to
Speaker 1: dry people. What's your passion for? By hold cell? I mean,
Speaker 1: what's where's the value in this crazy bowl market and
Speaker 1: the Michael Nathan's and space? Yeah, Tom, you know it's interesting.
Speaker 1: The past couple of months have been really um surprising.
Speaker 1: We've seen we've seen it. So we have buys on
Speaker 1: Disney and Fox that's been consistently our buys because both
Speaker 1: those companies own a ton of life sports proprietary, proprietary content.
Speaker 1: So we're always been Disney Bowls, as you know, and
Speaker 1: we've been Fox Bowls absent that. In traditional media, we
Speaker 1: have a really hard time with all the changing um,
Speaker 1: you know, the changing landscape. And again we come back
Speaker 1: to we're a fang. We cover the fangs. Facebook and
Speaker 1: Google get seem to us as the place to go,
Speaker 1: and they are not that expensive relative to the growth
Speaker 1: they deliver, So our remain pretty barished on tradial media.
Speaker 1: You and I can't help but look at those fangs
Speaker 1: and say, you know, two of the three recover a
Speaker 1: really good value for the growth they deliver. We're gonna
Speaker 1: come back on that, I know, John Farrow and I
Speaker 1: want to talk about Facebook and the video. John one
Speaker 1: more question squeezing and when Mr Nations thank you. So
Speaker 1: I appreciate that, Micho, this conversation based on the assumption
Speaker 1: that the actual Disney Folksdale closes um could take a while,
Speaker 1: It might not happen. It's so where do you stand
Speaker 1: on that right now? What's the vice case for you? Guys? Well,
Speaker 1: let's say our our base our base case here is
Speaker 1: we were surprised that Disney, you know, that this deal
Speaker 1: included all the regional sports networks, because when Disney is
Speaker 1: going to own, if this deal goes through, will be ESPN,
Speaker 1: ABC and your local regional sports network. That seems like
Speaker 1: too much concentration or power. We're assuming that they're gonna
Speaker 1: have to divest the rs NS, the regional sports network.
Speaker 1: So we assume the deal goes through, but that Disney
Speaker 1: is going to have to divest an asset to get
Speaker 1: it through. And I don't think that that's not out
Speaker 1: of mainstream thinking. So that's not why they're buying Fox,
Speaker 1: and buying Fox for that TV and a film library
Speaker 1: and for FX, which is those three properties have a
Speaker 1: ton of content for the long, long run. Michael Nathanson
Speaker 1: with US thrilled, Davin with us with Mofatt Nathanson. Thanks
Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen
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Speaker 1: you prefer. I'm on Twitter at Tom Keane before the podcast.
Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio