WEBVTT - CVS Ousts CEO, China Data, Netflix Earnings 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.160 --> 0:00:13.320 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:17.040 Eastern on afocarplaying and broyd Outo with the Bloomberg Business app. 0:00:17.079 --> 0:00:20.279 Listen on demand wherever you get your podcasts, or watch 0:00:20.360 --> 0:00:22.800 us live on YouTube. 0:00:23.360 --> 0:00:26.439 One of the big stock stories of to day is CBS, 0:00:26.520 --> 0:00:30.880 the healthcare company. CBS stocks down today. Management change is 0:00:30.920 --> 0:00:32.360 never a good thing. We wanted to get to the 0:00:32.360 --> 0:00:34.120 bottom of it because a lot of people don't really 0:00:34.159 --> 0:00:37.400 know what CBS is. It's not CBS the television network. 0:00:37.560 --> 0:00:42.080 It's c and Victor and s CBS. Jonathan Palmer, he 0:00:42.120 --> 0:00:43.880 knows what's going on. He's a senior healthcare anles for 0:00:43.960 --> 0:00:46.680 Bloomberg Intelligence. Hey, Jonathan, thanks so much for joining us. 0:00:46.720 --> 0:00:48.120 I know you know this company. Well, can you tell 0:00:48.159 --> 0:00:51.600 us what CBS is and why the stock is down today? 0:00:51.640 --> 0:00:52.400 What's going on there? 0:00:53.479 --> 0:00:55.440 Yeah, Paul, thanks for having me on. So you know, 0:00:55.440 --> 0:00:58.720 most people think of CBS as their corner drug store, 0:00:58.760 --> 0:01:01.680 but really it's a far bigger healthcare company in the 0:01:02.080 --> 0:01:06.120 ecosystem than just that pharmacy that you see around your corner. 0:01:06.480 --> 0:01:09.640 They own the benefits manager Etna, and they also own 0:01:09.720 --> 0:01:13.360 what's called a large PBM, a pharmacy benefit manager called 0:01:13.440 --> 0:01:17.520 care Mark. So really it's a vertically integrated enterprise that 0:01:17.959 --> 0:01:20.480 you know, most people knows their corner pharmacy, but actually 0:01:20.560 --> 0:01:23.039 has a far bigger reach through the insurance side of 0:01:23.040 --> 0:01:26.080 the business as well. So the stocks down today. They 0:01:26.200 --> 0:01:30.120 pre announced earnings that missed. They announced the management change. 0:01:30.240 --> 0:01:34.560 The CEO has left. They're calling it a resignation, but 0:01:34.600 --> 0:01:37.080 this was really probably the last straw in her tenure, 0:01:37.880 --> 0:01:41.399 and they promoted the head of care Mark, the benefits 0:01:41.400 --> 0:01:44.040 manager and a longtime employee to become the new CEO. 0:01:45.319 --> 0:01:48.240 Talk us through the build up to this management change 0:01:48.240 --> 0:01:49.280 what was going on exactly. 0:01:50.920 --> 0:01:53.520 Yeah, So the story of CBS, or the narrative on 0:01:53.560 --> 0:01:56.880 the stock, has been one of missed expectations. You know, 0:01:56.920 --> 0:01:59.480 they've been trying to get back to the double digit 0:01:59.520 --> 0:02:02.560 EPs growth and they've put that out in the in 0:02:02.640 --> 0:02:06.520 the outer years, and they keep pulling back on that guidance, 0:02:06.560 --> 0:02:10.280 you know, both reaching that milestone, but also every year 0:02:10.320 --> 0:02:12.959 they've been kind of missing their EPs guidance, and so 0:02:13.400 --> 0:02:17.560 they'd already revised guidance down last year they revised guidance 0:02:17.600 --> 0:02:21.760 down with two Q earnings last quarter, and so really 0:02:21.800 --> 0:02:25.720 I think it's a question of execution. The CEO just 0:02:25.800 --> 0:02:28.840 hasn't executed on the game plan that she has spoused, 0:02:28.880 --> 0:02:31.920 and so they've got little they can do to kind 0:02:31.919 --> 0:02:34.840 of turn the story around other than making the management change. 0:02:35.200 --> 0:02:37.959 Thirty seconds, Jonathan, do you think it can be done 0:02:38.000 --> 0:02:38.960 and in what timeframe? 0:02:40.400 --> 0:02:40.640 Yeah? 0:02:40.680 --> 0:02:42.440 I do, you know, I think it's going to take 0:02:42.480 --> 0:02:45.880 a lot of blocking and tackling. But the hard part 0:02:45.880 --> 0:02:48.800 about this business is it's based on contracts, and contracts 0:02:48.800 --> 0:02:51.200 are typically two to three years, and so it's going 0:02:51.280 --> 0:02:53.320 to take it take some time to work through the 0:02:53.320 --> 0:02:57.360 headwinds that they're facing and their benefits business on the 0:02:57.360 --> 0:03:00.120 pharmacy side. But these can be overcome. 0:03:00.200 --> 0:03:02.440 All right, Jonathan, thanks so much for joining us. Jonathan Palmer, 0:03:02.520 --> 0:03:06.040 senior healthcare analyso Bloomberg Intelligence, joining us via zoom talking 0:03:06.040 --> 0:03:09.160 about CBS Health the economics of the healthcare business. I 0:03:09.160 --> 0:03:10.760 don't pretend to understand that. I think one of the 0:03:10.760 --> 0:03:13.720 most complex businesses to analyze. So we're glad we have 0:03:13.800 --> 0:03:15.440 a smart people like Jonathan Parker. 0:03:15.520 --> 0:03:16.280 The cupons are good. 0:03:16.840 --> 0:03:19.240 The coupons are good. Coupons we get some really good 0:03:19.320 --> 0:03:21.600 coupons for CBS through our CBS care Mark. 0:03:21.720 --> 0:03:26.280 Yeah, but in New York City, in New York City Weekly, exactly, 0:03:26.440 --> 0:03:28.600 you believe it, exactly. There you go, stock off eight 0:03:28.600 --> 0:03:31.000 and a half percent today. So again, maybe this is 0:03:31.040 --> 0:03:33.240 a little bit of a kitchen sink moment for the company, 0:03:33.240 --> 0:03:36.480 and Jonathan Palmer suggested there is a path towards improved 0:03:36.480 --> 0:03:39.040 profitability there, So we'll see how they do their. 0:03:40.360 --> 0:03:44.240 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:03:44.320 --> 0:03:47.880 weekdays at ten am Eastern on applecar Play and Android 0:03:47.880 --> 0:03:50.680 Auto with the Bloomberg Business app. You can also listen 0:03:50.760 --> 0:03:53.880 live on Amazon Alexa from our flagship New York station 0:03:54.240 --> 0:03:57.960 just say Alexa playing Bloomberg eleven thirty. 0:03:58.400 --> 0:04:01.880 China it's front center, not just for folks that invest 0:04:01.920 --> 0:04:04.760 in China or in emerging markets, but it's one could 0:04:04.840 --> 0:04:07.800 argue as the second largest economy in world. Everybody has 0:04:07.840 --> 0:04:10.520 to have a view on China. Our next guest, does 0:04:10.640 --> 0:04:16.640 Urar DiPippo, Senior geoeconomics analyst for Bloomberg Economics, joins us Geron. 0:04:16.720 --> 0:04:18.360 I guess the question a lot of people have as 0:04:18.360 --> 0:04:21.920 it releas to China is are their fiscal and monetary 0:04:21.960 --> 0:04:25.440 moves to support this economy? Are they enough? What do 0:04:25.440 --> 0:04:26.360 you think at this stage? 0:04:27.440 --> 0:04:30.880 So they've already announced monetary policies a few weeks ago, 0:04:31.120 --> 0:04:34.280 those by their centers are fairly aggressive. The big question 0:04:34.800 --> 0:04:38.279 is how big will the fiscal policies be. They the 0:04:38.360 --> 0:04:41.800 Ministry of Finance had a press conference on Saturday where 0:04:41.920 --> 0:04:45.760 reporters asked many questions, but they didn't provide any actual number. 0:04:46.040 --> 0:04:49.200 The reason for that is that in China, they actually 0:04:49.200 --> 0:04:52.240 need the legislator to approve any change in fiscal policy 0:04:52.640 --> 0:04:56.600 like government borrowing. They won't be meeting until probably late October, 0:04:56.640 --> 0:04:59.159 possibly early November, so we don't actually know, but I 0:04:59.160 --> 0:05:01.680 think that the general consensus is that there was sort 0:05:01.680 --> 0:05:05.840 of this initial euphoria in late September, which explains the 0:05:05.839 --> 0:05:07.760 massive stock market rally, that they were going to do 0:05:07.800 --> 0:05:10.279 this big bang stimulus. They kind of are on the 0:05:10.320 --> 0:05:13.000 monetary side, but it's not exactly clear yet whether they're 0:05:13.040 --> 0:05:15.120 going to do it on the fiscal side. But what 0:05:15.360 --> 0:05:18.320 sort of qualitatively what they're saying suggests that the early 0:05:18.360 --> 0:05:21.640 hopes of doing sort of a big consumer oriented fiscal 0:05:21.640 --> 0:05:24.159 stimulus that's likely not going to happen, but we're still 0:05:24.160 --> 0:05:25.359 waiting for the top line number. 0:05:25.760 --> 0:05:27.640 So what does this all mean for investors who are 0:05:27.640 --> 0:05:31.280 interested in equities in China? 0:05:31.360 --> 0:05:33.440 So I mean it was a good day for equities 0:05:33.440 --> 0:05:36.400 in China. The two big things that happened today were 0:05:36.480 --> 0:05:39.000 they put out their Q three data, which is generally 0:05:39.040 --> 0:05:41.920 above consensus, and how well it did, including for GDP. 0:05:42.320 --> 0:05:43.960 The other thing that might have helped for the stock 0:05:43.960 --> 0:05:47.279 market was that the PBAC reiterated that it has these 0:05:47.360 --> 0:05:50.960 these swap facilities, including to help companies buy back shares, 0:05:51.000 --> 0:05:53.839 which then puts up the stock market. In general. The 0:05:53.839 --> 0:05:56.680 stock market has done well over the last few weeks, 0:05:56.880 --> 0:05:59.440 but over the past year not so much. The Chinese 0:05:59.440 --> 0:06:03.120 stock market has sort of a feast or famine tendency 0:06:03.120 --> 0:06:04.960 when it comes to sort of boom and bus. This 0:06:05.000 --> 0:06:07.559 has happened over the past decade or so. It often 0:06:07.600 --> 0:06:10.200 sort of appears to underperform. Then there's a lot of euphoria, 0:06:10.240 --> 0:06:11.599 and then a lot of that is often based on 0:06:11.640 --> 0:06:14.320 what the government is doing. So I think what everyone 0:06:14.400 --> 0:06:16.880 is waiting for now is again, what is the actual 0:06:16.920 --> 0:06:20.039 top line number for fiscal fiscal stimulus, Because if it 0:06:20.040 --> 0:06:23.560 comes in below expectations. The rally, which has already given 0:06:23.640 --> 0:06:25.320 up some of its gains, could give up even more. 0:06:25.320 --> 0:06:27.920 But if it's actually at that level three trillion R 0:06:27.960 --> 0:06:31.120 and B, maybe more than you could see some upside. 0:06:31.440 --> 0:06:35.040 Hey, Gerard, I see that the China GDP numbers recently 0:06:35.040 --> 0:06:37.880 came out at rows four point six percent from last year. 0:06:37.880 --> 0:06:41.080 That's the slowest pace in six quarters. Is there still 0:06:41.160 --> 0:06:44.600 room to go in terms of decelerating booth or economists 0:06:44.600 --> 0:06:46.240 out there are they saying, hey, maybe we're atur near 0:06:46.320 --> 0:06:47.080 the bottom. 0:06:47.880 --> 0:06:49.880 So at Bloomerg Economics, we think they're probably at the 0:06:49.880 --> 0:06:52.680 bottom in terms of top line GDP growth, And in 0:06:52.720 --> 0:06:56.839 general the data was fairly good, so industrial production, retail sales, 0:06:57.200 --> 0:07:01.200 fixed ass and investment were all just slightly above the consensus. 0:07:02.120 --> 0:07:05.160 But the sort of broader bad news is that those 0:07:05.160 --> 0:07:09.800 things are still generally below the sequential trend. So consumption, 0:07:09.840 --> 0:07:13.160 particularly retail sales, is still well below its pre pandemic trend. 0:07:13.680 --> 0:07:15.920 And the bottom line is that even though the sort 0:07:15.920 --> 0:07:19.560 of top line number might have bottomed out, the economy 0:07:19.640 --> 0:07:22.000 needs more stimulus and that's what everyone's waiting for. And 0:07:22.040 --> 0:07:24.560 the big thing in particular, it's really two that are 0:07:24.560 --> 0:07:27.120 related one is the property sector with the government that 0:07:27.280 --> 0:07:31.320 intends to stabilize probably through stabilizing the purchases, not investment 0:07:31.360 --> 0:07:33.880 or prices per se. And the other thing that's related 0:07:33.880 --> 0:07:37.000 to that is consumption or consumer confidence, which is integral 0:07:37.400 --> 0:07:40.040 linked to the property sector, which is where people have 0:07:40.080 --> 0:07:40.680 their savings. 0:07:41.480 --> 0:07:44.000 So what further risks are out there, especially as we 0:07:44.080 --> 0:07:46.240 dig a bit deeper into the property market that they 0:07:46.240 --> 0:07:48.680 did say has still yet to stabilize. 0:07:50.200 --> 0:07:52.960 Well, so in the property sector, I mean, the main 0:07:53.240 --> 0:07:56.040 thing is that one of them is that the property 0:07:56.080 --> 0:07:59.720 developers are still in a tough spot. They are in 0:07:59.760 --> 0:08:02.520 the process of recapitalizing banks in parts of the banks 0:08:02.560 --> 0:08:04.800 can lend to the property developers and help stabilize that, 0:08:05.160 --> 0:08:07.200 but ultimately you have to get sales back, you have 0:08:07.240 --> 0:08:10.280 to basically get the confidence back in. And what's tricky 0:08:10.320 --> 0:08:12.480 for the Chinese government is they actually wanted to deflate 0:08:12.480 --> 0:08:14.760 the property center. It was a property bubble. They have 0:08:14.840 --> 0:08:17.040 deflated it. It needed to happen, But then what they 0:08:17.040 --> 0:08:20.160 don't want to do is reinflate it to restabilize the economy. 0:08:20.360 --> 0:08:23.760 So they're walking a sort of a tightrope at the moment. 0:08:23.800 --> 0:08:26.480 With that, what are the next data points that we 0:08:26.480 --> 0:08:28.800 need to be looking for for China here. 0:08:29.800 --> 0:08:32.680 I mean we would be the high frequency indicators like 0:08:32.720 --> 0:08:38.880 PMIS or in general things like retail sales. The thing 0:08:38.960 --> 0:08:41.360 that the event to look forward to would be the 0:08:41.440 --> 0:08:45.120 National People's Congress meeting that will be happening probably in 0:08:45.160 --> 0:08:47.240 a few weeks, and that is when they'll announce the 0:08:47.280 --> 0:08:49.240 big stimulus or whatever the number is. 0:08:49.760 --> 0:08:51.760 That'll be interesting to see because a lot of folks 0:08:51.800 --> 0:08:53.760 and a lot of I think investments are weighing in 0:08:53.880 --> 0:08:56.360 large part on what the Chinese government will do. We here, Gerard, 0:08:56.440 --> 0:08:58.920 thanks so much for joining us. Gerard to Pippo, senior 0:08:59.000 --> 0:09:02.920 geoeconomics fist for Bloomberg Economics, giving us the latest on 0:09:03.000 --> 0:09:07.040 the monetary fiscal stimulus in China. Again, the GDP last 0:09:07.080 --> 0:09:09.560 period rows four point six percent from last year, but 0:09:09.600 --> 0:09:11.800 that was the slowest pace in six years. 0:09:13.160 --> 0:09:17.040 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:09:17.120 --> 0:09:20.440 weekdays at ten am Eastern on focarplaying and broud Otto 0:09:20.559 --> 0:09:23.440 with the Bloomberg Business app. Listen on demand wherever you 0:09:23.520 --> 0:09:27.199 get your podcasts, or watch us live on YouTube. 0:09:28.440 --> 0:09:32.240 Our good friends over at Netflix and FLX is the 0:09:32.320 --> 0:09:35.480 ticker symbol. They reported numbers last night, beat the streets, 0:09:35.520 --> 0:09:38.200 some good guidance, some good discussion around kind of the 0:09:38.200 --> 0:09:41.440 growth out look. The stock's up ten percent today fifty 0:09:41.480 --> 0:09:43.319 two week hig. I'm guessing that's probably close to on 0:09:43.320 --> 0:09:45.920 an all time high three hundred and twenty five billion 0:09:45.920 --> 0:09:49.240 dollar market cap. I don't know what's going on there, 0:09:49.360 --> 0:09:51.480 Keith rag and Othin does because she's the analyst of 0:09:51.480 --> 0:09:56.280 Bloomberg Intelligence who follows Netflix. Boy, what happened last night? 0:09:56.280 --> 0:09:57.640 What did Netflix report? Ethan? 0:09:59.000 --> 0:10:02.959 Yeah, Netflix had an actually very very high quality earnings 0:10:03.000 --> 0:10:06.880 report last night, Paul. So they were up on subscriber metrics. 0:10:06.880 --> 0:10:09.160 They came in ahead of consensus. But I think really 0:10:09.160 --> 0:10:12.280 what excited the street was they were ahead in terms 0:10:12.280 --> 0:10:15.120 of guidance both for the fourth quarter revenue guidance as 0:10:15.120 --> 0:10:19.200 well as operating margin guidance, and their outlook for twenty 0:10:19.280 --> 0:10:23.640 twenty five was slightly ahead of consensus. And mind you, 0:10:23.720 --> 0:10:27.840 it was slightly ahead of consensus just based on subscriber growth. 0:10:28.000 --> 0:10:30.840 So the two big growth levers that you know, everybody 0:10:30.920 --> 0:10:33.560 was expecting they would pull. One was, of course, the 0:10:33.600 --> 0:10:35.360 ad business that doesn't look like it's going to be 0:10:35.360 --> 0:10:37.480 a huge contributor in twenty twenty five looks more like 0:10:37.480 --> 0:10:40.000 a twenty twenty six event. And then, of course the thing, 0:10:40.080 --> 0:10:41.840 the event that we were all waiting for, which was 0:10:41.960 --> 0:10:44.679 you know, a price increase on their standard plan in 0:10:45.040 --> 0:10:47.440 the US, and they didn't announce that. And so the 0:10:47.480 --> 0:10:50.360 fact that they're able to guide to double digit, solid 0:10:50.400 --> 0:10:53.040 double digit revenue growth without pulling any of those growth 0:10:53.120 --> 0:10:55.640 levers just tells us that there's a lot more Jews 0:10:55.720 --> 0:10:58.760 left in this business, even with you know, just playing subscriber. 0:10:58.400 --> 0:11:02.640 Growth, right, good news coming out of this report. Where 0:11:02.679 --> 0:11:04.360 are some areas that they could have done better? Is 0:11:04.400 --> 0:11:06.280 there any areas that people are critiquing? 0:11:07.600 --> 0:11:09.600 I think the areas that people are critiquing is really 0:11:09.640 --> 0:11:13.200 just the lack of disclosure around advertising. And one can 0:11:13.320 --> 0:11:16.160 understand why they are holding their cards close to their chest. 0:11:16.160 --> 0:11:18.920 So this is still a very small business. They have 0:11:19.120 --> 0:11:22.840 not disclosed the number of subscribers that they have on 0:11:22.880 --> 0:11:26.520 the ad tear and that's you know, color that investors 0:11:26.520 --> 0:11:28.640 and the whole investment community has kind of been looking 0:11:28.679 --> 0:11:30.800 for for a long time. But they did give us 0:11:30.880 --> 0:11:34.160 some qualitative kind of guidelines, right, They said that, yes, 0:11:34.240 --> 0:11:36.640 we are growing pretty fast, but it's off a small base. 0:11:36.800 --> 0:11:39.520 Don't expect the advertising business to be a huge growth 0:11:39.559 --> 0:11:41.880 driver in twenty twenty five, but I think come twenty 0:11:41.960 --> 0:11:44.079 twenty six, that completely changes. 0:11:44.200 --> 0:11:46.880 Where we on programming budgets Keith, because I think one 0:11:46.920 --> 0:11:48.760 of the things that you and you and I worked together, 0:11:48.760 --> 0:11:51.600 we were just shocked at the early days of Netflix 0:11:51.640 --> 0:11:53.960 and the types of money they were willing to spend, 0:11:54.400 --> 0:11:56.240 the billions of dollars they're willing to spend on their 0:11:56.280 --> 0:11:58.960 programming budget, and that forced everybody else to kind of 0:11:59.280 --> 0:12:02.559 keep pace. Where are they with their spending their spending strategy. 0:12:02.600 --> 0:12:06.079 Do they have to keep spending to get subscribers? 0:12:06.880 --> 0:12:08.880 I think they do, but they're doing it in a 0:12:08.960 --> 0:12:13.080 much more intelligent, much more efficient way. And the ROI 0:12:13.160 --> 0:12:16.320 on the content spend has absolutely, you know, increased so 0:12:16.320 --> 0:12:18.920 so much, Paul, And that's just because you know, it's 0:12:19.000 --> 0:12:20.880 been a function of just the operating leverage that they 0:12:20.920 --> 0:12:23.280 have in the model, with the scale and the way 0:12:23.280 --> 0:12:25.319 that they're able to spread those costs over you know, 0:12:25.360 --> 0:12:28.600 a two hundred and eighty five million subscriber base. So 0:12:29.000 --> 0:12:31.880 you know, yes, there has been some content cost rationalization 0:12:31.960 --> 0:12:35.079 across the board, including Netflix, They are still spending about 0:12:35.120 --> 0:12:37.960 seventeen billion dollars this year on content, which makes them 0:12:38.000 --> 0:12:41.240 one of the biggest spenders in the streaming space. They 0:12:41.240 --> 0:12:45.000 are planning to increase their budget a little bit going forward, 0:12:45.000 --> 0:12:47.199 so I think closed about eighteen billion dollars in twenty 0:12:47.200 --> 0:12:51.240 twenty five is what the general estimate is. But then again, 0:12:51.320 --> 0:12:54.560 remember they are looking to build out an AD business, 0:12:54.720 --> 0:12:57.840 and for ads you do need to invest in different 0:12:57.920 --> 0:13:01.400 kinds of programming, not really the entertainment programming. It probably 0:13:01.440 --> 0:13:03.840 has to be more a live sports or a live 0:13:03.920 --> 0:13:06.800 events type of strategy, and they I think are willing 0:13:06.840 --> 0:13:09.640 to kind of splurge on that to really build up 0:13:09.640 --> 0:13:11.520 and scale up that AD business. 0:13:11.880 --> 0:13:13.840 How's the debt looking on their balance sheet? I know 0:13:13.840 --> 0:13:15.960 there are big spenders, especially as we think about all 0:13:15.960 --> 0:13:17.959 the shows and the movies that they're rolling out. Are 0:13:17.960 --> 0:13:19.120 they staying above water? 0:13:20.120 --> 0:13:22.480 Oh, very very much so. They have about fourteen billion 0:13:22.520 --> 0:13:26.640 dollars in debt, but remember they have over seven billion 0:13:26.679 --> 0:13:29.120 dollars in cash on there on their balance sheet and 0:13:29.120 --> 0:13:31.280 they're going to throw out, you know, six billion this year. 0:13:31.320 --> 0:13:33.880 So absolutely in very very good shape. 0:13:34.600 --> 0:13:37.400 So the sixty four thousand dollars question geetha which I'm 0:13:37.400 --> 0:13:39.679 sure you get asked by your institutional investor clients all 0:13:39.679 --> 0:13:42.760 the time, is how about everybody else? When you see 0:13:42.760 --> 0:13:46.439 a Netflix quarter like this, you're like, boy, how's everybody 0:13:46.440 --> 0:13:49.240 else can to compete against these guys in the streaming world? 0:13:49.400 --> 0:13:51.000 What are you saying to them? 0:13:51.400 --> 0:13:54.560 Yeah, so they definitely Netflix has definitely won the streaming wars. 0:13:54.559 --> 0:13:57.080 They're going to keep it that way. You know, we 0:13:57.200 --> 0:14:00.600 know that they have about ten percent of all viewing 0:14:00.679 --> 0:14:03.600 time in the United States, so they obviously see much 0:14:03.640 --> 0:14:06.480 more upside for themselves to kind of grow. And I 0:14:06.480 --> 0:14:09.360 think that's exactly what's going to happen, you know, as 0:14:09.400 --> 0:14:12.760 they have more and more plans, you know, cheaper plans 0:14:13.040 --> 0:14:15.040 with of course the advertising based here, and of course 0:14:15.040 --> 0:14:18.120 as they have more and more must have content. So 0:14:18.240 --> 0:14:23.680 there's definitely the competitive intensity is absolutely easing, which allows 0:14:23.720 --> 0:14:25.880 them to be a dominant player. But I think also 0:14:25.960 --> 0:14:29.520 Netflix is really showing the other players how it's done. 0:14:29.600 --> 0:14:32.080 So one of the big points that came out yesterday 0:14:32.640 --> 0:14:35.800 from their earnings report was the fact that they've increased margins. 0:14:35.840 --> 0:14:37.800 Remember at the start of twenty twenty four they said 0:14:37.840 --> 0:14:41.720 twenty two percent operating margin. Yesterday, they're saying twenty seven 0:14:41.840 --> 0:14:45.640 percent operating margin for twenty twenty four. And remember, Paul, 0:14:45.680 --> 0:14:47.680 I mean you know this, well, the Bogie has always 0:14:47.680 --> 0:14:49.680 been about thirty thirty five percent margins, and it looks 0:14:49.720 --> 0:14:50.760 like they're going to be able to get there in 0:14:50.800 --> 0:14:52.760 the next couple of years. So this is going to 0:14:52.800 --> 0:14:56.960 be and probably even more profitable model than the traditional 0:14:56.960 --> 0:14:58.680 TV model, which is great news. 0:14:58.880 --> 0:15:02.320 Well can am I I'm not seeing that or are 0:15:02.760 --> 0:15:04.080 we going to see that with some of the other 0:15:04.120 --> 0:15:07.800 traditional media companies which are still chasing profitability Because you 0:15:07.840 --> 0:15:09.520 say it can be done, I'd go out there and 0:15:09.600 --> 0:15:12.120 take a flyer on Warner Brothers, Discovery. I take a 0:15:12.160 --> 0:15:15.040 flyer maybe even on Power Amount. If you're saying that 0:15:15.080 --> 0:15:17.920 model can be profitable, yeah, it. 0:15:17.880 --> 0:15:19.920 Can be profitable, but of course it depends on so 0:15:19.960 --> 0:15:22.280 many other factors. I think Disney is definitely in the 0:15:22.320 --> 0:15:26.120 strongest position to kind of replicate this success. The other 0:15:26.240 --> 0:15:28.640 is not so much because again, you know, scale is 0:15:28.680 --> 0:15:30.920 going to be a huge issue for them, Marketing costs 0:15:31.000 --> 0:15:32.480 is going to be a huge issue for them. They 0:15:32.560 --> 0:15:35.880 just don't have that cloud or the firepower that you know, 0:15:35.920 --> 0:15:38.120 Netflix and Disney kind of have with their IP and 0:15:38.160 --> 0:15:39.000 their franchises. 0:15:39.640 --> 0:15:41.360 I mean, after these results, it seems like a bit 0:15:41.400 --> 0:15:43.600 of a positive start so far. When we're thinking about 0:15:43.600 --> 0:15:46.760 those sort of former fameing names. What is the next 0:15:46.800 --> 0:15:49.680 thing that investors are looking for? Has the company talked 0:15:49.720 --> 0:15:51.880 anything about new projects that they're rolling out? What are 0:15:51.880 --> 0:15:53.040 investors on the watch for? 0:15:54.200 --> 0:15:56.760 Yeah, so the new projects right now? Rah. Of course, 0:15:56.760 --> 0:15:58.880 the big thing that everybody has kind of got their 0:15:58.960 --> 0:16:01.840 hat hanging on is the advertising business and how big 0:16:01.880 --> 0:16:04.200 that can potentially be when it takes off in a 0:16:04.200 --> 0:16:07.000 big way. They also, of course again are making this 0:16:07.080 --> 0:16:10.360 big you know splash or this big foray into live events. 0:16:10.360 --> 0:16:12.040 So you have you know, the NFL games that are 0:16:12.040 --> 0:16:13.960 going to come up, you have that Jake Paul Versus 0:16:14.040 --> 0:16:16.240 Mike Tyson event. The question is how many more of 0:16:16.280 --> 0:16:18.680 those are they going to do and will those actually 0:16:18.720 --> 0:16:22.160 be a big you know, needle mover for them, and 0:16:22.200 --> 0:16:24.320 then of course you would have them kind of taken 0:16:25.240 --> 0:16:27.040 you know, these baby steps in the in the gaming 0:16:27.040 --> 0:16:30.720 industry again not necessarily been a game changer so far, 0:16:31.040 --> 0:16:34.200 but over time it certainly can be. So they have 0:16:34.320 --> 0:16:39.000 these different ancillary revenue streams that can definitely build uh 0:16:39.080 --> 0:16:42.560 and kind of increase their not only their catalog of content, 0:16:42.880 --> 0:16:46.840 but also their competitive positioning as in strengthening their competitive positioning. 0:16:48.040 --> 0:16:49.800 I need I need some tips on how to get 0:16:49.840 --> 0:16:50.760 around the sharing. 0:16:50.920 --> 0:16:53.520 Well that's the thing. I mean, getha, that's sharing thing. 0:16:53.640 --> 0:16:54.000 Please? 0:16:54.160 --> 0:16:55.520 That's that that helps them out. 0:16:55.480 --> 0:16:59.200 Right them out huge, big time, big time, one hundred 0:16:59.240 --> 0:17:03.080 million subscribe versus the opportunity that they outlined there. 0:17:03.160 --> 0:17:07.080 So they've identified that. The Tucker offspring, I think is 0:17:07.960 --> 0:17:11.680 the dead beats like me to get around I know, 0:17:11.960 --> 0:17:14.359 all right, thanks so much. Keith wrong an oath and 0:17:14.400 --> 0:17:17.040 she's a medias for Bloomberg Intelligence. And I'll notice what's. 0:17:16.880 --> 0:17:19.000 The Netflix nowadays? 0:17:19.400 --> 0:17:21.959 Since I don't get it anymore? Oh you you were 0:17:22.000 --> 0:17:23.360 cripping off one of your kids. 0:17:24.000 --> 0:17:28.080 No, I'm not going to make yourself. It's called sharing, 0:17:28.520 --> 0:17:29.800 right is carring? 0:17:30.080 --> 0:17:30.240 Yes? 0:17:30.640 --> 0:17:34.639 Thank you? Sweeny shocked when this happened. Oh, I like 0:17:34.800 --> 0:17:37.439 they were calling like all like, Dad, would you do 0:17:37.440 --> 0:17:38.000 you cut us off? 0:17:38.000 --> 0:17:38.200 Said? 0:17:38.240 --> 0:17:39.160 I didn't cut you off. 0:17:39.640 --> 0:17:40.840 My dad was like, I don't even know how to 0:17:40.880 --> 0:17:42.160 work this cut it off. 0:17:43.359 --> 0:17:45.080 That's why we own the stock. It's one of the 0:17:45.080 --> 0:17:48.520 many reasons for Dead beats like you were off the 0:17:48.600 --> 0:17:52.080 doll So so that's important. And the advertising, is Keitha said, 0:17:52.119 --> 0:17:54.240 is a you know, twenty five twenty six event that 0:17:54.359 --> 0:17:56.040 investors can hold their hats on as they look for 0:17:56.119 --> 0:17:58.520 growth to continue to support that multiple. 0:17:58.560 --> 0:18:03.880 There you're listening to the Bloomberg Intelligence Podcast. Catch us 0:18:03.920 --> 0:18:07.280 live weekdays at ten am Eastern on applecar Play and 0:18:07.280 --> 0:18:10.240 Android Outo with the Bloomberg Business Act. You can also 0:18:10.280 --> 0:18:13.480 listen live on Amazon Alexa from our flagship New York 0:18:13.520 --> 0:18:19.200 station Just Say Alexa Play Bloomberg eleven thirty. 0:18:18.560 --> 0:18:22.960 SAMAS officials they have confirmed the dethical maas leader Yagat Sinwar, 0:18:23.440 --> 0:18:25.640 who was said to be the architect behind October seventh 0:18:25.640 --> 0:18:29.680 attack order. Today, President Joe Biden spoke on Sinewar's death, 0:18:29.800 --> 0:18:33.480 seeing it as a quote moment of justice and quote 0:18:33.800 --> 0:18:36.320 while also renewing the call for a cease fire dealist 0:18:36.320 --> 0:18:36.840 take a listen. 0:18:37.200 --> 0:18:41.400 The death of leader AMAS represents a moment of justice. 0:18:41.640 --> 0:18:44.760 He had the blood of Americans and Israelis, Palestinians in Germany, 0:18:44.760 --> 0:18:48.600 and so many others on his hands. I told the 0:18:48.600 --> 0:18:52.800 Prime Minister Visil yesterday, let's also make this moment an 0:18:52.800 --> 0:18:57.399 opportunity to seek a path to piece a better future 0:18:57.440 --> 0:18:58.800 in Gaza without Amas. 0:19:00.400 --> 0:19:03.879 All right, That was President Biden earlier today speaking about 0:19:03.920 --> 0:19:06.119 the death of Sinwar's death, again calling it a moment 0:19:06.240 --> 0:19:08.160 of justice. Let's break it down a little bit farther. 0:19:08.359 --> 0:19:11.440 We talked geopolitics in the Middle East. Some smart voices 0:19:11.440 --> 0:19:13.920 help us out there. Jonathan Schanzer, He's the senior vice 0:19:13.920 --> 0:19:17.000 president for research. He's at the non partisan Foundation for 0:19:17.080 --> 0:19:21.680 Defense of Democracies think tank. Joins us from Washington, DC 0:19:21.880 --> 0:19:25.440 via zoom. Jonathan, what do you make of this latest news? 0:19:25.480 --> 0:19:28.880 I mean, the Israeli seemed to be quite successful targeting 0:19:29.280 --> 0:19:33.800 leaders of Hamas and Hesbola. What do you think their 0:19:33.800 --> 0:19:35.160 strategy is right now? 0:19:36.640 --> 0:19:39.399 Well, first, I think we need to acknowledge something that 0:19:39.480 --> 0:19:44.159 yesterday's strike against Sinwar was dumb luck. The Israelis have 0:19:44.240 --> 0:19:47.199