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Speaker 1: This is Bloomberg surveillance. I think that the world's markets

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Speaker 1: and global economies are maturing. There are numerous peaks I

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Speaker 1: see by raising rates and federally signal to everybody, businesses, individuals,

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Speaker 1: everybody that the economy is in better shape of normalizing

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Speaker 1: the problem with low interest races steaming. It puts all

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Speaker 1: the focus on the benefits of borrowing and takes away

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Speaker 1: focus from the benefits of saving. Bloomberg Surveillance your link

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Speaker 1: to the world of economics, finance, and investment on Bloomberg Radio.

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Speaker 1: Here is what you need to know. Good morning everyone.

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Speaker 1: At the State of the Union speech, the Vice President

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Speaker 1: cannot be sitting in the same room with the President

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Speaker 1: along with the Speaker of the House. We break that

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Speaker 1: rule in this hour the acts as a Moffett Nathanson,

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Speaker 1: Craig Moffatt and Mr Nathanson Michael Nathanson will join us together.

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Speaker 1: They're in the same room. This has only happened one

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Speaker 1: other time when they agreed to set up shop UM

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Speaker 1: teen years ago. Media, what happens if Iger walks by

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Speaker 1: or you know whoever? This is gonna be great. This

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Speaker 1: is must listen in this our worldwide Moffatt and Nathanson

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Speaker 1: together on the state of their many media and telecommunication concerns.

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Speaker 1: Blueberg Surveillance Worldwide on Media. Brought to you by Cone

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Speaker 1: Resnick Accounting, Tax Advisory Trust, Cone RESIDNUC for the strategy

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Speaker 1: the insight your business needs to move forward. Find out

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Speaker 1: what Cone Resneck thinks. Sign up for insights at Cone

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Speaker 1: Resnick dot com. Craig Moffatt with us and Michael Nathans

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Speaker 1: and Craig tell us about the glory of you guys

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Speaker 1: at Sanford Bernstein, which is, you know, the desire of

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Speaker 1: so many people a place to work and the two

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Speaker 1: of you coming together. How did that happen? Well, look,

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Speaker 1: we we both we overlap for about seven years at

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Speaker 1: Bernstein and and you're absolutely right. It was a terrific

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Speaker 1: platform for us and UH and UM we were we

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Speaker 1: were really privileged to be there. But after I'd been

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Speaker 1: there for eleven years, Michael had been there even longer.

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Speaker 1: Michael by that point had left to go to Nomura UM.

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Speaker 1: But after about eleven years for me, I started to

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Speaker 1: get an itch to do something a little more entrepreneurial

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Speaker 1: and and try something a little different and UM and

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Speaker 1: the opportunity came up to do it with Michael. That

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Speaker 1: had always been my dream. I always thought, Um, if

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Speaker 1: there was any any way to do it, I would

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Speaker 1: do it with Michael and uh. And so the opportunity

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Speaker 1: came up in the beginning of and we just celebrated

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Speaker 1: our third anniversary in in business last week. Uh, you

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Speaker 1: picked a great time going to business. Of course for yourselves. Well,

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Speaker 1: let's go to business. We just had the worse for sessions.

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Speaker 1: It's the Great Depression. So I mean, obviously you're you're

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Speaker 1: very successful, but I mean, what was it like trying

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Speaker 1: to to fight a tide? Well, you know, in some ways,

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Speaker 1: we weren't fighting a time. I mean, what we had

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Speaker 1: at our backs UM is was that this sector, the

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Speaker 1: telecom and particularly media sector at large, UM was undergoing

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Speaker 1: such profound change that the clients that Michael and I

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Speaker 1: had always worked with genuinely wanted help and and so

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Speaker 1: and and look, we we already had ten or eleven

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Speaker 1: years of working with the biggest institutional investors. We had

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Speaker 1: really deep relationships with them, UM and UH. And so

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Speaker 1: that given take was, was in some ways perfectly time

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Speaker 1: for the kind of seismic changes that we've seen since then.

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Speaker 1: Let's dive into Michael Nathanson. There's no question what's up

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Speaker 1: front here for us is the future of TV. Everybody says, yeah,

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Speaker 1: but digital blah blah blah, and then everybody goes, wait,

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Speaker 1: they're all still watching TV. Why is Disney challenged if

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Speaker 1: we're all still watching ESPN and TV. I don't think

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Speaker 1: Disney's challenged. I I think what's gonna happen is the

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Speaker 1: market's gonna realize that people who own live sports, live news,

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Speaker 1: big events are going to get paid by advertisers well

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Speaker 1: into the future, and the fragmentation is going to happen

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Speaker 1: on scripted, smaller type channels. I think if you have

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Speaker 1: large live events, you gotta you gotta hold an audience.

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Speaker 1: And I think that's what people are missing, that things

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Speaker 1: are not changing the Disney fourteen point six percent total

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Speaker 1: return up ten years expand that things are not changing

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Speaker 1: as much as people think. Well, if you look at

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Speaker 1: consumer you know, viewership of live sports the past five, six,

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Speaker 1: seven years, rings for the live events are actually pretty

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Speaker 1: stable against the backdrop of viewership down five a year

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Speaker 1: for almost everything else. So I think longer term it's

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Speaker 1: gonna happen is that people who are staying in the

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Speaker 1: ecosystem to pay for TV are going to be there

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Speaker 1: the live sports, live news, and big events, right, so

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Speaker 1: the world's gonna start recognizing that people have different programming hands.

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Speaker 1: It's just it's just can I up a justic a

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Speaker 1: question with the live sports thing? Um? The networks to

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Speaker 1: carry it, carry sports pay so much, and I wonder

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Speaker 1: in this in this world, whether they can continue to

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Speaker 1: increase the rights fees that they pay and then jack

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Speaker 1: up the commercial time and then the players all get

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Speaker 1: paid more and more and more money. And it's this

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Speaker 1: incredible cycle that leaves the average fan out. But can

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Speaker 1: I continue and they keep making money? Well, it's really interesting,

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Speaker 1: you said, because the next six seven years most of

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Speaker 1: the major rights are locked up. The real concern for

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Speaker 1: everyone's going to be in and beyond, because that's when

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Speaker 1: the next set of rights come due. And the question

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Speaker 1: is will Facebook, will Google, Apple, will another outsider come

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Speaker 1: in and bid for those rights and create a true

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Speaker 1: bidding war? Right, That's when things get interesting. And my

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Speaker 1: Craig Moffitt, you have a fabulous page, as you always

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Speaker 1: you folks. I've already had two emails. I'm not going

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Speaker 1: to send out the copy. We've got eat a feat

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Speaker 1: of data here for Mofatt Nathanson. We protect the copyright

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Speaker 1: of all of our guests. Craig Moffatt, you've got a

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Speaker 1: sell on a T and T just as one part

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Speaker 1: of the picture. Who will be the losers and the

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Speaker 1: Moffatt Nathanson universe. Well, you know, I think there are

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Speaker 1: a couple of broad themes here. UM. If you think

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Speaker 1: about on my telecommunication side of the of coverage, Um,

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Speaker 1: the telecom business is getting to be more and more

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Speaker 1: capital intensive, not just Capex, but the wireless companies buying

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Speaker 1: more and more spectus. And you say telecomical skill telecom, Well,

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Speaker 1: telecom has historically been all about scale. The challenge for

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Speaker 1: for these companies is um, their their balance sheets are

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Speaker 1: now very stretched. We we published a very detailed report

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Speaker 1: a couple of weeks ago UM saying that the reported

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Speaker 1: leverage ratios of the telephone companies are significantly understated for

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Speaker 1: a number of accounting reasons. And and they have a

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Speaker 1: lot less balance sheet flexibility. Then you think, um, and

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Speaker 1: yet they face this big wave of calls on their

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Speaker 1: capital of densifying their networks to do five G and

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Speaker 1: what have you? So everybody is struggling with that. Now.

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Speaker 1: The reality is for the big telcos and for A

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Speaker 1: T and T, they tend to move with big macro themes.

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Speaker 1: And generally speaking, you can think of it as if

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Speaker 1: you get this somewhat unusual combination of of a rising

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Speaker 1: US dollar coupled with falling interest rates, Usually you get

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Speaker 1: interest rates leading the dollar higher or interest rates leading

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Speaker 1: the dollar lower. But if you get that unusual combination

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Speaker 1: of a rising dollar and UH and falling interest rates

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Speaker 1: like you had at the end of the fourth quarter

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Speaker 1: and beginning of the first, these stocks end up doing

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Speaker 1: really well. And that's what happened with the telecoms. If

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Speaker 1: you don't get that, it's much harder for them, and

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Speaker 1: the fundamentals don't really support further valuation appreciation for a

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Speaker 1: name like A T and T. A long term UM,

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Speaker 1: these companies have have one thing that a lot of

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Speaker 1: the tech companies don't, and that's an enormous as you

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Speaker 1: mentioned with capital barrier and entry. Yeah, that's right, um

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Speaker 1: and you. But you can use that framework of how

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Speaker 1: big is a moat around these businesses to pick out

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Speaker 1: some winners and losers, and the mode is actually much

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Speaker 1: bigger is much bigger for the cable operators. You know,

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Speaker 1: the cable operators. I've been on your show for what

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Speaker 1: a decade talking about While everybody says the cable operators

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Speaker 1: are these old media dinosaurs that are about to be

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Speaker 1: run over by over the top video and Netflix and

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Speaker 1: what have you, that they've actually got the biggest mode

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Speaker 1: of anybody in physical inferation. Within that mode, let's pick

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Speaker 1: a name that we all know that we can see.

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Speaker 1: John Tucker can see it out through Central Park here,

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Speaker 1: and that's Time Warner. I mean, what is the to

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Speaker 1: do list strategically for some of the companies you face.

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Speaker 1: We can talk about Verizon and who they're ever they're

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Speaker 1: gonna buy next, But Michael tell us about Time Warner,

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Speaker 1: not so much by hold Cell, but just what's going

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Speaker 1: through their heads now at the corporate headquarters. Well, Time Warners, Michael,

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Speaker 1: the microphone is here. You gotta give Nathan some media training.

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Speaker 1: Come on closer to you. So Time Warners got through

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Speaker 1: divisions pretty simple. They're going every division is to make

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Speaker 1: their content more and more indispensable. HBO Warners turner right.

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Speaker 1: So they're trying to basically find investing, find new content

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Speaker 1: that's gonna basically break through the clutter. It's a very

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Speaker 1: simple story, which is like at Turner, more and more

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Speaker 1: original content. At Warner Brothers Better Movies, that's their mandate.

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Speaker 1: And the mode, as Craig talks about in Cable, the

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Speaker 1: mode and media has to be proprietary content. That's where

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Speaker 1: they're trying to find what's the what's what's the ability

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Speaker 1: to do that these days with everybody looking, I mean,

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Speaker 1: is there is there somebody everybody wants to work for? No,

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Speaker 1: that's I'm not in my head because that's the biggest

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Speaker 1: challenge here. Right. You've had an explosion of original content.

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Speaker 1: Fox has a stat that the number of original shows

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Speaker 1: past five years two hundred to four hundred across the

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Speaker 1: entire equals. It's a glut. It's just too many shows.

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Speaker 1: And you asked this before, how does that continue? At

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Speaker 1: some point it has to break apart. You can't keep

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Speaker 1: funding there is there is there another stupid guy there

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Speaker 1: to buy the next transaction? Well? Yeah, or the markets.

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Speaker 1: You know, we're we're relatively neutral on Netflix and we

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Speaker 1: look at Netflix and we say they're losing a billion

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Speaker 1: dollars a year in building out their their business at

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Speaker 1: some point that billion dollars has to have a return,

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Speaker 1: right you have to look and say we need to

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Speaker 1: return The markets willing to fund it, but at some

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Speaker 1: point the market may say this is not worth funding

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Speaker 1: if we can't get better returns. Right now, Michael Nathanson

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Speaker 1: with us. He brought along Craig Moffatt. This is very

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Speaker 1: cool Moffett Nathanson. We've tried for a good six months

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Speaker 1: to get the two of them in to talk about

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Speaker 1: media about what to buy. We'll focus at some point

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Speaker 1: here on single best buys in that, but much more

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Speaker 1: on the media awards with Craig Moffat and Michael Nathanson.

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Speaker 1: Futures negative six. All right, let's check out with Michael

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Speaker 1: barn Now get the latest world of national headlines. Mike Tom,

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Speaker 1: thank you very much. The Obama administration is sending a

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Speaker 1: directive to the nations, but like schools, telling them that

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Speaker 1: they must allow students to use bathrooms and locker rooms

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Speaker 1: consistent with their chosen gender identity. The letter does not

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Speaker 1: impose any new legal requirements, but is a reminder of

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Speaker 1: obligations to provide non discriminatoryate environments. President Obama's healthcare law

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Speaker 1: was DEALTA below the federal judge rule that a program

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Speaker 1: to reduce out of pocket costs for low income people

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Speaker 1: who purchase Obamacare insurance plans is unconstitutional. The Islamic State

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Speaker 1: Group has claimed responsibility for an attack on a coffee

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Speaker 1: shop north of Baghdad that killed at least thirteen people

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Speaker 1: and wounded fifteen others. Global News twenty four hours a day,

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Speaker 1: powered by our twenty four hundred journalists and more than

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Speaker 1: a hundred fifty news bureaus from around the world. Michael

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Speaker 1: bar and Michael, thanks so much. You're gonna destroy some

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Speaker 1: mis here. Coming up, Craig Moffatt with us at Michael Nathanson.

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Speaker 1: Everybody's in search of unicorns the new digital world. They're

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Speaker 1: grizzled jaundice vetrans Nathanson, I'm Bloomberg Surveillance and coming up

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Speaker 1: at the bottom of the hour, we've got us retail sales.

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Speaker 1: We'll check out with Howard Divenoments of Divenoment's Associates and

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Speaker 1: get his take on the numbers. Global Business News twenty

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Speaker 1: four hours a day. If Bloomberg dot Com, the Radio

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Speaker 1: plus Mobile Act and on your radio, this is a

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Speaker 1: Bloomberg Business Flash and I'm Karen, Moscow U S Dock

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Speaker 1: Index futures are dropping this morning. Let's go to the

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Speaker 1: first Word Breaking news desk for today's morning call. Here's

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Speaker 1: Bill muloney. Good morning, Bill, Good morning Karen. That's right.

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Speaker 1: US futures remain under pressure. DEAF you just currently lower

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Speaker 1: by sixty points, SESPS drop five and NAZAC futures declined

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Speaker 1: by thirteen. The U S tenual at one point seven

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Speaker 1: three per cent on the economic Frinday thirty retail sales

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Speaker 1: and at ten o'clock business imatories and Michigan sentiment. After

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Speaker 1: Deblas Night North from cut year views, shares plummet seventeen

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Speaker 1: percent pre market, Navidia q T revenue forecast, top deestimates,

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Speaker 1: C pennyfalls ten percent pre market after its results finding

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Speaker 1: some of your Wall sheet upgrades and downgrades. Cyberk race

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Speaker 1: the by over at Bank of America jan J cut

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Speaker 1: to neutral at bt I, g Algon, added to conviction

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Speaker 1: BYO list at Goldman Sachs, Locke Martin cut the hold

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Speaker 1: Wells Fargo Live in the first Breaking newsdask Dom Bill Maloney,

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Speaker 1: Karen thanks Bill to hear live breaking news over your

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Speaker 1: Bloomberg type squawk and go on your terminal. That's s

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Speaker 1: q you a w K go and that's a Bloomberg

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Speaker 1: business flash. Tom and Mike Karena, thanks so much. Bloomberg

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Speaker 1: Surveillance brought you by Investco. Investco believes it's time to

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Speaker 1: bench the benchmarks to consider active management and factor based strategies.

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Speaker 1: Find out more Investco dot com Slash high Conviction Mom,

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Speaker 1: Michael Nathanson, Craig Moffatt, Moffatt Nathanson with us for the hour.

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Speaker 1: We're gonna interrupt in a bit and get Howard di

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Speaker 1: vidofots On in the Ugly Week for Retail, but right

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Speaker 1: now Michael McKee, Kevin Draper at Gawker hit the ball

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Speaker 1: over the fence, over the turnpike. It bounced off the

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Speaker 1: roost roof of the cask and flaggon and ended up

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Speaker 1: somewhere in Austin. He had. Kevin Draper in Gawker wrote

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Speaker 1: this killer article on the BS that is clicks. Michael

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Speaker 1: Nathanson helped me here. Eight hundred thousand people see a

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Speaker 1: watermelon blow up on BuzzFeed and Draper and Nielsen say,

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Speaker 1: you gotta be kidding me. Compared to TV ratings, it's

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Speaker 1: next to nothing. Discuss Okay, So there was a Buffalo

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Speaker 1: Bills Jacksonville Jaguar game of Yahoo this year fifteen million views.

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Speaker 1: That's a huge number. When we looked at it versus

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Speaker 1: a TV rating and put it apples to apples, they're

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Speaker 1: like two million viewers and a TV game could be

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Speaker 1: eight ten million. So you need in the world's getting

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Speaker 1: there a common set of standards to compare right, and

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Speaker 1: the past decade we've had two different measurement sticks and

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Speaker 1: now getting to one measurement stick. That's where within the

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Speaker 1: one measures was to Craig Mohford critically, here are we

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Speaker 1: going to deploy mail investment, dumb investment by the big

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Speaker 1: deep cash flow pockets you follow to pick up Nathan

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Speaker 1: Sin's content. Is it gonna be an era of stupid investment? Well, look,

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Speaker 1: it certainly has. The The history of M and A

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Speaker 1: in in our companies is not terribly good, uh and UM,

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Speaker 1: particularly on the telecom side, there's been a lot of

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Speaker 1: misinvestment and returns on capital, as we just published this week,

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Speaker 1: are not very inspiring um. But but look, everybody has

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Speaker 1: faced the same challenge, which is how do we how

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Speaker 1: do we adapt our business to to the new economy.

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Speaker 1: And you know, I actually give Verizon a little credit.

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Speaker 1: They're the ones whose name is floated around as the

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Speaker 1: buyer of of Yahoo. They bought a O l um,

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Speaker 1: And I give them a little credit for at least

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Speaker 1: trying in a in an intelligent way to reinvent the model,

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Speaker 1: because I think what they're they're sitting on top of

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Speaker 1: a ton of data about where their their customers have

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Speaker 1: been and that sort of thing based on their wireless network,

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Speaker 1: and they're trying to figure out a way to monetize

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Speaker 1: that with advertising. And so they're not out to say, hey,

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Speaker 1: let's build a media empire. They're out to say, let's

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Speaker 1: build some ad inventory that we can sell with all

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Speaker 1: that data. And that strikes me as actually a pretty

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Speaker 1: intelligent model, given that it's really really hard to extract

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Speaker 1: another dollar out of wire Do you want to cut

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Speaker 1: in here to disagree with your not? No, I don't.

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Speaker 1: I want to say what's happened in media was Post

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Speaker 1: a all time warner fifteen years ago. Our guys have

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Speaker 1: stopped doing big kind of big picture deals. They are

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Speaker 1: just doing bolt on acquisitions because they're done trying to

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Speaker 1: buy these digital unicorns. Can't buy the can't buy the

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Speaker 1: earnings from it. Well, you say we're going to a

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Speaker 1: standardized measuring system. How we're going to major If it's

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Speaker 1: not clicks? What are advertisers going to be paying for engagement? Views,

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Speaker 1: time spent, time spent word engagement? What does it mean? Well,

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Speaker 1: what you're gonna do is, you know, it's really hard

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Speaker 1: to measure mobile phone engagement, right, so we look at it,

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Speaker 1: and we look at your Twitter feed. You see a

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Speaker 1: commercial on there that's hard to measure. We're moving towards

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Speaker 1: a standard where how much time do you spend looking

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Speaker 1: at that video? Start? Right? So we're moving to not

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Speaker 1: streams or clicks, but time spend. Mine. I'm under a

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Speaker 1: shameless plug here. That's what makes Bloomberg Radio pluts go.

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Speaker 1: We have a wonderful global audience. But what's stunning to

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Speaker 1: our good colleagues over on the Death Star is people

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Speaker 1: listen for a long time a MEMBERG Radio plus. That's

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Speaker 1: I think that's what's called engagement. As did to seven

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Speaker 1: times you mentioned the motile phones click did when when

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Speaker 1: people are looking at all this stuff on mobile phones,

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Speaker 1: Is the engagement the same? It's not. We spend so

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Speaker 1: much money on these fifty inch television sets at home

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Speaker 1: and then you're walking around with this tiny little screen.

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Speaker 1: Is it the same? Does it get you the same

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Speaker 1: thing as an advertiser? Depends what you're what kind of

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Speaker 1: advertising you're talking about, right, So, if you're talking about search,

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Speaker 1: search is actually pretty valuable on mobile devices because it

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Speaker 1: can be very topical and immediate. And if you're in

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Speaker 1: a retail store, what have you intention to buy? Um

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Speaker 1: For longer form advertising, so far, it's been a bust

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Speaker 1: um and but people are trying to figure out what

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Speaker 1: are the different ad models that make sense on the

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Speaker 1: different platforms. I mean, when I'm standing in the corner

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Speaker 1: and I'm looking for directions to wherever I'm going, I'm

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Speaker 1: not going to buy a car, Well, that's right, and

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Speaker 1: we're gonna find Starbucks. You want to find me your

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Speaker 1: Starbucks is right app? And I do do it on that. Yeah,

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Speaker 1: I mean that that's but but let me dispel a notion,

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Speaker 1: by the way, about what location based advertising is, because

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Speaker 1: I think location based advertising is is going to be

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Speaker 1: one of the really big themes that that we're talking about.

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Speaker 1: Everybody sort of immediately jumps to, oh, wouldn't it be

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Speaker 1: great to put a McDonald's ad in front of somebody

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Speaker 1: while they're standing in front of McDonald's. That's not what

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Speaker 1: location based advertising is. And this may sound Big brotherish,

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Speaker 1: but what location based advertising is really about is saying, hey,

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Speaker 1: I can because of where your phone was in your

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Speaker 1: pocket while you were traveling last week, I know that

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Speaker 1: you were in a Mercedes dealership. And because you were

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Speaker 1: in a Mercedes dealership and you were down at the

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Speaker 1: east end of the dealership looking at the SUVs instead

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Speaker 1: of the west end of the dealership looking at the

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Speaker 1: sports cars, I know you might be in the market

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Speaker 1: for a luxury suv and I can put ads in

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Speaker 1: front of you that are freakishly well targeted. Um. That's

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Speaker 1: a lot of what's going on, both in the advertising

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Speaker 1: community and by the way, the FCC struggling with the

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Speaker 1: privacy issues around this. Michael Nathanson scaring the hell out

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Speaker 1: of us. I hope not you either. Coming up one

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Speaker 1: Highlight brought to you by land Rober. If it's in

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Speaker 1: a day. If Bloomberg dot com the radio plus mobile

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Speaker 1: app and on your radio. This is a Bloomberg Business

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Speaker 1: Flash and I'm Karin Moscow. This updates brought to you

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Speaker 1: by van Eck Vector's e t f s. Expect more

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Speaker 1: Sales at retailers jumped in April by the most in

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Speaker 1: a year. Purchases climbed one three last month, the biggest

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Speaker 1: game since March. US wholesale prices rose in April for

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Speaker 1: the first time in three months, avoid by firm or

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Speaker 1: costs for portfolio management services. The two ten percent gaining

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Speaker 1: the Producer Price Index last month followed a one percent

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Speaker 1: decline in March US dock index. Futures trimmed their declines

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Speaker 1: following the retail sales report. SNPE Many Future is still lower,

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Speaker 1: down two points now, DOWI Mini futures down thirty two,

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Speaker 1: NAS DOCU many futures down to the docks in Germany

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Speaker 1: is higher, up half percent ten. Your treasury up three

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Speaker 1: thirty seconds, the yield one point seven three percent. Ni

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Speaker 1: Max screw oil down one point three percent, or sixty

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Speaker 1: cents to forty six ten. A barrel Comex gold is

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Speaker 1: down three tenths percent or three dollar seventy cents to

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Speaker 1: twelve sixty seven sixty an ounce. The euro at other

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Speaker 1: thirteen sixteen, the yen one oh nine point two eight,

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Speaker 1: and j C Penny down almost nine percent this morning

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Speaker 1: after posting first quarter revenue that trailed analysts estimates. And

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Speaker 1: that's a Bloomberg business flash. Tom and Mike Karen, thanks

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Speaker 1: so much. What a treat. Craig Moffett with us, with

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Speaker 1: Michael Nathanson. We have fourteen things to talk about in

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Speaker 1: ten minutes. Mike McKee wants to talk hardware, so let

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Speaker 1: me get that going. Craig Moffatt, in your authoritative report,

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Speaker 1: you talk about Cooper's law, which is not Moore's law.

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Speaker 1: Cooper's law is how the thing we take for granted happens,

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Speaker 1: which is equality signal to our phone four G, five G,

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Speaker 1: six G. Is the infrastructure gonna be there for our

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Speaker 1: hopes and dreams of what we want to do with

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Speaker 1: Mike McKee's toys. Well, let me give you a sort

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Speaker 1: of a provocative take on that, because I think that's

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Speaker 1: a really interesting point. Tom Is is where we're headed.

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Speaker 1: Is wireless networks getting denser and denser and denser. So

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Speaker 1: the old adage is wireless networks are wires and ten

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Speaker 1: percent wireless. Remember it's only that last little link between

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Speaker 1: your phone and the and the cell tower that's wireless.

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Speaker 1: The rest of it's good old fashioned wires. If you

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Speaker 1: keep densifying these networks and have smaller and smaller radii

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Speaker 1: on the cell towers to get more traffic through the network,

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Speaker 1: it means more wires. So where is the ultimate advantage

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Speaker 1: going to come from in wireless networks? Wires? Who's got

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Speaker 1: the most wires the cable operators. You can actually make

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Speaker 1: a good case that the ultimate winner in wireless is

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Speaker 1: the cable industry. That's fascinating, and the Comcast is one

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Speaker 1: of your leading choices, we like Comcast, you know all

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Speaker 1: these themes. By the way, Michael and I are are

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Speaker 1: hosting a conference for our investors next week where UM,

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Speaker 1: where we will be talking to UM sort of who's

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Speaker 1: who of all these companies. And part of the goal

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Speaker 1: of that UM conference is to is to put together

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Speaker 1: the sort of narrative of all this stuff and hear

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Speaker 1: from them directly. Why why you did you see that?

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Speaker 1: Just so you know, why is a younger lad? That

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Speaker 1: was the ultimate softball. Shame was plugged? That was true,

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Speaker 1: very right. It was really that softball, Michael said about engagement.

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Speaker 1: Someone's got a bills fat, I know that we Blum

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Speaker 1: is gonna bill us. So we got the retail sales

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Speaker 1: report and a surprising number and here for those who

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Speaker 1: follow this regularly, electronics sales up half a percent after

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Speaker 1: a six tense game in March. This follows many, many

427
00:24:14,080 --> 00:24:18,120
Speaker 1: months of declines in that category that the numbers don't

428
00:24:18,160 --> 00:24:21,680
Speaker 1: capture what's really happening in the sense that UM electronics

429
00:24:21,760 --> 00:24:25,920
Speaker 1: keep getting cheaper. So this measures dollar volumes, so you

430
00:24:25,960 --> 00:24:28,080
Speaker 1: can sell a lot of them and still have a decline.

431
00:24:28,160 --> 00:24:31,320
Speaker 1: So if we're actually going up, people seem to be

432
00:24:31,440 --> 00:24:37,560
Speaker 1: interested in getting devices that will pull in this engagement

433
00:24:37,680 --> 00:24:40,320
Speaker 1: that you're talking about. Yeah, you know. And one of

434
00:24:40,359 --> 00:24:43,199
Speaker 1: the funny things is, though, where's all of the value

435
00:24:43,280 --> 00:24:46,400
Speaker 1: in those devices coming from. If you went back five

436
00:24:46,480 --> 00:24:49,080
Speaker 1: years ago, it was hardware. Now it's all software. And

437
00:24:49,200 --> 00:24:51,320
Speaker 1: so one of the things that's a big theme in

438
00:24:51,400 --> 00:24:54,640
Speaker 1: the wireless industry right now is that people are keeping

439
00:24:54,680 --> 00:24:57,320
Speaker 1: their devices longer. Why are you keeping your iPhone longer?

440
00:24:57,440 --> 00:25:00,560
Speaker 1: Because the software is getting upgraded anyway, the hardware it

441
00:25:00,560 --> 00:25:03,840
Speaker 1: doesn't matter that much um and and so you're seeing

442
00:25:03,880 --> 00:25:06,879
Speaker 1: these kind of lengthening product cycles. If you're an Apple investor,

443
00:25:06,920 --> 00:25:08,440
Speaker 1: it's one of the things that it's one of the

444
00:25:08,520 --> 00:25:10,800
Speaker 1: reasons the stock is down in Why Apple and long

445
00:25:10,880 --> 00:25:13,960
Speaker 1: Apple you follow it, We don't cover it, We're coming

446
00:25:14,000 --> 00:25:16,760
Speaker 1: we cover the service side. But but all the handset

447
00:25:16,840 --> 00:25:19,960
Speaker 1: cycles are are lengthening, and the upgrade rates are are

448
00:25:20,200 --> 00:25:23,680
Speaker 1: are coming down because your your handset works for a

449
00:25:23,760 --> 00:25:26,440
Speaker 1: long time and there's not a lot of new innovation. Michael,

450
00:25:26,480 --> 00:25:29,160
Speaker 1: in your world, it's about people, It's about leaders. Mr

451
00:25:29,240 --> 00:25:32,600
Speaker 1: Bukus and Mr Murdoch and his family and saw let's

452
00:25:32,640 --> 00:25:35,399
Speaker 1: start with Mr Murdoch. What are they thinking It Fox.

453
00:25:35,520 --> 00:25:38,440
Speaker 1: What is the strategic I don't mean, like you know,

454
00:25:38,520 --> 00:25:40,399
Speaker 1: are they going to do this with Fox Sports or that.

455
00:25:40,960 --> 00:25:44,680
Speaker 1: What's the plan for Fox? Great question? The plan is

456
00:25:44,840 --> 00:25:49,199
Speaker 1: to use Hulu to build a next generation PTV business, Right,

457
00:25:49,280 --> 00:25:51,720
Speaker 1: so they own a piece of Hulu and the idea

458
00:25:51,760 --> 00:25:54,119
Speaker 1: of taking what you guys just both said is we

459
00:25:54,240 --> 00:25:57,159
Speaker 1: have to move content to connected devices, right, we have

460
00:25:57,280 --> 00:26:00,359
Speaker 1: to move it away from the TV screen to any screen.

461
00:26:00,920 --> 00:26:03,280
Speaker 1: And who lose one of their devices to do that?

462
00:26:03,359 --> 00:26:06,159
Speaker 1: I think you're gonna see more and more investment into

463
00:26:06,600 --> 00:26:10,360
Speaker 1: products that get your content to your phone, your tablet,

464
00:26:10,520 --> 00:26:13,639
Speaker 1: your getting your set top box. That's where Fox is

465
00:26:13,680 --> 00:26:16,800
Speaker 1: gonna move to. It's gonna be a long push to

466
00:26:16,920 --> 00:26:20,560
Speaker 1: basically build a system that's gonna be more mobile and

467
00:26:20,600 --> 00:26:24,360
Speaker 1: more portable. Um around you, just around the globe. Well

468
00:26:24,520 --> 00:26:27,639
Speaker 1: is this is there gonna be somebody who's new that

469
00:26:27,800 --> 00:26:30,159
Speaker 1: comes along and breaks into this or is it just

470
00:26:30,320 --> 00:26:33,879
Speaker 1: all of the Fox and NBC and Craig and I

471
00:26:33,920 --> 00:26:38,480
Speaker 1: have said the disruption will come from outside? Right? The

472
00:26:38,680 --> 00:26:41,560
Speaker 1: key is we keep saying this, it's post when most

473
00:26:41,600 --> 00:26:44,280
Speaker 1: of these key rights come available. The modes that are

474
00:26:44,280 --> 00:26:48,200
Speaker 1: built today are the NFL rights, the NBA rights, movie rights.

475
00:26:48,760 --> 00:26:52,200
Speaker 1: Nothing comes available in any scale until the end of

476
00:26:52,640 --> 00:26:54,879
Speaker 1: this decade of being the next decade. So if you

477
00:26:54,960 --> 00:26:58,359
Speaker 1: want to build the next generation competitor, you've got to

478
00:26:58,400 --> 00:27:01,159
Speaker 1: wait a bit, right, So we keep waiting. So we

479
00:27:01,240 --> 00:27:05,119
Speaker 1: think this business keeps slipping sliding along without much disruption

480
00:27:05,640 --> 00:27:08,920
Speaker 1: until the next writes become availbul that's when things get interesting.

481
00:27:09,680 --> 00:27:14,679
Speaker 1: What about the the idea that, um, you can create

482
00:27:15,160 --> 00:27:17,760
Speaker 1: through a YouTube channel, and now Amazon is gonna do this,

483
00:27:18,000 --> 00:27:21,520
Speaker 1: create a YouTube channel that creates its own channels and

484
00:27:21,600 --> 00:27:25,600
Speaker 1: then um, they become as as we've seen with some

485
00:27:25,720 --> 00:27:28,159
Speaker 1: of the stuff that Amazon's been doing in Netflix has

486
00:27:28,160 --> 00:27:31,200
Speaker 1: been doing, they become regular entertainment channels as well. Is

487
00:27:31,280 --> 00:27:33,480
Speaker 1: that a model that's going to continue to work. Yeah,

488
00:27:33,600 --> 00:27:37,480
Speaker 1: that is. You know, YouTube is quite successful in picking

489
00:27:37,560 --> 00:27:40,960
Speaker 1: off millennial audiences and monetizing it, right, and Google doesn't

490
00:27:41,000 --> 00:27:43,440
Speaker 1: tell you how big YouTube is. We think five six

491
00:27:43,520 --> 00:27:46,440
Speaker 1: billion dollars of advertising revenue. So there are pieces of

492
00:27:46,440 --> 00:27:48,520
Speaker 1: the ecosystem that are being chipped away right now. I

493
00:27:48,560 --> 00:27:51,800
Speaker 1: think your question was a larger disruption, but at this

494
00:27:51,960 --> 00:27:55,199
Speaker 1: point there will be pieces chipping away because there's too

495
00:27:55,280 --> 00:27:57,600
Speaker 1: much investment aimed at it right. Could you buy the

496
00:27:57,720 --> 00:28:00,440
Speaker 1: media stocks here, I mean Disney with a move shot

497
00:28:00,600 --> 00:28:04,800
Speaker 1: from two thousand and eight ten and it rolls over.

498
00:28:05,359 --> 00:28:07,520
Speaker 1: Is that an opportunity or do you have to go

499
00:28:07,640 --> 00:28:10,639
Speaker 1: look someplace else to really create off I think you

500
00:28:10,680 --> 00:28:12,359
Speaker 1: have to look at this as a long term sector,

501
00:28:12,600 --> 00:28:15,159
Speaker 1: right if you want to play quarter core. It's a

502
00:28:15,200 --> 00:28:18,480
Speaker 1: tough sector year to year. Yes, it's near to year.

503
00:28:19,520 --> 00:28:21,840
Speaker 1: We think there are three companies that have very very

504
00:28:21,920 --> 00:28:23,639
Speaker 1: strong futures. I want to get this in here. We

505
00:28:23,760 --> 00:28:26,480
Speaker 1: got just two minutes left. Craig Moffatt, you're single best

506
00:28:26,520 --> 00:28:29,160
Speaker 1: buy right now. You know it's actually on the telecom side.

507
00:28:29,520 --> 00:28:32,480
Speaker 1: Despite some of the things I've said about telecom Um,

508
00:28:32,760 --> 00:28:35,200
Speaker 1: I love T Mobile here. I think T Mobile is

509
00:28:35,640 --> 00:28:37,280
Speaker 1: has got a lot of things going for it. It's

510
00:28:37,359 --> 00:28:39,920
Speaker 1: it's gaining a ton of share, stock is still cheap,

511
00:28:40,040 --> 00:28:42,400
Speaker 1: it's starting to generate real free cash flow, and it's

512
00:28:42,440 --> 00:28:45,240
Speaker 1: got a really nice growth story, which is so much

513
00:28:45,320 --> 00:28:47,560
Speaker 1: of the country that they don't cover. Where they're starting

514
00:28:47,560 --> 00:28:50,560
Speaker 1: to add is their CEO and distraction um. I do

515
00:28:50,720 --> 00:28:53,120
Speaker 1: think that the stick of of the bad boy of

516
00:28:53,240 --> 00:28:57,120
Speaker 1: telecom Um has has perhaps sort of run its course

517
00:28:57,160 --> 00:28:59,320
Speaker 1: a little bit. He's actually a very cerebral guy and

518
00:28:59,680 --> 00:29:03,480
Speaker 1: to some greegree an act um. But but the that's

519
00:29:03,480 --> 00:29:06,920
Speaker 1: a business with with really interesting fundamentals. Michael Nathan's and

520
00:29:06,960 --> 00:29:10,040
Speaker 1: your single best pact with we like Fox same seventeen

521
00:29:10,480 --> 00:29:13,440
Speaker 1: or seventeen. We like Fox. Here Fox has had a

522
00:29:13,520 --> 00:29:16,360
Speaker 1: tough clear which Fox is this I can keep track

523
00:29:16,680 --> 00:29:21,360
Speaker 1: the Fox with a television assets, not your long Mr

524
00:29:21,480 --> 00:29:23,160
Speaker 1: Ails and Mr Hannity and the rest of them. Yes,

525
00:29:23,200 --> 00:29:26,160
Speaker 1: we are okay. Fox Sports cannot compete with the ESPN,

526
00:29:27,000 --> 00:29:29,000
Speaker 1: not in the next couple of years, and being you

527
00:29:29,000 --> 00:29:32,240
Speaker 1: should buy some more rights. Uh no, maybe to wrap

528
00:29:32,320 --> 00:29:38,840
Speaker 1: this up subscription versus advertising going forward? Who wins? Good question.

529
00:29:40,120 --> 00:29:42,400
Speaker 1: I want to own long term subscription assets and media

530
00:29:42,600 --> 00:29:47,280
Speaker 1: and advertising assets in digital. Interesting Why is that? Because

531
00:29:47,280 --> 00:29:50,520
Speaker 1: I think we're moving to mobile and mobile is gonna monetize.

532
00:29:51,000 --> 00:29:53,280
Speaker 1: Facebook and Google are going to just continue to control

533
00:29:53,360 --> 00:29:56,840
Speaker 1: mobile monetization. Facebook will win in terms of the share

534
00:29:57,080 --> 00:30:01,160
Speaker 1: of advertising. Facebook has just started monetize video. You've not

535
00:30:01,280 --> 00:30:04,400
Speaker 1: seen anything yet from Facebook video, and that's just scary people.

536
00:30:04,480 --> 00:30:06,520
Speaker 1: Did you to be like in terms of an ad

537
00:30:06,520 --> 00:30:09,000
Speaker 1: at the beginning? It will be better than that because

538
00:30:09,000 --> 00:30:11,160
Speaker 1: it'll be shorter and more engagement. You guys walk in here.

539
00:30:11,200 --> 00:30:16,080
Speaker 1: It feels so old. The most amazing story I saw

540
00:30:16,200 --> 00:30:22,920
Speaker 1: today Facebook is hiring middle schoolers two try to hack

541
00:30:23,120 --> 00:30:28,200
Speaker 1: their systems because they can't find enough security. Where do

542
00:30:28,320 --> 00:30:33,800
Speaker 1: I sign? They can't find enough coders to do this,

543
00:30:34,240 --> 00:30:36,440
Speaker 1: So they've made a game out of hack our system

544
00:30:36,480 --> 00:30:38,920
Speaker 1: and they sent it to Middleton. This has been wonderful,

545
00:30:38,960 --> 00:30:43,720
Speaker 1: Craig Man, congratulations in three years of entrepreneurial vision. Michael

546
00:30:43,800 --> 00:30:46,960
Speaker 1: Nathanson and Craig Mofatt with Mofatt Nathanson, We're gonna do

547
00:30:47,040 --> 00:30:48,960
Speaker 1: this a lot more, get to teams of people, and

548
00:30:49,080 --> 00:30:51,760
Speaker 1: it's very difficult with the schedules to do this. Just

549
00:30:51,880 --> 00:30:58,800
Speaker 1: took our team two years, them two years of planning.

550
00:30:59,040 --> 00:31:03,240
Speaker 1: Patrick o hon their director of institutional sales. Is it

551
00:31:03,360 --> 00:31:11,600
Speaker 1: a carefully sealed right now? Can we say it a

552
00:31:11,960 --> 00:31:15,080
Speaker 1: good morning to Mr O'Connell all the revenue producers at

553
00:31:15,120 --> 00:31:17,840
Speaker 1: Morbatt Naten's and pacing back and forth. They're out front

554
00:31:17,920 --> 00:31:22,680
Speaker 1: with rifles. They're gonna shoot down text here. Very good,

555
00:31:22,720 --> 00:31:26,560
Speaker 1: Buffett Nathans, and thank you. Thank features negative three down

556
00:31:26,600 --> 00:31:31,240
Speaker 1: features negative three good retail sales another hour of Bloomberg

557
00:31:31,360 --> 00:31:31,920
Speaker 1: surveillance