WEBVTT - Trump Backs Off Greenland Tariffs, Citing ‘Framework’ Deal 0:00:02.480 --> 0:00:10.720 Bloomberg Audio Studios, Podcasts, Radio News. This is Bloomberg Business Week, 0:00:10.800 --> 0:00:14.640 Daily reporting from the magazine that helps global leaders stay 0:00:14.680 --> 0:00:18.759 ahead with insight on the people, companies, and trends shaping 0:00:18.760 --> 0:00:23.720 today's complex economy, plus global business, finance and tech news 0:00:23.760 --> 0:00:27.760 as it happens. The Bloomberg Business Week Daily Podcast with 0:00:27.880 --> 0:00:31.720 Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.080 --> 0:00:34.280 All right, everybody, we begin this hour though, with the 0:00:34.280 --> 0:00:36.840 most read story on the Bloomberg in the past sixty minutes. 0:00:36.920 --> 0:00:39.600 President Trump said he would refrain from imposing tariffs on 0:00:39.640 --> 0:00:43.400 goods from European nations of posting his effort to take 0:00:43.440 --> 0:00:46.920 possession of Greenland, citing a framework for a future deal. 0:00:47.440 --> 0:00:49.920 I put quotations because those are his words. He was 0:00:50.560 --> 0:00:54.000 reached regarding the island. So we're talking about the island, 0:00:54.040 --> 0:00:55.880 of course, of Greenland. So it was kind of like 0:00:55.920 --> 0:00:58.760 a wait, what moment for a bunch of us because 0:00:58.760 --> 0:01:02.120 the President has been for days leading up to Davos 0:01:02.480 --> 0:01:07.600 talking about acquiring that island, so maybe he found an 0:01:07.640 --> 0:01:08.040 off ramp. 0:01:08.080 --> 0:01:09.480 So let's see what Nick Watams has to say. 0:01:09.480 --> 0:01:12.440 Bloomberg News National Security Team leader Nick Watams is in 0:01:12.440 --> 0:01:13.920 the Bloomberg DC News Bureau. 0:01:14.080 --> 0:01:14.839 It was Nick. 0:01:15.240 --> 0:01:17.160 It felt like a little bit like a wait what moment, 0:01:17.240 --> 0:01:20.600 Although we did have some market observers yesterday saying that, 0:01:20.680 --> 0:01:22.399 you know, the President's going to figure out a way 0:01:22.400 --> 0:01:24.880 out of this. How do you read what's you read 0:01:24.920 --> 0:01:26.360 on this right? 0:01:26.440 --> 0:01:28.800 I mean, it's one of those things that's a little 0:01:28.800 --> 0:01:32.000 bit shocking, but not entirely surprising. We've definitely been through 0:01:32.040 --> 0:01:35.040 this before where the Trump administration of the President himself 0:01:35.120 --> 0:01:38.360 ratchet so pressure, says he's going to impose tariffs and 0:01:38.400 --> 0:01:41.800 then backs down right at the last minute. The big 0:01:41.880 --> 0:01:45.800 question is going to be what this framework agreement will be, 0:01:46.000 --> 0:01:48.880 what it will entail, what will happen to Greenland, because 0:01:48.920 --> 0:01:51.640 the President was quite explicit in his comments today that 0:01:51.680 --> 0:01:55.520 he wants Greenland as US territory, so what the back 0:01:55.560 --> 0:01:58.440 down is going to be there, But also then, of course, 0:01:58.480 --> 0:02:00.880 what happened in the future, because we've been in this 0:02:01.000 --> 0:02:05.280 cycle so many times where he escalates tensions, backs down, 0:02:05.480 --> 0:02:08.600 and then escalates a tensions again, and it's a sort 0:02:08.639 --> 0:02:12.920 of rinse and repeat situation. So markets are certainly happy, 0:02:12.960 --> 0:02:15.840 but I don't think there's any indication at least that 0:02:15.880 --> 0:02:17.880 I'm seeing that we're anywhere near out of the woods, 0:02:17.919 --> 0:02:20.280 and you won't see the President just ratchet pressure up 0:02:20.320 --> 0:02:23.919 once again as a negotiating tool if this framework deal, 0:02:24.000 --> 0:02:26.919 once the details become more specific, aren't really to his liking. 0:02:27.000 --> 0:02:29.120 Well, he did make a comment earlier today in his 0:02:29.160 --> 0:02:32.519 speech at Davos Nick that he wouldn't use force. And 0:02:33.080 --> 0:02:38.160 I'm wondering if which is great, as you know, we 0:02:38.280 --> 0:02:40.880 don't want I just want to say, like, we don't 0:02:40.880 --> 0:02:45.520 want conflict here. I think I can say that, But 0:02:46.120 --> 0:02:50.200 is there another way to do this? If somebody who 0:02:50.280 --> 0:02:52.919 is not selling something says they're not interested in selling 0:02:52.960 --> 0:02:56.040 that thing to you, like I don't understand the how 0:02:56.080 --> 0:02:58.000 to thread that needle, right? 0:02:58.080 --> 0:03:01.840 I mean to me, the most likely scenario is that 0:03:01.880 --> 0:03:06.200 you would see the US put more military assets in Greenland. 0:03:06.240 --> 0:03:09.919 Of course, that's something that the US has been allowed 0:03:09.960 --> 0:03:13.000 to do for many decades. In fact, over the decades, 0:03:13.040 --> 0:03:17.880 the US has drastically scaled back its military presence in Greenland, 0:03:17.919 --> 0:03:21.480 and Greenland and Denmark have absolutely no objection to the 0:03:21.639 --> 0:03:26.040 US bolstering military assets that bases all up and down 0:03:26.040 --> 0:03:29.400 the island and putting essentially as much as they want there. 0:03:30.000 --> 0:03:32.120 What you heard from the President today as well was 0:03:32.160 --> 0:03:35.520 this mention of Golden Dome, which his so far unproven 0:03:35.880 --> 0:03:41.200 essentially missile interceptor system that he wants to put in 0:03:41.240 --> 0:03:44.160 place at a cost of many, many billions of dollars. 0:03:44.200 --> 0:03:47.640 So it's possible that what happened here is that Greenland, 0:03:48.440 --> 0:03:51.080 NATO and Denmark all sort of said, Okay, we're going 0:03:51.160 --> 0:03:54.520 to be willing for you to station Golden Dome there, 0:03:55.080 --> 0:03:57.960 and that was enough to mollify him. But you know, 0:03:58.320 --> 0:04:01.640 as usual with these things, clear how much the president 0:04:01.720 --> 0:04:06.280 knows about the history of US basing on Greenland, what 0:04:06.440 --> 0:04:08.800 he's allowed to do, and what he's not allowed to do. 0:04:08.840 --> 0:04:11.560 So it's entirely possible, for example, that they presented to 0:04:11.640 --> 0:04:14.600 him this thing that might be seen as a big concession, 0:04:15.000 --> 0:04:18.520 but was something he could already do in the first place. So, 0:04:18.600 --> 0:04:20.640 needless to say, we're trying to sort all that out 0:04:20.720 --> 0:04:21.120 right now. 0:04:21.600 --> 0:04:26.799 Yeah, it's my brain hurts a little bit, Nick, because 0:04:26.800 --> 0:04:29.240 I do feel like I'm sorry. Are you laughing at me? 0:04:29.400 --> 0:04:31.599 He's laughing at me, No, but it just feels like 0:04:32.200 --> 0:04:33.480 I'm just sad that your brain hurts. 0:04:33.560 --> 0:04:36.040 Where did we what did we get? What did we 0:04:36.080 --> 0:04:39.840 achieve as a nation, And I just think about some serious. 0:04:39.520 --> 0:04:41.400 Situations that are still going on around the world. 0:04:41.400 --> 0:04:44.760 Some Americans would say, we're still dealing with a war 0:04:44.800 --> 0:04:48.920 between Russia and Ukraine, Ukraine and Ally, right, or you know, 0:04:49.000 --> 0:04:51.120 we still have stuff going on in the Middle East, 0:04:51.160 --> 0:04:54.880 we still have stuff going on in Minneapolis, Minnesota, our 0:04:54.920 --> 0:04:58.080 home in front. I'm just trying to understand the amount 0:04:58.080 --> 0:05:01.080 of time and you know, spent on something like this, 0:05:01.200 --> 0:05:03.760 and I'm not quite sure what we got as a 0:05:03.839 --> 0:05:05.760 nation out of that, and as an American what we 0:05:05.800 --> 0:05:06.240 got out. 0:05:06.160 --> 0:05:08.880 Of that, right, I mean, well, I think on the 0:05:08.920 --> 0:05:11.080 one hand, you have the president's view, which is he 0:05:11.200 --> 0:05:15.719 sees this pressure dialing up, ratcheting up the pressure as 0:05:15.760 --> 0:05:19.360 a legitimate and successful strategy. Mean, you look at NATO itself, 0:05:19.440 --> 0:05:22.760 and he has one of the foreign policy achievements he 0:05:22.839 --> 0:05:26.480 has had, according to the administration, at least, is this 0:05:26.560 --> 0:05:29.400 idea of getting other NATO countries to commit to spending 0:05:29.480 --> 0:05:32.160 five percent of GDP on defense. 0:05:32.320 --> 0:05:32.960 And that's not. 0:05:33.040 --> 0:05:35.960 Something they would have done, certainly not at this pace, 0:05:36.040 --> 0:05:38.800 unless he had done that. So, you know, he may 0:05:38.920 --> 0:05:41.880 see this as something where the US gets an increased 0:05:41.920 --> 0:05:45.799 presence on Greenland has the ability to install Golden Dome, 0:05:46.279 --> 0:05:50.840 bolster its military presence, and portray this essentially as a 0:05:50.880 --> 0:05:54.799 win under the knowledge that a lot of people, certainly 0:05:54.839 --> 0:05:57.080 his base, are not going to look back and say, well, hey, 0:05:57.240 --> 0:05:59.400 you guys could have done that anyway, and you could 0:05:59.440 --> 0:06:03.400 have done it without all of this chaos and drama 0:06:03.640 --> 0:06:08.159 and brinksmanship with an ally. But you can be sure 0:06:08.240 --> 0:06:10.120 that he is going to portray this as a win, 0:06:10.360 --> 0:06:13.760 and the result may likely be that the US will 0:06:13.760 --> 0:06:17.520 have an increased military presence in Greenland, which is something 0:06:17.600 --> 0:06:19.680 that folks on both sides of the aisle. There are 0:06:19.680 --> 0:06:22.320 certainly voices who would advocate that that's an important thing 0:06:22.360 --> 0:06:22.560 to do. 0:06:22.800 --> 0:06:24.520 Yeah, and maybe all the cards are being laid out 0:06:24.520 --> 0:06:27.839 on the table. It may feels kind of messy, but 0:06:28.080 --> 0:06:30.120 there's certainly a lot that's out there at this point. 0:06:30.120 --> 0:06:33.520 Tips Nick, before we let you go, Article five, the 0:06:33.600 --> 0:06:38.039 collective defense clause for NATO, just remind everybody when it 0:06:38.080 --> 0:06:40.400 has been invoked and who benefited from. 0:06:40.320 --> 0:06:43.839 That, right, Well, I mean, so the President has said 0:06:43.880 --> 0:06:48.000 repeatedly that the US gets nothing from NATO. Obviously, the 0:06:48.120 --> 0:06:51.039 time that Article five was in voked was after the 0:06:51.080 --> 0:06:54.320 September eleventh attack, and a lot of NATO countries came 0:06:54.400 --> 0:06:57.240 to the US's eight and you saw participation by NATO 0:06:57.320 --> 0:07:02.440 forces in Afghanistan was really the big one. Of course, 0:07:02.480 --> 0:07:07.000 it would have been an extraordinary and chaotic situation if 0:07:07.320 --> 0:07:10.040 the US had decided to attack Greenland, and you would 0:07:10.080 --> 0:07:12.920 have essentially had to have had NATO invoking Article five 0:07:12.960 --> 0:07:15.400 against one of its own members, and then you would 0:07:15.400 --> 0:07:18.040 have essentially seen the total dissolution of NATO. 0:07:18.200 --> 0:07:20.400 So, at least for today. 0:07:20.280 --> 0:07:23.840 January late January twenty twenty six, we are not going 0:07:23.920 --> 0:07:27.040 to see the dissolution of NATO. But who knows what 0:07:27.080 --> 0:07:28.720 the President is going to say in the next day 0:07:28.800 --> 0:07:29.000 or two. 0:07:29.360 --> 0:07:32.040 Well, investors certainly like that, and probably like even more 0:07:32.080 --> 0:07:34.400 that we're not going to see more tariffs coming down. 0:07:34.880 --> 0:07:36.160 Nick Wadhams, thank you so much. 0:07:36.240 --> 0:07:39.040 Nick, of course, Bloomberg News National Security Team leader out 0:07:39.040 --> 0:07:40.480 there in our DCBREA. 0:07:40.840 --> 0:07:43.640 Stay with us. More from Bloomberg Business Week Daily coming 0:07:43.720 --> 0:07:44.600 up after this. 0:07:48.720 --> 0:07:52.600 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:07:52.680 --> 0:07:55.360 us live weekday afternoons from two to five eas during 0:07:55.560 --> 0:07:58.760 listen on Apple, Karplay and Android Otto with the Bloomberg 0:07:58.840 --> 0:08:01.760 business app just live on YouTube. 0:08:02.600 --> 0:08:06.080 Netflix shares tumbled earlier in the session by as much 0:08:06.120 --> 0:08:08.320 as six percent off their lows. Now as we see 0:08:08.360 --> 0:08:12.440 some buying across risk assets late into the trading day, 0:08:12.520 --> 0:08:15.559 Netflix shares down about two point nine percent right now, 0:08:15.760 --> 0:08:17.360 the stock taking a hit after the company issued a 0:08:17.400 --> 0:08:19.520 disappointing forecast for earnings in the months ahead as it 0:08:19.520 --> 0:08:21.920 spends more on programming and works to close it's eighty 0:08:21.960 --> 0:08:24.720 two point seven billion dollar deal with Warner Brothers Discovery. 0:08:25.000 --> 0:08:27.679 For more, let's bring in Alisha Reese, Senior vice president 0:08:27.680 --> 0:08:30.680 of equity Research. She covers media entertainment at Weblish Securities 0:08:31.040 --> 0:08:33.720 more than five billion dollars in assets under management. She 0:08:33.800 --> 0:08:36.760 joins us from Lake Oswego, Oregon. LISHA, welcome back to 0:08:36.800 --> 0:08:40.200 the program. You know, we were talking yesterday before the 0:08:40.280 --> 0:08:45.000 call about the idea of content spend sending shares lower. 0:08:45.080 --> 0:08:46.679 And it's like a story that we could have told 0:08:46.679 --> 0:08:49.240 about Netflix a dozen years ago, because this is always 0:08:49.640 --> 0:08:52.440 you know, apart from members and maybe get that number anymore. 0:08:52.760 --> 0:08:54.880 That's what in the past has moved the company's stock. 0:08:55.240 --> 0:08:57.320 Is that what happened this time or is it something different? 0:08:58.880 --> 0:09:00.839 There are a few different elements here going on. 0:09:01.000 --> 0:09:04.560 So you know, Netflix does give the engagement numbers now, 0:09:04.760 --> 0:09:08.760 and you know, after not giving subscriber numbers for most 0:09:08.840 --> 0:09:11.200 of the year, they did give their subscriber numbers. But 0:09:11.240 --> 0:09:13.760 the subscriber numbers are really where we expected them to be. 0:09:13.800 --> 0:09:16.559 There was no surprise there. I think, you know, there 0:09:16.640 --> 0:09:20.880 was some disappointment. And how much advertising revenue that Netflix 0:09:20.920 --> 0:09:23.760 was able to squeeze out of a quarter is as 0:09:23.800 --> 0:09:25.920 big as Q four. When you had you know, all 0:09:25.920 --> 0:09:30.600 those live events including NFL games on Christmas, some boxing matches, 0:09:31.000 --> 0:09:33.520 and of course stranger things, and you had a lot 0:09:33.520 --> 0:09:36.439 of you know, people coming onto the service and a 0:09:36.520 --> 0:09:40.080 lot more engagement around those events. Netflix should have been 0:09:40.120 --> 0:09:43.000 able to get some pretty significant advertising revenue. 0:09:43.200 --> 0:09:44.640 They did get decent amount. 0:09:45.080 --> 0:09:48.120 Advertising revenue did grow two and a half times year 0:09:48.120 --> 0:09:50.560 of a year, and they do expect another doubling in 0:09:50.640 --> 0:09:55.240 twenty six to about three billion dollars. And that's satisfactory, 0:09:55.280 --> 0:09:58.800 but it's not you know, exciting just yet. You know, 0:09:59.120 --> 0:10:03.840 there's still a significant growth opportunity for Netflix in advertising, 0:10:04.200 --> 0:10:06.760 and I think the hurdle so far has been just 0:10:06.760 --> 0:10:09.880 that they haven't had the data stack and the attribution 0:10:10.000 --> 0:10:14.679 available for advertisers significant enough for them to really, you know, 0:10:14.760 --> 0:10:16.480 do all of the campaigns. 0:10:15.920 --> 0:10:16.839 That they would like to do. 0:10:17.200 --> 0:10:20.600 They have great alternatives right now across social media and 0:10:20.640 --> 0:10:24.000 other connected TV items, but Netflix is really catching up 0:10:24.040 --> 0:10:25.720 on this and I do think that they'll be able 0:10:25.720 --> 0:10:28.760 to exploit that opportunity in the coming year, in year. 0:10:28.720 --> 0:10:32.600 Or two, So advertising being the big surge Alicia, when 0:10:32.640 --> 0:10:35.160 it comes to boosting the top line, the revenue line. 0:10:36.120 --> 0:10:39.160 Yeah, I think that's their biggest opportunity in the coming years. 0:10:39.559 --> 0:10:42.920 Twenty six is the first year where that's really meaningful. 0:10:42.960 --> 0:10:46.480 It's a meaningful contributor to its growth opportunity. And I 0:10:46.600 --> 0:10:48.520 you know, the three billion dollar market that they set 0:10:48.559 --> 0:10:51.680 for themselves, they can easily surpass that if they get 0:10:51.720 --> 0:10:55.000 all of the pieces in place, and that excessive content 0:10:55.080 --> 0:10:57.960 spen or what might look excessive content spend relative to 0:10:58.000 --> 0:11:00.720 the engagement will look a lot more reasonable if a 0:11:00.720 --> 0:11:03.199 lot of that engagement is on the ad tier. Now, 0:11:03.200 --> 0:11:06.120 they said that they're planning to do some price increases 0:11:06.160 --> 0:11:08.720 in the year, and I think that's going to be 0:11:08.760 --> 0:11:11.840 mainly on the premium tiers, trying to urge more of 0:11:11.880 --> 0:11:15.240 its users over to the advertising tier, which is significantly cheaper. 0:11:15.480 --> 0:11:16.959 If they get a lot of that engagement on the 0:11:16.960 --> 0:11:19.520 ad tier and a lot more advertisers in front of them, 0:11:19.679 --> 0:11:21.079 that results in profitability. 0:11:21.720 --> 0:11:24.559 The eighty two point seven billion dollar deal for Warner 0:11:24.559 --> 0:11:28.679 Brothers Discovery predict predict this for us. Does Netflix get 0:11:28.679 --> 0:11:29.320 these assets? 0:11:31.120 --> 0:11:33.839 The regulatory process is going to be long drawn out 0:11:33.880 --> 0:11:34.839 and very difficult. 0:11:35.480 --> 0:11:37.640 Why do you think that in this in this world? 0:11:37.640 --> 0:11:41.360 Well, yeah, well there's two different sides of it. On 0:11:41.400 --> 0:11:44.760 the one side, there's the consumer side. It's going to 0:11:44.760 --> 0:11:47.640 be hard for Netflix to argue that, you know, the 0:11:47.760 --> 0:11:51.800 likes of YouTube that you know, billions on YouTube are 0:11:51.960 --> 0:11:55.920 real competitors. You know, you do have some subscribers, but 0:11:55.960 --> 0:12:00.280 it's a significantly lower portion. Not all media is going 0:12:00.280 --> 0:12:03.839 to be, you know, considered a competitor. If you only 0:12:03.880 --> 0:12:07.760 have real competitors in their Netflix does have significant market share, 0:12:07.800 --> 0:12:10.440 and we'll have quite a bit when they have HBO. 0:12:10.760 --> 0:12:12.760 On the other side, it's content. 0:12:13.000 --> 0:12:16.560 As a content buyer, it's going to consolidate power pretty 0:12:16.600 --> 0:12:21.480 significantly for you know, against producers of content, and so it'll. 0:12:21.240 --> 0:12:23.319 Give Netflix almost too much. 0:12:24.720 --> 0:12:27.800 You know, collective power against those producers and how much 0:12:27.840 --> 0:12:31.720 they'll spend on content. So it does diminish some power 0:12:31.760 --> 0:12:35.000 in Hollywood potentially, and you know the prosecutors will be 0:12:35.040 --> 0:12:35.760 able to argue that. 0:12:36.440 --> 0:12:39.560 Alicia, you've got an outperform. You've had an outperform for 0:12:39.600 --> 0:12:42.360 a while. I think you've moved around the target price. 0:12:42.440 --> 0:12:44.520 Right now, you're looking for about one hundred and fifteen 0:12:44.600 --> 0:12:48.520 a share on Netflix, So that's some room to the upside. 0:12:48.559 --> 0:12:51.800 I mean, the stock right now trading just under eighty 0:12:51.840 --> 0:12:52.839 five dollars this year? 0:12:53.000 --> 0:12:53.240 Is it? 0:12:53.280 --> 0:12:55.520 Though we just talked about you stress that the revenue 0:12:55.880 --> 0:12:58.559 is certainly going to be a big opportunity for this company. 0:12:58.600 --> 0:13:01.240 AD revenue growth. Is that what gets it to the 0:13:01.320 --> 0:13:02.600 target or there other things? 0:13:02.640 --> 0:13:02.800 Is that? 0:13:02.920 --> 0:13:04.640 Is it also the completion of the deal. And if 0:13:04.640 --> 0:13:08.320 that deal doesn't happen, then what what does the story 0:13:08.360 --> 0:13:10.760 the growth story look like for Netflix going forward? Is 0:13:11.080 --> 0:13:13.520 add revenue enough or do they need that deal to 0:13:13.559 --> 0:13:15.680 help with that growth in the AD revenue? 0:13:16.679 --> 0:13:19.520 So my price target does not include Warner Brothers at 0:13:19.520 --> 0:13:22.480 this time, and it won't until the deal closes. Right now, 0:13:22.640 --> 0:13:25.040 I'm you know, my my assumption is that they're going 0:13:25.080 --> 0:13:27.360 to just continue operating as Netflix at least for the 0:13:27.360 --> 0:13:31.240 next you know, year plus during the regulatory process. So 0:13:31.600 --> 0:13:33.920 my one hundred and fifty dollars price target if one 0:13:34.000 --> 0:13:36.880 year out includes only Netflix and its own you know 0:13:36.960 --> 0:13:41.000 internal opportunity with AD revenue growth and so you know, 0:13:41.200 --> 0:13:44.880 should that deal go through, that will you know, significantly 0:13:44.920 --> 0:13:49.280 improve Netflix's ability to leverage its AD stack, which by 0:13:49.320 --> 0:13:52.880 then should be you know, absolutely booming. So I do 0:13:52.920 --> 0:13:55.240 think there's a lot of upside opportunity with or without 0:13:55.280 --> 0:13:56.360 Warner Brothers at this point. 0:13:56.400 --> 0:13:59.120 Okay, what happens though if a competitor gets it. You said, 0:13:59.120 --> 0:14:02.679 there's still a lot of upside even if. 0:14:01.800 --> 0:14:05.760 Content gets more expensive. Yeah, yeah, that is that is 0:14:05.800 --> 0:14:07.920 the issue. You know, Netflix has been making a lot 0:14:07.920 --> 0:14:12.080 of partnerships and content you know, they made their one 0:14:12.080 --> 0:14:13.319 with Sony recently. 0:14:13.559 --> 0:14:15.839 Of course, they have their you know, content deal with. 0:14:15.800 --> 0:14:19.880 Warner Brothers, and they've seen how successful that content library 0:14:20.040 --> 0:14:23.760 is foreign Netflix on Netflix, and so owning the content 0:14:23.840 --> 0:14:25.240 makes a lot of sense. It'll save them a lot 0:14:25.240 --> 0:14:27.840 of money on those content costs. If somebody else gets 0:14:27.920 --> 0:14:31.280 the content, it could potentially be more expensive, but Netflix 0:14:31.320 --> 0:14:35.640 buys that content, plenty of content from paramount already, so 0:14:35.960 --> 0:14:38.320 you know, it's it's just a matter of will Netflix 0:14:38.360 --> 0:14:42.040 continue to spend this much on you know, procuring content 0:14:42.400 --> 0:14:45.520 through licensing deals and then producing its own content and 0:14:45.560 --> 0:14:48.680 a combination of that in a combination of international content 0:14:48.760 --> 0:14:51.760 as well. It certainly can, you know, it just would 0:14:51.800 --> 0:14:54.360 be a little bit more profitable, especially if they're able 0:14:54.400 --> 0:14:59.200 to leverage that content against a global you know base 0:14:59.280 --> 0:15:01.360 that that utilize this advertising. 0:15:01.560 --> 0:15:04.440 Okay, so years ago Netflix said, all we're doing, you know, 0:15:04.600 --> 0:15:07.480 is sending DVDs to people, and that's our business. Then 0:15:07.520 --> 0:15:11.120 they you know, quick Stir and the whole spin off, 0:15:11.120 --> 0:15:13.320 and that didn't end up happening. But then they're like, Okay, 0:15:13.680 --> 0:15:15.880 now all we're doing is focusing on on demand streaming. 0:15:15.880 --> 0:15:17.840 We're never gonna do sports, We're never gonna do anything live. 0:15:19.480 --> 0:15:21.640 If they throw all that out the window, they're doing 0:15:21.680 --> 0:15:24.520 everything right now, they're doing advertising these to say we 0:15:24.600 --> 0:15:28.680 never do advertising. What is left for Netflix to do, 0:15:28.760 --> 0:15:31.800 at least from a content perspective. If they're doing games, 0:15:32.080 --> 0:15:35.240 if they're doing sports, if they're doing these live one 0:15:35.280 --> 0:15:38.960 off events, if they're doing the live not one off 0:15:39.000 --> 0:15:42.520 events and getting actually rights to broadcast sports, if they're 0:15:42.720 --> 0:15:45.280 if they're doing podcasts, what's left. 0:15:46.400 --> 0:15:48.760 Yeah, I mean, there's a lot left in terms of 0:15:48.920 --> 0:15:52.520 gaming cloud gaming. They have a really big opportunity there 0:15:53.160 --> 0:15:56.800 as cloud gaming becomes more pervasive on connected TVs, they 0:15:56.800 --> 0:15:57.720 have a good opportunity. 0:15:57.760 --> 0:16:00.000 Just given their global base and the number of games 0:16:00.320 --> 0:16:00.960 out there. 0:16:01.160 --> 0:16:03.200 They can do a lot with that. I think they 0:16:03.200 --> 0:16:07.000 could become a really important platform for gaming. You know, 0:16:07.160 --> 0:16:10.000 similar to you know, some of the consoles. They can 0:16:10.280 --> 0:16:13.360 operate as such, you know, licensing in a lot of 0:16:13.400 --> 0:16:17.040 really quality, you know, high quality gaming content and then 0:16:17.120 --> 0:16:20.080 leveraging their own IP as they see fit. You know, 0:16:20.120 --> 0:16:23.680 there are a lot of other opportunities in sports to 0:16:23.760 --> 0:16:27.200 your point, they don't have to you know, they can 0:16:27.280 --> 0:16:29.920 do one off events. They can do you know, WWE, 0:16:30.040 --> 0:16:31.640 which has been really successful for them. 0:16:31.840 --> 0:16:36.120 They're going to do, you know, the baseball in Japan. 0:16:36.320 --> 0:16:39.240 I think that's a really important step for them. 0:16:39.520 --> 0:16:42.240 And it doesn't have to be global, it can be localized. 0:16:42.560 --> 0:16:45.840 They can also leverage their global base to bring sports 0:16:46.120 --> 0:16:49.240 that are not big in certain regions to those regions 0:16:49.280 --> 0:16:52.400 and and you know, create a larger fan base around 0:16:52.400 --> 0:16:56.000 the world. You know, take Gaelic football to the US, 0:16:56.000 --> 0:16:58.080 for instance. You know, that could work. There are a 0:16:58.120 --> 0:17:01.520 lot of different opportunities within those I think podcasts. You know, 0:17:02.200 --> 0:17:06.359 the whole idea is to have content that will appeal 0:17:06.480 --> 0:17:11.600 to everyone of their subscriber households and keep everyone engaged. 0:17:11.640 --> 0:17:13.600 And however they need to do, that is what. 0:17:13.480 --> 0:17:14.040 They're going to do. 0:17:14.280 --> 0:17:18.000 Alichari, Senior Vice president of equity Research covering media Entertainment 0:17:18.040 --> 0:17:22.240 at web Bush Securities. Stay with us more from Bloomberg 0:17:22.280 --> 0:17:24.320 Business Week Daily coming up after this. 0:17:28.800 --> 0:17:32.640 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:17:32.720 --> 0:17:35.400 us live weekday afternoons from two to five eas during 0:17:35.600 --> 0:17:39.520 Listen on Applecarplay and Android Auto with the Bloomberg Business app, 0:17:39.720 --> 0:17:42.920 or watch us live on YouTube well. 0:17:42.920 --> 0:17:46.159 Also on the President's radar, has moved to ban institutional 0:17:46.160 --> 0:17:48.840 investors from buying single family homes, the latest proposal from 0:17:48.880 --> 0:17:51.879 the administration to address housing affordability ahead of this year's 0:17:51.880 --> 0:17:54.920 midterm elections. Actually signed an executive order on this yesterday. 0:17:55.119 --> 0:17:57.920 The President address housing affordability in his speech in Davos 0:17:57.960 --> 0:17:59.760 earlier today. 0:17:59.760 --> 0:18:02.320 Time you make it more and more and more affordable 0:18:02.320 --> 0:18:04.960 for somebody to buy house cheaply, you are actually hurting 0:18:05.440 --> 0:18:06.800 the value of those houses. 0:18:07.160 --> 0:18:09.200 Now, if I want to really crush the housing market. 0:18:09.240 --> 0:18:12.080 I could do that so fast to be good by houses, 0:18:12.680 --> 0:18:16.160 but you would destroy a lot of people that already 0:18:16.160 --> 0:18:16.760 have houses. 0:18:17.840 --> 0:18:21.040 Thus, President Trump earlier today, Jonathan Reckford knows what it 0:18:21.080 --> 0:18:23.880 takes to build affordable housing. You CEO of Habitat for Humanity. 0:18:23.920 --> 0:18:28.200 He joins us from the World Economic Forum in Davos, Switzerland. Jonathan, 0:18:28.200 --> 0:18:31.119 good to have you on the program. Is you know, 0:18:31.400 --> 0:18:34.520 we spoke a lot last week about institutional investors owning 0:18:34.560 --> 0:18:36.680 single family homes in the US, and the data are 0:18:36.760 --> 0:18:40.920 out there. It's actually a small percentage of the homes 0:18:40.920 --> 0:18:44.080 in the US are owned by institutional investors. In your view, 0:18:44.200 --> 0:18:48.400 would banning these folks from owning single family homes ease 0:18:48.440 --> 0:18:49.800 the housing crisis in the US? 0:18:51.520 --> 0:18:54.840 Well, first, we're just pleased the administration is talking about housing, 0:18:55.000 --> 0:18:57.639 and I think the housing crisis is such a huge 0:18:57.680 --> 0:19:00.560 issue in the US and globally. I'm glad it's on 0:19:00.600 --> 0:19:03.280 the agenda here at Davos as well. And we would 0:19:03.320 --> 0:19:06.520 say that now that middle class families children cannot afford housing, 0:19:06.880 --> 0:19:10.800 the more invisible housing crisis has become visible. We need 0:19:10.920 --> 0:19:14.240 We haven't taken a stance on the issue that you've 0:19:14.280 --> 0:19:16.359 just raised. We still want to look at the details. 0:19:16.680 --> 0:19:20.480 There are certain markets nationally it's a very small percent 0:19:20.600 --> 0:19:23.720 There's small certain markets like Atlanta, Charlotte, a few others 0:19:23.720 --> 0:19:26.840 where it's a meaningful percentage. But that's only one small 0:19:26.880 --> 0:19:29.680 piece of the broader housing issue. And what we really 0:19:29.720 --> 0:19:32.560 have is a supply problem. We have a massive shortage, 0:19:32.600 --> 0:19:35.639 particularly at the low end of the market, starter homes, 0:19:36.000 --> 0:19:38.119 and so our view is creating a lot more supply 0:19:38.200 --> 0:19:41.760 on the starter home side would not actually damage home 0:19:41.880 --> 0:19:43.760 values in the middle and upper ends because we have 0:19:43.800 --> 0:19:46.040 such a shortage right now. In fact, if we work 0:19:46.080 --> 0:19:49.560 more on the demand side without increasing supply, we'll drive 0:19:50.040 --> 0:19:52.960 house costs up further and it won't really solve the 0:19:53.000 --> 0:19:55.920 housing crisis. So we need really a little bit of everything. 0:19:55.960 --> 0:19:58.360 We do need demand side solutions, but the most important 0:19:58.359 --> 0:20:01.080 thing is to increase the supply of houses at the 0:20:01.080 --> 0:20:01.919 low end of the market. 0:20:02.119 --> 0:20:04.880 You know, I have to I don't always understand. 0:20:05.080 --> 0:20:08.480 I mean, I understand giving developers breaks and tax breaks 0:20:10.680 --> 0:20:15.080 to build in certain areas that maybe need some juice 0:20:15.080 --> 0:20:17.280 and some help, right to get a kind of back 0:20:17.359 --> 0:20:19.720 and bring back a community, bring back a city, bring 0:20:19.800 --> 0:20:23.720 back a town. But I'm amazing, like tax abatements that 0:20:23.800 --> 0:20:27.000 still get given in areas where things are good without 0:20:27.000 --> 0:20:30.240 any maybe provisions to make sure that there is housing 0:20:31.000 --> 0:20:35.560 for everybody in the community, not just the wealthier folks. 0:20:35.800 --> 0:20:37.440 So how do we really fix this? 0:20:37.640 --> 0:20:40.800