WEBVTT - Bloomberg Businessweek Weekend - July 14th, 2023 0:00:01.360 --> 0:00:05.680 This is Bloomberg business Week inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.079 --> 0:00:22.800 Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week. 0:00:22.880 --> 0:00:25.040 Carol Masser along with Matt Miller, who is in for 0:00:25.160 --> 0:00:29.520 tim our backdrop. This week, US inflation cooling sharply, perhaps 0:00:29.560 --> 0:00:32.560 marking a turning point for the FED. Earnings got underway 0:00:32.600 --> 0:00:35.680 courtesy of the big banks. Yes, all important and yet 0:00:35.720 --> 0:00:38.960 top of mind for us. This week, Disney's succession plans 0:00:39.000 --> 0:00:41.520 and why the iconic company could struggle to gain ground 0:00:41.600 --> 0:00:44.680 in the streaming wars, a short seller living in fear, 0:00:45.080 --> 0:00:49.400 flying cars Yes they are maybe here, And Barbie hits 0:00:49.440 --> 0:00:51.760 the big screen. All of that to come. We begin 0:00:51.840 --> 0:00:55.560 with Meta's answer to Twitter, Meta platform signing up one 0:00:55.600 --> 0:00:59.760 hundred million users in four days on its latest venture Threads, 0:01:00.120 --> 0:01:03.000 often described as a Twitter knockoff. This story and the 0:01:03.000 --> 0:01:06.120 Tech section of the new issue at Bloomberg BusinessWeek on newstands, 0:01:06.160 --> 0:01:08.640 now online at Bloomberg dot com, Slash BusinessWeek, and on 0:01:08.640 --> 0:01:11.399 the Bloomberg terminal. Let's get more from Bloomberg News social 0:01:11.440 --> 0:01:14.400 media reporter Asha Counts and our Big Tech team leader 0:01:14.640 --> 0:01:15.319 Sarah Fryar. 0:01:15.959 --> 0:01:21.520 After all the times we've talked about meta's consoliding power 0:01:21.520 --> 0:01:26.280 and social media growing to have so much influence over 0:01:26.319 --> 0:01:31.440 our behavior, we're kind of vulteering on Zuckerberg in this 0:01:31.560 --> 0:01:35.400 land crab, which is not where I would have expected 0:01:35.480 --> 0:01:37.360 us to be. But you know, Elon Musk and what 0:01:37.400 --> 0:01:41.240 he's done with Twitter has really made an opening for him. 0:01:41.800 --> 0:01:44.800 And you know, even if it feels a lot like Twitter, 0:01:44.840 --> 0:01:47.520 there are people who don't want to be on that 0:01:47.520 --> 0:01:50.400 platform anymore because of all the changes Asia. 0:01:50.560 --> 0:01:54.600 Is it really that successful a launch? I mean, they 0:01:54.600 --> 0:01:57.840 have two billion global users, so all they need to 0:01:57.880 --> 0:02:02.240 do to get to hundred million on threads is get 0:02:02.320 --> 0:02:06.360 ten percent of people who are addicted to Instagram and 0:02:06.400 --> 0:02:08.400 constantly checking it to click. 0:02:09.639 --> 0:02:09.799 Well. 0:02:09.800 --> 0:02:12.400 Look, some people have told me they're like, I'm not 0:02:12.440 --> 0:02:15.440 really impressed. Those people are just on Instagram. They don't 0:02:15.440 --> 0:02:18.880 have any new users, which I mean is partially true. 0:02:18.919 --> 0:02:21.440 A lot of those people were from Instagram. They did 0:02:21.480 --> 0:02:24.000 pull some Twitter people. I don't know that people are 0:02:24.080 --> 0:02:27.240 leaving Twitter, but they are signing up for Threads and 0:02:27.639 --> 0:02:29.560 you got to say, one hundred million in a couple 0:02:29.600 --> 0:02:31.840 of days is impressive, even though they have all these 0:02:31.880 --> 0:02:33.440 other apps and counting. 0:02:33.520 --> 0:02:36.480 Hey guys, I love in your story this line medicineo. 0:02:36.520 --> 0:02:39.320 Mark Zuckerberg's business instincts are to acquire copy or some 0:02:39.440 --> 0:02:42.880 other rival social media products. Is that a good thing though? 0:02:42.919 --> 0:02:45.080 For people who are thinking, Okay, I'm done with Twitter, 0:02:45.240 --> 0:02:48.360 and so's it's kind of an easy switchover. 0:02:49.480 --> 0:02:51.200 Yeah, I mean, I think it's it's just like Twitter 0:02:51.240 --> 0:02:53.399 in the sense that it's a it's a text based 0:02:53.440 --> 0:02:57.680 social networking situation. But I think that where it is 0:02:57.800 --> 0:03:00.480 different than Twitter now and the reason people have been 0:03:00.480 --> 0:03:05.079 moving over to it is because it has content moderation 0:03:05.440 --> 0:03:09.800 from a company that you know isn't that graded it 0:03:09.840 --> 0:03:13.840 but is better than Twitter Edit, and it has a 0:03:13.880 --> 0:03:17.320 connection to an existing network. And as as Asha and 0:03:17.360 --> 0:03:19.440 I have reported over the last few months, there has 0:03:19.520 --> 0:03:23.600 been an exodus from Twitter, specifically to apps like massed 0:03:23.680 --> 0:03:26.359 on Blue Sky and we'll get to it in second, 0:03:26.360 --> 0:03:30.359 but those are apps that promise to decentralize the future 0:03:30.400 --> 0:03:33.320 of social media and say that you know, it won't 0:03:33.360 --> 0:03:38.080 be holding power by one company. So what they're promising 0:03:38.080 --> 0:03:40.960 with this one is this is not necessarily a land 0:03:41.000 --> 0:03:45.040 grab like we've done on the past, that cross copykill strategy. 0:03:45.560 --> 0:03:49.120 This will actually be able to communicate with those other apps. 0:03:49.320 --> 0:03:52.320 To me that, you know, Threads looks just like Twitter. 0:03:52.360 --> 0:03:56.280 The buttons are kind of the same. But the one 0:03:56.280 --> 0:03:58.360 place I was really hoping it would be different is 0:03:58.400 --> 0:04:03.560 in the kind of political partisan battle. Like the crazies 0:04:03.680 --> 0:04:06.920 are out on Twitter, you know, and I wonder if 0:04:07.320 --> 0:04:10.680 Mark Zuckerberg has any incentive to make Threads different in 0:04:10.680 --> 0:04:13.800 that sense, because the crazies are what these social. 0:04:13.440 --> 0:04:15.000 Media companies count on. Right. 0:04:15.040 --> 0:04:18.240 You need people to make incendiary comments and you know, 0:04:18.400 --> 0:04:19.960 lob bombs and start fights. 0:04:20.000 --> 0:04:22.880 That's the whole point of social networks. 0:04:23.800 --> 0:04:27.880 Well, look, starting fights increases engagement, right, Like if you 0:04:27.920 --> 0:04:30.760 have a bunch of replies and arguments on Twitter, it's 0:04:30.800 --> 0:04:34.040 actually kind of good for Twitter in a really weird way. 0:04:34.800 --> 0:04:37.919 But I mean, meta executives have come out saying like, 0:04:38.400 --> 0:04:39.920 we don't really want this to be about news and 0:04:39.960 --> 0:04:43.280 politics on Threads, which is really interesting because I think 0:04:43.279 --> 0:04:45.960 it will set Threads apart from Twitter. But then are 0:04:46.000 --> 0:04:48.440 people going to want to be on there if they 0:04:48.480 --> 0:04:51.120 can't have some of those conversations and discussions, right, That's 0:04:51.160 --> 0:04:53.240 what made Twitter blow up was that a bunch of 0:04:53.240 --> 0:04:55.880 people were able to share real time news and information 0:04:56.080 --> 0:04:59.080 and talk about politics. So I think that will be 0:04:59.160 --> 0:05:01.680 the big difference between the two. And who knows whether 0:05:01.720 --> 0:05:03.600 that's good or bad. Maybe it's good and bad for 0:05:03.600 --> 0:05:04.280 different reasons. 0:05:04.400 --> 0:05:06.000 Yeah. I have to say, you know, when it's going 0:05:06.000 --> 0:05:09.679 through the story to myself, two questions ads no, no ads, 0:05:09.760 --> 0:05:12.479 question mark question mark no news, question mark question mark. 0:05:12.520 --> 0:05:15.080 I mean Sarah like, how can it become kind of 0:05:15.120 --> 0:05:18.320 I'm going to steal like a tom Ki and the zeitgeist, like, 0:05:19.040 --> 0:05:20.360 how can it become the thing? 0:05:21.920 --> 0:05:22.080 Oh? 0:05:22.120 --> 0:05:22.200 No? 0:05:22.240 --> 0:05:22.880 Hashtags? 0:05:22.920 --> 0:05:27.560 No hashtag? How can it really become a thing without 0:05:27.600 --> 0:05:28.120 those two? 0:05:29.200 --> 0:05:32.080 Well, it's gonna have ads eventually, it's meta. Yeah, So 0:05:33.040 --> 0:05:35.600 it's just a matter of time. And we've already been 0:05:35.600 --> 0:05:37.599 hearing from advertisers that they're interested in that. We've already 0:05:37.600 --> 0:05:40.280 seen a little brand sign up. I think that is 0:05:40.400 --> 0:05:44.480 also why it's people on Instagram who're trying to figure 0:05:44.520 --> 0:05:47.239 out how to be twittery, but they're not really that 0:05:47.360 --> 0:05:50.280 kind of person. So I do think it'll be different 0:05:50.360 --> 0:05:54.800 and really the opportunity here. The question about whether it 0:05:54.800 --> 0:05:59.400 will become like Twitter or not lies in how much 0:05:59.560 --> 0:06:03.880 more Twitter deteriorates from its current state. Because it wasn't 0:06:03.920 --> 0:06:07.080 letting people see more than six hundred tweets unless you 0:06:07.120 --> 0:06:11.359 were paying. Twitter's putting up more paid walls around its API, 0:06:11.520 --> 0:06:15.200 around its around its users. So I think that if 0:06:15.279 --> 0:06:18.600 people get disenchanted with Twitter, they're going to look for 0:06:18.640 --> 0:06:23.320 an alternative. Maybe they'll pick Threads and try to make 0:06:23.360 --> 0:06:25.919 it work for them. But yeah, you're right, it doesn't 0:06:25.960 --> 0:06:30.479 have those same tone, the same urgency that Twitter does. 0:06:30.560 --> 0:06:31.240 Can this be? 0:06:31.360 --> 0:06:34.080 You know, we were talking with Laura Martin yesterday and 0:06:34.160 --> 0:06:37.760 she was basically saying, ever since Elon Musk took over, 0:06:37.920 --> 0:06:40.760 Twitter has become even more of a cluster show than 0:06:40.760 --> 0:06:48.480 it already was, and the aanchisers were just leaving in droves, 0:06:48.960 --> 0:06:53.239 and we're desperate for something like Threads. Is it possible, Sarah, 0:06:53.320 --> 0:06:57.080 that we see Twitter just crater and disappear? 0:06:58.839 --> 0:07:02.040 Anything is possible in the world of Elon Musk. There 0:07:02.120 --> 0:07:05.840 is no There's no scenario that I would entirely rule out. 0:07:06.640 --> 0:07:10.200 We're prepare for them possible, But but yeah, I think 0:07:10.960 --> 0:07:14.440 I think people thought that would happen very quickly after 0:07:14.520 --> 0:07:17.880 he took over and hired Sorry, it's fired seventy five 0:07:17.880 --> 0:07:21.640 percent and lost a seventy five percent of the staff. 0:07:22.720 --> 0:07:24.320 They thought, you know, there's no way this is gonna 0:07:24.360 --> 0:07:26.080 this is gonna get a bugs right away. It's gonna 0:07:26.240 --> 0:07:31.200 it's gonna collapse, rip Twitter. It didn't turn out that way. 0:07:31.240 --> 0:07:33.160 It's still kicking, it's still live. It just got a 0:07:33.160 --> 0:07:37.120 new CEO, right, so really anything is possible. 0:07:37.120 --> 0:07:39.240 It's not winding down. He feels like he's winding up. 0:07:39.280 --> 0:07:40.920 Hey guys, One thing I did want to get into 0:07:40.960 --> 0:07:43.160 in your story, and I think it's important, is the 0:07:43.200 --> 0:07:46.200 open platform that you guys, the open system platform activity 0:07:46.200 --> 0:07:49.000 Pop because I do feel like this is an important 0:07:49.000 --> 0:07:51.680 part of it Asha coming on in that U and 0:07:51.960 --> 0:07:55.080 who they are, because this is part of you know, 0:07:55.280 --> 0:07:57.880 Meta is certainly doing this right, This is where it's 0:07:57.920 --> 0:08:01.720 Threads is using this platform for Yeah. 0:08:01.760 --> 0:08:05.840 I mean the idea behind this idea of decentralized social 0:08:05.880 --> 0:08:07.720 media is that you're not going to have one social 0:08:07.760 --> 0:08:10.360 media platform that's going to have all this power. So 0:08:10.560 --> 0:08:13.840 users would be able to maybe vote on the features 0:08:13.840 --> 0:08:16.880 that they want or communicate with other apps, so it's 0:08:16.920 --> 0:08:20.680 not all consolidated and to one place. The thing is, 0:08:21.040 --> 0:08:24.320 people we talk to in the sort of decentralized community 0:08:24.720 --> 0:08:27.440 are really skeptical about Meta being a part of it 0:08:27.480 --> 0:08:30.120 because they can say all this stuff, but they actually 0:08:30.120 --> 0:08:32.360 have to take the steps to integrate activity pub and 0:08:32.440 --> 0:08:35.560 actually activate it. And then are they going to really 0:08:35.600 --> 0:08:38.800 allow people to, let's say, take their followers onto mast 0:08:38.800 --> 0:08:41.240 it on and take all of their data. I don't know, 0:08:41.360 --> 0:08:43.880 right So that's going to be the thing to watch 0:08:44.000 --> 0:08:47.160 over the coming months, But so far, people in the 0:08:47.440 --> 0:08:50.720 open source, sort of decentralized community are pretty skeptical about 0:08:50.720 --> 0:08:52.960 Meta being involved on Disney. 0:08:53.040 --> 0:08:56.679 Right now, the board is extending Bob Eiger's contract as 0:08:56.720 --> 0:09:00.720 CEO through twenty twenty six. Is only going to stay 0:09:00.760 --> 0:09:02.720 on two years, and we already gone through twelve months 0:09:02.760 --> 0:09:06.040 of that. So through twenty twenty six, we're gonna see 0:09:06.080 --> 0:09:08.960 Bob Iger hang on and Sarah. I know this isn't 0:09:09.000 --> 0:09:12.160 your team specifically, but it's in the same zip code 0:09:12.200 --> 0:09:15.800 as Big Tech, and it's something that a lot of 0:09:15.800 --> 0:09:20.280 people have been talking about, especially as he hangs out 0:09:20.320 --> 0:09:21.959 in Sun Valley, Idaho at the Allen and Co. 0:09:22.040 --> 0:09:26.719 Conference. What do you think about this failure. 0:09:26.360 --> 0:09:31.240 To create the right kind of succession brings Bob Iger back, 0:09:31.320 --> 0:09:34.040 and now he has to do something about it in 0:09:34.080 --> 0:09:38.080 two years, and I guess they're saying, well, maybe four years. 0:09:39.920 --> 0:09:41.800 I think it's a really tough time to be an 0:09:41.880 --> 0:09:45.200 entertainment company. And actually, you know, if I can put 0:09:45.240 --> 0:09:47.920 it in my wheelhouse a little bit more, it's because 0:09:48.240 --> 0:09:52.840 of social media, because we are all picking our own celebrities, 0:09:53.360 --> 0:09:56.760 We're following our own media, our own stars, or spending 0:09:56.800 --> 0:10:01.400 time on TikTok, spending time on reels for movies with 0:10:01.559 --> 0:10:04.559 Barbie and Oppenheimer. I can't think of the last weekend 0:10:04.640 --> 0:10:07.880 that people were excited to go to the movies. No, it's 0:10:08.640 --> 0:10:11.480 really a tough time to be a company with that 0:10:11.640 --> 0:10:17.240 kind of classic entertainment cloud centralized in one creator that 0:10:17.720 --> 0:10:18.360 Disney is. 0:10:18.520 --> 0:10:21.480 Bloomberg News Big Tech team leader Sarah Fryer and social 0:10:21.520 --> 0:10:24.360 media reporter Asha Counts with us there. Sarah, by the way, 0:10:24.640 --> 0:10:27.680 is the author of No Filter, the inside story of Instagram. 0:10:28.120 --> 0:10:30.839 Now we mentioned Disney and Bob Iger there at the end, 0:10:30.880 --> 0:10:33.040 and that's where we're going to head next. 0:10:33.280 --> 0:10:37.640 These large entertainment companies can no longer actually afford the 0:10:37.679 --> 0:10:42.320 economics to compete against Amazon and Apple, which never ever 0:10:42.400 --> 0:10:44.600 need to make money from actually content creation. 0:10:44.880 --> 0:10:47.480 Leading in longtime Wall Street Media analyst explains why the 0:10:47.520 --> 0:10:50.960 Magic Kingdom reigns as a prime takeover target. You're listening 0:10:51.000 --> 0:10:53.479 to Bloomberg Business Week. This is Bloomberg. 0:10:57.600 --> 0:11:01.480 You're listening to the Bloomberg Business Week. Catch us live 0:11:01.520 --> 0:11:04.720 weekday afternoons from three to six Eastern Listen. 0:11:04.440 --> 0:11:07.400 On Bloomberg dot com, the iHeartRadio app, and. 0:11:07.320 --> 0:11:10.760 The Bloomberg Business app, or watch us live on YouTube. 0:11:11.600 --> 0:11:14.839 This past week, investors were focused on the media entertainment 0:11:14.880 --> 0:11:17.800 business thanks to Alan and Company holding its annual gathering 0:11:17.800 --> 0:11:21.000 of billionaire moguls in Sun Valley, Idaho. And that's when 0:11:21.000 --> 0:11:23.560 we learned that the Walt Disney Company extended the contract 0:11:23.559 --> 0:11:26.600 of CEO Bob Iger for another two years to the 0:11:26.720 --> 0:11:29.760 end of twenty twenty six. The move gives the executive 0:11:29.840 --> 0:11:32.800 more time to implement his turnaround and find a successor. 0:11:33.440 --> 0:11:36.439 There are other concerns at the entertainment and media giant, though, 0:11:36.640 --> 0:11:39.040 and a top ranked analyst who has watched and analyzed 0:11:39.080 --> 0:11:42.320 this sector for years thinks the iconic company will eventually 0:11:42.320 --> 0:11:45.480 become a takeover target Matt Miller and I as Needham 0:11:45.480 --> 0:11:48.640 and Company senior media analyst Laura Martin to expand on 0:11:48.760 --> 0:11:51.080 her take when it comes to Disney. We spoke with 0:11:51.120 --> 0:11:53.640 her just prior to the news of Iiger's extension. 0:11:54.440 --> 0:11:58.680 So I think that these large entertainment companies can no 0:11:58.760 --> 0:12:03.680 longer actually afford the economics to compete against Amazon and Apple, 0:12:03.800 --> 0:12:06.560 which never ever need to make money from actually content 0:12:06.640 --> 0:12:10.040 creation because they have like a new device called like 0:12:10.120 --> 0:12:12.720 Vision pro over an Apple great example, where they need 0:12:12.840 --> 0:12:16.280 content in order to drive adoption of a device that's 0:12:16.320 --> 0:12:19.520 brand new, so that content is worth more to them, 0:12:19.679 --> 0:12:22.120 especially if they can do exclusive content for that. 0:12:22.480 --> 0:12:26.560 Those new goggles that Apple is trying to drive adoption 0:12:26.640 --> 0:12:28.959 for worth a lot more. And you never need to 0:12:29.000 --> 0:12:29.840 make money from content. 0:12:29.880 --> 0:12:32.600 As we know from these standalone content companies, they're all 0:12:32.640 --> 0:12:35.960 losing money thanks to streaming, So the economics have really 0:12:35.960 --> 0:12:38.600 gotten compressed in content, so we think they need to 0:12:38.640 --> 0:12:42.720 be purchased by larger companies that have sister subsidiaries that 0:12:42.760 --> 0:12:43.760 can fund them. 0:12:44.160 --> 0:12:47.280 Paul Sweeney tells me you're his favorite analyst, so you 0:12:47.679 --> 0:12:50.240 must know a lot more about this industry than even 0:12:50.280 --> 0:12:54.560 he does. But when I hear about a device company 0:12:54.640 --> 0:12:58.120 looking to buy content for exclusivity, I think instantly about 0:12:58.320 --> 0:13:02.400 Microsoft and its attempt to buy Activision, which right now 0:13:02.440 --> 0:13:05.080 looks pretty good, but it didn't look that great for 0:13:05.120 --> 0:13:07.440 a while, and it still would be a problem if 0:13:07.520 --> 0:13:10.920 they wanted Call of Duty exclusively on the Xbox. Won't 0:13:11.000 --> 0:13:16.280 this be you know, an issue for the FTC and 0:13:16.360 --> 0:13:19.720 for other regulators if if, for example, an Apple tried 0:13:19.760 --> 0:13:22.319 to buy a Disney Yeah. 0:13:22.160 --> 0:13:24.480 So good question on the regulatory front. First of all, 0:13:24.520 --> 0:13:27.320 as you know, these kinds of things take multiple years. 0:13:27.720 --> 0:13:29.720 So let's see who's in the president's seat. 0:13:29.520 --> 0:13:32.960 Because that person appoints the head of the FTC, the DOJ. 0:13:33.640 --> 0:13:36.640 So if we end up with a Republican president, then suddenly, 0:13:36.800 --> 0:13:39.600 like all bets are off in terms of allowing consolidation, 0:13:40.120 --> 0:13:44.080 even if we stay with the democratic regime. I think 0:13:44.120 --> 0:13:46.560 one of the differences remember when Comcast was allowed to 0:13:46.559 --> 0:13:49.719 buy NBC, they said, look, you can have no exclusive 0:13:49.760 --> 0:13:54.680 content on Comcast rails meaning those the video like the 0:13:54.880 --> 0:13:59.120 wires for seven years, and after that you can. So 0:13:59.559 --> 0:14:02.720 that's they have a way to make behavioral changes to 0:14:02.760 --> 0:14:05.360 make sure they can just force Apple to sell Disney 0:14:05.440 --> 0:14:08.280 content to everybody at the same price. But as you know, 0:14:08.360 --> 0:14:11.760 if Apple buys Disney's content, it's a transfer price, so 0:14:11.800 --> 0:14:13.680 they can double the price of Disney content. 0:14:13.800 --> 0:14:14.000 Yeah. 0:14:14.000 --> 0:14:15.880 By the way, the way you make money and content 0:14:15.920 --> 0:14:18.040 to sell it to everybody, So Apple really is in 0:14:18.120 --> 0:14:20.760 incentive to not sell it for a price to everybody. 0:14:21.080 --> 0:14:23.040 It's just that if I was Apple, I would have 0:14:23.080 --> 0:14:26.880 those fabulous storytellers at Pixar make three minute shorts that 0:14:26.920 --> 0:14:29.520 are only available on and probably I could offer it 0:14:29.520 --> 0:14:30.080 to anybody else. 0:14:30.080 --> 0:14:32.200 But who else is buying a three minute short from Pixar. 0:14:32.360 --> 0:14:35.000 Probably nobody except for putting it on the goggles, I 0:14:35.000 --> 0:14:35.640 would guess. 0:14:35.560 --> 0:14:36.560 That's also that's legit. 0:14:36.640 --> 0:14:40.800 What goes around comes around, right, because yeah, Pixar, Steve 0:14:40.920 --> 0:14:44.680 Jobs sold Pixar to Disney, and it would be hilarious 0:14:45.040 --> 0:14:47.680 if Tim Cook then bought it back, right. 0:14:47.640 --> 0:14:48.560 Yeah, totally. 0:14:48.800 --> 0:14:51.080 I so agree with that, And so much of that 0:14:51.200 --> 0:14:54.120 happened because of Eiger's relationship with Steve Jobs, right, And 0:14:54.160 --> 0:14:56.960 I do think about Iger and his relationships with lots 0:14:57.000 --> 0:15:01.360 of folks. Having said that, one thing that disneylare you know, 0:15:01.520 --> 0:15:04.200 is so well known for buying some kind of content 0:15:04.280 --> 0:15:06.640 and putting it at the theme parks and making movies 0:15:06.680 --> 0:15:09.160 and selling stuff in blah blah blah. Is that a 0:15:09.200 --> 0:15:10.880 good strategy for Disney? 0:15:11.800 --> 0:15:12.080 Look? 0:15:12.120 --> 0:15:14.640 I think the big fundamental, the biggest question for Disney 0:15:14.680 --> 0:15:16.600 is how do you invest in this company today when 0:15:16.640 --> 0:15:18.720 you do not have a permanent CEO and you do 0:15:18.760 --> 0:15:21.760 not have a permanent CFO. And as we know from 0:15:21.760 --> 0:15:25.080 the failed attempt of a Disney trying to replace Iger 0:15:25.200 --> 0:15:27.400 for a decade and then picking a guy that didn't 0:15:27.480 --> 0:15:30.280 last two years, this issue of succession at the Walt 0:15:30.320 --> 0:15:33.080 Disney Company is a really hard problem to solve. It 0:15:33.120 --> 0:15:35.520 becomes an easier problem to solve it is a division 0:15:35.560 --> 0:15:37.280 of a larger company, because now you just need a 0:15:37.320 --> 0:15:41.760 division ed. You don't need a world class politician, which 0:15:41.800 --> 0:15:44.400 is what Disney requires at the top level. 0:15:44.800 --> 0:15:47.600 So I think it solves one of the big problems. 0:15:47.000 --> 0:15:50.960 Which is it gives Disney a more permanent management structure 0:15:51.080 --> 0:15:53.840 and a clear sense of strategic vision if it's part 0:15:53.840 --> 0:15:54.800 of something larger. 0:15:55.440 --> 0:15:57.480 Is there any way to make money if they stay 0:15:57.520 --> 0:16:00.320 in this business? I mean, is the streaming business? Can 0:16:00.320 --> 0:16:01.320 that be profitable? 0:16:01.680 --> 0:16:04.360 I always think about ESPN, like I would pay so 0:16:04.560 --> 0:16:07.480 much money if I could stream all of ESPN's content 0:16:07.800 --> 0:16:12.080 without happening having to buy a cable TV package. 0:16:12.480 --> 0:16:16.520 So maybe. But the problem is, as you know, bundle bundle, 0:16:16.960 --> 0:16:21.120 media bundles double economics. So when you unbundle ESPN, you. 0:16:21.040 --> 0:16:23.280 Know that destroys value because now they're not getting paid 0:16:23.280 --> 0:16:26.520 twelve dollars a month for every cable subscriber, whether or 0:16:26.560 --> 0:16:27.320 not they use it or not. 0:16:27.360 --> 0:16:29.440 The minue you unbundle it, you've got to take that 0:16:29.520 --> 0:16:32.920 price up two three x. So suddenly you may say 0:16:32.920 --> 0:16:34.640 today you'd be willing to buy it, but if the 0:16:34.640 --> 0:16:36.720 price point was one hundred dollars a month, you might 0:16:36.760 --> 0:16:37.000 not be. 0:16:37.560 --> 0:16:38.640 Then I'd rather get the cable. 0:16:39.760 --> 0:16:44.560 Yeah, exactly, exactly. So I think the answer is capitalism. 0:16:44.840 --> 0:16:48.920 Rit large has a lot of trouble funding negative growth businesses, 0:16:49.040 --> 0:16:52.520 and right now that linear TV ecosystem is really weighing 0:16:53.080 --> 0:16:56.120 on the revenue growth line of these big conglomerates like 0:16:56.320 --> 0:16:59.720 Warner Brothers and Disney and Paramount. And if you can 0:16:59.760 --> 0:17:02.640 put capital to work in something that's clearly growing, that's 0:17:02.680 --> 0:17:05.399 worth a lot more than something that has these declining 0:17:07.040 --> 0:17:10.480 you know, it has declining revenue or just single growth. 0:17:11.200 --> 0:17:14.159 So Laura, so do you anticipate something coming out of 0:17:14.200 --> 0:17:16.120 Sun Valley or what are you watching for to come 0:17:16.160 --> 0:17:18.359 out about Disney? 0:17:18.200 --> 0:17:20.040 They all get bought. I hope they all. 0:17:19.960 --> 0:17:23.560 Merge and they all get bought, sharing Redstone Cells because 0:17:23.560 --> 0:17:26.720 she's the small but I hope they all get purchased. 0:17:26.720 --> 0:17:29.000 And I think the good news is, I mean there's 0:17:29.040 --> 0:17:31.920 a serious rain trust. Like you know, John Malone Sits 0:17:32.040 --> 0:17:34.480 is a large personal shareholder of Warner Brothers. 0:17:34.480 --> 0:17:36.239 And I think all these guys are deal guys. Right, 0:17:36.320 --> 0:17:38.359 what's a film. It's a bunch of deals. 0:17:38.400 --> 0:17:40.760 It's a bunch of contract So they're all deal guys 0:17:40.800 --> 0:17:43.440 at some level. And so I hope they all understand 0:17:43.440 --> 0:17:46.119 that they've got to get bigger to save costs, or 0:17:46.119 --> 0:17:48.080 they've got to sell out to somebody that doesn't need 0:17:48.119 --> 0:17:49.680 to make money in the content business. 0:17:50.240 --> 0:17:50.960 But they are not. 0:17:51.160 --> 0:17:54.919 I do not think these are standalone companies for the 0:17:54.960 --> 0:17:55.720 next three years. 0:17:55.800 --> 0:17:59.040 I do not think they can be well, including including Netflix. 0:17:59.160 --> 0:18:01.240 Netflix has to get well, you. 0:18:01.160 --> 0:18:02.800 Know, it could just merge with Warner Brothers, or it 0:18:02.800 --> 0:18:04.960 could buy Paramount and actually have a library of IP 0:18:05.240 --> 0:18:08.200 rather than always renting other people's IP. All of these 0:18:08.200 --> 0:18:10.640 companies make more money together than they do separately. 0:18:11.119 --> 0:18:14.280 Hey, you know last year the boy that everybody talked 0:18:14.320 --> 0:18:16.600 about was Elon Musk right in Twitter. The boys. 0:18:17.560 --> 0:18:21.080 I can see that, imagine if I don't. 0:18:21.640 --> 0:18:23.520 Hey, we women have dealt with a lot for years 0:18:23.560 --> 0:18:24.000 and decades. 0:18:24.240 --> 0:18:24.600 Fair enough. 0:18:24.680 --> 0:18:27.000 Having said that, now we're all like talking about meta 0:18:27.040 --> 0:18:30.560 and threads. What's your take on that, Laura, So. 0:18:30.600 --> 0:18:32.840 As you know, we have an wrongly, we have an 0:18:32.920 --> 0:18:35.680 underperform on meta because we're saying, look, we don't think 0:18:35.760 --> 0:18:38.919 it's social network business has a terminal value because we 0:18:38.960 --> 0:18:42.560 think TikTok's going to win. But I got to say, 0:18:43.080 --> 0:18:46.280 I sort of think Elon Musk, in blowing up Twitter 0:18:46.480 --> 0:18:50.440 in a series of bad execution moves, actually has left 0:18:50.440 --> 0:18:52.760 a huge hole in the market where there was clearly 0:18:52.800 --> 0:18:56.520 a consumer demand for platform that met that, but it 0:18:56.560 --> 0:19:00.119 couldn't generate ad revenue because of the fact that he 0:19:00.160 --> 0:19:02.160 sort of let in the crazies once he got in 0:19:02.200 --> 0:19:06.159 and didn't have content moderation, so advertisers abandoned ship. So 0:19:06.280 --> 0:19:08.800 there is a need by advertisers to meet that. Needa, 0:19:08.840 --> 0:19:11.760 guess what Facebook is best in class. It's sort of 0:19:11.800 --> 0:19:15.639 guaranteeing wall guard and access to premium advertisers. You know, 0:19:15.680 --> 0:19:17.760 he has a million advertisers, so she's got brands all 0:19:17.760 --> 0:19:18.800 the way down to long tail. 0:19:19.280 --> 0:19:21.320 I think Meta does that really well. 0:19:21.440 --> 0:19:23.479 So and we know they're good at ripping off other 0:19:23.520 --> 0:19:26.360 people's ideas because they did it with Snap and Instagram, so. 0:19:26.320 --> 0:19:28.359 There and with Facebook that was friends her. 0:19:29.320 --> 0:19:32.959 That's fair, okay, great, So that's their core skill, fast 0:19:33.000 --> 0:19:36.480 following and improving on somebody else's idea. So I think 0:19:36.520 --> 0:19:39.080 Elon Musk might have just lost all of his financiers 0:19:39.160 --> 0:19:40.600 forty billion dollars. 0:19:40.280 --> 0:19:43.000 That was needed in company's senior media analyst Laura Martin 0:19:43.080 --> 0:19:46.600 on Disney and the social networking world as well. Still ahead, 0:19:46.640 --> 0:19:48.919 on Bloomberg Business Week, we turned to the fraught and 0:19:49.040 --> 0:19:52.840 often misunderstood world of short selling, as US regulators i 0:19:52.960 --> 0:19:55.080 a crackdown on some of its biggest players. 0:19:55.440 --> 0:19:57.520 If making money in the market was as easy as 0:19:57.560 --> 0:20:00.760 knowing the information, it would be a different world. Trading 0:20:00.880 --> 0:20:05.160 the information, trading the market. Understanding the dynamics beneath markets 0:20:05.480 --> 0:20:06.280 mean a lot more. 0:20:06.400 --> 0:20:09.560 Why Citron Research founder Andrew Left is living in fear 0:20:09.600 --> 0:20:11.240 of the Feds. This is Bloomberg. 0:20:15.920 --> 0:20:19.479 You're listening to the Bloomberg Business Week Podcast. Catch us 0:20:19.520 --> 0:20:23.640 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:20:23.760 --> 0:20:27.040 the Bloomberg Business App, and YouTube. You can also listen 0:20:27.119 --> 0:20:30.240 live on Amazon Alexa from our flagship New York station, 0:20:30.680 --> 0:20:33.480 Just Say Alexa Play Bloomberg eleven thirty. 0:20:35.000 --> 0:20:37.040 It was among our most read stories on the Bloomberg 0:20:37.119 --> 0:20:40.280 Terminal this past week about the short seller Andrew Left, 0:20:40.280 --> 0:20:43.000 who is well known to our Bloomberg audience, now living 0:20:43.000 --> 0:20:46.000 in fear of federal investigators showing up at his door, 0:20:46.480 --> 0:20:50.159 and who, as Bloomberg's Tom Schoenberg writes, terrorized more than 0:20:50.160 --> 0:20:53.520 one hundred companies and riled an army of memestock traders, 0:20:53.920 --> 0:20:56.560 and now lives a life where he feels hunted. The 0:20:56.560 --> 0:20:59.000 founder of Citron Research joined me and Matt Miller to 0:20:59.040 --> 0:21:01.720 explain how his world has been turned upside down in 0:21:01.760 --> 0:21:04.240 the two years since FBI agents showed up at his 0:21:04.320 --> 0:21:07.280 California home to seize computers and phones. 0:21:07.840 --> 0:21:10.320 Well, I wasn't home at the time I was written 0:21:10.320 --> 0:21:13.520 about agents. I guess they showed up and they took 0:21:13.560 --> 0:21:16.840 your computers. So I was I wasn't there, But someone's 0:21:16.840 --> 0:21:17.280 at my house. 0:21:17.720 --> 0:21:19.240 Yes, but your life changed. 0:21:20.080 --> 0:21:21.760 Yes, yes, yes, of course. 0:21:22.240 --> 0:21:26.120 You know, whenever there's a DOJ investigation, any form of investigation, 0:21:26.880 --> 0:21:29.159 you have to take it serious. So despite me not 0:21:29.400 --> 0:21:31.719 understanding what it was about, I have you think? 0:21:31.880 --> 0:21:32.719 Of course it changes. 0:21:33.800 --> 0:21:38.200 The biggest fear here is that prosecutors will try and 0:21:38.359 --> 0:21:39.320 prove collusion. 0:21:39.520 --> 0:21:40.080 Is that right? 0:21:40.359 --> 0:21:44.359 Is that the one thing that's kind of the worst 0:21:44.400 --> 0:21:45.879 sin a short seller could commit. 0:21:46.560 --> 0:21:49.439 I mean, I don't understand what collusion would be. You know, 0:21:49.520 --> 0:21:51.239 if we're long a stock and I say to you, Hey, 0:21:51.320 --> 0:21:53.520 I like Apple. Do you like Apple? You like Apple? 0:21:53.760 --> 0:21:56.080 I'm buying Apple. You're buying Apple. I'm buying Apple. Have 0:21:56.160 --> 0:21:56.720 we cluded? 0:21:57.920 --> 0:21:58.359 I don't know. 0:21:58.480 --> 0:22:00.920 I'm not a lawyer, but I guess that's the kind 0:22:00.920 --> 0:22:04.280 of market manipulation that they're trying to weed out. Have 0:22:04.400 --> 0:22:06.880 you seen any of that, even if you're not guilty 0:22:06.920 --> 0:22:08.719 of it, Have you seen any of that in the 0:22:08.760 --> 0:22:12.160 industry that you essentially have have pioneered here? 0:22:13.680 --> 0:22:14.280 Yeah? I don't know. 0:22:14.320 --> 0:22:17.000 I mean when you say collusion, it's a very Again, 0:22:17.119 --> 0:22:19.840 just like the example I brought up is you know, 0:22:19.880 --> 0:22:22.919 if two people say I like this stock, I mean, 0:22:23.080 --> 0:22:24.920 so when you say the collusion, I'll give you an example, 0:22:25.880 --> 0:22:29.480 I famously did Valiant. Devaliant story. How many people wrote 0:22:29.480 --> 0:22:32.159 about Valiant? Many short sellers wrote about it also, And 0:22:32.240 --> 0:22:35.120 during that process, I'm sure many people exchange notes saying, 0:22:35.160 --> 0:22:35.879 oh did you see this? 0:22:35.960 --> 0:22:37.639 Oh my god, what about this? Did you see this? 0:22:38.760 --> 0:22:40.800 When you do homework and you exchange notes to someone, 0:22:40.880 --> 0:22:43.960 is that collusion? The opposite side of that is, could 0:22:43.960 --> 0:22:46.400 you imagine if you didn't speak to anyone on anything, 0:22:46.440 --> 0:22:48.800 they would say, well, you didn't speak to anyone. You'd 0:22:48.800 --> 0:22:50.520 never checked this work with anyone. You did it all 0:22:50.560 --> 0:22:52.520 by yourself. You didn't want to see if they would. 0:22:52.480 --> 0:22:55.520 Possibly you were wrong, So you know, I don't. I 0:22:55.520 --> 0:22:56.879 guess that's just verbage. 0:22:57.080 --> 0:22:59.640 Well, and I guess, as Tom notes in his story 0:22:59.760 --> 0:23:01.879 that but what the government is looking for is whether 0:23:02.200 --> 0:23:07.000 firms are acting in concert right, so potentially amplifying a 0:23:07.080 --> 0:23:09.960 report yours or others impact on a stock. Did you, 0:23:10.200 --> 0:23:13.240 in any of your cases act in concert with others 0:23:14.520 --> 0:23:15.280 acting concert? 0:23:15.280 --> 0:23:18.520 Again, I asked the question, which is if I'm if 0:23:18.560 --> 0:23:21.160 two people buy Apple and I say to you, I 0:23:21.200 --> 0:23:22.640 want to make sure my work is right. 0:23:22.760 --> 0:23:24.480 Next year, I've had them selling X amount of phones. 0:23:24.480 --> 0:23:25.080 What about you? 0:23:25.520 --> 0:23:28.080 And you're checking your work with someone who might also 0:23:28.160 --> 0:23:31.360 belong with the stock, you know, to see if your models 0:23:31.520 --> 0:23:35.439 in line maybe with their model. Okay, is that working 0:23:35.480 --> 0:23:39.160 in collusion with somebody? So have I ever discussed an 0:23:39.200 --> 0:23:41.520 idea with another person? I think most people have. 0:23:42.400 --> 0:23:46.080 You know, if I get it, we're not gonna figure 0:23:46.119 --> 0:23:46.600 this out here. 0:23:47.800 --> 0:23:48.399 I don't understand. 0:23:48.640 --> 0:23:50.440 I get your point. I get your point. 0:23:50.840 --> 0:23:53.639 The one of the other problems Andrew that people have is, 0:23:55.480 --> 0:23:58.000 you know, you you started off in a bucket shop, 0:23:58.080 --> 0:24:00.960 right with people pumping stocks and then dumping them after 0:24:01.240 --> 0:24:05.280 mom and pop got into it, and the concern I mean, now, 0:24:05.359 --> 0:24:08.560 I'm not saying that you were necessarily the inventor of 0:24:08.600 --> 0:24:10.960 this idea, but that's kind of famously how you got 0:24:11.000 --> 0:24:14.280 your start in markets, and people have a problem with 0:24:15.600 --> 0:24:17.480 pumping up a stock and then getting out of it 0:24:17.600 --> 0:24:20.320 right away, and short sellers. 0:24:20.680 --> 0:24:22.919 Some of the mechanics are similar in terms of the timing. 0:24:23.040 --> 0:24:26.439 Right you place your bet, then you make your case, 0:24:26.560 --> 0:24:29.240 and a lot of times they'll sell out quickly. Is 0:24:29.280 --> 0:24:31.680 that you think another one of the concerns that maybe 0:24:31.760 --> 0:24:32.560 the DOJ. 0:24:32.400 --> 0:24:36.200 Has I mean, sure, I don't know their concerns. 0:24:36.520 --> 0:24:39.119 If the information's correct you know, I can't tell you 0:24:39.160 --> 0:24:41.800 how many stocks I've covered too soon have gone much 0:24:41.880 --> 0:24:43.879 lower and same at the same time. 0:24:43.920 --> 0:24:45.200 Let's say a stock like game Stock. 0:24:45.440 --> 0:24:47.840 Imagine if I wrote said, hey, game stops are short 0:24:47.920 --> 0:24:50.119 and I was not able to cover it. But it 0:24:50.200 --> 0:24:52.240 just goes to three hundred and fifty dollars and I'm 0:24:52.240 --> 0:24:54.560 not able to cover it, right, you know? So trading, 0:24:55.200 --> 0:24:57.320 If making money in the market was as easy as 0:24:57.320 --> 0:25:00.560 knowing the information, it would be a different world. Trading 0:25:00.640 --> 0:25:04.960 the information, trading the market. Understanding the dynamics beneath markets 0:25:05.280 --> 0:25:07.560 mean a lot more. I mean, a couple of years ago, 0:25:07.600 --> 0:25:10.560 I was short GSX, which was a Chinese the number 0:25:10.560 --> 0:25:12.920 one percentage gainer on the New York Stock Exchange, which 0:25:13.119 --> 0:25:16.960 Bill Wong from our Chagos manipulated up with Goldman Sachs 0:25:17.000 --> 0:25:19.280 and Morgan Stanley as you know, when he's been charred, 0:25:19.560 --> 0:25:21.560 and that stock just kept going up. It was a 0:25:21.600 --> 0:25:23.719 complete fraud. It kept going up every day. What am 0:25:23.760 --> 0:25:25.000 I not allowed to cover the stock? 0:25:25.359 --> 0:25:25.560 Wait? 0:25:25.600 --> 0:25:27.200 I should jump in just and say that I don't 0:25:27.240 --> 0:25:30.760 know the details of that, so you know, I don't 0:25:30.760 --> 0:25:33.040 know if we can. I don't want to make any 0:25:33.080 --> 0:25:35.960 allegations of fraud against Goldman Sachs and Morgan Stanley or 0:25:36.000 --> 0:25:36.960 even Bill Wanne. 0:25:36.680 --> 0:25:39.360 No no, no, no, no no. But I'm saying they were 0:25:39.359 --> 0:25:42.480 the number one and two shareholders of GSX, which was 0:25:42.520 --> 0:25:45.399 a Chinese education company which in twenty twenty was the 0:25:45.440 --> 0:25:48.080 number one gainer on the New York Stock Exchange, which 0:25:48.119 --> 0:25:51.080 is you know, from Archagos, Bill Wong manipulating the stock hire. 0:25:51.200 --> 0:25:53.520 That's all, okay, I'm sorry, but let's go on. 0:25:53.640 --> 0:25:56.360 Well, so what can you tell us about what investigators 0:25:56.680 --> 0:25:58.640 have wanted to know from you specifically? 0:25:59.480 --> 0:26:01.439 I really can't discussed the details. I don't know. 0:26:01.560 --> 0:26:03.520 I've not spoken to them. I can't, so I don't 0:26:03.520 --> 0:26:06.200 know any details what they're looking at. I only know 0:26:06.520 --> 0:26:09.760 the way I've operated myself for twenty years. I think 0:26:10.160 --> 0:26:12.119 over twenty years, twenty two years, I've been doing this 0:26:12.840 --> 0:26:15.600 a high standard. I thought this before, let's say, in 0:26:15.680 --> 0:26:17.800 China a couple of years ago, like six years ago, 0:26:17.840 --> 0:26:20.479 with Evergrand, when I put my opinion out, I wrote it, 0:26:20.760 --> 0:26:23.280 I went to court in China, I lost, and then 0:26:23.320 --> 0:26:26.000 literally within months after losing, Evergrant default on their bonds. 0:26:26.000 --> 0:26:29.000 Everything I said was going to be true happened. So 0:26:29.400 --> 0:26:29.960 you know I take. 0:26:30.040 --> 0:26:32.520 I think I understand the SEC and the DJ have 0:26:32.560 --> 0:26:35.160 difficult jobs and they're trying to keep a regulated market. 0:26:35.359 --> 0:26:37.480 I think the markets did a good job regulating itself. 0:26:37.800 --> 0:26:40.680 I also think it's very tough to regulate people's opinions. 0:26:41.040 --> 0:26:43.159 I mean, look Twitter, me look thread now, it was 0:26:43.160 --> 0:26:45.240 one hundred million users in like four or five days. 0:26:45.480 --> 0:26:47.520 What you can't talk about a stock on there if 0:26:47.520 --> 0:26:49.800 you have a position, I mean. 0:26:49.680 --> 0:26:50.159 Think about that. 0:26:50.160 --> 0:26:53.400 I think Twitter is all people talking stock positions. 0:26:53.920 --> 0:26:57.760 So what changed during meme stocks? You write in the 0:26:57.800 --> 0:27:00.720 story that Tom wrote on you, you said, during the 0:27:00.800 --> 0:27:03.920 run up, during the pandemic and memestocks, you realize something 0:27:04.000 --> 0:27:07.480 changed when it came to short sellers and you specifically. 0:27:08.160 --> 0:27:08.959 Well what changed? 0:27:09.000 --> 0:27:12.000 Well, first of all, what changed is the gamification of 0:27:12.040 --> 0:27:15.240 the market. So people realize the fact that, okay, who 0:27:15.280 --> 0:27:17.720 cares if the stock's garbage? And who cares if there's 0:27:17.720 --> 0:27:19.840 a high short interest in the stock. The stock can 0:27:19.880 --> 0:27:22.399 squeeze higher and if the higher it goes, the higher 0:27:22.440 --> 0:27:25.000 it can go. So once people understood the gamification of 0:27:25.040 --> 0:27:27.320 the market, it changed the way you were able to. 0:27:27.240 --> 0:27:29.240 Allocate size on short selling. 0:27:29.560 --> 0:27:31.920 Okay, So you couldn't you know, you couldn't be all 0:27:31.920 --> 0:27:34.200 in on a short regardless of how good. 0:27:34.040 --> 0:27:34.880 Information you've had. 0:27:35.240 --> 0:27:37.560 You understand, if you knew a complete fraud, you still 0:27:37.600 --> 0:27:39.760 couldn't say, okay'muting all my chips on this one because 0:27:39.800 --> 0:27:41.159 people say it doesn't make a difference. 0:27:41.200 --> 0:27:44.920 Now, I mean or a bad business, Isn't. 0:27:44.760 --> 0:27:49.560 It also the wrong direction to go because you. 0:27:49.480 --> 0:27:53.480 Know, game Stop and AMC are not necessarily flourishing business 0:27:53.800 --> 0:27:56.560 is that are generating a ton of cash flow. In fact, exactly, 0:27:56.600 --> 0:27:59.000 there's no reason for game Stop to have brick and 0:27:59.040 --> 0:27:59.560 mortar stores. 0:27:59.560 --> 0:28:01.840 I don't get it. I go in sometimes and they're empty. 0:28:03.720 --> 0:28:07.800 Is it when you and Carson Block and Nate Anderson, 0:28:07.800 --> 0:28:10.160 when you guys kind of pull back a little bit, 0:28:10.480 --> 0:28:14.800 doesn't that allow a little bit too much irrational exuberance 0:28:14.920 --> 0:28:16.200 to flourish in the markets? 0:28:18.200 --> 0:28:18.440 Uh? 0:28:18.760 --> 0:28:19.399 Yeah, you know. 0:28:19.520 --> 0:28:20.840 Similarly you can say that. 0:28:20.920 --> 0:28:23.480 But then the flip side is as short ollers bring 0:28:23.520 --> 0:28:25.880 attention to it and there's a short interest, you get 0:28:25.880 --> 0:28:28.160 a stock that's wound up that could take off at anytime. 0:28:28.160 --> 0:28:28.920 Look at game Stop. 0:28:29.320 --> 0:28:31.760 So you know, the markets become gamified, and that is 0:28:31.800 --> 0:28:33.840 nothing to do with game Stop, just gamified. Many people 0:28:33.880 --> 0:28:36.359 get the fact that, Okay, we can you know, the 0:28:36.359 --> 0:28:38.240 markets can move around the algorithms. 0:28:38.440 --> 0:28:40.240 To this day, we still don't really know what drove 0:28:40.280 --> 0:28:41.440 game stopped to those levels. 0:28:41.840 --> 0:28:44.400 Was it, you know, was it algorithms or was it 0:28:44.520 --> 0:28:46.400 retail investors who were buying it at three hundred? 0:28:46.440 --> 0:28:46.880 I don't know. 0:28:47.920 --> 0:28:50.320 So hey, listen, there's a movie coming out about it. 0:28:50.320 --> 0:28:51.840 By the way, we hit we only have about a 0:28:51.840 --> 0:28:53.680 minute and a half left here. You know, one of 0:28:53.680 --> 0:28:57.240 the things in this story by Tom Andrew you at 0:28:57.280 --> 0:28:59.040 one point asked him for a hug. How come? 0:29:00.480 --> 0:29:02.880 Tom said that I was having a rough day personally 0:29:02.880 --> 0:29:04.320 that day, nothing to do with the market. 0:29:04.520 --> 0:29:04.760 I had. 0:29:04.800 --> 0:29:06.920 It's a rough family day. And I was looked at 0:29:06.920 --> 0:29:09.040 my phone. I was like, oh God knocked this. And 0:29:09.080 --> 0:29:10.800 I looked at Tom and I just I'm an emotional guy, 0:29:10.880 --> 0:29:11.640 So give me a hug. 0:29:12.440 --> 0:29:14.520 Well, and you brought that? 0:29:14.800 --> 0:29:14.960 Yeah? 0:29:15.440 --> 0:29:15.760 Can you? 0:29:15.800 --> 0:29:16.040 Can you? 0:29:16.120 --> 0:29:18.400 Jess, We've just got about a minute left here. What 0:29:18.480 --> 0:29:20.360 this has been like on your life and your family? 0:29:21.800 --> 0:29:24.200 Oh, it's been It's been difficult for me. Obviously. 0:29:25.280 --> 0:29:29.200 It's difficult because I take what I do serious, and 0:29:29.280 --> 0:29:31.480 I treat it with respect and high regard for the law, 0:29:31.920 --> 0:29:33.920 so I don't even know what to be accused of, 0:29:34.240 --> 0:29:36.520 so that's been very difficult for me. And obviously being 0:29:36.560 --> 0:29:39.120 a patriarch of a family, everything's going to take effect 0:29:39.160 --> 0:29:40.800 on you know, your wife, your kids, and your life 0:29:40.800 --> 0:29:41.360 around you. 0:29:41.880 --> 0:29:44.480 So yeah, it's it's been a difficult. 0:29:44.080 --> 0:29:46.840 Challenging two and a half years and hopefully we get 0:29:46.840 --> 0:29:48.400 through this sooner than later. 0:29:48.720 --> 0:29:50.960 Our thanks to sit You On Research founder Andrew Left. 0:29:50.960 --> 0:29:53.000 Be sure to stick with Bloomberg for the latest on 0:29:53.080 --> 0:29:56.360 whether the Justice Department in SEC pursue charges against him 0:29:56.600 --> 0:29:59.680 in their investigations of tactics used by activists short sellers. 0:29:59.680 --> 0:30:02.400 Be sure to read Bloomberg's Tom Schoenberg his story that's 0:30:02.400 --> 0:30:05.640 on the Bloomberg You're listening to Bloomberg BusinessWeek. Up next, 0:30:05.680 --> 0:30:07.840 we take a look at the leverage loan market in 0:30:07.880 --> 0:30:11.160 an era of higher interest rates and growing uncertainty about 0:30:11.160 --> 0:30:14.400 the nation's commercial real estate market. This is Bloomberg. 0:30:18.880 --> 0:30:22.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:30:22.480 --> 0:30:25.960 live weekday afternoons from three to six Eastern Listen. 0:30:25.720 --> 0:30:28.680 On Bloomberg dot com, the iHeartRadio app, and. 0:30:28.600 --> 0:30:31.880 The Bloomberg Business App, or watch us live on YouTube. 0:30:33.000 --> 0:30:36.160 Bloomberg News reporting this past week that cooling US inflation 0:30:36.240 --> 0:30:39.320 will help fuel demand for leverage loans. The Federal Reserve 0:30:39.400 --> 0:30:42.640 is widely expected to end its policy tightening cycle after 0:30:42.680 --> 0:30:45.680 this month's meeting, and that should help these concerns about 0:30:45.680 --> 0:30:48.880 a recession leading to higher default rates. For a closer 0:30:48.880 --> 0:30:51.400 look at this corner of the financial markets, let's bring 0:30:51.400 --> 0:30:54.160 in ROBERTA. Goss, Senior managing director and head of the bank, 0:30:54.200 --> 0:30:57.920 loan and clo platform at Predium. It's a specialized investment 0:30:57.960 --> 0:31:01.520 firm with approximately fifty billion dollars in assets under management, 0:31:01.800 --> 0:31:05.920 focused on US residential real estate, residential credit, and corporate credit. 0:31:06.240 --> 0:31:09.720 So leverage loans this year have actually performed quite well 0:31:10.640 --> 0:31:13.840 through the first half of the year, the leverage loan 0:31:13.880 --> 0:31:17.200 index up close to seven percent six and three quarter percent, 0:31:17.800 --> 0:31:22.160 but that was with some degree of volatility. So as 0:31:22.240 --> 0:31:26.640 we went through the regional bank crisis in March, the 0:31:26.760 --> 0:31:29.840 loan market went from a high of ninety four to 0:31:29.920 --> 0:31:33.400 a low of ninety two and have largely recovered back 0:31:33.400 --> 0:31:39.120 to the highs of February. That has been almost entirely 0:31:39.240 --> 0:31:43.240 driven by corporate earnings as we went through Q four 0:31:43.280 --> 0:31:46.560 and Q one, but I would expect a little more 0:31:46.640 --> 0:31:50.160 volatility as we go through the back half of this year, 0:31:50.680 --> 0:31:53.080 but I don't believe it will be as noted as 0:31:53.120 --> 0:31:54.200 we saw in March. 0:31:55.720 --> 0:31:59.880 Really is that because companies were doing so well that 0:32:00.040 --> 0:32:03.960 they're able to continue to meet their you know, to 0:32:04.040 --> 0:32:08.480 make payments. Because if you borrowed money FIRS say four percent, 0:32:08.720 --> 0:32:12.720 and now you're paying twelve, that's that's problematics painful, right 0:32:13.880 --> 0:32:14.280 it is. 0:32:15.560 --> 0:32:21.000 What is really driving the exceeding expectations over the course 0:32:21.040 --> 0:32:24.840 of this year is that we already experienced a lot 0:32:24.920 --> 0:32:28.040 of volatility through twenty twenty one and twenty twenty two. 0:32:28.680 --> 0:32:30.840 And I've talked about this in the past, which is 0:32:31.360 --> 0:32:37.120 this is largely a function of corporate margins, which were 0:32:37.640 --> 0:32:43.520 dramatically compressed over the last really twenty four months. We're 0:32:43.560 --> 0:32:47.840 starting to see as inflation starts to ease, that's helping 0:32:47.880 --> 0:32:52.760 on the margin side, even as we're seeing the top 0:32:52.800 --> 0:32:59.280 line start to decelerate. On the interest rate impact, yes, 0:32:59.360 --> 0:33:05.040 we've seen libor effectively go from zero to mid five 0:33:05.080 --> 0:33:10.520 and a half percent over the last year, and most 0:33:11.120 --> 0:33:14.920 I would say fifty to sixty percent of most companies 0:33:15.040 --> 0:33:20.400 total loans outstanding in the loan market are hedged. That 0:33:20.520 --> 0:33:23.719 being said, there's some companies that are completely unhedged, but 0:33:23.920 --> 0:33:31.040 most leverage companies raise liquidity well ahead of expectations and need. 0:33:31.560 --> 0:33:36.400 So we've seen companies, as a result of the inflation pressures, 0:33:36.640 --> 0:33:41.200 really try to raise cash out of working capital, raise 0:33:41.280 --> 0:33:45.760 liquidity in the loan market. And I think the majority 0:33:45.960 --> 0:33:51.000 of businesses are well positioned even with sort of continued 0:33:51.160 --> 0:33:53.960 rate hike expectations over the balance of this year. 0:33:54.280 --> 0:33:57.120 So I am curious what's the demand, what's the default 0:33:57.160 --> 0:33:59.480 rate that you are seeing, and what it tells you 0:33:59.520 --> 0:34:01.440 about the health of maybe the corporate market. 0:34:02.200 --> 0:34:05.640 So I think one of the indicators that we look at, 0:34:05.760 --> 0:34:07.880 or one of the stats we look at every day, 0:34:08.600 --> 0:34:11.920 is the percentage of loans that are trading below ninety, 0:34:12.120 --> 0:34:17.000 so ninety being a level where stress starts to become 0:34:17.000 --> 0:34:22.120 a concern for a company. In the mid sort lows 0:34:22.160 --> 0:34:23.880 of March, when we were in the midst of the 0:34:23.880 --> 0:34:29.439 banking crisis, that percentage reached over twenty percent since then, 0:34:29.600 --> 0:34:33.759 and as of this week that number has reduced to 0:34:33.880 --> 0:34:34.760 thirteen percent. 0:34:35.320 --> 0:34:38.399 That was roberta Gossipredium with me and Matt Miller head 0:34:38.400 --> 0:34:41.000 over to our podcast feed to hear the entire conversation, 0:34:41.600 --> 0:34:43.200 and that wraps up the first hour of the weekend 0:34:43.320 --> 0:34:46.160 edition of Bloomberg Business Week from Bloomberg Radio. Ahead, in 0:34:46.239 --> 0:34:48.600 our next hour, we'll speak with the CEO of one 0:34:48.680 --> 0:34:51.800 of the biggest convenience store in pizza chains in the country, 0:34:51.920 --> 0:34:55.719 and chances are you've never been inside one. Plus they've 0:34:55.760 --> 0:34:58.560 been talked about and promised for years now it could 0:34:58.719 --> 0:35:03.200 actually be happening. Personal flying cars coming to market. Plus 0:35:03.200 --> 0:35:06.920 our BusinessWeek cover story Barbie's one hundred million dollar rebirth 0:35:07.040 --> 0:35:10.200 on the silver Screen. I'm Carol Masser. Stay with us. 0:35:10.280 --> 0:35:13.160 Today's top stories and global business headlines are coming up. 0:35:13.360 --> 0:35:21.160 Right now, you're listening to the Bloomberg Business Week Podcast. 0:35:21.360 --> 0:35:24.439 Catch us live weekday afternoons from three to six Easter 0:35:24.760 --> 0:35:28.520 on Bloomberg Radio, the Bloomberg Business app and YouTube. You 0:35:28.560 --> 0:35:31.840 can also listen live on Amazon Alexa from our flagship 0:35:31.880 --> 0:35:37.879 New York station, Just Say Alexa play Bloomberg eleven thirty Carol. 0:35:37.600 --> 0:35:39.760 Masser along with Matt Miller. He is of course filling 0:35:39.800 --> 0:35:42.000 in for Tim plenty. Ahead in our second hour of 0:35:42.000 --> 0:35:45.400 the weekend edition of Bloomberg Business Week, including a conversation 0:35:45.520 --> 0:35:48.840 with the CEO of Casey's General Stores on expansion catering 0:35:48.880 --> 0:35:52.960 to America's rural communities and an unusual spin on pizza, 0:35:53.400 --> 0:35:56.320 plus the founder and CEO of Darroni Aerospace on personal 0:35:56.360 --> 0:36:00.279 flying cars that are just around the corner. First though, 0:36:00.280 --> 0:36:03.319 this hour this week's cover story. And I got to say, 0:36:03.320 --> 0:36:05.680 as someone who grew up playing big time with Barbie's, 0:36:05.680 --> 0:36:08.759 I still remember inheriting my older sisters, it was a 0:36:08.760 --> 0:36:11.080 big deal for me. I am definitely all in on 0:36:11.160 --> 0:36:13.160 Barbie as it heads to the movies in the big screen. 0:36:13.200 --> 0:36:14.759 And I gotta say it sounds like a lot of 0:36:14.760 --> 0:36:16.480 people are. This could turn out to be one of 0:36:16.480 --> 0:36:20.080 the summer big blockbusters. And this story, by the way, 0:36:20.200 --> 0:36:22.640 it was a Bloomberg big take and the cover story 0:36:22.680 --> 0:36:25.920 for the latest issue of Bloomberg BusinessWeek, now at Bloomberg 0:36:25.920 --> 0:36:28.040 dot com, slash business Week, on newsstands and on the 0:36:28.040 --> 0:36:32.120 Bloomberg terminal. Bloomberg News Global Business editor Kelly Gilblom and 0:36:32.320 --> 0:36:35.840 entertainment reporter Thomas Buckley co wrote the piece. They joined 0:36:35.880 --> 0:36:38.600 us on Mattel's risky bet to prove that Barbie isn't 0:36:38.640 --> 0:36:40.160 hopelessly out of date. 0:36:40.560 --> 0:36:42.320 I think the way we want to approach a story 0:36:42.480 --> 0:36:45.319 was trying to understand the history of Barbie and also 0:36:45.400 --> 0:36:48.360 kind of trying to understand what it meant for Mattel. 0:36:48.880 --> 0:36:51.480 You know, it's an iconic doll, and the reason that 0:36:51.520 --> 0:36:54.959 it is is because she was so aspirational to young 0:36:55.000 --> 0:36:57.480 girls when she came out in the fifties, and so 0:36:57.640 --> 0:37:00.360 I think we just wanted to understand how kind of 0:37:00.400 --> 0:37:04.200 her reputation fell over the years, and how this movie 0:37:04.280 --> 0:37:06.840 is going to help rehabilitate it and help change the 0:37:06.880 --> 0:37:08.120 business model at Mattel. 0:37:08.920 --> 0:37:12.239 So, I mean, Barbie was a big hit when it 0:37:12.280 --> 0:37:14.440 first came out. You give some of that history and 0:37:14.520 --> 0:37:16.839 your story. I learned a lot reading it, So it's 0:37:16.920 --> 0:37:21.839 a fantastic piece. Have the sales numbers dipped as she's 0:37:21.920 --> 0:37:25.040 become kind of more controversial over the years. 0:37:26.440 --> 0:37:29.279 Yeah, absolutely. In the two thousands, Mattel was in a 0:37:29.280 --> 0:37:33.040 true crisis. I mean, Barbie sales fell every year between 0:37:33.040 --> 0:37:35.759 twenty twelve and twenty fifteen because it was so out 0:37:35.800 --> 0:37:40.200 of touch with the culture. They revived the brand in 0:37:40.239 --> 0:37:44.520 twenty sixteen by introducing new body types, and that helped, 0:37:44.680 --> 0:37:47.240 you know, kind of set the stage for another sales 0:37:47.239 --> 0:37:51.080 boom in the pandemic when all toy sales were up. However, 0:37:51.560 --> 0:37:54.840 that hasn't lasted due to just kind of inflationary pressures 0:37:54.880 --> 0:37:57.920 and economic malaise, so they have to keep those sales. 0:37:58.040 --> 0:37:59.200 Arrows kind of pointed. 0:37:58.960 --> 0:38:02.200 Up, Thomas Buckley. You're with us as well, you and 0:38:02.320 --> 0:38:05.600 Kelly putting out and reporting out this story. You're an 0:38:05.680 --> 0:38:08.040 entertainment reporter with Bloomberg News. You two are in la 0:38:08.200 --> 0:38:11.600 joining us on zoom Come on in on the conversation. 0:38:11.760 --> 0:38:16.120 Because Barbie's iconic been around for decades, has this kind 0:38:16.160 --> 0:38:19.520 of incredible legacy in history, but she has definitely had 0:38:19.520 --> 0:38:21.719 her ups and downs. 0:38:21.560 --> 0:38:22.920 That's as you right, and I think that as we 0:38:22.920 --> 0:38:24.879 think about her ups and downs over the years, what's 0:38:24.960 --> 0:38:27.360 very interesting is that she has never really been tested 0:38:27.800 --> 0:38:30.200 as a brand and as an icon on the big screen. 0:38:30.560 --> 0:38:32.480 And that's not to say that I haven't been iterations 0:38:32.520 --> 0:38:34.719 of Barbie on screen, you know, from TV shows to 0:38:34.840 --> 0:38:36.960 video games. But this is the first half of time 0:38:36.960 --> 0:38:39.680 that she's going to get a full fledged theatrical release, 0:38:39.760 --> 0:38:42.640 and so that's in partnership with Warner Brothers that's produced 0:38:42.640 --> 0:38:46.000 the movie alongside Mattel with a budget of about one 0:38:46.040 --> 0:38:50.200 hundred million dollars, directed by Greta Gerwick, starring Marga Robbie 0:38:50.239 --> 0:38:53.520 as Barbie in the title role. And it's going to 0:38:53.520 --> 0:38:55.480 be very interesting to see how this film plays out. 0:38:55.520 --> 0:38:57.600 I mean, I think that, you know, the hype around 0:38:57.640 --> 0:39:00.560 it is unlike anything that we've seen in months. The 0:39:00.600 --> 0:39:02.440 most recent example I can probably think of it is 0:39:02.480 --> 0:39:05.200 maybe the Avatar sequel, but since then that hasn't been 0:39:05.280 --> 0:39:07.680 very much. And this could really storm the box office. 0:39:07.719 --> 0:39:10.520 And Kelly and I have been tracking the numbers on 0:39:10.560 --> 0:39:12.640 a weekly basis to see how it's set to open, 0:39:13.040 --> 0:39:14.520 and it's set to open at the moment at a 0:39:14.800 --> 0:39:18.719 very impressive one hundred plus million dollars domestically. 0:39:19.120 --> 0:39:22.200 Yeah, well, the social media presence has been just crazy. 0:39:22.320 --> 0:39:24.640 I mean, I've watched the videos and so on. What's 0:39:24.640 --> 0:39:28.240 interesting too, Thomas is I think about enon Cries of Mattel, 0:39:28.280 --> 0:39:31.680 the CEO, and they've gone through several CEOs over the years. 0:39:32.280 --> 0:39:33.960 You know, we've talked with him a lot, and he 0:39:34.040 --> 0:39:37.000 is very into intellectual property and he is thinking about 0:39:37.080 --> 0:39:40.320 the media world in terms of bringing you know, various 0:39:40.360 --> 0:39:41.560 properties to life. 0:39:42.280 --> 0:39:44.160 Absolutely, and this is something that you know, Kelly and 0:39:44.239 --> 0:39:46.640 I have often discussed is the fact that Inon is 0:39:46.760 --> 0:39:50.720 very much as CEO, who considers himself increasingly a major 0:39:50.760 --> 0:39:53.719 player in the entertainment game, and he's previously had a 0:39:53.760 --> 0:39:57.240 career mostly in entertainment. He's sold two very successful companies 0:39:57.239 --> 0:39:59.440 to Disney, and I think he's trying to apply that 0:39:59.480 --> 0:40:02.640 playbook to Mattel came in, as Kelly mentioned as CEO 0:40:02.640 --> 0:40:06.000 in twenty eighteen, looked at the stable of brands and thought, 0:40:06.040 --> 0:40:08.720 you know, all of these authora breads in the stable, 0:40:09.080 --> 0:40:11.040 and why should they only be toys when they can 0:40:11.080 --> 0:40:14.680 be so much more than that, including theatrical films, possible 0:40:14.760 --> 0:40:17.040 theme park rids, video games, and the rest of it. 0:40:17.680 --> 0:40:22.680 Why hasn't Kelly Barbie had a starring role in a 0:40:22.719 --> 0:40:27.080 feature film before? I mean she was invented in like 0:40:27.200 --> 0:40:31.480 the late fifties early sixties, right, and all of the 0:40:31.520 --> 0:40:35.680 other iconic characters from Mickey Mouse to Superman have been 0:40:35.719 --> 0:40:39.000 in movies. Obviously that's a great way to sell the toys. 0:40:39.080 --> 0:40:42.120 So why didn't Mattel do this earlier? 0:40:43.600 --> 0:40:46.480 I think the reason is because Barbie has some specific 0:40:46.600 --> 0:40:49.839 risks associated with her. You know, she was marketed as 0:40:49.880 --> 0:40:53.239 this toy of special personal importance. She's supposed to be 0:40:53.280 --> 0:40:56.640 aspirational and so therefore she kind of has to encompass 0:40:56.920 --> 0:41:00.520 every little girl's hopes and dreams, and that has also 0:41:00.560 --> 0:41:03.200 made her kind of a cultural lightning rod, especially because 0:41:03.239 --> 0:41:05.759 her body type has, you know, kind of been out 0:41:05.760 --> 0:41:09.520 of step with what women want to have people expect 0:41:09.520 --> 0:41:11.880 of them and how they should look. And so I 0:41:11.920 --> 0:41:15.160 think they basically just thought there was a possibility for 0:41:15.200 --> 0:41:18.720 a huge backlash and kind of this emotionally charged environment 0:41:19.120 --> 0:41:22.440 and they couldn't afford that because Barbie is their biggest brand. 0:41:22.880 --> 0:41:26.200 It is the one responsible for the biggest portion of 0:41:26.239 --> 0:41:28.840 their sales, sometimes as much as half of their sales, 0:41:29.160 --> 0:41:31.360 and definitely one of the most profitable products. 0:41:31.640 --> 0:41:33.240 I mean, there's a lot on the line, I feel 0:41:33.239 --> 0:41:36.080 like from the movie studio as well as for Mattel, right, 0:41:36.280 --> 0:41:37.640 no doubt about it. I Mean, this was what one 0:41:37.719 --> 0:41:39.760 hundred million dollars Kelly to put together. 0:41:41.360 --> 0:41:43.560 Yeah, there's a lot online for Mattel. And keep in 0:41:43.600 --> 0:41:47.360 mind that their strategy doesn't include actually funding movies, so 0:41:47.440 --> 0:41:50.200 they license their brands out to the studios who pay 0:41:50.200 --> 0:41:52.240 for the movies, and they don't even get much box 0:41:52.280 --> 0:41:55.640 office returns. That'll be Warner Brothers that takes those ticket sales. 0:41:55.920 --> 0:41:59.640 But it's about reputation, it's about brand management, and it's 0:41:59.680 --> 0:42:03.840 about out creating a business model that's reliant on franchises 0:42:03.920 --> 0:42:08.240 that they can push out and create new streams of revenue, 0:42:08.560 --> 0:42:11.160 kind of like what Disney does. Just think and Star 0:42:11.200 --> 0:42:11.799 Wars just. 0:42:11.800 --> 0:42:14.080 Thinking Disney right, has a property and whether it goes 0:42:14.120 --> 0:42:16.239 in the theme parks, whether it goes on the screens, 0:42:16.280 --> 0:42:18.600 whether it goes into apps, whatever. I mean, that's what 0:42:18.640 --> 0:42:18.960 they do. 0:42:19.320 --> 0:42:21.319 Thomas, How did they sell this film to. 0:42:22.880 --> 0:42:28.080 Margot Robbie? She's been a pretty outspoken feminist. I guess 0:42:28.440 --> 0:42:30.880 I don't know exactly what that means anymore, but you know, 0:42:31.040 --> 0:42:34.680 Ryan Gosling, he's a fairly progressive actor. How did they 0:42:34.719 --> 0:42:39.280 sell this project to those, you know, huge Hollywood names. 0:42:40.400 --> 0:42:43.600 Well, it's very interesting. I think people when they have 0:42:43.640 --> 0:42:46.800 a preconceived notion of what Barbie looks like, they probably 0:42:46.840 --> 0:42:50.360 think about somebody very akin to the looks of Margot Robbie. 0:42:50.800 --> 0:42:55.319 What's interesting. What's interesting is that, well, I think most 0:42:55.400 --> 0:42:58.960 audiences know Margot Robbie, you know, for the star actress 0:42:59.000 --> 0:43:02.360 that she is. What maybe fewer people know is just 0:43:02.560 --> 0:43:05.680 how incredibly talented she is a producing these films behind 0:43:05.680 --> 0:43:08.880 the scenes. So Lucky Chapin's Atainment, which is a company, 0:43:08.920 --> 0:43:11.759 a production company that she manages with her husband, and 0:43:11.960 --> 0:43:14.399 you know, plays a major part in getting this film 0:43:14.400 --> 0:43:17.720 off the ground. And some of the earliest conversations revolved around, 0:43:17.760 --> 0:43:19.920 you know, who would be the right steward in the 0:43:20.000 --> 0:43:22.840 director's chair for a film such as this, you know, 0:43:22.920 --> 0:43:25.200 which is we've said, the sort of girl boss, post 0:43:25.200 --> 0:43:27.360 feminist and the rest of it. And I think that 0:43:27.440 --> 0:43:29.640 it was actually Margot and Kelly knows this as well, 0:43:29.680 --> 0:43:34.520 who suggested Greta Gerwick as the potential director, and Enon 0:43:34.680 --> 0:43:36.720 was very much sold on that idea. So it's interesting 0:43:36.800 --> 0:43:38.319 to see it take off from the direction. 0:43:38.080 --> 0:43:38.600 That it has. 0:43:39.120 --> 0:43:42.080 Yeah, I mean, Greta girrig she's like incredible and if 0:43:42.080 --> 0:43:44.160 you think about the work she's already done. She's really young, 0:43:44.200 --> 0:43:47.640 but just has been so successful out of the gate. 0:43:48.280 --> 0:43:50.320 You know, in doing this story, Kelly, what kind of 0:43:50.400 --> 0:43:52.400 jumped out for you? Because you guys did dig into 0:43:52.840 --> 0:43:55.640 Ruth Handler and her family and her kids, Ken and Barbie, 0:43:55.680 --> 0:43:58.239 Like I mean, the history of this is a lot 0:43:58.280 --> 0:44:00.560 of fun. But what really jumped out in poorting out 0:44:00.560 --> 0:44:01.040 this story. 0:44:02.680 --> 0:44:05.640 I think what jumped out is I guess I didn't 0:44:05.800 --> 0:44:10.759 realize how opinionated people are on Barbie. I mean, it's 0:44:10.840 --> 0:44:14.200 kind of shocking. Her recognition rate is something like ninety 0:44:14.320 --> 0:44:18.120 nine percent, Mattel says, and she's been literally the subject 0:44:18.200 --> 0:44:24.160 of like graduate feminist courses, and people feel very strongly. 0:44:25.000 --> 0:44:28.960 And I think that's just because you know, they're especially 0:44:28.960 --> 0:44:32.480 when she was introduced, not that many role models that 0:44:32.480 --> 0:44:35.160 that little girls could could look up to. So I 0:44:35.200 --> 0:44:38.160 guess what shocked me was was just how important she 0:44:38.480 --> 0:44:41.680 was to kind of female culture. How few movies, how 0:44:41.760 --> 0:44:45.799 few entertainment properties in general are targeted at women. We 0:44:46.080 --> 0:44:48.279 you know, an analysis we saw with something like six 0:44:48.400 --> 0:44:52.560 percent of all major movies since the history of time 0:44:53.280 --> 0:44:56.680 have been targeted toward women. So that was one of 0:44:56.680 --> 0:44:58.680 the things that really shocked me. And if you can 0:44:58.800 --> 0:45:02.280 understand that market, you can understand it well, then clearly 0:45:02.400 --> 0:45:04.160 you can have a big hit on your hands. 0:45:04.400 --> 0:45:06.239 Yeah, I think, I mean I learned so much by 0:45:06.280 --> 0:45:08.680 reading this story. So you guys did really great work. 0:45:09.400 --> 0:45:11.960 Have you seen the movie? Do you like the movie? 0:45:12.680 --> 0:45:16.120 We haven't seen it. Unbelievably, but there'll be a chance 0:45:16.160 --> 0:45:18.560 this weekend, so we're pretty excited. 0:45:18.719 --> 0:45:21.399 Thomas real quickly thirty seconds here. What'd you get from 0:45:21.400 --> 0:45:23.280 doing all this story in this reporting? 0:45:24.360 --> 0:45:27.200 You know, I got a free Bobby Baseball Capital spend 0:45:27.280 --> 0:45:29.080 time with Kelly, so the best of both worlds. 0:45:29.239 --> 0:45:32.360 Great conversation with Bloomberg's Kelly Gilblum and Thomas Buckley on 0:45:32.400 --> 0:45:35.480 this week's cover story, joining Matt Miller and me. You're 0:45:35.480 --> 0:45:38.759 listening to Bloomberg Business Week. Coming up, Darren Rebellas, the 0:45:38.760 --> 0:45:42.160 CEO of Casey's General Stores, talks building for the future 0:45:42.160 --> 0:45:44.680 and how the company stays low key despite a footprint 0:45:44.719 --> 0:45:46.280 of twenty five hundred stores. 0:45:46.480 --> 0:45:49.040 We really kind of consider ourselves in a category of 0:45:49.080 --> 0:45:52.520 one because we have those unique attributes, that rural footprint, 0:45:53.000 --> 0:45:56.839 our you know, our grocery, our alcohol and liquor, our 0:45:56.880 --> 0:45:58.200 pizza business. 0:45:58.000 --> 0:46:01.000 More on the category of one. This is Bloomberg. 0:46:05.400 --> 0:46:09.000 You're listening to the Bloomberg Business Week podcast. Catch us 0:46:09.040 --> 0:46:12.480 live weekday afternoons from three to six Eastern Listen. 0:46:12.280 --> 0:46:15.759 On Bloomberg dot com, the iHeartRadio app, and the Bloomberg 0:46:15.800 --> 0:46:18.600 Business app, or watch us live on YouTube. 0:46:19.080 --> 0:46:21.520 Wait last month RBC Capital Markets put out a note 0:46:21.560 --> 0:46:24.640 praising the tone at Casey's General Store's recent investor day, 0:46:24.960 --> 0:46:27.399 the company announced a new three year strategic plan aimed 0:46:27.400 --> 0:46:31.920 at driving store growth, accelerating its food business, and enhancing operations, 0:46:32.080 --> 0:46:36.000 which RBC said was realistic and constructive. With more on 0:46:36.000 --> 0:46:38.640 those plans, Matt Miller and I caught up with Darren Rebellas. 0:46:38.800 --> 0:46:41.120 Darren is president and CEO of the nine billion dollar 0:46:41.200 --> 0:46:44.520 market cap in Iowa based convenience store chain. He stopped 0:46:44.520 --> 0:46:46.640 by our New York studio on June twenty eighth. 0:46:46.840 --> 0:46:50.160 We have twenty five hundred stores focused in the Midwest 0:46:50.160 --> 0:46:54.560 and sixteen Midwestern states, and about half of our stores 0:46:54.640 --> 0:46:57.799 are in rural communities, towns of five thousand people or less, 0:46:58.280 --> 0:47:01.520 and so in those communities we play a number of roles. 0:47:01.560 --> 0:47:04.360 We're the third largest commediance store chain in the US, 0:47:04.400 --> 0:47:07.680 and so we supply basic needs and groceries and that 0:47:07.760 --> 0:47:11.279 sort of thing. We're also the fifth largest pizza chain 0:47:11.480 --> 0:47:14.360 in the US, so we're the pizza area. And in 0:47:14.400 --> 0:47:17.880 about fifteen hundred of our stores, we have full liquor licenses, 0:47:17.960 --> 0:47:20.680 so we're also the liquor store, so we wear a 0:47:20.680 --> 0:47:22.520 lot of hats and serve a lot of needs in 0:47:22.520 --> 0:47:23.040 those community. 0:47:23.360 --> 0:47:24.920 Open twenty four hours. 0:47:24.760 --> 0:47:27.040 In some of our stores. Yeah, but as you can imagine, 0:47:27.080 --> 0:47:28.840 in some of those more rural communities, there's not a 0:47:28.880 --> 0:47:31.480 lot happening between midnight and four in. 0:47:31.400 --> 0:47:33.640 The morning, or there is sometimes. 0:47:34.000 --> 0:47:36.759 Yeah, we don't want to be involved in So the 0:47:36.800 --> 0:47:38.799 ticker is I don't think the year to date move 0:47:38.840 --> 0:47:41.280 really tells the story because I look over the last 0:47:41.320 --> 0:47:43.160 five years and you've gone from one hundred dollars to 0:47:43.160 --> 0:47:46.400 two thirty five, so you've drastically outperformed the S and 0:47:46.400 --> 0:47:50.640 P five hundred. Of course, you're Nasdaq listed, right, and 0:47:50.680 --> 0:47:52.319 the ticker is c as Y. 0:47:52.800 --> 0:47:54.480 That's rights. 0:47:55.120 --> 0:47:59.480 It's interesting to be because of you have a rural 0:47:59.760 --> 0:48:02.640 pre you're a very big company that a lot of 0:48:02.680 --> 0:48:05.359 people on the coasts maybe haven't heard of, right, right, 0:48:05.520 --> 0:48:07.240 So does that make it harder to tell your story 0:48:07.280 --> 0:48:07.960 to shareholders? 0:48:08.560 --> 0:48:11.400 You know, we just have to continue to tell it. 0:48:11.440 --> 0:48:14.600 And you know, we always invite shareholders to come to 0:48:15.040 --> 0:48:18.400 where our store support center is in Ancone, Iowa, and 0:48:18.440 --> 0:48:19.880 we can show them around, and we've done that a 0:48:19.960 --> 0:48:22.880 number of times. But yeah, I mean, people don't run 0:48:22.960 --> 0:48:25.640 into cases in their day to day lives, so we 0:48:25.760 --> 0:48:28.759 have to explain to them. And in certain markets, I'll 0:48:28.760 --> 0:48:31.560 take New York as an example, you wouldn't find anything 0:48:31.600 --> 0:48:35.240 that even resembles the cases here, so when we describe it, 0:48:35.239 --> 0:48:36.279 it takes a little bit of work. 0:48:36.280 --> 0:48:38.040 But yeah, because you said, you have your own kitchens 0:48:38.040 --> 0:48:40.480 in the stores, so they make their pizza dough from scratch, 0:48:40.600 --> 0:48:43.120 and it's not when I think of convenience store, That's 0:48:43.160 --> 0:48:43.960 not what I think of. 0:48:44.320 --> 0:48:44.799 That's right. 0:48:45.040 --> 0:48:47.840 Yeah, So we really kind of consider ourselves in a 0:48:47.880 --> 0:48:51.000 category of one because we have those unique attributes, that 0:48:51.080 --> 0:48:57.040 rural footprint, you know, our grocery, our alcohol and liquor, 0:48:57.040 --> 0:49:00.680 our pizza business. We really are unique that respect. 0:49:00.920 --> 0:49:03.880 So does it make sense to kind of just continue 0:49:03.880 --> 0:49:05.680 along those lines? Like I said to you, you know 0:49:06.200 --> 0:49:07.600 you're not here in New York, would you come to 0:49:07.640 --> 0:49:09.040 the New York metro area. 0:49:09.120 --> 0:49:12.120 Well, the way we focus our development for the moment 0:49:12.360 --> 0:49:15.200 is we have three distribution centers as we supply all 0:49:15.239 --> 0:49:20.200 of our own stores, and so we look initially at 0:49:20.600 --> 0:49:24.520 the effective distribution radius around those and so we know 0:49:24.600 --> 0:49:27.400 we can continue to build a lot of stores in 0:49:27.440 --> 0:49:30.600 that geography. In fact, of our twenty five hundred stores, 0:49:30.640 --> 0:49:32.759 two thousand of them are in only nine of the 0:49:32.760 --> 0:49:35.560 states we operate in, and so we still have plenty 0:49:35.560 --> 0:49:38.080 of white space. So it's not that we would never 0:49:38.480 --> 0:49:40.759 come to in New York, but we would probably do 0:49:40.840 --> 0:49:42.880 something a little more upstate if we were ever to 0:49:42.920 --> 0:49:43.800 get to that point. 0:49:43.960 --> 0:49:47.040 So how have you dealt with inflation? How have your 0:49:47.080 --> 0:49:48.640 consumers been dealing with this? 0:49:49.080 --> 0:49:49.840 With this inflation? 0:49:50.239 --> 0:49:52.920 You know, I would say, so far, so good. Our 0:49:52.960 --> 0:49:55.719 guests have proven to be pretty resilient. What I'd tell 0:49:55.760 --> 0:50:00.120 you about the demographics of our guests, three quarters of 0:50:00.120 --> 0:50:03.800 of our folks make fifty thousand dollars a year or more. 0:50:04.280 --> 0:50:06.200 And while I know that doesn't sound like a lot 0:50:06.239 --> 0:50:10.000 in New York, in the states where we operate, that 0:50:10.080 --> 0:50:12.839 goes a long way. In fact, if your rank ordered 0:50:12.880 --> 0:50:14.760 all the states in the US in terms of cost 0:50:14.800 --> 0:50:17.360 of living, the most expensive state we operate in is 0:50:17.440 --> 0:50:18.280 ranked twenty second. 0:50:18.520 --> 0:50:20.439 Interesting do you think about that in terms of where 0:50:20.440 --> 0:50:21.080 you want to open? 0:50:21.400 --> 0:50:23.160 Well, we factor in a lot of things of where 0:50:23.200 --> 0:50:26.080 we want to open the economy and cost of living 0:50:26.160 --> 0:50:28.760 is definitely one of those that fit into the equation. 0:50:29.320 --> 0:50:32.000 Talk to us a little bit about your new three 0:50:32.040 --> 0:50:32.520 year plan. 0:50:33.280 --> 0:50:37.480 Yeah. You know, we've had a long track record of 0:50:37.840 --> 0:50:40.680 success in our company, and the last three or four 0:50:40.760 --> 0:50:43.520 years is really accelerated. But we've done that through a 0:50:43.520 --> 0:50:46.600 couple of ways. Our growth algorithm is pretty simple. We 0:50:46.640 --> 0:50:49.759 get about half of our growth from what we call 0:50:49.840 --> 0:50:54.239 the mothership, the base business, driving same store sales, improving 0:50:55.280 --> 0:50:57.279 the base business, and then the other half is from 0:50:57.640 --> 0:51:01.600 new unit development. So that three hundred and fifty stores 0:51:02.040 --> 0:51:04.960 really represents a bit of an acceleration, but really a 0:51:05.000 --> 0:51:07.399 continuation of where we've been for the last few years. 0:51:07.400 --> 0:51:10.920 And we'll do that through a combination of organic growth 0:51:11.000 --> 0:51:16.200 and acquisitions. And our industry is highly fragmented. About ninety 0:51:16.200 --> 0:51:18.800 five thousand of the one hundred and fifty thousand Commence 0:51:18.840 --> 0:51:21.279 stores in the US or operate and change at ten 0:51:21.320 --> 0:51:24.319 stores or less. Yeah, and as you can imagine, with 0:51:24.400 --> 0:51:27.360 the inflationary pressures and supply chain issue everything else that 0:51:27.360 --> 0:51:30.880 we've all been dealing with, those smaller operators really struggle 0:51:31.000 --> 0:51:33.840 and so provides a great opportunity for us to acquire 0:51:33.960 --> 0:51:35.640 and operate those stores. 0:51:35.680 --> 0:51:38.480 Help us always supply chains, because I feel like they've 0:51:38.600 --> 0:51:41.120 eased and gotten better. Are they back to where they 0:51:41.160 --> 0:51:42.160 were pre pandemic. 0:51:42.480 --> 0:51:45.960 I would say for the most part, yes, I mean 0:51:46.040 --> 0:51:49.160 it's gotten significantly better from where it was twelve eighteen 0:51:49.160 --> 0:51:54.520 months ago. There's still some lingering things on certain things 0:51:54.560 --> 0:51:58.759 like tractor trailer trucks that still been delayed. You know, 0:51:58.800 --> 0:52:01.040 some things that required chips have a little bit longer 0:52:01.120 --> 0:52:03.759 lead times. But for the most part, we're about back 0:52:03.760 --> 0:52:04.080 to normal. 0:52:04.200 --> 0:52:06.760 Just trying to understand, you know, as inflation has certainly 0:52:06.800 --> 0:52:10.279 settled back in the past twelve months, but we still 0:52:10.280 --> 0:52:11.839 have a ways to go, and you still hear about 0:52:11.840 --> 0:52:13.960 inflationary pressures. I mean, I feel like I'm still paying 0:52:13.960 --> 0:52:15.840 a lot for a lot of stuff, and I'm trying 0:52:15.840 --> 0:52:20.360 to understand kind of whether you guys are seeing these pressures. 0:52:20.600 --> 0:52:24.600 Is wages also a decent pressure right now still for you. 0:52:24.400 --> 0:52:28.760 Know, that's moderated. You know, after the peak of COVID, 0:52:28.760 --> 0:52:31.440 we saw a real acceleration in wages. That is somewhat 0:52:31.480 --> 0:52:34.040 moderated a bit. But you know, what we've really been 0:52:34.080 --> 0:52:39.520 focused on is is employee engagement in retaining the team 0:52:39.560 --> 0:52:42.600 members that we have, and so if you looked at 0:52:42.600 --> 0:52:45.440 our results over the last year, we actually had a 0:52:45.480 --> 0:52:48.960 reduction in same store labor hours, and it was really 0:52:49.360 --> 0:52:52.600 driven by the fact that we reduced our turnover, so 0:52:52.680 --> 0:52:55.520 we have twenty percent reduction in overtime, twenty percent reduction 0:52:55.560 --> 0:52:59.200 and training hours and really focused on making the job 0:52:59.360 --> 0:53:02.440 in the store easier so we relieve some of that 0:53:02.520 --> 0:53:05.680 pressure and so we don't have to throw money at people. 0:53:05.719 --> 0:53:07.840 We want to take care of them. We paid people fairly, 0:53:08.160 --> 0:53:10.440 but also making their job easier close a long one. 0:53:10.480 --> 0:53:12.800 So the culture is extremely important to you. 0:53:12.640 --> 0:53:16.120 Absolutely, and so they get benefits and everything. Yes, yeah, yes, 0:53:16.960 --> 0:53:18.920 Sam in our control room wants to know if you're 0:53:18.920 --> 0:53:20.360 going to run for political office. 0:53:20.480 --> 0:53:22.640 We've all taken a poll and decided that we would 0:53:22.719 --> 0:53:23.880 vote for you. Yeah. 0:53:23.920 --> 0:53:26.759 Well, there's probably fewer things I'd want to do. 0:53:26.840 --> 0:53:31.520 Less for office. I could understand that. Talk to us 0:53:31.520 --> 0:53:31.800 about that. 0:53:31.920 --> 0:53:33.319 I was an infantry guy in the Army, so I've 0:53:33.320 --> 0:53:35.640 done some pretty nasty things. I'd rather do that than 0:53:35.719 --> 0:53:37.400 run for a thank you for your service. 0:53:37.440 --> 0:53:39.680 Talk to us about the pizza, because we hear it 0:53:39.719 --> 0:53:41.640 has a bit of a cult following. We already talked 0:53:41.640 --> 0:53:42.880 about the fact that it's handmade. 0:53:42.920 --> 0:53:45.960 I'd like pizza is it's key here in New York. 0:53:45.960 --> 0:53:46.759 It's important, you know. 0:53:46.920 --> 0:53:51.600 Yeah, yeah, it's well, it's it's iconic and we've been 0:53:51.600 --> 0:53:55.160 doing it since the eighties, so we've got a long 0:53:55.200 --> 0:53:58.200 track record. What I think is really cool one is 0:53:58.320 --> 0:54:00.840 that we make it from scratch and we use really 0:54:00.960 --> 0:54:03.920 quality and green so one hundred percent whole milk mozzarella cheese. 0:54:03.920 --> 0:54:06.160 Now you kind of think, well, doesn't everybody do that? 0:54:06.239 --> 0:54:09.200 But no, now most people don't. None of the large 0:54:09.280 --> 0:54:12.040 chains do. They use low fat mozzera because it's cheaper. 0:54:12.400 --> 0:54:15.160 We don't do that. We put extra cheese on the pizza. 0:54:15.200 --> 0:54:18.319 So it's not a thing to get to order extra 0:54:18.400 --> 0:54:20.399 cheese on your pizza from a Casey's because you don't 0:54:20.440 --> 0:54:23.520 need it. But what really sets us apart is our 0:54:23.560 --> 0:54:28.600 breakfast pizza. And it's not pizza for breakfast, it's breakfast pizza. 0:54:28.760 --> 0:54:31.560 And so we have people coming into our stores every day. 0:54:31.680 --> 0:54:33.279 What's that a breakfast pizza. 0:54:33.400 --> 0:54:38.360 Oh, it's bacon and eggs, bacon, eggs, sausage, cheese, and 0:54:38.400 --> 0:54:39.280 then more cheese. 0:54:39.440 --> 0:54:42.680 That's Darren Rebella's presidency of Casey's General Stores. That's stock, 0:54:42.760 --> 0:54:44.839 by the way, up more than eight percent so far 0:54:44.880 --> 0:54:47.759 this year. Still to come on Bloomberg Business Week, a 0:54:47.800 --> 0:54:51.000 former member of the Israeli Air Force, says his company's 0:54:51.040 --> 0:54:54.319 ready to make flying cars a reality, and there's no 0:54:54.360 --> 0:54:56.080 need to worry about air traffic. 0:54:56.360 --> 0:54:59.240 We're not flying at an altitude of like thirty thousand feet 0:54:59.280 --> 0:55:01.080 like a regular What we're doing is a couple of 0:55:01.080 --> 0:55:03.640 one hundred feet like a drone. This is the comfortable 0:55:03.719 --> 0:55:06.160 zone for us. And you know, the whole idea is 0:55:06.160 --> 0:55:07.920 not just to get from point to point B, but 0:55:07.960 --> 0:55:09.120 the whole idea is to enjoy. 0:55:09.200 --> 0:55:12.440 Djer Toroni, Aerospace CEO, joins us. On the other side, 0:55:12.600 --> 0:55:13.400 this is Bloomberg. 0:55:17.880 --> 0:55:21.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:55:21.480 --> 0:55:25.520 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:55:25.719 --> 0:55:29.000 the Bloomberg Business app and YouTube. You can also listen 0:55:29.080 --> 0:55:32.200 live on Amazon Alexa from our flagship New York station. 0:55:32.640 --> 0:55:35.440 Just say Alexa play Bloomberg eleven thirty. 0:55:36.640 --> 0:55:39.120 Well, everyone, stop the presses. Just found the next segment 0:55:39.120 --> 0:55:42.200 for what's Matt Miller driving or should I say flying? 0:55:42.600 --> 0:55:46.759 We're talking about personal flying cars And according to Vencat Biswanthonon, 0:55:47.080 --> 0:55:50.120 he's a Carnegie Mellon University professor who's worked with many 0:55:50.200 --> 0:55:52.799 leading battery startups. He says we could see a world 0:55:52.840 --> 0:55:56.279 of electric flying vehicles in the next decade, joining us 0:55:56.280 --> 0:55:58.760 with more on the nascent market for personal flying cars. 0:55:58.960 --> 0:56:01.759 The founder and CEO of Direct Aerospace, Jerome. 0:56:01.480 --> 0:56:04.360 Murder car, this is the definition. Essentially, it's an evy 0:56:04.440 --> 0:56:08.560 talk electric vertical take off a landing vehicle. It's on 0:56:08.719 --> 0:56:13.719 electric personally use for a two seater, and you can 0:56:13.719 --> 0:56:15.879 park it home and charge it home. It's very easy 0:56:15.920 --> 0:56:17.759 and intuitive and safe to use. 0:56:18.120 --> 0:56:20.799 So you're not I mean like some random inventure from 0:56:20.840 --> 0:56:24.120 the nineteen fifties who's just attached wings and a propeller 0:56:24.160 --> 0:56:27.960 to an old car. You were in the Israeli Air Force, 0:56:28.160 --> 0:56:32.080 serve air Force intelligence in Israel, you went got your 0:56:32.400 --> 0:56:35.000 MBA at the NYU Stern School of Business. 0:56:35.080 --> 0:56:36.600 You're a serious man here. 0:56:37.960 --> 0:56:42.160 How likely is it that I will have the opportunity 0:56:42.480 --> 0:56:45.840 to buy and operate a flying car in my lifetime? 0:56:47.000 --> 0:56:50.040 Well, first of all, we're already doing it here. I mean, 0:56:50.040 --> 0:56:54.400 it's already happening. It's you know, some of the futuristic 0:56:54.440 --> 0:56:58.000 movies are showing, you know, get engines, but we are 0:56:58.000 --> 0:57:03.760 doing it with preparers electric autopilot system. So the target 0:57:03.800 --> 0:57:06.120 for US is to we already have over a three 0:57:06.200 --> 0:57:09.160 hundred requests for pre orders to start delivering by twenty 0:57:09.239 --> 0:57:11.920 twenty five, so it's it's pretty close. And if you 0:57:11.960 --> 0:57:15.120 look at what's going on in this market, it's divided 0:57:15.160 --> 0:57:18.360 into three main segments. The biggest one of these, even 0:57:18.400 --> 0:57:21.520 to als called flying car, belongs to air Taxi, so 0:57:21.960 --> 0:57:25.320 as it's a ride sharing service and they are already 0:57:25.760 --> 0:57:27.880 out there, they claim that they're going to be the 0:57:27.880 --> 0:57:31.040 first one by twenty twenty four. And our vehicle is 0:57:31.120 --> 0:57:34.760 less complicated and in terms of certification and use, so 0:57:34.880 --> 0:57:37.600 we expect that you should be alignment as well, so 0:57:38.080 --> 0:57:38.480 very soon. 0:57:39.720 --> 0:57:43.280 Well, but there's always regulatory oversight. And I'm just thinking 0:57:43.320 --> 0:57:45.840 about these crowded spot you know, like I'm assuming the 0:57:45.920 --> 0:57:49.560 demand will be well, the demand will be in big cities, 0:57:49.560 --> 0:57:52.720 but it's pretty crowded up in the air, So how 0:57:52.720 --> 0:57:53.760 does that work. 0:57:54.920 --> 0:57:58.200 Yeah, So the goal for us is not immediately, is 0:57:58.240 --> 0:58:01.360 not to go into main cities like you know, your Boston, Chicago. 0:58:01.440 --> 0:58:03.919 This is really not where we want to you know, fly. 0:58:04.120 --> 0:58:07.560 At this point, there is enough space to fly everywhere 0:58:07.600 --> 0:58:13.160 around the US suburban area and outside, you know, it's 0:58:13.160 --> 0:58:16.680 so beautiful outside and unless congested. So as far as 0:58:17.000 --> 0:58:19.960 being crowded, we're not flying at an altitude of like 0:58:20.040 --> 0:58:22.320 thirty thousand feet like a regular aircraft. What we're doing 0:58:22.360 --> 0:58:24.200 is a couple of one hundred feet like a drone. 0:58:24.560 --> 0:58:27.000 This is the comfortable zone for us. And you know, 0:58:27.040 --> 0:58:28.840 the whole idea is not just to get from point 0:58:29.000 --> 0:58:31.240 to point B, but the whole idea is to enjoy nature, 0:58:31.240 --> 0:58:31.760 and you can't. 0:58:31.640 --> 0:58:32.120 Do that to that. 0:58:32.680 --> 0:58:34.240 So it's not crowded. It will take a lot of 0:58:34.240 --> 0:58:36.840 time until that become crowded. This is you know, this 0:58:36.920 --> 0:58:40.160 is a myth that people you know were asking yo crowded, 0:58:40.200 --> 0:58:42.680 But it will take a long time for it to happen. 0:58:42.760 --> 0:58:43.840 If it will happen, I don't know. 0:58:44.000 --> 0:58:47.400 But so it does look like fun and an amazing 0:58:47.440 --> 0:58:52.200 way to see nature. I think that's laudable to do 0:58:52.240 --> 0:58:55.520 it for that reason rather than you know, reducing congestion 0:58:55.720 --> 0:58:56.120 or whatever. 0:58:57.280 --> 0:58:58.840 Describe to us your vehicle. 0:58:58.920 --> 0:59:01.640 Because a lot of our listeners are on radio and 0:59:01.720 --> 0:59:03.680 can't see the picture behind you. 0:59:04.600 --> 0:59:06.040 It looks like you've got what. 0:59:06.040 --> 0:59:09.959 Four props main propulsion systems? How does it work? 0:59:11.000 --> 0:59:14.040 So first of all, they can go into our website 0:59:14.120 --> 0:59:16.440 Doroni that I owe and they can see a lot 0:59:16.480 --> 0:59:20.960 of information there. As far as the way it works, yeah, 0:59:21.000 --> 0:59:24.680 we have all together ten motors, so we have four 0:59:24.800 --> 0:59:27.120 ducts and this is what sets us apart where unique 0:59:27.160 --> 0:59:30.400 to that we have ducted fans embedded into wings, so 0:59:30.480 --> 0:59:32.760 that gives us extra lift. So in each duct we 0:59:32.800 --> 0:59:36.160 have two motors for redundancy, so altogether we have eight 0:59:36.160 --> 0:59:39.280 for vertical and two pushers for a four efficient flight. 0:59:39.760 --> 0:59:43.720 So it's very I mean it's very simple to use. 0:59:44.640 --> 0:59:46.720 Let's say that you're already out there and you want 0:59:46.720 --> 0:59:49.040 to fly, so three kicks of a button, you're going up. 0:59:49.560 --> 0:59:53.120 And this system is a semi autonomous system. If you 0:59:53.280 --> 0:59:56.560 fluid drone today, you know how it works like DJI, 0:59:57.040 --> 0:59:57.960 so it just goes up. 0:59:58.040 --> 0:59:58.880 It knows exactly. 0:59:58.920 --> 1:00:02.520 It's ok in our three dimensional world with multiple sensors 1:00:02.520 --> 1:00:05.440 which are already you know, working pretty good for the last. 1:00:05.880 --> 1:00:10.120 So it's very drone like in other words, which is cool? 1:00:10.240 --> 1:00:12.240 Is it going to be piloted like a drone? Will 1:00:12.280 --> 1:00:15.840 you use you know, a screen with a joystick or 1:00:15.840 --> 1:00:17.520 how how does how do the controls look? 1:00:18.160 --> 1:00:20.880 Yeah, so in our case, we have one big screen 1:00:20.880 --> 1:00:22.760 that you have everything, but the control really is just 1:00:22.760 --> 1:00:26.840 one simple joystick, very intuitive. You go forward, you go backwards, 1:00:26.880 --> 1:00:29.080 you go left, you go up with a throttle, and 1:00:30.280 --> 1:00:33.600 there's it's really it's really there's nothing much you need 1:00:33.640 --> 1:00:35.680 to know. I mean, because it's a semi toy of 1:00:35.720 --> 1:00:38.800 a system. It makes everything very simple for you essentially. 1:00:39.160 --> 1:00:42.240 And we presented in Oshkosh Inertia the oshcostcier last year 1:00:42.280 --> 1:00:44.240 and the biggest reject that we go over there is 1:00:44.240 --> 1:00:45.800 like people saying, hey, guys, you know I learned to 1:00:45.880 --> 1:00:48.560 five for twenty years. I took all the complexities out 1:00:48.560 --> 1:00:51.720 of the flight because we're not flying like a regular helicopter, 1:00:51.880 --> 1:00:54.400 not like a regular you know, aircraft. Essentially it's a 1:00:54.480 --> 1:00:57.360 drone right like, So we have eight motors for redundancies 1:00:57.360 --> 1:00:58.200 as well for safety. 1:00:58.680 --> 1:01:01.240 So how many motors can you lose before it becomes 1:01:01.320 --> 1:01:01.960 a problem. 1:01:02.480 --> 1:01:06.000 Yeah, So that we design it in a way so 1:01:06.120 --> 1:01:09.520 you have a working motor for vertical and if any 1:01:09.720 --> 1:01:13.320 four motor is separate in different ducts, will will have 1:01:13.400 --> 1:01:17.240 an issue. The system can self stabilize itself and would 1:01:17.520 --> 1:01:20.800 commence automatic descent. So this is all you know that 1:01:20.800 --> 1:01:23.040 it's aware of. Like a gyroscope. Where is it in 1:01:23.040 --> 1:01:24.040 the three dimensional world? 1:01:24.320 --> 1:01:24.680 Durone? 1:01:24.720 --> 1:01:29.880 What what kind of license would I need to fly that? 1:01:30.080 --> 1:01:32.240 I mean if I buy one from you guys and 1:01:32.680 --> 1:01:34.720 I don't know park it at my ranch in Montana? 1:01:35.120 --> 1:01:36.880 Do I have to take a course? Do I have 1:01:36.960 --> 1:01:38.560 to be a private pilot? What do I need? 1:01:39.480 --> 1:01:42.680 So at this point what we have is called some 1:01:42.760 --> 1:01:47.080 CO called LSA Lightboard Aircraft type certification, which for now 1:01:47.160 --> 1:01:49.760 is for one reciprocal motor. You need at least twenty 1:01:49.800 --> 1:01:52.600 hours of course the premises of the factory, so at 1:01:52.640 --> 1:01:56.200 fifteen hours of you know, on the vehicle and fivur 1:01:56.240 --> 1:01:58.920 of solo. This is what we expect, you know, in 1:01:58.960 --> 1:02:02.120 our case as well as the rules and regulation are 1:02:02.160 --> 1:02:04.920 being now changed by the FAA. They're aware of that. 1:02:04.960 --> 1:02:09.080 We're sitting in committees advising them also to NASA and 1:02:09.120 --> 1:02:12.720 to the FA as well. So it's very very simple, 1:02:12.840 --> 1:02:16.480 very straightforward, less complex than any aircraft. So the ED 1:02:16.560 --> 1:02:18.480 essay will enable you to fly up to ten thousand 1:02:18.520 --> 1:02:20.840 feet again we are good a couple of hundred feet 1:02:21.240 --> 1:02:21.520 to go. 1:02:22.440 --> 1:02:24.760 So what's going to be the biggest market segment do 1:02:24.800 --> 1:02:27.720 you think? Is it military? Is it tourism? Is it 1:02:27.920 --> 1:02:30.720 just kind of an uber transportation kind of thing. 1:02:31.920 --> 1:02:35.080 So we all the request that we have are for 1:02:35.240 --> 1:02:37.080 private people. At this point, we were kind of amazed. 1:02:37.120 --> 1:02:39.840 There was one article on us and just you know, 1:02:39.880 --> 1:02:42.640 people started to basically order pre order that. 1:02:43.080 --> 1:02:46.520 So it's two hundred and fifty thousand, right, two. 1:02:46.400 --> 1:02:49.840 Hundred and fifty to three hundred, it's about yeah. So yeah, 1:02:49.960 --> 1:02:53.200 private people very interested. You know, people have you know, 1:02:53.280 --> 1:02:55.800 maybe a collection of cars, a few cars, maybe aircraft, 1:02:55.840 --> 1:02:57.680 so it's a bunch of them. One of them, for example, 1:02:57.800 --> 1:03:00.480 is a doctor in our case, he lives is one 1:03:00.480 --> 1:03:03.640 of the first one. He lives in an airport community. Uh, 1:03:04.400 --> 1:03:06.720 it's essentially a private airport. He wants to fly to work. 1:03:06.920 --> 1:03:10.320 You know, he's with But where do you see the growth, 1:03:10.320 --> 1:03:11.680 where do you see the business? 1:03:12.240 --> 1:03:16.440 So business definitely, you know, private people. Again, the production 1:03:16.720 --> 1:03:19.560 the capacity at this point is like limited to what 1:03:19.680 --> 1:03:22.600 we can deliver, so we see that definitely. Personal were 1:03:22.640 --> 1:03:24.760 also in touch with the with the Air Force. They 1:03:24.800 --> 1:03:31.120 won't use these vehicles for SURVEILLISKA and also reconnaissance and 1:03:31.360 --> 1:03:33.800 you know, rescue a planet that ejected abundant out of 1:03:34.320 --> 1:03:37.400 you know, are in the territory for also getting from 1:03:37.640 --> 1:03:40.800 first respondents, police department. You can it's very fast, easy 1:03:40.840 --> 1:03:41.400 to deploy. 1:03:41.920 --> 1:03:42.280 FEMA. 1:03:42.560 --> 1:03:45.000 We're is getting them all the time from all. I mean, 1:03:45.040 --> 1:03:47.320 it's just it's hard for to say. But the perorders 1:03:47.360 --> 1:03:50.000 at this point, and we also from Canada, uh so 1:03:50.120 --> 1:03:53.040 the perioders are more personal, which has kind of amazed us. 1:03:53.080 --> 1:03:55.400 And I mean, we we do it what we get. 1:03:56.440 --> 1:03:58.840 So a lot of official use cases though, even if 1:03:59.160 --> 1:04:02.160 the pre orders are person So how many do you 1:04:02.200 --> 1:04:05.560 expect to produce, like say twenty twenty five, how many 1:04:05.600 --> 1:04:06.960 are going to be rolling out of your factory? 1:04:07.680 --> 1:04:10.040 So for twenty twenty five, we're you're talking about about 1:04:10.040 --> 1:04:13.520 one hundred and twenty twenty five units the first the 1:04:14.720 --> 1:04:17.240 first to twenty five, My apport is six units, the 1:04:17.280 --> 1:04:19.320 next year is one twenty five, and their scant up 1:04:19.320 --> 1:04:25.400 production to about twenty five hundred units a year. We 1:04:25.480 --> 1:04:28.720 will probably have to scat up because this technology is 1:04:29.320 --> 1:04:32.840 well just so revolutionary that will take place from you know, 1:04:32.920 --> 1:04:34.600 other market segments as well. 1:04:34.680 --> 1:04:37.880 That was darn Merdinger, founder and CEO of d'roni Aerospace. 1:04:38.240 --> 1:04:40.840 You're listening to Bloomberg Business Week coming up, How tighter 1:04:40.920 --> 1:04:43.920 monetary policy in America is putting the squeeze on New 1:04:44.000 --> 1:04:46.400 York City's pricey residential real estate sector. 1:04:46.480 --> 1:04:49.720 The problem with the market right now is that these 1:04:49.840 --> 1:04:53.760 high interest rates are causing people to be forced to 1:04:53.760 --> 1:04:55.000 pay lower prices. 1:04:55.280 --> 1:04:56.240 This is Bloomberg. 1:05:00.760 --> 1:05:04.320 You're listening to the Bloomberg Business Week podcast. Catch us 1:05:04.360 --> 1:05:07.720 live weekday afternoons from three to six Eastern Listen on 1:05:07.760 --> 1:05:11.800 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, 1:05:12.080 --> 1:05:13.960 or watch us live on YouTube. 1:05:14.760 --> 1:05:18.080 Bloomberg News recently reported on how more Manhattan buyers are 1:05:18.120 --> 1:05:20.840 paying cash than at any other time on record. In fact, 1:05:20.880 --> 1:05:23.680 some sixty five percent of purchases in the second quarter 1:05:24.000 --> 1:05:27.200 were done without financing. That's up from fifty seven percent 1:05:27.200 --> 1:05:29.960 in the first quarter and the largest share since appraiser 1:05:30.000 --> 1:05:33.520 Miller Samuel and Brokeridge Douglas Element real Estate began tracking 1:05:33.560 --> 1:05:37.000 payment methods in twenty fourteen. For an update on what 1:05:37.120 --> 1:05:40.280 she is seeing firsthand, we welcome back Barbara Fox, president 1:05:40.280 --> 1:05:43.040 at Fox Residential Group and an Upper East sider for 1:05:43.120 --> 1:05:45.560 a post check on housing prices in the Big Apple. 1:05:45.920 --> 1:05:50.560 The spring and early summer markets were a little were 1:05:50.600 --> 1:05:52.800 pretty active. There was a lot of activity there was 1:05:52.880 --> 1:05:56.600 sales being made. There were things coming on the market, surprisingly, 1:05:57.600 --> 1:06:02.280 but mainly it's that was in the smaller units one, two, 1:06:02.720 --> 1:06:06.320 and even three bedroom units, not the super luck stuff, 1:06:06.400 --> 1:06:12.200 but the the lower price stuff. But that's fallen off 1:06:12.280 --> 1:06:14.560 now we're in the summer doldrum. 1:06:14.640 --> 1:06:14.800 You know. 1:06:14.840 --> 1:06:18.360 Carol is talking about the fact that more buyers are 1:06:18.480 --> 1:06:22.640 cash now than ever before, and well, it's a very 1:06:22.800 --> 1:06:25.440 expensive place to buy real estate, so that means a 1:06:25.480 --> 1:06:29.600 lot of cash in these transactions. Is it only the 1:06:29.720 --> 1:06:32.160 very wealthy that are transacting right now? 1:06:33.040 --> 1:06:38.840 No, actually it's not. The very wealthy always transact and 1:06:38.920 --> 1:06:41.880 they can pay cash. However, the bulk of the people 1:06:41.880 --> 1:06:45.080 who are buying in New York City really can afford 1:06:45.120 --> 1:06:47.920 to pay cash or don't want to pay cash. They 1:06:48.040 --> 1:06:50.680 do it if they have to because of the interest rates. 1:06:51.080 --> 1:06:54.320 The problem with the market right now is that these 1:06:54.440 --> 1:06:58.360 high interest rates are causing people to be forced to 1:06:58.400 --> 1:07:04.520 pay lower prices, and there is a there's a juxtaposition 1:07:04.640 --> 1:07:07.160 between what the buyers think and what the sellers think. 1:07:07.280 --> 1:07:10.520 That still exists, doesn't that's very much in an existence now. 1:07:10.560 --> 1:07:14.480 It's uh, it's really a it's it's a difficult situation. 1:07:15.000 --> 1:07:21.520 And the sellers who are pretty savvy in New York 1:07:23.040 --> 1:07:26.320 have been gotten so used to these very high inflated 1:07:26.360 --> 1:07:30.680 prices that they aren't really coming down to reality at 1:07:30.680 --> 1:07:34.440 this point. And that's the only way to do transactions. 1:07:34.520 --> 1:07:37.640 I mean, the buyers are very cautious. They're not going 1:07:37.720 --> 1:07:40.440 to overpay. They will look at a million things. 1:07:40.240 --> 1:07:42.360 Because they can. If they've got to higher interest rate 1:07:42.360 --> 1:07:44.880 and a mortgage, right, they've got to kind of reduce 1:07:44.920 --> 1:07:46.720 what they can pay essentially for the pass. 1:07:47.880 --> 1:07:51.680 All right, So what kind of properties are moving then 1:07:51.800 --> 1:07:56.160 right now? Which ones are are are people willing to 1:07:56.200 --> 1:07:56.960 actually sell? 1:07:57.560 --> 1:08:02.280 Well, the people that it's really an interesting market right 1:08:02.320 --> 1:08:06.440 now because most of the people who are selling, there's 1:08:06.440 --> 1:08:09.720 not a lot of product coming on the market because 1:08:09.880 --> 1:08:12.400 because of the people, because of the interest rate situation. 1:08:12.480 --> 1:08:15.040 If people are moving, they don't want to have to 1:08:15.040 --> 1:08:17.880 pay a higher interest rate for a new apartment, so 1:08:18.040 --> 1:08:20.200 they aren't. There's not a lot of movement in the 1:08:20.280 --> 1:08:20.800 in the market. 1:08:20.840 --> 1:08:24.960 You're saying there's no movement or what what does sell? 1:08:25.040 --> 1:08:28.080 Less expective, It does sell, and people are always having 1:08:28.080 --> 1:08:32.439 to sell for various reasons, moving or whatever. And what 1:08:32.640 --> 1:08:39.760 sells fastest are new developments and the nicely renovated apartment. 1:08:39.920 --> 1:08:42.600 Is that because if you're a new developer, can you 1:08:42.600 --> 1:08:44.640 figure out a way to give people a four or 1:08:44.640 --> 1:08:47.400 five percent mortgage rather than a six or seven percent mortgage? 1:08:47.520 --> 1:08:50.679 I presume I don't really think that's happening right now, 1:08:51.400 --> 1:08:52.800 but I'm sure what is. 1:08:52.760 --> 1:08:54.000 The good happen between now? 1:08:54.120 --> 1:08:57.719 Barbara, and you're not nearly old enough, but some people 1:08:57.760 --> 1:09:00.479 remember the eighties when rates were not. 1:09:00.400 --> 1:09:02.400 Only this high, but a lot higher. 1:09:02.640 --> 1:09:07.320 I remember I remember in the seventies and eighties when 1:09:07.360 --> 1:09:09.000 the rates were eighteen percent. 1:09:09.280 --> 1:09:12.000 Our thanks to Barbara Fox, president at Fox Residential Group, 1:09:12.040 --> 1:09:14.400 for joining me and Matt Miller in studio. Head over 1:09:14.439 --> 1:09:16.760 to our BusinessWeek podcast feed for more on the New 1:09:16.840 --> 1:09:19.400 York City housing market. And that wraps up the weekend 1:09:19.520 --> 1:09:21.960 edition at Bloomberg business Week from Bloomberg Radio. Thank you 1:09:22.000 --> 1:09:24.080 so much for joining us. Be sure to tune into 1:09:24.080 --> 1:09:26.960 Bloomberg Business Week Monday through Friday starting at three pm 1:09:27.000 --> 1:09:30.240 Wall Street Time on Bloomberg Radio and on serious XM 1:09:30.320 --> 1:09:33.240 Channel one nineteen. You can also watch our daily broadcast 1:09:33.280 --> 1:09:37.160 on YouTube. Just search Bloomberg Global News and we're summacast 1:09:37.200 --> 1:09:40.520 on Bloomberg Originals available at Bloomberg dot com, Slash Originals, 1:09:40.800 --> 1:09:45.679 and streaming platforms including Roku, Amazon, fireTV, Samsung TV Plus 1:09:45.720 --> 1:09:49.639 and more. Find our Bloomberg BusinessWeek podcast at Bloomberg dot com, Apple, 1:09:49.760 --> 1:09:52.439 or wherever you get your podcasts, and the latest edition 1:09:52.479 --> 1:09:55.760 of the magazine available on newstands now at Bloomberg dot com, 1:09:55.760 --> 1:09:59.040 Slash Businessweekend, always on the Bloomberg Terminal. Have a good 1:09:59.040 --> 1:10:01.840 and safe weekend for Matt Miller. I'm Carol Masser. Stay 1:10:01.880 --> 1:10:04.599 with us. Today's top stories in global business headlines are 1:10:04.640 --> 1:10:05.680 coming up right now. 1:10:06.400 --> 1:10:11.040 This is the Bloomberg Business Week Podcast, available on Apple, Spotify, 1:10:11.200 --> 1:10:14.880 and anywhere else you get your podcasts. Listen live weekday 1:10:14.920 --> 1:10:18.559 afternoons from three to six Eastern on Bloomberg dot com, 1:10:18.600 --> 1:10:21.920 the iHeartRadio app, tune In, and the Bloomberg Business App. 1:10:21.960 --> 1:10:24.919 You can also watch us live every weekday on YouTube 1:10:25.160 --> 1:10:27.160 and always on the Bloomberg Terminal.