1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? It defresent is a real issue. The US 3 00:00:06,400 --> 00:00:09,719 Speaker 1: economy continues to send mixed signals to the financial stories, 4 00:00:09,760 --> 00:00:12,680 Speaker 1: the cheap our word fed action to con concerns over 5 00:00:12,760 --> 00:00:16,360 Speaker 1: dollar liquidity and encouraging China data. The town's reaction to 6 00:00:16,440 --> 00:00:18,960 Speaker 1: news on Brexit. Through the eyes of the most influential 7 00:00:19,000 --> 00:00:22,240 Speaker 1: voices Larry Summers, the former Treasury Secretary, star Ward CEO, 8 00:00:22,400 --> 00:00:26,040 Speaker 1: Kevin Johnson sec Chairman Jake Clayton. Bloomberg wool Street Week 9 00:00:26,200 --> 00:00:30,400 Speaker 1: with David Weston on Bloomberg Radio, Davos decides what the 10 00:00:30,400 --> 00:00:33,560 Speaker 1: world should be concerned about, and competition and streaming video 11 00:00:33,640 --> 00:00:37,520 Speaker 1: heats up. I'm David Weston. Welcome to Bloomberg Wall Street Week. 12 00:00:37,800 --> 00:00:40,800 Speaker 1: This week was the Week of Davos, that annual gathering 13 00:00:40,840 --> 00:00:43,120 Speaker 1: the Swiss Alps, when the great and the good convened 14 00:00:43,159 --> 00:00:46,080 Speaker 1: to reassure one another that they are both great and good. 15 00:00:46,440 --> 00:00:49,159 Speaker 1: We've talked this year about growth and reduced trade tensions 16 00:00:49,159 --> 00:00:52,720 Speaker 1: and high hopes for one of our Wall Street Week contributors, 17 00:00:52,880 --> 00:00:56,480 Speaker 1: Chief Bloomberg economist Stephanie Flanders, was on the scene and 18 00:00:56,520 --> 00:00:59,320 Speaker 1: gave us this week's contributors take they like to talk 19 00:00:59,440 --> 00:01:02,240 Speaker 1: big hit in Davos about the threats the world must 20 00:01:02,280 --> 00:01:07,000 Speaker 1: confront climate change, the dark side of the Internet technology 21 00:01:07,120 --> 00:01:10,959 Speaker 1: turning old business models on their heads, but about the 22 00:01:11,040 --> 00:01:14,720 Speaker 1: short term state of the global economy. The conversation here 23 00:01:14,720 --> 00:01:18,679 Speaker 1: has been remarkably upbeat. But don't be fooled. The past 24 00:01:18,680 --> 00:01:21,280 Speaker 1: two years of drama have come at a cost, and 25 00:01:21,280 --> 00:01:23,840 Speaker 1: if we don't pay it in twenty we will almost 26 00:01:23,840 --> 00:01:26,640 Speaker 1: certainly feel it down the road. And remember, the US 27 00:01:26,760 --> 00:01:29,400 Speaker 1: China trade deal has not removed most of the tariffs 28 00:01:29,400 --> 00:01:33,240 Speaker 1: the Trump administrations slapped on Chinese goods. The average tariff 29 00:01:33,440 --> 00:01:36,360 Speaker 1: on Chinese imports to the US is now nearly twenty 30 00:01:37,240 --> 00:01:40,479 Speaker 1: up from three percent two years ago, and China has 31 00:01:40,480 --> 00:01:45,319 Speaker 1: put similar tariffs on US imports. Everyone agrees all the 32 00:01:45,360 --> 00:01:48,080 Speaker 1: really important stuff has been left for the Phase two deal, 33 00:01:48,520 --> 00:01:50,840 Speaker 1: and there's little chance of that happening to this side 34 00:01:50,840 --> 00:01:54,440 Speaker 1: of the presidential election. And because the US has refused 35 00:01:54,440 --> 00:01:56,960 Speaker 1: to appoint anyone to the appeal system within the World 36 00:01:57,000 --> 00:02:01,760 Speaker 1: Trade Organization, there is now no global system for resolving 37 00:02:01,840 --> 00:02:05,200 Speaker 1: trade disputes. The Europeans say even the U S China 38 00:02:05,240 --> 00:02:09,440 Speaker 1: deal violates w t O rules, but without that appeal system, 39 00:02:09,560 --> 00:02:12,320 Speaker 1: it's not clear they could do anything about it even 40 00:02:12,360 --> 00:02:15,440 Speaker 1: if they were right. So the global trading system has 41 00:02:15,520 --> 00:02:19,120 Speaker 1: taken a hit, and Britain leaving the EU is going 42 00:02:19,160 --> 00:02:21,919 Speaker 1: to make it harder for British companies to do business 43 00:02:22,200 --> 00:02:25,040 Speaker 1: with their most important trading partner in a year's time. 44 00:02:25,320 --> 00:02:27,560 Speaker 1: And that won't sink the UK economy, but it's going 45 00:02:27,600 --> 00:02:31,320 Speaker 1: to make it hard to sustain that Boris bouts. And 46 00:02:31,400 --> 00:02:35,080 Speaker 1: don't forget the most important consequence of all the dramas 47 00:02:35,120 --> 00:02:39,480 Speaker 1: we've seen since the US Central Bank never got to 48 00:02:39,480 --> 00:02:43,160 Speaker 1: take interest rates closer to normal levels, and neither did 49 00:02:43,200 --> 00:02:46,760 Speaker 1: central banks in the Eurozone, China or the UK. So 50 00:02:46,840 --> 00:02:50,640 Speaker 1: after more than a decade of economic recovery, interest rates 51 00:02:50,960 --> 00:02:55,280 Speaker 1: are still at or rather close to record lows. So yes, 52 00:02:55,800 --> 00:02:57,880 Speaker 1: the FED coming to the rescue of the U s 53 00:02:57,919 --> 00:03:01,200 Speaker 1: economy and the financial markets last year has probably put 54 00:03:01,240 --> 00:03:04,600 Speaker 1: off the date of the next recession, but it's also 55 00:03:04,680 --> 00:03:08,760 Speaker 1: taken away central banks ammunition for fighting one when it comes. 56 00:03:09,440 --> 00:03:12,360 Speaker 1: Then I expect the movers and shakers here in Davos 57 00:03:12,520 --> 00:03:15,000 Speaker 1: will be looking for those same governments to all come 58 00:03:15,040 --> 00:03:18,639 Speaker 1: together to collaborate to prop up the global economy as 59 00:03:18,680 --> 00:03:21,800 Speaker 1: they did in two thousand and eight. But after everything 60 00:03:21,840 --> 00:03:25,560 Speaker 1: that's happened, I wonder is there any chance of that 61 00:03:25,639 --> 00:03:28,360 Speaker 1: happening again? Now? To our contributors with us today are 62 00:03:28,440 --> 00:03:31,120 Speaker 1: Larry Summers are Harvard, who is not only an esteemed 63 00:03:31,160 --> 00:03:33,600 Speaker 1: economist in his own right, but the nephew of two 64 00:03:33,680 --> 00:03:37,240 Speaker 1: Nobel laureates and economics Paul Samuelson and Kenneth Arrow. What 65 00:03:37,360 --> 00:03:39,120 Speaker 1: you might not know about Larry, but you should be 66 00:03:39,120 --> 00:03:42,320 Speaker 1: careful about this. He as an undergraduate and M I 67 00:03:42,400 --> 00:03:45,440 Speaker 1: T was a serious debater, qualifying three times for the 68 00:03:45,520 --> 00:03:48,480 Speaker 1: National Debate Tournament, which explains a lot about Larry Summers, 69 00:03:48,560 --> 00:03:50,520 Speaker 1: I think. And Roger Ferguson is with us for t 70 00:03:50,600 --> 00:03:52,720 Speaker 1: I a A. Roger was the only member of the 71 00:03:52,720 --> 00:03:55,119 Speaker 1: Federal Reserve Board in Washington when terrorist attacked the United 72 00:03:55,120 --> 00:03:57,240 Speaker 1: States on nine eleven, and drew on his experience with 73 00:03:57,280 --> 00:03:59,640 Speaker 1: the New York banking system to make sure the financial 74 00:03:59,640 --> 00:04:02,560 Speaker 1: system remained up and running to avoid a possible panic. 75 00:04:02,880 --> 00:04:05,360 Speaker 1: Roger has a long affiliation with Wall Street Week, having 76 00:04:05,400 --> 00:04:08,560 Speaker 1: watched the original Lewis Rockheiser program with his father as 77 00:04:08,600 --> 00:04:11,400 Speaker 1: a young boy growing up in Washington, so welcome, Larry Roger, 78 00:04:11,480 --> 00:04:13,480 Speaker 1: good to have you here. You just heard what Stephie Flanders, 79 00:04:13,480 --> 00:04:15,920 Speaker 1: our contributor, had to say that things look pretty good 80 00:04:15,920 --> 00:04:17,520 Speaker 1: for the short term, but if there's a down term, 81 00:04:17,520 --> 00:04:20,599 Speaker 1: we're not prepared for it. What's your take, Larry, I 82 00:04:20,600 --> 00:04:23,479 Speaker 1: think that's about I think Stephanie was right about that. 83 00:04:24,080 --> 00:04:26,919 Speaker 1: I thought her comments were in general right on the mark. 84 00:04:27,560 --> 00:04:31,640 Speaker 1: I don't think she's right that it's only trade frictions 85 00:04:31,680 --> 00:04:34,440 Speaker 1: and the like that explain why the FED hasn't been 86 00:04:34,480 --> 00:04:37,039 Speaker 1: able to raise interest rates. I think it's the much 87 00:04:37,040 --> 00:04:39,760 Speaker 1: more fundamental things we talked about a couple of weeks ago, 88 00:04:40,200 --> 00:04:45,200 Speaker 1: having to do with secular stagnation, rising savings, diminished investment propensity, 89 00:04:45,800 --> 00:04:49,039 Speaker 1: all that, and I think we have a deep problem 90 00:04:49,160 --> 00:04:55,400 Speaker 1: of maintaining demand without having unsound uh financial conditions, and 91 00:04:55,839 --> 00:04:58,640 Speaker 1: they should be talking about that in Davos, but I 92 00:04:58,680 --> 00:05:02,560 Speaker 1: actually don't think uh they are. I also have to 93 00:05:02,560 --> 00:05:07,839 Speaker 1: say I've been going to Davos probably and last thirty years. 94 00:05:07,880 --> 00:05:11,520 Speaker 1: I missed it this year, And in general, I'm not 95 00:05:11,560 --> 00:05:13,839 Speaker 1: sure it's a leading indicator. I think it might be 96 00:05:13,880 --> 00:05:18,000 Speaker 1: a contrary indicator. When Davos is most optimistic, that's when 97 00:05:18,040 --> 00:05:21,440 Speaker 1: things tend to get worse. When Davos is most pessimistic, 98 00:05:21,760 --> 00:05:25,040 Speaker 1: that's when things tend to get better. Right, I want 99 00:05:25,040 --> 00:05:27,040 Speaker 1: to pick about one thing Larry said, it's not all 100 00:05:27,080 --> 00:05:29,240 Speaker 1: about trade, but people are talking about trade. We had 101 00:05:29,279 --> 00:05:32,120 Speaker 1: Christine Lagarde about what was going on with Europe and 102 00:05:32,120 --> 00:05:33,560 Speaker 1: this is what she said. She said, part of the 103 00:05:33,560 --> 00:05:36,560 Speaker 1: turner in Europe is because of trade. The risks surrounding 104 00:05:36,600 --> 00:05:44,039 Speaker 1: the euro Area growth outlook related to geopolitical factors, rising protectionism, 105 00:05:44,839 --> 00:05:50,640 Speaker 1: and vulnerabilities in emerging markets remain tilted to the downside, 106 00:05:51,560 --> 00:05:56,000 Speaker 1: but have become less pronounced as some of the uncertainty 107 00:05:56,080 --> 00:05:59,720 Speaker 1: surrounding international trade is receding. Okay, so how much of 108 00:05:59,760 --> 00:06:02,400 Speaker 1: them in the economy overall is because of at least 109 00:06:02,440 --> 00:06:05,440 Speaker 1: a receiving of trade tensions. I think fair amount of it. Frankly, 110 00:06:05,480 --> 00:06:08,360 Speaker 1: as one thinks about what was happening last year, a 111 00:06:08,440 --> 00:06:10,520 Speaker 1: year and a half ago, there was anxiety about recession 112 00:06:10,920 --> 00:06:14,240 Speaker 1: that receded anxiety about trade as Trump put on more 113 00:06:14,240 --> 00:06:16,760 Speaker 1: and more terroffs, and indeed, as we got through the 114 00:06:16,760 --> 00:06:19,400 Speaker 1: so called Phase one deal, my senses that markets were 115 00:06:19,480 --> 00:06:21,960 Speaker 1: breathing a bit of a side relief, having set out 116 00:06:22,000 --> 00:06:23,960 Speaker 1: of that. If you listen to everything Christine had to say, 117 00:06:24,000 --> 00:06:26,400 Speaker 1: she also points to a number of other risks, some 118 00:06:26,520 --> 00:06:29,160 Speaker 1: which are still, as she says, tilted the downside. And 119 00:06:29,200 --> 00:06:31,200 Speaker 1: so if I put Christine's comments and a brought a 120 00:06:31,279 --> 00:06:34,800 Speaker 1: context of what's next, partically for the ECB, what I 121 00:06:34,839 --> 00:06:38,960 Speaker 1: take from the entire pictures trade uncertainty perhaps has receded 122 00:06:39,000 --> 00:06:40,920 Speaker 1: that might help growth this a little bit. Okay, we're 123 00:06:40,960 --> 00:06:43,360 Speaker 1: gonna be back with our contributors coming up next from 124 00:06:43,440 --> 00:06:45,839 Speaker 1: Davos to a different kind of entertainment, the kind on 125 00:06:45,960 --> 00:06:48,479 Speaker 1: film that gets Oscars and Emmy's. We talked of the 126 00:06:48,520 --> 00:06:52,600 Speaker 1: streaming media transformation with dean of media analysts, Jessica reef 127 00:06:52,720 --> 00:06:56,320 Speaker 1: Erlick from Back America. This is Boomberg Wall Street greeting. 128 00:07:01,960 --> 00:07:06,200 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 129 00:07:06,279 --> 00:07:10,360 Speaker 1: Bloomberg Radio. Shaping up to be the year of streaming 130 00:07:10,520 --> 00:07:14,360 Speaker 1: video and the competition is really heating up. Comcast Peacock 131 00:07:14,440 --> 00:07:16,920 Speaker 1: app is the latest on the scene, entering a crowded 132 00:07:16,960 --> 00:07:21,440 Speaker 1: space already occupied by Netflix, Amazon and Disney. So consumers 133 00:07:21,480 --> 00:07:23,600 Speaker 1: who were hoping they might just save some money by 134 00:07:23,640 --> 00:07:26,680 Speaker 1: cord cutting are now facing the prospect of paying seven dollars, 135 00:07:26,720 --> 00:07:31,120 Speaker 1: thirteen dollars, fifteen dollars for each of the individual streaming services, 136 00:07:31,360 --> 00:07:33,680 Speaker 1: but so far it isn't slowing them down. Banc of 137 00:07:33,680 --> 00:07:36,600 Speaker 1: America sees people continuing to add to their streaming this 138 00:07:36,680 --> 00:07:40,080 Speaker 1: year and then at least three streaming subscription for each 139 00:07:40,120 --> 00:07:43,080 Speaker 1: of us will become the new norm, and the services 140 00:07:43,120 --> 00:07:45,120 Speaker 1: appear to be willing to spend whatever it takes to 141 00:07:45,200 --> 00:07:48,320 Speaker 1: keep their growing customer base. It that critical race to 142 00:07:48,360 --> 00:07:51,920 Speaker 1: create streaming content. Netflix last year outproduced everybody else with 143 00:07:51,960 --> 00:07:56,280 Speaker 1: nearly sixty releases. Now two of their streaming films, The 144 00:07:56,360 --> 00:07:59,600 Speaker 1: Irishman and Marriage Story are in the Oscar running for 145 00:07:59,640 --> 00:08:03,040 Speaker 1: Best Picture. So, whether you've jumped on the streaming bandwagon 146 00:08:03,120 --> 00:08:05,680 Speaker 1: yet or not, if you're rooting for Robert de Niro 147 00:08:05,760 --> 00:08:09,200 Speaker 1: in The Irishman, you are a streaming fan. We are 148 00:08:09,200 --> 00:08:11,640 Speaker 1: back with Roger Ferguson and Larry Summers, and we welcome 149 00:08:11,680 --> 00:08:15,200 Speaker 1: now our special guest, Jessica reef Erlick from Bank of America. 150 00:08:15,320 --> 00:08:17,680 Speaker 1: Back when I ran the ABC Television Network and then 151 00:08:17,720 --> 00:08:20,560 Speaker 1: ABC News, Jessica was the person on the outside we 152 00:08:20,600 --> 00:08:23,360 Speaker 1: paid attention to when we wanted a smart inform take 153 00:08:23,400 --> 00:08:25,560 Speaker 1: on what was going on in media, generally in the 154 00:08:25,600 --> 00:08:27,320 Speaker 1: companies we were competing with, and I have to say 155 00:08:27,360 --> 00:08:31,240 Speaker 1: sometimes even within our own company. She covers broadcast, cable, satellite, 156 00:08:31,280 --> 00:08:34,760 Speaker 1: filmed entertainment, and now streaming video for Bank of America. Jessica, welcome, 157 00:08:34,800 --> 00:08:36,640 Speaker 1: great to head. Thank you so much. What an introduction. 158 00:08:36,800 --> 00:08:38,960 Speaker 1: It's all true, you know it's all true. So let's 159 00:08:38,960 --> 00:08:41,800 Speaker 1: start with the most basic question. Why is a year 160 00:08:41,800 --> 00:08:43,800 Speaker 1: We've heard about streaming for some time. Now it's coming, 161 00:08:43,800 --> 00:08:45,800 Speaker 1: It's coming, It's coming. You think this is the year. 162 00:08:46,040 --> 00:08:48,600 Speaker 1: This is the year of comody launches. So Disney Plus 163 00:08:48,679 --> 00:08:51,600 Speaker 1: launched well late to thos nineteen, but it was an 164 00:08:51,640 --> 00:08:54,920 Speaker 1: amazing launch, a ten million subscribers the first day and 165 00:08:55,200 --> 00:08:58,000 Speaker 1: way past the estimates. What way I mean they were 166 00:08:58,080 --> 00:09:01,360 Speaker 1: they've been talking about well they said, um sixty ninety 167 00:09:01,360 --> 00:09:04,839 Speaker 1: billion subs in five years, of which would be in 168 00:09:04,880 --> 00:09:07,400 Speaker 1: the US. I mean, they're obviously going to blow past 169 00:09:07,600 --> 00:09:11,840 Speaker 1: their forecasts. Not even a question. But then we have Peacock, 170 00:09:11,960 --> 00:09:15,240 Speaker 1: which is owned by Comcast or NBC Universal parent company 171 00:09:15,240 --> 00:09:19,480 Speaker 1: Comcast launching Phase launched April, and then bigger push behind 172 00:09:19,520 --> 00:09:23,080 Speaker 1: the Olympics, HBO Max is launching. So that's just all 173 00:09:23,120 --> 00:09:26,200 Speaker 1: the traditional media companies have to get in the game. 174 00:09:26,600 --> 00:09:29,280 Speaker 1: Discovery has launched also in a very different way, but 175 00:09:29,720 --> 00:09:32,800 Speaker 1: every media company has got to be in streaming. That is, 176 00:09:32,920 --> 00:09:35,560 Speaker 1: this is the new distribution system. Is this an offensive 177 00:09:35,600 --> 00:09:37,280 Speaker 1: move or a defensive move? I mean, do they see 178 00:09:37,280 --> 00:09:38,559 Speaker 1: a lot of money out there to be made or 179 00:09:38,559 --> 00:09:40,240 Speaker 1: they're saying we have to get there because otherwise we 180 00:09:40,280 --> 00:09:43,440 Speaker 1: lose our base. It's both. I mean it clearly it 181 00:09:43,480 --> 00:09:45,800 Speaker 1: was defensive and they you know, everybody sort of held back. 182 00:09:45,840 --> 00:09:48,480 Speaker 1: But it takes a long time to have the technology, 183 00:09:48,559 --> 00:09:50,880 Speaker 1: and there's a lot of content. It's not just library 184 00:09:50,880 --> 00:09:53,800 Speaker 1: content that's going in but original to keep people on 185 00:09:54,440 --> 00:09:56,880 Speaker 1: and you know, all the strategy strategy is a little 186 00:09:56,880 --> 00:10:00,480 Speaker 1: bit different. But the traditional media companies are compete with 187 00:10:00,679 --> 00:10:05,720 Speaker 1: the fan companies who have not unlimited funds but eumongus 188 00:10:05,800 --> 00:10:08,280 Speaker 1: eumongus balance sheets. Can we talk a bit about those 189 00:10:08,280 --> 00:10:10,760 Speaker 1: funds because if one looks at what Netflix has been doing, 190 00:10:11,080 --> 00:10:13,960 Speaker 1: three billion dollars spend the free crash flow burn rate, 191 00:10:13,960 --> 00:10:16,280 Speaker 1: it is pretty high. The market sort of hoping at 192 00:10:16,320 --> 00:10:18,800 Speaker 1: it settles down to only two and a half bay 193 00:10:18,840 --> 00:10:22,520 Speaker 1: and next year the cost of interests is huge. You've 194 00:10:22,520 --> 00:10:25,080 Speaker 1: had both content and the technology. So how does this 195 00:10:25,480 --> 00:10:28,079 Speaker 1: how does this become profitable for a lot of these businesses. 196 00:10:28,080 --> 00:10:31,640 Speaker 1: It's I mean, the traditional media companies have given a 197 00:10:31,679 --> 00:10:35,240 Speaker 1: path to profitability and they are different. Netflix suspending seventeen 198 00:10:35,280 --> 00:10:38,000 Speaker 1: billion dollars in cash on content this year, and and 199 00:10:38,160 --> 00:10:40,000 Speaker 1: the burn is as you said, the free cashold and 200 00:10:40,200 --> 00:10:43,320 Speaker 1: it's negative more than three billions. So it's and that 201 00:10:43,400 --> 00:10:47,719 Speaker 1: would not be accepted from traditional media investors. Having said that, 202 00:10:47,760 --> 00:10:50,920 Speaker 1: there are advantages that the traditional media companies have. They 203 00:10:51,080 --> 00:10:54,400 Speaker 1: have brands, they have they have content that they already 204 00:10:54,400 --> 00:10:57,720 Speaker 1: produced in any case, they have deep libraries, and maybe 205 00:10:57,840 --> 00:11:02,240 Speaker 1: most important, they have you manga platforms to promote from. 206 00:11:02,240 --> 00:11:06,720 Speaker 1: So think about Peacock's launch. They will launch UM initially Enapril, 207 00:11:06,800 --> 00:11:10,520 Speaker 1: and with all of Comcast properties and its theme parks, films, 208 00:11:11,080 --> 00:11:13,520 Speaker 1: there are a lot of touchpoints cable networks. And then 209 00:11:13,520 --> 00:11:16,200 Speaker 1: when they really fully launched, it will be behind the Olympics. 210 00:11:16,240 --> 00:11:19,520 Speaker 1: Two fifty million people in the US watched the Olympics. 211 00:11:19,520 --> 00:11:24,760 Speaker 1: That's an unparalleled platform. When Disney launched, of the US 212 00:11:25,040 --> 00:11:27,520 Speaker 1: was aware of the service launching, So it's gonna be 213 00:11:27,559 --> 00:11:30,880 Speaker 1: a game where scale will win out, and as you 214 00:11:30,920 --> 00:11:33,240 Speaker 1: point out, the ability to cross market, etcetera. And so 215 00:11:33,440 --> 00:11:37,040 Speaker 1: if one were an investor, maybe you think not as 216 00:11:37,080 --> 00:11:39,760 Speaker 1: much disruption as one might have imagine. And the big names, 217 00:11:39,840 --> 00:11:44,400 Speaker 1: the historic names, the NBC, Universal's, the the Disneys have 218 00:11:44,480 --> 00:11:47,040 Speaker 1: a real shot at holding on and not being disintermediated. 219 00:11:47,640 --> 00:11:49,960 Speaker 1: They sort of have been already and they're fighting back. 220 00:11:50,160 --> 00:11:52,280 Speaker 1: You know, we're going through this transition period and the 221 00:11:52,320 --> 00:11:56,400 Speaker 1: stocks reflect that. We've in my entire career decades, I've 222 00:11:56,440 --> 00:11:59,560 Speaker 1: never seen multiples this low for media. So the stocks 223 00:11:59,559 --> 00:12:03,120 Speaker 1: reflect the worst and now they're coming back. So it's defensive, 224 00:12:03,160 --> 00:12:07,760 Speaker 1: but it's also offensive, and it's it's really interesting. Peacock 225 00:12:07,840 --> 00:12:12,360 Speaker 1: had an analyst event recently, and it's it's a different 226 00:12:12,360 --> 00:12:16,040 Speaker 1: strategy than Disney. You know, Disney is sort of family 227 00:12:16,080 --> 00:12:20,000 Speaker 1: and kids and amazing titles. You know, boys with Marvel, 228 00:12:20,400 --> 00:12:22,320 Speaker 1: you know what you you know exactly what you're not geo. 229 00:12:22,440 --> 00:12:25,120 Speaker 1: You know, you know what you're getting. NBC U or 230 00:12:25,120 --> 00:12:28,959 Speaker 1: Peacock will have news and sports and you know, all 231 00:12:29,000 --> 00:12:32,720 Speaker 1: of their library and original content, but they're also curating 232 00:12:32,760 --> 00:12:35,440 Speaker 1: stuff differently, so it's you know, it's the curating channels 233 00:12:35,440 --> 00:12:38,079 Speaker 1: and it's it is they actually isn't a lot of comedy. 234 00:12:38,600 --> 00:12:42,320 Speaker 1: There's there's my question not about this, not about the 235 00:12:42,320 --> 00:12:45,360 Speaker 1: stock market. It's like a golden age for the viewer. 236 00:12:46,080 --> 00:12:51,400 Speaker 1: There's huge amounts of stuff being produced from lots of sources, 237 00:12:51,440 --> 00:12:54,640 Speaker 1: really high quality. Seems to me as an amateur, really 238 00:12:54,720 --> 00:12:59,720 Speaker 1: high production values. Is it economic to produce as much 239 00:13:00,240 --> 00:13:04,080 Speaker 1: new content, as many new series, as many new films 240 00:13:04,440 --> 00:13:07,720 Speaker 1: as are being produced right now, or are we in 241 00:13:07,760 --> 00:13:10,760 Speaker 1: a situation like when a lot of new airlines crowd 242 00:13:10,800 --> 00:13:13,680 Speaker 1: into a route where sooner or later it shakes out 243 00:13:14,120 --> 00:13:16,240 Speaker 1: and the amount of capacity comes down. Is this a 244 00:13:16,320 --> 00:13:19,920 Speaker 1: golden age that we're going to remember as being special 245 00:13:19,960 --> 00:13:22,200 Speaker 1: in the amount of content that's being produced, or is 246 00:13:22,240 --> 00:13:25,679 Speaker 1: this the new normal? There has to be a shakeout. 247 00:13:25,960 --> 00:13:28,640 Speaker 1: There is no way you can have five hundred plus 248 00:13:28,679 --> 00:13:32,600 Speaker 1: original you know, episodic shows and there's not just no 249 00:13:32,720 --> 00:13:35,520 Speaker 1: time for everyone to watch and and and you know 250 00:13:35,600 --> 00:13:37,880 Speaker 1: viewers are watching YouTube as well. I mean, there's just 251 00:13:37,920 --> 00:13:40,880 Speaker 1: there's just so many options right now, So there has 252 00:13:40,920 --> 00:13:43,600 Speaker 1: to be a shakeout. So it's interesting to see everybody's 253 00:13:43,640 --> 00:13:47,840 Speaker 1: different approaches um different revenue drivers, some the subscription, some 254 00:13:47,960 --> 00:13:50,680 Speaker 1: is advertising. The case of Discovery, there's a big piece 255 00:13:50,720 --> 00:13:54,920 Speaker 1: of e commerce as well. Um, but there's there's no 256 00:13:55,080 --> 00:13:57,839 Speaker 1: question that they can also live with old. This new 257 00:13:57,880 --> 00:14:04,040 Speaker 1: competition is the price for standard properties half an hour 258 00:14:04,120 --> 00:14:07,560 Speaker 1: new show at six thirty in the afternoon, the World, 259 00:14:07,920 --> 00:14:12,880 Speaker 1: the World Series, Uh, the Masters, the NFL. Are the 260 00:14:12,920 --> 00:14:15,440 Speaker 1: prices for those things coming down just because there's so 261 00:14:15,520 --> 00:14:19,360 Speaker 1: much more stuff, or the prices going up because their 262 00:14:19,360 --> 00:14:21,920 Speaker 1: flagships that will bring everything else in, I mean the 263 00:14:21,960 --> 00:14:24,640 Speaker 1: cost of sports. We're all waiting for the NFL to 264 00:14:24,680 --> 00:14:27,480 Speaker 1: be renewed. Um, there is no way that's going down. 265 00:14:27,520 --> 00:14:29,800 Speaker 1: There will be a lot of competition. Our view is 266 00:14:29,800 --> 00:14:31,880 Speaker 1: that it will stay on broadcast TV because of the 267 00:14:31,880 --> 00:14:35,240 Speaker 1: reach and the production capability. But the digital rights there's 268 00:14:35,240 --> 00:14:37,280 Speaker 1: gonna going to be a battle. But there's a real 269 00:14:37,320 --> 00:14:40,120 Speaker 1: bifurcation between live sports on the one hand, that is 270 00:14:40,200 --> 00:14:42,280 Speaker 1: much more resistant to some of the forces we've seen 271 00:14:42,320 --> 00:14:45,080 Speaker 1: as opposed to filmed entertainment. So the sports rice go up, 272 00:14:45,080 --> 00:14:47,920 Speaker 1: as you say, the NFL, NBA, major League Baseball I 273 00:14:47,920 --> 00:14:50,520 Speaker 1: think went out. The sports rights are going to come down. 274 00:14:50,640 --> 00:14:52,920 Speaker 1: You know, they're just not okay. Thanks so much to 275 00:14:53,000 --> 00:14:55,400 Speaker 1: Jessica Weak Girl, We're gonna be back with our contributors. 276 00:14:55,440 --> 00:15:03,960 Speaker 1: This is Bloomberg Wall Street Week. This is Bloomberg Will 277 00:15:04,080 --> 00:15:08,280 Speaker 1: Street Week with David Weston from Bloomberg Radio. The Hills 278 00:15:08,280 --> 00:15:10,760 Speaker 1: were alive this week in Davos with the sounds of 279 00:15:10,880 --> 00:15:14,440 Speaker 1: what everyone's going to do about climate change, from investment 280 00:15:14,480 --> 00:15:17,000 Speaker 1: funds talking about what they would and wouldn't invest in 281 00:15:17,080 --> 00:15:19,320 Speaker 1: the government saying how they were going to invest in 282 00:15:19,400 --> 00:15:21,920 Speaker 1: green or what they've already done for that matter, to 283 00:15:22,040 --> 00:15:24,400 Speaker 1: reports that even the big oil companies were meaning to 284 00:15:24,440 --> 00:15:26,280 Speaker 1: try to come up with a common approach to louving 285 00:15:26,360 --> 00:15:28,960 Speaker 1: CEO two emissions from the oil and gas they produced 286 00:15:29,120 --> 00:15:32,080 Speaker 1: spoiler alert. The reportedly all agreed something needs to be done, 287 00:15:32,320 --> 00:15:34,600 Speaker 1: but they couldn't agree on what to do. Here's a 288 00:15:34,640 --> 00:15:38,840 Speaker 1: sample of what we heard. Given the signs that climate change, 289 00:15:38,840 --> 00:15:41,920 Speaker 1: it requires immediate action. This is the decade and so 290 00:15:42,080 --> 00:15:44,360 Speaker 1: be more need to start by saying, look, let's make 291 00:15:44,400 --> 00:15:47,720 Speaker 1: some good commitments. These issues have moved very swiftly from 292 00:15:47,760 --> 00:15:52,360 Speaker 1: being corporate social responsibility issues or more niche issues within 293 00:15:52,480 --> 00:15:56,040 Speaker 1: finance to fundamental value drivers. You will ultimately invest in 294 00:15:56,040 --> 00:15:58,240 Speaker 1: a company who really think we're not getting the traction 295 00:15:58,280 --> 00:16:01,800 Speaker 1: that we need We do need real breakthroughs. This is 296 00:16:01,800 --> 00:16:03,640 Speaker 1: no one company is going to do this. We do 297 00:16:03,680 --> 00:16:06,480 Speaker 1: a little with millennials in terms of the next generation, 298 00:16:07,120 --> 00:16:10,840 Speaker 1: and clearly they are very focused on the um if 299 00:16:10,840 --> 00:16:12,800 Speaker 1: you we should be ethical signature. We've got to set 300 00:16:12,880 --> 00:16:15,520 Speaker 1: up policies around the world that changes the demand patterns 301 00:16:16,040 --> 00:16:19,520 Speaker 1: of the market, because it isn't supply that creates economics. 302 00:16:19,520 --> 00:16:22,200 Speaker 1: That's supply and demand. Climate change is not going to 303 00:16:22,240 --> 00:16:25,520 Speaker 1: be fixed by a central bank, and it's gonna be 304 00:16:25,560 --> 00:16:28,400 Speaker 1: fixed by combination of public and private. We want to 305 00:16:28,440 --> 00:16:32,720 Speaker 1: invest in clean technology, in the green new procedures. We 306 00:16:32,800 --> 00:16:35,040 Speaker 1: are doing better right now than we've ever done in 307 00:16:35,120 --> 00:16:38,840 Speaker 1: terms of cleanliness, in terms of numbers. We have a 308 00:16:38,880 --> 00:16:43,040 Speaker 1: beautiful ocean called the Pacific Ocean with thousands and thousands 309 00:16:43,120 --> 00:16:46,320 Speaker 1: of tons of garbage flows towards us, and that's put 310 00:16:46,320 --> 00:16:48,640 Speaker 1: there by other countries. It's time now to turn back 311 00:16:48,680 --> 00:16:51,520 Speaker 1: to our contributors, Larry Summers and Roger Ferguson. So Roger, 312 00:16:51,560 --> 00:16:53,560 Speaker 1: I'll pick on you first, because this is not new 313 00:16:53,600 --> 00:16:55,560 Speaker 1: to you at t i A. You've been involved in 314 00:16:55,560 --> 00:16:57,440 Speaker 1: this for some time. What do you do and what 315 00:16:57,480 --> 00:16:59,320 Speaker 1: have you learned from it? All? Right, So you're right, 316 00:16:59,360 --> 00:17:01,560 Speaker 1: it's not new to us. We've been involved in climate 317 00:17:01,600 --> 00:17:03,480 Speaker 1: and E s G issues for about fifty years and 318 00:17:03,520 --> 00:17:05,679 Speaker 1: we're really proud to be one of the leaders. And 319 00:17:05,720 --> 00:17:07,480 Speaker 1: what we've learned over that period of time is you 320 00:17:07,520 --> 00:17:10,080 Speaker 1: have to take a holistic approach. So first, we are 321 00:17:10,119 --> 00:17:13,040 Speaker 1: a very large asset manager, and we think about first 322 00:17:13,040 --> 00:17:15,280 Speaker 1: how do we vote the shares in the proxies And 323 00:17:15,320 --> 00:17:19,840 Speaker 1: we're really proud that we voted with shareholder resolutions about 324 00:17:19,840 --> 00:17:22,239 Speaker 1: eighty two of the time, much higher than a lot 325 00:17:22,280 --> 00:17:24,560 Speaker 1: of others in the industry. And so, you know, the 326 00:17:24,600 --> 00:17:26,919 Speaker 1: first thing is use your voice as a shareholder to 327 00:17:27,000 --> 00:17:29,800 Speaker 1: let management know that your care. The second thing that 328 00:17:29,840 --> 00:17:31,720 Speaker 1: we've learned is really are going to have to start 329 00:17:31,720 --> 00:17:34,720 Speaker 1: to build a databases and to really understand and dig 330 00:17:34,800 --> 00:17:37,840 Speaker 1: in with what companies that actually are doing and use 331 00:17:37,960 --> 00:17:42,040 Speaker 1: that to engage them on getting more transparency, more disclosure, 332 00:17:42,080 --> 00:17:44,960 Speaker 1: including oil companies and others. And the funny thing that 333 00:17:45,000 --> 00:17:47,600 Speaker 1: we've learned in terms of this being a holistic solution 334 00:17:48,200 --> 00:17:50,960 Speaker 1: is we also own and manage a lot of assets 335 00:17:50,960 --> 00:17:53,520 Speaker 1: and think about managing and owning those in a responsible way, 336 00:17:53,640 --> 00:17:57,920 Speaker 1: be real estate agg timber So it's a holistic story. 337 00:17:58,280 --> 00:18:00,520 Speaker 1: Crashings you get credit for that, we get drum credit. 338 00:18:00,880 --> 00:18:03,360 Speaker 1: To be fair, we've got two classes of investors. We've 339 00:18:03,359 --> 00:18:07,040 Speaker 1: got a group for whom E s G. Climate very 340 00:18:07,080 --> 00:18:09,320 Speaker 1: important and they want to put their money there. We 341 00:18:09,359 --> 00:18:11,880 Speaker 1: have a number of brothers who I think are less focused. 342 00:18:12,359 --> 00:18:14,080 Speaker 1: One of the things that we've learned over time, though, 343 00:18:14,359 --> 00:18:18,120 Speaker 1: is all of these factors e s G. Climate, governance, 344 00:18:18,119 --> 00:18:21,639 Speaker 1: et cetera important risks to manage. And now we're starting 345 00:18:21,640 --> 00:18:24,640 Speaker 1: to see the conversation turn towards the fact that this 346 00:18:24,720 --> 00:18:28,560 Speaker 1: is a positive return generator, taking these factors in consideration 347 00:18:28,920 --> 00:18:31,600 Speaker 1: and creating investment thesis around us. So, Larry, can private 348 00:18:31,640 --> 00:18:34,639 Speaker 1: investment make the difference in climate? I think most of 349 00:18:34,640 --> 00:18:38,720 Speaker 1: what you heard is a pretty total avoidance of the 350 00:18:38,800 --> 00:18:42,199 Speaker 1: real problem, and that as long as this kind of 351 00:18:42,240 --> 00:18:45,119 Speaker 1: thing is the focus, the problem is going to get worse. 352 00:18:45,600 --> 00:18:47,439 Speaker 1: There are three things that need to happen if the 353 00:18:47,440 --> 00:18:50,640 Speaker 1: world's are going to make real progress on climate, none 354 00:18:50,640 --> 00:18:53,400 Speaker 1: of which were mentioned by any of those people. One 355 00:18:53,520 --> 00:18:55,720 Speaker 1: is we need to scale back the hundreds of millions 356 00:18:55,720 --> 00:18:58,320 Speaker 1: of dollars that the world spends on fossil fuels and 357 00:18:58,359 --> 00:19:02,840 Speaker 1: fossil fuel subsidies. We need to have governments stop around 358 00:19:02,920 --> 00:19:08,200 Speaker 1: the world subsidizing fossil fuels and their ability and their use. Second, 359 00:19:08,440 --> 00:19:13,280 Speaker 1: we need much more invested by governments in clean energies. 360 00:19:13,680 --> 00:19:15,960 Speaker 1: And the way governments need to get the revenue to 361 00:19:16,080 --> 00:19:20,520 Speaker 1: make those investments is by levying taxes and having the 362 00:19:20,520 --> 00:19:24,440 Speaker 1: people and the organizations represented in that video paying more 363 00:19:24,480 --> 00:19:27,199 Speaker 1: in taxes. And none of them are willing to say that. 364 00:19:27,240 --> 00:19:30,000 Speaker 1: They'd rather talk about how they've got a pied a 365 00:19:30,400 --> 00:19:34,399 Speaker 1: chief Green officer and how they're using a putting up 366 00:19:34,400 --> 00:19:37,000 Speaker 1: solar power plant SOL or something or other on their 367 00:19:37,119 --> 00:19:40,400 Speaker 1: roof than recognize that they need to pay more taxes. 368 00:19:40,880 --> 00:19:43,840 Speaker 1: And the third thing is we need to tax things 369 00:19:43,840 --> 00:19:46,160 Speaker 1: that are bad. Right now, we have a world that's 370 00:19:46,200 --> 00:19:49,560 Speaker 1: oriented to taxing things that are good, like work and saving, 371 00:19:50,000 --> 00:19:52,080 Speaker 1: and we need to think tax things that are bad, 372 00:19:52,440 --> 00:19:56,200 Speaker 1: like putting emissions UH into the air. So as long 373 00:19:56,240 --> 00:20:01,840 Speaker 1: as the word tax and subsidy are outside of the 374 00:20:01,920 --> 00:20:07,840 Speaker 1: conversation and it's all just will feel better if we 375 00:20:07,920 --> 00:20:11,240 Speaker 1: do this, the world's not going to make progress in 376 00:20:11,840 --> 00:20:17,960 Speaker 1: UH solving UH this problem. And the president notwithstanding emissions, 377 00:20:18,320 --> 00:20:20,919 Speaker 1: the idea is that we're supposed to in twenty or 378 00:20:20,960 --> 00:20:24,679 Speaker 1: thirty years, get a mission, get the level of emissions 379 00:20:24,720 --> 00:20:28,480 Speaker 1: to zero. We haven't even achieved the much more modest 380 00:20:28,520 --> 00:20:33,280 Speaker 1: goal of stopping emissions from growing year after year. Okay, 381 00:20:33,280 --> 00:20:35,440 Speaker 1: we will come back with our contributors coming up. Here 382 00:20:35,520 --> 00:20:38,960 Speaker 1: we turn from investing in climate to changing operations on 383 00:20:39,000 --> 00:20:41,600 Speaker 1: the ground and one of the most difficult industries. Sophia 384 00:20:41,720 --> 00:20:44,400 Speaker 1: Mendelssohn is here from Jet Blue who tells how she's 385 00:20:44,400 --> 00:20:47,600 Speaker 1: trying to take an entire airline industry green. This is 386 00:20:47,680 --> 00:20:57,960 Speaker 1: Bloomberg Wall Street Week. This is Bloomberg Wall Street Week 387 00:20:58,200 --> 00:21:01,359 Speaker 1: with David Weston from bloom Bird Radio. We're going to 388 00:21:01,520 --> 00:21:03,960 Speaker 1: stay on the subject of climate and get a second opinion. 389 00:21:04,000 --> 00:21:06,199 Speaker 1: Now that takes us beyond the world of investing in 390 00:21:06,240 --> 00:21:09,720 Speaker 1: economics to the world of operating a company. Sophia Mendelssohn 391 00:21:09,800 --> 00:21:12,639 Speaker 1: is Jet Blues head a sustainability Thank you very much 392 00:21:12,680 --> 00:21:15,080 Speaker 1: for being here. Sylvia, So you're trying to take an 393 00:21:15,080 --> 00:21:18,360 Speaker 1: airline company green, which doesn't sound like an easy thing 394 00:21:18,400 --> 00:21:21,080 Speaker 1: to do. Well, it's not easy, but that doesn't mean 395 00:21:21,119 --> 00:21:22,639 Speaker 1: we can't do it, and we don't have to do 396 00:21:22,720 --> 00:21:26,720 Speaker 1: it quickly. The larger, the polluter. The more you rely 397 00:21:26,840 --> 00:21:29,720 Speaker 1: on fossil fuels, the faster you have to act now. 398 00:21:29,840 --> 00:21:32,119 Speaker 1: And that's why recently Jet Blue has made an announcement 399 00:21:32,160 --> 00:21:35,200 Speaker 1: there we are going carbon neutral on all our domestic flying. 400 00:21:35,480 --> 00:21:37,840 Speaker 1: We're already have a carbon deal for a lot of 401 00:21:37,840 --> 00:21:40,520 Speaker 1: our international flying, and we see this as the way 402 00:21:40,320 --> 00:21:42,280 Speaker 1: of business going. Well, how do you do that? Is that? 403 00:21:42,480 --> 00:21:44,560 Speaker 1: Is that buying offsets and do those really work? Does 404 00:21:44,560 --> 00:21:47,280 Speaker 1: that really make us carbon neutral? Well, the first step 405 00:21:47,359 --> 00:21:49,760 Speaker 1: is that you avoid burning fuel where you don't have to, 406 00:21:50,080 --> 00:21:52,880 Speaker 1: you don't want to spend the money or burning emissions 407 00:21:52,880 --> 00:21:55,600 Speaker 1: in the first place. The second immediate step is carbon 408 00:21:55,640 --> 00:21:58,920 Speaker 1: offsets now and we've been very clear these these work 409 00:21:59,000 --> 00:22:02,960 Speaker 1: for now. They're verifiable, they're traceable, they're retired on our behalf, 410 00:22:03,080 --> 00:22:05,960 Speaker 1: they're permanent, and they're also only the first step and 411 00:22:06,080 --> 00:22:09,399 Speaker 1: certainly not a silver bullet. Next has to come sustainable 412 00:22:09,440 --> 00:22:14,280 Speaker 1: aviation fuel, a lower carbon alternative to a liquid fossil fuel, 413 00:22:14,400 --> 00:22:17,160 Speaker 1: and of course, finally we want to make the transition 414 00:22:17,200 --> 00:22:19,840 Speaker 1: to electric aircraft at least for short and medium hall. 415 00:22:20,600 --> 00:22:24,479 Speaker 1: How do you think this plays into pricing consumer demand? 416 00:22:24,560 --> 00:22:26,359 Speaker 1: Are you expecting that you're gonna be a bunch of 417 00:22:26,359 --> 00:22:28,520 Speaker 1: consumers who are going to sort of sign up for 418 00:22:28,560 --> 00:22:30,320 Speaker 1: that view, and you know, this is a way that 419 00:22:30,359 --> 00:22:32,920 Speaker 1: they expressed their support by, you know, switching some of 420 00:22:32,960 --> 00:22:35,960 Speaker 1: their demand over to your airline. Absolutely, we don't expect it. 421 00:22:36,040 --> 00:22:39,199 Speaker 1: We're already seeing it. Europe has already seen it. And 422 00:22:39,359 --> 00:22:41,560 Speaker 1: our job here at jeff Blue, my job is to 423 00:22:41,600 --> 00:22:45,080 Speaker 1: stay ahead of customer demand. We know people need to 424 00:22:45,160 --> 00:22:47,520 Speaker 1: keep flying. They want to keep flying. Quite frankly, we 425 00:22:47,560 --> 00:22:50,120 Speaker 1: need flying to keep the global economy together. Well, let's 426 00:22:50,119 --> 00:22:52,399 Speaker 1: be real concrete. As I understand, sustainable jet fuel is 427 00:22:52,400 --> 00:22:54,119 Speaker 1: more expensive than on the jet fuel by the way, 428 00:22:54,160 --> 00:22:56,040 Speaker 1: there's not a lot of availability, but it's more expensive. 429 00:22:56,320 --> 00:22:58,520 Speaker 1: Are your customers willing to pay more for their airline 430 00:22:58,520 --> 00:23:00,760 Speaker 1: ticket because they know jet flew is green and the 431 00:23:00,760 --> 00:23:03,400 Speaker 1: next guy isn't. Right now, what Jet Blue has done 432 00:23:03,480 --> 00:23:06,359 Speaker 1: is take care of the carbon on the customer's behalf. 433 00:23:06,480 --> 00:23:08,960 Speaker 1: We are paying for the carbon offset as a cost 434 00:23:09,040 --> 00:23:11,639 Speaker 1: of doing business, which it is and which we know 435 00:23:11,760 --> 00:23:15,199 Speaker 1: other companies are increasingly seeing it. As As for sustainable 436 00:23:15,200 --> 00:23:19,359 Speaker 1: aviation fuel being more expensive, there's nothing inherently more expensive. 437 00:23:19,560 --> 00:23:22,159 Speaker 1: There's nothing about the physics of it that makes it 438 00:23:22,240 --> 00:23:25,360 Speaker 1: need to be more expensive. What we need is volume, 439 00:23:25,440 --> 00:23:27,760 Speaker 1: and we need economies of scale to bring that price down. 440 00:23:28,400 --> 00:23:30,760 Speaker 1: Let me ask you about something I've wondered about for 441 00:23:31,200 --> 00:23:34,879 Speaker 1: a long time. Thirty years ago, I could fly to 442 00:23:35,000 --> 00:23:39,520 Speaker 1: Chicago in half an hour less. From Boston. I could 443 00:23:39,520 --> 00:23:43,600 Speaker 1: fly to California in about forty five minutes less. I 444 00:23:43,600 --> 00:23:46,600 Speaker 1: could fly from Boston to New York in fifteen to 445 00:23:46,640 --> 00:23:52,040 Speaker 1: twenty minutes less. Some of that's about congestion and landing rights, 446 00:23:52,080 --> 00:23:55,080 Speaker 1: but some of that's about airlines fly their plane slower 447 00:23:55,760 --> 00:23:59,680 Speaker 1: so that they're gonna be more fuel of more fuel 448 00:23:59,720 --> 00:24:02,840 Speaker 1: of Well, that's what people have told me. Do you 449 00:24:02,880 --> 00:24:07,399 Speaker 1: make flights longer on Jet Blue in order to save 450 00:24:07,480 --> 00:24:10,520 Speaker 1: on carbon admissions and save on energy costs? Could you 451 00:24:10,520 --> 00:24:13,960 Speaker 1: fly the plane's faster if you wanted to. Each airline 452 00:24:14,000 --> 00:24:17,880 Speaker 1: flies their plane differently. What we're doing is taking care 453 00:24:17,880 --> 00:24:20,919 Speaker 1: of the carbon on the customer's behalf without asking the 454 00:24:20,960 --> 00:24:24,719 Speaker 1: customer to make a sacrifice. We're not saying squeeze your 455 00:24:24,760 --> 00:24:28,560 Speaker 1: knees in or give up first class. We're saying flying 456 00:24:28,600 --> 00:24:31,000 Speaker 1: needs to happen. You need to be on our aircraft, 457 00:24:31,359 --> 00:24:34,520 Speaker 1: and that creates carbon emissions, which we need to take 458 00:24:34,560 --> 00:24:36,920 Speaker 1: care of as a costom doing business. So how about 459 00:24:36,920 --> 00:24:40,000 Speaker 1: the speed at which you fly the planes? So flying 460 00:24:40,119 --> 00:24:43,480 Speaker 1: slower does in some cases save fuel. A much more 461 00:24:43,800 --> 00:24:46,560 Speaker 1: business friendly, customer savvy way to do it is to 462 00:24:46,640 --> 00:24:49,520 Speaker 1: buy new aircraft, much like Jet Blue has. The new 463 00:24:49,560 --> 00:24:52,480 Speaker 1: aircraft are increasingly fuel efficient. So if we talk a 464 00:24:52,480 --> 00:24:55,359 Speaker 1: bit more about that, so technology, I'm hearing offing the 465 00:24:55,400 --> 00:24:57,840 Speaker 1: answer is gonna be technology driving down the need to 466 00:24:57,880 --> 00:25:01,840 Speaker 1: consume fossil fuels while we're waiting for better you know, 467 00:25:01,920 --> 00:25:04,359 Speaker 1: sort of green fuels. What are you seeing when you 468 00:25:04,400 --> 00:25:07,400 Speaker 1: talk to the providers of jet engines that is helping 469 00:25:07,520 --> 00:25:09,320 Speaker 1: us give you some sense of confidence. This is going 470 00:25:09,359 --> 00:25:11,760 Speaker 1: to get better and better over time. Yeah, aviastion is 471 00:25:11,760 --> 00:25:15,040 Speaker 1: a bright spot in this. We're not waiting for the technology. 472 00:25:15,080 --> 00:25:18,880 Speaker 1: The technology is here. The new aircraft are more fuel efficient. 473 00:25:18,920 --> 00:25:23,240 Speaker 1: We've already made investments in new electric aircraft companies. Um, 474 00:25:23,400 --> 00:25:26,879 Speaker 1: the carbon offsets are happening now, that's today, that's carbon 475 00:25:26,960 --> 00:25:30,560 Speaker 1: being avoided and sucked out of the environment today. Sustainable 476 00:25:30,600 --> 00:25:34,160 Speaker 1: aviation fuel already exists, it's already safe. We need more 477 00:25:34,200 --> 00:25:37,760 Speaker 1: of it, We need economies of scale. That's an economics problem, 478 00:25:38,040 --> 00:25:40,560 Speaker 1: not a technology problem. Feel one piece of technology the 479 00:25:40,600 --> 00:25:43,280 Speaker 1: airlines can't fix on their own is air traffic control. 480 00:25:43,320 --> 00:25:45,520 Speaker 1: That's true. If we were to really revamp, which I 481 00:25:45,560 --> 00:25:47,600 Speaker 1: understand we need to do, it's absolutely If we were 482 00:25:47,640 --> 00:25:50,520 Speaker 1: tomorrow to revamp our air traffic control system, how much 483 00:25:50,520 --> 00:25:53,800 Speaker 1: would it save in terms of carbon? It would be significant. 484 00:25:53,840 --> 00:25:56,280 Speaker 1: And it would not just save carbon, It would save time, 485 00:25:56,359 --> 00:25:58,720 Speaker 1: it would save money. This is a really good example 486 00:25:58,760 --> 00:26:02,040 Speaker 1: of the intersection of business US in government. The global 487 00:26:02,119 --> 00:26:05,479 Speaker 1: climate crisis is so big, it's affecting us so quickly. 488 00:26:05,520 --> 00:26:08,639 Speaker 1: There is no corner of the economy that hasn't already 489 00:26:08,640 --> 00:26:11,600 Speaker 1: been affected, that isn't going to be potentially crippled by it. 490 00:26:11,920 --> 00:26:14,240 Speaker 1: Everyone needs to be coming with part of the solution. 491 00:26:14,800 --> 00:26:18,000 Speaker 1: I tell you a story when I entered the government, 492 00:26:18,160 --> 00:26:21,000 Speaker 1: and we were in the beginning in two thousand and nine, 493 00:26:21,080 --> 00:26:25,920 Speaker 1: the government was thinking about it's uh priorities. I had 494 00:26:25,960 --> 00:26:28,560 Speaker 1: a meeting as the head of the President's National Economic 495 00:26:28,600 --> 00:26:32,159 Speaker 1: Council with the CEOs. Then there were half a dozen 496 00:26:32,560 --> 00:26:36,040 Speaker 1: or more airlines and they all told me we needed 497 00:26:36,040 --> 00:26:38,199 Speaker 1: to work on the air traffic control system. And they 498 00:26:38,200 --> 00:26:41,560 Speaker 1: had a plan and it was called next Gen. And 499 00:26:41,600 --> 00:26:43,800 Speaker 1: the thing about the plan was it was going to 500 00:26:43,880 --> 00:26:47,760 Speaker 1: take a whole gen, a whole generation. And I said, 501 00:26:48,040 --> 00:26:51,560 Speaker 1: if we did this according to your plan, when would 502 00:26:51,560 --> 00:26:55,240 Speaker 1: we have a modern air traffic control system. This was 503 00:26:55,280 --> 00:27:00,080 Speaker 1: in two thousand and nine, and they said wow, And 504 00:27:00,200 --> 00:27:03,080 Speaker 1: I said to them, that's really very interesting, and I 505 00:27:03,119 --> 00:27:05,720 Speaker 1: appreciate it. And I know this is a really big, 506 00:27:05,760 --> 00:27:08,920 Speaker 1: complicated problem. But World War two is a really big 507 00:27:08,960 --> 00:27:11,840 Speaker 1: and complicated war. And it took three and a half 508 00:27:11,960 --> 00:27:15,320 Speaker 1: years from the time we entered till the time we 509 00:27:15,359 --> 00:27:18,560 Speaker 1: won with twelve million people under arms. So why was 510 00:27:18,600 --> 00:27:21,520 Speaker 1: it going to take a quarter century to get a 511 00:27:21,560 --> 00:27:24,800 Speaker 1: better air traffic control system? Has any progress really been 512 00:27:24,800 --> 00:27:27,240 Speaker 1: made on that? Yeah, there's been there's been progress made. 513 00:27:27,240 --> 00:27:29,520 Speaker 1: And I will say, you know, it's not the job 514 00:27:29,720 --> 00:27:33,040 Speaker 1: of CEO's. No one's ever made money just waiting on 515 00:27:33,160 --> 00:27:36,480 Speaker 1: congressional action, betting on what congressional action might or might 516 00:27:36,560 --> 00:27:39,800 Speaker 1: not do. So what we need to do, as airlines, 517 00:27:39,840 --> 00:27:42,639 Speaker 1: as the people running the companies today is find the 518 00:27:42,680 --> 00:27:46,200 Speaker 1: solutions that we can work on today. White carbon offsets 519 00:27:46,200 --> 00:27:50,120 Speaker 1: like sustainable aviation fuel. How about airlines contributing How about 520 00:27:50,119 --> 00:27:54,159 Speaker 1: airlines contributing to an infrastructure that would enable them to 521 00:27:54,200 --> 00:27:57,560 Speaker 1: save fuel costs by not spending as much time circling 522 00:27:57,880 --> 00:28:00,800 Speaker 1: that would enable the land scarce landing slide to be used. 523 00:28:01,200 --> 00:28:03,879 Speaker 1: Do you don't you think the airline industry should be 524 00:28:03,920 --> 00:28:07,119 Speaker 1: willing to contribute to the airline traffic air traffic control 525 00:28:07,119 --> 00:28:10,719 Speaker 1: system we need so we have we have next gen 526 00:28:10,840 --> 00:28:14,160 Speaker 1: equipment on our aircraft, and that aircraft needs to talk 527 00:28:14,320 --> 00:28:16,800 Speaker 1: to other parts of the system. Government does need to 528 00:28:16,840 --> 00:28:20,120 Speaker 1: build out some of that. And every time we land 529 00:28:20,160 --> 00:28:22,199 Speaker 1: a plane, every time we fly a plane, there's so 530 00:28:22,280 --> 00:28:24,880 Speaker 1: much going on. There's so many ways that we can 531 00:28:24,920 --> 00:28:27,960 Speaker 1: be reducing those emissions. And what we're really looking for 532 00:28:28,320 --> 00:28:31,560 Speaker 1: is the ways that affect the customer today, because this 533 00:28:31,640 --> 00:28:34,919 Speaker 1: is a customer driven revolution that we're saying, Sophia, Are 534 00:28:34,960 --> 00:28:37,639 Speaker 1: you seeing action on the part of your partners, the 535 00:28:37,680 --> 00:28:40,880 Speaker 1: major oil companies, that the engine companies, those are the 536 00:28:40,960 --> 00:28:44,600 Speaker 1: manufacturing the planes. Is this becoming an ecosystem of folks 537 00:28:45,000 --> 00:28:46,960 Speaker 1: supporting what you're trying to do and helping you drive 538 00:28:47,000 --> 00:28:48,880 Speaker 1: it forward. I think there's a lot of room for 539 00:28:48,920 --> 00:28:52,400 Speaker 1: opportunity there. I'd like to see more of the majors 540 00:28:52,480 --> 00:28:55,560 Speaker 1: in the sustainable aviation fuel space. There's some companies that 541 00:28:55,600 --> 00:28:59,400 Speaker 1: have started making it on the smaller side. We're really 542 00:28:59,440 --> 00:29:03,200 Speaker 1: looking for economies of scale going forward in and I 543 00:29:03,240 --> 00:29:06,360 Speaker 1: think is going to be the year where customers begin 544 00:29:06,400 --> 00:29:08,440 Speaker 1: to demand that where is big energy on this? Because 545 00:29:08,440 --> 00:29:09,960 Speaker 1: we heard they just met Oro in Dallas to figure 546 00:29:09,960 --> 00:29:11,640 Speaker 1: out what they could do about CEO two emissions. It 547 00:29:11,640 --> 00:29:13,320 Speaker 1: sounds like there's a proposal, So okay, you want to 548 00:29:13,360 --> 00:29:15,239 Speaker 1: do something, here's one concrete thing you can do. What 549 00:29:15,280 --> 00:29:17,160 Speaker 1: did they say when you when you're talking about this, 550 00:29:17,640 --> 00:29:20,080 Speaker 1: you know they're they're working on a number of things. 551 00:29:20,280 --> 00:29:23,280 Speaker 1: Our job in the conversation is to say the demand 552 00:29:23,400 --> 00:29:26,240 Speaker 1: is here, and it's not just because we're good people 553 00:29:26,280 --> 00:29:29,200 Speaker 1: who want to sleep easy at night. It's because our 554 00:29:29,360 --> 00:29:33,760 Speaker 1: primary fiduciary responsibility on a daily basis is to protect 555 00:29:33,840 --> 00:29:37,520 Speaker 1: that share price over the long run, and reducing carbon 556 00:29:37,560 --> 00:29:40,480 Speaker 1: emissions taking care of the carbon emissions you can't avoid 557 00:29:40,880 --> 00:29:43,640 Speaker 1: is part of that financial value. So this goes back 558 00:29:43,680 --> 00:29:45,960 Speaker 1: to our point and we're making earlier we're talking about 559 00:29:46,040 --> 00:29:48,560 Speaker 1: good returns in this space, and it sounds like you've 560 00:29:48,600 --> 00:29:51,320 Speaker 1: just convinced yourself and present your shareholders that over the 561 00:29:51,360 --> 00:29:54,000 Speaker 1: long term, share price would be higher if you become 562 00:29:54,040 --> 00:29:56,040 Speaker 1: a Green Airline as opposed to if you didn't do that, 563 00:29:56,440 --> 00:29:59,040 Speaker 1: I'm reading it's correctly. And look at the facts that 564 00:29:59,080 --> 00:30:01,920 Speaker 1: we know. We know at the climate crisis is getting worse. 565 00:30:02,240 --> 00:30:05,520 Speaker 1: We know that we can't have a global economy without aviation. 566 00:30:05,920 --> 00:30:09,360 Speaker 1: That means, in some fundamental way, aviation is going to 567 00:30:09,440 --> 00:30:11,360 Speaker 1: have to deal with their emissions. And that's not just 568 00:30:11,440 --> 00:30:13,760 Speaker 1: our industry as you guys have seen, as you've said, 569 00:30:13,800 --> 00:30:17,040 Speaker 1: it's literally going to be every industry. So the price 570 00:30:17,160 --> 00:30:20,000 Speaker 1: of carbon is going to rise over time. Not taking 571 00:30:20,040 --> 00:30:22,320 Speaker 1: a stance on that is effectively still making a joint, 572 00:30:22,400 --> 00:30:27,320 Speaker 1: shouldn't we. I I admire enormously, Really I do what 573 00:30:27,480 --> 00:30:31,320 Speaker 1: your company is doing in the energy or bringing uh 574 00:30:31,480 --> 00:30:35,400 Speaker 1: to this. But when you say the solutions or customer driven, 575 00:30:36,240 --> 00:30:39,160 Speaker 1: actually wonder whether you're right. That's what the tobacco industry 576 00:30:39,240 --> 00:30:41,480 Speaker 1: used to say. They used to say the solutions to 577 00:30:41,560 --> 00:30:46,120 Speaker 1: access smoking or educating consumers about the bad health and 578 00:30:46,320 --> 00:30:49,800 Speaker 1: consequences and letting it be customer driven. And in fact 579 00:30:50,240 --> 00:30:53,280 Speaker 1: it turned out we've made enormous progress, almost none of 580 00:30:53,280 --> 00:30:57,280 Speaker 1: which has been customer driven. We tax tobacco, we've stopped 581 00:30:57,560 --> 00:31:02,920 Speaker 1: outlawed smoking in restaurants, we've outlaw smoking in airplanes. It 582 00:31:03,040 --> 00:31:05,080 Speaker 1: was basically when we decided it wasn't going to be 583 00:31:05,120 --> 00:31:08,160 Speaker 1: customer driven, it was going to be policy driven that 584 00:31:08,240 --> 00:31:12,800 Speaker 1: we solve the problem. And shouldn't we not be putting 585 00:31:12,840 --> 00:31:16,880 Speaker 1: you at a competitive disadvantage if you decide that you 586 00:31:16,920 --> 00:31:19,959 Speaker 1: want to do the right thing and do complete offsets 587 00:31:20,320 --> 00:31:24,760 Speaker 1: and your airline competitors don't. Isn't the right thing to 588 00:31:24,840 --> 00:31:27,400 Speaker 1: do to make there be rules so you can do 589 00:31:27,440 --> 00:31:31,040 Speaker 1: the right thing by the environment and by the future 590 00:31:31,400 --> 00:31:34,000 Speaker 1: without being at a competitive disadvantage. Don't we need much 591 00:31:34,040 --> 00:31:38,440 Speaker 1: more active public policy rather than this talk and hopes 592 00:31:38,880 --> 00:31:42,480 Speaker 1: about private policy. Well, well, where the kicker is. I'm 593 00:31:42,520 --> 00:31:45,240 Speaker 1: not trying to do the right thing. I'm in doing 594 00:31:45,280 --> 00:31:48,720 Speaker 1: the smart thing because dealing with carbon is part of 595 00:31:48,760 --> 00:31:51,920 Speaker 1: going forward for any business. Sophia, thank you so much 596 00:31:51,960 --> 00:31:54,320 Speaker 1: for being here. That's Sophia Mendelssohn of Jet Blue. This 597 00:31:54,400 --> 00:31:57,200 Speaker 1: has been another edition of Bloomberg Wall Street Week and 598 00:31:57,280 --> 00:31:59,760 Speaker 1: had to Boomberg dot com for more exclusive thoughts from 599 00:31:59,800 --> 00:32:02,680 Speaker 1: our weekly contributors, along with full episodes and the official 600 00:32:02,720 --> 00:32:06,880 Speaker 1: Bloomberg Wall Street Week podcast. This is Bloomberg Wall Street Week. 601 00:32:11,520 --> 00:32:11,560 Speaker 1: H