WEBVTT - Bloomberg Intelligence: Oil Merger, U.S Earnings 0:00:00.600 --> 0:00:07.280 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.600 --> 0:00:14.360 This is Bloomberg Intelligence with Alex Steinhl and Paul'sweeny. 0:00:14.520 --> 0:00:17.720 The real ap performance has been in US corporate high yield. 0:00:17.880 --> 0:00:20.280 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.480 The semiconductor business is a really cyclical. 0:00:23.079 --> 0:00:27.200 Business, breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:31.000 These are two. 0:00:31.040 --> 0:00:33.159 Big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:41.720 Bloomberg Intelligence with Alex Steinhl and Paul'sweenye on Bloomberg Radio. 0:00:42.800 --> 0:00:45.400 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:45.520 --> 0:00:47.839 business stories impacting Wall Street and the global markets. 0:00:47.920 --> 0:00:49.680 Each and every week, we're going to provide in depth 0:00:49.680 --> 0:00:52.200 research and data on some of the two thousand companies 0:00:52.240 --> 0:00:55.240 and one hundred and thirty industries our analysts cover worldwide. 0:00:55.440 --> 0:00:57.639 Today will take a look at Paramount Global and why 0:00:57.680 --> 0:01:00.000 they're said to be cutting jobs despite hosting a record 0:01:00.200 --> 0:01:00.960 breaking Super Bowl. 0:01:01.000 --> 0:01:03.320 Plus, we'll discuss why food and beverage company craft Times 0:01:03.400 --> 0:01:04.760 is experiencing weaker sales. 0:01:04.880 --> 0:01:06.960 But first we dive into a major deal that could 0:01:07.000 --> 0:01:10.440 redefine the US energy sector. Diamondback Energy has agreed to 0:01:10.440 --> 0:01:14.080 buy fellow Permian base and driller Endeavor Energy Resources and 0:01:14.160 --> 0:01:15.360 a twenty six billion dollar. 0:01:15.319 --> 0:01:17.920 Deal Love Me Energy Deals. We're joined by Vince Piazza, 0:01:17.920 --> 0:01:21.000 Bloomberg Intelligence senior energy research analyst, and we asked him 0:01:21.040 --> 0:01:22.280 first what he thought of the deal. 0:01:22.600 --> 0:01:26.120 I think the deal ticks all the boxes that we're 0:01:26.160 --> 0:01:29.399 going to need to see in this MNA. 0:01:29.040 --> 0:01:30.319 Wave in the Permian. 0:01:30.840 --> 0:01:36.560 It grows Diamondbacks acreage, it grows locations, so inventory is 0:01:36.600 --> 0:01:37.720 not going to be an issue. 0:01:38.280 --> 0:01:39.920 In terms of the price that they paid. 0:01:40.000 --> 0:01:45.720 Look, Diamondback, in my universe of coverage had the highest premium, 0:01:46.000 --> 0:01:49.440 so they're using their multiple to get this deal done 0:01:49.640 --> 0:01:53.320 and so elevated currency along with some. 0:01:53.720 --> 0:01:54.680 Cash and debt. 0:01:55.000 --> 0:01:58.280 They do have a fairly low leverage on their balance sheet, 0:01:58.400 --> 0:02:01.280 so I think the picks all of the boxes. They'll 0:02:01.280 --> 0:02:04.720 throw off significant free cash flow in twenty twenty four 0:02:04.720 --> 0:02:07.440 and twenty twenty five, so in terms of paying off 0:02:07.480 --> 0:02:10.000 whatever bank loans that they're going to take on for this, 0:02:10.280 --> 0:02:13.080 but also works out for the founding family of Endeavor, 0:02:13.400 --> 0:02:16.200 they get to monetize decades of hard work. 0:02:16.480 --> 0:02:18.160 Vince is this a merger of equals? 0:02:18.840 --> 0:02:21.160 Well, in this case, think about what Endeavor brings to 0:02:21.200 --> 0:02:21.680 the table. 0:02:21.840 --> 0:02:28.040 It almost doubles Diamondbacks Middlin acreage, and it brings sizeable 0:02:28.200 --> 0:02:32.480 oil production for the broader Diamondback franchise. So I would 0:02:32.520 --> 0:02:35.280 tell you that in terms of size, it is a 0:02:35.320 --> 0:02:39.080 merger of equals. But the family will get roughly thirty 0:02:39.120 --> 0:02:45.160 percent of Diamondback with selling off almost half the resource 0:02:45.240 --> 0:02:50.120 to Diamondbacks, so it basically doubles Diamondbacks total size, and 0:02:50.320 --> 0:02:53.840 the founding family gets about thirty percent of the new Diamondback. 0:02:53.919 --> 0:02:56.720 Let's say, Vince, are there any regulatory issues here? A 0:02:56.800 --> 0:02:58.760 lot of m and A going on in this space here. 0:02:59.760 --> 0:03:01.400 Yeah, you know it's going to get looked at. 0:03:01.800 --> 0:03:06.760 So Southwestern and Chesapeake getting together out in Apalachia, that's 0:03:06.800 --> 0:03:10.040 a gas deal. But that will get a very very 0:03:10.080 --> 0:03:13.400 clear look, a very very deep look by the regulators. 0:03:13.560 --> 0:03:14.560 This will as well. 0:03:14.600 --> 0:03:17.440 I don't see why it wouldn't because of the actual 0:03:17.600 --> 0:03:20.840 size of this entity. It's going to be an enterprise 0:03:21.000 --> 0:03:23.240 value of north with sixty billion. It will be the 0:03:23.400 --> 0:03:27.480 largest Permian pure play, so it'll get looked at. 0:03:27.600 --> 0:03:29.400 All these deals will get looked at and. 0:03:29.360 --> 0:03:33.440 It'll take a deeper look, same as Southwestern and Chesapeake. 0:03:33.520 --> 0:03:35.800 I was talking to jenre and she covers Antrust for 0:03:35.800 --> 0:03:39.400 Bloomberg Intelligence, and she's like, yes, like all of these 0:03:39.440 --> 0:03:41.080 are going to have to get looked at. They're particularly 0:03:41.080 --> 0:03:44.480 interested in the Exon Permian Pioneer deal and that all 0:03:44.520 --> 0:03:46.720 these deals are definite gonna have the FTC sort of 0:03:46.920 --> 0:03:49.960 wide eyed looking at it. But you have to wonder though, 0:03:50.000 --> 0:03:52.840 if they want more oil, they're going to have to 0:03:52.960 --> 0:03:55.080 do it, right, Vince, I mean it's gonna I'm just 0:03:55.080 --> 0:03:57.080 trying to think of like what the rationale will be 0:03:57.120 --> 0:03:59.840 to block say this deal, but like let exce On 0:04:00.040 --> 0:04:01.760 Pioneer and go through, Like you can't. 0:04:02.400 --> 0:04:05.960 This deal is much more North America centric, much more 0:04:06.000 --> 0:04:07.240 North America focused. 0:04:07.800 --> 0:04:09.200 So when you think about you know. 0:04:09.200 --> 0:04:14.920 Exon and Pioneer Pioneer fits within Exon's Permian portfolio, but 0:04:15.000 --> 0:04:19.680 Exon is a large, integrated multinational franchise. 0:04:20.000 --> 0:04:24.599 This is more US centric and Permian centric as well. 0:04:25.320 --> 0:04:27.960 But look, they're all going to get looked at. It 0:04:28.040 --> 0:04:31.159 is what it is. This is a very large transaction. 0:04:31.720 --> 0:04:34.520 Like I said, Southwestern Chesapeake is getting looked at. This 0:04:34.560 --> 0:04:36.800 will get looked at as well. It's an important resource. 0:04:36.960 --> 0:04:41.240 What you have here, though, is you have resources now 0:04:41.320 --> 0:04:47.080 in stronger hands. You have Exon Mobile, Chevron, you have Diamondback. 0:04:47.160 --> 0:04:52.240 You have very large entities with big balance sheets and 0:04:52.279 --> 0:04:56.840 the capability to take down even greater levels of capital 0:04:57.160 --> 0:05:02.799 in order to move production from the delineation phase into 0:05:02.800 --> 0:05:03.800 the production phase. 0:05:04.240 --> 0:05:06.800 Give me a sense, Vincent, I'm putting my banker hat on. 0:05:07.320 --> 0:05:09.520 Can I keep doing a bunch of deals here? I mean? 0:05:09.760 --> 0:05:11.360 How many players are left? 0:05:12.440 --> 0:05:13.719 Yeah, it's a very interesting question. 0:05:13.760 --> 0:05:17.680 So we put out last year the top twenty privately 0:05:17.720 --> 0:05:21.800 held PE sponsored names in the Permian. In this case 0:05:21.920 --> 0:05:26.880 Endeavor being the second largest, Mewborn, which has mentioned that 0:05:26.960 --> 0:05:31.240 it wishes to sell. That's the largest of the top 0:05:31.320 --> 0:05:34.800 twenty that'll go out, we think, because it has been 0:05:34.839 --> 0:05:39.440 mentioned as a takeover candidate. Similar situation Founding family looking 0:05:39.480 --> 0:05:43.119 to move the assets. If you think about the top five, 0:05:43.560 --> 0:05:46.480 three are now gone, so there is a great deal 0:05:46.520 --> 0:05:50.240 of interest. There's interest by the private players as well, 0:05:50.360 --> 0:05:54.160 especially the PE sponsored players. You're getting close to these 0:05:54.240 --> 0:05:57.680 vintages that are aged and now this capital needs to 0:05:57.720 --> 0:06:00.960 be recycled, so you will see more of that. You 0:06:01.000 --> 0:06:05.839 will see public buying private. Public does have the currency. 0:06:06.160 --> 0:06:09.320 In the case of Diamondback, they had a premium multiple 0:06:10.240 --> 0:06:13.799 elevated currency that they were able to use to monetize 0:06:13.960 --> 0:06:17.760 the founding families investment, and you'll see that as well, 0:06:17.960 --> 0:06:21.040 especially in the permium where you do have this difference 0:06:21.160 --> 0:06:26.320 of large cap premium valuations looking for assets and the 0:06:26.360 --> 0:06:30.800 smaller cap names trading at a relative discount to peers, 0:06:31.120 --> 0:06:33.840 but trading at a discount to the larger names as well. 0:06:33.920 --> 0:06:37.159 Our thanks to Vincent Piazza Bloomberg Intelligence and Senior Energy 0:06:37.200 --> 0:06:38.320 Research analysts, we go. 0:06:38.320 --> 0:06:40.799 Next to earnings and focus on Hasbro, the toy maker, 0:06:40.800 --> 0:06:43.279 reporting fourth quarter net revenue and adjuster earnings per share 0:06:43.320 --> 0:06:45.920 the trailed analyst estimates, and this comes that the toy 0:06:45.960 --> 0:06:49.039 industry continues to suffer from week consumer demand after that 0:06:49.120 --> 0:06:50.839 boom in the early days of the pandemic. 0:06:51.200 --> 0:06:53.400 For more on this, we talked with Lindsay Dutch Bloomberg 0:06:53.440 --> 0:06:57.159 Intelligence Consumer Hardlines Senior Analysts. We first asked Lindsay what 0:06:57.360 --> 0:06:58.279 she made of the quarter. 0:06:58.560 --> 0:07:02.520 Osbro definitely disappointed on the quarter as top and bottom 0:07:02.560 --> 0:07:06.680 line missing, but more importantly that outlook for twenty twenty 0:07:06.680 --> 0:07:10.360 four looks pretty rough. They're definitely thinking about the toy 0:07:10.440 --> 0:07:13.600 industry more bearish than some of their peers like Mattel. 0:07:14.440 --> 0:07:17.080 And this is coming from a place where they've had 0:07:17.160 --> 0:07:21.240 more challenges than Mattel. In twenty twenty three, and even 0:07:21.320 --> 0:07:24.320 at the very end of twenty twenty two, there's some 0:07:24.480 --> 0:07:28.520 concern about profitability improvement for this company. They've sort of 0:07:28.560 --> 0:07:31.880 struggled to raise that operating margin over the past year, 0:07:32.560 --> 0:07:35.200 and I think that's like a really big worry bead 0:07:35.400 --> 0:07:39.040 thinking about twenty twenty four. They posted an operating margin 0:07:39.080 --> 0:07:41.680 for twenty twenty three nine point five percent. It was 0:07:41.720 --> 0:07:45.040 the lowest in at least twelve years, So there's real 0:07:45.080 --> 0:07:45.760 concern there. 0:07:45.840 --> 0:07:48.239 So let's start with the top line in the toy business. 0:07:48.320 --> 0:07:52.520 Is this a GDP growth business? Less more, how does 0:07:52.560 --> 0:07:53.120 this business grew? 0:07:53.200 --> 0:07:55.720 Yeah, so typically, I mean the toy business. You know, 0:07:55.840 --> 0:07:59.280 you think about growth two to three percent a year. 0:08:00.200 --> 0:08:04.320 Toy business boomed with the pandemic, so we're still coming 0:08:04.360 --> 0:08:08.760 off of those twenty twenty twenty twenty one highs, and 0:08:09.200 --> 0:08:12.239 in twenty twenty three, the industry contracted about seven percent 0:08:12.400 --> 0:08:16.160 per Circana data. Mattel was thinking that, you know, this 0:08:16.320 --> 0:08:19.080 year twenty twenty four would be a little bit better 0:08:19.120 --> 0:08:23.160 than that, but still contraction. Hasbro is saying down eight percent, 0:08:23.560 --> 0:08:26.400 So definitely a more bearish view on the industry as 0:08:26.440 --> 0:08:30.760 a whole. But this year definitely looks rough in terms 0:08:30.840 --> 0:08:33.200 of toy demands, still coming off of those. 0:08:33.040 --> 0:08:37.320 Highs, and they don't have Barbie. I mean, I asked 0:08:37.320 --> 0:08:39.280 the CEO of Mattel this on TV. I was like, 0:08:39.320 --> 0:08:41.720 you know, do you need a Barbie two? Like, what's 0:08:41.760 --> 0:08:45.480 your next evolution here? I mean, I know the quarter 0:08:45.600 --> 0:08:48.120 was better than Hasbro, but it still has problems. There's 0:08:48.120 --> 0:08:50.000 still an activist investor that wants them to spin off 0:08:50.040 --> 0:08:52.560 their American Girl and Fisher Price business, et cetera. It's like, 0:08:52.600 --> 0:08:54.840 you have to sell more cars if you're not selling dolls. 0:08:55.280 --> 0:08:59.000 And Hasbro doesn't have Barbie. Pow Reliant is a toy business. 0:08:59.000 --> 0:09:03.320 On movies, yes, so content has been a big driver 0:09:03.480 --> 0:09:06.760 over the past couple of years. Barbie is a great 0:09:06.800 --> 0:09:09.880 example of that. I think we also know that you 0:09:09.960 --> 0:09:13.880 can't have that blockbuster type movie every single year, but 0:09:13.960 --> 0:09:16.320 a lot of the preschool brands, you know, you can 0:09:16.400 --> 0:09:19.520 link to a series. So Hasbro does own Pepa pig. 0:09:19.960 --> 0:09:23.520 So just getting like this the animated series there sometimes 0:09:23.559 --> 0:09:26.439 can help with toy sales, but there's a major connection 0:09:26.480 --> 0:09:30.360 with entertainment. Entertainment generally across the board, not just Hasbro 0:09:30.520 --> 0:09:33.880 specific is going to be light in twenty twenty four, 0:09:34.040 --> 0:09:37.440 so they do lose that driver. Hasbro is also different 0:09:37.440 --> 0:09:40.880 than Mattel in the key categories that they play in, 0:09:40.960 --> 0:09:43.440 so they own NERF So they're really big sort of 0:09:43.440 --> 0:09:47.720 on that outdoor category, which again that's an outsize grower 0:09:47.800 --> 0:09:51.480 during the pandemic. They play in arts and crafts with Plato. 0:09:51.880 --> 0:09:54.520 Plato's like they've come out with some new products, but 0:09:54.559 --> 0:09:56.360 it's kind of really hard to come up with new 0:09:56.360 --> 0:10:01.480 innovative things in that category. Some of their outperformers were 0:10:01.520 --> 0:10:07.160 like Transformers in the past year again and entertainment linked product, 0:10:07.480 --> 0:10:09.160 you know that did well because of that. 0:10:09.679 --> 0:10:11.960 All Right, So if I've got a business where the 0:10:12.000 --> 0:10:14.960 demand is challenge, what do I do on the cost 0:10:15.000 --> 0:10:17.360 side to try to preserve my margins here? 0:10:18.400 --> 0:10:18.640 Right? 0:10:18.800 --> 0:10:22.240 So you know, Hasbro laid out a plan in October 0:10:22.280 --> 0:10:25.880 of twenty twenty two cutting costs. They kind of realized 0:10:25.920 --> 0:10:28.960 over time that wasn't quite enough, but they were planning, 0:10:29.000 --> 0:10:31.200 so they wint of double that goal, a lot of 0:10:31.200 --> 0:10:35.600 it coming out of SG and A. They're also offloading 0:10:35.679 --> 0:10:39.200 some of their brands and basically licensing out to other 0:10:39.679 --> 0:10:43.679 manufacturers to actually make the products, and that is going 0:10:43.720 --> 0:10:46.320 to be a key part of you know, their outlook 0:10:46.400 --> 0:10:49.400 for a stronger operating margin in that toy segment in 0:10:49.480 --> 0:10:52.680 twenty twenty four, and by that, they're expecting a four 0:10:52.720 --> 0:10:56.440 to six percent operating margin this year, whereas last year 0:10:56.440 --> 0:10:59.000 it was an operating loss. It's still a pretty low 0:10:59.120 --> 0:11:03.400 number below they're targeting twenty percent over the long term, 0:11:03.600 --> 0:11:05.079 so there's a lot of work to. 0:11:05.080 --> 0:11:08.280 Be done there. What's the Wizards of the Coast segment? 0:11:08.880 --> 0:11:11.199 Does that really hurt? What is that? 0:11:11.200 --> 0:11:14.840 That includes their magic of the gathering at tabletop gaming 0:11:15.080 --> 0:11:19.319 digital gaming brands, So that has been a top grower 0:11:19.400 --> 0:11:22.760 for this company over the past couple of years. They're 0:11:22.840 --> 0:11:26.480 again lapping difficult comparisons, only expecting three to five percent 0:11:26.600 --> 0:11:30.720 growth in twenty twenty four. But that business is a 0:11:30.800 --> 0:11:34.240 high margin business for them, So you're talking about thirty 0:11:34.280 --> 0:11:38.960 eight forty percent margins, but the problem is it's it's 0:11:39.000 --> 0:11:42.720 closer to thirty percent of their overall business. So as 0:11:43.559 --> 0:11:47.160 continued growth there is great, the margin is great, but 0:11:47.240 --> 0:11:49.560 it's still a smaller part of their mix, so it 0:11:49.600 --> 0:11:54.080 can't quite offset this weakness that they feel sort of 0:11:54.120 --> 0:11:55.720 in the traditional toy business. 0:11:56.160 --> 0:11:59.400 Thanks to Lindsey Dutch Bloomberg Intelligence Consumer Hardline Secret Analyst. 0:11:59.600 --> 0:12:01.440 Coming up, we're going to break down what Paramount Global 0:12:01.520 --> 0:12:02.560 said be cutting jobs. 0:12:02.880 --> 0:12:05.559 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:05.600 --> 0:12:07.760 there with research and data on two thousand companies and 0:12:07.760 --> 0:12:10.760 one hundred and thirty industries. You can access Bloomberg Intelligence 0:12:10.840 --> 0:12:12.280 via b I go on the terminal. 0:12:12.360 --> 0:12:14.880 I'm Paul Sweeney and am Malling Steel and this is Bloomberg. 0:12:21.800 --> 0:12:25.679 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:25.760 --> 0:12:29.120 weekdays at ten am Eastern on Afocarplay and Android Auto 0:12:29.160 --> 0:12:32.080 with the Bloomberg Business App. Listen on demand wherever you 0:12:32.160 --> 0:12:35.839 get your podcasts, or watch us live on YouTube. 0:12:37.040 --> 0:12:39.880 Let's turn out to the media and entertainment industry. Earlier 0:12:39.880 --> 0:12:41.640 in the week, we heard the Paramount Global is cutting 0:12:41.679 --> 0:12:44.360 roughly eight hundred jobs, or three percent of its workforce. 0:12:44.559 --> 0:12:46.720 We're told the cuts of our response to the continued 0:12:46.760 --> 0:12:49.680 loss of cable and satellite TV subscribers to streaming services 0:12:49.920 --> 0:12:53.360 like Netflix, and this comes despite Paramount hosting a record 0:12:53.400 --> 0:12:54.840 breaking Super Bowl TV audience. 0:12:55.000 --> 0:12:57.760 So for more, we're joined by either Maganathan Bloomberg intelligence 0:12:57.800 --> 0:12:59.840 analyst on US Media, and we ask Ether for her 0:13:00.040 --> 0:13:01.160 take on this week's news. 0:13:01.400 --> 0:13:03.640 This is really more of course, they did have a 0:13:03.679 --> 0:13:06.880 great Super Bowl, but I think this is really more 0:13:06.920 --> 0:13:09.240 about the future outlook for the company, and that is 0:13:09.320 --> 0:13:12.640 super super bleak. Yes, it was a great night for 0:13:12.720 --> 0:13:16.840 TV advertising. We think they gotten seven hundred million dollars 0:13:16.920 --> 0:13:20.520 in roughly about four hours. But then it's throughout twenty 0:13:20.559 --> 0:13:25.199 twenty three we've seen TV advertising decline by low double digits. 0:13:25.240 --> 0:13:28.080 It was down almost thirteen percent in the latest quarter 0:13:28.120 --> 0:13:29.840 that they reported, and it's not going to get too 0:13:29.920 --> 0:13:32.480 much better. And it's not just the challenges on the 0:13:32.520 --> 0:13:35.080 TV side of the equation for them. It's also about 0:13:35.120 --> 0:13:38.000 their streaming business and they've made good strides absolutely in 0:13:38.080 --> 0:13:41.440 terms of you know, streaming subscribers, and again I anticipate 0:13:41.480 --> 0:13:43.400 that they're going to have some good streaming numbers to 0:13:43.440 --> 0:13:46.480 report thanks to the Super Bowl, but it is burning 0:13:46.559 --> 0:13:50.079 a lot of money, almost one point seven billion dollars 0:13:50.200 --> 0:13:53.440 is what they will report in losses for twenty twenty three, 0:13:53.480 --> 0:13:55.760 and before that they lost about one point eight billion. 0:13:55.840 --> 0:13:58.679 So it's just been a continuous drain on the company. 0:13:59.200 --> 0:14:01.000 And I know they're there's a lot of talk around 0:14:01.320 --> 0:14:05.920 perhaps the controlling shareholder, Sherry Redstone, will consider selling all 0:14:05.960 --> 0:14:08.200 a part of the company. What's the latest on that? 0:14:09.720 --> 0:14:11.839 So the latest actually in that saga, and this has 0:14:11.880 --> 0:14:15.120 now been an ongoing drama for many months now, Paul, 0:14:15.559 --> 0:14:18.679 The latest is that Byron Allen actually came up with 0:14:19.000 --> 0:14:21.320 a bid for all of the company, not just for 0:14:21.400 --> 0:14:24.000 the controlling stake held through National Amusements. 0:14:24.280 --> 0:14:26.600 And he actually put up a pretty good bid. 0:14:26.880 --> 0:14:30.200 You know, it was fourteen billion dollars in terms of equity, 0:14:30.280 --> 0:14:33.560 so thirty billion dollars enterprise value. We think it was 0:14:33.600 --> 0:14:36.720 a pretty fair bid. The problem is, you know, Byron Allen, 0:14:36.800 --> 0:14:39.320 I don't think anybody is taking him too seriously. He's 0:14:39.400 --> 0:14:42.200 you know, had this track record of kind of coming 0:14:42.280 --> 0:14:46.000 up with these empty bids. So while it is a number, again, 0:14:46.280 --> 0:14:48.720 we've not really seen a whole lot of action that 0:14:48.800 --> 0:14:50.160 we would have expected. 0:14:50.640 --> 0:14:54.000 So this is a totally unfair question to Paul. Let's 0:14:54.000 --> 0:14:56.960 pretend you're still an M and a banker here, investment banker. 0:14:57.120 --> 0:14:59.160 What would you be talking to Paaramount about. 0:14:59.200 --> 0:15:01.560 I would I would say, I think the best buyer 0:15:01.560 --> 0:15:04.880 here there's a strategic buyer, maybe Warner Brothers, the Discovery, 0:15:04.880 --> 0:15:07.240 But both of those companies, as keitha Wall and those 0:15:07.360 --> 0:15:09.680 bound sheets are not great. I think I would be 0:15:09.720 --> 0:15:13.160 shopping into a private equity because they're still good for 0:15:13.480 --> 0:15:15.600 free cash flows here and let them deal with it. 0:15:15.920 --> 0:15:19.400 So Githay, what is the sense here as to I 0:15:19.440 --> 0:15:23.080 think about Paramount, I think about Warner Brothers, Discovery, what 0:15:23.280 --> 0:15:25.520 happens to these companies because it just feels like against 0:15:25.520 --> 0:15:28.360 some of the big tech companies, they're just not big 0:15:28.440 --> 0:15:31.160 enough here, against Netflix, are just not big enough. What 0:15:31.200 --> 0:15:31.640 did they do? 0:15:33.040 --> 0:15:33.120 So? 0:15:33.160 --> 0:15:36.400 I think Warner Brothers Discovery actually had a pretty interesting 0:15:36.440 --> 0:15:40.600 move last week Pall, which was they banded together with ESPN, 0:15:40.760 --> 0:15:44.680 Disney and Fox to kind of create this sports super 0:15:44.720 --> 0:15:47.280 app which will launch in the fall. And that's one 0:15:47.320 --> 0:15:49.880 way for them to kind of protect at least some 0:15:50.080 --> 0:15:52.240 part of their linear revenue stream, because I mean they've 0:15:52.320 --> 0:15:53.920 kind of everybody's seeing the writing. 0:15:53.680 --> 0:15:54.600 On the wall here. 0:15:54.320 --> 0:15:57.880 We're seeing cord cutting, we're seeing about ten percent of 0:15:58.000 --> 0:16:02.040 the subscriber base get eroded ear after ear We've already 0:16:02.040 --> 0:16:05.400 lost thirty million subscribers. So that's one good way for them, 0:16:05.400 --> 0:16:08.240 I think, to kind of control their destiny a little 0:16:08.280 --> 0:16:12.240 bit in terms of distribution. Again, remember Paramount is not 0:16:12.520 --> 0:16:15.480 part of that bundle, so that again is a little 0:16:15.520 --> 0:16:18.520 bit of you know, a strike against them. But you know, 0:16:18.560 --> 0:16:19.920 you bring up a good point. I think at the 0:16:20.000 --> 0:16:21.520 end of the day, we are going to have to 0:16:21.560 --> 0:16:23.920 see consolidation. Of course, as you just pointed out, there 0:16:23.920 --> 0:16:27.240 were rumors of actually Warner Brothers Discovery being interested in Paramount, 0:16:27.240 --> 0:16:30.240 but that would be about more than you know, sixty 0:16:30.280 --> 0:16:33.240 billion dollars I think in debt for those combined companies. 0:16:33.600 --> 0:16:35.640 So yeah, it is it is definitely going to be challenging, 0:16:35.640 --> 0:16:38.160 but I think consolidation is definitely on the cards. 0:16:38.200 --> 0:16:40.000 Okay, So then how does that happen? Because if like, 0:16:40.080 --> 0:16:41.920 three wrongs don't make a right, and you're not going 0:16:42.000 --> 0:16:43.720 to put all the media companies together because it's going 0:16:43.760 --> 0:16:46.800 to create more problems. So is it private equity like 0:16:47.280 --> 0:16:49.960 to split up different areas of media within the company. 0:16:50.480 --> 0:16:52.160 Yeah, I think Paramount I think one of the things 0:16:52.160 --> 0:16:53.720 has been you know, to sell it for parts. Right, 0:16:53.760 --> 0:16:57.080 there are some parts of the company, the TV networks 0:16:57.080 --> 0:16:59.840 that could be very, very attractive to private equity, as 0:16:59.840 --> 0:17:01.720 you just pointed out, because of the cash flows. Right, 0:17:01.720 --> 0:17:04.120 it's still a business. It used to throw out about 0:17:04.160 --> 0:17:06.480 six billion dollars in ebit dah, but it will still 0:17:06.480 --> 0:17:08.440 throw out about four and a half to almost close 0:17:08.480 --> 0:17:10.639 to four point eight billion dollars in ebit DAH. So 0:17:11.000 --> 0:17:14.320 again cash highly cash generative. Of course, the future you 0:17:14.359 --> 0:17:16.840 know flows don't look so great. But then there has 0:17:16.920 --> 0:17:18.800 been a lot of interest in the studio part of 0:17:18.800 --> 0:17:21.040 the business, right, whether that's you know, David Ellison with 0:17:21.080 --> 0:17:22.879 his guy Dance Media, maybe. 0:17:22.600 --> 0:17:24.040 Somebody else, maybe even an Apple. 0:17:24.320 --> 0:17:27.639 We haven't necessarily seen any of those you know, bids 0:17:27.720 --> 0:17:30.119 kind of come to fruition, but there definitely will be 0:17:30.119 --> 0:17:31.760 a lot of interest. But I think the one thing 0:17:31.800 --> 0:17:33.240 that we kind of have to wait to get some 0:17:33.280 --> 0:17:36.400 clarity on is definitely the regulatory environment. We've seen big 0:17:36.480 --> 0:17:40.280 tech kind of really shy away from anything too splashy, 0:17:40.680 --> 0:17:43.080 but who knows, maybe when the government changes, all of 0:17:43.080 --> 0:17:44.119 that will change as well. 0:17:44.520 --> 0:17:48.280 You know, Githa, When these networks bid and pay billions 0:17:48.280 --> 0:17:50.960 of dollars for sports rights. And even if you you know, 0:17:50.960 --> 0:17:52.680 you put up that seven hundred million dollars of bad 0:17:52.720 --> 0:17:55.640 revenue that you reference, you know, it's tough to make 0:17:55.680 --> 0:17:58.960 a profit on that kind of business. So what the 0:17:59.000 --> 0:18:02.520 networks have always said is, yes, but we promote other 0:18:02.760 --> 0:18:07.119 shows on our networks, and that value is really worth 0:18:07.119 --> 0:18:10.000 paying these big rights fees. But if you're promoting all 0:18:10.000 --> 0:18:12.400 these shows on the CBS network that nobody's watching because 0:18:12.400 --> 0:18:15.919 of chord cutting, how valuable is that? I mean, I 0:18:16.000 --> 0:18:18.800 thought about that they were promoting all their shows that 0:18:19.520 --> 0:18:22.040 I don't think anybody's watching because they've already cut the cord. 0:18:22.600 --> 0:18:24.320 Yeah, you're absolutely right for them. Though. 0:18:24.760 --> 0:18:27.440 The one thing that Paramount has done really kind of well, 0:18:27.440 --> 0:18:28.840 and I don't know whether this is a plus or 0:18:28.880 --> 0:18:29.800 a minus. 0:18:29.440 --> 0:18:31.639 But it definitely helps them at least shore up. 0:18:31.640 --> 0:18:33.400 I think the total value of their assets is they've 0:18:33.440 --> 0:18:37.120 actually all of their sports properties, including the NFL, they've 0:18:37.119 --> 0:18:39.119 actually kind of leaked it outside the bundle, so they 0:18:39.160 --> 0:18:41.800 were showing it on Paramount Plus Day one, and they 0:18:41.800 --> 0:18:44.040 did the same thing with the Super Bowl as well. 0:18:44.080 --> 0:18:45.719 So I think even if they're you know, even if 0:18:45.760 --> 0:18:48.600 you have cord cutters. They could make the argument that yes, 0:18:48.720 --> 0:18:51.400 you know, people can potentially sign up for that service. 0:18:51.600 --> 0:18:54.160 We saw, of course Peacock do that with that wildcard 0:18:54.320 --> 0:18:57.920 NFL game. Again, what they know that they're losing subscribers 0:18:57.960 --> 0:19:00.800 on the PATV bundle, so they're trying to they're trying 0:19:00.840 --> 0:19:02.720 their best, I don't know how successfully to kind of 0:19:02.720 --> 0:19:05.080 make it up on the streaming side, but you're right, 0:19:05.119 --> 0:19:06.560 I mean it is kind of a lose. 0:19:06.359 --> 0:19:08.560 Lose, Keitha. So what's next? Like, what are you watching? 0:19:09.119 --> 0:19:10.200 Preparea amount now? 0:19:10.840 --> 0:19:13.080 For Paramount, It's definitely it is an M and a place. 0:19:13.200 --> 0:19:17.360 Something has to happen. It has to happen fast. Bob Backish, 0:19:17.359 --> 0:19:19.879 the CEO, has pretty much said it. You know, he 0:19:19.960 --> 0:19:20.520 said he's. 0:19:20.359 --> 0:19:25.240 Evaluating Bayern Allen's proposal again, not sure whether that will 0:19:25.280 --> 0:19:27.600 necessarily pan out, but somebody has to come up with 0:19:28.000 --> 0:19:29.320 something and it has. 0:19:29.200 --> 0:19:29.959 To happen quickly. 0:19:30.160 --> 0:19:33.680 Our thanks to Keitha Ranganathan Bloomberg intelligence analyst on US 0:19:33.720 --> 0:19:34.320 Media fall. 0:19:34.440 --> 0:19:37.000 Let's turn out of Cisco So the largest maker of 0:19:37.000 --> 0:19:40.840 computer networking equipment, Cisco announcing plans to cut thousands of jobs, 0:19:41.040 --> 0:19:44.040 saying the cuts will affect roughly five percent of its workforce. 0:19:44.280 --> 0:19:46.320 This all comes after a slow down and corporate tech 0:19:46.359 --> 0:19:49.639 spending wiped out Cisco's sales growth last quarter. For more 0:19:49.680 --> 0:19:51.840 on all of this, we spoke with Woojin Hoo, Bloomberg 0:19:51.880 --> 0:19:55.359 Intelligence senior technology analysts. We first asked him if anything 0:19:55.400 --> 0:19:57.280 stood out from Cisco's quarterly results. 0:19:57.680 --> 0:19:59.960 I think after the job cuts league from last quarter, 0:20:00.040 --> 0:20:02.480 I think there were expectations that there were going to 0:20:02.520 --> 0:20:05.159 be cut the estimates. Quite frankly, the big standout for 0:20:05.200 --> 0:20:07.399 me was that the cuts were big enough. You know, 0:20:07.480 --> 0:20:10.080 five percent op X cuts. That's part of the course 0:20:10.160 --> 0:20:12.639 for what Cisco typically does. But at the end of 0:20:12.680 --> 0:20:15.000