WEBVTT - BI Weekend: US Earnings, Kenvue Deal, Ridesharing Latest 0:00:02.759 --> 0:00:11.040 Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.119 --> 0:00:13.200 with Scarletfoo and Paul Sweeney. 0:00:13.320 --> 0:00:15.440 How do you think the FED is looking at tariffs? 0:00:15.560 --> 0:00:16.799 The uncertainty of terriffs. 0:00:16.840 --> 0:00:18.840 Let's take a look at the sectors and how. 0:00:18.680 --> 0:00:20.920 They performed a lot of investors getting whip saled every 0:00:21.000 --> 0:00:21.959 day by news. 0:00:21.680 --> 0:00:24.080 Events, breaking market headlines. 0:00:23.560 --> 0:00:25.840 And corporate news from across the globe. 0:00:25.840 --> 0:00:28.440 Could we see a market disruption of market events? 0:00:28.520 --> 0:00:30.560 So people just too exuberant out there? 0:00:30.680 --> 0:00:33.280 You see some so called low quality stocks driving this 0:00:33.320 --> 0:00:34.120 short term rally. 0:00:34.159 --> 0:00:38.920 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 0:00:39.120 --> 0:00:41.000 YouTube and Bloomberg Originals. 0:00:42.000 --> 0:00:44.560 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:44.600 --> 0:00:46.800 business stories impacting Wall Street and global markets. 0:00:46.840 --> 0:00:48.960 Each and every week, we provide in depth research and 0:00:49.040 --> 0:00:50.879 data on some of the two thousand companies and one 0:00:50.960 --> 0:00:53.559 hundred and thirty industries are analysts covered worldwide. 0:00:53.720 --> 0:00:55.840 Today, as earning season rolls on, we'll take a look 0:00:55.840 --> 0:00:58.240 at results from some of the biggest names in food, travel, 0:00:58.280 --> 0:00:59.440 and entertainment. 0:00:59.000 --> 0:01:01.440 Plus the cash stock While at Berkshire, Hathway grows through 0:01:01.440 --> 0:01:02.320 a record. 0:01:02.200 --> 0:01:05.160 But first this week, Young Brands launched a strategic review 0:01:05.200 --> 0:01:07.640 for the pizza maker Pizza Hut. This comes after the 0:01:07.640 --> 0:01:10.360 company reported earnings that beat Wall Street estimates. For more, 0:01:10.440 --> 0:01:13.120 we were joined by Michael Halen, Bloomberg Intelligence senior restaurant 0:01:13.160 --> 0:01:15.640 and food service analyst, first to ask Michael for his 0:01:15.760 --> 0:01:18.240 take on the possible sale of Pizza Hut. 0:01:18.520 --> 0:01:20.679 I think this was kind of a long time coming. 0:01:20.720 --> 0:01:22.880 It's really been a drag on the top and bottom 0:01:22.920 --> 0:01:27.080 line growth. Taco Bell is an absolute monster as putting 0:01:27.120 --> 0:01:30.040 up strong unit growth as well as same store sales 0:01:30.040 --> 0:01:34.080 growth quarter after quarter after quarter. KFC has had some 0:01:34.120 --> 0:01:37.520 well documented same store sales issues in the US, but 0:01:38.440 --> 0:01:41.280 that seems to be turning. They had a solid little 0:01:41.400 --> 0:01:45.440 quarter here with flat same store sales versus six straight 0:01:45.520 --> 0:01:49.000 quarters of decline, so that business seems to be accelerating 0:01:49.040 --> 0:01:52.800 a little bit. And KFC unit growth overseas is phenomenal, 0:01:53.080 --> 0:01:57.160 absolutely phenomenal. They crush it overseas. Yeah, So Pizza Hut 0:01:57.160 --> 0:02:00.559 has been this drag on this business for quite some time. 0:02:00.640 --> 0:02:04.120 I think the street is is really excited about a 0:02:04.120 --> 0:02:05.400 potential divestiture here. 0:02:05.760 --> 0:02:09.000 Any potential buyers out there that you can identify, No, 0:02:09.080 --> 0:02:09.520 we don't have. 0:02:10.160 --> 0:02:12.720 We don't think any of the companies in the public 0:02:12.760 --> 0:02:17.280 market are going to be an acquirer of pizza hut. 0:02:17.320 --> 0:02:17.560 Yeah. 0:02:17.600 --> 0:02:20.160 We you know this this thing is, like I said, 0:02:20.280 --> 0:02:24.200 has struggled mightily. I mean we can see pete private equity. 0:02:24.240 --> 0:02:29.440 I think private equity would be a good fit, right, 0:02:29.560 --> 0:02:31.480 because it's going to take you know, management set on 0:02:31.480 --> 0:02:34.040 the call. It might take some of their markets two 0:02:34.280 --> 0:02:37.640 three years to get them back to like their rightful 0:02:37.680 --> 0:02:42.040 position as market leader in those countries they which they 0:02:42.080 --> 0:02:45.440 see as their rightful h you know position. I think 0:02:45.440 --> 0:02:48.760 Dominos would have something to say about that. But you know, 0:02:48.800 --> 0:02:50.480 it's going to take a few years to turn around 0:02:50.480 --> 0:02:53.400 some of these markets, and private equity obviously looking at 0:02:53.440 --> 0:02:56.120 a five to seven year time horizon, would be a 0:02:56.120 --> 0:02:56.519 good fit. 0:02:56.880 --> 0:02:59.680 All right, Mike, let's step back the restaurant space in general, 0:02:59.720 --> 0:03:02.840 getting through you know, earning season here. What are you 0:03:02.919 --> 0:03:05.359 learning about kind of the consumer out there from the 0:03:05.400 --> 0:03:06.239 restaurant perspective. 0:03:06.760 --> 0:03:10.800 We heard from Wingstop and another fast casual chain that's 0:03:11.000 --> 0:03:14.280 struggling also partly been a victim of its own success, right, 0:03:14.440 --> 0:03:17.840 It's absolutely crushed it over the last six years, and 0:03:17.919 --> 0:03:20.560 it's lapping very very strong results from last year, but 0:03:20.919 --> 0:03:24.560 they talked some more about low income consumers and Hispanic 0:03:24.919 --> 0:03:30.120 consumer weakness and it broadening here in the third quarter. 0:03:30.680 --> 0:03:33.520 There's some optimism here, I think around the smart kitchens. 0:03:33.560 --> 0:03:37.040 So what's a smart kitchen they're so they're rolling out 0:03:37.320 --> 0:03:44.680 some kitchen technology that's boosting operations. It's speeding up service times, 0:03:44.720 --> 0:03:49.119 you know, they're they're putting out consistent ten minute service times, 0:03:50.040 --> 0:03:52.760 which is fifty percent better than they were doing prior. 0:03:54.440 --> 0:03:58.480 Accuracy is better, Food's getting to customers hotter and fresher, 0:03:58.560 --> 0:04:01.160 and people are going to have a better experience. And 0:04:01.240 --> 0:04:05.000 so stores that have had this technology right now, it's 0:04:05.000 --> 0:04:06.920 in about two thirds of the US stores, it's going 0:04:06.960 --> 0:04:09.200 to be in all three thousand by the end of 0:04:09.240 --> 0:04:12.480 the year. But stores that have this equipment and have 0:04:12.600 --> 0:04:15.800 had it the longest are outperforming on same source sales 0:04:15.840 --> 0:04:19.840 by five hundred basis points. So we think that's that's 0:04:19.920 --> 0:04:22.359 why the stock is up so much. People are now 0:04:22.640 --> 0:04:26.160 a little bit more confident in a positive twenty twenty 0:04:26.200 --> 0:04:31.200 six despite the decelerating trends here in the third quarter. 0:04:31.600 --> 0:04:34.360 What's going on on the laborfront for restaurants I think 0:04:34.800 --> 0:04:38.719 quick service restaurants, you know, with the Southern border shut off, 0:04:38.720 --> 0:04:40.880 that was one of the industries that said we may 0:04:40.920 --> 0:04:43.520 have some labor problems associated with that. Have you heard 0:04:43.520 --> 0:04:44.480 from your companies about that? 0:04:46.080 --> 0:04:50.320 Yeah, you know, our companies just talk about the fact 0:04:50.320 --> 0:04:54.480 that they use Everify and there and they do everything 0:04:54.520 --> 0:04:57.440 by the book, which you know, I think is predominantly 0:04:57.520 --> 0:05:01.440 the case. The impact that you know you're seeing a 0:05:01.440 --> 0:05:04.680 is with more of the independent restaurants. Okay, then be 0:05:05.400 --> 0:05:10.479 also kind of causes labor costs to go higher here 0:05:10.640 --> 0:05:13.599 for the public chains, right right, they're seeing another four 0:05:13.600 --> 0:05:17.680 to five percent you know, wage rate inflation this year. 0:05:17.720 --> 0:05:20.840 That's been pretty common year in and year out since 0:05:20.880 --> 0:05:21.480 the pandemic. 0:05:21.839 --> 0:05:24.560 All right, Thanks to Michael Halin, Bloomberg Intelligence Senior Restaurant 0:05:24.600 --> 0:05:25.599 and Food Service ANLS. 0:05:25.920 --> 0:05:28.640 We move now to earnings from the fast food giant McDonald's. 0:05:28.800 --> 0:05:31.440 The company reported faster than expected US sales growth in 0:05:31.480 --> 0:05:33.680 the third quarter, and this comes as the restaurant looks 0:05:33.720 --> 0:05:36.880 to restore its reputation for affordable meals with new deals 0:05:36.880 --> 0:05:40.400 and promotions. We're joined by Red Brown, Bloomberg News earnings reporter. 0:05:40.960 --> 0:05:43.359 I think in the context of the other results that 0:05:43.360 --> 0:05:45.200 we've gotten from a couple of other restaurants. I think 0:05:45.200 --> 0:05:50.560 it's really interesting. During the call, the McDonald's CEO CFO 0:05:50.839 --> 0:05:53.400 really talked about this bifurcation that they've been observing for 0:05:53.400 --> 0:05:57.880 the last two years between higher income diners and lower 0:05:57.880 --> 0:06:01.000 income people, and it seems like that trend is cantinuing, persisting, 0:06:01.800 --> 0:06:04.920 potentially accelerating. It seems like, and specifically what I'm talking 0:06:04.960 --> 0:06:06.920 about is the higher income consumers seem to be coming 0:06:06.960 --> 0:06:10.240 down into McDonald's and shopping a bit more drawn in 0:06:10.320 --> 0:06:12.800 by the value that McDonald's has been pushing over the 0:06:12.839 --> 0:06:15.840 last couple of quarters. And we're seeing that across all 0:06:15.880 --> 0:06:18.720 of the fast food chains that's young as well, and 0:06:18.839 --> 0:06:21.720 also burger king things like that. And then on the 0:06:21.760 --> 0:06:24.840 other side of that, companies like Chipotle and Cava, these 0:06:24.920 --> 0:06:27.800 kind of like middle tier that you know, twenty dollars 0:06:28.320 --> 0:06:30.440 bowls of food are struggling a little bit more. Is 0:06:30.480 --> 0:06:34.039 like people lose interest in that value proposition that they're offering. 0:06:34.080 --> 0:06:36.920 So I think McDonald's, obviously the biggest name in the space, 0:06:37.000 --> 0:06:39.839 really kind of hammers that point home for this earning season, 0:06:39.880 --> 0:06:41.159 and I think that's kind of the thing like the 0:06:41.200 --> 0:06:42.800 main takeaway for me at the moment, And. 0:06:42.760 --> 0:06:45.719 Of course McDonald's is leaning into this idea that it 0:06:45.760 --> 0:06:48.720 offers value at a difficult time for a lot of consumers. 0:06:49.000 --> 0:06:51.840 It's got a lot of deals and promotions to maintain 0:06:51.880 --> 0:06:54.840 that reputation. Does that cost it in any way or 0:06:54.920 --> 0:06:57.080 do the same source of sales kind of back that 0:06:57.240 --> 0:06:58.400 up that this works. 0:06:58.680 --> 0:07:01.280 I think it's a little early before they've seen that 0:07:01.960 --> 0:07:04.200 benefit from it quite yet, Like they have seen a 0:07:04.240 --> 0:07:07.080 little bit of pressure on the profitability because the company 0:07:07.120 --> 0:07:10.040 is so committed to this, like getting restoring the value 0:07:10.040 --> 0:07:12.680 reputations kind of the language that they use with their 0:07:12.680 --> 0:07:16.280 customers that they're actually supporting the franchisees. They're giving them marketing, 0:07:16.720 --> 0:07:18.680 they're helping them make up some of that losses that 0:07:18.720 --> 0:07:22.480 they will make they will have from offering these discounts 0:07:22.720 --> 0:07:26.080 on the menu. So McDonald's committed to this. It sounds 0:07:26.120 --> 0:07:28.559 like they're committed to this in the long term because 0:07:28.600 --> 0:07:30.440 they do want to get people back in the stores. 0:07:30.480 --> 0:07:32.200 It doesn't it's kind of remains to be seen whether 0:07:32.280 --> 0:07:34.800 or not the foot traffic is actually benefiting such that 0:07:34.880 --> 0:07:37.720 it is driving the bottom line as well. But they see, 0:07:37.720 --> 0:07:41.080 it is so important to kind of refreshing or kind 0:07:41.120 --> 0:07:44.480 of reintroducing the brand proposition to people that they're willing 0:07:44.520 --> 0:07:46.240 to commit to this. Take a little bit of that 0:07:46.280 --> 0:07:48.960 short term pain for the long term benefits. 0:07:49.280 --> 0:07:51.239 What are they saying about their cost structure here? Actue 0:07:51.800 --> 0:07:55.320 beef prices much higher over the last year or two. 0:07:55.440 --> 0:07:57.760 What are they saying about there's some of their cost 0:07:57.760 --> 0:07:58.480 to get sold here. 0:07:58.800 --> 0:08:01.080 Well, the one thing they call it on the cost 0:08:01.120 --> 0:08:03.040 of good soul before we get into the beef issue 0:08:03.080 --> 0:08:05.000 is the marketing, So they are kind of bumping up 0:08:05.040 --> 0:08:07.120 the marketing. They saw around a twenty percent jump in 0:08:07.160 --> 0:08:11.640 their their SGNA expense because of that. But on the 0:08:11.640 --> 0:08:15.560 beef thing, McDonald's is the largest buyer of beef yep, 0:08:15.600 --> 0:08:17.760 so that scale kind of allows them to take it. 0:08:17.920 --> 0:08:20.480 They can take advantage of the scale and and you know, 0:08:21.080 --> 0:08:23.440 and negotiate strong contracts when it comes to beef. Obviously, 0:08:23.480 --> 0:08:26.080 beef inflation has been hitting all of these companies, but 0:08:26.240 --> 0:08:30.080 not in a way that the companies are like outsized. 0:08:30.800 --> 0:08:33.720 Negatively impact thus far, but definitely something to watch as 0:08:33.720 --> 0:08:35.600 the beef prices continue to go higher. 0:08:35.600 --> 0:08:38.480 And the improvement here, especially for its US comparable sales 0:08:38.559 --> 0:08:41.720 really comes at a timely point because for a while 0:08:41.760 --> 0:08:44.440 the company had been laggered when it came to comparable 0:08:44.440 --> 0:08:45.719 sales at least domestically. 0:08:46.080 --> 0:08:49.800 Yeah, definitely, And it does speak to the kind of 0:08:50.240 --> 0:08:52.959 strategic changes that they've they've made, like they did act 0:08:53.160 --> 0:08:54.920 maybe a little bit late in the game. Burger King 0:08:54.960 --> 0:08:57.880 has been rolling out their value offerings for a little 0:08:57.880 --> 0:09:02.199 over a year, butmc Donald's has like acted and acted swiftly, 0:09:02.280 --> 0:09:03.920 like you know, it's it's a big deal, I think 0:09:03.960 --> 0:09:06.760 to get the buy in from the franchise ease of McDonald's, 0:09:06.800 --> 0:09:09.760 like they had almost a consensus. It's very rare that 0:09:09.800 --> 0:09:12.320 you see almost like a high ninety percentage of franchisees 0:09:12.480 --> 0:09:14.160 willing to take the prices because they're the ones that 0:09:14.200 --> 0:09:15.520 are dealing with this at the end of the day. 0:09:16.200 --> 0:09:19.640 But I think, you know, McDonald's acting fast, acting boldly 0:09:19.760 --> 0:09:22.280 to kind of get back into the green. 0:09:22.880 --> 0:09:25.560 I've noticed, really really in the last several years, so 0:09:25.640 --> 0:09:28.880 much more technology in the stores, Like you can a 0:09:28.960 --> 0:09:31.840 lot of them don't even have people practically taking your order. 0:09:31.960 --> 0:09:36.280 It's all done electronically. What are they saying about their 0:09:36.320 --> 0:09:40.959 investments in technology, maybe even AI how's that impacting that business? 0:09:41.000 --> 0:09:43.240 Yeah, for McDonald's, like they it was. There's quite a 0:09:43.240 --> 0:09:47.040 bit of talk about their their digital offerings for this quarter. 0:09:47.679 --> 0:09:51.200 All of these companies, so so between McDonald's, Young which 0:09:51.240 --> 0:09:55.200 has KFC, Taco Bell, and a couple other brands under 0:09:55.200 --> 0:09:57.920 that umbrella, are all really pushing the digital for that 0:09:57.960 --> 0:10:00.959 exact reason to get the cost down. You know, McDonald's 0:10:01.000 --> 0:10:03.040 just rolled out their Monopoly program. And when I was 0:10:03.040 --> 0:10:05.080 a kid, Monopoly was the peel off on the cops. 0:10:05.120 --> 0:10:07.320 It was very exciting. Now it's completely digital, right, So, 0:10:07.320 --> 0:10:09.480 like that's another way of their kind of drive people 0:10:09.559 --> 0:10:11.600 into the app to beet people to shop through there. 0:10:11.640 --> 0:10:13.480 This is where a lot of promotions are that'll help 0:10:13.520 --> 0:10:16.680 also drive foot traffic. So it's two it's helping in 0:10:16.720 --> 0:10:19.080 two ways. It's helping people get in chop more and 0:10:19.120 --> 0:10:20.320 also helping on the cost front. 0:10:20.960 --> 0:10:22.920 Our Thanks to Red Brown, he is a Bloomberg News 0:10:22.960 --> 0:10:23.640 earnings reporter. 0:10:24.080 --> 0:10:27.080 Moving next to the hospitality industry, this week, Cruse, company 0:10:27.120 --> 0:10:30.160 in the Reach and Cruise line, reported earnings that missed expectations. 0:10:30.400 --> 0:10:32.400 For more on this, we were joined by Brian Egger, 0:10:32.440 --> 0:10:34.800 Bloomberg Intelligence Senior Gaming and lodging analyst. 0:10:35.280 --> 0:10:37.840 People are still cruising, the bookings are higher. I think 0:10:38.000 --> 0:10:39.760 that there was a bit of a change in their 0:10:39.800 --> 0:10:43.240 strategy related to the Norwegian Cruise Line brand, trying to 0:10:43.280 --> 0:10:46.440 get more families and kids and all that could talk 0:10:46.440 --> 0:10:49.559 about that, but that does have some slightly dampiting impact 0:10:49.559 --> 0:10:51.080 on you'll growth for the fourth quarter. 0:10:51.720 --> 0:10:54.320 So this is the idea that they're broadening their customer base, 0:10:54.440 --> 0:10:58.679 not just targeting the super high income consumer, which by 0:10:58.720 --> 0:11:02.120 all accounts is doing just in this economy, whereas the 0:11:02.120 --> 0:11:04.800 lower income consumer and the mass consumer perhaps is struggling 0:11:04.840 --> 0:11:08.160 with rates staying fairly elevated and a lot of question 0:11:08.240 --> 0:11:11.800 marks over their job prospects. What is Norwegian Cruise Lines 0:11:12.040 --> 0:11:15.600 strategy here, certainly compared to its peers like Carnival and 0:11:16.240 --> 0:11:16.960 Royal Caribbean. 0:11:17.800 --> 0:11:20.320 I think it's twofold. I think number one, to try 0:11:20.360 --> 0:11:23.920 to attract more of a family audience, increase the core 0:11:23.960 --> 0:11:26.480 customer base of the Norwegian Cruise Line brand, and also 0:11:26.960 --> 0:11:31.600 by having more shorter duration cruises, maybe with homeports closer 0:11:31.640 --> 0:11:34.440 to where people live, that could result the longer term 0:11:34.480 --> 0:11:39.040 and kind of more efficient operations and some you know, 0:11:39.160 --> 0:11:42.720 more savings on the net cruise costs for net unicost side, 0:11:43.000 --> 0:11:45.079 but it remains to be seen, and I think that's 0:11:45.080 --> 0:11:47.200 why there's a little bit of caution, because the near 0:11:47.280 --> 0:11:50.200 trim effect will be a slightly dampening impact on the 0:11:50.280 --> 0:11:53.920 overall mix of yields. You know, caverns filled with children 0:11:54.000 --> 0:11:58.520 or families may have a slightly lower combined revenue yield 0:11:58.600 --> 0:12:00.280 than a different type of customer. 0:12:00.080 --> 0:12:05.240 Audience, typically the cruiser. They're pretty loyal people, Brian, how 0:12:05.240 --> 0:12:09.560 did they typically react or how did they spend during 0:12:10.040 --> 0:12:12.600 what could be maybe a little bit softer economic environment. 0:12:14.040 --> 0:12:16.640 So if you judge by the current environment, the overall 0:12:16.640 --> 0:12:19.800 bookings pace, I think for the third quarter overall was 0:12:19.880 --> 0:12:22.480 up twenty percent. The out for next year is quite 0:12:22.480 --> 0:12:24.800 good with at least modest field growth, you know, so 0:12:24.880 --> 0:12:27.520 I think we're seeing still a pretty steady pace of 0:12:28.360 --> 0:12:30.920 consumer demand. Obviously, that could always change if we see 0:12:30.920 --> 0:12:34.680 a more severe economic downturn, But the overall pace in 0:12:34.760 --> 0:12:38.120 terms of bookings demand, notwithstanding this kind of tweak and 0:12:38.200 --> 0:12:40.960 marketing strategy, has been quite good. 0:12:41.080 --> 0:12:44.439 Our thanks to Brian Eggert, Bloomberg Intelligence senior gaming and lodging. 0:12:44.200 --> 0:12:46.760 Analysts coming up inside one of the biggest deals of 0:12:46.800 --> 0:12:49.360 the Week, Kimberly clarkbind can you the maker of til 0:12:49.400 --> 0:12:49.600 and All? 0:12:49.760 --> 0:12:52.679 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:52.760 --> 0:12:54.920 depth research at data on two thousand companies and one 0:12:54.960 --> 0:12:56.000 hundred and thirty industries. 0:12:56.080 --> 0:12:59.280 You can access Bloomberg Intelligence via bi go on the terminal. 0:12:59.360 --> 0:13:00.360 I'm Scarlett and. 0:13:00.400 --> 0:13:02.439 I'm Paul Swimming. This is Bloomberg. 0:13:06.160 --> 0:13:10.680 This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney 0:13:11.040 --> 0:13:12.360 on Bloomberg Radio. 0:13:13.120 --> 0:13:15.240 It was a merger Monday this week in the consumer 0:13:15.320 --> 0:13:17.760 goods space, Kimberly Clark announced plans to by ken View, 0:13:17.880 --> 0:13:19.920 the maker of tile On, in a forty billion dollar 0:13:20.000 --> 0:13:21.080 cash and stock deal. 0:13:21.240 --> 0:13:23.520 A combination would create a company with thirty two billion 0:13:23.520 --> 0:13:26.040 dollars in revenue and become the second biggest seller of 0:13:26.080 --> 0:13:28.560 health and wellness products for more. We were joined by 0:13:28.559 --> 0:13:31.720 Diana Gomez, Bloomberg Intelligence senior equity research analyst. 0:13:32.360 --> 0:13:38.240 So it is surprising in many ways from the perspective 0:13:38.240 --> 0:13:43.240 of Kimberly Clark, I must confess it shows that ken 0:13:43.320 --> 0:13:45.960 View really has a lot of work to do to 0:13:46.040 --> 0:13:49.960 turn around the business since it split from Jane Jay 0:13:50.520 --> 0:13:55.480 about two years ago and the third quarter miss just 0:13:55.559 --> 0:14:00.200 added up to a pile of disappointing results. Obviously, there 0:14:00.280 --> 0:14:04.040 there's a ton of law hanging fruit, let's say, in 0:14:04.080 --> 0:14:07.200 terms of efficiencies that can be gained in terms of 0:14:07.400 --> 0:14:11.360 plugging the great iconic, well known trusted brands from Canview 0:14:11.760 --> 0:14:17.960 into Canview's system that is running at a more efficient 0:14:18.240 --> 0:14:24.160 level at the moment, but it will there is septicism 0:14:24.200 --> 0:14:28.360 there because we are talking about revenue synergies as well 0:14:28.400 --> 0:14:31.520 as cost synergies, and this will be quite a complex 0:14:32.360 --> 0:14:36.120 new company. At the point when Kimberly Clark was just 0:14:36.200 --> 0:14:40.720 simplifying as they were, they are aiming to close the 0:14:40.760 --> 0:14:46.840 transaction on their international business that includes segments like tissue 0:14:47.920 --> 0:14:52.720 by mid twenty twenty six, and now this merger expected 0:14:52.760 --> 0:14:55.800 to close around the same time, just seems to complicate 0:14:56.320 --> 0:15:01.120 the picture a little bit. The file andal, yes, and 0:15:01.280 --> 0:15:04.960 we know ow Kenvy has been dealing with some crisis 0:15:05.520 --> 0:15:09.720 in the last months with tailan Ore and then with 0:15:10.000 --> 0:15:11.560 talk all suits outside the. 0:15:11.600 --> 0:15:13.440 US as well, So I'm glad you went there. The 0:15:13.520 --> 0:15:18.440 tailan Al situation. The Trump administration has been attacking Thailand 0:15:18.440 --> 0:15:21.200 a overall. Do you think that's something that might complicate 0:15:21.240 --> 0:15:26.040 this deal. Could regulators step in and hold things up 0:15:26.160 --> 0:15:28.800 or raise questions that will just drag things out. 0:15:31.240 --> 0:15:34.600 Quite different questions, I would say, but great questions. So 0:15:34.760 --> 0:15:39.320 in terms of thailan O, the legal risk is there. 0:15:40.200 --> 0:15:44.360 They can View was already fighting in the courts some lawsuits, 0:15:44.440 --> 0:15:49.680 but we now have Texas State wawsuit on top on 0:15:49.760 --> 0:15:55.720 top of it, the Humbroway Quarks price. When we walk 0:15:55.760 --> 0:15:59.760 in terms of for instance, UH and a bit to enterprise, 0:16:00.120 --> 0:16:04.240 you multiple and I'm taking twenty twenty five, twenty six, 0:16:05.600 --> 0:16:09.760 twenty twenty five, sorry that they will report, so that 0:16:09.880 --> 0:16:14.200 will come at about fourteen times, whereas historic call transactions 0:16:14.200 --> 0:16:17.240 in the consumer health space were in the range of 0:16:17.320 --> 0:16:20.560 sixteen to twenty times. So fourteen times comes built all 0:16:20.680 --> 0:16:24.680 that so really reflecting not only the struggles of can 0:16:24.800 --> 0:16:29.640 View where their organic growth is still declining, but also 0:16:29.800 --> 0:16:34.160 that viability risk with lawsuits that are ongoing. And that's 0:16:34.280 --> 0:16:37.760 a new lawsuits that can be added as well. In 0:16:37.880 --> 0:16:43.880 terms of the say anti trust competition regulatory approval, as 0:16:43.920 --> 0:16:47.200 I see it, they don't really overlap directly, but it 0:16:47.320 --> 0:16:52.240 really depends on a country, region by region basis. Because 0:16:52.280 --> 0:16:54.920 we know the US stands can be very different from 0:16:55.000 --> 0:16:56.400 the European Commission one. 0:16:57.520 --> 0:17:00.680 Yeah, I'm should we expect more consolidation and consumer product space? 0:17:00.760 --> 0:17:01.400 Do you think. 0:17:03.160 --> 0:17:03.360 Yes? 0:17:03.480 --> 0:17:09.320 So that's a team that I've been watching very closely. Obviously, 0:17:09.400 --> 0:17:15.159 we had other large former groups with significant consumer health businesses, 0:17:15.200 --> 0:17:18.520 so we are talking not only over the counter medicines 0:17:18.760 --> 0:17:23.560 but also the more personal care that deals with wellness. 0:17:24.880 --> 0:17:28.800 Sonofi decided to sell it to private equity, so at 0:17:28.880 --> 0:17:32.479 least for the next few years. That is that buyer 0:17:32.680 --> 0:17:37.600 is still considering while not considering, as management says, puts it. 0:17:37.680 --> 0:17:41.639 But buyer still has their consumer health business and they 0:17:41.680 --> 0:17:47.840 could be walking into either listing it or further consolidation 0:17:48.200 --> 0:17:50.360 within the current employers. 0:17:50.440 --> 0:17:54.399 Our Thanks to Diana Gomez Bloomberg Intelligence here equity research journalists, we. 0:17:54.440 --> 0:17:56.600 Also got earnings in the media space as well. 0:17:56.720 --> 0:17:59.639 Warner Brothers Discovery, the parent of HBO and CNN, reported 0:17:59.680 --> 0:18:03.000 third sales that missed analyst estimates, providing a glimpse into 0:18:03.040 --> 0:18:05.760 the company's businesses as it puts itself up for sale. 0:18:05.920 --> 0:18:08.320 For details, we caught up with KEITHA. Rung Andathan Bloomberg 0:18:08.320 --> 0:18:10.040 intelligence analysts on US media. 0:18:11.280 --> 0:18:15.440 So fundamental Scarlett really don't measure all that much at 0:18:15.440 --> 0:18:18.919 this point. Especially yes, the TV networks business, as we 0:18:19.000 --> 0:18:21.960 know now for many many quarters, has been severely challenged. 0:18:22.000 --> 0:18:25.479 We saw a twenty percent slump in TV advertising, We 0:18:25.480 --> 0:18:28.840 saw a twenty percent decline in TV EBITDA. This was 0:18:28.960 --> 0:18:31.760 kind of well expected, and this really speaks to why 0:18:31.840 --> 0:18:34.480 they need to separate themselves, why they need to separate 0:18:34.760 --> 0:18:38.160 the low growth or rather the no growth TV assets 0:18:38.200 --> 0:18:40.440 from one part from the part of the business that's 0:18:40.480 --> 0:18:44.720 actually growing, which is studio and streaming. That part of 0:18:44.720 --> 0:18:47.240 the business actually posted really good numbers. We saw the 0:18:47.280 --> 0:18:50.800 studio Warner Brothers has actually been having a very very 0:18:50.800 --> 0:18:53.080 successful run in the box office this year. They have 0:18:53.080 --> 0:18:56.440 about a twenty seven percent share of domestic box office 0:18:56.480 --> 0:18:58.600 and we've seen that kind of translate into really strong 0:18:58.640 --> 0:19:01.600 IBIDA numbers. So we saw studio and streaming actually put 0:19:01.680 --> 0:19:04.520 up really really good numbers, and that again speaks to 0:19:04.680 --> 0:19:08.600 why so many different parties, including a Netflix, including a Comcast, 0:19:08.920 --> 0:19:12.560 are interested in going after those studio and streaming assets. 0:19:13.320 --> 0:19:17.440 So right now, again fundamentals don't matter that much. It's 0:19:17.520 --> 0:19:18.760 really all about the M and A. 0:19:19.160 --> 0:19:21.840 And I'm actually surprised KEITHA that maybe we haven't had 0:19:21.920 --> 0:19:24.000 some more news on the MNA front because we've seen, 0:19:24.680 --> 0:19:26.560 you know, the m and A environment is very very 0:19:26.560 --> 0:19:29.000 active with the market. It's very receptive to m and A. 0:19:29.080 --> 0:19:32.560 Here we have a willing seller in terms of David 0:19:32.640 --> 0:19:36.480 Zaslov and the board of directors here, who do you 0:19:36.720 --> 0:19:38.200 how do you think this is going to play out? 0:19:39.480 --> 0:19:41.159 Is something to make a bid for the entire company 0:19:41.240 --> 0:19:43.080 or just maybe the good pieces for it. 0:19:44.600 --> 0:19:47.480 We're having all possible permutations and combinations here, Paul. So 0:19:47.520 --> 0:19:50.280 we know that Paramounts Guidance is actually interested in all 0:19:50.320 --> 0:19:53.160 of the company, including the TV networks. They've already made 0:19:53.320 --> 0:19:56.600 three bids. The highest one was for twenty three and 0:19:56.600 --> 0:19:59.760 a half dollars per share for Warner Brothers Discovery. All 0:19:59.800 --> 0:20:03.720 of that was turned down, so they obviously have to 0:20:03.720 --> 0:20:06.720 come up with a much better offer now. The other bidders, 0:20:07.040 --> 0:20:09.440 and the two that are most often mentioned are Netflix 0:20:09.440 --> 0:20:12.199 and Comcast. They are the ones that are only interested 0:20:12.800 --> 0:20:15.720 in the studio and streaming assets, no interest at all 0:20:15.760 --> 0:20:19.160 in the TV linear network business. We know that Netflix 0:20:19.160 --> 0:20:21.960 has started looking into the books of Warner Brothers Discovery. 0:20:22.119 --> 0:20:24.720 This doesn't necessarily mean that they have to come out 0:20:24.720 --> 0:20:28.600 with a bid. I mean, remember this. You know zaslav Is, 0:20:28.640 --> 0:20:31.280 as you just mentioned, he's a very very tough negotiator. 0:20:31.359 --> 0:20:34.240 He's a deal maker. He is going to make sure 0:20:34.320 --> 0:20:36.879 that they really get paid well for the streaming and 0:20:36.920 --> 0:20:39.639 studio assets if they sell that, and we expect, you know, 0:20:39.680 --> 0:20:41.919 a price tag somewhere in the ballpark of about seventy 0:20:41.920 --> 0:20:44.080 five to eighty billion. So you know, whoever makes a 0:20:44.119 --> 0:20:46.800 big bid has to cough up a huge chunk of 0:20:46.880 --> 0:20:48.119 change for this asset. 0:20:48.440 --> 0:20:51.800 So we keep talking about how it's Netflix, Comcast and 0:20:51.880 --> 0:20:55.000 Paramount Skuidance. Could there be another bidder that emerges from 0:20:55.040 --> 0:20:56.159 the shadows. 0:20:56.760 --> 0:20:59.760 Absolutely, I mean you can never rule out big tech. 0:21:00.320 --> 0:21:03.280 You know, Amazon obviously has shown some interest in the past. 0:21:03.359 --> 0:21:06.400 They bought the MGM studio. We're not necessarily sure whether 0:21:06.440 --> 0:21:08.840