WEBVTT - Amazon, Google Probed by FTC Over Search Advertising Practices 

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<v Speaker 2>There was a headline today about how Amazon and Google

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<v Speaker 2>are being probed by the Federal Trade Commission on their

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<v Speaker 2>search advertising practices.

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<v Speaker 3>This is according to.

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<v Speaker 2>Bloomberg reporting, citing people who are familiar with the matter.

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<v Speaker 2>So we need to bring in Justin Treesi. He is

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<v Speaker 2>the anti trust litigation and policy analyst here for us

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<v Speaker 2>at Bloomberg Intelligence. Justin just walk us through what these

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<v Speaker 2>headlines mean to you when you look at it through

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<v Speaker 2>your anti trust lens.

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<v Speaker 4>Hi Scarlett, Happy Friday to you. So interestingly enough, here

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<v Speaker 4>in this case, it really looks like more of a

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<v Speaker 4>consumer protection investigation, not an anti trust kind of investigation.

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<v Speaker 4>So what I mean by that here is that we're

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<v Speaker 4>really looking at the pricing and the terms that perhaps

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<v Speaker 4>were set forth by Amazon and by Google in their

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<v Speaker 4>workings with advertisers, and when the or not that pricing

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<v Speaker 4>and those terms was misleading in any way, So a

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<v Speaker 4>different kind of series of facts here from what we're

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<v Speaker 4>seeing in the anti trust cases route advertising, with a

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<v Speaker 4>big one coming up in about a week the Remedies

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<v Speaker 4>trial and the Google ad Tech case starts in Virginia

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<v Speaker 4>very soon. More risk there, if you ask me. But

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<v Speaker 4>this one here really focused on those pricing policies. It

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<v Speaker 4>looks like at those companies and the remedies here are

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<v Speaker 4>probably nowhere near the kind of breakup risk that we

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<v Speaker 4>would see in a more antitrust aligned case.

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<v Speaker 5>That's what I was going to ask justin is whether

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<v Speaker 5>or not you know this makes the case to bolsters

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<v Speaker 5>the case to break up these tech giants. I also

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<v Speaker 5>want to make clear that these allegations are now different

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<v Speaker 5>from what both Google and Amazon are facing. They're facing

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<v Speaker 5>trials this month, right with separate lawsuits brought by federal agencies.

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<v Speaker 6>Yep, that's right.

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<v Speaker 4>So you're hit the nail on the head there too.

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<v Speaker 4>This is really more related to search issues and search advertising, which,

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<v Speaker 4>interestingly enough, that's what we just had that huge remedies

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<v Speaker 4>ruling on in the Google search case, right. And in

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<v Speaker 4>that case, there was a lot of discussion in the

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<v Speaker 4>remedies about increasing transparency and pricing for the text based

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<v Speaker 4>search ads, right, So one could actually say a lot

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<v Speaker 4>of those remedies are already on their way to being

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<v Speaker 4>implemented as part of that ruling Number one. Number two, Yeah, absolutely,

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<v Speaker 4>the Google case that's pending, that's about open web advertising

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<v Speaker 4>on websites, you know, little ads you see when you

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<v Speaker 4>might go to Bloomberg dot com or CNN dot com

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<v Speaker 4>for example, that pop up on the side, separated apart

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<v Speaker 4>from search ads. And then the Amazon trial coming up

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<v Speaker 4>this month that's about Amazon Prime terms, right, and whether

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<v Speaker 4>or not there was misleading kind of behavior and how

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<v Speaker 4>that was sold to consumers.

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<v Speaker 2>We should note that the FDC and Google declined to

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<v Speaker 2>comment on our reporting in Amazon did not respond to

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<v Speaker 2>requests for comment. So justin when you look at all

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<v Speaker 2>of this, what does this mean in terms of how

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<v Speaker 2>much of an overhang this will be for the companies?

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<v Speaker 2>Is this something that's going to be a month long

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<v Speaker 2>investigation or months long maybe years long investigation?

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<v Speaker 7>Right?

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<v Speaker 4>And I think the latter definitely scarlet right, So I

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<v Speaker 4>think just now you know, and great reporting by the way,

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<v Speaker 4>as usual by our colleagues Leahoniland and Josh Cisco over

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<v Speaker 4>at Bloomberg News. But I would say, you know, we're

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<v Speaker 4>really early on here, I think, is the story if

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<v Speaker 4>they're just starting to look into these these allegations, These

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<v Speaker 4>things can take years absolutely to pan out. A lot

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<v Speaker 4>of times there's no case that's even broad at the

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<v Speaker 4>end of them. It's really about ascertaining the facts, figuring

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<v Speaker 4>out what, if anything, happened, and moving on from there.

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<v Speaker 4>So I don't think we'll see any more announcements from

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<v Speaker 4>the FTC about how this is proceeding either. Typically all

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<v Speaker 4>of this is confidential, so as it moves forward, we

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<v Speaker 4>may or may not see updates that come out, you know,

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<v Speaker 4>in different ways about the case. But it's a long

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<v Speaker 4>term risk absolutely.

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<v Speaker 5>Is this just another example though, of how the Trump

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<v Speaker 5>administration is deal with big tech? Do you think justin.

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<v Speaker 4>Yeah, you know, I find this a little interesting too, right,

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<v Speaker 4>So I think, you know, you look back to the

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<v Speaker 4>AI Action Plan that came out earlier in the summer,

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<v Speaker 4>and you know, in that plan language the White House said, hey, FTC,

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<v Speaker 4>stay away from investigations that might inhibit the growth of

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<v Speaker 4>AI in any way. So that leads me to believe,

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<v Speaker 4>you know, are we looking to areas like advertising as

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<v Speaker 4>a car veut from that messaging, right, are we looking

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<v Speaker 4>to different areas of tech there there might be a

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<v Speaker 4>problem that falls out of that.

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<v Speaker 6>Ambit of AI.

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<v Speaker 4>But it seems like, you know, and there is that

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<v Speaker 4>whiplash right where the White House might have one statement

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<v Speaker 4>on things and there might be a visit to the

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<v Speaker 4>White House right by certain CEOs on the other hand,

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<v Speaker 4>But then you said the FTC file pursuing an investigation

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<v Speaker 4>like this, So there certainly is a back and forth.

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<v Speaker 4>But I would say if it doesn't fall within the

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<v Speaker 4>ambit of AI, there's still is a possibility and some

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<v Speaker 4>risk that things could be subject to investigations.

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<v Speaker 2>Okay, so very much moving goalposts and a TBD kind

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<v Speaker 2>of scenario. Justin you and Jennifer Ree, who's our senior

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<v Speaker 2>litigation analysts, have also done some research on Live Nation

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<v Speaker 2>and how its dominance in events is at risk because

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<v Speaker 2>of a lawsuit. And this is a lawsuit that will

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<v Speaker 2>is scheduled to lead to an antitrust jury trial that

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<v Speaker 2>will begin I think in the first quarter.

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<v Speaker 3>Just walk us through what we'd need to know there.

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<v Speaker 4>Yeah, So alter for Jennifer on the nuts and bolt

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<v Speaker 4>of that particular case, she's been following from the start,

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<v Speaker 4>she's really been knee deep in that litigation. But what

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<v Speaker 4>I will say is that it's not just the courts

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<v Speaker 4>we're looking at here from the aspect of ticketing right

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<v Speaker 4>Really recently, we've seen legislation introduced at the federal and

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<v Speaker 4>state levels where we're looking at the secondary marketplace for

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<v Speaker 4>ticketing too, and what's happening there things like increased price

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<v Speaker 4>price transparency for consumers when they're going through that ticket

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<v Speaker 4>purchasing process, a whole host of issues there, but perhaps

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<v Speaker 4>capping the fees that are allowed on the secondary sale

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<v Speaker 4>of tickets. So there's a lot happening in that particular area.

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<v Speaker 4>You're right, there is a monopolization suit that precedes next spring,

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<v Speaker 4>and I think that's going to be a really you know,

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<v Speaker 4>bet the company kind of litigation in many ways for

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<v Speaker 4>Live Nation. But there also is this kind of political

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<v Speaker 4>risk that's out there too, really more focused, I would say,

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<v Speaker 4>on those secondary resale tickets, ticket resellers, you know what, I'm.

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<v Speaker 5>Curious, So have consumers really felt the difference yet when

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<v Speaker 5>it comes to ticketing and pricing regarding Live Nation. I mean,

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<v Speaker 5>I know they're sort of embroiled in a lot of a.

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<v Speaker 3>Lot of lawsuits.

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<v Speaker 4>Actually, sure, I'd say probably not yet, right. I think

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<v Speaker 4>we saw some activity around a class action case just

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<v Speaker 4>really recently there. But you know, the FTC's rule mandating

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<v Speaker 4>these price transparency issues for consumers when they're in that

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<v Speaker 4>kind of ticket prison purchasing process that just wanted to

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<v Speaker 4>effect a few months ago, right, So, really it's a

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<v Speaker 4>trickle out, trickle down here, a slow moving kind of

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<v Speaker 4>issue here with politics and with litigation, and of course,

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<v Speaker 4>you know, we haven't even gotten to the liability phase

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<v Speaker 4>of that Live Nation trial, much less remedies that would

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<v Speaker 4>be imposed if there were a finding of liability in

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<v Speaker 4>that case. Right, So, I think we're at the beginning

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<v Speaker 4>of a lot of activity, but certainly no real outcomes

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<v Speaker 4>are developing just yet.

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<v Speaker 2>I mean, I'm a very imperfect example of you know

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<v Speaker 2>what you see when you actually try to buy tickets,

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<v Speaker 2>But I've noticed when I do try to buy tickets

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<v Speaker 2>on secondary markets, there's a lot more text about how

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<v Speaker 2>this is. You know, every single fee included, so we're

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<v Speaker 2>not going to add anything more to your final price tag.

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<v Speaker 2>And that's something that's only really started to roll out,

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<v Speaker 2>I would see in the last couple of months.

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<v Speaker 4>Yep, you're right, and that's the FTC rule right there

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<v Speaker 4>in play right. You're seeing them with ticketing applications. We're

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<v Speaker 4>also seeing that in kind of travel travel websites as well,

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<v Speaker 4>right where you kind of get to the checkout page

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<v Speaker 4>and wait a minute, there's all these fees for things

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<v Speaker 4>like baggage that maybe you didn't know about upfront when

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<v Speaker 4>you saw the fairs. So that's kind of how those

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<v Speaker 4>are rolling out there too. And i'd say to your point,

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<v Speaker 4>that's really the impact you've had so far on the consumer.

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<v Speaker 4>More likely yet to come.

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<v Speaker 2>Stay with us. More from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 1>weekdays at ten am Eastern on applecar Play and Android

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<v Speaker 5>Lots of news in tech, Adobe's earnings beat open AI

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<v Speaker 5>closer to becoming a for profit company. Want to break

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<v Speaker 5>some of this down now with any rog Rana Bloomberg

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<v Speaker 5>Intelligence technology analysts coming to us from our Chicago bureau.

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<v Speaker 5>So a rog, let's break down Adobe first, because I

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<v Speaker 5>know it was sort of the step child of the

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<v Speaker 5>AI craze for a long time. But I think with

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<v Speaker 5>this earnings report it sort of has Wall Street rethinking.

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<v Speaker 6>That, Yeah, I know, it's still the stepchild. It's still

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<v Speaker 6>not up.

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<v Speaker 7>I mean you could see that, you know, imagine what

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<v Speaker 7>would have happened even if they would have missed the numbers.

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<v Speaker 6>So this is definitely the one that.

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<v Speaker 7>Has the biggest AI cloud in terms of being disrupted.

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<v Speaker 7>And it's going to take some multiple quarters like this

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<v Speaker 7>for people to get comfortable with the story.

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<v Speaker 6>I think last night they showed.

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<v Speaker 7>Really good numbers, really good AI adoption, but they really

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<v Speaker 7>have to do continue to do that for a long

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<v Speaker 7>period of time.

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<v Speaker 3>I think you hit it on the hit the nail

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<v Speaker 3>on the head.

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<v Speaker 2>That's going to take multiple quarters of this to convince

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<v Speaker 2>Wall Street that this is a story where Adobe has

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<v Speaker 2>figured out AI and how to monetize off of it.

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<v Speaker 2>Up until this point, and until very recently, it feels

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<v Speaker 2>like investors were souring on app software makers. Why is

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<v Speaker 2>that and how does Adobe's results start to push back

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<v Speaker 2>against that idea?

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<v Speaker 7>See there again that Halo is not going to again

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<v Speaker 7>go for multiple quarters. The concept is very simple because

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<v Speaker 7>of large language models, you can spin up a software

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<v Speaker 7>very quickly, which means if you do not, you don't

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<v Speaker 7>need to go to app software vendors. You know, whether

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<v Speaker 7>it's be salesforce, workday, or any any function that you're

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<v Speaker 7>looking at where your large language model can do for it.

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<v Speaker 7>We think it's a bit false narrative over there, but

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<v Speaker 7>it's going to take some time again for people to

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<v Speaker 7>get comfortable. We think it is not going to be

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<v Speaker 7>easy to get rid of the system of record for finance,

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<v Speaker 7>for HR for sales. People are not just going to

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<v Speaker 7>get rid of those software and just put in a

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<v Speaker 7>prompt and let you know, let somebody take care of it.

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<v Speaker 7>So but again, the software industry is declining right now.

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<v Speaker 7>That is not tied to AI. But that has to

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<v Speaker 7>do with macro spending being bad, the overall economy being

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<v Speaker 7>bad when it comes to enterprise IT spending. So I

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<v Speaker 7>think those are the two opposing factors that are happening there. Oracle,

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<v Speaker 7>I mean Adobe's results do help them a little bit,

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<v Speaker 7>but I think it's going to be multiple years before

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<v Speaker 7>we get comfortable with that.

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<v Speaker 5>And Eric, I want to switch gears and talk a

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<v Speaker 5>little open AI because we know the company is trying

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<v Speaker 5>to move closer to becoming a for profit company. We

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<v Speaker 5>know that it is, you know, facing criticism from Elon Musk,

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<v Speaker 5>who's accusing the company of defrauding investors about its commitment

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<v Speaker 5>to its charitable mission. Just tell us how this might work,

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<v Speaker 5>How might this conversion work?

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<v Speaker 7>Yeah, so again we don't have any details of what happened,

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<v Speaker 7>but the only good thing is that Microsoft and Opening

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<v Speaker 7>I have in principle agreed that they will move forward

0:10:51.760 --> 0:10:54.679
<v Speaker 7>with this. The question, you know, for us, the biggest

0:10:54.679 --> 0:10:58.560
<v Speaker 7>thing is will Microsoft still have access to open aiyes,

0:10:58.840 --> 0:11:00.560
<v Speaker 7>you know, top of the line mode models or not.

0:11:00.720 --> 0:11:01.800
<v Speaker 6>So that's the biggest thing.

0:11:02.080 --> 0:11:05.200
<v Speaker 7>And second, what kind of revenue shared they will have

0:11:05.240 --> 0:11:08.320
<v Speaker 7>with Microsoft on the inferencing side, so when people are

0:11:08.960 --> 0:11:12.240
<v Speaker 7>using more chat GPT, whether that operation will run on

0:11:12.679 --> 0:11:15.280
<v Speaker 7>Microsoft Cloud or not. So those are the things if

0:11:15.360 --> 0:11:18.560
<v Speaker 7>and we think Microsoft will be willing to give some

0:11:18.800 --> 0:11:22.160
<v Speaker 7>equity for these kinds of deals for these two factors,

0:11:22.480 --> 0:11:24.680
<v Speaker 7>and you know that would be in the best interest

0:11:24.760 --> 0:11:25.920
<v Speaker 7>of Microsoft sharedholders.

0:11:26.720 --> 0:11:28.800
<v Speaker 2>Let me ask you presently as that John had mentioned,

0:11:28.800 --> 0:11:31.320
<v Speaker 2>which is about Apple delaying the launch of its new

0:11:31.360 --> 0:11:34.880
<v Speaker 2>iPhone Air in mainland China. These are regulatory approval issues

0:11:34.880 --> 0:11:36.960
<v Speaker 2>that are holding that up. Is that on the side

0:11:37.000 --> 0:11:39.040
<v Speaker 2>of the US or on the side of China. And

0:11:39.240 --> 0:11:42.240
<v Speaker 2>how big of a knock is this for on Apple's

0:11:42.280 --> 0:11:43.079
<v Speaker 2>revenue line.

0:11:44.040 --> 0:11:46.520
<v Speaker 7>Yeah, it sounds like it's more from the you know,

0:11:46.559 --> 0:11:48.960
<v Speaker 7>the China side of it. Now, the big question is

0:11:49.360 --> 0:11:52.440
<v Speaker 7>what happens is the iPhone's going to be available, you know,

0:11:52.760 --> 0:11:56.240
<v Speaker 7>a week from now, so from September nineteenth to October

0:11:56.360 --> 0:11:58.960
<v Speaker 7>you know thirty first is you could say, a few

0:11:59.040 --> 0:12:02.160
<v Speaker 7>days of revenue recognition of the newest model that you

0:12:02.240 --> 0:12:05.360
<v Speaker 7>get in the current quarter. Most likely that gets pushed

0:12:05.400 --> 0:12:07.319
<v Speaker 7>out in the next quarter. So that's the only difference

0:12:07.320 --> 0:12:09.320
<v Speaker 7>it's going to have. I know, it's a you know

0:12:09.400 --> 0:12:12.680
<v Speaker 7>for the Chinese users who are looking forward to this phone,

0:12:12.720 --> 0:12:14.959
<v Speaker 7>they may not get it in the next ten to

0:12:15.000 --> 0:12:17.600
<v Speaker 7>fifteen days, but you know, I don't think it's going

0:12:17.640 --> 0:12:19.480
<v Speaker 7>to be longer before they'll be able to get.

0:12:19.280 --> 0:12:24.120
<v Speaker 5>That in the about forty five seconds we have left.

0:12:24.160 --> 0:12:27.440
<v Speaker 5>Just want to get your take on Microsoft teams basically

0:12:27.520 --> 0:12:30.280
<v Speaker 5>avoiding a hefty fine with the EU. Bring us up

0:12:30.280 --> 0:12:30.880
<v Speaker 5>to speed on that.

0:12:32.200 --> 0:12:34.200
<v Speaker 7>Yeah, So this has been a case that's been around

0:12:34.200 --> 0:12:36.360
<v Speaker 7>for a while, and the question is to use aggreg

0:12:36.440 --> 0:12:39.559
<v Speaker 7>disaggregate teams versus Slack. So Microsoft has to do it.

0:12:39.760 --> 0:12:44.040
<v Speaker 7>There's always a tying aspect of Microsoft products. It bundles

0:12:44.040 --> 0:12:46.360
<v Speaker 7>in these things, and competitors think, you know, that's an

0:12:46.400 --> 0:12:48.640
<v Speaker 7>unfair advantage for them, and you know they have to

0:12:48.640 --> 0:12:50.680
<v Speaker 7>do with they're frankly speaking otherwise. You know this is

0:12:50.720 --> 0:12:53.920
<v Speaker 7>a you know, the lawsuits otherwise that they will face

0:12:53.960 --> 0:12:54.600
<v Speaker 7>because of it.

0:12:55.480 --> 0:12:58.400
<v Speaker 3>Stay with us. More from Bloomberg Intelligence coming up after this.

0:13:02.160 --> 0:13:05.840
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:13:05.920 --> 0:13:09.000
<v Speaker 1>weekdays at ten am heasterne on Apple, Cocklay and Android

0:13:09.040 --> 0:13:12.320
<v Speaker 1>Auto with the Bloomberg Business App. Listen on demand wherever

0:13:12.400 --> 0:13:15.520
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0:13:16.320 --> 0:13:20.400
<v Speaker 5>I'm Alexis Kristoffers along with Scarlett Foo and Paramount sky

0:13:20.600 --> 0:13:23.400
<v Speaker 5>Dance Boy wasting no time when it comes to making

0:13:23.440 --> 0:13:26.840
<v Speaker 5>acquisitions right The Hollywood Studio taken over just last month

0:13:26.880 --> 0:13:30.880
<v Speaker 5>by the independent filmmaker David Ellison, now reportedly preparing a

0:13:30.920 --> 0:13:34.960
<v Speaker 5>bid for Warner Brothers. Discovery and Wall Street seems to

0:13:35.080 --> 0:13:38.320
<v Speaker 5>like the news because Warner Brothers up about fourteen percent

0:13:38.440 --> 0:13:41.319
<v Speaker 5>right now. We've even got Paramount sky Dance on the

0:13:41.360 --> 0:13:44.160
<v Speaker 5>plus side by nearly three percent. Let's break it down

0:13:44.200 --> 0:13:48.480
<v Speaker 5>with Geetha Ranganathan Bloomberg, intelligence analyst on US Media. He's

0:13:48.520 --> 0:13:52.400
<v Speaker 5>watching it all for us from his perch in Princeton, GI.

0:13:52.440 --> 0:13:54.800
<v Speaker 5>The great to see you. I guess Bloomberg was the

0:13:54.800 --> 0:13:57.400
<v Speaker 5>first to report this, but we should make clear no

0:13:57.559 --> 0:14:00.560
<v Speaker 5>official offer made yet. So what do we know?

0:14:02.240 --> 0:14:05.679
<v Speaker 8>Yeah, so what we know right now, alexis is that

0:14:05.720 --> 0:14:09.680
<v Speaker 8>Paramount is definitely interested in making a bid for Warner

0:14:09.679 --> 0:14:12.360
<v Speaker 8>Brothers Discovery. And what's interesting. I mean, you pointed out

0:14:12.440 --> 0:14:15.280
<v Speaker 8>the timing. That's definitely a very very critical aspect here.

0:14:15.679 --> 0:14:18.280
<v Speaker 8>The second thing that's very interesting about this offer is

0:14:18.280 --> 0:14:21.080
<v Speaker 8>that it's going to be for the entire company.

0:14:21.360 --> 0:14:21.480
<v Speaker 4>Now.

0:14:21.520 --> 0:14:23.400
<v Speaker 8>The reason I bring that up is because Warner Brothers

0:14:23.480 --> 0:14:28.360
<v Speaker 8>Discovery was actually planning to split off its different assets. So,

0:14:28.680 --> 0:14:32.160
<v Speaker 8>you know, the company owns TV networks like a CNN,

0:14:32.240 --> 0:14:35.360
<v Speaker 8>a TVs at TNT. They also own one of you know,

0:14:35.400 --> 0:14:39.800
<v Speaker 8>the biggest Hollywood movie and TV studios, and of course

0:14:39.840 --> 0:14:43.400
<v Speaker 8>they have their you know, iconic HBO Max streaming platform.

0:14:43.440 --> 0:14:46.840
<v Speaker 8>So there's a whole you know, portfolio of different assets there,

0:14:46.840 --> 0:14:49.760
<v Speaker 8>and they were planning to separate out the TV assets

0:14:49.760 --> 0:14:52.400
<v Speaker 8>which have been challenged for the past few years by

0:14:52.440 --> 0:14:55.200
<v Speaker 8>cord cutting, and separate that out from the studio and

0:14:55.240 --> 0:14:58.000
<v Speaker 8>the streaming part of the business. And so really what

0:14:58.040 --> 0:14:59.560
<v Speaker 8>we were kind of thinking was that there would be

0:14:59.600 --> 0:15:02.120
<v Speaker 8>a lot of and interest, a lot of appetite for

0:15:02.240 --> 0:15:05.160
<v Speaker 8>the studio and streaming portion of the business, just given that,

0:15:05.240 --> 0:15:07.400
<v Speaker 8>you know, those are kind of the crown jewels of

0:15:07.400 --> 0:15:10.960
<v Speaker 8>the business, if you will. But you know, having Paramount

0:15:11.040 --> 0:15:13.680
<v Speaker 8>kind of come in for the entire company is obviously

0:15:13.720 --> 0:15:17.000
<v Speaker 8>a little bit of a surprise. There's no deal or

0:15:17.120 --> 0:15:19.640
<v Speaker 8>dollar value yet, though, Alexis and.

0:15:19.920 --> 0:15:22.120
<v Speaker 5>You are saying Etha that this, if it were to happen,

0:15:22.120 --> 0:15:25.120
<v Speaker 5>would be a cash offer, like an all cash offer.

0:15:26.200 --> 0:15:28.480
<v Speaker 8>That is what has been reported. It would be a

0:15:28.520 --> 0:15:32.240
<v Speaker 8>majority cash offering for all of Warner Brothers Discovery.

0:15:32.520 --> 0:15:35.880
<v Speaker 5>So I'm wondering if if Paramount Skydance is interested in

0:15:36.040 --> 0:15:39.920
<v Speaker 5>all of Warner Brothers Discovery, what might regulators have to

0:15:39.960 --> 0:15:40.680
<v Speaker 5>say about that.

0:15:42.120 --> 0:15:45.120
<v Speaker 8>Yeah, normally it would have been a problem. I think,

0:15:45.440 --> 0:15:48.040
<v Speaker 8>you know, you do have two of the biggest studios

0:15:48.120 --> 0:15:51.240
<v Speaker 8>kind of combining it will become a top studio with

0:15:51.280 --> 0:15:54.840
<v Speaker 8>about a twenty five percent box office share, Not that

0:15:54.880 --> 0:15:59.080
<v Speaker 8>such deals haven't gone through, you know, the regulatory process before.

0:15:59.120 --> 0:16:01.760
<v Speaker 8>So if you just remember if years ago Disney bought

0:16:01.840 --> 0:16:04.400
<v Speaker 8>the Fox studio that gave them about a twenty five

0:16:04.480 --> 0:16:06.720
<v Speaker 8>twenty six percent share of the box office. So it

0:16:06.800 --> 0:16:09.280
<v Speaker 8>has been done. But I think what gives us more

0:16:09.320 --> 0:16:14.040
<v Speaker 8>confidence in the whole regulatory process here is that David

0:16:14.040 --> 0:16:16.680
<v Speaker 8>Ellison and you know, the family, the whole Sky Dance

0:16:16.800 --> 0:16:21.240
<v Speaker 8>A team just went through this whole approval process for

0:16:21.400 --> 0:16:24.560
<v Speaker 8>the Paramount merger with the Trump administration just about a

0:16:24.600 --> 0:16:27.600
<v Speaker 8>month ago, so they obviously know their way around around

0:16:27.640 --> 0:16:29.760
<v Speaker 8>the system. They know how to navigate all of the

0:16:29.760 --> 0:16:32.640
<v Speaker 8>different challenges that come with, you know, a deal of

0:16:32.720 --> 0:16:35.840
<v Speaker 8>this size. So I think that gives us plenty of confidence.

0:16:36.040 --> 0:16:37.400
<v Speaker 8>And the other thing that I would mention is that

0:16:37.400 --> 0:16:40.400
<v Speaker 8>there is no broadcast there's no combination of broadcast assets,

0:16:40.440 --> 0:16:43.880
<v Speaker 8>So combining two broadcast networks like a CBS or an

0:16:43.960 --> 0:16:46.880
<v Speaker 8>NBC that would be problematic. In this case, there is

0:16:46.960 --> 0:16:49.960
<v Speaker 8>no broadcast asset from Warner Brothers, Discovery.

0:16:49.560 --> 0:16:51.960
<v Speaker 5>Good good point, Githa. So I'm just wondering about the

0:16:52.040 --> 0:16:56.080
<v Speaker 5>synergies here bouncing off of that, and you know, would

0:16:56.160 --> 0:16:59.960
<v Speaker 5>there be a fair amount of overlap in the center

0:17:00.120 --> 0:17:03.200
<v Speaker 5>that we may see a bunch of layoffs if and

0:17:03.240 --> 0:17:04.760
<v Speaker 5>when this deal happens.

0:17:05.520 --> 0:17:07.960
<v Speaker 8>Well, that is absolutely bound to happen. So we were

0:17:08.000 --> 0:17:11.159
<v Speaker 8>actually already seeing that at both companies separately. So remember

0:17:11.640 --> 0:17:14.639
<v Speaker 8>Warner Brothers Discovery is actually a combination of Warner Brothers

0:17:14.640 --> 0:17:17.560
<v Speaker 8>and Discovery, and they had like mentioned or they had

0:17:17.560 --> 0:17:19.920
<v Speaker 8>announced a lot of synergies and a lot of cost

0:17:19.920 --> 0:17:22.280
<v Speaker 8>savings at the time that they you know, merged those

0:17:22.280 --> 0:17:24.159
<v Speaker 8>two companies. We're going to see the same thing with

0:17:24.200 --> 0:17:25.960
<v Speaker 8>Paramount and sky Dance. And now when you kind of

0:17:26.000 --> 0:17:29.359
<v Speaker 8>see this mega merger, there absolutely is going to be

0:17:29.680 --> 0:17:31.720
<v Speaker 8>a ton of layoffs just kind of given you know,

0:17:31.760 --> 0:17:35.080
<v Speaker 8>the duplicative systems in place here. You know, you're talking

0:17:35.119 --> 0:17:37.600
<v Speaker 8>about a studio business. Again, a lot of positions there

0:17:37.640 --> 0:17:41.320
<v Speaker 8>can be eliminated, you know, the streaming platforms, the TV networks.

0:17:41.359 --> 0:17:43.720
<v Speaker 8>You're going to have multiple teams kind of performing the

0:17:43.760 --> 0:17:47.480
<v Speaker 8>same functions. So, yes, we do project something like about

0:17:47.520 --> 0:17:51.520
<v Speaker 8>four or five billion dollars in potential cost savings. A

0:17:51.560 --> 0:17:54.919
<v Speaker 8>lot of those, of course would be you know, with

0:17:55.000 --> 0:17:58.120
<v Speaker 8>the elimination of jobs. So the Hollywood unions definitely would

0:17:58.160 --> 0:17:58.880
<v Speaker 8>not be happy here.

0:17:59.080 --> 0:18:01.159
<v Speaker 5>Yeah, I bet, and I just want to ask you

0:18:01.160 --> 0:18:04.560
<v Speaker 5>a little bit about the market reaction we're seeing. Again, again,

0:18:04.600 --> 0:18:07.840
<v Speaker 5>no deal has been made. This is Bloomberg reporting out

0:18:07.840 --> 0:18:10.920
<v Speaker 5>there that's actually moving these stocks today. Warner Brothers Discovery

0:18:11.000 --> 0:18:14.120
<v Speaker 5>up about fourteen percent, but we also got Paramount sky

0:18:14.240 --> 0:18:17.840
<v Speaker 5>Dance up about three percent. Usually the acquirer comes under

0:18:17.840 --> 0:18:20.040
<v Speaker 5>a little bit of pressure in the thirty seconds I have.

0:18:20.160 --> 0:18:22.040
<v Speaker 5>Why do you think we're seeing both stocks higher?

0:18:23.080 --> 0:18:25.640
<v Speaker 8>Yeah, that's a really interesting point you bring up, Alexis.

0:18:25.800 --> 0:18:28.399
<v Speaker 8>The reason we're seeing Paramount trade higher is because remember

0:18:28.440 --> 0:18:30.720
<v Speaker 8>this is a subscale streamer, so they have only about

0:18:30.760 --> 0:18:34.520
<v Speaker 8>seventy five million streaming subscribers right now. Merging with Warner

0:18:34.520 --> 0:18:37.160
<v Speaker 8>Brothers Discovery really kind of puts them on the map

0:18:37.280 --> 0:18:41.000
<v Speaker 8>along with Netflix and Disney makes them a really formidable player.

0:18:41.200 --> 0:18:42.960
<v Speaker 8>And so this is why we're kind of seeing a

0:18:42.960 --> 0:18:44.800
<v Speaker 8>lot of enthusiasm for this bid.

0:18:44.920 --> 0:18:49.600
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

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