WEBVTT - CrowdStrike Issues Sales Outlook Meeting Wall Street Views 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.840 Eastern on Apple, Corplay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.080 or watch us live on YouTube. 0:00:24.120 --> 0:00:26.200 Stay on the technology theme here, we're gonna check out 0:00:26.200 --> 0:00:30.760 the man Deep Singh, global tech research head at Bloomberg Intelligence, Mandy. 0:00:30.880 --> 0:00:31.840 Lots of news to talk about. 0:00:31.880 --> 0:00:35.639 I want to just start with CrowdStrike sales outlook kind 0:00:35.680 --> 0:00:36.920 of in line with expectations. 0:00:36.920 --> 0:00:39.800 Stock off a little bit here, just refresh our memory. 0:00:39.920 --> 0:00:42.600 What is crowd strike and how does it fit into 0:00:42.600 --> 0:00:43.400 the tech stack? 0:00:44.880 --> 0:00:47.240 Yeah, I mean they are one of the pure play 0:00:47.360 --> 0:00:53.000 cybersecurity names and clearly they have done quite well in 0:00:53.120 --> 0:00:56.080 terms of their top line growth over the last two 0:00:56.120 --> 0:00:59.440 three years. And you know, like with everything in the 0:00:59.520 --> 0:01:03.400 SaaS complex, some of these names have come under pressure 0:01:04.160 --> 0:01:10.520 because of potential competition from LLLM companies like Anthropic, and 0:01:11.440 --> 0:01:14.759 I think that's where you see a muted reaction today. 0:01:14.840 --> 0:01:19.080 But you know, they had their best new arr growth 0:01:19.920 --> 0:01:24.720 yesterday and the guidance was a little conservative, but that's 0:01:24.760 --> 0:01:27.880 what we are seeing from all the software companies that 0:01:27.920 --> 0:01:31.080 have reported results this quarter is they want to be 0:01:31.160 --> 0:01:35.000 then race for the next one. And I think for 0:01:35.080 --> 0:01:39.720 a company like CrowdStrike that's growing mid twenty percent and 0:01:41.040 --> 0:01:45.600 very high retention rate, I mean things are looking good 0:01:45.640 --> 0:01:50.160 because all these lms should potentially drive more demand for cybersecurity. 0:01:50.160 --> 0:01:54.520 If there's one area that certainly is poised to benefit 0:01:54.640 --> 0:01:58.080 from LLLM usage, it should be cybersecurity. 0:01:59.080 --> 0:02:01.760 Man Deep crowdstre has been, as you mentioned, one of 0:02:01.760 --> 0:02:07.040 the biggest beneficiaries of cybersecurity spending boom. After this earnings report, 0:02:07.200 --> 0:02:10.040 does it still look like there's still strong secular demand 0:02:10.200 --> 0:02:12.400 or are we starting to see signs that those budgets 0:02:12.440 --> 0:02:13.880 are becoming a little bit more selective? 0:02:16.080 --> 0:02:21.320 Not in the cybersecurity complex. So if anything, you know, 0:02:21.440 --> 0:02:24.720 if you have more data now, which is the case 0:02:24.800 --> 0:02:28.959 with llms, now, you know you are generating a lot 0:02:29.040 --> 0:02:33.120 more data, you are using it for training and so 0:02:33.360 --> 0:02:37.119 all that needs to be secured and prompt injection attacks 0:02:37.200 --> 0:02:40.720 is a new type of attack that you have to secure. Again, 0:02:40.880 --> 0:02:45.560 So from my perspective, you know, and based on our conversations, 0:02:45.600 --> 0:02:49.280 like this is the last thing any enterprise would want 0:02:49.320 --> 0:02:53.440 to cut. Yes, they are shifting budgets, you know, allocating 0:02:53.520 --> 0:02:57.359 to AI more compared to the traditional areas. But when 0:02:57.400 --> 0:03:00.880 it comes to cybersecurity, I mean, the risks continue to 0:03:00.919 --> 0:03:04.080 get bigger and bigger in terms of data loss or 0:03:04.680 --> 0:03:07.520 you know, getting hacked, and so from that perspective, you're 0:03:08.000 --> 0:03:12.000 unlikely to cut back on, you know, especially a primary 0:03:12.000 --> 0:03:15.640 cybersecurity product, which I mean you know a lot of 0:03:15.680 --> 0:03:18.840 cases there are point products, but CrowdStrike is more of 0:03:18.880 --> 0:03:22.960 a platform with multiple sort of threat vectors that they 0:03:23.000 --> 0:03:26.320 protect against. So from that perspective also they are quite insulated. 0:03:26.680 --> 0:03:28.720 All right, folks, this is how it works at Bloomberg. 0:03:29.000 --> 0:03:31.240 Usually Man Deep he comes into our studio when we 0:03:31.280 --> 0:03:33.280 want to talk to him. He's not in our studio today, 0:03:33.280 --> 0:03:35.840 which got me thinking, where is Man Deep seeing today? 0:03:36.040 --> 0:03:38.280 And at Bloomberg we can tell where everybody is at 0:03:38.320 --> 0:03:40.120 all times. You have to put where you are and 0:03:40.120 --> 0:03:42.800 who you're meeting with. It's kind of the full disclosure 0:03:42.840 --> 0:03:44.560 thing they do a Bloomberg, so I know where he is. 0:03:44.760 --> 0:03:48.520 He's downtown at the Bloomberg invest conference. Anytime Bloomberg gets 0:03:48.680 --> 0:03:51.960 its clients together, they all just want to talk to 0:03:52.000 --> 0:03:53.920 Man Deep. They want to hear man Deep, talk about 0:03:53.920 --> 0:03:56.120 what's going on in tech and most notably AI. So 0:03:56.160 --> 0:03:58.960 I'm going to go right there, Mandeep, what's the conversation 0:03:59.200 --> 0:04:01.120 today about AI? 0:04:01.480 --> 0:04:04.119 It went from just build, build, build build, Now. 0:04:03.920 --> 0:04:05.720 People are starting to think about what are some of 0:04:05.760 --> 0:04:09.160 the ripple effects, third and second and third quarter effects? 0:04:09.200 --> 0:04:09.360 Here? 0:04:09.400 --> 0:04:13.640 What's the investor view of AI these days? Yeah? 0:04:13.680 --> 0:04:16.920 I mean at this conference, over the last couple of days, 0:04:17.160 --> 0:04:20.000 the focus has been on the private markets. And as 0:04:20.040 --> 0:04:23.160 you know, you know, private equity owns a lot of 0:04:23.200 --> 0:04:27.719 these software traditional software companies that generate very high free 0:04:27.720 --> 0:04:30.800 cash flow. But everyone is looking at, you know, what 0:04:30.920 --> 0:04:33.680 are these lms going to disrupt and what does that 0:04:33.800 --> 0:04:36.120 mean you know, to the free cash flow of some 0:04:36.200 --> 0:04:38.880 of these companies, And so the private markets have been 0:04:38.920 --> 0:04:42.200 a big focus. I would say over the last two days. 0:04:43.080 --> 0:04:46.599 Man Deep, there's been this trade, the halo trade, focusing 0:04:46.680 --> 0:04:49.680 on tangible assets when it comes to deciphering you know, 0:04:49.720 --> 0:04:52.000 who the AI winners and loss are going to be. 0:04:52.279 --> 0:04:55.920 I spoke recently to ubs, a global wealth CIO, and 0:04:55.960 --> 0:04:58.880 she said that she's focusing on the builders and not 0:04:58.960 --> 0:05:01.640 the coders. How are you thinking about this dynamic between 0:05:02.000 --> 0:05:05.200 the companies with tangible assets versus intellectual property. 0:05:06.920 --> 0:05:10.719 Yeah, I mean, look at all the hyperscalers, right, they 0:05:11.040 --> 0:05:13.120 used to have most of them used to have an 0:05:13.160 --> 0:05:16.160 asset light business model. Now we are talking about, you know, 0:05:16.200 --> 0:05:19.479 seven hundred billion dollars in aggregate capex for this year 0:05:19.800 --> 0:05:23.360 just from the hyperscalers, and this is likely a multi 0:05:23.480 --> 0:05:27.359 year cycle. So from that perspective, I mean, we know 0:05:27.640 --> 0:05:32.800 AI is compute intensive and you need a lot more 0:05:33.240 --> 0:05:38.200 you know, infrastructure to do AI, and so from that perspective, 0:05:38.320 --> 0:05:42.159 things certainly are shifting, you know, from intellectual property to 0:05:42.360 --> 0:05:45.960 owning infrastructure, and that's the trend that is likely to continue. 0:05:46.279 --> 0:05:49.440 Stay with us. More from Bloomberg Intelligence coming up after this. 0:05:53.279 --> 0:05:56.960 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:05:57.080 --> 0:06:00.000 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:00.560 --> 0:06:03.599 with the Bloomberg Business App. Listen on demand wherever you 0:06:03.640 --> 0:06:06.640 get your podcasts, or watch us live on YouTube. 0:06:07.600 --> 0:06:11.280 AI story just yet another angle is how AI is 0:06:11.400 --> 0:06:14.120 being deployed by the Department of Defense and other parts 0:06:14.160 --> 0:06:14.920 of the US government. 0:06:14.960 --> 0:06:16.560 Particularly about the Defense Department. 0:06:17.160 --> 0:06:21.719 We had anthropic clashing with the Pentagon about how their 0:06:21.760 --> 0:06:24.120 AI could be used. Then we had to open ai 0:06:24.760 --> 0:06:27.920 chief executive officer Sam Altman says, we'll come in and we'll. 0:06:27.680 --> 0:06:29.480 Do some of the work for you. And there's a 0:06:29.520 --> 0:06:29.800 lot of. 0:06:29.760 --> 0:06:32.560 Uncertainly about how AI is going to be used and 0:06:32.600 --> 0:06:36.200 who will actually provide it for various government entities, including 0:06:36.240 --> 0:06:37.760 most notably the Department of Defense. 0:06:38.040 --> 0:06:39.279 Vlad Richter joins us here. 0:06:39.320 --> 0:06:43.520 He's the CEO of the cybersecurity company Fencer vladd how 0:06:43.520 --> 0:06:46.960 do you think this is playing out AI the Department 0:06:47.000 --> 0:06:50.120 of Defense specifically, We've had some uncertainty here. 0:06:50.120 --> 0:06:50.840 What do you make of it? 0:06:52.560 --> 0:06:54.840 Yeah, Look, I think there's clearly some sort of misunderstanding 0:06:54.839 --> 0:07:00.960 internally between between the departments, the Pentagon, and Anthropic, seemingly 0:07:01.000 --> 0:07:04.240 because from what we're reading over the weekend, open ai 0:07:04.400 --> 0:07:09.160 is signed an agreement according to Sam Albyn, with the Pentagon. 0:07:09.160 --> 0:07:11.200 They kind of stated the lines that I think we 0:07:11.240 --> 0:07:13.520 as citizens would very much care about, which is we 0:07:13.560 --> 0:07:16.000 don't want to see MAS surveillance and we definitely don't 0:07:16.240 --> 0:07:18.920 can't even imagine a situation where there will be autonomous 0:07:19.280 --> 0:07:21.320 weapons going through there. But I think this also speaks 0:07:21.360 --> 0:07:25.200 to part of the challenge within these AI companies and 0:07:25.280 --> 0:07:27.520 specific in the models, is that you know, a lot 0:07:27.520 --> 0:07:31.520 of the data that they're trained on is effectively the same, 0:07:31.560 --> 0:07:33.680 and so over time, you know, the work that they're 0:07:33.720 --> 0:07:36.160 doing becomes kind of commoditized and there's much of a mode, 0:07:36.320 --> 0:07:39.760 and so the government will inevitably, in my opinion, turn 0:07:39.840 --> 0:07:41.960 around and start to work with the vendors that will 0:07:41.960 --> 0:07:44.240 play ball with them and not try to strong arm 0:07:44.240 --> 0:07:45.480 them in any single position. 0:07:46.560 --> 0:07:50.800 Opportunistic and sloppy was the language that Sam Altman used. 0:07:50.800 --> 0:07:53.400 Pretty strong language there. What does that tell us about 0:07:53.640 --> 0:07:57.120 the rushed by AI labs to secure government contracts And 0:07:57.120 --> 0:08:00.119 how important of a customer is the Pentagon when a 0:08:00.200 --> 0:08:01.240 to the AI industry? 0:08:02.600 --> 0:08:05.520 Yeah, great question. So I think from a perspective of 0:08:05.560 --> 0:08:10.440 how important the Pentagon is or the government specifically to 0:08:10.480 --> 0:08:13.120 these AI companies as a customer, it's actually not that much. 0:08:13.120 --> 0:08:14.720 I mean, if you look at it from the perspective 0:08:14.720 --> 0:08:17.200 of Anthropic. You know, was reported that the deal with 0:08:17.240 --> 0:08:20.160 the Pentagon was around two hundred million dollars a year, 0:08:20.280 --> 0:08:23.040 and I think, as reported by Bloomberg today, Anthropic went 0:08:23.080 --> 0:08:26.440 from fourteen billion in run rate a few weeks ago 0:08:26.520 --> 0:08:29.720 to nearly nineteen billion dollars today. It's one percent of 0:08:29.760 --> 0:08:32.760 their revenue right, and I think for the same probably 0:08:32.760 --> 0:08:34.720 similar to open Ai and some of these other ones, 0:08:34.720 --> 0:08:37.440 that it's meaningful revenue, but as a percentage of the 0:08:37.480 --> 0:08:41.360 overall base, it's not significant. And instead what you end 0:08:41.440 --> 0:08:44.360 up what we need as citizens is that the government 0:08:44.400 --> 0:08:46.839 actually chooses and it's more important for them. I think 0:08:46.880 --> 0:08:48.880 in the case of open Ai, with the contract they 0:08:48.920 --> 0:08:51.199 just signed, it was a little bit too fast, like 0:08:51.760 --> 0:08:55.040 Sam said, and the communication was was not great. I mean, 0:08:55.040 --> 0:08:58.080 there was a handful of departures, including some relatively senior 0:08:58.120 --> 0:09:01.679 people from open Ai after the weekend that decided to 0:09:01.679 --> 0:09:04.439 go to Anthropic. And I'm not sure how much people 0:09:04.480 --> 0:09:08.200 know about this historically, but the Anthropic founding team was 0:09:08.280 --> 0:09:10.600 actually all X for the most part, all X open 0:09:10.640 --> 0:09:13.880 Ai employees that disagreed back in twenty twenty one with 0:09:13.880 --> 0:09:17.200 some direction that Open Eye was heading to and decided 0:09:17.200 --> 0:09:19.880 to leave and start Anthropopic themselves. And I think today 0:09:20.160 --> 0:09:23.000 there are roughly seventy to eighty employees at Anthropopic that 0:09:23.040 --> 0:09:25.600 are ex open Ai, but at open Ai, I think 0:09:25.600 --> 0:09:27.240 they are only about ten or twelve employees that are 0:09:27.360 --> 0:09:29.560 ex Anthropics. You can see kind of where the movement's 0:09:29.559 --> 0:09:32.400 been going between the sort of the intelligent folks there. 0:09:32.280 --> 0:09:35.360 Do have any idea to what extent in the Pentagon 0:09:35.400 --> 0:09:38.480 and the Department of Defense that AI is being utilized. 0:09:38.520 --> 0:09:41.839 Are they cutting edge because they have the resources, or 0:09:41.840 --> 0:09:45.479 are they kind of an old government plotting institution. 0:09:45.800 --> 0:09:46.880 How are they employing AI. 0:09:48.400 --> 0:09:50.120 There's a great article and I think it was actually 0:09:50.600 --> 0:09:53.439 from you guys earlier this morning that popped out that 0:09:53.559 --> 0:09:56.520 kind of described a little bit of that was revealed 0:09:56.520 --> 0:09:59.000 by some source of how it was being used and 0:09:59.240 --> 0:10:03.440 in the understanding, what was reported was that the Pentagon 0:10:03.480 --> 0:10:05.080 had decided that there were going to be roughly a 0:10:05.080 --> 0:10:07.199 thousand places that they were going to hit initially a 0:10:07.200 --> 0:10:10.439 thousand sites that they were going to initially inside of Iran. 0:10:11.840 --> 0:10:14.280 Previous versions of this you can't hit all a thousand 0:10:14.320 --> 0:10:16.320 of once, and so people would sit down. They were 0:10:16.360 --> 0:10:19.120 prioritize them based on a handful of different factors, and 0:10:19.160 --> 0:10:21.160 it would probably take a couple of weeks to get 0:10:21.160 --> 0:10:24.360 this done, if not longer. Right, in this case, what 0:10:24.400 --> 0:10:27.559 was understood was that they were using Palenteer's Maven product, 0:10:27.760 --> 0:10:31.280 which underneath the hood was also being powered by Claude 0:10:31.400 --> 0:10:33.960 from Anthropic and they basically fed in a bunch of 0:10:34.280 --> 0:10:38.240 data that palunteers access from the government and said, okay, 0:10:38.280 --> 0:10:40.800 prioritize this for us based on what we need to 0:10:40.800 --> 0:10:43.679 do and the different sort of movements right, step one, 0:10:43.760 --> 0:10:45.719 step two, step three, whatever it may be. I think 0:10:45.760 --> 0:10:47.480 at that point, just like if any of us were 0:10:47.559 --> 0:10:50.240 using AI to prioritize some other things for us, it 0:10:50.400 --> 0:10:52.719 pulled out a spreadsheet and said, listen, this is I'm 0:10:52.720 --> 0:10:55.880 paraphrasing here, assuming this is what you should be doing, 0:10:56.440 --> 0:10:59.000 and I imagine the powers that be sat down took 0:10:59.040 --> 0:11:00.720 a look at it and said, is this really what 0:11:00.760 --> 0:11:01.960 we want to be doing? Do we want to hit 0:11:01.960 --> 0:11:04.160 these first hunter or not? But at a minimum, you're 0:11:04.160 --> 0:11:06.080 getting that done in forty five minutes, right, This is 0:11:06.120 --> 0:11:08.720 not a multi week endeavor. It just kind of gets 0:11:08.720 --> 0:11:10.360 you a little bit faster there. It might only be 0:11:10.440 --> 0:11:12.760 ninety percent correct, but humans will decide the rest of 0:11:12.760 --> 0:11:13.160 it from there. 0:11:14.000 --> 0:11:17.920 Glad we've seen AI leaders call for stricter regulation while 0:11:17.960 --> 0:11:22.080 simultaneously pursuing a defense contracts. Is there a sense that 0:11:22.120 --> 0:11:26.080 these deals are happening faster than the industry can establish 0:11:26.160 --> 0:11:28.239 the right ethical guardrails? 0:11:29.920 --> 0:11:33.920 Yeah? So, I you know, depends on the day. Sometimes 0:11:34.120 --> 0:11:36.000 can go back and forth. What I think, what I 0:11:36.000 --> 0:11:37.880 would tell you is that it's not even sometimes so 0:11:38.000 --> 0:11:40.560 much as the guardrails from the industry, but the guardrails 0:11:40.559 --> 0:11:43.760 from the government. Right, there are some significant points that 0:11:44.559 --> 0:11:48.040 I agree very much with Dario, the CEO at Dariamidad 0:11:48.480 --> 0:11:50.959 Anthropic on this, which is the government does need to 0:11:50.960 --> 0:11:54.200 provide some guardrails for us on what is appropriate, what 0:11:54.320 --> 0:11:56.520 is not appropriate, How do we protect you as citizens? 0:11:56.880 --> 0:11:59.560 At what point in time does the Pentagon decide to 0:11:59.679 --> 0:12:01.640 overset step some of these boundaries and if they're allowed to. 0:12:02.480 --> 0:12:04.480 But I think these things are moving too quickly at 0:12:04.520 --> 0:12:07.559 this point, right. I mean, these models come out every 0:12:07.640 --> 0:12:09.280 you know, a new version of a model comes out 0:12:09.280 --> 0:12:12.200 every few months from one of these organizations, and it 0:12:12.280 --> 0:12:15.400 beats the previous one by ten, fifteen, twenty thirty percent, 0:12:15.720 --> 0:12:17.400 and all of a sudden, it unlocks things that we 0:12:17.440 --> 0:12:20.760 didn't think was possible. And you hear these comments that 0:12:21.040 --> 0:12:24.559 I think Darius said this earlier earlier and earlier this week, 0:12:24.600 --> 0:12:26.480 where he said that he believes that there's going to 0:12:26.480 --> 0:12:30.160 be exponential growth later this year. And I you know, 0:12:30.440 --> 0:12:32.760 for a company like ours, you know, we went from 0:12:32.920 --> 0:12:35.080 five percent of our code being written by Ai year 0:12:35.120 --> 0:12:38.800 ago to north of sixty percent. Today, you start to 0:12:38.840 --> 0:12:42.040 struggle to imagine what exponential looks like by the end 0:12:42.080 --> 0:12:44.280 of the year, and so I think it's just tough 0:12:44.280 --> 0:12:45.240 to keep up with these things. 0:12:46.160 --> 0:12:49.320 Stay with us. More from Bloomberg Intelligence coming up after this. 0:12:53.200 --> 0:12:56.920 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:12:57.000 --> 0:13:00.000 weekdays at ten am Eastern on Apple, Cocklay, and Android 0:13:00.480 --> 0:13:03.560 with the Bloomberg Business app. Listen on demand wherever you 0:13:03.600 --> 0:13:06.920 get your podcasts, or watch us live on YouTube. 0:13:07.280 --> 0:13:10.520 Paramount's guidance acquisition of Warner Brothers Discovery, we'll trigger a 0:13:10.679 --> 0:13:13.560 media reranking and strategic sector reset. 0:13:13.600 --> 0:13:15.280 Our guests says, we expect. 0:13:14.960 --> 0:13:20.959 The industry to consolidate around three dominant players Disney, Paramount, Netflix, 0:13:21.120 --> 0:13:24.840 leaving comcasts subscale and making further m and a likely 0:13:24.880 --> 0:13:27.679 Keitha Ranganath and she is the media als or Bloomberg Intelligence, 0:13:28.400 --> 0:13:31.200 Brian Robertson and the gang down there in Philadelphia probably 0:13:31.200 --> 0:13:32.800 not gonna be happy to read this, Keitha, what do 0:13:32.840 --> 0:13:35.600 you think comcasts will do in this. 0:13:35.520 --> 0:13:37.120 New world of Paramount and Warner Brothers. 0:13:38.920 --> 0:13:41.440 They absolutely need to do something, Paul, I mean that 0:13:41.520 --> 0:13:44.080 has been the whole thinking. We know that they are 0:13:44.120 --> 0:13:47.400 ready to do something because last year when we had 0:13:47.440 --> 0:13:50.800 this whole Warner Brothers Discovery auction kicked off, we know 0:13:50.880 --> 0:13:53.319 that Comcast would actually kicked the tires there. They had 0:13:53.320 --> 0:13:56.840 a proposed a merger of NBC Universal, which is their 0:13:56.880 --> 0:13:59.959 media division, along with Warner Brothers Discovery. But of course, 0:14:00.160 --> 0:14:03.120 because it was a major restock deal as opposed to 0:14:03.120 --> 0:14:05.920 a cash deal, it was you know, obviously the Warner 0:14:05.920 --> 0:14:08.160 Brothers Discovery team didn't go ahead with it, So they 0:14:08.240 --> 0:14:10.120 know that something needs to be done. But at the 0:14:10.160 --> 0:14:12.920 same time, I think Brian Roberts and the team have 0:14:13.040 --> 0:14:18.280 been somewhat shy to you know, spin out NBC, But 0:14:18.360 --> 0:14:22.320 I think it's it's some kind of strategic action is 0:14:22.360 --> 0:14:24.240 absolutely imperative at this point. 0:14:24.320 --> 0:14:26.000 Paul Keitha. 0:14:26.120 --> 0:14:28.240 Paul and I were just talking about the language in 0:14:28.280 --> 0:14:32.320 your note, a media re ranking and a strategic sector reset. 0:14:32.360 --> 0:14:34.600 That's going to rattle a lot of folks at Comcast. 0:14:34.800 --> 0:14:36.520 Can you talk to us a little bit more about 0:14:36.560 --> 0:14:37.880 what exactly that means? 0:14:39.840 --> 0:14:41.040 Yeah, Alex, absolutely so. 0:14:41.440 --> 0:14:45.320 If in fact the Warner Brothers Netflix transaction had gone through, 0:14:46.040 --> 0:14:49.440 that would have left Paramount without a dance partner so 0:14:49.520 --> 0:14:51.240 to speak, right, and they were they were they were 0:14:51.280 --> 0:14:55.520 already considered a subscale player. They would have absolutely needed another, 0:14:56.120 --> 0:14:58.080 you know kind of deal, and and majority of the 0:14:58.120 --> 0:15:02.440 thinking was that, yes, they might then approach Comcast and 0:15:02.520 --> 0:15:05.880 look to kind of bolster up their whole media presence. Now, 0:15:05.920 --> 0:15:10.400 with the Paramount and Warner Brothers deal going through, you 0:15:10.560 --> 0:15:13.720 have you know, obviously the media re ranking. You have 0:15:13.800 --> 0:15:15.760 the three, the big what we call the Big Three. 0:15:15.880 --> 0:15:18.000 So you have Disney there with almost one hundred billion 0:15:18.000 --> 0:15:21.920 in revenue, Paramount and Warner Brothers Discovery will bring in 0:15:22.000 --> 0:15:24.680 about seventy billion, and then you have Netflix with about 0:15:24.720 --> 0:15:28.360 fifty to fifty five billion. That really leaves now Comcast 0:15:28.440 --> 0:15:30.280 as somewhat of a subscale player. So they, you know, 0:15:30.320 --> 0:15:32.560 this is the whole thinking. They need to do something, 0:15:32.600 --> 0:15:33.760 they need to do it quickly. 0:15:34.920 --> 0:15:37.160 You know. It's somewhat of a unique. 0:15:36.800 --> 0:15:40.800 Play Comcast because they have both distribution and content assets. 0:15:40.800 --> 0:15:44.200 So they are the biggest broadband provider right now in 0:15:44.200 --> 0:15:48.240 the United States with over thirty million households. The problem 0:15:48.280 --> 0:15:50.440 for them is their broadband business has been under a 0:15:50.480 --> 0:15:53.400 lot of pressure, so that has kind of taken the spotlight. 0:15:53.480 --> 0:15:57.960 Now to the media assets and media assets actually for them. Unfortunately, 0:15:58.640 --> 0:16:00.360 there's a lot of focus and it's it's a lot 0:16:00.360 --> 0:16:03.320 of positive focus because we know that Netflix was willing 0:16:03.360 --> 0:16:06.320 to pay a twenty five times multiple for the Warner 0:16:06.320 --> 0:16:08.920 Brothers studio, so you just kind of applied that multiple 0:16:08.920 --> 0:16:11.640 to the Universal studio and they have had so many hits, 0:16:11.640 --> 0:16:14.160 you know, whether you're thinking about the Minions or Oppenheimer 0:16:14.240 --> 0:16:18.280 or Jurassic Park, Jurassic World. I mean, that's a studio 0:16:18.320 --> 0:16:21.200 that delawarees consistently, so you know, you just slap that 0:16:21.280 --> 0:16:25.360 multiple onto you know, the the NBC studio that should 0:16:25.400 --> 0:16:27.800 be worth at least thirty billion, and then they have 0:16:27.920 --> 0:16:30.200 the theme parks, and the theme parks are really growing 0:16:30.240 --> 0:16:31.640 at a nice space for them. 0:16:32.160 --> 0:16:33.680 We did some analysis. 0:16:33.760 --> 0:16:36.240 We said that the theme parks for NBC should be 0:16:36.240 --> 0:16:37.360 worth at least forty billion. 0:16:37.480 --> 0:16:39.840 So you have an asset here which is. 0:16:39.920 --> 0:16:43.400 Really kind of undervalued under the Comcast umbrella. So they 0:16:43.400 --> 0:16:45.760 need to do something and they need to do it quickly. 0:16:46.200 --> 0:16:46.480 KEITHA. 0:16:46.520 --> 0:16:50.040 I've always thought two of the key advantages for Comcasts 0:16:50.080 --> 0:16:51.760 are won their management team might have been a big 0:16:51.760 --> 0:16:53.440 fan of Brian Roberts and his management team for a 0:16:53.480 --> 0:16:53.800 long time. 0:16:53.800 --> 0:16:55.400 And the second thing is their balance sheet. They've got 0:16:55.400 --> 0:16:56.520 a very strong balance. 0:16:56.280 --> 0:16:59.280 Sheet, you know, but there's not a lot out there 0:16:59.320 --> 0:17:00.160 for them to buy. 0:17:00.000 --> 0:17:02.080 Why what do you think they should do? 0:17:03.920 --> 0:17:05.880 I think the first thing that they should do, Paul, 0:17:06.040 --> 0:17:10.199 is spin out NBC. So NBC under the whole Comcast, 0:17:10.440 --> 0:17:12.720 you know, family thing is is just not working out. 0:17:15.400 --> 0:17:17.480 I think the ultimate route will be for them to 0:17:17.480 --> 0:17:20.360 spin out NBC maybe, you know, kind of become. 0:17:20.119 --> 0:17:21.440 This this roll up vehicle. 0:17:21.520 --> 0:17:24.359 Maybe they combined with some other assets some of the 0:17:24.400 --> 0:17:26.960 smaller players out there, could be an AMC Networks, could 0:17:26.960 --> 0:17:29.439 be a lions Gate. Of course, nothing is necessarily going 0:17:29.520 --> 0:17:33.359 to be transformative, but you know, at least, you know, 0:17:33.400 --> 0:17:36.360 maybe once they're spun out, maybe they become an interesting 0:17:36.359 --> 0:17:37.280 target for Netflix. 0:17:37.320 --> 0:17:37.920 I mean, who knows. 0:17:37.960 --> 0:17:39.920 Netflix has already kind of gone this whole m and 0:17:40.000 --> 0:17:42.600 a route maybe Comcasts becomes interesting to them. 0:17:42.960 --> 0:17:45.840 You know, I see Fox out there and there. I 0:17:45.840 --> 0:17:49.480 would call them a subscale player too. But boy, they're 0:17:49.520 --> 0:17:51.639 doing fine. It seems like they've got i mean, they're 0:17:51.760 --> 0:17:54.760 broadcast and their whole audience. They've got that editorial thing down. 0:17:54.800 --> 0:17:57.159 They know who their audience is. What do you think 0:17:57.200 --> 0:17:57.560 they do? 0:17:59.440 --> 0:18:01.639 Yeah, so the the endgame for them is also a 0:18:01.680 --> 0:18:04.240 little bit unclear, Appaul. I mean, up until now, I 0:18:04.240 --> 0:18:08.399 think Fox has made all of the right decisions, you know, 0:18:08.480 --> 0:18:11.399 whether it has been to get rid of some of 0:18:11.440 --> 0:18:14.679 the you know, challenged cable TV networks, the studio with 0:18:14.720 --> 0:18:17.920 the whole Disney deal in twenty seventeen, and really kind 0:18:17.920 --> 0:18:21.679 of doubled down on live sports and news. The thing is, 0:18:21.720 --> 0:18:23.560 the one big thing that we're all kind of looking 0:18:23.600 --> 0:18:26.480 at this year is going to be the NFL renegotiations, 0:18:26.480 --> 0:18:28.800 and that's going to have some serious implications for all 0:18:28.840 --> 0:18:31.760 of these companies, whether it's Comcast with you know, NBC 0:18:31.880 --> 0:18:34.919 exposure and Fox. Fox is the most heavily exposed to 0:18:35.080 --> 0:18:38.119 NFL programming and they're going to have to pay up 0:18:38.320 --> 0:18:40.119 and so, you know, at that point, I think that 0:18:40.200 --> 0:18:41.840 there is going to be some kind of reckoning for 0:18:41.880 --> 0:18:42.920 all of these media companies. 0:18:45.040 --> 0:18:47.840 Stay with us more from Bloomberg Intelligence coming up there 0:18:47.880 --> 0:18:48.119 for this. 0:18:51.200 --> 0:18:54.920 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:18:55.000 --> 0:18:57.679 weekdays at ten am. He's done on Apple, Cocklay, and 0:18:57.680 --> 0:19:00.959 Android Auto with the Bloomberg Business app. Listen on demand 0:19:01.000 --> 0:19:04.560 wherever you get your podcasts or watch us live on YouTube. 0:19:05.320 --> 0:19:07.199 There's a time of the earning cycle, the end of 0:19:07.200 --> 0:19:08.560 the earning cycle, where we get to hear from a 0:19:08.560 --> 0:19:09.560 lot of these retailers. 0:19:09.600 --> 0:19:10.439 Today's no different. 0:19:11.160 --> 0:19:13.480 Bath and body Works reporting some numbers here, So let's 0:19:13.480 --> 0:19:16.399 break it down. Lindsay, Dutch Consumer Hardlines, senior analysts for 0:19:16.440 --> 0:19:18.000 Bloomberg Intelligence Joints is here. 0:19:18.280 --> 0:19:21.000 So Bath and Bodyworks I know they're doing it. 0:19:21.000 --> 0:19:23.879 They're in the midst of a turnaround here, lindsay, what 0:19:23.880 --> 0:19:25.080 did you learn on the earnings release? 0:19:26.080 --> 0:19:29.439 Hi, Paul, thanks for having me. Yes, Bath and body 0:19:29.480 --> 0:19:34.480 Works is aggressively pursuing a turnaround strategy. The fourth quarter, 0:19:34.800 --> 0:19:38.160 we saw sales and earnings come in better than expected, 0:19:38.200 --> 0:19:41.960 but still down year over year, and then their outlook 0:19:42.000 --> 0:19:44.920 for twenty six wasn't super surprising, kind of in line 0:19:44.920 --> 0:19:47.880 with what they were expecting three months ago. 0:19:48.200 --> 0:19:48.399 You know. 0:19:48.440 --> 0:19:51.200 Growth is kind of off the table as they pursue 0:19:52.240 --> 0:19:55.760 a strategy that's going to attract younger customers, a broader 0:19:55.800 --> 0:19:58.960 customer base. They're moving a little bit into wholesale, They're 0:19:59.000 --> 0:20:02.840 pulling on lots of different levers to really become back 0:20:02.880 --> 0:20:05.000 to the brand that they have been historically. 0:20:06.000 --> 0:20:08.840 Lindsay, promotions are a big part of Bath and body 0:20:08.840 --> 0:20:13.680 Works as strategy. Are they driving traffic successfully or are 0:20:13.680 --> 0:20:16.919 they assigned that demand is a little bit more shaky. 0:20:17.520 --> 0:20:18.439