Speaker 1: We're from Mahard where Innovation of Money and power Collie
Speaker 1: in Silicon Vallet NBN. This is Bloomberg Technology with Caroline
Speaker 1: Hyde and Ed Ludlow.
Speaker 2: Live from New York and San Francisco. This is Bloomberg
Speaker 2: Technology coming up. Disney shares pop on profit promises out
Speaker 2: to twenty twenty seven.
Speaker 3: We sit down with the company's CFO.
Speaker 4: Plus, Meta gets its first ever penalty for EU antitrust
Speaker 4: violations related to Facebook marketplace service.
Speaker 2: And Thrive Capital as in talks to acquire a one
Speaker 2: billion dollar stake in analytics software maker Data Bricks' value
Speaker 2: the startup fifty five billion dollars.
Speaker 3: First, we get back to the public markets and what
Speaker 3: are you looking at?
Speaker 4: Yeah, straight to our top story, and that is Disney
Speaker 4: shares up almost nine percent session highs but on track
Speaker 4: for this biggest jump since February of this year. A
Speaker 4: strong performance in the court are gone. They beat analysts
Speaker 4: expectations and then told us that for the next three
Speaker 4: years they will see earning's growth. Disney does not do
Speaker 4: forecasts like that. It's strength in the streaming business. Movies
Speaker 4: are getting better, but there are some areas of weakness.
Speaker 4: Early today, Caroline and I spoke to Disney CFO Hugh Johnston,
Speaker 4: and we discussed all of those parts of the House
Speaker 4: of Mouse.
Speaker 5: Isn't to this.
Speaker 6: If you look at the major investments that we've been
Speaker 6: making in the business over the last couple of years,
Speaker 6: number one is in the streaming business, and number two
Speaker 6: obviously is in the experiences business, so parks and cruises
Speaker 6: and the like. And as you've seen in the number
Speaker 6: is through twenty twenty four, you know, it really marked
Speaker 6: a pivot for the Walt Disney Company. The creativity is
Speaker 6: certainly very much back back to back billion dollar movies
Speaker 6: and a terrific slid for twenty five in addition to
Speaker 6: that fantastic workout of the TV studios with sixty Emmys,
Speaker 6: and that obviously feeds the flywheel of the Walt Disney Company,
Speaker 6: whether it's streaming or whether it's experiences including parks, consumer products,
Speaker 6: and of course the cruise ships.
Speaker 5: So given those.
Speaker 6: Investments that we've been making, and given that we now
Speaker 6: have good financial visibility into the returns on those investments,
Speaker 6: we felt like it was important to inform investors not
Speaker 6: just on how we were investing, but what they should
Speaker 6: expect in terms of the returns on those and with
Speaker 6: that visibility, we're confident that we can actually deliver.
Speaker 5: Here across the media sect.
Speaker 4: Your industry is getting better at being profitable in streaming,
Speaker 4: so that's where I want to go. Is this something
Speaker 4: that is kind of industry wide macro level factor is
Speaker 4: supporting you, or is this something that you've done in
Speaker 4: the last year specifically that's kind of cracked the formula
Speaker 4: for streaming at Disney.
Speaker 5: I think it's a combination of both.
Speaker 6: Streaming is certainly very much scale business, so as everyone
Speaker 6: gains more scale, obviously that that helps the industry overall.
Speaker 6: For us in particular, I think the combination of the
Speaker 6: terrific ip that we're putting into the service, the product
Speaker 6: improvements that we're making, and that we are intending to
Speaker 6: make with the new leader that we have on product,
Speaker 6: Adam Smith, who came over to us from YouTube, we
Speaker 6: see obviously a terrific future in terms of where streaming
Speaker 6: is going. You know, it's important to think about what
Speaker 6: do additional subscribers mean in terms of the streaming business.
Speaker 6: In many ways, streaming has the characteristics of a software business,
Speaker 6: where the incremental value of an additional subscriber is very
Speaker 6: high because the incremental cost to that incremental subscriber are
Speaker 6: very low.
Speaker 1: So we feel.
Speaker 6: Optimistic about as the industry is coming together, we're going
Speaker 6: to continue to both add subscribers and in addition to that,
Speaker 6: because of the value we're delivering with the great ip
Speaker 6: and the great product that we're putting into this service,
Speaker 6: we'll be able to take pricing as well. And that
Speaker 6: combined with good cost management that we have in place
Speaker 6: in terms of good disciplines on that business, we feel
Speaker 6: very optimistic about where streaming is going for us.
Speaker 2: You're also curving password sharing. How much of an impact
Speaker 2: will that make?
Speaker 1: You think it'll be a positive.
Speaker 6: It'll be gradual over time and strengthen from quarter to quarter,
Speaker 6: but we do think it'll be a positive impact on subscribers.
Speaker 2: I'm interested in the film studio and what bonus you're
Speaker 2: going to get from one or two, what bonus you're
Speaker 2: going to be getting from Mafasa the Lion King.
Speaker 3: How important has the investment been there?
Speaker 6: Well, I think it's quite important, and in many ways
Speaker 6: to talk about that, we ought to dial back a
Speaker 6: little bit to where we were a few years ago.
Speaker 6: You know, as we launch streaming and It's important to
Speaker 6: remember we've only been in the streaming business five years.
Speaker 6: This is a relatively nascent business for us in many ways,
Speaker 6: even though it's going to be quite profitable for us,
Speaker 6: or is quite profitable now, and it'll be even more
Speaker 6: profitable in the future. But as we think about where
Speaker 6: we were a few years ago, we were very much
Speaker 6: focused on creating a lot of quantity in order to
Speaker 6: fill the service with and as is often the case,
Speaker 6: when you push hard on quantity, sometimes quality isn't quite
Speaker 6: up to where you would like it to be. When
Speaker 6: Bob Aiger came back a couple of years ago, he
Speaker 6: talked about restoring creativity to the center of the company
Speaker 6: and reducing quantity and focusing on raising the bar on quality.
Speaker 6: Now we've been talking about that for really a year
Speaker 6: year and a half, but you saw that the impact
Speaker 6: of that, I think very much in twenty four with
Speaker 6: Inside Out two and Deadpool and Wolverine back to back
Speaker 6: billion dollar movies, is it's never been done before. And
Speaker 6: then on the TV side with Avid Elementary and The
Speaker 6: Bear and of course Showgun, you know, we had sixty Emmys.
Speaker 6: So I think that focus on quality is not something
Speaker 6: that's kind of a one time random thing, but in
Speaker 6: fact is a sustaining impact on the company. So as
Speaker 6: we think forward to the slate in twenty twenty five,
Speaker 6: whether it's mwana Iu or Mufasa the Lion King, or
Speaker 6: Lilo and Stitch or Avatar or Captain America, we're very
Speaker 6: optimistic that those movies are going to be big, big
Speaker 6: hits as well. We couldn't be more excited about them.
Speaker 4: So you've talked about the linear TV or live TV
Speaker 4: business almost.
Speaker 5: Like a hedge.
Speaker 4: I know you want to keep that audience. It's important
Speaker 4: to you, particularly the older demographic. But like many sports fans,
Speaker 4: I'm interested in the D two C launch on ESPN.
Speaker 4: How you think that that will kind of change your
Speaker 4: audience and customers' attitudes in how they pay for sports
Speaker 4: by sports, Well.
Speaker 6: The important thing I think about the ESPN Flagship launch
Speaker 6: Flagship is the project name that we use on that.
Speaker 6: The thing to think about it is it's not just
Speaker 6: another distribution channel. So it's not basically taking ESPN a
Speaker 6: lon as it exists and just putting it into streaming.
Speaker 6: It will have all of that content, to be clear,
Speaker 6: but in addition to that, it's really going to be
Speaker 6: a true digital experience in so many ways, So the
Speaker 6: ability to do e commerce, the ability to track fantasy,
Speaker 6: the ability to shape some of the ESPN broadcast products
Speaker 6: to your liking, the ability to do online vetting as
Speaker 6: a part of the product. It's a much more interactive,
Speaker 6: much more digital product, and that's where I think the
Speaker 6: big reshaping will come from. Consumers will choose whether they
Speaker 6: want to go through traditional cable networks or whether they
Speaker 6: want to go through the newer digital networks, and that's
Speaker 6: something that we're there for everyone everywhere. That's really the
Speaker 6: goal of ESPN is we want to be where the
Speaker 6: sports fan wants to be, but we do intend to
Speaker 6: bring a lot of value in that product, and I
Speaker 6: think sports fans will come to it relatively quickly.
Speaker 3: Disney CFO Hugh Johnston.
Speaker 2: There, let's get more inside tape for you from our
Speaker 2: own BlueBag intelligence analyst Ethan Rang and Evan And what
Speaker 2: was really interesting is who's trying to say, look, don't
Speaker 2: judge us, buy well our TV arm alone or cable
Speaker 2: look at it as entertainment broadly and how they play
Speaker 2: with each other. Is that the right way to see
Speaker 2: its ecosystem?
Speaker 7: I absolutely think so, and that's really the story of
Speaker 7: Disney more broadly, right, it's every part of the business
Speaker 7: feeding every other part of the business. So you look
Speaker 7: at you know, the studio that feeds contents not just
Speaker 7: into the studio itself, but across the networks, across parks,
Speaker 7: across you know, consumer products, everything. And it's the same
Speaker 7: story with linear and streaming as well. So you have
Speaker 7: content that feeds both the linear networks lineup as well
Speaker 7: as the streaming a portion of it. And it becomes
Speaker 7: really interesting because you have sports rights here, and when
Speaker 7: you have sports rights, you have to be really careful
Speaker 7: because you know, you have both the linear TV component
Speaker 7: of it as well as digital rights, and so it
Speaker 7: looks like they want to keep everything together right now
Speaker 7: under the same umbrella.
Speaker 4: Peter I asked that ESPN question for you because I
Speaker 4: know that you're modeling around it. And what's so interesting
Speaker 4: is just before we came on air, the ten K
Speaker 4: hit and actually it showed that ESPN subscribers dropped to
Speaker 4: sixty six million this year, down from seventy one million
Speaker 4: last year.
Speaker 5: Then you got the warning that actually.
Speaker 4: Subscribers will taper off in the fiscal first quarter of
Speaker 4: twenty five. Do you look past that noise and look
Speaker 4: to the three year horizon that you were shocked by
Speaker 4: this morning.
Speaker 7: Yeah, I mean cord cutting, ed is. I mean, the
Speaker 7: writing is on the wall. We're definitely going to see
Speaker 7: cord cutting kind of persist. You know, we're seeing subscriber
Speaker 7: erosion at around eight to nine percent. I think the
Speaker 7: ESPN launch, I mean, the launch of the flagship ESPN
Speaker 7: is definitely going to be another trigger that is going
Speaker 7: to kind of accelerate cord cutting.
Speaker 3: But you're absolutely right.
Speaker 7: I mean the guidance that they issued was absolutely stellar.
Speaker 7: I mean, investors love it. I Mean, the biggest overhang
Speaker 7: on this stock ed over the past few quarters has
Speaker 7: been this lack of clarity has been the lack of visibility.
Speaker 7: And so for them to go out and give us
Speaker 7: earnings growth not just into fiscal twenty twenty five, but
Speaker 7: then to kind of lay out that roadmap going into
Speaker 7: twenty twenty six and twenty twenty seven, definitely, Ali is
Speaker 7: a lot of concerns about the help of all of
Speaker 7: the different parts of the business.
Speaker 4: Is twenty twenty four and we're still talking about cord cutting,
Speaker 4: Bloomberg Intelligence and this Keitha anger Athan, thank you so much.
Speaker 4: All right, Coming up on the show, why more tech
Speaker 4: firms are eyeing a twenty twenty five IPO. Emma Taylor,
Speaker 4: global head of Investment Internet Investment Banking at.
Speaker 5: Berkeley's, Coming up next big interview. This is Bloomberg.
Speaker 8: Technology IMPO is few and far between, but this year,
Speaker 8: actually seven tech companies have indeed gone public and collectively
Speaker 8: they're training well higher, more than eighty.
Speaker 3: Percent above their original offer prices. What's more to come?
Speaker 3: What about M and A. Let's talk about all of it.
Speaker 2: When we think about the growth of twenty twenty five
Speaker 2: with Emma Taylor.
Speaker 3: She's the global head of Internet Investment.
Speaker 2: Banking at Berkley's and many have been waiting watching thinking
Speaker 2: twenty twenty five post election will be the year suddenly
Speaker 2: IPO springs to life and maybe more some M and A.
Speaker 3: Is that something that you're talking about with clients?
Speaker 9: Yeah, well, first off, thank you for having me, Caroline
Speaker 9: and Ed. That's exactly right.
Speaker 3: So we are.
Speaker 9: We are very focused on it, we're very optimistic about it.
Speaker 9: As you said, there was seven true tech IPOs last year.
Speaker 9: Their they as a class have actually traded very well.
Speaker 9: I think that. You know, we've been focused on why
Speaker 9: are some companies waiting on the sidelines, But when we
Speaker 9: look at the pipeline and the things that are on
Speaker 9: our radar in terms of tech IPOs for twenty twenty five,
Speaker 9: if we look at what's just on our what's on
Speaker 9: our radar just for the first half of twenty twenty five,
Speaker 9: there's at least seven tech companies on our radar for that.
Speaker 9: And I think success begets success, and so if those
Speaker 9: companies go public, and if those are successful, which we
Speaker 9: expect that to be the case, then we would expect
Speaker 9: that a lot of the companies that are on the
Speaker 9: sidelines now we'll get off the sidelines and we'll start
Speaker 9: to start to tap the market.
Speaker 3: So were the risk reward for us?
Speaker 10: Because bigger and bigger private companies aid to able to
Speaker 10: raise more and more money, that extra Warner evaluations that
Speaker 10: clearly the money is still coming in from the private side.
Speaker 3: Why go public?
Speaker 9: Yeah, Yeah, it's I think that's the exact right question.
Speaker 9: And I actually think that's the exact question that companies
Speaker 9: are asking themselves. You know, generally we see that at
Speaker 9: some point, regardless of whether or not the private capital
Speaker 9: is available to them. Companies do choose to go public,
Speaker 9: and they do that for a variety of reasons. You
Speaker 9: see companies that there's a branding impact, and so whether
Speaker 9: they're an enterprise company or a consumer company, they think
Speaker 9: that going public is going to give them a brand
Speaker 9: and help in terms of accessing more clients and more customers.
Speaker 3: So you see it for that reason.
Speaker 9: You oftentimes see it for employee liquidity, for shareholder liquidity,
Speaker 9: and so you know, at some point as companies mature,
Speaker 9: it starts to make sense for them to tap the
Speaker 9: public markets. The other thing, and you know this, but
Speaker 9: there's it gives you access to currency for M and A.
Speaker 9: So as companies start to think about M and A
Speaker 9: becoming an important portion of their company going forward. That's
Speaker 9: another reason why we see companies decide.
Speaker 3: That you want to go public.
Speaker 4: And let me jump in here on employee liquidity. I
Speaker 4: feel like companies, particularly at later stages, have options.
Speaker 6: Right.
Speaker 4: Two deals that I've reported on recently Viry Data Bricks
Speaker 4: doing tenders literally to keep talent happy.
Speaker 5: I think in the Data Bricks case, it's an.
Speaker 4: Example where the company might even buy back shares themselves.
Speaker 5: How big a factor is that.
Speaker 4: I mean, if you're a company that can use a
Speaker 4: tender as an option to keep staff happy, you don't
Speaker 4: need the cash, why go public?
Speaker 9: I think that's I think that's a great question.
Speaker 6: Ed.
Speaker 9: I think that's that's exactly right. I mean, look, the
Speaker 9: way that we think about it is that you want
Speaker 9: to give companies lots of options, and so we have
Speaker 9: a lot of companies that we're working with that are
Speaker 9: weighing what they can access in the private markets. And
Speaker 9: that's not all created equal either, and so there's a
Speaker 9: significant amount of structured equity and structured finances coming into
Speaker 9: the private markets. There's you know, more straightforward equity capital,
Speaker 9: but all of those things are available to them, and
Speaker 9: so I actually think that that creates a really healthy
Speaker 9: dynamic in which companies can make the best choice for
Speaker 9: themselves and they can optimize for whatever the factors that
Speaker 9: are most important to them, whether that's shareholders, whether that's
Speaker 9: as I said before, branding value, or whether that's you know,
Speaker 9: valuation or other things. And so the access to those
Speaker 9: private markets I actually think is very helpful in terms
Speaker 9: of how companies can make decisions for themselves.
Speaker 4: Emma twenty twenty five, Which country is going to be
Speaker 4: the hot place to do a listing for tech.
Speaker 9: Oh, that is a good question, you know. Look, what
Speaker 9: I would say is I think that the vast majority
Speaker 9: of volume, or what I'll say is that a lot
Speaker 9: of volume comes to the US. I think that that
Speaker 9: will continue to be the case. I think it's hard
Speaker 9: to imagine that that's not the case. All that being said,
Speaker 9: we're seeing other countries and other exchanges have incredibly successful listings.
Speaker 9: You're seeing very large companies potentially choose to list in
Speaker 9: venues outside of the US as well, and so there's
Speaker 9: a global investor base they can invest across the various exchanges.
Speaker 9: So I think all of those things are healthy dynamics.
Speaker 9: And so I think you'll continue to see that.
Speaker 2: Barclay's a British band. Come sure, there's some loyalty to
Speaker 2: the UK. India has been on far as well. It's
Speaker 2: really interesting where people choose to list. Emma, what about
Speaker 2: the story you tell into listing When it was the
Speaker 2: crop of companies that came the end of twenty twenty
Speaker 2: three and into twenty twenty four, you had to have
Speaker 2: artificial intelligence exactly in your story?
Speaker 3: Is that still going to be the case? I think
Speaker 3: that's one hundred percent truth.
Speaker 9: So I think we've seen I think we've seen a
Speaker 9: massive shift in terms of companies, particularly around so why
Speaker 9: I spend most of my time is consumer tech, and
Speaker 9: particularly around consumer tech, companies have to be talking about AI.
Speaker 9: And then this has been true for the last year.
Speaker 9: It's been true for the last year and a half.
Speaker 9: I think what's been really interesting is the shift in
Speaker 9: the way companies are talking about AI. So one of
Speaker 9: the things that we saw early on is that most
Speaker 9: consumer tech, most Internet companies were talking about AI mostly
Speaker 9: in the forms of cost saving, so they were talking
Speaker 9: about call centers or customer service and how can you
Speaker 9: create a better customer interaction with less manual touch points.
Speaker 9: We then started to see a shift where we're seeing companies,
Speaker 9: particularly the AD based companies, talk about AIS relates to
Speaker 9: advertising and so you know, you saw with the earning
Speaker 9: season that the ad based companies did extraordinarily well for
Speaker 9: the most part, and a lot of what we're hearing
Speaker 9: around that is that the AI technology around ROI for
Speaker 9: ad placement has has continued to improve and is really
Speaker 9: driving a lot of that. I think one of the
Speaker 9: interesting shifts that we're now seeing is we're seeing internet
Speaker 9: and consumer tech companies talk about AI as it relates
Speaker 9: to real sort of revenue or consumer UI use cases.
Speaker 9: And so you're seeing online travel companies talk about discovery
Speaker 9: and planning of trips instead of just booking them. You're
Speaker 9: seeing ed tech companies talk about AI tutoring, and so
Speaker 9: you're seeing cases in which companies are saying consumers know
Speaker 9: that they're interacting with AI, and they're happy to do
Speaker 9: that because we're providing a lot of value to them.
Speaker 4: Emma Taylor, Global head of Internet Investment Banking at Barkley's.
Speaker 4: Great to have you here on Bloomberg Technology. Thank you
Speaker 4: very much. A quick news story out in Europe shares
Speaker 4: a Zeeman's rose to a record, predicting a boom empower
Speaker 4: hungry data centers driving demand for its transformers and grid
Speaker 4: technology in the coming year. The company is saying it's
Speaker 4: seen orders for its electrification products jump with the surge
Speaker 4: in AI investments. Even CEO Roland Bush talked about the
Speaker 4: company making its own investments too.
Speaker 5: Listen to this.
Speaker 11: We an answer the excision of IA Engineering. It's a
Speaker 11: ten billion equisition, as you said, which is strengthening our
Speaker 11: software portfolio to the what it is about simulation in
Speaker 11: the areas where we have where we were weak. It's
Speaker 11: not only simulation, but it's also AI and high performance computing.
Speaker 2: LEAK.
Speaker 3: We're going to talk about AI a little bit more.
Speaker 2: And still in Europe, the AI demand story coming from
Speaker 2: AIRSML that we're up some five percent after the Dutch
Speaker 2: maker of the equipment that makes advanced chip making, well,
Speaker 2: we're seeing them still managing to project sales in twenty
Speaker 2: thirty in a range of forty four billion to sixty
Speaker 2: billion basice in line with their.
Speaker 3: PRIs vs forecast.
Speaker 2: But ed just remember how hard they hit the market
Speaker 2: with a significant miss on estimates in their third quarter,
Speaker 2: So maybe a bit of a reprieve there and some
Speaker 2: little elements of confidence being built back in.
Speaker 4: Okay, it's time for talking tech and first up, Netflix's
Speaker 4: Squid Games is set to return in December with its
Speaker 4: second season. The streaming giant looking to replicate the global
Speaker 4: success of its first season, which was the most popular
Speaker 4: show in Netflix's history, generating nearly nine hundred million dollars
Speaker 4: in value for the company. The third and final season
Speaker 4: of the series for twenty twenty five plus on Hi
Speaker 4: one of the world's largest assembler or servers, tamped down
Speaker 4: on concerns that data center spending is decelerating. The company,
Speaker 4: also known as Foxcon, reported results that beat expectations that
Speaker 4: says the boom in AI serve demand will continue next year,
Speaker 4: and Australia's planning to enact laws that would require big
Speaker 4: tech firms to protect its citizens online. The plan, called
Speaker 4: the Digital Duty of Care, was unveiled last night and
Speaker 4: is the latest effort by the Australian government to crack
Speaker 4: down on social media and curb misinformation.
Speaker 2: Caroline, that story, of course is going to be impacting Meta.
Speaker 2: Another thing affecting Meta overseas is a fine eight hundred
Speaker 2: and forty one million dollars has been laid down by
Speaker 2: EU regulators.
Speaker 3: The social media.
Speaker 2: Giant has said it has potentially has been deemed to
Speaker 2: a breached antitrust rules by tying its Facebook Marketplace service
Speaker 2: to its social network. Lu Merg's man nipsingh joins us
Speaker 2: now and that as a user of Facebook Marketplace, I
Speaker 2: rather like that I can tell what the profile is
Speaker 2: that the person that I'm buying or selling to. But
Speaker 2: they want these separated because of competition here.
Speaker 12: Yeah, look, I think it's the same for all the
Speaker 12: things that Google does, you know, when it comes to
Speaker 12: their ads stack, the fact that they run the exchange
Speaker 12: and they are a publisher as well. So same thing
Speaker 12: with Meta, you know. I mean, all these companies have
Speaker 12: the engagement and they you know, show you the relevant
Speaker 12: ads and you know, ancillary products like marketplaces in Meta's case,
Speaker 12: and the regulators don't want that. They want more choice screens.
Speaker 12: They don't want Google to show maps or you know,
Speaker 12: a flights product on the search page because they want
Speaker 12: more optionality. And it's the same concept here. I think
Speaker 12: you are probably going to see more fines simply because
Speaker 12: that's the whole focus of the Digital Markets Act in
Speaker 12: the EU. So I'm not surprised they had to pay
Speaker 12: this fine. But clearly the remedy here is to offer
Speaker 12: more choice to the users.
Speaker 4: Yeah, quite right, Mandy, I mean giving some of the
Speaker 4: details or audience. The accusation is that Meta is putting
Speaker 4: unfair trading practices on rivals through that marketplace, and Meta
Speaker 4: unsurprisingly says it will appeal this fine decision. I guess
Speaker 4: for you and other analysts, the question is will it
Speaker 4: materially impact the business model? Or have any negative impact
Speaker 4: to the business.
Speaker 12: Well, so in the case of the Digital Markets Act,
Speaker 12: you could find up to ten percent of the company's
Speaker 12: global revenue. So we are talking about potentially a ten
Speaker 12: billion dollar fine if the EU deems that Meta is
Speaker 12: not complyingt and this keeps happening. In this case, obviously
Speaker 12: the marketplace business is around, based on our estimate, less
Speaker 12: than ten billion to the Blue app.
Speaker 1: But clearly, you.
Speaker 12: Know you have that risk that even a load to
Speaker 12: mid single digit revenue percentage of global Meta revenue like
Speaker 12: one hundred and fifty billion dollars, that's a substantial seven
Speaker 12: to ten billion dollar fine. So I think there is
Speaker 12: that risk that these companies have to offer an ad
Speaker 12: free version, and that's what you're seeing with Meta.
Speaker 4: Bloom Meg Intelligence Senior analyst Mandat Singh.
Speaker 2: Welcome back to Blue Meg Technology. I'm Karen Hide in
Speaker 2: New York and I.
Speaker 4: Med love Low in San Francisco. What's going on in
Speaker 4: tech in the market's character?
Speaker 2: Let's check on it, ed, because not very much of
Speaker 2: anything if you're looking at the benchmarks overall, we're kind
Speaker 2: of been trading sideways since a run up post election
Speaker 2: where people wanted to.
Speaker 3: Dive back into big tech.
Speaker 2: And equities more generally a risk on field. Today we
Speaker 2: pulled back just about two tenths of a percent. I'll
Speaker 2: get into the nitty gritty in a moment, but look,
Speaker 2: Bitcoin also coming off of its highs. But boy what
Speaker 2: highs we saw ninety three thousand eclipsed. Now we pulled
Speaker 2: back to eighty eight thousand, but still a significant leap
Speaker 2: from Wednesday of last week. Move on to the individual
Speaker 2: movers that tug these benchmarks around.
Speaker 3: From a points perspective.
Speaker 2: Disney we've talked about, we'll go back to talking about
Speaker 2: up some seven percent on the back of its numbers,
Speaker 2: earnings doing well, and we see growth in particular from
Speaker 2: the streaming side of the business in video, the leader
Speaker 2: of the pack. If you're looking at points, we're at
Speaker 2: one point seven percent. Han Hi's numbers. Another earnings out
Speaker 2: of Asia as well, really signifying that the demand for
Speaker 2: AI and AI equipment and infrastructure is still there, and
Speaker 2: Video rises ahead of that. We've got their earnings next week. Interestingly,
Speaker 2: Tesla pulling back from its recent highs. Of course, that
Speaker 2: Elon Musk trade, the Trump trade has.
Speaker 3: Been there for Tesla.
Speaker 2: Interestingly, Jeffrey's analysts saying, look, they should sell equity at
Speaker 2: this particular point, raising the price target, but just a
Speaker 2: three hundred, which is actually down from where we currently
Speaker 2: are ed.
Speaker 5: Okay, back to Disney earnings.
Speaker 4: We just spoke with the CFO, Hugh Johnston, who told
Speaker 4: us he's very optimistic about the streaming landscape.
Speaker 5: In particular, listen to this.
Speaker 6: We feel optimistic about as the industry is coming together,
Speaker 6: we're going to continue to both add subscribers, and in
Speaker 6: addition to that, because of the value we're delivering with
Speaker 6: the great ip and the great product that we're putting
Speaker 6: into this service, we'll be able to take pricing as well.
Speaker 6: And that combined with good cost management that we have
Speaker 6: in place in terms of good disciplines on that business,
Speaker 6: we feel very optimistic about where streaming is going for us.
Speaker 4: It's got a shareholder take Ross Gerba, CEO of Gerber Kawasaki.
Speaker 4: I mean, the streaming focus is interesting because actually they
Speaker 4: warned that in that fiscal first quarter of the next.
Speaker 5: Year might taper off a bit.
Speaker 4: But I don't think I've ever seen have you ever
Speaker 4: seen Disney say for the next three years we'll see
Speaker 4: earnings growth and this is how we feel about the
Speaker 4: streaming business in particular.
Speaker 13: Yeah, I mean, I think this is a major inflection
Speaker 13: point for Disney. It's an incredible value for investors at
Speaker 13: this price, literally trading at half the value of Netflix,
Speaker 13: but with all these other businesses in sports and in experiences.
Speaker 13: So you know, their streaming businesses grew like crazy during
Speaker 13: the pandemic.
Speaker 1: But they were spending so much money and made no sense.
Speaker 13: And now they've gotten this right, and as they move
Speaker 13: forward with aggressive pricing actually and incredibly good content, people
Speaker 13: are not canceling their Disney and they're not canceling their Netflix.
Speaker 1: But we've seen a lot of churn in the other streamers.
Speaker 13: So what we've really seen is what we hoped, which
Speaker 13: is Disney and Netflix have come out as the winner in.
Speaker 5: Streaming carry offs.
Speaker 4: A really interesting question about password sharing. You know, we
Speaker 4: got that wrong with Netflix. You know, didn't seem to
Speaker 4: impact Netflix negatively necessarily. Do you just see Disney following
Speaker 4: the same arc? You know, Johnston kind of leans on
Speaker 4: this idea that they've not been at it very long
Speaker 4: in the streaming game, but they have grown quickly, right.
Speaker 13: I mean, it grew much quicker than anybody would have
Speaker 13: guessed because of the pandemic, and they really just were
Speaker 13: not good at managing the cost side of the business,
Speaker 13: and they were making tons of content that they weren't
Speaker 13: releasing in theaters that was costing a fortune and now
Speaker 13: getting the model right like Mowana too. Like I was
Speaker 13: watching Deadpool last night. Deadpool and Wolverine goes out in
Speaker 13: the theaters, that makes a billion dollars.
Speaker 1: Then it goes on the streamer.
Speaker 13: Everybody want to watch the stream and that's what we're
Speaker 13: going to see with Molwana two coming, and then we
Speaker 13: have Mustafa, which is Lion King two coming in December,
Speaker 13: and boy, this is going to drive you know, not
Speaker 13: only keeping the people from churning on the streamer, but
Speaker 13: adding new subscribers who really just want to watch the movie,
Speaker 13: you know, and not have to pay for all a car.
Speaker 1: You know.
Speaker 2: What's interesting, Ross is that Q in particular try to
Speaker 2: articulate this vision that yes, TV cable is showing weakness,
Speaker 2: but it basically feeds the beast of streaming and stop.
Speaker 3: Looking at it separately.
Speaker 2: But there's also this element going forward that they've got
Speaker 2: to do something to change revenue operating profit in the
Speaker 2: different direction and start showing stabilization or at least growth
Speaker 2: once again. And that sort of can be said more
Speaker 2: broadly when you're thinking of venue back on ice, when
Speaker 2: you're thinking of Venue Sports, the joint venture they were
Speaker 2: going to be doing with Fox and Warner Brothers.
Speaker 3: There are some stop starts here.
Speaker 1: Well, yeah, and.
Speaker 13: See part of it is ESPN has this limitation because
Speaker 13: it's still you know, tethered to cable for another year.
Speaker 13: And once that is done and you can actually get
Speaker 13: ESPN as a standalone app with real ESPN content without
Speaker 13: actually a cable subscription, that will open up opportunities for
Speaker 13: ESPN they've just been unable to open. But the cable
Speaker 13: issue is one that will continue to be one for
Speaker 13: some time. And you know, some cable companies get it,
Speaker 13: like Spectrum, where they've pivoted in the business and tried
Speaker 13: to create value for cable subscribers.
Speaker 1: But like most the.
Speaker 13: Young people today don't even know what cable is. So
Speaker 13: you know, we're gonna so feeding the beast of streaming
Speaker 13: is the appropriate strategy, and young people today will sign
Speaker 13: up for multiple streamers and pay the money and it's
Speaker 13: still cheaper than cable from the old days. But you know,
Speaker 13: Netflix and Disney have the opportunity to really engage a
Speaker 13: global audience that has you know, potentially as many a
Speaker 13: five hundred million, maybe a billion subscribers total in this
Speaker 13: total market globally that they.
Speaker 1: Can grow to.
Speaker 2: Let's just look at that valuation you talked about how
Speaker 2: basically Disney is half a Netflix. It is when you're
Speaker 2: looking at forward estimate, like price to forward earnings is
Speaker 2: forty two on Netflix, They're never going to trade at
Speaker 2: that valuation if they are using a hedge of experiences,
Speaker 2: using a hedge of older consumers with cable.
Speaker 13: Well, right, it's a much clunkier, capital intensive business than Netflix,
Speaker 13: hence the higher pe multiple.
Speaker 1: But I'm also just talking about pure market cap.
Speaker 13: Ye, you know, so the valuation that the premium valuation
Speaker 13: Netflix gets to certainly deserved. But what we're saying is
Speaker 13: that Disney is really trading at a discount on all
Speaker 13: levels in the marketplace today. I mean, it's cheaper than
Speaker 13: the SMPPE when you look at forward and then you
Speaker 13: start thinking, wait, now, this business is really growing at
Speaker 13: double digits going into the fairly decent midterm.
Speaker 1: And you know, once again, Experiences is a wonderful business.
Speaker 13: Just because it grew crazily in twenty one and twenty
Speaker 13: two as everybody you know came back out oh host pandemic,
Speaker 13: and now it's slowed, doesn't mean it's not going to
Speaker 13: continue to gain steam as we move into twenty five
Speaker 13: and twenty six with new cruise ship launches, which might
Speaker 13: cost Disney on the short term as they launched the
Speaker 13: new cruise ship, but over time these cruises are like
Speaker 13: gold mines.
Speaker 1: I mean, so Disney is a cash cow.
Speaker 13: They're returning money to shareholders, are extremely shareholder friendly company.
Speaker 1: And you know the big question is secession.
Speaker 13: Planning, and once they clear that up, then you know
Speaker 13: Disney has a great runway over the next five years.
Speaker 2: Clarity on earnings, but not on the CEO yet. Gerbert Kawasaki,
Speaker 2: CEO Ross Gerba, We thank you. Let's just talk about
Speaker 2: the private markets. Thrive Capital in talks to acquire roughly
Speaker 2: one billion dollar stake and analytics software maker Data Bricks
Speaker 2: deal that with value the start up out of whopping
Speaker 2: fifty five billion dollars according to sources. Katie Ruff joins us,
Speaker 2: Now you helped report this out with ed. In fact,
Speaker 2: Katie's so Was this a surprise? Did we know that
Speaker 2: they were potentially going to get a new injection.
Speaker 14: Well, what we've been seeing a lot lately is a
Speaker 14: lot of these tender offers for the companies that aren't
Speaker 14: in arrested to go public and have plenty of private
Speaker 14: investor interest. So it's not a surprise.
Speaker 3: In that sense.
Speaker 14: But fifty five billion is still a pretty high price.
Speaker 3: They were valued it forty three.
Speaker 14: Billion last year. And you know Thrive they're investing a
Speaker 14: billion dollars and that's something we've been seeing more with
Speaker 14: Thrive lately. They invested that much in Opening Eye and
Speaker 14: also a lot in Stripe Datie.
Speaker 4: Just the basics on a tender or secondary right. This
Speaker 4: is employee, some early investors that sell their shares directly
Speaker 4: to the firm and other firms leading the around. So
Speaker 4: Data Breaks doesn't raise any money, and it gives those
Speaker 4: staff some chance to cash in like long serving. And
Speaker 4: I think you and I both recognize this is happening
Speaker 4: more often at the moment.
Speaker 3: Sure exactly.
Speaker 14: So it's the insiders, the existing shareholders that are getting
Speaker 14: an opportunity to sell their shares and you know, buy
Speaker 14: that house and not wait until the IPO markets are perfect.
Speaker 14: They can just get that liquidity now, and so this
Speaker 14: provides an opportunity to reward those early employees, those shareholders,
Speaker 14: and then also gives an opportunity for prospective investors to invest.
Speaker 4: All right, Bloomos Katie Roof with another piece of exclusive reporting. Well,
Speaker 4: I'm coming up San Francisco's right wood Shift. We're going
Speaker 4: to discuss the future of Silicon Valley politics. Next, this
Speaker 4: is Bloomberg Technology.
Speaker 2: We're getting some thirteen F filings, among them soft Bank
Speaker 2: expanding its communication portfolio, and for September the thirtieth quarter,
Speaker 2: the company has shown that it's bought stock a popular
Speaker 2: online comic platform, Webtoon Entertainment. This is Webtoons or strong
Speaker 2: third quarter marked by revenue growth of nine and a
Speaker 2: half percent. We're going to talk about all of it.
Speaker 2: The CFO David Lee, And wasn't so long ago that
Speaker 2: you went public and when you're reporting these earnings, perhaps
Speaker 2: you were a bit knocked by the fact that a
Speaker 2: few price targets came down on the back of it.
Speaker 3: How did investors understand the growth potential? What's happening with
Speaker 3: manga in your area?
Speaker 15: Well, it's interesting Webtuned is very new for most investors.
Speaker 1: Here.
Speaker 5: We have a global business.
Speaker 15: Where stories are being consumed, not just in Asia where
Speaker 15: the company started. Sixty percent of our audience now is
Speaker 15: outside of Japan and Korea. But people don't realize here,
Speaker 15: even in North America, that they've probably seen a number
Speaker 15: of films on Netflix or Amazon Prime and soon to
Speaker 15: be Friday after Thanksgiving on tub Actually where we've powered
Speaker 15: stories not just on our platform, but we've powered stories
Speaker 15: that turn into great films and great pieces of collateral
Speaker 15: in merchandise. Yeah, so it's so early for us that
Speaker 15: I think investors are still getting an understanding of how
Speaker 15: explosive our global growth already can be. And I think
Speaker 15: we're just going to have to focus on educating the
Speaker 15: street quarter by quarter, since we're only about a quarter
Speaker 15: and a half out since going properly.
Speaker 3: Let's talk about the future of IP.
Speaker 2: I can totally see how it transfers onto movie and
Speaker 2: onto streaming. A lot of your just names of some
Speaker 2: of the content I almost think would be a generative
Speaker 2: AI chatbot. I mean a lot of them have those
Speaker 2: sorts of names and likenesses. Is that something you've been
Speaker 2: plowing into the generative AI space.
Speaker 15: Well, we're very focused on AI. But what's interesting about
Speaker 15: our approach is we believe in human creativity. We think
Speaker 15: we are still the best storytellers. But taking our AI
Speaker 15: we have one hundred AI technologists been hard at work
Speaker 15: for a long time, and we may have one of
Speaker 15: the largest repositories of data around stories, enabling them to
Speaker 15: take hours out of the process to make sure that
Speaker 15: their images are compelling, giving them a chance to really
Speaker 15: be heard by our global audience. We have one hundred
Speaker 15: and nearly seventy million monthly active users, and enabling for example,
Speaker 15: the one hundred and twenty four thousand stories evergreen stories
Speaker 15: that come to our platform every day means that AI
Speaker 15: can help find the ones that people care about.
Speaker 4: David, I'm a two thousands comic book kid, right. I
Speaker 4: still have the X Men edition somewhere in my dad's garage.
Speaker 4: The world's different now, I look at like streaming the
Speaker 4: growth of anime. Can you just distill your strategy, particularly
Speaker 4: for the US.
Speaker 15: So it's interesting is our core consumer in the United
Speaker 15: States looks a lot different than ed you and me.
Speaker 15: It's a sub twenty five year old female skewing passionate
Speaker 15: of twenty.
Speaker 5: Five David, I might be doubled out or more.
Speaker 15: But the genres that we power every genre. Let me
Speaker 15: give you an example. You know, one of the astounding
Speaker 15: facts is on Netflix, two of all time top ten
Speaker 15: projects came from us, and they weren't the anime and
Speaker 15: manga you might expect all of us are dead. Okay,
Speaker 15: that kind of fits with that notion. But through my window,
Speaker 15: which came from a kindergarten teacher, a full time kindergarten
Speaker 15: teacher that was enabled by our platform to tell a
Speaker 15: story that's now reached the world, it kind of shows
Speaker 15: that we meet our consumers with any genre they want.
Speaker 5: Just like you love the X Men.
Speaker 15: I think that our current consumers, who are much younger
Speaker 15: than you and me, are finding unexpected stories from all
Speaker 15: over the world.
Speaker 4: So, David, those consumers not just here in America but
Speaker 4: in international markets find themselves in a very different world
Speaker 4: after the US election. How are you modeling for economic
Speaker 4: policy around that and doing business across jurisdictions.
Speaker 15: Well, one of the great benefits of Webtoon as a
Speaker 15: global storytelling hub, we don't have to focus for the
Speaker 15: long term on short term changes and administration. In fact,
Speaker 15: in this day and age, with all the news that's
Speaker 15: coming out, I think consumers want a good story and
Speaker 15: we're seeing that focus be our guidepost long term with
Speaker 15: the consumer. Having said that, there is going to be
Speaker 15: a lot of volatility and FX, and we are benefited
Speaker 15: by the fact that we oftentimes receive revenue and the
Speaker 15: same currency that we pay costs, so we have the
Speaker 15: ability to be transparent with the street to talk about eths,
Speaker 15: volatility on headline numbers and revenue, but we're relatively immune
Speaker 15: and can focus on our law long term business websoon.
Speaker 4: CFO David Lee, great to have you on the show.
Speaker 4: Thank you very much. All right, let's bring it back
Speaker 4: to San Francisco. It's become something less of a liberal
Speaker 4: bastion and more of a conservative punching bag. But even then,
Speaker 4: the cities found itself caught up in the nation's right
Speaker 4: wood shift.
Speaker 5: More than fifteen percent.
Speaker 4: Of the city's voters cast their ballot for Donald Trump
Speaker 4: in last week's election, compared with nine point three percent
Speaker 4: when he first ran in twenty sixteen. That according to
Speaker 4: data from the California Secretary of State, it.
Speaker 5: Was the highest share for a Republican.
Speaker 4: Presidential candidate in San Francisco in twenty years as ring
Speaker 4: in Bloomberg editor Cara Wetzel for more and talk a
Speaker 4: bit about Silicon Valley. Okay, historically liberal, yes, but what's
Speaker 4: happened here is part of the nationwide trend. And if
Speaker 4: you look on social media, it is prominent names in
Speaker 4: technology in this city that kind of led that.
Speaker 16: Absolutely, I mean arguably, you know, Elon Musk had a
Speaker 16: big role in what the rise of Trumky continues now
Speaker 16: have a role in the administration now in San Francisco anymore.
Speaker 16: But he has a lot of prominent you know people
Speaker 16: and ties to this area. David Sachs, notably San Francisco resident,
Speaker 16: held a fundraiser for Trump, raised about twelve million dollars. So,
Speaker 16: you know, I think, as we say, what is happening
Speaker 16: in San Francisco is what's happening across the country. It
Speaker 16: is still fifteen percent is still a very small number,
Speaker 16: but it's kind of just you know, by there's a
Speaker 16: door has cracked a bit for Republicans. And now we
Speaker 16: see you know, some Republican groups saying, hey, maybe we
Speaker 16: can if.
Speaker 3: Not you know, win electorally a national vote.
Speaker 16: But have you know, some more donors, some multi class,
Speaker 16: some more tech people speaking out in favor of Republican candidates.
Speaker 2: As they have done on the old in Pod and
Speaker 2: it's sort of echoed here on the other side of
Speaker 2: the country in New York as well. Kara, I'm interested
Speaker 2: in what happened at a governor and mayor level, in particular,
Speaker 2: because London breed the movement there still stayed within the Democrats.
Speaker 3: But Daniel Lurie wells a whole new quotes to you.
Speaker 16: Really that's right, Daniel Lurie, he's a Levi strauss Er
Speaker 16: and the founder of a prominent nonprofit here in San Francisco.
Speaker 16: Won the mayoral election and you know, he put a
Speaker 16: lot of money into the race. He doesn't have any
Speaker 16: political experience, which I think maybe was appealing to voters.
Speaker 16: He's a political outsider, and again it's kind of just
Speaker 16: dissatisfaction with the status quo. And I think you can,
Speaker 16: you know, argue that was you know, something that played
Speaker 16: out nationally and in San Francisco. We have a lot
Speaker 16: of problems, homelessness crisis, a drug crisis, record high office
Speaker 16: vacancies that you really have seen come to the four
Speaker 16: in the past several years since the pandemic, and there's
Speaker 16: just a lot of dissatisfaction, and I think that's kind
Speaker 16: of what is reflected, you know, with some of these
Speaker 16: movements politically that we've seen.
Speaker 3: So it's a great story.
Speaker 2: Thanks coming on and tooking us through it of what's
Speaker 2: happening locally in San Francisco.
Speaker 17: All the businesses, whether it be TKO, whether it be Endeavor,
Speaker 17: and all the assets and are great businesses. What remains
Speaker 17: doesn't remain will play itself out over the next couple
Speaker 17: of years. I guess I don't really know the timeframe,
Speaker 17: and so whatever is left, I'm going to be around.
Speaker 17: For whatever doesn't, I'll probably be really sad. I try
Speaker 17: to teach my kids this. I try to teach the employees.
Speaker 17: It's about not how many punches you can throw. It's
Speaker 17: about how many punches you can take, even though you
Speaker 17: love something. It's tough, and endurance is an important quality
Speaker 17: for anybody now running a public company, starting a business,
Speaker 17: and so I've built my endurance up Endeavor and TKO.
Speaker 2: Boss Ari Emmanuel on his approach to running multiple companies,
Speaker 2: probably his frustration with some of them being public. He
Speaker 2: can talk to the person conducting that interview the circuit
Speaker 2: of course, Host Emily Chang.
Speaker 3: Please have you on this lot of America with us?
Speaker 2: Oh, congratulations on the next set of content. And look,
Speaker 2: he has voiced his frustration plenty of times with being
Speaker 2: a public company and he wants to take it private.
Speaker 2: How is what he's doing with the business changing the
Speaker 2: perception in the market.
Speaker 18: Well, and he is taking it private now. You know,
Speaker 18: our emmanual for many many years has said live sports,
Speaker 18: live entertainment is the future and kept buying up all
Speaker 18: these businesses, saying they all make each other stronger. But
Speaker 18: Wall Street didn't necessarily buy into that idea. So he's like, now, hey,
Speaker 18: I'm just going to take it private. I'll show you.
Speaker 18: And so he's selling off different parts of the business,
Speaker 18: in fact, selling some parts of Endeavor now to TKO.
Speaker 18: He's actually moving into a chairman role at Endeavor and
Speaker 18: will remain CEO of TKO. But we've seen the value
Speaker 18: just triple there, whereas they obviously have a lot of
Speaker 18: work to do with Endeavor. And I should say, by
Speaker 18: the wayful disclosure, I'm an Endeavor client.
Speaker 4: So okay, well you're so some of the talent that
Speaker 4: he's got to handle because in June, when everyone was
Speaker 4: focused on UFC three oh two or whether Zuck would
Speaker 4: fight Mask, Bloomberg's Emily Chang was in the oxygonin which
Speaker 4: I never thought i'd see. And you're training there, seriously,
Speaker 4: I know you were training. You spoke to Dana White
Speaker 4: just to explain that experience. And I'm also conscious that White,
Speaker 4: you know, alongside Trump in the last ten days following
Speaker 4: the result of the election.
Speaker 18: You know, it was my first fight, so a lot
Speaker 18: of anticipation, and honestly, the energy was electric, Like I
Speaker 18: can see why this has become more of a mainstream sport.
Speaker 18: The training was intense, mad respect for those UFC fighters.
Speaker 18: But I did get to go backstage with Dana White
Speaker 18: and Ari and we talked about, you know, the ceiling,
Speaker 18: the potential for the UFC, and Dana White thinks it's.
Speaker 3: Eight billion people.
Speaker 18: There are billions of fans still out there that you know,
Speaker 18: don't necessarily have an easy way to watch this, that
Speaker 18: you know, could become obsessed with this if they had
Speaker 18: that opportunity. And it's definitely interesting in retrospect, especially seeing
Speaker 18: Dana White at the right hand of President Elect Trump.
Speaker 18: On the day of the election, and he said Trump
Speaker 18: will always be the UFC's number one fan. He gave
Speaker 18: the UFC a lifeline twenty years ago when no one
Speaker 18: wanted to host them. He said, Hey, come to my
Speaker 18: Lantic City casino.
Speaker 3: I'll host you here.
Speaker 18: And so, you know, certainly helps now that the UFC
Speaker 18: has a direct line to.
Speaker 2: The White House, Dana White. It's going to be on
Speaker 2: air a little bit later as well. Emany Chang, great
Speaker 2: to have you. Thank you for bringing us the latest
Speaker 2: ari Emanuel. You've got to check it out. You've got
Speaker 2: to check out all of the circuit that is coming.
Speaker 2: Some incredible people and themes around technology. But meanwhile, that
Speaker 2: does it for this edition of Bloomberg Technology.
Speaker 5: Yeah, yeah, very interesting in the context of Disney. A
Speaker 5: lot to recap on the pod.
Speaker 4: You know where to find the pod online, all those
Speaker 4: platforms might drop moment.
Speaker 5: Just go and check it out.
Speaker 4: Thank you team in New York City, Thank you team
Speaker 4: here in SF.
Speaker 5: This is Bloomberg Technology.