Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Let's break down this
Speaker 1: Disney news. We do that with uh shann Allie Bastick.
Speaker 1: She covers all things Wall Street. She joins us here
Speaker 1: on a Bloomberg Interactive Broker studio, and keithan Ranganathan. She
Speaker 1: is the senior media analyst for Bloomberg Intelligence. Keith, I
Speaker 1: want to start with you. What do you think is
Speaker 1: kind of job one on Bob Iger's to do list
Speaker 1: in his return to the CEO spot. Yeah, thanks, thanks
Speaker 1: Paul for having me. So, I think job number one
Speaker 1: is kind of really re examining scrutinizing the streaming strategy.
Speaker 1: Obviously they've done really, really well when it comes to
Speaker 1: subscriber numbers, but that is not the focus anymore. It's
Speaker 1: all about economics. It's all about stability, and we know
Speaker 1: they've had some huge losses in the streaming department, and
Speaker 1: it looks like they're going to lose another three billion
Speaker 1: dollars this year. Um So, unless you know Bob Eiger
Speaker 1: goes back to the drawing board, uh sees exactly what
Speaker 1: needs to be trimmed, whether it's marketing expenses, whether it's
Speaker 1: a whole real realignment of the content strategy. I think
Speaker 1: that is the number one item on us to do list, Jinale,
Speaker 1: What are you hearing from your contract contacts on Wall Street?
Speaker 1: What what needs to be done? What needs to be done? Well,
Speaker 1: they have two activist investors here that has a lot
Speaker 1: of suggestions and what they want to do, and they
Speaker 1: might take more of a stake. According to Wall Street
Speaker 1: journals reporting Tryan in particular, they might want to expand
Speaker 1: their steak as well as seek a board seat. Tryon
Speaker 1: has how much? I heard they bought an eight hundred
Speaker 1: million dollars worth of stock, but this is an eight
Speaker 1: billion dollar company. So and you were asking, I just
Speaker 1: did some quick backup a manible maths. When you look
Speaker 1: at today's stock price, Bob I. Eiker himself has about
Speaker 1: ninety million worth of shares, so and again that his
Speaker 1: declined significantly this year, so and he might own more
Speaker 1: than that decides what's publicly disclosed, So what will now
Speaker 1: third Point also want. They also have a small steak
Speaker 1: as well. Remember these are not steaks that are big
Speaker 1: enough to immediately cause a lot of change, especially in Kias.
Speaker 1: That's like ESPN that initially there was some change wanted
Speaker 1: in terms of monetizing more of what we've already seen.
Speaker 1: But remember, Bob Eiger, to your point on the Wall
Speaker 1: Street perspective, this is one of the most beloved CEOs
Speaker 1: across Wall Street. This is somebody that bankers, investors fall
Speaker 1: over themselves for. But a guy in according to the
Speaker 1: Wall Street Journal report, Tryan in particular, doesn't necessarily want
Speaker 1: him there in this capacity. You know, Shenalie just brought
Speaker 1: up the ESPN boy, there was a time and you
Speaker 1: and I remember not so long ago when this was
Speaker 1: the profit driver for the entire company. Now with cord
Speaker 1: cutting not so much, what do you think Bob Iger
Speaker 1: and the board are thinking about ESPN. I mean, this
Speaker 1: is a real head screature, Paul Um. You know this
Speaker 1: is Yes, it is the profit over It continues to
Speaker 1: be a huge profit driver though let me it's still
Speaker 1: is generating about four points three billion dollars in Ibada
Speaker 1: every year. The problem, though, is that the revenue is
Speaker 1: shrinking rapidly as you have more and more court cutting,
Speaker 1: and Bob Iger himself just recently said that, you know,
Speaker 1: courd cutting has reached unprecedented levels, and you know, there
Speaker 1: might just be a point in time that comes very
Speaker 1: soon when you know, the switch finally goes off. But
Speaker 1: at the same time they have so they have the
Speaker 1: shrinking revenue base, they have subscribers going away, but they
Speaker 1: have sports rights. Disney by far pace the highest sports
Speaker 1: rights in the media ecosystem at nine billion dollars every year.
Speaker 1: They have an NBA deal that's coming up. You know,
Speaker 1: there are all of these different sports rights that that
Speaker 1: are coming up for renewal where we've seen like huge,
Speaker 1: huge increases in rights fees, you know, thirty So it's
Speaker 1: gonna be interesting to see exactly what bob Iger looks
Speaker 1: to do. Does he make that shift finally, that that
Speaker 1: big jump into streaming kind of pivoting away from the
Speaker 1: TV ecosystem. But then again, it's gonna be a tough
Speaker 1: balancing act because, as I said, you know, the suite
Speaker 1: of networks does bring in more than four billion dollars.
Speaker 1: But what do you mean? I mean ESPN They already
Speaker 1: have ESPN Plus, right, but I still if I stream,
Speaker 1: if I subscribe to ESPN Plus, which I do, I
Speaker 1: still can't see all the games. Yeah, that's exactly what
Speaker 1: it is. So ESPN Plus is kind of this watered
Speaker 1: down version with like more like second tier sports content.
Speaker 1: All of the market properties are on you know, the
Speaker 1: main TV networks, right, whether it's uh, you know, the NFL,
Speaker 1: the NBA, really all top tier properties. And so the
Speaker 1: question is, you know, do they kind of kind of
Speaker 1: finally take that step and move everything to uh, you know,
Speaker 1: ESPN Plus and then obviously bump up the price pretty
Speaker 1: significantly as well. Please please Dear God that there are
Speaker 1: other things that Wall Street has wanted from this company.
Speaker 1: You know, I'm looking at Third Points initial letter, and
Speaker 1: they wanted the company to use free cash flow to
Speaker 1: pay down debt more meaningfully, repurchase shares and suspend a
Speaker 1: cash tive and and as far as streaming goes, they
Speaker 1: really want them to work faster and harder to in
Speaker 1: Great Hulu into the Disney Plus platform. So it's not
Speaker 1: just ESPN streaming it's Hulu also, which has been you know,
Speaker 1: a long prized asset that of course Comcast had that
Speaker 1: stake in as well. And I think there there are
Speaker 1: a lot of things here that Wall Street wants them
Speaker 1: to do, and we did not see them happening too quickly.
Speaker 1: That we did see some movement towards these things under
Speaker 1: shape that I will say that if you on the
Speaker 1: Disney screen d I S Equity go. If you type
Speaker 1: d d I S go, you can see how much
Speaker 1: debt they have coming to you about forty five billion
Speaker 1: dollars over the next thirty years. So that could be
Speaker 1: reshaped if you pull up a cop screen. See this
Speaker 1: is what we like to do. And look at Disney
Speaker 1: versus Netflix and Amazon. They have drastically underperformed the others.
Speaker 1: Amazon you can tell me geth okay, they have this
Speaker 1: big cloud business. I get it. Or you can order
Speaker 1: stuff from them online. I've done it. Netflix, what do
Speaker 1: they have over Disney? Do they just have better content?
Speaker 1: I wouldn't say it's better content. I would say Disney
Speaker 1: are combly has the best content in the media business.
Speaker 1: But Netflix now is a pure place story right It's
Speaker 1: and and investors like that. Wall Street likes that they
Speaker 1: like pure play businesses where it's an uncomplicated, clean story.
Speaker 1: With Disney, you do have a lot of exposure to
Speaker 1: the linear TV business, and we know the linear TV
Speaker 1: business isn't secular decline and those headwinds are only mounting.
Speaker 1: So that's something that investors really don't like. Alright, great stuff.
Speaker 1: As always, our go to a person for all things media,
Speaker 1: Geith wrong Enough, and she is the senior media annals
Speaker 1: for Bloomberg Intelligence and Shinnelli Bassa giving us the Wall
Speaker 1: Street angle. Why because she is our Wall Street ace
Speaker 1: here at Bloomberg News bringing it all together here around
Speaker 1: tabling it. I'm still on Twitter, but I don't know.
Speaker 1: I could dump it tomorrow and that I'd just find
Speaker 1: them off Facebook. I feel like a lot of people
Speaker 1: I thought that a lot of people would bail on
Speaker 1: Twitter for you know, ethical reasons, because at least the
Speaker 1: people around me that I fall or who followed me
Speaker 1: I feel like, are pretty left leaning, um and not
Speaker 1: libertarian in the sense that Elon Musk is, and a
Speaker 1: lot of them seem very angry, you know, about the
Speaker 1: takeover from Elon, but at the same time, um, they're
Speaker 1: just addicted that's I love the meme that Elon Musk
Speaker 1: posted today or yesterday, um with lois from Family Guy, who,
Speaker 1: by the way, is one of my all time favorite
Speaker 1: cartoon characters. And she's looking at this bottle of prescription
Speaker 1: medication and clearly shaking because she wants to grab a
Speaker 1: pill of Twitter, you know. And the idea is that's
Speaker 1: what Donald Trump is doing, man deep saying he covers
Speaker 1: all things tech, and that means, for better worse, he
Speaker 1: covers Twitter and all that kind of stuff in the
Speaker 1: social media platforms. What do you think is going on
Speaker 1: there with Twitter? I mean, is this a viable business?
Speaker 1: Can he support the debt? Is this he gonna get ugly?
Speaker 1: I mean there were rumors a couple days ago that
Speaker 1: this thing would go dark. Well so clearly with you know,
Speaker 1: him having laid off about seventy eight percent of the staff,
Speaker 1: and we don't know whether the infrastructure, you know, and
Speaker 1: the back end people who really make sure that the
Speaker 1: app and website are up and running are still there.
Speaker 1: Like Look, when you do mass firings like this, the
Speaker 1: real risk is you don't know who is critical to
Speaker 1: your development velocity. And if he has figured that out,
Speaker 1: great for him and you know things will be fine.
Speaker 1: It seems like not very many people as the answer
Speaker 1: that question. I mean, if you say he fired seventy
Speaker 1: of the staff and it's working fine so for now. Yeah,
Speaker 1: but I mean it's been days and days and days
Speaker 1: with millions and millions of users. This is the thing
Speaker 1: what I've learned from the smart people like men Deep
Speaker 1: and others in tech. You have to iterate every day.
Speaker 1: I mean, how many times you go on the LinkedIn
Speaker 1: You're like, oh, that's new, and you have to have
Speaker 1: that every single day. And I'm guessing, okay, maybe they
Speaker 1: will we stay five but so you have to assume
Speaker 1: they cut us aside. Answer that question, especially for listeners
Speaker 1: who may be trying to connect to me on LinkedIn?
Speaker 1: How many times do I go on LinkedIn once every
Speaker 1: three or four months? But Twitter? Twitter once every maybe
Speaker 1: three or four times a day? Yeah? Yeah, okay, there
Speaker 1: you go. Well, So look, I think in terms of
Speaker 1: the usage, no one questions that. You know, Twitter is
Speaker 1: a unique platform, and I think the competition risk is low.
Speaker 1: So even if you know there are all these things
Speaker 1: going on, and he has brought back uh formal president
Speaker 1: from and some people are happy some are not. But
Speaker 1: at the end of the day, the platform is addictive
Speaker 1: and there isn't an alternative. The key question is is
Speaker 1: it a good model in terms of what he's trying
Speaker 1: to do with subscriptions, blue checks and all the changes
Speaker 1: that he wants to do with the company that is
Speaker 1: smaller than it was in terms of headcount. So how
Speaker 1: do you drive all these product changes when you get
Speaker 1: rid of so many people. Maybe he has a pulse
Speaker 1: on who the right talent is to, you know, make
Speaker 1: these changes, but I don't think so. In like, if
Speaker 1: you're cost cutting, then your focus should be cost cutting.
Speaker 1: If you want to expertise product avelopment velocity, then that
Speaker 1: should be a focus. You can do both simultaneously. You know.
Speaker 1: It's funny as you say that, I'm thinking about Disney
Speaker 1: because I was reading in the story last night and
Speaker 1: early this morning. What they need to do is cut
Speaker 1: costs for the streaming business and also boost subscribers for
Speaker 1: the streaming business. So and maybe even the price right,
Speaker 1: so they want to pay less for the product that
Speaker 1: they're selling and charge more for it. Is that possible? Well, look,
Speaker 1: anything is possible. I don't know if Disney's in your Wheelhouse.
Speaker 1: We can't have woken up without you know, getting into
Speaker 1: this story, right. Yeah, but look the end of the day,
Speaker 1: for one thing you have to make sure is you
Speaker 1: have the right people in charge. For the most time,
Speaker 1: we kept hearing like Ellen isn't gonna run Twitter. Now
Speaker 1: it looks like he's the one who's doing it. He's
Speaker 1: not bringing anyone externally. So I think to me, there
Speaker 1: are a lot of question marks around the vision. If
Speaker 1: you have the vision, if you lay out the vision
Speaker 1: and you're executing towards it, I think you get everyone
Speaker 1: on board. In this case. I don't know if there's
Speaker 1: a vision and every day it's something new, yes, you can,
Speaker 1: you know, talk about stuff, but to execute on it,
Speaker 1: you really need to, you know, have a vision. And
Speaker 1: I think that's what's missing here. You know, I'm looking
Speaker 1: at the Bloomberg Terminal, the f A, and the most
Speaker 1: recent estimates for Twitter before it's taken public private a
Speaker 1: billion dollars a billion too, and there's like thirteen billion
Speaker 1: of debt on there, if not more. That's a lot
Speaker 1: of leverage thirteen times. I mean, that's even before we
Speaker 1: had some of these advertisers pulling back. That's the exactly.
Speaker 1: So from my perspective, they're they're already down almost in
Speaker 1: terms of the advertising revenue because a lot of advertisers
Speaker 1: have pulled out, and the reason is brand safety, because
Speaker 1: they have gotten rid of all the you know, people
Speaker 1: moderating content. Brand safety is a big issue. So I
Speaker 1: wouldn't be surprised in the near term they lose more
Speaker 1: advertising revenue and they can offset a little bit of
Speaker 1: it using the lower costs because they have fired sev
Speaker 1: of the staff. But net net, you're not gonna make
Speaker 1: a big jump in even dug growth because this is
Speaker 1: gonna be tough. And remember those fixing up people want
Speaker 1: their money back. It's strange. Alright, let's talk about the
Speaker 1: streaming business, because it turns out it's easier to get subscribers.
Speaker 1: It's a little bit harder to make money off of
Speaker 1: those subscribers. And for the Walt Disney Company, it was
Speaker 1: such a big deal that they made a big change
Speaker 1: at the top, bringing back to Bob e to b
Speaker 1: CEO for a couple of years. I'm gonna have talked
Speaker 1: to Mark Douglas. He's smart on all this stuff. He'st
Speaker 1: president and CEO of Mountain Mountain is an advertising software
Speaker 1: company enabling brands to drive measurable conversions, revenue, and site business. Hey, Mark,
Speaker 1: it turns out I guess that again, a lot of
Speaker 1: these streaming companies are realizing it's hard to make money.
Speaker 1: Maybe we need to think about advertising. What did you
Speaker 1: make the news at Disney today? Well, I mean it
Speaker 1: was I think a shock to everyone. I've talked to
Speaker 1: folks at Disney as recently as the middle of last week,
Speaker 1: and if they had any idea this was about to happen,
Speaker 1: they did a very good job of hiding that. So
Speaker 1: I think it was definitely shocking news. Um. But you know,
Speaker 1: these are um challenging times in the television industry, mainly
Speaker 1: because there's a lot of innovation, a lot of change.
Speaker 1: And so if you have a track record of managing
Speaker 1: large companies but haven't had a track record and and
Speaker 1: I'm not saying of you know, essentially innovating while doing that,
Speaker 1: you're that's probably gonna be a real challenge for you.
Speaker 1: I don't know if that was the case, um with
Speaker 1: the person Bob is replacing, but I think Bob Iger
Speaker 1: definitely has that track record, and that's why Disney needs them. Well,
Speaker 1: I mean, you need to, as the CEO of a
Speaker 1: company that's worth when Bob Iger was running it, you know,
Speaker 1: two hundred billion dollars, not only innovate and make money
Speaker 1: on the products that you're developing, but also somehow take
Speaker 1: care of succession. Right, you can't just leave with nobody
Speaker 1: good in charge, or at least two people good in charge.
Speaker 1: So the idea is that Bob Iger leaves shapec is
Speaker 1: a successor. Shape is not good enough, and now they
Speaker 1: have zero bench, there's no one else to choose from.
Speaker 1: They have to call Bob Eiger back. Isn't that crazy? Well?
Speaker 1: I may, that's one way of looking at it, But
Speaker 1: I think also, um, look a lot of you you
Speaker 1: have a lot of things have changed since Bob left.
Speaker 1: You have Netflix and Ring the market, Disney them in
Speaker 1: terms of bad supported streaming, Disney themselves announced with Disney
Speaker 1: Plus they're going to be doing the same. You have
Speaker 1: Apple actually a lot of rumors about Apple um about
Speaker 1: to do the same. Um. Just the world has changed
Speaker 1: in terms of the economic conditions, and so you know,
Speaker 1: it's it's when you have someone who has this fifteen
Speaker 1: year track record, knows the business. Sometimes you know, you
Speaker 1: go back to the bench, so to say, and that's
Speaker 1: what they did here. I get your point completely, but
Speaker 1: I also don't think it was a it's a bad
Speaker 1: choice to say, Look, let's let's go with let's let's
Speaker 1: redo this, let's do this one more time, two years,
Speaker 1: line it up for the future, and then, you know,
Speaker 1: hopefully be in a much stronger place at the end
Speaker 1: of that. Mark, what if you left Mountain, what have
Speaker 1: you found something else? Maybe you want to dedicate the
Speaker 1: rest of your life to charity, so you give it
Speaker 1: to Ryan. Ryan Reynolds takes over. He makes it maybe
Speaker 1: a year and a half too. He's no good. You
Speaker 1: can't do the business. It's just a pretty face and
Speaker 1: reads a script. Do you got a plan B for that?
Speaker 1: Someone else gonna take over? I the least, don't pass
Speaker 1: along that description. I don't think Ryant that's a pretty
Speaker 1: face reading the script. But the and but I'll make
Speaker 1: sure he knows that you said that. Okay, all right,
Speaker 1: but you do look at the case of Salesforce. Totally
Speaker 1: different company, it's totally different industry. The only people most
Speaker 1: people know that um Mark Bennioff left, you know, did
Speaker 1: that he left the company? At that he had built
Speaker 1: and went off and did something else and wound up
Speaker 1: and left some very capable people in charge. But he
Speaker 1: wound up coming back. And that's what we're talking about here,
Speaker 1: that DNA to build and to see the opportunities and
Speaker 1: to be willing to take the risk that is very,
Speaker 1: very hard to find. And when you have it formally
Speaker 1: as your CEO, and now as as you know someone
Speaker 1: that was on your board and that person is willing
Speaker 1: to come back at a critical moment, I think it's
Speaker 1: always going to be the right choice. And it was
Speaker 1: the right choice for Salesforce, It's probably gonna be the
Speaker 1: right choice for Disney, and those are not the only
Speaker 1: two examples of that happening. Yeah. Well, Mark, I've covered
Speaker 1: this stock for thirty years and in my take today
Speaker 1: as I read this was this is not a victory
Speaker 1: lap for Bob Iger. It's an admission that his succession
Speaker 1: plan was a complete failure. He had a great he
Speaker 1: had a great one at one point with Jay Russulo
Speaker 1: and Tom Stagg's, but he blew that up as well.
Speaker 1: So here we are, Um, he only has two years.
Speaker 1: I think one of his top jobs, in addition to
Speaker 1: fixing the streaming is to find a successor. I mean,
Speaker 1: I wonder if they're gonna go external, internal, any thoughts
Speaker 1: you're hearing the well, I think I think that's not
Speaker 1: his first priority. I mean, this was announced yesterday. Today
Speaker 1: is his literally is his first day back. I think
Speaker 1: the first priority is vision where they want to be. Um,
Speaker 1: there's a lot of people who left Disney and very
Speaker 1: see in your roles who um, I wouldn't be surprised
Speaker 1: if they came back also, um who left over the
Speaker 1: last year or so. So I think it's first, what's
Speaker 1: the vision. Let's make sure we have the right team
Speaker 1: execute on that vision. And I do think that if
Speaker 1: you're Bob, you you are looking at the situation and saying, look,
Speaker 1: we want to make sure that twenty four months from now, UM,
Speaker 1: when we do this again, that we have what's you know,
Speaker 1: really the companies in the right place and the team
Speaker 1: is in the right place and and and learn from
Speaker 1: that and that that I think that's what's going to happen.
Speaker 1: But you have to just keep reiterating you you can't
Speaker 1: lead a company. Leaders have vision. Leaders have are fearless
Speaker 1: and and you know, and they know where they want
Speaker 1: to go. And that's that's task number one. And and
Speaker 1: what about Mark? What about I feel like there's so
Speaker 1: much they've left on the table in terms of the
Speaker 1: stream business. Right, I have Disney and I have Hulu,
Speaker 1: and I have Espn Plus, and I still can't watch
Speaker 1: the games that I want to watch. I'm not gonna
Speaker 1: go back to cable um. Like a lot of people,
Speaker 1: I just want everything in one place as well? Is that?
Speaker 1: Am I the only one who wants it that way?
Speaker 1: Are they smart to have, you know, ten different apps
Speaker 1: for their content or do they need to make a
Speaker 1: change there? Well? They I mean they're they have a
Speaker 1: really good lineup of assets here. Hulu gives them live
Speaker 1: con excuse me, gives them live content as well as
Speaker 1: original content. They have Disney have ABC, they have Espn,
Speaker 1: they have the Disney Plus, have Star I mean literally
Speaker 1: I was watching the latest Star Wars last night, So,
Speaker 1: I mean they have an incredible bunch of content. The
Speaker 1: other thing I don't think most people think about when
Speaker 1: it comes to TV in general, it's under monetized. Then
Speaker 1: more people watch television than use social It has three
Speaker 1: times the engagement three hours a day watching TV For
Speaker 1: the average individual, an hour day on social media, but
Speaker 1: somehow makes less money. So this, this is a business
Speaker 1: that is primed for, you know, to really expand the
Speaker 1: monetization move beyond just upfronts. From monetization, really moved to
Speaker 1: capturing more revenue with the with that triple that engagement.
Speaker 1: And so I think you're gonna see a lot of
Speaker 1: consolidation and content business. I think companies like Disney, you're
Speaker 1: gonna figure out how to monetize them much more effectively.
Speaker 1: Bob is on record talking about them in the past.
Speaker 1: And once you monetize them more effectively, then you're gonna
Speaker 1: look to buy more content more TV networks. So this
Speaker 1: is gonna be an exciting two years. I think this
Speaker 1: is kicking off a wave of a lot of changes
Speaker 1: in the business model and consolidation in terms of TV networks.
Speaker 1: All right, Mark, great stuff, and you want to talk
Speaker 1: about an under monetized audience, I'll give you over the
Speaker 1: air radio. Mark Douglas, President and CEO of Mountain joining
Speaker 1: us onto this Disney News. I want to get right
Speaker 1: to our next guest, Michael Nathanson, Founding partner and senior
Speaker 1: Research Annel set MOFA at Nathanson and Folks he is
Speaker 1: just one of the top voices on Wall Street covering
Speaker 1: the media industry. He knows all the players. I want
Speaker 1: to get his thoughts here on the Disney news. Mike,
Speaker 1: thanks so much for joining us here. When you saw
Speaker 1: the news, What do you think here? What do you
Speaker 1: think is going on at the House of Mickey Well? First,
Speaker 1: if it was a joke, Paul Um, I thought someone
Speaker 1: who was playing a joke on me. Um. After realizing
Speaker 1: it was real, I don't know if you can hear this,
Speaker 1: lens alligned me breaking out, But if I realized it
Speaker 1: was real, Um, it made sense to me. We have
Speaker 1: these you know, been a doubt about streaming economics. We
Speaker 1: thought that that Disney strategy RESI the streaming had changed
Speaker 1: a lot. They had gone broader and moved away from
Speaker 1: kind of their tent poles, And it made sense to
Speaker 1: me because we had not recommended Disney. We think the
Speaker 1: losses and streaming a way too large. We thought the
Speaker 1: company was too optimistic about their businesses ahead. I think
Speaker 1: Bob brings a real clear eyed view of what they
Speaker 1: have to do to kind of fix their company. Isn't
Speaker 1: there anyone else in the d and nine thousand employees
Speaker 1: at Walt Disney. I mean, this guy is uh, you know,
Speaker 1: seventy one. He's retired for a couple of years now,
Speaker 1: and he picked his own successor. Um, don't they have,
Speaker 1: like at two billion dollar companies plans like with a
Speaker 1: third string guy and a fourth string guy. Yes. To
Speaker 1: be fair, the bench that was in place when Bob
Speaker 1: made the decision had been hurt by succession planning that
Speaker 1: went awry. Do you remember they had picked Tom Staggs
Speaker 1: to be the CEO and he left and they had
Speaker 1: a bake off for that job Jay Rozzulo. So they
Speaker 1: had a really strong bench that they were building towards
Speaker 1: succession planning, and that bench became weaker Uh as part
Speaker 1: of the planning. I don't think there's anyone who has
Speaker 1: the too Bob Brings is. Bob brings the level of success.
Speaker 1: He's able to look look things honestly and share bad news,
Speaker 1: and I think when you're a new CEO it's really
Speaker 1: hard to communicate bad news. He can share bad news
Speaker 1: with us, the bad news being cord cutting is running amuck. UH.
Speaker 1: Streaming will not be profitable. The company needs to generate
Speaker 1: more cash flow, and I think I think you know,
Speaker 1: it takes someone with that type of success and experience
Speaker 1: to be able to deliver bad news and then radically
Speaker 1: make changes. And streaming isn't profitable. Michael, What why do
Speaker 1: we want to own this stock? Is it because they
Speaker 1: have an awesome cruise line business? Is it because every
Speaker 1: family in the country has to take um their kids
Speaker 1: to the parks at least once? Um? But I mean,
Speaker 1: what else do they have If it's ESPN, I guess
Speaker 1: is fantastic, But you've got to have cable, and who
Speaker 1: wants to have cable anymore? Right? So so let's let's
Speaker 1: let's look at there's there's three pieces to the puzzle.
Speaker 1: There's the park business, which is a great business that
Speaker 1: um generally you know, a ton of free cash flows
Speaker 1: managed really well. That business is exceptionally good. There's a
Speaker 1: linear network business that we know is heading in the
Speaker 1: wrong direction, a skyby mashed free cash flow. It has
Speaker 1: not been managed that way as of late. That business
Speaker 1: is not the reason why we're excited about Disney. That's
Speaker 1: going to be managed. It's a streaming business. We don't
Speaker 1: think playing abroad gell entertainment streaming strategy the way Netflix
Speaker 1: doing it. Amazon Prime is doing it is good football
Speaker 1: Disney company. Right, Walt Disney has these strong brand, strong temples,
Speaker 1: family based content, they should basically have less subscribers that
Speaker 1: pay a higher price. Right. So when I look at
Speaker 1: the stock, what's embedded in the stock as of yesterday
Speaker 1: morning or last night was you know, three and a
Speaker 1: half billion dollars of losses in streaming. Right, it doesn't
Speaker 1: make any sense when you don't need to spend all
Speaker 1: that money on extremeous content when you have the temples
Speaker 1: they have. So the path they went down about two
Speaker 1: years ago was to challenge Netflix in terms of the
Speaker 1: long term potential of the business to be a global,
Speaker 1: you know, massive player and have subs as high as
Speaker 1: the sky. They could still have a great business with
Speaker 1: with not having the same you know focus to just
Speaker 1: be all things all people. Right, That's the appeal is
Speaker 1: that this price, what are you paying? Not paying very
Speaker 1: much at all for streaming if it becomes profitable or
Speaker 1: even break even to where it is today. Right, I
Speaker 1: felt to the previous regime was not going to make
Speaker 1: that happen because they were weathered to a strategy that
Speaker 1: was blowed and just folks that that are listening to
Speaker 1: our thirty three analysts that cover the Walt Distian Company
Speaker 1: have buys, only five have hold ratings. Michael Nathanson was
Speaker 1: one of those hold ratings, So we've got that right. Hey, Michael,
Speaker 1: I think you know, if I'm the board of directors,
Speaker 1: one of the things I say is, hey, turn around
Speaker 1: this company fixed streaming, but also delivered to us, you know,
Speaker 1: as soon as possible a succession plan, and try to
Speaker 1: get it right this time. You know, bring back stags,
Speaker 1: bring back for solo. The street will take either of those.
Speaker 1: I think, how do you think the succession will work
Speaker 1: in two years? Yeah? Good, good question. By the way,
Speaker 1: we were a hold until this morning when we upgrade
Speaker 1: this good stuff stuff. Yeah, so we were old. Yeah,
Speaker 1: it wasn't fun being against what Disney Company. But to
Speaker 1: your point, I think the mistake was Bob was not
Speaker 1: a creative person. He worked in the parks his whole career.
Speaker 1: You could say that I wasn't creative, But you know,
Speaker 1: Iger was ahead of programing at ABC, worked at ABC Sports.
Speaker 1: He then became very close to um the content creators
Speaker 1: at Disney, and helped help there. So I think you
Speaker 1: need someone from the other side of the house. You
Speaker 1: don't need a park exact use someone from the content side.
Speaker 1: I would spend my time that was Bob identifying two
Speaker 1: or three people who are the content creators too, to
Speaker 1: be my successors. You know, it can't be someone from
Speaker 1: the park side. Alight, all right, Michael Nathans and good stuff.
Speaker 1: Really appreciated big news, big news also um MOFA Nathans
Speaker 1: and upgrading the stock here today from a hold to
Speaker 1: a bye. So good stuff there. Michael Nathanson, founding Partner
Speaker 1: and senior Research Channels at MOFAT Nathanson here and the
Speaker 1: stock is is higher here. I think you know, investors
Speaker 1: are are looking for Bob By at the bare minimum
Speaker 1: to just kind of steady the ship. It maybe give
Speaker 1: some direction and give some U confidence and it's maybe
Speaker 1: some kind of a little bit of a turnaround. And
Speaker 1: it's not like we should turn in the entire company,
Speaker 1: but there's definitely some big fixes it. Let's get now
Speaker 1: to my co host on the television show Bloomberg E
Speaker 1: t f i Q. Katie Greifeld, joins us in the
Speaker 1: Interactor Broker studio. We broadcast at one pm. So let's
Speaker 1: make this quick. Uh, what are we talking about? On
Speaker 1: the show today. On the show today, we're going to
Speaker 1: talk about e t f s. We're gonna talk a
Speaker 1: little bit though about the Gray Skille Bitcoin Trust. Is
Speaker 1: not an e t F. As you know, I'm obsessed
Speaker 1: with it. This thing. It closed Friday at at discount
Speaker 1: to its underlying holdings. This is a ten billion dollar tracks.
Speaker 1: Why is that by? Why is such a I know
Speaker 1: I ask people this every couple of days, but why
Speaker 1: is such a huge discount? Do investors just not believe
Speaker 1: that Gray Scale has all of the bitcoin it should
Speaker 1: or let me tell you about it. So it's been
Speaker 1: treating at a discount for going on a year now.
Speaker 1: So that's just because of the way this trust is
Speaker 1: set up so long before f t X, right back
Speaker 1: when we thought Sam bankman Fried was a super genius
Speaker 1: who was going to fix the world. Yes, back when
Speaker 1: we were young and different people. But it has so
Speaker 1: this discount it's been around for a while, it's widened
Speaker 1: dramatically in the past couple of weeks, and I mean
Speaker 1: I've been asking around why because basically what that means
Speaker 1: is that people are offloading shares of GPDC quicker than
Speaker 1: they're selling bitcoin. It was just something that conversation with
Speaker 1: James Stayford of Bloomberg Intelligence. His take is that people
Speaker 1: just want to get away from anything that could have
Speaker 1: any hint of contagion risk right now, even if it's
Speaker 1: only a remote possibility. So if you think of it
Speaker 1: from that lens, that kind of makes sense. Because you
Speaker 1: think about gray Skills Parent, that would be buying opportunity
Speaker 1: right assuming you don't think Bitcoin is going to drop
Speaker 1: more than no. But what James is saying is that
Speaker 1: if you think about gray Skills parent Digital Currency Group,
Speaker 1: they also own Genesis. That's a Barry Silbert company. Yes,
Speaker 1: that's the Barry Silver Empire. Uh, the Empire is a
Speaker 1: little bit shaky right now relative to how it appeared
Speaker 1: to be two weeks ago. So there's just a lot
Speaker 1: of fear in this industry right now. There's been cascading
Speaker 1: blow ups. No one knows where to look next. And
Speaker 1: even though by you know everything that we know Gray
Speaker 1: Skill is absolutely fine, there's just a lot of fear
Speaker 1: in the marketplace generally defined. Do people feel like this
Speaker 1: is a defining moment for crypto bump in the road
Speaker 1: part of just the growing process for new classet class
Speaker 1: Where are we takes, it feels a little panicky. It's
Speaker 1: absolutely a life altering event. It's absolutely an existential moment.
Speaker 1: But if you look past I don't know, the past
Speaker 1: couple of years, really all of Bitcoin's existence, trawl downs
Speaker 1: are not unusual. If you think back to pass blow
Speaker 1: ups Mount Gox, for example, that was the exchange a
Speaker 1: couple of years ago. That exchange blew up spectacularly. It
Speaker 1: was hacked. It was a huge scandal. And still and
Speaker 1: what did Mount Cox stand for? I was hoping you
Speaker 1: would tell me. So. Mount Cox was the first really
Speaker 1: big and popular crypto exchange. It was founded as an
Speaker 1: exchange for playing cards in the Dungeons and Dragons type
Speaker 1: of game. It was called Magic the Gathering online exchange
Speaker 1: Mount I never played Magic the Gathering neither did I really.
Speaker 1: I have two brothers who Dungeons and Dragons. Guy, I
Speaker 1: bet I was, you know what. I was mildly into
Speaker 1: it in like third or fourth grade, before I had
Speaker 1: any inkling as to how it worked, just because I
Speaker 1: also loved Deaf Leopard Pyromania at the time. It was
Speaker 1: my favorite record. So, you know, people change, I thought
Speaker 1: you were like a motorcycle guy, which seems unintuitive to
Speaker 1: also say that you were into I'm telling you this
Speaker 1: is a long time ago, ka, before I developed, you know,
Speaker 1: before I turned into a man in any in any case,
Speaker 1: um you know. So so Mount Cox was the first
Speaker 1: one to fantastically um implode, and we've since had a
Speaker 1: number of events a lot this year. It seems like
Speaker 1: more than ever this year, but maybe that's because of
Speaker 1: the size. One of the open questions is what happened
Speaker 1: to this like half a billion dollars worth of coins
Speaker 1: on the ft X exchange. I think the debate right
Speaker 1: now is was there a hack? SPF said in his
Speaker 1: famous you know, off the record conversation with his friend
Speaker 1: as a reporter for Vox Beautiful, it was a hack,
Speaker 1: but maybe it was the Bahamian authorities, um, you know,
Speaker 1: asking him to get it so that the US authorities couldn't.
Speaker 1: It's like, I think, one of the most fun and
Speaker 1: mysterious issues of the whole Oh. Absolutely, I mean, this
Speaker 1: is an existential moment, but as a journalist, it's just
Speaker 1: an embarrassment of riches. There's so many different threads to
Speaker 1: pull on here, uh, and I mean just the players involved.
Speaker 1: We talked about Elizabeth Holmes just got eleven years in prison. Yes, right,
Speaker 1: wasn't that on Friday? I think, and I wonder what
Speaker 1: kind of prison did she um dupe more people? Was
Speaker 1: she the source of more financial ruin than Sam Bankman Freed?
Speaker 1: I was actually hoping you would speculate on that, and
Speaker 1: I don't speculate. The question is where do you rank
Speaker 1: these people in terms of how much damage they've done?
Speaker 1: F t x more than a million creditors. That's just
Speaker 1: a staggering number. I mean, I'm sure of them only
Speaker 1: had a hundred dollars or so on fts. The top
Speaker 1: fifty had at least twenty one million apiece. The top
Speaker 1: two had more than two million each. And it's like
Speaker 1: Bernie made Off, Elizabeth Homes same, Bankman Freed. Are always
Speaker 1: people playing in the same league. I don't know under investigation, well,
Speaker 1: if there is even I don't even know if there's
Speaker 1: fraud here, right, I mean do we know yet? I
Speaker 1: don't know. I don't know. I don't know, And I
Speaker 1: would not make that kind of accusation, no idea. All right,
Speaker 1: Katie Gray felt, uh, we have some crypto stuff, so
Speaker 1: that was good. We appreciate that. West Kosova, he is
Speaker 1: the host of Bloomberg Big Take podcast West, What do
Speaker 1: you have for us here? Thanks for having me on again. Yes,
Speaker 1: this morning, we have a really interesting show that's based
Speaker 1: on a story that Sheridan Prasso wrote about Shean, which
Speaker 1: is the world's largest online retailer of clothes as the
Speaker 1: Chinese company, they sell a ton of fast fashion. These
Speaker 1: are clothes that are really cheap. They're kind of on trend,
Speaker 1: you buying without having to think too much because it
Speaker 1: costs so little, you wear them for a while, and
Speaker 1: really they're kind of meant to be disposable, which is
Speaker 1: why they keep people coming back for more and more.
Speaker 1: But it then causes all kinds of problems. Yeah, I
Speaker 1: mean fast fashion. It's a notoriously awful product. I mean
Speaker 1: for the environment, it's bad for humanity, it's bad. Movies
Speaker 1: have been made about the disastrous impact, and consumers continue
Speaker 1: to go back for more. Yeah, and it's because you know,
Speaker 1: you can just buy and buy these things, and especially um,
Speaker 1: you know, younger people who kind of want to be
Speaker 1: trendy and don't have a lot of money to spend.
Speaker 1: It becomes kind of like a fun thing to do
Speaker 1: and don't care apparently about the people who are employed
Speaker 1: in making this clothing, right, yes, and that of course
Speaker 1: is the subject of the story and our podcast. So
Speaker 1: she In Uh makes uh a lot of his clothes
Speaker 1: from cotton that comes from the ship Jan region, which
Speaker 1: is this northwestern region of China that we've heard a
Speaker 1: lot about in the news because the US and other
Speaker 1: countries have accused the Chinese government of imposing this campaign
Speaker 1: of forced labor on the weaker Muslim people there, putting
Speaker 1: the internment camps and as part of that, forcing them
Speaker 1: to work in different industries, including harvesting of cotton. And
Speaker 1: so what this story is all about is that Sheridan Prasso,
Speaker 1: the reporter, went to try to find out where does
Speaker 1: the cotton in clothing from Sheen come from? And she
Speaker 1: who she went and she actually tested garments that came
Speaker 1: from there and found out that yes, indeed, it does
Speaker 1: come from that region. And what are what are some
Speaker 1: of the western retailers that that that may be involved
Speaker 1: in the process, what what do they say? What's kind
Speaker 1: of the feedback you're getting from the industry. Well, what's
Speaker 1: interesting about this is sherry reports is that because she
Speaker 1: In is entirely online, they don't have really any retail operations.
Speaker 1: You know, you go into h and M, you go
Speaker 1: into Zara Gap. You know, all these clothing retailers and
Speaker 1: if you look at the labels on those clothes, allow
Speaker 1: of them come from Thailand. Now they come from Malaysia,
Speaker 1: they come from Vietnam. About their places, uh, in in
Speaker 1: part because uh, you know, manufacturing is easier, even cheaper
Speaker 1: than it is in China, but also because they can
Speaker 1: avoid the problems of sourcing cotton that then becomes problematic
Speaker 1: because of the Xinjiang region and everything that's involved in
Speaker 1: the politics of not sourcing materials from there. Isn't it
Speaker 1: dangerous to even be reporting in that part of the world. Um, well,
Speaker 1: I don't know that there's a danger. Person in this story.
Speaker 1: She had bought garments that came from she and she
Speaker 1: sent them out to a lab to have them tested. Uh.
Speaker 1: And then they use this very interesting process which should
Speaker 1: be listening to the podcast you can here Erry explained
Speaker 1: she is I wanted the guests on the show today.
Speaker 1: Um where they tested and they are able to determine
Speaker 1: not only did this cotton come from Shinjang Um, but
Speaker 1: exactly where like they know because of the way they
Speaker 1: tested that it didn't just come from China and didn't
Speaker 1: just come from particular region. It came exactly from there.
Speaker 1: That's how sophisticated the testing is. Now. Well, you know,
Speaker 1: before this story was I didn't even I wasn't even
Speaker 1: aware of this company, never heard of it before. But
Speaker 1: it's a big company. Uh. You got some reporting in
Speaker 1: their backed by investors including Sequoia Capital and I d
Speaker 1: G Capital. She And conducted a funding round this year
Speaker 1: that put its value at one hundred billion dollars. So
Speaker 1: this is a big company. Do we have any response
Speaker 1: from the company. Uh, yeah, you're right, it is huge.
Speaker 1: And it's funny because I hadn't really heard about it either.
Speaker 1: But you know I talked to my daughters, they sure
Speaker 1: heard about it. And you talked to you know, young people,
Speaker 1: they know all about this company. And so just go
Speaker 1: to show you like you go on TikTok, and there
Speaker 1: are people who who like put out on TikTok all
Speaker 1: their she in halls where they show all the clothes
Speaker 1: that they got um, and so this has become kind
Speaker 1: of like a thing. Um. The company says that they
Speaker 1: may have agreements with supply suppliers and the suppliers tell
Speaker 1: them that the clothing is all uh, you know, made humanly,
Speaker 1: and that's the sourcing of the material is smiling, that is,
Speaker 1: share your rights. There's an interesting sort of buying that
Speaker 1: she and finds itself in because they're Chinese company. If
Speaker 1: they deny that the clothing came or the cotton came
Speaker 1: from Shenjang, then they could get themselves in trouble with
Speaker 1: China because China claims that there's absolutely nothing wrong with
Speaker 1: sourcing it and they say that there is no forced
Speaker 1: labor UH. And then of course if they say that
Speaker 1: it does come from there, then they get in trouble
Speaker 1: with Western government. So they're kind of in between. But
Speaker 1: they're responses. There is no forced labor used in Jinjang,
Speaker 1: that is the Chinese government's UH position, and their suppliers
Speaker 1: certified that the clothing is made UH correctly. So But
Speaker 1: I mean um Chinjang is Chinese. She and his Chinese
Speaker 1: TikTok is Chinese. I'm guessing your kids aren't. But are
Speaker 1: the customers for She and mostly Chinese UM consumers Uh.
Speaker 1: She sells close all over the world, in Europe, in
Speaker 1: the United States, everywhere, UH, And so they are truly
Speaker 1: a global retailer, so many many of the customers, I mean,
Speaker 1: Ali Baba is a global retailer too, but most of
Speaker 1: their pyres are in Asia. Right, It's not like you
Speaker 1: and I are gonna say, hey, I need a vacuum
Speaker 1: cleaner and go online and get it at Ali Baba.
Speaker 1: It's just not as likely as someone in Asia buying it.
Speaker 1: That's right. Although, um, for this clothing, because it's cheap
Speaker 1: and it's easy to ship, you know, it just comes
Speaker 1: in a little envelope like anything else. Uh, then it
Speaker 1: shipped all over the world. And because the uh, these
Speaker 1: things don't meet the threshold for value that the U
Speaker 1: S Customs Enforcement Agency would like take a look at
Speaker 1: these things. They just come to the mail and you know,
Speaker 1: we're talking millions and millions of packages. So there's no
Speaker 1: way that the US can track every envelope that comes in.
Speaker 1: All right, was great stuff as always, West Coast of
Speaker 1: a host of Bloomberg's Big Take podcast. You can listen
Speaker 1: to The Big Take podcast on I Heart Radio, app,
Speaker 1: Apple and anywhere else you get your podcast and listen
Speaker 1: to The Big Take every night out of eleven pm
Speaker 1: Wall Street Time on Bloomberg Radio. Thanks for listening to
Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to
Speaker 1: interviews of Apple Podcasts or whatever podcast platform you prefer.
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.
Speaker 1: Pet On false Sweeney I'm on Twitter at pt Sweeney.
Speaker 1: Before the podcast, you can always catch us worldwide at
Speaker 1: Bloomberg Radio