WEBVTT - Paramount to Settle Lawsuits Against WBD Deal 

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<v Speaker 3>We want to get to one of the big company

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<v Speaker 3>news stories this morning, and that is Paramount Skydance reaching

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<v Speaker 3>a settlement, according to people familiar with the matter. with

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<v Speaker 3>California and other states sowing to block its proposed acquisition

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<v Speaker 3>of Warner Brothers Discovery. That means we need to bring

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<v Speaker 3>in Geetha Ranganathan, our media analyst here at Bloomberg Intelligence,

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<v Speaker 3>to cover this. She's been covering this story from the beginning. Geetha,

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<v Speaker 3>this sounds like this was the one thing we're waiting for.

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<v Speaker 1>What are you hearing in terms.

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<v Speaker 3>Of how solid this potential compromise is?

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<v Speaker 4>Hey, Scarlett. Yeah, I think it's pretty solid just from,

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<v Speaker 4>you know, whatever we've been hearing over the weekend. So

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<v Speaker 4>we've kind of gone from, you know, is this deal

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<v Speaker 4>ever going to close to kind of broader promises to

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<v Speaker 4>now some concessions that seem really, really reasonable from a

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<v Speaker 4>paramount standpoint. And I say that because one of the

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<v Speaker 4>things that, you know, I think investors were really fearful

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<v Speaker 4>about with this merger and the potential settlement was, was

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<v Speaker 4>whether they would have to divest assets, especially whether they

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<v Speaker 4>would have to divest the cable networks, which would have

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<v Speaker 4>been really problematic because it would directly have affected their

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<v Speaker 4>synergy target. And they have a really ambitious synergy target

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<v Speaker 4>of $ 6 billion. So it looks like they don't have

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<v Speaker 4>to do anything on that front. They do, however, have

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<v Speaker 4>to promise to theatrically release 30 films from both studios

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<v Speaker 4>every year, failing which there will be a penalty. They

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<v Speaker 4>also have to make an investment in the California production

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<v Speaker 4>and also maintain the two studio operations so they can't

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<v Speaker 4>dispose off any of the studios.

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<v Speaker 2>But all of.

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<v Speaker 4>That seems to be something that David Ellison will be,

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<v Speaker 4>I think, happy to live with as long as he

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<v Speaker 4>can get this deal closed by that September 30th date

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<v Speaker 4>and avoid those very, very expensive ticking fees.

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<v Speaker 2>Paramount stock is up about 8.5% today. Warner Brothers Discovery

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<v Speaker 2>up about 10%, so the market's happy about that. All right, Geetha,

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<v Speaker 2>I think this is a little bit of be careful

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<v Speaker 2>what you wish for. They're going to get their deal done.

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<v Speaker 2>Now they've got to operate this thing. What are the

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<v Speaker 2>key challenges, do you think, for this combined company going forward?

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<v Speaker 4>Yeah, the biggest challenge there, Paul, is definitely going to

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<v Speaker 4>be the leverage, the debt. So we're looking at about

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<v Speaker 4>$ 80 billion of debt. It's going to be about six

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<v Speaker 4>and a half times levered. So it's really, really going

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<v Speaker 4>to come down, as you just pointed out, to execution

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<v Speaker 4>about getting those synergies and trying to drive this to

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<v Speaker 4>three times leverage within a few years after closing. That's

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<v Speaker 4>a tall order. Given that you have two businesses that

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<v Speaker 4>are in secular decline, which are the TV businesses. Yes,

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<v Speaker 4>they can extract some synergies, but you're doing that at

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<v Speaker 4>the cost of those businesses bleeding further. And then remember,

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<v Speaker 4>the studios is really a very, very up and down business.

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<v Speaker 4>And you've always said this, Paul, it's like it's such

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<v Speaker 4>a hit and hit or miss business. It's not predictable

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<v Speaker 4>at all. So you just look at the two combined

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<v Speaker 4>studios last year. They had about a 30 percent share

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<v Speaker 4>of the domestic box office this year. Year to date,

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<v Speaker 4>they're only at about 10 percent. So, you know, it's

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<v Speaker 4>it's again, it's going to be a tough slog on

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<v Speaker 4>that on that front. streaming is definitely a bright spot

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<v Speaker 4>for both companies. But again, we're seeing even streaming leaders

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<v Speaker 4>really struggle. You look at the likes of Netflix and,

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<v Speaker 4>you know, every day we see some engagement data that

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<v Speaker 4>comes out that doesn't look so optimistic, really struggling against

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<v Speaker 4>the likes of YouTube and some of the other social

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<v Speaker 4>media platforms. So whichever way you kind of slice or

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<v Speaker 4>dice it, this is really going to be a tough

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<v Speaker 4>road ahead for Paramount Skydance.

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<v Speaker 3>Yeah, the company, Paramount, has promised merger synergies of $ 6 billion.

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<v Speaker 3>So that means a lot of cost cuts, probably job eliminations.

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<v Speaker 3>And you mentioned all the challenges operationally. If they're going

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<v Speaker 3>to grow their way out of this debt, what part

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<v Speaker 3>of the business has the best prospects for growth?

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<v Speaker 4>Yeah, definitely. Streaming, I think, has the best prospects. Remember,

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<v Speaker 4>this is at its heart, David Ellison and the whole

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<v Speaker 4>Oracle backing at its heart is a technology operation. So

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<v Speaker 4>I think one of the things that the market and

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<v Speaker 4>investors are kind of banking on is the use of

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<v Speaker 4>technology in the media operations, whether that's for content creation,

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<v Speaker 4>content production, eliminating a lot of those post-production costs. I mean,

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<v Speaker 4>they do have a seat at the table when it

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<v Speaker 4>comes to AI. And so it's going to come down

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<v Speaker 4>how well they can kind of leverage some of the

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<v Speaker 4>edge that they have there and implement those across their

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<v Speaker 4>media operations. But I think definitely one of the business

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<v Speaker 4>units that everybody is going to be looking at very

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<v Speaker 4>closely is going to be the streaming side and how

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<v Speaker 4>fast they can go profitability. Even though 70% Scarlett off

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<v Speaker 4>the combined company, 70% of EBITDA will still be from

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<v Speaker 4>the secularly challenged TV businesses.

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<v Speaker 6>Yeah.

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<v Speaker 2>30 seconds left here, Geetha. What's the Wall Street's view

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<v Speaker 2>of David Ellison? He's kind of a new entity to

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<v Speaker 2>Wall Street. Has there been enough time for the street

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<v Speaker 2>to get a sense of, is this the management and

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<v Speaker 2>management team that can execute this deal?

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<v Speaker 4>I think they can, Paul. And actually, whatever we've seen

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<v Speaker 4>so far, he's actually been pretty impressive because he's more

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<v Speaker 4>than delivered on the synergy targets for the Skydance acquisition. Remember,

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<v Speaker 4>this is Paramount Skydance. They just executed that transaction. And

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<v Speaker 4>so far, he's actually more than delivered what he had promised.

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<v Speaker 4>So let's see.

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<v Speaker 1>Stay with us.

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<v Speaker 5>More from Bloomberg Intelligence coming up after this. You're listening

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<v Speaker 5>to the Bloomberg Intelligence Podcast. Catch us live weekdays at

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<v Speaker 5>10 a.m. Eastern on Apple CarPlay and Android Auto with

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<v Speaker 5>your podcasts or watch us live on YouTube.

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<v Speaker 2>Edward Price joins us here, non-resident senior fellow at NYU

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<v Speaker 2>joining us here in studio. Ed, I've been getting the

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<v Speaker 2>sneaky feeling that with President Trump in New York for

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<v Speaker 2>a couple of days, with the United Nations General Assembly

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<v Speaker 2>here this week, We've got leaders from Iran coming, which

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<v Speaker 2>is very rare. They were granted some visas. We've got

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<v Speaker 2>President Zelensky here. For some reason, it's just me. I'm

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<v Speaker 2>getting this feeling that we might have some announcements this

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<v Speaker 2>week on maybe Ukraine, maybe Iran, maybe President Trump is

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<v Speaker 2>feeling the pressure with midterms coming up, with diesel at $ 6.

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<v Speaker 6>50.

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<v Speaker 2>Am I just kind of whistling in the dark here,

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<v Speaker 2>or do you think there's possibly some movement here on

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<v Speaker 2>some of these key global issues?

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<v Speaker 7>I don't think you're whistling in the dark. There might

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<v Speaker 7>be some rhetorical movement, and I definitely think that Trump

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<v Speaker 7>is desperate. I mean, diesel at 650 at my local

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<v Speaker 7>gas station is wild. I mean, that's fritzing everybody's brain

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<v Speaker 7>that voted for him. But I use the word rhetorical

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<v Speaker 7>because I'm not sure that he is in control of

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<v Speaker 7>events anymore. Zelensky seems more in control of his war

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<v Speaker 7>than does Trump. Likewise, Xi seems like he's in a

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<v Speaker 7>good position versus Putin. So I think Trump and Putin,

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<v Speaker 7>both of them are desperate. And whatever the announcements, I mean,

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<v Speaker 7>who knows what they're worth.

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<v Speaker 3>So if you say Trump is desperate, he's heading into

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<v Speaker 3>this summit with Xi Jinping in a more desperate position

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<v Speaker 3>than China. What kind of prepackaged announcement do you think

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<v Speaker 3>we'll get versus what actually will be happening between these

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<v Speaker 3>two gentlemen?

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<v Speaker 7>Well, what's actually happening between these two gentlemen is great

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<v Speaker 7>power politics. And Xi Jinping is on the rise. And

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<v Speaker 7>Donald Trump represents a, I hate to say it, it's painful,

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<v Speaker 7>declining power. If we look at measures such as the

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<v Speaker 7>dollar in the next 20 years. So what's actually happening

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<v Speaker 7>between them is that Xi Jinping is telling Trump what's what, frankly.

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<v Speaker 7>I imagine that happens with Putin and Trump behind closed doors.

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<v Speaker 7>What we'll see, you know, for the likes of us

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<v Speaker 7>will be some handshaking, the usual stuff, right? Everyone will

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<v Speaker 7>be smiling and there'll be maybe an agreement on X, Y,

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<v Speaker 7>Z soybean site. But it's all nonsense, right? So we

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<v Speaker 7>are in a period of undeclared great power war. Russia

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<v Speaker 7>is losing its war. I think we're just about winning

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<v Speaker 7>our wars, albeit that's a controversial opinion. And China's watching

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<v Speaker 7>and waiting to see when it gets involved.

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<v Speaker 3>We're winning our wars?

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<v Speaker 1>You mean the Iran war?

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<v Speaker 7>I'm not sure that we're winning the Iran war that

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<v Speaker 7>we described we wanted to fight. But I think, as

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<v Speaker 7>I say before, and I get in trouble for this.

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<v Speaker 7>In a counterfactual where we didn't fight Iran and where

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<v Speaker 7>we didn't back Israel, and in a counterfactual where Ukraine

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<v Speaker 7>lost its war to Russia, that universe, I think, is

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<v Speaker 7>the universe that we would have lost World War III

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<v Speaker 7>right off the bat. So I think we're somewhere in

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<v Speaker 7>the middle because we are reacting to these undeclared, we

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<v Speaker 7>sometimes call it hybrid war. The West is doing things.

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<v Speaker 7>It's just a shame that we are led by someone

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<v Speaker 7>who doesn't really know what they're doing.

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<v Speaker 2>So given that midterms, how do you think these are

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<v Speaker 2>going to play out here? Do you think President Trump

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<v Speaker 2>cares about the midterms? Because one could argue some of

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<v Speaker 2>his key policies are not supportive of the Republican Party,

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<v Speaker 2>that being tariffs, that being starting a war in the

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<v Speaker 2>middle of the oil, you know, global oil patch. Those

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<v Speaker 2>things aren't they generally don't pull very well.

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<v Speaker 7>Well, President Trump has never had policies, per se. He's

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<v Speaker 7>never had a thought-out, programmatic piece of paper where you can,

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<v Speaker 7>as a consumer of politics, as a voter, go and

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<v Speaker 7>look at it and say yes or no. What he's

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<v Speaker 7>done is systematically attacked our constitutional government, systematically attacked our alliances.

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<v Speaker 7>and try to undermine his own country on the world stage.

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<v Speaker 7>And I think that the voters are beginning to realize this.

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<v Speaker 7>It's a shame that it took diesel, of all things,

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<v Speaker 7>to really get through to people, because there were any

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<v Speaker 7>number of clues that President Trump was not a conventional

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<v Speaker 7>politician offering us what we wanted. But no, I don't

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<v Speaker 7>think there's anything that he can say at this point

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<v Speaker 7>that are going to bring people back on board if

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<v Speaker 7>they're losing their farms, literally losing the farm.

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<v Speaker 3>Meantime, our allies are looking the other way and trying

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<v Speaker 3>to form alliances with other countries. I'm thinking about Canada

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<v Speaker 3>and the overtures it's made to the European Union.

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<v Speaker 1>Is that a good thing?

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<v Speaker 7>I think the European Union made the overture to Canada now.

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<v Speaker 7>I think they saw the opportunity to maybe checkmate Trump.

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<v Speaker 1>The associate member.

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<v Speaker 7>Yes, yes, which makes me as a British rather jealous

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<v Speaker 7>because I used to have an Italian passport, you know,

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<v Speaker 7>de jure. Look, I think that's a good development. I

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<v Speaker 7>think Mark Carney is an absolute player. He's really giving

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<v Speaker 7>the world an example of what democratic leadership looks like

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<v Speaker 7>in contrast to Trump. The European Union itself doesn't have

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<v Speaker 7>a presidency, right? So my interpretation is they've been looking

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<v Speaker 7>around for an executive function. Germany doesn't want to do

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<v Speaker 7>it for obvious reasons. And now they're like, oh, there's

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<v Speaker 7>this very interesting Canadian guy that seems to be able

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<v Speaker 7>to address large groups of people. So maybe we'll make

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<v Speaker 7>him the honorary president of the European Union.

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<v Speaker 2>Do you think the European Union, other than Germany, is

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<v Speaker 2>prepared to make the investments that they initially talked about,

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<v Speaker 2>whether it's in defense or in infrastructure? Again, people feel

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<v Speaker 2>pretty confident that Germany is moving in the right direction.

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<v Speaker 2>How about the rest of Europe?

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<v Speaker 7>Well, I'm not sure that places like Spain or Italy

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<v Speaker 7>ever had much of a military tradition. And I don't

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<v Speaker 7>think it matters. I'm not being rude. I just don't

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<v Speaker 7>think that they... maybe since the 16th century, Spain hasn't

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<v Speaker 7>really been a military player. It doesn't really matter. If

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<v Speaker 7>Poland and Germany rearm properly, and if France extends its

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<v Speaker 7>nuclear umbrella, and if my country, the UK, gets back

0:11:26.700 --> 0:11:29.600
<v Speaker 7>to proper defense spending, and a bit more of a

0:11:30.120 --> 0:11:32.869
<v Speaker 7>bullish attitude in the world, we could roll Russia in

0:11:32.910 --> 0:11:34.950
<v Speaker 7>a conventional war. I don't worry about that at all.

0:11:35.050 --> 0:11:37.090
<v Speaker 7>So if Germany does the right thing, which it is,

0:11:38.290 --> 0:11:41.130
<v Speaker 7>we'll be solid. I think the problem is the window,

0:11:41.550 --> 0:11:46.460
<v Speaker 7>because it takes time to rearm, And Germany's talking about 2039,

0:11:46.460 --> 0:11:48.859
<v Speaker 7>I think, at the point they'll be ready. I mean, guys, let's,

0:11:49.160 --> 0:11:50.300
<v Speaker 7>you know, let's much know.

0:11:50.740 --> 0:11:55.150
<v Speaker 1>Yeah, exactly. In that time, what does Putin do here?

0:11:55.309 --> 0:11:57.910
<v Speaker 2>I mean, is he is he bogged down in Ukraine?

0:11:58.490 --> 0:12:00.840
<v Speaker 1>Is he what do you think the next moves are there?

0:12:00.890 --> 0:12:03.850
<v Speaker 1>Because I don't think people feel. very good about what

0:12:03.890 --> 0:12:04.830
<v Speaker 1>he could do going forward.

0:12:05.210 --> 0:12:07.970
<v Speaker 7>So Putin likes to think of himself as like a wolf, right?

0:12:08.309 --> 0:12:11.359
<v Speaker 7>As this kind of lone wolf, like stalking the European plane.

0:12:12.179 --> 0:12:14.840
<v Speaker 7>I think of him as a rabid groundhog at this point.

0:12:15.160 --> 0:12:19.450
<v Speaker 7>I'm serious. Like he is cornered. He's unwell. He's clearly

0:12:19.490 --> 0:12:22.349
<v Speaker 7>losing that war with Ukraine. And Zelensky, if anything, is

0:12:22.390 --> 0:12:26.410
<v Speaker 7>holding back. I mean, Zelensky must have more cards to play, right,

0:12:26.429 --> 0:12:30.920
<v Speaker 7>to return to that phrase. And Putin must realize, even

0:12:30.960 --> 0:12:34.280
<v Speaker 7>in his delusions, that that war is lost. So if

0:12:34.320 --> 0:12:38.240
<v Speaker 7>he wants to fight a new war called me versus NATO,

0:12:38.760 --> 0:12:41.170
<v Speaker 7>maybe a sprinkling of tactical nukes or something, I mean,

0:12:41.330 --> 0:12:43.030
<v Speaker 7>let's bring a military expert into your show and ask

0:12:43.050 --> 0:12:45.470
<v Speaker 7>him if that's possible. This war, he's losing.

0:12:45.490 --> 0:12:46.350
<v Speaker 1>Stay with us.

0:12:46.490 --> 0:12:48.650
<v Speaker 3>More from Bloomberg Intelligence coming up after this.

0:12:52.720 --> 0:12:56.420
<v Speaker 5>You're listening to the Bloomberg Intelligence Podcast. Catch us live

0:12:56.490 --> 0:12:59.530
<v Speaker 5>weekdays at 10 a.m. Eastern on Apple CarPlay and Android

0:12:59.590 --> 0:13:02.900
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0:13:02.940 --> 0:13:06.000
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0:13:07.210 --> 0:13:08.980
<v Speaker 2>Nat gas is where you've got to spend a lot

0:13:09.000 --> 0:13:10.220
<v Speaker 2>of time as well, because if you're going to have

0:13:10.250 --> 0:13:12.579
<v Speaker 2>all these data centers all over the country, you've got

0:13:12.600 --> 0:13:14.820
<v Speaker 2>to power these things up and electrify them, and you

0:13:14.840 --> 0:13:15.080
<v Speaker 2>do it.

0:13:15.059 --> 0:13:17.319
<v Speaker 1>A lot with nat gas. And we have a lot

0:13:17.340 --> 0:13:18.780
<v Speaker 1>of it, too. We have a lot of nat gas,

0:13:18.900 --> 0:13:21.000
<v Speaker 1>because we frack it down in the oil patch.

0:13:21.840 --> 0:13:23.800
<v Speaker 3>That's your second gig, I know.

0:13:23.900 --> 0:13:24.300
<v Speaker 7>Exactly.

0:13:24.800 --> 0:13:26.679
<v Speaker 1>I'm thinking about it. Henry Eaton, he does this stuff

0:13:26.720 --> 0:13:27.160
<v Speaker 1>for a living.

0:13:27.700 --> 0:13:27.840
<v Speaker 6>U.S.

0:13:27.860 --> 0:13:31.590
<v Speaker 2>Natural gas market analyst for BNEF. The BNEF folks are...

0:13:31.850 --> 0:13:34.710
<v Speaker 2>The folks here at Bloomberg, they analyze the energy evolution

0:13:35.090 --> 0:13:35.550
<v Speaker 2>taking place.

0:13:35.570 --> 0:13:36.610
<v Speaker 1>They have all the data.

0:13:36.710 --> 0:13:38.990
<v Speaker 2>I mean, the best data out there as it relates

0:13:39.030 --> 0:13:40.250
<v Speaker 2>to the global energy business.

0:13:40.270 --> 0:13:42.490
<v Speaker 1>They've got smart analysts up on us to make sense

0:13:42.510 --> 0:13:44.050
<v Speaker 1>of it. Henry, thanks for joining us here.

0:13:44.090 --> 0:13:48.130
<v Speaker 2>Talk to us about the demand for natural gas these days.

0:13:48.860 --> 0:13:50.540
<v Speaker 2>The good news is we have supply of it, but

0:13:50.559 --> 0:13:51.500
<v Speaker 2>talk to us about the demand.

0:13:52.160 --> 0:13:54.440
<v Speaker 6>Yeah, so the demand side is super interesting.

0:13:55.679 --> 0:13:59.359
<v Speaker 8>There are two key drivers that we see through the

0:13:59.400 --> 0:14:03.350
<v Speaker 8>next five to ten years. That is data centers, as

0:14:03.370 --> 0:14:06.550
<v Speaker 8>you mentioned, are expected to consume a lot of natural gas,

0:14:07.830 --> 0:14:11.290
<v Speaker 8>as well as LNG exports. We export a lot of

0:14:11.390 --> 0:14:15.130
<v Speaker 8>our energy overseas, and that has only ramped up over

0:14:15.150 --> 0:14:17.070
<v Speaker 8>the past few years and will continue to ramp up

0:14:17.130 --> 0:14:18.260
<v Speaker 8>over the next five to 10.

0:14:18.250 --> 0:14:20.120
<v Speaker 1>So it's a long-term bullish story.

0:14:20.500 --> 0:14:24.560
<v Speaker 3>When it comes to data centers, how difficult or easy

0:14:24.620 --> 0:14:26.940
<v Speaker 3>is it to get that nat gas to where these

0:14:27.240 --> 0:14:27.940
<v Speaker 3>data centers are?

0:14:29.390 --> 0:14:31.530
<v Speaker 6>Yeah, the gas story in the U.S.

0:14:31.630 --> 0:14:34.890
<v Speaker 8>Is a very regional one, so it depends where the

0:14:34.930 --> 0:14:37.780
<v Speaker 8>data centers are being deployed. As you mentioned, we have

0:14:37.900 --> 0:14:41.400
<v Speaker 8>plentiful natural gas reserves here in the U.S. A lot

0:14:41.440 --> 0:14:46.180
<v Speaker 8>of that is in Texas, in the Permian, in West Texas.

0:14:46.200 --> 0:14:52.510
<v Speaker 8>There's also production in the Northeast, in Appalachia. One of

0:14:52.570 --> 0:14:56.950
<v Speaker 8>the major problems that we see or challenges, I should say,

0:14:56.970 --> 0:15:00.630
<v Speaker 8>is building the pipeline capacity to get that gas to

0:15:00.670 --> 0:15:01.290
<v Speaker 8>where it is.

0:15:02.100 --> 0:15:04.040
<v Speaker 6>We have it under the ground. It's a question of

0:15:04.080 --> 0:15:04.700
<v Speaker 6>getting there.

0:15:05.080 --> 0:15:08.560
<v Speaker 8>Building pipeline capacity in the northeast, for example, is extremely difficult,

0:15:09.140 --> 0:15:13.220
<v Speaker 8>much more difficult than in, say, West Texas. The other

0:15:13.320 --> 0:15:18.140
<v Speaker 8>option is to use price as a balancing mechanism and

0:15:18.240 --> 0:15:21.450
<v Speaker 8>have that price unlock more expensive supply that we see in.

0:15:23.330 --> 0:15:27.290
<v Speaker 6>The Hainesville Basin, which is in eastern Texas and western Louisiana.

0:15:27.830 --> 0:15:31.370
<v Speaker 2>So on the demand side, data centers, we need more energy.

0:15:31.390 --> 0:15:34.859
<v Speaker 2>Isn't that gas enough to fuel these things, do you think?

0:15:34.900 --> 0:15:37.500
<v Speaker 2>Or is it just one source of energy that you

0:15:37.540 --> 0:15:39.630
<v Speaker 2>think that the that will be needed.

0:15:39.430 --> 0:15:42.040
<v Speaker 1>To fund these data centers or fuel up these data centers?

0:15:42.220 --> 0:15:44.320
<v Speaker 8>I think you'll see a combination of a lot of

0:15:44.440 --> 0:15:49.330
<v Speaker 8>different fuels. I think the characteristics of NatGas make it

0:15:49.730 --> 0:15:50.990
<v Speaker 8>advantageous to do so.

0:15:51.010 --> 0:15:54.530
<v Speaker 6>A gas plant can ramp up and down quickly like

0:15:54.570 --> 0:15:55.410
<v Speaker 6>a data center needs.

0:15:56.650 --> 0:16:00.050
<v Speaker 8>And I'd say one of the challenges to powering all

0:16:00.110 --> 0:16:03.680
<v Speaker 8>this natural gas is getting the gas turbine capacity.

0:16:03.740 --> 0:16:06.000
<v Speaker 6>We've seen that that has been a challenge.

0:16:06.500 --> 0:16:09.560
<v Speaker 8>Order books at a lot of the large manufacturers are full.

0:16:10.260 --> 0:16:15.510
<v Speaker 8>And a gas turbine ordered today, we don't see coming

0:16:15.530 --> 0:16:17.310
<v Speaker 8>online by 2031 at the earliest.

0:16:17.330 --> 0:16:21.070
<v Speaker 6>So it's about five to six years to secure new capacity.

0:16:21.450 --> 0:16:21.670
<v Speaker 8>All right.

0:16:21.730 --> 0:16:22.750
<v Speaker 6>So that'll be a challenge.

0:16:22.930 --> 0:16:26.680
<v Speaker 3>All things to come. When we talk about LNG exports,

0:16:27.400 --> 0:16:30.580
<v Speaker 3>how quickly is that growing? What's the growth rate compared

0:16:30.640 --> 0:16:32.860
<v Speaker 3>to demand for data centers?

0:16:33.700 --> 0:16:37.080
<v Speaker 8>So on a relative scale, I believe our growth rate

0:16:37.760 --> 0:16:42.010
<v Speaker 8>for data centers is quicker. On an absolute basis for

0:16:42.050 --> 0:16:46.510
<v Speaker 8>gas demand, LNG is going to be the largest contributor

0:16:46.670 --> 0:16:48.810
<v Speaker 8>to new natural gas demand over the next five to

0:16:48.810 --> 0:16:52.489
<v Speaker 8>10 years. Our latest outlook for data centers, however, has

0:16:52.570 --> 0:16:56.489
<v Speaker 8>pushed that power sector much closer to LNG. And so

0:16:56.530 --> 0:17:00.350
<v Speaker 8>we see these two major demand sectors colliding essentially at

0:17:00.370 --> 0:17:04.280
<v Speaker 8>the same time. And so essentially something needs to give.

0:17:04.840 --> 0:17:07.500
<v Speaker 8>We see an undersupplied market over the next five to

0:17:07.560 --> 0:17:09.080
<v Speaker 8>ten years from what we can see today.

0:17:09.920 --> 0:17:11.360
<v Speaker 6>Now we're not saying the U.S. is going to run

0:17:11.380 --> 0:17:13.040
<v Speaker 6>out of gas. We're saying something has to give.

0:17:13.060 --> 0:17:16.030
<v Speaker 8>And there's a lot of uncertainty on both the LNG

0:17:16.150 --> 0:17:19.480
<v Speaker 8>and the data center side. For LNG, we see a

0:17:19.560 --> 0:17:23.740
<v Speaker 8>global LNG oversupply, meaning that there's a lot of liquefaction

0:17:23.790 --> 0:17:27.630
<v Speaker 8>capacity coming online, particularly here in the U.S. And so

0:17:27.890 --> 0:17:31.270
<v Speaker 8>if you see those global LNG prices potentially come down

0:17:31.310 --> 0:17:35.610
<v Speaker 8>in the next five years, we could see essentially curtailments

0:17:35.710 --> 0:17:36.130
<v Speaker 8>at U.S.

0:17:36.170 --> 0:17:36.690
<v Speaker 6>Facilities.

0:17:36.730 --> 0:17:39.270
<v Speaker 8>So that would reduce the demand impact that LNG has.

0:17:39.950 --> 0:17:42.150
<v Speaker 8>On the data center side, a lot of the data

0:17:42.170 --> 0:17:45.580
<v Speaker 8>centers that we're looking at are fairly speculative. meaning that

0:17:45.600 --> 0:17:49.570
<v Speaker 8>they're just announcements rather than committed facilities. And so there's

0:17:49.609 --> 0:17:51.830
<v Speaker 8>a lot that could happen there to sort of move that,

0:17:52.609 --> 0:17:55.590
<v Speaker 8>shift those numbers around and bring the market back into balance.

0:17:55.910 --> 0:17:57.020
<v Speaker 1>I mean, I can not guess.

0:17:57.020 --> 0:17:58.020
<v Speaker 6>$ 2.

0:17:57.020 --> 0:18:02.500
<v Speaker 1>85 per million? BTU, which I think is British Thermal Unit.

0:18:02.619 --> 0:18:04.139
<v Speaker 1>Have I got that right? I think so.

0:18:04.220 --> 0:18:04.420
<v Speaker 4>See?

0:18:04.760 --> 0:18:06.460
<v Speaker 1>Land man, I'm telling you. I know what's going on

0:18:06.500 --> 0:18:06.740
<v Speaker 1>out there.

0:18:06.980 --> 0:18:11.760
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