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Speaker 2: Let's move on to another tech story. It is on
Speaker 2: the Bloomberg Big Take Today and the title is the
Speaker 2: Apple Insiders in the running to succeed Tim Cook. Only
Speaker 2: one person you can talk to about anything to do
Speaker 2: with technology and Apple, and that's Mark German, Bloomberg, Chief
Speaker 2: correspondent on Bloomberg Technology joining us. It was so interesting
Speaker 2: when I read this because I don't think I have
Speaker 2: heard of anyone talking about succession with Tim Cook. But
Speaker 2: he's been around for a very.
Speaker 3: Long time.
Speaker 4: For having me.
Speaker 5: That's right.
Speaker 4: Cook has been around for over two decades at Apple now.
Speaker 4: He was named CEO in twenty eleven and obviously taking
Speaker 4: over for Steve Jobs. He's turning sixty five next year.
Speaker 4: He's one of the older CEOs in the S and
Speaker 4: P five hundred. They have a management team that's essentially
Speaker 4: been the same cast of characters for a decade plus
Speaker 4: and they're in a precarious position right now, battling smartphone slowdowns,
Speaker 4: battling a shift of manufacturing out of China while trying
Speaker 4: to keep China still happy, regulatory concerns in both the
Speaker 4: US and the European Union. So there's a lot going on.
Speaker 4: But Tim Cook's getting up there, and it's time to
Speaker 4: start thinking about who comes after Cook. And so my
Speaker 4: story this week takes a look at some of the options,
Speaker 4: and I'll just give you the quick summary here. If
Speaker 4: he were to step down in the near term, he'd
Speaker 4: likely be replaced by Jeff Williams. He's the chief operating officer.
Speaker 4: If he stays around about five years, as many expect,
Speaker 4: including me, he'd likely to be replaced by John Turnis.
Speaker 4: He's the company's senior VP of hardware Engineering, and he's
Speaker 4: been playing an increasingly important role in product development and
Speaker 4: other aspects of the company.
Speaker 6: So, Mark, this was a great point that you made
Speaker 6: in the story that you said, So Tim Cook, he's
Speaker 6: sixty three older than a lot of his peers in
Speaker 6: the average Fortune five hundred C suite company. But it's
Speaker 6: interesting because there was a quote from somebody you know saying,
Speaker 6: you know, if Biden Trump could be president at eighty
Speaker 6: years old. Like, who's to say that Tim Cook can't
Speaker 6: stay on as CEO or that you know, someone else
Speaker 6: of one of his peers who's maybe also in that
Speaker 6: same kind of age range also couldn't be suitable for it.
Speaker 4: Yeah, he certainly, you know, could stick around, right. I mean,
Speaker 4: if you can run the country at that age, you
Speaker 4: can run Apple at that age. But I don't think
Speaker 4: that's what Apple's board of directors or Tim Cook would want,
Speaker 4: to be honest.
Speaker 3: Why not?
Speaker 4: Well, I think there is a culture of passing the
Speaker 4: baton right in these corporations, and Tim Cook is going
Speaker 4: to want to give someone else a chance.
Speaker 3: Right.
Speaker 4: It's a technology company, and you know, many people want
Speaker 4: someone who you know, grew up in Silicon Valley, someone
Speaker 4: who is newer and more innovative, to take over these
Speaker 4: tech companies. So I just don't think Tim Cook at
Speaker 4: eighty years old would want to run Apple or should
Speaker 4: run Apple.
Speaker 6: It doesn't sound like Tim Cook has talked a whole
Speaker 6: lot about this. You mentioned this was I thought this
Speaker 6: was kind of weird that of all places where Tim
Speaker 6: Cook has shared the most about, you know, his life
Speaker 6: after Apple, has been on a podcast with Dua Lipa
Speaker 6: didn't see that coming.
Speaker 7: I don't know is she.
Speaker 6: Presently did not see that coming, Like, is this like
Speaker 6: the place to go if you're going to drop some
Speaker 6: secession news.
Speaker 4: Well, Tim Cook doesn't do many interviews, right, He does
Speaker 4: a few a year, and you know, to be fair,
Speaker 4: du Alipa probably asked the best questions of any interview
Speaker 4: that I've seen Tim Cook participate in a while, and
Speaker 4: she brought up the succession question. Obviously, that was a
Speaker 4: little surprising that she brought that up because it doesn't
Speaker 4: seem central to, you know, her line of questions that
Speaker 4: the rest of the podcast had. But she asked, and
Speaker 4: Tim Cook gave his most in depth comments on the
Speaker 4: subject to date.
Speaker 2: You mentioned a hardware engineering person that may be taking
Speaker 2: over if it's longer than five years, Why not like
Speaker 2: an ai Ish person.
Speaker 4: Well, it's not necessarily because John Turnus is a harderre
Speaker 4: engineering person that he's going to be taking over the company.
Speaker 4: It's mostly because he's in the right age range. He's
Speaker 4: so important to the company. He has excellent managerial skills,
Speaker 4: He's extremely well respected inside the company and within the industry.
Speaker 4: So he has a lot of things going for him
Speaker 4: other than obviously very important being the hardware engineering person.
Speaker 4: In terms of not an AI person, well, Apple's AI
Speaker 4: person John Jane Andrea. Quite frankly, I don't expect him
Speaker 4: to remain at Apple for many more years, and I
Speaker 4: certainly don't think that he's prime to run the whole company.
Speaker 4: He joined Apple in twenty nineteen. For all intentsive purposes,
Speaker 4: he's an outsider. When you're at Apple, you really want
Speaker 4: to gain steam there, especially if you're going to be
Speaker 4: the next CEO. You really got to be there for
Speaker 4: two decades. It's a cult, right, You're not going to
Speaker 4: see someone be able to be CEO who comes in
Speaker 4: from the outside and their head of AI for all
Speaker 4: intensive purposes, Like I said, is an outsider.
Speaker 6: So when Steve Jobs was, you know, toward the end
Speaker 6: of his tenure, obviously he was battling cancer at the time.
Speaker 6: What kind of circumstances, you know, barring you know, a
Speaker 6: health crisis, which of course we hope that wouldn't happen,
Speaker 6: But what kind of circumstances do you think would be
Speaker 6: fitting for Cook to step down?
Speaker 3: Under?
Speaker 4: Well, Cook is going to run Apple as long as
Speaker 4: he wants to run Apple.
Speaker 5: Right.
Speaker 4: Like I said, I don't think that's going to be
Speaker 4: until eighty, but I wouldn't be surprised if he remains
Speaker 4: at Apple until seventy, right, And the circumstances would be
Speaker 4: when he feels it's time to pass the baton. No
Speaker 4: one is going to force him out. There's no retirement age,
Speaker 4: there's no requirement, So it's going to be as long
Speaker 4: as he wants to run the company, and so there's
Speaker 4: no circumstance that I think would push him out the door.
Speaker 2: It also feels like managing Apple is also about and
Speaker 2: managing geopolitical relationships with China, Like how do you think
Speaker 2: that kind of overlays? Or are I making too much of
Speaker 2: a big deal about it and it's actually a cyclical
Speaker 2: thing and I should chill out.
Speaker 4: Well, No, I think that's extremely central to the CEO role, right,
Speaker 4: And the thing that's going to test turnus the most
Speaker 4: is how do you operate on the world stage. Now,
Speaker 4: there's something else to really understand here. The CEO of
Speaker 4: Google Sundor Prichai, the CEO of Microsoft Satanadella. They are
Speaker 4: both engineers who took on the CEO role, just like
Speaker 4: I expect turnis to eventually right. But both of those
Speaker 4: people have an executive there that manage the relations for
Speaker 4: them right. Microsoft famously has a president whose name is
Speaker 4: Brad Smith. He handles all the international relations, right soundor Prachai.
Speaker 4: They made their CFO Ruth porat Right. She now manages
Speaker 4: these international relations and these issues, So the CEO doesn't
Speaker 4: necessarily have to be the person who manages these relationships.
Speaker 4: The reason Tim Cook does it at Apple is not
Speaker 4: because he's the CEO. That's because he's the best at it, right,
Speaker 4: And different CEOs are going to have different skill sets,
Speaker 4: And being the CEO doesn't mean you have to do everything.
Speaker 4: It means you have to do a mix of things,
Speaker 4: but have the ability to appoint the right person and
Speaker 4: put the right people in position to do the things
Speaker 4: that you're not good at.
Speaker 6: Last one for you here mark thirty seconds. Tim Cook's
Speaker 6: talking about maybe life after Apple being something more philanthropic.
Speaker 7: Any ideas on what that might be like.
Speaker 4: Well, obviously he generated a lot of money while being
Speaker 4: CEO of Apple. My belief he's going to open up
Speaker 4: some sort of charitable foundation and make donations to you know,
Speaker 4: various places. I would say the best comp to This
Speaker 4: would be something like what Mackenzie Scott has been doing
Speaker 4: or Lorraine Powell jobs. Both have opened foundations over the past,
Speaker 4: you know, several years and make fill philanthropic donations on
Speaker 4: a pretty targeted basis to specific entities constantly, and so
Speaker 4: I would expect the cook to do the same.
Speaker 2: Really appreciate it, Mark, I know what's early where you are.
Speaker 2: We appreciate you getting up for us. Mark German Bloomberg
Speaker 2: a chief correspondent on global technology, and you can read
Speaker 2: this great story on Bloomberg and also at Bloomberg dot
Speaker 2: com Slash Big Take. Don't miss it.
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Speaker 2: We also have a really interesting move here with HubSpot
Speaker 2: and Alphabet. Do I know those things?
Speaker 7: I don't really know. Those things don't have a man
Speaker 7: deep saying, thankfully.
Speaker 2: Jos and so does Narash Patel. So manyep Singh is
Speaker 2: Senior Technology Software Senior Technology analyst for Bloomberg Intelligence Naragepitel
Speaker 2: at Bloomberg Intelligence senior software analysts. Luckily they can have
Speaker 2: us covered on all of this, Garage. What is HubSpot
Speaker 2: and what does a Google slash alphabet want with it?
Speaker 5: Yeah? Hi, Alex and HubSpot they are playing directly into
Speaker 5: sales and marketing software. Small player, well below the scale
Speaker 5: of Salesforce and Adobe. They have about two and a
Speaker 5: half billion in revenue relative to a forty billion salesforce scale,
Speaker 5: so much smaller. They target SMBs. Their average customers about
Speaker 5: fifty one hundred employees. So they offer this type of platform,
Speaker 5: which is about two hundred and ten thousand total customers
Speaker 5: to Google to maybe enhance some advertisement and leverage CRM
Speaker 5: as a gateway for AI into software. For Google, this is.
Speaker 7: A pretty big potentially acquisition.
Speaker 6: So I want to bring in man Deep saying here,
Speaker 6: who's with us in the studio today?
Speaker 7: Hey, Man Deep.
Speaker 6: So this would be a company right now that's valued HubSpot,
Speaker 6: that is around thirty billion dollars.
Speaker 7: So much talk of antitrust.
Speaker 6: Going on in the tech space, Is this something like
Speaker 6: Google could really pull off?
Speaker 8: I mean they could in theory simply because Microsoft recently
Speaker 8: bought Activision and that was close to seventy billion dollars,
Speaker 8: So you know, any acquisition here would not be north
Speaker 8: of thirty five to forty billion. So from that perspective,
Speaker 8: you know, given Google is not a player in application software,
Speaker 8: I think the antitrust argument is pretty weak in terms of,
Speaker 8: you know, preventing them from acquire HubSpot and in terms
Speaker 8: of why they are looking to buy an asset like this. Look,
Speaker 8: Google's primary business remains ads. They're big on the you know,
Speaker 8: the foundational model side with generative AI. They have the
Speaker 8: cloud infrastructure, so getting a data CRM play for training
Speaker 8: your models is something that is quite forward looking. I
Speaker 8: don't think the market fully grasps what they're trying to
Speaker 8: to do here, but it does make sense because in
Speaker 8: the end, if you have to deploy generative AI at
Speaker 8: the enterprise level, you need data and who better than
Speaker 8: a CRM company that has got data related to an
Speaker 8: enterprise system sales system. So it does make sense that
Speaker 8: they are trying to apply that kind of AI in
Speaker 8: the context of an enterprise.
Speaker 6: Well to your point of you know, maybe investors not
Speaker 6: quite grasping it yet. Google shares more or less unchanged
Speaker 6: on the day actually slightly down, but you think this
Speaker 6: could be maybe a more positive longer term story for
Speaker 6: the stock.
Speaker 8: I mean, these companies don't make acquisitions for inorganic growth.
Speaker 8: It isn't about the revenue contribution from hubsqat. It is
Speaker 8: more about how can they position themselves better at the
Speaker 8: enterprise level. And in the case of Alphabet, look, they've
Speaker 8: never had an enterprise business before Google Cloud. So the
Speaker 8: fact that they have a thirty five billion dollars Google
Speaker 8: Cloud infrastructure business, they can add this DRM asset and
Speaker 8: then the generative AI aspect is huge because that's where
Speaker 8: everyone is expecting all the growth.
Speaker 7: To be nearage.
Speaker 2: Do you like the numbers that we're looking at here,
Speaker 2: I mean, what do you think it would be worth
Speaker 2: if Alphabet had to take it over, had to want
Speaker 2: it to take it over.
Speaker 5: Yeah, this is HubSpot's landing at the high end of
Speaker 5: app software evaluation today it's about twelve times on a
Speaker 5: forward sales. Some of the comparable piers in SMB space
Speaker 5: are half of that multiple. So you know, giving Google's
Speaker 5: balance sheet, they have the appetite to keep pushing the
Speaker 5: valuation to a higher level. The offset here not from
Speaker 5: the numbers but from a perspective of HubSpot management, this
Speaker 5: is really their baby. They're going to have a very
Speaker 5: hard time letting go. You have two active co founders
Speaker 5: and one is still very active in all product development.
Speaker 5: He's the current CTO, So there will be a little
Speaker 5: resistance from the management perspective.
Speaker 2: So real quick on that could somebody else come in
Speaker 2: and make another bid that would make them feel better?
Speaker 5: They probably prefer a Google that's not in CRM software
Speaker 5: versus a salesporce Adobe s a P type of company
Speaker 5: where they would just be rolled up into an enterprise portfolio.
Speaker 6: So if we were to think man deep of how
Speaker 6: something like this could hypothetically be financed, obviously cash not
Speaker 6: a problem for Google. You think this is something they
Speaker 6: would buy and uh, you know, just with cash on
Speaker 6: the balance sheet, would go to a debt or equity market.
Speaker 8: I mean, look if being bore shareholder friendly recently with
Speaker 8: the announcement of a dividend, so clearly they are making
Speaker 8: changes to their capital structure. I wouldn't be surprised if
Speaker 8: they go to the bond market to finance such a
Speaker 8: big acquisition with these rates. Yeah, but I mean Google
Speaker 8: is like triple A.
Speaker 7: Yeah, probably basically cheaper than the government can.
Speaker 8: Yeah, so I don't think financing is an issue, but
Speaker 8: the regulatory scrutiny is going to come no matter, you know,
Speaker 8: I whether they compete in that same space or not,
Speaker 8: given the size of a potential deal. But I think
Speaker 8: they can convince the regulators that this deal makes sense
Speaker 8: for them.
Speaker 2: Can we go to Roadblocks for a second, because maybe
Speaker 2: you also cover this. So my knowledge of Roadblocks is this.
Speaker 2: My daughter comes in in the morning on Saturday and Sunday,
Speaker 2: takes my phone and plays Roadblocks on my phone Warrior cats.
Speaker 3: That's all I know.
Speaker 7: I don't really know what that means.
Speaker 2: She knows to talk to anyone online and she basically
Speaker 2: makes cats fight each other and.
Speaker 7: Get animals and you know, more than based up.
Speaker 2: That's all I know what's going on.
Speaker 3: But she plays a lot.
Speaker 8: And I bet you she's using your credit card to
Speaker 8: make those Roadblocks purchases.
Speaker 7: Alex Face, what are you saying?
Speaker 2: I think Roadblocks wants her to do that.
Speaker 7: But why is the stockdown like.
Speaker 2: Twenty three percent?
Speaker 8: Well so in this case, I mean engagement is what
Speaker 8: drives all these plats and the fact that we are
Speaker 8: going into summer months, it's kind of a natural to
Speaker 8: see some seasonality in terms of engagement coming down. So
Speaker 8: ours spent were three percent below consensus expectations, even though
Speaker 8: the user growth was in line with consensus twenty percent
Speaker 8: user growth. And to my mind, the long term story
Speaker 8: is still intact. They have the content to drive you know,
Speaker 8: kids of that age, and they have the engagement. There
Speaker 8: will always be seasonality, and you know, once in a
Speaker 8: while the stock will react like this because the expectations
Speaker 8: were higher, but there was nothing on the call that
Speaker 8: suggested they're losing their engagement to social media. Yeah, and
Speaker 8: so I think this is the case of market being
Speaker 8: in that mood where if it's not a beat and
Speaker 8: a big raise, your stock is going to get hit.
Speaker 8: And you're seeing that with the robots tough crowd.
Speaker 6: Yeah, you know, this is something that I wanted to
Speaker 6: come back to. We I covered the economy in my
Speaker 6: regular job here at Bloomberg, and we actually we're talking
Speaker 6: to the lead economists of Visa not too long ago,
Speaker 6: and they had some great research out about how the
Speaker 6: gaming economy has really added like so much in terms
Speaker 6: of consumption just by virtue of so many people being
Speaker 6: on computers being exposed to so many more ads and
Speaker 6: buying more things, not just within the game, but you
Speaker 6: know in the broader internet at large, and I don't know,
Speaker 6: it's do you like see the connection with that as
Speaker 6: well in this gaming world and how that's also just
Speaker 6: boosting aggregate consumption.
Speaker 8: I mean, Roadblocks did call out virtual shopping being a
Speaker 8: potential driver for twenty twenty five. So even though no
Speaker 8: one talks about metaverse now, the fact that you know,
Speaker 8: companies are still talking about virtual storefronts and the fact
Speaker 8: that you can do shopping on these kind of platforms
Speaker 8: down the line goes to show that gaming is something
Speaker 8: that everyone fields contributes to this AI wave as well
Speaker 8: as you know, largely e commerce connection in terms of
Speaker 8: you know, the storefronts and how the behavior could change
Speaker 8: down the line.
Speaker 7: What are they sell in there? What can you buy
Speaker 7: on that shop?
Speaker 8: I mean, like that was the whole promise of metawverse,
Speaker 8: that you can replicate malls in the metaverse. And so
Speaker 8: if I'm a Walmart that is setting up a grocery
Speaker 8: or you know, their shop in that kind of a
Speaker 8: virtual storefront, I can drive that kind of experience where
Speaker 8: people feel they are inside them all when they're sitting
Speaker 8: in front of a computer and they can do a
Speaker 8: lot of the shopping, which again was the promise of Meatowors.
Speaker 8: There were probably three four years too early and it
Speaker 8: will take time to build that.
Speaker 2: All right, Naraj, I know you're still here. Sorry, we
Speaker 2: need to get more info on roadblocks, basically, so I
Speaker 2: understand what it actually is. My daughter's playing it. What
Speaker 2: else are you working on right now in your sphere?
Speaker 5: I think there's a big dichotomy with the valuations that
Speaker 5: are occurring in software. You're seeing the SMB companies like
Speaker 5: a HubSpot, which is a little bit moving against the wave.
Speaker 5: The rest of the companies are getting hit because small
Speaker 5: medium business spending is quite constrained, and you're seeing a
Speaker 5: significant downward push on valuation multiples for other companies like
Speaker 5: a Claviow, like a pay Call Pay loss a, a
Speaker 5: whole host of companies and app software.
Speaker 2: All right, guys, I really appreciate it, Thank you so much.
Speaker 2: Can't get any more and can't get better than this.
Speaker 2: You're at Narajhpatel Bloomberg Intelligence senior software analysts joining us
Speaker 2: at man Deep Singh. He is Bloomberg Intelligence a senior
Speaker 2: technology analyst.
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Speaker 7: Just get back to Warner Brothers Discovery.
Speaker 2: That stock us out by about four tens of one
Speaker 2: percent as Nor was talking about the company reporting sales
Speaker 2: and profit that fell short analyst expectations. Shocker lower TV
Speaker 2: ad sales plus poor performance of video games. So no
Speaker 2: one better to talk to than KEITHR. Mangana than Bloomberg
Speaker 2: Intelligence and Animal on US media. Why is the stock
Speaker 2: up on the earnings?
Speaker 9: Yeah, it was a little bit of a mixed bag
Speaker 9: Alex so definitely ebitdah under pressure as always TV advertising,
Speaker 9: as you just pointed out, But they did have some
Speaker 9: bright spots and I think that's why we're seeing a
Speaker 9: little bit of enthusiasm here. So one thing that they
Speaker 9: did mention was that, you know, Warner Brothers in Discovery.
Speaker 9: It's obviously a merger. They've extracted so far about four
Speaker 9: billion dollars in cost savings. They are now projecting an
Speaker 9: extra one billion dollars in synergies so that I think
Speaker 9: is something that you know, the street is definitely hopeful about.
Speaker 3: And then you have the streaming business.
Speaker 9: Remember this is the HBO business that has now been
Speaker 9: rebranded as Max and we're seeing some some green shoots here,
Speaker 9: so you know, subscriber growth had kind of hit a wall,
Speaker 9: but again we're seeing some reinviegration here. So they had
Speaker 9: about two million subscriber ads and they have a lot
Speaker 9: more momentum going forward because we're going to see a
Speaker 9: lot of overseas market launches.
Speaker 3: But that's not real. The real story.
Speaker 9: The real stories that the segment is actually profitable, and
Speaker 9: that is what has become the new gauge across the
Speaker 9: whole streaming landscape whether the streaming business can be profitable,
Speaker 9: and obviously Warner Brothers showing us how it's done.
Speaker 6: I honestly, you know, I will admit I'm not part
Speaker 6: of the gaming worlds, but I was under the impression
Speaker 6: that this is a pretty strong segment of consumer spending,
Speaker 6: has a lot of people who are very active in
Speaker 6: the gaming world, and it seems like for Warner Brothers
Speaker 6: at least, this came down to one game in particular.
Speaker 6: How would you categorize that segment of the business.
Speaker 5: Keep that.
Speaker 9: Yeah, So Warner Brothers, I mean not necessarily known for
Speaker 9: you know, their video games in general, but they did
Speaker 9: have a huge blowout hit last year with Hogwatts Legacy
Speaker 9: that became one of the biggest selling games throughout twenty.
Speaker 3: Twenty three and Harry Potter One.
Speaker 9: Harry Potter One just huge, And so when they were
Speaker 9: comping this year, obviously they knew coming into this quarter
Speaker 9: that it was going to be you know, tough comps.
Speaker 9: But then they also had their release from this quarter,
Speaker 9: which was you know, Suicide Squad, which really did not
Speaker 9: live up to expectations at all, and then you have
Speaker 9: obviously that Harry Potter effect, and that just didn't bode
Speaker 9: well for them for that studio slash gaming segment.
Speaker 2: The idea, though, right, is that the streaming part is
Speaker 2: going to wind up doing better and that will eventually
Speaker 2: offset slowing TV AD sales. Right is where are they
Speaker 2: on that sort of balance beam.
Speaker 9: Yeah, that's such a great point, Alex, I mean that's
Speaker 9: the hope, right, That's what everybody's hoping for that this
Speaker 9: transition would eventually pay off and at some point like
Speaker 9: the streaming service would be better or at least equal to,
Speaker 9: if not better than, linear TV.
Speaker 3: But I don't know.
Speaker 9: I don't think it's actually going to happen, or it's
Speaker 9: going to take a very very long time. Obviously, we've
Speaker 9: seen kind of Netflix set the stage here for everybody else.
Speaker 9: This year, we're going to see them throughout something like
Speaker 9: ten billion dollars in profit. So we know it can
Speaker 9: be done. I'm just not sure if who can do it,
Speaker 9: first of all, and if many people can or many
Speaker 9: streamers can kind of replicate that success, because if you
Speaker 9: kind of look at even the Max business, yes, it's
Speaker 9: good that they were able to show, you know, throughout
Speaker 9: kind of ninety million dollars in profits, but you're taking
Speaker 9: a business that was originally generating something like two billion
Speaker 9: dollars in Ibada every year, and so you know, you
Speaker 9: kind of then take it from two billion to you know,
Speaker 9: even if it's going to be two hundred or three
Speaker 9: hundred million, that's just a fraction of what it was generating.
Speaker 9: And that's kind of the whole story in media right now.
Speaker 9: Right you're treating the TV dollars for kind of these
Speaker 9: these digital pennies, and so it does become a game
Speaker 9: of scale and that's where kind of this whole bundling
Speaker 9: concept comes in, because that helps you kind of not
Speaker 9: only get more subscribers, but it helps you reduce churn,
Speaker 9: which is really the biggest problem for streaming right now.
Speaker 6: Another big story in media is obviously just cutting costs,
Speaker 6: right and Warner Brothers has done quite a bit of
Speaker 6: layoffs in the past year and it's and we had
Speaker 6: some additional Bloomberg reporting out this morning saying that CEO
Speaker 6: David Zaslov is looking to find more opportunities to cut
Speaker 6: costs and that more layoffs could be part of that.
Speaker 6: Is that something Eitha that you're worried about.
Speaker 9: I mean, yeah, this has kind of again been a
Speaker 9: major thing that that Warner Brothers has been very good at,
Speaker 9: you know, cutting costs.
Speaker 3: I mean they did this originally with.
Speaker 9: Their first deal, which was the Discovery Script's deal, where
Speaker 9: they again they went in and they eliminated a lot
Speaker 9: of those extraneous costs. They're really very very good in
Speaker 9: terms of implementing you know, cost savings and synergies. And
Speaker 9: again they've kind of, uh, you know, reproduced that same
Speaker 9: playbook with the Warner Brothers Discovery mergers.
Speaker 3: The thing with cost cutting.
Speaker 9: Is it's it's it's very tricky, you know, because yes,
Speaker 9: you you can cut out a lot of extra duplicative costs,
Speaker 9: especially in kind of streaming businesses when you're combining two
Speaker 9: streaming platforms, but you don't want to cut too much.
Speaker 9: You don't want to underinvest in content. And I think
Speaker 9: what they're going to do here is it's not so
Speaker 9: much about the content side of things. It's more about
Speaker 9: marketing and selling expenses. And that's again where you know
Speaker 9: you kind of yes, they're going to cut that, but
Speaker 9: that's again where you see how the bundling aspect could
Speaker 9: really help them, because that helps them save a lot
Speaker 9: of those marketing and advertising expenses.
Speaker 3: Before we let you.
Speaker 2: Go, what the whole like Disney plus Hulu and Max together.
Speaker 7: I have a couple questions.
Speaker 2: One how much is gonna cost?
Speaker 3: Two?
Speaker 7: How much should it cost? Three?
Speaker 2: Will they tell me that that's an option? Or am
Speaker 2: I gonna weirdly double pay for a while? And four
Speaker 2: I forgot the fourth.
Speaker 3: All great questions, All great questions.
Speaker 6: Excellent trifecta with an optional plus one.
Speaker 2: There was a plus one somewhere.
Speaker 7: It'll come to me in my brilliance.
Speaker 9: So Alex, what we're paying right now, if you want
Speaker 9: just the just Hulu and Disney Plus without ads is
Speaker 9: around twenty dollars on the nose, and if you're taking
Speaker 9: the Max product without ads, that's sixteen dollars, So combine
Speaker 9: together that would be thirty six dollars. Now, again they
Speaker 9: haven't said anything on pricing yet, so this is just
Speaker 9: me speculating, but I would think they would when they're
Speaker 9: kind of combining those three together, it would probably be
Speaker 9: at maybe a thirty dollars or.
Speaker 3: A sub thirty dollars.
Speaker 9: Price point to kind of make it really attractive in
Speaker 9: terms of will they you know, will you double bay?
Speaker 3: I don't think so.
Speaker 9: I think if you're a Disney Plus, existing Disney Plus
Speaker 9: or Hulu subscriber, you'll just have kind of an option
Speaker 9: when you log in saying you know this, this Max
Speaker 9: is available to you, and do you kind of want
Speaker 9: to switch your subscription now?
Speaker 3: That's how I think they're going to do it.
Speaker 9: And conversely, if you're a MAX subscriber, I forgot your
Speaker 9: third question me too, it.
Speaker 2: Was much of a cause will they tell me about it?
Speaker 7: And are you gonna end up double paying? I think
Speaker 7: they got them all.
Speaker 2: I did remember my fourth one, the fourth one. Oh gosh,
Speaker 2: it went away again. Oh no, okay, I got a
Speaker 2: backup on cable Cube ahead. Is this just about like
Speaker 2: cable Is this basically what I did with like Verizon,
Speaker 2: but now I'm going to do it on my streaming TV.
Speaker 9: It's very much the same idea. I mean, we're going
Speaker 9: back to bundling again. And I think what all of
Speaker 9: these services are trying to do. Alex and Mali's they're
Speaker 9: just trying to now create this super bundle. Remember, Disney
Speaker 9: and Warner have another sports JV a Sports a bundle
Speaker 9: that's going to come out in conjunction with Fox a
Speaker 9: little bit later. So now they have this this Disney
Speaker 9: Max bundle. I think eventually they're going to you know,
Speaker 9: ask you to maybe have that extra super super bundle
Speaker 9: along with you know, the sports, the sports option as well.
Speaker 9: So it's really kind of them trying to keep you
Speaker 9: on their platforms as much as possible.
Speaker 7: And isn't that just the name of the game.
Speaker 6: We do that here at Bloomberg too, you know, always
Speaker 6: trying to keep people on the terminal.
Speaker 7: Oh yeah, oh yeah, the all day log. So we're
Speaker 7: guilty of it. Two.
Speaker 2: We understand where that goes. Keitha, thanks a lot, thanks
Speaker 2: for playing with us, keithing wrong and not and Bloomberg Intelligence,
Speaker 2: as senior media analyst joins us, Okay, so you're getting
Speaker 2: a couch delivered.
Speaker 3: I get that.
Speaker 2: Are you gonna sit on the couch and watch like
Speaker 2: all the streaming things?
Speaker 6: I guess I have to decide which ones I'm going
Speaker 6: to be, you know, signing up for me? And I
Speaker 6: do have the TV already in some of these subscriptions,
Speaker 6: but I was under the impression, like I know, I've
Speaker 6: got Hulu Netflix. Those are each under ten dollars a
Speaker 6: month if you have the version with ads. These ones
Speaker 6: up here, we're talking like sixteen to twenty. Well you
Speaker 6: saw my face, right, So that's why I bring it up.
Speaker 2: As Githa is like rolling off the numbers of how
Speaker 2: much people pay. My mouth keeps dropping and I'm like,
Speaker 2: I paid that much for these things. That's the thing
Speaker 2: is you say yes and you don't actually know where
Speaker 2: you're paying, and if you go through, you're like, wait,
Speaker 2: I'm paying one hundred bucks for all this?
Speaker 7: Why did I cut cable to people?
Speaker 4: It is YouTube YouTube.
Speaker 2: I don't do no Hello. We know I watch Survivor,
Speaker 2: so I need that. And then I have a child
Speaker 2: and she needs options for when mommy needs to sleep.
Speaker 7: She also needs warrior cats, which she could be knocking
Speaker 7: up my gout the card on that too. Things I
Speaker 7: am learning.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple card Play and
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Speaker 1: Just Say Alexa Play. Bloomberg eleven thirty.
Speaker 2: With Molly Smith Paulsweeni is out today. This is Bloomberg
Speaker 2: Intelligence Radio. We cover all the top news for you
Speaker 2: through our lens of Bloomberg Intelligence analysts. They cover two
Speaker 2: thousand companies and one hundred and thirty into strees worldwide.
Speaker 2: Here's what's so interesting to me, and I mean this
Speaker 2: is nothing new, but sort of the two speed economy
Speaker 2: that I feel like we keep seeing in that certain
Speaker 2: areas of the economy, the lower income spend more on
Speaker 2: credit cards by now, pay later, n if I be
Speaker 2: the small business sentiment all weaker, but companies, big companies,
Speaker 2: good earnings, earnings beats profit continues to grow, buybacks happening. Basically,
Speaker 2: the rich get richer in.
Speaker 7: The por getpor It's sad, isn't it. Yeah?
Speaker 6: We see that too in like some of the jobs
Speaker 6: numbers that are broken out by firm size, and we
Speaker 6: see that like way more of the hiring is also
Speaker 6: being done at firms that have at least five hundred employees.
Speaker 6: So interesting, great to be in a building like this,
Speaker 6: you know, but for much of America, what is it?
Speaker 7: Like half of America works for a small business?
Speaker 3: Right?
Speaker 7: Is this something like that?
Speaker 2: And then so even if you have wages keeping pace
Speaker 2: with inflation, if if big if, that's still sort of
Speaker 2: the cloud that goes a long way to explaining the
Speaker 2: cloud that we feel, even if we don't see it. Yeah, yeah, okay,
Speaker 2: clouds for TikTok, Yeah, go ahead.
Speaker 7: That's just kind of sad. I hope we want to.
Speaker 7: I hope we talk about something more positive.
Speaker 6: I don't know what today is somebody who covers the economy,
Speaker 6: you know, it's just I'm looking for the happier news.
Speaker 3: I don't feel it.
Speaker 7: Maybe Barry has it. You think he does.
Speaker 2: I don't think he has it? Ok, Barry, do you
Speaker 2: have happier news right now.
Speaker 10: Well, the silver lining and he does he did get that.
Speaker 6: Barry Ridholts right here, founder of Ritsults Wealth Management, host
Speaker 6: of Masters and Business.
Speaker 7: Take it away, Barry. What's the good news?
Speaker 10: So the silver lining is whenever the economy sees a
Speaker 10: lot of these scams and frauds bubbling up from especially
Speaker 10: from social media and the Internet, it's usually because the
Speaker 10: economy is so strong and people have so much money
Speaker 10: that it attracts the fraudsters. I'm not saying the fraudsters
Speaker 10: disappeared in the middle of eight o nine, but you
Speaker 10: really didn't. I see a lot of them other than
Speaker 10: the ones who were revealed by the financial crisis, like
Speaker 10: Bernie Madoff couldn't perpetrate his fraud anymore because you couldn't
Speaker 10: make up numbers anymore. But you know, it's a unfortunate
Speaker 10: side effect of a lot of wealth, is you know
Speaker 10: why do we people rob banks because that's where the
Speaker 10: money is.
Speaker 2: I was talking about someone yesterday about bitcoin too, and
Speaker 2: just sort of having going down the scale in sort
Speaker 2: of the bitcoin products that are being offered, in the
Speaker 2: crypto products that are being offered, and the question marks
Speaker 2: around it as there's just so much.
Speaker 3: Money slashing around. I don't know.
Speaker 2: You're going to relate this to TikTok, aren't you, because
Speaker 2: that's part of where we're getting a lot of it
Speaker 2: our news and information. Right, What do you make of
Speaker 2: a whole byte Dance is now suing the US government
Speaker 2: for forcing a sale of TikTok, but then you still have,
Speaker 2: say Steve minus into TikTok in some way. What are
Speaker 2: you making of all this?
Speaker 10: Well, let's give Byteedance credit for what they do better
Speaker 10: than either Twitter or Instagram or Facebook, which is they
Speaker 10: have created an algorithm that knows exactly how to tickle
Speaker 10: your dopamine receptors, and you know, once you fail, your
Speaker 10: down a rabbit hole of a particular type. On TikTok.
Speaker 10: My wife, it's all about rescue dogs on TikTok, and
Speaker 10: it's just endlessly charming videos about dogs that have been saved.
Speaker 10: But there's a darker side, whether it's investing or day training,
Speaker 10: or taxes or go down the list. You know, some
Speaker 10: of the crypto scams, you can earn twenty percent a
Speaker 10: year back when the tax the risk free rate on
Speaker 10: the tenure was one and a half percent and here's
Speaker 10: what you do. You max out your credit cards, you
Speaker 10: go buy a house. You put this money, earn twenty percent,
Speaker 10: you use that to pay off the house, and hey,
Speaker 10: in seven years you own this house. And of course
Speaker 10: you're nothing like That sort of stuff is incredibly irresponsible,
Speaker 10: and it's all over TikTok.
Speaker 6: How so i've I mean, I'm someone who admittedly is
Speaker 6: not on TikTok, but tell me what kind of posts
Speaker 6: that would come across in.
Speaker 10: So for people who are not on TikTok what like,
Speaker 10: I'm not a big TikTok user. I tend to be
Speaker 10: more of a Twitter user. But one of my favorite
Speaker 10: follows on Twitter is TikTok Investors, And this is a
Speaker 10: person who is in the financial industry but not authorized
Speaker 10: to speak on behalf of their employer, so they have
Speaker 10: to be anonymous. And they've been curating some of the
Speaker 10: most outrageous money losing videos from the experts from the
Speaker 10: finfluencers at TikTok, and as I wrote in a note
Speaker 10: this morning, they range from merely wrong to risky to
Speaker 10: actually criminal, where people are giving tax advice that if
Speaker 10: you follow the irs is going to have a little
Speaker 10: conversation and it's going to be expensive.
Speaker 2: Well, but Barry, do you feel it as the as
Speaker 2: parts of the economy slow and as we go to
Speaker 2: a slowing or normalization aka liquidity comes out of the market,
Speaker 2: do these things stop or do you think like we're
Speaker 2: just in it now.
Speaker 10: So here's the thing that I think people kind of
Speaker 10: overlook because we all have a tendency to see the
Speaker 10: world from our own unique perspective, and only some of
Speaker 10: us are paid to step back and look at the
Speaker 10: thirty thousand foot few. There is just so much money
Speaker 10: sloshing around the US economy. It's not just stocks and bonds.
Speaker 10: It's not just the six trillion with a t trillion
Speaker 10: dollars that flowed into five plus percent money market accounts.
Speaker 10: But you look at venture capital, you look at private equity,
Speaker 10: you look at private credit. There is just trillions upon
Speaker 10: trillions of dollars in the US economy. And even as
Speaker 10: things start to slow from the massive fiscal stimulus of
Speaker 10: the pandemic era. Remember Keresact one was the biggest fish
Speaker 10: stimulus since World War Two? Who is ten percent of GDP.
Speaker 10: We've never seen something like that in a few generations.
Speaker 10: Then Cares Act two both of those under President Trump
Speaker 10: then cares Act three under President Biden to say nothing
Speaker 10: of the other ten year long sort of infrastructure, semiconductor,
Speaker 10: all the other legislation that came out. There's a lot
Speaker 10: of money out there and it's going through the economy,
Speaker 10: and when people have been erroneously forecasting a recession, we
Speaker 10: can have a whole long, complicated discussion as to why
Speaker 10: or why not a recession hasn't happened. But it comes
Speaker 10: back to too much money, too strong of an economy
Speaker 10: for a true, persistent and pervasive contraction to take place
Speaker 10: at this time.
Speaker 6: Yeah, I mean, that's really the story of the economy
Speaker 6: all these days, right, that demand that just will not
Speaker 6: rein in last one for you quickly, Barry. We're saying
Speaker 6: in this note here on TikTok that investors should consider
Speaker 6: making changes on the very social media themselves.
Speaker 7: Thirty seconds. What do you mean by that?
Speaker 10: So you have to be very wary about claims that
Speaker 10: are just too good to be true. Turn one hundred
Speaker 10: dollars into a million. Hey, all you have to do
Speaker 10: is earn two percent a day. Seems kind of ridiculous.
Speaker 10: Don't pay taxes, just be on a boat on tax
Speaker 10: Day on April fifteenth, utterly ridiculous.
Speaker 6: Some of the other stuff.
Speaker 10: Here's why we're teaching our kids today trade from home. Yeah,
Speaker 10: I mean, really is this good advice for anybody? So
Speaker 10: be skeptical. Anything that seems too good.
Speaker 4: To be true probably is.
Speaker 2: All right, Barry, We really appreciate it. Fun to chat
Speaker 2: Barry wood Holtz joining us there. You can check out
Speaker 2: his Master's in Business podcast. Check that out. Definitely. It's
Speaker 2: almost telling me that his like twenty three year old
Speaker 2: son is like, let's talk to me about dollar yen, Like,
Speaker 2: how do I trade that?
Speaker 5: In?
Speaker 2: My colleague was like, please don't do that.
Speaker 7: Far and above where I was a.
Speaker 1: You're listening to the Bloomberg and tell Us podcast. Catch
Speaker 1: us live weekdays at ten am Eastern on Applecarplay and
Speaker 1: Android Auto with the Bloomberg Business App. You can also
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Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: And it is an exciting day, particularly if you like Space.
Speaker 2: So Bloomberg Space is the newest editorial franchise within our
Speaker 2: far reaching newsroom, and it's launching today and it brings
Speaker 2: together the best reporters and editors in the game, including
Speaker 2: Lauren Crush, Bruce Einhorn, Kate Duffy, Todd Shields, and Eric
Speaker 2: Johnson to deliver some hard hitting enterprise scoops, documentaries, photography
Speaker 2: and podcasts all about dot do dot.
Speaker 7: The business of space.
Speaker 2: So for more inside stories of investments beyond Earth, from
Speaker 2: satellite networks to moonlandings, you can visit bloomberg dot com
Speaker 2: slash space for more.
Speaker 7: And one of the stories.
Speaker 2: Being featured is being included in the special section of
Speaker 2: the Bloomberg BusinessWeek magazine titled Musk and Bezos Are Racing
Speaker 2: to Bring Americans back to the Moon. It discusses how
Speaker 2: NASA's hopes for a return to the Moon depend on
Speaker 2: Elon Musk's SpaceX and Jeff Bezos's Blue Origin. Here to
Speaker 2: discuss all of this with us is Lauren Grush, Bloomberg
Speaker 2: US Space reporter. First of all, congrats on launching the
Speaker 2: vertical that's no small feet. Definitely looking into that. I
Speaker 2: did a half hour special on space once and I
Speaker 2: loved it. It was so interesting, so thanks for doing that.
Speaker 6: And also just to quickly confirm, this does not mean
Speaker 6: that Bloomberg is launching anything into space. Yeah, we are
Speaker 6: launching a vertical on a website about space.
Speaker 11: It's hilarious how many people thought we might actually be
Speaker 11: sending something to space.
Speaker 7: But if people really think that's.
Speaker 2: Yeah, so let's talk about launching humans into space. If
Speaker 2: you're looking at Blue Origin or a SpaceX, how is
Speaker 2: NASA taking a different approach to Blue Origin and SpaceX
Speaker 2: this time round?
Speaker 3: Right?
Speaker 11: So, NASA is very intent on sending people back to
Speaker 11: the Moon for its Artemis program, its goal is to
Speaker 11: send the first woman and the first person of color
Speaker 11: to the Larner's surface. But the other main goal is
Speaker 11: to start a sustainable presence on the lunar surface other
Speaker 11: than you know, as opposed to the Apollo missions, where
Speaker 11: we just kind of went, we left flags and footprints
Speaker 11: and then we came back and we were done. And
Speaker 11: part of that is stimulating commercial companies to create hardware
Speaker 11: that NASA can use to send people to the Moon,
Speaker 11: and then those companies can use that hardware to potentially
Speaker 11: turn a profit. And the big high profile companies are
Speaker 11: of course Elon Musk, SpaceX and Jeff Bezos's Blue Origin,
Speaker 11: which have both been tapped to create the lunar landers
Speaker 11: that will be used to carry humans to and from
Speaker 11: the lunar surface.
Speaker 6: Lauren, I got to ask, as one of these mirror
Speaker 6: Earth links here, why is this important to send people
Speaker 6: to the Moon beyond just having the flags and the footprints.
Speaker 7: Like, what is the you know, real.
Speaker 6: Useful takeaway from having a presence on the Moon.
Speaker 11: Well, of course there's the geopolitical one. You know, NASA
Speaker 11: has a lot of partnerships with countries all over the world,
Speaker 11: and Artemis is definitely a global program, So it's a
Speaker 11: way for us to foster, you know, these relationships with
Speaker 11: companies that want to send vehicles in hardware to space.
Speaker 11: And then additionally it's kind of a proving ground. You know,
Speaker 11: NASA is hoping to eventually send humans to Mars someday,
Speaker 11: and the idea is that by living and working on
Speaker 11: the Moon, they can you know, come up with new technologies,
Speaker 11: new processes that they'll eventually use to send humans to
Speaker 11: the Red planet.
Speaker 6: I guess I still just wonder, though, how is that
Speaker 6: like useful, you know besides just saying like we went
Speaker 6: to space, Like, what's there.
Speaker 3: To be that?
Speaker 7: I don't know? Am I missing it?
Speaker 5: No?
Speaker 7: There there?
Speaker 11: That is part of the use you know, you know,
Speaker 11: obviously there are concerns about China also sending people to
Speaker 11: the moon. NASA you know, doesn't want you know, there
Speaker 11: is a bit of a race and that and that respect.
Speaker 11: But at the same time, there are all these kinds
Speaker 11: of side benefits that come from sending people to the moon.
Speaker 11: A lot of the technologies that we use here on
Speaker 11: Earth have come from space exploration, and so by you know,
Speaker 11: making this that a goal, there are all there are
Speaker 11: going to be all of these side benefits that we
Speaker 11: that trickle down to us. And then of course there's
Speaker 11: the inspirational element of it too. You know, seeing a
Speaker 11: woman walk on the moon will definitely inspire.
Speaker 7: Many young women to.
Speaker 11: Hopefully want to become astronauts or join the space industry someday.
Speaker 2: Well, and for a while, no one seemed to care
Speaker 2: about space launches anymore. Like that was sixties and seventies
Speaker 2: and we stopped kind of caring, and Jeff Bezos sending
Speaker 2: on a musk made it all really cool and sexy again.
Speaker 2: And now we have a space launch, we take it
Speaker 2: and we talk about it, and we own that, we
Speaker 2: have a vertical about it. I mean, now it's becoming
Speaker 2: something that is inspirational. Again, what company do you think
Speaker 2: is going to be the first to land humans on
Speaker 2: the Moon?
Speaker 7: Well, that's a that's.
Speaker 11: A great question and obviously something that we're going to
Speaker 11: watch over the next decade or so. So as of
Speaker 11: this moment, SpaceX is technically in the front running. They're
Speaker 11: supposed to land humans on the Moon as early as
Speaker 11: twenty twenty six. I think a lot of people are
Speaker 11: skeptical about that date just because of the amount of
Speaker 11: you know, technical things that they have to overcome, the
Speaker 11: challenges they have. There's a lot of technology development they
Speaker 11: have to do, and also the deadline for their human
Speaker 11: lunar landing has changed.
Speaker 7: A few times before.
Speaker 11: Blue Origin says that they're hoping to land humans as
Speaker 11: early as twenty twenty nine, which may be a.
Speaker 7: More realistic date.
Speaker 11: However, they are looking to land a cargo version of
Speaker 11: their vehicle on the Moon as early as next year.
Speaker 11: SpaceX is also hoping to do an uncrewde landing of
Speaker 11: their hardware on the Moon as early as next year.
Speaker 11: So you know, it's anyone's game at that moment to
Speaker 11: see who can actually land something on the Moon. But
Speaker 11: whoever does if that is Blue Origin. It'll be a
Speaker 11: bit of a shot across the bow, if you will,
Speaker 11: because Blue Origin has had execution problems, whereas SpaceX is
Speaker 11: obviously quite famous for, you know, rapidly launching and iterating
Speaker 11: and moving forward with its programs.
Speaker 2: All right, thank you so much, Lauren, We really appreciate it.
Speaker 2: Congrats on the article, congrats on launching the vertical, and
Speaker 2: no small feet. Lauren Crush joins US now called Space
Speaker 2: Reporter for Bloomberg and for more inside stories of investments
Speaker 2: beyond Earth, from satellite networks to moon landing. Visits bloomberg
Speaker 2: dot com slash space for more. So I'm taking got
Speaker 2: a nice couch, by the way in the background.
Speaker 7: I don't see how the couch is relevant to space.
Speaker 7: It's not going up there.
Speaker 4: You go to Mars, you want a nice couch.
Speaker 7: My couch is staying on Earth. It's getting in this
Speaker 7: apartment one way or another.
Speaker 2: Okay, So you would not be on board for literally
Speaker 2: going to space is not your jam.
Speaker 6: I mean, look, if someone's going to pay you know,
Speaker 6: the millionaires whatever dollars for my ticket, I'm sure it's.
Speaker 3: More than a million.
Speaker 6: Like, yeah, I'll be the beneficiary of that.
Speaker 7: But like I don't know.
Speaker 6: I still do struggle to see what's the utility of
Speaker 6: going to space?
Speaker 7: Am I missing it? I get the whole inspirational aspect
Speaker 7: of it.
Speaker 6: Like wow, this is so great, you know, and like
Speaker 6: the images of like you know, Armstrong with the flag,
Speaker 6: But why is this useful for us here on earth?
Speaker 6: Besides it's cool? Has anyone answered it? Did I miss it?
Speaker 2: I mean I think it's learning. I mean I think
Speaker 2: it's learning stuff. Could you imagine you're going to learn.
Speaker 4: How that's advanced and how we can build new couches
Speaker 4: based on what we learn in space.
Speaker 2: Actually ignore the last little landage made her couch. They
Speaker 2: built it in space. That's why it's taken so long.
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