WEBVTT - Netflix to Buy Warner Bros. Discovery 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.520 us live on YouTube. 0:00:27.320 --> 0:00:29.120 With us again and ring us back to back. 0:00:29.160 --> 0:00:31.760 Stephen Flynn here in a moment on the credit side 0:00:31.760 --> 0:00:35.239 of this historic transaction, a trooper Getha ragenoffen with us 0:00:35.240 --> 0:00:39.199 in the last hour and joins again. Githa, somebody emails 0:00:39.240 --> 0:00:41.519 in from Delaware loose beach or something. 0:00:42.120 --> 0:00:45.479 It never goes under freezing on the Delaware beach. Githa, 0:00:45.760 --> 0:00:47.120 what happens to CNN? 0:00:49.240 --> 0:00:52.559 So what happens to CNN? So the Netflix transaction actually 0:00:52.720 --> 0:00:58.080 is only for the streaming and the studio business. So CNN, TBSTNT, 0:00:58.160 --> 0:01:00.680 which are all part of the Turner Networks, they are 0:01:00.720 --> 0:01:03.920 going to be spun out into a separate company by 0:01:04.080 --> 0:01:07.240 the end of the third quarter of next year. And 0:01:07.760 --> 0:01:11.039 you know, hopefully, I think along the way, Warner Brothers 0:01:11.080 --> 0:01:13.080 is going to look for some m and a combination 0:01:13.160 --> 0:01:14.640 for that asset as well. 0:01:15.040 --> 0:01:18.319 With mister Roberts. I don't mean that's exactly right. Wait 0:01:18.319 --> 0:01:21.720 a minute, let's get this straight. Geitha expert, Sweeney expert, 0:01:21.920 --> 0:01:22.760 Keen the dummy. 0:01:22.959 --> 0:01:25.560 I'll shut up, Paul, Please, Hey, Keith, I was just 0:01:25.560 --> 0:01:29.520 gonna ask David Zaslov, the CEO of Warner Brothers Discovery, 0:01:29.520 --> 0:01:33.160 a self proclaimed media mogul, here, what happens to him 0:01:33.200 --> 0:01:33.920 in this transaction? 0:01:34.800 --> 0:01:37.600 Yeah, that's what's kind of been the real head scratcher here, Paul, 0:01:37.640 --> 0:01:39.240 because you know, as we were chatting a little bit 0:01:39.480 --> 0:01:42.399 earlier this week, I mean, we thought that they would 0:01:42.400 --> 0:01:45.200 really favor the Comcast transaction because NBC was going to 0:01:45.240 --> 0:01:49.040 be spun out and they had reportedly offered David Zaslav 0:01:49.480 --> 0:01:53.120 the position of CEO for the combined NBC and Warner 0:01:53.160 --> 0:01:57.240 Brothers streaming and studio. So it's it's really a little 0:01:57.240 --> 0:02:00.160 bit puzzling at this point. But I think what David's 0:02:00.160 --> 0:02:03.440 love has done here is the best outcome for shareholders. So, 0:02:03.880 --> 0:02:05.360 you know, as he promised. 0:02:05.280 --> 0:02:09.040 Yes he did, he absolutely delivered for shareholders here. What 0:02:09.160 --> 0:02:12.440 is the you know, Jason Bezen end at City had 0:02:12.480 --> 0:02:14.600 a nice comment earlier this week. I was listening to 0:02:14.600 --> 0:02:17.520 one of his podcasts. This is kind of a long term. 0:02:17.560 --> 0:02:20.840 This is going to be really good for Netflix because 0:02:21.320 --> 0:02:23.880 they need, believe it or not, even more content. They 0:02:23.919 --> 0:02:26.320 spend seventeen eighteen billion dollars a year own content, but 0:02:27.040 --> 0:02:29.240 they really need a library. Do you think this is 0:02:29.240 --> 0:02:31.760 a deal that Netflix really had to do, Githa. 0:02:32.520 --> 0:02:34.280 I think I think so, Paul. I mean, we were 0:02:34.360 --> 0:02:37.160 we were talking about whether this was really existential for Netflix. 0:02:37.400 --> 0:02:39.519 You know, many on the street had argued that this 0:02:39.560 --> 0:02:41.760 would be a major distraction. But I think it's not 0:02:41.800 --> 0:02:43.280 so much the cost of doing the deal. It's the 0:02:43.320 --> 0:02:46.480 cost of not doing the deal. And yeah, and really 0:02:46.480 --> 0:02:49.040 it's like as they kind of play the long game here. 0:02:49.160 --> 0:02:52.280 You know, Netflix is not competing against Disney Plus or 0:02:52.320 --> 0:02:55.920 Amazon Prime. They are competing against YouTube and you know, 0:02:56.040 --> 0:02:59.240 this is where they really need to kind of you know, 0:02:59.360 --> 0:03:02.520 double dow on franchises on. You know, they're getting a 0:03:02.560 --> 0:03:04.880 lot here. Of course, you have all the franchises, you 0:03:04.880 --> 0:03:07.440 have the library, you have a prestige brand, and HBO 0:03:07.480 --> 0:03:10.040 you get a studio lot. So this was a once 0:03:10.040 --> 0:03:12.200 in a lifetime opportunity in Netflix made sure, you know, 0:03:12.240 --> 0:03:12.920 they didn't mess up. 0:03:12.919 --> 0:03:15.000 Okay, but Thel, you just mentioned the elephant in the room, 0:03:15.040 --> 0:03:19.120 which is Google Now they're distracted with AI, AI eio, Google, 0:03:19.200 --> 0:03:22.560 Gemini home run this That what Google does for us 0:03:22.600 --> 0:03:24.720 every day here at Bloomberg Surveillance. 0:03:24.760 --> 0:03:26.840 Subscribe to Bloomberg Podcast. Keitha. 0:03:26.919 --> 0:03:32.400 Raganathan, what is the response of Google to this transaction question? 0:03:33.040 --> 0:03:35.680 I mean they're already responding, Tom. I mean, you have 0:03:35.880 --> 0:03:39.480 AI here. Netflix is really kind of looking at this 0:03:39.840 --> 0:03:42.440 as AI kind of comes in and changes the whole 0:03:42.440 --> 0:03:45.880 content cost structure, changes the whole content industry. You can 0:03:45.920 --> 0:03:48.960 basically make a movie. You have all these video or 0:03:49.040 --> 0:03:52.600 text to video functionality on these lllms right now, and 0:03:52.840 --> 0:03:55.920 that can completely change the game. And that's really what 0:03:56.000 --> 0:03:59.440 Netflix is protecting against here. YouTube already is doing a 0:03:59.440 --> 0:04:01.840 lot in that field, so you know, they don't really 0:04:01.840 --> 0:04:03.640 need to do anything. They just keep doing what they're 0:04:03.680 --> 0:04:06.200 doing and everybody else has to really get scared and 0:04:06.880 --> 0:04:09.720 you know, buckle up. And that's exactly what Netflix has done. 0:04:10.520 --> 0:04:11.360 So Keetha. 0:04:11.400 --> 0:04:14.960 We're going to talk to Jenery Bloomberg Intelligence antitrust analyst 0:04:15.000 --> 0:04:17.600 in the next hour here. But what's the what are 0:04:17.600 --> 0:04:20.600 the companies saying about the regulatory risks to this transaction? 0:04:20.640 --> 0:04:23.200 Because I know there's a really big breakup fees here 0:04:23.200 --> 0:04:24.159 in the billions of dollars. 0:04:24.279 --> 0:04:27.880 Yeah, yeah, it's a five point eight billion dollars break off, 0:04:28.160 --> 0:04:30.880 one of the highest I think ever in a media transaction. 0:04:31.640 --> 0:04:34.560 You know, we're almost six percent of the end more 0:04:34.560 --> 0:04:36.760 than six percent of the enterprise value here, so they're 0:04:36.760 --> 0:04:40.520 definitely a huge number. Yeah, anti trust is going to 0:04:40.520 --> 0:04:43.760 be a problem. Obviously, genre has much more perspective than 0:04:43.800 --> 0:04:46.919 I do. But you're basically combining the number one streaming 0:04:46.960 --> 0:04:48.919 service with the number three streaming service, So that's not 0:04:48.960 --> 0:04:53.320 going to fly nicely with regulators. So again, it's it's 0:04:53.360 --> 0:04:55.239 going to be a little bit of a weight and watch, 0:04:55.240 --> 0:04:58.120 and Netflix really didn't provide too much color on that, 0:04:58.839 --> 0:05:00.520 so we don't know whether they're going to sell the 0:05:00.640 --> 0:05:03.279 HBO service or how exactly they're going to manage that 0:05:03.360 --> 0:05:03.839 going forward. 0:05:03.960 --> 0:05:06.479 Gaza, you know, this is the question of the day. 0:05:06.839 --> 0:05:10.040 I'm sorry all this other stuff. Yeah, Sarah, coming out 0:05:10.080 --> 0:05:13.120 of a Thursday night, you know, what are what do 0:05:13.120 --> 0:05:15.320 you used to call Thursday nights in college? Oh? 0:05:15.440 --> 0:05:18.359 Just that's my Friday, you know, like rip it on Thursdays, 0:05:18.520 --> 0:05:19.360 rip it on Thursday. 0:05:19.880 --> 0:05:24.120 This is a Temple University in Philly, Sarah, thanks for 0:05:24.200 --> 0:05:27.159 emailing in what happens to my Netflix Bill? 0:05:27.400 --> 0:05:29.120 I mean, geith, is the price of all this is 0:05:29.160 --> 0:05:29.839 going to go up? 0:05:30.880 --> 0:05:33.960 It has to, Tom, you know, it has to. 0:05:34.160 --> 0:05:35.880 Can you round it up? Are we going to stay 0:05:35.960 --> 0:05:38.000 under twenty dollars a month for Netflix? 0:05:38.760 --> 0:05:41.000 I think eventually it's going to go higher than that. 0:05:41.040 --> 0:05:43.479 But yeah, as much as we complain about you know, 0:05:43.560 --> 0:05:46.080 Netflix of price being high for the cost of the 0:05:46.080 --> 0:05:48.560 streaming service, if you're actually looking at the value you're 0:05:48.600 --> 0:05:51.240 getting a per dollar, you know, in terms of time 0:05:51.279 --> 0:05:55.640 spent per dollar, it's actually really a pretty compelling value proposition. 0:05:55.920 --> 0:05:57.880 And I think as they keep adding more content, as 0:05:57.880 --> 0:05:59.839 they keep adding you know, more to the library of 0:06:00.080 --> 0:06:02.280 that give them huge pricing power. It also helps them 0:06:02.279 --> 0:06:04.599 to build their advertising business, so maybe you know a 0:06:04.640 --> 0:06:09.000 little bit of that the price increase, they can kind 0:06:09.000 --> 0:06:11.680 of offset that by also building their advertising business and 0:06:11.720 --> 0:06:12.440 keeping costs slow. 0:06:12.880 --> 0:06:14.960 Keithie, your trooper, I'm sure you got a twenty four 0:06:15.000 --> 0:06:17.560 hour day ahead of you. Getha Raganath and driving our 0:06:17.640 --> 0:06:22.239 expertise on Netflix given this historic just transaction. 0:06:21.839 --> 0:06:22.560 Stay with us. 0:06:22.800 --> 0:06:26.000 More from Bloomberg Surveillance coming up after this. 0:06:33.279 --> 0:06:36.880 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:06:36.920 --> 0:06:40.120 weekday afternoons from seven to ten am Eastern Listen on 0:06:40.160 --> 0:06:43.839 Applecarplay and Android Otto with the Bloomberg Business app, or 0:06:44.000 --> 0:06:45.520 watch us Live on YouTube. 0:06:45.720 --> 0:06:48.000 One of our most popular guests a huge value added 0:06:48.000 --> 0:06:51.480 through the year is Katherine Kaminski. She's with Alpha Simplex, 0:06:51.680 --> 0:06:57.039 hugely associated with the Massachusetts Institute of Technology. Katie Kominski 0:06:57.160 --> 0:07:01.440 here on trend, Katie, when we had some angst here recently, 0:07:02.080 --> 0:07:05.040 I guess we have a trend and we have stopped loss. 0:07:05.320 --> 0:07:09.320 Were your stops violated within all the angst or were 0:07:09.360 --> 0:07:10.960 you okay to stay on trend? 0:07:12.880 --> 0:07:14.600 I would say that there was a little bit of 0:07:14.640 --> 0:07:18.320 a pullback in equities, but you really haven't seen anything 0:07:18.400 --> 0:07:21.360 substantial enough, and as you've seen the last two weeks, 0:07:21.880 --> 0:07:25.560 equities back in motion again, so that that's kind of surprising. 0:07:25.680 --> 0:07:27.920 There there are some jitters, though, I'd say. 0:07:27.800 --> 0:07:32.040 What's the technical characteristic of the new strength in this 0:07:32.240 --> 0:07:33.560 equity market. 0:07:33.840 --> 0:07:35.160 I say it's re emerging. 0:07:35.280 --> 0:07:38.960 So you've seen definite strength in the equity markets, but 0:07:39.000 --> 0:07:43.760 you've seen that sort of consolidate and then re emerge 0:07:43.840 --> 0:07:46.080 in the sense that you know a trend that started 0:07:46.120 --> 0:07:46.920 to consolidate. 0:07:47.600 --> 0:07:49.440 Still kind of is holding on. 0:07:49.440 --> 0:07:52.080 One of the heroes for Catherine Coavinsky and meet paul 0:07:52.200 --> 0:07:53.840 Is Louise Eumada. 0:07:54.280 --> 0:07:57.160 Yeah, I kind of absolutely iconic, and she. 0:07:57.200 --> 0:08:02.280 Would say, Luis Jumada would say, we're seeing distribution and 0:08:02.320 --> 0:08:03.960 then boom, yeah you. 0:08:03.920 --> 0:08:06.320 Go where down you go? Yep, distribution is what we 0:08:06.440 --> 0:08:07.240 enjoyed this year. 0:08:08.000 --> 0:08:10.400 So Katie talked us about the dollar here. It seems 0:08:10.400 --> 0:08:13.160 to have kind of stabilized here. I'm not sure from 0:08:13.200 --> 0:08:16.080 your perspective is that a trend because we had an 0:08:16.080 --> 0:08:18.640 eight percent nine percent soft, but it's kind of stabilized here. 0:08:19.760 --> 0:08:23.160 Yeah, the dollar is stabilized from the week dollar trend, 0:08:23.160 --> 0:08:26.920 but we've seen very different positioning in the dollar across 0:08:26.960 --> 0:08:30.800 different em and developed currencies. I think I'm the most 0:08:30.800 --> 0:08:34.720 interested to see what happens with the VOJ because you know, 0:08:34.760 --> 0:08:37.960 you have US cutting rates and then you have VOJ 0:08:38.160 --> 0:08:41.360 potentially hiking rates, which is going to kind of cause 0:08:41.440 --> 0:08:44.840 currencies to dislocate and move around, I would guess. 0:08:45.840 --> 0:08:47.480 So I'd say the currency trade is. 0:08:47.440 --> 0:08:50.600 One that is up for grabs going on in the 0:08:50.640 --> 0:08:52.200 next two three weeks. 0:08:53.040 --> 0:08:56.120 So how do we think about just going into twenty 0:08:56.160 --> 0:08:59.360 twenty six. Are there any themes you're you guys are 0:08:59.400 --> 0:09:02.640 looking at from a kind of momentum type perspective. 0:09:03.720 --> 0:09:06.319 Yeah, this is a good question, because you know, I 0:09:06.400 --> 0:09:10.000 think the really interesting thing that we're seeing right now 0:09:10.080 --> 0:09:15.040 is just the very dispergent or disparate trends that you're 0:09:15.080 --> 0:09:18.199 seeing across the globe. Fixed income in particular is very 0:09:18.200 --> 0:09:20.840 interesting just this idea. 0:09:20.880 --> 0:09:22.840 I mean, let's take Japan and Australia. 0:09:22.920 --> 0:09:26.160 They're in a completely different trajectory than the US, So 0:09:26.240 --> 0:09:28.680 I think it could be a very exciting year next 0:09:28.760 --> 0:09:33.040 year where you'd have sort of cycles of boom and deflation. 0:09:33.800 --> 0:09:36.480 And that's always exciting for us who are looking for 0:09:36.600 --> 0:09:38.360 different themes and trends over time. 0:09:38.600 --> 0:09:41.760 Katie Kminsky with us A very strong thirty five to 0:09:41.880 --> 0:09:44.439 forty minutes for you. Katie Kiminski with us the Uri 0:09:44.520 --> 0:09:47.360 and Shimmer. Good morning to Boston as we look at 0:09:47.360 --> 0:09:50.880 different sides of the Charles River. In ninety two nine 0:09:51.040 --> 0:09:53.760 FM UP in Boston features Up thirteen, Town features up 0:09:53.840 --> 0:09:56.720 forty three. Right now again for you, in a historic 0:09:56.840 --> 0:10:00.000 moment for American capitalism, Paul am I right, the only 0:10:00.040 --> 0:10:02.920 equivalent I can think of as Time Warner AOL a 0:10:02.960 --> 0:10:03.600 few years ago. 0:10:03.720 --> 0:10:07.880 I mean, it's that kind of romance and emotion, isn't it. Yeah? 0:10:07.960 --> 0:10:11.080 Absolutely, And this this is a very interesting deal because 0:10:11.120 --> 0:10:14.800 you have two really really high quality companies coming together. 0:10:14.960 --> 0:10:17.760 The headline Netflix to buy Warner Brothers in seventy two 0:10:18.080 --> 0:10:22.960 billion dollar cash in stock deal. We continue with Katie Kaminski. 0:10:23.240 --> 0:10:25.920 Katie the idea that we are resilient. That's a word 0:10:25.960 --> 0:10:29.360 I've seen fourteen times in the last forty eight hours. 0:10:29.920 --> 0:10:33.400 I would say we are resilient. Are we resilient because 0:10:33.440 --> 0:10:38.520 we allow capitalism, because we have a shepherdarian ability to 0:10:38.640 --> 0:10:39.520 allow failure? 0:10:41.280 --> 0:10:44.360 I mean, I think that's a very good existential question. 0:10:45.520 --> 0:10:48.040 I'd say that, you know, the US markets still have 0:10:48.480 --> 0:10:52.560 been leaning on relatively strong growth and the numbers are 0:10:52.880 --> 0:10:56.760 still in our favor. What is a cautionary tale, though, 0:10:56.880 --> 0:11:01.000 is looking at places like Australia that had out all 0:11:01.000 --> 0:11:04.080 of their rate cuts for next year. So I think 0:11:04.160 --> 0:11:07.319 it's still a very you know, you know, the tides 0:11:07.360 --> 0:11:10.400 can turn and you can see a hot inflation print 0:11:10.559 --> 0:11:13.920 or things that might kind of change direction. But for 0:11:14.040 --> 0:11:17.880 right now, growth has been steady. The US is looking strong, 0:11:18.679 --> 0:11:21.440 but that can change if we start to see more deterioration. 0:11:22.520 --> 0:11:25.000 I mean, I look, Katie, at where we are, and 0:11:25.040 --> 0:11:28.120 there's going to be winners and losers. What flavor I 0:11:28.120 --> 0:11:32.120 mean within CTAs and hedge funds, what flavors the winner 0:11:32.120 --> 0:11:36.240 this year? Off trend analysis? What flavor is the loser? 0:11:37.600 --> 0:11:41.000 Oh, that's a good one. Equities have definitely been a winner. 0:11:41.120 --> 0:11:46.040 Besides what happened in April. Gold is also a clear winner. 0:11:46.200 --> 0:11:46.560 Silver. 0:11:47.840 --> 0:11:49.640 But when you look at things that have been hard 0:11:49.679 --> 0:11:53.120 to trade, I'd say it's fixed income because fixed income 0:11:53.200 --> 0:11:56.520 has been very back and forth, and there's been a 0:11:56.559 --> 0:12:00.520 lot of speculation about sort of the general move the FED. 0:12:00.960 --> 0:12:03.679 There's been descents in the FED. So I think fixed 0:12:03.720 --> 0:12:05.680 income has been hard to trade this year. 0:12:06.559 --> 0:12:08.760 But Katie, how about it on the commodity side, Boy, 0:12:08.800 --> 0:12:12.840 that dollar? I mean the gold's ripping, silver even more so. 0:12:13.240 --> 0:12:17.280 I mean, I haven't seen movements in these precious metals 0:12:17.320 --> 0:12:18.120 in a long time. 0:12:18.160 --> 0:12:18.360 Here. 0:12:18.520 --> 0:12:19.880 How do you think about it going forward? 0:12:20.960 --> 0:12:23.960 So I think to think about the gold trade, especially 0:12:24.040 --> 0:12:27.160 in a situation when the dollar is weaker as this 0:12:27.240 --> 0:12:31.280 potential hedge, and you're really seeing something that people are 0:12:31.280 --> 0:12:34.080 holding on to while they hold on to something that 0:12:34.360 --> 0:12:36.800 they know they should hold, so equity, So it's kind 0:12:36.800 --> 0:12:41.640 of this risk mitigator in a sense. And I think 0:12:41.720 --> 0:12:44.880 that's why gold is so valuable. People are thinking we 0:12:44.960 --> 0:12:47.440 got to hold onto something real and that way, if 0:12:47.480 --> 0:12:49.520 things do get challenging, we have that. 0:12:49.760 --> 0:12:51.959 I got opinion down O. Katie De Paul's good question. 0:12:52.040 --> 0:12:55.400 In commodities, I brought up the Bloomberg Commodity Index iconic 0:12:55.440 --> 0:12:59.000 at UBS. It's a really important blended index at what's 0:12:59.040 --> 0:13:01.880 going on. I took it back, Katie to Richard Nixon 0:13:02.320 --> 0:13:06.280 in Gold nineteen seventy. I've got a multi decade rushier 0:13:06.400 --> 0:13:07.920 Sharma commodity boom. 0:13:08.400 --> 0:13:09.760 It ends O nine to ten. 0:13:10.280 --> 0:13:12.760 I got a bear market in commodities, but you know what, 0:13:12.760 --> 0:13:15.520 I'm sort of teen swings kind of breaking out. Do 0:13:15.600 --> 0:13:18.880 you have an up trend on a blended commodity index. 0:13:20.240 --> 0:13:24.640 So we're definitely seeing generally up trends in commodities. The 0:13:24.679 --> 0:13:28.400 best ones have been the base and precious metals aags 0:13:28.440 --> 0:13:31.440 have been more mixed, and energies have actually frankly been 0:13:31.480 --> 0:13:34.960 a little difficult to trade because they've been somewhat range bound. 0:13:35.480 --> 0:13:37.880 If you look at the BCom Index, it does have 0:13:37.960 --> 0:13:42.200 a significant energy tilt, so that may make a difference 0:13:42.240 --> 0:13:44.840 in terms of looking at that particular index, but more 0:13:44.880 --> 0:13:49.120 equal weighted index I would assume would be definitely up, 0:13:49.240 --> 0:13:51.679 particularly because of what's going on in the metals. 0:13:52.840 --> 0:13:56.880 Katie, We're going to hear from the feeder Reserve next Wednesday. 0:13:57.960 --> 0:14:00.800 How do you guys, as you know, kind of momentum 0:14:00.880 --> 0:14:05.320 type traders, trend traders, how do you guys factor in 0:14:05.400 --> 0:14:07.839 kind of FED policy? And maybe we'll get it and 0:14:07.920 --> 0:14:09.240 get a change in FED leadership. 0:14:09.280 --> 0:14:13.120 Actually, so i'd say that, you know what's interesting, that's 0:14:13.120 --> 0:14:15.800 a very good question because right now I am scratching 0:14:15.840 --> 0:14:18.880 my head a little bit about fixed income because you 0:14:19.000 --> 0:14:22.320 do see yields going up in anticipation of what is 0:14:22.960 --> 0:14:26.200 seen as a foregone conclusion, and the way that we 0:14:26.320 --> 0:14:29.840 trade fixed income trends is really about where the prices move. 0:14:30.000 --> 0:14:33.680 So I think it is interesting to think about more 0:14:33.760 --> 0:14:37.840 short signals and perhaps less conviction and fixed income because 0:14:37.880 --> 0:14:40.800 yields are rising, I think that's really more of the 0:14:40.840 --> 0:14:44.000 market being concerned about the BOJ in the short term, 0:14:44.680 --> 0:14:48.040 but the general trend has been more long for fixed 0:14:48.040 --> 0:14:52.200 income and anticipation of a tilt in the fed to 0:14:52.320 --> 0:14:54.000 a much more dubbish stance. 0:14:54.400 --> 0:14:56.720 Katie, thank you so much for joining us all through 0:14:56.760 --> 0:15:00.800 the year. Kathy Kominsky with Elpha Simplex huge. You get 0:15:00.800 --> 0:15:04.840 a huge response from our work on trend analysis and 0:15:04.960 --> 0:15:07.080 all this of course off the work of Andrew Low 0:15:07.560 --> 0:15:12.640 and Mit just absolutely legendary up in Boston. 0:15:13.120 --> 0:15:13.840 Stay with us. 0:15:14.080 --> 0:15:24.360 More from Bloomberg Surveillance coming up after this. 0:15:24.360 --> 0:15:28.280 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:15:28.320 --> 0:15:31.720 starting at seven am Eastern on Applecarplay and Android Auto 0:15:31.760 --> 0:15:34.720 with the Bloomberg Business App. You can also listen live 0:15:34.760 --> 0:15:38.360 on Amazon Alexa from our flagship New York station, Just 0:15:38.400 --> 0:15:40.920 say Alexa Play Bloomberg eleven thirty. 0:15:41.040 --> 0:15:43.200 We start with the heart and soul of our coverage. 0:15:43.240 --> 0:15:48.400 He has built our entertainment franchise truly worldwide. Felix Gillette, 0:15:48.640 --> 0:15:53.560 who's done serious reporting on this. You're right now at 0:15:53.640 --> 0:15:57.920 Michaels and you're having a Felix Gillette Power launch at Michael's. 0:15:58.360 --> 0:16:01.280 Zazz Love's with you. Maybe kind of let it with 0:16:01.360 --> 0:16:04.880 all of their history here. What's David Zevlav thinking about 0:16:04.920 --> 0:16:05.480 this morning? 0:16:06.320 --> 0:16:09.760 I mean, I think that it's hilarious that you know, 0:16:09.920 --> 0:16:12.240 we're just talking. Three years ago, we heard the argument 0:16:12.320 --> 0:16:16.640 that combining the Warner brother assets with the Discovery assets 0:16:16.760 --> 0:16:19.600 was going to unleash all of this synergy that was 0:16:19.640 --> 0:16:22.760 going to better position this company to take on Netflix. 0:16:23.160 --> 0:16:25.680 And here we are three years later, after Zaslov made 0:16:25.680 --> 0:16:27.360 that argument to all of us, and he's saying, you 0:16:27.360 --> 0:16:29.200 know what, like you know, it would be really great, 0:16:29.280 --> 0:16:31.760 is combining these assets with Netflix? 0:16:31.840 --> 0:16:36.240 Exactly right? What do you think the Netflix strategies? 0:16:36.280 --> 0:16:40.120 Because one could argue Netflix was doing great, Yeah, stock. 0:16:39.920 --> 0:16:42.200 Was doing great. Shareholders loved in the bond market, it 0:16:42.280 --> 0:16:42.640 loved them. 0:16:42.680 --> 0:16:45.080 There was a nice clean story. Now they're going to 0:16:45.160 --> 0:16:47.400 go do this huge acquisition and deal with all these 0:16:47.400 --> 0:16:49.800 crazy people in Hollywood. What do you think they're they're 0:16:50.000 --> 0:16:50.760 strategies here? 0:16:51.400 --> 0:16:53.040 Well, I think if you listened to what they were 0:16:53.080 --> 0:16:56.600 saying today, they think that those all the you know, 0:16:56.720 --> 0:17:01.040 TV series, all the movies, one hundred years of library 0:17:01.040 --> 0:17:04.119 that you're getting from Warner Brothers, that those assets are 0:17:04.160 --> 0:17:08.480 really have not been utilized to great extent, both in 0:17:08.520 --> 0:17:10.800 the US, but also they mentioned a lot internationally that 0:17:10.960 --> 0:17:13.320 you know, they see a lot of room for growth 0:17:13.440 --> 0:17:16.320 in getting more money out of the HBO brand, in 0:17:16.359 --> 0:17:20.560 particular in markets overseas. I mean, HBO had this incredibly 0:17:20.640 --> 0:17:23.720 rich brand history in the US, but overseas they always 0:17:23.800 --> 0:17:28.040 license their content to other local distributors. And I think 0:17:28.160 --> 0:17:31.200 Netflix has built this new model with the truly international 0:17:31.240 --> 0:17:34.440 distribution brand, and they think, Hey, now we can have 0:17:34.520 --> 0:17:38.080 all of those HBO shows, all of those Warner Brothers movies, 0:17:38.359 --> 0:17:40.000 and we can get a lot more out of them 0:17:40.040 --> 0:17:40.960 in these markets around. 0:17:41.240 --> 0:17:42.200 Hey, you're the expert. 0:17:42.680 --> 0:17:44.399 I mean, it always looks great on paper. 0:17:44.600 --> 0:17:46.880 What do you do with Castle blank? Make a Saturday 0:17:46.880 --> 0:17:47.720 Morning cartoon? 0:17:47.960 --> 0:17:50.200 Yeah, I think a video game or two, you know, 0:17:50.320 --> 0:17:52.760 for your mobile phone on your Netflix app? Yeah, I 0:17:52.800 --> 0:17:55.480 think it's again, these things always sound great when you 0:17:55.480 --> 0:17:57.720 look at them on paper, and then of course you 0:17:57.760 --> 0:18:00.280 get into the messy business of trying to act actually 0:18:00.359 --> 0:18:04.600 combine these different groups of people, and that's where it 0:18:04.600 --> 0:18:05.800 gets a little messy. 0:18:05.880 --> 0:18:07.800 I mean, Paul and I just talk about it. Yeah, 0:18:07.880 --> 0:18:08.200 lived it. 0:18:08.600 --> 0:18:10.600 The last time you were at the Sunset Tarro Hotel. 0:18:10.640 --> 0:18:13.040 You almost fell into the pool. You did one too 0:18:13.040 --> 0:18:16.040 many beverages with an umbrella in it. What happens on 0:18:16.119 --> 0:18:19.560 the Warner Brothers lot, What happens in those little cabanas 0:18:19.960 --> 0:18:21.880 that you've been in that Paul and I have never 0:18:21.960 --> 0:18:22.280 been in. 0:18:22.480 --> 0:18:27.240 Yeah, you know, those people have a job. I think 0:18:27.280 --> 0:18:29.560 that a lot of those people are sweating pretty hard 0:18:29.640 --> 0:18:32.040 right now. I mean they're talking about two or three 0:18:32.080 --> 0:18:33.920 billion dollars of savings a year. 0:18:35.040 --> 0:18:36.520 You know, today they're saying, well, we. 0:18:36.600 --> 0:18:38.720 You know, that's going to come out of the tech stack. 0:18:38.880 --> 0:18:41.119 That's not about you know, we're going to continue to 0:18:41.160 --> 0:18:43.960 spend money where We're going to continue everything just as 0:18:44.000 --> 0:18:46.400 it is. We embraced We're going to embrace the theaters, 0:18:46.840 --> 0:18:50.119 even though you know, we've basically been saying for years 0:18:50.119 --> 0:18:54.520 that we don't care about movie theater distribution. And so yeah, 0:18:54.560 --> 0:18:57.200 I think it's it's a little worrisome for all those people. 0:18:57.280 --> 0:18:58.399 We're commercial free for you. 0:18:58.480 --> 0:19:02.040 The day of this historic transit for Hollywood and for 0:19:02.160 --> 0:19:05.000 Los Angeles, New York and America, Felix Jillette with his 0:19:05.119 --> 0:19:08.399 Jason Bezinett and Jenery coming up as well into the 0:19:08.400 --> 0:19:11.119 ten o'clock our Paul, you know I did all the 0:19:11.160 --> 0:19:11.880 work myself. 0:19:11.960 --> 0:19:14.240 I know you did with the help of Google Gemini. 0:19:14.720 --> 0:19:19.240 Three years ago, the Reverse Morris Trust was a forty 0:19:19.280 --> 0:19:22.200 three billion dollar transaction. 0:19:22.840 --> 0:19:24.600 So now they're going to squeeze out of age of 0:19:24.680 --> 0:19:27.360 eighty two billion. Yep, that's a first daf of seging 0:19:27.400 --> 0:19:29.960 those numbers. I know. Yeah, was this a. 0:19:29.920 --> 0:19:33.800 Win win or a win lose or a lose loose transaction? 0:19:34.000 --> 0:19:36.159 Well, ultimately it's going to be good for shareholders. 0:19:36.160 --> 0:19:37.239 I think I have to go back and look at 0:19:37.240 --> 0:19:40.679 the historical returns, but I mean it's certainly way more 0:19:40.720 --> 0:19:43.680 than when the stock was trading just a few months ago. Felix, 0:19:44.960 --> 0:19:47.560 the management team of Netflix very well thought of. They've 0:19:47.560 --> 0:19:52.280 done an extraordinary job reinventing the entire entertainment business. One 0:19:52.280 --> 0:19:54.720 thing they haven't done is they haven't done a big acquisition. 0:19:55.240 --> 0:19:57.560 How are people feeling about that? Do they feel like 0:19:57.600 --> 0:19:59.320 this managing team can execute here? 0:20:00.080 --> 0:20:02.000 Yeah, I mean I think they're feeling like it's a 0:20:02.000 --> 0:20:04.439 big challenge and they haven't done it before. They also, 0:20:04.760 --> 0:20:06.560 you know, not too long ago, were saying we'll never 0:20:06.600 --> 0:20:09.159 do advertising, and then what do they do. They lounge 0:20:09.200 --> 0:20:12.320 an advertising service that now is starting to get traction. 0:20:12.840 --> 0:20:14.879 You know, Oh, we're you know, we're not interested in 0:20:15.560 --> 0:20:18.600 all these things. And they've they've you know, continued to 0:20:18.640 --> 0:20:21.239 evolve and continue to make these big moves. I think 0:20:21.280 --> 0:20:23.960 it's fascinating to watch. You know, Ted Sarandos has been 0:20:24.080 --> 0:20:29.399 chasing the HBO series from twenty ten. You know, they 0:20:29.480 --> 0:20:32.480