WEBVTT - Netflix, Comcast and Paramount Make Bids for Warner Bros 0:00:02.759 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.640 --> 0:00:14.600 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:14.640 --> 0:00:17.880 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.960 --> 0:00:21.080 Business app. Listen on demand wherever you get your podcasts, 0:00:21.400 --> 0:00:23.120 or watch us live on YouTube. 0:00:24.400 --> 0:00:27.760 M and A Media m and A pending big, big 0:00:27.760 --> 0:00:31.520 deal Warner Brothers Discovery. It's in discussions and accepted bids 0:00:31.520 --> 0:00:37.559 from Paramount, sky Dance, from Netflix, maybe even Comcast. Now, 0:00:37.600 --> 0:00:39.120 I guess we wait and see what happens. But this 0:00:39.159 --> 0:00:40.920 is when this deal crosses a tape, it's going to 0:00:40.960 --> 0:00:43.280 be a big deal. It's gonna have enterprise value of 0:00:43.520 --> 0:00:44.880 north of ninety billion. 0:00:45.120 --> 0:00:46.800 I can't wait for them to make a limited TV 0:00:46.880 --> 0:00:48.320 series about this parting process. 0:00:48.360 --> 0:00:49.320 Yes, it's gonna be great. 0:00:49.400 --> 0:00:53.479 Yeah, exactly right, coming to Netflix on soon. Keitha rang 0:00:53.520 --> 0:00:56.920 Andathen She covers the media space for Bloomberg Intelligence as 0:00:56.960 --> 0:00:59.960 the media analyst there Ethan. What's the latest on Warner 0:01:00.080 --> 0:01:02.560 Brothers Discovery. I guess the question now is that BIS 0:01:02.440 --> 0:01:05.960 has been accepted. What are next steps? Yeah? 0:01:06.040 --> 0:01:10.160 Next steps, Paul is that these were just first round bids. 0:01:10.240 --> 0:01:12.920 They're non binding bids. You know, as far as the 0:01:12.920 --> 0:01:16.440 news reports go, it looks like all three companies that 0:01:16.480 --> 0:01:19.160 were in the race, Paramount skuy Dance for all of 0:01:19.200 --> 0:01:22.240 Warner Brothers, and then Netflix and Comcast for just the 0:01:22.280 --> 0:01:25.440 studio and streaming assets, have all placed their bids. This 0:01:25.480 --> 0:01:27.720 is going to be a very long drawn process, so 0:01:27.760 --> 0:01:29.480 we're going to have multiple rounds. 0:01:30.280 --> 0:01:30.480 You know. 0:01:30.520 --> 0:01:34.360 We've had some conflicting reports actually on what Paramount sky 0:01:34.480 --> 0:01:36.760 Dance was offering. There was something earlier this week but 0:01:36.920 --> 0:01:40.480 suggested they were offering something north of twenty eight dollars 0:01:40.480 --> 0:01:44.600 per share. They came out refuted that report, and the 0:01:44.680 --> 0:01:48.400 latest reports seemed to suggest that it might be it's 0:01:48.440 --> 0:01:51.200 definitely going to be something much lower than that, probably 0:01:51.280 --> 0:01:54.240 something above twenty five, but still below twenty seven. But 0:01:54.320 --> 0:01:58.480 let's remember David Zaslav has publicly said that he wants 0:01:59.040 --> 0:02:02.600 something north of thirty dollars per share, So this is 0:02:02.640 --> 0:02:04.880 going to play out for quite a while. 0:02:04.880 --> 0:02:07.200 I think, yeah, that is a pretty big gap between 0:02:07.200 --> 0:02:10.640 what David Zaslov wants and what the reporting indicates Paramounts 0:02:10.639 --> 0:02:12.880 Guidance is likely to pay. So if this is going 0:02:12.919 --> 0:02:15.359 to be a long drawn out process, does that benefit 0:02:16.000 --> 0:02:18.800 Warner Brothers Discovery or these bidders, who comes out ahead 0:02:18.800 --> 0:02:19.760 in that kind of scenario. 0:02:21.280 --> 0:02:23.720 Yeah, I mean, the long drawn out processes is really 0:02:23.760 --> 0:02:27.000 not good, I think for for Warner Brothers Discovery. But 0:02:27.560 --> 0:02:30.760 having said that, let's remember that they do have another 0:02:30.919 --> 0:02:33.560 plan B in place, and the Plan B is that 0:02:33.600 --> 0:02:37.000 they are going to go ahead and split their company 0:02:37.040 --> 0:02:39.440 into two parts, so you have the TV Networks business 0:02:39.800 --> 0:02:42.360 and the streaming and studio business. And the good news 0:02:42.400 --> 0:02:45.320 for them is that the studio turnaround, which was you know, 0:02:45.440 --> 0:02:48.560 kind of in progress, is now really kind of taking shape. 0:02:48.880 --> 0:02:52.440 We're seeing some really tangible, you know, growth come out 0:02:52.440 --> 0:02:55.200 of both streaming as well as studio. And so worst 0:02:55.200 --> 0:02:58.280 comes to worst if nothing you know, materializes from all 0:02:58.320 --> 0:03:00.519 of these bids and from all of this same chatter 0:03:00.600 --> 0:03:04.200 and buzz, they are still on track to separate their businesses, 0:03:04.200 --> 0:03:06.079 and who knows, maybe that would be the better path 0:03:06.120 --> 0:03:09.240 for them going forward. So all is not lost even 0:03:09.320 --> 0:03:11.119 if you know these bids don't work out. 0:03:12.040 --> 0:03:13.960 KEITHA, I know you've done the work. What do you 0:03:13.960 --> 0:03:15.280 think the entire company is worth? 0:03:17.040 --> 0:03:19.960 So, Paul, you know, it all again depends here on 0:03:20.040 --> 0:03:22.320 who's making the bid for what parts of the business 0:03:22.320 --> 0:03:23.880 they're making. But so as we kind of look at 0:03:23.880 --> 0:03:27.399 it right now, I don't think David Zaslav is far 0:03:27.440 --> 0:03:29.959 off when he says he wants thirty dollars per share 0:03:30.320 --> 0:03:33.680 for all of the company. We think majority of that 0:03:33.840 --> 0:03:37.480 value will actually rest with the studio and streaming network. 0:03:37.520 --> 0:03:40.240 So we when we kind of crunch the numbers, we 0:03:40.360 --> 0:03:42.800 get twenty five to twenty eight dollars just for the 0:03:42.840 --> 0:03:45.680 studio and the streaming business. But at the end of 0:03:45.720 --> 0:03:47.760 the day, Paul, it all comes down to synergy. So 0:03:47.840 --> 0:03:51.360 if you look at you know, combining the entire corporation, 0:03:51.560 --> 0:03:54.800 all of Warner Brothers Discovery with all of Paramount for instance, 0:03:54.800 --> 0:03:58.000 and they both have you know, substantial linear network exposure, 0:03:58.280 --> 0:04:01.160 they both have studios, they both have streaming assets. You know, 0:04:01.200 --> 0:04:03.680 we're looking like something like at about four or five 0:04:03.720 --> 0:04:07.200 billion dollars in synergies, which you know, then then adds 0:04:07.240 --> 0:04:08.240 to the deal value. 0:04:08.280 --> 0:04:12.800 Also, stay with us. More from Bloomberg Intelligence coming up 0:04:13.000 --> 0:04:13.400 after this. 0:04:17.040 --> 0:04:20.720 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:04:20.800 --> 0:04:23.880 weekdays at ten am Eastern on Apple, Cocklay and Android 0:04:23.920 --> 0:04:27.200 Auto with the Bloomberg Business app. Listen on demand wherever 0:04:27.279 --> 0:04:30.800 you get your podcasts or watch us live on YouTube. 0:04:31.480 --> 0:04:33.920 A column that I read this week really resonated because 0:04:33.920 --> 0:04:36.880 it hits upon three key themes that we're seeing across 0:04:36.880 --> 0:04:41.960 the markets. Retail earnings, tech forward companies, and people worried 0:04:41.960 --> 0:04:44.920 about losing their jobs in this AI era. Beth cow 0:04:45.000 --> 0:04:47.000 It is a Bloomberg opinion columnist, and she's written a 0:04:47.000 --> 0:04:50.520 story about Walmart and it's masterclass and reputation rehab. But 0:04:50.560 --> 0:04:53.120 it really rests on this idea that Walmart invested in 0:04:53.160 --> 0:04:56.120 its workforce and its treatment of workers at a time 0:04:56.240 --> 0:04:59.320 when it was being criticized for not treating its workers well, 0:04:59.320 --> 0:05:01.479 and this is paid off in many ways. Beth joins 0:05:01.560 --> 0:05:04.120 us now in our bloom Work Interactive Brokers studio. So Beth, 0:05:04.480 --> 0:05:06.839 just take us back a couple of years to when 0:05:06.880 --> 0:05:09.320 Walmart decided that it was going to spend on its workforce. 0:05:09.320 --> 0:05:11.479 It was going to invest money into the workforce, and 0:05:11.560 --> 0:05:13.599 investors did not like hearing that. 0:05:13.960 --> 0:05:15.600 Yeah, I mean, it's hard to think about this now, 0:05:15.640 --> 0:05:18.480 but a decade ago, Walmart was one of the most 0:05:18.560 --> 0:05:21.279 reviled companies in America. Right it was being criticized for 0:05:21.360 --> 0:05:25.040 paying its employees low wages. For wiping out mom and 0:05:25.080 --> 0:05:30.960 pop retailers for basically creating a culture of disposable consumerism. 0:05:31.000 --> 0:05:32.720 So it really was getting hit from a lot of 0:05:32.760 --> 0:05:36.920 different angles. And rather than just ignore the bad press 0:05:37.120 --> 0:05:39.360 or army, you know, hire an army of pr people, 0:05:39.360 --> 0:05:42.600 it decided to do something about it. And Doug McMillan decided, 0:05:42.680 --> 0:05:45.440 we're going to invest in our people and two point 0:05:45.440 --> 0:05:47.760 seven billion dollars over a couple of years, and we 0:05:47.880 --> 0:05:49.280 now know this really paid off. 0:05:50.320 --> 0:05:53.000 So I mean, for Doug McMillan, I mean to me, 0:05:53.279 --> 0:05:55.000 after reading your article, this could be one of his 0:05:55.520 --> 0:05:58.000 as he's stepping down, could be one of his lasting 0:05:58.080 --> 0:05:59.000 legacies at the company. 0:05:59.080 --> 0:05:59.640 I really think so. 0:05:59.760 --> 0:06:01.599 I think I think that you know, he's been at 0:06:01.640 --> 0:06:03.680 the company now more than a decade. I think this 0:06:03.720 --> 0:06:07.280 will be amongst the most enduring things that he has done. 0:06:07.480 --> 0:06:10.560 I think this. I'm not sure that the company would 0:06:10.800 --> 0:06:12.680 be in the place it's at today if he had 0:06:12.680 --> 0:06:13.520 not really addressed this. 0:06:13.880 --> 0:06:16.320 And let's be clear about what exactly he did with 0:06:16.360 --> 0:06:19.120 that two point seven sharing dollars. Pay increases, there is 0:06:19.200 --> 0:06:24.360 training and really just attracting a better quality worker. 0:06:24.680 --> 0:06:26.599 Yeah, and the way he did this was right. It 0:06:26.640 --> 0:06:29.000 was pay increases, but more than anything else, it was 0:06:29.080 --> 0:06:32.599 creating not low paying jobs, but a career. 0:06:32.839 --> 0:06:32.960 Right. 0:06:33.440 --> 0:06:34.640 There was now a path. 0:06:34.440 --> 0:06:37.120 For people who started at Walmart to move up the ranks, 0:06:37.240 --> 0:06:41.760 and that was really important, right to attracting more ambitious employees, 0:06:42.720 --> 0:06:44.920 to getting them to stay, and I think that that 0:06:45.680 --> 0:06:48.000 shifted the whole culture of the company. 0:06:48.920 --> 0:06:52.719 So what's the company saying about AI? Because there's a 0:06:52.720 --> 0:06:55.360 lot of answer just in the overall economy about what 0:06:55.400 --> 0:06:58.280 the impact AI will have upon jobs. One could look 0:06:58.320 --> 0:07:01.000 at big box stores as industry that might be at 0:07:01.040 --> 0:07:01.640 risk because. 0:07:01.440 --> 0:07:02.880 They do employ so many people. 0:07:03.160 --> 0:07:03.960 What does Walmart say. 0:07:04.120 --> 0:07:06.600 Walmart's taken a very different approach, I think than some 0:07:06.640 --> 0:07:10.080 other big employers, and it has embraced a EYE. Let's 0:07:10.120 --> 0:07:13.360 be clear, Like there's a AI is throughout embedded throughout 0:07:13.400 --> 0:07:16.200 the company, but it has not used a EE to 0:07:16.480 --> 0:07:19.120 have some of these mass layoffs that were justify some 0:07:19.160 --> 0:07:21.680 of these mass layoffs that we've seen at other companies. 0:07:21.680 --> 0:07:24.240 And I think part of that is this history, like 0:07:24.320 --> 0:07:29.280 it knows how important these entry level workers are and 0:07:29.360 --> 0:07:32.360 that they need a path, they need this workforce to 0:07:32.440 --> 0:07:36.679 sort of grow the company. So it said AI will 0:07:36.920 --> 0:07:40.640 change every job. It knows that, but it is trying 0:07:40.680 --> 0:07:43.960 to get every worker through to the other side, so 0:07:44.000 --> 0:07:47.280 whether that's retraining, finding new rules, rules for them. So 0:07:47.760 --> 0:07:50.200 it's just a very different outlook, I think than what 0:07:50.240 --> 0:07:51.119 we're hearing from others. 0:07:51.720 --> 0:07:53.960 And you've noted as well that the last ten years 0:07:53.960 --> 0:07:57.120 at Walmart has led to tremendous return for shareholders, but 0:07:57.240 --> 0:08:00.680 also it's become a case study at heart Heard Business 0:08:00.680 --> 0:08:05.000 school on how to on how an experiment on paying 0:08:05.040 --> 0:08:07.440 your workers war or investing your workers can pay off. 0:08:07.520 --> 0:08:08.080 Absolutely. 0:08:08.120 --> 0:08:10.320 I mean we you mentioned this at the beginning, but 0:08:10.720 --> 0:08:14.080 Wall Street hated this plan. I mean the company lost 0:08:14.080 --> 0:08:18.120 tremendous value, about that much tremendous value when they announced it, 0:08:18.200 --> 0:08:21.360 and now you know, we have the receipts a decade later, 0:08:21.440 --> 0:08:24.920 and the I think the market gap has tripled. The 0:08:24.960 --> 0:08:28.240 stock has returned more than four hundred percent. So they 0:08:28.240 --> 0:08:30.480 really took a gamble on this and stuck with it, 0:08:30.600 --> 0:08:33.320 and it really has it has paid off for them. 0:08:33.679 --> 0:08:35.920 I mean, every time I look at the dees screen 0:08:36.160 --> 0:08:38.720 on the Bloomberg terminal for Walmart, had just blown away 0:08:38.760 --> 0:08:42.439 by the fact that they have two point one million employees. 0:08:42.720 --> 0:08:46.040 What's the retention of those employees. I'm wondering if there's 0:08:46.120 --> 0:08:47.960 like I would think in the warehouses it might be 0:08:48.000 --> 0:08:48.720 really really high. 0:08:48.760 --> 0:08:50.760 I'm not sure about the stores. How is retention sure? 0:08:50.800 --> 0:08:53.839 So they've actually increased retention by ten percent since twenty 0:08:53.880 --> 0:08:57.200 fifteen they when they started this plan. And another thing 0:08:57.240 --> 0:09:00.680 is that they've some of the more management len roles. 0:09:01.800 --> 0:09:04.760 Seventy five percent of those are hired from with it. 0:09:05.120 --> 0:09:08.040 So this pipeline is really critical for them. And so 0:09:08.120 --> 0:09:10.280 that's why I think that they are so focused on 0:09:10.360 --> 0:09:11.920 creating a place where people stay. 0:09:13.320 --> 0:09:13.800 That's key. 0:09:14.040 --> 0:09:15.960 And you only have to look at the outgoing CEO 0:09:16.040 --> 0:09:19.120 and the NTO, right, Both Doug McMillan and John Ferner, 0:09:19.480 --> 0:09:23.360 the successor, are Walmart lifers. They started off as hourly 0:09:23.400 --> 0:09:24.240 workers there. 0:09:24.080 --> 0:09:26.120 Right, They know the importance of that and having worked 0:09:26.160 --> 0:09:28.440 their way up, that needs to be something that continues. 0:09:28.480 --> 0:09:31.600 There is this something that you think the new CEO 0:09:31.800 --> 0:09:33.960 is as committed to as the prior CEO. 0:09:34.280 --> 0:09:36.840 I would think so because he has the same background. 0:09:36.920 --> 0:09:40.280 I mean, I think he knows the importance of emerging technologies. 0:09:40.480 --> 0:09:43.520 He's really focused on that. But I think because of 0:09:43.520 --> 0:09:47.520 his history and he's worked very closely with McMillan for 0:09:47.559 --> 0:09:49.920 a long time, so they must be aligned on this. 0:09:51.440 --> 0:09:54.560 Stay with us. More from Bloomberg Intelligence coming up after this. 0:09:58.480 --> 0:10:01.840 You're listening to the Bloomberg and Intelligence podcast. Catch us 0:10:01.920 --> 0:10:04.800 live weekdays at ten am. He's done on Apple, Cocklay 0:10:04.840 --> 0:10:07.840 and Android Auto with the Bloomberg Business App. Listen on 0:10:07.880 --> 0:10:11.160 demand wherever you get your podcasts, or watch us live 0:10:11.200 --> 0:10:11.840 on YouTube. 0:10:13.000 --> 0:10:16.120 Jody Lori joints us here in our Bloomberg Interactive Broker 0:10:16.200 --> 0:10:17.600 studio in the Big Town. 0:10:17.640 --> 0:10:19.760 How about that, Jody. 0:10:19.840 --> 0:10:20.800 We love your coverage. 0:10:20.960 --> 0:10:24.520 You covered from the credit perspective, all the fun industries 0:10:25.160 --> 0:10:27.440 like hotels, like cruise ships and all that kind of stuff. 0:10:27.480 --> 0:10:30.680 I know, you guys put out a survey talking about 0:10:30.679 --> 0:10:33.080 how people are spending their vacation money. 0:10:33.520 --> 0:10:34.120 What'd you learn? 0:10:34.800 --> 0:10:37.160 So we do the survey every half a year, and 0:10:37.240 --> 0:10:39.720 so we just got the results out for the most 0:10:39.760 --> 0:10:42.840 recent one that we ran last week. And what's interesting 0:10:43.080 --> 0:10:46.240 is that we're seeing more people planning on keeping their 0:10:46.280 --> 0:10:47.120 budgets the same. 0:10:47.559 --> 0:10:49.640 But what's more interesting is. 0:10:49.559 --> 0:10:53.440 That if costs succeed, budgets fewer people than last year. 0:10:53.320 --> 0:10:54.800 So they'd increase their budget. 0:10:55.040 --> 0:10:58.079 And that's on the back of them knowing that inflation 0:10:58.559 --> 0:11:01.040 is a much higher risk for them for their portfolio. 0:11:01.400 --> 0:11:04.000 So in other words, people are making room for time off, 0:11:04.080 --> 0:11:07.160 but they're going to have to scrimp more in order 0:11:07.240 --> 0:11:10.960 to make it happen because their money is not going 0:11:11.040 --> 0:11:13.760 to take them as far as it used to correct. 0:11:13.480 --> 0:11:16.400 And Scarlett, I mean, I think to piggyback on that. 0:11:16.840 --> 0:11:21.640 If you look the eating out, anticipation of spending is 0:11:21.840 --> 0:11:23.839 higher this year than last year, and I think that's 0:11:23.920 --> 0:11:26.199 lesser reflection of people wanting to eat out, but more 0:11:26.240 --> 0:11:29.080 that they're expecting eating out is going to be more expensive. 0:11:29.440 --> 0:11:32.800 And so even though we're seeing people want to spend 0:11:32.840 --> 0:11:35.760 on paid activities and experiences, which could bode well for 0:11:35.880 --> 0:11:39.080 the cruise lines and the theme parks, at the end 0:11:39.120 --> 0:11:42.440 of the day, when cost succeed budgets, more people this 0:11:42.520 --> 0:11:45.520 year over last year are planning on cutting and looking 0:11:45.559 --> 0:11:48.480 at free options. So going to the free museums, going 0:11:48.480 --> 0:11:49.400 to low cost. 0:11:49.120 --> 0:11:51.360 Options, well, now that the government is open DC is 0:11:51.400 --> 0:11:54.679 an option once again. How about in terms of destination, 0:11:55.600 --> 0:11:58.560 maybe staying closer to home, maybe not going quite as 0:11:58.600 --> 0:12:00.600 far internationally, Yes. 0:12:00.200 --> 0:12:03.680 And staying closer to home is very very much key 0:12:04.080 --> 0:12:09.120 if we see the data, the international trend is to Canada. 0:12:09.240 --> 0:12:12.360 Canada bumped up to the second spot. So we saw 0:12:12.360 --> 0:12:15.320 that in the midyear, and it was pretty curious for US, 0:12:15.360 --> 0:12:18.080 particularly because when you look at it the opposite way, 0:12:18.160 --> 0:12:21.000 and we did this announced a few months ago. Canada 0:12:21.160 --> 0:12:22.920 is not coming to the US. They don't want to 0:12:22.960 --> 0:12:25.120 come to the US. It's too expensive for them, they 0:12:25.120 --> 0:12:28.800 don't really like the current government situation, and on top 0:12:28.840 --> 0:12:31.480 of it, I think they're scared about crossing the border 0:12:31.600 --> 0:12:34.959 and what it means for immigration. So we're seeing Canadians 0:12:35.080 --> 0:12:36.760 not come to the US, and we're seeing a lot 0:12:36.800 --> 0:12:37.880 of companies comment on that. 0:12:38.240 --> 0:12:40.560 But we are seeing a lot of Americans go to Canada. 0:12:40.600 --> 0:12:42.920 And I am curious how much and this is going 0:12:42.960 --> 0:12:45.920 to come in further reports. How much of the Canada 0:12:46.000 --> 0:12:48.679 move is a reflection of the World Cup next year. 0:12:49.160 --> 0:12:51.120 There's a lot of people going to Vancouver, for instance, 0:12:51.160 --> 0:12:52.880 for the World Cup. I'll actually be there during the 0:12:52.880 --> 0:12:54.560 World Cup, but not going to the World Cup. 0:12:55.200 --> 0:12:56.360 Why we. 0:12:58.640 --> 0:13:01.760 Might be doing a very family friendly cruise to Alaska. 0:13:01.920 --> 0:13:02.360 Nice. 0:13:02.440 --> 0:13:04.280 It just works out that that's the same time as 0:13:05.040 --> 0:13:05.800 it was bad timing. 0:13:06.360 --> 0:13:09.839 It's bad time, all right, talk to me. This is 0:13:09.880 --> 0:13:12.400 when I go to Aruba, we go to an all inclusive. 0:13:13.800 --> 0:13:15.640 How come I didn't know about this all inclusive thing 0:13:15.679 --> 0:13:16.800 when I had four little kids. 0:13:17.360 --> 0:13:19.600 I mean, were they were they a thing back then? 0:13:19.800 --> 0:13:21.559 I don't know, but I mean I would get the 0:13:21.600 --> 0:13:24.599 bill which would be five inches thick with like smoothies 0:13:24.640 --> 0:13:26.640 and chicken fingers and all that kind of crap that 0:13:26.640 --> 0:13:27.679 they'd eat throughout. 0:13:27.360 --> 0:13:28.400 The day four kids. 0:13:28.720 --> 0:13:30.560 Man if if I knew about the all inclusive, that 0:13:30.559 --> 0:13:33.320 would have been a savior for me. What are people 0:13:33.360 --> 0:13:35.680 doing when they are they willing to still pay it 0:13:35.720 --> 0:13:39.200 for travel? Because I still here people going to Europe 0:13:39.240 --> 0:13:41.800 and stuff like that. I mean, they're not going to Poughkeepsie, 0:13:41.800 --> 0:13:43.360 They're going to Parish and things. 0:13:43.800 --> 0:13:46.800 Yeah, I mean Japan is certainly a popular destination. Strong 0:13:46.840 --> 0:13:49.000 dollar there, yeah, very much increased. 0:13:49.040 --> 0:13:50.400 Italy has increased. 0:13:50.600 --> 0:13:53.920 We're seeing among the upper income level, you know, Portugal 0:13:53.920 --> 0:13:57.560 and Spain as popular destinations. And I think probably what's 0:13:57.559 --> 0:14:00.960 even more interesting is onboard spending for cruises is still 0:14:00.960 --> 0:14:02.680 continuing to have momentum. 0:14:02.760 --> 0:14:03.920 At the moment, I. 0:14:03.880 --> 0:14:07.120 Think where we're watching is when that onboard spending shifts 0:14:07.280 --> 0:14:09.760 and then the cruise lines, for example, don't get that. 0:14:09.800 --> 0:14:11.480 Gravy for cash flow. 0:14:11.920 --> 0:14:14.000 And to your point, Paul, I mean, even though you 0:14:14.080 --> 0:14:16.440 have something called all inclusives, even though you have the 0:14:16.480 --> 0:14:19.480 cruise lines, that they all are considered these package deal 0:14:19.920 --> 0:14:22.360 what every company is doing, and we're talking the rental 0:14:22.400 --> 0:14:24.960 car companies. You know, Avius is doing this too, obviously, 0:14:25.040 --> 0:14:26.520 the airlines is they're all. 0:14:26.520 --> 0:14:28.000 Doing these premium products. 0:14:28.040 --> 0:14:30.760 These you know, you do different tiers of products, so 0:14:30.840 --> 0:14:32.880 the add on so you can get the base level, 0:14:32.920 --> 0:14:36.200 which is really the skeleton package. But anyone from cruise 0:14:36.240 --> 0:14:40.040 lines to you know, theme parks, to some extent, to 0:14:40.080 --> 0:14:42.480 the all inclusives, to the airlines, to the rental car 0:14:42.560 --> 0:14:45.400 companies are all segmenting to give you know, the lower 0:14:45.440 --> 0:14:47.720 income consumer the ability to say that they traveled and 0:14:47.760 --> 0:14:51.400 the higher income consumer the ability to travel luxury. And 0:14:51.440 --> 0:14:53.600 in terms of the add ons, what are these add 0:14:53.600 --> 0:14:56.240 ons are they? You know, things that they used to 0:14:56.240 --> 0:14:58.280 offer for free and now charge. 0:14:58.080 --> 0:14:59.160 You for for some of it. 0:14:59.160 --> 0:15:01.800 It is so you know, a good example I have 0:15:02.080 --> 0:15:04.600 is anecdotally, I know that some of the cruise lines 0:15:04.640 --> 0:15:07.480 that used to not charge to get people into the 0:15:07.520 --> 0:15:09.280 center of a city, say in Europe, you're on a 0:15:09.320 --> 0:15:10.120 European cruise. 0:15:10.440 --> 0:15:12.200 They used to give that for free. 0:15:12.440 --> 0:15:13.840 Now they say no, you have to be a part 0:15:13.880 --> 0:15:16.920 of one of our you know, expeditions, one of one 0:15:16.920 --> 0:15:19.080 of our excursions in order to get that for free. 0:15:19.120 --> 0:15:21.160 Otherwise we charge you twenty dollars to get into the 0:15:21.160 --> 0:15:25.000 Senate's colwn in you know, Czechoslovakia and not Checklisvokia, check Republic. 0:15:26.040 --> 0:15:29.160 Stay with us. More from Bloomberg Intelligence coming up after this. 0:15:33.080 --> 0:15:36.760 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:15:36.840 --> 0:15:39.960 weekdays at ten am Eastern on Apple Coarclay and Android 0:15:39.960 --> 0:15:43.280 Auto with the Bloomberg Business App. Listen on demand wherever 0:15:43.320 --> 0:15:47.200 you get your podcasts, or watch us live on YouTube. 0:15:47.560 --> 0:15:49.880 Obviously, the theme this week, one of the things has 0:15:49.880 --> 0:15:54.160 been Nvidian It's strong earnings. AI fight has been really 0:15:54.200 --> 0:15:56.920 a driving theme for this overall market for going on 0:15:57.080 --> 0:15:59.880 three years now, and Investor has been looking for your 0:16:00.000 --> 0:16:02.720 privative ways to play that theme, and one of that 0:16:02.760 --> 0:16:05.040 has been how do you get tompower all these data 0:16:05.080 --> 0:16:07.160 centers out there? And that leads you to utilities, and 0:16:07.160 --> 0:16:10.320 that leads you to our next guest, Calvin Butler, CEO 0:16:10.440 --> 0:16:14.120 of exelon it is a publicly traded company. EXC is 0:16:14.160 --> 0:16:16.720 the ticker of the stocks up about one percent today, 0:16:16.800 --> 0:16:19.280 up about twenty two percent year to date, so certainly 0:16:19.280 --> 0:16:22.360 performing well with the other utility stocks. Calvin, thank you 0:16:22.360 --> 0:16:26.120 so much for joining us here. Again, when I look 0:16:26.120 --> 0:16:29.520 at your industry, you guys are critical to the rollout 0:16:29.640 --> 0:16:32.280 of AI because we've got to power this stuff, these 0:16:32.360 --> 0:16:33.000 data centers. 0:16:33.360 --> 0:16:34.400 How do you guys view it? 0:16:35.560 --> 0:16:38.320 Yeah, Paul, thank you for having me and exactly how 0:16:38.320 --> 0:16:44.560 you said it. We're critical to the development of AI 0:16:44.720 --> 0:16:48.880 data centers and large load quantum and we take that 0:16:48.960 --> 0:16:54.560 responsibility very serious. And from a standpoint of building that infrastructure, 0:16:54.600 --> 0:16:57.280 protecting that grid, it's going to be the backbone of 0:16:57.320 --> 0:16:59.920 all this. We always say that the energy in sector 0:17:00.000 --> 0:17:02.760 there is five percent of the GDP, but we power 0:17:02.800 --> 0:17:05.840 the next ninety five and we take that very seriously. 0:17:06.720 --> 0:17:07.480 You take it seriously. 0:17:07.520 --> 0:17:09.240 So walk us through some of the plans you're making, 0:17:09.320 --> 0:17:14.280 how you're preparing for this transition, for this increase in demand. 0:17:15.359 --> 0:17:17.960 Yeah, thank you, Scarlett. What we have done, We've done 0:17:18.000 --> 0:17:22.639 a few things. Is one understanding for your listeners, excellent. 0:17:23.200 --> 0:17:27.280 We are truly a transmission and distribution company, you know, 0:17:27.480 --> 0:17:31.080 proud to have six utilities operating the electric gas side 0:17:31.280 --> 0:17:34.120 through the pipes and wires. So having said that, being 0:17:34.160 --> 0:17:38.000 the backbone of that, we're encouraging those data centers and 0:17:38.080 --> 0:17:41.400 large developers to come into the states in which we operate, 0:17:41.760 --> 0:17:45.720 and we put together a comprehensive plan to get them online, 0:17:45.880 --> 0:17:49.840 up and running sooner rather than later. Speed is everything 0:17:49.880 --> 0:17:54.160 for them, and so what it takes is a coordinated effort, 0:17:54.280 --> 0:17:58.120 and we've worked very hard to move upstream to get 0:17:58.119 --> 0:18:00.680 them online so they can do what they do, which 0:18:00.720 --> 0:18:04.040 is on the technology side. Now, as we do that, 0:18:04.520 --> 0:18:07.080 we have to keep in mind first and foremost the 0:18:07.160 --> 0:18:10.680 affordability factor for all of our communities, and that's where 0:18:10.720 --> 0:18:15.360 we're working with them to identify sites that are more 0:18:15.480 --> 0:18:19.040 ready to put their equipment and their technology in place. 0:18:19.880 --> 0:18:23.719 We had a couple of governor races recently in New 0:18:23.800 --> 0:18:26.359 Jersey and in Virginia, and affordability was one of the 0:18:26.359 --> 0:18:29.440 big issues. And in New Jersey the governor elect who 0:18:29.480 --> 0:18:32.320 actually won, one of her number one issues was bringing 0:18:32.400 --> 0:18:36.440 down electric utility bills. So this is an issue we 0:18:36.520 --> 0:18:39.800 got to fund, We got to I guess create and 0:18:39.840 --> 0:18:41.840 develop these data centers, but we got to do it 0:18:41.920 --> 0:18:43.720 in a way that it doesn't cause. 0:18:43.520 --> 0:18:45.560 Everybody's power bills to go up. 0:18:45.880 --> 0:18:47.640 How do you think about that transition. 0:18:48.200 --> 0:18:51.600 Paul, You're absolutely right. It was a race in both 0:18:51.880 --> 0:18:56.080 New Jersey and Virginia, an issue, and we believe it's 0:18:56.080 --> 0:18:58.080 going to be an issue in the twenty twenty six 0:18:58.119 --> 0:19:02.320 elections because of affordability. Pocketbook issues are going to be key. 0:19:02.560 --> 0:19:05.639 So let me tell you what we're doing from excellent perspective. 0:19:06.200 --> 0:19:09.000 We are protecting our residential customers. You know, we serve 0:19:09.080 --> 0:19:12.359 almost eleven million customers. So as as important as it 0:19:12.400 --> 0:19:15.720 is for data center development, it's more important for me 0:19:15.800 --> 0:19:19.240 to protect the other customers in this process. So we've 0:19:19.280 --> 0:19:21.840 come up with what we consider a rather innovative solution 0:19:22.280 --> 0:19:26.239 in creating a tear up a transmission security agreement. So 0:19:26.280 --> 0:19:29.600