WEBVTT - Softbank Sells Nvidia Stake for $5.8 Billion to Fund AI Bets 0:00:02.720 --> 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 ea'sterne 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 --> 0:00:23.520 or watch us live on YouTube. 0:00:24.200 --> 0:00:27.840 A lot of news flow today on the tech front Nvidia. 0:00:27.960 --> 0:00:31.320 I mean, when Masa Son sells stock in a company, 0:00:31.520 --> 0:00:32.280 that's news to me. 0:00:32.479 --> 0:00:34.520 That is news. But I mean does he have great 0:00:34.560 --> 0:00:36.760 timing or does he have poor timing? That's my question? 0:00:36.880 --> 0:00:39.360 Uh, yep, I don't know. I mean you mean sold 0:00:39.360 --> 0:00:41.040 it for five twenty billions. What are you gonna do 0:00:41.040 --> 0:00:41.239 with that? 0:00:41.520 --> 0:00:43.920 Ed Luvelow, he does all this tech stuff out there 0:00:44.080 --> 0:00:45.240 in San Francisco. 0:00:45.280 --> 0:00:48.680 He is the b Tech co anchor alongside Caroline Hyde. 0:00:48.920 --> 0:00:52.919 So Ed, you know, whenever Massa herosn does anything, it 0:00:53.000 --> 0:00:54.560 really gets people's attention. 0:00:54.640 --> 0:00:57.560 Here, what do you make of this trade? Your heads 0:00:57.560 --> 0:00:58.520 are in the right place. 0:00:58.760 --> 0:01:01.080 I mean, they're selling out of the entire stake, and 0:01:01.120 --> 0:01:03.440 that's worth reiterating. It's all of it in one go 0:01:03.840 --> 0:01:06.119 five point six billion dollars, which for a five trillion 0:01:06.160 --> 0:01:10.119 dollar company, almost five trillion dollar company is not that much, 0:01:10.200 --> 0:01:13.360 but it's also not unprecedented. And what Scarlett was saying 0:01:13.400 --> 0:01:17.080 about timing, soft Banks sold out of Nvidia once before. 0:01:17.240 --> 0:01:20.080 That was in twenty nineteen, right before the kind of 0:01:20.160 --> 0:01:25.880 chat GBT explosion in AI data center demand. But then 0:01:25.920 --> 0:01:28.720 they kind of realized twenty twenty they needed to get 0:01:28.760 --> 0:01:31.440 back in and they slowly built up a stake which 0:01:31.600 --> 0:01:36.360 resulted in on paper gains that were really significant. So 0:01:36.959 --> 0:01:39.520 the market seeing this, even though in video is down, 0:01:39.560 --> 0:01:41.160 I think it's down two and a half per cent, right, guys, 0:01:41.480 --> 0:01:45.280 not necessarily is an issue with Nvidia or a signal 0:01:45.319 --> 0:01:49.200 that SoftBank has concerned about Nvidia. They're seeing it or 0:01:49.240 --> 0:01:51.120 taking soft Bank at its word that this is just 0:01:51.200 --> 0:01:52.920 financing for the other things they want to do. 0:01:53.440 --> 0:01:55.880 Okay, And in terms of the other things that wants 0:01:55.920 --> 0:01:58.160 to do, It's got a lot of different AI projects 0:01:58.360 --> 0:01:59.320 going on, isn't it. 0:02:00.200 --> 0:02:02.960 Across both public and private initiatives. Right, There are some 0:02:03.480 --> 0:02:06.160 AI startups in the compute space that they're looking at 0:02:06.200 --> 0:02:09.919 taking private. For example. They still want to deploy capital 0:02:10.000 --> 0:02:12.840 out of the Vision funds and Vision fund too. And 0:02:13.000 --> 0:02:16.200 you know they didn't tell tell us much. The CFO 0:02:16.240 --> 0:02:20.560 in particular on the call. But but that's it, you know, 0:02:21.080 --> 0:02:25.920 realizing gains, using the realized gains to generate cash, and 0:02:26.000 --> 0:02:28.240 using that cash for investing. 0:02:28.880 --> 0:02:31.560 That's what they do, right, I think, yep, exactly right. 0:02:32.240 --> 0:02:35.600 Do you think that Massa believes that he and the 0:02:35.600 --> 0:02:38.080 fund have a proper allocation to AI at the moment? 0:02:39.520 --> 0:02:43.880 This is the really important question because there is a 0:02:43.880 --> 0:02:47.040 lot of exposure with soft Bank to open AI, both 0:02:47.080 --> 0:02:52.120 in terms of direct investment but also co financing and 0:02:52.280 --> 0:02:56.240 partnering on the Stargate Data Center project. Some people have 0:02:56.320 --> 0:03:00.320 concern about the concentration risk. You know, right now AI 0:03:00.400 --> 0:03:02.560 as seen as the world's leading frontier. 0:03:02.160 --> 0:03:03.440 Model lab or AI lab. 0:03:03.800 --> 0:03:07.040 But that's not guaranteed of course, and so they would 0:03:07.040 --> 0:03:10.480 ask what is it diversified enough? But yeah, it's a 0:03:10.480 --> 0:03:15.640 really critical question. Remember, like through ARM and the board 0:03:15.680 --> 0:03:18.480 representation that they have with ARM, there is an idea 0:03:18.600 --> 0:03:21.919 that if ARMED design staf senships, Top Bank benefits from that. 0:03:22.040 --> 0:03:25.080 What they're doing with ampare in the compute space as well. 0:03:25.840 --> 0:03:28.440 That's why they need this five point six billion dollars. 0:03:28.480 --> 0:03:31.519 They say, Okay, so that's one of the big stories 0:03:31.919 --> 0:03:34.640 on the top Worldwide page on the Bloomberg terminal. The 0:03:34.720 --> 0:03:37.600 other one is Corewed's results, and we talked a little 0:03:37.600 --> 0:03:40.280 bit about Nvidia earlier. In Vidia actually owns about a 0:03:40.320 --> 0:03:42.640 six and a half percent stake in Coreweaves, one of 0:03:42.720 --> 0:03:45.200 those neo cloud companies. What was the takeaway from the 0:03:45.280 --> 0:03:46.280 latest earnings report. 0:03:46.920 --> 0:03:50.360 Yeah, so they cut their full year revenue guidance for 0:03:50.400 --> 0:03:53.000 fiscal twenty five to a range of five point zero 0:03:53.040 --> 0:03:56.760 five billion to five point one five billion dollars. The 0:03:56.840 --> 0:03:59.440 previous high end of the range had been five point 0:03:59.480 --> 0:04:02.720 three five billion dollars, so they've lowered it by about 0:04:02.720 --> 0:04:06.520 two hundred million dollars. And they say that that is 0:04:06.560 --> 0:04:10.560 because a third party that was building data center capacity 0:04:10.600 --> 0:04:14.080 for them let them down. They're behind schedule, and because 0:04:14.120 --> 0:04:16.719 that data center won't be up and running, they can't 0:04:16.800 --> 0:04:20.520 realize the revenue for a specific customer, which they're not naming. 0:04:22.160 --> 0:04:26.120 Does that justify the stock being down eleven percent? That's 0:04:26.120 --> 0:04:27.800 not a question for us. That's a question for the 0:04:27.839 --> 0:04:30.279 sale s item, for the investors themselves. But there's a 0:04:30.279 --> 0:04:32.440 lot of commotion about what it is a two hundred 0:04:32.480 --> 0:04:35.719 million dollar trim because some capacity is delayed and the 0:04:35.760 --> 0:04:38.320 thing you need to know Scarlet is like generally speaking, 0:04:38.800 --> 0:04:41.960 call we've cannot get data center capacity up and running 0:04:42.040 --> 0:04:44.240 quick enough to meet the demand that it has. 0:04:45.800 --> 0:04:48.919 Stay with us. More from Bloomberg Intelligence coming up after this. 0:04:52.520 --> 0:04:56.200 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:04:56.320 --> 0:04:59.400 weekdays at ten am Eastern on Apple Coarclay and Android 0:04:59.400 --> 0:05:02.280 Otto with the bloom Work Business app. Listen on demand 0:05:02.320 --> 0:05:06.800 wherever you get your podcasts, or watch us live on YouTube. 0:05:07.440 --> 0:05:10.600 I think my new favorite stock symbol is peace guy. 0:05:11.080 --> 0:05:12.040 Yeah, such a good one. 0:05:12.120 --> 0:05:14.880 I like that one for Paramount Skydance. The company reported 0:05:15.200 --> 0:05:18.240 earnings yesterday kind of in line numbers, but there's a 0:05:18.320 --> 0:05:20.200 lot of cost cutting going over there, and the stocks 0:05:20.240 --> 0:05:23.599 up ten percent on the news today. So let's check 0:05:23.600 --> 0:05:25.960 it out with Getha rang on Nothing because she covers 0:05:25.960 --> 0:05:28.200 all the media stuff for Bloomberg Intelligence and Getha I'll 0:05:28.200 --> 0:05:31.160 ask you the one you know, Ernie's question. Then I 0:05:31.200 --> 0:05:32.599 want to get to the need of the matter here. 0:05:32.680 --> 0:05:35.680 How were the earnings for this newly combined company and 0:05:35.920 --> 0:05:36.680 what's the outlook? 0:05:37.839 --> 0:05:41.240 Yeah, Paul, earnings were a little bit messy. They were mixed, 0:05:41.360 --> 0:05:44.920 but the good news was that the company kind of 0:05:44.960 --> 0:05:48.039 over delivered when it came to streaming crafitability, which is 0:05:48.040 --> 0:05:50.479 the big thing that everybody's looking for, given that, you know, 0:05:50.520 --> 0:05:53.320 they've just lost tons and tons of money on their 0:05:53.360 --> 0:05:56.359 streaming business, so that was good news. I think why 0:05:56.400 --> 0:05:59.520 Wall Street is really cheering, you know, paramount Skuidance today 0:05:59.600 --> 0:06:02.360 is because the guidance that they provided for twenty twenty 0:06:02.400 --> 0:06:06.080 six was pretty promising. So A Street was in at 0:06:06.120 --> 0:06:09.120 about three point one billion for ibit dah for next year, 0:06:09.760 --> 0:06:12.200 they came in with three point five billion, and a 0:06:12.240 --> 0:06:14.640 lot of that, as you just pointed out, was because 0:06:14.640 --> 0:06:16.760 of the cost savings. So they've taken it out from 0:06:16.760 --> 0:06:20.960 two billion to three billion. Very very aggressive measures across 0:06:21.000 --> 0:06:23.520 the board, but I think overall it was you know, 0:06:23.560 --> 0:06:25.440 what really kind of came across was that this is 0:06:25.480 --> 0:06:28.239 a solid management team that really knows what they're doing. 0:06:28.839 --> 0:06:33.719 They're super focused, you know, on driving that transformation within 0:06:33.760 --> 0:06:37.680 the company, and I think that really kind of cheered investors. 0:06:37.960 --> 0:06:40.960 Speaking of driving transformation in the company, the big question 0:06:41.200 --> 0:06:45.520 for Paramounts guidance is whether it's going to buy Warner 0:06:45.520 --> 0:06:48.960 Brothers Discovery wholesale or at least parts of it. Did 0:06:48.960 --> 0:06:51.760 we hear anything from the executives in the earnings call. 0:06:52.760 --> 0:06:54.839 Yeah, Scarlet, that's a great question. I mean, obviously that 0:06:54.880 --> 0:06:57.120 was the first thing on everybody's minds. So, you know, 0:06:57.160 --> 0:07:00.359 obviously no specific commentary on Warner Brothers itself, but the 0:07:00.400 --> 0:07:03.040 one thing that they did say was that they think, 0:07:03.680 --> 0:07:06.440 you know, they don't there's no must have for them, 0:07:06.440 --> 0:07:09.560 So they really kind of downplayed the whole need for 0:07:09.760 --> 0:07:11.640 M and A. They said that, you know, they have 0:07:11.760 --> 0:07:13.720 all of the you know, they have a great portfolio 0:07:13.760 --> 0:07:16.160 of assets. Of course, we all know that these assets 0:07:16.160 --> 0:07:19.960 have been undermanaged for many many years, underinvested, so there's 0:07:20.000 --> 0:07:21.840 a lot of work to do there. There's a lot 0:07:21.840 --> 0:07:25.360 of restructuring that needs to happen. But they really kind 0:07:25.360 --> 0:07:29.040 of downplayed you know, Warner Brothers. Of course, we know that, 0:07:29.200 --> 0:07:32.280 you know, yes, they are making huge content investments. They 0:07:32.320 --> 0:07:35.200 are making huge technological investments. But if you look at 0:07:35.240 --> 0:07:37.960 their streaming service, which is Paramount Plus, it has roughly 0:07:38.080 --> 0:07:41.840 eighty million subscribers. Okay, they do have, you know, all 0:07:41.880 --> 0:07:44.679 of these new content investments. Let's say the UFC ZUOFA boxing, 0:07:44.720 --> 0:07:47.840 all of that South Park not enough to move the needle. 0:07:47.880 --> 0:07:49.760 And I think they know that the street knows that, 0:07:49.840 --> 0:07:52.600 which is why they do need something transformative like Warner 0:07:52.600 --> 0:07:55.000 Brothers Discovery, which will really kind of put them on 0:07:55.040 --> 0:07:58.240 the map when it comes to streaming for sure, and 0:07:58.320 --> 0:08:00.920 also in terms of extracting more synergy on the linear 0:08:00.960 --> 0:08:03.400 TV side of the business where they have huge exposure. 0:08:03.400 --> 0:08:06.000 Over fifty five percent of revenue still comes from linear TV. 0:08:06.800 --> 0:08:08.560 So when you look at the enterprise value of Warner 0:08:08.600 --> 0:08:13.120 Brothers Discovery, it's almost three times the enterprise value of 0:08:13.920 --> 0:08:17.600 Paramount Skuidance, suggesting that if Paramounts Guidance wants to do 0:08:17.640 --> 0:08:19.520 a deal here, they're going to need a ton of equity, 0:08:19.720 --> 0:08:23.920 whether it comes from mister Ellison or whether it comes 0:08:23.920 --> 0:08:26.360 from private equity or some combination. Is that kind of 0:08:26.400 --> 0:08:28.480 where people are thinking about it. 0:08:29.200 --> 0:08:30.840 That is kind of where people are thinking about it. 0:08:30.840 --> 0:08:32.920 And you know what was really interesting, Paul was, you know, 0:08:32.960 --> 0:08:36.640 they've made three bids for Warner Brothers Discovery thus far, 0:08:37.200 --> 0:08:41.120 all of which have been rejected. The last one was 0:08:41.200 --> 0:08:44.560 for almost twenty four dollars a share, which was basically 0:08:44.600 --> 0:08:48.640 sixty billion equity value, about ninety billion enterprise value. And 0:08:48.679 --> 0:08:50.920 the thing there was they were offering eighty percent cash. 0:08:50.960 --> 0:08:52.600 I mean they first started out with sixty percent. They 0:08:52.600 --> 0:08:55.280 sweetened it to eighty percent, but David Zaslav, as we know, 0:08:55.360 --> 0:08:58.400 is really a tough negotiator and basically said no, So 0:08:58.440 --> 0:09:01.720 we think he's looking for something north of thirty. I'm 0:09:01.760 --> 0:09:04.079 not sure Paramount Skuidance is going to be willing to 0:09:04.120 --> 0:09:06.000 cough up that much, but let's see. 0:09:07.480 --> 0:09:10.120 Yeah, that's a that's a big, big question, Mark Keitha. 0:09:10.200 --> 0:09:13.640 As you look at the media landscape, we're focused so 0:09:13.720 --> 0:09:16.640 much on Warner Brothers Discovery and what happens to its assets, 0:09:16.679 --> 0:09:19.719 what's happening to its businesses. What are we missing when 0:09:19.760 --> 0:09:21.600 we look at what else might be a for sale 0:09:21.679 --> 0:09:26.120 or might become, you know, not a for sale, but 0:09:26.360 --> 0:09:29.280 something that a buyer might be interested in pursuing. 0:09:30.559 --> 0:09:32.959 Yeah, I mean, when we look across the landscape, you're 0:09:33.000 --> 0:09:35.120 absolutely right, Scarleton. The reason why there's so much of 0:09:35.160 --> 0:09:37.880 attention on Warner Brothers Discoveries because it's really kind of 0:09:38.280 --> 0:09:41.679 the last big you know, iconic studio if you're looking 0:09:41.720 --> 0:09:44.200 at it, a huge streaming property with HBO, you know, 0:09:44.320 --> 0:09:47.640 huge names in the business, just iconic franchises, big brands, 0:09:47.679 --> 0:09:50.040 big brands, core franchises, things that can really move the 0:09:50.080 --> 0:09:53.400 needle for any company, for any buyer. We don't really 0:09:53.559 --> 0:09:57.040 have anything quite like Warner Brothers. Yes, we have a 0:09:57.040 --> 0:09:59.319 lot of smaller names. You can think of an AMC Networks, 0:09:59.320 --> 0:10:01.600 you can think of a Life studio, you can think 0:10:01.640 --> 0:10:05.400 of comcasts new spinoff cable TV networks which is called worsened, 0:10:05.800 --> 0:10:09.640 but none of them as attractive, you know, as as 0:10:09.720 --> 0:10:12.400 Warner Brothers. So there there are a lot of opportunities 0:10:12.440 --> 0:10:15.160 for consolidation. You have a lot on the broadcast TV 0:10:15.240 --> 0:10:17.679 station side, whether you're thinking of a Gray or Sinclair, 0:10:18.160 --> 0:10:22.760 but again, nothing quite as attractive or as massive as 0:10:22.800 --> 0:10:25.160 Warner Brothers Discovery. 0:10:25.200 --> 0:10:27.800 Timing. When do you think something might happen with Warner 0:10:27.840 --> 0:10:29.400 Brothers Discovery. 0:10:29.480 --> 0:10:32.400 It has to happen quickly, Paul, because they you know, 0:10:32.480 --> 0:10:36.040 if Warner Brothers Discovery doesn't decide to go ahead with 0:10:36.120 --> 0:10:39.800 a sale, they do have a split of the company, 0:10:39.800 --> 0:10:42.120 which is, you know, splitting the company into the TV 0:10:42.200 --> 0:10:44.319 network's division and the streaming of studio's division. That is 0:10:44.360 --> 0:10:48.439 supposed to happen sometime mid twenty twenty six. So I'm 0:10:48.440 --> 0:10:50.600 assuming you know, things have to move pretty quickly in 0:10:50.600 --> 0:10:51.800 the next couple of months. 0:10:52.400 --> 0:10:55.520 Stay with us. More from Bloomberg Intelligence coming up after this. 0:10:59.400 --> 0:11:03.120 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:03.200 --> 0:11:06.280 weekdays at ten am Eastern on Apple, Coarclay, and Android 0:11:06.320 --> 0:11:09.600 Auto with the Bloomberg Business App. Listen on demand wherever 0:11:09.679 --> 0:11:12.800 you get your podcasts, or watch us live on YouTube. 0:11:13.800 --> 0:11:16.760 One subject that I can't get enough of is premium 0:11:16.760 --> 0:11:20.000 credit cards and the rewards that you rack up if 0:11:20.040 --> 0:11:23.120 you use them only in certain times at grocery stores 0:11:23.200 --> 0:11:26.319 versus restaurants versus to pay for your plane ticket. Well, 0:11:26.320 --> 0:11:29.680 there's been a settlement between Visa MasterCard and merchants that 0:11:30.040 --> 0:11:33.600 may change the way that we use our premium credit cards. 0:11:33.640 --> 0:11:36.000 And Justin Teresi is here with us. He is a 0:11:36.000 --> 0:11:40.080 bi litigation analyst to hear at Bloomberg Intelligence. Justin what 0:11:40.280 --> 0:11:43.079 happened and what does this mean for my Chase Sapphire 0:11:43.120 --> 0:11:44.680 card or my AMX Platform card. 0:11:44.880 --> 0:11:46.040 Yeah, really big news here. 0:11:46.080 --> 0:11:47.880 So first of all, this case has been going on 0:11:47.920 --> 0:11:50.840 for about twenty years now, long I started before I 0:11:50.880 --> 0:11:52.560 went to law school, which was a long time ago. 0:11:52.800 --> 0:11:54.720 There's salt and pepper in my hair. So we're talking 0:11:54.720 --> 0:11:57.800 about a really really ancient case. But basically what a 0:11:57.840 --> 0:12:00.280 lot of folks don't know is when you have those 0:12:00.320 --> 0:12:03.480 really valuable premium cards, right the airline miles cards or 0:12:03.480 --> 0:12:06.360 the cash back cards, there's a fee associated with those, 0:12:06.400 --> 0:12:08.720 and it's the merchants who are eating that fee, typically 0:12:08.720 --> 0:12:11.680 around three or four percent depending on the varying swipe 0:12:11.679 --> 0:12:14.360 fee when you use it at a register. So merchants, 0:12:14.400 --> 0:12:17.840 no surprise, they're upset about that, right. So Visa, you know, 0:12:17.920 --> 0:12:20.960 big litigation here, the accusation being that they fix those 0:12:21.000 --> 0:12:22.920 fees and that you know, the merchants are basically the 0:12:23.000 --> 0:12:26.560 ones eating the costs there. So big deal announced yesterday 0:12:26.559 --> 0:12:29.480 between Visa, master Card and merchants would make a little 0:12:29.520 --> 0:12:32.040 bit more flexibility on the part of merchants here. They 0:12:32.040 --> 0:12:34.520 could basically say, hey, we're going to take the lower 0:12:34.600 --> 0:12:36.959 tier version of a Visa or a master Card, but 0:12:37.120 --> 0:12:40.000 we're maybe not going to accept airline miles cards or 0:12:40.280 --> 0:12:43.120 cash back cards. And then alternatively, they also might have 0:12:43.160 --> 0:12:45.720 the option of passing those fees onto you, the consumer 0:12:45.840 --> 0:12:47.920 at the register if they do take them. So some 0:12:47.920 --> 0:12:50.480 big changes here and how things are shaping up. 0:12:50.400 --> 0:12:52.480 Well, I've noticed in the last couple of three years 0:12:52.600 --> 0:12:54.960 they are doing that. Yeah, I mean, almost every merchant 0:12:55.000 --> 0:12:56.480 I go to now, I don't know if it's just 0:12:56.520 --> 0:12:58.679 a state of New Jersey thing, but they're saying, hey, 0:12:58.720 --> 0:13:00.720 here's the cash price, here's the credit card price. 0:13:00.800 --> 0:13:03.600 Yeah, Paul, this is actually a really interesting issue here 0:13:03.679 --> 0:13:06.160 because state by state there's a lot of differences in 0:13:06.280 --> 0:13:08.440 how this actually plays out. In New York, and I 0:13:08.440 --> 0:13:10.160 see this too when I go to my dry cleaner, 0:13:10.200 --> 0:13:12.600 it's like, oh, maybe that's four percent more if I'm 0:13:12.600 --> 0:13:15.120 going to use my credit card here. That's actually illegal 0:13:15.160 --> 0:13:17.160 in New York right now to do that, But the 0:13:17.280 --> 0:13:19.240 enforcement seems to be lacking that this is a new 0:13:19.320 --> 0:13:21.400 law pass in twenty twenty four, there has to be 0:13:21.440 --> 0:13:24.040 an upfront kind of price on a tag if they're 0:13:24.040 --> 0:13:26.040 going to pass a surch charge onto the consumer. In 0:13:26.080 --> 0:13:29.400 New York, Massachusetts, Connecticut, you can't surcharge at all. So 0:13:30.000 --> 0:13:32.439 if this settlement goes through, you know, that's a big 0:13:32.520 --> 0:13:33.040 question mark. 0:13:33.080 --> 0:13:35.760 Too interesting that you say that the surcharge is illegal 0:13:35.760 --> 0:13:37.800 in New York, because what I've seen is the dry 0:13:37.800 --> 0:13:39.679 cleaner will say we'll give you a discount if you 0:13:39.800 --> 0:13:42.400 pay in cash. Here's the regular price, but you get 0:13:42.440 --> 0:13:43.600 the discount if you pay cash. 0:13:43.600 --> 0:13:45.880 So it's no longer a surcharge. 0:13:45.400 --> 0:13:47.320 Justin you said that this has been a case that's 0:13:47.320 --> 0:13:50.840 been around for twenty some odd years. So yes, this 0:13:50.920 --> 0:13:52.920 settlement that was announced yesterday, I mean, is it just 0:13:52.920 --> 0:13:55.080 going to get caught up in a more legal jegmire? 0:13:55.320 --> 0:13:57.480 You know, it really could. So last year there was 0:13:57.480 --> 0:13:59.760 a first attempt to this. This is the second try now, right, 0:13:59.840 --> 0:14:02.160 And the big issue that blew up the deal last 0:14:02.200 --> 0:14:04.760 year is that the smaller merchants kind of pushed for 0:14:04.800 --> 0:14:06.720 the terms that they set in the first place, and 0:14:06.760 --> 0:14:09.320 big folks like Walmart, et cetera kind of got ice 0:14:09.400 --> 0:14:11.959 out from the discussions on that. It seems like that 0:14:12.080 --> 0:14:15.240 might have happened again here. The National Retail Federation was 0:14:15.280 --> 0:14:18.000 out yesterday saying, wait a minute, what kind of business 0:14:18.000 --> 0:14:20.680 practice would this be for us to say, hey, we're 0:14:20.680 --> 0:14:22.440 going to take these cards and not those cards. And 0:14:22.440 --> 0:14:25.440 they're also criticizing the fee concessions that were part of 0:14:25.480 --> 0:14:27.520 this deal too for the next five years or so. 0:14:27.520 --> 0:14:29.680 So I think there's still a lot of questions here. 0:14:29.720 --> 0:14:32.480 There's probably enough changes from last year's deal to get 0:14:32.520 --> 0:14:35.760 it over the finish line, but there's a big period 0:14:35.800 --> 0:14:37.680 here with objectors who are going to be weighing in 0:14:37.800 --> 0:14:40.000 on what they think of the deal. And honestly, the 0:14:40.080 --> 0:14:41.920 judge last year she said, look, you guys can do 0:14:41.960 --> 0:14:44.600 a lot more than you're offering to do in this deal. 0:14:44.640 --> 0:14:46.640 So is this enough? That's going to be a huge 0:14:46.720 --> 0:14:49.720 question moving into an approval hearing. What are the dollars 0:14:50.040 --> 0:14:52.400 dollar amounts we're talking about here, you know, so it's 0:14:52.480 --> 0:14:55.960 quadrupled according to the National Retail Federation since two thousand 0:14:55.960 --> 0:14:58.320 and nine. But if you said MasterCard, they've got eighty 0:14:58.360 --> 0:15:01.160 percent of this market for the the card fees, right, 0:15:01.560 --> 0:15:05.160 one hundred and eleven billion dollars last year alone collected 0:15:05.240 --> 0:15:09.400 in these wipe fees according to the NRF, So really massive, massive. 0:15:09.400 --> 0:15:12.120 But you know, these companies are also diversifying their streams, right, 0:15:12.160 --> 0:15:15.520 They're looking into digital wallets and other payment platforms too. 0:15:15.640 --> 0:15:17.560 So there's a lot more on the table now than 0:15:17.600 --> 0:15:19.560 there was when this was first brought back in two 0:15:19.560 --> 0:15:20.160 thousand and five. 0:15:20.360 --> 0:15:23.880 And to be clear, this is Visa and MasterCard and merchants. 0:15:23.920 --> 0:15:25.960 What about American Express? Where does it sit here? 0:15:26.080 --> 0:15:29.640 Yeah, so that's another great question. American Express basically settled 0:15:29.640 --> 0:15:32.120 a version of this loss or one a version of 0:15:32.160 --> 0:15:35.120 this lawsuit years ago. Their card acceptance terms are a 0:15:35.160 --> 0:15:38.320 little bit different. Surcharging doesn't really allowed with those when 0:15:38.360 --> 0:15:41.040 it's not applied to all card types, right, But that 0:15:41.080 --> 0:15:44.240 begs the question if you start allowing surcharging through card 0:15:44.280 --> 0:15:48.160 holder through acceptance agreements for Visa MasterCard, does Amex now 0:15:48.200 --> 0:15:50.040 have to allow us for charging on its card? So 0:15:50.080 --> 0:15:52.440 that's another big question mark. If this deal goes through, 0:15:52.640 --> 0:15:55.040 it really has the potential to impact everything, not just 0:15:55.200 --> 0:15:56.320 Visa MasterCard. 0:15:56.440 --> 0:15:56.680 Paul. 0:15:56.720 --> 0:15:59.640 I remember when MX used to be accepted everywhere, and 0:15:59.640 --> 0:16:01.520 then after while it was like, oh we'll take Visa 0:16:01.560 --> 0:16:04.520 master Card, but not American Express because it was always 0:16:04.560 --> 0:16:05.160 for the merchants. 0:16:05.240 --> 0:16:06.440 Too expensive, too expensive. 0:16:06.480 --> 0:16:09.120 Okay, yeah, I haven't. I can't remember the last time 0:16:09.120 --> 0:16:10.240 I used my AMEX card. 0:16:10.080 --> 0:16:10.680 Literally can't. 0:16:10.840 --> 0:16:12.520 It's there in your pocket, though it's in my pocket. 0:16:12.560 --> 0:16:12.760 Okay. 0:16:12.840 --> 0:16:13.520 See that's the thing. 0:16:13.560 --> 0:16:16.800 I mean, what does this mean for companies that have 0:16:16.880 --> 0:16:18.640 corporate cards justin. 0:16:18.560 --> 0:16:20.680 So that's one of the different brackets here too. So 0:16:20.720 --> 0:16:22.520 the way the settlement works is that it's going to 0:16:22.520 --> 0:16:25.440 divide cards into three different types, so it be commercial cards, 0:16:25.760 --> 0:16:28.720 standard customer cards, and then premium customer cards. 0:16:28.760 --> 0:16:29.600 I think the. 0:16:29.560 --> 0:16:32.720 Commercial and standard cards you know, you want that corporate business. 0:16:32.800 --> 0:16:35.120 I think those two really are of the less concern. 0:16:35.480 --> 0:16:38.280 It's those premium cards, I think, with the rewards that 0:16:38.400 --> 0:16:40.400 really are on the line here in terms of whether 0:16:40.480 --> 0:16:43.320 or not they continue to have that universal acceptance everywhere. 0:16:44.040 --> 0:16:47.239 So there's so many businesses built around how to gamify 0:16:47.360 --> 0:16:47.960 your points. 0:16:48.160 --> 0:16:51.240 Oh yeah, I love it, So you do that question. 0:16:51.400 --> 0:16:52.800 I absolutely love it. 0:16:52.840 --> 0:16:54.880 I mean every day it's like, oh, these annex offers, 0:16:54.880 --> 0:16:57.280 you know, what can I get here for this discount paper. 0:16:57.040 --> 0:16:58.440 And redsheet tracking? 0:16:58.480 --> 0:17:00.880 But I really should, honestly, I mean it's that good, 0:17:00.920 --> 0:17:01.280 I think. 0:17:01.320 --> 0:17:03.040 So Paul's like, I cannot get into this. 0:17:04.280 --> 0:17:05.119 But the kids are. 0:17:05.040 --> 0:17:08.439 Because I mean I've noticed it that they really are 0:17:08.480 --> 0:17:11.160 good at gaming the system and to the point where, 0:17:11.480 --> 0:17:13.479 you know, I'm going to Barcelona for the weekend on points, 0:17:13.760 --> 0:17:15.040 you know, right exactly. 0:17:15.080 --> 0:17:18.119 And these premium credit cards are almost like coupon books 0:17:18.119 --> 0:17:20.520 in any ways, right because they offer you know, like 0:17:20.840 --> 0:17:23.920 fifty dollars a quarter at well, actually it's seventy five 0:17:23.960 --> 0:17:26.359 dollars a quarter at Lululemon for instance, right, the Camic's 0:17:26.359 --> 0:17:28.880 Platinum card. And then people try to buy gift card 0:17:28.920 --> 0:17:31.000 and stack them and use them like a year later. 0:17:31.160 --> 0:17:31.800 Paul's laughing. 0:17:31.880 --> 0:17:33.880 I mean that's true, and they carry those really high 0:17:33.880 --> 0:17:36.600 annual fees. But I always think to myself, look how 0:17:36.680 --> 0:17:38.560 much I'm getting back for this, and that ways the 0:17:38.560 --> 0:17:40.120 fees sometimes at least in my mind. 0:17:40.200 --> 0:17:41.000 So there you go. 0:17:41.520 --> 0:17:44.320 What are what are Visa MasterCards saying about this? 0:17:44.600 --> 0:17:47.480 So they are they signed onto this deal, they reach 0:17:47.560 --> 0:17:50.160 this agreement. I think they're pretty happy with the terms 0:17:50.160 --> 0:17:51.600 of it because you know, that kind of lets them 0:17:51.640 --> 0:17:54.880 walk away. The issuing banks like JP Morgan, Bank of America, 0:17:54.920 --> 0:17:56.840 all of them are also defendants. They get to walk 0:17:56.840 --> 0:17:59.600 away from this litigation. The overhang would be removed, right, 0:17:59.640 --> 0:18:02.280 So it's really the merchants. Are all of the merchants 0:18:02.280 --> 0:18:04.640 going to sign on? And what are those objections look 0:18:04.720 --> 0:18:06.720 like in the coming months to the court? 0:18:07.840 --> 0:18:10.959 Stay with us. More from Bloomberg Intelligence coming up after this. 0:18:14.880 --> 0:18:18.560 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:18:18.640 --> 0:18:22.040 weekdays at ten am Eastern on Applecarclay, and Android Auto 0:18:22.160 --> 0:18:25.199 with the Bloomberg Business app. Listen on demand wherever you 0:18:25.240 --> 0:18:28.680 get your podcasts, or watch us live on YouTube. 0:18:29.280 --> 0:18:30.439 I don't know, for a lot of us that have 0:18:30.480 --> 0:18:31.879 been in this market for a long time, this is 0:18:31.960 --> 0:18:33.560 kind of the end of an. 0:18:33.480 --> 0:18:35.280 Ear, if you will, Warren Buffett. 0:18:35.800 --> 0:18:39.119 Warren Buffett saying that he is going quiet and marking 0:18:39.119 --> 0:18:40.600 the end of an ear for one of the business 0:18:40.640 --> 0:18:44.399 world's most watched investing gurus. He will stop writing BERTRAI 0:18:44.440 --> 0:18:47.600 Hathaway's annual letters and speaking at its meetings. 0:18:48.000 --> 0:18:50.040