Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's bring in Ross Gerber. He has thoughts on both
Speaker 2: of these companies. He's president and CEO of Gerber Kawasaki
Speaker 2: Wealth and Investment Management. They've got about four billion in
Speaker 2: assets under management, and he's with us from my bet
Speaker 2: lovely Santa Monica, California. How warm is it by you?
Speaker 3: Seventy five?
Speaker 4: And Sonny, I'm right next to the beach too, so
Speaker 4: I don't want to rub it.
Speaker 1: That's enough, We're moving on.
Speaker 2: We're done with you.
Speaker 4: No, we're so glad to have you here.
Speaker 3: Ask me.
Speaker 2: I know, I know, I know, I'm a sucker for
Speaker 2: paying here. Hey, what story is more interesting to you? Ross?
Speaker 2: Is it Tesla and the possible combination of SpaceX x
Speaker 2: AI or is it Disney?
Speaker 4: Well, the Disney story is a little bit sad for
Speaker 4: me because I'm just like, I've owned this compedy for
Speaker 4: my whole life.
Speaker 3: And and Iger has done.
Speaker 4: A great job sort of refixing the business and getting
Speaker 4: good movies back in the theaters and such, but they
Speaker 4: just can't seem to get the momentum going. And the
Speaker 4: valuation for Disney just makes no sense. It's so cheap
Speaker 4: relative to what they're willing to play for Warner Brothers assets,
Speaker 4: which are garbage compared to Disney. But they just seem like,
Speaker 4: maybe this company needs to be broken up. Wow, that's
Speaker 4: part of it, that's part of it.
Speaker 1: What does that look like? What does that breakup look like?
Speaker 3: Ross?
Speaker 4: Well, see, Josh and Dana are both great executives, so
Speaker 4: like they have like the fact they have to pick
Speaker 4: one is the problem because Dana runs entertainment and Josh
Speaker 4: runs the theme parks and all this kind of stuff,
Speaker 4: and they're just completely different businesses with different skill sets.
Speaker 4: And maybe they should be co CEOs, even though I
Speaker 4: hate that formula for businesses. Disney's just the parts are
Speaker 4: worth more than the whole. And we've waited five plus
Speaker 4: years since the pandemic for them to do something good
Speaker 4: and they haven't. So it's time for change at Disney,
Speaker 4: and I think it's breaking up the business and spinning
Speaker 4: off ESPN.
Speaker 1: Would that be the only thing spun off? It would
Speaker 1: just ESPN would be.
Speaker 4: No, it should be three companies the way I see.
Speaker 1: It, what should they be?
Speaker 4: Well, you have theme parks, resorts and experience. Oh that
Speaker 4: the cruise ships is one, and then you have you know,
Speaker 4: your streaming business as the other, and then you have
Speaker 4: ESPN Sports as the third right, so you have entertainment
Speaker 4: that's non sports, and then you have a pure sports play.
Speaker 4: Would that they just sold ten percent to the NFL?
Speaker 1: Would that work with all the cross pollination that happens
Speaker 1: these days, Like you know, you go on a Disney
Speaker 1: cruise and the Disney IP is everywhere you go see
Speaker 1: a Disney film, and if it's a popular film, that
Speaker 1: ends up becoming something that is an attraction at one
Speaker 1: of the parking resorts. It's supposed to be this virtual
Speaker 1: cycle that for years worked out really well. Could they
Speaker 1: still do that as separate companies?
Speaker 4: Yes, and I think it still works now that way,
Speaker 4: you know, but like explain how the sports business really
Speaker 4: matters when it comes to going, you know, on a cruise.
Speaker 4: It's nice to have ESPN on the TV there, but
Speaker 4: there's no relationship really. So I get when you're making
Speaker 4: a movie you wanted to go through the streamers, but
Speaker 4: I'm saying keep that all together. And then they licensed
Speaker 4: all their IP to the theme parks and resorts anyway,
Speaker 4: so it would just be an exclusive licensing agreement.
Speaker 3: I think it's actually quite simple.
Speaker 4: I think the real issue is extracting value from the
Speaker 4: very valuable assets and IP that Disney has while everybody's
Speaker 4: fighting over crappy IP and assets, like Disney has the
Speaker 4: best assets in Hollywood.
Speaker 3: So you know, I don't know.
Speaker 4: I just don't think they have a future of the market,
Speaker 4: saying like, wait, we don't see this future that you're
Speaker 4: making for us. Iigers ready to leave, you know. So
Speaker 4: I actually think this story is pretty interesting because you know,
Speaker 4: the entertainment business is never going to be the same
Speaker 4: after this murder goes through, and I don't know what
Speaker 4: it looks like on the other side.
Speaker 2: One more company, Well, I expect to you in one question. No,
Speaker 2: forgive me, I broke in on you. But I do
Speaker 2: wonder you know Roscoe back a few years and I
Speaker 2: remember doing this deep dive on Disney and talking with
Speaker 2: Bob and all the executives and just this whole idea,
Speaker 2: like Tim said, this cross pollination and people.
Speaker 1: Well before Bob left for the first time, yeah, this.
Speaker 2: Is right exactly. And you know, people talked about the
Speaker 2: value of ESPN, like it that's the value of the company.
Speaker 2: But it sounds like there is value in a lot
Speaker 2: of parts today and hence why you would argue for
Speaker 2: breaking it up into three. Is that is that true?
Speaker 3: Yeah?
Speaker 4: I mean I love the parks and resorts and cruise business.
Speaker 4: I mean that business is killing it for them. It's
Speaker 4: tons of cash flow. Like people love the cruises. They
Speaker 4: just launched a few ships. They've got a great business there.
Speaker 4: I love the streaming business they finally, I mean, once
Speaker 4: they get this all under one roof, under Disney plus Hulu,
Speaker 4: Disney Plus is a is a great streamer and a
Speaker 4: real competitor out there to the other streamers. And then
Speaker 4: you got ESPN, which is now like dominating sports again
Speaker 4: and really has a piece of every major you know
Speaker 4: league out there from a broadcasting perspective. But ESPN financials
Speaker 4: don't make any sense next to the cruise ship financials
Speaker 4: because ESPN loses money having these big events you know
Speaker 4: that we all want on ESPN, and they make money
Speaker 4: when there aren't big events. Actually it's kind of a
Speaker 4: weird business. So they just don't compliment each other. And
Speaker 4: you saw it in the earning support, which was generally
Speaker 4: a very good report for Disney, and the stock gets
Speaker 4: hammered because when you look at all the moving parts.
Speaker 3: It's never consistent.
Speaker 4: And so I just think if they were able to
Speaker 4: prove that these assets I think are worth closer to
Speaker 4: one hundred and fifty dollars a share, and that's what
Speaker 4: it was trading at, then I'd say I wouldn't be
Speaker 4: saying this one hundred dollars a share. You got to
Speaker 4: break up this company and find value for shareholders after
Speaker 4: five years of waiting.
Speaker 1: Okay, Disney down seven point four percent at one O
Speaker 1: four forty three right now, from in your view, the
Speaker 1: move to break up a company into separate parts, to
Speaker 1: combine a company in two different companies intech to one company.
Speaker 1: Let's talk a little bit about Elon Musk being in
Speaker 1: advanced talks to combine SpaceX with Xai. This according to
Speaker 1: people familiar with the matter. You had a really interesting
Speaker 1: comment out on social media earlier today. You wrote, Yeah,
Speaker 1: x was out of money, merged with Xai, Xai out
Speaker 1: of money, merged with SpaceX, SpaceX out of money, merged
Speaker 1: with Tesla when they are all out of money? Dot
Speaker 1: dot dot. You obviously are not a fan of this idea.
Speaker 4: No, you know, it's not that it's just first of all,
Speaker 4: you're saying there Elon Musten talks with himself, like who's
Speaker 4: he in talks with? I don't think Elon must talks
Speaker 4: to anybody. He's gonna do this. So he's gonna merge
Speaker 4: all three companies because he has to, and he needs
Speaker 4: to because Tesla has forty four billion on the books
Speaker 4: and they need the money. And every one of his
Speaker 4: projects is well out into the future. So I'm not
Speaker 4: going to tell you whether I think all these ideas
Speaker 4: are going to work or not work.
Speaker 3: I don't bet against Elon.
Speaker 4: I think that's up for the future to determine, you know,
Speaker 4: But all these businesses are incredibly capital intensive with very
Speaker 4: very questionable profit margins or even viability, Like data centers
Speaker 4: in space is not a viable business. Let's be real,
Speaker 4: It's very expensive to build a data center on Earth.
Speaker 4: Now imagine putting it up in space. Like this is
Speaker 4: just we're getting into this level of absurdity. So that's
Speaker 4: why I put it out there, like what happens next?
Speaker 4: So I've got like eighteen projects that are incredibly capital intensive.
Speaker 4: Will people just keep giving Elon Musk money forever? But
Speaker 4: a lot of it's the same people who he's made
Speaker 4: money for just giving him back the money they've made
Speaker 4: for the next project. And so that's why I put
Speaker 4: the dot dot dot. It's like, well, what happens when
Speaker 4: this all comes together, because that's what's going to happen.
Speaker 4: It's all going to come together as one, and then
Speaker 4: what happens to that business looking forward? They'll have to
Speaker 4: raise money. And so that's what this looks like in
Speaker 4: my mind as we go out over the next twelve months.
Speaker 2: As an investor. You have invested in shares of Tesla,
Speaker 2: you buy and sell. You've done that, We've talked about
Speaker 2: that a million times. You've owned you own Tesla Cars.
Speaker 2: What is it for you that you need to own
Speaker 2: X too? I own Xay, that's right, Okay, So I'm
Speaker 2: just curious. So you obviously like what, you know a
Speaker 2: lot of what Elon's doing. You know, what is it
Speaker 2: that has to happen that makes you say I'm done?
Speaker 4: No, I please don't say that I like what Elon's doing.
Speaker 3: I actually abhor him.
Speaker 4: Okay, He's doing horrendous things that I don't agree with
Speaker 4: at all, and I want to make that very very clear.
Speaker 4: On a personal level, I think his behavior is disgusting okay,
Speaker 4: And I think his viewpoints are disgusting and he's destroyed
Speaker 4: the brand. But he is one of the greatest engineers
Speaker 4: of our time, and he's a great inventor and he
Speaker 4: gets He's built a lot of amazing things. So I
Speaker 4: don't discount that, and I'm invested in that. But that said,
Speaker 4: you know, at some point this all has to come
Speaker 4: together and actually work, and that's you know, you know,
Speaker 4: the big question. So I don't bet against Elon, and
Speaker 4: I am sort of betting for him, or I I
Speaker 4: I Actually what I say is I bet with crazy
Speaker 4: people sometimes and that's worked for me over my life.
Speaker 4: And you know, so I have a certain path with him,
Speaker 4: and I think he's crazy and maybe he pulls this
Speaker 4: stuff off, you know.
Speaker 2: Yeah, So you're willing to make the bet on Elon
Speaker 2: still just got a bet, figu.
Speaker 4: Well look at the other side of the coins. You
Speaker 4: have Tim Cook at Apple. You won't do anything. This
Speaker 4: guy is so risk adverse, he's scared to get in
Speaker 4: the water, you know what I mean. And so like
Speaker 4: Apple's just sitting on the cusp of the AI revolution,
Speaker 4: like with binoculars, going.
Speaker 3: Who do I pay next? Because I haven't done.
Speaker 4: Anything, So you know you have Elon on one end
Speaker 4: of the risk spectrum and you have Tim Ross.
Speaker 2: We gotta go. Always love talking with you, Ross Gerber