Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day,
Speaker 1: we bring you interviews from CEOs, A, market pros, and
Speaker 1: Bloomberg experts, along with essential market moving news. Find the
Speaker 1: Bloomberg Markets Podcast on Apple podcast or wherever you listen
Speaker 1: to podcasts, and on Bloomberg dot com. Alright, so, the
Speaker 1: Microsoft TikTok President Trump triumvirate is a really interesting little grouping.
Speaker 1: And obviously this story started at the end of last
Speaker 1: week and then there was all sorts of reports coming
Speaker 1: out over the weekend. Today, the latest is that it
Speaker 1: looks like Microsoft is now trying to buy TikTok with
Speaker 1: Trump's approval and is trying to get back in the game,
Speaker 1: so to speak. So let's bring in a Bloomberg opinion
Speaker 1: columnist who's been writing about this. Take him. Thanks for
Speaker 1: joining us. Take him. What is this all about? It's obviously,
Speaker 1: I mean, very tenuously about national security. What would you
Speaker 1: say the reason behind this whole escapade on the part
Speaker 1: of President Trump is, um, it's tough to say. I mean,
Speaker 1: it all started at the beginning of July last month,
Speaker 1: when Secretary Stayed from Pale said, they're looking at it
Speaker 1: concerning banning all these Chinese apps based on national security ascerns.
Speaker 1: And I'm sure part of this political because everyone has
Speaker 1: opinion on TikTok, and every time they talked about TikTok,
Speaker 1: they dominate the headlines, so that that's the issue national
Speaker 1: and gaty privacy concernance according to the government, UM there
Speaker 1: hasn't been any faster evidence that they proved or presented
Speaker 1: uh to substant substantiate those concerns. But it looks like
Speaker 1: with this latest Trump phone call with the CEO of Microsoft,
Speaker 1: they're gonna have forty five days to come to some
Speaker 1: kind of agreement and this would actually solve a lot
Speaker 1: of the concerns that people have and actually makes sense
Speaker 1: for Microsoft too. So today is this kind of the
Speaker 1: latest step and maybe the most important step, and what
Speaker 1: is appearing to be evolving a cold war, a technology
Speaker 1: cold war between China and the West. I think so
Speaker 1: I mean this for some reason, TikTok, and like I said,
Speaker 1: it is because it's a very popular topic has become
Speaker 1: like defront in this rising political and economic tension war
Speaker 1: between the US and China. Trump has repeatedly said that
Speaker 1: he's considering getting the app to retaliate against China over
Speaker 1: how they handle the virus. So it's becoming that key
Speaker 1: vector in the rising tensions between the two countries. But
Speaker 1: you know, just taking everything that China has innovated, let's say,
Speaker 1: or in taking Chinese companies and having US companies buy
Speaker 1: them for parts, is that really a solution here? I
Speaker 1: think it's a solution in the short term. Um, it
Speaker 1: does make sense for Microsoft to take over the US
Speaker 1: stuff basically ensure there will be no privacy issues, no
Speaker 1: security issues, but also opens the door, like you said,
Speaker 1: to other potential retaliation. And you know what's the stop.
Speaker 1: The main issue with TikTok is because it's owned by
Speaker 1: a Chinese company, right, Does that mean every Chinese company
Speaker 1: that owns something that becomes popular in the US or
Speaker 1: buy something in the US? Is that like in play now?
Speaker 1: So it opens the cannon worms that we're really going
Speaker 1: to see how it turns out in the next few
Speaker 1: months to a year. So to your column is out
Speaker 1: and it's in uh, you know, it's a title, the
Speaker 1: TikTok Microsoft deal might solve everything. How do you feel
Speaker 1: what's what's your thesis behind that. So, like like we said,
Speaker 1: if Microsoft does consummate this transaction, they could protect the
Speaker 1: US consumer privacy. It's a hundred million Americans now TikTok
Speaker 1: came out with that number on Saturday for the first time,
Speaker 1: so that's a huge portion of the American population. So
Speaker 1: data security wise, it protects UM Americans data it And
Speaker 1: then from Microsoft, it really helps their advertising business which
Speaker 1: has kind of been floundering. They have the being searchtensined
Speaker 1: and the big question last week with the antitrust hearing
Speaker 1: everyone saying oh there's big tech is they have all
Speaker 1: this market power and anti trust. What this deal does
Speaker 1: from Microsoft and kind a strangely for the ad market,
Speaker 1: is that adds a big third player the digital ad
Speaker 1: market that's dominated by Google and Facebook. So it counterintruvely
Speaker 1: makes UM the market more competitive in terms of the
Speaker 1: anti trust issues. And then from Microsoft this huge base
Speaker 1: of a hundred million consumers, they could cross promoted across
Speaker 1: their other consumer businesses where they have the Xbox gaming
Speaker 1: constable business, they could use this as a key tenant
Speaker 1: of their cloud service where they're the number two player
Speaker 1: ask for Amazon. And they also have this thing where
Speaker 1: on TikTok right now, a lot of the creators can
Speaker 1: do video sprains very similar to Amazon Twitch. So this
Speaker 1: is like a new market where creators can do streaming
Speaker 1: of whatever they want and they get paid the small gifts.
Speaker 1: It's clearly a great deal from Microsoft, right, I mean
Speaker 1: we have we have snapped now as well also trying
Speaker 1: to develop something quickly that would compete with it. I mean,
Speaker 1: obviously it's a great deal for Microsoft. But how unusual
Speaker 1: is it that a president would get involved to this extent.
Speaker 1: I mean, if we're concerned about national security and you know,
Speaker 1: Americans privacy and so on, are we really just handing
Speaker 1: over those concerns to another private company will be at
Speaker 1: a US one. Isn't this a regulator's job? I agree
Speaker 1: with you, it's a total regulators shop. And this is
Speaker 1: very strange in the way Trump has been unilaterally making
Speaker 1: these decisions, and traditionally it's been much more of a
Speaker 1: multilateral do process oriented process. And this is kind of
Speaker 1: strange where all of a sudden they've been looking at
Speaker 1: TikTok league last year in the sixty story view and
Speaker 1: then right before election, you know, they're really bringing up
Speaker 1: to the forefront. So the timing is strange, and the
Speaker 1: d process death only questionable in terms of what's going on,
Speaker 1: and they still haven't presented clear cut evidence that TikTok,
Speaker 1: which the company thoroughly denies, has data process the issues.
Speaker 1: So you do you think this is kind of a
Speaker 1: done deal with Microsoft or we're gonna get other bidders
Speaker 1: coming in here, because I'm sure a lot of other
Speaker 1: tech companies would love to get the US operations of TikTok.
Speaker 1: I think if it happens, it's going to be Microsoft because,
Speaker 1: like I said, the anti trust issues with I'm sure Amazon, Facebook,
Speaker 1: all these guys who love to buy TikTok, but they
Speaker 1: have for the anti trust issues. So the one that
Speaker 1: makes sense is Microsoft because they have the whole in
Speaker 1: their consumer social media segment, and they have the technical
Speaker 1: know how, the financial resources to get down quickly. And
Speaker 1: the funny thing is TikTok's founder used to work on Microsoft,
Speaker 1: so there's a lot of connections there. That's not The
Speaker 1: deal that I was talking about was the deal with
Speaker 1: music companies to add songs to videos. So just this
Speaker 1: morning we heard that a snap and secured rights from
Speaker 1: Warner Universal Publishing and Merlin which sounds very close to
Speaker 1: what the TikTok experience would be right to ten seconds,
Speaker 1: and you can add sort of songs and so on.
Speaker 1: Is there any guarantee that all of these users that
Speaker 1: loved TikTok when it was a Chinese owned company would
Speaker 1: stay with TikTok wants a Microsoft own company, I mean something,
Speaker 1: there's something different about Microsoft own TikTok. TikTok then bye
Speaker 1: Dance TikTok. I think they're definitely gonna stay. My I'm
Speaker 1: slightly less confident in TikTok stability in a date like
Speaker 1: two or three years out as Microsoft buys them, because
Speaker 1: it was a different engineering team in different sense, but
Speaker 1: at least in the mix short and intermediate term, there's
Speaker 1: no doubt TikTok us static. Microsoft buys them because it
Speaker 1: means they're app survived. Um, they're basically like crying and
Speaker 1: depressed over over the weekend thinking that it's going to
Speaker 1: get banned because Trump said he was going to ban
Speaker 1: on Saturday and that hasn't happened. So yeah, Microsoft buying
Speaker 1: it would be the apps users will be very happy. Interesting,
Speaker 1: well fascinating story to follow in the coming week and
Speaker 1: months as you suggested take take him technology calumnists for
Speaker 1: Bloomberg Opinion. You can read all of Tay's work and
Speaker 1: that of our fine Bloomberg opinion columnists at Bloomberg dot com,
Speaker 1: slash Opinion or O. P. I. N. Go on the terminal.
Speaker 1: Lots of great work there, and again the very interesting deal,
Speaker 1: a lot of folks saying this really, you know, sets
Speaker 1: down the marker for a cold war and technology be
Speaker 1: team between China and the West um and that could
Speaker 1: have ramifications for years to come. And Bloomberg will certainly
Speaker 1: follow that story. This is Bloomberg Markets with Paul Sweeney
Speaker 1: and Bunny Quinn on Bloomberg Radio. Well, we got some
Speaker 1: better than expected manufacturing dated this morning, so that's a
Speaker 1: great time to chat about the auto business. Alan Baum,
Speaker 1: auto analysts and principal Bauman Associates, joins us this morning. Alan,
Speaker 1: thanks so much for joining us here. Let's step back
Speaker 1: just give us Allen maybe the thirty thousand foot view
Speaker 1: of the US auto industry. And I want to start
Speaker 1: with production. What are the factories doing terms of production?
Speaker 1: How open are they? Well? Production has actually done much
Speaker 1: better uh than expected and frankly better than the market needs.
Speaker 1: It to do. Now, that's obviously not true in the
Speaker 1: area of the vehicles that are doing the best, trucks
Speaker 1: and SUVs, But in general, UH production is getting the
Speaker 1: inventories back to a reasonable level, again with some exceptions
Speaker 1: in pickups where you you generally like to have a
Speaker 1: lot of inventory because there's a lot of diversity within
Speaker 1: the product line. UM. That's said, that means that we're
Speaker 1: in a position where as we expect sales to be
Speaker 1: quite shoppy now through the next couple of months because
Speaker 1: of the virus, UH production will will start to pull
Speaker 1: back a little bit unless the automakers go ahead and
Speaker 1: make those vehicles and then get themselves in a in
Speaker 1: a bit of a pickle because of H too much
Speaker 1: inventory and then apps to need to go to incentives.
Speaker 1: Who will surprise us today, Well, unfortunately, not that many
Speaker 1: automakers report UH. This is something that was started by
Speaker 1: General Motors a couple of years ago, and most of
Speaker 1: the industry has has followed. All we're gonna see today
Speaker 1: is Hyundai, Toyota, Honda, Mazdao, UM and I might have
Speaker 1: might have missed UH company or or so UM what
Speaker 1: we've already seen Hyundai and and Toyota and Mazda report UM,
Speaker 1: and Toyota uh was down. Uh. There the the group
Speaker 1: they're they're certainly the full line automakers, very much exposed
Speaker 1: to both the car and the truck market, whereas Hyundai
Speaker 1: is increasingly moving over to the crossover side. They had
Speaker 1: a one percent gain UM, which is in large part
Speaker 1: the same story as the last few months. New product
Speaker 1: has helped them a lot, particularly on the crossover side. So, Allen,
Speaker 1: where are we on the demand side? I have some
Speaker 1: anecdotal evidence from a buddy mine who manages a dealership
Speaker 1: here in New Jersey, and he was kind of surprised
Speaker 1: that how strong the sales have been as they reopened
Speaker 1: their dealership. Um, how are you viewing the demand side? Well,
Speaker 1: we've got short term pent up demand from the March
Speaker 1: April May period. Uh that has has really propelled the market.
Speaker 1: You know, a lot of lease leases were extended, UM
Speaker 1: and Uh it became a good deal, particularly in the
Speaker 1: earlier part of the of this May June July period
Speaker 1: to come in and and get a get a product,
Speaker 1: as I say, particularly with high incentives. Those incentives have
Speaker 1: actually backed off dramatically because they're they're simply in the
Speaker 1: high uh demand uh segments. Uh, there's not as much
Speaker 1: product uh and so no reason for the automakers or
Speaker 1: the dealers to offer those high incentives. In fact, the
Speaker 1: automakers and the and the dealers are making more per
Speaker 1: vehicle right now than they do normally, again, because those
Speaker 1: incentives are down, and because fleet sales have almost dropped
Speaker 1: to to to nothing uh and of course those were
Speaker 1: less generally less profitable UH sales. That said, I'm expecting
Speaker 1: a rather uh poor uh fall period. Um. Again, going back,
Speaker 1: of course to the virus, what we're also seeing is
Speaker 1: that UM, you know, there there's a lot of talk,
Speaker 1: even uh from me a few months ago that might
Speaker 1: have said, well, this is not going to be quite
Speaker 1: as bad as it might otherwise be because new cars
Speaker 1: are bought by upper income people. In fact, we are
Speaker 1: seeing the luxury carmakers, particularly the Mercedes and and the
Speaker 1: BMW's of the world, not doing well at all uh
Speaker 1: and and I think that's attributed to the fact, not
Speaker 1: necessarily the buyers don't at the income but because they're
Speaker 1: they're they're so concerned about what the process of recovery
Speaker 1: is going to be, either for their own businesses or
Speaker 1: for the the economy as a whole. And how uh
Speaker 1: they clearly don't have to buy. And with the decline
Speaker 1: and uh in availability in some cases and incentages in
Speaker 1: the other, uh, they're not. So if that's the case
Speaker 1: with wealthy buyers, what's the case with less wealthy buyers
Speaker 1: that might be hoping for a new stimulus check or
Speaker 1: waiting on you know, the extension of federal benefits to
Speaker 1: add too unemployment benefits statewise in order just to live,
Speaker 1: never mind drive well. Yeah, and and those less wealthy buyers,
Speaker 1: as you say, very correctly, uh, the the almost the
Speaker 1: last thing that they're going to think about is a
Speaker 1: new car, and even a late model used car. I mean,
Speaker 1: this is this is the time. Uh. And and those
Speaker 1: those volumes are a little depressed, as some people hold
Speaker 1: onto their lease cars beyond uh the expiration of their lease. Uh.
Speaker 1: And so clearly, as you say, you're gonna be paying
Speaker 1: the rent and uh and giving yourself uh fed and
Speaker 1: and uh in your home as opposed to buying even
Speaker 1: a used car. And and uh, as as I said
Speaker 1: a minute ago, uh, increasingly that new car buyer is
Speaker 1: the upper income buyers. So those uh now that's not
Speaker 1: to say, of course that uh the unemployment search has
Speaker 1: not affected across the board, but it certainly has a
Speaker 1: greater impact on that lower income person. So, Allen, let's
Speaker 1: just real quickly here. What's the impact of any so
Speaker 1: far on the electric vehicle market stemming from the pandemic? Well,
Speaker 1: you know, the problem is UH that uh a number
Speaker 1: of new vehicles have been delayed a little bit new
Speaker 1: launches um, and the volumes were pretty modest, uh even
Speaker 1: with the launches, with the obvious exception of Tesla. UH
Speaker 1: and and Tesla, just as its stock seems to be
Speaker 1: on another plane, uh, some of its sales are on
Speaker 1: another plane as well. UM because uh and and I
Speaker 1: will be one of the first pisode that the uh
Speaker 1: the competition the Tesla faces is a lot less obvious
Speaker 1: than it than it might seem. And what I mean
Speaker 1: by that is as other automakers UH introduce electric vehicles,
Speaker 1: some of them frankly with a lot less uh interest
Speaker 1: or excitement if you will, UH than a player like Tesla,
Speaker 1: UM with their own marketing efforts, UH leading the way
Speaker 1: in that lack of excitement if you will, UM that
Speaker 1: those those sales are not gonna be great. Uh and uh.
Speaker 1: We've also seen UM in part because of regulatory issues
Speaker 1: here in the US, where they at least temporarily have
Speaker 1: backed away, and in Europe where those requirements are quite strong.
Speaker 1: Uh and uh, the automakers have focused on the markets
Speaker 1: where they need to meet regulations. Alan, thank you, always
Speaker 1: a pleasure to speak with you. That's allan Bomb, a
Speaker 1: Bomb and associates. And don't forget a little later on
Speaker 1: we get July auto sales numbers. This is Bloomberg. Robert
Speaker 1: Thompson is CEO of Clinical Reference Laboratory. It's one of
Speaker 1: the largest privately held clinical testing labs in the US.
Speaker 1: Well now it's developing a rapid response COVID test, basically
Speaker 1: one with the forty eight hour turnaround period. Let's check
Speaker 1: in with Mr Thompson now to see how the development
Speaker 1: of this test is going, not only development of the test,
Speaker 1: but also FDA emergency approval. Robert, thank you for joining us.
Speaker 1: First of all, how does your rapid response test differ
Speaker 1: from others that are almost on the market. So our
Speaker 1: test is a saliva based test. Um It's called CRL
Speaker 1: rapid response and saliva allows for easy, frequent testing. It's
Speaker 1: much more pleasant than the traditional nasal swabs, and it
Speaker 1: allows for the testing of large populations quickly and cost effectively. Alright, So, Robert,
Speaker 1: one of the key things is turnaround times. Um, you know,
Speaker 1: we talk about we're doing millions and millions of tests,
Speaker 1: but they're really, for many people ineffectual because the turnaround
Speaker 1: times can take you know, seven, eight, nine days and
Speaker 1: therefore kind of defeats the whole purpose. Give us a
Speaker 1: sense of how sure, how much confident do you have
Speaker 1: in your hour turnaround time? Well, I have a great
Speaker 1: degree of confidence in it. We have invested heavily in automation,
Speaker 1: which has allowed us to really radically expand the number
Speaker 1: of tests that we can do in any given day. Um,
Speaker 1: we're planning on fifty US per day and actually have
Speaker 1: the ability to scale beyond that if need be. So,
Speaker 1: how does the FDA emergency approval work? Are there stag disolves?
Speaker 1: How do you sort of distinguish yourself from you know,
Speaker 1: I'm sure tens, if not hundreds of other companies trying
Speaker 1: to do various things in terms of testing. So the
Speaker 1: FDA processes is a rigorous multi month process where they
Speaker 1: make you, uh, you go through a set of clinical
Speaker 1: trials where you're comparing your product to other approved products
Speaker 1: on the market. We compared ourselves to those sort of
Speaker 1: six inch deep UH deep sinus and pea swabs um
Speaker 1: and we showed a hundred percent agreement with those, so
Speaker 1: we're uh as accurate as the n P swab is.
Speaker 1: The goal here is really to provide a service to
Speaker 1: get America back to work and school. So we paired
Speaker 1: the the test itself with a with a web application
Speaker 1: which uh sort of pre registers a test whether you're
Speaker 1: doing it at home, or you're doing it in a
Speaker 1: school cafeteria, or you're doing um, doing it in a workplace,
Speaker 1: and we deliver the result back to the you know,
Speaker 1: the employee or the student back over that that same
Speaker 1: app So we've wrapped an entire solution around the very accurate,
Speaker 1: quick and easy test UM. All right, so you received
Speaker 1: the clinical research laboratory received the approval. What are next steps?
Speaker 1: We've been able to operate as a lab developed test
Speaker 1: for some time, so we have we have aggressively built
Speaker 1: out our capacity. So at this point, there were a
Speaker 1: bunch of our clients that were waiting for the eu
Speaker 1: A before they started testing. So we've really the phones
Speaker 1: have been ringing off the hook. Here we have banks, airlines,
Speaker 1: sports teams, auto manufacturers, retailers, financial organizations, and universe cities
Speaker 1: all under contractor in the process of contracting with us UM.
Speaker 1: As an example, University of Kansas, we will be handling
Speaker 1: over twenty five students as they returned to to school
Speaker 1: over the next three weeks. We'll be testing all of
Speaker 1: them upon entry. So, Robert, I mean, this sounds amazing.
Speaker 1: And you know, if everyone in the country were to
Speaker 1: get one, you know, on a twice weekly basis, we'd
Speaker 1: probably really tump down this thing. What are the barriers
Speaker 1: to something like that happening? Really, the restriction on capacity
Speaker 1: is more about the availability of the testing equipment than
Speaker 1: anything else. Most of these tests at our lab and
Speaker 1: a QUEST and lab corps as well, we rely on
Speaker 1: automation in the form of liquid handling robots, and those
Speaker 1: have been very hard to come by. Uh. Gradually, the
Speaker 1: supply chains are expanding and we're beginning to see not
Speaker 1: only in our lab but in other labs UM the
Speaker 1: ability to ramp up for auctions significantly. The f t
Speaker 1: A also recently approved pooling, which I know QUEST and
Speaker 1: lab corps are going to be using which will expand
Speaker 1: their capacity to test, especially in low prevalence areas, by
Speaker 1: four to five times. So, Robert, is a scenario for you.
Speaker 1: You mentioned a test as a capacity that you could
Speaker 1: increase from. There is it does it make sense to
Speaker 1: you to license your technology out to maybe some of
Speaker 1: these bigger testing companies UM. We are having conversations with
Speaker 1: some additional laboratories UM, in particular in the university space.
Speaker 1: There have been some labs that have that have expressed
Speaker 1: an interest. There are other labs working on saliva based testing.
Speaker 1: You'll be hearing more about it in the coming weeks,
Speaker 1: just because of the ease of use and the and
Speaker 1: the accuracy of the test. We partnered with a couple
Speaker 1: of companies or Shure Technologies for the collection device which
Speaker 1: preserves the sample for shipping to the labrary tory for
Speaker 1: up to twenty one days, and with Codiagnostics, who's our
Speaker 1: partner for probes and primers, which is you know, sort
Speaker 1: of think of it as the chemicals that that detect
Speaker 1: the viral nucleic acid UM and both of them together
Speaker 1: it creates a very unique and sensitive tests were more
Speaker 1: sensitive statistically than the other products on the market, Robert,
Speaker 1: how much does it cost and how long does it
Speaker 1: stay valid for? So if I'm tested today and I
Speaker 1: meet somebody later that hazard, you know, will I need
Speaker 1: another test tomorrow? It is always. All of these viral
Speaker 1: tests are a spot in time. So the most companies
Speaker 1: are creating and universities are creating sort of a regular
Speaker 1: frequency of testing, a cadence of testing to try to
Speaker 1: keep you know, as you were calling it tamped down
Speaker 1: on the on the number of outbreaks. The other aspect
Speaker 1: of this is that we have to respond quickly when
Speaker 1: there is an outbreak. We can't wait fourteen days or
Speaker 1: even seven days for results, as you were saying earlier,
Speaker 1: they have to get results back in twenty four forty
Speaker 1: eight hours. Okay, Robert, really really exciting news. The best
Speaker 1: of luck to you in the company. Robert Thompson, CEO
Speaker 1: of Clinical Reference Lab talking about a rapid COVID nineteen
Speaker 1: tests using saliva, key thing, twenty four hour turnaround. Very
Speaker 1: excited to speak with our next guest. He is known
Speaker 1: the country over after the very popular documentary on cheer
Speaker 1: leading called Cheer but also because many people need to
Speaker 1: buy his stuff Adam Bloominfeld is CEO at Varsity Brands
Speaker 1: and he joins us now from Pharmas, Texas. Adam, thanks
Speaker 1: for joining. Talked to us about how the pandemic has
Speaker 1: impacted sales and also subscriptions, for example to your internal
Speaker 1: TV service. Well, thank you Vannie and Paul for having me. Um.
Speaker 1: I will tell you that the pandemic has been no
Speaker 1: friend to anybody that serves schools, as you will probably imagine.
Speaker 1: But that being said, we have pivoted pretty hard to
Speaker 1: a virtual world here at Varsity Brands. For those who
Speaker 1: don't know, we're comprised of b Sen Sports does sporting
Speaker 1: goods apparel across the country, Varsity Spirit as cheered dancing
Speaker 1: band as your reference, and Hearth Jones is our achievement
Speaker 1: arm that does class rings, caps and gowns and diplomas.
Speaker 1: And I will tell you that post pandemic, we have
Speaker 1: really started engaging with our clients a different way, UH,
Speaker 1: most notably to a program called Impact Now, which launches
Speaker 1: this week. Actually, we're helping fifty five million kids across
Speaker 1: the country, UH with masks, signage both inside the school
Speaker 1: and outside the school, and empowerment journals so that kids
Speaker 1: can get used to journaling and dealing with the problems
Speaker 1: attendant to anxiety, depression, isolation during the kinds of events
Speaker 1: that we're seeing right now. So it's curriculum for schools
Speaker 1: to get through back to school, get there safely and securely.
Speaker 1: And it's been the biggest pivot that we've made so far, uh,
Speaker 1: in the sixteen weeks of the pandemic. So, Adam, what's
Speaker 1: your sense from the schools that you deal with. What
Speaker 1: percentage would you say are going to try to reopen
Speaker 1: virtually versus physically or maybe even a hybrid. Yeah, it's
Speaker 1: a total hybrid. In the checkerboard. We have schools in
Speaker 1: Georgia that are opening today, we have schools on the
Speaker 1: West Coast that have deferred or gone virtual for the
Speaker 1: entire fall season, and then we have many schools as
Speaker 1: you mentioned, that are in between. Um. I've seen a
Speaker 1: lot of schools in the last two weeks announced a
Speaker 1: hybrid model where kids will be on campus two to
Speaker 1: three days in high schools per week and then virtual
Speaker 1: the other times. Interestingly, we're seeing a number of districts
Speaker 1: use extracurricular activities its sport, cheer outside of school activities
Speaker 1: as a way to keep the kids engaged outside of
Speaker 1: the classroom, even if they can't stay engaged inside the classrooms.
Speaker 1: So Vaine acquired you back in two thousand eighteen. Right,
Speaker 1: how much has Beyan been involved since the beginning of
Speaker 1: the pandemic? And you know, how much has your actual
Speaker 1: revenue been impacted? So Bank Capital, which bought the business
Speaker 1: about two years ago, Uh, majority of the business, Charles
Speaker 1: Bank Capital Partners still thing has been extremely involved. Um.
Speaker 1: You know, they sit on our board as you would imagine,
Speaker 1: and have been incredible thought partners for the last sixteen
Speaker 1: to twenty weeks but also the last two years. I
Speaker 1: can't tell you. I've been in the public markets before
Speaker 1: our business was public, before going private twenty years ago,
Speaker 1: and the the amount of progress and change you can
Speaker 1: make with private equity, thought leadership and that kind of
Speaker 1: attention to detail is unmatched, in my opinion, compared to
Speaker 1: other ways of running a business. So I'm grateful to
Speaker 1: have them. Having said that, we've seen revenue to your
Speaker 1: question down as much as when the pandemic started, and
Speaker 1: it's improved gradually. So I would tell you that revenue
Speaker 1: is down in the range now depending on division and
Speaker 1: it varies between b SM Sports, Varsity Spirit and herf shones.
Speaker 1: But what we have done is important is kept our
Speaker 1: two thousand cell in the marketplace. Uh not on furlough,
Speaker 1: but in the market this entire pandemic. It's been expensive,
Speaker 1: it's been a real investment by the company, but it's
Speaker 1: increased the engagement. We're using these tools like virtual graduation.
Speaker 1: We had never nearly a thousand virtual graduations. This year
Speaker 1: they help two hundred and fifty kids graduated virtually, and
Speaker 1: virtual fittings and cheer competitions that are online um through
Speaker 1: Varsity Spirit. These kind of events helped the schools stay
Speaker 1: engaged with the kids. Were doing virtual press conferences through
Speaker 1: sport and through the athletic directors and the coaches, so
Speaker 1: they look like a college coach or a professional coach
Speaker 1: when they're having these meetings with their kids and they're
Speaker 1: talking to their parents. All of these tools, which have
Speaker 1: been candidly invented over the last three months, would have
Speaker 1: taken us three years during normal times. Has been kind
Speaker 1: of the secret sauce to stay engaged with these schools
Speaker 1: and keep the kids engaged with their coaches and their administrators.
Speaker 1: How about on the sports side. What what are you
Speaker 1: finding the schools are thinking about their fall sports schedule.
Speaker 1: You know, it's a mixed bag. Um, We've got an
Speaker 1: number of delays. So I will tell you that the
Speaker 1: pre eminent thought is to delay until the middle of
Speaker 1: September end of September, but still have the sports season.
Speaker 1: Some schools are talking about having the games without the fans,
Speaker 1: or having the fans socially distanced. Um. There are other
Speaker 1: parts of the country, namely the Southeast, where sports are
Speaker 1: starting on time and there are no restrictions with respect
Speaker 1: to who plays or who comes to the games and watches.
Speaker 1: And then in the Northeast you have examples of some
Speaker 1: schools that are differring uh sports until later in the
Speaker 1: fall or into the winter. So you know, to the
Speaker 1: earlier comment, it really is a mixed bag out there.
Speaker 1: I think over the next thirty days, if there's a
Speaker 1: stabilization with what's going on with infection rates, hospitalization, mortality,
Speaker 1: I think you're going to see schools come to a
Speaker 1: firm conclusion they have to by nature of the academic calendar,
Speaker 1: and by the middle the end of August, I think
Speaker 1: you're gonna need decisions be made on how to actually
Speaker 1: come back with the sports in the fall. And I'm
Speaker 1: real quick because we're out of time, but you do employe.
Speaker 1: Varsity itself employs around about nine thou have you had
Speaker 1: to make offs? Are you considering furlows layoffs? We have
Speaker 1: had layoffs. We have had furloughs. We are doing everything
Speaker 1: we can to keep employees employed and bring people back
Speaker 1: to the business. And our number one focus beyond safety
Speaker 1: and security is getting all of our teammates back into
Speaker 1: the family as fast as possible. Very interesting, Adam Blumenfeld,
Speaker 1: CEO of Varsity Brands. We really appreciate that UH schools
Speaker 1: trying to figure this out, um and both from an
Speaker 1: academic perspective and then an extracurricular perspective, And as Adam
Speaker 1: was mentioning, kind of a patchwork across the country, no
Speaker 1: real consistency, but I think the local communities are trying
Speaker 1: to figure out what works best for them and as
Speaker 1: well as you know, again academically than sports and all
Speaker 1: the extra curriculars. Very interesting perspectively there. Thanks for listening
Speaker 1: to the Boomberg Markets podcast. You can subscribe and listen
Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you
Speaker 1: prefer I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn.
Speaker 1: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney.
Speaker 1: Before the podcast, You Can oh Is, catch us worldwide
Speaker 1: at Bloomberg Radio m