WEBVTT - Disney Taps Parks Chief Josh D’Amaro to Succeed Iger as CEO 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.840 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business app. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.080 or watch us live on YouTube. 0:00:23.800 --> 0:00:27.080 Walt Disney saying that Josh Tomorrow will succeed Bob Iger 0:00:27.200 --> 0:00:30.600 as CEO of the company. This ends a three year 0:00:30.680 --> 0:00:33.479 search to replace its long serving leader, who had to 0:00:33.520 --> 0:00:36.880 come back after the first time around didn't quite work out. 0:00:37.120 --> 0:00:38.480 Let's bring in Githa Ranganathen. 0:00:38.520 --> 0:00:41.400 She is our US media analyst here at Bloomberg Intelligence. 0:00:41.600 --> 0:00:44.120 And I want to contrast what happened this time around 0:00:44.159 --> 0:00:47.200 with the succession planning Githa, with what happened in the 0:00:47.280 --> 0:00:50.960 past when Bob Chapek, also of the Parks division, was 0:00:51.040 --> 0:00:54.280 named CEO but didn't last too long on the job. 0:00:54.360 --> 0:00:57.680 Can you compare and contrast the different succession efforts. 0:00:59.080 --> 0:01:01.800 Yeah, I think it was a very different time Scarlet. 0:01:01.920 --> 0:01:05.600 So remember he was appointed in February of twenty twenty. 0:01:06.160 --> 0:01:10.120 March twenty twenty, everything closes down, including you know, Disney 0:01:10.160 --> 0:01:14.240 Parks because of the pandemic. So it was kind of unfortunate. 0:01:14.319 --> 0:01:17.280 The timing was all wrong, I would say for Bob Chapek. 0:01:18.160 --> 0:01:21.320 And what happened then is, of course, you know, movies 0:01:21.800 --> 0:01:24.600 were shut down a big part of Disney's business, movies 0:01:24.640 --> 0:01:27.440 as well as the parks again. But then what really 0:01:27.560 --> 0:01:29.520 kind of shot into prominence at that point was the 0:01:29.560 --> 0:01:32.880 streaming business, a business that Bob Chapik was not really 0:01:33.000 --> 0:01:36.880 very familiar with, and while he did have some experience 0:01:36.920 --> 0:01:39.240 in content, obviously it was not enough. And we had 0:01:39.280 --> 0:01:43.920 a whole bunch of different missteps with the content part 0:01:44.000 --> 0:01:46.839 of the business, which kind of led to the whole 0:01:47.440 --> 0:01:51.280 you know mess that we saw, you know follow I 0:01:51.280 --> 0:01:53.920 think this time we were in a very very different position. 0:01:54.000 --> 0:01:55.760 I think at that point Disney was still kind of 0:01:55.800 --> 0:01:57.480 trying to figure out what it really was. Was it 0:01:57.520 --> 0:01:59.320 a TV company, was it a studio, was it a 0:01:59.320 --> 0:02:01.360 theme park company? Or was it really a streaming player? 0:02:01.720 --> 0:02:03.840 And I think now the pieces have kind of fallen 0:02:03.840 --> 0:02:07.000 in place. We are on much more steady ground. I 0:02:07.040 --> 0:02:09.800 would say, you know, they have their clear mandates, whether 0:02:09.880 --> 0:02:12.840 it isn't streaming, whether it's in studio, you know, the 0:02:13.160 --> 0:02:16.679 clear what has really emerged clearly right now Scarlett is 0:02:16.720 --> 0:02:20.320 that parks is the main core growth engine of the company, 0:02:20.520 --> 0:02:22.680 and I think that is reflected in this choice today 0:02:22.720 --> 0:02:23.680 with Josh Tomorrow. 0:02:24.280 --> 0:02:24.720 So Keithan. 0:02:24.760 --> 0:02:28.560 Josh is a twenty eight year veteran of Disney running 0:02:28.560 --> 0:02:31.160 the parks. But of course the other big part of 0:02:31.200 --> 0:02:36.440 the company is it's you know, entertainment business. Dana Walden 0:02:37.000 --> 0:02:40.200 who runs the big part of that business, great reputation 0:02:40.280 --> 0:02:44.000 in Hollywood. It's important to keep her at the Walt 0:02:44.000 --> 0:02:44.800 Disney Company. 0:02:45.800 --> 0:02:46.800 Are they going to be able to do that? 0:02:48.280 --> 0:02:50.680 I absolutely think so. So, you know, they obviously this 0:02:50.800 --> 0:02:53.120 was a very clever move by the board to kind 0:02:53.160 --> 0:02:56.520 of create this new role for Dana Walden, make her 0:02:56.560 --> 0:02:59.600 the president and the chief creative officer. They've never had 0:02:59.639 --> 0:03:03.680 this before, but they specifically created this one for Dana Walden, 0:03:03.760 --> 0:03:07.359 so that I think really kind of I think dispels 0:03:07.400 --> 0:03:09.520 a lot of fears about what would happen from a 0:03:09.520 --> 0:03:13.160 creative perspective. You know, last time, this was the same 0:03:13.240 --> 0:03:16.120 problem that you know, many investors raised when Bob Japek 0:03:16.160 --> 0:03:19.119 became CEO. So having her there in the creative role 0:03:19.200 --> 0:03:22.520 I think definitely plays very well with Hollywood, with the 0:03:22.520 --> 0:03:25.519 creative community. And ensures that, you know, Disney will still 0:03:25.560 --> 0:03:29.040 have a top tier content coming to its streaming platforms 0:03:29.080 --> 0:03:30.320 for the foreseeable future. 0:03:31.960 --> 0:03:36.080 So Josh Deamarrow takes the job on March eighteenth, that's 0:03:36.120 --> 0:03:39.080 when the succession is effective. And we talked about how 0:03:39.160 --> 0:03:42.000 yesterday Disney came out with a forecast that was fairly tepid, 0:03:42.080 --> 0:03:44.280 and one way of looking at that is it kind 0:03:44.280 --> 0:03:45.480 of you know, clears the deck. 0:03:46.520 --> 0:03:48.200 Lets him start off with the clean say. 0:03:48.200 --> 0:03:51.600 And set expectations and kind of manage it for investors 0:03:51.640 --> 0:03:54.240 a way that he sees fit. At what point does 0:03:54.280 --> 0:03:57.000 he own everything that happens to Disney. 0:03:58.360 --> 0:04:00.240 So actually a lot of the things that we're seeing 0:04:00.320 --> 0:04:04.720 right now with the Parks has been under Josh Tomorrow's watch. 0:04:04.800 --> 0:04:09.920 Remember once Bob Chapek was promoted to the CEO position, 0:04:10.040 --> 0:04:14.240 Josh Tomorrow assumed the role of chief of the Parks, 0:04:14.240 --> 0:04:16.440 and so all of the different initiatives that we've seen, 0:04:16.480 --> 0:04:18.960 you know, whether it's Lightning Lane, whether it's Genie, whether 0:04:19.000 --> 0:04:22.400 it's the sixty billion dollar expansion, a lot of that 0:04:22.600 --> 0:04:26.600 has been you know Josh Tomorrow's doing. So yeah, I mean, 0:04:26.680 --> 0:04:28.400 of course we're you know, I think the street is 0:04:28.400 --> 0:04:30.159 definitely going to give him a few quarters to kind 0:04:30.160 --> 0:04:33.440 of settle in, But he has pretty much been the architect, 0:04:33.440 --> 0:04:35.680 along with Barb Aiger, I'm sure and the rest of 0:04:35.880 --> 0:04:38.880 you know, the management team in kind of instituting the 0:04:38.880 --> 0:04:42.680 strategy and making the parks a prominent, you know, part 0:04:42.720 --> 0:04:45.839 of the portfolio going forward. So very soon, you know, 0:04:46.040 --> 0:04:48.120 the short answer, Scarlett is very soon. I think he 0:04:48.200 --> 0:04:50.559 owns pretty much all of this right away. 0:04:50.560 --> 0:04:53.720 In fact, Keith I five Josh Tomorrow, day one of 0:04:53.760 --> 0:04:56.640 my tenure CEO. I would go and I would say, hey, 0:04:57.240 --> 0:05:00.200 explain to me why we are not spinning out are 0:05:00.440 --> 0:05:03.440 broadcasting cable networks. They are businesses that are in a 0:05:03.440 --> 0:05:07.080 secular decline. They're dragging down our multiple Let's cut them loose. 0:05:07.480 --> 0:05:09.360 Do you think that's even an option for the Walt 0:05:09.400 --> 0:05:10.040 Disney Company. 0:05:11.400 --> 0:05:13.839 I think it is. I think everybody is considering that 0:05:14.040 --> 0:05:17.120 right now. I mean we've just seen what you know, 0:05:17.200 --> 0:05:20.279 Warner Brothers Discovery has been able to achieve by kind 0:05:20.279 --> 0:05:22.880 of separating out it's a studio and streaming from the 0:05:22.920 --> 0:05:26.240 TV network's business. So I definitely would not rule that out. 0:05:26.279 --> 0:05:29.320 I'm sure Disney will consider and Josh Tomorrow will consider 0:05:29.480 --> 0:05:31.760 all options once he becomes CEO. 0:05:33.080 --> 0:05:36.960 What happens to Jimmy Pataro over at ESPN, I mean, 0:05:37.000 --> 0:05:39.480 does that become part of the spinouts as Paul was 0:05:39.480 --> 0:05:42.200 talking about it, Because there's different parts of Disney's media 0:05:42.240 --> 0:05:44.839 business that are slowing down that are no longer the 0:05:44.839 --> 0:05:47.000 crown rules the way they once were, whether you're talking 0:05:47.000 --> 0:05:50.760 about the network television, or whether you're talking about ESPN, 0:05:50.880 --> 0:05:52.400 or whether you're talking about the movie business. 0:05:53.640 --> 0:05:56.360 Yeah, I think sports is still very core to Disney. 0:05:56.400 --> 0:05:58.800 I mean they are so if you just kind of 0:05:58.839 --> 0:06:02.800 look at the US sports landscape, ESPN actually owns majority 0:06:02.880 --> 0:06:06.599 of the marquee US sports right almost about forty percent 0:06:06.680 --> 0:06:10.240 of all sports viewing happens on ESPN platforms. So obviously 0:06:10.279 --> 0:06:12.720 it's still very core to the company. As far as 0:06:12.800 --> 0:06:15.760 Jimmy Pittaro is concerned. Scarlett, I mean, yes, he was 0:06:15.800 --> 0:06:19.200 one of the you know, candidates that they were considering 0:06:19.279 --> 0:06:21.320 to take on this job, but I think he himself 0:06:21.320 --> 0:06:24.000 had many times indicated that he was not really interested 0:06:24.080 --> 0:06:26.480 in the top spot. I think he kind of carries 0:06:26.520 --> 0:06:29.800 on business as usual with ESPN. You know, it's a 0:06:29.800 --> 0:06:31.960 little bit of a wait and watch what exactly happens 0:06:31.960 --> 0:06:34.680 with the strategy. It is really instrumental, I think, to 0:06:34.720 --> 0:06:37.200 their streaming business because you know, as they kind of 0:06:37.200 --> 0:06:40.240 mentioned even yesterday on their earnings call, you know a 0:06:40.320 --> 0:06:43.679 lot of people taking the bundle, the ESPN streaming plus 0:06:43.680 --> 0:06:45.560 the Disney plus the Hulle. So it is a critical 0:06:45.600 --> 0:06:48.359 portion of that. So I'm not really sure how exactly 0:06:48.680 --> 0:06:52.800 a spinout Wood would work. But of course, again, you know, 0:06:52.920 --> 0:06:55.039 we are in a very very different time and age, 0:06:55.080 --> 0:06:58.719 and everybody is thinking about all possible options when it 0:06:58.720 --> 0:07:01.159 comes to a media. 0:07:00.480 --> 0:07:03.599 Stay with us. More from Bloomberg Intelligence coming up after this. 0:07:07.480 --> 0:07:11.200 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:07:11.280 --> 0:07:14.679 weekdays at ten am Eastern on Applecarcklay and Android Auto 0:07:14.760 --> 0:07:17.840 with the Bloomberg Business App. Listen on demand wherever you 0:07:17.880 --> 0:07:20.840 get your podcasts, or watch us live on YouTube. 0:07:21.600 --> 0:07:26.960 PayPal Holding said HP chief executive officer Enrique Lauris will 0:07:27.000 --> 0:07:30.200 take the top job from Alex Chris, whose turnaround plan 0:07:30.800 --> 0:07:33.480 failed to meet targets and streamline the payments business. The 0:07:33.520 --> 0:07:37.480 stocks down nineteen percent today, fifty two week low, off 0:07:37.520 --> 0:07:40.400 twenty seven percent year to date, off over fifty percent 0:07:40.840 --> 0:07:42.960 over the trailing twelve months. This is a name I 0:07:43.000 --> 0:07:45.240 thought at the beginning of this whole fintech thing that 0:07:45.320 --> 0:07:47.040 this had This was a company that could really be 0:07:47.080 --> 0:07:49.000 a leader there, but that has not been the case. 0:07:49.520 --> 0:07:50.520 Dick sa Garrett joins us. 0:07:50.520 --> 0:07:53.960 She's a senior fintech and payments analyst for Bloomberg Intelligence Dix. 0:07:54.240 --> 0:07:57.840 Not a good day for PayPal. What's going on here? 0:07:59.440 --> 0:08:03.200 Yeah, definitely right, like two big headlines. Hit At once 0:08:03.640 --> 0:08:07.480 missed four Q expectations and then announced a CEO change. 0:08:07.960 --> 0:08:11.560 So on the print side, adjusted EPs was about a 0:08:11.640 --> 0:08:14.960 four percent miss and the revenue came in one percent lower, 0:08:15.520 --> 0:08:17.760 and I should highlight this is like their first miss 0:08:17.760 --> 0:08:20.880 in two years. But I think the bigger issue is 0:08:20.960 --> 0:08:25.800 forward looking branded checkout, which is the main core high 0:08:25.880 --> 0:08:28.800 margin business for PayPal that has slowed to one percent 0:08:28.840 --> 0:08:32.000 in the fourth quarter. And PayPal is also flagging in 0:08:32.080 --> 0:08:34.800 earnings decline for twenty twenty six, So those were the 0:08:34.880 --> 0:08:40.040 key forward looking problem areas, and the CEO change definitely 0:08:40.080 --> 0:08:42.600 was a surprise. I mean, the guidance division was driven 0:08:42.679 --> 0:08:47.560 by their investments in some of the merchant business that 0:08:47.559 --> 0:08:52.920 they're doing, but I think the market reaction goes beyond that. 0:08:53.040 --> 0:08:56.000 I think it goes more around some of the serious 0:08:56.040 --> 0:09:00.720 gaps that appear to have been discovered actually with Apple 0:09:00.760 --> 0:09:03.880 Bay and all the product advancements that the competition has 0:09:04.360 --> 0:09:07.880 come through, and I think, yeah, lots to unpack there today. 0:09:08.679 --> 0:09:11.840 So just give us a sense of the competitive landscape 0:09:11.880 --> 0:09:14.840 of the businesses that paypals and the financial technology and 0:09:14.920 --> 0:09:16.840 kind of where do they fit in what are they 0:09:16.840 --> 0:09:17.960 maybe not doing right here? 0:09:19.640 --> 0:09:24.040 So PayPal has two parts of the ecosystem. It works 0:09:24.040 --> 0:09:26.280 with the merchants where you see the PayPal button when 0:09:26.320 --> 0:09:28.800 you check out, and it works with the consumers through 0:09:28.840 --> 0:09:32.960 its app, the PayPal app and the Venmo app. What 0:09:33.120 --> 0:09:38.120 is very interesting is that management kept highlighting execution, discipline 0:09:38.280 --> 0:09:42.440 and prioritization, but honestly, like that is the main game. 0:09:42.559 --> 0:09:46.640 PayPal's biggest A value ad is the two sided network. 0:09:46.679 --> 0:09:49.760 They could not have afforded to either drop the merchant 0:09:50.000 --> 0:09:53.199 or forget about the consumer. So it's been like it's 0:09:53.240 --> 0:09:57.959 a very competitive landscape. You have Stripe, Aden, Apple, pay 0:09:58.080 --> 0:10:03.280 Is you would have noticed recently revised their partnership from 0:10:03.520 --> 0:10:06.520 they moved from Goldman's to JP Morgan. So everyone is 0:10:06.600 --> 0:10:09.600 charging first there and PayPal needs to show up on 0:10:09.640 --> 0:10:12.040 that and I thought they were getting that. But I 0:10:12.040 --> 0:10:16.400 think this new CEO to change definitely puts a multi 0:10:16.480 --> 0:10:18.320 year transformation back in the play now. 0:10:18.600 --> 0:10:21.760 So what do you think is the is the next 0:10:21.800 --> 0:10:24.640 step for this company here? I mean a can of 0:10:25.160 --> 0:10:28.400 kind of remain competitive in this business going forward? Does 0:10:28.400 --> 0:10:31.360 it need to think about a new structure or a 0:10:31.400 --> 0:10:32.319 new strategy. 0:10:32.360 --> 0:10:33.560 What do you think needs to happen here? 0:10:34.320 --> 0:10:36.360 Yeah, that's the million dollar question, Paul. I think so 0:10:36.400 --> 0:10:39.160 there are two things. One is, I think investors need 0:10:39.240 --> 0:10:43.480 really need clarity now on how PayPal reaccelerates hiscore checkout business. 0:10:43.960 --> 0:10:48.160 Is it conversion, is it pricing merchant value proposition, because 0:10:48.200 --> 0:10:51.280 that's still the core engine. But I think secondly is 0:10:51.480 --> 0:10:55.200 whether the new leadership really signals of broader strategic shakeup, 0:10:55.280 --> 0:10:58.040 Like do they streamline initiatives, are they going to step 0:10:58.120 --> 0:11:01.560 up cost discipline or capital return or if it doesn't 0:11:01.559 --> 0:11:04.560 work out, maybe they'd consider like big assets like Venmo. 0:11:05.480 --> 0:11:08.040 You know, strategically, the performance doesn't inflect from that. 0:11:08.559 --> 0:11:12.319 So what's the fintech landscape like these Daystally, it seems 0:11:12.360 --> 0:11:15.960 like it's very quickly evolving. Here, Just give us a 0:11:15.960 --> 0:11:18.000 sense of the lay of the land airs ore. You 0:11:18.000 --> 0:11:20.640 talk to anybody under the age of thirty, they ain't 0:11:20.640 --> 0:11:21.800 got any cash in their pockets. 0:11:21.840 --> 0:11:23.120 So what's the whole new world out there? 0:11:24.200 --> 0:11:26.560 Yes, I'm with you that, which is why it was 0:11:26.640 --> 0:11:31.320 quite interesting that they replaced Alex Chris is the CEO. 0:11:31.320 --> 0:11:35.480 I think the landscape is intensely competitive. The two key 0:11:35.559 --> 0:11:39.480 themes that are driving at the cutting edge of fintech 0:11:39.640 --> 0:11:43.480 is the innovation around agentic payments, agentic commerce where paper 0:11:43.679 --> 0:11:45.800 was showing up in a big way as well, and 0:11:45.880 --> 0:11:50.920 stable coins, which is again like moving transactions on the blockchain. 0:11:51.640 --> 0:11:55.000 And things are moving really fast, Paul, because as you 0:11:55.080 --> 0:11:58.480 really pointed out, like nobody carries cash in their wallet. 0:11:58.960 --> 0:12:02.880 The younger generations want transactions to happen in the flip 0:12:02.920 --> 0:12:05.720 of a second. There is and you know, the base 0:12:05.760 --> 0:12:09.560 at pitch software and AI has moved payments needs to 0:12:09.640 --> 0:12:12.959 kind of keep pace with that. So and the regulatory 0:12:13.000 --> 0:12:15.800 regime obviously has supported that as well. So there is 0:12:15.840 --> 0:12:18.720 a lot going on, and I just worry that if 0:12:18.720 --> 0:12:20.600 Peopal is going to get left behind. 0:12:21.280 --> 0:12:24.400 Stay with us. More from Bloomberg Intelligence coming up after this. 0:12:28.320 --> 0:12:32.000 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:32.120 --> 0:12:35.160 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:35.200 --> 0:12:38.520 Auto with the Bloomberg Business app. Listen on demand wherever 0:12:38.559 --> 0:12:41.680 you get your podcasts, or watch us live on YouTube. 0:12:42.440 --> 0:12:44.240 Pepsi out with some numbers today. 0:12:44.240 --> 0:12:47.480 The earnings beat estimates, But for me, the big thing 0:12:47.600 --> 0:12:50.000 is Pepsi's going to cut De Rito's prices by as 0:12:50.080 --> 0:12:52.440 much as fifteen percent to boost demand. 0:12:52.440 --> 0:12:55.000 When you see that, I just can't remember. 0:12:54.920 --> 0:12:56.000 Double did your price cut? 0:12:56.040 --> 0:12:58.559 Well, I just don't think you remember the prices of 0:12:58.800 --> 0:13:00.920 sieyes one. 0:13:00.880 --> 0:13:02.880 When all the supply chain stuff happened. Okay. 0:13:03.120 --> 0:13:05.040 I could see how they were jacking up prices because 0:13:05.200 --> 0:13:09.320 a pandemic, but they don't come down after the stuff's over, 0:13:09.480 --> 0:13:11.240 do they. I mean, it's not like an avocado, which 0:13:11.280 --> 0:13:11.960 is a commodity. 0:13:12.120 --> 0:13:14.160 I want to see this charted out what it looks like. 0:13:14.240 --> 0:13:15.000 Yes, over time. 0:13:15.160 --> 0:13:17.719 Ken Chay, senior consumer Products analyst, joins us here from 0:13:17.720 --> 0:13:21.800 Bloomberg Intelligence. Ken talk to us about Pepsi again. Came 0:13:21.800 --> 0:13:24.959 out with some earnings results and then some interesting topics 0:13:24.960 --> 0:13:26.959 about pricing some of their products. 0:13:27.720 --> 0:13:30.840 Yeah, Hi, Paul, Yeah, PepsiCo's numbers today, as you alluded to, 0:13:31.320 --> 0:13:34.839 they beat their expectations by a little bit. But I 0:13:34.880 --> 0:13:38.400 think the broad takeaway for investors from today is that 0:13:38.480 --> 0:13:42.840 PepsiCo is committed to bringing better focus to this company. 0:13:43.320 --> 0:13:45.400 You know, I've covered this company a long time and 0:13:45.720 --> 0:13:49.800 it's it's primary competitors, Coca Cola, Cure, Doctor Pepper, you 0:13:49.800 --> 0:13:53.760 can say, Primal Water Monster. How they different from PepsiCo 0:13:53.880 --> 0:13:58.400 is the much more focused particularly specific categories. But PepsiCo, 0:13:59.240 --> 0:14:03.480 with the urge of the activists urging them on, is 0:14:03.520 --> 0:14:05.719 bringing more focus to this company. And what I mean 0:14:05.800 --> 0:14:09.080 is they're rationalizing a lot of the SKUs that really 0:14:09.160 --> 0:14:15.800 aren't contributing much. They're consolidating plans, they are bringing more 0:14:15.880 --> 0:14:19.040 rationality to the trade spending. So when I hear things 0:14:19.080 --> 0:14:22.160 that like, you know, cutting prices, that's tactical. That's just 0:14:22.360 --> 0:14:24.360 a way to move the need a little bit with 0:14:24.520 --> 0:14:27.280 near term sales. But I think the bigger picture is 0:14:27.320 --> 0:14:29.840 to bringing more focus to this enterprise, and I think 0:14:29.920 --> 0:14:31.960 that's what's behind a lot of the enthusiasm behind the 0:14:32.000 --> 0:14:33.800 share price today, right. 0:14:33.840 --> 0:14:37.160 I mean, investors are excited about it strategy as opposed 0:14:37.200 --> 0:14:39.040 to just kind of moving forward with the way it's 0:14:39.080 --> 0:14:42.200 always been. When it comes to those price cuts, though, 0:14:42.280 --> 0:14:44.400 I wonder if this is going to spark any kind 0:14:44.400 --> 0:14:48.040 of price war, will other snack makers feel the pressure 0:14:48.080 --> 0:14:50.680 to also reduce prices, even if they've gone up quite 0:14:50.680 --> 0:14:52.000 a bit since the pandemic. 0:14:53.240 --> 0:14:56.600 That's possible, Scarlett. In the case of free too lay though, 0:14:56.760 --> 0:14:59.200 they have such a dominant market share, and they have 0:14:59.240 --> 0:15:01.520 like sixty percent of the market in the in the 0:15:01.560 --> 0:15:05.960 measure channels, and when you have that much of a share, 0:15:05.360 --> 0:15:10.440 you deserve a premium. Particularly with Petsico's direct store delivery system. 0:15:11.200 --> 0:15:14.040 What that means is that they help their retailers much 0:15:14.040 --> 0:15:16.720 more than a lot of their competitors, and that is 0:15:17.480 --> 0:15:20.040 they actually go to the store quickly, respond to out 0:15:20.080 --> 0:15:24.440 of stocks, they help you know, position the product, they 0:15:24.480 --> 0:15:27.880 create the end caps in the in the store. They 0:15:27.920 --> 0:15:31.280 do a lot more for the retailer than the competitors. 0:15:31.280 --> 0:15:35.840 And so that's how they are helped to get premium pricing. So, yes, 0:15:35.880 --> 0:15:38.920 they're rolling back some prices. You know, it's no secret 0:15:38.960 --> 0:15:41.160 that price increases have been up quite a bit since 0:15:41.160 --> 0:15:44.800 the pandemic, and a lot of it's cost driven. Uh 0:15:45.160 --> 0:15:48.280 and and private label has encroached a little bit on 0:15:48.360 --> 0:15:51.320 PepsiCo share. But to answer your question directly, they are 0:15:51.320 --> 0:15:54.400 the dominant player. I would not expect them to give 0:15:54.440 --> 0:15:58.920 back too much over time. And while their competitors may 0:15:59.320 --> 0:16:03.280 cut price as well, I think retail would be alienating 0:16:03.320 --> 0:16:07.800 consumers if they pushed too hard on Petsico's price increases 0:16:07.800 --> 0:16:08.760 down the road. 0:16:09.080 --> 0:16:10.760 I was just in the shop rate in Bellmart, New 0:16:10.800 --> 0:16:13.920 Jersey yesterday. Lots of private label stuff on the shelves. 0:16:14.000 --> 0:16:15.280 I mean, prominent shows. 0:16:15.320 --> 0:16:16.160 How are you reaching for this? 0:16:16.400 --> 0:16:18.720 I am in many cases. I am in many cases. 0:16:19.000 --> 0:16:20.680 Ken talk to us about Elliott Management. 0:16:20.720 --> 0:16:23.280 They've been in this company, they've owned this stock here 0:16:23.280 --> 0:16:24.440 pushing for some change. 0:16:24.600 --> 0:16:26.600 How much of an impact are they having. 0:16:28.400 --> 0:16:30.840 I think on the margin there's an impact. Poll maybe 0:16:31.080 --> 0:16:34.440 to the degree that Petsico is hastening. It's moved to 0:16:34.520 --> 0:16:36.920 more focus, you know a lot of the things that 0:16:36.960 --> 0:16:40.600 it's been doing all along, and that is upbringing their 0:16:40.600 --> 0:16:44.680 portfolio with more functionality. This is some of the things 0:16:44.720 --> 0:16:47.200 we talked about in the past. They're bringing more protein 0:16:47.280 --> 0:16:52.440 to their mix, the poppy prebotic sodas, they're bringing i'm sorry, 0:16:52.720 --> 0:16:56.320 more fiber, the probiotic sodus. They're bringing more protein by 0:16:56.360 --> 0:17:02.600 restaging muscle milk, so bringing more value to to the beverages. 0:17:04.160 --> 0:17:07.200 So they've always been doing that, but to your question, 0:17:07.280 --> 0:17:10.840 Elliott is pushing them to do things like, Okay, you 0:17:10.880 --> 0:17:13.120 can still do that, but also cut costs a little 0:17:13.119 --> 0:17:16.040 more aggressively. You know, maybe maybe you don't need all 0:17:16.080 --> 0:17:19.679 these plants, Maybe you can consolidate some. Maybe there's some SKUs, 0:17:19.720 --> 0:17:21.600 you know, some products that aren't selling, well you can 0:17:21.680 --> 0:17:25.480 roll those back. Be a little more nimble when it 0:17:25.640 --> 0:17:28.240 comes to getting rid of some products that aren't winners, 0:17:28.440 --> 0:17:29.760 because at the end of the day, you have to 0:17:29.760 --> 0:17:32.520 grab as much shelf space as the retailer as possible, 0:17:33.040 --> 0:17:35.080 and when you have products on the shelf that aren't moving, 0:17:35.119 --> 0:17:38.200 you're not helping them, you know, with their business. So 0:17:38.800 --> 0:17:41.840 be more a little more aggressive with that. So it's 0:17:41.840 --> 0:17:45.680 helping and I think that's a positive thing for shareholders. 0:17:46.520 --> 0:17:48.360 Is this a company that's going to have to separate 0:17:48.359 --> 0:17:50.159 its drinks business from its back business. 0:17:51.960 --> 0:17:54.200 Well, that's the age old question we've been talking about 0:17:54.280 --> 0:17:57.119 for a while. And as I mentioned, if it can 0:17:57.240 --> 0:18:00.280 prove to the market that this increased focus that they 0:18:00.320 --> 0:18:03.800 have with just doing their you know, daily business or 0:18:03.840 --> 0:18:07.439 running these operations, they can improve them. I think the 0:18:07.440 --> 0:18:08.960 heat will be off for them to go to the 0:18:09.240 --> 0:18:13.760 draconian measure of breaking up food and beverages. That's always, 0:18:13.880 --> 0:18:15.720 you know, the wild card I think down the road, 0:18:16.000 --> 0:18:17.480 and I think will be well received by the market 0:18:17.520 --> 0:18:20.960 quite frankly, but I don't think it's necessary at this point. 0:18:21.680 --> 0:18:25.440 What are you consumer product products companies telling you ken 0:18:25.480 --> 0:18:27.280 about just the consumer out there? 0:18:29.440 --> 0:18:31.399 Well, Altria just the other day. I mean, it's a 0:18:31.400 --> 0:18:34.480 different market with cigarettes, you know. They noted that consumers 0:18:34.480 --> 0:18:37.560 are still hesitant in paying up for premium products, and 0:18:37.560 --> 0:18:42.000 the cigarettes mentioned isn't the same category as salty snacks, 0:18:42.520 --> 0:18:46.119 but they do note that consumers are reaching for the 0:18:46.160 --> 0:18:49.200 private label, the low priced alternative, more than they've done 0:18:49.200 --> 0:18:51.400 in the past, and so the extent of that that 0:18:51.480 --> 0:18:54.520 carries over to you know, sacks and beverages. I can 0:18:54.600 --> 0:18:58.639 see some parallel lines here, and as more companies, uh 0:18:58.800 --> 0:19:00.720 you know, release their numbers, I think that could be 0:19:00.760 --> 0:19:04.160 a common theme here that private labels encroaching and maybe 0:19:04.200 --> 0:19:06.959 there needs to be some more deceleration in the uh, 0:19:07.400 --> 0:19:10.840 you know, reliance on price increases to stimulate sales growth. 0:19:13.800 --> 0:19:16.320 Stay with us. More from Bloomberg Intelligence coming up. 0:19:19.920 --> 0:19:23.639 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:19:23.720 --> 0:19:26.760 weekdays at ten am Eastern on Apple, Cocklay and Android 0:19:26.800 --> 0:19:30.120 Auto with the Bloomberg Business App. Listen on demand wherever 0:19:30.160 --> 0:19:33.280 you get your podcasts, or watch us live on YouTube. 0:19:34.119 --> 0:19:35.159 It is earning season. 0:19:35.200 --> 0:19:37.680 We're knee deep in it and big pharma is reporting, 0:19:37.840 --> 0:19:40.360 and let's start off with Pfizer. The shares are down 0:19:40.400 --> 0:19:44.399 about three point four percent. Pfizer is trying to break 0:19:44.400 --> 0:19:49.240 into the anti obesity market, the you know, the diet pills, 0:19:49.600 --> 0:19:52.000 we don't call it die pills, weight loss waits, yes, 0:19:52.240 --> 0:19:54.680 and not getting very far in it. They've made some big, 0:19:54.720 --> 0:19:57.119 big investments and it's time now to see how it's 0:19:57.160 --> 0:20:00.000 all paying off or perhaps not. Sam Fizzelli is out 0:20:00.000 --> 0:20:03.800 our director of research for Global Industries and senior pharmaceuticals analysts, 0:20:03.800 --> 0:20:06.600 and he's in London right now with a jacket that 0:20:06.680 --> 0:20:08.040 says this. 0:20:08.160 --> 0:20:12.080 BI drug Boss. BI is Bloomberg Intelligence. 0:20:11.960 --> 0:20:12.760 And he's the drug Boss. 0:20:12.800 --> 0:20:13.920 And he's the drug boss all right. 0:20:14.040 --> 0:20:17.199 So your producer told me I can wear it, so 0:20:18.400 --> 0:20:21.160 if I shouldn't have, a very good friend of BI 0:20:21.359 --> 0:20:23.720 got this for me. So I thought that these ones 0:20:23.760 --> 0:20:26.520 I should hear it otherwise that's my boring jacket on next. 0:20:26.359 --> 0:20:28.800 No, no, no, we welcome it, mister drug boss, So 0:20:29.480 --> 0:20:30.760 thank you for joining us again. 0:20:30.880 --> 0:20:31.280 Sam. 0:20:31.800 --> 0:20:34.680 Let's talk a little bit about these visor results because 0:20:34.760 --> 0:20:37.520 it feels like it's the you know, people aren't paying 0:20:37.560 --> 0:20:39.840 that much attention to what happened in the fourth quarter 0:20:39.960 --> 0:20:42.560 or even the reaffirmed full year guidance. It's all about, 0:20:42.920 --> 0:20:46.320 you know, the latest data on the obesity drug from 0:20:46.359 --> 0:20:47.920 met Sarah, which Vizer is purchasing. 0:20:49.200 --> 0:20:51.600 Yeah, yeah, so look they paid ten point one billion 0:20:51.600 --> 0:20:53.760 dollars for this and the share price is down three percent. 0:20:54.200 --> 0:20:55.800 If it all to do with that, there is it 0:20:55.880 --> 0:20:58.960 people being reminded again that the next three four years 0:20:59.280 --> 0:21:03.520 there's a may headwind from generic drugs coming for there 0:21:03.640 --> 0:21:07.960 some of the key products on the market eyebrands, ex Standy, 0:21:08.760 --> 0:21:11.760 et cetera. So that's partly the issue. And you know, 0:21:11.840 --> 0:21:14.800