WEBVTT - FedEx Raises Profit Outlook on Network Overhaul 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 --> 0:00:17.880 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. 0:00:24.079 --> 0:00:26.960 FedEx coming out with results it's seen as economic belt whether, 0:00:27.040 --> 0:00:30.080 even as it clearly has its own issues to work through, 0:00:30.200 --> 0:00:34.239 namely this overhaul of its businesses. Lee Costco is our 0:00:34.320 --> 0:00:38.200 senior transport, logistics and shipping analyst here at Bloomberg Intelligence 0:00:38.560 --> 0:00:42.240 and Lee a good report here from FedEx, whose shares 0:00:42.280 --> 0:00:45.400 are right now up about two percent. A forecast that 0:00:45.479 --> 0:00:48.440 came in better than most people expected, including the range 0:00:48.479 --> 0:00:49.199 that it offered. 0:00:50.440 --> 0:00:52.840 Yeah, it definitely was a nice print for their third quarter, 0:00:52.880 --> 0:00:56.840 which includes their peak season in December. It shows us 0:00:56.840 --> 0:00:59.480 that they're really executing on their plan. The beat was 0:00:59.520 --> 0:01:02.480 really driven by their express business or their parcel business. 0:01:02.760 --> 0:01:05.600 Their freight business, which is their less than truckload business, 0:01:05.680 --> 0:01:08.960 continues to struggle. That's really not a company specific thing, 0:01:09.000 --> 0:01:12.399 that's an industry thing. The LTL market has been pretty 0:01:12.400 --> 0:01:16.000 weak over the last year, and we expect that weakness 0:01:16.040 --> 0:01:20.800 to continue. I think people were encouraged about the fact 0:01:20.800 --> 0:01:23.280 that they raise their full year guidance. You know, they 0:01:23.360 --> 0:01:27.720 did put out a twenty five dollars EPs target for 0:01:27.760 --> 0:01:29.880 twenty twenty nine when they had their analyst AA a 0:01:29.880 --> 0:01:32.520 couple of months ago. You know, we've written over the 0:01:32.600 --> 0:01:34.160 last month that, you know, we think that might be 0:01:34.280 --> 0:01:40.480 conservative if the company continues to execute on its restructuring 0:01:40.560 --> 0:01:43.680 plan and assuming that the you know, the economy doesn't 0:01:43.680 --> 0:01:48.520 create from here all a recession. You know, I think 0:01:48.560 --> 0:01:51.520 that you know, its numbers can be can be made. 0:01:52.240 --> 0:01:52.400 Lee. 0:01:52.480 --> 0:01:55.800 I know it looks that some of my banker buddies 0:01:55.840 --> 0:01:57.680 got to this company at some point because they are 0:01:58.000 --> 0:01:59.520 going to spin off their freight unit. 0:01:59.600 --> 0:02:02.360 I guess sometime in June. What are you looking for there? 0:02:02.440 --> 0:02:04.960 What's the what's what? What's the story there? 0:02:05.000 --> 0:02:05.400 Do you think? 0:02:06.200 --> 0:02:06.440 Yeah? 0:02:06.480 --> 0:02:09.040 So, I think they're following the footsteps of UPS. UPS 0:02:09.160 --> 0:02:11.840 also had a lesson truckload business. They spun out whether 0:02:11.880 --> 0:02:14.760 they sold excuse me to a t f I, a 0:02:14.840 --> 0:02:17.639 Canadian company. Uh. And you know, I think what these 0:02:17.680 --> 0:02:19.760 parcel carriers want to do is they want to focus 0:02:19.800 --> 0:02:22.600 on you know that they're parcel carriers and not some 0:02:22.720 --> 0:02:25.959 of these ancillary businesses. You know, I think this will 0:02:25.960 --> 0:02:29.840 really sharpen FedEx's focus. U The LTIL business or the 0:02:29.880 --> 0:02:33.240 FedEx's LTL business is a great business. It's the largest 0:02:33.280 --> 0:02:37.799 lesson truckload carrier in North America. It'll be an interesting spinoff. 0:02:37.840 --> 0:02:40.119 I mean, we'll see where valuations are by the time 0:02:40.160 --> 0:02:42.840 they spin it off in June. You know, like I mentioned, 0:02:43.080 --> 0:02:47.040 tonnage has been kind of depressed. So obviously maybe they're 0:02:47.040 --> 0:02:49.240 not getting the most that they possibly can, I mean 0:02:49.919 --> 0:02:52.120 because of the timing. But I think it is it 0:02:52.240 --> 0:02:54.160 is a good thing for them to do, and only 0:02:54.200 --> 0:02:56.400 are doing that, you know, they're they're they're doing things 0:02:56.400 --> 0:03:00.000 that that they that was you know, unheard of maybe 0:02:59.840 --> 0:03:02.480 three five years ago. You know, they're combining their air 0:03:02.880 --> 0:03:06.560 and ground networks, and they're doing things within their businesses 0:03:06.600 --> 0:03:10.920 to really drive overall productivity. You layer on top of 0:03:10.960 --> 0:03:15.000 that technology investments to enhance productivity. You know, this could 0:03:15.000 --> 0:03:18.040 be a company that can you know, generate earnings you know, 0:03:18.160 --> 0:03:20.600 north of that twenty five dollars number that they put 0:03:20.600 --> 0:03:21.880 out for twenty twenty nine. 0:03:22.120 --> 0:03:24.919 Lee final question too. We have about thirty seconds left. 0:03:24.960 --> 0:03:28.040 We know FedEx has sued the federal government for refunds 0:03:28.040 --> 0:03:30.960 on tariffs, any update, any progress on that front. Is 0:03:31.000 --> 0:03:31.960 this a meaningful number? 0:03:33.240 --> 0:03:36.080 Yeah, honestly, I don't know much about that. They really 0:03:36.080 --> 0:03:38.080 didn't talk that much about it on the earnings call, 0:03:38.120 --> 0:03:40.119 but it would probably be would be a pass through 0:03:40.160 --> 0:03:41.920 that they get back to their customers, so it's not 0:03:41.960 --> 0:03:45.640 really going to impact their bottom line, and if it does, 0:03:45.720 --> 0:03:48.480 it'd probably be, you know, not meaningful. 0:03:49.120 --> 0:03:52.040 Stay with us more from Bloomberg Intelligence coming up after this. 0:03:55.680 --> 0:03:59.360 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:03:59.440 --> 0:04:02.560 weekdays ten am. He's derned on Apple, Cocklay and Android 0:04:02.560 --> 0:04:05.880 Auto with the Bloomberg Business app. Listen on demand wherever 0:04:05.920 --> 0:04:09.480 you get your podcasts, or watch us live on YouTube. 0:04:10.000 --> 0:04:14.600 Well up, potential mega m and a trade reported today 0:04:14.720 --> 0:04:18.640 Potential Unilever is in talks to sell its food business 0:04:18.680 --> 0:04:21.440 to McCormick and what would be the biggest overhaul of 0:04:21.440 --> 0:04:24.000 the company since it was founded almost a century ago. 0:04:24.560 --> 0:04:27.200 We're talking this business could be worth about thirty three 0:04:27.320 --> 0:04:31.440 billion US dollars, so that would be a sizeable trade there, 0:04:31.480 --> 0:04:34.120 for sure. Let's get down into the details here. We 0:04:34.160 --> 0:04:36.719 can do that with Diana Gomes. She is a senior 0:04:36.720 --> 0:04:38.240 equity research channels. 0:04:38.000 --> 0:04:41.160 To Bloomberg Intelligence. She's based in London, Diana. 0:04:41.240 --> 0:04:45.360 This would be a big, big move for Unilever's what's 0:04:45.400 --> 0:04:46.200 the strategy here? 0:04:48.200 --> 0:04:53.600 Yes, thank you. So the strategy for Union Lever would 0:04:53.640 --> 0:04:58.560 be really to simplify and refocus more on the higher 0:04:58.600 --> 0:05:04.400 growth imium skincare wellbeing beauty portfolio, which is what the 0:05:04.440 --> 0:05:08.599 company is trying to do in order to reach about 0:05:08.600 --> 0:05:11.920 two thirds of sales in the midterm. So it is 0:05:11.960 --> 0:05:17.159 not surprising that Unilever is considering a split. I believe 0:05:17.200 --> 0:05:20.280 the questions are more out that will be structured. 0:05:21.600 --> 0:05:23.200 So is this a move? 0:05:23.200 --> 0:05:25.240 I mean, I see the stocks of just fractionally today. 0:05:25.320 --> 0:05:27.599 Is this something that was expected by the street? Is 0:05:27.640 --> 0:05:30.800 this something the street would support? Is this evaluation that 0:05:30.839 --> 0:05:31.640 seems reasonable? 0:05:34.160 --> 0:05:39.520 So the valuation we pam up with we calculated a 0:05:39.560 --> 0:05:42.920 potential nine times if it too a bit multiple or 0:05:43.600 --> 0:05:47.640 potential three point two billion euros of a BIT nine 0:05:47.680 --> 0:05:51.320 twenty twenty six for the foods business as part of 0:05:51.440 --> 0:05:56.480 unil Ever, which would be aligned with packaged food multiples 0:05:56.600 --> 0:06:02.480 and slightly below Union versus multiple at the moment, which 0:06:02.800 --> 0:06:05.520 accounts for the fact that foods has been a slower 0:06:05.560 --> 0:06:08.920 growth segment for unil ever, but it's still margin a creative, 0:06:08.920 --> 0:06:13.920 it's cash creative, so a quick sale at a non 0:06:13.960 --> 0:06:17.920 favorable value would not be something that I see, you know, 0:06:18.160 --> 0:06:22.920 ever working for. But in the prior days, we have 0:06:22.960 --> 0:06:28.600 seen more chatter in the market about unil ever potentially 0:06:28.839 --> 0:06:35.120 spitting up some considerations for a split, spin off, a sale. 0:06:35.800 --> 0:06:42.000 There are many ipodsis being put out there, so it 0:06:42.160 --> 0:06:45.640 is not coming as a complete surprise. I believe the 0:06:45.720 --> 0:06:49.040 details are quite thin at the moment, so it's difficult 0:06:49.120 --> 0:06:51.000 to just say so. 0:06:51.200 --> 0:06:53.120 But I think we've seen a lot in the consumer 0:06:53.160 --> 0:06:56.520 products state space just over the last several weeks several months, 0:06:56.920 --> 0:06:59.280 a lot of companies re examining kind of their their 0:06:59.320 --> 0:07:02.320 portfolio brands. And because there's been a lot of competition 0:07:02.360 --> 0:07:05.560 from private label there's been you know, a lot of 0:07:05.839 --> 0:07:08.800 inflation author that has been pinching the consumer, it seems 0:07:08.800 --> 0:07:11.200 like a lot of these companies are re examining their portfolios. 0:07:11.400 --> 0:07:13.640 Should we expect more of this going forward. 0:07:15.000 --> 0:07:18.480 Yes, definitely. So that's a trend that we see continuing 0:07:19.040 --> 0:07:24.680 through through the year. And it is also possible that 0:07:25.560 --> 0:07:32.760 the current uncertain environment from the geopolitics risk potential boost 0:07:32.840 --> 0:07:38.440 to inflation as well, which would further squeeze consumers, is 0:07:38.480 --> 0:07:46.720 prompting strategic thoughts as well. We and and that's the 0:07:46.880 --> 0:07:50.360 that's the backdrop under which this this comes. So not 0:07:50.720 --> 0:07:55.040 completely surprised given that foods would potentially be the segment 0:07:55.160 --> 0:08:01.560 more vulnerable in Lever's portfolio. But companies have been trying 0:08:01.600 --> 0:08:07.280 to simplify and get more focused. So that's the investment 0:08:07.480 --> 0:08:12.400 in their premium innovation allows them to better differentiate themselves 0:08:12.400 --> 0:08:17.920 from private toyable, more affordable options in the market, sometimes 0:08:17.960 --> 0:08:19.680 from smaller players. 0:08:20.480 --> 0:08:24.200 So Diana, who's typically investing in these big consumer products 0:08:24.200 --> 0:08:27.000 companies like Procter and Gamble, Unilever, because I see, you know, 0:08:27.040 --> 0:08:29.720 kind of their stock prices are kind of flatish over time, 0:08:29.800 --> 0:08:31.480 not a lot of movement. They do have nice dividend 0:08:31.520 --> 0:08:35.480 yields three four five percent. Are these investors that in 0:08:35.520 --> 0:08:39.400 their portfolio they just want these stocks to represent stability. 0:08:41.160 --> 0:08:44.920 That is one of the key elements for that staples 0:08:44.920 --> 0:08:48.080 that have been known for for that stability on income 0:08:48.559 --> 0:08:53.079 and some attractive dividend iills as well. So we see 0:08:53.760 --> 0:08:59.680 further buiveex and dividend growth still possible into the year, 0:09:00.480 --> 0:09:05.000 but obviously, with the potential for volume growth to not 0:09:05.480 --> 0:09:09.720 pick up as much as was initially expected free the war, 0:09:11.000 --> 0:09:13.280 it does raise some questions there. 0:09:13.559 --> 0:09:14.199 Stay with us. 0:09:14.280 --> 0:09:15.959 More from Bloomberg Intelligence coming. 0:09:15.800 --> 0:09:16.400 Up after this. 0:09:19.760 --> 0:09:23.480 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:09:23.559 --> 0:09:26.640 weekdays at ten am Eastern on Apple Corplay and Android 0:09:26.640 --> 0:09:29.959 Auto with the Bloomberg Business app. Listen on demand wherever 0:09:30.000 --> 0:09:33.120 you get your podcasts, or watch us live on YouTube. 0:09:34.040 --> 0:09:35.520 Let's go over to the consumer side. 0:09:35.960 --> 0:09:40.040 When you think about where consumers spend money, well for 0:09:40.240 --> 0:09:42.040 enjoyment and entertainment and all that kind of stuff. They 0:09:42.040 --> 0:09:44.120 can go take a cruise, they can go to a casino, 0:09:45.240 --> 0:09:47.000 go to a theme park, all that kind of stuff. 0:09:47.240 --> 0:09:52.040 But if the consumer may face some additional challenges going forward, 0:09:52.320 --> 0:09:53.520 what does it mean for those businesses? 0:09:53.559 --> 0:09:54.800 What does it mean for those businesses? 0:09:55.720 --> 0:09:59.560 Credits out there, Jody Lourie, She's a Bloomberg Intelligence credit 0:09:59.679 --> 0:10:02.640 analy Jody, how do you think about some of the 0:10:02.640 --> 0:10:05.520 industries you follow again, kind of the cruise industry, the 0:10:05.960 --> 0:10:08.880 gaming industry, the theme park business, hotels, all that kind 0:10:08.880 --> 0:10:11.880 of stuff. What's your view of the consumer and what 0:10:11.920 --> 0:10:12.880 are your companies telling you. 0:10:14.280 --> 0:10:16.680 So, I think, Paul, there's a couple of things to 0:10:16.800 --> 0:10:19.600 tackle here. First of all, of course, there's the pressure 0:10:19.640 --> 0:10:22.440 from the Iron War, which at the end of the day, 0:10:22.600 --> 0:10:24.720 I think there's more of an echo effect event, and 0:10:24.760 --> 0:10:27.240 it's more just adding to some of the pressures that 0:10:27.320 --> 0:10:29.679 the consumer is already feeling. We've been talking about the 0:10:29.720 --> 0:10:32.160 K shaped economy. We've been seeing some of the effects 0:10:32.160 --> 0:10:35.679 of the K shaped economy in hotels, in theme parks, 0:10:35.760 --> 0:10:39.920 in cruise lines, in gaming, but we haven't necessarily seen 0:10:40.400 --> 0:10:44.840 a broader scale effect of this inflation pressure on the 0:10:44.880 --> 0:10:48.440 consumer when it comes to higher income consumers, and so 0:10:48.760 --> 0:10:50.440 I think that's where you're going to start seeing a 0:10:50.480 --> 0:10:53.480 little bit more of that creep in and that pullback 0:10:53.520 --> 0:10:55.599 by the consumer. But I think at the end of 0:10:55.640 --> 0:10:57.679 the day, when you look at the companies, a lot 0:10:57.760 --> 0:10:59.920 of them are really well positioned. It's only the low 0:11:00.000 --> 0:11:03.400 twist rated companies that we are concerned about. The ones 0:11:03.400 --> 0:11:06.600 that are operating on a tight sort of cushion at 0:11:06.640 --> 0:11:09.680 the moment, such as six Flags, such as Hurts, the 0:11:09.760 --> 0:11:12.120 names that really are trying to get their balance sheets 0:11:12.120 --> 0:11:14.800 in order and trying to address fundamental issues at their 0:11:14.840 --> 0:11:19.200 companies that we're concerned about at this moment, right, especially 0:11:19.200 --> 0:11:19.520 when you. 0:11:19.520 --> 0:11:21.760 Look at especially when you look at the fact that 0:11:22.000 --> 0:11:25.079 traders are now betting on the possibility of a rate 0:11:25.160 --> 0:11:28.200 hike as well. Not only have they priced out rate 0:11:28.240 --> 0:11:30.040 cuts for the rest of this year, they're now looking 0:11:30.040 --> 0:11:33.040 at possibly the FED needing to increase interest rates because 0:11:33.040 --> 0:11:36.400 of rising inflation. A rate hike would really be bad 0:11:36.480 --> 0:11:38.240 news for a lot of these weak barrors with a 0:11:38.240 --> 0:11:40.640 lot of debt coming up, wouldn't it. 0:11:40.640 --> 0:11:44.360 It would absolutely scarlet And I think the key here though, 0:11:44.400 --> 0:11:46.600 is that a lot of the companies have been proactive 0:11:46.600 --> 0:11:49.360 in terms of deleveraging, and so for twenty twenty six, 0:11:49.440 --> 0:11:51.400 we actually don't have that much debt outstanding for a 0:11:51.400 --> 0:11:53.760 lot of the companies that we cover. It's really as 0:11:53.760 --> 0:11:56.320 you get in twenty twenty seven, twenty twenty eight, when 0:11:56.320 --> 0:11:59.480 it's that prolonged sort of view, that's when you start 0:11:59.520 --> 0:12:01.800 feeling the pressure. If this is a sort of you know, 0:12:02.960 --> 0:12:05.440 one year blip or so, I don't think it's really 0:12:05.440 --> 0:12:07.360 going to affect them. I mean, we didn't anaunce us 0:12:07.360 --> 0:12:09.840 on a company like Carnival, for example, which you know 0:12:09.880 --> 0:12:12.800 they've been working their way towards investment grade ratings. They 0:12:12.840 --> 0:12:16.040 obviously are feeling the strain of something like Iran and 0:12:16.080 --> 0:12:19.559 it's going to possibly affect booking levels for a lot 0:12:19.559 --> 0:12:21.480 of their consumers. But at the end of the day, 0:12:21.920 --> 0:12:25.720 for someone like Carnival, they've been proactively deleveraging, which is 0:12:25.760 --> 0:12:28.959 certainly a positive, and when we've looked at similar times 0:12:28.960 --> 0:12:32.439 in the past, it really hasn't affect EBIT of margins 0:12:32.440 --> 0:12:34.599 that much. Net income might be a different story, but 0:12:34.640 --> 0:12:37.240 EBIT margins not that much, which is a little surprising 0:12:37.280 --> 0:12:39.920 for us. I think where we're sort of hesitant to 0:12:39.960 --> 0:12:43.520 feel really comfortable for a company that's unheedged on their 0:12:43.559 --> 0:12:47.880 fuel exposure is more in that secondary and tertiary effects 0:12:48.280 --> 0:12:52.400 related to something like this massive event, and also the 0:12:52.440 --> 0:12:55.120 consumer feeling pressure. By that I mean is consumers if 0:12:55.120 --> 0:12:57.120 they're not spending on the scuba diving, if they're not 0:12:57.160 --> 0:13:00.440 spending on the random excursions the same way, you're not 0:13:00.480 --> 0:13:03.280 going to have that gravy of cash flow that a 0:13:03.320 --> 0:13:04.520 lot of these companies feel. 0:13:06.000 --> 0:13:08.439 It's the first weekend of March Madness, which makes me 0:13:08.480 --> 0:13:10.839 think about sports books, and my favorite sports book in 0:13:10.920 --> 0:13:12.480 Vegas is that Caesar's Palace. 0:13:12.520 --> 0:13:14.400 It is just awesome to take care of you there. 0:13:14.679 --> 0:13:18.760 And I noticed Jody that. 0:13:17.720 --> 0:13:20.840 Caesar's is I guess there's some reports that maybe they 0:13:20.840 --> 0:13:25.000 were going to be taken private by Tilman and Fertita. 0:13:25.080 --> 0:13:27.080 What does that mean for its bonds? What does that 0:13:27.120 --> 0:13:29.640 mean for bonds of other kind of leader companies out there. 0:13:31.000 --> 0:13:33.800 Well, Paul, we've been a little bit concerned about some 0:13:33.840 --> 0:13:37.199 of our companies just because we're towards that tail end 0:13:37.400 --> 0:13:39.920 of a really good momentum of the past few years 0:13:39.960 --> 0:13:43.280 post COVID, and so for someone like Caesar's, while they 0:13:43.360 --> 0:13:45.880 do have change of control provision, which what that is 0:13:45.880 --> 0:13:48.760 is that's a protection measure for anybody who owns their 0:13:48.760 --> 0:13:51.280 bonds to put back the bonds at one hundred and 0:13:51.320 --> 0:13:54.440 one percent of par while those bonds do have that, 0:13:54.480 --> 0:13:58.000 there's reports by Wall Street Journal and others that indicate 0:13:58.120 --> 0:14:01.800 that Caesars may have found loopholes or around their relationship 0:14:01.960 --> 0:14:04.960 with Vichy Properties, which is the one that owns about 0:14:04.960 --> 0:14:07.280 fifty percent of their properties. They have a sale lease 0:14:07.320 --> 0:14:09.800 back with Viacci. So not to get into too much detail, 0:14:10.200 --> 0:14:14.760 but if they're looking at ways to skirt conversations with 0:14:15.240 --> 0:14:18.720 key counter parties. I'm a little bit concerned when it 0:14:18.760 --> 0:14:22.120 comes to creditors, particularly when you look at where the 0:14:22.120 --> 0:14:24.760 bonds are trading, and they're trading so much below par. 0:14:25.320 --> 0:14:28.720 I think that's a sign that maybe perhaps whatever deal 0:14:28.800 --> 0:14:31.520 might be forming is not necessarily going to be credit 0:14:31.640 --> 0:14:34.560 or friendly. Then if you think about Caesar's in general, 0:14:34.760 --> 0:14:38.680 the long history legacy Caesars, what happened with their LBO, 0:14:38.760 --> 0:14:41.920 what happened with their restructuring. Now we have El Dorado 0:14:42.040 --> 0:14:44.880 as the management team. They're the ones who bought Caesar's 0:14:44.960 --> 0:14:47.480 and took on the Caesars name. At the end of 0:14:47.480 --> 0:14:50.000 the day, though, I think a lot of investors have 0:14:50.120 --> 0:14:52.680 a hard time getting over a name that burned them 0:14:52.720 --> 0:14:56.880 in the past. Feeling comfortable with this discussion going forward. 0:14:57.120 --> 0:14:58.960 We have a lot of companies within our sectors. We 0:14:59.000 --> 0:15:02.760 actually just publish something yesterday on it looking at the 0:15:02.960 --> 0:15:07.080 risk related to activist investors for a lot of our 0:15:07.120 --> 0:15:09.280 companies and what that could mean for these credits. 0:15:09.480 --> 0:15:12.600 Stay with us. More from Bloomberg Intelligence coming up after this. 0:15:16.480 --> 0:15:20.200 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:15:20.280 --> 0:15:23.640 weekdays at ten am Easterned on Applecarplay and Android Auto 0:15:23.760 --> 0:15:26.840 with the Bloomberg Business App, listen on demand wherever you 0:15:26.880 --> 0:15:30.280 get your podcasts, or watch us live on YouTube. 0:15:30.520 --> 0:15:31.400 The Business of Sports. 0:15:31.440 --> 0:15:33.520 Nobody does it better than our next guest, Randa Williams, 0:15:33.640 --> 0:15:37.000 US sports business reporter for Bloomberg News. He doesn't mail 0:15:37.000 --> 0:15:38.920 it in from home like the rest of these folks 0:15:39.680 --> 0:15:41.480 live in the Bloomberg Interactive Brokers studiing. 0:15:41.520 --> 0:15:42.240 We appreciate that. 0:15:42.440 --> 0:15:44.520 Rinda, I'm so glad that you here because to me, 0:15:44.640 --> 0:15:48.760 I've been following closely this WNBA collective barting agreement because 0:15:48.800 --> 0:15:50.720 what I think we've all noticed over the last several 0:15:50.800 --> 0:15:53.680 years is just the explosive growth of Women's National Basket, 0:15:53.840 --> 0:15:56.880 women's sports and general. But certainly the WNBA and boy 0:15:56.960 --> 0:16:01.240 I did not think the economics for them reflected that agreement. 0:16:01.400 --> 0:16:04.040 I remember when Kaylyn Clark was drafted. I think all 0:16:04.080 --> 0:16:06.400 of us Bloomberg included around the story that she was 0:16:06.440 --> 0:16:08.680 going to be making either it was seventy six thousand 0:16:08.720 --> 0:16:11.160 dollars or seventy eight thousand dollars. You think about the 0:16:11.160 --> 0:16:13.160 growth that she brought to the league as well as 0:16:13.200 --> 0:16:15.320 many many others. I mean, the league was growing before 0:16:15.320 --> 0:16:18.320 she arrived as well. And then she in her rookie class, 0:16:18.360 --> 0:16:21.160 Angel Reeves and Cameron Brinkin so many more served as 0:16:21.160 --> 0:16:23.840 a title wave and so their salaries didn't reflect that. 0:16:23.880 --> 0:16:24.600 But they will soon. 0:16:25.840 --> 0:16:26.600 They will soon. 0:16:26.760 --> 0:16:29.800 But there was a lot of bad blood between the commissioner, 0:16:29.880 --> 0:16:33.040 Kathy Engelbert and the players and the players' union leading 0:16:33.160 --> 0:16:38.480 up to the agreement that they'll come to something together. 0:16:39.840 --> 0:16:41.840 Where do they go from here? Because I wonder how 0:16:41.880 --> 0:16:43.840 much of that kind of cast a paul over how 0:16:43.840 --> 0:16:45.200 they work together going forward. 0:16:45.400 --> 0:16:48.160 It's a great question. And I think there was a 0:16:48.200 --> 0:16:50.120 picture that was posted, but I want to say it 0:16:50.160 --> 0:16:53.440 was by the women's the union side of things, and 0:16:53.480 --> 0:16:55.760 they toasted when they got a deal, and everyone looks happy, 0:16:55.760 --> 0:16:57.360 and of course they have to have a deal in 0:16:57.480 --> 0:16:59.200 order for the league to continue. 0:16:59.280 --> 0:16:59.440 Right. 0:16:59.520 --> 0:17:02.080 At the same time, there were some very very strong 0:17:02.080 --> 0:17:05.119 comments made that you know, in all my years of 0:17:05.200 --> 0:17:07.960 covering sports, both professionally and then as a kid, I've 0:17:08.000 --> 0:17:11.520 never heard anyone make comments like Nifista Collier said about 0:17:11.600 --> 0:17:14.080 Kathy Engelbert. And you know, we also reported that Kathy 0:17:14.160 --> 0:17:18.159 had conversations about whatever her next chapter was, meaning that 0:17:18.200 --> 0:17:20.879 she could depart the league. Now, is that still a 0:17:20.920 --> 0:17:23.240 factor now that a deal is close to being done, 0:17:23.359 --> 0:17:25.800 we're going to find out probably in the months and 0:17:25.880 --> 0:17:28.080 maybe a year or so to come. I think that 0:17:28.200 --> 0:17:30.280 the next time she talks will be at the WNBA Draft, 0:17:30.320 --> 0:17:32.040 and I have no doubt that someone will ask about it. 0:17:32.080 --> 0:17:36.200 Well, we know across sports globally, the main main driver 0:17:36.280 --> 0:17:38.200 of the economics is the rights fees. 0:17:38.440 --> 0:17:39.280 Media rights fees. 0:17:39.880 --> 0:17:41.680 Where's the WNBA these days? 0:17:41.800 --> 0:17:44.239 So that was a big part of this, was that 0:17:44.240 --> 0:17:47.280 the WNBA agreed to a new media rights deal I 0:17:47.280 --> 0:17:50.639 believe it was in twenty twenty four with Amazon, ESPN 0:17:50.920 --> 0:17:54.520 and Comcast. And so that deal is going to pay 0:17:54.560 --> 0:17:57.399 them at minimum two hundred million dollars a year. And Okay, 0:17:57.520 --> 0:18:00.760 so when the players were having conversations, they're like, listen, 0:18:00.800 --> 0:18:03.240 we're seeing expansion fees rise. We're seeing our media rides 0:18:03.280 --> 0:18:06.320 field fees rise. And so they were like, if all 0:18:06.359 --> 0:18:08.000 of this money is rising, where is it? When is 0:18:08.040 --> 0:18:09.560 it going to come down to us? And the league 0:18:09.600 --> 0:18:11.720 and the players saw two completely different ways for a 0:18:11.760 --> 0:18:13.120 long time, but they got on. 0:18:13.040 --> 0:18:15.280 Middle ground, all right, and it's about time. 0:18:15.320 --> 0:18:16.200 Frankly, I agree. 0:18:16.280 --> 0:18:19.360 I mean, let's talk about college basketball because it is 0:18:19.480 --> 0:18:22.520 March March twentieth and March madness is in full swing 0:18:23.200 --> 0:18:25.639 here at Bloomberg. Of course, we have our brackets for 0:18:25.680 --> 0:18:28.280 a cause. If you have a Bloomberg terminal's b r 0:18:28.359 --> 0:18:32.719 KT go where. We've invited folks to put together their 0:18:32.760 --> 0:18:37.119 bracket and appoint the charity that they would get a 0:18:37.160 --> 0:18:40.600 winning donation if they do come out ahead. And these 0:18:40.600 --> 0:18:43.119 are always full of surprises, absolutely. 0:18:43.160 --> 0:18:46.119 I mean, yesterday we saw Duke almost get upset by it. 0:18:49.080 --> 0:18:51.600 I was at a CBS watch party yesterday and everyone 0:18:51.720 --> 0:18:54.400 was on edge. And then of course BYU lost to Texas, 0:18:54.440 --> 0:18:57.000 and so that first round in that second round are 0:18:57.160 --> 0:19:01.560 always always dangerous. And I mean Ken is leading right now, 0:19:01.680 --> 0:19:03.960 so I mean it sounds like if he continues down 0:19:04.000 --> 0:19:05.879 this track, you know he'll be the winner. 0:19:05.960 --> 0:19:08.120 I am close on his heels. I'm in the top 0:19:08.160 --> 0:19:10.640 four percent. How many points do you have right now? 0:19:10.800 --> 0:19:11.400 Twenty six? 0:19:11.640 --> 0:19:14.520 I'm five sixty eight out of eight and seventy two 0:19:14.520 --> 0:19:15.840 people rank. 0:19:16.760 --> 0:19:17.600 I have Duke winning. 0:19:18.040 --> 0:19:20.560 I just pencil and Duke then I worked backwards. Oh 0:19:20.640 --> 0:19:23.120 and yesterday, let's not forget Carolina loss. 0:19:23.160 --> 0:19:23.720 Oh here we going? 0:19:23.880 --> 0:19:24.800 Where'd you got to school again? 0:19:24.840 --> 0:19:27.560 In case anyday exactly so it was. It was a 0:19:27.720 --> 0:19:31.000 very good day yesterday. So how big is this. 0:19:30.960 --> 0:19:34.120 For, you know, the media side of the business, because 0:19:34.160 --> 0:19:36.320 it just seems a lot of people are concerned and 0:19:36.440 --> 0:19:39.360 upset with college athletics in general because it's maybe gone 0:19:39.400 --> 0:19:41.840 swung too far the other way with nil and the 0:19:41.880 --> 0:19:44.879 transfer portal, and it's lost some of its cachet a 0:19:44.920 --> 0:19:47.600 little bit. Are we seeing that the numbers anywhere? 0:19:47.960 --> 0:19:51.240 I think you're seeing it across competition more than you 0:19:51.280 --> 0:19:53.480 are with the numbers, because I mean, you look at 0:19:53.600 --> 0:19:55.879 Duke's game yesterday. Again, I don't want I mean to 0:19:55.960 --> 0:19:58.240 shame you because they came out on top, but you 0:19:58.240 --> 0:20:00.520 know you have more of these results and more upsets 0:20:00.560 --> 0:20:03.240 happening because college players are being paid more so they 0:20:03.280 --> 0:20:05.479 have the choice to go and play for a smaller 0:20:05.480 --> 0:20:07.439 school that might be close to home, or maybe go 0:20:07.560 --> 0:20:10.880 somewhere far away that offered them an incredible price. Now, 0:20:10.960 --> 0:20:13.960 from the media rights perspective, Duke loses, and I can 0:20:14.040 --> 0:20:16.159 guarantee you there are media executives who are not going 0:20:16.200 --> 0:20:19.000 to be happy. And so Duke Kansas, all the blue 0:20:19.080 --> 0:20:23.840 chip schools. The farther they go, normally, the better the rights, the. 0:20:23.800 --> 0:20:26.119 Better the ratings and because of name, image and like this, 0:20:26.320 --> 0:20:28.960 these athletes and the transferportal, these athletes can go to 0:20:29.280 --> 0:20:32.080 schools where last year, you know, wasn't even on the map. 0:20:32.200 --> 0:20:35.280 So which schools look most interesting based on the players, 0:20:35.280 --> 0:20:37.480 the players who have come over from other teams. 0:20:37.560 --> 0:20:40.119 Which schools look I need to be in college to 0:20:40.119 --> 0:20:42.960 answer that question, because ultimately I would jump school I 0:20:42.960 --> 0:20:45.760 would jump schools every single year someone was paying me more. 0:20:45.800 --> 0:20:49.119 That's the right thing to do, I mean, that's unfortunately, 0:20:49.200 --> 0:20:51.679