1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P M L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,560 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P and L 6 00:00:20,840 --> 00:00:28,159 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. My 7 00:00:28,320 --> 00:00:31,840 Speaker 1: next guest is William R. Rhodes, better known as Bill 8 00:00:31,920 --> 00:00:35,400 Speaker 1: Rhodes to listeners of this program. He is the author 9 00:00:35,440 --> 00:00:38,520 Speaker 1: of Banker to the World, Leadership Lessons from the front 10 00:00:38,560 --> 00:00:42,879 Speaker 1: Lines of Global of Finance. He has held a variety 11 00:00:42,880 --> 00:00:46,280 Speaker 1: of senior and executive positions at a City Group and 12 00:00:46,400 --> 00:00:51,440 Speaker 1: City bank from ninety seven until his retirement in but 13 00:00:51,520 --> 00:00:54,720 Speaker 1: he's been busy in retirement, writing books and serving on 14 00:00:54,760 --> 00:00:58,280 Speaker 1: a variety of boards. And he joins us here in 15 00:00:58,280 --> 00:01:01,280 Speaker 1: our eleven Trio Studios. Bill, it's pleasure to have you here, 16 00:01:01,600 --> 00:01:04,000 Speaker 1: and I want to do something slightly different because you know, 17 00:01:04,080 --> 00:01:06,160 Speaker 1: normally it's a back and forth thing, but I think 18 00:01:06,200 --> 00:01:10,920 Speaker 1: in this context you actually have met and spend time 19 00:01:11,040 --> 00:01:14,600 Speaker 1: with the world leaders of the countries we're going to 20 00:01:14,720 --> 00:01:17,400 Speaker 1: talk about. So I'm just gonna give you a topic, 21 00:01:17,680 --> 00:01:21,160 Speaker 1: and I want you to offer the detail that you have, because, 22 00:01:21,200 --> 00:01:23,880 Speaker 1: as I said, you've sat with people who are in 23 00:01:24,000 --> 00:01:27,399 Speaker 1: charge in the room, and you know them, you know 24 00:01:27,440 --> 00:01:30,959 Speaker 1: how they think. I want to begin with China trade 25 00:01:31,440 --> 00:01:34,000 Speaker 1: and tariffs in the United States. Tell us about what's 26 00:01:34,040 --> 00:01:37,200 Speaker 1: going on you believe behind the scenes. Well, first of all, 27 00:01:37,240 --> 00:01:39,760 Speaker 1: it's always great to be on with you, Pim. I 28 00:01:39,800 --> 00:01:43,640 Speaker 1: think the so called skirmish that we're on with China 29 00:01:43,680 --> 00:01:47,880 Speaker 1: and trade is starting to harden into what could be 30 00:01:48,440 --> 00:01:52,000 Speaker 1: a difficult trade war, and both sides think they have 31 00:01:52,080 --> 00:01:55,960 Speaker 1: an advantage. I think the United States under Trump feels 32 00:01:55,960 --> 00:01:59,600 Speaker 1: that with our economy growing so strongly, as I always 33 00:01:59,600 --> 00:02:01,800 Speaker 1: tell you, I think we're in the goldilocks period here. 34 00:02:02,080 --> 00:02:04,040 Speaker 1: A year from now, I don't think we are, we 35 00:02:04,600 --> 00:02:08,839 Speaker 1: will be, and so they they in the administration feel 36 00:02:08,880 --> 00:02:12,400 Speaker 1: they have an advantage, and particularly since the Chinese export 37 00:02:13,240 --> 00:02:16,000 Speaker 1: about five billion dollars to US, and you know we 38 00:02:16,080 --> 00:02:19,200 Speaker 1: do a hundred and thirty or forty with them. The 39 00:02:19,280 --> 00:02:21,400 Speaker 1: problem is there are so many other things that are 40 00:02:21,400 --> 00:02:24,800 Speaker 1: tied into into this, and of course we need China 41 00:02:25,120 --> 00:02:28,480 Speaker 1: with our discussions with North Korea. So it's not all 42 00:02:28,600 --> 00:02:31,919 Speaker 1: one sided. At the same time, the Chinese have problems 43 00:02:31,960 --> 00:02:34,080 Speaker 1: with their own economy. They have a very high debt 44 00:02:34,080 --> 00:02:37,320 Speaker 1: to GDP level, reaching almost three percent of debt to 45 00:02:37,400 --> 00:02:40,200 Speaker 1: g g P. UH. They still haven't controlled the shadow 46 00:02:40,240 --> 00:02:43,120 Speaker 1: banking situation. There are a lot of weak smaller banks, 47 00:02:43,160 --> 00:02:46,960 Speaker 1: particularly in north Northeast China. UH. They're still tied in 48 00:02:47,040 --> 00:02:50,080 Speaker 1: with the old steelmaking and things like that. UH and 49 00:02:50,120 --> 00:02:54,080 Speaker 1: the state owned enterprises still have not been properly I 50 00:02:54,160 --> 00:02:57,040 Speaker 1: think dealt with UH and and a good portion of 51 00:02:57,080 --> 00:02:59,760 Speaker 1: the economy is still dependent in China on those things. 52 00:02:59,800 --> 00:03:03,320 Speaker 1: So the Chinese have to get to economic reform or 53 00:03:03,320 --> 00:03:05,360 Speaker 1: they're going to have a problem with their own economy. 54 00:03:05,880 --> 00:03:07,880 Speaker 1: And at the same time they now have to face 55 00:03:07,919 --> 00:03:11,079 Speaker 1: off with the United States on trade. So I think 56 00:03:11,120 --> 00:03:14,520 Speaker 1: it is a it's a difficult situation. Of course, we 57 00:03:14,600 --> 00:03:16,880 Speaker 1: have the all powerful if you want to call him, 58 00:03:16,880 --> 00:03:19,920 Speaker 1: Emperor chi Jinping, but he still has to deliver to 59 00:03:20,040 --> 00:03:23,919 Speaker 1: his people UH. And there's sligns, their signs now that 60 00:03:24,000 --> 00:03:27,240 Speaker 1: growth are slowing down in China UH, and this makes 61 00:03:27,240 --> 00:03:30,600 Speaker 1: it all the more difficult. So the question is are 62 00:03:30,600 --> 00:03:32,760 Speaker 1: we going to sit down eventually with China and work 63 00:03:32,880 --> 00:03:36,160 Speaker 1: something out. It looks like for the moment that doesn't 64 00:03:36,160 --> 00:03:39,320 Speaker 1: seem to be what's in the cards. I think UH, 65 00:03:39,760 --> 00:03:41,960 Speaker 1: medium term, we're going to have to do so because 66 00:03:42,000 --> 00:03:45,760 Speaker 1: the world economy will be affected, not just UH China's 67 00:03:45,800 --> 00:03:48,000 Speaker 1: and our own, but I think the world economy, because 68 00:03:48,000 --> 00:03:51,360 Speaker 1: we're talking about the world's too largest economies. Tell us 69 00:03:51,400 --> 00:03:57,120 Speaker 1: about the link between China, the International Monetary Fund and 70 00:03:57,200 --> 00:04:01,440 Speaker 1: the debts that other countries have incurred because they have 71 00:04:01,640 --> 00:04:06,200 Speaker 1: borrowed money from China and now can't pay it back. Well, 72 00:04:06,240 --> 00:04:09,120 Speaker 1: I think what you're referring to is the One Belt, 73 00:04:09,160 --> 00:04:13,360 Speaker 1: One Road UM, which stretches now to depending on what 74 00:04:13,480 --> 00:04:16,120 Speaker 1: list of countries you look at. Some people say fifty 75 00:04:16,240 --> 00:04:20,560 Speaker 1: sixty seventy countries starting in Asia but now into Africa, 76 00:04:21,240 --> 00:04:24,159 Speaker 1: UH and UH in the Middle East and even now 77 00:04:24,200 --> 00:04:29,000 Speaker 1: in parts of South America. And the problem there is 78 00:04:29,080 --> 00:04:33,680 Speaker 1: that UH these projects supposedly are funded by the Chinese 79 00:04:34,240 --> 00:04:37,000 Speaker 1: Development Bank, the Chinese x In Bank, and UH and 80 00:04:37,120 --> 00:04:42,440 Speaker 1: private UH public s O type banks, but they're running 81 00:04:42,480 --> 00:04:46,560 Speaker 1: up tremendous debt. Pakistan, for instance, is in U has 82 00:04:46,640 --> 00:04:49,839 Speaker 1: borrowed or is planning to borrow up to sixty billion 83 00:04:49,880 --> 00:04:53,240 Speaker 1: from the Chinese for infrastructure. And the question is, here's 84 00:04:53,240 --> 00:04:56,400 Speaker 1: an economy that's in deep trouble. They have a new UH, 85 00:04:56,520 --> 00:05:00,360 Speaker 1: they have a new elected government UH him were in 86 00:05:00,480 --> 00:05:03,479 Speaker 1: Khan and he's facing the idea of how he's going 87 00:05:03,560 --> 00:05:05,960 Speaker 1: to be able to deal with his economy, which is 88 00:05:06,040 --> 00:05:08,680 Speaker 1: basically run out of reserves. The logical things you go 89 00:05:08,720 --> 00:05:11,680 Speaker 1: to the International Monetary FONT, which we're the largest shareholder, 90 00:05:11,920 --> 00:05:14,640 Speaker 1: and you ask for a bailout, just like Argentina got 91 00:05:14,640 --> 00:05:17,320 Speaker 1: a fifty billion dollar bailout a couple of months ago, 92 00:05:18,040 --> 00:05:20,159 Speaker 1: and Turkey may have to get one going forward. And 93 00:05:20,200 --> 00:05:23,520 Speaker 1: the question is does the United States want the I 94 00:05:23,760 --> 00:05:27,559 Speaker 1: m F and other institutions, the World Bank, the Breton 95 00:05:27,600 --> 00:05:31,400 Speaker 1: Woods institutions to be bailing out these clients of the 96 00:05:31,440 --> 00:05:34,400 Speaker 1: One Belt, One Road for China. And the answer is 97 00:05:34,480 --> 00:05:38,120 Speaker 1: I don't think so. Bill Rhodes, let's continue. Let you 98 00:05:38,200 --> 00:05:40,760 Speaker 1: continue on China because you want to make note of 99 00:05:40,760 --> 00:05:45,120 Speaker 1: a change in the disposition of the Chinese economy. Right. 100 00:05:45,240 --> 00:05:47,600 Speaker 1: I think most people grew up with the idea that 101 00:05:47,720 --> 00:05:51,919 Speaker 1: China was was really very dependent on their exports. But 102 00:05:52,000 --> 00:05:54,880 Speaker 1: the truth is five years ago, fifty percent of the 103 00:05:54,880 --> 00:05:59,000 Speaker 1: economy was based on exports. Today, the latest figures I 104 00:05:59,040 --> 00:06:02,400 Speaker 1: saw a couple of months go. Uh at seventy seven 105 00:06:02,480 --> 00:06:06,320 Speaker 1: point eight percent is domestic consumption. So they feel that 106 00:06:06,400 --> 00:06:08,599 Speaker 1: they are in a stronger position than they would have 107 00:06:08,600 --> 00:06:11,520 Speaker 1: been a few years ago. Uh, we'll see what happens, 108 00:06:11,800 --> 00:06:14,039 Speaker 1: because as I mentioned, they still have those problems with 109 00:06:14,120 --> 00:06:17,400 Speaker 1: their domestic economy in the sense of debt to GDP 110 00:06:17,760 --> 00:06:21,880 Speaker 1: and reorganizing state owned enterprise at etcetera. Let's hope this 111 00:06:21,880 --> 00:06:24,080 Speaker 1: thing gets settled in the next six months or so, 112 00:06:24,800 --> 00:06:27,800 Speaker 1: because we're already talking you know, figures that get into 113 00:06:28,320 --> 00:06:31,320 Speaker 1: uh fifty billion, we're talking then we're talking about a 114 00:06:31,360 --> 00:06:36,040 Speaker 1: hundred billion, and then two billion and etcetera. And President 115 00:06:36,040 --> 00:06:38,080 Speaker 1: Trump said the other day that necessary, he'll go to 116 00:06:38,120 --> 00:06:40,719 Speaker 1: five hundred billion, which means we won't we won't take 117 00:06:40,720 --> 00:06:44,520 Speaker 1: any Chinese exports. So we'll see how that works itself out. 118 00:06:45,320 --> 00:06:48,480 Speaker 1: I want you to just continue your thought that links 119 00:06:48,760 --> 00:06:54,480 Speaker 1: China the International Monetary Fund and countries that request money 120 00:06:54,880 --> 00:06:58,320 Speaker 1: from the International Monetary Fund, and I want to bring 121 00:06:58,320 --> 00:07:02,280 Speaker 1: in Turkey. Tell us what you believe is going on. Well, 122 00:07:02,320 --> 00:07:06,359 Speaker 1: Ankin In the case of Turkey, Uh, they are in 123 00:07:06,400 --> 00:07:09,600 Speaker 1: a very difficult spot, which they've been in before. I 124 00:07:09,680 --> 00:07:14,240 Speaker 1: helped them work their way out of problems when they 125 00:07:14,320 --> 00:07:19,840 Speaker 1: had their first and only female premier, Gennesu Chili. UH 126 00:07:19,880 --> 00:07:22,760 Speaker 1: to get an agreement with the International Monetary Fund, because 127 00:07:23,080 --> 00:07:26,720 Speaker 1: in the case of Turkey, the tendency is they borrow 128 00:07:27,280 --> 00:07:31,120 Speaker 1: short term in dollars, both the banking system and the 129 00:07:31,160 --> 00:07:34,920 Speaker 1: private sector. It's not so much the sovereign. And any 130 00:07:35,000 --> 00:07:39,880 Speaker 1: time they there's a problem of confidence, UH, these lines 131 00:07:39,920 --> 00:07:42,640 Speaker 1: are withdrawn and they leave them high and dry. The 132 00:07:42,680 --> 00:07:47,280 Speaker 1: worst crisis was two thousand one. Uh and UH. They 133 00:07:47,320 --> 00:07:50,000 Speaker 1: were very fortunate because Turkey at the time put in 134 00:07:50,520 --> 00:07:52,680 Speaker 1: Kamal Dervish, who had been a vice president of the 135 00:07:52,680 --> 00:07:55,600 Speaker 1: World Bank, who was a first rate economist and knew 136 00:07:55,600 --> 00:07:59,800 Speaker 1: how to get things done. But we had a new 137 00:07:59,840 --> 00:08:04,560 Speaker 1: government with the Bush administration. Uh and uh. We had 138 00:08:05,000 --> 00:08:11,600 Speaker 1: a new Secretary of the Treasury O'Neill, who felt that 139 00:08:12,680 --> 00:08:16,080 Speaker 1: countries that had problems to just go bankrupt and they 140 00:08:16,080 --> 00:08:20,000 Speaker 1: should not be bailed out. And he uh in discussions 141 00:08:20,000 --> 00:08:21,640 Speaker 1: I had when he said, you know, Bill, if if 142 00:08:21,680 --> 00:08:24,720 Speaker 1: I were there when Mexico and Argentina had their problems, 143 00:08:25,040 --> 00:08:27,200 Speaker 1: I would have just told him to go get to 144 00:08:27,280 --> 00:08:30,520 Speaker 1: go into bankruptcy like we have to in the in 145 00:08:30,560 --> 00:08:34,520 Speaker 1: the business sector. He was from Alcoa O'Neill exactly into 146 00:08:34,600 --> 00:08:39,880 Speaker 1: the UH as we do in the private sector. Anyway, 147 00:08:40,040 --> 00:08:44,280 Speaker 1: the the head of the International Monetary Fund at the time, 148 00:08:44,320 --> 00:08:48,120 Speaker 1: Horse Kohler, came to me because he couldn't get a 149 00:08:48,280 --> 00:08:54,080 Speaker 1: meeting with with O'Neill with Paul, because Paul said, you know, 150 00:08:54,160 --> 00:08:56,040 Speaker 1: he's just gonna come here and ask for us to 151 00:08:56,080 --> 00:09:01,800 Speaker 1: support these bailouts. And UH. What I pointed out uh 152 00:09:02,000 --> 00:09:04,600 Speaker 1: to UH to Paul was I thought in Turkey who 153 00:09:04,600 --> 00:09:08,520 Speaker 1: had a new government, a new UH finance minister, World 154 00:09:08,520 --> 00:09:11,160 Speaker 1: Bank trained, and he was prepared to take the tough 155 00:09:11,240 --> 00:09:14,640 Speaker 1: steps to rationalize the economy before the I m F 156 00:09:15,000 --> 00:09:18,840 Speaker 1: put one diamond there. And so the point was if 157 00:09:18,880 --> 00:09:22,400 Speaker 1: they didn't carry forth the reforms that were promised by 158 00:09:22,440 --> 00:09:25,040 Speaker 1: the government at the time, the Yes of It government 159 00:09:25,120 --> 00:09:29,080 Speaker 1: and particularly Kamal Dervish, then the Fund promised it wouldn't 160 00:09:29,520 --> 00:09:32,120 Speaker 1: it wouldn't give any money. So this has worked up 161 00:09:32,120 --> 00:09:36,760 Speaker 1: to bring these reforms forward before any money was dispersed. 162 00:09:36,840 --> 00:09:40,520 Speaker 1: And so I acted as a Meeka's korey I entry 163 00:09:40,600 --> 00:09:44,960 Speaker 1: between Turkey, the International Monetary Fund and the U. S. Treasury. 164 00:09:45,480 --> 00:09:48,520 Speaker 1: Fortunately it worked out and for many years Turkey had 165 00:09:48,559 --> 00:09:50,920 Speaker 1: a booming economy. But the one thing they didn't resolve 166 00:09:51,000 --> 00:09:53,600 Speaker 1: when she is getting at them again is all of 167 00:09:53,640 --> 00:09:57,640 Speaker 1: this borrowing in foreign currency by the private sector and 168 00:09:57,679 --> 00:10:00,240 Speaker 1: a lot of a short term and the banking sect there. 169 00:10:00,520 --> 00:10:02,520 Speaker 1: And so when you have a loss of confidences what 170 00:10:02,720 --> 00:10:08,280 Speaker 1: you have now because uh, the financial community uh both 171 00:10:08,520 --> 00:10:12,480 Speaker 1: I think, primarily internationally but even somewhat domestically, is very 172 00:10:12,480 --> 00:10:17,079 Speaker 1: concerned about the economic policies of President Urvan, who was 173 00:10:17,160 --> 00:10:19,920 Speaker 1: just re elected as the strongest head of state since 174 00:10:20,000 --> 00:10:22,600 Speaker 1: Kamal out of Turk when the when the modern Turkish 175 00:10:22,640 --> 00:10:25,400 Speaker 1: Republic was founded. Do you believe that Turkey will get 176 00:10:25,600 --> 00:10:30,440 Speaker 1: money from the International Monetary Fund? Uh? First of all, 177 00:10:30,480 --> 00:10:32,400 Speaker 1: I have to ask for it what they may be 178 00:10:32,480 --> 00:10:35,600 Speaker 1: forced to, just like Argentina, because just take a look, 179 00:10:35,679 --> 00:10:38,520 Speaker 1: they announced, uh, three three or four months ago to 180 00:10:38,600 --> 00:10:41,240 Speaker 1: inflation wouldn't get more than seven or eight percent. It's 181 00:10:41,240 --> 00:10:45,640 Speaker 1: already the sixteen percent run and growing. Uh. And Uh, 182 00:10:45,800 --> 00:10:50,200 Speaker 1: the the currency has depreciated almost thirty percent in the 183 00:10:50,559 --> 00:10:54,480 Speaker 1: since since May, and so I think the uh, the 184 00:10:54,520 --> 00:10:58,400 Speaker 1: whole economy is under siege. And of course President Van 185 00:10:58,480 --> 00:11:01,160 Speaker 1: says the way to cure inflation and is to just 186 00:11:01,679 --> 00:11:04,640 Speaker 1: keep interest rate slow. Well, you keep interest rate slow 187 00:11:04,679 --> 00:11:07,240 Speaker 1: and the central bank doesn't intervene to support the currency 188 00:11:07,679 --> 00:11:10,600 Speaker 1: or wit or raise its rates. Uh, people are just 189 00:11:10,640 --> 00:11:13,720 Speaker 1: gonna pull even more. And so I think they're caught 190 00:11:13,760 --> 00:11:16,640 Speaker 1: in a real bind. And so there are two possibilities. 191 00:11:16,640 --> 00:11:20,839 Speaker 1: One they put on capital controls, which I think would 192 00:11:20,880 --> 00:11:26,559 Speaker 1: be the wrong signal. Second, they start pushing through the reforms, 193 00:11:26,600 --> 00:11:30,959 Speaker 1: including let letting the central bank raise interest rates, uh, 194 00:11:31,000 --> 00:11:34,240 Speaker 1: you know, to kill this inflationary spiral they're in. Or 195 00:11:35,040 --> 00:11:38,680 Speaker 1: the third thing is they go to the International Monetary Fund, 196 00:11:39,000 --> 00:11:43,120 Speaker 1: which would you know, insist that they that they start 197 00:11:43,200 --> 00:11:48,520 Speaker 1: fighting inflation and make other reforms they're necessary. Fortunately or unfortunately, 198 00:11:48,920 --> 00:11:52,160 Speaker 1: Van has put his son in law as the Treasury 199 00:11:52,240 --> 00:11:55,920 Speaker 1: and Economic Minister, and so people are concerned that you 200 00:11:55,960 --> 00:12:00,240 Speaker 1: won't have an independent authority running the economics out of 201 00:12:00,280 --> 00:12:03,079 Speaker 1: his administration. So there's a lot of lack of confidence. 202 00:12:03,080 --> 00:12:04,560 Speaker 1: So I think what you need to do is to 203 00:12:04,600 --> 00:12:07,640 Speaker 1: have this government do what the past two governments that 204 00:12:07,760 --> 00:12:10,480 Speaker 1: I met when they were last under crisis where I 205 00:12:10,480 --> 00:12:14,400 Speaker 1: worked in two thousand one, to take these reforms and 206 00:12:14,400 --> 00:12:17,400 Speaker 1: if necessary, go to the I m F for a 207 00:12:17,440 --> 00:12:21,000 Speaker 1: standby line. What they should not do U would be 208 00:12:21,800 --> 00:12:24,520 Speaker 1: to slap on capital controls because I think that would 209 00:12:24,600 --> 00:12:27,640 Speaker 1: just exacerbate the lack of confidence that already is existing. 210 00:12:28,600 --> 00:12:30,400 Speaker 1: I want to give you twenty seconds, and I know 211 00:12:30,480 --> 00:12:35,680 Speaker 1: it's tough. Pick one thing that you're doing now that 212 00:12:35,760 --> 00:12:42,080 Speaker 1: you're supporting that is outside of the banking arena. Well, unfortunately, 213 00:12:42,080 --> 00:12:46,400 Speaker 1: my beautiful wife Louise died two years ago of khalio blastoma. 214 00:12:47,200 --> 00:12:50,480 Speaker 1: Uh and uh, you know Louise, and we battled it 215 00:12:50,520 --> 00:12:54,680 Speaker 1: for two years. And so I've set up a center 216 00:12:54,720 --> 00:12:57,800 Speaker 1: a New York Presbyterian Hospital to fight this terrible disease, 217 00:12:57,840 --> 00:13:00,320 Speaker 1: the first in the world. There are many the many 218 00:13:01,120 --> 00:13:04,160 Speaker 1: hospitals that have centers for neurology, but not one for 219 00:13:04,320 --> 00:13:06,800 Speaker 1: just glob blostoma. So I spend a lot of time 220 00:13:06,800 --> 00:13:10,840 Speaker 1: on that. Thanks very much. Bill Rhodes, President, Chief Executive, 221 00:13:11,000 --> 00:13:15,120 Speaker 1: William R. Rhodes, Global Advisors, author of Banker to the World. 222 00:13:18,440 --> 00:13:20,520 Speaker 1: One of the deals today that has gone bad is 223 00:13:20,559 --> 00:13:26,000 Speaker 1: Sinclair Broadcasting's bid to become a nationwide operators collapsed as 224 00:13:26,080 --> 00:13:29,760 Speaker 1: Tribune Media withdrew from the plan merger, and it's actually 225 00:13:29,840 --> 00:13:33,520 Speaker 1: suing for a billion dollars in Delaware courts here to 226 00:13:33,640 --> 00:13:36,480 Speaker 1: tell us more about these two media giants. As Porter 227 00:13:36,559 --> 00:13:40,440 Speaker 1: bib managing partner for Media Tech Capital Partners, he joins 228 00:13:40,480 --> 00:13:43,240 Speaker 1: us here in our eleven Trio Studios, Porter, a pleasure 229 00:13:43,280 --> 00:13:45,360 Speaker 1: as always to have you. I'm just gonna let you 230 00:13:45,480 --> 00:13:48,080 Speaker 1: run on these topics because there are so many of them. 231 00:13:48,120 --> 00:13:52,520 Speaker 1: We've got to get through Sinclair Broadcasting and Tribune Media. 232 00:13:52,600 --> 00:13:56,400 Speaker 1: What happened and why? Well, there there are two levels 233 00:13:56,440 --> 00:13:59,360 Speaker 1: to this story, or at least to the explanation of 234 00:13:59,440 --> 00:14:05,000 Speaker 1: why Tribune pulled out. Basically, the FCC under Agit Pay 235 00:14:05,320 --> 00:14:08,600 Speaker 1: wasn't going to approve the consolidation of Tribune and Trip 236 00:14:08,720 --> 00:14:13,240 Speaker 1: in Sinclair to which would have created the nation's largest 237 00:14:13,360 --> 00:14:19,040 Speaker 1: television station network, primarily because Sinclair had been very open 238 00:14:19,080 --> 00:14:26,520 Speaker 1: about wanting to compete as a radical conservative network going 239 00:14:26,640 --> 00:14:31,400 Speaker 1: head to head with Fox News m Nobody knows why 240 00:14:31,640 --> 00:14:35,160 Speaker 1: Mr Pay changed his mind, because he's been very pro 241 00:14:35,280 --> 00:14:40,400 Speaker 1: business and no interference from all of the other major 242 00:14:40,520 --> 00:14:43,400 Speaker 1: consolidations that he's had to oversee in his tenure as 243 00:14:43,480 --> 00:14:47,400 Speaker 1: a chairman of the FCC. It's possible that somebody at 244 00:14:47,440 --> 00:14:51,120 Speaker 1: the Justice Department persuaded him to look hard at the 245 00:14:51,160 --> 00:14:55,840 Speaker 1: Sinclair consolidation. Uh, since they are appealing the Time owner 246 00:14:56,040 --> 00:15:00,120 Speaker 1: a T and T combination and I don't think are 247 00:15:00,120 --> 00:15:02,240 Speaker 1: going to get anywhere. But that seems to be the 248 00:15:02,320 --> 00:15:06,440 Speaker 1: sense that the government is taking on large media combinations. 249 00:15:06,840 --> 00:15:11,400 Speaker 1: Is print media dead? Print media is another story altogether, 250 00:15:11,480 --> 00:15:17,600 Speaker 1: because we've had another broken deal. Uh this morning. UH Trunk, 251 00:15:17,680 --> 00:15:22,560 Speaker 1: which owns the major tribune newspapers in UH seven major 252 00:15:22,680 --> 00:15:27,240 Speaker 1: metropolitan areas walked away from a deal that would have 253 00:15:27,760 --> 00:15:31,360 Speaker 1: put uh those newspapers in the hands of a private 254 00:15:31,400 --> 00:15:36,600 Speaker 1: equity company. Um. There there really is no explanation other 255 00:15:36,640 --> 00:15:39,479 Speaker 1: than the fact that financing for that for that transaction 256 00:15:39,600 --> 00:15:42,840 Speaker 1: was that the statement was that it was impossible to complete. 257 00:15:42,840 --> 00:15:46,640 Speaker 1: So they both parties walked away. Um, somebody is going 258 00:15:46,640 --> 00:15:50,120 Speaker 1: to get those newspapers because, Uh, the l A Times 259 00:15:50,160 --> 00:15:53,560 Speaker 1: new owner has shown what can happen when you put 260 00:15:53,600 --> 00:15:57,080 Speaker 1: an enlightened management and and get the community behind the 261 00:15:57,080 --> 00:16:00,800 Speaker 1: paper and respect the fact that journalists, whether they're in 262 00:16:00,960 --> 00:16:04,720 Speaker 1: print or on the Internet, are vital asset to the 263 00:16:04,720 --> 00:16:07,840 Speaker 1: community and hardly the enemy of the people. Uh. He's 264 00:16:07,880 --> 00:16:10,920 Speaker 1: making a real goal of the l A. Times. He 265 00:16:11,040 --> 00:16:15,160 Speaker 1: brought Norman Pearlstein in one of the most UH experienced 266 00:16:15,240 --> 00:16:19,840 Speaker 1: and capable and proven UH newspaper and editorial managers in 267 00:16:19,880 --> 00:16:22,840 Speaker 1: the country. Um, and he's going to start making profit 268 00:16:22,920 --> 00:16:26,560 Speaker 1: in the next twelve eighteen months from a paid paper. 269 00:16:26,640 --> 00:16:30,320 Speaker 1: That Trunk when they owned it, had decimated both the 270 00:16:30,360 --> 00:16:35,280 Speaker 1: newsroom and the business side of UH that that company. Um, 271 00:16:35,360 --> 00:16:39,040 Speaker 1: you're going to see more and more enlightened ownership. The 272 00:16:39,040 --> 00:16:42,520 Speaker 1: New York Times today reported twenty four million dollars profit, 273 00:16:43,000 --> 00:16:48,160 Speaker 1: but primarily from their digital side. Um. Jeff Bezos owns 274 00:16:48,200 --> 00:16:52,480 Speaker 1: The Washington Post and he's had eight consecutive quarters of profitability, 275 00:16:52,880 --> 00:16:56,720 Speaker 1: and those demonstrate that print is not dead. But it 276 00:16:56,840 --> 00:17:00,400 Speaker 1: depends on who is owning the print to keep alive. 277 00:17:01,640 --> 00:17:05,600 Speaker 1: Fox and Disney cy Fox and the Walt Disney Company. 278 00:17:05,640 --> 00:17:08,520 Speaker 1: And then you've got to mix in, of course, Comcast 279 00:17:08,800 --> 00:17:14,160 Speaker 1: and Sky Broadcasting. Well, that's right now. Fox owns thirty 280 00:17:14,240 --> 00:17:18,520 Speaker 1: nine percent of Sky. Sky is the holy Grail, according 281 00:17:18,560 --> 00:17:24,200 Speaker 1: to Bob Iger, he needs it to finish taking ESPN globally. 282 00:17:25,040 --> 00:17:28,840 Speaker 1: ESPN has lost its franchise in or let's say it's 283 00:17:28,880 --> 00:17:32,760 Speaker 1: losing it rapidly in the cable industry. Domestically, it has 284 00:17:32,840 --> 00:17:37,719 Speaker 1: virtually no revenue generation outside the US. If he can 285 00:17:37,760 --> 00:17:41,520 Speaker 1: acquire the rest of Sky for Disney, he can take 286 00:17:42,160 --> 00:17:45,439 Speaker 1: ESPN global, and he can add Sky Sports rights. They 287 00:17:45,480 --> 00:17:49,240 Speaker 1: own the rights to the Premier League soccer, the Formula 288 00:17:49,280 --> 00:17:52,399 Speaker 1: One racing, and a whole slew of other European major 289 00:17:52,480 --> 00:17:56,680 Speaker 1: sports right so it's really important for him to do it. Yesterday, 290 00:17:57,040 --> 00:18:01,119 Speaker 1: the UK regulators gave bob Iger a big step forward 291 00:18:01,240 --> 00:18:05,040 Speaker 1: to complete the transaction of taking control of Sky. They 292 00:18:05,080 --> 00:18:09,679 Speaker 1: said Fox does not have to go for a percent. 293 00:18:09,840 --> 00:18:11,960 Speaker 1: They they have thirty nine and all they have to 294 00:18:11,960 --> 00:18:14,840 Speaker 1: do is get to fifty one and bid for that. 295 00:18:14,960 --> 00:18:17,840 Speaker 1: And if they do, which they will, they will have 296 00:18:17,920 --> 00:18:20,040 Speaker 1: to pay up a little bit, but not anything like 297 00:18:20,119 --> 00:18:22,800 Speaker 1: the thirty five or thirty six billion dollars that it 298 00:18:22,840 --> 00:18:24,720 Speaker 1: would cost them if they had to buy the whole 299 00:18:24,760 --> 00:18:29,399 Speaker 1: of Sky. Then Disney gets it and puts ESPN around 300 00:18:29,440 --> 00:18:34,000 Speaker 1: the world. The odd irony of that whole situation is 301 00:18:34,040 --> 00:18:39,760 Speaker 1: that Brian Roberts keeps getting whacked by Bob Iger. Uh 302 00:18:40,000 --> 00:18:43,520 Speaker 1: eight ten years ago when he tried to take over Disney, 303 00:18:43,680 --> 00:18:46,879 Speaker 1: Bob Iger was not happy. They've been at each other's 304 00:18:46,960 --> 00:18:50,320 Speaker 1: throats ever since, and Sky is going to be another 305 00:18:50,359 --> 00:18:53,160 Speaker 1: loss for Roberts. But there's one more yet to come, 306 00:18:53,200 --> 00:18:57,000 Speaker 1: and that's Hulu. Uh. Disney now owned sixty of Hulu. 307 00:18:57,200 --> 00:19:01,760 Speaker 1: Comcast hast uh isn he can squeeze them out if 308 00:19:01,760 --> 00:19:03,680 Speaker 1: they want. And it's going to be a sad day 309 00:19:03,720 --> 00:19:06,199 Speaker 1: for Mr. Roberts because there's not much he can do 310 00:19:06,280 --> 00:19:14,320 Speaker 1: about that. Another topic, Viacom and CBS. UH. I think 311 00:19:14,359 --> 00:19:19,720 Speaker 1: the easiest way to summarize that situation is Sherry wins Um. 312 00:19:19,760 --> 00:19:23,600 Speaker 1: It's going to be a long bitter struggle for less Moonviz. 313 00:19:23,720 --> 00:19:27,600 Speaker 1: But uh, he is suing her in the Delaware Chance record. 314 00:19:27,640 --> 00:19:29,920 Speaker 1: He's going to lose that battle. He's trying to reduce 315 00:19:30,240 --> 00:19:33,800 Speaker 1: her control of eighty percent of devoting shares to twenty 316 00:19:34,320 --> 00:19:38,399 Speaker 1: or less. Uh. He's not gonna prevail there. But more importantly, 317 00:19:38,960 --> 00:19:41,000 Speaker 1: I don't think he's going to prevail at CBS. I 318 00:19:41,000 --> 00:19:46,040 Speaker 1: think less Moonvius Uh, at some point when the outside 319 00:19:46,160 --> 00:19:50,359 Speaker 1: legal investigations are concluded. Uh, First, Jeff Figure is going 320 00:19:50,400 --> 00:19:53,520 Speaker 1: to go from CBS News. He's actually already said he's 321 00:19:53,560 --> 00:19:58,080 Speaker 1: not returning from his vacation quite yet. I think less 322 00:19:58,119 --> 00:20:01,320 Speaker 1: Moonvius will take the money in and then Sherry will 323 00:20:01,320 --> 00:20:05,720 Speaker 1: combine veh COOM and CBS seldom probably the Verizon, which 324 00:20:05,840 --> 00:20:09,639 Speaker 1: is very interested, and be done with it all right. 325 00:20:10,119 --> 00:20:14,160 Speaker 1: This is not necessarily media, but it's sure has grabbed 326 00:20:14,400 --> 00:20:21,399 Speaker 1: media attention around the world. Elon Muska, how can you 327 00:20:21,560 --> 00:20:24,200 Speaker 1: do what Elon Musk did and stay out of jail 328 00:20:24,400 --> 00:20:27,280 Speaker 1: or at least stay out of being banned from the 329 00:20:27,359 --> 00:20:33,200 Speaker 1: securities industry by the SEC. The toothless sec has done nothing. 330 00:20:33,680 --> 00:20:37,959 Speaker 1: They're already a half dozen class action suits being organized 331 00:20:38,000 --> 00:20:42,280 Speaker 1: by some of the aggressive litigators against Elon and Tesla 332 00:20:42,640 --> 00:20:46,639 Speaker 1: for his failure to identify the financing source that he 333 00:20:46,720 --> 00:20:50,000 Speaker 1: said he had lined up to take Tesla private. It's 334 00:20:50,040 --> 00:20:53,520 Speaker 1: outrageous that he can play the stock market that way. 335 00:20:53,520 --> 00:20:57,760 Speaker 1: But my senses, he was so moved by the shorts 336 00:20:58,040 --> 00:21:00,800 Speaker 1: that he had to take vengeance and he got it. 337 00:21:01,520 --> 00:21:05,040 Speaker 1: As always, Thank you very much. Porter bib managing partner 338 00:21:05,320 --> 00:21:10,239 Speaker 1: Media Tech Capital Partners on the swirl of media and 339 00:21:10,400 --> 00:21:19,520 Speaker 1: headlines in the news A confrontation between Canada and not 340 00:21:19,720 --> 00:21:23,879 Speaker 1: the United States, between Canada and Saudi Arabia. Here to 341 00:21:23,960 --> 00:21:27,439 Speaker 1: tell us about this feud and its implications is Paul 342 00:21:27,600 --> 00:21:30,600 Speaker 1: we Be. He is a research fellow at the Daniel 343 00:21:30,640 --> 00:21:34,280 Speaker 1: Morgan Graduate School of National Security in Washington, d C. 344 00:21:34,760 --> 00:21:37,280 Speaker 1: He is also the former vice president of the Liberal 345 00:21:37,320 --> 00:21:42,000 Speaker 1: Party of Canada under the Prime ministership of Pierre Elliott Trudeau. 346 00:21:42,119 --> 00:21:44,040 Speaker 1: Paul we Be, thank you very much for being here. 347 00:21:44,320 --> 00:21:47,360 Speaker 1: Can you outline for us what you believe to be 348 00:21:47,440 --> 00:21:52,679 Speaker 1: the ultimate issue that exists between Canada and Saudi Arabia 349 00:21:52,800 --> 00:21:57,840 Speaker 1: and why good morning, Pin And you're absolutely correct. It's 350 00:21:57,920 --> 00:22:03,040 Speaker 1: high noon between Saudi Arabia and Canada. Totally unexpected, but 351 00:22:03,840 --> 00:22:07,360 Speaker 1: high drama indeed, and one of the two is going 352 00:22:07,400 --> 00:22:11,199 Speaker 1: to have to blink. So the genesis of all this is, 353 00:22:12,080 --> 00:22:14,960 Speaker 1: I'm sure much of your audience knows, is a tweet 354 00:22:15,040 --> 00:22:17,640 Speaker 1: that was sent out UH at the end of last 355 00:22:17,640 --> 00:22:22,040 Speaker 1: week by the Canadian Foreign Minister demanding that human rights 356 00:22:22,080 --> 00:22:25,120 Speaker 1: activists in Saudi Arabia who were recently arrested be released. 357 00:22:26,200 --> 00:22:29,879 Speaker 1: So the Saaluadis reacted and reacted in a way that 358 00:22:30,040 --> 00:22:34,600 Speaker 1: was totally unanticipated by the markets or or by the 359 00:22:34,600 --> 00:22:37,680 Speaker 1: government's Canada. And I've taken a whole series of actions, 360 00:22:38,160 --> 00:22:42,439 Speaker 1: really Druyconian measures in fact and um and they've placed 361 00:22:42,440 --> 00:22:49,760 Speaker 1: in jeopardy a some major major trade UM agreements between 362 00:22:49,840 --> 00:22:54,800 Speaker 1: Canada and Saudi Arabia. So where do we stand right now? 363 00:22:55,720 --> 00:23:01,320 Speaker 1: We stand um, We're looking at a Canadian government that 364 00:23:01,520 --> 00:23:05,439 Speaker 1: does not have any support from its traditional allies like 365 00:23:05,480 --> 00:23:09,040 Speaker 1: the US, the UK, and the EU. The Canadians are 366 00:23:09,119 --> 00:23:13,240 Speaker 1: up there twisting in the wind, and they've taken a 367 00:23:13,240 --> 00:23:17,600 Speaker 1: lot of body blows from the Saudis, including UH, the 368 00:23:17,680 --> 00:23:22,399 Speaker 1: Sally's selling off of assets, stopping airline flights between two countries, 369 00:23:22,960 --> 00:23:30,080 Speaker 1: pulling out twelve thousand students from Canada, UH, cessation of 370 00:23:30,160 --> 00:23:33,080 Speaker 1: the sale of wheat and barley, large volumes of those 371 00:23:33,359 --> 00:23:39,560 Speaker 1: commodities being shut down. And the major issue here is 372 00:23:39,720 --> 00:23:45,040 Speaker 1: a fourteen billion dollar arms deal between Canada and Saudi Arabia, 373 00:23:45,080 --> 00:23:49,720 Speaker 1: which I believe is in jeopardy because yesterday my Saudi 374 00:23:49,800 --> 00:23:54,840 Speaker 1: foreign minister, Minister Al Jebar said there's nothing to mediate. 375 00:23:55,160 --> 00:23:58,240 Speaker 1: A mistake has been made and should be corrected, and 376 00:23:58,280 --> 00:24:04,160 Speaker 1: if it's not corrected, the Kingdom will consider additional measures 377 00:24:04,240 --> 00:24:08,720 Speaker 1: against Canada. That's pretty ominous, you know. So I think 378 00:24:08,840 --> 00:24:12,600 Speaker 1: there's a lot here between the two countries, and I 379 00:24:12,640 --> 00:24:16,680 Speaker 1: think the Canadians may have blinked this morning because they're 380 00:24:16,720 --> 00:24:20,480 Speaker 1: reaching out to the Emiratis. You a to try and 381 00:24:20,680 --> 00:24:23,359 Speaker 1: back channel into suth Arabian and find a way to 382 00:24:24,000 --> 00:24:28,080 Speaker 1: cool things down. Do you believe that the leadership of 383 00:24:28,240 --> 00:24:31,440 Speaker 1: Canada in the Prime Minister Trudeau, do you believe that 384 00:24:32,280 --> 00:24:36,199 Speaker 1: he expected this to happen? No, I don't believe it. 385 00:24:36,480 --> 00:24:40,640 Speaker 1: And here here is where I think there is criticism 386 00:24:40,800 --> 00:24:46,240 Speaker 1: warranted of the tweet that the foreign ministers sent on 387 00:24:46,320 --> 00:24:53,280 Speaker 1: uh Friday. Um what she was the Foreign minister of Canada, 388 00:24:53,960 --> 00:24:57,520 Speaker 1: none of the foreign minister I beg your pardon, right, Okay, Yes, 389 00:24:57,560 --> 00:25:00,600 Speaker 1: the foreign ministers sent out the tweet. And here's the issue, Uh, 390 00:25:00,800 --> 00:25:04,560 Speaker 1: the tweet. It was a clear manifestation or expression of 391 00:25:04,600 --> 00:25:10,280 Speaker 1: an overt values driven foreign policy, which when you're dealing 392 00:25:10,280 --> 00:25:13,080 Speaker 1: with the Kingdom of Saudi Arabia, could lead to disaster. 393 00:25:13,160 --> 00:25:16,040 Speaker 1: In this case, it has led to the disaster. The 394 00:25:16,040 --> 00:25:19,720 Speaker 1: the operational word is over it. You can have a 395 00:25:20,200 --> 00:25:24,840 Speaker 1: value of driven foreign policy, but when dealing with sau 396 00:25:24,880 --> 00:25:28,680 Speaker 1: Arabia in particular, one has to be discreete. One has 397 00:25:28,680 --> 00:25:31,760 Speaker 1: to engage in diplomatic dialogue work behind the scenes. In 398 00:25:31,760 --> 00:25:34,159 Speaker 1: this case that wasn't done. So I think you know, 399 00:25:34,240 --> 00:25:38,320 Speaker 1: why do you have any idea why why the tweet 400 00:25:38,400 --> 00:25:40,880 Speaker 1: was sent out? Yeah, why was this done in public? 401 00:25:40,920 --> 00:25:44,680 Speaker 1: I mean, isn't there a tradition of back channel, behind 402 00:25:44,760 --> 00:25:49,040 Speaker 1: the scenes foreign policy discussion If you have a problem, absolutely, 403 00:25:49,240 --> 00:25:53,320 Speaker 1: Uh then I worked with the Canadian embassy in Beirut. 404 00:25:53,760 --> 00:25:57,639 Speaker 1: These guys are, you know, uh, top tier professionals. They 405 00:25:57,840 --> 00:25:59,520 Speaker 1: know how to back channel and they know how to 406 00:25:59,600 --> 00:26:03,520 Speaker 1: engage quiet and effective diplomas. You have the utmost regard 407 00:26:03,520 --> 00:26:08,080 Speaker 1: for the Canayan Foreign ministry um and their diplomat um. 408 00:26:08,119 --> 00:26:11,240 Speaker 1: But in this case, I think the Foreign Minister, possibly 409 00:26:11,280 --> 00:26:14,160 Speaker 1: because of a lack of experience, uh in that part 410 00:26:14,200 --> 00:26:17,879 Speaker 1: of the world, sent out this this tweet and the 411 00:26:17,960 --> 00:26:21,480 Speaker 1: Saladia's reacted and you could have predicted that reaction in fact. 412 00:26:22,040 --> 00:26:26,719 Speaker 1: Uh So, having this sort of overt foreign policy using tweets, now, 413 00:26:26,760 --> 00:26:28,800 Speaker 1: you can get away with it if you're Donald Trump, 414 00:26:28,840 --> 00:26:30,919 Speaker 1: if you're in the United States, or if you're a 415 00:26:30,960 --> 00:26:34,320 Speaker 1: major power like Russia or China. But when you're a 416 00:26:34,320 --> 00:26:37,960 Speaker 1: middle range power like Canada, no, you cannot be as 417 00:26:37,960 --> 00:26:41,359 Speaker 1: an overt and in your face with values driven type 418 00:26:41,359 --> 00:26:44,480 Speaker 1: of foreign policy. All right, So if the Foreign Ministry, 419 00:26:44,760 --> 00:26:47,440 Speaker 1: the Foreign Minister of Canada, if you get a call 420 00:26:47,600 --> 00:26:50,000 Speaker 1: from maybe even the Prime Minister's office, and they say, 421 00:26:50,040 --> 00:26:53,080 Speaker 1: Paul we Be, what should we do now? What would 422 00:26:53,080 --> 00:26:58,760 Speaker 1: you say? Well, Uh, I would I would engage in 423 00:26:59,240 --> 00:27:03,920 Speaker 1: uh media discussions between the Prime Minister and the Crown 424 00:27:03,920 --> 00:27:07,720 Speaker 1: Prince Mohammed bin Salmon, who's decision maker in in this 425 00:27:08,080 --> 00:27:13,680 Speaker 1: particular area, and I would indicate to the Crown Prince 426 00:27:14,119 --> 00:27:16,560 Speaker 1: that we Canadians. You know, we believe in our values. 427 00:27:16,640 --> 00:27:19,119 Speaker 1: We believe in the release of human rights activists. But 428 00:27:19,200 --> 00:27:21,960 Speaker 1: we're not going to embarrass you publicly. We're not going 429 00:27:22,040 --> 00:27:27,120 Speaker 1: to uh dictate how you run your own domestic issues, 430 00:27:27,960 --> 00:27:30,480 Speaker 1: and UH we're going to look for a way to 431 00:27:30,480 --> 00:27:35,280 Speaker 1: climb down from from this uh confrontation. We cherish a 432 00:27:35,320 --> 00:27:39,320 Speaker 1: good relationship with Saudi Arabia, but we also cherished democratic values. 433 00:27:39,320 --> 00:27:42,640 Speaker 1: But this sort of thing, UH diplomacy by tweet will 434 00:27:42,640 --> 00:27:45,399 Speaker 1: not continue. Thanks very much for being with us, Paul 435 00:27:45,440 --> 00:27:49,960 Speaker 1: we Be, Research Fellow, Daniel Morgan, Graduate School of National 436 00:27:50,080 --> 00:27:55,080 Speaker 1: Security in Washington, d C. Coming up, we'll be talking 437 00:27:55,119 --> 00:27:59,639 Speaker 1: about China trade disputes and the United States. This is 438 00:27:59,680 --> 00:28:07,440 Speaker 1: bloom Work. Joining me now is Brooks Sutherland are Bloomberg 439 00:28:07,440 --> 00:28:10,760 Speaker 1: Opinion Deals and Industrials columnists and Brook you've been busy, 440 00:28:10,800 --> 00:28:15,520 Speaker 1: because today's the day. I guess we'll where old deals 441 00:28:15,560 --> 00:28:19,800 Speaker 1: go to die. I mean really, right Tribune in Sinclair, no, 442 00:28:20,560 --> 00:28:24,520 Speaker 1: Right Aid and Albertson's No, although we got a couple 443 00:28:24,520 --> 00:28:27,000 Speaker 1: of others that might be a yes, maybe done in Bradstreet, 444 00:28:27,040 --> 00:28:29,160 Speaker 1: but go ahead, what is going on? No? I mean 445 00:28:29,200 --> 00:28:32,400 Speaker 1: there has been a lot of deals that have died lately, um, 446 00:28:32,480 --> 00:28:35,439 Speaker 1: and you know, they're all sort of for different reasons. 447 00:28:35,960 --> 00:28:39,120 Speaker 1: You know, in the case of Tribune Sinclair, the issue 448 00:28:39,360 --> 00:28:44,800 Speaker 1: is regulatory or rather mismanagement of the regulatory process. And 449 00:28:44,840 --> 00:28:47,280 Speaker 1: in the case of Right Aid Albertson's, you know, I 450 00:28:47,280 --> 00:28:50,720 Speaker 1: think shareholders just felt like they weren't getting that great 451 00:28:50,760 --> 00:28:52,880 Speaker 1: of the deal. Now, the question in Right Aid's cases 452 00:28:52,920 --> 00:28:57,840 Speaker 1: whether there's really any winning Has right A tried repeatedly 453 00:28:58,080 --> 00:29:02,640 Speaker 1: to combine with me Boots with Walgreens, Yes, and that 454 00:29:02,720 --> 00:29:06,040 Speaker 1: deal was was blocked on regulatory ground, So Walgreens ultimately 455 00:29:06,120 --> 00:29:09,280 Speaker 1: ended up buying a smaller package of Right Aid stores. 456 00:29:09,920 --> 00:29:14,520 Speaker 1: So alright, so the Right Aid deal is off because 457 00:29:14,560 --> 00:29:17,560 Speaker 1: the shareholders really just want more money. Yes, And now 458 00:29:17,600 --> 00:29:20,080 Speaker 1: the question is whether or not going to get it? Yes, 459 00:29:20,160 --> 00:29:23,120 Speaker 1: And what the company's standalone prospects are because at this point, 460 00:29:23,160 --> 00:29:27,040 Speaker 1: you know, right, it is a significantly smaller drug store 461 00:29:27,080 --> 00:29:29,400 Speaker 1: competitor at a time when a lot of its biggest 462 00:29:29,480 --> 00:29:33,560 Speaker 1: rivals are diversifying into other areas buying pharmacy benefit managers, 463 00:29:33,600 --> 00:29:36,400 Speaker 1: for example, or insurers or different things like that, and 464 00:29:36,800 --> 00:29:39,360 Speaker 1: it's just not really clear how right it is going 465 00:29:39,360 --> 00:29:43,200 Speaker 1: to compete with that. Okay, now let's do Tribune and 466 00:29:43,360 --> 00:29:48,440 Speaker 1: Sinclair Broadcasting. What happened? You know, all of the reporting 467 00:29:48,480 --> 00:29:51,320 Speaker 1: that I've seen on this is the FCC really bent 468 00:29:51,400 --> 00:29:54,320 Speaker 1: over backwards here to try to make this deal possible. 469 00:29:54,360 --> 00:29:58,600 Speaker 1: They revived this old regulatory loophole that would allow Sinclair 470 00:29:58,640 --> 00:30:01,520 Speaker 1: to buy more stations with out bumping up over the 471 00:30:01,600 --> 00:30:06,080 Speaker 1: national ownership limits. But even with that modification, that sort 472 00:30:06,120 --> 00:30:08,760 Speaker 1: of loosening of the rules, Sinclair still had to sell 473 00:30:08,920 --> 00:30:13,280 Speaker 1: some station and the proposals that it made for divestitures 474 00:30:13,360 --> 00:30:16,320 Speaker 1: were just unworkable. A lot of times it was trying 475 00:30:16,400 --> 00:30:19,160 Speaker 1: to sell you know, TV stations to people who were 476 00:30:19,160 --> 00:30:22,680 Speaker 1: affiliated with this chairman but didn't have any experience running 477 00:30:22,680 --> 00:30:24,520 Speaker 1: a TV station, or they were selling it to people 478 00:30:24,560 --> 00:30:27,920 Speaker 1: who add ties to his family and family companies, and 479 00:30:27,960 --> 00:30:29,520 Speaker 1: so I mean, this is just really sort of a 480 00:30:29,640 --> 00:30:34,040 Speaker 1: blatant disregard for the regulatory process and the and the 481 00:30:34,120 --> 00:30:35,800 Speaker 1: rules that we have in place here. And so it 482 00:30:35,880 --> 00:30:38,600 Speaker 1: got to the point that the FCC said, we can't 483 00:30:38,720 --> 00:30:41,040 Speaker 1: sanction this, we feel like we've been misled. They sent 484 00:30:41,120 --> 00:30:45,080 Speaker 1: it to an administrative hearing, which historically has been tantamount 485 00:30:45,080 --> 00:30:47,360 Speaker 1: to a death sentence for deals because that just tends 486 00:30:47,360 --> 00:30:50,200 Speaker 1: to drag on for a very long time. So Tribune 487 00:30:50,240 --> 00:30:53,120 Speaker 1: is saying, we've had enough. We feel like you, you know, 488 00:30:53,240 --> 00:30:56,240 Speaker 1: did not follow through on your end of the merger agreement. 489 00:30:56,520 --> 00:30:59,680 Speaker 1: You did not take every reasonable effort to win regulatory support, 490 00:30:59,720 --> 00:31:02,880 Speaker 1: and I sort of took, you know, harmful efforts to 491 00:31:02,920 --> 00:31:05,360 Speaker 1: try to win regulator approval. So they're backing out and 492 00:31:05,480 --> 00:31:09,360 Speaker 1: suing Sinclair. They want they want a billion dollars? Do 493 00:31:09,600 --> 00:31:12,200 Speaker 1: they want a lot of damages? And I, you know, frankly, 494 00:31:12,400 --> 00:31:14,760 Speaker 1: they seem to have an argument here just given how 495 00:31:14,760 --> 00:31:18,120 Speaker 1: this all played out. What kind of assets does Tribune 496 00:31:18,640 --> 00:31:22,120 Speaker 1: have that are going to be worth money to somebody else? 497 00:31:22,360 --> 00:31:25,000 Speaker 1: So they have TV stations, And it was interesting because 498 00:31:25,040 --> 00:31:28,360 Speaker 1: at the time that the Sinclair deal was agreed to, 499 00:31:28,400 --> 00:31:30,640 Speaker 1: there were a number of different companies that were interested 500 00:31:30,720 --> 00:31:33,720 Speaker 1: in Tribune. Next Star is one of those. Fox and 501 00:31:33,840 --> 00:31:36,400 Speaker 1: Blackstone were contemplating a joint bid. There were a number 502 00:31:36,400 --> 00:31:38,800 Speaker 1: of private equity firms in the mix, So I think 503 00:31:38,920 --> 00:31:41,920 Speaker 1: there's definitely a distinct possibility that now this asset is 504 00:31:41,960 --> 00:31:44,160 Speaker 1: back on the market, you could see other buyers come 505 00:31:44,200 --> 00:31:46,400 Speaker 1: forward who are willing to be a little bit more 506 00:31:46,440 --> 00:31:49,440 Speaker 1: reasonable and going through the regulatory process and possibly getting 507 00:31:49,480 --> 00:31:53,400 Speaker 1: a deal done. What happens at Sinclair Broadcasting, you know, 508 00:31:53,560 --> 00:31:56,040 Speaker 1: I don't think they're done either as far as M 509 00:31:56,120 --> 00:31:58,400 Speaker 1: and A, And maybe they've learned some lessons from this 510 00:31:58,480 --> 00:32:01,520 Speaker 1: experience and can get back to it. But I'm not 511 00:32:01,600 --> 00:32:03,920 Speaker 1: really sure what assets are out there that would make 512 00:32:03,960 --> 00:32:06,120 Speaker 1: as big of a difference for them as Tribune. I 513 00:32:06,160 --> 00:32:08,640 Speaker 1: don't really see them buying next Star. I'm not That 514 00:32:08,680 --> 00:32:10,880 Speaker 1: deal just doesn't seem feasible at all. You'd have to 515 00:32:10,880 --> 00:32:13,800 Speaker 1: divest so many stations that that just that doesn't make sense. 516 00:32:14,200 --> 00:32:17,120 Speaker 1: So you're talking about probably a lot smaller deals versus 517 00:32:17,160 --> 00:32:20,080 Speaker 1: one big bite. Just quickly, is it is there any 518 00:32:20,200 --> 00:32:24,440 Speaker 1: lingering animosity? Does that linger? In Washington, d C. At 519 00:32:24,480 --> 00:32:27,680 Speaker 1: the Department of Justice, in the Trade Commission I think so. 520 00:32:27,880 --> 00:32:29,840 Speaker 1: And you know, some of the reporting has pointed to 521 00:32:29,920 --> 00:32:33,120 Speaker 1: there was a different issue that the FCC find Sinclair 522 00:32:33,200 --> 00:32:35,520 Speaker 1: for something, and rather than just taking what was a 523 00:32:35,520 --> 00:32:39,880 Speaker 1: relatively small fine over sort of a bureaucratic issue, they 524 00:32:40,000 --> 00:32:43,080 Speaker 1: fought that really aggressively and they were really pushy on that, 525 00:32:43,120 --> 00:32:45,720 Speaker 1: and I think that, you know, made people at the 526 00:32:45,720 --> 00:32:48,600 Speaker 1: FCC feel uncomfortable, and I think those feelings do linger 527 00:32:48,720 --> 00:32:52,000 Speaker 1: for a while. Thanks very much, Always a pleasure. Brooks Southerland, 528 00:32:52,360 --> 00:32:56,920 Speaker 1: Bloomberg Opinion, Deals and Industrials columnist, always expert on the 529 00:32:56,960 --> 00:33:02,600 Speaker 1: world of combinations and in this case, bust combinations. Thanks 530 00:33:02,600 --> 00:33:05,240 Speaker 1: for listening to the Bloomberg P and L podcast. You 531 00:33:05,240 --> 00:33:09,040 Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 532 00:33:09,160 --> 00:33:12,640 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 533 00:33:12,640 --> 00:33:16,200 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa 534 00:33:16,240 --> 00:33:19,200 Speaker 1: Abramo wits one. Before the podcast, you can always catch 535 00:33:19,280 --> 00:33:21,000 Speaker 1: us worldwide on Bloomberg Radio.