Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
Speaker 1: news from the world of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Bloomberg Business Week reporters and editors,
Speaker 1: not to mention our journalists and analysts more than a
Speaker 1: hundred and twenty countries. You can download Bloomberg Business Week
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Speaker 1: listen to our radio show weekdays at two pm Eastern
Speaker 1: only on Bloomberg Radio. Here at the Year Ahead Summit
Speaker 1: at Bloomberg WW, the company probably known as Weight Watchers
Speaker 1: continuing to undergo a transformation. Really thanks to the company's
Speaker 1: president CEO, Mindy Grossman and her team, they're getting a
Speaker 1: big brand relaunch in twenty nine, a marketing campaign featuring
Speaker 1: its third largest shareholder and board member Oprah Winfrey. I
Speaker 1: caught up with Mindy at the summit to talk about
Speaker 1: brands with purpose and how this brand transformation differs from
Speaker 1: the brand she am impacted before. We're talking about brands
Speaker 1: like HS and Nike, Raff Lauren and more. Listen up,
Speaker 1: you know on one hand, there are a lot of
Speaker 1: similarities to transformation, and particularly of a legacy brand that
Speaker 1: has had such meaning to people for so many years
Speaker 1: um and this idea of moving forward but retaining the
Speaker 1: beauty of that legacy and what the brand stands for.
Speaker 1: So there's similarities. The difference is that this is not
Speaker 1: an exercise in only a financial return on the impact,
Speaker 1: although that is critical. The reality is if we accomplish
Speaker 1: what we believe we want to accomplish and what has
Speaker 1: to be accomplished, the return on human equity will be
Speaker 1: so powerful that it becomes not just the fact that
Speaker 1: we've got permission to be more in people's lives. We
Speaker 1: feel we have a responsibility to do what it is
Speaker 1: we're trying to do. And it goes back to the
Speaker 1: comment you made about solving the paradox um and it
Speaker 1: really heightened to me. I was in Italy at the
Speaker 1: Global Wellness Summit and they presented the white paper on
Speaker 1: how the global wellness economy has gone from three point
Speaker 1: seven trillion to four point two trillion, and everybody was clapping.
Speaker 1: But the reality is there's not a single marker anywhere
Speaker 1: in the world that shows we're getting healthier and if
Speaker 1: we do not do something. For example, today's millennial will
Speaker 1: be the most obest generation in history. In today's two
Speaker 1: year old has a better chance of not being healthy
Speaker 1: than being healthy. And then if you look at the
Speaker 1: gap in underserved communities, it's that much more dramatic. So
Speaker 1: as a culture and as an organization, you know, this
Speaker 1: evolution for us of not abdicating our position is the
Speaker 1: best healthy eating and weight loss program on the planet,
Speaker 1: because that's really important, but really giving people much more
Speaker 1: of an ecosystem to help them sustainably lead better lives
Speaker 1: and change that trajectory. The word purpose comes up a
Speaker 1: lot of mindy that every corporate decision is put through
Speaker 1: a purpose filter, and that people crave purpose. So this
Speaker 1: underlines everything that you do. So I not only does
Speaker 1: it underline everything we do. I think any brand today
Speaker 1: that does not truly believe that there has to be
Speaker 1: a purpose at their core and it has to be
Speaker 1: relevant for your brand, I think is going to have
Speaker 1: a challenge having long term sustainable success because you want
Speaker 1: to attract talent, uh, you want to retain talent, You
Speaker 1: want to create meaning with consumers. And you know, I've
Speaker 1: spoken a lot how the brands of the future are
Speaker 1: going to have to marry technology plus meaning to help
Speaker 1: people lead more connected, fulfilled lives UM and I started
Speaker 1: writing on building a culture of purpose UM, and you
Speaker 1: have to define what that is for your brand, you know.
Speaker 1: For for our company, it's very obvious UM. And so
Speaker 1: everyone that works there not only feels they have a job,
Speaker 1: but they really are having an impact on people's lives
Speaker 1: and it really makes a very big difference, especially at
Speaker 1: our underlying you know base where technology platform company, and
Speaker 1: we are in the same fight for talent that everybody
Speaker 1: else is, and that factor and that purpose factor, and
Speaker 1: even especially moving forward is going to be very important.
Speaker 1: Last year we talked I think at the end, I
Speaker 1: was like, what are the things that are on your mind?
Speaker 1: You talked about talent acquisition, and I know you are
Speaker 1: increasingly becoming a technology company and competing for those software
Speaker 1: engineers that everybody else wants, So tell me a little
Speaker 1: bit about that. That's still number one on your mind. Absolutely, yea.
Speaker 1: So what we've done over the course of the last year,
Speaker 1: first of all, table Stakes is that there has to
Speaker 1: be exciting, interesting technology that people are working on right UM,
Speaker 1: and we're doing so many new things, and our brand
Speaker 1: has a different element of relevancy today. But we're really
Speaker 1: getting out there and we are a technology, technology, platform,
Speaker 1: experience company with this human centric overlay. UM. Last week
Speaker 1: we just opened new offices in San Francisco and we're
Speaker 1: making sure our environment and you know, we're attracting talent
Speaker 1: and we have room to double our staff out there. UM.
Speaker 1: And so we did a big event out there and
Speaker 1: we'll continue to do that. UM. We've done a lot
Speaker 1: of work around us as an employer brand to get
Speaker 1: people to understand who we are today and recruiting on
Speaker 1: college campuses. But I would say the real important thing
Speaker 1: is culture and purpose married to exciting technology, because it's
Speaker 1: a war for talent in these areas. UM. But we're
Speaker 1: doing exciting things around everything from data to AI to
Speaker 1: the utilization of technology, and that's how the word of
Speaker 1: mouth is attracting. And then I'd say, lastly, diversity. We
Speaker 1: have an unusually diverse technology and product team and that
Speaker 1: attracts talent. All right. Of course that was president CEO
Speaker 1: of w W Mindy Grossman. I want to point out,
Speaker 1: Jason I was reading in last night this morning, JP Morgan,
Speaker 1: there Alice came out this week said the company's valuation
Speaker 1: is significantly decoupled from its earnings growth reality, pointing out
Speaker 1: the company's earnings growth opportunity in because the stock rallied
Speaker 1: when Oprah got involved, rallied when Mindy got involved. Has
Speaker 1: had quite a run, but it has pulled back significantly
Speaker 1: from its highs. And this Alice saying it's undervalued. But
Speaker 1: it was fun to talk to people after we had
Speaker 1: our conversation. I'm sure you're experiencing this where people are saying,
Speaker 1: she's onto something, building these platforms that are hopefully sticky
Speaker 1: and that become a part of a person's life, you know,
Speaker 1: where they check it constantly, just like we all check
Speaker 1: whether it's social media, whether it's you know what have you? Well, listen,
Speaker 1: it's a lifestyle brand for sure. If I should say,
Speaker 1: if they can make it a lifestyle brand, yes, it's
Speaker 1: a whole new world. It's an entirely new world. But
Speaker 1: it's not something you do. It's who you are. And
Speaker 1: we talked a lot about that when it comes to
Speaker 1: fitness and wellness, and and that does seem to be
Speaker 1: uh the holy grail. All right, Well, anyone who listens
Speaker 1: to this program on any sort of regular basis. Knows
Speaker 1: I love talking about private equity. I've been looking at
Speaker 1: it for a long time. Antoindrian, he is an old friend,
Speaker 1: Chairman of Triago, founder of Palico, really at the heart
Speaker 1: of private equity fundraising especially. We've talked a lot over
Speaker 1: the years. Antoine. It's great to see you here in
Speaker 1: New York. You're all over the world. We're really glad
Speaker 1: you stopped by to see us here on Bluemberg Business Week.
Speaker 1: So what is the state of private equity right now?
Speaker 1: Money seems to still be pouring in to this asset class.
Speaker 1: Is that going to go on for a while? I
Speaker 1: think it will go on for a while. I guess
Speaker 1: the major reason is that most of the investors out
Speaker 1: there are now understanding that private equity delivers great returns
Speaker 1: and these actually not that risky at least as long
Speaker 1: as you make the right choices when it comes to
Speaker 1: general partners. They also understand that liquidity is not that bad.
Speaker 1: You know that there is a pretty active secondary market now,
Speaker 1: and all of this means that there is more There
Speaker 1: are more people looking at this asset class and investing
Speaker 1: in it. And so how much do you worry about
Speaker 1: that sort of wall of that that wall of capital,
Speaker 1: you know, the dry powder. It's measured in trillions of
Speaker 1: dollars at this point. How much pressure does that put
Speaker 1: on these managers to put money to work. Well, depending
Speaker 1: on who you're talking about, obviously, private equity is just
Speaker 1: it is not just one uh, you know, strategy, and
Speaker 1: you have many strategies in the asset class. Some people
Speaker 1: do feel pressure in some areas you have like a
Speaker 1: hundred groups for one asset. I mean, obviously these people
Speaker 1: may lose some discipline when it comes to buying, but
Speaker 1: I think that overall, people in this asset class know
Speaker 1: what they're doing. And if you look at many casualties
Speaker 1: there has been after Lehman, actually it's not that bad.
Speaker 1: Probably que saved a lot of you know, a lot
Speaker 1: of money to everyone, But at the end of the day,
Speaker 1: it's it's actually it wasn't a blood bath. And so
Speaker 1: as you talk to these managers, you know, I've just
Speaker 1: spent some time with John Gray. We're gonna hear more
Speaker 1: from him later in the show. President of Blackstone, you know,
Speaker 1: talking about valuations at least on the public side, starting
Speaker 1: to come off a little excuse me a little bit.
Speaker 1: What do you see, uh, in terms of valuations and
Speaker 1: dealmaking as we head into twenty nineteen. Uh, it looks
Speaker 1: like they're they're pretty stable right now, at least here
Speaker 1: in the US and in Europe. Uh. They may actually
Speaker 1: go down a little bit if if markets are are
Speaker 1: going down. There is some sort of correlation. Obviously not
Speaker 1: a high one, but there is one. So so we'll see.
Speaker 1: But I think it's still, you know, fairly valued at
Speaker 1: this point. And in terms of where the money is
Speaker 1: coming from and going into these private equity funds. How
Speaker 1: has the mixed change over the years? You know, public
Speaker 1: pensions for were for a long time, US public pensions
Speaker 1: were the biggest contributor, are the biggest investor um. Sovereign
Speaker 1: wealth has come on pretty strong. Family offices have come
Speaker 1: on strong. How is that mix changing? It's now a
Speaker 1: lot of very different investors. When I started twenty six
Speaker 1: years ago in this business, most of the people were
Speaker 1: in this country, and you were right. I mean, you're right,
Speaker 1: most of them were pension funds. Today you have investors
Speaker 1: pretty much all over the world. There are fifteen thousand
Speaker 1: of them now. Uh. And of course the family piece
Speaker 1: is now a big one, and it will it will
Speaker 1: most probably grow. And the third third big space that
Speaker 1: could grow is actually the retail investors. I mean there
Speaker 1: are there will be more retail investors in the Sunset class.
Speaker 1: I'm so glad you brought that up, because that seems
Speaker 1: to be the holy grail for especially some of these
Speaker 1: bigger managers, the big publicly traded guys like a black Stone,
Speaker 1: a KKR, a Carlisle. How realistic is that that we
Speaker 1: really wealth see a robust retail effort in private equity.
Speaker 1: I think it is very realistic. The question is is when?
Speaker 1: But it is p a great asset class. Yes, if
Speaker 1: it works for institutions, why shouldn't it work for uh,
Speaker 1: you know, everyone on the street. I think that everyone
Speaker 1: is a candidate for eight ten percent a year returned, right,
Speaker 1: whether you're a huge pension fund or or Joshmo on
Speaker 1: the street, I mean you don't, you don't, doesn't really matter. Uh,
Speaker 1: So there is there will be demand. Now, the question
Speaker 1: is more liquidity, right, I think that's that's the big,
Speaker 1: big question. When you're a pension fund and you have
Speaker 1: money for ever almost you can take the risk of
Speaker 1: being you know, locked for ten years Uh, if you're
Speaker 1: a person and you could need the money in a
Speaker 1: few weeks, then there's an issue. So I mean, obviously
Speaker 1: I think that retail investors won't put you know, everything
Speaker 1: in this asset class. But at least there should be
Speaker 1: a better liquidity team mechanism, even better than today. It's
Speaker 1: not bad, but then than today, to make sure that
Speaker 1: these people can actually used private equity for their own accounts.
Speaker 1: So thirty seconds left and maybe a little bit less.
Speaker 1: Are we gonna see a big retail push in nineteen
Speaker 1: or is it further out than that? I think it's
Speaker 1: not nineteen. I mean some people thought it would be
Speaker 1: seventeen eighteen. I'm not sure it's going to be nineteen,
Speaker 1: but it's growing and it should be, you know, maybe
Speaker 1: twenty or twenty one. I'm talking about the big wave,
Speaker 1: but not not this thing, not the trickle, the big wave.
Speaker 1: Antoine Dron chairman of Triago, founder of Palico. Based in Paris,
Speaker 1: but here with me in our Bloomberg headquarters in New York.
Speaker 1: Always great to catch up with you. You don't get
Speaker 1: a lot of chances to listen to that song, uh
Speaker 1: these days, But snacks they're a big business model a
Speaker 1: CEO Dirt Vanderputt is joining me here at the Year
Speaker 1: Ahead summit. Dirt, great to be with you. You were
Speaker 1: up stairs participating in a panel uh part of the
Speaker 1: Year Ahead summing. Let's talk about snacks a little bit.
Speaker 1: We're sitting here in the Bloomberg pantry, snacks all around us.
Speaker 1: But it feels like we're more conscious these days about
Speaker 1: what we're putting into our bodies, even when it comes
Speaker 1: to snacks. So how do you deal with that as
Speaker 1: a snack maker? Well, um, you need to offer the
Speaker 1: variation that the consumer wants. Um, it is clear that
Speaker 1: the consumer is much more conscious about what they eat.
Speaker 1: And in fact it is is not so that the
Speaker 1: same consumer there's always the same thing. They do different things.
Speaker 1: It depends of the moment and how they feel and
Speaker 1: so on. And as a company that obliges us to
Speaker 1: go from very healthy snacks to more indulgent oriented snacks.
Speaker 1: And and how's business right now globally? Where do you
Speaker 1: see kind of the pockets of opportunity? You know, that's
Speaker 1: been sort of a big question at the Year Ahead
Speaker 1: writ large. Is you know, as the as we get
Speaker 1: longer and longer into this bowl market as we've had
Speaker 1: a very healthy global economy and certainly here in the US. UH,
Speaker 1: where do you see the biggest opportunities around the world.
Speaker 1: I would say the longer term, um, the emerging markets
Speaker 1: are clearly where where most of the opportunity lies in
Speaker 1: the snacking business. Short term that's still the case, but
Speaker 1: I would say for it's just North America, the markets
Speaker 1: that we are in biscuits, chocolate, candy, and so on
Speaker 1: are showing some some pretty good growth, much better than
Speaker 1: the previous years. So you can feel the confidence from
Speaker 1: the consumer and and and the fact that there is
Speaker 1: a little bit of momentum. So at this stage it's
Speaker 1: it's developed being and developed markets both are doing quite well.
Speaker 1: And how do you see that plane going into nineteen?
Speaker 1: It feels like That's the other big existential question is
Speaker 1: does that consumer confidence play through nineteen or we started
Speaker 1: to see signs and maybe some caution. At this moment,
Speaker 1: we don't see those signs. I feel a bit more
Speaker 1: caution on the business side. Those business people are a
Speaker 1: bit more worried about what could come. But from a
Speaker 1: consumer's perspective, we see the momentum continue. Um, there's there's
Speaker 1: signs around the world that that the momentum in other
Speaker 1: countries also is continued. So I don't expect from a
Speaker 1: consumer's perspective that nineteen will be a year where there's
Speaker 1: a big change in their attitude. I don't see it
Speaker 1: at the moment. So speaking globally, you obviously see opportunities
Speaker 1: both for consumers but also to build your business, maybe
Speaker 1: expand your business. We've talked a lot today about maybe
Speaker 1: some valuations coming down. Is that present a buying opportunity
Speaker 1: for you, maybe pick up some assets here and there.
Speaker 1: Um yeah, yes, of course. Um our strategy is to
Speaker 1: be the biggest snacking player around the world, and as
Speaker 1: you can imagine, we still have a lot of white
Speaker 1: spaces where we can do that. We do that through
Speaker 1: a combination of launching our own products and try to
Speaker 1: grow like that. But if the right opportunity presents itself
Speaker 1: at the right financial conditions, and we always try to
Speaker 1: take a discipline approach, of course, then we will certainly
Speaker 1: do that. Are there specific areas that make more sense
Speaker 1: to buy rather than launch, Um, yes, if you are
Speaker 1: seeing something that is a strong position, if there's a
Speaker 1: company that's a strong position in the market, a strong brand,
Speaker 1: growing nicely. It would be probably very expensive to go
Speaker 1: against that brand, and if you would be able to
Speaker 1: partner or buy, that would be the best solution to
Speaker 1: my opinion. Kellogg, for instance, is getting out of some
Speaker 1: of its businesses. Is that somewhere you you might shop. Um,
Speaker 1: we look at any opportunity. I don't particularly think that
Speaker 1: this one's in our biscuit position already in North America,
Speaker 1: that that's immediately going to be something for us, But
Speaker 1: we will evaluate everything that that that goes on for sure.
Speaker 1: And as you think about your business, obviously a question
Speaker 1: that comes to every CEO's to global ceo is cost shipping,
Speaker 1: especially given the trade world, the new trade world. Shall
Speaker 1: we say that we are living in of late How
Speaker 1: is that affecting your cost in and ultimately your bottom line? Um?
Speaker 1: It is, Uh, it is affecting our costs and the
Speaker 1: consequence of that is that we will have to price
Speaker 1: a little bit more than normal. The effect we see
Speaker 1: going into nineteen as it relates to inflation on our
Speaker 1: input cost is a bit higher than it was in
Speaker 1: the previous years. And but at the same time the
Speaker 1: consumer confidence is there, so increasing prices a little bit.
Speaker 1: I think is doable at this stage um UM. We
Speaker 1: will not be affected in our bottom line. Um Our
Speaker 1: bottom line next year will be not that aggressive because
Speaker 1: we have decided that we will do more investment in
Speaker 1: our brands and innovation and our route the market. So
Speaker 1: so we're a little bit in an investment next year,
Speaker 1: but that's not because of our cost that's because of
Speaker 1: the investments that we're making. So you have you've had
Speaker 1: a fascinating career. You worked at Group don Own, you
Speaker 1: worked at Coca Cola, you worked at McCain Foods up
Speaker 1: in uh Canada. As you look as you think about
Speaker 1: that experience, you look at where we are, you know,
Speaker 1: in the in the world right now, what's the biggest
Speaker 1: opportunity kind of across the world of food, the biggest
Speaker 1: opportunity or the winner will be the company that can
Speaker 1: understand and a company the consumer where she or he
Speaker 1: is going. There's so much change taking place and you
Speaker 1: refer to it that it's become the old recipe doesn't
Speaker 1: work anymore. One big global brand that is so all
Speaker 1: over the world that I don't I don't believe in
Speaker 1: the restuming animal. So you need to adapt, you need
Speaker 1: to be on top of the consumer and quickly changed
Speaker 1: with the consumer needs the company that can do that,
Speaker 1: I think we'll win. And do you see like a
Speaker 1: cannabis or something like that, you know, being something that
Speaker 1: you might be interested in, certainly seems to be getting
Speaker 1: a lot of attention. Well, we certainly will look at it.
Speaker 1: We're not not gonna say no. But at the same time,
Speaker 1: we make orioles, we make chips. You will not see
Speaker 1: a canna misinfused oreo with coming through the market. Well,
Speaker 1: I'm sure there we have some disappointed listeners out there
Speaker 1: hearing that news. All right, Dirk vanderbut thank you so much,
Speaker 1: Chief executive officer of Mondel. He's based in Deerfield, Illinois,
Speaker 1: but here with us at Bloomberg Headquarters as part of
Speaker 1: the Year Ahead Somewhe great to spend some time. We
Speaker 1: can usually appreciate it. Yeah, we're talking sploring. Go figure
Speaker 1: right wait what wait? What perfect guest to do that with.
Speaker 1: Don Cornwell is with us. He's partner at p j
Speaker 1: T Partners, participating in our Bloomberg Your HEEAD summit here
Speaker 1: at Bloomberg Headquarters. In fact, he's gonna be part of
Speaker 1: a panel later today on the high stakes of sports betting.
Speaker 1: Nice to have you here with us, Good to be here.
Speaker 1: There is so much going on. Where do you want
Speaker 1: to start? What do you find most interesting when you
Speaker 1: look at the sports world? Is it sports? Media? Is
Speaker 1: it E sports? Is it so different things? What it was?
Speaker 1: I mean right now E sports and gaming are the
Speaker 1: two areas I'm spending the most time in. But the
Speaker 1: convergence of all these things, the media companies, the gaming companies,
Speaker 1: the league's you're seeing just so much activities. So let's
Speaker 1: talk about the sports for a second. Because Jim Coulter,
Speaker 1: you know, gave a sort of his view of the
Speaker 1: world for twenty nineteen earlier this morning. One thing he
Speaker 1: didn't actually get to talk to the audience about, but
Speaker 1: I talked to him about on the sidelines was E
Speaker 1: sports is a highly investable area. Where is the money
Speaker 1: to be made there at this moment A lot of
Speaker 1: different places. So you're seeing lots of capital come into
Speaker 1: the teams themselves, the franchises, right, And I didn't what
Speaker 1: Activision Blue first of all, the idea of like an
Speaker 1: E sports team, like these are teams that people playing
Speaker 1: video games teams. These are just like the New York
Speaker 1: Jets and the Giants and the Knicks. These are teams
Speaker 1: with professional athletes who have contracts, and they have schedules,
Speaker 1: and they have matches that are televised, and then people
Speaker 1: watch them playing, people watch them live, uh, and people
Speaker 1: watch them streaming and on TV. Uh. You know. This
Speaker 1: past summer, I went to the Active as a Blizzard
Speaker 1: over Watch finals out. Barkley's sold out. I was talk
Speaker 1: into a buddy mine who works with the Nets. He's
Speaker 1: telling me as the loudest he's ever seen the building,
Speaker 1: louder than the jay Z concert, louder than when the
Speaker 1: Nets win the playoffs. It was the loudest he's ever seen.
Speaker 1: So how big does this market get? What are we
Speaker 1: talking and how quickly does it ramp up? I think
Speaker 1: it is um It's global in nature, right, So just
Speaker 1: to put it in perspective, I just saw a stat
Speaker 1: this morning Fortnite has now two million users. Think about that.
Speaker 1: That game is not that old, right, It is moving
Speaker 1: at a pace where it is approaching with nothing else.
Speaker 1: And when the world of entertainment there's no other thing
Speaker 1: that looks like that, right, and you've got people of
Speaker 1: all demographics. I think that's the big difference when you
Speaker 1: think about video games, it's people who play sports who
Speaker 1: like video games. It's professional athletes, it's musicians, it's the
Speaker 1: guy who never leaves his basement. It's all right, it's
Speaker 1: somebody in America, somebody in Asian women. Well, no, if
Speaker 1: you look at the Fortnite numbers, there's a lot of
Speaker 1: females who play. That's what's got people very excited about it.
Speaker 1: So the numbers are huge, so it could get very large.
Speaker 1: What what do you give me a number? Do you
Speaker 1: have a number that So here's one way of thinking
Speaker 1: about it. Um people are raising capital for these franchises
Speaker 1: now at valuations hundred million, hundred million, These things are
Speaker 1: one or two years old. These a brand new entity.
Speaker 1: Put that in context with an NFL franchise that might
Speaker 1: be worth two or three billion dollars. That's fifty or
Speaker 1: sixty years old, right, It's taken him that long. So
Speaker 1: the trajectory is just you know, at a different level.
Speaker 1: All right, So you let us right there, let's talk
Speaker 1: about valuations in in more traditional pro sports as it were.
Speaker 1: As you look around right now, NFL ratings back up
Speaker 1: again after a tough year last year amid a lot
Speaker 1: of politics and various controversies. Valuations stabilized, growing in let's
Speaker 1: just start with the NFL still growing, still growing. People
Speaker 1: like to talk negatively about the Catalan Panthers. Valuation still
Speaker 1: a record. I mean, you know, we solved it wasn't
Speaker 1: as big as it's just as big as people reported,
Speaker 1: but it's still a record. I mean, that's a lot
Speaker 1: of money, right, David Tepper wrote a very very large
Speaker 1: check to own an asset, uh, And so I think
Speaker 1: there's still lots of upside both on the broadcast side.
Speaker 1: What's happening is the NFL and other leagues would just
Speaker 1: be more creative, right, So they're thinking about, Okay, how
Speaker 1: do I chop up my packages to get streaming? How
Speaker 1: do I think about leveraging an Amazon when I'm talking
Speaker 1: to Fox? Right? So over time we'll see uh, lots
Speaker 1: more improven there. But also there's the data element, and
Speaker 1: I think that's where you're starting to see some some
Speaker 1: some headlines around the value of that data. But with
Speaker 1: things like football, I mean there's been so much controversy
Speaker 1: about the injuries and you see younger, you're like set,
Speaker 1: You're are you rolling your eyes there? I mean, is
Speaker 1: it a case that e sports replaces like traditional football.
Speaker 1: You don't see that how it's additive. It's additive. They're Look,
Speaker 1: if you're a three hundred pound guy with really quick feet,
Speaker 1: what else are you gonna do? Right? That's the sport
Speaker 1: to play as football? All right, There's gonna be people
Speaker 1: who want to play football because the money is there, right.
Speaker 1: You know, will you see certain people not be allowed
Speaker 1: to play as kids? Yeah? Sure, right, So there is
Speaker 1: some fear around concussion around that front, but I think
Speaker 1: there's still gonna be plenty of athletes who want to
Speaker 1: play it, and we're still gonna watch it. I mean,
Speaker 1: look at boxing, like boxing and UFC, that's as barbaric
Speaker 1: as it gets, right, people fighting in a ring. Right,
Speaker 1: you look at the numbers, it's huge, right, So I
Speaker 1: still think football will be so. Jerry Jones says Dallas
Speaker 1: Cowboys worth ten billion dollars. You buy it? I mean,
Speaker 1: if he was trying to sell it, I'd like to
Speaker 1: sell for ten. Do you think you think somebody would
Speaker 1: pay ten or close to it? It looked that that
Speaker 1: is a very unique brand, uh, And he's got a
Speaker 1: business model that's very different than everybody else in the NFL.
Speaker 1: Uh and he makes a lot of money. So who knows? Right?
Speaker 1: So before we let you go, what what's the one
Speaker 1: league where the valuations are growing the fastest from your estimation?
Speaker 1: Outside of the sports, I am the NBA's still you're
Speaker 1: looking at numbers and me if you think about what
Speaker 1: you know, you got your Mark Lasser and West Indians
Speaker 1: came in for and what they alluishers now Blitzer and
Speaker 1: Hairs with the sixers. I mean the numbers are ten seconds.
Speaker 1: Tiger Woods, he's back, that Discovery deal back, he's back.
Speaker 1: That's pretty big, right yeah? Is that the best thing
Speaker 1: that's happened to golf? Absolutely? Yeah, It's a game change.
Speaker 1: Nobody like him, right, Don Cornwell Partner p J Partners.
Speaker 1: Always good to see you. Thank you for participating in
Speaker 1: the Yearhead Summit and thanks for stopping by to see us.
Speaker 1: You are listening to Bloomberg Business Week here on a
Speaker 1: busy Wednesday afternoon at bloom Bloomberg World Headquarters, Your Head Summit,
Speaker 1: Jason Kelley and Carol Masser. You are listening to Bloomberg
Speaker 1: Business Week on Bloomberg Radio Broom a journal. Yeah, but
Speaker 1: you let me drive? Oh no, no, no no, no, please,
Speaker 1: I'll do the right revel I want to drive ball,
Speaker 1: just drive questions to the globe on Bloomberg Radio. So
Speaker 1: it is time for the drive to the clothes. And
Speaker 1: for that, we're gonna go back to a conversation I
Speaker 1: had earlier today, Carol here at the Year Ahead Summit.
Speaker 1: John Gray the president and chief operating officer of black
Speaker 1: So newly minted. He took that job earlier this year.
Speaker 1: He was a real estate phenomen of sorts. Really built
Speaker 1: that business. It's the only place he's ever worked. Blackstone
Speaker 1: started his career straight out of University of Pennsylvania, UH
Speaker 1: and really worked his way up and has been quite successful.
Speaker 1: And you know, we talked a lot about the investing environment,
Speaker 1: and we started on the topic that is on everyone's mind,
Speaker 1: of volatility. Here's what you have to say. We're certainly
Speaker 1: in a world with more volatility. The data would say that,
Speaker 1: and I don't think we should be shocked by that.
Speaker 1: We've had a great run in asset prices for a
Speaker 1: long period of time. Volatility had been fairly low. UH.
Speaker 1: The ft has begun to raise rates. We've got some
Speaker 1: trade tensions out there, we have some issues in emerging markets,
Speaker 1: we have some issues in Europe as well. You know,
Speaker 1: oil prices have come down sharply. I think it's natural
Speaker 1: that you have this kind of volatility at some point
Speaker 1: during a cycle. So I don't think that's necessarily bad
Speaker 1: for our business. This is generally a good thing because
Speaker 1: if asset prices keep grinding higher, that's hard to find opportunity.
Speaker 1: And so if you have a business model like we do,
Speaker 1: where you get capital tied up for long periods of time,
Speaker 1: you have discretion. When things drop in price, you can
Speaker 1: move quickly, and because you're not short term financed or
Speaker 1: the capital can't be called away, you're not forced to sell.
Speaker 1: So for us, we look at this and say, wow,
Speaker 1: there are lots of assets around the world that have
Speaker 1: been repriced. We've got close to a hundred billion dollars
Speaker 1: of dry powder. This could be a more interesting investment
Speaker 1: environment going forward. Help us understand the investing environment versus
Speaker 1: the economic environment, because obviously they're in a related but
Speaker 1: not necessarily super correlated. It feels like right now, yes,
Speaker 1: So I'd say on the economic side, people are obviously
Speaker 1: a little bit nervous given this volatility. I would say,
Speaker 1: if you look down at the numbers are still pretty good.
Speaker 1: Consumer confidence is at an eighteen year high. Small business
Speaker 1: confidence is at i think in all time high. Unemployments
Speaker 1: obviously very low. Corporate earnings have been strong um and
Speaker 1: what we're seeing with our companies is generally pretty good,
Speaker 1: so that's positive. I think the issue, back to my
Speaker 1: earlier comments, is as the labor market titans, the FED
Speaker 1: naturally is going to move towards raising rates, and that
Speaker 1: is going to put pressure on multiples. And that's really
Speaker 1: the shift we're facing right now. So it's very possible
Speaker 1: you could see a decoupling where economic growth continues to
Speaker 1: be pretty good, but because wages go up, that impacts
Speaker 1: companies bottom lines and becomes multiples come under pressure. Valuations
Speaker 1: don't grow at the same rate that the economy maybe,
Speaker 1: so you have a stronger economy, less growth in valuation,
Speaker 1: and therefore as an investor, you have to become much
Speaker 1: more selective in how you deploy capital. As you look
Speaker 1: across the world, let's talk about Europe for for one second,
Speaker 1: because bregit. Obviously I feel like every day they're more
Speaker 1: in different headlines. Italy remains an opportunity. Europe is a
Speaker 1: place where you guys have invested heavily across a lot
Speaker 1: of different asset classes. What's the opportunity or is there
Speaker 1: an opportunity there right now? So interestingly, on Europe, I'd
Speaker 1: almost say the opposite. I'd say growth in Europe is challenged,
Speaker 1: and growth is challenged because if you think about what
Speaker 1: leads to economic growth, you want an environment where there's
Speaker 1: more certainty. People have confidence today with what's happening in Brexit,
Speaker 1: what's happening in Italy, what's happening with some of the
Speaker 1: more extreme political parties, it's making people more cautious to
Speaker 1: invest to higher and so I think that translates into
Speaker 1: slower growth in Europe. Now you might say, gosh, then
Speaker 1: I don't want to invest in Europe, But then you
Speaker 1: have to say the good news is rates are likely
Speaker 1: to stay lower for longer in Europe and there are
Speaker 1: fewer people who are enthused about investing in Europe. So
Speaker 1: we in the last six weeks announced two large deals
Speaker 1: in the UK. I just said Brexit slowed growth, but
Speaker 1: we were able to buy these arches under the rail
Speaker 1: network in the UK. We were buying a big convention
Speaker 1: in arena business in Birmingham, UK because in both cases
Speaker 1: we felt like we were able to price in a
Speaker 1: lower growth environment. So invest as investors, you have to
Speaker 1: look at the matrix both ways. It's not just is
Speaker 1: the economic climate favorable, it's what price do I have
Speaker 1: to pay for that? So it's possible today and we're
Speaker 1: I would say overall at Blackstone, Europe actually looks more
Speaker 1: favorable because there's not a consensus that the place to invest.
Speaker 1: You guys are the biggest in that business of you know,
Speaker 1: backing hedge funds, fund of hedge funds. It feels like
Speaker 1: we're in a state of existential crisis in hedge funds.
Speaker 1: Is that what you see or what's the I think
Speaker 1: the biggest challenges the traditional long short hedge fund business
Speaker 1: is struggling in the equity markets. That the idea of
Speaker 1: paying higher, higher fees um and trying and heading a
Speaker 1: big chunk of market exposure and then providing significant outperformance.
Speaker 1: That that as hard as the market gets more and
Speaker 1: more efficient. So what I think that means is the
Speaker 1: hedge fund business very much survives, but you see more
Speaker 1: of the quants and and other strategies that are seeing
Speaker 1: more capital flowing into them where they have moats around
Speaker 1: their business and are able to deliver differentiated returns. I
Speaker 1: think the other thing you're seeing in the hedge fund
Speaker 1: world in our business is you do some other semi
Speaker 1: liquid things Illinois receivables claims in certain other company bonds,
Speaker 1: things that, um, you can get excess return without taking
Speaker 1: undue risk. But I do think sort of the pure
Speaker 1: long short equity business, some of the activists guys, because
Speaker 1: there were so many people who went into that space
Speaker 1: UM have seen some pressure. But long term, I think
Speaker 1: the hedge fund business survives, but it just continues to evolve.
Speaker 1: And that was my conversation part of my conversation Carol
Speaker 1: with John Gray, the president and chief operating officer at Blackstone,
Speaker 1: the world's largest firm of its kind, managing all sorts
Speaker 1: of alternative assets. Almost half a trillion dollars they've got
Speaker 1: under This is why you love to talk to folks
Speaker 1: at Blackstone, because there's so much money and they're investing
Speaker 1: it in different ways, so they have a real handle
Speaker 1: on kind of where investors are finding interests, where money
Speaker 1: is flowing. The other thing I thought that was interesting
Speaker 1: that he that he talked about with you was this
Speaker 1: whole idea of repricing um and valuations lower valuations, and
Speaker 1: that can create an interesting investment environment. People who have
Speaker 1: been on the sidelines waiting to come in now say hey,
Speaker 1: this is a better prior A second, I can maybe
Speaker 1: make some money off of this. Well, and I really
Speaker 1: was intrigued by what he said about this decoupling between
Speaker 1: sort of valuations and the economic data whereby sending the
Speaker 1: valuations come down, but there's still growth to be had.
Speaker 1: And look, that is magic for private equity. We know that,
Speaker 1: and there are obviously a lot of opportunities. And I
Speaker 1: go back to you know what Jim Culture shared with
Speaker 1: us at the top of the You're Ahead show this
Speaker 1: morning about the various places he's looking, including sports, including
Speaker 1: you know, he had a riff on marijuana, you know,
Speaker 1: all sorts of things. You just he had a whiff
Speaker 1: of marijuana. He had a riff a riff. I'm just
Speaker 1: checking a riff on, a riff on you know, the
Speaker 1: You're Ahead, we're you know, we do things and looking
Speaker 1: around the corner, what are you gonna see there? You're
Speaker 1: listening to Bloomberg Business Week. Well, certainly people have their preferences,
Speaker 1: their opinions. Shall we say about public transit, and the
Speaker 1: man sitting before me, here's them all. He's Andy Biford.
Speaker 1: He runs the mt A here uh in New York City. Andy,
Speaker 1: thanks so much. We're having this conversation ahead of the
Speaker 1: conversation we're gonna have upstairs at the at the year.
Speaker 1: I had some and so I'm excited to get some
Speaker 1: time with you ahead of that. I gotta tell you
Speaker 1: your job must be pretty tough. I'm not sure you
Speaker 1: get a lot of calls that say my subway ride
Speaker 1: was amazing, Thank you so much. Not too many. I mean,
Speaker 1: what is nice is the occasionally when I right on
Speaker 1: the subway, and I do it every day. That's how
Speaker 1: I get to him. From home. People do say you know,
Speaker 1: you're doing a great job, or you or keep up
Speaker 1: the great work, don't leave, please keep at it, which
Speaker 1: I'm always humbled by. I'm always humbled by how gracious
Speaker 1: New Yorkers are in what I know. It's a subject
Speaker 1: of very great importance to them. It's it obviously is
Speaker 1: a subject of great importance for sure. And everybody's got,
Speaker 1: as I said, uh, their opinions. You know, when you
Speaker 1: talk to people and you set out your priorities based
Speaker 1: on what you hear from them. What's the single thing
Speaker 1: you go back and say, this is this is the
Speaker 1: thing we're going to fix first shot. Number one priority.
Speaker 1: I'm crystal clear on this, and this goes for buses,
Speaker 1: for subways, and for paratrans, all three of equal importance.
Speaker 1: Number one priority is to provide safe, reliable, punctual, clean transit.
Speaker 1: So you know, there's a lot of other things that
Speaker 1: we need to attend to, but job one is you
Speaker 1: pay to get from A to B. You want that
Speaker 1: to happen reliably, predictably and on time. So that will
Speaker 1: always be number one priority. And obviously the key thing
Speaker 1: is to do that safely right And how big of
Speaker 1: a challenge is that given the infrastructure that you're dealing with.
Speaker 1: Let's just you know beginning, this is not a new system. No,
Speaker 1: it's huge, and I knew that when I walked into
Speaker 1: this chase. I mean, I'm used to dealing with old
Speaker 1: transit infrastructure. I started my career thirty years ago just
Speaker 1: about on the tube, the London Underground, which is actually
Speaker 1: even older than the New York system. It's the oldest
Speaker 1: system in the world. But massive investment has been has
Speaker 1: been expended on the tube system and it looks completely
Speaker 1: transformed now, So that both inspires me and and also
Speaker 1: shows just what needs to be done. Here we are
Speaker 1: dealing with equipment that my my miracle workers as I
Speaker 1: call them, the fifty thou men and women of Transit.
Speaker 1: They are in some cases using one hundred year old
Speaker 1: signal frames. Now these this equipment is safe. Obviously we
Speaker 1: keep it safe. But it's increasingly unreliable, and it is
Speaker 1: increasingly difficult to maintain. And it's also um we we
Speaker 1: even make our own parts. It's that old. The equipment
Speaker 1: manufacturers have gone out of business, so it is a
Speaker 1: daily challenge. We will not give up on it. The
Speaker 1: big issue, and you know you're talking about the year ahead,
Speaker 1: is to build the case for fast forward the complete
Speaker 1: top to bottom modernization of transit. We have a great plan.
Speaker 1: We just need the money. How much money do you need?
Speaker 1: We need billions, you know I mean, And at the
Speaker 1: end of the day I said in public it's a
Speaker 1: round about forty billion. We're still finalizing the cost, but
Speaker 1: we may be able to pair that in. But let's
Speaker 1: just take that as an as an example. Forty billion
Speaker 1: dollars a lot of money to you and me, but
Speaker 1: not if you think that that's a ten year program.
Speaker 1: Divide that by tenants around four billion dollars a year,
Speaker 1: split between the state, the city, and the FEDS, and
Speaker 1: that would move us from a state of emergency, which
Speaker 1: we're currently in. The governor right to put us into
Speaker 1: state of emergency given all the reliability problems. We could
Speaker 1: go from state of emergency to state of the art
Speaker 1: in less than four thousand days ten years. I think
Speaker 1: most New Yorkers would say that would be four billion
Speaker 1: dollars a year well spent, particularly when you think of
Speaker 1: the US economy, the state economy, where literally trillions of
Speaker 1: dollars for the for the country uphold in four billion
Speaker 1: dollars to keep New New York at the forefront. I
Speaker 1: think that's worth it. So among those three big constituencies,
Speaker 1: those three funding elements, who's the most reluctant, Well, I
Speaker 1: mean we've we've yet to finalize the case, so I'm
Speaker 1: not hearing any pushback. I think just about everyone I
Speaker 1: taught to be that city officials, be that state officials,
Speaker 1: and we're beginning to engage with the Feds now. I
Speaker 1: think the good news is most people get it. Most
Speaker 1: people know that New York can't see this slow decline,
Speaker 1: this decline in reliability. Most people understand that New Yorkers
Speaker 1: are rightly frustrated and de fed up with the fact
Speaker 1: that their services and where it should be. I like
Speaker 1: to paint a picture of you know, I've traveled extensively
Speaker 1: in the world. I've been to Hong Kong, I've been
Speaker 1: to Singapore, I've been on these world class systems. Why
Speaker 1: can't we have that? We absolutely can, and the fact
Speaker 1: that London turned it around shows me that we can too.
Speaker 1: So I need to make the case you don't. You
Speaker 1: don't get billions by going out with a begging bowl.
Speaker 1: You have to be way more sophisticated. We are putting
Speaker 1: together a compelling economic impact analysis that I think will
Speaker 1: be irresistible anybody from you are the president of the
Speaker 1: New York City Transit Authority joining me here on Bloomberg.
Speaker 1: Thanks for listening to Bloomberg Business Week. You can subscribe
Speaker 1: to the podcast on iTunes, SoundCloud, or Bloomberg dot com.
Speaker 1: You can also listen to our radio show every weekday
Speaker 1: at two pm Eastern only on Bloomberg rad Yeah