Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: at two pm Eastern Time on Bloomberg Radio or watch
Speaker 1: us on YouTube search Bloomberg Global News. Well, we mentioned
Speaker 1: some of the top headlines today concerning COVID and the
Speaker 1: vaccine um Maderno's vaccine for younger teens, but I also
Speaker 1: wanted to mention that a White House officials saying that
Speaker 1: half of American adults will be fully vaccinated as of today, Tim,
Speaker 1: So we're definitely making progress in the United States. We are,
Speaker 1: and the number that the Biden administration is looking for
Speaker 1: a little over a month from now at the fourth
Speaker 1: of July, seventy of American adults having at least one shot.
Speaker 1: As far as the cases around the world, topping one
Speaker 1: hundred and sixty seven point four million deaths, succeeding three
Speaker 1: point four seven million. Back to vaccines, more than one
Speaker 1: points six eight billion doses have been given. All right,
Speaker 1: let's get back to someone who has often been a
Speaker 1: guiding voice for us throughout the pandemic. We're talking about
Speaker 1: Dr Seth Letterman. He's co founder, CEO, and chairman of
Speaker 1: the New York based specialty pharmaceutical biopharmer company Tonics Pharmaceuticals,
Speaker 1: and he joins us on the phone in Bedford, Massachusetts. Um,
Speaker 1: Dr Letterman, could to have you here with Tim and myself.
Speaker 1: There is a lot going on, and it does always
Speaker 1: feel like we're making some steps forward and uh every
Speaker 1: once in a while, though, of course, when we look
Speaker 1: at the numbers and look at around the world, we're
Speaker 1: reminded that we are not yet out of the health pandemic,
Speaker 1: at least not globally. How do you see kind of
Speaker 1: where we are in our world right now? Well, first,
Speaker 1: it's great to be back with you. I think that
Speaker 1: your summary was very accurate. It feels really good in
Speaker 1: the in America with our vaccine supplies and cases dropping,
Speaker 1: but the world is still in a pretty tough place.
Speaker 1: I'd like to be optimistic, but as CEE of a
Speaker 1: company that's developing a vaccine and anti viral and the
Speaker 1: skin test, I'm paid to be pessimistic. So I am
Speaker 1: worried about the fall, about whether COVID is becoming seasonal.
Speaker 1: I'm worried about the durability of vaccine protection. And I'm
Speaker 1: worried about the variants coming back to the United States
Speaker 1: from places like India and other places which one of
Speaker 1: those three things were easy the most. I think the
Speaker 1: vaccine durability is the biggest issue. The m RNA or
Speaker 1: the modified RNA vaccines are remarkable and I don't don't
Speaker 1: even have words to express how grateful we should be
Speaker 1: to the inventors and the developers of these vaccines who
Speaker 1: have made such an important contribution. But it is a
Speaker 1: brand new technology. We don't know the durability. I think
Speaker 1: there's good data now for about six months of protection.
Speaker 1: But there are two kinds of immunity, antibody immunity and
Speaker 1: T cell immunity, and if, if, if the protection from
Speaker 1: these vaccines fades, then that would be more of a
Speaker 1: signature of antibody immunity so I think that we are
Speaker 1: all waiting to see if vaccinated people will be protected
Speaker 1: a year out right, and we've talked with you about
Speaker 1: your your vaccine then X right. That is it's all
Speaker 1: about eliciting a T cell immunity exactly. We are developing
Speaker 1: t X eighteen hundred. It elicits a strong T cell immunity,
Speaker 1: and T cell immunity is the kind that can last
Speaker 1: for years or decades, and that's usually imparted by a
Speaker 1: live virus vaccine like the MMR Measles monster Bella vaccines.
Speaker 1: Those are three live virus vaccines given once in childhood.
Speaker 1: So we're optimistic. I'm hoping that the m RNA vaccines
Speaker 1: will have durical protection, but we just don't know. We
Speaker 1: all don't know if can it be just as good revaccination.
Speaker 1: I'm just gonna say, can a booster shot though Dr
Speaker 1: Letterman basically kind of give us that reassurance and protection, Well,
Speaker 1: we just don't know. It's an excellent point. I know that,
Speaker 1: um uh, you know, there's been an idea that annual
Speaker 1: vaccinations with the mr ANDA vaccines might be good, but
Speaker 1: we don't know. The mRNA vaccines are novel because they
Speaker 1: avoid the immune system, but we don't know how well
Speaker 1: they avoid it, and there's just no evidence to lead
Speaker 1: us to have a national policy that's based on annual revaccinations.
Speaker 1: I'm hopeful, I'm hopeful they're durable. I'm hopeful they can
Speaker 1: be used in re vaccination scenarios, but it's too early
Speaker 1: to tell. Dr Letterman. Where are you exactly in the
Speaker 1: development of your vaccine. We expect to be in human
Speaker 1: trials early in next year. In we've announced very encouraging
Speaker 1: data in monkeys that have been challenged with COVID to
Speaker 1: the virus that causes COVID. But we are still developing
Speaker 1: a preparation of our vaccine that meets the high standard
Speaker 1: to be tested in humans. Our vaccine takes longer to
Speaker 1: develop the manufacturing protocols that we expect once it's once
Speaker 1: we've been through it the first time. Actually, our cost
Speaker 1: of goods, our doses and the rest of it are
Speaker 1: probably more suitable for wide deployment, uh than the existing
Speaker 1: m RNA vaccine. You said that one thing that concerned
Speaker 1: you was durability of the m RNA vaccines. So I'm
Speaker 1: wondering about not about durability of your vaccine, but about
Speaker 1: resistance that it has to potential variants. Well, the the
Speaker 1: T cell vaccines we think will be more robust to
Speaker 1: covering the different variants than some of the other vaccines
Speaker 1: that are more focused on antibodies. Dr Letterman, we were
Speaker 1: we were finishing up talking about your vaccine that you're developed,
Speaker 1: that's in development a Tonic Tonics Pharmaceuticals, And I know
Speaker 1: because it is a public traded company and because regulatory reasons,
Speaker 1: you can't be exact with with dates. But what's a
Speaker 1: realistic way for us to think about if it goes
Speaker 1: to clinical trials in humans starting next year, when could
Speaker 1: it become available for widespread potential emergency use authorization? UM
Speaker 1: I think we would take at least a year after
Speaker 1: the first clinical studies because you see seen from the
Speaker 1: FIS or Moderne experiences, you need large studies to show
Speaker 1: the effects. But part of it will be influenced by
Speaker 1: how prevalent the infection is, how prevalent COVID is. Hopefully
Speaker 1: again hopefully COVID will be less and less prevalent and
Speaker 1: then it will take us longer to develop it. But
Speaker 1: if there is a big rebound because of seasonality, the
Speaker 1: variant or you know, maybe because of the waning of
Speaker 1: protection from the existing vaccines, then you know, things could
Speaker 1: move more quickly. You know. It's interesting. We have a
Speaker 1: story coming up. It's in a Blueberg business Week magazine
Speaker 1: and it's specifically taking a look at Cuba and the
Speaker 1: work that they have done in vaccines. And Tim and
Speaker 1: I were kind of marveling as we came into the
Speaker 1: studio today about who knew you know, all of the
Speaker 1: work that Cuba is doing in the bio sense bioscience
Speaker 1: sector specifically, and they've they've got advanced vaccines that they've
Speaker 1: been working on. You know, uh when it comes to
Speaker 1: lung cancer and so on. It's actually I think before
Speaker 1: FDA approval, it does remind me and we we saw
Speaker 1: that certainly with COVID. You know that when you tap
Speaker 1: the world, you know, maybe what we can come together
Speaker 1: on and ultimately solve. And I do wonder, since this
Speaker 1: is your world, how is the world change when it
Speaker 1: comes to really working on global solutions global vaccines not
Speaker 1: just done something like COVID, but the next virus that's
Speaker 1: going to you know, kind of turn the world into
Speaker 1: a tailspin or send the world to a talpan or
Speaker 1: on some of the diseases and ailments that really plague
Speaker 1: our society. Well, I think COVID has brought the world
Speaker 1: together in the research community. But even looking at something
Speaker 1: like the Fasier vaccine, which is you know, just remarkable.
Speaker 1: I mean, the original work started with Drew Weissman and
Speaker 1: Catalan Krrico at the University of Pennsylvania. She's American born,
Speaker 1: but she's Hungarian. UM and then if you look at
Speaker 1: their major partner, bio in Tech, is based in Mainz, Germany.
Speaker 1: UM and UH is run largely by a husband and
Speaker 1: wife team who are Turkish, and you know, you could
Speaker 1: go on and on and on. So I don't know
Speaker 1: that science has any borders that you know. Basically these
Speaker 1: are well and into people getting together and putting their
Speaker 1: best ideas together. So I think that this really is
Speaker 1: a global effort, even if the most wrecking noizeable UM
Speaker 1: sponsor of it is a global pharmaceutical files are based
Speaker 1: in New York City. I think that you know, there
Speaker 1: really is a global effort. And um you know, the
Speaker 1: the change of information, the way that articles have come
Speaker 1: out so quickly, people rushing together. It's been a wonderful
Speaker 1: UM community effort. Hey, Dr Letterman, Um, what's the way
Speaker 1: that we get to widespread vaccination in the United States.
Speaker 1: What's the right conversation to have with people who are
Speaker 1: still hesitant to take one of these vaccines that's available.
Speaker 1: I wish I knew the answer. I'm hopeful that time
Speaker 1: will will be a deciding factor. I think that a
Speaker 1: lot of people don't want to be first. They want
Speaker 1: to see that other people have gotten it, that you
Speaker 1: know that the that the benefits are evident, and things
Speaker 1: like that. So hopefully time and information will come through.
Speaker 1: I think, Um, you know, it was very difficult to
Speaker 1: have the pandemic at all, but it was also difficult
Speaker 1: to of it during an election year. And I think
Speaker 1: that now that the messaging to people is much more consistent,
Speaker 1: that you know, the vaccines are safe and effective. I
Speaker 1: hope slowly people will come through. But there are other
Speaker 1: things that will be incentives. For example, the CDC recommendations
Speaker 1: saying if you're vaccinated, you don't have to wear a
Speaker 1: mask in many places, going back to work, going back
Speaker 1: to school. A lot of these places can regulate whether
Speaker 1: someone can do something if they're vaccinated or not. All right,
Speaker 1: Dr Seth Laderman, thank you so much. Co founder, CEO,
Speaker 1: chairman of Tonics Pharmaceuticals on the phone from New Bedford, Massachusetts.
Speaker 1: I meager the stock up about sixty percent so far
Speaker 1: this year, trading for a dollar thirteen. So just to
Speaker 1: kind of give you some perspective in terms of movements,
Speaker 1: this is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovan on Bloomberg Radio. So you might
Speaker 1: recall last week at the Bloomberg Live or to vent
Speaker 1: Bloomberg Business Week, we caut up at Jason Lynn, the
Speaker 1: director behind a massively successful Fast and Furious franchise. While
Speaker 1: the latest installment term out this past weekend called F nine,
Speaker 1: opened internationally, most of the tickets sales happening in the
Speaker 1: biggest market in the world, China. There was a lot
Speaker 1: going on. Well it makes sense given given the status
Speaker 1: of reopening in China versus the United States. Exactly, we're
Speaker 1: gonna talk about the movie industry. Theaters opening up right
Speaker 1: here on Bloomberg Business Week. So let's talk about the
Speaker 1: theater industry. Someone who's got a front row seat to
Speaker 1: that F nine opening and just what's going on and
Speaker 1: great to be talking with him again. Is I'm AXIEO
Speaker 1: Richard Gelfon, He joins us on the phone in New
Speaker 1: York City, rich and so nice to have you here
Speaker 1: with Tim and myself. How are you, Um, I'm great,
Speaker 1: and especially great because of what you alluded to with
Speaker 1: the opening of F nine weekend. Um. You know, it's
Speaker 1: it's been a long cold winter, as you guys are
Speaker 1: quite aware, and it's nice to have the good old
Speaker 1: fashioned Hollywood blockbuster back. And I inc. F nine really
Speaker 1: opened up like a Hollywood blockbuster. It did hundred sixty
Speaker 1: million dollars globally, hundred thirty five million dollars in China.
Speaker 1: IMAX's market share was very healthy. It's our biggest opening,
Speaker 1: um in you know, since before the pandemic started. So
Speaker 1: feeling a lot better than I was a few weeks ago, Carol.
Speaker 1: That's a big change. How I mean, how are you
Speaker 1: feeling a few weeks ago? And what changed that? Was it?
Speaker 1: This opening weekend? Especially globally? You know, probably be more
Speaker 1: honest than I should be. This has been one of
Speaker 1: the most frustrating periods of the pandemic for me, and
Speaker 1: that's because I think the world is really ready to
Speaker 1: go back to the movies, and I think there are
Speaker 1: a lot of movies that are ready to go, but
Speaker 1: I think not every territory in the world is ready
Speaker 1: at the same time and the same pace. And the
Speaker 1: traditional distribution model would say you open up globally at
Speaker 1: one time all over the world, but you know, guess what,
Speaker 1: this just isn't the time without works, so that this
Speaker 1: time is called for different kinds of models. And as
Speaker 1: a result, um, the studios, who mostly were located in Hollywood,
Speaker 1: we're looking out their windows and saying the pandemic is
Speaker 1: really not doing well here, ignoring the fact that you know,
Speaker 1: they've been blockbusters in Japan and China and Korea and
Speaker 1: Taiwan for months. So I think kind of we've been
Speaker 1: ready in a lot of places, but the movies just
Speaker 1: haven't been there. And one of the things that was
Speaker 1: really unique about the release of F nine was it
Speaker 1: was released in China about five weeks before it's being
Speaker 1: released in the rest of the world, which is a
Speaker 1: different model. And I think most of the studios have
Speaker 1: played it really conservative and said we're not opening anywhere
Speaker 1: until we could open everywhere. Um. But fortunately universal you know,
Speaker 1: took a risk in doing this, and it opens in
Speaker 1: the US in late June, but it really worked. And
Speaker 1: I think you need to demonstrate that people want to
Speaker 1: go back to the movies, and you need the kind
Speaker 1: of numbers that we had in order to get people
Speaker 1: a studios comfortable opening in their movies. So I think
Speaker 1: this was a pretty big deal. Yeah. Well, what's interesting
Speaker 1: is I remember you saying to when you and I
Speaker 1: talked um at that Bloomberg Live event. I think it
Speaker 1: was back in April. You know how you guys went
Speaker 1: into COVID earlier because of China and then came out
Speaker 1: of it earlier too because of China, And that how
Speaker 1: China in many ways has been a guiding light about
Speaker 1: kind of where we're going and how the world is reopening.
Speaker 1: Not apples to apples, I understand that, but it has
Speaker 1: helped us give us a little bit of kind of
Speaker 1: the way forward in terms of how the world maybe reopens. Yeah,
Speaker 1: I think that's definitely the case. I think the big
Speaker 1: distinguished thing thing between China and other places, though, is
Speaker 1: China didn't vaccinate at the level that other places did
Speaker 1: and mostly achieved it's kind of feeling of safety and
Speaker 1: low results through social contact tracing and other means that
Speaker 1: we're not used here in the West. So in a way,
Speaker 1: as good as China has been, um, places like North
Speaker 1: America could be even better once it really opens up,
Speaker 1: because I imagine you guys noticed that the Nick Game
Speaker 1: the other night, there were fifteen thousand people, um, you know,
Speaker 1: having a great time. And I really feel that it's
Speaker 1: going to be like the Roaring twenties and people at
Speaker 1: once they get out of the house and you know,
Speaker 1: they can go back to what their lives were like before.
Speaker 1: I think that's going to happen very quickly, and I
Speaker 1: think you know it. As I said, it's happening in Asia,
Speaker 1: and there's no reason I think that that won't happen here. Well,
Speaker 1: I'm wondering about that specifically here in the US, because
Speaker 1: we have seen companies like Disney and Warner Media as
Speaker 1: it has is still called, release theatrical releases to streaming
Speaker 1: direct consumer. And I'm wondering if you think that consumers
Speaker 1: have been conditioned to enjoy this stuff at home rather
Speaker 1: than in a theater, and that might not provide the
Speaker 1: incentive for them to get back to what they were
Speaker 1: doing before the pandemic because now they've been able to
Speaker 1: do it from their couch and not get a babysitter. Yeah.
Speaker 1: I mean that's a narrative that I think a lot
Speaker 1: of the streaming services are promoting. But I don't really
Speaker 1: think it's going to play out that way. I mean,
Speaker 1: people were locked in their living rooms, were locked in
Speaker 1: their kitchens. So when you're locked in your living room,
Speaker 1: you watch movies on your television set. When you locked
Speaker 1: in your kitchen, you don't go to restaurants. You eat
Speaker 1: in your kitchen when you're allowed to go out. I
Speaker 1: mean you look at almost every behavior. Look at what's
Speaker 1: gone on with the restaurants in New York and London
Speaker 1: and Los Angeles. I mean people weren't condition the only
Speaker 1: bringing in food. They were limited by the circumstances to
Speaker 1: doing that. And you even look at um Um one
Speaker 1: of the recent films, god Zilla Versus Kang that was
Speaker 1: released simultaneously by Warner Media um in imax. We sold
Speaker 1: out about a thousand shows around the United States when
Speaker 1: people could get it for free if they were subscribers
Speaker 1: on their TV sets. So I just don't think that's
Speaker 1: the way it is. I mean, people go to the movies,
Speaker 1: partly for escapism, partly for social reasons, partly for social activity,
Speaker 1: probably to get away from their kids, probably to get
Speaker 1: away from their parents. You know, everyone has a different reason.
Speaker 1: But I don't think they're gonna say, oh, I'd much
Speaker 1: rather watch this in my living room with my family,
Speaker 1: which is what I've been doing for the last fifteen months.
Speaker 1: That's oh g, it's this summer. Can't wait to do
Speaker 1: that on Saturday night. I just think I am I
Speaker 1: am being sarcastic, but continue but one second, and sorry Carol,
Speaker 1: but it was an interim solution designed for pandemic. And
Speaker 1: I don't blame anybody. I mean, if you're Disney, you're Warner,
Speaker 1: you know the movie theaters are closed. You've got this
Speaker 1: content you paid for, You've got to do something with it.
Speaker 1: And by the way, streaming happens to be something that
Speaker 1: the stock market likes an awful lot. So you say, oh,
Speaker 1: I'll stream, but they know that that's that's made for
Speaker 1: a time and a place. And again, I don't want
Speaker 1: to make too much of it, but if you look
Speaker 1: at the recent results and the and the projections from
Speaker 1: the streaming services during the last quarter, as the pandemic
Speaker 1: has started to fade. You know, the numbers for streaming
Speaker 1: of you know, not kept pace with where they were
Speaker 1: in the pandemic. And again that's logical, and people are
Speaker 1: still going to stream certain things, but for big blockbuster
Speaker 1: movies like IMAX does no one's gonna look forward to
Speaker 1: spending Saturday night on the couch with the parents rich.
Speaker 1: To be fair, just like you're saying the narrative of
Speaker 1: the streaming guys, they're kind of talking their book to
Speaker 1: some extent. I think it's safe to say that you're
Speaker 1: talking your book about people coming back. But I mean,
Speaker 1: what do you then make of all the streaming deals
Speaker 1: that are happening right now? We're kind of on, you know,
Speaker 1: the edge of our seat, waiting for Amazon to maybe
Speaker 1: announce that they are acquiring the MGM. You know, studios
Speaker 1: line up in library. Uh. And so you've worked in
Speaker 1: mergers and acquisitions. You're an investment, but you understand this world.
Speaker 1: Do you think this is just a cycle that runs
Speaker 1: out of steam or do you think there's real momentum
Speaker 1: Because there's some things that changes, but as a result
Speaker 1: of the pandemic that will stay with us. And I
Speaker 1: think there's a lot that would say that streaming is
Speaker 1: part of that. I think streaming is part of it,
Speaker 1: but I think in a different way than it was
Speaker 1: during the pandemic. I think for niche movies and movies
Speaker 1: that you know, cost less in a budget and have
Speaker 1: to find a specific audience, releasing them direct to streaming
Speaker 1: will make sense because the marketing costs are extremely high
Speaker 1: to do that reaching your consumer and a niche market
Speaker 1: is difficult to find. And I think those things will
Speaker 1: continue to stream. Also, almost every studio has come up
Speaker 1: now with a forty five day window where they'll they'll
Speaker 1: stream forty five days after opening. And I think, if anything,
Speaker 1: that's going to make the content more valuable and the
Speaker 1: theatrical run more valuable to the studio. Because remember, how
Speaker 1: did HBO get started? How did um um, how did
Speaker 1: Netflix get started? They streamed Hollywood movies and those movies
Speaker 1: got a lot of exposure, got a brand, got good
Speaker 1: word of mouth. I've got brand recognition, built sequels, and
Speaker 1: then people paid a lot to go stream them. Um.
Speaker 1: You know, as I'll ask you a question, name five
Speaker 1: stream movies from Netflix last year? Um? You know? Uh.
Speaker 1: And by the way, it is a trick question because
Speaker 1: I was just in l A and I asked ten
Speaker 1: people that and nobody can name five stream movies during
Speaker 1: and that's streaming. When I was growing up, there were
Speaker 1: TV movies and then there were real movies. I think
Speaker 1: now there's going to be real movies and streaming movies.
Speaker 1: But do theaters have to do something rich to kind
Speaker 1: of bring everybody back? Like listen, I love that the
Speaker 1: seat's got more comfy, that I can stretch out like
Speaker 1: that has it's a reason for me to go to theaters.
Speaker 1: I know people who it's become a real date night
Speaker 1: where they're in a little cocoon and there's drinks and
Speaker 1: their food and it's like an experience. But you know,
Speaker 1: I don't know if that's just the minority or do
Speaker 1: the majority wants something wrong? You know more that you
Speaker 1: know experience experiential aspect of it. Does it have to
Speaker 1: be amped up? Yeah? I think it does. And I
Speaker 1: think that's why IMAX is doing really well. So if
Speaker 1: you look at our results in Asia, our market share
Speaker 1: has gone up in virtually every country post pandemic because
Speaker 1: I think you know, people who have been watching in
Speaker 1: their living rooms and watching their televisions, they when they leave,
Speaker 1: they want to do something really special. So I think,
Speaker 1: you know, that's why IMAX has been very successful over
Speaker 1: the last number of years, and that's why I think
Speaker 1: will be even more successful during this because filmmakers make
Speaker 1: these big films to be seen on the big screen
Speaker 1: and to be heard with the big sound. And UM,
Speaker 1: you know, I think you're completely right, and um you know,
Speaker 1: God knows. I hope you're even more and more right
Speaker 1: because we'll be a beneficiary of that trend. Hey, Rich
Speaker 1: I'm wondering how your business changes, how the economics of
Speaker 1: IMAX changes when you have more consolidation within the studios
Speaker 1: when Discovery and uh Warner Media are tied up. If
Speaker 1: Amazon and MGM studios are tied up, are they going
Speaker 1: to charge you more? No, I don't. You have to
Speaker 1: look on in a very individual basis. So Discovering made
Speaker 1: unscripted content and none of that really went into the
Speaker 1: theatrical ecosystem. So by merging with Warner you're not really
Speaker 1: losing the studio. You're getting Actually, I think a more
Speaker 1: pro theatrical management team behind one of the best studios
Speaker 1: that's existed for a long time. Um. I think if
Speaker 1: Amazon ends up buying MGM. They're buying it for their
Speaker 1: you know, their expertise in television program which programming, which
Speaker 1: fits perfectly with Amazon's prime strategy. I don't think Amazon
Speaker 1: is gonna, you know, start putting Bond on your telephone.
Speaker 1: I mean, I just don't think that's the way I'm
Speaker 1: double O seven or or the Broccoli family, which owns
Speaker 1: a lot of those rights, wants to see that franchise go.
Speaker 1: I mean, MGM has not been in the blockbuster business
Speaker 1: except for a Bond for a while. They've been really
Speaker 1: in the TV business. I think it makes a lot
Speaker 1: of sense for Amazon and fits right in. So I
Speaker 1: I don't think, UM, there's gonna be a loss of content. No, Hey,
Speaker 1: we wanted to also ask you about working in China.
Speaker 1: I mean, you've been in the market, you UM have
Speaker 1: figured out a way forward, and I feel like it
Speaker 1: gets more and more complicated between the East versus the West,
Speaker 1: particularly when you're talking about China. There's a story, it's
Speaker 1: among the most read on the Bloomberg Today about UM
Speaker 1: actor and former w w E champion John Cena apologizing
Speaker 1: for describing Taiwan as a country in a promotional video
Speaker 1: that he did for his latest movie and saying sorry
Speaker 1: ultimately in Mandarin after the comments triggered a backlash in China.
Speaker 1: Is the world allowing China too much say and control?
Speaker 1: In your view, especially when it comes to kind of
Speaker 1: the arts and culture. I mean, China is such a
Speaker 1: complicated place. And I've been going to China for almost
Speaker 1: twenty five years. And the way I'm ex dealt with
Speaker 1: China is we created a separate entity UM in Hong
Speaker 1: Kong Cold I'm at China, and it's owned by a
Speaker 1: lot of people in mainland China people in Hong Kong.
Speaker 1: It's staffed by almost completely Chinese people. It's senior management
Speaker 1: team is Chinese. And we've been one of the most
Speaker 1: successful Western media companies in China UM, and I think
Speaker 1: the reason for that is because we haven't tried to
Speaker 1: come in and be a US company in China. We've
Speaker 1: tried to be a Chinese company in China. And I
Speaker 1: think a lot of the media entertainment companies have missed
Speaker 1: that nuance a little bit and have tried to set
Speaker 1: up a branch office run by an American who heads
Speaker 1: that branch, and the Chinese are very proud people and
Speaker 1: they're obviously their culture is really important to them, and
Speaker 1: I think trying to manage their culture on remote control
Speaker 1: is difficult, and I think there are a lot of pitfalls,
Speaker 1: and we're seeing a lot of those. So we've taken
Speaker 1: a different approach and I think gets worked for us,
Speaker 1: and I would expect that other people are going to
Speaker 1: learn from that and take a similar approach. Hey, one
Speaker 1: thing I want to ask you, because we are awaiting, UM,
Speaker 1: some comments from the family of George Floyd, who was
Speaker 1: meeting with President Biden today. This is, of course the
Speaker 1: one year anniversary of the death of George Floyd. Early
Speaker 1: on in the pandemic. You know, we talked with you
Speaker 1: about or you know we talked with you about a
Speaker 1: month ago, but how early on in the pandemic and
Speaker 1: some of the difficult issues of a racism and writing
Speaker 1: and companies were dealing with that. George Floyd, of course,
Speaker 1: black lives matter, and you said that you had some
Speaker 1: outside pr consults that told you to basically hide and
Speaker 1: be quiet. You felt otherwise, what is the responsibility of
Speaker 1: global corporations on on things like racism and what happened
Speaker 1: to George Floyd? I mean, obviously, UM, George Floyd was murdered,
Speaker 1: and thank god, um always, you know, one of the
Speaker 1: killers was brought to justice, and that's you know, that's
Speaker 1: the bedrock of American you know, really happy that that happened. Um.
Speaker 1: In terms of a corporate response, I mean, at the time,
Speaker 1: we did a number of internal things. We've you know,
Speaker 1: we we put together a committee, We've done different things
Speaker 1: on diversity recruiting, and we'll continue to do them. But
Speaker 1: I don't think, um, there's one stock answer for every company.
Speaker 1: So you know, for example, I don't know whether you're
Speaker 1: aware of this, but I'm act as a Canadian company
Speaker 1: and we do business in eighty four countries. So I
Speaker 1: think maybe our responsibility and our views are different than
Speaker 1: a company that is the US company completely. I mean,
Speaker 1: there are just a lot of conflicting issues, but I
Speaker 1: do think all companies have a duty when there's massive
Speaker 1: social injustice to engage in some way and to make
Speaker 1: sure their employees feel hurt. Can you talk a little
Speaker 1: bit about what you're doing inside the company, because that's
Speaker 1: something that we've been talking about all day at Bloomberg Quicktake,
Speaker 1: and and something that I've been thinking a lot about
Speaker 1: a lot because In the last year, we got a
Speaker 1: lot of commitment from from companies about how they're trying
Speaker 1: to hire more diverse talent across the companies and making
Speaker 1: changes within the company. What specifically are you guys doing
Speaker 1: at Imax. Well, you know, it's it's never enough, but
Speaker 1: you should know that in the five years I'm from uh,
Speaker 1: five years ago to now, my management team is about
Speaker 1: women or people of diversity, and that was you know,
Speaker 1: we did that before you know, any of these efforts
Speaker 1: became public. And you know, we're trying to add more
Speaker 1: women to our board and more people of color, and
Speaker 1: we've been somewhat successful in doing that, but we have
Speaker 1: I'm farther to go and I think I'm preaching tolerance
Speaker 1: day today and inclusiveness and you know, that's the way
Speaker 1: we always try to model our culture and this just
Speaker 1: reinforces it. But I do wonder too, especially when you're
Speaker 1: a publicly held entity. We talked about this, whether it's E.
Speaker 1: S G. Climate change, um, but you social responsibilities and
Speaker 1: invest You know, there's a lot of speak, as you know,
Speaker 1: rich about the importance of diversity, and yet it does
Speaker 1: still feel like when it comes to actual actions and
Speaker 1: you know, your company aside that companies still are kind
Speaker 1: of slow to make change. Why is that. Well, I
Speaker 1: can only speak for my own company, and I told
Speaker 1: you we completely remade our management team and are in
Speaker 1: the process of remaking significant parts of our board. So
Speaker 1: you know, not to point fingers than anyone, but it's
Speaker 1: harder for bigger companies. Were relatively small company, so we
Speaker 1: can be much more agile. And I think also because
Speaker 1: UM we're so diverse geographically, you know, we have a
Speaker 1: different perspective, you know, coming into it. Like you know,
Speaker 1: for example, in Asia, we have a hundred and fifty employees.
Speaker 1: In China, we have an office in Japan, So you know,
Speaker 1: we don't have to be encouraged or sensitized on how
Speaker 1: we feel about Asians. They're part of our company, They're
Speaker 1: part of our DNA. So maybe that's part of your answer.
Speaker 1: Size of the company and you know, its roots being
Speaker 1: diverse or its roots being more singular. Hey, rich One,
Speaker 1: you and I talked back in April to UM and
Speaker 1: just kind of going back to the impact you know,
Speaker 1: the pandemic has had on so many of us in
Speaker 1: so many different ways. You mentioned to me that the
Speaker 1: pandemic opened your eyes that you can't be a one
Speaker 1: trick pony and and Tim and I were talking about,
Speaker 1: you know, innovation is one thing Tim, right, we talked
Speaker 1: about a lot with companies we do, and I'm wondering
Speaker 1: how you are innovating at Imax and what's in the pipeline,
Speaker 1: because before the pandemic, the narrative was, Okay, this is
Speaker 1: about the experience economy. How do we get people to
Speaker 1: do things that they cannot do at home, they can't
Speaker 1: do online, and they can only do in person. And
Speaker 1: of course seeing a movie on an IMAX screen in
Speaker 1: an IMAX studio is a way that you do that.
Speaker 1: But I mean, how do you take that even further? Yes,
Speaker 1: So I was going to say this country, this company
Speaker 1: has been built on innovation and some of this might
Speaker 1: surprise you. At UM stadium seating was invented by Imax.
Speaker 1: UM we were the first ones, more recently to launch
Speaker 1: laser projection on a global basis, advanced sound systems, special
Speaker 1: cameras that we built, whether to go into space, which
Speaker 1: we've done, or to go to the bottom of the ocean.
Speaker 1: We've always been a leading innovator in an industry not
Speaker 1: known for innovation. UM UM in the movie industry, but
Speaker 1: during the pandemic we stepped it up a little more
Speaker 1: and we worked with a company that's fairly well known
Speaker 1: in the founders of our company, of our partner in
Speaker 1: artificial intelligence had started a company called ken Show, which
Speaker 1: is now owned by SMP and it's the largest sale
Speaker 1: of an AI company, and we're working with them. We
Speaker 1: announced the joint venture to figure out how to enhance images,
Speaker 1: so whether they're old movies or old sports events, and
Speaker 1: there are a lot of uses for that, whether in
Speaker 1: hardware or software. We haven't fully outlined outlined it yet. UM.
Speaker 1: We've got another new product for I'm streaming on large
Speaker 1: screen TVs in the home. It's called IMAX Enhanced, and
Speaker 1: we've done a deals with Sony, in ten Cent and
Speaker 1: others where when you have content that's been put through
Speaker 1: the process and you watch it on these big screens,
Speaker 1: it looks better than an otherwise would by a significant amount. UM.
Speaker 1: We've been working on our direct to consumer app. UM
Speaker 1: we're looking at putting live content in our theaters. So
Speaker 1: we're always purged to look on how we can innovate.
Speaker 1: And in fact, not many people will say this, but
Speaker 1: you know, Despite all the horrible things about the pandemic,
Speaker 1: one good thing is it gave you, you know, a reset.
Speaker 1: It gave you the time and the ability to use
Speaker 1: a lot of your people to try and look for
Speaker 1: new ways to innovate. Yeah, it's interesting. I think people
Speaker 1: were worried about you wouldn't be able to do that,
Speaker 1: but ultimately we found a way forward with that. Hey, Rich,
Speaker 1: thank you so much. So happy to talk with you,
Speaker 1: uh and really a nice deep diving conversation there, and
Speaker 1: look forward to checking in with you again, uh further
Speaker 1: in the year and hopefully we just continue this reopening globally. UM,
Speaker 1: so so great, Thank you so much. I'm axo. Rich
Speaker 1: Galfon on the phone in New York City. I can't
Speaker 1: even remember the last time. I was just trying to
Speaker 1: think of but you know what, we had a kid
Speaker 1: a year before the pandemic, so we haven't been to
Speaker 1: the theater since before then. Yeah, there was a point,
Speaker 1: but I know I went with Aggie's probably God, I'm
Speaker 1: just trying to think what it was. I don't know.
Speaker 1: I think we saw probably an Avenger movie, that great
Speaker 1: rock climbing documentary. I forget what it's called. It was
Speaker 1: so good. It was a long time ago a journal. Yeah,
Speaker 1: but you let me drive. No, no, honey, please, I'll
Speaker 1: do the drivel. I want to drive. Just drive by
Speaker 1: the questions trying. This is the drive to the globe community. Thanks,
Speaker 1: we'll drying us down on Bloomberg Radio. All right, everybody, Yep,
Speaker 1: it's Tuesday. I gotta check my calendar. There it is.
Speaker 1: It doesn't feel like one of those weeks it does
Speaker 1: for the markets. Oh my god. Yeah, it's kind of
Speaker 1: crazy and I feel like you're it's playing out that
Speaker 1: way in the trading day. Let's get to it. Close
Speaker 1: to me, President portfolio manager at Smeat Capital Management, on
Speaker 1: the phone in Phoenix, Arizona. Smeat Value Fund. Check it out,
Speaker 1: beating just about all of its peers so far this year,
Speaker 1: up on beating most of its piers two over the
Speaker 1: past five years, returning on average more than annually. Call
Speaker 1: how are you doing? How about you guys doing well?
Speaker 1: Doing well? Um? Tell us. You know what we love
Speaker 1: about talking with you is you guys are buying, your selling,
Speaker 1: your taking moves. Um. You love the discovery move with
Speaker 1: a T and T. Let's just go right to it
Speaker 1: because we have been talking about streaming every day. We're
Speaker 1: waiting to see if Amazon ultimately does that MGM deal.
Speaker 1: Why do you like the Discovery A T and T deal.
Speaker 1: It's a great question. We've been involved with Discovery since
Speaker 1: late seventeen, and we actually were involved with Scripts prior
Speaker 1: to the transaction where they bought UM Scripts, and you know, Discovery,
Speaker 1: as Barry Diller said last week, UM went from being UM,
Speaker 1: you know, nothing to a something under the leadership of
Speaker 1: David sass Laught since that company has gone public back
Speaker 1: in oh seven, and UM sath last took what was
Speaker 1: you know, really kind of considered low grade content reality
Speaker 1: television and made it a highly profitable business, and no
Speaker 1: one expected that, might I add, and now he with
Speaker 1: a background where he was at NBC Universal for years,
Speaker 1: is going to take UM, you know, scripted television. He's
Speaker 1: gonna be taking news and sports and putting into those
Speaker 1: into one place. And I think the irony is they
Speaker 1: yet again do not believe in his leadership or the
Speaker 1: assets they have. In comparison and UM having the blessing
Speaker 1: of the Malone and new House family, UM in toe
Speaker 1: with an effect a takeover by A T and T
Speaker 1: shareholders of Discovery. We think it's got quite a bit
Speaker 1: of fun all around it, and we're very pleased to
Speaker 1: be involved a shareholder. Did you buy more Discovery as
Speaker 1: a result. Uh, well, let's let's slow this way. I
Speaker 1: compliance officers probably listening, so I will say, UM, we
Speaker 1: find it interesting. We were what we've been doing with
Speaker 1: the run up and Discovery you know, through this year,
Speaker 1: is we were actually buying non voting shares UM, and
Speaker 1: so we're we're kind of blown at the spread between
Speaker 1: the voting versus non voting. We saw that in the day. Yeah. Yeah,
Speaker 1: and Malone also said he won't take a premium on
Speaker 1: his super voting, which was even a higher price. So UM.
Speaker 1: I think while Amazon is finishing up their deal with MGM,
Speaker 1: the other interesting part is this movie business of of
Speaker 1: this um. You know the Warner Brothers studio, if you will,
Speaker 1: it's a highly marketable asset. UM. So yes, there's debt
Speaker 1: going on in this, but not to say that there's
Speaker 1: not assets that they could divest if they want. And
Speaker 1: we know there's buyers. We know Apple needs content, we
Speaker 1: know Google needs content. There's a big short on content. UM.
Speaker 1: And I would also say to you guys that all
Speaker 1: these businesses are in play. Lions Gates in play, Vicom,
Speaker 1: CBS is in play, Discoveries in play, time, Warners in
Speaker 1: play for Warner Medias and play. Excuse me, um, I
Speaker 1: think it's only going to heat up because the pockets
Speaker 1: and the stock prices and the money that could come
Speaker 1: after them from the likes of Apple and Google are incredible.
Speaker 1: Do you think NBCUniversal, owned by Comcast right now, is
Speaker 1: in play? Uh? Well, how I you know? Uh? Using
Speaker 1: Malone's comments UM from the last week, he said that
Speaker 1: it's problematic for Comcast because of the regulatory They own
Speaker 1: the data, they know a lot about the customer, and
Speaker 1: they have the content. UM. I think you could also
Speaker 1: see where they could get a deal done where they
Speaker 1: kind of step back arm's length UM, where it's not
Speaker 1: directly held by Comcast. But UM, let's say you have
Speaker 1: a co ownership or part of it sold UM to
Speaker 1: get a deal where you bring in other people's assets
Speaker 1: into the NBC Universal fold. So I think the possibilities
Speaker 1: are endless at this point. That's the way I look
Speaker 1: at it. So in terms of other streaming things that
Speaker 1: might happen deals, are there any investments that you've made
Speaker 1: based on your expectations of something that might happen. No, No,
Speaker 1: I mean we we really like this, and by we
Speaker 1: own Comcast as well. That's why I say that from
Speaker 1: that perspective. But I think the truth is we're going
Speaker 1: to find out in this era is that only media
Speaker 1: people are good at media. And why we we found
Speaker 1: that every era Coca Cola sucked at at doing movie
Speaker 1: pictures at one point, um the conglomerates got into the
Speaker 1: movie business. Gulf and Western was an example of that
Speaker 1: with Paramount so Um. What's interesting today is we think
Speaker 1: that big behemoth corporations a k a. Tech companies are
Speaker 1: going to be better at media than media people, which
Speaker 1: is kind of mind blowing relative to history. So so,
Speaker 1: Tara La Chapelle, a Bloomberg opinion has a column out
Speaker 1: today and you're quoted in it. I noticed, um, is
Speaker 1: Amazon's MGM deal a game changer? And you and she
Speaker 1: draws this connection between what happened with Amazon and Whole Foods,
Speaker 1: and you told her the biggest mistake of Jeff bezos
Speaker 1: career was buying Whole Foods. Um, excuse me, that was
Speaker 1: Bill Smeat. I'm sorry, yeah, yeah, that was your dad
Speaker 1: wrong smeat. But but I do I am interested in
Speaker 1: this idea of the of the of you guys thinking
Speaker 1: about this from Amazon's perspective. So what can Amazon do
Speaker 1: if if it's been such a mistake for them to
Speaker 1: buy whole foods, what does Amazon do with MGMs content?
Speaker 1: We'll see that here's the reality to whether it be
Speaker 1: the whole foods at the MGM, it can never be
Speaker 1: a meaningful part of the overall size of the business.
Speaker 1: And I'll give you another relic of history. Okay, Um,
Speaker 1: don't forget that Expedia came out of Microsoft. Was Expedia
Speaker 1: a very successful online travel agent answers? Yes, it's one
Speaker 1: of the two. It's an old adopaly it's booking in them.
Speaker 1: But inside Microsoft, it was not a meaningful business and
Speaker 1: it never was going to be. Um, even today it's
Speaker 1: a non meaningful size of a business rolls to the Microsoft.
Speaker 1: So and that's the problem is that history would argue
Speaker 1: when you see businesses diversifying, you should get really nervous
Speaker 1: because it should tell you what's wrong with the core
Speaker 1: business that makes them want to go into a new arena.
Speaker 1: And today we applaud it because the market has incredible
Speaker 1: confidence in the data or in the management team or whatever.
Speaker 1: That is the problem is we should all be asking
Speaker 1: what's wrong with the core business and why are we
Speaker 1: going to a different direction? All right, So tell us
Speaker 1: what else do you like or anything that you've been
Speaker 1: buying home building our names that you guys love, NVR,
Speaker 1: d h I, LNAR. Also, we've got some housing data today. Um,
Speaker 1: there was some of it a little bit troubling, but
Speaker 1: maybe not surprising in terms of prices, especially with the
Speaker 1: demand that's out there. Um, how do you see the
Speaker 1: housing market playing out? Are continuing to play out? It's
Speaker 1: gonna be wonderful. We share with people that we were
Speaker 1: gonna go to fifty percent higher home building numbers, um
Speaker 1: assuredly over the next decade at some point, and people
Speaker 1: say that's impossible. And what I love about that is
Speaker 1: the economists should say it's possible. But it's based on price,
Speaker 1: and that's the way we're gonna get enough labor and
Speaker 1: inputs and so on and so forth. So this is
Speaker 1: not a short term phenomena. It's not a sugar high
Speaker 1: like people running their steamy checks out of the casino
Speaker 1: or out of the robin hood accounts. We're talking about
Speaker 1: where people live, and so it's a completely different thing.
Speaker 1: The other thing, I would say, the mall business is
Speaker 1: gonna boom. It's already booming in markets that's that have
Speaker 1: been open. And we think the economics of names like
Speaker 1: Mace rich In Simon Property Group are going to make
Speaker 1: people cry at a later date because pre pandemic mall
Speaker 1: business sucked. Post pandemic is winning and winning great Tilman
Speaker 1: I thought Tilman for Tita being interviewed earlier today. And
Speaker 1: you can't find a restaurant that's not booming right now,
Speaker 1: and they're paying up for all kinds of delicacies at
Speaker 1: at nice restaurants. And that's wonderful for a mall because
Speaker 1: that's a kind of property business that sits on a mall.
Speaker 1: If those restaurants find parking at our mall, and here
Speaker 1: in Arizona, we've been open for a year, location location, Look,
Speaker 1: if those restaurants can find employee exactly, yeah, exactly. It's
Speaker 1: tough to find employees, but you know what a booming
Speaker 1: business where it's tough to find employee, that's the first
Speaker 1: world problem in my book. All right, we gotta run. Hey, Cole,
Speaker 1: thank you so much to how do your dad calls
Speaker 1: to me? President and Portfolio Mager. It's Meat Capital Management
Speaker 1: on the phone from Phoenix, Arizona. Listen. Their value fund
Speaker 1: has been a top performer consistently over the years, and
Speaker 1: I love it that we get to talk on names.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
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Speaker 1: also listen to our radio show at two pm Eastern
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Speaker 1: Bloomberg Global News Number,