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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Well.

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Speaker 3: Netflix back in the news today.

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Speaker 4: They're amending their offer for Warner Brothers Discovery to an

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Speaker 4: all cash deal. Was cash and stock, now going all cash,

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Speaker 4: believing that will strengthen their bid.

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Speaker 3: They've also got earnings there for the closer.

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Speaker 4: So a lot to talk about on the Netflix front,

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Speaker 4: which means we want to check in with Eitha.

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Speaker 3: Wrong or nothing.

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Speaker 4: She covers all the media stocks for Bloomberg Intelligence. She's

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Speaker 4: based down in Princeton here. So Keitha, what did you

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Speaker 4: make of Netflix today kind of amending their offer to

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Speaker 4: an all cash offer.

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Speaker 2: Yeah, so this really Paul puts to rest this ongoing

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Speaker 2: investor debate about whether you know the paramount thirty dollars

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Speaker 2: all cash bid for all of Warner is really in

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Speaker 2: fact superior to Netflix's bid, which was a which is

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Speaker 2: a combination of both stock and cash, especially since the

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Speaker 2: value of Netflix's stock has been declining now for many months.

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Speaker 2: So I think what Netflix really aims to do here

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Speaker 2: is to first of all, just show David Zaslab and

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Speaker 2: Warner Brothers Discovery shareholders the money. So they're going all cash,

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Speaker 2: you know, and they're basically saying that we want to

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Speaker 2: really get this deal on a fast track here because

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Speaker 2: this will speed up the shareholder vote. It will now

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Speaker 2: happen sometime in April. It was previously supposed to happen

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Speaker 2: sometime in June. So they're really kind of getting going here,

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Speaker 2: and you know, put the putting the money where their

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Speaker 2: mouth is, you know.

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Speaker 4: You know, first thing, when I saw this news this morning, KEITHA,

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Speaker 4: I put my own banker hat back on. I said, boys,

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Speaker 4: seems like Netflix is bidding against the self because we

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Speaker 4: haven't heard any kind of counterbid from Paramount here. What

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Speaker 4: do you think is going on behind the scenes with

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Speaker 4: both of these bidders.

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Speaker 2: Yes, so you know, Paramount obviously they've been constantly insisting,

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Speaker 2: you know, about the superiority of that thirty dollars all

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Speaker 2: cash offer. With Netflix having changed its bid to an

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Speaker 2: all cash bid, I think the ball is now squarely

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Speaker 2: in Paramount score. They have to have to increase or

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Speaker 2: sweeten their bid. You know, one of the things, Paul,

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Speaker 2: that has been constantly debated is the value of the

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Speaker 2: TV networks, that is, the remaining portion of the business

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Speaker 2: that Netflix will not acquire, so this will be spun

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Speaker 2: off by Warner Brothers. Discovery Paramount has argued that those

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Speaker 2: TV networks are actually worth nothing. That's what they've said,

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Speaker 2: And they've based our argument just you know, kind of

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Speaker 2: on the performance and the valuation of Worsen, which is

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Speaker 2: the Comcast cable network spin off. But Discovery actually put

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Speaker 2: out a filing today and it basically suggests that, of

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Speaker 2: course there's a huge range for those cable TV networks,

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Speaker 2: but they value them anywhere from about a dollar fifty

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Speaker 2: a share to as high as seven dollar dollars a share,

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Speaker 2: and they kind of lay out many different scenarios basically

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Speaker 2: suggesting that, you know, some of those networks, like a CNN,

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Speaker 2: like some networks international networks in Poland could actually be

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Speaker 2: sold and you know, a lot more shareholder value could.

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Speaker 4: Be extracted, so to speak.

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Speaker 3: So I think Warner Brothers still.

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Speaker 2: Believes that the spin off of the cable networks will

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Speaker 2: actually bring it more value. And this is why they're

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Speaker 2: kind of leaning towards that Netflix offer.

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Speaker 4: What's the timing here, do we wait until the shareholder

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Speaker 4: vote until April or do we expect something happening. Seems

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Speaker 4: to be dragging on here a little bit.

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Speaker 2: Yeah, it is. So Actually tomorrow is a very important day.

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Speaker 2: And I say that because tomorrow is the deadline for

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Speaker 2: the Paramount tender, which is the thirty dollars tender. So

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Speaker 2: expect something to happen. Either Paramount extends that offer or

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Speaker 2: they basically have to sweeten the bit. So so something

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Speaker 2: definitely should have happened tomorrow. If nothing happens, then we'll

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Speaker 2: have to wait and watch and see, you know, what

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Speaker 2: happens now On the regulatory front, because now that we

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Speaker 2: have all the financial terms in place, I think the

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Speaker 2: next big question mark is obviously what are the regulators

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Speaker 2: going to say about this.

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Speaker 3: Deal and what's the early thinking there.

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Speaker 2: So it's a little bit of a mixed bag here,

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Speaker 2: and it's going to be really interesting to see what

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Speaker 2: Netflix actually does. So they've kind of laid out many

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Speaker 2: different arguments which should, I think, kind of soothe regulator fears,

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Speaker 2: kind of not have too much of regulatory scrutiny. So

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Speaker 2: they've said that they're going to maintain the HBO business,

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Speaker 2: they're going to maintain the theatrical business. These were all

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Speaker 2: big question marks when they initially announced the deal. One

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Speaker 2: of the big things that we are kind of looking

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Speaker 2: for tonight when Netflix reports earnings is what their stance

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Speaker 2: is going to be on price increases. So the last

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Speaker 2: time that they raised prices in the US was last January,

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Speaker 2: so exactly twelve months ago, and typically they have the

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Speaker 2: s cadence of increasing prices every twelve to eighteen months.

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Speaker 2: So it's going to be interesting to see whether they

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Speaker 2: are going to take that chance and go ahead and

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Speaker 2: raise prices or in fact stay away from raising prices.

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Speaker 2: That's making the case regulators that you know they're more

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Speaker 2: pro consumer, and you know they're they're kind of especially

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Speaker 2: when you know the deal is kind of in regulatory

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Speaker 2: cross hairs. So a lot of things here still kind

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Speaker 2: of waiting to unfold, Paul, But it's it's going to

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Speaker 2: be a very different process here in the US where

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Speaker 2: it seems like that regulators might give Netflix a green signal.

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Speaker 2: But I think it's going to be much tougher for

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Speaker 2: them in the EU, where where they do have much

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Speaker 2: higher anti trust issues.

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Speaker 4: Thirty seconds left here, geth the company Netflix is reporting

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Speaker 4: after the close here Aside from this deal flow, what

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Speaker 4: else are you looking for?

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Speaker 2: I think the number one thing that everybody is going

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Speaker 2: to look for is revenue guidance for twenty twenty six.

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Speaker 2: I mean, one of the things that the deal, the

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Speaker 2: concern that it raises is revenue growth going to slow?

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Speaker 2: Is revenue growth slowing? Is that why they bought Warner?

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Speaker 5: And so?

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Speaker 2: Anything below thirteen percent? Thirteen percent is the consensus number

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Speaker 2: right now. Anything below thirteen percent not good for Netflix?

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Speaker 3: Say with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: Listening to the Bloomberg Intelligence podcast. Catch us live weekdays

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Speaker 1: at ten am Eastern on Apple, Cocklay and Android Atto

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Speaker 1: with the Bloomberg Business app, Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 5: Well, the President is on a mission. He is determined

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Speaker 5: to gain control of Greenland, and he has made that

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Speaker 5: his central issue as he makes his way to Davos

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Speaker 5: tomorrow to speak with global leaders. In doing so, he's

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Speaker 5: breaking all kinds of diplomatic norms, sharing friend Emanuel Maccon's

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Speaker 5: personal text to him and essentially mocking him. So new

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Speaker 5: things are happening every day. Let's bring in Henrietta Trace.

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Speaker 5: She is managing partner and director of Economic Policy at

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Speaker 5: Veda Partners. Henrietta help us make sense of what is

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Speaker 5: happening here when it comes to Greenland and the President

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Speaker 5: threatening perhaps the EU trade deal that was struck last year,

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Speaker 5: threatening to impose more tariffs even as we await a

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Speaker 5: Supreme Court ruling on the legality of those terrffts.

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Speaker 6: I think you just nailed two of the three reasons

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Speaker 6: we are talking about Greenland. The first one is that

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Speaker 6: the USU trade deal, as far as I can tell,

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Speaker 6: is dead. The EU was planning to drop its industrial

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Speaker 6: tariffs on US exports to zero percent later on this week.

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Speaker 6: That's off the table. I think the agreement and the

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Speaker 6: lower fifteen percent tariffs that were reached last year are

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Speaker 6: probably going to revert back to probably going to revert

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Speaker 6: back to the twenty percent Liberation Day tariffs. So I

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Speaker 6: think that's an acknowledgment that there's no deal on digital

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Speaker 6: services taxation, there's no deal on agriculture issues that have

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Speaker 6: plagued the two sides for one hundred years. There are

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Speaker 6: a lot of issues with the USU trade deal that

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Speaker 6: just are not going to be resolved, and this is

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Speaker 6: the President's way of sort of circumventing that. And then finally,

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Speaker 6: as we all await the Supreme Court, it strikes me

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Speaker 6: as plainly obvious that when and if they do strike

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Speaker 6: down the President's i EPA tariff authority, and the Republican

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Speaker 6: Party and President Trump specifically are materially underwater on their

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Speaker 6: hands of inflation prices and the economy with the American

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Speaker 6: voter base, they don't have the ability to keep ratcheting

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Speaker 6: up tariffs through other alternatives. So Greenland is actually an

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Speaker 6: excellent replacement for tariffs because it keeps those EU and

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Speaker 6: UK and other NATO allies incredibly focused on the US

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Speaker 6: willing to cater to the President's needs and wants, and

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Speaker 6: they don't have to necessarily hit back with tariffs which

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Speaker 6: the domestic audience in the United States cannot stomach anymore.

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Speaker 6: And those are the biggest reasons I think we're talking

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Speaker 6: about Greenland right.

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Speaker 3: Now, Henrietta.

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Speaker 4: How's it playing within the Republican Party these days or

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Speaker 4: just within Washington. This whole focus on Greenland, it seemed

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Speaker 4: to come out of nowhere and the presence not letting

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Speaker 4: it go. Are there political ramifications? This is an election here.

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Speaker 6: You know, I've watched polling data, and I've worked on

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Speaker 6: elections from Texas to Rhode Island for twenty years now.

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Speaker 6: I have never seen the American public so unified in

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Speaker 6: opposition to a single item. I don't think this many

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Speaker 6: Americans like ice cream or disney World. You know, it's

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Speaker 6: something like eighty two eighty three percent of Americans oppose

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Speaker 6: this Greenland move. That's a striking amount of unanimity and

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Speaker 6: a pretty clear message to the president.

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Speaker 3: What does he do with that? Though? What does Congress

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Speaker 3: do with that?

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Speaker 5: What does the Republican Party do with that unified opposition

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Speaker 5: to Greenland? To the US taking control of Greenland?

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Speaker 1: Well?

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Speaker 6: I think it really Yeah, I think it really speaks

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Speaker 6: to the next phase of President Trump's political status in

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Speaker 6: the United States, which is that we're moving into lame

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Speaker 6: duck territory. I think we're already there. So what that

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Speaker 6: means is you're not going to get out of Congress

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Speaker 6: this year that will advance the president's agenda. That's not abnormal.

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Speaker 6: Very few presidents pass two reconciliation bills Joe Biden was

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Speaker 6: definitely an outlier in that regard, and you got two

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Speaker 6: bipartisan bills done. I don't think that's an option for

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Speaker 6: this president, you know, in this sort of scorched earth environment.

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Speaker 6: So what presidents do in that scenario is they pivot

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Speaker 6: to foreign policy. And that's what the president has been

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Speaker 6: focused on for many months now, whether it is you know, Israel,

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Speaker 6: Gaza or Venezuela and now Greenland. And that's where lame

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Speaker 6: duck presidents traditionally head to at the end of their terms.

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Speaker 6: So I know we have three years left of President Trump,

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Speaker 6: but the legislative realities, particularly as we look forward to

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Speaker 6: a midterm election cycle where Democrats are leading in the

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Speaker 6: generic ballot, which is highly predictive of election outcomes by

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Speaker 6: five points on average. So the president is migrating into

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Speaker 6: what is a very normal place for presidents to move

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Speaker 6: into in their last couple of years in office, which

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Speaker 6: is foreign policy.

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Speaker 4: I seem to have something in the back of my mind,

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Speaker 4: you know, I spent the last week on a beach.

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Speaker 3: How about the government staying open? Where are we in that?

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Speaker 6: Oh, we got some really good news on that front.

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Speaker 6: The House is moving forward with the six remaining bills,

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Speaker 6: even the very contentious online security package, And I'm very

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Speaker 6: hopeful that they'll be able to clear the rule later

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Speaker 6: on and get that sort of big package of six

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Speaker 6: appropriations bills over the Senate by the time they get

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Speaker 6: back next week and we can have a shutdown. So

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Speaker 6: I think we're on the right path with that one.

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Speaker 5: But there's no resolution on healthcare right. Republicans have not

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Speaker 5: come up with a way to make or keep healthcare

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Speaker 5: plans affordable for Americans who do rely on the Obamacare exchanges.

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Speaker 6: No, there's no solution to the ACA subsidies. And again,

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Speaker 6: I think that goes back to the President having a

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Speaker 6: situation where Congress is not capable of passing legislation, so

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Speaker 6: he pivots to foreign policy in lieu of domestic legislation,

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Speaker 6: So an ACA subsidy extension. You know, my colleague expense

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Speaker 6: or Pearlman has been on the contrary side of this

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Speaker 6: for many months now, but it's still proving accurate. There's

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Speaker 6: just no way to get past the impass Republicans have

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Speaker 6: on the High Amendment and abortion legislation, the income caps,

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Speaker 6: the applicability of the ACA subsidies. There's just not a

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Speaker 6: path forward at this time. The House is acted on

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Speaker 6: a three year extension, but the Senate it's not going

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Speaker 6: to pass that bill.

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Speaker 3: Henrietta about thirty seconds left.

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Speaker 4: Should we expect any legislation from this Congress in twenty

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Speaker 4: twenty six?

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Speaker 6: I don't think so. My adds of a second reconciliation

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Speaker 6: bill are inordinately low. I'm at twenty percent, and that's

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Speaker 6: really trying to be generous. I don't see a path

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Speaker 6: forward for material legislation this year. It's going to be

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Speaker 6: keep the lights on. More bailouts for farmers I think

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Speaker 6: are obviously coming. We'll get fifteen billion dollars added in

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Speaker 6: this latest bill that brings us to a total of

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Speaker 6: thirty billion dollars for farmers, and we're going to try

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Speaker 6: to keep doing that with the Highway bill, with the

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Speaker 6: farm bill, and those pieces of sort of must pass legislation.

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Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Cocklay and Android

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Speaker 1: you get your podcasts, or watch us live on YouTube, Over.

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Speaker 4: The weekend, Greenland became front and center once again. President

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Speaker 4: Trump talking about having tariffs on some of the European

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Speaker 4: countries that are pushing back on some of the presidents

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Speaker 4: moves towards a Greenland. Next guest suggest maybe they should

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Speaker 4: rethink that, Mark Champion, he's a calmness for Bloomberg opinion

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Speaker 4: as late as a calm is entitled Europe can't afford

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Speaker 4: a throwdown over Greenland.

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Speaker 3: Mark, thanks so much for joining us here. Why do

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Speaker 3: you write that? How do you think Europe will respond

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Speaker 3: or should respond?

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Speaker 7: Well, I mean we can see that they are. I mean,

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Speaker 7: so they're right in principle in everything that they say.

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Speaker 7: You know that they've had enough that Trump is using trade,

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Speaker 7: you know, for reasons that it's really shouldn't be used,

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Speaker 7: is using it as leverage in order to basically break

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Speaker 7: international law and demand that another country hands over sovereignty

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Speaker 7: over a piece of territory. He has no good reason

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Speaker 7: for doing it. He's given various reasons. They simply don't

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Speaker 7: stand up. The US can do everything that they need

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Speaker 7: to do in Greenland without having to take it. They

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Speaker 7: already have a treaty that allows them to do anything more.

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Speaker 7: Or less, so you know, the European the outrage is

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Speaker 7: completely understandable. The difficulty is if they get into a

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Speaker 7: trade war, like Prince President Emineuel Macaron is suggesting that

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Speaker 7: they fire this so called trade bazooka that was designed

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Speaker 7: for exactly this sort of purpose, where a foreign country

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Speaker 7: is misusing trade in order to pressure the EU. If

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Speaker 7: they do that, as Trump has already known, then he

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Speaker 7: will escalate. If they escalate, they need to think of

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Speaker 7: where they get to and whether they will be able

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Speaker 7: to stay together and whether they will be able to resist.

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Speaker 7: And the real problem here, and the point that I

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Speaker 7: was trying to make, is these things are ultimately not

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Speaker 7: determined by principle but by power, and Europe lacks the power.

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Speaker 7: Trump has that leverage, not necessarily because of trade. If

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Speaker 7: it was just about trade, the EU could could you know,

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Speaker 7: properly stand its own. The real problem is that they

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Speaker 7: are so dependent in terms of security. They care about NATO,

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Speaker 7: they care desperately about NATO. He does not, you know,

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Speaker 7: they care very much about what happens in Ukraine, and

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Speaker 7: that Ukraine should you know that the Russian forces to

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Speaker 7: be stopped in Ukraine and not allowed to go further west,

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Speaker 7: he does not, So this is where they have a

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Speaker 7: real problem.

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Speaker 5: And you point out that you're already seeing a splintering

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Speaker 5: in that European defense, or that that rallying of European nations.

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Speaker 5: Italy notably did not send anyone to Greenland to fight

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Speaker 5: this kind of symbolic or to put up a symbolic

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Speaker 5: defense against the US's goals for that that island. How

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Speaker 5: are you thinking of this divide and conquer strategy that

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Speaker 5: the US is employing or is it? It's not really

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Speaker 5: much of one. All it has to do is kind

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Speaker 5: of poke holes.

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Speaker 7: Well, well, that's it. And if there is, you know,

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Speaker 7: if there is a kind of diabolical logic to what

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Speaker 7: Trump is doing, I suspect that this is it. He's

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Speaker 7: very much on the record is believing that the or

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Speaker 7: saying that the EU is designed to rip off the

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Speaker 7: United States. He'd like to see it dissolved. And trade

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Speaker 7: is an area where one of the few areas where

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Speaker 7: the EU is truly united in terms of its you know,

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Speaker 7: foreign international presence, so you know the power to make

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Speaker 7: trade treaties and trade policy is concentrated in Brussels, not

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Speaker 7: in the capitals. So you know, he he would like

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Speaker 7: to break that down. It's much easier to deal with

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Speaker 7: the UK or France, or Germany or Denmark individually for

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Speaker 7: the US than it is to deal with them more collectively.

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Speaker 7: So you know, you can see that a kind of

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Speaker 7: logic to what he might be trying to do. But again,

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Speaker 7: if he is, you cannot maintain an alliance that way.

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Speaker 7: And unfortunately, the risk, real risks of the Europeans is

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Speaker 7: that they are not ready to give up that alliance.

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Speaker 7: They still depend too much on the US nuclear umbrella,

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Speaker 7: too much on NATO, you know, US assets within NATO

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Speaker 7: to have a kind of you know, meaningful deterrent against

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Speaker 7: fully militarized countries such as Russia or China, and it's

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Speaker 7: going to be you know, they're ten years away at

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Speaker 7: least from being able to stand on their own in

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Speaker 7: that sense, and that gives Trump a great deal of

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Speaker 7: leverage in the short term.

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