Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and Eva Though in San Francisco.
Speaker 2: This is Bloomberg Tech coming up Paramounts, Guidance amend it's
Speaker 2: been for Warner Brothers Discovery, this time including a personal
Speaker 2: financial guarantee by Oracle chairman Larry Ellison. Plus Chinese chip
Speaker 2: makers are rushing to the IPO market after back to.
Speaker 3: Back listing surge.
Speaker 2: We discuss the ongoing global AI race and New York
Speaker 2: Governor Kavie Hokel signs a bill to restrict the most
Speaker 2: advanced artificial intelligence.
Speaker 3: We discuss a regulatory landscape.
Speaker 2: Building in the United States, but first we check in
Speaker 2: on these markets at the moment that are building too.
Speaker 2: We're building towards what has been a spectacular year for
Speaker 2: the NASVAQ one hundred and more than twenty percent. We're
Speaker 2: up four tens percent. We're fading some of the initial
Speaker 2: gains at the open. But really, more broadly, this is
Speaker 2: about big tech AI anxiety.
Speaker 3: Just pulling back a little bit and actually people putting.
Speaker 2: Money on towards this shortened trading week. We delve into
Speaker 2: the individual movers. One is being driven by breaking news.
Speaker 2: Right now, Alphabet, we check in on their particular shares.
Speaker 3: In a moment for you.
Speaker 2: But now I'm looking at the media landscape. Let's go
Speaker 2: to Alphabet because we're trading flat. But this is news
Speaker 2: breaks that is actually making a big acquisition in the
Speaker 2: world of energy, Intersect Energy, helping them develop their overall
Speaker 2: well data centers that are becoming sprawling and ever more
Speaker 2: necessary here in the United States where they need the
Speaker 2: energy infrastructure.
Speaker 3: With wit to do that.
Speaker 2: Four point seventy five billion dollars including debt for this
Speaker 2: particular private equity backed company which is still building out
Speaker 2: in Texas for other clients than Alphabet. So keep an
Speaker 2: eye on what's happening in the world of energy and Alphabet.
Speaker 2: Move on from Alphabet and look at what's happening in
Speaker 2: the media industry because that's what drives the trade and
Speaker 2: all the talk on the day. Paramount skuideouts basically the Ellison's.
Speaker 3: Back with an amended deal.
Speaker 2: They will pay more if indeed they were able to
Speaker 2: clinch Warner Brothers Discovery, but it failed to go through
Speaker 2: to five point eight billion dollars. If the deal didn't happen.
Speaker 2: But more broadly, they're saying, by the way, we're good
Speaker 2: for the money. We're going to give a personal guarantee
Speaker 2: from Larry Ellison, David Ellison's father, to ensure that the money,
Speaker 2: the forty billion dollars of equity there that they'll be
Speaker 2: doing to help purchase Warner Brothers Discovery is intact Netflix
Speaker 2: on the downside, as perhaps says more tussle at the
Speaker 2: top for this particular asset. Let's get Chris Palmurray's take
Speaker 2: on all of this. You're out covering the world of media.
Speaker 2: Boy is entertainment and media on ten to hooks at
Speaker 2: the moment, Chris, what do you make of this amended deal?
Speaker 2: Because the price doesn't change, it's just the guarantee on
Speaker 2: the money.
Speaker 4: So extraordinary amount of steps on Paramount's part to address
Speaker 4: the concerns that Warner Brothers had identified last week and
Speaker 4: why they didn't pick them to begin with. So quite
Speaker 4: a lot there. The personal guarantee from Larry Ellison. One
Speaker 4: of the issues was this was being backed by a
Speaker 4: revocable trust. What if he revoked it? A lot of
Speaker 4: other changes to terms in terms of their ability Warner Brothers'
Speaker 4: ability to operate in the interim period before something's improved,
Speaker 4: the extended the tender date, a lot of changes everything
Speaker 4: Bud raising the price, and that's a big issue because
Speaker 4: if Warner Brothers did decide to not go with Netflix
Speaker 4: and go with another suitor, they would have to pay
Speaker 4: Netflix two point eight billion dollars and somebody's going to
Speaker 4: have to pay that. So so everything but a change
Speaker 4: in price.
Speaker 2: And then four does it all come down to what
Speaker 2: you think the cable networks are actually worth? Chris, if
Speaker 2: they indeed managed to convince David Zaslov that they're good
Speaker 2: for the money, is this more personal for David or
Speaker 2: is this more about the price of the networks?
Speaker 4: You know, it does go beyond all of that for sure.
Speaker 4: Right now there is this difference in how you because
Speaker 4: you know, Netflix is not buying the cable networks any
Speaker 4: their worth paramount says only a dollar is share, other
Speaker 4: people say three or four dollars a share. That's a
Speaker 4: big part of it. But really, when you also saw
Speaker 4: that letter and filing last week from Warner Brothers, they
Speaker 4: talked about having a stronger balance sheet long term, which
Speaker 4: netflixdisputably has about a fewer cuts of jobs because Netflix
Speaker 4: really doesn't have a studio a lot like Warner Brothers does,
Speaker 4: so they wouldn't. They aren't promising as many cuts as
Speaker 4: Paramount would, So better for Hollywood is one of the
Speaker 4: things Warner Brothers said. So those sort of intangible things
Speaker 4: are also part of the mix.
Speaker 2: Chris Palmury running us through what is a very complex
Speaker 2: Hollywood shakeup. Look in fact, we talked about this last week.
Speaker 2: Remember Kevin Maher joined the show is Candel Media co CEO,
Speaker 2: former TikTok CEO, but also a Disney executive. Here's what
Speaker 2: he had to say about a potential Paramount comeback.
Speaker 5: Even though Netflix won the first round. Don't count out
Speaker 5: the Allison's. They're incredibly smart and aggressive. Don't count out
Speaker 5: don't count out Jerry Cardinal Redbird. These guys are very serious.
Speaker 5: I think they're going to come back with a higher
Speaker 5: bid and when approached, and remember shareholders still haven't spoken yet.
Speaker 5: I think the likelihood of here is that Martin Brothers
Speaker 5: ends up with Paramount, and I think it's ultimately it's
Speaker 5: the cost some jobs. Obviously in Hollywood, there's no getting
Speaker 5: around that, but ultimately good for creators I mean.
Speaker 2: He found Disney plus what therefore for Born and Brothers,
Speaker 2: Discovery Saga. John clins with US, co founder of Hang
Speaker 2: Media of course, the former president of CNN. You know
Speaker 2: the inner workings of media right now, John, do you
Speaker 2: think that the deal has to be sweetened? It can't
Speaker 2: just be about more for a breakup fee or good for.
Speaker 3: The money in terms of Larry Allison.
Speaker 6: Yeah, you know, it's a very clear picture of who's
Speaker 6: got the leverage here.
Speaker 7: Clearly WBT has suitors.
Speaker 6: David Zaslav could just sit and fold his arms and say, look,
Speaker 6: you're not talking in my good here yet paramount and
Speaker 6: it's a it's not a dumb way to try to
Speaker 6: drive their offer up even higher than that wouldn't surprise me.
Speaker 2: What do you think could be the quibbling around the
Speaker 2: cable network.
Speaker 3: That's the area that you knew, you love.
Speaker 2: You performed in and there has been, of course the
Speaker 2: regulatory concern about who ends up owning CNN, but more
Speaker 2: broadly about.
Speaker 3: What they really are basically priced at. John.
Speaker 6: Yeah, And you know, value really depends on the acquirer,
Speaker 6: and there could very well be acquirers out there in
Speaker 6: the universe of media who value those cable networks much
Speaker 6: more highly than a Netflix would or even Paramount would.
Speaker 6: And you know, you could see where Versant, for example,
Speaker 6: which is being spun off from comcasts, which is identical
Speaker 6: to the cable.
Speaker 7: Spinoff that WBD is doing.
Speaker 6: You could see them valuing TNT, TBS, True TV, CNN
Speaker 6: much more highly than these current players are.
Speaker 7: So value is in the eye of the holder.
Speaker 6: I could see the local station giants like Nextstar and
Speaker 6: Sinclair also loving the idea of having both a national
Speaker 6: footprint as well as their ever growing roster of local stations.
Speaker 7: So you know, there could be even.
Speaker 6: More money available to WBD if they go ahead and
Speaker 6: sell those two components separately.
Speaker 2: I see, what would you think would happen if and
Speaker 2: it's a big if Paramount's guidance got hold of all
Speaker 2: the assets because Netflix we know if that deal gets done,
Speaker 2: the cable networks would be spun off.
Speaker 3: But if Paramount's guidance took hold, would you think then
Speaker 3: would be the evolution here?
Speaker 6: Well, they could still do a spin off of their
Speaker 6: own cable properties and broadcast properties. There's all kinds of
Speaker 6: financial engineering that could then take place.
Speaker 7: I don't know that it would happen overnight.
Speaker 6: Although this new paramount management team has moved extremely quickly.
Speaker 6: You know, David Ellison gets a lot of attention, but
Speaker 6: Jeff Shell, who was the chairman of NBC Universal, it
Speaker 6: is a fantastic operator and and I could see them
Speaker 6: moving quickly. However, it sort of reminds one of the
Speaker 6: snake that eats the deer, you know, it unhinges its
Speaker 6: jaw and it spends the next three months just trying
Speaker 6: to move that thing down the tunnel.
Speaker 7: And it could take a while for all of these
Speaker 7: synergies to be realized.
Speaker 2: How important is the Ellison relationship with the administration at
Speaker 2: this point, John, because that's in many ways what they
Speaker 2: thought would clinch the deal.
Speaker 8: It's been reported well, much as David's ass lab is
Speaker 8: able to sit there and play one side off the other,
Speaker 8: so is Donald Trump in a similar position.
Speaker 6: Where he has not put his finger on the scale
Speaker 6: yet in favor of paramounts offered, despite his relationship with
Speaker 6: Larry Ellison. And he has said very nice things about
Speaker 6: Ted Sarandos, the co CEO of Netflix. And I think
Speaker 6: that Donald Trump is enjoying being a position to see
Speaker 6: who can curry more favor with him, so there's no
Speaker 6: reason for either President Trump or David Zaslav to pull
Speaker 6: a trigger on anything just yet. They want to see
Speaker 6: how these deals all get sweetened.
Speaker 2: I suppose the other contingent of stakeholder who has sat
Speaker 2: there with their arms folded is the investor base. Right now,
Speaker 2: they've got one until January the twenty first to digest
Speaker 2: whether this go direct in way the Edisons have approached
Speaker 2: them Warner Brothers Discovery shareholders to be clinched versus going
Speaker 2: with Netflix.
Speaker 3: What would you say to.
Speaker 2: An investor who's holding Warner Brothers Discovery shares right now.
Speaker 6: That there's plenty of time for this deal from paramount
Speaker 6: to go even higher. So one way or another, WBD
Speaker 6: is going to be making out very nicely. History has
Speaker 6: shown us that the sellers in these media deals tend
Speaker 6: to make out better than the buyers, so they're in
Speaker 6: a pretty good position in that respect as well. You
Speaker 6: look at Disney's acquisition of the Fox assets a few
Speaker 6: years ago, and Disney's valuation has dropped significantly since then,
Speaker 6: and Rupert Murdock is counting his money, So they're in
Speaker 6: a decent position and there's no need to get too
Speaker 6: worked up just yet, plenty of time for the dollars
Speaker 6: to increase.
Speaker 2: What's so interesting about your trajectory and media is you've
Speaker 2: sort of been able to see around the corners. You
Speaker 2: were in the heart of news, in the heart of production,
Speaker 2: then you went into the world of AI selling while
Speaker 2: helping manage a business, eventually went to Apple.
Speaker 3: You're with hang Media at the moment.
Speaker 2: What does all of this mean for Hollywood and for
Speaker 2: content creation right now?
Speaker 6: Well, we're on at the very beginning of a content
Speaker 6: creation explosion, and this deal, however, it turns out, is
Speaker 6: taking place within a much larger environment in which the
Speaker 6: creators who are being distributed by you tube and TikTok
Speaker 6: are commanding much more viewing time than the traditional producers, writers,
Speaker 6: directors and most of all studios and so in a
Speaker 6: lot of ways, this battle for the assets of WBD
Speaker 6: is really all about the way media used to be.
Speaker 6: But the big winner here is YouTube because nobody's keeping
Speaker 6: their eye on that. I mean, YouTube made headlines last week.
Speaker 6: They just stole the Oscars from ABC. Beginning in twenty
Speaker 6: twenty nine, YouTube is going to be where you go
Speaker 6: to watch the Oscars and listen in the twenty thirties.
Speaker 7: I think all those tech.
Speaker 6: Giants are going to be running media and all of
Speaker 6: these other companies will be significantly smaller.
Speaker 7: And we're just seeing the beginning of this.
Speaker 6: So in a lot of ways, this matters a lot
Speaker 6: to the shareholders for the for WBD, Netflix, Paramount, etc.
Speaker 6: But in terms of the long term trajectory of the
Speaker 6: media industry, that's all happening somewhere.
Speaker 2: Else, and suddenly that's one the regulators how to digest
Speaker 2: what really is the market that a Netflix plus Warner
Speaker 2: Brothers Discovery would be competing in chunkline of hang media.
Speaker 2: It's always great to catch up with you. Happy holidays,
Speaker 2: Thank you. Coming up, Google is buying Intersect Power to
Speaker 2: help build out its energy infrastructure for AI products. We
Speaker 2: delve into that next the Springberg Tech Google is agreed
Speaker 2: to buy power provider Intersect Power for four week seventy.
Speaker 3: Five billion dollars in cash plus existing debt.
Speaker 2: This as the tech giant makes a push to grow
Speaker 2: its data center presence.
Speaker 3: Bloomberg's Joshua joins us.
Speaker 2: Now to discuss that Sharzo moving higher up about five
Speaker 2: ten percent.
Speaker 3: Josh, why is alphabet getting ever more into the world
Speaker 3: of clean energy.
Speaker 9: Ever since we saw tech companies needing a lot of
Speaker 9: electricity for their data centers, there's been a conflict between utilities.
Speaker 9: Traditional power providers which move slow make sure that nothing
Speaker 9: ever breaks. Grid reliability is paramount for them. Tech companies
Speaker 9: want to move really fast. They want to get a
Speaker 9: ton of power. They're not against breaking things. This is
Speaker 9: an example of a big tech company saying we're just
Speaker 9: going to bring a whole a whole power generation company.
Speaker 9: We're going to bring that in house so that we
Speaker 9: can really quickly develop a lot of clean energy to
Speaker 9: power a lot of our data centers and our AI dreams.
Speaker 3: Intersect Power is an interesting company.
Speaker 2: It's been backed by private equity players such as TPG,
Speaker 2: but they actually build out, particularly in Texas, not just
Speaker 2: for Alphabet, so they've got other clients on their books.
Speaker 3: How is this actually going to work from an M
Speaker 3: and A.
Speaker 9: Perspective, that's that's interesting. I'm not sure how that's going
Speaker 9: to get worked out, but I think what it means
Speaker 9: for Google is that they'll be obviously front a line
Speaker 9: and able to build a lot of clean energy on
Speaker 9: site with its data centers, something that that allows Google
Speaker 9: to go even faster with is it won't have to
Speaker 9: build big transmission lines if you have power plants or
Speaker 9: solar and wind farms somewhere, and then you have to
Speaker 9: permit transmission lines to move that electricity long distances to
Speaker 9: get to the data centers. What Intersect is good at,
Speaker 9: what Google has expressed interest about in the past is
Speaker 9: building those big solar and wind farms on the exact
Speaker 9: same site, basically ringing or adjacent to the huge AI
Speaker 9: data centers. So that means that the electricity can just
Speaker 9: flow directly into those facilities.
Speaker 2: So No pitch I, chief executive officer of Google and
Speaker 2: parent company Alphabet talking about how it's going to expend,
Speaker 2: expand capacity and operate nimbly and building new power generation
Speaker 2: in lockstep with the data center need.
Speaker 3: They are not the only player needing to expand in
Speaker 3: data centers. Is this kind of come thick and fast.
Speaker 2: These sort of energy assets are going to be really
Speaker 2: interesting to some of these big hyperscaters.
Speaker 9: Yes, for sure, we've seen all the big hyper scalers
Speaker 9: making different moves in the energy space in.
Speaker 7: A way that they wouldn't have in past years.
Speaker 9: I've reported this year on Meta getting into power trading
Speaker 9: so that they're able to help energy generation get brought
Speaker 9: online faster, more at the cadence that they want as
Speaker 9: opposed to the frequency and speed with which power generation
Speaker 9: has been provided in the past. So yeah, basically to
Speaker 9: a company, you can expect all of the big hyper
Speaker 9: scalers to be making different moves in the energy space
Speaker 9: to try to make sure that they're getting as much electrons,
Speaker 9: as many electrons as they need for their big AI goals.
Speaker 2: Josh, it's going to be a busy one for you
Speaker 2: in twenty twenty six. Thanks so much for talking us
Speaker 2: through this particular deal. We appreciate it. Josh saw the
Speaker 2: Chinese chip makers, they are rushing to IPO following some
Speaker 2: blockbuster debuts that we've just had as recently.
Speaker 3: As last week.
Speaker 2: This seems to be huge demand for future national champions,
Speaker 2: the analysts say could one day rival even the likes
Speaker 2: of Nvidia.
Speaker 3: But does that.
Speaker 2: Enthusiasm mask technological challenges facing these firms? Boombergs Maggie Eastland,
Speaker 2: who covers Chips, joins us. Now the context of this
Speaker 2: is almost a seven hundred percent pop in Metax that
Speaker 2: debuted last week. We've got other of the so called
Speaker 2: four little dragons looking to IPO, it's all about domestic national.
Speaker 3: Champions exactly, Caroline.
Speaker 10: So China is certainly putting a lot of support behind
Speaker 10: these chip champions, and there's no shortage of capital. Bloomberg
Speaker 10: has reported on an incentives package for semiconductors of up
Speaker 10: to seventy billion dollars. So the push for domestic chip
Speaker 10: companies is alive, it's strong and well. The questions come
Speaker 10: in when you look at the technological challenges. So Chinese
Speaker 10: chip makers, you could look at Huawei as one of
Speaker 10: the top champions this year. We're still relying on foundry
Speaker 10: services from TSMC as well as memory from Korean providers.
Speaker 10: So you know, it's a key question what is going
Speaker 10: to happen once China actually makes that shift to relying
Speaker 10: on smith and relying on their own manufacturing where the
Speaker 10: yields are kind of questionable.
Speaker 2: Okay, So they've got to get the foundries in place.
Speaker 2: They've got to of course, many quandering what the ISML
Speaker 2: competitor is over there as.
Speaker 3: Well, Maggie.
Speaker 2: But take us back to some of the other reporting
Speaker 2: that's in the market today that H two hundreds from
Speaker 2: video will stop being produced and being able to be
Speaker 2: issued into China. I mean, we haven't heard from the government,
Speaker 2: but what do you think about the need the use
Speaker 2: case of H two hundreds.
Speaker 10: Of course, when you look at H two hundreds, I
Speaker 10: think one of the key questions going forward is how
Speaker 10: is this going to affect the ecosystem of Chinese model companies.
Speaker 10: You know, last year we had this deep sea moment
Speaker 10: and that is very intertwined with access to chips.
Speaker 3: Of course, now it's widely.
Speaker 10: Known that you know, deep seek access A one hundreds.
Speaker 10: Those are in video chips that are less powerful than
Speaker 10: the AGE two hundreds. So you know what is going
Speaker 10: to happen once China is able to access if they
Speaker 10: accept the H two hundreds, what does that mean for
Speaker 10: the Chinese model companies?
Speaker 11: Will they grow more competitive?
Speaker 10: There was a story today on Bloomberg about Zippu and
Speaker 10: Mini Max and their revenue.
Speaker 3: We're just seeing some numbers.
Speaker 10: They're not quite as high as Open AI and Anthropic,
Speaker 10: but this is a key area of interest going forward,
Speaker 10: right given that they're no longer going to be as
Speaker 10: hindered by their lack of access to advanced in vidio chips.
Speaker 2: Higie Eastland it's going to be a fascinating trend you're
Speaker 2: continuing to watch for us.
Speaker 3: Thank you.
Speaker 2: Now, let's talk more about the geopolitical issues at play
Speaker 2: here between the US between China as it opens with
Speaker 2: US managing director at Garot Global. All of this is
Speaker 2: so interesting as to whether or not indeed in video
Speaker 2: gets access to China, whether we see a TikTok deal,
Speaker 2: whether we see continuing trade issues between US and China
Speaker 2: iron out do If we talk about chips in particular,
Speaker 2: what have you made of the ferocious focus on domestic
Speaker 2: supply chain they coming from China.
Speaker 12: Yeah, it's a great question, Caroline, and I agree with
Speaker 12: Maggie just now that the you know, the H two
Speaker 12: hundred is really going to be a boon for some
Speaker 12: of these Chinese AI companies. As we've seen over and
Speaker 12: over again, compute is really the bottleneck. But I want
Speaker 12: to go back to what you said about the TikTok deal.
Speaker 12: You know, we heard the news a few days ago.
Speaker 12: It hasn't yet been finalized, and I think a lot
Speaker 12: of investors are going to be analyzing what is the
Speaker 12: structure of this deal. But what I think is more
Speaker 12: interesting is what appears to be the case is that
Speaker 12: byte Edance, the parent company that owns TikTok, is going
Speaker 12: to maintain control over TikTok's algorithm. This, of course, is
Speaker 12: the special sauce that makes TikTok what it is, that
Speaker 12: makes it so addictive and so special in the first place.
Speaker 12: And I just want to remind your audience that Beijing
Speaker 12: has never agreed to turn over control of this algorithm
Speaker 12: over to this the US investors, and that's.
Speaker 11: Really at the heart of the deal.
Speaker 12: So what you see is as a Trump administration keeps
Speaker 12: trying to come up with some kind of a deal
Speaker 12: to end this TikTok saga and keep it in the
Speaker 12: United States, it keeps kind of lowering the bar on
Speaker 12: this deal with Beijing over TikTok to the point where
Speaker 12: now we're probably going to be settling on a deal
Speaker 12: where Beijing, through byte Dance, maintains control over this algorithm
Speaker 12: and this vector of influence over American discourse. And what
Speaker 12: you know, hundreds of millions of people are seeing on
Speaker 12: this app every day.
Speaker 2: So Elsa, are you saying when the talk is the
Speaker 2: reporting is that they will be able to license the
Speaker 2: algorithm and then rebuild it.
Speaker 3: You don't think that they will be rebuilding.
Speaker 2: You don't think that will be some sort of retraining,
Speaker 2: will still be dependent on byte Dances underlying algorithm.
Speaker 11: Yeah, I mean, color be skeptical.
Speaker 6: They are.
Speaker 12: They've been working on this you know, so called security
Speaker 12: deal for quite some time. But the reason that the Congress,
Speaker 12: on a bipartisan basis passed the law in the first place,
Speaker 12: and then the Supreme Court upheld it was because they
Speaker 12: did not see it as viable for US national security
Speaker 12: for a adversary controlled company, you know, Byteedance and TikTok
Speaker 12: to be maintaining control of this algorithm. So I think
Speaker 12: they're going to be putting some kind of lipstick on
Speaker 12: the pig and some kind of security arrangement in place.
Speaker 12: But remember, going all the way back to twenty twenty,
Speaker 12: Beijing put export controls on this algorithm. Those haven't gone away.
Speaker 12: Beijing has never budged in its stance. It's the US
Speaker 12: side that has kind of lowered expectations over and over again,
Speaker 12: and the deal still isn't done yet.
Speaker 3: Eliza, very briefly, is national security at risk?
Speaker 12: If that Scot's yeah, you know, it's you know, we
Speaker 12: can make an analogy perhaps to the Cold War. It's
Speaker 12: almost as if, you know, during the Cold War we
Speaker 12: let the Soviets take control over some of our major newspapers.
Speaker 12: Or imagine today if Bloomberg TV were up for sale
Speaker 12: to the Russians of the Iranians. What's somewhat ironic is
Speaker 12: that last month the Trump administration put out its National
Speaker 12: Security strategy. You can see it on the White House website,
Speaker 12: and it makes the point over and over again that
Speaker 12: foreign interference in US media is a problem. And yet
Speaker 12: here we are on the verge of this deal.
Speaker 11: With TikTok, with Beijing maintaining control.
Speaker 2: Lisotoven, managing director of god Global, it's great to catch
Speaker 2: up with a thank you as a Blue meg Tech.
Speaker 2: Welcome back to Blue meg Tech. Let's check in on
Speaker 2: these markets because we're on risk one mode. It is
Speaker 2: a shortened week ahead of the holidays, people selling up
Speaker 2: the books and just trading into this tech market. We
Speaker 2: see that's that one hundred up five tens of a percent.
Speaker 2: In fact, it's on course to delivering more than twenty
Speaker 2: percent post of the entire year. So big tech remains
Speaker 2: on top, even as we still have some.
Speaker 3: AI anxieties around.
Speaker 2: We're seeing less anxieties around crypto today. We're up more
Speaker 2: than two percent, but look it is down on the
Speaker 2: year by some four percent. We have only seen that
Speaker 2: a handful of times for the OG in the crypto space.
Speaker 3: Keep an eye at the ninety thousand dollars level.
Speaker 2: Let's move on to look at the individual players in
Speaker 2: the NAZNAK one hundred.
Speaker 3: They want to keep an eye on.
Speaker 2: Because it's all about MNA in media and the tussle
Speaker 2: at the top for what is a prize asset a
Speaker 2: Warner Brothers Discovery. It's straining up to two point nine
Speaker 2: percent because we seem to have an amended offer coming
Speaker 2: from the Ellison family. This one paramount's guidear't saying, look,
Speaker 2: we're paying more if there's a breakup fee, and also
Speaker 2: we guarantee the money coming from Larry Llison, David Ellison's
Speaker 2: father Mewe.
Speaker 3: Netflix off by seven tenths of a percent.
Speaker 2: As it looks as though they might have to be
Speaker 2: hear a bit more of a bidding war or indeed
Speaker 2: some sort of worry that they might not clinch the deal.
Speaker 3: Let's talk about it all.
Speaker 2: We've got Bloomberg Tech editor Tom Giles with us. So
Speaker 2: it seems as though Larry Ellison, to the rescue. A
Speaker 2: lot of the worry from Warner Brothers Discovery have been
Speaker 2: around how good Paramout's guidance was for the money.
Speaker 13: That's right, when you've got the backing the personal guarantee
Speaker 13: of one of the world's wealthiest people, that's bound to
Speaker 13: make a difference. Remember that one of the bones of
Speaker 13: contention between the two companies was the idea of where
Speaker 13: this money, how this money would be held. Previously, it
Speaker 13: was going to be held in a revocable trust, and
Speaker 13: as the name implies, there was a little bit of
Speaker 13: room there for it to be moved around, for the
Speaker 13: terms to change a little bit somehow. Now Larry Ellison
Speaker 13: is saying that forty billion, we're going to back it
Speaker 13: with an irrevocable trust. That's an extra element of assurance
Speaker 13: that time that Warner Brothers shareholders should be able to
Speaker 13: take away from this extra bit of This extra assurance
Speaker 13: from one of the world's wealthiest people.
Speaker 2: Just remind us of extraordinary nature that Larry Ellison has
Speaker 2: been playing in the world of techomedia.
Speaker 3: Just the entirety of twenty twenty five.
Speaker 2: He's ordered at the root of nearly all stories that
Speaker 2: we're covering at the moment, Tom, is that competitive instinct there.
Speaker 2: Do we think that they'll actually raise the bid, not
Speaker 2: just amend it.
Speaker 13: Yeah, well, you know, right on your show, including with
Speaker 13: Kevin Meyer, former Disney executive, you've had several people speculating
Speaker 13: that they will have to sweeten their bid. As of
Speaker 13: right now, they're amending some of the terms, but in
Speaker 13: terms of the dollar value that's going to go into
Speaker 13: the share into the hands of shareholders, Warner Brothers shareholders, that.
Speaker 14: Has not changed.
Speaker 13: There's a lot of speculation that in order to get
Speaker 13: Zoslav Warner Brothers CEO back to the table, they're going
Speaker 13: to have to sweeten the bid, that these terms they're
Speaker 13: going to help, they're going to address some of the concerns,
Speaker 13: but that the number has to rise. Remember that there's
Speaker 13: a disagreement between Netflix and Paramount as to.
Speaker 3: Whose bid is superior.
Speaker 13: David Ellison's CEO of Paramount will definitely say his is
Speaker 13: period puts more money into the hands of shareholders, But
Speaker 13: it's difficult to assess on an apples to Apple's basis
Speaker 13: because one of them places a value on the cable networks,
Speaker 13: the other one dozen the other one presupposes that those
Speaker 13: cable networks are going to be spun off. So there's
Speaker 13: it's a disagreement around how do you value those networks? Also,
Speaker 13: how much stock do you put in the share price
Speaker 13: of Netflix, which is a big part of its share price.
Speaker 2: Meanwhile, Netflix has been tidying our its own financing for
Speaker 2: the deal today as well, Tom Jiles, very busy end
Speaker 2: of the year for you. Thanks so much for joining
Speaker 2: us on this deal. And look, let's talk about how
Speaker 2: the deal for Warner Brothers really is upending potentially the
Speaker 2: future of Hollywood. But there's a bigger shift at play
Speaker 2: as well simultaneously, and it's artificial intelligence. It is rewriting
Speaker 2: how content is created, its license is monetized. Just talk
Speaker 2: about that with Robin Feldman, professor of Law and you
Speaker 2: see Law San Francisco and a leading expert on intellectual
Speaker 2: property and innovation. You're out with a new book AI
Speaker 2: versus IP rewriting creativity. You seem to have an argument
Speaker 2: that they could work in lockstep. But for now, just
Speaker 2: let's think back to how the IP relationship has been
Speaker 2: redrawn with Disney.
Speaker 3: And Open AI. Was that for positive Do you.
Speaker 15: Think I asked them Mickey Mouse deal. Well, it's hard
Speaker 15: to know whether there's much substance to that deal.
Speaker 3: If you look into it, we.
Speaker 15: See Disney promising to invest money into open Ai, but
Speaker 15: it's a drop in the bucket compared to the amount
Speaker 15: of money that open Ai says it's going to spend
Speaker 15: on infrastructure and chips. And then for open AI's part,
Speaker 15: open Ai says that it is licensing the Disney characters,
Speaker 15: but it's not paying any cash in the deal, just
Speaker 15: stock warrants, which is the opportunity for Disney to invest
Speaker 15: more money in the future if it wants to. So
Speaker 15: when I look at this deal, it reminds me a
Speaker 15: little of the Sorcerer's Apprentice movie. There's a lot of
Speaker 15: mopping and water are going back and forth, but it's
Speaker 15: not clear to me there's anything really going on.
Speaker 2: We're living in fantasia or fantasy in some way. I'm
Speaker 2: interested in, Province Professor. Look, actually, Warner Brothers, not only
Speaker 2: is it fending off simultaneous deals some Netflix and Paramount
Speaker 2: at the moment, but also it's busy suing other AI
Speaker 2: companies in lockstep with Disney and with Universal. They've been
Speaker 2: taking on a Chinese AI company, in particular Minimax. How
Speaker 2: are we seeing IP being at the root of legal ramifications?
Speaker 3: Here is IP being protected.
Speaker 15: So the Minimax case is fascinating because the lawsuits in
Speaker 15: the United States between content creators and the generative AI
Speaker 15: companies are completely different from the one that's happening with
Speaker 15: Minimax in China. In the US, we're talking about training.
Speaker 3: The models using the content.
Speaker 15: What's a little like traveling all over the world and
Speaker 15: looking at museums and studying the great artists to figure
Speaker 15: out how.
Speaker 3: To create things.
Speaker 15: But Minimax, now that's different when you talk about the output.
Speaker 15: When the output mirrors the creative content and potentially competes
Speaker 15: with the creative content, courts are likely to be much
Speaker 15: more critical of activity like that with Minimax. We also
Speaker 15: have the complications of international relations. The US is locked
Speaker 15: in a battle with China, a cold war of types
Speaker 15: over AI that will dominate the next generation economically and
Speaker 15: from a defense possibility, So it'll be interesting to see
Speaker 15: what moves China may make.
Speaker 3: Well.
Speaker 2: This comes in the context of actually the United States
Speaker 2: President in one speech saying, look, you can't win all
Speaker 2: your IP battles at the moment, we are in a
Speaker 2: race with China, and in many ways intellectual property has
Speaker 2: to take some sort of sideline for national security sake.
Speaker 2: And if you can just summarize, is IP safe for
Speaker 2: this man, Robin?
Speaker 3: Can it work together with a innovation?
Speaker 15: IP has to change. Technology rarely moves backwards. So the
Speaker 15: challenge for intellectual property and content holders is to figure
Speaker 15: out how to work with it, use it, manage it,
Speaker 15: and take advantage of it.
Speaker 2: Wow, professor, we thank you so much. Roan Fellman of
Speaker 2: you c law SF out with the book as well,
Speaker 2: we appreciate you.
Speaker 3: Talking us through it. New York Governor Kathy.
Speaker 2: Hokol has signed a state bill into law restricting the
Speaker 2: most advanced AI, making New York the second state to
Speaker 2: pass AI curbs opposed by the tech industry. Let's get
Speaker 2: the details with Blue Megs Miles Meller. This took months
Speaker 2: in the making.
Speaker 3: Why did it take so long?
Speaker 16: Yeah, the Reis Act was passed in June. But it
Speaker 16: took so long because there was significant lobbying from tech industry. Right,
Speaker 16: they really wanted to see changes to this law number one,
Speaker 16: but number two, they were cognizant that California was coming
Speaker 16: out with its own law, and they wanted to see
Speaker 16: what was in that bill so that they could make
Speaker 16: some significant changes to New York's bill. What is at
Speaker 16: the center of all this are these frontier AI models,
Speaker 16: what we also call foundational AI models, right GPT four,
Speaker 16: Gemini Claude. The companies behind these now get a level
Speaker 16: of state oversight. The state Financial Services Department will now
Speaker 16: be able to say, we want advanced reporting on these
Speaker 16: risks that these models pose. And that is really at
Speaker 16: the forefront of all of this. California's bill pass in September.
Speaker 16: What's in California's bill now is in New York's bill,
Speaker 16: and that's exactly what they wanted because at the heart
Speaker 16: of all this is like, if there's fifty states coming
Speaker 16: up with their own bills, then how do you handle
Speaker 16: that in a regulatory space?
Speaker 6: Right.
Speaker 16: I was at Meta and just we would think about, okay,
Speaker 16: so if this state's going to do this, how do
Speaker 16: you do it in this state? And then you've got
Speaker 16: the Trump component to it as well.
Speaker 2: Right, But I mean, banks might say, well, we're regulated
Speaker 2: in fifty different states, but there is an element that
Speaker 2: the federal level is coming in here. They hope cal
Speaker 2: took hits on either side, many confronting that feeling that
Speaker 2: she did water it down, others feeling that this is
Speaker 2: one of the most strict laws out there. So how
Speaker 2: does it come in with the executive order that was
Speaker 2: just to.
Speaker 3: Pass last week?
Speaker 10: Right?
Speaker 16: You know, the executive order, which is sure to have
Speaker 16: some court challenges, will also be met with probably some
Speaker 16: significant backing or opposition in Congress. Right, Congress is going
Speaker 16: to have to figure out a way to regulate all
Speaker 16: of this. But when it really comes down to it,
Speaker 16: this is about what the tech industry says is stifling innovation,
Speaker 16: but what local government says is all about trying to
Speaker 16: figure out if these models are facilitating fraud or misinformation.
Speaker 16: You've seen so many issues with some of these models
Speaker 16: where they're generating stuff that's just not true. The focus
Speaker 16: of this bill is to make sure that what is
Speaker 16: being generated is correct and is not causing undue harm
Speaker 16: on citizens. But the teeth of this bill is that
Speaker 16: the fines from Thettorney General's office will start at a
Speaker 16: million dollars. And if you know anything about Tis James,
Speaker 16: she loves a lawsuit.
Speaker 2: Well, said Miles Miller, Thanks so much, for running us
Speaker 2: through it today. Well, let's talk about AI regulation and
Speaker 2: more broadly about the moves in the market that have
Speaker 2: seen AI pessimism perhaps easing on the stock prices today,
Speaker 2: but longer term anxieties that remain, particularly around the debt
Speaker 2: issuing side as well. Tomash Strong gooz is with us,
Speaker 2: his general partner at Theory Ventures. You're here to talk
Speaker 2: about the broader AI landscape. I want to get into
Speaker 2: regulation in a minute, but let's start with what you've
Speaker 2: been writing about, the debt issuance, the worries that you
Speaker 2: have about Oracle, and the basically business is able to
Speaker 2: afford the AI inrastructure build out.
Speaker 17: One of the big drivers of USGDP growth in the
Speaker 17: last year has really been the data center build outs.
Speaker 17: About one percent one point six percent of us GDP,
Speaker 17: probably three percent next year. It's funded a lot by debt,
Speaker 17: about sixty to seventy percent of it.
Speaker 3: Okay, funded by debt.
Speaker 2: How does you, as a VC backer, someone who's found
Speaker 2: unicorns out there, who keeps I can gold, how does
Speaker 2: that matter to you if some of the biggest companies
Speaker 2: out there are financing the AI infrastructure with that.
Speaker 17: Lot. Because the startups that we backed rely on these
Speaker 17: data centers in order to run AI, and if those
Speaker 17: data centers are ultimately healthy or unhealthy, it dictates whether
Speaker 17: or not they're GPUs the processors to.
Speaker 7: Execute the AI.
Speaker 17: For example, we've been watching Oracle credit default flops. You
Speaker 17: can see the spread on that CDs that is growing
Speaker 17: to about one hundred and fifty percent, trading out or
Speaker 17: near junk levels, and that's because there's broader concerns about
Speaker 17: whether Oracle can.
Speaker 7: Repay that debt. If you look at the cash flow.
Speaker 17: From operations is negative and they have eight years about
Speaker 17: an eight year time horizon to repay that debt before
Speaker 17: they went cash negative, and so as a result, they're
Speaker 17: trading at junk and that can be a concern if
Speaker 17: the ultimate demand for their data centers doesn't.
Speaker 3: Exist, wellmatch what about the ultimate demand?
Speaker 2: You're the person who's helping finance the companies that want
Speaker 2: to use the data centers or need build upon models
Speaker 2: that are using them.
Speaker 17: Well, right now, you see the major hyperscalers, they're sold
Speaker 17: two years out on their GPUs. Neo clouds, which are
Speaker 17: the smaller GPU data center companies are also growing incredibly quickly.
Speaker 17: The vast majority of AI today is text. As we
Speaker 17: heard just a little bit before, we will see significant
Speaker 17: use of.
Speaker 7: AI and the use of video.
Speaker 17: And as we've seen with Netflix and others, video takes
Speaker 17: about one hundred two one thousand x the overall consumption.
Speaker 17: So right now, as of this moment, there's no real
Speaker 17: concern around overall AI demand. We see plenty of it.
Speaker 17: But what we're watching is if there's any slip, if
Speaker 17: there's a change in the dynamic between in Nvidia and
Speaker 17: Google GPUs, if there's a change in the overall consumption,
Speaker 17: if open source models, because there's so much more efficient,
Speaker 17: ultimately take GPU cycles away from some of these data centers.
Speaker 17: The massive expectations placed on these companies could be crushing.
Speaker 3: What about the regular shoe landscape.
Speaker 2: We were just talking about that with Miles Miller and
Speaker 2: AI oversight in New York, SF, well on the West
Speaker 2: Coast in California.
Speaker 3: Does it matter to your startups?
Speaker 7: Absolutely matters.
Speaker 17: One of the dynamics around regulation is the idea of
Speaker 17: regulatory capture, where the largest companies actually benefit from regulation.
Speaker 17: They have bigger balance sheets, they can sustain the regulatory costs,
Speaker 17: lobbying costs in order to advocate for their for their
Speaker 17: long term goals, whereas a smaller companies, say a business
Speaker 17: that we back to the tune of twenty five to
Speaker 17: fifty million, may.
Speaker 7: Not have those resources.
Speaker 17: So we would like to see very simple regulations that
Speaker 17: are at an extremely high level with a single regulatory body,
Speaker 17: and that way it starts to continue to thrive just
Speaker 17: the way they did in the early days.
Speaker 7: Of the Internet.
Speaker 2: Do you think the federal government will help pass that Congress?
Speaker 17: I hope so. David Sachs, who's the AISR, has indicated
Speaker 17: that that is the intent that the federal government pass
Speaker 17: up over arching regulatory regime and ideally that simplifies the
Speaker 17: eliminates all of the state regulation because if there's this
Speaker 17: panoply of different state regulation, just as there is with
Speaker 17: money transmitter licenses or within banking, the cost of doing
Speaker 17: business in each of these states increases, and that reduces
Speaker 17: the pace of innovation and ultimately our competitiveness, US competitive
Speaker 17: isness is in the world.
Speaker 2: How is AI innovation from your viewpoint right now, Tomash,
Speaker 2: how are we seeing some of your companies perform?
Speaker 17: So the companies are growing at rates that we've never
Speaker 17: seen zero to one hundred million in run rate in
Speaker 17: a year that is now still rare, but it was
Speaker 17: unthinkable maybe five years ago in the previous generation of software.
Speaker 17: So these companies are growing unbelievably quickly. Another data point
Speaker 17: that I'll share is that the pace of the models themselves,
Speaker 17: their sophistication, is only accelerating. So Gemini, it was just
Speaker 17: the Google model released. Gemini three was the single largest
Speaker 17: step function in performance ever, which is wild right because
Speaker 17: we think about AI innovation is on the step function
Speaker 17: of s ferves and we think at some point it
Speaker 17: will plateau. But if the recent data is any indication,
Speaker 17: the pace of innovation is only steepening.
Speaker 2: Going to keep you busy and keep us busy, come
Speaker 2: back and talk to us about it. More than six
Speaker 2: hundred million dollars and as its center management for three Aventures,
Speaker 2: tomash Tongos, thank you very much for your enterprise and
Speaker 2: your expertise.
Speaker 3: Today we are coming up.
Speaker 2: We're gonna be joined by Ted Morderenston, Manage the director
Speaker 2: over at BED. We're thinking about how you're going to
Speaker 2: trade AI in twenty twenty six.
Speaker 14: This is a really big tech time around for talking tech.
Speaker 2: First up, Walt Disney's Avatar three It's top the weekend
Speaker 2: box office, taking in eighty eight million dollars in US
Speaker 2: and Canada.
Speaker 3: The film also opening at number one in China.
Speaker 2: Taking fifty seven point six million dollars there. The numbers
Speaker 2: come in the low end of projections. Avatar three is
Speaker 2: expected to dominate the box office for weeks plus. JP
Speaker 2: Morgan Well It said to be considering offering crypto trading
Speaker 2: for asistitutional clients Quinator sources. The Wall Street Giant is
Speaker 2: looking at potential products and services to expand the crypto footprint.
Speaker 2: Discussions are said to be in early stages, and a
Speaker 2: Bloomberg investigation when it's found that at least fifteen deaths
Speaker 2: have occurred across a dozen incidents in the past decade
Speaker 2: which rescuers were unable to open the doors of a
Speaker 2: Tesla that had crashed. Now, the US National Highway Traffic
Speaker 2: Safety Administration has opened a defect investigation into whether the
Speaker 2: door issues prevent access into certain Tesla vehicles, a story
Speaker 2: that Bloomberg continues to follow. Now, we want to turn
Speaker 2: our attention back from individual companies and moves, but to
Speaker 2: tech more broadly. Now's that one hundred nearly twenty one
Speaker 2: percent year to date. What do we expect twenty twenty
Speaker 2: six ten Modern Stones with us Beed Managing Director. You've
Speaker 2: been writing look for more volatility in the tech sector
Speaker 2: as expectations are high and the reality is there's a
Speaker 2: mismatch between infrastructure, data center build versus enterprise adoption of
Speaker 2: AI TED What adoption do you want to see in
Speaker 2: twenty twenty six to help bring together this MISSI matched.
Speaker 18: Well, that's a great question, and thanks Carolyn for having
Speaker 18: me and happy holidays. Listen, this cycle is probably the
Speaker 18: most robust I've seen in thirty thirty plus years of
Speaker 18: doing this, So the overall JENNYI infrastructure is not going
Speaker 18: to change. The spend is still robust, but in reality
Speaker 18: you have the socks up forty two percent, you have
Speaker 18: the NDX up twenty one percent, and you have the
Speaker 18: IGV index, which is the software kind of index for
Speaker 18: software only up seven point six percent.
Speaker 7: If you look at.
Speaker 18: Beyond that one step down. Most of the performance in
Speaker 18: twenty five has been really focused on optical memory quantum
Speaker 18: and some of the bigger semiconductor companies like a Vago
Speaker 18: or Broadcom like Navidia and AM as well as some
Speaker 18: of the big cloud Titans, Ali Baba being one in China,
Speaker 18: and obviously Google. With that said, going into twenty five,
Speaker 18: the street is really not looking around the corner of
Speaker 18: what could what you could see as or relates to
Speaker 18: headwinds right now we're in Right now, I would just
Speaker 18: say we're in a market of that's really almost over
Speaker 18: exuberant speculation, a lot of complacency.
Speaker 2: So do you think some of the previous winners, the
Speaker 2: in videos, the broadcoms, the Microns are going to fare
Speaker 2: badly in twenty twenty six or is it more we're
Speaker 2: going to pivot more into a software era.
Speaker 18: I think there's a that's a great question, and I
Speaker 18: think the right one. When you have optical names up
Speaker 18: three hundred percent, there is a worry about two things
Speaker 18: in kind of the semi food chain. One is pricing.
Speaker 18: If you look at Micron's last report last week, d
Speaker 18: RAM prices were up twenty percent sequentially, not you over year, sequentially,
Speaker 18: we have a price issue. The other thing, if you
Speaker 18: listen to the Dell call a few weeks back, the
Speaker 18: CEO is very adamant that we're going to potentially run
Speaker 18: into some shortage issues. Now, is that in the ecostructure
Speaker 18: of jenai hard to say, but I think when I
Speaker 18: talked to portfolio managers that are managing a tremendous amount
Speaker 18: of client money, the worry is that what worked in
Speaker 18: twenty five may not work in twenty six. And if
Speaker 18: you look at the pivot to software in kind of
Speaker 18: that late twenty seven twenty eight time frame, it's probably
Speaker 18: worth worth looking at that area, specifically on the agentic
Speaker 18: names and the security AI names, which have corrected recently.
Speaker 2: Maybe at Salesforce has time to shine. Ted Walterson of BED,
Speaker 2: it's great having you please come back in twenty twenty six,
Speaker 2: or is you push towards whether those themes start to
Speaker 2: erupt into existance? Meanwhile, that does it for this edition
Speaker 2: at Blomberg Tech. You don't want to forget to check
Speaker 2: out our podcast. You can find it on the terminal
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