Speaker 1: Runt You by Bank of America Mary Lynch with virtual reality,
Speaker 1: virtually everything will change. Discover opportunities in a transforming world
Speaker 1: VI of a mL dot Com slash VR, Mary Lynch,
Speaker 1: Pierced Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best of economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg. He has been generous
Speaker 1: of his time and joining us this morning. Mario Gabelli
Speaker 1: for those of you not on Global Wall Street. Um,
Speaker 1: he is an original in my value investment, and he's
Speaker 1: an original in patience, and he's an original in shareholders
Speaker 1: should get their fair share? Are we going to continue
Speaker 1: to see share buy backs? Mario? As we go up
Speaker 1: up up? Is that just an easy path? That's a
Speaker 1: great question, and it always depends on how you allocate capital. Tom,
Speaker 1: what is the right Now You've got almost the triple
Speaker 1: tax on the corporate earnings, the corporate tax, the tax
Speaker 1: on dividends, and then the surcharge on dividends. That was
Speaker 1: a snug in at night. But if I'm a steel company,
Speaker 1: do I want to reinvest in the steel business and
Speaker 1: open heart? No, the answers business has changed, so keep
Speaker 1: your powder dry, be flexible and uh obviously changed with
Speaker 1: the world that's going on over the next ten of
Speaker 1: twenty years. And uh, buy backs. If I'm buying back
Speaker 1: the stock materially below intrinsic value, that helps everyone. If
Speaker 1: it's buying it back to support the stock, it makes
Speaker 1: no sense of you know. And so you gotta figure
Speaker 1: out what when do yields compete with dividen ends again
Speaker 1: in our lifetime? Well, it depends on a snapshot or
Speaker 1: emotion picture. On emotion picture, you really want to own
Speaker 1: up companies that are good I have corporate earnings and
Speaker 1: are growing and can maintain purchasing power in real terms.
Speaker 1: So if inflation picks up, which I'm at the camp
Speaker 1: that says it will, uh, then you want to earn
Speaker 1: a static return, tom, but a return that grows with time. Okay,
Speaker 1: let's bring into O'Brien, who knows nothing about yours or
Speaker 1: my world, but he's been talking with Matthew Levina Bloomberg
Speaker 1: View all night about the Financial Markut Tim O'Brien with
Speaker 1: Mario Gabelli. Mario is good to have you here today,
Speaker 1: My privilege to listen to you. Thanks for tolerating me.
Speaker 1: My actually my Bloomberg gad Fly colleagues. Stephen Gandeli Rope
Speaker 1: had a nice piece about earnings outlooks for the S ANDP.
Speaker 1: We obviously had a great first quarter where earnings across
Speaker 1: the border up about four It looks in the second
Speaker 1: quarter like they're gonna slow to about six point four percent,
Speaker 1: and people are even a little more bearish for earnings
Speaker 1: in the third quarter at maybe only five percent or so.
Speaker 1: So what does that mean about valuations? Mario? If for
Speaker 1: for the bullish out look at the market, that it
Speaker 1: probably is more than fully valued right now. Corporate earnings
Speaker 1: always drive that picture. So what do you think, Well,
Speaker 1: it's a multiple, it's earnings, and the multiple to earnings.
Speaker 1: The multiple earnings a function of interest rates and inflation
Speaker 1: isn't as an underpinning to interest rates and so on.
Speaker 1: From my point of view, the Euro today is one fourteen,
Speaker 1: a year ago is one ten. So American companies are
Speaker 1: going to get the tail wind. Thirty percent of earnings
Speaker 1: are outside the United States, so you're gonna get a
Speaker 1: tail whin it's opposed to the head. When on translations
Speaker 1: Europe is doing better, Germany you're gonna think is doing better?
Speaker 1: Is the core Well, I've been not that much earnings
Speaker 1: in China and the financials are going to do better
Speaker 1: if the slope of the interest rate curve goes upwards.
Speaker 1: So those are important parts of the market. So I,
Speaker 1: you know the macro guys, Steve is probably right. I
Speaker 1: don't do macro. On the other side, there's always opportunities
Speaker 1: anywhere in the world, and that's where we try to
Speaker 1: ferret out. Jon Tucker, did you see how smart that
Speaker 1: Tim O'Brien question was? This? Is he's like sitting in
Speaker 1: or is this an audition? Is there's something I need
Speaker 1: to know? I should point out to Mario that Tom
Speaker 1: is approaching the mandatory return. Very good, could have Let's
Speaker 1: have another mandatory question from Mr O'Brien, tim um Uh, Mario.
Speaker 1: The other thing that sort of sneaks in on this
Speaker 1: is how much energy companies contributed to the first quarter
Speaker 1: earnings rises That sustainable in that sector from your perspective, Uh,
Speaker 1: look to make the case that oil at forty five
Speaker 1: dollars a barrel is a question mark. But if Saudi
Speaker 1: Arabia is trying to go public with one of their companies,
Speaker 1: will take trim back. And the other side, American technology
Speaker 1: and a form of fracking has given us a reservoir
Speaker 1: of energy. It is providing at the margin the incremental amount.
Speaker 1: But at the same time you look at what happened
Speaker 1: to Adelaide Australia where they ran out of energy because
Speaker 1: they didn't have the right policy. So we got to
Speaker 1: do a lot of things together. And as far as
Speaker 1: Ernie is are concerned, we are buying some of these
Speaker 1: stocks now. Is President Trump good for the stock market? No,
Speaker 1: But the policies of a applaud business as opposed to
Speaker 1: condemn them is clearly very good. The allocation of money
Speaker 1: to capitalism as opposed to socialism is always very good.
Speaker 1: And the free market system, which has functioned effectively since
Speaker 1: Adam Smith came around and allocated has been one of
Speaker 1: the great wonders of the world in terms of helping
Speaker 1: helping mankind. You and I heard Jake Clayton, the Securities
Speaker 1: and Exchange Commission yesterday at the Economic Club of New
Speaker 1: York I don't believe he brought up a tea word once.
Speaker 1: And it's interesting how government could move on even with
Speaker 1: all the uproar about the president. Do you have an
Speaker 1: optimism that can occur? Well if the moment can move on,
Speaker 1: but not under Bernie Sanders? Well, well, how about on
Speaker 1: infrastructure or great question and Tim let me go into that.
Speaker 1: In the December fift two thousand and fifth, we as
Speaker 1: a government passed the rules saying the fixed American surface
Speaker 1: transportation and companies did well today inland waterway, inland waterway
Speaker 1: things that helped the American farmer move goods Uh. The
Speaker 1: notion of avionics infrastructure is going to do well. From
Speaker 1: what I like is case New Holland. I like companies
Speaker 1: that are involved in infrastructure, like Dana, which sells parts
Speaker 1: of the Class eight trucks on a global basis, uh
Speaker 1: and so on. So case New Holland, for example, has
Speaker 1: farm equipment, it has construction equipment. It has a company
Speaker 1: that has run by a guy that took Ferrari public
Speaker 1: because he realized there wasn't a car company. But it
Speaker 1: alloxurally good. They're gonna take a Vaco public and take
Speaker 1: uh and do a lot so there's a lot going on.
Speaker 1: One final question before he could before you start your day.
Speaker 1: You were iconic on Steve Ross and Time Warner of
Speaker 1: a long time ago. Give us an update now on
Speaker 1: Time Warner in the media business in general. Are you
Speaker 1: enthused well the notion of the Stevenson a T and
Speaker 1: T putting his arms around direct TV and now putting around.
Speaker 1: You've got to allow companies to buy what they want.
Speaker 1: If they make mistakes, it is what it is. If
Speaker 1: they add value, it is what it is. So I
Speaker 1: like entertainment, I like content, I like connectivity, wireless, cable.
Speaker 1: What am I buying? I'm buying Millcom because John Malone
Speaker 1: is going to buy it. He just primed the pump
Speaker 1: with Lilac a Liberty International by buying stock that he
Speaker 1: hasn't bought before. So there's a lot going on. Tom
Speaker 1: and I want to own wireless companies. I want to
Speaker 1: own cable companies. Millecom is one that will be taken
Speaker 1: over within two years. The stocks fifty five owned by
Speaker 1: a Swedish company called Shinovic. Uh. That's clearly and everyone's
Speaker 1: radar screen belly. Thank you so much to meet you
Speaker 1: and use your shop elbow and move them out. Thank you,
Speaker 1: I said, I said, t okay, belly, thank you so much.
Speaker 1: This is just a joy this morning, Timthy O'Brien in
Speaker 1: for us is David Gurrs in Idaho. We'll go to
Speaker 1: Mr Gura later on and joining us now. Really in
Speaker 1: the nexus of our nation's political science is Douglas Elmendorf.
Speaker 1: To say he's at Kennedy out of Harvard barely describes
Speaker 1: his public service, particularly his service with a Congressional Budget Office. Uh,
Speaker 1: Dean Elmendorff? Do you go by Dean du Doug? I mean,
Speaker 1: is Dean the appropriate title? You can just call me?
Speaker 1: Do all? I one of knows do you have Red
Speaker 1: Sox tickets? Because that's the only reason to talk to you.
Speaker 1: But Doug, Doug, Seriously, within the CBO scoring debate is
Speaker 1: the CBO. Mitch McConnell's friend right now, because everybody seems
Speaker 1: to look at CBO as the evil enemy, is the
Speaker 1: CBO Senator McConnell's friend. CBOs isn't supposed to be anybody's
Speaker 1: friend or enemy. Their objective analysts providing their best informed
Speaker 1: estimate of the effects of proposed policies, and at different
Speaker 1: points in time, those estimates will turn out to help
Speaker 1: or her certain Congressional members causes, and that's just the
Speaker 1: way the system works. But through that system, you and I,
Speaker 1: as well as all the members of Congress, learn what
Speaker 1: the effects of proposals will be before the members have
Speaker 1: to vote on them. I should point out that Dean
Speaker 1: Almendorff was need deep been President Clinton's health care efforts
Speaker 1: of another time in place. Timothy O'Brien with us this
Speaker 1: morning from Bloomberg View. Tim A question for Dean Almendorff, Uh, Doug,
Speaker 1: is do you think that this sort of backlash against
Speaker 1: the CBO smacks of the previous backlash against the statisticians
Speaker 1: at the BLS around labor statistics. Have we entered into
Speaker 1: this sort of moment where people feel comfortable contending with
Speaker 1: almost anything that he once considered to be objective facts. Yes,
Speaker 1: I'm very concerned about that this administration is afraid of
Speaker 1: facts and evidence and analysis, and OMB Director Mulvaney attacked
Speaker 1: the Bureau of Labor Statistics for how it calculates the
Speaker 1: unemployment rate. He's attacking CBO for its independent analysis. This
Speaker 1: is very dangerous for our political system and for our country,
Speaker 1: and I think it's important that Republican Congressional leaders stand
Speaker 1: up for CBO and its work because this actually isn't
Speaker 1: a partisan ideological issue. It's just about good government and
Speaker 1: good data at the end of the day, isn't it.
Speaker 1: That's exactly right? Um, what do you where do you
Speaker 1: think this is springing from it its core? Well, I
Speaker 1: understand that the administration and some Republicans and Congress are
Speaker 1: frustrated because CBO's estimates are not helping them pass their
Speaker 1: health legislation. But that's not cbio's fault. The Republicans are
Speaker 1: pushing legislation that would health insurance away from tens of
Speaker 1: millions of Americans. That's going to be a hard sell
Speaker 1: to the American people if the American people understand it.
Speaker 1: So naturally, the sponsors of that sort of legislation don't
Speaker 1: want that understanding to occur, and they're going to try
Speaker 1: to stop the people like BBO who are informing Americans.
Speaker 1: Dinamer's one more question if we could in a brief
Speaker 1: visit this morning. I know you read all of your
Speaker 1: working papers at Kennedy the great Danny Roderick on Populism
Speaker 1: in the Economics of Globalization. Is the American populism. The
Speaker 1: same is the population of populism of Europe. There are
Speaker 1: different strands, of course, in different places and different particular issues.
Speaker 1: But Danny wrote twenty years ago that the great challenge
Speaker 1: was whether global economic integration would lead to domestic social disintegration,
Speaker 1: and he saw that coming decades away, and unfortunately we
Speaker 1: are now seeing the fruits of that in ways that
Speaker 1: are very damaging for our countries. Dinamo or thank you
Speaker 1: too shut to visit this morning, We greatly appreciate it.
Speaker 1: Douglas Almondorf is with the Comedy School at Harvard University.
Speaker 1: We forget Tim O'Brien that these schools have entire industries
Speaker 1: of bright people really struggling with the topics of the day,
Speaker 1: and we're in the era where, to some extent, maybe
Speaker 1: not a great extent, they're basically tarted and feathered on
Speaker 1: a daily basis. There's always been an an anti academia,
Speaker 1: but maybe it's a little harsher now that has been
Speaker 1: And it's not just academia. It's about data and research
Speaker 1: and facts. I think we have to be really cautious
Speaker 1: around all this, and we try. We're working on that
Speaker 1: as well. Runch you by Bank of America, Mary Lynch.
Speaker 1: With virtual reality, virtually everything will change. Discover opportunities in
Speaker 1: a transforming world. VI of a mL dot Com, slash VR,
Speaker 1: Mary Lynch, Pierce Uner and Smith Incorporated. Good morning everyone,
Speaker 1: David Gurr again, and I know Timothy O'Brien and Bloomberg
Speaker 1: view that with us this morning and joining us now
Speaker 1: Brian Weezer a pivotal research and really, Brian, I guess
Speaker 1: what we need to focus rather, Brian, what we need
Speaker 1: to focus on is is continued dominance of Google and Facebook.
Speaker 1: It's such a pervasive feeling. My radars up. Do you
Speaker 1: buy the idea that is dominant as dominant could be? Oh,
Speaker 1: it's not just the buying an idea. Any fact out
Speaker 1: there supports it. There're seventy of the total revenue from
Speaker 1: digital advertising, their nine percent of the growth depending on
Speaker 1: when you UH define the period um. Yeah, no, they're dominant,
Speaker 1: and I think the rest of the industry is looking
Speaker 1: for a way to prevent their dominance from expanding. Let
Speaker 1: me bring in someone who lives as Timothy O'Brien. You've
Speaker 1: lived this advertising change, not only the New York Times
Speaker 1: but also at Helfington Post as well. I mean, you've
Speaker 1: lived what Brian Weezer is talking about. It's you know,
Speaker 1: monetization of content and platforms is the key industry for
Speaker 1: anybody who's on the web, or key metric to consider
Speaker 1: for anyone's on the web right now. Brian, you raised
Speaker 1: a really interesting and crucial point obviously in your in
Speaker 1: your in one of your notes that I read, which
Speaker 1: is this whole issue of you ability and metrics and
Speaker 1: weather the duopoly. But really anyone else in the industry
Speaker 1: who's selling advertising is going to open themselves up to
Speaker 1: third party analysts who will either validate or or have
Speaker 1: their own point of view on monetization and advertising revenue.
Speaker 1: Where do you think we are on the view ability issue? Uh, well,
Speaker 1: the industry is at least to where that has got
Speaker 1: a problem. And I think, like you know, people like me,
Speaker 1: I'll call myself a digital truth or um that for
Speaker 1: far too many years there's this shine on digital advertising
Speaker 1: that it's perfect, it's targetable to dress bullets perfect, and
Speaker 1: that was never true. Um. And so now at least
Speaker 1: large bands are fully aware that their problems and their
Speaker 1: finding solutions. So it's really Facebook and Google in particular
Speaker 1: where the world garden problem is most pronounced because it's
Speaker 1: so important, because it's so big. Um. You know. I
Speaker 1: think Mark Pritchard from Who's Procter and Gambles chief brand officer,
Speaker 1: has been one of the most vocal um industry players
Speaker 1: and really is leading the charge right now by basically
Speaker 1: indicating there they're going to move their money if Facebook
Speaker 1: doesn't do what they need them to do. Now that
Speaker 1: might not be enough for Facebook. Well, and where do
Speaker 1: they move it to? They increase or spending on TV
Speaker 1: pretty significantly, which is why they upfronts went up. So
Speaker 1: that's part of it, you know. I mean the problem
Speaker 1: is that Facebook. So the metrics I have seen suggests
Speaker 1: that video views on Facebook are like two percent viewable.
Speaker 1: In other words, two percent of the ads delivered on
Speaker 1: Facebook get actually viewed. Then why do they get money? Uh?
Speaker 1: That's a really good question. So in all cases, advertising
Speaker 1: is at least battle Turner's business. Right, So, if you've
Speaker 1: got a digital budget to spend, you've allocaed my to
Speaker 1: spend on digital, where's the least bad place to spend it?
Speaker 1: If you're a big brand, Facebook's the least bad place.
Speaker 1: Do you have a single bust buy right now? Before
Speaker 1: you run out the door. I have exactly one by
Speaker 1: out of eighteen stocks. Isn't that shocking? Fox Fox? What
Speaker 1: Fox Fox? Only by I have I have three cells
Speaker 1: or two cells? Have three cells? White Fox. It's just undervalued.
Speaker 1: I think, you know, the market is really you know,
Speaker 1: doesn't like James Murdoch that much. I think they're concerned
Speaker 1: about what the Fox News in particular. I think I
Speaker 1: hear a lot of concerns that so this is a
Speaker 1: TV Fox. This is all the uproar room. They're not
Speaker 1: News Corp. But yeah, exactly the studio, the TV station group. Um.
Speaker 1: I think the Sky transaction, I mean it's going to
Speaker 1: be a bit of a rocky road to get there,
Speaker 1: but I think it's gonna be really good if it happens.
Speaker 1: Brian Weiser, thank you so much. I believe Tim O'Brien's
Speaker 1: rumored to take out Seawan handy spot. Brian Weezer with
Speaker 1: pivol as a joke, folks, Brian Weiser with a pivol
Speaker 1: research this one. Greatly appreciate that this is a good
Speaker 1: time and this goes to what Tim O'Brien was talking
Speaker 1: about earlier. It is a good time and we spoof
Speaker 1: about the words are, which has always been unfortunate. Czar
Speaker 1: Ratner joins us this morning. Stephen Ratner, we should say, uh,
Speaker 1: he's involved in the investment activities of our principal owner,
Speaker 1: Michael Bloomberg. But Steve Rattner, I really want to talk
Speaker 1: to you about what Tim O'Brien was talking about, which
Speaker 1: is process and procedure in a given institution like the
Speaker 1: White House. How do we assist our president towards process
Speaker 1: and procedure in the White House? And even as Czar
Speaker 1: could understand, look, I don't think we have a president
Speaker 1: who's all that interested in advice or suggestions or pretty
Speaker 1: much any thing else as to how he should operate
Speaker 1: the White House. I did spend some time in the
Speaker 1: White House. I've obviously observed this one from afar, as
Speaker 1: we all have, and it is it is really quite
Speaker 1: extraordinary to see how this White House operates relative to
Speaker 1: any other one I've ever been around in my my
Speaker 1: time in and out of Washington. You've you is there
Speaker 1: nobody you could compare him to? Steve? Is he that
Speaker 1: of of his own? I don't think there's anybody you
Speaker 1: can compare him to. I think when Jimmy Carter, who's
Speaker 1: White House I also covered as a reporter. I think
Speaker 1: the chaos that existed there at the beginning when when
Speaker 1: Carter announced he wasn't going to have a chief of staff,
Speaker 1: he was going to have this hub and spoke approach,
Speaker 1: and all these different people wandering in and out of
Speaker 1: the Oval office. You could probably compare the confusion to it.
Speaker 1: But but the the sort of the the sort of uh,
Speaker 1: but that was sort of undesired confusion. This seems to
Speaker 1: be desired chaos on on President Trump's part, And so
Speaker 1: there's nobody in my lifetime you can compare him to.
Speaker 1: Do you think it's bleeding into the rest of Washington,
Speaker 1: the sort of trump lack of managerial focus and I
Speaker 1: think a lack of goal orientation. I've been watching Mitch
Speaker 1: McConnell move this bill through the Congress, and there was
Speaker 1: this thought, after the House debacle on healthcare, that the
Speaker 1: Senate was going to step in and be the adult
Speaker 1: in the room and and craft more thoughtful legislation. And
Speaker 1: yet here we are with a bill and motion that
Speaker 1: everyone seems to hate, a process that McConnell is running
Speaker 1: the dark, and and and and a lot of people
Speaker 1: seeming to a qu s to the chaos of the
Speaker 1: Trump white House. I'd say two things about that. I'd say, first,
Speaker 1: healthcare bill, as we found during the Obama administration, is
Speaker 1: very very difficult to pass. McConnell has an extremely difficult
Speaker 1: job that no matter who is president, it would be
Speaker 1: hard to bring the two ends of his party together
Speaker 1: into and get fifty votes. And uh, let Rand Paul
Speaker 1: and somebody else, Susan Collins go often do their thing.
Speaker 1: It's really really hard, but it is made much harder
Speaker 1: by the lack of leadership from the White House. There's
Speaker 1: no rama. Manuel, as they're wondering, was during the bombed
Speaker 1: administration going up to the hill every day talking to
Speaker 1: people saying, come on, guys, let's just make this tweak.
Speaker 1: Let's make that tweak. Let's get a deal done. Having
Speaker 1: a dysfunctional White House does not make things easier for Congress.
Speaker 1: And you are arguably more qualified than anyone we speak
Speaker 1: to to ask this question. Does it dampen the animal spirit,
Speaker 1: does it bring down nominal GDP? Does it bring down
Speaker 1: inflation just a d d G d P? And does
Speaker 1: it filter into our investment world or is the czar
Speaker 1: world you lived in, Steve Rattner? Is it discreet and separate?
Speaker 1: So far? It appears to be discreet and separate so
Speaker 1: far as you look at, certainly the markets and how
Speaker 1: they're behaving, as you look at the consumer confidence and
Speaker 1: consumer and business confidence and business optimism indicase, UH, they
Speaker 1: still so far seem to be riding along on the
Speaker 1: so called Trump bump and the belief that Trump will
Speaker 1: run a very business friendly administration, a lot of deregulation,
Speaker 1: a lot of tax and are the benefits for the
Speaker 1: corporate sector that will, at least in the short run
Speaker 1: drive the economy upward. But as the dysfunctionality continues, and
Speaker 1: as and if and when the scandal UH permeates further,
Speaker 1: I think it certainly could affect the animal spirits. Um
Speaker 1: are you where do you think this goes? Long term?
Speaker 1: For the GOP as a party, how are they do they?
Speaker 1: Are they going to be split permanently between the populist
Speaker 1: wing and the more moderate wing. If they're not, how
Speaker 1: does that get cured so that you can have a
Speaker 1: party in a Congress that actually produces legislation The answers,
Speaker 1: I don't know. I write the populist so called populist
Speaker 1: wing is really more exists at the voting level rather
Speaker 1: than at the UH senator and representative level. At the
Speaker 1: senate representative level, it's a pretty it's still a pretty
Speaker 1: uh conventional group of folks with with as it is
Speaker 1: in the Democratic Party, with some people far out on
Speaker 1: the edges of it in terms of their own philosop
Speaker 1: and the concept of trying to make a have a
Speaker 1: big tent. But I think, I think, um, I think
Speaker 1: the question where the party goes depends a lot on
Speaker 1: what happens to the president, whether he's able to function
Speaker 1: as a president Steve Retner very quickly or George Will
Speaker 1: mentioning it up in tax reform today and senator wide,
Speaker 1: can we get tax reform under a reconciliation process? Well,
Speaker 1: that's the only way we're gonna get tax reform is
Speaker 1: through reconciliation. But I think tax reform is very problematic
Speaker 1: because the border adjusted tax is not going to happen
Speaker 1: without that. There may be some revenue from this tax
Speaker 1: healthcare build, that's a less than fifty probability in my opinion,
Speaker 1: So they don't have that much revenue to pay for
Speaker 1: tax reform. And I think the deficit. Hawks are going
Speaker 1: to keep them from just spending a lot of money
Speaker 1: on tax reform that we don't have. Steve Retnor, thank
Speaker 1: you so much as Willow Advisors this morning on our
Speaker 1: perspective of Washington and economics, finance and investments as well.
Speaker 1: Good morning everyone. Timothy O'Brien and Tom Keene were thrilled of.
Speaker 1: Timothy O'Brien is our permanent host with Bloomberg surveillance of
Speaker 1: course here in New York. In a minute, we'll go
Speaker 1: to our reporter, David Gura, John Daker. David Gura, our
Speaker 1: reporter out in Idaho, will go to him in a moment.
Speaker 1: They found nothing but to his hat left his hunter's cat.
Speaker 1: I know his Pilson red and plaid hunter's cap, which
Speaker 1: will look perfect on park slope. As he tells people
Speaker 1: about the brave tundra of Idaho. Features up to down,
Speaker 1: features up six with a churn to the market chair
Speaker 1: yelling speaking to the Senate, Q and A there could
Speaker 1: be of importance as well. Right now, we go to
Speaker 1: our reporter, Oh, our David Gura, our guest host or
Speaker 1: our host or whatever he is. When he gets back.
Speaker 1: David Gura and Ida David, what have you learned from
Speaker 1: the people of Sun Valley in your first hours there? Well,
Speaker 1: you you were talking to me yesterday about the prospect
Speaker 1: that there being some snakes on the ground. You are
Speaker 1: nearly stepped on one yesterday, Tom. But we're not humans,
Speaker 1: all here with with their Martin's soil. Here the CEO
Speaker 1: of w PP, he's joined me here on set and
Speaker 1: it's a beautiful set. Tom. I'm sorry that you can't
Speaker 1: see it. We're on the side of a mountain overlooking
Speaker 1: the the resort, obviously painting a tough life for you, David,
Speaker 1: I have my sympathy, sir. Let me start by asking
Speaker 1: you about this conference, in particularly what with the with
Speaker 1: the participants here, the attendees say about the state of
Speaker 1: media today, about the media landscape, Well, the obviously there
Speaker 1: are probably three things that we we think about. The
Speaker 1: first is what is the role of traditional print, you know,
Speaker 1: filling true trees and distributing newsprint. So that's one thing,
Speaker 1: and whether the investment is at the right level or not,
Speaker 1: whether the engagement level is higher than people give it
Speaker 1: credit to, or whether the time spent is the right metric.
Speaker 1: The second thing is mobile and whether they're sufficient essement.
Speaker 1: And mobile probably Internet generally or as defined, it's probably
Speaker 1: the right investment, but mobile is probably underinvested. And then
Speaker 1: the third thing is probably linear TV, is whether traditional
Speaker 1: network television is at the right level of investment, what's
Speaker 1: going to happen in the future to that, whether it
Speaker 1: will be maintained, whether it will come under pressure, not
Speaker 1: to the extent that traditional print has, but that that
Speaker 1: traditional media generally has come under more pressure. So I
Speaker 1: think those are the three things that you see in
Speaker 1: the US, and you see that obviously increasingly abroad. Now
Speaker 1: related to that is the sort of pressure that we're
Speaker 1: seeing in maybe package goods retailing from the growth of
Speaker 1: e commerce as well. So it's it's in those areas
Speaker 1: that people are focused time. Ask me what I've I've
Speaker 1: learned with thus far a lot of people who are
Speaker 1: talking about content and consolidation and what companies are gonna
Speaker 1: be doing, how they're going to be creating more, providing more.
Speaker 1: How are you watching that? How does that determine what
Speaker 1: your business it does? Well, there are three things that
Speaker 1: we're trying to do. We're trying to get our traditional businesses.
Speaker 1: Are traditional agencies unfair to call them that because they
Speaker 1: Morphed is not Don Draper anymore. But to become more digital,
Speaker 1: more global, and more digital, that's one thing. Secondly, when
Speaker 1: you have digital asses like we do with a Wonderman
Speaker 1: and Ogilvy one and a k k o A, a
Speaker 1: possible VML or a Mirrum, drive them faster globally. And
Speaker 1: then thirdly, experiment moving into the continent area. So we've
Speaker 1: made lots of investments. It started, I guess, with our
Speaker 1: investment in Vice dot Com ten percent of that for
Speaker 1: about six or seven years ago. But we've gone through
Speaker 1: Brian Grazer, Ron Howard's film, Weinstein, Weinstein's how Weinstein's Howvy,
Speaker 1: Weinstein's company. We've invested in content, Millennial Content with a
Speaker 1: T eight rising with Refinery twenty nine, Media Rights Capital,
Speaker 1: which brought you House of Cards, full screen one YouTube channels.
Speaker 1: Of the investments in the continent, Yeah, sir Martin, I
Speaker 1: want to go to your wonderful and your report, and folks,
Speaker 1: I would suggest it's a totally twisted and different in
Speaker 1: your report. It's something you throw at a kid in
Speaker 1: college and say shut up and read this page one
Speaker 1: eleven Jeremy Bullmore just because you can, doesn't mean you should,
Speaker 1: Sir Martin. What they don't know is you're the king
Speaker 1: and know how do you control the modern digital impulse?
Speaker 1: How do you harness and police all the young Turks
Speaker 1: that say we gotta do this, we gotta do this,
Speaker 1: we gotta do that. Uh well, well the answer is
Speaker 1: with difficulty, Tom, I mean it's not an easy, easy task.
Speaker 1: I mean, our business at fifteen years ago was about
Speaker 1: ten percent in the fast so called fast growth markets
Speaker 1: of the world. It's now one third. It was virtually
Speaker 1: negligible in digital. That's now to your to your question,
Speaker 1: I think you probably have to give those young Turks
Speaker 1: or those people that push you even more room. You know,
Speaker 1: there's one thing I regret is it's probably we didn't
Speaker 1: go faster on the technology side and on the data side.
Speaker 1: Today s our business is in media, data and digital.
Speaker 1: I probably regret that we didn't go harder and faster
Speaker 1: because one of the things that people are raising, analysts
Speaker 1: are raising, institutional invased investors are raising his weather traditional
Speaker 1: businesses can cope with the digital disruption that we're seeing.
Speaker 1: I mean, we have three forces, Tom, as you well
Speaker 1: know digital disruption, zero based budgeting, and then last, but
Speaker 1: not least, activist investors. The digital disruption is something that
Speaker 1: affects everybody. There's a BB and the activist investors tend
Speaker 1: to be focused around consumer staples and f MCG. Not
Speaker 1: not exclusively, but they tend to be But so that
Speaker 1: aut much more focused. Digital, however, affects everything. Well, what's
Speaker 1: so important here in Terroller Chapelle kills it with Max
Speaker 1: Neeson and Bloomberg gad fly Sir Martin today on the
Speaker 1: mating of Verizon in Disney? Can those cultures mate in
Speaker 1: your experience? And this is like a Sun Valley question.
Speaker 1: I mean, you've got a grizzly bear and a black
Speaker 1: bear and they're not supposed to get together. Can Verizon
Speaker 1: mate with Disney? That's so that's very unfair. I mean,
Speaker 1: I'm sure you've been peppering all the people from Verizon
Speaker 1: and Disney or try to hear they they fend you
Speaker 1: off here, they keep you penned out, thank goodness. But
Speaker 1: I mean you can make the same comments. You can
Speaker 1: make the same comments about A T and T I
Speaker 1: guess and Time Warner. Uh, you know, companies that come
Speaker 1: from different ends of the spectrum. But the intent is clear.
Speaker 1: The question is the implementation. I guess Tom and what
Speaker 1: you're getting out. And we've seen history listed with examples
Speaker 1: of companies with different for one of a better word,
Speaker 1: cultures trying to get together. And it's been increasingly difficult
Speaker 1: for people to do that. But that doesn't remove the
Speaker 1: necessa t or the sense of trying to bring these
Speaker 1: two things or two approaches together. We've seen it in
Speaker 1: our own industry, people trying to marry different approaches. They
Speaker 1: take us, for example, trying to marry marry traditional creativity
Speaker 1: with digital, with data with media. The big, the big
Speaker 1: challenge facing us is how do we integrate the efforts
Speaker 1: of two hundred thousand people in a hundred and thirteen
Speaker 1: countries for the benefit of our clients. And it's actually
Speaker 1: very similar to the challenge that you laid out. If
Speaker 1: Verizon was to do anything with Disney, as you're suggesting,
Speaker 1: they might. Let me ask you just one last question
Speaker 1: here about uncertainty. Of course, we've talked about Brexit over
Speaker 1: these last many months. How is that affecting your business?
Speaker 1: How is the uncertainty here in the US about policy
Speaker 1: affecting your business? Well? On the UK, first of all,
Speaker 1: the answer is not as much as we thought, but
Speaker 1: it will do. I think. I think that over the
Speaker 1: next two years life is going to be very uncertain
Speaker 1: in this Brexit negotiation we're in at the moment. So
Speaker 1: the irony about this is that Britain might be leaving
Speaker 1: the EU at a time when France, Germany, Italy and
Speaker 1: Spain are on the up. We'll have to see what
Speaker 1: happens with the Italian election which will come, which is
Speaker 1: a really important event I think in the context of
Speaker 1: EU politics, and also who replaces Mario drug that's an
Speaker 1: important event from the financial side. As far as the
Speaker 1: US is concerned, it depends really on whether President Trump
Speaker 1: can implement his program. If he can, that's in my
Speaker 1: view positive for the US economy. Reduction in regulation, which
Speaker 1: is also always also happening irrespective of what's happening on
Speaker 1: healthcare and tax but certainly if implement after healthcare, tax
Speaker 1: reform and regulation reform and infrastructure spending, that must be
Speaker 1: good for the economy, at least in the short term
Speaker 1: medium term. That's what we're waiting for. I have to
Speaker 1: say that generally the world is a low growth, low inflation,
Speaker 1: lack of pricing, pal and therefore focus on cost world.
Speaker 1: It's a tough worldly. We gotta leave it there, Sir Martin,
Speaker 1: thank you very much to Martin st Tom great to
Speaker 1: speak with you. David Growth, thank you so much of
Speaker 1: Sir Martin. Sorrel greatly appreciated as well from Sun Valley.
Speaker 1: I don't tim O'Brien there there's a real window into
Speaker 1: this idea of culture in corporations. I guess it's the
Speaker 1: same as a political world, is well. I I really
Speaker 1: wonder about really two separate psychologies mating, whether it's this
Speaker 1: company or company being the case of terror, it's Verizon
Speaker 1: and Disney. But you just wonder how those boardroom meetings go.
Speaker 1: You know, um, I think I can. I can recall
Speaker 1: a million different instances in which Richard Plepler of HBO
Speaker 1: he said to me, uh, culture, eat strategy for lunch.
Speaker 1: That is no matter, you know, how should you are strategically,
Speaker 1: how great your product is. If you don't have a
Speaker 1: strong managerial culture that frees people up to do their
Speaker 1: best work and guide them appropriately, you're done. And that
Speaker 1: is well timed for season forty two of Game of
Speaker 1: Thrones or whatever. Talk about a scary culture. It's you know,
Speaker 1: it's congratulations to HPO and completely dominating the cultural uh
Speaker 1: need of people to tune in. It will be what
Speaker 1: do you throw an you think tip twenty million people
Speaker 1: something like that. I think it's a Sunday Game of
Speaker 1: Thrones Sunday. Thanks for listening to the Bloomberg Surveillance Podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene.
Speaker 1: David Gura is at David Gura. Before the podcast, you
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