WEBVTT - Disney Profit Tops Estimates, Arm Forecast Disappoints

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Brian Curtis and I'm Doug Prisner. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 1>Israel saying that his troops have entered the middle of

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<v Speaker 1>Gaza City. At Baxter is covering that story and has

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<v Speaker 1>more from the nine to sixty news women in San Francisco.

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<v Speaker 3>Yeah, Brian, exactly the way they put it is the

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<v Speaker 3>heart of Gaza. It says it's continuing the offensive against Hamas,

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<v Speaker 3>while signaling there will be a post conflict transition period

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<v Speaker 3>in quotes until it is clear who takes control of

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<v Speaker 3>the territory. G seven is issued a statement out of

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<v Speaker 3>their Tokyo meeting that Gaza needs a pause. US Secretary

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<v Speaker 3>of State Anthony Blincoln says humanitarian aid needs to get in.

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<v Speaker 4>We all agree that humaniitrane pauses would advance key objectives

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<v Speaker 4>to protect Palestinian civilians, to increase the sustained flow of

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<v Speaker 4>humanitarian assistance, to allow our citizens in foreign nationals to exit,

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<v Speaker 4>and to facilitate the release of hostages.

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<v Speaker 3>Drawing a distinction between pause and sees fire.

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<v Speaker 4>Calling for an immediate ceasefire have an obligation to explain

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<v Speaker 4>how to address the unacceptable result. It would likely bring

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<v Speaker 4>about amass left in place with more than two passages

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<v Speaker 4>with a capacity and stated intent to repeat October seventh,

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<v Speaker 4>again and again and again.

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<v Speaker 3>Meanwhile, frustration and getting that humanitarian aid in and out

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<v Speaker 3>through the RAFA crossing. State Department spokesman Vida Patel, this.

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<v Speaker 5>Is not a crossing in which we really have much

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<v Speaker 5>input into whether it can open or close.

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<v Speaker 3>He says, See he does expect American citizens to still

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<v Speaker 3>be able to exit at some point. One other note,

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<v Speaker 3>Yameni Huthies backed by Iran say that they have shot

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<v Speaker 3>down a us drone over Yumena Waters. Third GOP debate

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<v Speaker 3>tonight because of polling, Ron De Santas and Nikki Haley's

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<v Speaker 3>center and stage literally and figuratively, and it'll be a

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<v Speaker 3>story line tonight whether they go after each other, Donald Trump,

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<v Speaker 3>and now the issue of abortion will also play a

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<v Speaker 3>major role. But Bloomberg Christian Hall says foreign policy as well.

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<v Speaker 6>I think Nikki Hayley this is the winning moment for her.

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<v Speaker 6>It's her show. I mean, she has a lot to take,

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<v Speaker 6>she has a lot to win from this debate. Her

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<v Speaker 6>campaign has really tried to make her foreign policy experience

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<v Speaker 6>a highlight of her campaign. I know that they have

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<v Speaker 6>often brought up that she's a former UN ambassador.

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<v Speaker 3>As for the post mortem on the issue of abortion

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<v Speaker 3>from last night's election, Vice President Kamala Harris says, it's simple.

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<v Speaker 7>The voter said, look, the government should not be telling

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<v Speaker 7>a woman what to do with her body.

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<v Speaker 3>Harris says, voters stood with freedom. Ivanka Trump on the

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<v Speaker 3>stand today and her dad's civil fraud trial, says she

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<v Speaker 3>had no role in figuring or reporting her dad's property

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<v Speaker 3>and that worth claims. Attorney General Letitia James says, no,

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<v Speaker 3>that's not the case.

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<v Speaker 8>Ivanka Trump secured negotiated loans to obtain favorable terms based

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<v Speaker 8>on fraudulent statements of financial condition.

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<v Speaker 3>Ed says Trumps can't hide from the truth. Panda diplomacy

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<v Speaker 3>nearly over. Amazing beloved giant pandas at Washington, d c's

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<v Speaker 3>National Zoo have started the journey back to China, created

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<v Speaker 3>up loaded into a special Panda Express FedEx flight. Others

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<v Speaker 3>in Atlanta, San Diego, Memphis heating back as well soon.

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<v Speaker 3>This of course happening in the shadow of the she

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<v Speaker 3>Biden summit. Global News twenty four hours a day, whenever

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<v Speaker 3>you want it with Bloomberg News Now in San Francisco.

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<v Speaker 3>I'm Ed Baxter, and this is Bloomberg.

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<v Speaker 1>Let's take a look at some of the top business

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<v Speaker 1>stories of the hour now. While Disney posting better than

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<v Speaker 1>expected fourth quarter earnings and said that it would seek

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<v Speaker 1>an additional two billion dollars in cost savings, Disney's flagship

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<v Speaker 1>theme parks delivered the biggest profit boost, with earnings rising

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<v Speaker 1>thirty one percent. Losses in Disney's streaming business also narrowed,

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<v Speaker 1>and globally, the number of Disney Plus paying subscribers rose

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<v Speaker 1>to more than one hundred and fifty million at pete

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<v Speaker 1>analyst estimates of hundred and forty seven point four million,

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<v Speaker 1>and so it means that signups are returning to growth.

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<v Speaker 1>We heard earlier from Paul Verner, analyst at Insider Intelligence, saying,

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<v Speaker 1>despite the numbers today, thinks that Bob Eiger has his

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<v Speaker 1>work cut out for him going forward.

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<v Speaker 9>I think he took on this job knowing that it

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<v Speaker 9>would be challenging, but he's face challenges that I think

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<v Speaker 9>nobody expected, like the writers strike, and some of the

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<v Speaker 9>softness in the ad market maybe was expected, but it's

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<v Speaker 9>probably more of a headwind than anticipated. And really just

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<v Speaker 9>existential questions about the streaming business model TV dwindling. I mean,

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<v Speaker 9>he's pretty much said he's going to sell off those

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<v Speaker 9>traditional TV assets, but that begs the question is that

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<v Speaker 9>going to be enough to finance the Hulu acquisition.

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<v Speaker 1>That's Paul Verna, an analyst. Disney shares A trading up

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<v Speaker 1>three percent in late trading.

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<v Speaker 2>Well after the bell Armholdings delivered its first earnings report

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<v Speaker 2>since the IPO results from the just ended quarter longer

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<v Speaker 2>than forecast. We have revenue growing twenty eight percent, total

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<v Speaker 2>top line eight hundred and six million. This is where

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<v Speaker 2>it gets interesting. Guidance for the current quarter was disappointing

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<v Speaker 2>on the revenue front. Here is Bloomberg's Bailey Lipshultz.

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<v Speaker 5>When you see their third quarter revenue view missing the midpoint,

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<v Speaker 5>that's really a bad sign. It's back below on pace

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<v Speaker 5>to break below that fifty one dollars IPO issuance price,

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<v Speaker 5>which again is critical because that's where a lot of

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<v Speaker 5>investors bought in. That's where all these stocks are going

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<v Speaker 5>to be benchmarked against. And when you look at the

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<v Speaker 5>results and you look at the guidance again, as you mentioned,

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<v Speaker 5>the smartphone business broadly speaking, has been pretty poor. This

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<v Speaker 5>is a company that's going to have to sell investors

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<v Speaker 5>on AI.

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<v Speaker 2>That is Bloomberg's Bailey Lipshultz. Now Arm did say that

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<v Speaker 2>uncertain timing for some new licensing deals contributed to that

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<v Speaker 2>conservative forecast for the current quarter. But if you look

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<v Speaker 2>at the stock right now in late in New York trading,

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<v Speaker 2>we're down by more than eight percent right.

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<v Speaker 1>Doug during the regular session, Eli Lilly shares gained three

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<v Speaker 1>point two percent, and the company won't approval for its

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<v Speaker 1>diabetes drug to treat obesity Bloomberg's and Kate's as the story.

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<v Speaker 10>The weight loss medication, brandon zep Bound, will cost close

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<v Speaker 10>to eleven hundred dollars for a month's supply and will

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<v Speaker 10>be available by the end of the year. Monjaro, the

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<v Speaker 10>diabetes version of the same drug, could not be marketed

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<v Speaker 10>for weight loss until it got the go ahead by

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<v Speaker 10>the Food and Drug Administration. Monjarro has approved last year

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<v Speaker 10>as a treatment for adults with type two diabetes, but

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<v Speaker 10>studies showed it helped patients lose up to twenty six

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<v Speaker 10>percent of their body weight, or more than sixty one pounds.

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<v Speaker 10>In Washington and Kate's Bloomberg Radio.

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<v Speaker 2>Well, a meeting is reportedly set for next week between

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<v Speaker 2>President Spiden and She that will happen in San Francisco.

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<v Speaker 2>We got to the view of Singapore's Prime Minister Lis

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<v Speaker 2>Young Lung, who told us this face to face could

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<v Speaker 2>dial down tensions between the US and China, especially over Taiwan.

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<v Speaker 11>I don't believe that they are trigger happy. They have

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<v Speaker 11>a problem. They would like Taiwan to be part of

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<v Speaker 11>one China, but how did from here to there? And

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<v Speaker 11>I believe if they are not provoked, if events don't

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<v Speaker 11>spin out of control, I don't believe that they are

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<v Speaker 11>going to You're going to wake up one day and

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<v Speaker 11>find that they've decided to launch d D.

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<v Speaker 2>The ADIA Singapore's Prime Minister Lihi Hiang Lung on a

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<v Speaker 2>conversation or as a part of a conversation with Bloomberg

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<v Speaker 2>editor in chief John Micklethwaite at the Bloomberg New Economy

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<v Speaker 2>Forum in Singapore, and you can listen to more of

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<v Speaker 2>that conversation throughout daybreak Asia.

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<v Speaker 1>Right, Well, we go to data in China. Now, China's

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<v Speaker 1>consumer price inflation probably flat lined in October as overall

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<v Speaker 1>demand lagged. Bloomberg's Rashad Salamat has a preview from Hong Kong.

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<v Speaker 12>The CPI reading is likely to have hovered around zero

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<v Speaker 12>during the month. Bloomberg Economics seeing inflation rising just zero

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<v Speaker 12>point two percent from a year ago, but our survey

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<v Speaker 12>of market economists projects a decline of one tenth of

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<v Speaker 12>one percent. The official gauge was flat in September. Software

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<v Speaker 12>indicators for the month sug just domestic demand has not

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<v Speaker 12>picked up much despite recent policy easing. Meanwhile, Bloomberg Economics

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<v Speaker 12>projects outright deflation for producer prices. The PPI expected to

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<v Speaker 12>have dropped three percent year on year, more than the

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<v Speaker 12>prime month's decline of two and a half percent. I'm

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<v Speaker 12>Richard salamat Bloomberg Radio.

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<v Speaker 1>Well, it's eleven minutes past the hour, now close to

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<v Speaker 1>look at Walt Disney earnings. Joining us now is Gita

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<v Speaker 1>Ranganatha and Bloomberg Intelligence analyst on US Media. So revenue

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<v Speaker 1>mostly in line, no big surprise, their profit looking pretty

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<v Speaker 1>good though, beating expectations. That shows you that cost cutting

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<v Speaker 1>is one of the top issues at Disney.

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<v Speaker 6>At the moment.

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<v Speaker 7>It definitely does. And you know they can't do a

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<v Speaker 7>whole lot about revenue. I mean, those trends have been

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<v Speaker 7>kind of challenged across the whole media landscape. But they

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<v Speaker 7>are doing what they can control, which is cutting costs

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<v Speaker 7>and cutting them pretty dramatically. So we saw really good

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<v Speaker 7>numbers in terms of operating income. We saw them actually

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<v Speaker 7>taking up their cost saving target. It's up now by

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<v Speaker 7>two billion from five and a half to seven and

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<v Speaker 7>a half billion. They're reducing their cash content spend. They're

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<v Speaker 7>moving really aggressively to kind of restructure the company. But

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<v Speaker 7>most important, and I think this is a really critical metric,

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<v Speaker 7>is they really guide it to a strong jump in

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<v Speaker 7>free cash flow, almost a sixty percent jump in twenty

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<v Speaker 7>twenty four. So they're really moving from you know, and

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<v Speaker 7>bab Bieger said this aptly. They said they're moving from

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<v Speaker 7>a fix to a build phase as they positioned this

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<v Speaker 7>company for, you know, its next phase of growth, GITA.

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<v Speaker 10>They are targeting two billion dollars more in cost cutting.

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<v Speaker 10>But is all that to do is content spend? And

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<v Speaker 10>is that wise given that they want their streaming services

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<v Speaker 10>to do better.

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<v Speaker 7>Yeah, So, you know, that's a great question, Vannie. I mean,

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<v Speaker 7>they're so they're they're Mantra and they were kind of

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<v Speaker 7>launching their streaming product was just to go out with

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<v Speaker 7>a whole lot of content, right, So it became more

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<v Speaker 7>a game of volume just to kind of take on Netflix,

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<v Speaker 7>and Barbeyger acknowledged that that might not have been the

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<v Speaker 7>best strategy because what it did is it kind of

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<v Speaker 7>devalued a lot of the content. It led to a

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<v Speaker 7>lot of franchise fatigue, people complaining they're not able to

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<v Speaker 7>kind of follow storylines as you have, you know, multiple

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<v Speaker 7>Marvel movies, multiple Marvel series kind of jumping back and forth.

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<v Speaker 7>And so now their priority is really quality over quantity,

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<v Speaker 7>and so they're looking to kind of cut their production

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<v Speaker 7>but really focus really consolidate. What that is doing is

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<v Speaker 7>it's definitely driving up the programming cost savings. Of course

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<v Speaker 7>they're taking down some non programming costs as well, but

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<v Speaker 7>I think overall it's really kind of improving the efficiency

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<v Speaker 7>in the business. And they were asked even about, you

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<v Speaker 7>know what about taking some of their non core content

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<v Speaker 7>titles and kind of licensing it to Netflix, something similar

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<v Speaker 7>to what Warner Brothers has done with some of their

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<v Speaker 7>older HBO titles, whether it's Bawlers or Insecure, and kind

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<v Speaker 7>of licensing that to Netflix and Disney said they're very

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<v Speaker 7>very open to doing that. So again, they're really looking

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<v Speaker 7>to monetize content, but at the same time, they're being

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<v Speaker 7>very very disciplined in terms of spending, you know, both

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<v Speaker 7>content wise and non content wise.

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<v Speaker 1>I'm Brian Curtis along with Vonnie Quinn. Our guest is

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<v Speaker 1>Gita ron Ganathan Bloomberg Intelligence analyst on US Media. Geita

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<v Speaker 1>so many different angles at Disney. Hate to jump around

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<v Speaker 1>so much, but ESPN always gets a lot of attention.

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<v Speaker 1>We know that the streaming business, including ESPN Plus, is

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<v Speaker 1>still losing money three hundred and eighty seven million in

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<v Speaker 1>the quarter. That was better than expected, but they're they're

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<v Speaker 1>expecting to climb up into profit at some point. But

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<v Speaker 1>what I'm really interested in is the Disney pursuit to

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<v Speaker 1>get a partner for ESPN and what's happening on that front.

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<v Speaker 2>What are you hearing?

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<v Speaker 7>Yeah, so they said it's pretty much in the work.

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<v Speaker 7>So there was nothing concrete that was necessarily reported during

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<v Speaker 7>the earnings call, Brian, but they did say they did

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<v Speaker 7>say that they are laser focused to bringing the ESPN

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<v Speaker 7>streaming product, you know, over the next few months, you know,

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<v Speaker 7>as they kind of work out details, they will release that,

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<v Speaker 7>but it is it is inevitable. The transition to streaming

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<v Speaker 7>is inevitable at this point. Of course, that doesn't mean

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<v Speaker 7>that they're going to completely abandon the linear TV network.

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<v Speaker 7>The continue They're going to continue to have content there,

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<v Speaker 7>but their major focus is going to be on the

0:12:08.720 --> 0:12:12.720
<v Speaker 7>streaming solution, and they're looking at a host of different partners. So,

0:12:12.960 --> 0:12:14.640
<v Speaker 7>you know, there's been a lot of chatter about whether

0:12:14.679 --> 0:12:16.480
<v Speaker 7>they wanted to want to wanted to bring in the

0:12:16.559 --> 0:12:19.600
<v Speaker 7>leagues like you know, the NFL or the NBA so

0:12:19.640 --> 0:12:23.160
<v Speaker 7>that they're assured of you know, a steady supply of content,

0:12:23.600 --> 0:12:25.240
<v Speaker 7>or whether they want to kind of bring in a

0:12:25.280 --> 0:12:27.920
<v Speaker 7>tech partner like an Apple or an Amazon, which is

0:12:27.920 --> 0:12:31.400
<v Speaker 7>you know, deep pocketed, or they want to focus on distribution.

0:12:31.520 --> 0:12:34.040
<v Speaker 7>So nothing really concrete. All that Barb Bieger said was

0:12:34.080 --> 0:12:37.400
<v Speaker 7>that they are working, They have had a lot of conversations,

0:12:37.480 --> 0:12:39.280
<v Speaker 7>and they you know, they think that they're going to

0:12:39.280 --> 0:12:40.320
<v Speaker 7>make progress very soon.

0:12:40.640 --> 0:12:45.000
<v Speaker 2>What about ABC National Geographic FX Is Eiger really looking

0:12:45.040 --> 0:12:45.400
<v Speaker 2>to sell?

0:12:46.440 --> 0:12:48.880
<v Speaker 7>I think they are. So, you know, he outlined for

0:12:49.320 --> 0:12:51.960
<v Speaker 7>you know, strategic priorities at the outset of the call.

0:12:52.040 --> 0:12:54.520
<v Speaker 7>What he talked about was, you know, streaming profitability, the

0:12:54.760 --> 0:12:58.040
<v Speaker 7>ESPN transition, you know, continued growth in parks, and he

0:12:58.080 --> 0:13:01.120
<v Speaker 7>also spoke about reintegrating the movie business. So obviously linear

0:13:01.160 --> 0:13:03.920
<v Speaker 7>TV is not a focus for them. It is not

0:13:04.120 --> 0:13:06.640
<v Speaker 7>a growth business. I mean, all that they're doing is

0:13:06.640 --> 0:13:09.120
<v Speaker 7>they're kind of managing it to the best of their ability,

0:13:10.160 --> 0:13:12.600
<v Speaker 7>you know, because it isn't it isn't secular declient, there's

0:13:12.760 --> 0:13:16.360
<v Speaker 7>just no sugarcoating that. So I think he is very

0:13:16.480 --> 0:13:18.880
<v Speaker 7>very open to, you know, getting rid of some of

0:13:18.920 --> 0:13:21.840
<v Speaker 7>these non core assets, or or at least that's what

0:13:21.880 --> 0:13:25.040
<v Speaker 7>they refer to them as. So, I mean, we don't

0:13:25.040 --> 0:13:28.400
<v Speaker 7>have any necessary specifics again Vannie on you know, whether

0:13:28.480 --> 0:13:32.040
<v Speaker 7>they have actually had any discussions with anybody, but we

0:13:32.160 --> 0:13:33.920
<v Speaker 7>know that he has said that everything is on the

0:13:33.960 --> 0:13:35.720
<v Speaker 7>table when it comes to you know, some of the

0:13:35.760 --> 0:13:37.080
<v Speaker 7>linear TV networks.

0:13:37.800 --> 0:13:41.240
<v Speaker 1>Parks another crown jewel of Disney. The parks did really

0:13:41.240 --> 0:13:44.480
<v Speaker 1>well after the pandemic with all the pent up spending

0:13:44.520 --> 0:13:47.400
<v Speaker 1>that came out, particularly in the US. I think it

0:13:47.440 --> 0:13:51.520
<v Speaker 1>was a little less so abroad. What have we learned

0:13:51.559 --> 0:13:53.760
<v Speaker 1>about how how well are the parks doing abroad?

0:13:53.840 --> 0:13:56.760
<v Speaker 7>Now? They're actually doing really really well, and actually we're

0:13:56.760 --> 0:13:59.560
<v Speaker 7>seeing some of the softness now in the domestic park

0:13:59.600 --> 0:14:02.520
<v Speaker 7>so early. You're absolutely right, it was the domestic parks

0:14:02.520 --> 0:14:05.880
<v Speaker 7>that were outperforming. The international was still kind of challenged

0:14:05.920 --> 0:14:09.040
<v Speaker 7>because of COVID restrictions. Now it's kind of reversed a

0:14:09.080 --> 0:14:13.440
<v Speaker 7>little bit, so we're seeing the domestic actually softer trends.

0:14:13.440 --> 0:14:16.280
<v Speaker 7>I wouldn't say it's necessarily weak, but definitely some softness

0:14:16.320 --> 0:14:20.200
<v Speaker 7>because of tough comparisons. You know, maybe the revenge travel

0:14:20.320 --> 0:14:24.480
<v Speaker 7>is kind of coming to its you know, close still strong,

0:14:24.640 --> 0:14:28.080
<v Speaker 7>but not as strong as before. But International is really

0:14:28.200 --> 0:14:31.680
<v Speaker 7>back with a bang, and that actually contributed to a

0:14:31.720 --> 0:14:34.080
<v Speaker 7>lot of you know that that thirty one percent and

0:14:34.160 --> 0:14:36.560
<v Speaker 7>operating profit. A lot of that was due to International.

0:14:36.600 --> 0:14:38.960
<v Speaker 7>A lot of that was due to, you know, their

0:14:39.680 --> 0:14:42.640
<v Speaker 7>their strength and their cruise segment, so a lot of

0:14:42.680 --> 0:14:45.000
<v Speaker 7>the other levers that they're kind of pulling in their

0:14:45.040 --> 0:14:45.720
<v Speaker 7>park segment.

0:14:46.960 --> 0:14:49.800
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