WEBVTT - John Wick’s Blowout Opening Lifts Lions Gate 0:00:01.280 --> 0:00:05.640 This is Bloomberg business Week Inside from the reporters and 0:00:05.840 --> 0:00:09.400 editors who bring you America's most trusted business magazine, plus 0:00:09.480 --> 0:00:13.640 global business, finance and tech news. The Bloomberg Business Week 0:00:13.680 --> 0:00:22.880 Podcast with Carol Masser and Tim Stenebec from Bloomberg Radio. 0:00:27.040 --> 0:00:29.560 All right, everybody, in other busy days, you know, media 0:00:29.600 --> 0:00:33.199 frenzy around former President Donald Trump. We covered that a 0:00:33.240 --> 0:00:36.280 lot earlier, and while it kind of felt like today 0:00:36.320 --> 0:00:38.040 almost was like you were watching a bit of a 0:00:38.080 --> 0:00:40.519 streaming series, we did want to share with you a 0:00:40.520 --> 0:00:43.519 couple of stories Buyer Bloomberg Business Week team from the 0:00:43.560 --> 0:00:46.320 actual world of media and entertainment that you can find 0:00:46.360 --> 0:00:48.680 at Bloomberg dot com slash business Week. In fact, one 0:00:48.720 --> 0:00:50.160 of the stories is going to be in the upcoming 0:00:50.159 --> 0:00:52.600 new issue of Bloomberg Business Week out later this week. 0:00:53.159 --> 0:00:55.640 One is on a streaming service at Linsgate is still 0:00:55.640 --> 0:00:58.840 looking to unload. Another about the writer strike that Maddie 0:00:58.960 --> 0:01:01.840 is fearful is booming and we'll disrupt her viewing habits. 0:01:02.000 --> 0:01:04.600 So let's get to Bloomberg News reporter Thomas Buckley. He's 0:01:04.600 --> 0:01:07.200 out there in Los Angeles joining us via zoom and 0:01:07.280 --> 0:01:09.959 right here in our studio is the editor of Bloomberg 0:01:09.959 --> 0:01:12.000 business Week, Joel Webber. So, Joe, let's can we start 0:01:12.040 --> 0:01:14.640 with lions Gate? Why not? All right? So I seen 0:01:14.680 --> 0:01:19.360 john Wick yet number four except that one. I'm ready 0:01:19.360 --> 0:01:22.840 for it. It's not going to save the day. No, Well, 0:01:22.600 --> 0:01:24.920 we hope, you know, we live in Hope, and and 0:01:25.160 --> 0:01:30.440 this has become obviously a real hit and favorite in Hollywood. 0:01:31.240 --> 0:01:32.880 Was a bit of a sleeper and then it just 0:01:33.080 --> 0:01:37.920 continued to rack up more and more eyeballs. Um, what's 0:01:37.959 --> 0:01:41.480 at stake here for lions Gate? Though? Because um, maybe 0:01:41.480 --> 0:01:44.600 you've seen the recent Business Week cover Dungeons and Dragon 0:01:45.360 --> 0:01:49.760 cover story which overtook at the box office this weekend. 0:01:50.560 --> 0:01:54.920 John Wick? So what's at store for for Lionsgate? Who 0:01:55.240 --> 0:01:59.360 really has has bet the house on john Wick? Well, 0:01:59.440 --> 0:02:00.760 let me tell you, well, I mean at first i'd 0:02:00.760 --> 0:02:03.280 be REMISAPPI didn't say that You're going to be absolutely 0:02:03.360 --> 0:02:05.200 loving john Wick four when you go see it. If 0:02:05.240 --> 0:02:09.960 you enjoyed one, two, and three up, can't wait? Yeah, exactly. 0:02:10.520 --> 0:02:12.320 There are actually no plans for a sequel. When john 0:02:12.360 --> 0:02:14.960 Wick one came out, says tremendous feed To have gotten 0:02:15.000 --> 0:02:21.280 this far with the franchise is exactly right, and and 0:02:21.360 --> 0:02:23.720 John Wick has really moved into one of them, Lionsgate's 0:02:23.840 --> 0:02:26.480 largest franchises of late they will so you know, own 0:02:26.880 --> 0:02:29.680 the rights to the likes of Twilight and Hunger Games. 0:02:29.720 --> 0:02:33.000 And what's interesting, it's structupposing the strength of that film 0:02:33.080 --> 0:02:36.519 studio against some of the weakness in its streaming service operations. 0:02:36.800 --> 0:02:39.760 And that's precisely why the company is seeking to demerge 0:02:39.800 --> 0:02:42.920 Wishes and Effects, say unwind, a merger that they created 0:02:42.960 --> 0:02:45.480 in twenty sixteen from the acquisition of Stars for the 0:02:45.560 --> 0:02:48.560 four point four billion dollars. The acquisition has not delivered 0:02:48.560 --> 0:02:50.800 for them. The combined market cab of the company now 0:02:51.000 --> 0:02:55.600 is around half that and so they're exactly and their 0:02:55.680 --> 0:02:59.800 feeling is once they unwind the two distinct businesses, investors 0:03:00.120 --> 0:03:02.400 see more value in each rather than the sum of 0:03:02.400 --> 0:03:04.680 the parts. Why didn't streaming, I mean, come on, help 0:03:04.720 --> 0:03:07.079 me out here, Thomas. I mean, streaming supposed to be 0:03:07.120 --> 0:03:08.880 all the rage, and I know we're kind of getting 0:03:08.919 --> 0:03:11.399 some filtering of that, I feel like over the last 0:03:11.440 --> 0:03:13.720 year or so, because we do have so many different services, 0:03:13.720 --> 0:03:16.280 But why did it not work out? I mean, Stars 0:03:16.360 --> 0:03:18.240 was the home of an Outlander. Didn't we know that 0:03:18.480 --> 0:03:23.440 was kind of a huge as well, and some other things. Yeah, 0:03:23.440 --> 0:03:26.919 but why didn't work out? So yeah, right to a 0:03:27.000 --> 0:03:29.399 nice sense, streaming was all the rage stillers all the rage. 0:03:29.440 --> 0:03:32.200 The issue is that investors really have shifted their focus 0:03:32.200 --> 0:03:35.360 from what used to be entirely subscribe the growth to 0:03:35.640 --> 0:03:38.080 now profitability with the rights of interest rates and seeing 0:03:38.080 --> 0:03:40.200 how a lot of these tech companies adapt to this 0:03:40.280 --> 0:03:43.840 new normal in streaming. There is an enormous cash burn 0:03:43.920 --> 0:03:46.280 associated with the business. I mean, you saw, for example, 0:03:46.600 --> 0:03:50.640 the departure last year of the Disney chief executive officer 0:03:50.760 --> 0:03:53.920 Bob Chapec as a result of a one point five 0:03:53.920 --> 0:03:57.280 billion dollar loss in a single course run streaming. So 0:03:57.320 --> 0:03:59.480 I think that now the attention has turned to that 0:03:59.560 --> 0:04:02.080 side of the This is a little more investors a 0:04:02.200 --> 0:04:05.600 much more favoring, you know, solid studio operations that can 0:04:05.640 --> 0:04:08.160 be arms dealers, rather than prioritize shows for their own 0:04:08.480 --> 0:04:12.840 streaming operations. Well, it seems like Lionsgate didn't exactly help 0:04:12.960 --> 0:04:15.720 the Stars case here, based on some comments that you 0:04:15.800 --> 0:04:19.520 got from a source who basically said that a John 0:04:19.560 --> 0:04:23.400 Wicks spinoff was pulled from the Stars lineup after Amazon 0:04:23.440 --> 0:04:26.559 and Comcast Peacocks streaming service offered lions Gate one hundred 0:04:26.560 --> 0:04:32.400 million dollars for the show. That seems tough. It seems 0:04:32.440 --> 0:04:34.960 tough for Stars. And this is what's quite interesting. I mean, 0:04:35.000 --> 0:04:37.800 it's tough for Stars, but great for Lionsgate because I 0:04:37.839 --> 0:04:40.440 think that there when you have a real you know, 0:04:40.520 --> 0:04:43.160 equity story for the studio going forward, as they can 0:04:43.240 --> 0:04:46.600 farm out you know, very high value, high price properties 0:04:46.640 --> 0:04:49.400 like this to the highest bidder, that highest bidder is 0:04:49.520 --> 0:04:51.719 unlikely to be starts for any of its shows going 0:04:51.760 --> 0:04:54.919 forward because it starts, you know, relative to likes of 0:04:54.960 --> 0:04:58.799 Netflix is you know, under a fifth the size of Netflix, 0:04:59.360 --> 0:05:02.960 and you know, fellow competitors, so I think that, you know, 0:05:03.160 --> 0:05:05.320 going forward, it is going to be tough of the 0:05:05.400 --> 0:05:07.039 Stars to compete. And I think that, you know, the 0:05:07.040 --> 0:05:08.920 people who run Stars have said that of their own 0:05:08.960 --> 0:05:12.360 volition as well. But it puts signs get in a 0:05:12.400 --> 0:05:15.320 great studio wherein they can you know, sell as I mentioned, 0:05:15.320 --> 0:05:17.360 to the highest bidder and and do very well from 0:05:17.360 --> 0:05:21.680 their existing franchises. Okay, so there's some other stuff happening 0:05:21.680 --> 0:05:25.799 in Hollywood, like a potential writer strike, and it's we've 0:05:25.839 --> 0:05:29.119 seen that before, but it's been a little while. So 0:05:29.480 --> 0:05:33.320 what what the timeline look like here and what are 0:05:33.320 --> 0:05:36.159 the you know, the issues, because I think streaming comes 0:05:36.240 --> 0:05:39.919 up yet again in that whole conversation, right, yeah, absolutely, So. 0:05:39.960 --> 0:05:41.960 The last time we saw a significant right strike, as 0:05:41.960 --> 0:05:44.520 you mentioned, was probably in two thousand and seven, when 0:05:44.560 --> 0:05:47.240 the strike lasted about one hundred days, give or take, 0:05:47.560 --> 0:05:49.839 and it costs the LA economy, you know, anywhere between 0:05:49.880 --> 0:05:53.960 two and three billion dollars. That's because all Hollywood productions 0:05:54.160 --> 0:05:57.479 shut down during a writer strike. I mean scripts have 0:05:57.600 --> 0:06:01.520 to be finast and reworked to your production. Obviously, that 0:06:01.560 --> 0:06:05.679 can't happen if all your writers are picketing the lines. 0:06:06.240 --> 0:06:09.320 At the moment, what's at stake is really in part 0:06:09.360 --> 0:06:12.680 of residuals from streaming. A number of writers feels like 0:06:12.960 --> 0:06:15.680 their conditions are necessarily as good as they were ten 0:06:15.800 --> 0:06:18.640 years ago, and the rise of streaming has really affected 0:06:18.640 --> 0:06:21.240 them in that regard. And what's interesting is there is 0:06:21.279 --> 0:06:23.440 some parallel give them the two thousand and seven writers strike. 0:06:23.600 --> 0:06:27.200 The main point of contention there happened to be DVD residuals, 0:06:27.200 --> 0:06:28.960 and we're seeing the same sort of thing now. And 0:06:29.040 --> 0:06:33.800 now you said something it was like a technology interpretation. 0:06:33.800 --> 0:06:39.480 Please do you not remember those? Yeah? What does that mean? No? 0:06:39.560 --> 0:06:42.080 Go ahead, No, it's just it's so interesting the DVD 0:06:42.240 --> 0:06:44.599 thing in comparison to what I was thinking about reading 0:06:44.640 --> 0:06:46.920 your story as someone who's I shouldn't bring up laser 0:06:46.960 --> 0:06:49.279 discs then either, huh. I guess I'll be like laughed 0:06:49.279 --> 0:06:52.440 out of the studio VHS is I mean, all of it. 0:06:52.880 --> 0:06:55.159 But it's so interesting because one of the things that 0:06:55.200 --> 0:06:58.800 the writers are thinking about is the performance of their 0:06:58.839 --> 0:07:00.800 shows and whether or not they should be getting a 0:07:00.839 --> 0:07:03.200 premium if their show gets a lot of clicks or 0:07:03.240 --> 0:07:05.840 makes it into the Netflix top ten. As someone who 0:07:05.920 --> 0:07:08.720 works on our social team mainly, I would never want 0:07:08.720 --> 0:07:10.880 to be judged on the clicks because that can also 0:07:10.920 --> 0:07:13.280 be a bad thing if it doesn't go well. What 0:07:13.320 --> 0:07:16.640 are your sources saying about that? Yeah? Absolutely, And this 0:07:16.720 --> 0:07:18.840 is a fascinating thing, right, I mean I think that previously, 0:07:18.880 --> 0:07:20.880 writers who are writing for TV, I mean, when the 0:07:21.000 --> 0:07:23.760 shows are widely syndicated around the world, you know they 0:07:23.880 --> 0:07:29.280 would benefit from that very consistent income and cold plan. Accordingly, now, 0:07:29.400 --> 0:07:31.560 I think you know, if a writer is paid upfront 0:07:31.600 --> 0:07:33.440 for a show and it happens to then break into 0:07:33.480 --> 0:07:36.520 the top ten, and that's very limited upside for them 0:07:36.600 --> 0:07:39.640 because the performance based bonus is that much smaller than 0:07:39.680 --> 0:07:44.080 it is to say, by comparison a big film released 0:07:44.120 --> 0:07:46.400 in theaters and how well that does at the box office. 0:07:46.760 --> 0:07:48.560 I think a lot of them are thinking, we'll look, 0:07:48.600 --> 0:07:51.440 we're seeing our shows breaking in the top ten, racking up, 0:07:51.480 --> 0:07:53.559 you know, hundreds of millions of hours worth of viewing, 0:07:53.600 --> 0:07:56.520 and we're not being compensated fairly for it. So what 0:07:56.600 --> 0:07:59.600 are the goals that the Writer's Guild is seeking out for? 0:08:01.040 --> 0:08:03.960 So basically they are working under a current contract that 0:08:04.040 --> 0:08:06.920 expires on May first, and so they've sat down now 0:08:07.000 --> 0:08:10.280 with the studios and promot to understand, you know, perhaps 0:08:10.320 --> 0:08:13.240 that loggerheads not making much progress yet, but what they're 0:08:13.240 --> 0:08:17.440 seeking is a number of assurances, certainly as regards to 0:08:17.480 --> 0:08:20.760 residual compensation, so that they're better paid for that shows 0:08:20.800 --> 0:08:22.840 going forward. You know, it does feel like, you know, 0:08:22.920 --> 0:08:25.400 we constantly see this as things change, especially in terms 0:08:25.440 --> 0:08:28.880 of how we consume content. Thomas is that, you know, 0:08:29.000 --> 0:08:30.560 it's got to kind of catch up right with the 0:08:30.600 --> 0:08:32.760 players in it so that they are just like compensated. 0:08:32.760 --> 0:08:35.600 I'm curious what outside observers are saying that do they 0:08:35.640 --> 0:08:38.200 have a good point that it makes sense because things 0:08:38.200 --> 0:08:42.600 are changing exactly it is changing. I think that, you know, 0:08:42.679 --> 0:08:44.680 it's it's interesting because as I think about this story, 0:08:44.720 --> 0:08:46.760 it can sometimes feel a bit like inside Baseball. But 0:08:46.800 --> 0:08:49.160 the truth is there are some real world, you know, 0:08:49.440 --> 0:08:51.520 ramifications for us of you as I mean, certainly during 0:08:51.559 --> 0:08:54.360 the last writer strike you had shows from The Simpsons, 0:08:54.360 --> 0:08:56.280 the Desperate Housewives that all had to make do with 0:08:56.400 --> 0:08:59.319 far shorter seasons because Hollywood just ground to a halt. 0:08:59.600 --> 0:09:01.480 So but you know, even though it might feel like 0:09:01.480 --> 0:09:04.520 inside Baseball at times, we will be affected as fans 0:09:04.520 --> 0:09:06.720 of these shows if they don't find a resolution in 0:09:06.760 --> 0:09:10.920 the coming weeks. What do you think the potential impact 0:09:11.040 --> 0:09:13.600 of that is going to look like? In which specific 0:09:13.640 --> 0:09:17.360 shows do that? Don't worry like watching things Maddie's terrified? Specifically? 0:09:17.400 --> 0:09:21.360 Can we I'm sorry, let's just up and final Succession right, 0:09:21.480 --> 0:09:24.560 because it's already done and that's the that's the only 0:09:24.600 --> 0:09:26.880 thing that I live and die for. But what are 0:09:26.960 --> 0:09:29.080 what are the other ones in production right now that 0:09:29.120 --> 0:09:30.800 we need to worry about? And what's the timeline? Like 0:09:31.120 --> 0:09:32.840 let me let me read that thine back to you 0:09:33.120 --> 0:09:36.040 every US movie and TV show risk stopping as writer 0:09:36.240 --> 0:09:42.160 strike clothes like, truly, this is an existential one, right, Thomas, Exactly, 0:09:42.240 --> 0:09:45.800 It's it's pretty pervasive. Um. What I will say is 0:09:45.840 --> 0:09:48.640 that you know, hopefully what happens in the situations and 0:09:48.679 --> 0:09:51.440 they can't find a resolution and people do go on strike. 0:09:52.040 --> 0:09:55.439 You know, the risk are very very high profile shows, 0:09:55.640 --> 0:09:58.560 you know, being outright canceled. It's probably quite low. I 0:09:58.559 --> 0:10:01.079 think that what we saw the last write to strike 0:10:01.240 --> 0:10:03.080 is that you know, the shows that work canceled are 0:10:03.120 --> 0:10:06.040 probably you know, shows that the studios weren't necessarily that 0:10:06.160 --> 0:10:09.600 bent on renewing anyway. So there is a comfort there. 0:10:09.640 --> 0:10:12.320 And also put any fan of reality TV out there, 0:10:12.360 --> 0:10:15.360 you know that a genre doesn't necessarily to you know, 0:10:15.600 --> 0:10:18.480 that much writing at all. If any I think, you know, 0:10:18.559 --> 0:10:21.760 they their appetites will be satiated and the thank god, yeah, 0:10:21.800 --> 0:10:24.040 I hope you like reruns though it could be a 0:10:24.040 --> 0:10:27.320 little bit right like and remember last time, the part 0:10:27.320 --> 0:10:30.520 of the joy was like, you know, people took a 0:10:30.600 --> 0:10:33.360 little break, and I remember more than a few actors 0:10:33.400 --> 0:10:36.760 who looked a little different when they came back. There 0:10:36.840 --> 0:10:39.319 was the continuity folks were like, wait, wait, wait, wait 0:10:39.480 --> 0:10:41.880 a minute, we got a problem here. Um, okay, So 0:10:42.000 --> 0:10:46.560 timeline May first, exactly, So that's when the contract expires. 0:10:46.559 --> 0:10:49.320 And so currently negotiations being had between the two parties. 0:10:49.320 --> 0:10:52.440 And I hope in part resolution before May first. All right, 0:10:52.600 --> 0:10:55.120 And and are you hearing anything moving on that front 0:10:56.360 --> 0:10:58.400 at the moment, I'm not hearing a lot of resolution. 0:10:58.440 --> 0:11:01.920 I'm hearing of our talks and that and that the 0:11:02.040 --> 0:11:05.160 talks are a little bit more tense than usual. How 0:11:05.200 --> 0:11:08.640 would you compare the intensity of the talks to previous 0:11:09.400 --> 0:11:14.240 writer strikes. I would say that it's probably the most 0:11:14.240 --> 0:11:17.120 tensible it's been since two thousand and seven. I know 0:11:17.280 --> 0:11:20.319 certainly that a number of agencias and studios are really 0:11:20.360 --> 0:11:23.400 preparing themselves for potential strikes. So that means, you know, 0:11:23.480 --> 0:11:26.520 stockpiling scripts and the like to make sure that there 0:11:26.600 --> 0:11:30.160 isn't that dramatic a close down if a strike were 0:11:30.200 --> 0:11:33.240 to occur. I think that the view from the top 0:11:33.280 --> 0:11:36.840 of these places is that, you know, if not fifty fifty, 0:11:37.040 --> 0:11:39.679 then that probably is going to be a strike. It's 0:11:39.720 --> 0:11:42.120 probably more fifty one forty nine in favor of a strike. 0:11:42.160 --> 0:11:44.040 At the minutes Okay. So one of the things that 0:11:44.080 --> 0:11:48.080 I'm just remembering is actually the last time this happened, 0:11:48.480 --> 0:11:52.079 there was that surge in reality TV shows, which you 0:11:52.160 --> 0:11:55.679 mentioned because you don't need a screenplay for reality TV. 0:11:55.960 --> 0:11:58.680 So is there is there some speculation or talk that 0:11:59.320 --> 0:12:04.960 between I don't know, like TikTok on TV or Reality 0:12:05.080 --> 0:12:08.720 TV like new versions of reality TV? Are we going 0:12:08.760 --> 0:12:11.840 to see any of that? Like what happens? Like, you know, 0:12:11.920 --> 0:12:16.680 how quickly do they do they dust off that playbook? Yeah? 0:12:16.720 --> 0:12:18.959 They can absolutely default to that. Um. I don't know 0:12:19.000 --> 0:12:21.240 about you guys. Are certainly myself during the pandemic, I 0:12:21.280 --> 0:12:24.000 watch way too much. Reality TV got into the Kardashians 0:12:24.040 --> 0:12:27.120 in a big way. Also below Deck, I don't know 0:12:27.120 --> 0:12:30.840 really you've seen that show, but it's fair exactly. So 0:12:31.000 --> 0:12:34.000 these are shows that are, you know, relatively inexpensive to 0:12:34.120 --> 0:12:38.720 shoot versus you know, a scripted show certainly less expensive 0:12:38.760 --> 0:12:41.200 to script. So I think that that's something that could 0:12:41.240 --> 0:12:43.080 definitely take off in a big way all over again 0:12:43.120 --> 0:12:45.360 if we were to see us right, that's right, So 0:12:45.440 --> 0:12:48.920 this could fuel some extra creativity on the reality TV 0:12:49.080 --> 0:12:54.000 show the word development process. That's exciting. Blow Deck just 0:12:54.080 --> 0:12:56.360 hitting ten years by the way, that is a must watch, 0:12:56.760 --> 0:13:00.440 all the variations. Hey, listen, we just have a nitor 0:13:00.480 --> 0:13:02.520 a minute and a half left here while we have you, 0:13:02.640 --> 0:13:07.839 and forgive me, I'm going to go a little bit. 0:13:09.200 --> 0:13:11.200 It is a week where we get a lot on 0:13:11.240 --> 0:13:14.679 the labor market. Are things are there still? What is 0:13:14.679 --> 0:13:16.920 the labor market? You know on the West Coast when 0:13:16.960 --> 0:13:20.880 it comes to filming and doing stuff within the content world? 0:13:22.360 --> 0:13:24.600 I think you know you saw the huge wave of 0:13:24.679 --> 0:13:28.560 layoffs originating in Silicon Valleys as the West Coast is concerned. 0:13:28.559 --> 0:13:31.040 I mean, Hollywood is certainly catching up to that very quickly. 0:13:31.160 --> 0:13:34.120 The story at the moment this most closely followed is 0:13:34.240 --> 0:13:36.640 the number of layoffs that occurring at Disney right, and 0:13:36.760 --> 0:13:40.440 they're cutting a workforce for about seven thousand people. That 0:13:40.440 --> 0:13:43.359 doesn't include so much you know, front of health employees 0:13:43.400 --> 0:13:46.439 at their parks, but certainly a number of back office 0:13:46.440 --> 0:13:50.280 employees losing their jobs. Sad time for the company in 0:13:50.280 --> 0:13:53.360 that regard, But everybody is seeking to streamline as fast 0:13:53.400 --> 0:13:56.439 as possible to prepare for a new normal, new normal 0:13:56.600 --> 0:13:58.520 new you heard it there. I don't even know what 0:13:58.559 --> 0:14:02.480 that is. Reality TV, Bring it on, Bring it on. 0:14:02.760 --> 0:14:07.200 Love is blind. Um, We're gonna leave it there. Thomas, 0:14:07.200 --> 0:14:11.040 thank you so much, So appreciate two great stories. Thomas Buckley, 0:14:11.240 --> 0:14:14.079 reporter at Bloomberg News via Zoom from Los Angeles, History 0:14:14.200 --> 0:14:16.560 on Stars and lines Gate. You can catch that in 0:14:16.559 --> 0:14:18.839 the new issue of Bloomberg Business Week. You'll be out 0:14:18.840 --> 0:14:21.480 on newsstands on Thursday. It's already on the Bloomberg and 0:14:21.600 --> 0:14:23.480 you can find it up Bloomberg dot com slash business Week. 0:14:23.520 --> 0:14:26.480 Jill Webber, the editor Bloomberg Business Week, your favorite indulgence 0:14:26.640 --> 0:14:32.520 when it comes to streaming. Oh man, uh, Bluie what yeah, exactly. 0:14:32.720 --> 0:14:38.720 We don't have a kid, all right, Disney Plus, what 0:14:38.760 --> 0:14:42.720 would you watch? Oh, it's it's Hanny Time. Very you know, 0:14:42.760 --> 0:14:46.080 it's like less than ten minutes and so wholesome, like 0:14:46.200 --> 0:14:49.320 you know, Bluie Blue. I'll give it a try tonight. 0:14:49.400 --> 0:14:52.080 We'll be looking it up. Don't regret. I always look 0:14:52.080 --> 0:14:55.880 at him differently then, you know these facets. Um, Joel, 0:14:55.880 --> 0:14:57.640 thank you so much, really appreciate it. As we said, 0:14:57.640 --> 0:14:59.560 the new shop Bloomberg Business Week coming out later on. 0:15:00.360 --> 0:15:03.880 You're listening to the Bloomberg Business Week podcast. Catch us 0:15:03.960 --> 0:15:07.200 live weekday afternoons from three to six Eastern Listen on 0:15:07.360 --> 0:15:11.360 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 0:15:11.680 --> 0:15:15.120 or watch us live on YouTube. We do want to 0:15:15.160 --> 0:15:17.640 also bring you one of the most read stories. I 0:15:17.720 --> 0:15:20.560 think it is the most read on the Bloomberger has 0:15:20.600 --> 0:15:22.320 been for most of the day. It's about what we 0:15:22.440 --> 0:15:24.840 often say is the most listened to voice on Wall Street, 0:15:24.920 --> 0:15:27.920 Jamie Diamond. He came out with his annual letter to shareholders. 0:15:27.920 --> 0:15:30.480 So let's get into it with Sally Bakewell. She joins 0:15:30.560 --> 0:15:33.720 Maddy and me. She is Bloomberg News America's finance team leader. 0:15:33.760 --> 0:15:36.760 She's here in our Bloomberg Interactive Broker's studio. Sally, we 0:15:36.880 --> 0:15:39.400 know it when Jamie Diamond talks, when he goes to Washington, 0:15:39.480 --> 0:15:41.800 when he writes something, we all go over it with 0:15:41.880 --> 0:15:44.840 a fine tooth comb. Right, yes, correct, we do. So 0:15:45.320 --> 0:15:48.160 what did we get from him today? I think one 0:15:48.200 --> 0:15:52.440 of the big takeaways here is his perspective on regulation 0:15:52.600 --> 0:15:56.120 and how it caused potentially a lot of what happened 0:15:56.160 --> 0:15:59.000 with Silicon Valley Bank. So, by the way, let's note 0:15:59.080 --> 0:16:02.960 he has long ray old against post financial crisis regulation. 0:16:03.120 --> 0:16:06.320 He's called it complex, he's said it harms the country. 0:16:07.120 --> 0:16:09.760 He's been pretty vociferous about it. Is he now a 0:16:09.840 --> 0:16:14.120 fanboy of it? No, he's so that would be fantastical, 0:16:14.640 --> 0:16:18.640 fantastically interesting. So here today in his annual letter that 0:16:18.880 --> 0:16:22.760 is passed out, as you say, by bankers, traders, politicians alike, 0:16:23.280 --> 0:16:27.520 he said that post crisis regulation that actually encouraged banks 0:16:27.640 --> 0:16:29.960 to load up on a lot of these US Treasury 0:16:30.000 --> 0:16:34.040 bonds that ultimately sort of became their downfall because they 0:16:34.240 --> 0:16:37.400 saw their value eroded as interest rates rose, and they 0:16:37.480 --> 0:16:40.040 weren't really prepared or hedged for that. And so we 0:16:40.160 --> 0:16:42.600 have banks like Silicon Value Bank and Signature Bank that 0:16:42.640 --> 0:16:44.280 were left with these sort of big holes in the 0:16:44.360 --> 0:16:46.760 balance sheet and that ultimately led to their demise. And 0:16:46.880 --> 0:16:49.440 he was also kind of like everyone it was at 0:16:49.520 --> 0:16:52.840 fault here, right, Like, it's the banks themselves, it's regulation, 0:16:52.960 --> 0:16:56.960 it's the authorities. What was his biggest concern? Would you 0:16:57.040 --> 0:17:01.160 say on what authorities could do in term of overreaction? 0:17:01.320 --> 0:17:05.360 Do we have any specifics from him about his biggest worry? There? 0:17:05.840 --> 0:17:09.520 Great question. He very much cautioned against any kind of 0:17:09.720 --> 0:17:13.000 knee jerk reaction in regulation, and I guess he also 0:17:13.080 --> 0:17:15.399 doesn't want to see a repeat of the financial crisis, 0:17:15.480 --> 0:17:17.800 where probably in his view, that's exactly what they did, 0:17:17.960 --> 0:17:21.480 and they proposed all these, in his view again unnecessary 0:17:21.560 --> 0:17:23.840 rules that have made things a bit difficult for the 0:17:23.880 --> 0:17:26.359 banking industry, even though it has also protected them in 0:17:26.480 --> 0:17:30.240 some regard. So he just said, any regulation that we 0:17:30.320 --> 0:17:32.520 have now and there is likely to be some because 0:17:32.560 --> 0:17:35.920 we know that Biden is looking at increasing scrutiny on 0:17:36.040 --> 0:17:38.840 banks with one hundred billion to two hundred and fifty 0:17:38.840 --> 0:17:42.159 billion assets, that we are likely to see heightened and 0:17:42.240 --> 0:17:44.159 tough and regulation. He said, it should just be a 0:17:44.280 --> 0:17:47.280 real the right mix of rules that take into consideration 0:17:47.720 --> 0:17:50.960 things like the banks and should deposits, their accounting practices, 0:17:51.040 --> 0:17:53.560 their deposit concentration. I think he just doesn't want to 0:17:53.600 --> 0:17:56.600 sort of blunt whackamole like tools. It's kind of interesting 0:17:56.640 --> 0:17:58.840 considering we know we went and met right with Trojury 0:17:58.880 --> 0:18:01.840 Secretary Janet Yell, and you know he is a voice 0:18:01.920 --> 0:18:07.080 that government officials certainly reach out to. I know there 0:18:07.200 --> 0:18:09.560 was a lot of speculation. I mean, is he gunning 0:18:09.640 --> 0:18:13.639 for a position in Washington, perhaps next Treasury secretary? I mean, 0:18:13.720 --> 0:18:18.119 is that's something I don't know a great question, because 0:18:18.160 --> 0:18:20.480 he asked it right, Yeah, and he did sort of 0:18:20.600 --> 0:18:23.760 reprise his role of the from the past financial crisis. 0:18:23.840 --> 0:18:26.280 By the way, he is the only CEO still in 0:18:26.400 --> 0:18:29.600 command since they've just press remarkable. Yeah, and he has 0:18:29.720 --> 0:18:31.960 you know, he has been positioning himself as a kind 0:18:32.000 --> 0:18:35.600 of elder statesman like character on the banking and sort 0:18:35.640 --> 0:18:40.359 of geopolitical and other spheres and stages. So who can 0:18:40.400 --> 0:18:42.520 say what's on his mind, but he doesn't shy away 0:18:42.600 --> 0:18:45.800 from being in these roles. And indeed he and Yellen 0:18:45.960 --> 0:18:49.000 kind of conjured up this plan which Diamonds sort of 0:18:49.000 --> 0:18:51.760 took the lead on to basically rescue one of their 0:18:51.800 --> 0:18:54.679 smaller peers in First Republic when he sort of galvanized 0:18:54.720 --> 0:18:57.960 eleven banks to all throw in thirty billion dollars of 0:18:58.080 --> 0:19:01.200 rescue money to that bank. Well, our final two minutes 0:19:01.240 --> 0:19:03.920 with you on this, there were some non banking things 0:19:03.960 --> 0:19:06.960 that he talked about. He's talked about AI before, but 0:19:07.040 --> 0:19:09.239 he brought it up again, right. He also brought up 0:19:09.680 --> 0:19:12.879 the importance of free market capitalism. What were the things 0:19:13.000 --> 0:19:16.240 outside of the banking turmoil that he brought up that 0:19:16.320 --> 0:19:19.000 stood out to you as critical? Yeah, so I think 0:19:19.680 --> 0:19:23.800 CHAT GBT AIM were two things that they said that 0:19:23.920 --> 0:19:26.440 they Jamie Diamond said that they are you know, looking 0:19:26.480 --> 0:19:29.560 at and using I had to say, because every CEO 0:19:29.720 --> 0:19:32.240 is now saying but go ahead, No exactly that, but 0:19:33.119 --> 0:19:35.600 you know, finding ways to use it to fight against fraud. 0:19:35.640 --> 0:19:39.600 For example, energy security has been a topic that he 0:19:39.680 --> 0:19:42.520 talks about a lot, and you know, improving investments into 0:19:42.560 --> 0:19:46.520 renewable energy to sort of improve energy security was another one. 0:19:46.560 --> 0:19:49.639 He also brought up succession and pointed to you know, 0:19:49.720 --> 0:19:52.639 the number of successor candidates that are well known to 0:19:52.680 --> 0:19:54.880 the board and well known to the community that could 0:19:55.040 --> 0:19:57.480 replace him if he ever, one day and it's not 0:19:57.600 --> 0:20:01.160 looking likely, decided to not be Jai JP Morgan see 0:20:01.160 --> 0:20:04.120 you anymore? Is there a bottom line takeaway? Because you guys, 0:20:04.240 --> 0:20:06.080 you know you and your team, you know, covering the 0:20:06.119 --> 0:20:09.399 banks on Wall Street, covering the finance industry at an 0:20:09.440 --> 0:20:12.840 interesting time another time, if you will, how do you 0:20:13.119 --> 0:20:17.800 kind of put what Jamie Diamond said against the whole 0:20:17.880 --> 0:20:20.040 industry and how you're thinking about it and thinking about 0:20:20.119 --> 0:20:23.240 stories and so on and so forth. Definitely, regulation, the 0:20:23.400 --> 0:20:26.880 unintended consequences they're in I think is the big takeaway 0:20:26.920 --> 0:20:30.000 from Jiffy Diamond's letters. Stay all right, it's an interesting 0:20:30.040 --> 0:20:32.880 Carol though. We were just talking about how usually when 0:20:32.880 --> 0:20:35.480 a Jamie Diamond shareholder letter comes out, that's like the 0:20:35.560 --> 0:20:37.960 big news for a large part of our shows. And 0:20:38.000 --> 0:20:40.000 look at us today. Well, and it's interesting because it 0:20:40.080 --> 0:20:42.680 really did stay atop the most read I'm just looking 0:20:42.720 --> 0:20:44.600 now it's number two in the past eight hours, and 0:20:44.680 --> 0:20:46.920 now we have how the markets ended. But it's it's 0:20:46.960 --> 0:20:48.959 been a funny day right where our focus has been 0:20:49.000 --> 0:20:51.480 so much on what's been going on in Lower Manhattan, 0:20:51.520 --> 0:20:54.119 not because the financial sector are the exchange is down there, 0:20:54.240 --> 0:20:57.399 but because of the former president. Thank you for breaking 0:20:57.440 --> 0:20:59.359 it down, because we know it's something that our audience 0:20:59.440 --> 0:21:02.720 really cares about. Sally Bakewell, she's Bloomberg News America's Finance 0:21:02.760 --> 0:21:06.119 team leader. Joining us here in our Bloomberg Interactive Broker's studio. 0:21:06.920 --> 0:21:10.439