WEBVTT - Apple Revamps iPads, Disney Earnings, Tesla Probe 0:00:02.920 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.000 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:17.520 Eastern on Apple car Playing and Broid Auto with the 0:00:17.520 --> 0:00:21.400 Bloomberg Business app. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.000 or watch us live on YouTube. 0:00:25.000 --> 0:00:27.920 All right, Well, long term investors in and observers of 0:00:28.040 --> 0:00:30.880 Apple know that a big part of the story is 0:00:30.960 --> 0:00:35.200 product refreshes. New products. The newest versions of the iPads 0:00:35.200 --> 0:00:37.199 and the iPhones and the watches and all the kind 0:00:37.200 --> 0:00:39.919 of stuff is important for this company. And Apple had 0:00:39.920 --> 0:00:44.240 an event today where they unveiled some new iPads. So questions, 0:00:44.479 --> 0:00:46.479 is it time to upgrade your iPad? Man Deep sing 0:00:46.600 --> 0:00:49.320 Joints is here. He covers all the technology stuff for 0:00:49.440 --> 0:00:53.640 Bloomberg Intelligence. Man Deep, I'm you know, looking at Apple 0:00:53.680 --> 0:00:56.120 shares up about half a percent. Talk to us about 0:00:56.320 --> 0:01:00.360 the new upgraded iPad. How what is it and how 0:01:00.360 --> 0:01:03.840 important is it to the company these days? Yeah? 0:01:03.880 --> 0:01:06.919 I mean, look, iPad line is about a high single 0:01:06.959 --> 0:01:11.440 digit contributor to their overall revenue, so not as big 0:01:11.480 --> 0:01:15.399 as the iPhone of course, but clearly you know they 0:01:15.400 --> 0:01:19.520 are trying to put their latest chip in the iPad. 0:01:20.000 --> 0:01:25.440 They showcase a new keyboard for the iPad, and there 0:01:25.440 --> 0:01:29.600 were other battery announcements new all at display. So all 0:01:29.640 --> 0:01:32.880 these are cool, but fundamentally you have to ask yourself, 0:01:33.600 --> 0:01:37.040 is it, you know, worth to upgrade to a new 0:01:37.080 --> 0:01:40.200 iPad with all these incremental features as I would like 0:01:40.240 --> 0:01:44.040 to call And that's where I think the market is 0:01:44.080 --> 0:01:47.080 anticipating more along the lines of what can you show 0:01:47.160 --> 0:01:51.160 me in terms of AI and the wow factor around LLMS? 0:01:51.400 --> 0:01:54.400 And I think that's what was missing at the event. 0:01:54.680 --> 0:01:56.800 Well what could they show? I mean, when we talk 0:01:56.840 --> 0:02:00.840 about AI and Apple, what do we think about Because 0:02:01.640 --> 0:02:04.760 Mark German says that this is an AI focused pro model, 0:02:04.840 --> 0:02:08.920 So I'm wondering, apart from the chip, what about it 0:02:09.000 --> 0:02:10.160 is AI? 0:02:11.880 --> 0:02:15.000 It's at the app level. So that's why that operating 0:02:15.040 --> 0:02:18.360 system upgrade. And they did talk about the iOS eighteen. 0:02:18.960 --> 0:02:22.880 Look right now, the current version of my iPad, which 0:02:22.919 --> 0:02:26.400 is five generations behind what they launch, can run the 0:02:26.480 --> 0:02:30.120 latest version of the iOS operating system. So why do 0:02:30.240 --> 0:02:32.400 I need to upgrade? They have to give me a 0:02:32.440 --> 0:02:36.280 reason to upgrade to the latest iPad because my current 0:02:36.400 --> 0:02:39.480 version can't run the operating system and it's got some 0:02:39.639 --> 0:02:43.840 cool apps. That is what was missing, Like what functionality 0:02:43.880 --> 0:02:48.360 can you show me around Siri, around image editing, around summaries, 0:02:48.800 --> 0:02:51.200 like all the cool stuff that we talk about from 0:02:51.280 --> 0:02:55.720 Nvidia at the data center level. That's what a small 0:02:55.880 --> 0:02:57.959 kind of version of it is what you want to 0:02:58.040 --> 0:03:01.280 run on device instead of going to the cloud. And 0:03:01.800 --> 0:03:04.120 that's what they got to showcase in terms of why 0:03:04.160 --> 0:03:05.919 you need to upgrade to the latest hardware. 0:03:06.040 --> 0:03:10.240 Okay, so Paul, this is not our first rodeo. You 0:03:10.280 --> 0:03:12.920 and I have anchored before, and one thing that's different 0:03:13.840 --> 0:03:16.400 than versus a few years ago. When I would walk 0:03:16.440 --> 0:03:19.000 in here, you would have an iPad next to you. Yep, 0:03:19.080 --> 0:03:21.799 And the iPad you told me, was like a really 0:03:21.840 --> 0:03:23.800 big part of how you prepared for the show. Use 0:03:23.800 --> 0:03:26.400 the Boomberg terminal on the iPad. You also have the 0:03:26.440 --> 0:03:29.600 two screens for the terminal. You have no iPad anymore? Nope, 0:03:29.680 --> 0:03:30.000 why not? 0:03:30.760 --> 0:03:33.280 I still have the iPad, although it's probably the original version, 0:03:33.320 --> 0:03:34.440 but now everything's on the phone. 0:03:35.120 --> 0:03:37.160 So your phone has replaced your iPad absolutely. 0:03:37.160 --> 0:03:40.520 And I have a very long train ride every day 0:03:40.560 --> 0:03:43.760 which I need a very engaging device, and. 0:03:44.240 --> 0:03:46.440 Your phone is that it's not the iPad. So man, deep. 0:03:46.480 --> 0:03:47.960 How big of a problem is that for Apple? 0:03:49.360 --> 0:03:52.640 I mean, look in their case, some of their newer 0:03:52.680 --> 0:03:56.280 products do cannibalize. You know, if the iPad is very good, 0:03:56.320 --> 0:03:58.960 it's going to cannibalize the max Hills, and if the 0:03:59.040 --> 0:04:02.680 iPhone is very it's going to cannibalize the iPad sales. 0:04:02.760 --> 0:04:05.320 So that's always been the case. But it's still a 0:04:05.440 --> 0:04:09.720 very sticky operating system and you know, just ecosystem overall. 0:04:10.120 --> 0:04:13.000 The only problem that I think people are trying to 0:04:13.040 --> 0:04:16.440 grapple with here is what is the refresh cycle? Because 0:04:16.520 --> 0:04:20.040 right now, the refresh cycle continues to get longer and longer. 0:04:20.080 --> 0:04:21.880 It's not as if, you know, people are moving out 0:04:21.880 --> 0:04:25.839 of the ecosystem, but they're not gaining more Android users 0:04:26.320 --> 0:04:29.039 because they don't have the best looking phones or the 0:04:29.080 --> 0:04:33.200 best features that Android phones can offer. And so that 0:04:33.400 --> 0:04:36.240 is the part that is hurting their refresh rate and 0:04:36.360 --> 0:04:39.000 also the share gain from Android users. 0:04:41.360 --> 0:04:45.000 June meeting, their developer meeting, anything on the wow factor? 0:04:45.040 --> 0:04:46.760 I mean, are they going to is there a chance 0:04:46.800 --> 0:04:48.359 in your June developer meeting that they're going to come 0:04:48.360 --> 0:04:49.920 out with something that's going to blow the street away 0:04:50.040 --> 0:04:51.400 or expectations low? 0:04:52.720 --> 0:04:56.520 I mean, I'm expecting more emphasis on the software side 0:04:56.640 --> 0:05:00.560 in that developer meeting, and clearly they need to showcase 0:05:00.720 --> 0:05:05.000 what they are doing around the LLLM strategy, whether an 0:05:05.160 --> 0:05:08.400 L and large anguid model will be part of their OS, 0:05:08.680 --> 0:05:13.040 and then how it influences the overall app ecosystem, because 0:05:13.120 --> 0:05:15.200 that those are the features. If you look at the 0:05:15.320 --> 0:05:19.120 latest pixel phone, they offer you a lot of those 0:05:19.160 --> 0:05:23.599 features already on Android, and that's what the Android ecosystem 0:05:23.680 --> 0:05:25.680 is looking to leverage more and more off look at 0:05:25.680 --> 0:05:29.200 the latest Samsung phones. They are targeting a lot of 0:05:29.240 --> 0:05:32.800 those JNAI features and Apple is really playing catch up 0:05:32.839 --> 0:05:34.960 over there, and they need to showcase that at the 0:05:35.160 --> 0:05:39.159 WWDC when they have all the developers over there. 0:05:39.320 --> 0:05:41.080 Made this is something you think about a lot. So 0:05:41.160 --> 0:05:43.600 lay out the ultimate vision for us. What does Apple 0:05:43.960 --> 0:05:46.440 want its devices to be able to do for us 0:05:46.440 --> 0:05:48.840 from an AI perspective, like how how is it going 0:05:48.880 --> 0:05:51.119 to interact with me using AI? 0:05:52.760 --> 0:05:56.640 I mean, the biggest kind of UI upgrade they can 0:05:56.720 --> 0:05:59.719 offer is around this series. You know the fact that 0:06:00.080 --> 0:06:03.560 theory is so underutilized right now as a voice assistant 0:06:04.160 --> 0:06:07.400 if it has the right set of JENNYI features. Clearly 0:06:07.560 --> 0:06:10.080 that will have a big influence and how we interact 0:06:10.080 --> 0:06:12.880 with the next version offer of the phones they make. 0:06:13.279 --> 0:06:16.680 And also, you know, some of the utility inside the app, 0:06:17.120 --> 0:06:21.239 like you don't have to you know, kind of touch 0:06:21.400 --> 0:06:25.960 everything or do everything manually. In terms of giving instructions, 0:06:26.040 --> 0:06:29.560 there is this concept of AI agents that has to 0:06:29.600 --> 0:06:32.600 be front and center in the next version of software 0:06:32.680 --> 0:06:36.200 that Apple offers within their operating system, so that AI 0:06:36.360 --> 0:06:41.000 agent can automate a lot of the tasks, not fully, 0:06:41.120 --> 0:06:43.839 but pieces of it. And you want to see Apple 0:06:43.880 --> 0:06:45.640 making progress on that front. 0:06:45.720 --> 0:06:47.719 All right, Man Deep, thanks so much for joining us. 0:06:47.720 --> 0:06:50.000 Appreciate it as always. Man Deep saying he's a senior 0:06:50.000 --> 0:06:53.440 technology channels for Bloomberg Intelligence giving us the latest. Again. 0:06:53.440 --> 0:06:58.200 Apple had their new product unveiling of the new Apple iPad, 0:06:58.240 --> 0:07:00.599 and I think what I've heard from Mandeep and an 0:07:00.720 --> 0:07:04.400 Aagrana also covers technology for Bloomberg Intelligence is in terms 0:07:04.440 --> 0:07:08.600 of new product launches and refreshes, it's really just evolutionary. 0:07:09.040 --> 0:07:11.280 They just iterate on the margins as opposed to something 0:07:11.320 --> 0:07:13.880 really radically new that I'll cause everybody to run out 0:07:13.880 --> 0:07:18.360 and buy a new product. Those days are probably behind Apple. 0:07:19.240 --> 0:07:21.560 People have said that in the past though, Paul, So, 0:07:22.360 --> 0:07:24.480 I see where you're coming from. But there would be 0:07:24.520 --> 0:07:26.080 those people who said, you know what, they said that 0:07:26.200 --> 0:07:28.160 when Steve Jobs died, and look what's happened over the 0:07:28.240 --> 0:07:30.720 last ten years. I will say, I think they need 0:07:30.760 --> 0:07:33.880 to move the air pods from a hardware category to 0:07:34.000 --> 0:07:36.680 services because I am just it's like I need a 0:07:36.680 --> 0:07:38.520 subscription to these things because I lose them. 0:07:38.440 --> 0:07:41.640 So much, Yach, Exactly, that's the issue, Yeah, exactly so, 0:07:42.320 --> 0:07:44.440 but it's interesting so forward. That's why. You know, if 0:07:44.520 --> 0:07:46.880 you do think that it's less of a product story, 0:07:47.520 --> 0:07:49.520 then you focus more on the services side of the business, 0:07:49.520 --> 0:07:51.480 which is about twenty percent of their revenue, and it's 0:07:51.520 --> 0:07:54.120 growing double digits, and that's and it's a higher margin business, 0:07:54.120 --> 0:07:56.840 and that's and that's a good story. 0:07:56.920 --> 0:07:59.040 The German has talked to us about the air pods 0:07:59.080 --> 0:08:03.000 actually getting some AI features too, really okay, lenses, maybe 0:08:03.000 --> 0:08:03.840 we'll see, all right, we'll see. 0:08:03.880 --> 0:08:06.440 It goes to me if I'm an investor in Apple, 0:08:06.520 --> 0:08:10.440 it's just all about China. I'm concerned that the demand 0:08:10.440 --> 0:08:12.600 there for my products and services is going to be 0:08:12.920 --> 0:08:14.920 less going forward. And that's a concern. That's one of 0:08:14.920 --> 0:08:17.840 the concerns for the stock. We'll certainly keep on top 0:08:17.840 --> 0:08:18.040 of that. 0:08:19.640 --> 0:08:23.559 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:08:23.640 --> 0:08:26.680 weekdays at ten am Eastern on Apple card Play and 0:08:26.680 --> 0:08:29.600 Android Otto with the Bloomberg Business App. You can also 0:08:29.680 --> 0:08:32.840 listen live on Amazon Alexa from our flagship New York 0:08:32.920 --> 0:08:37.040 station just Say Alexa playing Bloomberg eleven thirty. 0:08:38.000 --> 0:08:38.080 Now. 0:08:38.160 --> 0:08:40.679 I've been covering Walt Disney for thirty five years. There 0:08:40.760 --> 0:08:43.280 was a time when I got paid for my research 0:08:43.320 --> 0:08:45.120 on Walt Disney. So of course I looked at the 0:08:45.160 --> 0:08:46.960 results this morning, so I had this stock will trade 0:08:47.000 --> 0:08:50.960 up down eight percent? So what do I know? So 0:08:51.120 --> 0:08:53.040 let's go to somebody who's much smarter than any of 0:08:53.120 --> 0:08:55.720 us here about this kind of STU. That's Keitha Ranganath, 0:08:55.760 --> 0:09:00.120 and she is the media analyst for Bloomberg Intelligence. What 0:09:00.160 --> 0:09:03.199 does the street not like? I thought it was pretty 0:09:03.240 --> 0:09:04.760 good print there for the company. 0:09:05.600 --> 0:09:08.200 It certainly was Paul. But what the street didn't like 0:09:08.400 --> 0:09:12.160 was the outlook. The outlook for the fiscal third quarter, 0:09:12.280 --> 0:09:15.800 especially for the theme park business, was definitely weak and 0:09:15.840 --> 0:09:18.720 not something that the street was expecting. So Consensus had 0:09:18.960 --> 0:09:22.199 a twelve percent growth in operating income for the parks business. 0:09:22.559 --> 0:09:25.720 What Disney said zero growth, Wow, and that kind of 0:09:25.760 --> 0:09:29.199 really spooked investors, and they talked about different aspects here. 0:09:29.640 --> 0:09:31.920 They said that they have, you know, three new cruise 0:09:31.920 --> 0:09:34.680 ships that are basically coming on board, and you know 0:09:34.720 --> 0:09:37.640 there are launch costs associated with that. They're also opening 0:09:37.640 --> 0:09:40.480 this new kind of private island along with their vacation 0:09:40.600 --> 0:09:43.400 club and cruise business. Of course that also, you know, 0:09:43.920 --> 0:09:46.760 is contributing to that. But I think what really has 0:09:46.920 --> 0:09:50.000 investors super nervous at the at this point is that 0:09:50.080 --> 0:09:53.480 they spoke about a moderation in demand. And this has 0:09:53.559 --> 0:09:56.720 been a constant, constant question for Disney. You know, can 0:09:56.800 --> 0:10:00.280 that park's momentum sustain and how long can it and 0:10:00.320 --> 0:10:02.360 will they have pricing power? And I think this is 0:10:02.400 --> 0:10:04.800 where you're kind of seeing, you know, that the negative 0:10:04.840 --> 0:10:07.679 reaction come in because people are not so confident anymore. 0:10:07.800 --> 0:10:11.040 Is the moderation of demand about Disney's lack of exciting 0:10:11.200 --> 0:10:14.160 things to draw in people to the parks, to draw 0:10:14.240 --> 0:10:17.080 people to the theaters, or is it about a story 0:10:17.080 --> 0:10:18.920 that has to do with the consumer and the way 0:10:18.960 --> 0:10:20.400 that the consumer feels strapped. 0:10:21.360 --> 0:10:23.760 I think it's a little bit of everything, Tim, So 0:10:24.000 --> 0:10:26.480 you know, definitely the consumer, the overall health of the 0:10:26.520 --> 0:10:30.520 economy and the consumer for certain, and you know, tremendous 0:10:30.559 --> 0:10:33.280 inflationary pressures. But of course for Disney, you know, one 0:10:33.280 --> 0:10:35.560 thing that they've done over the past few years is 0:10:35.559 --> 0:10:39.640 they've really raised prices in their parks pretty dramatically, and 0:10:39.679 --> 0:10:43.800 it's becoming increasingly increasingly expensive for you know, a family vacation, 0:10:43.960 --> 0:10:47.239 so you know, the to the point of almost becoming prohibitive. 0:10:47.280 --> 0:10:49.520 And you know, that's where kind of that whole pricing 0:10:49.559 --> 0:10:51.839 power question comes in. I think they're going to have 0:10:51.880 --> 0:10:54.720 to do it much more cautiously and gently in the future. 0:10:55.040 --> 0:10:57.400 Paul talking to some neighbors the other day who recently 0:10:57.440 --> 0:11:00.000 took their kids to Disney. Yep, they were adding up 0:11:00.000 --> 0:11:01.600 how much it costs for just a couple of days 0:11:01.640 --> 0:11:04.640 down there. They were saying, probably about five grand is 0:11:04.640 --> 0:11:08.079 what they spent in Florida, two kids, a few days 0:11:08.080 --> 0:11:09.880 down there. Wow, it's a lot of money. 0:11:10.120 --> 0:11:12.280 You need an advisor to like set all this stuff 0:11:12.360 --> 0:11:13.680 up because it's so complicated. 0:11:13.800 --> 0:11:15.959 Yeah, So I've heard with these like I just. 0:11:15.920 --> 0:11:17.840 Called I just called Githa. She makes a phone call 0:11:17.840 --> 0:11:20.840 and I'm like the front line every time. Eithan. The 0:11:20.840 --> 0:11:23.200 other part of this story, and for the longest time, 0:11:23.320 --> 0:11:25.000 you know, the last four or five years, has been 0:11:25.160 --> 0:11:28.240 their streaming business and when will that business term profitable? 0:11:28.440 --> 0:11:30.280 They had some pretty good news on that front, didn't 0:11:30.280 --> 0:11:31.600 they They. 0:11:31.440 --> 0:11:33.360 Did, Paul, I mean, we're just on the cosp of 0:11:33.400 --> 0:11:36.600 a major, major earning inflection point here for the first 0:11:36.640 --> 0:11:39.800 time ever in the in the streaming business's history, they 0:11:39.800 --> 0:11:43.079 actually posted a model that modest profit. Now again they 0:11:43.080 --> 0:11:45.280 said fiscal third quarter, which is the next quarter, is 0:11:45.320 --> 0:11:47.640 going to be a little bit choppy. But then what 0:11:47.679 --> 0:11:51.480 they've said all along is that expect some really good 0:11:51.559 --> 0:11:53.880 results in the fiscal fourth quarter, and then they're really 0:11:53.880 --> 0:11:55.880 going to build on that starting in you know, fiscal 0:11:55.920 --> 0:11:58.320 twenty twenty five and beyond. They have a lot of 0:11:58.360 --> 0:12:01.720 initiatives in the works. You know, they're cracking down on 0:12:01.760 --> 0:12:04.920 password sharing a la Netflix, and remember that has been 0:12:04.960 --> 0:12:07.959 a huge growth story at Netflix. The Netflix added almost 0:12:07.960 --> 0:12:10.360 thirty five million subscribers after they started cracking down on 0:12:10.360 --> 0:12:13.160 password sharing, So Disney can also hope to see quite 0:12:13.200 --> 0:12:14.800 a lot of success with that. And then of course 0:12:14.800 --> 0:12:16.960 they also have the Hulu integration as well as you know, 0:12:17.000 --> 0:12:19.920 the ad tier, all of that kind of contributing. So streaming, 0:12:19.960 --> 0:12:22.240 I think is going to be a considerable source of 0:12:22.280 --> 0:12:24.959 earnings upside in the next few years. 0:12:25.040 --> 0:12:26.080 How's Bob Iger doing? 0:12:26.800 --> 0:12:27.920 Does he having successor? 0:12:29.360 --> 0:12:31.360 He spoke about that actually on the call that that 0:12:31.480 --> 0:12:33.440 came up, and he said that they're, you know, they're 0:12:33.520 --> 0:12:36.520 kind of actively considering. They have four internal candidates the 0:12:36.679 --> 0:12:39.440 all of the division chiefs chiefs that are kind of 0:12:40.160 --> 0:12:42.760 up for consideration, and you know, he said that they're 0:12:42.800 --> 0:12:45.319 looking at them very carefully and the announcement will come 0:12:45.360 --> 0:12:46.240 when the time is right. 0:12:46.559 --> 0:12:49.840 Is this any replay of what happened a few years 0:12:49.840 --> 0:12:51.880 ago when Bob Jpek took over. I mean it kind 0:12:51.920 --> 0:12:54.800 of sounds familiar. A number of internal candidates, the person 0:12:54.800 --> 0:12:57.040 gets picked, the other ones leave, and then Bob Ager 0:12:57.080 --> 0:12:58.439 comes back because it didn't work out. 0:12:59.480 --> 0:12:59.680 Yeah. 0:12:59.720 --> 0:13:01.760 I mean, we've seen this movie play out so many 0:13:01.840 --> 0:13:04.840 times now at Disney. I hope and I think this 0:13:04.920 --> 0:13:07.480 time it really will be different. I mean, that was 0:13:07.520 --> 0:13:10.840 the whole bone of contention, you know, for the activist investors, 0:13:10.840 --> 0:13:13.719 including Nelson Pals, and I think having this new succession 0:13:13.760 --> 0:13:17.360 Planning committee suggests that this time they will do things 0:13:17.400 --> 0:13:19.560 probably a little bit differently, all. 0:13:19.480 --> 0:13:21.240 Right, Githa. So clearly we're going at the stock down 0:13:21.280 --> 0:13:23.680 eight percent. The market clearly is focusing on that theme 0:13:23.720 --> 0:13:26.440 park business, and for good reason, it's become, you know, 0:13:26.920 --> 0:13:29.040 kind of on a kind of under the radars. Now 0:13:29.120 --> 0:13:33.160 become seventy seven zero percent of their operating income. So 0:13:33.280 --> 0:13:36.480 it is the business here. What did the companies say 0:13:36.480 --> 0:13:40.680 about their ability to potentially deal with maybe weaker demand. 0:13:40.760 --> 0:13:43.400 It's been a long time since we've seen them ever 0:13:43.520 --> 0:13:47.199 cut prices at the theme parks, promote, you know, at 0:13:47.200 --> 0:13:49.920 the theme parks, anything that would hurt profitability. It's been 0:13:49.920 --> 0:13:51.480 a long time since they've had to do that. 0:13:52.640 --> 0:13:54.480 Yeah, I mean, the theme park business has been such 0:13:54.520 --> 0:13:57.480 a consistent story for them, Paul, as you just pointed out, 0:13:57.520 --> 0:13:59.959 they have twenty five percent operating margin in that business, 0:14:00.360 --> 0:14:03.120 and they are really looking at this as a future 0:14:03.360 --> 0:14:06.920 earnings growth driver, which is why you know, they're investing 0:14:07.000 --> 0:14:10.480 sixty billion dollars in the theme parks over the next 0:14:10.480 --> 0:14:14.400 ten years. Over half of that is basically just adding capacity, 0:14:14.480 --> 0:14:18.520 adding new attractions, and I think it's it's it's a 0:14:18.559 --> 0:14:20.840 really timely and a good strategic mode they're also bringing 0:14:20.840 --> 0:14:22.880 on those cruise ships that that's going to cost them 0:14:22.880 --> 0:14:26.120 about twelve to fifteen billion dollars, so you know, they're 0:14:26.120 --> 0:14:28.920 definitely adding capacities. So I think, you know, overall, definitely 0:14:28.920 --> 0:14:31.000 the business is in good shape, but in the near term, 0:14:31.080 --> 0:14:33.200 obviously the sentiment has definitely soured. 0:14:33.600 --> 0:14:33.720 Well. 0:14:33.760 --> 0:14:36.800 Speaking of souring sentiment, curious about the media business here, 0:14:37.040 --> 0:14:41.960 apart from streaming the legacy media business, talking ESPN, talking ABC, 0:14:42.760 --> 0:14:44.360 what do we learn about that business? 0:14:45.280 --> 0:14:45.560 Bad? 0:14:45.720 --> 0:14:46.520 Bad, bad bad? 0:14:46.680 --> 0:14:51.320 So Legacy TV Networks the operating income was down twenty 0:14:51.440 --> 0:14:54.600 two percent. That's not surprising, but it's just the rate 0:14:54.640 --> 0:14:57.160 of decline. I mean, we were expecting, you know, you know, 0:14:57.200 --> 0:15:00.800 maybe high single digits. This is, you know, this really bad. 0:15:01.280 --> 0:15:04.280 And what gets worse is, you know, we're obviously hearing 0:15:04.280 --> 0:15:07.680 about all of the sports rights negotiations that are ongoing. 0:15:07.960 --> 0:15:10.880 If you look at the NBA deal for instance, that's 0:15:10.920 --> 0:15:14.200 basically looking at tripling the sports value. So their previous 0:15:14.200 --> 0:15:16.920 deal was twenty about twenty five billion, new deal will 0:15:16.920 --> 0:15:20.360 be over seventy five billion dollars, and so these companies 0:15:20.360 --> 0:15:23.360 are going to have to pay up just to kind 0:15:23.400 --> 0:15:25.880 of maintain the status score or maybe not not even 0:15:25.920 --> 0:15:28.080 maintain the status score and their TV networks business, which 0:15:28.120 --> 0:15:31.000 is really going to crimp profitability pretty significantly. 0:15:31.280 --> 0:15:34.160 So, I mean it begs a question. Your costs are tripling, 0:15:34.880 --> 0:15:37.920 your revenue is not tripling. Is streaming going to pay 0:15:37.960 --> 0:15:40.440 for all these sports rights? How does the company even 0:15:41.160 --> 0:15:42.520 position out in the marketplace. 0:15:43.280 --> 0:15:45.600 That's what they're betting on, Paul. I'm not sure that 0:15:45.640 --> 0:15:47.280 it's going to be Streaming is going to be able 0:15:47.320 --> 0:15:49.840 to reclaim all of that leakage that we're seeing on 0:15:49.880 --> 0:15:52.160 the linear TV side, but they're definitely betting that it 0:15:52.320 --> 0:15:55.480 will be able to salvage some of those losses. So 0:15:55.920 --> 0:15:58.840 you know, ESPN, for instance, they are having obviously their 0:15:58.880 --> 0:16:00.760 new standalone app that is going to come out sometime 0:16:00.760 --> 0:16:02.400 in twenty twenty five, and then they have this new 0:16:02.440 --> 0:16:05.240 sports JV that again is supposed to come out a 0:16:05.280 --> 0:16:07.480 little bit later this year, along with Warner Brothers Discovery 0:16:07.480 --> 0:16:11.280 in Fox, so they're doing different things. Again, not sure 0:16:11.320 --> 0:16:14.800 whether you know how successful it's going to be. That's 0:16:14.840 --> 0:16:16.320 a little still a little bit of a wait. 0:16:16.200 --> 0:16:17.280 And watch getha. 0:16:17.320 --> 0:16:18.960 We're so lucky we have you because you not just 0:16:19.040 --> 0:16:22.320 cover Disney, but you also cover Peloton and shares a 0:16:22.360 --> 0:16:26.480 Peloton hire by twelve percent right now. This after CNBC 0:16:26.600 --> 0:16:28.960 reported that a number of PE firms have been considering 0:16:28.960 --> 0:16:31.520 a buyout of the company. They cited people familiar with 0:16:31.560 --> 0:16:35.480 the matter. What could a private equity firm do with Peloton, Like, 0:16:35.480 --> 0:16:38.960 how could a PE firm make Peloton successful? Solve its problems? 0:16:39.920 --> 0:16:43.040 Good costs, I mean, that's what PE firms do best. 0:16:43.200 --> 0:16:47.160 And the Peloton really has had a huge cost problem. 0:16:47.440 --> 0:16:49.720 And the cost problem is because the costs haven't really 0:16:49.760 --> 0:16:52.880 been aligned to its revenue base. Its revenue has been 0:16:52.920 --> 0:16:56.760 steadily decreasing, just a combination of different factors. We demand, 0:16:56.960 --> 0:17:01.280 saturated market. Their new products haven't really taken off. You know, 0:17:01.280 --> 0:17:04.080 they've tried all kinds of different things with their whole 0:17:04.119 --> 0:17:07.480 new digital app revamp. Again, that's really not done the 0:17:07.480 --> 0:17:09.840 way that they've wanted it to kind of perform. They 0:17:09.840 --> 0:17:12.719 have all these other partnerships with Lulu, you know, they 0:17:12.720 --> 0:17:15.200 had this new hotel partnership. Again, nothing has really been 0:17:15.200 --> 0:17:18.360 a game changer. But the costs are still very very high, 0:17:18.359 --> 0:17:20.119 and that's just because it's cost them so much to 0:17:20.119 --> 0:17:22.359 manufacture their equipment, and so PE can kind of really 0:17:22.400 --> 0:17:23.919 come in and trim that cost space. 0:17:24.560 --> 0:17:27.120 All right, Githa, thanks so much for joining us. Keithan 0:17:27.200 --> 0:17:30.080 Raganath and she is the media anuals the Bloomberg Intelligence folks. 0:17:30.119 --> 0:17:32.040 She is over the last fifteen years has built up 0:17:32.040 --> 0:17:34.399 an amazing franchise on Wall Street as being one of 0:17:34.440 --> 0:17:37.760 the leading research voices on that space, and it's been 0:17:37.800 --> 0:17:41.800 going undergoing a tremendous amount of generational change in the 0:17:41.840 --> 0:17:45.520 media business from the traditional cable TV satellite delivery mechanisms. 0:17:45.640 --> 0:17:48.119 This whole thing called streaming has required a lot of 0:17:48.119 --> 0:17:50.479 work and a lot of folks on Wall Street pay 0:17:50.520 --> 0:17:53.440 attention to Keitha's researching. Can you find Getha's research and 0:17:53.520 --> 0:17:56.280 all of the Bloomberg Intelligence research on the Bloomberg terminal? 0:17:57.040 --> 0:17:59.960 B I go is the function that'll get you there. 0:18:00.200 --> 0:18:03.320 It's good stuff. Disney stock down around the seven eight 0:18:03.359 --> 0:18:08.880 percent here again, concerns about maybe peak theme park demand 0:18:08.960 --> 0:18:11.159 there coming out of the pandemic, maybe getting back to 0:18:11.160 --> 0:18:14.359 a more normalized level of attendance. But you know what 0:18:14.359 --> 0:18:16.880 we've seen over the years from Disney is they really 0:18:17.160 --> 0:18:20.360 know better than anybody else how to price their theme 0:18:20.400 --> 0:18:22.800 park product and how to invest in how to generate 0:18:22.880 --> 0:18:24.720 returns so longer trim. I think a lot of people 0:18:24.720 --> 0:18:25.639 feel pretty good about that. 0:18:28.000 --> 0:18:31.879 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:31.960 --> 0:18:34.760 weekdays at ten am Eastern on Apple Card playing en 0:18:34.800 --> 0:18:37.639 Broud Otto with the Bloomberg Business App. Listen on demand 0:18:37.720 --> 0:18:42.080 wherever you get your podcasts, or watch us live on YouTube. 0:18:43.119 --> 0:18:45.600 Our next guest, Sandy Briggar, joins us. She's a chief 0:18:45.720 --> 0:18:48.800 client officer at Experience, joining us live here in our 0:18:48.800 --> 0:18:53.720 Bloomberg Interactive Broker's studio. Sandy, it's funny this market here. 0:18:53.800 --> 0:18:55.760 A lot of folks, you know, we had that nice 0:18:55.840 --> 0:18:58.679 run off those October lows. People felt like maybe the 0:18:58.680 --> 0:19:01.080 market got ahead of itself, and then we had the 0:19:01.160 --> 0:19:03.720 FED saying, gee, maybe we're not going to cut race, 0:19:03.720 --> 0:19:05.200 maybe we're going to hype rates. And people got a 0:19:05.200 --> 0:19:07.280 little spook there for a while. But it seems like 0:19:07.280 --> 0:19:09.440 we're back on a positive trajectory here. How do you 0:19:09.480 --> 0:19:12.560 guys think about the markets and maybe get away from 0:19:12.560 --> 0:19:14.720 that day to day type of view of the market. 0:19:14.880 --> 0:19:16.439 Yeah, it's hard to get away from the day to day, 0:19:16.520 --> 0:19:19.480 especially when it's bouncing around so much and penning upon 0:19:19.560 --> 0:19:19.840 the day. 0:19:19.880 --> 0:19:21.400 You have a different view of what's happening. 0:19:21.720 --> 0:19:27.080 But our clients are corporate executives, family business owners, entrepreneurs, inheritors. 0:19:27.080 --> 0:19:29.800 They're really thinking about their portfolios for the long term 0:19:30.000 --> 0:19:32.000 and they're not so worried about what's happening on the 0:19:32.080 --> 0:19:33.720 day to day. So that takes a little bit of 0:19:33.720 --> 0:19:35.680 pressure off of us. Although we get questions about the 0:19:35.760 --> 0:19:38.440 day to day all the time, our best advice to 0:19:38.480 --> 0:19:40.840 our clients is really to be prepared for anything in 0:19:40.880 --> 0:19:41.399 this market. 0:19:41.480 --> 0:19:43.440 So we're playing both offense. 0:19:43.000 --> 0:19:47.840 And defense simultaneously in portfolios, just being prepared for a 0:19:47.960 --> 0:19:48.760