WEBVTT - Spotify User Growth, Paramount’s Enhanced Offer 0:00:02.560 --> 0:00:13.760 Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live 0:00:13.800 --> 0:00:17.599 from coast to coast with Caroline Hide in New York 0:00:17.880 --> 0:00:19.840 and Ed Lovelow in sent Francesco. 0:00:23.280 --> 0:00:26.400 This is Bloomberg Tech coming up. Spotify added a record 0:00:26.520 --> 0:00:29.080 number of users last quarter thanks to its end of 0:00:29.200 --> 0:00:32.440 year wrapped campaign, shares search plus. 0:00:32.240 --> 0:00:36.080 Paramount enhances its bid for Warner Brothers Discovery, offering billions 0:00:36.120 --> 0:00:39.200 to cover termination debt, refinancing and ticking fees. 0:00:39.479 --> 0:00:40.599 Details this hour. 0:00:41.200 --> 0:00:44.159 And Runway CEO Chris thebau Valezuela joins us to talk 0:00:44.159 --> 0:00:46.959 about the new funding round that values the company at 0:00:47.040 --> 0:00:49.280 five point three billion dollars. 0:00:49.000 --> 0:00:52.959 From private markets to the public market. Look on the benchmarks, 0:00:53.000 --> 0:00:53.920 nothing that exciting. 0:00:53.960 --> 0:00:54.640 We're holding on too. 0:00:54.720 --> 0:00:57.200 Gains just eking out twenty three points in the green 0:00:57.240 --> 0:00:59.040 and the NASTAQ one hundred. But you go underneath a 0:00:59.120 --> 0:01:02.120 herd ed and rotation continues. But this time is the 0:01:02.120 --> 0:01:03.279 hardware that gets sold off. 0:01:03.320 --> 0:01:05.600 The software is being bought for a third straight day. 0:01:05.680 --> 0:01:08.280 Software really up about nine percent as we buy back 0:01:08.280 --> 0:01:10.920 into that beaten up sector. But we're looking also to 0:01:10.959 --> 0:01:13.640 what the macro picture is painting. We have got retail 0:01:13.720 --> 0:01:16.480 sales that come in less than have been expected. What 0:01:16.480 --> 0:01:18.160 does that mean for a FED cut? What does it 0:01:18.200 --> 0:01:20.479 mean for equities? What does mean for crypto? Because let's 0:01:20.480 --> 0:01:23.080 face it, that is where the movement's happening today. Bigoin 0:01:23.160 --> 0:01:25.199 not by one point six percent, look at Eth down 0:01:25.319 --> 0:01:28.800 almost another five percent. As we still question what's sort 0:01:28.800 --> 0:01:31.479 of an asset? This really is what are you looking at? 0:01:31.640 --> 0:01:34.800 I'm looking at Spotify and shares are absolutely surging. A 0:01:34.880 --> 0:01:38.440 record number of subscribers added last quarter, taking the total 0:01:38.800 --> 0:01:41.039 to seven hundred and fifty one million dollars. Later in 0:01:41.080 --> 0:01:43.360 the show, we'll get to it where Bloomberg's actually Carmen. 0:01:43.400 --> 0:01:45.000 But it was all about the end of year rat 0:01:45.200 --> 0:01:47.960 and I know as a team we all exchanged our raps. 0:01:48.080 --> 0:01:49.960 The stock was on track for its best day over 0:01:50.240 --> 0:01:52.760 up almost twenty percent, now on track for its figures 0:01:52.800 --> 0:01:55.560 jumping about seven years. But that is a big response 0:01:55.640 --> 0:01:57.960 to strength when it comes to music streaming. 0:01:57.680 --> 0:02:01.560 Character It certainly is tell you else's strength. The bond market. 0:02:01.760 --> 0:02:04.000 We're not looking at shares of Alphabet, but really I 0:02:04.040 --> 0:02:06.280 want you to focus on its debt because it's bond 0:02:06.280 --> 0:02:09.840 offerings keep coming and after the US dollar debt sale, 0:02:09.960 --> 0:02:12.840 raised twenty billion dollars yesterday, it was upsized. 0:02:13.000 --> 0:02:15.240 The company is now selling over eleven. 0:02:14.919 --> 0:02:18.400 Billion more in Sterling and Swiss frank denominated bonds. And 0:02:18.440 --> 0:02:20.880 that's super rare one hundred year note we told you 0:02:20.880 --> 0:02:24.480 about yesterday while it was oversubscribed and then some almost 0:02:24.520 --> 0:02:27.800 ten times according to sources. Let's talk about it with 0:02:27.919 --> 0:02:30.720 Robert Schiffman from Blue Meg Intelligence. In less than twenty 0:02:30.720 --> 0:02:33.160 four hours, they've raised thirty two billion dollars basically on 0:02:33.200 --> 0:02:36.360 the debt markets. Let's just focus in on what that 0:02:36.440 --> 0:02:39.880 one hundred year debt signals about the confidence people have 0:02:39.919 --> 0:02:40.560 in this company. 0:02:40.960 --> 0:02:43.760 Well, I think what the bond market is telling us 0:02:43.840 --> 0:02:47.080 is that AI bubble talks are so twenty twenty five. 0:02:47.760 --> 0:02:51.840 But the concerns that, at least from the creditors perspective, 0:02:51.919 --> 0:02:55.040 is not anything near what it is from inequity standpoint. 0:02:55.320 --> 0:02:58.519 The reality, though, is what is the benefit of a 0:02:58.520 --> 0:03:00.760 one hundred year bond? To me, it's just a trophy. 0:03:00.800 --> 0:03:02.640 It's going to be put on the shelf of pension 0:03:02.680 --> 0:03:05.960 funds and insurance companies. They're going to hold it to maturity. 0:03:06.400 --> 0:03:08.640 And let me tell you something, if anyone's really worried, 0:03:08.919 --> 0:03:10.880 if that bond does not pay off in one hundred years. 0:03:11.040 --> 0:03:12.679 Come and look me up at Bloomberg. I'm going to 0:03:12.720 --> 0:03:14.760 be upstairs in my office eating free. 0:03:14.560 --> 0:03:16.160 Snacks, Robert. 0:03:16.360 --> 0:03:20.919 The macro point is that they're doing interesting things with capital, 0:03:21.440 --> 0:03:25.400 the bigger picture, to fund CAPEX, right, to grow AI 0:03:25.480 --> 0:03:30.160 infrastructure at scale. I always read your memo every morning, 0:03:30.360 --> 0:03:33.400 and you revise constantly the kind of trajectory. What are 0:03:33.440 --> 0:03:36.440 the latest numbers that you see going over the next decade. 0:03:36.600 --> 0:03:39.400 Yeah, you know, it sort of becomes monopoly money, the 0:03:39.800 --> 0:03:42.720 type of spending that we're seeing. I mean, we're now 0:03:42.760 --> 0:03:47.800 projecting over four trillion dollars of cumulative hyperscaler spend through 0:03:47.880 --> 0:03:50.560 twenty thirty. You can afford a lot of that from 0:03:50.680 --> 0:03:54.600 operating cash flow. However, how do you supplement it? You 0:03:54.640 --> 0:03:57.680 supplement it with really cheap bonds. And the way that 0:03:57.720 --> 0:04:00.000 you can do that is you start off with balance 0:04:00.040 --> 0:04:02.200 sheets that are in phenomenal shape. You know, if you 0:04:02.280 --> 0:04:06.040 look at Alphabet's DOAA plus credit rating, SMP came out 0:04:06.120 --> 0:04:10.160 yesterday and said in order to breach their downgrade trigger, 0:04:10.520 --> 0:04:12.680 they would have to issue more than one hundred and 0:04:12.720 --> 0:04:17.400 eighty billion dollars of incremental net debt. So what I 0:04:17.400 --> 0:04:19.320 would argue is, hey, if they wanted to be a 0:04:19.320 --> 0:04:22.240 triple bname, would they have to issue a trillion dollars 0:04:22.240 --> 0:04:25.080 of bonds? There is so much capacity. Why not take 0:04:25.120 --> 0:04:28.159 the money down, borrow long dated paper at five and 0:04:28.160 --> 0:04:31.039 a half five point seven percent, put it to work 0:04:31.080 --> 0:04:34.640 today and grow your future cash flows for another decade, 0:04:34.680 --> 0:04:35.880 if not one hundred years. 0:04:36.320 --> 0:04:40.160 There is some pushback in the market that yes, it's 0:04:40.160 --> 0:04:43.200 a trophy on a pension fund's desk, maybe it's a 0:04:43.200 --> 0:04:46.200 trophy on Alphabet's CFO and treasurer's desk if they sell 0:04:46.200 --> 0:04:48.680 one hundred year bonds, but also signals at the top 0:04:48.680 --> 0:04:50.720 of the market. Look, we go back to when the 0:04:50.800 --> 0:04:52.760 last time a tech company did this, it was Motroller 0:04:52.800 --> 0:04:55.080 back in the nineties, and people are trying to make 0:04:55.080 --> 0:04:57.080 this serchon that may be Motrola was at the peak 0:04:57.120 --> 0:04:59.400 of its game then and where is it now? What 0:04:59.520 --> 0:05:01.400 do you say, so this is a question marks about 0:05:01.400 --> 0:05:02.160 one hundred a to tech. 0:05:02.279 --> 0:05:04.800 Yeah, listen, I think you know what's going to be 0:05:04.800 --> 0:05:06.599 the top. We can never call the top. Let me 0:05:06.600 --> 0:05:08.719 tell you something though, I think there's more bonds to come. 0:05:09.000 --> 0:05:11.800 We still have Microsoft, we still have Meta, we still 0:05:11.800 --> 0:05:13.440 probably have Amazon. 0:05:13.000 --> 0:05:14.880 But would they do one hundred Yeah, you know what. 0:05:15.279 --> 0:05:17.760 They might, and they also might do a lot of 0:05:17.800 --> 0:05:20.760 other incremental currencies like we talked about yesterday. I'm actually 0:05:20.800 --> 0:05:23.120 surprised they stayed out of the euromarket. I think there's 0:05:23.160 --> 0:05:26.719 a big, deep demand there is. Every portfolio manager that 0:05:26.800 --> 0:05:29.600 we are talking to is talking about having excess cash 0:05:29.640 --> 0:05:33.360 on hand, and everyone is looking at the same compressed yields. 0:05:33.560 --> 0:05:35.880 There is a bid for a yield. It is not 0:05:36.040 --> 0:05:38.520 going away anytime soon. So if we hit the top 0:05:38.560 --> 0:05:40.880 of the market, I don't think it's today. Maybe it's 0:05:40.920 --> 0:05:42.920 next week, Maybe it's going to be in three weeks, 0:05:43.000 --> 0:05:45.120 but I don't think it's yet. I listen, I've never 0:05:45.200 --> 0:05:48.480 been as bullish on tech as I am today. I 0:05:48.520 --> 0:05:50.760 don't think these companies have ever been better positioned. I 0:05:50.760 --> 0:05:53.080 don't think their balance sheets have ever been better positioned. 0:05:53.120 --> 0:05:55.400 And I actually think the confidence levels that we see 0:05:55.440 --> 0:05:59.320 across the bond market far supersede what I think even 0:05:59.320 --> 0:06:01.000 Bloomberg News starking belt. 0:06:01.920 --> 0:06:05.720 Robert Schiffman from Bloomberg Intelligence bonds are fun, thank you 0:06:05.839 --> 0:06:08.640 very much. The software sector may have a chance to 0:06:08.680 --> 0:06:12.600 rebound we're so closely tracking what's happening in software right now. 0:06:12.600 --> 0:06:16.280 According to JP Morgan Strategists, fears of AI disruption may 0:06:16.320 --> 0:06:19.600 be overblown and the current bearish sentiment is a quote 0:06:19.720 --> 0:06:23.279 overshoot at this time. That views echoed by Lauren Webster, 0:06:23.720 --> 0:06:27.680 Managing Director of Investment Banking for Technology at Piper Sandler. 0:06:27.760 --> 0:06:30.479 She writes, while there is merit that AI will be 0:06:30.520 --> 0:06:34.000 a death sentence to certain sectors of software, the notion 0:06:34.400 --> 0:06:38.320 of software's broad obsolescence is overstated. 0:06:39.480 --> 0:06:40.600 Delighted to say that, she. 0:06:40.640 --> 0:06:43.120 Joins us, Now, I mean this is a day by 0:06:43.240 --> 0:06:47.360 day thing. Looking at some of the trading and action 0:06:47.440 --> 0:06:49.080 in the moment, I see a lot of green in 0:06:49.120 --> 0:06:52.280 the software space. But I say every day, one market 0:06:52.560 --> 0:06:55.000 session a market does not make just go a bit 0:06:55.040 --> 0:06:56.880 deeper on your thesis and why you're a bit more 0:06:56.880 --> 0:06:57.360 calm here. 0:06:58.880 --> 0:07:01.920 Absolutely, So, I think where we are is in sort 0:07:01.960 --> 0:07:06.880 of this phase of forming, storming, norming in the market 0:07:06.920 --> 0:07:12.400 and the give and take between AI innovation and software stocks, 0:07:12.440 --> 0:07:17.560 and so you're seeing a lot of volatility disruption each 0:07:17.640 --> 0:07:20.960 time there is a new product release from an AI innovator. 0:07:21.480 --> 0:07:28.320 Yet this broader realization that enterprise software is here for good. 0:07:28.720 --> 0:07:31.640 You can't rip it out tomorrow, and this is a 0:07:31.880 --> 0:07:36.240 longer term trend. As we figure out how to embed 0:07:36.680 --> 0:07:40.680 AI into enterprise solutions, what is actually going to be disrupted. 0:07:41.400 --> 0:07:44.480 We are canvassing a wide and diverse range of views 0:07:44.480 --> 0:07:46.920 and what's happening in software. Earlier today, we spoke to 0:07:46.920 --> 0:07:48.520 the Golden and Sax CEO David Solomon. 0:07:48.520 --> 0:07:49.280 Here's what he thinks. 0:07:49.800 --> 0:07:52.600 We have software exposure, but I'd say it's insignificant the 0:07:52.600 --> 0:07:55.760 scale of our overall platform, but it's certainly something that 0:07:55.800 --> 0:07:58.360 we're monitoring. I think the narrative over the last week 0:07:58.400 --> 0:07:59.760 has been a little bit too broad and will be 0:08:00.000 --> 0:08:03.640 as losers and plenty of companies pilot do just find. 0:08:05.360 --> 0:08:06.160 Sell off too broad. 0:08:06.200 --> 0:08:09.480 It sounds like you and mister Solomon agree that maybe 0:08:09.520 --> 0:08:11.920 what we've seen in the last seven to ten days 0:08:12.320 --> 0:08:13.960 a little overdone. 0:08:14.720 --> 0:08:17.400 Certainly, with that said, though, I would if I was 0:08:17.480 --> 0:08:20.320 running a business in the software sector today, I would 0:08:20.320 --> 0:08:23.520 be taking a hard look, spending time with customers understanding 0:08:23.920 --> 0:08:27.760 how they're using AI in place of the products that 0:08:27.880 --> 0:08:31.240 I offer, where I should be embedding it, and certainly 0:08:31.280 --> 0:08:36.120 planning for the next decade. Will transition towards more AI 0:08:36.240 --> 0:08:40.320 infrastructure tooling. But yes, as I said, nothing is getting 0:08:40.400 --> 0:08:44.000 ripped out tomorrow, and this is a much longer transition period. 0:08:44.280 --> 0:08:46.319 And the good news in that is that it gives 0:08:46.320 --> 0:08:49.280 software companies time to catch up figure out how they 0:08:49.320 --> 0:08:51.280 can play this opportunity. 0:08:51.760 --> 0:08:54.840 Lauren, what data do you look to as to what 0:08:55.120 --> 0:08:58.120 might be being ripped out? What is a point of 0:08:58.120 --> 0:09:01.360 offering rather than a platform that's into more deeply within 0:09:01.400 --> 0:09:01.920 a business. 0:09:03.320 --> 0:09:08.240 Yeah, certainly looking at those that have been disrupted most 0:09:08.400 --> 0:09:12.840 by recent product launches from whether it be anthropic or others. 0:09:13.200 --> 0:09:17.079 Workflow tooling is a place at risk. Certainly, there are 0:09:17.120 --> 0:09:22.360 elements within the legal sector that some of the newer 0:09:22.400 --> 0:09:26.600 announcements are starting to displace. There are, however, bright spots 0:09:26.640 --> 0:09:29.560 like cybersecurities one where I spend a lot of time 0:09:29.920 --> 0:09:33.600 and certainly you need cybersecurity capabilities to even implement some 0:09:33.679 --> 0:09:37.679 of that AI enterprise infrastructure. So there will be pockets 0:09:37.679 --> 0:09:41.080 of opportunity in the software sector, and then certainly in 0:09:41.080 --> 0:09:44.280 the picks and shovels around AI infrastructure. 0:09:44.600 --> 0:09:48.079 Go there a little bit more, because that was clearly 0:09:48.240 --> 0:09:50.560 the read across from some of this capital expenditure spend 0:09:50.679 --> 0:09:52.240 that we saw last week and now so I mean 0:09:52.320 --> 0:09:56.560 extraordinary numbers coming from the hyperscalers, and then of course 0:09:56.600 --> 0:09:59.360 people thought, well, time to be long, energy, time to 0:09:59.360 --> 0:10:02.400 be long the chips that go inside these data centers. 0:10:02.480 --> 0:10:04.360 Is that still the right play, feelin. 0:10:05.720 --> 0:10:06.560 Absolutely? 0:10:06.720 --> 0:10:06.760 So. 0:10:07.400 --> 0:10:09.240 The money is not pulling out of the market and 0:10:09.280 --> 0:10:11.800 sitting on the sidelines. It truly is going into a 0:10:11.800 --> 0:10:15.160 lot of the infrastructure opportunity what is often called the 0:10:15.760 --> 0:10:20.280 physical AI play, where it is energy networking. I mean, 0:10:20.320 --> 0:10:24.800 we're even seeing physical security around data centers getting another lock, 0:10:25.120 --> 0:10:28.800 and so there's a significant opportunity in that infrastructure and 0:10:29.080 --> 0:10:32.640 elsewhere that is, you know, irl are in the physical world. 0:10:34.360 --> 0:10:37.679 What I'm trying to understand is why the story has 0:10:37.800 --> 0:10:39.280 changed for lots of investors. 0:10:39.640 --> 0:10:40.120 You know, if you. 0:10:40.080 --> 0:10:44.319 Think back to when we started closing closely tracking capital expenditures, 0:10:44.640 --> 0:10:48.640 people wanted to see the software revenues. On the other side, 0:10:48.679 --> 0:10:51.880 they wanted to see revenue top line growth that directly 0:10:51.920 --> 0:10:55.120 resulted from AI investment. Right think about the core to 0:10:55.160 --> 0:10:59.160 gone a name like Salesforce. They posted really good numbers, 0:10:59.440 --> 0:11:02.920 but the anxiet is still there despite the evidence. It's 0:11:02.960 --> 0:11:05.839 backward looking that people are willing to pay for. 0:11:05.840 --> 0:11:08.400 That AI era of software. Why is that? 0:11:09.760 --> 0:11:12.040 Look, there's a broad realization that you're going to have 0:11:12.120 --> 0:11:16.240 to invest ahead of ahead of the real realization of 0:11:16.280 --> 0:11:19.240 the opportunity, the real realization of the profits. And so 0:11:19.720 --> 0:11:23.160 that's why you're seeing a lot of these hyperscalers poor 0:11:23.320 --> 0:11:29.960 tremendous capital, hundreds of billions into their capex infrastructure associated 0:11:30.000 --> 0:11:32.800 with AI. And there will be support for others across 0:11:32.840 --> 0:11:36.440 the software ecosystem as long as there is also that 0:11:36.600 --> 0:11:39.880 customer enterprise customer journey narrative going with it as well. 0:11:40.480 --> 0:11:44.199 Yeah, that enterprise evidence is right is what we're looking for. 0:11:44.320 --> 0:11:46.240 I can to ask you one of my favorite questions, 0:11:46.240 --> 0:11:48.599 given with still early in the year, what happens in 0:11:48.640 --> 0:11:51.440 the rest of twenty twenty six with a software sector. 0:11:52.880 --> 0:11:54.960 Yeah, I'm going to go back to where I started, 0:11:55.000 --> 0:11:59.040 which is really this forming norming storming. You have a 0:11:59.120 --> 0:12:02.839 lot of AI forming right now, and I will tell 0:12:02.840 --> 0:12:04.760 you we are not we are not at the end 0:12:04.760 --> 0:12:07.040 of that formation. There are going to be gives and takes, 0:12:07.360 --> 0:12:10.920 and then that's storming with traditional software. The winner there 0:12:11.320 --> 0:12:13.920 is going to be those that are really spending time 0:12:14.120 --> 0:12:18.840 understanding the evolution of their technology with their customers and 0:12:18.960 --> 0:12:23.000 how those customers are applying AI to their solutions, and 0:12:23.040 --> 0:12:25.560 then you'll have this normalization and it could be a 0:12:25.600 --> 0:12:29.280 few years out where there's a balance between you know, 0:12:29.480 --> 0:12:35.040 AI infrastructure leaders and those software innovators enterprise SaaS who 0:12:35.080 --> 0:12:38.240 have really seized the opportunity to embed AI for their 0:12:38.280 --> 0:12:39.200 customer benefit. 0:12:39.440 --> 0:12:41.840 Non Webster wait to have you back on the show. 0:12:42.000 --> 0:12:44.880 Thank you very much. Indeed, Pype Sandler, we appreciate it. 0:12:45.000 --> 0:12:45.480 Coming up. 0:12:45.800 --> 0:12:50.040 Spotify reporting record user growth in its fourth quarter. What's 0:12:50.040 --> 0:12:52.680 to discuss next? We're in these earnings, but what are 0:12:52.679 --> 0:12:53.480 you looking at? 0:12:53.800 --> 0:12:57.040 Just a very quick look at TSMC's US listed shares 0:12:57.080 --> 0:13:00.319 there are almost two percent one point percent, but trading 0:13:00.320 --> 0:13:03.360 at a record high. The shares in Taiwan overnight traded 0:13:03.679 --> 0:13:07.160 at record highs. The revenue jump thirty seven percent in January. 0:13:07.320 --> 0:13:11.960 Same story, AI spending marches on. TSMC dominates the market 0:13:12.000 --> 0:13:13.359 for chip manufacturing. 0:13:13.880 --> 0:13:14.840 This is bloomboag tech. 0:13:28.679 --> 0:13:31.120 It's checking on a Spotify shares having a strong day 0:13:31.200 --> 0:13:33.440 up fifteen percent at one point, having their biggest move 0:13:33.520 --> 0:13:36.679 on record after the company reported well record use a 0:13:36.720 --> 0:13:39.000 growth in that fiscal fourth quarter. And eight hundred and 0:13:39.000 --> 0:13:42.120 thirty five million dollars in operating income. Let's turn to 0:13:42.200 --> 0:13:44.840 Bloombo's Ashley Carmen, who broke down the numbers and look, 0:13:45.640 --> 0:13:49.000 the mighty have fallen a lot coming into this number, Ashley, 0:13:49.120 --> 0:13:51.240 So the bounce back is perhaps not surprising when they're 0:13:51.240 --> 0:13:53.560 able to give some sort of like ease to the 0:13:53.559 --> 0:13:54.240 investor base. 0:13:54.679 --> 0:13:56.280 Yeah, and I think that was a lot of what 0:13:56.320 --> 0:13:59.760 this call was today is just addressing concerns that AI, 0:14:00.320 --> 0:14:04.920 specifically AI music startups might I mean these are supposed 0:14:04.960 --> 0:14:07.360 launch this year, so people are concerned they are people 0:14:07.360 --> 0:14:09.959 going to start using AI degenerate songs and then listen 0:14:09.960 --> 0:14:12.080 to those songs on other platforms, or are they going 0:14:12.120 --> 0:14:14.840 to keep coming to Spotify? And today the co CEOs 0:14:14.840 --> 0:14:17.000 were saying, we think they'll keep coming to Spotify. 0:14:17.960 --> 0:14:20.120 So the stock at one point was up on track 0:14:20.120 --> 0:14:22.360 for its bigges jump. Ever it's now up fifteen and 0:14:22.360 --> 0:14:25.000 a half percent, I think, contract for its biggest jump 0:14:25.040 --> 0:14:28.000 in seven almost eight years. You write about in the 0:14:28.080 --> 0:14:31.840 report the impact of Rapped for those although I don't 0:14:31.880 --> 0:14:34.040 imagine there's many that don't know what that is, Ashley, 0:14:34.440 --> 0:14:36.560 just explain it. But like, why was that such a 0:14:36.560 --> 0:14:38.360 big factor. 0:14:38.760 --> 0:14:43.560 So Rapped is their annual interactive viral marketing campaign where 0:14:43.560 --> 0:14:46.000 people share their music and podcasts that they listen to 0:14:46.040 --> 0:14:49.400 the most this year and every year. It is just 0:14:49.520 --> 0:14:52.480 a moment on the Internet. People tend to activate their 0:14:52.520 --> 0:14:56.000 service to participate in RAP, so they always expect to 0:14:56.000 --> 0:14:57.640 see a boost. But I believe on the call today 0:14:57.680 --> 0:15:00.400 they said this was their biggest Rapped ever, So we 0:15:00.440 --> 0:15:02.560 can really see the results of that marketing campaign. 0:15:03.200 --> 0:15:05.600 But are people advertising more with Spotify? 0:15:05.880 --> 0:15:08.840 Are they able to drive revenues not just by having 0:15:08.920 --> 0:15:11.920 more of us tune in and unearth our Spotify account 0:15:11.960 --> 0:15:12.760 every end of year. 0:15:12.960 --> 0:15:15.440 So this is the one part of the earnings today 0:15:15.440 --> 0:15:18.040 that was a little bit gloomy. The ad supported revenue 0:15:18.040 --> 0:15:20.400 actually dropped year over year, and this has been a 0:15:20.400 --> 0:15:23.120 part of the business that people are really wondering, when 0:15:23.200 --> 0:15:24.880 are we going to see you start making more money 0:15:24.920 --> 0:15:27.360 from advertising, Which is also an important question because when 0:15:27.360 --> 0:15:30.360 we're talking about them adding users, these are ad supported users. 0:15:30.840 --> 0:15:33.000 Subscribers grew as well, but if you're going to keep 0:15:33.000 --> 0:15:34.840 adding ad supported users, you also. 0:15:34.600 --> 0:15:36.400 Want to see the revenue in that department go up 0:15:36.440 --> 0:15:36.800 as well. 0:15:37.640 --> 0:15:40.760 Bloomberg's actually coming on Spotify, Thank you very much. Power 0:15:40.800 --> 0:15:43.840 Amount is trying to sweeten it's Warner Brothers bid the 0:15:43.880 --> 0:15:46.400 media giants, saying it will cover a two point eight 0:15:46.480 --> 0:15:50.080 billion dollar termination fee that Warner Bros. Would pay Netflix 0:15:50.520 --> 0:15:54.080 if it terminates and already agreed upon deal. Bloombok's Lucashaw, 0:15:54.120 --> 0:15:56.960 who leads the screen Time team, it's with us. This 0:15:57.120 --> 0:15:59.720 was interesting, right, So the headline's here and it's a 0:16:00.080 --> 0:16:03.800 wheatner an improvement on their deal. But actually the specifics 0:16:03.920 --> 0:16:08.440 are very interesting. They're not just they're not boosting the 0:16:08.600 --> 0:16:12.440 offer price. Go into detail, explain how we unpick this. 0:16:13.280 --> 0:16:16.880 Yeah, so they are addressing and they being Paramount. Two 0:16:16.920 --> 0:16:20.000 of the concerns that Warner Brothers has had about their deal. 0:16:20.040 --> 0:16:22.200 One is this question of the breakup thee Right, So, 0:16:22.360 --> 0:16:25.520 Warner Brothers has been had been debating between two main 0:16:25.560 --> 0:16:29.520 offers between Netflix and Paramount. They pick Netflix, but if 0:16:29.520 --> 0:16:32.640 they walk away from Netflix to you know, re engage 0:16:32.640 --> 0:16:35.520 with Paramount, they have to pay Netflix a bunch of money. 0:16:35.760 --> 0:16:38.600 Paramount had is now offering to cover that, and Warner 0:16:38.600 --> 0:16:41.560 Brothers had been very worried about it because they said 0:16:41.560 --> 0:16:43.800 that one of the reasons that the deals weren't equivalent. 0:16:43.880 --> 0:16:46.800 Was Paramount wasn't kind of covering Warner Brothers downside on that, 0:16:46.840 --> 0:16:48.720 which would have come out of the money that they get. 0:16:49.600 --> 0:16:51.760 The other thing here is Warner Brothers have been really 0:16:51.800 --> 0:16:54.680 concerned about their ability to refinance their debt going forward. 0:16:54.720 --> 0:16:58.960 Paramount has now or David Ellison both first in swallowing 0:16:59.040 --> 0:17:01.680 Paramount and now try follow. Warner Brothers has a history 0:17:01.680 --> 0:17:04.679 of trying to impose really onerous kind of covenants on 0:17:04.760 --> 0:17:07.600 what the company he's acquiring can do, which would have 0:17:07.680 --> 0:17:10.040 limited Warner Brothers in that respect, and now Paramount is 0:17:10.040 --> 0:17:13.720 saying basically, we'll cover you on whatever costs are related 0:17:14.040 --> 0:17:15.200 to that debt financing. 0:17:15.359 --> 0:17:16.880 To your point, they still haven't. 0:17:16.680 --> 0:17:19.160 Actually raised the thirty dollars a share offer. This does 0:17:19.200 --> 0:17:22.080 increase the total net value of the bid, and so 0:17:22.200 --> 0:17:25.040 we're waiting to see what the Warner Brothers board has 0:17:25.080 --> 0:17:25.680 to say about it. 0:17:25.880 --> 0:17:28.359 What credence to investors give at the moment. Lucas to 0:17:28.440 --> 0:17:31.400 that this would pass through regulators more easily. This whole 0:17:31.440 --> 0:17:34.480 ticking fee the idea that if it goes past the 0:17:34.560 --> 0:17:37.679 quarter expected, they get a chunk of change in return. 0:17:37.720 --> 0:17:39.960 If it's delayed, I mean that really just speaks to 0:17:40.000 --> 0:17:40.840 the bravado here. 0:17:41.560 --> 0:17:41.760 Yeah. 0:17:42.119 --> 0:17:45.199 Well, Paramount has been adamant all along that it stands 0:17:45.200 --> 0:17:48.320 a better chance of getting its deal approved, which on 0:17:48.359 --> 0:17:51.240 its face makes some sense. Netflix is a much larger company, 0:17:51.240 --> 0:17:54.040 a more powerful company. It's the number one player in streaming. 0:17:54.560 --> 0:17:57.320 Netflix of course has countered that, you know, they're very 0:17:57.320 --> 0:18:00.280 confident in getting their deal approved and raised issues with 0:18:00.280 --> 0:18:04.000 with Paramounts offer because Paramount plus Warner Brothers Discovery combined 0:18:04.000 --> 0:18:07.680 would account for technically a larger share of television viewing 0:18:08.040 --> 0:18:10.960 than Netflix would under the deal. But both sides are 0:18:10.960 --> 0:18:13.199 trying to plead their case. Paramount obviously is sort of 0:18:13.200 --> 0:18:16.199 coming from behind here, and what they are trying to 0:18:16.240 --> 0:18:19.320 do is inject enough doubt in the minds of shareholders 0:18:19.320 --> 0:18:21.800 that they will not vote for the Netflix deal next month. 0:18:22.760 --> 0:18:25.159 Lucas both sides trying to plead their case. There's been 0:18:25.200 --> 0:18:27.560 a lot of recent reporting from US and what's also 0:18:27.600 --> 0:18:30.480 happening kind of in the background. There's obviously been an 0:18:30.520 --> 0:18:33.520 interest from Washington DC. What else do we need to 0:18:33.560 --> 0:18:36.480 know about how this is going from a regulatory perspective, 0:18:36.920 --> 0:18:39.639 or at least interest from government as well. 0:18:40.560 --> 0:18:41.399 I don't know. 0:18:41.760 --> 0:18:46.000 Right we've had Paramount shareholders or we've had kind of 0:18:46.040 --> 0:18:49.080 Paramount and David Allison lobbying people in DC and Europe. 0:18:49.119 --> 0:18:52.240 We've had Netflix going ahead of the Senate last week. 0:18:53.160 --> 0:18:55.480 President Trump had said he'll be involved, and he said 0:18:55.480 --> 0:18:58.639 he's not involved. What we do know, just as a 0:18:58.800 --> 0:19:00.600 as a kind of basic set of facts, is that 0:19:00.640 --> 0:19:03.640 the DOJ is looking into both cases and has yet 0:19:03.680 --> 0:19:06.040 to say whether or not it's going to challenge either 0:19:06.040 --> 0:19:07.960 of them. 0:19:08.160 --> 0:19:11.000 In terms of timing, Is there anything pressuring? Is there 0:19:11.000 --> 0:19:14.280 any date, any number, any any time frame that we 0:19:14.320 --> 0:19:14.960 look to for the. 0:19:14.920 --> 0:19:20.760 Next Yeah, the next big one is the shareholder vote. Really, 0:19:20.800 --> 0:19:23.560 we're expecting Warner Brothers to arrange a vote of its 0:19:23.560 --> 0:19:26.879 shareholders sometime probably in mid to late March, kind of 0:19:26.920 --> 0:19:30.600 at the latest early April. That's something of a deadline 0:19:30.640 --> 0:19:32.760 for Paramount because they need to convince a bunch of 0:19:32.840 --> 0:19:36.600 shareholders before then to change their mind. Otherwise then they're 0:19:36.640 --> 0:19:38.720 really up to the whims of regulators, because if it 0:19:38.720 --> 0:19:42.960 gets to shareholders and shareholders do approve that Netflix deal, 0:19:43.080 --> 0:19:45.480 there's not much Paramount can do besides hope that the 0:19:45.520 --> 0:19:48.600 government in the US or Europe blocks the. 0:19:48.600 --> 0:19:52.760 Deal for sure, we appreciate you on the story. Meanwhile, 0:19:52.800 --> 0:19:55.760 coming up, we're going to talk about how storied VC 0:19:55.920 --> 0:19:58.840 firm and recent Prowitz is helping drive the Trump administration's 0:19:58.880 --> 0:20:00.440 AI approach us. 0:20:00.480 --> 0:20:02.280 Next, this is brettly bed Tech. 0:20:16.560 --> 0:20:18.960 It's time now for Talking tech and first up Stripe. 0:20:19.000 --> 0:20:21.440 It's arranging a tender offer that would value the company 0:20:21.480 --> 0:20:24.440 at one hundred and forty billion dollars now. According to sources, 0:20:24.640 --> 0:20:27.080 that marks a roughly thirty billion dollar increase from the 0:20:27.080 --> 0:20:29.680