1 00:00:00,240 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:09,480 --> 00:00:13,480 Speaker 2: This is Bloomberg Intelligence with Alex Steele and Paul Sweeney. 3 00:00:13,520 --> 00:00:16,760 Speaker 3: The real our performance has been the US corporate high yields. 4 00:00:16,920 --> 00:00:19,279 Speaker 4: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:19,360 --> 00:00:22,520 Speaker 3: The semiconductor business is a really cyclical. 6 00:00:22,120 --> 00:00:26,120 Speaker 2: Business, breaking market headlines and corporate news from across the globe. 7 00:00:26,239 --> 00:00:28,760 Speaker 4: Do investors like the M and A that we've seen? 8 00:00:29,040 --> 00:00:32,080 Speaker 3: These are two big time blue chip companies. 9 00:00:32,400 --> 00:00:35,839 Speaker 4: Window between the peak and cut changing super fast. 10 00:00:36,000 --> 00:00:41,280 Speaker 2: Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio. 11 00:00:41,440 --> 00:00:44,080 Speaker 5: On Today's Bloomberg Intelligence Show, We're going to dig inside 12 00:00:44,080 --> 00:00:47,040 Speaker 5: the big business stories impacting Wall Street and global markets. 13 00:00:47,360 --> 00:00:49,760 Speaker 5: Each and every week we provide in depth research and 14 00:00:49,840 --> 00:00:51,680 Speaker 5: data on some of the two thousand companies and one 15 00:00:51,720 --> 00:00:55,680 Speaker 5: hundred and thirty industries our analysts cover worldwide, And today 16 00:00:55,800 --> 00:00:58,240 Speaker 5: we'll look at what to expect in the media streaming 17 00:00:58,240 --> 00:01:01,400 Speaker 5: space in twenty twenty five. Plus we'll discuss why Toyota's 18 00:01:01,440 --> 00:01:03,520 Speaker 5: recent success may be getting in the way of its 19 00:01:03,600 --> 00:01:06,960 Speaker 5: evy future. But first we turn to US bank earnings. 20 00:01:07,120 --> 00:01:10,080 Speaker 5: The four giant lenders that reported full year results Wednesday 21 00:01:10,160 --> 00:01:13,480 Speaker 5: notch their second most profitable year ever in twenty twenty four. 22 00:01:13,600 --> 00:01:17,160 Speaker 5: They include JP Morgan, City, Goldman Sachs, and Wells Fargo. 23 00:01:17,520 --> 00:01:21,720 Speaker 5: The results were driven by interest rate moves, investment banking fees, 24 00:01:21,760 --> 00:01:24,600 Speaker 5: and trading revenue. For more, guest host Matt Miller and 25 00:01:24,640 --> 00:01:28,480 Speaker 5: Nora Melinda spoke with Alison Williams Bloomberg Intelligence, senior analysts 26 00:01:28,480 --> 00:01:31,399 Speaker 5: for global banks and asset managers, and they started by 27 00:01:31,400 --> 00:01:34,240 Speaker 5: asking Allison about City Group's outlook for twenty twenty five. 28 00:01:34,600 --> 00:01:38,279 Speaker 6: Well, I think they sort of notched down their return 29 00:01:38,360 --> 00:01:40,960 Speaker 6: on tangible equity target in the near term, but I 30 00:01:40,959 --> 00:01:45,039 Speaker 6: think it's realistic. You know, it's interesting, even Goldman Sachs, 31 00:01:45,040 --> 00:01:49,680 Speaker 6: who had like a blowout quarter, really strong numbers. It's 32 00:01:49,840 --> 00:01:53,800 Speaker 6: tough to see them. You know, they say they have 33 00:01:53,880 --> 00:01:56,320 Speaker 6: a path to reach their target. But I think what 34 00:01:56,360 --> 00:01:59,280 Speaker 6: all these banks did was after twenty twenty one, which 35 00:01:59,320 --> 00:02:01,160 Speaker 6: was a blowout year, you saw a lot of people 36 00:02:01,280 --> 00:02:04,800 Speaker 6: raise their targets, but at these very bullish targets. And 37 00:02:05,000 --> 00:02:07,840 Speaker 6: JP Morgan has met their targets. But for everybody else, 38 00:02:08,160 --> 00:02:10,520 Speaker 6: you know, it's tough and even with the markets as 39 00:02:10,560 --> 00:02:11,160 Speaker 6: strong as. 40 00:02:11,000 --> 00:02:11,680 Speaker 3: They are, so. 41 00:02:13,280 --> 00:02:16,200 Speaker 7: But targets were pretty high, right, yeah, I mean Shannali 42 00:02:16,800 --> 00:02:20,560 Speaker 7: keeps telling me that JP Morgan missed on equities trading, 43 00:02:20,880 --> 00:02:22,720 Speaker 7: but equities trading rose. 44 00:02:23,919 --> 00:02:27,639 Speaker 6: Right I think because I think because they restated their numbers, 45 00:02:27,880 --> 00:02:32,080 Speaker 6: and so if you look at the restatement, what happened 46 00:02:32,120 --> 00:02:35,200 Speaker 6: was they shifted a little bit from equities to thick 47 00:02:35,760 --> 00:02:38,520 Speaker 6: and so I think that's why it appears that they 48 00:02:39,000 --> 00:02:42,480 Speaker 6: missed on the equities line but really beat on FICK 49 00:02:43,280 --> 00:02:46,360 Speaker 6: and explained to her fixed income. 50 00:02:46,520 --> 00:02:48,440 Speaker 8: Okay, what's acronym? 51 00:02:48,800 --> 00:02:49,080 Speaker 9: Thank you? 52 00:02:49,160 --> 00:02:52,600 Speaker 7: Yeah, it's an acronym that also doesn't do well in Germany. 53 00:02:53,760 --> 00:02:55,680 Speaker 6: Yeah, I'm not sure what it would be, although Deutsche 54 00:02:55,680 --> 00:02:58,079 Speaker 6: Bank only does fick with oneesay because. 55 00:02:57,840 --> 00:02:59,720 Speaker 9: They're not that good man. 56 00:03:00,080 --> 00:03:03,440 Speaker 8: So who's the front runner here and who are the laggards? 57 00:03:03,639 --> 00:03:07,600 Speaker 6: So you know, JP Morgan really continues to post the 58 00:03:07,680 --> 00:03:10,960 Speaker 6: leading returns of the group. As I said, there, you know, 59 00:03:11,040 --> 00:03:13,639 Speaker 6: exceeding their target in the near term. We expect they'll 60 00:03:13,639 --> 00:03:17,239 Speaker 6: meet their target again next year. But I would say 61 00:03:17,280 --> 00:03:19,920 Speaker 6: that for I say you that all the banks really 62 00:03:20,000 --> 00:03:22,560 Speaker 6: had a good quarter. And it's not just the quarter, 63 00:03:22,639 --> 00:03:26,200 Speaker 6: it's the guidance and so net interest income coming in 64 00:03:26,240 --> 00:03:27,320 Speaker 6: better than expected. 65 00:03:28,760 --> 00:03:30,600 Speaker 1: You know, WELLS. 66 00:03:30,280 --> 00:03:33,440 Speaker 6: Fargo and JP Morgan in particular raising their guidance for 67 00:03:33,440 --> 00:03:37,400 Speaker 6: a net interest income for next year. With the City Group, 68 00:03:37,640 --> 00:03:41,560 Speaker 6: as we pointed out, you know, they had the buyback 69 00:03:41,640 --> 00:03:44,000 Speaker 6: is about fourteen percent of their market cap, So that's 70 00:03:44,080 --> 00:03:47,600 Speaker 6: pretty significant. I mean, keep in mind the valuation at 71 00:03:47,600 --> 00:03:51,240 Speaker 6: City and so that's why I think investors are even 72 00:03:51,280 --> 00:03:52,640 Speaker 6: more excited about that. 73 00:03:52,720 --> 00:03:55,880 Speaker 7: Well, you know what, that brings up an interesting question. 74 00:03:56,360 --> 00:04:00,960 Speaker 7: We have the inauguration and will be a different regulatory regime. 75 00:04:01,480 --> 00:04:05,880 Speaker 7: Not just throwing out the Basil three endgame, but I 76 00:04:05,920 --> 00:04:08,160 Speaker 7: wonder if these banks are going to be able to 77 00:04:08,200 --> 00:04:10,360 Speaker 7: do more buybacks, Are they going to be able to 78 00:04:10,360 --> 00:04:12,080 Speaker 7: pay more in dividend? Are they gonna be able to 79 00:04:12,080 --> 00:04:13,160 Speaker 7: return more cash? 80 00:04:13,200 --> 00:04:17,240 Speaker 6: To show that is that is definitely the thesis. 81 00:04:16,839 --> 00:04:17,320 Speaker 3: If you will. 82 00:04:17,360 --> 00:04:19,400 Speaker 6: And so a lot of the run up that we 83 00:04:19,480 --> 00:04:24,640 Speaker 6: saw in the banks was due to this lighter regulatory environment. 84 00:04:24,680 --> 00:04:27,320 Speaker 6: A big part of that, to your point, is the 85 00:04:27,400 --> 00:04:31,960 Speaker 6: capital rules. So Basil three endgame as we call it. 86 00:04:31,839 --> 00:04:32,559 Speaker 2: Sounds like a movie. 87 00:04:32,680 --> 00:04:35,520 Speaker 6: Yes, right, so it will eventually happen. 88 00:04:35,800 --> 00:04:36,320 Speaker 9: I mean. 89 00:04:37,640 --> 00:04:39,960 Speaker 6: For the banks, it's probably a good thing actually, if 90 00:04:39,960 --> 00:04:43,680 Speaker 6: it happens under the current administration, because the current administration, 91 00:04:44,680 --> 00:04:49,159 Speaker 6: as we know, is very US focused, and a lot 92 00:04:49,160 --> 00:04:52,159 Speaker 6: of the issues that the banks had with the capital 93 00:04:52,200 --> 00:04:56,920 Speaker 6: rules was that it was very punitive versus some other jurisdictions. 94 00:04:57,120 --> 00:04:59,359 Speaker 6: So it felt like it put them at a disadvantage. 95 00:04:59,440 --> 00:05:02,320 Speaker 6: Especially it's something like prime brokerage, and that's not a 96 00:05:02,320 --> 00:05:06,560 Speaker 6: business that regulators are necessary. You know, regulators generally they're 97 00:05:06,600 --> 00:05:10,000 Speaker 6: looking to protect the smaller banks and do things, and 98 00:05:10,040 --> 00:05:13,280 Speaker 6: you know they're not as concerned with trading and prime brokerage. 99 00:05:14,240 --> 00:05:19,480 Speaker 6: But to the extent that this at this administration, you know, 100 00:05:19,960 --> 00:05:22,200 Speaker 6: we would see the lighter rules come through. 101 00:05:22,320 --> 00:05:24,520 Speaker 3: It could be good to get them solidified. 102 00:05:24,800 --> 00:05:28,640 Speaker 6: The other thing M and A less antitrust should be 103 00:05:28,680 --> 00:05:30,479 Speaker 6: good for M and A. It's actually a little bit 104 00:05:30,520 --> 00:05:30,720 Speaker 6: of a. 105 00:05:30,800 --> 00:05:32,400 Speaker 7: How many banks are there in the US and the 106 00:05:32,480 --> 00:05:33,400 Speaker 7: United States of America. 107 00:05:33,440 --> 00:05:34,320 Speaker 10: How many banks do we have? 108 00:05:34,600 --> 00:05:36,400 Speaker 3: Well, it's not it's not five thousand. 109 00:05:36,960 --> 00:05:39,520 Speaker 6: It's not necessarily even the bank insolidation. It's the fees 110 00:05:39,560 --> 00:05:41,200 Speaker 6: that they'll make advising other people. 111 00:05:41,760 --> 00:05:44,480 Speaker 7: Right. Okay, So you're saying advising M and A for 112 00:05:44,600 --> 00:05:47,159 Speaker 7: other industries. Okay, I thought you were talking about in banks, 113 00:05:47,160 --> 00:05:50,040 Speaker 7: because you know, in some countries they have like. 114 00:05:50,040 --> 00:05:51,960 Speaker 8: Four or five, but just a couple that you can 115 00:05:52,000 --> 00:05:52,760 Speaker 8: count on your hand. 116 00:05:52,880 --> 00:05:55,120 Speaker 3: And this country, we have we have a lot, a lot. 117 00:05:55,360 --> 00:05:57,440 Speaker 7: I mean, I'm not far off with five thousand. 118 00:05:57,200 --> 00:06:01,000 Speaker 6: Right, yes, so you're not far off. But I mean 119 00:06:01,080 --> 00:06:04,160 Speaker 6: the size of these g SIPs as we call them, 120 00:06:04,200 --> 00:06:08,000 Speaker 6: which globally systemically important banks. I mean, the big really 121 00:06:08,080 --> 00:06:11,200 Speaker 6: have gotten bigger. They have consolidated share, and they've gotten 122 00:06:11,240 --> 00:06:12,760 Speaker 6: bigger globally. 123 00:06:14,080 --> 00:06:16,400 Speaker 7: I don't know if Nora remembers, but there was a 124 00:06:16,440 --> 00:06:20,119 Speaker 7: time when we were concerned about banks being too big 125 00:06:20,160 --> 00:06:22,200 Speaker 7: to fail. Okay, I mean you were probably in middle 126 00:06:22,200 --> 00:06:25,520 Speaker 7: school at the time, but now they're even bigger. I 127 00:06:25,560 --> 00:06:28,359 Speaker 7: don't know that I shouldn't assume that your age is. 128 00:06:28,560 --> 00:06:31,280 Speaker 7: But you know, twenty ten now is fifteen years ago, 129 00:06:31,440 --> 00:06:34,840 Speaker 7: so into two thousand and eight, right, seventeen years ago. 130 00:06:34,920 --> 00:06:37,320 Speaker 1: What grade were you in seventeen years ago? 131 00:06:37,360 --> 00:06:39,520 Speaker 7: I don't think I'm allowed to ask, Actually forget that. 132 00:06:40,040 --> 00:06:42,760 Speaker 7: In any case, these g sibs are g sibbier than ever. 133 00:06:43,040 --> 00:06:43,200 Speaker 11: Right. 134 00:06:43,279 --> 00:06:45,680 Speaker 8: I'm also so I keep an eye on real estate stocks, 135 00:06:45,680 --> 00:06:48,040 Speaker 8: so I'm covering office rates, and one thing that I'm 136 00:06:48,040 --> 00:06:50,280 Speaker 8: always looking at is return to office. So we did 137 00:06:50,320 --> 00:06:52,719 Speaker 8: have JP Morgan saying that they're pushing people back into 138 00:06:52,760 --> 00:06:55,800 Speaker 8: the office. What has been the general mandate and what 139 00:06:55,839 --> 00:06:58,440 Speaker 8: has been the conversation for the banking industry in general? 140 00:06:59,160 --> 00:06:59,880 Speaker 1: In general? 141 00:07:00,320 --> 00:07:02,640 Speaker 6: You know those that are front office, if you will, 142 00:07:02,760 --> 00:07:04,840 Speaker 6: that are out there. You know, we have this banking 143 00:07:04,839 --> 00:07:07,960 Speaker 6: fee recovery. Banks are competing with each other, so a 144 00:07:07,960 --> 00:07:12,040 Speaker 6: lot of those senior people happen in office or traveling again, right, 145 00:07:12,080 --> 00:07:14,600 Speaker 6: so a lot of for investment bankers, a lot of 146 00:07:14,640 --> 00:07:17,320 Speaker 6: it is not necessarily sitting in your office, but being 147 00:07:17,400 --> 00:07:20,480 Speaker 6: out there and visiting clients. So we definitely saw that 148 00:07:20,520 --> 00:07:23,920 Speaker 6: return to travel and JP Morgan, even though the five 149 00:07:24,000 --> 00:07:26,520 Speaker 6: days a week is getting a lot of headlines, you know, 150 00:07:26,560 --> 00:07:28,000 Speaker 6: the senior people at JP. 151 00:07:27,880 --> 00:07:30,000 Speaker 3: Morgan have already been back. 152 00:07:30,920 --> 00:07:32,720 Speaker 6: You know, people that I talked to at the company 153 00:07:32,760 --> 00:07:35,080 Speaker 6: were back, you know, May of twenty twenty. They were 154 00:07:35,080 --> 00:07:38,040 Speaker 6: back in their office five days a week. So yeah, 155 00:07:38,040 --> 00:07:40,680 Speaker 6: so definitely there is the return to office. 156 00:07:41,080 --> 00:07:41,480 Speaker 12: Office. 157 00:07:41,480 --> 00:07:44,600 Speaker 6: Commercial real estate, as you know, was a big concern, 158 00:07:45,200 --> 00:07:49,840 Speaker 6: but we're we're definitely seeing some stabilization there all right. 159 00:07:49,840 --> 00:07:53,200 Speaker 5: Thanks to Alison Williams, Bloomberg Intelligence Senior Analyst, global banks 160 00:07:53,200 --> 00:07:56,360 Speaker 5: and asset managers. We move next to the streaming business. 161 00:07:56,400 --> 00:07:59,040 Speaker 5: We heard recently that Walt Disney, Fox, and Warner Brothers 162 00:07:59,040 --> 00:08:02,840 Speaker 5: Discovery scrapped plans to create a joint sports streaming service 163 00:08:02,920 --> 00:08:06,240 Speaker 5: called Venue Sports, and the company said they instead want 164 00:08:06,240 --> 00:08:09,520 Speaker 5: to focus on their existing online offerings instead. For more 165 00:08:09,640 --> 00:08:11,760 Speaker 5: host Paul Sweeney and Normal Linda were joined by Gethera 166 00:08:11,800 --> 00:08:15,360 Speaker 5: Monkannathan Bloomberg intelligence analyst on US Media, and they first 167 00:08:15,400 --> 00:08:17,840 Speaker 5: asked Etha what Venue was to be and why the 168 00:08:17,880 --> 00:08:19,880 Speaker 5: parties decided not to go through with it. 169 00:08:20,040 --> 00:08:24,640 Speaker 13: So Venue was really this skinny sports service that that 170 00:08:24,760 --> 00:08:28,560 Speaker 13: was having content from Disney, Fox, and Warner Brothers. It 171 00:08:28,640 --> 00:08:32,840 Speaker 13: was supposed to launch last year. But Fubo, which is 172 00:08:32,960 --> 00:08:36,720 Speaker 13: another player in the space, they're a digital PayTV service provider, 173 00:08:37,160 --> 00:08:40,480 Speaker 13: they actually had filed a lawsuit against Venues saying that 174 00:08:40,520 --> 00:08:44,560 Speaker 13: it kind of blocks competition, and so you know, because 175 00:08:44,559 --> 00:08:47,440 Speaker 13: of that, there was an injunction which had blocked the 176 00:08:47,559 --> 00:08:50,960 Speaker 13: launch of Venue. Now, in a somewhat of a surprising move, 177 00:08:51,200 --> 00:08:54,760 Speaker 13: Disney actually merged Hulu Live Tv, which is its own 178 00:08:55,440 --> 00:08:58,880 Speaker 13: digital PATV service, with Fubo, and as part of that deal, 179 00:08:58,960 --> 00:09:03,199 Speaker 13: Fubo actually agreed to drop litigation, which potentially, i mean theoretically, 180 00:09:03,200 --> 00:09:06,000 Speaker 13: on paper, it kind of cleared the way for the 181 00:09:06,080 --> 00:09:07,080 Speaker 13: launch of venues. 182 00:09:07,080 --> 00:09:10,840 Speaker 9: So this move, or this announcement rather is somewhat. 183 00:09:10,520 --> 00:09:13,520 Speaker 13: Of a head scratcher because we really thought that they had, 184 00:09:13,600 --> 00:09:15,520 Speaker 13: you know, kind of put everything in place to actually 185 00:09:15,559 --> 00:09:17,040 Speaker 13: go ahead with the launch of venue. But you know, 186 00:09:17,080 --> 00:09:20,280 Speaker 13: Direct TV and Dish had also come up with their 187 00:09:20,320 --> 00:09:23,120 Speaker 13: own concerns, and they had said that, you know, antitrust 188 00:09:23,280 --> 00:09:26,200 Speaker 13: concerns regarding Venue were actually still very much in place, 189 00:09:26,200 --> 00:09:28,280 Speaker 13: which kind of suggests to us that maybe Disney, Fox 190 00:09:28,320 --> 00:09:31,360 Speaker 13: and Warner Brothers said that it's really not worth all 191 00:09:31,400 --> 00:09:34,720 Speaker 13: of this, you know, legal and time resources being spent 192 00:09:34,760 --> 00:09:36,360 Speaker 13: on Venue, so let's just crap the whole thing. 193 00:09:36,760 --> 00:09:38,080 Speaker 1: We're in also expecting this. 194 00:09:38,760 --> 00:09:40,080 Speaker 9: Nobody was really expecting this. 195 00:09:40,200 --> 00:09:42,240 Speaker 13: I mean, first of all, nobody was really expecting that 196 00:09:42,280 --> 00:09:44,840 Speaker 13: whole fuboat Disney move, but really that kind of seemed 197 00:09:44,840 --> 00:09:47,920 Speaker 13: like this perfect setup for actually a go ahead on Venue. 198 00:09:47,960 --> 00:09:50,079 Speaker 13: So this obviously, this is the kind of our second 199 00:09:50,080 --> 00:09:52,400 Speaker 13: big shock this week, but it really kind of goes 200 00:09:52,440 --> 00:09:55,680 Speaker 13: to prove to us, you know, despite everybody kind of 201 00:09:55,720 --> 00:09:59,960 Speaker 13: wanting to make this transition into you know, streaming pauls. 202 00:10:00,080 --> 00:10:02,040 Speaker 13: You very well know there are so many legal and 203 00:10:02,120 --> 00:10:04,120 Speaker 13: logistical complications associated with it. 204 00:10:04,120 --> 00:10:05,679 Speaker 9: I mean we've seen that time and time again. 205 00:10:05,960 --> 00:10:08,520 Speaker 13: You know, there was this short form video service called Queebi, 206 00:10:09,160 --> 00:10:11,839 Speaker 13: which basically was kind of dead or arrival. We had 207 00:10:11,840 --> 00:10:14,320 Speaker 13: CNN Plus again never really took off the ground. So 208 00:10:14,320 --> 00:10:17,680 Speaker 13: so many of these services, Yes, theoretically they're good, but 209 00:10:17,800 --> 00:10:20,000 Speaker 13: practically it becomes almost impossible to implement. 210 00:10:20,360 --> 00:10:23,520 Speaker 14: Can you update us on what disney strategy is for 211 00:10:24,360 --> 00:10:25,720 Speaker 14: ESPN in the streaming world? 212 00:10:26,760 --> 00:10:29,000 Speaker 13: Yeah, Now, I think all eyes now that this whole 213 00:10:29,080 --> 00:10:33,440 Speaker 13: venue thing is off, I think all eyes are on ESPN. 214 00:10:33,600 --> 00:10:36,880 Speaker 13: So the big move that happens this year, it happens 215 00:10:36,920 --> 00:10:39,960 Speaker 13: in fall of twenty twenty five, when Disney is preparing 216 00:10:40,000 --> 00:10:44,160 Speaker 13: to launch what they call the flagship ESPN product, which 217 00:10:44,240 --> 00:10:46,800 Speaker 13: is all of the ESPN content, all of the Marquee 218 00:10:46,800 --> 00:10:50,760 Speaker 13: Sports content actually going direct to consumer. Now, the big 219 00:10:50,800 --> 00:10:53,320 Speaker 13: news that we're still kind of waiting for Paul is 220 00:10:53,400 --> 00:10:55,839 Speaker 13: what the price point is going to be. So we 221 00:10:55,920 --> 00:10:59,000 Speaker 13: knew that Venue Sports was priced at about forty three 222 00:10:59,040 --> 00:11:02,160 Speaker 13: dollars a month, but that included, you know, obviously content 223 00:11:02,240 --> 00:11:06,320 Speaker 13: from Fox Waterer Brothers and Disney just kind of looking, 224 00:11:06,480 --> 00:11:09,920 Speaker 13: you know, crunching some numbers. We think that this new 225 00:11:09,960 --> 00:11:13,079 Speaker 13: Disney ESPN service could be priced anywhere from about twenty 226 00:11:13,080 --> 00:11:15,520 Speaker 13: two to twenty five dollars a month. So then the 227 00:11:15,600 --> 00:11:17,599 Speaker 13: question is, you know, how many people are going to 228 00:11:17,640 --> 00:11:22,319 Speaker 13: subscribe to the service and will it potentially help Disney 229 00:11:22,559 --> 00:11:25,640 Speaker 13: to offset all of the losses that they're seeing on 230 00:11:25,640 --> 00:11:28,480 Speaker 13: the linear TV side. We think over time it will, 231 00:11:28,520 --> 00:11:29,920 Speaker 13: but it's still a little bit of a weight and 232 00:11:30,040 --> 00:11:32,160 Speaker 13: wash because we really need that price point. 233 00:11:32,600 --> 00:11:35,000 Speaker 8: So how big could this really be if they were 234 00:11:35,040 --> 00:11:36,600 Speaker 8: to launch this ESPN product. 235 00:11:37,720 --> 00:11:39,680 Speaker 9: We think it can be really really big. 236 00:11:39,840 --> 00:11:44,920 Speaker 13: So remember right now we have about seventy million PayTV households, 237 00:11:45,240 --> 00:11:48,680 Speaker 13: but there are totally one hundred and thirty million TV households, 238 00:11:48,679 --> 00:11:51,360 Speaker 13: so that means sixty million households are actually not even 239 00:11:51,400 --> 00:11:54,720 Speaker 13: subscribing to a PATV service. So we think that, you know, 240 00:11:54,800 --> 00:11:58,800 Speaker 13: the ESPN product potentially can capture a lot of both 241 00:11:58,880 --> 00:12:01,680 Speaker 13: the PATV household on as well as the ones that 242 00:12:01,720 --> 00:12:04,320 Speaker 13: we call cord never's or you know, cord cutters who 243 00:12:04,360 --> 00:12:07,839 Speaker 13: have just completely left the TV ecosystem. So the way 244 00:12:07,880 --> 00:12:09,600 Speaker 13: that we're kind of modeling it out is we think 245 00:12:09,600 --> 00:12:12,199 Speaker 13: that this service gets about, you know, ten twelve million 246 00:12:12,240 --> 00:12:15,360 Speaker 13: subscribers by the end of next year, potentially reaches almost 247 00:12:15,440 --> 00:12:18,080 Speaker 13: thirty forty million subscribers over the next few years. But 248 00:12:18,080 --> 00:12:20,040 Speaker 13: again no, a lot of that is going to depend 249 00:12:20,040 --> 00:12:23,400 Speaker 13: on exactly where they price the product and also what 250 00:12:23,440 --> 00:12:25,840 Speaker 13: content would they offer. Do they go out and license 251 00:12:26,040 --> 00:12:28,640 Speaker 13: more content from let's say some of their peers like 252 00:12:28,679 --> 00:12:30,000 Speaker 13: you know Fox or Warden Brothers. 253 00:12:30,360 --> 00:12:34,280 Speaker 5: Thanks to gethr Maranganathan, Bloomerg Intelligence analyst on US Media. 254 00:12:34,360 --> 00:12:36,240 Speaker 5: Coming up, We're going to break down why the investment 255 00:12:36,280 --> 00:12:40,280 Speaker 5: company black Rock attracted record client cash last year. You're 256 00:12:40,320 --> 00:12:43,760 Speaker 5: listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth 257 00:12:43,800 --> 00:12:46,280 Speaker 5: research and data on some of the two thousand companies 258 00:12:46,280 --> 00:12:49,280 Speaker 5: and one hundred and thirty industries. You can access Bloomberg 259 00:12:49,320 --> 00:12:52,640 Speaker 5: Intelligence through Bigo. I'm a terminal, I'm Alex Steel, and 260 00:12:52,720 --> 00:12:53,800 Speaker 5: this is Bloomberg. 261 00:12:58,480 --> 00:13:02,280 Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live 262 00:13:02,360 --> 00:13:05,320 Speaker 2: weekdays at ten am Easter on Apple CarPlay and the 263 00:13:05,360 --> 00:13:08,400 Speaker 2: Android Auto with the Bloomberg Business app. Listen on demand 264 00:13:08,400 --> 00:13:14,280 Speaker 2: wherever you get your podcasts, or watch us live on YouTube. 265 00:13:13,280 --> 00:13:15,720 Speaker 5: We moved next to earnings results from the investment company 266 00:13:15,720 --> 00:13:18,480 Speaker 5: black Rock. This week, we heard the black Rock attracted 267 00:13:18,520 --> 00:13:21,240 Speaker 5: an annual record of six hundred and forty one billion 268 00:13:21,280 --> 00:13:24,640 Speaker 5: dollars in client cash. The number show the firm's global 269 00:13:24,679 --> 00:13:28,559 Speaker 5: reach as it integrates multi billion dollar acquisitions and reshapes 270 00:13:28,600 --> 00:13:31,600 Speaker 5: its leadership. For more, guest host John Tucker and Normal 271 00:13:31,600 --> 00:13:35,480 Speaker 5: Linda spoke to Neil Sipes, Bloomberg Intelligence financials analyst, and 272 00:13:35,520 --> 00:13:38,720 Speaker 5: they asked him how much assets under management Blackrock had now. 273 00:13:38,840 --> 00:13:41,800 Speaker 10: The number now is eleven point six trillion. Wow, that's 274 00:13:42,000 --> 00:13:45,079 Speaker 10: chilling with the tee, right the t And what's really 275 00:13:45,080 --> 00:13:48,680 Speaker 10: interesting is you know that number, you know, blows people's 276 00:13:48,720 --> 00:13:51,320 Speaker 10: minds away, especially if they're not following the name closely. 277 00:13:51,880 --> 00:13:53,880 Speaker 10: You think about the rule of seventy two, how many 278 00:13:53,920 --> 00:13:56,520 Speaker 10: years it takes to double. Their assets have grown ten 279 00:13:56,559 --> 00:14:00,040 Speaker 10: percent a year over the past seven years, So that 280 00:14:00,120 --> 00:14:02,400 Speaker 10: how we've sort of gotten here. Twenty seventeen we were 281 00:14:02,440 --> 00:14:06,240 Speaker 10: at six trillion. Now we're at eleven point six trillion, so, 282 00:14:07,320 --> 00:14:10,200 Speaker 10: you know, effectively doubling a lot of that of course's markets, 283 00:14:10,600 --> 00:14:12,439 Speaker 10: but with black Rock, what we know is sort of 284 00:14:12,520 --> 00:14:17,079 Speaker 10: premium organic growth that's net inflows of client assets. That's 285 00:14:17,120 --> 00:14:18,040 Speaker 10: been their strong suit. 286 00:14:18,559 --> 00:14:21,040 Speaker 8: Neil, As we look at earnings, what were your biggest 287 00:14:21,040 --> 00:14:22,400 Speaker 8: takeaways for this company? 288 00:14:22,720 --> 00:14:26,240 Speaker 10: Yeah, I think the biggest takeaway was that at eleven 289 00:14:26,280 --> 00:14:29,800 Speaker 10: point six trillion dollars, the question of can you still 290 00:14:29,880 --> 00:14:33,360 Speaker 10: grow at that scale is sort of answered here and 291 00:14:33,400 --> 00:14:35,960 Speaker 10: we've seen that, you know, the two hundred billion in 292 00:14:36,040 --> 00:14:39,840 Speaker 10: long term flows in client assets, that's eight percent long 293 00:14:39,920 --> 00:14:43,240 Speaker 10: term organic growth. That's one of their best quarters in 294 00:14:43,280 --> 00:14:46,120 Speaker 10: a handful of years, and it's at the point where 295 00:14:46,120 --> 00:14:49,440 Speaker 10: they've been the biggest they've ever been. So they're proving that, 296 00:14:49,800 --> 00:14:52,280 Speaker 10: you know, the bigger they get, the growth is still there. 297 00:14:52,520 --> 00:14:54,040 Speaker 10: And a lot of that speaks to sort of the 298 00:14:54,080 --> 00:14:56,840 Speaker 10: breadth of that franchise where we know they have the 299 00:14:56,880 --> 00:15:01,040 Speaker 10: massive eye shares franchise, the legacy sort of active mutual 300 00:15:01,040 --> 00:15:04,000 Speaker 10: fund franchise, and now that push into private markets. 301 00:15:04,120 --> 00:15:06,840 Speaker 15: As a client of Blackrock, how much money am I 302 00:15:06,920 --> 00:15:08,720 Speaker 15: making with my stuff? 303 00:15:09,600 --> 00:15:09,800 Speaker 13: Yeah? 304 00:15:09,800 --> 00:15:11,960 Speaker 10: Well, I guess it's going to depend what sort of 305 00:15:12,000 --> 00:15:14,880 Speaker 10: products you're investing in, but a lot of what they've 306 00:15:15,120 --> 00:15:18,120 Speaker 10: sort of typically done or legacy when you think of 307 00:15:18,160 --> 00:15:21,000 Speaker 10: Blackrock as a lot of those beta type products, the 308 00:15:21,080 --> 00:15:24,000 Speaker 10: simple I shares ETFs that are going to track an 309 00:15:24,040 --> 00:15:26,600 Speaker 10: index or an index mutual fund that you might find 310 00:15:27,120 --> 00:15:29,480 Speaker 10: in your four oh one K or in your retirement plans. 311 00:15:30,160 --> 00:15:33,520 Speaker 10: So that's going to vary buy product. But what I 312 00:15:33,560 --> 00:15:36,240 Speaker 10: think is a bigger story in asset management as well 313 00:15:36,360 --> 00:15:39,560 Speaker 10: is the fees that are associated with those types of products. 314 00:15:39,600 --> 00:15:42,520 Speaker 10: So we know that Blackrock is huge in that sort 315 00:15:42,520 --> 00:15:45,600 Speaker 10: of passive realm. That's where fees are lowest, but we 316 00:15:45,680 --> 00:15:48,200 Speaker 10: know that's where investor demand is, so that's where those 317 00:15:48,240 --> 00:15:51,200 Speaker 10: assets are growing quickest. On the other side, in the 318 00:15:51,240 --> 00:15:53,960 Speaker 10: asset management industry, we call it the Barbell strategy. 319 00:15:54,320 --> 00:15:54,720 Speaker 1: Passive. 320 00:15:54,760 --> 00:15:57,480 Speaker 10: On one side, that's low fee, high growth. On the 321 00:15:57,520 --> 00:16:00,200 Speaker 10: other side, you have the higher fee, high growth, and 322 00:16:00,240 --> 00:16:01,080 Speaker 10: that's private market. 323 00:16:01,240 --> 00:16:03,280 Speaker 15: I guess what I'm asking is what is the secret 324 00:16:03,320 --> 00:16:06,080 Speaker 15: sauce that attracts so many clients to them? Is it 325 00:16:06,240 --> 00:16:08,920 Speaker 15: the low fee aspect of this? 326 00:16:09,120 --> 00:16:12,320 Speaker 10: Yeah, I think it's a combination of both both performance 327 00:16:12,480 --> 00:16:15,920 Speaker 10: and sort of competition on price. Right, Blackrock has the 328 00:16:15,920 --> 00:16:19,200 Speaker 10: scale to be competitive on price, so they can effectively 329 00:16:19,280 --> 00:16:23,520 Speaker 10: either undercut competitors or at least justify you know, the 330 00:16:23,560 --> 00:16:28,200 Speaker 10: fees with performance where necessary, and you have Blackrock, that's 331 00:16:28,200 --> 00:16:32,080 Speaker 10: pretty much embedded with all financial services, all at financial 332 00:16:32,080 --> 00:16:36,160 Speaker 10: institutions across the world, wealth advisors down to the self 333 00:16:36,160 --> 00:16:40,640 Speaker 10: directed brokers, you know, defined contribution providers, all of that 334 00:16:40,720 --> 00:16:45,480 Speaker 10: sort of makes their products permeate pretty much everyone's portfolios, 335 00:16:45,520 --> 00:16:47,680 Speaker 10: from retail all the way up to institutional. 336 00:16:47,920 --> 00:16:51,040 Speaker 8: So Neil Blackrock also mentioned the announced that we were 337 00:16:51,040 --> 00:16:53,400 Speaker 8: going to be having a shake up and management. So 338 00:16:53,800 --> 00:16:56,840 Speaker 8: one of its most senior executives, Mark Weedman, will be 339 00:16:56,920 --> 00:16:58,080 Speaker 8: exiting this spring. 340 00:16:58,120 --> 00:17:01,240 Speaker 15: And why would shake things up are going so well, right, 341 00:17:01,400 --> 00:17:02,440 Speaker 15: don't shake anything. 342 00:17:02,760 --> 00:17:06,560 Speaker 8: He was also seen as a potential successor for Larry Fink, 343 00:17:06,640 --> 00:17:07,240 Speaker 8: the CEO. 344 00:17:07,480 --> 00:17:08,480 Speaker 1: So what are. 345 00:17:08,400 --> 00:17:11,040 Speaker 8: Conversations like, what are you hearing in terms of how 346 00:17:11,080 --> 00:17:13,720 Speaker 8: people think about who could potentially replace the CEO? And 347 00:17:13,760 --> 00:17:16,080 Speaker 8: if there's any sort of you know, instability there. 348 00:17:16,400 --> 00:17:20,399 Speaker 10: Yeah, I don't necessarily view these headlines as as a 349 00:17:20,920 --> 00:17:24,399 Speaker 10: you know, indication of instability. I think we know that 350 00:17:24,440 --> 00:17:28,040 Speaker 10: Blackrock has a pretty strong bench. You are, you know, 351 00:17:28,119 --> 00:17:31,600 Speaker 10: at times going to see higher profile people depart certain firms. 352 00:17:32,359 --> 00:17:34,119 Speaker 10: You know, Larry's been at the Helm for you know, 353 00:17:34,200 --> 00:17:37,639 Speaker 10: over thirty years at this point, since co founding Blackrock, 354 00:17:38,080 --> 00:17:41,360 Speaker 10: So that's always sort of been a question that's sort 355 00:17:41,400 --> 00:17:43,879 Speaker 10: of in the back of investors' minds. It doesn't sound 356 00:17:43,960 --> 00:17:46,440 Speaker 10: like it's you know, on the verge of being announced 357 00:17:47,080 --> 00:17:50,879 Speaker 10: or anything changing, but you know, ultimately that's one person 358 00:17:51,080 --> 00:17:54,719 Speaker 10: out that may have been a sort of potential heir 359 00:17:54,880 --> 00:17:57,840 Speaker 10: to the CEO. But we view the bench as pretty 360 00:17:57,840 --> 00:17:59,600 Speaker 10: solid and don't see that as a negative. 361 00:17:59,760 --> 00:18:02,240 Speaker 15: Right, So what do you do for an encore? Larry 362 00:18:02,240 --> 00:18:04,720 Speaker 15: finks this is just the beginning, I think. 363 00:18:04,600 --> 00:18:07,560 Speaker 4: He said, or seventy two years old. 364 00:18:07,800 --> 00:18:11,040 Speaker 10: Yeah, right, And some may even call the past twelve 365 00:18:11,040 --> 00:18:15,320 Speaker 10: months the encore where he strung together three pretty sizable 366 00:18:15,359 --> 00:18:20,240 Speaker 10: transactions in private markets, Global Infrastructure Partners, Prequeen, the private 367 00:18:20,280 --> 00:18:24,360 Speaker 10: market's data provider, and then just recently HPS that has 368 00:18:24,400 --> 00:18:28,280 Speaker 10: significantly shaken up the firm in terms of how those 369 00:18:28,320 --> 00:18:30,119 Speaker 10: fees are going to be generated, where the growth is 370 00:18:30,160 --> 00:18:33,840 Speaker 10: ultimately going to come from. So that's perhaps sort of 371 00:18:33,880 --> 00:18:37,320 Speaker 10: the latest in the legacy of Larry Fink, and ultimately 372 00:18:37,320 --> 00:18:39,879 Speaker 10: where that goes is going to be the question. But 373 00:18:40,320 --> 00:18:42,600 Speaker 10: it feels like more of the same, more on the 374 00:18:42,640 --> 00:18:46,120 Speaker 10: passive etf side of the business as well as now 375 00:18:46,119 --> 00:18:47,200 Speaker 10: into private markets. 376 00:18:47,640 --> 00:18:51,080 Speaker 5: Our thanks to Neil Sipes, Bloomberg Intelligence financials analyst, we 377 00:18:51,200 --> 00:18:54,320 Speaker 5: move next to the renewable energy space. There's been growing 378 00:18:54,400 --> 00:18:57,680 Speaker 5: concern that changes under a new Trump administration could undercut 379 00:18:57,760 --> 00:19:01,320 Speaker 5: US policies that have spurred renewable energy, but according to 380 00:19:01,320 --> 00:19:04,479 Speaker 5: Bloomberg Intelligence, greater private equity involvement and much of the 381 00:19:04,560 --> 00:19:07,560 Speaker 5: S and P five hundred seeking emission cuts could offer 382 00:19:07,680 --> 00:19:10,439 Speaker 5: support for more. Co host Paul Sweenie and I were 383 00:19:10,480 --> 00:19:14,800 Speaker 5: joined by Margo Wenzel, Bloomberg Intelligence Senior ESG research associate. 384 00:19:15,119 --> 00:19:17,679 Speaker 5: We first asked Margaret to talk about the renewable space 385 00:19:17,720 --> 00:19:20,240 Speaker 5: and if it's right for some m and A and consolidation. 386 00:19:20,800 --> 00:19:23,760 Speaker 16: It's a really small market. I will say it's only 387 00:19:23,800 --> 00:19:28,399 Speaker 16: about two percent of total deals currently, but it's growing 388 00:19:28,440 --> 00:19:32,119 Speaker 16: pretty quickly. It's grown around sixty five percent if we 389 00:19:32,200 --> 00:19:35,720 Speaker 16: compare twenty twenty to twenty twenty four versus the prior decade, 390 00:19:36,119 --> 00:19:38,960 Speaker 16: and if we look at the overall market zooming out 391 00:19:38,960 --> 00:19:41,359 Speaker 16: a little bit that has grown around thirty percent. So 392 00:19:41,400 --> 00:19:45,000 Speaker 16: there's definitely some focus there for this particular part of 393 00:19:45,000 --> 00:19:45,720 Speaker 16: the market and. 394 00:19:45,640 --> 00:19:48,240 Speaker 11: Does it slow down under President like Trump and administration. 395 00:19:49,040 --> 00:19:53,400 Speaker 16: I think there's certainly risk for that the changing administration 396 00:19:54,080 --> 00:19:58,040 Speaker 16: definitely presents some challenges. We saw President Trump talk about 397 00:19:58,040 --> 00:20:00,919 Speaker 16: how there will be no wind bild out under his 398 00:20:01,119 --> 00:20:06,200 Speaker 16: off show wind offshore wind YEP, which it presents a challenge. 399 00:20:06,200 --> 00:20:08,960 Speaker 16: But I think we do see some longer term key 400 00:20:09,040 --> 00:20:12,560 Speaker 16: drivers that could continue to propel the momentum of this market, 401 00:20:13,119 --> 00:20:18,560 Speaker 16: especially things like companies have set decarbonization goals. Ninety eight 402 00:20:18,600 --> 00:20:21,160 Speaker 16: percent of the S and P five hundred have set 403 00:20:21,160 --> 00:20:23,840 Speaker 16: emissions reduction targets, a lot of those ending term in 404 00:20:23,920 --> 00:20:26,480 Speaker 16: twenty thirty they've cited M and A is a key 405 00:20:26,520 --> 00:20:30,520 Speaker 16: strategy for that. And then secondly something that everyone is 406 00:20:30,560 --> 00:20:33,399 Speaker 16: talking about AI data center build out. We are going 407 00:20:33,440 --> 00:20:37,080 Speaker 16: to need so much energy for that. IA is saying 408 00:20:37,080 --> 00:20:40,600 Speaker 16: demand's going to increase four percent just this year compared 409 00:20:40,600 --> 00:20:44,199 Speaker 16: to last year, with renewables meeting like seventy five percent 410 00:20:44,240 --> 00:20:47,199 Speaker 16: of that. So I think those long term drivers are 411 00:20:47,240 --> 00:20:47,840 Speaker 16: important to know. 412 00:20:48,320 --> 00:20:52,479 Speaker 14: So generally speaking, in the renewable space, where is the 413 00:20:52,520 --> 00:20:53,200 Speaker 14: growth here? 414 00:20:54,320 --> 00:20:58,680 Speaker 16: It's interesting because renewable energy costs have actually dropped quite 415 00:20:58,680 --> 00:21:01,320 Speaker 16: a lot. We look at SOUL, Solar costs has come 416 00:21:01,359 --> 00:21:05,280 Speaker 16: down over eighty percent since twenty ten, wind over forty 417 00:21:05,320 --> 00:21:09,399 Speaker 16: percent I think it's important to note what Alex mentioned 418 00:21:09,480 --> 00:21:13,600 Speaker 16: about it's offshore wind. Offshore wind has faced a lot 419 00:21:13,600 --> 00:21:17,480 Speaker 16: of challenges recently with regards to supply chain issues and 420 00:21:17,640 --> 00:21:21,000 Speaker 16: rising costs. It's interesting because last year three of the 421 00:21:21,000 --> 00:21:23,359 Speaker 16: biggest deals that we saw in the renewable energy M 422 00:21:23,359 --> 00:21:26,840 Speaker 16: and A space were actually electric utilities selling off stakes 423 00:21:26,840 --> 00:21:31,199 Speaker 16: and their offshore wind and private equity buying that. And 424 00:21:31,240 --> 00:21:33,160 Speaker 16: that was so that they could generate some cash flow 425 00:21:33,200 --> 00:21:34,200 Speaker 16: to pay off those costs. 426 00:21:34,240 --> 00:21:37,080 Speaker 11: It's interesting, where do you think in renewables we'll see 427 00:21:37,119 --> 00:21:40,000 Speaker 11: the most action, because renewables is a huge bucket. Like 428 00:21:40,040 --> 00:21:43,520 Speaker 11: we might wind, you got renewable natural gas. I mean, 429 00:21:43,840 --> 00:21:46,679 Speaker 11: is nuclear now included in renewables with natural gas included 430 00:21:46,680 --> 00:21:49,320 Speaker 11: in renewables? I think it depends on who you ask, right, right, 431 00:21:49,320 --> 00:21:51,600 Speaker 11: clean coal, that's a thing, right. 432 00:21:52,240 --> 00:21:56,680 Speaker 16: I think from a cost standpoint, solar has been adopted 433 00:21:56,720 --> 00:22:01,040 Speaker 16: pretty widely. We're seeing a lot of companies acquiring solar assets, 434 00:22:01,080 --> 00:22:03,000 Speaker 16: so I think solar is a place to watch. And 435 00:22:03,040 --> 00:22:07,160 Speaker 16: as you mentioned, nuclear energy has been a huge focus recently. 436 00:22:07,400 --> 00:22:09,879 Speaker 16: There's still opportunity for costs to come down there, but 437 00:22:10,600 --> 00:22:11,600 Speaker 16: definitely a focus. 438 00:22:11,880 --> 00:22:15,640 Speaker 14: So where are we in terms of you think kind 439 00:22:15,680 --> 00:22:20,000 Speaker 14: of just the evolution to deploying renewable energy, where are 440 00:22:20,040 --> 00:22:22,800 Speaker 14: we VISA v the goals as the US and as 441 00:22:22,920 --> 00:22:24,600 Speaker 14: US different from other parts of the world. 442 00:22:25,160 --> 00:22:29,960 Speaker 16: Yeah, I think the IRA has definitely improved adoption in 443 00:22:30,040 --> 00:22:32,880 Speaker 16: the US. We're probably seeing a little bit more adoption 444 00:22:33,240 --> 00:22:37,680 Speaker 16: in Europe just from a policy standpoint. But yeah, I 445 00:22:37,680 --> 00:22:39,440 Speaker 16: guess it'll be interesting to see what happens. 446 00:22:39,720 --> 00:22:43,879 Speaker 11: Yeah, it feels like the two areas. Definitely, EVIS is 447 00:22:43,880 --> 00:22:45,880 Speaker 11: going to be a risk and the Department of Loan 448 00:22:45,960 --> 00:22:48,240 Speaker 11: programs right and that, but that would go to fund 449 00:22:48,240 --> 00:22:50,320 Speaker 11: many different things, Like it wouldn't just be like super 450 00:22:50,359 --> 00:22:53,800 Speaker 11: weird green Techi's things, It was like real projects. Also, 451 00:22:54,560 --> 00:22:57,760 Speaker 11: those threats impact M and A or as you pointed out, 452 00:22:57,800 --> 00:23:01,119 Speaker 11: are these like longer term, multi year dis. 453 00:23:01,200 --> 00:23:04,359 Speaker 16: I think they could impact renewable energy emity in the 454 00:23:04,400 --> 00:23:07,480 Speaker 16: short term. I mean the IRA is it's a broad 455 00:23:07,520 --> 00:23:08,920 Speaker 16: piece act. 456 00:23:10,600 --> 00:23:10,800 Speaker 1: Yeah. 457 00:23:10,840 --> 00:23:14,520 Speaker 14: Sorry, but is there rich that President Trump could unwind 458 00:23:14,600 --> 00:23:16,040 Speaker 14: the Inflation Reduction Act? 459 00:23:16,320 --> 00:23:19,400 Speaker 16: Yeah, I mean it's such a broad piece of legislation. 460 00:23:19,480 --> 00:23:22,560 Speaker 16: There are so many policies involved. He's been pretty vocal 461 00:23:22,600 --> 00:23:25,160 Speaker 16: about rolling back certain parts of it, like the ev 462 00:23:25,280 --> 00:23:29,200 Speaker 16: tax credits, for example, but it's pretty unclear exactly how 463 00:23:29,240 --> 00:23:31,479 Speaker 16: that would work, and it would take a lot of 464 00:23:31,520 --> 00:23:35,160 Speaker 16: time to really unwind policies within the and. 465 00:23:35,119 --> 00:23:37,240 Speaker 11: Some of it you can't do unless you have Congress too, 466 00:23:37,280 --> 00:23:40,440 Speaker 11: So there is right, So there is that as well. 467 00:23:41,000 --> 00:23:43,600 Speaker 11: Last question, Paul didn't ask it, so I will is 468 00:23:43,840 --> 00:23:44,760 Speaker 11: ESG still a thing? 469 00:23:45,640 --> 00:23:48,080 Speaker 4: Yes, but there's a butt. I can look at our 470 00:23:48,119 --> 00:23:49,000 Speaker 4: face and see there's a butt. 471 00:23:49,080 --> 00:23:51,239 Speaker 16: I think ESG is still a thing. At the end 472 00:23:51,240 --> 00:23:55,440 Speaker 16: of the day. I think esg's broad it's it's good investing. 473 00:23:56,040 --> 00:23:59,639 Speaker 16: We have a ESG team here within BI and the 474 00:23:59,640 --> 00:24:02,959 Speaker 16: research we do and we'll continue to do, is going 475 00:24:03,040 --> 00:24:06,600 Speaker 16: to be around. Are their investment risks and opportunities associated 476 00:24:06,640 --> 00:24:09,159 Speaker 16: with ESG themes. So I think it's here to stay, 477 00:24:09,640 --> 00:24:13,280 Speaker 16: but we are weathering some challenges associated with the changing administration. 478 00:24:13,600 --> 00:24:16,800 Speaker 5: Our thanks to Margot Wenzel, Bloomberg Intelligence and your ESG 479 00:24:17,000 --> 00:24:19,679 Speaker 5: research associate. Coming up on the program, a look at 480 00:24:19,680 --> 00:24:21,880 Speaker 5: how the world's number one auto maker has kept its 481 00:24:21,920 --> 00:24:25,080 Speaker 5: focus on hybrids and gas guzzlers for better and worse. 482 00:24:25,400 --> 00:24:28,600 Speaker 5: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 483 00:24:28,640 --> 00:24:31,040 Speaker 5: depth research and data on some two thousand companies in 484 00:24:31,080 --> 00:24:34,400 Speaker 5: one hundred and thirty industries. You can access Bloomberg Intelligence 485 00:24:34,440 --> 00:24:37,560 Speaker 5: through Bigo on the terminal. I'm Alex Steel, and this 486 00:24:37,880 --> 00:24:38,480 Speaker 5: is Bloomberg. 487 00:24:43,320 --> 00:24:46,879 Speaker 2: You were listening to the Bloomberg Intelligence podcast. Catch the 488 00:24:46,920 --> 00:24:50,640 Speaker 2: program live weekdays at ten am Eastern on Apple CarPlay 489 00:24:50,680 --> 00:24:53,520 Speaker 2: and Android Auto with the Bloomberg Business app. You can 490 00:24:53,560 --> 00:24:56,719 Speaker 2: also listen live on Amazon Alexa from our flagship New 491 00:24:56,800 --> 00:24:59,720 Speaker 2: York station. Just say Alexa play Bloomberg eleven. 492 00:25:00,840 --> 00:25:03,399 Speaker 5: We take a look next at the media streaming space. 493 00:25:03,600 --> 00:25:05,760 Speaker 5: Co host Paul Sweenie and I were recently joined by 494 00:25:05,760 --> 00:25:09,000 Speaker 5: Mark Douglas, President and CEO of Mountain, and he joined 495 00:25:09,040 --> 00:25:11,600 Speaker 5: to discuss what he expects in the media streaming landscape 496 00:25:11,600 --> 00:25:14,639 Speaker 5: this year. We began the conversation with live sports and 497 00:25:14,680 --> 00:25:18,000 Speaker 5: ask Mark how that will migrate into streaming moving forward. 498 00:25:18,480 --> 00:25:21,239 Speaker 12: Well, I think you're seeing a few things happening at 499 00:25:21,240 --> 00:25:24,320 Speaker 12: the same time what you just mentioned, which is Netflix 500 00:25:24,320 --> 00:25:28,720 Speaker 12: getting into sports. Also ESPN is coming like fully to streaming. 501 00:25:28,840 --> 00:25:33,320 Speaker 12: So I think the advertisers really like they still are 502 00:25:33,320 --> 00:25:36,320 Speaker 12: addicted to kind of like big audiences watching at the 503 00:25:36,359 --> 00:25:40,280 Speaker 12: same time, so they can create big moments and so 504 00:25:40,520 --> 00:25:43,000 Speaker 12: these networks they want to commodate that, but they're going 505 00:25:43,040 --> 00:25:45,800 Speaker 12: to start accommodating that on streaming in twenty and twenty five. 506 00:25:45,880 --> 00:25:46,800 Speaker 1: It's already happening. 507 00:25:46,840 --> 00:25:49,480 Speaker 12: But now you hear from Disney, you hear from Netflix, 508 00:25:49,480 --> 00:25:51,760 Speaker 12: they're really going all in on it. I think ESPN 509 00:25:51,840 --> 00:25:54,399 Speaker 12: on streaming, really going full in on streaming is a 510 00:25:54,400 --> 00:25:54,880 Speaker 12: big deal. 511 00:25:55,400 --> 00:25:58,280 Speaker 11: Will the ad revenue for that live streaming of sports 512 00:25:58,320 --> 00:25:59,280 Speaker 11: follow I. 513 00:25:59,200 --> 00:26:00,960 Speaker 1: Think it will. I think the. 514 00:26:02,520 --> 00:26:05,600 Speaker 12: Netflix in particular is a big advantage because so many 515 00:26:05,640 --> 00:26:08,320 Speaker 12: people go to Netflix as their first source, so they 516 00:26:08,320 --> 00:26:11,679 Speaker 12: can turn something that might not have been that big 517 00:26:12,520 --> 00:26:15,120 Speaker 12: into a big moment. They did that with the Tyson 518 00:26:15,320 --> 00:26:18,159 Speaker 12: Jake Paul fight. I think they're gonna do that with 519 00:26:18,359 --> 00:26:23,040 Speaker 12: WWE on Monday, where people who normally wouldn't watch WWE 520 00:26:23,359 --> 00:26:25,119 Speaker 12: are going to turn on the TV and that's what 521 00:26:25,160 --> 00:26:27,399 Speaker 12: they see and they're gonna, you know, click and watch, 522 00:26:27,760 --> 00:26:32,040 Speaker 12: and so they able to kind of amplify these sports events. 523 00:26:32,080 --> 00:26:36,320 Speaker 12: But Disney, with ABC and all their other and especially ESPN, 524 00:26:36,800 --> 00:26:38,919 Speaker 12: also has ability to deliver a big audience. 525 00:26:39,000 --> 00:26:40,000 Speaker 1: I think they'll do the same. 526 00:26:40,359 --> 00:26:43,480 Speaker 3: You were really early on on the Netflix story, Mark, 527 00:26:43,880 --> 00:26:47,240 Speaker 3: Are you still as bullish about them, because one could 528 00:26:47,359 --> 00:26:50,560 Speaker 3: argue it's a whole new competitive landscape here these days. 529 00:26:51,000 --> 00:26:55,320 Speaker 12: Yeah, I think where you go first, you know, in 530 00:26:55,359 --> 00:26:59,240 Speaker 12: some sense, the modern day TV guy is a really, 531 00:26:59,320 --> 00:27:03,159 Speaker 12: really big and as long as Netflix owns that spot, 532 00:27:03,240 --> 00:27:07,000 Speaker 12: I think there's data to show that well more than 533 00:27:07,000 --> 00:27:09,720 Speaker 12: fifty percent of people when they turn on the TV, 534 00:27:09,880 --> 00:27:12,800 Speaker 12: the first app because now you like start an app 535 00:27:12,880 --> 00:27:15,439 Speaker 12: rather than change the channel, the first app they go 536 00:27:15,520 --> 00:27:19,040 Speaker 12: to is Netflix. As long as you own that spot, 537 00:27:19,400 --> 00:27:22,800 Speaker 12: you will own, you know, kind of be the leader 538 00:27:22,960 --> 00:27:27,160 Speaker 12: in streaming. But it requires a big investment in content. 539 00:27:27,359 --> 00:27:30,000 Speaker 12: People go there first because that's the first place they 540 00:27:30,040 --> 00:27:30,720 Speaker 12: think there's. 541 00:27:30,520 --> 00:27:31,920 Speaker 1: Going to be new content. 542 00:27:32,040 --> 00:27:34,679 Speaker 12: So Netflix is going to have to keep beating that machine. 543 00:27:34,680 --> 00:27:37,359 Speaker 12: And they're doing it now, and they're doing it profitably, 544 00:27:37,520 --> 00:27:39,720 Speaker 12: so you know, all of that combined I think keeps 545 00:27:39,720 --> 00:27:43,120 Speaker 12: them in the lead until they they until they make 546 00:27:43,160 --> 00:27:46,520 Speaker 12: a strategic error essentially, and maybe you know, get cheap 547 00:27:46,520 --> 00:27:49,119 Speaker 12: about how much you're willing to spend on content people 548 00:27:49,160 --> 00:27:49,960 Speaker 12: abandon them. 549 00:27:50,280 --> 00:27:50,520 Speaker 9: Mark. 550 00:27:50,560 --> 00:27:53,800 Speaker 5: When it comes to the next step, then are we 551 00:27:53,840 --> 00:27:56,199 Speaker 5: going to see bundles? Like you said, it's Netflix is 552 00:27:56,280 --> 00:27:58,640 Speaker 5: like basically raced to lose at the end of the day. 553 00:27:58,920 --> 00:28:02,639 Speaker 12: Yeah, I mean bundles in the form of acquisitions. 554 00:28:02,640 --> 00:28:03,159 Speaker 1: I think. 555 00:28:04,080 --> 00:28:07,520 Speaker 12: So there's some loose bundles now that don't involve acquisitions. 556 00:28:07,560 --> 00:28:10,720 Speaker 12: But I mean what's happening in twenty twenty five is 557 00:28:10,920 --> 00:28:14,199 Speaker 12: every network is all in on streaming. I mean I 558 00:28:14,280 --> 00:28:16,920 Speaker 12: talk to executives at all these networks. W this is 559 00:28:16,960 --> 00:28:19,800 Speaker 12: pretty regularly all that I mean, linear doesn't even come 560 00:28:19,800 --> 00:28:20,800 Speaker 12: out of their mouth anymore. 561 00:28:20,840 --> 00:28:22,120 Speaker 1: That's a legacy business. 562 00:28:23,920 --> 00:28:25,800 Speaker 12: You know, the viewers are still there, so they still 563 00:28:25,800 --> 00:28:27,760 Speaker 12: have to migrate them, but they only want to talk 564 00:28:27,800 --> 00:28:31,160 Speaker 12: about streaming and the you know, the big winners I've 565 00:28:31,160 --> 00:28:33,280 Speaker 12: said this many times are the ones where I can 566 00:28:33,400 --> 00:28:34,359 Speaker 12: name them and you can. 567 00:28:34,240 --> 00:28:36,119 Speaker 1: Tell me why you go there and watch them. 568 00:28:36,560 --> 00:28:39,440 Speaker 12: And so those winners are going to started consolidating the 569 00:28:39,480 --> 00:28:43,400 Speaker 12: buy content and it's already under way, and that that 570 00:28:43,400 --> 00:28:45,800 Speaker 12: that's kind of what's going to have that bundles in 571 00:28:45,800 --> 00:28:49,160 Speaker 12: the form of let's just start buying content and buying 572 00:28:49,200 --> 00:28:52,120 Speaker 12: these brands which are going to disappear like old you know, 573 00:28:52,760 --> 00:28:56,720 Speaker 12: car companies that that you never hear about anymore. 574 00:28:56,800 --> 00:28:58,520 Speaker 1: Something you know, similar to that. 575 00:28:58,680 --> 00:29:01,360 Speaker 3: Are the economics Are they as good in streaming? 576 00:29:01,520 --> 00:29:01,720 Speaker 1: Mark? 577 00:29:01,800 --> 00:29:03,360 Speaker 3: Do we know that. I mean, it seems like they're 578 00:29:03,360 --> 00:29:04,320 Speaker 3: pretty good for Netflix. 579 00:29:04,760 --> 00:29:07,240 Speaker 12: They're good for Netflix, and I think starting to get 580 00:29:07,240 --> 00:29:10,640 Speaker 12: good for Disney. And you know, it's when do you 581 00:29:10,720 --> 00:29:15,000 Speaker 12: reach a critical mass of subscribers that is more than 582 00:29:15,200 --> 00:29:18,120 Speaker 12: your cost of acquisition for the consumers and the costs 583 00:29:18,120 --> 00:29:21,600 Speaker 12: of the content. And Netflix is clearly at that point. 584 00:29:21,640 --> 00:29:24,840 Speaker 12: I think Disney is. If not, I think I think 585 00:29:25,200 --> 00:29:29,160 Speaker 12: Disney Plus is now profitable. I hope they don't underinvest 586 00:29:29,280 --> 00:29:33,520 Speaker 12: in content to maintain that profitability, and so and a 587 00:29:33,560 --> 00:29:35,240 Speaker 12: few others are going to follow it. I think the 588 00:29:35,280 --> 00:29:38,480 Speaker 12: business is going to become very, very profitable, and it's 589 00:29:38,520 --> 00:29:40,720 Speaker 12: going to go back to being a growth business. That's 590 00:29:40,720 --> 00:29:43,680 Speaker 12: been the story of Linear is it grows at one 591 00:29:43,720 --> 00:29:46,960 Speaker 12: percent a year, and streaming has obviously grown a lot faster. 592 00:29:47,080 --> 00:29:49,080 Speaker 12: So hopefully the whole industry is going to grow a 593 00:29:49,080 --> 00:29:49,600 Speaker 12: lot faster. 594 00:29:50,040 --> 00:29:52,960 Speaker 11: If everyone's talking about streaming, are the ad pricing that 595 00:29:53,560 --> 00:29:56,920 Speaker 11: a streamer can get as good as Linear? And then 596 00:29:57,080 --> 00:29:59,160 Speaker 11: if not, when does that ship turn? 597 00:29:59,760 --> 00:30:01,120 Speaker 1: Yeah, it is as good. 598 00:30:02,040 --> 00:30:05,280 Speaker 12: The ad load is not quite as high, and so 599 00:30:05,400 --> 00:30:08,160 Speaker 12: consumers are probably happy about that. They see fewer ads, 600 00:30:08,200 --> 00:30:11,320 Speaker 12: but the ad load will probably catch up and so 601 00:30:11,440 --> 00:30:13,920 Speaker 12: the pricing is about the same, meaning how much money 602 00:30:13,920 --> 00:30:18,040 Speaker 12: can you make per consumer is about the same. One 603 00:30:18,080 --> 00:30:21,280 Speaker 12: thing also just switching back ear so, you know, kind 604 00:30:21,280 --> 00:30:24,640 Speaker 12: of the previous topic. The interesting thing about Netflix is 605 00:30:24,680 --> 00:30:27,400 Speaker 12: they're profitable while they're bringing one out of every two 606 00:30:27,520 --> 00:30:32,200 Speaker 12: subscribers is paying the lowest possible price with ads supported, 607 00:30:32,360 --> 00:30:35,600 Speaker 12: and they're not selling many ads right, They're still relatively 608 00:30:35,640 --> 00:30:39,160 Speaker 12: small in the ad game, and so it bodes well 609 00:30:39,200 --> 00:30:41,400 Speaker 12: for how profitable this company is going to become. I 610 00:30:41,400 --> 00:30:43,760 Speaker 12: think it's five pot ninety nine price point is the 611 00:30:43,840 --> 00:30:48,800 Speaker 12: cheapest price point to join Netflix, and they remain profitable, 612 00:30:49,280 --> 00:30:52,600 Speaker 12: not actually expanding profits at that price point, and the 613 00:30:52,680 --> 00:30:55,120 Speaker 12: media dollars are going to show up and make this 614 00:30:55,200 --> 00:30:59,720 Speaker 12: company incredibly profitable. So that's back to the question about 615 00:30:59,800 --> 00:31:01,680 Speaker 12: you know, is the industry going to grow? 616 00:31:02,160 --> 00:31:03,520 Speaker 1: Is the profitability going to be there? 617 00:31:03,600 --> 00:31:05,080 Speaker 12: Yeah, it's going to be there pretty big, and the 618 00:31:05,200 --> 00:31:06,920 Speaker 12: particularly pretty large for Netflix. 619 00:31:07,080 --> 00:31:09,440 Speaker 3: Is there a sense mark how many streamers can be 620 00:31:09,560 --> 00:31:13,000 Speaker 3: economically supported in this marketplace? 621 00:31:13,360 --> 00:31:16,320 Speaker 12: I wouldn't call it unlimited demand for TV advertising, but 622 00:31:16,360 --> 00:31:19,400 Speaker 12: there's a lot of demand. The pricing has been coming 623 00:31:19,440 --> 00:31:22,440 Speaker 12: down a bit because of the competition. You had you know, 624 00:31:22,520 --> 00:31:25,479 Speaker 12: like Netflix started to really come on board, Disney plus 625 00:31:26,240 --> 00:31:30,720 Speaker 12: Amazon Prime. Now every subscriber receives ads. There's not even 626 00:31:30,720 --> 00:31:33,440 Speaker 12: a way to opt out, and so all of that 627 00:31:33,560 --> 00:31:38,120 Speaker 12: new inventory is definitely bringing prices down, triggering a little 628 00:31:38,120 --> 00:31:40,960 Speaker 12: bit of a price war. But I think that'll shake 629 00:31:41,000 --> 00:31:43,720 Speaker 12: out when you combine that with the acquisition spree that's 630 00:31:43,760 --> 00:31:46,720 Speaker 12: probably gonna happen over the next few years. I think 631 00:31:46,760 --> 00:31:49,600 Speaker 12: pricing will temporarily dip then start to go back up. 632 00:31:49,880 --> 00:31:51,440 Speaker 12: And the main thing is you have a lot of 633 00:31:51,520 --> 00:31:55,440 Speaker 12: new advertisers comeing in market, a lot smaller, younger, mid 634 00:31:55,480 --> 00:31:58,760 Speaker 12: sized companies, smaller companies and bringing new revenue that will 635 00:31:58,920 --> 00:32:01,040 Speaker 12: will drive up revenue for the whole industry. 636 00:32:01,520 --> 00:32:03,800 Speaker 5: Mark are we ever going to see the streamers get 637 00:32:03,800 --> 00:32:06,080 Speaker 5: really into news talking about live? I know that some 638 00:32:06,120 --> 00:32:09,640 Speaker 5: of them have their own streaming news part, right like 639 00:32:09,720 --> 00:32:11,000 Speaker 5: CBS Now, et cetera. 640 00:32:11,080 --> 00:32:12,480 Speaker 4: How do you think that part evolves. 641 00:32:12,880 --> 00:32:16,080 Speaker 12: I think probably not, And the reason is is because 642 00:32:16,920 --> 00:32:20,000 Speaker 12: no one really, I think fully understood in their recent 643 00:32:20,080 --> 00:32:24,360 Speaker 12: years that like social media is a big competitor in news, 644 00:32:24,440 --> 00:32:26,239 Speaker 12: so they get the kind of news that people are 645 00:32:26,280 --> 00:32:29,880 Speaker 12: getting literally right now listening to you, I think that's 646 00:32:29,920 --> 00:32:33,280 Speaker 12: going to remain relatively independent. I don't see like Netflix 647 00:32:33,320 --> 00:32:38,320 Speaker 12: and Disney getting into that and so and I've never, 648 00:32:38,480 --> 00:32:41,680 Speaker 12: honestly never hear from any of these companies about news. 649 00:32:41,720 --> 00:32:44,120 Speaker 12: They only want to talk about sports and entertainment. 650 00:32:44,640 --> 00:32:47,959 Speaker 5: Thanks to Mark Douglas, President and CEO of Mountain, this 651 00:32:48,040 --> 00:32:50,480 Speaker 5: week we focus on a Bloomberg Big Take story titled 652 00:32:50,560 --> 00:32:53,920 Speaker 5: Toyota's recent success is getting in the way of its future. 653 00:32:54,240 --> 00:32:56,080 Speaker 5: You can find it on Bloomberg dot Com and on 654 00:32:56,160 --> 00:32:58,520 Speaker 5: the Terminal, and the story looks at how the world's 655 00:32:58,600 --> 00:33:01,520 Speaker 5: number one automaker has came. It's focused on hybrids and 656 00:33:01,600 --> 00:33:05,000 Speaker 5: gas guzzlers for better and worse For more. Guest hosts 657 00:33:05,000 --> 00:33:07,920 Speaker 5: Matt Miller and normal Inda spoke with Chester Dawson, Bloomberg 658 00:33:08,000 --> 00:33:09,520 Speaker 5: Senior editor tode Is. 659 00:33:10,080 --> 00:33:12,440 Speaker 17: You know they're kicking it and taking names right. I mean, 660 00:33:12,440 --> 00:33:16,640 Speaker 17: they're the world's largest automaker, full stop. They're highly profitable, 661 00:33:17,840 --> 00:33:22,400 Speaker 17: and they've got you know, business growing and markets right 662 00:33:22,400 --> 00:33:25,600 Speaker 17: around the world. But they too haven't quite figured out 663 00:33:25,600 --> 00:33:29,160 Speaker 17: eves and you know, it's it's it's keeping them up 664 00:33:29,200 --> 00:33:31,520 Speaker 17: at night because they realized that, you know, by looking 665 00:33:31,600 --> 00:33:35,120 Speaker 17: over their shoulder. The Tesla's and about three dozen Chinese 666 00:33:35,600 --> 00:33:37,960 Speaker 17: ev makers that nobody in this country's ever heard of, 667 00:33:38,560 --> 00:33:42,280 Speaker 17: are are quickly creeping up with products that cost a 668 00:33:42,280 --> 00:33:45,320 Speaker 17: lot less and have just as much, if not better, 669 00:33:45,560 --> 00:33:49,280 Speaker 17: you know, cockpit technology, and are flooding into work at markets, 670 00:33:49,360 --> 00:33:52,920 Speaker 17: you know, in places like Africa and Southeast Asia and 671 00:33:53,000 --> 00:33:56,040 Speaker 17: the Middle East, among others. And and they've got to 672 00:33:56,040 --> 00:33:58,040 Speaker 17: figure out what to do about it. So yeah, the 673 00:33:58,080 --> 00:34:01,360 Speaker 17: scene that that that you describe it, you know, they 674 00:34:01,400 --> 00:34:06,920 Speaker 17: have it's actually a specially reverse engineering company that that 675 00:34:07,120 --> 00:34:09,879 Speaker 17: has these facilities. And you know, the fact that they 676 00:34:09,880 --> 00:34:14,600 Speaker 17: put one in Japan, you know, uh is is I 677 00:34:14,600 --> 00:34:16,960 Speaker 17: think telling you know, they realize that the world's largest 678 00:34:16,960 --> 00:34:20,080 Speaker 17: dottomaker and Japan's largest automaker by the way, you know, 679 00:34:20,080 --> 00:34:22,480 Speaker 17: it was kind of interested in and peeling apart the 680 00:34:22,480 --> 00:34:24,920 Speaker 17: onion and finding out how it is that Tesla and 681 00:34:24,920 --> 00:34:28,520 Speaker 17: the Chinese can make these things so darn cheaply. By 682 00:34:28,520 --> 00:34:30,719 Speaker 17: the way, I'll just mention that there's also a facility 683 00:34:31,200 --> 00:34:34,520 Speaker 17: right here in suburban Detroit. It's in a former milk 684 00:34:34,600 --> 00:34:38,799 Speaker 17: processing facility, so not a not a junior high school gymnasium, 685 00:34:38,920 --> 00:34:41,080 Speaker 17: but but they do the same thing for the Detroit 686 00:34:41,120 --> 00:34:42,319 Speaker 17: three to show them. 687 00:34:42,480 --> 00:34:45,680 Speaker 7: So they take they take a by d seagull apart 688 00:34:45,800 --> 00:34:47,960 Speaker 7: there and say, like, how did they do this so 689 00:34:48,080 --> 00:34:49,120 Speaker 7: well for so little? 690 00:34:49,560 --> 00:34:53,000 Speaker 17: Exactly? They take it, they literally strip it part by part, 691 00:34:53,080 --> 00:34:56,840 Speaker 17: piece by piece. They X ray, you know, each piece 692 00:34:56,960 --> 00:34:59,600 Speaker 17: to determine, you know, what it's made of, how much 693 00:34:59,640 --> 00:35:01,560 Speaker 17: it weigh. You know, some of the interior things that 694 00:35:02,000 --> 00:35:05,200 Speaker 17: can't be seen, but I saw, for example, they had 695 00:35:05,200 --> 00:35:07,880 Speaker 17: a cyber truck in there and they had the battery 696 00:35:07,920 --> 00:35:09,520 Speaker 17: pack and they ripped off the top of it and 697 00:35:09,560 --> 00:35:13,799 Speaker 17: you could literally see all those prismatic cylinder batteries stacked up, 698 00:35:14,280 --> 00:35:17,640 Speaker 17: you know, like so many bowling pins, which I'd never 699 00:35:17,640 --> 00:35:20,120 Speaker 17: seen before. I mean, it's kind of cool, but it's 700 00:35:20,160 --> 00:35:22,880 Speaker 17: also very frightening to these executives at companies who are 701 00:35:22,880 --> 00:35:25,239 Speaker 17: trying to figure out, you know, because I mean the 702 00:35:25,280 --> 00:35:27,319 Speaker 17: other thing about this is and this we get into 703 00:35:27,320 --> 00:35:29,520 Speaker 17: this in the story. You know, Toyda knows how to 704 00:35:29,520 --> 00:35:32,840 Speaker 17: make an internal combustion engine vehicle or even a hybrid 705 00:35:33,160 --> 00:35:36,160 Speaker 17: very very well. They are in many ways the world's 706 00:35:36,280 --> 00:35:37,400 Speaker 17: leading experts on it, and. 707 00:35:37,480 --> 00:35:42,400 Speaker 7: People says from Toyota right their their production their production 708 00:35:42,520 --> 00:35:45,960 Speaker 7: methods are have been world famous since the since the 709 00:35:46,000 --> 00:35:47,280 Speaker 7: eighties exactly. 710 00:35:47,400 --> 00:35:49,480 Speaker 17: Yeah, and we get into that too, the kind of 711 00:35:49,520 --> 00:35:52,520 Speaker 17: somewhat mystical may the Force be with you, Toyta Production 712 00:35:52,680 --> 00:35:56,440 Speaker 17: System and Kaizen and just in Time and lean manufacturing, 713 00:35:56,840 --> 00:35:59,760 Speaker 17: all that stuff, you know, comes straight out of Toda City. 714 00:36:00,400 --> 00:36:02,520 Speaker 17: But it's not. It just turns out it's not so 715 00:36:02,680 --> 00:36:07,840 Speaker 17: relevant in the world of you know, modular manufacturing vehicles 716 00:36:07,840 --> 00:36:10,680 Speaker 17: that have many fewer parts and you know, a lot 717 00:36:11,280 --> 00:36:14,880 Speaker 17: different technology. So trying to you know, Toda's trying to 718 00:36:14,920 --> 00:36:18,600 Speaker 17: put a square peg into a round hole and it's 719 00:36:18,600 --> 00:36:21,520 Speaker 17: not alone, right, I mean, and we chronicled how other automakers, 720 00:36:21,760 --> 00:36:25,600 Speaker 17: you know, Volkswagen, Ford, General Motors, they're all struggling to 721 00:36:25,640 --> 00:36:29,240 Speaker 17: figure this out. But in some ways TPS Tota Production 722 00:36:29,360 --> 00:36:31,799 Speaker 17: System actually seems to kind of get in Toto's own 723 00:36:31,840 --> 00:36:35,240 Speaker 17: way because they're so imbued with this there. It's almost 724 00:36:35,280 --> 00:36:40,640 Speaker 17: this reverential philosophy that permeates everything in Toyota. You know, 725 00:36:40,680 --> 00:36:42,759 Speaker 17: how do you kind of think outside the box when 726 00:36:43,040 --> 00:36:45,600 Speaker 17: everyone in the company is trying to think a certain 727 00:36:45,640 --> 00:36:49,640 Speaker 17: way to kind of hone and shape and incrementally improve things. 728 00:36:50,280 --> 00:36:52,279 Speaker 17: You know, that doesn't help when you're looking at a 729 00:36:52,320 --> 00:36:54,520 Speaker 17: revolutionary change, how. 730 00:36:54,400 --> 00:36:57,240 Speaker 8: Important is it that Toyota catches up in the EV transition? 731 00:36:57,280 --> 00:36:59,799 Speaker 8: If you're thinking from a US perspective, maybe there isn't 732 00:36:59,800 --> 00:37:02,400 Speaker 8: as much demand for EV's, but more globally, how important 733 00:37:02,400 --> 00:37:03,200 Speaker 8: is it that they catch up? 734 00:37:03,400 --> 00:37:06,440 Speaker 17: Well, Laura, that's a good question. You know, it isn't 735 00:37:06,760 --> 00:37:10,600 Speaker 17: super relevant in this market right here and now, except 736 00:37:10,640 --> 00:37:13,880 Speaker 17: for one thing. They've invested thirteen billion dollars in a 737 00:37:14,000 --> 00:37:18,759 Speaker 17: giant lithium ion battery factory in a rural part of 738 00:37:18,800 --> 00:37:22,080 Speaker 17: North Carolina. So if they're not going to be selling evs, 739 00:37:22,120 --> 00:37:23,759 Speaker 17: they got to figure out what to do with that 740 00:37:23,880 --> 00:37:24,880 Speaker 17: sunk investment, all right. 741 00:37:24,880 --> 00:37:27,320 Speaker 5: Thanks to Chester Dawson, Bloomberg Senior Editor. 742 00:37:27,960 --> 00:37:32,360 Speaker 2: This is a Bloomberg Intelligence podcast, available on Apple, Spotify, 743 00:37:32,480 --> 00:37:35,759 Speaker 2: and anywhere else you get your podcasts. Listen live each 744 00:37:35,800 --> 00:37:38,920 Speaker 2: weekday ten am to noon Eastern on Bloomberg dot Com, 745 00:37:38,960 --> 00:37:42,360 Speaker 2: the iHeartRadio app, tune In, and the Bloomberg Business App. 746 00:37:42,520 --> 00:37:45,440 Speaker 2: You can also watch us live every weekday on YouTube 747 00:37:45,640 --> 00:37:47,480 Speaker 2: and always on the Bloomberg terminal