1 00:00:00,080 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Daily we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:28,000 Speaker 1: Bloomberg dot com, and of course on the Bloomberg Julia 5 00:00:28,120 --> 00:00:31,080 Speaker 1: Cornado with US with mecro policy perspectives. Let's rip up 6 00:00:31,080 --> 00:00:35,040 Speaker 1: the script. Teva Pharmaceuticals laying off at a jillion people. 7 00:00:35,520 --> 00:00:37,960 Speaker 1: You know, there's gonna be layoffs in the Fox Disney 8 00:00:37,960 --> 00:00:42,159 Speaker 1: meeting as well. Companies have tebenomenal g d P. They 9 00:00:42,200 --> 00:00:45,360 Speaker 1: have little idea where revenue growth is coming from. So 10 00:00:45,360 --> 00:00:48,400 Speaker 1: they're all the good consolidate and mate, that's the fear 11 00:00:48,520 --> 00:00:52,560 Speaker 1: of the American public. The chair yelling danced around yesterday. 12 00:00:53,040 --> 00:00:56,840 Speaker 1: What is economic growth? Well, look, I mean economic growth 13 00:00:56,840 --> 00:00:59,760 Speaker 1: has actually been a little bit better over the last year, 14 00:00:59,800 --> 00:01:01,880 Speaker 1: and it's been a little bit more broad based. And yes, 15 00:01:01,960 --> 00:01:05,640 Speaker 1: companies are still very, very focused on cost cutting. We 16 00:01:05,720 --> 00:01:09,319 Speaker 1: see that in its very subdued wage growth continuing to 17 00:01:09,400 --> 00:01:12,480 Speaker 1: be the norm rather than an upward trend that we 18 00:01:12,520 --> 00:01:16,360 Speaker 1: would expect with this low unemployment. But I think overall, 19 00:01:16,400 --> 00:01:20,000 Speaker 1: you know, the US corporate sector of the US economy 20 00:01:20,280 --> 00:01:23,640 Speaker 1: is in seeing broader growth in its scene in many years, 21 00:01:23,680 --> 00:01:25,920 Speaker 1: and that's that's good news. I mean, I think, what 22 00:01:26,000 --> 00:01:29,360 Speaker 1: did Cherry yell and say that there's fewer things that 23 00:01:29,480 --> 00:01:32,040 Speaker 1: keep her up at night than than there have been 24 00:01:32,040 --> 00:01:36,440 Speaker 1: in many years? So so it's it's not four percent, perhaps, 25 00:01:36,560 --> 00:01:39,000 Speaker 1: but it is well pretty decent. You know. I look 26 00:01:39,040 --> 00:01:42,120 Speaker 1: at the subheadline John Ferrell, benefits to consumers in Disney. 27 00:01:42,160 --> 00:01:44,759 Speaker 1: You wonder what the benefits is to the employees. Yeah, 28 00:01:44,840 --> 00:01:47,000 Speaker 1: that you imagine that costs are going to go down, 29 00:01:47,040 --> 00:01:48,840 Speaker 1: and you imagine people will get laid off. And may 30 00:01:48,880 --> 00:01:51,160 Speaker 1: we struck me about the meeting yesterday with the Federal 31 00:01:51,200 --> 00:01:55,200 Speaker 1: Reserve with Chair Yellen doubting this administration's ability to get 32 00:01:55,200 --> 00:01:58,960 Speaker 1: GDP up to full Well, I mean, any economist, every economist, 33 00:01:58,960 --> 00:02:03,400 Speaker 1: Republican and Democo. There isn't a single economist well, there 34 00:02:03,440 --> 00:02:08,160 Speaker 1: may be a one or two, but but but actually 35 00:02:08,200 --> 00:02:11,880 Speaker 1: even a lot of of Republican economists that have worked 36 00:02:11,880 --> 00:02:17,239 Speaker 1: for prior administrations, you can't um practice economics seriously and 37 00:02:17,400 --> 00:02:20,200 Speaker 1: think that we can have sustainable four percent growth. And 38 00:02:20,240 --> 00:02:22,720 Speaker 1: I don't think. Look, we talked about this earlier. Tom 39 00:02:22,760 --> 00:02:25,600 Speaker 1: it's not a forecast. You know, President Trump is not 40 00:02:25,639 --> 00:02:28,840 Speaker 1: getting into the GDP forecasting business. He is marketing a 41 00:02:28,960 --> 00:02:33,680 Speaker 1: tax cut. This is a political announcement. Uh, we don't 42 00:02:33,800 --> 00:02:38,520 Speaker 1: need to see four percent growth with the slow population growth. 43 00:02:38,560 --> 00:02:40,840 Speaker 1: That way, I don't want you to be an equity strategist. 44 00:02:41,000 --> 00:02:46,520 Speaker 1: But if you assume tepdomenal GDP right like the thirties 45 00:02:46,520 --> 00:02:51,359 Speaker 1: and Andrew Mellon corporations merge, Yes, that's a fact. Yes, 46 00:02:51,440 --> 00:02:54,400 Speaker 1: and that's a further weight there the quote unquote synergies. 47 00:02:54,520 --> 00:02:57,639 Speaker 1: Here's the quote John from the press release. The acquisition 48 00:02:57,760 --> 00:03:01,200 Speaker 1: is expected. I can't do I gotta can prove it voice. 49 00:03:01,680 --> 00:03:05,160 Speaker 1: The acquisition is expected to yield at least two billion 50 00:03:05,200 --> 00:03:10,960 Speaker 1: dollars in cost savings from efficiencies realize to the combination 51 00:03:11,440 --> 00:03:14,480 Speaker 1: of businesses. Some executives will be put on the rack. 52 00:03:14,600 --> 00:03:16,600 Speaker 1: You know what Professor Galloway would say, don't you that 53 00:03:16,720 --> 00:03:21,600 Speaker 1: synergies synergies is Latin for job costs? Yes? No, absolutely, absolutely, 54 00:03:21,680 --> 00:03:23,960 Speaker 1: and and and that is sort of the trend towards 55 00:03:23,960 --> 00:03:25,839 Speaker 1: the top of the cycle that we tend to see 56 00:03:25,880 --> 00:03:29,800 Speaker 1: lots of mergers and acquisition acquisitions, slowing job growth, A 57 00:03:29,880 --> 00:03:34,359 Speaker 1: focus on maintaining the profit shares that that that they have. 58 00:03:34,480 --> 00:03:37,760 Speaker 1: So it's not h and it hasn't been globally a 59 00:03:37,840 --> 00:03:42,480 Speaker 1: labor market that favors workers. Uh, and that's probably not 60 00:03:42,600 --> 00:03:44,600 Speaker 1: going to change. I mean that that's a that's a 61 00:03:44,640 --> 00:03:48,400 Speaker 1: harsh reality. Are you willing to predict wage growth? No? 62 00:03:48,640 --> 00:03:51,200 Speaker 1: I mean, I think we might see some upward pressure, 63 00:03:51,320 --> 00:03:53,280 Speaker 1: you know, a little bit next year, but that has 64 00:03:53,320 --> 00:03:57,960 Speaker 1: been consistently one of the biggest disappointments this year. Wage 65 00:03:57,960 --> 00:04:01,360 Speaker 1: growth just won't accelerate. It's not even accelerating insectors that 66 00:04:01,360 --> 00:04:05,080 Speaker 1: are doing well and reporting tightness and labor markets like construction. 67 00:04:05,480 --> 00:04:09,360 Speaker 1: So there's something much more fundamental going on in terms 68 00:04:09,440 --> 00:04:13,280 Speaker 1: of the labor bargaining process. But as far as your concerned, Julior, 69 00:04:13,320 --> 00:04:15,040 Speaker 1: as we spend the rest of the morning talking about 70 00:04:15,040 --> 00:04:17,760 Speaker 1: this deal between twenty one century Folks and Disney, this 71 00:04:17,800 --> 00:04:23,120 Speaker 1: is classic light cycle behavior. Yeah, absolutely absolutely, Murders and acquisitions. Um, 72 00:04:23,520 --> 00:04:27,160 Speaker 1: you know, it's not like there's an acceleration and growth 73 00:04:27,200 --> 00:04:30,120 Speaker 1: to invest into. And that's I mean, this is the 74 00:04:30,120 --> 00:04:32,320 Speaker 1: proof in the pudding, right. I Mean, when even when 75 00:04:32,360 --> 00:04:34,800 Speaker 1: CEOs were asked what they would do with the tax cut, 76 00:04:34,880 --> 00:04:37,360 Speaker 1: very few say that they're going to invest in higher 77 00:04:37,480 --> 00:04:42,200 Speaker 1: as a result. Right, this is this is bottom line boosting. Uh. 78 00:04:42,240 --> 00:04:46,320 Speaker 1: That's great, that's helps share prices, but it's not something 79 00:04:46,360 --> 00:04:50,520 Speaker 1: that's going to flow freely into the real economy. UH 80 00:04:50,560 --> 00:04:53,960 Speaker 1: in a meaningful way. Julia Karnet a macro policy perspective 81 00:04:53,960 --> 00:04:56,240 Speaker 1: president and found at joining us on the Federal Reserve. 82 00:04:56,440 --> 00:04:59,160 Speaker 1: And that deal that's just crossed the wats as they 83 00:04:59,160 --> 00:05:01,920 Speaker 1: finally get their faults. It's Disney getting a chunk of 84 00:05:01,960 --> 00:05:04,200 Speaker 1: twenty one century Fox. Who would have thought this time 85 00:05:04,279 --> 00:05:07,440 Speaker 1: last year that Rupert would be sounding anything from from 86 00:05:08,000 --> 00:05:11,599 Speaker 1: when I talked to experts on this, truly Joan Farrell 87 00:05:11,640 --> 00:05:13,840 Speaker 1: or no one? Yeah, And the question remains, And as 88 00:05:13,880 --> 00:05:15,800 Speaker 1: you said, it's not in the press releases. Where does 89 00:05:15,800 --> 00:05:18,560 Speaker 1: this leave James Murdock? Where does it leave James Murdoch? 90 00:05:18,600 --> 00:05:20,440 Speaker 1: And does he does he get any kind of position 91 00:05:20,760 --> 00:05:22,880 Speaker 1: within the Walt Disney Company? So I wonder what they'll 92 00:05:22,920 --> 00:05:27,279 Speaker 1: do with the Simpsons franchise. You know he's serious about that. 93 00:05:27,880 --> 00:05:30,880 Speaker 1: What what? What? What are you worried about? Why do 94 00:05:30,920 --> 00:05:35,799 Speaker 1: you think I became like I became inspired by inspired 95 00:05:35,839 --> 00:05:38,760 Speaker 1: by Homer, inspired by its poetry, it's wow, it's like 96 00:05:38,800 --> 00:05:43,120 Speaker 1: American Shakespeare. Then we go or something like that. Julia 97 00:05:43,160 --> 00:06:00,520 Speaker 1: carn owd to thank you so much. Let's get right 98 00:06:00,560 --> 00:06:04,960 Speaker 1: to it. We've got nine minutes with Jant of Golden Sex, 99 00:06:05,040 --> 00:06:07,880 Speaker 1: and I'm going to frame him this way is long, 100 00:06:08,440 --> 00:06:12,600 Speaker 1: long before the Crisis of two thousand seven, toiling away 101 00:06:12,640 --> 00:06:17,000 Speaker 1: in the dungeon of Golden Sex economics, young Hots, working 102 00:06:17,040 --> 00:06:21,400 Speaker 1: with Mr Dudley and Mr McKelvey said, watch what Americans 103 00:06:21,440 --> 00:06:24,320 Speaker 1: do with their money. Your work on mortgage mortgage equity 104 00:06:24,360 --> 00:06:27,719 Speaker 1: withdrawal at the time was brilliant. What's the thing you're 105 00:06:27,800 --> 00:06:32,000 Speaker 1: watching now like you looked at the flows of mortgages 106 00:06:32,440 --> 00:06:35,720 Speaker 1: a million years ago? I would say probably our star 107 00:06:36,040 --> 00:06:40,440 Speaker 1: the equilibrium funds rate and financial conditions. Um, there's a 108 00:06:40,520 --> 00:06:42,800 Speaker 1: there's a lot of focus on the idea that there 109 00:06:42,920 --> 00:06:47,080 Speaker 1: is a long term equilibrium federal funds rate that you 110 00:06:47,120 --> 00:06:50,640 Speaker 1: can estimate and that the Feds just converging to. But 111 00:06:50,760 --> 00:06:55,040 Speaker 1: my view is that this can change. The views can change, 112 00:06:55,279 --> 00:06:57,680 Speaker 1: and what we really ought to be watching is how 113 00:06:57,800 --> 00:07:01,560 Speaker 1: how do financial conditions develop up as the Fed raises 114 00:07:01,600 --> 00:07:03,520 Speaker 1: the funds rate? And what we've been seeing is that 115 00:07:03,560 --> 00:07:05,880 Speaker 1: they've been hiking the funds rate, but financial conditions have 116 00:07:05,920 --> 00:07:08,400 Speaker 1: actually eased, and I think that tells you something very 117 00:07:08,440 --> 00:07:11,679 Speaker 1: important about how these long term perce episodes can shift. 118 00:07:11,960 --> 00:07:15,040 Speaker 1: This sounds like a random Crossner conversation. Was wonderful to 119 00:07:15,120 --> 00:07:19,560 Speaker 1: speak with the governor from Bosco Chicago yesterday. The linkage 120 00:07:19,600 --> 00:07:21,920 Speaker 1: is that you observe every day and particularly within your 121 00:07:21,960 --> 00:07:25,880 Speaker 1: optimistic note about better economic growth and such. Are you 122 00:07:26,040 --> 00:07:29,640 Speaker 1: using traditional economics? I mean, if you look at aggregate 123 00:07:30,040 --> 00:07:33,640 Speaker 1: supply geometry or I S. L on geometry, it's supposed 124 00:07:33,680 --> 00:07:36,040 Speaker 1: to link in at some point into the interest rate 125 00:07:36,080 --> 00:07:39,800 Speaker 1: in the financial system. Did those models still work? I mean, 126 00:07:39,840 --> 00:07:41,720 Speaker 1: we try to be eclectic. We use some of that, 127 00:07:41,800 --> 00:07:45,600 Speaker 1: and we you know, use use other models. Um. I mean, 128 00:07:45,640 --> 00:07:48,920 Speaker 1: I think the the I S curve is the relationship 129 00:07:49,000 --> 00:07:53,320 Speaker 1: between output or economic activity and short term interest rates, 130 00:07:53,320 --> 00:07:56,000 Speaker 1: and that doesn't work particularly well. And that actually ties 131 00:07:56,040 --> 00:07:58,800 Speaker 1: back into what we just talked about. If that did 132 00:07:58,840 --> 00:08:01,960 Speaker 1: work very well, if they was very clear relationship between 133 00:08:02,000 --> 00:08:03,920 Speaker 1: output and the and the policy rate, it would be 134 00:08:03,960 --> 00:08:07,240 Speaker 1: easy to back out where the short term rate should be. 135 00:08:07,240 --> 00:08:10,760 Speaker 1: But it's actually not. Okay, it's six. And then is 136 00:08:10,760 --> 00:08:15,120 Speaker 1: this about the new technology and the bimodal labor America 137 00:08:15,480 --> 00:08:18,760 Speaker 1: Chair Yellow's words slack. Is it just a new model 138 00:08:19,040 --> 00:08:23,240 Speaker 1: of technological overlay on two America's one fully employed and 139 00:08:23,320 --> 00:08:26,200 Speaker 1: one lesser employee. I think that's a that's that's also 140 00:08:26,240 --> 00:08:29,160 Speaker 1: an important issue. Um. I mean, it seems to us 141 00:08:29,280 --> 00:08:33,080 Speaker 1: that we are, you know, at full employment pretty broadly, 142 00:08:33,280 --> 00:08:36,480 Speaker 1: but if you if you dissect the labor market more, 143 00:08:36,520 --> 00:08:39,920 Speaker 1: you will find still some areas that are probably underemployed, 144 00:08:39,920 --> 00:08:43,160 Speaker 1: in other areas that are probably overemployed. So I think 145 00:08:43,160 --> 00:08:46,080 Speaker 1: that that is an important and important issue that we've 146 00:08:46,080 --> 00:08:47,600 Speaker 1: looked at quite a lot in the in the last 147 00:08:47,679 --> 00:08:49,320 Speaker 1: year in particular as well. Can we get to the 148 00:08:49,320 --> 00:08:52,680 Speaker 1: headline cod from government sax for next year four hikes? 149 00:08:53,040 --> 00:08:55,880 Speaker 1: What do you see that the Fed doesn't? Well, the 150 00:08:55,920 --> 00:08:58,480 Speaker 1: Fed's not too far away. I mean, I think you 151 00:08:58,520 --> 00:09:00,360 Speaker 1: know where it for the Feds more all of you 152 00:09:00,520 --> 00:09:03,359 Speaker 1: is three. The market's priced for a little under two. 153 00:09:03,880 --> 00:09:06,599 Speaker 1: But our basic view is that the Fed's going to 154 00:09:06,679 --> 00:09:08,760 Speaker 1: keep doing what they've been doing since the fourth quarter 155 00:09:08,800 --> 00:09:12,000 Speaker 1: of last year, which is basically deliver one tightening step 156 00:09:12,000 --> 00:09:16,000 Speaker 1: per quarter, and that happens in an environment where, yes, 157 00:09:16,040 --> 00:09:19,600 Speaker 1: inflation is still below their long term target. But they 158 00:09:19,640 --> 00:09:22,040 Speaker 1: also care about employment. They have a dual mandate. And 159 00:09:22,080 --> 00:09:24,720 Speaker 1: the unemployment rate continues to fall, you know, pretty rapidly, 160 00:09:24,720 --> 00:09:26,720 Speaker 1: and we think that the unemployment rate is going to 161 00:09:26,720 --> 00:09:29,280 Speaker 1: continue to fall more rapidly than what the Fed has 162 00:09:29,280 --> 00:09:30,880 Speaker 1: in their forecasts, and so they're going to do a 163 00:09:30,920 --> 00:09:33,920 Speaker 1: little more. And they worried about unemployment with the three 164 00:09:34,559 --> 00:09:37,960 Speaker 1: I think so, I mean, they would probably not worried 165 00:09:38,080 --> 00:09:40,720 Speaker 1: in the sense that, you know, their hair is on fire, 166 00:09:40,840 --> 00:09:42,880 Speaker 1: but in the sense that they think that we're in 167 00:09:42,880 --> 00:09:45,120 Speaker 1: the process of maybe moving a little bit beyond what 168 00:09:45,160 --> 00:09:47,760 Speaker 1: we can sustain. What was interesting yesterday is that their 169 00:09:47,880 --> 00:09:51,360 Speaker 1: estimate of the sustainable unemployment rates still four point six pc, 170 00:09:52,000 --> 00:09:54,040 Speaker 1: but the forecast for way it gets is three point 171 00:09:54,080 --> 00:09:56,240 Speaker 1: nine That's a seven tenth scap. That's already quite a 172 00:09:56,320 --> 00:09:59,160 Speaker 1: quite a sizeable labor market overshoot, and I think, frankly, 173 00:09:59,400 --> 00:10:01,240 Speaker 1: in the end we'll see a bigger decline than the 174 00:10:01,440 --> 00:10:03,440 Speaker 1: plan for you and the research that you do. What 175 00:10:03,640 --> 00:10:07,640 Speaker 1: is the lag time for inflation versus GDP? GDP growth 176 00:10:07,720 --> 00:10:11,480 Speaker 1: is accelerating, when does inflation start to pick up? I mean, 177 00:10:11,520 --> 00:10:14,959 Speaker 1: it's more about the level of output or employment relative 178 00:10:15,000 --> 00:10:17,840 Speaker 1: to what we estimate as potential gum. So that's that's 179 00:10:17,880 --> 00:10:20,760 Speaker 1: the relationship we're watching, and you're right that that is 180 00:10:20,840 --> 00:10:25,880 Speaker 1: pointing to somewhat higher inflation. That said, inflation is driven 181 00:10:25,880 --> 00:10:28,800 Speaker 1: by a lot of things, and you know the strength 182 00:10:28,800 --> 00:10:30,719 Speaker 1: of the macro economy is only one of them. That 183 00:10:30,760 --> 00:10:33,640 Speaker 1: Phillips curve is quite flat, and that means there are 184 00:10:33,640 --> 00:10:35,560 Speaker 1: lots of other things that can also have an impact. 185 00:10:35,880 --> 00:10:38,640 Speaker 1: What's going on in the residential housing market, what's going 186 00:10:38,679 --> 00:10:42,080 Speaker 1: on with government influence on the on the healthcare market, 187 00:10:42,200 --> 00:10:44,520 Speaker 1: what's going on with cell phone plans. All of these things, 188 00:10:44,720 --> 00:10:48,680 Speaker 1: maybe they're at some level related to the macro economy, 189 00:10:48,720 --> 00:10:50,800 Speaker 1: but certainly not very tightly. I want to put together 190 00:10:50,840 --> 00:10:53,200 Speaker 1: your work together with the work the Francesco guts really 191 00:10:53,200 --> 00:10:55,800 Speaker 1: would do with bond yield. Have you guys been speaking 192 00:10:55,840 --> 00:10:58,000 Speaker 1: and how does this work out through next year? Week? 193 00:10:58,080 --> 00:11:00,800 Speaker 1: Very because because most people are where the ten year 194 00:11:00,880 --> 00:11:02,839 Speaker 1: is right now? Wait wait wait wait, are you on 195 00:11:02,960 --> 00:11:08,840 Speaker 1: speaking terms with Francis part of the same team. Yeah, 196 00:11:09,040 --> 00:11:10,600 Speaker 1: some people are looking at where the ten year is 197 00:11:10,679 --> 00:11:12,440 Speaker 1: right now and saying that the ten year yield is 198 00:11:12,480 --> 00:11:15,000 Speaker 1: basically a function of where the Fed funds rate will 199 00:11:15,040 --> 00:11:18,680 Speaker 1: pick and that's where things are bouncing around somewhere in 200 00:11:18,720 --> 00:11:23,760 Speaker 1: the two's. Does that argument resonate with your team? Yes, 201 00:11:23,880 --> 00:11:25,880 Speaker 1: I mean I think what he's also saying, though, in 202 00:11:25,880 --> 00:11:30,160 Speaker 1: addition to that, is that the term premium, the compensation 203 00:11:30,240 --> 00:11:33,480 Speaker 1: that investors require over and above where short term interest 204 00:11:33,600 --> 00:11:36,520 Speaker 1: rates are expected to be, is very depressed at the moment, 205 00:11:37,200 --> 00:11:40,640 Speaker 1: in fact negative according to a lot of the estimates, 206 00:11:40,760 --> 00:11:43,079 Speaker 1: and there is a good case for that to to 207 00:11:43,280 --> 00:11:46,600 Speaker 1: rise somewhat, for example, because the Feds starting to run 208 00:11:46,679 --> 00:11:49,000 Speaker 1: down the balance sheet. So I think both of those 209 00:11:49,000 --> 00:11:52,600 Speaker 1: things are reasons for why longer term yields over time 210 00:11:53,000 --> 00:11:55,760 Speaker 1: should write somewhat. I want to talk about nominal GDP. 211 00:11:55,880 --> 00:11:58,360 Speaker 1: We've got the mating of Disney and part of Fox today. 212 00:11:58,640 --> 00:12:00,880 Speaker 1: You're in a room with David cars You're talking to 213 00:12:01,000 --> 00:12:04,400 Speaker 1: Golden Sex clients about nominal GDP and the linkage in 214 00:12:04,440 --> 00:12:08,120 Speaker 1: the revenues. We saw single headline from Honeywell yesterday, organic 215 00:12:08,160 --> 00:12:11,960 Speaker 1: revenue goes that's a wow number. Can you tell David 216 00:12:12,040 --> 00:12:16,040 Speaker 1: Coston that we're going to see better nominal GDP that 217 00:12:16,160 --> 00:12:19,959 Speaker 1: will give Corporate America a revenue pop? Well, I think 218 00:12:20,000 --> 00:12:22,679 Speaker 1: probably not dramatically better than than what we're seeing at 219 00:12:22,679 --> 00:12:25,640 Speaker 1: the moment. Maybe a little stronger. I mean for a 220 00:12:25,920 --> 00:12:28,360 Speaker 1: for a period of time you could say something see 221 00:12:28,440 --> 00:12:31,520 Speaker 1: something more like five rather than four, but probably not 222 00:12:31,640 --> 00:12:34,280 Speaker 1: for a long time. I think that's beyond beyond the 223 00:12:34,280 --> 00:12:37,240 Speaker 1: supply potential of the of the economy in the two 224 00:12:37,240 --> 00:12:39,920 Speaker 1: percent inflation environment. So I think you look at nominal 225 00:12:39,960 --> 00:12:43,200 Speaker 1: GDP growth. Of course it's lower than it was twenty years. 226 00:12:43,360 --> 00:12:47,720 Speaker 1: I've got uh listener emails in from Europe. It says, wow, 227 00:12:47,800 --> 00:12:51,120 Speaker 1: you have John Hats and John Ferroll together, can you 228 00:12:51,160 --> 00:12:53,600 Speaker 1: please ask this questions? So we've got a listener question, 229 00:12:53,960 --> 00:12:58,439 Speaker 1: who's worse a c Milan or Humber? Which you would 230 00:12:58,520 --> 00:13:01,600 Speaker 1: love to say Milan, but unfortunately I'm going to have 231 00:13:01,640 --> 00:13:04,280 Speaker 1: to say Hbokohn. Do you want to wear in on that? 232 00:13:04,360 --> 00:13:06,760 Speaker 1: I would just say Germany is quite clearly better than Italy, 233 00:13:06,800 --> 00:13:08,480 Speaker 1: and maybe if we did a national team version of 234 00:13:08,559 --> 00:13:11,240 Speaker 1: this um, there's one clear winner there right now. That's 235 00:13:11,360 --> 00:13:14,160 Speaker 1: how is the soccer different in Italy versus Germany? There 236 00:13:14,240 --> 00:13:19,079 Speaker 1: is there is a real rivalry one of us. The 237 00:13:19,120 --> 00:13:22,800 Speaker 1: damn question, how is German soccer better than Italy? Well, 238 00:13:22,800 --> 00:13:28,719 Speaker 1: Germany will be participating in the World Cup. He there 239 00:13:28,840 --> 00:13:31,200 Speaker 1: is there is a history here that goes back decades. 240 00:13:31,240 --> 00:13:37,760 Speaker 1: In decades, Italy it is always has always been Germany's 241 00:13:37,800 --> 00:13:42,160 Speaker 1: toughest upland, and until two years ago Germany had never 242 00:13:42,160 --> 00:13:43,839 Speaker 1: been literally at a major So what happened in the 243 00:13:43,920 --> 00:13:46,360 Speaker 1: World Cup is in nineteen ninety when it was hosted 244 00:13:46,360 --> 00:13:50,160 Speaker 1: in Italy, Germany won it on the Italian turf, and 245 00:13:50,200 --> 00:13:52,160 Speaker 1: then in two thousand and six, when the World Cup 246 00:13:52,200 --> 00:13:55,840 Speaker 1: was hosted in Germany, Italy won it on German turf. 247 00:13:56,040 --> 00:13:58,280 Speaker 1: So in many ways Italy and Germany have been upsetting 248 00:13:58,280 --> 00:14:01,240 Speaker 1: each other in the world of football. For that, Lloyd 249 00:14:01,280 --> 00:14:03,760 Speaker 1: Blank finds in a limit going what the hell I'm 250 00:14:03,760 --> 00:14:07,480 Speaker 1: talking about? Y Nazis, thank you so much for joining us. 251 00:14:07,480 --> 00:14:10,240 Speaker 1: Please don't be a stranger. We enjoys where he is, 252 00:14:10,280 --> 00:14:26,800 Speaker 1: of course with a golden sex right now. We appreciate 253 00:14:26,840 --> 00:14:31,960 Speaker 1: the support of the always interesting, always controversial Stephen Keene. 254 00:14:31,960 --> 00:14:35,800 Speaker 1: No relation e n He has the proper key name 255 00:14:36,160 --> 00:14:38,840 Speaker 1: the elite fancy pants people put an E on the 256 00:14:38,960 --> 00:14:42,440 Speaker 1: end about three hundred years ago. So Stephen Keene joins 257 00:14:42,480 --> 00:14:46,440 Speaker 1: us from Kingston University in England. Stephen as we listen tomorrow, 258 00:14:46,480 --> 00:14:51,600 Speaker 1: Droggy as we listen to Cherry Yellen, etcetera, etcetera. Is 259 00:14:51,680 --> 00:14:55,120 Speaker 1: Mr Alpert would say, Dan Alpert, are we just dealing 260 00:14:55,160 --> 00:14:58,480 Speaker 1: with an age of oversupply where there's just too much 261 00:14:58,560 --> 00:15:01,560 Speaker 1: stuff out there? Well? Too much of that is the 262 00:15:01,560 --> 00:15:03,600 Speaker 1: BLYF and central banks, because the way they've tried to 263 00:15:03,600 --> 00:15:05,400 Speaker 1: get out of this crisis that they had no idea 264 00:15:05,520 --> 00:15:08,720 Speaker 1: was coming is by pumping up asset pricess through que 265 00:15:09,200 --> 00:15:11,640 Speaker 1: and that's made a tiny leakage from the enormous amount 266 00:15:11,680 --> 00:15:13,800 Speaker 1: of money that pumped into asset markets had dribbled into 267 00:15:13,800 --> 00:15:17,360 Speaker 1: the rural economy. Now, if you compare how America has 268 00:15:17,400 --> 00:15:21,400 Speaker 1: performed versus England versus the Europe you can see basically 269 00:15:21,520 --> 00:15:24,880 Speaker 1: USP has been a complete failure because the other two 270 00:15:24,920 --> 00:15:27,760 Speaker 1: countries had some degree of fiscal stimulus, which the European 271 00:15:27,840 --> 00:15:31,080 Speaker 1: rules rule out. And of course unemployment in the European 272 00:15:31,120 --> 00:15:33,480 Speaker 1: region is roughly still about ten percent, which is more 273 00:15:33,520 --> 00:15:36,120 Speaker 1: than twice the level it is in the UK and 274 00:15:36,200 --> 00:15:41,280 Speaker 1: in America. So this is a continued use of a wimpy, 275 00:15:41,280 --> 00:15:45,120 Speaker 1: expensive policy to replace the economy because the European rules 276 00:15:45,120 --> 00:15:47,760 Speaker 1: don't allow us fiscal stimulus you're one of the great 277 00:15:47,800 --> 00:15:51,800 Speaker 1: thinkers in this world of Joseph Schumpeter in creative destruction 278 00:15:52,360 --> 00:15:56,400 Speaker 1: is central bank theory of the last ten years nothing 279 00:15:56,440 --> 00:16:01,320 Speaker 1: more than avoiding the always pain of any given creative 280 00:16:01,360 --> 00:16:05,080 Speaker 1: destruction out of crisis and technological change. Is that all 281 00:16:05,120 --> 00:16:08,640 Speaker 1: we've done is delayed the pain. It's partly that they've 282 00:16:08,680 --> 00:16:11,640 Speaker 1: also let an enormous financial bubble occur, which would not 283 00:16:11,920 --> 00:16:14,080 Speaker 1: have occurred if that actually paid attention to the role 284 00:16:14,120 --> 00:16:16,200 Speaker 1: of credit in the economy. To most of my book, 285 00:16:16,240 --> 00:16:19,560 Speaker 1: tim that the UK had a maximum level of private 286 00:16:19,600 --> 00:16:23,400 Speaker 1: debt between for the entire century from eighties and seventy 287 00:16:23,400 --> 00:16:26,920 Speaker 1: three percent of GDP under Central Bank rules with a 288 00:16:27,000 --> 00:16:29,600 Speaker 1: ignored the level of private debt, and they deregulated the 289 00:16:29,640 --> 00:16:32,680 Speaker 1: financial sector laven inarticularly for mortgages that went to a 290 00:16:33,640 --> 00:16:36,080 Speaker 1: percent of GDP. Now, if we'd been back in the 291 00:16:36,120 --> 00:16:38,600 Speaker 1: days when you still had credit limited, we would have 292 00:16:38,640 --> 00:16:41,800 Speaker 1: had that creative destruction with the minor credit downturn they 293 00:16:41,840 --> 00:16:44,160 Speaker 1: had given us the mother of all credit bubbles. Stephen 294 00:16:44,240 --> 00:16:46,680 Speaker 1: Keene were this folks trities with us out of Australian 295 00:16:46,800 --> 00:16:50,600 Speaker 1: Sydney and now at Kingston in England. UH Stephen. We've 296 00:16:50,640 --> 00:16:53,320 Speaker 1: got Robert Iger coming up, Bob Iger coming up with Disney. 297 00:16:53,360 --> 00:16:57,160 Speaker 1: About nine ten folks were thinking on Mr Iger's date 298 00:16:57,200 --> 00:17:01,920 Speaker 1: calendar off the mating of need with the Simpsons, which 299 00:17:01,960 --> 00:17:03,640 Speaker 1: is you really wonder what he's going to do with 300 00:17:03,640 --> 00:17:07,240 Speaker 1: the Simpsons, among other things. Professor Keene, I want to 301 00:17:07,280 --> 00:17:09,840 Speaker 1: go to the work of Magnan Desire the London School 302 00:17:10,160 --> 00:17:14,280 Speaker 1: of Economics, which is everything is about profitability. Are what 303 00:17:14,320 --> 00:17:18,560 Speaker 1: we're really talking about is some sense of reducts of 304 00:17:18,600 --> 00:17:22,920 Speaker 1: the twenties and the thirties where there's no inflation. Companies 305 00:17:22,920 --> 00:17:26,359 Speaker 1: are struggling to find profit down the income statement and 306 00:17:26,359 --> 00:17:28,679 Speaker 1: they're only incentive is to merge. I mean, are we 307 00:17:28,760 --> 00:17:32,880 Speaker 1: on the edge of an Andrew mellon late nineteen thirties. 308 00:17:35,640 --> 00:17:38,120 Speaker 1: What's actually been happening instead of something that didn't happen 309 00:17:38,119 --> 00:17:39,760 Speaker 1: Back on the non incuties, which is the level of 310 00:17:39,800 --> 00:17:43,600 Speaker 1: share buybacks, and that's all being financed but tom predominantly 311 00:17:43,600 --> 00:17:46,040 Speaker 1: by the amount of money generated by QA. So we've 312 00:17:46,080 --> 00:17:49,280 Speaker 1: driven up asset process in the process without needing to 313 00:17:49,440 --> 00:17:53,960 Speaker 1: have firms merging, but the real weaknesses they're not investing, 314 00:17:54,280 --> 00:17:56,320 Speaker 1: so you're getting a change in the financial structure of 315 00:17:56,320 --> 00:17:58,720 Speaker 1: the corporations, but not that genuine investment in any the 316 00:17:58,760 --> 00:18:01,959 Speaker 1: genuine creative destruction. So when you toss out your oiler 317 00:18:02,000 --> 00:18:05,600 Speaker 1: equations and you look at dampening forces, can we do 318 00:18:05,720 --> 00:18:11,440 Speaker 1: quantitative tightening into two thousand, eighteen nineteen two twenty. Can 319 00:18:11,480 --> 00:18:15,239 Speaker 1: we do some form or three or four forms of 320 00:18:15,440 --> 00:18:18,840 Speaker 1: q T and not upset the apple cart like we 321 00:18:18,880 --> 00:18:21,640 Speaker 1: did in August of oh seven. I think we're gonna 322 00:18:21,720 --> 00:18:23,280 Speaker 1: I think it will happen Tom, and I think it 323 00:18:23,320 --> 00:18:25,399 Speaker 1: will upset the apple cart at the same time, because 324 00:18:25,440 --> 00:18:28,560 Speaker 1: the major factor behind the rise and the yellow s 325 00:18:28,560 --> 00:18:30,199 Speaker 1: and p and some one is not the yellow the 326 00:18:30,240 --> 00:18:33,280 Speaker 1: orange head person in white and the white house. It's 327 00:18:33,359 --> 00:18:36,119 Speaker 1: que which has been buying, in the America's case, a 328 00:18:36,200 --> 00:18:39,040 Speaker 1: trillion dollars worth of bombs every year, meaning that the 329 00:18:39,359 --> 00:18:42,000 Speaker 1: companies that sell those bombs and have cash that they 330 00:18:42,000 --> 00:18:44,359 Speaker 1: then used to buy shares and that rips up the 331 00:18:44,359 --> 00:18:47,680 Speaker 1: share prices massively. Now they reverse that process, those share 332 00:18:47,720 --> 00:18:49,800 Speaker 1: prices will fall, and as soon as they do, and 333 00:18:49,920 --> 00:18:51,480 Speaker 1: for banks and going to panic mode and go back 334 00:18:51,480 --> 00:18:54,399 Speaker 1: to QA again. Stephen King, thank you so much, Professor King, 335 00:18:54,480 --> 00:19:13,960 Speaker 1: greatly appreciate your attendance. This morning with Kingston University, and 336 00:19:14,000 --> 00:19:18,280 Speaker 1: now to our John Ferrell and Mr Bloomberg Radio and 337 00:19:18,320 --> 00:19:21,640 Speaker 1: TV viewers worldwide, breaking this morning a deal that reshapes 338 00:19:21,720 --> 00:19:25,560 Speaker 1: the global media landscape, Disney by most of Century Fox 339 00:19:25,560 --> 00:19:28,360 Speaker 1: for fifty two billion dollars. I'm very pleased to say 340 00:19:28,359 --> 00:19:30,560 Speaker 1: that joining us right here, right now on Bloomberg TV 341 00:19:30,680 --> 00:19:34,439 Speaker 1: and Radio from Burbank, California, is Bob Iger, Disney Chairman 342 00:19:34,520 --> 00:19:37,840 Speaker 1: and CEO, Bob Grady cash out with you. Congratulations on 343 00:19:37,880 --> 00:19:40,040 Speaker 1: the deal. I do want to backtrack just a little 344 00:19:40,080 --> 00:19:42,080 Speaker 1: bit and say that a year ago, no one saw 345 00:19:42,119 --> 00:19:44,600 Speaker 1: this one coming. Several months ago, no one saw this 346 00:19:44,640 --> 00:19:47,760 Speaker 1: one coming. How did you get Rupert to sell some 347 00:19:47,800 --> 00:19:52,240 Speaker 1: of the Crown Jewels? Well, good morning to you, by 348 00:19:52,280 --> 00:19:54,920 Speaker 1: the way, as well. A year ago, I didn't see 349 00:19:54,920 --> 00:19:56,359 Speaker 1: this one coming either, in nor did I see it 350 00:19:56,400 --> 00:19:59,040 Speaker 1: coming six months ago. Rupert and I have known each 351 00:19:59,040 --> 00:20:00,720 Speaker 1: other for a long time. We have a lot of 352 00:20:00,720 --> 00:20:04,480 Speaker 1: respect for one another and occasionally get together to muse 353 00:20:04,520 --> 00:20:07,800 Speaker 1: about the business and and get together. This summer when 354 00:20:07,840 --> 00:20:10,239 Speaker 1: we were talking about all the disruptive forces that we 355 00:20:10,280 --> 00:20:13,399 Speaker 1: were seeing and the relative position of our companies, I 356 00:20:13,520 --> 00:20:16,720 Speaker 1: left thinking that there might be an opportunity for us 357 00:20:16,760 --> 00:20:19,480 Speaker 1: to do something with him, and I thought about it 358 00:20:19,520 --> 00:20:23,120 Speaker 1: for a few weeks, called them thereafter and suggested maybe 359 00:20:23,119 --> 00:20:25,240 Speaker 1: we should get together and talk about it. And we 360 00:20:25,320 --> 00:20:28,960 Speaker 1: did spend some time actually analyzing whether there was something 361 00:20:29,000 --> 00:20:31,280 Speaker 1: to be done and what the value proposition might be 362 00:20:31,440 --> 00:20:35,720 Speaker 1: for shareholders of both companies, and ultimately rolled our sleeves up, 363 00:20:35,760 --> 00:20:38,560 Speaker 1: got into a negotiation, and here we are today, And 364 00:20:38,600 --> 00:20:40,919 Speaker 1: I think what we're doing is creating not only a 365 00:20:40,960 --> 00:20:44,600 Speaker 1: great company, but a great global opportunity for consumers to 366 00:20:44,840 --> 00:20:48,960 Speaker 1: not only consume great content made by both entities, but 367 00:20:49,040 --> 00:20:52,800 Speaker 1: to consume it under circumstances that are innovative and compelling 368 00:20:52,880 --> 00:20:55,720 Speaker 1: and much more user friendly. And that's what the consumer 369 00:20:55,760 --> 00:20:57,800 Speaker 1: of today demands. But we learned a little bit more 370 00:20:57,840 --> 00:21:01,840 Speaker 1: about your future now stepping down one versus twenty nineteen. Previously, 371 00:21:02,240 --> 00:21:06,800 Speaker 1: what's the future for James Murdoch. James and I have 372 00:21:06,840 --> 00:21:09,199 Speaker 1: talked a lot about a potential role for him. He 373 00:21:09,280 --> 00:21:12,920 Speaker 1: will be integral to helping us plan the integration process, 374 00:21:13,000 --> 00:21:16,080 Speaker 1: and you know, I will continue to talk about whether 375 00:21:16,119 --> 00:21:17,879 Speaker 1: there's a role for him at this company. We've had 376 00:21:17,880 --> 00:21:21,320 Speaker 1: a good relationship and he's been extremely helpful in this process, 377 00:21:21,400 --> 00:21:23,280 Speaker 1: and I look forward to talking to him more about it. 378 00:21:23,320 --> 00:21:25,040 Speaker 1: But a lot of people are thinking about the succession 379 00:21:25,040 --> 00:21:27,159 Speaker 1: plan that the what Disney Company now and thinking that 380 00:21:27,240 --> 00:21:29,919 Speaker 1: maybe Jams James Murdock could be part of that. Is 381 00:21:29,960 --> 00:21:34,880 Speaker 1: that something you could see happening. Well, I'm now extended 382 00:21:34,920 --> 00:21:37,639 Speaker 1: through two thousand twenty one, and the board of the 383 00:21:37,680 --> 00:21:40,760 Speaker 1: company will have ample time to consider its options in 384 00:21:40,840 --> 00:21:43,560 Speaker 1: terms of my succession and to re engage in a 385 00:21:43,680 --> 00:21:46,520 Speaker 1: planning process for that, and it's premature to really speculate 386 00:21:46,600 --> 00:21:48,879 Speaker 1: ultimately will be a board decision. Let's talk about the 387 00:21:48,960 --> 00:21:51,560 Speaker 1: here and now. There's a pretty healthy breakup fee on 388 00:21:51,600 --> 00:21:54,720 Speaker 1: this deal. You must be pretty convinced that the era 389 00:21:54,800 --> 00:21:56,840 Speaker 1: of A T and C Time Warner, that this deal 390 00:21:57,320 --> 00:21:59,360 Speaker 1: one that looks a lot more horizontal than that one 391 00:21:59,760 --> 00:22:04,120 Speaker 1: can actually close. Bob, What gives you that confidence, Well, 392 00:22:04,160 --> 00:22:06,280 Speaker 1: we won't comment about the A T and T Time 393 00:22:06,320 --> 00:22:09,359 Speaker 1: Warner merger, although we will say that this is different, 394 00:22:09,400 --> 00:22:13,000 Speaker 1: as you pointed out, But we think that this obviously 395 00:22:13,040 --> 00:22:15,879 Speaker 1: will get a lot of scrutiny from regulatory authorities worldwide. 396 00:22:15,880 --> 00:22:18,520 Speaker 1: It will take some time, but we think the proposition 397 00:22:18,560 --> 00:22:22,439 Speaker 1: here is very pro consumer. What this combination will do 398 00:22:22,520 --> 00:22:24,480 Speaker 1: as I said, a moment ago, is going to give 399 00:22:25,400 --> 00:22:30,040 Speaker 1: the consumer opportunities not only to consume far greater amounts 400 00:22:30,040 --> 00:22:34,119 Speaker 1: of high quality content, but to do so under extremely innovative, modern, 401 00:22:34,440 --> 00:22:38,640 Speaker 1: modern circumstances. And we think, at least from a regulatory perspective, 402 00:22:38,800 --> 00:22:41,720 Speaker 1: they focus just on the consumer, that that's actually quite 403 00:22:41,720 --> 00:22:45,439 Speaker 1: a positive thing. Confidence We yeah, there might be some 404 00:22:45,480 --> 00:22:48,240 Speaker 1: consent control control of the box office. You can have 405 00:22:48,240 --> 00:22:50,120 Speaker 1: a big chunk of the U S box office. Now 406 00:22:50,280 --> 00:22:53,000 Speaker 1: you're gonna have more sports channels going together with the ESPN. 407 00:22:53,280 --> 00:22:57,160 Speaker 1: Why is that going to be positive for the consumer. Well, 408 00:22:57,160 --> 00:22:59,520 Speaker 1: first of all, let's talk about the movie business. You 409 00:22:59,520 --> 00:23:02,919 Speaker 1: mentioned box office. The movie business is vastly different today 410 00:23:02,920 --> 00:23:06,359 Speaker 1: than it was. There are numerous new entries entrants into 411 00:23:06,359 --> 00:23:09,720 Speaker 1: the marketplace, Netflix and Amazon to name just a few, 412 00:23:10,200 --> 00:23:13,160 Speaker 1: and there are just hundreds and hundreds of movies being 413 00:23:13,200 --> 00:23:16,480 Speaker 1: made worldwide, and so it's a very very different market 414 00:23:16,520 --> 00:23:19,320 Speaker 1: today than it was, you know, just to three years ago, 415 00:23:19,400 --> 00:23:21,919 Speaker 1: five years ago, ten years ago, because there are so 416 00:23:21,960 --> 00:23:24,600 Speaker 1: many players in the space and there's so much content 417 00:23:24,680 --> 00:23:27,320 Speaker 1: being made, which is good from a consumer perspective and 418 00:23:27,440 --> 00:23:31,280 Speaker 1: good from a creative perspective. On the sports side, the 419 00:23:31,359 --> 00:23:33,720 Speaker 1: twenty two regional networks that we're buying in the United 420 00:23:33,760 --> 00:23:36,560 Speaker 1: States actually a great compliments to ESPN. If you think 421 00:23:36,560 --> 00:23:40,520 Speaker 1: about a national network and its TV affiliates, that's how 422 00:23:40,560 --> 00:23:42,679 Speaker 1: we look at this. This is a national network or 423 00:23:42,720 --> 00:23:48,040 Speaker 1: networks and ESPN serving consumers with national sports coverage. And 424 00:23:48,080 --> 00:23:51,040 Speaker 1: then the twenty two regional sports networks that will be buying, 425 00:23:51,119 --> 00:23:54,400 Speaker 1: which are very locally oriented, locally focused, and the two 426 00:23:54,440 --> 00:23:58,199 Speaker 1: will complement each other well and ultimately enhance each other's offering, 427 00:23:58,560 --> 00:24:01,200 Speaker 1: which is obviously to the benefit of their consumers. Well, 428 00:24:01,200 --> 00:24:03,760 Speaker 1: of course, this isn't just about content, it's about distribution 429 00:24:03,760 --> 00:24:05,920 Speaker 1: as well. You're gonna gain some serious scale there too. 430 00:24:05,960 --> 00:24:07,679 Speaker 1: Is that what you're most excited about? What you can 431 00:24:07,680 --> 00:24:10,680 Speaker 1: do on the distribution side, and maybe more so outside 432 00:24:10,720 --> 00:24:14,880 Speaker 1: the United States. We're excited about a number of things. 433 00:24:14,880 --> 00:24:17,359 Speaker 1: I've talked about the content, I've talked about offering it 434 00:24:17,400 --> 00:24:20,240 Speaker 1: in more compelling ways. This gives us a far greater 435 00:24:20,320 --> 00:24:23,920 Speaker 1: global footprint. Twenty one century Fox has done an amazing 436 00:24:24,000 --> 00:24:28,000 Speaker 1: job at growing its international businesses with its ownership of 437 00:24:28,040 --> 00:24:30,959 Speaker 1: a piece of Sky and Europe that has roughly twenty 438 00:24:31,040 --> 00:24:35,000 Speaker 1: three million subscribers, its ownership of Star in India with 439 00:24:35,560 --> 00:24:39,399 Speaker 1: hundreds of millions of viewers a month, and so this 440 00:24:39,480 --> 00:24:42,480 Speaker 1: gives us far greater international reach than we ever had 441 00:24:42,520 --> 00:24:45,879 Speaker 1: before and an ability to reach consumers directly. And the 442 00:24:45,920 --> 00:24:48,879 Speaker 1: other thing that's quite compelling about this combination is the 443 00:24:48,920 --> 00:24:51,359 Speaker 1: talent that comes with it, not just on the creative side, 444 00:24:51,680 --> 00:24:54,119 Speaker 1: the creative talent that Fox has been in business with 445 00:24:54,200 --> 00:24:57,480 Speaker 1: and will continue to be, but the management talent as well. 446 00:24:57,560 --> 00:25:00,840 Speaker 1: We look very carefully at the landed there. We look 447 00:25:00,960 --> 00:25:03,240 Speaker 1: very carefully the talent of their company, and we know 448 00:25:03,320 --> 00:25:05,520 Speaker 1: them well. We've competed with them hard over the years, 449 00:25:05,520 --> 00:25:08,119 Speaker 1: and we're looking forward to them becoming colleagues of hours 450 00:25:08,160 --> 00:25:10,199 Speaker 1: and helping us run when we think will be a 451 00:25:10,240 --> 00:25:12,919 Speaker 1: great company. Well, you'll be inheriting a lot of talent. 452 00:25:13,080 --> 00:25:15,680 Speaker 1: When we talk about synergies and we talk about cost savings, 453 00:25:15,680 --> 00:25:18,399 Speaker 1: often that's Latin for job cuts. Is this Latin for 454 00:25:18,480 --> 00:25:24,600 Speaker 1: job cuts? Again? Well, there are synergies and uh we 455 00:25:24,680 --> 00:25:28,440 Speaker 1: obviously will take a look at the overlap between businesses 456 00:25:28,480 --> 00:25:31,359 Speaker 1: that are similar and look for efficiencies there. But the 457 00:25:31,359 --> 00:25:35,360 Speaker 1: synergies and the efficiencies will come from multiple directions. Ultimately, 458 00:25:35,359 --> 00:25:38,200 Speaker 1: we believe we're going to create a lot of opportunities 459 00:25:38,200 --> 00:25:41,400 Speaker 1: for a number of people within the Fox organization, opportunities 460 00:25:41,440 --> 00:25:44,439 Speaker 1: beyond the opportunities they've had today. And we look forward 461 00:25:44,480 --> 00:25:47,680 Speaker 1: to planning the integration of both companies and getting to 462 00:25:47,760 --> 00:25:50,359 Speaker 1: work to growing the company that will exist for the 463 00:25:50,400 --> 00:25:53,000 Speaker 1: shareholders and to create long term value. Well, the long 464 00:25:53,080 --> 00:25:55,440 Speaker 1: term value. What can you extract out of Sky? They've 465 00:25:55,440 --> 00:25:57,240 Speaker 1: got a loss making division in terms of the news 466 00:25:57,320 --> 00:25:59,240 Speaker 1: unit of Sky News. Um, what do you want to 467 00:25:59,240 --> 00:26:00,880 Speaker 1: do with the asset? But if you spend much time 468 00:26:00,920 --> 00:26:05,399 Speaker 1: thinking about that, yeah, sure we have. First of all, 469 00:26:05,520 --> 00:26:09,440 Speaker 1: twenty century Fox will to continue continue to pursue its 470 00:26:09,480 --> 00:26:13,120 Speaker 1: acquisition of of all of Sky, and we're hopeful that 471 00:26:13,160 --> 00:26:15,879 Speaker 1: they will be successful in doing so. Sky is just 472 00:26:15,960 --> 00:26:20,159 Speaker 1: an amazing platform. Not only does it provide consumers with 473 00:26:20,240 --> 00:26:24,000 Speaker 1: a great consumer experience in terms of access to the programming, 474 00:26:24,000 --> 00:26:26,800 Speaker 1: but also creates a lot of great programming from sports 475 00:26:27,119 --> 00:26:30,240 Speaker 1: to news to all forms of entertainment. And we've actually 476 00:26:30,280 --> 00:26:33,760 Speaker 1: distributed a lot of our programming on Sky. We're extremely 477 00:26:33,800 --> 00:26:37,560 Speaker 1: impressed with their user interface, uh their ability to attract 478 00:26:37,640 --> 00:26:42,200 Speaker 1: and retain customers, the value proposition to their consumers, and 479 00:26:42,440 --> 00:26:46,000 Speaker 1: that obviously is a real crown jewel in the assets 480 00:26:46,640 --> 00:26:49,439 Speaker 1: Century Fox, and we certainly would be looking forward to 481 00:26:49,480 --> 00:26:52,640 Speaker 1: having the opportunity to have Sky be part of our company. 482 00:26:52,840 --> 00:26:58,080 Speaker 1: Sky News have a future up. Absolutely all of Sky 483 00:26:58,200 --> 00:27:00,680 Speaker 1: has a great future. Let's move on from Scott. I 484 00:27:00,680 --> 00:27:02,040 Speaker 1: want to get your thoughts on Huli. You're gonna have 485 00:27:02,040 --> 00:27:03,720 Speaker 1: a ton of content that you can push through Hulu 486 00:27:03,760 --> 00:27:06,400 Speaker 1: now that you're the majority owner. Is that the goal here? 487 00:27:06,560 --> 00:27:08,440 Speaker 1: And when you think about what you've done with Netflix 488 00:27:08,480 --> 00:27:11,480 Speaker 1: recently on the Disney side, you've cut that licensing agreement, 489 00:27:11,560 --> 00:27:13,560 Speaker 1: and I wonder whether you're gonna approach the assets over 490 00:27:13,560 --> 00:27:15,560 Speaker 1: its twenty one Century Fox and think about doing the 491 00:27:15,600 --> 00:27:21,400 Speaker 1: same thing with that content. Is that something you're considering. Yes. Absolutely, 492 00:27:22,119 --> 00:27:25,520 Speaker 1: We have long expressed a desire to be in the 493 00:27:25,560 --> 00:27:28,760 Speaker 1: director consumer business. We think that that is, in many 494 00:27:28,800 --> 00:27:31,120 Speaker 1: respects a way of the world these days. Not only 495 00:27:31,160 --> 00:27:35,320 Speaker 1: does provide consumers with better opportunities in terms of personalization 496 00:27:35,359 --> 00:27:39,080 Speaker 1: and customization, but it provides a company with more opportunities 497 00:27:39,119 --> 00:27:42,199 Speaker 1: in terms of reaching more consumers and more consumers in 498 00:27:42,280 --> 00:27:44,800 Speaker 1: more consumer friendly ways. And we think that it's a 499 00:27:44,840 --> 00:27:48,120 Speaker 1: compelling argument in terms of creating value. We will use 500 00:27:48,200 --> 00:27:51,480 Speaker 1: the Fox assets in terms of intellectual property and intellectual 501 00:27:51,520 --> 00:27:55,520 Speaker 1: property creation abilities to grow Hulu, probably at a more 502 00:27:55,560 --> 00:27:59,600 Speaker 1: accelerated pace. Will also use the Fox assets to help 503 00:27:59,640 --> 00:28:02,600 Speaker 1: copple at our other services as well, Disney branded Director 504 00:28:02,640 --> 00:28:06,280 Speaker 1: Consumer service as well as on the sports front. Well, Bob, 505 00:28:06,320 --> 00:28:07,760 Speaker 1: just to put you on the spot, though, what you 506 00:28:07,800 --> 00:28:10,960 Speaker 1: did with Disney and Netflix ending the licensing agreement, is 507 00:28:11,000 --> 00:28:13,960 Speaker 1: that something you think that makes financial sense to consider 508 00:28:14,040 --> 00:28:16,760 Speaker 1: ending any license agreement The twenty one century Fox on 509 00:28:16,760 --> 00:28:21,320 Speaker 1: the content side had with Netflix. Netflix has been a 510 00:28:21,320 --> 00:28:25,359 Speaker 1: great partner to us, and we considered essentially ending that 511 00:28:25,480 --> 00:28:29,360 Speaker 1: relationship very seriously because of the revenue that have generated 512 00:28:29,359 --> 00:28:31,879 Speaker 1: for our company. But we're in the business of creating 513 00:28:31,920 --> 00:28:34,520 Speaker 1: long term value. We're in this for the long term. 514 00:28:34,560 --> 00:28:38,600 Speaker 1: And as we looked ahead and we saw the basically 515 00:28:38,640 --> 00:28:40,920 Speaker 1: the world that I just described, the world where directed 516 00:28:40,920 --> 00:28:44,960 Speaker 1: consumer proposition was far more compelling both of the consumer 517 00:28:45,000 --> 00:28:47,880 Speaker 1: and for the distributor, we believed it was time. And 518 00:28:47,920 --> 00:28:51,600 Speaker 1: we'll obviously take that approach time to exit the Netflix relationship, 519 00:28:51,920 --> 00:28:53,920 Speaker 1: and we'll take that approach with the assets that we're 520 00:28:53,920 --> 00:28:56,120 Speaker 1: buying as well. So just to aim here is to 521 00:28:56,160 --> 00:28:58,920 Speaker 1: be in the director consumer business in a in a 522 00:28:59,080 --> 00:29:01,440 Speaker 1: in a greater more telling which makes sense, Bob. So 523 00:29:01,560 --> 00:29:04,800 Speaker 1: just to confirm that you will be actually considering ending 524 00:29:04,800 --> 00:29:07,440 Speaker 1: the license and agreement with Netflix. On the twenty one 525 00:29:07,560 --> 00:29:12,280 Speaker 1: century Fox side, well, twenty one century Fox has a 526 00:29:12,280 --> 00:29:14,920 Speaker 1: different output deal on their movie front. They've they've got 527 00:29:14,920 --> 00:29:17,960 Speaker 1: an output deal with HBO. They have a relationship with 528 00:29:18,000 --> 00:29:20,680 Speaker 1: Netflix as well. But again we're gonna be looking at 529 00:29:21,200 --> 00:29:24,280 Speaker 1: more direct to consumer opportunities for our company, and if 530 00:29:24,320 --> 00:29:28,840 Speaker 1: that requires us to win the businesses of their relationships 531 00:29:28,880 --> 00:29:31,320 Speaker 1: with other distributors, then that's what we'll do, just as 532 00:29:31,360 --> 00:29:34,040 Speaker 1: we did with Netflix. B Barga, Disney Chairman and see 533 00:29:34,520 --> 00:29:36,720 Speaker 1: thank you very much for joining us their congratulations on 534 00:29:36,760 --> 00:29:39,840 Speaker 1: a harder deal, Thank you very much. And John Ferrell 535 00:29:40,480 --> 00:29:44,920 Speaker 1: Bloomberg's Surveillance and the open speaking with Mr Iger about 536 00:29:44,920 --> 00:29:47,960 Speaker 1: some of the minutia there of different parts of this 537 00:29:48,040 --> 00:29:51,960 Speaker 1: transaction and different properties, and also some of the strategic 538 00:29:52,080 --> 00:30:03,680 Speaker 1: vision forward as as we can. MM. Thanks for listening 539 00:30:03,720 --> 00:30:08,280 Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews 540 00:30:08,280 --> 00:30:13,520 Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 541 00:30:14,080 --> 00:30:17,440 Speaker 1: I'm on Twitter at Tom Keene. Before the podcast, you 542 00:30:17,440 --> 00:30:20,880 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.