WEBVTT - New Kraft Heinz CEO Pauses Split to Focus on Boosting Profit 0:00:02.720 --> 0:00:10.559 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:17.880 easterne on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.920 --> 0:00:21.040 Business App. Listen on demand wherever you get your podcasts, 0:00:21.360 --> 0:00:23.080 or watch us live on YouTube. 0:00:24.320 --> 0:00:26.920 It is earning season right now, and one of the 0:00:26.920 --> 0:00:29.920 most anticipated results set of results that came out today 0:00:30.040 --> 0:00:33.000 came from Craft Highs, mainly because the food company had 0:00:33.040 --> 0:00:35.480 been on this mission to split itself up into two 0:00:36.120 --> 0:00:40.400 in order to really free up its faster growing business 0:00:40.400 --> 0:00:43.480 from its slower growing business. Christina Peterson is our food 0:00:43.520 --> 0:00:47.159 industry reporter and has been reporting on Craft Times, and Christina, 0:00:47.240 --> 0:00:50.760 the new CEO over at Craft Times, surprise everyone by saying, 0:00:50.800 --> 0:00:52.640 you know what, I'm not going to split up the company. 0:00:53.040 --> 0:00:54.000 What's the thinking here? 0:00:54.520 --> 0:00:55.040 That's right. 0:00:55.200 --> 0:00:57.760 He's only been on the job since January first, so 0:00:57.800 --> 0:00:59.760 I think this came as a surprise to folks at 0:00:59.800 --> 0:01:02.800 The split was called off about five months after it 0:01:02.840 --> 0:01:06.560 was announced or paused. There is no end date to 0:01:06.600 --> 0:01:08.679 the pause, so we don't know if it will at 0:01:08.720 --> 0:01:12.880 some point rezuom, but the CEO, Steve Kahleane said that 0:01:13.480 --> 0:01:15.800 he came on the job knowing that there had been 0:01:16.040 --> 0:01:20.120 levels of under investment in Kraft Heins's brands and decided 0:01:20.120 --> 0:01:22.320 that after reviewing all of them, that there were brands 0:01:22.360 --> 0:01:25.240 that would respond to more investment. So they announced that 0:01:25.240 --> 0:01:28.080 they would be putting six hundred million dollars into things 0:01:28.120 --> 0:01:32.399 like R and D marketing and lowering some prices in 0:01:32.480 --> 0:01:35.920 hopes that that would bolster the entire company and that 0:01:35.920 --> 0:01:38.039 that would be in a better position put them in 0:01:38.040 --> 0:01:40.760 a better position to evaluate whether they should move forward 0:01:40.800 --> 0:01:41.279 with the split. 0:01:42.160 --> 0:01:45.039 So what a most investors want? Did they you think 0:01:45.040 --> 0:01:47.480 they want the split up? Sometimes split ups work, a 0:01:47.480 --> 0:01:51.000 lot of times they don't. What if investor's been saying 0:01:51.040 --> 0:01:53.120 over the past months, There's. 0:01:52.920 --> 0:01:56.920 Clearly been some anxiety among investors since the news of 0:01:56.920 --> 0:02:00.680 the split was announced. I think that the new CEO 0:02:01.080 --> 0:02:04.720 was seen as there were hopes that he would do 0:02:04.800 --> 0:02:07.400 what he had done with the Kellgg company, which split 0:02:07.440 --> 0:02:10.760 into two publicly traded entities and then where both both 0:02:10.800 --> 0:02:14.200 of those companies were bought by privately held entities. So 0:02:14.280 --> 0:02:17.160 there was some speculation that the same thing would occur 0:02:17.280 --> 0:02:21.520 at Kraft Higns, and Kaylaine said basically not yet real. 0:02:22.400 --> 0:02:24.440 There's another twist to all of this, which is that 0:02:24.520 --> 0:02:27.960 Kraft Tigns's biggest shareholder is Berkshire Hathway and Warren Buffett, 0:02:27.960 --> 0:02:30.400 who runs Berkshire Hathway until he handed the raise to 0:02:30.440 --> 0:02:33.640 Greg Abel, said he was never a fan of that 0:02:33.800 --> 0:02:35.760 idea to split up the company. I mean, he was 0:02:35.840 --> 0:02:38.720 kind of mastermind behind craft Higns becoming the behemoth it was, 0:02:38.760 --> 0:02:41.119 and that didn't work out so well. But he made 0:02:41.160 --> 0:02:42.800 clear that the split was not a good thing in 0:02:42.840 --> 0:02:45.400 his mind. Do we think that has anything to do 0:02:45.440 --> 0:02:46.400 with this about face? 0:02:47.560 --> 0:02:50.040 I don't know. It is clear that he had publicly 0:02:50.080 --> 0:02:54.119 expressed disappointment in the split, and his successor had said 0:02:54.160 --> 0:02:57.000 in a filing that Berkshire Hathaway was taking steps to 0:02:57.120 --> 0:03:00.680 sell its twenty eight percent stake in craft Tigns. So 0:03:00.800 --> 0:03:03.560 clearly they were nervous about this and not fans of 0:03:03.600 --> 0:03:04.320 the news. 0:03:04.560 --> 0:03:07.000 So do we have any idea how long this pause 0:03:07.600 --> 0:03:11.600 will last? I mean, is he trying to turn stuff around, 0:03:11.680 --> 0:03:14.000 make it maybe better, so if when they do split 0:03:14.000 --> 0:03:15.880 it up it be worth more. What do we know? 0:03:17.000 --> 0:03:19.320 They clearly are not going to make the decision this year. 0:03:19.480 --> 0:03:22.040 They talked about returning to growth in twenty twenty seven, 0:03:22.280 --> 0:03:25.079 So it seems like this is a month's away decision. 0:03:25.720 --> 0:03:27.799 Oh the investment bankers who had that on their deal 0:03:27.800 --> 0:03:29.080 sheet for twenty twenty six. 0:03:29.720 --> 0:03:31.400 But they get paid in the meantime for the work 0:03:31.440 --> 0:03:31.919 that they've done. 0:03:31.960 --> 0:03:32.320 Right now. 0:03:32.320 --> 0:03:33.520 You don't get paid to closes. 0:03:33.560 --> 0:03:35.320 Oh really, you can't build them along the way. 0:03:35.600 --> 0:03:37.720 We're not lawyers. Okay, we get paid. 0:03:37.800 --> 0:03:40.720 We take the I like how you still say we yeah, yeah, 0:03:40.800 --> 0:03:42.320 exactly cause you feel for these guys. 0:03:42.400 --> 0:03:47.240 Yeah, what's next for Kellogg? What what's the company want 0:03:47.280 --> 0:03:50.600 to do now? Is as a standalone company. 0:03:50.400 --> 0:03:54.119 For craft Hens. Yeah, well, they've talked about releasing some 0:03:54.280 --> 0:03:58.200 healthier products. They are launching a craft Heines Mac and 0:03:58.280 --> 0:04:02.120 cheese PowerMac nice protein it. I knew iber, I knew it. 0:04:02.160 --> 0:04:02.760 I knew it. 0:04:03.960 --> 0:04:06.640 And they will be lowering prices. They talked about the 0:04:06.680 --> 0:04:11.680 opening price points being important for low income families. So 0:04:11.720 --> 0:04:13.160 those are some of the areas that they're going to 0:04:13.200 --> 0:04:16.560 be focusing on, some healthier options, more affordable price points. 0:04:16.880 --> 0:04:19.279 So Kellogg was the example of a company that split 0:04:19.279 --> 0:04:21.480 into two and then both got taken private. I mean, 0:04:21.560 --> 0:04:23.840 is that a trend overall? In the food industry to 0:04:24.080 --> 0:04:26.720 split yourself up after being kind of a big overall 0:04:26.720 --> 0:04:28.560 food company. 0:04:28.839 --> 0:04:30.920 You know, I think we're seeing examples of both of 0:04:31.000 --> 0:04:35.280 companies getting smaller and bigger. There's obviously a lot more 0:04:35.880 --> 0:04:40.520 criticism and focus on ultra processed foods. Packaged food companies 0:04:40.560 --> 0:04:43.679 are dealing with this. We saw the Super Bowl ad 0:04:43.680 --> 0:04:47.360 this weekend saying processed food kills. So I think big food, 0:04:47.760 --> 0:04:50.360 generally speaking, is trying to figure out what to do 0:04:50.440 --> 0:04:52.159 with these headwinds. 0:04:52.920 --> 0:04:56.000 So what is the story there? 0:04:56.080 --> 0:04:59.320 Is this a short term blip, this whole processed food thing, 0:04:59.800 --> 0:05:01.880 or is it's been brewing because I hear more and 0:05:01.920 --> 0:05:04.839 more and more about that being a cause for so 0:05:04.880 --> 0:05:07.920 many the ills in healthcare and people's health. 0:05:08.279 --> 0:05:10.240 I think this is the first time we've seen an 0:05:10.279 --> 0:05:15.560 administration come down so harshly on ultra processed food. That's 0:05:15.600 --> 0:05:19.240 clearly been a huge focus of Health Secretary Kennedy and 0:05:19.279 --> 0:05:22.240 the White Houses backed him up on this. Of course, 0:05:22.480 --> 0:05:25.760 Americans don't always eat the way they say they want 0:05:25.800 --> 0:05:29.640 to eat, so you know, there's plenty of Dorito's still 0:05:29.640 --> 0:05:32.160 being eaten even as people say they're trying to move 0:05:32.200 --> 0:05:33.320 away from process foods. 0:05:34.120 --> 0:05:37.280 Stay with us. More from Bloomberg Intelligence coming up after this. 0:05:41.120 --> 0:05:44.839 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:05:44.920 --> 0:05:48.000 weekdays at ten am Eastern on Apple, Cocklay and Android 0:05:48.000 --> 0:05:51.320 Auto with the Bloomberg Business App. Listen on demand wherever 0:05:51.360 --> 0:05:56.600 you get your podcasts, or watch us live on youtubelt. 0:05:55.360 --> 0:05:59.880 In Hotel reporting some numbers here today beat expectation. 0:06:00.400 --> 0:06:02.320 You know, people can't get a room anywhere. 0:06:02.320 --> 0:06:03.520 If you do, you got to pay through the nose, 0:06:03.880 --> 0:06:05.520 and the consumer seems to be doing finding. 0:06:05.600 --> 0:06:06.560 Look at some of that stuff. 0:06:06.720 --> 0:06:08.919 Brian Egger, Senior Gaming and Lodging Analysts. 0:06:08.640 --> 0:06:10.600 Joints is here in our Bloomberg Interactive Brooker Studio. 0:06:11.200 --> 0:06:14.720 Hilton Worldwide stocks up about one percent today, fifty two 0:06:14.760 --> 0:06:17.200 week high today, so pretty good for them. It's got 0:06:17.200 --> 0:06:19.080 a market cap ISS seventy five billion. What did Hilton 0:06:19.120 --> 0:06:21.520 report from an earning perspective. 0:06:21.160 --> 0:06:22.919 Yeah, so, I mean what we saw in the quarter 0:06:23.320 --> 0:06:26.360 was kind of mixed in terms of US being down 0:06:26.400 --> 0:06:27.960 a little bit or maybe a little blow of rep 0:06:27.960 --> 0:06:31.200 part in the fourth quarter, mostly because of the government shutdown, 0:06:31.360 --> 0:06:35.359 So a bit weaker in bound travel to the US, 0:06:35.360 --> 0:06:37.279 a little bit weaker government travel, but the ALC for 0:06:37.320 --> 0:06:39.720 next year. I should say for this year one twenty 0:06:39.760 --> 0:06:42.279 six is pretty good. One to two percent rep part growth. 0:06:42.200 --> 0:06:44.560 That's revenue per available per available room. 0:06:44.680 --> 0:06:49.839 Yeah, and so leisure group, luxury all kind of strong international, 0:06:50.200 --> 0:06:52.480 a little stronger than the US. But although this is 0:06:52.520 --> 0:06:55.520 an aging up cycle in the lodging industry, it's still 0:06:55.560 --> 0:06:56.120 got some WI. 0:06:56.040 --> 0:06:56.480 Likes to it. 0:06:57.320 --> 0:06:57.520 Now. 0:06:57.640 --> 0:07:00.760 Hilton, along with many of the other hotel company like Marriott, 0:07:01.080 --> 0:07:03.680 has an asset light business model, which means that it's 0:07:03.720 --> 0:07:06.480 brand licensing right. They don't actually own and manage any 0:07:06.520 --> 0:07:09.320 of their own properties, and that, you know, allows it 0:07:09.360 --> 0:07:11.600 to move more nimbly. The profit margins are much higher. 0:07:11.800 --> 0:07:13.200 What's the downside of that, Brian? 0:07:13.800 --> 0:07:15.600 So, I mean, there's some benefit to actually owning the 0:07:15.600 --> 0:07:17.520 real estate when you're really in an up cycle. But 0:07:17.680 --> 0:07:21.080 this kind of feebase model is a very capital efficient 0:07:21.120 --> 0:07:23.840 way to expand and grow. You get your franchise fees 0:07:23.880 --> 0:07:25.680 and management fees. They've got a little bit of own 0:07:25.680 --> 0:07:30.520 hotel exposure as well. But most of the lodging companies 0:07:30.560 --> 0:07:34.800 separate from the reads are actually asset light manager franchisers 0:07:35.040 --> 0:07:36.360 with some own assets. 0:07:36.480 --> 0:07:38.280 Yeah, I'm looking at you know, you've got a company 0:07:38.280 --> 0:07:41.360 with you know, thirteen billion of revenue call it, you know, 0:07:41.760 --> 0:07:45.320 four billion of EBATA, one hundred million of cappecs. 0:07:45.480 --> 0:07:46.280 Are you kidding me? 0:07:46.960 --> 0:07:47.760 That is awesome? 0:07:48.080 --> 0:07:51.320 So we who builds a If Hilton wants to. 0:07:51.240 --> 0:07:54.200 Build a new hotel in South Beach, they don't build it. 0:07:54.200 --> 0:07:54.920 Somebody else builds it. 0:07:55.000 --> 0:07:57.840 Yeah, so you're you have like ownership entities. Obviously you've 0:07:57.840 --> 0:08:01.080 got the ds like park hotels, resorts and others that 0:08:01.200 --> 0:08:03.400 own the real estate. So this is, as you said, 0:08:03.480 --> 0:08:06.880 like an asset white franchised management, tree driven business with 0:08:06.960 --> 0:08:09.520 some own hotels. There is some otel exposure. 0:08:10.120 --> 0:08:11.440 So what do they do with all the free cashal 0:08:11.480 --> 0:08:13.280 review they get? You know, most of that debada goes 0:08:13.280 --> 0:08:14.440 down to the free cashle line. 0:08:14.440 --> 0:08:18.160 They have been returning capital, right, so they've got capital returns. Uh. 0:08:18.400 --> 0:08:21.800 And you know there is real opportunity for growth within 0:08:21.840 --> 0:08:24.280 their business model, and a while of that is international, 0:08:24.400 --> 0:08:26.560 a lot of conversions, a lot of conversions from other 0:08:26.600 --> 0:08:29.280 assets that fit very well under their brand flags. And 0:08:29.280 --> 0:08:32.000 they have also been launching some new brands as well, 0:08:32.080 --> 0:08:34.000 and kind of that white style category. 0:08:34.080 --> 0:08:35.520 How many brands do they have right now? 0:08:36.080 --> 0:08:38.320 So where are they now I know Marriott's thirty one. 0:08:38.320 --> 0:08:41.480 I'm turning to remember, well, that's all those thirty one 0:08:41.640 --> 0:08:44.680 is such a slice it is. I mean, yeah, I 0:08:44.679 --> 0:08:47.960 think over all of you slice the market segment wise, 0:08:48.440 --> 0:08:51.400 Hyatt and Marriott are more prominent in the luxury high stand. 0:08:52.480 --> 0:08:54.800 Hilton has some luxury, but it's also got a very 0:08:54.840 --> 0:08:58.200 solid kind of mid scale women as service portfolio. And 0:08:58.280 --> 0:09:00.480 so what you tend to see is that in this environment, 0:09:00.920 --> 0:09:05.840 luxury upscale is tends to outperforming, and the limited services 0:09:06.000 --> 0:09:09.080 is somewhat weaker, partly because that's where you've got the 0:09:09.080 --> 0:09:13.400 government travel, you've got the transit, independent business travel, but 0:09:13.520 --> 0:09:20.160 stuff like leisure group luxury, particularly international markets UA, Europe, 0:09:20.320 --> 0:09:23.240 Non China, Asia, all have been really quite strong. 0:09:24.200 --> 0:09:26.600 I wonder, Brian, do you I know you don't cover 0:09:26.679 --> 0:09:29.400 air Andbnb as a company, but do you ever see 0:09:29.440 --> 0:09:33.040 any correlation between the performance of Airbnb and you know, 0:09:33.160 --> 0:09:36.360 a Hilton or Marriott, Because I'm sure in markets where 0:09:36.440 --> 0:09:39.400 Airbnb is not allowed, like New York City for instance, 0:09:40.040 --> 0:09:40.880 Hilton benefits. 0:09:40.960 --> 0:09:41.320 Yeah. 0:09:41.360 --> 0:09:44.199 I tend to think of, you know, the the OTAs 0:09:44.240 --> 0:09:46.760 the Airbnb's of the world, as being a factor with 0:09:46.840 --> 0:09:50.079 respect to both las Vegas watching particularly and kind of 0:09:50.120 --> 0:09:52.959 the value conscious consumer women at service. You know, you've 0:09:52.960 --> 0:09:54.960 got some extra invagery there where it's good for that 0:09:55.040 --> 0:09:57.760 kind of last minute imagery management. But the big focus 0:09:57.760 --> 0:10:01.480 of Hilton Marriott High has been for loyalty programs and 0:10:01.520 --> 0:10:05.640 a strong correlation between loyalty members and kind of booking directly. 0:10:06.320 --> 0:10:08.040 So there's there's that aspect as well. 0:10:08.200 --> 0:10:10.440 The Walt Disney Company called out in their theme park 0:10:10.480 --> 0:10:14.119 business some weakness on inbound international travel. 0:10:14.520 --> 0:10:16.000 Is that are the hotels seeing. 0:10:15.880 --> 0:10:17.559 There as well? There are some of that, I mean, 0:10:17.559 --> 0:10:21.240 some of it's from Canada terriff related. I think kind 0:10:21.280 --> 0:10:25.160 of that globally, the weaker areas maybe your inbound US travel, 0:10:25.520 --> 0:10:29.480 US governor travel, China's kind of flat as strong areas 0:10:29.559 --> 0:10:31.640 or all the other categories we talked about, you know, 0:10:31.760 --> 0:10:33.040 luxuries group travel. 0:10:33.160 --> 0:10:34.720 I always stayed in my Canadian fans. 0:10:34.800 --> 0:10:37.920 You know, the first time it drops like below twenty 0:10:37.960 --> 0:10:40.959 degrees or ten degrees in like November, you guys are 0:10:41.160 --> 0:10:42.480 booking your flights down the Florida. 0:10:42.559 --> 0:10:45.480 It can be Holling a different too, sing it different, Brian. 0:10:45.640 --> 0:10:48.680 How exposed are the Hilton's and the Mariots of the 0:10:48.679 --> 0:10:51.920 world to you know, the whole credit card debate. You 0:10:51.920 --> 0:10:55.000 know the President wanting to cap interest rates to ten 0:10:55.000 --> 0:10:57.600 percent on credit card companies and that putting at risk 0:10:57.679 --> 0:10:59.240 all these reward credit cards. 0:10:59.400 --> 0:11:03.080 Right well, I mean it's a consideration partly because a 0:11:03.120 --> 0:11:06.160 big part of that franchise fee line you see for 0:11:06.200 --> 0:11:09.840 health and merit is actually fees from co branded credit cards. 0:11:10.120 --> 0:11:13.240 That's actually a big kind of fee source. So all 0:11:13.320 --> 0:11:16.600 us being the same, the royalty rates and the level 0:11:16.640 --> 0:11:20.200 of credit card activity are somewhat of a driver for 0:11:20.280 --> 0:11:23.640 these franchise fees. These i should say co branded credit 0:11:23.720 --> 0:11:26.400 card license fees, which which kind of find their way 0:11:26.400 --> 0:11:27.720 into the franchise fee line. 0:11:27.880 --> 0:11:30.320 So it is important stay with us. 0:11:30.480 --> 0:11:32.839 More from Bloomberg Intelligence coming up after this. 0:11:36.720 --> 0:11:40.439 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:40.520 --> 0:11:43.560 weekdays at ten am Eastern on Apple, Cocklay and Android 0:11:43.600 --> 0:11:46.920 Auto with the Bloomberg Business app. Listen on demand wherever 0:11:46.960 --> 0:11:50.080 you get your podcasts, or watch us live on YouTube. 0:11:51.000 --> 0:11:53.200 Let's get back to earnings right now, because plenty of 0:11:53.200 --> 0:11:56.240 companies reporting. We're past the point where big tech is reporting. 0:11:56.480 --> 0:11:59.920 Now it's consumer related companies. We have a telecom name 0:12:00.280 --> 0:12:04.119 reporting one of the biggest. T Mobile adding fewer subscribers 0:12:04.120 --> 0:12:07.559 that anticipated, yet the stock is moving higher. John Butler 0:12:07.679 --> 0:12:10.960 is our senior telecom analyst, and John, in terms of 0:12:11.000 --> 0:12:15.319 the actual growth in its subscribers, this was a disappointing 0:12:15.360 --> 0:12:16.280 quarter for T Mobile. 0:12:17.679 --> 0:12:20.880 It was a bit of a disappointment for T Mobile Scarlet. 0:12:20.920 --> 0:12:23.680 I think one of the things that really impacted them 0:12:23.800 --> 0:12:27.880 is we've seen Verizon, which now has a new CEO 0:12:28.080 --> 0:12:32.240 who's come in. He's very volume focused, so he's out there. 0:12:32.760 --> 0:12:36.800 They're promoting heavily. They're trying to win new subscribers, and 0:12:36.880 --> 0:12:38.880 I think it took a bit of a den out 0:12:38.920 --> 0:12:42.360 of T Mobile's growth in the fourth quarter. I think 0:12:42.400 --> 0:12:45.240 one thing T Mobile did which was smart is they 0:12:45.280 --> 0:12:50.400 combined the four Q report with a capital market stay update. 0:12:50.480 --> 0:12:55.200 They updated their twenty twenty seven guidance, and they increased 0:12:55.240 --> 0:12:58.880 their free cash flow outlook for twenty seven by one 0:12:58.920 --> 0:13:01.920 point five billion. And so when you saw them do that, 0:13:02.559 --> 0:13:08.280 you saw an inflection and investor sentiment almost instantly, because 0:13:08.480 --> 0:13:12.600 again this has this has gone from a story of 0:13:13.200 --> 0:13:16.800 revenue growth. Now they're pivoting more to free cash flow growth. 0:13:16.840 --> 0:13:21.280 They're really pointing investors to that bottom line to to 0:13:22.760 --> 0:13:25.800 you know, get the focus off of revenue growth as 0:13:25.920 --> 0:13:29.920 things get more promotional and as industry growth slows. 0:13:30.400 --> 0:13:33.040 So is this a new wave of just I guess 0:13:33.080 --> 0:13:34.920 across the board. If you know, Verizon is getting a 0:13:34.920 --> 0:13:38.240 little bit more promotional this T Mobile to AT and T, 0:13:38.400 --> 0:13:40.800 do they have to respond or the other things they 0:13:40.800 --> 0:13:41.120 can do? 0:13:42.880 --> 0:13:47.360 So great question, Paul. Right, We're in a mature industry backdrop. Now, 0:13:47.440 --> 0:13:52.120 growth overall is slowing for everyone. T Mobile is not 0:13:52.280 --> 0:13:56.200 alone in point pointing to pree cash flow growth. You've 0:13:56.200 --> 0:13:59.000 got AT and T and Verizon doing the same thing. 0:13:59.679 --> 0:14:03.800 And so I think again, with that new CEO in place, 0:14:03.920 --> 0:14:07.760 now you've got T Mobiles sort of driving a growth 0:14:07.840 --> 0:14:13.120 story that centers on not only smart promotion, but also 0:14:13.320 --> 0:14:18.959 driving into adjacent markets like advertising and even credit cards. 0:14:20.160 --> 0:14:20.360 Yeah. 0:14:20.360 --> 0:14:22.520 I'm a Team Mobile subscriber, and there's always a ton 0:14:22.560 --> 0:14:25.080 of emails from the company offering all kinds of different 0:14:25.160 --> 0:14:27.480 services and deals, and it really feels like they're just 0:14:27.560 --> 0:14:30.960 trying to develop you into their ecosystem. John, I kind 0:14:30.960 --> 0:14:34.560 of call the effort to sell internet access to AT 0:14:34.600 --> 0:14:37.880 broadband customers a side hustle for these telecoms companies. But 0:14:37.920 --> 0:14:40.800 this is how they can make sure that they continue 0:14:40.840 --> 0:14:43.840 to build out their customer base even as they try 0:14:43.840 --> 0:14:46.240 to fight for market share when it comes to mobile 0:14:46.280 --> 0:14:49.440 phone subscribers. How is that side hustle going for TEA Mobile. 0:14:51.200 --> 0:14:53.760 So the side hustle, as you call it, and I 0:14:53.800 --> 0:14:57.080 think that's a good word for it, is still small 0:14:57.200 --> 0:15:00.360 right now. I think they're real opportunity for them in 0:15:00.400 --> 0:15:04.280 the near term. Scarlet lies in the broadband business. They're 0:15:04.440 --> 0:15:09.320 pushing into fiber, another side hustle. It's small, but I 0:15:09.360 --> 0:15:12.680 think over the next couple of years it could increasingly 0:15:12.760 --> 0:15:16.000 contribute to growth. And then at the core of the 0:15:16.040 --> 0:15:21.360 broadband business is their fixed wireless access business, so delivering 0:15:21.400 --> 0:15:26.520 broadband to the home over cellular spectrum. That's been very 0:15:26.600 --> 0:15:30.680 popular and T Mobile remains a real leader there. It 0:15:30.800 --> 0:15:33.800 continues to be a growth engine for them. And so 0:15:33.920 --> 0:15:37.680 I think when you pair that with the the ad business, 0:15:38.240 --> 0:15:41.960 the credit card business, and more importantly the fiber business, 0:15:42.520 --> 0:15:46.600 it all adds up to help sustain that free cash 0:15:46.640 --> 0:15:51.640 flow growth and call it the five to six percent range, 0:15:51.640 --> 0:15:54.240 maybe even more as we go forward over the next 0:15:54.280 --> 0:15:55.160 three years. 0:15:55.640 --> 0:15:58.680 John about thirty seconds dividend policy. T Mobile's got a 0:15:58.720 --> 0:16:01.960 one point eight percent yield, Verizon five point six percent 0:16:02.040 --> 0:16:04.200 and eight and T three point nine percent, So there's 0:16:04.200 --> 0:16:06.760 something for everybody. In terms of investors, does T Mobile 0:16:06.800 --> 0:16:08.560 DoD They worry about their dividend yield. 0:16:10.520 --> 0:16:13.200 Little less so than share buybacks. In fact, one of 0:16:13.280 --> 0:16:16.400 the things they did with Capital Markets Day was announced 0:16:16.400 --> 0:16:19.880 that they're buying back five billion in shares over the 0:16:19.920 --> 0:16:22.960 course of the first quarter here, which is double the 0:16:23.040 --> 0:16:26.640 normal rate. So you know, I think they're leaning more 0:16:26.720 --> 0:16:30.200 into that than dividend growth, although it's part of that 0:16:30.320 --> 0:16:33.320 share buyback program and it's going to continue to be 0:16:33.360 --> 0:16:34.680 as we go forward here. 0:16:35.560 --> 0:16:38.000 Stay with us. More from Bloomberg Intelligence coming up. 0:16:41.720 --> 0:16:45.400 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:45.480 --> 0:16:48.880 weekdays at ten am Eastern on Applecarplay and Android Auto 0:16:48.960 --> 0:16:52.040 with the Bloomberg Business App. Listen on demand wherever you 0:16:52.080 --> 0:16:55.080 get your podcasts, or watch us live on YouTube. 0:16:55.800 --> 0:16:57.960 Let's check in with somebody who's in the TV business, 0:16:57.960 --> 0:17:00.960 in the TV advertising business, trying to make it easier 0:17:01.120 --> 0:17:04.440 for smaller midsized businesses to really get their message out 0:17:04.440 --> 0:17:08.440 there versus via all these digital opportunities here, including television. 0:17:08.440 --> 0:17:11.240 Mark Douglas, President and CEO of Mountain that is a 0:17:11.240 --> 0:17:14.800 publicly traded company, a newly publican traded company tickers and 0:17:15.720 --> 0:17:19.520 the reported numbers just today, I think stocks up thirty percent, 0:17:19.560 --> 0:17:21.480 so I guess them just today, So I guess the 0:17:21.760 --> 0:17:24.400 market likes what they heard here. Mark, appreciate you coming 0:17:24.440 --> 0:17:27.040 in our studio here talk to us about Mountain. I 0:17:27.080 --> 0:17:28.679 know you guys are trying to work with small and 0:17:28.680 --> 0:17:32.080 mid sized businesses and help them get their advertising message 0:17:32.080 --> 0:17:34.480 out in the world. That's got tons of digital and 0:17:34.520 --> 0:17:35.440 analog opportunities. 0:17:35.560 --> 0:17:37.240 So what's going on in your business? 0:17:37.320 --> 0:17:37.520 Yeah? 0:17:37.520 --> 0:17:42.600 Absolutely, So what we do is television and streaming television 0:17:42.800 --> 0:17:46.800 in particular has been underserved, but for small businesses. It's 0:17:46.880 --> 0:17:50.320 just been very hard, very expensive for small mid sized 0:17:50.359 --> 0:17:52.960 businesses to use that medium. And what we did is 0:17:52.960 --> 0:17:56.080 we turned it into performance marketing channel, like something that 0:17:56.119 --> 0:17:58.919 they can add to their marketing mix a long search 0:17:59.000 --> 0:18:03.280 along social and use streaming TV to get the next customers. 0:18:03.320 --> 0:18:06.640 And we've been consistently growing. And you know, we did 0:18:06.680 --> 0:18:10.320 earnings last night and I had a very strong quarter 0:18:10.359 --> 0:18:12.800 in Q four, very strong, ended a very strong year, 0:18:13.400 --> 0:18:17.280 and we're you know, our focus is on continuing to 0:18:17.359 --> 0:18:19.000 just exeget the business and do the same. 0:18:19.760 --> 0:18:22.080 And I am assuming for even the small businesses, the 0:18:22.119 --> 0:18:25.440 opportunities lie in things like live sporting events, because those 0:18:25.480 --> 0:18:29.120 are must view, appointment watching that you don't get from 0:18:29.119 --> 0:18:29.800 other shows. 0:18:29.920 --> 0:18:30.240 Yeah. 0:18:30.280 --> 0:18:32.720 Absolutely, Well, the nice thing about streaming is you can 0:18:32.880 --> 0:18:36.879 everyone can find whatever is their you know, thing that 0:18:36.920 --> 0:18:39.159 they love to watch. For me, actually, one of the 0:18:39.280 --> 0:18:42.040 things I love talking about in this business is just 0:18:42.119 --> 0:18:43.159 like the shows I like. 0:18:43.240 --> 0:18:45.359 So, I'm a big fan of Traders right now. 0:18:46.880 --> 0:18:49.800 I love that show on Peacock cannot wait till they 0:18:49.880 --> 0:18:52.520 only released one episode of the week. I'm like, kind 0:18:52.560 --> 0:18:55.680 of damn, well, I just get all tet episodes and once. 0:18:56.119 --> 0:18:58.480 But you know live sports, I watch the super Bowl, 0:18:58.600 --> 0:19:01.440 you have March and it's coming up. You have a 0:19:01.480 --> 0:19:03.240 lot of dating shows for Valentine's say. 0:19:03.240 --> 0:19:04.000 So all of that. 0:19:04.080 --> 0:19:06.920 We give our customers access to all of that kind 0:19:06.920 --> 0:19:10.679 of content, get their message and really target it and 0:19:10.720 --> 0:19:14.280 most importantly, measure the impact how much revenue that drive 0:19:14.359 --> 0:19:17.320 to their business. And so we pioneered this space. We 0:19:17.400 --> 0:19:21.560 call it performance TV. We literally created the term performance TV. 0:19:21.680 --> 0:19:24.760 It's now ubiquitous in the advertising industry, and we just 0:19:24.880 --> 0:19:27.920 kind of keep growing into the scaley opportunity, which we 0:19:27.960 --> 0:19:28.880 think is enormous. 0:19:29.320 --> 0:19:30.160 Talk to about AI. 0:19:30.240 --> 0:19:34.520 How's AI impacting the advertising business? Meta calls it out. 0:19:34.680 --> 0:19:36.320 Google calls it out as. 0:19:36.240 --> 0:19:38.080 Relates to their YouTube business and or search business. 0:19:38.560 --> 0:19:39.480 How do you see it impacting it? 0:19:40.160 --> 0:19:42.960 It's having an impact across the board. The obvious is 0:19:43.000 --> 0:19:47.440 on the creative the time they get creative, like meaning 0:19:47.720 --> 0:19:50.160 what does it take to get a TV commercial? Used 0:19:50.200 --> 0:19:53.640 to be a lot of costs, very time consuming, lots 0:19:53.640 --> 0:19:56.919 of people involved. That still occurs for some of the creative, 0:19:56.920 --> 0:20:00.639 but increasingly there's AI creative. We ourselves are now putting 0:20:00.680 --> 0:20:04.760 out two to three Mountain branded TV commercials a week 0:20:04.920 --> 0:20:07.639 that are being created like in the under a day. 0:20:08.640 --> 0:20:11.800 We have what we now refer to as AI creators 0:20:11.880 --> 0:20:15.119 using our own tools to do that, and it's just 0:20:15.359 --> 0:20:18.879 substantially lowered the cost. We did a video last week 0:20:19.359 --> 0:20:22.359 for around the show Heated Rivalry, which is kind of 0:20:22.359 --> 0:20:25.280