Speaker 1: From Mahart. We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: I'm Caroline Heiner bluemgg's world headquarters in New York, and
Speaker 3: I'm Ed Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology.
Speaker 3: Coming up Paramount Warner Brothers. Are they in talks for
Speaker 3: a possible merger. We're going to break down what we
Speaker 3: know on any talks between the two biggest media companies
Speaker 3: in the world.
Speaker 4: We'll get the outlook for the tech sectors.
Speaker 5: Then, as that one hundred bounces back from a sell off,
Speaker 5: the knocked it off record highs dnny Fish of Janis
Speaker 5: Henderson in the house.
Speaker 3: Plus Apple rams up production of its Vision Pro headset,
Speaker 3: so in the stage for a launch by this February.
Speaker 4: The one story that everyone's talking about.
Speaker 5: Warner Brothers, Discovery and Paramount have held talks about a merger.
Speaker 4: According to Bloomberg's sources.
Speaker 5: Who else to turn to on the details than Bloomberg's
Speaker 5: Lucas Shaw, who leads our screen time coverage of Global
Speaker 5: Hollywood And Lucas what do we know?
Speaker 6: Well, we know that that Warner Brothers Discovery CEO David
Speaker 6: Zaslav had lunch with or had a meal with Paramount
Speaker 6: Global CEO Bob Backish, and that there have been sort
Speaker 6: of informal conversations between the two companies, also involving Sherry Redstone,
Speaker 6: who sort of controls Paramount.
Speaker 1: You know, it's early.
Speaker 6: Warner Brothers Discovery can't even do a deal like this
Speaker 6: for a few months because of some complications or some
Speaker 6: tax issues related to the deal that they did. But look,
Speaker 6: we have been assuming that there would be greater consolidation
Speaker 6: in the media business over the last few months, and
Speaker 6: a deal between these two is one of many scenarios
Speaker 6: it's been proposed. I don't think this was a huge
Speaker 6: shock to anyone. I think people may be a little
Speaker 6: surprised by how quickly it came or at what point
Speaker 6: they were thinking that maybe there'd be some discussion in
Speaker 6: spring of next year.
Speaker 7: I think that's exactly it isn't it, Lucas.
Speaker 3: Everyone's been deciding how we're going to see consolidation. Everyone's
Speaker 3: been eyeing, you know, the ongoing narrative that maybe Paramount's
Speaker 3: going to be selling off some of its assets, but
Speaker 3: ultimately have we sort of open Pandora's box here.
Speaker 7: Can it be closed that.
Speaker 3: These sorts of companies actually are a going concern in
Speaker 3: their current scenario and their current forms.
Speaker 6: Well, it's a good question, and some of that is
Speaker 6: really up to Sherry Redstone, right, she has to decide
Speaker 6: what she wants to do with her family company.
Speaker 4: That can mean that she.
Speaker 6: Sells it for pieces, they have explored a sale of
Speaker 6: bet they've been approached about someone who wanted to buy showtime,
Speaker 6: or she can try to sell the whole thing, or
Speaker 6: she can try to buy something or hold on.
Speaker 4: Most people assume that things.
Speaker 6: Are going to get worse before they get better, and
Speaker 6: may never be able to get better. You know, the
Speaker 6: linear TV business is just moving in the wrong direction.
Speaker 6: But that's what happens when a family controls a company,
Speaker 6: they get to decide what.
Speaker 4: They want to do.
Speaker 3: We want to thank you, Lucas Shaw just all across
Speaker 3: this story as always and throughout what's happening in the
Speaker 3: world of Hollywood. We're now joined for some more perspective
Speaker 3: on an analyst who's kind of been calling this joining
Speaker 3: together of two of some of the biggest companies media
Speaker 3: companies in the world she's over at Needham Senior Entertainment
Speaker 3: and Internet. Aalyist is Laura Martin. You've got a hold
Speaker 3: rating on Aller Brothers Discovery shares, You've got a buy
Speaker 3: rating on Paramount and naturally. Back in November, we're thinking
Speaker 3: about how these two juggernauts could sort of perhaps be
Speaker 3: bigger than the some of their parts that they come together.
Speaker 7: Do you still stand by that? Do you think they
Speaker 7: could be better together?
Speaker 8: Yeah?
Speaker 9: I think they'd definitely be better together because both of
Speaker 9: their streaming assets at Paramount Plus and HBO Max or subscale,
Speaker 9: but you put them together, they would be bigger than
Speaker 9: Netflix or the Disney Plus bundle with Hulu, so that
Speaker 9: would make them They got way too much debt over
Speaker 9: at Paramount. When you put these companies together, especially if
Speaker 9: you issue equity to do the deal, suddenly the enterprise
Speaker 9: isn't as overlevered. And we've got a world class cost
Speaker 9: cutter at Warner Brothers Discovery, so we think they could
Speaker 9: get a billion to two billion dollars worth of cost
Speaker 9: cutting if you put these companies together, which would delver
Speaker 9: the enterprise much faster than either company can delever standalone.
Speaker 9: So we think these two companies are worth more than
Speaker 9: the some of their parts. Importantly, Amazon and Apple are
Speaker 9: DC contacts. I would not be allowed to buy Paramount
Speaker 9: or anything else really but not be allowed.
Speaker 8: And because Paramount owns CBS, which is a.
Speaker 9: Broadcaster, Disney can't buy it because they own ABC, nor
Speaker 9: can Comcast buy it because they own NBC.
Speaker 8: So limited. The number of people that are big.
Speaker 9: Enough and could buy Paramount, including the CBSS.
Speaker 4: Is sort of limited to Warner Browners.
Speaker 8: It's sort of the only bidder.
Speaker 5: So on that point of Paramount having something that Warner
Speaker 5: Brothers doesn't CBS to traditional broadcast network. In the Axios report,
Speaker 5: they made this idea that Warner Brothers executives see that
Speaker 5: as a reason that it might pass the regulatory test
Speaker 5: that they are acquiring something or would acquire something that
Speaker 5: they already have.
Speaker 8: I agree with that.
Speaker 9: And also regulators really care about the number of local
Speaker 9: voices and CBS broadcaster in the hands of Paramount, where
Speaker 9: the debt is fifteen billion and the equities ten billion,
Speaker 9: which actually has the risk of financial distress which means
Speaker 9: CBS might cease to exist, is they should, they would
Speaker 9: be happy, I think to put it with Warner Brothers Discovery,
Speaker 9: where the whole enterprise becomes less leveraged overall, which increases
Speaker 9: the chance that CBS can survive as a local voice
Speaker 9: in every market.
Speaker 5: I think back to some valley earlier in the year.
Speaker 5: The same existential question still is there. How do you
Speaker 5: make any streaming platform profitable? And in that respect, Laura,
Speaker 5: how would this deal achieve that?
Speaker 9: So everybody's raising price, right, we have streamflation, I mean streamers.
Speaker 4: Are taking inflation.
Speaker 8: Nice streamflation up thirty to fifty percent.
Speaker 9: So everybody's raising price and you must cut content costs,
Speaker 9: you must, and they are are doing that. So we're
Speaker 9: getting higher prices for consumers and lower original content.
Speaker 8: So the consumers getting squeezed in this.
Speaker 9: But Wall Street and the consumer are often at odds,
Speaker 9: and it is time to play wall Street's game because
Speaker 9: these stocks are down sixty to seventy percent because Wall
Speaker 9: Street is moving capital out unless you consolidate, which drives
Speaker 9: earnings for share growth, or unless you get profitability in
Speaker 9: your streaming assets.
Speaker 3: What other configurations do you see, Laura, if this is
Speaker 3: to you the better outcome, what are the other areas?
Speaker 7: What asset sales you anticipating?
Speaker 3: We keep on talking about it around Paramount, but sometimes
Speaker 3: market narratives get ahead of actually what would really occur.
Speaker 8: So you know, we think that.
Speaker 9: The streaming So right now consumers have five streaming platforms
Speaker 9: and the biggest frustration for consumers is it feels like
Speaker 9: no matter what they're paying for the content on something
Speaker 9: they're not paying for. Super frustrating for consumers. So you know,
Speaker 9: I think at the end of the day, there are
Speaker 9: three big streaming platforms total. Amazon Prime Onion will be
Speaker 9: one of them because Amazon the entity never needs to
Speaker 9: make money on its video service. So Amazon Prime winner.
Speaker 9: I would guess that the Disney Bundle winner, although I
Speaker 9: would like to see Apple by Disney, but can't be
Speaker 9: done so long as we have the current administration because
Speaker 9: big is bad in Washington, DC right now. So then
Speaker 9: that's the third. A lot of people will put Netflix
Speaker 9: in that camp, which means there isn't room for Peacock,
Speaker 9: which is owned by Comcast.
Speaker 8: There isn't room for Paramount Warner Brothers.
Speaker 9: But it just tells you there should be more consolidation
Speaker 9: in this group in the larger entities.
Speaker 5: Well, all you've just done is list off every subscription
Speaker 5: I have in my household.
Speaker 4: And you raise a good point that that's a lot.
Speaker 5: I mean, let's go back to the point that content
Speaker 5: is king right, and this deal we'll do Apple and
Speaker 5: Disney on another day, Paramount and HBO Max. From a
Speaker 5: content perspective, I think of The Last of Us being
Speaker 5: my favorite series of the year. Is there a content
Speaker 5: advantage to doing this, Laura, Yes.
Speaker 8: Absolutely.
Speaker 9: One of the largest film, largest and high quality film
Speaker 9: libraries sort of on planet Earth is that Warner Brothers
Speaker 9: Library CBS, which was the number one TV network okay
Speaker 9: with NBC taking like sixty years for the last fifty years,
Speaker 9: has the largest television library. So putting these two libraries together,
Speaker 9: you end up with sort of an unparalleled, enormous IP
Speaker 9: content library that you can then make sequels from or
Speaker 9: license to other people. So yes, the library would become
Speaker 9: best in class. And that then feeds your streaming app,
Speaker 9: which would be the combination of HBO plus Paramount plus,
Speaker 9: so you'd get a really big streaming app, and you
Speaker 9: would have the option to license content to other streaming
Speaker 9: apps if you wanted, like Netflix, if they wanted to
Speaker 9: pay a fortune for a couple of your mission impossible
Speaker 9: movies or er some of your great ncis some of
Speaker 9: your great CBS long running TV.
Speaker 4: Shows Needums or a Martin.
Speaker 5: You have an encyclopedic knowledge of what to watch literally
Speaker 5: as well as good insight on this deal. It's great
Speaker 5: to have you on the program again. Okay, there's just
Speaker 5: a few days of trading left. In twenty twenty three,
Speaker 5: the market winners of the year have been tech stocks,
Speaker 5: with then as that one hundred outpacing the S and
Speaker 5: P five hundred and fifty percent or more than fifty
Speaker 5: percent gain year to date. That puts it on track
Speaker 5: for its biggest annual jump going back to two thousand
Speaker 5: and nine. Joining us here in San Francisco on set
Speaker 5: Danny Fish, portfolio manager on the Global Technology in Innovation
Speaker 5: Team at Janis Henderson. If you go back two years
Speaker 5: or five years when I moved to the Bay Area,
Speaker 5: or with respect to nineteen ninety five, when you move
Speaker 5: to the Bay Area, technology comes out on top, it
Speaker 5: will it continues to come out on top?
Speaker 4: Is the question?
Speaker 10: Yeah, I mean it's it's a really good question. And
Speaker 10: I you know, given the secular trends that we have
Speaker 10: in place in the foundation that we've lead over the
Speaker 10: last twenty five years, I firmly believe that's the case.
Speaker 4: And the reality is.
Speaker 10: If you look at the tech sector in general, look
Speaker 10: at now at this point in time, by the end
Speaker 10: of twenty twenty four, if you look at the largest
Speaker 10: spenders on CAPEX globally, seven out of ten of those
Speaker 10: are going to be technology companies. If you look at
Speaker 10: companies that are spending the most on R and D
Speaker 10: across the global economy, six or seven out of the
Speaker 10: top ten globally are tech companies. The scale that's required
Speaker 10: to compete on an ongoing basis is at an immense
Speaker 10: level that continues to advantage the magnificent seven, let's call it.
Speaker 10: But then in addition, there's so much innovation that's being
Speaker 10: unleashed in areas like artificial intelligence that are taking the
Speaker 10: handoff from the generational value creation we've seen in cloud
Speaker 10: and SaaS and other areas of the economy.
Speaker 5: I mean, AI seems like the easy catalyst to point to.
Speaker 5: Th if I punch MRR into my Bloomberg terminal and
Speaker 5: just bring up the top performers on the nastat idea today,
Speaker 5: Nvidia has been the standalone top or former.
Speaker 4: I get that story.
Speaker 5: But next you have names like Meta, AMDs not far behind,
Speaker 5: but then Door Dash, Tesla, Brolcom. Is there any commonality
Speaker 5: in AI or something else.
Speaker 10: Well, there's some commonality. Most of those companies that you
Speaker 10: just mentioned in one form or another are instituting AI
Speaker 10: into their business, either to sell it directly to consumers
Speaker 10: or businesses or to enhance.
Speaker 7: Their value proposition.
Speaker 10: So I view AI as an enabling technology that companies
Speaker 10: and the long term winners are actually going to leverage
Speaker 10: in ways that create durable competitive advantage. And that's not
Speaker 10: going to change in twenty four. Now. Look, the market
Speaker 10: finally woke up to AI in twenty twenty three, and
Speaker 10: I think as we look forward, what we have to
Speaker 10: think about is now this is where the rubber starts
Speaker 10: to meet the road, and we actually have to start
Speaker 10: to see the revenues start to come through. You know,
Speaker 10: things like if we think about Microsoft, example and co pilot,
Speaker 10: you know they're a natural winner with copilot. Do we
Speaker 10: need fifteen co pilots? I don't think we do, you know,
Speaker 10: as consumers or enterprises. And so we're really going to
Speaker 10: see companies start to separate in terms of actually monetizing
Speaker 10: AI as we go forward.
Speaker 3: Denny to that end, Is it then earnings that we
Speaker 3: have to become obsessive about. Is it are the guides
Speaker 3: that throughout the year. Is it product innovation and launches?
Speaker 3: What's going to dictate when we decide which are the
Speaker 3: winners and losers?
Speaker 10: Well, I think it's all of the above, and we're
Speaker 10: in that position now where the financial performance really needs
Speaker 10: to come through for the companies that are getting an
Speaker 10: AI halo effect. But what I would also say is,
Speaker 10: you know, if we look at you know, you were
Speaker 10: just talking about Micron, there are actually parts of the
Speaker 10: technology market that have actually underperformed, but where there are
Speaker 10: really high quality businesses. And you know, memory is an
Speaker 10: area that you know, it's you know, there are three
Speaker 10: providers globally. It's been in the most significant downturn we've
Speaker 10: seen in many years because of the overbuild during COVID,
Speaker 10: But now it's slowly starting to improve. And you know
Speaker 10: the most important thing for stocks like that is when
Speaker 10: things start to improve, And that has implications across both
Speaker 10: memory providers as well as semiconductor capital equipment providers that
Speaker 10: actually provide the equipment to build new fabs to support
Speaker 10: demands in memory that are being driven by all the
Speaker 10: things that have been driven historically and now a little
Speaker 10: bit of a kicker with AI. And then another area
Speaker 10: I would point to too is analog semiconductors. They're great businesses,
Speaker 10: they're GDP dependent, they generally grow to multiple GDP, they
Speaker 10: have higher operating margins and returns than the average company
Speaker 10: in the S and P five hundred, and they grow
Speaker 10: a multiple of them, and they've really lagged. And so
Speaker 10: this can be an opportunity with rates coming down with
Speaker 10: a better global macroeconomic backdrop, that you start to see
Speaker 10: some areas that don't necessarily get an AI halo but
Speaker 10: are actually great technology businesses.
Speaker 3: I mean, isn't it wild sixty eight percent year to
Speaker 3: date increase on Micron as an underperformance, when, of course
Speaker 3: it is when you're looking to two hundred and thirty
Speaker 3: two percent increase on the year of an Invidia or
Speaker 3: a Meta that's like more than doubled.
Speaker 7: I'm interested in.
Speaker 3: Who ultimately should be being avoided, if anyone at the moment.
Speaker 3: What's interesting is I go to, like, who the worst
Speaker 3: performing companies on year to date for the NASDAQ one hundred,
Speaker 3: and it's it's PayPal. I'm interested as to whether you know,
Speaker 3: it's fintech and those sorts of names still going to
Speaker 3: be under pressure.
Speaker 10: Yeah, so it's a really good question. And you know,
Speaker 10: PayPal is unique in that it's a classic example of
Speaker 10: what I would call a value trap. At least over
Speaker 10: the last couple of years, the company was deemed a
Speaker 10: winner through COVID. But what's happened is the competitive advantage
Speaker 10: is for the company have significantly dwindled. The take rate
Speaker 10: for the company has come in, and you've seen margin
Speaker 10: pressure in the business. And generally that is is a
Speaker 10: recipe for stock underperformance because two things happen. One is
Speaker 10: the financial performance over the near term period is actually
Speaker 10: less than inspiring than what investors are looking for. And
Speaker 10: then investors start to discount the stock and the terminal
Speaker 10: value because of questions about what the stock is going
Speaker 10: to be worth over the next decade. And that's what
Speaker 10: we've seen with names like PayPal.
Speaker 3: Denny, it's always great to get your perspective on individual
Speaker 3: names on the sector as a whole. Pushing forward, Denny Fish,
Speaker 3: we look forward to seeing you in any year of
Speaker 3: Janice Henderson say, well, meanwhile, coming up, the Apple rumbling
Speaker 3: off its production of its Vision pro we're going to
Speaker 3: be breaking down everything you need to.
Speaker 7: Know next time.
Speaker 3: Now for Talking tech and first up US semi conductors,
Speaker 3: they continue to flow to Russian military.
Speaker 7: Link companies this year.
Speaker 3: That's despite an export restriction aimed at cutting them off. Now,
Speaker 3: shipments of the semiconductors actually surged in the first half
Speaker 3: of the year, many of them traveling through Kong on
Speaker 3: their way to this sanctioned country. Texas Instruments analog Devices
Speaker 3: emerged as the biggest makers of those chips. Plus, the
Speaker 3: Biden administration is weighing a tariff to increase in increasing
Speaker 3: of that tariff on Chinese electric vehicles and other goods
Speaker 3: in an effort to make US clean energy.
Speaker 7: Products more competitive.
Speaker 3: The talks are part of years long deliberations that began
Speaker 3: shortly after Biden took office. And artificial intelligence startup Anthropic
Speaker 3: It's in talks for a seven hundred and fifty million
Speaker 3: dollars in funding. That's an evaluation of as much as
Speaker 3: eighteen point four billion now. The potential deal is being
Speaker 3: there by Silicon Valley venture capital fair Menno Adventures, startup
Speaker 3: founded by open AA open AI defectors, focuses on responsible
Speaker 3: aied all right.
Speaker 5: Another top story, let's turn into Apple gearing up for
Speaker 5: its launch of the Vision Pro joining us down to
Speaker 5: break it all down is the man with the scoop
Speaker 5: blue most mark Germin.
Speaker 4: We think February for a launch. What do we know? Hi, Ed, Yeah,
Speaker 4: thanks for having me.
Speaker 2: So Apple has ramped up production overseas in China of
Speaker 2: the Vision Pro headset. This is going to be the
Speaker 2: first product category from Apple since the Apple Watch launched
Speaker 2: in the beginning of twenty fifteen.
Speaker 4: Right now, the plan.
Speaker 2: Is to get units stateside and ready to put into customers'
Speaker 2: hands by the end of January, and they're ramping up
Speaker 2: for a retail launch late January, early February time financial
Speaker 2: buy February is what we said. So this is coming
Speaker 2: sooner than I think most people had anticipated. When the
Speaker 2: Apple Watch came out, Apple said that would launch in
Speaker 2: early twenty fifteen. For Apple, early twenty fifteen was pretty
Speaker 2: much the last week of April. So this is coming
Speaker 2: quite a bit sooner than I think a lot of
Speaker 2: people expected. So we're only a couple months away from
Speaker 2: this headset. Pretty significant launch for Apple, but it's.
Speaker 4: Going to be a bit muted.
Speaker 2: I don't think they're going to hold another media event
Speaker 2: to introduce additional functionality. I think users will either have
Speaker 2: to experience that on their own through the media, but
Speaker 2: of course Apple will probably have a ton of videos
Speaker 2: online on YouTube, on its website, tons of stuff on
Speaker 2: their website to indicate all the new features coming to
Speaker 2: the headset that weren't shown back in June at the
Speaker 2: developer comp diference. They're already working on a subsequent update
Speaker 2: to the software on the headset, Vision OS two point
Speaker 2: zero that'll come out at the tail end of twenty
Speaker 2: twenty four. So this is a big priority right now
Speaker 2: for the.
Speaker 3: Company, big priority getting their staff train up to be
Speaker 3: teaching us consumers on how it really works.
Speaker 7: Mark I'm interested in.
Speaker 3: At the same time, we know that Apple's still having
Speaker 3: to deal with potentially well already taking the Apple Watches
Speaker 3: off the shelves and showing that they can't be sold
Speaker 3: during their holiday period or the back end of it.
Speaker 7: Have we got any update on that.
Speaker 2: Actually, today is when they're going to be removing the
Speaker 2: Apple Watch from its online store. That's going to happen
Speaker 2: at three pm Eastern time noon Pacific. The Apple Watch
Speaker 2: will be removed. The reason they have to do. This
Speaker 2: is because they need time to actually import those Apple watches,
Speaker 2: actually ship those Apple watches, get them into the hands
Speaker 2: of consumers. So you have that three four day window
Speaker 2: before the ban actually comes into place on the end
Speaker 2: of Christmas Day and December twenty fifth, and then those
Speaker 2: are going to be removed from sale at Apple's physical
Speaker 2: retail channels by December twenty fourth, So Christmas Eve and
Speaker 2: all indications still show that you'll be able to still
Speaker 2: get one at Best By Target, Walmart. What have you
Speaker 2: just not an official Apple stores?
Speaker 7: Mark German always on the news, We thank you so much.
Speaker 5: Warner Brothers Discovery paramount in talks, according to sources, about
Speaker 5: a possible merger.
Speaker 3: Meanwhile, let's just get some of the analysis the takes
Speaker 3: on this potential set of talks that we're hearing about.
Speaker 3: So we need an entertainment and internet analyst, Laura Martin.
Speaker 3: Let's get another take from Rich Greenfield, like sheared media
Speaker 3: and technology analysts, who will have us be wearing a
Speaker 3: bit of an asset a Warner Brothers Discovery today.
Speaker 7: Of course they made Barbie.
Speaker 3: I'm interested in Rich whether you think that sort of
Speaker 3: content Barbie plus what paramount has would be a good
Speaker 3: equation together.
Speaker 11: Well, putting content together always makes a tremendous amount of
Speaker 11: sense having scale and content. But honestly, I couldn't disagree
Speaker 11: more with the analyst's viewpoint before putting two linear TV
Speaker 11: companies together, Well, one plus one does not equal to
Speaker 11: as we've seen when you put Viacom and CBS together,
Speaker 11: you've ended up with point five when you've put those
Speaker 11: two companies together. Putting one Media together with Discovery has
Speaker 11: led to, you know, maybe point five.
Speaker 1: You put these two.
Speaker 11: Now combined companies together, you're not going to get more
Speaker 11: than two. You're gonna get a lot less because at
Speaker 11: the end of the day, the problem is linear. Your
Speaker 11: TV is collapsing, advertising is never getting better.
Speaker 1: It's in secular decline. For TV. Viewership is in secular decline.
Speaker 11: Cord cutting meaning cable satellite, these virtual cable companies like
Speaker 11: a YouTube TV or a Hulu Live. The overall number
Speaker 11: of subscribers are in secular decline. People are moving away
Speaker 11: from bundles of channels to streaming services. Those are not
Speaker 11: fixable things. And so when seventy percent of your company
Speaker 11: is linear your TV, that's Warner Brothers Discovery today, and
Speaker 11: one hundred and fifty percent of your earnings at Paramount
Speaker 11: today are from linear your TV. Putting them together doesn't
Speaker 11: solve the problem. The way you solve the problem is
Speaker 11: dramatically shrinking your line your TV business, galing it down dramatically,
Speaker 11: not trying to enlarge it and try to take out
Speaker 11: some cost. It means literally cutting seventy eighty percent of
Speaker 11: the employees at these cable networks, at these broadcast networks.
Speaker 1: You have to dramatically reduce cost.
Speaker 4: Let's put to one side.
Speaker 5: Okay, whether or not you think the deal should happen,
Speaker 5: Can the deal happen? Would it ever pass the regulatory test?
Speaker 11: Well, you know, that is a great question that I
Speaker 11: think is not being talked about enough actually in the
Speaker 11: last twenty four hours. So thank you for asking that.
Speaker 11: The reality is no, I think the odds are actually
Speaker 11: very slim. But first of all, we don't even know
Speaker 11: what administration. You know, let's just say this was announced
Speaker 11: in February or March. Let's just you know, for humor me,
Speaker 11: you wouldn't get approval within twelve months. You would need
Speaker 11: both doj antitrust. You would also need FCC approval. This
Speaker 11: would be a long, arduous process given a potential shift
Speaker 11: in the administration.
Speaker 1: You know whether that happens or not, no idea.
Speaker 11: But the odds of this thing gets approved I think
Speaker 11: would be very difficult in a democratic administration we have today,
Speaker 11: given the way they've looked at horizontal mergers. And I
Speaker 11: also think it would be very difficult in a Republican administration,
Speaker 11: given sort of their dislike of a lot of the
Speaker 11: traditional media, news media especially. You'd be talking about putting
Speaker 11: CNN together with CBS News Good luck though those are
Speaker 11: not going to be easy transactions.
Speaker 1: But again, I don't think it's going to get to
Speaker 1: that because I.
Speaker 11: Don't think there's any real story here. I think this
Speaker 11: is sort of a There is reasons why both of
Speaker 11: these companies want to be seen as merger candidates. It's
Speaker 11: because their businesses are in secular decline and they want
Speaker 11: they'd like to have some form of M and A
Speaker 11: happen in twenty twenty four.
Speaker 1: The reality is it's unlikely.
Speaker 3: And it's certainly unlikely before April, right because the Warner Brothers.
Speaker 3: Discovery's got its hands tied in terms of doing any
Speaker 3: sort of.
Speaker 7: Deal post the Pride deal.
Speaker 3: That they're still sort of putting together, but rich what
Speaker 3: therefore could happen? Both of these assets, parts of the
Speaker 3: assets are in play. I mean, goodness, Consolidation across the
Speaker 3: entire industry is in play. Pandora's box is open. Where
Speaker 3: do we go? What should be sold to?
Speaker 4: Who?
Speaker 12: Well?
Speaker 1: I think go back.
Speaker 11: I mean over the summer, you probably remember Sun Valley
Speaker 11: Barbieger got up and said, oh, ABC's for sale, or
Speaker 11: linear TV channels or for sale. You know, I think
Speaker 11: everybody in the media sector is realizing we've hit the
Speaker 11: point of secular decline, and so everyone's you know.
Speaker 1: Everyone is rushing for the exit.
Speaker 11: You know that classic like cartoon where everyone's trying to
Speaker 11: squeeze through the door. Everybody wants to sell. The problem
Speaker 11: is who wants to buy? And I think the investors.
Speaker 11: I mean, I'm sure if you pull up stock charts
Speaker 11: on Paramount and Warner Brothers Discovery, you'll see both are
Speaker 11: down on the news.
Speaker 1: Investors don't like this.
Speaker 4: You know.
Speaker 11: More linear TV is not the answer. Anyone who says
Speaker 11: that putting linear TV in linear TV is going to
Speaker 11: magically make it better is just wrong. It's a flawed thesis.
Speaker 11: These companies lead to focus less on mergers and focus
Speaker 11: more on what is the right strategy. And so the
Speaker 11: right strategy is not trying to be a streaming company,
Speaker 11: not trying to be Netflix.
Speaker 1: It's too late. They can't do it.
Speaker 11: They don't have the balance sheets of the financials. And
Speaker 11: so take the content. Take Barbie. You mentioned that at
Speaker 11: the outset, these companies make great content. HBO is a
Speaker 11: great content engine. Stop trying to be Netflix. Focus on
Speaker 11: what you're good at, which is creating great content and
Speaker 11: monetizing it to whoever wants to buy it.
Speaker 1: On really think that's the key.
Speaker 5: You started by saying you fundamentally disagree with Laura Martin
Speaker 5: of Needham. Her point was that the content's the key.
Speaker 5: If you combine them, you have a much bigger library
Speaker 5: of content, making you more competitive against the Lights and Netflix, etc.
Speaker 5: So let's go back to space. If one, do you
Speaker 5: think this is a good deal? It sounds like know
Speaker 5: and be what about the content combination.
Speaker 11: It's a sort of you're missing you know, she's missing
Speaker 11: the entire story here, which is sure. If you could
Speaker 11: just buy Paramount the studio and combine it with Warner
Speaker 11: Brothers Discovery, that would be great.
Speaker 1: I think there would be.
Speaker 11: As we've written, there would probably be seven or eight
Speaker 11: potential buyers of Paramount the studio if it was for sale. Again,
Speaker 11: the problem here is not the studio. The problem is
Speaker 11: is that one hundred I want to make this clear,
Speaker 11: over one hundred and fifty percent of the earnings of
Speaker 11: this company come from the cable networks, the broadcast the
Speaker 11: linear TV assets.
Speaker 1: So again not the content creation.
Speaker 11: Vehicle, the linear TV assets, and so putting linear TV
Speaker 11: assets together is not a smart idea. It's why the
Speaker 11: stocks are down. This is not just about Anyone who
Speaker 11: says this is about putting the content together is completely
Speaker 11: missing the fact that what you're actually doing is putting
Speaker 11: two dying linear TV businesses together, and you're not solving
Speaker 11: the fundamental.
Speaker 3: Problem that make it betterat does not make it better
Speaker 3: at a streaming product.
Speaker 11: Sure, it would definitely make a streaming product better, absolutely,
Speaker 11: but you'd be weighing it down with having an even
Speaker 11: greater exposure to linear.
Speaker 1: TV, which is in rapid secular decline.
Speaker 11: So yes, it adds more content to the streaming service,
Speaker 11: But then you have to ask yourself, should you actually
Speaker 11: be in the streaming business or should you be an
Speaker 11: arms dealer. Sony is sitting out there smiling, making hundreds
Speaker 11: of millions of dollars of profit.
Speaker 1: There are no losses.
Speaker 11: They're laughing at the rest of the industry, looking at
Speaker 11: how everyone else is just burning black holes and streaming.
Speaker 11: You don't have to be a streamer, you know, you
Speaker 11: don't have to. We thought these companies could, and I
Speaker 11: don't think they can. Peacock is not a business. Paramount
Speaker 11: Plus is not a business. I think Max honestly, it's
Speaker 11: a good idea Originally, I don't think the balance sheet
Speaker 11: and the financial situation is capable. I think they should
Speaker 11: go back to HBO, go back to something smaller, and
Speaker 11: just execute on what they can and sell their content.
Speaker 11: Ballers does far better on Netflix than it did on HBO.
Speaker 11: Suits did far better on Netflix than it did on Peacock.
Speaker 1: Like, do what you're great at, make great.
Speaker 11: Content, and stop trying to be a streaming platform if
Speaker 11: you can't do it. And I think the last couple
Speaker 11: of years has really proven and I think the capital
Speaker 11: markets are telling you these companies can't do it, and so.
Speaker 4: M and A.
Speaker 1: It makes bankers fees.
Speaker 11: I understand why every banker is proposing and I understand
Speaker 11: all the leaks and all the trying to get something
Speaker 11: to happen, but I honestly believe you're fixing the wrong problem.
Speaker 11: The problem is the strategies need to shift. Making these
Speaker 11: things bigger is not the right answer.
Speaker 5: Rich Rich Greenfield of light Shehd. We love having you
Speaker 5: on the show. Thank you for debate, come back to
Speaker 5: your need. Yeah, all right, thank you so much. I'm
Speaker 5: coming out here on Bluemberg Technology take jobs just on
Speaker 5: what they used to be. It's the focus of today's
Speaker 5: Tech Daily, and we'll discuss it next for Jessica Kreegel,
Speaker 5: Culture Partner's Chief Scientists of Workplace Culture.
Speaker 4: Nice, this is Bloomberg Technology.
Speaker 5: Okay, tech jobs over the last decade gained a reputation
Speaker 5: for being lucrative, comfortable, and stable. This year that changed
Speaker 5: in several rounds of cuts. Meta laid off thousands of people,
Speaker 5: citing the need for greater efficiency in a tough economic environment.
Speaker 5: So did Alphabet, Amazon, Microsoft and Salesforce, and even in
Speaker 5: the last couple of weeks some smaller names have made
Speaker 5: more trims. Let's continue that conversation and bring in Jessica Kreegel,
Speaker 5: Culture Partners Chief scientist of workplace culture. Just a few
Speaker 5: days left of twenty twenty three. That was our summary
Speaker 5: at the tech jobs market. What's yours?
Speaker 12: Well, twenty twenty three was a year of transition away
Speaker 12: from the Great Resignation and towards the next year, which
Speaker 12: is going to be an election year. And election years
Speaker 12: create a lot of dynamics in the workplace that are
Speaker 12: going to be challenging for both CEOs and white collar
Speaker 12: workers and frontline workers. Frankly, everyone is going to struggle
Speaker 12: this next year. I don't think people will continue to
Speaker 12: leave their jobs, and I don't think there will be
Speaker 12: as many layoffs. I think there will instead be strife
Speaker 12: and conflict, and that will be what we have to
Speaker 12: deal with next year.
Speaker 7: Okay, so next year conflicts.
Speaker 3: Potentially we have an economic environment that well, web is
Speaker 3: it right?
Speaker 7: The pendulum has shifted.
Speaker 3: We've got people ultimately feeling that they were empowered as employees.
Speaker 3: Now we've got AI, plus the fact that people are
Speaker 3: running to run tighter ships. What happens in terms of
Speaker 3: culture at these companies, Jessica.
Speaker 12: Well, internally, interestingly, this last quarter we PubL a state
Speaker 12: of Culture report, and we're asking employees what they love
Speaker 12: about their culture what they hate about their culture. And
Speaker 12: for the first time in the history of the report,
Speaker 12: we saw political polarization rise to the top of the
Speaker 12: list is what people love and hate about their culture.
Speaker 12: People love diversity, equity, and inclusion. And we also saw
Speaker 12: woke ideology rise to the top of the list about
Speaker 12: what people hate about their culture, which means this political
Speaker 12: conflict happening internally amongst workers is creating a problem for managers.
Speaker 12: It's creating toxic workplaces, and you're going to continue to
Speaker 12: see that. It's going to amplify in twenty twenty four.
Speaker 5: It's been hard to draw conclusions from the job stata,
Speaker 5: the jobless data.
Speaker 4: Next year we have an election.
Speaker 5: Everyone is hoping from a consumer point of view, that
Speaker 5: interest rates come down. What does that set us up
Speaker 5: for in technology jobs next year?
Speaker 8: Well, it's interesting.
Speaker 12: We started this year with one point eight job openings
Speaker 12: for every job seeker. We're now around one point four.
Speaker 12: And that jobs data, the employment reports come out and
Speaker 12: the economists and leaders say, Okay, we're on track. That
Speaker 12: sounds good. Why doesn't the frontline worker experience it that way?
Speaker 12: There's the tale of two economies right now. There's the
Speaker 12: real economy according to the charts, and then there's the
Speaker 12: perceived economy that young people have today. They're looking at
Speaker 12: the price of gas, they're looking at the price of groceries,
Speaker 12: and they're frustrated. And the issue isn't necessarily is there
Speaker 12: a job. The issue is, even if I have a job,
Speaker 12: can I afford to live? That frustration is increasing unionization efforts.
Speaker 12: For example, you're seeing a lot more union activity than
Speaker 12: you have before. And as a CEO, that's what I
Speaker 12: would be worried about, is the collective action that my
Speaker 12: employees might take, the way that I handle that as
Speaker 12: I get ahead of it. The CEOs who are listening
Speaker 12: to their workforces, that are making space for people to
Speaker 12: feel heard, that are making sure that problems that are
Speaker 12: at the bottom of the organization bubble up quickly so they,
Speaker 12: as the CEO, solve those problems. Those are the CEOs
Speaker 12: that are less worried going into the next year.
Speaker 3: We've actually had some CEOs in tech saying I don't
Speaker 3: want to hear you on political divisions.
Speaker 7: Keep that at home. Is that the way it's going
Speaker 7: to have to go in twenty twenty four?
Speaker 12: Jessica, Well, I actually agree I think that's fantastic. I
Speaker 12: don't think that it's appropriate for CEOs or business leaders
Speaker 12: middle managers to offer their opinions about political issues in
Speaker 12: the workplace.
Speaker 8: That's not the place for that.
Speaker 12: And when you create a environment where we're debating political issues,
Speaker 12: you're distracted from the work at hand, and it's just unsafe.
Speaker 12: It creates a lack of psychological safety. It's unsafe also
Speaker 12: for business results. Social activism is the greatest threat to
Speaker 12: American business in twenty twenty four. Companies are great at
Speaker 12: dealing with regulation. Whatever happens with the election, people will adjust.
Speaker 12: But what they're not great at right now is understanding
Speaker 12: cultural norms at a societal level. The end zone about
Speaker 12: what's acceptable keeps moving. You're going to see DEI as
Speaker 12: a battleground this next year, and CEOs are worried about
Speaker 12: what do I say? Should I see anything, should I
Speaker 12: not say anything. It's not seeing something a problem and
Speaker 12: that is going to be the main focus for CEOs
Speaker 12: figuring out next year.
Speaker 3: I got to have you back then, Jessica Kruegel Culture Partners,
Speaker 3: Thank you. It is going to be a pretty volatile year,
Speaker 3: that's so sure. Meanwhile, let's turn now to actually those
Speaker 3: that are running the businesses, the leaders, the CEOs, particularly
Speaker 3: of certain startups in particular, and entrepreneurial and as that
Speaker 3: Entrepreneurial Center on women entrepreneurs in particular, have been running
Speaker 3: the research trying to understand where they're starting to see
Speaker 3: shifts within the viewpoints of these leaders. Nicola causes with us,
Speaker 3: executive director of nazac's Entrepreneurial Center. I've been running research
Speaker 3: ultimately trying to get into the psyche of these business
Speaker 3: leaders and ultimately what's helping and hindering.
Speaker 7: What is it the moment, Nicola, That's a great question.
Speaker 13: A lot of the challenges are not surprisingly around access
Speaker 13: to capital, but we found some very interesting and unique
Speaker 13: perspectives that emerged in the lived experience of our women
Speaker 13: entrepreneurs in America, things that are not always well talked about,
Speaker 13: such as the importance of paying oneself. You know, we
Speaker 13: have a large amount of disparities with our women entrepreneurs,
Speaker 13: including rating higher than average in the US around food
Speaker 13: insecurity and the worry of being able to make it
Speaker 13: to cash flow break ethen which right now is taking
Speaker 13: about eight years for our women entrepreneurs. But the importance
Speaker 13: of realizing if they actually pay themselves, it's the fastest
Speaker 13: indicator of getting them to cash flow break even the
Speaker 13: problem is we don't talk about the importance of paying oneself.
Speaker 13: So this emerging research is identifying some of the mythologies
Speaker 13: and challenges that we need to get away from and
Speaker 13: start to really address at a core kernel of what
Speaker 13: is going to bring vibrancy and opportunity to our new
Speaker 13: majority of business owners in this country.
Speaker 5: And Nikola, you are to all intents and purposes and
Speaker 5: not for profit that wants to help entrepreneurs or another word, founders,
Speaker 5: get going. That's right, and carrying on from our last conversation,
Speaker 5: one of the stories of this year was the thousands
Speaker 5: of people that lost their jobs at very big technology
Speaker 5: companies suddenly having some time on their hands and being
Speaker 5: able to start new companies. Is that reflected in what
Speaker 5: you see day to day?
Speaker 13: Yes, Actually it's really interesting. Some of the things that
Speaker 13: we didn't expect to see was the idea that it
Speaker 13: takes a little bit of age to find the opportunity
Speaker 13: when it comes to entrepreneurship.
Speaker 4: I mean being literally older, quite.
Speaker 13: Literally older exactly exactly. There is a reverse correlation right
Speaker 13: now of If our business owners are between forty to
Speaker 13: forty nine, they have the highest chances of success in
Speaker 13: this country, which is really interesting when we think about
Speaker 13: the typical environment of thinking, oh, I got to be
Speaker 13: eighteen industright out of college, no problems, no challenges to
Speaker 13: think of, no worries in the world. But it's actually
Speaker 13: quite the opposite. Our most successful business owners are our
Speaker 13: ones that have typically ten to twenty years of work
Speaker 13: experience behind them. And I think that's really exciting when
Speaker 13: we imagine what's possible by looking at a new appreciation
Speaker 13: of intellectual currency that's being missed in the country right now.
Speaker 3: And Nikol, what was interesting is you also say those
Speaker 3: that basically get to success break even quicker pay themselves value.
Speaker 13: Them That's right, that's right, that's right, And again I
Speaker 13: think that's not often talked about.
Speaker 7: Right, you say, go all in, don't pay.
Speaker 13: Yourself week for that payday that is eventually in a
Speaker 13: come at some point in the ever possible future. But
Speaker 13: the challenge of what we find there is that we
Speaker 13: lose so much market value in that and it actually
Speaker 13: impeded the ability for our business owners, especially our women
Speaker 13: business owners, to be successful. This is the culmination of
Speaker 13: two years of work that was funded by Wells Fargo Foundation.
Speaker 13: And were it not for these eight hundred and sixty
Speaker 13: women that took us behind the scenes, that helped us
Speaker 13: see things differently around what really drives success in community
Speaker 13: entrepreneurs and then the rise of high tech entrepreneurs, we
Speaker 13: would never have been able to discover this. It's been
Speaker 13: one of the reasons we've been so inspired to be
Speaker 13: able to share this research obviously on a national stage,
Speaker 13: including most recently being cited in the annual sec R
Speaker 13: on Recommendations to Congress.
Speaker 5: Nicola Cuisine of the NASDAQ Entrepreneurial Center, Great to have
Speaker 5: you here on the program. Okay, Cerberus and Blue Origin
Speaker 5: compete to buy SpaceX rocket rival Ula. Earlier this year,
Speaker 5: I sat down with Ula CEO Tory Bruno. Here's what
Speaker 5: he had to say when I asked him about the
Speaker 5: idea of being bought.
Speaker 14: I would never be allowed to talk about an M
Speaker 14: and A activity as the company's CEO. I've been asked
Speaker 14: this question twice a year for the last nine years.
Speaker 14: I have not been able to talk about it. Then.
Speaker 14: I can't talk about it now. Even if there were
Speaker 14: such a thing and I'll also share with you I'm
Speaker 14: not a board member of ULA's board of directors. I'm
Speaker 14: not an owner. I'm just an employee.
Speaker 5: But you did say if I were to buy a
Speaker 5: space business, I'd look at ULA, which is like a
Speaker 5: bit of a wink wink.
Speaker 3: I'm just an employee. I'm interested at. Ultimately, what is
Speaker 3: it that they're looking at? What are they seeing? What
Speaker 3: would hold them back from lurgy.
Speaker 5: It's a great question. It's the government contracts. They see
Speaker 5: all the money going to SpaceX, and despite the delays
Speaker 5: at ULA, I think a lot of investors want a
Speaker 5: piece of that.
Speaker 3: They're certainly eyeing it. It feels like MNA is just
Speaker 3: something we're talking a lot about as we end this year.
Speaker 3: And meanwhile that does it with this addition of Bluemo technology.
Speaker 5: A big thanks to everyone that listens to the pod.
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