WEBVTT - McCormick-Reckitt Could Be Kraft-Heinz's Worst Nightmare, Flickinger Says 0:00:05.800 --> 0:00:08.360 Welcome to the Bloomberg P and L Podcast. I'm Pim 0:00:08.400 --> 0:00:11.440 Fox along with my co host Lisa Abramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg P and 0:00:20.680 --> 0:00:32.240 L Podcast on Apple Podcasts, SoundCloud and Bloomberg dot Com. Well, 0:00:32.280 --> 0:00:34.240 we want to talk about one of the biggest deals 0:00:34.479 --> 0:00:37.440 in the food service and the food industry because there's 0:00:37.520 --> 0:00:40.360 distribution that may be involved, and to help us understand 0:00:40.440 --> 0:00:43.680 what's going on, We've got Bert Flickinger. And Bert, of 0:00:43.760 --> 0:00:46.159 course is an expert when it comes to retail. He's 0:00:46.200 --> 0:00:50.360 the managing director at Strategic Resource Group. Bert tell us 0:00:50.520 --> 0:00:54.400 about the companies involved, admonished me for how poorly I 0:00:54.480 --> 0:00:58.360 pronounced their names, and uh tell us about who the 0:00:58.400 --> 0:01:03.960 protagonists are Uhi. This this will be If McCormick is 0:01:04.040 --> 0:01:07.520 able to buy Record Record ben Kaiser Food division, which 0:01:07.840 --> 0:01:11.399 the crown jewels are French As Mustard and Frank's Hot Sauce, 0:01:12.200 --> 0:01:14.720 there will be one of the great acquisitions in the 0:01:14.800 --> 0:01:18.840 last fifteen years. Fast footnote. I've worked with mccormicks CEO 0:01:19.040 --> 0:01:23.240 Frank Curzy is since I started at zat Iran sleepy 0:01:23.240 --> 0:01:27.000 little New Orleans brand for years with Steve's eighties Millenn 0:01:27.120 --> 0:01:31.760 Pollock and colleagues at IPG. Lawrence and his team takes 0:01:31.760 --> 0:01:36.000 at Iran's from multi regional to national to international, and 0:01:36.160 --> 0:01:39.280 McCormick has done a lot of great things with with 0:01:39.480 --> 0:01:44.560 mayonnaise obviously spices, but with what they can do with 0:01:44.640 --> 0:01:49.320 Frank's hot sauce and UH taking French as mustard from 0:01:49.440 --> 0:01:54.640 UH distant almost non entity in major markets to a powerhouse. 0:01:55.200 --> 0:01:59.720 It's gonna be Kraft Heinz's worst nightmare. And it's people 0:01:59.760 --> 0:02:03.400 say it's overpaying, their underpaying that that's that's bold. And 0:02:03.480 --> 0:02:05.480 you say the people say that they're overpaying, I want 0:02:05.520 --> 0:02:08.160 to home in on that because they are paying four 0:02:08.240 --> 0:02:12.560 point two billion dollars for record UH Right now, McCormick 0:02:12.639 --> 0:02:15.480 shares down about five and a half percent, So indeed, 0:02:15.520 --> 0:02:19.240 shareholders do not think UH that they're going to UH 0:02:19.400 --> 0:02:22.360 compete with Kraft Heinz perhaps in the same level that 0:02:22.440 --> 0:02:24.160 you do. What gives you faith that you're right in 0:02:24.200 --> 0:02:29.040 the market's wrong. Because Laurence Lawrence Curzy has has been 0:02:29.080 --> 0:02:33.000 a brilliant brand builder and marketers his whole life. Lisa, 0:02:33.120 --> 0:02:36.760 see you look at French as um, you know, good 0:02:36.880 --> 0:02:40.919 good brand in Rochester where Wegmans is, but really hasn't 0:02:40.960 --> 0:02:45.360 achieved size and scale anywhere else. Lawrence Uh and other 0:02:45.440 --> 0:02:48.000 than the northeast, and Lawrence Curzy is will will make 0:02:48.080 --> 0:02:50.320 French as a power brand. All right, hang on, hang 0:02:50.360 --> 0:02:53.520 on Bird, hang on, that's all in the future. Can 0:02:53.560 --> 0:02:56.480 you just explain to me a little bit about the 0:02:56.560 --> 0:03:00.160 stock because at one time, I mean, this was just 0:03:00.440 --> 0:03:02.959 you know, a hundred and five bucks of share and 0:03:04.280 --> 0:03:07.600 the McCormick I mean, and unless I'm reading it wrong, 0:03:07.600 --> 0:03:10.160 I mean it has not been a pretty ride down 0:03:10.240 --> 0:03:15.080 to nine. Full disclosure, Pim. I've I've been a McCormick 0:03:15.120 --> 0:03:18.280 shareholder halfway to forever and I'm ecstatic about the deal. 0:03:18.639 --> 0:03:21.639 I've seen the stock drop in recent years as low 0:03:21.680 --> 0:03:26.800 as sixty eight. But mc McCormick needs more size and 0:03:26.880 --> 0:03:29.880 scale record Ben Kaiser never had. At the combination of 0:03:29.919 --> 0:03:34.120 the two companies gives it. Uh provides that size and scale, 0:03:34.560 --> 0:03:38.600 and they'll help the retailers profitably grow the sales in 0:03:38.640 --> 0:03:44.040 the departments and with the consumers, particularly millennials there in 0:03:44.040 --> 0:03:46.760 the sweet spot of categories that will take it from 0:03:47.600 --> 0:03:50.800 a routine category to a growth what the f Stein 0:03:50.880 --> 0:03:54.920 calls expandable consumption that the more people buy, they'll quickly 0:03:54.960 --> 0:03:58.960 consume it and and buy more. So you're you're portraying 0:03:58.960 --> 0:04:02.480 a world where just a wash in mustard and hot sauce, 0:04:03.040 --> 0:04:05.080 as well as perhaps some allspice. You know, I have 0:04:05.200 --> 0:04:08.160 to wonder given the fact that grocery chains have had 0:04:08.800 --> 0:04:12.360 quite a bit of trouble, given the depressed pricing on 0:04:12.600 --> 0:04:17.719 commodities on different food staples, as well as distribution challenges, 0:04:17.800 --> 0:04:20.680 right because we have Amazon buying whole foods, you know, 0:04:21.040 --> 0:04:23.839 how does this play into that and what challenges do 0:04:23.920 --> 0:04:26.360 they face that may uh you know, be a little 0:04:26.360 --> 0:04:31.080 bit more complicated than past challenges. Lisa, to your present points, 0:04:31.160 --> 0:04:35.360 let the key retailers in Texas or the fastest growing 0:04:35.400 --> 0:04:39.200 selling the Latino, African, American and Caucasian and Asian communities 0:04:39.240 --> 0:04:43.360 answer your question. McCormick's Mayonnaise is one of the fastest 0:04:43.360 --> 0:04:47.159 growing mayonnaisees uh craft both for miracle whip and craft 0:04:47.200 --> 0:04:50.600 mayonnaisees uh cut quality and being able to do a 0:04:50.640 --> 0:04:56.040 combination of mayo in In addition to spice product all 0:04:56.080 --> 0:05:00.720 the way across salet, snacks, condiments, uh, pickles, a lot 0:05:00.760 --> 0:05:04.919 of other things that McCormick can move quickly on. Retailers 0:05:05.320 --> 0:05:09.039 want this, They're excited about it. Consumer consumers will be 0:05:09.160 --> 0:05:10.680 very all right, hang on, hang on, hang on, let 0:05:10.720 --> 0:05:12.600 me ask, let me just let let let's just get 0:05:12.640 --> 0:05:15.880 your your detail. On another topic, I happen to do 0:05:15.960 --> 0:05:20.560 with Lawrence Curtis, right, he is the chief executive of McCormick. 0:05:20.839 --> 0:05:23.240 But he hasn't been in that role for very long, 0:05:23.360 --> 0:05:28.719 or has he. He's he's been for a few fist goals, 0:05:29.000 --> 0:05:33.280 and but Lawrence was in charge of marketing, uh, president 0:05:33.279 --> 0:05:36.080 and CEO for a long time. Okay, So this is 0:05:36.120 --> 0:05:39.080 something that that that a veteran because if he is 0:05:39.120 --> 0:05:42.520 a veteran of McCormick, I mean he's spent many many 0:05:42.600 --> 0:05:45.560 years there. Uh yeah, PIM and LI. So you could, 0:05:45.600 --> 0:05:49.560 you could, You can take any CpG company nationally internationally. 0:05:49.880 --> 0:05:54.560 Lawrence is one of the best marketers, executive leaders, and 0:05:54.640 --> 0:05:58.919 business builders anywhere any country. He can make this work. 0:05:59.839 --> 0:06:03.480 I sorry, can he make this deal work? Because I mean, 0:06:03.560 --> 0:06:06.400 right now you have a situation where their stock is 0:06:06.480 --> 0:06:09.120 down five and a McCormick stock is down five and 0:06:09.120 --> 0:06:13.760 a half percent. The record stock is up about one uh. 0:06:14.120 --> 0:06:17.440 And you know, you look at that chart of McCormick, 0:06:17.760 --> 0:06:21.320 it's not good by one. Courtys should make it. Make 0:06:21.360 --> 0:06:24.520 it work too. This will be this will be a 0:06:24.600 --> 0:06:28.039 stock even in an overvalued market. Uh. There will be 0:06:28.120 --> 0:06:32.599 up in two years. And it's an individual investor, I'd 0:06:32.640 --> 0:06:34.960 be buying more. And I don't say that lightly because 0:06:34.960 --> 0:06:37.760 there are very few stocks that that I'd recommend at 0:06:37.760 --> 0:06:43.040 this point. All right, Bert Flickinger is absolutely bullish on 0:06:43.440 --> 0:06:47.719 McCormack after this acquisition. Shareholders not so much right now, 0:06:47.760 --> 0:06:50.760 but we'll see if they joined Burnt in his enthusiasm 0:06:50.880 --> 0:06:54.359 for hot sauce and Mannise. Bert flickinjer managing director at 0:06:54.360 --> 0:07:10.400 Strategic Resource Group, coming to us on the phone. This 0:07:10.560 --> 0:07:13.280 is the era of data that just is more and 0:07:13.320 --> 0:07:16.840 more of it being churned out by huge companies. You're 0:07:16.840 --> 0:07:20.440 talking from Amazon to Google to IBM uh and it's 0:07:20.480 --> 0:07:25.160 getting more tricky to stored. All enter company called Looker, 0:07:25.400 --> 0:07:29.520 which is trying to assemble data from the variety of 0:07:29.560 --> 0:07:33.280 different places that companies have stored uh stored it without 0:07:33.520 --> 0:07:35.840 having to extract it from those platforms to give us 0:07:35.840 --> 0:07:37.440 more of a sense of what really this means, because 0:07:37.440 --> 0:07:39.680 I'm sure I butchered it. Frank b. N He is 0:07:39.760 --> 0:07:43.920 chief executive officer of Looker, which is based in Santa Cruz, California, 0:07:44.080 --> 0:07:47.480 and also joining us as man Deep Singh industry analysts 0:07:47.480 --> 0:07:51.400 at Bloomberg Intelligence, who's based Who's in Chicago today? Frank, 0:07:51.680 --> 0:07:54.640 did I totally butcher that? Can you explain a little 0:07:54.640 --> 0:07:59.320 bit better what it is that Looker is seeking to accomplish? Sure? 0:07:59.440 --> 0:08:02.880 Thanks a lot, I appreciate you having me on this morning. Um. Yeah, 0:08:02.880 --> 0:08:04.840 you know, look, there's a software product, I mean where 0:08:04.840 --> 0:08:07.760 a software as a service cloud product that helps companies. 0:08:08.360 --> 0:08:10.760 Think of it as putting data into the hands of 0:08:10.880 --> 0:08:14.160 everyone to make better decisions. You know, in the past, 0:08:14.240 --> 0:08:16.680 I think we served the c suite, or we we 0:08:16.760 --> 0:08:19.280 gave data to the CFO, or we gave data to 0:08:19.400 --> 0:08:21.960 the important people. And now what we're seeing is we're 0:08:21.960 --> 0:08:25.559 seeing companies who are who are disrupting their industries really 0:08:25.600 --> 0:08:28.120 put data into the hands of everyone so they can 0:08:28.160 --> 0:08:30.880 make better decisions. And and I mean we're doing like 0:08:30.920 --> 0:08:32.920 you said, we're doing it at interesting companies, you know, 0:08:32.960 --> 0:08:37.200 places like Amazon or the Economist or Sony Gaming, you know, 0:08:37.240 --> 0:08:40.000 Blue Apron, Twilio. So so it's the companies who are 0:08:40.000 --> 0:08:42.120 disrupting on data or finding if they if they give, 0:08:42.400 --> 0:08:44.760 if they give better information to the people in their 0:08:44.880 --> 0:08:47.840 organizations to make better decisions that they can they can 0:08:47.880 --> 0:08:50.840 actually you know, work more on on you know, fact 0:08:50.960 --> 0:08:55.160 rather than just intuition. Man Deep maybe just explained to 0:08:55.280 --> 0:08:57.480 us exactly where this fits in and what kind of 0:08:57.520 --> 0:09:01.600 growth the industry is seeing. We think bi analytics is 0:09:01.640 --> 0:09:05.880 about a fifteen to twenty billion dollar market growing at 0:09:05.920 --> 0:09:09.319 ten percent, and part of the growth, like Frank said, 0:09:09.520 --> 0:09:13.400 is coming from this wave around a self service analytics 0:09:13.480 --> 0:09:18.200 where companies are now letting their line of business users 0:09:18.320 --> 0:09:22.520 to leverage analytics and really do it on their own 0:09:22.640 --> 0:09:25.240 raw than giving it to an I T. Department to 0:09:25.400 --> 0:09:29.840 crank out reports. So that has really driven the market 0:09:30.080 --> 0:09:32.800 and I think it's it's there's a lot of upside 0:09:32.800 --> 0:09:36.480 to you know, just the growth Outlook, Frank, I'm trying 0:09:36.520 --> 0:09:40.040 to wrap my head around what exactly it means to 0:09:40.160 --> 0:09:43.680 give the consumer, the little guy, uh, the access to 0:09:43.840 --> 0:09:47.160 leverage data. Does that mean when somebody is looking up 0:09:47.160 --> 0:09:49.360 their Twitter statistics to find out how many of their 0:09:49.440 --> 0:09:52.079 users are fake or does it mean, uh, they can 0:09:52.200 --> 0:09:56.320 use Amazon data that they've accumulated to give them a 0:09:56.400 --> 0:10:00.560 personality profile of themselves. Yeah. It. You know, it doesn't 0:10:00.559 --> 0:10:03.880 even have to be that complex. You know, companies you 0:10:03.920 --> 0:10:07.160 know are operating, you know, with lots of systems. You know, 0:10:07.200 --> 0:10:10.520 they have customer support systems, and they have finance systems, 0:10:10.480 --> 0:10:12.800 and they have all of these things. But think think 0:10:12.840 --> 0:10:15.000 if I'm just a customer support person on the phone 0:10:15.000 --> 0:10:17.760 and I'm helping I'm helping people every day, I want 0:10:17.760 --> 0:10:20.240 to have access to exactly what's happening. I want to 0:10:20.280 --> 0:10:23.200 have access is the person I'm talking to? Are they 0:10:23.320 --> 0:10:26.360 not paying their bills? Are they behind? Are they you know, 0:10:26.480 --> 0:10:29.440 have they filed a lot of customer support tickets? What's 0:10:29.480 --> 0:10:32.000 their overall health? How should I be you know, kind 0:10:32.000 --> 0:10:34.360 of thinking about it when I'm talking to them in 0:10:34.480 --> 0:10:36.880 real time, you know, at that moment. And I think, 0:10:37.160 --> 0:10:39.320 you know, data has done well to serve the big 0:10:39.320 --> 0:10:41.880 science projects that you mentioned, you know, like what's happening 0:10:41.880 --> 0:10:45.920 on Twitter things like that, but it hasn't really been democratized, right, 0:10:46.000 --> 0:10:48.359 It hasn't really been put into the hands of everybody, 0:10:48.559 --> 0:10:50.080 and what we're trying to do a looker is put 0:10:50.080 --> 0:10:52.360 it into the hands of everybody, like those customer support 0:10:52.440 --> 0:10:55.680 people or or people on the warehouse floor taking pictures 0:10:55.679 --> 0:10:58.840 of merchandise. How are those pictures, you know, performing on 0:10:58.880 --> 0:11:00.920 the web really put it in the hands of everyone 0:11:00.920 --> 0:11:03.120 so they can they can you know, make better decisions 0:11:03.120 --> 0:11:06.120 every day. Frank, there's a tension here because on one level, 0:11:06.320 --> 0:11:09.520 it's important to have a certain democratization of information, and 0:11:09.840 --> 0:11:12.440 on the other hand there's some pretty big privacy concerns 0:11:12.440 --> 0:11:15.200 that this race is as well. How do you address that? Yeah, 0:11:15.240 --> 0:11:19.200 that's an interesting question. So data has been really decentralized, 0:11:19.280 --> 0:11:22.439 and there's been this proliferation of lots of like spreadsheet 0:11:22.480 --> 0:11:25.760 tools and workbook tools and and things that people carry 0:11:25.760 --> 0:11:27.800 around on their on their laptops. And that's a big 0:11:27.840 --> 0:11:31.760 security problem because you know, people go around with patient, private, 0:11:32.000 --> 0:11:34.680 private information on their laptops or things like that because 0:11:34.679 --> 0:11:37.439 they're downloading these spreadsheets. And what we're trying to do 0:11:37.480 --> 0:11:39.679 and look or is sort of bring control over all 0:11:39.720 --> 0:11:42.199 of that so that there's this single source of truth, 0:11:42.240 --> 0:11:45.400 but it's also managed and governed in their security around 0:11:45.400 --> 0:11:47.480 and I think that is a huge issue because we've 0:11:47.480 --> 0:11:49.360 really been suffering over the last ten years of a 0:11:49.400 --> 0:11:53.080 proliferation of small tools that let people walk around with 0:11:53.120 --> 0:11:56.679 stuff on on their desktops and laptops. Tell us about 0:11:56.720 --> 0:12:01.000 this language that you've developed, and why people should now 0:12:01.040 --> 0:12:05.480 go and have to learn another computer language, not more 0:12:05.559 --> 0:12:08.520 middleware please. Yeah, no, we're not. We're not, you know, 0:12:08.600 --> 0:12:11.160 saying that that business users would learn any kind of 0:12:11.240 --> 0:12:14.080 data language. But but you know, people coming out of 0:12:14.120 --> 0:12:16.199 school today who want to get into tech are often 0:12:16.240 --> 0:12:18.640 looking at data as a career. And you know, you 0:12:18.640 --> 0:12:21.040 have a lot of people are majoring in economics or 0:12:21.120 --> 0:12:23.720 business and and they're doing data stuff. It's one of 0:12:23.720 --> 0:12:26.960 the fastest growing career paths. Yeah, you end up taking 0:12:27.000 --> 0:12:30.439 that sequel server course right exactly. And what we want 0:12:30.440 --> 0:12:33.280 to do is we want to give those people interesting 0:12:33.360 --> 0:12:36.120 tools so they can better serve their companies. So the 0:12:36.160 --> 0:12:38.240 people in the company and the support team or the 0:12:38.559 --> 0:12:40.800 you know, the warehouse, they're not you know, learning a 0:12:40.880 --> 0:12:43.920 data language by any means. But we're sort of leveraging 0:12:43.960 --> 0:12:45.800 these people who are coming out of school with a 0:12:45.840 --> 0:12:50.040 bit of data background and allowing them to curate an experience, right, 0:12:50.120 --> 0:12:53.440 curate you know, a better application for those for those 0:12:53.520 --> 0:12:56.840 end business users, Man Deep, what's the barrier to entry here? 0:12:56.920 --> 0:12:59.520 Why aren't some of the behemoth tech companies coming up 0:12:59.559 --> 0:13:03.120 with their own analytics systems and UH and using them 0:13:03.240 --> 0:13:07.000 to democratize their offerings. I think right now, this is 0:13:07.160 --> 0:13:10.360 coming up bottom up, So you're you're seeing a lot 0:13:10.400 --> 0:13:13.320 of the startups, I mean a Tableau and Click are 0:13:13.360 --> 0:13:17.000 not startups anymore. But they really came up with a 0:13:17.040 --> 0:13:20.280 new way to think outside of the data warehouse realm. 0:13:20.480 --> 0:13:23.000 So a lot of this kind of functionality was done 0:13:23.000 --> 0:13:26.600 in a dataware housing platform. What these guys did was 0:13:27.040 --> 0:13:30.480 came up with this self service analytics platform where, like 0:13:30.640 --> 0:13:35.199 Frank said, you you can have the users crankout reports, 0:13:35.280 --> 0:13:38.800 analyzed the data. And this whole proliferation of cloud and 0:13:38.920 --> 0:13:43.640 AI is actually a tail wind for for this analytics wave. 0:13:43.760 --> 0:13:47.240 So the large behemoths are still catching up, you know, 0:13:47.480 --> 0:13:51.080 just integrating the new technologies, and they haven't really focused 0:13:51.080 --> 0:13:54.040 on the analytics aspect that much. Man Deep, can you 0:13:54.080 --> 0:13:57.520 just give us a little more detail about artificial intelligence? 0:13:57.559 --> 0:14:01.200 Give you about thirty seconds here, sure, So AI is 0:14:01.320 --> 0:14:05.600 really coming together in the sense that the basis of 0:14:06.120 --> 0:14:10.400 performing AI analytics is data and once you have data 0:14:10.440 --> 0:14:14.000 aggregated and you can process it in real time through cloud, 0:14:14.400 --> 0:14:17.400 it enables a lot of things in terms of doing 0:14:17.440 --> 0:14:20.360 things real time, which can drive our o I for 0:14:20.440 --> 0:14:23.480 a lot of industries. So that's really the genesis of 0:14:23.520 --> 0:14:26.360 this wave of self service analytics. Frank, I'm only going 0:14:26.400 --> 0:14:30.120 to give you ten seconds. Ai. Yeah, No, I think 0:14:30.120 --> 0:14:32.280 that you know, we're finally starting to see, you know, 0:14:32.320 --> 0:14:35.360 out of the benefit of the cloud platforms at Amazon 0:14:35.400 --> 0:14:37.880 and Google and whatnot, the ability for everyone to be 0:14:38.040 --> 0:14:40.920 like those organizations. And I think you'll see those kind 0:14:40.920 --> 0:14:43.480 of technologies go into the hands of smaller you know, 0:14:43.720 --> 0:14:46.880 or smaller companies. Thank you very much, Frank Bien. He 0:14:47.040 --> 0:14:49.640 is the chief executive of Looker. They are based in 0:14:49.720 --> 0:14:52.600 Santa Cruz and our thanks to man Deep Singh, industry 0:14:52.640 --> 0:15:09.240 analysts for Bloomberg Intelligence. One of the biggest movers today 0:15:09.240 --> 0:15:13.120 in the stock market is Scripts Networks Interactive, with a 0:15:13.240 --> 0:15:16.600 gain in its shares of about fourteen and a half percent. 0:15:16.680 --> 0:15:20.520 This comes after Discovery and via commercead to be talking 0:15:20.560 --> 0:15:24.000 about combining with this network and just for anyone who 0:15:24.040 --> 0:15:28.240 doesn't know, we're talking HDTV and food network. People want uh, 0:15:28.480 --> 0:15:31.760 some some food throwdowns and some renovations of their homes. 0:15:31.760 --> 0:15:33.000 Here to give us a little bit more of a 0:15:33.040 --> 0:15:35.840 sense of how realistic a deal is is Alex Sherman, 0:15:35.920 --> 0:15:39.760 Technology Media and Telecom Mergers and Acquisitions reporter for bloom 0:15:39.760 --> 0:15:43.120 Brick News. Alex, do you think, first of all, who 0:15:43.120 --> 0:15:46.360 do you think has the upper hand? Discovery or Viacom. 0:15:46.440 --> 0:15:49.640 So this is a tricky one because I think there 0:15:49.640 --> 0:15:52.800 are problems with both buyers um and that, and therefore, 0:15:52.920 --> 0:15:55.080 while the market seems to be pretty confident that a 0:15:55.120 --> 0:15:57.600 deal is going to happen here, I am less confident. 0:15:58.200 --> 0:16:00.680 I can look, I reported this story, so I can 0:16:00.720 --> 0:16:03.480 say that there is a sales process going on. But 0:16:03.560 --> 0:16:07.240 Scripts has been perennially for sale. Three years ago. Discovery 0:16:07.240 --> 0:16:10.280 almost bought Scripts and that deal fell apart. So there 0:16:10.360 --> 0:16:12.840 is some logic there that Discovery is at least interested. 0:16:13.280 --> 0:16:15.640 And Discovery has a lot of programming that is geared 0:16:15.640 --> 0:16:18.480 towards men in general, and Scripts has a lot of 0:16:18.520 --> 0:16:21.320 programming that is geared toward women in general. So there 0:16:21.360 --> 0:16:23.840 there is sort of a natural fit there. But that 0:16:23.880 --> 0:16:26.880 deal didn't get done for a reason, in part because 0:16:27.320 --> 0:16:31.000 there was a bid ask difference. And now if if 0:16:31.080 --> 0:16:34.680 Scripts is running a sales process, you'd imagine again Discovery 0:16:34.680 --> 0:16:37.200 would have to pay up. And Discovery is controlled or 0:16:37.200 --> 0:16:39.960 at least not quite controlled. But let's say thirty of 0:16:39.960 --> 0:16:42.600 the votes are controlled by John Malone, who is not 0:16:42.760 --> 0:16:45.320 known to bid up in auctions, So that is a 0:16:45.360 --> 0:16:48.880 problem with Discovery. Viacom's problem is if you take a 0:16:48.880 --> 0:16:52.200 look at Viacom shares, you don't You only have to 0:16:52.200 --> 0:16:55.360 go back until about March or so when Viacom was 0:16:55.360 --> 0:16:57.960 trading out about forty six dollars a share. They're now 0:16:58.000 --> 0:17:00.880 trading at thirty six dollars a share. So any deal 0:17:00.920 --> 0:17:03.600 with Viacom would probably be at least some component of 0:17:03.600 --> 0:17:05.920 it would be stock, and they sort of missed their 0:17:06.040 --> 0:17:10.360 chance to use their currency. Well uh, and now their 0:17:10.520 --> 0:17:13.640 company is about fourteen fourteen and a half billion dollar 0:17:13.760 --> 0:17:17.879 market cap company. Scripts is about let's say a nine 0:17:17.920 --> 0:17:21.200 point eight nine point nine is almost ten billion dollar 0:17:21.280 --> 0:17:24.720 market cap company. It would be a huge deal for Viacom, 0:17:24.960 --> 0:17:28.159 and they wouldn't be using their stock at its high price, 0:17:28.320 --> 0:17:31.199 So that's probably the problem with Viacom. They're just from 0:17:31.240 --> 0:17:34.640 a financial standpoint, this would be an enormous bet. Viacom 0:17:34.680 --> 0:17:38.080 almost merged with CBS. Is Scripts really the right bet? 0:17:38.280 --> 0:17:41.919 I don't know. Doesn't this also lead to Sherry Redstone, 0:17:42.920 --> 0:17:45.720 So there's control issues on both front to your point, 0:17:45.760 --> 0:17:49.800 because say you need a genealogical assistant here, because there 0:17:49.800 --> 0:17:52.639 are a lot of tangled right. So Summer Redstone is 0:17:52.640 --> 0:17:55.480 still alive, but not the only family, right. But ya, exactly, 0:17:55.480 --> 0:17:57.480 They're all run by families, which is, by the way, 0:17:57.520 --> 0:18:01.680 a bigger reason, even beyond Viacom, why any of these 0:18:01.720 --> 0:18:04.439 media deals haven't happened yet. So let me take a 0:18:04.480 --> 0:18:07.800 step back here. All of these media companies probably should 0:18:07.800 --> 0:18:12.440 consolidate with each other, and by all I mean a MC, Scripts, Discovery, Viacom. 0:18:12.480 --> 0:18:16.960 They're all challenged right now because cable providers are offering 0:18:17.119 --> 0:18:20.399 skinnier bundles where they for years and years and years, 0:18:20.640 --> 0:18:23.640 these companies have done phenomenally well because when it came 0:18:23.640 --> 0:18:27.640 time to negotiating contracts with the PayTV providers I mean 0:18:27.680 --> 0:18:30.880 the Comcast, Direct TV, Dish Network, etcetera of the world, 0:18:30.880 --> 0:18:33.320 how you get your TV. When it came down to 0:18:33.359 --> 0:18:36.960 negotiating contracts with them, the deal was you either take 0:18:37.000 --> 0:18:40.639 all of our channels or none. That is starting to 0:18:40.840 --> 0:18:44.960 happen less and less these days because the leverage has 0:18:45.040 --> 0:18:48.000 moved towards the PayTV providers who have basically said, we'll 0:18:48.000 --> 0:18:51.040 take none and then what are you gonna do about it? Uh? 0:18:51.240 --> 0:18:53.080 And the reason they're being that you can get a 0:18:53.080 --> 0:18:56.560 lot of these programming, the taped programming in other ways. 0:18:56.600 --> 0:18:58.359 You can get some on Netflix, you can get some 0:18:58.680 --> 0:19:01.520 on Hulu. Uh. You know, I want to just go 0:19:01.560 --> 0:19:04.480 a little bit broader. And when we're talking about h 0:19:04.560 --> 0:19:07.800 g TV, we're talking reality television shows, and I'm wondering 0:19:08.080 --> 0:19:11.240 how much their business model is being challenged by YouTube 0:19:11.400 --> 0:19:13.600 and the fact that the barrier to entry has just 0:19:13.680 --> 0:19:16.840 gone down so dramatically, So a lot of the programming 0:19:16.880 --> 0:19:19.440 has been challenged. The programming that has not been challenged 0:19:19.520 --> 0:19:22.400 is live programming because you can't get that on YouTube. 0:19:22.680 --> 0:19:26.800 But Discovery and and viacommon scripts they don't have live programming. 0:19:27.000 --> 0:19:30.280 So they are really in the crosshairs of how people 0:19:30.320 --> 0:19:34.560 watch TV changing and and and it's it's not it's 0:19:34.680 --> 0:19:38.280 it's not good for these companies, which is why theoretically 0:19:38.880 --> 0:19:42.879 they could merge and then they could sort of have 0:19:43.000 --> 0:19:44.800 a little bit more leverage because they could be like, well, 0:19:44.800 --> 0:19:48.240 we have these three channels that are still good, like HDTV, 0:19:48.320 --> 0:19:50.359 A lot of people still watch that. And you know, 0:19:50.400 --> 0:19:53.400 Discovery has a few channels that people still watch. And yeah, 0:19:53.440 --> 0:19:55.240 we have a bunch of these channels that nobody still watches. 0:19:55.280 --> 0:19:58.120 But if we put our combined forces together, we come 0:19:58.160 --> 0:20:00.359 up with a company that at least still has some average. 0:20:00.400 --> 0:20:02.959 Of course, you end up then with a huge company 0:20:03.000 --> 0:20:06.280 that has a lot of channels that nobody still watches too, 0:20:06.400 --> 0:20:09.000 So this runs both ways, where yeah, they get a 0:20:09.000 --> 0:20:10.680 little bit more leverage, But then what are you gonna 0:20:10.680 --> 0:20:14.399 do with the fourteen channels that no one's watching anymore? Wow? 0:20:14.440 --> 0:20:17.200 I don't know what I know. That is the challenge, 0:20:17.240 --> 0:20:19.040 I guess. But but Alex, can you just do a 0:20:19.080 --> 0:20:21.879 little family feud for us? I was on a family 0:20:21.880 --> 0:20:25.240 feud by the way, like literally on family. But we 0:20:25.320 --> 0:20:28.879 got to talk about that, all right, family, I love it, alright. 0:20:29.040 --> 0:20:31.639 So did you get to meet Richard Dawson. It was 0:20:31.640 --> 0:20:35.320 not Richard Dawson. It was Louis Anderson. I was not 0:20:35.400 --> 0:20:38.360 kissed on the cheek by Richard Dawson. All right, So 0:20:39.080 --> 0:20:41.800 who are the families involved here? So the families are 0:20:41.800 --> 0:20:45.320 the Redstone family, runs Viacom. Sumner Redstone is still alive. 0:20:45.600 --> 0:20:48.760 He's very ill. Sherry Redstone has basically been running the 0:20:48.760 --> 0:20:52.920 company and in his stead for years now. Scripts is 0:20:52.960 --> 0:20:58.600 also owned by a family, and it's the idea behind 0:20:59.280 --> 0:21:02.920 whether or not Scripts would sell has always been like, well, 0:21:02.960 --> 0:21:05.040 the family is on board if the price is right. 0:21:05.720 --> 0:21:08.840 Discovery is owned by John Malone. A MC is owned 0:21:08.840 --> 0:21:14.240 by the Dolan family. There are you know. CBS is 0:21:14.280 --> 0:21:17.040 sort of a free radical. That's the Deaths John Malone's 0:21:17.119 --> 0:21:19.560 term out there, but but only in the sense that 0:21:19.600 --> 0:21:22.439 the Redstones of course controls CBS two. They're only a 0:21:22.480 --> 0:21:25.480 free radical in the sense that less Moonvez maybe has 0:21:25.480 --> 0:21:28.439 more control than than most CEOs with that company. So 0:21:28.720 --> 0:21:30.840 some people think that CBS might be able to do 0:21:30.960 --> 0:21:34.480 something on the pure force of less Moonvez, the CEO 0:21:34.560 --> 0:21:36.840 of that company, even though he doesn't own it. So 0:21:36.920 --> 0:21:39.040 each of these families is owned. Each of these companies 0:21:39.080 --> 0:21:42.240 is owned by family, and yes they're publicly traded companies, 0:21:42.600 --> 0:21:45.399 but whether or not they actually trade depends really on 0:21:45.440 --> 0:21:47.320 whether or not the families want to keep owning the 0:21:47.359 --> 0:21:50.600 company or whether they're game to do a deal. As always, 0:21:50.640 --> 0:21:53.120 thank you very much, Alex Sherman. He is our mergers 0:21:53.119 --> 0:22:08.080 and acquisitions reporter for Bloomberg. Well, I want to turn 0:22:08.160 --> 0:22:11.840 to Ksey Matthews, an economist and the chief investment officer 0:22:11.960 --> 0:22:15.440 for U m B Bank with the responsibility for over 0:22:15.480 --> 0:22:20.280 eight billion dollars. They're based in Kansas City, and Casey Matthews, 0:22:20.280 --> 0:22:23.080 thanks very much for coming into our Bloombrook studio. Good morning, 0:22:23.080 --> 0:22:25.800 Good to see you. I'm wondering if you could. First 0:22:25.800 --> 0:22:29.199 of all, I'm outgunned here because I understand that there 0:22:29.200 --> 0:22:32.800 are two people in the studio who have connections to Wisconsin. 0:22:33.359 --> 0:22:37.520 That's right, grew up just outside Milwaukee, Wisconsin, all right, 0:22:37.640 --> 0:22:42.199 and Lisa Abrahmwitz. Come on. My mother's family is from Wiscon, Okay. 0:22:42.240 --> 0:22:44.960 So that reason I ask is what is the view 0:22:45.080 --> 0:22:49.199 of what is going on, not only with the politics 0:22:49.200 --> 0:22:54.040 and song, but with money and people's relationship. What do 0:22:54.040 --> 0:22:57.159 they think to feel confident that the stock market is 0:22:57.160 --> 0:23:00.439 going to stay moving higher? Well, yeah, let me let 0:23:00.480 --> 0:23:02.560 me start with maybe confidence in the business sector. I'm 0:23:02.600 --> 0:23:05.680 more of a mackerel stage, and we'll get into the micro. 0:23:06.280 --> 0:23:08.560