1
00:00:02,720 --> 00:00:10,600
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

2
00:00:10,640 --> 00:00:14,600
Speaker 1: Bloomberg Intelligence Podcast. Catch us Live weekdays at ten am

3
00:00:14,640 --> 00:00:17,880
Speaker 1: Eastern on Apple Coarclay and Android Auto with the Bloomberg

4
00:00:17,960 --> 00:00:21,080
Speaker 1: Business App. Listen on demand wherever you get your podcasts,

5
00:00:21,400 --> 00:00:23,600
Speaker 1: or watch us live on YouTube.

6
00:00:24,320 --> 00:00:27,560
Speaker 2: Delta Airlines came out some better expected results for the quarter,

7
00:00:27,680 --> 00:00:30,880
Speaker 2: saying that helped by leisure travelers and a rebounding corporate travel.

8
00:00:30,880 --> 00:00:33,239
Speaker 2: How about that, said Philip joins us. He's deputy team

9
00:00:33,320 --> 00:00:35,800
Speaker 2: leader for Global Aviation. Join us live here in our

10
00:00:35,800 --> 00:00:39,280
Speaker 2: Bloomberg Interactive Brokers studio. Are we kind of back to

11
00:00:39,840 --> 00:00:42,519
Speaker 2: pre pandemic levels in terms of air travel?

12
00:00:43,440 --> 00:00:46,360
Speaker 3: Also, there is a Dichoto me in the aviation industry

13
00:00:46,360 --> 00:00:50,760
Speaker 3: at the moment where we're seeing airlines profitability, especially at

14
00:00:50,800 --> 00:00:52,519
Speaker 3: the top end of the market in the premium and

15
00:00:52,640 --> 00:00:56,000
Speaker 3: corporate sector. So they're doing really well. So Delta air Lines,

16
00:00:56,080 --> 00:00:58,600
Speaker 3: United Airlines doing really well. At the other end of

17
00:00:58,600 --> 00:01:01,480
Speaker 3: the market, does the the likes of Spirit Airlines that's

18
00:01:01,480 --> 00:01:04,560
Speaker 3: in its second bankruptcy. You've got the other sort of

19
00:01:04,680 --> 00:01:06,840
Speaker 3: low cost carriers that are struggling to fill up seats,

20
00:01:06,880 --> 00:01:10,520
Speaker 3: and that's partly on account of the fact that low

21
00:01:10,560 --> 00:01:13,520
Speaker 3: cost carriers their customer base is still hurting from the

22
00:01:13,560 --> 00:01:17,000
Speaker 3: sort of tariffs and the economic uncertainty, whereas for the

23
00:01:17,040 --> 00:01:19,319
Speaker 3: top end of the market, they seem to be traveling

24
00:01:19,440 --> 00:01:20,600
Speaker 3: and as normal.

25
00:01:20,680 --> 00:01:23,440
Speaker 4: Actually, yeah, it's the manifestation of the key shaped economy

26
00:01:23,520 --> 00:01:25,560
Speaker 4: right where the higher income consumer is doing much better

27
00:01:25,600 --> 00:01:26,880
Speaker 4: than the lower end consumer.

28
00:01:27,480 --> 00:01:30,120
Speaker 5: The CEO of Delta at Bastion said.

29
00:01:30,040 --> 00:01:33,280
Speaker 4: In the earnings report that our customer is financially in

30
00:01:33,360 --> 00:01:36,880
Speaker 4: a good spot. Said, who exactly is Delta's customer because

31
00:01:36,920 --> 00:01:40,039
Speaker 4: it's not the same as you said as for instance,

32
00:01:40,040 --> 00:01:44,480
Speaker 4: Spirit or Southwest or even you can argue United, sure.

33
00:01:44,240 --> 00:01:46,200
Speaker 3: I mean Delta air Lines. I mean they frequently talk

34
00:01:46,240 --> 00:01:49,400
Speaker 3: about how their customer is in the sort of average

35
00:01:49,400 --> 00:01:52,600
Speaker 3: of over one hundred thousand earnings in one hundred thousand

36
00:01:52,600 --> 00:01:54,560
Speaker 3: dollars a year in terms of earnings, and they sort

37
00:01:54,560 --> 00:01:57,320
Speaker 3: of are looking for experiences. They're looking to sort of

38
00:01:57,360 --> 00:02:00,320
Speaker 3: travel premium. They're not looking to sort of go coach

39
00:02:00,360 --> 00:02:02,840
Speaker 3: and sort of nickel and dime their way through the

40
00:02:03,000 --> 00:02:06,440
Speaker 3: aviation experience. And they're sort of more willing to splurge

41
00:02:06,480 --> 00:02:10,639
Speaker 3: on experiences. And that's sort of the post pandemic revenge

42
00:02:10,639 --> 00:02:14,160
Speaker 3: traveler who is now continuing to sort of spend money

43
00:02:14,200 --> 00:02:17,560
Speaker 3: on travel, and they seem to be suggesting that airlines

44
00:02:17,560 --> 00:02:19,839
Speaker 3: are willing. People are willing to keep going and keep

45
00:02:19,880 --> 00:02:23,760
Speaker 3: traveling and keep spending money on experiences and holidays.

46
00:02:24,520 --> 00:02:27,560
Speaker 2: If United beach their numbers this quarter, it's because what

47
00:02:27,600 --> 00:02:31,560
Speaker 2: I spent ticket or really spared no expense to get

48
00:02:31,560 --> 00:02:34,640
Speaker 2: over there, I needed the rest. Talk to us about

49
00:02:34,680 --> 00:02:37,840
Speaker 2: just visibility. These airlines they put they have some pretty

50
00:02:37,840 --> 00:02:40,000
Speaker 2: decent visibility on on their bookings.

51
00:02:39,840 --> 00:02:40,359
Speaker 5: So they do.

52
00:02:40,400 --> 00:02:43,760
Speaker 3: They've been talking about how the visibility into the into

53
00:02:43,840 --> 00:02:46,359
Speaker 3: the holiday quarta, into the fourth quarter of the year

54
00:02:46,960 --> 00:02:49,320
Speaker 3: is looking good at the moment they see they're seeing

55
00:02:49,440 --> 00:02:52,000
Speaker 3: demand being strong as they get into the close of

56
00:02:52,000 --> 00:02:55,359
Speaker 3: the year, and that's at least. Delta Airlines is talking

57
00:02:55,360 --> 00:02:58,720
Speaker 3: about how they expect corporate travel to continue to be

58
00:02:59,200 --> 00:03:02,120
Speaker 3: so a solid and robust in twenty twenty six. Are

59
00:03:02,120 --> 00:03:06,320
Speaker 3: saying that companies that they surveyed are seeing continued appetite

60
00:03:06,320 --> 00:03:09,320
Speaker 3: for corporate travels. So it remains to be seeing what

61
00:03:09,480 --> 00:03:14,200
Speaker 3: actually materializes. I mean, airlines had massive forecasts for record

62
00:03:14,280 --> 00:03:17,240
Speaker 3: growth this year and then sort of liberation they came

63
00:03:17,280 --> 00:03:20,239
Speaker 3: around and that sort of torpedo that and they've now

64
00:03:20,320 --> 00:03:23,600
Speaker 3: sort of come back to those levels, but will remains

65
00:03:23,639 --> 00:03:25,760
Speaker 3: as be seeing what surprises come out next year.

66
00:03:25,840 --> 00:03:27,920
Speaker 4: I'm so glad you bring that up because earlier this

67
00:03:28,080 --> 00:03:32,440
Speaker 4: year Delta warned of an abrupt slowdown or I don't

68
00:03:32,480 --> 00:03:34,120
Speaker 4: know that it actually saw when it just said it

69
00:03:34,200 --> 00:03:36,720
Speaker 4: kind of was seeing it on the horizon. Has that

70
00:03:36,840 --> 00:03:38,960
Speaker 4: been completely a race and turned around?

71
00:03:39,040 --> 00:03:42,000
Speaker 3: Now for the moment, it does look like it is smooth,

72
00:03:42,240 --> 00:03:45,760
Speaker 3: smooth skies for them. But at the same time, we

73
00:03:45,800 --> 00:03:48,480
Speaker 3: don't really know what's going to happen in the current

74
00:03:48,760 --> 00:03:52,760
Speaker 3: economic environment or what demand looks like as we go

75
00:03:52,800 --> 00:03:55,640
Speaker 3: into twenty twenty six, and that's something that we need

76
00:03:55,680 --> 00:03:58,560
Speaker 3: to watch as the airline sort of report their fourth

77
00:03:58,600 --> 00:04:01,760
Speaker 3: quarter results and sort of about their future vocalsts.

78
00:04:02,320 --> 00:04:04,920
Speaker 2: What are the big airlines, the big ones you mentioned

79
00:04:05,000 --> 00:04:07,080
Speaker 2: United Deltas. What are they doing with capacity? Are they

80
00:04:07,120 --> 00:04:10,520
Speaker 2: adding capacity trimming it back? I mean, I don't know

81
00:04:10,560 --> 00:04:11,800
Speaker 2: if they're doing with routes. I don't know if they

82
00:04:11,840 --> 00:04:13,160
Speaker 2: have enough planes, all that kind of stuff.

83
00:04:13,240 --> 00:04:15,720
Speaker 3: So they have been so Delta has been adding capacity,

84
00:04:15,800 --> 00:04:19,800
Speaker 3: They've been retiring older planes and taking on new planes,

85
00:04:20,120 --> 00:04:22,120
Speaker 3: and so they seem to be adding a little bit

86
00:04:22,120 --> 00:04:22,840
Speaker 3: of capacity.

87
00:04:23,320 --> 00:04:24,400
Speaker 5: And we're also.

88
00:04:24,200 --> 00:04:27,039
Speaker 3: Seeing, like so United talk about how they are upgrading

89
00:04:27,040 --> 00:04:30,440
Speaker 3: their fleet. They're replacing their old aircraft with seven eighty

90
00:04:30,440 --> 00:04:34,599
Speaker 3: seven's and Maxes, and so we are seeing the US

91
00:04:34,640 --> 00:04:37,640
Speaker 3: carriers upgrade their fleets, and that's sort of adding more capacity,

92
00:04:37,720 --> 00:04:41,040
Speaker 3: especially as they upgate aircraft, so they sort of replace

93
00:04:41,160 --> 00:04:44,520
Speaker 3: smaller narrow bodies with the larger eight three twenty one

94
00:04:44,640 --> 00:04:46,360
Speaker 3: or the Max nine, and that sort of adds more

95
00:04:46,400 --> 00:04:48,960
Speaker 3: seats and more capacity. But then at the same time,

96
00:04:49,040 --> 00:04:52,679
Speaker 3: they're also premiumizing the cabins, so they're adding more business

97
00:04:52,680 --> 00:04:56,279
Speaker 3: class cabins and more premium economy than they ever did before.

98
00:04:56,680 --> 00:04:59,120
Speaker 5: Premiumizing. That is a new word. I had not heard

99
00:04:59,160 --> 00:04:59,520
Speaker 5: of it.

100
00:04:59,320 --> 00:05:03,720
Speaker 2: But economy coming back from Italy was actually like the

101
00:05:03,760 --> 00:05:06,520
Speaker 2: old first class in terms of really I was shocked

102
00:05:06,560 --> 00:05:07,640
Speaker 2: at how much room there was this.

103
00:05:07,800 --> 00:05:09,520
Speaker 5: How how far back can you recline?

104
00:05:10,400 --> 00:05:11,200
Speaker 6: Just the normal one?

105
00:05:11,320 --> 00:05:13,479
Speaker 2: Okay, but it was just way more like mouse And

106
00:05:13,520 --> 00:05:15,080
Speaker 2: it wasn't that much money. It was a couple hundred

107
00:05:15,120 --> 00:05:18,200
Speaker 2: bucks to uperate, So that was pretty interesting.

108
00:05:18,279 --> 00:05:20,719
Speaker 4: No, and that's that's a big part of Delta's push right,

109
00:05:20,839 --> 00:05:22,920
Speaker 4: pushing these premium products in the cabin.

110
00:05:23,440 --> 00:05:24,599
Speaker 5: What about on the ground.

111
00:05:24,640 --> 00:05:27,400
Speaker 4: What is Delta doing on the ground to really harness

112
00:05:27,960 --> 00:05:30,720
Speaker 4: its customers desire for a premium experience.

113
00:05:30,960 --> 00:05:34,159
Speaker 3: So they bartnering with they have that partnership with Uber

114
00:05:34,279 --> 00:05:38,560
Speaker 3: the they've sort of added more of those Delta one lounges,

115
00:05:38,600 --> 00:05:40,880
Speaker 3: and they're sort of doing those credit card partnerships, and

116
00:05:40,920 --> 00:05:43,200
Speaker 3: those are all sort of ways to keep customers sticky

117
00:05:43,600 --> 00:05:46,040
Speaker 3: and keep them engaged because, I mean, the moment you're

118
00:05:46,080 --> 00:05:49,080
Speaker 3: sort of signed into the ecosystem, you're more likely to

119
00:05:49,400 --> 00:05:52,120
Speaker 3: book with them and sort of not really use price

120
00:05:52,200 --> 00:05:55,680
Speaker 3: comparison websites. You're more likely to sort of keep.

121
00:05:55,440 --> 00:05:57,000
Speaker 5: Going customer for life kind of thing.

122
00:05:58,520 --> 00:06:01,599
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.

123
00:06:05,279 --> 00:06:08,960
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

124
00:06:09,040 --> 00:06:12,120
Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android

125
00:06:12,160 --> 00:06:15,440
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

126
00:06:15,520 --> 00:06:19,040
Speaker 1: you get your podcasts, or watch us live on YouTube.

127
00:06:19,839 --> 00:06:21,880
Speaker 2: You know, I'm a coke guy. Be with PEPSI in

128
00:06:21,920 --> 00:06:24,040
Speaker 2: front of me. Fine, I'm just as happy I can

129
00:06:24,120 --> 00:06:26,800
Speaker 2: realize it. But Ken Chase. He follows this stuff for living.

130
00:06:26,880 --> 00:06:30,200
Speaker 2: Ken Chase, the senior consumer products analysts of Bloomberg Intelligence. Pepsi,

131
00:06:30,240 --> 00:06:33,040
Speaker 2: reported some numbers a little bit better than expected. Here, Ken,

132
00:06:33,080 --> 00:06:35,440
Speaker 2: tell us what you heard from our good friends at PEPSI.

133
00:06:36,560 --> 00:06:40,520
Speaker 6: Yeah, Hi, Paul, Well, PepsiCo report a number today, numbers

134
00:06:40,560 --> 00:06:43,960
Speaker 6: today that we're pretty much in line, maybe a little

135
00:06:44,000 --> 00:06:48,880
Speaker 6: bit above expectations. But I think they also masked persistent

136
00:06:48,960 --> 00:06:55,280
Speaker 6: weak market conditions of the US across its broad food, snack,

137
00:06:55,440 --> 00:07:00,880
Speaker 6: and beverage businesses. The company pretty much, you know, hit

138
00:07:00,920 --> 00:07:03,560
Speaker 6: their numbers, as I said, but it didn't do much

139
00:07:03,600 --> 00:07:07,040
Speaker 6: to relieve the pressure it's getting from activists, an activist

140
00:07:07,680 --> 00:07:11,600
Speaker 6: who's asking the company to do more. Basically, flat performance

141
00:07:11,680 --> 00:07:13,760
Speaker 6: is just not good enough for something that's perceived or

142
00:07:13,760 --> 00:07:17,840
Speaker 6: a company that's perceived as a growth company. I guess

143
00:07:17,920 --> 00:07:20,360
Speaker 6: the good news is their language during the call, though,

144
00:07:20,560 --> 00:07:23,280
Speaker 6: did provide investors a bit of optimism. It sounds like

145
00:07:23,360 --> 00:07:26,160
Speaker 6: the company is getting it. They said they're going to

146
00:07:26,280 --> 00:07:29,800
Speaker 6: ramp up innovation, they're going to be more aggressive with

147
00:07:29,880 --> 00:07:32,840
Speaker 6: cost cutting. They're listening to the activist points and they

148
00:07:32,840 --> 00:07:34,720
Speaker 6: said buy a Laerds. They agree with many of them.

149
00:07:35,000 --> 00:07:37,600
Speaker 6: So those are all, you know, good things to hear.

150
00:07:37,800 --> 00:07:39,800
Speaker 6: You know, from an investor point of view, it's just

151
00:07:39,800 --> 00:07:42,520
Speaker 6: a matter of executing and actually following through with them,

152
00:07:42,600 --> 00:07:44,720
Speaker 6: I think is where the jury is out.

153
00:07:45,120 --> 00:07:48,200
Speaker 4: So I guess ken the question is is this enough

154
00:07:48,240 --> 00:07:51,120
Speaker 4: for Elliott the activist semester which took about a four

155
00:07:51,120 --> 00:07:54,200
Speaker 4: billion dollar steak in PepsiCo and called for a strategic

156
00:07:54,240 --> 00:07:59,880
Speaker 4: review a streamlining of a snack portfolio in particular, Well.

157
00:07:59,760 --> 00:08:03,440
Speaker 6: I think think the CEO of PepsiCo mentioned that they

158
00:08:04,160 --> 00:08:05,880
Speaker 6: are on the same page on a lot of fronts,

159
00:08:06,400 --> 00:08:09,080
Speaker 6: but what they didn't say is one of the big

160
00:08:09,120 --> 00:08:11,400
Speaker 6: things that Elliott is calling for is basically, you know,

161
00:08:11,440 --> 00:08:14,040
Speaker 6: the beverage business to refranchise itself, sort of what Coca

162
00:08:14,040 --> 00:08:18,280
Speaker 6: Cola does, to let the bottlers be independent rather than

163
00:08:18,360 --> 00:08:21,440
Speaker 6: own those very capital intentsive businesses. They didn't go there.

164
00:08:21,840 --> 00:08:23,800
Speaker 6: I'm sure that's going to be a big sticky point.

165
00:08:24,440 --> 00:08:27,240
Speaker 6: What they are in agreement, though, is that innovation is

166
00:08:27,280 --> 00:08:29,480
Speaker 6: needed to be even more on Trent. You know, I

167
00:08:29,520 --> 00:08:32,920
Speaker 6: covered PepsiCo. I've covered PepsiCo for a long time. They

168
00:08:32,960 --> 00:08:35,960
Speaker 6: are probably on the forefront of the most innovative companies

169
00:08:36,160 --> 00:08:38,760
Speaker 6: across the beverage world that I cover, and yet they're

170
00:08:38,760 --> 00:08:43,199
Speaker 6: even ramping it up even more aggressively across food, aggressively

171
00:08:43,240 --> 00:08:46,320
Speaker 6: across beverage to be as on trend as possible. And

172
00:08:46,400 --> 00:08:49,199
Speaker 6: on that note, you know, Bloomberg Intelligence came out with

173
00:08:49,240 --> 00:08:52,800
Speaker 6: its annual consumer Beverage survey just on Monday, and some

174
00:08:52,880 --> 00:08:56,200
Speaker 6: of the big findings that we're seeing is that advanced,

175
00:08:56,280 --> 00:09:00,800
Speaker 6: high duration, wellness, and value are more more important than

176
00:09:00,840 --> 00:09:03,280
Speaker 6: ever in the world of beverages. And it was interesting

177
00:09:03,320 --> 00:09:06,600
Speaker 6: to hear PepsiCo pretty much address all three of those

178
00:09:06,679 --> 00:09:10,040
Speaker 6: areas with their new product innovation. So that's encouraging.

179
00:09:10,720 --> 00:09:12,800
Speaker 2: At the end of the day, can as a company

180
00:09:13,520 --> 00:09:17,079
Speaker 2: like Pepsi, is that nothing more than really a GDP

181
00:09:17,320 --> 00:09:19,840
Speaker 2: kind of growth story. There's not much more you can

182
00:09:19,880 --> 00:09:22,600
Speaker 2: do to goose it above that? Or is that or

183
00:09:22,640 --> 00:09:25,720
Speaker 2: can they do better? Maybe that may be true in

184
00:09:25,760 --> 00:09:28,040
Speaker 2: the US pool. I mean, it's such a large business,

185
00:09:28,160 --> 00:09:30,960
Speaker 2: it's in most channels, it's you know, it's been around

186
00:09:30,960 --> 00:09:34,240
Speaker 2: a long time obviously, but I think most people looking

187
00:09:34,240 --> 00:09:36,439
Speaker 2: at this company would say, look, you have great opportunities

188
00:09:36,480 --> 00:09:40,840
Speaker 2: outside the US. There's much less price competition. You know,

189
00:09:40,920 --> 00:09:44,080
Speaker 2: outside the US, people are embracing you know, these consumer

190
00:09:44,160 --> 00:09:47,800
Speaker 2: goods and these brands outside the US. So that's one

191
00:09:47,840 --> 00:09:50,360
Speaker 2: of the things Elliet is actually saying, provide you know,

192
00:09:50,400 --> 00:09:53,760
Speaker 2: feed the capital needed outside the US to grow these

193
00:09:53,800 --> 00:09:57,440
Speaker 2: business in these big growing markets, you know, like China

194
00:09:57,559 --> 00:10:01,640
Speaker 2: and India and so on, Latin America. These are really

195
00:10:01,640 --> 00:10:03,920
Speaker 2: big growing markets. And to the extent that they could

196
00:10:04,000 --> 00:10:06,839
Speaker 2: play more in those markets I think would be good

197
00:10:06,920 --> 00:10:08,880
Speaker 2: for the enterprise in the whole.

198
00:10:09,360 --> 00:10:11,599
Speaker 4: But for those markets, would they need to take a

199
00:10:11,640 --> 00:10:13,439
Speaker 4: similar approach as what they do in the US. Be

200
00:10:13,520 --> 00:10:16,960
Speaker 4: more innovative, keep up with this shifting consumer taste towards

201
00:10:17,320 --> 00:10:22,280
Speaker 4: healthier offerings, higher protein, portion controlled, less sugary drinks, or

202
00:10:22,280 --> 00:10:24,160
Speaker 4: can they go with their old playbook.

203
00:10:25,880 --> 00:10:29,240
Speaker 6: I think it's a combination of doing what they're doing.

204
00:10:29,320 --> 00:10:31,680
Speaker 6: You know, in some of these markets they have to

205
00:10:32,120 --> 00:10:36,000
Speaker 6: adhere to local tastes. My guess is that a lot

206
00:10:36,000 --> 00:10:38,760
Speaker 6: of these consumers are seeking the same kind of things

207
00:10:38,800 --> 00:10:42,240
Speaker 6: the US though is or I should say, you know,

208
00:10:42,440 --> 00:10:46,400
Speaker 6: wellness value, but the portfolios are not quite as broad

209
00:10:46,520 --> 00:10:51,320
Speaker 6: outside the US. So I think it's tailoranto's the local

210
00:10:52,559 --> 00:10:56,000
Speaker 6: areas and bringing some of their learnings from the US

211
00:10:56,040 --> 00:10:57,400
Speaker 6: to these markets over time.

212
00:10:58,880 --> 00:11:01,000
Speaker 2: Ken talk to us about the They got about a

213
00:11:01,000 --> 00:11:04,120
Speaker 2: four percent dividend yield on PEPSI. That seems pretty solid.

214
00:11:04,400 --> 00:11:07,000
Speaker 2: What's their policy on dividends these days?

215
00:11:07,720 --> 00:11:10,120
Speaker 6: Oh, they're committed. I mean they know that a big

216
00:11:10,160 --> 00:11:13,920
Speaker 6: shareholder base, you know, is income investors. So they are

217
00:11:13,920 --> 00:11:17,520
Speaker 6: there committed. In every quarter like this one, they said, Look,

218
00:11:17,520 --> 00:11:21,280
Speaker 6: we're committed to have a multi prong capital allocation policy.

219
00:11:21,280 --> 00:11:24,320
Speaker 6: We're going to you know, invest in the business, you know, innovation,

220
00:11:24,720 --> 00:11:28,040
Speaker 6: like I said, but they're also going to buy stockback

221
00:11:28,200 --> 00:11:31,120
Speaker 6: on a you know, selected basis. They're going to commit

222
00:11:31,240 --> 00:11:36,520
Speaker 6: to their growing dividend, and their balance sheet would support

223
00:11:36,559 --> 00:11:38,320
Speaker 6: them doing that. I mean, the balance sheet is in

224
00:11:38,360 --> 00:11:42,079
Speaker 6: good shapes and good investment grade, and so I see

225
00:11:42,120 --> 00:11:45,600
Speaker 6: this company continue to have a balanced allocation going forward.

226
00:11:46,440 --> 00:11:49,520
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.

227
00:11:53,480 --> 00:11:57,160
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

228
00:11:57,240 --> 00:11:59,839
Speaker 1: weekdays at ten am Eastern on Apple, cock Play and

229
00:12:00,040 --> 00:12:03,240
Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand

230
00:12:03,280 --> 00:12:07,199
Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

231
00:12:07,800 --> 00:12:12,040
Speaker 2: We were talking about the auto business in Ferrari or Ferrari,

232
00:12:12,120 --> 00:12:14,880
Speaker 2: thinking this brings to mind, I don't know how these

233
00:12:14,920 --> 00:12:16,679
Speaker 2: companies are going to go for the next five years,

234
00:12:16,720 --> 00:12:19,199
Speaker 2: ten years in terms of that evolution, because it's kind

235
00:12:19,200 --> 00:12:20,080
Speaker 2: of fits and starts.

236
00:12:20,240 --> 00:12:22,200
Speaker 5: They can't figure out next year, and some point.

237
00:12:21,960 --> 00:12:23,560
Speaker 2: The market rewards them for it. At some point the

238
00:12:23,559 --> 00:12:26,280
Speaker 2: market penalizes before Craig Trudell it's his job to make

239
00:12:26,320 --> 00:12:28,320
Speaker 2: a sense out of all this. He's a Global autos

240
00:12:28,440 --> 00:12:31,760
Speaker 2: editor for Bloomberg News. So, Craig, can you see news

241
00:12:31,800 --> 00:12:36,120
Speaker 2: from Ferrari about its cautious forecast maybe just kind of

242
00:12:36,320 --> 00:12:39,160
Speaker 2: cautious commera territory on EV's. What does it tell you

243
00:12:39,200 --> 00:12:40,199
Speaker 2: here from Ferrari?

244
00:12:41,480 --> 00:12:45,080
Speaker 7: Yeah, I mean, I think the market was taking in stride,

245
00:12:45,240 --> 00:12:48,120
Speaker 7: you know, the the caution on EV's. I think even

246
00:12:48,400 --> 00:12:51,600
Speaker 7: you know, sort of among the investor base and certainly

247
00:12:51,679 --> 00:12:54,400
Speaker 7: the analysts too, there's some real concerns about, you know,

248
00:12:54,559 --> 00:12:59,079
Speaker 7: just how sort of incongruous Evs are with Ferrari, and

249
00:12:59,120 --> 00:13:01,720
Speaker 7: some questions about whether you know, whether they should even

250
00:13:01,760 --> 00:13:05,880
Speaker 7: bother uh going in that in that direction. Uh, you know,

251
00:13:05,920 --> 00:13:08,439
Speaker 7: I think I think the shares were down a little bit,

252
00:13:08,800 --> 00:13:11,480
Speaker 7: what you know, earlier this morning when they were talking

253
00:13:11,480 --> 00:13:13,720
Speaker 7: about that. I think where we saw the stock really

254
00:13:13,760 --> 00:13:15,760
Speaker 7: just take it on the chin, was when they came

255
00:13:15,760 --> 00:13:18,880
Speaker 7: out with their their outlook you know, for through twenty

256
00:13:18,960 --> 00:13:21,840
Speaker 7: thirty and I you know, I think that the profit

257
00:13:22,160 --> 00:13:25,520
Speaker 7: uh you know, growth was was underwhelming. I should you know,

258
00:13:25,600 --> 00:13:27,720
Speaker 7: sort of say it. It also is the case that

259
00:13:27,840 --> 00:13:30,360
Speaker 7: they are still you know, calling for growth. I think

260
00:13:30,440 --> 00:13:34,040
Speaker 7: some analysts were maybe hoping for for uh you know,

261
00:13:34,120 --> 00:13:37,640
Speaker 7: also some some increase in volumes, but it's not really

262
00:13:37,760 --> 00:13:40,920
Speaker 7: you know what what Ferrari is about. They you know,

263
00:13:41,080 --> 00:13:44,480
Speaker 7: are sort of like clockwork, you know, making a pretty

264
00:13:44,480 --> 00:13:47,880
Speaker 7: set number of vehicles every year and uh, charging an

265
00:13:47,880 --> 00:13:50,480
Speaker 7: awful lot of money for them, and and uh that's

266
00:13:50,559 --> 00:13:54,120
Speaker 7: that's really been you know, something that's that's paid off.

267
00:13:54,160 --> 00:13:56,240
Speaker 7: And I think, you know, just the other thing to

268
00:13:56,280 --> 00:13:58,040
Speaker 7: sort of keep in mind here when you look at

269
00:13:58,360 --> 00:14:01,320
Speaker 7: what these shares have done, you know since they listed.

270
00:14:02,240 --> 00:14:04,480
Speaker 7: You know, the shares in Milan have been trading since

271
00:14:04,480 --> 00:14:07,440
Speaker 7: early twenty sixteen, the New York ones a little bit

272
00:14:07,440 --> 00:14:10,960
Speaker 7: earlier than that. But this is a stock that has

273
00:14:11,080 --> 00:14:13,760
Speaker 7: absolutely been on a tear all those years since. And

274
00:14:13,840 --> 00:14:17,480
Speaker 7: so you know, I yes, a sixteen percent to decline

275
00:14:17,520 --> 00:14:19,600
Speaker 7: and one day, you know, sort of makes your eyes pop.

276
00:14:19,680 --> 00:14:22,800
Speaker 7: But this is a company that is still valued very richly,

277
00:14:23,040 --> 00:14:26,000
Speaker 7: and that makes a little bit more sense in hindsight.

278
00:14:26,280 --> 00:14:28,520
Speaker 4: And Frari also of course coming out with its first

279
00:14:28,640 --> 00:14:31,720
Speaker 4: EV too, and that might be accounting for some of

280
00:14:31,760 --> 00:14:33,120
Speaker 4: the caution in terms.

281
00:14:32,960 --> 00:14:34,120
Speaker 5: Of what it sees going forward.

282
00:14:35,040 --> 00:14:38,440
Speaker 4: In the story, you and your colleagues Craig talk about

283
00:14:38,440 --> 00:14:41,520
Speaker 4: how not just Ferrari, but Portia and Mercedes Benz have

284
00:14:41,560 --> 00:14:45,080
Speaker 4: also struggled with the electric transition. Why are wealthy buyers

285
00:14:45,120 --> 00:14:49,400
Speaker 4: somewhat resistant to switching over to plug in EV's what's

286
00:14:49,440 --> 00:14:49,960
Speaker 4: behind that?

287
00:14:50,960 --> 00:14:53,000
Speaker 7: Yeah, it's a really good question. I think you know,

288
00:14:53,200 --> 00:14:55,720
Speaker 7: there was just this sort of working assumption that you know,

289
00:14:55,760 --> 00:14:58,440
Speaker 7: the only thing that you were going to have to

290
00:14:58,480 --> 00:15:03,480
Speaker 7: overcome was caught, and so you know, there was this,

291
00:15:03,920 --> 00:15:06,920
Speaker 7: i think, sort of conventional wisdom. Well, oh, we'll just

292
00:15:07,000 --> 00:15:09,800
Speaker 7: have you know, the folks who are most able to

293
00:15:09,840 --> 00:15:14,800
Speaker 7: afford this incremental additional costs, they'll they'll fit the bill,

294
00:15:14,840 --> 00:15:17,280
Speaker 7: and we'll be sort of off and running as an

295
00:15:17,280 --> 00:15:20,640
Speaker 7: industry and gradually sort of work our way down price wise.

296
00:15:20,920 --> 00:15:24,120
Speaker 7: I think if if you're a luxury car buyer and

297
00:15:24,200 --> 00:15:29,280
Speaker 7: you're having to pay a significant premium over you know,

298
00:15:29,600 --> 00:15:32,000
Speaker 7: looking at at models that are that are the same

299
00:15:32,080 --> 00:15:35,040
Speaker 7: one combustion and one electric, the electric ones a lot more.

300
00:15:35,480 --> 00:15:38,520
Speaker 7: You know, it is still a decision and sort of

301
00:15:38,720 --> 00:15:41,720
Speaker 7: a rational decision to a sort of second guess whether

302
00:15:41,800 --> 00:15:43,640
Speaker 7: or not you want to go electric. And I think

303
00:15:43,640 --> 00:15:46,440
Speaker 7: that's what what you're seeing is is that you know,

304
00:15:46,520 --> 00:15:50,240
Speaker 7: BMW and Mercedes until and unless they sort of you know,

305
00:15:50,360 --> 00:15:53,840
Speaker 7: price their models closer to one another, you're you're going

306
00:15:53,880 --> 00:15:56,040
Speaker 7: to have, you know, some pushback on the part of

307
00:15:56,080 --> 00:16:00,240
Speaker 7: the consumer to make that transition, even as as we

308
00:16:00,360 --> 00:16:03,600
Speaker 7: make progress and things like charging infrastructure and some of

309
00:16:03,600 --> 00:16:05,560
Speaker 7: these hurdles that you have to overcome that or unique

310
00:16:05,560 --> 00:16:06,040
Speaker 7: to EBS.

311
00:16:06,360 --> 00:16:09,600
Speaker 2: My biggest question for you know, the supercars going electric

312
00:16:09,720 --> 00:16:12,360
Speaker 2: is I think a big part of the reason people

313
00:16:12,400 --> 00:16:16,920
Speaker 2: buy the Ferraris the Lamborghinis is for the cool sound

314
00:16:16,920 --> 00:16:21,080
Speaker 2: when they're coming down the street. What's Ferrari doing with

315
00:16:21,080 --> 00:16:21,880
Speaker 2: with that part of it?

316
00:16:23,000 --> 00:16:26,640
Speaker 7: Yeah, it's it's interesting and we saw sort of, you know,

317
00:16:27,440 --> 00:16:30,120
Speaker 7: and we had the indications that Ferrari was working on

318
00:16:30,160 --> 00:16:32,640
Speaker 7: something in this regard to to try and sort of

319
00:16:32,680 --> 00:16:35,960
Speaker 7: preserve the noise that you can make driving a Ferrari

320
00:16:36,640 --> 00:16:40,000
Speaker 7: that they patented, you know, systems to kind of create

321
00:16:40,120 --> 00:16:43,080
Speaker 7: essentially artificial noise, or at least to play up the

322
00:16:43,120 --> 00:16:46,160
Speaker 7: noise that is made by you know, electric motors in

323
00:16:46,800 --> 00:16:50,640
Speaker 7: electric vehicles. You know, I think that being said, well,

324
00:16:50,680 --> 00:16:54,040
Speaker 7: we see Ferraris externally make you know, nearly as much

325
00:16:54,120 --> 00:16:59,080
Speaker 7: noise as a Ferrari supercar. I suspect that the answer

326
00:16:59,080 --> 00:17:01,640
Speaker 7: to that is probably no. But I've been I've been

327
00:17:01,720 --> 00:17:04,040
Speaker 7: very entertained that, you know, Dodge came out with an

328
00:17:04,080 --> 00:17:08,400
Speaker 7: electric vehicle last year, and I saw a report recently

329
00:17:08,480 --> 00:17:11,800
Speaker 7: that you know, an owner in Canada was ticketed for

330
00:17:11,840 --> 00:17:16,080
Speaker 7: a noise violation with his electric Dodge vehicle. So, you know,

331
00:17:16,119 --> 00:17:18,800
Speaker 7: maybe maybe it's for the best actually that this will

332
00:17:18,840 --> 00:17:19,720
Speaker 7: become a thing of the path.

333
00:17:20,640 --> 00:17:23,720
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.

334
00:17:27,240 --> 00:17:30,920
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

335
00:17:31,000 --> 00:17:34,120
Speaker 1: weekdays at ten am Eastern on Apple Coarcklay, and Android

336
00:17:34,119 --> 00:17:37,440
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

337
00:17:37,480 --> 00:17:41,000
Speaker 1: you get your podcasts, or watch us live on YouTube.

338
00:17:41,760 --> 00:17:43,840
Speaker 2: Let's talk a little bit about the media business there.

339
00:17:44,160 --> 00:17:48,040
Speaker 2: It's undergoing a certain degree of consolidation here as it

340
00:17:48,080 --> 00:17:52,440
Speaker 2: tries to deal with the rising tide of YouTube among

341
00:17:52,520 --> 00:17:55,600
Speaker 2: other streaming type services and digital services that have really

342
00:17:55,840 --> 00:17:58,399
Speaker 2: displaced many of the traditional media businesses. And one of

343
00:17:58,440 --> 00:18:03,399
Speaker 2: those is Paramount Global that was so bought by sky Dance.

344
00:18:03,840 --> 00:18:07,280
Speaker 2: Larry Ellison's family now looking to take a look at

345
00:18:07,280 --> 00:18:10,240
Speaker 2: Warner Brothers Discovery, another publicly traded company. Maybe those two

346
00:18:10,320 --> 00:18:12,960
Speaker 2: might get together. Check in with Githa rang Aanath and

347
00:18:13,000 --> 00:18:16,440
Speaker 2: she's the media analyso over Bloomberg Intelligence. Githa talk to

348
00:18:16,560 --> 00:18:23,240
Speaker 2: us about the likelihood of Paramount merging with or acquiring

349
00:18:23,400 --> 00:18:27,040
Speaker 2: Warner Brothers Discovery and how that might look.

350
00:18:28,480 --> 00:18:30,760
Speaker 8: Yeah, thank you so much, Paul. So it's been a

351
00:18:30,800 --> 00:18:34,879
Speaker 8: while actually, so there's been these on again, off again reports.

352
00:18:35,280 --> 00:18:37,880
Speaker 8: The first time the news broke was almost a month ago.

353
00:18:37,960 --> 00:18:39,840
Speaker 8: It was on September eleventh that there was this swall

354
00:18:39,840 --> 00:18:42,439
Speaker 8: Street Journal article which suggested that Paramount was kind of

355
00:18:42,440 --> 00:18:47,280
Speaker 8: exploring this bid. There hasn't actually been any formal bid

356
00:18:48,040 --> 00:18:51,160
Speaker 8: from Paramount, however, you know, the shares of both those

357
00:18:51,160 --> 00:18:54,159
Speaker 8: companies have kind of really gone up very nicely on

358
00:18:54,200 --> 00:18:57,280
Speaker 8: the news, kind of just telling us how important it

359
00:18:57,320 --> 00:19:00,399
Speaker 8: is for both of them to have this consolate. If

360
00:19:00,440 --> 00:19:03,439
Speaker 8: you look at Paramount. Obviously they just went through that merger.

361
00:19:03,560 --> 00:19:06,119
Speaker 8: There is really very little details when it comes to

362
00:19:06,160 --> 00:19:08,640
Speaker 8: what is, you know, kind of the strategy for this business.

363
00:19:08,960 --> 00:19:12,880
Speaker 8: They definitely need something big. Having a studio like Warner

364
00:19:12,960 --> 00:19:16,199
Speaker 8: having a service like HBO Max, it really kind of

365
00:19:16,240 --> 00:19:18,399
Speaker 8: puts them on that global media map, so they I

366
00:19:18,440 --> 00:19:21,679
Speaker 8: think they definitely need it in order to kind of

367
00:19:21,680 --> 00:19:24,640
Speaker 8: make this big splash in the media ecosystem. But there,

368
00:19:24,720 --> 00:19:26,880
Speaker 8: you know, as days pass along and we don't get

369
00:19:26,920 --> 00:19:29,159
Speaker 8: a bit, it just seems like the probability of this

370
00:19:29,280 --> 00:19:32,120
Speaker 8: happening gets smaller and smaller.

371
00:19:32,800 --> 00:19:35,240
Speaker 4: Yeah, it's curious because we've been waiting for so long

372
00:19:35,280 --> 00:19:40,240
Speaker 4: and the industry has been ripe for consolidation, and David Zazov,

373
00:19:40,560 --> 00:19:43,119
Speaker 4: who of course runs Warner Brothers Discovery, has been talking

374
00:19:43,119 --> 00:19:46,240
Speaker 4: about how consolidation is something that he anticipates and he

375
00:19:46,359 --> 00:19:49,880
Speaker 4: wants to see happen. Is there role here for regulators?

376
00:19:50,320 --> 00:19:52,159
Speaker 4: Is this something that they would weigh in on. Is

377
00:19:52,160 --> 00:19:55,040
Speaker 4: Brendan Carr going to play any kind of role here.

378
00:19:56,320 --> 00:19:59,960
Speaker 8: So a Paramount, Yes, there is potentially a role for

379
00:20:00,080 --> 00:20:03,679
Speaker 8: for any and all types of regulatory scrutiny in the Paramount.

380
00:20:03,840 --> 00:20:08,040
Speaker 8: A Warner Brothers deal or a potential deal, the FCC's

381
00:20:08,119 --> 00:20:12,199
Speaker 8: involvement likely wouldn't be as heavy just because there is

382
00:20:12,400 --> 00:20:15,840
Speaker 8: no merger of two broadcast assets, so Warner Brothers only

383
00:20:15,880 --> 00:20:20,760
Speaker 8: has streaming studio and cable networks, no broadcast networks like

384
00:20:20,920 --> 00:20:23,479
Speaker 8: a Paramount which owns the CBS broadcast network. So they

385
00:20:23,480 --> 00:20:26,280
Speaker 8: should get like a fairly you know, quick green signal

386
00:20:26,320 --> 00:20:29,679
Speaker 8: from the FCC. Well, all mergers are ultimately, you know,

387
00:20:29,800 --> 00:20:33,119
Speaker 8: kind of a subject regulatory scrutiny. But let's remember Paramount

388
00:20:33,119 --> 00:20:36,240
Speaker 8: has just gone through this whole process with the regulators,

389
00:20:36,320 --> 00:20:38,080
Speaker 8: kind of getting that skydance, so they kind of know

390
00:20:38,119 --> 00:20:40,240
Speaker 8: how to navigate their whole way around, you know, the

391
00:20:40,280 --> 00:20:42,800
Speaker 8: regulatory ecosystem, if you will. So I don't think it

392
00:20:42,800 --> 00:20:44,560
Speaker 8: should be much of a problem at all, Scarlett.

393
00:20:44,800 --> 00:20:47,480
Speaker 2: Now the New York Post, I saw some reporting, and

394
00:20:47,560 --> 00:20:48,560
Speaker 2: by the way, then your post.

395
00:20:48,720 --> 00:20:50,040
Speaker 5: They do a great job covering.

396
00:20:49,800 --> 00:20:51,560
Speaker 2: The media sector, particularly on the M and A front,

397
00:20:51,560 --> 00:20:55,800
Speaker 2: always have, always have. They're suggesting maybe paramount S Guidance

398
00:20:55,960 --> 00:20:59,879
Speaker 2: might be talking with some private equity players about participating

399
00:21:00,200 --> 00:21:02,600
Speaker 2: any potential deal, and I think they mentioned Apollo as

400
00:21:02,640 --> 00:21:05,239
Speaker 2: one that they were talking with. What does that mean

401
00:21:05,280 --> 00:21:05,479
Speaker 2: to you.

402
00:21:06,920 --> 00:21:09,440
Speaker 8: What that means to us is that, you know, obviously

403
00:21:09,560 --> 00:21:11,960
Speaker 8: funding is a problem here. I mean, this is a

404
00:21:12,000 --> 00:21:15,840
Speaker 8: big deal, Paul. You know, there was an initial a

405
00:21:15,880 --> 00:21:18,720
Speaker 8: price range that was suggested by CNBC of about twenty

406
00:21:18,760 --> 00:21:21,760
Speaker 8: two to twenty four dollars a share. I think David

407
00:21:21,840 --> 00:21:24,480
Speaker 8: Zaslav is looking for something much much higher than that.

408
00:21:24,640 --> 00:21:26,440
Speaker 8: You know, the New York Post themselves had reported that

409
00:21:26,480 --> 00:21:28,679
Speaker 8: he was probably looking for something in the range of

410
00:21:28,720 --> 00:21:31,280
Speaker 8: forty dollars a share. Not sure whether he's going to

411
00:21:31,480 --> 00:21:34,080
Speaker 8: be yeah, not sure whether he's going to get that,

412
00:21:34,200 --> 00:21:36,880
Speaker 8: but regardless, I mean, this is a huge deal. I mean,

413
00:21:36,920 --> 00:21:38,800
Speaker 8: even at that twenty two to twenty four dollars, we're

414
00:21:38,800 --> 00:21:42,040
Speaker 8: looking at about a sixty billion dollar deal. So funding

415
00:21:42,320 --> 00:21:45,320
Speaker 8: is definitely going to be, you know, an issue. And

416
00:21:45,359 --> 00:21:48,280
Speaker 8: that's kind of what it suggests the news article from

417
00:21:48,320 --> 00:21:50,919
Speaker 8: yesterday suggests to us, Because if Paramount is kind of

418
00:21:50,960 --> 00:21:53,600
Speaker 8: scouting for all of these different partners, they've talked to Apollo,

419
00:21:53,640 --> 00:21:56,760
Speaker 8: as you just suggested, they're talking to Legendary. You know,

420
00:21:57,080 --> 00:22:00,359
Speaker 8: funding doesn't seem to be as easy as you know,

421
00:22:00,359 --> 00:22:01,520
Speaker 8: maybe we initially thought.

422
00:22:02,119 --> 00:22:04,359
Speaker 5: And also Warner Brothers is carrying a lot of debt.

423
00:22:04,400 --> 00:22:07,800
Speaker 4: I know Zaslov has made a priority of reducing leverage

424
00:22:08,600 --> 00:22:11,199
Speaker 4: and he you know, has executed on a lot of that,

425
00:22:11,240 --> 00:22:13,360
Speaker 4: but there is still quite a bit of debt involved here.

426
00:22:14,200 --> 00:22:17,439
Speaker 5: How willing is Skydance to take that on.

427
00:22:18,840 --> 00:22:21,280
Speaker 8: They are willing to take that on because Scarlett, you know,

428
00:22:21,359 --> 00:22:24,920
Speaker 8: Warner Brothers is actually in the midst of their own restructuring.

429
00:22:25,000 --> 00:22:26,720
Speaker 8: So what they had planned, even before all of this

430
00:22:26,760 --> 00:22:30,040
Speaker 8: Paramount news broke, they had planned to actually split their company.

431
00:22:30,119 --> 00:22:31,919
Speaker 8: So they have a TV network's business and they have

432
00:22:31,960 --> 00:22:34,520
Speaker 8: their streaming and studio business, so kind of the no

433
00:22:34,640 --> 00:22:37,200
Speaker 8: growth assets and the high growth assets, they're kind of

434
00:22:37,359 --> 00:22:40,480
Speaker 8: splitting those two out, and majority of the debt. They

435
00:22:40,480 --> 00:22:42,800
Speaker 8: started with about fifty five billion dollars in debt, they've

436
00:22:42,880 --> 00:22:45,359
Speaker 8: kind of whittled that down to about thirty thirty two billion,

437
00:22:45,800 --> 00:22:47,840
Speaker 8: but majority of that thirty two billion dollars debt was

438
00:22:47,840 --> 00:22:50,840
Speaker 8: actually supposed to travel with the TV network's business, with

439
00:22:50,920 --> 00:22:53,199
Speaker 8: Paramount kind of coming in and making a bid for

440
00:22:53,240 --> 00:22:56,320
Speaker 8: the entire company. Even before that split actually took place,

441
00:22:56,720 --> 00:22:59,320
Speaker 8: just kind of signaled that they wanted to get, you know,

442
00:22:59,359 --> 00:23:01,920
Speaker 8: the entire business, and they were willing to take all

443
00:23:01,960 --> 00:23:04,360
Speaker 8: of the debt, not wait for the split and wait

444
00:23:04,359 --> 00:23:05,720
Speaker 8: for you know, kind of the debt to go away

445
00:23:05,720 --> 00:23:07,560
Speaker 8: and then just go scoop in on the on the

446
00:23:07,560 --> 00:23:11,480
Speaker 8: streaming assets. So they definitely know about the situation and

447
00:23:11,680 --> 00:23:13,040
Speaker 8: seemed like they were willing to take it.

448
00:23:13,600 --> 00:23:16,560
Speaker 2: Another company that's talked that I announced they're splitting their

449
00:23:16,600 --> 00:23:18,560
Speaker 2: networks away with Comcasts. Where are we on that?

450
00:23:20,080 --> 00:23:24,720
Speaker 8: So that seems to be coming pretty close now in

451
00:23:24,800 --> 00:23:27,760
Speaker 8: contrast to the whole Warner Brothers Discovery split. The nice

452
00:23:27,800 --> 00:23:30,520
Speaker 8: thing about the Comcast cable network split, which is by

453
00:23:30,520 --> 00:23:33,159
Speaker 8: the way going to be called worsened, is that it

454
00:23:33,240 --> 00:23:35,920
Speaker 8: doesn't have a lot of debt, so it has it's

455
00:23:36,080 --> 00:23:40,240
Speaker 8: really a well capitalized company. Uh they're throwing about they're

456
00:23:40,280 --> 00:23:42,919
Speaker 8: throwing they're throwing off about three billion dollars in ebit DA,

457
00:23:43,560 --> 00:23:45,440
Speaker 8: but debt is only going to be close to about

458
00:23:45,440 --> 00:23:47,200
Speaker 8: two and a half to three billion dollars. So really

459
00:23:47,200 --> 00:23:50,240
Speaker 8: well capitalized. The problem is with the cable network business,

460
00:23:50,280 --> 00:23:52,560
Speaker 8: as you well know, Paul, that just the options are

461
00:23:52,600 --> 00:23:55,280
Speaker 8: not looking that great U you know, affiliate revenue as

462
00:23:55,320 --> 00:23:57,920
Speaker 8: we know, and is it decline with cord cutting again,

463
00:23:58,000 --> 00:24:00,239
Speaker 8: advertising is going to be you know that most these

464
00:24:00,280 --> 00:24:03,840
Speaker 8: ad dollars are going away from linear TV to digital outlets,

465
00:24:03,880 --> 00:24:07,800
Speaker 8: so again the outlook is just very bleak, but you

466
00:24:07,840 --> 00:24:11,440
Speaker 8: know that company should come on the market sometime pretty soon.

467
00:24:12,600 --> 00:24:17,280
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

468
00:24:17,480 --> 00:24:20,960
Speaker 1: and anywhere else you get your podcasts. Listen live each

469
00:24:20,960 --> 00:24:24,720
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com,

470
00:24:24,840 --> 00:24:28,399
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

471
00:24:28,800 --> 00:24:31,720
Speaker 1: You can also watch us live every weekday on YouTube

472
00:24:32,119 --> 00:24:34,360
Speaker 1: and always on the Bloomberg terminal