WEBVTT - Delta Sees Robust Demand Going Into 2026 Amid Premium Focus 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.640 --> 0:00:14.600 Bloomberg Intelligence Podcast. Catch us Live weekdays at ten am 0:00:14.640 --> 0:00:17.880 Eastern on Apple Coarclay and Android Auto with the Bloomberg 0:00:17.960 --> 0:00:21.080 Business App. Listen on demand wherever you get your podcasts, 0:00:21.400 --> 0:00:23.600 or watch us live on YouTube. 0:00:24.320 --> 0:00:27.560 Delta Airlines came out some better expected results for the quarter, 0:00:27.680 --> 0:00:30.880 saying that helped by leisure travelers and a rebounding corporate travel. 0:00:30.880 --> 0:00:33.239 How about that, said Philip joins us. He's deputy team 0:00:33.320 --> 0:00:35.800 leader for Global Aviation. Join us live here in our 0:00:35.800 --> 0:00:39.280 Bloomberg Interactive Brokers studio. Are we kind of back to 0:00:39.840 --> 0:00:42.519 pre pandemic levels in terms of air travel? 0:00:43.440 --> 0:00:46.360 Also, there is a Dichoto me in the aviation industry 0:00:46.360 --> 0:00:50.760 at the moment where we're seeing airlines profitability, especially at 0:00:50.800 --> 0:00:52.519 the top end of the market in the premium and 0:00:52.640 --> 0:00:56.000 corporate sector. So they're doing really well. So Delta air Lines, 0:00:56.080 --> 0:00:58.600 United Airlines doing really well. At the other end of 0:00:58.600 --> 0:01:01.480 the market, does the the likes of Spirit Airlines that's 0:01:01.480 --> 0:01:04.560 in its second bankruptcy. You've got the other sort of 0:01:04.680 --> 0:01:06.840 low cost carriers that are struggling to fill up seats, 0:01:06.880 --> 0:01:10.520 and that's partly on account of the fact that low 0:01:10.560 --> 0:01:13.520 cost carriers their customer base is still hurting from the 0:01:13.560 --> 0:01:17.000 sort of tariffs and the economic uncertainty, whereas for the 0:01:17.040 --> 0:01:19.319 top end of the market, they seem to be traveling 0:01:19.440 --> 0:01:20.600 and as normal. 0:01:20.680 --> 0:01:23.440 Actually, yeah, it's the manifestation of the key shaped economy 0:01:23.520 --> 0:01:25.560 right where the higher income consumer is doing much better 0:01:25.600 --> 0:01:26.880 than the lower end consumer. 0:01:27.480 --> 0:01:30.120 The CEO of Delta at Bastion said. 0:01:30.040 --> 0:01:33.280 In the earnings report that our customer is financially in 0:01:33.360 --> 0:01:36.880 a good spot. Said, who exactly is Delta's customer because 0:01:36.920 --> 0:01:40.039 it's not the same as you said as for instance, 0:01:40.040 --> 0:01:44.480 Spirit or Southwest or even you can argue United, sure. 0:01:44.240 --> 0:01:46.200 I mean Delta air Lines. I mean they frequently talk 0:01:46.240 --> 0:01:49.400 about how their customer is in the sort of average 0:01:49.400 --> 0:01:52.600 of over one hundred thousand earnings in one hundred thousand 0:01:52.600 --> 0:01:54.560 dollars a year in terms of earnings, and they sort 0:01:54.560 --> 0:01:57.320 of are looking for experiences. They're looking to sort of 0:01:57.360 --> 0:02:00.320 travel premium. They're not looking to sort of go coach 0:02:00.360 --> 0:02:02.840 and sort of nickel and dime their way through the 0:02:03.000 --> 0:02:06.440 aviation experience. And they're sort of more willing to splurge 0:02:06.480 --> 0:02:10.639 on experiences. And that's sort of the post pandemic revenge 0:02:10.639 --> 0:02:14.160 traveler who is now continuing to sort of spend money 0:02:14.200 --> 0:02:17.560 on travel, and they seem to be suggesting that airlines 0:02:17.560 --> 0:02:19.839 are willing. People are willing to keep going and keep 0:02:19.880 --> 0:02:23.760 traveling and keep spending money on experiences and holidays. 0:02:24.520 --> 0:02:27.560 If United beach their numbers this quarter, it's because what 0:02:27.600 --> 0:02:31.560 I spent ticket or really spared no expense to get 0:02:31.560 --> 0:02:34.640 over there, I needed the rest. Talk to us about 0:02:34.680 --> 0:02:37.840 just visibility. These airlines they put they have some pretty 0:02:37.840 --> 0:02:40.000 decent visibility on on their bookings. 0:02:39.840 --> 0:02:40.359 So they do. 0:02:40.400 --> 0:02:43.760 They've been talking about how the visibility into the into 0:02:43.840 --> 0:02:46.359 the holiday quarta, into the fourth quarter of the year 0:02:46.960 --> 0:02:49.320 is looking good at the moment they see they're seeing 0:02:49.440 --> 0:02:52.000 demand being strong as they get into the close of 0:02:52.000 --> 0:02:55.359 the year, and that's at least. Delta Airlines is talking 0:02:55.360 --> 0:02:58.720 about how they expect corporate travel to continue to be 0:02:59.200 --> 0:03:02.120 so a solid and robust in twenty twenty six. Are 0:03:02.120 --> 0:03:06.320 saying that companies that they surveyed are seeing continued appetite 0:03:06.320 --> 0:03:09.320 for corporate travels. So it remains to be seeing what 0:03:09.480 --> 0:03:14.200 actually materializes. I mean, airlines had massive forecasts for record 0:03:14.280 --> 0:03:17.240 growth this year and then sort of liberation they came 0:03:17.280 --> 0:03:20.239 around and that sort of torpedo that and they've now 0:03:20.320 --> 0:03:23.600 sort of come back to those levels, but will remains 0:03:23.639 --> 0:03:25.760 as be seeing what surprises come out next year. 0:03:25.840 --> 0:03:27.920 I'm so glad you bring that up because earlier this 0:03:28.080 --> 0:03:32.440 year Delta warned of an abrupt slowdown or I don't 0:03:32.480 --> 0:03:34.120 know that it actually saw when it just said it 0:03:34.200 --> 0:03:36.720 kind of was seeing it on the horizon. Has that 0:03:36.840 --> 0:03:38.960 been completely a race and turned around? 0:03:39.040 --> 0:03:42.000 Now for the moment, it does look like it is smooth, 0:03:42.240 --> 0:03:45.760 smooth skies for them. But at the same time, we 0:03:45.800 --> 0:03:48.480 don't really know what's going to happen in the current 0:03:48.760 --> 0:03:52.760 economic environment or what demand looks like as we go 0:03:52.800 --> 0:03:55.640 into twenty twenty six, and that's something that we need 0:03:55.680 --> 0:03:58.560 to watch as the airline sort of report their fourth 0:03:58.600 --> 0:04:01.760 quarter results and sort of about their future vocalsts. 0:04:02.320 --> 0:04:04.920 What are the big airlines, the big ones you mentioned 0:04:05.000 --> 0:04:07.080 United Deltas. What are they doing with capacity? Are they 0:04:07.120 --> 0:04:10.520 adding capacity trimming it back? I mean, I don't know 0:04:10.560 --> 0:04:11.800 if they're doing with routes. I don't know if they 0:04:11.840 --> 0:04:13.160 have enough planes, all that kind of stuff. 0:04:13.240 --> 0:04:15.720 So they have been so Delta has been adding capacity, 0:04:15.800 --> 0:04:19.800 They've been retiring older planes and taking on new planes, 0:04:20.120 --> 0:04:22.120 and so they seem to be adding a little bit 0:04:22.120 --> 0:04:22.840 of capacity. 0:04:23.320 --> 0:04:24.400 And we're also. 0:04:24.200 --> 0:04:27.039 Seeing, like so United talk about how they are upgrading 0:04:27.040 --> 0:04:30.440 their fleet. They're replacing their old aircraft with seven eighty 0:04:30.440 --> 0:04:34.599 seven's and Maxes, and so we are seeing the US 0:04:34.640 --> 0:04:37.640 carriers upgrade their fleets, and that's sort of adding more capacity, 0:04:37.720 --> 0:04:41.040 especially as they upgate aircraft, so they sort of replace 0:04:41.160 --> 0:04:44.520 smaller narrow bodies with the larger eight three twenty one 0:04:44.640 --> 0:04:46.360 or the Max nine, and that sort of adds more 0:04:46.400 --> 0:04:48.960 seats and more capacity. But then at the same time, 0:04:49.040 --> 0:04:52.679 they're also premiumizing the cabins, so they're adding more business 0:04:52.680 --> 0:04:56.279 class cabins and more premium economy than they ever did before. 0:04:56.680 --> 0:04:59.120 Premiumizing. That is a new word. I had not heard 0:04:59.160 --> 0:04:59.520 of it. 0:04:59.320 --> 0:05:03.720 But economy coming back from Italy was actually like the 0:05:03.760 --> 0:05:06.520 old first class in terms of really I was shocked 0:05:06.560 --> 0:05:07.640 at how much room there was this. 0:05:07.800 --> 0:05:09.520 How how far back can you recline? 0:05:10.400 --> 0:05:11.200 Just the normal one? 0:05:11.320 --> 0:05:13.479 Okay, but it was just way more like mouse And 0:05:13.520 --> 0:05:15.080 it wasn't that much money. It was a couple hundred 0:05:15.120 --> 0:05:18.200 bucks to uperate, So that was pretty interesting. 0:05:18.279 --> 0:05:20.719 No, and that's that's a big part of Delta's push right, 0:05:20.839 --> 0:05:22.920 pushing these premium products in the cabin. 0:05:23.440 --> 0:05:24.599 What about on the ground. 0:05:24.640 --> 0:05:27.400 What is Delta doing on the ground to really harness 0:05:27.960 --> 0:05:30.720 its customers desire for a premium experience. 0:05:30.960 --> 0:05:34.159 So they bartnering with they have that partnership with Uber 0:05:34.279 --> 0:05:38.560 the they've sort of added more of those Delta one lounges, 0:05:38.600 --> 0:05:40.880 and they're sort of doing those credit card partnerships, and 0:05:40.920 --> 0:05:43.200 those are all sort of ways to keep customers sticky 0:05:43.600 --> 0:05:46.040 and keep them engaged because, I mean, the moment you're 0:05:46.080 --> 0:05:49.080 sort of signed into the ecosystem, you're more likely to 0:05:49.400 --> 0:05:52.120 book with them and sort of not really use price 0:05:52.200 --> 0:05:55.680 comparison websites. You're more likely to sort of keep. 0:05:55.440 --> 0:05:57.000 Going customer for life kind of thing. 0:05:58.520 --> 0:06:01.599 Stay with us. More from Bloomberg Intelligence coming up after this. 0:06:05.279 --> 0:06:08.960 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:09.040 --> 0:06:12.120 weekdays at ten am Eastern on Apple, Coarclay, and Android 0:06:12.160 --> 0:06:15.440 Auto with the Bloomberg Business app. Listen on demand wherever 0:06:15.520 --> 0:06:19.040 you get your podcasts, or watch us live on YouTube. 0:06:19.839 --> 0:06:21.880 You know, I'm a coke guy. Be with PEPSI in 0:06:21.920 --> 0:06:24.040 front of me. Fine, I'm just as happy I can 0:06:24.120 --> 0:06:26.800 realize it. But Ken Chase. He follows this stuff for living. 0:06:26.880 --> 0:06:30.200 Ken Chase, the senior consumer products analysts of Bloomberg Intelligence. Pepsi, 0:06:30.240 --> 0:06:33.040 reported some numbers a little bit better than expected. Here, Ken, 0:06:33.080 --> 0:06:35.440 tell us what you heard from our good friends at PEPSI. 0:06:36.560 --> 0:06:40.520 Yeah, Hi, Paul, Well, PepsiCo report a number today, numbers 0:06:40.560 --> 0:06:43.960 today that we're pretty much in line, maybe a little 0:06:44.000 --> 0:06:48.880 bit above expectations. But I think they also masked persistent 0:06:48.960 --> 0:06:55.280 weak market conditions of the US across its broad food, snack, 0:06:55.440 --> 0:07:00.880 and beverage businesses. The company pretty much, you know, hit 0:07:00.920 --> 0:07:03.560 their numbers, as I said, but it didn't do much 0:07:03.600 --> 0:07:07.040 to relieve the pressure it's getting from activists, an activist 0:07:07.680 --> 0:07:11.600 who's asking the company to do more. Basically, flat performance 0:07:11.680 --> 0:07:13.760 is just not good enough for something that's perceived or 0:07:13.760 --> 0:07:17.840 a company that's perceived as a growth company. I guess 0:07:17.920 --> 0:07:20.360 the good news is their language during the call, though, 0:07:20.560 --> 0:07:23.280 did provide investors a bit of optimism. It sounds like 0:07:23.360 --> 0:07:26.160 the company is getting it. They said they're going to 0:07:26.280 --> 0:07:29.800 ramp up innovation, they're going to be more aggressive with 0:07:29.880 --> 0:07:32.840 cost cutting. They're listening to the activist points and they 0:07:32.840 --> 0:07:34.720 said buy a Laerds. They agree with many of them. 0:07:35.000 --> 0:07:37.600 So those are all, you know, good things to hear. 0:07:37.800 --> 0:07:39.800 You know, from an investor point of view, it's just 0:07:39.800 --> 0:07:42.520 a matter of executing and actually following through with them, 0:07:42.600 --> 0:07:44.720 I think is where the jury is out. 0:07:45.120 --> 0:07:48.200 So I guess ken the question is is this enough 0:07:48.240 --> 0:07:51.120 for Elliott the activist semester which took about a four 0:07:51.120 --> 0:07:54.200 billion dollar steak in PepsiCo and called for a strategic 0:07:54.240 --> 0:07:59.880 review a streamlining of a snack portfolio in particular, Well. 0:07:59.760 --> 0:08:03.440 I think think the CEO of PepsiCo mentioned that they 0:08:04.160 --> 0:08:05.880 are on the same page on a lot of fronts, 0:08:06.400 --> 0:08:09.080 but what they didn't say is one of the big 0:08:09.120 --> 0:08:11.400 things that Elliott is calling for is basically, you know, 0:08:11.440 --> 0:08:14.040 the beverage business to refranchise itself, sort of what Coca 0:08:14.040 --> 0:08:18.280 Cola does, to let the bottlers be independent rather than 0:08:18.360 --> 0:08:21.440 own those very capital intentsive businesses. They didn't go there. 0:08:21.840 --> 0:08:23.800 I'm sure that's going to be a big sticky point. 0:08:24.440 --> 0:08:27.240 What they are in agreement, though, is that innovation is 0:08:27.280 --> 0:08:29.480 needed to be even more on Trent. You know, I 0:08:29.520 --> 0:08:32.920 covered PepsiCo. I've covered PepsiCo for a long time. They 0:08:32.960 --> 0:08:35.960 are probably on the forefront of the most innovative companies 0:08:36.160 --> 0:08:38.760 across the beverage world that I cover, and yet they're 0:08:38.760 --> 0:08:43.199 even ramping it up even more aggressively across food, aggressively 0:08:43.240 --> 0:08:46.320 across beverage to be as on trend as possible. And 0:08:46.400 --> 0:08:49.199 on that note, you know, Bloomberg Intelligence came out with 0:08:49.240 --> 0:08:52.800 its annual consumer Beverage survey just on Monday, and some 0:08:52.880 --> 0:08:56.200 of the big findings that we're seeing is that advanced, 0:08:56.280 --> 0:09:00.800 high duration, wellness, and value are more more important than 0:09:00.840 --> 0:09:03.280 ever in the world of beverages. And it was interesting 0:09:03.320 --> 0:09:06.600 to hear PepsiCo pretty much address all three of those 0:09:06.679 --> 0:09:10.040 areas with their new product innovation. So that's encouraging. 0:09:10.720 --> 0:09:12.800 At the end of the day, can as a company 0:09:13.520 --> 0:09:17.079 like Pepsi, is that nothing more than really a GDP 0:09:17.320 --> 0:09:19.840 kind of growth story. There's not much more you can 0:09:19.880 --> 0:09:22.600 do to goose it above that? Or is that or 0:09:22.640 --> 0:09:25.720 can they do better? Maybe that may be true in 0:09:25.760 --> 0:09:28.040 the US pool. I mean, it's such a large business, 0:09:28.160 --> 0:09:30.960 it's in most channels, it's you know, it's been around 0:09:30.960 --> 0:09:34.240 a long time obviously, but I think most people looking 0:09:34.240 --> 0:09:36.439 at this company would say, look, you have great opportunities 0:09:36.480 --> 0:09:40.840 outside the US. There's much less price competition. You know, 0:09:40.920 --> 0:09:44.080 outside the US, people are embracing you know, these consumer 0:09:44.160 --> 0:09:47.800 goods and these brands outside the US. So that's one 0:09:47.840 --> 0:09:50.360 of the things Elliet is actually saying, provide you know, 0:09:50.400 --> 0:09:53.760 feed the capital needed outside the US to grow these 0:09:53.800 --> 0:09:57.440 business in these big growing markets, you know, like China 0:09:57.559 --> 0:10:01.640 and India and so on, Latin America. These are really 0:10:01.640 --> 0:10:03.920 big growing markets. And to the extent that they could 0:10:04.000 --> 0:10:06.839 play more in those markets I think would be good 0:10:06.920 --> 0:10:08.880 for the enterprise in the whole. 0:10:09.360 --> 0:10:11.599 But for those markets, would they need to take a 0:10:11.640 --> 0:10:13.439 similar approach as what they do in the US. Be 0:10:13.520 --> 0:10:16.960 more innovative, keep up with this shifting consumer taste towards 0:10:17.320 --> 0:10:22.280 healthier offerings, higher protein, portion controlled, less sugary drinks, or 0:10:22.280 --> 0:10:24.160 can they go with their old playbook. 0:10:25.880 --> 0:10:29.240 I think it's a combination of doing what they're doing. 0:10:29.320 --> 0:10:31.680 You know, in some of these markets they have to 0:10:32.120 --> 0:10:36.000 adhere to local tastes. My guess is that a lot 0:10:36.000 --> 0:10:38.760 of these consumers are seeking the same kind of things 0:10:38.800 --> 0:10:42.240 the US though is or I should say, you know, 0:10:42.440 --> 0:10:46.400 wellness value, but the portfolios are not quite as broad 0:10:46.520 --> 0:10:51.320 outside the US. So I think it's tailoranto's the local 0:10:52.559 --> 0:10:56.000 areas and bringing some of their learnings from the US 0:10:56.040 --> 0:10:57.400 to these markets over time. 0:10:58.880 --> 0:11:01.000 Ken talk to us about the They got about a 0:11:01.000 --> 0:11:04.120 four percent dividend yield on PEPSI. That seems pretty solid. 0:11:04.400 --> 0:11:07.000 What's their policy on dividends these days? 0:11:07.720 --> 0:11:10.120 Oh, they're committed. I mean they know that a big 0:11:10.160 --> 0:11:13.920 shareholder base, you know, is income investors. So they are 0:11:13.920 --> 0:11:17.520 there committed. In every quarter like this one, they said, Look, 0:11:17.520 --> 0:11:21.280 we're committed to have a multi prong capital allocation policy. 0:11:21.280 --> 0:11:24.320 We're going to you know, invest in the business, you know, innovation, 0:11:24.720 --> 0:11:28.040 like I said, but they're also going to buy stockback 0:11:28.200 --> 0:11:31.120 on a you know, selected basis. They're going to commit 0:11:31.240 --> 0:11:36.520 to their growing dividend, and their balance sheet would support 0:11:36.559 --> 0:11:38.320 them doing that. I mean, the balance sheet is in 0:11:38.360 --> 0:11:42.079 good shapes and good investment grade, and so I see 0:11:42.120 --> 0:11:45.600 this company continue to have a balanced allocation going forward. 0:11:46.440 --> 0:11:49.520 Stay with us. More from Bloomberg Intelligence coming up after this. 0:11:53.480 --> 0:11:57.160 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:57.240 --> 0:11:59.839 weekdays at ten am Eastern on Apple, cock Play and 0:12:00.040 --> 0:12:03.240 Android Auto with the Bloomberg Business App. Listen on demand 0:12:03.280 --> 0:12:07.199 wherever you get your podcasts, or watch us live on YouTube. 0:12:07.800 --> 0:12:12.040 We were talking about the auto business in Ferrari or Ferrari, 0:12:12.120 --> 0:12:14.880 thinking this brings to mind, I don't know how these 0:12:14.920 --> 0:12:16.679 companies are going to go for the next five years, 0:12:16.720 --> 0:12:19.199 ten years in terms of that evolution, because it's kind 0:12:19.200 --> 0:12:20.080 of fits and starts. 0:12:20.240 --> 0:12:22.200 They can't figure out next year, and some point. 0:12:21.960 --> 0:12:23.560 The market rewards them for it. At some point the 0:12:23.559 --> 0:12:26.280 market penalizes before Craig Trudell it's his job to make 0:12:26.320 --> 0:12:28.320 a sense out of all this. He's a Global autos 0:12:28.440 --> 0:12:31.760 editor for Bloomberg News. So, Craig, can you see news 0:12:31.800 --> 0:12:36.120 from Ferrari about its cautious forecast maybe just kind of 0:12:36.320 --> 0:12:39.160 cautious commera territory on EV's. What does it tell you 0:12:39.200 --> 0:12:40.199 here from Ferrari? 0:12:41.480 --> 0:12:45.080 Yeah, I mean, I think the market was taking in stride, 0:12:45.240 --> 0:12:48.120 you know, the the caution on EV's. I think even 0:12:48.400 --> 0:12:51.600 you know, sort of among the investor base and certainly 0:12:51.679 --> 0:12:54.400 the analysts too, there's some real concerns about, you know, 0:12:54.559 --> 0:12:59.079 just how sort of incongruous Evs are with Ferrari, and 0:12:59.120 --> 0:13:01.720 some questions about whether you know, whether they should even 0:13:01.760 --> 0:13:05.880 bother uh going in that in that direction. Uh, you know, 0:13:05.920 --> 0:13:08.439 I think I think the shares were down a little bit, 0:13:08.800 --> 0:13:11.480 what you know, earlier this morning when they were talking 0:13:11.480 --> 0:13:13.720 about that. I think where we saw the stock really 0:13:13.760 --> 0:13:15.760 just take it on the chin, was when they came 0:13:15.760 --> 0:13:18.880 out with their their outlook you know, for through twenty 0:13:18.960 --> 0:13:21.840 thirty and I you know, I think that the profit 0:13:22.160 --> 0:13:25.520 uh you know, growth was was underwhelming. I should you know, 0:13:25.600 --> 0:13:27.720 sort of say it. It also is the case that 0:13:27.840 --> 0:13:30.360 they are still you know, calling for growth. I think 0:13:30.440 --> 0:13:34.040 some analysts were maybe hoping for for uh you know, 0:13:34.120 --> 0:13:37.640 also some some increase in volumes, but it's not really 0:13:37.760 --> 0:13:40.920 you know what what Ferrari is about. They you know, 0:13:41.080 --> 0:13:44.480 are sort of like clockwork, you know, making a pretty 0:13:44.480 --> 0:13:47.880 set number of vehicles every year and uh, charging an 0:13:47.880 --> 0:13:50.480 awful lot of money for them, and and uh that's 0:13:50.559 --> 0:13:54.120 that's really been you know, something that's that's paid off. 0:13:54.160 --> 0:13:56.240 And I think, you know, just the other thing to 0:13:56.280 --> 0:13:58.040 sort of keep in mind here when you look at 0:13:58.360 --> 0:14:01.320 what these shares have done, you know since they listed. 0:14:02.240 --> 0:14:04.480 You know, the shares in Milan have been trading since 0:14:04.480 --> 0:14:07.440 early twenty sixteen, the New York ones a little bit 0:14:07.440 --> 0:14:10.960 earlier than that. But this is a stock that has 0:14:11.080 --> 0:14:13.760 absolutely been on a tear all those years since. And 0:14:13.840 --> 0:14:17.480 so you know, I yes, a sixteen percent to decline 0:14:17.520 --> 0:14:19.600 and one day, you know, sort of makes your eyes pop. 0:14:19.680 --> 0:14:22.800 But this is a company that is still valued very richly, 0:14:23.040 --> 0:14:26.000 and that makes a little bit more sense in hindsight. 0:14:26.280 --> 0:14:28.520 And Frari also of course coming out with its first 0:14:28.640 --> 0:14:31.720 EV too, and that might be accounting for some of 0:14:31.760 --> 0:14:33.120 the caution in terms. 0:14:32.960 --> 0:14:34.120 Of what it sees going forward. 0:14:35.040 --> 0:14:38.440 In the story, you and your colleagues Craig talk about 0:14:38.440 --> 0:14:41.520 how not just Ferrari, but Portia and Mercedes Benz have 0:14:41.560 --> 0:14:45.080 also struggled with the electric transition. Why are wealthy buyers 0:14:45.120 --> 0:14:49.400 somewhat resistant to switching over to plug in EV's what's 0:14:49.440 --> 0:14:49.960 behind that? 0:14:50.960 --> 0:14:53.000 Yeah, it's a really good question. I think you know, 0:14:53.200 --> 0:14:55.720 there was just this sort of working assumption that you know, 0:14:55.760 --> 0:14:58.440 the only thing that you were going to have to 0:14:58.480 --> 0:15:03.480 overcome was caught, and so you know, there was this, 0:15:03.920 --> 0:15:06.920 i think, sort of conventional wisdom. Well, oh, we'll just 0:15:07.000 --> 0:15:09.800 have you know, the folks who are most able to 0:15:09.840 --> 0:15:14.800 afford this incremental additional costs, they'll they'll fit the bill, 0:15:14.840 --> 0:15:17.280 and we'll be sort of off and running as an 0:15:17.280 --> 0:15:20.640 industry and gradually sort of work our way down price wise. 0:15:20.920 --> 0:15:24.120 I think if if you're a luxury car buyer and 0:15:24.200 --> 0:15:29.280 you're having to pay a significant premium over you know, 0:15:29.600 --> 0:15:32.000 looking at at models that are that are the same 0:15:32.080 --> 0:15:35.040 one combustion and one electric, the electric ones a lot more. 0:15:35.480 --> 0:15:38.520 You know, it is still a decision and sort of 0:15:38.720 --> 0:15:41.720 a rational decision to a sort of second guess whether 0:15:41.800 --> 0:15:43.640 or not you want to go electric. And I think 0:15:43.640 --> 0:15:46.440 that's what what you're seeing is is that you know, 0:15:46.520 --> 0:15:50.240 BMW and Mercedes until and unless they sort of you know, 0:15:50.360 --> 0:15:53.840 price their models closer to one another, you're you're going 0:15:53.880 --> 0:15:56.040 to have, you know, some pushback on the part of 0:15:56.080 --> 0:16:00.240 the consumer to make that transition, even as as we 0:16:00.360 --> 0:16:03.600 make progress and things like charging infrastructure and some of 0:16:03.600 --> 0:16:05.560 these hurdles that you have to overcome that or unique 0:16:05.560 --> 0:16:06.040 to EBS. 0:16:06.360 --> 0:16:09.600 My biggest question for you know, the supercars going electric 0:16:09.720 --> 0:16:12.360 is I think a big part of the reason people 0:16:12.400 --> 0:16:16.920 buy the Ferraris the Lamborghinis is for the cool sound 0:16:16.920 --> 0:16:21.080 when they're coming down the street. What's Ferrari doing with 0:16:21.080 --> 0:16:21.880 with that part of it? 0:16:23.000 --> 0:16:26.640 Yeah, it's it's interesting and we saw sort of, you know, 0:16:27.440 --> 0:16:30.120 and we had the indications that Ferrari was working on 0:16:30.160 --> 0:16:32.640 something in this regard to to try and sort of 0:16:32.680 --> 0:16:35.960 preserve the noise that you can make driving a Ferrari 0:16:36.640 --> 0:16:40.000 that they patented, you know, systems to kind of create 0:16:40.120 --> 0:16:43.080 essentially artificial noise, or at least to play up the 0:16:43.120 --> 0:16:46.160 noise that is made by you know, electric motors in 0:16:46.800 --> 0:16:50.640 electric vehicles. You know, I think that being said, well, 0:16:50.680 --> 0:16:54.040 we see Ferraris externally make you know, nearly as much 0:16:54.120 --> 0:16:59.080 noise as a Ferrari supercar. I suspect that the answer 0:16:59.080 --> 0:17:01.640 to that is probably no. But I've been I've been 0:17:01.720 --> 0:17:04.040 very entertained that, you know, Dodge came out with an 0:17:04.080 --> 0:17:08.400 electric vehicle last year, and I saw a report recently 0:17:08.480 --> 0:17:11.800 that you know, an owner in Canada was ticketed for 0:17:11.840 --> 0:17:16.080 a noise violation with his electric Dodge vehicle. So, you know, 0:17:16.119 --> 0:17:18.800 maybe maybe it's for the best actually that this will 0:17:18.840 --> 0:17:19.720 become a thing of the path. 0:17:20.640 --> 0:17:23.720 Stay with us. More from Bloomberg Intelligence coming up after this. 0:17:27.240 --> 0:17:30.920 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:31.000 --> 0:17:34.120 weekdays at ten am Eastern on Apple Coarcklay, and Android 0:17:34.119 --> 0:17:37.440 Auto with the Bloomberg Business App. Listen on demand wherever 0:17:37.480 --> 0:17:41.000 you get your podcasts, or watch us live on YouTube. 0:17:41.760 --> 0:17:43.840 Let's talk a little bit about the media business there. 0:17:44.160 --> 0:17:48.040 It's undergoing a certain degree of consolidation here as it 0:17:48.080 --> 0:17:52.440 tries to deal with the rising tide of YouTube among 0:17:52.520 --> 0:17:55.600 other streaming type services and digital services that have really 0:17:55.840 --> 0:17:58.399 displaced many of the traditional media businesses. And one of 0:17:58.440 --> 0:18:03.399 those is Paramount Global that was so bought by sky Dance. 0:18:03.840 --> 0:18:07.280 Larry Ellison's family now looking to take a look at 0:18:07.280 --> 0:18:10.240 Warner Brothers Discovery, another publicly traded company. Maybe those two 0:18:10.320 --> 0:18:12.960 might get together. Check in with Githa rang Aanath and 0:18:13.000 --> 0:18:16.440 she's the media analyso over Bloomberg Intelligence. Githa talk to 0:18:16.560 --> 0:18:23.240 us about the likelihood of Paramount merging with or acquiring 0:18:23.400 --> 0:18:27.040 Warner Brothers Discovery and how that might look. 0:18:28.480 --> 0:18:30.760 Yeah, thank you so much, Paul. So it's been a 0:18:30.800 --> 0:18:34.879 while actually, so there's been these on again, off again reports. 0:18:35.280 --> 0:18:37.880 The first time the news broke was almost a month ago. 0:18:37.960 --> 0:18:39.840 It was on September eleventh that there was this swall 0:18:39.840 --> 0:18:42.439 Street Journal article which suggested that Paramount was kind of 0:18:42.440 --> 0:18:47.280 exploring this bid. There hasn't actually been any formal bid 0:18:48.040 --> 0:18:51.160 from Paramount, however, you know, the shares of both those 0:18:51.160 --> 0:18:54.159 companies have kind of really gone up very nicely on 0:18:54.200 --> 0:18:57.280 the news, kind of just telling us how important it 0:18:57.320 --> 0:19:00.399 is for both of them to have this consolate. If 0:19:00.440 --> 0:19:03.439 you look at Paramount. Obviously they just went through that merger. 0:19:03.560 --> 0:19:06.119 There is really very little details when it comes to 0:19:06.160 --> 0:19:08.640 what is, you know, kind of the strategy for this business. 0:19:08.960 --> 0:19:12.880 They definitely need something big. Having a studio like Warner 0:19:12.960 --> 0:19:16.199 having a service like HBO Max, it really kind of 0:19:16.240 --> 0:19:18.399 puts them on that global media map, so they I 0:19:18.440 --> 0:19:21.679 think they definitely need it in order to kind of 0:19:21.680 --> 0:19:24.640 make this big splash in the media ecosystem. But there, 0:19:24.720 --> 0:19:26.880 you know, as days pass along and we don't get 0:19:26.920 --> 0:19:29.159 a bit, it just seems like the probability of this 0:19:29.280 --> 0:19:32.120 happening gets smaller and smaller. 0:19:32.800 --> 0:19:35.240 Yeah, it's curious because we've been waiting for so long 0:19:35.280 --> 0:19:40.240 and the industry has been ripe for consolidation, and David Zazov, 0:19:40.560 --> 0:19:43.119 who of course runs Warner Brothers Discovery, has been talking 0:19:43.119 --> 0:19:46.240 about how consolidation is something that he anticipates and he 0:19:46.359 --> 0:19:49.880 wants to see happen. Is there role here for regulators? 0:19:50.320 --> 0:19:52.159 Is this something that they would weigh in on. Is 0:19:52.160 --> 0:19:55.040 Brendan Carr going to play any kind of role here. 0:19:56.320 --> 0:19:59.960 So a Paramount, Yes, there is potentially a role for 0:20:00.080 --> 0:20:03.679 for any and all types of regulatory scrutiny in the Paramount. 0:20:03.840 --> 0:20:08.040 A Warner Brothers deal or a potential deal, the FCC's 0:20:08.119 --> 0:20:12.199 involvement likely wouldn't be as heavy just because there is 0:20:12.400 --> 0:20:15.840 no merger of two broadcast assets, so Warner Brothers only 0:20:15.880 --> 0:20:20.760 has streaming studio and cable networks, no broadcast networks like 0:20:20.920 --> 0:20:23.479 a Paramount which owns the CBS broadcast network. So they 0:20:23.480 --> 0:20:26.280 should get like a fairly you know, quick green signal 0:20:26.320 --> 0:20:29.679 from the FCC. Well, all mergers are ultimately, you know, 0:20:29.800 --> 0:20:33.119 kind of a subject regulatory scrutiny. But let's remember Paramount 0:20:33.119 --> 0:20:36.240 has just gone through this whole process with the regulators, 0:20:36.320 --> 0:20:38.080 kind of getting that skydance, so they kind of know 0:20:38.119 --> 0:20:40.240 how to navigate their whole way around, you know, the 0:20:40.280 --> 0:20:42.800 regulatory ecosystem, if you will. So I don't think it 0:20:42.800 --> 0:20:44.560 should be much of a problem at all, Scarlett. 0:20:44.800 --> 0:20:47.480 Now the New York Post, I saw some reporting, and 0:20:47.560 --> 0:20:48.560 by the way, then your post. 0:20:48.720 --> 0:20:50.040 They do a great job covering. 0:20:49.800 --> 0:20:51.560 The media sector, particularly on the M and A front, 0:20:51.560 --> 0:20:55.800 always have, always have. They're suggesting maybe paramount S Guidance 0:20:55.960 --> 0:20:59.879 might be talking with some private equity players about participating 0:21:00.200 --> 0:21:02.600 any potential deal, and I think they mentioned Apollo as 0:21:02.640 --> 0:21:05.239 one that they were talking with. What does that mean 0:21:05.280 --> 0:21:05.479