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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple Coarcklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: And one of the bigger I think stock news stories

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Speaker 2: today Kurt Wagner Bloomberg News breaking the story that the

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Speaker 2: folks at Meta cutting back some of their spending on

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Speaker 2: the Metaverse, in particular by as much as thirty percent,

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Speaker 2: which is a big number because remember, folks, this company pivoted,

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Speaker 2: pivoted hard to the metaverse several years ago, to the

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Speaker 2: point where they changed their name from Facebook to Metaverse.

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Speaker 2: This was a big, big pivot for Mark Zuckerberg and

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Speaker 2: now kind of dialing it back a little bit.

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Speaker 3: So we want to get some more reporting on that.

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Speaker 2: We turned to Caroline I'd she joins us here in

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Speaker 2: study Bloomberg Tech co anchor.

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Speaker 3: So this is kind of a big I think from

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Speaker 3: mister Zuckerberg, don't you, Carolyn.

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Speaker 4: It's a signal.

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Speaker 5: And what's interesting about it is, as usual as they

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Speaker 5: think about the budget for twenty twenty six, they're going

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Speaker 5: to make layoffs.

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Speaker 4: They're going to cut about ten percent across the entire business.

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Speaker 4: That tends to be what happens at this time of year.

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Speaker 5: But he gathered his top executives in his house in

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Speaker 5: Hawaii to discuss, Okay, where should most of the resources be

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Speaker 5: coming from, because remember they're spending a ton on AI

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Speaker 5: and people have been worried about that.

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Speaker 4: How can he offset that?

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Speaker 5: Well, thirty percent more cuts therefore going to this particular

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Speaker 5: part of reality labs. Now, Reality Labs are still going

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Speaker 5: to be making your ray bound meta glasses. They've seen

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Speaker 5: real interest in the AI use in augmented reality, but

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Speaker 5: virtual reality, we're not living in it yet. He really

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Speaker 5: thought we'd all be doing our workouts there, would be

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Speaker 5: working there, and it just hasn't caught on in the

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Speaker 5: way that was expected. So of course, pull out resources

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Speaker 5: from there, reallocate them, and I do think that it's interesting.

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Speaker 5: Of course they rebranded under this name for now it's

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Speaker 5: becoming sort of a metaverse of AI and augmented reality

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Speaker 5: rather than virtual reality right here right now.

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Speaker 6: So was meta just to earlier? Were not ready for

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Speaker 6: a virtual reality?

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Speaker 2: Or we are?

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Speaker 4: Okay, I mean, are you using it.

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Speaker 5: I'm I mean, my husband loved getting He got the

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Speaker 5: one of the original sort of Ocunus versions of the headset,

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Speaker 5: and yeah, he was doing workouts.

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Speaker 4: And then he sold it in a Gara set.

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Speaker 5: Because I think and it got to a point where

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Speaker 5: it's like, what are the applications of this. I love

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Speaker 5: the idea of when I'm in working abroad and I

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Speaker 5: need to not have I need access to lots of screens,

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Speaker 5: but I can't have just lots of screens. It was

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Speaker 5: great to see how that could have been used, but

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Speaker 5: I wasn't going to spend that many thousands on the.

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Speaker 4: Piece of hardware.

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Speaker 5: They've really got to understand the integration here. That's kind

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Speaker 5: of why it's so interesting. It comes at that time.

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Speaker 5: We've also understand Aland from Apple. One of the key

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Speaker 5: interface design team leads the person who's been behind the

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Speaker 5: iPhone X and behind the operating system, behind the applications

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Speaker 5: of Apple.

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Speaker 4: He's jumping ship to Meta.

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Speaker 5: This is a huge coup. He's going to be thinking

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Speaker 5: about the design of these things in the future.

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Speaker 7: You bring that up about the Apple thing I seen.

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Speaker 2: That's not the first person we've seen Leu the Apple

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Speaker 2: AI stream going on there.

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Speaker 4: Yeah, they've really been shutting people in many ways.

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Speaker 5: This is tied more back to Johnny I's departure back

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Speaker 5: in twenty nineteen and they lost a lot of their

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Speaker 5: design prowess people. Then this is also turning of the guard.

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Speaker 5: A lot of these people have in an Apple for

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Speaker 5: a very long time. And we think about Tim Cook

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Speaker 5: himself coming to an age where he might be retiring.

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Speaker 5: Many are wondering how executives shift. But you're right, the

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Speaker 5: real deluge, the real loss has been in the AI area,

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Speaker 5: particularly in the large language model department, where they've just

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Speaker 5: taken so many hits in terms of morale because look,

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Speaker 5: they might have been turning to Google for its large

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Speaker 5: language model rather than building in house, and they've been

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Speaker 5: recently losing out or sort of waving goodbye to John

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Speaker 5: Jian Andrea.

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Speaker 4: That's the main lead of the.

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Speaker 2: Issuers at the assumption that they're going to farm this

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Speaker 2: their AI out to Google. Perhaps, And that's perhaps. And

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Speaker 2: I think we'll talk to Anna k Gran in just

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Speaker 2: a moment. He'll say, from a stock perspective, that's what

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Speaker 2: investors kind of want. Yeah, I mean it's well, why

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Speaker 2: spend a good jillion dollars to be just what you

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Speaker 2: do a search.

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Speaker 5: And it's been self limiting for Apple in many ways

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Speaker 5: because they're all about safety on the phone.

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Speaker 4: This is all about edjai. It's not about.

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Speaker 5: Therefore sending all your data into the cloud and doing

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Speaker 5: enormous amounts of data analysis and therefore feeding it through

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Speaker 5: large language models.

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Speaker 4: There they want.

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Speaker 5: To be secure. That means you have to only be

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Speaker 5: able to really do the compute on your own phone.

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Speaker 5: That's very limiting at the moment. So you're just not

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Speaker 5: getting the parameters that you need to have a really

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Speaker 5: effective large language model. So therefore maybe they do have

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Speaker 5: to shift to a part third party at least while

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Speaker 5: they get their ducks in a row.

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Speaker 6: So how are we thinking about how Meta is scaling

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Speaker 6: against a lot of its competitors right now as we

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Speaker 6: think about this AI race.

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Speaker 5: Why isn't it interesting all dogtails together in the same way.

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Speaker 5: For many Meta is showing that it's putting AI first.

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Speaker 5: And we've understand the impact because everyone loves these ray

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Speaker 5: band metaglasses.

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Speaker 4: They've been selling very well.

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Speaker 5: We've seen that people have really seen the revenue streams

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Speaker 5: galvanize the advertising offering. The market is loving how they've

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Speaker 5: used generator of AI within the product. We're all getting

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Speaker 5: fed a content more specific to us that's going to

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Speaker 5: be the help of Generator AI. But are we really

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Speaker 5: downloading Meta AI's own individual AI app.

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Speaker 4: I haven't. I'm using it more in WhatsApp.

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Speaker 5: But then we've also got the EU worrying about how

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Speaker 5: they're fending off competition in WhatsApp because they're saying, look,

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Speaker 5: chatchbt even though you can put your chatchybut within your

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Speaker 5: meta and WhatsApp at the moment, they're making it too difficult.

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Speaker 4: They don't want to be straining their own APIs.

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Speaker 5: Yeah, they don't want to be basically marketing Open AI's chatchibt.

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Speaker 5: They're only marketing well co pilot for Microsoft. They want

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Speaker 5: you to use Meta AI. So I think they've still

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Speaker 5: got to show that they're the place that you're going

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Speaker 5: to use large aguage models. They're the place you're going

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Speaker 5: to come from a chatbot, and I think more broadly,

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Speaker 5: they're the place that all of this ends up working

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Speaker 5: from a capital EXPENDITSHI perspective. So I think for many

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Speaker 5: over at BI they love the idea that they're going

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Speaker 5: to maybe use Google's TPUs because that's a cost saving Yeah.

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Speaker 2: Absolutely, Carolin, Hi, thank you so much for joinings. Caroline Hyde,

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Speaker 2: b Tech co anchor along with Ed Ludlow Bloomberg News.

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Speaker 2: They are on top of everything happening out there in

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Speaker 2: the world of technology in a Silicon valley. You appreciate

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Speaker 2: getting a few minutes of Caroline's time here.

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Speaker 7: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: Piece of news coming out of the tech space is

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Speaker 2: meta you know, stepping back a little bit from their

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Speaker 2: investments in the metaverse, and as Lisa Mitaylo's just reporting,

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Speaker 2: that's pushing a stock up four percent today, which is

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Speaker 2: a pretty big move here there's talks only a bit

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Speaker 2: about thirteen percent year to day. Let's check in with

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Speaker 2: Honor rog Ran and we'll talk about a lot of

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Speaker 2: tech issues out there. Honor rog Ron is a senior

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Speaker 2: technology annls from Bloomberg Intelligence out there in Chicago. Honra,

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Speaker 2: what do you make of this announcement or this report

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Speaker 2: from Bloomberg News, Kurt Wagner's reporting that Meta may cut

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Speaker 2: back investments on its metaverse by as much as thirty percent.

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Speaker 3: What do you make of that?

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Speaker 8: See, when you have to invest billions in the EI

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Speaker 8: sight of it, you gotta find that money somewhere. I

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Speaker 8: know they have good cash flow, but you know, right

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Speaker 8: now everything is going towards building your AI infrastructure, So

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Speaker 8: I think it makes sense for them to cut in

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Speaker 8: other regions or areas to fund this particular project.

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Speaker 6: It seems as though investors are clearly celebrating this. I

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Speaker 6: mean we're seeing it up more than three point eight

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Speaker 6: percent right now, and earlier a lot higher. What do

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Speaker 6: you think about next steps from here? I mean, clearly

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Speaker 6: they're trying to redistribute their funds into AI development. What

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Speaker 6: are investors looking for from that?

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Speaker 8: So the same way they were looking at you know,

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Speaker 8: metaverse a few years ago, they want to see an ROI.

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Speaker 8: They will ask, you know, the management team as to

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Speaker 8: you're investing all these billions to create new data center

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Speaker 8: super intelligence team. What do I have to c ine

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Speaker 8: terms of the return on the core business? And I

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Speaker 8: think that those questions are not just for meta but

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Speaker 8: the entire ecosystem as to what is the net effect

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Speaker 8: addition to your revenue or reduction to your expenses down

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Speaker 8: the road. And I think that is not going to

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Speaker 8: end anytime soon, all right.

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Speaker 2: So I don't know, I'm just I think most shareholders

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Speaker 2: are like, I don't really get the whole metaverse thing.

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Speaker 2: So to the extent you can scale back investment there

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Speaker 2: and put it anywhere else, that's probably a good thing.

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Speaker 6: All right.

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Speaker 2: We also had the salesforce reporting results. Talk to us

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Speaker 2: about that name because that name's been under pressure I think,

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Speaker 2: maybe potential threats from AI in general.

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Speaker 8: Yeah, there's say the results did come in, I mean

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Speaker 8: almost in line with how we were looking at it

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Speaker 8: in terms of that the core business is still struggling,

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Speaker 8: but when it comes to some of their AI products

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Speaker 8: that has started to do well, they've gained momentum. But

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Speaker 8: when you look at somebody like a Salesforce, when you

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Speaker 8: have a revenue base of forty one billion dollars, it

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Speaker 8: takes a lot to move the needle. So even though

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Speaker 8: these products are very small and you know, growing triple digits,

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Speaker 8: but they are not you know, right there in order

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Speaker 8: to take down what is happening on the core business,

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Speaker 8: which is a decline in seat growth or the less

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Speaker 8: addition of seats because of macro it spending, and that

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Speaker 8: is probably going to be the story at least for

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Speaker 8: the near term.

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Speaker 6: So it seems as though analysts are still generally positive

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Speaker 6: on in terms of AI adoption trends when we think

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Speaker 6: about this company though.

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Speaker 8: Yes, absolutely, and that's you know, one of the things.

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Speaker 8: We saw really good numbers on both the data cloud

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Speaker 8: side of Fate and also the agent force. But when

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Speaker 8: you look at the stock reaction last night, you know,

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Speaker 8: it was up five six percent. And finally people have

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Speaker 8: when you really scrape the numbers and see that their

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Speaker 8: commercial remaining performance obligations, which is the order book for

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Speaker 8: next quarter, which they expect to grow about thirteen percent

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Speaker 8: in constant currency. Four percentage of point of that is informatica.

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Speaker 8: So when you strip that out, you will see that

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Speaker 8: that particular backlock number goes from eleven percent this quarter

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Speaker 8: to let's say nine or ten percent. So the core

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Speaker 8: is still declining or the core is still under pressure.

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Speaker 2: So the stock down twenty seven percent year to date

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Speaker 2: on a rock is that does that reflect the fact

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Speaker 2: that it's just it budgets are tight, or that AI

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Speaker 2: poses an existential threat to certain providers like a Salesforce.

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Speaker 8: I don't think that's the case, because it's going to

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Speaker 8: be very difficult for an established Fortune two thousand company

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Speaker 8: to get rid of their core system of record, you know,

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Speaker 8: whether that's an HR sales customer service and just deploy

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Speaker 8: a model in there. At least, we are not there yet.

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Speaker 8: Maybe you know, five years down the road, we may

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Speaker 8: see a scenario like this, but that's not really why

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Speaker 8: Salesforce is struggling. It is basically, we are the largest

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Speaker 8: provider of sales automation tool and customer service tool to

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Speaker 8: Fortune two thousand companies. It's those companies that are not

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Speaker 8: hiring at that same rate that they used to because

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Speaker 8: outside of AI and AI infrastructure, everything else is still

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Speaker 8: weak at this point.

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Speaker 2: All right, Dona our good stuff as always, Honor Agrana.

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Speaker 2: He is our senior technology analyst, Bloomberg Intelligence from the

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Speaker 2: burgeoning tech hub of Chicago, Illinois. We appreciate gtting a

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Speaker 2: few minutes of your time stay with us. More from

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Speaker 2: Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business Up. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Dick Sporting Goods reported some numbers here the stocks off

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Speaker 2: about one percent, but.

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Speaker 3: Boy they put up I thought they were some pretty

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Speaker 3: decent numbers. But what do I know about this stuff?

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Speaker 2: Lindsay Dutch Consumer Hardline senior analy She's the expert, and

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Speaker 2: she's a Bloomberg Intelligence.

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Speaker 3: She joins us here.

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Speaker 7: Lindsay, talk to us about Dick's Sporting Goods.

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Speaker 3: What did you learn with their earnings release?

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Speaker 4: Positive?

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Speaker 9: I think that there's, you know, continued strength in the

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Speaker 9: legacy business, and sometimes that that's being overshadowed by their

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Speaker 9: Footlocker acquisition, which close in early September. But there's certainly

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Speaker 9: pressure on this retailer to execute a very quick turnaround

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Speaker 9: at Footlocker, and they are already planning to aggressively offload

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Speaker 9: some stale inventory and close some stores. And we even

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Speaker 9: saw some of that change is already over the Black

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Speaker 9: Friday and Cyber Monday shopping weekend.

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Speaker 6: What's really in the focus, They were with foot Locker

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Speaker 6: would have been the issues at play.

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Speaker 9: So Footlocker is a little bit of a different animal

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Speaker 9: for Dix. They have a lifestyle focus. They also have

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Speaker 9: to be more on trend with their assortment and they

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Speaker 9: really have to carry sort of the top of the

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Speaker 9: line items, you know, across a variety of brands running

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Speaker 9: shoes have been in lately. Dix does have expertise sort

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Speaker 9: of in that more sports focused arena. And so you know,

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Speaker 9: Dix is looking to bring its strong partnerships with a

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Speaker 9: Nike for example, and other brands like that to elevate

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Speaker 9: the assortment, which should help. They're also looking to bring

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Speaker 9: in more apparel to the stores and I saw that

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Speaker 9: when I was out on Black Friday.

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Speaker 8: You know, my.

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Speaker 9: Footlocker had a lot more apparel this year. They also

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Speaker 9: had lots of other brands that were being highlighted, Crocs, Timberland,

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Speaker 9: so all more doing a lot more than just Nike.

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Speaker 2: Dick's calls the World Cup quote the biggest sports moment

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Speaker 2: the US has ever had. What are they telling us

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Speaker 2: about the World Cup and maybe how it might impact

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Speaker 2: their company.

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Speaker 9: Yeah, so they mentioned that at the Morgan Stanley conference yesterday.

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Speaker 9: All of these sports moments have been really big for

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Speaker 9: their legacy business. People are really leaning into sport. They

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Speaker 9: saw over the shopping weekend interest in their products that

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Speaker 9: were marketed for the World Cup, and that could be

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Speaker 9: a key event to dry sales going forward. But they

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Speaker 9: touch lots of aspect of sport. Their golf business is

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Speaker 9: doing excellent this year. They also do very well in

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Speaker 9: just team sports when you think about getting your NFL

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Speaker 9: gear for your favorite teams and things like that. They're

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Speaker 9: really seeing success across the board. But those big events

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Speaker 9: just give them an opportunity to advertise and bring people

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Speaker 9: into their store.

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Speaker 6: Who are their main competitors right now? Who do you

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Speaker 6: see within this landscape?

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Speaker 4: Yeah?

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Speaker 9: Yeah, So that's a very difficult question, given that I

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Speaker 9: think that they've done a really good job sort of

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Speaker 9: breaking out of lifestyle and really focused on athletes, and

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Speaker 9: that's what makes them different than a foot locker, than

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Speaker 9: a JD Sport. I think one of their closer competitors

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Speaker 9: could be Academy Sports and Outdoors. They're much smaller in size,

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Speaker 9: but that retailer Academy, you know, does compete with Dix

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Speaker 9: and is looking to more focus on athletes and bringing

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Speaker 9: sort of that athletic assortment to their customer as well.

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Speaker 7: Linda, what is Dix telling you?

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Speaker 2: What are some of the other consumer hardlines companies telling

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Speaker 2: you about the consumer right now?

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Speaker 9: So Dix is also unique in that they typically cater

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Speaker 9: to a higher income consumer, so you know, they have

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Speaker 9: seen resilient demand. They have seen both ticket and transactions

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Speaker 9: continue to rise, which is rather unique. A lot of

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Speaker 9: other retailers are only seeing the transaction front rather than

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Speaker 9: the ticket front. So it tells me that the demand

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Speaker 9: from that higher income consumer you know, is steadied to strong.

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Speaker 9: We do also see that demand for new products that's

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Speaker 9: being rolled out. People are willing to pay a high

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Speaker 9: price point for that. We also see that in footwear

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Speaker 9: right like On has a very high price point they

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Speaker 9: haven't discounted. Dix is also not discounting on those premium

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Speaker 9: products and so that consumer is willing to splurge on

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Speaker 9: those items. There is a little bit more pressure on

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Speaker 9: the lower income consumer this year. I think that affects

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Speaker 9: footlocker a little bit more. But the way Dix is

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Speaker 9: approaching sort of the turnaround and offering greater discounts, it

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Speaker 9: might be an opportunity, you know, to continue to cater

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Speaker 9: to that customer this holiday season.

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Speaker 6: How are you thinking about the discretionary space. I mean,

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Speaker 6: I know Alta is reporting after the bell today.

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Speaker 4: I assume maybe the beauty space.

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Speaker 6: Can we call it discretionary?

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Speaker 9: Some people might call it A said, yeah, I would agree.

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Speaker 7: I think, you know ALTA is.

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Speaker 9: There are a lot of connections I can draw between

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Speaker 9: Alta and Dix. You know, both of them had you know,

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Speaker 9: very conservative outlooks for the back half of the year,

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Speaker 9: you know, baking in a lot of uncertainty about you know,

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Speaker 9: where demand would go. So Alta, you know, better than

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Speaker 9: expected results in the first half, very similar to Dicks.

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Speaker 9: We get third quarter results later today, but that outlook

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Speaker 9: again is very low, so there's a low bar for

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Speaker 9: them to hit, at least on the top line. And

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Speaker 9: they're coming off a two year best same store sales

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Speaker 9: comp of almost seven percent growth in the second quarter,

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Speaker 9: So I'm optimistic for some strong top line numbers there.

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Speaker 9: But I do think the number to watch for Alta

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Speaker 9: today is going to be on the profit line. They

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Speaker 9: already have some pressure on profit within reinvesting in the business,

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Speaker 9: and we've seen some of the retailer stocks even if

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Speaker 9: you know the quarter was good. If that profit line

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Speaker 9: is missing, you know, investors aren't really liking that.

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Speaker 2: Lindsay, we're not hearing a whole lot about tariffs this quarter.

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Speaker 3: What are your companies saying?

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Speaker 9: So, most of my companies have low direct exposure, meaning

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Speaker 9: they weren't directly importing a lot of goods, so the

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Speaker 9: direct impact on them is low. They're working with suppliers

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Speaker 9: and raising prices where they need to to manage that.

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Speaker 9: You know, the biggest company in MySpace that that's most

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Speaker 9: exposed would be elf Beauty, so also in the beauty space,

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Speaker 9: seventy five percent of their product, at least their namesake

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Speaker 9: product is made in China, so highly exposed there to

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Speaker 9: the China tariffs. But we'll have to wait and see

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Speaker 9: because you know, there are some legal action out there,

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Speaker 9: you know, looking to get those costs back on the

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Speaker 9: retailer side. But you're right, earnings calls have sort of

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Speaker 9: left that topic mostly out of the third quarter commentary.

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Speaker 6: What are the top major trends that you're keeping an

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Speaker 6: eye on as we head into the next year.

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Speaker 9: So I do think costs in general, you know, still

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Speaker 9: are facing some upward pressure going into next year and

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Speaker 9: discretionary as a whole. You know, demand has been quite

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Speaker 9: soft since the back half of twenty two, so you

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Speaker 9: know we're looking to see, you know, when is that

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Speaker 9: going to turn. When are we going to see stronger

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Speaker 9: discretionary demand across the board. And that will help a

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Speaker 9: lot of these, you know, more secondary retailers in the space,

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Speaker 9: someone like an academy who's sort of struggling to see growth.

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Speaker 9: We can see a lot stronger of a year, you know,

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Speaker 9: with a pickup in that discretionary spend.

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Speaker 2: All right, Lindsay, thanks so much, appreciate it. Lindsay Dutch

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Speaker 2: Consumer Hardlines. She's a senior analyst at Bloomberg Intelligence down

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Speaker 2: there in our Princeton office talking to us about Dick

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Speaker 2: Sporting Goods has some pretty decent numbers.

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Speaker 7: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am easterne on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: Well, there's a lot going on in the world of media.

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Speaker 2: I mean, we're waiting for a big m and a

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Speaker 2: trade to happen. We've also got a lot of streaming

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Speaker 2: services jocking for competitive position relative to Netflix. We've got

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Speaker 2: Ai impacting advertising, a lot going on in there. So

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Speaker 2: let's check with somebody who does this stuff for living.

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Speaker 2: Mark Douglas, President and CEO of Mountain. He's zooming in

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Speaker 2: from one of my favorite towns in this country, San Antonio, Texas,

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Speaker 2: home of my former biggest client, Clear Channel Communications.

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Speaker 3: That was a good company back back in the day.

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Speaker 2: Mark, how do you think you talked a lot of advertisers,

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Speaker 2: You talked a lot of agencies, You talked to a

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Speaker 2: lot of folks in the media business. How do you

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Speaker 2: think this Warner Brothers Discovery thing is going to go down?

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Speaker 2: Do you think anybody's got the inner track here?

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Speaker 10: Well, I mean we're literal word on the street is

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Speaker 10: Netflix kind of has the inside track. But it's some

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Speaker 10: pretty serious bidders, you know, kind of the Ellison family

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Speaker 10: who I us work for, Larry Ellison, Netflix. I mean

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Speaker 10: a lot of people with resources and who seem to

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Speaker 10: have a lot of vision and really are in building modes.

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Speaker 10: So I think it's like exciting times watching this go down.

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Speaker 6: I mean, as we're thinking about this potential deal. If

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Speaker 6: Netflix were to actually come out on the winning end,

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Speaker 6: what does this mean potentially about antitrust concerns. Have you

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Speaker 6: been hearing any conversation about that.

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Speaker 10: I don't think so. I mean, there are somewhat around

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Speaker 10: two hundred streaming networks, almost all of whom are billion

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Speaker 10: dollar companies. I think it's pretty hard even to look

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Speaker 10: at this from a trust perspective, even if it's two

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Speaker 10: of the largest. I think the library that and honestly,

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Speaker 10: you know, some of those companies are hurting, and so

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Speaker 10: you know, having some consolidation I think is a healthy thing.

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Speaker 10: And Warner Brothers Discovery, I think it's just a fantastic asset.

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Speaker 10: I think in terms of acquisitions or mergers in the

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Speaker 10: media space, I think it's kind of being number one

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Speaker 10: our list. I think the way people are responding to

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Speaker 10: the opportunity is kind of validating that.

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Speaker 2: Yeah, with Terry Quadra back of Salmas Smith Brothers, Salmas

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Speaker 2: Smith Barney, he was the first one to treade this

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Speaker 2: asset when he represented AOL buying Time Warner back in

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Speaker 2: the day. So this is not the first go round

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Speaker 2: for these Time Warner people.

440
00:21:24,200 --> 00:21:26,960
Speaker 10: And look and look at the program they have Harry Potter,

441
00:21:27,160 --> 00:21:30,399
Speaker 10: Game of Thrones, White Loaded. I mean, it's it's in

442
00:21:30,440 --> 00:21:33,400
Speaker 10: a lot of ways. HBO was kind of the original Netflix.

443
00:21:33,480 --> 00:21:36,560
Speaker 10: You know, it wasn't obviously on net, but it had

444
00:21:36,680 --> 00:21:40,560
Speaker 10: like this incredible original content, which it continues to still

445
00:21:40,600 --> 00:21:44,199
Speaker 10: have along with just this broad library of content and

446
00:21:44,200 --> 00:21:47,359
Speaker 10: we all watched it on cable. Netflix kind of brought

447
00:21:47,440 --> 00:21:51,040
Speaker 10: that formula to the Internet and obviously it's you know,

448
00:21:51,160 --> 00:21:54,120
Speaker 10: kind of been become this massive company as a result

449
00:21:54,119 --> 00:21:56,480
Speaker 10: of that. But I think that's why that library of

450
00:21:56,560 --> 00:21:58,840
Speaker 10: content and that ability to kind of keep doing it.

451
00:21:58,960 --> 00:22:03,080
Speaker 10: Like they haven't really lost meaning Warner Brothers, Discovery, I

452
00:22:03,119 --> 00:22:06,760
Speaker 10: haven't really lost their mojo in terms of creating content

453
00:22:06,880 --> 00:22:10,800
Speaker 10: like that. And I think Discovery is under underappreciated in

454
00:22:10,920 --> 00:22:14,080
Speaker 10: terms of the value you know that that it brings.

455
00:22:14,080 --> 00:22:18,920
Speaker 10: Shark Yeah, Shark Week and kind of like like documentary

456
00:22:19,200 --> 00:22:23,320
Speaker 10: style and and they turned kind of showing and they

457
00:22:23,359 --> 00:22:27,640
Speaker 10: turned that also into like reality TV with with what's

458
00:22:27,640 --> 00:22:28,720
Speaker 10: the show up in Alaska?

459
00:22:28,800 --> 00:22:34,080
Speaker 7: The fishing shows. Yeah, I mean it's a lot to watch.

460
00:22:34,280 --> 00:22:36,200
Speaker 10: It's a lot to watch, and I think that's why

461
00:22:36,240 --> 00:22:37,240
Speaker 10: people want the essence.

462
00:22:37,960 --> 00:22:39,440
Speaker 6: I've forgotten about Shark Week.

463
00:22:39,560 --> 00:22:40,960
Speaker 3: Yes, that's a big.

464
00:22:42,840 --> 00:22:46,520
Speaker 10: Just imagine any of these players, especially on Netflix, who

465
00:22:46,520 --> 00:22:49,640
Speaker 10: has you know, the resource to do it, bringing back

466
00:22:49,680 --> 00:22:52,080
Speaker 10: Game of Thrones, bringing back a lot of program I

467
00:22:52,080 --> 00:22:54,440
Speaker 10: think it's still going to play really, really well, and

468
00:22:54,440 --> 00:22:58,360
Speaker 10: and it might also play really well outside the United States,

469
00:22:58,400 --> 00:23:00,320
Speaker 10: so you know where a lot of these company need

470
00:23:00,359 --> 00:23:00,960
Speaker 10: to expand to.

471
00:23:01,440 --> 00:23:05,040
Speaker 6: So we talked about Netflix, what about Paramount's guidance. How

472
00:23:05,040 --> 00:23:08,000
Speaker 6: big of a deal could this be for them?

473
00:23:08,359 --> 00:23:11,560
Speaker 10: I think it makes a lot of sense. I mean,

474
00:23:11,560 --> 00:23:15,719
Speaker 10: the Paramount is a good asset. I think this is

475
00:23:16,000 --> 00:23:19,080
Speaker 10: kind of meaning there's a lot of programming there and

476
00:23:19,080 --> 00:23:21,919
Speaker 10: obviously they pick up CBS and things like that. But

477
00:23:22,200 --> 00:23:26,840
Speaker 10: adding Warner Brothers Discovery, I kind of think puts them

478
00:23:26,880 --> 00:23:30,239
Speaker 10: in a much stronger position to challenge a Netflix and

479
00:23:30,320 --> 00:23:33,000
Speaker 10: challenge a Disney. And that may be one of the

480
00:23:33,040 --> 00:23:36,000
Speaker 10: reasons Netflix is interested is more is somewhat as a

481
00:23:36,280 --> 00:23:39,200
Speaker 10: you know, kind of to hold their ground, hold their

482
00:23:39,240 --> 00:23:43,360
Speaker 10: turf by not allowing someone to put together a library

483
00:23:43,440 --> 00:23:47,520
Speaker 10: of content that is put you know, potentially as in

484
00:23:47,600 --> 00:23:50,159
Speaker 10: the range or strength as theirs is, so that you know,

485
00:23:50,200 --> 00:23:52,440
Speaker 10: this could be as much of a defensive move as

486
00:23:52,720 --> 00:23:54,520
Speaker 10: a defensive move, but I think it makes a lot

487
00:23:54,560 --> 00:23:57,760
Speaker 10: of sense for Paramoun. I mean, once they committed to

488
00:23:57,760 --> 00:24:02,080
Speaker 10: to getting Paramount, I think, you know, the acquisitions can't stop.

489
00:24:02,160 --> 00:24:05,960
Speaker 10: They have to kind of double down. And so you know,

490
00:24:06,040 --> 00:24:07,600
Speaker 10: we'll see how this plays out.

491
00:24:07,960 --> 00:24:09,280
Speaker 3: Mark for twenty twenty six.

492
00:24:09,280 --> 00:24:10,920
Speaker 2: In the streaming business, you mentioned there's you know, a

493
00:24:10,960 --> 00:24:12,440
Speaker 2: couple hundred streamers out there.

494
00:24:13,040 --> 00:24:16,080
Speaker 7: Are there too many? Does there need to be consolidation

495
00:24:16,520 --> 00:24:18,199
Speaker 7: or bundling or how do.

496
00:24:18,200 --> 00:24:20,600
Speaker 3: You think the streaming landscape is going to evolve mature?

497
00:24:21,440 --> 00:24:23,920
Speaker 10: Yeah, I mean it has to consolidate. I've always thought,

498
00:24:24,160 --> 00:24:25,720
Speaker 10: I mean kind of one of the things I've always

499
00:24:25,760 --> 00:24:28,600
Speaker 10: said on this topic is we can play a game.

500
00:24:28,680 --> 00:24:31,400
Speaker 10: If I name a streaming network and you can't tell

501
00:24:31,440 --> 00:24:35,399
Speaker 10: me immediately why why you will watch it, then it

502
00:24:35,560 --> 00:24:40,199
Speaker 10: probably should not exist in a network. And so and

503
00:24:40,280 --> 00:24:43,000
Speaker 10: we played that game. You know, if I say Discovery,

504
00:24:43,040 --> 00:24:45,920
Speaker 10: you would say documentary. If I say Netflix, you would say,

505
00:24:45,960 --> 00:24:48,679
Speaker 10: you know, new shows every Tuesday, and there'd be a

506
00:24:49,040 --> 00:24:51,200
Speaker 10: range of things you want to watch. If I say

507
00:24:51,440 --> 00:24:53,920
Speaker 10: ESPN and you'd say sports, and so you know, when

508
00:24:53,920 --> 00:24:56,000
Speaker 10: you get into sum of the names, you can clearly

509
00:24:56,040 --> 00:24:58,840
Speaker 10: say that then I think there has to be a

510
00:24:58,880 --> 00:25:02,840
Speaker 10: consolidation both in terms of the health of those businesses

511
00:25:02,880 --> 00:25:05,760
Speaker 10: as well as just what consumers are willing to spend

512
00:25:06,200 --> 00:25:08,920
Speaker 10: and tolerate. We've gotten to this point where pre much,

513
00:25:09,040 --> 00:25:10,720
Speaker 10: you know, we went back to the future in terms

514
00:25:10,760 --> 00:25:13,200
Speaker 10: of ad supporting content. At this point, I think every

515
00:25:13,200 --> 00:25:17,080
Speaker 10: streaming network except for Apple TV Plus now has adds,

516
00:25:17,119 --> 00:25:19,920
Speaker 10: so you can you can do an ad model and

517
00:25:20,760 --> 00:25:23,080
Speaker 10: do well. You're not as relying on subscriptions, but you

518
00:25:23,080 --> 00:25:25,280
Speaker 10: still have to have a reason for people to come

519
00:25:25,320 --> 00:25:26,560
Speaker 10: and watch you, and that's the key.

520
00:25:27,440 --> 00:25:29,959
Speaker 6: What are your major themes for twenty twenty six as

521
00:25:29,960 --> 00:25:31,240
Speaker 6: you're looking at the media landscape?

522
00:25:32,520 --> 00:25:35,800
Speaker 10: The I mean, this is the year where like it's

523
00:25:35,920 --> 00:25:39,040
Speaker 10: kind of the official death of cable in a sense.

524
00:25:39,080 --> 00:25:42,320
Speaker 10: I mean, obviously it's a legacy business, but like there's

525
00:25:42,400 --> 00:25:46,960
Speaker 10: nothing like live sports is moving on the streaming as

526
00:25:47,080 --> 00:25:50,280
Speaker 10: fast as it possibly can. It's a topic of the day,

527
00:25:50,280 --> 00:25:53,680
Speaker 10: it's what everyone wants. We got the I think Netflix

528
00:25:54,200 --> 00:25:57,040
Speaker 10: continues to expand in terms of their ad supported business,

529
00:25:57,400 --> 00:26:01,000
Speaker 10: which is great for advertisers and great for consumers. But

530
00:26:01,240 --> 00:26:05,520
Speaker 10: it's kind of that, like all content consumption is streaming.

531
00:26:06,040 --> 00:26:08,840
Speaker 10: I think with the live live sports in particular.

532
00:26:08,960 --> 00:26:09,600
Speaker 3: Yeah, and.

533
00:26:11,080 --> 00:26:13,560
Speaker 10: One of the things that's really interesting about streaming is

534
00:26:13,560 --> 00:26:17,159
Speaker 10: you can turn content that's not the NBA and not

535
00:26:17,320 --> 00:26:20,440
Speaker 10: the NFL into content consumers want to watch and.

536
00:26:20,480 --> 00:26:23,160
Speaker 2: Just work to the NFL reopens its contract with its

537
00:26:23,200 --> 00:26:24,840
Speaker 2: media partners, that's gonna be seismic.

538
00:26:24,880 --> 00:26:26,800
Speaker 7: Mark Douglas, President CEO of Mountain.

539
00:26:28,359 --> 00:26:33,040
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

540
00:26:33,240 --> 00:26:37,200
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541
00:26:37,400 --> 00:26:40,760
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542
00:26:40,800 --> 00:26:44,639
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543
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544
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