WEBVTT - A Netflix Price Makeover Is Coming 0:00:01.760 --> 0:00:04.400 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 0:00:07.280 --> 0:00:09.800 you the latest news from the world to business and finance, 0:00:09.800 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:20.400 analyst in more than twenty countries. You can download Bloomberg 0:00:20.400 --> 0:00:23.439 Business Week on iTunes, SoundCloud, or Bloomberg dot Com. You 0:00:23.440 --> 0:00:25.400 can also listen to our radio show at two pm 0:00:25.440 --> 0:00:28.360 Eastern Time on Bloomberg Radio or watch us on YouTube 0:00:28.400 --> 0:00:32.680 search Bloomberg Global News. Well, we just talked about Netflix 0:00:32.960 --> 0:00:35.959 coming out with its tears in terms of its ad 0:00:36.040 --> 0:00:42.280 supported streaming. Tis not tears like earlier this year for Netflix. Okay, 0:00:42.720 --> 0:00:44.640 like those tears, Yeah, I mean that was happening earlier 0:00:44.640 --> 0:00:46.560 this year. I know people were like, what, yeah, what's 0:00:46.560 --> 0:00:49.760 going on? Ats Netflix? Okay, So we mentioned that's going 0:00:49.800 --> 0:00:53.640 to launch that at supported plan on November three. That 0:00:53.760 --> 0:00:56.640 story was reported by Lucas shaw As is a most 0:00:56.640 --> 0:00:58.720 read on the Bloomberg That is in the new issue 0:00:58.720 --> 0:01:01.600 of Bloomberg Business Week, Maga Scene and that story that 0:01:01.800 --> 0:01:04.559 Netflix is coming makeover in the face of some real 0:01:04.600 --> 0:01:07.880 streaming competition. Yeah. The piece by Lucas Shaw, entertainment reporter 0:01:07.920 --> 0:01:09.880 for Blueberg News. He joins us on the phone from 0:01:10.000 --> 0:01:13.240 Los Angeles, give a follow on Twitter at Lucas Underscore Shaw, 0:01:13.280 --> 0:01:16.320 and then sign up for screen time his fantastic newsletter. Lucas, 0:01:16.360 --> 0:01:18.920 good to have you with us this afternoon. I want 0:01:18.920 --> 0:01:21.560 to go back years ago to sort of the d 0:01:21.720 --> 0:01:25.000 n a of Netflix, the way that it disrupted Blockbuster 0:01:25.080 --> 0:01:27.360 but then kind of had to disrupt itself when it 0:01:27.680 --> 0:01:31.200 really brought streaming to the masses, because I think that's 0:01:31.240 --> 0:01:33.640 a big part of your piece, because Netflix, once again, 0:01:34.000 --> 0:01:36.600 in order to succeed in this new ecosystem, has to 0:01:36.680 --> 0:01:41.000 disrupt itself one more time. Where should we start. I mean, 0:01:41.080 --> 0:01:44.039 you can start with with advertising, which is where we 0:01:44.080 --> 0:01:46.560 started earlier, because it's something that Flix has always said 0:01:46.560 --> 0:01:51.080 it would never do, uh, you know, never say Yeah, 0:01:51.360 --> 0:01:53.320 being an ad free streaming service was sort of the 0:01:53.400 --> 0:01:55.880 core part of its proposition, something that made it better 0:01:56.240 --> 0:01:59.680 than cable TV, where people were overwhelmed with ten fifteen 0:01:59.680 --> 0:02:02.760 minutes of advertising per hour. And it's really a sign 0:02:03.080 --> 0:02:07.560 of kind of the maybe not desperation, but the you know, 0:02:07.600 --> 0:02:09.840 the challenge they face here where they've just hit a 0:02:09.880 --> 0:02:12.560 wall in terms of growth over the last eighteen months 0:02:12.880 --> 0:02:15.560 and are now doing two things both advertising and charging 0:02:15.560 --> 0:02:18.320 for passwords sharing that they've long set we're not an issue. 0:02:18.360 --> 0:02:20.680 The one the one quible I take with the comparison 0:02:20.760 --> 0:02:23.880 to starting streaming, which I think is totally valid, is 0:02:23.919 --> 0:02:26.760 that if you asked the leadership of the company, they 0:02:26.760 --> 0:02:29.760 would argue that this is more of a minor alteration 0:02:29.800 --> 0:02:32.040 because they still believe in streaming. They're just making some 0:02:32.160 --> 0:02:34.080 changes to it. But that is, of course a little 0:02:34.080 --> 0:02:37.160 bit of corporate spin. Jieber's here, the editor of Bloomberg 0:02:37.200 --> 0:02:41.519 business Week magazine, and it's really timely story considering the 0:02:41.560 --> 0:02:45.959 headlines we got earlier today about netflak Netflix launching that service, 0:02:46.000 --> 0:02:47.720 and we've got some details on how much it's going 0:02:47.760 --> 0:02:50.680 to cost you. Yeah, so the Lucas. The thing that 0:02:50.800 --> 0:02:52.280 I just wanted to it's been a little bit of 0:02:52.320 --> 0:02:55.720 time talking to you, was this the culture at Netflix, 0:02:56.080 --> 0:02:59.160 and you know, Surrender's obviously been there for a while, 0:02:59.200 --> 0:03:01.640 has been the arc text of of sort of the 0:03:01.680 --> 0:03:06.920 content strategy. Um. The the thing that you know, like 0:03:06.960 --> 0:03:08.720 we said in the story, he never wanted to do, 0:03:09.440 --> 0:03:14.359 was was ads right? And so internally, I'm really curious 0:03:14.639 --> 0:03:18.079 to see how they tested this the price of this model, 0:03:18.200 --> 0:03:20.680 Like what's your early sense of just like how did 0:03:20.720 --> 0:03:25.160 they land on this particular price. Well, I think the 0:03:25.240 --> 0:03:29.320 price comes from mimicking other services. They don't like to 0:03:29.360 --> 0:03:31.840 say that out externally. You know, there was a call 0:03:31.919 --> 0:03:35.640 earlier today where a reporter asked Regg Peters, the CEO 0:03:35.760 --> 0:03:37.960 of the company, if they chose six nine a month 0:03:37.960 --> 0:03:40.320 because it's a dollar less than Disney pluses at Sero, 0:03:40.320 --> 0:03:42.600 which is seven ninths nine a month, And they said no. 0:03:43.160 --> 0:03:45.560 But I've had conversations with people at the very top 0:03:45.600 --> 0:03:48.440 of the company who said that they were modeling it 0:03:48.480 --> 0:03:51.480 a little bit after Hulu, which was sort of the 0:03:51.520 --> 0:03:54.960 first big streaming service to offer AD, one of Netflix's 0:03:54.960 --> 0:03:58.520 earliest competitors, and it's priced in a way where they 0:03:58.600 --> 0:04:01.480 believe the six nine a month, seven dollars a month 0:04:01.560 --> 0:04:04.320 plus what they'll make from advertising means that they'll make 0:04:04.440 --> 0:04:07.480 as much, if not more from an AD to your 0:04:07.520 --> 0:04:10.360 customer as they will from the premium one. To your 0:04:10.440 --> 0:04:13.120 question about culture, I just think this year, in general, 0:04:13.240 --> 0:04:16.640 the past couple of years have been very destructive towards 0:04:16.640 --> 0:04:19.719 the culture that was was pretty unique in business. Well, 0:04:20.120 --> 0:04:21.880 stick with that because one of the things that you 0:04:21.920 --> 0:04:25.160 talk about was the I will call it a debacle, 0:04:25.200 --> 0:04:27.599 which was the Quister moment where they said, you know what, 0:04:27.760 --> 0:04:31.800 we're we're gonna change the name and we're gonna turn 0:04:31.839 --> 0:04:35.880 the streaming thing into Quister and uh, you know it's Boy, 0:04:36.000 --> 0:04:39.479 did not go over well, but it speaks to this 0:04:39.920 --> 0:04:44.360 company's ability to sort of try things. Maybe you soft 0:04:44.440 --> 0:04:47.160 launched something, it doesn't go well and you pivot and boy, 0:04:47.279 --> 0:04:50.520 that last decade since the Quister thing looked really good. 0:04:50.800 --> 0:04:52.039 But one of the things you point out in the 0:04:52.040 --> 0:04:55.000 story is that there's not that many people left at 0:04:55.000 --> 0:04:58.719 the company from back then. Yeah, I mean you have 0:04:58.839 --> 0:05:01.279 to give them credit to your point about Quickster with 0:05:01.480 --> 0:05:04.360 the advertising and the passer charing. They're moving very quickly. 0:05:04.400 --> 0:05:06.880 I mean, they went from at the end of last 0:05:06.960 --> 0:05:10.160 year still not thinking they were doing advertising to standing 0:05:10.200 --> 0:05:12.680 up an AD service less than a year. They're doing 0:05:12.720 --> 0:05:16.080 it faster than Disney got there at supported tier out there. 0:05:16.120 --> 0:05:18.520 And keep in mind, Disney already has an ad supported 0:05:18.520 --> 0:05:20.760 service in Hulu, and Disney is a major player in 0:05:20.839 --> 0:05:23.680 video advertising. So there is a degree to which the 0:05:23.680 --> 0:05:26.240 company can still move incredibly quickly, and I think that's 0:05:26.240 --> 0:05:29.000 the credit to be Page Things and and Ted serandos, 0:05:29.400 --> 0:05:32.119 but a lot of the senior leadership around them has left. 0:05:32.240 --> 0:05:35.520 There's just in general, a lot of restlessness among employees. 0:05:35.880 --> 0:05:37.520 And I think there was a feeling for a long 0:05:37.600 --> 0:05:40.799 time that, you know, Netflix was the place to work 0:05:40.839 --> 0:05:42.640 if you wanted to be in in media and in 0:05:42.640 --> 0:05:44.120 some cases in tech. I mean, it was at the 0:05:44.160 --> 0:05:47.360 top of every list of most desirable company. And it's 0:05:47.400 --> 0:05:50.080 not like it's completely fallen off, but for a lot 0:05:50.120 --> 0:05:52.960 of the folks who work there, it now feels like 0:05:53.040 --> 0:05:56.320 another company because there there was forever this very unique 0:05:56.320 --> 0:05:58.840 culture that Read Tastings had built and written a book about. 0:05:59.200 --> 0:06:01.599 And while while it still there in pieces, you know, 0:06:01.720 --> 0:06:04.120 it has kind of fallen to pray to the same 0:06:04.160 --> 0:06:06.880 thing that all companies do, is they is they get scale, 0:06:06.920 --> 0:06:10.240 They just become a more corporate and traditional. So what 0:06:10.360 --> 0:06:13.120 is stuck around from that that infamous culture deck that 0:06:13.360 --> 0:06:15.479 kind of went viral years ago. The idea, you know, 0:06:15.520 --> 0:06:18.160 the company is is like a sports team, not a family, right, 0:06:18.200 --> 0:06:20.680 They'll cut people who don't who aren't taught performers. But 0:06:20.720 --> 0:06:22.400 at the same time they encourage you to go out 0:06:22.440 --> 0:06:24.560 and see how much you're worth in the marketplace and 0:06:24.600 --> 0:06:26.800 come back and you can can get a raise from 0:06:26.839 --> 0:06:28.960 Netflix that way. I mean, what parts are sticking around 0:06:28.960 --> 0:06:31.080 to you and what parts are kind of gone there? 0:06:32.080 --> 0:06:34.800 I mean it's I'd say it's it's a moderation of things, right. 0:06:34.839 --> 0:06:40.159 So the company is infamous for having radical transparency. You know. 0:06:40.200 --> 0:06:42.680 Redhastings modeled a lot of his leadership off of Ray 0:06:42.760 --> 0:06:46.880 Dahlio the Bridgewater guy um. And that comes in a 0:06:46.880 --> 0:06:49.119 couple forms. It's it's a lot of feedback, so people 0:06:49.160 --> 0:06:52.240 being very direct and blunt with one another, and also 0:06:52.440 --> 0:06:55.640 then sharing metrics and data. You know, Netflix makes pay 0:06:56.240 --> 0:06:59.600 the pay available to or excuse me, employees can see 0:06:59.600 --> 0:07:02.440 what one others making above a certain level. They share 0:07:02.520 --> 0:07:05.400 their financial results weeks before they announced them publicly with 0:07:05.480 --> 0:07:08.719 hundreds of employees, which is very rare. Um. Some of 0:07:08.760 --> 0:07:11.720 that is still sticking around. They still share some of 0:07:11.720 --> 0:07:14.480 those financial results ahead of time. They do still have 0:07:14.560 --> 0:07:17.200 to pay available to some, but you talk to employees 0:07:17.200 --> 0:07:18.960 and they say that a lot of the decision making 0:07:19.000 --> 0:07:20.960 which used to be decentralized. It used to be you 0:07:20.960 --> 0:07:23.800 wanted to empower people who are you know, VP level, 0:07:23.880 --> 0:07:26.640 relatively mid level executives to be able to buy a 0:07:26.680 --> 0:07:29.920 project or try something that just doesn't happen as much anymore. 0:07:29.960 --> 0:07:31.720 A lot of the decisions seem to be made by 0:07:31.720 --> 0:07:35.280 a few stakeholders, and people are just playing with fear 0:07:35.480 --> 0:07:38.920 more because the company is under more pression. Hey just 0:07:38.960 --> 0:07:41.320 got about thirty seconds left here. I love this line though, 0:07:41.320 --> 0:07:43.240 in your story, with all this going on, you say, 0:07:43.280 --> 0:07:46.120 it's important to note that in some ways Netflix, Netflix 0:07:46.120 --> 0:07:51.400 has never been stronger twenty seconds. Why. Uh, it's profitable, 0:07:51.480 --> 0:07:53.640 it doesn't have to borrow money anymore, and it is 0:07:53.720 --> 0:07:56.000 far and away the bigger than all these other companies 0:07:56.040 --> 0:07:58.880 which are dealing with the decline of cable DV which 0:07:58.920 --> 0:08:02.120 does not affect Netflix, which I mean, Lucas, thank you 0:08:02.160 --> 0:08:05.640 for this story perfectly timed. I mean, you think about 0:08:05.680 --> 0:08:08.240 all these other companies that are basically going through the 0:08:08.280 --> 0:08:11.640 growing pains that Netflix has gone through. Netflix built its 0:08:11.720 --> 0:08:14.920 dynasty on cheap debt and they're profitable, know how to 0:08:14.960 --> 0:08:17.200 do this. It's like, you know, to some advantage that 0:08:17.240 --> 0:08:20.000 there's a serious advantage there. Yeah, It's a great deep 0:08:20.040 --> 0:08:22.400 dive into so much. When it comes to Netflix and 0:08:22.440 --> 0:08:24.200 the changes that it's making. It's like you knew something 0:08:24.280 --> 0:08:25.920 was going on it there'd be some headlines here, Doll. 0:08:26.080 --> 0:08:29.400 I mean, get to work with people like Lucas he 0:08:29.560 --> 0:08:32.760 is amazing, Lucashaw's entertainment reporter at Bloomberg News from l 0:08:32.800 --> 0:08:34.920 A and of course the editor of Bloomberg Business Week, 0:08:34.960 --> 0:08:37.640 Deal Webber. Here in our studio. This is Bloomberg Radio. 0:08:38.679 --> 0:08:42.280 You're listening to Bloomberg Business Week with Carol Masser and 0:08:42.360 --> 0:08:47.120 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio this past Monday. 0:08:47.240 --> 0:08:49.240 You all know this, uh And depending on where you 0:08:49.240 --> 0:08:52.320 were around the country, Columbus Day and or Indigenous People's 0:08:52.400 --> 0:08:55.160 Day and on the ladder. The World Health Organization has 0:08:55.200 --> 0:08:58.200 noted that the health of Indigenous peoples is often marked 0:08:58.200 --> 0:09:01.080 by higher rates of health risks, poor health outcomes, and 0:09:01.160 --> 0:09:03.760 greater unmet needs in terms of health and social services. 0:09:03.880 --> 0:09:06.280 We've got Dr Donald Warren with US, co director of 0:09:06.320 --> 0:09:08.760 the Center for Indian Health at the Johns Hopkins Bloomberg 0:09:08.760 --> 0:09:10.960 School of Public Health. Doctor Warren joining us on the 0:09:10.960 --> 0:09:13.760 phone from Baltimore this afternoon Dr Warren, how are you 0:09:14.920 --> 0:09:17.920 doing very well? How are you doing? We're doing well. Thanks. Hey. Um, 0:09:18.080 --> 0:09:21.280 give us an idea of the health challenges facing indigenous 0:09:21.280 --> 0:09:24.000 people in this country. Um, what are what are you 0:09:24.080 --> 0:09:26.560 focused on as at the Center for Indian Health at 0:09:26.559 --> 0:09:28.599 the Johns Hopkins Bloomberg School of Public Health, which I 0:09:28.600 --> 0:09:31.000 should note is supported by Michael R. Bloomberg, the founder 0:09:31.000 --> 0:09:35.360 of Bloomberg LP and Bloomberg Philanthropies. Yeah. So we've had 0:09:35.400 --> 0:09:38.280 the Center for American Indian Health over thirty years actually, 0:09:38.760 --> 0:09:42.400 and the original work took place in Arizona and collaboration 0:09:42.480 --> 0:09:44.319 with a couple of the tribes who are facing some 0:09:44.400 --> 0:09:49.320 infectious disease issues. And at that time there were children, 0:09:50.160 --> 0:09:53.520 very young children who are dying from dehydration. So the 0:09:53.559 --> 0:09:59.360 original work was actually to develop oral rehydration therapy that 0:09:59.480 --> 0:10:02.160 eventually be game pediolite. Actually, it's a little long fact 0:10:02.200 --> 0:10:04.400 that could be like actually originated out of that work, 0:10:04.559 --> 0:10:06.920 interesting to the Johns Hopkins School of Public Health and 0:10:06.960 --> 0:10:10.280 collaboration with tribes in Arizona. And since that time or 0:10:10.360 --> 0:10:14.000 less thirty or so years, they've expanded the work to 0:10:14.400 --> 0:10:18.080 well over two tribes across the US and expanded beyond 0:10:18.160 --> 0:10:21.240 infectious disease to include things like maternal and child health 0:10:21.760 --> 0:10:26.000 as well as addressing behavioral health considerations and chronic disease. 0:10:26.679 --> 0:10:30.640 So we just recently, within the last less than one month, 0:10:31.280 --> 0:10:33.600 changed the name from the Center for American Indian Health 0:10:33.640 --> 0:10:36.120 to the Center for Indigenous Health, and we'll be having 0:10:36.160 --> 0:10:40.000 more of an international focus moving forward. Talk to us 0:10:40.040 --> 0:10:43.760 about indigenous communities in the US, in the United States 0:10:43.880 --> 0:10:47.280 or or even globally. Um, what's why is it that 0:10:48.080 --> 0:10:50.160 they're having such a tough time in terms of access 0:10:50.200 --> 0:10:54.440 to good health care and having good health outcomes. Well, 0:10:54.480 --> 0:10:58.880 each population is different, but there are some commonalities. And 0:10:59.360 --> 0:11:01.960 when we look at the indigenous populations as are the 0:11:02.000 --> 0:11:05.920 first inhabitants of various parts of the earth, and of 0:11:05.960 --> 0:11:08.360 course of the United States, that would include both American 0:11:08.360 --> 0:11:12.559 Indian and Alaska Native populations, as well as Native Hawaiian 0:11:12.880 --> 0:11:16.120 and other indigenous peoples in the Pacific Islands that are 0:11:16.200 --> 0:11:19.000 in U s territories. So we have a very diverse 0:11:19.240 --> 0:11:22.959 group of indigenous peoples in the United States, but specifically 0:11:23.000 --> 0:11:27.000 for American Indians and Alaskan Natives. What really makes us 0:11:27.160 --> 0:11:30.640 unique is that we have sovereign nations within the United States, 0:11:30.640 --> 0:11:35.840 there's actually five seventy four federally recognized sovereign tribes. So 0:11:35.880 --> 0:11:39.120 we have our own elected officials, our own governments, in 0:11:39.160 --> 0:11:42.440 many cases, our own health systems. But the big challenge 0:11:42.480 --> 0:11:46.439 is that we face terrible rates of poverty and marginalization 0:11:46.480 --> 0:11:49.200 in many of our tribes. So one of the things 0:11:49.200 --> 0:11:53.080 that we see across population served by Indian Health Service 0:11:53.840 --> 0:11:58.080 is a lot of poverty related illnesses and other socially 0:11:58.120 --> 0:12:02.160 determined health to spared ease. And unfortunately, the Indian Health 0:12:02.200 --> 0:12:05.600 Service is terribly underfunded. And if we look at just 0:12:05.679 --> 0:12:08.880 the funding for i S compared to Medicare, for example, 0:12:10.120 --> 0:12:12.520 is funded about free to four thousand dollars per patient 0:12:12.600 --> 0:12:15.760 per year. Medicare has funded a twelve thousand dollars per 0:12:15.760 --> 0:12:18.600 patient per year. So we just have a terribly underfunded 0:12:18.600 --> 0:12:23.839 health system coupled with an impoverished population. Generally speaking, Dr 0:12:24.040 --> 0:12:26.720 Warren Um, can you talk a little bit about your 0:12:26.720 --> 0:12:29.959 bio and and you know from what I've I've read 0:12:30.559 --> 0:12:34.360 um this you know medicine runs in your family. Can 0:12:34.360 --> 0:12:36.880 you talk a little bit about your background and how 0:12:36.960 --> 0:12:41.520 you bring a traditional approach to what you're doing today? 0:12:42.240 --> 0:12:46.440 Absolutely so I'm Oglala Lakota reading from Kyle, South Dakota 0:12:46.440 --> 0:12:49.240 on the Pine Bridge Indian Reservation, and I was very 0:12:49.240 --> 0:12:51.160 fortunate to grow up in a family with a lot 0:12:51.200 --> 0:12:54.560 of traditional healers and medicine men. So several uncles and 0:12:54.600 --> 0:12:57.840 a head of grandfather who were all traditional healers, and 0:12:57.880 --> 0:13:02.679 I've learned a lot about traditional Lakota approaches to health 0:13:02.720 --> 0:13:06.200 and wellness just from my own family. And it's also 0:13:06.240 --> 0:13:09.600 a ceremony family, so we have sacred ceremonies that we 0:13:09.640 --> 0:13:13.640 participate in every year and really hanging onto the beauty 0:13:13.640 --> 0:13:18.120 and the benefits of connectedness to traditional culture. In addition 0:13:18.160 --> 0:13:21.480 to that, my mom is a nurse. Um she's eighty 0:13:21.559 --> 0:13:23.600 three and still working. I like to teach her that 0:13:23.640 --> 0:13:27.920 she failed retirement. She tried to retire, still working as 0:13:27.960 --> 0:13:32.959 an educator and really helping to educate the next generation 0:13:32.960 --> 0:13:36.400 of American Indian nurses. So I've been exposed to the 0:13:36.400 --> 0:13:40.560 whole field of health care from traditional cultural perspectives as 0:13:40.600 --> 0:13:43.959 well as modern medical perspectives. And then I was very 0:13:44.000 --> 0:13:46.400 fortunately did well in school and was able to go 0:13:46.440 --> 0:13:50.319 to Stanford for medical school and Harvard for my master 0:13:50.440 --> 0:13:53.440 public Health. I've got to ask you, we've only got 0:13:53.440 --> 0:13:55.559 about a minute left. So this is not an easy thing, 0:13:55.559 --> 0:13:57.360 I know to answer, but I mean it feels like 0:13:58.640 --> 0:14:02.599 another population in the United States that gets an incredible 0:14:02.720 --> 0:14:05.800 raw deal and Indigenous people over and over again. You know, 0:14:05.880 --> 0:14:09.240 you can pick your point um is being left behind? 0:14:09.760 --> 0:14:13.120 What what big program or policy change could we do 0:14:13.240 --> 0:14:15.640 that would make a difference on the population in the 0:14:15.720 --> 0:14:19.040 United States, specifically in asking we've got about a minute. Yeah, 0:14:19.040 --> 0:14:21.760 And in the US, one of the unique considerations that 0:14:21.960 --> 0:14:24.480 most of our tribes also have treaties with the federal government, 0:14:24.520 --> 0:14:27.360 so there's a government to government relationship, and as part 0:14:27.360 --> 0:14:30.200 of those treaties, it's well documented in case law and 0:14:30.240 --> 0:14:34.120 then other examples that we have a legal treaty right 0:14:34.200 --> 0:14:37.160 to health services in the United States. So the only 0:14:37.160 --> 0:14:38.960 thing that we would ask is that the federal government 0:14:39.040 --> 0:14:41.800 live up to its treaty obligations. Much in the same 0:14:41.840 --> 0:14:44.600 way we would criticize other nations for not living up 0:14:44.640 --> 0:14:47.520 to their treaty obligations, we should actually be looking at 0:14:47.520 --> 0:14:50.680 our treaty obligations to our indigenous peoples in the US 0:14:50.720 --> 0:14:54.280 and recognize that underfunding the Indian Health Service really is 0:14:54.320 --> 0:14:59.640 a breach of those treaty obligations very interesting, um and informative. 0:15:00.160 --> 0:15:02.480 Dr Donald Warren, thank you so much, really appreciate your 0:15:02.480 --> 0:15:05.400 time today. Co director for the soon to be Center 0:15:05.480 --> 0:15:09.200 for Indigenous People at the Johns Hopkins Bloomberg School of 0:15:09.200 --> 0:15:12.520 Public Health Center for Indigenous Help People's Health, I should 0:15:12.520 --> 0:15:15.600 say uh. And of course Johns Hopkins is supported by 0:15:15.600 --> 0:15:18.720 Michael or Bloomberg founder, Bloomberg LP and Bloomberg Philanthropies. Dr 0:15:18.760 --> 0:15:21.440 Warren joining us on the phone from Baltimore, and we 0:15:21.520 --> 0:15:23.320 just want to mention be sure to check out to 0:15:23.560 --> 0:15:26.920 We've got a podcast here at Bloomberg. Rachel Adams heard. 0:15:27.000 --> 0:15:29.960 It's called Interest and they've been investigating a transfer of 0:15:30.040 --> 0:15:32.280 Native American wealth and you can find that at Bloomberg 0:15:32.280 --> 0:15:35.800 dot com or wherever you get your podcasts. This is 0:15:35.880 --> 0:15:39.800 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes 0:15:39.880 --> 0:15:44.560 Tim Stenovic on Bloomberg Radio. Well today Bloomberg Live hosting 0:15:44.640 --> 0:15:47.200 a second day of Bloomberg invest It's an annual gathering 0:15:47.280 --> 0:15:50.080 of the leading names covering everything from cryptot to credit 0:15:50.120 --> 0:15:52.600 markets and then everything in between. And it was in 0:15:52.680 --> 0:15:55.600 person for the first time since the pandemic and comes amid, 0:15:55.720 --> 0:15:58.080 as you know, an era of lots of market volatility 0:15:58.080 --> 0:16:00.280 and uncertainty. I caught up with an exact it from 0:16:00.280 --> 0:16:04.000 the largest owner of commercial real estate globally, Kathleen McCarthy. 0:16:04.080 --> 0:16:06.440 She is the global co head of Blackstone real Estate, 0:16:06.440 --> 0:16:09.600 which has a five hundred seventy seven billion dollar portfolio 0:16:10.040 --> 0:16:13.960 and about three twenty twenty billion that is investor capital 0:16:14.040 --> 0:16:17.240 under management. Lots of talk about we began, though when 0:16:17.240 --> 0:16:19.840 I asked her how against a tough market backdrop and 0:16:19.960 --> 0:16:24.600 daily mixed signals, how things are going. It is an 0:16:24.600 --> 0:16:27.080 exciting and interesting time because, as you can see, there's 0:16:27.080 --> 0:16:29.520 different signals coming through, and I think we are better 0:16:29.560 --> 0:16:32.400 positioned than anyone to know what's really happening. We have 0:16:32.400 --> 0:16:34.840 six hundred billion dollars of real estate. We're in thirty 0:16:34.840 --> 0:16:39.480 seven different countries portfolio, though that's highly concentrated into four 0:16:39.560 --> 0:16:42.720 key themes. Eight percent of our capital is in warehouses, 0:16:42.840 --> 0:16:47.520 rental housing, lab office and hospitality investments, and what I'd 0:16:47.520 --> 0:16:52.040 say we're seeing is actually very strong fundamentals in those sectors. 0:16:52.040 --> 0:16:55.400 So when you talk about property performance, particularly for rental housing, 0:16:55.760 --> 0:16:58.600 that continues to be strong, partly because of the pressures 0:16:58.600 --> 0:17:02.480 on the for sale market with rise interest rates, logistics demands, 0:17:02.480 --> 0:17:06.040 so warehouses in the US today we are at record 0:17:06.119 --> 0:17:09.720 low vacancies, less than three percent vacancies and the markets 0:17:09.760 --> 0:17:12.479 we operate in which are the densest, most urban kind 0:17:12.520 --> 0:17:16.000 of areas, and we're also seeing very strong rent growth. 0:17:16.080 --> 0:17:20.119 So in the US and last month rent growth in 0:17:20.160 --> 0:17:23.880 our markets was thirty percent. In Canada it was even 0:17:23.960 --> 0:17:27.080 stronger fifty percent. And so I think when we when 0:17:27.119 --> 0:17:29.119 we're thinking about the real estate market, we continue to 0:17:29.160 --> 0:17:33.000 see a lot of strength. Notwithstanding there are pressures around 0:17:33.119 --> 0:17:36.480 us in terms of interest rates, an economy that the 0:17:37.480 --> 0:17:40.240 central governments are of course trying to cool uh and 0:17:40.240 --> 0:17:43.240 and persistent inflation. But we feel really well positioned for that. 0:17:43.600 --> 0:17:46.280 And i'd also highlight that I think this moment in 0:17:46.320 --> 0:17:49.040 real estate, this cycle is quite different than others we've 0:17:49.040 --> 0:17:52.000 been different. That's a good different, I mean good different. 0:17:52.400 --> 0:17:54.359 When you think about what kind of lad to real 0:17:54.480 --> 0:17:57.720 estate downturns in the past, there are really two primary factors. 0:17:58.040 --> 0:18:00.480 It was too much capital, generally in the four of debt, 0:18:00.560 --> 0:18:04.919 creating greater leverage fueling new speculative development. And it was 0:18:04.960 --> 0:18:08.000 too many cranes, too much development and really when you 0:18:08.000 --> 0:18:10.360 think about what happened in the years following the financial 0:18:10.400 --> 0:18:13.560 crisis and leading up into COVID, we really never saw 0:18:13.640 --> 0:18:16.639 those excesses come into our market. And so as we 0:18:16.720 --> 0:18:19.240 head into um, you know, period where there may be 0:18:19.320 --> 0:18:21.959 more economic headwinds, real estate actually is really well positioned 0:18:21.960 --> 0:18:25.600 from a fundamental standpoint. Economic headwinds or recession, it's very 0:18:25.640 --> 0:18:28.120 hard to call, and I'm not it's so hard. I think, 0:18:28.160 --> 0:18:29.840 you know, I think part of it is what we're 0:18:29.840 --> 0:18:31.880 seeing and and some of the things that I think 0:18:31.880 --> 0:18:35.399 the central governments are trying to to combat, which is 0:18:35.400 --> 0:18:38.840 just this continued strength that they see, low unemployment, strong 0:18:38.880 --> 0:18:41.560 rend growth, and and that is part of what the 0:18:41.600 --> 0:18:44.600 big challenges challenges ahead. So I I don't know if 0:18:44.600 --> 0:18:46.320 we're going to have a recession. I'm not an economist, 0:18:46.320 --> 0:18:49.000 but I would say there's definitely economic cooling. Are you 0:18:49.040 --> 0:18:51.800 guys having conversations internally like thinking like, hey, guys, we 0:18:51.880 --> 0:18:54.439 need to be thinking that maybe in this market, in 0:18:54.480 --> 0:18:57.159 this market, Yeah, What I would say is we've been 0:18:57.520 --> 0:18:59.840 we've been planning for a long time, and in this 0:19:00.000 --> 0:19:03.480 comes through in the portfolio we've constructed for an environment 0:19:03.640 --> 0:19:05.679 that might have been like this in terms of higher 0:19:05.840 --> 0:19:09.200 interest rates, higher inflation, and so we really focused on 0:19:09.359 --> 0:19:11.480 trying it to be in those high cash flow growth 0:19:11.520 --> 0:19:14.480 and assets. And again i'd say today we're still seeing 0:19:14.480 --> 0:19:18.440 those stronger than inflationary cash flows in our portfolio, but 0:19:18.640 --> 0:19:21.800 certainly we are always trying to position for environments that change. 0:19:21.800 --> 0:19:23.879 We've been doing this for thirty years. We've seen a 0:19:23.920 --> 0:19:27.000 lot of different environments. We thought we had seen it 0:19:27.040 --> 0:19:31.160 all and then COVID hit and hotel revenues went to zero. 0:19:31.240 --> 0:19:33.440 I'm telling you no one underwrote that where we had 0:19:33.480 --> 0:19:36.760 a pandemic um. But the great news is our portfolios 0:19:36.800 --> 0:19:39.280 are built really to try to withstand any kind of environment, 0:19:39.680 --> 0:19:43.600 and the higher than anticipated rent growth we've experienced again 0:19:43.760 --> 0:19:47.040 may kind of come down modestly, but we're we feel 0:19:47.040 --> 0:19:49.639 really well positioned for that. Distressed for you guys can 0:19:49.640 --> 0:19:52.160 be opportunity big time. We saw that after the financial 0:19:52.200 --> 0:19:55.880 crisis in terms of housing. I would say, uh, environments 0:19:55.920 --> 0:20:00.440 with distress, with volatility, with a pullback in capital markets activity. 0:20:00.680 --> 0:20:03.160 And you know we're seeing in particular much more constrained 0:20:03.200 --> 0:20:06.639 capital markets today. That tends to be a great environment 0:20:06.680 --> 0:20:08.920 for us and really for any investor who is well 0:20:08.960 --> 0:20:12.600 capitalized and who has real strength to lean on, So 0:20:12.680 --> 0:20:15.520 we have a data advantage. Our portfolio gives us more 0:20:15.560 --> 0:20:18.800 information on what's really happening that helps us build conviction 0:20:18.920 --> 0:20:21.359 around what we want to do next. And then I'd 0:20:21.359 --> 0:20:24.600 say the combination of deep experience from a large team 0:20:24.600 --> 0:20:28.640 and capital makes us well positioned to really support situations 0:20:28.640 --> 0:20:31.320 where others may be needing to sell assets, others might 0:20:31.320 --> 0:20:33.040 need liquidity, and we were able to then get in 0:20:33.040 --> 0:20:37.119 and buy high quality real estate. Alright, that was a 0:20:37.160 --> 0:20:42.680 conversation earlier at Bloomberg Live there Bloomberg Invest event Kathleen McCarthy, 0:20:42.720 --> 0:20:45.439 Global co head of Blackstone real Estate Massive Portfolio. As 0:20:45.440 --> 0:20:48.280 I mentioned largestone of commercial real estate. We covered a 0:20:48.280 --> 0:20:50.639 lot of ground. We could have stuck for another thirty 0:20:50.680 --> 0:20:54.320 forty minutes easily. But there's a lot more to that conversation. 0:20:54.359 --> 0:20:56.840 You can find it at Bloomberg Live dot com and 0:20:56.920 --> 0:20:59.520 just search on Bloomberg invest. We're good, but well, I'm 0:20:59.520 --> 0:21:01.560 eager to see what they do in this environment, like 0:21:01.600 --> 0:21:04.400