WEBVTT - Daybreak Weekend: Disney Earnings, Portugal Web Summit, China Singles’ Day 0:00:00.240 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio News. 0:00:09.560 --> 0:00:12.399 This is Bloomberg day Break Weekend, our global look at 0:00:12.400 --> 0:00:14.680 the top stories in the coming week from our Daybreak 0:00:14.680 --> 0:00:17.840 anchors all around the world. Straight ahead on the program, 0:00:17.960 --> 0:00:21.239 some big entertainment earnings are coming out this week. We'll 0:00:21.280 --> 0:00:24.439 break down what to expect from Disney and Paramount Sky Dance. 0:00:24.560 --> 0:00:26.280 I'm Nathan Hager in Washington. 0:00:26.440 --> 0:00:28.760 I'm krolyin Hepkea in London, where we're looking ahead to 0:00:28.800 --> 0:00:32.960 Portugal's Web Summit as the country pivots to tech and AI. 0:00:33.320 --> 0:00:36.520 I'm dek Krisner looking ahead to Singles Day in China. 0:00:37.640 --> 0:00:41.680 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:41.720 --> 0:00:45.400 eleven three y oh New York, Bloomberg ninety nine one, Washington, DC, 0:00:45.920 --> 0:00:51.040 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 0:00:51.200 --> 0:00:54.720 XM one twenty one, and around the world on Bloomberg Radio, 0:00:54.760 --> 0:00:56.960 dot Com and the Bloomberg Business app. 0:01:01.440 --> 0:01:04.200 Good day to you. I'm Nathan Hager. We begin today's 0:01:04.240 --> 0:01:06.840 program with a look at some upcoming earnings reports in 0:01:06.880 --> 0:01:10.640 the entertainment sector. We get results this week from both 0:01:10.680 --> 0:01:14.840 Walt Disney and Paramount sky Dance. For more on what 0:01:14.920 --> 0:01:18.839 to expect from both these entertainment giants, we are joined 0:01:18.840 --> 0:01:23.680 by Bloomberg Intelligence analyst Geita Ranganathan and Bloomberg Surveillance co 0:01:23.760 --> 0:01:26.040 host Paul Sweeney, who spent a better part of his 0:01:26.080 --> 0:01:29.120 career covering the media. Great to have both of you 0:01:29.280 --> 0:01:32.640 with us on the weekend program. And let's start with Disney. 0:01:32.800 --> 0:01:37.640 Obviously the biggest entertainment company in the world. Gita, what 0:01:37.720 --> 0:01:39.479 are some of the key things we need to watch 0:01:39.520 --> 0:01:42.240 from the House of Mouse this time around. 0:01:43.560 --> 0:01:45.920 Yeah, so, I think, as usual, the big thing that 0:01:45.959 --> 0:01:49.800 we're watching for is the Parks segment. This is the 0:01:49.880 --> 0:01:52.920 biggest segment for Disney, brings in about sixty percent of 0:01:52.960 --> 0:01:58.120 their profits. So obviously, you know, any trends, any consumer trends, 0:01:58.360 --> 0:02:01.040 are very very important. One of the key things that 0:02:01.080 --> 0:02:03.400 you know, people have been concerned about for Disney for 0:02:03.480 --> 0:02:06.680 this year is the competition from the opening of Epic 0:02:06.800 --> 0:02:12.240 Universe in Florida, which happened in May. When they reported 0:02:12.360 --> 0:02:15.440 last they actually showed a really good results. They were 0:02:15.440 --> 0:02:18.280 able to hold their ground despite all of that competition, 0:02:18.639 --> 0:02:21.560 So I think we're expecting to see more of that, 0:02:22.160 --> 0:02:25.560 you know, resilient demand going into the quarter. And then 0:02:25.560 --> 0:02:27.800 the other big thing that we're watching for is really 0:02:27.840 --> 0:02:34.160 the streaming business. So in August, ESPN launched its streaming 0:02:34.200 --> 0:02:37.480 platform for the very first time. We're going to look 0:02:37.520 --> 0:02:41.400 to see if Disney management team provides any numbers in 0:02:41.480 --> 0:02:44.359 terms of early adoption and just to see how that 0:02:44.440 --> 0:02:45.440 launch has been going. 0:02:46.240 --> 0:02:49.680 Paul, you of course follow this company very closely as well. 0:02:49.800 --> 0:02:52.640 I mean, I gotta admit when it comes to Disney streaming, 0:02:52.680 --> 0:02:56.240 I sometimes forget about my Disney Plus subscription. I mean, 0:02:56.680 --> 0:02:58.600 am I part of the problem here? I mean, how 0:02:58.600 --> 0:03:03.880 do you see Disney navigating the very competitive streaming universe. 0:03:04.200 --> 0:03:07.040 Yeah, I think, Nathan, it all comes down, as it 0:03:07.160 --> 0:03:10.960 usually does in the media business, to content, and Disney 0:03:11.120 --> 0:03:14.000 has some of the absolute best content in the world, 0:03:14.120 --> 0:03:17.400 including live sports. So when you put that all together, 0:03:17.400 --> 0:03:19.720 it's just a question of how you deliver that content 0:03:20.639 --> 0:03:22.720 to people. And when I came up into business, it 0:03:22.840 --> 0:03:26.119 was through the cable bundle, it was through satellites like DirecTV. 0:03:26.360 --> 0:03:29.040 Now it's streaming, and so you just got to figure 0:03:29.040 --> 0:03:31.239 out how do you most efficiently get that content to 0:03:31.320 --> 0:03:33.600 your client when they want your customer, when they want 0:03:33.600 --> 0:03:36.720 it where they want it, and charge a price that 0:03:36.840 --> 0:03:40.240 is profitable for you, and Disney's has a great track 0:03:40.280 --> 0:03:43.240 record of doing that. Netflix paved the way and streaming 0:03:43.280 --> 0:03:46.040 and really showed kind of the world how this new 0:03:46.080 --> 0:03:49.040 media models can be. And now what we've seen from 0:03:49.080 --> 0:03:51.200 the legacy media companies over the last ten years or so, 0:03:51.600 --> 0:03:54.360 as Githa writes about with her research, is these legacy 0:03:54.400 --> 0:03:56.360 media companies are trying to catch up. They're trying to 0:03:56.400 --> 0:03:59.320 transition from a model where the cable TV bundle was 0:03:59.600 --> 0:04:02.600 really a way to go to now streaming and Disney 0:04:03.600 --> 0:04:05.160 is really doing a good good job, and I think 0:04:05.200 --> 0:04:07.560 the street believes that they can certainly be a really 0:04:08.120 --> 0:04:09.600 big player in the streaming business. 0:04:09.640 --> 0:04:13.480 Yeah, Githor, we've talked before about how Netflix has expanded 0:04:13.520 --> 0:04:18.240 its own streaming strategy with live events, getting into sports 0:04:18.400 --> 0:04:23.080 as well, and now with Disney introducing its own streaming 0:04:23.279 --> 0:04:27.880 sports platform with ESPN Plus, is it kind of like 0:04:28.000 --> 0:04:30.560 legacy media playing catch up again? 0:04:32.480 --> 0:04:34.440 Yes, a little bit of that, but you know the 0:04:34.480 --> 0:04:37.920 way that they're kind of positioning ESPN, So Disney has 0:04:37.960 --> 0:04:40.279 to be really careful. They're kind of walking a tightrope 0:04:40.279 --> 0:04:43.320 here because remember they have the leading brand when it 0:04:43.320 --> 0:04:48.400 comes to linear TV with ESPN. ESPN generates about fifteen 0:04:48.520 --> 0:04:51.880 billion dollars from the linear TV model ear in and 0:04:51.960 --> 0:04:54.680 ear out. You know, we're talking about affiliate fees. They 0:04:54.680 --> 0:04:58.720 are the highest affiliate fee generator across the industry. They 0:04:58.800 --> 0:05:02.080 charge something like ten dollars per month per subscriber, so 0:05:02.160 --> 0:05:06.039 absolutely way way above competitors who charge maybe you know 0:05:06.360 --> 0:05:08.840 or other channels that are at like one dollar or 0:05:08.880 --> 0:05:11.080 one and a half dollars per month. So obviously they 0:05:11.120 --> 0:05:14.440 have to be very careful to protect that legacy TV model, 0:05:14.640 --> 0:05:16.400 but at the same time, they want to be able 0:05:16.480 --> 0:05:20.080 to appeal to consumers who are outside the PATV ecosystem. 0:05:20.120 --> 0:05:21.880 And there are a lot of consumers, by the way, 0:05:21.920 --> 0:05:25.200 outside the PATV ecosystem. We're talking about sixty five to 0:05:25.320 --> 0:05:29.479 seventy million households that do not take a PATV or 0:05:29.480 --> 0:05:32.640 that do not subscribe to a PATV bundle, and so 0:05:32.640 --> 0:05:35.279 it's really important to be able to, you know, provide 0:05:35.360 --> 0:05:38.240 access to sports content and that's exactly what ESPN is 0:05:38.279 --> 0:05:41.000 going after and we think that so far, you know, 0:05:41.000 --> 0:05:42.880 they've done a really good job with that in terms 0:05:42.880 --> 0:05:47.680 of putting their content out there. You talk about catchup 0:05:47.720 --> 0:05:50.080 and are they a little bit late to the game. Yes, 0:05:50.200 --> 0:05:52.880 maybe in terms of Disney Plus, but again with ESPN, 0:05:52.920 --> 0:05:56.120 they had to be really measured, really deliberate, make sure 0:05:56.120 --> 0:06:00.440 that they don't cannibalize, you know, their linear TV business, 0:06:00.440 --> 0:06:01.600 which is really their cash go. 0:06:02.480 --> 0:06:05.680 And Paul, you mentioned the content slate that Disney has 0:06:05.839 --> 0:06:07.960 as well. We haven't even talked about what, you know, 0:06:08.000 --> 0:06:11.880 their traditional business, what's coming in the box office? What 0:06:11.920 --> 0:06:13.000 are we expecting there? 0:06:13.320 --> 0:06:16.919 You know, it's interesting, as Githa writes in her research, 0:06:17.000 --> 0:06:19.520 Disney is just in a phenomenal place from a content 0:06:19.560 --> 0:06:22.800 creation perspective. They've got obviously all the Disney product that 0:06:23.160 --> 0:06:25.360 has propelled the company for decades, but then they also 0:06:25.400 --> 0:06:27.760 have the Star Wars stuff and the Marvel stuff, and 0:06:27.800 --> 0:06:29.760 they just seem if they see something good out there 0:06:30.120 --> 0:06:32.080 over the past ten or fifteen years, they went out 0:06:32.080 --> 0:06:35.120 and bought it. So they have the best content in 0:06:35.160 --> 0:06:37.640 the business and they usually lead box office by a 0:06:37.720 --> 0:06:40.560 wide margin, although Warner Brothers is having a very good 0:06:40.640 --> 0:06:43.640 year this year, so again Disney's at a spot you know. 0:06:44.240 --> 0:06:47.440 You know, they bought the media assets, including the studio, 0:06:47.480 --> 0:06:50.760 from Fox, so they have all of that content as well. 0:06:50.839 --> 0:06:54.760 So from a content perspective, nobody really can compete against them, 0:06:55.680 --> 0:06:58.400 and so they're in a great spot there, and they 0:06:58.520 --> 0:07:01.440 monetize it better than anybody else, whether it's through the 0:07:01.440 --> 0:07:05.119 cable bundle, through the streaming service, you know, making bringing 0:07:05.160 --> 0:07:07.599 some of the content to the theme parks. That's kind 0:07:07.600 --> 0:07:09.960 of been the magic of Disney as a company and 0:07:10.000 --> 0:07:12.360 as a stock over the years, their ability to really 0:07:12.440 --> 0:07:15.080 monetize their content as well or better than anybody else 0:07:15.080 --> 0:07:15.480 out there. 0:07:15.640 --> 0:07:18.720 You know, we haven't even talked about the linear networks yet. 0:07:18.800 --> 0:07:22.320 They've got ABC as well, and I think this is 0:07:22.360 --> 0:07:27.480 going to be the quarter since the controversy surrounding Jimmy Kimmel, 0:07:27.560 --> 0:07:31.000 isn't it. Is this going to be a hindrance potentially 0:07:31.080 --> 0:07:34.520 the traditional broadcast and cable networks. 0:07:34.600 --> 0:07:38.480 Kitha, Yeah, So, I mean, you know, one thing that 0:07:38.880 --> 0:07:41.960 all media companies, this is not just Disney, have to 0:07:41.960 --> 0:07:44.920 contend with is cord cutting. Is a lot of pressure 0:07:45.080 --> 0:07:47.880 with the linear TV networks. Of course, you had the 0:07:47.960 --> 0:07:51.520 Jimmy Kimmel, you know, controversy. One thing that we're going 0:07:51.560 --> 0:07:53.560 to be looking for when they report is whether that 0:07:53.640 --> 0:07:57.520 Jimmy Kimmel's suspension actually hurt their streaming numbers because we 0:07:57.560 --> 0:08:00.560 did get reports that users were kind of canceling, you know, 0:08:00.560 --> 0:08:04.120 their subscriptions. Again, I don't think it's going to be material, 0:08:04.160 --> 0:08:05.920 but this is something that all media companies have to 0:08:05.920 --> 0:08:09.120 contend with. What is the plan that they have for 0:08:09.200 --> 0:08:13.400 their networks? For Disney, ABC is a very important property 0:08:13.440 --> 0:08:19.400 because it shares a lot of the sports rights with ESPN. 0:08:19.560 --> 0:08:21.440 You know, they do show a lot of Monday night 0:08:21.440 --> 0:08:24.960 football games. You know, they have NBA games, There's a 0:08:25.000 --> 0:08:28.040 lot of college football. So you know, ABC is still 0:08:28.080 --> 0:08:30.560 a very very important property to them. Yes, they have 0:08:30.640 --> 0:08:33.440 a whole bunch of other cable TV networks, you know, 0:08:33.480 --> 0:08:37.720 think about the whole Disney suite, you know, National Geographic, 0:08:37.800 --> 0:08:41.960 all of those channels that are definitely insecular decline. But 0:08:42.080 --> 0:08:46.240 so far there are no plans, at least publicly that 0:08:46.240 --> 0:08:48.120 that Disney has said that they want to you know, 0:08:48.280 --> 0:08:51.280 necessarily separate that business or sell that business. So again 0:08:51.320 --> 0:08:53.800 we're kind of contending here with the melting ice cube. 0:08:53.679 --> 0:08:56.760 And Nathan you know, interesting on the subject. Laura Martin 0:08:56.920 --> 0:08:58.719 Research Channels that need them in company came out with 0:08:58.760 --> 0:09:01.600 a really provocative note about a month ago, saying that 0:09:02.320 --> 0:09:05.120 Disney should just shut down the ABC network, make it 0:09:05.160 --> 0:09:07.880 go dark, don't sell it, just shut it down. It's 0:09:07.920 --> 0:09:11.040 a declining business, and it's really the only business business 0:09:11.040 --> 0:09:13.640 that is under federal regulation. And if you want to 0:09:13.679 --> 0:09:16.080 get out of the way President Trump and maybe some 0:09:16.120 --> 0:09:19.280 heavy handed regulation, just sell it and or just shut 0:09:19.280 --> 0:09:21.280 it down. Which I thought was an interesting topic. 0:09:21.559 --> 0:09:24.480 Yeah, I'm really interesting. Indeed, we're speaking with Paul Sweeney, 0:09:24.600 --> 0:09:29.520 host of Bloomberg Surveillance and get the wronganathen of Bloomberg Intelligence. 0:09:29.840 --> 0:09:33.480 Let's shift over to Paramount sky Dance. The first quarter 0:09:33.559 --> 0:09:36.440 that they're going to be reporting as Paramount sky Dance 0:09:36.520 --> 0:09:39.600 under the new ownership with David Ellison at the helm, 0:09:39.640 --> 0:09:42.120 a lot of job cuts, a lot of changes. Getha, 0:09:42.200 --> 0:09:43.600 How could that play into the results? 0:09:44.800 --> 0:09:48.559 Yeah, we really expect the upcoming results to be a 0:09:48.600 --> 0:09:52.040 big reset in the whole Paramount sky Dance outlook. I mean, 0:09:52.040 --> 0:09:55.600 this will be the new management team's first big reveal 0:09:55.840 --> 0:09:59.720 off its operational of its financial plans. As you just mentioned, 0:09:59.720 --> 0:10:02.040 there's to be a mix of major cost cuts to 0:10:02.240 --> 0:10:05.440 improve efficiency and there'll probably be some major investments that 0:10:05.480 --> 0:10:08.880 they announced to support you know, long term growth, especially 0:10:08.960 --> 0:10:10.480 on both on the content side as well as on 0:10:10.520 --> 0:10:12.599 the tech side. We have to remember that this was 0:10:12.600 --> 0:10:17.720 a company that was undermanaged, underinvested in for years, so 0:10:17.960 --> 0:10:20.040 you know, really looking forward to see what they have 0:10:20.120 --> 0:10:22.520 to say. But of course, the big looming question other 0:10:22.600 --> 0:10:25.040 than results is are they going to make or are 0:10:25.080 --> 0:10:29.080 they going to increase their bid for Warner Brothers Discovery. 0:10:29.120 --> 0:10:30.559 That is really the big. 0:10:30.320 --> 0:10:30.880 Big question. 0:10:31.160 --> 0:10:33.880 Absolutely I wanted to get into that with you, Paul. 0:10:34.080 --> 0:10:38.280 Is Paramount Skydance is going to have to become Paramounts Skiddance, 0:10:38.280 --> 0:10:40.520 Warner Brothers Discovery or whatever other names they're going to 0:10:40.559 --> 0:10:42.120 have to put at the end of their title. 0:10:42.240 --> 0:10:44.760 Yeah, you know, it's interesting they have an enterprise value 0:10:44.800 --> 0:10:46.720 of thirty billion dollars in at one point in time 0:10:46.760 --> 0:10:49.200 that was a big media company. In today's world, it 0:10:49.240 --> 0:10:51.760 really is not, and I think, you know, it's kind 0:10:51.760 --> 0:10:53.200 of a lot of folks will call it, you know, 0:10:53.280 --> 0:10:55.760 substandard in size, but you take a look at Warner 0:10:55.760 --> 0:10:59.400 Brothers Discovery, it is three times the size of Paramount 0:11:00.040 --> 0:11:01.920 at ninety billion dollars of enterprise value. 0:11:01.960 --> 0:11:03.079 So it's it's. 0:11:03.000 --> 0:11:06.760 Really a big something, a big pill to swallow there. 0:11:06.800 --> 0:11:07.880 So they're going to need some help. 0:11:08.120 --> 0:11:08.360 Now. 0:11:08.679 --> 0:11:13.079 It's nice when Larry Elson is the CEO's father that 0:11:13.320 --> 0:11:15.600 lends some support there, But they're going to need some 0:11:15.640 --> 0:11:18.319 partners probably if they want to pursue this. Here so 0:11:18.480 --> 0:11:20.000 be aching to see how it plays. And as Githa 0:11:20.520 --> 0:11:22.880 well knows, this is a company that is now officially 0:11:23.160 --> 0:11:25.600 in play. I mean the CEO said it, the board 0:11:25.600 --> 0:11:28.160 has said it, and so it's just a question of 0:11:28.200 --> 0:11:29.880 who and when, I think at what price. 0:11:30.480 --> 0:11:32.760 Yeah, it would be fascinating to see. I given the 0:11:33.840 --> 0:11:36.400 merger between Disney and Fox just a few years ago, 0:11:36.440 --> 0:11:40.720 if we see yet another major media entertainment merger like this, 0:11:40.960 --> 0:11:47.280 where could that position Paramount against Disney with competing giant 0:11:47.640 --> 0:11:48.640 content slates. 0:11:48.720 --> 0:11:49.040 KEITHA. 0:11:50.600 --> 0:11:53.040 Yeah, I think it puts them really within striking distance 0:11:53.120 --> 0:11:55.760 of Disney. It puts them within striking distance of even 0:11:55.800 --> 0:11:58.240 I would say in Netflix, because they're going to have 0:11:58.640 --> 0:12:02.640 a fantastic content. They're going to have some best best 0:12:02.679 --> 0:12:05.959 in class, I would say IP so really really puts 0:12:05.960 --> 0:12:07.640 them on the map because right now, if you kind 0:12:07.640 --> 0:12:11.319 of look at Paramount, they have about eighty million streaming subscribers. 0:12:11.760 --> 0:12:14.480 You put that together though with HBO, Max which has 0:12:14.520 --> 0:12:17.160 about one hundred and thirty million. You already get to 0:12:17.160 --> 0:12:19.920 two hundred million, which is above what Disney has in 0:12:20.000 --> 0:12:23.840 terms of streaming subscriptions, So definitely makes them a major player, 0:12:24.400 --> 0:12:26.480 you know, somebody that you have to take note of, 0:12:27.200 --> 0:12:29.560 and gives them a lot of firepower in terms of 0:12:29.600 --> 0:12:32.679 growing both the studio business as well as the streaming platforms. 0:12:33.400 --> 0:12:38.040 Yeah, really busy entertainment earnings week on tap Forest. Thanks 0:12:38.080 --> 0:12:41.200 to both of you for this. That's Paul Sweeney, co 0:12:41.280 --> 0:12:45.240 host of Bloomberg Surveillance and geta ronganath and media analyst 0:12:45.400 --> 0:12:49.040 from Bloomberg Intelligence, and coming up on Bloomberg Daybreak Weekend 0:12:49.080 --> 0:12:52.320 will preview Portugal's Web Summit, one of the largest of 0:12:52.360 --> 0:12:56.760 its kind in Europe. I'm Nathan Hager, and this is Bloomberg. 0:13:07.800 --> 0:13:10.520 This is Bloomberg day Break Weekend, our global look ahead 0:13:10.520 --> 0:13:12.760 at the top stories for investors in the coming week. 0:13:13.000 --> 0:13:16.280 I'm Nathan Hager in Washington. Up later in our program, 0:13:16.440 --> 0:13:19.520 Singles Day in China is coming up. We'll get a preview. 0:13:19.720 --> 0:13:22.960 But first Portugal. It's looking to accelerate the growth of 0:13:23.000 --> 0:13:26.800 its AI, technology and startup industries. For more than a decade, 0:13:26.840 --> 0:13:29.760 the country's been louring top international business talent through its 0:13:29.760 --> 0:13:32.800 Golden Visa program, but now it's also playing host of 0:13:32.880 --> 0:13:36.520 billion dollar investments from the likes of Microsoft and Nvidia 0:13:36.679 --> 0:13:39.600 in new AI data centers. With the Web Summit in 0:13:39.679 --> 0:13:42.040 Lisbon taking place in the next few days, we want 0:13:42.080 --> 0:13:45.400 to get more from Bloomberg Daybreak Europe Banker Caroline Hepger 0:13:45.559 --> 0:13:46.559 in London. 0:13:46.679 --> 0:13:51.720 Nathan Portugal's Web Summit, which Bloomberg once dubbed the Davos 0:13:51.840 --> 0:13:54.920 for Geeks, is one of the largest tech summits in Europe. 0:13:55.240 --> 0:13:57.959 In the next few days, the forum in Lisbon will 0:13:58.000 --> 0:14:02.920 hold discussions on topics ranging from AI to cybersecurity to fintech, 0:14:03.280 --> 0:14:06.320 whilst playing host to speakers from Meta all the way 0:14:06.360 --> 0:14:10.319 to tennis legend Maria Sharapova. It comes as the country 0:14:10.320 --> 0:14:14.000 looks to consolidate its status as a tech haven and 0:14:14.080 --> 0:14:18.559 to court investment in its burgeoning AI and startup industries. 0:14:18.960 --> 0:14:22.120 Now in the last few weeks, investors have grown increasingly 0:14:22.200 --> 0:14:27.160 concerned though, about the prospect of stretchtech, dot valuations and 0:14:27.240 --> 0:14:31.160 maybe even an AI bubble. In Vidias, Jensen Wong spoke 0:14:31.200 --> 0:14:34.920 to Blueberg's Ed Ludlow and tried to calm the market's nerves. 0:14:35.480 --> 0:14:37.160 I don't believe we're in an AI bubble, and the 0:14:37.200 --> 0:14:40.520 reason for that is we're going through a natural transition 0:14:41.160 --> 0:14:44.080 from an old computing model based on general purpose computing 0:14:44.080 --> 0:14:48.600 to accelerated computing. We also know that AI has now 0:14:48.640 --> 0:14:52.440 become good enough because of reasoning capability, research capabilities, its 0:14:52.480 --> 0:14:56.040 ability to think. It's now generating tokens and now generating 0:14:56.080 --> 0:14:59.960 intelligence that's worth paying for to the point where I'm 0:15:00.080 --> 0:15:01.000 paying lots of it. 0:15:01.480 --> 0:15:04.960 That was Nvidia's Jensen Won speaking to Bloomberg's Ed Ludlow, 0:15:05.360 --> 0:15:08.800 well as tech CEOs, then seek to reassure investors that 0:15:08.840 --> 0:15:13.239 AI spending shows no signs of abating. Portugal is positioning 0:15:13.280 --> 0:15:17.240 itself as one of the beneficiaries of Europe's AI build out. 0:15:17.760 --> 0:15:20.640 How far, though, can the country's growing tech scene thrust 0:15:20.640 --> 0:15:24.840 its economy into the twenty first century? Joining us now 0:15:24.880 --> 0:15:28.920 is Bloomberg's Portugal bureau chief, Sofia Auto Ecosta. Sofia, good 0:15:28.960 --> 0:15:31.360 to speak to you. So shall we start with the 0:15:31.360 --> 0:15:34.120 Web Summit, which is one of the largest of its 0:15:34.200 --> 0:15:37.640 kind in Europe? What do the main themes this year 0:15:37.680 --> 0:15:40.080 that they'll be talking about actually kind of tell us 0:15:40.520 --> 0:15:42.680 about Portugal's priorities. 0:15:43.520 --> 0:15:46.000 It's kind of the greatest hit of the biggest talking 0:15:46.080 --> 0:15:49.600 points across AI and tech at the moment. So we 0:15:49.640 --> 0:15:54.000 do have AI and ethics really exploring how to govern 0:15:54.440 --> 0:15:59.160 this increasingly important industry in Europe and how really to 0:15:59.360 --> 0:16:02.560 kind of align it with human values. We also have 0:16:02.680 --> 0:16:06.360 the future of work climate, tech growth and startups, you 0:16:06.440 --> 0:16:08.880 name it. And we do have the Finance Minister from 0:16:08.920 --> 0:16:12.520 Portugal attending and expected to speak. So that really shows 0:16:12.560 --> 0:16:16.440 you where the priorities life for this new government that 0:16:16.520 --> 0:16:19.320 followed the elections earlier in May this year. 0:16:19.880 --> 0:16:20.840 That's really kind of. 0:16:20.800 --> 0:16:24.760 Throwing investment and subsidies at this industry, trying to position 0:16:24.880 --> 0:16:29.640 Portugal as one of the forefront economies to invest in 0:16:29.640 --> 0:16:30.800 in the European Union. 0:16:31.440 --> 0:16:35.400 Sophia, you've been writing about the town of Scenes, which 0:16:35.480 --> 0:16:40.440 is on Portugal's dramatic Atlantic coast. Then actually this could 0:16:40.440 --> 0:16:43.920 be a data center, a tech hub, not just for 0:16:44.000 --> 0:16:47.320 Portugal but maybe for Europe. Tell us about what's been 0:16:47.440 --> 0:16:50.840 happening there in terms of deals and breaking ground. 0:16:51.680 --> 0:16:54.640 So this is really interesting because this is a very 0:16:54.680 --> 0:16:59.040 small town, about fifteen thousand residents. I went down there. 0:16:59.080 --> 0:17:01.920 It's about an hour and a half's drive from our 0:17:02.080 --> 0:17:07.200 Lisbon office. And what's happening there is investment from Chinese, 0:17:07.440 --> 0:17:10.639 US European investors and. 0:17:11.240 --> 0:17:12.080 Quite a lot of it. 0:17:12.240 --> 0:17:15.119 So my interest was, you know, why are billions of 0:17:15.160 --> 0:17:20.600 dollars pouring into this really small Portuguese town And one 0:17:20.640 --> 0:17:22.960 of them is what's set to be one of the 0:17:22.960 --> 0:17:26.640 biggest data center projects in the European Union. And it's 0:17:27.280 --> 0:17:29.720 one point two gigawatts. Now, Karlyn, I have no idea 0:17:29.720 --> 0:17:32.359 what what one point two gigawatts is, So just to 0:17:32.400 --> 0:17:35.160 put it in context, that's about as much as the 0:17:35.320 --> 0:17:39.200 entire metropolis of Lisbon consumes, so it's quite a lot 0:17:39.240 --> 0:17:41.359 of energy. Now why does this matter? I mean, this 0:17:41.400 --> 0:17:45.639 is a big investment. It's a ten billion dollar data center. 0:17:45.760 --> 0:17:49.439 This is huge for Portugal, and Portugal is really trying 0:17:49.480 --> 0:17:52.320 to say, hey, we're not just tourism, even though it 0:17:52.400 --> 0:17:56.520 accounts for about a quarter of GDP and a lot 0:17:56.560 --> 0:18:01.160 of jobs. So incredibly important of this still for the economy, 0:18:01.640 --> 0:18:05.199 but that was important to bring the economy out of 0:18:05.200 --> 0:18:08.800 the crisis, out of the not just the financial crisis, 0:18:08.800 --> 0:18:11.760 but the sovereign deck crisis. But now, okay, let's invest 0:18:11.760 --> 0:18:15.000 in the future. This is where it's at. The government 0:18:15.119 --> 0:18:18.000 is making it easier for these companies to come here. 0:18:18.200 --> 0:18:21.600 I spoke to the Stark Campus Data Center CEO and 0:18:21.680 --> 0:18:24.240 he said, you know, we were welcomed with open arms. 0:18:24.880 --> 0:18:29.399 And the Chinese battery maker calb is the fourth largest 0:18:29.400 --> 0:18:31.719 battery maker in the world, so this is quite significant 0:18:31.760 --> 0:18:36.240 as well. That's a two billion euro investment. They just 0:18:36.280 --> 0:18:40.800 broke ground on their first battery factory outside of China. 0:18:40.840 --> 0:18:45.359 They picked seeing this tiny, tiny town as the gateway 0:18:46.000 --> 0:18:49.800 into the European Union and this was really heralded by 0:18:49.840 --> 0:18:53.240 both sides of the political spectrum as a big step 0:18:53.280 --> 0:18:57.280 forward for Portugal in terms of the green energy transition. 0:18:57.760 --> 0:19:00.560 Yeah, lots of visit is bit of population in Portugal 0:19:00.600 --> 0:19:05.439 only just about ten million people. But the focus on 0:19:05.560 --> 0:19:08.880 data centers, you know, raises the same question for Portugal 0:19:08.880 --> 0:19:12.479 as across Europe, which is that the AI boom is 0:19:12.640 --> 0:19:16.520 power hungry. There will be growing power demands. There's a 0:19:16.560 --> 0:19:19.840 worry about whether it's going to strain Portugal's energy system. 0:19:19.920 --> 0:19:23.520 I mean, we did see blackouts in Portugal earlier this 0:19:23.720 --> 0:19:27.320 year and that was blamed on a number of factors, 0:19:27.359 --> 0:19:29.199 but one of them was you know the green and 0:19:29.240 --> 0:19:32.480 clean energy system, there is the infrastructure going to be 0:19:32.520 --> 0:19:33.240 able to cope. 0:19:33.800 --> 0:19:36.640 So that's the big question, and there's been a lot 0:19:36.640 --> 0:19:38.919 of discussion at the government level but also at the 0:19:38.920 --> 0:19:42.919 company level over who really should take the lead on 0:19:43.240 --> 0:19:46.119 investing in the grid infrastructure here. 0:19:46.440 --> 0:19:48.840 We actually had EDP that's. 0:19:48.640 --> 0:19:52.679 Portugal's biggest utility today, saying that it plans to allocate 0:19:53.359 --> 0:19:57.159 a significant amount of money into investing in the grid 0:19:57.640 --> 0:19:59.040 here in Portugal, but. 0:19:59.040 --> 0:20:01.800 Also in Spain where they have a market. 0:20:01.840 --> 0:20:04.920 And I'll just tell you that number three point six 0:20:05.040 --> 0:20:09.920 billion euros in electricity, grids and infrastructure through twenty twenty eight. 0:20:09.960 --> 0:20:13.159 That's a big number, Caroline. So the problem here, or 0:20:13.440 --> 0:20:13.800 I mean, I. 0:20:13.800 --> 0:20:17.080 Guess the issue I wouldn't call it a problem, is 0:20:17.119 --> 0:20:22.000 that Portugal uses renewable energy for about seventy percent of 0:20:22.040 --> 0:20:26.080 its energy consumption, so that's a pretty big proportion, and 0:20:26.119 --> 0:20:29.480 it still also imports a bit of energy, a lot 0:20:29.520 --> 0:20:33.760 of that from Spain. So whether to kind of reduce 0:20:33.800 --> 0:20:37.359 the reliance on the Spanish grid, that's one question. Whether 0:20:37.440 --> 0:20:40.600 to improve the infrastructure here and whether it makes sense 0:20:40.640 --> 0:20:43.680 for private companies to do that and share the load 0:20:43.720 --> 0:20:46.520 with the government these are all still questions and there's 0:20:46.560 --> 0:20:51.199 still a lot of looking into what happened around that blackout. 0:20:51.600 --> 0:20:55.159 The Portugal does like to blame its neighbors in Spain 0:20:55.240 --> 0:20:55.479 for that. 0:20:55.880 --> 0:21:01.120 Indeed, in terms of startups, Portugal's also got an interesting 0:21:01.240 --> 0:21:05.440 scene there Sword Health, this startup that uses AI for 0:21:05.920 --> 0:21:09.479 medical rehabilitation, for example, that has raised quite a lot 0:21:09.520 --> 0:21:13.480 of money and is now more valuable than everything other 0:21:13.560 --> 0:21:17.800 than about five listed companies in Lisbon. Is that part 0:21:17.840 --> 0:21:19.800 of a kind of growing scene as well? If you're 0:21:19.800 --> 0:21:22.119 seeing data centers, you're seeing all of this interest. Is 0:21:22.160 --> 0:21:25.919 there also a bit of a growing startup scene in Portugal? 0:21:26.600 --> 0:21:29.400 Yeah, there is, and you know, there has been an 0:21:29.400 --> 0:21:33.800 attempt for the past decade or so to really nurture 0:21:34.359 --> 0:21:37.440 startups in Portugal. But I think this one really grabbed 0:21:37.440 --> 0:21:40.520 my attention, Caroline, because it was valued at three billion 0:21:40.560 --> 0:21:44.240 dollars in a financing round last year, and this year 0:21:44.280 --> 0:21:47.240 in June it was valued at four billion dollars, and 0:21:47.440 --> 0:21:50.680 as you said, this is this is pretty significant for Portugal. 0:21:50.880 --> 0:21:54.520 It's one of the most valuable private companies for sure, 0:21:54.640 --> 0:21:58.080 and one of the most valuable companies you know, full 0:21:58.160 --> 0:22:01.680 stop in Portugal and It's also backed by Founders fund, 0:22:01.720 --> 0:22:05.440 so very high profile investors looking at this company and. 0:22:05.359 --> 0:22:07.440 What it does is obviously quite interesting. 0:22:07.800 --> 0:22:13.560