Latest / Bloomberg Intelligence / Amex Expenses Surge 12% as Marketing Costs for Cards Rise

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Amex Expenses Surge 12% as Marketing Costs for Cards Rise · Bloomberg Intelligence

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  Speaker 2: Alexis and I were just talking about how we're both
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  Speaker 2: AMEX cardholders. We're trying to figure out the most economical
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  Speaker 2: way of transferring rewards points to your airline account and
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  Speaker 2: not have to pay fees.
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  Speaker 3: Yeah, if you find a way to do that without
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  Speaker 3: paying fees, please do let me know because it just
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  Speaker 3: it varies on how much you're going to pay to
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  Speaker 3: do the transfer. But I feel like, you know, there's
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  Speaker 3: a fee for almost everything you do.
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  Speaker 2: You know what, you need to go on Reddit because
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  Speaker 2: the folks on Reddit have like broken this down to
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  Speaker 2: a science.
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  Speaker 3: I'm doing all the details.
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  Speaker 4: Let's bring in Ben Elliott.
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  Speaker 2: He's our consumer finance analyst and he's going to talk
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  Speaker 2: to us about American Express earnings. And Ben, the big
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  Speaker 2: part of what we're seeing from an American Express is
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  Speaker 2: how much it spends on marketing these cards to Alexis,
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  Speaker 2: these cards to me, and you know, the Platinum card
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  Speaker 2: in particular is like their big money maker because the
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  Speaker 2: fees are almost eight hundred.
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  Speaker 5: Dollars, that's right, Yeah, So it's sort of a you
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  Speaker 5: got to spend money and make money scenario for AMEX, right.
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  Speaker 5: And one of the challenges they're facing right now, which
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  Speaker 5: you can see in the response to earnings today, is
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  Speaker 5: that the expenses happen right away and the benefits take
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  Speaker 5: a year or two to float through P and L.
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  Speaker 5: So one of the things that I saw, I was
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  Speaker 5: very optimistic in the earnings was management guided towards a
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  Speaker 5: higher card feed growth in the third quarter and then
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  Speaker 5: a higher run rate exiting twenty twenty four. And that's
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  Speaker 5: just because mechanically, you know, they raise people's card fees
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  Speaker 5: when they renew their card, right, So that's kind of
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  Speaker 5: on a rolling basis, and they're still raising card fees
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  Speaker 5: from the previous refresh of the mx plat so that's
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  Speaker 5: going to keep rolling into P and L through next year,
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  Speaker 5: and that will make some of the elevated expenses look
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  Speaker 5: more palatable to investors.
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  Speaker 3: I think, Ben, how is artificial intelligence part of the
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  Speaker 3: American Express story right now? And did they talk about
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  Speaker 3: it at all?
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  Speaker 5: On the call. They talked about it on the call.
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  Speaker 5: They talk about it quite a bit of regularity right now.
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  Speaker 5: I think the biggest impact they're seeing is they're just
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  Speaker 5: really a lot more efficient on the sort of the
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  Speaker 5: tech stack modernization effort that's been ongoing for a long time.
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  Speaker 5: But they would like to do things like agentic purchasing
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  Speaker 5: AI travel agents, things like that, and they think that
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  Speaker 5: that could add meaningfully to revenue and also be a
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  Speaker 5: big positive on the expense side.
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  Speaker 2: Your colleague, Nathan Dean is our senior policy analyst in Washington,
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  Speaker 2: and he's been writing about how there's this credit card
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  Speaker 2: Competition Act that hasn't made its way through Congress yet
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  Speaker 2: but would supposedly require banks to offer two rival credit
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  Speaker 2: card networks to their merchants, and that would potentially be
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  Speaker 2: a threat to American Express, Visa MasterCard. Is this something
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  Speaker 2: that the company is worried about is kind of working
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  Speaker 2: around at this point positioning itself in any way.
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  Speaker 5: I don't think that they're particularly worried about it yet.
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  Speaker 5: I think that Nathan has some sort of tempered odds
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  Speaker 5: on that, but I don't know his latest odds. You know, MX,
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  Speaker 5: I think is such a sort of like lifestyle brand,
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  Speaker 5: value proposition driven company that you know, if they had to,
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  Speaker 5: for instance, off for like a Visa a MasterCard branded card,
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  Speaker 5: it would impact the discount revenue sort of side of things.
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  Speaker 5: But I imagine that they would still try it to
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  Speaker 5: drive users towards their MX branded cards where they have
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  Speaker 5: the full economics, and they could do something like, you know,
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  Speaker 5: provide a more basic card on the Visa MasterCard network
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  Speaker 5: and provide kind of like the higher end, the real
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  Speaker 5: meat and potatoes of the business on their own proprietary network,
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  Speaker 5: and that might be an offset. And there's also you know,
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  Speaker 5: all kinds of other different ways to add fees and
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  Speaker 5: you know, find other revenue sources that well couldn't call.
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  Speaker 3: Those fees be I was talking to Scarlet off Mike
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  Speaker 3: earlier about let's say, for instance, you have a bunch
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  Speaker 3: of rewards points and you want to transfer them over
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  Speaker 3: to an airline that you fly often. Amex does charge you,
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  Speaker 3: at least in my experience, to make that transfer, and
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  Speaker 3: I have to tell you when you're paying you know,
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  Speaker 3: eight hundred dollars a year for a car. That doesn't
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  Speaker 3: feel too good.
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  Speaker 5: Ben, Yeah, I'm not sure exactly which program you're talking about.
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  Speaker 3: But I was trying to get miles over to Delta
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  Speaker 3: and was charged ninety nine bucks to do it, and
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  Speaker 3: she's outraged, and yeah, I'm quietly outraged.
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  Speaker 5: Interesting. I mean, that's like the flagship program. So I'm
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  Speaker 5: not exactly sure the scenari you're talking about, but I
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  Speaker 5: don't think that they would want to do something that
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  Speaker 5: sort of negatively impacted partners. So that's probably not the
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  Speaker 5: first fee that would be on the menu. But you know,
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  Speaker 5: there are plenty of voys to bifurcate your audience and
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  Speaker 5: still provide what Amex does provide now and then just
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  Speaker 5: to have like some sort of add on that meets
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  Speaker 5: any kind of new regulatory requirement.
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  Speaker 2: I like the way you put that bifurkate the audience,
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  Speaker 2: meaning if you upgrade to a better level the next
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  Speaker 2: Welter card, maybe you won't be subject to the fees
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  Speaker 2: that you just experience. And that kind of gets to
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  Speaker 2: the heart of it, right Ben. I mean they can
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  Speaker 2: slice and dices in very very thin slices.
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  Speaker 5: Yeah, everything's about the platinum, So anything they can do
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  Speaker 5: to drive more traffic to the Platinum I think will
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  Speaker 5: in the end actually be in that positive even if
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  Speaker 5: you know there's some sort of change in the business
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  Speaker 5: model and they have to serve you know, maybe a
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  Speaker 5: lower fight go borrower, maybe a broader audience. I don't
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  Speaker 5: think it will affect the core audience who likes what
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  Speaker 5: they have right now and they have to keep paying more.
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  Speaker 2: For it, and just very quickly for the American Express
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  Speaker 2: card holders, like maybe those who come in down the
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  Speaker 2: introductory card, like the you know, blue card, do they
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  Speaker 2: tend to stick with AMX so they kind of go
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  Speaker 2: along with the brand and make it all the way
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  Speaker 2: to platinum.
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  Speaker 6: Yeah.
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  Speaker 5: So I think seventy five percent of new customers are
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  Speaker 5: coming onto a fee paying card already from the get go.
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  Speaker 5: Sixty five percent of those are gen z and millennial,
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  Speaker 5: and the company sees a gigantic lifetime value in those
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  Speaker 5: consumers and explicit goal is to get those people to
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  Speaker 5: spend more over their lifetime. And retention rates are crazy
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  Speaker 5: high on the mx plat it's like almost one hundred percent,
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  Speaker 5: so people basically never give up their card once they
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  Speaker 5: get it.
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  Speaker 4: 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 2: Let's talk a little bit about Intel, because Intel shares
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  Speaker 2: are down about four percent, and Alexis you were pointing
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  Speaker 2: out earlier that the outlook was good and the results
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  Speaker 2: looked dec and yet the stock, however, is that respecting?
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  Speaker 3: Yeah, I mean like it was higher in the pre
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  Speaker 3: market when I was doing the flashes on surveillance talking
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  Speaker 3: about how Intel was rallying, and then once regular trading started,
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  Speaker 3: stock is down.
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  Speaker 2: All right, So let's check in with Konjoan Shobani. He
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  Speaker 2: is our senior semiconductor analyst joining us from San Francisco.
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  Speaker 2: Kunjohn explained to us what happened between the pre market
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  Speaker 2: and they started regular trading when things looked fairly good
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  Speaker 2: for Intel, and now clearly the market does not like
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  Speaker 2: everything at seas with the latest set of results.
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  Speaker 7: I mean, from our perspective, we liked everything we saw.
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  Speaker 7: I mean, after quarters and quarters of facing hurdles and
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  Speaker 7: you know, missteps, this was the finally the most cleanest
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  Speaker 7: positive quarter from a fundamental perspective, they beat on all matrix.
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  Speaker 7: But more important than that, they showcased a lot of
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  Speaker 7: confidence in the foundry progress that they're making. If I
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  Speaker 7: had to guess, what the you know, just a reaction
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  Speaker 7: a few hours since since the market has opened. Is
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  Speaker 7: could be just because some folks are not liking the
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  Speaker 7: higher spending, which is going to be a headwind to
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  Speaker 7: the free cash flow. Right, so, if you add on
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  Speaker 7: everything positive that's happening, they were finally now getting to
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  Speaker 7: a free cash flow which people are liking. But this
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  Speaker 7: additional spending is again going to put a pause and
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  Speaker 7: a lot of investors have been waiting to get this
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  Speaker 7: positive free cash flow. But other than that, fundamentally everything
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  Speaker 7: looks really good.
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  Speaker 3: You know, earlier we were talking with Dan Ives about
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  Speaker 3: this and about the hyperscalers that are going to be
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  Speaker 3: reporting next week, and I'm curious, is there anything they
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  Speaker 3: can say with regards to CAPEX spending on AI that
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  Speaker 3: would please this market, because you would think if they're
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  Speaker 3: spending too little, the market might not like it. If
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  Speaker 3: they're spending too much, the market doesn't seem to like it.
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  Speaker 7: Well, you got it spot on right. The investors insuredholders
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  Speaker 7: of those hyperscalers don't like it when they spend a
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  Speaker 7: lot of money, but the investors for the semi guys
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  Speaker 7: that I cover, should like that higher number. In fact,
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  Speaker 7: I mean, if we don't get a much higher number,
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  Speaker 7: you know, those inventors might not like for the names
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  Speaker 7: of NBDA, AMD, Intel and so forth. Because remember, the
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  Speaker 7: higher the capex for the hyperscalers, that means the better
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  Speaker 7: the probability of upside for the semi connected guys that
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  Speaker 7: I cover.
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  Speaker 2: So, Kanyam, would you say that the US government owning
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  Speaker 2: a stake in Intel has been unequivocally good for the
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  Speaker 2: company in the stock?
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  Speaker 7: I mean, I don't see any direct correlation there, Like
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  Speaker 7: they haven't done anything except for you know, investment, just
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  Speaker 7: bringing in the liquidity and the cash flow. There's definitely
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  Speaker 7: that credibility that you know, government likely won't let Intel fall,
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  Speaker 7: But I think I would not give them a lot
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  Speaker 7: more credit for what we're seeing in the stock. It
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  Speaker 7: has been all been executions since the new CEO coming in,
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  Speaker 7: and we are now seeing the fruits of that discipline
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  Speaker 7: and the execution finally showing up.
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  Speaker 3: I was looking a little more into the report and
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  Speaker 3: also just taking a look at what some analysts had
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  Speaker 3: to say. So, Intel, this is their strongest revenue growth
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  Speaker 3: in more than fifteen years. This according to a City analyst,
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  Speaker 3: what an is it all AI that's driving that right now?
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  Speaker 3: Is it diversified in any way?
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  Speaker 7: Well, it's mostly AI because again they're in the computer business,
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  Speaker 7: right and anyone who is in that proportional business, it's
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  Speaker 7: mostly AI. I think they reported a number that now
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  Speaker 7: seventy percent of their total revenue in this quarter was
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  Speaker 7: AI exposed or AI related in some shape or form.
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  Speaker 7: But more importantly, what's driving it? You know, the tide
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  Speaker 7: is lifting all boats. Everyone's enjoying that. But really what
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  Speaker 7: the goodness came out in this quarter was again their
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  Speaker 7: execution on the foundry and the reels are getting better,
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  Speaker 7: costs are coming down. It's a supply constraint and environment
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  Speaker 7: everywhere else, and Intel has its own supply, so when
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  Speaker 7: they are able to bring up more volume, they're able
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  Speaker 7: to sell more parts and drive higher revenue and charge
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  Speaker 7: a lot more because again supply constraints. So any new
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  Speaker 7: volume that they bring up, they're able to write now
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  Speaker 7: charge a lot more higher prices.
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  Speaker 4: Stay with us. More from Bloomeric Intelligence coming up.
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  Speaker 1: After this, you're listening to the Bloomberg Intelligence Podcast. Catch
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• 11:11
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  Speaker 3: We want to talk earnings next week because they're going
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  Speaker 3: to be dominated by the megacap hyper scalers. We're talking
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  Speaker 3: meta Microsoft, Apple, Amazon and the like. And who better
• 11:23
  Speaker 3: to do that with than mister Dan Ives live in
• 11:26
  Speaker 3: our studios here in the air, Active Broker Studio partner
• 11:28
  Speaker 3: and senior managing Director, Yorkville Ives and Co.
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  Speaker 8: Dan. Good to see you.
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  Speaker 3: And you have an animal motif for those not watching
• 11:37
  Speaker 3: on YouTube. Animal motif ways is a tiger.
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  Speaker 8: Tiger got a hat hat. So yeah, little little animal
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  Speaker 8: motif me, I should brought a ball maybe soon.
• 11:49
  Speaker 7: I like that.
• 11:49
  Speaker 8: Animal spirits to the conversation.
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  Speaker 3: We'll talk about next week in a moment, because I
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  Speaker 3: want to talk about Intel right now. After the belly yesterday,
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  Speaker 3: I'm on every metric. I thought blew it out of
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  Speaker 3: the water, Yet Intel is down three percent.
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  Speaker 8: Why do you think I think the reality is some
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  Speaker 8: of these knee jerk reactions I think could be misleading
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  Speaker 8: relative to the fundamentals, because what investors are looking at
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  Speaker 8: here is what does demand look like for the AI revolution?
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  Speaker 8: And look, Intel has become a huge barometer, and you
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  Speaker 8: combine what we saw from Intel with the hyperscalurs, that
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  Speaker 8: just gives you more confidence to what we're going to
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  Speaker 8: see over the next week relative to cap backs, enterprise demand.
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  Speaker 8: I think that's why it's very easy for investor. I
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  Speaker 8: caught up sometimes in what the stocks do you know
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  Speaker 8: a day after? But for Intel, I mean they've almost
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  Speaker 8: become the comeback kid.
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  Speaker 2: They have, Yeah, they definitely have, with a big helping
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  Speaker 2: hand from the US government of course, and in video, yeah,
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  Speaker 2: and in video. Okay, so let's talk about the hyperscalet
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  Speaker 2: earnings that are coming up next week Alphabet. The knee
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  Speaker 2: jerk reaction there was to sell it off yesterday down
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  Speaker 2: almost seven percent. Today it's making a little bit of
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  Speaker 2: a comeback, stabilizing two thirds of one percent. We've got Meta, Microsoft,
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  Speaker 2: Amazon on all reporting next week. Are we going to
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  Speaker 2: see a similar kind of outcome where they're going to
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  Speaker 2: increase their capex and the return on investment, you know
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  Speaker 2: through cloud sales for instance, is going to show that
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  Speaker 2: they're getting some payoff, but investors bar are so high
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  Speaker 2: right now that they're not going to be rewarded for it.
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  Speaker 8: And I think the Alphabet reaction, you know, I think
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  Speaker 8: that someone would say maybe head scratching because if you
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  Speaker 8: saw the cloud growth, you look what they're doing across
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  Speaker 8: the business, and then of course increasing capex. But as
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  Speaker 8: we've talked about, this is an arms race. It's third
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  Speaker 8: inning in the AI revolution, Microsoft, Amazon, Meta. No one's
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  Speaker 8: going to slow capecs. Could you slow it down? You
• 13:45
  Speaker 8: get ultimately, you know, you're out of the line in
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  Speaker 8: terms of when it comes to capacity. I think the
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  Speaker 8: most important thing relative to tech earnings, to the market,
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  Speaker 8: to these stocks is is demand accelerating. Our enterprise is
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  Speaker 8: set toward what ultimates we monetization and use cases. And
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  Speaker 8: in terms of the reactions, look, I think we've seen
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  Speaker 8: you know, I think investors are definitely fickle and worrying
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  Speaker 8: about We'll say, maybe patients wearing thin. But guess what,
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  Speaker 8: Let's say Alphabet said we're cutting catacs exactly.
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  Speaker 5: The market would freak out.
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  Speaker 8: So that's why it's one where these companies are doing everybody.
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  Speaker 8: They're not just spending like nineteen eightys rock stars for
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  Speaker 8: no reason. They're spending because their customers are moving on
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  Speaker 8: the hyperscos on the cloud with AI. That's why they're doing.
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  Speaker 3: It's sort of like you're damned if you if you do,
• 14:35
  Speaker 3: and you're damned if you don't, right, because if you're not,
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  Speaker 3: if you're not spending and keeping pace with the other
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  Speaker 3: big hyper scalers with then what are you doing? But
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  Speaker 3: if you're if you're spending a lot, they're still going
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  Speaker 3: what are you doing?
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  Speaker 8: But it's the you're building out the Vegas Strip in
• 14:48
  Speaker 8: nineteen fifty five, right, analogy. So the point is you
• 14:52
  Speaker 8: get one spot on the strip, if you pull back,
• 14:56
  Speaker 8: guess what, you're two miles where you're in Reno, right,
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  Speaker 8: And that's how these companies are thinking.
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  Speaker 2: Okay, so they want to make sure they have a
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  Speaker 2: prime spot on the strip, and that means they need
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  Speaker 2: to spend a lot of money. They also need to
• 15:08
  Speaker 2: raise a lot of money. They've been doing that in
• 15:10
  Speaker 2: the bond market. Are more companies going to do what
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  Speaker 2: Alphabet did and tap the equity market as well?
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  Speaker 8: I think it's it's going to be a tidal wave
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  Speaker 8: now in terms of I think it's also that's going
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  Speaker 8: to happen over the next six, twelve, eighteen months, because
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  Speaker 8: the reality is, if they don't do it, despite whatever
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  Speaker 8: the stocks do, they know they're out of the game
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  Speaker 8: now investors, how are they going to react to that?
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  Speaker 8: I would argue, see if you get Meta. Meta's last
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  Speaker 8: quarter was basically increase capbacks, dog gate the homework. They
• 15:40
  Speaker 8: didn't show it Alphabet, they are showing it Microsoft, penalty Box,
• 15:46
  Speaker 8: prove me moving from Thedella. Each one's almost become idiosyncratic
• 15:50
  Speaker 8: relative to how they're treated. But the reality is investadors
• 15:53
  Speaker 8: are going from cap bax to monetization. That's the phase
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  Speaker 8: we're in. But it's still early in terms of it's
• 16:00
  Speaker 8: all playing out, and for the first time in thirty years,
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  Speaker 8: the US is ahead of China when it comes tech.
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  Speaker 3: Apple is a different animal from the other companies we
• 16:08
  Speaker 3: were just talking about, and they're every day I feel
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  Speaker 3: like they're saying, we're going to revamp another product in
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  Speaker 3: our lineup again geared towards AI. So what can they
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  Speaker 3: possibly say that's new When they come out with earning
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  Speaker 3: sexty weeks.
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  Speaker 8: Look for Apple, they finally now have an AI strategy.
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  Speaker 8: It's not just talk and we talk about we start
• 16:26
  Speaker 8: a WWDC. It's not anthropic, it's not an open air.
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  Speaker 8: They don't need to be that because they have the
• 16:32
  Speaker 8: install based on two point five billion iOS devices one
• 16:35
  Speaker 8: point five billion iPhones for them. Okay, it's really about
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  Speaker 8: giving investors update on the deployment of the AI strategy
• 16:45
  Speaker 8: and then giving some sort of sense in terms of
• 16:47
  Speaker 8: what this iPhone seventeen. It has been a surprise upgrade
• 16:51
  Speaker 8: cycle and I think that's something you saw it even
• 16:54
  Speaker 8: on the AT and T numbers, and it's very important
• 16:57
  Speaker 8: for this broader market to stop. What's happening to the
• 17:00
  Speaker 8: stock investors are realizing Apple is basically they're going to
• 17:05
  Speaker 8: be the toll collector right on the consumer AI highway,
• 17:09
  Speaker 8: no matter which way.
• 17:10
  Speaker 3: Do we need a foldable Apple phone? That's my question, Dan, and.
• 17:13
  Speaker 8: Again Keenes talked about that, and I think, you know,
• 17:15
  Speaker 8: I know he's waiting for it, but I think it's
• 17:17
  Speaker 8: going to come by in their pocket.
• 17:19
  Speaker 6: Better.
• 17:19
  Speaker 2: It's not going to fall out of your pocket that way. Okay,
• 17:21
  Speaker 2: I'll be bulkier, but it won't fall out.
• 17:24
  Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
• 17:31
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 17:35
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 17:38
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• 17:41
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• 17:45
  Speaker 3: We want to talk about Charter Communications because this stock
• 17:50
  Speaker 3: taking it on the chin today, down about six and
• 17:52
  Speaker 3: a half percent after it's a quarterly earnings report. You
• 17:55
  Speaker 3: want to dig in a little more with geth i Roanganathan,
• 17:58
  Speaker 3: us media analyst for Bloomberg Intelligence, and she joins us
• 18:01
  Speaker 3: from our Princeton, New Jersey office. He's always good to
• 18:04
  Speaker 3: see you. I guess the top line here is they
• 18:07
  Speaker 3: did it again. Revenue declining once again at Charter as
• 18:11
  Speaker 3: subscriber growth continues to slide. What else in this report
• 18:16
  Speaker 3: did Wall Street not like?
• 18:20
  Speaker 6: Thanks so much Alexis for having me. So really, this
• 18:23
  Speaker 6: story is, you know, we've seen this movie before, and
• 18:26
  Speaker 6: just the story just keeps getting worse and worse every quarter.
• 18:30
  Speaker 6: So you know, Charter, as you may know, is going
• 18:33
  Speaker 6: to very soon be the largest broadband provider in the
• 18:37
  Speaker 6: United States after it closes on its Cocks deal, which
• 18:40
  Speaker 6: will happen in the next couple of weeks time. And really,
• 18:43
  Speaker 6: the story for this company has been this persistent loss
• 18:46
  Speaker 6: in broadband subscriptions. And what Wall Street did not like
• 18:50
  Speaker 6: this quarter was that not only did we see a
• 18:52
  Speaker 6: deterioration in those subscribers trends, which was losses much worse
• 18:57
  Speaker 6: than what we had initially projected, but all so along
• 19:00
  Speaker 6: with that, we are seeing this tremendous pressure on broadband rpooh,
• 19:05
  Speaker 6: which is causing declines in ebit DAH and so just
• 19:09
  Speaker 6: you know, as you kind of think about the growth
• 19:11
  Speaker 6: outlook for this company over the next few years, there
• 19:14
  Speaker 6: is just no turnaround in sight, and that is making
• 19:17
  Speaker 6: investors extremely nervous.
• 19:20
  Speaker 3: Now there were bright spots here, no, I mean they
• 19:23
  Speaker 3: did add I guess subscribers on the mobility end of things.
• 19:27
  Speaker 3: How is that going?
• 19:29
  Speaker 6: Yeah, So, you know, this is a story that we're
• 19:31
  Speaker 6: seeing across a lot of the cable providers. So both
• 19:33
  Speaker 6: Charter and Comcast introducing their mobile product, which is Spectrum
• 19:37
  Speaker 6: Mobile and Exfinity Mobile, and we've seen a lot of
• 19:40
  Speaker 6: success with this. And really what these cable providers have
• 19:42
  Speaker 6: done very creatively is that they're bundling their mobile solutions
• 19:46
  Speaker 6: with broadband. Really the big picture here is they're trying
• 19:49
  Speaker 6: to retain those broadband subscribers as well as attract new
• 19:53
  Speaker 6: ones by bundling in mobile, and you know, people kind
• 19:57
  Speaker 6: of like that, so that you do have quite a few,
• 20:00
  Speaker 6: you know, new subscribers kind of signing on. Because if
• 20:02
  Speaker 6: you actually look at the market out there, the wireless market,
• 20:06
  Speaker 6: you know, Spectrum Mobile is priced very very competitively, much
• 20:10
  Speaker 6: much more competitively than the big three, and that is
• 20:13
  Speaker 6: what is helping them kind of gain subscribers. But remember,
• 20:16
  Speaker 6: you know, they have about ten to twelve million subscribers
• 20:20
  Speaker 6: versus you know, we're comparing it with Verizon and an
• 20:23
  Speaker 6: Ant and T and T Moore, which have hundreds of
• 20:25
  Speaker 6: millions of subscribers. So you know, again it's it's small potatoes,
• 20:28
  Speaker 6: but yes, there are some bright spots.
• 20:30
  Speaker 3: What about some of its competitism. I guess we heard
• 20:33
  Speaker 3: from Comcast this week quite a different story. But then
• 20:36
  Speaker 3: I guess you could also argue Comcast is a lot
• 20:38
  Speaker 3: more diversified than a charter communications.
• 20:42
  Speaker 6: Yeah, so actually for Comcast there, you know, it's it's
• 20:46
  Speaker 6: kind of ironic Alexis because they've always been punished because
• 20:50
  Speaker 6: they were not a pure play cable company. They had
• 20:53
  Speaker 6: this media operation with NBC which and which they never
• 20:57
  Speaker 6: really got credit for, and actually, in order to kind
• 20:59
  Speaker 6: of simplify the story and get more value for their
• 21:04
  Speaker 6: media business, they announced that they will be separating out
• 21:08
  Speaker 6: those media operations, which will happen sometime in twenty twenty seven.
• 21:12
  Speaker 6: But you have the cable business that has really come
• 21:15
  Speaker 6: under tremendous pressure, and we're seeing that both you know,
• 21:17
  Speaker 6: with Comcast as well as Charter. Comcast is slightly better
• 21:21
  Speaker 6: because again they have that divers diversification as you pointed
• 21:24
  Speaker 6: out with media, but cable valuations if you just track
• 21:26
  Speaker 6: them over the past four years of Alexis, I mean,
• 21:29
  Speaker 6: they've basically gone down by fifty percent, so right now
• 21:31
  Speaker 6: we're under five percent historical lows. And the problem is
• 21:35
  Speaker 6: that the story is not getting any better. So with
• 21:37
  Speaker 6: the emergence of Starlink and the possibility of having much
• 21:41
  Speaker 6: greater competition in the broadband landscape, you know, the story
• 21:45
  Speaker 6: just gets so much more complicated and muddied for both
• 21:49
  Speaker 6: Comcasts and Charter.
• 21:50
  Speaker 3: I'm just looking at that service area. Charter Communications provides
• 21:55
  Speaker 3: a service across forty one states, including much of New York, California, Texas, Florida,
• 22:02
  Speaker 3: and I'm taking a look at the STAE now coming
• 22:05
  Speaker 3: up to nine percent year to date. I mean, is
• 22:08
  Speaker 3: it a possibility here that Charter Communications either tries to
• 22:11
  Speaker 3: sell off some parts of the business or just gets
• 22:13
  Speaker 3: bought out in the next couple of years.
• 22:16
  Speaker 6: Excellent question, And this is what all of us have
• 22:18
  Speaker 6: kind of been, you know, scratching our heads with. So
• 22:21
  Speaker 6: one of the things that came out of the Comcast's
• 22:24
  Speaker 6: decision to separate out its NBC media business is the
• 22:28
  Speaker 6: fact that now the remaining business will be a pure
• 22:30
  Speaker 6: play cable company, a clean cable company, and that kind
• 22:33
  Speaker 6: of sets the stage for a potential you know, m
• 22:35
  Speaker 6: and a deal with Charter. So remember there is really
• 22:39
  Speaker 6: no regional overlap with this. Both Comcasts and Charter will
• 22:43
  Speaker 6: have that national footprint. And really what investors are banking
• 22:46
  Speaker 6: on is that a combined company with roughly about eighty
• 22:49
  Speaker 6: billion dollars in costs, can can really extricate some synergies,
• 22:54
  Speaker 6: maybe up to about five to six billion dollars, and
• 22:56
  Speaker 6: they would be then able to compete better against fiber
• 22:59
  Speaker 6: and fixed wireless, which has really caused us extreme deterioration
• 23:03
  Speaker 6: in their subscriber trends. That's what everybody's hoping for We'll
• 23:06
  Speaker 6: see how everything plays out.
• 23:08
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