Latest / Bloomberg Intelligence / Warner Bros. Rejects Latest Paramount Bid, Favoring Netflix

Transcript

Warner Bros. Rejects Latest Paramount Bid, Favoring Netflix · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
• 0:10
  Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am
• 0:14
  Speaker 1: Eastern on Apple Coarclay, and Android Auto with the Bloomberg
• 0:17
  Speaker 1: Business App. Listen on demand wherever you get your podcasts,
• 0:21
  Speaker 1: or watch us live on YouTube.
• 0:23
  Speaker 2: All Right, the media MN a trade that just won't
• 0:26
  Speaker 2: go away. Warner Brothers Discovery says an amended takeover offer
• 0:30
  Speaker 2: from Paramounts Guidance is inferior to its deal with Netflix
• 0:34
  Speaker 2: and urges shareholders not to tender their shares. I don't
• 0:37
  Speaker 2: know what's going on here, people, but our next guest
• 0:39
  Speaker 2: does Keith wrong, Anathan. She is the media analyst for
• 0:42
  Speaker 2: Bloomberg Intelligence here. Actually, Keith, I thought we'd have something
• 0:47
  Speaker 2: done by now. I mean, these offers are pretty clear.
• 0:51
  Speaker 2: The value seemed kind of similar to me.
• 0:54
  Speaker 3: What do you think's going on here?
• 0:56
  Speaker 4: Yeah?
• 0:57
  Speaker 5: So this time what Warner Brothers is saying, in addition
• 1:00
  Speaker 5: to the fact that the offer is actually inadequate, this
• 1:03
  Speaker 5: is what they said the very first time when they
• 1:04
  Speaker 5: rejected this thirty dollars bid from paramount You know, they
• 1:09
  Speaker 5: obviously wanted the personal guarantee from Larry Ellison, which they got.
• 1:13
  Speaker 5: They wanted, you know, paramount to raise its termination fee
• 1:16
  Speaker 5: to five point eight billion to match Netflix that also
• 1:19
  Speaker 5: they got. But now they're saying that they actually really
• 1:22
  Speaker 5: do need, you know, a sweetened bid, So they cite
• 1:25
  Speaker 5: a number there. They say that if they had to
• 1:28
  Speaker 5: terminate their agreement with Netflix, they will also incur you know,
• 1:32
  Speaker 5: obviously they have to pay the termination fee, plus there's
• 1:34
  Speaker 5: going to be significant financing costs, so all of that
• 1:37
  Speaker 5: comes out about one dollars one dollar and eighty cents,
• 1:41
  Speaker 5: close to one seventy nine or one eighty a share,
• 1:44
  Speaker 5: So they obviously need to be compensated for that. So
• 1:46
  Speaker 5: basically I think, you know, they do need a sweetened offer.
• 1:49
  Speaker 5: And the big thing that they highlight this time around
• 1:52
  Speaker 5: is the amount of debt, so they actually call this
• 1:56
  Speaker 5: a leveraged buyout, probably the biggest one in the history
• 2:00
  Speaker 5: of M and A, and so say that, you know,
• 2:03
  Speaker 5: it just presents too many risks and too many uncertainties
• 2:07
  Speaker 5: and is definitely inferior to the Netflix offer.
• 2:10
  Speaker 6: Right, the conclusion that it has drawn and what it's
• 2:12
  Speaker 6: recommending to shareholders remains the same, which is go with Netflix's.
• 2:17
  Speaker 6: The Netflix bid having said that, what does it mean
• 2:20
  Speaker 6: that Warner Brothers Discovery wrote this letter to shareholders? Do
• 2:24
  Speaker 6: we get the sense that shareholders are tendering shares to
• 2:26
  Speaker 6: the paramount?
• 2:29
  Speaker 5: Not so from what we've heard. You know, when it
• 2:32
  Speaker 5: was last reported Scarlett, about five hundred thousand shares were
• 2:36
  Speaker 5: tendered at that thirty dollars price. Remember we have about
• 2:39
  Speaker 5: two point six billion, so we're really very very long
• 2:44
  Speaker 5: ways off. So you know, I think shareholders definitely expect
• 2:48
  Speaker 5: the price to go up. They do, you know, think
• 2:51
  Speaker 5: that there is going to be a bidding war. The
• 2:53
  Speaker 5: number out there on the street is that David Zaslav
• 2:56
  Speaker 5: is looking for thirty four dollars, as you know, the
• 2:59
  Speaker 5: final offer which he will sign this his company away
• 3:03
  Speaker 5: to Paramount. I'm not sure whether you know Paramount is
• 3:06
  Speaker 5: actually going to raise their offer, but that that is
• 3:09
  Speaker 5: really the number that he's looking for. And we know him.
• 3:11
  Speaker 5: He's he's really a master craftsman when it comes to
• 3:14
  Speaker 5: to getting the best deal for his company. So again
• 3:17
  Speaker 5: it's it's a way and watch.
• 3:18
  Speaker 2: We used to call that the final final offer. This
• 3:20
  Speaker 2: is our final final We're not we're not getting any.
• 3:23
  Speaker 6: So final that we need to say twice.
• 3:24
  Speaker 3: Exactly, Githy.
• 3:26
  Speaker 7: We have not heard really too much from Netflix, have we.
• 3:30
  Speaker 5: So all on Netflix said today Paul was after you know,
• 3:33
  Speaker 5: Warner Brothers Discovery put out that letter, was you know,
• 3:35
  Speaker 5: they said, yes, we continue to you know, work with
• 3:38
  Speaker 5: Warner Brothers. We filed, we're working with the anti trust authorities,
• 3:42
  Speaker 5: you know, we're working with the regulators, and we hope
• 3:44
  Speaker 5: to get you know, the deal down. So everything kind
• 3:47
  Speaker 5: of proceeding as expected from from the Netflix management team.
• 3:51
  Speaker 6: You mentioned thirty four dollars a share is what David
• 3:53
  Speaker 6: Zaslov is really eyeing. Is there any reason to think
• 3:57
  Speaker 6: Netflix will raise its offer.
• 4:00
  Speaker 5: Netflix needs to raise its offer, Scarlett, only if Paramount
• 4:04
  Speaker 5: comes back with a sweetened bid, And we do think
• 4:06
  Speaker 5: that they actually will raise their offer. They really believe
• 4:10
  Speaker 5: even though the you know, the market price reaction obviously
• 4:13
  Speaker 5: has been very negative to this whole Netflix deal, just
• 4:16
  Speaker 5: kind of given that it really kind of complicates a
• 4:18
  Speaker 5: very clean narrative. I think Netflix really believes that they're
• 4:21
  Speaker 5: doing this, you know, in the long in the long
• 4:23
  Speaker 5: they're playing the long game here. You know, this is
• 4:26
  Speaker 5: a great collection of assets. Again, it's not just the
• 4:29
  Speaker 5: cost of doing the deal. It's the cost of not
• 4:31
  Speaker 5: doing the deal, and they obviously do not want to
• 4:33
  Speaker 5: strengthen their competitors. They believe this is a great collection
• 4:35
  Speaker 5: of assets that gives them, you know, tremendous value over many,
• 4:38
  Speaker 5: many years to come. So I absolutely think they will
• 4:41
  Speaker 5: raise the price, but the first move has to be
• 4:43
  Speaker 5: from Paramount.
• 4:44
  Speaker 2: GITHA part of the Warner Brothers discovery plan before this
• 4:47
  Speaker 2: offer was it was to spin out their cable networks.
• 4:49
  Speaker 2: And that's exactly what Compcast did several days ago, spinning
• 4:53
  Speaker 2: out its cable networks. The company new companies called Versant
• 4:56
  Speaker 2: Media vs NT. That thing is traded off about twenty
• 5:00
  Speaker 2: just in the last few days. Man, what does that
• 5:03
  Speaker 2: tell you about the cable network business and maybe how
• 5:06
  Speaker 2: it might affect these bids.
• 5:08
  Speaker 5: Yeah, it's it's really bleak. And so this actually strengthens
• 5:12
  Speaker 5: the case for Paramount. This is exactly what they were saying.
• 5:14
  Speaker 5: They were saying, let's buy this whole thing, because you
• 5:17
  Speaker 5: don't know where this, you know, the global networks business
• 5:19
  Speaker 5: and the TV networks is going to actually trade and
• 5:22
  Speaker 5: here we go. Versun is actually just proving their point.
• 5:25
  Speaker 5: So does not really bode well for Warner Brothers. But
• 5:28
  Speaker 5: again I think still Warner Brothers will continue to have
• 5:30
  Speaker 5: to have the upper hand because again they can argue
• 5:32
  Speaker 5: that their cable networks, again a slightly different business, much
• 5:36
  Speaker 5: larger in scale compared to the version properties, has an
• 5:39
  Speaker 5: international footprint. But again the writing is on the wall, Paula.
• 5:44
  Speaker 5: As you've said many times, I mean that the TV
• 5:46
  Speaker 5: network business is bleeding, not a slow death anymore. This
• 5:50
  Speaker 5: is really happening fast and furious.
• 5:53
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
• 6:00
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 6:04
  Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
• 6:07
  Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
• 6:10
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 6:14
  Speaker 2: Nvidia CEO Jensen Wang says the artificial intelligence industry always
• 6:19
  Speaker 2: needs more energy. On the sidelines of the annual Consumer
• 6:22
  Speaker 2: Tech Events, cees Jensen Wang and Siemens CEO roll On
• 6:27
  Speaker 2: Bush spoke exclusively with Bloomberg's Ed Ludlow on their AI partnership.
• 6:32
  Speaker 4: From Hopper to Blackwell, we increased energy efficiency by tenx.
• 6:38
  Speaker 4: From Blackwell to Reuben, we increased energy efficiency again by tenx.
• 6:43
  Speaker 4: And that translates directly to our customers revenues because in
• 6:48
  Speaker 4: the case of ANAI factory, whatever factory size you have,
• 6:53
  Speaker 4: you're limited by the power.
• 6:55
  Speaker 7: All Right.
• 6:55
  Speaker 3: That was Jensen Wang.
• 6:57
  Speaker 2: He is head of Nvidia and Siemens COO role On Bush,
• 7:00
  Speaker 2: speaking exclusively with Bloomberg's ed La Low of the AI
• 7:03
  Speaker 2: Partnership AD at the Consumer Electronics Show in Las Vegas.
• 7:07
  Speaker 2: Let's get the latest reporting from Vegas. Caroline Hydroids is
• 7:09
  Speaker 2: she's out there. She's the b Tech co anchor for
• 7:12
  Speaker 2: a Bloomberg News. Caroline, it just seems like, you know,
• 7:16
  Speaker 2: you're listening to mister Wog, mister Bush. The need for
• 7:20
  Speaker 2: AI and the spending on AI shows no real signs
• 7:24
  Speaker 2: of slowing yet.
• 7:26
  Speaker 3: Is that the vibe you're getting out there?
• 7:30
  Speaker 8: That is very much the vibe we're getting. We heard
• 7:32
  Speaker 8: from Lisa Su yesterday as well, CEO of AMD, saying
• 7:35
  Speaker 8: in the next few years, you're going to have to
• 7:37
  Speaker 8: one hundred x the amount of compute that we currently have.
• 7:41
  Speaker 8: Has stock still falling today, I might add, and so
• 7:43
  Speaker 8: many people may be factoring in this extraordinary scale, which
• 7:47
  Speaker 8: we'd likely to see the compute needs still ramp up.
• 7:50
  Speaker 8: And it's having a marked effect on certain companies stocks
• 7:52
  Speaker 8: like I'm sure you were covering yesterday and into today
• 7:55
  Speaker 8: sand Disc. It is up one thousand percent from its
• 7:58
  Speaker 8: lows back in April, but it's almost fifty in the
• 8:00
  Speaker 8: first few trading days of the year. This is all
• 8:02
  Speaker 8: about a shortage in memory, memory storage. We are seeing
• 8:06
  Speaker 8: still the fact that we're worrying about energy, as Jentsen says,
• 8:09
  Speaker 8: we're worrying about memory as you're seeing, impacting.
• 8:11
  Speaker 4: Some Sung stock as well.
• 8:12
  Speaker 8: We had a Somesung executive on the network yesterday saying, Nook,
• 8:15
  Speaker 8: we're going to have to see a high con prices
• 8:17
  Speaker 8: because supply is just so tight. And yet still people
• 8:21
  Speaker 8: question whether we're in some sort of bubble. But all
• 8:23
  Speaker 8: I'm hearing is the infrastructure just needs to get ever
• 8:25
  Speaker 8: bigger and we kind of need to get on board
• 8:27
  Speaker 8: with that.
• 8:28
  Speaker 6: Yeah, speaking of memory chip makers, Micron the biggest US
• 8:31
  Speaker 6: memory chip maker, jumping two hundred and forty percent last
• 8:34
  Speaker 6: year and up about ten percent yesterday. So interesting example
• 8:38
  Speaker 6: of that. So Caroline the Consumer Electronics show, Paul and
• 8:40
  Speaker 6: I were reminiscing how once upon a time it met
• 8:42
  Speaker 6: big screen TVs and other gadgets that you know, companies
• 8:46
  Speaker 6: dreamt up but consumers may or may not want to
• 8:48
  Speaker 6: sign on for. Is that still what's happening at the
• 8:51
  Speaker 6: cees or has it turned into a high level discussion
• 8:55
  Speaker 6: on chips and AI.
• 9:00
  Speaker 8: I think they're managing to walk both sides. We're still
• 9:03
  Speaker 8: seeing those big unveils and discussions coming from in video
• 9:08
  Speaker 8: CEO from AMDCO, from Quilcom CEO. They're talking about what's
• 9:11
  Speaker 8: inside these electronics or what's inside the compute that is
• 9:15
  Speaker 8: needed to foster these electronics. But then you have Samsung,
• 9:18
  Speaker 8: which is very much on the AI train with its chips,
• 9:20
  Speaker 8: but also unveiling the latest, greatest Samsung frame or the
• 9:23
  Speaker 8: latest TV that has you can see all around the
• 9:26
  Speaker 8: curvature of it, or the fact that they are still
• 9:28
  Speaker 8: trying to think about how your home is going to
• 9:30
  Speaker 8: be connected, how your television is discussing, discussing with your
• 9:33
  Speaker 8: oven as to whether or not the food is cooked,
• 9:35
  Speaker 8: and you get in between messaging between the two. I
• 9:38
  Speaker 8: mean there are companies that still continue to unveil. They're
• 9:40
  Speaker 8: also the ludicrous. I mean there's lollipops that play music
• 9:43
  Speaker 8: as you eat them, There's little toys, everything that seems
• 9:47
  Speaker 8: to be about AI and about companionship is something that
• 9:50
  Speaker 8: just seems to involve some sort of cuddly toy that
• 9:53
  Speaker 8: talks to you. But apparently cute is the way in
• 9:55
  Speaker 8: which we're going to go forward. But there are the
• 9:57
  Speaker 8: vacuum cleaners, there's the massoles chairs. It's still very much
• 10:00
  Speaker 8: has this idea of pushing the innovation forward. And the
• 10:03
  Speaker 8: main thing, guys, I cannot walk without seeing a humanoid
• 10:07
  Speaker 8: robot or some sort. So we're gonna have some big
• 10:09
  Speaker 8: interviews a little bit later. We got Boston Robotics, for example,
• 10:11
  Speaker 8: coming on the show, and that's really Boston Dynamics in fact,
• 10:14
  Speaker 8: which has a huge new unveil of its latest humanoid.
• 10:18
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up.
• 10:20
  Speaker 7: Are for this.
• 10:25
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 10:28
  Speaker 1: weekdays at ten am. He's done on Apple, Cocklay and
• 10:31
  Speaker 1: Android Otto with the Bloomberg Business app. Listen on demand
• 10:35
  Speaker 1: wherever you get your podcasts, or watch us live on YouTube.
• 10:39
  Speaker 6: Well, there have been lots of big games in the
• 10:41
  Speaker 6: lead up to the Super Bowl, and of course there
• 10:43
  Speaker 6: will continue to be as we head in that direction.
• 10:45
  Speaker 6: So let's bring in Brian Eggers. He covers everything for us,
• 10:48
  Speaker 6: from the gaming companies to the lodging companies to the
• 10:53
  Speaker 6: cruise ship companies. See your gaming and lodging analysts here
• 10:56
  Speaker 6: at Bloomberg Intelligence. And Brian, you and your team have
• 10:59
  Speaker 6: done some work and how Draft Kings is positioning itself
• 11:02
  Speaker 6: for the NFL playoffs.
• 11:04
  Speaker 9: Yeah, so, DraftKings and Fandel, among other things, recently rolled
• 11:07
  Speaker 9: out these prediction market apps which are separate from their
• 11:10
  Speaker 9: sports books.
• 11:11
  Speaker 7: And this is really to.
• 11:12
  Speaker 9: Coldpeep our head on against call She and Robinhood and
• 11:15
  Speaker 9: other of these financial firms that offer these event contracts
• 11:18
  Speaker 9: in a number of states.
• 11:20
  Speaker 7: How big is it?
• 11:20
  Speaker 3: I'm hearing more and more about this prediction market market.
• 11:23
  Speaker 3: How big is this that?
• 11:24
  Speaker 7: I mean, this is potentially really large.
• 11:26
  Speaker 9: I don't have numbers in front of me, But the
• 11:28
  Speaker 9: key thing is that call She and Robin Hood are
• 11:30
  Speaker 9: trying to do this in all fifty states. They're about
• 11:32
  Speaker 9: a dozen states that either hold them cease and desist
• 11:36
  Speaker 9: because they effectively are engaging in illegal sports betting according
• 11:39
  Speaker 9: to the states, or a couple of states have warned DraftKings,
• 11:43
  Speaker 9: fandled don't do the same thing.
• 11:44
  Speaker 7: If you've got a sports book license.
• 11:46
  Speaker 9: So what DraftKings and Fandal did is try to go
• 11:49
  Speaker 9: into states with this product where they don't.
• 11:51
  Speaker 7: Operate sports books.
• 11:52
  Speaker 9: They can do prediction markets on politics or entertainment events
• 11:56
  Speaker 9: in any state, but the real issue is with respective sports.
• 12:00
  Speaker 7: That's where they limit themselves.
• 12:02
  Speaker 6: Let me ask you dumb question, and maybe we don't
• 12:04
  Speaker 6: know the answer to this yet. Who is the target
• 12:07
  Speaker 6: audience for a sports prediction market versus a sports contract
• 12:12
  Speaker 6: and in production market setting versus you know, just a
• 12:15
  Speaker 6: regular parlay or simple bet.
• 12:17
  Speaker 9: In recourse, the type of person in terms of the
• 12:20
  Speaker 9: type of area or territory. Think about the fact that
• 12:24
  Speaker 9: you've got mobile sports books in almost thirty states, with
• 12:27
  Speaker 9: thirty some odd states Draftings, Fandel and twenty five of
• 12:29
  Speaker 9: them other states, big states like Texas and California that
• 12:33
  Speaker 9: don't have legal sports books in sports betting, that's a
• 12:36
  Speaker 9: logical market for call She and Robin the do go
• 12:40
  Speaker 9: in there and say you can do these prediction markets
• 12:43
  Speaker 9: and engage in that even though sports betting isn't active
• 12:46
  Speaker 9: and legal in the state.
• 12:47
  Speaker 7: That's really the big.
• 12:48
  Speaker 3: So what would Texas and a Florida say about that?
• 12:51
  Speaker 4: Right?
• 12:51
  Speaker 7: So, without going through every state.
• 12:53
  Speaker 9: There about a dozen states that either specifically told call
• 12:56
  Speaker 9: she and poly Market or Robinhood ye see and assist
• 13:00
  Speaker 9: on do this. A few others have issued Wetter's warning
• 13:03
  Speaker 9: Draftings of Fandel do not offer a sports prediction market
• 13:07
  Speaker 9: in a state where you've got a sports bet license.
• 13:09
  Speaker 9: So what Fandom and Draftings did is you know, seventeen
• 13:12
  Speaker 9: states for Draftings five or Fandel. They're offering this product
• 13:16
  Speaker 9: in states where they don't have sports books, and we're
• 13:18
  Speaker 9: sports betting isn't quote legal.
• 13:21
  Speaker 6: Who regulates the sports markets, So it's confused.
• 13:23
  Speaker 9: It's very confusing because the sports books are regulated by
• 13:27
  Speaker 9: state gaming regulatory authorities. The prediction markets are regulated by
• 13:30
  Speaker 9: the CFTC, so it's state versus federal. And that's been
• 13:34
  Speaker 9: the argument of Kolchi that you know, we're a financial
• 13:36
  Speaker 9: futures contract, we're not sports betting. We are federally regulated.
• 13:41
  Speaker 9: The states have pushed back and said no, this is
• 13:43
  Speaker 9: a form of effectively on licened sports betting, and ultimately
• 13:46
  Speaker 9: I think this heads to the Supreme Court. That's certainly
• 13:48
  Speaker 9: in the view of Eliott Stein or litigation analyst.
• 13:51
  Speaker 2: So what are the casino companies say these days? What
• 13:55
  Speaker 2: do they say, does that impact their sports book and
• 13:58
  Speaker 2: their sports betting?
• 13:59
  Speaker 9: And on the margin, to the extent that MGM and
• 14:01
  Speaker 9: Caesars have mobile products, it's very possible to look into
• 14:05
  Speaker 9: this type of product as well. Again in those states
• 14:08
  Speaker 9: where sports beinning isn't legal, so.
• 14:10
  Speaker 7: Everyone's going to be think about it.
• 14:11
  Speaker 9: And the real other other wrinkle is Texas and California
• 14:15
  Speaker 9: once they realize we may not have sports betting. What
• 14:18
  Speaker 9: we have effectively sports betters. If you believe that's what
• 14:20
  Speaker 9: prediction markets are, we might as well legalize it. And
• 14:23
  Speaker 9: so there's a whole bunch of ramifications to this.
• 14:27
  Speaker 6: What about Native American tribes in states like California in Connecticut,
• 14:32
  Speaker 6: where do they fit it?
• 14:33
  Speaker 9: I mean in California, although sports betting isn't legal in California,
• 14:37
  Speaker 9: the tribes have themselves challenged and through legally the Whites
• 14:42
  Speaker 9: of KAlSi and Robin Hood I don't remember which one.
• 14:45
  Speaker 9: So you know to the extent that tribes have opportunities
• 14:48
  Speaker 9: to operate sports books, which effectively Florida has the Seminal
• 14:51
  Speaker 9: Tribe operating operating hard rock betting site even though draftings
• 14:56
  Speaker 9: and or are not involved. So the tribes very much,
• 14:59
  Speaker 9: will care to the extent that this is effectively a
• 15:02
  Speaker 9: competing product as consumers might perceive it.
• 15:06
  Speaker 3: So is betting just going crazy the total dollar not.
• 15:09
  Speaker 2: I see kids, high school kids having conversations in detail
• 15:15
  Speaker 2: showing a level of expertise which really blows me away.
• 15:19
  Speaker 2: Kids high school kids, and I don't know, it just
• 15:23
  Speaker 2: doesn't feel it's surprising.
• 15:24
  Speaker 9: And it also gets very problematic when you have college
• 15:27
  Speaker 9: kids college games.
• 15:28
  Speaker 7: Yeh, college players.
• 15:30
  Speaker 9: So but yeah, there's a big national draw to that
• 15:34
  Speaker 9: draw to this, and I think the real I don't
• 15:36
  Speaker 9: think draftings of fand will get as affected as some
• 15:40
  Speaker 9: might fear in states where they've got a sports book,
• 15:43
  Speaker 9: but in states where they can't operate a sports book.
• 15:45
  Speaker 9: But Kyll she and Robinhood and Polymarket others are offering
• 15:49
  Speaker 9: prediction markets. That's where I think they see risk as
• 15:53
  Speaker 9: well as opportunity.
• 15:54
  Speaker 6: Brian, what about the sports leagues, the NFL, the NBA,
• 15:58
  Speaker 6: the NHL, the MLB. How do they fit into all this?
• 16:01
  Speaker 6: I mean, are they're going all in with the prediction markets?
• 16:03
  Speaker 7: Well, I think so.
• 16:04
  Speaker 9: They're watching obviously with interests. I mean, the major principles
• 16:08
  Speaker 9: in terms of where there's heads are state regulators versus
• 16:12
  Speaker 9: federal regulators. State's issuing in some cases seas and desist orders.
• 16:16
  Speaker 4: It.
• 16:16
  Speaker 9: Ultimately, because there's a lot of ongoing court cases, many
• 16:20
  Speaker 9: on appeal, the Supreme Court is the logical destination for
• 16:24
  Speaker 9: the legality of this.
• 16:25
  Speaker 7: But I mean that's the good reason. Maybe years away,
• 16:28
  Speaker 7: depends on the urgency.
• 16:29
  Speaker 9: I know Elliott Stein believes that could happen potentially as
• 16:32
  Speaker 9: early as twenty twenty six, that there's a decision, but
• 16:34
  Speaker 9: we don't know. But ultimately, I think this it needs
• 16:37
  Speaker 9: to be qualified and resolved as to who has jurisdiction here.
• 16:41
  Speaker 3: It is crazy the amount.
• 16:43
  Speaker 2: I mean just a few years ago, I mean, you
• 16:45
  Speaker 2: wouldn't even have thought this, But now you get sports
• 16:48
  Speaker 2: teams in Vegas.
• 16:49
  Speaker 9: Yeah, I mean, yeah, so they I think my way
• 16:51
  Speaker 9: to start this is the leading up to the presidential election.
• 16:53
  Speaker 9: There was a lot of activity on one and polymarket
• 16:57
  Speaker 9: about who we win the election, and that kind of
• 16:59
  Speaker 9: kicked off awful water popular interest in this, which means
• 17:02
  Speaker 9: that's when they became involved in sports prediction markets actively
• 17:06
  Speaker 9: a year ago.
• 17:07
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
• 17:14
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 17:18
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 17:21
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 17:25
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 17:28
  Speaker 3: We'll get a story here today.
• 17:30
  Speaker 2: Alaska Airline ordering Boeing Company aircraft including one hundred and
• 17:34
  Speaker 2: five narrow body seven thirty seven Max ten models and
• 17:38
  Speaker 2: five Trip seven eighty seven wide body aircraft. So good
• 17:42
  Speaker 2: day for Boeing. This stocks up about eight tens to
• 17:43
  Speaker 2: one percent. Stocks up about thirty four percent over the
• 17:46
  Speaker 2: trailing twelve months. George Ferguson joins us here senior Aerospace,
• 17:50
  Speaker 2: defense and airlines analyts for Bloomberg Intelligence. George A, is
• 17:55
  Speaker 2: this this seems like a nice day, a good order
• 17:58
  Speaker 2: for Boeing.
• 17:59
  Speaker 3: How are they doing out in the marketplace?
• 18:01
  Speaker 10: Yeah, I think it's a It was a nice kickoff
• 18:03
  Speaker 10: to the year. As far as orders look through, we've
• 18:07
  Speaker 10: tracked them through November of last year. We get to
• 18:10
  Speaker 10: see December order and deliveries from Boeing or Airbus. But
• 18:14
  Speaker 10: through November of last year, Boeing was beating Airbus in
• 18:17
  Speaker 10: the order game for the year, and so you know,
• 18:21
  Speaker 10: we had sort of expected this or there were some
• 18:24
  Speaker 10: core customers. I think that we're probably sitting on the
• 18:26
  Speaker 10: sideline watching the sea if Boeing was going to get
• 18:30
  Speaker 10: its troubles behind it before it placed orders, and so
• 18:33
  Speaker 10: we saw a bit of a bounce back last year
• 18:36
  Speaker 10: in twenty twenty five. Is Boeing sort of pulled in
• 18:39
  Speaker 10: a bunch of those orders. I think if you're an airline,
• 18:42
  Speaker 10: you know, and you're sort of fleet planning, when you
• 18:44
  Speaker 10: have backlogs that are ten years large for the for
• 18:47
  Speaker 10: the most important airplanes, for the narrow bodies, you kind
• 18:50
  Speaker 10: of got to be sort of in the order mode,
• 18:53
  Speaker 10: you know, every year or so many years, sort of
• 18:57
  Speaker 10: tapping up orders to make sure that you have airplane
• 19:00
  Speaker 10: is coming regularly as either you're expanding or things leaving
• 19:03
  Speaker 10: your fleet. So good to see Alaska do it again.
• 19:06
  Speaker 10: We think Boeing a lot of Boeing customers caught up
• 19:08
  Speaker 10: last year. This year probably a decent order year as
• 19:12
  Speaker 10: well as that catchup continues for Boeing. And this was
• 19:15
  Speaker 10: a core customer for Boeing. Alaska has been a core
• 19:19
  Speaker 10: Boeing flyer. They recently bought Hawaiian that added a bunch
• 19:22
  Speaker 10: of Airbus aircraft to its fleet, not a lot, but
• 19:25
  Speaker 10: a bunch of them, a handful of them, actually more
• 19:27
  Speaker 10: than a handful of twenties or thirties. And I think
• 19:30
  Speaker 10: another indicator that they've kept this Alaska have kept the
• 19:34
  Speaker 10: Alaska Airlines as a core customer, and I would see
• 19:37
  Speaker 10: them kind of going to a more pure Boeing fleet
• 19:40
  Speaker 10: in the future as they ease out some of those
• 19:43
  Speaker 10: Airbus aircraft.
• 19:44
  Speaker 2: It seems like a big order for Alaska. Is this
• 19:46
  Speaker 2: signal any change in strategy or what's going on there?
• 19:50
  Speaker 10: Well, I think it's pretty interesting, right Alaska they're seven
• 19:53
  Speaker 10: eighty seven dash. They think DASH tens altering when they
• 19:57
  Speaker 10: buy them. With the biggest seven eighty seven, they've got
• 19:59
  Speaker 10: an order for fi of them. Alaska traditionally had been
• 20:02
  Speaker 10: just a narrow body kind of US but really West
• 20:05
  Speaker 10: Coast focused airline. Since they bought Hawaiian, they've added international routes.
• 20:10
  Speaker 10: Clearly they added Hawaii Hawaii Hawaiian had routes into Asia
• 20:14
  Speaker 10: where there's a fair amount of demand for Hawaii. Alaska
• 20:17
  Speaker 10: looks to be trying to grow into a global airline.
• 20:22
  Speaker 10: They've got European service now too, So this is I
• 20:25
  Speaker 10: think a continuation of that push by Alaska to be
• 20:30
  Speaker 10: what it wants to be when it grows up. I
• 20:31
  Speaker 10: guess which is going to be maybe another one of
• 20:34
  Speaker 10: the big, big US full service carricers.
• 20:37
  Speaker 2: Is there room, George, do you think for another US
• 20:41
  Speaker 2: full service carrier?
• 20:42
  Speaker 10: I think if you do it well, there probably is, right.
• 20:44
  Speaker 10: I think, look, got you got Southwest coming as well.
• 20:47
  Speaker 10: Southwest is adding premium seating. They're already pretty.
• 20:50
  Speaker 7: Large in the US.
• 20:51
  Speaker 10: They don't have much international, but Southwest is definitely a
• 20:56
  Speaker 10: force to be reckoned with. But they're leaving the old
• 20:59
  Speaker 10: world where they were very much a pure fleet and
• 21:01
  Speaker 10: they could control costs well, going again into the you know,
• 21:05
  Speaker 10: sort of premium and making their operations more complex. Alaska
• 21:10
  Speaker 10: kind of come in the other way. They already have
• 21:12
  Speaker 10: premium now trying to go global. I mean, I think
• 21:16
  Speaker 10: going back to Alaska, they've got to figure out what
• 21:18
  Speaker 10: they want to be when they grow up, because I
• 21:21
  Speaker 10: don't think they can survive just as a largely West
• 21:24
  Speaker 10: coast airline. I think Hawaiian was the beginning of that
• 21:28
  Speaker 10: expansion strategy, which included long all this, uh, these following
• 21:32
  Speaker 10: orders I think reinforced to me that's the direction they're going.
• 21:36
  Speaker 10: They're going for a global airline.
• 21:38
  Speaker 7: You know it's going to.
• 21:39
  Speaker 10: Take a while to get there, but that's what they're
• 21:40
  Speaker 10: going for.
• 21:41
  Speaker 2: Would regulators ever allow, you know, the combination of all
• 21:45
  Speaker 2: Alaskan Southwest for example.
• 21:49
  Speaker 10: You know, that's to me, I think anytime you get
• 21:52
  Speaker 10: some of the big carriers involved in buying somebody, I
• 21:56
  Speaker 10: think it gets difficult.
• 21:58
  Speaker 7: I think it's gonna I think it would be hard.
• 22:00
  Speaker 7: I think it would be hard.
• 22:00
  Speaker 10: I think Alaska I had to look at something maybe
• 22:02
  Speaker 10: smaller or you know, Southwest. I think would be difficult
• 22:06
  Speaker 10: to do an acquisition, maybe a very small acquisition. But
• 22:08
  Speaker 10: if Alaska's getting together with somebody, I think it's kind
• 22:11
  Speaker 10: of jet blue and down.
• 22:13
  Speaker 2: What do you think here of just in twenty twenty
• 22:15
  Speaker 2: six air traffic?
• 22:17
  Speaker 3: Air travel? How do you think that's going to shape
• 22:19
  Speaker 3: up this year?
• 22:20
  Speaker 10: Yeah, So we see a lot of additions to premium
• 22:23
  Speaker 10: to premium carriers, and we see carriers adding premium seats
• 22:27
  Speaker 10: that weren't traditionally premium carriers. So to us, it feels
• 22:30
  Speaker 10: like premium could be under a bit of pressure as
• 22:34
  Speaker 10: we get into the into the new year or twenty
• 22:36
  Speaker 10: twenty six here because it looks like a lot of
• 22:38
  Speaker 10: people go in that direction. That's where that's where the
• 22:40
  Speaker 10: earnings have been driven lately. Loyalty programs super important. Basic economy.
• 22:45
  Speaker 10: World looks like it's starting to right size. Things could
• 22:49
  Speaker 10: get better, but it will take a little time.
• 22:51
  Speaker 4: I think.
• 22:53
  Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
• 22:58
  Speaker 1: and anywhere else you get your podcast. Listen live each
• 23:01
  Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com,
• 23:05
  Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
• 23:09
  Speaker 1: You can also watch us live every weekday on YouTube
• 23:13
  Speaker 1: and always on the Bloomberg terminal