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Disney Wins Proxy Fight, Hertz Troubles · Bloomberg Intelligence

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Speaker 2: Another stock that we're watching today is a Disney. Shares
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Speaker 2: are up by about six tenths of one percent after
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Speaker 2: Bob Iger prevailed yesterday in the shareholder vote meeting. Either
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Speaker 2: Rogannath and Bloomberg Intelligence analysts on US Media is standing
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Speaker 2: by for us KEITHA, What did we learn yesterday about
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Speaker 2: Disney and mister Eiger.
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Speaker 3: Yeah, definitely a huge sigh of relief for both Bob
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Speaker 3: Iger and the management team. I mean it would have been,
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Speaker 3: I think a very very publicly embarrassing thing for him
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Speaker 3: if Pelts had had won. So this is definitely I
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Speaker 3: think gives them some something to cheer about, at least
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Speaker 3: in the near term. But other than that, Alex, I
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Speaker 3: think it's really business as usual.
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Speaker 1: Right.
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Speaker 3: They had their work cut out for them. They know
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Speaker 3: exactly what they need to do, whether it's finding a
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Speaker 3: proper good ESPN digital strategy, whether it's getting the streaming
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Speaker 3: business to profits and more importantly for the board, whether
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Speaker 3: it's chalking out a really bulletproof succession plan this time around.
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Speaker 4: And on that succession plan, is the expectation getha that
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Speaker 4: they will hire from within or will they try to
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Speaker 4: make a big splash by hiring an outsider.
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Speaker 5: How do you think Disney would like to proceed?
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Speaker 3: Disney has always kind of looked within, Paul, and you
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Speaker 3: know this well. I mean the last time that they
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Speaker 3: went external was back in nineteen eighty four. That's when
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Speaker 3: they hired you know, Michael Eisner, right, the Barry Diller protege.
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Speaker 3: But after that, it's always been internal, right, whether it's
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Speaker 3: Bob Bieger, I mean, it was Bob Biger after that
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Speaker 3: for almost fifteen years, and then of course you had
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Speaker 3: Bob Japek for a couple of years, and then you know,
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Speaker 3: we have Bob Bieger two point zero back again. So
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Speaker 3: they've always kind of had, you know more, they've always
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Speaker 3: looked internal. And they do have four solid candidates, so
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Speaker 3: all the division chiefs kind of emerging as potential successor candidates.
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Speaker 3: It's just going to be up to how they groomed them.
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Speaker 3: Is Barbiger going to do something very similar to what
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Speaker 3: he did with you know, Tom's tags and Jay Rizzulo
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Speaker 3: kind of have that coo position for somebody whom he's
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Speaker 3: kind of looking to to elevate.
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Speaker 2: What's the timeframe here, Keitha?
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Speaker 3: For this, it has to happen pretty quickly, Alex. I
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Speaker 3: mean bar Biger's term, which was initially when he came
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Speaker 3: back in November twenty twenty two, was supposed to be
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Speaker 3: two years. They extended that out to four years. So
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Speaker 3: we have until the end of twenty twenty six.
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Speaker 4: Yeah, and he's been known to extend extend extent. I mean,
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Speaker 4: he could do that because most shaholders are like barb
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Speaker 4: Biger's better than anybody else out there, will stick with that.
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Speaker 4: All right, So Keitha's things seem to be settling down
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Speaker 4: a little bit of stability. Returning to Mickey Mouse, how
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Speaker 4: about Paramount Global. It's almost the opposite there. The stock
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Speaker 4: is down six point six percent. Are they going to
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Speaker 4: sell the entire company parts of the company super voting stock?
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Speaker 5: What's going on there?
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Speaker 3: Yeah, So it looks like now they have or they've
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Speaker 3: entered this period of exclusive talks with Skydance Media and
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Speaker 3: Sky Dance Media has kind of been you know this,
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Speaker 3: on again, off again interested party in the Paramount company.
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Speaker 3: But of course they didn't want to come out with
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Speaker 3: a bid for the entire company at least up until
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Speaker 3: this point. They always kind of wanted to do it
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Speaker 3: in a slightly different way by kind of taking control
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Speaker 3: of uh of the voting stock with through National Abusements
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Speaker 3: and the Redstone family. Now it looks like they're kind
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Speaker 3: of going to engineer like a two step process where
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Speaker 3: they first take control of National Amusements and then go
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Speaker 3: about and merge sky Dance with the entire company with Paramount.
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Speaker 3: So still, I mean, there are two there's just more
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Speaker 3: unknowns than knownes. At this point. There seems to be
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Speaker 3: some report out there suggesting that they would need to
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Speaker 3: do an equity deal raise of at least three billion
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Speaker 3: dollar do that's going to be really dilutive for the
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Speaker 3: current shareholders. Again, we don't know exactly how much Sherry
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Speaker 3: Redstone is demanding for her voting stock. There are rumors
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Speaker 3: out there suggesting it's upwards of about two to two
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Speaker 3: and a half billion dollars. She also owns about close
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Speaker 3: to almost a billion dollars in economics take in Paramount.
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Speaker 3: So again, too many unknowns right now, Paul. But you know,
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Speaker 3: we do definitely have concrete talks, that much is for sure.
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Speaker 2: So is the Apollo thing like off the table, right,
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Speaker 2: because that would be more of a piecemeal approach to Paramount, right,
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Speaker 2: even though the cash deal was better.
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Speaker 3: So the Apollo thing was actually initially it was it
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Speaker 3: was piecemeal. So but they only were really interested in
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Speaker 3: the film studio. They did not want the TV networks,
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Speaker 3: They did not want the streaming acid. But it looks
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Speaker 3: like yesterday, you know, when reports emerge about the sky
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Speaker 3: Dance deal, they said that Apollo actually had made a
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Speaker 3: twenty six billion offer and all cash deal for the
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Speaker 3: entire company, which Cherry Redstone for some reason basically said no.
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Speaker 4: To wow, because I'm looking at the enterprise value today
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Speaker 4: about twenty three billions. It would have been a little
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Speaker 4: bit of a premium there. And boy, you know who
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Speaker 4: looks smart is the guys at News Corp. I mean
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Speaker 4: selling their company, you know several years ago, you know.
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Speaker 5: I just the Murdocks. They look kind of smart here.
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Speaker 4: So what's the future. I mean, this is the Paramount Studio, Gith,
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Speaker 4: this is one of the prize jewels in Hollywood. I mean,
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Speaker 4: what happens to this company? I mean, is it can
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Speaker 4: remain a publicly traded company.
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Speaker 5: Is it going to be taken private? What's this? What's
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Speaker 5: mostly outcome?
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Speaker 3: I think the most likely outcome at this point, Paul,
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Speaker 3: is that it still very much remains a public company.
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Speaker 3: You know, we know that David Ellison is really only
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Speaker 3: interested in the studio portion of the business. And you're
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Speaker 3: absolutely right. It's an iconic studio, There's no doubt about it.
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Speaker 3: They have a very very valuable studio lot right in
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Speaker 3: the heart of la that's worth maybe upwards of one
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Speaker 3: point five two billion dollars. So obviously there's a lot
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Speaker 3: of assets that he likes, but only with the studio business.
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Speaker 3: So again the question is, yes, he can keep it
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Speaker 3: a public company, but he might really kind of trim
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Speaker 3: it down, try and find some buyers for the TV network,
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Speaker 3: for probably the streaming platform, and just make this like
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Speaker 3: a pure play kind of a film studio with you know,
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Speaker 3: production and licensing operations very similar to like what lions
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Speaker 3: Gate is doing.
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Speaker 2: Would that command of valuation like a good valuation for
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Speaker 2: that if they did that?
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Speaker 3: So we do know that Apollo came came out with
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Speaker 3: eleven billion offer. That's a pretty decent It's about a
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Speaker 3: thirteen thirteen and a half times EBITDA valuation, which is
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Speaker 3: pretty much in line with where other you know, pure
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Speaker 3: play studios are trading. So probably, yes, somewhere in that
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Speaker 3: in that range.
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Speaker 4: All right, we got you here. Let's ask you about
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Speaker 4: Warner Brothers. Discovery off another one percent today, off twenty
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Speaker 4: four percent this year, down forty three percent over the
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Speaker 4: last year. Any scenario there that's that is worth kind
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Speaker 4: of looking at.
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Speaker 3: I mean, it's just it's been all doom and gloom
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Speaker 3: at Warner Brothers. And really the one, the one metric
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Speaker 3: I think that people are like fixated on for Brothers
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Speaker 3: is EBITDA. You know that when the deal actually went
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Speaker 3: through or when they when they were looking to merge
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Speaker 3: those two companies, they spoke about fourteen billion dollars in EBITDA.
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Speaker 3: This year, probably we're not even going to hit ten billion,
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Speaker 3: and that's really why investors are so upset. Combine that
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Speaker 3: with over forty billion dollars in debt, and that's a
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Speaker 3: recipe for you know, the doom and gloom, and that's
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Speaker 3: exactly what's happening there. So until we kind of get
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Speaker 3: some better metrics, it's not.
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Speaker 4: Going to look bailed on the media industry at the
7:27
Speaker 4: right time.
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Speaker 5: You me, yeah, exactly.
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Speaker 2: I mean, I am going to see you doing well.
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Speaker 2: You're kind of in it right now.
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Speaker 4: My lively.
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Speaker 5: Well, it does kind of. I don't know, but you know,
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Speaker 5: it's just this is.
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Speaker 2: An excellent point. This is an excellent point, John Tucker,
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Speaker 2: that you just went from the other side of the
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Speaker 2: media business. I'm seeing Dune two on Saturday, so I
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Speaker 2: feel like I'm doing my part.
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Speaker 6: That's right.
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Speaker 2: Excellent brothers, excellent movies and excellent excellent movie.
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Speaker 3: It is absolutely brilliant.
7:53
Speaker 2: I like Paramount Plus because of the whole survivor thing
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Speaker 2: because I'm addicted to survivors. So you know, I'm helping.
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Speaker 4: I'm what I need to do, all right, Githa, thanks
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Speaker 4: so much. As always, Keitha rock Nathin. She covers all
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Speaker 4: the media stuff for Bloomberg Intelligence space down in Princeton.
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Speaker 1: Just say Alexa, play Bloomberg eleven thirty.
8:26
Speaker 2: Let's say with energy for a moment. So Green Plains
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Speaker 2: is basically an ethanol company producer that wants to become
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Speaker 2: an ag tech company, and the CEO is taking this
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Speaker 2: very seriously and doing a lot in the middle of
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Speaker 2: this transition. The stock is down, though twenty three percent
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Speaker 2: in the last year, it is up about two percent today.
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Speaker 2: And we welcome the CEO and president, Todd Becker. He
8:49
Speaker 2: joins us now from Omaha, Nebraska. Todd, it's always good
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Speaker 2: to talk to you. What I love about talking to
8:53
Speaker 2: you is you just give it like it is. And
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Speaker 2: you saw the shift from ethanol into something else before
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Speaker 2: really anyone else did. And the idea is, look, you
9:02
Speaker 2: mix ethanol with gasoline, but if we're all driving evs,
9:04
Speaker 2: do you really need the ethanol. How's it going? How's
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Speaker 2: this transition for you going?
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Speaker 7: It's actually going really well. I mean, thanks for having
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Speaker 7: me again. I'd love talking to you guys. And you know,
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Speaker 7: everything that we've laid out so far is on track
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Speaker 7: to get to twenty twenty five, which is when we
9:19
Speaker 7: said we're really going to be able to start operating
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Speaker 7: on all cylinders, no pun intended.
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Speaker 1: But look, I.
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Speaker 7: Think our base feel still has has strong demand, but
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Speaker 7: there's other value that we can unlock and everything that
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Speaker 7: we do, and there's so much technology out there, and
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Speaker 7: we just announced a great collaboration with Shell, a joint
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Speaker 7: venture that we just basically had a grand opening ceremony
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Speaker 7: that really just takes us next level on what we're
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Speaker 7: doing in ag tech because they, as much as they
9:46
Speaker 7: are one of the largest energy companies in the world,
9:47
Speaker 7: they also have a really interesting view on agriculture and
9:51
Speaker 7: technology and combining what we can do and energy with
9:53
Speaker 7: what we can do in agriculture. And we've just kicked
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Speaker 7: off an amazing partnership that we've been building for several years.
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Speaker 7: So a lot's going on and we're really excited about
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Speaker 7: what's happening.
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Speaker 4: All right, Can you talk to us about this joint
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Speaker 4: venture because when you mentioned Shell, that gets my attention
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Speaker 4: when I'm thinking about kind of biofuels companies like yourselves
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Speaker 4: kind of getting together with traditional traditional energy companies.
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Speaker 7: Yeah, So, look, what Shell's looking for is more low
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Speaker 7: carbon feedstocks. That's the most important thing to them. And
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Speaker 7: what we're looking for is more low carbon ingredients for
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Speaker 7: food and for feed and so we have this technology.
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Speaker 7: We bought a company a few years ago which we
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Speaker 7: think is one of the leading ag tech companies in
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Speaker 7: the world called flu Equipped Technologies, and they have a
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Speaker 7: separation technology that basically just puts something into their machine
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Speaker 7: and it separates it out into all really interesting ingredients.
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Speaker 7: Shell on the other hand, had a chemical process that
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Speaker 7: basically unlocks what's left on different parts of agricultural waste
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Speaker 7: or fiber or anything that's getting processed that we couldn't
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Speaker 7: go after to start. And when we put these two together,
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Speaker 7: basically you can combine their chemical process to liberate oils
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Speaker 7: and proteins and other things that are stuck on sugars
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Speaker 7: that are stuck within processes, and then we take it
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Speaker 7: from there and we can separate them all out. So
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Speaker 7: it's really an amazing technology collaboration. We want it so
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Speaker 7: we can get more sugars and proteins. They want it
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Speaker 7: so they can unlock more from the standpoint of vegetable
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Speaker 7: oil so they can make renewable diesel and other things
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Speaker 7: like that, as well as the last part of it
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Speaker 7: is that we could finally unlock the sugar that's stuck
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Speaker 7: within the fiber, and that's cellulostic sugars. And for years
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Speaker 7: and years and years, people have been trying to crack
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Speaker 7: this code on cellulosic alcohol and fuels and that dream
11:35
Speaker 7: that people have had, and this is one thing that
11:37
Speaker 7: potentially unlocks that whole dream of getting every piece of
11:40
Speaker 7: value out of every piece of that corn kernel. And
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Speaker 7: the great thing about this technology is it's just not
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Speaker 7: limited to a single commodity. It's actually agricultural feedstock agnostic.
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Speaker 7: You could drop a lot of different things in this technology.
11:54
Speaker 7: So we think it revolutionizes agricultural processing if it works,
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Speaker 7: of course, revolutionizes agricultural processing globally. Bio refining globally unlocks
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Speaker 7: all of the value of what we do in everything
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Speaker 7: from food and fuel and feed. And it's the first time,
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Speaker 7: really we think that a major agricultural company, and one
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Speaker 7: of the first times a major agricultural company and a
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Speaker 7: major energy company get together to use everything we do
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Speaker 7: to make all of the different different products that we need.
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Speaker 2: So Todd, it does sound amazing, and I like the
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Speaker 2: idea of like liberating all the parts of the corn.
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Speaker 2: It's it's a great phrase It's a two full question
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Speaker 2: for me. When you get the stuff from that, what
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Speaker 2: do you use it for? And how expensive is it
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Speaker 2: to sort of ramp and scale all this up.
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Speaker 8: You know.
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Speaker 7: The great thing is is that over the last several years,
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Speaker 7: as we've been transforming our company, we've deployed about three
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Speaker 7: hundred and fifty million to four hundred million dollars in
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Speaker 7: the separation technology already, so we're ready using it. So
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Speaker 7: our technology has proven already, so we've we've put it
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Speaker 7: at several of our facilities and joint venture facility, so
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Speaker 7: we are already beginning to separate most of what happens
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Speaker 7: in a kernel of corn and other products. So what
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Speaker 7: this does You lay this over it and it's all
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Speaker 7: the remaining things that we can't get they can get
13:13
Speaker 7: it chemically in their process. Is we just could never
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Speaker 7: get it that way because that's not what we did
13:18
Speaker 7: as a company. So, you know, the cost we hope,
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Speaker 7: we're hoping because we've already deployed technology of five of
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Speaker 7: our sites, which is six coming on today, We're going
13:28
Speaker 7: when we overlay this technology on top of it, we
13:30
Speaker 7: should be very cost efficient. The first one we built
13:33
Speaker 7: it under really nobody really knew what we were building.
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Speaker 7: But in ne York, Nebraska, we already have the first
13:39
Speaker 7: build that we've been spending years doing quietly under the
13:43
Speaker 7: radar screen, putting our technologies together, and we're going to
13:46
Speaker 7: start that up in about a month or two. And
13:48
Speaker 7: that's really what what we had our grand opening and
13:50
Speaker 7: our announcement on it was just a very quiet collaboration.
13:54
Speaker 7: But really what it does it extracts everything available. So
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Speaker 7: all we leave corn oil when we send out, when
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Speaker 7: we send out our fiber, we can go after that
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Speaker 7: that can be using renewable diesel and sustainable aviation fuel.
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Speaker 7: We use sugars, We leave sugars on our fiber that
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Speaker 7: goes out as animal feed. We can go get that
14:11
Speaker 7: which can be made into say elastic second generation low
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Speaker 7: carbon ethanol. There's more protein to go after we send
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Speaker 7: out very low value protein. Still, this technology together unlocks
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Speaker 7: ultra high protein that we're already shipping to pet food
14:24
Speaker 7: and salmon producers around the world. It just gives us more,
14:28
Speaker 7: you know. And then and then lastly, you know, what
14:30
Speaker 7: we're able to do is take all of that and
14:33
Speaker 7: think about low carbon alcohol for things like sustainable aviation fuel.
14:37
Speaker 7: That's going to be coming down in the future because
14:39
Speaker 7: the only true path to volumes of sustainable aviation fuel
14:43
Speaker 7: is going to come through alcohol.
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Speaker 2: So and I'm assuming so if if it's cost competitive,
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Speaker 2: if you overlay the technology, is that cost for you guys?
14:50
Speaker 2: It doesn't raise the price of the products that you're
14:53
Speaker 2: then having to sell.
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Speaker 7: No, Actually, you know, we're just able to unlock more.
14:57
Speaker 7: We're sending it already out as a as a ever
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Speaker 7: thing left we send out as a more of a
15:01
Speaker 7: lower value product. So it unlocks all of that. And
15:05
Speaker 7: now now what we can do is actually make great
15:07
Speaker 7: products and get much higher values for what we're what
15:10
Speaker 7: we're going to produce than what we're doing today. And
15:12
Speaker 7: the most interesting thing about this technology, Alex is is
15:16
Speaker 7: I can either drop a corn, you know, to the
15:18
Speaker 7: basic of it, I could drop a kernel of corn
15:20
Speaker 7: in there, But I could also drop a soybean in
15:22
Speaker 7: there and blow up and chemically separate that and really
15:25
Speaker 7: disrupt what's happening potentially in soybean processing. Or I can
15:29
Speaker 7: drop a kernel of wheat in there, yeah, and go
15:31
Speaker 7: unlock all of the protein and the oils and the
15:33
Speaker 7: sugars and all of those things. That nobody's been able
15:36
Speaker 7: to go after in any in any kind of early
15:38
Speaker 7: efficient way.
15:39
Speaker 2: So Todd, if I'm looking at your stock, it's up
15:42
Speaker 2: ten percent almost since that announcement, but it's not had
15:45
Speaker 2: a good full year, and I'm wondering, like, when do
15:48
Speaker 2: you feel like you should be getting credit for this?
15:51
Speaker 2: And I know you're going to say, like yesterday, but
15:52
Speaker 2: you know what I'm saying, Like.
15:55
Speaker 7: When we started our transformation to stock was eight, it
15:58
Speaker 7: ran up into the you know, the high thirty, and
16:00
Speaker 7: that we're back down. You know, we brought the couple
16:02
Speaker 7: of reasons. I think we're down a little bit this
16:03
Speaker 7: year is well not a little bit, but you know,
16:05
Speaker 7: we brought our MLP in, so we wanted to clean
16:07
Speaker 7: up our capital structure. So we were able to bring
16:09
Speaker 7: that in and we and we handed our shares to
16:12
Speaker 7: MLP shareholders that you know, they were earning a pretty
16:15
Speaker 7: high yield. And I think that puts some pressure on
16:17
Speaker 7: our stock as well, as we've seen some drops in
16:19
Speaker 7: prices and in ethanol is trading a dollar under gas,
16:22
Speaker 7: and so now we're getting more competitive again. And but
16:24
Speaker 7: we really saw a dropping veg oil price. Vegetable oil
16:27
Speaker 7: pricing here recently, but now that's starting to come back,
16:29
Speaker 7: which I think is putting it bid back into our
16:32
Speaker 7: stock as well. So you know, we're about a year.
16:34
Speaker 7: You know, what you've said is our path to twenty
16:36
Speaker 7: twenty five, twenty four is our transition year. We need
16:39
Speaker 7: to deliver on some some financial results this year, and
16:41
Speaker 7: I think we're going to be able to do that
16:43
Speaker 7: as a year progresses. But you know, we've made investments,
16:46
Speaker 7: and you know, the whole sector really kind of fell
16:49
Speaker 7: out of favor anyways, and I think we got dragged
16:51
Speaker 7: down with that. But we have a great technology, we
16:54
Speaker 7: have a great platform, We've got great products. We're going
16:56
Speaker 7: to start our first and I know we talked about
16:57
Speaker 7: this a few years ago, our first clean sugar facility.
17:00
Speaker 7: We're going to make food grade dextros for everything from
17:02
Speaker 7: Gumbi bears to to Seltzer drinks. That's never happened in
17:06
Speaker 7: the history of our industry. We're starting that up next
17:09
Speaker 7: month and later this month as well. So there's a
17:12
Speaker 7: lot going on. We're right towards the back end of
17:16
Speaker 7: what we said we were going to do, and now
17:18
Speaker 7: it's starting to all come to fruition, you know, and
17:20
Speaker 7: the pressure came across the whole sector. If you look
17:22
Speaker 7: across the whole sector and agricultural processing.
17:25
Speaker 2: You finally said the word that got John Tucker here
17:27
Speaker 2: in the studio excited. You said gummy bears.
17:29
Speaker 5: And I was writing, I got distracted. I'm sorry, but.
17:32
Speaker 2: You know ethanol whate was okayne, but you know, gummy bears,
17:38
Speaker 2: no sugar. He was paying attention. I hate Todd, really
17:41
Speaker 2: appreciate it. Always going to catch up with you. Todd Becker,
17:43
Speaker 2: President and CEO of Green Plans, joining us from Nebraska.
17:48
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
17:52
Speaker 1: weekdays at ten am Eastern on fo CAR playing Enroud
17:56
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
17:59
Speaker 1: you get your podcast, or watch us live on YouTube.
18:03
Speaker 2: So every day Bloomberg has a big take where they
18:07
Speaker 2: really dive deep into a topic and a story and
18:10
Speaker 2: they're quite good. And there's a podcast and it's a
18:12
Speaker 2: written piece and I highly recommend that you check it out.
18:14
Speaker 2: And the one today is particularly interesting. The title Hubris
18:18
Speaker 2: at Hurts Doomed its massive bet on one hundred thousand teslas.
18:24
Speaker 2: It's basically the rise and fall over the last few
18:27
Speaker 2: years of Hurts and its relationship with Tesla and EV's
18:31
Speaker 2: Eric Shatsker and David Welch responsible for this article. We
18:35
Speaker 2: have Eric Shatsker, who is now at Bloomberg New Economy
18:37
Speaker 2: editorial director joining us. It was a great piece, and
18:41
Speaker 2: there were things about Tesla's that, like I didn't know
18:44
Speaker 2: were problems, like if you don't know how to drive
18:47
Speaker 2: it and you r of a sudden, put the pedal
18:49
Speaker 2: to the metal, you go really fast and then you crash.
18:51
Speaker 2: Like these little details I found so interesting. Walk us
18:54
Speaker 2: through what you learned and what the piece is about.
18:58
Speaker 9: Well, you just touched on one of those those things, Alex,
19:01
Speaker 9: which is that the experience of a Tesla owner is
19:06
Speaker 9: very different from the experience of a Tesla renter. And
19:10
Speaker 9: going into this big bet on one hundred thousand Teslas
19:13
Speaker 9: they placed in order for one hundred thousand Teslas. In fact,
19:16
Speaker 9: back in twenty twenty one, the new owners at Hurtz
19:19
Speaker 9: didn't appreciate that there were no data to be fair
19:23
Speaker 9: on what it was like for our rental car company
19:25
Speaker 9: to have evs in the fleet, because none did. Heurtz
19:30
Speaker 9: was going to be the first, and so they did
19:32
Speaker 9: look at the data how to Tesla's perform when they're
19:36
Speaker 9: owned by individuals, And generally speaking, teslas perform well. They
19:40
Speaker 9: don't require a lot of maintenance. Obviously, refueling the car,
19:44
Speaker 9: so to speak, is a matter of plugging it in.
19:47
Speaker 9: But if it's your Tesla, it probably sits in your garage,
19:50
Speaker 9: or it sits in your driveway, or maybe if you
19:51
Speaker 9: live in a city like New York, it's at a
19:54
Speaker 9: parking garage and you've had a charger put in. That's
19:57
Speaker 9: all fine, and these people tend not to get into
19:59
Speaker 9: a lot of accidents, and they don't have range anxiety
20:02
Speaker 9: because they own the car, they made the decision to
20:05
Speaker 9: buy it. It's a totally different story when you get
20:09
Speaker 9: off of a Red Eye flight and stroll up to
20:16
Speaker 9: the Hurtz counter and are told that no, I'm sorry,
20:19
Speaker 9: the car you reserved is not available, but we're giving
20:22
Speaker 9: you a Tesla. If you've never been behind the wheel
20:26
Speaker 9: of an ev it can be a terrifying experience.
20:29
Speaker 8: You don't know.
20:30
Speaker 9: You don't want to have to find a charger in
20:32
Speaker 9: the wild. You don't know what this instantaneous breaking.
20:35
Speaker 2: Is Liken the car, you don't.
20:37
Speaker 9: Realize that it has rocket like acceleration, and as a result,
20:41
Speaker 9: Hurts with its Tesla fleet, started running into all kinds
20:45
Speaker 9: of problems. They were crashing and it's very expensive to
20:48
Speaker 9: repair a Tesla. In many cases they have to be
20:51
Speaker 9: junked because insurance companies are worried about the damage that
20:55
Speaker 9: might have occurred to the battery. People didn't want to
20:58
Speaker 9: rent them, so the demand was isn't there? And then
21:01
Speaker 9: of course Elon Musk cut Tesla prices by thirty percent
21:04
Speaker 9: and kind of blew a hole into Hurtz's balance.
21:07
Speaker 10: Sheet economic mode.
21:08
Speaker 4: How did Hurts get into this position, It's a good question.
21:12
Speaker 9: This was a rental car company, the only major rental
21:16
Speaker 9: car company that went bankrupt in the early days of
21:19
Speaker 9: the pandemic.
21:19
Speaker 4: I'm a gold circle member of Hurts.
21:21
Speaker 5: By the way, I just strolled right up to my car, John.
21:24
Speaker 9: Some people have very good experiences with Hertz, including Paul Sweeney. Evidently,
21:30
Speaker 9: so Herts went bankrupt. It was bought at a bankruptcy
21:32
Speaker 9: in June twenty twenty one by two professional investors. Tom
21:36
Speaker 9: Wagner runs Nighthead Capital and Greg O'Hara is the founding
21:41
Speaker 9: partner at Stari's Management. They raised a billion and a
21:44
Speaker 9: half dollar fund. They wanted to find travel and leisure
21:47
Speaker 9: companies that had been crushed by the pandemic, but of
21:50
Speaker 9: course which in theory would soar once the economy reopened,
21:55
Speaker 9: and Hurts seemed like a great candidate. And actually that
21:58
Speaker 9: part of the thesis played out perfectly once the economy reopened.
22:02
Speaker 9: In fact, before the economy reopened, when people realized getting
22:06
Speaker 9: into a car and driving somewhere doesn't put me at
22:08
Speaker 9: risk of COVID at all, demand for rentals went sky high,
22:13
Speaker 9: and so coming out of this acquisition from bankruptcy, Hurts
22:17
Speaker 9: was crushing it. But they had a transformational plan to
22:21
Speaker 9: turn it into a largely electrified rental car company, and
22:25
Speaker 9: that's where everything went pear shaped. I talked about it,
22:29
Speaker 9: the demand, the damage, the price cuts, and we say
22:34
Speaker 9: it's a tale of hubris, because in many respects it is.
22:38
Speaker 9: Of course, everything looks clear in hindsight, it did sound
22:41
Speaker 9: like an incredibly good idea of the time, and I
22:44
Speaker 9: think for the sake of the planet, it would be
22:47
Speaker 9: nice if you could electrify a rental car company and
22:50
Speaker 9: save you know, the environment from all the gasoline that
22:55
Speaker 9: gets poured into rental cars. But it just doesn't work
22:58
Speaker 9: in practice. And whether it's arrogance, whether it's hubris, whether
23:03
Speaker 9: it's blind optimism, it could be.
23:05
Speaker 5: A combination of all those three.
23:07
Speaker 9: These new owners, these professional investors, one who runs a
23:10
Speaker 9: hedge fund, the other who runs a private equity firm,
23:13
Speaker 9: thought that they had an answer for this industry that
23:15
Speaker 9: the industry itself had ignored for years. And the truth
23:20
Speaker 9: of the matter is running, running any company in the
23:23
Speaker 9: industry is tough, right, requires some experience, maybe.
23:28
Speaker 2: And they and the funny thing is, well, not for them,
23:31
Speaker 2: but is that they could be right just either a
23:33
Speaker 2: little earlier, a little late, depending on how you look
23:35
Speaker 2: at it.
23:36
Speaker 9: You know, whenever we talk about early, right, it's the
23:38
Speaker 9: broken clock thing, right, broken clock is right two times
23:41
Speaker 9: a day. And the case of being early, I.
23:46
Speaker 4: Thought it was a great strategy when I first heard
23:48
Speaker 4: it just sounded hit so many buttons there. But I
23:52
Speaker 4: guess that kind of goes to the bigger question, which
23:54
Speaker 4: we asked the auto industry were at large, is have
23:58
Speaker 4: we seen peak interest in evs?
24:00
Speaker 2: This is why I found the article so interesting because
24:01
Speaker 2: there were things that I didn't think about, in that
24:04
Speaker 2: they don't have dealerships, right, they don't have a relationship
24:06
Speaker 2: with dealerships. So like when my super retire gets, you know,
24:09
Speaker 2: messed up, I did just drive it in and then
24:11
Speaker 2: they fix it and then we drive out. Kind of thing.
24:13
Speaker 2: You can't do that with a Tesla. I never thought
24:16
Speaker 2: of that. For example, I never thought of how difficult
24:18
Speaker 2: it would be to all of a sudden get off
24:20
Speaker 2: a plane and go sit in a Tesla. It's weird
24:22
Speaker 2: enough getting in the morning to a Tesla and getting
24:24
Speaker 2: in the backseat. I can't imagine just being shoved into
24:26
Speaker 2: the front seat and having to drive it at the
24:28
Speaker 2: same time. And these little details I found to be
24:30
Speaker 2: very prevocative.
24:32
Speaker 9: Well, they are, as you say, something of an indication
24:36
Speaker 9: as to why demand for EV's right now is slowing.
24:39
Speaker 4: Hurts.
24:41
Speaker 9: You know, we can play on the fact that it
24:43
Speaker 9: even has yellow as part of its logo. Was the
24:46
Speaker 9: canary in the coal mine for the EV industry. True
24:49
Speaker 9: what began to happen it hurts is what the rest
24:52
Speaker 9: of the industry is beginning to wake up to that
24:54
Speaker 9: all of the evs that are being cranked out right
24:56
Speaker 9: now may not have a natural buyer because people aren't
25:01
Speaker 9: enough chargers out there. People haven't gotten over this idea
25:05
Speaker 9: that it's a different driving experience. People, as we all know,
25:08
Speaker 9: are very personal about their cars, right, it's an extension
25:13
Speaker 9: of themselves. And you don't want your arm to feel
25:18
Speaker 9: like it doesn't belong on your body, and that's in
25:20
Speaker 9: some respects how people feel about getting behind the wheel
25:23
Speaker 9: of an EV.
25:24
Speaker 4: Thirty seconds left, Eric, if I wanted a Tesla from
25:28
Speaker 4: Hurts tomorrow, could I get one?
25:30
Speaker 9: Or are they just you can? They are beginning to
25:32
Speaker 9: sell down the fleet. Though they had sixty thousand evs,
25:34
Speaker 9: they've put about twenty thousand Teslas on the market. In fact,
25:37
Speaker 9: if you want to buy a Tesla, that was a
25:39
Speaker 9: great time to buy one used in fact, even off
25:42
Speaker 9: the Hurts website, because they are way cheaper than they've
25:46
Speaker 9: ever been before.
25:47
Speaker 4: All Right, I tell you, folks, this is great stuff.
25:51
Speaker 4: Big Take stories.
25:52
Speaker 5: We love them.
25:52
Speaker 4: We love to support the Big Take reporting because it
25:55
Speaker 4: is deep, really cool stories and really cool, well researched,
25:59
Speaker 4: role sourced articles. You can read the big Take stuff.
26:02
Speaker 4: Eric story today on all the Big Take stories on
26:05
Speaker 4: the terminal place. I'm going to Bloomberg dot com slash
26:07
Speaker 4: Big Take get access there. Eric Shatsker Bloomberg New Economy
26:11
Speaker 4: Editorial Director. We appreciate getting it in the Bloomberg Interactive
26:14
Speaker 4: Broker Studio.
26:16
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
26:20
Speaker 1: weekdays at ten am Eastern on applecard Play and Android
26:24
Speaker 1: Auto with the Bloomberg Business app. You can also listen
26:27
Speaker 1: live on Amazon Alexa from our flagship New York station.
26:30
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
26:35
Speaker 4: I'm going to talk technology. I got a lot of
26:37
Speaker 4: things on the play here technology wise on a rock.
26:39
Speaker 4: Rana joins his senior technology channels for Bloomberg Intelligence. He's
26:42
Speaker 4: sharing our Bloomberg Interactive Brokers studio in New York City
26:45
Speaker 4: because Bloomberg Intelligence is hosting an AI seminar conference Bloomberg
26:51
Speaker 4: Headquarters this afternoon.
26:52
Speaker 5: Is that right?
26:52
Speaker 1: Yeah?
26:53
Speaker 10: Twelve thirty onwards.
26:54
Speaker 11: A lot of companies Google, Microsoft, Salesforce.
26:57
Speaker 10: Adobe, I mean it's we have.
26:59
Speaker 4: A and lots of smart investors are gonna be there, right,
27:01
Speaker 4: lots of spart.
27:02
Speaker 2: From But I'm martyring a panel and you said that
27:04
Speaker 2: I could ask dumb questions though? Is that? Does that
27:06
Speaker 2: still hold?
27:08
Speaker 1: No?
27:08
Speaker 10: No, You're gonna you're gonna do really right because.
27:10
Speaker 2: I'm like, I'm serious, I'm no way I expert here. Yeah,
27:13
Speaker 2: so I.
27:14
Speaker 4: Wanted to start with this story of this hubbub thing.
27:16
Speaker 4: What what is hub Spot? And it's a thirty billion
27:19
Speaker 4: dollar market cap company. Yeah, they can't be acquired.
27:23
Speaker 11: They're too big for exactly my point because they see
27:26
Speaker 11: from a market share point of.
27:27
Speaker 5: Vie summarize the story.
27:28
Speaker 11: Because it's a CM software company, HubSpot. They primarily sell
27:33
Speaker 11: to small and medium businesses. It's a high growth company.
27:37
Speaker 11: It's done very well. It is you know, it is
27:40
Speaker 11: one of the favorite stocks stocks for people, I mean,
27:43
Speaker 11: a growth stock.
27:45
Speaker 4: But the story today is that alphabet This is a
27:48
Speaker 4: Royter's reporting that alphabet is I think Bloomberg's Matt match
27:51
Speaker 4: it Alphabets perhaps is and talks to acquire this company.
27:54
Speaker 4: And again this company has a market cap at thirty
27:56
Speaker 4: four billion dollars, which automatically means.
28:00
Speaker 5: Regulars are not going to.
28:00
Speaker 11: Allow That's that's my biggest thing.
28:03
Speaker 10: See.
28:03
Speaker 11: One of the things is Google does not play a
28:05
Speaker 11: lot into the enterprise applications world, which is Salesforce, Workday, Microsoft.
28:10
Speaker 11: You know, Google has some Google Sheets and a few
28:12
Speaker 11: other products, but it's really not a big player in
28:15
Speaker 11: the cloud applications area as much as you know somebody
28:20
Speaker 11: like a.
28:20
Speaker 10: Salesforce would do. But this could be a big deal.
28:23
Speaker 11: I mean, if that it happens, it you know, it
28:25
Speaker 11: completely shakes up the competitive landscape. But as Paul mentioned,
28:28
Speaker 11: I mean, it's going to be tough for regulators to
28:30
Speaker 11: approve anything that big.
28:32
Speaker 2: Yeah, exactly. But then there are so many software companies
28:35
Speaker 2: at some point they're going to have to do some
28:37
Speaker 2: M and A. Right, there's like a bazillion of them.
28:39
Speaker 2: I honestly can't keep them straight.
28:40
Speaker 11: No, I agree with everything that you're saying, But the
28:42
Speaker 11: question is who the buyer is going to be the
28:44
Speaker 11: problem in this case or in a lot of these
28:47
Speaker 11: cases is regulators are very tough on large you know,
28:51
Speaker 11: of the big tech giants buying software come or any
28:54
Speaker 11: company that, how are they going to.
28:55
Speaker 2: Feel about Apple and robots. So here's the So this
28:57
Speaker 2: Pokemon was on TV yesterday. So this is Mark and
29:00
Speaker 2: broke the story that Apple apparently as teams investigating a
29:03
Speaker 2: push into personal robotics, and that's a feel but the
29:05
Speaker 2: potential to become one of the companies ever shifting quote
29:09
Speaker 2: next big things. This is according to people familiar with
29:12
Speaker 2: the situation they were looking at, say, robots that can
29:15
Speaker 2: follow users around their home, for example, and exactly, and
29:20
Speaker 2: they have also deployed an advanced tabletop home device that
29:23
Speaker 2: uses robotics to move a display around.
29:26
Speaker 4: What because this.
29:28
Speaker 11: Means so, I you know, I see Samson showed a
29:33
Speaker 11: demo of a robot that's following around and you know,
29:36
Speaker 11: you're working out and all.
29:37
Speaker 10: Sorts of stuff.
29:37
Speaker 11: So these things don't really move the needle. It's a
29:40
Speaker 11: fancy stuff to be part of the you know, Apple ecosystem.
29:44
Speaker 11: But you know, Frankly, I mean, how many can you
29:46
Speaker 11: sell and how much money can you make? So I'm
29:49
Speaker 11: I'm you know, doesn't get me excited.
29:50
Speaker 10: Frankly, Yeah, I.
29:51
Speaker 4: Mean I think the so as we think about Apple,
29:55
Speaker 4: it seems to me the next big thing to use
29:57
Speaker 4: that term has got to be you have to give
30:00
Speaker 4: shareholders and AI play. Oh yeah, absolutely, and if and
30:04
Speaker 4: perhaps it will occur as soon as their developer conference
30:07
Speaker 4: in Juque. What do you think, whether it's this year
30:10
Speaker 4: or next, what do you think a viable AI play
30:13
Speaker 4: is for Apple?
30:14
Speaker 11: Think about it that our phone is a medium for anything.
30:18
Speaker 11: If I give you a right now, if I have to.
30:21
Speaker 11: Let's say, ask a question to Open Ai. I open
30:23
Speaker 11: the phone, go into the open Ai app and write
30:26
Speaker 11: my querdi. Imagine you don't have to do any of
30:29
Speaker 11: that stuff. You straight away ask CID that question and
30:31
Speaker 11: you get a very good answer. Right now, the answers
30:34
Speaker 11: aren't very good. So that's the step that if they
30:37
Speaker 11: can figure out that algorithm in between, I think it's
30:40
Speaker 11: going to.
30:40
Speaker 10: Do them very well.
30:41
Speaker 2: Did they figure it out or do they work with
30:42
Speaker 2: Google and stuff for Microsoft to figure it out?
30:45
Speaker 10: That's a very good question.
30:46
Speaker 11: And you know Mark had reported that if they've worked
30:49
Speaker 11: with In my view, if they work with Google, I
30:51
Speaker 11: think it's going to be much faster. I think if
30:54
Speaker 11: they work with open Ai saying it's going to be faster,
30:58
Speaker 11: just because we've only heard that they got trad of
31:00
Speaker 11: the car division a few months ago, reallocated some engineers there.
31:03
Speaker 11: You know, if they had something, they would have deployed it,
31:06
Speaker 11: you know, or would have showcased it. So if they're
31:08
Speaker 11: working very hard to come up with a new product,
31:10
Speaker 11: you're not can it just come up within two three
31:12
Speaker 11: months and be ready for it?
31:14
Speaker 10: So I hope for their sake, for their.
31:16
Speaker 11: Stock that they do announce a partnership with one of
31:19
Speaker 11: those two companies and showcase people what capabilities can we do.
31:23
Speaker 1: Now.
31:23
Speaker 11: Remember in the case of Microsoft, when they have a
31:25
Speaker 11: deal with open Ai, their products have got enhanced very
31:29
Speaker 11: quickly using open eyes, you know, backbone or technology, whether
31:33
Speaker 11: it's you know office or whether it's a GitHub, the
31:36
Speaker 11: coding platform. It's been very quick. So it can be done.
31:40
Speaker 11: But you know, we'll find out in June.
31:42
Speaker 4: The stocks down eleven percent this year lends me to
31:45
Speaker 4: believe that, you know, the marginal hedge fund buyer is
31:47
Speaker 4: not going in and they're buying a.
31:48
Speaker 5: Position ahead of this June event.
31:51
Speaker 4: Is that I mean, what are you hearing at today?
31:53
Speaker 5: People think we'll get something this June or not.
31:55
Speaker 11: Apple has always been more of a value play for
31:58
Speaker 11: a long while. In between it became a growth story
32:01
Speaker 11: because during the pandemic there was a lot of games downloaded.
32:04
Speaker 11: And you know, so now that growth phase is over.
32:07
Speaker 11: Now we're getting back to that single digit growth rate.
32:09
Speaker 11: I always thought they had maybe a high single digit number,
32:13
Speaker 11: but this year is going to be low single digit
32:15
Speaker 11: to even flat, you know, So it's going to be
32:17
Speaker 11: bad this year only because of China, but having said
32:19
Speaker 11: that this is a company that can grow you know,
32:22
Speaker 11: revenue five six percent an in a normal year.
32:25
Speaker 2: So this is why the robot thing, if we circle
32:27
Speaker 2: back to that, confused me because why would they put
32:30
Speaker 2: anybody into something like that. Why wouldn't they just take
32:32
Speaker 2: those workers and put them into an AI segment to
32:35
Speaker 2: work on that instead, Like why it.
32:39
Speaker 10: Could be somebody spent project.
32:40
Speaker 4: I mean, it's just these are such a I mean,
32:42
Speaker 4: they can't afford to do at all.
32:44
Speaker 2: Yeah wogue, Okay, well fair enough, fair enough? Are they
32:46
Speaker 2: going to do a big buyback?
32:49
Speaker 11: I they have been spending almost ninety billion dollars a
32:52
Speaker 11: year for buybacks. I've been wanting, I mean hoping they
32:54
Speaker 11: will do a little more. But but no, that's not
32:57
Speaker 11: the case because they do have to showcase whether they're
32:59
Speaker 11: really can fix the China situation or not, because I
33:02
Speaker 11: don't think buybacks would help that unless we have some
33:05
Speaker 11: clarity on China or AI on China.
33:08
Speaker 4: Since you bring up China, how do we get clarity
33:12
Speaker 4: on China? Because right now I would just if I
33:14
Speaker 4: were a shareholder, I would feel like that is by
33:16
Speaker 4: far the biggest headwind to the.
33:18
Speaker 11: Jample it has been, and you know, we've talked about
33:20
Speaker 11: it for the last two years.
33:22
Speaker 10: He just went to China.
33:23
Speaker 11: He's been, you know, basically telling everybody how China is
33:27
Speaker 11: very good for them and they'll invest more money. Maybe
33:31
Speaker 11: that changes the behavior over the next few months, because
33:33
Speaker 11: so far what we have seen in the last two
33:35
Speaker 11: quarters is they've been losing market share and people are
33:39
Speaker 11: opting for a local brand rather than the Apple brand.
33:42
Speaker 11: And I think Apple's cache, you know, should come back
33:46
Speaker 11: if they are able to convince that China is an
33:48
Speaker 11: integrative part of their story.
33:50
Speaker 10: I think it can. It can turn around.
33:52
Speaker 2: We'll try to Secretary Jennet Yell in there now, so
33:54
Speaker 2: see how that sort of pairs out before I let
33:56
Speaker 2: you go. Also, FT had an interesting article that talked
33:59
Speaker 2: about Google considering charging for AI powered search. What would
34:05
Speaker 2: that in essence mean And that's a big deal for
34:08
Speaker 2: Google to do something along those.
34:10
Speaker 10: Lines, right see once again Open an Eye.
34:12
Speaker 11: When you get the app, you get the free app
34:15
Speaker 11: which everybody if you want GPT four, which is the
34:19
Speaker 11: latest version of their their you know AI model, you
34:22
Speaker 11: have to pay a subscription.
34:23
Speaker 10: I think it's nineteen ninety nine a month or twenty
34:25
Speaker 10: dollars a month.
34:26
Speaker 11: It's probably going to be the same thing for you know,
34:28
Speaker 11: Google or anybody else out there, that you have a
34:30
Speaker 11: base level model that's free, and then you can, you know,
34:33
Speaker 11: charge a little bit more for a premium model. It's
34:35
Speaker 11: just part of, you know, how they want to monetize
34:38
Speaker 11: some of that.
34:38
Speaker 2: That's an interesting Paul. I don't know if you if
34:40
Speaker 2: you notice this, but when I start for something on
34:42
Speaker 2: Google now on my phone, I don't click any of
34:44
Speaker 2: the links anymore, because all of a sudden you can
34:47
Speaker 2: click on a drop down menu and it gives you
34:49
Speaker 2: a quote from the page you would have clicked on.
34:52
Speaker 2: And I have to think, like, does Google lose money?
34:55
Speaker 3: There?
34:55
Speaker 2: Is that or the or the or the other companies,
34:58
Speaker 2: Like how does that affect them?
35:00
Speaker 11: Google controls the search market and they have a little
35:03
Speaker 11: bit of a threat in front of them. I personally
35:06
Speaker 11: think they will figure it out. But the two demos
35:09
Speaker 11: that they have done in the last one yere have
35:11
Speaker 11: not really worked out well for them. But I feel
35:13
Speaker 11: they will figure it out all right.
35:15
Speaker 4: On rag Rana, thank you so much. He's in talent again.
35:17
Speaker 4: The Bloomberg Intelligence folks, they're hosting a big conference here
35:21
Speaker 4: in our New York Headquarters at seven thirty one Lex
35:23
Speaker 4: about all things AI. I think they got the definitive
35:26
Speaker 4: research report out there, deep dive on AI, and are
35:29
Speaker 4: going to get some of the industry leaders coming to
35:32
Speaker 4: the Bloomberg headquarters today giving us the latest on what
35:35
Speaker 4: has really been the driving force, not just in technology,
35:38
Speaker 4: but really across the markets over the last eighteen months
35:41
Speaker 4: or so.
35:41
Speaker 10: So that's going to be cool.
35:42
Speaker 5: This Say afternoon on Rograna. Thank you so much.
35:44
Speaker 4: We appreciate that.
35:48
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
35:52
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35:56
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36:02
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36:06
Speaker 5: All right, folks.
36:07
Speaker 4: On this week's episode of The Deal, Jason Kelly and
36:10
Speaker 4: former baseball star Alex Rodriguez, they talked with Redford Capital
36:13
Speaker 4: founder and managing partner Jerry Cardinali. He breaks down his career,
36:17
Speaker 4: the purchase of AC Milan, and so much more. He
36:20
Speaker 4: also discusses how sports investing has evolved over time.
36:24
Speaker 8: Tick list and so I guess I had a very
36:26
Speaker 8: philosophical moment where I said, you know what gets me
36:28
Speaker 8: up in the morning.
36:29
Speaker 5: What do I love?
36:30
Speaker 8: And I love playing shadow entrepreneur, and I like solving
36:33
Speaker 8: problems with capital, and I just it just so happens,
36:37
Speaker 8: you know, luck in people's career. I happen to hit
36:40
Speaker 8: an inflection point with sports that I couldn't possibly have
36:43
Speaker 8: seen coming back in two thousand, two thousand and one. Right,
36:47
Speaker 8: you look back on that the last twenty years and
36:50
Speaker 8: you're like, wow, you really you know, Luck's great. You
36:52
Speaker 8: really hit an air pocket that you know you could
36:55
Speaker 8: where you took off. Now the challenge is navigating that
36:59
Speaker 8: because now everybody he's discovered sports. Yeah, sports is now
37:02
Speaker 8: an asset class. That scares me. When I start to
37:04
Speaker 8: hear about things like sports being an asset class, my
37:07
Speaker 8: initial reaction is to run in the other way. Yeah,
37:11
Speaker 8: and so you know, but I say, look, you can't
37:13
Speaker 8: make money if you don't put money to work, all right.
37:15
Speaker 4: That is Jerry Cardinali. He is the Redbird Capital founder
37:19
Speaker 4: and managing partner and a big fan of his. He's
37:21
Speaker 4: a really leading financier in the world of sports entertainment media.
37:25
Speaker 4: The convergence of all that kind of good stuff, and
37:27
Speaker 4: he sat down with Jason Kelly and Alex Rodriguez for
37:29
Speaker 4: their Big Take podcast. Jason Kelly joins us here. He's
37:32
Speaker 4: chief correspondent for Bloomberg Originals. Jason's also host an executive
37:36
Speaker 4: producer of The Deal podcast Jason. Really cool discussion with
37:40
Speaker 4: Jerry Cardinally, he's involved in so much.
37:43
Speaker 5: What would you guys talk about?
37:45
Speaker 6: Yeah, I mean it was the biggest challenge with Jerry
37:48
Speaker 6: was sort of narrowing it down and in a lot
37:51
Speaker 6: of ways. I mean, to me, the two most interesting
37:54
Speaker 6: things about him at the moment, and there is more
37:56
Speaker 6: than this, you know. One was the very instrumental role
37:59
Speaker 6: he played with the Yankees at a pivotal time in
38:02
Speaker 6: that franchise, you know, late nineties, early two thousands, especially,
38:07
Speaker 6: you know, right in your wheelhouse, the creation of the
38:09
Speaker 6: Yes Network, which obviously just set sort of a different
38:13
Speaker 6: path for media rights and how teams and leagues you know,
38:16
Speaker 6: sort of deal with with all of that. So that's one,
38:19
Speaker 6: and then the second is moving into ownership in a
38:22
Speaker 6: meaningful way with AC Milan, you know, one of the
38:24
Speaker 6: most storied soccer clubs in the world, and sort of
38:27
Speaker 6: what led him there, and then along the way he's
38:29
Speaker 6: doing business with Tom Cruise and Top Gun Maverick, and
38:32
Speaker 6: he's in business with Ben Affleck and Matt Damon, and
38:35
Speaker 6: he's in business with the Rock and Danny Garcia and
38:39
Speaker 6: the XFL. So he's got his he's got his hands
38:41
Speaker 6: on a lot.
38:42
Speaker 2: Yeah he does. So, wasn't it like what else is
38:44
Speaker 2: he working on?
38:45
Speaker 6: I mean, I don't know how he does it, because
38:49
Speaker 6: I mean he really is just he's a globe trotting
38:52
Speaker 6: deal maker, you know. I mean, you know, one of
38:54
Speaker 6: the things he identified, I think along with a lot
38:57
Speaker 6: of folks, was you know, the importance of sovereign wealth.
39:00
Speaker 6: So he's in business with Abu Dhabi looking at a
39:03
Speaker 6: number of different things. Jeff Zucker, you know, the former
39:06
Speaker 6: CNN executive is a partner of his, looking at media deals.
39:10
Speaker 5: They took a look at the Telegraph over in the UK.
39:13
Speaker 6: They're involved in sky Dance, you know, which obviously is
39:15
Speaker 6: in the headline headlines today with the paramount deal. So
39:20
Speaker 6: a lot going on for him, clearly, and as he said,
39:24
Speaker 6: as you heard him say in that clip, you know,
39:27
Speaker 6: part of it was luck. I mean he was at
39:29
Speaker 6: Goldman and you know saw some things happening with the
39:33
Speaker 6: sports world. Clearly, the Yankees were a local client. I
39:36
Speaker 6: mean that sounds ridiculous, but they were. But you know,
39:39
Speaker 6: he clearly anticipated a lot of this collision, this coalescing
39:43
Speaker 6: as it were, of business, sports, technology, media, et cetera.
39:47
Speaker 4: One of the things we've all seen over the last,
39:49
Speaker 4: you know, many years is just the continued increase in
39:52
Speaker 4: the value of sports, whether it's the franchises themselves in
39:56
Speaker 4: a various sports globally, or the rights fees for the
39:59
Speaker 4: broadcas casting. What's this view on that, because it seems
40:02
Speaker 4: like you just can't lose money in this kind of stuff.
40:05
Speaker 6: I mean, that's and that's always the dangerous place to be, right,
40:07
Speaker 6: you know, when when it feels like that, which it
40:09
Speaker 6: certainly does, You're exactly right, Paul, that's exactly how it
40:12
Speaker 6: feels right now, you know. I mean, and this again
40:14
Speaker 6: gets into a lot of your expertise around the media world.
40:17
Speaker 6: I mean, part of what is fueling that is this
40:20
Speaker 6: massive disruption in media between you know, broadcast cable streamers.
40:25
Speaker 6: Who's going to really pay up for the media rights
40:28
Speaker 6: for the big sports and even some of the smaller sports.
40:31
Speaker 6: We don't know I mean, when this new NBA deal
40:33
Speaker 6: comes up, one of the big speculations is is Netflix.
40:37
Speaker 5: Going to be in that?
40:37
Speaker 6: Is Amazon going to be in that, or is it
40:39
Speaker 6: going to be some of the more traditional players. That
40:42
Speaker 6: flows straight through to valuations, as you alluded to, and
40:47
Speaker 6: you know, you're seeing, you know, these teams just trade
40:49
Speaker 6: up and up and up. The Washington Commander is going
40:52
Speaker 6: for six billion dollars. The Phoenix Sun's going for four
40:54
Speaker 6: billion dollars. I mean, these are eye popping, mind blowing
40:58
Speaker 6: numbers for franchises that twenty years ago we're selling for
41:01
Speaker 6: like a couple hundred million dollars.
41:02
Speaker 2: So why did we freak out? And he said sports
41:04
Speaker 2: is an asset class? I think freak out's number statement.
41:08
Speaker 2: But you know, like, why does that worry him then,
41:10
Speaker 2: when like he's part of making it an asset class?
41:13
Speaker 6: I think because it has the danger of becoming sort
41:17
Speaker 6: of commodified and you know, traded in a way that
41:20
Speaker 6: you know, maybe takes out some of the some of
41:24
Speaker 6: the some of the opportunities to really some of the
41:29
Speaker 6: opportunity to find opportunities, if.
41:31
Speaker 2: That makes sense.
41:31
Speaker 6: He had this one line that I love that we've
41:34
Speaker 6: been talking about in our production team, which is they
41:37
Speaker 6: trying arbitrage incompetence, which I think is one of the
41:40
Speaker 6: funniest things. And like, where else can we do exactly,
41:44
Speaker 6: It's like, can we make do you want to make
41:46
Speaker 6: a list? We don't make a list right now, Let's
41:49
Speaker 6: let's create a shared note, you know and me because
41:52
Speaker 6: I just love that idea. I mean as an investor,
41:54
Speaker 6: I mean that is actually what you're trying to do,
41:57
Speaker 6: right You're trying to find these opportunities where it's like
41:58
Speaker 6: they're not running it right, Let's go in and run
42:00
Speaker 6: it better.
42:01
Speaker 4: So how does Alex in these conversations? I would think
42:05
Speaker 4: Alex is most of these kind of an insider. He
42:08
Speaker 4: knows all these people. He's probably seen a lot of
42:11
Speaker 4: the deals that they've seen.
42:13
Speaker 6: Well, this one people, Oh, totally, you're totally right, Paul.
42:16
Speaker 6: I mean, this one was fascinating because you know, this
42:19
Speaker 6: is a guy who actually was instrumental Jerry in helping
42:23
Speaker 6: bring Alex to New York, which is, you know, one
42:24
Speaker 6: of the biggest deals that happens for the Yankees in
42:26
Speaker 6: the last twenty five years, as you well know, you know.
42:30
Speaker 6: The other thing they talked about was, you know, getting
42:32
Speaker 6: together over dinner with Randy Levine, the president of the Yankees,
42:35
Speaker 6: and saying, hold on, how do we put together a
42:38
Speaker 6: roster that can actually win us a championship? And guess
42:41
Speaker 6: what they did in two thousand and nine. I mean
42:43
Speaker 6: they were the three of them instrumental in identifying who
42:46
Speaker 6: could make that happen. So you're right. I mean it's
42:48
Speaker 6: it's very fun, I fully confess for me to sit
42:51
Speaker 6: here and be like, no, you guys, just tell this
42:53
Speaker 6: story what was happening sort of behind the scenes and
42:56
Speaker 6: around that table.
42:57
Speaker 2: Yeah, Oh my gosh, I can imagine that, Like you
42:59
Speaker 2: feel success full if you don't have to talk.
43:01
Speaker 6: Yeah, because I say more about that, that's my contribution.
43:06
Speaker 2: Tell me how you felt about that. So what else
43:09
Speaker 2: can we look forward to? What's next on your plate?
43:11
Speaker 6: So a couple really good episodes, you know, still to come.
43:14
Speaker 6: More about halfway through the season. Brandy Chastain is one
43:17
Speaker 6: I'm especially excited for people to listen to. Of course,
43:20
Speaker 6: Iconic Player, And last week we were down in Miami
43:24
Speaker 6: filming an episode with none other than the Goat herself,
43:28
Speaker 6: Serena Williams. So that's coming up in a few weeks.
43:31
Speaker 2: This is why you have son on your face? Yes,
43:32
Speaker 2: for a radio audience, I was like, why is he?
43:35
Speaker 4: Sort of.
43:38
Speaker 10: How does this guy?
43:38
Speaker 6: How does this guy pull it off?
43:40
Speaker 4: Yeah?
43:40
Speaker 6: So I can't wait for y'all to listen to Serena.
43:43
Speaker 6: She is unbelievable. It's it's stories and perspectives from her
43:48
Speaker 6: that you've never heard before. So very very.
43:52
Speaker 5: Excited for that one downline. Okay, awesome stuff.
43:54
Speaker 4: Jason Kelly chief correspondent for Bloomberg Originals. She's also a
43:56
Speaker 4: host an executive producer of the Deal, and on this
44:00
Speaker 4: week's episode of the Deal, Jason Kelly and Alex Rodriguez
44:03
Speaker 4: a talk with Redbird Capital founder and manager partner Jerry Cardinali.
44:07
Speaker 4: Jerry he going to break down his career, the purchase
44:10
Speaker 4: of ac Milan, they owned that one storied franchise in
44:14
Speaker 4: Saria in Italy, and so much more. He's also discusses
44:16
Speaker 4: how sports investing has evolved over time.
44:18
Speaker 5: So some good stuff there. We'll have that. Jason, thanks
44:20
Speaker 5: so much for joining us.
44:22
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