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Meta Falls After Boosting Spending Plans for AI Bet · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios. Podcasts.
• 0:05
  Speaker 2: Radio.
• 0:06
  Speaker 3: News.
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  Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
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  Speaker 4: Auto with the Bloomberg Business App. Listen on demand wherever
• 0:19
  Speaker 4: you get your podcasts or watch us live on YouTube.
• 0:24
  Speaker 5: The meta earnings here. I don't know, Scarlett, when I
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  Speaker 5: covered the stock, tons of free cash flow. Everything was easy.
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  Speaker 5: I turn it over to these technology analysts at Bloomberg Intelligence.
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  Speaker 5: Now I've got negative free cash flow, all this AI spending.
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  Speaker 1: Very different profile.
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  Speaker 5: It's a very different profile. It's a different world out there.
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  Speaker 5: Mandeep Singh, he and his team are on top of it.
• 0:46
  Speaker 5: Mandeep covers all the technology stuff, leads our efforts there
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  Speaker 5: at Bloomberg Intelligence. Mandeep, what did you take away from
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  Speaker 5: the meta earnings release and their conference call?
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  Speaker 3: That they are leading the pack when it comes to
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  Speaker 3: agentic AI on the consumer side. And now they are
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  Speaker 3: looking to expand the 10 million users who are using
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  Speaker 3: Muse to 100 million users and potentially a billion users.
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  Speaker 3: What was missing was the timeline in terms of when
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  Speaker 3: they will start monetizing that and what's the scale of
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  Speaker 3: CapEx they are planning to do in 2027 and 2028.
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  Speaker 6: And if there'll be more equity issuance, which is why
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  Speaker 6: I think you see the negative stock react.
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  Speaker 1: And do you expect more debt issuance?
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  Speaker 7: Either way, there's a lot of money that they have
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  Speaker 7: ready to, I mean, they're committing to spending a lot
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  Speaker 7: more money given their plans.
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  Speaker 6: And right now there is peer pressure.
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  Speaker 3: So SpaceX the night before said they could add up
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  Speaker 3: to 10 gigawatt capacity. Now that equates to almost 400
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  Speaker 3: billion in CapEx for a company that doesn't even generate $ 2.
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  Speaker 6: Billion in free cash flow. They're talking big game.
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  Speaker 3: So now I think everyone realizes the supply-constrained nature of
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  Speaker 3: chips and the AI infrastructure, and everyone wants to jack
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  Speaker 3: up their CapEx expectations. I expect the same from hyperscalers
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  Speaker 3: when they report next week, your Amazon, Google, and Microsoft.
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  Speaker 3: And that's why I think Meta didn't give a number yesterday,
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  Speaker 3: but they're clearly prepping for a big 2027 CapEx.
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  Speaker 5: Talk to us about this non-voting stock. It's going to be,
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  Speaker 5: I guess, like a stock split, effectively, I guess. So
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  Speaker 5: everybody owns the non-voting stock today. It's one vote share
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  Speaker 5: for one vote. Now you're going to get a non-voting stock.
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  Speaker 5: This is going to help Mark Zuckerberg stay in California forever.
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  Speaker 5: Did you see that angle, that article?
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  Speaker 6: Yes, I did.
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  Speaker 5: So basically it's going to allow him, because he's going
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  Speaker 5: to be paid with this billion-dollar tax that's coming from
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  Speaker 5: the state of California, he's going to have to sell
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  Speaker 5: stock to pay this tax.
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  Speaker 1: And he doesn't want to do that.
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  Speaker 5: He doesn't want to sell any voting stock. So now
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  Speaker 5: they're going to grant him effectively, along with every other shareholder,
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  Speaker 5: a share of non-voting stocks.
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  Speaker 1: So the shareholders pay for his tax bill.
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  Speaker 6: Um, no, um, it's just in an indirect way.
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  Speaker 2: I don't know.
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  Speaker 6: I mean, they are diluting.
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  Speaker 3: There's no doubt that existing shareholders will get diluted.
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  Speaker 6: Yes.
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  Speaker 1: So they're paying for it in a way.
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  Speaker 6: They are paying for it in a way.
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  Speaker 3: And it gives them the ability to issue more stock,
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  Speaker 3: which is what Alphabet did a few months back.
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  Speaker 8: Yeah.
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  Speaker 3: You know, you can't do it with all debt financing.
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  Speaker 3: That's why your spreads are going up. It's not the
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  Speaker 3: right message to the bond market, you know, when it
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  Speaker 3: comes to the kind of numbers they're talking about.
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  Speaker 6: So they have to do some equity issuance.
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  Speaker 2: Okay.
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  Speaker 6: And I think this is a step in that direction.
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  Speaker 7: But along the way, Mark Zuckerberg doesn't have to pay
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  Speaker 7: any big tax bill on his own.
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  Speaker 1: That will be something borne by everyone.
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  Speaker 6: Yeah, I mean, he's still going to have to.
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  Speaker 5: hey, whatever the billions is, he's going to go to
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  Speaker 5: the state of California. But he won't have to sell
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  Speaker 5: his voting stock.
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  Speaker 1: And give up his voting control.
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  Speaker 6: Right.
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  Speaker 5: But it was very, I thought, a pretty elegant way
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  Speaker 5: to do it. I thought it was, whatever Laura thought
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  Speaker 5: of that.
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  Speaker 7: It's a very elegant way of putting it, and the
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  Speaker 7: CFO didn't talk about it in that way, but the
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  Speaker 7: reporting shows that this.
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  Speaker 1: Is one of the motivations behind all of this.
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  Speaker 7: Okay, so SpaceX and Meta have reported, they've made clear
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  Speaker 7: that they plan to do a lot more in the
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  Speaker 7: AI build-out, so they're going to have to... spend more
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  Speaker 7: money and therefore raise more money. What does this herald
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  Speaker 7: for Microsoft, for Alphabet and all the other hyperscalers?
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  Speaker 3: I feel they will have a better story to tell
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  Speaker 3: in terms of monetization of this AI infrastructure that all
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  Speaker 3: these companies are building because of their cloud business. Remember,
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  Speaker 3: these companies have a backlog, Amazon, Microsoft, Microsoft, Alphabet, and
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  Speaker 3: I think Oracle combined have a backlog of $ 2 trillion.
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  Speaker 3: So a lot of that backlog will get converted to revenue.
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  Speaker 6: So if you are saying.
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  Speaker 3: My cloud business is now growing 100%, whereas previously it
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  Speaker 3: was growing 30%, That's a great story to tell and
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  Speaker 3: then raise your capex because you're showing the ROI. Whereas
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  Speaker 3: with Meta, there was no cloud business. Yes, agentic AI
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  Speaker 3: will eventually be monetized.
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  Speaker 1: We're not there yet, though.
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  Speaker 6: We're not there yet. And so that's the uncertainty with Meta.
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  Speaker 3: But with Google or Microsoft or Amazon, it's going to
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  Speaker 3: show up in the numbers. Their cloud businesses are going
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  Speaker 3: to accelerate for the next three or four quarters, and
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  Speaker 3: they will beat their numbers, consensus numbers, handedly.
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  Speaker 5: Anna Wong was just in here earlier this morning, Bloomberg Economics,
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  Speaker 5: and she said, hey, all the investment in AI this
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  Speaker 5: year equates to about half of U.S. real GDP.
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  Speaker 7: So if we didn't have this AI boom, the economy
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  Speaker 7: would look very different. And this is an economy typically
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  Speaker 7: driven by consumer spending. And we know what's going on
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  Speaker 7: in the consumer sector.
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  Speaker 5: Yeah, so she just put a number on it.
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  Speaker 6: Meta does have a play with that.
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  Speaker 3: So if agent AI takes off and your agent is
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  Speaker 3: transacting with the agent of the merchant, then Meta is
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  Speaker 3: a winner.
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  Speaker 8: Stay with us. More from Bloomberg Intelligence coming up after this.
• 6:14
  Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 6:18
  Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 6:21
  Speaker 4: Auto with the Bloomberg Business App. Listen on demand wherever
• 6:25
  Speaker 4: you get your podcasts or watch us live on YouTube.
• 6:29
  Speaker 2: Tesla.
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  Speaker 5: I reported some results last night. I mean, are we
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  Speaker 5: still worried about them making cars? Isn't it all about
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  Speaker 5: merging with SpaceX?
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  Speaker 1: They do make cars.
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  Speaker 5: They do make cars, but although they don't talk about
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  Speaker 5: it a lot, I guess. I don't know.
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  Speaker 8: David Welch, Detroit Bureau Chief for Bloomberg News.
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  Speaker 5: He knows a thing or two about the auto industry.
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  Speaker 5: He's based in Detroit, but we got him in New
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  Speaker 5: York City here today in the studio. David, what did
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  Speaker 5: you take away from the Tesla results last night?
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  Speaker 6: Like, it has been.
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  Speaker 9: With Tesla, in most periods of the company's history, even
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  Speaker 9: when the financial results are relatively good, surprised in a
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  Speaker 9: lot of ways, it's not about that. Investors seem to
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  Speaker 9: react the way that shares traded after market last night
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  Speaker 9: more about the fact that they spend less on R & D.
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  Speaker 9: So they're worried that maybe the whole AI autonomous driving
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  Speaker 9: push isn't being developed as fast as Elon Musk has said.
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  Speaker 9: So they initially traded down. They're up a bit today,
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  Speaker 9: at least the last I looked. So it's doing all right.
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  Speaker 9: But given that the auto business actually has a decent
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  Speaker 9: bounce here, it really just didn't get the pop you
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  Speaker 9: would expect because it's all about what can you do
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  Speaker 9: for the robotaxi business and AI and all of these robots,
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  Speaker 9: all of these other things that people would rather they
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  Speaker 9: made besides low-margin, capital-intensive production of automobiles.
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  Speaker 7: So Tesla shareholders don't seem to care that much about
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  Speaker 7: the auto business. Does the management care at all about
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  Speaker 7: the auto business? I mean, are they coming out with
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  Speaker 7: a new lineup? Are they going to refresh any of
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  Speaker 7: these vehicles? Are they coming out with the low-cost version
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  Speaker 7: of a Tesla car that Elon Musk had promised years ago?
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  Speaker 9: No, the low-cost version of the car, he basically turned
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  Speaker 9: it into the Cybercat. So instead of a cheap, I
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  Speaker 9: think there were talking about calling it a Model 2,
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  Speaker 9: he kind of realized that they couldn't make it profitably,
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  Speaker 9: and they couldn't compete with Chinese automakers over there with
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  Speaker 9: their cost base.
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  Speaker 1: But we don't sell Chinese EVs here.
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  Speaker 9: No, but he does, he sells cars over there. He
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  Speaker 9: competes in China and he competes in Europe where the
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  Speaker 9: Chinese do sell cars. So he kind of scrapped that
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  Speaker 9: and turned it into the cyber cab and figured, okay,
• 8:40
  Speaker 9: we're just going to be, we're going to compete with
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  Speaker 9: Waymo instead and go there. And look, if you've Yuan
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  Speaker 9: is pretty good at understanding market psychology. Actually, I would
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  Speaker 9: say he's very good at understanding market psychology and keeping
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  Speaker 9: a narrative going. And making cars had captured the imagination
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  Speaker 9: of investors when they were the only company in the U.S.
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  Speaker 9: really making EVs in a big way. So there was
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  Speaker 9: a huge growth track for them to run, and they did.
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  Speaker 9: And that's what powered their valuation. Once that started to
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  Speaker 9: taper off and you saw their shares go down a lot,
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  Speaker 9: Two years ago, because of that, and everyone else was
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  Speaker 9: coming out with EVs and it wasn't the latest thing,
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  Speaker 9: he started changing his focus. And so the narrative now
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  Speaker 9: is all about robotaxis. It's about AI. It's about robots.
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  Speaker 9: And if you look last week at their press conference
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  Speaker 9: with this flying Tesla car, I mean, that to me
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  Speaker 9: was the sort of automotive embodiment of talking about a
• 9:42
  Speaker 9: Tesla merger, right? You have a car that's flying with
• 9:45
  Speaker 9: rocket jets or rocket packs. So he's basically saying our
• 9:50
  Speaker 9: future is merging up with SpaceX and being this technology
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  Speaker 9: conglomerate as opposed to a car company. Because, look, we
• 9:56
  Speaker 9: saw General Motors buy back or announce a plan to
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  Speaker 9: buy back. $ 20 billion in shares. And the stock got crushed.
• 10:03
  Speaker 9: And earnings were pretty good. But you talk about stock multiples,
• 10:08
  Speaker 9: there are a few things less sexy than a conventional
• 10:11
  Speaker 9: car company bending metal and assembling vehicles and selling them
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  Speaker 9: at retail to the public. So You look at what
• 10:19
  Speaker 9: happened to GM shares, and Elon saw that a while ago,
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  Speaker 9: and he wants to be anything but a car company.
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  Speaker 9: So he's drifting away both with what Tesla has done,
• 10:29
  Speaker 9: and if you merge it up with SpaceX, then it's
• 10:31
  Speaker 9: really not a car company.
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  Speaker 5: So is it a foregone conclusion that the Tesla shareholders
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  Speaker 5: are going to line up to exchange their shares for SpaceX,
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  Speaker 5: that this is a fait accompli?
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  Speaker 9: You never know. I would think they would. SpaceX has
• 10:45
  Speaker 9: a pretty hot hand, especially with Trump in office. I've
• 10:50
  Speaker 9: always thought that was a big part of Elon cozying
• 10:52
  Speaker 9: up to Trump. Elon's politics, is he a super conservative?
• 10:57
  Speaker 9: In some ways, but this is also a guy who
• 10:59
  Speaker 9: pushed solar power and pushed electric vehicles. Not exactly a
• 11:02
  Speaker 9: hard right guy with most of his businesses and how
• 11:05
  Speaker 9: he made most of his money. Elon's about the politics
• 11:09
  Speaker 9: of Elon and his companies and whatever it takes. And
• 11:11
  Speaker 9: if cozying up to the Trump administration so SpaceX can
• 11:14
  Speaker 9: be this big player for NASA helps that company, then
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  Speaker 9: he's going to do it.
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  Speaker 7: David, how much space does Elon take up in the
• 11:22
  Speaker 7: brains and the heads of conventional car makers, CEOs? How
• 11:26
  Speaker 7: much do they look at him and react to him?
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  Speaker 7: Or is it not a factor anymore?
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  Speaker 9: It's a factor. Probably not as big a factor as
• 11:33
  Speaker 9: it was. But a lot of what General Motors talked
• 11:36
  Speaker 9: about here in New York yesterday was their own push
• 11:40
  Speaker 9: into self-driving vehicles. So I think where companies are more
• 11:45
  Speaker 9: worried about Tesla now is, does it become more of
• 11:49
  Speaker 9: a legitimate competitor to Waymo with self-driving vehicles? And Waymo
• 11:55
  Speaker 9: wants to be a robo-taxi service provider. They want to
• 11:57
  Speaker 9: take on Uber and Lyft with self-driving vehicles. Tesla wants
• 12:02
  Speaker 9: to do that as well, but They're also selling self-driving
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  Speaker 9: services in the way that GM is with Super Cruise.
• 12:09
  Speaker 9: And in 2028, GM will have fully hands-free, eyes-free driving
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  Speaker 9: on the highway, and they eventually want to migrate that
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  Speaker 9: to off-highway driving and not just inexpensive Cadillacs but all
• 12:20
  Speaker 9: of their vehicles. So they're watching General Motors and other
• 12:24
  Speaker 9: companies who also have similar kinds of things in development
• 12:27
  Speaker 9: will be watching Tesla to see where they get with
• 12:29
  Speaker 9: personally owned self-driving vehicles. That's where the auto companies want
• 12:33
  Speaker 9: to be. They don't want to run robotaxi services. They
• 12:36
  Speaker 9: want to sell cars that, whenever you want, can drive them.
• 12:40
  Speaker 8: Stay with us. More from Bloomberg Intelligence coming up after this.
• 12:47
  Speaker 4: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 12:51
  Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 12:54
  Speaker 4: Auto with the Bloomberg Business App. Listen on demand wherever
• 12:58
  Speaker 4: you get your podcasts or watch us live on YouTube.
• 13:02
  Speaker 5: Elon Musk, he confirmed that SpaceX and Tesla have formed
• 13:06
  Speaker 5: special committees to examine a potential merger, with Musk noting
• 13:10
  Speaker 5: his personal preference for a deal. Let's dig into that
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  Speaker 5: a little bit.
• 13:14
  Speaker 6: We can do that with Liam Neeson.
• 13:15
  Speaker 5: Denning, a Bloomberg opinion columnist covering the energy space. He
• 13:18
  Speaker 5: has a column out, Space X and Tesla is a strange.
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  Speaker 6: But certain deal.
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  Speaker 8: Liam, thanks so much for joining us here.
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  Speaker 6: What do you make of this?
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  Speaker 5: Because, I mean, this is going to be a monster,
• 13:29
  Speaker 5: monster consolidation merger. There's got to be some guardrails on
• 13:33
  Speaker 5: there to make sure we've got some, this is a
• 13:36
  Speaker 5: fair deal for everyone. How do you think this is
• 13:38
  Speaker 5: going to play out?
• 13:40
  Speaker 6: Guardrails.
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  Speaker 10: Guardrails.
• 13:43
  Speaker 6: So....
• 13:45
  Speaker 10: Yeah, the thing, I mean, the thing to understand is
• 13:48
  Speaker 10: these are both, you know, expressions of what the market
• 13:54
  Speaker 10: thinks of as Elon Musk's genius and And so they
• 13:58
  Speaker 10: are run in a way that I think for most
• 14:01
  Speaker 10: ordinary companies wouldn't fly. And part of that is that
• 14:06
  Speaker 10: Elon Musk essentially controls the direction of both of these companies.
• 14:12
  Speaker 10: They of course have a board of directors and all that,
• 14:15
  Speaker 10: and there's special committees that have been formed to look
• 14:18
  Speaker 10: at this potential deal. But I think the overriding logic
• 14:26
  Speaker 10: for this deal is essentially consolidating Elon Musk's power over
• 14:30
  Speaker 10: his empire. I mean, he has talked in the past
• 14:33
  Speaker 10: repeatedly about his desire to get greater control of Tesla.
• 14:38
  Speaker 10: And with SpaceX, where he has a special class of
• 14:41
  Speaker 10: shares that gives him overwhelming voting power, he has the
• 14:45
  Speaker 10: perfect vehicle to do that.
• 14:49
  Speaker 1: Is this a good thing or a bad thing for
• 14:51
  Speaker 1: Tesla shareholders?
• 14:54
  Speaker 10: So I can answer that on a couple of levels.
• 14:56
  Speaker 10: I think Tesla is wildly overvalued. I think its latest
• 15:00
  Speaker 10: results offered another proof point of that. The bulls will
• 15:05
  Speaker 10: point to the fact that Tesla said, well, we're driving
• 15:09
  Speaker 10: many more miles under unsupervised driving. The Optimus robots are
• 15:15
  Speaker 10: only a couple of years away, et cetera. But this
• 15:18
  Speaker 10: narrative continues to roll But if you look at the
• 15:21
  Speaker 10: fundamentals of the business, they're not great. I mean, Tesla's
• 15:25
  Speaker 10: main business, although they don't talk about it a lot anymore,
• 15:29
  Speaker 10: is building and selling cars.
• 15:31
  Speaker 2: It is, yeah.
• 15:32
  Speaker 10: And that business hasn't been growing now for almost three years,
• 15:35
  Speaker 10: despite the fact that the stock is.
• 15:37
  Speaker 6: Valued at nearly 200 times forward earnings.
• 15:41
  Speaker 10: It is a narrative-driven stock, and the narrative is at
• 15:46
  Speaker 10: odds with what it is actually achieving in the fields
• 15:49
  Speaker 10: of self-driving and robots. So I think as much as...
• 15:54
  Speaker 10: Tesla shareholders may be concerned about being rolled into a
• 15:59
  Speaker 10: company where, you know, they have less voting power and
• 16:03
  Speaker 10: that sort of thing. By my math, this deal will
• 16:07
  Speaker 10: get done at a price that they can almost certainly
• 16:10
  Speaker 10: live with. They'll end up owning more of the combined
• 16:14
  Speaker 10: entity than their contribution to the profits would really warrant
• 16:18
  Speaker 10: in a normal company. merger situation. So I think they'll
• 16:22
  Speaker 10: be fine with it because in the end, look, if
• 16:23
  Speaker 10: you own Tesla stock or you own SpaceX stock, it's
• 16:27
  Speaker 10: a bet on Musk really either way. And you're happy
• 16:30
  Speaker 10: to let him do what he wants. So what's changing really?
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  Speaker 5: And I guess one of the key issues is, is timing.
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  Speaker 5: I mean, I think presumably Elon Musk is what I've
• 16:40
  Speaker 5: read reporting broadly is repaired his relationship with president Donald Trump.
• 16:44
  Speaker 5: So presumably he would like to get this transaction completed
• 16:48
  Speaker 5: while President Trump is still in office. How does that
• 16:53
  Speaker 5: play into it, do you think?
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  Speaker 10: I mean, that may well be the case. Clearly, Musk
• 16:58
  Speaker 10: has thrown in his lot with Trump and the Republicans,
• 17:01
  Speaker 10: which I think, you know, has worked well for him
• 17:05
  Speaker 10: the past couple of years. I tend to think, you know,
• 17:09
  Speaker 10: as a CEO in general, If you live in a dictatorship,
• 17:15
  Speaker 10: it's probably good to throw in your lot with one
• 17:17
  Speaker 10: party in a country where power can shift around every
• 17:21
  Speaker 10: couple of years. I don't know. There might be some
• 17:23
  Speaker 10: risks around that. So, yeah, I think that could be
• 17:25
  Speaker 10: a consideration for him. But I think, overall, the logic
• 17:29
  Speaker 10: here is he wants to cement control over his empire.
• 17:34
  Speaker 10: I also think, as I pointed out in my column
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  Speaker 10: this morning.
• 17:39
  Speaker 10: These are two narrative-driven stocks, and the fact is SpaceX's
• 17:42
  Speaker 10: narrative has now eclipsed Tesla's. I think the fact that
• 17:46
  Speaker 10: Tesla cut its CapEx budget, and by the way, is
• 17:50
  Speaker 10: still underspending even that cutback.
• 17:54
  Speaker 6: CapEx budget.
• 17:57
  Speaker 10: Is part and parcel of a situation where all the
• 18:01
  Speaker 10: momentum now, I think, is swinging away. SpaceX and so
• 18:05
  Speaker 10: therefore there is a certain value to subsuming Tesla's narrative
• 18:11
  Speaker 10: into that more expansive one.
• 18:13
  Speaker 1: Liam, what's the number one thing that could go wrong here?
• 18:18
  Speaker 10: I think, look, the number one thing that can go
• 18:20
  Speaker 10: wrong with any of Elon Musk's companies is that belief
• 18:25
  Speaker 10: in the long-dated option cracks, right? I think with Tesla,
• 18:31
  Speaker 10: we've seen instances where confidence has.
• 18:34
  Speaker 1: Wavered, wavered, absolutely.
• 18:37
  Speaker 10: As you would expect it to, you know, if you
• 18:38
  Speaker 10: promise self-driving cars for 10 years and they still haven't
• 18:41
  Speaker 10: really appeared and you're being eclipsed by rivals like Waymo,
• 18:46
  Speaker 10: then you would expect confidence to wobble. But belief in
• 18:49
  Speaker 10: Musk is incredibly strong. Same with SpaceX. I mean, SpaceX
• 18:53
  Speaker 10: has a far stronger narrative than Tesla at the moment.
• 18:58
  Speaker 10: But its valuation still rests on enormously ambitious readings.
• 19:03
  Speaker 8: Stay with us. More from Bloomberg Intelligence coming up after this.
• 19:10
  Speaker 4: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 19:14
  Speaker 4: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 19:17
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• 19:20
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• 19:25
  Speaker 5: We had a couple of media companies report earnings here.
• 19:27
  Speaker 5: Comcast reported, as did Spotify. Both stocks are trading higher today.
• 19:31
  Speaker 5: Geetha Ranganathan joins us here. She is the media analyst
• 19:34
  Speaker 5: for Bloomberg Intelligence. Geetha, I saw that Comcast lost more
• 19:38
  Speaker 5: residential broadband customers than forecasted, but stocks up 4% today.
• 19:42
  Speaker 5: What's going on?
• 19:44
  Speaker 2: Yeah, stocks up, Paul, because somehow NBC actually kind of
• 19:48
  Speaker 2: is offsetting a lot of those broadband pressures. So, you know,
• 19:52
  Speaker 2: on NBC, they had obviously the huge benefit of the
• 19:55
  Speaker 2: FIFA World Cup on Telemundo. And so we saw some
• 19:58
  Speaker 2: really good numbers from the media division, as well as Peacock,
• 20:01
  Speaker 2: which is their streaming platform, which has been historically posting very,
• 20:05
  Speaker 2: very heavy losses, but has now actually turned a corner
• 20:08
  Speaker 2: and is profitable. And so that somehow managed to, you know,
• 20:13
  Speaker 2: keep EBITDA in decent shape.
• 20:15
  Speaker 5: So what's the, are the core business, their cable TV business,
• 20:19
  Speaker 5: their internet access, the broadband business, are they just, those
• 20:24
  Speaker 5: are in secular declines.
• 20:25
  Speaker 8: Are they just kind of managing that for cashflow?
• 20:28
  Speaker 2: Yeah, pretty much, Paul, at this point. So 85% of
• 20:31
  Speaker 2: Comcast's EBITDA right now comes from its cable business. But
• 20:34
  Speaker 2: as you just pointed out, it is under tremendous secular decline.
• 20:38
  Speaker 2: You're having telecom products like fiber, like fixed wireless access,
• 20:43
  Speaker 2: and now even Starlink kind of really eat cable's lunch here.
• 20:47
  Speaker 2: And so they've been losing market share. And it looks
• 20:50
  Speaker 2: like just with those players getting so much more aggressive,
• 20:53
  Speaker 2: it looks like they're going to continue to lose market share.
• 20:56
  Speaker 2: And so, really, it's going to come down to a question,
• 20:58
  Speaker 2: as you just pointed out, about stemming the bleed here.
• 21:01
  Speaker 2: But one of the things that Comcast is doing is
• 21:02
  Speaker 2: they're actually separating out their cable business from their media business. So,
• 21:07
  Speaker 2: you know, oddly enough, media has actually been the outperformer
• 21:10
  Speaker 2: for Comcast this year, and they plan to separate out
• 21:14
  Speaker 2: NBC and Sky into a separate company by mid-2027. And
• 21:17
  Speaker 2: the hope.
• 21:19
  Speaker 2: I think that investors are kind of placing their bet
• 21:22
  Speaker 2: on is that Comcast will eventually combine with the other
• 21:25
  Speaker 2: big cable operator, which is Charter, given the whole shift
• 21:30
  Speaker 2: in the market as we see it today.
• 21:33
  Speaker 5: How about the theme park business for Comcast? They had
• 21:36
  Speaker 5: the Warner Brothers. I mean, talk to us about just
• 21:40
  Speaker 5: that Universal Studios and that whole part of the business.
• 21:43
  Speaker 2: Theme Park has actually been, you know, really, really resilient
• 21:47
  Speaker 2: across the board, especially for Disney and Universal when it
• 21:51
  Speaker 2: came out with Epic Universe, you know, a few quarters ago. Recently, however,
• 21:56
  Speaker 2: the theme park business has been struggling. So we've seen
• 21:58
  Speaker 2: in Orlando that visitation has not really held up. They're
• 22:02
  Speaker 2: having a weakness across some of their international parks as well.
• 22:06
  Speaker 2: So theme parks right now, not such a hot commodity,
• 22:09
  Speaker 2: but hopefully things settle down. And the good news for
• 22:12
  Speaker 2: Comcast is as we kind of look out over the
• 22:15
  Speaker 2: next few years, they're really investing very heavily in their
• 22:18
  Speaker 2: theme parks. So this is You know, they're really looking
• 22:21
  Speaker 2: to kind of take on Disney. They're going to have
• 22:23
  Speaker 2: this huge theme park property that they're building in London.
• 22:26
  Speaker 2: So really expanding their footprint in a pretty significant way
• 22:30
  Speaker 2: to capture all of that growth.
• 22:34
  Speaker 4: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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• 22:43
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• 22:52
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