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Netflix to Buy Warner Bros. in $72 Billion Cash, Stock Deal · Bloomberg Intelligence

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  Speaker 2: It is Merger Friday.
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  Speaker 3: Here Netflix agree to by Warner Brothers Discovery in a
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  Speaker 3: historic combination, joining the world's dominant paid streaming service with
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  Speaker 3: one of Hollywood's oldest and most revered studios. To get
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  Speaker 3: the bottom of this, gets some real analysis with this
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  Speaker 3: return to Githa rang Annat and she covers all the
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  Speaker 3: media companies for Bloomberg Intelligence here. You know, it's interesting, getha.
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  Speaker 3: You could argue that paramount sky Dance and Comcasts arguably
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  Speaker 3: needed this Warner Brothers Discovery company more than Netflix. Yeah,
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  Speaker 3: Netflix comes out on top here. What do you think
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  Speaker 3: the strategy for netfocuses?
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  Speaker 4: Yeah, thank you so much, Paul, So definitely in Netflix here.
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  Speaker 4: Kind of really looking at the future. I mean we
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  Speaker 4: are I think at you know, this cusp of the
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  Speaker 4: media landscape kind of completely changing with the advent of
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  Speaker 4: jen Ai, and I think the barriers to entry for
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  Speaker 4: anybody is going to come down substantially because the costs
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  Speaker 4: to produce content are going to come down substantially. And
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  Speaker 4: I think Netflix kind of sees the writing on the
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  Speaker 4: wall and says that they really need to play the
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  Speaker 4: long game here and deepen their library with a lot
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  Speaker 4: of the beloved and you know, global franchises that Warner
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  Speaker 4: Brothers Discovery has to offer. So I'm just absolutely not
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  Speaker 4: seen as existential for Netflix at all, but I think
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  Speaker 4: they see it as existential from a long range perspective.
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  Speaker 4: But of course the big losers here definitely Paramount and Comcast,
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  Speaker 4: at least in the short run.
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  Speaker 5: In talking about Paramount and Comcast here, how are we
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  Speaker 5: thinking about the added pressures that they may be potentially
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  Speaker 5: facing if we think about the fact that they are
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  Speaker 5: lower or subscale I should say, into their streaming in
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  Speaker 5: comparison to Netflix.
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  Speaker 4: Yeah, this is pretty much game over. You know, we
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  Speaker 4: already knew that Netflix had won the streaming wars. Now
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  Speaker 4: without a shred of doubt, they are going to cement
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  Speaker 4: their dominance. I mean, you just look at the numbers,
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  Speaker 4: four hundred and fifty million global streamers. Yes, Paramount Plus
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  Speaker 4: was already a subscale streamer with only about seventy million subscribers.
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  Speaker 4: Peacock is even in worse shape with you know, only
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  Speaker 4: close about forty to forty five million. So this really
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  Speaker 4: kind of puts, you know, tremendous pressure on them, and
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  Speaker 4: they really have to come up with some kind of
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  Speaker 4: strategy to to you know, fortify their businesses. Maybe they
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  Speaker 4: have to look at a potential combination. I don't know
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  Speaker 4: what it's going to look like.
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  Speaker 3: Keith and we talked who spoke earlier this morning to Jenrie.
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  Speaker 3: She covers all the anti trust stuff for Bloomberg Intelligence.
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  Speaker 3: Since she suggested that this will face a very difficult
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  Speaker 3: regulatory review.
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  Speaker 2: What if that is.
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  Speaker 3: In fact the case, what do you think Netflix would
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  Speaker 3: be willing to do to maybe get this deal done with?
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  Speaker 3: They think about selling some massets here.
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  Speaker 4: They definitely could, so so far paut there. They're saying
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  Speaker 4: all the right things. They're saying everything you know that
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  Speaker 4: should assuage any regulatory regulatory fears that said, I mean,
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  Speaker 4: you are combining the number one streaming service in the
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  Speaker 4: world with the number three streaming service. Obviously a lot
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  Speaker 4: of red flags there. Potentially They are, however, saying that
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  Speaker 4: this is going to be good for consumers. This you know,
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  Speaker 4: it's going to provide more consumer choice, that's actually going
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  Speaker 4: to lower costs for consumers because you know, they're going
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  Speaker 4: to be able to sell a bundle of HBO Max
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  Speaker 4: with Netflix, potentially lowering costs by I don't know, thirty
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  Speaker 4: forty percent. So that's one thing they're saying. The second
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  Speaker 4: thing where there was obviously a lot of concern, and
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  Speaker 4: not just from regulators but also from Hollywood content and
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  Speaker 4: Hollywood moguls, would be that, you know, Netflix has typically
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  Speaker 4: been very anti theatrical, so they talk always about day
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  Speaker 4: and date releases, how you know, movies should be released
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  Speaker 4: directly to streaming, and so obviously there's been a lot
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  Speaker 4: of backlash from the exhibitors, from the theater, from the
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  Speaker 4: you know, create community. But Netflix again kind of plicating everybody,
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  Speaker 4: saying that they are going to continue the Warner theatrical
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  Speaker 4: strategy by continuing to release those fifteen twenty movies year
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  Speaker 4: after year in the theaters. And the last thing that
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  Speaker 4: you know, everybody has been worried about is we have
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  Speaker 4: to remember that Warner is actually a huge content supplier,
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  Speaker 4: so they supply all of these big shows or you
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  Speaker 4: think of Ted Lasso on Apple Tweed that's a Warner show.
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  Speaker 4: So you know, again, are they going to pull The
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  Speaker 4: big question is is Netflix going to pull back on that,
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  Speaker 4: on all that content, And just this morning Ted Sarandos
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  Speaker 4: said on the call that no, we're not. You know,
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  Speaker 4: Warner Studio is going to continue to do whatever it
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  Speaker 4: has been doing. But again, you know, not really sure
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  Speaker 4: how that's going to work for Netflix if they you know,
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  Speaker 4: just continue to do that. But so far they're saying
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  Speaker 4: all the right things from you know, a regulatory standpoint.
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  Speaker 5: So from a consumer experience standpoint here if it's Netflix
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  Speaker 5: and they've got Warner Brothers Discovery here, we're thinking about
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  Speaker 5: HBO Max and things of that sort. Essentially, are you
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  Speaker 5: going to maybe see some sort of merger of experience
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  Speaker 5: when you go on to net you're also accessing HBO
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  Speaker 5: or will it be more of a bundle mindset here?
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  Speaker 4: Yeah, So that is what has been really difficult to
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  Speaker 4: parse out Nora. So they were asked this question again
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  Speaker 4: repeatedly this in this morning's call. Is HBO Max kind
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  Speaker 4: of going to be like one of the tiles that
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  Speaker 4: you would see on a Disney Plus? Right, you go
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  Speaker 4: and you see Pixar and Marvel, and is HBO going
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  Speaker 4: to be something similar to that or are they just
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  Speaker 4: going to continue to run the two services completely independently.
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  Speaker 4: If you kind of run the math, it just doesn't
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  Speaker 4: make sense for them to have two separate streaming platforms
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  Speaker 4: because you have all of the overhead expenses and the
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  Speaker 4: corporates and all of that to a company at that
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  Speaker 4: so that doesn't really make sense. I think at some
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  Speaker 4: point they basically fold in HBO max all of that
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  Speaker 4: content onto Netflix, although they haven't necessarily clarified that, but
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  Speaker 4: I think that in you know, basically helps them from
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  Speaker 4: a cost perspective, helps them from a content perspective, and
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  Speaker 4: then really helps them with engagement, which is really what
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  Speaker 4: they're looking for. Deepen engagement on the Netflix platform. How
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  Speaker 4: do you do that by increasing the amount of content?
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  Speaker 4: So I think eventually that is the game plan, But
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  Speaker 4: no specifics from the Netflix management team just yet.
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  Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.
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  Speaker 3: A big deal of the day, Netflix acquiring Warner Brothers Discovery.
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  Speaker 3: What's the regulatory framework? Are the regulators going to take
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  Speaker 3: a look at this deal? This is a monster deal
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  Speaker 3: in terms of dollars, you know, eighty billion dollars of
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  Speaker 3: enterprise value. Let's check in with Jennifer Rea, Bloomberg Intelligence
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  Speaker 3: senior litigation analysts.
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  Speaker 2: So, Jen, this is a big deal. How the regulator's
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  Speaker 2: going to view this?
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  Speaker 6: It really is, Paul, and I think, and we've seen
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  Speaker 6: a lot of opposition to it coming out already. I
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  Speaker 6: think it's going to get really significant scrutiny, not just
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  Speaker 6: in the United States by the Department of Justice, but
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  Speaker 6: likely also in Europe and by the UK and possibly
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  Speaker 6: some other jurisdictions as well. But you know, they're going
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  Speaker 6: to look at these overlaps, which in this case are
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  Speaker 6: both horizontal. That's in streaming. They both provide stream both
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  Speaker 6: companies provide streaming services, but they're also vertical. You have
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  Speaker 6: a big streaming service buying a big movie and TV
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  Speaker 6: producer and a big content a library of content, and
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  Speaker 6: that creates vertical issues. And when a company is really
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  Speaker 6: strong in both levels of a supply chain. When they
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  Speaker 6: vertically integrate this way, that can raise concerns too, So
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  Speaker 6: the Department of Justice is going to have to dig
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  Speaker 6: into both of those issues. And last, Paul, I'll say
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  Speaker 6: this because we haven't seen very much about it, but
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  Speaker 6: there's also what we call a monopsony concern here. Monopsony
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  Speaker 6: is when there are a merger results and too few
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  Speaker 6: buyers of a service or product. So in this case,
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  Speaker 6: you've got two huge creators of scripted content that are
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  Speaker 6: coming together and that could have a negative impact on
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  Speaker 6: the artists, the production people, the writers that go into
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  Speaker 6: making all the TV and movie content that the companies make.
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  Speaker 5: Jennifer walk us through what exactly happens to the deal
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  Speaker 5: if the DOJ or regulators more broadly decide to push
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  Speaker 5: back on this.
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  Speaker 6: Sure, So there are a couple different things that can happen.
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  Speaker 6: I'll start by saying this. In depth investigation usually starts
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  Speaker 6: by issuing what are called second requests for information. Those
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  Speaker 6: are like really big subpoenas where they're going to get
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  Speaker 6: a lot of business documents, a lot of data and
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  Speaker 6: information from the companies. Now, once the DOJ has looked
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  Speaker 6: at all that material. They have to decide either they
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  Speaker 6: clear it out right, they clear it with the negotiated
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  Speaker 6: settlement with the companies, or they soon to try to
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  Speaker 6: block it in trial. A negotiated settlement could mean agreeing
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  Speaker 6: to divest a product such as HBO max and or
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  Speaker 6: agreeing to behavioral remedies such as making promises about the
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  Speaker 6: way the post merger firm will behave in the marketplace.
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  Speaker 6: But if something like that can't be agreed upon, then
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  Speaker 6: the only thing the DJ has left to do is
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  Speaker 6: go to trial and seek a permanent injunction from a
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  Speaker 6: judge that blocks the companies from closing the deal. They
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  Speaker 6: did that when AT and T he tried to buy
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  Speaker 6: Time Warner several many years ago. But I'll contrast that
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  Speaker 6: to when Comcasts bought NBCU. They also had some concerns there,
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  Speaker 6: but they entered a settlement agreement with respect to that deal.
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  Speaker 3: Jen Politics, I think politics is going to come into
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  Speaker 3: this deal, maybe more so than some others here generally,
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  Speaker 3: I guess, on the one hand, we have an administration
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  Speaker 3: that presumably is more open to consolidation across industries, taking
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  Speaker 3: a lighter touch. But then there's also a president who
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  Speaker 3: makes it personal oftentimes.
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  Speaker 2: Do we have any idea how that might shake out?
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  Speaker 6: You know, Paul, You're exactly right, And it makes it
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  Speaker 6: so hard nowadays to actually really do a true anti
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  Speaker 6: trust analysis of a deal because we have seen the
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  Speaker 6: Department of Justice and the Federal Trade Commission, I could say,
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  Speaker 6: aligning with the Trump administration in anti trust outcomes for
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  Speaker 6: deals and pushing the policy priorities of the administration and
• 9:56
  Speaker 6: listening to what the President has to say. So where
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  Speaker 6: the pre and the administration is against a deal, it
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  Speaker 6: is a higher risk, i would say, of that deal
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  Speaker 6: having to defend itself in court and the Department of
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  Speaker 6: Justice seeking a block. But on the other hand, Paul,
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  Speaker 6: we don't really know what's going on behind the scenes.
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  Speaker 6: You know, we've seen some of these companies to mergers
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  Speaker 6: hire some Trump aligned lobbyists, powerful people in Washington that
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  Speaker 6: have helped them to push through the deal that was
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  Speaker 6: the allegation with respect to the settlement the DJ entered
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  Speaker 6: when Hewlett Packard bought Juniper. We don't know what other
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  Speaker 6: kinds of concessions or agreements are being made. You know,
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  Speaker 6: this is all sort of the back room channels and
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  Speaker 6: without knowing that It's hard to understand where the administration
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  Speaker 6: may come out months from now in the end on
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  Speaker 6: the deal, but at least for right now, we know
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  Speaker 6: that the administration doesn't look happy about this buyer. They
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  Speaker 6: would have preferred Paramount.
• 10:46
  Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
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  Speaker 5: We did get some earnings out of Hewlett Packard Enterprise,
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  Speaker 5: that's taker HPE. We did see that this essentially disappointed
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  Speaker 5: what investors were looking for here. We did see the
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  Speaker 5: company gave an outlook for sales in the current quarter
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  Speaker 5: that fell short of the high expectations, particularly for its
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  Speaker 5: AI server business. And we've got the best person to
• 11:25
  Speaker 5: help us break this down. We're looking at going to
• 11:27
  Speaker 5: be chatting with Bloomberg Intelligence senior tech analyst Wu Jinho.
• 11:31
  Speaker 5: He's coming to us out of Princeton, New Jersey. Tell
• 11:33
  Speaker 5: us a little bit about what you took away from
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  Speaker 5: this earnings report.
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  Speaker 7: Oh yeah, thanks for having me so I actually like it.
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  Speaker 7: I know there was a high focus on the revenue
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  Speaker 7: numbers for the upcoming quarter, but EPs they actually erased
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  Speaker 7: the EPs guidance from two twenty on the lower end
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  Speaker 7: to two twenty five and two forty on the high
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  Speaker 7: end to two forty five. So essentially, the strategy that
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  Speaker 7: Antonio straight laid out with the Juniper acquisition is working
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  Speaker 7: out as planned. It is cushioning some of these higher
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  Speaker 7: commodity costs and the higher AI mix. So you despite
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  Speaker 7: the disappointing one Q sales outlook, the overall years should
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  Speaker 7: be fine.
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  Speaker 3: So the company's talking about, you know, substantial interest in
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  Speaker 3: its AI servers, and they call out governments, and that's
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  Speaker 3: kind of new for me at least. I guess I'm
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  Speaker 3: kind of used to talking about the hyper scalers, whether
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  Speaker 3: it's Microsoft or Amazon. I've just spent maybe other categories
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  Speaker 3: of people that may be making some AI investments and servers.
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  Speaker 7: Yeah, hey, Paul, So let's think about the sovereigns. Let's
• 12:39
  Speaker 7: think about the Saudi's, the US, the US federal government,
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  Speaker 7: they are going to start ramping up their own AI
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  Speaker 7: initiatives as well, right, the Department of Energy, Department of defense.
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  Speaker 7: They're customers of HPEES Supercompute, and they're going to convert
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  Speaker 7: from supercomputing to AI s servers as some of these
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  Speaker 7: configurations start rolling out. They already you know, h HPE
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  Speaker 7: already has some agreements with the saudist. But you know,
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  Speaker 7: and that's one of the issues with with HPE's outlook.
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  Speaker 7: It's more on the timing of when these deals are
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  Speaker 7: flowing through. It's being pushed out more towards the second
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  Speaker 7: half of the year versus the first half. But they
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  Speaker 7: are going to play a much more meaningful role in
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  Speaker 7: the future, not only for HPE, for Dells and super
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  Speaker 7: Micro as well.
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  Speaker 5: So how are they doing in terms of comparison to
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  Speaker 5: competitors in this market.
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  Speaker 7: Well, I mean, you know, HPE has made the strategic
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  Speaker 7: content on not going after these lower margin AI server deals.
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  Speaker 7: If we look at, you know, some of the competitors
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  Speaker 7: the way I have Dell modeled out, they're going to
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  Speaker 7: do roughly about forty billion dollars in AI server revenue.
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  Speaker 7: Super Micro around the seminal level similar level for next
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  Speaker 7: year is probably going to do roughly about five billion
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  Speaker 7: dollars in AI server AI server revenues. In physical twenty six. Now,
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  Speaker 7: look that five billion dollars is not that the sneeze at,
• 14:12
  Speaker 7: but you know, relatively speaking, it's gonna be much smaller
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  Speaker 7: in scope and scale.
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  Speaker 3: Why are they smaller? Why are they lagging? And is
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  Speaker 3: there a plan for them to kind of narrow that gap?
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  Speaker 7: Yeah, you know, I found that to be disappointing in
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  Speaker 7: terms of lagging. I do think they have the assets
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  Speaker 7: to do so. But at the end of the day,
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  Speaker 7: you know, the management team at HPE is very focused
• 14:35
  Speaker 7: on shareholder and shareholder value. These AI server deals are
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  Speaker 7: very low in margin and highly competitive, so they're not
• 14:43
  Speaker 7: chasing after these lower margin deals. And one of the
• 14:45
  Speaker 7: streetategic reasons on why they're going after HP is going
• 14:49
  Speaker 7: after these sovereign deals is because they think it's going
• 14:51
  Speaker 7: to be higher in margin and and hopefully that does
• 14:55
  Speaker 7: pan out for them, which is one of the reasons
• 14:57
  Speaker 7: why that you know, we're talking about one fifth the
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  Speaker 7: size of the deal flow for them.
• 15:03
  Speaker 5: So out of outside of HPE, what else are you
• 15:05
  Speaker 5: really keeping an eye on right now in this tech space?
• 15:09
  Speaker 7: Well, well, the AI play is going to be pretty important,
• 15:14
  Speaker 7: but I will tell you, uh, the d ram story
• 15:17
  Speaker 7: is actually going to start materializing in as a potential
• 15:21
  Speaker 7: headwind for all of the hardware space. One thing that
• 15:24
  Speaker 7: we didn't discuss on HPE is the three hundred percent
• 15:29
  Speaker 7: rise and d RAM prices is going to affect their
• 15:31
  Speaker 7: server sales. They think they're going to pass that through
• 15:33
  Speaker 7: to customers. I have I'm a little bit skeptical, but
• 15:36
  Speaker 7: I think it's you know, the rise in commodity costs
• 15:38
  Speaker 7: and d RAM is going to be the new tariff
• 15:41
  Speaker 7: story in twenty twenty six. That's going to affect a
• 15:43
  Speaker 7: lot of these hardware vendors.
• 15:45
  Speaker 2: Why are DRAMs up so much?
• 15:48
  Speaker 7: AI AI AI, you know these hyperscale the hyperscale cloud
• 15:53
  Speaker 7: guys are sucking up so much of this memory, and
• 15:56
  Speaker 7: the DRAM vendors aren't raising the capacity. So when demand
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  Speaker 7: is tilting over one way, uh and some of the
• 16:04
  Speaker 7: standard DRAMs they're not producing as many DRAMs and the
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  Speaker 7: capacity is not growing, you know, there's no nowhere else
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  Speaker 7: to go for the price to go higher.
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  Speaker 5: I mean, when we think about AI, and we're talking
• 16:14
  Speaker 5: about HPE right now in particular, our expectation is just
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  Speaker 5: too high. Are people putting so much pressure in these
• 16:20
  Speaker 5: companies and we're seeing these you know, these estimates and
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  Speaker 5: we're not really seeing them delivering or what's your read
• 16:26
  Speaker 5: on that?
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  Speaker 7: Well, So let let's let's let's talk about HPE in particular.
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  Speaker 3: Right.
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  Speaker 7: You know, the way I wrote my earnings outlook commentary
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  Speaker 7: was it depends on the lens that you look at, right,
• 16:39
  Speaker 7: from an earning from a sales lens, the AI sales
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  Speaker 7: did disappoint, right, But if we think about it from
• 16:45
  Speaker 7: an earnings and a cash flow lens, the networking business
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  Speaker 7: actually did as well as it should have, and it's
• 16:51
  Speaker 7: doing the work that it's supposed to be doing in
• 16:53
  Speaker 7: terms of cushioning some of the lower margining business. And
• 16:57
  Speaker 7: quite frankly, I still think that there's potential for Ernie's
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  Speaker 7: upside if networking execution strengthens going into the rest of
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  Speaker 7: the year.
• 17:06
  Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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• 17:27
  Speaker 5: Let's switch gears and dig a bit into the industrial space.
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  Speaker 5: I mean, just last month we had a sphears of
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  Speaker 5: a government shutdown continuing, and we saw it was the
• 17:34
  Speaker 5: longest government shutdown in US history. But this did drag
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  Speaker 5: on a lot of the major airlines. And we have
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  Speaker 5: a wonderful person to discuss us here with us today,
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  Speaker 5: George Ferguson. Of course, he's Bloomberg Intelligence senior Aerospace, Defense
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  Speaker 5: and airlines analysts, and we want to chat a bit
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  Speaker 5: about what's going on in terms of Southwest earnings and
• 17:51
  Speaker 5: how government shutdown actually weighed potentially on this company here. George,
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  Speaker 5: what is your takeaway here from what we're hearing from Southwest?
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  Speaker 8: Yeah, I mean it was a little bit more than
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  Speaker 8: we expected. I think the impact was about two hundred
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  Speaker 8: million dollars on the quarter. It was in line with
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  Speaker 8: what Delta Airlines had reported. We probably thought, you know,
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  Speaker 8: perhaps Southwest a little bit less impacted as they're not
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  Speaker 8: as heavily into the sort of the high volume airports,
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  Speaker 8: you know. And actually I think it was a bit
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  Speaker 8: surprised as well that they talked about the booking curve.
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  Speaker 8: We think most people, you know, typically book well before
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  Speaker 8: the holiday season, so we wouldn't have expected their booking
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  Speaker 8: curve to be as impacted, But I mean again, I
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  Speaker 8: think it's you know, largely in line with what we expected.
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  Speaker 8: A couple hundred million dollars hit. I don't think it'd
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  Speaker 8: be It's not gonna be terrible.
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  Speaker 3: Stock is up four point six percent today, fifty two
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  Speaker 3: week high for Southwest Airlines. So, George, what's the I
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  Speaker 3: know you've either have publisher working on your twenty twenty
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  Speaker 3: six outlook here, what's kind of the call for the
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  Speaker 3: airlines in the next six or twelve months?
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  Speaker 8: Yes, I mean as we look at you know, twenty
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  Speaker 8: twenty six, we get it like visibility about six months
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  Speaker 8: where the schedule and you know, we've already started to
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  Speaker 8: look at schedules for the new year. So in the
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  Speaker 8: first half of the year, the domestic business appears to
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  Speaker 8: be growing. The domestic capacity for US airlines is.
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  Speaker 9: Growing around GDP is two and a half percent, and
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  Speaker 9: we see less of that growth in the low cost
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  Speaker 9: airlines space.
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  Speaker 8: Now, Southwest is in the middle of migrating between I
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  Speaker 8: don't know if I call them low cost, they call
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  Speaker 8: them budget. They're in the middle of migrating from budget
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  Speaker 8: to an airline that's going to offer premium, you know,
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  Speaker 8: premium seating and some premium services in the new year.
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  Speaker 8: So look, you know, it looks like there is a
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  Speaker 8: not a restructuring, but an adjustment underway again in that
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  Speaker 8: budget low cost world. That's going to be less growth
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  Speaker 8: than you're seeing in the full service the trend we've
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  Speaker 8: seen here in twenty twenty five. So we're thinking that
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  Speaker 8: premium seating, full service seating could be a bit excess
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  Speaker 8: and could see continued push on the unfairs. We're thinking
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  Speaker 8: budget ought to get a bit better. We were projecting
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  Speaker 8: kind of a three percent increase in Southwest yields originally
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  Speaker 8: before the government shut down. Now we're kind of thinking
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  Speaker 8: two and a half percent. I mean, that's really not
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  Speaker 8: bad for four Q So again we think that sort
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  Speaker 8: of carries into the new year. Another big issue in
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  Speaker 8: the new year is going to be a lot of
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  Speaker 8: the US airlines got a bit of a kicker, got
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  Speaker 8: a tailwind from lower fuel prices. We don't see fuel
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  Speaker 8: prices going much lower from here, so that tailwind sort
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  Speaker 8: of peels away in the new year, and that's something
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  Speaker 8: they're going to have to manage as well, even as
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  Speaker 8: they try to get sort of yields sorted out. We
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  Speaker 8: don't see yields improving dramatically right now, but we see
• 20:51
  Speaker 8: yields probably firming a bit and maybe not falling. As
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  Speaker 8: you know, following George, you have.
• 20:57
  Speaker 5: A broad view between aerospace, defense, airline, and you know,
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  Speaker 5: as we're kind of wrapping up earning season, if you
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  Speaker 5: want to call it that, did you hear about tariffs
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  Speaker 5: at all during this earning season? Are you expecting to
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  Speaker 5: hear about this in twenty twenty six?
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  Speaker 8: The truth is tariffs. Really there was a little bit
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  Speaker 8: of commentary around tariffs. We heard, I think most of
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  Speaker 8: it from the engine makers, you know, a couple hundred million,
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  Speaker 8: five hundred million here and there, which really doesn't matter
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  Speaker 8: a lot on their business. So largely tariffs look to
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  Speaker 8: have been you know, sort of I don't know if
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  Speaker 8: they were sidestep but avoided by the aerospace supply chain.
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  Speaker 8: One of the things about the aerospace supply chain is
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  Speaker 8: that it definitely bridges the US and Europe, and it's
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  Speaker 8: definitely sort of a you know, a NAFTA. NAFTA is
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  Speaker 8: the old word whatever that North American Free Trade Zone is.
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  Speaker 8: There's a lot of componentry that moves around that those
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  Speaker 8: two regions, and so it's going to be I think
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  Speaker 8: in everyone's best interest to keep tariffs off of aerospace, so,
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  Speaker 8: you know, I think some of that had to play
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  Speaker 8: obviously with the European agreements. In North America, we've seen
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  Speaker 8: some give and take, right as Trump got mad at
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  Speaker 8: at Canada here and there and decided there's going to
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  Speaker 8: put some terrorfts on them. But again largely it's been
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  Speaker 8: side step. The biggest problem was I think Brazil and
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  Speaker 8: late in the you know, late or recently we've seen
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  Speaker 8: the Canadian issue, but I think it's going to go.
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  Speaker 8: I don't think it's going to be big issue.
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