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OpenAI Joins a Massive IPO Pipeline Now Worth $3.6 Trillion · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am
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  Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
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  Speaker 1: Business App. Listen on demand wherever you get your podcasts,
• 0:21
  Speaker 1: or watch us live on YouTube.
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  Speaker 2: Through open Ai. That's the latest big AI tech company
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  Speaker 2: to announce its intention to go public, and of course
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  Speaker 2: it comes on the heels of SpaceX, potentially listing as
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  Speaker 2: early as this Friday. The IPO is supposed to be
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  Speaker 2: priced on Thursday, and Anthropic filing confidentially for an IPO
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  Speaker 2: in the recent weeks. So let's bring in our next guest.
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  Speaker 2: He is Dan Ives. Dan is global head of Technology
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  Speaker 2: Research at Webbush Securities, and Dan, I'm curious to hear
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  Speaker 2: from you whether being the last of the three mega
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  Speaker 2: tech IPOs is a good place or potentially a troubling
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  Speaker 2: place for open Ai. Is the company? Is any company
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  Speaker 2: really at risk of the public market capital exhausting itself
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  Speaker 2: because there's a lot of money that needs to find
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  Speaker 2: a home for these companies.
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  Speaker 3: Yeah, I mean I'd start at the ladder. I don't
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  Speaker 3: think there's a risk, you know, in terms of if
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  Speaker 3: you're last, there's no more tap. I mean, look, we're
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  Speaker 3: coing at three the core foundational pieces of the AI
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  Speaker 3: revolution and toropic Open AI. Of course SpaceX look first
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  Speaker 3: to market. There's an advantage. It's important and that's why
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  Speaker 3: this is going to be a continued sort of battle
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  Speaker 3: arms race between open AI and DROPIC and that's essential
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  Speaker 3: what investors are watching. Obviously SpaceX a you know, very
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  Speaker 3: important on this watershed moment for the overall markets this week.
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  Speaker 3: But to get the popcorn down, I mean, it's just starting.
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  Speaker 4: For our viewers on YouTube. I always try to figure
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  Speaker 4: out where in the world is Dana eyes when we
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  Speaker 4: have them on via zoom, because it could be anywhere
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  Speaker 4: literally on the place.
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  Speaker 2: Joined us from Asia.
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  Speaker 4: I know everywhere. I don't know.
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  Speaker 2: In the middle of his night today, I can't figure it.
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  Speaker 4: I think there's in a bunker somewhere like an a Pentagon.
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  Speaker 4: But Dan talks us about what's the feedback?
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  Speaker 3: Just got off the Red Eye. But I know what
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  Speaker 3: a better place to be than we deal with you?
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  Speaker 4: That exactly appreciate that.
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  Speaker 5: Dan.
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  Speaker 4: We're day three of the roadshow for space X. What
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  Speaker 4: are the what's some of the feedback you're hearing from
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  Speaker 4: your institutional investor clients.
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  Speaker 3: Look, I think the big focus is just is it
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  Speaker 3: a space play? Is it a data play?
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  Speaker 5: Right?
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  Speaker 3: I mean, I think that's really how investors overall are
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  Speaker 3: focused on SpaceX. O can I continue to believe like
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  Speaker 3: when it comes to SpaceX, it's much more on data
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  Speaker 3: and AI and the ecosystem than maybe just when you
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  Speaker 3: think about space and its first sort of phase. But
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  Speaker 3: what we were talking about what's going to be a
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  Speaker 3: decade build out a space and it's not just about SpaceX,
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  Speaker 3: it's about the broader sector than now investors are really
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  Speaker 3: starting to focus. You're now going to have in sutional month,
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  Speaker 3: not just retail, You're going to have a space on orst.
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  Speaker 2: Very well said, And I guess the question is how
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  Speaker 2: do people value it going forward? Because there's different explanations
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  Speaker 2: for whether this is a rocket company, a data company,
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  Speaker 2: as you put it, or kind of a vertically integrated
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  Speaker 2: new technology company, which is kind of what Elon Musk
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  Speaker 2: is envisioning here in the same way that Tessa started
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  Speaker 2: off as an electric vehicle company and has become a
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  Speaker 2: lot more. How are you anticipating Elon to kind of
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  Speaker 2: set the benchmark for how he's going to talk about
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  Speaker 2: the the kinds of numbers that SpaceX can achieve. We
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  Speaker 2: got a sense of it through the IPO perspectus, but
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  Speaker 2: you know he's going to have to manage expectations quarter
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  Speaker 2: after quarter here.
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  Speaker 3: Yeah, no doubt, as well as what's on the rise.
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  Speaker 3: And look, I think Tessa is a good group print
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  Speaker 3: because you look, can you go back right? I mean,
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  Speaker 3: you know when it came out here Mini bet against
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  Speaker 3: Mask Tessa in numbers, in terms in the near term,
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  Speaker 3: and then Alton what's out to be nonsense really changed
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  Speaker 3: the world. I think to some extent, if you're buying
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  Speaker 3: space X, you're buying Musk. I mean you're buying into
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  Speaker 3: the Musk ecosystem now the challenge and the opportunity to
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  Speaker 3: build that out execution step by step. But it's also
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  Speaker 3: argue like in a year has some merger. We've said
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  Speaker 3: over eighty percent chance between SpaceX and Testa Dan.
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  Speaker 4: It was an important day yesterday for our friends in
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  Speaker 4: Coopertino Apple and with their AI story and the narrative there,
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  Speaker 4: what did you learn from their announcement?
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  Speaker 3: Yeah, I mean, look, being there lives, I think this
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  Speaker 3: was one where a lot different than the last two
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  Speaker 3: years in a great way, because two years ago there
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  Speaker 3: was all the promise and none of that really came true.
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  Speaker 3: Last year, it was kind of really absent in terms
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  Speaker 3: of AI strategics. I mean, Paul, now you finally have
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  Speaker 3: an AI strategy. It's finally a foundational piece that you
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  Speaker 3: could sell into the eCos They're no longer watchers from
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  Speaker 3: the sideline. They're not going to be an anthropical and
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  Speaker 3: open a eye, but.
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  Speaker 5: They don't need to be.
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  Speaker 3: You have one point five billion iPhones and I think
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  Speaker 3: this is really going to be the start of mondivation
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  Speaker 3: when it comes to AI. They laid it out, but
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  Speaker 3: now devices will file the hardware ecosystem build up and
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  Speaker 3: I think what this is going to do services and
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  Speaker 3: obviously stocks off in terms of what we've seen knee jerk,
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  Speaker 3: but I think this is one It leads the foundation
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  Speaker 3: for turnus as a baton t hander from Cook.
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  Speaker 2: Were you disappointed that Turners didn't speak? Some people have
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  Speaker 2: cited that as one reason why overall the unveiling of
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  Speaker 2: the AI infuse SORIY is not impressing investors. Today the
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  Speaker 2: stock is down two point nine percent, and yesterday when
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  Speaker 2: the stock gave up its early gains.
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  Speaker 3: Yeah, I think this is it took shut. I mean
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  Speaker 3: you're talking about you know, Mount Rushmore, Hall of Fame
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  Speaker 3: or CEO. You don't want turnus there. I think that
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  Speaker 3: would take away a little of the spot. I mean,
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  Speaker 3: this is really cook handing the last WWDC afterwards obviously
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  Speaker 3: been just a historical, legendary market. But some of it
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  Speaker 3: it's going to be execution. Now it's like executing. It's
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  Speaker 3: showing developers, it's building it out. I think investors, they
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  Speaker 3: always tend to be skeptical on APP. I think this
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  Speaker 3: time is different.
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  Speaker 2: Okay, so let's talk about the fact that this time
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  Speaker 2: it's different. What does you know the unveiling of this
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  Speaker 2: new series mean for developers. Do they walk away with
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  Speaker 2: a clear roadmap for how to integrate their offerings with
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  Speaker 2: Apple's ecosystem or does this remain a wait and see
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  Speaker 2: like it has been for the past two years.
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  Speaker 3: Well, I think they finally got what they want. I
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  Speaker 3: think it's developers now that they actually have the platform
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  Speaker 3: to build out. This is no longer something on a
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  Speaker 3: whiteboard or there's some conceptual Now it's actually going to
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  Speaker 3: be the put And also it's about the app actually
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  Speaker 3: shape them building. It's about Gemini obviously as a foundation,
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  Speaker 3: which isn't just cooking cut Gemini in terms of what
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  Speaker 3: they've built. And now Apple is basically saying, like from
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  Speaker 3: a privacy security you, your data is will not going
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  Speaker 3: to be shared externally. And now it's the start of
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  Speaker 3: how they monetize it. Cloud, more applications, more devices that
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  Speaker 3: ultimately feed into this the consumer AI revolution. Apple They're
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  Speaker 3: essentially they're they're a toll collector on the AI consumer highway.
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  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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  Speaker 1: weekdays at ten am Eastern on Apple Cocklay and Android
• 7:42
  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
• 7:45
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 7:49
  Speaker 4: Comana Royal joints us here. She's a tech reporter for
• 7:51
  Speaker 4: Bloomberg News. She and Dana Hall have a great, great
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  Speaker 4: story out today. SpaceX IPO forces investors to bet on
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  Speaker 4: must entangled AI empire. Carmen, thanks much for joining us
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  Speaker 4: here in studio. I guess this IPO is really just
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  Speaker 4: a bet on Elon Musk and his vision and all
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  Speaker 4: that type of stuff. But he's got a lot of
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  Speaker 4: interest out there and a lot of different companies. How
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  Speaker 4: do investors thinking about that?
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  Speaker 6: Yeah, that's exactly kind of like the point we tried
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  Speaker 6: to do with the story. It's like it's not only
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  Speaker 6: a bet on this specific company, It's like all his
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  Speaker 6: companies have like intermingling businesses and it's becoming more so.
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  Speaker 6: He's trying to create this like vertically integrated AI company
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  Speaker 6: basically that has all the supply chain in it. So
• 8:36
  Speaker 6: if you're buying SpaceX stock, you need to take all
• 8:38
  Speaker 6: of Elon's world into account, not just the company itself.
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  Speaker 2: It kind of reminds me of how Tessel was once
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  Speaker 2: upon a time an electric vehicle company and it's become
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  Speaker 2: something much more than that. SpaceX was a rocket company,
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  Speaker 2: a rocket launch company, but now it's got AI in there.
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  Speaker 2: It's what was formerly on his Twitter in there, and
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  Speaker 2: a lot of people are expecting it's going to also
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  Speaker 2: have Tesla in there as well. They're going to combine
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  Speaker 2: it two.
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  Speaker 6: Yes, exactly. It feels like both Musk's key companies, which
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  Speaker 6: are Tesla and SpaceX, had their own goals at one
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  Speaker 6: point and then in the past six years, he's turned
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  Speaker 6: both of them into AI and now with a purchase
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  Speaker 6: of like XAI and x into SpaceX, that's become a
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  Speaker 6: lot more clear. Like Tesla's like no focusing on human
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  Speaker 6: aid robots and SpaceX want to do the satellite on space.
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  Speaker 6: And it's kind of like all in search of like AGI,
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  Speaker 6: like artificial general intelligence and like who's going to get
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  Speaker 6: there first and how they're going to do it. And
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  Speaker 6: Alon clearly doesn't want to lose, and he's really concerned
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  Speaker 6: with like having the right infrastructure in place. He doesn't
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  Speaker 6: He thinks I compute and power are going to be
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  Speaker 6: like bottlenecks for the industry, so he's trying to make
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  Speaker 6: sure that he doesn't have those bottlenecks.
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  Speaker 4: When I first started on Wall Street nearly forty years
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  Speaker 4: ago today, somebody taught me go to the when he
• 9:59
  Speaker 4: goes yeah, IPO perspectives and pick one up. Go to
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  Speaker 4: the related party transactions. That's the first place you go,
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  Speaker 4: and boy, there are a lot of related party transactions here.
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  Speaker 4: Is are we getting any reporting back that from this
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  Speaker 4: road show that there's pushback from investors or investors willing
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  Speaker 4: to give Elon benefit the down.
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  Speaker 6: It depends on who you ask. There's like some investors
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  Speaker 6: that really believe in Elon. You have to like bet
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  Speaker 6: on him.
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  Speaker 4: Yep.
• 10:22
  Speaker 6: I think that if if it's more integrated, just because
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  Speaker 6: it's like it's going to become a conglomerate and it
• 10:27
  Speaker 6: makes sense for innovation. There's others that don't really like it.
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  Speaker 6: They think like there's not enough corporate governance and it's
• 10:33
  Speaker 6: going to be less especially if spaces and stuff buying Tesla,
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  Speaker 6: And sometimes it's hard to figure out what's the valuation if,
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  Speaker 6: like Elon has had both sides of every transaction. So
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  Speaker 6: there's definitely concerns around.
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  Speaker 2: What's the value here, not just that I feel like
• 10:51
  Speaker 2: a while ago, there was a lot of premium put
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  Speaker 2: into the idea that you could have a big conglomerate
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  Speaker 2: with businesses that are kind of loosely integrated but you know,
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  Speaker 2: just tangentially. And now companies, especially those industrials, want to
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  Speaker 2: be very very narrowly focused on the other side of
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  Speaker 2: the equation. You're looking at some of these big tech
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  Speaker 2: companies like a SpaceX, like Tesla get bigger and bigger
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  Speaker 2: and you know, kind of mimic what those industrials were doing.
• 11:18
  Speaker 2: Is SpaceX kind of like the new Ge.
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  Speaker 6: That's what some investors are starting to think about, like
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  Speaker 6: does it become too unwildy and it ends up like
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  Speaker 6: Ge Or does he manage to actually have advertically integrated
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  Speaker 6: Other tech companies have gotten bigger, but sometimes they spin
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  Speaker 6: off their ventures. It doesn't seem like that's what he
• 11:38
  Speaker 6: long wants to do. It's kind to the opposite. So
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  Speaker 6: that's definitely a question on everyone's mind. All right.
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  Speaker 4: What I like about your story, in addition to the
• 11:46
  Speaker 4: deep reporting, is you have this nice graphic that tries
• 11:48
  Speaker 4: to explain must universe and how it's become more intertwined.
• 11:53
  Speaker 4: It's a graphic here and it tries to show you
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  Speaker 4: how things are interrelated. It's not helping me here, dude. Yeah,
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  Speaker 4: I mean, is there is so much stuff out there
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  Speaker 4: that he owns kind of owns influences. This is a
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  Speaker 4: lot for investors, isn't it.
• 12:08
  Speaker 6: Yeah? I mean the graphic is a lot, but it
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  Speaker 6: kind of shows how Tessa first bought Solar City, and
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  Speaker 6: like all his more successful ventures, tend to buy his
• 12:18
  Speaker 6: more flailing ones. So Solar City was struggling and then
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  Speaker 6: Tessa bought it a decade ago. Twitter was struggling under
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  Speaker 6: the dead load, Xai bought it. Then Xtai was spurning
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  Speaker 6: a lot, SpaceX spotted. So it just feels like every
• 12:33
  Speaker 6: single struggling company and suff swallowed is the expection.
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  Speaker 4: Is the expectation that SpaceX will buy Tesla.
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  Speaker 6: That's part of the market shatter. Now I don't know.
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  Speaker 2: I mean, you'd make this graphic a lot more simple.
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  Speaker 2: Swallowed by SpaceX.
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  Speaker 4: All Right, so folks, you have to go out on
• 12:52
  Speaker 4: the Bloomberg termor will go into Bloomberg dot com and
• 12:54
  Speaker 4: check out this story. It's really really good if you're
• 12:56
  Speaker 4: trying to get a handle on one aspect of this deal,
• 12:58
  Speaker 4: which is the inter party and the related transactions, this.
• 13:02
  Speaker 2: Story really stay with us. More from Bloomberg Intelligence coming
• 13:06
  Speaker 2: up after this.
• 13:11
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 13:14
  Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android
• 13:18
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 13:21
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 13:25
  Speaker 4: Fuck a little healthcare here, we do that with Sam Fazzelli,
• 13:27
  Speaker 4: Director of Research for Global Industries and a senior pharmaceuticals
• 13:30
  Speaker 4: analysts Bloomberg intelligence. He's based in London. I have no
• 13:33
  Speaker 4: idea where he is, but he's based in London. Sam
• 13:36
  Speaker 4: talk to us about Eli Lilly and their obesity products offerings.
• 13:44
  Speaker 4: Where do they stand in this market? Where are they
• 13:45
  Speaker 4: going to go going forward?
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  Speaker 5: Yeah, so Paul, they continue to lead in terms of efficacy,
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  Speaker 5: So zip bound has the better efficacy proven in a
• 13:56
  Speaker 5: head to head trial versus. And they now have this
• 14:02
  Speaker 5: drug or the retro truetide or retatrotide as I like
• 14:05
  Speaker 5: to call it, which is a triple mechanisms of action,
• 14:10
  Speaker 5: and that is got to blowout efficacy. Particularly obviously they
• 14:15
  Speaker 5: tried it in people with a very high level of
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  Speaker 5: obesity where you can lose thirty percent of your body
• 14:22
  Speaker 5: weight and not be seriously suffering. So again they have
• 14:27
  Speaker 5: this mechanism of action that this triple product that seems
• 14:31
  Speaker 5: to be doing very well. A whole bunch of other
• 14:33
  Speaker 5: companies have reported and they still lead in the oral space.
• 14:39
  Speaker 5: Astro Senecus have some good data and that looks good,
• 14:41
  Speaker 5: that looks competitive, and they're moving to phase three. They
• 14:44
  Speaker 5: have other plans for that space. So Lily still really
• 14:47
  Speaker 5: is in the lead here in terms of efficacy, particularly
• 14:53
  Speaker 5: how much.
• 14:53
  Speaker 2: Do consumers patients care about efficacy. I mean, all of
• 14:57
  Speaker 2: these drug makers have treatments that are effective, but are
• 15:02
  Speaker 2: they making the distinction between twenty seven percent versus thirty percent?
• 15:06
  Speaker 5: Very good question, Scarlett. The interesting thing here is that
• 15:12
  Speaker 5: you are coming and I'm sure you have across more
• 15:15
  Speaker 5: and more people who talk about microdosing, right, So they
• 15:20
  Speaker 5: lose the desired amount of weight that they want and
• 15:23
  Speaker 5: then they just want to keep it at base, so
• 15:25
  Speaker 5: they go into a lower dose that I don't even
• 15:27
  Speaker 5: know how they calculate that, their physician maybe helps them
• 15:30
  Speaker 5: calculate it. It gets rid of some other side effect profiles.
• 15:33
  Speaker 5: So really these big numbers and you know, and I've
• 15:37
  Speaker 5: said this before, and although the answer Toude question was
• 15:41
  Speaker 5: literally leads bone efficacy, but when you think about it,
• 15:45
  Speaker 5: does it matter for me If I'm I don't know,
• 15:48
  Speaker 5: ninety five kilos and I lose ten kilos over the
• 15:51
  Speaker 5: space of six months, whether that was twelve or eight,
• 15:56
  Speaker 5: I'm still losing quite a lot of weight and getting
• 15:59
  Speaker 5: into shape and then allowing me to do everything else
• 16:02
  Speaker 5: that I need to do. So I agree with you,
• 16:04
  Speaker 5: it's not as important. And the market's telling us that
• 16:07
  Speaker 5: except that bound is the best drug out there.
• 16:10
  Speaker 4: So Sam was quoting weight in kilo's, like, we know
• 16:13
  Speaker 4: what a kilo is, but at least it didn't go
• 16:14
  Speaker 4: stone on us.
• 16:15
  Speaker 5: Lost by two point two two point two to get
• 16:18
  Speaker 5: two pounds.
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  Speaker 4: Where Sam, Eli Lilly in twenty twenty two had twenty
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  Speaker 4: eight billion dollars of revenue. You guys out there on
• 16:25
  Speaker 4: Wall Street are projecting eighty five billion this year. Where
• 16:29
  Speaker 4: did that sixty billion of revenue come from?
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  Speaker 5: It's majority of it is obesity. So you know, I mean,
• 16:36
  Speaker 5: this has been a great company for a long time,
• 16:40
  Speaker 5: as because how do we measure farmer companies their growth profile,
• 16:44
  Speaker 5: their earnings profile, their margin evolution, but also their pipeline. Right,
• 16:49
  Speaker 5: and so they've hit the jackpot today. And I'll tell
• 16:51
  Speaker 5: you what, Paul, They're out there deal after deal. We
• 16:55
  Speaker 5: talked about it last week. I think the amazonification of
• 16:58
  Speaker 5: being a farmer company. Do everything right. They go after
• 17:01
  Speaker 5: infectious diseases, everything they can get their hands on, and
• 17:06
  Speaker 5: just just you know, feather that nest. So are they
• 17:09
  Speaker 5: and we've had another deal in the sector, right, Yes.
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  Speaker 2: I wonder to what extent Eli Lilly going out there
• 17:15
  Speaker 2: and being and doing the sort of position of strength
• 17:17
  Speaker 2: means that they're setting new benchmarks and overpaying and forcing
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  Speaker 2: everyone else to overpay. Maybe they're not overpaying, but I
• 17:24
  Speaker 2: defer to you on that.
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  Speaker 5: But they certainly have bigger firepower, right, I mean, my
• 17:29
  Speaker 5: checkbook's bigger than your checkbook. Is the kind of situation
• 17:32
  Speaker 5: I think they're in. But I think they're very disciplined.
• 17:34
  Speaker 5: I think you sometimes look at things you go, wow,
• 17:37
  Speaker 5: that's a big number for a deal of this size,
• 17:40
  Speaker 5: of this stage of development. But then what do you
• 17:42
  Speaker 5: find after six months and nine months, twelve months. Of
• 17:44
  Speaker 5: course dructs fail, there's issues that happened. But we just
• 17:47
  Speaker 5: had been looking at one called Colonia that they've done,
• 17:49
  Speaker 5: and the dation is looking really good. It's a totally
• 17:52
  Speaker 5: novel way of treating cancers using what we call in
• 17:57
  Speaker 5: vivo carti. That's not going to the detail, but totally
• 18:00
  Speaker 5: novel way. And at the time they did the sketching,
• 18:03
  Speaker 5: hay a little bit, they must know something. And of
• 18:05
  Speaker 5: course as the datas come out, yes they did know something.
• 18:08
  Speaker 5: Some of that data is looking better, So you know,
• 18:11
  Speaker 5: I think farmer companies have to think strategically too. It's
• 18:13
  Speaker 5: not just about a multiple today or an MPV analysis.
• 18:17
  Speaker 5: Does this really give me a great portfolio to go
• 18:22
  Speaker 5: and make a difference in this disease and be heard
• 18:25
  Speaker 5: by physicians real quick?
• 18:27
  Speaker 4: Sam gske GSK, a big farmer company, bought Neuvalent for
• 18:32
  Speaker 4: ten point six billion. What is Neuvalent?
• 18:35
  Speaker 5: So Newvalent is a biotech company that did what a
• 18:39
  Speaker 5: lot of these new biotech companies are doing, finding ways
• 18:43
  Speaker 5: of making fourth generation, third generation drugs with the science
• 18:48
  Speaker 5: and technology that's been evolving over the past five to
• 18:50
  Speaker 5: ten years, fifteen years. And that's exactly where this deal
• 18:54
  Speaker 5: comes into. You look at the headline number, you can
• 18:57
  Speaker 5: go that's really really you know, it's a full price
• 19:00
  Speaker 5: if you don't want to say overpaid. But then of
• 19:03
  Speaker 5: course for GSK, it's a strategic decision, right they need
• 19:06
  Speaker 5: to have getting into lung cancer. Here's two drugs to
• 19:10
  Speaker 5: put into your lung cancer bag.
• 19:14
  Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
• 19:21
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• 19:25
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• 19:28
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• 19:32
  Speaker 1: get your podcasts or watch us live on YouTube.
• 19:36
  Speaker 4: You know, we're looking at Paramounts Guidance one hundred and
• 19:38
  Speaker 4: ten billion dollar takeover Warner Brothers Discovery. This is right
• 19:41
  Speaker 4: in my backyard. I spend decades putting these companies together,
• 19:44
  Speaker 4: and now you get Paramounts Guidance looking to buy Warner
• 19:47
  Speaker 4: Brothers Discovery. But apparently the UK's got a problem with it. Apparently.
• 19:52
  Speaker 6: I think a lot of people have a problem with that.
• 19:53
  Speaker 4: I think so apparently, you know, so, I think it's
• 19:57
  Speaker 4: just something that's not necessarily going to be passed without
• 20:01
  Speaker 4: some big time review, and we want to review the
• 20:04
  Speaker 4: anti trust. We go to Jennifer Ree, senior litigation analyst
• 20:08
  Speaker 4: at Bloomberg Intelligence. Jen thanks so much for joining us
• 20:12
  Speaker 4: here talk to us about what's going on with this
• 20:14
  Speaker 4: deal and the United Kingdom.
• 20:19
  Speaker 7: We're happy to me, Paul and John. I mean, you
• 20:21
  Speaker 7: know what's happening here is that, like most big global deals,
• 20:24
  Speaker 7: this deal triggered these notification requirements across the world, not
• 20:28
  Speaker 7: just in the US and EU and UK, but elsewhere also,
• 20:32
  Speaker 7: and they have to get clearance from these entities before
• 20:34
  Speaker 7: they can go ahead and close their deal legally. So
• 20:38
  Speaker 7: you know you've heard as you mentioned there's been a
• 20:40
  Speaker 7: lot of opposition. There's been political opposition, there's been opposition
• 20:43
  Speaker 7: from labor groups coming for this deal, and so these
• 20:46
  Speaker 7: agencies really have to investigate. You know, this is just
• 20:49
  Speaker 7: the position they're in, and you have a lot of
• 20:51
  Speaker 7: different markets that they're going to be looking at. So
• 20:54
  Speaker 7: the UK's opened an investigation. They've set an end date
• 20:57
  Speaker 7: for that phase one investigation of August seventh, and at
• 21:00
  Speaker 7: that point they're going to have to decide what they
• 21:02
  Speaker 7: want to do. Do they have some concerns about the
• 21:05
  Speaker 7: impact on different markets from this combination. Are there remedies
• 21:09
  Speaker 7: that have been offered that could resolve those concerns that
• 21:11
  Speaker 7: they can get it closed up more quickly, or do
• 21:13
  Speaker 7: they need to continue to investigate, which would be opening
• 21:15
  Speaker 7: a phase two, which I think would be you know,
• 21:18
  Speaker 7: a difficult thing for these companies that intend to close
• 21:20
  Speaker 7: in the third quarter and also have a ticking pee
• 21:23
  Speaker 7: that's going to start to kick in for paramount as
• 21:25
  Speaker 7: of September thirty, so they're going to want to get
• 21:27
  Speaker 7: this cleared up before then.
• 21:29
  Speaker 2: Is there one concern that Trump's everything else?
• 21:30
  Speaker 4: I mean, are my streaming prices going on?
• 21:35
  Speaker 7: You know, it's funny. I think what everybody thinks about
• 21:37
  Speaker 7: is streaming, because that's what we all understand, and we're consumers,
• 21:40
  Speaker 7: all of us for these streaming services. But I just
• 21:43
  Speaker 7: don't see that streaming overlap being problematic anywhere in the world.
• 21:47
  Speaker 7: You know, Paramount plus and HBO are the two entities
• 21:49
  Speaker 7: that would come together, and they are still relatively small
• 21:53
  Speaker 7: in the world of streaming compared to Netflix and Disney
• 21:56
  Speaker 7: Plus and all the others. And I don't think anywhere
• 22:00
  Speaker 7: and buying market share gets anywhere near thirty percent, and
• 22:02
  Speaker 7: that's kind of a flashpoint for antitrust. Under thirty percent,
• 22:06
  Speaker 7: you probably don't have concerns. Over thirty percent, you probably do.
• 22:09
  Speaker 7: So I think any agency regulator that's looking at this
• 22:14
  Speaker 7: can probably get past that streaming concern.
• 22:17
  Speaker 4: Jen just summarize for us, what's the status of the
• 22:19
  Speaker 4: regulatory review in the US here the federal versus state.
• 22:23
  Speaker 7: You know, it's really complicated. In the United States, there's
• 22:27
  Speaker 7: a mandatory antitrust waiting period that allows the Department of
• 22:31
  Speaker 7: Justice in this case, to investigate the deal. If that
• 22:34
  Speaker 7: period expires, if the Department of Justice allows it to expire, legally,
• 22:38
  Speaker 7: the companies are free to close. That happened. But even
• 22:41
  Speaker 7: though the Department of Justice allowed that period to expire,
• 22:44
  Speaker 7: there have been news reports that it is continuing to
• 22:47
  Speaker 7: investigate the deal, which is a little bit odd. It's
• 22:50
  Speaker 7: just an unusual sort of set of circumstances. Even if
• 22:54
  Speaker 7: that period has expired, the Department of Justice could still
• 22:57
  Speaker 7: do something. They could still sue, which I highly doubt
• 22:59
  Speaker 7: that will, or they could still seek remedies and enter
• 23:02
  Speaker 7: a consent order. There's nothing that stops them. But if
• 23:05
  Speaker 7: they don't do something and all these other clearances come through,
• 23:08
  Speaker 7: the companies legally can go ahead and close their deal.
• 23:11
  Speaker 7: Now we've heard that the states, led by California, a
• 23:15
  Speaker 7: group of states I should say, are thinking about suing
• 23:17
  Speaker 7: to block the deal as well. If they do that,
• 23:20
  Speaker 7: what they're going to need to do is get a
• 23:22
  Speaker 7: preliminary injunction because the time it will take them for
• 23:26
  Speaker 7: a judge to get to a decision on permanently blocking
• 23:28
  Speaker 7: the deal is probably nine months, eight months, nine months
• 23:32
  Speaker 7: maybe even more from the time they file, and by
• 23:34
  Speaker 7: then I think the other clearances will probably be in
• 23:37
  Speaker 7: and the companies could close, and it is much harder
• 23:40
  Speaker 7: to get a decision unwinding a deal, So the first
• 23:42
  Speaker 7: thing they would do is seek a preliminary injunction, and
• 23:44
  Speaker 7: that process can be much more much up quicker than permanent.
• 23:48
  Speaker 7: It can get resolved within about four or five months.
• 23:50
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