Latest / The Chuck ToddCast / Interview Only w/ William D. Cohan - Media Consolidation, Private Equity & Shadow Banking

Transcript

Interview Only w/ William D. Cohan - Media Consolidation, Private Equity & Shadow Banking · The Chuck ToddCast

• 0:00
  Speaker 1: This episode of the Chuck Todd cast is brought to
• 0:02
  Speaker 1: you by Chapter. Now, almost everything you hear about Medicare
• 0:06
  Speaker 1: is somebody quietly trying to steer you somewhere. And you're
• 0:11
  Speaker 1: skeptical of that, as you should be. I get it.
• 0:14
  Speaker 1: I mean, there's a federal lawsuit going on right now
• 0:17
  Speaker 1: over exactly this. Companies that branded themselves as unbiased while
• 0:21
  Speaker 1: allegedly pointing people toward whatever would pay them the most
• 0:25
  Speaker 1: as some sort of broker. So if your default is
• 0:28
  Speaker 1: to distrust everyone in this space, honestly.
• 0:30
  Speaker 2: I get it.
• 0:31
  Speaker 1: I'm a bit distrustful these days myself. That's the whole
• 0:34
  Speaker 1: reason I want to tell you about Chapter. They're independent
• 0:37
  Speaker 1: Medicare advisors whose entire model is that their advisors are
• 0:41
  Speaker 1: not paid to push any one plan. They're just trying
• 0:45
  Speaker 1: to help. Yes, there's compensation that goes with it. but
• 0:47
  Speaker 1: it's across the board is what they're trying to do.
• 0:51
  Speaker 1: At the end of the day, they're advocating for you.
• 0:52
  Speaker 1: They're not the insurance companies themselves. They're an actual person
• 0:56
  Speaker 1: who actually goes through your doctors, your prescriptions, your needs,
• 1:01
  Speaker 1: and then compares them to every single plan available to
• 1:04
  Speaker 1: find the best one that will work for you and
• 1:06
  Speaker 1: hopefully save you a couple dollars too. And here's the
• 1:09
  Speaker 1: part that sets chapter apart. They don't disappear once you've
• 1:14
  Speaker 1: been in They will keep advocating for you. They're kind
• 1:17
  Speaker 1: of like almost like a concierge service. You're just there.
• 1:19
  Speaker 1: I need help. You're like customer service. You know, the plan,
• 1:22
  Speaker 1: you know, help me navigate this again. So you ever
• 1:24
  Speaker 1: get hit with a wrongful medical bill, they'll help you
• 1:28
  Speaker 1: fight it. They want to stay an advocate for you
• 1:31
  Speaker 1: even after you've done this. So look, I get it.
• 1:34
  Speaker 1: I think there's all sorts of space. You see a
• 1:38
  Speaker 1: lot of people are throwing themselves in this healthcare space.
• 1:41
  Speaker 1: What I like about these chapter folks, I've spent time
• 1:44
  Speaker 1: with them. This is a very transparent organization. It is
• 1:48
  Speaker 1: Medicare and all of its affiliated stuff can be very confusing.
• 1:53
  Speaker 1: The whole point of this is to make this easier
• 1:56
  Speaker 1: and less confusing. Okay, so look, take the skepticism you
• 2:00
  Speaker 1: already have in all of this, point it at your
• 2:02
  Speaker 1: own plan for 20 minutes. It's free. There's no pressure.
• 2:06
  Speaker 1: And then call chapter today at 980-734-4255. Well, as many
• 2:18
  Speaker 1: of you know, I am knee deep in trying to
• 2:21
  Speaker 1: figure out where the media business is going, where the
• 2:25
  Speaker 1: news media business is going. And my next guest is
• 2:28
  Speaker 1: someone who understands the world of business and journalism and
• 2:34
  Speaker 1: that turned financial journalist, founding partner of Puck. I have
• 2:42
  Speaker 1: become addicted to his newsletter. And he's author of several
• 2:46
  Speaker 1: terrific books about Wall Street and the personalities that dominate it.
• 2:50
  Speaker 1: His latest is called Money to Burn, The Unvarnished Truth
• 2:54
  Speaker 1: about Leon Black, Apollo, and the rise of a new
• 2:57
  Speaker 1: Wall Street. I'm going to talk with Bill about his book,
• 3:01
  Speaker 1: don't get me wrong, but there's something else I want
• 3:04
  Speaker 1: to spend some time with, and that's just sort of
• 3:06
  Speaker 1: where's the media business going? Are we going to continue
• 3:10
  Speaker 1: to have publicly traded companies even want to own news
• 3:17
  Speaker 1: networks anymore? My thesis is, you guys have heard me
• 3:21
  Speaker 1: say this, I don't think they do. But we're going
• 3:24
  Speaker 1: to find out. Bill, welcome to the podcast. It's great
• 3:28
  Speaker 1: to be here, Chuck.
• 3:29
  Speaker 2: Thank you. Thanks for having me.
• 3:30
  Speaker 1: You got it. So let's look, I want to get into, look,
• 3:33
  Speaker 1: there's a ton of questions I have about Leon Black.
• 3:35
  Speaker 1: And I got obsessed about Mark Walters and the whole
• 3:40
  Speaker 1: how private credit works and sort of how Leon Black
• 3:43
  Speaker 1: sort of invented this whole thing. I could do an
• 3:46
  Speaker 1: hour just on that. But I do want to concentrate
• 3:49
  Speaker 1: on sort of where big media is going. Because I'll
• 3:55
  Speaker 1: tell you my theory, and I'm curious to get your
• 3:58
  Speaker 1: reaction and then get your expertise, which is, I think
• 4:01
  Speaker 1: all of the major publicly traded media companies are going
• 4:05
  Speaker 1: to try to get rid of their news divisions. whether
• 4:08
  Speaker 1: it seems like ABC to Nexstar seems like a likely thing.
• 4:12
  Speaker 1: I assume when Trump leaves office, some combo platter of
• 4:15
  Speaker 1: CNN and CBS gets offloaded to pay down debt. And
• 4:19
  Speaker 1: certainly Comcast is already talking about spinning off NBCUniversal. So
• 4:24
  Speaker 1: it feels like that's where that's headed. Maybe it's five years.
• 4:28
  Speaker 1: Maybe it's sooner than that. But it's certainly a world.
• 4:32
  Speaker 1: That's the world I'm expecting over the next five years. Fair?
• 4:38
  Speaker 2: I mean, I think you can't go wrong with that thesis.
• 4:44
  Speaker 2: There are a couple of complicating factors. You're right. Your
• 4:47
  Speaker 2: old network, NBC, Comcast Network. has taken it further than anyone. Ironically,
• 4:54
  Speaker 2: they spun off their cable channels, you know, MSNBC and
• 4:58
  Speaker 2: CNBC and others. So they, they did that. That's versant.
• 5:02
  Speaker 2: That's already out there trading and not, not trading particularly well, frankly.
• 5:07
  Speaker 1: I mean, I own quite a bit of it as
• 5:09
  Speaker 1: you might, as you might imagine, you know, some things
• 5:11
  Speaker 1: you just sort of hold that feels like a, a
• 5:15
  Speaker 1: hold and hope. Exactly.
• 5:17
  Speaker 2: Comes along to scoop it up. Maybe, maybe this Jeff shells, uh,
• 5:21
  Speaker 2: First acquisition, you can pull off what he's trying to do.
• 5:25
  Speaker 2: So there's a clear example, right? I mean, the Comcast
• 5:29
  Speaker 2: guys are smart. When I was a banker, I worked
• 5:31
  Speaker 2: on the Comcast acquisition of AT & T Broadband, which
• 5:35
  Speaker 2: was a big cable business. That was a $ 72 billion
• 5:38
  Speaker 2: deal back in 2001. That was the biggest deal of
• 5:41
  Speaker 2: all time up to that date. So that was, I mean,
• 5:45
  Speaker 2: those guys are smart. Mike Cavanaugh is smart. Brian Robert
• 5:48
  Speaker 2: is smart. They know what they're doing. And if they're
• 5:51
  Speaker 2: saying we're spinning these businesses off, you know, good luck.
• 5:56
  Speaker 2: We don't we don't want them part of Comcast anymore.
• 5:59
  Speaker 2: I think what they're saying is these are, you know,
• 6:02
  Speaker 2: linear TV assets. They have nice cash flow, but they're
• 6:06
  Speaker 2: but they're declining in the long run. So we don't
• 6:09
  Speaker 2: want them. OK, then you look at Skydance, the newly
• 6:14
  Speaker 2: created Skydance now. Obviously, they own both CBS and CNN now,
• 6:20
  Speaker 2: and there's been a lot of talk about whether those
• 6:23
  Speaker 2: two would be combined. That's putting fear into the hearts
• 6:27
  Speaker 2: of people at CNN. The difference there, as opposed to Comcast,
• 6:32
  Speaker 2: is Skydance has $ 80 billion of debt. So they need
• 6:38
  Speaker 2: this cash flow. CNN has, what, $ 750 million of EBITDA?
• 6:43
  Speaker 1: So the cash that comes in, I've always heard this
• 6:46
  Speaker 1: about CNN, that the cash, particularly internationally, that that cash
• 6:50
  Speaker 1: flow is actually quite helpful. So you think they want
• 6:53
  Speaker 1: to keep CNN for a while because of the cash flow?
• 6:55
  Speaker 2: They need it. They need it. They got to pay
• 6:57
  Speaker 2: down this $ 80 billion of debt. And that's a lot
• 7:00
  Speaker 2: of debt.
• 7:01
  Speaker 1: So flipping it as a package, CBS News and CNN
• 7:04
  Speaker 1: is one thing. That's not what you would expect them
• 7:08
  Speaker 1: to pay down debt with.
• 7:09
  Speaker 2: I feel certain they're going to. do something to quote unquote,
• 7:14
  Speaker 2: combine CBS and CNN, whether that's just like a back
• 7:18
  Speaker 2: office kind of thing. You know, I've, I've been plenty
• 7:22
  Speaker 2: of times on both. So you go to CBS and
• 7:26
  Speaker 2: which is, I believe, you know, union organization. And there's
• 7:29
  Speaker 2: like five people putting my earpiece in five people doing
• 7:33
  Speaker 2: my makeup, five people putting my microphone on and 20
• 7:37
  Speaker 2: people leading me to the set. Okay. You go to CNN,
• 7:41
  Speaker 2: there's nobody. There's one intern, a young intern, saying, why
• 7:44
  Speaker 2: are you so late? We're waiting for you on set.
• 7:49
  Speaker 2: I apologize.
• 7:49
  Speaker 1: We didn't have hair and makeup for you on this
• 7:52
  Speaker 1: one here at the world headquarters of the podcast.
• 7:56
  Speaker 2: Hair and makeup constantly. There's clearly some costs that can
• 8:01
  Speaker 2: be taken out. I know at the highest levels of Skydance,
• 8:04
  Speaker 2: they are definitely thinking about that. Now, whether they actually...
• 8:08
  Speaker 2: take it even further and put the two news organizations
• 8:11
  Speaker 2: together and call it something, I don't know, CNN or
• 8:15
  Speaker 2: CBS or CBS-CNN, I don't know. That might be a
• 8:18
  Speaker 2: bridge too far, at least in the early days. But
• 8:20
  Speaker 2: I don't see them spinning this off. I don't think
• 8:22
  Speaker 2: CBS News, anyway, is making a lot of money these days.
• 8:26
  Speaker 2: But I think they need that cash flow. Even though
• 8:30
  Speaker 2: they're declining, these linear TV assets are declining in terms
• 8:33
  Speaker 2: of EBITDA, they need it to pay down this debt.
• 8:36
  Speaker 1: I compare linear TV right now to radio in the nineties,
• 8:40
  Speaker 1: you know, it was a declining business, but good cash,
• 8:43
  Speaker 1: which is why you saw some consolidation. Is that a,
• 8:45
  Speaker 1: do you, do you, is that a fair comparison? It is,
• 8:50
  Speaker 1: except I think, uh, it's a better business than radio is.
• 8:55
  Speaker 1: I mean, because of streaming, uh, music streaming, I mean,
• 9:00
  Speaker 1: who even no offense to anybody, uh, I don't know
• 9:03
  Speaker 1: many people who listen to the radio anymore. Even when
• 9:05
  Speaker 1: they're driving, they're always listening to a book. They're listening
• 9:09
  Speaker 1: to their Apple Music or their Alexa or whatever, asking people. Clearly,
• 9:16
  Speaker 1: there are big radio station groups, and they're hanging in there.
• 9:20
  Speaker 2: But I think that people still... watching TV, right? I mean,
• 9:25
  Speaker 2: even though they're streaming, they're still watching linear TV, especially,
• 9:29
  Speaker 2: you know, live sports. I mean, as we know, you know,
• 9:33
  Speaker 2: 98 of the top 100 shows on TV are NFL
• 9:37
  Speaker 2: football games. So people are still watching live sports and
• 9:41
  Speaker 2: that is an incredibly valuable asset, especially for the NFL.
• 9:45
  Speaker 2: And they'll continue to monetize that. So, you know, Comcast
• 9:49
  Speaker 2: has sort of taken it one way. I think the
• 9:51
  Speaker 2: Skydance people have got to stick with this until they
• 9:54
  Speaker 2: pay down this debt or until Larry decides to put
• 9:57
  Speaker 2: more equity in. And then there's Disney. you know abc
• 10:01
  Speaker 2: which they've talked about i mean eiger talked about spinning
• 10:04
  Speaker 2: that off at sun valley you know whatever it was
• 10:07
  Speaker 2: two or three years ago and nothing ever came of
• 10:09
  Speaker 2: it keeps talking about spinning off espn and.
• 10:13
  Speaker 1: The rumor I keep hearing is that when the Tegna
• 10:16
  Speaker 1: merger finishes, Nextar-Tegna merger, that it's Nextar that there's some
• 10:23
  Speaker 1: sort of handshake deal for ABC.
• 10:26
  Speaker 2: Well, the question is if that happens during the Trump administration.
• 10:30
  Speaker 1: Right.
• 10:30
  Speaker 2: If out of spite, they nix it because Trump doesn't
• 10:35
  Speaker 2: like Disney.
• 10:36
  Speaker 1: Right. Well, the other idea was that if Nexstar was
• 10:42
  Speaker 1: the purchaser, this administration would accelerate approval of something like that.
• 10:48
  Speaker 2: Yes, but then they'd be helping out Disney, which they
• 10:51
  Speaker 2: don't want to do because they don't like Iger and
• 10:53
  Speaker 2: they don't like the new regime either.
• 10:58
  Speaker 1: Let me ask you about the Comcast question. And I
• 11:02
  Speaker 1: say this, frankly, I'm still a big shareholder because they
• 11:05
  Speaker 1: had an incredible.
• 11:07
  Speaker 2: they had.
• 11:07
  Speaker 1: An incredible employee stock plan that I remember Steve Burke
• 11:13
  Speaker 1: one time saying to me, I think I'm going to
• 11:14
  Speaker 1: make it an IQ test. Cause if you don't do it,
• 11:16
  Speaker 1: you're an idiot. And it, you know, it was, it was,
• 11:20
  Speaker 1: it was a good, good plan for a while. Why
• 11:23
  Speaker 1: did they get caught? They were always a fish that
• 11:26
  Speaker 1: was too big to swallow. And then also a fish
• 11:28
  Speaker 1: that was not big enough to swallow others, right? Like,
• 11:31
  Speaker 1: is it Fox deal that should, that could have happened
• 11:35
  Speaker 1: that didn't, what was the, What could have allowed Comcast
• 11:39
  Speaker 1: to become Skydance?
• 11:41
  Speaker 2: Oh, well, well, let's be clear. I mean, Skydance is
• 11:45
  Speaker 2: only Skydance because of Larry Ellison.
• 11:47
  Speaker 1: Right. And so without.
• 11:50
  Speaker 2: Larry Ellison, you know, putting in this money and, you know,
• 11:54
  Speaker 2: for his son and, and, and, and signing on for
• 11:58
  Speaker 2: his son's dream year, and maybe it's an Ellison family legacy.
• 12:03
  Speaker 2: We wouldn't be talking about Skydance. We wouldn't be talking
• 12:05
  Speaker 2: about Paramount Global. I mean, so that is all an anomaly, okay? Now,
• 12:10
  Speaker 2: Comcast doesn't have– Brian Roberts is plenty wealthy, but he's
• 12:14
  Speaker 2: not Larry Ellison wealthy. So, I mean, he was tapped out.
• 12:19
  Speaker 2: I mean, look, for many years, he was a deal machine, right?
• 12:22
  Speaker 1: I mean– And honestly, I thought it was inevitable that
• 12:27
  Speaker 1: Comcast was going to be able to just, in the
• 12:30
  Speaker 1: Brian Roberts way, essentially, I think he had a vision.
• 12:34
  Speaker 1: I think he thought it would be orderly and logical.
• 12:37
  Speaker 1: And then came the Ellison's, right? Is that really the answer?
• 12:41
  Speaker 2: And look, also, you know, as a guy who wrote
• 12:43
  Speaker 2: a book about the rise and fall of GE, too,
• 12:46
  Speaker 2: before this latest book about Leon, look, I would have
• 12:51
  Speaker 2: never thought that GE would come apart at the seams.
• 12:54
  Speaker 1: Right.
• 12:54
  Speaker 2: I mean, who could have ever imagined? And they owned
• 12:57
  Speaker 2: NBC and did a stupid deal and sold it to
• 13:00
  Speaker 2: Comcast for pennies. I mean, basically, I mean, that was
• 13:03
  Speaker 2: one of the greatest. Again, that was another example of
• 13:06
  Speaker 2: Brian Roberts at his at his best. And Steve Burke
• 13:09
  Speaker 2: at their best scooping up, you know, NBCU from GE
• 13:14
  Speaker 2: of when they were desperate and they didn't even run
• 13:17
  Speaker 2: an auction for it. They just sold it to Comcast.
• 13:20
  Speaker 2: Brian handled that beautifully. And at one point, you know, pre. pre-pandemic,
• 13:25
  Speaker 2: it was worth $ 100 billion, and then they paid $ 30 billion.
• 13:28
  Speaker 2: But again, then it sort of succumbed to the linear
• 13:31
  Speaker 2: TV decline, number one. And I think a general feeling
• 13:36
  Speaker 2: that the cable companies don't need to own the content,
• 13:41
  Speaker 2: and these things become faddish. And if the investors turn
• 13:47
  Speaker 2: on you, it's hard to get it back unless you
• 13:49
  Speaker 2: give them what they want. I mean, And Zaz gave
• 13:53
  Speaker 2: investors what they wanted by announcing the split up of
• 13:56
  Speaker 2: Warner Brothers Discovery. What he, I think, didn't count on
• 14:01
  Speaker 2: necessarily was that that would put Warner Brothers Discovery in play.
• 14:05
  Speaker 2: And along would come, you know, Larry Ellison to scoop
• 14:10
  Speaker 2: it up at $ 31 a share, which is like a
• 14:12
  Speaker 2: legendary purchase price that he couldn't possibly say no to.
• 14:17
  Speaker 2: But Comcast couldn't play in that. That was way too
• 14:20
  Speaker 2: rich for their blood. They couldn't compete with Netflix. I mean, so,
• 14:23
  Speaker 2: I mean, and then just look at, say, Netflix, what's
• 14:26
  Speaker 2: happened in the wake of Netflix trying to buy Warner
• 14:30
  Speaker 2: Brothers Discovery. They've been they've been trashed and now they're
• 14:34
  Speaker 2: firing everybody. So, you know, these things happen, you know,
• 14:40
  Speaker 2: sort of like Hemingway said about falling in love.
• 14:42
  Speaker 1: Right.
• 14:44
  Speaker 2: And then all at once.
• 14:46
  Speaker 1: Uh so he said it about falling in love we
• 14:48
  Speaker 1: use it for bankruptcy we use it for you know
• 14:51
  Speaker 1: that metaphor we love that one hemingway and churchill right
• 14:56
  Speaker 1: we just over quote them uh forever because they're they're
• 15:00
  Speaker 1: very wise men um in 10 years is the big
• 15:04
  Speaker 1: three going to be youtube netflix and amazon.
• 15:06
  Speaker 2: Well youtube is a juggernaut as we know although i
• 15:10
  Speaker 2: personally don't understand it um I think it's.
• 15:14
  Speaker 1: Become too big to organize. And I don't, I say
• 15:17
  Speaker 1: this as some, I mean, I'm fascinated. I'm trying to
• 15:21
  Speaker 1: get my arms around whether fast channels are going to
• 15:23
  Speaker 1: be something. Is this going to replace cable? My guess
• 15:28
  Speaker 1: is it might for older people, but I, it almost,
• 15:31
  Speaker 1: I keep waiting for somebody to just organize YouTube. It
• 15:35
  Speaker 1: needs to be curated and organized. That feels like.
• 15:39
  Speaker 2: Well, of course my kids, you know, or at least
• 15:41
  Speaker 2: one of my kids, loves, you know, loves it and doesn't,
• 15:45
  Speaker 2: that doesn't have cable. My kids don't have cable.
• 15:49
  Speaker 1: I have cable. Same with my kids.
• 15:51
  Speaker 2: And I would, and I can't even imagine giving it up,
• 15:53
  Speaker 2: but at some point I'm not going to be around
• 15:56
  Speaker 2: and they will be, and they won't have cable. And I,
• 15:58
  Speaker 2: and I, and I'll be, I'll be gone and my
• 16:00
  Speaker 2: cable subscription will go with me. So, I mean, yeah,
• 16:05
  Speaker 2: it's like anything at some point, the baby boomers will
• 16:07
  Speaker 2: be gone from politics and, and we'll see what we're
• 16:11
  Speaker 2: left with. I, I saw, I, but I mean, there's
• 16:15
  Speaker 2: no question that YouTube and that those individual channels and
• 16:18
  Speaker 2: the way people interact with that is something that that
• 16:22
  Speaker 2: generation quite, quite likes. I think, you know, HBO still
• 16:27
  Speaker 2: seems to me to be very powerful entity. And if
• 16:30
  Speaker 2: it's combined with paramount plus and rebranded for the 20,000th time, uh,
• 16:37
  Speaker 2: I mean, I think the content creators there are very good. Um,
• 16:42
  Speaker 2: You know, Apple could swoop in at any time. I mean,
• 16:45
  Speaker 2: you know.
• 16:46
  Speaker 1: It's still a hobby for Apple, isn't it?
• 16:48
  Speaker 2: Yeah, but it doesn't have to be.
• 16:50
  Speaker 1: Yeah.
• 16:52
  Speaker 2: I mean, and you know what? They've created... I think
• 16:55
  Speaker 2: they've created a lot of great shows. Oh.
• 16:59
  Speaker 1: But it does feel... It feels like... frankly, it feels
• 17:01
  Speaker 1: like HBO in the early aughts, right? Like they, they,
• 17:04
  Speaker 1: they just always find a winner and you're like, I
• 17:06
  Speaker 1: didn't know I'd like that. How about that? Right. I know.
• 17:09
  Speaker 2: And it's very thoughtful and, and they could, I mean,
• 17:14
  Speaker 2: they've got so much cash, they've got such a huge
• 17:17
  Speaker 2: market cap. I mean, they could easily absorb any of
• 17:22
  Speaker 2: these people and not, you know, and, and still have
• 17:24
  Speaker 2: it be a sideshow. Why not pick up a, skydance
• 17:30
  Speaker 2: when it goes into bankruptcy under the $ 80 billion of debt.
• 17:36
  Speaker 2: Are you saying that facetiously?
• 17:38
  Speaker 1: Not really.
• 17:39
  Speaker 2: I'm not rooting for it, obviously, but $ 80 billion of
• 17:45
  Speaker 2: debt is a lot of debt. They have $ 12 billion
• 17:47
  Speaker 2: of cash flow and $ 80 billion of debt And they
• 17:50
  Speaker 2: promised $ 6 billion of go-to-go synergies. Right now, we're talking
• 17:54
  Speaker 2: about seven times leverage. We're talking about junk. The junk
• 17:57
  Speaker 2: bonds are trading like junk bonds already. And the debt
• 18:00
  Speaker 2: was just issued two weeks ago. And the market is
• 18:07
  Speaker 2: clearly expecting Larry. I mean, they've said they're going to
• 18:10
  Speaker 2: get this leverage down to three times by 2029. And
• 18:14
  Speaker 2: the market is expecting Larry to put more equity in.
• 18:17
  Speaker 2: But Larry's people, you know, they're saying absolutely not. We
• 18:20
  Speaker 2: don't need to. So there's already a tension there. I'm
• 18:24
  Speaker 2: not sure why they structured it this way. It's basically
• 18:28
  Speaker 2: a publicly traded leveraged buyout. One of the biggest that
• 18:31
  Speaker 2: there's ever been.
• 18:35
  Speaker 1: This episode of the Chuck Todd cast is brought to
• 18:37
  Speaker 1: you by Quince. You know, the best pieces in your
• 18:40
  Speaker 1: closet are the ones you can count on, whether you're
• 18:43
  Speaker 1: heading to work, going out or keeping things a bit casual.
• 18:46
  Speaker 1: And this time of year, Quince makes finding something great
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• 18:57
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• 19:06
  Speaker 1: Quince focuses on high-quality staples made with premium materials like 100%
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  Speaker 1: Everything at Quince is priced 50 to 80% less than
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• 19:53
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• 19:58
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• 20:00
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• 20:02
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• 20:06
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• 20:10
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• 20:13
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• 20:28
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• 20:58
  Speaker 1: was the Chuck Todd cast. It's the best way to
• 21:01
  Speaker 1: support the show and the best way to make sure
• 21:03
  Speaker 1: you're getting every discount. Is there any comparison from the
• 21:12
  Speaker 1: past that you look at that and say, hey, this
• 21:14
  Speaker 1: could blow up?
• 21:17
  Speaker 2: Look what happened to RJR Nabisco, which... you know, became
• 21:22
  Speaker 2: a legendary deal.
• 21:23
  Speaker 1: Yeah.
• 21:23
  Speaker 2: Yeah. I mean, they, I mean, KKR made no money
• 21:27
  Speaker 2: from that deal. And, and, you know, again, I don't
• 21:31
  Speaker 2: wish this upon them, but the, the, the, the skydance
• 21:35
  Speaker 2: stock is already down like, you know, 25% since the
• 21:39
  Speaker 2: closing on October 6th. So all those, all those, uh, uh,
• 21:46
  Speaker 2: Larry Ellison investors, uh, Redbird Capital, the Mideast Sovereign Wealth Funds,
• 21:55
  Speaker 2: the Korean billion-dollar player, Mrs. Jobs, Lorraine Powell Jobs, who
• 22:02
  Speaker 2: invested $ 250 million in this and sits on the board,
• 22:05
  Speaker 2: which is a real head-scratcher.
• 22:06
  Speaker 1: I mean, Mrs.
• 22:08
  Speaker 2: Jobs has already lost $ 100 million of her $ 250 million investment.
• 22:14
  Speaker 1: What do you think of what red bird is up to?
• 22:16
  Speaker 1: I mean, I sit there and I, you know, certainly
• 22:19
  Speaker 1: know plenty of people. A couple of them have been
• 22:22
  Speaker 1: my boss, uh, boss over, over the years. Um, whether
• 22:25
  Speaker 1: it's Mr. Shell, Mr. Zucker, various votes that have been
• 22:29
  Speaker 1: in that orbit. Um, they seem to be building something,
• 22:34
  Speaker 1: you know, like grabbing, you know, new niche media, things
• 22:37
  Speaker 1: like this is, you think that's a smart play? Well, uh,
• 22:43
  Speaker 1: I know they're and I know I know they're investors.
• 22:45
  Speaker 2: I mean, let's do it.
• 22:47
  Speaker 1: I hope I'm hopeful myself. I get to have to
• 22:49
  Speaker 1: make a disclosure myself. So do your disclosure.
• 22:53
  Speaker 2: The owner of the park, which is, of course, my company,
• 22:58
  Speaker 2: part of my. So and I'm an equity holder in it.
• 23:02
  Speaker 2: And so I know Jerry Cardinale very well at this
• 23:07
  Speaker 2: point and have a lot of respect for him. He's
• 23:10
  Speaker 2: a great collector of talent, and I'm not just saying
• 23:13
  Speaker 2: that because he's got puck in the stable now, but
• 23:18
  Speaker 2: Jeff Zucker is an immense talent. In fact, I'm waiting,
• 23:23
  Speaker 2: and I've written this many times, why the heck is
• 23:26
  Speaker 2: he at Redbird IMI acting like an investor when he's
• 23:31
  Speaker 2: really an operator of media?
• 23:36
  Speaker 1: He's an operator, yes.
• 23:39
  Speaker 2: It's head of CNN and CBS. It's so obvious to me.
• 23:43
  Speaker 2: I don't know why that hasn't happened. Maybe they're waiting
• 23:45
  Speaker 2: for Trump to get out of office or after the
• 23:47
  Speaker 2: midterms or something when he's less powerful. Uh, uh, then
• 23:52
  Speaker 2: you mean you've got to bring, uh, Jeff Zucker back
• 23:55
  Speaker 2: to this, uh, combined organization. He's the adult in the room.
• 23:59
  Speaker 2: It just, he's already in the stable. Just bring him over.
• 24:02
  Speaker 2: It makes so much sense. So, um, but jerry uh
• 24:06
  Speaker 2: you know he owns soccer teams he's doing you know
• 24:09
  Speaker 2: he worked with you know um created that you know
• 24:14
  Speaker 2: actors equity and sold that to what apple or something
• 24:18
  Speaker 2: i mean you know uh you know he's he's a
• 24:21
  Speaker 2: smart guy um you know he certainly put a nice
• 24:26
  Speaker 2: valuation on puck which were Certainly appreciative. Now we've got.
• 24:30
  Speaker 1: To go live up to it.
• 24:32
  Speaker 2: So I got to keep working. But I think, you know,
• 24:38
  Speaker 2: he's got he's put six billion dollars into the Skydance deal.
• 24:43
  Speaker 2: Two billion in the first round of Paramount Skydance and
• 24:47
  Speaker 2: now another four billion in Skydance. So, I mean, that's
• 24:51
  Speaker 2: a six billion dollars. That's that's not nothing.
• 24:55
  Speaker 1: Right. I know that, you know, I joke these days that,
• 24:59
  Speaker 1: that I think people are numb to these valuations. They're
• 25:03
  Speaker 1: numb to some of these dollar figures, which actually moves me.
• 25:07
  Speaker 1: I want to get to the world of sports a
• 25:08
  Speaker 1: little bit. I dabble in that. I, um, was helped
• 25:12
  Speaker 1: found a sports business publication back in the day. And, um,
• 25:18
  Speaker 1: I'm a skeptic that these valuations are what they say
• 25:20
  Speaker 1: they are, uh, on some of these things. And, um, Meaning,
• 25:26
  Speaker 1: you know, I get, okay, Hey, I sold 15% at
• 25:30
  Speaker 1: a valuation of, you know, $ 4 billion, whatever sports franchise acts,
• 25:34
  Speaker 1: you know, it could be a private equity deal. It
• 25:36
  Speaker 1: could be a new investor and we get these valuations.
• 25:40
  Speaker 1: And I got really, you know, when, when, when the
• 25:42
  Speaker 1: whole when the whole Mark Walters thing sort of became
• 25:48
  Speaker 1: front page, I went down plenty of rabbit holes and,
• 25:51
  Speaker 1: And you start to ask yourself, how real are these
• 25:54
  Speaker 1: valuations in particularly with these sports franchises? And it made
• 25:59
  Speaker 1: me a skeptic of the value of the that this
• 26:02
  Speaker 1: a lot of this stuff is maybe more inflated than
• 26:04
  Speaker 1: we think. How would that show itself if that's true?
• 26:10
  Speaker 2: I'm not sure I agree with you that they're inflated.
• 26:13
  Speaker 2: In other words, I think that please push back. I mean,
• 26:16
  Speaker 2: the numbers that you hear are basically real. I mean, obviously.
• 26:21
  Speaker 2: If you're selling a minority stake at 10%, you're not
• 26:25
  Speaker 2: selling the whole company at that huge valuation. So that's
• 26:29
  Speaker 2: probably easier to ratchet up a valuation on a minority stake.
• 26:33
  Speaker 2: But take, for instance, the Lakers, which was sold over
• 26:40
  Speaker 2: a weekend to Bob Iger and and... Come on, that
• 26:47
  Speaker 2: had to be.
• 26:48
  Speaker 1: We've never seen a sports transaction like that, really. Even
• 26:52
  Speaker 1: Ballmer took longer to get the Clippers, right? Exactly.
• 26:56
  Speaker 2: I mean, I've never seen anything this pricey that was
• 27:03
  Speaker 2: a private company as opposed to a public company. Sometimes
• 27:06
  Speaker 2: public deals do get done over the weekend because they're
• 27:09
  Speaker 2: public companies, and so more information is known about them,
• 27:12
  Speaker 2: but But this is a private company. I understand the
• 27:15
  Speaker 2: need for speed here because the Walter Empire is listing.
• 27:21
  Speaker 2: But where did Bob Iger and Josh Kushner get the
• 27:25
  Speaker 2: money for $ 12. 5 billion to.
• 27:27
  Speaker 1: Pay for this?
• 27:28
  Speaker 2: I know Bob Iger is rich, but maybe a billionaire.
• 27:33
  Speaker 2: And Kushner, I know, has a fund and he's made
• 27:34
  Speaker 2: a lot of money investing in some of these early
• 27:37
  Speaker 2: tech companies. But I think private equity guys are limited
• 27:41
  Speaker 2: to how much they can put in a sports company.
• 27:44
  Speaker 2: I think there are limitations, whatever it is, 30% or whatever.
• 27:48
  Speaker 1: The leaks keep raising it because all the owners want
• 27:51
  Speaker 1: more capital.
• 27:52
  Speaker 2: By the way, those limits, those are going to come
• 27:54
  Speaker 2: off because, I mean, if you buy the Lakers for
• 27:58
  Speaker 2: $ 12. 5 billion, like the Celtics were bought for 2006, wasn't it?
• 28:05
  Speaker 1: Or 6.6 or something like that?
• 28:07
  Speaker 2: Before that, but the deal that was done in 2002
• 28:10
  Speaker 2: was like 300 million say, okay. And they just sold
• 28:14
  Speaker 2: it for like 7 billion. So that's like 20 times,
• 28:18
  Speaker 2: you know, your money kind of thing.
• 28:21
  Speaker 1: Okay.
• 28:21
  Speaker 2: How do you get 20 times your money? If you've
• 28:23
  Speaker 2: paid 12 and a half billion dollars for the Lakers,
• 28:26
  Speaker 2: is somebody going to pay, you know, 120 billion, 240
• 28:29
  Speaker 2: billion for the Lakers 20 years from now?
• 28:34
  Speaker 1: Maybe inflation goes that nuts, huh?
• 28:36
  Speaker 2: No, it's not going to happen. That's why, that's why
• 28:39
  Speaker 2: it's a ridiculous amount to pay. Okay. And I don't
• 28:43
  Speaker 2: know where they got the money.
• 28:44
  Speaker 1: I'm a believer that sport, look, these sports franchises are trophies, right?
• 28:49
  Speaker 1: They're artwork, right? I mean, so they're meaning there, there's
• 28:53
  Speaker 1: a lot of vanity involved in these purchases, right? More
• 28:56
  Speaker 1: than there are people that concentrate on how good of
• 28:59
  Speaker 1: a business they are. Is that fair?
• 29:02
  Speaker 2: Well, look, this is oceanfront property. Like, they're not making
• 29:05
  Speaker 2: any more of it, right? So, you know, occasionally you'll
• 29:08
  Speaker 2: get like a team in Las Vegas or whatever, and
• 29:11
  Speaker 2: people pay up for that. So, yes, they are trophy assets.
• 29:15
  Speaker 2: They do not trade on a P & L basis.
• 29:19
  Speaker 2: In other words, they're not income statement driven. They're not
• 29:22
  Speaker 2: EBITDA driven. They're not cash flow driven because they're not
• 29:25
  Speaker 2: really making a lot of money, but they're rare, right? They're,
• 29:27
  Speaker 2: I mean.
• 29:30
  Speaker 2: So, I mean, Josh Harris, one of the people in
• 29:34
  Speaker 2: my Apollo book, bought the Sixers for $ 250 million or
• 29:40
  Speaker 2: whatever it was. Now it's worth $ 4 or $ 5 billion.
• 29:45
  Speaker 2: They haven't won a championship since 1983 or whatever. Then
• 29:49
  Speaker 2: he just bought the Commanders for $ 6 billion. These are
• 29:54
  Speaker 2: smart guys who are doing it because they are rare
• 29:58
  Speaker 2: assets and they rarely go down in value.
• 30:03
  Speaker 1: You know, it's interesting. Can't you plot the value? I
• 30:07
  Speaker 1: feel like we get these jumps in sports valuations about every,
• 30:11
  Speaker 1: and they almost always go when there is a new
• 30:14
  Speaker 1: media technology creating a frenzy, right? And so, I mean,
• 30:19
  Speaker 1: everybody who bought into the NBA in the early teens
• 30:22
  Speaker 1: or the late aughts, just, they all hit the lottery
• 30:25
  Speaker 1: with streaming, right? They all hit the lottery with streaming.
• 30:30
  Speaker 1: And I guess it sounds like what you're saying is
• 30:33
  Speaker 1: we won't see another jump in sports valuations until probably
• 30:36
  Speaker 1: there's a new media frenzy, almost a new way people
• 30:40
  Speaker 1: want to experience this stuff where suddenly the value, you know,
• 30:45
  Speaker 1: you've got more pieces of your IP that's valuable to people.
• 30:53
  Speaker 2: I mean, even with that, I don't see how you
• 30:54
  Speaker 2: get to $ 240 billion for the Lakers. But maybe if
• 30:59
  Speaker 2: we all have chips in our brains and you just say, okay,
• 31:02
  Speaker 2: I want to watch the Lakers game now, whichever Lakers
• 31:06
  Speaker 2: game I want, it just starts appearing in your brain.
• 31:11
  Speaker 1: So let me ask you this about Mark Walters. Did
• 31:15
  Speaker 1: he buy the Dodgers or did little old ladies and
• 31:18
  Speaker 1: their life insurance annuities buy the Dodgers?
• 31:21
  Speaker 2: Well, I'm not an expert on, you know, I know Guggenheim,
• 31:24
  Speaker 2: his company bought bought the Lakers and the Dodgers, right?
• 31:30
  Speaker 1: Yeah.
• 31:33
  Speaker 2: And they have a network of insurance companies and they
• 31:39
  Speaker 2: generate a lot of free cash flow and they have
• 31:43
  Speaker 2: to figure out what to do with that. And so
• 31:46
  Speaker 2: it looks like they decided wisely, I might add. So,
• 31:51
  Speaker 2: I mean, no, I don't think it's little old ladies
• 31:54
  Speaker 2: in Dubuque. I think it's whoever owns those insurance companies.
• 32:00
  Speaker 2: But I don't claim to be an expert on that.
• 32:05
  Speaker 2: It's clear that people have been wondering about how he's
• 32:09
  Speaker 2: done that for a long time. He also owns Guggenheim Partners.
• 32:15
  Speaker 2: There's an investment bank run by the former CEO of
• 32:19
  Speaker 2: Bear Stearns, Alan Schwartz, that they own too. So You know,
• 32:24
  Speaker 2: they got their fingers in a lot of pies. You know,
• 32:27
  Speaker 2: he paid $ 10 billion for the Lakers and sold it
• 32:30
  Speaker 2: for $ 12. 5 billion a year later. So that's pretty good ROI. Right. And,
• 32:37
  Speaker 2: you know, I'm sure the Dodgers, despite getting swept by Milwaukee,
• 32:41
  Speaker 2: are plenty valuable. And he's got a big gain there, too. So,
• 32:48
  Speaker 2: you know, I think that's, you know, helping to prop
• 32:52
  Speaker 2: up this. whatever's going wrong at his company now.
• 32:56
  Speaker 1: Well, I asked this because, you know, as I learned
• 32:59
  Speaker 1: and you're, you just wrote a book on that basic,
• 33:02
  Speaker 1: is it fair to say Leon black is sort of,
• 33:04
  Speaker 1: of who sort of, it seems like if you're a
• 33:07
  Speaker 1: successful private equity fund, an insurance company is a key
• 33:12
  Speaker 1: part is a key asset in order to, to have
• 33:17
  Speaker 1: cash to grow. Is that, is, is that how it works?
• 33:21
  Speaker 2: Well, it depends what your goals are as a private
• 33:25
  Speaker 2: equity mogul. There are plenty of private equity funds that
• 33:30
  Speaker 2: are just private equity funds where people just buy companies
• 33:36
  Speaker 2: with their own equity and other people's money. And then
• 33:40
  Speaker 2: they buy them, they try to fix them up, and
• 33:42
  Speaker 2: then they sell them and they make a lot of money.
• 33:45
  Speaker 2: So a lot of people, I mean, private equity is
• 33:47
  Speaker 2: like one of the greatest businesses in ever created by
• 33:50
  Speaker 2: man that's legal. You know, I mean, people, pretty much
• 33:55
  Speaker 2: everybody who's been involved in the private equity business has
• 33:58
  Speaker 2: made a shitload of money and are very rich. So
• 34:04
  Speaker 2: there are people who just continue to do private equity.
• 34:07
  Speaker 2: Then there are the private equity firms that went public. Blackstone, Apollo, TBG, Carlyle, KKR,
• 34:16
  Speaker 2: the bigger private equity firms. And as public companies, I
• 34:21
  Speaker 2: guess at some point they decided that private equity is
• 34:25
  Speaker 2: a wonderful and profitable but slow growth business. And so
• 34:31
  Speaker 2: they needed to get into businesses that were faster growth.
• 34:35
  Speaker 2: And this is what, you know, slowly but surely post
• 34:39
  Speaker 2: the 2008 financial crisis created what we call now the
• 34:43
  Speaker 2: private credit industry. And depending on which firm you're at,
• 34:49
  Speaker 2: having an embedded insurance company is key to that because
• 34:54
  Speaker 2: it provides you with a huge amount of cash that
• 34:58
  Speaker 2: you can then invest in things that can make you
• 35:03
  Speaker 2: more money than you have to pay out to your
• 35:07
  Speaker 2: insurance claimants or your annuity holders, depending on the kind
• 35:11
  Speaker 2: of insurance company is. But then there's like Blackstone, which
• 35:14
  Speaker 2: doesn't have an insurance company, doesn't do it that way.
• 35:17
  Speaker 2: They just say they just go to their investors and say, hey,
• 35:20
  Speaker 2: we made all this money, you know, in private equity.
• 35:24
  Speaker 2: Give us your money and we'll make you plenty of
• 35:26
  Speaker 2: money in private credit, too. But we don't owe you anything.
• 35:29
  Speaker 2: You know, it works out great. It works out. Whereas, say,
• 35:32
  Speaker 2: Mark Rowan, what he's created at Apollo, his successor to
• 35:36
  Speaker 2: Leon Black as CEO, he created this annuity company called
• 35:42
  Speaker 2: Athene and he owns the annuitants, you know, Basically, they
• 35:46
  Speaker 2: insure people's retirement. If you give me, I'll give you
• 35:51
  Speaker 2: a million dollars and you give me 5% a year.
• 35:57
  Speaker 2: They owe them that 5% a year. They have to
• 35:59
  Speaker 2: make more than 5% a year on what they invest
• 36:03
  Speaker 2: in to capture that spread. So far, they've been pretty
• 36:08
  Speaker 2: good at that.
• 36:10
  Speaker 1: I want you to assume my listeners are not as
• 36:13
  Speaker 1: are not as tuned into certain, you know, understanding the
• 36:20
  Speaker 1: intricacies of private equity. But as a political story. Private
• 36:29
  Speaker 1: equity is turning into a boogeyman, right? You can see
• 36:32
  Speaker 1: it on the campaign trail. You know, you hear people, exactly.
• 36:37
  Speaker 1: They don't know why they're upset at it, but they're upset.
• 36:40
  Speaker 1: I always said data centers are not about the data centers.
• 36:42
  Speaker 1: It's about tech. It's about frustrations over 20 years. It's, it's,
• 36:46
  Speaker 1: it's sort of, it's, it's like electricity prices.
• 36:48
  Speaker 2: Exactly.
• 36:49
  Speaker 1: It's, it's sort of a bunch of things in one. Right.
• 36:52
  Speaker 2: That's right.
• 36:53
  Speaker 1: And private equity feels the same way. It's this whole, like,
• 36:56
  Speaker 1: who are these people and all this stuff?
• 36:58
  Speaker 2: They're all making money. Right. They're all rapacious.
• 37:01
  Speaker 1: So if you were advising one of these private equity funds,
• 37:05
  Speaker 1: I do think government's coming for them, right? The pitchforks
• 37:08
  Speaker 1: are being sharpened. Um, And I don't know what that
• 37:12
  Speaker 1: looks like, right? There could be, you see that some
• 37:15
  Speaker 1: states want to ban private equity from buying up houses or,
• 37:18
  Speaker 1: you know, buying certain, you know, becoming big landlords, things
• 37:23
  Speaker 1: like this. They clearly have a PR problem, right? What
• 37:30
  Speaker 1: would you do if you were on the PE side?
• 37:32
  Speaker 1: And what do you think is fair critiques from the
• 37:36
  Speaker 1: politician side?
• 37:38
  Speaker 2: Look, they're low-hanging fruit from politicians, right?
• 37:44
  Speaker 1: Yeah, we love to bash rich people. It's always good politics,
• 37:48
  Speaker 1: especially when the country's in a populist mood, left and right.
• 37:52
  Speaker 2: And the dichotomy between rich and poor has never been greater, right?
• 37:56
  Speaker 2: I mean, the Bloomberg 500 list, I mean, it's just mind-blowing, right? So,
• 38:03
  Speaker 2: and a bunch of guys on there are private equity guys. Again,
• 38:07
  Speaker 2: it's an unbelievable business. They've gotten unbelievably rich. And, you know,
• 38:12
  Speaker 2: and as Tom Wolfe said, you know, insulate, insulate, insulate.
• 38:15
  Speaker 2: They've done that in spades, right? They are the most insular,
• 38:19
  Speaker 2: insulated group. They've totally lost touch with, you know, reality.
• 38:25
  Speaker 2: But nevertheless, we celebrate them. They're fabulous. We love them,
• 38:29
  Speaker 2: et cetera. So they have a huge PR problem. they
• 38:34
  Speaker 2: should think about correcting some of that. Instead of fighting
• 38:40
  Speaker 2: some of the things that politicians go after them for,
• 38:43
  Speaker 2: maybe make a concession or two. Instead of always fighting
• 38:47
  Speaker 2: carried interest, maybe they wouldn't be that worse off if they.
• 38:53
  Speaker 1: Had to pay A little bit more in taxes, yeah. Hey,
• 38:56
  Speaker 1: Ken Griffin says we cut taxes too much. Ken Griffin
• 39:00
  Speaker 1: said this.
• 39:02
  Speaker 2: They all say tax me more, knowing that, of course,
• 39:04
  Speaker 2: it's never going to happen.
• 39:06
  Speaker 1: Right.
• 39:06
  Speaker 2: And you know that better than any. So instead of
• 39:12
  Speaker 2: fighting the carried interest boogeyman, Give into it. You're already
• 39:16
  Speaker 2: plenty rich. You're still going to be rich. The rest
• 39:19
  Speaker 2: of us pay ordinary income rates, and hopefully we can
• 39:24
  Speaker 2: increase our wealth over time. You're just going to be
• 39:28
  Speaker 2: just fine, OK? Instead of constantly fighting for lower taxes,
• 39:35
  Speaker 2: which these guys do, it's like I've heard them complain
• 39:40
  Speaker 2: so much about Obama, Biden, Harris. I'm thinking to myself,
• 39:47
  Speaker 2: look at how much your net worths have increased during Obama, Biden, Harris.
• 39:53
  Speaker 2: I mean, it's phenomenal. What do you have to complain about? Well,
• 39:57
  Speaker 2: you know, they don't like, they don't like people who
• 39:59
  Speaker 2: make money. They don't like private equity guys. With Trump,
• 40:02
  Speaker 2: at least I can get him on the phone. You know,
• 40:04
  Speaker 2: they love to say things like that.
• 40:14
  Speaker 1: I've heard that. I know with Obama, they got to
• 40:16
  Speaker 1: talk to Rob. With Trump, they get to talk to Trump.
• 40:20
  Speaker 1: I've heard this same complaint.
• 40:22
  Speaker 2: I mean, what are you complaining about? Your net worth
• 40:24
  Speaker 2: has gone from nothing to $ 15 billion. This has all
• 40:28
  Speaker 2: been very, very good for you.
• 40:30
  Speaker 1: How much of it's ego? They just, you know, hey,
• 40:33
  Speaker 1: I should be talking to the president. Is it ego?
• 40:36
  Speaker 2: Well, I mean, I'm sure they believe that. They also
• 40:40
  Speaker 2: believe their shit doesn't stink. You know, that they all
• 40:45
  Speaker 2: believe they should be Treasury Secretary and they would do
• 40:47
  Speaker 2: a much better job than the person who has it,
• 40:50
  Speaker 2: even if it's them.
• 40:52
  Speaker 1: If it's one of them, I was just going to say,
• 40:54
  Speaker 1: how is Besant's reputation right now?
• 40:57
  Speaker 2: Terrible. I mean, I think he's a joke. And I
• 41:02
  Speaker 2: think most people on Wall Street think he's a joke.
• 41:04
  Speaker 1: And I accepted the premise that he could be one
• 41:07
  Speaker 1: of the adults in the room, and he's turned out
• 41:09
  Speaker 1: not to be.
• 41:09
  Speaker 2: I don't know. I don't know how you accepted that premise.
• 41:12
  Speaker 1: I don't know how.
• 41:14
  Speaker 2: Anybody who agreed.
• 41:15
  Speaker 1: You thought he was a joke from the big get go.
• 41:18
  Speaker 2: Yes. Anybody who agreed to be in the cabinet, anybody
• 41:24
  Speaker 2: who was to be selected to be in the cabinet
• 41:27
  Speaker 2: for the second term, who agreed to be into it
• 41:30
  Speaker 2: to me was a joke, was a sycophant, you know,
• 41:33
  Speaker 2: had geography, you know, yes, man, totally lost the plot.
• 41:39
  Speaker 1: Well, supposedly there was a group of normies that were
• 41:42
  Speaker 1: trying to, you know, force Trump to take Besson, right?
• 41:45
  Speaker 1: That was the way it was sold to some in Washington. No, no, no, no, no.
• 41:50
  Speaker 1: Rubio and Besson, they're going to make sure that, you know,
• 41:53
  Speaker 1: Trump doesn't totally drive into the ditch. And as we've known,
• 41:56
  Speaker 1: Besson has turned out to be the exact opposite of that.
• 41:59
  Speaker 1: He seems to have loved being a celebrity, a low-rent
• 42:03
  Speaker 1: celebrity and things like this. And Rubio's the Homer Simpson
• 42:06
  Speaker 1: into the bushes guy pretty much every.
• 42:08
  Speaker 2: Week, but- I mean, Besant's pathetic effort to try to
• 42:15
  Speaker 2: buy long-term debt to lower interest rates. Treasury market trades
• 42:23
  Speaker 2: a trillion dollars of securities a day, and he's in
• 42:26
  Speaker 2: there buying $ 4 billion or $ 6 billion. I mean, nobody
• 42:30
  Speaker 2: thought that. And it didn't work. Look where interest rates
• 42:33
  Speaker 2: were when he started this plan, and look where they
• 42:36
  Speaker 2: are now. They've exploded like up. nearly 100 basis points.
• 42:40
  Speaker 2: So it's a pathetic display by Treasury Secretary.
• 42:45
  Speaker 1: One last thing on bad PR for private equity, and frankly,
• 42:50
  Speaker 1: the guy you wrote about, and it's Epstein. How much,
• 42:55
  Speaker 1: and it's interesting, on the campaign trail right now, Bill,
• 43:00
  Speaker 1: you're seeing suddenly Epstein attacks are being essentially like, Hey,
• 43:05
  Speaker 1: it's the rich people. It's they're getting away with, right.
• 43:08
  Speaker 1: It's not a specific, it's a general and it's all
• 43:10
  Speaker 1: being put into, you know, they're living in their own world.
• 43:14
  Speaker 1: They get to do whatever the hell they want. Um,
• 43:18
  Speaker 1: how much exposure do you think some of these guys
• 43:20
  Speaker 1: have in the, in that world and how much of
• 43:22
  Speaker 1: it is, it's just sticking to them because Epstein was
• 43:25
  Speaker 1: a part of their world for a while.
• 43:29
  Speaker 2: Well, I mean, the people who, um, had interactions with
• 43:35
  Speaker 2: epstein and pay the price for that uh is that
• 43:39
  Speaker 2: what you're referring to i mean like.
• 43:41
  Speaker 1: Well i mean have that i mean you know i
• 43:43
  Speaker 1: mean you i mean you know yeah.
• 43:46
  Speaker 2: Leon black is still worth 18 billion dollars but he's
• 43:49
  Speaker 2: he's sort of held in.
• 43:51
  Speaker 1: No one's going to do business with him is what
• 43:52
  Speaker 1: you're saying well.
• 43:53
  Speaker 2: No no but he's in like a purgatory of sorts
• 43:57
  Speaker 2: right uh you know he's He's, uh, people like he,
• 44:01
  Speaker 2: he told me that, you know, he's got more than
• 44:03
  Speaker 2: a billion. This is a perfect example. He's got a billion,
• 44:06
  Speaker 2: more than a billion dollars in his foundation. He'd like
• 44:08
  Speaker 2: to give away and he can't really, nobody wants it
• 44:10
  Speaker 2: away because, you know, it's kind of like he's tainted,
• 44:14
  Speaker 2: tainted money because of he's Leon black and his interactions
• 44:18
  Speaker 2: with Jeffrey Epstein. Now that's maybe in the nonprofit world,
• 44:23
  Speaker 2: but obviously there are plenty of people who still do business.
• 44:26
  Speaker 2: Like he has a family office and he buys and
• 44:28
  Speaker 2: sells companies. Um, he's still the largest shareholder at Apollo. Um,
• 44:34
  Speaker 2: he's not involved with the company anymore, but he's still
• 44:36
  Speaker 2: the largest shareholder. So that gives him plenty of access.
• 44:39
  Speaker 2: I mean, he's, he's, uh, got one of the best
• 44:42
  Speaker 2: art collections in private hands in the world. I mean,
• 44:46
  Speaker 2: he's trying to do good things, but I think, you know,
• 44:49
  Speaker 2: he spent a lot of time with me, I think
• 44:51
  Speaker 2: in part to try to get his version of events
• 44:54
  Speaker 2: out there and to try to, you know, rehabilitate his image,
• 44:57
  Speaker 2: but it's, it's not easy. It's not easy. He's not
• 45:00
  Speaker 2: all that sympathetic a character and, and he may never be.
• 45:04
  Speaker 2: And then there are, there are other people like, you know, Larry,
• 45:07
  Speaker 2: Larry Summers. I mean, I mean, I mean, I mean,
• 45:11
  Speaker 2: people with, you know, exquisite, you know, professional accomplishments and
• 45:17
  Speaker 2: then like unbelievably bad personal judgment.
• 45:22
  Speaker 1: It's amazing to me what people will do for a
• 45:25
  Speaker 1: free ride on a private plane. Yes. I've discovered that
• 45:31
  Speaker 1: in politics over the years. It's amazing what these guys
• 45:34
  Speaker 1: will do for just a free ride.
• 45:37
  Speaker 2: And bankers and journalists and then lots of people. It's
• 45:41
  Speaker 2: very seductive. And then there are other things that people
• 45:46
  Speaker 2: will do to get access to things they might not
• 45:50
  Speaker 2: normally get access to. And then their judgment goes out
• 45:54
  Speaker 2: the door.
• 45:54
  Speaker 1: And I can.
• 45:58
  Speaker 2: I don't mean to be so opaque about that, but
• 46:00
  Speaker 2: I mean, Leon had, you know, plenty of affairs with
• 46:03
  Speaker 2: women who were not his wife.
• 46:06
  Speaker 1: What are his regrets? Does he wish he would have
• 46:08
  Speaker 1: done so that he did, you know, does he feel like,
• 46:11
  Speaker 1: I mean, is it, or is it just, he feels
• 46:13
  Speaker 1: like there's nothing he can do to get people on?
• 46:17
  Speaker 2: Well, I mean, he had, you know, we had, many,
• 46:20
  Speaker 2: many on the record interviews. And I give him credit
• 46:24
  Speaker 2: for that. You know, he was very forthright. I mean,
• 46:26
  Speaker 2: I was you can imagine what I was asking him.
• 46:29
  Speaker 1: Of course.
• 46:30
  Speaker 2: And he was answering the questions. Now, some of it
• 46:33
  Speaker 2: I still scratch my head about. I find I'm still
• 46:35
  Speaker 2: rather incredulous about some of his answers. But, you know,
• 46:39
  Speaker 2: he you know, as he points out, like, for instance, with,
• 46:43
  Speaker 2: you know, no one else who's been involved with Epstein
• 46:46
  Speaker 2: has asked to be investigated. about his relationship with Epstein.
• 46:51
  Speaker 2: And he asked the special committee of the Apollo Board
• 46:54
  Speaker 2: of Directors to do this study. And they hired this
• 46:57
  Speaker 2: law firm, Deckert, and this guy, Andy Lavander, to do it.
• 47:01
  Speaker 2: And the report came out in January of 2021. And
• 47:05
  Speaker 2: it was public. It was filed with the SEC. And,
• 47:10
  Speaker 2: you know, it basically went through all of Leon's relationships
• 47:14
  Speaker 2: with Epstein. And And nothing, you know, criminal or nefarious
• 47:20
  Speaker 2: or anything related to all that innuendo that we still
• 47:23
  Speaker 2: believe he's involved with, you know, was included in that.
• 47:27
  Speaker 2: So and he told me, I said, why did you
• 47:30
  Speaker 2: do that, Leah? So because I knew I didn't do
• 47:32
  Speaker 2: anything wrong. So, you know, but how does he how
• 47:37
  Speaker 2: does he. So there's this there's this report that comes out.
• 47:41
  Speaker 2: that is an independent report that he was investigated. He
• 47:45
  Speaker 2: turned over all of his documents and emails and texts
• 47:48
  Speaker 2: or whatever. And, you know, it came out that he
• 47:51
  Speaker 2: had paid Epstein $ 158 million. So, which is like a
• 47:57
  Speaker 2: mind-blowing amount. So even though it didn't find any wrongdoing
• 48:00
  Speaker 2: or criminal activity or nefarious activity, people are like stuck with,
• 48:04
  Speaker 2: how could you pay this guy $ 158 million? He didn't
• 48:07
  Speaker 2: even graduate, you know, high school or whatever.
• 48:11
  Speaker 1: Yeah. What was it about Epstein that would sucker in
• 48:15
  Speaker 1: all these people? I mean, it can't be just the
• 48:18
  Speaker 1: free ride on an airplane or free use of the airplane.
• 48:22
  Speaker 2: It was he provided them with things they wanted but
• 48:27
  Speaker 2: couldn't otherwise get.
• 48:31
  Speaker 1: People are going to use their imagination on that, aren't they?
• 48:34
  Speaker 1: And that's what's happened. And I don't, you know, it's,
• 48:36
  Speaker 1: it's almost like the JFK conspiracy. People are always going
• 48:42
  Speaker 1: to believe what they believe on this Epstein thing. And
• 48:44
  Speaker 1: there's no amount, there might not be any amount of
• 48:47
  Speaker 1: new information.
• 48:48
  Speaker 2: Seven years ago that the guy committed suicide. We are
• 48:51
  Speaker 2: still talking about him. The, the, You get what's another
• 48:54
  Speaker 2: example of a law that was unanimously passed and signed
• 49:00
  Speaker 2: by the president, even though he's all over those files
• 49:02
  Speaker 2: and requiring that they become public. It's I still can't
• 49:06
  Speaker 2: believe that happened. Now, it's great for me as sure.
• 49:09
  Speaker 2: So I could go through and I'm still looking for
• 49:11
  Speaker 2: the other three million. But it certainly let me see
• 49:15
  Speaker 2: what was going on between Leon and Epstein, which I
• 49:18
  Speaker 2: otherwise wouldn't know.
• 49:19
  Speaker 1: Um let me get you out of here on this
• 49:22
  Speaker 1: it's a little bit of a turn which is um
• 49:26
  Speaker 1: one of the as private equity grows as private credit
• 49:29
  Speaker 1: grows um One of the questions, how much insight do
• 49:35
  Speaker 1: we really have on the state of the economy? Is
• 49:38
  Speaker 1: there more stuff hidden than ever? And could these hidden
• 49:43
  Speaker 1: things create another economic catastrophe like we went through in 2008, 2009?
• 49:54
  Speaker 1: Because it does feel as if they moved a bunch
• 49:55
  Speaker 1: of stuff off the books to sort of because they
• 49:58
  Speaker 1: didn't like the new regulation, right? I mean, and look,
• 50:01
  Speaker 1: money always finds a way, right? If we tighten the
• 50:03
  Speaker 1: rules on banking, fine, they're going to go another way
• 50:06
  Speaker 1: and they're going to find regulators that are looser, state regulators.
• 50:10
  Speaker 1: To me, the insurance industry makes a lot of sense
• 50:12
  Speaker 1: because you don't have to deal with the feds. Insurance,
• 50:15
  Speaker 1: you get to deal with the states. Now, maybe that
• 50:18
  Speaker 1: ends up changing as Washington tries to get their arms
• 50:23
  Speaker 1: around this. But as a risk to the economy itself,
• 50:28
  Speaker 1: You know, given given, you know, there's a high, medium,
• 50:33
  Speaker 1: low where we have so much money that sort of
• 50:37
  Speaker 1: outside of the purview of our of our normal eyeballs
• 50:42
  Speaker 1: when it comes to this, whether it's the Federal Reserve, Treasury,
• 50:45
  Speaker 1: et cetera.
• 50:46
  Speaker 2: Well, you're you're you're talking to the broken clock of
• 50:50
  Speaker 2: economic prognosticators, because I think. i'm like a broken clock
• 50:56
  Speaker 2: i'm right twice a day i mean so i i
• 50:59
  Speaker 2: believe look i i'm.
• 51:01
  Speaker 1: A oh what was it it was a harry truman
• 51:04
  Speaker 1: that wanted a one-armed economist right because he was tired
• 51:07
  Speaker 1: of hearing them on both you know on the one
• 51:08
  Speaker 1: hand on the other.
• 51:09
  Speaker 2: Hand so i mean i've become a you know a
• 51:13
  Speaker 2: historian of wall street not not intentionally but as a
• 51:17
  Speaker 2: result of my books and uh So I learned that,
• 51:22
  Speaker 2: you know, we have a financial crisis on average once
• 51:24
  Speaker 2: every 20 years. And the last one was in 2008.
• 51:29
  Speaker 2: I'm looking at my clock here. Right. And so we're
• 51:32
  Speaker 2: kind of overdue. You know, after the 2008 financial crisis,
• 51:38
  Speaker 2: the Federal Reserve and Congress decided that they didn't want
• 51:42
  Speaker 2: the Wall Street banks, the ones that survived, to be
• 51:48
  Speaker 2: the cause of of the next financial crisis. So they
• 51:52
  Speaker 2: pushed a lot of what they deemed to be risky
• 51:57
  Speaker 2: assets out of the Wall Street banks, off the balance
• 52:01
  Speaker 2: sheets of the Wall Street banks. They've said you can't
• 52:04
  Speaker 2: have as much leverage. You can't hold on to these
• 52:06
  Speaker 2: risky assets. You have to distribute them. You have to
• 52:10
  Speaker 2: syndicate them. You can't write as many of them. And
• 52:13
  Speaker 2: this is why this whole, this is the new Wall
• 52:16
  Speaker 2: Street part of the book, You know, this whole new
• 52:18
  Speaker 2: Wall Street that's created this sort of alternative asset management,
• 52:22
  Speaker 2: the Apollos, the KKRs, the Sixth Street, the Aries, this
• 52:27
  Speaker 2: whole what we also call shadow banking, they're not regulated
• 52:30
  Speaker 2: by the Fed. As you point out, I mean.
• 52:33
  Speaker 1: Almost all by state, right? Basically, they have entities.
• 52:36
  Speaker 2: Within them- That's if they have an insurance company, right?
• 52:38
  Speaker 1: That they get some oversight.
• 52:40
  Speaker 2: If they're public, they're regulated by the SEC. So I
• 52:43
  Speaker 2: say they're lightly regulated. The Apollo guys don't like when
• 52:46
  Speaker 2: I say that because they say, well, our insurance company,
• 52:48
  Speaker 2: which is a big part of our business, is regulated
• 52:50
  Speaker 2: by the states. Okay, but that's not quite the same
• 52:54
  Speaker 2: as being regulated by the Federal Reserve. So- So that
• 52:57
  Speaker 2: is growing like a weed. So like Apollo has a
• 53:00
  Speaker 2: trillion dollars of assets under management now. $ 150 billion is
• 53:05
  Speaker 2: the same $ 150 billion of private equity they've had for years.
• 53:09
  Speaker 2: Now they have $ 850 billion of their trillion is private credit.
• 53:14
  Speaker 2: And that's all grown since 2008. It was nothing, zero
• 53:17
  Speaker 2: in 2008. Now it's $ 850 billion. OK, so that has
• 53:22
  Speaker 2: grown like a week and that's their growth area. And
• 53:25
  Speaker 2: that's the same thing that's happened across this sort of
• 53:28
  Speaker 2: unregulated landscape. OK, and now it's like a 40 trillion
• 53:31
  Speaker 2: dollar market for private.
• 53:33
  Speaker 1: I mean, I kind of think we know what's going
• 53:36
  Speaker 1: to happen. We're going to have a problem. And then
• 53:38
  Speaker 1: suddenly Wall Street or Washington is going to say, hey,
• 53:40
  Speaker 1: how come we're not regulating this?
• 53:42
  Speaker 2: Well, why aren't they already regulating it? We always wait
• 53:47
  Speaker 2: for the crisis.
• 53:48
  Speaker 1: You know this.
• 53:48
  Speaker 2: OK, but. you'd think we would learn this lesson. So
• 53:52
  Speaker 2: we don't, we never learned the lesson.
• 53:53
  Speaker 1: We never learned the lesson.
• 53:55
  Speaker 2: It's like, I think that, you know, you have to
• 53:58
  Speaker 2: understand if you look in a fractional banking system, which
• 54:01
  Speaker 2: is what we have, which means that people put deposits
• 54:05
  Speaker 2: in banks and the deposits aren't there, or they put, they, they,
• 54:09
  Speaker 2: or they buy an annuity from Apollo. That money is
• 54:13
  Speaker 2: not in the bank. If it, if we're ever in
• 54:16
  Speaker 2: the bank, the bank couldn't make any money that many,
• 54:18
  Speaker 2: the banks take that money and they lend it out. So,
• 54:21
  Speaker 2: And it's fine as long as everybody doesn't want their
• 54:23
  Speaker 2: money at the same time. But when they do, it's
• 54:25
  Speaker 2: a disaster. So we're basically willing to put up with
• 54:28
  Speaker 2: the fact that once every 20 years, people are going
• 54:30
  Speaker 2: to freak out and want their money at the same time.
• 54:33
  Speaker 2: And that's what happened in 2008. That's what always happens.
• 54:37
  Speaker 2: It's always the same. This might be a little different because,
• 54:40
  Speaker 2: you know, at least like Apollo, they believe that they
• 54:44
  Speaker 2: have matched the duration, not to get too technical with
• 54:47
  Speaker 2: your audience, they've matched the duration of their assets and
• 54:49
  Speaker 2: their liabilities. The liability, what they owe the annuity holders,
• 54:54
  Speaker 2: is like five or seven or 10 years. And their assets,
• 54:58
  Speaker 2: the senior secured debt that they're invested in, is also
• 55:02
  Speaker 2: seven or 10 years. So it's a little harder than
• 55:05
  Speaker 2: being able to go to your ATM machine and taking
• 55:08
  Speaker 2: your money out that same day and having your assets
• 55:11
  Speaker 2: being 10-year treasuries, like what happened in Silicon Valley Bank,
• 55:15
  Speaker 2: which blew people's mind. Bank disappeared in a day. I.
• 55:21
  Speaker 1: I could keep going. I, I, um, I really appreciate this.
• 55:24
  Speaker 1: I feel like I learn a ton and I do
• 55:26
  Speaker 1: think that it's like, we know, you know, how much,
• 55:30
  Speaker 1: and you know, my fear is many politicians who are
• 55:33
  Speaker 1: about to get elected, don't understand this world. And yet
• 55:36
  Speaker 1: we're asking them to figure out how to regulate it. Hell,
• 55:39
  Speaker 1: I hope they at least read your book. Speaking of which,
• 55:42
  Speaker 1: where can people find all your stuff? Where should they
• 55:43
  Speaker 1: go find more Bill Cohen? Well, there's, there's POC, which, uh,
• 55:47
  Speaker 1: you know, is, uh, like an octopus. It's everywhere.
• 55:50
  Speaker 2: We're all.
• 55:51
  Speaker 1: Absolutely.
• 55:52
  Speaker 2: I have a website, uh, William Cohen.com and eight books.
• 55:56
  Speaker 2: So they're all, it's all out there, baby.
• 55:58
  Speaker 1: Look, they're very readable. Business books aren't always readable, like
• 56:01
  Speaker 1: financial books like this. Um, you're, you're a terrific writer. Uh,
• 56:05
  Speaker 1: you make it very accessible. So I appreciate it.
• 56:07
  Speaker 2: So have you enjoyed, uh, becoming a podcaster? I, uh.
• 56:11
  Speaker 1: I've, I love it. I, the, the last three or
• 56:15
  Speaker 1: the last three or four years, uh, was very frustrating
• 56:19
  Speaker 1: because we just kept shrinking the interview slots. And in fact,
• 56:23
  Speaker 1: I think the more you shrink an interview slot on
• 56:25
  Speaker 1: legacy television, the more, the more unintentionally antagonistic you make
• 56:31
  Speaker 1: the interview because everybody's in a hurry. And when you're
• 56:34
  Speaker 1: in a hurry to make a point, when you're in
• 56:35
  Speaker 1: a hurry to ask a question, when you're in a
• 56:37
  Speaker 1: hurry to get to the next, correct everything. And so
• 56:41
  Speaker 1: my theory was that everybody had hacked the legacy TV
• 56:46
  Speaker 1: interview timing. Everybody knew, oh, they're not going to go
• 56:49
  Speaker 1: more than eight to 10 minutes and I can filibuster
• 56:51
  Speaker 1: here and I can do this. The beauty of this environment,
• 56:54
  Speaker 1: and I think why more people gravitate to it, is
• 56:57
  Speaker 1: we can do what we just had. And you can't
• 57:00
  Speaker 1: do your topic. In a five minute segment on Meet
• 57:04
  Speaker 1: the Press. As much as I, and I don't know
• 57:07
  Speaker 1: if I could have done it in a 10. And
• 57:08
  Speaker 1: you're not going to do it in a five minute
• 57:10
  Speaker 1: interview on Squawk Box either, even though the audience knows
• 57:13
  Speaker 1: the stuff.
• 57:14
  Speaker 2: I know, I know. But that's what you're forced into.
• 57:17
  Speaker 2: That's why I like it.
• 57:19
  Speaker 1: I view it as this is sort of 21st century magazines, right?
• 57:22
  Speaker 1: We don't do the 10,000 word magazine piece anymore. You know,
• 57:26
  Speaker 1: I just started getting some gigs writing on that in
• 57:28
  Speaker 1: the late 90s, early aughts. And then suddenly there was
• 57:31
  Speaker 1: no money to be made as a freelancer doing those
• 57:33
  Speaker 1: pieces because you realize people were moving, you know, they
• 57:36
  Speaker 1: were moving online. That's what I feel like the podcast
• 57:39
  Speaker 1: space has become. It's sort of where can I get
• 57:42
  Speaker 1: You know, just like you would sit down with a
• 57:44
  Speaker 1: big magazine piece to understand an idea or a person
• 57:48
  Speaker 1: without maybe reading the whole book. Right. Without doing a
• 57:51
  Speaker 1: full on book. I think that's the space. I'd like
• 57:54
  Speaker 1: to think that's the space we're all we're filling here
• 57:56
  Speaker 1: a little bit.
• 57:58
  Speaker 2: Good. Well, you're very good at it. So thank you
• 58:00
  Speaker 2: for having me. All right, Bill.
• 58:02
  Speaker 1: Good luck. And I'm a huge puck fan. I mean,
• 58:05
  Speaker 1: first of all, I love John Oron, old sports business
• 58:10
  Speaker 1: daily guy. So I'm always going to promote that. Leanne
• 58:13
  Speaker 1: Caldwell worked with me forever. So to think that you
• 58:18
  Speaker 1: have a good team, at least as far as I'm concerned.
• 58:21
  Speaker 2: Yes, we do.
• 58:23
  Speaker 1: Yes.
• 58:23
  Speaker 2: Well, now Jerry Cardinal is the team owner.
• 58:27
  Speaker 1: There you go. And he's the type of person that
• 58:30
  Speaker 1: a lot of people want to be owned by these days.
• 58:32
  Speaker 1: And I'll just leave it at that. Anyway.
• 58:34
  Speaker 2: All right.
• 58:35
  Speaker 1: Thanks, brother.