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Ad Budgets Shift from Social Media To Connected TV: Steelhouse · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa A. Bramowitz. Each day
• 0:11
  Speaker 1: we bring you the most important, noteworthy, and useful interviews
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  Speaker 1: for you and your money, whether you're at the grocery
• 0:17
  Speaker 1: store or the trading floor. Find the Bloomberg p m
• 0:20
  Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com.
• 0:32
  Speaker 1: We've talked a lot about Mark Zuckerberg in his presentations
• 0:36
  Speaker 1: in front of Congress. One thing we've heard less about
• 0:40
  Speaker 1: is what's been going on in the minds of big
• 0:42
  Speaker 1: advertisers and how they're going to be using Facebook going forward.
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  Speaker 1: Here to talk a little bit about it from that
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  Speaker 1: angle is Mark Douglas, chief executive officer of Steelhouse, which
• 0:52
  Speaker 1: works with advertisers of all sizes and tries to give
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  Speaker 1: them some context from a data perspective of how to
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  Speaker 1: go about doing so, and his bay in Los Angeles. Mark,
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  Speaker 1: thank you so much for being with us. UM, So
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  Speaker 1: just let's start with how much advertisers have actually pulled
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  Speaker 1: back in the wake of the Facebook reach, if at all. UM,
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  Speaker 1: we haven't seen any advertisers pulled back, and we have
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  Speaker 1: UM close to a thousand pretty sizable advertisers that use
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  Speaker 1: our software. Um, what we've seen is actually a lot
• 1:23
  Speaker 1: more concern about GDPR, which is a whole another topic.
• 1:27
  Speaker 1: Basically there being yet global basically is a global UM
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  Speaker 1: protect a privacy protection law that's coming out of the EU,
• 1:35
  Speaker 1: and so I think there's and that has that has
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  Speaker 1: some stiff penalties. If you violate it, you can be
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  Speaker 1: penalized four percent of your revenue. What's the concern on
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  Speaker 1: behalf of advertisers. Well, because the virtually every company in
• 1:48
  Speaker 1: Europe has to conform with it, and it's brand new,
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  Speaker 1: it goes in effect on MA and UM. Europe has
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  Speaker 1: more consumers than actually the US does. So in other words,
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  Speaker 1: the idea here is advertisers wouldn't be able to access
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  Speaker 1: the information of European users. Therefore they couldn't target the
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  Speaker 1: odds as well as the idea they have to dislose.
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  Speaker 1: But what the information that they're collecting is being used for.
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  Speaker 1: So Apple actually this past weekend released OS updates for
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  Speaker 1: every every Apple OS, iOS, Apple TV, Mac os and
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  Speaker 1: now when you open their operating systems or any of
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  Speaker 1: the apps, they just slose to you that they value
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  Speaker 1: your privacy. They dislose what data are collecting, how long
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  Speaker 1: they're retaining it for. That's going to happen in Europe
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  Speaker 1: for essentially every company in Europe and every app in Europe.
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  Speaker 1: And Apple did it worldwide. I don't know if they
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  Speaker 1: did in China, but they did it certainly in the
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  Speaker 1: US and Europe. And that that happened for Apple this weekend.
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  Speaker 1: It has to happen for all companies that operate in Europe.
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  Speaker 1: So if someone, if you're a US company, soone gets
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  Speaker 1: on an airplane, when they get off the airplane and
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  Speaker 1: they read and they use your app, you now subject
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  Speaker 1: to that law as a company. And that's coming on. Mark.
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  Speaker 1: I want to give you about the thirty seconds or
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  Speaker 1: maybe even forty five seconds, give us the short version
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  Speaker 1: of of Mark Douglas. Because you're born in the Bronx
• 3:13
  Speaker 1: Aviation High School, you learned to code in Seattle Oracle
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  Speaker 1: Center of you E Harmony. These are all part of
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  Speaker 1: your biography. Yeah, so um, yeah, I'm a Bronx kid
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  Speaker 1: and UM dropped out of college about one semester and
• 3:29
  Speaker 1: then UM taught myself to program, bought a book and
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  Speaker 1: borrow a computer, taught myself to program and then UM
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  Speaker 1: just kind of found kept connecting with the right technologies.
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  Speaker 1: I learned how to program on Windows, which is now
• 3:42
  Speaker 1: way back from the developers at Microsoft that wrote it,
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  Speaker 1: and then eventually met Larry Ellison and then that you know,
• 3:49
  Speaker 1: was in Silicon Valley, and now um, I'm in Los
• 3:52
  Speaker 1: Angeles kind of enjoying the l A lifestyle, but I
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  Speaker 1: think working harder than most people. And you know, I
• 3:58
  Speaker 1: bring some New York five to l A, so working
• 4:00
  Speaker 1: a little harder than most people in l A. The
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  Speaker 1: reason I wanted to introduce your background here is because
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  Speaker 1: I want to get to this idea of how you
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  Speaker 1: reinvent yourself and specifically the reinvention of video and video
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  Speaker 1: on demand. Tell us what's going on with things like
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  Speaker 1: video advertising, Direct TV now, Hulu Live, Fox Now, and
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  Speaker 1: the way that marketing and advertising is going to be
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  Speaker 1: working with video in the future. So, you know, one
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  Speaker 1: thing that's really interesting. If you ask UM, if anyone
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  Speaker 1: in the industry, what's whether to where the biggest um
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  Speaker 1: at tech companies, the first name they'll say is Google
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  Speaker 1: and the second name they'll say is Facebook. Well, actually
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  Speaker 1: that's not right. Fox is actually bigger than Facebook. And
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  Speaker 1: if Fox and Disney combined, they might be bigger than Google.
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  Speaker 1: So and that's all television ad revenue. All that ad
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  Speaker 1: revenue is going online and so connected to TV. More
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  Speaker 1: than six percent of Americans now watch a majority of
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  Speaker 1: their television on demands, so use it. It's started with Netflix,
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  Speaker 1: but now it's basically every channel. And so when you
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  Speaker 1: watch television is broadcasts we might I say broadcast, I
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  Speaker 1: mean just cable. Um, those ads are just broadcast based
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  Speaker 1: on time slots. Like the people watch the show have
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  Speaker 1: these qualities and we want to, you know, kind of
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  Speaker 1: put our message in front of them. But you watch
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  Speaker 1: the same exact show on connected TV, um, you can
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  Speaker 1: you Basically the targeting on those ads is now much
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  Speaker 1: more personalized in the way that Mark Zuckerberg talked about
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  Speaker 1: basically gave a tutorial on Internet advertising this week and
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  Speaker 1: for a lot of centators even just the Internet, and um,
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  Speaker 1: so you get kind of the same kind of targeting
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  Speaker 1: now for television. It's a huge transition. Okay, So given
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  Speaker 1: that that is a huge transition, are you seeing that
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  Speaker 1: Facebook and frankly Google are losing some of the lure
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  Speaker 1: that they once had because these targeted ads are perhaps
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  Speaker 1: even more effective given the fact that they are more
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  Speaker 1: notable as the only advertisement and they're on a specific show,
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  Speaker 1: and they're also not skippable. The ad completion rates broadcast
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  Speaker 1: television or fourteen percent, so because most people DV are
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  Speaker 1: the ads. The ad completion rates for connected television on
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  Speaker 1: demand television are nine percent because they're completely unskippable. And
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  Speaker 1: you're right the the earl. We can now measure this
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  Speaker 1: at sealhouse. We can now measure this. And the TV
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  Speaker 1: is a powerful medium and it's showing up on connected
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  Speaker 1: TV also, so we're seeing already some budgets. That's where
• 6:40
  Speaker 1: we're seeing some budgets move where the early adopters have
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  Speaker 1: connected to the advertisers who are early adopters are starting
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  Speaker 1: to move some budget from UM social media, from other
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  Speaker 1: digital channels like mobile advertising, display advertising to television and UM.
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  Speaker 1: We're seeing response rates for the consumer that are just,
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  Speaker 1: you know, kind of really really strong. Approaching paid search
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  Speaker 1: in terms of effectiveness. If you're in the marketing or
• 7:08
  Speaker 1: advertising world and you're listening to Mark Douglas, what are
• 7:13
  Speaker 1: some of them I'm going to use the term buzz words,
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  Speaker 1: but what are those key things that you want to
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  Speaker 1: be spending your weekend learning about so that when you
• 7:21
  Speaker 1: go into the office on Monday, you can have a
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  Speaker 1: constructive conversation about how your business is going to operate
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  Speaker 1: in the future. The that's an interesting question. I think, um,
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  Speaker 1: you know, the topics we touched on are really the
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  Speaker 1: ones I'm putting most of my energy into, and it's there.
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  Speaker 1: There's basically another way to think about it is that
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  Speaker 1: traditional media is making a comeback. It's kind of been predicted,
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  Speaker 1: you know, like Google dominates and Facebook dominates, and Display dominates,
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  Speaker 1: and essentially traditional media because it's not just connected television,
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  Speaker 1: digital radio is like with and or with Spotify, who
• 8:01
  Speaker 1: I think just went public or is about to go
• 8:03
  Speaker 1: put don't know they went public, got it, and so
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  Speaker 1: that is making a big comeback, and I think that's
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  Speaker 1: where we're putting a lot of attention. I think any
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  Speaker 1: advertiser should, especially traditional media advertiser, should be thinking, how
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  Speaker 1: can you know? How do I how do I now
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  Speaker 1: target traditional media? Thanks very much for being here, Mark Douglas,
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  Speaker 1: Chief executive Steelhouse. You're listening to Bloomberg. It's been one
• 8:41
  Speaker 1: of the biggest secrets in the global oil business for
• 8:45
  Speaker 1: more than forty years. These are the financials of Saudi Aramco.
• 8:49
  Speaker 1: Well secret no longer here to tell us more. Will Kennedy,
• 8:53
  Speaker 1: Managing editor for Europe, Middle East and Africa, Energy and
• 8:57
  Speaker 1: Commodities for Bloomberkey, joins us for London. Well Kennedy, thank
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  Speaker 1: you very much for being with us. Just to give
• 9:03
  Speaker 1: people a little bit of a sort of description as
• 9:06
  Speaker 1: to why this is so relevant and interesting, not only
• 9:09
  Speaker 1: if you're an investor, but just if you want to
• 9:11
  Speaker 1: understand how the oil business works. There were two things
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  Speaker 1: to say I think him One, Saudi Arabia has suggested
• 9:20
  Speaker 1: that it might like to I p O this company,
• 9:22
  Speaker 1: and it would, given its scale, be the probably the
• 9:24
  Speaker 1: largest sequity deal ever. So that's made it hugely interesting
• 9:28
  Speaker 1: to investors and everyone around the world. And secondly, this
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  Speaker 1: soil at Aramco pumps underpins the whole Saudi economy. This
• 9:36
  Speaker 1: is the income stream that pays for social spending in
• 9:39
  Speaker 1: the kingdom. It's increasingly assertive military and uh the royal family.
• 9:45
  Speaker 1: So I want to just get your sense. Do you
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  Speaker 1: think the potential investors looking at the numbers reviewed by
• 9:51
  Speaker 1: Bloomberg would feel more positively towards the company considering the
• 9:55
  Speaker 1: fact that it's the world's most profitable one, or take
• 9:59
  Speaker 1: a take a little bit more of a placious stance.
• 10:02
  Speaker 1: There were there's a mixture of things here in Lisa.
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  Speaker 1: I mean there were some extremely good positives. Clearly, even
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  Speaker 1: last year when our prices were below where they are now,
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  Speaker 1: this was a company that was making considerably more than
• 10:14
  Speaker 1: any other company in the world. Um, and it will
• 10:17
  Speaker 1: be making even more money this year as all that
• 10:19
  Speaker 1: vallees to seventy dollars and beyond. Do you see a
• 10:23
  Speaker 1: balance sheet that's pretty much pristine, no debt at all.
• 10:26
  Speaker 1: You see oil production costs which by our estimates perhaps
• 10:31
  Speaker 1: a quarter of ex On and Shell, the two biggest
• 10:33
  Speaker 1: publicly traded companies oil companies in the world. But there
• 10:37
  Speaker 1: are probably negatives for investors, and the one that probably
• 10:40
  Speaker 1: needs highlighting more than any other is is the tax regime.
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  Speaker 1: What we discovered is that saudio Abia has imposed a
• 10:46
  Speaker 1: new tax regime, a royalty regime, which takes a share
• 10:50
  Speaker 1: of every single dollar the company owns earns sorry um,
• 10:54
  Speaker 1: and that that take rises of oil prices. So it
• 10:57
  Speaker 1: goes up once I'll get to seventy, it goes up
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  Speaker 1: a and to once ago to a hundred to investors
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  Speaker 1: may feel that really limits for them the upside of
• 11:05
  Speaker 1: any rallying oil prices if they were to invest in
• 11:08
  Speaker 1: a company like this when it went public. Now, what
• 11:10
  Speaker 1: are we talking about in terms of actual profits? I
• 11:13
  Speaker 1: believe what do they say about the almost thirty four
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  Speaker 1: billion dollars in income for the first six months. That's
• 11:19
  Speaker 1: according to what Blimberg News has seen. Yeah, that's right,
• 11:23
  Speaker 1: and that was in seventeen when prices were a lot lower.
• 11:26
  Speaker 1: And to put that in perspective, I mean they produced
• 11:28
  Speaker 1: ten million miles a day. Excellent Shell between them probably
• 11:32
  Speaker 1: produced somewhere about seven million miles a day, but those
• 11:36
  Speaker 1: two companies made just seven point four billion each. So
• 11:40
  Speaker 1: you can really see that the low costs that Aramco
• 11:43
  Speaker 1: have to pump their ta million miles a day from
• 11:46
  Speaker 1: these giant fields under the Society desert mean that it's
• 11:49
  Speaker 1: far more profitable than its nearest piers in among the
• 11:52
  Speaker 1: western all major's. Excellent Shell. Now, the Saudi crown Prince
• 11:56
  Speaker 1: Mohammed been a salmon who has justly been visiting the
• 12:00
  Speaker 1: United States in the last couple of weeks. What is
• 12:03
  Speaker 1: he said about about Saudi ARAMCA I mean, he he
• 12:10
  Speaker 1: has while he was in America all along his our
• 12:14
  Speaker 1: start again him and forgive me he made He made
• 12:17
  Speaker 1: selling Saudi Aramco doing an I p O a centerpiece
• 12:21
  Speaker 1: of his reform for the kingdom, and he said that
• 12:24
  Speaker 1: it might be worth as much as two trillion dollars
• 12:26
  Speaker 1: and it would be key to key to change in
• 12:29
  Speaker 1: the economy of the kingdom of preparing it for the
• 12:31
  Speaker 1: oil age. I mean, he's still stuck by that. What
• 12:33
  Speaker 1: has changed that he says they'll only sell it when
• 12:35
  Speaker 1: the time is right, when oil prices right. One thing
• 12:39
  Speaker 1: that I'm struck by is how much flexibility does the
• 12:42
  Speaker 1: Saudi Arabian government have to love the additional taxes or
• 12:47
  Speaker 1: take additional profits from the company. It has all the
• 12:51
  Speaker 1: scope that it wants. I mean, it can change the
• 12:52
  Speaker 1: tax regime whenever it wants. And I think you're rightly
• 12:55
  Speaker 1: st highlight that that's probably going to be a key
• 12:58
  Speaker 1: concern for investors if they look at this company. Clearly,
• 13:01
  Speaker 1: the primary role of Saudi Aramco is to support the
• 13:04
  Speaker 1: fiscal uh power of Saudi Arabia, and if they need to,
• 13:09
  Speaker 1: that's going to take presidents over looking after minority investors,
• 13:14
  Speaker 1: and that you know that maybe we'll be enough money
• 13:16
  Speaker 1: for everyone, but that's going to be something for investors
• 13:19
  Speaker 1: to think about as they assessed the risk of this investment. Well, Kennedy,
• 13:22
  Speaker 1: thank you so much for joining us, and congratulations, really
• 13:25
  Speaker 1: really fascinating story at William Kennedy, Managing editor for the
• 13:29
  Speaker 1: E M e A Energy and Commodities Team, UH for Bloomberg.
• 13:49
  Speaker 1: We are joined now by Bob mulroy, chief executive officer
• 13:52
  Speaker 1: of Partner Therapeutics, also former founder and chief executive of
• 13:56
  Speaker 1: Merrimac based in Boston. Bob, thank you so much for
• 14:01
  Speaker 1: being with us in congratulations. Your first drug, lu Keen,
• 14:04
  Speaker 1: I hope I'm pronouncing that correctly, was just approved by
• 14:06
  Speaker 1: the FDA to treat acute radiation sickness. I am a
• 14:10
  Speaker 1: little concerned, however, about the sort of fact that this
• 14:13
  Speaker 1: drug exists and the fact that the U. S. Department
• 14:15
  Speaker 1: of Health and Human Services office actually began stockpiling this
• 14:20
  Speaker 1: drug in case of a nuclear attack. Is that the
• 14:24
  Speaker 1: main purpose of this drug, so lucine isn't actually an
• 14:27
  Speaker 1: older drug, and its purposes really to help restore your
• 14:31
  Speaker 1: entire immune system and so in diseases where you might
• 14:34
  Speaker 1: have in affections, it's very important. Um. And in the
• 14:37
  Speaker 1: case of a radiation sickness, which you could occur from
• 14:40
  Speaker 1: a nuclear accident, but that could be a leak at
• 14:42
  Speaker 1: a power plant, it could be from a radioactive mind
• 14:45
  Speaker 1: that's deep in the ground. So there are many different
• 14:47
  Speaker 1: possible sources of radiation sickness. But but the US government
• 14:51
  Speaker 1: did after nine eleven make a decision to stockpile drugs
• 14:54
  Speaker 1: that could help in a public emergency, and lucine is
• 14:57
  Speaker 1: one of those drugs. So how many people do they
• 14:59
  Speaker 1: have doses for? So I'm not sure that that's public information.
• 15:03
  Speaker 1: I know that they are targeting, uh, you know, covering
• 15:06
  Speaker 1: hundreds of thousands of patients with the stockpile over time,
• 15:08
  Speaker 1: and what they've done today, I'm not sure that's public.
• 15:10
  Speaker 1: But um, you know, we're excited that this new approval
• 15:14
  Speaker 1: and the new data that's been shown with luke. I'm
• 15:15
  Speaker 1: where it's the first drug to be shown effective at
• 15:18
  Speaker 1: treating patients who have been exposed to radiation forty eight
• 15:20
  Speaker 1: hours after an incident. Is really important because in an emergency,
• 15:25
  Speaker 1: you can necessarily dose everybody right away. You've got to
• 15:27
  Speaker 1: get the drug and the medical treatment to the potential
• 15:29
  Speaker 1: patients who have been exposed. Um so luka I really
• 15:33
  Speaker 1: is a is a breakthrough in that area. Just tell
• 15:36
  Speaker 1: people a little bit about your background, because you're the
• 15:39
  Speaker 1: former chief executive of Merrimack that ran into some issues
• 15:43
  Speaker 1: that caused you to leave and you had to cut
• 15:46
  Speaker 1: the workforce there. Tell us about why you decided to
• 15:49
  Speaker 1: put together Partner Therapeutics and the strategy behind Partner. Well,
• 15:55
  Speaker 1: I've been in the industry for twenty five years and
• 15:57
  Speaker 1: I love drug development. And after leaving Merrimack, I partnered
• 16:01
  Speaker 1: with a gentleman named Debashi's Road Chattery who ran oncology
• 16:04
  Speaker 1: at exactly at Sergeon, Well he was chief medical officer there,
• 16:08
  Speaker 1: but he ran oncology at Sinofie and Glaxo and and
• 16:11
  Speaker 1: we've been good friends for years. And what we saw
• 16:14
  Speaker 1: was a trend in the industry where um, the larger
• 16:17
  Speaker 1: companies were focusing on fewer and fewer targets, particularly in
• 16:19
  Speaker 1: the immunotherapy space. But there weren't a lot of companies
• 16:22
  Speaker 1: thinking about what would you need to make those immunotherapies work.
• 16:26
  Speaker 1: And so we said, well, let's try and work on
• 16:27
  Speaker 1: the elements of the components you need to get immunotherapy work,
• 16:31
  Speaker 1: and so one of the key components is stimulating the
• 16:33
  Speaker 1: immune cells that immune therapies can trigger. And Luken we
• 16:37
  Speaker 1: saw it was a key ingredient to that. And if
• 16:39
  Speaker 1: you think about luke on, it's only one of two
• 16:42
  Speaker 1: drugs and combinations with immunotherapy that have been shown to
• 16:44
  Speaker 1: work in cancer. Now, if you happen to be a
• 16:47
  Speaker 1: patient who is undergoing or undergone chemotherapy or bone marrow transplant,
• 16:53
  Speaker 1: how would Lukin figure into your life. So today Lukens
• 16:59
  Speaker 1: approved to treat patients with with a m al acute
• 17:01
  Speaker 1: Milo leukemia or under a bone mile transplortation transplantation. And
• 17:06
  Speaker 1: what happens in those cases is you need to uh
• 17:09
  Speaker 1: in amail for instance, the cancer is against the immune
• 17:11
  Speaker 1: system and destroying immune cells. So UH Luken can help
• 17:16
  Speaker 1: reconstitute and rebuild your immune system. UH when you're getting
• 17:20
  Speaker 1: chemotherapy for treatment, so you don't have an infection, so
• 17:22
  Speaker 1: effectively replace the cells that are cancers that are geting
• 17:25
  Speaker 1: killed by the chemotherapy. The same is true with bone
• 17:27
  Speaker 1: mile transplantation, where you have to regrow or restimulate or
• 17:30
  Speaker 1: replace that immune system. Because many of those patients they
• 17:33
  Speaker 1: don't die of the cancer, they'll die of infections as
• 17:35
  Speaker 1: a result of the cancer reducing their immune systems effectiveness.
• 17:39
  Speaker 1: Lukin restores the immune systems so that they don't they
• 17:42
  Speaker 1: don't suffer those effects. I want to talk about the
• 17:44
  Speaker 1: process of getting the drug approved by the FDA, because
• 17:46
  Speaker 1: there's been talk that the FDA is trying to expedite
• 17:49
  Speaker 1: approvals in response to the to the cries for cheaper medications.
• 17:54
  Speaker 1: Did you find that it was a faster process than
• 17:56
  Speaker 1: you've heard and experience than in the past. It was
• 17:59
  Speaker 1: a very fat process for us, but but not one
• 18:01
  Speaker 1: that's a typical today. We applied for something called priority review,
• 18:04
  Speaker 1: which is available to any drug that is deemed to
• 18:07
  Speaker 1: be important to the public health, to a particular treatment
• 18:10
  Speaker 1: of a condition where you really have a breakthrough therapy opportunity,
• 18:14
  Speaker 1: and so we applied for a priority review in the
• 18:16
  Speaker 1: f d A granted that priority review and review the
• 18:20
  Speaker 1: drug in essentially a six month time frame as opposed
• 18:22
  Speaker 1: to uh, you know, typical twelve or fourteen months. What
• 18:25
  Speaker 1: are you working on now? What's in the pipeline? Well,
• 18:28
  Speaker 1: for luke On what's exciting about it is that uh
• 18:31
  Speaker 1: uh emunotherapy, which is the latest wave in cancer is
• 18:35
  Speaker 1: is a really important growing area and lucan is in
• 18:37
  Speaker 1: a whole number of trials, including a big Phase three
• 18:39
  Speaker 1: in frontline melanoma today as well as in trials with
• 18:42
  Speaker 1: cancer vaccines. And in the second area, uh, lucan has
• 18:46
  Speaker 1: plays in a very important role in the immune system,
• 18:49
  Speaker 1: where we're finding out that our diseases like Alzheimer's and
• 18:51
  Speaker 1: Parkinson's that have a big immune system component and potentially
• 18:54
  Speaker 1: in those indications that there have been early dated in
• 18:56
  Speaker 1: Phase two showing if you can restore the immune system
• 18:59
  Speaker 1: you can benefit those diseases as well. Just real quick,
• 19:02
  Speaker 1: any any wish for an initial public offering anytime in
• 19:05
  Speaker 1: the near future. Well, right now, we're going to focus
• 19:07
  Speaker 1: on on on growing lukine of the business and working
• 19:09
  Speaker 1: on building our pipeline of other drugs um but uh,
• 19:14
  Speaker 1: we'll see how things go. And just to offer the opportunity,
• 19:18
  Speaker 1: you did pick up a manufacturing plan from Santa Few, right,
• 19:20
  Speaker 1: That's right, that's right. So we did acquire a biological
• 19:24
  Speaker 1: manufacturing facility outside of Seattle, Washington, which helps make lucine.
• 19:28
  Speaker 1: But we're hopeful other products that we're bringing into the
• 19:30
  Speaker 1: pipeline they can make for us as well, and so
• 19:33
  Speaker 1: we'll have. An important capacity in today's world is the
• 19:36
  Speaker 1: ability to supply product reliably to patients and too physicians.
• 19:40
  Speaker 1: Uh and and that's a critical thing as as capacity
• 19:43
  Speaker 1: industry gets constrained with all the development. Thanks very much
• 19:46
  Speaker 1: for being with us. Bob mulroy is the chief executive
• 19:48
  Speaker 1: partner Therapeutics. They are based in Boston, home to a
• 19:51
  Speaker 1: Bloomberg one of six one Boston New Report int thirty
• 19:54
  Speaker 1: in MetroWest and the South Shore. There seems to be
• 20:11
  Speaker 1: escalating fissure between the left and the right in the
• 20:16
  Speaker 1: United States? Is it the same among chief executive officers
• 20:20
  Speaker 1: of American companies? Here to talk about that and the
• 20:22
  Speaker 1: consequences of these fissures is Joe Minerrek, Senior vice president
• 20:27
  Speaker 1: and director of Research at the Committee for Economic Development,
• 20:31
  Speaker 1: also a former chief Economists at the Office of Management
• 20:34
  Speaker 1: and Budget during all eight years of the Clinton administration. Joe,
• 20:38
  Speaker 1: thank you so much for being with us. You co
• 20:41
  Speaker 1: authored a book last year, Sustaining Capitalism, Bipartisan Solutions to
• 20:45
  Speaker 1: Restore Trust and Prosperity. In your conversations with executives, do
• 20:51
  Speaker 1: you get the sense that they are trying to foster
• 20:54
  Speaker 1: more bipart partisanship, or if you've seen the partisanship sort
• 20:58
  Speaker 1: of spread to the c suite. We have something of
• 21:03
  Speaker 1: a self selected audience. I don't want to overstate this,
• 21:07
  Speaker 1: but uh, the folks who engage with us at the
• 21:10
  Speaker 1: Committee for Economic Development believe in bipartisan solutions to the
• 21:16
  Speaker 1: nation's problems. I think that that. However, I think I
• 21:19
  Speaker 1: can assert that that is fairly representative of the business community.
• 21:23
  Speaker 1: When you have problems in business, Uh, they're not republican
• 21:27
  Speaker 1: or democratic problems. There are not republican or democratic facts.
• 21:32
  Speaker 1: They are not republican or democratic solutions. Business leaders tend
• 21:36
  Speaker 1: to be focused at solving problems, facing facts, and uh,
• 21:42
  Speaker 1: coming out at the end with success and our perception,
• 21:46
  Speaker 1: my perception is that the folks I talked to are
• 21:50
  Speaker 1: trying to find a way to solve the nation's problems. Well,
• 21:54
  Speaker 1: Joe interact, I beg your pardon is is there a
• 21:58
  Speaker 1: development of a parallel economy or a parallel government? Because
• 22:03
  Speaker 1: in your book you talk about how that that lawmaking
• 22:07
  Speaker 1: is polluted by special interest lobbying, re election fundraising demands,
• 22:12
  Speaker 1: and revolving door job appointments. That seems to be pretty
• 22:17
  Speaker 1: contradictory to what you're describing when you talk about business leaders. Well,
• 22:22
  Speaker 1: I'm talking to business leaders who want to try to
• 22:26
  Speaker 1: find solutions. And I find that many business leaders, even
• 22:30
  Speaker 1: those who don't engage with us directly, do have a
• 22:34
  Speaker 1: sense of the need to face facts when they are
• 22:37
  Speaker 1: dealing with issues with respect to their own businesses. So
• 22:41
  Speaker 1: we do have, I believe, an opportunity to work with business,
• 22:46
  Speaker 1: to have business cooperate with government to try to find
• 22:51
  Speaker 1: ways to solve the problems that we face today. I
• 22:54
  Speaker 1: know there will be differences with respect to particular issues.
• 22:58
  Speaker 1: It of course gets very tricky when you have business
• 23:03
  Speaker 1: leaders from different parts of a particular industry where there
• 23:08
  Speaker 1: are issues of regulation or issues of alternative technologies, where
• 23:16
  Speaker 1: you have the potential to have one side win and
• 23:18
  Speaker 1: the other side lose. But the business community, by and large,
• 23:23
  Speaker 1: in my experience and the people with my work, try
• 23:27
  Speaker 1: to find a way to solve problems. And right now
• 23:31
  Speaker 1: we have some very big issues that we need to address,
• 23:33
  Speaker 1: and folks I talked to are willing to do that.
• 23:36
  Speaker 1: So let's talk about some of the big issues and
• 23:38
  Speaker 1: just wearing your hat as the head of the committee
• 23:40
  Speaker 1: for Economic Development, but also as the as the senior
• 23:43
  Speaker 1: vice president of the agency, but also with your former
• 23:47
  Speaker 1: role at the o MB. How concerned are you about
• 23:50
  Speaker 1: the deepening deficit in the US. We have been on
• 23:55
  Speaker 1: a path where our debt has been growing faster than
• 23:59
  Speaker 1: our elective income. The debt to GDP ratio, which is
• 24:04
  Speaker 1: economist jargon, has been rising, and that has been going
• 24:09
  Speaker 1: on for uh, just about two decades now. That is
• 24:14
  Speaker 1: not sustainable. We can't continue along that path. And the
• 24:20
  Speaker 1: longer we wait, the bigger build up of debt we
• 24:24
  Speaker 1: will have. And that to me is a matter of
• 24:28
  Speaker 1: enormous concern. Uh. It's a matter of concern for me personally.
• 24:33
  Speaker 1: I have two daughters and three grandchildren, and I have
• 24:37
  Speaker 1: a hard time looking at them in the eye sometimes.
• 24:40
  Speaker 1: You know, I can imagine my grandchildren saying, ten twenty
• 24:43
  Speaker 1: years from now, you know, why didn't pop a deal
• 24:46
  Speaker 1: with that? I thought it was supposed to be something
• 24:49
  Speaker 1: he worked on. Uh. And that's that should be worrisome
• 24:53
  Speaker 1: for everybody. The head of a corporation wants to leave
• 24:57
  Speaker 1: a corporation behind. UH. That is sound. And I've spoken
• 25:02
  Speaker 1: of business leaders telling me that they consider the nation's
• 25:06
  Speaker 1: fiscal and balanced to be the greatest threat to the
• 25:08
  Speaker 1: future of their businesses. Really, that's that's really, you know.
• 25:12
  Speaker 1: It's It's interesting though, because if you hear some economists
• 25:15
  Speaker 1: and some members of the current administration, they'll say, if
• 25:18
  Speaker 1: you look at the deficit with respect to the GDP
• 25:20
  Speaker 1: of the nation, UH, it's not so big of it.
• 25:23
  Speaker 1: It's not so big of a deal. What do you
• 25:24
  Speaker 1: say to that, Uh, If you want to measure that
• 25:30
  Speaker 1: by recent history, you have to understand that you have
• 25:33
  Speaker 1: not just lowered the bar, you buried the bar. For
• 25:37
  Speaker 1: the last twenty years, our budget UH position has not
• 25:41
  Speaker 1: been sustainable. And you want to say, well, it's not
• 25:44
  Speaker 1: so bad, it's better than it was in the depths
• 25:47
  Speaker 1: of the UH the financial crisis. That's true. In the
• 25:51
  Speaker 1: depths of the financial crisis, we were setting records for
• 25:55
  Speaker 1: the size of our deficits, you know, trillion dollar deficits
• 25:59
  Speaker 1: for the first time in our history. And now we're
• 26:02
  Speaker 1: in a position where if you start from where we
• 26:04
  Speaker 1: are and you draw a straight line with a UH
• 26:08
  Speaker 1: with a ruler in the direction in which we want
• 26:11
  Speaker 1: to go, in which we are now going, UH, you
• 26:14
  Speaker 1: will find that in we're going to have uh deficits
• 26:18
  Speaker 1: that are back in the trillion dollar range again. Uh.
• 26:21
  Speaker 1: Ten years from now, in the nation's debt will be
• 26:26
  Speaker 1: greater than it's gross domestic product. The debt to GDP
• 26:30
  Speaker 1: ratio will be over for the first time since the
• 26:34
  Speaker 1: end of World War Two. Uh. And now we're talking
• 26:38
  Speaker 1: about setting that standard in a peacetime economy, when the
• 26:42
  Speaker 1: economy is growing relative to of course, the the the
• 26:47
  Speaker 1: enormous emergency in World War Two when we we would
• 26:51
  Speaker 1: borrow all we needed to to finance our freedom. Uh.
• 26:54
  Speaker 1: We have no excuses today for that kind of behavior.
• 26:58
  Speaker 1: All right, So what so what do you said us
• 27:00
  Speaker 1: that people who are listening to you do? Earlier today,
• 27:04
  Speaker 1: I got the chance to speak the Congressman Dave Bratt,
• 27:06
  Speaker 1: Republican the Virginia seventh District, asked him about teacher pay
• 27:11
  Speaker 1: at the time when you're running one and a half
• 27:14
  Speaker 1: trillion dollar deficits according to the OMB, and there was
• 27:18
  Speaker 1: a disconnect in terms of trying to make any kind
• 27:21
  Speaker 1: of inroads into Well, you know, maybe the money should
• 27:23
  Speaker 1: have been spent on education. What do you do? Well,
• 27:29
  Speaker 1: I'm talking here and the members of our organization are
• 27:33
  Speaker 1: talking about bipartisan solutions. I think the first thing that
• 27:38
  Speaker 1: we have to recognize is that our budget problem is
• 27:43
  Speaker 1: so large that the only way that we are going
• 27:47
  Speaker 1: to solve it is if we have everyone at the
• 27:50
  Speaker 1: table and everything on the table. We need our nation's
• 27:56
  Speaker 1: leaders in the Congress and in the executive branch to
• 28:00
  Speaker 1: recognize that there is no way to solve this problem
• 28:05
  Speaker 1: where one side gets everything at once and does not
• 28:09
  Speaker 1: have to pitch in. Alright, everybody is going to have
• 28:11
  Speaker 1: to be involved. Well, thank you for being involved, and
• 28:14
  Speaker 1: thank you for Sustaining Capitalism, the book that you co
• 28:17
  Speaker 1: authored last year. Joe Minrick is the director of Research
• 28:21
  Speaker 1: at the Committee for Economic Development. He's all our former
• 28:24
  Speaker 1: chief economist at the Office of Management and Budget. Thanks
• 28:31
  Speaker 1: for listening to the Bloomberg P and L podcast. You
• 28:33
  Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
• 28:37
  Speaker 1: or whatever podcast platform you prefer. I'm Pim Fox. I'm
• 28:41
  Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
• 28:45
  Speaker 1: It's one before the podcast. You can always catch us
• 28:47
  Speaker 1: worldwide on Bloomberg Radio.