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P&L: Why Fake News Is A Global Problem · Bloomberg Intelligence

• 0:04
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:14
  Speaker 1: you and your money, whether at the grocery store or
• 0:16
  Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
• 0:20
  Speaker 1: SoundCloud and at Bloomberg dot com. Well, talking about fake
• 0:30
  Speaker 1: news is David Guarantee, CEO of g v A Research.
• 0:34
  Speaker 1: Thank you David so much for being here and sort
• 0:36
  Speaker 1: of helping us understand how big of a problem the
• 0:40
  Speaker 1: proliferation of some of this fake news is on a
• 0:42
  Speaker 1: global level. Certainly, Lisa, my pleasure and thank you pim um.
• 0:46
  Speaker 1: You know, in terms of looking at the current election cycle,
• 0:48
  Speaker 1: two thousand and sixteen, we didn't see the rise of
• 0:51
  Speaker 1: this sort of unverified content being put out onto the
• 0:55
  Speaker 1: social media, and if we went back to two thousand twelve,
• 0:58
  Speaker 1: we were in a situation here where social media was
• 1:00
  Speaker 1: really at a point where the size of their audience
• 1:03
  Speaker 1: was outstripping that of traditional news organizations. However, four years
• 1:07
  Speaker 1: further down the road, things obviously have massively changed, and
• 1:10
  Speaker 1: we're now in a situation where organizations such as the
• 1:13
  Speaker 1: Pew Center have said that of their survey respondents recently,
• 1:16
  Speaker 1: about forty percent of them are roving relying upon social
• 1:19
  Speaker 1: media as being their primary information source. However, social media
• 1:24
  Speaker 1: organizations bend over backwards to say we're not news organizations,
• 1:28
  Speaker 1: were technology companies. Well, the fact of the matter is
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  Speaker 1: the size of their audience is now larger than traditional
• 1:34
  Speaker 1: news organizations. They are in effect news organization because their
• 1:38
  Speaker 1: audience treats them as such. However, given the fact that
• 1:41
  Speaker 1: they're now adults, they don't wish to take on the
• 1:43
  Speaker 1: responsibilities that would fall traditionally to a news organization, which
• 1:47
  Speaker 1: means they don't they would want not enjoy the protections
• 1:51
  Speaker 1: of the US Constitution as a news media outlet. And
• 1:57
  Speaker 1: they will also say that they would be subject to
• 1:58
  Speaker 1: libel laws. Well, was where I was going to go
• 2:01
  Speaker 1: with this, because we all recall the libel uh suit
• 2:05
  Speaker 1: that was filed against Vice. Was this That's what I
• 2:11
  Speaker 1: beg Gawker was a director of Facebook. Peter Teal, yes,
• 2:15
  Speaker 1: who funded that lawsuit, and its not the only lawsuit
• 2:18
  Speaker 1: that Pete that Teal and other billionaires have funded. So clearly,
• 2:23
  Speaker 1: if people are concerned about a free press, people are
• 2:26
  Speaker 1: concerned about having proper information, and if proper information is
• 2:30
  Speaker 1: what is necessary to have an informed electorate that can
• 2:34
  Speaker 1: make proper and appropriate choices in elections. Liberal democracy needs
• 2:38
  Speaker 1: an informed electorate. Misinformation cuts right at that route. I
• 2:42
  Speaker 1: want to play the devil's advocate because in your comments
• 2:44
  Speaker 1: you're basically saying that the facebooks and the twitters of
• 2:47
  Speaker 1: the world really ought to So the implication is that
• 2:49
  Speaker 1: they really ought to police what's getting distributed and understood
• 2:54
  Speaker 1: as truth. At the same time, isn't the onus on
• 2:58
  Speaker 1: the consumers of this, I mean, isn't it to sort
• 3:00
  Speaker 1: of seek out the verified information? And I mean, by
• 3:03
  Speaker 1: how do you how do you make sure that the
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  Speaker 1: twitters and facebooks of the world aren't de facto censors
• 3:09
  Speaker 1: and becoming you know, uh and viewed frankly as as
• 3:13
  Speaker 1: the man or sort of be viewed as in bed
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  Speaker 1: with a particular political party in going after you know,
• 3:18
  Speaker 1: another side. I mean, this sort of edges into a
• 3:21
  Speaker 1: pretty scary territory. Yes, we we are relying upon an
• 3:23
  Speaker 1: informed electorate to basically exercise their judgment, but at the
• 3:26
  Speaker 1: same time, we look at how social media sites have
• 3:28
  Speaker 1: developed their algorithms they're programming is developed in such a
• 3:32
  Speaker 1: way as to show people what it is that they
• 3:34
  Speaker 1: already like. The idea being if the dogs reading the
• 3:37
  Speaker 1: dog food, give them more dog food. And from that standpoint,
• 3:40
  Speaker 1: we've seen the creation of basically filter bubbles in terms
• 3:43
  Speaker 1: of people basically sharing information with their friends and they're
• 3:46
  Speaker 1: basically just given more of the same. They're not given
• 3:49
  Speaker 1: a contrasting point of view. There is nothing that as
• 3:52
  Speaker 1: individuals requires them to be fair and balanced in terms
• 3:55
  Speaker 1: of what media they consume. There is a concern here
• 3:58
  Speaker 1: which I think we have to look were the corporate
• 4:00
  Speaker 1: advertisers who have been looking at using social media as
• 4:03
  Speaker 1: a channel increasingly because that's where the audiences migrated. Were
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  Speaker 1: the advertisers from the standpoint of concerns over their own
• 4:11
  Speaker 1: brand reputations, not wishing to have an ad served next
• 4:14
  Speaker 1: to a piece of news that is fake or false
• 4:17
  Speaker 1: or hateful or misleading. You know, there could be a
• 4:19
  Speaker 1: move here by advertisers essentially, Sarah say, yes, social media
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  Speaker 1: maybe a lot of noise, but it's not something we
• 4:25
  Speaker 1: used to identify with. Why because we've spent you know,
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  Speaker 1: billions of dollars building our reputations and We're not going
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  Speaker 1: to see it sold away for something that basically gives
• 4:33
  Speaker 1: the way the truth or debases it. Didn't that already
• 4:35
  Speaker 1: happen with pripe Bart. Wasn't there an a distributor that
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  Speaker 1: removed it's uh its services from bright part calling it
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  Speaker 1: hate speech? It was last week there was there was
• 4:44
  Speaker 1: something like this. I mean it is there are There
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  Speaker 1: is starting to be some pushback, but it'll be curious
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  Speaker 1: to see whether it will be. I was actually in
• 4:51
  Speaker 1: a meeting recently with a fellow who was in charge
• 4:54
  Speaker 1: of WPP Group, very large global advertising agency amongst the largest,
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  Speaker 1: and he was the one who is simply indicating that
• 5:00
  Speaker 1: this was a likely response to fake news coming off
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  Speaker 1: of the selection, that he would basically go out and
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  Speaker 1: council the global advertisers that they work with to say, look,
• 5:09
  Speaker 1: focus on reliable sources of media and information. You know,
• 5:15
  Speaker 1: from that standpoint, social media, like any other organization, has
• 5:18
  Speaker 1: to pay bills, and if they don't get any money
• 5:20
  Speaker 1: from advertisers, I think their tune will change. Well, let
• 5:23
  Speaker 1: me just give you the detail here. The bright Bart
• 5:26
  Speaker 1: example that you just offered a Lisa it was app
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  Speaker 1: nexus and they deactivated bright Bart News after an audit
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  Speaker 1: of the site's content determined that it violated the Advertising
• 5:37
  Speaker 1: Networks Code of Conduct banning hate speech and great hate speech.
• 5:44
  Speaker 1: But I didn't say fake speech. And one David, how
• 5:47
  Speaker 1: long have you been covering the technology industry more technology
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  Speaker 1: sector of going back before the change the millennium? Okay,
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  Speaker 1: so consequences responsibilities? Do technology companies have a great track
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  Speaker 1: record when it comes to the social consequences and responsibilities?
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  Speaker 1: Because if they want those press uh freedoms, then maybe
• 6:08
  Speaker 1: they're going to have to change the way that they charge.
• 6:10
  Speaker 1: This is very true. And if we go back and
• 6:12
  Speaker 1: look historically a technology companies, they tend to have a
• 6:15
  Speaker 1: shorter lifespan, if you will, than than other companies. But
• 6:19
  Speaker 1: one thing that people have noted more broadly is that
• 6:21
  Speaker 1: the lifespan of corporations has been contracting. But arguably one
• 6:25
  Speaker 1: would say technology companies lead in this regard. Typically there
• 6:28
  Speaker 1: has been a disposition on the part of managements whre
• 6:31
  Speaker 1: in early stage investors and technology companies essentially to build
• 6:34
  Speaker 1: them for sale, basically passed the buck on to somebody else,
• 6:38
  Speaker 1: the acquirer, to have the acquirer solve the problem. Some
• 6:42
  Speaker 1: of the concerns that they have been in the case
• 6:44
  Speaker 1: of social media companies, is being concerned about how fickle
• 6:47
  Speaker 1: the demographics of their audience was. Certainly we've seen early
• 6:51
  Speaker 1: age demographics going from say fifteen to twenty four have
• 6:56
  Speaker 1: been migrating away from Facebook, have been migrating more towards
• 6:59
  Speaker 1: things like Napchat. Obviously, we'll see how well that does
• 7:02
  Speaker 1: with its I p O. But nonetheless, the audience is fickle,
• 7:05
  Speaker 1: and from that standpoint, one would argue that there is
• 7:09
  Speaker 1: a hands off attitude in order to maintain an audience.
• 7:12
  Speaker 1: And so as a result, you know, this kind of disregard,
• 7:17
  Speaker 1: if you will, for the niceties that news organizations need
• 7:20
  Speaker 1: to follow have certainly led social media organizations Facebook at
• 7:25
  Speaker 1: al to wander far afield Um. Now I want to
• 7:39
  Speaker 1: turn our attention to the fate of Italian banks. We
• 7:42
  Speaker 1: have Jonathan Tyson is our senior banks analyst for Bloomberg Intelligence,
• 7:46
  Speaker 1: joining us from London. Jonathan, there is a referendum scheduled
• 7:52
  Speaker 1: for December the fourth. What does the referendum in Italy
• 7:56
  Speaker 1: mean not only for the government but for the future
• 8:00
  Speaker 1: of Italian banking. That's good, good morning. I think the
• 8:03
  Speaker 1: referendum per se was clearly Mario Renzi um the prime minister,
• 8:08
  Speaker 1: the prime minister looking to consolidate his position or have
• 8:11
  Speaker 1: an exit strategy. And in terms of what it means
• 8:15
  Speaker 1: for the sort of wider economy and the banks, um,
• 8:18
  Speaker 1: if it's a no vote and Renzy does walk, then
• 8:22
  Speaker 1: quite clearly all of the things the Italian banks, mostly
• 8:25
  Speaker 1: via UNI Credit and Monty Pachy, where most of the
• 8:28
  Speaker 1: people are looking at the moment they're trying to do,
• 8:30
  Speaker 1: they get set back. Confidence dwindles. We've already seen, for example,
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  Speaker 1: a five billion euro fifty year bond that was issued
• 8:38
  Speaker 1: very recently by itaally that's now trading at eighty five
• 8:41
  Speaker 1: cents in the euro. So it's fallen in a very
• 8:45
  Speaker 1: few weeks. When they issued it, I think it was
• 8:47
  Speaker 1: like two point eight three percent or something around there.
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  Speaker 1: And you wonder, who would you know lend their money
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  Speaker 1: for fifty years. Well, so, I mean we we've seen
• 8:54
  Speaker 1: hundred year bonds in Europe. Certainly, sometimes you do look
• 8:58
  Speaker 1: at it and think, two people believe that the Eurozone
• 9:01
  Speaker 1: crisis has gone away, and if anything, as very little
• 9:04
  Speaker 1: is achieved, we're getting further right um politically across Europe
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  Speaker 1: and there are so many questions unresolved, with so little
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  Speaker 1: action and resolution in the banks. Um, it's very hard
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  Speaker 1: to see this not dragging into two thousands and seventeen
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  Speaker 1: and beyond. Well, okay, so the Italian banks have been
• 9:21
  Speaker 1: in trouble for a while that there is are a
• 9:23
  Speaker 1: number of them that are looking for some kind of
• 9:25
  Speaker 1: solution that may, if possible, include some kind of government bailout. Again,
• 9:30
  Speaker 1: that's not necessarily possible under some of the recent rules
• 9:34
  Speaker 1: that have been implemented. But can you walk us through
• 9:38
  Speaker 1: the direct mechanism by which the banks will suffer in
• 9:41
  Speaker 1: a no vote for the referendum? In other words, walk
• 9:43
  Speaker 1: us through kind of Is this a matter of yields
• 9:46
  Speaker 1: on an Italian government bonds, blowing out any of their holdings,
• 9:51
  Speaker 1: losing a lot of value, borrowing costs for them, you know, ballooning.
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  Speaker 1: Is that sort of the mechanism by which this will
• 9:58
  Speaker 1: lead to trouble for them? No? Not really, I mean
• 10:01
  Speaker 1: that is that's amcillary, that's part of it. Because the
• 10:05
  Speaker 1: Italian banks owned several hundred billion of government bonds, So
• 10:09
  Speaker 1: clearly yields blowing out means that the unrealized gains in
• 10:12
  Speaker 1: those bonds are disappearing, and Italian banks include that in
• 10:16
  Speaker 1: regulatary solvency, so it's unhelpful. But that's not the problem.
• 10:19
  Speaker 1: The problem is that the banks have got several hundred
• 10:22
  Speaker 1: billions of non performing loans. They've got two hundred plus
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  Speaker 1: billion of the very worst sort of loans, and Monty Pasky,
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  Speaker 1: which is the poster child for everything that's bad and
• 10:32
  Speaker 1: needs addressing in Italy, they are trying to raise up
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  Speaker 1: to five billion and are flowed tens of billions of
• 10:38
  Speaker 1: non performing loans. And we need proof that there is
• 10:41
  Speaker 1: actually a secondary market for the sale of non performing loans,
• 10:46
  Speaker 1: because it's not just Monti Paski. Uni Credit is the
• 10:49
  Speaker 1: largest bank in Italy by assets. They've got tens of billions,
• 10:52
  Speaker 1: multiples of what Monty Pasky has. So if we lose confidence,
• 10:57
  Speaker 1: if the market takes a step back and doesn't understand
• 10:59
  Speaker 1: the direction politically and regulatorily of Italy into two thousands
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  Speaker 1: and seventeen, it's very hard to see how Monty Patsky
• 11:08
  Speaker 1: and then Newny Credit, which has, by the way, a
• 11:11
  Speaker 1: strategy day one December where they're going to try and
• 11:14
  Speaker 1: articulate how many billions of new capital they need and
• 11:16
  Speaker 1: how they're going to get it if we get the
• 11:19
  Speaker 1: no vote, and there is significant fallout even from here
• 11:22
  Speaker 1: because things have already moved. The problem remains, how on
• 11:26
  Speaker 1: earth does Italy address it's bad loans, Jonathan the the
• 11:31
  Speaker 1: introduction of a sort of a bad loan bank. Hasn't
• 11:35
  Speaker 1: that been considered? And have US institutions such as Goldman
• 11:40
  Speaker 1: Sachs and JP Morgan. They have indicated that something might
• 11:45
  Speaker 1: change if indeed that referendum gets the no vote. As
• 11:47
  Speaker 1: you describe, well, the problem is that you can't have
• 11:51
  Speaker 1: state aid, and because Italy has been very very slow
• 11:55
  Speaker 1: in applying bailin enforcing its banks to take its medicine
• 11:59
  Speaker 1: um the the bailing rule effectively kicked in for Italy
• 12:03
  Speaker 1: at the beginning of two thousand and sixteen. One of
• 12:05
  Speaker 1: the problems they face is that, unlike many other markets,
• 12:08
  Speaker 1: a lot of the bond or the debt funding that
• 12:10
  Speaker 1: the banks have is actually held by retail bond holders.
• 12:14
  Speaker 1: So the last thing really that you want for the
• 12:17
  Speaker 1: Italian bank system is to have a bail in from here,
• 12:20
  Speaker 1: because suddenly you've got a lot of retail investors and
• 12:23
  Speaker 1: retail deposit holders who will lose significance amount of money.
• 12:27
  Speaker 1: At that point you've got a proper liquidity crisis for
• 12:29
  Speaker 1: the bank system as well. So unfortunately that the bail
• 12:33
  Speaker 1: in should Montypasky struggle to raise its five billion and
• 12:37
  Speaker 1: if it doesn't manage to use the securitization guarantee from
• 12:41
  Speaker 1: the government to offload its nonforming leans, I think bailing
• 12:44
  Speaker 1: is what people begin to think. At that point, you're
• 12:46
  Speaker 1: a retail bond holder and some of the other small
• 12:49
  Speaker 1: Italian banks, what do you do with your money and
• 12:51
  Speaker 1: what happens to liquidity? And as we all know from
• 12:53
  Speaker 1: two thousand and eight, when you get a significant liquidity problem,
• 12:57
  Speaker 1: it becomes a capital problem very quickly. When we're already
• 13:00
  Speaker 1: concerned about the solvancy of the Italian banks, Jonathan real
• 13:03
  Speaker 1: quick Is any of this price into the market currently
• 13:06
  Speaker 1: that a no vote will be the presiding one? Oh? Absolutely?
• 13:10
  Speaker 1: I think the mark is well aware, um that this
• 13:12
  Speaker 1: will be the case. And the fact is that you've
• 13:15
  Speaker 1: got France at the moment, you've got what happens with Brexit.
• 13:18
  Speaker 1: So is it priced inadequately? I don't know, But as
• 13:20
  Speaker 1: we just said, um, you've got a five billion, fifty
• 13:23
  Speaker 1: year bond away and it's four and fift cent and
• 13:25
  Speaker 1: two to three weeks. The market is clearly very aware
• 13:27
  Speaker 1: of this, It just doesn't understand what the real number
• 13:30
  Speaker 1: needs to be. Lisa A. Bronwitz. Something else happening today
• 13:45
  Speaker 1: taking place in Dallas, A T and T is said
• 13:48
  Speaker 1: to reveal its new online video service. Of course, A
• 13:52
  Speaker 1: T and T the owner of the video streaming service
• 13:56
  Speaker 1: direct Tv. Now it's the country's time pay TV producer,
• 14:02
  Speaker 1: and we know that they also want to get into
• 14:03
  Speaker 1: the content business. We don't know exactly whether A T.
• 14:09
  Speaker 1: T will receive a regulatory approval for their pending Uh
• 14:13
  Speaker 1: they're pending acquisition, um is it? Uh? This is a
• 14:18
  Speaker 1: good introduction though, for our next guest, because A T.
• 14:21
  Speaker 1: T has been behind this this venture. Couldn't go as
• 14:24
  Speaker 1: the co founder and the general manager of Crunchy Roll.
• 14:28
  Speaker 1: And by the way, it makes me hungry, though, well okay,
• 14:31
  Speaker 1: couldn't you. You've got one, You've got one follower there
• 14:34
  Speaker 1: already already because of the name. Tell us what is
• 14:37
  Speaker 1: what is crunchy role and then maybe just explain the
• 14:41
  Speaker 1: relationship between you and A T and T because they're
• 14:43
  Speaker 1: they're part owner. Sure, thank you for having me. Crunchy
• 14:47
  Speaker 1: Role is a anime streaming service. We bring the latest
• 14:52
  Speaker 1: shows out of Japan and we stream it to eight
• 14:55
  Speaker 1: different languages, including English, Spanish, French, Portuguese, Italian, German, Arabic
• 15:01
  Speaker 1: into a hundred sixty different countries. We have millions of
• 15:05
  Speaker 1: viewers and a lot of paid subscribers. Our relationship with
• 15:09
  Speaker 1: A T and T. They are an investor along with
• 15:12
  Speaker 1: the Trending Group into Outer Media, which is a digital
• 15:17
  Speaker 1: media venture UH company, and that is a majority investor
• 15:21
  Speaker 1: into crunchy roll. Um. I want to talk a little
• 15:24
  Speaker 1: bit about the demand for viewing anime or sort of
• 15:27
  Speaker 1: a Japanese form of hand drawn or computer animation. How
• 15:31
  Speaker 1: much has it sort of gained in popularity away from Japan.
• 15:34
  Speaker 1: I mean, I know that it has been popular for
• 15:36
  Speaker 1: years in certain um, in certain circles, but you know,
• 15:40
  Speaker 1: is it proliferating more? Absolutely? We think this is just
• 15:45
  Speaker 1: the early innings and there's a lot more demand and
• 15:48
  Speaker 1: a lot more popularity to be had. What we've seen
• 15:52
  Speaker 1: is that there's a lot of misconception about what is
• 15:55
  Speaker 1: anime and generally animation. Anime is a medium for a
• 16:00
  Speaker 1: using storytelling, just like live action is a medium and
• 16:03
  Speaker 1: within that medium there's a lot of diversity. There's a
• 16:06
  Speaker 1: lot of different genres within that medium, including romance, horror,
• 16:11
  Speaker 1: sci fi, comedy, action, drama, you name it, and there's
• 16:15
  Speaker 1: just so much rich storytelling, amazing characters. I think that's
• 16:19
  Speaker 1: what draws audience into it as has been very much
• 16:23
  Speaker 1: under the radar for a lot of years, but I
• 16:26
  Speaker 1: think that's because it's mostly the fans who are into
• 16:29
  Speaker 1: it were really in the know, And what we're really
• 16:31
  Speaker 1: seeing now is that the fan base has grown and
• 16:34
  Speaker 1: there are the millennials today and they're uh figuring out
• 16:38
  Speaker 1: new ways to access this content, to engage with its content,
• 16:40
  Speaker 1: and making it even more popular. Can you explain the
• 16:44
  Speaker 1: financial background for Crunchy Role in the context of advertisements,
• 16:51
  Speaker 1: but also in the context of you can have your
• 16:53
  Speaker 1: own YouTube television channel now and I believe that you
• 16:56
  Speaker 1: can watch a lot of these types of programs in
• 17:00
  Speaker 1: another format. How does crunch your role figure into this?
• 17:02
  Speaker 1: How do you make money? Absolutely? So, we're still really
• 17:07
  Speaker 1: early innings into digital media and we're still learning a lot.
• 17:11
  Speaker 1: But I think one thing that we've learned and that's
• 17:14
  Speaker 1: been valuated across other different businesses in this space is
• 17:17
  Speaker 1: that it takes a lot of capital to be able
• 17:21
  Speaker 1: to make investments to create premium truly premium content, and
• 17:25
  Speaker 1: premium content is what gets people to really engage and
• 17:29
  Speaker 1: to get ultimately people to pay and subscribe to your
• 17:32
  Speaker 1: content because you've got general discussion boards and forms about
• 17:36
  Speaker 1: each individual character and episode. That's right. So the difference
• 17:42
  Speaker 1: here is that comparing UH for example, us to other services,
• 17:46
  Speaker 1: there are a lot of services that are in the
• 17:47
  Speaker 1: digital space that are basically something for everyone. What we're
• 17:52
  Speaker 1: trying to be is we're trying to be everything for
• 17:55
  Speaker 1: some people, the most passionate fans. And what we've seen
• 17:58
  Speaker 1: is that with really passionate fans, for them, it's not
• 18:00
  Speaker 1: just let's watch a video and and let's watch a
• 18:04
  Speaker 1: show and let's come back later. Once they engage with
• 18:07
  Speaker 1: the show, they're absolutely engaging with everything else. They're going
• 18:10
  Speaker 1: going to the community, they're they're engaging in forums, they're
• 18:13
  Speaker 1: transacting by buying merchandise and figures around the shows they're watching.
• 18:17
  Speaker 1: They're going to physical conventions. They're just doing a lot
• 18:20
  Speaker 1: more things and and creating a lot more engagement and
• 18:23
  Speaker 1: hopefully a lot more opportunities for monetization. How big is
• 18:27
  Speaker 1: the online market for viewing anime right now? We have
• 18:32
  Speaker 1: many millions of viewers over the US as well as
• 18:35
  Speaker 1: the rest of the world. We think that there's still
• 18:38
  Speaker 1: a lot more potential. Ultimately, we think that anime is
• 18:41
  Speaker 1: one of the ways that millennial audiences really want to
• 18:45
  Speaker 1: engage with digital content, and they really embrace it, and
• 18:49
  Speaker 1: and they really can relate to a lot of characters,
• 18:51
  Speaker 1: a lot of the stories are being told, and they
• 18:54
  Speaker 1: think it's a lot of fun. You know. I want
• 18:56
  Speaker 1: to bring up something we talked about earlier in the program.
• 18:58
  Speaker 1: We were talking about social media of sites um and
• 19:01
  Speaker 1: whether they ought to be getting involved in some of
• 19:04
  Speaker 1: the conversations and preventing speech that might be their hate speech,
• 19:08
  Speaker 1: or you know, if there's something that veers into some
• 19:11
  Speaker 1: kind of inappropriate territory. I mean, do you guys have
• 19:14
  Speaker 1: some kind of approach to that. I think that's an
• 19:18
  Speaker 1: amazing and very relevant topic. So with animation, what we
• 19:23
  Speaker 1: do is we we take everything that's on air on
• 19:26
  Speaker 1: TV and we rebroadcasted and we self title it into
• 19:29
  Speaker 1: multiple languages. But what we have seen is that animation
• 19:33
  Speaker 1: is amazingly diverse, and there's a lot of storytelling around empowerment,
• 19:39
  Speaker 1: around growing up, around a lot of these themes that
• 19:42
  Speaker 1: are anti boling around Uh, really, how do you develop
• 19:45
  Speaker 1: yourself and find your own perspective as a as an individual?
• 19:49
  Speaker 1: And how do you do that with friends? So we
• 19:52
  Speaker 1: think that the content is amazingly empowering and not just
• 19:55
  Speaker 1: towards one demographic or one audience. It captures an entire
• 19:59
  Speaker 1: sp a froum of perspective in in terms of not
• 20:04
  Speaker 1: just male, but female, various other gender or sexual orientations,
• 20:10
  Speaker 1: all of those things. So it's it's an amazing diverse
• 20:12
  Speaker 1: medium for storytelling and empowerment. Couldn't you graduated from UC
• 20:17
  Speaker 1: Berkeley with honors? You've got a Bachelor of Science and
• 20:19
  Speaker 1: Electrical engineering computer science, also be an applied mathematics. Does
• 20:25
  Speaker 1: anyone question like, you're working with cartoons? Does that? How
• 20:30
  Speaker 1: does that go down? So I had this, Uh, I
• 20:36
  Speaker 1: had this debatement with myself many many years ago. I think,
• 20:40
  Speaker 1: you know, the path was either academia or go into
• 20:44
  Speaker 1: working with animation. And I think the great thing about
• 20:47
  Speaker 1: animation is we're able to bring through crunch real amazing
• 20:51
  Speaker 1: story telling that touches people touches many millions of people
• 20:56
  Speaker 1: in meaningful ways, and I think that's ultimately very impacting
• 20:59
  Speaker 1: and very very rewarding for me personally as well as
• 21:02
  Speaker 1: to be able to reach so many people and and
• 21:05
  Speaker 1: we would impact so many lives. Kuno, co founder and
• 21:09
  Speaker 1: general manager of Crunchy Role, coming to us from San
• 21:12
  Speaker 1: Francisco talking about UH, the movement of anime to the
• 21:16
  Speaker 1: United States. This is Bloomberg. Wait, Wait is that a
• 21:31
  Speaker 1: black sweater? No? Do I want to get that microwave?
• 21:34
  Speaker 1: Wait we have to be on the radio. Oh, yes,
• 21:36
  Speaker 1: that's right. I'll stop shopic. But one person who may
• 21:39
  Speaker 1: go back to shop in. Christian mcgoon, CEO of Amplify
• 21:42
  Speaker 1: Investments and manager of the Amplify Online Retail et F,
• 21:45
  Speaker 1: is here in the studio to talk about what we
• 21:47
  Speaker 1: know so far about how well UH stores did on
• 21:52
  Speaker 1: Black Friday. Of course, as we just heard from Greg
• 21:55
  Speaker 1: Jared in the Bloomberg news room, it's unclear whether we
• 21:58
  Speaker 1: have a better sense from maybe Cyber Monday than we
• 22:00
  Speaker 1: do from Black Friday. But Christian, thank you so much
• 22:03
  Speaker 1: for being with us. I want to start out with
• 22:06
  Speaker 1: how much do we really know already about Black Friday,
• 22:10
  Speaker 1: there was that UH National Federation of National Retail Federation
• 22:14
  Speaker 1: that came out saying the average spending per person was
• 22:18
  Speaker 1: down slightly dollars per person from more than two last year.
• 22:24
  Speaker 1: How accurate is this? Yeah, I think it's fairly accurate.
• 22:27
  Speaker 1: Big data is now emerging in the retail scene. It's
• 22:30
  Speaker 1: less about opinions and it's more about gathering all these
• 22:33
  Speaker 1: streams of data into quick analytics, and I think that's correct.
• 22:37
  Speaker 1: I think consumers haven't spent as much so far this year.
• 22:41
  Speaker 1: I think it's probably due to the fact that these
• 22:43
  Speaker 1: UH deals have been extended before Black Friday and even
• 22:47
  Speaker 1: after Cyber Monday, so I think there's less urgency to
• 22:50
  Speaker 1: go out and make your purchase on that single day
• 22:52
  Speaker 1: or wait for for for Cyber Monday today, and that's
• 22:55
  Speaker 1: impacting I think some of the swiftness of the sales,
• 22:58
  Speaker 1: but I think they're still going to be there, and
• 23:00
  Speaker 1: it's clear the big winner here is online retail versus
• 23:03
  Speaker 1: brick and mortar. Christian, I wonder if you could just
• 23:06
  Speaker 1: tell us a little bit of your background, going back
• 23:08
  Speaker 1: to claim More and the exchange traded fund industry, and
• 23:11
  Speaker 1: then the creation and the manager of this new amplify
• 23:15
  Speaker 1: online Retail et F symbol I buy. Yeah. So I've
• 23:19
  Speaker 1: been involved in the et F industry since the early
• 23:21
  Speaker 1: two thousands and done about sixtiesome funds in the United States,
• 23:25
  Speaker 1: and uh, this particular fund, the online Retail et F,
• 23:28
  Speaker 1: I buy. It's kind of it's coming out day, so
• 23:30
  Speaker 1: to speak. It's the first time it's been out during
• 23:33
  Speaker 1: the holiday shopping season, and you know, it's a way
• 23:35
  Speaker 1: to actually take advantage of not only the seasonal trend,
• 23:38
  Speaker 1: but it's really kind of a change in the whole
• 23:41
  Speaker 1: retail and environment. Uh, the amount of sales in online
• 23:45
  Speaker 1: retail is growing at about a annualized pace versus brick
• 23:50
  Speaker 1: and mortar, and that's a trend many investors don't have
• 23:53
  Speaker 1: exposure to into the in the traditional brick and mortar
• 23:55
  Speaker 1: exchange traded funds out there. So I buy offers that
• 23:58
  Speaker 1: focused exposure and to as like it's a holiday so
• 24:01
  Speaker 1: to speak, Well because I was sorry, but just because
• 24:03
  Speaker 1: I was looking at the the companies that are in
• 24:06
  Speaker 1: the the e t F D I buy, Okay, etc.
• 24:09
  Speaker 1: It's like a major position pet met Express one eight
• 24:12
  Speaker 1: hundred flowers Overstock Neutral Systems hs N. What is the
• 24:17
  Speaker 1: rationale for why some companies go in and why some don't. Yeah,
• 24:20
  Speaker 1: so there's a hard and fast rule. A company has
• 24:23
  Speaker 1: to have seventy percent of their revenue coming from online
• 24:26
  Speaker 1: retail sales. So if you don't meet that seventy percent threshold,
• 24:30
  Speaker 1: you're not in the e t F. So Best Buy
• 24:31
  Speaker 1: had a bright spot with online sales. Walmart and their
• 24:34
  Speaker 1: acquisition of Jet got dot dot dot com has had
• 24:37
  Speaker 1: a bright spot and online sales, but it's not seventy
• 24:39
  Speaker 1: of their revenue. The ETF really wants to have companies
• 24:42
  Speaker 1: that are exposed the majority of their revenue to that
• 24:45
  Speaker 1: online trend. Uh. So, yeah, I believe it or not.
• 24:48
  Speaker 1: PIM Amazon is not even in the top ten holdings here.
• 24:51
  Speaker 1: But when you look at these companies like Etsy or
• 24:53
  Speaker 1: pet Meds or eight hundred Flowers, Uh, they've had some
• 24:56
  Speaker 1: unbelievable performance. A lot of it has been fueled, we believe,
• 24:59
  Speaker 1: because they're available online and that segment is just growing markedly.
• 25:03
  Speaker 1: How concerned are you about their share falling markedly when
• 25:07
  Speaker 1: the biggest retailers figure out how to better sort of
• 25:11
  Speaker 1: uh negotiate their their transactions online. Yeah, it's clear that
• 25:14
  Speaker 1: you know Walmart, for example, is you know, doing some
• 25:16
  Speaker 1: strategic acquisitions. I think, um where the e t F
• 25:19
  Speaker 1: could benefit is some of the merger and acquisition potential.
• 25:22
  Speaker 1: So some of these UH companies will get taken out
• 25:25
  Speaker 1: by these broad based retailers that are brick and mortar
• 25:27
  Speaker 1: because they have to. I think these companies will benefit
• 25:29
  Speaker 1: because of the consolidation that's going to happen in the
• 25:32
  Speaker 1: physical space, whether that's in terms of employees or or
• 25:35
  Speaker 1: square footage. But I think these companies not only should
• 25:38
  Speaker 1: benefit kind of this growth. We're only doing eight percent
• 25:40
  Speaker 1: of all sales online right now. Estimates are that goes
• 25:44
  Speaker 1: to ft by thirty so we're seeing a global trend
• 25:47
  Speaker 1: that's much more than one single day, and I think
• 25:50
  Speaker 1: this et F and the company should stand to benefit.
• 25:52
  Speaker 1: I want to thank you very much for coming in
• 25:53
  Speaker 1: and giving us a look under the hood of I
• 25:56
  Speaker 1: Buy the new Amplify Online Retail e t F. Chris
• 26:00
  Speaker 1: Jim Magoon is the chief executive of Amplify Investments. Thanks
• 26:10
  Speaker 1: for listening to the Bloomberg pen L podcast. You can
• 26:12
  Speaker 1: subscribe and listen to interviews at iTunes, SoundCloud, or whatever
• 26:17
  Speaker 1: podcast platform you prefer. I'm pim Fox. I'm out there
• 26:21
  Speaker 1: on Twitter at pim Fox. I'm out there on Twitter
• 26:24
  Speaker 1: at Lisa Abramo. It's one before the podcast. You can
• 26:27
  Speaker 1: always catch us worldwide on Bloomberg Radio